FROM SOLO TO SYMPHONY

Transcription

1 Annual Report FROM SOLO TO SYMPHONY All for One Midmarket AG A subsidiary of BEKO HOLDING AG

2 All for One at a Glance CONTENTS From Solo to Symphony 3 Corporate Governance 4 The Share 7 Report of the Supervisory Board 8 Group Management Report 10 Consolidated Financial Statements 26 Profit and Loss Statement 27 Balance Sheet 28 Cash Flow Statement 30 Changes in Shareholders Equity 31 Notes to the Consolidated Financial Statements 32 Changes in Non-Current Assets 49 Responsibility Statement 50 Group Auditor s Report 51 Continuing Operations According to IFRS Values in EUR millions (unless otherwise stated) Delta 2006 Sales revenues 85,2 78,1 9% 62,6 EBITA 0,2 2,4-93% 1,3 EBIT -0,8 1,4 n/a 0,3 EBT -0,7 1,3 n/a -0,4 Earnings after tax* 1,6 1,2 34% -1,9 Earnings per share in EUR* 0,28 0,22 27% -0,35 Cash flow from operating activities 0,9 4,0-78% 3,0 Number of employees (at year-end) % n/a Full-time equivalents (average) % Dec 31 Dec 31 Dec Shareholders' equity** 28,3 26,2 8% 24,8 Equity ratio** 45% 38% 39% Total assets** 63,4 69,1-8% 64,3 * incl. discontinued operation ** incl. discontinued operation, 2006 Page 2

3 From Solo to Symphony Magnificent symphony orchestras and remarkable companies have a great deal in common:»good«is not enough. Both demand top performance from their members. Solo virtuosos and superb team players must be harmonised so that something simply»outstanding«is created. This is the goal that moved us away from AC-Service AG and onward to All for One Midmarket AG.»From solo to symphony«describes this progression best. Page 3

4 Corporate Governance All for One Midmarket AG is committed to a responsible and transparent corporate management and welcomes the recommendations of the German government s Commission on the German Corporate Governance Code to promote the confidence of investors, customers, partners, employees and the public in the company. The joint declaration of conformity by the supervisory and management board was published on 22 November in the official electronic Federal Gazette and made permanently available on the company s website. Shareholders and Annual General Meeting Around 80 shareholders attended the annual general meeting on 25 June. The resolution to change the company name from AC- Service AG to All for One Midmarket AG was approved with a large majority. The management and supervisory board had recommended this resolution at the annual general meeting in line with the implementation of the corporate strategy of being a leading full-service provider in the German-speaking SAP midmarket. The annual general meeting also approved all of the managements other proposals on the agenda with a large majority. Furthermore, the shareholders respresentatives and the shareholders themselves voiced their seal of approval on the strategic course of the management board and the accompanying high growth drive of the corporate development. A total of 63% of the share capital were represented at the annual general meeting. Active use was made of the company s broad range of internet services for the annual general meeting. The company refrained from live coverage of the annual general meeting on the internet mainly for cost reasons. The directors speeches were recorded on video and published on the website soon after. Supervisory and Management Board The supervisory board of All for One Midmarket AG consists of the unchanged three members Peter Brogle (Chairman), Rainer Schad (Deputy Chairman) and Peter Fritsch. All members were elected for a 5-year period of office until the 2009 Annual General Meeting. The management board of All for One Midmarket AG consists of Lars Landwehrkamp (CEO) and Stefan Land (CFO since 1 April ). The employment relationship with CFO Marco Fontana was amicably dissolved on 31 March. The new contracts for the two management board members were concluded in and each run until 31 December Neither of the two directors hold any positions in supervisory or similar boards outside of the All for One Group. Cooperation between the Supervisory and Management Board The supervisory board oversees and advises the management board and is directly involved in decisions of fundamental importance for the company. The management and supervisory board regularly exchange ideas. The management board continuously informs the supervisory board about the company s situation, the corporate budget and the implementation of the business strategy. The management board fine-tunes the strategic direction of company with the supervisory board. The chairman of the supervisory board coordinates the supervisory board s work and chairs the meetings, at which the management board usually attend. Further details can be found in the report of the supervisory board. There were no conflicts of interest between the members of the management board or supervisory board during the reporting year. Compensation Report A comprehensive report on the compensation for the management and supervisory board, on an individualised basis and divided into fixed and variable components, can be found in the notes to the consolidated financial statements. The structure of the compensation systems is regularly reviewed. Page 4

5 Stock Option Programmes or Other Similar Incentive Systems There are currently no stock option programmes or similar compensation systems in place that provide a long-term incentive for the members of the supervisory or management board Shares Held by Board Members The management and supervisory board together hold around 2% (prior year: around 1%) of the shares in the company. Shares Held by Board Members 31 Dec 31 Dec Supervisory Board Peter Brogle Rainer Schad Peter Fritsch Management Board Lars Landwehrkamp Stefan Land Changes in Shares Held by Board Members During the year, the management and supervisory board increased their shareholdings in the company. All changes in stock ownership of the management and supervisory board were disclosed in accordance with statutory regulations and also made permanently and publicly available on the company s website Risk Management and Control Risk management and risk awareness are integrated into a systematic and permanent process in all organisational units of the All for One Midmarket AG Group and its procedures. The supervisory board also drew on the auditor s report to monitor the management board and was informed by the management board in depth, both orally and in writing, about the results of the risk early warning system. They came to the conclusion that the risk management is appropriate for a company of this size and is suitable for identifying risks that pose a threat to the company as early as possible. Monthly reporting delivers detailed information about the corporate development and enables deviations to the respective division and corporate budgets to be identified at an early stage. Furthermore, some of the directors are represented in the administrative boards and corporate management of the subsidiaries where they perform duties within the sphere of risk management. Financial risks and undesirable developments can therefore often be identified at a very early stage. The risk management and control system cannot prevent all business threats and hazards. In particular, it can not offer absolute protection against losses or fraudulent acts. Compliance: Ensuring Compliance with Internal Company and Statutory Regulations The business activities of All for One Midmarket AG and its subsidiaries are aligned to the legal systems of various countries, which impose a number of different duties on the company, its subsidiaries and employees. Every employee and board member of the company is required to keep personal and company affairs separate in order to avoid any conflicts of interest. Integrity towards the company and responsible handling of business data, so-called insider information, as well as operating and trade secrets are clearly defined. All for One Midmarket AG and its subsidiaries fully respect prevailing law and expect the same from their employees and business partners. Competence and responsibility are the keys to success and both are reflected in adherence to the law and in ethical behaviour. Apart from professional skills and expertise, it is the employee s sense of responsibility that is an important source of business success. Every supervisor ensures that his or her organisation complies with the requirements of the principles outlined above. The management board systematically monitors the compliance with internal company guidelines and legal Page 5

6 regulations. On account of the size and structure of the company, it was abstained from establishing an independent office for reporting violations of internal company guidelines and legal regulations. Transparency on the Capital Market In order to ensure the greatest amount of transparency, All for One Midmarket AG, which is listed on the Prime- Standard of the German Stock Exchange, reports regularly and promptly to its shareholders, financial analysts, shareholder associations, the media and the interested public about the company s situation and significant changes in the business and operations. All for One Midmarket AG uses the internet intensively as a comprehensive disclosure and publication platform, which is constantly kept up-to-date. In line with the principle of fair disclosure, all shareholders and important target groups are treated equally when it comes to information. For statutory reasons, however, the publicly listed company BEKO HOLDING AG receives information, sometimes in advance, required to prepare its consolidated financial statements, interim group reports and the group s budget. The recipients of this information have agreed in writing to maintain confidentiality and not to disclose this information. Accounting and Audit of Financial Statements All for One Midmarket AG prepares its consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). During the course of, the German accounting test center (DPR) chose the consolidated annual financial statements of the former AC- Service AG (now: All for One Midmarket AG) to carry out random audit tests. No objections were raised. Filderstadt, March 2009 All for One Midmarket AG Supervisory and Management Board Page 6

7 The Share Still Room for Improvement Share prices have plummeted during the global financial crisis. Even well-positioned shares such as those of All for One Midmarket AG have suffered tremendous losses in value. And yet this temporary crisis offers good opportunities for investing in the stock market. A 41% drop in the DAX over the course of one year is something that traders and investors have not seen in quite some time, if ever. Hardest hit, however, were the indexes in which All for One Midmarket AG shares are traded. Triggered by fears of recession and the alarming reports about banks in particular, the stock markets repeatedly stood on the verge of panic in. Small investors started fleeing in droves. The DAI German Equity Institute (Deutsches Aktieninstitut) reported that 4 million people in Germany owned stock at the beginning of, and how twelve months later the number had dropped to only 3.5 million. No other industrialised country has a level this low. Buy When the Market is Down Fundamental factors naturally get ignored in times of crisis. Even strategically well-positioned shares like those of All for One Midmarket AG were unable to fend off the spiralling drop in share prices. And so this SAP fullservice provider lost a massive 58% of its value in. Nevertheless, such weak phases offer the chance to get into the market at low prices. Even our newly formed management team took advantage of this situation as you can see in the»shares held by Board Members«section of the corporate governance report. Key Data ISIN / WKN DE / Market Segment Prime Standard Stock Exchange Centre Frankfurt Stock Exchange Date of Listing 30 November 1998 Indices CDAX, GEX, Prime All Share Technology All Share Designated Sponsor LBBW (up to November ) BankM (since December ) Highest Price / Lowest Price * EUR 4.85 / EUR 1.87 Price at Start / End of * EUR 4.85 / EUR 2.02 Market Capitalisation** EUR 10.9 million Earnings per Share in EUR 0.28 Share Capital EUR 16.2 million Number of Shares 5,400,000 registered shares Shareholders' Structure BEKO HOLDING AG ca. 58% Universal-Investment-Gesellschaft mbh ca. 5% All for One Midmarket AG ca. 4% Management and Supervisory Board ca. 2% Financial Calendar Financial Results Press Conference 24 March 2009 Analyst Conference 25 March 2009 Quarterly Report 1/ May 2009 Annual General Meeting 19 May 2009 Quarterly Report 2/ August 2009 Quarterly Report 3/ November 2009 * share price at day-end (XETRA) ** share price at year-end (XETRA) Page 7

8 Report of the Supervisory Board New CFO, sale of ACCURAT, restructuring of corporate financing, reorganisation of AC-Service Group to All for One Midmarket AG, the implementation of the SAP full-service provider strategy developed in 2006 has accomplished key milestones in. The supervisory board was regularly informed, both orally and in writing, by the management board about all significant projects, issues and decisions and has resolutely monitored the management board s realignment of the Group. There were no conflicts of interest between members of the supervisory board during the reporting period. Supervisory Board Meetings The main focus of the supervisory board meetings was on the monitoring of the strategy implementation, business performance and budgeting, the risk situation and risk management as well as the further development of the corporate governance principles of the company. For this purpose, the supervisory board convened seven meetings during the reporting year as discussed below. Telephone conferences were also held. One additional audit committee meeting was held during the reporting year. This committee comprised all of the members of the supervisory board under the direction of supervisory board member Peter Fritsch. The report of the supervisory board for the financial year has already provided information about the significant content of the supervisory board meeting held on 7 March and the balance sheet meeting held on 13 March. well as the restructuring of the corporate financing were the main issues dealt with at the supervisory board meeting held on 7 May. During the supervisory board meeting held on 24 June, the supervisory board granted their approval to new contracts with two banks for the restructuring of the corporate financing. The meeting was also used to discuss preparations for the annual general meeting held on 25 June. The first six months business performance and the outlook for the whole year were the main issues discussed at the supervisory board meeting held on 15 August. During the supervisory board meeting held on 7 November, the supervisory and management board dealt at length with the possible consequences of the impending economic downturn and discussed actions and planning prerequisites for Furthermore, the 9- month business performance was discussed and the Declaration of Conformity with the German Corporate Governance Code was reviewed and concluded. The main issues dealt with during the supervisory board meeting held on 10 December were the evaluation and approval of the 2009 budget and the report on the results of the internal audit. Two further supervisory board meetings were held after the close of the reporting year: The main focus of the supervisory board meeting held on 11 April was the discussion on making the decision about the ongoing negotiations for the sale of AC- CURAT. Furthermore, the agenda for the annual general meeting on 25 June and the aspired change of name from»ac-service AG«to»All for One Midmarket AG«were discussed. The first three months business performance, the progress of the negotiations for the sale of ACCURAT as On 2 March 2009, the supervisory board held an audit committee meeting in the presence of the management board, the Group auditors and the auditors of the annual financial statements. During this meeting, the consolidated financial statements and the annual financial statements of All for One Midmarket AG as at 31 December were examined, discussed in detail and were handed over with the respective recommendations to the supervisory board to be finalised and approved in the supervisory board meeting held on 10 March Page 8

9 The risk report was examined, discussed and approved during the balance sheet meeting held on 10 March Furthermore, the consolidated financial statements and the annual financial statements of All for One Midmarket AG as at 31 December were discussed. The consolidated financial statements of All for One Midmarket AG were prepared in accordance with the International Reporting Standards (IFRS). The consolidated financial statements as at 31 December and the Group Management Report were audited by the accounting firm KPMG AG Wirtschaftsprüfungsgesellschaft, Stuttgart, and the annual financial statements as at 31 December and the management report were audited by the accounting firm UWP Unitreu GmbH Wirtschaftsprüfungsgesellschaft, Eschborn. Both sets of financial statements were given an unqualified audit opinion. The annual financial statements and management report, the consolidated financial statements and Group Management Report and the corresponding audit reports were presented to all of the members of the supervisory board and were discussed in detail in the presence of the auditors. On 10 March 2009 the Company Dependent Report prepared by the management board was issued the following unqualified audit opinion by the auditors in their audit report:»based on our statutory audit and evaluation, we certify that: 1. The actual information contained in the report is correct, 2. The actions listed in the report provide no cause for any significantly different assessment than that expressed by the management board«. After examining the Company Dependent Report, the supervisory board concurred with the findings of the auditors examination and raised no objections to the management board s closing statement in the Company Dependent Report. The supervisory board meeting held on 10 March 2009 closed after discussing the agenda for the annual general meeting. Corporate Governance The joint declaration of conformity by the management and supervisory board, which was prepared in accordance with 161»Aktiengesetz«in conjunction with the German Corporate Governance Code, was published in the official electronic Federal Gazette on 21 December and made permanently available on the company s website. The supervisory board examined the annual financial statements, management report and the proposal for the appropriation of the net earnings as well as the consolidated financial statements and the Group Management Report. No objections were raised. The result of the audit of the financial statements was approved by the supervisory board during the meeting held on 10 March The annual and consolidated financial statements prepared by the management board are hereby approved and the annual financial statements according to 172»Aktiengesetz«are finalised. The supervisory board concurred with the management report and the assessment of the further development of the company by the management board. The supervisory board wishes to thank the management board and all the employees of All for One Midmarket AG and its subsidiaries for their good work and dedication. Filderstadt, 10 March 2009 All for One Midmarket AG Peter Brogle Chairman of the Supervisory Board Page 9

10 Group Management Report of All for One Midmarket AG Unless otherwise stated, the designation»all for One Midmarket AG«as used in this Group Management Report refers to the All for One Midmarket AG Group (including subsidiaries). Financial Year in Review All for One Midmarket AG was noticeably affected by the serious economic downturn that set in near the end of. The risk provisioning for doubtful accounts was increased, which further burdened earnings. At the close of the year the restructured balance sheet showed an equity ratio of 45% (: 38%) while liabilities were reduced by EUR 7.8 million in to EUR 35.1 million. Sales revenues increase 9% to EUR 85.2 million EBIT declines to minus EUR 0.8 million Group profit climbs to EUR 1.6 million from the sale of ACCURAT 54 new jobs created in Record investments of EUR 6.4 million Equity ratio grows to 45% Solid funding The realignment towards becoming a leading IT service provider for SAP in the German-speaking midmarket sector that began in continued to make giant steps forward during : The management board was reorganised, the ACCURAT division was sold, new business divisions and an integrated business model were established, and the corporate financing was placed on a new footing. AC-Service AG was renamed All for One Midmarket AG, the holding company and largest subsidiary were combined to form a new lead operating company. What s more, this growth-based corporate restructuring also led to the relocation of more than half of all the employees to four new office buildings and two data center facilities. The business model was more effectively integrated as the strategy to become a leading SAP full-service provider was being accelerated, which in turn ensured that robust growth could continue. It was especially pleasing to see the rise in recurring outsourcing revenues, including those from software maintenance. Together they now account for about one third of total revenues. Operating earnings were severely burdened by one-time costs of some EUR 1.3 million that arose in conjunction with the Group restructuring and the numerous relocations that were made. The company met its sales forecasts of from EUR 82 to 85 million for the full year that were announced in March, but fell far short of reaching its earnings goals. The EBIT projections of from EUR 1.3 to 1.7 million announced in March turned out to be too ambitious in light of the extensive reorganisation and were therefore cut back»more than EUR 1 million«in an ad hoc announcement made on 1 August. In light of the increasing signs pointing to a massive economic downturn, the company stressed in another ad hoc announcement on 5 November that reaching the revised EBIT target of»more than EUR 1 millionwill depend for the most part on how the economic situation develops in the remaining weeks of the year«. All for One Midmarket AG has been pursuing a course of consolidation since mid- following an uninterrupted three-year period of strong growth that led to a major expansion of both its market share and customer base. This phase is focusing on further improving the integration of human resources and processes in order to enhance profitability. With a customer base of recurring revenues that has expanded greatly during the past few years, All for One Midmarket AG sees an excellent opportunity to emerge from this crisis stronger and to later profit greatly when the economy recovers. Market Trends The positive economic trend of the past years continued unabated over much of. For a long time it appeared as if the crisis on the financial markets would pass by or at least not have any serious impact on the real economy. Page 10

11 All for One Midmarket AG s key industries, such as machinery and equipment manufacturers, the auto parts industry and specialised service industries, continued posting sustained growth well into the year. The ongoing internationalisation and globalisation of the procurement and sales markets proved to be the growth drivers for enterprise software and IT services. What also spurred business was the progress made in optimising costs, quality and processes and the investment security that comes from an SAP-based solution delivered by a leading full-service provider. The trend towards one-stop and end-to-end IT solutions and services, and especially the tendency of small to mid-sized businesses to outsource their IT infrastructure to providers such as All for One Midmarket AG, continued despite no significant let up in pricing pressures and price sensitivity. Market Observers Revise Projections Under the general impression that the economy would continue performing as well as it had in previous years, market observers, analysts and industry associations (e.g. BITKOM) projected over much of that the IT services market in Germany would post gains of between 6% and 7% (and about 5% for each of the years and 2009). It was only in late that scores of analyst projections were cut back dramatically once they were examined in a new context. The revised expectations for how the overall IT market will perform in 2009 range from minus 3.7% (Experton Group, Research Note, 5 December ) to zero growth (BITKOM, 11 December ). Still, gains of around 7% for 2009 are considered possible for certain segments of the IT services market, particularly outsourcing, business process outsourcing and similar services (BITKOM, 22 January 2009). All for One Midmarket AG already holds promising positions in these market segments, which are the ones that observers believe can profit from this economic crisis. SAP Midmarket and SAP Ecosystem As a permanent member of the SAP Partner Executive Council, the European council within the SAP organisation that handles partner issues, All for One Midmarket AG was able to reinforce its role as a recognised and leading figure within the SAP ecosystem and maintain its foremost position within the German-language SAP midmarket segment. It was during phases involving the introduction of new software maintenance services (»Enterprise Support«) and delays in the market launch of Internet-based enterprise software (»SAP Business By- Design«) or when emerging product strategies for new software tools (»Business Objects«) were being developed that All for One Midmarket AG was able to both mediate and contribute to finding answers that in particular addressed the needs of small to mid-sized businesses. Strategy and Corporate Development Major steps forward have been made in implementing the strategy to become a leading SAP full-service provider for small to mid-sized manufacturing and project services companies in countries where German is spoken. This progress also led to major changes in the Group structure, most notably during the year. New Name, New Content AC-Service AG is now called All for One Midmarket AG and the shares have been trading under this new name since 18 July. Then, on 2 September the merger of All for One Midmarket Solutions & Services GmbH, Stuttgart, into All for One Midmarket AG, Stuttgart, was recorded in the commercial register. With that the holding company and the Group s largest subsidiary were combined into one lead operating company, which has some 270 employees and accounts for approximately 60% of the sales volume for the Group as a whole. The Group headquarters was moved to its new home in Filderstadt at the Stuttgart Airport. The names»ac/ac- Service«,»Process Partner«and»KWP«, which are well established in Switzerland, Belgium and Luxemburg, as well as on the market for human resources management, were retained as Group brands of All for One Midmarket AG. No changes were made to the names of the related subsidiaries. Page 11

12 This new All for One Midmarket AG unites AC-Service s experience and service lines with the strengths of the former All for One. The positive momentum generated by this integrated business model, which provides a single source that covers the entire IT value chain of small to mid-sized businesses, is really making its mark. ACCURAT Division is Sold On 19 May all of the shareholdings in ACCURAT Informatik GmbH, Dreieich (Frankfurt), which operates outside the SAP market, were sold to SD Worx, Antwerp, as part of a share purchase agreement. This business division, which in last year s annual report was reported (under IFRS 5) as»non-current assets held for sale«, not only employed 95 people in, but also generated segment revenues of EUR 10.4 million and segment earnings of EUR 1.1 million, mostly through payroll services. Due to the changes in segment reporting, the segment earnings of the discontinued ACCURAT division declined by approximately EUR 0.4 million. The sale price was EUR 10.1 million. This successfully completed transaction sharpens the strategic focus on SAP and strengthens All for One Midmarket AG s balance sheet. And the cash flow it generated will help fund greater investments to enhance future profitability. Newly Formed Business Divisions Highlight the Integrated Business Model Because of the early application of the new IFRS 8, All for One Midmarket AG was divided into the two newly formed business divisions»integrated Solutions«and»HR Solutions«effective 1 January. All of the companies of the former»managed IT Services«and»Other Operations«divisions are included in the Integrated Solutions business division. The former»sap Solutions«business division was divided up and allocated to the two new segments. The centralised and unallocated Group costs (»Corporate Services«) that used to be reported separately are apportioned on a pro rata basis to the two business divisions. The comparable figures for the prior year were adjusted accordingly. The reduction from five to now only two business divisions perfectly reflects the strategic development of the Group with its clearly focused and integrated business model and best accommodates the transformed management and reporting structure (»management approach«). The segment figures from the prior year were adjusted accordingly. Record Investments to Boost Profitability In order to grow profitably in the future, some 8% of sales revenues were invested in new data center technologies, new locations and in further integrating business activities and business units in. Despite intensive cost management, the various one-time costs for these comprehensive realignment steps added up to about EUR 1.3 million and placed a major burden on earnings during the reporting year. New Corporate Financing and Solid Funding Funding these major investments for future profitable growth from the operating cash flow alone was not possible. All for One Midmarket AG completely restructured its external financing in the 2nd quarter. The existing financial liabilities of EUR 11.0 million from an acquisition loan made in 2006 were completely repaid. Counter financing was accomplished by using available funds from the sale of ACCURAT and by concluding two new loan agreements with an overall volume of EUR 9.0 million, of which a total of EUR 6.5 million had been utilised as at 31 December. In addition, the two new operational funding lines of credit, which are available for a volume of up to EUR 6.0 million, were utilised for existing aval guarantees in the amount of EUR 0.3 million. The terms and rates of principal repayments for both loans were aligned with the company s long-term budget and planning. This means that All for One Midmarket AG is much more solidly funded than it was at the end of. The net debt was repaid and the equity ratio at the end of the year (45%) was improved significantly compared to what it was at the beginning of the year (38%). Industry-Focused Portfolio as the Starting Point for a Full Range of Products and Services SAP-based»All in One«solutions are an important pillar of All for One Midmarket AG s integrated business model. Page 12

13 These solutions are specifically pre-configured to the typical enterprise processes of certain branches of industry, are very economical to implement and can be run either within All for One Midmarket AG s Managed Service Center or in-house at the customer s location. This All for One collection includes the industry solutions for machinery and equipment manufacturers (All for Machine), the auto parts industry (All for Automotive) and for project services companies (All for Service or ProServ). All for One Midmarket AG develops further industry solutions for the sub-industries (»micro verticals«) that supply the auto manufacturers; the plastics industry (All for Plastics), the metalworking industry (All for Metal) and the electronic components industry (All for Electric) and foundries (All for Foundry). An industry-specific platform called KWP.All-in-One.HR that is geared to the wideranging demands of human resource management has also been developed. Numerous add-ons are also available that not only enhance user-friendliness, but include additional specific functions such as electronic data interchange (EDI), enterprise data analysis (business intelligence), tracking the movement of goods with radio frequency identification (RFID) to mention only a few. The electronic workplace (»AC EAP«), a service portfolio developed by AC-Service (Schweiz) AG, incorporates all of the services and features that are needed at an office workstation. It comes with such features as telephony, workplace hardware, peripherals and software applications including their maintenance, support and operation from within the Outsourcing Service Center. All for One Midmarket AG conducts no research activities and holds no patents. Sales Performance and Earnings Situation The company uses sales revenues and operating earnings (EBIT) as the key financial indicators for corporate management purposes. A. Sales Performance Sales Plus 9% / Recurring Revenues Increase 18% All for One Midmarket AG not only continued its robust growth for three years in a row, but also boosted its sales revenues by 9% to EUR 85.2 million. This increase would even have been 14% above that of if sales revenues were to be adjusted for the hardware revenues (commercial goods, one-time transactions) included Sales by Types of Proceeds Continuing Operations Other Sales 4% Software Licenses 17% Outsourcing* 34% In EUR millions 34.2 I 12% Hardware 5% EUR 85.2 million I 18% I 13% I -41% 3.6 I 9% Consulting 40% I * In sales revenues in the amount of EUR 0.7 million from hardware sales were reclassified as outsourcing sales, in order to establish comparability with. Page 13

14 Sales by Country Continuing Operations Rest of Europe 7% In EUR millions Switzerland 19% Austria 5% EUR 85.2 millions I 14% 16.2 I -1% Germany 69% I -14% I 35% I therein. All types of proceeds (except hardware revenues) contributed to what is again a level of growth that is not only well above the industry average, but underscores how well the business model has been integrated. As a full-service provider and»one-stop shop«, All for One Midmarket AG provides its customers with end-to-end support to meet their needs along the entire IT value chain. This close bond with the customer increasingly leads to recurring revenues from outsourcing and software maintenance services, whose share of the business now accounts for about one third of total revenues. This share of revenues also reinforces the basis for expanding the business and can increasingly temper the volatility involved in selling software licenses. This growth in revenues is attributable primarily to proceeds from the sale of software licenses (+13% compared to the prior year), recurring outsourcing services (+18%) and consulting (+12%). More than 69% of the Group s total revenues came from Germany (+14% compared to the prior year), 5% from Austria (+35% compared to the prior year) and 19% from Switzerland (minus 1% compared to the prior year). The prior-year revenue figures for Switzerland include large one-time revenues from hardware-related projects, which led to Switzerland posting a record year in. The remaining European countries generated 7% of total revenues (minus 14% compared to the prior year). Major progress has been made in the programme designed to take individuals with expertise in other ERP solutions and train them to become SAP consultants. Newly trained consultants are increasingly being used productively in a variety of projects. As a result, the slightly declining revenues from IT consulting in the 1st quarter of picked up over the course of the full year, but were still clearly below expectations. Not only did the record revenues (EUR 14.4 million, +13%) from the sale of SAP licenses vastly exceed expectations, they also included a licensing order of some EUR 2 million which is the biggest order of its kind ever placed with All for One Midmarket AG. Revenues from the sale of software licenses are an important indicator of the potential for future recurring revenues from software maintenance, since each license goes hand in hand with such recurring software maintenance revenues. What s more, the sale of software licenses is often the entry point for larger projects involving multi-year contracts for outsourcing services, which in turn generate even more recurring revenues. Page 14

15 B. Earnings Performance One-Time Realignment Costs Place a Greater-than- Expected Burden on Operating Earnings In the wake of a strong 1st quarter (EBIT: EUR 0.6 million) and a weak 2nd quarter (EBIT: minus EUR 0.5 million), operating profitability again moved upwards during the period July to September and reached some EUR 0.3 million. The 4th quarter of only generated an EBIT of minus EUR 1.1 million. This was mostly due to high one-time expenses relating to the Group restructuring and increased risk provisioning for doubtful accounts and unsellable inventories as a result of the economic downturn. Thus the full-year EBIT was minus EUR 0.8 million (prior year: EUR 1.4 million) and is much lower than the original projections announced in March which called for it to be within the range of from EUR 1.3 to 1.7 million for the year as a whole. Due to changes in the segment reporting, the EBIT for the prior year (continuing operations) increased by approximately EUR 0.4 million. In spite of the major increase in licensing revenues, the ratio of the cost of traded goods to sales revenues declined from 38% to 34%. This is a result of a change the sales mix. A great deal of low-margin hardware revenues were generated in, which then dropped dramatically in. Personnel expenses during the reporting year rose 12% to EUR 37.9 million due to the large increase in staff numbers (from an average of 420 to 487 employees). Other operating costs also increased disproportionately from EUR 11.5 million to 15.8 million (+38%). This surge in expenses is not only a result of the increased costs for personnel recruitment and development, but also stems from the one-time and duplicate costs from the necessary relocations and consolidations, especially the occupation of new data centers. Other operating costs also include an increase in risk provisioning for potential doubtful accounts and bad debt in the amount of EUR 0.4 million that had to be undertaken as a result of the ongoing recession, as well as one-time and duplicate costs of EUR 1.3 million. Other operating income declined to EUR 1.0 million (: EUR 1.8 million). The prior-year figure includes investment tax credits relating to other periods in an amount totalling EUR 0.7 million (: EUR 0.1 million). The increase in depreciation on tangible fixed assets by 26% to EUR 2.9 million is attributable to the extensive investments made during the reporting year to implement the business strategy. On the other hand, amortisation of other intangible assets remained virtually unchanged at the prior-year level of EUR 1.0 million. No extraordinary amortisation of intangible assets with an indefinite useful life, primarily goodwill, was undertaken. The respective assets underwent annual impairment testing. The financial result was EUR 0.1 million and showed an overall positive trend starting in June (: minus EUR 0.1 million) as a result of the modified corporate financing. This resulted in earnings before taxes (EBT) of minus EUR 0.7 million (: EUR 1.3 million). The large income tax burden of EUR 0.8 million (: EUR 0.1 million) is attributable primarily to the positive earnings of the companies in Switzerland, Belgium and Luxemburg. The income tax expense of the prior year also includes tax income of EUR 0.3 million relating to other periods from the reversal of no longer needed income tax provisions. Earnings per share after taxes (continuing operations) were minus 32 euro cents (: plus 22 euro cents). Together with the contribution to earnings from the sale of the ACCURAT division (discontinued operation), the earnings after taxes for were EUR 1.6 million (: EUR 1.2 million). This corresponds to earnings per share of 28 euro cents (: 22 euro cents). Performance by Business Division The transformed management organisation and the systematic integration of the business model led to the newly formed business divisions»integrated Solutions«and»HR Solutions«through the application of IFRS 8 (»Op- Page 15

16 erating Segments«). In the process of doing this, the central Group costs, which had been reported separately, were allocated on a pro rata basis to these two new business divisions. In the»integrated Solutions«segment accounted for 88% of revenues and 82% of the entire Group s employees. The statements regarding market trends made in the first part of this Group Management Report pertain equally to both segments. Both business divisions companies work together on specific projects and in areas that span the two segments. In addition to that, they operate a joint HR Performance Center that allows customers to use SAP HCM as a full service that includes application management (»HR Solutions«segment) from within the Managed Service Center (»Integrated Solutions«segment).»Integrated Solutions«Business Division The»Integrated Solutions«segment encompasses a full range of products and services geared towards end-toend customer support that starts with management consulting and extends from software licenses, industry solutions, implementation and optimisation projects all the way to software maintenance, outsourcing and managed services, and covers the entire spectrum of enterprise processes. The Group companies assigned to this segment are located in Germany, Austria, Switzerland, Belgium and Luxemburg. Customers in other countries are supported mainly by the»united VARs«partner network. The integrated business model is generating more and more energy and momentum. Segment revenues rose 7% to EUR 75.6 million (including EUR 0.6 million in revenues among the segments themselves). The EBIT declined during the same period from EUR 1.5 million to minus EUR 0.9 million. EUR 0.6 million of this decline was a result of the lower investment tax credit in Luxemburg. Over 90% of the total of EUR 1.3 million in one-time and duplicate costs in mentioned above is reflected in the segment earnings of the»integrated Solutions«business division. When adjusted for these special items, the resulting figure gives you a good indication of the progress made in enhancing operational growth in. Segment assets less segment liabilities totalled EUR 24.5 million as at 31 December (prior year: EUR 16.3 million). The average number of employees in the segment during the reporting year was 399 (prior year: 344). The number of employees at the end of the year was 412 (prior year: 364).»HR Solutions«Business Division At the heart of the»hr Solutions«segment is the human resources software platform SAP HCM (»Human Capital Management«), which forms the basis for providing comprehensive implementation, consulting and support services all the way to recurring HR outsourcing and HR business process outsourcing services. With some 750 customers, the HR Solutions segment in Germany estimates that it holds a good 20% of the market share. The segment reported a positive trend in business performance during reporting year. Segment revenues increased 15% to EUR 10.4 million (of which EUR 0.2 million are attributable to revenues among the segments themselves). This segment mostly generates revenues from consulting activities, whose recurring share, which includes a variety of long-term support agreements (»application management«), was further expanded. The growth driver within this segment continued to be the remarkable penchant for change on the part of legislators in Germany, who place ever-greater demands on personnel administration which in turn increases the need for the related consulting services. Our consultants often reached peak capacity thanks to special consulting projects relating, for example, to the establishment of what is called the national»health care fund«and the increased use of short-time working that companies initiated as the year drew to a close. Many customers soon discovered that a lot of consulting assistance is needed from a personnel administration aspect when scheduling entire workforces to work fewer hours. The»HR Solutions«segment not only accomplished a great deal in the traditional administrative HCM areas, but in strategic human resources issues as well. The ability to provide highly sophisticated consulting expertise in the Page 16

17 fields of erecruiting, performance management, human resources controlling, the electronic personnel file and ehr portal applications allowed this segment to acquire a number of major-name domestic and international reference clients. Besides the primary Germany market with five locations nationwide, this business division operates mostly in Austria, along with France and the Czech Republic. Along with a major increase in sales revenues, the segment s EBIT improved to EUR 0.1 million from minus 0.1 million. At the end of the reporting year the segment assets, less segment liabilities totalled EUR 3.9 million (31 December : EUR 3.6 million). The number of employees within the segment also increased to an annual average of 88 (prior-year period: 76) and the segment had 91 employees at the end of the year (31 December : 85). Assets and Financial Situation Indicator Calculation Unit Delta Equity to assets Total equity Fixed assets % 111% 116% -4% Days of sales Trade receivables * 360 days outstanding Group revenues Days % Cash resources Cash and cash equivalents less MEUR 8,1 5,6 45% funds not disposable Net debt Interest-bearing liabilities less MEUR 4,0 5,9-32% cash and cash equivalents Equity ratio Total equity Balance sheet total % 45% 38% 18% Return on equity Net Group earnings / average equity % 5,8% 4,6% 25% Return on total capital Net Group earnings / average total capital % 2,4% 1,8% 34% Net Assets Position The balance sheet structure changed fundamentally from that of the end of the year. This was due primarily to the successful finalisation of the sale of ACCURAT (discontinued operation) in mid-may and to the new corporate financing agreements that were made in late June. The equity and liabilities side of the balance sheet was restructured and the financial obligations were repaid, which resulted in a significant increase in equity. as a result of the elimination of the assets held for sale of the discontinued ACCURAT division in the amount of EUR 8.0 million. A more rigorous receivables management effort also led to a reduction of outstanding accounts receivable from EUR 17.6 million (end of prior year) to EUR 15.0 million. The days of sales outstanding, or DSO, declined by 18 days to a more satisfactory 63 days at the end of. Non-current assets increased in turn by a total of EUR 3.5 million. This increase resulted primarily from the major investments made in fixed assets and from the increase in other assets. These include such items as the residual purchase price (earnout) for ACCURAT (EUR 1.5 million), which has been placed in a trust account until May 2010 for possible events that would make a guarantee operative. To date no guarantee claims have been asserted. Impairment tests were used to review and validate capitalised goodwill and those intangible assets with an indefinite useful life. No extraordinary amortisation was made. In contrast, the other intangible assets continue to be regularly amortised and declined by EUR 0.9 million to 9.8 million. There were no significant changes in deferred tax assets. The current liabilities to banks of most recently EUR 11.0 million from the financing of a corporate acquisition in February 2006 were repaid in their entirety. As a result of the new and long-term growth financing, the non-current financial liabilities increased from EUR 1.4 million (end of prior year) to EUR 9.9 million (31 December ), while the current financial liabilities declined during the same period from EUR 12.0 million to 2.6 million. Overall, financial liabilities were reduced from EUR 13.3 million (end of prior year) to EUR 12.5 million while the net debt decreased during the same period from EUR 5.9 million (end of prior year) to EUR 4.0 million as at the end of. Simultaneously, the trade accounts receivable were reduced from EUR 10.5 million (end of prior year) to EUR 7.9 million. Total reported assets at the end of declined to EUR 63.4 million (end of prior year: EUR 69.1 million) primarily The improvement in equity from EUR 26.2 million (end of prior year) to EUR 28.3 million (31 December ) is Page 17

18 attributable primarily to the earnings (including the discontinued operation). The equity ratio improved from 38% to 45%. Cash Flow and Investments The cash flow from operating activities declined by EUR 3.1 million to 0.9 million during the reporting year. Also in, the one-time payment of a residual purchase price (earnout) of EUR 1.6 million was made, which stemmed from the acquisition of 100% of the shareholdings in Process Partner AG at the end of Because of this, the cash flow from operating activities was only reduced by EUR 1.5 million. There was also a significant decrease of EUR 2.6 million in trade accounts payable in. The EUR 5.2 million (prior year: EUR 2.3 million) cash outflow from investing activities increased far beyond the usual amount and is mostly attributable to record investments in new data center technologies and office locations. The cash outflow for investment in fixed assets totalled EUR 6.4 million (cash used prior year: EUR 2.9 million). As expected, the cash flow from operating activities was unable to cover the large amount of cash used in investing activities during the reporting year. The cash flow from financing activities changed from minus EUR 3.6 million to minus 2.8 million. In the process, net repayments of EUR 4.7 million against bank loans and operational funding lines of credit were made, financial liabilities (leasing) rose by a net of EUR 2.8 million and interest payments in the amount of EUR 0.9 million, including the interest share of leasing rates, were made. The sale of ACCURAT has provided the Group with EUR 8.6 million of the agreed purchase price during the reporting year. An additional EUR 1.5 million of the agreed purchase price payment is being held in a trust account for another 17 months. The total disposable cash and cash equivalents increased from EUR 5.6 million (end of prior year) to EUR 8.1 million as at 31 December. All for One Midmarket AG s financial resources as at the end of can be described as solid. Beyond the disposable cash resources and current receivables, the newly concluded growth financing provides the opportunity to enhance the Group s credit by EUR 2.5 million, an option that so far has not been utilised. As yet, unused operational funding lines of credit also help expand the scope of liquidity. Management and Human Resources Composition of the Management Board During the reporting year the management board of All for One Midmarket AG consisted of Lars Landwehrkamp and Stefan Land (as of 1 April ). Marco Fontana stepped down from the board on 31 March. Fundamentals of the Compensation System for the Management Board and Supervisory Board Total compensation for the management board for the financial year was 756 (prior year: 996). The fixed compensation for members of the management board consists of a basic salary, benefits in kind for the use of a company car and pension plans. The additional performance-related compensation component is based on achieving the annual earnings target (EBIT/EBT) as reflected in the audited consolidated financial statements for All for One Midmarket AG and on certain project goals set for each individual. A dividend-based variable compensation component will also be paid if dividend payments can be made to shareholders for the financial years 2009 to The total management board compensation for the financial year also includes remuneration in the amount of 179 for a member of the management board who prematurely left the company. In addition to reimbursement for expenses, the members of the supervisory board receive an attendance allowance, as well as a fixed basic remuneration for each full financial year that they are members of the supervisory board. The chairman is paid twice the amount and the deputy chair- Page 18

19 man one and a half times the amount of this remuneration. No performance-based compensation is provided. Total compensation for the supervisory board amounted to 69 (prior year: 68). No loans were extended or stock options granted to the members of the management or supervisory board during the reporting year. The individual compensation paid to the members of both boards is shown in the notes to the consolidated financial statements and in the corporate governance report. In its official notification of 18 February 2009, and in response to a related request, the German Federal Financial Supervisory Authority (BaFin) exempted the following persons and companies from the obligation to announce the obtaining of control pursuant to 35, section 1, sentence 1»Wertpapiererwerbs- und Übernahmegesetz«(WpÜG) with regard to the obtaining of control over All for One Midmarket AG on 1 October, as well as from the obligations pursuant to 35, section 2, sentence 1 WpÜG to submit a mandatory offer to the shareholders of All for One Midmarket AG and publish the same: CROSS Industries AG, Edisonstr. 1, Wels, Austria Pierer GmbH, Edisonstr. 1, Wels, Austria Knünz GmbH, Pfarrgasse 7, Dornbirn, Austria Mr Stefan Pierer, Roithenstr. 89, Wels, Austria Dr Rudolf Knünz, Pfarrgasse 7, Dornbirn, Austria Personnel People are the most important resource for a services company like All for One Midmarket AG. All for One Midmarket AG has more than doubled its staffing strength since the beginning of 2006 (continuing operations). Besides personnel retention and development, the primary focus of our human resources management effort during the second half of was on consolidating this considerable increase in staff and on better integrating the large number of new people who joined the company. Special training and retraining programmes were completed for application consultants who already have related industry experience and want to transfer to a career in SAP software. These newly trained consultants are increasingly being used in client projects. The average annual number of employees in increased 16% to 487 (: 420), while the number of employees at the end of the year rose 12% to 503 (31 December : 449). Important Events after the Balance Sheet Date Beyond that, no other events of importance occurred after the balance sheet date. Risk and Opportunity Report In order to provide the company with highly responsible and value-based leadership, the management s objective is to rigorously capitalise on business opportunities and identify potential risks early on and be pro-active and foresighted in managing them. Risk Early Warning and Internal Control Systems In line with its overall responsibility for the Group, the management board established a risk early warning system in accordance with 91, section 2»Aktiengesetz«. This system is an integral part of the planning, control and reporting process. In the course of combining the former holding activities and what was once the largest business unit into the lead operating company and parent called All for One Midmarket AG, the existing risk early warning system and the internal control systems were carefully reviewed and adapted to meet the demands of the changed situation. In doing so, the risk management organisation was revamped and integrated into the new organisational and operational structure. A risk management handbook was also written and will be used uniformly throughout the Group in the future. Special risk workshops help the or- Page 19

20 ganisation to identify risks more effectively and to recommend and implement the appropriate measures and actions to manage them. The risk manager and the controlling department play key roles in this process. The company s internal planning, control and reporting system incorporates a number of analyses and reports on the current situation and outlook for the All for One Group. Planning and budgeting is a bottom-up process carried out on a monthly basis. In addition, a forecasting process is initiated several times a year in order to further improve management control and to take the appropriate actions to avoid or counteract any emerging variances or discrepancies. The effectiveness of the Group s present information system is ensured by management meetings and business reviews conducted at various levels within the individual companies. It is there that opportunities, risks and variances are identified, discussed and acted upon. Each year one or two companies within the Group undergo an internal audit. Compliance with company policies and the quality of the internal control system are just some of the things that this audit examines. The risk manager reports the results of these internal audits directly to the chairman of the supervisory board s audit committee. Opportunities for Future Business Performance Strategic Alignment The clear focus on key industries in selected midmarket segments offers an even greater opportunity of becoming the first choice for companies looking for a consulting, solutions and service partner for their IT projects. Rigorous and consistent direct sales together with sales and marketing through partners are helping to expand our base of reference customers. Our outstanding reputation on the market and the image we present by being an economically sound service partner that values quality and offers its customers a substantial long-term investment perspective are what form an excellent basis for even more successful sales. Our prominent position and visibility as one of the leading Gold Partners within the SAP organisation also helps us market and sell the corresponding SAP licences. As we continue to expand our full range of products and services, so too do opportunities arise to comprehensively support our customers even as the economy worsens, and to gradually go beyond primary support and successfully market our entire range of solutions and services. Our extensive partner network gives us an important competitive edge and, thanks to our relationship with United VARs, also ensures low-risk, worldwide customer service and support of the utmost quality. Risks to Future Business Performance Risks Associated with Developments in the Economy The global financial crisis is adversely affecting the overall development of the economic environment in an intensity never seen before. Further developments and events over which All for One Midmarket AG has no influence, such as changes in tax legislation, can pose risks to future business performance, restrict the ability to reliably plan and budget and can endanger our ability to achieve revenue and earnings targets. Risks are monitored constantly. Nevertheless, there remain considerable risks associated with overall economic developments. The management board continues to keep a close eye on how the economy is developing in order to be able to implement corrective actions as rapidly as possible. Industry Risks All for One Midmarket AG operates predominantly in markets where the competition is extremely intense. These markets are characterised by rapid technological advancements. Naturally this situation generates risks in addition to the opportunities outlined above. There is constant pressure on prices and margins, and the extreme competitive pressure could lead to greater-than-expected strains on prices and margins. Our clear focus on selected industries results in an even greater dependence on how the economy develops within these target industries. Page 20

21 By further expanding our range of high-quality services and more thoroughly integrating the full range of products and support to further strengthen recurring revenues from longstanding client contracts, we are working hard and with noticeable success to enhance the benefits and value for the customer and in turn reduce the pressure on prices and margins. The use of new industry solutions that are being improved and upgraded continuously also helps counteract pricing pressures. Still, this is not enough to rule out every case of cost overruns or losses from doubtful accounts at the expense of the operating margin. Risks from the Dependence on Key Clients All for One Midmarket AG s sales revenues are basically spread across a large number of customers. There is only one customer whose business accounts for about 11% of the Group s total revenues. All for One Midmarket AG uses careful account management to mitigate its dependence on key clients. Measures designed to ensure sustained customer satisfaction with the solutions and services provided together with contractual commitments (longer contract periods) can also effectively enhance customer loyalty. Risks Associated with the Service Portfolio and Dependence on SAP The strategy s alignment to providing the full range of services involving SAP has increased our dependency on the world s largest supplier of enterprise software solutions. The continued success of existing and future SAP products on the market and the sustainability of SAP s midmarket strategy and the terms and conditions for partner sales that go with it cannot be predicted with certainty and therefore represent a potential risk. However, All for One Midmarket AG is a permanent member of the SAP Partner Executive Council. This central European council within the SAP organisation carries a lot of weight in dealing with partner-related issues. Management also maintains regular and close contact with SAP s decisionmakers to highlight the positions held by the partners, as well as the needs and concerns of their small to mid-sized business customers. Personnel and Integration Risks There are additional risks inherent with the development and motivation of the workforce. The tremendous interest in services by our customers and the concurrent restructuring of the company put a great deal of pressure on the employees. Relentless periods of peak stress can also cause important employees to leave the company. This is why greater efforts are being made to consolidate the growth strategy and make improvements to internal and customer-related processes. Moving into new offices and data centers has produced some major improvements in both the workflow and the work environment. Financial, Liquidity and Default Risks The Group balance sheet shows an equity ratio of 45% as at 31 December. This financial flexibility also includes disposable cash resources in the amount of EUR 8.1 million and short-term third-party receivables of EUR 15.0 million. Furthermore, All for One Midmarket AG generated EUR 0.9 million in cash flows from operating activities in the financial year. As yet unused operational funding lines of credit in excess of EUR 5 million currently add to the amount of financial leeway that the Group enjoys. Principal loan repayments were geared to the longterm corporate planning and budgets. Interest rates are variable and interest hedges are currently not being used. Should certain events described in the loan agreements (covenants) arise, then the lenders are, among other things, authorised to raise the interest rate or to terminate the loans and call them due immediately. The management board exercises the utmost diligence regarding compliance with the terms and requirements set forth in credit agreements. Aggressive receivables management, valuation allowances on specific accounts receivable and lump-sum valuation allowances for bad debt are used to respond to the risk posed by doubtful accounts. The fact that the vast majority of the business is distributed across a large number of individual customers also helps limit risk. What s more, All for One Midmarket AG is not subject to considerable fluctuations in payment flows in the course of the year, which facilitates cash management and further reduces the existing risks. Page 21

22 Risks in the Managed IT Field Managed IT is exposed to the risks inherent in data center operations including those relating to the transmission of data. Extensive security measures help reduce these risks. State-of-the-art buildings and infrastructures are leased and operated, and investments are made in the finest technologies from brand-name manufacturers in order to keep risks as small as possible. Strict process definitions and exacting audits are made to further reduce risk. Insurance policies are also in place that can help reduce the damage even further. In spite of all this, risks in this field cannot be eliminated completely. Disclosures Pursuant to 315, Section 4»Handelsgesetzbuch«Composition of issued share capital (No. 1) The issued share capital in the amount of EUR 16,200,000 consists of 5,400,000 registered, no-par-value individual share certificates. Restrictions on voting rights or the transfer of shares (No. 2) With the exception of the dormant voting rights for 226,582 shares of All for One Midmarket AG treasury stock pursuant to 71 b»aktiengesetz«, the management board is not aware of any restrictions affecting voting rights or the transfer of shares, or in particular of any restrictions that could result from agreements among the shareholders. Direct or indirect shares in the capital that exceed 10% of the voting rights (No. 3) BEKO HOLDING AG has held more than 50% of the capital and voting rights of the company since the year In CROSS Industries AG took over a majority stake in BEKO HOLDING AG and disclosed to us the following: 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Pierer GmbH, Wels, Austria, notified the company on 6 October that its allocated share of voting rights via CROSS Industries AG via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Knünz GmbH, Dornbirn, Austria, notified the company on 6 October that its allocated share of voting rights via CROSS Industries AG via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Mr Stefan Pierer, Austria, notified the company on 7 October that his allocated share of voting rights from Pierer GmbH via CROSS Industries AG via BEKO HOLD- ING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Dr Rudolf Knünz, Austria, notified the company on 7 October that his allocated share of voting rights from Pierer GmbH via CROSS Industries AG via BEKO HOLD- ING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Holders of shares with special rights (No. 4) There are no All for One Midmarket AG shares that confer special control rights. Type of voting rights control for employee shares (No. 5) Furthermore, there are no employees holding an interest in the share capital of All for One Midmarket AG who cannot directly exercise their rights of control. CROSS Industries AG, Wels, Austria, notified the company on 2 October that its allocated share of voting rights via BEKO HOLDING AG exceeded the thresholds of Legal provisions and stipulations in the company bylaws governing the appointment and removal of members of the management board and on amending the company by-laws (No. 6) Page 22

23 a) Appointment of members of the management board According to 6, section 2 of the company by-laws, the management board shall consist of at least two individuals. Furthermore, the supervisory board will determine the number of members in the management board in accordance with the provisions set forth by law. The supervisory board can appoint a member of the management board to be chairperson of the management board and may also appoint deputy members of the management board. Pursuant to 85, section 1»Aktiengesetz«, the court can, in urgent cases and on petition of an involved party, appoint the member in the event that a required member of the management board is missing (for example when there is only one member of the management board in office). In any case, and pursuant to 85, section 2»Aktiengesetz«, the term of the court-appointed member of the management board expires as soon as the original deficiency is corrected. b) Removal of members of the management board The supervisory board may revoke the appointment as member of the management board and the appointment as chairperson of the management board with good cause in accordance with 84, section 3, sentence 1»Aktiengesetz«. Good cause according to 84, section 3, sentence 2»Aktiengesetz«is gross dereliction of duty, inability to properly manage the business or a vote of no confidence by the annual general meeting, unless such confidence by the shareholders was withdrawn for clearly irrelevant reasons. The revocation of appointment to the management board is effective according to 84, section 3, sentence 4»Aktiengesetz«until such time as the invalidity of such revocation may be judged legally final. c) Amendments to the company by-laws Under 179, section 1, sentence 1»Aktiengesetz«any amendment to the company by-laws requires a resolution of the annual general meeting. The supervisory board is, however, authorised according to 17 of the company bylaws in connection with 179, section 1, sentence 2»Aktiengesetz«to approve amendments to the company bylaws that only affect its wording. Under 179, section 2, sentence 1»Aktiengesetz«, a resolution by the annual general meeting on amending or changing the company by-laws requires a majority vote that includes at least three-quarters of the represented share capital at the time the resolution was adopted. According to 179, section 2, sentence 2»Aktiengesetz«the company by-laws may set forth other requirements and a different capital majority, although only a larger capital majority for any changes to the corporate purpose. On the basis of this statutory authority, 14, section 3, sentence 3 of the company by-laws provides that resolutions for amending the company by-laws be approved by simple majority vote to the extent that such is legally permissible. Powers of the management board, particularly regarding its ability to issue or repurchase shares (No. 7) In accordance with 5, section 4 of the company by-laws, and until 17 May 2011, the management board is authorised, with the approval of the supervisory board, to increased the company s share capital once or several times up to a total of EUR 8,100,000 (authorised capital) through the issuance of new shares for cash contributions or contributions in kind. The management board is authorised to exclude fractional shares from the shareholders subscription rights The management board is furthermore authorised, with the approval of the supervisory board, to exclude shareholder subscription rights; to issue new shares for cash contributions with a pro-rata share of the authorised capital in the amount of up to a total of EUR 1,620,000, provided that these new shares are issued at a price that does not lie significantly below the stockexchange price ( 186, section 3, sentence 4»Aktiengesetz«); to issue new shares for contributions in kind, provided these new shares are issued as consideration for the purchase of companies, parts of companies or interests in companies and provided that the purchase of the companies, parts of companies or interests in companies are understood to be in the best interests of the company. The management board, with the approval of the supervisory board, will decide on the content of the respective share rights and the other stipulations regarding the issu- Page 23

24 ance of shares in connection with the authoriseld capital. The supervisory board is authorised to modify the wording of the company by-laws according to the intended utilisation of the authorised capital or following the expiration of the period of authorisation. There is currently no authorisation in place pursuant to 71, section 1, number 8»Aktiengesetz«for the management board to purchase All for One Midmarket AG stock. The annual general meeting of 25 June passed a resolution to withdraw, without substitution, the authority of the management board to issue up to 360,000 shares (»contingent capital«, 5, section 5 of the company bylaws), an authority that had been included in the company by-laws since The 226,582 shares of treasury stock were purchased using authorisations that have since expired. One Midmarket AG embarked on a path of consolidation after what has been an uninterrupted three-year phase of strong sales growth during which revenues almost doubled from EUR 45.7 million (2005) to EUR 85.2 million () and the number of employees increased dramatically from 302 (2005 average) to 487 ( average). This consolidation phase will concentrate on enhancing the integration of human resources and processes in order to gradually achieve sustained profitability. All for One Midmarket AG is affected by the major economic downturn that set in near the end of. The slowdown in new business for software licenses is clearly being felt and the pressure on prices in the highly competitive consulting sector continues to rise. Customers may well decide to significantly reduce or delay many of their investments in Change of control / Indemnity agreement following a takeover bid (Nr. 8) In the event of a change of control, and in accordance with the existing loan agreement for EUR 5 million with the Dresdner Bank, the company is required to negotiate with the bank a continuation of the loan under modified terms that is satisfactory to both parties. Any acquisition of control over BEKO HOLDING AG is not, however, a»change of control«relating to the company. Analysts, industry associations and other market observers have significantly rolled back their forecasts. The revised projections for the IT market in Germany as a whole for 2009 range from minus 3.7% (Experton Group, Research Note, 5 December ) to zero growth (BITKOM, 11 December ). Gains of about 7% are only considered possible for 2009 in selected segments of the IT services market, particularly outsourcing, business process outsourcing and similar services. Indemnity agreements in the event of a takeover bid (No. 9) No company indemnity agreements with members of the management board or other employees have been made for the event of a takeover bid. Outlook The strategy of being an SAP full-service provider, which was developed in 2006 and whose implementation began in, has led to a major realignment that culminated in becoming All for One Midmarket AG. In mid-, All for With what in recent years has become a vastly expanded core customer base, All for One Midmarket AG sees good opportunities to further expand an already considerable share of recurring revenues from outsourcing services and software maintenance. Doing so should also help make the Group more resistant to a potentially growing recession. Recurring revenues presently provide too small a counterweight to the extreme volatility of the licensing and consulting businesses, and therefore need to be reinforced so that profitability can be increased gradually. Eliminating the kind of high one-time expenses that burdened earnings in will also have an increasingly favourable effect on profits. Page 24

25 All for One Midmarket AG expects an overall slight increase in sales revenues within the lower single-digit percentage range for The EBIT should also be positive in Over and above the serious economic uncertainties for 2009, All for One Midmarket AG considers itself to be well positioned and firmly expects to emerge from this crisis as a winner and benefit from impressive growth in profits once the economy picks up again. ees alike. The management board wishes to thank everyone in the Group for their outstanding dedication and hard work. Filderstadt, 10 March 2009 All for One Midmarket AG Management Board The extensive realignments of the past financial year put a great deal of stress and strain on managers and employ- Lars Landwehrkamp Stefan Land Page 25

26 Consolidated Financial Statements of All for One Midmarket AG Page 26

27 Group Profit and Loss Statement All for One Midmarket AG, Filderstadt (up to 4 July AC-Service AG, Stuttgart) 1 January to 31 December Sales revenues from continuing operations (1) Other operating income (2) Cost of traded goods and third party services (3) Personnel expenses (4) Depreciation and amortisation (6) Other operating costs (7) EBIT from continuing operations Financial income Financial expense Financial result from continuing operations (8) EBT from continuing operations Income tax (9) Earnings after tax from continuing operations Earnings after tax from discontinued operation Earnings after tax Attributable to equity holders of the parent Attributable to minority interests Earnings after tax Undiluted and diluted earnings per share in EUR Earnings per share in EUR from continuing operations -0,32 0,22 Earnings per share in EUR from discontinued operation 0,60 0,00 Earnings per share in EUR (10) 0,28 0,22 Page 27

28 Group Balance Sheet All for One Midmarket AG, Filderstadt (up to 4 July AC-Service AG, Stuttgart) Assets 31 Dec 31 Dec Non-current assets Goodwill (11) Other intangible assets (11) Tangible fixed assets (12) Financial assets (13) Other assets (14) Deferred tax assets (15) Total non-current assets Current assets Inventories (17) Trade accounts receivable (18) Current income tax assets (16) Financial assets (19) Other assets (20) Cash and cash equivalents (21) Total current assets from continuing operations Assets held for sale from discontinued operation (30) Total current assets Total assets Page 28

29 Equity and Liabilities 31 Dec 31 Dec Equity (22) Issued share capital Treasury stock (23) Capital reserve Other reserves Accumulated losses Share of equity attributable to equity holders of the parent Minority interests (24) Total equity Non-current liabilities Provisions (25) Post-employment benefit liabilities (5) Financial liabilities (26) Deferred tax liabilities (27) Other liabilities (28) Total non-current liabilities Current liabilities Provisions (25) Current income tax liabilities (16) Financial liabilities (26) Trade accounts payable (29) Other liabilities (28) Total current liabilities from continuing operations Liabilities from discontinued operation (30) Total current liabilities Total liabilities Total equity and liabilities Page 29

30 Group Cash Flow Statement All for One Midmarket AG, Filderstadt (up to 4 July AC-Service AG, Stuttgart) EBT Amortisation of intangible assets Depreciation of tangible fixed assets Financial result EBITDA Hardware sales / purchases under finance lease Increase (+) / decrease (-) in value adjustments and provisions Other non-cash expense (+) and income (-) Changes in assets and liabilities: Increase (-) / decrease (+) in trade receivables Increase (-) / decrease (+) in other assets Increase (+) / decrease (-) in trade payables Increase (+) / decrease (-) in other liabilities Income tax paid Cash flow from operating activities of continuing operations Purchase of intangible, tangible fixed and other assets Sale of intangible, tangible fixed and other assets Acquisition of shares and minority interests Cash flow from minority interests Interest received Cash flow from investing activities of continuing operations Cash flow from bank borrowings and long-term financial liabilities Repayment of bank borrowings Interest paid Repayment of finance leases Cash flow from financing activities of continuing operations Cash flow from transactions with discontinued operation Changes in disposable cash and cash equivalents Decrease in cash and cash equivalents from continuing operations Effect of exchange rate fluctuations on cash funds Change in assets and liabilities from the sale of the discontinued operation Proceeds from the sale of shares in companies Cash and cash equivalents from discontinued operation at the end of the period Cash funds at the beginning of the period Cash funds at the end of the period Composition of cash funds at the end of the period Cash and cash equivalents according to the balance sheet Less cash und cash equivalents not disposable Cash funds at the end of the period Page 30

31 Changes in Shareholders Equity of the Group All for One Midmarket AG, Filderstadt (up to 4 July AC-Service AG, Stuttgart) Issued share capital Share of equity attributable to equity holders of the parent Treasury stock Capital reserve Other reserves Accumulated losses Total Minority interests Shareholders' equity 1 January Foreign currency translation differences Additions from changes in the scope of the consolidation Change in minority interests Contribution to capital Distribution to minority interests Market valuation of financial instruments IAS Deferred taxes on market valuation of financial instruments Net income and expense recognised directly in equity Earnings after tax Total recognised income and expense December January Foreign currency translation differences Additions from changes in the scope of the consolidation Change in minority interests Contribution to capital Distribution to minority interests Market valuation of financial instruments IAS Deferred taxes on market valuation of financial instruments Net income and expense recognised directly in equity Earnings after tax Total recognised income and expense December Page 31

32 Notes to the Consolidated Financial Report of All for One Midmarket AG A. General All for One Midmarket AG is a public corporation with its headquarters at Gottlieb-Manz-Strasse 1, Filderstadt, Germany. The company arose from AC-Service AG, Stuttgart, which was renamed All for One Midmarket AG on 4 July. As a leading SAP full-service provider, All for One Midmarket AG s range of products and services includes consulting, the sale of software licenses, outsourcing and IT services. BEKO Holding AG, Nöhagen, Austria, is the parent company of All for One Midmarket AG. CROSS Industries AG, Wels, Austria, has been the ultimate parent company since 1 October. The consolidated financial statements include the company and its subsidiaries. B. Accounting The consolidated financial statements of All for One Midmarket AG (hereafter called: All for One, the company or the Group) as at 31 December are based on the company s uniform accounting principles. The valuation, consolidation and classification principles were applied consistently by all the Group companies. The consolidated financial statements are presented in thousand euros () rounded to the next thousand. The consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), which are required to be applied in the European Union (EU). All of the International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) of the International Financial Reporting Interpretations Committee/Standing Interpretations Committee (IFRIC/SIC) required for the preparation of the IFRS consolidated financial statements in this financial year were applied. The consolidated financial statements of All for One Midmarket AG apply the historical cost principle except for securities and first-time reported assets from business combinations at the time control was assumed. These assets are reported at their respective fair values. Expenses and income are allocated on an accrual basis. C. New Accounting Standards Changes in Accounting Principles The following amendments to the standards of the International Accounting Standards Board (IASB) and new interpretations took effect in : On 1 January : IFRIC 11»Group and Treasury Share Transactions«IFRIC 14»The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction«Early Application of IFRS 8»Operating Segments«The application of IFRS 8 is required for financial years beginning on or after 1 January This new standard demands that there be reportable segments that meet specified criteria and reflect the management organisation (»management approach«). All for One decided to adopt IFRS 8 early beginning on 1 January. Additional New or Revised Standards Adopted by the EU The EU adopted the following enacted standards beginning in These should not have a material impact on All for One: IAS 1»Presentation of Financial Statements«IFRS 2»Share-Based Payments«IAS 23»Borrowing Costs«IAS 32» Financial Instruments: Disclosure and Presentation«IFRIC 13»Customer Loyalty Programmes«Additional New or Revised Standards Not Yet Adopted by the EU The EU did not adopt the following standards that were enacted in These should not have a material impact on All for One: IAS 27»Consolidated and Separate Financial Statements«IFRS 3»Business Combinations«IFRIC 12»Service Concession Arrangements«IFRIC 15»Agreements for the Construction of Real Estate«IFRIC 16»Hedges of a Net Investment in a Foreign Operation«IFRIC 17»Distributions of Non-Cash Assets to Owners«D. Restructuring of Operating Segments In connection with the first-time adoption of IFRS 8»management approach«and the modified management organisation and corporate structure, the original segments»managed IT Services«,»Human Resource Services«,»SAP Solutions«,»Other Operations«and the»corporate Services«division for unallocated Group costs and expenditures were discontinued and fundamentally reorganised. This led to the Group being divided into the two operating segments»integrated Solutions«and»HR Solutions«. The former»corporate Services«division and its related corporate costs were allocated appropriately and directly to the two new segments. The restructuring of the segments in led to changes in the Group s profit and loss statement for (see Segment Reporting). E. Consolidation Principles All for One Midmarket AG and all subsidiaries over which the company exercises legal or actual control are included in the company s consolidated financial statements. On 1 July : IAS 39/IFRS 7»Reclassification of Financial Instruments«These had no direct implications for the All for One consolidated financial statements. The exercise of control is presumed once the parent company holds more than 50% of the voting rights in a company or controls the financial or business policies of a company in any other way, or can exercise a controlling influence on the company through a majority in the supervisory board or other executive body. The financial statements of the companies to be included in the consolidated financial statements are included in the consolidated financial statements from the beginning of the time exercise of control was possible until the end of the time of possible exercise of control. Page 32

33 Intergroup revenues, expenses and income, as well as all receivables and liabilities among the consolidated companies, were eliminated. The effects on income tax were taken into account for those consolidation transactions treated as income, and deferred taxes were recognised. In the initial consolidation of subsidiaries, the acquisition costs of the equity investments are reconciled with the fair value of the net assets of each company. Any remaining asset-side difference is recognised as goodwill and undergoes impairment testing according to IAS 36 at least once a year. The effects that the acquisition of former minority shareholdings has on already fully consolidated companies are reported under equity. F. Scope of the Consolidation and Changes in Group Structure In addition to All for One Midmarket AG, the consolidated financial statements include all domestic and foreign companies in which the company as at 31 December directly or indirectly held a majority of the voting rights or exercised control on the basis of other rights in terms of IAS 27. The following companies are included in the company s consolidated financial statements as at 31 December : Company Share AC-Service Beteiligungs GmbH, Filderstadt, Germany 100% All for One Midmarket Solutions & Services GmbH, Vienna, Austria 100% KWP Kümmel, Wiedmann + Partner Unternehmensberatung GmbH, Heilbronn, Germany 56% KWP Professional Services GmbH, Hamburg, Germany 46,5% KWP Austria GmbH, Vienna, Austria 56% KWP Czech s.r.o., Prague, Czech Republic 56% KWP France S.à.r.l., Haguenau, France 56% AC-Service (Schweiz) AG, Wettingen, Switzerland 95% AC-Service Management AG in liq, Wettingen, Switzerland 100% Process Partner AG, St. Gallen, Switzerland 100% AC Automation Center SA/NV, Zaventem, Belgium 100% AC Automation Center Sàrl, Luxemburg, Luxemburg 100% The annotation»in liq«denotes that AC-Service Management AG is in liquidation. On 18 February, KWP Kümmel, Wiedmann + Partner Unternehmensberatung GmbH, Talheim (effective 12 October : Heilbronn), purchased a 13% minority shareholding in KWP Professional Services GmbH, Hamburg, and now owns 83% of the company. The acquisition costs were 17. The scope of the consolidation as at 31 December has changed compared to that as at the end of the prior year due to the sale of ACCURAT Informatik GmbH, Dreieich (19 May ) and the liquidation of Patroklos EDV Beratungs GmbH, Vienna, Austria. AC-Service AG, Stuttgart, was renamed All for One Midmarket AG on 4 July and its registered domicile was moved to Filderstadt on 14 October. All for One Midmarket Solutions & Services GmbH, Stuttgart, was merged into All for One Midmarket AG, Stuttgart, on 2 September. AC-Service Management AG, Wettingen, Switzerland, is in liquidation as of 31 December. G. Foreign Currency Translation The items recognised in the financial statements of the individual companies within the Group are valued on the basis of the respective functional currency. The consolidated financial statements are prepared in the euro currency. All for One s reporting currency and functional currency is the euro. Transactions made in foreign currencies are translated into the functional currency at the prevailing rate of exchange on the date of the transaction. Foreign-currency monetary assets and debts are translated at the exchange rate on the balance sheet date. Exchange differences are recognised in the profit and loss statement under other operating expenses. Non-monetary assets and liabilities, which were valued at historical cost in a foreign currency, are translated at the exchange rate on the day of the business transaction. The translation of the financial statements of the included companies, whose functional currency differs from the Group s reporting currency, is made as follows: The assets and liabilities are translated at the period-end exchange rate, equity at historical rates and the expenses and income at the average annual exchange rate. The resulting exchange differences are recognised as equity not affecting net income. The most important exchange rates changed in relation to the euro as follows: Year-end rate Average exchange rate in EUR CHF 1,5000 1,6500 1,5874 1,6427 CZK 26, , , ,7660 H. Accounting and Valuation Principles The financial statements of All for One Midmarket AG and its domestic and foreign subsidiaries are prepared in accordance with IAS 27 using uniform accounting and valuation principles. Assumptions and Estimates Assumptions were made and estimates were used when preparing the consolidated financial statements, which affected the disclosure and amounts of the reported assets, debts, income, expenses and contingent liabilities. In some cases, the actual amounts may vary from the assumptions and estimates that were made. Changes will be recognised in the profit and loss statement at the time more accurate information becomes available. In this regard, particular note should be made of the reporting and valuation of goodwill and other intangible assets (note 11), trade accounts receivable (note 18), provisions (note 25), deferred tax assets (note 15) and deferred tax liabilities (note 27). Recognition of Revenues and Expenses Sales revenues and other operating income are credited to the profit and loss statement at the time the product is delivered to, or the service is Page 33

34 rendered for, the customer. Sales revenues are reported without valueadded tax and take into consideration sales adjustments such as credit notes, commercial discounts and similar deductions. Revenues from software maintenance and service agreements, as well as from managed services, are recognised on an accrual basis. Revenues from the sale of licenses are considered realised when the customer acquires actual power of disposition over the software. Consulting and training revenues are generated on the basis of individual services agreements and realised as the services are performed. In accordance with IAS 18 and in conjunction with IAS 11, revenues from the rendering of longer-term project contracts are recognised with reference to their stage of completion using the percentage of completion method of accounting. The stage of completion is determined on the basis of the hours of work already performed in relation to the estimated total number of hours for the respective project. The amount of revenue to be recognised on the reporting date is determined by applying this result (as a percentage) to the total revenues. Operating costs are recognised in the profit and loss statement at the time use is made of the rendered service, or at the time of its causation, while interest income and expenses are recognised on an accrual basis. Income and expenses from profit and loss transfer agreements are recognised at the end of the financial year. Dividends are recognised at the time they are distributed. Financial Result Valuation differences from adjustments of foreign currency exchange rates, which arise on financial assets and liabilities including internal Group financial relationships, are reported in the financial result. Goodwill Goodwill arises from the application of the purchase method to business combinations, provided the cost of purchase exceeds the fair value of the assets of the purchased subsidiary on the acquisition date. In accordance with IFRS 3 no goodwill amortisation has been made since 1 January Other Intangible Assets Acquired and self-created intangible assets are capitalised at acquisition or production cost or fair value if it involves business combinations, provided that the criteria stipulated in IAS 38 are met. Regular straight-line amortisation is made over the projected useful lives of the assets, provided that their useful lives can be determined with sufficient accuracy. Impairment of Goodwill and Other Intangible Assets Goodwill and other intangible assets with an indefinite useful life are tested for impairment at least once a year in accordance with IAS 36. Each impairment loss is recognised immediately in the profit and loss statement. All other intangible assets are tested for impairment as circumstances dictate. For impairment testing, assets are allocated where necessary to the smallest identifiable group of assets, or cash-generating unit, which generates cash flows that can be measured. An impairment loss is recognised when the cash-generating unit s carrying amount is greater than the recoverable amount. This is determined by the higher of the fair value less costs to sell and the value in use as measured using the discounted cash flow method. Tangible Fixed Assets Tangible fixed assets are reported at acquisition or production cost less regular straight-line depreciation in accordance with IAS 16. Regular depreciation is made across the projected useful life of the assets within the Group, which are as follows: Financial income includes dividend income from unconsolidated equity interests, interest income from loans granted and assets from finance leases as well as other income directly related to the financing or the investment in financial assets. Buildings Leasehold improvements IT systems Operating and office equipment 30 years 2-15 years 3-6 years 4-13 years Financial expenses include the interest expenses from loans and finance lease obligations, as well as other expenses directly related to the financing or the investment in financial assets, insofar as these are not required to be reported as shareholders equity. Interest expenses are recognised in the profit and loss statement using the effective-interest method. The cost of borrowed capital is not capitalised. Government Grants These government grants relate to assets. In accordance with IAS 20, they are only recognised when there is reasonable assurance that any conditions attached to the grants will be complied with and that the grants will be awarded. Earnings per Share Earnings per share are determined on the basis of dividing the annual net earnings by the average number of shares outstanding (issued shares less treasury stock). There are no effects from dilution. Land is not depreciated. An impairment loss is charged against earnings in accordance with IAS 36 in the event that the carrying amount is greater than the estimated recoverable amount. Any income or loss generated from the disposal of tangible fixed assets is reported in the profit and loss statement. Leasing Arrangements Leased assets under IAS 17, which are leased under terms by which the Group assumes all substantial risks and benefits incident to ownership from an economic perspective, are classified as finance leases and capitalised as non-current assets at the time of acquisition. At the same time, financial liabilities of the corresponding amount are recognised. Recognition is made at the lower of the fair value at the inception of the lease or the present value of the minimum lease payments. The depreciation methods and useful lives should be consistent with those for other comparable purchased assets. The interest component of lease payments is recognised in the interest result. Page 34

35 Lease payments are recognised in full as an expense in the case of operating leases in which beneficial ownership remains with the lessee. Financial Assets Financial assets in terms of IAS 39 which are of relevance for All for One are classified as follows: held-to-maturity investments receivables and loans available-for-sale financial assets With the exception of receivables and loans, financial assets with determinable payments and fixed terms, which the company can and wishes to hold to maturity, are classified as held-to-maturity investments. These financial investments with a maturity of more than 12 months after the balance sheet date are reported as non-current assets, while all others are reported as current liabilities. In particular, the former includes entitlements from finance leases as well as other assets. Their value is stated at nominal value or at the original acquisition cost including transaction costs less cumulative value adjustments. recognised in the profit and loss statement together with the change in the fair value of the hedged asset or liability. Fair value adjustments from cash flow hedging instruments, which can be allocated to the effective portion, are recognised in the listing of all income and expenses under equity. The change in fair value attributable to the ineffective portion is recognised in the profit and loss statement. Hedges of net investments in foreign Group companies are recognised from a future transaction or firm commitment, in the same way as cash flow hedges. When a hedging instrument expires or is sold, or when the conditions set forth for the hedging transactions are no longer met, then the cumulative changes in fair value up to that time remain in the presentation of all the income and expenses under equity and are only then recognised in the profit and loss statement if the future transaction actually occurs. If however, the forecast transaction is no longer expected to occur, then the cumulative changes in fair value under equity are immediately shifted to the profit and loss statement. All hedging instruments were appropriately dissolved or discontinued in the financial year. Cash and cash equivalents include cash on hand and deposits in banks. Changes in fair values are recognised in the financial result. Trade accounts receivable are reported less value adjustments. Accounts receivable exposed to an increased risk of default are evaluated individually and written down as needed. As yet uncompleted contract activity from consulting or managed services agreements is valued using the percentage of completion method and reported under trade accounts receivable, provided it is probable that payment will be made to the Group. Included under available-for-sale financial assets are those assets that cannot be allocated to the categories above. Gains and losses from the evaluation of the fair value are recognised directly in equity. Cumulative gains and losses that were previously recognised in equity are reported in the net profit or loss at the time the financial investments are cancelled. Hedging Transactions Hedging transactions are reported in the balance sheet at fair value and revalued based on their performance. The manner in which a change of fair value is recognised depends on whether the instrument meets the criteria for accounting treatment as a hedging transaction (»hedge accounting«). To qualify for treatment as a hedging transaction, a hedging relationship must fulfil specific requirements relating to the documentation, the probability of its occurrence, the effectiveness of the hedging instrument and the reliability of the valuation. At the inception of a hedge, the relationship between the hedging instrument and the hedged item, as well as the purpose and strategy of the risk hedging, is documented. At its inception, a hedging instrument that qualifies for hedge accounting is defined as a) a hedge of the fair value of the recognised asset or liability (»fair value hedge«), or b) a hedge of the cash flow from a future transaction or from a firm commitment (»cash flow hedge«), or c) a hedge of a net investment in a foreign Group company. Changes in the value of hedging instruments, which are used to hedge the fair value of a balance sheet item and which are effective hedges, are Minority Interests Minority interests include their share of the fair values of the identifiable assets and debts at the time the subsidiary is acquired, as well as the gains and losses assigned to these shares in subsequent periods. Minority interests are reported as equity in the Group balance sheet. Inventories Inventories of merchandise (hardware and software for resale) are valued at average cost or their potentially lower net realisable sale value. An appropriate value adjustment will be made for any other impairment. Provisions Provisions are made for obligations of uncertain amount or cause if there is a legal or actual obligation stemming from an event occurring prior to the balance sheet date and if it is probable that an economic cost will be incurred in fulfilling the obligation. Long-term provisions with a remaining term of more than one year are reported at their discounted settlement amount on the balance sheet date, provided the discounting effect is significant. Post-Employment Benefit Liabilities All for One s active and former employees receive benefits and pensions based on the various local statutory post-employment benefit plans. In addition to defined contribution plans, there are also defined benefit plans whose value is determined using the projected unit credit method stipulated in IAS 19. The employer contributions for the respective period are recognised in the profit and loss statement for all benefit plans with defined contribution plans. In the case of defined benefit plans, actuarial gains and losses are recognised as income or expenses as soon as they fall outside a defined corridor. The amounts that exceed the corridor are distributed across the expected overall term of the agreement. An independent insurance expert Page 35

36 will appraise all material commitments and the assets used to cover them annually. Liabilities Trade accounts payable and other liabilities are reported at their nominal value or repayment amount. Financial Liabilities The financial liabilities include interest-bearing liabilities from loans and from finance lease transactions as well as short-term liabilities to banks. These are reported at their nominal value or repayment amount. Taxes Current income taxes are calculated on the basis of earnings before taxes taking into account the respective country-specific regulations governing the computation of taxable income. Deferred income tax assets and liabilities result from the differences between the amounts stated for assets and liabilities in the tax balance sheet and the consolidated financial statements, provided such differences are not permanent. The Group uses the»liability method«, according to which deferred tax assets or liabilities can be determined based on the legal principles that are either valid or actually in force on the balance sheet date. In this case the tax rates at the time of the projected tax realisation are applied. Deferred tax assets also result from accumulated tax losses that can be carried forward (tax loss carry forwards), which can be offset against subsequent taxable earnings. Deferred tax assets on temporary differences and on tax losses brought forward are only recognised in an amount corresponding to the probability that in the foreseeable future there will be sufficient taxable income available and that the Group will derive a benefit from applying them to it. The foreseeable future is principally considered to be the next four financial years. Deferred tax assets and liabilities are not discounted and are shown in the balance sheet as non-current assets and liabilities. Other taxes, such as transaction taxes or taxes on wealth and capital, are shown as operating expenses. The service charges between business divisions (intersegment revenues) are made at prices comparable to those of independent business partners. All internal service charges are shown separately in the segment information and are eliminated accordingly under»consolidations«. All operating assets and liabilities (except tax liabilities) that can be allocated either directly or on the basis of an objective allocation formula are reported in the respective business divisions. The segment reporting by country is divided into the markets in Germany, Austria, Switzerland and the rest of Europe. The segment reporting by country thus reflects those All for One sales markets in which the Group operates with its own companies. Integrated Solutions Segment The Integrated Solutions segment encompasses a full range of products and services geared towards end-to-end customer support that starts with management consulting and extends from software licenses, industry solutions, implementation and optimisation projects all the way to software consulting, outsourcing and managed services, and covers the entire spectrum of business processes. HR Solutions Segment The core of the HR Solutions segment is the human resources platform SAP HCM (Human Capital Management, HCM), which forms the basis for providing comprehensive implementation, consulting and support services all the way to recurring HR outsourcing and HR business process outsourcing services. Cash Flow Statement The cash flow statement depicts an analysis of the changes in cash and cash equivalents. In accordance with IAS 7, the cash flow statement differentiates between cash flows from operating activities, investing activities and financing activities. The cash flow statement is derived from the balance sheet and the Group s profit and loss statement using the indirect method. Influences from changes in the scope of the consolidation, effects from the application of IFRS 5, as well as any currency-related valuation differences on the cash and cash equivalents, are shown separately. Personnel Figures Unless otherwise indicated, the personnel figures refer to the number of individuals employed. Part-time positions are not included on a pro rata basis. Trainees and interns are not included in the personnel figures. Contingent Liabilities Potential obligations for which the outflow of resources is considered improbable are not reported in the balance sheet and their potential projected financial effects (exposure) are reported as contingent liabilities. Segment Reporting All for One has been preparing segment reporting in accordance with what is known as the»management approach«(ifrs 8) since the financial year, and has fundamentally reorganised its segments in line with the changed management organisation and corporate structure. As a result, the Group is divided into the two business divisions»integrated Solutions«and»HR Solutions«. The Human Resource Services business division, which was sold in May, is reported under»discontinued operation«. An allocation formula is used to appropriately distribute to the two business divisions those Group expenses that cannot otherwise be allocated. Discontinued Operation As in the prior year, the discontinued operation includes all the assets and liabilities of the wholly-owned subsidiary ACCURAT Informatik GmbH, Dreieich. All shareholdings in the company were sold on 19 May. I. Risk Management Financial Risks Financial risk management is handled according to the principles established by the company. These govern the company s protection against currency, interest and credit risks, cash management and short-term and Page 36

37 long-term financing. The goal is to reduce financial risks while weighing the hedging costs against the risks being taken. Derivative financial instruments to hedge the mainstream business may be used when deemed appropriate. In order to minimise the counterparty credit risk, transactions will only be made with first-class counterparts. Currency Risks Fluctuations in currency rates have an impact on the presentation of assets and liabilities in the consolidated financial statements that are prepared in euros, insofar as assets and liabilities are denominated in currencies other than the euro. This is why All for One strives to finance its assets in the same currency. Revenue recognition within the individual companies is made predominantly in the same currency as that used for expenses. To the extent deemed necessary, remaining risks involved in foreign-currency accounting are covered using currency transactions (futures, options). There were no currency-hedging transactions in. Sales revenues include separate revenues of 6,247 (prior year: 5,415) determined by using the percentage of completion method. The segment reporting provides additional breakdowns by business division and country. Sales revenues from the BEKO Group were 85 (prior year: 85). 2. Other Operating Income Investment tax credits Income from release of provisions and value adjustments Insurance benefits Marketing support Other items Total Changes in Interest Rate Risks There will be exposure to changes in interest rates as long as there are long-term, interest-bearing liabilities with variable interest rates. These risks are minimised by interest hedges. Interest hedges are not being used at present due to the expected downward trend in interest rates. Liquidity Risks All for One places the utmost importance on maintaining solvency at all times. Each company maintains an adequate amount of cash. The lead operating company All for One Midmarket AG also has a liquidity reserves and unused operational funding lines of credit. Credit Risks Credit risks arise primarily from affording clients time to make payments and from the counterparty risk involved in financial transactions. The credit risks from providing services and products are addressed in part through commercial credit insurance, credit checks on customers, monitoring of accounts receivable and the implementation of regular reminder procedures. Notes to the Consolidated Financial Statements J. Profit and Loss Statement The profit and loss statement was prepared according to the aggregate cost method. 1. Sales Revenues Sales by type of revenue are depicted as follows: In the Luxemburg subsidiary received investment tax credits totalling 739 that pertain to the years 2002 to Investment tax credits of 84 for the year were received in. 3. Cost of Traded Goods and Third Party Services Third party services Cost of traded goods Total Third-party services mostly involve expenses for SAP maintenance contracts. The cost of traded goods results primarily from the purchase of SAP software licensing rights and the procurement of hardware for customer projects. Services amounting to 89 (prior year: 7) were purchased from the BEKO Group. 4. Personnel Expenses Salaries and wages Social security contributions Defined contribution plan expenses Defined benefit plan expenses Other personnel expenses Total Included in the personnel expenses for the prior year is an amount of 743 in compensation of a severance-related nature for former members of the management board. Consulting Outsourcing services Software licenses Hardware Other sales Total Personnel capacity by function 31 Dec 31 Dec Outsourcing services and consulting Sales Administration Total In All for One employed an annual average of 487 (prior year: 420) employees. Page 37

38 5. Post-Employment Benefit Plans The following information provides an overview of the financial situation of sumptions on which the actuarial estimates of the defined benefit plans were based: the defined benefit plans as at 31 December and : Benefit obligations as at 1 January Interest expense Current service cost Benefits Contributions Actuarial losses Foreign currency differences Benefit obligations as at 31 December Market value of plan assets as at 1 January Expected return on plan assets Company contributions Participant contributions Benefits Contributions Actuarial profits Foreign currency differences Market value of plan assets as at 31 December Deficit/surplus Uncapitalised surplus (Asset Ceiling as per IAS 19.58A) Unconsidered actuarial losses (prior year: gains) Post-employment benefit liability as at 31 December Number of plans 4 4 of which with assets set aside 2 2 of which with no assets set aside 2 2 Number of individuals participating in the plans of whom are active insurance participants of whom are retired Discount rate (weighted) 3,41% 3,27% Expected return on plan assets (weighted) 3,99% 3,96% Development of wages 0-1,0% 0-1,5% Development of pensions 0-2% 0-2% Average projected remaining working life of participants years years Effective return on plan assets -10,53% 0,78% A discount rate of 6.41% was used for the German post-employment benefit plans. A discount rate of 3.40% was used for the Swiss postemployment benefit plans. The following table shows how the defined benefit obligations are secured and the impact of variances between the expected and actual return on the plan assets over the past few years: The changes in post-employment benefit obligations and liabilities are as follows: Post-employment benefit liability as at 1 January Expenses for benefit plans recognised in the profit and loss statement Company contributions Foreign currency differences 9-3 Post-employment benefit liability as at 31 December The following benefit expenses were recognised under personnel expenses: Current service cost Interest expense Expected return on benefit plan assets Amortised loss 3 7 Gross benefit expense for the period Participant contributions Uncapitalised additional payments Total expenses for benefit plans The assumptions for the actuarial valuations differ for each individual plan, since they were made by taking into consideration the specific circumstances of the asset investment strategy and the personnel structure of the affiliated companies. The following table shows the key benchmarks of the plans that are included in the calculation and the average weighted as Plan assets Obligations from benefit plans Surplus Difference between the expected and actual surplus Adjustments to benefit obligations The average weighted distribution of the plan assets as at 31 December and is shown below: Rented properties 13% 11% Owner-occupied properties 21% 18% Obligations CHF 29% 44% Obligations other currencies 2% 1% Shares Switzerland 8% 5% Shares other countries 12% 15% Proprietary financial instruments 9% 0% Liquid assets and other financial assets 6% 6% Total plan assets 100% 100% All for One s expected payments for post-employment benefit plans for the year 2009 are 661 (prior year: 606). 6. Depreciation and Amortisation The amounts of depreciation and amortisation are determined on the changes in non-current assets (see statement of changes in non-current assets). Page 38

39 7. Other Operating Costs Data processing expenses Cost of premises Vehicle costs Other items Total Current taxes are calculated on the basis of prevailing tax rates. In Germany the combined tax rate amounted to 30% (prior year: 39%) and comprises a corporate income tax rate of 15%, the solidarity surcharge of 5.5% on this corporate income tax and a municipal trade tax of 14%. The following table shows a reconciliation of the expected and the actually reported tax expenses:»other items«include marketing, investor relations and administrative expenses, as well as legal and consulting fees and expenditures for personnel recruitment. The other operating costs in the amount of 12 pertain to the BEKO Group. 8. Financial Result Financial income Financial expense Total The liquidation of the interest hedge in December added 16 (prior year: 49) to the financial result. Financial income includes finance lease interest income in the amount of 646 (prior year: 523). Financial expense includes finance lease interest expenses in the amount of 175 (prior year: 71). 9. Income Tax Tax expenses consist of the following: Current tax expense Deferred tax expense (prior year: revenue) Total Current tax expenses Current income tax for the reporting year Current income and withholding taxes relating to prior periods Total Expense/revenues from deferred taxes Change in tax charge on undistributed profits for the reporting year Change in temporary differences from change in tax rates 0 69 Change in temporary differences for the reporting year Recognition of tax assets from tax losses brought forward for prior years Total Reference is made to deferred tax assets (note 15) and deferred tax liabilities (note 27) regarding the changes in deferred tax assets and liabilities. EBT Expected tax expense/revenue at the rate of 30% (prior year: 39%) (Net) tax effect from non-taxable expenses/revenues Deferred tax expenses/revenues from tax losses brought forward for prior years Current tax expenses/revenues relating to prior periods Current tax losses not utilised Effect of different tax rates in foreign countries Effect of changes in tax rates in Germany 0 27 Other effects Total The transition of the changes in deferred tax assets and liabilities to the expense/revenue from deferred taxes reported in the profit and loss statement is shown below: Changes in deferred tax assets and liabilities Change in deferred tax assets Change in deferred tax liabilities Total Tax assets/liabilities from discontinued operation Tax expense recorded in the profit and loss statement from discontinued operation Tax expense recorded in the profit and loss statement from continuing operations Tax expense recorded in the shareholders' equity 14 6 Initial consolidation 0-9 Foreign currency differences Total Earnings per Share Earnings per share were calculated based on the net annual earnings and the average number of shares outstanding (issued shares less treasury stock). An average number of 5,173,418 (prior year: 5,173,418) were outstanding in the year. The average number of shares (diluted) outstanding is the same as the average number of shares (undiluted) outstanding. The diluted earnings per share are therefore the same as the undiluted earnings per share. K. Notes to the Balance Sheet 11. Goodwill and Other Intangible Assets The Group balance sheet as at 31 December reported goodwill with a carrying value of 4,520 and other intangible assets with a carrying value of 9,762. In order to determine if any assets may be impaired, the company estimated the expected cash flows from the use and eventual Page 39

40 sale of the assets. The actual cash flows derived may vary from the projected cash flows and from the cash flows discounted to the balance sheet date. In particular, any departure of customers from the core client business accounted for in the balance sheet, and the subsequent lower-thanprojected amount of products and services sold, may result in shortened useful lives and impairment. Impairment Testing of Goodwill and Trademark Rights For the purpose of performing impairment tests, All for One has designated the following companies as cash-generating units to which the respective goodwill and trademark rights are allocated. The value in use was applied when testing goodwill and trademark rights for impairment. The value in use of the future cash flows was determined using the discounted cash flow method, which does not take tax payments into consideration. As in the prior year, the applied discount rate built on the capital asset pricing model and was derived from the average weighted cost of equity and borrowed capital. The cost of equity is based on a risk-free capital-market interest rate for the respective period taking into consideration the Beta factor for the industry and a risk premium based on the relevant capital market. From this a pre-tax discount rate was derived based on the tax situation. Current assets and earnings projections for the next five years have been prepared for the cash-generating units, which reflect and incorporate the company s latest estimates regarding how these units sales and costs will develop. Prospective cash flow statements were derived from this, and plausible assumptions about further performance in the years that follow were made. Goodwill and Trademark Rights Goodwill totalled 4,520 (prior year: 4,471) as at 31 December. The 49 increase in goodwill results from the retroactive adjustment of the goodwill in connection with the acquisition of shares of Process Partner AG, St. Gallen, Switzerland, which was completed in The reason for this was the foreign currency difference from the residual purchase price having been paid in Swiss francs (CHF) in the financial year. No goodwill amortisation was made in the reporting year. KWP Kümmel, Wiedmann + Partner Unternehmensberatung GmbH, Heilbronn Process Partner AG, St. Gallen, Switzerland All for One Midmarket Solutions & Services GmbH, Vienna, Austria All for One Midmarket Solutions & Services GmbH, Stuttgart (merged into the Group parent in September ) Total Trademark rights of the (former) All for One Midmarket Solutions & Services GmbH, Stuttgart, in the amount of 3,283 are reported under other intangible assets. The goodwill and trademark rights were tested for impairment at the end of the financial year. This testing showed no impairment of the goodwill and trademark rights allocated to the cash-generating units as at 31 December. The company believes, extraordinary events and circumstances aside, that a revision of its assumptions would not lead to the carrying amounts of the goodwill and trademark rights exceeding their respective recoverable amounts. KWP Kümmel, Wiedmann + Partner Unternehmensberatung GmbH, Heilbronn: The implied average pre-tax discount rate is 10.49% (prior year: 18.00%). Process Partner AG, St. Gallen, Switzerland: The implied average pretax discount rate is 9.11% (prior year: 13.70%). All for One Midmarket Solutions & Services GmbH, Vienna, Austria: The implied average pre-tax discount rate is 9.84% (prior year: 15.77%). (Formerly) All for One Midmarket Solutions & Services GmbH, Stuttgart: The implied average pre-tax discount rate is 10.35% (prior year: 10.47%). Other Intangible Assets Purchase price 31 Dec Additions reporting year Estimated useful life Months Remaining useful life Months Net book value Internal SAP R/3 solution Customer base former All for One Midmarket Solutions & Services GmbH, Stuttgart Industry solutions All for One Midmarket Solutions & Services GmbH, Stuttgart Trademark rights All for One Midmarket Solutions & Services GmbH, Stuttgart infinite infinite Customer base Process Partner AG, St. Gallen, Switzerland Customer base KWP Kümmel, Wiedmann + Partner nternehmensberatung GmbH, Heilbronn Preferred partnership agreement Customer base KWP Austria GmbH, Vienna, Austria Customer base All for One Midmarket Solutions & Services GmbH, Vienna, Austria Other intangible assets December Page 40

41 12. Tangible Fixed Assets Your attention is directed to the statement of changes in non-current regarding the composition of these tangible fixed assets. There are no finance lease contracts with a remaining term of more than five years. The share of unrealised interest in the income from finance leases is 473 (prior year: 497). The land and buildings pertain to a Belgian Group company s commercial building. Under leasehold improvements are also included those improvements over which the lessor has since assumed legal ownership, but which remain in the beneficial ownership of the lessee for the term of the lease. The useful life for depreciation purposes is the shorter of the remaining term of the lease or the useful life. The item»it installations«includes standard software usage rights acquired from third parties, which are used in the sense of an operating resource for the provision of services. The other tangible fixed assets include office machines and equipment, office furniture and furnishings, as well as company cars. The lessor has legal ownership of the tangible fixed assets of 1,256 (prior year: 1,089) under finance leases. At the end of the lease term, the lessee has the option of buying the item at a residual purchase price that is significantly lower than the market value. This option is generally made use of. 13. Non-Current Financial Assets Non-current financial assets primarily comprise receivables from finance lease contracts in the amount of 3,791 (prior year: 4,777), deposits paid in the amount of 10 (prior year: 13) and other loans in the amount of 49 (prior year: 34). The average remaining term of the lease receivables is approximately 18 months (prior year: 23 months) for the contracts in Switzerland and approximately 27 months (prior year: 24 months) for the contracts in Luxemburg. 14. Other Non-Current Assets Other non-current assets primarily comprise an outstanding receivable from the sale of ACCURAT Informatik GmbH, Dreieich, in the amount of 1,523. Furthermore, there are support and maintenance entitlements in the amount of 405 (prior year: 327). Support and maintenance agreements, in the form of total packages for an initial maintenance period, are concluded at the same time that hardware and software are bought. These support and maintenance assets are recognised as other receivables and are then eliminated over an agreed term. 15. Deferred Tax Assets TEUR TEUR 1 January Deferred income tax assets discontinued operation Other increases 2 19 Change in capitalised loss carry forwards Other decreases Foreign currency translation differences December Temporary differences and assets from deferred taxes Loss carry forward / temporary differences Deferred tax assets Loss carry forward / temporary differences Deferred tax assets German tax loss brought forward Austrian tax loss brought forward Goodwill Trade accounts receivable Post-employment benefit liabilities Other temporary differences Total As at the balance sheet date, All for One Midmarket AG had corporation tax loss carry forwards of 24,817 (prior year: 20,899) and municipal trade tax loss carry forwards of 24,030 (prior year: 20,505). As at 31 December deferred income tax assets of 1,300 (prior year: 1,159) were recognised. All for One Midmarket AG s current budget planning for the coming years shows future taxable earnings, which indicate the probable use of the tax loss carry forwards in the amount recognised. The subsidiaries All for One Midmarket Solutions & Services GmbH, Vienna, Austria, and KWP Austria GmbH, Vienna, Austria, have tax loss carry forwards that were capitalised as deferred income tax assets in the amount of 76 (prior year: 19). Recognition of deferred tax assets is made on the basis of each respective company s budget. These budgets are revised annually and require a variety of estimations. Such estimations may change as a result of changes in the market, competitive environment, customer structure and general economic situation. There is a great deal of volatility involved in recognising deferred tax assets in light of the regular reassessments that are made. 16. Current and Deferred Income Tax Assets and Liabilities As at 31 December, All for One showed net receivables from current income taxes in the amount of 28 and net liabilities from deferred income taxes in the amount of 598. The management board has to make far-reaching estimates to determine the receivables and liabilities relating to current and deferred income taxes. These estimates are based Page 41

42 among other things on the interpretation of each country s prevailing tax laws and regulations. The management board makes estimates about the subsidiaries future taxable earnings situation both upon the initial recognition and regular determination of deferred tax assets from chargeable tax loss carry forwards. Numerous internal and external factors can have favourable or unfavourable impacts on the assets and liabilities from deferred income taxes. Changes can also be attributable to amendments in tax legislation, final tax assessment notices and the favourable or lessfavourable way that the taxable income projections for the subsidiaries develop. Such factors may necessitate adjustments in the reported income tax assets and liabilities. 17. Inventories Inventories consist of hardware for further sale in the amount of 325 (prior year: 741), software for further sale in the amount of 148 (prior year: 381) and expendable and operating materials in the amount of 9 (prior year: 7). Value adjustments for hardware for further sale totalled 0 (prior year: 284) and for software for further sale 96 (prior year: 101). 18. Trade Accounts Receivable Accounts receivable from BEKO Group Accounts receivable from other third parties Value adjustments Total Allowance for Doubtful Accounts The allowance of 497 as at 31 December was released in an amount of 44 and increased by 334. The figure of 803 for allowances as at 31 December is attributable to having taken into account exchange differences from foreign currency translation in the amount of 16. The following table shows the breakdown of trade accounts receivable not yet due and overdue based on the terms agreed to with the customers and the age structure of the receivables: Total gross trade accounts receivable Thereof: 0 0 Not yet due Due under 1 month Due between 1 and 3 months Due between 3 and 6 months Due between 6 and 12 months Due after 12 months Value adjustment The allowances for doubtful accounts are determined based on the difference between the nominal value of the accounts receivable and their estimated net recoverable amounts. The trade accounts receivable of KWP Kümmel, Wiedmann + Partner Unternehmensberatung GmbH, Heilbronn, are pledged to the financing bank through a blanket assignment. The receivables as at 31 December totalled 1,749 (prior year: 1,544). The blanket assignment is used to secure a current account line of credit in the amount of 100 (prior year: 100) (see note 26, financial liabilities). 19. Current Financial Assets Current financial assets mainly include receivables from finance lease contracts in the amount of 4,019 (prior year: 2,818), advances and loans to employees in the amount of 5 (prior year: 22) and deposits paid in the amount of 3 (prior year: 4). There were neither receivables from interest hedges (prior year: 47) nor other financial assets (prior year: 85) as at the balance sheet date. The amounts reported under finance leases include that share of the income from the finance leases that is due within 12 months. The unrealised share of interest therein totalled 504 (prior year: 485). 20. Other Current Assets Support and maintenance entitlements Prepaid services Other accounts receivable Total Cash and Cash Equivalents Cash assets Financial investments with an original fixed term of under 90 days Total The average interest on bank deposits was 3.48% (prior year: 2.32%). Of the cash and cash equivalents 81.2% (prior year: 72.1%) is denominated in EUR, 17.6% (prior year: 27.0%) in CHF and 1.2% (prior year: 0.9%) in CZK. Cash and Cash Equivalents as at 31 December for the Cash Flow Statement Cash and cash equivalents according to the balance sheet Less cash and cash equivalents not disposable Total cash and cash equivalents accounted for in the cash flow statement A bank guarantee for the benefit of a managing director of a subsidiary was obtained in order to secure an obligation from a severance agreement with the managing director in place since 1 January. Because of this bank guarantee, 355 (prior year: 448) of the cash and cash equivalents are not at the disposal of All for One as at 31 December. Page 42

43 Also in the prior year, a senior lien on receivables from the principal bank in the amount of 1,382 for the benefit of the seller of the shares was granted to secure the variable additional purchase price that was due in for the acquisition of Process Partner AG, St. Gallen, Switzerland. 22. Shareholders Equity The issued share capital is divided into 5,400,000 registered, no-par-value shares (individual share certificates) and has been fully paid in. The arithmetic nominal value is an unchanged EUR 3 per share. In addition to the share capital of 16,200 there is also authorised capital in the amount of 8,100, which can be used until 17 May 2011 in accordance with the annual general meeting s resolution of 18 May The management board is authorised, with the approval of the supervisory board, to exclude shareholders subscription rights for parts of the authorised capital. All for One s capital is governed by the cost of equity. Investments and acquisitions will continue to be made with outside capital as long as borrowing costs are lower than the cost of equity. All for One has not set any quantitative goals in terms of controlling the capital. Therefore, no statements can be made about goal achievement. The other provisions as at the balance sheet date are exclusively exchange differences from foreign currency translation. In addition to these, the other provisions of the prior year also included the market value amounts of financial instruments under IAS 39. All for One is not required to adhere to certain regulatory internal-fund stipulations. 23. Treasury Stock As in the prior year, no shares were purchased during the reporting period. As at 31 December, All for One Midmarket AG held 226,582 shares (prior year: 226,582 shares), which were repurchased at an average price of EUR 4.52 (prior year: EUR 4.52). As at 31 December, there were 5,173,418 shares outstanding (prior year: 5,173,418 shares). Treasury stock 31 Dec / 31 Dec Number of repurchased treasury shares Average cost price in EUR 4,52 Highest price paid in EUR 5,01 Lowest price paid in EUR 3,95 Cost price of repurchased treasury shares, Amount of nominal capital allotted to treasury shares, 680 Percentage of treasury shares to nominal capital 4,20% 24. Minority Interests 1 January Profit distribution Profit share of current year Change in minority interest Cash contribution to capital reserve Addition from changes in the scope of the consolidation Foreign currency differences December These pertain to an interest of 5% held by Sanitas Privatversicherungen AG, Zurich, Switzerland, in the shareholders equity of AC-Service (Schweiz) AG, Wettingen, Switzerland, and an interest of 44% in KWP Kümmel, Wiedmann + Partner Unternehmensberatung GmbH, Heilbronn. 25. Provisions 1 Jan Provisons made Provisions used Provisions reversed Foreign currency differences Reclassification 31 Dec Severance payments Austria Additional purchase price for Process Partner Other severance payments Long-term share thereof Other long-term provisions Guarantee and damages cases Dilapidation reserves Total Long-term (> 12 months) Short-term (< 12 months) Total When establishing provisions, the management board estimated the probability and the amounts of the anticipated outflow of resources for the respective obligations and circumstances. Provisions are recognised on the basis of estimates regarding the probable outflow of economic resources. These estimates are reviewed at each balance sheet date. In the case of long-term provisions, the expected future cash outflows are discounted when the effect is material. Provisions are also accrued for contractual obligations where the unavoidable costs involved in fulfilling or terminating them are greater than the expected benefits and proceeds (so-called onerous contracts). Severance Payments Austria This item pertains to statutory entitlements to severance payments or redundancies in cases of regular retirement or severance actions initiated by the company in Austria. Recognised values are based on actuarial calculations. Severance Payments Provisions for severance payments are recognised when existing employment relationships must be terminated for operational reasons or dissolved Page 43

44 by mutual consent. The amount of such severance payments is not always established definitively at the time the balance sheet is prepared. In such cases, provisions are recognised in the amount that would be expected to be paid were the matter to be settled through a legal process. 26. Financial Liabilities Total liabilities Due under 1 year Due after 5 years Future payments for finance leases Interest thereof Finance lease liabilities Bank loans Total 31 December Future payments for finance leases Interest thereof Finance lease liabilities Bank loans Total 31 December All for One Midmarket AG and the Dresdner Bank AG, Frankfurt, concluded a credit agreement for an acquisition loan in the amount of 15,500, as well as a 4,000 operational funding line of credit, to finance the acquisition of the shareholdings of All for One Systemhaus GmbH Midmarket Solutions. The agreement is dated 13 February 2006 and has a term extending to 30 December Repayment of the acquisition loan is made semi-annually at fixed contractual instalments on 30 June and 31 December of each year. In All for One Midmarket AG completely restructured its external financing and fully repaid the remaining financial liabilities in the amount of EUR 11.0 million from the agreement discussed above. This was financed on the one hand by using available funds from the sale of ACCURAT Informatik GmbH, Dreieich, and by concluding a new loan agreement with the BW Bank for EUR 4.0 million and a new loan agreement with the Dresdner Bank for EUR 5.0 million, of which a total of EUR 6.5 million had been utilised as at 31 December. The former operational funding line of credit in the amount of EUR 4.0 million was increased to a total of EUR 6.0 million through these new loan agreements. The term of the loan agreement with the Dresdner Bank ends on 30 June 2012 and the term of the loan agreement with the BW Bank ends on 30 June The agreed fixed repayments begin in 2009 and are to be made respectively on 30 June and on 31 December of each year. The amount of each of the repayments increases in stages. Early unscheduled repayments may be made. The interest rates are based on the EURIBOR (Euro Interbank Offered Rate) plus an interest add-on of between 1 and 2 percentage points. There are covenants that have to be fulfilled. A senior pledge of the business interests in AC Automation Center SA/NV, Belgium and in AC Automation Center Sàrl, Luxemburg, Luxemburg, serve as security for the loan from the Dresdner Bank. The assignment of the trade account receivables of All for One Midmarket AG serves as security for the loan from the BW Bank. There are no other contractual guarantees or obligations in place. The average interest rate for lease liabilities was 3.89% (prior year: 3.29%) during the reporting period. The lease payments are established at the beginning of the contract and are not subject to changes in the instalment amount or interest for the duration of the term. The amounts due to banks at 31 December comprised the two new loan agreements totalling 6,500 and the drawing of 65 from the operational funding line of credit. Of the financial liabilities, 74.4% (prior year: 84.4%) are denominated in EUR, 25.3% (prior year: 15.6%) in CHF and 0.3% (prior year: 0.0%) in CZK. As at the balance sheet date, All for One had approved lines of credit at banks in the amount of 7,100 (prior year: 16,736). These have been utilised in the form of aval guarantees for rental security deposits in the amount of 341 (prior year: 138), performance bonds of 355 (prior year: 602) and bank loans of 6,565 (prior year: 11,238). 27. Deferred Tax Liabilities 1 January Deferred income tax liabilities discontinued operation Changes in the scope of the consolidation 0 9 Addition to undistributed profits Reductions in temporary differences Additions to temporary differences Foreign currency differences December Make-up of deferred income tax liabilities Temporary differences Deferred tax liabilities Temporary differences Deferred tax liabilities Intangible assets Financial assets Tangible fixed assets Trade accounts receivable Provisions Undistributed profits Other temporary differences Total For corporation-tax purposes, distributions from subsidiaries to a parent company in Germany are subject to a flat-rate offset to operating expenses in the amount of 5% of the amount distributed. Deferred income tax liabilities are then recognised for the resulting additional anticipated corporationtax expense. 28. Other Liabilities Personnel obligations Other tax liabilities Advanced payment on maintenance charges for following year Liabilities from KWP cooperation agreement BEKO Group obligations 12 0 Other liabilities Total Short-term element thereof Long-term element thereof Page 44

45 The item»personnel obligations«relates predominately to liabilities from unused holiday leave, partial retirement work arrangements, as yet unpaid variable compensation components, commissions, flexitime and overtime payments, bonuses and obligations to social security providers. Other liabilities are reported exclusively as nominal amounts. 29. Trade Accounts Payable Trade accounts payable of 7,886 (prior year: 10,487) relate solely to third parties outside the Group. There are trade accounts payable to the BEKO Group in the amount of 61 (prior year: 6). The general payment term for trade accounts payable is 0 to 60 days. A payment term of 60 days is given primarily to invoices for SAP maintenance services. 30. Discontinued Operation 1-5/ 1-12/ Sales revenues from discontinued operation Capitalised services Other operating income Cost of traded goods and third party services Personnel expenses Depreciation and amortisation Other operating costs EBIT Financial income 3 6 EBT Income tax Net result for the period discontinued operation Accounting profit from the sale of ACCURAT Overall result discontinued operation Earnings per share in EUR from discontinued operation 0,60 0,00 Assets from discontinued operation 19 May 31 Dec Non-current assets Current assets Total assets from discontinued operation Liabilities from discontinued operation 19 May 31 Dec Non-current liabilities Current liabilities Total liabilities from discontinued operation Cash flow from discontinued operation 1-5/ 1-12/ Cash flow from operating activities Cash flow from investing activities Cash flow from transactions with continuing operations Total cash flow from discontinued operation Related Parties CROSS Industries AG, BEKO HOLDING AG and their Group Companies BEKO HOLDING AG, Nöhagen, Austria, held an interest of more than 50% of the share capital of All for One Midmarket AG, Filderstadt. CROSS Industries, Wels, Austria, is the majority shareholder of BEKO HOLDING AG. BEKO HOLDING AG, Nöhagen, Austria, as the majority shareholder, prepares the consolidated financial statements for the smallest group, CROSS Industries AG, Wels, Austria, prepares the consolidated financial statements for the largest group of companies that include All for One Midmarket AG, Filderstadt. During the reporting year, sales revenues of 85 (prior year: 85) were generated with BEKO HOLDING AG group companies in connection with support relating to the applications deployed and the operation of an SAP R/3 system. During the reporting year, IT services for internal SAP systems totalling 89 (prior year: 7) and other services totalling 12 (prior year: 0) were purchased from group companies of BEKO HOLDING AG. All business transactions with BEKO HOLDING AG and its group companies were made on the basis of terms and conditions that would apply among independent business partners. There are no business transactions with CROSS Industries AG. Members of the Supervisory Board During the reporting year, the supervisory board consisted of Peter Brogle (corporate consultant, chairman), Rainer Schad (lawyer, deputy chairman), Peter Fritsch (CFO of BEKO HOLDING AG, Nöhagen, Austria, and member of control bodies in other BEKO Group companies. During the reporting year, the supervisory board members were also members of the supervisory boards and control bodies of the following companies in terms of 125, section 1, sentence 3»Aktiengesetz«: Peter Brogle: Alupak AG, Belp, Switzerland (member of the administrative board), Nahrin AG, Sarnen, Switzerland (member of the administrative board), Similasan AG, Jonen, Switzerland (member of the administrative board), AC-Service (Schweiz) AG, Wettingen, Switzerland (president of the administrative board), AC-Service Management AG (in liquidation) Wettingen, Switzerland (president of the administrative board), Triplan AG, Bad Soden, Germany (chairman of the supervisory board). Seats on supervisory boards vacated as of 15 May : RedIT AG, Zug, Switzerland (president of the administrative board) and its subsidiaries: InteGreat Business Solutions AG, Zug, Switzerland (president of the administrative board), RedIT Service AG, Zug, Switzerland (president of the administrative board), RedIT Dynamics ZG AG, Zug, Switzerland (president of the administrative board), RedIT Dynamics TG AG, Zug, Switzerland (president of the administrative board), RedIT Dynamics ZH AG, Zug, Switzerland (president of the administrative board), Object DynamiX AG, Buochs, Switzerland (president of the administrative board). Rainer Schad: Triplan AG, Bad Soden, Germany (member of the supervisory board), Hipp Medical AG, Kolbingen, Germany (member of the supervisory board). Peter Fritsch: Pallas Soft AG, Regensburg, Germany (member of the supervisory board), FRAMISAN AG (up to 21 November ), Nöhagen, Austria (member of the supervisory board), Triplan AG, Bad Soden, Germany (member of the supervisory board). Page 45

46 Compensation for Supervisory Board Total fixed compensation for the supervisory board was as follows: Compensation for Supervisory Board Peter Brogle Rainer Schad Peter Fritsch Total In addition to reimbursement for expenses, each member of the supervisory board also receives a fixed remuneration in the amount of 8 for each full financial year of membership in the supervisory board. The members of the supervisory board are also paid an attendance allowance in the form a fixed fee for each meeting of the supervisory board or one of its committees that they attend, as well as for each meeting they attend with the management board that is held outside of a meeting of the supervisory board. The attendance allowance is EUR 400 for each meeting of up to four hours in duration and EUR 800 for each meeting of more than four hours in duration. The chairman of the supervisory board receives twice the amount, and the deputy chairman of the supervisory board one and a half times the amount of the basic remuneration and the attendance allowance. Performance-related components are not included in the compensation for the supervisory board. Payment of the total fixed compensation for the supervisory board is made in This pay as at 31 December is reported in the»other Liabilities«item. In addition to the compensation as set forth by the company by-laws, Peter Brogle received a fee of 6 (prior year: 6) as president of the administrative board of AC-Service (Schweiz) AG. Mr Brogle received compensation of 0 (prior year: 14) for his business consulting activities. Members of the Management Board Compensation for Management Board Lars Landwehrkamp (CEO) Stefan Land (since ) Marco Fontana (up to ) Herbert Werle (up to ) Total Compensation for Fixed compensation* n/a 536 Variable compensation** n/a 220 Total n/a 756 Compensation for Fixed compensation* 265 n/a Variable compensation** 140 n/a Total 405 n/a * incl. benefits in kind from use of company car and pension plans ** estimates During the reporting year, the management board consisted of Lars Landwehrkamp (CEO) and Stefan Land (CFO, since 1 April ). The director Marco Fontana relinquished his duties on 31 March. Membership by management board members in control bodies in terms of 125, section 1, sentence 3»Aktiengesetz«, are limited to various companies within All for One Midmarket AG. Compensation for the management board members for all of their employment relationships in companies included within the scope of the consolidation for the year include salaries, bonuses (performance-related components) and lump-sum compensation for representation and car expenses. The compensation model for members of the management board is described in detail in the Group Management Report. No loans were extended and no options for shares of All for One Midmarket AG were granted to the management board during the reporting year. Unusual transactions with related parties did not take place. Pension Fund of AC-Service (Schweiz) AG, Wettingen, Switzerland The AC-Service (Schweiz) AG pension fund rents office space in Wettingen, Switzerland, to AC-Service (Schweiz) AG. The terms and conditions of the rental agreement are within the range of what is customary. These rent expenses for the financial year amounted to 355 (prior year: 276). AC-Service (Schweiz) AG provides services in connection with the administration of the pension fund of AC-Service (Schweiz) AG. Compensation for these services totalled 45 (prior year: 12). 32. Other Financial Liabilities not Reported on the Balance Sheet The financial obligations from»operating Leases«not reported on the balance sheet primarly consist of leases for company cars and the leasing of EDP infrastructure (predominantly hardware and operating software). The lease periods range from 1 to 10 years. These obligations are as follows: Operating leases* n/a 2, ,365 1, , and later 0 n/a Total 4,287 4,151 * continuing operations In addition there are other unreported financial obligations, particularly from rental agreements, as shown below: Rental agreements* n/a and later n/a Total * continuing operations Page 46

47 The finance lease liabilities are included under financial liabilities (see note 26, financial liabilities). 33. Hedges Interest Hedges The interest rate swap agreement for an initial 7,000 that was entered into in March 2006 and the interest rate cap for 4,000 that was also initiated in March 2006 were discontinued in December. No new interest hedges were implemented in. The liquidation resulted in total proceeds of 16 in the financial year. Currency Hedges Revenues generated by the individual companies are predominantly made in the same currency in which expenses are incurred. Therefore, no currency hedges were undertaken in the years and. 34. Announcements According to 21, Section 1»Wertpapierhandelsgesetz«BEKO HOLDING AG, Nöhagen, Austria, notified the company on 27 November 2003 that on 27 November 2003 it exceeded the threshold of 50% of the voting rights to the company and that it now holds a 50.25% interest in the company. The company published this announcement in the Financial Times Deutschland on 4 December Universal-Investment-Gesellschaft mbh, Frankfurt am Main, notified the company on 1 March that on 1 March its share of the voting rights in the company exceeded the threshold of 5% and since that time has totalled 5.11% (corresponding to 275,710 voting rights or shares). At the same time, Universal-Investment-Gesellschaft mbh also reported that the voting-rights threshold of 3% had already been exceeded prior to the implementation of the»transparenzrichtlinie-umsetzungsgesetz«on 20 January. Knünz GmbH, Dornbirn, Austria, notified the company on 6 October that its allocated share of voting rights via CROSS Industries AG via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Mr Stefan Pierer, Austria, notified the company on 7 October that his allocated share of voting rights from Pierer GmbH via CROSS Industries AG via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Dr Rudolf Knünz, Austria, notified the company on 7 October that his allocated share of voting rights from Pierer GmbH via CROSS Industries AG via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. 35. Corporate Governance Code On 22 November the supervisory and management board published the declaration of conformity for the year in accordance with 161»Aktiengesetz«and made it permanently accessible. The full text of this declaration can be found on the company s website. 36. Group Auditors Fees and Services The fees for Group auditor services in the financial year were 147. The prior-year figure of 235 included other fees of 103 for so-called SAS 70 certifications for the discontinued ACCURAT business division. The auditing fees include all the fees for the auditing of the consolidated financial statements and the auditing costs for the financial statements of All for One Midmarket AG and its subsidiaries to the extent that these services were performed by the KPMG Germany and KPMG Switzerland (prior year: KPMG Germany) CROSS Industries AG, Wels, Austria, notified the company on 2 October that its allocated share of voting rights via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. Pierer GmbH, Wels, Austria, notified the company on 6 October that its allocated share of voting rights via CROSS Industries AG via BEKO HOLDING AG exceeded the thresholds of 3%, 5%, 10%, 15%, 20%, 25%, 30% and 50% on 1 October and totals 56.74%. 37. Events after the Balance Sheet Date No important events occurred after the balance sheet date of 31 December. 38. Release of Consolidated Financial Statements for Publication The management board released these consolidated financial statements for publication on 10 March Page 47

48 Segment Reporting Integrated Solutions* HR Solutions Consolidation Group Sales to external customers Intersegment sales Segment sales Cost of traded goods Personnel expenses Other operating costs and income Depreciation EBIT Interest income Interest expense EBT Incomet tax Net result for the year continuing operations Result discontinued operation Net result for the year Investments Segment assets Segment liabilities Personnel capacity (average) Number of employees (average) * 9,283 (prior year: 10,208) of which with one customer Due to the change in segment reporting under IFRS 8 compared to that of the prior year, the prior-year EBIT from the continuing operations increased by 352 to 1,387. The EBIT of the discontinued operation decreased by this same amount. Segment Reporting by Country Germany Austria Switzerland Rest of Europe Group Sales to external customers* Non-current assets** Personnel capacity (at year-end) * based on the domicile of the service provider ** not including financial assets and deferred tax assets Filderstadt, 10 March 2009 All for One Midmarket AG Management Board Lars Landwehrkamp Stefan Land Page 48

49 Statement of Changes in Non-Current Assets in the Financial Year All for One Midmarket AG, Filderstadt (up to 4 July AC-Service AG, Stuttgart) Acquisition costs Accumulated depreciation/amortisation Carrying amounts 1 Jan 08 Foreign currency differences Additions Disposals Reclassifications 31 Dec 08 1 Jan 08 Foreign currency differences Deprec./ amortisation Disposals Reclassifications 31 Dec Dec Dec 07 Intangible assets Goodwill 5, ,831 1, ,311 4,520 4,471 Other intangible assets 13, ,399 2, ,637 9,762 10,706 19, ,230 4, ,948 14,282 15,177 Tangible fixed assets Land and buildings 1, , ,097 1,151 Leasehold improvements 3, ,637 1, ,663 1,974 1,405 IT systems 14, ,487 3, ,295 10, ,228 3, ,721 6,574 4,144 Operating and office equipment 2, , ,067 1, ,527 1, , ,380 5, ,947 14, ,863 4, ,762 11,185 7,378 Total 41, ,394 5, ,177 18, ,835 5, ,710 25,467 22,555 Page 49

50 Responsibility Statement»Statement pursuant to 37y, No. 1,»Wertpapierhandelsgesetz«in connection with 297, section 2, sentence 3 and 315, section 1, sentence 6,»Handelsgesetzbuch«:»To the best of our knowledge, and in accordance with the applicable reporting principles, we affirm that the consolidated financial statements give a true and fair view of the assets, financial position and earnings of the Group, and that the Group Management Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal opportunities and risks associated with the expected development of the Group«. Filderstadt, 10 March 2009 All for One Midmarket AG Management Board Lars Landwehrkamp Stefan Land Page 50

51 Group Auditor s Report We have issued the following unqualified auditor s report:»group Auditor s Report We have audited the consolidated financial statements prepared by the All for One Midmarket AG, Filderstadt, comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements, together with the group management report for the business year from 1 January to 31 December. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to 315a Abs. 1 HGB are the responsibility of the parent company s management. Our responsibility is to express an opinion on the consolidated financial statements and the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principle used and significant estimates made by management, as well as evaluation the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to 315a Abs. 1 HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group s position and suitably presents the opportunities and risks of future development«. Stuttgart, 10 March 2009 KPMG AG Wirtschaftsprüfungsgesellschaft (formerly KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft) Bayer Auditor Rettich Auditor Page 51

52 SAP FOR THE MIDMARKET All for One Midmarket AG implements high-quality end-to-end solutions using its extensive expertise covering the entire IT value chain. More than 1,000 customers value the quality of the All for One service culture. 0 8 All for One Midmarket AG Gottlieb-Manz-Strasse Filderstadt Germany T F