Annual Report

Transcription

1 Annual Report

2 GFT Group at a Glance Financial Figures according to IAS in 3(k) 01/01/-31/12/ /01/-31/12/2001 Revenues 155, ,861 EBIT -34,264-4,818 Amortization and Depreciation 23,071 7,743 Amortization of Goodwill 17,959 4,110 EBITDA -11,193 2,925 Operating Loss (EBITA) -16, Net Loss -28,737-2,289 Cash-flows from Operating Activities 18,168 10,979 Earnings Per Share According to DVFA/SG Earnings Per Share According to DVFA/SG pre Goodwill Amortization Employees, Average for the Period 1, Employees, Absolute as of 31/12 1,090 1,337

3 GFT Your Partner for Smart IT-Solutions Contents Executive Board s Letter to the Shareholders 2 Supervisory Board s Report 6 Corporate Governance 8 The GFT Share 12 Management Report and Group Management Report 18 The GFT Group 34 Employees 40 Research and Development 43 Consolidated Financial Statements of GFT Group 46 Annual Financial Statements of GFT Technologies AG 78 Auditor s Certifications 94 Glossary 96 Imprint and Important Dates 98

4 Executive Board s Letter to the Shareholders In the past financial year the GFT Group managed in a turbulent environment to implement structural adjustments in line with the new outline conditions the IT market faces. In order to orient ourselves for the future we undertook four different initiatives, which we will continue to focus on in 2003: consistent cost management, an innovative market strategy with new product offerings, a quality offensive in the entire group and the empowerment of our employees. During the second half of the year we achieved significant reductions to our cost basis in material and personnel expenses and also managed to increase our capacity utilization. To achieve this, staff cutbacks were inevitable; these were implemented both by dismissing employees and by not appointing new employees to fill vacant positions. The long-term positive effects of these measures, which were initiated in the second half of 2002, will only become apparent during the course of the current financial year. At the same time, we were confronted with two developments, which had negative effects on our revenues. On the one hand, our clients continued to demonstrate a low readiness to invest. On the other, competitors from Southeast Asia and India entered the European market at considerably lower prices. Whilst we have to record a deficit of 3-29m. with revenues of 3 156m. for 2002, our now considerably lowered cost basis should lead to a positive result for 2003 if our revenues remain the same. In order to increase our competitiveness, we are concentrating on three key factors. Firstly, we aim to increase productivity in Germany

5 by standardizing software components. Secondly, we are making greater use of our Spanish and Hungarian facilities as so-called cross-border and near-shore development centers. Finally, we have analyzed our product and service portfolio and aligned ourselves towards promising growth markets. the highest price efficiency, quality and specific know-how. This means that our development centers in Spain and Hungary in particular are becoming increasingly significant. We are able here to carry out topquality production work at more competitive prices than at our German facilities. We have made progress in our traditional project business, particularly in defining and implementing analysis procedures, consulting concepts, planning and calculation methods and project and solution approaches. One of the most important tasks our software production division will face this year will be to achieve greater standardization of software components and procedures than in the past and to use these in as many projects as possible. This modular approach is intended to achieve considerable productivity gains. We are using the flexibility of our Europewide network. We thus provide our clients with local support and advice wherever this is required, whilst having our production work performed at the GFT facilities with In the course of 2002 we streamlined our product portfolio and focused on markets with high growth potential: enterprise application integration, enterprise portals, document management and solutions for the financial services sector. We also developed a new application management offering, which we will promote increasingly. The popularity of our freelance business is also promising; we have positioned this division by giving it its own brand. We discontinued loss-making participations during the course of the year. We also consistently continued our quality offensive in the entire group during the past year. Client satisfaction was always the central focus of our activities, and we were guided

6 by our company claim GFT Your Partner for Smart IT-Solutions. Smart not only characterizes our solutions and the way we produce them, it also refers to our whole profile and approach regardless of whether we are dealing with external or internal clients. Being smart also means living with slim processes and hierarchies; working together in an uncomplicated, cooperative fashion; predictive thinking in order to anticipate problems and risks so that these can be dealt with in good time. We will do all that we can in order to meet this goal in We have improved internal communication through regular employee meetings at both local and European levels and achieved increased transparency within the GFT Group. This is supported by a uniform target system containing concrete negotiated targets for every employee. We have also created project teams, which work on continuous optimization of project management and communication. Our employees showed solidarity by voluntarily waiving special payments and vacation and contributing to our cost-saving efforts by suggesting many different ideas. In 2002 GFT managed to adapt to altered market circumstances under difficult conditions. Our committed employees and our company culture supported this. We are well prepared for the challenges of the current year and beyond. We are prepared to permanently confront the changing character of the market and its demands. We have in the GFT Group employees who are committed with maximum energy and with amazing motivation in difficult times to the company s success. At this point we would like to offer these employees our heartfelt thanks. We are only able to make a cautious estimate as to how the IT sector and GFT will develop in the current 2003 financial year. The outlook for the first half of the year does not indicate any improvement in demand and pricing pressure will not relax either. However, together with my colleagues from the Executive Board, I m convinced that the measures we have initiated in the summer of 2002 have brought important adjustments

7 for our company. To this end, new strategic paths and cooperative agreements are not unthinkable. We thus hope both to absorb the pricing pressure and also to resume our revenue growth. If the weak demand stayed, however, should last or even intensify, we are ready to approve and implement further cost saving measures. We would like to thank our clients and investors for their loyalty and for their confidence in our long-term prospects and we hope that they ll continue to be on our side during the current financial year. Yours sincerely, Ulrich Dietz Chief Executive Officer

8 Dear shareholders, In the period under review the Supervisory Board has carried out the tasks required of it by law and by the company s articles of association. It continuously monitored and advised the company s management. The basis for these activities were the four ordinary meetings of the Supervisory Board on March 20, May 8, August 13 and November 12, 2002 which took place regularly, on the occasions of the quarterly financial statements. An additional meeting was held on May 28, 2002 to prepare for the annual general meeting. At these meetings the Executive Board presented quarterly financial statements and provided detailed reports of the company s strategic development, areas of business, economic position and financial and investment planning. The cost reduction program, the risk management system and the guidelines for transparent and responsible Corporate Governance in particular were discussed and supervised by the committee, as were all measures requiring the notification or consent of the Supervisory Board. Outside these meetings, the Executive Board also regularly informed the Supervisory Board s chairman in writing and in individual conversations about significant business procedures and decisions. At the meeting on May 8, 2002 the Supervisory Board established a personnel committee, which at two meetings on September 16 and November 12, 2002 dealt with Executive Board matters in particular. The members of this committee are the Supervisory Board s chairman Franz Niedermaier, Prof. Dr. Gerhard Barth and Ingrid Schmidt; the deputy member is Manfred Schuster. The following changes were made to the management organs in the period under review. With effect as of July 1, 2002, the Supervisory Board appointed Marika Lulay to the Executive Board. The position of Executive Board member Roland Härtner was terminated by mutual consent as of July 12, At the annual general meeting on May 29, 2002, Manfred Schuster and Rainer Neske were elected to the Supervisory Board. Dr. Martin Raab and Friedhelm Freiburger relinquished their Supervisory Board mandates. The Supervisory Board thanks all

9 resigned members of the management organs for their constructive commitment on behalf of the company. The Supervisory Board also audited the annual financial statements, group financial statements, the management report and the group management report and discussed these at the meeting on March 24, 2003 with the qualified auditors present at this meeting and with the members of the Executive Board, and approved them. The annual financial statements have thus been passed. The Supervisory Board supports the Executive Board s proposal that no dividend should be issued and the balance sheet loss shown in the annual financial statements should be carried forward. The annual general meeting on May 29, 2002 elected Grant Thornton GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, to be the auditing company. The Supervisory Board then duly entrusted this firm with the audit. Grant Thornton audited the annual financial statements, the group annual financial statements, the management report and the group management report for the period from January 1 to December 31, 2002 and awarded all these reports unqualified audit certificates. In 2002 GFT managed to make prompt adjustments in line with a market characterized by structural upheaval, uncertainty and volatility. These new outline conditions will make it difficult in 2003 to exceed the revenues achieved in Thanks to the rigorous cost saving programs of the past two year, provided the market does not deteriorate any further, there should be an improvement in the company s result and its competitiveness should be guaranteed. The Supervisory Board thanks the company s management and all its employees for their strong personal commitment and for their solidarity in this difficult financial year. St. Georgen, March 24, 2003 Franz Niedermaier Chairman of the Supervisory Board

10 Corporate Governance The German Corporate Governance Codex combines essential legal regulations with nationally and internationally recognized standards of sound, responsible business management. In particular, it clarifies shareholder rights and aims to promote the confidence of investors, clients, employees and the general public in the management and supervision of German stock corporations. The German Corporate Governance Codex governmental commission presented its behavioral codex on February 26, It was made legally effective through the German Transparency and Disclosure Law (Transparenzund Publizitätsgesetz, TransPuG), which came into force on July 26, The newly added paragraph no. 161 of the German Company Law (Aktiengesetz, AktG) obliges the executive and supervisory boards of a stock market-listed company to issue an annual statement as to whether the codex has been or will be met and which of its recommendations it has chosen not to follow. Corporate Governance Commitment Already in opting for the stock market segment Neuer Markt until 2002, Prime Segment from 2003 and the related disclosure obligations, GFT made a conscious decision in favor of transparent and responsible business management in keeping with the highest national and international standards. It continuously monitors and discusses the recommendations, requirements and best practice models set out by the German Corporate Governance Codex governmental commission, as per the codex s current version of February 26, At least once a year these recommendations are examined in terms of their relevance to GFT, adjusted in accordance with the latest developments and made available to all interested parties via the internet and in GFT s annual report. This process is guided by a neutral internal corporate governance representative who reports to the Supervisory Board at least once a year. GFT Technologies AG s Statement of Compliance with the German Corporate Governance Codex as per 161 AktG The Executive and Supervisory Board of GFT Technologies AG accept the recommendations of the German Corporate Governance Codex governmental commission and will comply to these from the 2003 financial year onwards, apart from the exceptional cases detailed below: When new shares are issued, shareholders, in principle, have pre-emptive rights corresponding to their share of equity capital. At the issuance of new shares, in principle GFT grants its shareholders a subscription right. However, on the basis of the company s articles of association the Executive Board is entitled, with the consent of the Supervisory Board, to exclude this shareholder subscription right in cases of capital increases in return for contributions in kind and to exclude residual amounts from the subscription right.

11 Compensation of the members of the Management Board shall be reported in the Notes of the Consolidated Financial Statements subdivided according to fixed, performancerelated and long-term incentive components. The figures should be individualized. GFT will maintain its customary report structure, which shows executive board salaries with a breakdown of total remuneration and components, which are long-term incentives (e.g. stock options) Members of the Supervisory Board shall receive fixed as well as performance-related compensation. Performance-related compensation should also contain components based on the long-term performance of the company. The remuneration of Supervisory Board members at GFT is relatively low by comparison with other companies. In view of the company s economic context, the introduction of additional variable, performance-related components does not seem appropriate at present. A corresponding amendment to its articles of association will is planned to be passed at GFT s 2004 annual general meeting The Supervisory Board shall set up an Audit Committee, which, in particular, handles issues of accounting and risk management, the necessary independence required of the auditor, the issuing of the audit mandate to the auditor, the determination of auditing focal points and the fee agreement. The Chairman of the Audit Committee should not be a former member of the Management Board of the company. The above-mentioned tasks are performed by GFT s economic committee, to which all its Supervisory Board members belong. This ensures that all its Supervisory Board members receive the same quality and volume of information. In practice, detailed notification of the entire Supervisory Board with regard to the quarterly and annual financial statements and risk management plus an extensive discussion of these issues with the qualified auditor has proved successful at GFT. GFT Technologies AG December 12, 2002 Executive and Supervisory Board Corporate Governance im Internet Complete wording of the German Corporate Governance Kodex including further information Corporate Governance at GFT

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13 Perspectives Developing New Forms of Cooperation The IT industry and its clients are subject to the same outline economic conditions: internationalized markets, ever more sophisticated demand, shorter product life cycles and increasing complexity of development. The pressure of competition is on the rise. Prices get under strong pressure. Rationalization is a necessity. Every company develops individual strategies in order to successfully deal with the market conditions including GFT. In this context, a clear trend is becoming apparent which harmonizes the interests of businesses and suppliers: outsourcing. More and more often, the software development value-added chain is being passed on to experienced suppliers. This not infrequently includes business-critical applications. This extends GFT s vertical range of production and thus also its development and production know-how. Outsourcing does not bring only advantages for clients and suppliers. In order to neutralize its disadvantages, GFT is developing various platforms for trusting, secure cooperation: long-term framework agreements strategic partnerships with equity participations (Deutsche Bank, Deutsche Post) cooperative development projects

14 The GFT Share Share Performance The environment on German and international stock markets in the 2002 financial year was once again affected by declining turnover and falling share prices. Worldwide insecurity concerning economic future, balance sheet scandals and disappointing company results knocked investor confidence in the share markets. The 2002 stock market year was the third successive year to end with a minus for the major international share indices. The German share index lost a good 40 %, the technology index NEMAX 50 almost 70 %. The German share market thus underperformed comparable markets. The major US share index Dow Jones lost 15 % of its value, whilst the US technology stock market NASDAQ fell around 32 %. In London, Paris and Tokyo the major share indices lost between 20 % and 30 %. Technology shares came under particularly strong pressure in The price of the GFT share was inevitably affected by the lack of investor confidence in the entire IT sector. We once again experienced a marked, painful fall in our share price. The GFT share s performance almost paralleled that of NEMAX All Share and NEMAX Internet (see graphic). It started the 2002 financial year at a price of , briefly broke through the 3 6 barrier in mid-january and then fluctuated around the 3 5 mark up to the beginning of May. After falling to in mid-may, it recovered to The price then declined until the end of June. In July, the share staged another brief recovery rising from to but then fell again. In the remaining months, the share price fluctuated between and 3 2. The GFT share finished the 2002 financial year at a price of At the beginning of 2003 closing prices ranged between and By the end of February the increasing fear of war became perceivable in the capital market; the GFT share price slipped to

15 In accordance with the decline in stock market turnover, which is attributable to investors increasing lack of interest and to their insecurity, the trade volume for the GFT share fell markedly relative to the previous year. Whereas in 2001 an approximate average of Members of the Executive and Supervisory Boards once again purchased shares in the 2002 financial year (see Directors Dealings, page 74), thus continuing to demonstrate their belief in the long-term positive performance of the company and its share. 45,000 shares were traded each day, in 2002 the approximate average figure was just 15,000. Development of Share Price 2002 Per cent Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Closing Price at end of 2001 = 100 % GFT Technologies AG NM-Internet NEMAX All Share

16 Annual General Meeting Approves Capital Measures At our annual general meeting on May 29, 2002 in Stuttgart almost 84 % of the voting capital was represented. The shareholders approved all the items on the agenda submitted for approval by large majorities. This included the implementation of various capital measures, such as the creation of Authorized Capital for cash and non-cash capital increases, the creation of Authorized but Unissued Capital and authorization for the issuance of convertible bonds and warrant bonds. Full details of the capital measures are provided from page 86 onwards of the notes to the financial statements. Earnings per Share Earnings per share as per DVFA/SG before goodwill amortization amounted to in In 2001, these amounted to At the annual general meeting the Executive Board will propose that this year again no dividend should be issued and the balance sheet loss should be carried forward to a new account. Stock Options Programs In November last year, both the second tranche of the employee options program introduced in the summer of 1999 and the first tranche of the options program introduced in the summer of 2000 became due. However, it was not possible to exercise the subscription rights for either program, as the performance criteria were not met. For the first options program, the average price of the GFT share would have had to have exceeded the subscription price of by 40 % in the second exercise phase. It was not possible to implement the first exercise phase in November 2001 either, as these criteria were not met. For the second employee options program, the average price of the GFT share would have had to have exceeded the subscription price of by 25 % in the first exercise phase in November However, the options program exercise tranches have not expired, and may be exercised together with the next tranche in November Shareholder Structure The shareholder structure has not changed compared to the past year. As before, the founders of the company and the management of GFT with a total of 44 % hold the majority of the shares. Deutsche Bank owns 25 % of the shares, 12 % belong to Deutsche Post. The remainder of the 26,325,946 issued ordinary shares make up the free float. Performance of the GFT Share Opening quotation at the beginning of the year Closing price at the end of the year Change in value of the GFT share - 75 % - 87 % Highest variable price (04/01/2002) (22/01/2001) Lowest variable price (08/10/2002) (21/09/2001) Market capitalization as of 31/ m m.

17 Investor Relations An intensive dialogue with the capital market was particularly important to us given the continuing difficult position of the IT services sector. The work of our Investor Relations Department aimed to continue our open and transparent information and communication policy and to maintain contact with shareholders and analysts. In personal conversations and via , it provided prompt answers to all kinds of questions concerning the company and its share. Our internet sites made Shareholder Structure 23.0 % Free float (thereof 4.0 % Dr. Markus Kerber) 12.0 % Deutsche Post 30.0 % Ulrich Dietz 10.0 % Maria Dietz 25.0 % Deutsche Bank available comprehensive information on the company s development. At two roadshows and three capital market conferences in European financial centers, we presented the company to interested parties. In regular quarterly result conference calls we notified analysts of the business situation and of significant changes. In publishing our annual results in March 2002, for the first time we also held an Analyst Day at our Eschborn facilities at which we provided detailed information on our strategy, areas of business and market trends. All these events met with a very enthusiastic response. GFT in Prime Standard With effect as of January 1, 2003, the GFT shares were admitted upon application to the Prime Standard of the Frankfurt Stock Exchange. The new segmentation of the equity market has created two new listing segments: General Standard and Prime Standard. The minimum legal requirements apply for the General Standard, whilst the Prime Standard meets the highest international transparency requirements. As a former Neuer Markt company, GFT already fully met the Prime Standard s transparency requirements in the past. In making the move to the Prime segment, GFT s Executive Board made a conscious decision to retain its usual transparent reporting.

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19 Bridgehead Combining Quality and Cost Awareness In recent years expectations in respect of the Return on Investment of IT investments have increased. This has necessitated sometimes substantial price cuts. GFT believes this attitude is hardening and is not merely a short-term trend. This can only mean clear cost optimization, but without abandoning its customary quality benchmark. Near-shore and cross-border software development present a strategic opportunity for GFT to profit from location-based cost advantages at best proximity to clients. The bridgehead model safeguards quality. A strong, experienced GFT project management team looks after the coordination and control of the foreign development teams. This means that three demands are met: quality, cost minimization and proximity to clients. With its two development centers in Hungary and Spain, GFT has met the requirements for the bridgehead model and has already had very positive experiences with this model.

20 GFT Technologies Aktiengesellschaft, St. Georgen Management Report and Group Management Report as of December 31, 2002 Overall economy plagued by insecurity At the beginning of 2002, most business analysts and market participants expected a medium-term economic recovery. In the course of the year, however, it became clear that this scenario was overly optimistic, and that the position of the economy in 2002 would still become even more difficult. Consumption was restricted due to economic insecurity, strongly shaken investor confidence in the capital markets and declining private incomes. Businesses too increasingly put a brake on costs. The prevalent insecurity increased still further at the beginning of 2003 due to intensifying political disputes concerning an impending war against Iraq. According to the Organization for Economic Cooperation and Development (OECD), at the time of writing real gross domestic product (GDP) growth in the markets relevant for the GFT Group was as follows: in Germany just 0.4 % (previous year: 0.6 %), in Switzerland -0.2 % (previous year: 0.9 %), in Spain 1.8 % (previous year: 2.7 %) and in Britain 1.5 % (previous year: 2.0 %). Following a period of stagnation in the fourth quarter of 2002, the latest survey released by the German Federal Statistical Office on February 26, 2003 predicts even lower annual growth of 0.2 % for Germany. European IT market shrank According to the latest study published by the European Information Technology Observatory (EITO) on February 25, 2003, the western European IT market shrank last year by 1.5 % to approx billion. There was an above-average collapse of demand on the German market (-3.7 %), relative to the British (-0.3 %) and Spanish (-0.4 %) markets. If expenditure on information technology and telecommunications is considered as a proportion of GDP then Germany (6.4 %) is bringing up the rear behind other European countries. Whilst this business sector has a stronger effect on the British and Swiss economies, the latest survey published by

21 European IT Market Growth 2002 in per cent % Germany 0.00 % UK % France % Italy % Spain Source: EITO 2003 Graphs and diagrams are for illustration only and are not part of the Management Report Employees in the Software and IT Services Sector , , , , * 380,000* Source: German Federal Statistical Office * estimated the German Federal Association for the Information, Telecommunications and New Media Industries (BITKOM) estimates that there is still potential in Germany and Spain the two largest markets the GFT Group is active in. Last year businesses reacted to this difficult economic trend by shedding around 8,000 jobs in the software and IT services sector in Germany. Falling demand also led to a consolidation of the competitive environment: around 2,000 information and telecommunication technology firms left the German market last year. The IT sector thus finds itself in an extreme market cycle. Within less than 24 months it has evolved from a highly-rated bearer of hope into a crisisridden problem sector.

22 The 2002 financial year GFT Technologies AG ( GFT AG ) and the companies affiliated with it in the group were inevitably affected by the negative market trend which intensified during Through the merger with the former emagine business group in the summer of 2001 we had positioned ourselves for a growth market, and yet the market was increasingly on the decline. An assessment of the economic and financial position of GFT in 2002 must take account of the fact that the 2002 financial year was the first year in which the former emagine companies (now: GFT Financial Solutions GmbH and GFT Iberia Solutions S.A.) were consolidated for the entire year. All group-level figures for 2001 reflect only five months in which these companies were part of the group. Company revenues rise by 5 %, falling revenues in individual companies In 2002 the GFT Group recorded revenues of m., compared to m. in the previous year. This 5 % rise is due to GFT s merger with the former emagine business group which in 2002 was consolidated for the entire year for the first time. If the former emagine companies had been consolidated for the whole of 2001, the group s overall revenues would have fallen in Revenues in the individual companies fell. GFT AG s revenues fell from m. in 2001 to m. in This is due to the fall in demand for programming services on the company s domestic German market. As in the previous year, GFT AG was negatively affected by the fact that German companies GFT Old Company Group without former Emagine Group GFT Group Emagine Group 01/ / / / /2002 Overall group revenues grew in 2002 by 5 % relative to At the same time, the operating costs rose by 15 %. Whilst in 2001 the fact that the former emagine companies were only included for five months meant a distorted view of the earnings position for the year as a whole, in 2002 the significantly increased whole-year fixed personnel costs made themselves strongly felt. At the same time, project revenues fell disproportionately strongly, thus intensifying the gap between these two ratios in the course of the year. In the middle of the year we turned the tide by initiating considerable cost savings. once again drastically cut back on their IT expenditure or postponed already budgeted expenditure. In terms of group business segments, almost half of revenues (49 %) was accounted for by backend integration (previous year: 56 %), whilst approx. 17 % (previous year: 20 %) resulted from frontend development and 3 % (previous year: 4 %) from products. The freelance business gained in importance relative to these sectors, providing 31 % of revenues, an increase of 11 percentage points on the previous year.

23 Development of Revenues of the GFT Group in 4m Revenues of the GFT Group According to Segments in per cent 3 % Products 49 % Backend the largest proportion of revenues. At group level, m. or 56 % (previous year: 74 %) of overall revenues was obtained from this sector. The relative proportion of turnover this sector made up fell relative to the previous year and declined in absolute terms by approx m. If the revenues of m. provided by the freelance business are excluded, the proportion of turnover generated by consulting and software development in the past financial year amounted to 84 %, compared to 93 % in the previous year. Turnover from maintenance and other revenues rose markedly in the period under review. The group provided operating and maintenance services to the value of m., compared to m. in 2001, and other revenues generated by training and passedon travel costs to the value of m., compared to m. in % Freelance Agency 17 % Frontend In GFT AG, the distribution of revenues by business sector hardly changed relative to the previous year. Overall turnover was almost exclusively generated by consulting and software development (99 % or m.). In the previous year, these provided m. or 98 %. Service portfolio more evenly balanced Revenues are more evenly distributed within our service portfolio than in previous years. Whilst in the project business the reluctance to invest continued to make itself felt, the freelance business gained in importance. In addition, as part of the outsourcing trend a rising demand for operating concepts and maintenance services for software applications was apparent. In its product business, GFT performed particularly well in the strongly competitive document management and archiving system market. Both in the GFT Group and in GFT AG, consulting and software development make up Revenues of the GFT Group According to Fields of Operation in per cent 33 % Freelance Business 56 % Software Development and Consulting 11 % Software Products, Maintenance & Others

24 A fifth of revenues outside Germany The international profile of the GFT Group hardly changed compared to the previous year. We obtained approx. 79 % (approx m.) of revenues from clients in Germany. The next largest sales markets were Spain with 9 % (previous year: 11 %) and Switzerland with 5 % (previous year: 6 %). The British market gained in importance in both absolute and relative terms, providing 3 7.2m. or 5 % of overall revenues compared to m. or 0.6 % in the previous year. Our London sales team is thus successfully executing its function within the GFT Group s European production model, acting as a bridgehead between the local clients and the Spanish development units. International business gained in significance in GFT AG; this was mainly with one client in the building technology sector. Whilst 92 % of turnover (previous year 96 %) was obtained from clients in Germany, revenues obtained from clients outside the domestic German market increased by 3 1.2m. to m. Domestic and Foreign Revenues of the GFT Group in per cent 5 % Switzerland 9 % Spain 5 % Great Britain 2 % Other Countries 79 % Germany Focus on financial and logistics service providers In terms of revenues distribution by sector, the GFT Group s strong alignment towards solutions for the financial services sector is apparent; this alignment was definitively effected through the merger with the former Emagine Group in The group obtained approx. 72 % (previous year: 58 %) of its revenues from clients from this sector, whilst 46 % of turnover was provided by the freelance business. The sales situation was affected by the strong cost pressure this sector was particularly exposed to. Whilst revenues provided by logistics service providers (mainly our major client Deutsche Post) fell comparatively sharply compared to the previous year, declining by 11 percentage points, the other sectors remained relatively stable from one year to the next. Consumer goods manufacturers provided 3 % of revenues (previous year: 2 %), industrial companies 9 % (previous year: 11 %), the public sector 4 % (previous year: 5 %) and other industries including telecommunications and IT 3 % (previous year: 4 %). Well-known major clients shape turnover The GFT Group relies on a solid base of regular clients which are well-known major companies. This is reflected in the distribution of group revenues. In the year under review the GFT Group obtained approx. 84 % of its overall revenues from its ten largest clients including four industrial companies, three banks, one logistics service provider, one public authority and one consumer goods manufacturer. GFT s intensive business relations with Deutsche Bank and Deutsche Post should be evaluated in two different respects in the context of the economically difficult market cycle. On the one hand, these two main clients represent a solid base for us, providing 70 % of overall revenues. On the other, however, we suffered above all due to

25 Revenues of the GFT Group by Industries in per cent 3 % Consumer Goods 9 % Industry 3 % Other kind relating to private vehicle use and income from legal disputes from the previous year. In GFT AG, the other operating income rose only slightly, by 3(k) 134 to m. The largest items in this respect are income from reversals of accruals, income from charges passed on to affiliated companies and payments in kind relating to private vehicle use. 4 % Public Sector 9 % Logistics 72 % Financial Services the drastic cost reduction measures undertaken by these two major business groups, in terms of both multiple rounds of price negotiations and also the postponement or cancellation of major projects. The revenues obtained from Deutsche Bank amounted to m. (previous year m., with the former emagine companies only being taken into consideration for five months). Revenues obtained from Deutsche Post amounted to m. (previous year m.). Fall in total output The GFT Group s total output amounted to m., compared to m. in the previous year in which the former Emagine Group was only consolidated for five months. GFT AG s total output fell strongly, amounting to m. in 2002 compared to m. in the previous year. The other operating income in the GFT Group increased by m. to m. The largest portion of this income, 3 3.5m., was generated by Deutsche Bank s reimbursement of restructuring costs. Further individual items were the reversal of accruals, payments in Cost reduction measures have positive effect in second half of the year The cost reduction measures initiated in the summer of 2002 had a positive effect. Although the GFT Group was forced to report an increase in its costs compared to the previous year due to the first-time whole-year consolidation of the former Emagine Group, it was able to reduce both personnel and material expenditure in the project business in the second half of the year. These savings did not entirely make up for the disproportionately high decline in revenues in the second half of the year, however. Since demand was in any case disappointing, we used the month of December in particular to work off holiday entitlements completely. The number of hours end clients were invoiced for and thus the rate of utilization were lower than in the previous quarters. GFT AG s cost structure was also encumbered by the overall structure of its business locations in Germany and through administrative structures within GFT AG which have groupwide tasks whose expenses were only partially passed on. Reduced material expenditure in project division Costs of purchased goods and services increased in the GFT Group compared to the previous year by approx. 3 10m. to m. This rise reflects not only the first-time whole-year inclusion of the former emagine companies, but also our clients strong demand for flexible and demand-oriented

26 use of external employees which the GFT Group meets through its freelance business. Material expenditure in the freelance business thereby amounted to m., whilst both revenues and material expenditure increased in this business in the second half of the year. Material expenditure in the project business amounted to m., whilst this expenditure fell in the second half of the year. The GFT Group reduced the proportion of freelance employees working on its own projects, and in the period under review had an average of 114 freelance employees compared to 264 in the same period in the previous year. emagine gmbh, which runs the freelance business, had an annual average of 289 external employees (previous year: 400). In GFT AG, expenditure on purchased goods and services rose by 3(k) 561 to m. compared to m. in the previous year even though the average number of freelance employees in the project business fell by 8 to 32. This is due to the longer average period of use of these employees in fixed price projects during the 2002 financial year. Reduced personnel expenditure in second half of the year Personnel expenditure in the GFT Group rose by 13 % to m., whilst in GFT AG it was reduced by 15 % to m. This corresponds to approx. 47 % of revenues, in GFT AG to even as much as 73 %. These ratios illustrate the burden of personnel costs in GFT s business model and how strongly the company s results are affected by this in case of a large decline in revenues. GFT is only able to meet predictable and unpredictable falling revenues by reducing capacities. Finally, in the prevalent market environment price increases are no more realistic than an increase in revenues through expansions of the company s market shares. For this reason, in the middle of the year personnel capacities were reduced on a long-term basis in both the GFT Group and in GFT AG. This ensured an improvement in the ratio of fixed personnel costs to revenues. One-off redundancy payments and continued pay for employees still on the payroll at the end of the year due to long periods of notice amounted to as much as m. in the 2002 financial year in the GFT Group. This cost item will be relieved in 2003 through the loss of this expenditure. If the savings achieved through personnel reduction are extrapolated for an entire financial year, this points to a long-term reduction of personnel costs in the current financial year. In 2002 an annual average of 1,204 employees (previous year: 980) were employed in the GFT Group, in GFT AG 316 employees (previous year 418). As of December 31, 2002 the number of employees had fallen in the GFT Group by 247 to 1,090 and in GFT AG by 73 to 277, relative to the same date in the previous year. The GFT Group thus shed roughly a fifth of its personnel in the past financial year. If the 1,090 employees as of December 31, 2002 are compared with the historical peak of 1,517 employees on September 30, 2001, capacities have been reduced by almost a third. This ratios once again illustrate the extent of the restructuring measures undertaken and should be viewed in the context of the deep structural crisis in the IT sector. Research and development Research and development expenditure, largely consisting of personnel costs, amounted to m. in the GFT Group. The m. increase on the previous year is mainly due to the first-time whole-year

27 inclusion of GFT Financial Solutions GmbH and GFT Iberia Solutions S.A. In addition, GFT Solutions GmbH invested personnel capacities in developing the new release 6D of the document management and archiving product HYPARCHIV which was unveiled at CeBIT Productivity Total material and personnel expenditure in the GFT Group amounted to m., thus contributing to gross earnings of approx. 3 15m. Compared to overall output, this amounts to a gross earnings proportion of 9.5 % (previous year: 17 %). In 2002 GFT AG s productivity rate fell once again. Whilst gross earnings in the previous year amounted to 16 % of overall output, after taking restructuring costs into consideration this ratio last year fell to 2 %. GFT AG was thus no longer able to cover its operating costs. One reason for this was that as part of 2001 s expansion strategy GFT AG assumed more and more group-wide functions. Due to various central administrative functions and the overall structure of its business locations in Germany, it has to bear costs which were originally envisaged for a larger business group. These costs were a substantial burden, particularly in the context of the marked fall in revenues. They were only partially passed on. Depreciations and other operating expenses Group depreciations on tangible and intangible fixed assets almost tripled compared to the previous year, amounting to m. This includes goodwill amortization of m. and depreciations on intangible fixed assets to the value of 3(k) 901. Goodwill resulting from consolidation measures amounting to m. (previous year: m.) was amortized according to schedule. The 30 % increase is due to the first-time whole-year consolidation of the former emagine companies. Non-scheduled goodwill amortization due to consolidation measures amounted to m. This was attributable to GFT Solutions GmbH (3 6.29m.), which was written off by 50 %, and to GFT Pixelfactory GmbH (3 6.31m.), which was completely written off. In the context of the declining IT services sector, on the one hand, and the almost complete collapse of the market for frontend services, on the other, we acted in this respect according to the commercial principle of caution. In GFT AG, the depreciations on tangible and intangible fixed assets included non-scheduled depreciations of 3(k) 72. Despite this, depreciations on tangible and intangible fixed assets were reduced in GFT AG by 3(k) 90 to m. In addition, non-scheduled amortizations of financial assets amounting to m. were effected in GFT AG. These relate to the above-mentioned 50 % depreciation of the acquisition costs of the participation in GFT Solutions GmbH, which amounted to m. in GFT AG, and the complete write-off of the participation in GFT UK Ltd (3(k) 387). The participating interests in Plumb Design Inc. (3(k) 514) and CScout Inc. (3(k) 317) were also completely written off. The other operating expenses in the GFT Group increased by more than a quarter to 32.90m., mainly due to the first-time wholeyear consolidation of the former emagine companies. In contrast, in GFT AG the costsaving measures bore fruit. In the GFT Group too savings of 3 1.7m. were made on selling expenses. However, these were not able to make up for the operating expenses which increased by a third to m., the administrative expenses which increased by 7 % to m. and the valuation allowances and losses of receivables outstanding which increased from 3(k) 469 to m. In addition, due to the above-mentioned capacity

28 reduction and the associated reduction in space requirements, accruals amounting to 3 5.2m. were made for vacant leased premises to the end of the contractually agreed terms. These one-off expenses will reduce costs in the 2003 financial year and beyond. In GFT AG, other operating expenses amounted to m., 15 % less than in the previous year ( m.). More than half these savings were made on advertising and travel costs. Net interest income/financial results The GFT Group reports interest income of 3(k) 882 compared to interest expenditure of 3(k) 720. A positive net interest income of 3(k) 162 is the result (previous year: 3(k) 287). In GFT AG, interest income rose by 18 % to 3(k) 661. Outside funds were increasingly borrowed from affiliated companies before the end of the same period. This was necessary in order to deal with the fall in revenues which was particularly apparent in GFT AG. Interest expenditure consequently increased from 3(k) 465 to m. On balance, in 2002 GFT AG recorded a negative net interest income of 3(k) -526, compared to a positive net interest income of 3(k) 93 the previous year. The financial results of the GFT Group were encumbered by depreciations on financial assets and on marketable securities. They amounted to 3(k) -861, compared to 3(k) -830 in the previous year. GFT AG s positive financial results amounting to m. (previous year: 3(k) -978) were mainly due to income from subsidiaries ( m. which more than made up for depreciations on financial assets and on marketable securities ( m.). Extraordinary effects influence result In the past financial year the GFT Group s result was affected by extraordinary expenditure of m. due to the exceptionally bad economic environment. These were made up of one-off restructuring expenses and of necessary goodwill amortization. The restructuring expenses alone amounted to approx m.; these were due to the above-mentioned redundancy payments and continued employee pay associated with the capacity reduction (3 4.68m.) and the expenses for vacant rented floor space with remaining contractual terms (3 5.6m.). In addition, nonscheduled goodwill amortizations of approx m. were effected. In connection with the excessively low overall output and the above-mentioned expense items, the results of ordinary activities for the GFT Group were m. (previous year: m.). After taking into consideration tax proceeds (3 5.37m.), income owed to other shareholders (3(k) 68) and the loss brought forward from the previous year (3 2.69m.), the group s accumulated deficit amounts to m. In the GFT Group the EBIT were thus m., the EBITA m. and the operating EBITDA m. If the EBITDA are considered without taking into account the one-off restructuring expenses amounting to m., after adjustments for excess capacities the EBITDA amounted to almost 3-1m. In GFT AG the results of ordinary activities improved from m. to m. The net loss was reduced by more than half, from m. to m. This result was crucially determined by income from investments, i.e. affiliated companies. Earnings per share as per DVFA/SG methods thus amounted to , compared to in the previous year. Before goodwill amortization, the GFT Group records earnings per share of (previous year: ). This calculation is based on a figure of 26,325,946 shares (previous year:

29 22,503,274). Consequently, the Executive Board will propose to the annual general meeting that no dividend should be issued. Investments In the 2002 financial year investments of almost m. were made in tangible and intangible fixed assets in the GFT Group, compared to m. in the previous year m. of this was accounted for by investments in tangible fixed assets, corresponding to an investment rate of 0.9 % relative to overall output. In the previous year, investments in tangible fixed assets amounted to m., corresponding to an investment rate of 3.12 %. For the same period, GFT AG records investments in tangible and intangible fixed assets amounting to 3(k) 791, compared to m. in the previous year. As was already the case in 2001, this approx. 55 % reduction is attributable to the stringent cost reduction program and the associated freeze on expenditure. Of GFT AG s total volume of investments, approx. 3(k) 459 was attributable to investments in tangible fixed assets. No bank loans and overdrafts or third-party funds were used for this purpose, but rather GFT AG s own funds or those of affiliated companies. Financial position In the GFT Group, at the end of the financial year the stock of liquid funds amounted to m., thus m. more than at the same point in the previous year. This positive stock of liquid funds, which was achieved despite the negative economic environment and the considerable restructuring expenses, is due to the cooperation with Deutsche Bank AG, amongst other reasons. The set of agreements concluded in 2001 in connection with the contribution of the former Emagine Group envisaged an equity capital compensation payment in April 2002 ( m.) and a loss compensation payment (3 1.2m.) in November 2002; these were made during the 2002 financial year. In the balance sheet as of December 31, 2001, under the item Other receivables and other current assets receivables from Deutsche Bank AG amounting to m. were capitalized. In addition, the savings programs and rigid purchasing management had a positive effect on the stock of liquid funds. The situation in GFT AG was similar. Here, the stock of liquid funds at the end of the year amounted to m., compared to m. at the end of These figures cannot be compared in absolute terms, however, as GFT AG introduced a cash pooling procedure during the 2002 financial year and became the administrative center for liquid fund holdings. GFT AG is thus now recording an increase of approx. 3 20m. in its cash holdings, whilst also recording an increase of almost 20m. in the amounts owed to affiliated companies the group companies participating in the cash pooling procedure. In the year under review, the GFT Group recorded positive cash-flows resulting from operative activities amounting to m., compared to m. in the previous year. This improvement was achieved despite the negative period result and is mainly due to the increased depreciations on fixed assets, the reduced accruals and increased conversion of trade accounts receivables into liquid funds. The low rate of financing obtained through funds from outside the group is apparent in the cash-flows from financing activities, which was reduced to m. in the year under review, compared to m. in the previous year. Assets On the balance sheet cut-off date, the GFT Group s balance sheet total amounted to m., corresponding to a reduction of 22.6 % or m. compared to the same

30 point in the previous year. The equity capital shown in the balance sheet amounted on the balance sheet cut-off date to m., compared to m. on December 31, Following the implementation of the approved capital increase by contributions in kind (former Emagine Group), the balance sheet equity capital rose before the end of the period under review by m. to m. only to fall, after a net loss pre minority share of result of to m. The capital situation is characterized by the following ratio of funds available in the medium and long-term to funds available in the short-term: long-term liabilities of 3(k) 774 in the 2002 financial year (previous year: 3(k) 788) compared with short-term liabilities of m. (previous year: m.). In terms of the GFT Group s assets, the longterm tied-up assets amount to 31 % of the total assets, compared with 41 % at the same point in the previous year. This reduction is mainly attributable to the reduced goodwill. As of December 31, 2002, the reported equity capital provided 191 % of the coverage for the long-term assets. By comparison with the previous year, GFT AG s balance sheet total increased from m. by m. or 14 %. In terms of its assets, the long-term tied-up assets amounted to 44 % of the total assets on the balance sheet cut-off date of December 31, 2002, compared to 67 % on the balance sheet cut-off date in the previous year. There was thus a shift in the assets from the long-term tied-up assets towards the short to medium-term tied-up assets. In terms of capital, the equity capital increased in the 2002 financial year from m. to m.; this was due to the entry in the German Commercial Register made in February 2002 of the implementation of the capital increase by contribution in kind made in the 2001 financial year. This was associated in the 2002 financial year with a capital reserve increase in GFT AG of m. to m., so that GFT AG s balance sheet equity capital on the balance sheet cut-off date for the current financial year amounted to m., compared to m. at the same point in the previous year. In respect of the capital there was also a clear shift from the funds available in the long to medium-term towards the short-term funds. The equity capital shown in the balance sheet thus provides 115 % of the coverage for GFT AG s long-term assets. GFT AG s financial assets fell in the past financial year from approx. 3 42m. to m. Relative to the balance sheet cut-off date for the previous year, the financial assets were augmented by the capital payments to GFT Solutions GmbH (3 3m.) and to GFT UK Ltd. (3(k) 388) and by the acquisition costs for emagine gmbh (3(k) 25). They were reduced by non-scheduled depreciations of the shares in GFT Solutions GmbH ( m.), Plumb Design Inc. (3 (k)-514), GFT UK Ltd. (3(k) -388) and CScout Inc. (3(k) -317). The amounts owed to affiliated companies changed considerably compared to the cutoff date for the previous year, increasing by m., m. of which was owed to GFT Financial Solutions GmbH as part of the cash pooling procedure. Including the 3 18m. payment made in 2002, GFT AG received 3 35m. from GFT Financial Solutions GmbH in the 2002 financial year. This is the main reason for the m. increase in liquid assets despite the financial losses and the otherwise amortized liabilities amounting to 3 5m. GFT AG s balance sheet equity capital on December 31, 2002 amounted to m.,

31 thus corresponding to approx. 51 % of the balance sheet total (previous year: 66 %, defined as commercial equity capital), the group s balance sheet equity capital amounted to 58 % of the balance sheet total (previous year: 65 %, defined as commercial equity capital). systematically diagnosed, assessed and controlled are set out in a directive approved by the Executive Board and are verified and updated regularly, at least once a quarter. Risks are diagnosed, assessed and analyzed on the basis of a cross-hierarchical reporting system with a defined procedure of escalation. Both GFT AG and the other affiliated companies were always in a position to meet their financial obligations. After a very difficult year, GFT AG and the GFT Group are now back on a comparatively firm footing. Significant events after the balance sheet date Agreements existing in connection with the GFT Group s merger with the former Emagine Group on August 1, 2001 stated that Deutsche Bank was to enable certain revenues to be obtained. There was also a claim against Deutsche Bank for it to take on restructuring costs on a pro rata basis. The relevant contractual passages were revised in 2003 and an agreement was reached that all claims arising from these contractual passages for the year 2002 have been settled through payment of a one-off amount of 3 3.5m. and for the period after 2002 with a one-off amount of 3 3.8m. The claim for the year 2002 has been capitalized in the annual financial statements of GFT Financial Solutions GmbH and in the group annual financial statements as of December 31, 2002 under the other assets to the value of 3 3.5m. The Executive Board views this agreement both as proof of the confidence Deutsche Bank AG has in the GFT Group and also as an illustration of the continuing cost-cutting pressure all its major clients are experiencing. Risks for future developments The risk management system is an integral part of the GFT Group s overall planning, control and reporting process. The principles whereby risks and opportunities are The management is currently paying particular attention to the following risks: In view of the current cost structure, continued weak revenues would in the mediumterm jeopardize the existence of both GFT AG and the GFT Group. The Executive Board is mainly concentrating on stabilizing or increasing revenues and taking measures to achieve long-term improvements in the cost situation. The Executive Board regularly carries out scenario analyses and simulates cost reduction options, so as to be prepared for continued weak demand and even for further instances of weak demand. Significant deteriorations in the outline economic conditions and increasingly restrained client behavior might have a negative effect on the revenues and results trends of the GFT Group or individual subsidiaries. We are dealing with this risk by examining each month potential deviations from our planning and through continuous cost management. Falling demand on the part of our two major clients and strategic partners Deutsche Bank and Deutsche Post in particular might have a negative effect on our revenues and results trends. We aim to safeguard this dependence by means of intensive client supervision at Executive Board level, key account management and cooperative agreements.

32 A potential sudden collapse in revenues would within a few months have negative consequences for the liquidity of both GFT AG and also the GFT Group. We are dealing with this risk through predictive liquidity planning and also through a continuous exchange of information with our house banks. Prospects The predictions made by the leading business analysts for the development of the German economy in the current financial year vary considerably. They range from 0.6 % (DIW) to 1.5 % (OECD), although several institutes have already lowered their predictions or have announced their intention to do so. Project commitments in terms of prices, completion dates and extent of services might lead to liability risks and also financial risks. GFT is tackling this risk through close coordination of its sales and production divisions, particularly when quotations are drawn up. Project quality audits and commercial project controlling are also regularly effected. Like any company, the GFT Group is exposed to management risks which are tackled through a systematic reporting system which defines detailed planning and control procedures. The Executive Board s running of the business is supervised by the Supervisory Board. Both organs have committed themselves to the key guidelines of the German Corporate Governance Codex. Company restructuring always depends on confidence in its feasibility. Should this confidence be jeopardized by negative press coverage or industry rumors, for example, a negative automatic process might unfold which would be very hard to control. GFT deals with this risk through a permanently open, honest and transparent communication policy towards clients, employees, investors and the media. EITO predicts for 2003 gradual signs of a recovery of the western European market for information and communication technology and expects growth of 2.5 % with an overall volume of 3 607m. The IT services sector is expected to grow by 2.8 %, software expenditure by 2.4 %. EAI, security and e-government solutions are expected to provide significant stimuli, and investments are expected to shift from hardware to software and services. BITKOM forecasts more job cuts in Germany, although fewer than last year. The administrative and marketing sectors are expected to be worst hit, whilst the prospects for highly-qualified IT experts will remain good. We are only able to make a cautious estimate as to how GFT will develop in the current 2003 financial year. The outlook for the first half of the year does not indicate any improvement in demand and pricing pressure will not relax either. However, the Executive Board is convinced that the measures it has initiated have brought important adjustments for our company, and it will if necessary approve and implement further measures. We thus hope both to absorb the pricing pressure and also to resume our revenue growth. To this end, new strategic paths and cooperative agreements are not unthinkable.

33 We expect positive stimuli particularly from our clients increasing outsourcing of IT-based business processes and related services. Through our EAI, enterprise portals, document management and application management products, we have covered the areas in which our clients intend to make increasing investments in the near future. In addition, with Basel II financial services providers face major challenges in the IT sector, for which the GFT Group is optimally prepared. St. Georgen, March 11, 2003 The Executive Board Ulrich Dietz Dr. Thomas Gumsheimer Dr. Erwin Haller Dr. Markus Kerber Marika Lulay Executive Board Executive Board Executive Board Executive Board Executive Board (Chief Executive Officer)

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35 Task assignment Structure Energies, Gain Synergies In many companies a large part of the basic development work has already been accomplished. Software use has achieved a high degree of penetration, even including business-critical applications. This means that whilst the demand for original development activity is decreasing, the demand for services, which maintain the day-to-day functioning of the systems, is rising. As a consequence, companies are more and more commonly opting to rearrange their IT structures. If companies decide to largely or even completely outsource their IT operations, GFT partially or completely takes on their applications management in accordance with an agreed service level. In a standardized, tried-and-tested procedure, it gradually prepares for and assumes this management. Data centers which clients own or GFT operates in Eschborn and Barcelona carry out this procedure. Its experiences to date mean that GFT is able to make its application management service widely available. GFT s clients fully benefit from its existing and developing synergies, which are due in part to multiple use of know-how, personnel and hardware.

36 The GFT Group The GFT Group is well positioned in the European market. With a comprehensive business location structure, we provide local advice and support for our clients in Germany, Great Britain, Austria, Switzerland, Spain and Hungary. At the same time, these clients benefit from the advantages of cost-efficient, top-quality production work at our development centers in Barcelona, Valencia, Zaragoza and Budapest in particular. Above all our major companies were seriously affected by the economic downturn and reacted with delay by adjusting their cost structures in line with market developments. However, our smaller subsidiaries outside Germany succeeded in exploiting market niches in a targeted fashion and thus achieved revenues and earnings growth. GFT in Germany In the past year the negative effect of outline economic policy conditions on our business was stronger in Germany than in any other country GFT is active in. In our domestic market we suffered particularly acutely from high location-based personnel costs and legal barriers obstructing unavoidable staff cutbacks; this made it difficult for us to react flexibly to market volatility. One result of this is that we are now increasingly relocating production to countries where we can develop software more cost-efficiently. There were no changes to our service portfolio last year. Our main area of business was implementing software solutions as part of projects to help our clients operate their core business profitably. Amongst many other projects, Deutsche Bank commissioned us as a strategic partner to implement a new advanced systems architecture for its German branches and service centers. The PACKSTATION delivery service was piloted in the Netherlands using technology by GFT. Packages can now be picked up and dispatched around the clock using publicly accessible locker systems. We also developed a program planning system which is used in various radio stations

37 belonging to Germany s ARD broadcast network. Frankfurt Airport s internet portal went online with greatly expanded functions and a new design on the basis of an editing system developed by GFT. For Tchibo, GFT consolidated several individual intranet solutions into a portal accessible for all its employees. emagine gmbh aims to manage and mediate small IT service providers and freelance IT specialists, in keeping with the trend of increasingly outsourcing procurement processes. With its document management and archiving software HYPARCHIV, GFT Solutions GmbH has now clearly defined itself as a product company and has intensified its sales and partner management activities. On the basis of internally developed software solutions, its shareholders meeting service (HV-Service) expertly handled shareholders meetings, including those of major listed corporations such as Altana, Deutsche Bank, Deutsche Börse and mg technologies. The German companies made varying contributions to the group s financial result. Whilst GFT Systems and GFT Financial Solutions provided positive income as in the previous year, both GFT Solutions and GFT AG reported significant losses. GFT in Great Britain GFT s seven-strong British team managed to considerably expand its operational activity in It recorded a significant revenue increase of 3(k) 37 to m. and reduced its net loss for the year by roughly two thirds to 3(k) GFT s European production model is paying off in this respect: our London colleagues mainly function as a bridgehead between the local clients and our development centers in Barcelona, Valencia and Zaragoza. Its sales operations focus on two client groups: banks preparing for the IT requirements of Basel II and logistics service providers.

38 GFT-Standorte Dublin London Hamburg Berlin Dortmund Dresden Ilmenau Frankfurt New York Stuttgart St. Georgen Vienna Basel Munich Budapest Bern Zurich Zaragoza Barcelona Madrid Valencia GFT in Austria GFT Austria broke even in its second year of operating activity. With revenues of around 3 2m., its net profit was 3(k) 48. The office had seven employees, as in the previous year. Significant project successes in the past financial year included the implementation of two internet portals for the fashion manufacturer Licona and for the investment company Raiffeisen Capital Management. GFT in Switzerland GFT Switzerland once again bucked all the market trends and achieved above-average growth. Revenues increased by 3 6.5m. on the previous year, its net profit from 3(k) 156 to 3(k) 422. Its workforce remained almost constant, with 33 employees compared to 31 in the previous year. GFT s business activity in Switzerland is focused on major long-term projects in the public administration and e-government sector. GFT s clients in Switzerland include the Federal Road Construction Agency, the Federal Tax Authority, the Swiss Postal Service and Siemens Building Technologies. GFT in Spain Our business locations on the Iberian peninsula are gaining in importance within GFT s European production model. Valencia, Zaragoza and above all Barcelona are strategic technology and development centers within the GFT Group which cost-efficiently implement projects from throughout Europe. GFT s Spanish subsidiary was also successful

39 in expanding its own list of regular clients. GFT Iberia mainly focuses on banks, insurance companies and the public sector. In the past year, we gained clients such as Banc Sabadell, CAI Vida y Pensiones and the Zurich insurance group. We concluded a cooperative agreement with the Spanish Chamber of Notaries in May 2002 regarding the introduction of new technology solutions for the administrative sector throughout the country. Business with Deutsche Bank was considerably reduced due to this client s cost-savings efforts. Because of this and the loss of revenues from the freelance business, revenues declined by half compared to the previous year to around 3 28m. Despite its significant fall in revenues, the company achieved an almost balanced result of 3(k) -55. GFT in Hungary Our Hungarian subsidiary mainly functioned as a near-shore development center for the Austrian market. With revenues of around 3 1m., its 23 employees made a positive contribution of 3(k) 89 to the group s result. GFT in the USA The American market continues to suffer from a massive fall in demand following the terror attacks of September 11, 2001 and due to the threat of war against Iraq. GFT has retreated from this market and limited its activities to its participations in the trend consultancy CScout and the internet service provider Plumb Design. These two companies have also been affected by the collapse of the US market and they reported negative results for Key figures for main GFT companies as of December 31, 2002 Revenues in 3(k) Annual net profit in 3(k) Employees GFT Iberia Solutions S.A., Sant Cugat del Vallés 27, GFT Financial Solutions GmbH, Eschborn 75, GFT Systems GmbH, Ilmenau 3, GFT Technologies AG 30,871-5, GFT Solutions GmbH, Hamburg 20,193-4, GFT Technologies GmbH, Vienna 2, GFT Technologies (Schweiz) AG, Wallisellen 10, GFT UK Ltd, London 5, GFT Websolutions Kft., Budapest 1,

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41 Elements Modularity as a Result of Economic Common Sense Many software suppliers decided early on to develop their systems in a modular fashion, in order to be more cost-effective whilst simultaneously better able to meet client demands. Today s clients expect an even more favorable price-performance ratio. GFT has therefore consistently built on the concept of modularity. It offers not just software modules, but also standardized analysis approaches, consulting concepts, planning and estimate methods and project and system solution procedures in brief: technologies, methods and tools. Depending on the product package, apart from the required system modules the client thus obtains the relevant consulting and other services and thus a system, which is very close to a individually developed project. The advantages of this smart solution are: high operational security through the reuse of previously tried-and-tested modules, considerably shorter production times thanks to the knowledge and experience gained from similar projects and production costs, which are far lower than for individual solutions.

42 Employees Number of Employees The order situation in the 2002 financial year continued to be difficult, and this was reflected in the development of the company s number of employees. The business performance and the realization that the reluctance to invest in IT services is a structural change necessitated a considerable adjustment of our workforce capacities. In June 2002 measures were initiated to increase capacity utilization and to lower costs. The aim was to achieve a workforce of 1,100 employees by the end of the year. In the first half of the year employees in the frontend sector were dismissed, whilst in the second half of the year it was necessary to cut 120 jobs. As of December 31, 2002 the GFT Group had 1,090 permanent employees. This was 247 employees less than at the same point in the previous year (1,337 employees). The group also had 98 freelance employees, plus 392 external employees who at the end of the financial year were active in client projects via our IT agency emagine. In the 2002 financial year the employees of the GFT Group once again demonstrated a high level of commitment and solidarity. By waiving bonus payments, salary increases and unpaid vacation leave, they helped to ensure that no further job cuts were necessary. Taking into account the salary payments saved through the job cutbacks, a figure of 3 4.1m. was saved in the year 2002 alone. Further positive effects on our cost trends will become apparent in Employee Structure Our employee structure clearly reflects the GFT Group s international focus. With 493 employees outside Germany, the proportion of foreign employees is around 45 %; the group brings together 27 different nationalities. More than half of our employees have a university degree. A further special characteristic of our employee structure is the

43 average age of our employees of 33 years. Thus the GFT Group has a very young team with first-rate education. Human Resources As in the 2001 financial year, the position of the economy and the related freeze on hiring new employees meant that the Personnel Department was again more concerned with personnel management than with recruitment in The Human Resources Department organized preparatory and supplementary measures alongside the personnel adjustments made in the middle of the year, and implemented the adjustments in a socially Number of Employees in the GFT Group absolute figures as of year-end , ,090 responsible manner. Thanks to cooperation with the works council at GFT s Eschborn office, a limited-duration job-safeguarding model was introduced. In order to be able to assess employee performance in a more quantifiable manner, the Personnel Department has introduced a uniform target system containing concrete negotiated targets for every employee. The Personnel Department also carried out a training requirement analysis to assist future training planning and was involved in the decision to adopt an employee pension scheme. GFT was once again represented at selected trade fairs and personnel events in order to recruit employees with particular areas of specialization. We were represented in the careers section of the CeBIT 2002, and took part in various university fairs. We also continued to maintain our good contacts with Berlin Technical University, Darmstadt Technical University, Furtwangen Technical College, Escuela Superior de Administración y Dirección de Empresas (ESADE) in Barcelona

44 and the IESE Business School, Navarra. As a member of the computer science forum, we promoted this subject at the University of Stuttgart, and lectured on the Internet & New Media MBA course at the Steinbeis Institute, Berlin. Education We consider the training and education of young recruits to be part of our social responsibility. In the 2002 financial year, in cooperation with higher job education institutions (Berufsakademie) GFT trained 23 students in business studies, information technology and business data processing. We also supervised many interns and graduands. Dialogue between Employees and Management We place a high value on internal communication. In order to develop communication within the group, we have introduced local and european-wide employee meetings at all our offices. At these events, the employees receive information about projects, events, current news and financial results for the entire group. They are also able to address questions to the Executive Board and senior staff. We also established Coach & Facilitate and Communication & Feedback project teams, which work on optimizing project management and communication. We set up an employee portal for the entire company which serves to exchange knowledge and know-how and functions as a further mouthpiece within the company. The dialogue between employees and management is supported not least by the works council and GFT s Round Tables, an alternative model of employee representation. The management supports this dialogue: members of the Executive Board and employee representatives regularly meet each quarter to discuss the company s economic position and strategy. Employees According to Countries as of 31/12/2002 Great Britain: 7 Hungary: 23 Germany: 597 Spain: 423 Switzerland: 33 Austria: 7

45 Research and Development In 2002 we continued to invest in the GFT Group s ability to innovate. We provided our employees with training in the latest technologies and developed innovative solution approaches to qualify us to implement outstanding projects. Our research and development expenditure, which mainly consist of personnel costs, amounted to m. in the GFT Group. In the previous year, where GFT Iberia Solutions and GFT Financial Solutions were only included for five months, this expenditure amounted to m. The core focus of our activities in the past financial year was standardizing our production work. Our development centers in Barcelona, Eschborn, Hamburg, Ilmenau, St. Georgen, Valencia and Zaragoza also maintained close cooperation with selected partners and leading research institutes. Standardization creates space for individual solutions Wherever possible, procedures were defined for architecture and IT consulting, whilst software components were produced during the development phase. Our employees continuously contributed their experience from ongoing projects in order to make profitable use of them in new ones. This enables fixed procedural models for the development and implementation of solutions for enterprise portals, enterprise application integration (EAI), application management and risk management for financial service providers, but also schemes for cost estimate procedures, return on investment calculations and feasibility studies. This procedure in no way contradicts our clients demand for individual solutions. On the contrary, through routine use of standard modules, we increase our productivity and are also able to meet general requirements not just more cost-effectively, but also significantly faster. This enables us to concentrate our capacity for innovation on client-specific requirements. We added major features and functions to our document management and archiving product HYPARCHIV. Version 6D of this product, which was presented at CeBIT 2003, enables companies for the first time to timestamp and digitally sign contracts and digital documents with complete legal and audit security and to ensure their long-term availability on self-supporting media. Server application monitoring, user and administrator activity recording and full-text indexing were also added. Cooperation with technology providers and research institutes GFT cooperates closely with recognized technology providers and leading research institutes. In the year under review, our partnerships were particularly intensified with companies active in the content management systems and EAI sectors. By supervising master s theses with practical relevance, we also benefited from knowledge, which we directly incorporate in projects.

46

47 Growth Organizing Complex Structures Transparently Looking back on 15 successful years at GFT, many qualities can be distinguished which have contributed to the continuous growth. Two in particular are worthy of special mention: the capacity to innovate and the ability to adapt. In spite of very rapidly changing outline conditions, GFT has consistently managed not only to establish itself on the market, but also to achieve noteworthy successes thanks to adapted strategies and innovative products. GFT s development has thus practically bucked the market trend at times. Increasing size means that more complex structures are unavoidable, particularly if a company is to maintain its strong capacity to act and react. However, complexity in no way means a loss of transparency, which is absolutely crucial for investors in particular. GFT has retained its transparency in line with the strategic alignment, which will influence the company s future and its further growth.

48 GFT Technologies Aktiengesellschaft, St. Georgen Group Balance Sheet as of December 31, 2002 (IAS) Assets Notes 4 4 4(k) Fixed Assets Intangible Assets Licences, industrial property rights and similar rights (8) 1,290, ,732 Goodwill (8) 26,792, ,394 28,082, ,126 Tangible Fixed Assets Other fixed assets, plant and equipment (8) 5,687, ,969 Financial Assets Investments in associated companies (5, 9) Other investments (9) ,769, ,942 Current Assets Inventories Goods (10) 107, Receivables and Other Current Assets Trade receivables (10) 22,668, ,793 Receivables from taxation (16) 1,320, ,054 Other receivables and current assets (11) 4,701, ,044 28,690, ,891 Securities (12) 3,226, ,772 Liquid assets (12) 34,935, ,510 66,961, ,486 Deferred Taxes (16) 9,940, , ,671, ,068

49 Balance Sheet Shareholders' Equity and Liabilities Notes 4 4 4(k) Shareholders' Equity Subscribed Capital (13) 26,325, ,744 - Conditional capital 3 8,280, (2001: 3 780,000.00) Capital Reserve (13) 67,346, ,395 Revenue Reserve Legal reserve (13) 1, Other revenue reserves (13) 2,343, ,344 Currency Translation Adjustment (4) 138, Group Accumulated Deficit (13) -31,433, ,628 64,722, ,851 Capital Contributions to carry out the Resolved Increase in Capital (13) ,533 Minority Interests (14) 323, Long Term Liabilities Long term financial liabilities (18) 1, Accruals for pension (15) 772, , Short Term Liabilities Short term financial liabilities (18) 1,282, ,016 Trade liabilities (18) 13,586, ,445 Accruals for taxation (16) 797, Other accruals (17) 18,341, ,700 Tax liabilities (18) 3,735, ,892 Other short term liabilities (18) 6,313, ,368 44,056, ,408 Deferred Taxes (16) 795, , ,671, ,068

50 GFT Technologies Aktiengesellschaft, St. Georgen Group Profit and Loss Statement as of Januar 1 until December 31, 2002 (IAS) Group Profit and Loss Statement Notes 4 4 4(k) Revenues (19) 155,736, ,861 Decrease in work in progress Other operating income (21) 7,923, , ,659, ,144 Cost of materials a) Cost of raw materials and supplies and goods purchased (22) 1,363, ,220 b) Cost of services purchased (22) 66,212, ,151 67,575, ,371 Personnel expenses a) Wages and salaries (22) 62,188, ,702 b) Social security and pension benefits (22) 11,169, ,360 73,357, ,062 Depreciation on intangible and tangible fixed assets (23) 23,070, ,743 Other operating expenses (24) 32,897, ,669 Result from operating activities -33,241, ,701 Result from investments in associated companies (5) -294, Other interest and similar income (26) 882, Depreciation on financial assets and on marketable securities (12, 23) 727, ,094 Interest and similar expense (26) 720, Financial result -860, Result from ordinary activities -34,102, ,531 Taxes on income (16) -5,365, ,242 Net loss pre minority share of result -28,736, ,289 Result attributable to minority shareholders (14) -68, Net loss after minority share of result -28,805, ,180 Loss carried forward from the prior year (13) -2,627, Group accumulated deficit -31,433, ,628 Earnings per share undiluted (28) -1, Earnings per share diluted (28) -1,

51 Equity Capital GFT Technologies Aktiengesellschaft, St. Georgen Changes of the Equity Capital Entries of GFT Group as of December 31, 2002 Changes of the Equity Capital Entries of GFT Group as of December 31, 2002 Subscribed Capital Statutory Other Adjustment Group Total capital reserve reserve revenue item-currency retained reserves conversion earnings As of 01/01/ ,500, ,702, , , , ,226, ,116, Application of profits as per annual general meeting 22/05/2001 1,674, ,674, Execution of capital increases by contribution in kind as of 04/07/ , ,851, ,096, Meanwhile clarified cash payment out of acquisition of GFT Solutions GmbH -2,158, ,158, Currency changes -23, , Net loss after other shareholders' share or net earnings -2,179, ,179, As of 31/12/ ,744, ,395, , ,343, , ,627, ,851, Execution of capital increase by contribution in kind as of 20/02/2002 6,581, ,951, ,532, Currency changes 143, , Net loss after other shareholders' share or net earnings -28,805, ,805, As of 31/12/ ,325, ,346, , ,343, , ,433, ,722,776.70

52 GFT Technologies Aktiengesellschaft, St. Georgen Group Cash-flow Statement as of January 1 until December 31, 2002 Cash-flow Statements (k) Net income pre minority share of result -28,736, ,289 Depreciation on tangible and intangible assets 23,623, ,256 Changes in accruals 3,032, Other non-cash expenses 175, Result from consolidation at equity 294, Profit/Loss on disposals of fixed assets -68, Changes in trades receivables 17,035, ,890 Changes in other assets 7,727, ,822 Changes in trade liabilities and other liabilities and accruals -4,914, ,964 Cash-flows from operating activities 18,168, ,979 Paid-in on disposals of tangible fixed assets 289, Payments related to investments in tangible fixed assets ,399 Paid-in on disposals of intangible fixed assets 145, Payments related to investments in intangible fixed assets -551, ,217 Payments related to investments in financial assets -282 Acquisition of subsidiaries net of liquid assets -3, ,878 Sale of subsidiaries net of liquid assets -49, Receipts in connection with the short-term financial management of cash investments 1,422, ,383 Payments in connection with the short-term financial management of cash investments -2,051, ,319 Cash-flows from investing activities -2,172, ,095 Cash proceeds from issuing bonds/loans 561, Payments related to repayments of bonds/loans -2,294, ,703 Other changes in shareholders' equity and minority interest 162, Cash-flows from financing activities -1,570, ,932 Change in cash funds from cash relevant transaction 14,425, ,142 Cash funds at the beginning of period 20,510, ,368 Cash funds at the end of period 34,935, ,510

53 Notes GFT Technologies Aktiengesellschaft, St. Georgen Notes on the Group Financial Statements as of December 31, 2002 Fundamentals and methods 1. Fundamentals for the group financial statements The group financial statements of the GFT Group for the 2002 financial year were prepared in 3 according to standard principles of account balancing and valuation. The International Financial Reporting Standards ( IFRS ) formerly International Accounting Standards (IAS) of the International Accounting Standards Board ( IASB ) prevailing on the date of the balance sheet as well as the interpretations of the International Financial Reporting Interpretations Committee ( SIC ) were applied. The new or revised standards, which were applied from January 1, 2001, had no significant effect on the reporting of the group s assets, financial and earnings situation. The prerequisites for exemption from the requirement to draw up a group financial statement according to German accounting rules have been met as per 292a German Commercial Code (Handelsgesetzbuch, hereafter HGB ). The group financial statements were approved for publication by the Executive Board on March 11, 2003 (IAS 10). 2. Consolidated group, comparability with the previous year Consolidated group In addition to GFT Technologies Aktiengesellschaft ( GFT AG ), the following subsidiaries were included in the group financial statements as of December 31, 2002 (fully consolidated): GFT Technologies (Schweiz) AG, Wallisellen, Switzerland GFT Systems GmbH, Ilmenau GFT Solutions GmbH, Hamburg GFT Websolutions Kft, Budapest, Hungary GFT TransForce GmbH, Stuttgart Pixel Factory Inc., New York, NY, USA GFT Technologies GmbH, Vienna, Austria GFT UK Limited, London, Great Britain GFT Financial Solutions GmbH, Eschborn GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain emagine gmbh, Eschborn (first-time inclusion) Emagine Servicios de Consultoría e Informática, S.A., Sant Cugat del Vallés, Spain (first-time inclusion). The shares (51.0 %) in the subsidiary ACS Systems S.A.R.L., Valbonne, France, were sold on December 30, 2002; this company left the consolidated group at this time. ACS Systems S.A.R.L. made a contribution of 0.3% to the group s revenues in the 2002 financial year; its withdrawal had no significant impact on the group s assets, financial and earnings situation. Emagine Solutions Inc., Wilmington, Delaware/USA, also left the consolidated group in the 2002 financial year. It had already discontinued its operations in December 2001 and was dissolved in 2002; its withdrawal had no significant impact on the group s assets, financial and earnings situation.

54 In neither case was a business division relinquished as per IAS 35. The first-time inclusion in the consolidated group in 2002 of emagine gmbh, Eschborn, and Emagine Servicios de Consultoría e Informática, S.A., Sant Cugat del Vallés does not affect comparability with the previous year. Both companies together contributed 0.0% of the group s revenues in the 2002 financial year; their share of the group s assets on December 31, 2002 amounts to 0.5 %. Comparability with the previous year The following subsidiaries of major significance for the GFT Group were included in the group financial statements for the first time as of their date of acquisition, August 1, 2001 ( Emagine Group ): GFT Financial Solutions GmbH, Eschborn GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain Emagine Solutions Inc., Wilmington, Delaware, USA. Although the first-time consolidation of these companies in 2001 before the end of this period does not affect comparability of the balance sheet figures as of December 31, 2002 with the previous year, it does affect comparability of the figures in the 2002 profit and loss statement and the 2002 cash-flow statement with the corresponding figures for the previous year. The Emagine Group has been included in the calculations for this period in the following manner: Annual financial statement for the period 01/01-31/12/ months Annual financial statement for the period from 01/01-31/12/ months To show the effect of the incorporation of the Emagine Group, several key figures from the profit and loss statement are shown with and without the incorporation of the Emagine Group in the table below. 3. Consolidation methods The year-end financial statements of the companies included in the group, which were drawn up according to standard IFRS regulations and audited by independent auditors, provide the basis for the group financial statements. First-time consolidations were Effect of the incorporation of the Emagine Group in 4(k) 01/01-31/12/ /01-31/12/ /01-31/12/ /01-31/12/2001 with Emagine- with Emagine- without without Group 12 months Group 5 months Emagine Group Emagine Group ( New Company Group ) ( New Company Group ) ( Old Company Group ) ( Old Company Group ) Revenues 155, ,861 63,640 85,373 Material expenditure 67,576 57,371 21,805 22,078 Personnel expenditure 73,357 65,062 38,670 46,519 Result of operating activities -33,241-3,701-31,243-4,516 Financial result , Result of ordinary activities -34,102-4,531-32,751-5,500 Net loss for the year -28,737-2,289-27,368-3,318 Earnings per share

55 Notes carried out as per IFRS regulations at the moment of acquisition, deconsolidation on the relevant dates of sale. The relevant date for the companies included in the group financial statements corresponds to the relevant date of the group financial statements (December 31). Capital consolidation for the subsidiaries which are included is carried out using the acquisition method (book value method). The costs of acquisition of the acquired interests are set off against the book value of the subsidiary's pro rata equity capital on the date of acquisition. Discrepant amounts which later became apparent were incorporated in the group financial statements as goodwill (due to a lack of significant deviations between the attributable figures for assets and debts and those which are shown). These are written off in accordance with IAS 22. The profit and loss account items for the post-acquisition period are incorporated in the group financial statements pro rata temporis. In accordance with IAS 22, the stock price of the GFT share on the day of the exchange or a minimum price contractually guaranteed for the buyer is taken as a basis for acquisition costs for shares in subsidiaries acquired by transferring GFT shares. This has a substantial influence on the goodwill resulting from the capital consolidation of the shares acquired in 2001 in the Emagine Group s companies and in 2000 in GFT Solutions GmbH and GFT Pixelfactory GmbH. Internal revenues, expenses and income as well as all accounts receivable and accounts payable between the consolidated companies were eliminated. Assets contained in the fixed assets and the inventory due to internal trade were adjusted in line with the interim results. For consolidation processes affecting net income, the consequences for earnings on taxes are taken into consideration and deferred taxes are estimated. 4. Currency conversion The concept of functional currency is applied when converting financial statements of the included companies which were drawn up in foreign currencies. Since the foreign companies operate their businesses with economic independence, their assets and debts as per the balance sheet date price and their expenditure and income are converted into average annual prices as per IAS 21. The difference thus arising is applied to the equity capital in a manner not affecting net income and shown there separately. In accordance with IAS 21, monetary items are valued in foreign currency at the current price at the end of the year in the individual accounts drawn up by consolidated companies in local currency; exchange gains and losses thus resulting have an immediate affect on net income. 5. Associated companies / equity method The valuation of the holdings in associated companies (equity method) was carried out using the book value method; capital was offset at the moment of acquisition. The valuation carried out in the associated companies year-end financial statements, which were prepared using the equity method, was in accordance with local law for these companies. As in the previous year, the group financial statements as of December 31, 2002 consider CScout Inc., New York, USA, as an affiliated company. In the 2001 financial year GFT AG acquired 25.1 % of the shares in this company; the discrepancy between the acquisition costs of the participation and this associated

56 company's pro rata equity capital on the date of the acquisition amounted to 3(k) 277. In the 2002 financial year the pro rata result including the scheduled depreciation of the discrepancy was 3(k) -77; in addition, the participation in CScout Inc. was written off by 3(k) 217 to zero due to its decline in economic value. 6. Summary of principal accounting and valuation methods Intangible assets The balancing and valuation of intangible assets is as per IAS 38. Thus acquired intangible assets are valued at acquisition costs, less the scheduled linear depreciations. The GFT Group s intangible assets include computer software and acquired goodwill. Software is usually allotted an operating life of three years. After investments by acquisition have been committed long-term, goodwill resulting from consolidation measures is subject to linear amortization over a period of ten years, in keeping with IAS 22. Goodwill not resulting from consolidation measures is mainly written off in a linear fashion over five years, in lesser cases over 15. Amortization begins at the moment of acquisition. Research costs are recorded as expenses the moment they are incurred. If the expected future economic benefit of internal developments cannot reliably be estimated, then developmental costs are recorded as expenses in the period in which they are incurred; thus far, all development costs have been recorded as expenses. Tangible fixed assets The tangible assets are reported at acquisition cost, less scheduled wear-and-tear depreciations. In case of movable tangible assets, the depreciations are effected in a linear fashion over a service life period of three to thirteen years. The German companies use in the year of acquisition the simplification rule stated in R 44 para. 2 of the German Income Tax Regulations ( EstR ) 2001 when referring to movable assets and liabilities as part of the fixed assets. Low-value assets are fully depreciated in the year of acquisition and their retirement is also assumed in the year of acquisition. Repair work and maintenance costs are recorded as expenses on the dates of their occurrence. If fixed assets are leased and the relevant group company has economic ownership of these ( finance lease ), these will be capitalized at the current market rate attributable at the beginning of the lease or at the lesser present value for the lease installments as per IAS 17 and will be depreciated as per their service life period; the corresponding payment obligations resulting for future lease installments are carried as liabilities. If the lessor is the economic owner, the lease installments are recorded as expenses in a linear fashion for the term of the lease ( operating lease ). If non-scheduled depreciations occur in the fixed assets, including the intangible assets, then in keeping with IAS 36 a decision will be made on the basis of the future payment flows whether the assets concerned are to be depreciated at their market or current values. Reinstatements of original values relating to fixed (and current) assets are carried out if there are no longer any reasons for non-scheduled depreciations. Financial assets Other participations are estimated at acquisition costs, participations in associated companies at equity, in each case observing the principle of the lower of cost or market.

57 Notes Work and goods in progress Work in progress is handled as per IAS 11 according to the realization of order revenues as per the completion status of the work and related job costs. Profits are thus realized as per the services rendered as of the relevant balance sheet date; a project s completion status is determined on the basis of the employees /subcontractors project times. Losses resulting from projects are recorded immediately as expenses. Goods are valued at purchase cost or lower attributable values on the date of the relevant balance sheet. Receivables and securities Receivables are reported in the balance sheet at face value; discernible individual risks are taken into consideration through value adjustments. Securities are assessed at the time of their initial accounting at their acquisition costs, subsequently at their attributable current values in accordance with IAS 39. All income and expenditure due to short-term finance investments are recorded in terms of their effect on the current-period result. of the countries in which the relevant company is active. The calculation of deferred taxes on income as per IAS 12 includes the calculation of deferred taxation relating to different valuations for assets and liabilities in the commercial balance sheet (IFRS) and tax balance sheet, relating to consolidation processes and to realizable tax losses brought forward (balance sheet liability method). Deferred tax assets for deductible temporary differences and for tax losses brought forward which exceed temporary differences subject to taxation are shown only insofar as it can be assumed with sufficient probability that the respective company will achieve enough taxable income to realize the benefit in question. Assets and liabilities relating to deferred taxes are shown separately in the balance sheet. The deferred taxes are assessed as per the tax rates applicable on the balance sheet date or the tax rates which have been made legally valid for the future. For operations within Germany, mixed tax rates are reported which are particular to each company; these consider the corporate income tax and trade tax implications, which are between 36.0 % and 41.4 % (previous year between 36.8 % and 40.1 %). Accruals The pension reserves are determined according to the projected unit credit method in accordance with IAS 19; these are serviceorientated plans. The other receivables take into consideration all discernible commitments to third parties as per IAS 37. The levels of the receivables are reported in accordance with the probable amounts. Taxes on income The actual taxes on income are determined in accordance with the tax law stipulations Other assets and liabilities, costs of debts The other assets and liabilities are shown in the balance sheet at face value or at repayment value. Costs of debts are recorded as expenditure in the period in which they arise, without taking the use of the borrowed capital into consideration. Use of estimates The preparation of financial statements in accordance with the International Financial Reporting Standards requires estimates and assumptions from the management which

58 affect the amounts of the assets and debts shown in the balance sheet, the earnings and expenses, the contingent liabilities and also the manner in which these are shown. The actual results may deviate from these estimates. Details of balance sheet and profit and loss statement 8. Fixed assets The development of the GFT Group s fixed assets is set out in the table below. 7. Explanations of the balancing, valuation and consolidation methods which deviate from German Commercial Law. In keeping with IAS 12, taxation has been deferred with respect to losses brought forward, thus departing from HGB regulations. The company pension reserves are determined according to IAS 19 using the projected unit credit method, and do not conform to HGB regulations. Likewise, income and expenses from project business was realized according IAS 11, and not according to HGB regulations. The additions resulting from the change in the consolidated group refer to emagine gmbh, Eschborn, which was acquired in The asset disposals resulting from the change in the consolidated group are due to the deconsolidation of ACS Systems S.A.R.L., Valbonne, France, on the date of sale December 30, The goodwill amortization to the value of 3(k) 2,680 is based on the following facts: On August 1, 2001, GFT AG acquired all of Changes in Group Fixed Assets At cost Balance as of Additions due to Additions Disposals Disposals due to Balance as of 01/01/2002 the change to the the change to the 31/12/2002 consolidates group consolidated group Intangible Assets Licences, industrial property rights and similar rights 4,412, , , , ,683, Goodwill 57,360, , ,680, , ,530, ,773, , , ,947, , ,213, Tangible Fixed Assets Other assets, plant and equipment 19,535, ,372, ,505, , ,330, Financial Assets Investments in associated companies 317, , Other investments 1,127, ,127, ,444, ,444, ,753, , ,924, ,453, , ,988,839.82

59 Notes the shares in GFT Financial Solutions GmbH, Eschborn and in GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain (including subsidiaries: Emagine Group ). These shares were contributed within the framework of an increase in capital in return for a contribution in kind, whilst utilizing a part of the authorized capital and with an exclusive subscription right for the contributing company; 6,581,487 individual share certificates were issued in the process. In accordance with the capital contribution and takeover agreement between GFT AG and the contributing company relating to the contribution of the Emagine Group, the contributing company guaranteed that the Emagine Group has certain capital and operating funds as of the contribution date. For this reason, the contributing company was still obliged to make payments; the level of these was not conclusively determined until the preparation of the group annual financial statements as of December 31, In the group annual financial statements as of December 31, 2001, this claim was capitalized to the value of m.; its real value is m. This amount was collected in the second quarter of The discrepancy of m. is accounted for by the reduction in the goodwill of GFT Financial Solutions GmbH, Eschborn, relative to December 31, Depreciation Book value Balance as of Depreciation Disposals Disposals due to Balance as of Balance as of Balance as of 01/01/2002 of the the change to the 31/12/ /12/ /12/2001 financial year consolidated group ,680, , , , ,393, ,290, ,732, ,966, ,817, , ,737, ,792, ,393, ,647, ,718, , , ,131, ,082, ,125, ,566, ,352, ,231, , ,642, ,687, ,969, , , , , , , ,127, , , , ,444, , ,810, ,917, ,406, , ,219, ,769, ,942,387.05

60 3(k) 26,792 of the goodwill reported as of December 31, 2002 (previous year 3(k) 47,536) is due to capital consolidation measures and has the following makeup: Goodwill due to Capital Consolidation Measures 31/12/ /12/2001 4(k) 4(k) GFT Iberia Solutions S.A., Sant Cugat del Vallés 17,362 19,385 GFT Solutions GmbH, Hamburg 6,287 14,554 GFT Financial Solutions GmbH, Eschborn 2,682 5,688 GFT Systems GmbH, Ilmenau Unit former company GFT Pixelfactory GmbH 7,243 Remaining subsidiaries ,792 47,536 The other intangible fixed assets relate to software. Goodwill from individual accounts for GFT Iberia Solutions, S.A. 778 Goodwill from individual accounts for GFT AG 80 26,792 48,394 The participations in associated companies shown in the balance sheet relate to the participation in CScout Inc., the other participations shown relate to the participation in Plumb Design Inc., both of New York, USA. Both participations were written off to zero as of December 31, 2002 due to their decline in economic valule. 9. Share ownership As of December 31, 2002 GFT AG held direct and indirect shares in the following companies: Investment Holdings of GFT AG Name Headquarters Share of Equity capital Result for the capital 31/12/2002 financial year Direct investments GFT Technologies (Schweiz) AG Wallisellen, 99,0 % CHF 1,642, CHF 621, Switzerland GFT Systems GmbH Ilmenau 81,0 % 2 1,730, ,045,60 GFT Solutions GmbH Hamburg 100 % 3 777, ,487, GFT Websolutions Kft. Budapest 100 % HUF 45,504, HUF 21,546, GFT TransForce GmbH Stuttgart 100 % 2-112, , GFT Technologies GmbH Vienna 100 % 2 72, , GFT UK Limited London 100 % GBP -470, GBP -187, Pixel Factory Inc. New York 100 % USD -391, USD -69, GFT Financial Solutions GmbH Eschborn 100 % 2 10,355, , GFT Iberia Solutions, S.A. Sant Cugat del 100 % 2 5,221, , Vallés, Spain emagine gmbh Eschborn 100 % 3 20, , CScout Inc. New York 25,1 % USD -22, USD -44, Plumb Design Inc. New York 18,7 % USD 289, USD -1,349, Indirect participations Emagine Servicios de Consultoría Sant Cugat del 100,0 % 3 60, e Informática, S.A. Vallés, Spain

61 Notes The 51.0 % indirect participation in ACS Systems S.A.R.L., Valbonne, France, reported the previous year was sold on December 30, 2002; this led to a disposal loss of 3(k) 210. The other indirect participation reported the previous year, in Emagine Solutions Inc., Wilmington, Delaware/USA, (100 %) was terminated due to the dissolution of this company during the 2002 financial year. 10. Inventories and receivables The goods to hand on the balance sheet date relate to hardware and software envisaged for sale as part of projects. Of the receivables, a partial amount of 3(k) 69 (previous year 3(k) 0) is due after more than one year; the remaining receivables are due in the short-term. Necessary individual value adjustments on the basis of the probable non-payment risk have been earmarked as 3(k) 1,485 (previous year 3(k) 836). The receivables include accounts receivable from realized revenues as per IAS 11 from projects in progress as of the balance sheet date, amounting to 3(k) 5,636 (previous year 3(k) 8,961), less advance payments received in this connection, amounting to 3(k) 4,105 (previous year 3(k) 5,551). 11. Other receivables and current assets The other receivables and current assets are as follows: Other Receivables and Current Assets 31/12/ /12/2001 4(k) 4(k) Receivables due to reimbursement of restructuring costs 3,500 Security deposits Accruals Accounts receivable loans Receivables from sale of share in SECUDE Sicherheitstechnologie Informationssysteme GmbH 62 Loan receivables from ACS Systems S.A.R.L. 50 Receivables from grants Loans to employees Receivables from Emagine Group capital contribution agreement 12,000 Receivables from repayment of losses of Emagine Solutions Inc. 1,528 Employer's pension liability insurance assets 340 Other ,702 15,044 - thereof with a remaining term of more than one year: In accordance with the various agreements relating to the takeover of the Emagine Group on August 1, 2001, there are claims against the contributing company for the reimbursement of certain restructuring costs m. will be reimbursed to the GFT Group for 2002.

62 12. Securities and liquid assets The securities held by the GFT Group as of December 31, 2002 consist of shares in equity, investment and money market funds and shares in an international IT company. A depreciation value of 3(k) 175 (previous year 3(k) 580) resulted from an evaluation at the attributable current market value as per IAS 39. The liquid assets include cash (3(k) 14, previous year 3(k) 12) and short-term liquid deposits held by banks (3(k) 34,922; previous year 3(k) 20,498). 13. Equity capital In respect of equity capital development during the 2001 and 2002 financial years, we refer to the separate analysis on page 49. As of December 31, 2002, the share capital, amounting to 3 26,325,946.00, consists of 26,325,946 non-par value individual share certificates; of these, 6,581,487 shares were created in the 2002 financial year from authorized capital. The shares are made out in the name of the holder and all confer equal rights. In the 2002 financial year the share capital increased from 3 19,744, to 3 26,325, through the entry in the German Commercial Register on February 20, 2002 of the implementation of the capital increases with non-cash capital contributions made in the 2001 financial year (non-cash capital contributions of shares in GFT Financial Solutions GmbH, Eschborn, and in GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain). For the same reason, 3 43,951, was contributed to the capital reserves in the 2002 financial year. The group's balance sheet loss as of December 31, 2002 contains a carry forward from the previous year amounting to 3(k) -2,628 (previous year 3(k) -448). On August 1, 2001, GFT AG held all of the shares in GFT Financial Solutions GmbH, Eschborn and in GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain (including subsidiaries: Emagine Group ). These shares were contributed within the framework of a capital increase with non-cash capital contributions, whilst utilizing a part of the authorized capital at that time and with an exclusive subscription right for the contributing company; 6,581,487 individual share certificates were issued in the process. Since the implementation of the share capital increase of 3 6,581, was not registered in the German Commercial Register until the 2002 financial year, the capital contributions paid as of December 31, 2001 are shown in the special item Capital contributions paid to carry out the resolved increase in capital (3 50,532,657.19). The special item showed the following development: Special Item: Capital Contributions to carry out the Resolved Increase in Capital 4 As of 31/12/ ,096, Implementation of the capital increases with contributions in kind on 04/07/ ,096, Resolutions to utilize authorized capital for capital increases and contributions in kind in August ,532, As of 31/12/ ,532, Implementation of the capital increase with non-cash capital contributions on 20/02/ ,532, As of 31/12/ There is no transfer to the statutory reserves because, on the one hand, there is no annual net profit and, on the other, the statutory reserve fund as per 150 para. 2 German Company Law (Aktiengesetz, hereafter: AktG ) is already more than 10 % of the share capital due to the high capital reserves as per 272 para. 2 no. 1 HGB.

63 Notes Authorized capital Of the capital authorized by the resolution passed at the annual general meeting held on May 16, 2000, 3 2,924, was still available as of December 31, This authorized capital was cancelled by the shareholders meeting on May 29, The Executive Board is now authorized, on the basis of the resolution passed at the annual general meeting held on May 29, 2002, with the consent of the Supervisory Board in the period until May 26, 2007 to increase the share capital by issuing new shares in return for cash contributions or non-cash capital contributions, once or several times, by up to 3 7,500,000.00, by issuing up to 7,500,000 new share certificates made out in the name of the holder providing dividend entitlements from the beginning of the financial year they are issued in return for cash contributions or non-cash capital contributions (Authorized Capital I/2002). The Executive Board has been authorized with the consent of the Supervisory Board to exclude the shareholders subscription right in cases of capital increases in return for non-cash capital contributions. A resolution passed at the annual general meeting held on May 29, 2002 also authorized the Executive Board with the consent of the Supervisory Board in the period until May 26, 2007 to increase the share capital by issuing new shares in return for cash contributions, once or several times, by up to 3 2,632,594.00, by issuing new share certificates made out in the name of the holder providing dividend entitlements from the beginning of the financial year they are issued in return for cash contributions (Authorized Capital II/2002). Under certain conditions, the Executive Board is authorized with the consent of the Supervisory Board to exclude the shareholders' subscription right. Non-utilized authorized capital of 3 10,132, is thus available as of December 31, Conditional capital Conditional capital as of December 31, 2002 amounts to 3 8,280, (previous year 3 780,000.00). The previous conditional capital, which resulted from the allocation of subscription rights to employees and Executive Board members as per 192 para. 2 no. 3 AktG (3 780,000.00), was renamed Conditional Capital I/1999 through a resolution passed at the annual general meeting held on May 29, The annual general meeting held on May 29, 2002 approved a conditional capital increase of up to 3 7,500, by issuing up to 7,500,000 new share certificates made out in the name of the holder providing dividend entitlements from the beginning of the financial year they are issued (Conditional Capital II/2002). The conditional capital increase has been made in order to issue shares to the holders of or creditors for warrant or convertible bonds issued by the company or a subordinate group company before May 26, 2007 on the basis of the authorization provided by the annual general meeting of May 29, 2002, where these are issued in return for cash. It will only be implemented insofar as option or conversion rights resulting from the above-mentioned bonds are exercised or conversion obligations resulting from such bonds are met. A resolution passed at the annual general meeting held on May 29, 2002 authorized the Executive Board to issue in the period until May 26, 2007, once or several times, warrant or convertible bonds with a total par value of up to 3 100m. and a maturity period of up to 20 years, or to guarantee

64 such bonds issued by subordinate companies in the group, and to provide the holders of or creditors for such bonds with option rights or conversion privileges for new shares in the company, with a pro rata share capital proportion of up to 3 7.5m. following the announcement of the precise terms for the warrant or convertible bonds. Stock options programs The special meeting of shareholders which took place on June 4/24, 1999 approved a conditional equity capital increase through an issue of up to 260,000 individual share certificates (corresponding to 780,000 individual share certificates following the 1:3 stock split of May 16, 2000, Conditional Capital I/1999) permitting subscription rights exclusively through stock options programs as well as the basic features of stock options programs to be launched by the Executive Board. The conditional capital increase will only be executed if the holders of the subscription rights issued exercise their right of subscription as per 192 para. 2 no. 3 AktG. Beneficiaries are exclusively members of the Executive Board and employees of GFT Technologies AG and of wholly owned subsidiaries who have been granted subscription rights. The subscription rights are non-transferable except in the event of death of the holder and will lapse if the subscription right holder leaves an employment relationship with a company of the GFT Group. The figures given below in respect of the stock options programs have been adjusted in line with the 1:3 stock split of May 16, 2000; the adjustment will be made de facto when the subscription right is exercised. With the authorization of the shareholders meeting of June 4, 1999 and with the consent of the Supervisory Board, on June 24/ August 25, 1999 the Executive Board approved an initial stock options program Option terms and conditions regarding the issuance of subscription rights for GFT Technologies AG This stock options program concerns subscription rights for up to 379,179 individual share certificates for the resolved conditional increase in capital of 3 780,000 (= 780,000 individual share certificates). According to this program, a subscription right authorizes the holder to acquire one individual share certificate of GFT AG at the placement price fixed within the framework of the admission to stock exchange dealing (subscription price /share). The subscription rights were acquired in the period from June 1 to 25, On fulfillment of the performance criterion the exercise of the subscription rights will take place in three exercise tranches of equal size during specific exercise phases starting from November According to the performance criterion subscription is possible if the average price of the GFT share at the time of the exercise phase exceeds the subscription price of by 40 %. Since the performance criterion was not met, it was not possible to exercise the first two exercise tranches in November 2001 and November 2002; however, they have not expired and may be exercised together with the next exercise tranche in November 2003 if the performance criterion is met. With the consent of the Supervisory Board and following its decision of May 30, 2000 the Executive Board launched a further Stock options program relating to subscription rights for up to 163,350 individual share certificates for conditional capital amounting to 3 780,000. In accordance with this program a subscription right provides an entitlement to acquire one individual GFT AG share certificate at On fulfillment of the performance criterion the subscription rights will be exercised in three exercise tranches of equal size during specific exercise phases from November 2002 onwards.

65 Notes Subscription is possible after fulfillment of the performance criterion if the average price of the GFT share at the time of the exercise phases exceeds the subscription price of by 25 %. Since the performance criterion was not met, it was not possible to exercise the first exercise tranche in November 2002; however, it has not expired and may be exercised together with the next exercise tranche in November 2003 if the performance criterion is met. Since the shares to be issued result from a conditional capital increase, the company is not encumbered by the stock options programs; nor has a contribution been made to the capital reserves. The stock options programs have not therefore had any effects on the balance sheet for the 2002 financial year. We will be following further national and international developments regarding the issue of share-based payments. The stock of issued subscription rights developed as follows up to December 31, 2002: Stock of issued Subscription Rights Subscription rights to one share each Stock options Stock options Total program 1999 program 2000 Subscription rights as of 1/1/ , ,179 newly issued subscription rights in , ,350 subscription rights that lapsed in ,152-3,150-31,302 Subscription rights as of 31/12/ , , ,227 newly issued subscription rights in subscription rights that lapsed in ,359-14,550-48,909 Subscription rights as of 31/12/ , , ,318 thereof employees 283, , ,473 thereof Executive Board 33,345 37,500 70,845 newly issued subscription rights in subscription rights that lapsed in ,704-27,600-53,304 Subscription rights as of 31/12/ , , ,014 thereof employees 257,619 80, ,169 thereof Executive Board 33,345 37,500 70,845 Minority Interests (k) 4(k) As of 01/ Additions resulting from first-time consolidations 440 Disposals resulting from deconsolidation Share in result for the financial year As of 31/ Interests of other shareholders In the 2002 financial year, interests of other shareholders changed as shown in the table aside:

66 15. Accruals for pension The company accruals for pension shown as of December 31, 2002 concern direct obligations resulting from individual commitments to active managers of two subsidiaries and to a former manager of a further subsidiary (pension recipient). The actuarial reports drawn up for the valuation are dated January 13 and 14, 2003 and February 11, 2003; the expected annuity development which was taken as a basis for the assessment amounts to 1.75 %, 1.0 % and 2.0 %, the expected salary development amounts to 2.5 %, 0.0 % und 0.0 %, and the interest rate for accounting purposes to 5.75 %, 5.5 % and 5.75 %. Assumptions regarding the average rate of fluctuation were not necessary due to the low level of persons (0.0 %). The mortality rate assumptions are based on the 1998 version of the mortality charts compiled by Dr. Klaus Heubeck. In the 2002 financial year an outcome of 3(k) 14 (previous year 3(k) -124) resulted from the changes in pension obligations. The deferred tax accruals and deferrals are attributable to the individual balance sheet items as follows: Deferred Tax Accruals and Deferrals (k) 4(k) Tax losses brought forward 7,670 4,472 Accruals for impending losses (mainly rental agreements) 2,043 Anniversary accruals Pension reserves Receivables 29 Deferred tax assets 9,941 4,640 Receivables 645 1,152 Liabilities 56 Warranty provision 146 Pension reserves 4 6 Deferred tax liabilities 795 1,214 No deferred tax assets were established for subsidiaries accumulated tax losses brought forward (3 1.7m., previous year 3 6.0m.) as a future set-off is not currently expected. 16. Taxes on income The item Taxes on income shown in the profit and loss statement relates to the following (see table aside): The accruals for taxation of 3(k) 797 (previous year 3(k) 987) refer exclusively to actual income tax liabilities. The tax claims amounting to 3(k) 1,321 (previous year 3(k) 1,054) contain actual income tax claims amounting to 3(k) 1,217 (previous year 3(k) 963), the remaining tax claims relate to other, nonincome-related taxes. Deferred tax claims and liabilities have been balanced where they refer to the same tax authority. In the balance sheet they have thus been recorded as follows (see table aside): Taxes on Income (k) 4(k) Actual tax expenditure 365 1,287 Deferred tax proceeds/deferred tax expenditure (net) -5,730-3,529 Tax proceeds -5,365-2,242 Deferred Tax Claims and Liabilities (k) 4(k) Deferred tax claims (deferred tax assets) 9,941 4,640 Deferred tax obligations (deferred tax liabilities) 795 1,214

67 Notes The transition between the applicable tax rate for the GFT Group and the German tax rate for GFT AG of 39.0 % (previous year 39.0 %) is as follows: Transition of Tax Rate (k) 4(k) Earnings before taxes -34,102-4,531 Expected tax proceeds à 39 % -13,300-1,767 Non-deductible goodwill amortization 7,004 1,603 Other non-deductible expenditure Losses for which no tax claims can be shown in the balance sheet 165 1,132 Tax rate differences Tax losses for individual companies which did not appear in the group -2,874 Other tax expenses Effective tax proceeds (previous year expenditure) -5,365-2,242 Effective tax rate 15.7 % 49.5 % 17. Other accruals The other accruals developed as follows in the 2002 financial year: The asset retirements resulting from the change in the consolidated group are due to the deconsolidation of ACS Systems S.A.R.L., Valbonne, France, on the date of sale December 31, Other accruals As of Consumption Transfer Accessions As of 01/01/2002 Auflösung (A) from change in 31/12/2002 consolidated group 4(k) 4(k) 4(k) 4(k) 4(k) Employee provisions/bonuses/ 6,203 5,127 5,883 6,480 anniversaries/settlements 479 (A) Anticipated losses due to rental agreements 5,169 5,169 Outstanding purchase invoices 2,407 2,372 2,813 2,843 5 (A) Credit notes not yet issued 1, , (A) Vacation obligations 1,511 1, Warranty (A) Social insurance contributions against occupational accidents 5 (A) Other 2,695 1,333 1, ,379 1,040 (A) 14,700 11,356 16, ,341 1,649 (A)

68 18. Liabilities The remaining terms and collateral provisions for liabilities are based on the following outline: Liabilities Due within a period of Total amount Thereof secured by Nature and type up to 1 year more than 5 years 31/12/2002 rights of lien of the security and similar rights Long-term financial liabilities 0.00 (pr. yr. 3(k) 0) 0.00 (pr. yr. 3(k) 0) 1, (pr. yr. 3(k) 2) 1, (pr. yr. 3(k) 2) Assignments as security motor vehicles Short-term financial liabilities 1,282, (pr. yr. 3(k) 3,016) 0.00 (pr. yr. 3(k) 0) 1,282, (pr. yr. 3(k) 3,016) 26, (pr. yr. 3(k) 39) Assignments as security motor vehicles Trade accounts payable 13,586, (pr. yr. 3(k) 17,445) 0.00 (pr. yr. 3(k) 0) 13,586, (pr. yr. 3(k) 17,445) Ordinary retentions of title Tax liabilities 3,735, (pr. yr. 3(k) 5,892) 0.00 (pr. yr. 3(k) 0) 3,735, (pr. yr. 3(k) 5,892) Other short-term liabilities 6,313, (pr. yr. 3(k) 5,368) 0.00 (pr. yr. 3(k) 0) 6,313, (pr. yr. 3(k) 5,368) - thereof for social security ,26 (pr. yr. 3(k) 1,136) 24,917, (pr. yr. 3(k) 31,721) 0.00 (pr. yr. 3(k) 0) 24,919, (pr. yr. 3(k) 31,723) The financial liabilities exclusively relate to amounts owed to banks. Other short-term obligations are made up as follows: Other Short-term Liabilities 31/12/ /12/2001 4(k) 4(k) Payments received on account of orders 3, Amounts due as social security contributions 1,409 1,136 Deferred items (mainly maintenance revenues) Credit receivables Severe disablement contribution Loans to employees Balance of purchase price for shares in affiliated companies (GFT Solutions GmbH) 2,158 Other ,313 5,368

69 Notes 19. Revenues Revenues by Type and Region (k) 4(k) By area of activity Consulting and software development 87, ,147 Freelance Agency 51,331 30,815 Sale of software products 2,214 2,537 Maintenance proceeds 8,090 2,943 Other revenues 6,509 2, , ,861 By region * Germany 122, ,311 Foreign 32,974 31, , ,861 * According to location of client s head office 20. Segmental reporting Segmental reporting for the GFT Group is carried out in accordance with IAS 14, whereby the business spheres Frontend, Backend, Products and Freelance Agency are defined as primary report segments. The Freelance Agency segment was introduced for the first time in the 2001 financial year due to the inclusion of the Emagine Group; the Freelance Agency revenues and results for 2002 are for twelve months, whilst those for 2001 are for five months (see 2). Frontend is considered to include graphical user interfaces (as sub-concepts of web-based solutions) that facilitate presentations, interaction, navigation and communication for the user, while Backend refers to established operational systems that support existing business processes. The Products segment covers the business area of internal software product development and distribution. In the Freelance Agency segment the placing of freelance IT specialists is summarized. The reporting which relates to the business divisions is shown on page 76. In addition to segment data by field of business, oriented by company structure, the following tables contain regional data in accordance with IAS 14 (secondary information). Regional Data in accordance with IAS 14 in 4m External revenues Book value for segmental assets Investments in tangible fixed for group* assets and intangible assets Germany Spain Switzerland Great Britain Other foreign countries Total * According to location of client s head office

70 21. Other operating income Other Operating Income This item includes: (k) 4(k) Reimbursement of restructuring expenses 3,500 Reversal of accruals 1, Payments in kind/private vehicle use employees Income from previous year s legal disputes Profits from fixed asset retirements Public subsidies Income from reinstated depreciations: receivable against SECUDE Sicherheitstechnologie Informationssysteme GmbH 187 Brokerage and placement income Income from exchange differences Repayment of losses of Emagine Solutions Inc. 1,528 Income from sale of Min-Oil 230 Income from sale of SECUDE Sicherheitstechnologie Informationssysteme GmbH 200 Other ,924 4,288 Like the repayment of losses of Emagine Solutions Inc. reported the previous year, the reimbursement of restructuring expenses is associated with the contribution of the Emagine Group as of August 1, 2001 (see 11). The public subsidies consist of grants funded by the German government and federal states to support particular projects and also by local sponsor companies in Spain. Where they were provided as percentages of accrued costs, they are recorded in accordance with IAS 20 as income in the period of subsidization. Where grants were received for investments made, these were assumed to affect net income for the service life of the investment. The other operating income includes income attributable to another financial year which amounts to 3(k) 2,763 (previous year 3(k) 923). This mainly relates to the reversal of accruals (3(k) 1,649; previous year 3(k) 91), income from the previous year's legal disputes (3(k) 566; previous year 3(k) 423) and profits from fixed asset retirements (3(k) 202; previous year 3(k) 17). 22. Material expenditure, personnel expenditure Apart from expenditure on software and hardware resold during projects (3(k) 1,363; previous year 3(k) 1,220), the material expenditure is almost entirely attributable to expenditure for freelance employees (consultants, software developers) and subcontractors, including the expenses associated with the Freelance Agency s revenues. The personnel expenditure for the 2002 financial year contains expenses associated with the cutback in the number of employees; these relate to settlements and job layoffs to the value of 3(k) 4,682. The wages and salaries do not contain any amounts not relating to the period under review (previous year 3(k) 181). The expenditure on old-age pension schemes amounted to 3(k) 469 (previous year 3(k) 779).

71 Notes 23. Depreciation Depreciations of tangible and intangible fixed assets include goodwill amortization resulting from consolidation measures amounting to 3(k) 17,959 (previous year 3(k) 4,109). Of this, 3(k) 5,361 (previous year 3(k) 4,109) is attributable to scheduled amortization and 3(k) 12,598 (previous year 3(k) 0) to nonscheduled amortization due to declines in economic value. The goodwill of GFT Solutions GmbH, Hamburg, was subject to a 50 % nonscheduled amortization (3(k) 6,287) and the segment for the former company GFT Pixelfactory GmbH to a 100 % non-scheduled amortization (3(k) 6,311). Depreciations of tangible and intangible fixed assets also include non-scheduled amortization due to declines in economic value relating to goodwill which did not result from consolidation measures amounting to 3(k) 659 (previous year 3(k) 0). The depreciations of financial assets and securities relating to current assets contain non-scheduled depreciations relating to the participation in Plumb Design Inc., New York (3(k) 553; previous year 3(k) 514) and to securities relating to current assets (3(k) 175; previous year 3(k) 580). The other operating expenses are made up of: 24. Other operating expenses The other operating expenses contain amounts from other periods amounting to 3(k) 501 in 2002 and 3(k) 184 in 2001 as stated in the table below. 25. Research and development outlays In the 2002 financial year, a total of 3(k) 4,893 was recorded as an expense for research and development outlays (previous year 3(k) 2,675). The group summarizes under research and development expenditure on developing new technologies (3(k) 2,961) and expenditure on qualifying employees for new areas of activity for the group (3(k) 1,932). 26. Interest income and expenditure Interest income mainly resulted from fixedterm deposits, fixed yield securities and other bank interest. Interest expenditure mainly relates to bank interest for short-term financial obligations. Further details 27. Cash-flow statement The GFT Group's cash-flow statement for the 2002 financial year is shown on page 50. The supplementary information as per IAS 7 is as follows: (k) 4(k) Operating expenses 9,589 7,224 Distribution expenses 8,059 9,765 Administrative expenses 7,319 6,867 Expenses due to vacant leased premises 5,601 Valuation allowances and losses of receivables outstanding 1, Reimbursement of losses of Emagine Solutions Inc. 367 Loss from sale of ACS Systems S.A.R.L. 210 Exchange losses Disposal value SECUDE Sicherheitstechnologie Informationssysteme GmbH 402 Other operating expenses ,898 25,669 The funds on which the cash-flow statement is based consist of liquid assets (bank cash holdings and deposits); these funds correspond to the balance sheet item of the same name. The GFT Group may only dispose of deposits held by banks amounting to 3(k) 2,556 with the express approval of the relevant bank. The cash-flow resulting from taxes on income for the 2002 financial year amounts to 3(k) -553 (net pay-out; previous year 3(k) -4,591); like the cash flow resulting

72 from interest, it is included in the cash-flow resulting from ongoing business activities. Interest paid during the 2002 financial year amounted to 3(k) 718 (previous year 3(k) 454), deposits of interest income to 3(k) 841 (previous year 3(k) 643). The following table provides information relating to the company acquisitions in 2002: Company Acquisitions Purchase price Cash proportion of Acquired cash Other Acquired purchase price acquired assets liabilities 4(k) % 4(k) 4(k) 4(k) Acquired 2002 Included companies thereof Current assets 0 The following table provides information relating to the sale of companies in 2002: Sale of Companies Sale price Cash proportion Cash disposals Other asset Disposals of purchase price disposals of liabilities 4(k) % 4(k) 4(k) 4(k) Sale 2002 Included companies thereof Fixed assets 136 Current assets 130 Accruals 14 Liabilities 156

73 Notes 28. Earnings per share Earnings per share as per IAS 33 for the GFT Group are shown in the following table: Earnings per Share as per IAS Undiluted earnings per share as per IAS period result allowed for -28,805,023-2,179,728 - no. of ordinary shares allowed for 26,325,946 22,503,274 Diluted earnings per share as per IAS period result allowed for -28,805,023-2,179,728 - no. of ordinary shares allowed for 26,325,946 22,503,274 GFT AG s stock option programs may create potential diluting ordinary shares. As of December 31, 2002, it is not necessary to calculate the diluted earnings per share, since as of the balance sheet date none of the stated criteria for the exercise of the subscription rights has been met (see also section 13). The earnings per share as per DVFA/SG amount to: Earnings per Share as per the DVFA/SG method Undiluted earnings per share as per DVFA/SG Diluted earnings per share as per DVFA/SG Undiluted earnings per share as per DVFA/SG prior to goodwill amortization resulting from consolidation measures Diluted earnings per share as per DVFA/SG prior to goodwill amortization resulting from consolidation measures Contingencies The GFT Group may only dispose of deposits held by banks amounting to 3(k) 2,556 with the express approval of the relevant bank.

74 30. Other financial obligations Other Financial Obligations (k) 4(k) Order commitment for consulting services Obligations resulting from rental, leasing and licensing agreements: ,897 7, ,766 19, onwards (excluding obligations unlimited in time) 5,566 1,562 20,229 28,260 Annual obligations due to open-ended rental agreements 1,709 1, Relationships with affiliated companies and persons Since February 20, 2002, Deutsche Bank AG, including its subsidiary ARGFRAN Beteiligungs Aktiengesellschaft, both of Frankfurt am Main, holds % of the shares in GFT AG % of the share ownership arose through ARGFRAN Beteiligungs Aktiengesellschaft s contribution of the Emagine Group in 2001 (see 13). The GFT Group obtained turnover of m. (previous year m.) with companies of the Deutsche Bank group in the 2002 financial year; the services rendered were charged for in accordance with the normal market terms. Deutsche Post ebusiness GmbH (formerly Deutsche Post Beteiligungen GmbH), Bonn, holds 12 % (to February 20, %) of the shares in GFT AG. The GFT Group obtained turnover of m. (previous year m.) with companies of the Deutsche Post group in the 2002 financial year; the services rendered were charged for in accordance with the normal market terms. The pre-ipo shareholders are a group of affiliated persons; they are the shareholders who held shares in the company before the initial public offering in June The pre IPO shareholders also include the Executive Board members Mr. Ulrich Dietz and Dr. Markus Kerber and the authorized clerk Ms. Maria Dietz. Mr. Ulrich Dietz and Ms. Maria Dietz notified the company that on April 1, 2002 they held respectively % and 9.67 % of the voting rights for GFT Technologies AG. On December 31, 2002 Mr. Ulrich Dietz holds % of the GFT shares, whilst Dr. Markus Kerber holds 4.39 % of the GFT shares on the same cut-off date. Apart from the employment relationships with the three above-mentioned persons, in the 2002 financial year there were also current clearing accounts subject to interest at a rate of 6.0 % p.a. These were due in the short-term and were not secured. On December 31, 2002 these clearing accounts contained amounts due to pre-ipo shareholders to the value of 3(k) 47 (as of December 31, (k) 9). Until April 16, 2002 the Chief Executive Officer Mr. Ulrich Dietz held one share (=0.33 %) in the subsidiary GFT Technologies (Schweiz) AG, Wallisellen/Switzerland. From April 16, 2002 to August 26, 2002 the Executive Board member Mr. Roland Härtner held this share; since August 26, 2002 it has been held by the Executive Board member Ms. Marika Lulay.

75 Notes 32. Organs of the parent company Executive Board and Supervisory Board of the company are part of the notes to the group financial statement. In this printed version the content is not shown here but reference is made to the identical content on page 92 of the notes to the annual financial statement of GFT AG. The total remuneration of the Executive Board for the 2002 financial year amounted to 3(k) 1,759 (previous year 3(k) 1,627). The total remuneration of the Supervisory Board for the 2002 financial year amounted to 3(k) 51 (previous year 3(k) 54). As of December 31, 2002, members of the Supervisory Board held 2,302 shares and 6,168 subscription rights, each corresponding to one share in GFT AG (previous year 1,802 shares and 6,168 subscription rights); members of the Executive Board held 9,044,086 shares and 70,845 subscription rights, each corresponding to one share in GFT AG (previous year 9,037,586 shares, 70,845 subscription rights). 33. Security transactions of the organs (directors dealings) The tables on page 74 show the development of the stocks of GFT shares and GFT subscription rights held by the members of the Group's organs in the 2002 financial year. 34. Employees During the 2002 financial year an average of 1,204 staff members were employed. In 2001 the figure was 980. If the Emagine Group had formed part of the GFT Group for all of 2001, there would have been an average of 1,364 employees for Statements as per 160 para. 1 no. 8 German Company Law On March 4, 2002 Deutsche Bank AG, Frankfurt am Main, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: On February 20, 2002 Deutsche Bank AG, Frankfurt am Main, exceeded the limit of 25 % of the voting rights for GFT Technologies AG and now holds a voting right share of %, which is to be ascribed to it as per 22 para. 1 no. 1 of the German Securities Act (Wertpapierhandelsgesetz, hereafter: WpHG ). On February 20, 2002, ARGFRAN Beteiligungs Aktiengesellschaft, Frankfurt am Main, a subsidiary of Deutsche Bank AG, exceeded the limit of 25 % of the voting rights for GFT Technologies AG and now holds %. On April 3, 2002, Mr. Ulrich Dietz and Ms. Maria Dietz, St. Georgen, notified GFT AG of the existence of participating interests; the published content of these notifications is as follows: Mr. Ulrich Dietz of St. Georgen has notified us on April 3, 2002 as per 41 para. 2 p. 1 WpHG that he holds % of the voting rights for GFT Technologies AG on April 1, Ms. Maria Dietz of St. Georgen has notified us on April 3, 2002 as per 41 para. 2 p. 1 WpHG that she holds 9.67 % of the voting rights for GFT Technologies AG on April 1, On April 16, 2002 Deutsche Post AG, Bonn, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: Deutsche Post AG, headquartered in Bonn, a subsidiary of Bundesanstalt für Post und Telekommunikation Deutsche Bundespost,

76 33. Security transactions subject to reporting requirements (directors' dealings) Shares; Executive Board Members Ulrich Dr. Thomas Dr. Erwin Roland Dr. Markus Marika Gesamt Dietz Gumsheimer Haller Härtner Kerber Lulay Number Number Number Number Numbere Number Number As of 31/12/2001 7,881, , ,150, ,037,586 Additions ,000 1,500 6,500 Disposals As of 31/12/2002 7,881, , ,155,258 1,500 9,044,086 Subscription Rights to 1 Share; Executive Board Members Ulrich Dr. Thomas Dr. Erwin Roland Dr. Markus Marika Gesamt Dietz Gumsheimer Haller Härtner Kerber Lulay Number Number Number Number Number Number Number As of 31/12/ ,000 49, ,845 Additions , ,000 Disposals ,000* ,000 As of 31/12/ ,000 49, ,845 *The subscription rights do not come from the stock options programs of GFT AG. The disposals related to the retirement from the company. Shares; Supervisory Board Members Franz Dr. Gerhard Friedhelm Dr. Simon Rainer Ingrid Manfred Gesamt Niedermaier Barth Freiburger Kischkel Neske Schmidt Schuster Number Number Number Number Number Number Number Number As of 31/12/ , ,802 Additions Disposals As of 31/12/ , , ,302 Subscription Rights to 1 Share; Supervisory Board Members Franz Dr. Gerhard Friedhelm Dr. Simon Rainer Ingrid Manfred Gesamt Niedermaier Barth Freiburger Kischkel Neske Schmidt Schuster Number Number Number Number Number Number Number Number As of 31/12/ , ,168 Additions Disposals As of 31/12/ , ,168

77 Notes has notified us on April 16, 2002 as per 41 para. 2 p. 1 WpHG that it holds 12 % of the voting rights in GFT Technologies AG on April 1, Of these, 12 % of the voting rights are to be ascribed to it as per 22 para. 1 p. 1 no. 1 WpHG. On April 17, 2002 Bundesanstalt für Post und Telekommunikation Deutsche Bundespost, Bonn, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: Bundesanstalt für Post und Telekommunikation Deutsche Bundespost, headquartered in Bonn, has notified us on April 17, 2002 as per 41 para. 2 p. 1, 22 para. 1 p. 1 no. 1 WpHG that the Federal Republic of Germany holds 12 % of the voting rights on April 1, 2002 and that these are to be ascribed to the Federal Republic of Germany as per 22 para. 1 p. 1 no. 1 WpHG. On April 22, 2002 Deutsche Post ebusiness GmbH, Bonn, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: Deutsche Post ebusiness GmbH, headquartered in Bonn and a subsidiary of Deutsche Post AG, has notified us on April 22, 2002 as per 41 para. 2 p. 1 WpHG that it holds 12 % of the voting rights for GFT Technologies AG on April 1, Issuance of German Corporate Governance Codex statement as per 161 German Company Law On December 12, 2002 the Executive and Supervisory Boards issued GFT s first statement of compliance as per 161 AktG and since February 2003 have made this permanently available to shareholders on the company s website. St. Georgen, March 11, 2003 The Executive Board Ulrich Dietz Dr. Thomas Gumsheimer Dr. Erwin Haller Dr. Markus Kerber Marika Lulay Executive Board Executive Board Executive Board Executive Board Executive Board (Chief Executive Officer)

78 GFT Technologies Aktiengesellschaft Group Information about business segments Information about Business Segments Frontend Frontend Backend Backend Products Products (all amounts in 3(k)) Revenues Exernal sales 25,395 29,787 74,937 81,779 4,073 5,480 Inter-segment sales 4,592 1,163 11,807 4, Total revenues 29,987 30,950 86,744 85,831 4,417 5,543 Result Segment result -6, ,073 3,421-1,832-1,555 Unallocated income/expenses and eliminations Unallocated corporate expenses Amortization of goodwill - Group Operating profit Interest expenses Interest income Share of net profits of associates Result from ordinary activities pre taxes Taxes on income Net loss Other information Segment assets 5,989 11,290 18,012 29,925 1,323 1,192 Investment in equity method associates Unallocated corporate assets Consolidated total assets Segment liabilities 4,160 7,529 14,476 21,031 1,003 1,276 Unallocated corporate liabilities Consolidated total liabilities Capital expenditure ,002 2, Depreciation ,079 1, The unallocated income/expenses and eliminations contain: a) Elimination of intra-group sales, results, income, expenses, assets and liabilities b) Assets, liabilities, investments and depreciations, that are not allocated to segments c) Amortization of goodwill is not allocated to segments

79 Notes: Business Segments Freelance Freelance Sum Sum Eliminations Eliminations Consolidated Consolidated Agency Agency ,331 30, , ,861 2,212 18,955 5,278-18,955-5,278 53,543 30, , ,139-18,955-5, , ,861 1, ,423 3,762-16,423 3, ,448-17,959-4,109-33,969-4, ,102-4,531 5,365 2,242-28,737-2,289 3,566 10,056 28,890 52,463 28,890 52, ,782 90,311 81,782 90, , ,068 13,148 11,613 32,787 41,449 32,787 41,449 13,162 8,235 13,162 8,235 45,949 49, ,530 3, ,199 1,925 4, ,525 2,736 20,393 5,544 23,918 8,280

80 GFT Technologies Aktiengesellschaft, St. Georgen Balance Sheet as of December 31, 2002 (HGB) Assets (k) A. Fixed Assets I. Intangible Assets 1. Licenses, industrial property rights and similar rights 356, Goodwill , II. Tangible Fixed Assets Other fixed assets, plant and equipment 1,237, ,971 III. Financial Assets 1. Shares in affiliated companies 32,238, , Investments ,238, ,981 33,832, ,360 B. Current Assets I. Inventories Work in progress 989, ,818 II. Receivables and Other Assets 1. Trade receivables 7,982, , Receivables from affiliated companies 1,322, , Other assets 225, ,003 9,530, ,026 III. Securities Other securities 1,712, ,855 IV. Cash, Bank Balances 31,058, ,306 43,291, ,005 C. Prepayments and Accrued Income 144, ,268, ,484

81 Balance Sheet Shareholders' Equity and Liabilities (k) A. Shareholders' Equity I. Subscribed Capital 26,325, ,744 - Conditional capital 3 8,280, (2001: 3 780,000.00) II. Capital Reserve 27,943, ,702 III. Revenue Reserve 1. Legal reserve 1, Other revenue reserves 2,343, ,344 IV. Deficit carried forwart from the previous year -12,079, V. Net loss -5,176, ,079 39,358, ,712 B. Capital contributions paid to carry out the resolved increase in capital ,823 C. Accruals 1. Accruals for taxation 204, Other accruals 3,522, ,358 3,726, ,379 D. Liabilities 1. Bank liabilities 22, , Prepayments received on orders 1,709, , Trade liabilities 1,231, , Accounts due to affiliated companies 28,298, , Accounts due to other investments Other liabilities 2,906, ,742 34,170, ,570 E. Accruals and Deferred Income 13, ,268, ,484

82 GFT Technologies Aktiengesellschaft, St. Georgen Profit and Loss Statement as of January 1 until December 31, 2002 (HGB) Profit and Loss Statement (k) 1. Revenues 30,870, , Decrease (2001: Increase) in work in progress -828, Other operating income 1,556, ,423 31,598, , Cost of materials a) Cost of goods purchased 18, b) Cost of services purchased 8,021, ,366 8,039, , Personnel expenses a) Wages and salaries 19,836, ,199 b) Social security and pension benefits 2,792, ,500 thereof pension benefits 2 13, (2001: 3(k) 23) 22,629, , Depreciation on intangible and tangible fixed assets 1,536, , Other operating expenses 9,615, ,060-10,222, , Income from investments 19,585, thereof from affiliated companies 3 19,585, (2001: 3(k) ) 9. Other interest and similar income 661, thereof from affiliated companies 3 134, (2001: 3(k) 33) 10. Depreciation on financial assets and on marketable securities 13,329, , Interest and similar expenses 1,187, thereof to affiliated companies 3 852, (2001: 3(k) 95) 5,729, , Result from ordinary activities -4,492, , Extraordinary cost , Extraordinary result , Taxes on income 671, Other taxes 12, , Net loss -5,176, ,079

83 Cash-flow Statement Cash-flow Statement as of January 1 until December 31, 2002 Cash-flow Statements (k) 3(k) Net income before extraordinary result -5,177-5,481 Depreciation 14,691 2,291 Increase (2001: decrease) of accruals 348-1,504 Other non-cash expenses Loss (2001: profit) on disposal of fixed assetsn Increase (2001: decrease) of trade receivables -1,549 2,029 Decrease (2001: Increase) of inventories and other assets 1,459-2,973 Decrease of trade liabilities Increase of other liabilities or capital items 14,484 2,956 Payments related to extraordinary items -4,547 Cash-flows from operating activities 23,743-6,882 Paid-in on disposals of fixed assets Payments related to investments in tangible fixed assets ,585 Paid-in on disposals of intangible fixed assets 42 Payments related to investments in intangible fixed assets Payments related to investments in financial assets -3, Receipts in connection with the short-term financial management of cash investments 779 Payments in connection with the short-term financial management of cash investments -32 Cash-flows from investing activities -3,755-1,701 Cash proceeds from issuing loans 10,032 7,059 Payments related to repayments of loans -9,267-2,581 Cash-flows from financing activities 765 4,478 Change in cash funds from cash relevant transactions 20,753-4,105 Increase of cash funds by merger 01/ Cash funds at the beginning of the period 10,306 14,205 Cash funds at the end of the period 31,059 10,306 Cash funds include cash and bank balances. GFT Financial Solutions GmbH, Eschborn, was included in the cash-pooling procedure with GFT AG from March 1, 2002 onwards. The funds transferred to GFT AG as part of the initial consolidation of GFT Financial Solutions GmbH were reported as cash proceeds from issuing finance loans (3(k) 10,032). The subsequent transfers occurring as part of the cash-pooling procedure have been included in ongoing business activities. On balance, in the 2002 financial year GFT AG received 3 35m. from GFT Financial Solutions GmbH; of this, 3 18m. was in the form of payments whilst 3 17m. resulted from an increased debt balance. Increase of cash funds by merger 01/01 concern the liquid funds of GFT Pixelfactory GmbH in 2001.

84 GFT Technologies Aktiengesellschaft, St. Georgen Notes to Financial Statements as of December 31, 2002 I. General Information about the Financial Statements and the Accounting and Valuation Methods The financial assets are reported at acquisition cost in compliance with the lower-of-cost-ormarket principle. 1. General The financial statements of GFT Technologies Aktiengesellschaft (hereinafter referred to as GFT AG or Company ) were prepared according to the rules of the German Commercial Code (HGB) and the German Company Law (AktG) in 3. The profit and loss statement was prepared according to the type-ofexpenditure format. The company is a big corporation within the meaning of 267 HGB. 2. Accounting and valuation methods Acquired goodwill is capitalized and amortized according to schedule over 15 years. Other acquired intangible assets are valued at acquisition cost, less the scheduled linear amortizations. They are usually allotted an operating life of three years. The tangible assets are reported at acquisition cost, less the scheduled wear-and-tear depreciations. In case of movable tangible assets, the linear depreciations are effected over an operating life period of three to 13 years. In the year of acquisition the company uses the simplification rule stated in R 44 para. 2 of the German Income Tax Regulations (Einkommensteuerrichtlinien = EStR) 2001, when referring to movable assets as part of the fixed assets. Minor-value assets are fully depreciated in the year of acquisition and their retirement is also assumed in the year of acquisition. Non-scheduled depreciations are carried out in the event that the value of the fixed assets ascertained according to the above-mentioned principles exceeds the value attributable to them on the balance sheet date. A write-up is carried out if the reasons for the depreciations carried out in the previous financial years are no longer applicable. The valuation of work in progress is on the basis of the production costs incurred. Projects expected to incur losses are reported at lower attributable values. In the case of receivables, discernible individual risks are taken into consideration through valuation allowances. Sufficient consideration is given to the general financial risk by means of a lump sum valuation allowance of 1.0 % (previous year 1.0 %) for receivables. Securities are valued at acquisition cost or at the lower stock market price. The other accruals take into account all discernible risks and contingent obligations. The provisions for taxes may contain deferred tax obligations in addition to the actual obligations. The other assets and liabilities are shown in the balance sheet at face value or at the repayment amount.

85 Notes Receivables and liabilities in foreign currency are valued at the rate on the day of the transaction. Losses from changes in the rate of exchange are taken into consideration. II. Details of Balance Sheet and Profit and Loss Statement 1. Balance sheet Fixed assets The changes in fixed assets are shown in the table on page 84. Share ownership The company holds direct and indirect shares in the following companies as of December 31, 2002: Investment Holdings Name Headquarters Share of Equity capital Result for the capital 31/12/2002 financial year Direct investments GFT Technologies (Schweiz) AG Wallisellen, Switzerland 99.0 % CHF 1,642, CHF 621, GFT Systems GmbH Ilmenau 81.0 % 3 1,730, , GFT Solutions GmbH Hamburg 100 % 3 777, ,487, GFT Websolutions Kft. Budapest 100 % HUF 45,504, HUF 21,546, GFT TransForce GmbH Stuttgart 100 % 3-112, , GFT Technologies GmbH Vienna 100 % 3 72, , GFT UK Limited London 100 % GBP -470, GBP -187, Pixel Factory Inc. New York 100 % USD -391, USD -69, GFT Financial Solutions GmbH Eschborn 100 % 3 10,355, , GFT Iberia Solutions, S.A. Sant Cugat del Vallés, Spain 100 % 3 5,221, ,496,000 emagine gmbh Eschborn 100 % 3 20, , CScout Inc. New York 25.1 % USD -22, USD -44, Plumb Design Inc. New York 18.7 % USD 289, USD -1,349, Indirect investments Emagine Servicios de Consultoría Sant Cugat del Vallés, 100 % 3 60, e Informática, S.A Spain The 51.0 % indirect investment in ACS Systems S.A.R.L., Valbonne, France, reported the previous year was sold on December 30, The other indirect investment reported the previous year, in Emagine Solutions Inc., Wilmington, Delaware/USA, (100 %) was terminated due to the dissolution of this company during the 2002 financial year.

86 At cost Balance as of Additions Disposals Balance as of 01/01/ /12/ I. Intangible Assets 1. Licences, industrial property rights and similar rights 1,621, , , ,903, Goodwill 127, , ,749, , , ,030, II. Tangible Fixed Assets Other assets, plant and equipment 4,310, , , ,389, III. Financial Assets 1. Shares in affiliated companies 41,300, ,412, ,713, Investments 1,344, ,344, ,645, ,412, ,058, ,705, ,203, , ,478, Receivables and other assets Of the receivables from affiliated companies, a partial amount of 3(k) 486 (previous year 3(k) 668) is due after more than one year. This relates to loans to the subsidiaries GFT Technologies GmbH, Vienna, and GFT Websolutions Kft., Budapest (in previous year to GFT Technologies GmbH, Vienna, and GFT UK Ltd., London). The receivables from affiliated companies concern trade receivables of 3(k) 823 (previous year 3(k) 751) and other assets amounting to 3(k) 500 (previous year 3(k) 839), of which the loan receivables amount to 3(k) 486 (previous year 3(k) 821). The other assets do not contain any amounts with remaining terms of more than one year (previous year 3(k) 43). Equity capital As of December 31, 2002, the share capital of 3 26,325, is made up of 26,325,946 nonpar value individual share certificates; of these, 6,581,487 shares were created in the financial year 2002 from authorized capital. The shares are made out in the name of the holder and all confer equal rights. In the 2002 financial year the share capital increased from 3 19,744, to 3 26,325, through the entry made in the German Commercial Register on February 20, 2002 relating to the implementation of the capital increase with contributions in kind made in the 2001 financial year (contributions in kind of shares in GFT Financial Solutions GmbH, Eschborn, and in GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain). For the same reason, 3 12,241, was contributed to the capital reserves in the 2002 financial year. The balance sheet as of December 31, 2002 has not been drawn with regards to the complete or partial disposal of the annual result; the result shown in the previous year has been adjusted accordingly. The transition to the net loss according to $ 158 para. 1 AktG is as follows:

87 Depreciation Notes Book value Balance as of Depreciation Disposals Balance as of Balance as of Balance as of 01/01/ /12/ /12/ /12/ ,293, , , ,546, , , , , , , ,340, , , ,674, , , ,339, ,176, , ,151, ,237, ,971, , ,323, ,474, ,238, ,149, , , ,344, , , ,154, ,819, ,238, ,980, ,344, ,691, , ,645, ,832, ,360, Transition to the net loss Net loss -5,176, , Loss carried forward from the previous year -12,079, Accumulated deficit -17,256, ,079 On August 1, 2001, GFT AG held all of the shares in GFT Financial Solutions GmbH, Eschborn and in GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain (including subsidiaries: Emagine Group ). These shares were contributed within the framework of a capital increase with contributions in kind, whilst utilizing a part of the authorized capital at that time and with an exclusive subscription right for the contributing company; 6,581,487 individual share certificates were issued in the process. Since the implementation of the share capital increase of 3 6,581, was not registered in the German Commercial Register until the 2002 financial year, the capital contributions paid as of December 31, 2001 are shown in the special item Capital contributions paid to carry out the resolved increase in capital (3 18,823,052.82). The special item showed the following development: Development of the Special Item Capital Contributions paid to carry out the Resolved Increase in Capital 4 As of 01/01/ , Implementation of the capital increases with contributions in kind on 04/07/ , Resolution to utilize authorized capital for capital increases and contributions in kind in August, ,823, As of 31/12/ ,823, Implementation of the capital increases with contributions in kind on 20/02/ ,823, As of 31/12/

88 The changes to the equity capital items during the 2002 financial year are shown in the following summary: Changes to the Equity Capital Subscribed Capital Statutory Other revenue Retained capital reserve reserve reserves earnings As of 31/12/ ,744, ,702, , ,343, ,079, Implementation of the capital increases with contributions in kind 20/02/2002 6,581, ,241, Net loss for the year ,176, As of 31/12/ ,325, ,943, , ,343, ,256, There is no transfer to the statutory reserves because, on the one hand, there is no annual net profit, and on the other, the statutory reserve fund as per 150 para. 2 AktG is already more than 10 % of the share capital due to the high capital reserves as per 272 para. 2 no. 1 HGB. Authorized capital Of the capital authorized by the resolution passed at the annual general meeting held on May 16, 2000, 3 2,924, was still available as of December 31, This authorized capital was cancelled by the annual general meeting on May 29, The Executive Board is now authorized, on the basis of the resolution passed at the annual general meeting held on May 29, 2002, with the consent of the Supervisory Board in the period until May 26, 2007 to increase the share capital by issuing new shares in return for cash contributions or contributions in kind, once or several times, by up to 3 7,500,000.00, by issuing up to 7,500,000 new share certificates made out in the name of the holder providing dividend entitlements from the beginning of the financial year, they are issued in return for cash contributions or contributions in kind (Authorized Capital I/2002). The Executive Board has been authorized with the consent of the Supervisory Board to exclude the shareholders subscription right in cases of capital increases in return for contributions in kind. A resolution passed at the annual general meeting held on May 29, 2002 also authorized the Executive Board with the consent of the Supervisory Board in the period until May 26, 2007 to increase the share capital by issuing new shares in return for cash contributions, once or several times, by up to 3 2,632,594.00, by issuing new share certificates made out in the name of the holder providing dividend entitlements from the beginning of the financial year, they are issued in return for cash contributions (Authorized Capital II/2002). Under certain conditions, the management is authorized with the consent of the Supervisory Board to exclude the shareholders' subscription right. Non-utilized authorized capital of 3 10,132, is thus available as of December 31, Conditional capital Conditional capital as of December 31, 2002 amounts to 3 8,280, (pr. yr ,000.00).

89 Notes The previous conditional capital, which resulted from the allocation of subscription rights to employees and Executive Board members as per 192 para. 2 no. 3 AktG (3 780,000.00), was renamed Conditional Capital I/1999 by a resolution passed at the annual general meeting held on May 29, The annual general meeting held on May 29, 2002 approved a conditional capital increase of up to 3 7,500, by issuing up to 7,500,000 new share certificates made out in the name of the holder providing dividend entitlements from the beginning of the financial year they are issued (Conditional Capital II/2002). The conditional capital increase has been made in order to issue shares to the holders of or creditors for warrant or convertible bonds issued by the company or a subordinate group company before May 26, 2007 on the basis of the authorization provided by the annual general meeting of May 29, 2002, where these are issued in return for cash. It will only be implemented insofar as option or conversion rights resulting from the above-mentioned bonds are exercised or conversion obligations resulting from such bonds are met. A resolution passed at the annual general meeting held on May 29, 2002 authorized the Executive Board to issue in the period until May 26, 2007, once or several times, warrant or convertible bonds with a total par value of up to 3 100m. and a maturity period of up to 20 years, or to guarantee such bonds issued by subordinate companies in the group, and to provide the holders of or creditors for such bonds with option rights or conversion privileges for new shares in the company, with a pro rata share capital proportion of up to 3 7.5m. following the announcement of the precise terms for the warrant or convertible bonds. Stock options programs The extraordinary shareholders meeting which took place on June 4/24, 1999 approved a conditional equity capital increase through an issue of up to 260,000 individual share certificates (corresponding to 780,000 individual share certificates following the 3:1 stock split of May 16, 2000, Conditional Capital I/1999) permitting subscription rights exclusively through stock options programs as well as the basic features of stock options programs to be launched by the Executive Board. The conditional capital increase will only be executed if the holders of the subscription rights issued exercise their right of subscription as per 192 para. 2 no. 3 AktG. Beneficiaries are exclusively members of the Executive Board and employees of GFT Technologies AG and of wholly owned subsidiaries who have been granted subscription rights. The subscription rights are non-transferable except in the event of death of the holder and will lapse if the subscription right holder leaves an employment relationship with a company of the GFT Group. The figures given below in respect of the stock options programs have been adjusted in line with the 3:1 stock split of May 16, 2000; the adjustment will be made de facto when the subscription right is exercised. With the authorization of the shareholders meeting of June 4, 1999 and with the consent of the Supervisory Board, on June 24/August 25, 1999 the Executive Board approved an initial stock options program Optional conditions regarding the issue of subscription rights for GFT Technologies AG 1999/2004. This stock options program concerns subscription rights for up to 379,179 individual share certificates for the resolved conditional increase in capital of 3 780,000 (= 780,000 individual share certificates). According to this program, a subscription right authorizes the holder to acquire one individual share

90 certificate of GFT AG at the placement price fixed within the framework of the admission to stock exchange dealing (subscription price /share). The subscription rights were acquired in the period from June 1 to 25, On fulfillment of the performance criterion the exercise of the subscription rights will take place in three exercise tranches of equal size during specific exercise phases starting from November According to the performance criterion subscription is possible if the average price of the GFT share at the time of the exercise phase exceeds the subscription price of by 40 %. Since the performance criterion was not met, it was not possible to exercise the first two exercise tranches in November 2001 and November 2002; however, they have not expired and may be exercised together with the next exercise tranche in November 2003 if the performance criterion is met. With the consent of the Supervisory Board and following its decision of May 30, 2000 the Executive Board launched a further Stock Options Program 2000/2005 relating to subscription rights for up to 163,350 individual share certificates for conditional capital amounting to 3 780,000. In accordance with this program a subscription right provides an entitlement to acquire one individual GFT AG share certificate at On fulfillment of the performance criterion the subscription rights will be exercised in three exercise tranches of equal size during specific exercise phases from November 2002 onwards. Subscription is possible after fulfillment of the performance criterion if the average price of the GFT share at the time of the exercise phases exceeds the subscription price of by 25 %. Since the performance criterion was not met, it was not possible to exercise the first exercise tranche in November 2002; however, it has not expired and may be exercised together with the next exercise tranche in November 2003 if the performance criterion is met. The stock of issued subscription rights developed as follows up to December 31, 2002: Issued Subscription Rights in the 2001 Financial Year Subscription rights to one share each Stock options Stock options Total program 1999 program 2000 Subscription rights as of 1/1/ , ,179 newly issued subscription rights in , ,350 subscription rights that lapsed in ,152-3,150-31,302 Subscription rights as of 31/12/ , , ,227 newly issued subscription rights in subscription rights that lapsed in ,359-14,550-48,909 Subscription rights as of 31/12/ , , ,318 thereof employees 283, , ,473 thereof Executive Board 33,345 37,500 70,845 newly issued subscription rights in subscription rights that lapsed in ,704-27,600-53,304 Subscription rights as of 31/12/ , , ,014 thereof employees 257,619 80, ,169 thereof Executive Board 33,345 37,500 70,845

91 Notes Since the shares to be issued are as a result of a conditional increase in capital, the company is not encumbered by the stock options programs; nor has a contribution been made to the capital reserves. The stock options programs have not therefore had any effects on the balance sheet for the 2002 financial year. Other Accruals and Accruals for Taxes The accruals for taxation do not contain any deferred taxes as per 274 para. 1 HGB (previous year 3(k) 5) (see table aside). Liabilities The information on the liabilities is shown in the following table: Other Accruals and Accruals for Taxes Other significant accruals 3(k) Employee commissions/bonuses 1,169 Anticipated losses due to rental agreement 539 Credit notes not yet issued 504 Vacation obligations 276 Outstanding purchase invoices 217 Preparing the financial statements and audit 160 Shareholders meeting/annual report 150 Repayment commitments 93 Trade association 84 3,192 Other 330 3,522 Liabilities Due within a period Total amount Thereof secured - Nature and type up to 1 year more than 5 years 31/12/2002 by rights of lien of the security And similar rights Bank liabilities 22, (pr. yr. 3(k) 2,289) 0.00 (pr. yr. 3(k) 0) 22, (pr. yr. 3(k) 2,289) 0.00 (pr. yr. 3(k) 33) Payments received on orders 1,709, (pr. yr. 3(k) 1,974) 0.00 (pr. yr. 3(k) 0) 1,709, (pr. yr. 3(k) 1,974) Trade liabilities 1,231, (pr. yr.3(k) 1,867) 0.00 (pr. yr. 3(k) 0) 1,231, (pr. yr. 3(k) 1,867) Ordinary retentions of title Accounts due to affiliated companies 28,298, (pr. yr. 3(k) 8,682) 0.00 (pr. yr. 3(k) 0) 28,298, (pr. yr. 3(k) 8,682) Accounts due to other investments 0.00 (pr. yr. 3(k) 16) 0.00 (pr. yr. 3(k) 0) 0.00 (pr. yr. 3(k) 16) Other liabilities 2,906, (pr. yr. 3(k) 4,742) - thereof for taxes 2,223, (pr. yr. 3(k) 1,842) 0.00 (pr. yr. 3(k) 0) 2,906, (pr. yr. 3(k) 4,742) - thereof for social security 381, (pr. yr. 3(k) 467) 34,170, (pr. yr. 3(k) 19,570) 0.00 (pr. yr. 3(k) 0) 34,170, (pr. yr. 3(k) 19,570)

92 The accounts due to affiliated companies relate to trade liabilities (3(k) 799; previous year 3(k) 427) and other liabilities (3(k) 27,500; previous year 3(k) 8,255); the other liabilities mainly consist of liabilities arising from the cash-pooling procedure, whilst in the previous year they consisted of a loan from GFT Financial Solutions GmbH, Eschborn (3(k) 0; previous year 3(k) 7,000). The previous year s accounts due to other investments resulted from trade. 2. Profit and loss statement Depreciation Depreciations of tangible and intangible fixed assets include non-scheduled depreciations as per 253 para. 2 p. 3 HGB amounting to 3(k) 72 (previous year 3(k) 0). The scheduled amortization of goodwill over 15 years is made in accordance with 7 para. 1 p. 3 of the German Income Tax Law (EStG). The amortizations of financial assets and securities relating to current assets contain non-scheduled amortizations of financial assets as per 253 para. 2 p. 3 HGB amounting to 3(k) 13,155 (previous year 3(k) 665). Revenues (k) 3 (k) By fields of operation Consulting and software development 30,494 38,952 Maintenance proceeds Software product sales Other revenues ,871 39,749 By region Domestic 28,264 38,340 Foreign 2,607 1,409 30,871 39,749 Income/Expenses not relating to the period under review The other operating income includes income amounting to 3(k) 380 (previous year 3(k) 247) which is attributable to another financial year; this relates to the reversal of accruals (3(k) 264), credit notes received for previous years (3(k) 63) and income from fixed asset retirements (3(k) 53). The other operating expenses do not contain any amounts not relating to the period under review (previous year 3(k) 22). Extraordinary expenses/ Extraordinary result The extraordinary expenses of the financial year 2001 related to the merger loss resulting from the merger of GFT Pixelfactory GmbH, Offenbach am Main, with GFT AG on January 1, 2001 (3(k) 2,051) and the expenses accrued in connection with the acquisition of shares in GFT Financial Solutions GmbH, Eschborn, and GFT Iberia Solutions, S.A., Sant Cugat del Vallés ( Emagine Group ) (3(k) 4,547). Taxes on income and returns The taxes on income mainly relate to tax increases due to the dividend payouts

93 Notes received from subsidiaries in the 2002 financial year. In the previous year they related to tax refunds due to tax loss carrybacks. III.Further Details Contingencies GFT AG has provided its subsidiary Pixel Factory Inc., New York, with a guarantee bond in which it releases Pixel Factory Inc. from future expenses until their reversal; this commitment amounts to approx. 3(k) 70. With its receivables from Pixel Factory Inc. GFT has fallen into line behind other creditors receivables; the receivables have been completely depreciated. GFT AG has provided its subsidiary GFT UK Limited, London, with a guarantee bond, which states that it will provide GFT UK Limited with continuous financial support and will not demand repayment of its receivables before February 2003 at the earliest. In GFT AG s financial statements as of December 31, 2002 all assets resulting from the commitment to GFT UK Limited were completely depreciated. In addition, obligations resulting from openended rental agreements amount to 3(k) 715 p.a. (previous year 3(k) 627 p.a.). Of this, 3(k) 503 p.a. is owed to affiliated companies (previous year 3(k) 539 p.a.). The company has a commitment amounting to 3(k) 351 (previous year 3(k) 473) resulting from an order commitment for consulting services. Statements as per 160 para. 1 no. 8 German Company Law On March 4, 2002 Deutsche Bank AG, Frankfurt am Main, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: On February 20, 2002 Deutsche Bank AG, Frankfurt am Main, exceeded the limit of 25 % of the voting rights for GFT Technologies AG and now holds a voting right share of %, which is to be ascribed to it as per 22 para. 1 no. 1 of the German Securities Act (Wertpapierhandelsgesetz = WpHG). On February 20, 2002, ARGFRAN Beteiligungs Aktiengesellschaft, Frankfurt am Main, a subsidiary of Deutsche Bank AG, exceeded the limit of 25 % of the voting rights for GFT Technologies AG and now holds %. With its receivables from its subsidiary GFT TransForce GmbH, Stuttgart, GFT AG has fallen into line behind other creditors receivables. In GFT AG s financial statements as of December 31, 2002 all assets resulting from the commitment to GFT TransForce GmbH are completely depreciated. The company may only dispose of deposits held by banks amounting to 3(k) 2,556 with the express approval of the relevant bank. Other financial obligations Where not shown in the balance sheet, obligations arising from fixed-term rental, leasing and licensing agreements amount to 3(k) 2,750 (previous year 3(k) 4,033). On April 3, 2002, Mr. Ulrich Dietz and Ms. Maria Dietz, St. Georgen, notified GFT AG of the existence of participating interests; the published content of these notifications is as follows: Mr Ulrich Dietz of St. Georgen has notified us on April 3, 2002 as per 41 para. 2 p. 1 WpHG that he holds % of the voting rights for GFT Technologies AG on April 1, Ms. Maria Dietz of St. Georgen has notified us on April 3, 2002 as per 41 para. 2 p. 1 WpHG that she holds 9.67 % of the voting rights for GFT Technologies AG on April 1, On April 16, 2002 Deutsche Post AG, Bonn, notified GFT AG of the existence of a partici-

94 Executive Board Mr. Ulrich Dietz Director of Strategy and Marketing, Chairman Supervisory board seats: GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain (Deputy Chairman) tesion Communikationsnetze Südwest GmbH & Co. KG, Stuttgart (supervisory board), (until September 2, 2002) Sparkasse Villingen-Schwenningen Other seats on similar Boards: Deutsche Bank AG, Stuttgart (Advisory Board) Dr. Thomas Gumsheimer Director of Sales and Production, Client Group Banking Supervisory board seats: CScout Inc., New York, USA (Board of Directors) Motte Consult AG, Gerlingen quibiq.de Internet-Handels-Plattform GmbH, Stuttgart. Dr. Erwin Haller Director of Technology/Research and Development Herr Roland Härtner Executive Board member (until July 12, 2002) Supervisory Board seats: GFT Technologies (Schweiz) AG, Wallisellen, (until July 12, 2002). Dr. Markus Kerber Director of Finance, Accounting and Personnel Supervisory Board seats: GFT Iberia Solutions, S.A., Sant Cugat del Vallés, Spain Plumb Design Inc., New York, USA (Board of Directors) The Eureka Interactive Fund Limited, George Town, Cayman Islands IQ International Incubator AG, Berlin Pepper Technologies AG, Munich Ms. Marika Lulay Director of Sales and Production Client Group Industry and Services (since July 1, 2002) Supervisory Board seats: GFT Technologies (Schweiz) AG, Wallisellen, (since August 26, 2002) Supervisory Board Mr. Franz Niedermaier Managing Director of Oracle Deutschland GmbH until 1997, Chairman Further Supervisory Board seats: PSI Aktiengesellschaft für Produkte und Systeme der Informationstechnologie, Berlin (until June 7, 2002) Pepper Technologies AG, Munich (Chairman) SECARON AG, Munich XTRADYNE Technologies AG, Berlin (since August 22, 2002) Prof. Dr. Gerhard Barth Director Dresdner Bank AG until end of 2001 Further Supervisory Board seats: Bauer & Partner, Kreuzlingen, Switzerland clearstream International S.A., Luxembourg Insiders Wissensbasierte Systeme GmbH, Mainz Mr. Friedhelm Freiburger Tax Consultant, Deputy Chairman (until May 29, 2002). Dr. Simon Kischkel Director of Competence Center Minimal Invasive Medizin und Technik, Tübingen Mr. Rainer Neske Deputy Spokesman of the Executive Board of Deutsche Bank Privat- und Geschäftskunden AG, Frankfurt/Main (since May 29, 2002) Further Supervisory Board seats: DB Payments Projektgesellschaft AG, Frankfurt/Main (since December 12, 2002) Deutscher Herold Lebensversicherung Aktiengesellschaft, Bonn (since May 6, 2002) Deutsche Bank Bauspar-Aktiengesellschaft, Frankfurt/Main (Deputy Chairman), (since March 21, 2002) Lufthansa Airplus Servicekarten GmbH, Neu-Isenburg paybox.net AG, Raunheim (until December 31, 2002) Servicegesellschaft der Deutschen Bank Privat- und Geschäftskunden mbh, Bonn (Chairman) ARGFRAN Beteiligungs Aktiengesellschaft, Frankfurt/Main (until April 17, 2002) Sinius GmbH, Düsseldorf (until February 7, 2002) Other seats on similar Boards: easycash GmbH, Ratingen (until November 11, 2002) Euro Kartensysteme Eurocard und eurocheque GmbH, Frankfurt/Main Ms. Ingrid Schmidt Project Manager GFT Technologies AG (Employee Representative) Mr. Manfred Schuster Director Corporate IT of Deutsche Post AG and Executive Board Chairman of Deutsche Post IT Solutions GmbH, Bonn (Deputy Chairman), (since May 29, 2002)

95 Notes pating interest. The published contents of this notification are as follows: Deutsche Post AG, headquartered in Bonn and a subsidiary of Bundesanstalt für Post und Telekommunikation Deutsche Bundespost, has notified us on April 16, 2002 as per 41 para. 2 p. 1 WpHG that it holds 12 % of the voting rights for GFT Technologies AG on April 1, Of these, 12 % of the voting rights are to be ascribed to it as per 22 para. 1 p. 1 no. 1 WpHG. On April 17, 2002 Bundesanstalt für Post und Telekommunikation Deutsche Bundespost, Bonn, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: Bundesanstalt für Post und Telekommunikation Deutsche Bundespost, headquartered in Bonn, has notified us on April 17, 2002 as per 41 para. 2 p. 1, 22 para. 1 p. 1 no. 1 WpHG that the Federal Republic of Germany holds 12 % of the voting rights on April 1, 2002 and that these are to be ascribed to the Federal Republic of Germany as per 22 para. 1 p. 1 no. 1 WpHG. On April 22, 2002 Deutsche Post ebusiness GmbH, Bonn, notified GFT AG of the existence of a participating interest. The published contents of this notification are as follows: Deutsche Post ebusiness GmbH, headquartered in Bonn and a subsidiary of Deutsche Post AG, has notified us on April 22, 2002 as per 41 para. 2 p. 1 WpHG that it holds 12 % of the voting rights for GFT Technologies AG on April 1, Issuance of German Corporate Governance Codex statement as per 161 German Company Law On December 12, 2002 the Executive and Supervisory Boards issued GFT s first statement of compliance as per 161 AktG and since February 2003 have made this permanently available to shareholders on the company s website. The total remuneration of the Executive Board for the 2002 financial year amounted to 3(k) 1,739 (previous year 3(k) 1,627). The total remuneration of the Supervisory Board for the 2002 financial year amounted to 3(k) 51 (previous year 3(k) 54). As of December 31, 2002, members of the Supervisory Board held 2,302 shares and 6,168 subscription rights, each corresponding to one share in GFT AG (previous year 1,802 shares and 6,168 subscription rights); members of the Executive Board held 9,044,086 shares and 70,845 subscription rights, each corresponding to one share in GFT AG (previous year 9,037,586 shares, 70,845 subscription rights). Employees An average of 316 members of staff (previous year 418) were employed in the 2002 financial year. Group financial statements As the parent company of the GFT Group, GFT AG will prepare group financial statements according to 292a HGB. St. Georgen, March 7, 2003 The Executive Board Ulrich Dietz Dr. Thomas Gumsheimer Dr. Erwin Haller Dr. Markus Kerber Marika Lulay Executive Board Executive Board Executive Board Executive Board Executive Board

96 Auditor s certification of the annual financial statements We have audited the annual financial statements, including the accounting, and the summarized management report and group management report for GFT Technologies Aktiengesellschaft, St. Georgen, for the financial year from January 1, 2002 to December 31, The company s legal representatives are responsible for the accounting and the preparation of the annual financial statements and the summarized management report and group management report in accordance with prescriptions of German commercial law. Our task is to submit an assessment, based on our audit, of the annual financial statements, including the accounting, and the summarized management report and group management report. We undertook our audit of the annual financial statements in accordance with 317 of the German Commercial Code, whilst complying with the German principles of proper accounts auditing which are laid down by the German Institute of Qualified Auditors (Institut der Wirtschaftsprüfer = IDW). These state that the audit is to be planned and implemented in such a way that mistakes and errors having a significant effect on the presentation of the picture of the assets, financial and earnings position ascertained by means of the annual financial statements whilst complying with the principles of proper accounting and the summarized management report may be recognized with a sufficient degree of certainty. In determining the audit activities, knowledge of the area of business, the company s economic and legal environment and anticipations of possible errors are taken into consideration. As part of the audit, the effectiveness of the internal accounting control system and proofs of the information provided in respect of the accounting, group financial statements and summarized management report are assessed mainly on the basis of samples. The audit includes an assessment of the accounting principles applied, the main valuations presented by the legal representatives and an appraisal of the overall presentation of the annual financial statements and the summarized management report. We are of the opinion that our audit forms a sufficiently certain basis for our assessment. Our audit did not meet with any objections. We are satisfied that the annual financial statements provide a picture of the company s asset, financial and earnings situation which is in keeping with the actual facts and complies with the principles of proper accounting. The summarized management report and group management report provide overall a correct account of the company s position and correctly present the risks relating to future development. Stuttgart, March 12, 2003 Grant Thornton GmbH Auditing firm Müller, Chartered accountant Hämmerle, Chartered accountant

97 Auditor s certification of the group s financial statements We have examined the group financial statements drawn up by GFT Technologies Aktiengesellschaft, St Georgen, consisting of a balance sheet, a profit and loss statement, an assessment of the change in the equity capital position, a cash-flow statement and notes to the financial statements for the financial year from January 1, 2002 to December 31, The company s Executive Board is responsible for the preparation and content of the group financial statements. Our task is to judge on the basis of the audit carried out by us whether the group financial statements conform to International Financial Reporting Standards (IFRS). We undertook our audit of the group annual financial statements in accordance with German audit regulations, whilst complying with the German principles of proper accounts auditing which are laid down by the German Institute of Qualified Auditors (Institut der Wirtschaftsprüfer = IDW) and whilst also complying with the International Standards on Auditing (ISA). These state that the audit is to be planned and implemented such that an assessment may be made with a sufficient degree of certainty as to whether the group financial statements are free of significant errors. In determining the audit activities, knowledge of the area of business, the group s economic and legal environment and anticipations of possible errors are taken into consideration. As part of the audit, proofs relating to the stated amounts and to information in the group financial statements are assessed on the basis of samples. The audit includes an assessment of the accounting principles applied, the main valuations presented by the legal representatives and an appraisal of the overall presentation of the group financial statements. We are of the opinion that our audit forms a sufficiently certain basis for our assessment. We are satisfied that the group financial statements conform to the IFRS and provide a picture of the group s asset, financial and earnings situation and of the payment flows for the financial year that corresponds to the actual situation. Our audit, which covered the management report and group management report prepared by the Executive Board for the financial year from January 1, 2002 to December 31, 2002, has not met with any objections. We are satisfied that overall the summarized management report and group management report, together with the other information contained in the group financial statements, provide a correct account of the group s situation and correctly present the risks relating to future development. We also confirm that the group financial statements and the summarized management report and group management report for the financial year from January 1, 2002 to December 31, 2002 meet the conditions for the company s exemption from the preparation of group financial statements and a group management report in accordance with German law. Stuttgart, March 14, 2003 Grant Thornton GmbH Auditing firm Müller, Chartered accountant Hämmerle, Chartered accountant

98 Glossary Application Management To operate, monitor and maintain software applications based on service contracts. Audit Audit, control, revisal; for example of financial statements, processes or project advances. Backend Term used for established operational hardware and/or software systems which support existing business processes in the background. Content Management Administration of the contents of a website. This usually includes tasks such as: maintenance of contents, dynamic generation of web sites, event-controlled or user-controlled presentation of contents and management of user rights. Corporate Governance Kodex Rules and regulations for business management and business supervision, due to international acknowledged standards of a good and liable business management. Cross-Border-Development Software development, accomplished cross location resp. cross national to save time and costs. Directors Dealings Purchase and sale of securities by Executive Board members or members of the Supervisory Board. Document Management Application, which enables business processes to access documents of different types and origins on a common platform. These documents can be paper, fax, , Internet transactions or office documents. DVFA Deutsche Vereinigung für Finanzanalyse und Anlagenberatung (German Association of Investment Analysts and Asset Managers). Association of financial market experts in Germany. Enterprise Application Integration (EAI) Use of methods, technologies and tools with the aim of, modernizing, consolidating and integrating information systems platform independent throughout the company. Enterprise Portals Extensive Internet platform with central access and management, which bundles the presentation and functionality of all existing websites of a company (Internet, Extranet and Intranet). Digital Signature Electronic signature. Should dispel doubts regarding the identity of a communication and business partner on the Internet, primarily during payment transactions and legally binding transactions. Will be assigned by an authorized center (Trust Center). Enterprise Resource Planning (ERP) Business application software (e.g. SAP R/3), which identifies and plans resources throughout the company. It can be used to handle customer orders from the coclusion of the contract right up to billing and accounting.

99 Fixed-Price-Project Project with binding agreements concerning a fixed price, completion date and scope of services. Nearshore Development Software development accomplished not on site but on other locations, e.g. in domestic or closely abroad development centers. Adjustment of goodwill Documentation and accounting of goodwill amortization. Goodwill results, as soon as a company s acquisition price exceeds the value of the adopted financial assets and debts. This additional price is represented in the balance sheet and scheduled to be depreciated over a certain period of time. Freelance-business Placing of freelancers, e.g. for IT-services Frontend Graphical user interfaces providing the user interaction, navigation and communication as well as access to programs. HYPARCHIV Archiving and document management system developed by GFT. Organizes the entire document pool in the company and can be implemented through interfaces in heterogenous IT environment. HYPARCHIV ensures an audit-proof long-term archiving for ERP, mail systems and web applications. Information Technologie (IT) Ranges from data processing in the company via Internet technologies right up to mobile communication via cell phones. Offshore Development Software development accomplished not on site but on other locations, e.g. in remote development centers abroad. Outsourcing Practice of authorizing external providers to manage IT processes. These take over the operational, functional and organisational responsibility for predefined services. Prime Standard Quality-segment of the German equity market introduced in January Recruiting The searching for new employees and their contractual obligation. Return on Investment (ROI) Rate of return on assets and capital. Service Level Agreement (SLA) Written arrangement between a client and a service provider to manage business processes, competencies and costs. This contains the extent and functionality of provided services as well as their proficiency level. Investor Relations Support of relationship to private and institutional investors as well as to analysts. Key Account Management Foster relationship to major clients by a dedicated contact person.

100 Important Dates Annual Results Press Conference March 27, 2003 Analysts Conference March 28, 2003 Three Months Statement May 15, 2003 Annual General Meeting May 27, 2003 Six Months Statement August 14, 2003 Nine Months Statement November 13, 2003 Further Information Should you have any queries, please do not hesitate to contact our Investor Relations Team, which will be able to answer your questions. Or you might want to visit our website at There you will find further information on our company and the GFT share. GFT Technologies AG Investor Relations Düsseldorfer Str. 13 D Eschborn/Germany Telephone Telefax emagine und HYPARCHIV are registered trademarks, trademarks and/or brand names of the GFT Group. All other names mentioned in this annual report may be trademarks the use of which may violate the rights of their respective owner. Imprint Concept and Text GFT Technologies AG, St. Georgen Photography GFT; Ralf Amos, Stuttgart Print Straub Druck + Medien GmbH, Schramberg Translation media lingua translations GmbH, Berlin Typesetting OREL & UNGER, Stuttgart 2003 GFT Technologies AG

101 Deriving new perspectives from reality Ralf Amos photographic art Photos depict reality. Ralf Amos is concerned with transforming this reality, with capturing new dimensions, new perspectives, even visions. He is stimulated by architectural motifs, urban landscapes. He takes his pictures directly, manually and without any aids, using just double exposures and a simply turned camera lens. He has developed a visual language of his own; it offers the viewer a perspective in which the original motif always remains recognizably authentic, but at the same time is introduced into new surroundings and thus given new functions. The result is no trickery, and certainly no cheap kaleidoscopic effect. Quite the contrary: it yields images which motivate us to rediscover reality time and time again. Ralf Amos photographic art thus has a lot in common with what we stand for: deriving new perspectives from reality and implementing them innovatively. Ralf Amos was born in 1969 and works as a freelance photographic artist in Stuttgart. The major theme of his work is the urban landscape, from Stuttgart to Berlin, from Moscow to Naples.

102 GFT Technologies AG Leopoldstraße St. Georgen, Germany T F