cpr company profile International products

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4 cpr company profile Unit 4 Agresso is a leading international manufacturer of business software. With branches in 1 European countries, the United States and Canada and sales worldwide, a turnover of million (for continuing operations) was achieved in 26. The head office is situated in Sliedrecht, the Netherlands. At the end of 26 Unit 4 Agresso had 2,76 employees (continuing operations). Unit 4 Agresso develops, sells, implements and supports business software for the management, support and optimization of business operations and for the optimization of the operational management. Unit 4 Agresso has leading international market positions in the public sector and in the professional and business services sectors. In the Benelux Unit 4 Agresso also has strong market positions in the wholesale trade and distribution sectors and in the market for accountancy firms. International products With its leading international product Agresso Business World, Unit 4 Agresso directs itself primarily at the market which it defines as BLINC: Businesses Living IN Change. These are people-oriented companies and institutions where frequent changes in internal and external factors are inherent in the strategy. Organizations in which provision of services, projects and many different sorts of client relationships are the key element, receive maximum functionality for the management and control of their business operations. The competitive advantages of Agresso Business World are: specialization per business sector, which to a large extent makes customization superfluous; permanent flexibility following implementation, which ensures quick modifications in case of changes within the organization and enables direct management of change processes; short implementation time, which makes Agresso Business World quickly available; extensive and flexible reporting facilities; low total cost of ownership. With Unit 4 AccountAnalyser Unit 4 Agresso has an international product for accountancy firms and end users. The internationalization of Agresso Wholesale, for the wholesale and distribution sector, is under development. Local products In the Benelux and on a smaller scale in a number of other countries Unit 4 Agresso offers business software for small and medium-sized enterprises (SME) and various sectors, such as the wholesale trade and distribution, health care and accountancy. In addition, a range of functionalities is offered for personnel information and salary management. All applications have extensive facilities for reporting and management information. Stock exchange quotation and market capitalization Unit 4 Agresso shares have been quoted on Euronext Amsterdam since 1998 and form a part of the Amsterdam Small cap index (AScX). At the end of 26 the market capitalization was valued at approximately 46 million. Notice to the reader The underlying Annual Report 26 of Unit 4 Agresso N.V. is an unofficial translation of the Dutch version (Jaarverslag 26 Unit 4 Agresso). We have audited the official Dutch version of the Annual Report of Unit 4 Agresso N.V. for the year 26. Ernst & Young Accountants Annual Report 26

5 Key figures (in x 1 million) Continuing operations Turnover Turnover growth compared to prior year IFRS 26 IFRS 25 IFRS % 16.% Gross margin % gross margin 88.6% 89.6% 88.2% Operating result before depreciation and impairment (EBITDA) % EBITDA 16.9% 16.1% 18.7% Employees/activities ratios Average number of employees (FTE) * 2,116 1,696 1,474 Turnover per employee ** Discontinued operations*** Turnover Turnover growth compared to prior year 12.7% 7.7% Gross margin % gross margin 17.% 18.6% 21.5% Operating result before depreciation and impairment (EBITDA) % EBITDA 4.1% 2.9% 4.8% Employees/activities ratios Average number of employees (FTE) * Turnover per employee ** Total Net profit before impairment Net profit before impairment/turnover 7.% 7.3% 7.5% Cash flow (net profit + depreciations) Total number of employees year-end 2,933 2,91 1,85 Balance sheet ratios Equity % equity in total assets 35.1% 42.7% 41.3% % quick ratio 7.9% 11.6% 12.2% Financial figures per share Earnings per share before goodwill related impairment * in numbers ** in x 1, *** For an explanation on the discontinued operations see paragraph of the financial statements, page 9 Annual Report 26

6 Earnings per share before goodwill related impairment NL 23 NL GAAP GAAP IFRS IFRS IFRS Annual Report 26

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8 cntnts content s Unit 4 Agresso in short Company profile Key figures Vision, activities, strategy and objectives Management Report from the Board of Directors Prospects for 27 Developments continuing operations Discontinued operations Financial summary Risks and risk management Personnel, organization and environment Corporate governance Information for shareholders Report from the Supervisory Board 57 Financial statements Consolidated income statement Consolidated balance sheet Consolidated statement of changes in equity Consolidated cash flow statement Notes to the consolidated financial statements Company income statement Company balance sheet Notes to the company financial statements Other information Auditor s report Regulations in the articles of association concerning the appropriation of result Appropriation of the net profit 26 Stichting Continuïteit Unit 4 Agresso Operating companies and addresses Annual Report 26

9 vaso vision, activities, str ategy and objectives Vision Unit 4 Agresso is committed to being a reliable and sound, internationally operating organization which helps its clients realize their corporate objectives by means of the development, distribution and maintenance of business software and on the basis of specialized know-how and effective product market combinations. Activities Unit 4 Agresso develops, sells, implements and supports business software for the management, support and optimization of business operations and for the optimization of the operational management. With its international product Agresso Business World, Unit 4 Agresso focuses primarily on the market for people and project-oriented companies and institutions which it defines as BLINC: Businesses Living IN Change. In the Benelux, Unit 4 Agresso also focuses with other products on the small and medium-sized enterprises (SME) and a number of vertical markets, including wholesale trade and distribution, accountancy and health care. After the realization of the intended divestment of the security activities, the business software activities will comprise all activities of Unit 4 Agresso in 27. Str ategy Unit 4 Agresso decided in 26 to sharpen its strategic focus and intends to divest the security activities. The activities will be specifically concentrated on the development, distribution and maintenance of business software. Unit 4 Agresso offers its clients business software for the management, support and optimization of business operations and for the optimization of the operational management. Unit 4 Agresso distinguishes itself in this market from its competitors by means of combining specialized, in-depth knowledge of a number of selected markets and sectors with product Overview of the principal products, client groups, geographical markets and market positions Business Software Product clients countries Market position People-oriented, Agresso Business World Medium-sized and Worldwide Leading or strong BLINC * large companies regional positions and institutions (vertical markets) Sector-focused Agresso Wholesale Wholesale trade & Benelux plus a few No. 1 in Benelux distribution other European Unit 4 Cura Health care countries Top-3 Benelux Various accountancy Accountancy No. 1 in Benelux products Unit 4 Multivers SME Benelux Top-3 Benelux Supplementary Among other things Medium-sized and Part Benelux and Good (niche)positions payroll, large companies part worldwide personnel information, and institutions internet bookkeeping (horizontal markets) *BLINC stands for Businesses Living IN Change. With this specification of the target group the marketing communication for Agresso Business World was sharpened in 26. For more information see Developments continuing operations, page 24. Annual Report 26

10 standardization on the basis of high-quality technology and functionality. The business strategy is aimed at enabling the country organizations to improve their market positions by means of new, supplementary or improved products and services. Our international product Agresso Business World is a key element in this. Unit 4 Agresso promotes the growth possibilities of its international products with focused and centrally coordinated investments in R&D, marketing communication and acquisitions. In addition, our country organizations optimize their own mix of international and local products on the basis of the local market opportunities. SWOT analysis Strengths Leading position in the public sector In Sweden, Norway and the United Kingdom, Unit 4 Agresso, with its product Agresso Business World, has a leading position in the public sector. Also in other countries, Unit 4 Agresso is successful in the public sector. Contracts agreed in the public sector often have a longer term than contracts in the private sector. The product range Unit 4 Agresso has a range of strong products, which ensure a large degree of client satisfaction. Out of this range Agresso Business World and Agresso Wholesale are the most distinctive products. They are both based on a technologically and functionally high-quality concept. Positioning A strong advertizing campaign for Agresso Business World (ERP with NO expiration date) brings out the unique competitive advantages of this product very clearly. A strong market position in Europe With Agresso Business World, Unit 4 Agresso has strong market positions in Europe and with a number of other products strong market positions in the Benelux. Limited client turnover and good organic growth A high degree of client satisfaction and a large share of turnover in the public sector ensure a stable client portfolio with limited turnover. Partly for this reason the organic growth is stable and at a good level. The financial position As a result of many years of good profitability Unit 4 Agresso has built up a sound financial position, with a solvency of 35%. Weaknesses Scale size In relation to a number of important competitors the scale size is still limited, as a result of which the costs of R&D are relatively high. Name recognition In comparison to a number of important competitors the name recognition of Unit 4 Agresso and its products is less widespread. Small market positions in a number of countries In a number of countries the market positions are still too small for a good profit contribution. This is particularly the case in France and the United States. Opportunities Agresso Business World is perfectly positioned to be successful in new geographical markets. The intended divestment of the security activities will increase the financial opportunities for growth by means of acquisitions in new and existing markets. Strategic alliances provide the opportunity to gain access to new vertical and geographical markets with Agresso Business World in a cost-efficient manner. A number of products which have hitherto been successful in the Benelux, including Unit 4 AccountAnalyser, lend themselves well for international sales. The prospects for 27 are good with regard to the willingness to invest in the market for business software. Integration of technology and products and the relocation of a part of the development activities to countries with lower salary levels offer opportunities for cost management. Threats The consolidation of large IT companies leads to further increase in scale in the market. The general pressure on the prices of licence sales. Decreasing willingness to invest in the public sector in a number of geographical markets. Salary developments in the market for IT professionals. Annual Report 26

11 Str ategic priorities Partly on the basis of this strengths/weaknesses analysis Unit 4 Agresso has determined a main strategic direction with the following priorities: 1. Increase in scale by means of organic growth, acquisitions and strategic alliances. 2. Continued focus on specialized standard products for vertical markets, whereby the R&D capacity is utilized efficiently and the products distinguish themselves through a low total cost of ownership. 3. Optimization of the product mix per country. Every year these priorities are translated into new initiatives. The section entitled Prospects for 27 gives an overview of the strategic initiatives for the coming year. In the sections dealing with the developments in 26 the most important initiatives of 26 are discussed and the initiatives announced last year evaluated. Explanation of the str ategic priorities 1. Increase in scale Increase in scale can bring the profitability to a structurally higher level. Regardless of the profit level, Unit 4 Agresso spends a relatively constant amount on Research & Development. At present this is approximately 13% of the turnover. Increasing the number of clients, by means of organic growth, new distributors, strategic alliances or acquisitions, has for this reason a strong positive effect on the fixed R&D costs per client and the profitability of the company. In addition, increase in scale contributes towards an improvement of our name recognition. In countries with good sales prospects where Unit 4 Agresso does not have its own sales organization, the company often enters into an alliance agreement with a distributor of business software. In some cases the alliance acts as a trial period for acquisition of the distributor. In a strategic alliance Unit 4 Agresso and its partner offer their applications and/or services jointly. The objectives for a strategic alliance or an acquisition could be: increase in the number of potential clients by means of conversion to the products of Unit 4 Agresso. In the case of companies with a large client portfolio but with obsolete products, this is a good option; gaining access to new vertical markets or certain niche markets, for example those of local authorities in a country; expansion of functionalities, for example in the area of CRM, payroll or Human Resources; expansion of the services package. In principle Unit 4 Agresso will not make any acquisitions with a view to an expansion with similar products. In connection with return requirements and risk management a number of basic principles and conditions have been formulated for acquisitions. Reference is made here to Risks and risk management from page 37 onwards. By increasing the number of clients the annual maintenance turnover will similarly increase and supplementary services can be provided. This will improve the risk profile of the company. 2. Focus on specialized standard products As medium-sized international player, Unit 4 Agresso s competitive position is dependent upon the ability to put distinctive products onto the market. The financial resources are more limited than with the bigger players. In order to be able to utilize the R&D capacity efficiently, Unit 4 Agresso concentrates on standard technological concepts for a number of specific vertical markets. In these concepts, specialization, reliability, transparency and flexibility are important elements. Due to specialization per vertical market the Unit 4 Agresso standard applications are quick to implement and relatively simple to maintain. This results in a low total cost of ownership, with which Unit 4 Agresso distinguishes itself from its competitors. 3. Optimization of product mix per country Per country, Unit 4 Agresso strives for an optimum mix of international and national products in order to capitalize optimally on local opportunities and promote economies of scale in distribution and R&D. To this end three product classes are distinguished per country: Product class 1: international with a central market approach This is applicable to Agresso Business World, for which an international development plan has been drawn up and joint investments in marketing and R&D are made. Annual Report 26 1

12 Product class 2: local with international growth potential For these products there are national development plans, whereby the international growth potential is regularly assessed and where possible exploited. A contribution is made at a central level towards the development of these products. Examples from this category are Agresso Wholesale and Unit 4 AccountAnalyser, which were developed in the Netherlands, and a front-office application developed in Canada for educational institutions. Product class 3: local These products contribute per country towards a better overall range of products, whereby local sales opportunities, client needs and market requirements are responded to. Only a limited amount is invested in the marketing of these products. Products can be promoted or demoted to a different class. A number of products in product class 3 originate from acquisitions. These are usually replaced after a certain time by existing Unit 4 Agresso products with proven success. Product class 3 however also appears to act as a good breeding ground for the identification of products with growth potential. The sale of Unit 4 Agresso products takes place via: in-house sales organizations, which also sell products from partners in order to be able to offer clients a better overall choice. distribution partners who offer products from several manufacturers. strategic partners, who offer their own products coupled with a product from Unit 4 Agresso as a total solution. Unit 4 Agresso expects an active input from its employees in the realization of the necessary growth and a high degree of responsibility. Objectives Oper ational objectives In order to continue to distinguish itself from its competitors and to implement its business strategy, Unit 4 Agresso strives to fulfil the following objectives: supply the best products and services imaginable for selected markets and sectors; quick and effective implementation by means of standardization of products; acquire a strong market share (top-3 position) in the markets in which it operates; remain in a position to offer clients the lowest total cost of ownership by means of specialization; offer products which, by means of their many analysis and reporting facilities, make the business operations and results of our clients fully transparent; stay close to the client by means of field operatives, branches, distributors and/or dealers. Financial objectives for the medium term Our business strategy, aimed at the protection and strengthening of our market positions, requires continuous growth via existing and new activities. For the financing of this growth Unit 4 Agresso has determined a number of financial objectives for the medium term. Assuming a normal growth of economic activity the financial objectives for the coming 3 years are: an average organic growth in turnover of 7-1%; a turnover between at least 4 and 5 million in 29, including the contribution from new acquisitions. Employees Unit 4 Agresso considers the professionalism and dedication of its employees to be of vital importance. It goes without saying that Unit 4 Agresso values a good bond with the 2,76 plus employees. It therefore offers good opportunities for personal development and good salaries and fringe benefits. 11 Annual Report 26

13 Board of Directors C. Ouwinga (1955) Chris Ouwinga has been chairman of the board (CEO) since His primary area of attention within the organization is business software. In 198 he was co-founder of the then Unit 4. In 1983 he was promoted to assistant director and he became responsible for technical matters. In 1986 he was appointed CEO of Unit 4. Under his leadership Unit 4 Agresso grew into one of Europe s leading suppliers of business software. Annual Report 26 12

14 drs. E.T.S. van Leeuwen RA (1966) Edwin van Leeuwen joined Unit 4 Agresso in the middle of 1999 and has been Chief Financial Officer (CFO) since April 22. His primary areas of attention are Finance, Legal Affairs and Investor Relations. He is a chartered accountant (RA) and was previously employed as manager of Finance & Control with Koninklijke Van Ommeren N.V. Prior to this he worked for 8 years as an accountant at, amongst others, Coopers & Lybrand. 13 Annual Report 26

15 drs. H.P. De Smedt (1963) Harry De Smedt has been Executive Vice President (COO) and director of Internet & Security since January 21. His primary area of attention is IT security. He has been employed by the company since 199 and has occupied various management positions. Mr De Smedt has a degree in computer sciences, in advanced management (Vlerick Management School), is a Bachelor of Economics and has an MBA from the University of Diepenbeek in Belgium. Annual Report 26 14

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17 rbd report from the board of directors Turnover EBITDA (operating result before depreciation and impairment) Net result attributable to Unit 4 Agresso s shareholders Earnings per share before goodwill related impairment e million +19% e 4.1 million +25% e 18.3 million +3% e % Focus on business software Unit 4 Agresso experienced a successful year in several ways. Our performance in the market was excellent, with our product Agresso Business World as the motor behind a stable international growth. We also took important steps in the implementation of our long-term strategy. The decision to divest our security activities creates space for the realization of our growth ambitions for business software. With the reinforcement of our positions in Germany and Spain we have already taken the first step in this respect in 26. Whilst the market for business software grew by between 6 and 7%, the organic growth of our business software activities amounted to approximately 9%. Our flagship product Agresso Business World provided an important contribution towards further internationalization of our activities and the improvement of our scale size in the weaker regions. The new 5.5 version, which was introduced in the second half of 25, was positively received and formed the basis for a steady growth in turnover during the year. A strong contribution towards the absolute growth in business software turnover was especially made by the Netherlands. The largest growth was realized in Germany (>1%), the United Kingdom (+32%), Norway (+2%) and the Benelux (+2%). Annual Report 26 16

18 NO expir ation date In the current replacement market the unique competitive advantages of Agresso Business World once again become clear. Whilst the business software of many companies has reached the end of its product cycle of between 5 and 8 years, this end is not yet in sight for the users of Agresso Business World. After all, Agresso Business World changes with the changing requirements organizations set for their business software. Practice proves the correctness of the closing sentence of our new marketing campaign launched in 26: ERP... with NO expiration date. Of the companies and institutions which do require replacement there are many who, following evaluation of their previous purchase, now opt for Agresso Business World. The licence sales to these new clients will also contribute to the growth in turnover from maintenance contracts during the coming years. In a number of countries national products also contributed substantially towards the growth in turnover, particularly in the Netherlands. Local and supplementary products remain important in the support of our international growth. With these products we direct ourselves at attractive niche markets, support the access to new vertical markets and increase the efficiency of our distribution network. Sale of NOXS and reseller activities Unit 4 Agresso succeeded in continuing the many years of turnover growth in Internet & Security in 26 as well. The turnover of the discontinued operations increased to million (+13%), whereby our small market positions in the United Kingdom and Italy were greatly strengthened. We had already announced earlier that we were considering the sale of these activities as the possibilities for synergy with the business software activities are very limited. In October 26 we were able to announce that we had entered into negotiations on the sale of NOXS, the distribution activity of the Internet & Security division. In February 27 Key points 26 Strong organic growth of 9% in business software Agresso Business World 5.5 the motor behind international growth Better growth prospects due to intended divestment of security activities Market positions in Germany and Spain strongly reinforced the negotiations were completed and agreement was reached with Westcon. The sale of NOXS enables a more efficient utilization of capital and accelerated internationalization of the business software activities. The strong European market position which we had built up over the last few years in Internet & Security, led to high demand in the market and made a good transaction possible. The internet activities under the name Amercom, which was successfully repositioned in 26, and Unit 4 Agresso Continuity & Security, which offers a total range of ICT services, are excluded from the sale and will be incorporated in the business software activities. Both activities offer good opportunities for cross-selling. Strengthening of positions in Spain and Germany One of our strategic spearheads is the strengthening of market positions in countries with as yet a limited scale size. In Germany we took an important strategic step with the acquisition of the financially sound sister companies Dogro and Kirp, with which we achieve a top-4 position in the German public sector and acquire a portfolio of approximately 6 clients, good references and knowledge of the required specific functionality for the German public sector. The addition of Agresso knowledge offers good growth prospects for the coming years. The joint turnover of Dogro and Kirp amounted to 14 million in 26. In Spain the basis for further turnover and profit growth was greatly strengthened with the acquisition of CCS, the largest acquisition by Unit 4 Agresso in business software since the acquisition of Agresso in 2. CCS enjoys a large name recognition as software developer and provider of support services. With 522 employees and a turnover in 26 of 34 million CCS has a leading position in the Spanish market for financial applications for medium-sized companies, accountancy firms and tax consultancy firms. Spain is one of the fastest growing software markets in Europe and offers good opportunities for cross-selling and the application of our knowledge for vertical markets. 17 Annual Report 26

19 In addition we acquired a 5% interest in the Dutch software company Amedia (turnover 12 million in 26), with an option for complete takeover. Amedia is market leader in software for insurance and mortgage intermediaries. This niche market offers opportunities for expansion of our market share and cross-selling. Acceler ated internationalization through cooper ation With the growing scope and spread of our activities, the opportunities for cross-border cooperation and synergy are increasing. A new technological step in 26 was the separation of the Agresso platform and the Agresso applications. As a result of this we will be able to couple this platform with several other products. In 26 a start was made with the introduction of Agresso Wholesale, formerly Omnivers. The more frequent use of the Agresso platform does not only lead to efficiency advantages in product development. It makes more products suitable for international growth, improves the effectiveness of our marketing and brings a number of our technological concepts closer together. Agresso Business World is the motor behind our international growth, but for the penetration of new vertical markets and strengthening of market positions the correct supplementary functionality is of great importance. This functionality we develop ourselves, acquire by means of acquisitions or obtain from strategic partners. Strategic alliances can lead to both a strong product on the basis of integrated functionality and access to new markets. In 26 we entered into an alliance with the American Hansen Information Technologies. We expect that in 27 this will lead to orders in the American public sector and to an entry into Australia. We also achieve integrated functionality through increased internal cooperation. In France we acquired access to the market for higher education with the help of a student registration system from our Canadian branch. Cooperation between the country organizations led to it that Unit 4 AccountAnalyser, a specialized product for the accountancy market, is now being sold in the Netherlands, France and the USA. Furthermore, a number of contracts were concluded for this product with internationally operating accountancy firms. In addition, we continue to improve upon our ability to utilize our joint knowledge, capacity and experience in the area of R&D and the strengthening of positions in countries with as yet small market positions. Investing in basis for growth With a strong product range, a dedicated organization with 1% focus on business software and a good investment climate the prospects for Unit 4 Agresso are excellent. However, we are faced with major challenges to successfully take a new step in our international growth. Although many clients and technical analysts are already convinced of the unique competitive advantages of Agresso Business World, we still lack name recognition in many markets to be able to grow quickly and cost efficiently. In 26 we therefore invested in a sharpening of our marketing communication, whereby we explain the advantages for the client and the distinctive strength of Agresso Business World even better. Also in the coming years we will keep our investments in marketing at a substantially higher level than in the past years. New acquisitions remain important. In 26 we invested 49.8 million in acquisitions and partly depending on the opportunities which arise, we will also invest substantially in acquisitions in the coming years. In addition we will strive for geographic expansion via strategic participating interests, so that we can build up large market positions more quickly, and achieve profitability more quickly in new markets. Growth also takes place by means of cooperation with new distributors and intensification of existing relationships with distributors. A point for special attention, in the case of continued growth, is to keep our R&D costs manageable and at a moderate level. A more efficient utilization of our joint R&D capacity and intensification of cooperation with partners in countries with lower salary levels are essential in this respect. Annual Report 26 18

20 Almost every country in which we are active contributed to our growth in turnover in 26. The fact that also during the past year we were able to convince so many existing and new clients of the quality of our products and services, is attributable to the effort and dedication of our employees. The management is fully aware of this and wishes to thank them for this. Kind regards, on behalf of the management, Chris Ouwinga 19 Annual Report 26

21 27 prospects for 27 The market for business software The investment climate for 27 remains favourable. Many organizations have reached the point where their business software needs to be replaced. By means of a good positioning of our products on the replacement market we expect that the organic growth of Unit 4 Agresso, just as in 26, will exceed the average market growth. Survey of the replacement market commissioned by Unit 4 Agresso Many companies and institutions are currently considering new business software. They have often undergone turbulent changes. This applies particularly to the service sector, both the commercial companies and the public sector. In the period following the bursting of the internet bubble the focus lay first on cost savings. Thereafter, organizations again developed the need for applications which could provide them with a competitive advantage: applications with which important decision-making information could be retrieved from the systems, with which old systems could be coupled with new processes and with which company portals were built in order to bring processes and information together and to make them accessible to end users. But how satisfied were these organizations during the last few years with all these modifications they had implemented upon the advice of their software supplier? In order to find this out Unit 4 Agresso commissioned a survey amongst ERP users by the Canadian Technology Evaluation Centers at the end of 26. In this survey, 87 IT and company managers in 83 countries were approached. 7% of these were of the opinion that they were caught in an endless spiral of costs for their ERP software. One third of the managers said that their software supplier could not offer effective means for good entrepreneurship. More than 7% indicated that they continually invest in improvements, upgrades and supporting applications in order to obtain the maximum from their ERP system. The survey shows that many managers are frustrated because they are put to great expense when they want to modify the implemented system. Almost 3% of the managers interviewed stated that they are discouraged by the impact these changes have on their ERP system. Conclusions for the replacement market The constantly recurring need to reinvest in updates of the ERP system, makes it clear what the policy of most business software manufacturers is. The flexibility of their ERP system is based on the prevailing situation before the implementation. Organizations which operate in reasonably stable environments can easily handle static business software, but companies that are involved in fast growth, that need to modify their corporate model regularly or that often have to respond to changes in legislation and regulations, need a different type of business software. These companies need business software which has been designed for flexibility after implementation, whereby the software easily changes along with new requirements for the organization after the initial implementation. Many company managers and IT managers are currently taking stock of their experiences with the business software they purchased 5 to 8 years ago. With regard to the peopleoriented organizations, in which project-based working and frequent changes in external and internal factors play an important role, Unit 4 Agresso, with its product Agresso Business World, is extremely well placed to benefit from the stricter requirements which organizations currently set for business software. These requirements relate to the degree to which the business software contributes towards the realization of the company objectives and to the lowest possible total purchase and maintenance costs of the system. The Technology Evaluation Centers survey shows that many organizations have misjudged the maintenance costs of their Annual Report 26 2

22 ERP system over the last few years. With traditional, static business software the initial purchase forms only a small part of the total costs and by far the biggest part of the costs consists of costs for the support of organizational changes in the years thereafter. In the case of Agresso Business World the adjustment to this type of change is inherent in the architecture. For organizations which are subject to many changes, Businesses Living IN Change, this results in a favourable total cost of ownership. The report Western European ERP Application Competitive Analysis 26 published by market research bureau IDC in November 26 endorses this conclusion. In the accompanying press release by IDC, which can be found at Unit 4 Agresso, SAP and Microsoft are named as ERP suppliers with the best possibilities for gaining market share in Western Europe. The report itself states: Unit 4 Agresso is rated as well positioned for market share gains, primarily driven by its industry depth (for people-intensive enterprises in the public sector and business services verticals), product vision around the decentralized organization and post implementation agility, and perceived low total cost of ownership. Trends in client requirements Unit 4 Agresso pays a great deal of attention to the development of new and improved functionality which will help our clients to realize their corporate objectives even better. For the coming years we foresee four important effects which in many organizations could lead to essential changes in the activities, the organizational structure or the corporate model. Unit 4 Agresso is developing specific functionality in every field in order to respond to these trends. The labour market effect The success of organizations is dependent upon the availability of expert and motivated employees and well-functioning teams. In many countries the labour market is currently becoming tighter. This means, among other things, that: employees more easily leave the organization, as a result of which the employer runs the risk of losing important knowledge; organizations must strengthen their ability to attract, develop and keep good employees, and to assess and pay them on the basis of their performance; organizations are seeking possibilities to outsource certain office activities, making use of the latest IT technology, without detriment to the effective management of employees and teams; the possibilities which the new generation of employees offers, being intellectual and physical mobility and a flexible approach to challenges, must be capitalized upon. New applications in the area of personnel information, with more advanced registration and analysis facilities, offer organizations important decision-making information. Organizations which manage the opportunities and threats with regard to their human resources and the labour market better than others will gain a competitive advantage through this. The Google effect Search engines on the internet, such as Google, have drastically changed the manner in which we find, share and utilize information these days. More than a billion searches are requested per day via Google, of which more than half are in languages other than English. As a result the way in which people live, exchange information and do business is changing. This also leads to changes in the manner in which companies compete with each other: Organizations are becoming less dependent on companies with exclusive knowledge, as a result of which new opportunities for price competition and cost advantages arise. These days, organizations can collect and combine information regarding any subject, which they can use to develop a better vision and strategy in areas such as products, services, price, clients and suppliers. Good ideas are quickly spread around. This encourages innovation and makes it necessary to react quickly when new opportunities arise. Bad news is also spread more quickly. People are able to distinguish more quickly between good things and bad, and this also creates new opportunities in the market. Clients expectations are changing with regard to the speed with which they are served and the accessibility and transparency of products and services. Due to the simple and quick manner in which information can be found these days, computer users expect that other links via the computer can also be made easily. This we call the 21 Annual Report 26

23 Google effect. Organizations which succeed in managing the opportunities and threats related to the Google effect, will gain a competitive advantage from this. The globalization effect Almost all organizations will be involved in the effects of globalization, even if all branches and clients are in one country. Examples are a local hospital which can obtain second opinions regarding X-ray photographs in India against low costs, or more flexibility in the conditions of supply of an IT supplier because components can be obtained from various countries. Globalization leads, among other things, to: new organizational structures of internationally operating companies, whereby new information technology makes it easier to divide the work such that optimum use is made of the specific circumstances in a particular country; blurring of the boundaries of companies due to close cooperation with networks of suppliers, manufacturers and clients; easier access to the international labour market, which can help in cases of increasing scarcity of specialized employees; the search for a corporate model whereby the advantages of globalization are utilized in a socially responsible manner; continued (international) consolidation in many sectors; the entrance of non-traditional competitors to markets; the rise of large private equity funds, which carry with them different norms in the area of ownership management, company and product cycles and company performance. Organizations which manage the opportunities and threats with regard to globalization better than others, will gain a competitive advantage through this. The stakeholders effect Organizations are under increasing pressure from legislative and regulatory bodies, shareholders and society to account more often and in more detail for their performance and the policy followed. Expectations are constantly changing. Precisely this leads to the fact that the influence of stakeholders on the operational management and the strategic planning continues to grow. This requires: greater emphasis on quick and effective implementation of strategic initiatives such as reorganizations, restructuring, modifications to the corporate model and integrations following mergers and acquisitions; greater emphasis on business software which enables organizations to offer the required transparency more quickly and easily all the time; greater emphasis on improvement of instruments for performance measurement and efficiency in the reporting process; greater emphasis on the quality of financial planning and management processes, in view of the fact that more frequent and more detailed reporting increases the risk of damage from incorrect implementations. Organizations which are able to fulfil the expectations of their stakeholders better and more efficiently than others, will gain a competitive advantage through this. Developments amongst providers There is continued (international) consolidation amongst the providers of business software. Medium-sized providers such as Unit 4 Agresso can protect and strengthen their competitive position by means of increase in scale, strategic alliances and further specialization per market segment. Str ategic initiatives Unit 4 Agresso remains focused on the optimization of its market positions. The strategic spearheads for 27 are: further development of the positioning of Agresso Business World; increase in the number of distribution partners in countries where we are not yet or hardly active, in particular in Eastern Europe, South America and South-East Asia; expansion of the international sales of Unit 4 AccountAnalyser and further development of Agresso Wholesale as an international product; the entering into and further development of strategic alliances for product integration and the sale of integrated solutions, for the advancement of economies of scale and access to new markets; better utilization of the R&D capacity by means of internal cooperation, improvement in efficiency, cooperation with partners and partial outsourcing. The strongly increased R&D capacity in Spain resulting from the acquisition of CCS plays a part in this. Annual Report 26 22

24 In addition the following initiatives will remain of importance in the coming years: expansion of the distribution networks for our existing products in new markets by means of acquisitions, strategic participating (minority) interests and alliances; expansion in areas with an as yet limited scale size, such as France and the USA; the development of specific supplementary products for the target groups. Turnover and profit expectations Unit 4 Agresso is in a good position to benefit from the favourable investment climate for business software and to further strengthen its market positions. Except in cases of exceptional economic circumstances we are therefore positive with regard to the anticipated growth in turnover and result. We anticipate an organic growth in turnover of 7 to 1%, which will surpass the growth in the market for business software. The strengthening of our market positions in Germany and Spain will provide an important contribution towards the turnover and profit development. Unit 4 Agresso expects, on the basis of the current trends, similar accounting principles and excluding extraordinary expenses, that the operating result (EBITDA) will show a growth of at least 15% in Annual Report 26

25 dbs developments continuing oper ations Activities Unit 4 Agresso develops, sells, implements and supports business software for the management, support and optimization of business operations and for the optimization of the operational management. With its international product Agresso Business World, Unit 4 Agresso focuses primarily on the market for people and project-oriented companies and institutions which it defines as BLINC: Businesses Living IN Change. In the Benelux, Unit 4 Agresso also focuses with other products on the small and medium-sized enterprises (SME) and a number of vertical markets, including wholesale trade and distribution, accountancy and health care. Because of the strong turnover growth in licences the turnover share in this segment decreased only slightly last year. This does not detract from the fact that there is a relative decrease in the turnover share from licences due to the strongly increasing size of the total client portfolio. This is due to the long life span of our products, the high degree of client satisfaction and the very limited loss of clients. This results in the basis for the turnover from maintenance services becoming more robust every year. After the realization of the intended divestment of the security activities, the business software activities will comprise all activities of Unit 4 Agresso in 27. Turnover development All countries in which Unit 4 Agresso has its own sales organization, knew a favourable investment climate. The turnover development was widely supported by a large number of new clients in the middle segment as a result of which it shows fewer peaks and troughs than in 25. In almost all countries Unit 4 Agresso was able to improve its market share. The turnover increased in 26 to million (+19%). The turnover of the acquired German sister companies Dogro and Kirp was consolidated with effect from July 26. The influence of the 5% interest in the Dutch Amedia, consolidated as per July 26 as well, was modest. The organic growth of the turnover amounted to 9%. The relative increase of the turnover share from maintenance contracts and subscriptions means an improvement of the risk profile because the economic dependence on the willingness to invest in the market decreases. Products The turnover from product sales (licences) increased by 17%. The strong growth is directly related to the successful introduction of a new version of Agresso Business World, the 5.5 version, half way through 25. This product became available in 26 for many clients, following completion of the required local modifications. The turnover spread in licences for Agresso Business World includes many vertical markets. Most of the new contracts were signed in the government Turnover of continuing operations (in x 1 million) Development 26 as a percentage 25 as a percentage 26 vs. 25 of the total of the total Products Provision of services and other Contracts and subscriptions Total % 24% 25% % 37% 4% % 39% 35% % 1% 1% Annual Report 26 24

26 sector and in the professional services sector. But there was also a healthy growth in the business services sector and in the smaller non-profit organizations and higher-education sectors, in which we have strong market positions. Of the remaining products our products for the accountancy sector and the processing of salary and personnel information in particular, contributed substantially towards the growth in turnover. Provision of services and other The turnover from services increased by 11%. The services consist mainly of implementation of software at our clients. The turnover development of these services is closely related to the development of the licence turnover. Part of the growth of these services is related to the increasing complexity of a number of our products. During the last few years we have improved our management with regard to the efficiency and effectiveness of the services. This resulted in a good calculable capacity utilization in 26. There was however a higher cost level due to a higher percentage of hired-in personnel in order to be able to meet the demand for maintenance services during peak periods. Contr acts and subscriptions Both existing and new clients form the growing and stable basis for our turnover in maintenance contracts. The turnover in maintenance contracts grew to 91.6 million (+3%). This activity is of great importance due to the recurrent nature of the income. Part of the maintenance turnover originates from clients who opt for a subscription to our software instead of the purchase of a licence. In the case of a subscription all the necessary costs for maintenance and updates are included in the lease price. The lease agreement is entered into for a minimum number of years, as a result of which the total turnover per client is at least equal to the turnover which would have been realized via the licence model and the associated subsequent costs for maintenance. Companies and institutions who opt for a subscription are often relatively small and often also opt for the use of business software via an Application Service Provider (ASP). In that case they make use, via an internet connection, of an application on a central server which is managed by or on behalf of Unit 4 Agresso. In the public sector smaller institutions, including local authorities, often opt for a cost-efficient joint ASP subscription. In the private sector specialist shops which are part of the same chain, such as travel agents, opt to an increasing extent for a joint subscription. Most important initiatives in 26 Every year many initiatives are implemented in order to strengthen our market positions. Some of them are centrally initiated and the remainder consists of initiatives from the country organizations. This concerns acquisitions, quality improvement, expansion of products and services and improvements in marketing and sales or in the organization. An overview of the most important initiatives of the past year is given hereafter. Access to the German public sector The public sector is a core market for Unit 4 Agresso. With the acquisition of Dogro and Kirp (turnover approximately 14 million in 26) Unit 4 Agresso has now also acquired an important position in this market in Germany. In most of our countries, in particular in the United Kingdom, Sweden, Norway, Spain, the USA and the Netherlands, Unit 4 Agresso already has an important market share in the public sector. Dogro and Kirp offer standardized financial software solutions for local and central governments and public institutions. More than 2, users spread over hundreds of towns and public institutions work with the Dogro and Kirp software and these support more than 15 million residents. The approximately 6 clients include the municipalities of Düsseldorf, Krefeld, Mönchengladbach, the federal states Baden-Württemberg and Berlin and the federal employment office Bundesagentur für Arbeit, with more than 4, users. The Dogro and Kirp products fit in closely with the Agresso Business World philosophy and technical infrastructure. Dogro and Kirp together have approximately 14 employees. Strong expansion in Spain The acquisition of Centro de Cálculo de Sabadell (CCS), with a turnover of approximately 34 million in 26 and over 52 employees, was the largest acquisition by Unit 4 Agresso in 25 Annual Report 26

27 Business Software since the takeover of Agresso in 2. CCS develops, distributes and supports financial software applications and offers consultancy services with added value for the improvement of business operations such as payroll, bookkeeping, planning, invoicing, human resources and client management. CCS has a leading position in the Spanish market for financial applications for medium-sized companies (1-5 employees), accountancy firms and tax consultancy firms. The total turnover in Spain in 27 is estimated at 5 million. With over 7 employees in total Unit 4 Agresso now has its largest services capacity in Spain. Spain is one of the fastest growing software markets in Europe. CCS adds, amongst other things, payroll software to our Spanish product range, strengthens our joint R&D capacity, and offers many possibilities for the cross-selling of products, amongst others in accountancy, and the utilization of joint expertise in various vertical markets. ERP... with NO expir ation date A survey commissioned by Unit 4 Agresso showed that our explanation with regard to the client advantages and product characteristics of Agresso Business World could be improved upon. On the basis of this the marketing communication for Agresso Business World was sharpened. Most large ERP suppliers claim that they can respond flexibly to the wishes of their clients. This is flexibility prior to the implementation. In practice however it appears that the flexibility after the implementation generally leaves a lot to be desired, which either leads to high costs for modifications to the system or to the user not being able to respond sufficiently to changes in the environment. This can immediately jeopardize the realization of corporate objectives. Agresso Business World is a product which is specifically geared to changes in the environment. Following the initial implementation the software changes relatively easy along with new requirements for the organization in connection with market developments or regulations, also if it involves for example a flotation on the stock exchange, globalization, a merger, large influx or outflow of personnel or drastic measures in crisis situations or in the case of a profit warning. This means that the maintenance costs are significantly lower than at the competition and the life span significantly longer. On the basis of this Unit 4 Agresso therefore now defines its target group for Agresso Business World as Businesses Living IN Change (BLINC). These are people and project-oriented companies and institutions where frequent changes in internal and external factors are inherent in the strategy. Annual Report 26 26

28 Since the start of the marketing campaign our shortest summary of the competitive advantages of Agresso Business World is: ERP... with NO expiration date. Internationalization of products The internationalization of our specialist product Unit 4 AccountAnalyser was successful. Contracts were concluded with a number of large internationally operating accountancy firms and in addition local sales were started in the USA, France and on a smaller scale in a number of other countries. Sales of Agresso Wholesale took place in France on an as yet modest scale. Technological integr ation A new technological step was the separation of the Agresso platform and the Agresso applications. This makes it possible to couple this platform with other products. In 26 a start was made with the introduction of Agresso Wholesale, formerly Omnivers. The more frequent use of the Agresso platform leads to efficiency advantages in product development, makes more products suitable for international growth, improves the effectiveness of our marketing and brings our technological concepts closer together in the longer term. Alliance with Hansen in the USA Unit 4 Agresso started a strategic alliance with Hansen Information Technologies from the United States for the sale of software solutions to local and regional authorities. Agresso Business World fits in well technologically with the front-office applications of Hansen, who offers good references. The first contracts on the basis of this alliance are expected in 27. Other reinforcements in distribution In the Netherlands Unit 4 Agresso acquired an interest of 5%, with an option for complete takeover, in the software company Amedia, which is market leader in software for insurance and mortgage intermediaries. In Portugal Unit 4 Agresso took over the distributor who had been conducting the sale and support of Agresso Business World for a couple of years. This concerns a small acquisition, which will simplify the cooperation between the Spanish and Portuguese activities and puts Unit 4 Agresso in a better position to investigate the possibilities for expansion in South America. In South Africa and Australia Unit 4 Agresso entered into a cooperation with new distributors. Unit 4 Agresso Continuit y & Securit y In the Netherlands the integration of the security and network management activities of Foundation ICT Solutions, which was taken over in 25, was completed on 1 July 26. The activities were incorporated into our other ICT services in the Netherlands and these activities were continued jointly under the name Unit 4 Agresso Continuity & Security. For its ICT services Unit 4 Agresso now has 16 employees spread across branches in the regions Amsterdam, Rotterdam and Utrecht. Following this integration Unit 4 Agresso can offer its clients the following total range of services: professional services: projects and implementations; secondment: for network or system management; outsourcing: complete outsourcing of the IT network management; products and licences: advice, registration, administration and/or complete contracts management in the area of products and licences. In 26 the outsourcing activities were thoroughly revised and brought up to the same professional level as that of Unit 4 Agresso s other services. The turnover share of services in the total turnover increased to more than 9% in the Netherlands following the successful revision and repositioning of the Continuity & Security activities. The client portfolio consists mainly of medium to large-sized enterprises, which show a high degree of loyalty in their partnership with Unit 4 Agresso. To smaller companies, mainly products are supplied. In 26, Unit 4 Agresso Continuity & Security achieved a turnover of 15.3 million. Str ategy change in internet activities At Amercom, the Dutch company of Unit 4 Agresso which specializes in internet activities, a successful change in the strategy was implemented. Up until then, Amercom had focused on the development of websites and advised its clients with regard to the design and implementation of websites. The range of services was expanded in 26 with concept development. With this, Amercom is now able to advise its clients at a strategic level on the deployment of the internet as a communication medium. Following the introduction of a new logo and the new motto Interactive thought and action the new 27 Annual Report 26

29 strategy caught on quicker than expected. The average order size and the number of billable hours for consultancy increased substantially. This resulted in a strong growth in turnover and profitability. In 26, Amercom achieved a turnover of 2.9 million. Evaluation of initiatives announced earlier The previously announced initiatives for 26 were: The marketing, sale and local optimization of Agresso Business World 5.5. This went according to plan and expectations. The 5.5 version introduced half way through 25 has greatly contributed towards the strong organic turnover growth in 26. For most countries the local optimizations were completed in 26. For the remaining countries this will be the case in 27. The expansion of activities in countries with as yet limited market positions. In Germany and Spain we have strengthened our market positions substantially. Our acquisition in Germany means a growth of approximately 14 million in turnover value, a number 4 position in the public sector and an increase in the number of employees from 4 to 17. Our acquisition in Spain means a growth of approximately 34 million in turnover value and an increase in the number of employees from 18 to approximately 7. The preparation and expansion of the international sales in Europe of a number of locally developed applications. The international sales of Unit 4 AccountAnalyser developed favourably. This product is now sold in 2 different countries. Good progress was made with the preparation for the internationalization of Agresso Wholesale and a modest start was made with the international sale. The entering into and further development of strategic and ad-hoc alliances for product integration, sale of integrated solutions and project implementation, for the advancement of economies of scale and access to new markets. In 26 we entered into a strategic alliance with the American Hansen, which offers good prospects for the strengthening of our market positions in the public sector in the USA and other markets in which Hansen operates, including Australia and the United Kingdom. In our alliance with Sabre, aimed at the joint offering of the Central Command management information system for the travel sector, we modified our strategy. We set up our own sales staff for direct sales to clients in the USA. Our product range was improved as a result of the addition of a business intelligence application under the name Open Book, which was acquired via a small acquisition. This low-threshold application can be sold either together with Central Command or separately. This product is already popular with British travel agents and was well received at the introduction in the USA in 26. Uncertainties with regard to the commission structure led to a weak investment climate in the travel sector in 26. For 27 we expect a better development in turnover for Central Command. In Spain we intensified the cooperation with Siebel, who develops CRM software (Customer Relationship Management). Unit 4 Agresso implements and maintains these applications for approximately 3 municipal and provincial authorities. This led to a better access for Agresso Business World to this market. Further development and expansion of technology and functionality aimed at specific markets, amongst others in the area of personnel information. In several countries we achieved expansion of the functionality of our payroll software with personnel information. As a result of the acquisition of CCS in Spain we expanded our product range in this market with HR/payroll functionality. In France we successfully introduced a localized application of a student registration system which was developed in Canada. Last year we stated the following as objectives for the medium term: Expansion of the distribution networks, expansion of scale size in areas with an as yet limited scale size and the development of specific supplementary products for the target groups. The acquisitions in Germany, Spain, the Netherlands and Portugal, the cooperation with new distributors in Australia and South Africa, the new alliance with the American Hansen and the product portfolios of the Annual Report 26 28

30 acquired companies, with supplementary and specific functionality for our target groups, contributed towards this. maintenance. In dozens of other countries sales take place via a Unit 4 Agresso organization in a neighbouring country or via an external distributor. Developments per region Turnover spread 26 Benelux The turnover increased from 7.2 million to 84. million (+2%). The turnover of Amedia, in which Unit 4 Agresso has a 5% interest, was consolidated with effect from July 26. The largest turnover growth was achieved in accountancy. The successful international sales of Unit 4 AccountAnalyser played an important role in this. For the health care sector Unit 4 Agresso offers the product line Unit 4 Cura, specialized software aimed at client registration, electronic care dossier, financial, logistical, personnel and rota information systems, payroll and reporting. In 26 a strong increase in turnover was realized in this sector due to good and timely responses to a number of legislative changes which were important to this sector. For payroll and personnel administration Unit 4 Agresso offers the products Unit 4 Personnel and Unit 4 Payroll, which can be used both in combination and independently of each other. The turnover of these products grew strongly. At the present time more than 1 million salary slips in the Netherlands are periodically processed with Unit 4 Payroll. The strongest growths in turnover were achieved in Germany (>1%), the United Kingdom (+32%), Norway (+2%) and the Benelux (+2%). In Spain the turnover increased by 1%, in the United States/ Canada by 5%. In Sweden the turnover slightly decreased. In absolute figures the Benelux contributed the most to the increase in turnover. Unit 4 Agresso achieves approximately 65% of its turnover with its software package Agresso Business World. In addition, in a number of countries branch-specific software is offered, mostly in the form of an integrated solution based on Agresso Business World. In Sweden, for example, Unit 4 Agresso offers specialized software for construction companies based on Agresso technology. In a number of countries, in particular in the Benelux, the turnover largely consists of products based on a different technology. In the following regions/countries Unit 4 Agresso has its own branches for sales, local optimization and Agresso Wholesale, aimed at the wholesale trade and distribution sector, provides the largest contribution towards turnover in the Benelux and in 26 a healthy turnover growth was achieved. The growth in turnover from Agresso Business World can be particularly attributed to a few large orders from Belgian clients, including one from the digital bank platform ISABEL. Unit 4 Multivers, our financial administrative program for the SME, operates in an extremely competitive market, but was able to achieve a good increase in turnover and further increase its market share. The number of clients grew to more than 2,. The turnover development of Unit 4 Multivers Online, our solution for internet bookkeeping, was still modest. The turnover in the public sector increased slightly compared to 25. The market demand in this sector was concentrated more on front-office applications than on the back-office software which we currently offer. In 26 the activities in the public sector were integrated with our activities in business and professional services, of which Agresso Business World also forms a part. We expect that this will result in an improvement of our offer and of the sales opportunities in the public sector. 29 Annual Report 26

31 The turnover of Amedia developed well in the second half of 26. The market for insurance and mortgage intermediaries is an interesting niche market with good opportunities for improvement of the market share. With effect from 1 January 27 Unit 4 Agresso Continuity & Security, which offers a total range of ICT services, and Amercom, which focuses on concept development, design and implementation of websites, have become part of the Dutch business software activities as independent operating companies. United Kingdom The turnover increased from 38.6 million to 5.9 million (+32%). The majority of the turnover was realized in the higher education and government sectors. The orders from the University of Southampton, Loughborough University and The Crown Estate each represented a turnover value in excess of 1 million. The University of Southampton strives for a high level of research and was searching for the best and most cost-efficient software solution which fitted in with this. The Crown Estate, formerly owned by the Royal Family, manages a property portfolio with an estimated value of 6 billion, the proceeds of which go to the treasury. This government institution, which has both commercial and cultural-historical objectives, was searching for a modern and flexible back-office system in which the processing of its extensive insurance administration is properly safeguarded. A large proportion of the remaining orders came from other universities, local and regional authorities, and non-profit organizations. The bundling of the Agresso functionality with the front-office application of MCA, which was taken over in 25, proved fruitful and contributed towards the turnover growth in the education sector. The turnover in the private sector grew slightly. Sweden The turnover decreased from 39.5 million to 39.1 million (<1%). Following the launch of Agresso Business World 5.5, Sweden was one of the first countries for which the localization became available. This contributed towards a strong turnover development. That the total turnover nevertheless showed a decrease can be explained by the fact that in 25 a number of very large orders were obtained. The product range in Sweden is broader than in most of our other countries, but is, in contrast to the Benelux, almost completely related to the Agresso technology. The broad range of functionality, largely acquired via acquisitions, enables the Swedish organization to serve different vertical markets. An order of more than 1 million was received from the Ethiopian Insurance Corporation. This concerns the supply of software for webbased services in a network which includes all national branches. Prior to this, our Swedish organization was already successful with orders for the national power station EEPCo and various international organizations in Ethiopia. The remaining orders were primarily realized in central government and local and regional authorities, but also, amongst others, in technical services for aviation (SAAB), project-oriented construction companies, property management, financial services and services for the agricultural sector. The Swedish R&D department developed a service-order module which was added to the Agresso package. With this, a new market sector, (mobile) maintenance and repair services, was successfully reached. Based on this module the central R&D department for Agresso in Oslo will develop a generic module suitable for worldwide sales. N o r way The turnover in Norway increased from 19.6 million to 23.4 million (+2%). Norway is a relatively small market, but Unit 4 Agresso has a very strong market position here. Most new orders were realized with government and local authorities and in the public sector. The largest order in 26, for almost 1 million, was received from Helse Vest, a regional hospital organization in the south west of the country. This concerns the supply and implementation of new software which will be used by more than 2, employees, divided over various branches. In the Norwegian private sector Unit 4 Agresso retained the strong positions which it has in the markets for technological and construction companies, utility and energy companies and in the oil and offshore sector. Annual Report 26 3

32 The Danish activities are managed from Norway and the turnover is conlidated in the Norwegian turnover. In Denmark an order was received, amongst others, from Saab Danmark, a developer, manufacturer and supplier of military information and communication systems for ships. Spain The turnover increased from 12.1 million to 13.3 million (+1%). In Spain Unit 4 Agresso holds strong positions in the private sector, particularly in business and professional services, and in the market for local and provincial authorities. The strongest growth took place in 26 in the private sector, partly due to an effective cooperation with Siebel. The Siebel frontoffice applications fit in extremely well with our Agresso product. Extra cross-selling possibilities are created due to the fact that Unit 4 Agresso also performs the services for Siebel. Particularly in the area of financial services this led to a strong growth in turnover in 26. Unit 4 Agresso regards Spain as an important growth market for business software. The acquisition of CCS is of great strategic value for further growth in Spain. Both the CCS product portfolio, which includes payroll software, and the capacity and the specialist nature of the service, amongst others in the area of accountancy, offer an excellent addition to the current activities. On the basis of the turnover value in 26 the total turnover in Spain will increase to approximately 5 million in 27. The number of employees will increase to in excess of 7. The larger scale and a reorganization of the accommodation will enable a substantial improvement of the efficiency and profitability of the Spanish activities. Fr ance The turnover decreased from 8.2 million to 8.1 million (-1%) partly as a result of the reorganization which was implemented at the end of 25. Nevertheless, further modifications and professionalization proved fruitful. In the education sector and in central and regional government, the two core markets for which a specific market approach has been developed, a number of large orders were realized. Three orders had a turnover value of more than 1 million each. The largest order concerned the supply of software for the central administration of the French air force. The reason was a government decision which made a completely new system necessary. Other large orders were received from AFTRP (Agence Foncière et Technique de la Region Parisienne), which deals with land and property development in Paris, and HEC Paris, an institution for higher education which provides various training programmes in the area of management and entrepreneurship and which is financed by the CCIP, the Parisian Chamber of Commerce. Our French organization achieved an important breakthrough in 26 in both its core markets. Upon completion of these orders, which still requires the necessary attention, good references for further growth are created. Germany The turnover increased from 4. million to 1.9 million (>1%). The Dogro and Kirp turnover was consolidated with effect from July 26. The contribution towards turnover from Dogro and Kirp in the second half of 26 developed according to expectations. Dogro has strong positions at a regional level, in the federal states, whilst Kirp has in excess of 5 regional authorities as client. The companies offer good references and knowledge of the required specific functionality for the German public sector. The addition of our Agresso knowledge offers good growth prospects. United States/Canada The turnover increased from 6.1 million to 6.5 million (+5%). The US was the first country where our new marketing campaign for Agresso Business World was launched. This resulted in a number of new clients from the local and regional authorities. The largest growth was achieved in business and professional services, including the oil, offshore and technology/construction sectors. 31 Annual Report 26

33 Oper ational results Operational results continuing operations (in x 1 million) Development 26 vs. 25 Turnover Cost price of the turnover Gross margin Operational costs ebitda % gross margin EBITDA as % of the turnover % % % % % 88.6% 89.6% -1% 16.9% 16.1% 5% The EBITDA increased by 25% to 4.1 million. Of great importance to the profitability is the size and the number of existing clients, since the maintenance services for these clients are a fixed source of income. This is why the largest contribution towards the EBITDA growth originates from the countries in which we have been active for a longer time: Sweden, the Benelux, the United Kingdom and Norway. Research & Development In 26 investments in R&D increased slightly to 27.7 million (+11%). The internal cooperation was intensified in various areas. Exchange of knowledge and utilization of joint R&D capacity played an important role in this. The cooperation with external partners was also intensified. The cooperation with Microsoft was expanded, particularly in the area of CRM functionality in the public sector. An increasing part of the development, programming and bug-fixing activities was outsourced to external partners in Romania and South Africa. Our R&D department focuses mainly on the building of supplementary functionality and the improvement of existing functionality. An important area for special attention is currently the further expansion of functionality for personnel information. This provides a good supplement to the functionality for project management and the payroll software, which is already offered in many countries. In most countries R&D activities are also carried out for local, specialized applications for niche markets. Notwithstanding the limited scale size these often lead to market positions which enable a good profit level. The less-strong presence of international competition plays a part in this. Annual Report 26 32

34 do discontinued oper ations Activities In various European countries NOXS, Unit 4 Agresso s distribution activity, sells security software from third parties and provides services for the implementation and maintenance of data security. With this, Unit 4 Agresso offers specialized know-how and tailor-made solutions with added value for the complete security process: from risk analysis to the implementation, optimization and maintenance of the security. The Internet & Security division will be discontinued in 27. Sale of NOXS On 18 October 26 Unit 4 Agresso announced that it had entered into negotiations regarding the sale of NOXS, the distribution activities of the Internet & Security division. These activities take place in the Benelux, France, Germany, Italy and the United Kingdom. The Dutch activities for the research, implementation and optimization of internet applications and support in IT management are excluded from the divestment. These activities form a good supplement to our range of support services in the business software market. The resale of security products in Belgium and Ireland are also excluded from the divestment of NOXS. In 26 it became apparent that the Belgian and Irish organization cannot be repositioned as ICT service providers without acquisitions. In view of the fact that these activities no longer form part of the core activities, they will be divested in 27. Turnover development Following years of turnover growth the turnover also increased in 26 reaching a level of million (+13%). The growth was achieved completely organically. The development of the US dollar exchange rate had a negative effect of approximately 2% on the turnover development. The turnover ratio between products and services changed minimally in favour of services. There was a strong growth in product sales, particularly due to the increased demand for UTM hardware (Unified Threat Management). These are integrated security products which ensure a better coordination between different functions. The growth within services was strongest in support. Turnover discontinued operations Development 26 as % 25 as % 26 vs. 25 of total of total Products Provision of services and other Total % 95% 95% % 5% 5% % 1% 1% 33 Annual Report 26

35 P r o d u c t s The turnover from products increased from to million (+13%). In the product group firewall & appliances, in particular Checkpoint, Juniper, Nokia, Fortinet, Sonicwall and Symantec contributed towards the turnover growth. In the product group content security, in particular Bluecoat, Websense, Juniper, ISS, Finjan and Symantec contributed towards the turnover growth and in e-business Juniper, F5, Citrix, Radware and Infoblox were particularly successful. Turnover spread products Antivirus 18% 27% Firewall & appliances 38% 41% AAA 6% 5% E-business 19% 19% Content security 19% 8% The turnover from services increased to 9.1 million (+ 17%). Turnover spread services Managed services 13% 18% Professional services 54% 61% Support contracts 23% 8% Training 1% 13% Most important initiatives in 26 Every year many initiatives are implemented in order to strengthen our market positions. These concern quality improvement, expansion of our services, new contracts with suppliers for the sale of successful or promising products and improvements in marketing and sales or in organization. An overview of the most important initiatives of the past year is given hereafter. The focus in 26 was on strengthening of the organization and improvement of the business operations. Unit 4 Agresso Continuity & Security and Amercom in the Netherlands will become part of the business software activities as independent operating companies following the divestment of NOXS. For more information on these activities see the chapter Developments continuing operations, from page 24 onwards. Europe and therefore played an important role in this. Evaluation of initiatives announced earlier The previously announced initiatives for 26 were: Growth via existing activities, in particular in regions with as yet limited market positions, such as Italy and the United Kingdom. Organic growth was achieved in almost all countries, whereby the turnover in Italy and the UK more than doubled. Growth via new activities, through acquisition(s) or through remote managed services, which lend themselves well to cross-border services. Due to the strategic decision to sell the distribution activities the emphasis lay on the strengthening of the existing activities. Growth through a continued focus on services with added value. On the basis of best practices the services have been further harmonized and expanded in almost all the countries in which we are active. By means of coordination between the various support centres we are able to optimize the capacity utilization and guarantee our clients a quick solution to their problems in a cost-efficient manner. In all countries except Italy, paid services are offered, varying from support contracts to assistance with the implementation of important and business critical projects. D i s t r i b u t i o n o f new products In 26 there was a large number of takeovers and mergers amongst suppliers. A number of our suppliers were involved in this, which resulted in a substantial increase of their product range. Our distribution organization NOXS together with these suppliers had to fit the marketing and sale of these new products properly into the existing marketing approach. For our suppliers, NOXS is the largest distribution channel in Annual Report 26 34

36 Operational results Operational results discontinued operations (in x 1 million) Development 26 vs. 25 Turnover Cost price of the turnover Gross margin Operational costs ebitda % gross margin EBITDA as % of the turnover % % % % % 17.% 18.6% -9% 4.1% 2.9% 41% 35 Annual Report 26

37 financial summary Because of the intended sale of the Internet & Security division s distribution activities (NOXS) the turnover and results of these activities are categorized under discontinued operations. The comparing figures are adjusted accordingly. The total turnover of the continuing operations rose by 19% in 26 to million. The gross margin increased by 31.9 million (mainly because of increased turnover from maintenance contracts and increased licence sales). Organically the turnover grew by 9% in 26. The personnel costs increased by 17%, while the average number of employees rose by 25%. In 26 Unit 4 Agresso employed on average 2,116 people (FTE, 25: 1,695). The EBITDA of the continuing operations rose by 8.1 million to 4.1 million, which comes down to an increase of 25%. The EBITDA for the first half of the year amounted to 18.2 million, for the second half of the year to 21.9 million. This difference is caused by the seasonal pattern, especially in the licence sales. In the first half of the year the turnover amounted to 17.1 million, in the second half of the year to million. Depreciations increased by 4.9 million to 16.5 million due to increased depreciation on capitalized R&D, acquisitions (customer contracts) and impairment. Because of the higher depreciations and lower results from the discontinued operations the net result after taxes rose by 3% to 18.3 million. The net result before goodwill related impairment increased in 26 by 12% to 28.9 million. The net earnings per share before goodwill related impairment rose by 11% to 1.12 (25: 1.1). met. For both components an impairment test is carried out every year in order to check the valuation. The intangible assets total to million (25: 9.4 million). The increase in goodwill can be attributed to the acquisitions that took place in 26. The rise in development costs relates to acquired products on the one hand and to internally developed software on the other. The internally developed software mainly concerns the development of Agresso Business World and localizations of this product. Total R&D costs amounted to 27.7 million in 26 (25: 24.9 million). Out of this amount 9.8 million was capitalized in 26 (25: 9.3 million). Depreciations on software products rose by 64% to 7.7 million (25: 4.6 million). The operating capital of the continuing operations (excluding cash at bank and in hand) amounted to 19.3 million negative in 26. Mainly because of the acquisition the net cash position decreased with 17.1 million in 26 to a level of 17.3 million negative. In 26 the group capital grew to the amount of 133. million, an increase of 22% compared to 25 ( 18.9 million). The solvency (the share of group equity in the total capital) at 31 December 26 came to 35.1% (25: 42.7%). Part of the capital consists of goodwill and capitalized and acquired software development costs. These development costs are capitalized only when all criteria for capitalization have been Annual Report 26 36

38 rrm risks and risk management Risk management in gener al The management of Unit 4 Agresso is responsible for the internal risk management and control systems and, as far as possible, for actively managing the strategic, financial and operational risks Unit 4 Agresso has to deal with. When carrying out its activities, Unit 4 Agresso has to deal with business risks such as macro-economic developments, seasonal influences, changing market circumstances, new competition, changing purchasing margins, fluctuations in supply and demand and the speed with which new technologies are accepted. In addition, it is possible that risks which are currently not recognized, or are deemed as not material, will later turn out to have an important negative effect on the ability of Unit 4 Agresso to realize its corporate objectives. Our internal risk management and control systems are geared to the timely identification of these risks. In order to manage the effects of these developments, every organizational unit of Unit 4 Agresso must periodically carry out an analysis of the risks. On the basis of this analysis every organization within Unit 4 Agresso must then draw up a plan for risk management that forms part of the business plan. In addition Unit 4 Agresso operates in accordance with directives in the area of internal control, financial reporting and investment decisions, making intensive use of its own software which has been integrated over the entire width of the organization. In addition to quantitative aspects, information provision also contains qualitative aspects, such as the development of the prospect portfolio and the capacity usage of the consultants. The risk management and internal management system of Unit 4 Agresso consists of the following main components: Guidelines and consultation structures Reporting and analysis Inspection visits Guidelines and consultation structures The following important management measures (guidelines and policy rules) exist within Unit 4 Agresso: guidelines (manual) with regard to financial reporting; corporate governance structure laid down in articles of association and internal regulations; treasury policy plan which sets out objectives and policy rules for cash and foreign currency management and financing; guidelines with regard to budgeting and annual plans; annual consultation with the Supervisory Board, in which the most important risks and mitigating measures are discussed in detail; management regulations in which specific (conduct) rules and authorizations are regulated for all operating company directors; regulations and recording for transfer pricing; monthly meetings between division management and members of the Board of Directors to discuss progress and relevant matters. Reporting and analysis (per oper ating company) Reporting within Unit 4 Agresso is geared to being able to gain timely, effective and efficient insight into the degree to which strategic and financial objectives are achieved. The communication of financial and management information takes place in accordance with the guidelines which have been laid down within the reporting system. All operating companies report via a uniform procedure. The most important reports are: annual budget including business plan; daily reporting on cash position (cash pool); every quarter, detailed financial information on the expected outcome of the annual budget (estimate and rolling forecast); detailed monthly financial results compared to the budget and preceding years; detailed qualitative information per month (development of pipeline, capacity usage of consultants, order portfolio, development of operating capital and R&D projects); 37 Annual Report 26

39 monthly written reports of account of local management on relevant matters such as receivables, personnel affairs, possible claims, market expectations, competitive position, analysis of monthly result and other risks. The Board of Directors is of the opinion that systematic and regular reporting of the development of the most significant risks for Unit 4 Agresso is a vital aspect of the demonstrability of the effectiveness of the internal risk management system. In addition to the reports, timely and thorough analysis and consolidation of the financial management information is a critical success factor. The consolidation and analyses take place at the head office and are carried out by the Corporate Finance Department (CFD) which reports directly to the CFO. Inspection visits Unit 4 Agresso consists of a large number of operating companies which are responsible for their own local internal control, financial reporting and risk management. With regard to reporting to the head office, it is important that there is consultation between the local financial management and the head office. In addition to this consultation there are regular inspection visits from CFD. These inspection visits are carried out locally and are geared to determining that all reporting takes place timely and reliably, and that risk management and the management measures are executed adequately. In addition, CFD advises on the further optimization of the internal management system. Partly because of this a beginning was made in 26 with the implementation of a new and improved internal reporting system. The system is expected to be brought into use mid 27. The objectives are an improvement of the internal reporting by means of daily insight into financial figures, insight into more detailed information, broadening of reporting fields, reduction of dependence on the persons locally responsible and improvement of analysis facilities. At the same time an integrated budgeting module will be implemented (for budgeting, estimate and rolling forecast) to further professionalize the budgeting process. In addition to the aforementioned internal control, all the regular audits are carried out by external accountants of which Ernst & Young is the primary one. Based on the reports of these audits, its own observations and past experience, the Board of Directors states that the risk management and internal management system, as outlined above, functioned properly in the 26 reporting year. The true effectiveness can only be assessed on the basis of the results over a longer period of time and/or on the basis of specific review of the design, the existence and the working of the internal management measures. In a rapidly changing world with ever new challenges, ever further reaching demands are set for internal risk management processes and the review thereof, so that these processes can always stand improvement. The policy of the Board of Directors remains geared to the continual review and improvement of the risk management system in order to optimize the reliability and effectiveness of these processes and the monitoring thereof as much as possible and to adjust them where necessary. Annual Report 26 38

40 Reservation: No matter how well we have set up our internal risk management and control system, it can never offer absolute certainty that objectives in the area of strategy, operation, reporting and compliance with legislation will always be reached. Reality shows that when making decisions human errors of judgment can be made, that cost/benefit considerations always have to be made when accepting risks and taking management measures, that even simple errors or mistakes through human failing can cause significant losses, that conspiring functionaries can lead to circumvention of internal control measures and finally that it is possible for the management to insufficiently comply with agreements made. Compliance Compliance can be defined as the act of complying with the legislation and regulations that apply to an organization, in a controlled and verifiable manner. Continuous sharpening of the legislation and regulations continually leads to new rules regarding operational management, transparency and duty to maintain. For Unit 4 Agresso especially the Financial Supervision Act that came into effect on 1 January 27 and the accompanying implementing and further regulations are of importance. Unit 4 Agresso has appointed a compliance officer that together with the Corporate Finance and Corporate Legal Departments watches over the compliance within and outside the Unit 4 Agresso organization. Str ategic risks Economic climate and seasonal influences Unit 4 Agresso s flow of revenue primarily consists of the sale of licences, maintenance contracts and services. The latter component mainly consists of implementation and support. The economic climate and the related willingness to invest have an immediate impact on the number of new licences and the related maintenance contracts and services. Outsourcing of implementation work, especially in periods of boom, cushions part of the negative consequences of a possible lapse of the market. The revenues from maintenance contracts are far less susceptible to the economic climate. These revenues come from the existing clientele and are recurring. At present 39% of the total turnover comes from maintenance contracts. Due to the fact that this turnover category rose sharpest in 26, we can say that the risk profile has improved. The sensitivity to economic fluctuations lies in particular in the area of new licences. Partly due to the seasonal influences this kind of revenue flow entails a specific risk. The months of June and December are very important, not least because they immediately precede a natural starting time for the use of new software. A risk-reducing factor for licences and services is the fact that over two thirds of the turnover is achieved from the existing clientele. Turnover spread A balanced spread of turnover and profit over various countries and markets is important to avoid being dependent on the results of a specific country or a specific market. Compared to previous years, Unit 4 Agresso was able to ensure a better spread of the risk in 26. Not only because Unit 4 Agresso is active in different markets but also through the long relations with various clients. Geographically speaking, the turnover of Unit 4 Agresso is spread as follows: Benelux (35%), the United Kingdom (21%), Scandinavia (27%), Germany (5%), France (3%), Spain (6%), United States of America and Canada (3%). The vertical markets in which Unit 4 Agresso is active are the public sector (local and central governments, healthcare, non-profit organizations, universities and schools), professional service providers, wholesale and distribution companies. R isks of harm in acquisitions Risk management is an important part of the acquisition policy. In order to control the risks when executing this policy, Unit 4 Agresso has formulated the following positions: In principle, acquisitions must immediately contribute to the earnings per share and a return requirement is observed whilst maintaining healthy balance sheet ratios. Unit 4 Agresso looks closely at the quality of the management and attaches great importance to the involvement of selling directors/stakeholders. To achieve this commitment, in some cases use is made of earn-out structures in which, for example, a (limited) package of shares in Unit 4 Agresso can be issued. In principle a lock-up scheme applies to these packages. 39 Annual Report 26

41 The acquisitions must correspond with the strategy of the organization as a whole and must contribute to strengthening the position of Unit 4 Agresso on the intended key markets. Finally the company culture of the takeover candidate must correspond with that of Unit 4 Agresso to promote integration into and cooperation with the existing organizations. Competitive position In terms of size, Unit 4 Agresso has a position in the middle of the market compared to the other players. The difference in size between Unit 4 Agresso and its most important competitors directly affects its competitive position. The larger companies in principle have more budget for R&D and can invest more easily in new activities and products and theoretically have greater resilience in case of setbacks. Unit 4 Agresso s size forms a risk when making large investments and important acquisitions. Decisions in this area have a relatively large impact on the results. Unit 4 Agresso s reply to this risk is focus. The competitive position of Unit 4 Agresso depends on its ability to put distinctive products on the market. That is why Unit 4 Agresso concentrates on a number of specific vertical markets with technological concepts it has developed itself. Specialization, reliability, flexibility and low total cost of ownership are the most important elements in this. Technological risks R&D R&D is one of the critical success factors for the company. The development of new products and technologies requires a lot of time. Depending on the technology applied, it can take three to seven years. That means high investments and a small tolerance for failures or late introduction of products. Unit 4 Agresso spends approximately 13% of the turnover of business software on R&D. In absolute terms this is a substantially lower amount than a number of competitors earmark for this purpose. This forces Unit 4 Agresso to maintain a sharp focus and increase the number of clients by means of alliances and acquisitions. The R&D activities of Unit 4 Agresso are controlled centrally by one director who is responsible for corporate R&D. Oper ational risks Debtors As a sales organization, Unit 4 Agresso has debtor risks. By means of careful investigation of creditworthiness and the system that use can only be made of the software after payment (by means of annually changing PIN codes), the risk of non-payment is limited. Only in cases of bankruptcy or possible product and implementation problems is the risk increased. Financial risks Currency risks Unit 4 Agresso s financial statements are in euros. The Unit 4 Agresso group operates worldwide with its subsidiaries. This causes the group to be subject to fluctuations between the reporting currency and the different functional currencies formed by the local currencies of the economic regions in which the subsidiaries operate. An important part of Unit 4 Agresso s results is realized in non-euro countries, mainly being Norway, Sweden and Great Britain. If deemed necessary, Unit 4 Agresso uses financial instruments such as different forms of options and forward contracts to safeguard its results as much as possible. Interest r ate risks Unit 4 Agresso is only partly liable to interest rate risks because it has nearly no long-term agreements with third parties including an interest fee. The funding of the group is monitored and managed on consolidated level by means of which interest rate agreements concerning subsidiaries in the different countries are centralized as much as possible. Annual Report 26 4

42 Credit risks Unit 4 Agresso assesses the creditworthiness of its clients and customers, both with new clients and on a continuous basis if deemed necessary. In specific cases advice is obtained from credit agencies. 41 Annual Report 26

43 poe personnel, organization and environment In 26 the total average number of employees increased from 1,97 (FTE) to 2,376 (+21%). This increase can be mainly attributed to the acquisitions of the German companies Dogro and Kirp (14 employees) and the Spanish CCS (52 employees). Organically, the number of employees decreased slightly. For 27 a further growth in the number of employees is expected. In all countries initiatives were implemented for the further improvement of the professionalism of employees and the efficiency within the organization. Unit 4 Agresso has a number of centrally formulated basic principles in the areas of employees and organization. For the rest, the policy in this area is optimized per region and per operating company. Attr active employer Unit 4 Agresso strives to be an attractive employer for its employees. Good employment conditions, training and facilities for professional and personal growth play an important role in this. The Unit 4 Agresso corporate culture appeals to many young professionals. The achievement of objectives which have been clearly communicated in advance and the short lines between management and employees are key elements in this. The values which Unit 4 Agresso advocates are: integrity, pride in your company and your work, and loyalty. Due to the tightening of the labour market which is noticeable in most countries, Unit 4 Agresso will develop new initiatives in 27 in order to increase its name recognition and to better communicate the attractive working conditions and career opportunities. Participation in trade fairs, regional campaigns and promotion campaigns at universities play a role in this. There is currently a large number of unfilled positions, especially for software developers. This problem was partly solved in 26 by means of outsourcing a larger proportion of the development and programming work to a Romanian and South African partner. The outsourcing of this work will further increase in 27. Tr aining and development Unit 4 Agresso has a clear growth strategy. In order to implement this the availability and quality of management are important success factors. In the Benelux Unit 4 Agresso implements the programme High Performance Organization, which is aimed at continuous improvement of the organization. The programme promotes not only result-oriented management and assessment of managers, but also result-oriented working by all other employees. All managers make clear agreements with their employees regarding objectives and results. Our training is explicitly geared to the principles of a High Performance Organization. The training policy has two objectives. Firstly, it must enable the company to achieve its objectives by means of trained and well-educated employees. Secondly, it must offer the employees the opportunity to develop themselves both professionally and personally. In 27 Unit 4 Agresso will further professionalize its training policy. Within this framework a Unit 4 Academy will be set up in the Netherlands. Fixed curricula will be developed for this which provide a clear perspective of career development. Annual Report 26 42

44 R e m u n e r a t i o n In all operating companies the total remuneration package is in line with the accepted remuneration structures in the countries and regions concerned. The primary remuneration of the direct employees consists of a fixed part and a variable part. The level of the variable part is dependent upon personal effort and the results of the company. Social responsibility Unit 4 Agresso strives for more diversity in the workforce and expressly offers opportunities to people from disadvantaged groups. Traditionally, there is close cooperation with the educational institutions in the different regions. Unit 4 Agresso offers students, in many different ways, the opportunity to get to know the company. Both on the initiative of the company and the initiative of employees attention and money are paid to charitable causes. Unit 4 Agresso shows commitment to the local communities in the regions in which it is established. In sponsoring local organizations the emphasis is on sports clubs. In 26 the term of office of the then current works council and subcommittees expired. Elections were therefore held in September. The finding of representatives for all operating companies failed once again. The concern expressed in 25 that not all operating companies have their own subcommittee and that therefore a proportion of the employees is not represented in the PLC works council, thus still remains. The works council has expressed a wish that subjects which fall outside the legal scope of the Works Councils Act, are also open to discussion within Unit 4 Agresso. In 26 the works council held one meeting in the presence of a member of the Supervisory Board to discuss the general course of events. Environment As an IT company, Unit 4 Agresso develops all its products and services in offices. In comparison to many other business sectors the impact of operations on the environment is therefore limited. In the practices of our operating companies, which are directed at efficiency and cost management, the attention paid to the environment however forms an integral part. With the construction of a new head office for Unit 4 Agresso, which will be taken into use in 28, attention is paid to energy efficiency and the use of durable materials. The present head office and the new head office are situated opposite a railway station. Sliedrecht, 1 April 27 Works council In the Netherlands employee participation within Unit 4 Agresso consists of one central works council and subcommittees per operating company. The central works council operates at a PLC level for the Dutch operating companies. Consultation takes place with the director, the manager of Unit 4 Agresso Benelux & France. Here all subjects are discussed which exceed the interests of the individual operating companies. The subjects which relate to an individual operating company are dealt with by the relevant subcommittee. Board of Directors Chris Ouwinga Edwin van Leeuwen Harry De Smedt 43 Annual Report 26

45 cgcorporate governance In view of the goal of Unit 4 Agresso to follow the Netherlands Corporate Governance Code as much as possible and to make this procedure public, and in view of the obligations under the heading of Article 391 Paragraphs 4 and 5 Book 2 of the Civil Code and the Decree of 23 December 24 to establish further regulations regarding the contents of the annual report, following is a point-by-point summary of the degree in which the Principles and Best-Practice Provisions of the Netherlands Corporate Governance Code are being followed by Unit 4 Agresso. The documents on the web site referred to in this summary, can be found on Best-practice provisions according to the Dutch Corporate Governance Code I. Compliance with and enforcement of the code I.1 The broad outline of the Corporate Governance structure shall be explained in the annual report. In the Annual Report 26 Unit 4 Agresso gives an integral reaction to the Corporate Governance Code. I.2 Each substantial change in the Corporate Governance structure shall be discussed as a separate agenda item in the general meeting of shareholders. Unit 4 Agresso complies with this provision. II. Management Board II.1 Role and procedure II.1.1 A management board member is appointed for a maximum period of four years. A member may be reappointed for a term of not more than four years at a time. Unit 4 Agresso does not apply this provision. In principle, directors act from a strategic, long-term perspective as a result of which the limitation of an appointment does not fit in. Furthermore, Unit 4 Agresso does not endorse the principle that the progression to a position within the management board results in a change in the terms of employment from a permanent to a non-permanent appointment. For future members of the management board, the duration for which the employment will remain in force will be assessed per situation. II.1.2 The management board shall submit the strategy and objectives to the supervisory board for approval. The main elements shall be mentioned in the annual report. Unit 4 Agresso complies with this provision. Having regard to the Regulations of the supervisory board the strategy and objectives are submitted to the supervisory board for approval. As regards the statement of strategy and objectives in the annual report, the following must be taken into consideration: Unit 4 Agresso operates in a market which is cyclically sensitive and the results are often sensitive to market and seasonal fluctuations. Expectations must be expressed in a responsible manner, and especially under uncertain economic circumstances Unit 4 Agresso must ensure that no expectations are aroused which, due to major uncertainties, may not come to fruition. Unit 4 Agresso will, where possible, communicate its financial objectives but reserves the right to make no pronouncements if the uncertainties are too great. II.1.3 The company shall have an internal risk management and control system that is suitable for the company. Unit 4 Agresso complies with this provision. For this, Unit 4 Agresso makes use of internally-developed software. Risk analysis and management are also fixed items on the agenda of the supervisory board. II.1.4 The management board shall declare in the annual report that the internal risk management and control systems are adequate and effective. During the financial year attention was paid to the further construction of the company s internal risk management and control systems. The strategic and operational risks were listed, providing insight into the risks that are significant and specific to Annual Report 26 44

46 the company. These risks and the policy formulated to that are described in the chapter Risks and risk management on the pages 37 to 41 of this annual report. The functioning of the systems will be monitored systematically. The management board will carry out evaluations in cooperation with the management of divisions, business units and specialized departments using the COSO (ERM) model as frame of reference. The activities relating to the internal risk management and control systems are discussed regularly by the management board and the supervisory board. II.1.5 In the annual report the management board shall set out the sensitivity of the results of the company to external factors and variables. Unit 4 Agresso complies with this provision and includes this information in the chapter Risks and risk management of the annual report. II.1.6 Whistleblower procedure A whistleblower procedure has been made public on the website. II.1.7 A management board member may not be a member of the supervisory board of more than two listed companies. Nor may a management board member be the chairman of the supervisory board of a listed company. Unit 4 Agresso complies with this regulation. At the present time the members of the Unit 4 Agresso management board do not hold positions on the supervisory boards of listed companies. II.2 Remuneration II.2.1 Options to acquire shares are a conditional remuneration component. Unit 4 Agresso does not have any conditional options. It should be noted in this respect that the options are issued at the money and only increases in the value thereof can be paid out. II.2.2 Unconditional options should not be exercised in the first two years after they have been granted. Unit 4 Agresso already operated this rule and complies with this provision. II.2.3 Shares which are granted to management board members without financial consideration, shall be retained for a period of at least five years. Unit 4 Agresso complies with this provision. So far no shares have been granted to management board members. II.2.4 The option exercise price shall not be fixed at a level lower than the stock exchange price at that moment. Unit 4 Agresso concurs with this provision and has also acted in accordance with this best-practice provision in the past. II.2.5 Neither the exercise price nor the other conditions shall be modified during the term of the options. Unit 4 Agresso complies with this provision and has in the past always acted in accordance with this best-practice provision. II.2.6 The supervisory board shall draw up regulations concerning the ownership of and transactions in shares. Unit 4 Agresso endorses this provision. II.2.7 The maximum remuneration in the event of non-voluntary dismissal is one year s salary or if this would be unreasonable, a maximum of two years. Unit 4 Agresso endorses the principle that unreasonably high severance payments should not be made to management board members in relation to the functioning and the working relationship of management board members. Unit 4 Agresso does not have any non-permanent appointments nor does it have any advance agreements with regard to severance payments for management board members. Cases of dismissal will be handled, when the occasion arises, with reasonableness and with due regard to the circumstances. II.2.8 The company shall not grant its management board members any personal loans or guarantees. Unit 4 Agresso has issued a loan to a party connected with one of Unit 4 Agresso s key officers. See note on page 11 of the financial statements. In the future Unit 4 Agresso will comply with this provision. II.2.9 Remuneration report In view of the fact that the remuneration of the management board is the joint responsibility of the supervisory board, the supervisory board implements this provision by including the remuneration of the management board on the agenda for its annual meeting without the presence of the management board members. II.2.1 Information to be included in the remuneration report Unit 4 Agresso endorses the main points of this best-practice provision. The supervisory board implements it in a practical manner with reference to the provisions of II.2.9. The remuneration report contains an overview of the remuneration policy and a report on the way in which the remuneration policy was applied in the past financial year. In accordance with provision II.2.13 the remuneration policy is presented to the 45 Annual Report 26

47 general meeting of shareholders for approval and is published on the website. II.2.11 The main elements of the contract of a management board member shall be made public. Unit 4 Agresso endorses this provision and will implement it with future appointments of management board members. II.2.12 Special remunerations to management board members to be explained in the remuneration report. Unit 4 Agresso endorses the content of this provision and will implement it when the occasion arises. II.2.13 Remuneration report to be posted on company s website. Unit 4 Agresso implements this provision by making the main points of the remuneration policy public in the annual report. The annual report is posted on the website. The remuneration policy, as established in the remuneration report, must be approved by the general meeting of shareholders. On the basis of the remuneration policy, the supervisory board determines the remuneration of the individual management board members. II.2.14 The company shall state in the notes to the annual accounts, the value of any options granted to the management board and personnel and shall indicate how this value is determined. Unit 4 Agresso complies with this provision. II.3 Conflicts of interest II.3.1 A management board member shall not, in relation to the company enter into competition, demand or accept (substantial) gifts, provide unjustified advantages, or take advantage of business opportunities to which the company is entitled. Unit 4 Agresso complies with this provision, which has in the meantime been established in the regulations of the management and supervisory boards, which have been posted on the website. II.3.2 A management board member shall immediately report any (potential) conflict of interest to the chairman of the supervisory board and to the other members of the management board. The supervisory board shall decide whether there is a conflict of interest. Unit 4 Agresso complies with this provision, which has in the meantime been established in the regulations of the management and supervisory boards, which have been posted on the website. II.3.3 A management board member shall not take part in any discussion or decision-making that involves a subject or transaction in relation to which he has a conflict of interest. Unit 4 Agresso complies with this provision, which has in the meantime been formally established in the regulations of the management and supervisory boards, which have been posted on the website. II.3.4 All transactions in which there are conflicts of interest with management board members require the approval of the supervisory board and shall be published in the annual report. Unit 4 Agresso complies with this provision, which has in the meantime been formally established in the regulations of the management and supervisory boards, which have been posted on the website. III Supervisory Board III.1 Role and procedure III.1.1 The division of duties and the procedures within the supervisory board shall be laid down in a set of regulations. These regulations shall state the supervisory board s relationships with the management board, the general meeting of shareholders, and, where relevant, the works council. The regulations shall be posted on the website. Unit 4 Agresso complies with this provision and has incorporated it into the articles of association. III.1.2 The annual report shall include a report of the supervisory board with regard to its activities. Unit 4 Agresso complies with this provision. III.1.3 Gender, age, profession, principal position, nationality, other positions, date of initial appointment and current term of office of supervisory board members shall be included in the report. Unit 4 Agresso has already been complying with this provision for some time. III.1.4 A supervisory board member shall retire early in the event of inadequate performance. Unit 4 Agresso complies with this bestpractice provision. Annual Report 26 46

48 III.1.5 Supervisory board members who are frequently absent from supervisory board meetings shall be called to account for this. Unit 4 Agresso complies with this bestpractice provision. III.1.6 Supervision of the management board by the supervisory board with regard to strategy and internal control. Unit 4 Agresso complies with this provision. III.1.7 The supervisory board shall discuss, without the management board being present, both its own functioning and that of its individual members, and the functioning of the management board and the performance of its individual members. Reference to these discussions shall be made in the report of the supervisory board. Unit 4 Agresso has already been complying with this provision for some time. III.1.8 Discussion by the supervisory board with regard to strategy and risks, internal risk management and control systems. Reference to these discussions shall be made in the report of the supervisory board. Unit 4 Agresso complies with this provision and dedicates a separate meeting thereto. III.1.9 The supervisory board and its individual members each have their own responsibility for obtaining all information from the management board and the external auditor, officers and external advisers. The company shall make the necessary information available. Unit 4 Agresso endorses the background to this provision, whereby the gathering of information is carried out in the first instance by the management board, due to its primary responsibility to inform the supervisory board. This is also established in the regulations of the supervisory board, which are signed by both the supervisory board and the management board, and are posted on the website. III.2 Independence III.2.1 All supervisory board members with the exception of not more than one, shall be independent. Unit 4 Agresso complies with this provision. III.2.2 Independence criteria applicable to supervisory board members. Unit 4 Agresso complies with this provision. III.2.3 The report of the supervisory board shall confirm the independence of its members. Unit 4 Agresso complies with this best-practice provision. III.3 Expertise and composition III.3.1 The supervisory board shall prepare a profile of its size and composition. The profile shall be posted on the website. Unit 4 Agresso complies with this provision (see art. 3 and Annex A of the regulations of the supervisory board on the website). III.3.2 At least one member of the supervisory board shall be a financial expert. Unit 4 Agresso complies with this provision (see art. 3 of the regulations of the supervisory board on the website). III.3.3 After their appointment, all supervisory board members shall follow an introduction programme. The supervisory board shall assess which of its members require further training or education. Unit 4 Agresso complies with this provision (see art. 7 of the regulations of the supervisory board on the website). III.3.4 Limitation of the number of supervisory boards on which a supervisory board member may sit in order to assure a proper performance of his duties. Unit 4 Agresso complies with this provision (see art. 3 of the regulations of the supervisory board on the website). III.3.5 A person may be appointed to the supervisory board for a maximum of three 4-year terms. Unit 4 Agresso complies with this provision (see art. 3 of the regulations of the supervisory board on the website). III.3.6 The supervisory board shall draw up a retirement schedule. This schedule shall be posted on the website. Unit 4 Agresso complies with this provision (see Annex B of the regulations of the supervisory board on the website). 47 Annual Report 26

49 III.4 Role of the chairman of the supervisory board and the company secretary. III.4.1 The chairman of the supervisory board monitors the proper functioning of the supervisory board and its committees, arranges for the timely provision of information, ensures that there is sufficient time for making decisions, initiates the evaluation of the functioning of the supervisory board and the management board, and ensures that contacts between the supervisory board and management board and the works council pass off properly. Unit 4 Agresso complies with this provision (see art. 4 of the regulations of the supervisory board on the website). III.4.2 The chairman of the supervisory board shall not be a former member of the management board of the company. Unit 4 Agresso complies with this provision (see art. 3 of the regulations of the supervisory board on the website). III.4.3 The chairman of the supervisory board shall be assisted by the company secretary. Unit 4 Agresso complies with this provision (see art. 4 of the regulations of the supervisory board on the website). III.5 Composition and role of three key committees of the supervisory board. In view of the relatively limited size of the organization and the supervisory board (four members) it has been decided not to set up a separate audit committee, remuneration committee and/or selection committee. This means that the supervisory board as a whole attends to these matters. Within the supervisory board, use is of course made of the specific expertise of the different members. However, discussion and decision-making in this respect are carried out by the complete supervisory board. III.5.1 The supervisory board shall draw up a set of regulations for each committee. The regulations and the composition of the committees shall be posted on the company s website. Not applicable. III.5.2 The report of the supervisory board shall state the composition of the individual committees, the number of committee meetings and the main items discussed. Not applicable. III.5.3 The supervisory board shall receive from each of the committees a report of its deliberations and findings. Not applicable. Audit committee III.5.4 The audit committee shall focus on supervising the activities of the management board with respect to internal risk management and control systems, the provision of financial information, compliance with recommendations of internal and external auditors, role and functioning of the internal audit department, the company policy on tax planning, relationships with the external auditor, financing of the company and the application of information and communication technology. Taking into account that there is no separate audit committee, Unit 4 Agresso complies with this best-practice provision. III.5.5 The audit committee shall act as the principal contact for the external auditor in the event of irregularities in the financial reports. Taking into account that there is no separate audit committee, Unit 4 Agresso complies with this best-practice provision. III.5.6 The audit committee shall not be chaired by the chairman of the supervisory board, or by a former member of the management board. Not applicable. III.5.7 At least one member of the audit committee shall be a financial expert. Not applicable III.5.8 The audit committee shall decide whether and when the CEO, the CFO, the external auditor and the internal auditor should attend its meetings. There is no separate audit committee, see introduction under III.5. III.5.9 The audit committee shall meet with the external auditor as often as it considers necessary, but at least once a year, without management board members being present. There is no separate audit committee, see introduction under III.5. Remuneration committee III.5.1 Duties of the remuneration committee: proposal to the supervisory board for the remuneration policy to be pursued, proposal for the remuneration of individual management board members, preparing the remuneration report. In view of the limited size of the supervisory Annual Report 26 48

50 board it has been decided not to set up a separate remuneration committee. Tasks are carried out by the complete supervisory board. III.5.11 The remuneration committee shall not be chaired by the chairman of the supervisory board, or by a former member of the management board, or by a supervisory board member who is a member of the management board of another listed company. Not applicable. III.5.12 No more than one member of the remuneration committee shall be a member of the management board of another Dutch listed company. Not applicable. Selection and appointment committee III.5.13 Selection, appointment and assessment of supervisory board members and management board members. Proposals for appointments and reappointments, supervising the management board on the selection criteria and appointment procedures for senior management. Taking into account that there is no separate appointment committee, Unit 4 Agresso complies with this best-practice provision. III.6 Conflicts of interest III.6.1 Reporting of a (potential) conflict of interest of a supervisory board member to the chairman of the supervisory board. Unit 4 Agresso complies with this provision (see art. 1 of the regulations of the supervisory board on the website). III.6.2 A supervisory board member shall not take part in a discussion and/or decision-making on a subject or transaction in relation to which he has a conflict of interest with the company. Unit 4 Agresso complies with this provision (see art. 1 of the regulations of the supervisory board on the website). III.6.3 Decisions to enter into transactions in which there are conflicts of interest with supervisory board members require the approval of the supervisory board. Such transactions shall be published in the annual report. Unit 4 Agresso complies with this provision (see art. 1 of the regulations of the supervisory board on the website). III.6.4 Transactions between the company and legal or natural persons who hold at least ten percent of the shares in the company, require the approval of the supervisory board. Such transactions shall be published in the annual report. Unit 4 Agresso complies with this provision (see art. 1 of the regulations of the supervisory board on the website). III.6.5 The regulations of the supervisory board shall contain rules on dealing with conflicts of interest between management board members, supervisory board members and the external auditor. Unit 4 Agresso complies with this provision (see art. 1 of the regulations of the supervisory board on the website). III.6.6 The duties of a delegated supervisory board member may entail more intensive supervision and advice and more regular consultation with the management board. The delegation shall be of a temporary nature. Unit 4 Agresso does not have a delegated supervisory board member. III.6.7 A supervisory board member who temporarily takes on the management of the company, where the management board members are absent or unable to fulfil their duties, shall resign from the supervisory board in order to take on the management board task. Unit 4 Agresso complies with this provision (see art. 5 of the regulations of the supervisory board on the website). III.7 Remuneration III.7.1 A supervisory board member shall not be granted any shares or rights to shares. Unit 4 Agresso complies with this provision (see art. 6 and Annex C of the regulations of the supervisory board on the website). III.7.2 Any shares held by a supervisory board member are long-term investments. Unit 4 Agresso complies with this provision (see art. 6 and Annex C of the regulations of the supervisory board on the website). III.7.3 The supervisory board shall adopt a set of regulations containing rules governing ownership of and transactions in securities by supervisory board members, other than securities issued by their own company. The regulations shall be posted on the website. Changes in the shareholding of the supervisory board member shall be reported to the compliance officer, or if the company has not appointed a compliance officer, to the chairman of the supervisory board. 49 Annual Report 26

51 Unit 4 Agresso complies with this provision (see art. 6 and Annex C of the regulations of the supervisory board on the website). III.7.4 The company shall not grant its supervisory board members any personal loans, guarantees or the like unless in the normal course of business and after the approval of the supervisory board. No remission of loans shall be granted. Unit 4 Agresso complies with this provision (see art. 6 and Annex C of the regulations of the supervisory board on the website). III.8 One-tier management structure This principle and the associated provisions are not applicable to Unit 4 Agresso, as Unit 4 Agresso has a management board and a supervisory board (two-tier management board structure) in accordance with Dutch company law. III.8.1 The chairman of the management board shall not also be and shall not have been an executive director. Not applicable. III.8.2 The chairman of the management board shall check the proper composition and functioning of the management board. Not applicable. III.8.3 The committees referred to in chapter III.5 shall consist only of non-executive management board members. Not applicable. III.8.4 The majority of the members of the management board shall be non-executive directors and are independent within the meaning of art. III.2.2. Not applicable. IV.1.4 The policy on reserves and dividends shall be dealt with and explained as a separate agenda item at the general meeting of shareholders. Unit 4 Agresso complies with this provision (see art. 3.2 of the articles of association on the website). IV.1.5 The resolution to pay a dividend shall be dealt with as a separate agenda item at the general meeting of shareholders. Unit 4 Agresso complies with this provision (see art. 3.2 of the articles of association on the website). IV.1.6 Resolutions regarding discharge of management board members from liability for execution of the policy, and discharge of supervisory board members from liability for the supervision exercised, shall be voted on separately in the general meeting of shareholders. Unit 4 Agresso complies with this provision (see art. 3.2 of the articles of association on the website). IV.1.7 Determination of registration date for the exercise of voting rights and the rights relating to meetings. Unit 4 Agresso complies with this provision and the possibility of a registration date exists (see art of the articles of association on the website). IV The shareholders and general meeting of shareholders IV.1 Powers IV.1.1 The general meeting of shareholders may pass a resolution to cancel a binding nomination by a majority vote and a quorum of a maximum of 1/3. If the quorum is not reached then a new meeting may be called without the quorum requirement. Unit 4 Agresso complies with this provision (see art of the articles of association on the website). IV.1.2 The voting right on financing preference shares shall be based on the fair value of the capital contribution. Unit 4 Agresso does not have any preference shares. IV.1.3 In the event of a bid for takeover or a participating interest above a certain value as named in draft article 2:17a of the civil code, the management board shall, at its earliest convenience, make its position public. Unit 4 Agresso complies with this provision (see art. 18.1c of the articles of association on the website). IV.2 Certification of shares Unit 4 Agresso is not involved in certification of shares, only shares with voting rights. IV.2.1 The management of the trust office shall enjoy the confidence of the certificate holders and operate independently. These matters shall be discussed explicitly during a meeting of certificate holders. Not applicable. IV.2.2 The managers of the trust office shall be appointed by the management of the trust office. No (former) management board members or (former) supervisory board members, employees or permanent advisers shall be part of the management of the trust office. Not applicable. Annual Report 26 5

52 IV.2.3 A person may be appointed to the management of the trust office for a maximum of three 4-year terms. Not applicable. IV.2.4 The management of the trust office shall be present at the general meeting of shareholders. Not applicable. IV.2.5 In exercising its voting rights, the trust office shall be guided primarily by the interests of the certificate holders. Not applicable. IV.2.6 The trust office shall report at least once per year on its activities. The report shall be posted on the website. Not applicable. IV.2.7 Requirements to be met by the report named in IV.2.6. Not applicable. IV.2.8 Issue of proxies to certificate holders. Not applicable. IV.3 Provision of information to and logistics of the general meeting of shareholders. IV.3.1 Presentations to analysts, (institutional) investors and press conferences shall be announced on the website and by means of press releases. Shareholders should be able to follow these meetings by means of web casting, telephone, etc. Presentations shall be posted on the website. Unit 4 Agresso complies with this provision. IV.3.2 Analysts reports and evaluations shall not be assessed, commented upon or corrected in advance, other than factually. Unit 4 Agresso complies with this provision IV.3.3 No fees for research, production or publication of analysts reports. Unit 4 Agresso complies with this provision. IV.3.4 Meetings with analysts/investors shall not take place shortly before the publication of the financial information. Unit 4 Agresso complies with this provision. IV.3.5 The management board and supervisory board shall provide the general meeting of shareholders with all requested information, unless this would be contrary to an overriding interest of the company. Unit 4 Agresso complies with this provision. IV.3.6 Information shall be placed on a separate, non-commercial part of the website. Unit 4 Agresso complies with this provision and gives information on a separate investor website. IV.3.7 If right of approval is granted to the general meeting of shareholders the information shall be provided via a shareholders circular. The shareholders circular shall be posted on the website. Unit 4 Agresso complies with this provision. IV.3.8 The report of the general meeting of shareholders shall be made available no later than three months after the end of the meeting, after which the shareholders shall have the opportunity to react to the report within the following three months. At Unit 4 Agresso, the chairman and secretary finalize the minutes in accordance with the law and regulations and the provisions of the articles of association. The minutes will also be posted on the website. The minutes will be discussed as a separate agenda item during the next general meeting of shareholders. IV.3.9 The management board shall provide a survey of all existing or potential anti-takeover measures in the annual report. Unit 4 Agresso complies with this provision and explains these measures in its annual report. IV.4 Responsibility of institutional investors. IV.4.1 Institutional investors shall annually publish on their website their policy on the exercise of the voting rights for shares they hold in listed companies. Not applicable. IV.4.2 Institutional investors shall annually report on their website and/or in their annual report, on how they have implemented their policy on the exercise of voting rights in the year under review. Not applicable. IV.4.3 Institutional investors shall report on their website at least once a quarter, on whether and how they have voted as shareholders in the general meeting of shareholders. Not applicable. 51 Annual Report 26

53 V The audit of the financial reporting and the positions of the internal auditor function and the external auditor V.1 Financial reporting V.1.1 Careful procedures, whereby the supervisory board supervises the preparation of the financial publications. Unit 4 Agresso complies with this provision, both with regard to the preparation and publication of (half-)yearly figures and financial information, and the supervisory role of the supervisory board in this area. V.1.2 The audit committee shall determine how the external auditor should be involved in the content and publication of financial reports other than the annual accounts. Unit 4 Agresso does not have an audit committee. V.1.3 The management board is responsible for quality and completeness of publicized financial reports. The supervisory board shall see to it that the management board fulfils this responsibility. Unit 4 Agresso has already been complying with this provision since it became a listed company. Apart from the applicable standard procedures and the use of unambiguous systems within Unit 4 Agresso for, inter alia, the financial reporting and management information, monthly reports are submitted to the supervisory board with regard to the financial progress and other relevant information. V.2 Role, appointment, remuneration and assessment of the functioning of the external auditor V.2.1 The external auditor shall attend the general meeting of shareholders and may be questioned in relation to the fairness of the annual accounts. Unit 4 Agresso complies with this provision. V.2.2 The management board and the audit committee shall report to the supervisory board with regard to the independence of the external auditor. The supervisory board shall make a nomination for appointment of the external auditor in the general meeting of shareholders. Unit 4 Agresso does not have an audit committee as a result of which this requires a combined action between the management board and the entire supervisory board. V.2.3 Assessment of the external auditor every four years and announcement of the most important conclusions in the general meeting of shareholders for assessment of the nomination for appointment. Unit 4 Agresso complies with this provision on the understanding that it will be implemented by the management board and the entire supervisory board, in view of the fact that there is no audit committee. V.3 Internal auditor function V.3.1 Involvement of the external auditor and the audit committee in the drawing up of the work schedule of the internal auditor. Unit 4 Agresso endorses the principle that the assessment and auditing of the internal risk management and control systems takes place under the responsibility of the management board. In view of the relatively limited scope and complexity, Unit 4 Agresso does not yet have a formal internal audit department. Implementation of this principle will be carried out by the Corporate Finance Department which operates under the direct responsibility of the CFO. V.4 Relationship and communication of the external auditor with the organs of the company V.4.1 The external auditor shall attend the meeting of the supervisory board at which the annual accounts are to be approved or adopted. Unit 4 Agresso endorses this provision and has already implemented it since it became a listed company. V.4.2 The external auditor may request the chairman of the audit committee to be present at the meeting of the audit committee. Unit 4 Agresso does not have an audit committee. V.4.3 The external auditor shall report to the management board and the supervisory board his findings in relation to his audit of the annual accounts. Unit 4 Agresso complies with this provision. Annual Report 26 52

54 Additional information pursuant to the Decree on the Implementation of Article 1 of the Takeover Directive / Article 2:391 Par agr aph 5 of the Dutch Civil b) Restrictions laid down by the Company in the articles of association or contractually regarding the transfer of shares or depositary receipts for shares issued with the cooperation of the Company. Not applicable. Code In view of the decree of 5 April 26 (which came into force on 31 December 26) to implement Article 1 of Directive no. 4/25/ EC of the European Parliament and the Council of the European Union of 21 April 24 on public bids (Bulletin of Acts and Decrees 26, 191), additional regulations have been drawn up regarding the contents of the annual report of a company whose shares or depositary receipts for shares issued with its cooperation are listed on a regulated stock exchange in the EU. c) Duty of disclosure of holdings pursuant to Articles 2 and 3 of the Major Holdings in Listed Companies Disclosure Act The AFM (Netherlands Authority for the Financial Markets) register provides the following notices of major holdings: Aviva plc, total stake: 7.5% WAM Acquisitions GP, Inc., total stake: 6.79% Navitas B.V, total stake: 6.7% d) Special control rights attached to shares and the name of the entitled party. Not applicable. a) The capital structure Unit 4 Agresso N.V. ( the Company ) had 25,945,533 issued ordinary shares as at 1 January 27. There are no other types of shares. It has been agreed with Stichting Continuïteit Unit 4 Agresso on the one part that Stichting will grant the Company the right to issue preference shares in the capital of the Company to Stichting up to such amount as the Company desires, up to a maximum of a nominal amount equal to 1% of the nominal amount of the share capital issued to third parties in the form of ordinary shares at the time the above-mentioned right is exercised, reduced by the nominal amount in preference shares which Stichting holds at the time of exercising, and on the other that the Company will grant Stichting the right to take preference shares in the capital of the Company up to such amount as Stichting desires, on the understanding that this may at most be a nominal amount which is equal to the total nominal amount of all shares in the capital of the Company not issued to Stichting prior to the issue of the preference shares, reduced by the nominal amount in preference shares which Stichting holds at the time of exercising. e) The control mechanism of a scheme in which employees are granted rights to take or acquire shares in the capital of the Company or in the capital of a subsidiary (employee share participation plan; employee stock option plan) if the control is not exercised by employees directly. The Company has several employee stock option schemes. Options are issued by the Board of Directors after approval by the Supervisory Board. f) Restrictions on voting rights, time periods for exercising voting rights and the issue of depositary receipts for shares with the cooperation of the Company. Not applicable. g) Contracts with shareholders insofar as known to the Company which can give rise to a restriction (i) of the transfer of shares or depositary receipts for shares issued with the cooperation of the Company, or (ii) of the voting right. Not applicable. h) The rules relating to the appointment and dismissal of directors and supervisory directors and alteration of the articles of association. Pursuant to the articles of association members of the Board of Directors shall be appointed by the General Meeting of Shareholders. The combined meeting of the Board of Directors and the Supervisory Board is entitled to submit a binding nomination containing at least two candidates. The General Meeting of Shareholders is entitled to suspend or dismiss a member of the Board of Directors at all times. The Supervisory 53 Annual Report 26

55 Board can suspend members of the Board of Directors. Members of the Supervisory Board shall be appointed by the General Meeting of Shareholders and can be suspended or dismissed by the General Meeting of Shareholders at all times. A decision regarding an amendment of the articles of association can only be taken by the General Meeting of Shareholders after the Supervisory Board has submitted a proposal for such amendment to the General Meeting of Shareholders. The articles of association and the regulations of the Board of Directors and Supervisory Board containing the complete regulations regarding the appointment and dismissal of Directors are posted on the company s website. i) The powers of the Board of Directors, in particular to issue shares in the Company and to acquire shares in the Company s own share capital. The Company may issue shares pursuant to a resolution of the General Meeting of Shareholders or of the Board of Directors if the Board of Directors was authorized for this purpose by the General Meeting of Shareholders. Such resolution was adopted on 11 May 25 for a period of two years pursuant to which the Board of Directors may issue shares up to the total authorized capital. The General Meeting of Shareholders cannot adopt resolutions to issue shares in a period during which it has authorized the Board of Directors to issue new shares. Prior approval of the Supervisory Board is required for resolutions regarding the issue of shares. Subject to certain conditions, and provided it has received the approval of the Supervisory Board and the authorization of the General Meeting of Shareholders, the Company may acquire fully paid-up shares in its own capital. The Board of Directors has been authorized by the General Meeting of Shareholders by means of a resolution adopted on 1 May 1 26 to acquire shares in the capital of the Company to a maximum of 1% of the issued shares and for a price not exceeding the difference between the nominal value of such shares and 11% of the average closing price on the three days prior to the day of acquisition. The articles of association containing the complete regulations in this respect are posted on the company s website. j) Important contracts to which the Company is a party and which are made, altered or dissolved on the condition of a change in the control over the Company after a public bid has been made as referred to in Articles 6a or 6e of the Securities Transactions Supervision Act 1995 (WTE) as well as the consequences thereof (change-ofcontrol clauses) unless the contracts or consequences are of such nature that the Company could be seriously harmed by the disclosure. There are a considerable number of important contracts with change-of-control clauses, particularly in the Internet & Security division. Detailed publication is not possible due to confidentiality agreements. k) Every contract between the Company and a director or employee which provides for a payout upon termination of the employment following a public bid as referred to in Articles 6a or 6e WTE Not applicable. Annual Report 26 54

56 iva information for shareholders Stock exchange quotation The Unit 4 Agresso shares are quoted on the Euronext Stock Exchange Amsterdam. The Unit 4 Agresso share forms a part of the Amsterdam Small cap index (AScX). This index consists of the 25 most traded small caps and is therefore a supplement to the AEX index of the 25 most traded Blue Chips in Amsterdam and the Amsterdam Midkap index, which also comprises 25 companies. The estimated weighting factor (indicative procentual weight) as at 2 March 27 is approximately 3.31% of the index. At the end of 26 25,945,533 Unit 4 Agresso shares were outstanding with a nominal value of 5. euro cents and the market capitalization amounted to approximately 46 million. Symbols The most used symbols for Unit 4 Agresso are Euronext: NL383896, Reuters: UNI4.AS, Bloomberg: U4AGR NA. Dividend proposal and dividend policy Since the stock exchange flotation in 1997 it has been the organization s objective to pay out the profit in the medium to long term in the form of dividends. Up until now the company has given, in accordance with the statutory decision-making power of the board of the organization, priority to a strong solvency, sufficient financial resilience and sufficient disposable funds and/or sufficient possibilities to attract external capital for the financing of further growth. In Net result per share Net result per share before goodwill related impairment Dividend.25 n/a Extraordinary dividend.5 n/a Information per share Other information per share can be found on page 4 (Key figures) and the pages 14 and 15 of the financial statements. Options Unit 4 Agresso has an option scheme for the management. Within the framework of this option scheme 76,238 options were outstanding at the end of 26 (25: 653,356). For further information see Notes to items on the income statement, page 86. It pleases the Board of Directors to announce that it will recommend to the Meeting of Shareholders that an ordinary dividend be paid out of.25 per share and an extraordinary dividend of.5 per share pending the realization of the sale of NOXS. The dividend policy for the coming years is aimed at paying out a dividend of between 2% and 25% of the net result if the yet to be determined conditions are met. 55 Annual Report 26

57 Financial agenda 27 February 27 Publication of annual results for 26 in Amsterdam 9 May 27 General Meeting of Shareholders in Sliedrecht, the Netherlands 23 August 27 Publication of half-yearly results for 27 in Amsterdam 26 February 28 Publication of annual results for 27 in Amsterdam The stated dates are provisional. Agenda for shareholders meeting The agenda for the General Meeting of Shareholders will be published on our website Printed copies may be requested by telephone or ([email protected]). Further information The most recent financial and other information including press releases and half-yearly figures, can be found on the website The information from this report and previous annual reports can be consulted and downloaded. Annual Report 26 56

58 rsb report from the supervisory board The Supervisory Board presents the annual report 26 of Unit 4 Agresso N.V. We discussed the financial statements drawn up by the Board of Directors of Unit 4 Agresso N.V. in the presence of the company s external auditors, Ernst & Young Accountants, Rotterdam. The auditors report is included on page 126 of this document. We advise the General Meeting of Shareholders to determine the 26 financial statements. The discharge of the Board of Directors for their management in 26 and of the Supervisory Board for their supervision are included as separate items on the agenda of the General Meeting of Shareholders. During the year under review the Supervisory Board discussed the business progress of Unit 4 Agresso N.V. regularly and in depth. To this end the entire Supervisory Board met formally eight times. There was also informal contact between the Board of Directors and the Supervisory Board. During 26 the Supervisory Board paid special attention to the strategic composition of Unit 4 Agresso s portfolio of activities. In view of the developments in the market that increasingly call for sufficient scale size, it was decided to have the organization focus on the business software activities. This decision has led to the agreement on a sales contract for the Internet & Security division s distribution activities in the first quarter of 27. The Board is of the conviction that this will optimally position Unit 4 Agresso for further successful growth. The functioning of both the Board of Directors and the Supervisory Board was discussed during a meeting of the Supervisory Board in the absence of the Board of Directors. The entire Supervisory Board has discussed, again in the absence of the Board of Directors, the staffing, succession and remuneration of the Board of Directors. At present, the Board s remuneration consists of a fixed salary and a variable pay. This latter component is dependent on the achievement of profit and growth objectives. The objectives set for 26 were all met during the reporting year. During these meetings special attention was paid to: market developments and the competitive position of Unit 4 Agresso; the strategy of the company as a whole and the development of the group results; the acquisitions and the integration of acquisitions; the developments with regard to the Corporate Governance Code (Tabaksblat); risks and risk management; the coherence and synergy between the Business Software and Internet & Securiy divisions. 57 Annual Report 26

59 Supervisory Board The Supervisory Board of Unit 4 Agresso consists of the following commissioners: drs. Th.J. van der Raadt (1953), chairman Appointed in Mr Van der Raadt is chairman of the Supervisory Board of Desso Management B.V. Next to that he is chairman of the Premsela Foundation for Dutch Design and member of the board of the Dutch-German Chamber of Commerce. Mr Van der Raadt has extensive general management experience and has specific knowledge in the area of financial corporate governance. J.A. Vunderink (1947) Appointed in 22. His current positions are: member of the Teleca AB Supervisory Board, Supervisory Director of Siennax International B.V. and chairman of the Supervisory Board of Quint Wellington Redwood B.V. Mr Vunderink has many years of experience in the IT industry, both in the market for professional services and for software products. He has led international expansions and is an expert in the area of marketing and account management. ir. P. Smits (1946) Appointed in 23. His current positions are: member of the Multikabel N.V. Supervisory Board, chairman of the Media Plaza Advisory Board, chairman of the General Board of the Dutch Animal Protection Society, chairman of the Board of the Central Discothèque Rotterdam Foundation Board, chairman of the Deerns N.V. Supervisory Board, member of the Board of the KNVB foundation More than soccer, advisor Warburg Pincus Bank USA, member of the Fortis Mees Pierson Advisory Board, and chairman of the Board of RET N.V. Rotterdam. Mr Smits has many years of experience in the area of ICT both at home and abroad. mr. E.D. Wiersma (1941) Appointed in 25. His current main position is partner in the lawyers practice De Brauw Blackstone Westbroek. Among his other positions are: chairman of the Supervisory Board of Jan Tabak N.V., member of the Supervisory Board of Krasnapolsky Hotels & Restaurants N.V. and member of the Supervisory Board of Luvata Netherlands B.V. Mr Wiersma has extensive management experience and is an expert in company law, in particular in the area of mergers and takeovers. All Supervisory Board members are of Dutch nationality and were appointed having due regard to the legal, statutory and regulatory stipulations for a term of 4 years. Annual Report 26 58

60 Changes in the Supervisory Board The resignation rota for the members of the Supervisory Board is as follows: Mr drs. Th.J. van der Raadt : reappointed on 11 May 25 until 29 Mr J.A. Vunderink : reappointed on 11 May 25 until 29 Mr ir. P. Smits : reappointed on 1 May 26 until 21 Mr mr. E.D. Wiersma : appointed on 11 May 25 until 29 In the year the reappointment expires, a new reappointment and/or the resignation of the commissioner concerned will be put on the agenda of the annual meeting of that year. Regulation A regulation on the Supervisory Board s working method and profile was adopted earlier. This regulation has been made available through Unit 4 Agresso s website. Shares and options During the year 26 no shares or options on shares of Unit 4 Agresso N.V. were issued to the members of the Supervisory Board. Conclusion In 26 Unit 4 Agresso demonstrated a further successful growth of both turnover and results, based on a consistent execution of the strategy. Therefore the Supervisory Board wishes to express its appreciation for the efforts of the Board of Directors and the employees of the company and for their continuous dedication to Unit 4 Agresso s success. Sliedrecht, 1 April 27 The Unit 4 Agresso N.V. Supervisory Board Theo van der Raadt, chairman Johan Vunderink Paul Smits Enno Wiersma 59 Annual Report 26

61 Financial Statements 1 Consolidated income statement Consolidated income statement for the financial year 26 (e x 1,) Notes Continuing operations Products 56,764 48,729 Services and other 88,382 79,382 Contracts and subscriptions 91,659 7,478 Revenue ,85 198,589 Cost of sales 27,44 2,726 Gross profit 29, ,863 Employee costs , ,887 Other operating expenses ,788 22,942 Operating result before depreciation and impairment (EBITDA) 4,128 32,34 Depreciation and impairment of intangible and tangible assets ,526 11,592 Operating result (EBIT) 23,62 2,442 Finance costs ,963 2,889 Finance revenue ,743 4,42 Result of associates Profit before tax 25,382 21,976 Income tax expense ,119 5,623 Profit for the year from continuing operations 18,263 16,353 Discontinued operations Result for the year from discontinued operations ,369 Profit for the year 18,432 17,722 Attributable to shareholders of Unit 4 Agresso 18,32 17,722 Earnings per share in (attributable to shareholders of Unit 4 Agresso) Basic earnings per share Basic earnings per share attributable to continuing operations.7.64 Diluted earnings per share.7.68 Diluted earnings per share attributable to continuing operations.7.63 Profit after tax before goodwill impairment * 28,945 25,879 Earnings per share in (attributable to shareholders of Unit 4 Agresso) Basic earnings per share (before goodwill impairment)* Diluted earnings per share (before goodwill impairment)* * including depreciation of customer contracts and acquired software development costs. Financial Statements 26 6

62 2 Consolidated balance sheet Consolidated balance sheet at 31 December 26 ( x 1,) Assets Non-current assets Intangible assets Tangible assets Investment in associates Other financial assets Deferred tax asset Current assets Inventories Trade and other receivables Income tax asset Other taxes Derivatives Cash and cash equivalents Notes ,649 9,49 2,774 9, ,618 2,219 13,47 4, ,147 16, ,848 67, ,775 1,741 3, , ,341 16,463 16, ,333 Assets held for sale 13,571 Total assets 379,6 255,7 Equity and liabilities Equity Issued capital ,297 1,286 Share premium , ,663 Currency translation differences Retained earnings -125, ,2 13,919 18,925 Minority interests 2,112 Total equity 133,31 18,925 Non-current liabilities Interest-bearing loans and borrowings , Pension obligations , Deferred tax liability ,695 13,193 Provisions ,268 5,447 4,84 19,988 Current liabilities Provisions ,68 9,959 Trade and other payables ,613 36,5 Interest-bearing loans and borrowings ,595 16,617 Income tax payable 1,626 3,88 Other taxes ,528 17,633 Other liabilities, accruals and deferred income ,349 42,72 148, ,94 Liabilities concerning assets held for sale 56,356 Total equity and liabilities 379,6 255,7 61 Financial Statements 26

63 3 Consolidated statement of changes in equity Consolidated statement of changes in equity at 31 December 26 ( x 1,) Issued Share Currency Retained Total Minority Total equity capital premium translation earnings interests differences reserve 1 January 26 1, , ,2 18,925 18,925 Foreign currency translation Total income and expenses for the year recognized directly in equity Profit for the year 18,32 18, ,432 Total income and expenses for the year ,32 18, ,65 Acquisition of minority interest 2, 2, Exercise of options 11 2,474 2,485 2,485 Share-based payment December 26 1, , ,144 13,919 2, ,31 Consolidated statement of changes in equity at 31 December 25 ( x 1,) Issued Share Currency Retained Total Minority Total equity capital premium translation earnings interests differences reserve 1 January 25 1, , ,841 91,67 91,67 Foreign currency translation Total income and expenses for the year recognized directly in equity Profit for the year 17,722 17,722 17,722 Total income and expenses for the year -7 17,722 17,652 17,652 Exercise of options Share-based payment December 25 1, , ,2 18,925 18,925 Financial Statements 26 62

64 4 Consolidated cash flow statement Consolidated cash flow statement for the financial year 26 ( x 1,) Notes Cash flows from operating activities Turnover (including discontinued operations) 414,48 356,271 Operating expenses (including discontinued operations) -387, ,279 Operating result (EBIT) 26,888 2,992 Adjustments for: Depreciation and impairment 2,429 15,66 Share-based payments Changes in provisions -1,425 2,585 Changes in operating capital -4,511-31,553 Cash flows from operations 41,937 7,729 Interest paid -4,933-3,867 Interest received 4,255 4,123 Income tax paid -3,31-3,5 Cash flows from operating activities 37,958 4,935 Cash flows from investing activities Investments in intangible assets -11,435-1,226 Acquisition of subsidiaries, net of cash and cash equivalents -44,25-5,441 Investments in other financial assets -7-3 Divestments of other financial assets 168 Repayment of other financial assets Investments in tangible assets -3,492-4,54 Divestments of tangible assets Cash flows used in investing activities -57,947-18,524 Cash flows from financing activities Proceeds from issue of shares 4, Payments of borrowings and earn out provisions -5,869-2,65 Dividends paid Proceeds from borrowings 4, Cash flows used in financing activities 2,617-2,543 Net cash flows -17,372-16,132 Currency translation differences Cash and cash equivalents at 1 January ,173 Cash and cash equivalents at 31 December -17, Reconciliation with items of the balance sheet: Cash and cash equivalents ,247 16,463 Interest-bearing loans and borrowings ,531-16,617 Cash and cash equivalents according to the cash flow statement -17, Financial Statements 26

65 5 Notes to the consolidated financial statements 5.1 Corporate information The consolidated financial statements of 26 of Unit 4 Agresso N.V. were authorized for issue in accordance with the resolution of the directors and the Supervisory Board of 1 April 27. Unit 4 Agresso N.V. is a limited company established and domiciled in the Netherlands whose shares are publicly traded. Unit 4 Agresso N.V. and its subsidiaries (jointly Unit 4 Agresso or Group ) operate as international producer of business software. The head office is based in Sliedrecht, the Netherlands. 5.2 General accounting principles Basis of prepar ation The consolidated financial statements of Unit 4 Agresso have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted within the European Union. The consolidated financial statements are presented in euros. Consolidation The consolidated financial statements include the financial information of the parent company, Unit 4 Agresso N.V., and its subsidiaries. A subsidiary is an entity over which Unit 4 Agresso has control. Control is the power to direct the financial and operational policy of the entity in order to achieve advantages from its activities. The financial figures of subsidiaries are recognized for 1% in the consolidation. Minority interests in the equity and the net profit will be mentioned separately. Subsidiaries are consolidated as of the takeover date, being the date when de facto control in the acquired company was obtained, and deconsolidated as of the time when the control ceases to exist. Acquisitions are recognized in accordance with the purchase accounting method (acquisition method). This method attributes the cost price of a business combination to the fair value of the acquired assets and liabilities and contingent liabilities as at the takeover date. With the consolidation all intra-group relationships in the balance sheet and intra-group transactions in the income statement are eliminated. At 31 December 26 the following companies are recognized as subsidiaries in the consolidation of the Group: Subsidiaries Registered office Share in capital (direct parent/ subsidiary relation) Unit 4 Agresso Business Software Holding B.V. Sliedrecht, the Netherlands 1% Unit 4 Agresso Business Software Benelux B.V. Sliedrecht, the Netherlands 1% Decade Financial Software B.V. Oosterhout, the Netherlands 1% Unit 4 Agresso Enterprise Solutions B.V. Houten, the Netherlands 1% Unit 4 Agresso Accountancy B.V. Veenendaal, the Netherlands 1% Unit 4 Agresso Oost-Nederland B.V. Hengelo, the Netherlands 1% Unit 4 Agresso Software B.V. Sliedrecht, the Netherlands 1% Unit 4 Agresso Belgium N.V. Antwerp, Belgium 1% UNM Holding B.V. Utrecht, the Netherlands 5% Amedia Holding B.V. The Hague, the Netherlands 1% ACT Personeel Services B.V. The Hague, the Netherlands 1% ACT Computer Services B.V. The Hague, the Netherlands 1% Unit 4 Agresso R&D Holding B.V. Sliedrecht, the Netherlands 1% Agresso R&D AS Oslo, Norway 1% Agresso AS Oslo, Norway 1% Agresso A/S Copenhagen, Denmark 1% Financial Statements 26 64

66 Subsidiaries Registered office Share in capital (direct parent/ subsidiary relation) Agresso AB Stockholm, Sweden 1% MAP Holding AB Stockholm, Sweden 1% MAP Skandinaviska AB Sundsvall, Sweden 1% MAP Skandinaviska Norge AS Nydalen, Norway 1% Cometen 3 KB Stockholm, Sweden 1% Agresso Ltd. Bristol, United Kingdom 1% Agresso UK Ltd. Bristol, United Kingdom 1% MicroComputer Associates Ltd. Swansea, United Kingdom 1% MicroCompass Systems Ltd. Swansea, United Kingdom 1% Logicale Ltd. Swansea, United Kingdom 1% Distinction Systems Ltd. Swansea, United Kingdom 1% Gestion de Servicios Integrales y Sistemas de Información S.L. (SPAI) Barcelona, Spain 1% Agresso Spain S.L. Granada, Spain 1% Centro de Cálculo de Sabadell S.A. Barcelona, Spain 1% IZAR Cálculo y Proyectos SA Zaragoza, Spain 1% Sistemas Informaticos Professionales Multimix S.L. Barcelona, Spain 1% CCS Professionales S.L. Barcelona, Spain 7% Unit 4 Agresso Unipessoal LDA Oeiras, Portugal 1% Agresso GmbH Munich, Germany 1% Agresso Verwaltungs GmbH Munich, Germany 1% Agresso Beteiligungs GmbH Munich, Germany 1% DOGRO-Partner Profiskal Software GmbH & Co. KG Remshalden, Germany 1% KIRP GmbH Cologne, Germany 1% Agresso France SA Paris, France 1% Agresso Travel Industry Solutions Ltd. Bristol, United Kingdom 1% Nextgen Computing Ltd. Hertfordshire, United Kingdom 1% Agresso Holdings Inc. Victoria (BC), Canada 1%* Agresso Americas Corp. Massachusetts, USA 1% Agresso Corp. Alberta, Canada 1% Agresso Travel Industry Solutions Inc. Texas, USA 1% Agresso Travel Industry Solutions Ltd. Victoria (BC), Canada 1% Unit 4 Agresso Holding Internet & Security B.V. Sliedrecht, The Netherlands 1% Compusec N.V. Brussels, Belgium 1% Unit 4 Agresso Security Solutions B.V. Capelle a/d IJssel, The Netherlands 1% Unit 4 Agresso Security Solutions Europe B.V. Sliedrecht, The Netherlands 1% Netpoint N.V. Ghent, Belgium 1% Impakt N.V. Ghent, Belgium 1% Amercom B.V. Amersfoort, The Netherlands 1% NOXS Austria IT Distribution GmbH Salzburg, Austria 1% Unit 4 Agresso Ireland Holdings Ltd. Dublin, Ireland 1% NOXS Ireland Ltd. Dublin, Ireland 1% Unit 4 Agresso Security Solutions Ireland Ltd. Dublin, Ireland 1% Unit 4 Security Solutions UK Ltd. Londen, United Kingdom 1% NOXS Europe B.V. Sliedrecht, The Netherlands 1% 4SureIT B.V. Sliedrecht, The Netherlands 1% NOXS Italy Srl. Milan, Italy 1% NOXS Netherlands B.V. The Hague, The Netherlands 1% NOXS Belgium N.V. Bussels, Belgium 1% NOXS UK Ltd. Berkshire, United Kingdom 1% NOXS Logistics N.V. Brussels, Belgium 1% NOXS France SAS Gennevilliers, France 1% NOXS Technology Germany GmbH Ludwigsburg, Germany 1% Foundation ICT Group B.V. Utrecht, The Netherlands 1% Foundation Educational Services B.V. Utrecht, The Netherlands 1% Foundation ICT Solutions B.V. Utrecht, The Netherlands 1% *As of balance sheet date not all the shares in Agresso Holdings Inc. had been legally transferred yet to Unit 4 Agresso N.V. The economic ownership is fully in the hands of Unit 4 Agresso N.V. 65 Financial Statements 26

67 Estimation uncertainties The most important assumptions regarding the future and other important sources of estimation uncertainties at the balance sheet date which entail a considerable risk of causing an important adjustment of the carrying amount of assets and liabilities in the following financial year, are set out below. Impairment of goodwill The Group will determine at least once a year whether the goodwill is subject to impairment. This requires an estimation of the present value of the cash-generating units to which the goodwill is attributed. For the estimation of the present value of the company, the Group must make an estimation of the expected future cash flows of the cash-generating unit and determine a suitable discount rate to calculate the net present value of those cash flows. The carrying amount of the goodwill is 55. million at 31 December 26 (25: 51.8 million). For more information see the notes under Chapter 5 Paragraph Foreign currency tr anslation The Group s presentation currency is the euro. Every entity of the Group will record the transactions and balance sheet items in the administration in its own functional currency, which can differ from that of the local currency. Commercial transactions which are expressed in a functional currency other than the entity s own currency, will be recognized at the rates applicable on the day of the transactions. All balance sheet items expressed in a currency other than the own functional currency will be retranslated using the closing rate method (closing rate at the balance sheet date). Currency differences ensuing from the settlement of these transactions are recognized in the profit or loss. In the consolidation the balance sheets of subsidiaries that use a functional currency other than the euro, are translated into euros using the closing rates on balance sheet date. The income statements of these entities are translated into euros at transaction rates, consisting of weighted average exchange rates for the year. Goodwill paid upon a takeover is expressed in the functional currency of the entity that effected the takeover. The foreign currency differences which ensue from the translation of the net investment in entities with another functional currency than the euro are recognized in the equity (currency translation differences reserve). This also applies to currency differences on loans and other financial instruments in this functional currency insofar as they provide a hedge against the currency risk in connection with the net investment. Upon the sale of an entity with another functional currency than the euro, the existing accumulated currency differences are taken to profit or loss on the basis of the translation of the net investment. The year-end exchange rates used are: foreign currency compared to 1 Canadian dollar (CAD) Danish krone (DKK) Norwegian krone (NOK) Pound sterling (GBP) US dollar (USD) Swedish krone (SEK) The average exchange rates used are: foreign currency compared to 1 Canadian dollar (CAD) Danish krone (DKK) Norwegian krone (NOK) Pound sterling (GBP) US dollar (USD) Swedish krone (SEK) Financial Statements 26 66

68 Financial risk management objectives and policies The most important financial instruments (outside of derivatives) of the Group encompass bank loans and overdrafts, debentures, financial lease and rental contracts and cash and cash equivalents. The most important objective of these financial instruments is to attract financing for the Group s operating activities. The Group has various other financial assets and liabilities, such as trade receivables and payables which ensue directly from the operating activities. To a limited degree, the Group also carries out transactions with derivatives which primarily relate to currency swaps and forward currency contracts. The objective is to manage the interest and currency risks the Group runs with regard to its operating activities and financing sources. In general the Group does not trade in financial instruments, nor did it do so during the financial year. The most important risks which ensue from the financial instruments of the Group are interest, currency, credit and liquidity risks. The management assesses and approves the policy for the management of these risks (see the summary hereafter). The Group s accounting policies relating to derivatives are set out in the Accounting policies for assets and liabilities. Interest risk The risk run by the Group due to fluctuations in the market interest rates primarily relates to the Group s bank accounts with a variable interest. The Group does not use derivatives or other instruments to manage the interest risk, as the interest risk at present is estimated to be low. Currency risk Because of the presence of investment activities in the United States, Canada, the United Kingdom, Norway, Sweden and Denmark, the Group balance sheet could to a slight extent be influenced by changes in the relevant exchange rates compared to the euro. The Group did not hedge the risks on investment activities for the years presented in this report. The Group also runs currency risks on transactions. These risks arise from sales or purchases made by subsidiaries in a currency other than the functional currency. The Group s currency policy requires all the subsidiaries to use, in consultation with the corporate financial department, forward currency contracts to eliminate the currency exposures on individual transactions resulting in balance sheet positions worth more than 5% of the subsidiary s balance sheet total or if the counter value exceeds the amount of 5,. Next to that the Group uses currency swaps to optimize the interest charges and interest income. The Group s corporate financial department concludes the derivatives with recognized banks. Credit risk The Group only trades with reputable, creditworthy third parties. It is the Group s policy that all customers who wish to pay in instalments are subject to a credit verification procedure. Moreover, the outstanding balances are continually monitored, so that the Group does not run any significant risks in respect to doubtful debtors. A credit risk is run on the other financial assets of the Group, which consist of cash and cash equivalents, securities and certain derivatives, arising from default of the other party, with a maximum risk equal to the carrying amount of these instruments. As the Group only does business with reputable third parties, there is no need for collateral. Liquidity risk The Group s objective is to strike a balance between continuity and flexibility of financing through the use of bank overdrafts, cash borrowings, factoring of trade receivables and lease and rental contracts. 67 Financial Statements 26

69 5.3 Accounting policies for assets and liabilities Intangible assets Goodwill is the excess of the acquisition price of an acquisition on top of Unit 4 Agresso s share in the net fair value of the identifiable assets, liabilities and contingent liabilities of an acquired subsidiary or associate. Goodwill paid upon the acquisition of a subsidiary is recognized under the intangible assets. Goodwill paid upon the acquisition of an associate is included in the carrying amount of the associate. Goodwill is reviewed at least once a year for impairment. Impairment is charged to the profit or loss. Up to and including 2, Unit 4 Agresso immediately charged goodwill paid to the equity. Under IFRS this goodwill remains charged to the equity. As of 21 up to and including May 23, goodwill was capitalized and amortized over the expected useful economic life. As of the transition date to IFRS (1 January 24) Unit 4 Agresso has made use of the exception provided by IFRS 1 not to apply IFRS 3, Business Combinations, with retroactive effect. The amount of the goodwill at 31 December 23 in accordance with the general accounting principles used in the Netherlands has been taken as the assumed cost price of the goodwill at the time of the transition to IFRS (1 January 24). In the result of the sale of an entity, the carrying amount of the goodwill of this entity is taken into account. The software products and customer contracts which have become the property of Unit 4 Agresso through acquisitions are separated from the goodwill, taking into account a deferred company tax for future differences between fiscal and commercial tax liabilities, and thus capitalized separately. Software products developed by the company itself, the software development costs, are also capitalized if they meet the capitalization conditions. Research costs are charged directly to the profit or loss. The expenses for maintenance of software products are immediately taken as costs. The software products (including own developed software products) and customer contracts are amortized using the straight-line method on the basis of the expected economic life, in principle 3 to 5 years. For software products, depreciation starts from the moment the product is launched on a commercial basis. Purchased licences and application software are valued at the acquisition value less depreciation using the straight-line method, in principle 3 to 5 years, and less any impairment. If there are indications that the carrying amount of the software products, customer contracts, purchased licences and application software cannot be realized, these items are reviewed for impairment and an assessment is made as to whether the depreciation period has to be revised. Changes in the expected useful economic life or in the expected pattern of future economic benefits of the assets are accounted for by changing the amortization period or amortization method and are treated as estimate changes. An impairment is charged to the profit or loss. Intangible assets which have not yet been put into use, are annually tested for impairment. The other intangible assets include licence rights and implementation costs relating to internal IT projects. These are valued at acquisition or production price and amortized on the basis of the expected economic life, in principle 3 to 5 years. Tangible assets Land and buildings are recognized at cost price, less depreciation on buildings and any impairment arising after the valuation date. The technological inventories and other tangible non-current assets are recognized at cost price, excluding the costs of daily maintenance, less the accumulated depreciation and the accumulated impairment. Depreciation is calculated on a straight-line basis over the useful life of the assets concerned. The expected useful life is for: - Buildings: 5 years - Land: indefinite economic life - Technological inventories: 2 to 3 years - Other tangible assets: 2 to 1 years Financial Statements 26 68

70 The depreciation and impairment are recognized in the income statement under Depreciation and impairment of tangible and intangible assets. The carrying amount of the tangible assets is reviewed for impairment if events or changes in the circumstances indicate that the carrying amount may not be recoverable. A tangible asset will be derecognized in the event of its disposal or if no future economic benefits can be expected from its use or its disposal. Any proceeds or losses from the disposal of the asset will be recognized in the income statement in the year in which the asset is derecognized. The residual value of the asset, the remaining economic life and the valuation methods are assessed and, if necessary, adjusted at the end of the financial year. Lease agreements Financial leases, for which all or virtually all the benefits and disadvantages connected with the ownership of the leased assets are transferred to the Group, are capitalized at the inception of the lease at the fair value of the leased asset or, if lower, at the cash value of the minimum lease payments. The lease payments are divided into finance costs and a decrease in the lease liability so as to achieve a consistent interest rate over the remaining balance of the liability. The finance costs are charged directly to the profit or loss. Capitalized leased assets are depreciated over the lease period or over the estimated useful life if shorter. Operational leases are all leases other than financial leases. Operational lease payments are recognized as expenses under Other employee costs and Other operating expenses on a straight-line basis over the lease term. Investment in associates An associate is an interest in an entity in which Unit 4 Agresso has significant influence, but no decisive control. Generally the interest in these entities accounts for 2% to 5% of the voting rights. Associates are measured on the basis of the equity method, which entails that Unit 4 Agresso s share in the profit or loss of the associate is recognized in the result. Unit 4 Agresso s interest in the associate is fixed at Unit 4 Agresso s share in the net assets of the associate, together with the goodwill paid upon acquisition, and less any impairment. If Unit 4 Agresso s share in the loss of the associate exceeds the carrying amount of an associate - including other receivables - the carrying amount is reduced to nil. No further losses are recognized, unless Unit 4 Agresso has taken on obligations of the associate on account of a guarantee or other obligation. The reporting dates of the associates and the Group are identical and the accounting policies for financial reporting of the associates conform to those used by the Group for similar transactions and events in similar circumstances. Other financial assets The other financial assets comprise loans and long-term receivables which are valued at the amortized cost price, less any value correction in connection with bad debts. Objective indications must exist to allow for a value correction. Securities (investments) are classified under this category as well and are recognized at fair value or at purchase price if the fair value cannot be determined in a reliable manner. Securities are not held for trading. In principle securities are held until the end of the term. 69 Financial Statements 26

71 Impairment When there are indications that the carrying amount of a non-current asset (an intangible, tangible or financial asset) exceeds the recoverable value (the higher of indirect and direct sale value), there will be an impairment review. For an asset that does not largely independently generate an inflow of cash, the recoverable value is determined for the cash-generating unit to which the asset belongs. When determining the indirect sale value, the estimated future cash flows are discounted at a discount rate before taxes, based on the market interest rate plus a surcharge for the specific risks of the asset. When the recoverable value of an asset is lower than the carrying amount, the carrying amount is decreased to the recoverable value. An impairment (with the exception of goodwill) is reversed when there has been a change in the estimates used to determine the recoverable value. Impairments of goodwill are recognized in the income statement under Depreciation and impairment of tangible and intangible assets. As at every reporting date it will be assessed whether indications exist that an asset has been impaired. If such indications exist, the recoverable value will be estimated. A previously recognized impairment loss (with the exception of goodwill) will only be reversed if there has been a change in the estimation used to determine the asset s recoverable value since the recognition of the last impairment loss. If this is the case, the carrying amount of the asset will be increased to the recoverable value. This increased amount cannot exceed the carrying amount that would have been determined (net of depreciation) if no impairment loss had been recognized for the asset in previous years. Such reversal will be recognized in the income statement, unless the asset is carried at the revalued amount, in which case the reversal will be treated as a revaluation increase. After such a reversal, the depreciation cost will be adjusted to systematically attribute the revised carrying amount of the asset (after deduction of any residual value) over the remaining useful life to future periods. Inventories Inventories are valued at the lower of cost price or realizable value. The FIFO valuation method (first-in, first-out) is applied. The net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Tr ade and other receivables Trade and other receivables include work in progress, trade receivables, other current receivables, securities and derivatives. Trade and other receivables are recognized at nominal value, except for the securities and derivatives, less a value correction for bad debt. The valuation of the work in progress at balance sheet date is based on hours directly attributable to projects in progress and the goods and services procured in connection with the projects. The direct hours are valued at cost price, which is based on the costs directly attributable to projects. The results are recognized depending on the progress of the individual projects. Securities that are expected to be sold within 1 year are recognized under Trade and other receivables. Securities are recognized at fair value or at purchase price if the fair value cannot be determined in a reliable manner. Financial Statements 26 7

72 Derivative financial instruments and hedging The Group uses derivative financial instruments (derivatives) such as forward currency contracts and currency swaps to hedge the risks of changes in exchange rates and to optimize the interest charges and income. Derivatives are initially recognized on the balance sheet at fair value and subsequently revalued at the fair value at every reporting date. The way in which the ensuing income or expense is measured depends on the nature of the item which is hedged. Securities that are expected to be sold within 1 year are recognized under Trade and other receivables. Derivatives are recognized as assets if the fair value is positive, and as liabilities if the fair value is negative. When entering into contracts for derivatives, the Group records the purpose thereof: hedging of the fair value of assets or liabilities recognized in the balance sheet (fair value hedging), hedging fixed commitments or future transactions (cash flow hedging) or hedging net investments in entities with a functional currency other than the euro. Changes in the fair value of derivatives are immediately recognized in the profit or loss, together with any change in the fair value of the hedged assets or liabilities. Changes in the fair value of derivatives designated to hedge a net investment are recognized in the equity (currency translation differences reserve). The income or expense relating to the non-effective part is immediately attributed to the profit or loss. The accumulated income and expenses in the currency translation differences reserve are recognized in the profit or loss when the net investment is divested. During the financial year no derivatives were designated to hedge a net investment. Cash and cash equivalents Cash and cash equivalents comprise cash at banks and in hand and bank deposits with a remaining term of less than 3 months. Bank overdrafts are recognized under Current liabilities. Cash and cash equivalents are valued at nominal value. Interest-bearing loans and borrowings Loans are initially carried at cost price, being the fair value of the received amounts less transaction costs. Loans are subsequently measured at the amortized cost price using the effective interest method. The amortized cost price is calculated by taking account of any discount on shares or share premium. The interest costs are attributed to the profit or loss of the period to which they relate. If a risk relating to a recognized long-term loan is hedged, and the hedge is deemed effective, the carrying amount of the long-term loan is adjusted to changes in the fair value. Repayments within 12 months on long-term loans are recognized under Current liabilities. Provisions Provisions are recognized in the balance sheet when they comply with the following conditions: 1) there is a legal or constructive obligation as a result of a past event, 2) it is likely that funds will be withdrawn from the company to settle the obligation, and 3) a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions will be discounted at a discount rate before tax. When the net present value is calculated, the increase in the provision over time is recognized as interest costs. The interest costs relating to pension liabilities are, however, recognized in the pension costs. Amounts that are withdrawn from provisions within 12 months will be recognized under the Current liabilities. 71 Financial Statements 26

73 Pensions Defined benefit plans (pensions and other post-employment benefits) are included in the balance sheet as the balance of: - the cash value of the defined benefit obligation on balance sheet date; - deferred actuarial gains and losses and deferred past service costs; - charges over passed service years to be recognized to next financial years; - the fair value of plan assets on balance sheet date that will be used to settle (future) obligations. The balance of these elements can be negative. Unit 4 Agresso uses the corridor approach to process actuarial gains and losses. Other deferred benefits (jubilees) Provisions for jubilees are recognized in the balance sheet at a value (per employee) that takes into account: - the proportional composition of the deferred benefit; - actuarial results; - tax law effects; and - discounting of the calculated obligation. The actuarial results and the charges over passed services years are recognized directly in the result. Derecognition of financial assets and liabilities in the balance sheet Financial assets A financial asset (or, where applicable, a part of a financial asset or a part of a group of similar financial assets) will no longer be recognized in the balance sheet if: - the Group is no longer entitled to the cash flows from this asset; - the Group has retained the right to receive the cash flows from this asset, but has taken on an obligation to pay these in full, without significant delay, to a third party pursuant to a special agreement, or - the Group has transferred its rights to receive cash flows from this asset and either (a) has transferred the majority of all risks and advantages of this asset, or (b) has neither transferred nor retained the majority of all risks and advantages of this asset, but has transferred the control over this asset. If the Group has transferred its rights to receive the cash flows from an asset, but has neither transferred nor retained the majority of all risks and advantages of this asset, nor transferred the control, this asset will be recognized to the extent of the Group s continuing involvement in this asset. Continuing involvement in the form of a guarantee over the transferred asset is valued at the original carrying amount or the lower maximum amount of the consideration that the Group might have to repay. Financial liabilities A financial liability is no longer included in the balance sheet as soon as the obligation relating to the liability is discharged, cancelled or has expired. If an existing financial liability is replaced by another of the same financier on virtually the same conditions, or the terms of the existing liabilities are changed considerably, such a replacement or change will be treated as derecognition of the original liability on the balance sheet and recognition of a new liability. The difference in the respective carrying amounts will be recognized in the income statement. Financial Statements 26 72

74 5.4 Accounting policies for the determination of the result Revenue Revenue consists of the proceeds of the services rendered to third parties in the reporting year and goods delivered to third parties. Revenue is primarily generated from the sales of software by means of a one-off licence price or by means of a fixed price per period (subscriptions), from software maintenance by means of maintenance contracts and from services (implementation). The proceeds from the sales of software and hardware are recognized at the time when the risks and rewards have passed to the buyer. The proceeds from services are recognized pro rata to the activities carried out in the execution of the work. The proceeds from maintenance contracts and subscriptions are recognized pro rata to the expired contract or subscription period. The net revenue equals the invoice value less discounts and net of sales tax. Cost of sales The costs recognized under cost of sales relate to the costs of the goods and services which are directly attributable to the realized revenue. Pensions and other post-employment benefit plans The Group has defined benefit pension plans for both entities in France and for Amedia Holding B.V. in the Netherlands. The plans at other entities, when available, qualify as contribution plans. With the exception of the pension plan in France, all plans are placed with local insurers. The pension plans are financed from payments by employees and the relevant entities. For the defined benefit pension plans in France and in the Netherlands at Amedia Holding B.V., the pension costs are measured using the projected unit credit method. Actuarial gains and losses are recognized in the profit or loss, spread out over the average remaining working lives of the employees, making use of the corridor approach, with an upper and lower limit set at 1%. This means that accumulated acturial gains and losses that are not yet recognized in the result will only be recognized in the result when at the beginning of the financial year they exceed the largest amount of: - 1% of the cash value of the defined benefit obligation on that date; - 1% of the fund investments at the beginning of the financial year (fair value). Prepaid pension costs connected with defined benefit pension plans are only recognized in the balance sheet if they lead to a repayment from the plan to the employer or to a reduction in future contributions by the employer. Contributions to defined benefits plans are charged to the profit or loss as soon as they are owed. Government gr ants Government grants are recognized in the balance sheet at their fair value when there is reasonable certainty that the grant will be received and that all related conditions will be met. Grants relating to expense items are systematically carried to the results of the periods in which the costs occur, that the grants are intended to compensate. Research and development Research costs are charged to the profit or loss in the period in which they incur. Internal development costs are charged to the profit or loss in the period in which they incur, unless they meet the criteria for capitalization of IAS 38 Intangible assets. In accordance with IAS 23 Finance costs the finance costs which are attributable to the internal development costs are capitalized when these internal development costs meet the criteria for capitalization. Generally a percentage of 4% is applied. 73 Financial Statements 26

75 Income tax In addition to the current tax assets and liabilities in the reporting year, the tax item includes deferred tax assets and liabilities. The current tax liabilities are calculated at the applicable rates. The deferred tax assets and liabilities are calculated at the tax rates that are expected to apply in the year when the relevant tax asset is realized or the relevant tax liability is settled, based on tax rates and tax laws which have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized in the balance sheet to the extent that it is likely that future fiscal profit will be available to settle temporary differences and non-compensated tax losses. If necessary a value correction will be made. Deferred tax assets and liabilities are recognized at nominal value. Deferred tax liabilities regarding withholding tax are only recognized if and insofar the intention exists to pay out the profit earned by the subsidiaries as dividend in the near future. Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off tax assets against tax liabilities and the deferred taxes relate to the same (taxable) entity and the same taxation authority. The taxes in the income statement are calculated over the profit or loss before tax on the basis of the tax rates applicable in the various countries, taking account of fiscal facilities and taking account of the deferred tax assets and liabilities recognized in the balance sheet. Share-based payment tr ansactions Higher-level employees of the Group receive remuneration in the form of share-based payment transactions (employee share options), if they realize a certain performance. This concerns equity-settled transactions. The costs of these employee share options are measured on the basis of the fair value of the options on the date when the options are awarded. The fair value is measured making use of a derivative of the binomial option model, taking account of market conditions relating to the Unit 4 Agresso share. The costs of these options are recognized in the profit or loss (Employee costs), with the equity (Retained earnings) as contra entry, over the period in which the performance conditions are fulfilled and the options are unconditionally granted, ending on the date on which the relevant employees acquire the full right to exercise the equity-settled transactions. In most cases a period of 2 years lies between the time of awarding and the time when the options can be freely exercised. The dilutive effect on the outstanding options is reflected as additional dilution of the shares in the calculation of the earnings per share. 5.5 Accounting policies for the cash flow statement The cash flow statement has been prepared in accordance with the indirect method. In the cash flow statement a distinction is made between cash flows from operating, investing and financing activities. Cash flows in foreign currency are translated at applicable rates on the dates of the transactions during the reporting year. Currency differences on cash and cash equivalents, less the overdraft liabilities are recognized separately in the cash flow statement. Revenue and expenses for income tax are recognized under Cash flows from operating activities. Interest costs and interest revenues are recognized under Cash flows from operating activities. Cash flows as a result of the acquisition or disposal of financial interests (subsidiaries and interests) are recognized under Cash flows from investing activities, taking into account the cash and cash equivalents present in these interests. Dividends paid out are recognized under Cash flows from financing activities. Financial Statements 26 74

76 5.6 Segment information Segment information is presented for the business and geographical segments of the Group. The primary segmentation basis, business segments, is based on the administrative structure and the internal reporting structure of the Group. Segment results, assets and liabilities consist of items that are directly attributable to the relevant segment, and items that can be reasonably allocated to the segment. Unallocated items primarily consist of deferred taxes and long-term interest-bearing loans, borrowings and costs, and joint assets and expenses. The investments in capital assets of a segment concern the total of the costs made in the reporting period to purchase the assets of the segment which are expected to be in use for longer than one reporting period. In its report Unit 4 Agresso defines a segment as a division. The primary segmentation derives from the division into the Business Software and Internet & Security divisions. Both divisions have their own return on investment and risk profiles. The Business Software division develops, sells, implements and supports business software for the management, support and optimization of business operations and for the optimization of the operational management. The Internet & Security division sells security software of third parties and provides services for implementation and maintenance of data protection. In October 26 it was announced that negotiations had started on the sale of the larger part of this division. In February 27 an agreement was reached regarding this sale. For more information on the discontinued operations see Chapter 5 Paragraph Within this primary segment a division is made into the categories revenue, profit, carrying amount of the assets, total liabilities, investments in intangible and tangible assets, depreciation and impairment. Inter-segment sales do not take place. The secondary segmentation is based on geographical segments, for the categories revenue, assets and investments in intangible and tangible assets. 75 Financial Statements 26

77 Primary segmentation At 31 December 26 (e x 1,) Continuing operations Discontinued operations Total Business Internet & Total Software Security Products 51,725 5,39 56, , ,339 Services and other 75,238 13,144 88,382 9,1 97,482 Contracts and subscriptions 91,659 91,659 91,659 Revenue 218,622 18, ,85 177, ,48 Operating result before depreciation and impairment (EBITDA) 38,874 1,254 4,128 7,189 47,317 Depreciation and impairment of tangible and intangible assets 16, ,526 3,93 2,429 Operating result (EBIT) 22,535 1,67 23,62 3,286 26,888 Finance costs 1, ,963 3,762 5,725 Finance revenue 3, ,743 1,367 5,11 Result of associates Profit before tax 24, , ,273 Taxes 6, , ,841 Profit for the year 17, , ,432 Assets Segment assets 257,992 15, ,353 13, ,924 Investment in associates Unallocated assets 2,23 2,23 Total assets 258,51 15, ,435 13, ,6 Liabilities Segment liabilities 167,37 5,19 172,56 56, ,412 Unallocated liabilities 17,563 17,563 Total liabilities 167,37 5,19 189,619 56, ,975 Other segment information Investments in: - intangible assets 65,568 65, ,794 - tangible assets 18, , ,277 Depreciation 16, ,449 1,13 17,462 Impairment losses recognized in profit or loss ,89 2,967 Weighted average number of employees (FTE) 1, , ,376 Financial Statements 26 76

78 At 31 December 25 (e x 1,) Continuing operations Discontinued operations Total Business Internet & Total Software Security Products 46,2 2,727 48, , ,571 Services and other 66,166 13,216 79,382 7,84 87,222 Contracts and subscriptions 7,478 7,478 7,478 Revenue 182,646 15, , , ,271 Operating result before depreciation and impairment (EBITDA) 31, ,34 4,564 36,598 Depreciation and impairment of tangible and intangible assets 11, ,592 4,14 15,66 Operating result (EBIT) 19, , ,992 Finance costs 2, ,889 1,729 4,618 Finance revenue 4, , ,459 Result of associates Profit before tax 21, ,976-1,14 2,836 Taxes 5, ,623-2,59 3,114 Profit for the year 16, ,353 1,369 17,722 Assets Segment assets 145,999 5, ,376 96, ,534 Investment in associates Unallocated assets 7,414 7,414 Total assets 146,58 5, ,849 96, ,7 Liabilities Segment liabilities 54,576 2,992 57,568 84, ,697 Unallocated liabilities 4,385 4,385 Total liabilities 54,576 2,992 61,953 84, ,82 Other segment information Investments in: - intangible assets 25,54 25,54-2,5 23,4 - tangible assets 4, ,28 1,186 6,394 Depreciation 1, ,529 1,188 11,717 Impairment losses recognized in profit or loss 1,55 8 1,63 2,826 3,889 Weighted average number of employees (FTE) 1, , ,97 77 Financial Statements 26

79 Secondary segmentation ( x 1,) 26 Investments in tangible 25 Investments in tangible and intangible and intangible Revenue Assets assets Revenue Assets assets Benelux 162, ,18 11, ,361 11,69 5,585 Denmark ,87 Germany 26,54 32,664 21,798 16,684 5, France 71,84 46,617 1,247 59,881 37,898 1,135 Ireland 2,256 1,13 3 3, Italy 9,46 7, ,475 1,742 3 Norway 23,395 39,977 7,332 19,551 28,521 7,847 Spain 13,296 59,93 34,918 12,81 8, United Kingdom 59,877 3,249 1,278 44,264 41,39 11,269 United States/Canada 6,451 3, ,145 4, Sweden 39,87 25,736 5,933 39,451 22,599 1,49 414,48 379,6 85,71 356, ,7 29,398 Discontinued operations -177,675-13, ,682-96, ,85 275,435 84,81 198, ,849 3,262 Financial Statements 26 78

80 5.7 Acquisitions and divestments of subsidiaries in Acquisitions in Activities Soft Cell At the beginning of April 26 the Group took over the activities of Soft Cell that was declared bankrupt previous to that. The Belgian software company Soft Cell, one of the oldest software companies in Belgium, focused on medium-sized, project driven companies. The company had its clients mainly in Belgium and the Netherlands. Through this transaction the Group obtained the intellectual property of the software (EFAS, SCBA and Minerva). Next to that the Group has taken on the most important support consultants to support the existing clients. The acquisition has led to an amount of.8 million in acquired customer contracts CTI AS At the beginning of May 26 the Group took a 1% interest in the Norwegian company CTI AS. This very small entity employed 2 people specialized in software consultancy for the public sector, carried a number of software products that are closely related to Agresso Business World and had several customer contracts. The acquisition is recognized in the Group s consolidated financial statements according to the purchase accounting method. CTI AS merged with Agresso AS mid 26. The results have been consolidated as from the acquisition on 2 May 26. The acquisiton has not led to goodwill (after revaluation of the balance sheet to fair values). Before the takeover the company realized an annual turnover of.1 million and a break even net result. ( x 1,) Fair values Carrying amount Intangible assets Trade and other receivables Cash and cash equivalents Provisions Non-current liabilities Current liabilities Net identified assets and liabilities Goodwill Cost price Acquired cash and cash equivalents Cost price net of cash and cash equivalents The cost price can be itemized as follows: Compensations paid Financial Statements 26

81 Nextgen Computing Ltd. At the beginning of May 26 the group took over all shares in Nextgen Computing Ltd., a supplier of a Business Intelligence product to the travel industry. At the time of the acquisition the company employed 6 people. The acquisition is recognized in the Group s consolidated financial statements according to the purchase accounting method. About 2 months after the acquisition Nextgen Computing Ltd. was integrated into Agresso Travel Industry Solutions Ltd. in the United Kingdom. Consequently, the consolidated financial statements include the results of Nextgen Computing Ltd. as from the acquisition on 1 May 26. The acquisition has not led to goodwill (after revaluation of the balance sheet to fair values). Before the takeover the company realized an annual turnover of.4 million and a break even net result. ( x 1,) Fair values Carrying amount Intangible assets Tangible assets Financial assets Trade and other receivables Cash and cash equivalents Provisions Current liabilities Net identified assets and liabilities Goodwill Cost price Acquired cash and cash equivalents Cost price net of cash and cash equivalents 1, The cost price can be itemized as follows: Compensations paid Estimated compensations Acquisition costs Financial Statements 26 8

82 Amedia Holding B.V. At the beginning of July 26 the Group took 5% of the shares of the newly established company UNM Holding B.V. which at the same time became the 1% owner of Amedia Holding B.V. (including subsidiaries). This joint venture was formed with investment company NPM Capital B.V. As of the acquisition date till 3 June 28 Unit 4 Agresso has a call option on 1% of the shares in UNM Holding B.V. Because of this opportunity to obtain complete control Unit 4 Agresso is required to consolidate UNM Holding B.V. and Amedia Holding B.V for 1% into its financial statements. Amedia is a producer and supplier of software for insurance and mortgage agents. At the time of the acquisition Amedia employed 13 people. The acquisition is recognized in the Group s consolidated financial statements according to the purchase accounting method. Consequently, the consolidated financial statements include the results of UNM Holding B.V. and Amedia Holding B.V. as of the acquistion on 3 July 26. The acquisition has led to an amount of 2.7 million in goodwill. UNM Holding B.V. and Amedia Holding B.V. realized a turnover of 12.4 million and a net result of.1 million over the period 1 January December 26. In the Group s consolidated figures the results (turnover 6.7 million and net result.2 million) as from the date of acquisition (3 July 26) are consolidated. ( x 1,) Fair values Carrying amount Intangible assets Tangible assets Financial assets Inventories Trade and other receivables Cash and cash equivalents Provisions Current liabilities Net identified assets and liabilities Goodwill Cost price Acquired cash and cash equivalents Cost price net of cash and cash equivalents 4, , ,162 3,893-2,24-3,586 7,966 2,716 1,682 3,893 6, , ,162 3, ,586 4,767 5,915 1,682 3,893 6,789 The cost price can be itemized as follows: Compensations paid Acquisition costs 1,6 82 1, Financial Statements 26

83 Dogro-Partner ProFiskal Software GmbH & Co. KG and Kirp GmbH At the beginning of July 26 the Group acquired a 1% interest in Dogro-Partner ProFiskal Software GmbH & Co. KG and Kirp GmbH. Both sister companies have a top-3 position in the German public sector market. Dogro and Kirp offer standard financial software solutions to both local and central governments and public institutions. At the time of the acquisition the companies employed 14 people. The acquisition is recognized in the Group s consolidated financial statements according to the purchase accounting method. Consequently, the consolidated financial statements include the results of Dogro and Kirp as from the acquisition on 19 July 26. The acquisition has led to an amount of 6. million in goodwill. Over the period 1 January December 26 Dogro and Kirp together realized a turnover of 14.2 million and a net result of.8 million. In the Group s consolidated figures the results (turnover 7.3 million and a break even net result) as from the acquisition date (19 July 26) are consolidated. ( x 1,) Fair values Carrying amount Intangible assets Tangible assets Financial assets Trade and other receivables Cash and cash equivalents Provisions Current liabilities Net identified assets and liabilities Goodwill Cost price Acquired cash and cash equivalents Cost price net of cash and cash equivalents 15, ,595 1,362-5,685-4,823 9,258 6,13 15,271 1,362 13, ,595 1, , ,439 15,271 1,362 13,99 The cost price can be itemized as follows: Compensations paid Estimated compensations Acquisition costs 1, 4, ,271 Financial Statements 26 82

84 Map Holding AB At the beginning of November 26 the Group took a 1% interest in the Swedish company MAP Holding AB. This entity is producer and supplier of specific project management software for the support of companies in the building sector. MAP Holding AB operates in Scandinavia and in northeast Europe. At the time of the acquisition the company employed 15 people. The acquisition is recognized in the Group s consolidated financial statements according to the purchase accounting method. The results (turnover.4 million and a break even net result) are consolidated as from the acquistion on 1 November 26. The acquisition has not led to goodwill (after revaluation of the balance sheet to fair values). Before the acquistion the company realized an annual turnover of 2.7 million and a net result of -.1 million. ( x 1,) Fair values Carrying amount Intangible assets Tangible assets Trade and other receivables Cash and cash equivalents Provisions Non-current liabilities Current liabilities Net identified assets and liabilities Goodwill Cost price Acquired cash and cash equivalents Cost price net of cash and cash equivalents 3, , ,283 1,37 1, , ,283-1,343 2,713 1, ,387 The cost price can be itemized as follows: Compensations paid Estimated compensations Acquisition costs ,37 83 Financial Statements 26

85 Activities Xit Consulting At the end of December 26 the Group took over the activities of Xit Consulting in Norway. Through this transaction the Group acquired customer contracts and 6 consultants. The acquisition has led to an amount of.4 million in customer contracts and.4 million in goodwill CCS (Centro de Cálculo de Sabadell) At the end of December 26 the Group acquired a 1% interest in Centro de Cálculo de Sabadell S.A. This company has a top-3 position in the Spanish market for financial applications for medium-sized organizations, accounting firms and tax consultancy firms. At the time of the acquisition the company employed 52 people. The acquisition is recognized in the Group s consolidated financial statements according to the purchase accounting method. The acquisition took place on 28 December 26. Since the results for the last two days of the financial year were not substantial, the consolidated financial statements 26 do not contain any results for CCS. The balance sheet as at 31 December 26 is entirely consolidated, taking into account a minority interest of 3% in CCS Professionales S.L. The acquisition has led to an amount of 4.1 in goodwill. Over the period 1 January December 26 CCS realized a turnover of 34. million and a result on ordinary activities before tax of approximately.1 million. ( x 1,) Fair values Carrying amount Intangible assets Tangible assets Financial assets Inventories Trade and other receivables Cash and cash equivalents Non-current liabilities Provisions Current liabilities Net identified assets and liabilities Goodwill Cost price Acquired cash and cash equivalents Cost price net of cash and cash equivalents 15,98 14,113 6, ,151-5,857-3,88-8,17-9,821 17,249 4,92 21,341-5,857 27,198 6,464 14,113 6, ,151-5,857-3,88-5,273-9,821 1,639 1,72 21,341-5,857 27,198 The cost price can be itemized as follows: Compensations paid Acquisition costs 21, , Divestments During the financial year certain entities have been categorized under discontinued operations. This is further explained in paragraph Financial Statements 26 84

86 5.8 Notes to items on the income statement Employee costs (E x 1,) Wages and salaries Social security costs Pension costs Expense of share-based payment Other employee costs Attributable to discontinued operations 13,937 21,91 6, ,76 162,675-18,83 143,845 91,33 19,216 5, , ,414-19, , Research and development costs The research and development costs incurred in the past year, divided into the part which has been capitalized and the part which is recognized under the employee costs are presented in the table below: (E x 1,) Year Research and Capitalized Capitalized Capitalized Recognized development employee finance costs development as employee costs costs costs costs 22 22,435 4,742 4,742 17, ,74 5,172 5,172 16, ,678 7,746 7,746 15, ,932 9,341 9,341 15, ,77 9, ,177 17, Employee share option plan General background In 1997, a general employee share option plan was offered to all the employees on the occasion of the intended flotation of the then Unit 4 N.V. After that the decision to grant new options was made dependent on the desire to bind employees to the company, the company s earnings, the permission of limited dilution and the future goals of the company. The employee share options set up always have (known) a term of 5 years for all employees, both for national and foreign offices. It was decided to always use the same exercise price for these unconditional options for all employees and, where applicable, the local (foreign) income tax and social legislation was declared applicable. Upon granting a choice was made with regard to the exercise price, to always minimize the participation costs for the employee. The price of granting options was therefore fixed at nil, and the exercise price of an option is always set in such a way that the tax burden remains as low as possible. With regard to granting (the number of) options to specific employees, position, individual performance and results achieved play an important role, as do personal goals of the relevant employee. In addition, employee share option plans are also used to achieve strategic goals of the company. 85 Financial Statements 26

87 Financial year 26 In the financial year 26, 354,25 options were granted to a specific group of employees at an exercise price of 14,41. The Board of Directors and Supervisory Board were not offered an employee share option plan. No other options were granted in 26. The term of the options issued in 26 is 5 years with a lock-up period of 2 years. A lock-up period has a valuedecreasing effect. In addition, the options are non-transferable and the options are cancelled as soon as the employment is terminated. In general account is taken of an expected departure of employees of 5%. To date the dividend earnings are nil. The valuation date is the same as the date of granting. The exercise price is based on the average price of the last 1 trading days of the share on the day of issue. The expected term of the options is based on historical information and is therefore not indicative for any exercise patterns. The volatility is based on a historical analysis of the daily share price fluctuations over the last 6 months. The risk-free interest rate is based on 1-year Netherlands government bonds. The fair value is measured by means of the binomial model, taking into account early exercising and the risk of departure during the vesting period until the moment the options are irrevocably granted. The valuation thus comes to 4.64 per option (plan 25: 1.98). The costs of these options are divided pro rata over the lock-up period up to the moment the options can be freely exercised Option rights granted during the year Price at issue date ( ) Exercise price ( ) Volatility (%) Staff turnover (%) Dividend (%) Risk-free average interest rate (%) 354, , Cost of options granted during the financial year 26 ( ) Cost of options granted during the financial year 25 ( ) 457, 99, 556, 99, 99, An overview of the current option plans is depicted below: Year Exercise period up Outstanding Expired Exercised Outstanding at Exercise granted to and including Granted at 26 in 26 in December 26 prijs ( ) 22 Dec ,26 212,268 19,46 192, Feb , 291,88 35,1 255, Apr , 15, 15, Feb ,25 354, ,94, ,356 19,46 227,962 76,238 The weighted average remaining term for the share options at 31 December 26 is 3. years (25: 2.3 years). Financial Statements 26 86

88 Number of employees at 31 December The number of employees concerns all employees that have a current employment contract, often referred to as headcount Netherlands Other Total Netherlands Other Total countries countries Sales & Marketing Consultants Developers Support Other ,177 3, ,434 2,156 Discontinued operations December 785 1,975 2, ,244 1,9 Average number of employees during the reporting year 845 1,622 2, ,33 2,4 Discontinued operations Continuing operations 784 1,414 2, ,121 1,765 Weighted number of employees at 31 December The weighted number of employees concerns the number of employees taking account of part-time employees and temporary staff, usually abbreviated as FTE (full time equivalents) Sales & Marketing Consultants Developers Support Other Discontinued operations 31 December NetherlandsNederland Other Overige landen Total Totaal Netherlands Nederland Overige Other landen Totaal Total 121 countries countries ,136 2, ,44 2, ,937 2, ,214 1,836 Average number of employees during the reporting year 794 1,582 2, ,97 Discontinued operations Continuing operations 736 1,38 2, ,86 1, Financial Statements 26

89 5.8.2 Depreciation and impairment of intangible and tangible assets (E x 1,) Depreciation of software products Depreciation of customer contracts Depreciation of other intangible assets Depreciation of tangible assets Impairment of intangible and tangible assets Attributable to discontinued operations 7,724 5, ,415 2,967 2,429-3,93 16,526 4,584 2, ,75 3,889 15,66-4,14 11,592 For notes to the goodwill impairment, see Paragraph Other oper ating expenses (E x 1,) Selling costs Accomodation costs Financial and advisory costs Other expenses Attributable to discontinued operations 6,472 11,84 3,551 8,886 29,993-4,25 25,788 6,322 9,943 3,38 8,634 28,27-5,265 22, Finance costs (E x 1,) Interest charges Exchange rate gains Interest concerning capitalized development costs Adjustment fair value financial instruments hedged by derivatives Attributable to discontinued operations 4, ,725-3,762 1,963 4, ,618-1,729 2,889 Financial Statements 26 88

90 5.8.5 Finance revenue (E x 1,) Interest revenue Result on derivatives Exchange rate gains Dividend received from securities Attributable to discontinued operations 4, ,11-1,367 3,743 3, , , Income tax expense (E x 1,) Current income tax charge Current financial year Amendments for preceding years Deferred taxes Temporary differences between fiscal and commercial valuation Change in tax rates Recognized losses 26 8, , , , , ,165 Taxes 7,841 3,114 Taxes divided into: Continuing operations Discontinued operations 7, ,841 5,623-2,59 3, Financial Statements 26

91 Specification of effective tax rate (E x 1,) 26 % 25 % Profit before tax from continuing operations 25,382 21,976 Profit before tax from discontinued operations 891-1,14 Profit before tax 26,273 2,836 Tax expense on the basis of Dutch nominal rate 7, % 6, % Application of local, nominal rates % % Non-tax deductible items/exempt expenses % % Set-off of non-capitalized tax deductible losses % % Prior-year capitalized fiscal losses -1,53-5.7%.% Fiscal write-down participating interests.% -4, % Prior-year tax liability/(asset) 82.3% % Non-compensatory losses (no valuation as deferred tax asset) 1,31 3.9% 1, % 7, % 3, % Discontinued oper ations On 18 October 26 it was announced that Unit 4 Agresso would enter into negotiations with a strategic buyer on the sale of NOXS, the Internet & Security division s distribution activity. Earlier in the reporting year it was announced that for strategic reasons the enitre Internet & Security division would be put up for sale. The only Internet & Security organizations that still fit within Unit 4 Agresso s strategy are Unit 4 Agresso Security Solutions B.V., Foundation ICT Solutions B.V. and Amercom B.V. Consequently, in 26 the following companies are categorized under discontinued operations: Unit 4 Agresso Holding Internet & Security B.V., NOXS Netherlands B.V., Compusec N.V., Unit 4 Agresso Security Solutions Europe B.V., Netpoint N.V., Impakt N.V., NOXS Belgium N.V., NOXS Austria IT Distribution GmbH, Unit 4 Agresso Ireland Holdings Ltd., NOXS Ireland Ltd., Unit 4 Agresso Security Solutions Ireland Ltd., Unit 4 Security Solutions UK Ltd., NOXS Europe B.V., 4 SureIT B.V., NOXS Italy Srl., NOXS UK Ltd., NOXS Logistics N.V., NOXS France SAS, NOXS Technology Germany GmbH, Foundation ICT Group B.V. and Foundation Educational Services B.V. The comparing figures include NOXS Germany GmbH that was liquidated in 25. Financial Statements 26 9

92 The results of the aforementioned companies are: (E x 1,) Revenues Operational costs Operating result (EBIT) Finance costs Profit before tax Taxes: - Current and deferred taxes - Fiscal downward revaluation of interests Profit after tax 177, ,389 3,286 2, , , ,69-1, ,992 1,369 Earnings per share in - Basic earnings per share attributable to discontinued operations - Diluted earnings per share attributable to discontinued operations Cash flow statement - Cash flow from operating activities - Cash flow from investing activities - Cash flow from financing activities Net c ash f low 4, ,497-17,725-1,318-19,43 The assets and liabilities of these companies that are held for sale, are per 31 December: (E x 1,) 26 Assets Intangible assets Tangible assets Other financial assets Deferred income tax asset Inventories Trade and other receivables Income tax Other taxes Cash and cash equivalents Assets held for sale 7,265 1, ,95 67, ,96 13,571 Liabilities Long-term liabilities Provisions Short-term liabilities Liabilities held for sale ,98 56,356 Net assets held for sale 47, Financial Statements 26

93 5.9 Notes to items on the balance sheet Intangible assets At 31 December 26 (E x 1,) Goodwill Internally Acquired Customer Other Total developed software contracts intangible software assets Carrying amount at 1 January 51,757 2,755 6,36 11, ,49 Acquisition of subsidiaries 12,821 6,516 5,984 29, ,17 Adjustments preceding financial years Internally developed intangible assets 1,177 1,177 Investments Divestments (cost price) -8-1,774-1, ,161 Divestments (accumulated depreciation and impairment) 8 1,774 1,5 87 4,161 Depreciation -5,862-1,862-5, ,47 Impairment -2,967-2,967 Currency translation differences Discontinued operations -6, ,265 Carrying amount at 31 december 55,43 31,62 1,187 36, ,649 1 January 26 Cost price 57,258 3,326 7,557 16, ,18 Accumulated depreciation -4,991-9,571-1,521-4, ,261 Accumulated impairment Carrying amount 51,757 2,755 6,36 11, ,49 31 December 26 Cost price 62,719 55,772 13,579 44, ,127 Accumulated depreciation -4,26-24,71-3,392-8, ,8 Accumulated impairment -3,47-3,47 Carrying amount 55,43 31,62 1,187 36, ,649 The adjustments for preceding financial years consist of the adjustments to the originally calculated goodwill, such as prior-year acquisition costs, adjustments to the fair value and adjustments to the earn out liabilities. Financial Statements 26 92

94 At 31 December 25 (E x 1,) Goodwill Internally Acquired Customer Other Total developed software contracts intangible software assets Carrying amount at 1 January 49,17 14,285 4,735 1, ,68 Acquisition of subsidiaries 7,963 2,622 3,836 14,421 Adjustments preceding financial years -1, ,387 Internally developed intangible assets 9, ,45 Investments Divestments (cost price) -14, ,52 Divestments (accumulated depreciation and impairment) 14, ,52 Depreciation -3,263-1,321-2, ,642 Impairment -3,889-3,889 Currency translation differences Carrying amount at 31 December 51,757 2,755 6,36 11, ,49 1 January 25 Cost price 64,875 2,287 4,935 12, ,155 Accumulated depreciation -9,156-6,2-2 -1, ,773 Accumulated impairment -6,72-6,72 Carrying amount 49,17 14,285 4,735 1, ,68 31 December 25 Cost price 57,258 3,326 7,557 16, ,18 Accumulated depreciation -4,991-9,571-1,521-4, ,261 Accumulated impairment Carrying amount 51,757 2,755 6,36 11, ,49 93 Financial Statements 26

95 Impairment test for cash-generating units in which goodwill is capitalized The Group annually carries out impairment tests on capitalized goodwill, based on the relevant cash-generating unit. In principle, the period to be used for discounting cash flows is infinite. The recoverable value of various cash-generating segments in which goodwill is capitalized is determined by measuring their operating value. For such calculations future cash flows based on current revenue from operations and (in general) a five-year forecast are used. Any residual value is calculated on the basis of an infinite cash flow that is determined by means of the projected cash flow in the fifth year. The individual growth percentages are derived from long term forecasts for the industry and the expectations of the management involved. A discount rate of 12% (25: 12%) is used to measure the cash value of the future cash flows (operating value) before tax. How the carrying amount of the goodwill unit can be attributed to the cash-generating units is described below. The year stated between brackets represents the year of acquisition. Per goodwill unit, which forms a significant part of the total goodwill item, the assumptions for determining the recoverable value are described. (E x 1,) Carrying amount per Impairment December 26 Van der Kley automatisering (2) Amercom B.V. (21) Agresso Holdings Inc. (22) Unit 4 Agresso Ireland Holdings Ltd. (22) Momentum (23) Agresso France SA (23) ESV (24) Agresso Spain S.L. (24) + Gestion de Servicios Integrales y Sistemas de Información S.L. (24) Decade Financial Software B.V. (24) Unit 4 Agresso Security Solutions B.V. formerly Amend B.V. (24) Foundation ICT Group B.V. (25) Micro Computer Associates Ltd. (25) CTI AS (26) Nextgen Computing Ltd. (26) Amedia Holding B.V. (26) Dogro-Partner ProFiskal Software GmbH & Co. KG (26) Kirp GmbH (26) Map Holding AB (26) Xit Consulting (26) Centro de Cálculo de Sabadell (26) Others 1,66 4,362 6,564 1,64 5,459 2,941 6,669 4,682 1,232 4, ,716 3,19 2, ,92 1,648 55,43 2, ,967 Financial Statements 26 94

96 However, future negative changes in the assumptions applied may cause the recoverable values to drop to such an extent that they fall below the carrying amount. Cash-generating unit Unit 4 Agresso Accountancy B.V (business unit Van der Kley automatisering) The recoverable value of Van der Kley automatisering is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 2% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Amercom B.V. The recoverable value of Amercom B.V. is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 23% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Agresso Holdings Inc. (including subsidiaries) The recoverable value of Agresso Holdings Inc. is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 12% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Unit 4 Agresso Ireland Holdings Ltd. (including subsidiaries) The recoverable value of Unit 4 Agresso Ireland Holdings Ltd. is set at nil, since the company only showed negative results in 26 and no positive results are to be expected in the future. The cause of this is the deterioration of the market position in Ireland, which has led to the decision to liquidate and partly sell the company/ies. No significant revenues are expected from these sales. Consequently an impairment of 2.3 million was recognized in 26. Cash-generating unit Agresso AB (business unit Momentum) The recoverable value of Momentum is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 1% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Agresso France SA (business unit Fininfor) The recoverable value of Fininfor is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows decrease on average by 11% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Agresso AB (business unit ESV) The recoverable value of ESV is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows decrease on average by 4% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. 95 Financial Statements 26

97 Cash-generating unit Agresso Spain S.L. The recoverable value of Agresso Spain S.L. is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 22% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Gestion de Servicios Integrales y Sistemas de Información S.L. This company will be merged with Agresso Spain S.L. in 27. Consequently, for 27 a budget for both companies combined was determined. The impairment test that took place for Agresso Spain S.L. was therefore carried out for both companies combined. The results of the impairment test were compared to the carrying amount of the goodwill of both companies together. Cash-generating unit Decade Financial Software B.V. Decade Financial Software merged with Unit 4 Agresso Enterprise Solutions B.V. on 1 January 27. Therefore, for 27 a budget for both companies combined was determined. The impairment test that took place is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 4% per year. The residual value is calculated on the basis of the eternal cash flow that is determined by means of the projected cash flow in the fifth year. Cash-generating unit Unit 4 Agresso Security Solutions B.V. (formerly Amend B.V.) The recoverable value of Unit 4 Agresso Security Solutions B.V. is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 14% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Cash-generating unit Foundation ICT Group B.V. (including subsidiaries) For business economic reasons the goodwill relating to Foundation ICT Group will be split into a part that is attributable to the joint activities of Foundation ICT Solutions B.V. and Unit 4 Agresso Security Solutions B.V. and a part that is attributable to the activities of Foundation Educational Services B.V. The recoverable value of the goodwill atrributable to Foundation ICT Solutions B.V. is determined based on an operating value that is calculated using cash flow projections based on financial budgets for the combination Foundation ICT Solutions - Unit 4 Agresso Security Solutions B.V. approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 14% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. The result of the impairment test was compared to the carrying amount of the goodwill of both companies together. The recoverable value of the remaining goodwill atrributable to Foundation Educational Services B.V. is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 3% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. The outcome was that the net recoverable value is 625, below the carrying amount of the goodwill, for which an impairment took place in 26. Financial Statements 26 96

98 Cash-generating unit Micro Computer Associates Ltd. (including subsidiaries) The recoverable value of Micro Computer Associates Ltd. is determined based on an operating value that is calculated using cash flow projections based on financial budgets approved by the management, covering a 5-year period, taking account of a residual value. In 5 years the cash flows grow on average by 4% per year. The residual value is calculated on the basis of an eternal cash flow that is determinded by means of the projected cash flow in the fifth year. Acquisitions 26 In 26 a number of acquisitions took place resulting in goodwill. An impairment test on the arisen goodwill is not required in the first year of acquisition, except when an occasion occurs that would lead to an impairment. No such occasion occurred Tangible assets At 31 December 26 (E x 1,) Land and Technological Other Total buildings inventories tangible assets Carrying amount at 1 January 1,496 4,815 2,911 9,222 Acquisition of subsidiaries 14, ,447 Investments 2, ,83 Divestments -3, ,992 Depreciation of divestments 3, ,737 Depreciation -23-3,142-1,25-4,415 Currency translation differences Assets held for sale -1,54-1,54 Discontinued operations -1, ,585 Carrying amount at 31 December 14,93 4,175 2,56 2,774 1 January 26 Cost price 1,517 18,222 1,155 29,894 Accumulated depreciation ,47-7,244-2,672 Carrying amount 1,496 4,815 2,911 9, December 26 Cost price 23,495 17,345 11,276 52,116 Accumulated depreciation -9,42-13,17-8,77-31,342 Carrying amount 14,93 4,175 2,56 2, Financial Statements 26

99 At 31 December 25 (E x 1,) Land and Technological Other tangible Total buildings inventories assets Carrying amount at 1 January 3,628 3,456 7,84 Acquisition of subsidiaries 1, ,368 Investments 3, ,26 Divestments -2,29-2,151-4,441 Depreciation of divestments 2,246 1,986 4,232 Depreciation -2,534-1,541-4,75 Currency translation differences Carrying amount at 31 December 1,496 4,815 2,911 9,222 1 January 25 Cost price 15,396 1,887 26,283 Accumulated depreciation -11,768-7,431-19,199 Carrying amount 3,628 3,456 7,84 31 December 25 Cost price 1,517 18,222 1,155 29,894 Accumulated depreciation ,47-7,244-2,672 Carrying amount 1,496 4,815 2,911 9, Investment in associates The Group has a 2% interest in Exa Group Consultores S.A. and a 2% interest in Islanda S.L. (Innovación en Software Libre, Análisis y Desarrollo de Aplicaciones S.L.), both based in Spain. Both companies are active in the software industry and are engaged in designing, developing, distributing and maintaining software products with related services. At 31 December 26 The revenue and the net profit of the associates at the balance sheet date are: ( x 1,) Revenue Net profit Exa Group Islanda Totaal Total , The (abridged) balance sheets of the associates at the balance sheet date are: ( x 1,) Exa Group Islanda Total Non-current assets Current assets Non-current liabilities Current liabilities Equity The share of the Group is: - in percentages 2% 2% - in x 1, Carrying amount of the investment Financial Statements 26 98

100 At 31 December 25 The revenue and the net profit of the associates at the balance sheet date are: ( x 1,) Revenue Net profit Exa Group Islanda Totaal Total The (abridged) balance sheets of the associates at the balance sheet date are: ( x 1,) Exa Group Islanda Total Non-current assets Current assets Non-current liabilities Current liabilities Equity The share of the Group is: - in percentages 2% 2% - in E x 1, Carrying amount of the investment Other financial assets The other financial assets can be specified as follows: At 31 December 26 (E x 1,) Loans and Investments Pensions Total receivables held till end of term Balance at 1 January 2, ,819 Acquisition of subsidiaries Investments Reclassifications Repayments -7-7 Discontinued operations Balance at 31 December 3, ,24 Current Non-current 2, ,618 3, ,24 The Loans and receivables item relates to a loan to a former subsidiary with a remaining term of two years which is repaid on the basis of straight-line repayment in the amount of.6 million per year with a remaining payment in 29 of 1. million on which.1 million has already been repaid. The loan is secured in the form of maintenance contracts. Besides that this item also comprises deposits. The item Investments held till end of term relates to the 15% interest in Arge Holding B.V. (formerly Arge Consultancy B.V.) and the.4% interest in ArgeWeb B.V., both based in Maassluis. 99 Financial Statements 26

101 At 31 December 25 (E x 1,) Loans and Investments Total receivables held till end of term Balance at 1 January 4, ,93 Acquisition of subsidiaries -1,123-1,123 Investments 3 3 Divestments Repayments Balance at 31 December 2, ,819 Current 6 6 Non-current 2, ,219 2, , Deferred tax asset The deferred tax asset recognized is caused by tax losses which are expected to be offset in the future against taxable income and by differences between fiscal and commercial valuations and result determinations. The deferred tax asset is to a significant extent of a long-term nature. The deferred tax asset at 31 December relates to the following: (E x 1,) Losses available for offset against future taxable income Delayed fiscal depreciation Provision for deferred benefits Fiscally not-realized provisions for receivables Discontinued operations 13, , ,47 4, ,765 4,765 The Group has an amount of 22.9 million in non-recognized losses available for offset. These losses are not recognized on the balance sheet because the losses have not yet been determined by the local authorities or because the uncertainty whether sufficient taxable profits can be realized within the foreseeable future is too high. Of this amount,.6 million will expire at 31 December 29,.4 million at 31 December 21,.4 million at 31 December 211,.9 million at 31 December 213,.2 million at 31 December 215 and 4.7 million at 31 December 221. The remainder can be offset indefinitely into the future on the basis of the current legislation and regulations. Financial Statements 26 1

102 5.9.6 Inventories The inventories consist entirely of trading stock. (E x 1,) Trading stock Discontinued operations 1,75-9, ,848 8, Tr ade and other receivables (E x 1,) Work in progress Trade receivables Other receivables Securities Discontinued operations ,562 26, ,491-67,493 67, ,651 23, , , Trade receivables An amount of 7.2 million has been deducted from the trade receivables for bad debt (25: 3.5 million) Other receivables (E x 1,) Short-term part of long-term receivables Receivables related parties Receivables employees Receivables from interests and former interests To be invoiced Receivable from former shareholder of acquired subsidiaries Other receivables Prepayments and accrued income Assets held for sale Discontinued operations ,254 13,255 1,282 7,895 1,54 26,371-2,839 23, ,115 2, ,464 23,84 23,84 11 Financial Statements 26

103 Receivables related parties This relates to a loan to a party which is related to a key official of Unit 4 Agresso N.V. The interest on this loan is 6% on an annual basis. Prepayments and accrued income Prepayments and accrued income includes, in particular, prepaid services or supplies, interest to be received and prepaid costs like lease, rental and interest costs. These can be specified as follows: (E x 1,) Prepaid pensions Prepaid rent Prepaid insurance Interest to be received Prepaid goods and services Prepaid maintenance contracts Deposits Discounts to be received Other Discontinued operations 11 1, ,328 2,877 7,895-2,524 5, , ,52 9,464 9, Securities (E x 1,) Debentures - unlisted Shares - listed Other taxes The other taxes consist of: (E x 1,) Sales tax Other taxes and social security premiums Discontinued operations ,88 1,72 3,16 3,16 Financial Statements 26 12

104 5.9.9 Cash and cash equivalents (E x 1,) ING Bank Fortis Bank Other bank balances and cash equivalents Discontinued operations 24,884 1,814 15,549 51,247-15,96 35, ,122 16,463 16, Equity For an overview of the changes in the equity, see Chapter 3 Consolidated statement of changes in equity Issued capital The authorized share capital at 31 December 26 encompasses 4,, (25: 4,,) ordinary shares and 4,, (25: 4,,) preference shares, both with a nominal value of.5. No preference shares have been issued. The holders of ordinary shares have one vote per share at Unit 4 Agresso s shareholders meeting. At the balance sheet date 25,945,533 ordinary shares were issued and paid up. The changes (in numbers) in the share capital can be presented as follows: Balance at 1 January Issues concerning instalments on long-term debts Exercise of options Balance at 31 December 25,717, ,962 25,945,533 25,77,133 1,438 25,717, Share premium The share premium can be considered as paid up capital and can be freely paid out Currency translation differences reserve The currency translation differences reserve encompasses all exchange differences, as of 1 January 24 (IFRS transition date), relating to foreign currency differences arising from the translation of the net investment in entities with another functional currency than the euro, and from the translation of liabilities (loans and other financial instruments) used to hedge the Group s net investment in a foreign subsidiary. 13 Financial Statements 26

105 Earnings per share Basic earnings per share The basic earnings per share over 26 amounted to.71 (25:.69). The basic earnings per share at 31 December 26 are based on the net profit as attributable to the ordinary shareholders, being 18.3 million (25: 17.7 million) and the weighted average number of shares outstanding in 26, being 25.8 million (25: 25.7 million). This is calculated as follows: Net profit attributable to ordinary shareholders ( x 1,) Net profit current financial year attributable to ordinary shareholders 18,32 17,722 Weighted average number of ordinary shares (in numbers x 1,) Number of ordinary shares at 1 January Issued shares as a result of exercised option rights Weighted average number of shares at 31 December 25, ,848 25, ,713 Basic earnings per share attributable to continuing operations The basic earnings per share attributable to continuing operations over 26 amounted to.7 (25:.64). The basic earnings per share attributable to continuing operations at 31 December 26 are based on the net profit attributable to continuing operations as attributable to ordinary shareholders, being 18.3 million (25: 16.4 million) and the weighted average number of shares outstanding over 26, being 25.8 million (25: 25.7 million). This is calculated as follows: Net profit attributable to continuing operations ( x 1,) Weighted average number of ordinary shares attributable to continuing operations 18,263 16,353 Weighted average number of ordinary shares attributable to continuing operations (in numbers x 1,) Number of ordinary shares at 1 January Issued shares as a result of exercised option rights Weighted average number of shares at 31 December 25, ,848 25, ,713 Financial Statements 26 14

106 Diluted earnings per share The diluted earnings per share over 26 were.7 (25:.68). The diluted earnings per share at 31 December 26 are based on the net profit as attributable to ordinary shareholders, being 18.3 million (25: 17.7 million) and the diluted number of shares outstanding in 26, being 26.1 million (25: 25.9 million). This is calculated as follows: Net profit attributable to ordinary shareholders (after dilution) ( x 1,) Net profit attributable to ordinary shareholders Outstanding option rights (after taxes) Net profit attributable to ordinary shareholders (after dilution) 18,32 18,32 17,722 17,722 Weighted average number of ordinary shares (after dilution) (in numbers x 1,) Weighted average number of shares at 31 December Outstanding option rights Weighted average number of shares (after dilution) at 31 December 25, ,9 25, ,924 Diluted earnings per share attributable to continuing operations The diluted earnings per share attributable to continuing operations over 26 amounted to.7 (25:.63). The calculation of the diluted earnings per share at 31 December 26 are based on the net profit attributable to continuing operations as attributable to ordinary shareholders, being 18.3 million (26: 16.4 million) and the diluted number of shares outstanding over 26, being 26.1 million (25: 25.9 million). This is calculated as follows: Net profit attributable to continuing operations (after dilution) ( x 1,) Net profit attributable to continuing operations Effect of outstanding option rights (after tax) Net profit attributable to continuing operations (after dilution) 18,263 18,263 16,353 16,353 Weighted average number of ordinary shares attributable to continuing operations (after dilution) (in numbers x 1,) Weighted average number of shares at 31 December Effect of outstanding option rights Weighted average number of shares (after dilution) at 31 December 25, ,9 25, , Financial Statements 26

107 Non-current liabilities Interest-bearing loans and borrowings The interest-bearing loans and borrowings consist of: ( x 1,) Financial lease obligations Fixed instalments to be paid relating to acquisitions Bank credits Other interest-bearing loans and borrowings 6,75 1,446 7, The item Bank credits includes a loan with Fortis bank of 4. million which was taken out for the acquisition of Amedia Holding B.V. to be repaid in 5 consecutive terms of 75, per quarter starting from 1 April 28 and with a closing term of 25, at 1 July 29. No specific securities have been given. The interest on this credit is the EURIBOR (3 month) interest plus a surcharge of 275 basis points. Next to this the item contains a loan of 1,175, with Institut Català de Finances, which is secured by a mortgage on the building. The interest is the EURIBOR (3 months) interest plus a surcharge of 1 basis points. Fixed instalments to be paid relating to acquisitions The fixed instalments to be paid relating to acquisitions concern the postponed payments agreed to in the contract Pension obligations The development of the pension obligations can be presented as follows: ( x 1,) Balance at 1 January Acquisition of subsidiaries Pension costs attributable to the year Discontinued operations Balance at 31 December , The division of the plans per country results in the following: ( x 1,) Defined benefit plan the Netherlands Defined benefit plan France Defined benefit plan Germany Defined benefit plan Sweden 1, , The provisions relate to the obligations regarding committed pension entitlements in France which are regulated by the government and to the obligations regarding defined benefit plans in the Netherlands (Amedia Holding B.V.). The individual pension plan at the Swedish subsidiary Formaster Consulting AB was settled in 26. Financial Statements 26 16

108 The plan in France concerns an unfunded obligation. Because of the limited importance of the obligation, no further explanation has been included. In Germany there is one individual pension plan with one employee for which the premiums are reinsured with an insurance company. Germany has no other pension plans. The other countries know defined contribution plans and/or old age provisions in accordance with the regulations and customs in those countries. The Netherlands have several (individual) pension plans which under IFRS qualify as defined contribution plans. These plans are fully reinsured. On determining the annual costs, account is taken of the nature of the plan which provides for indexation of built-up pension claims on the basis of the surplus interest calculated by the relevant insurer. Next to these defined contribution plans the Netherlands also have a defined benefit plan based on average pensionable salary (dependant s pension based on final pensionable salary) for which contributions are paid to separately managed funds. These can be specified as follows (actuarial pension calculation): (E x 1,) 26 Cash value pension rights Fair value fund investments Gross obligation (active) Unrecognized actuarial results Unrecognized back service costs Pension obligation 2,345-1,168 1, ,7 The actuarial assumptions on which the above calculation is based are: Demographic Mortality Mortality table 1993 Collective without adjustments for age Age difference man versus woman: 3 years (man older) Married state frequency 1% Resignation From 12% till the age of 25, till.% for age 55 and over Disablement From 1% till the age of 25, rising to 2.6% for age 55 and over Retirement At the age of 65 Financial Discount rate 4.75% Expected investment revenues 4.75% General wage movements 2.25% Price inflation 2.% Indexation of acquired rights Actives: 1.5% and Non-actives: 1.5% Belgium has a number of defined contribution plans. No pension plans have been established in Ireland, Spain and Italy. The United Kingdom has defined contribution plans for part of the personnel. In Norway and Denmark there were defined benefit plans up to and including 31 December 24. These were converted into defined contribution plans at 1 January 25. Next to the above-mentioned countries, Sweden, the US and Canada only have defined contribution plans. 17 Financial Statements 26

109 Deferred tax liability The deferred tax liability recognized is caused by differences between fiscal and commercial valuations and result determinations and by fiscal facilities which make it possible to postpone tax payment. The deferred tax liability is to a significant extent of a long-term nature. The deferred tax liability at 31 December relates to the following: ( x 1,) Temporary downward valuation facility (13ca) for interests Facility deferred tax payment Difference between commercial and fiscal result Pensions 5,3 1,413 17,279 23,695 7, , ,139 The temporary downward valuation facility (article 13ca Dutch tax law) for interests is related to the downward valuation option in the Dutch tax legislation offering the possibility of a temporary downward valuation of an interest (under normal circumstances 5 years), thus realizing an interest and rate gain. The valuation in the financial statements was effected in 26 after certainty was gained regarding the tax return submitted Provisions The development of the provisions can be specified as follows: At 31 December 26 ( x 1,) Earn out Reorganization Deferred Other Total obligations benefits provisions Balance at 1 January 12,51 2, ,46 Acquisition subsidiaries Arising during the year 7, ,87 Expenditure -4,973-2, ,31 Reversed unused amounts -2,214-2,214 Discount rate adjustment Foreign currency translation differences Liabilities directly related to the assets held for sale Balance at 31 December 12, ,336 Current 5, ,68 Non-current 6, ,268 12, ,336 Financial Statements 26 18

110 At 31 December 25 ( x 1,) Earn out Reorganization Deferred Other Total obligations benefits provisions Balance at 1 January 11, ,544 Acquisition subsidiaries Arising during the year 5,268 2, ,871 Expenditure -2, ,59 Reversed unused amounts -1,776-1,776 Discount rate adjustment Foreign currency translation differences Liabilities directly related to the assets held for sale Balance at 31 December 12,51 2, ,46 Current 7,492 2,467 9,959 Non-current 5, ,447 12,51 2, ,46 Earn out obligations The earn out obligations relate to the expectations of the management for the variable part of the purchase price of the shares acquired during the year or earlier. No interest is owed over the earn out obligations. The terms of these obligations vary between 3 months minimum till 8 years maximum. The earn out obligations to be paid were discounted at 3.84% (25: 1.65%). Reorganization The reorganization provision primarily relates to the reorganization at the French subsidiary Agresso France SA which was formed year-end 25 and was largely used in 26 for the dismissal of staff. Deferred benefits The provision for deferred benefits relates to the payments connected with years of service (12.5 and 25 years and right before retirement) which is applied by a number of subsidiaries within the Group Current liabilities Trade and other payables The trade payables and other payables consist of: ( x 1,) Trade payables Supplier invoices to be received Discontinued operations 45,943 7,116 53,59-32,446 2,613 28,332 7,673 36,5 36,5 19 Financial Statements 26

111 Interest-bearing loans and borrowings The interest-bearing loans and borrowings consist of: ( x 1,) Bank credit ING Cash loan Fortis Other bank credit facilities Discontinued operations 21,37 35,588 11,96 68,531-9,936 58,595 5,363 1, 1,254 16,617 16,617 ING Bank Nederland extended a credit facilty of 17.5 million to Unit 4 Agresso N.V. and its group companies that together are part of a pool of accounts that was set up for capital and interest compensation. This way the available funds are maximized and the interest costs are optimized. The balance of what is represented above as Bank credit ING relates to the total of debit balances present in the pool of accounts. No specific securities have been given. The interest on this credit facility is the EURIBOR (1 month) interest plus a surcharge of 15 basis points. Fortis Bank provided a multi-purpose facility with a limit of 2 million. This credit facility can be used as current account, as cash loan with a term between one and twelve months and in the form of guarantees. The interest on the current account is the Fortis basic interest plus a surcharge of 85 basis points. The interest on the cash loan is the EURIBOR interest, for a term equal to the term of the cash loan, with a surcharge of 65 basis points. At balance sheet date a cash loan of 13 million was taken out of this facility with a term up to and including 1 January 27. Besides this multi-purpose facility there is a transitional facility with the same conditions till 1 April 27, with a limit of 29 million. Out of this facility a cash loan of 22.6 million was taken with a term up to and including 1 January Other taxes Other taxes consist of: ( x 1,) Sales tax Income tax Other taxes and social security premiums Discontinued operations 1,52 4,522 4,263 19,35-6,777 12,528 1,397 3,869 3,367 17,633 17,633 Financial Statements 26 11

112 Other liabilities, accruals and deferred income Other liabilities, accruals and deferred income consist of: ( x 1,) Deferred income Holiday pay, holidays, salaries and employee bonuses to be paid Pensions to be paid Deferred and prepaid interest Factoring receivables Other Discontinued operations 23,354 14, ,133 46,815-6,466 4,349 22,236 11, ,333 5,859 42,72 42, Financial instruments Fair value The following overview presents a comparison of the carrying amount and fair value of all financial instruments of the Group recognized in the financial statements. ( x 1,) Financial assets Financial lease Other financial assets Securities Derivatives Cash and cash equivalents Financial liabilities Earn out liabilities Bank credit facilities Financial lease obligations Carrying amount ,24 2, ,341 16,463 38,893 19,577 12,38 12,51 58,595 16, ,93 29,23 Fair Value ,24 2, ,341 16,463 38,893 19,577 12,38 12,51 58,595 16, ,93 29,23 The fair value of the derivatives (forward currency contracts) is the difference between the forward exchange rate on closing date and the forward exchange rate on balance sheet date. The fair values of the financial lease obligations, the other financial assets and earn out obligations are calculated using the market interest rate. 111 Financial Statements 26

113 Interest risk The carrying amount of the Group s financial instruments that are exposed to an interest risk are set out below, by maturity. At 31 December 26 ( x 1,) Less than 1-5 years More than Total 1 year 5 years Fixed interest rates Other financial assets 622 2,618 3,24 Securities (current) 2 2 Financial lease obligations 642 2,618 3,26 Variable interest rates Cash and cash equivalents 51,247 51,247 Long-term bank credit facilities -6,75-6,75 Short-term bank credit facilities -68,531-68,531-17,284-6,75-23,359 At 31 December 25 ( x 1,) Less than 1-5 years More than Total 1 year 5 years Fixed interest rates Other financial assets 6 2,26 2,86 Securities (current) Financial lease obligations ,149 2,95 Variable interest rates Cash and cash equivalents 16,463 16,463 Long-term bank credit facilities Short-term bank credit facilities -16,617-16, Credit risk The Group is not exposed to important concentrations of credit risks. Financial Statements

114 Hedging activities At balance sheet date Unit 4 Agresso N.V. had the following derivatives outstanding at the ING bank. All positions relate to fair value hedges, used to hedge the exposure to currency risks for existing balance sheet positions in foreign currency. All changes in both the fair value of the underlying positions and in the financial instruments are recognized directly in the result. The fair values are determined as the difference between the forward exchange rate on closing date and the forward exchange rate on balance sheet date. Positions per 31 December 26 Expiration date Forward exchange rate Sell EUR 4.1 million credited to SEK 3 January Sell USD 11.6 million credited to EUR 3 January Sell USD 5.9 million credited to EUR 3 January Sell EUR 1.9 million credited to NOK 3 January Sell EUR 2.3 million credited to NOK 3 January Sell EUR 4.2 million credited to NOK 3 January Sell EUR 12.9 million credited to GBP 3 January Sell EUR.4 million credited to GBP 3 January Sell EUR.4 million credited to GBP 3 January Sell CAD 5.6 million credited to USD 3 January Positions per 31 December 26 Expiration date Forward exchange rate Buy EUR 2.6 million charged to USD 3 April Buy GBP 3.9 million charged to CAD 3 April Sell GBP 3.6 million credited to USD 3 April Sell EUR 2.7 million credited to SEK 3 July Sell EUR 9.2 million credited to GBP 3 July Obligations not disclosed in the balance sheet Rental obligations The Group has entered into rental obligations for an annual amount of 1.1 million (25: 7.5 million). The average term of the rental obligations is four years. The rental obligation for a period of less than one year is 9.2 million. The rental obligation for the period longer than one year and less than five years is 2.5 million. The rental obligation for the period longer than five years is 7.5 million. In 26, 8.7 million worth of rental costs was recognized in the income statement Lease obligations The Group has taken on operational lease obligations for which the remaining instalments amount to 11.1 million (25: 8.9 million). The average term of the lease obligations is two years. The lease obligation for a period of less than one year is 5. million. The lease obligation for the period longer than one year and less than five years is 6.1 million. The lease obligation for the period longer than five years is. In 26, 9.2 million worth of lease costs (including fuel costs) was recognized in the income statement Securities The securities issued by the Group on behalf of third parties amount to (25: ). 113 Financial Statements 26

115 Bank and other guarantees On the balance sheet date the amount of the current guarantees is 26.5 million (24: 9.6 million) Guarantee statement Unit 4 Agresso N.V. has issued statements in accordance with the provisions of Article 43 of Book 2 Title 9 of the Netherlands Civil Code with regard to a number of the Dutch companies mentioned under General accounting policies. These companies are therefore exempt from the regulations which apply to the preparation and publication of the financial statements Legal procedures Following the activities of the Group, the company is involved in a number of legal proceedings. In the opinion of the management this will not be of any material significance to the Group s financial position Abridged representation of company income statement As permitted pursuant to Article 42, Title 9, Book 2 of the Netherlands Civil Code Unit 4 Agresso N.V. s company income statement is presented in an abridged form. 5.1 Events after balance sheet date No significant events, other than explained below, occurred in the period between balance sheet date and the composition of the financial statements which could be of influence on the economic decisions made by users of these financial statements Proposed dividend for 26 During the financial year no dividend was paid out. It will be proposed to the General Meeting of Shareholders to pay out 6.5 million of the 26 result (attributable to Unit 4 Agresso s shareholders) as cash dividend and, provided the sale of the NOXS division takes place, to pay out an extraordinary cash dividend of 13. million which will be deducted from the Retained earnings reserve. The dividend payment can be specified as follows: Cash dividend on ordinary shares over 26 (.25 per share) 6,486 Extraordinary cash dividend on ordinary shares (.5 per share) 12,973 19,459 Pending the financial decision of the General Meeting of Shareholders the entire result (attributable to shareholders of Unit 4 Agresso) has been added to the Retained earnings reserve Related parties Identity of related parties The following related parties of the Group can be distinguished: the subsidiaries, the associates, the Supervisory Board and the Board of Directors. Chapter 5.2 provides an overview of the subsidiaries which are included in the consolidated figures. Financial Statements

116 Tr ansactions with and remuner ation of the Board of Directors The remuneration of the members of the Board of Directors of the company over 26 and 25 can be presented as follows: ( x 1,) C. Ouwinga E.T.S. van Leeuwen H.P. De Smedt Salary Profit share Bonus Pension (including disability insurance) Value of granted option rights Total A car and a mobile phone are made available to the members of the Board of Directors. In addition they receive a small monthly allowance to cover expenses. The remuneration of the members of the Board of Directors is determined annually by the Supervisory Board. The bonus scheme for the Board of Directors is dependent on two profit targets. The maximum bonus is 5% of the fixed annual salary, whereby half of the bonus is dependent on achieving the EBITDA target and the other half on achieving the target earnings per share. In both cases a bonus will be paid (pro rata) if at least 7% of the target is met, running up to a maximum of 1% of the maximum bonus when the target is fully achieved. No transactions were entered into nor were guarantees given on behalf of the members of the Board of Directors. The table below contains the information on options granted to the members of the statutory board: Outstanding Outstanding at Exercise Price on at 1 January Awarded in Exercised Expired 31 december date exercise Expiration date Director Year in 26 in ( ) date ( ) C. Ouwinga 23 2, 2, 4. - Feb , 5, April 21 Total 25, 25, E.T.S. van Leeuwen 23 15, 15, 4. - Feb , 5, April 21 Total 65, 65, H.P. De Smedt 23 4, 4, 4. - Feb , 5, April 21 Total 9, 9, 45, 45, 115 Financial Statements 26

117 Remuner ation of the other key officials In addition to the Board of Directors, two employees are designated key officials: the director for the international Agresso sub-division and the director for the Benelux sub-division. The remuneration of these key officials over 26 and 25 can be presented as follows: ( x 1,) Salary (incl. profit share and bonus) Pension (incl. disability insurance) Value of granted option rights Total Tr ansactions with the members of the Supervisory Board The remuneration of the members of the Supervisory Board over 26 and 25 can be presented as follows: ( x 1,) Th.J. van der Raadt, Chairman J.A. Vunderink P. Smits E.D. Wiersma Total No options are granted and no assets are made available to the members of the Supervisory Board. No loans have been granted to the members of the Supervisory Board. No guarantee obligations have been entered into on behalf of the members of the Supervisory Board Tr ansactions with other parties In the financial year no transactions took place with other parties, including the associates. Financial Statements

118 6 Company income statement For the financial year 26 ( x 1,) Notes Company profit for the year -3,697 1,282 Group companies profit for the year 22,17 16,44 Profit for the year ,32 17,722 7 Company balance sheet At 31 December 26 ( x 1,) Notes Assets Non-current assets Intangible assets ,539 18,429 Tangible assets Financial assets Interests in subsidiaries ,595 82,949 Other financial assets Deferred tax asset , ,165 13,29 Current assets Trade and other receivables ,613 8,362 Income tax asset 2,745 Cash and cash equivalents ,3 Total assets 183, ,616 Equity and liabilities Equity Issued capital 1,297 1,286 Share premium 254, ,663 Legal reserves 31,691 2,751 Retained earnings -156,26-164,775 13,919 18,925 Non-current liabilities Deferred tax liability ,3 7,99 Provisions ,169 7,159 Current liabilities Provisions Trade and other payables ,216 Interest-bearing loans and borrowings ,238 1, Income tax payable 3,883 Other taxes Other liabilities and accruals ,769 2,52 47,69 13,532 Total equity and liabilities 183, , Financial Statements 26

119 8 Notes to the company financial statements 8.1 Accounting policies for the company financial statements The company financial statements of Unit 4 Agresso N.V. are prepared in accordance with the provisions of Title 9, Book 2 of the Netherlands Civil Code making use of the facility offered by Article 362 Paragraph 8 to apply the same accounting policies for valuation of assets and liabilities and determination of the result to the company financial statements as are applied to the consolidated financial statements. Interests in subsidiaries Interests in subsidiaries relate to the subsidiaries in which the company has significant influence and decisive control. This creates the option of determining the financial and operational policy. Interests in subsidiaries are valued at the net equity value, taking into account minority interests. 8.2 Accounting policies for valuation of assets and liabilities and accounting policies for the determination of the result The accounting polices for valuation of assets and liabilities and the accounting policies for the determination of the result are set out in Chapter 5 Paragraphs 3 and 4 of the consolidated financial statements. 8.3 Notes to items on the balance sheet Company income statement The company profit after tax relates to the costs of the company, less inter-group charges to subsidiaries and taking into account minority interests Remuner ation of, loans to and guar antees for directors See Paragraph Financial Statements

120 8.3.3 Intangible assets The intangible assets consist entirely of goodwill. The development can be presented as follows: ( x 1,) Carrying amount at 1 January Acquisition of subsidiaries Adjustment prior financial years Divestments (cost price) Divestments (accumulated depreciation and impairment) Impairment Carrying amount at 31 December 18,429-2,89 15,539 16,242 4,997-13,125 13,125-2,81 18,429 1 January Cost price Accumulated depreciation Accumulated impairment Carrying amount 21,919-3, ,429 3,47-7,13-6,72 16, December Cost price Accumulated depreciation Accumulated impairment Carrying amount 21,919-3,96-3,284 15,539 21,919-3, , Impairment test for cash-generating units in which goodwill is capitalized Carrying amount at Impairment December 26 Amercom B.V. (21) Agresso Holdings Inc. (22) Unit 4 Agresso Ireland Holdings Ltd. (22) Foundation ICT Group B.V. (25) Other 4,362 6,564 4, ,539 2, ,89 For further explanation see Paragraph Financial Statements 26

121 8.3.4 Tangible assets At 31 December 26 ( x 1,) Technological Other tangible Total inventories assets Carrying amount at 1 January Investments Divestments (cost price) -1-1 Depreciation of divestments 1 1 Depreciation Carrying amount at 31 december January 26 Cost price Accumulated depreciation Carrying amount December 26 Cost price Accumulated depreciation Carrying amount At 31 December 25 ( x 1,) Technological Other tangible Total inventories assets Carrying amount at 1 January Investments 7 7 Divestments (cost price) Depreciation of divestments Depreciation Carrying amount at 31 December January 25 Cost price Accumulated depreciation Carrying amount December 25 Cost price Accumulated depreciationn Carrying amount Financial Statements 26 12

122 8.3.5 Interests in subsidiaries The interests in subsidiaries relate to the interests at 31 December 26 as set out in Chapter 5.2. With regard to the interests in subsidiaries at 31 December 25, account must be taken of the acquisitions and divestments during the financial year. The movements can be presented as follows: ( x 1,) Balance at 1 January Acquisition of subsidiaries Profit from group companies Foreign currency translation differences Balance at 31 December 82,949 22, ,595 7,482-3,93 16, , Other financial assets The other financial assets per 31 December 26 include an item Investments held till end of term. This item was not changed during 26 and relates to the 15% interest in Arge Holding B.V. (formerly Arge Consultancy B.V.) and the.4% interest in ArgeWeb B.V., both based in Maassluis, the Netherlands Deferred tax asset The deferred tax asset recognized is caused by tax losses expected to be offset in the future against taxable income and by differences between fiscal and commercial valuations and result recognitions. The deferred tax asset is to a significant extent of a long-term nature. The deferred tax asset at 31 December relates to the following: ( x 1,) Losses available for offset against future taxable income Provision deferred benefits 1, , Tr ade and other receivables ( x 1,) Trade receivables Intercompany accounts Other receivables 3 6,476 2,134 62,613 6,471 1,891 8, Cash and cash equivalents ( x 1,) Bank balances and cash equivalents 15,3 121 Financial Statements 26

123 8.3.1 Equity The division of the company equity in accordance with Title 9, Book 2 of the Netherlands Civil Code can be presented as follows: ( x 1,) Legal reserves Issued Share Currency Software Retained Total capital premium translation develop- earnings differences ment costs 1 January 26 1, , , ,775 18,925 Capitalized development costs in group companies 1,37-1,37 Foreign currency translation differences Profit for the year 18,32 18,32 Total income and expenses for the financial year 633 1,37 8,13 18,953 Exercise of options 11 2,474 2,485 Share-based payments December 26 1, , ,62-156,26 13,919 ( x 1,) Legal reserves Issued Share Currency Software Retained Total capital premium translation develop- earnings differences ment costs 1 January 25 1, , , ,426 91,67 Capitalized development costs in group companies 3,17-3,17 Foreign currency translation differences -7-7 Profit for the year 17,722 17,722 Total income and expenses for the financial year -7 3,17 14,552 17,652 Exercise of options Share-based payments December 25 1, , , ,775 18,925 Financial Statements

124 Non-current liability Deferred tax liability The deferred tax liability recognized relates to the future liability based on a temporary downward valuation facility. The temporary downward valuation facility (article 13ca Dutch tax law) for group companies is related to the downward valuation option in the Dutch tax legislation offering the possibility of a temporary downward valuation of a group company (under normal circumstances 5 years), thus realizing an interest and rate gain. The valuation in the financial statements was effected in 26 after certainty was obtained regarding the tax return submitted Provisions The development of the provisions can be specified as follows: At 31 December 26 ( x 1,) Earn out Deferred Total obligations benefits Balance at 1 January Arising during the year Expenditure Adjustments based on discount 8 8 Balance at 31 December Current Non-current At 31 December 25 ( x 1,) Earn out Deferred Total obligations benefits Balance at 1 January 6 6 Arising during the year Expenditure Adjustments based on discount Balance at 31 December Current Non-current Earn out obligations The earn out obligations relate to the expectations of the management for the variable part of the purchase price of the shares acquired during the year or earlier. No interest is owed over the earn out payments. The earn out obligations were discounted at a percentage of 3.84% (25: 1.65%). Deferred benefits The provision for deferred benefits relates to the payments connected with years of service (12.5 and 25 years and right before retirement). 123 Financial Statements 26

125 Current liabilities Trade and other payables The trade and other payables consist of: ( x 1,) Trade payables Other payables Derivatives , Interest-bearing loans and borrowings The interest-bearing loans and borrowings consist of: ( x 1,) Bank credit ING Cash loan Fortis Other bank credit facilities 65 35,588 5, 41,238 1, 1, For notes regarding the Group s credit facilities, see paragraph Other taxes The other taxes consist of: ( x 1,) Tax on wages Other taxes and social security premiums Accruals and deferred income The accruals and deferred income consist of: ( x 1,) Accountants and advisory costs to be paid Commissions to be paid Holiday pay/holidays to be paid Annual report costs to be paid Other , ,16 2,52 Financial Statements

126 Guar antee statement Unit 4 Agresso N.V. has issued statements in accordance with the provisions of Article 43 of Book 2 Title 9 of the Netherlands Civil Code regarding a number of the Dutch companies mentioned under General accounting policies. These companies are therefore exempt from the regulations which apply to the preparation and publication of the financial statements. Sliedrecht, 1 April 27 Board of Directors C. Ouwinga drs. E.T.S. van Leeuwen RA drs. H.P. De Smedt Supervisory Board drs. Th.J. van der Raadt J.A. Vunderink ir. P. Smits mr. E.D. Wiersma 125 Financial Statements 26

127 9 Other information 9.1 Auditor s report To: the shareholders of Unit 4 Agresso N.V. Report on the financial statements We have audited the accompanying financial statements 26 of Unit 4 Agresso N.V, Sliedrecht, the Netherlands. The financial statements consist of the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 26, the profit and loss account, statement of changes in equity and cash flow statement for the year 26, and a summary of significant accounting policies and other explanatory notes. The company financial statements comprise the company balance sheet as at 31 December 26, the company profit and loss account for the year 26 and the notes. Management s responsibility Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code, and for the preparation of the management board report in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility includes: desiging, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the financial position of Unit 4 Agresso N.V. as at 31 December 26 and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil Code. Opinion with respect to the company financial statements In our opinion, the company financial statements give a true and fair view of the financial position of Unit 4 Agresso N.V. as at 31 December 26 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Financial Statements

128 Report on other legal and regulatory requirements Pursuant to the legal requirement under 2:393 sub 5 part e of the Netherlands Civil Code, we report, to the extent of our competence, that the management board report is consistent with the financial statements as required by 2:391 sub 4 of the Netherlands Civil Code. Rotterdam, 1 April 27 Ernst & Young Accountants On behalf, drs. O.E.D. Jonker RA 9.2 R egul ations in the articles of association concerning the appropr iation of result In accordance with article 28.4 of the Articles of Association the Board of Directors is empowered, with the approval of the Supervisory Board, to entirely or partly reserve the profit remaining after payment to holders of preference shares. Any remaining profit is then at the free disposal of the General Meeting of Shareholders. 9.3 Appropriation of the net profit 26 It will be proposed to the General Meeting of Shareholders to pay out 6.5 million of the 26 result (attributable to Unit 4 Agresso s shareholders) as cash dividend and, provided the sale of the NOXS division takes place, to pay out an extraordinary cash dividend of 13. million which will be deducted from the Retained earnings reserve. The dividend payment can be specified as follows: Cash dividend on ordinary shares over 26 (.25 per share) 6,486 Extraordinary cash dividend on ordinary shares (.5 per share) 12,973 19,459 Pending the final decision of the General Meeting of Shareholders the entire result (attributable to shareholders of Unit 4 Agresso) has been added to the Retained earnings reserve. 9.4 Stichting Continuïteit Unit 4 Agresso The objective of the Stichting Continuïteit Unit 4 Agresso, seated in Sliedrecht, is to protect the interests of the group in such a way that the interest of the group, its subsidiaries and all parties involved will be safeguarded in the best possible way and that influences that might affect the independence and/or continuity and/or identity of the aforementioned companies are kept off, as well as performing all tasks related to or beneficial to the foregoing. The foundation strives to attain its objective by acquiring preference shares in the capital of the company and by exerting all rights connected with these preference shares. The Management of the foundation is formed by: J. Ekelmans, A. Offers, Th.J. van der Raadt, J. Thierry, R.D. Vriesendorp. Declaration of independence The Board of Directors of Unit 4 Agresso and the management of Stichting Continuïteit Unit 4 Agresso declare that to their joint opinion the requirements concerning the independence of the management of Stichting Continuïteit Unit 4 Agresso, as mentioned in Appendix X of the General Regulation Euronext Amsterdam Stock Market (Funds regulations) of EuroNext Amsterdam, have been met. Sliedrecht, 1 April 27 Unit 4 Agresso N.V Board of Directors Stichting Continuïteit Unit 4 Agresso Management 127 Financial Statements 26

129 Operating companies and addresses Headquarter Unit 4 Agresso N.V. Stationspark DA Sliedrecht Postbus AC Sliedrecht The Netherlands Tel: +31 () Fax: +31 () Belgium NOXS Belgium N.V. Koningin Astridlaan 59/1 178 Wemmel Belgium Tel: +32 () Fax: +32 () NOXS Logistics N.V. Koningin Astridlaan 59/1 178 Wemmel Belgium Tel: +32 () Fax: +32 () Unit 4 Agresso Belgium N.V. Meir 24 2 Antwerpen Belgium Tel: +32 () Fax: +32 () C anada Agresso Corp. 442 Chatterton Way Suite 21 Victoria, BC V8X 5J2 Canada Tel: +1 () Fax: +1 () Agresso Travel Industry Solutions Ltd. 442 Chatterton Way Suite 21 Victoria, BC V8X 5J2 Canada Tel: +1 () Fax: +1 () Denmark Agresso Denmark A/S Parallelvej 1 28 Lyngby Denmark Tel: +45 () Fax: +45 () Germany Agresso GmbH Feringastrasse Unterföhring Germany Tel: +49 () Fax: +49 () DOGRO-Partner ProFiskal Software GmbH & Co. KG Eisenbahnstrasse Remshalden Germany Tel: +49 () Fax: +49 () KIRP GmbH Mathias-Brüggen-Strasse Köln Germany Tel: +49 () Fax: +49 () NOXS Technology Germany GmbH Königsallee Ludwigsburg Germany Tel: +49 () Fax: +49 () Fr ance Agresso France S.A. Immeuble A Sud-Affaires 21/23 Rue de la Vanne 9212 Montrouge France Tel: +33 () Fax: +33 () NOXS France SAS Parc des Barbanniers 9-11 allée des Pierres Mayettes Gennevilliers Cedex France Tel: +33 () Fax: +33 () Ireland NOXS Ireland Ltd. Unit 2 The Village Green Complex Tallaght Dublin 24 Ireland Tel: +353 () Fax: +353 () Italy NOXS Italy Srl Via Ugo La Malfa, Cernusco s/n Milaan Italy Tel: +39 () Fax: +39 () Financial Statements

130 The Netherlands Amedia Boerhaavelaan HA Zoetermeer Postbus GB Zoetermeer The Netherlands Tel: +31 () Fax: +31 () Amercom B.V. Zielhorsterweg ZX Amersfoort The Netherlands Tel: +31 () Fax: +31 () Brio Software Nederland Stationspark DA Sliedrecht Postbus AC Sliedrecht The Netherlands Tel: +31 () Fax: +31 () NOXS Netherlands B.V. Kobaltweg CE Utrecht The Netherlands Tel: +31 () Fax: +31 () Unit 4 Agresso Accountancy B.V. De Schutterij PK Veenendaal Postbus AT Veenendaal The Netherlands Tel: +31 () Fax: +31 () Unit 4 Agresso Enterprise Solutions B.V. De Molen DB Houten Postbus GC Houten The Netherlands Tel: +31 () Fax: +31 () Unit 4 Agresso Security Solutions B.V. Kobaltweg CE Utrecht The Netherlands Tel: +31 () Fax: +31 () Sure.IT B.V. Stationspark DA Sliedrecht Postbus AC Sliedrecht The Netherlands Tel: +31 () Fax: +31 () Norway Agresso AS Gjerdrums vei 4 P.O. Box 4244 Nydalen 41 Oslo Norway Tel: +47 () Fax: +47 () Decade Financial Software B.V. Mathildastraat HC Oosterhout Postbus CA Oosterhout The Netherlands Tel: +31 () Fax: +31 () Foundation ICT Group B.V. Kobaltweg CE Utrecht The Netherlands Tel: +31 () Fax: +31 () Unit 4 Agresso Oost-Nederland B.V. Welbergweg PE Hengelo Postbus AH Hengelo The Netherlands Tel: +31 () Fax: +31 () Unit 4 Agresso Software B.V. Stationspark DA Sliedrecht Postbus AC Sliedrecht The Netherlands Tel: +31 () Fax: +31 () Portugal Agresso Portugal R. Gazete de Oeiras 2 2A Oeiras Portugal Tel: +351 () Fax: +351 () Financial Statements 26

131 Spain CCS Agresso Av. Castell de Barberà, Barberà del Vallès Spain Tel: +34 () Fax: +34 () CCS Agresso c/ Aixa la Horra, s/n. Urbanización El Serrallo 188 Granada Spain Tel: +34 () Fax: +34 () CCS Agresso C/ Josefa Valcárcel, 3-5 1a planta 2827 Madrid Spain Tel: +34 () Fax: +34 () Gestión de Servicios Integrales y Sistemas de Información S.L. C. Marqués de Comillas, 67-69, 5a planta 822 Sabadell (Barcelona) Spain Tel: +34 () Fax: +34 () Sweden Agresso AB Gustav III: s Boulevard 18 P.O. Box 75 SE Solna Sweden Tel: +46 () Fax: +46 () United Kingdom Agresso Ltd. St. George s Hall Easton-in-Gordano Bristol BS 2 OPX United Kingdom Tel: +44 () Fax: +44 () Distinction Systems Ltd. Riverside House Normandy Road Swansea SA1 2JA United Kingdom Tel: +44 () Fax: +44 () Logicale Ltd. Riverside House Normandy Road Swansea SA1 2JA United Kingdom Tel: +44 () Fax: +44 () NOXS UK Ltd. 1 Thatcham Business Village Colthrop Way Thatcham Berkshire RG19 4LW United Kingdom Tel: +44 () Fax: +44 () United States Agresso Americas Corp Los Altos Suite 35 Mission Viejo CA Los Angeles, California United States Tel: +1 () Fax: +1 () Agresso Travel Industry Solutions Inc Greenway Ave. Ste 33 Irving, Texas 7538 United States Tel: +1 () Fax: +1 () Financial Statements 26 13

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