Exact Company ProfileExact Annual Report 2004

4 Company Profile

20 Managing Directors’ Report

24 Supervisory Board Report

30 Corporate Governance

36 Financial Statements and Related Notes

60 Other Information

62 Auditors’ Report

64 Exact Holding N.V. Agenda 2005 – 2006

contents

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Rajesh PatelVP Exact Software

Group Director International

Peter van HaasterenVP Exact Software

Group Director the NetherlandsMember Board of Directors Jim Kent

VP Exact SoftwareCEO North America

Eduard HagensCEO Exact Software

Member Board of Directors

Management Team 2004

A world of customer focusThroughout the world, no matter what the customer profile may be, the focus is always on helping the customer become more efficient and more successful by using a single, integrated solution. In the Netherlands this has traditionally meant providing the SMB (small to medium-sized business) market with innovative back-office solutions, but the focus is changing towards more integrated back- and front-office solutions. In North America there is a distinct customer need in the manufacturing and distribution sector, to which Exact is responding successfully. And the International strategic group continues to follow the strategy of becoming the preferred tier-2 supplier for subsidiaries of multinationals. The expanded functionality of Exact Globe, our ERP software, provides a good foundation for many customers around the world as they make the transition to a more process-oriented enterprise. But the future for our customers, as well as for Exact, lies in Exact e-Synergy, our Web-based front-office product. It promises to deliver integration with ERP back-office, collaboration through knowledge sharing with our customers. All three strategic groups share this vision. To realize it, they are supported by Exact’s extensive global network of fully-owned subsidiaries.

“The question for each user has to be: `What’s in it for me?’ Then we show them. The software, with its many features, sells itself.” - Sharon Dill, CIO PADI

Although each of the three Exact strategic groups has a distinctly different type of customer, they all share the same infrastructure and commitment to an integrated solution.

6 Diving into AutomationSharon Dill doesn’t mind diving into new technology that will help her employees at PADI do their jobs better. But she’s not interested in drowning, either. So when Dill, CIO of the Rancho Santa Margarita, California-based PADI (Professional Association of Diving Instructors), introduced Exact e-Synergy to the organization, she took the necessary precautions. She made sure there was proper training. And she addressed any concerns about using the feature-packed application that would automate and streamline many of PADI’s business processes.

Implementation“It has to be a valuable tool that’s easy to use. It cannot be one more thing users have to figure out. They should look forward to using it,” says Dill, who has already seen the successful implementation at PADI of Exact’s back-end software.

“The question for each user has to be: ‘What’s in it for me?’ Then we show them. The software, with its many features, sells itself.”

Dill did not assume users would automatically make Exact e-Synergy as much a part of their daily routines as Microsoft Outlook or Excel. Instead, working with Exact Software and its local reseller, she met with PADI staff to determine the features they’d like to see in the software.

Deciding what you needFor PADI, the implementation of Exact e-Synergy was a multi-step process. Dill met with PADI business units to settle on about a dozen major functions for Exact e-Synergy. “The hard part is not setting it up,” she points out. “The hard part is deciding what you need.”

“What needs to be defined is one or more business processes that we’re going to automate,” says Hugh M. Riddle Jr., a principal with Triangle Partners LLC, an Exact Software reseller in Glendora, California. Riddle, whose firm helped PADI implement Exact e-Synergy, is a certified scuba diver. “With Exact e-Synergy fully implemented, 750 PADI employees are using the system,” he notes.

Ensuring PADI had the proper hardware for the implementation was one of Dill’s easier tasks. She purchased a robust server and installed Microsoft SQL Server. PADI already had one server running Exact software and a Microsoft Internet Information Services (IIS) server for PADI’s Web site.

Customer Profile: PADI & Exact e-Synergy

1984

july 13 exact releases its first e-account package (1.15) and is one of 600 software vendors

1985 e-account 2.15e-account

exact is located in delft, the netherlands and profits from ‘high tech’ knowledge of the delft university

release of version 2.15e-account for dos

hotline support desk opened

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Worldwide roll outOnce the world headquarters in California implemented Exact e-Synergy, it expanded to other PADI offices in Australia, Canada, Switzerland, Japan, Norway, Sweden and the United Kingdom. Together they serve more than 100,000 individual professional members and more than 4,300 dive centers and resorts. The software provides reliable, secure communications among those offices and their members. Exact e-Synergy melds well with PADI’s back-end software, which is considered a company’s ‘backbone’, providing order entry, accounting, inventory control and purchasing. Exact e-Synergy “gives you the information that allows you to connect better with your customers,” Dill explains.

Short termThe organization began using Exact e-Synergy for two functions: the entry of notes taken during telephone calls with members – a traditional customer relationship management function – and the assigning of tasks by employees to themselves or a colleague. Later it rolled out features that provide a document repository and emulate PADI’s workflow processes for check requests. “What Exact e-Synergy can do is help you create a paperless office,” Dill says. “Nothing gets lost. And you can link a request to a customer.” Exact e-Synergy also replaced Act! contact management software, which the group’s sales representatives used to update customer information. Now PADI staff can use the Web-based Exact e-Synergy to easily update customer information from remote locations worldwide.

Long termDill’s long-term plans include replacing PADI’s worldwide intranet with Exact e-Synergy. “Exact e-Synergy is even more effective to us now that we’re on Exact Macola ES in North America,” Dill says. “Exact Macola ES and Exact e-Synergy share a similar database, making it easier to provide advanced functions like customer portals.”

“Customers can come in and they can take a look at their own data,” she explains. “They can take a look at the status of their orders, they can look at their accounting status and they can actually place an order now through Exact e-Synergy.”

It’s the kind of automation that can help keep a busy IT manager’s head above water.

www.padi.com

“What Exact e-Synergy can do is help you create a paperlessoffice. Nothing gets lost. And you can link a request to a customer.” - Sharon Dill, CIO PADI

1986

1987

product line is expanded withe-stock control, e-invoice ande-project

hotline support desk opened release of version 3.0 dos exact becomes market leader in the netherlands with 20% market share

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Strategic Group: Exact InternationalExact International aims to become the preferred supplier for small to medium-sized subsidiaries of international companies worldwide by offering one global product and a uniform level of service via a global subsidiary network.

An international network of self-owned subsidiaries sharing one infrastructure guarantees standardized, high-quality services everywhere. Currently Exact International has 42 subsidiaries covering Europe, Middle East, Africa, Asia and the Americas. This network, unique in the mid-market, enables international organizations to create global standards backed by a global vendor, yet offering direct local support and services.

The strategy, referred to as ‘parenting’ – due to the nature of cross-selling, deeply embedded relationships within international organizations and the penetration to parent organizations and their subsidiaries – enables Exact International to serve two target market segments based on one global infrastructure.

For global multinationals this strategy is focused to establish Exact Software as the de facto tier-2 solution for smaller affiliates, co-existing with their tier-1 solution for their large and more complex operations. This strategy enables cost efficiencies, reduces complexity and substantially trims implementation periods. Most important, it integrates the process to and from the tier-1 solution, enabling seamless integration and one reporting platform within a parent organization. This strategy also enables small to medium-sized international organizations to deploy a single tier ERP strategy across all their affiliates, creating enterprise-wide standardization and integration for real-time enterprise information.

Global brands:• Exact Globe• Exact e-Synergy

Local leading brands:• Cubic Pro (financial software for small businesses), Belgium• DIMONI (ERP software for medium-sized and large organizations), Spain• Exact Pro (financial software for small businesses), Germany• Exact Pro Lohn XL/XXL (financial software for SMBs), Germany• Soft-2000 (financial, invoicing and payroll software for SMBs), Austria• SIIGO (financial software for SMBs), South America

Strategic Groups

1988

1989

a new division isestablished to supply custom solutions tolarger companies:exact custom solutions

dos version 5 is the firstlanguage-independent package

introduction of e-relation: revolutionary product for customer relationship management

the support department starts working with e-relation for registering and managing support calls

release of version 4.0 dos

new release of version 5, international version

Strategic Group: Exact North AmericaThe North American market still struggles in weak economic conditions, with continued decreases in IT spending. Tier-1 ERP vendors are pushing into the mid-size market, making it even more competitive. There is also a broad thrust by businesses to outsource many parts of their operation, including manufacturing. The good news is that these conditions drive three key trends: e-commerce, inter-enterprise business, and labor optimization. These issues play directly into the Exact solution strategy.

Exact enjoys a leadership tier-2 vendor position in North America, with 11,000 manufacturing customers. These customers continue to adopt Exact technology. Some expand their Exact legacy solution set to gain further control. Others upgrade to our latest core ERP solution to streamline and optimize manufacturing and distribution.

Across the North America market, Exact e-Synergy gained traction. Within our manufacturing customer base. And with new customers in service firms, utilities, financial services and health care. As these organizations grow and their need for efficiency increases, the number of users managing their workflow, projects and e-commerce in Exact e-Synergy will also rise.In short, Exact North America is ideally positioned to benefit from both a solid ERP customer base and a broader array of new clients in service industries that need an end-to-end, integrated solution.

Exact North America uses a multi-channel sales and marketing strategy, with eleven (nine in 2003) regional Exact offices in the U.S. and Canada, in addition to the sites of Exact’s divisional offices. Our channel partners are geographically distributed to complement our direct regional presence. This extended network, in partnership with Exact worldwide, provides Exact with both local touch and global reach as a competitive advantage.

Local leading brands:• Exact Macola ES (ERP software for small and medium-sized manufacturing and

distribution businesses)• Exact e-Synergy (Internet-based integrated suite for CRM, financial, workflow and

resource control) • Exact JobBOSS (ERP manufacturing software for job shops)• Exact Max (ERP manufacturing software for SMBs)• Exact Alliance/MFG (MRP software for small manufacturers)

1990

1991

introduction of mrp package e-pas; exact’s product offering is now a full suite erp solution

support functions are integrated in version 5 software, including remote support features

exact products available in 3 european legislations and 4 languages

version 5 allows remote support for customers via modem

a new division, exact industry, completes manufacturing product line

“Exact can accompany us to any new strategic step. For example, we have set our sights on worldwide expansion. Exact’s existing worldwide network fits perfectly with this plan.” - Laurent Saumon, Executive Vice-President and CFO, Altavia

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Strategic Group: Exact NetherlandsWhile continuing to serve its traditional customer base – the SMB market – Exact is expanding its focus to the higher end of the market, as well as to more modest operations. The increased functionality of our products has made Exact solutions even more appealing to larger organizations. Exact Globe Enterprise addresses this market by segmenting into more solutions areas, serving an array of different businesses, including those involved in wholesale, manufacturing, retail, education, PSA (professional services area), rental and accountancy. Each of these is served with an industry template of Exact e-Synergy, making them efficient and profitable e-businesses.

For small business, the target in the Netherlands, as in the rest of the world, is to integrate our customers’ complete organization, using the combination of Exact Globe and Exact e-Synergy. To realize this long-term goal while better meeting the immediate needs of specific customer segments, Exact continues with three versions of Exact Globe (Exact Globe 2003 Enterprise, Exact Globe 2003, Exact Compact 2003).

For small businesses, Exact Compact offers an ideal platform for combining efficient back-office functionality with a means to make an easy transition to a more integrated solution, enabled by Exact e-Synergy.

To further enhance the integration of a wide range of products into a single solution, Exact has also introduced a set of tools to improve connectivity. Exact’s Software Development Kit (SDK) offers the opportunity for IT developers to meet the functional requirements set by their customers in addition to the standard functionality offered by Exact.

Exact supports its important reseller network in many ways. The entire network has been trained sufficiently so that every reseller can now sell Exact e-Synergy. In addition, our annual conference for resellers, ‘Inspire’, was a huge success, providing the ideal forum for sharing knowledge and expertise.

new company, exact international, established for expansion to other markets

1992

1993

successor of version 5, globe 2.0, is launched

exact opens exact university in delft to train all new employees

globe 2.0 for dos available in 9 legislations and 20 countries

special department is set up to service large account customers

exact opens its international support desk for international customers

Strategic Groups

Local leading brands:• Exact Globe 2003 (financial software for SMBs)• Exact e-Synergy• Exact Compact 2003 (financial software for small businesses)• Exact Globe 2003 Enterprise (ERP software for larger corporations)• Exact Financials (financial, project management and HRM software for medium-sized

and large organizations)• Grote Beer for Windows (financial software for small businesses)

1994

1995

acquisition of largest competitor in the netherlands, grote beer bv, with 10,000 customers; market share of exact in the netherlands is 55%

launch of second windows product (2.0) with non-proprietary btrieve database

new company, training and consul-tancy, takes care of employee and customer training programs, imple-mentation and consulting services

acquisition of cubic in belgium

launch of first exact for windowspackage (1.05)

12 Becoming the best in Europe: An objective made real with ExactAltavia never sold itself short. From its beginning in 1983, this French-based publishing services company has aimed to be the benchmark in its core businesses. Over the years the company has evolved and grown to become the European leader in publishing services. Key to achieving success in this activity has been having the right tools for the job. Exact software - specifically Exact Globe - has been chosen to help the organization face its new challenges and to help it execute its strategy.

Geographic expansionTaking Altavia’s business processes beyond the borders of the home market in France was mandatory for realizing its objective. Finding the right software tool to integrate the organization as it grew was critical. In late 2002 Exact was selected at a time when there were seven subsidiaries running abroad. The next year, 2003, was the year of the ‘boom’. In France the company acquired Victor, a major competitor, and thus almost doubled its size in this market. In the meantime, outside France, Altavia opened in four more countries, particularly in the UK and in Germany, further strengthening its European leadership.

Standardization and centralizationWith expansion comes the need for more efficiency. It’s no surprise that the other key priority was to standardize and centralize all business management systems. Exact Globe was selected for this purpose. What, exactly, was Altavia looking for? Laurent Saumon, CFO, Altavia Group says, “In the beginning we needed a standard accounting system for all subsidiaries. The solution needed to be MS technologies based (SQL, XML) since it had to be synchronized daily with our own internally-made business software (Altavia Web System, AWS).” “We see Exact Globe as a global standard accounting system that can be easily integrated (using XML) with our existing system,” says Saumon. “This enables us to manage very specific invoicing and the entire stock management process.” Altavia was also looking for a means to accommodate and facilitate its rapid international expansion. This included a means to control the tools used in the subsidiaries and the way of reporting.

Customer Profile: Altavia & Exact Globe

new department for researchand development establishedto investigate e-business

1996

1997

over 150 employeesat support desk(60% of all employees)

launch of windows version 3

local support and consultingservices available in 35 countries

double byte version is developed forthe asian market: exact for windowsversion 3

acquisitionof szymaniakin germany

launch of new supportservices for large accounts:special support

25% of revenues allocated to r&d

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Saumon: “Exact was able to provide us with a standard and localized software in every country. In addition, we liked very much the approach of having a central and direct account management by Exact instead of a different reseller in each country.”

Working with Exact. Now and in the futureThe importance of working with Exact? Saumon says, “By working with one product globally, we standardize reporting and attain consistency of the interface with AWS in every country.” At the same time Altavia is benefiting from having a full suite product. Right now it’s only for accounting, but new discussions are under way between the company and Exact to implement additional features.

Clearly, Exact has helped the organization grow to realize its objectives. It is supplying the necessary software to quickly execute its strategy aimed to become a leader in Europe. “But we also see Exact as a partner,” says Saumon. “Exact can accompany us to any new strategic step. For example, we have set our sights on worldwide expansion. Exact’s existing worldwide network fits perfectly with this plan.”

In the case of Altavia’s success, Exact has proven to be exactly the right tool for the job.

Altavia: global solutionsAltavia offers a range of solutions whose ultimate goal is to optimize publishing management services. This includes consulting, delivery and in many cases actual installation of the finished product. Altavia Publishing Services guarantees top-performance processes, supplier management and results, in terms of enhanced quality, speed, productivity and transparency. In short, it provides constantly improved solutions. Altavia’s cutting-edge, purpose-built tools mean that it is able to manage the whole project, every step of the way, online and in real time on the Internet.

www.altavia-group.com

“We see Exact Globe as a global and standard accountingsystem that can be easily integrated (using XML) with our existing, centrally installed business management system.” Laurent Saumon, Executive Vice-President and CFO

1998

1999

a second database is supportednext to btrieve: sql for windows

acquisition ofsoft2000 in austria

launch of exact for windows on sql;first e-business product for financialreporting and consolidation, b@co(now e-synergy)

second e-businessproduct launched:b@co sales

acquisition ofsoft-researchin germany

acquisition ofinformatica y gestiónin South america

exact holding n.v. listed on euronext amsterdam stock exchange

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Technology strategyThe Exact Group always focuses on delivering solutions to help organizations increase their efficiency. We believe that technology can help create those solutions, and we continually investigate the latest technology to reach this goal. Technology, however, is never a goal in itself. The value for end users drives the adoption of new technologies.

There are three important criteria for selecting technologies in our solutions: • they must have a proven stability in the market• they must be a widely accepted in the mid market• they must be easy to deploy without highly trained IT staff

The Exact Group has two strategic product lines: Exact Globe and Exact e-Synergy.

Exact Globe specifics Exact Globe focuses on automating the traditional back-office ERP processes containing structured information (transactions). The number of users may be small, but they are well-trained in the applications and require a powerful environment with all the functionality that Windows can offer in terms of ease of use. Therefore, Exact Globe is developed in Microsoft Visual Basic 6.0, with a basic technical framework in Microsoft Visual C++ 6.0 to ensure programming efficiency and consistency. All data is stored in the Microsoft SQL Server 2000 database. Supported client platforms are Windows 2000 and Windows XP.

Exact e-Synergy specifics Exact e-Synergy focuses on providing structure and context for various types of collaboration. This platform for communication is accessible over the Web and provides a single place from which to plan, coordinate, track and initiate collaboration. Moreover it provides search and retrieval of content and back-office ERP transactional data.

The Web interface is familiar to users and provides an easy means of navigation. Exact e-Synergy is therefore completely built on Microsoft Active Server Pages 3.0 and runs on top of Microsoft Internet Information Server, both on Windows 2000 and Windows 2003. All data is stored in the Microsoft SQL Server 2000 database. All supported client platforms are Windows versions that support Internet Explorer 5.01 or better (Windows 95, Windows 98, Windows ME, Windows NT 4.0, Windows 2000 and Windows XP). Exact e-Synergy also provides support for other devices, including PDAs (such as HP Ipaq) and smart phones.

2000

2001

introduction of new generationerp software: exact globe 2000,introduction of successor of b@co: e-synergy

acquisition ofpaymate inthe netherlands

e-synergy covers all business processes, isfully web-based and developed on the latestmicrosoft platforms, windows and sql 2000

e-synergy and exact globe 2000 usesame database; the start of integrated erp and e-business

acquisition ofmacola softwareand the kent groupin the usa

acquisition ofdimoni in spain

the first customersand exact partnersget access to supportand knowledge basevia customer portal

Technology Strategy

IntegrationBoth Exact Globe and Exact e-Synergy are tightly integrated on multiple levels:• Both products share a single common data model called One-X. They run on the same

database, thereby providing two interfaces to the same data. • Both products share the same core business logic. A single, COM-based framework is used to store and implement business logic in both Exact e-Synergy and Exact Globe. • Both products support XML export and import of data, based on a common, published

XML schema for integration purposes in distributed environments or with external applications. For backwards compatibility, the legacy CSV import files are still supported, but the strategic direction forward is XML.

• A very robust, Internet-based installation technology ensures that both Exact Globe and Exact e-Synergy can be installed and updated anywhere any time from the Internet.

Connectivity and reportingWe believe that the real opportunities and technological challenges are in connectivity and reporting.

Exact’s products and services are offered in several target markets all over the globe. To suit the specific needs for these target groups, Exact has developed, SDK (Software Development Kit). It connects third-party applications, devices and acquired local leading ERP brands to our strategic products Exact Globe and Exact Exact e-Synergy.

By improving connectivity, we leverage existing investments and provide a path forward in technology. It also enables better integration between the Exact products and the products of other suppliers. Not only does this create a connection between standard ERP products, it also provides a means to use a wide range of mobile devices. The connectivity platform will be completely based on industry standard web services and XML.

The reporting needs in today’s ERP world have completely changed from accounting based to management by exception. The One-X concept of the Exact products holds all the information for Key Performance Indicators and balanced scorecard. Today’s reporting is dominated by Microsoft Excel for the ease of use and Crystal Reports as the defacto standard in reporting. Exact will deliver easy-to-use tools for getting your valuable information into Microsoft Excel and create custom Crystal Reports.

acquisition of kewill erpin the usa

2002

2003

e-synergy’s supplier portal wins award for ‘best enterprise application’ at cebit america

market introduction of e-synergy in the usa and pc magazine’s 2002 best of comdex finalist award for e-synergy in the enterprise software category

new subsidiary and two new offices opened in mexico; two offices opened in poland

exact globe 2003 product line introduced

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Exact Software productsAt Exact we believe in integrated solutions. Optimizing only at a company or departmental level, however, is no longer sufficient to succeed in today’s highly competitive environment. Every department contains mountains of data, but without an integrated solution, all this valuable information is lost for the company. What is needed is a real-time solution that goes beyond, for instance, the sales, marketing or support department. What is needed is an answer to very basic questions like: “What is the profit per product line?” “What is our current sales pipeline and how does that compare to last year?” “Who are our most profitable customers?”

With Exact’s integrated solutions these answers come naturally. We have focused our development on making sure that any company can significantly benefit from all data that is stored in different places in the organization. At Exact we have developed a platform that keeps all departmental data in one central information store. This information store is accessible, in real time, over the Web, and makes sure everyone within the organization works with the same information.

By focusing on improving and optimizing the processes instead of only the departments, any company, your company, will be better aligned and prepared to take on the challenges ahead.

The Exact solution consists of two fully integrated products: Exact Globe and Exact e-Synergy. Both are built on open standards (Microsoft) and can easily be connected to any application you may have. And both work from the same central information store.

ceo eduard hagens takes sabbatical leave

2004

two new offices opened in china

2005

new office in portugal,establishment of exact academy in north america

establishment of exact academy in malaysia new office in denmark establishmentof exact academy in china

exact globe 2003 release of manufacturing and project management suites

establishment of exactacademy in the netherlands

new offices in chile, colombiaand slovakRepublic

new supervisory board for exact holding n.v.

Exact Software products

Exact Globe and related brands increase productivity compared to traditional ERP solutions. Together with Exact e-Synergy, access to ERP data within the organization is increased from 10% to 90% of employees. As a result, productivity increases dramatically in relation to investment.

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Exact GlobeExact Globe is our business software solution. All traditional processes within an organization can be fully automated with Exact Globe. It provides support for financial, HR, sales, marketing, logistics and manufacturing processes. Furthermore, it is fully localized, so all legislative, fiscal and judicial obligations are met. Its ease of use and comprehensive implementation give your company an opportunity to quickly reap the benefits of the solution. Its breadth and depth provide your employees and management with all current and future software needs. Typically the product is used by a select number of users within your organization who bear responsibility for transactional actions (moving of goods, buying, selling, budgets, etc.). The key strengths of Exact Globe are:• supports fiscal, legal and commercial regimes of more than 20 legislations• provides financial accounting, cash flow management, asset & contract management,

project management and service management• provides industry templates for manufacturing and distribution businesses• streamlines international payroll and improves document management• uses one central database for recording transactions, documents and activities• uses classification of documents, making access simple and easy• reduces steps needed to process a document from order to payment

Other Exact products worldwide with the Exact Globe architecture and functionality:• Exact Macola ES (North America)• Grote Beer for Windows (The Netherlands)• Exact Pro (Germany)• Exact Pro Lohn XL/XXL (Germany)• Cubic Pro (Belgium)• Exact Globe 2004 Enterprise (The Netherlands and International)• Exact Compact 2004 (The Netherlands)

Exact Software products

Exact e-SynergyExact e-Synergy is our collaboration solution. As the name indicates, the solution is designed to provide synergy within your organization. All employees have web-access to real-time information from one central information source. They can plan, track and initiate collaboration and search and retrieve content, documents and transactional data. By making Exact e-Synergy your platform of communication and collaboration, no data is ever lost. Instead it is stored for quick retrieval. Because of its ability to align employees, information and processes across the enterprise, users of Exact e-Synergy can view the health of the entire value chain, help employees manage time more effectively and execute business processes more efficiently.

Key strengths Exact e-Synergy: • integrates all company information• accommodates Web sites and portals• encourages collaboration• supports mobile connectivity• increases transparency by managing all business processes through electronic workflow• gives access to all information and processes, including existing back office ERP data,

for the entire organization• reduces implementation and training cost by making use of a common Web browser to

input and access data• leverages investments in ERP systems by enabling access to this information for the

entire workforce• allows online add-on for PDA devices• integrates with Microsoft Office, Outlook and Exchange

Managing Directors’ Report

IntroductionDuring 2004 economic conditions remained challenging. The traditional ERP industry demonstrated to be sluggish. Traditional ERP users and customers were still hesitant with regard to additional investments in both upgrading their existing applications and on services to adopt new technology. Despite these conditions in the traditional ERP market, Exact’s leading edge 3rd generation application Exact e-Synergy again showed considerable growth, resulting in a year on year doubling of its user base compared to 2003. Total revenue increased to € 212 million from € 206 million in 2003. Earnings before amortization, financial income, expenses and income taxes amounted to € 50 million compared to € 49 million in 2004. During last quarter of 2004, the organization increased its investment in sales, marketing and additional personnel to further fuel organic growth in 2005 as reflected in the operating income.

Operational and Net ResultLicense revenue amounted to € 65 million in 2004, as compared to € 60 million in 2003. This increase was due to the successful new product line Exact e-Synergy, which was responsible for 19% of total license revenue. Maintenance revenue remained stable at € 117 million. This is mainly due to the price pressure in the North American market and the change in maintenance model for charging Exact e-Synergy users. Service revenue amounted to € 30 million as compared to € 29 million in 2003.

Fixed assets decreased to € 50 million due to amortization of goodwill, depreciation of tangible fixed assets and currency translation effects. Trade receivables remained stable at € 40 million. Average ageing of the trade receivables decreased to 68.3 days compared to 73.5 days in 2003.

Deposits, cash and cash equivalents increased with € 19 million to € 130 million.

The company’s strong equity position amounted to € 171 million. Total equity amounts to 74% of the balance sheet total.

With the combination of its solid balance sheet ratios and strong innovative products, the company feels confident that it will achieve, pursue and develop its strategic goals aimed at growth, organically, as well as through acquisitions. Furthermore with the existing cash balance and short-term investments together with cash-flow generated from operations, the Company will propose a dividend payout of € 1.00 per share to the Shareholders while maintaining sufficient liquidity to meet operating requirements and investments.

Strategic GroupsTotal revenue in the Netherlands amounted to € 95 million compared to € 93 million in 2003. Exact Globe 2003 Manufacturing and Project functionality were launched in June 2004. In 2004 Exact Netherlands has aligned its organization to better serve market segments that seek specific industry solutions. Together with its traditionally very loyal partner channel, this has proven to be successful in delivering solutions and implementations for the higher end of the SMB market in the Netherlands.

Total revenue from International Markets amounted to € 69 million compared to € 62 million in 2003. Exact International’s geographic expansion strategy resulted in new offices in Argentina, Denmark, Portugal, Kuwait, Chile, Colombia and Slovak Republic.In addition, the group opened 2 additional offices in China and 1 additional office in Russia.

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The revenue contribution of the North American operations amounted to € 48 million. At constant currency rates this would have amounted to € 53 million. This difference of € 5 million reflects the average decrease of the exchange rate of the US dollar versus the EURO. In US dollars revenue from North American operations amounted to US$ 59 million compared to US$ 58 million in 2003. In May 2004, Exact acquired the Treadstone Group, a Cincinnati, Ohio-based IT consulting and systems integration firm. Exact now operates 12 regional offices across the United States and two serving the Canadian market. In 2004, the first steps were taken to offer Exact Globe to North American customers enabling them to benefit from an extensive range of ERP solutions.

All strategic groups have contributed to the considerable increase in Exact e-Synergy revenue.

The Market and Exact’s positionThe traditional ERP mid market for standard business software remains sluggish and fragmented with increasing pricing pressure on products and services. However, due to the globalization and penetration of internet within businesses, customers increasingly seek collaborative and web based solutions to seek supply chain cost efficiencies and better organization of content within the enterprise. Exact is well positioned to respond to this customer demand with its Exact e-Synergy product, as well as to service the needs of bigger companies and organizations than Exact catered to traditionally. Furthermore we expect that standard business applications can drive organizations efficiencies by connecting to mobile devices that are increasingly in demand with new generation users. These users demand better and faster access to accurate and useful data.

The Exact OrganizationThe usage of Exact e-Synergy as a collaborative backbone for Exact’s own IT infrastructure enabled further improvements in the efficiency and control of the organization.

In 2004 the research & development activities were further centralized in Exact’s development centre in Kuala Lumpur, Malaysia. Exact expects to continue this trend in 2005 resulting in increased uniformity in working standards and faster roll out of new products, across all regions and strategic groups, enabling further cost efficiencies and a uniform level and manor of services to customers globally.

In the second half of 2004 Exact also started centralizing its financial services in Kuala Lumpur. This will lead to further cost gains and organizational control in 2005 and beyond.

Products and TechnologyIn 2004 Exact e-Synergy was fueling license revenue growth. This demonstrates that Exact’s vision on improving performance of organizations by allowing access to one information system for all their employees, partners and entire value chain is being aggressively materialized.

For Exact Globe 2003, Exact launched its Manufacturing and Project management functionality in the first half of 2004. During 2004, Exact Globe 2003 has been further developed to establish additional country legislations and languages, with the goal to be the only global mid-market player to offer one globally available product, sufficing local legislations and common business practices.

For the future Exact believes that the key to success in the mid market for packaged business solutions is technology leadership to enable separate information sources to be connected. In this respect Exact will further integrate its Exact Globe and Exact e-Synergy product functionality and allow these products to connect to other third party business applications and mobile devices. Exact is always researching and testing the most suitable technological platforms to support its product strategy like Microsoft .net, vCard (the electronic business card), Oracle and ASP (application service provider) concepts.

EmployeesAgain during 2004 the employees of Exact have shown a tremendous commitment in achieving a solid performance and considerable revenue growth in Exact e-Synergy. Whereas to the outside world, management changes in the board of directors and the supervisory board may have caught the attention, internally the company found its strength in the continued loyalty and ambition of the total workforce. We strongly believe and feel confident that our ‘human capital’ is a very important factor to sustain our ambition for sound growth in 2005 and beyond.

In 2004 the groups average number of employees was 2,153 and at 31 December, 2004 Exact employed 2,318 employees full-time. Next to the importance of having innovative products our Exact employees are mostly educated internally by attending the four Exact Academies situated on 3 different continents. This will ensure highly trained professionals to serve best our customers for now and in the future.

International Financial reporting Standards (‘IFRS’)As from January 1, 2005 all listed European companies have to comply with IFRS for their consolidated financial statements. Exact will report annual financial statements and half-yearly reports of each financial year beginning on or January 1, 2005 in accordance with IFRS.

Exact started in February 2005 with the conversion from its current reporting standard (Dutch GAAP) to IFRS. Hereto the company will prepare an auditable IFRS opening balance sheet at January 1, 2004 and IFRS compliant financial information for all accounting periods thereafter. The impact of the transition to IFRS can only be specified after appropriate investigation and analysis. The company is currently in the process of such an investigation and analysis.

OutlookIn 2005 management will focus on its core business: the product lines Exact Globe and Exact e-Synergy. These product lines have showed continuous success and Exact will continue to use its advantage of technology and being the first mid-market player to market a 3rd generation business application to drive growth.

Furthermore we expect to share our views on the future of the company in April 2005. We believe in a bright future for Exact as a leading international player in the mid-market with a clear global product and strategy. This belief is founded on the technological and management capabilities of the company. With its solid balance sheet and organizational fitness Exact feels confident that it can fuel growth organically as well as through acquisitions.

Delft, March 15, 2005

Eduard HagensPeter van Haasteren

Supervisory Board Report

We hereby submit the 2004 annual report of Exact Holding N.V., which includes the financial statements and the related notes. The financial statements were audited by Ernst & Young Accountants, whose unqualified audit certificate is also included in this report. The annual report was discussed both with the Board of Managing Directors and with the accountants.

We recommend that the Annual General Meeting of Shareholders adopts the annual report and discharges the members of the Board of Managing Directors and the Supervisory Board for their management respectively supervision in the last financial year.

2004 was a turbulent year for Exact Holding N.V. in which two members of the Board of Managing Directors resigned and the entire Supervisory Board announced it would be resigning as soon as their successors were found.

Former Supervisory BoardBy means of a shareholders circular the former Supervisory Board explained the decision to resign, which was also dealt with at the Extraordinary Meeting of Shareholders held on January 25, 2005. These members of the Supervisory Board resigned following this meeting of shareholders. Because they held their posts for the whole of 2004, this report from the Supervisory Board mainly concerns their supervision.

The Supervisory Board met with the Board of Managing Directors nine times in 2004. The strategy, the management and the policy of Exact were thoroughly discussed in detail. The risks regarding Exact and the system to control this, were also discussed.

Besides the performance of the Board of Managing Directors and that of its individual members, the Supervisory Board discussed its own composition and performance together with that of the individual members of the Supervisory Board. The conclusions concerning the composition of the Supervisory Board were taken into account during the selecting of new members of the Supervisory Board.

The Audit Committee, consisting of Louis de Bièvre and Dick Schonis met twice. The external auditors and the CFO participated in these meetings. Before the financial reporting was discussed in a Supervisory Board meeting, the Audit Committee had to assess the reporting extensively. The Audit Committee dealt with the compliance with the external auditors’ recommendations, with tax planning proposals, with the orientation towards IFRS.

The Remuneration Committee, consisting of Joost van Heijningen Nanninga and Leon van den Boom, met twice. This Committee discussed the remuneration of the members of the Board of Managing Directors and the Supervisory Board.

Due to the announcement that the Supervisory Board would resign, a Selection and Appointment Committee was not installed in 2004. This committee was installed in 2005.

The Supervisory Board also met with Exact’s Works Council in 2004. Pursuant to its strengthened recommendation right, the Works Council recommended Hans de Boer as a new member of the Supervisory Board. This recommendation was taken over by the Supervisory Board. This is a confirmation of the involvement of the Works Council in the company.

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Before the resignation of Bill Grabe on April 29, 2004 the former Supervisory Board complied with the independence norm of the Dutch Corporate Governance Code (‘the Code’). Dick Schonis was an exception to this independence norm because besides being a member of the Supervisory Board he was also affiliated with the firm that provided Exact with tax advice. However, the Code allows such an exception.

New Supervisory BoardFollowing the Extraordinary Meeting of Shareholders on January 25, 2005 a new Supervisory Board, consisting of three persons, was installed. The personalia of these members are included at the end of this Supervisory Board report.

Two of the new members of the Supervisory Board have the relevant knowledge and have had experience in finance and accounting for a listed company, so that this point of the Code is complied with.

The remuneration policy for the financial year 2005 and future years, and the amendments to the policy of the financial year 2004, shall be put forward to the Annual General Meeting of Shareholders in 2005 for adoption. After adoption of the remuneration policy the remuneration report shall be published on the Exact website.

The new Audit Committee, with its chairman Rob Bonnier and member Erik van de Merwe, met together with the accountants and the intended CFO on January 31 and March 15, 2005. The main subjects discussed were the financial reporting and the annual report for the financial year 2004.

Hans de Boer is the chairman of the new Remuneration Committee, which further includes Erik van de Merwe as a member. A Selection and Appointment Committee was installed in 2005, which will consist of all three members of the Supervisory Board, with Erik van de Merwe as its chairman.

Taking the criteria of the Code into consideration, every member of the new Supervisory Board is considered to be independent.

The Board of Managing DirectorsIn 2004 the composition of the Board of Managing Directors changed. As of October 15, 2004 two members of this board resigned and Eduard Hagens was again appointed as CEO. Peter van Haasteren continued to manage the strategic group ‘the Netherlands’ as managing director. The new Supervisory Board is planning to extend the Board of Managing Directors with three members.

FutureWith a new Supervisory Board and extension of the Board of Managing Directors in 2005, we believe that management issues are behind us and top management can once again focus on organic growth, integration and acquisitions. In the months to come, Exact will focus on the issues that are vital for the future of the company: the growing success of the product lines Exact Globe and Exact e-Synergy. We expect to present the strategic future plans at the Annual General Meeting of Shareholders in April 2005.

Delft, March 15, 2005

E.A.J. van de Merwe – ChairmanJ. de BoerR.W.J.M. Bonnier

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Personalia

Supervisory BoardErik van de Merwe• gender: male• title: drs (MA)• date of birth: December 30, 1950• profession: independent adviser• formerly: chairman of the Management Board of Fortis Bank Nederland and

MeesPierson• nationality: Dutch• date of initial appointment: January 25, 2005• current term of office: 4 years• other positions:

– chairman of the Supervisory Board of PCM– chairman of the Supervisory Board of Fornix BioSciences– chairman of the Supervisory Board of Royal Rotaform– chairman of the Supervisory Board of Curvalue– chairman of the Supervisory Board of GWK– chairman of the Supervisory Board of Achmea Bank– chairman of the Supervisory Board of Staal Bankiers– Supervisory Board Member of Achmea Holding and its holding company Eureko

N.V.– chairman of the Supervisory Board of Nova Chemicals N.V.– chairman of the Supervisory Board of Royal Schouten Group– Supervisory Board member of Mizuho Corporate Bank (Netherlands) N.V.– member of Sijthoff jury (the prize for the best annual report by a listed company in

the Netherlands)

Hans de Boer• gender: male• title: drs (MA)• date of birth: January 17, 1955• profession: entrepreneur and adviser• formerly: chairman of Koninklijke Vereniging MKB-Nederland• nationality: Dutch• date of initial appointment: January25, 2005• current term of office: 4 years• other positions:

– chairman of the Supervisory Board of Meerlanden N.V.– chairman of Innovation Platform United Services Group N.V.– board adviser KPMG accountants– Supervisory Board member of Vroegop & Ruhe B.V.– chairman of the Supervisory Board of DokterDokter.nl– Supervisory Board member of Sperwer-groep– Supervisory Board member of USUS B.V.– chairman of the Supervisory Board of ARBONED N.V.– member of the Supervisory Board of UWV– member of the Supervisory Board Stichting De Stromen– member of the Supervisory Board of Mondriaan College – member of the Advisory Council Zorgverzekeraars Nederland– chairman Platform Woningmarkt Nederland– chairman of the Governmental Taskforce to control youth unemployment– numerous ministerial committees including Participation of immigrant women,

Taskforce for the elderly, Public Governance

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Rob Bonnier• gender: male• title: drs (MA), Chartered Accountant• date of birth: May 3, 1943• profession: director• formerly: Management Board Member of KNP BT• nationality: Dutch• date of initial appointment: January 25, 2005• current term of office: 4 years• other positions:

– chairman of the Supervisory Board of Orange Fund N.V., Orange Largecap Fund N.V., Orange Deelnemingen Fund N.V.

– chairman of the Supervisory Board of DSB Groep N.V., DS Verzekeringen Holding N.V.– Supervisory Board member of Commerzbank (Netherlands) N.V.– Supervisory Board member of CRV Holding B.V.– Supervisory Board member of Ontwikkelingmaatschappij Oost Nederland N.V.– member of the Board of the Stichting Continuïteit Numico– member of the Board of Foundation for Management of Preferent Shares in Wolters

Kluwer N.V.– member of the Board of Stichting Van der Moolen Holding– member of the Board of Stichting Continuïteit PinkRoccade

Former Supervisory BoardLeon van den Boom – Chairman• date of initial appointment: January 1995• end of term of office: January 25, 2005

Louis de Bièvre• date of initial appointment: May 13, 1998• end of term of office: January 25, 2005

Joost van Heijningen Nanninga• date of initial appointment: June 29, 2000• end of term of office: January 25, 2005

Dick Schonis• date of initial appointment: June 29, 2000• end of term of office: January 25, 2005

Bill Grabe• date of initial appointment: January 1, 1997• end of term of office: April 29, 2004

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Corporate Governance Report

The Corporate Governance Code (‘the Code’) is part of the Dutch legislation as of January 1, 2005, as a consequence of which it is applicable to listed companies with a reporting obligation as of the financial year 2004. Henceforth Exact will annually devote a chapter of its annual report to the general outline of its corporate governance structure, taking into account the Code’s principles. Exact already reported on corporate governance for the financial year 2003 and the subject was also addressed at the Annual General Meeting of Shareholders on April 29, 2004.

For the explanation of the corporate governance structure and the compliance with the best practice principles, the subdivision of the chapters of the Code shall be adhered to. Subsequently the Statutory Two-Tier Rules (structured regime) will be dealt with, also in view of the new Structure Act (Structuurwet) which act went into effect on October 1, 2004.

Implementation CodeIn so far as Exact did not already comply with the Code in 2004, implementation thereof was commenced. Due to the change in the Board of Managing Directors in that year and the announced resignation of the Supervisory Board, the implementation of the Code shall be further effected in 2005. In 2005 Exact’s objectives and strategy shall for example be reconsidered and redetermined. The various regulations, like the Supervisory Board Regulations, shall also be further decided on in the course of 2005. Those regulations will in accordance with the Code be published on the Exact Website [NW1].

Exact concludes that it will comply with the principles of the Code and the best practice provisions it contains or that it is in the process of complying with these provisions.

The Board of Managing Directors

Appointment, role and management periodAs a result of the applicable full structured regime, the members of the Board of Managing Directors are appointed by the Supervisory Board, after presenting the intention to appoint a managing director to the General Meeting of Shareholders.

The division of duties within the Board of Managing Directors is to be decided on between the members themselves. Nonetheless the managing directors act as a board with joint responsibility.

The Code has introduced a four-year period as term of appointment for members of a board of managing directors. Although the Code in the transition provisions offers the possibility of not applying such a period for current board members, Exact will adopt the four-year period not only for new board members but also for the present members of the Board of Managing Directors. The contracts with the present members of the Board of Managing Directors will in that respect be modified in 2005.

Board proceduresThe operational and financial objectives, the strategy and the parameters to be applied in relation to the strategy shall be definitively determined in 2005.

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Financial reporting and risk management

Financial reportsExact endorses the principles contained in the Code with regard to financial reports and the role of the Board of Managing Directors and the Supervisory Board in this respect. A part of that role is fulfilled by the Audit Committee, which of course is also involved in determining the contents and publication of the financial reports.

External auditorsExact’s current external auditors, Ernst & Young Accountants, was appointed by the General Meeting of Shareholders of Exact on November 26, 2002. In accordance with the Code, the external auditors will be asked to attend the General Meeting of Shareholders to be held on April 7, 2005, in order to answer questions from shareholders about the auditors’ report on the financial statements.

Exact also endorses the principles included in the Code with regard to the external auditors’ relationship and communication with the company.

Internal auditExact has implemented checks and balances in its control structure, but has not institutionalized an internal auditor. In 2005 those checks and balances will be examined as well as the other risk management and controling systems. Appointing an internal auditor will be taken into consideration within that survey.

Risk managementDuring 2004 the implementation and improvement of our internal risk management and control systems were addressed. However, the management changes influenced the pace of the survey and embedding of the risk management and control system and the improvement thereof. The internal risk management and control systems will be further implemented and improved in 2005.

Whistleblowers procedureA whistleblowers procedure shall be part of the control system of Exact. The draft procedure is awaiting approval from the Supervisory Board and shall be implemented in 2005. After approval the whistleblowers procedure shall be published on the Website. The procedure is to ensure that any irregularities within the company Exact can be reported without any adverse effects for the person reporting such irregularities.

Remuneration Board of Managing DirectorsThe remuneration of the members of the Board of Managing Directors is determined by the Supervisory Board within the framework of the remuneration policy adopted by the General Meeting of Shareholders and taking the advice from the Remuneration Committee into consideration. The remuneration policy for 2005 and future years will be drawn up in this year.

With regard to the remuneration for the members of the Board of Managing Directors in 2004, referral is made to the related notes to the financial statements in this annual report.

The most important elements of the contracts with the present and future directors shall be published on the Exact website. This will be done once new members of the Board of Managing Directors have been formally appointed.

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At this time Exact has no stock or option plan for its managing directors. Options awarded to directors in the past have been exercised or will lapse in the near future. Exact shares owned by managing directors are intended for long-term investment.

Regulations for transactions in and ownership of other securities than those in Exact are at the moment subject to discussion within the Supervisory Board and Board of Managing Directors. The final regulations concerning such transactions and ownership will be published on the Exact Website.

Considering that the function of a managing director of a listed company entails special responsibility and may not be accepted lightly, a candidate managing director must be aware of this before he accepts the function. This includes realizing beforehand that in the case of involuntary termination of the contract with the company, the maximum remuneration will be one year’s salary. This will be included in the contracts of the managing directors. This maximum shall also apply for the present members of the Board of Managing Directors, who have committed themselves to such maximums.

Supervisory BoardThe Supervisory Board that was installed on January 25, 2005 consists of three members, who were appointed by the (Extraordinary) General Meeting of Shareholders on that date.

Role and procedureAs a result of the new Supervisory Board just recently being installed, various matters shall be worked out and formalized in the course of 2005. The regulations of the Supervisory Board and its committees shall therefore be further drawn up in 2005 and after completion the regulations will be published on the Website.

Expertise and compositionIn consultation with the Board of Managing Directors the Supervisory Board has drawn up a profile of its composition and size, which profile will be published on the Exact Website.

On January 25, 2005 all members of the Supervisory Board were appointed for four years. The rotation and retirement schedule is currently based upon the assumption of re-appointment in four years. This schedule will be reconsidered in the next few years.

RemunerationOn April 25, 2004 the Annual General Meeting of Shareholders determined the remuneration for the former members of the Supervisory Board. In 2005 the changes in remuneration for the Supervisory Board will be submitted to the Annual General Meeting of Shareholders.

As stated above, regulations for transactions in and ownership of other securities than those in Exact are at the moment subject to discussion within the Supervisory Board and Board of Managing Directors. The final regulations concerning such transactions and ownership will be published on the Exact Website. These regulations will also be applicable for the members of the Supervisory Board.

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General Meeting of ShareholdersThe Board of Managing Directors seeks to ensure that the General Meeting of Shareholders can exert such influence on the policy of Exact’s Board of Managing Directors and Supervisory Board that it plays a full-fledged role in Exact’s system of checks and balances. Resolutions by the Board of Managing Directors concerning a significant change in Exact’s identity or character are subject to the approval of the General Meeting of Shareholders. Statutory Two-Tier Rules (structured regime)In 1999, Exact voluntarily accepted application of the entire structured regime. The General Meeting of Shareholders had passed a resolution to this effect in 1999. Under this regime, the members of the Board of Managing Directors were appointed and dismissed by the Supervisory Board and the members of the Supervisory Board were appointed by the Supervisory Board itself. Based on the new Structure Act, supervisory board members are since October 1, 2004 to be appointed by the General Meeting of Shareholders on the Supervisory Board’s proposal. In addition, the Works Council has been given a strengthened right to recommend a third of the number of members of the Supervisory Board. The appointment of the members of the Supervisory Board has taken place according to this new act. As a consequence of these and other changes in the Structure Act, Exact will amend its articles of association. To this end, an Extraordinary General Meeting of Shareholders will be convened, at which meeting the application of the structured regime will be addressed.

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Financial Statements andRelated Notes

1 - Consolidated Balance Sheets as per December 31, 2004 and 2003 (after profit appropriation)

(in thousands of €) 2004 2003

ASSETS

Fixed assets

Intangible fixed assets 33,138 39,249

Tangible fixed assets 16,544 19,786

Total fixed assets 49,682 59,035

Current assets

Inventory 494 469

Receivables Trade receivables 39,765 41,588 Receivables on shareholders 70 0 Other receivables 4,090 554 Prepaid expenses 1,616 1,401 Deferred tax asset 3,686 0

Total receivables 49,227 43,543

Deposits 100,000 0

Cash and cash equivalents 30,109 111,213

Total current assets 179,830 155,225

Total assets 229,512 214,260

EQUITY AND LIABILITIES

Shareholders’ equity 170,188 155,282 Minority interest 736 571

Total group equity 170,924 155,853

Provisions Earn-outs 6,455 6,455 Other 1,144 922

Total provisions 7,599 7,377

Short-term liabilities Deferred revenue 28,820 29,915

Accounts payable and other liabilities 4,810 4,947 Corporate income tax 7,370 6,176 Other taxes and social securities 4,366 4,082 Accrued liabilities 5,623 5,910

Total short-term liabilities 50,989 51,030

Total equity and liabilities 229,512 214,260

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2.1 Consolidated Statements of Income for the years ended December 31, 2004, 2003

(in thousands of €) 2004 2003

Licenses 65,413 60,267 Maintenance 117,482 117,178 Services 29,577 28,953

Total revenue 212,472 206,398

Revenue-related expenses 18,353 17,808 Personnel expenses 93,996 91,508 Depreciation of tangible fixed assets 5,333 5,842 Exceptional book loss 949 879 Other operating expenses 30,675 29,245 Marketing and sales 12,748 11,709

Total operating expenses 162,054 156,991 Operating income before amortization 50,418 49,407 Amortization of goodwill 7,542 7,812 Operating income after amortization 42,876 41,595 Financial income and expenses

Interest income 3,179 1,795 Interest expenses (10) (30)Exchange rate differences (329) (1,335)Other financial income and expenses 118 103

Total financial income and expenses 2,958 533 Income before taxes 45,834 42,128 Taxes 12,675 14,347 Net income after taxes 33,159 27,781 Result on the sale of participations 0 4,358 Minority interest 243 108

Net income 33,402 32,247 Net income before amortization 40,944 40,059

Average number of shares outstanding (in thousands) Basic 23,596 23,490Diluted 23,601 23,513 Earnings per share (in €) after amortization of goodwill Basic 1.42 1.37Diluted 1.42 1.37 Earnings per share (in €) before amortization of goodwill Basic 1.74 1.71Diluted 1.73 1.70

2.2 Comprehensive Income Statements for the years ended December 31, 2004, 2003

Net income 33,402 32,247Translation adjustment (2,164) (9,668)Capital tax (9) (45) Comprehensive income 31,229 22,534

2 - Consolidated Statements of Income for the years ended December 31, 2004, 2003

(in thousands of €) 2004 2003 Net income 33,402 32,247 Adjustments to reconcile net income

Depreciation of tangible fixed assets and exceptional book loss 6,282 6,721 Amortization of goodwill 7,542 7,812 Changes in provisions 222 (717)Minority interest 243 108 Result on the sale of participations 0 (4,358)Exchange losses 0 519

Changes in operating assets and liabilities

Trade receivables 1,398 (2,385)Inventories (26) 149 Other current assets (4,310) 840 Accounts payable, accrued expenses (84) (3,711)Income taxes payable (1,807) (3,748)Deferred revenue (256) (1,219)

Total adjustments 9,204 11 Net cash provided by operating activities 42,606 32,258 Cash flow used for investing

Purchase of tangible fixed assets (5,424) (3,539)Disposals of tangible fixed assets 2,384 184 Acquisitions (3,510) (9,375)Sale of participations 0 13,733

Net cash provided by / used for investing (6,550) 1,003 Cash flow from financing activities

Proceeds from the sale of ordinary shares held by the Company 1,559 789 Deferred payments for acquisitions 0 (1,590)Dividend payments (17,827) 0

Net cash provided by financing activities (16,268) (801) Net increase 19,788 32,460 Other changes – exchange rate result (892) (1,438) Net increase of balance in cash, cash equivalents and deposits 18,896 31,022

Beginning of the year 111,213 80,191 End of the year 130,109 111,213

3 - Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003

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4.1 GeneralExact Holding N.V. (hereafter referred as the ‘Company’), legally seated in Delft, the Netherlands, was incorporated on February 19, 1993. The Company, as head of the group of subsidiaries, is engaged in holding, financing and managing its subsidiaries and other participations. The group’s activities relate primarily to the development, distribution and marketing of business software, end-user support, training and consultancy.

4.2 Consolidation The Consolidated Financial Statements for the year 2004 include the financial statements of Exact Holding N.V. and the following subsidiaries:

Name Ownership % Legal seat

Dimoni Software S.A. 100% Gandia, SpainExact Group B.V. 100% Delft, The Netherlands

Exact Software Nederland B.V. 100% Delft, The NetherlandsGrote Beer Software B.V. 100% Delft, The NetherlandsExact Alliances B.V. 100% Delft, The NetherlandsPaymate New Generation B.V. 100% Delft, The NetherlandsExact Maatwerk B.V. 100% Delft, The NetherlandsExact Small Business Solutions B.V. 100% Delft, The NetherlandsExact Industrie B.V. 100% Delft, The NetherlandsExact Retail B.V. 100% Delft, The NetherlandsRetail Solutions Software B.V. 100% Delft, The NetherlandsExact Training & Consultancy B.V. 100% Delft, The NetherlandsExact Nederland B.V. 100% Delft, The NetherlandsExact International Development B.V. 100% Delft, The NetherlandsExact e-Development B.V. 100% Delft, The NetherlandsExcellent International Development B.V. 100% Delft, The NetherlandsExact International B.V. 100% Delft, The NetherlandsExact Netherlands B.V. 100% Delft, The NetherlandsExact Asia Development Centre Sdn. Bhd. 100% Kuala Lumpur, Malaysia

Exact Software (International) N.V. 100% Curaçao, Netherlands AntillesExact Software Antilles N.V. 100% Curaçao, Netherlands Antilles

Exact Development Ireland Ltd. 100% Dublin, IrelandExact Holding Deutschland GmbH 100% Schwanewede, Germany

Exact Software Deutschland GmbH & Co.Kg 100% Munich, GermanyBavaria-Soft Datentechnik Verwaltungs GmbH 100% Schwanewede, Germany

Neue DB-Soft Software GmbH 100% Schwanewede, GermanyExact Belgium N.V. 100% Brussels, Belgium

Cubic S.A. 100% Brussels, BelgiumCobul S.A.(liquidated) 100% Brussels, Belgium

Exact Software GmbH 100% Cologne, GermanyExact Software (UK) Ltd. 100% Staines, Middlesex, United KingdomExact Software France Sarl. 100% Paris, FranceExact Software Spain S.R.L. 100% Madrid, SpainExact Business Software (Switzerland) AG 100% Duebendorf, SwitzerlandExact Hungary Software Kft. 100% Budapest, HungaryExact Software Czech Republic, s.r.o. 100% Prague, Czech RepublicExact Software Poland Sp. Z.o.o. 100% Warsaw, PolandExact Russia Representative Office* 100% Moscow, Russian RepublicExact Software Romania Srl. 100% Bucharest, RomaniaExact Software Ireland Ltd. 100% Dublin, IrelandExact Software Austria GmbH 100% Vienna, AustriaExact Soft-2000 GmbH 100% Salzburg, AustriaExact Software Asia Sdn. Bhd. 100% Kuala Lumpur, Malaysia

4 - Notes to the Consolidated Financial Statements as per December 31, 2004, 2003

Name Ownership % Legal sea

Exact Software (Malaysia) Sdn. Bhd. 100% Kuala Lumpur, MalaysiaExact Software Singapore PTE LTD 100% SingaporeExact Software Hong Kong, Ltd. 100% Hong KongExact Software Philippines, Inc. 75% Manila, The PhilippinesPT Exact Software Indonesia 100% Jakarta, IndonesiaExact Software Vietnam B.V. 100% Delft, The Netherlands

Exact Software (Vietnam) Ltd. 100% Ho Chi Minh City, VietnamExact Software (Thailand) Ltd. 85% Bangkok, ThailandExact Software (Shanghai) Co. Ltd. 100% Shanghai, ChinaExact Software Maroc S.A. 100% Casablanca, MoroccoExact Software Australia (Pty) 100% North Sydney, AustraliaExact Software Japan Co. Ltd. 100% Tokyo, JapanExact Software South-Africa (Pty) Ltd. 85% Centurion, South AfricaExact Software Middle East FZ-LLC 30% Dubai, United Arab Emirates

Exact Software Kuwait LLC 49% Kuwait, KuwaitExact Software Latin America, Inc. 100% Marion, OH, United States of AmericaExact Software de Mexico S.A., de C.V. 75% Guadalajara, MexicoInformatica y Gestión S.A. 70% Bogotá, Colombia

Exact Siigo del Peru S.A.C. 100% Lima, PeruExact Siigo de Colombia ltda 100% Bogotá, ColombiaExact Siigo de Ecuador S.A. 100% Quito, Ecuador

Exact Holding North America, Inc. 100% Marion, OH, United States of AmericaExact Software North America, Inc. 100% Marion, OH, United States of AmericaExact Software ERP-NA, Inc. 100% Minneapolis, MN, United States of AmericaExact Alliance, Inc. 100% Santa Barbara, CA, United States of America

Exact Software Canada Ltd. 100% Vancouver, BC, CanadaExact Alliance (UK), Ltd. 100% Leichester, United KingdomExact Investments Unlimited 100% Windsor, Berkshire, United Kingdom

Exact Holding (Luxembourg) SARL (in liquidation) 100% Luxembourg, LuxembourgExact Luxembourg SARL (in liquidation) 100% Luxembourg, LuxembourgExact Portugal Informatica, Lda 80% Braga, PortugalExact Software Denmark A/S 70% Copenhagen, DanmarkExact Software Argentina S.A. 80% Buenos Aires, ArgentinaExact Columbia S.A. 100% Bogotá, ColombiaExact Software Chile S.A. 80% Santiago, ChileExact Software Slovakia s.r.o. 80% Bratislava, Slovakia

* Exact Russia Representative Office is the branch office of Exact Holding N.V. in Moscow.

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4.3 Accounting policies General

The Consolidated Financial Statements and accompanying notes and the Company-only financial statements for the years ended December 31, 2004 and 2003 have been prepared in accordance with the accounting principles generally accepted in the Netherlands. The accounting principles are explained in the notes to the separate balance sheet headings. Assets and liabilities are stated at face value unless indicated otherwise.

The consolidated profit and loss statement discloses amortization of goodwill separately. This presentation provides better insight, which is in accordance with Article 362, Part 4, Book 2 of the Dutch Civil Code.

The Company-only Statement of Income for the years ended December 31, 2004 and 2003 have been prepared in accordance with Article 402, Part 9, Book 2.

In accordance with Article 403, Part 9, Book 2, Exact Holding N.V. has issued joint and several liability statements for its wholly owned Dutch subsidiaries, except for Paymate New Generation B.V.

Principles of consolidationAll assets, liabilities and results are consolidated in full; minority interest and results in consolidated group companies are disclosed separately.

Companies acquired during the year are consolidated for the period from the date of acquisition to December 31. The date of acquisition is determined as the date on which Exact Holding N.V. assumed effective control and economic risk over operations.

The results of group companies sold are included in the consolidation until the date of divestment. All significant inter-company balances and transactions have been eliminated from the Consolidated Balance Sheet and Statement of Income. Results of inter-company transactions have been eliminated.

Foreign currencies The assets, shareholders’ equity and liabilities of foreign subsidiaries are translated into euros using the exchange rate prevailing at balance sheet date. Revenue and expenses are translated at average exchange rates prevailing during the year. Translation adjustments resulting from this process and any translation result relating to the net equity value of the previous financial year are added to or charged against the currency translation adjustment included in shareholders’ equity.

Goodwill is accounted for by the local holding companies (in local currencies) and therefore translated at year-end rates.

Monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing at balance sheet date. Exchange rate differences resulting from the translation are included in the result as exchange rate differences under financial income & expenses. Transactions in foreign currencies during the financial year are included in the result at the exchange rate prevailing at the time of settlement.

Revenue recognitionThe Company derives its revenue from software license fees and forms; from providing maintenance, support, implementation and training services related to the use of the Company’s products; and to a limited extent, from services related to the configuration and customization of the Company’s products. The Company recognizes revenue from recurring and non-recurring licensing of business software when:

4 - Notes to the Consolidated Financial Statements continued

• a non-cancelable license agreement has been signed; • the software and related documentation have been shipped; • no material uncertainties regarding customer’s acceptance exist; • collection of the resulting receivable is deemed probable.

Revenue from forms is classified as license revenue.

Maintenance revenue consists of customer support revenue generated from maintenance contracts that provide the customer with telephone support and product upgrades and updates. The part of the maintenance agreements that relates to support is deferred and recognized over the related contract period, generally 12 months. The part of the maintenance agreements that relates to new versions (upgrades) of the software, generally 50%, is recognized as revenue in the month in which the agreements are renewed.

Service revenue generated from professional consulting and training services and software customization services is recognized as the services are provided. Revenue from fixed price contracts is accounted for in proportion to the performance rendered (percentage of completion). Losses are recognized when foreseeable.

Deferred revenue represents the unrecognized portion of maintenance and service contracts.

Operating expensesExpenses are recorded in the period in which they originate.

Depreciation of fixed assets is based on historical cost.

Profits on transactions are accounted for in the year in which they are realized; losses are accounted for in the year in which they were foreseen.

Marketing and sales include expenses related to advertising, tradeshows, promotions, market research and other programs and are expensed as incurred.

Revenue-related expenses include costs of material shipped, fees reimbursed to third parties for support services carried out on behalf of the Company and commissions reimbursed to agents for sales realized on behalf of the Company.

Research and development Research and development costs consist of costs attributable to the group’s research and development activities as well as maintenance activities of existing product lines, including personnel expenses, depreciation and other operating expenses. Technological feasibility for our software products, which include updates and upgrades of existing products as well as new products, is reached shortly before the products are released to the market. Costs incurred after technological feasibility is established are not material, and accordingly, we expense all research and development costs when incurred.

4.4 Consolidated Statements of Cash FlowsThe Consolidated Statements of Cash Flows have been drawn up on the basis of the indirect method. Cash is inclusive of deposits and securities, which may be considered to be investments of a highly marketable nature. The purchase price for acquisitions is recognized under cash flows used for investment activities, after the deduction of available cash. The cash flow statement has been set up per individual currency and was subsequently consolidated.

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4.5 Notes to the line items on the Consolidated Balance Sheets

4.5.1 Intangible fixed assetsGoodwill originating from the acquisitions is capitalized and amortized on a straight-line basis over the estimated useful life as from 2001. Goodwill represents the difference of the fair value of the acquired company and the total acquisition costs at the time of the acquisition. The amortization period and the expected operating cash flows are evaluated each financial year in order to determine whether any significant changes in the expected operating cash flows from previous estimates have occurred. If the value of the intangible asset exceeds the associated expected operating cash flows, goodwill impairment will be recognized in that specific year. The assessment of the useful life is based on characteristics of the business, such as: • an installed base of customers generating recurring revenues for the foreseeable future;• a distribution channel with product and market know-how and ability to sell, implement and

support these products;• a brand name that is recognized in the market;• the economies of scale that can be realized over time when the installed base can be migrated to

a single product platform of the Company. The goodwill capitalized in 2004 relates to the acquisition of all shares of IT-Totaal (renamed to Exact Retail) and Treadstone Inc., a reseller of Exact North America. Treadstone Inc. has been merged into Exact Software North America. The goodwill relating to these acquisitions will be amortized over a period of eight years. The movement in intangible fixed assets for the year can be summarized as follows:

(in thousands of €) 2004 2003 Balance as at January 1 Purchase value 74,942 74,942 Cumulative amortization (20,952) (13,140)Cumulative translation adjustment (14,741) (6,676) Book value as at January 1 39,249 55,126 Acquisitions 3,884 0 Amortization (7,542) (7,812)Currency translation adjustment (2,453) (8,065) Total changes in book value (6,111) (15,877) Balance as at December 31 Purchase value 78,826 74,942 Cumulative amortization (28,494) (20,952)Cumulative translation adjustment (17,194) (14,741) Book value as at December 31 33,138 39,249 4.5.2 Tangible fixed assets

Tangible fixed assets are valued at purchase price less straight-line depreciation. Depreciation takes place according to the estimated economic life and is calculated on the basis of purchase price less the estimated residual value. Depreciation starts at the moment the asset is taken into use. The annual depreciation percentages of the tangible fixed assets are:

Buildings and leasehold improvements 3.33 – 20 % Transportation 5 – 25 % Hardware 20 – 33.33 % Other fixed assets 20 – 33.33 %

4 - Notes to the Consolidated Financial Statements continued

Transportation includes an airplane. The components of this airplane are depreciated based on the actual usage (flying hours). During the period another airplane was sold for $ 2,200 thousand, which was in line with the estimated recoverable amount for which this airplane was valued at December 31, 2003. This airplane was sold to Eduard Hagens, CEO of Exact Holding and shareholder, on June 30, 2004.

Buildings include several apartments on which depreciation has been recognized as of 2004. These apartments are used for the housing of employees taking training courses in Delft, the Netherlands. Exact intends to sell the apartments in 2005.

Tangible fixed assets are revaluated in case of any impairment.

Movement in tangible fixed assets can be summarized as follows:

Buildings and Transportation Hardware Other Total leasehold fixed(in thousands of €) improvements assets

Balance as at January 1, 2004 Purchase value 4,588 16,284 19,445 10,909 51,226Cumulative depreciation (1,630) (5,086) (16,168) (8,556) (31,440)

Book value 2,958 11,198 3,277 2,353 19,786

Changes in book value Investments 19 2,276 2,084 961 5,340Disposals (39) (2,019) (122) (204) (2,384)Depreciation (315) (1,572) (2,481) (965) (5,333)Currency translation adjustment 6 (8) 66 20 84Exceptional book and currency loss* (949) 0 0 0 (949)

Total changes in book value (1,278) (1,323) (453) (188) (3,242)

Balance as at December 31, 2004 Purchase value 4,323 13,875 10,960 7,676 36,834Cumulative depreciation (2,643) (4,000) (8,136) (5,511) (20,290)

Book value as at December 31, 2004 1,680 9,875 2,824 2,165 16,544

Book value as at December 31, 2003 2,958 11,198 3,277 2,353 19,786

The estimated current market value of the buildings owned by the Company and its subsidiaries, included under buildings & leasehold improvements, is approximately € 2,400 thousand (2003: € 2,600 thousand) while the book value for these buildings as per December 31, 2004 is € 1,900 (2003: € 1,380 thousand). This estimate is based on an appraisal made by a real estate agent, applicable valuation for property tax and/or recent transactions for similar buildings.

* Exact Software Deutschland has made a total investment in leasehold improvements of just over € 2 million into the building. This investment would have been depreciated within 10 years. In December 2004, the rental agreement has been aborted. As a result, the remaining book value of these leasehold improvements has been written off for an amount of € 949 thousand and classified as exceptional book loss. In 2003 an exceptional book loss of € 1.398 thousand has been recognized on the airplane valued at recoverable amount.

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4.5.3 Inventory The inventory, comprising brochures and other marketing material and material shipped for licenses sold and upgrades (CDs, manuals, packing material, etc.), is stated at the lower of purchase price or net realizable value.

4.5.4 Receivables Receivables, as presented under current assets, mature within one year.

4.5.4.1 Trade receivables Trade receivables are included at nominal value less an allowance for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the trade receivables balance. The allowance is determined based on known troubled accounts, historical experience and other currently available evidence.

4.5.4.2 Receivables on shareholdersReceivables on shareholders mainly include a receivable on Eduard Hagens, CEO of Exact Holding N.V. and other shareholders.

4.5.4.3 Other receivables Other receivables include receivables, other than trade receivables, and accrued revenue on services performed by the Company.

4.5.4.4 Prepaid expenses Prepaid expenses include prepaid rent, prepaid insurance premiums, prepaid lease installments and an amount of € 293 thousand for the acquisition of Tectura Corporation in the USA (effective January 1, 2005).

4.5.4.5 Deferred tax assetsDeferred tax assets consist of timing differences and tax loss carried forward. As per December 31, 2004 the Company has an estimated total tax loss to carry forward of € 15 million (2003: € 18 million) among several subsidiaries outside the Netherlands. As circumstances have improved in subsidiaries abroad and are still improving, management has made a fair assessment about which part of these losses will be likely to be offset by taxable profits in the foreseeable future. The valuation of the deferred tax assets is based on direct tax rates net of a valuation allowance. A tax asset has been raised to the amount of € 3,686 thousand (2003: € 0). The deferred tax asset is valued at its nominal value. At the end of each reporting period the valuation of this asset will be reviewed.

4.5.5 Cash, cash equivalents and deposits

4.5.5.1 DepositsThe Company invested € 100,000 thousand in a five-year interest bearing callable instrument with a guaranteed principal at maturity. The first year the quarterly interest coupon amounts to 6.01%. In the following years the quarterly interest coupon is linked to the development of the 3M Euribor and cannot be less than 0%. If the 3M Euribor follows the following pattern: second year-2%, third year-3%, fourth year-4%, fifth year-5%, the interest rate of this instrument will remain stable at 6.01%. If the 3M Euribor increases more than the fixed pattern the interest rates will decrease accordingly. If the 3M Euribor will increase less than the fixed pattern the interest will increase. The instrument can be unwound at discretion of the Company at any moment against its marked-to-market value. The credit institution can call the instrument at any coupon day at 100% of the nominal value.

4.5.5.2 Cash and cash equivalentsNo restrictions exist on cash. As at December 31, 2004 the Company has predominantly euro denominated cash balances. At year end the Company held € 9,659 thousand in short-term interest-bearing bank balances.

4 - Notes to the Consolidated Financial Statements continued

4.5.6 Shareholders’ equity The changes in shareholders’ equity have been included in the notes to the Company-only Financial Statements on page 57.

4.5.7 Provisions

4.5.7.1 Provision for earn-outs The provision for earn-outs relates to the acquisition of Dimoni Software S.A. in 2000. Under the agreement of purchase and sale, the former shareholder of Dimoni Software S.A. is entitled to an additional purchase price installment depending on the performance of the acquired company over the period July 1, 2000 until June 30, 2001. Part of the earn-out was settled during 2003 through the issuance of 186,434 shares at a share price of € 33.87, the average share price calculated for the last ten days of June 2001 as stipulated in the purchase agreement. The Company has filed suit against the arbitration commission’s verdict regarding the earn-out. The remaining provision for this earn-out as per December 31, 2004 is sufficient to cover the financial consequences of the verdict.

The movement in the provision for earn-outs can be summarized as follows:

(in thousands of €) 2004 2003

Book value as at January 1 6,455 12,911Payments in shares 0 (6,315)Payments in cash 0 (141) Balance as at December 31 6,455 6,455

4.5.7.2 Other provisionsOther provisions include mainly warranty provisions. These provisions as at December 31, 2004 and 2003 have been made for specific risks known at the respective balance sheet dates. The other provisions are considered to be of a long-term nature. Changes in this provision were not material during the years 2004 and 2003.

4.5.8 Short-term liabilities Liabilities with a remaining period of up to one year are presented under short-term liabilities. In 2003 accounts payable and other liabilities include deferred payments for a total amount € 438 thousand in relation to various acquisitions. This entire balance was paid in 2004.

4.5.8.1 Deferred revenueThe maintenance agreements that the customers of the Company’s subsidiaries can enter into, entitle the user to support and to new versions of the software. The part of the maintenance agreements that relates to support is deferred and recognized over the related contract period, generally 12 months. The part of the maintenance agreements that relates to new versions (upgrades) of the software, generally 50%, is recognized as maintenance revenue in the month in which the agreements are renewed. Service revenue generated from professional consulting and training services and software customization services are recognized as the services are performed. Revenue from fixed price contracts is recognized in accordance with the percentage of completion method. If the resulting revenue to be recognized is smaller than the amount invoiced to the customer, the difference is recognized as deferred revenue. Deferred revenue represents the unrecognized portion of maintenance and service contracts (see also note 4.3). The nature of deferred revenue is considered to be long-term as the maintenance and service agreements, which typically have a contract period of 12 months, are automatically renewed at the end of the contract period.

Income resulting from the maintenance agreements pre-invoiced at the end of 2004 and that expire in the new financial year will be recognized in 2005. Insofar as the customer has paid in advance for agreements that are due for renewal in 2005, the value of the agreement is treated in its entirety as a liability under deferred revenue.

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4.5.8.2 Deferred taxesCorporate income tax is calculated through the application of the statutory tax rate on the result for the financial year, taking into account the temporary difference between the profit calculation for financial statement purposes and for tax purposes. The majority of the recognized deferred taxes arise from differences in deferred revenue calculation from maintenance contracts for fiscal and statutory purposes and tax loss carry forward potential in some of the foreign subsidiaries.

4.5.9 Financial instruments and risk managementThe Company is exposed to market risk, including primarily changes in exchange rates. Furthermore, the Company is exposed to credit risks. The Company neither holds nor issues financial instruments for trading purposes. On-balance sheet financial instruments are recorded at nominal value unless otherwise stated. The fair value of assets, liabilities and financial instruments does not differ materially from the balance sheet value.

4.5.9.1 Foreign exchange riskExact Software conducts business in euros and in foreign currencies. Since its financial statements are published in euros, it is subject to exchange risk due to the effects that changes in currency have on the revenues, results and balance sheet positions ultimately reported in euros. For 2004, 66% of revenues and 59% of operating expenses are denominated in euros. Since as much as 23% of revenue is US dollar denominated, the further weakening of the US dollar in 2004 has had a negative impact on revenue growth.

The Company is mainly exposed to foreign exchange risk in the following areas:

• Transactions in foreign currency (revenue and expenses) – these contain not only the existing and expected purchase and sale transactions, but also debts and receivables arising from these transactions.

• Investments in foreign group companies – these also contain results and other financial inter-company relationships.

All group companies must identify and measure the risks of important transactions executed in a currency other than their functional currency. Decisions to hedge important transactional risks are taken at Dutch HQ level in collaboration with local management.

In 2004 the Company decided to hedge part of its net US dollar cash flow against the Euro and engaged in a EUR/USD Swap. As a result of the agreed instrument the Company will until January 1, 2009 exchange USD 4,000 thousand per year into euro at a fixed exchange rate of 1.2780. The fair value of the SWAP at year end is € 1,068 thousand. The company did not engage in any other important hedge instruments.

4.5.9.2 Credit riskThe credit risk comprises the loss that should be recognized at the balance sheet date if customers would be in default in the fulfillment of their contractual obligations. In order to limit the credit risk, the Company continuously executes enquiries on the credit ratings of the customers and demands, where necessary, securities. Furthermore, the Company has procedures and policies to limit the size of the credit risk with each customer or market. These procedures and the geographical spread of the activities of the group companies limit the exposure of the Company to the risk connected with the concentration of credit and market risks.

4.5.9.3 Interest Rate riskReference is made to the notes in 4.5.5.1

4 - Notes to the Consolidated Financial Statements continued

4.5.10 Financial commitments and contingencies not shown on the Balance Sheet

4.5.10.1 Rent Total commitments in connection with rental obligations amount to approximately € 16,737 thousand (2003: € 13,946 thousand) and terminate in 2009. The short-term portion of these commitments amounts to approximately € 5,854 thousand . There is no obligation after five years.

4.5.10.2 Lease commitmentsThe Group has 34 (2003: 32) leased vehicles. The total lease amount for future periods is € 378 thousand (2003: € 491 thousand). The underlying lease agreements have a remaining duration ranging from 0 to 4 years. The short-term portion of the lease amounts is approximately € 195 thousand.

4.5.10.3 Guarantees At December 31, 2004 the Company had a total amount of € 1,185 thousand (2003 : € 1,370 thousand) issued for guarantees. The group stands surety for a maximum of € 371 thousand (2003 : € 371 thousand) for subsequent profit-dependent payments to the former shareholders of one of the companies acquired in 1994. The Company has issued a guarantee of € 113 thousand (2003: € 113 thousand) to guarantee payment of a potential settlement of a dispute on behalf of its subsidiary Exact Software Nederland B.V.. The remaining amount relates to several rental contracts.

4.5.10.4 Legal proceedings The Company is involved in several legal cases. Management is of the opinion that the warranty provision as per December 31, 2004 is adequate and that the final outcome of such litigation will not have an adverse material effect on the Company’s financial position or results of operations.

4.6 Notes to the line items in the Consolidated Statements of Income

4.6.1 RevenueThe revenue represented in the segmental overview is based on the revenue recognized by the organizational units. The revenue represented in the geographical composition is based on the revenue invoiced per geographical area and not by the organizational unit representing this area. The geographical composition of revenue is as follows:

(in thousands of €) 2004 2003

The Netherlands 96,303 92,420 North America 49,595 53,263 Germany 23,648 19,046 Other Western European countries 21,071 19,901 Eastern Europe 7,342 7,689 Latin America 7,543 6,650 Asia/Pacific 5,348 5,448 Middle East 747 851 Africa 875 1,130

Total 212,472 206,398

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4.6.2 Segmental informationThe business segments are defined to promote better alignment of strategies and objectives among development, sales, marketing and services and provide management with a comprehensive financial view of our key businesses. These business segments are separately managed and give the responsible owners more autonomy, whereas infrastructure and product development are shared among the segments. The segmental information is as follows:

(in thousands of €) 2004 2003

Revenue The Netherlands 95,535 92,943North America 48,157 51,637International 68,780 61,818 212,472 206,398

Operating income before amortizationThe Netherlands 32,201 32,363North America 5,245 5,326International 12,972 11,718 50,418 49,407

Total assets, excluding cash, deposits and intangible fixed assetsThe Netherlands 34,845 27,021North America 11,825 11,982International 19,595 24,795

66,265 63,798

Investments in tangible fixed assetsThe Netherlands 2,750 998North America 895 745International 1,695 1,796

5,340 3,539

DepreciationThe Netherlands 2,665 3,752North America 875 1,099International 2,742 1,870

6,282 6,721

Liabilities, including provisions and excluding deferred revenueThe Netherlands 13,984 19,056North America 4,187 3,741International 11,597 5,695

29,768 28,492

Deferred revenueThe Netherlands 12,582 11,271North America 10,581 10,959International 5,657 7,685

28,820 29,915

The balance for intangibles and the amortization of goodwill relate primarily to the acquisitions which have been made in 2001 and 2002 in North America.

4 - Notes to the Consolidated Financial Statements continued

4.6.3 TaxesThe activities of Exact Holding N.V. are subject to corporate income tax in all countries where the Company has an active subsidiary. The applicable statutory tax rates vary between 3% and 40%. Together with tax losses in some countries, non-deductible expenses and non-deductible amortization of goodwill, this causes the effective tax rate to differ from the weighted average tax rate.The Company and several subsidiaries inside and outside the Netherlands constitute a Dutch fiscal entity. The tax provision relating to this fiscal entity is allocated on a stand-alone basis to the result of the subsidiaries of the fiscal entity, while the total amount due is recognized by the Company. The effective tax rate, based on income before taxes, is 27.5% (2003: 34.1%).The reconciliation between the tax charge on the basis of the weighted average tax rate and the effective can be specified as follows:

2004 2003

Weighted average tax rate 32.8% 32.1%Non-deductible amortization of goodwill 4.5% 7.3%Tax losses (carry forward, def. assets, etc.) (6.6%) (5.9%)Release tax provision (3.4%) 0.4%Other 0.2% 0.2%

Effective tax rate 27.5% 34.1%

As per December 31, 2004 the Company has an estimated total tax loss to carry forward of € 15 million (2003: € 18 million) among several subsidiaries outside the Netherlands. Management has made a fair assessment about which part of these losses will be likely to be offset by taxable profits in the foreseeable future. A tax asset has been raised amounting to € 3,686 thousand (2003: € 0).

4.6.4 Remuneration of Directors The remuneration of the members of the Board of Managing Directors can be specified as follows:

Salary Bonus Severance Total Salary Bonus Bonus Total

(in €) 2004 2004 Pay 2004 2004 2003 2003 2002 2003

Eduard Hagens 236,700 100,000 0 336,700 243,496 74,015 57,959 375,470Lucas Brentjens 176,213 97,280 640,000 913,493 211,916 76,040 49,620 337,576Peter van Haasteren 153,812 95,000 0 248,812 127,848 60,080 21,206 209,134Bert Groenewegen 144,053 89,173 290,000 523,226 134,500 56,326 36,755 227,581

Total 710,778 381,453 930,000 2,022,231 717,760 266,461 165,540 1,149,761

Mr. Brentjens and Mr. Groenewegen were remunerated until November 5, 2004. A severance pay was granted by the Courts on November 5, 2004 to the amount of € 640 thousand for Mr. Brentjens and € 290 thousand for Mr. Groenewegen. These amounts are part of the accrued liabilities as of December 31, 2004. These amounts have been specified in the remuneration overview as stated above.

Besides this remuneration both Mr. Van Haasteren and Mr. Groenewegen have (had) a company car. For Mr. Hagens and Mr. Brentjens a contribution for the use of their private car for business purposes is included in their base salary. This contribution is fixed at € 22.7 thousand per year.

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The bonus is a performance-related payment and is determined by the members of the Supervisory Board. The bonus for 2004 was dependent on the realization of the financial targets for revenue and net income before amortization of goodwill that were established for 2004. For both components a minimum threshold needs to be achieved before a payout is calculated, and a maximum payout can never be more than 150% of the bonus that will be paid out if targets are exactly achieved. Therefore the bonus can never be more than approximately 60% of the base salary. The bonus comprised 50% for revenue target and 50% for the net income before amortization of goodwill target. A 100% payout of the revenue component would have been achieved if the target revenue of € 227 million would have been realized. For Mr. Van Haasteren the target revenue was set to total revenue of the Strategic Group The Netherlands of € 99 million. A 100% payout of the net income component would have been achieved if the net income before amortization of goodwill of € 38 million would have been achieved. Based on the actual results, the payout ratio for the bonus was 95%. For Mr. Hagens, a bonus was accrued for an amount of € 100,000. In 2004 the bonus for 2003 was settled based on the calculation mechanism as was applicable for 2004. The payout ratio based on the achieved results for 2003 was 150%. For 2005 the following salaries and bonuses have been established, assuming a 100% payout ratio:

(in €) Salary Bonus Total

Eduard Hagens 236,700 0 236,700Peter van Haasteren 150,000 100,000 250,000

Total 386,700 100,000 486,700

Payments to members of the Supervisory Board in 2004 totaled € 105 thousand (2003: € 77 thousand). The remuneration of the members of the Supervisory Board is not dependent upon the Company’s result. As of January 25, 2005 the Supervisory Board resigned and a new Supervisory Board was appointed by the General Meeting of Shareholders. The new Supervisory Board as of January 25, 2005 consists of E.A.J. van de Merwe, J. de Boer, R.W.J.M. Bonnier. Remuneration of the new Supervisory Board for 2005 is to be determined and to be approved by the General Meeting of Shareholders. The remuneration of the members of the Supervisory Board can be specified as follows:

(in €) 2004 2003

L. van den Boom 30,000 22,547L. de Bièvre 25,000 18,151D. Schonis 25,000 18,151J. van Heijningen Nanninga 25,000 18,151

Total 105,000 77,000

4 - Notes to the Consolidated Financial Statements continued

Besides this remuneration an additional remuneration of €2,500 will be added for membership in each of the following committees: remuneration, nomination and/or audit committee.

At the end of 2004 the Managing Directors held option rights on 5,000 shares (2003: 5,000). Movement during the year can be specified as follows:

Issued in Expiration Jan 1, Granted Exercised Lapsed Dec 31, Exercise in 2004 2004 price

Peter van Haasteren Oct ‘00 Oct ‘05 5,000 0 0 0 5,000 35.00

Total 5,000 5,000

At year end the Managing Directors held the following numbers of shares:

(in €) 2004 2003

Eduard Hagens 3,638,575 3,638,575Peter van Haasteren 20,000 20,000Lucas Brentjens 0 753,093Bert Groenewegen 0 89,642

Total 3,658,575 4,501,310

4.6.5 EmployeesPersonnel expenses can be specified as follows:

(in thousands of €) 2004 2003

Salaries and wages 75,892 74,788Social security contributions 11,126 10,190Other personnel expenses 6,978 6,530

Total 93,996 91,508

The Company has a pension plan based on defined contributions. Each individual employee determines his/her own defined contribution, which is deducted from his/her gross salary. Consequently, the Company has no charges for pension costs.

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In 2004 the group’s average number of employees was 2,153 (2003: 2,025). As at December 31, 2004 the Group employed 2,318 (2003: 1,987) employees (full time equivalent).

As per December 31 the employees worked in the following functional categories:

2004 2003

Support 25% 27%Services 13% 13%Research and development 21% 20%Sales and marketing 22% 22%Finance and administration 8% 7%Staff 7% 7%General and management 4% 4%

Total 100% 100%

During the years 2004 and 2003 the estimated personnel expenses for research and development were € 12,313 thousand and € 15,960 thousand respectively. Those amounts represent 13.5% and 17.4% respectively of the total personnel expenses in each of those years.

4 - Notes to the Consolidated Financial Statements continued

(in thousands of €) 2004 2003

ASSETS

Fixed assets

Financial fixed assets 148,825 117,287

Total fixed assets 148,825 117,287

Current assets

Receivables 0 0Group companies 28,931 46,310

Total receivables 28,931 46,310

Cash and cash equivalents 0 0

Total current assets 28,931 46,310

Total assets 177,756 163,597

EQUITY AND LIABILITIES

Issued and paid-up capital 488 488Capital surplus 81,002 79,507Retained earnings 85,933 81,066Proposed dividend distribution 23,702 12,994Cumulative translation adjustment (20,937) (18,773)

Shareholders’ equity 170,188 155,282

Provision for earn-outs 6,455 6,455

Short-term liabilitiesCorporate income tax 1,033 1,623Other taxes and social securities 80 199Accounts payable 0 38Accrued liabilities 0 0

Total short-term liabilities 1,113 1,860

Total equity and liabilities 177,756 163,597

(in thousands of €) 2004 2003

Income from participations in group companies 33,402 32,247 Other income after taxes 0 0

Net income 33,402 32,247

5 - Company - only Balance Sheets as at December 31, 2004 and 2003 (after profit appropriation)

6 - Company-only Statements of Income for the years ended December 31, 2004 and 2003

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7.1 GeneralThe Company’s annual accounts are included in the Consolidated Financial Statements. The share in group companies is valued at net equity value.

The valuation of assets and liabilities takes place according to the principles of valuation shown in the notes to the Consolidated Financial Statements. The same applies to the method for the determination of results.

7.3 Financial fixed assetsFinancial fixed assets include investments in subsidiaries on which a significant influence can be exercised. Financial fixed assets are stated at net asset value. The changes in financial fixed assets are as follows:

(in thousands of €) 2004 2003

Balance as at January 1 117,287 94,708Dividend 0 0Result from participations in group companies 33,402 32,247Translation result (2,164) (9,668)

Balance as at December 31 148,525 117,287

7.4 ReceivablesReceivables mature within one year.

7.5 Shareholders’ equity

7.5.1 Issued and paid-in capital The authorized share capital of the Company is € 1,500 thousand, consisting of 75,000 thousand ordinary shares, each with a nominal value of € 0.02 per share. Currently there are 24,400,405 ordinary shares outstanding, which are fully paid and non-assessable. Out of these, 698,277 ordinary shares are still held by the Company in portfolio with the purpose of covering the Exact Group Option Plan. The ordinary shares held by the Company include 68,009 (2003: 68,009) shares held in escrow for settlement of the earn-out with the former shareholder of Dimoni (see also note 4.5.7.1.). The ordinary shares held by the Company in portfolio have been deducted from capital surplus at their purchase price, which equals the nominal value. During the year 76,550 (2003: 84,655) shares were issued from this portfolio held by the Company for options which were exercised and 680 shares have been sold.

7 - Notes to the Company-only Financial Statements as per December 31, 2004 and 2003

The movement in shareholders’ equity can be summarized as follows:

Common Share Capital Retained Proposed Cumulative Total Total shares capital surplus earnings dividend translation 2004 2003(in thousands of €) distribution adjustment

Balances as atJanuary 1, 2004 24,400,405 488 79,507 81,066 12,994 (18,773) 155,282 125,623 Sale of shares 13 13 (5 ) Settlement earn-out 0 0 6,315 Exercise of stock options 1,491 1,491 815 Capital tax (9) (9) (45) Net income 33,402 33,402 32,247 Translation adjustment (2,164) (2,164) (9,668) Proposed dividend distribution (23,702) 23,702 0 0 Additional dividend distribution (4,833) 4,833 0 0Dividend distribution (17,827) (17,827) 0

Balances as atDecember 31, 2004 24,400,405 488 81,002 85,933 23,702 (20,937) 170,188 155,282

It will be proposed to the Annual General Shareholders’ Meeting to distribute a dividend of € 23,702 thousand (2003: € 12,898 thousand) to the shareholders. This represents 71% (2003: 40%) of the net income or € 1.00 per ordinary share (2003 : € 0.55 per ordinary share).

7.5.1.1 Stock option planIn 1995 the Company established the Exact Group Option Plan (the ‘Plan’). The Company determines the exercise price for each option granted, but such price cannot be below the deemed fair market value of the ordinary shares at the date of the grant. The option rights may be exercised in whole or in part during the exercise period, at the announced exercise dates, against payment of the exercise price. The exercise period of the option right is five years calculated from the date of the grant. Option rights will lapse if the option rights are not exercised during the exercise period. Should the employment agreement of the employee with the Company or one of its subsidiaries, for any or no reason, terminate within five years, then a certain part of the acquired option rights will lapse in accordance with the following scheme:

a) during the first year following the date of grant, all option rights will lapseb) during the second year following the date of grant, 75% of the option rights will lapsec) during the third year following the date of grant, 50% percent of the option rights will lapsed) during the fourth year following the date of grant, 25% percent of the option rights will lapsee) during the fifth year following the date of grant, 0% percent of the option rights will lapse Exercised option rights that have lapsed in accordance with the above mentioned scheme, should be reimbursed by the employee. As of December 31, 2004 the Company has a total of 698,277 (2003 : 775,605) shares in portfolio with the purpose to cover the Exact Group Option Plan, and there are options to purchase ordinary shares for an aggregate of 133,191 (2003: 249,696) ordinary shares outstanding. Included in this total are options to purchase 5,000 ordinary shares, which are held by the members of the Board of Managing Directors. No member of the Supervisory Board currently holds options.

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A summary of the total stock option activity under this plan is as follows:

Issued in Expiration in Jan 1, 2004 Granted Exercised Lapsed Dec 31, 2004 Exercise price (in €)

Apr–99 Apr–04 27,500 0 27,500 0 17.50 Jun–99 Jun–04 61,313 0 49,050 12,263 0 20.58 Jan–00 Jan–05 5,950 0 5,950 53.00 Feb–00 Feb–05 10,000 0 10,000 64.00 Sep–00 Sep–05 105,933 0 21,692 84,241 35.00 Apr–01 Apr–06 5,000 0 5,000 24.30 Aug–01 Aug–06 24,000 0 6,000 18,000 32.05Sep–01 Sep–06 10,000 0 10,000 26.85

249,696 0 76,550 39,955 133,191

The market price of the shares during the year when options were exercised was between € 22.30 and € 22.20 (2003: € 12.00 and € 22.30). It should be noted that options for Managing Directors are included in the total overview. A specification of the options granted to the Managing Directors is presented in paragraph 4.6.4.

7.6 Provision for earn-outsReference is made to the notes to the line items on the Consolidated Balance Sheet.

7.7 Short-term liabilitiesShort-term liabilities consists of the tax liability untill and including 2004.

7.8 Earnings per shareThe calculation of basic earnings per share is based on the net income for the year divided by the weighted average number of shares of 23,595,862 shares (2003: 23,489,596). The calculation of fully diluted earnings per share is based on 23,600,653 shares (2003: 23,513,188 shares), allowing for the exercise of outstanding share options.

(in €) 2004 2003

Basic income per share:

Net income after amortization of goodwill 1.42 1.37Net income before amortization of goodwill 1.74 1.71

Diluted income per share:

Net income after amortization of goodwill 1.42 1.37Net income before amortization of goodwill 1.73 1.70

7 - Notes to the Company-only Financial Statements continued

7.9 EmployeesIn 2004 the Company’s average number of employees was 33 (2003: 63). Expenses related to the employees have been charged to group companies.

Delft, March 15, 2005

Supervisory BoardE.A.J. van de MerweJ. de BoerR.W.J.M. Bonnier

Board of Managing DirectorsE. HagensP. van Haasteren

Other Information

1. Provisions governing the distribution of profitOn the basis of Article 14.1 of the Articles of Association of Exact Holding N.V., the profit is at the disposal of the General Shareholders’ Meeting.

2. Proposal for the allocation of the resultIt will be proposed to the General Shareholders’ Meeting that the profit for 2004 will be appropriated as follows:

(in thousands of €)

Addition to reserves 10,195Available for dividend in cash (€ 1.00 per share) 23,207

Total 33,402

The proposed dividend distribution in cash represents 71% of the net income for the year 2004.

Auditors’ Report

IntroductionWe have audited the financial statements of Exact Holding N.V., (Delft, The Netherlands) for the year 2004 (pages 37 to 59). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

ScopeWe conducted our audit in accordance with auditing standards generally accepted in the Netherlands. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Company as at December 31, 2004 and of the result for the year then ended in accordance with accounting principles generally accepted in the Netherlands, and comply with the financial reporting requirements included in Part 9, Book 2 of the Dutch Civil Code.

The Hague, The Netherlands, March 15, 2005

Ernst & Young Accountants

Exact Holding N.V.

Agenda 2005 – 2006

Publication of annual results 2004 February 3, 2005Analysts’ presentation February 3, 2005Ex-dividend quotation March 16, 2005Dividend made payable March 21, 2005General Meeting of Shareholders April 7, 2005Publication of half-year results 2005 July 28, 2005Analysts’ presentation July 28, 2005Publication of annual results 2005 February 9, 2006Analysts’ presentation February 9, 2006General Meeting of Shareholders April 27, 2006

Colophon

Production: RenewmediaText: Bill DickinsonPhotography: Jaap van den Beukel, FrisoSpoelstraPrinting: Forms Broker

With thanks to:Amsterdam Airport SchipholBodewes WinchesDrukkerij VeenmanSchuitemaScuba Center AmsterdamRotterdam Harbor

Exact Holding N.V., Poortweg 6, 2612 PA Delft, The NetherlandsP.O. Box 5066, 2600 GB Delft, The NetherlandsTel. +31 (0)15 261 3714, Fax +31 (0)15 262 5461www.exactsoftware.com

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