arinso international annual report 2000 · companies sap systems applications and products (ger) in...

THE HUMAN CAPITAL COMPANY

ARINSOI N T E R N A T I O N A L

A N N U A L R E P O R T

2 0 0 0

ARINSO International

combines world-class ICT skills

with an innovative HR approach.

We’ll run your HR engine,

so you can fully focus

on the road ahead.

www.arinso.com

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COMPANIES

SAP Systems Applications and Products (GER) in Data Processing. Largest worldwide provider in ERP-applications.

ORACLE Corp. (US) is the world's second largest software company and a leading supplier of software forenterprise information management.The company develops database software.

Meta4 Spanish company that offers the Web-based People & Knowledge Management System, a next generationHuman Resources Management System.

Peoplesoft is a leading and focused provider of HR eBusiness applications that enable people to power the inter-net.

TIBCO Software Inc., a leading provider of real-time e-business infrastructure software, is a pioneer in EnterpriseApplication Integration (EAI).

Business Objects (US) is a leading provider of e-business intelligence (e-BI) solutions.

Docent (US) is a recognized global leader in Education Commerce TM, providing comprehensive learning solu-tions via the Internet.

Saba A leading provider of Human Capital Development and Management (HCDM) solutions that consist of Internet-based learning, performance, content and resource management systems, business-to-business exchanges, integratedcontent and related services. Saba is a partner of Idégé, ARINSO’s specialized e-learning division.

IT JARGON

ASP Application Service Provider: an outsourcing partner to whom application and technical maintenance is outsourced.

BI Business Intelligence: Applications that analyze data, usually from a data warehouse, to generate pre-formattedreports and/or screens and/or models in support of management decision-making.

BPO Business Process Outsourcing: a contractual relationship with an external service provider to assumeresponsibility for one or more IT functions. Outsourcing is usually characterized by the transfer of facilities,systems, hardware or staff.

CM + HT Change Management and HR Transformation: methodology on how to manage the human aspects ofchange in an organisation.

e-HR e-HR e-HR involves the new concept of Web-enabling internal business processes, so that employees can send and receive information relative to their workplace in a self-service mode.

ERP Enterprise Resources Planning: Packages of data-processing programs allowing companies to optimize theiroperational processes.

ERM Employee Relationship Management: ERM consists of Technology-Assisted Employee RelationshipManagement holding the new concept of treating all employees as internal clients, to whom information needsto be made available in a user-friendly format and with real opportunities for dialogue.

HRMS Human Resources Management Systems: comprehensive IT solution which enables corporations toautomate most of the HR administrative and managerial functions, such as payroll, benefits, recruitment,capacity planning, training, time registration, etc.

PKMS People and Knowledge Management Systems: comprehensive IT solution, which enables corporations tomanage the knowledge inside the corporation, thus optimizing the existing "Human Capital".

HRSS HR Shared Services: the concept of offering a set of HR management services to a number of clients, froma common ICT platform – enabling a higher HR value to individual companies using web technology.

ARINSO International (Euronext: ARIN) is a global ICT (Information & CommunicationTechnology) consultancy operating in Europe, North America, Latin America, Asia Pacific and Africa.ARINSO provides comprehensive HR Management Solutions and Services for some of the world's largest employers and is active in three areas: implementation of ERP software (Enterprise Resource Planning), deployment of e-HR integration and HR Business ProcessOutsourcing. ARINSO has entered into major partnerships with SAP, Oracle and Meta4 - three leading ERP vendors for the HR market.

ARINSO was founded in 1994, and employs close to 1000 staff in 18 countries: Belgium, Luxembourg,the Netherlands, France, Spain, Portugal, Italy, United Kingdom, Germany, US, Canada, Argentina,Brazil, Mexico, Singapore, Malaysia,Taiwan and Morocco.

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Should you wish to be kept informed about

ARINSO International's news and financial releases,

please send us a mail at:

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A R I N S OANNUAL REPORT 2000

1

CONTENTS

1 . CONSOL IDATED KEY F IGURES 2000 2

2 . MESSAGE FROM THE CHAIRMAN 4

3 . MESSAGE FROM THE CEO 5

4 . REPORT OF THE BOARD OF D IRECTORS 6

5 . WELCOME TO AR INSO INTERNATIONAL 12

6 . WORLDWIDE STRUCTURE AND ACTIV IT IES 16

7 . CORPORATE GOVERNANCE 18

8 . LOOKING B ACK AT 2000 23

9 . INFORMATION FOR SHAREHOLDERS 26

10 . F INANCIAL INFORMATION 27

• Conso l i d a t ed a c coun t s o f AR INSO I n t e rna t i ona l 28

• S t a t u to r y a c coun t s o f AR INSO I n t e rna t i ona l 48


2

010.00020.00030.00040.00050.00060.00070.00080.00090.000

1997

in '000 EUR

1998 1999 2000

10.811

28.840

55.066

81.342

0

2.000

4.000

6.000

8.000

10.000

12.000

14.000

1997

in '000 EUR

1998 1999 2000

2.273

6.351

12.005

8.539

01.0002.0003.0004.0005.0006.0007.0008.0009.000

1997

in '000 EUR

1998 1999 2000

1.338

3.625

8.154

6.652

-6.000

-4.000

-2.000

0

2.000

4.000

6.000

8.000

1997

in '000 EUR

1998 1999 2000

1.338

3.604

6.792

-4.406

0

200

400

600

800

1000

1997 1998 1999 2000

104

404

598

959

5%

11% Management & Support

12%

16%

27%

29%

Senior Management

Expert/Project Manager

Senior Consultant

Consultant

Junior Consultant

NET SALES CURRENT EBIT

CURRENT RESULT NET RESULT

STAFF PROFILES HEADCOUNT GROWTH


3

1. CONSOLIDATED KEY FIGURES 2000

(in '000 EUR) 1997 1998 1999 2000(1) (1) (1) (2)

Net Sales 10.811 28.840 55.066 81.342

Operating Profit 2.274 6.351 11.415 450

Non recurring items - - 583 6.471Depreciation consolidation goodwill - - 7 1.618

EBIT (current) 2.273 6.351 12.005 8.539EBIT Margin (current) 21,0% 22,0% 21,8% 10,5%

Financial Result -3 -64 100 559Financial income 9 81 234 1.437Financial charges -12 -145 -134 -878

Result on ordinary activities 2.271 6.288 11.515 1.009

Extraordinary Result - -21 -772 -2.969Extraordinary income - 1 28 158Extraordinary charges - -22 -800 -3.127

Result before tax 2.266 6.268 10.743 -1.960

Tax -928 -2.664 -3.951 -2.446

Current profit 1.338 3.625 8.154 6.652Net profit after tax, before non current items,depreciation on consolidation goodwill and extraordinary results

Net result 1.338 3.604 6.792 -4.406

Capital and Reserves 1.725 5.376 12.599 61.023Balance sheet 6.003 16.004 28.156 80.855Solvency 28,7% 33,6% 44,4% 75,4%

Results per shareNumber of shares 13.228.021 13.228.021 13.228.021 14.550.823Current profit (EUR) 0,10 0,27 0,62 0,46Current profit after depreciation of consolidation goodwill (EUR) 0,10 0,27 0,62 0,35Net result (EUR) 0,10 0,27 0,51 -0,30

(3)

(4)

(1) Pro forma consolidatedaccounts, based on theassumption that all subsidaries were fullyowned by ARINSOInternational NV, althoughthis was not legallyrealised until the actualtransfer by contribution in kind of all shares d.d.26 August 1999 and 17December 1999.

(2) The consolidation extendedin 2000 with the followingacquired companies:ARINSO Germany, ARINSOBrazil, Idégé (Canada) andHRS (Italy), and the incorporated companies:ARINSO Africa, ARINSOArgentina, ARINSO Mexico,ARINSO Singapore, ARINSOMalaysia and ARINSOTaiwan.

(3) Costs in relation to thecapital increase, start upinvestments, acquisitioncosts and cost of restruc-turing. These costs areconsidered to be non-recurring and thus do notinfluence the operationalresult of the Group.

(4) Extraordinary charges consist mainly of costsrelated to the acquisitionof the O_Group SAP HRdivision in Italy. The Boardof Directors decided toexpense this amount ofEUR 2,5m rather than tocapitalise and depreciate it over a period of 5 years.


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2. MESSAGE FROM THE CHAIRMAN

Sir AlconCopisarow,

Chairman of theBoard of Directors

2000: A year of consolidation

It is with pleasure that I present this first annual report of ARINSO International since it was listed on the Brussels Stock Exchange (now Euronext) on 31 March 2000.

Flotation occurred at a historical peak of technology markets worldwide, so it has been a period calling for courage and determination. 2000 also proved to be a year ofconsolidation for the ARINSO Group.

We have witnessed a widespread downturn in financial markets, a decline in confidenceand a deferral of business investment decisions – even of some of the most worth-whileERP implementation projects. The downward revision in forecast earnings and the vanishing premium for technology shares both contributed to a lower valuation of ICT companies. By 15th March 2001, the EASDAQ index had fallen 76% below that of12 months earlier ; the NASDAQ composite index fell 61% over the same period.Although ARINSO’s sales growth outperformed the industry average, its operationalmargins, in common with many peer companies, suffered a severe reverse.

Despite this set-back, ARINSO International set to work with confidence, to strengthenits businesses, expanding into 9 countries – Germany, Portugal, Argentina, Mexico, Brazil,Morocco, Singapore, Malaysia and Taiwan – and acquire O_Group in Italy, Idégé inCanada, Dietz&Werner in Germany and Remix in Brazil – as promised at the time of theIPO. ARINSO is now a truly global player, able to serve large HR-customers all over theworld – an important competitive advantage.

The management structure has been substantially reinforced at both the regional andcorporate level – and the total staff number has risen 60% to close to1000.

Growth in net sales in the year was 48%, of which two-thirds arose from internal growth.All the costs arising from the IPO, the acquisitions, new country start-ups and the restructuring of existing operations have been borne within the fiscal year 2000. Thisconservative approach and the foundations now laid warrant, in the view of the Boardand Management, a definitely positive outlook for the future of the company.


5

Continuing ARINSO’s growth strategyWhen we started ARINSO – then ARGUS Integrated Solutions – in 1994, we stronglybelieved that Enterprise Resource Planning in general and HR Management Systems in particular were about to become an important segment in the global IT services market.The past seven years have proved this prediction to be an understatement.As the whole industry has been growing at an impressive pace, companies such as SAP,Oracle, PeopleSoft and Meta4 set the tone – even when Y2K temporarily put major ERPinvestments on hold.

ARINSO International has achieved a great deal since its inception – and 2000 was a particularly good year in the development of our corporate strategy.We became a trulyglobal player with market leadership in most of our core markets. We continued tostrengthen our operational and managerial structure and we moved successfully into new business areas. Our existing alliances have been strengthened and new strategicpartnerships with a number of market leaders have been set up.Together with TIBCO,or using the mySAP.com workplace, ARINSO offers real front & back office integrationin implementing employee portal sites and Business-to-Employee connectivity.

The Human Capital Business Model was successfully launched and is reflected in a solidgrowth of activities in e-HR and HR Business Process outsourcing.ARINSO has become a standard of reference in a number of vertical markets such aspension funds, and industries notably energy and financial services. In core markets likeBelgium, the Netherlands, Luxembourg and France, ARINSO remains an undisputedmarket leader in the development of Human Resource Management Systems.

Over the past year we have laid the foundation for our future growth strategy: we nowhave the size, the focus and the financial strength to offer innovative and global solutionsto our customers. We trust that the investments made in 2000 will start to yield as of2001.

Looking back at this historical year for our Group, I would also like to thank all the people who made ARINSO what it is today. Without the dedication, creativity and enthusiasm of our management and staff, the stellar growth of ARINSO would not havebeen possible. Our own Human Capital will continue to play an important role in thefurther growth and success of our Group.

3. MESSAGE FROM THE CEO

Jos Sluys,Chief ExecutiveOfficer


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4. REPORT FROM THE BOARD OF DIRECTORS

Overview of activities in 2000In 2000 ARINSO International (ARIN) further strengthened its market position inHuman Resources Solutions and recorded consolidated net sales of EUR 81,3 million, an increase of close to 48% compared to 1999. Over 66% of this growth stemsfrom internal growth. Increase in net sales was particularly strong in Q4 (+93% y-o-ygrowth) – compared to the first half year where y-o-y growth was +32%. Sales figuresare slightly above previous estimates made at the announcement of Q3 results.

The general slowdown in ERP services in the first half of the year, combined withARINSO’s aggressive geographic expansion made it very hard to realize the profit targets for the year. Important restructuring in the UK and France further exacerbatedthis effect.

Over 2000, current EBIT amounted to EUR 8,5 million as compared to EUR 12million in 1999, representing a 29% drop and a decline in current EBIT margin to 10,5%.Taking into account Income Tax (EUR 2,4m) and the non-recurring costs relating to theIPO (EUR 3,9m), Start-up Investments (EUR 1,8m), Acquisition/Restructuring Costs(EUR 3,6m), the Company recorded a first ever net loss of EUR –4,4 million.

The ARINSO balance sheet per 31 December 2000 is extremely solid, with a solvency ratio (equity vs. total assets) of 75%, close to zero financial debts and a cashposition of EUR 33,9 million. This healthy balance sheet gives the Company the independence to make all the necessary investments in the further expansion of its services portfolio. In (Technical) Business Process Outsourcing mainly, substantial upfrontinvestments are required in order to create long-term steady income and profit.

THE ARINSO BUSINESS MODEL

ARINSO's strategy to expand its Enterprise Resource Planning (ERP) solutions to HR Services via the Internet (e-HR) and HR Business Process Outsourcing (BPO) has started to pay off in most of the core markets. In 2000 e-HR and (T)BPO respectivelyaccounted for 10% and 12% of Group sales.This development is expected to continuein the years to come and will lead to a better-balanced services portfolio.

The leading region for e-HR is Northern Europe. The Dutch experience clearly demonstrates that this new business line offers important growth prospects for ARINSO worldwide.The leading region for (Technical) BPO is North America, where anumber of important deals have been signed in 2000.

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40

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60

70

80

90

100

1999

ERP-HRHR BPOe-HR

88

10

2

78

12

10

30

40

30

in %

2000 2003 (e)

5%

11% Management & Support

12%

16%

27%

29%

Senior Management

Expert/Project Manager

Senior Consultant

Consultant

Junior Consultant


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ARINSO’s largest customers include: Fortis, Renault, Exxon, ING, Essent, City of Toronto,B&Q, SHELL, Schlumberger, Dow Corning, Pirelli and Celestica. These large employers are developing a global e-HR strategy enabling HR to bring higher business value.ARINSO’s focus, skill set and international experience makes us a preferred partner for these companies for the development of new HR systems or the integration ofexisting HR systems into HR portals.

PARTNERSHIPS

In 2000 ARINSO continued to strengthen its relationship with its 3 key softwarepartners: SAP, ORACLE and META4.Joint development of the Pensions module between SAP and ARINSO is proving to bea success, with more clients lining up for deployment. In North America, ARINSO hasbeen selected by SAP America to become ASP/AMO (Application Service Provision /Application Management Outsourcing) partner, based on the success of the first TBPO(Technical Business Process Outsourcing) deals with large US customers.

A number of important partnerships have been signed in 2000.Together with TIBCO, aleading provider of middleware applications, ARINSO delivers state-of-the art employeeportals and Business-to-Employee connectivity.We are also extending our e-HR offeringby partnering with leading e-recruitment, e-learning and e-assessment providers thusintegrating these best of breed solutions into comprehensive e-HR solutions.

STAFF

Per 31 December 2000, the number of employees totalled 959, up 60% compared to1999. ARINSO expects to have a total work force of over 1250 by the end of 2001.Wehave been able to attract an increasing number of senior consultants and managers.Thisis an investment, which will start to yield in the coming quarters.

STAFF EVOLUTION IN 2000

Headcount 1999 Q1 Q2 Q3 Q4 2000

Employees hired* 107 254 90 107 558Left company 48 40 62 47 197

Total headcount 598 657 871 899 959 959

* including acquired companies

Exxon

4,8%

ING-IPS

3,6%

Renault

5,3%

Essent

3,5%

City of Toronto

3,0%

B&Q

2,7%

Shell

2,0%

Client 11-20

11,9%

Client 31-40

5,8%

Client 21-30

7,4%

Client 41-55

4,2%

NationaleNederlanden

2,6%

SAP

Fortis

27%

Other

8,2%

7,5%

STAFF BREAKDOWN 2000


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Important events after the closing of the fiscal year and prospects for 2001

After the closing of the fiscal year no specific events took place that may have influencedthe annual accounts proposed to the General Assembly.

Prospects for 2001 are favorable, continuing the current trend. The ERP industry is clearly emerging from its post Y2K deceleration, ARINSO’s positioning in some verticalmarkets is unique, the demand for global web enabled HR solutions is growing fast andour ability to deliver "HR value" by integrating existing HR systems is now proven.Above all, the structural measures taken by ARINSO in terms of the internal organisationpave the way for a return to higher profitability. For 2001, ARINSO targets consolidatednet sales of EUR 105 million (+29%) with a current EBIT margin between 13 and15%. Without the non-recurring costs of 2000, the Company should again be able to post an attractive net profit for the years to come. From a strategic point of view,ARINSO has decided to streamline and strengthen its business before investing in further acquisitions or geographic expansion.The key focus will therefore be on internalgrowth, increasing margins and developing new vertical business lines.

In March 2001 ARINSO International signed a strategic partnership with SHL Group, aworld leader in HR development and assessment. Completely integrated personnel portals can now be developed through the combined expertise of both partners, witha strong integration of front & back offices.

Research and development activities

Being a supplier of services, the Company does not perform any specific activities in the field of research and development.


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Initial Public Offering – Modification of the articles of association – Capital increase

FIRST PUBLIC OPERATION

Since 31 March 2000 the shares of the Company have been listed on the First Market of the Brussels Stock Exchange, now Euronext Brussels.As a result of the IPO, 1.302.802new shares and 1.322.802 existing shares were offered to institutional and privateinvestors. Pursuant to the quotation, the shareholders’ equity was increased with 52,9 Mio EUR. The collected funds made it possible for the Company to realise thefollowing objectives:

• Finance the geographical expansion of the Group, through four acquisitions and thecreation of new subsidiaries in different countries;

• Create a sound capital structure in the interest of the Company’s future;• Motivate staff members who have the possibility to participate in the capital of the

Company;• Further increase ARINSO’s reputation;• Facilitate ARINSO’s access to the labour market.

MODIFICATION OF THE ARTICLES OF ASSOCIATION AND CAPITAL INCREASE

Extraordinary General Meeting of 30 March 2000 (B.S. 5 May 2000)• Conversion of the capital to EUR;• Capital increase, on condition of the subscription to the shares at Initial Public Offering,

for a total amount of 733.361,43 EUR through the issue of 1.322.802 new shares atissue price of 40 EUR, creating a share premium of 52.178.718,57 EUR;

• Cancellation of the pre-emption right of the existing shareholders in accordance witharticle 34 bis § 4 alinea 3 of the Company Law;

• Round off the capital in accordance with article 47 of the Law of 30 October 1998on the EURO, bringing it to 8.067.000 EUR by incorporation of part of the issuancepremium for an amount of 295,16 EUR;

• Authorisation to the Board of Directors within the framework of the authorised capital;

• Changes to the statutes in order to align them with the decisions taken;• Nomination of the Directors for a period of 6 years, until the General Assembly to be

held in 2006.

As a consequence of the cited operations, the subscribed capital is raised to 8.067.000EUR represented by 14.550.823 shares.


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Application of Article 523 (formerly Article 60) of the Company Law(extract from the minutes from the Board of Directors of 29 February 2000)

The Directors, Jos Sluys, Rudy Vandenberghe and Steve Bergson, inform the Board ofDirectors that they have a direct or indirect conflict of financial interest with the Companyaccording to the stipulations of article 523 of the Company Law, with regard to the factthat the Company will bear the entire amount of costs of the stock market flotation, sincethey directly or indirectly receive part of the proceeds of the sale of existing shares in thecontext of the stock market floatation.The above mentioned Directors will as such not takepart in the discussion and voting regarding this point on the agenda. At the same time it should be pointed out explicitely that the decision concerned affects all existing share-holders at the occasion of the initial public offering to the same extent, and that the rightsof all existing shareholders are being respected to an equal extent.

The total costs of the offering relate mainly to the management fee, the underwriting fee and the selling fee payable to the banks, the expenses for the Banking and FinanceCommission and the Brussels Stock Exchange with regard to the quotation of shares, aswell as the expenses of other consultants who advised on the operation. A substantial proportion of these expenses (hereafter called "the fixed costs") is completely independentof the importance of the transaction as well as of the way the public offering is realised,being partially by issuance of 1.322.802 new shares that will be offered for subscription tothe public and partially by offering of 1.322.802 existing shares, and is primarily aimed atincreasing the professionalism of the Company. Indeed, the stock market flotation will leadto the Company raising new funds between 50 and 52 million EUR. The total budget forthe costs of the operation is estimated at 4 million EUR, hereafter "the total costs".Taking into account the nature of the transaction and as such the related difficulty to calculate that part of total costs that is borne by the Company but that relates to the public offering of existing shares, the Board estimates this part at maximum half of the difference between the fixed costs and the total costs.

The Board of Directors believes that the IPO will result in creating a new dynamic envi-ronment, leading to new opportunities. The IPO has substantial advantages for the Group,including the continuity and increased professionalism of the management. The Board of Directors considers that such a transaction offers the Company the possibility of extending and diversifying its financing options and implementing its international growth strategy. It will also raise the profile of the Group, which will have a beneficial influence on the marketing of its services and the recruitment of professional staff. Finally,via the priority allocation and the warrant plan, the personnel and the management will bemore closely involved in the Company's results.

In this context, it is important to create a sufficiently large free float. This free float shouldideally correspond to 20% post IPO. In view of the financial necessities and the structureof the Company, it is recommended to realise part of this free float with existing shares.The shareholders were found to be prepared to offer a proportion of their shares for saleon the stock market, in spite of the surplus value they might realise if they would sell theshares in individual transactions on the stock exchange at any later moment in time.


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However, they did state the condition that this cost should be borne by the Company.

Taking into account what precedes, the Board of Directors decides, without the abovementioned Directors taking part in the discussion and voting, that it is in the interest of theCompany that the placement and the quotation should continue, and therefore decidesunanimously that the Company should bear the entire costs associated with the stock market flotation.

Pursuant to Article 523 of the Company Law, the Board of Directors informs the Auditorsof the conflict of interest of the aforementioned Directors.

Auditor's Report

The individual and consolidated annual accounts of the Company were audited by theAuditors, BCV Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren, represented by Mr.Ludo Ruysen. The fee paid to the Auditors for carrying out this assignment is 19.831EURO per annum.

During the financial year 2000, the Auditors, KPMG Bedrijfsrevisoren and its associatedcompanies were paid a total amount of 129.153 EURO and 32.276 EURO respectivelyin fees for the performance of additional activities in the context of the stock marketflotation.

Proposal for appropriation of the results

The Board of Directors proposes to appropriate the result of ARINSO International NV,as shown in the individual annual accounts, as follows:

- Loss for the financial year for appropriation - 1.060.395,46 EUR- Profit brought forward from the previous Financial year 1.586.765,04 EUR

- Profit balance for appropriation 526.369,57 EUR

The Board of Directors proposes to distribute the profit balance for appropriation as follows:

- Profit carried forward to the next financial year 526.369,57 EUR


12

The Human Capital Company

Attracting, recruiting and retaining the best qualified people enables companies to respond toconstantly changing customer needs and fiercely competitive environments. Effectively managingthe relationship with employees is key to any company’s success.

Today’s leading organisations are re-thinking - and changing - their approach to people, theirmost valuable resource. HR Management is moving from a centrally-driven approach to onewhere a dialogue with individuals is taking place. Research has shown there is a directcorrelation between employee empowerment, customer satisfaction and bottom line benefits.

ARINSO International brings proven business solutions for the HR supply chain. From employers,via the financial & banking industry and employee benefits providers down to the ultimate targetgroup: each company’s men and women, their Human Capital.

HISTORY

ARINSO International operates in Europe,The Americas, North Africa and Asia Pacific.A short overview of the milestones in our growth history:

• ARINSO’s history starts in 1994 with the creation of ARGUS Integrated Solutions byJos Sluys, a former SAP executive.

• In 1995, first HR projects went live and we started servicing our first international customers.

• In 1996 we expanded into the Netherlands and France.• The following year, we launched our own add-on software tools for HR solutions.We

also started operations in the United States and Luxembourg.• In 1998, we continued our expansion in the UK, Canada and Spain, and our roll-out

proved to be a success. Gradually we gained more and more blue chip clients, whoentrusted ARINSO with the development of their HR systems.

• 1999 was a key year in the history of ARINSO; we created an international groupstructure and we developed the ‘human capital company’ business model. We started operations in Italy and made our first acquisition – Systech, an HR consultancyspecialising in distance learning.

• 2000 established ARINSO as a global leader in HR Management Solutions, with thelaunch of operations in Germany, Portugal, Morocco, Argentina, Mexico and Brazil. Asuccessful operation was also set up in the Asia Pacific region. The IPO on EuronextBrussels strengthened our reputation, and provided us with the necessary funds forfuture investments.

• In 2001 ARINSO is moving pro-actively into the e-HR and Outsourcing markets: wehave the drive, the strategy and the funding to do this successfully.

5. WELCOME TO ARINSO INTERNATIONAL


13

CLIENTS

The ARINSO client base is largely international and consists mostly of Tier-one employers– companies with more than 5,000 employees.Industry leaders such as SHELL, Exxon, and Dow Corning are serviced on a multi-country level, whereas other clients are rolling out projects on a country by countrybasis. At ARINSO we take pride in the quality of our client portfolio, and it is our ambition to have the highest client satisfaction in our industry.

BUSINESS MODEL

The ARINSO business model focuses on three business areas:Traditionally we have been developing ERP solutions, using SAP, Oracle and Meta4 as a backbone.We are expanding into the areas of Business Process Outsourcing, where we offerHR, Payroll and Benefits services.Thirdly, on the wave of the Internet, we provide HR value on the web, leading to e-HR initiatives such as Employee Self-Service, e-learning and e-recruitment.

The layer binding these three business lines consists of supporting disciplines,such as change management, business intelligence, workflow, knowledge mana-gement, e-learning and HR transfor-mation. The whole concept is referredto as Employee RelationshipManagement.

ARINSO’s mission is to maximisehuman capital through e-HR.It is our ambition to help HR organisa-tions streamline and optimise their HRprocesses, defining key performance indi-cators by which to support the CorporateStrategy more effectively.

The underlying idea is that every employeehas three distinct roles to play within acompany:• As a customer, he is entitled to Compensation &

Benefits, career prospects, training and appraisal.• He has individual drivers such as age, career history and

motivational needs.• As a supplier he offers specific skills, knowledge, experience and qualifications.These three roles combined form the essence of Employee Relationship Management.


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In order to bring this e-HR concept to life, ARINSO develops a whole range of employeeself-service projects, from Payroll portals to HR Intranets.

Four key components make ARINSO’s e-HRSolution successful

• E-HR FRONT OFFICE -Applications in the area of attracting andretaining people like e-Recruitment; Person

Job Matching; Job listings; e-Learning;Knowledge management; competencetests• BACK OFFICE -Applications in the area of HR man-agement; Payroll; Insurance &Benefits; Pensions; Shared Options(like SAP, Oracle, Meta4)• E-HR INTEGRATION - Integrating front office and back

office applications, in the area of oper-ational excellence. This is a direct link

to Shared Service Centres for improvingefficiency

• PERSONALISATION -Role-based personalised employee portals,

using integrated front office and back officeapplications. ‘Push to desktop’: employees and

employers can access information and administrationand do transactions through personalized portals

The second element of our business model is HR outsourcing, where we offer a scalableservice, ranging from application service provision to business process outsourcing. Inboth cases, it is our ambition to help clients build more HR value in their company,helping them to manage rather than perform HR processes.

Today, most HR departments have a workload mainly composed of administrative tasksin payroll and benefits, a limited range of services towards employees, and only very little time & energy can be focused on actual HR strategy.

In our model, the HR value perception can change drastically, as a substantial number ofadministrative tasks can be outsourced. The amount of services should grow as moreinformation can be pushed to the employee and manager’s desktop. As a result, moretime and effort can be spent on the HR core competence: making strategic choices con-cerning recruitment and staffing.The end result will be a more balanced HR function witha strong strategic focus.

SharedServiceCenter

eHRFrontoff ice Applications

Matching& testing

HRMS

Payroll Benefits

eLearning

eRecruit-ment

Backof f ice Appl icat ions

EHRIntegration

Layer

EM

PL

OY

EE

PO

RT

AL


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The third element of our model is Enterprise Resource Planning Solutions, where weturn software into actual HR management tools.As an established partner of SAP, Oracleand Meta4, we offer the best-of-breed in payroll and HR management systems. This issubstantiated by several studies where ERP providers have been positioned according totheir vision on HR and their ability to execute. It is clear that SAP and Oracle are lead-ers, while Meta4 offers an entirely new vision on people and knowledge management.In practice we offer clients in ERP anything from Payroll accounting to Time Managementand Knowledge Management solutions.

The cement binding our business model is called HR Transformation. HR departmentswill have to re-engineer themselves in order to meet the overall business strategy,thereby bridging the gap between HR goals and business goals. We have learned a great deal about the human factor surrounding the combination of HR and IT, and weobviously want to share this experience with our clients.

PARTNERS

ARINSO is fortunate to have a number of strategic partners: We are an SAP logo partner and have become an SAP development partner for Pensions. In addition, we arean implementation partner in every country where we operate.We are an Oracle HRpartner for Europe, the Middle East and Africa, as well as a Payroll development partner.In Spain and Latin America we are a Meta4 Implementation partner.

With TIBCO we have concluded an important partnership which will deliver state-of-the-art employee portals and Business-to-Employee connectivity.

Furthermore, we have ongoing technology partnerships with SUN, Compaqand Microsoft. We team up with Siemens Business Services, DEBIS, IBM Professional Services and KPMG as our Solutions Partners.For complementary software we partner with DOCENT, SABA and BusinessObjects, leaders in distance learning and business intelligence.

Finally, our claim is that ARINSO International combines world class Information &Communication Technology with an innovative HR approach.Our commitment towards our clients is that we will run their HR engine, so they canfully focus on the road ahead.


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6. WORLDWIDE STRUCTURE AND ACTIVITIES

A new organisational structure, grouping all 18countries into 6 regions, came into effectin Q3, 2000. As a result, ARINSO'sgrowth, both in terms of businessdevelopment and financial performance,

has been managed more closely in the second half year and the Companynow reports quarterly results. The successful turn-around of France and

UK has demonstrated that a strong corporate managementstructure isessential for continued profitable growth.

1. NORTHERN EUROPE In The Netherlands net sales grew 68% to EUR 18.8m, which accounts for 23% of netgroup sales. Current EBIT was at a record high of 29.5% (up 98%).The Netherlands areby far the most mature operation in the Group and best management practices are beingshared with the other countries. In The Netherlands the innovative development ofspecific vertical solutions, especially in the area of pensions management proves highlysuccessful.After a difficult first half year at ARINSO UK, the turn-around started only late in theyear. Net sales grew 62% with a negative current EBIT margin of –14.7%. However,Q4 EBIT margin was positive and new projects in e-HR and HR Integration Services are encouraging.

2. SOUTHERN EUROPE Belgium net sales grew to EUR 13.5m (+ 9%) with current EBIT of EUR 2.4m.The Belgianmarket is relatively mature in ERP implementations and the Company is developing newvertical solutions and integration business lines as a basis for future growth. InLuxembourg net sales grew with 20%, and current EBIT margin remained above 20%.ARINSO France had a difficult first half-year, but turned around successfully by year end.Net sales rose 10% to EUR 14.9m with a current EBIT margin of 4.9% (17.5% in Q4).Operations were started in Morocco and led to first modest sales in 2000.Clear synergiesexist between the French and North African markets.

Jos SluysCEO

Pierre TerlinchampAsia Pacific

Leo WagemansCentral Europe

Jean-Pierre WinantSouthern Europe

Rudy VandenbergheNorthern Europe

CommunicationsCorporate Office

Marleen VercammenCFO

Tony LuckxVP Technology

Ignacio PalomeraSpain & Latin America

Stephen BergsonNorth America

SingaporeGermanyFranceThe NetherlandsSpainUSA

MalaysiaItalyBelgiumUnited KingdomPortugalCanada

TaiwanHRSLuxembourgBrazilIdégé

SystechAfrica (Morocco)Remix

Mexico

Argentina

Southern Europe

36%

North America

18%

Northern EuropeCentral Europe

10%

6% 1%

Asia Pacific

Spain & Latin America

29%

The sum of sales per country is slightly higher

than consolidated net sales, because

of inter-company sales.

NET SALES PER REGION


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3. NORTH AMERICA ARINSO US managed to incrase sales by 21% to EUR 7.3m, EBIT margin dropped to –8.5%. Main reason is the continued effort to develop a strong local management as wellas the investments in Business Process Outsourcing, which will only start to generaterevenue in the coming years.Canada grew net sales to EUR 7.2m (+19%), current EBIT dropped to EUR 0.5mbecause of slow sales of SAP-HR in Canada in 2000 and the investment in a solidorganisational structure. Idégé – the ARINSO NA learning company - attained net salesof EUR 1.4m and ended the year close to break-even. Although e-learning proves to bea highly promising market, the integration of Idégé needs more time and energy thaninitially estimated and a new organisational structure has been put in place.

4. CENTRAL EUROPE With the acquisition of HRS in Italy, net sales grew to EUR 5.3m from EUR 0.4m in1999.This brought a break-even in terms of current EBIT. Some partnerships with majorSystem Integrators are being developed to assure future business. Systech, whichcontinues to operate as an independent entity, had net sales of EUR 1.6m with an EBITmargin of 1.5%.ARINSO Germany, in its first year of existence after the acquisition of Dietz&Werner,saw net sales of EUR 1.9m with an EBIT margin of 7.9%, thus creating a strong platformfor future development and growth.

5. SPAIN AND LATIN AMERICA 2000 has been an important year in the development of the Latin American market.Operations were started in Mexico and Argentina and an important acquisition wasmade in Brazil. In 2000, contribution of these new markets to net sales was limited(EUR 1.8m) with EBIT margins negative in the start-up phase. Starting up a new countryproves to cost at least EUR 0.5m. Clear targets have been set for each of these marketsfor 2001 and 2002 and late 2000 a number of major contracts were won in both Braziland Argentina.Spain grew net sales by 66%, but EBIT margin dropped substantially due to the marketposition of META4, one of our software partners and the focus of senior managementon developing Latin America. Operations also began in Portugal.

6.ASIA PACIFIC Towards the end of the year offices were started in Singapore, Malaysia and Taiwan.Market conditions in Asia Pacific are not always easy, but ARINSO feels it is important tooffer support to global customers in this part of the world.


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7. CORPORATE GOVERNANCE

In line with the requirements concerning corporate governance, as issued by the"Commission for Banking and Finance", the Company has elaborated the followinginternal Corporate Governance rules:

BOARD OF DIRECTORS:

Structure of the Board of Directors

The Company is managed by a Board of Directors consisting of legal or physical persons,who do not have to be shareholders. At least two members of the Board of Directorsmust be independent in that they are not an employee or consultant of the Companyor its subsidiary companies, that they hold no participating interest of 3% or more of theshares of the Company and that they have no other relationship with the Companywhich may have an influence on their independence.They are appointed for a period ofsix years and are re-eligible. At the IPO, the Board of Directors consisted of 6 peopleappointed by the Extraordinary General Assembly of 30 March 2000 for a period of 6years, i.e. until the General Assembly in 2006:

• Sir Alcon Copisarow, independent Director and Chairman of the Board of Directors• Mr Rudy Vandenberghe, Vice-Chairman of the Board of Directors and Regional

Manager Northern Europe• Mr Joseph McCarthy, independent Director• Mr Gérard Thulliez, independent Director• Mr Jos Sluys, Director and CEO of ARINSO International NV• Mr Stephen Bergson, independent Director and Regional Manager North America

In compliance with Article 13 of the statutes of the Company, the Board of Directorsunanimously decided to appoint Mrs Marleen Vercammen, CFO of the Company since15 September 2000, as member of the Board of Directors, replacing Mr Gérard Thulliezwho resigned from the Board on 3 May 2000. Mrs Vercammen will complete Mr Thulliez’smandate and her appointment will be presented during the next General Assembly.

Functioning of the Board of Directors

In compliance with the statutes, the Board of Directors meets on request of theChairman or 2 Directors, whenever it is in the Company’s interest. 11 meetings tookplace in the year 2000.


19

The Board of Directors has, next to its legal assignments, control of the most elaborateauthorities to execute all actions that are necessary or useful to fulfill the aim of theCompany.

Jos Sluys, founder and majority shareholder, holds the position of Managing Director.The Board of Directors is responsible for :• Determining the Group strategy • Assigning financial and other means to fulfill the strategy • Controlling management and the different committees • Defining the management structure of the subsidiaries

The Board’s procedure is the following:• the vote is with a simple majority, in practice decisions are made by consensus;• a Director unable to attend the Board of Directors may be represented by power of

attorney given to another Director;• for urgent matters, a Board of Directors may be convened within two days. In case of

extreme urgency, the Managing Director (CEO) is authorized to decide independently;• the Managing Director may decide independently in matters of daily management;• the Directors have signed a code of conduct concerning insider trading;• the Board of Directors meets at least 4 times a year.

COMMITTEES:

Audit Committee

In 2000 the Board of Directors created an Audit Committee that consists of at least 4 members. The independent Directors are always represented in this Committee.Mr Rudy Vandenberghe and Mrs Marleen Vercammen also sit on the Audit Committee.

The tasks and responsibilities of the Committee are clearly described in the AuditCommittee’s charter that was established at the meeting of 2 November 2000.

The Audit Committee assists the Board of Directors in the first place with the fulfilmentof its responsibilities concerning the realisation and control of:• The external financial reporting of the Company towards the shareholders,

government institutions and the public;• The internal control system on finance, accounting, compliance of the legal

requirements and ethical rules created by the management and the Board ofDirectors;

• The audit, accounting and financial reporting process of the Company.

The Audit Committee meets at least twice a year.The Committee met three times overthe past period.


20

Remuneration Committee

In 2000, within the Board of Directors, a Remuneration Committee was created thatconsists of at least 3 members.The independent Directors are always represented in thisCommittee. Mr Bergson and Mrs Vercammen are also member of the RemunerationCommittee.

The tasks and responsibilities of the Committee are clearly described in the charter ofthe Remuneration Committee that was established at the meeting of 2 November 2000.

In the Remuneration Committee propositions are discussed concerning theremuneration of the Directors and the members of the Board of the subsidiaries. Amember of this Committee cannot attend the meeting or the voting concerning his ownremuneration. The Remuneration Committee also advises the Board of Directors andthe Managing Director on the general remuneration policy.

The Remuneration Committee meets at least twice a year. The Committee met twiceover the past period.

Stock option Committee

The Stock option Committee is responsible for managing the different warrant plans andis also authorized to elaborate and grant new warrant plans.A member of this Committee is not allowed to attend the meeting or to vote concerningthe creation or allocation of his own warrants.

Regional Management Committee

Following the new organisational structure in 6 regions, the aim and the structure of theStrategic and Management Committee have been changed as follows:

Jos Sluys (Chief Executive Officer)Marleen Vercammen (Chief Financial Officer)Rudy Vandenberghe (Regional Manager Northern Europe)Jean-Pierre Winant (Regional Manager Southern Europe)Leo Wagemans (Regional Manager Central Europe)Ignacio Palomera (Regional Manager Spain and Latin America)Stephen Bergson (Regional Manager North America)Pierre Terlinchamp (Regional Manager Asia-Pacific)

This Committee generally meets every two months and evaluates and advises on thecurrent and future policy of the Company, on business development as well as financialand organisational matters. The Committee is also responsible for the communicationand implementation of strategic decisions of the Board of Directors towards thecountries.


21

REMUNERATION

In 2000, the overall gross remuneration of the members of the Board of Directors ofARINSO International NV, including their remuneration as Director of the subsidiariesamounted to 1.057.532 EUR.ARINSO International does not offer loans or guarantees to Directors, executive oradvisory bodies.The active Directors, Jos Sluys, Rudy Vandenberghe and Stephen Bergson jointly hold10.047.558 shares.

SHAREHOLDERS’ STRUCTURE

At the time of the Initial Public Offering, 1.322.802 new shares were floated togetherwith 1.322.802 existing shares.

During the General Meeting of 16 July 1999, the Company approved the creation of62.500 warrants for the benefit of Mr Jos Sluys and a share option plan of 375.000warrants for the benefit of its employees.During the General Meeting of 17 December 1999, the Company approved the creationof 500.000 warrants for the benefit of specific employees, Directors or persons in chargeof a management task at the subsidiaries of ARINSO International NV.To date, 15.000 warrants have been attributed to Directors of the Company.Each warrant gives the right to two shares, practicable at 3,5 EUR per share.


22

The shareholders’ structure as per 31 December 2000:

Shareholder Number of Shares %

Jos Sluys 9.222.794 63,4%Rudy Vandenberghe 784.264 5,4%Geert Truyts 640.750 4,4%Other nominative shareholders (13) 1.257.411 8,6%Public 2.645.604 18,2%

Total 14.550.823 100%

Shareholder After %exercise of

the warrants

Jos Sluys 9.347.794 56,9%Rudy Vandenberghe 784.264 4,8%Geert Truyts 640.750 3,9%Other nominative shareholders (13) 1.257.411 7,7%Public 2.645.604 16,1%Personnel 1.750.000 10,6%

Total 16.425.823 100%

The Company has not received a notice of any ownership of shares of more than 3% incompliance with the statutes.


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8. LOOKING BACK AT 2000

A solid basis for future growthJANUARY – FEBRUARYIn the first two months of 2000 ARINSO International prepares for its IPO.The decision togo public has been made in order to help fuel the company’s ambitious expansion andinvestment strategy. ARINSO’s strategic objective is to become a leading global provider ofHR Management Systems in Enterprise Resource Planning, Business Process Outsourcingand HR Services over the Internet.First SAP Pensions projects are being launched in The Netherlands.

MARCHThe Initial Public Offering starts on March 16th and holds a sale of 1.322.802 existing sharesand the subscription of up to 1.322.802 new shares.The total operation represents a freefloat of 18,2%. ARINSO’s market capitalisation at the time of IPO amounts to 582 millionEUR.ARINSO starts trading on Euronext Brussels on 31 March.

APRILWithin a month of going public, ARINSO executes one of its strategic ambitions: to set upa solid operation in Germany, home market of SAP. On April 18th, ARINSO Internationalannounces the launch of ARINSO Deutschland. To accelerate the start of this operationARINSO immediately acquires a specialized SAP-HR consultancy: Dietz&Werner wasfounded in 1996 by Thomas Werner and Michael Dietz, and has a strong track record inSAP-HR, including payroll and time management. An SAP Consulting Partner in Germanysince 1997, D&W employs 8 highly experienced consultants and has an impressive portfolioof top industry clients mainly operating in automotive and utilities. Amongst them: RWEEnergie,Thyssen Krupp, Steag, Hoogovens,TESSAG and Ruhrkohle AG.Leo Wagemans (previously Managing Director at Vanenburg Business Systems) becomesManaging Director of ARINSO Deutschland. In July, Leo Wagemans moves to the positionof Regional Manager for Central Europe, while Frank-Reiner Gross (formerly SAP-HRproject director at SAP headquarters) joins as Managing Director for Germany.

MAYOn May 15th, ARINSO strengthens its North American operations with the acquisition ofIdégé Group, a leading learning solutions organisation, which is to become the center ofexpertise in e-learning for the North American market.ARINSO, through its Canadian subsidiary, acquires 100 % of Idégé.The 1999 revenues ofIdégé were 2.1 million CAD (1.52 million EUR) and have doubled every year since 1997.Idégé is located in Montreal and employs 32 consultants, technical staff and trainingdevelopment specialists. Idégé clients include Hydro-Quebec, Fournier Pharma, SAP Canada,Rolls-Royce, Téléglobe, Group TVA, Messier Dowty, Domtar, Tecsys and the QuebecGovernment.


24

JUNEJune 1st, ARINSO International acquires the SAP Human Resources division of O_Groupin order to strengthen its Italian operations. ARINSO is SAP-HR development partner forthe localization of the Italian payroll. ARINSO, through its Italian subsidiary, acquires 100% ofthis division. With 30 experienced consultants on its payroll and an additional pool of 50consultants linked to the company through a consortium with Siemens EnterpriseConsulting SpA and independents and third party consultants, this operation plays a leadingrole in the SAP-HR market in Italy.

ARINSO Italy, through HRS and the consortium, now has offices in Milano, Roma and Torino.O_Group clients include Ferrari, ST Microelectronis, AEM (Electricity for Municipality ofMilano),Allianz,Aeroporti di Roma and SARAS.

Mid June ARINSO International continues its aggressive expansion and moves into Brazil. Itacquires REMIX Group and establishes ARINSO as a market leader in Latin America’s largesteconomy.Founded in 1990, REMIX has offices in Belo Horizonte and Sao Paulo and employs 62 staff.Revenues in 1999 were close to 2 million USD. REMIX holds a strong position in Payrollservices in the Brazilian market and is both SAP-HR Implementation Partner and the SAPDevelopment Partner for the localisation of the Brazilian payroll.The REMIX Group offersboth software products and services to over 200 leading clients including: Glaxo Wellcome,Tyco Electronics, Alstom, IBM, Nestlé, Mannesmann and Roche. Since this year, REMIXoperates Brazil’s first Payroll Portal on the Internet.

JULYBy the 1st of July ARINSO completes a major global IT project for Schlumberger Oilfieldservices.With the worldwide roll out of this SAP-HR project Schlumberger becomes oneof the first organisations to put in place a truly global HR Management System.ARINSO wasselected as the partner for global SAP-HR implementation, which facilitated thetransformation of all Schlumberger Oilfield Services systems towards a single HR system.Schlumberger took the decision to implement SAP-HR in 1996, a considerable undertakinginvolving 500 legal entities in over 80 countries. In the past, each division had their own setof HR procedures, the harmonisation of which was a key success factor for SAPimplementation.The project was based in Paris (France), London (UK) and Houston (Texas). It involved aglobal system design for supporting two payroll scenarios depending on country-specificfactors:• Gross and net integrated payroll in SAP for populations such as 6000 expatriates and over

10,000 North American employees • Personnel records in SAP (including gross payroll) with an interface to local payroll

providers

By the end of July, ARINSO and TIBCO Software Inc join forces in a strategic alliance todeliver the most advanced e-HR solutions. This partnership aims to build and deliver themost advanced and reliable e-HR solutions such as Employee Portals, EmployeeMarketPlaces and web-enabled HR services to customers.The combination of HR businessexperience combined with TIBCO’s state of the art e-business infrastructure softwareenables ARINSO to offer the most advanced and reliable B2E technology.


25

Earlier than anticipated, ARINSO moves into Asia Pacific and opens offices in Singapore,Taiwan and Malaysia.

AUGUSTOn August 24th, ARINSO North America announces a multi-year, multi-million dollaragreement with Kennametal to outsource its US SAP-HR Environment. Through thisagreement, ARINSO provides technical support and maintenance for the full suite of HRapplications using its TBPO (Technical Business Process Outsourcing) model.

The TBPO model includes fixed monthly pricing for full system integration, enhancements,upgrades, helpdesk, corrective maintenance and new functionalities.

SEPTEMBERIn early September ARINSO announces its half-year results. The company’s net salesincreased 32,6% in the first 6 months under difficult market conditions.A restructuring to anew regional management model provides an excellent platform for future growth.

In mid September former KPMG Audit Partner Marleen Vercammen joins ARINSOInternational as Chief Financial Officer. Her role is to oversee the group financial operationsand to lay the foundations to move the Group to its next phase of controlled growth.

At the end of September ARINSO launches the North American Oracle practice andnames Bruce Robertson as unit Vice President. Building on the success and expertise of itsEMEA Oracle practices,ARINSO will now provide HRMS/Payroll and e-HR solutions basedon the Oracle E-Business Suite in North America.

OCTOBERAt the end of October the company joins forces with Time Vision to deliver highly flexibleweb-enabled charting solutions.The ARINSO Connector provides exhaustive customisablesolutions for charting needs.This flexible, user-friendly web-enabled interface gives ARINSOcustomers the opportunity to fully retrieve their HR data from SAP and Oracle intoOrgPublisher in a single seamless process.

To complete its aggressive expansion ARINSO marks its global presence with the creationof ARINSO Morocco. ARINSO is rewarded with a contract for the implementation of thenew HR information system for Maphar Laboratories, an affiliate of Sanofi-Synthélabo.

NOVEMBERARINSO announces that in the third quarter of 2000 net sales were up 56% compared tothe same period in 1999.Total net sales for 2000 are estimated at EUR 79 million.

DECEMBERTowards the end of the year, ARINSO Netherlands was selected by SAP as Partner of theYear, a great recognition for an outstanding year 2000.By December 31st, ARINSO has increased its workforce to 959, up 60%. ARINSO closesthe year with a very strong Q4, which saw net sales rise to EUR 29,8 million, up 93%compared to Q4, 1999.

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9. INFORMATION FOR SHAREHOLDERS

The Company’s registered office is located at Humaniteitslaan 116 Bld de l’Humanité,1070 Brussels, Belgium.Brussels trade register n° 579.760The financial year starts on 1 January and ends on 31 December of each year.

The Company’s statutory annual accounts and additional reports are deposited with theNational Bank of Belgium.The articles of association and the special reports required bythe Company law can be obtained at the Clerk's office of the Commercial Court ofBrussels.These documents can be consulted at the registered office of the Company.Each year, the annual reports of the Company will be sent to the registered share-holders, as well as to persons who request them. They can also be obtained from theregistered office of the Company as well as any other public information.

At www.arinso.com there is an Investor Relations section including all financial informa-tion on our Company.

More information:

ARINSO InternationalMarleen VercammenChief Financial OfficerTel. +32 2 558 06 70Fax +32 2 558 06 [email protected]

INVESTOR RELATIONS CALENDAR

15 May 2001 Annual Shareholders Meeting15 May 2001 Q1 Results 2001 release03 Sep 2001 H1 Results 2001 release12 Nov 2001 Q3 Results 2001 release26 Feb 2002 Results 2001 release

ARINSO InternationalBEL20 INDEXNASDAQ COMPOSITE INDEX EASDAQ INDEXBloomberg Europe Computer Services INDEXERP Implementation Composite INDEX

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10. FINANCIAL INFORMATION

2 0 0 0 THE HUMAN CAPITAL COMPANY



28

Consolidated Financial Information

PRELIMINARY REMARK

Whereas the 2000 consolidated accounts are prepared on the factual status of the ARINSO Group, the 1999 accounts are pro formaconsolidated accounts.These pro forma consolidated accounts as per 31 December 1999 have been prepared on the assumption thatall –by that time existing– foreign ARINSO companies were affiliates at 100% of ARINSO International NV from the time of their incorporation. In practice, this implies that the companies that exist on 31 December 1999 were included in the consolidated accountsas from their incorporation, although legally they became affiliates of ARINSO International NV consequently:

• The capital increase of ARINSO International NV by contribution in kind of all shares of the European Group companies, carriedout on 26 August 1999.

• The capital increase of ARINSO International NV by contribution in kind of all shares of the former Argus Integrated SolutionsInc. (now: ARINSO International USA Inc.) and the former Argus Integrated Solutions Inc. (now: ARINSO Canada Inc.), carriedout on 17 December 1999.

The company decided to present the Group’s consolidated accounts based on this assumption in order to enforce the transparencyof the financial information. Consequently, the scope of consolidation consists in the following companies:

31 December 1999 ARINSO International BelgiumARINSO Nederland The NetherlandsARINSO France FranceARINSO Luxembourg LuxembourgARINSO UK United KingdomARINSO Iberica SpainARINSO Italy ItalySystech (Systech Technology Institute) ItalyARINSO International USA United StatesARINSO Canada Canada

31 December 2000 ARINSO Deutschland 1 GermanyHRS 2 (Human Resources Systems) ItalyIdégé 3 CanadaARINSO Argentina ArgentinaARINSO Mexico MexicoRemix 4 BrazilARINSO Brazil BrazilARINSO Singapore SingaporeARINSO Taiwan TaiwanARINSO Malaysia MalaysiaARINSO Africa Morocco

1 ARINSO Deutschland Gmbh (former: Dietz&Werner Gmbh) is an acquisition where ARINSO International holds control since 1 January 2000.2 ARINSO International bought Human Resources Systems, an Italian company that acquired the SAP HR activities of O_Group Technologies, a division of Getronics3 ARINSO Canada Inc acquired all shares of Idégé as from 15 May 2000.4 Remix and ARINSO Brazil (former: HRMS) are a part of the perimeter after ARINSO International bought 100% of the shares of Remix. Both Remix and its 100%

subsidiary ARINSO Brazil were taken into consolidation as of 1 July 2000.


29

1. Consolidated key figures

Financial year as per 31 December 1999 2000Net sales 5 (EUR) 55.066 81.342Current EBIT 6

• in EUR 12.005 8.539• in % of net sales 21,8% 10,5%Current profit 7 8.154 6.652Net result 6.792 -4.406Shareholders’ equity 12.599 61.023Balance sheet total 28.156 80.855Solvency 44% 75%

Information per share

Number of shares 13.228.021 14.550.823Current profit (EUR) 0,62 0,46Current profit after depreciation of goodwill (EUR) 0,62 0,35Net result (EUR) 0,51 -0,30

2. Review of the consolidated Balance Sheet and Income Statement

2.1 ASSETSThe main assets of ARINSO are the amounts receivable (30 Million EUR) and the cash and cash equivalents (34 Million EUR).Togetherwith the net book value of the consolidation goodwill, nearly 94% of the total of assets are explained.

Positive consolidation differencesThe consolidation goodwill consists of the difference between the acquisition cost of the participations in Systech Systems TechnologyInstitute Srl, HRS Srl, ARINSO Deutschland Gmbh (former Dietz&Werner), Idégé Inc. and Remix SpA, and the value of the shareholders’ equity, calculated at the moment ARINSO obtained the majority of control. The resulting goodwill is depreciated at charge of the income statement over a period of five years, pro rata the number of months since the acquisition date. In 2000, thegoodwill depreciation is calculated as follows: Systech twelve months,ARINSO Germany twelve months, Idégé seven and a half months,Remix and HRS over six months.

Formation expensesThe costs of incorporation of new affiliates are capitalised and depreciated over a period of five years. Whenever the importance ofthese costs is minor, they are entirely expensed if the Board of Directors decides so.

Intangible and tangible fixed assetsGiven the activity of ARINSO, the fixed assets mainly consist of investments in hardware and software.When the software applicationshave the character of system software, they are capitalised together with the hardware as tangible fixed assets (1.881.608 EUR).Application software, bought from third parties, is shown in the balance sheet as intangible fixed assets, representing a net book valueof 9.463 EUR per 31 December 2000.5 Net sales consist of the period’s turnover less expenses charged to the customers.The latter is not considered as operating income.6 Current EBIT equals the operating profit, less depreciation on consolidation goodwill and non recurring items in relation to the capital increase (3.909), start-up

investments (1.809), acquisitions related expenses (89) and costs of restructuring (665).These costs are considered to be non-recurring and hence do not influencethe operational margin (current EBIT) of the Group.

7 Current profit equals net profit after tax, before non recurring items, depreciation on consolidation goodwill and extraordinary result.


30

ARINSO does not own land nor buildings. Leasehold improvements have a net book value of 85.643 EUR, office equipment and vehicles count for 1.464.210 EUR.The leased vehicles rose in net book value due to the acquisition of Idégé.

Financial fixed assetsSince the mother company, ARINSO International NV, only holds 100% participations in all affiliates on 31 December 2000, no otherparticipations are revealed in the consolidated accounts. Hence, the financial fixed assets consist only in granted guarantees, mainly forrented office space, and a minor quote holding in Italy (5.156 EUR).

Work in progressARINSO mainly performs services in the scope of contracts ‘time and material’, meaning that services are invoiced towards the customers on a monthly basis, regardless the status of the project. Next to these contracts, there is also a limited number of fixed pricecontracts where a total sales price is agreed for clearly defined tasks.These fixed price projects are subdivided into so-called Milestonesor Deliverables. As 31 December 2000 was not the Milestone date for two important contracts in The Netherlands and Canada, the incurred costs are capitalised and will be expensed in direct relation to the contractual invoicing dates.That way, income and costs inrelation to these projects are perfectly matched. Based on management’s judgements of these contracts, no financial provision had tobe accounted for to guarantee the achievement of the Milestones.

Amounts receivable within one yearThe trade debtors remain the most important element of the working capital of ARINSO. As a result of the exponential increase inrevenue on a monthly basis, the straight-line calculation of the financial ratios with respect to the number of days customers creditwould be misleading. In 2000, this distortion becomes bigger as the revenue growth was particularly strong in the second year-half.Management acknowledges the importance of control of the debtors. In 2000, a discussion with an important UK customer led to an accrual for doubtful debtors of 360.203 EUR. In other countries, provisions were recorded if payment of outstanding amounts became doubtful or uncertain.The other amounts receivable (1.565.304 EUR) primarily consist in the value-added taxes to be recovered.

Investments and cash at bank and in handDespite the enormous investments in acquired companies, start-ups and the financing of net working capital, ARINSO succeeded in maintaining a very comfortable liquidity position. This healthy cash situation, enforced by the funds of the capital increase, allowsARINSO the independence to make all the necessary investments in the further expansion of its services portfolio.

2.2 LIABILITIESThe consolidated shareholders’ equity represent an amount of 61.023.483 EUR, compared to a total of liabilities of 80.854.525 EUR,being a solvency ratio of 75%.This very strong solvency is the result of the fund raising via capital increase, combined with a balancedgrowth management.

Shareholders’ equityThe table below summarises the composition and the evolution of the consolidated shareholders’ equity of ARINSO International in2000.

in EUR 31.12.1999 + - 31.12.2000

Capital 7.333.343 733.657 8.067.000Share premium account - 52.178.423 52.178.423Consolidated reserves 5.151.500 4.405.894 745.606Currency translation differences 114.376 81.922 32.454Total 12.599.219 52.912.080 4.487.816 61.023.483


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The Company made a public offer for the sale of 1.322.802 existing shares and 1.322.802 new shares in March 2000. Consequently,the share capital increased with 733.657 EUR, and a share premium account of 52.178.423 EUR was created. Due to the net loss of the accounting year 2000, the consolidated reserves decreased to 745.606 EUR.The inclusion of the accounts of the foreigncompanies in the consolidation causes currency translation differences from the conversion towards the European single currency.

Provision for liabilities and charges and deferred taxationThe provision for liabilities and charges include the provision for pensions the three Italian companies have to set up in accordancewith specific Italian social legislation (106.752 EUR), the provisions for technical guarantee obligations (865.851 EUR) and the cost offinalising the restructuring of the French company (76.225 EUR).The deferred tax liabilities amount to 312.104 EUR and solely concern the tax effect on the recalculation of the fixed assets, based onthe Group valuation rules.

Amounts payable after one year and within one yearThe important degree of financial independence of ARINSO is enforced by the very low financial debts.Whereas in 1999 the Groupstill owed 2.595.083 EUR of debt to financial institutions and leasing companies, this amount decreased to 515.559 EUR in 2000.The advances received on contracts in progress concern the work in progress that has already been invoiced in advance at year-endin relation to the work performed.The increase in headcount leads to a higher amount of remunerations and payable social security.The higher amount of payable taxesare a consequence of the increase in net profit of some important countries, leading to a higher tax pressure on the Group’s result, inspite of the consolidated net loss.

2.3 CONSOLIDATED INCOME STATEMENTARINSO’s growth is clearly reflected by the important increase of the turnover from 57 Mio EUR in 1999 to 83 Mio EUR in 2000.Some important non-recurring costs have an important influence on the operational margin and prevent a similar grow in EBIT (earn-ings before interest and taxes). In combination with extraordinary restructuring and acquisition costs, ARINSO closes its financialrecords with a consolidated net loss of 4,4 Mio EUR.

Operating incomeThe significant increase in turnover is a consequence of the better performances of the longer established ARINSO companies, in combination with the start-ups and the revenue from the acquired affiliates. Over 66% of the growth stems from internal growth.The consolidated turnover includes an important amount of expenses incurred by consultants in their daily operations (inter alia travel and accommodation) that are charged to the customers. As this revenue is no value added to the operational activity, the expenses charged to customers are excluded from the Group’s Net Sales. 2000 net sales is 81,3 Mio EUR, an increase of close to 48%compared to 1999. Increase in net sales was particularly strong in Q4 (+93% year-on-year), compared to the first half year where year-on-year growth was +32%.This period was indeed characterised by a general slowdown in ERP services.

Operating chargesAs a result of the organic growth of ARINSO and the geographical expansion, both by acquisitions and start-ups; the remunerationand social security becomes a more important part of the total costs structure. ARINSO is constantly looking to hire highly qualifiedconsultants, not only to service its existing and future ERP customers, but moreover to expand the business lines in accordance withARINSO’s business model.This broadening of service portfolio directly influences the cost per capita. Next to that, ARINSO investedstrongly in a solid management structure, allowing the streamlining and controlling of its ambitious expansion programme.The operating charges contain a large amount of services that the Group paid in the course of the year, but are not considered to berecurring: the admission to listing on the Brussels Stock Exchange (now: Euronext Brussels) and the restructuring of the Group before the listing stand for 3,9 Mio EUR.The investment in start-ups required 1,8 Mio EUR, acquisition related costs were 0,1 Mio EURand the cost of restructuring some practices, counted for in the operational charges, amounts to 0,7 Mio EUR.If the operating margin would be corrected for these items which are non-recurring, a current EBIT of 8,5 Mio EUR would be theresult, causing a current EBIT margin of 10,5%. In 1999, the current EBIT was 12 Mio EUR, with a current EBIT margin of 21,8%.Thedecrease in current EBIT margin is explained by the start-ups and the general slowdown in the markets’ demand for ERP solutions inthe first half year of 2000.


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A discussion with a large customer in the United Kingdom does not seem to evolve positively. Out of prudence, the management decided to record a provision for doubtful debtors for the entire amount. In other companies, provisions for doubtful debtors are accrued if payment is incertain.The goodwill paid on the acquisition of Systech Systems Technology Institute (1999), Dietz&Werner (January 2000), Idégé (May 2000),HR Systems (July 2000) and Remix (July 2000) is depreciated over five years, starting from the month of acquisition.

Financial resultsGiven the excellent cash position, the interest income increased importantly, whereas the financial charges on outstanding debts areminor. Fluctuations in foreign currencies influence the financial result both in a positive and negative way.

Extraordinary resultsThe extraordinary charges consist mainly of costs related to the acquisition of the O_Group SAP HR division in Italy. The Board ofDirectors decided to expense this amount of 2,5 Mio EUR rather than to capitalise and depreciate it over a period of five years.

3. Consolidated Balance Sheet and Income Statement3.1 BALANCE SHEET

ASSETS (in EUR) 31.12.1999 31.12.2000Fixed assets 2.903.835 15.487.601Formation expenses 3.491 190.230Intangible assets 9.463Consolidation differences 212.367 11.516.458Tangible assets 2.616.167 3.578.242

B. Plant, machinery and equipment 1.563.232 1.881.608C. Office furniture and vehicles 970.567 1.464.210D. Leasing and similar rights 66.719 82.657E. Other tangible assets 15.649 85.643F. Advance payments 64.124

Financial assets 71.810 193.208B. Other companies 71.810 193.208

1. Participating interests 5.1562. Amounts receivable 71.810 188.052

Current assets 25.252.142 65.366.924Inventory and contracts in progress 663.300

B. Contracts in progress 663.300Amounts receivable within one year 17.573.486 30.257.638

A. Trade debtors 17.130.134 28.692.334B. Other amounts receivable 443.352 1.565.304

Investments 542.672 20.417.026Cash at bank and in hand 6.917.785 13.445.035Deferred charges and Accrued income 218.199 583.925TOTAL ASSETS 28.155.977 80.854.525


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LIABILITIES (in EUR) 31.12.1999 31.12.2000Capital and reserves 12.599.219 61.023.483Capital 7.333.343 8.067.000Share premium account - 52.178.423Consolidated reserves 5.151.500 745.606Currency conversion differences 114.376 32.454Provisions and Deferred taxation 1.051.954 1.360.932Provisions for liabilities and charges 843.149 1.048.828

1. Pensions and similar obligations 75.010 106.7524. Other liabilities and charges 768.139 942.076

Deferred taxation 208.805 312.104Creditors 14.504.804 18.470.110Amounts payable after one year 54.310 329.771

A. Financial debts 54.310 321.7003. Leasing and similar debts 54.310 95.4614. Credit institutions 106.2595. Other loans 119.980

D. Other debts 8.071Amounts payable within one year 14.401.327 17.991.761

A. Current portion of amounts payable after one year 61.635 21.222B. Financial debts 2.479.138 164.566

1. Credit institutions 2.479.138 164.566C. Trade payables 2.472.748 7.756.923

1. Suppliers 2.472.748 7.756.923D. Advanced payments received 1.967.271 267.666E. Taxes, remuneration and social security 7.341.960 9.325.843

1. Taxes 3.420.025 4.645.5932. Remuneration and social security 3.921.935 4.680.250

F. Other amounts payable 78.575 455.541Accrued charges and Deferred income 49.167 148.578TOTAL LIABILITIES 28.155.977 80.854.525


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3.2 PROFIT AND LOSS STATEMENTin EUR 31.12.1999 31.12.2000Operating income 57.788.418 84.117.530

A. Turnover 57.122.537 82.714.393B. Changes in contracts in progress 650.194D. Other operating income 665.881 752.943

Operating charges 46.372.562 83.667.994A. Raw materials 891.218 1.010.371B. Services and other goods 14.047.970 28.861.626C. Remuneration and social security 29.778.046 48.232.991D. Depreciation and amounts written off on formation

expenses, intangible and tangible fixed assets 1.474.605 2.335.379E. Amounts written off on inventory, work in process and trade receivables 50.449 799.734F. Provisions for liabilities and charges (200.349) 328.093G. Other operating charges 323.300 481.837I. Depreciation on consolidation goodwill 7.323 1.617.963

Operating profit 11.415.856 449.536Financial income 234.045 1.437.266

A. Income from financial fixed assets 10.961B. Income from current assets 55.202 1.345.024C. Other financial income 167.882 92.242

Financial charges 133.651 877.520A. Interests 100.130 306.696C. Write-off on current assets 2.404D. Other financial charges 33.521 568.420

Result on ordinary activities before taxation 11.516.250 1.009.282Extraordinary income 28.171 158.196

D. Adjustments to provision for liabilities and charges 143.291E. Gain on disposal of fixed assets 12.508 10.486F. Other extraordinary income 15.663 4.419

Extraordinary charges 800.596 3.127.308E. Loss on disposal of fixed assets 8.960 52.689F. Other extraordinary charges 791.636 3.074.619

Result of the year before taxation 10.743.825 (1.959.830)Deferred taxation (88.586) (95.719)Income taxes (3.863.222) (2.350.344)

Consolidated result of the year 6.792.017 (4.405.893)


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3.3 NOTES TO THE CONSOLIDATED ANNUAL ACCOUNTSI.A Consolidation criteriaAll affiliated companies and companies in which a participating interest is held are included in the consolidation perimeter of ARINSOInternational NV on the basis of the following consolidation methods:

• Full consolidation this method is applied to companies in which ARINSO InternationalNV holds, directly or indirectly, more than 50% of the voting rights or over which companies the Group has a control in facto;

• Proportional consolidation this method is applied to companies that the Group controls jointly with other shareholders;

• Equity method this method is used for subsidiaries in which ARINSO International NV has a significant influence on the orientation of the management.

I.B Changes in the list of consolidated companies during 2000In the course of the fiscal year 2000, the following companies were added to the scope of consolidation:

Acquisitions Percentage of interestARINSO Germany (Dietz&Werner Gmbh) – Germany 100%Idégé Group – Canada 100%HR Systems – Italy 100%Remix – Brazil 100%ARINSO Brazil (HRMS) – Brazil, via Remix 100%

Start-upsARINSO Argentina – Argentina 100%ARINSO Mexico – Mexico 100%ARINSO Africa – Morocco 100%ARINSO Singapore – Singapore 100%ARINSO Malaysia – Malaysia 100%ARINSO Taiwan – Taiwan 100%

The acquired companies are included in the scope of consolidation at the moment ARINSO obtains the majority of control. Start-upsare counted for since their incorporation.

II. Scope of consolidationIn order to present the equity and the results of ARINSO for the different fiscal years in a comparable and consistent way and to allowa logical comparability between the figures, the consolidated accounts at the end of 1999 have been prepared on the assumption thatall foreign ARINSO companies were subsidiaries at 100% of ARINSO International NV as from their incorporation. This actually means that all group companies, with the exception of Systech Systems Technology Institute Srl, a company acquired on 17 October1999, are included in the pro forma consolidated accounts at the percentage of control by ARINSO International after the capital increase of the latter through contribution in kind of the shares, held by private persons, on 26 August and 17 December 1999 respectively.

II.A List of fully consolidated subsidiaries

ARINSO Nederland BV Rotterdam NL NL 804731962B01 100%ARINSO France SA Cachan FR FR 83409061181 100%ARINSO Luxembourg SA Luxembourg LUX LUX 171.538.35 100%ARINSO United Kingdom Ltd Surrey UK UK 710 9288 38 100%ARINSO Ibérica SA Madrid ESP ESA 82099839 100%


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ARINSO Italia Srl Milan I IT 1270 3160 155 100%Systech Systems Technology Institute Srl Milan I IT 0830 3620 150 100%Human Resources Systems Srl Milan I IT 1195 6590 159 100%ARINSO Deutschland Gmbh Dusseldorf DE DE 17 7775 465 100%ARINSO International US Inc Atlanta USA 100%ARINSO Canada Inc Toronto CAD 100%Idégé Inc Toronto CAD 100%Remix Belo Horizonte BR 100%ARINSO Brazil Sao Paulo BR 100%ARINSO Argentina SA Buenos Aires ARG 100%ARINSO Mexico Spa Mexico MEX 100%ARINSO Singapore PTE Ltd Singapore SGP 100%ARINSO Malaysia Kuala Lumpur MAL 100%ARINSO Taiwan Taiwan TWN 100%

Summary of valuation rules and methods of calculation of deferred taxes

VI.A. GeneralThe consolidated accounts are prepared in accordance with the Belgian Accounting Law and the regulations of the Royal Decree of 6 March 1990, with the exception of the derogations mentioned under II. Scope of consolidation concerning the pro forma scope ofconsolidation of the accounts of 1999.The consolidated accounts as per 31 December 2000 and the pro forma consolidated accounts as per 31 December 1999 are closed on 31 December, closing date of the mother company ARINSO International NV and all the affiliates, and eventually after profit distribution of the mother company.

Valuation rules• Formation expenses and intangible fixed assets

The formation expenses and the costs of capital increases are valued at cost and depreciated at the rate of 20% yearly. In specific situations, the Board of Directors may decide to include these costs directly in the profit and loss statement in the period of occurrence. Any loan costs are depreciated annually in line with the terms of the loan.At the Board of Directors initiative, the charges the company incurred in relation to the admission to listing IPO and the precedingprocess of group structuring are expensed entirely in 1999 and 2000.The intangible fixed assets are capitalised on the balance sheet at cost and depreciated on a straight line basis at a rate of 20% per year as from the month of acquisition. System software and firmware are considered tangible fixed assets and capitalised togeth-er with the hardware as Equipment.

• Consolidation differencesConsolidation differences represent the differences between on the one hand the acquisition cost and the other hand the corresponding share in the subsidiary’s shareholders’ equity.They are assigned to specific assets or liabilities depending on whether thedifferences originate from the over- or under-evaluation of these assets or liabilities. The remaining differences are included in the consolidated accounts in ‘Consolidation differences’ on the assets’ or liabilities’ side of the balance sheet, depending on whether theacquisition price is higher or lower than the stake in the acquired company’s equity.Consolidation differences on the assets’ side are, in principle, depreciated on a straight-line basis over a period of five years, startingfrom the moment of change in control. The actual period chosen depends however on an individual assessment of the anticipated useful life by the Board of Directors.The remaining differences could be subjected to complementary or exceptional depreciations assoon as it is no longer justified to keep the goodwill in the consolidated accounts in view of the economic circumstances.Consolidation differences on the liability’s side of the balance sheet are kept at initial value until a possible sale of the participation.


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• Tangible fixed assetsThe tangible fixed assets are capitalised at cost, including the ancillary charges or at the value of the contribution, minus the accumu-lated depreciation.For the aim of the consolidation, straight-line depreciation is applied on the basis of the expected economic lifetime of the concernedasset, excluding the possible residual value, with the application of the following depreciation percentages:

" Computers and computer equipment 50%" Office design 20%" Office equipment 20%" Furniture 20%" Vehicles 25%" Other tangible fixed assets 25%

Investments are depreciated pro rata temporis the month of acquisition. Costs of repairs, maintenance and replacements are expensedif they do not materially increase the useful life of the asset concerned.

• Financial fixed assetsThe book value of the affiliates consolidated in appliance of the proportional consolidation method is adapted to the proportionalshare in the equity of these companies, determined according to the consolidation rules.The shares that ARINSO holds in ‘Other companies’ are valued at cost, where appropriate subjected to a write-off in the case of a permanent capital loss.

• Amounts receivable and amounts payableAmounts receivable and amounts payable are valued at nominal value. If recovery of the whole or part of an amount receivable isuncertain or doubtful, provisions are accrued.Amounts receivable and amounts payable in foreign currency are converted at the end of the fiscal year at the closing rate. The currency differences that thus arise are transferred to the income statement if the calculation per currency results in a negative amount, and to the ‘Accrued charges and deferred income’ on the balance sheet if the calculation per currency results in apositive difference.

• Investments and cash and cash equivalentsSecurities with a fixed return, shares and bonds are valued at cost, including additional expenses, or at market value if the latter is lowerat balance date.

• Accrued charges/income and deferred income/chargesAccruals and deferrals are booked and valued at cost and recorded in the balance sheet for the part that is carried forward to the following fiscal period or that has to be attributed to the current fiscal period.

• Consolidated reservesThe consolidated reserves include the reserves and the results carried forward of the consolidated companies, plus the group sharein the profit or loss.The consolidated reserves as per 31 December 1999 have been adjusted for the part of the profit or loss carriedforward of the subsidiaries that is included in the capital of the consolidated accounts, consequently to the contribution in kind of theshares.We refer to the prospectus that was issued for the admission to listing on the First Market of the Brussels Stock Exchange.

• Currency differencesConcerning the integration of the accounts of affiliates, expressed in a currency other than BEF, all balance sheet items are translatedat the closing rate, or historical rate for the equity accounts. Income statement items are translated at average rate of the accountingperiod. Differences arising from the translation of non-euro currencies are recorded in the currency translation differences.


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• Provision for liabilities and other chargesThe Board of Directors decides on a prudent basis which provisions must be set up to cover the cost of all liabilities and charges forthe past fiscal year or previous years that are probable or definite on the date of the preparation of the accounts but for which it isnot possible to assess them precisely.

• Deferred taxesDeferred taxes are calculated at the rates applicable to the companies concerned on the temporary differences between the statu-tory profit or loss and the profit or loss reprocessed according to group rules.The concerned provision is revised annually to accountfor the trend in the taxable amount and any changes in the legislative field.ARINSO’s consolidated accounts do not contain deferred tax assets. Any deferred tax asset entered by foreign subsidiaries in theirstatutory accounts is reversed to the amount of the part exceeding the deferred tax liabilities of the company concerned.

• New financial instrumentsARINSO does not use derivatives. Speculative transactions are not carried out.

• Contracts at fixed priceARINSO’s activities primarily consist of servicing in the scope of ‘Time and Material’ contracts. Next to these contracts, a limited number of contracts exists where a fixed price is agreed for clearly defined tasks. Projects can also require advanced payments madeby the customer, that are compensated with later invoicing. Fixed price agreements are contractually subdivided into so-calledMilestones or Deliverables. At the completion of each Milestone, the project manager and the customer mutually agree upon the completion and invoices are raised. If contractual Milestones do not correspond with the closing of an accounting period, the man-agement of the company and the project manager make an accurate judgement of the progress of the activities and indicate precise-ly the financial impact on the accounts. If appropriate, the accounting records are affected to account for the unearned revenue or theadvanced payments.The risk of the project is judged in the same way on the basis of the tasks still to be performed to achieve theconcerned stage of the project or Milestone.The completion costs have to be translated in a supplementary provision.In the pro forma consolidated accounts on 31 December 1999, no specific provisions had to be set up because of the application ofthis method. In the records of 2000, the correct cut off and the fixed price administration leads to an amount of work in progress of663.300 EUR.

VI.B. Future taxation and deferred taxesAnalysis of Heading 168 of the liabilities 312.105- Future taxation (by application of Article 35 of the Royal Decree of 8 October 1976,

inserted by Royal Decree of 30 December 1991)- Deferred taxes (by application of Article 40 of the Royal Decree of 6 March 1990) 312.105

VII. Statement of formation expensesNet book value as at the end of the previous period 3.491

Movements of the period:- New expenses incurred 210.341- Depreciation (24.635)- Translation differences- Other 1.033

Net book value at the end of the period 190.230

Of which: - Expenses of formation or capital increase, loan issue expenses, other formation costs 190.230- Restructuring costs


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VIII. Statement of intangible assets

in EUR 2. Concessions, patents,licences, etc.

a)ACQUISITION COSTSAs at the end of the previous period 159.097

Movements during the period:- Acquisitions 9.760- Other movements 1.820

At the end of the period 170.677

c) DEPRECIATION AND AMOUNTS WRITTEN OFFAs at the end of the previous period 159.097

Movements during the period:- Recorded 1.205- Other movements 912

At the end of the period 161.214Net book value at the end of the period 9.463


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IX. Statement of tangible fixed assets

in EUR Plant, Machinery Office furniture Leasing andand Equipment and vehicles similar rights

a) ACQUISITION COSTSAs at the end of the previous period 3.351.456 1.599.577 117.307

Movements during the period:- Acquisitions 2.053.075 818.450- Sales and Disposals (109.435) (246.032)- Transfers from one heading to another (10.036) 10.036- Translation differences 31.621 4.625- Other movements 241.252 295.552 89.778

At the end of the period 5.557.933 2.482.208 207.085

c) DEPRECIATION AND AMOUNTS WRITTEN OFFAs at the end of the previous period 1.788.224 629.010 50.588

Movements during the period:- Recorded 1.811.278 427.126 56.123- Written down after sales and disposals (107.942) (134.559)- Transfer from one heading to another (6.553) 6.553- Translation differences 21.027 3.794 601- Other movements 170.291 86.074 17.116

At the end of the period 3.676.325 1.017.998 124.428Net book value at the end of the period 1.881.608 1.464.210 82.657

Of which: - Furniture and vehicles 82.657


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in EUR Other tangible Advanceassets payments

a)ACQUISITION COSTSAs at the end of the previous period 35.572

Movements during the period:- Acquisitions 82.335 64.124- Translation differences 423- Other movements 3.100

At the end of the period 124.430 64.124

c)DEPRECIATION AND AMOUNTS WRITTEN OFFAs at the end of the previous period 19.923

Movements during the period:- Recorded 15.012- Translation differences 76- Other movements 776

At the end of the period 35.787Net book value at the end of the period 85.643 64.124

X. Statements of financial fixed assets1. Participating interests Other enterprisesa)ACQUISITION COSTSAs at the end of the previous period

Movements during the period:- Acquisitions 5.156

At the end of the period 5.156

2. Amounts receivable Other enterprisesNet book value at the end of the previous period 71.810

Movements during the period:- Additions 69.984- Other 46.258

Net book value at the end of the period 188.052

XI. Statement of consolidated reserves

Consolidated reserves as at the end of the previous financial period 5.151.499

Movements during the year :- Share of the group in the consolidated income (4.405.893)

Consolidated reserves as at the end of the period 745.606


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XII. Statement of consolidation differences and differences resulting from the application of the equity method

in EUR Consolidation differencesPositive Negative

Net book value at the end of the preceding period 212.367

Movements during the period:- Arising from an increase of the percentage held 12.922.054- Write-downs 1.617.963

Net book value at the end of the period 11.516.458

XIII. Statement of amounts payable

A. Breakdown of the amounts originally payable after one year according to their residual termin EUR Amounts payable with a residual term

within within one and one year five years

Financial debts 21.222 321.7003. Leasing and other similar obligations 21.222 95.4614. Credit institutions 106.2595. Other loans 119.980

Other amounts payable 8.071TOTAL 21.222 329.771

XIV. Operating results

in EUR Current year Prior yearA. Net turnoverA.2. Aggregate turnover of the group in Belgium 11.504.381 9.837.976

B. Average Number of persons employed, in units,and personnel charges

B11. Average number of persons employed 779 551Employees 730 521Management personnel 49 30

B12. Personnel chargesRemunerations and social charges 48.232.991 29.575.598

B13. Average number of persons employed in Belgiumby enterprises of the group 132 112

C. Extraordinary resultsC1. Analysis of the other extraordinary costs,

if it involves significant amountsRestructuring costs France 366.567Acquisition costs Italy 2.500.000Dismissal of management personnel in Canada (1999)and United Kingdom (1999-2000) 184.161 789.467


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XIV. Rights and commitments not reflected in the balance sheet

in EUR Current period

A.5.b) Commitments from transactions- to exchange rates 14.573.068

C. Other significant CommitmentsWith regard to the participation in Dietz&Werner, the Company has a possible commitment for payment of an additional amount depending on the realisation of certain conditions. This conditional commitment, which amounts to minimum 0 EUR and maximum 6 Million EUR, can not be calculated as of today.

XIV. Financial relationships with directors or managers of the consolidation enterprise

in EUR Current period

A Total amount of remunerations granted in respect of their responsibilities in the consolidation enterprise, its subsidiaries and its affiliated enterprises,including the amount in respect of retirement pensions granted to former directors or managers. 1.057.532


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4. Cash flow statement

in EUR 31.12.1999 31.12.2000

OPERATING ACTIVITIES Operating profit 11.415.856 449.535 Depreciation and write-off on fixed assets 1.474.605 2.335.379 Depreciation on consolidation goodwill 7.323 1.617.963 Write-offs on amounts receivable 50.449 799.734 Provision for liabilities and charges -200.349 328.093 Extraordinary income and charges -775.973 -570.200

GROSS CASH FLOW 11.971.911 4.960.504 Taxation on the fiscal year’s result -3.863.222 -2.350.344 Changes in the net working capital -3.080.202 -8.460.012Currency translation differences 291.302 -81.922 Net cash flow from operating activities 5.319.789 -5.931.774

INVESTMENTS Investments in fixed assets -2.448.141 -3.238.085 Income from the sale of fixed assets 129.170 70.763 Other changes -32.131 -342.482 Net cash flow from investments -2.351.102 -3.509.804

FINANCIAL INVESTMENTS Financial investments 50.165 -121.399 Income from financial fixed assets 10.961 Income from current assets 55.202 1.345.024 Capital increase 169.911 52.912.080 Participation in Systech -219.690 Participation in Idégé -3.425.600 Participation in HRS -4.916.623 Participation in Dietz&Werner -1.961.793 Participation in HRMS -5.118.037 Net cash flow from financial investments 66.549 38.713.652

FINANCING Long term financing -89.179 267.390 Short term financial debts 1.614.372 -2.354.986 Interest paid on debts -100.130 -306.696 Other financial income and charges 140.742 -476.178Net cash flow from financing 1.565.805 -2.870.470


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in EUR 31.12.1999 31.12.2000

NET INCREASE OF INVESTMENTS AND CASH AT BANK AND IN HAND Beginning of the year Investments 32.055 542.672 Cash at bank and in hand 2.827.361 6.917.785 Total cash and cash equivalents at beginning of the year 2.859.416 7.460.457

End of the year Investments 542.672 20.417.026 Cash at bank and in hand 6.917.785 13.445.035 Total cash and cash equivalents at end of the year 7.460.457 33.862.061

The statement of cash flows has been elaborated on the basis of the flows of the fiscal year according to the consolidated situationat the end of 1999 and 2000 and is based on the indirect method as defined in IAS 7.


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5. Audit report on the consolidated annual accounts as per 31 December 2000

FREE TRANSLATION OF THE STATUTORY AUDITOR’S (Commissaris-revisor) REPORT ORIGINALLY PREPARED IN DUTCH ON THE CONSOLIDATED ACCOUNTS

OF THE GROUP ARINSO INTERNATIONAL NVSUBMITTED TO GENERAL SHAREHOLDERS' MEETING

Consolidated accounts for the year ended 31 December 2000

In accordance with legal and regulatory requirements, we are reporting to you on the completion of the mandate which you haveentrusted to us.

We have audited the consolidated financial statements for the year ended December 31, 2000 with a balance sheet total 80.855(000)EUR, and a loss for the year (share of the group in the results) of 4.406(000) EUR. These consolidated financial statements have been prepared under the responsibility of the Board of Directors of the Company.The financial statements of a certain numberof Companies whose statements reflect total assets of 39.425(000) EUR and a total loss of 6.684(000) EUR in the consolidated financial statements were audited by other auditors whose reports have been furnished to us, and our opinion is based solely on thereports of the other auditors. In addition we have reviewed the directors' report.

Unqualified audit opinion on the consolidated financial statementsOur audit was performed in accordance with the standards of the ”Institut des Reviseurs d'Entreprises-Instituut der Bedrijfsrevisoren”.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, taking into account the Belgian legal and regulatory requirements relating to theconsolidated financial statements.

In accordance with these standards we have taken into account the administrative and accounting organisation of your group as wellas the system of internal control.The Group's management have provided us with all explanations and information which we requiredfor our audit.We have examined on a test basis, the evidence supporting the amounts included in the consolidated financial statements.We have assessed the accounting policies used, the significant accounting estimates made by the Company and the overall presenta-tion of the consolidated financial statements. We believe that our audit and the report(s) of the other auditors provide a reasonablebasis for our opinion.

In our opinion, based on our audit and the report(s) of the other auditors, the consolidated financial statements of ARINSOInternational NV for the year ended December 31, 2000 present fairly the financial position of the group and the results of its oper-ations, in conformity with the prevailing legal and regulatory requirements, and the disclosures made in the notes to the accounts areadequate.

Additional assertions and informationAs required by generally accepted auditing standards the following additional assertions are provided.These assertions do not alter ouraudit opinion on the consolidated financial statements.

- The consolidated directors' report contains the information required by law and is in accordance with the consolidated financial statements.

- On February 29, 2000, the Board of Directors, in accordance with article 523 of the Company Law (former article 60), have been informed of the existence of a direct patrimonial conflicting interest concerning certain directors/shareholders as a result of the decision of the Board of Directors that the Company will bear all costs incurred for the IPO (Initial Public Offering) (3.887(000) EUR).We confirm that the Board of Directors has followed the procedure as outlined in article 523 and that the minutes of the decision of the Board of Directors have been fully disclosed in the annual report. We refer explicitly to the annual report.


47

In accordance with article 523, §1, 3° alinea, we provide below a separate description of the Company's patrimonial consequences of the decision of the Board of Directors: Given the nature of the transaction and as a result the difficulty to determine exactly that portion of the total costs borne by the Company, but which relates to the IPO of already existing shares, the Board of Directors estimates this portion at maximum half of the difference between the fixed costs and the total costs, as detailed in the annual report.

Antwerp, April 27, 2001Klynveld Peat Marwick Goerdeler Reviseurs d'Entreprises,Statutory Auditor, represented by L. RuysenReviseur d’entreprise/Bedrijfsrevisor


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6. Statutory accounts of ARINSO International NV

The annual accounts of ARINSO International NV as per 31 December 2000 have been certified and received an unqualified audit opinion from the statutory auditor, Klynveld Peat Marwick Goerdeler, represented by Ludo Ruysen.The annual accounts, the annual report of the Board of Directors and the audit report will be deposited after the Annual General Meeting of 15 May 2001.The annual accounts and the annual report of ARINSO International NV areavailable by simple request at the registered office of the Company.

6.1 BALANCE SHEETASSETS (in EUR) 31.12.1999 31.12.2000FIXED ASSETS 8.249.982 37.534.605Tangible fixed assets 547.398 509.022

B. Plant, machinery and equipment 302.740 223.058C. Furniture and vehicles 238.254 231.490E. Other tangible assets 6.404 54.473

Financial assets 7.702.585 37.025.583A. Affiliated companies 7.701.370 37.024.368

1. Participating interests 7.701.370 10.422.3862. Amounts receivable - 26.601.982

C. Other financial assets 1.215 1.2152. Amounts receivable 1.215 1.215

CURRENT ASSETS 3.884.501 27.561.195Amounts receivable after one year - 723.961

B. Other amounts receivable - 723.961Amounts receivable within one year 3.346.789 5.170.380

A. Trade debtors 3.162.603 4.595.833B. Other amounts receivable 184.186 574.547

Investments 497.933 20.366.646B. Other investments and deposits 497.933 20.366.646

Cash at bank and in hand 23.877 1.164.823Deferred charges and accrued income 15.902 135.385TOTAL ASSETS 12.134.484 65.095.800


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LIABILITIES (in EUR) 31.12.1999 31.12.2000CAPITAL AND RESERVES 9.736.525 61.588.210Capital 7.333.343 8.067.000Share premium account - 52.178.423Reserves 816.417 816.417

A. Legal reserves 72.736 72.736D. Available reserves 743.681 743.681

Profit carried forward 1.586.765 526.370

DEBTS 2.397.959 3.507.590Amounts payable within one year 2.397.114 3.448.007

A. Current portion of amounts payable after one year 36.107 -B. Financial debts 39.814 -C. Trade debts 952.523 1.939.279

1. Suppliers 952.523 1.939.279E. Amounts payable regarding taxes, remuneration

and social security 1.368.670 1.508.7281. Taxes 218.421 146.1022. Remuneration and social security 1.150.249 1.362.626

Accrued charges and deferred income 844 59.583TOTAL LIABILITIES 12.134.484 65.095.800


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6.2 INCOME STATEMENTin EUR 31.12.1999 31.12.2000Operating income 12.921.080 15.608.820

A. Turnover 12.545.769 15.376.545D. Other operating income 375.311 232.275

Operating charges (10.504.279) (17.923.807)A. Raw materials, consumables and goods for resale 891.218 1.145.815B. Services and other goods 3.192.248 8.295.873C. Remuneration, social security and pensions 5.770.335 7.703.599D. Depreciation and amounts written off 629.774 708.160G. Other operating charges 20.704 70.359

Operating profit or loss 2.416.801 (2.314.987)Financial income 72.057 1.671.323

A. Income from financial fixed assets - 554.514B. Income from current assets 36.580 1.111.153C. Other financial income 35.477 5.656

Financial charges (59.517) (440.404)A. Interest and other debt charges 53.073 90.349C. Other financial charges 6.444 350.055

Profit or loss on ordinary activities before taxation 2.429.342 (1.084.068)Extraordinary income 7.798 10.486

D. Gain on disposal of fixed assets 7.798 10.486Extraordinary charges (4.529) (5.403)

D. Loss on disposal of fixed assets 4.529 5.403Profit or loss for the financial period before taxation 2.432.611 (1.078.986)Income taxes (1.101.838) 18.590PROFIT OR LOSS OF THE YEAR 1.330.773 (1.060.395)

Important differences between the valuation rules of the statutory accounts and those of the consolidated accountsThe valuation rules that apply to ARINSO International NV are consistently applicable to its subsidiaries and are fully applied in theconsolidated valuation rules, except for the depreciation of tangible fixed assets, which are depreciated in the consolidation as fromthe month of acquisition.These rules are extended with those specifically applicable to the consolidation.


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6.3 APPROPRIATION ACCOUNTin EUR 31.12.1999 31.12.2000A. Profit to be appropriated 1.653.304 526.370

1. Profit for the year available for appropriation 1.330.773 -Loss for the year available for appropriation - (1.060.395)

2. Profit brought forward 322.531 1.586.765Loss brought forward - -

C. Transfer to capital and reserves (66.539) -2. To legal reserves 66.539 -

D. Result to be carried forward 1.586.765 526.3701. Profit to be carried forward 1.586.765 526.370


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III. Statement of tangible assets

in EUR Plant, Machinery Furniture Other tangibleand Equipment and vehicles assets

a) ACQUISITION COSTSAs at the end of the previous period 1.199.238 849.373 8.539

Movements during the period:- Acquisitions 446.116 167.255 66.939- Sales and Disposals (93.997)

At the end of the period 1.645.354 922.631 75.478

c) DEPRECIATION AND AMOUNTS WRITTEN OFFAs at the end of the previous period 896.498 611.119 2.135

Movements during the period:- Recorded 525.798 163.493 18.870- Written down after sales and disposals (83.471)

At the end of the period 1.422.296 691.141 21.005

Net book value at the end of the period 223.058 231.490 54.473

IV. Statement of financial assets

1. Participations, shares and investments Affiliated companiesa)ACQUISITION COSTS

As at the end of the previous period 7.701.370

Movements during the period:- Acquisitions 2.721.016

At the end of the period 10.422.386

2. Amounts receivable Affiliated companies Other enterprisesNet book value at the end of the previous period 1.215

Movements during the period:- Additions 26.601.982

Net book value at the end of the period 26.601.982 1.215


53

V.A. Investments and social rights held in other companiesAre to be mentioned hereafter, the companies in which the company holds an investment in the sense of the Royal Decree ofOctober 8, 1976 as well as the other companies in which the company holds shares in case where these shares represent at least10% of the subscribed capital.

ARINSO NederlandBeurs – WTC Beursplein 373001 DD Rotterdam, Nederland 400 100,00 31/12/1999 NLG 9.949.142 3.935.199

ARINSO FranceAvenue Aristide Brian 19194230 Cachan, France 3.000.000 100,00 31/12/1999 FRF 7.119.551 3.621.339

ARINSO LuxembourgPlace d’Armes 31670 Luxembourg, Luxembourg 1.000 100,00 31/12/1999 LUF 35.579.580 23.525.419

ARINSO United KingdomBell Court – Leapale Lane 2GU1 4JX Guildford – SurreyUnited Kingdom 25.000 100,00 31/12/1999 GBP 695.547 442.289

ARINSO IbéricaCarretera de La Coruña,km. 23,2Edificio ECU Planta 228290 Las RozasMadrid - Spain 10.000 100,00 31/12/1999 ESP 34.861.155 24.861.155

ARINSO ItaliaVia G. Murat 2320159 Milano, Italia 22.000 100,00 31/12/1999 ITL 174.411.010 (38.578.990)

Systech Systems Technology InstituteVia G. Murat 2320159 Milano, Italia 180.000 100,00 31/12/1999 ITL 179.244.712 (228.633.846)

ARINSO DeutschlandBerliner Strasse 10140880 Rattingen, Deutschland 2 100,00 31/12/1999 DEM 500.449 409.411

Information from the most recent periodName, full address of theregistered office

the company(directly)

Subsi-diaries

Annualaccounts

Mone-tary

Capital andreserves

Net result

Number % % as per Unit (+) or (-)(in monetary units)

Rights held by


54

ARINSO International USPiedmontroad 3575 box 15GA 30305 Atlanta, United States of America 100.000 100,00 31/12/1999 USD 1.665.227 1.490.731

ARINSO CanadaThe West Mall 185, suite 1530M9C 5L5 Ontario, Canada 1.000 100,00 31/12/1999 CAD 560.181 506.224

ARINSO ArgentinaAv. Cramer 2038 PB ‘A’1428 Buenos Aires, Argentina 1.200 100,00

REMIX TechnologiaRua dos Inconfidentes 1190CEP 3014 Belo Horizonte, Brasil 45.000 100,00

ARINSO MexicoJaimes Balmes 11, Plaza Polenco,Torre B off. 20111520 Mexico DF, Mexico 100,00

ARINSO Singapore83 Clemenceau Avenue# 14-01 UE SquareSingapore 239920 2 100,00

ARINSO MalaysiaEmpire TowerLevel 35A - 1Empire TowerJalan Tun Razak50400 Kuala LumpurMalaysia 100,00

ARINSO Taiwan18 F Suite C No 156 Ming Sheng E. Rd.Sec. 3,TaipeiTaiwan 100,00

ARINSO AfricaCasablanca Twin Center,Tour Ouest, Angle Boulevard,21000 CasablancaMaroc 10.000 100,00


55

VI. Investments

in EUR Period Preceding periodTerm deposits with credit institutions 20.366.646 497.933

Falling due:- less or equal to one month 20.366.646 497.933

VII. Deferred charges and accrued income

in EUR Period

Analysis of heading 490/1 of assets if the amount is significantExpenses in relation to a later accounting period 135.385

VIII. Statement of capital

in EUR Amounts Number of sharesA. Capital

1. Issued capital- at the end of the preceding period 7.333.343 xxxxxxxxx- changes during this period

Capital increase dated 30 March 2000 733.657 1.322.802- at the end of the period 8.067.000 xxxxxxxxx

2. Structure of the capital2.1 Different categories of shares

Shares without pair value 8.067.000 14.550.8232.2 Registered shares and bearer shares

Registered xxxxxxxxx 11.905.219Bearer xxxxxxxxx 2.645.604

D. Commitments to issue shares2. Following the exercising of SUBSCRIPTION rights- Number of outstanding subscription rights 937.500- Amount of capital to be subscribed 6.562.500- Maximum number of shares to be issued 1.875.000

E. Authorised capital, not issued 8.067.000


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X. Statement of amounts payable

in EUR PeriodC. Amounts payable for taxes, remuneration and social security

1. Taxesb) Non-expired taxes payable 146.102

2. Remuneration and social securityb) Other amounts payable relating to remuneration and social security 1.362.626

XI. Accrued charges and deferred income

in EUR PeriodAnalysis of heading 492/3 of liabilities if the amount is significantAccrued charges 40.000Deferred income 19.583

XII. Operating results

in EUR Period Preceding period

C1. Personnela) Total number of personnel at year end 137 128b) Average number of personnel in FTE 132,3 110,1c) Number of hours worked 232.277 194.769

C1. Personnel chargesa) Remuneration and direct social benefits 5.621.877 4.153.658b) Employers’ contribution for social security 1.626.813 1.271.290c) Employers’ premium for extra statutory insurance 18.472d) Other personnel charges 436.437 345.387

F . Other operating chargesTaxes relating to operations 42.250 20.704Others 28.109

G. Temporary workers and persons put at disposal of the company1. Total number at year-end 12. Average number in FTE 1,1

Number of hours worked 629Company charges 23.422


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XIII. Financial results

A. Other financial incomeDetail of other financial income classified under this heading,if materialTranslation differences 33.956Differences on payments 822 1.522Other 4.834

E. Other financial chargesAnalysis of other financial charges included under this heading,if materialTranslation differences 335.312 3.290Bank charges 6.718 2.391Other 8.026 763

XIV. Income taxes

in EUR PeriodA. Analysis of heading 670/3

1. Income taxes of the current perioda) Taxes and withholding taxes due or paid 99.157b) Excess of income tax prepayments and withholding

taxes capitalised (99.157)

XVI. Other taxes and taxes borne by third parties

in EUR Period Preceding PeriodA. The total amount of value added taxes, turnover taxes

and special taxes charged during the period1. to the company (deductible) 893.608 737.3192. by the company 2.514.903 1.903.220

B. Amounts retained on behalf of third parties1. payroll withholding taxes 1.736.489 1.134.7022. withholding taxes on investment income 27.582

XVII. Rights and commitments accrued in the balance sheet

in EUR PeriodAmount of forward contracts- Currencies sold (to be delivered) 14.573.068

Other significant CommitmentsWith regard to the participation in Dietz&Werner, the Company has a possible commitment for payment of an additional amountdepending on the realisation of certain conditions. This conditional commitment, which amounts to minimum 0 EUR and maximum 6 Million EUR, can not be calculated as of today.


58

XIX. Financial relationships with directors and managers

in EUR Period4. The amount of direct and indirect remuneration and pensions, included

in the income statement as long as this disclosure does not concern,exclusively or mainly, the situation of a single identifiable person- to the directors and managers 131.989

XVIII. Relationships with affiliated companies and companies linked by participating interests

in EUR Affiliated companiesPeriod Preceding period

1. Financial fixed assets 37.024.368 7.701.370Investments 10.422.386 7.701.370Amounts receivable: other 26.601.982

2. Amounts receivable 2.097.720 709.184more than one year 723.961within one year 1.373.759 709.184

4. Amounts payable 876.241 19.857within one year 876.241 19.857

7. Financial resultsFrom financial fixed assets 554.514

Declaration in relation to the statement of consolidated accountsA. Information to be disclosed by the reporting company

Consolidated accounts and a consolidated annual report have been prepared and published pursuant to the Royal Decree of March 6, 1990 on the consolidated accounts: yes


59

6.4 SOCIAL BALANCEIf applicable, registration number of the company at the Social Bureau (‘RSZ-nummer’): 010-1636985-57Number of the joint Industrial Committees that are applicable to the company: 218.00

I. Overview of the personnel employed A. Employees enrolled in the personnel register

1. Full time 2. Part time 3.Total (T) 4.Total (T)or total in full or total in full

time equivalents time equivalents(FTE) (FTE)

(period) (period) (period) (preceding period)1. During this period and the

preceding periodAverage number of employees 128,5 8,1 132,3 (FTE) 110,1 (FTE)Number of hours effectively worked 225.401 6.876 232.277 (T) 194.769 (T)Personnel charges (in EUR) 6.868.726 286.820 7.155.546 (T) 5.729.391 (T)Other advantages (in EUR) xxxxxxxx xxxxxxxx 135.380 (T) 23.632 (T)

1. Full time 2. Part time 3.Total in fulltime equivalents

2. At year end datea. Number of employees enrolled in the

personnel register 124 13 130,5b. According to the type of employment contract

Contract for an undetermined period of time 122 13 128,5Contract for a determined period of time 2 2,0

c. According to genderMale 100 9 103,9Female 24 4 26,6

d. According to professional classificationDirectors 5 5,0Employees 118 13 124,5Other 1 1,0

B. Temporary personnel and other personnel at the company’s disposition

1.Temporary 2. Personnel at thepersonnel disposition of the company

During the periodAverage number of personnel employed 1,1Number of hours effectively worked 629Charges for the account of the company (in EUR) 22.422


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II. Overview of the personnel turnover during the period


A. Personnel hired

a. Number of employees enrolled in the personnelregister during the period 59 4 61,5

b. According to the type of employment contractContract for an undetermined period of time 54 4 56,5Contract for a determined period of time 5 5,0

c. According to gender and education levelMale: higher education (non-university) 8 8,0

higher education (university) 33 3 35,0Female: higher education (non-university) 1 1,0

higher education (university) 17 1 17,5


B. Personnel resigned

a. Number of employees for whom a termination date has been noted down in the personnel register 53 1 53,5

b. According to the type of employment contractContract for an undetermined period of time 50 50,0Contract for a determined period of time 3 1 3,5

c. According to gender and education levelMale: higher education (non-university) 5 5,0

higher education (university) 36 36,0Female: higher education (non-university) 1 1,0

higher education (university) 11 1 11,5d. According to the reason for determination of the

employment contractDismissal 6 6,0Other 47 1 47,5

III. Overview regarding the application of the measures taken to improve employment during the period

Number of employees concerned1. Number 2. In full time equivalents

2. Other measures2.3. Agreements work-education 1 1,0Number of employees involved in one or more measurestaken in favour of employment- total for the period 1 1,0- total for the preceding period 4 3,1


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IV. Information concerning staff training during this period

1. Number of 2. Number of 3. Companyemployees involved training hours followed charges

Total number of training initiatives tothe account of the employerMale: 83 830 164.601 EURFemale: 21 219 41.646 EUR

Summary of valuation rules

• Formation expensesThe formation expenses and the costs of capital increases are valued at cost and depreciated at the rate of 20% yearly. Any loan costsare depreciated annually in line with the terms of the loan.At the Board of Directors’ initiative, the charges the company incurred in relation to the IPO and the preceding process of group struc-turing are expensed entirely in 1999 and 2000.

• Intangible fixed assetsThe intangible fixed assets are capitalised on the balance sheet at cost and depreciated on a straight line basis at a rate of 20 % peryear as from the month of acquisition. System software and firmware are considered tangible fixed assets and capitalised together withthe hardware as Equipment.

• Tangible fixed assetsThe tangible fixed assets are capitalised at cost, including the ancillary charges or at the value of the contribution, minus the accumu-lated depreciation.For the aim of the consolidation, straight-line depreciation is applied on the basis of the expected economic lifetime of the concernedasset, excluding the possible residual value, with the application of the following depreciation percentages:

- Buildings 10% straight line- Plant, machinery and equipment 20% straight line- Office equipment 20% straight line- Furniture 20% straight line- Leasehold improvements 20% straight line- Vehicles 25% straight line- Hard and software 50% straight line

Costs of repairs, maintenance and replacements are expensed if they do not materially increase the useful life of the asset concerned.

• Financial fixed assetsThe shares that ARINSO holds in other companies are valued at cost, where appropriate subjected to a write-off in the case of a per-manent capital loss.

• Amounts receivable and amounts payableAmounts receivable and amounts payable are valued at nominal value. If recovery of the whole or part of an amount receivable isuncertain or doubtful, provisions are accrued.Amounts receivable and amounts payable in foreign currency are translated at the end of the fiscal year at the closing rate.


62

The currency translation differences that thus arise are transferred to the income statement if the calculation per currency results in anegative amount, and to the ‘Accrued charges and deferred income’ on the balance sheet if the calculation per currency results in apositive difference.

• Investments and cash and cash equivalentsSecurities with a fixed return, shares and bonds are valued at cost, including additional expenses, or at market value if the latter is lowerat balance date.

• Accrued charges/income and deferred income/chargesAccruals and deferrals are booked and valued at cost and recorded in the balance sheet for the part that is carried forward to the fol-lowing fiscal period or that has to be attributed to the current fiscal period.

• Provision for liabilities and other chargesThe Board of Directors decides on a prudent basis which provisions must be set up to cover the cost of all liabilities and charges forthe past fiscal year or previous years that are probable or definite on the date of the preparation of the accounts but for which it isnot possible to assess them precisely.

REPORT FROM THE STATUTORY AUDITOR (Free translation)REPORT OF THE STATUTORY AUDITOR ON THE STATUTORY ACCOUNTS SUBMITTED TO

THE GENERAL SHAREHOLDERS’ MEETING OF ARINSO INTERNATIONAL NVFinancial year ended December 31, 2000

In accordance with legal and statutory requirements, we are reporting to you on the completion of the audit assignment with whichyou have entrusted us.

We audited the financial statements as of and for the financial year ended December 31, 2000, with a balance sheet total of65.095.799,79 EUR, and a loss for the financial year of 1.060.395,46 EUR.These financial statements have been prepared under theresponsibility of the company's management board.We also carried out the specific additional audit procedures, required by the law.

Unqualified audit opinion on the financial statementsWe performed our audit in accordance with the standards of the "Institut des Reviseurs d'Entreprises - Instituut der Bedrijfsrevisoren".These professional standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financialstatements are free of material misstatement, taking into account the Belgian legal and administrative requirements applicable to finan-cial statements in Belgium.

In accordance with these standards we have considered the company's administrative and accounting organisation as well as its inter-nal control procedures.The company's management has provided us with all explanations and information we required for our audit.We examined, on a test basis, evidence supporting the amounts in the financial statements.We assessed the accounting principles usedand significant accounting estimates made by the company, as well as the overall presentation of the financial statements. We believethat our audit provides a reasonable basis for our opinion.

In our opinion, taking into account the prevailing legal and regulatory requirements, the financial statements for the year endedDecember 31, 2000, present fairly the company's net worth and financial position and the results of its operations. The disclosuresmade in the notes to the financial statements are adequate.


63

Additional Assertions and InformationAs required by generally accepted auditing standards, the following additional assertions and information are provided.These assertionsand information do not alter our audit opinion on the financial statements.

- The annual report contains the information required by law and is consistent with the financial statements.- The appropriation of results proposed to you complies with the legal and statutory provisions.- There are no transactions undertaken or decisions taken in violation of the company's statutes or company law, which we have to

report to you.- Without prejudice to certain formal aspects of minor importance, the accounting records are maintained and the financial

statements have been prepared in accordance with the applicable Belgian legal and regulatory requirements.- On February 29, 2000, the Board of Directors, in accordance with article 523 of the Company Law (former article 60), have been

informed of the existence of a direct patrimonial conflicting interest concerning certain directors/shareholders as a result of thedecision of the Board of Directors that the Company will bear all costs incurred for the IPO (Initial Public Offering) (3.887(000)EUR). We confirm that the Board of Directors has followed the procedure as outlined in article 523 and that the minutes of the decision of the Board of Directors have been fully disclosed in the annual report. We refer explicitly to the annual report. Inaccordance with article 523, §1, 3° alinea, we provide below a separate description of the Company's patrimonial consequences ofthe decision of the Board of Directors: Given the nature of the transaction and as a result the difficulty to determine exactly thatportion of the total costs borne by the Company, but which relates to the IPO of already existing shares, the Board of Directorsestimates this portion at maximum half of the difference between the fixed costs and the total costs, as detailed in the annualreport.

Antwerp, April 27, 2001 Klynveld Peat Marwick Goerdeler, Bedrijfsrevisoren,Statutory Auditor, represented byL. RuysenBedrijfsrevisor

Important differences between the valuation rules of the statutory accounts and those of the consolidated accountsThe valuation rules that apply to ARINSO International NV are consistently applicable to its subsidiaries and are fully applied in theconsolidated valuation rules, except for the depreciation of tangible fixed assets, which are depreciated in the consolidation as fromthe month of acquisition.These rules are extended with those specifically applicable to the consolidation.


64

ARINSO BelgiumHumaniteitslaan 1161070 BrusselsBelgiumTel. + 32 2 558 06 70Fax + 32 2 558 06 80

ARINSO NederlandBeurs-World Trade CenterBeursplein 37 PO Box 301843001 DD RotterdamThe NetherlandsTel. + 31 10 205 25 33Fax + 31 10 205 53 79

ARINSO United Kingdom 2 Bell Court Leapale LaneGuildfordSurrey GU1 4LYUKTel. + 44 1483 46 71 00Fax + 44 1483 46 71 67

ARINSO France 191, Avenue Aristide Briand 94230 CachanFranceTel. + 33 1 45 36 10 80Fax + 33 1 45 36 10 84

ARINSO LuxembourgPlace d'Armes 31136 LuxembourgG.D. du LuxembourgTel. + 352 46 60 83Fax + 352 46 60 84

ARINSO AfricaCasablanca Twin Center,Tour OuestAngle Zerktouni et Al MassiraCasablanca 21000,MoroccoTel. + 212 229 58 459

ARINSO DeutschlandBerliner Strasse 10140880 RatingenGermanyTel. + 49 (0)2102 99 79 0Fax + 49 (0)2102 99 79 79

ARINSO ItalyVia G. Murat 2320159 MilanoItalyTel. + 39 02 694 321Fax + 39 02 694 322 01

SystechVia G. Murat 2320159 MilanoItalyTel. + 39 02 694 321Fax + 39 02 694 322 01

Human Resources Systems Via G. Murat 2320159 MilanoItalyTel. + 39 02 694 321Fax + 39 02 694 322 01

ARINSO SpainCarretera de la Coruña,km. 23,2Edificio ECU Planta 228290 Las RozasMadrid - SpainTel. + 34 91 640 28 90Fax + 34 91 640 28 91

ARINSO PortugalQuinta da FontaEdificio Forum - Piso 12780 - 730 Paço D'ArcosPortugalTel. + 351 214 467 000Fax + 351 214 460 459

ARINSO BrazilAv. das Nações Unidas 13.797Bloco III, 16° andarCEP 04794 - 000São PauloSP - BrasilTel. + 55 11 5501 3663Fax + 55 11 5501 3670

Remix TechnologiaRua dos Inconfidentes, 11902°andar, sala 201 -FuncionáriosCEP 30.140 - 120Belo HorizonteMG - BrasilTel. + 55 31 3228 2600Fax + 55 31 3262 0708

ARINSO Mexico Jaimes Balmes 11 Plaza PolancoTorre B Of 201-C11510 México DF MexicoTel. + 52 5234 3810Fax + 52 5234 3810-129

ARINSO ArgentinaAv. Cramer 2038 P.B. "A"1428 Buenos AiresArgentinaTel. + 54 11 4788 9717Fax + 54 11 4788 9644

ARINSO United States Fifteen Piedmont Center Suite 8203575 Piedmont Road NEAtlanta GA 30305USTel. + 1 404 869 20 40Fax + 1 404 869 20 45

ARINSO Canada185 The West MallSuite 1530Etobicoke, OntarioCanada M9C5L5Tel. + 1 416 622 9559Fax + 1 416 622 2676

Idégé215, Rue St-JacquesBureau 1000Montréal ( Québec )Canada H2Y 1M6Tel. + 1 514 499-3655Fax. + 1 514 499-3695

ARINSO MalaysiaEmpire TowerLevel 35A - 1Empire Tower182 Jalan Tun Razak50400 Kuala LumpurMalaysiaTel + 603 2166 5886Fax + 603 2166 5887

ARINSO Singapore83 Clemenceau Avenue# 14-01 UE SquareSingapore 239920Tel. + 65 73 61 366Fax. + 65 73 62 655

ARINSO Taiwan18F SUITE C, n° 156Ming Sheng E. Rd., Sec. 3Taipei Taiwan R.O.C.Tel. + 886 2 2546 1800Fax + 886 2 2514 64 08

ARINSO International • Humaniteitslaan 116 • 1070 Brussels • Tel. + 32 2 558 06 70 • Fax + 32 2 558 06 80

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Peoplesoft is a leading and focused provider of HR eBusiness applications that enable people to power the inter-net.

TIBCO Software Inc., a leading provider of real-time e-business infrastructure software, is a pioneer in EnterpriseApplication Integration (EAI).

Business Objects (US) is a leading provider of e-business intelligence (e-BI) solutions.

Docent (US) is a recognized global leader in Education Commerce TM, providing comprehensive learning solu-tions via the Internet.

Saba A leading provider of Human Capital Development and Management (HCDM) solutions that consist of Internet-based learning, performance, content and resource management systems, business-to-business exchanges, integratedcontent and related services. Saba is a partner of Idégé, ARINSO’s specialized e-learning division.

IT JARGON

ASP Application Service Provider: an outsourcing partner to whom application and technical maintenance is outsourced.

BI Business Intelligence: Applications that analyze data, usually from a data warehouse, to generate pre-formattedreports and/or screens and/or models in support of management decision-making.

BPO Business Process Outsourcing: a contractual relationship with an external service provider to assumeresponsibility for one or more IT functions. Outsourcing is usually characterized by the transfer of facilities,systems, hardware or staff.

CM + HT Change Management and HR Transformation: methodology on how to manage the human aspects ofchange in an organisation.

e-HR e-HR e-HR involves the new concept of Web-enabling internal business processes, so that employees can send and receive information relative to their workplace in a self-service mode.

ERP Enterprise Resources Planning: Packages of data-processing programs allowing companies to optimize theiroperational processes.

ERM Employee Relationship Management: ERM consists of Technology-Assisted Employee RelationshipManagement holding the new concept of treating all employees as internal clients, to whom information needsto be made available in a user-friendly format and with real opportunities for dialogue.

HRMS Human Resources Management Systems: comprehensive IT solution which enables corporations toautomate most of the HR administrative and managerial functions, such as payroll, benefits, recruitment,capacity planning, training, time registration, etc.

PKMS People and Knowledge Management Systems: comprehensive IT solution, which enables corporations tomanage the knowledge inside the corporation, thus optimizing the existing "Human Capital".

HRSS HR Shared Services: the concept of offering a set of HR management services to a number of clients, froma common ICT platform – enabling a higher HR value to individual companies using web technology.

ARINSO International (Euronext: ARIN) is a global ICT (Information & CommunicationTechnology) consultancy operating in Europe, North America, Latin America, Asia Pacific and Africa.ARINSO provides comprehensive HR Management Solutions and Services for some of the world's largest employers and is active in three areas: implementation of ERP software (Enterprise Resource Planning), deployment of e-HR integration and HR Business ProcessOutsourcing. ARINSO has entered into major partnerships with SAP, Oracle and Meta4 - three leading ERP vendors for the HR market.

ARINSO was founded in 1994, and employs close to 1000 staff in 18 countries: Belgium, Luxembourg,the Netherlands, France, Spain, Portugal, Italy, United Kingdom, Germany, US, Canada, Argentina,Brazil, Mexico, Singapore, Malaysia,Taiwan and Morocco.

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ARINSO International

combines world-class ICT skills

with an innovative HR approach.

We’ll run your HR engine,

so you can fully focus

on the road ahead.

www.arinso.com

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