econocom RA GB - KU Leuven...24 • Manufacturing, logistics, transportation, distribution 26 •...

Jean-Louis Bouchard Charles de Water Christian Bret Gaspard Dürrleman Rafi Kouyoumdjian

Luc Pintens Jean-Philippe Roesch Patrik Vandewalle Vincent Wajs

Board of Directors

Jean-Louis BouchardChairman and CEO

Charles de WaterCEO

Christian Bret

Gaspard Dürrleman

Rafi Kouyoumdjian

Luc Pintens

Jean-Philippe Roesch

Patrik VandewalleCEO

Vincent Wajs

Group Management Committee

Jean-Louis BouchardChairman

Charles de WaterCEO of the Financial Services Activity

Luc PintensCountry Manager Belgium

Jean-Philippe RoeschDeputy Managing Director

Patrik VandewalleChief Operating Officer

Statutory Auditors

PricewaterhouseCoopersReviseurs d’entreprises SCCRLrepresented by Emmanuèle Attout

Annual report

2005

Mastering your IT and

telecom resources

FinancialServices

SupportServices

Telecom Products &Solutions

ManagedServices

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www.econocom.comContents

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BelgiumClos du Parnasse, 13AB 1050 BrusselsEconocom Belgique

Parc Horizon Leuvensesteenweg 510, bus 801930 Zaventem

Tel.: 32 2 790 81 11Fax: 32 2 790 81 20

Luxembourg4, rue d’Arlon8399 Windhof

Tel.: 352 39 55 50Fax: 352 39 55 88

France France

42-46, rue Médéric92582 Clichy cedex

Tel.: 33 1 47 56 37 00Fax: 33 1 47 56 03 00

Italy Locazione Italia SpA

Via Giorgio Stephenson n. 43/A20157 Milan

Tel.: 39 02 39030411Fax: 39 02 39030400

Econocom Albis GmbH

GermanyIfflandstraße 422087 Hambourg

Tel.: 49 40 808 100 339Fax: 49 40 808 100 370

The NetherlandsKokermolen 113994 DG Houten

Tel.: 31 30 63 58 333Fax: 31 30 63 58 300

SpainC/ Josefa Valcarcel, N.42, 5° Planta28027 Madrid

Tel.: 34 91 411 91 20Fax: 34 91 563 92 33

United KingdomK

18-20, Kew Road, Richmond Surrey TW9 2NA

Tel.: 44 20 8948 83 77Fax: 44 20 8948 84 81

Econocomaddresses

www.econocom.com

Contents

1 • Group profile2 • Interview with Jean-Louis Bouchard,

Chairman of Econocom Group4 • Key figures6 • Econocom Group share performance8 • 2005 Highlights

12 • Econocom’s strategy16 • Customer references18 • Public sector & education

20 • Healthcare

22 • Finance & insurance

24 • Manufacturing, logistics, transportation, distribution

26 • Telecommunications, media, technology

28 • Energy & utilities

30 • Services

32 • Chemical

34 • Harmony, a communication-based program

35 • Financial Statements

2005 Annual report • 1

With a major presence in Europe*, Econocom uses the combined expertise of its 1,770 employees, including 1,200 engineers and technicians, to develop and implementtailor-made outsourcing services dedicated to managing its clients’ IT andtelecommunications assets.

Econocom’s expertise allows companies to improve the quality of services provided to end users and reduce IT and telecommunications costs by enhancing their control overthe utilization and development of resources in these areas.

Innovation is at the heart of Econocom’s business culture. Everything we do is underpinned by our four corporate values, through which we aim to: Be enterprising,Bounce back, Face reality, and Share. These values serve as a constant reminder to Econocom’s teams of the need to innovate.

As part of the 2003-2007 Share Five strategic plan, Econocom set for itself the goal of regaining market leadership in each of its activities.

Econocom is a member of the Euronext’s Next Economy index. Its shares are listed on the Premier Marché of Euronext Brussels and in Paris.

*Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the United Kingdom.

Econocom is a service providerspecializing in the management of ITand telecommunications resourcesfor businesses.

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2 •

Interview with Jean-Louis Bouchard, Chairman of Econocom Group

What do you think of Econocom’sresults for 2005?

I find them very encouraging in that they demonstrate thequality and originality of our offering. They also vindicateour choice of a business model weighted towardsvariable costs, with a sales force essentially made up of independent agents and an outsourced supply chain.We are generating a profit in each of our activities –administrative and financial management (FinancialServices), operational management (Managed Services),procurement (Products and Solutions) and mobiletelecommunications (Telecom). Profitability is on the rise, and our operating margin nowstands at 3.4%. We have overcome increasingly intensecompetition to achieve a commendable performance.This was made possible by our constant commitment to innovation, which has fostered a tradition of providingdifferentiated services that genuinely meet clients’ needs.Over 2005, revenues from services gained 12%, with telecommunications services experiencing double-digit growth.

What motivated the decision to refocusoperations on Europe and channelinvestment towards Belgium, France, the Netherlands, Italy and Spain?

Our aim is to provide a comprehensive range of services to give clients better control over their IT and telecom assets.

With this in mind, we decided at the end of 2005 to concentrate on Europe, particularly the five countrieswhere we are well positioned to expand all of ourofferings.

Why did Econocom emphasize B-to-B mobiletelecommunications services in 2005?

Mobility is the crucial link between IT systems and telecommunications.

There is currently an explosion of corporate mobilityrequirements, and Econocom’s dual expertise in IT and telecommunications makes us the ideal, dedicatedpartner for companies seeking mobility solutions.

It has been clear since 2000 that data-voiceconvergence will transform working habits, which iswhy we initiated telecommunications operations inFrance that year. In 2004, we took the process evenfurther with the acquisition of Signal Service in Franceand CHanSE in Belgium.

This targeted acquisition focus was maintained in 2005,when we purchased For Connected Services, a youngDutch company specialized in mobile data services.The acquisition of the B-to-B activity of JCA, a mobiletelecommunications company based in southwestFrance, has further strengthened our coverage of the French market.

Thanks to our range of telecommunications services,we are well positioned to satisfy all of our clients’ mobiletelecommunications requirements.

The mobility services contracts signed in 2005 withSNCF (the French national railway network), Airbus,Accenture and Dalkia prove that Econocom is now a force to be reckoned with in mobile technology.

The telecommunications services partnership forgedwith Belgium’s Proximus in early 2006 likewise istestament to market operators’ need for Econocom’svalue-added services.

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“Making technological innovation and the associated productivity gains a reality for clients”

How do you see Econocom evolving in the crowded IT services market?

Econocom specializes in corporate IT andtelecommunications assets. We aim to provide innovationand high performance via a comprehensive, goal-drivenrange of services that enables clients to achievecomplete control of those assets. This is what underpinsour corporate slogan - Mastering IT resources.

We are one of just a handful of European servicescompanies with across-the-board capabilities inconsulting, procurement, financing, day-to-daymaintenance and end-user support services.

Is the outsourcing of IT andtelecommunications resources the only way forward?

It is true that several major companies now seem less keen on full IT outsourcing. However, it is rare for companies to change their minds after opting to outsource the management of their IT and telecommunications assets.

There is an interesting parallel with the outsourcedmanagement of corporate vehicle fleets. Companiesthat choose to outsource the management of theirfleets seldom backtrack, and the same is true of IT and telecommunications outsourcing. This is easy to explain: today, IT departments are primarily requiredto focus on projects that are deemed strategic for theircompany. IT and telecommunications resources, nowcommonplace, are expected to deliver a consistentlyreliable performance, hence the attraction ofoutsourcing their management to specialists such as Econocom.

We are committed to making technological innovationand the associated productivity gains a reality forclients. In so doing, we enable them to concentrate on managing IT assets from a strategic – rather thanmaintenance – perspective.

What was behind Econocom’s 2005acquisition of A2Z, a Belgian start-upfocused on SMEs?

A2Z has developed an innovative and ingeniouslysimple approach to providing IT andtelecommunications services for small- and medium-sized companies. The service package includes overallmanagement of workstations and telecommunicationsresources, with billing on a monthly cost per user basis.Like Econocom, A2Z is committed to providingcompanies with affordable access to technology.

The acquisition of A2Z has given us a real window onthe SME segment. As most businesses in this segmentcannot afford full-time access to the IT expertise thatthey need, the comprehensive outsourcing of IT andtelecommunications resources management is the idealsolution for them.

How is 2006 shaping up so far?

So far, the trend is encouraging. Major servicescontracts have been signed with prestigious clientssuch as the Belgian Finance Ministry, Dexia, Renaultand Sanofi-Aventis. These success stories areattributable to the high-quality performance ofEconocom’s employees.

Is an operating margin of 5% by 2007 a realistic target?

It is ambitious, but achievable. It reflects ourdetermination to attain a level of profitability consistentwith our positioning as a services provider.

The changes occurring within Econocom support ouraspirations, and I am confident that success is withinour reach. Our services and telecommunicationsoperations are experiencing strong growth. We are alsodeveloping value-added offerings that set us firmly apartfrom our competitors in the sphere of financing, whilekeeping the management of our group on track.

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4 •

Key figures FinancialServices

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(in € millions) 2004 2005

Consolidated revenue 602.4 550.9Operating profit 17.8 19.0Net profit/(loss) Group share 13.4 14.2

Econocom Group revenue by activity (in € millions)

Value added by activity Employeesas of December 31, 2005

2004 2005

Condensed income statement in IFRS standards

Financial Services

Products and Solutions

Managed Services

30%Financial Services

15%Products and Solutions

55%Managed Services

Fond propre Trésorerie Rentabilité opérationnelleRésultat opérationnel

Chiffre d’affaire

Résultat net par action

Dividende brut par action

Répartition du capital au 31 décembre 2005

Chiffre d’affaire par activité

Chiffre d’affaire par segment vertical


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602.

4

191.3

248.1

111.5

299.1

203.4

99.9

551million euro

1,770 employees

550.

9

A2Z: 56Master IT: 15Telecom: 72Holding company: 39Agents: 155Financial Services: 130Products and Solutions: 113Managed Services: 1,190

Total: 1,770


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Revenue by vertical segment as of December 31, 2005


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Public sector & education: 17%

Healthcare: 5%

Finance & insurance: 11%

Manufacturing, logistics,transportation, distribution: 28%

Telecommunications, media,technology: 12%

Energy & utilities: 8%

Services: 14%

Chemical: 5%


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Operating profit (in € millions)

2004 2005


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17.8

19.0 million euro

Cash and cash equivalents (in € millions)

2004 2005


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60.4

60.3

60.3 million euro

Shareholders’ equity (in € millions)

2004 2005

83.5 88

.0

88.0 million euro

19.0

Operating margin (in % of revenue)

2004 2005


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3.0

3.4% of revenue3.

4

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Econocom Group share performance

■ Econocom shares are listed on the Premier Marché of Euronext Brussels and in Paris.

■ Econocom is a member of the Euronext Next Economy index.

■ ISIN code: BE0003563716

■ Average daily trading volume in Brussels in 2005: 19,902

■ Market capitalization as of December 31, 2005: €192 million

2001 2002 20020034 2004 2005

High (in €) 5.60 6.13 5.90 6.23 6.92Low (in €) 2.68 2.50 3.90 5.03 5.70Share price as of Dec. 31 (in €) 5.24 3.75 5.10 5.80 6.62Market capitalization as of Dec. 31 (in M€) 171 118 161 174 192Average daily trading volume 14,624 12,318 11,992 22,994 19,902Number of shares (in million) 32.6 31.5 31.5 30.0 29.0

Share performance


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Jan. 05 Feb. 05 Mar. 05 April 05 May 05 June 05 July 05 Aug. 05 Sept. 05 Oct. 05 Nov. 05 Dec. 05

2,821

,553

1,774

,921

1,487

,935

1,424

,129

3,238

,693

2,303

,853 3,6

14,89

5

3,067

,396

3,555

,757 4,5

35,82

8

2,607

,327

2,178

,251

€5.98 €6.32

Monthly traded cap (in €)


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Econocom Group Share (average monthly price)


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■ DividendAt the Annual General Meeting to be held on May 16,2006, the Board of Directors will recommend a grossdividend per share of e0.16 (e0.12 net). This dividendwill be paid at the beginning of June 2006.

■ Regular and transparent financialcommunication

The Econocom Group strives to establish a strongrelationship of trust and transparency with shareholdersby providing full and timely disclosure of information. To this end, for the past several years, the Group hasreported preliminary estimates of its full- and half-yearresults less than four weeks after the close of eachaccounting period.

■ Shareholders’ agenda

Annual General Meeting May 16, 2006

Dividend Payment date Early June 2006

2006 preliminary half-year results July 27, 2006

2006 half-year results September 7, 2006

2006 preliminary full-year results January 26, 2007

Earnings per share (in euros)

Ownership structure as of December 31, 2005

2004 2005

0.13% Treasury stock

49.27% Econocom International NV

50.60% Public shareholders


Chiffre d’affaire







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0.45 0.48

Gross dividendper share (in euros)

2004 2005


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0.15 0.

16

0.48 euro

0.16 euro

8 •

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2005 highlights


Expansion intelecommunicationsservices

Econocom became one of the forerunners in theEuropean B-to-B mobile telecommunications servicesmarket in 2004, with the acquisition of Signal Service inFrance and CHanSE in Belgium. Investments in Franceand the Netherlands in 2005 helped Econocom edgeahead of the field, and its sights are now firmly set onthe Spanish and Italian markets.

> Acquisition of For Connected Services in the Netherlands

In September 2005 Econocom acquired the Dutchcompany For Connected Services, which wasestablished in 2003 and specializes in mobile dataservices.For Connected Services offers several leading-edgemobile data and e-mail solutions. Econocom expects to use this acquisition to expand business in theNetherlands, bringing it in line with the growth alreadyachieved in Belgium and France.

> Takeover of JCA’s Entreprises activity in France

In November 2005, Econocom took over theEntreprises activity of JCA, a Toulouse-based mobiletelecommunications company that has a strongpresence in the southwest of France and managessome 15,000 cell phone lines. This takeover boostsEconocom’s coverage of the cell phone managementmarket in mainland France.

Refocusing on fivestrategic Europeancountries

Econocom’s 2003-2007 Share Five strategic plan wasput in place with a goal of regaining market leadershipin five European countries, namely Belgium, France, theNetherlands, Spain and Italy. In the context of this planEconocom: > sold its Swiss subsidiary Econocom Financial

Services in July 2005;> ceased its Financial Services activities in the United

States in December 2005.

Innovation

> Mobile messaging: launch of Ecomail HP In November 2005, Econocom joined forces with HP tolaunch Ecomail HP, a new mobile messaging service forroaming business users, bringing Econocom’s mobilemessaging solution onto the HP IPAQ platform via thenew hw 6515 PDA with built-in GSM/GPRS/EDGEtechnologies. This tool optimizes travel time by allowingusers to receive the information they need whereverthey are.

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10 •

Developments in the SMB* market

> Acquisition of A2Z: In September 2005, Econocom acquired full control ofA2Z, a Belgian start-up established in 2002. A2Z hasdeveloped an extremely innovative approach to providingIT and telecommunications services to small andmedium-sized businesses, based on a monthlysubscription price per user. This acquisition is a sign of Econocom’s new approach to the SMB market.

Performance

> In January 2006, Econocom entered into a five-year outsourcing agreement with the Belgian Finance Ministry for the management of its 25,000 printers.

Econocom’s service includes: ■ the maintenance of some 25,000 printers

throughout Belgium;■ the replacement of 15,000 to 20,000 toner

cartridges per year;■ second level support;■ monthly per-page billing;■ the optimization of the Belgian Finance Ministry’s

printer assets.

This “Papyrus” agreement comes in the wake of twoother agreements entered into between Econocom andthe Belgian Finance Ministry in 2005 for supply andsupport services.

> 60% of Dutch city councils use Econocom’s financing solutions for their ITinfrastructures.

> In 2005, 33 companies in Europe choseEconocom’s TRO** financing solution, which allows clients to replace a portion of theirleased hardware on demand with the latesttechnology without any increase in costs.

> The Departmental Council of Haute-Garonne picked Econocom to supply, install and roll out the ITinfrastructure for its junior high schools. The Regional Council of Midi-Pyrénées quicklyfollowed with a request to Econocom to supplysimilar services for its senior high schools.

> The Departmental Council of Ille et Vilaineasked Econocom to provide help desk support for12,000 junior high school students within the scopeof its Ordi 35 project. A dedicated three-person teamfrom Econocom provides support between 5:00 p.m.and 10:00 p.m. during the week and between 9:00a.m. and 10:00 p.m. on weekends and publicholidays.

> MasterCard awarded Econocom its preferredsupplier title in Belgium.

> Econocom Financial Services in Italy confirmed its ongoing success, with 32% growth in 2005.

* Small and Medium-sized Businesses

** Technology Refresh Option

2005 highlights

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Bertrand Dusausoy, Dalkia’s Organization and IT System Director

“I value Econocom’s ability to handle the challenges of this project every step of the way, while keeping the managementprocess straightforward.”

> Dalkia, the European leader in providingenergy services to public authorities, hasequipped 3,500 of its technicians withPDAs, allowing them to stay in constantcontact. Econocom is Dalkia’s dedicatedpartner on this project.

The services provided by Econocom include:■ consulting;■ equipment distribution;■ the setting up of telecommunications lines;■ relationships with operators and usage optimization;■ integration in the workshop;■ user help desk (Econocom Managed Services);■ next day equipment maintenance; ■ telecom infrastructure financing.

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12 •

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Econocom’sstrategy


Mastering IT andtelecommunicationsresources: a major challenge for businesses

> Econocom’s core business is helpingcompanies gain greater control over theirIT and telecommunications assets.

Companies and organizations are currently facing the twofold challenge of managing their IT resourcesand dealing with the increased popularity of PDA-typeroaming platforms.

> It is therefore imperative that their IT andtelecommunications infrastructures operate properlyand, where possible, 24/7. The productivity gainsoffered by the new roaming technologies aredependent on companies’ IT and telecommunicationsinfrastructures operating round-the-clock. User support also needs to be adapted to newrequirements on an ongoing basis.

> Companies also need to keep a constant eye on costs and infrastructure developments.

In the face of these challenges, many organizationsdecide to fully or partially outsource the management of their IT and telecommunications resources. This allows them to obtain guarantees from their serviceproviders regarding the satisfaction of internal clients(i.e., the end users), while at the same time reducingtheir IT spending.

With this in mind, Econocom has developed a comprehensive range of services around the IT and telecommunications product lifecycles and the management, financing and administration ofdistributed infrastructure. Indeed, only specialists in the latest technological developments, whose skillsare continually upgraded, can ensure that users receivethe up-to-the-minute services they require.

Econocom’sadvantages

> A direct European presence ensuring high quality, accessible service

A base in Belgium, France, Germany, Italy, Luxembourg,the Netherlands, Spain, and the UK allows us to provide our clients with the best possible service. Our accessibility is evident through our sales networkcoverage and a consistently high level of quality in each country.

> An independent intermediaryAs a services company operating independently from ITmanufacturers, telecommunications operators andbanks, Econocom views its relationship with each of itsclients as a true long-term partnership.

> Continued focus on improving servicequality through Service Level Agreementand Service Level Management clauses

Econocom provides a full array of audit, consulting andasset management services for IT resources, fromsystem rollout, storage, printing, and mobility solutions,to routine network operation and administration, usersupport services, reporting and asset managementsystems, as well as outsourcing and facilitiesmanagement. Econocom ensures high standards ofservice by committing to contractual quality levels,through Service Level Agreement and Service LevelManagement clauses agreed upon with clients, for the purpose of monitoring and enhancing theservices provided.

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14 •

> Financial Services In financing services, IT Asset Management hasincreasingly become a strategic imperative forbusinesses, with demand being driven by companiesthat require tailored hardware and software upgradeswhile keeping a tight rein on budgets and reducing costs.This explains the success of our TRO (TechnologyRefresh Option) solution, which allows clients to replace aportion of their leased hardware on demand with thelatest technology without any increase in costs.To satisfy these requirements Econocom works closelywith clients to create customized solutions that minimizethe burden of technology management and improve costeffectiveness. Our Master IT service enables companiesto switch from basic IT asset management to completecommand of their IT and telecommunications resources.

Econocom ranks among the leading Europeanproviders of IT and telecommunications leasingsolutions for companies.

> Telecom In the B-to-B mobile telecommunications services sector,Econocom’s leadership position is recognized by marketplayers in the IT manufacturing and telecommunicationsfields. Our mobility management expertise helps us standout from our competitors in what is now a booming nichemarket.Econocom is one of the only European providers capableof offering a comprehensive service that includes:■ consulting;■ equipment distribution;■ the setting up of telecommunications lines;■ relationships with operators and usage optimization;■ user help desk;■ equipment maintenance; ■ telecom infrastructure financing.


Innovative services,proof of greaterefficiency

> Econocom is developing innovativesolutions through its full IT andtelecommunications management services.

> Managed Services Our managed services and support offerings provideeffective solutions to clients’ various workstation needs,such as advice on distributed infrastructure architecture,rollout and implementation in project mode or on a piecemeal basis, and user support.Econocom enables companies to fully or partiallyoutsource the management of their IT resources.The development of ITIL (Information TechnologyInfrastructure Library), on which Econocom is now a recognized authority, allows us to support generalmanagement and sales management teams, and help ITmanagement adopt best practices in order to improvethe quality of service provided to internal clients.

> Products and SolutionsIT services has become a commodity. This is whyEconocom has adopted a variable cost business model,based on outsourcing to specialist wholesalers and asales force made up essentially of independent agents.In addition to enabling us to weather slowdowns in ITspending, this strategy has allowed us to actively preparefor the recovery in investment while focusing on the value-added aspect of our services, including service responseand value offerings, the overhaul of distributed ITarchitecture, and the compliance of rollouts with the veryhighest quality standards.

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Despite growing IT and telecommunications needs,most small and medium-sized businesses are still not ina position to invest in full-time IT services. Econocom iskeenly aware of the special attention and specificapproach required by this market.

A2Z’s service offering covers the completemanagement of workstations andtelecommunications resources, including:

■ equipment procurement and financing;

■ supplier management;

■ user support;

■ the remote management of clients’ IT and telephone resources;

■ maintenance.

This comprehensive service is billed on thebasis of a monthly subscription cost per user.All SMBs that have outsourced the management oftheir IT and telecommunications services to A2Z havegenerated savings of approximately 20% to 30% oftheir initial budget.

In Belgium, over one hundred SMBs are already usingA2Z. The service offering is currently in theimplementation phase in France.

A2Z client testimonial: INVE turns to A2Z for the management of its IT infrastructure INVE, a small Belgian company specialized in animalfoods, cut its IT spending by 30% by outsourcing ITsupport for its 120-strong workforce to A2Z. The three-year agreement, signed in November 2005,provided specifically for the incorporation of INVE’s ITstaff into A2Z.

A2Z’s clients include:

■ The Antwerp Chamber of Commerce and Industry ■ Select■ Techmar■ Vlaams Economisch Verbond

* Small and Medium-sized Businesses

A2Z tailored solutions for the SMB* market



Econocom offers corporate clients a full range ofservices for the operational, administrative and

financial management of their IT andtelecommunications resources.

Econocom has a proven track record with companiesand organizations from a wide range of business

sectors. To enhance the relevance of our responsesto our clients’ specific needs, we have decided to

break our services down by major business segment.

Mastering IT andtelecommunications

resources a major stake

for businesses’ productivity

16 •


Public sector & education

Healthcare

Finance & insurance

Manufacturing, logistics, transportation, distribution

Telecommunications, media, technology

Energy & utilities

Services

Chemical

public sector & education

The Pension & Benefits Board / THE NETHERLANDS

The Pension & Benefits Board (PBB) is a Dutch government body responsible for administering and applying the regulations governing the financial aid granted to victims of the Second World War and their close relations. Although the average client age is 75 years, and the PBB’s scope for expansion is naturally limited, the PBBnevertheless needs to provide clients with an optimum service, and a highly effective IT infrastructure isfundamental to its operations. The PBB had been updating its IT portfolio every three or four years before deciding, in 2000, to lease all of its ITequipment from a single partner. It saw Gemlease, Econocom’s public service-dedicated offering, as the solutionbest suited to its needs. The PBB’s continued association with Gemlease is based on flexible financing solutions and conditions, as well asthe freedom of choice of suppliers. Gemlease takes full responsibility for upgrading and replacing equipment.

Econocom has been developing specific services for the public andeducation sectors in the Netherlands since 2001. These offerings – Gemleaseand Edulease – have also gained significant market share in the rest of the Benelux. Econocom has also proven itself in the French market with the managementof IT and telecommunications resources in schools, universities and towncouncils.

18 •

Other clients includeAFPA • APEC • the Belgian finance ministry • the Belgian state police • Bibliothèque nationale de France •the Departmental Council of Calvados • the Departmental Council of Haute-Garonne • the DepartmentalCouncil of Ille et Vilaine • the Regional Council of Lorraine • the Regional Council of the greater Paris area •the Departmental Council of Seine-Maritime • the Departmental Council of Val d’Oise • ESSEC • the EuropeanCommission • the European Parliament • FNSEA • INSEAD • the Lyons Chamber of Commerce and Industry •Lyons city Council • RATP • Toulouse city council • UGAP

Palace of Versailles / FRANCE

The Palace of Versailles has outsourced management of its distributed infrastructure to Econocom as part of its IT enhancement program aimed at deploying support and supply services in accordance with ITIL.Econocom’s services involve 400 workstations, 25 applications, and 20 servers, as well as the remoteadministration and supervision of 22 servers located on site.Econocom supervises the management of:• support incidents;• configuration;• implementation;• capacity;• service continuity; • financing.In order to ensure the end-to-end management of this project, Econocom’s sales agent set up a dedicatedaccess number as well as a call center at our shared remote services center in Ulis, in the Essonne region.


healthcare

Catharina Ziekenhuis Hospital / THE NETHERLANDS

The Catharina hospital in Eindhoven, the Netherlands, employs over 3,000 people,including 150 specialists in its medical team. In 2000 the hospital opted for Medlease’s ITleasing solution, which allows it to swiftly replace any of its PCs whenever necessary andguarantee the security and reliability of its network. According to Drs Schekkerman:“Leasing gives us access to reliable equipment that meets the technical requirements of thehospital’s various departments while keeping within the fixed budget. It is this combinationof advantages that led us to opt for the lease financing solution proposed by Econocom.”

Other clients includeFoch Hospital • Groep Gasthuiszusters van Antwerpen - AZ Saint Augustinus - SaintVincentiusziekenhuis • MSR Famedi SEPP ASBL • the Regional healthcare center of Valde Sambre • Saint-Étienne Hospital • Saint-Joseph, Sainte-Thérèse and IMTR Hospital

Medlease, Econocom’s healthcare-related offering, has been makingsignificant headway in the Netherlands since 2001, and its tailor-madeservices are gradually being extended to our other markets, with a particularly large client base among Benelux hospitals.

20 •

Saint-Luc Academic Hospital / BELGIUM

Econocom first joined forces with the Saint-Luc Academic Hospital in Brussels in the 1990s and has been assisting it with its main IT requirements in terms of growth management and client file traceabilityever since.

Econocom was selected to supervise the following strategic projects in 2005 and 2006:• upgrade of the data storage infrastructure needed to archive patients’ files (documents

and medical imaging);• update of the back-up system;• full duplication of the IT room (Disaster Recovery);• implementation of blade architecture;• provision of remote access to patients’ files for doctors by means of a “light-client” solution;• computerization of care units using ambulatory solutions.Econocom’s ability to come up with original, reliable and effective solutions incorporating cutting-edgeproducts from various hardware and software suppliers is one of the reasons that Saint-Luc AcademicHospital continues to work so closely with Econocom.


finance & insurance

Other clients includeAce European Group Limited • AXA Banque Belgique • Banque Privée Edmond de Rothschild • COFACE • Caisses d’Épargne • Caixabank France • Crédit Agricole • Deloitte Touche Tohmatsu • Euroclear Bank • Fortis •KBC Bank • MGEN • MMA • Mastercard Europe • Médéric Group • Mercuria Services SA • Mutualité Française •Puilaetco Private Bankers • Rabobank

22 •

Dexia / BELGIUM

Dexia Group, which arose from the link-up of Crédit Communal de Belgique and Crédit Local de France in 1996, is one of the forerunners in the European finance world.Dexia has just entered into a three-year agreement with Econocomregarding the management of its IT licenses. The agreement involves all Microsoft license requirements for more than20,000 Dexia Group users worldwide.Through this new agreement, Dexia Group has endorsed Econocom as its“Software Advisor”.

Winterthur / BELGIUM

Winterthur Europe Assurances (WEA) is a Belgian insurance company belonging to Winterthur –Crédit Suisse Group. Winterthur decided to outsource the leasing arrangements for its entireprinter, PC and notebook portfolio to Econocom in 2006. Alain Huart, Winterthur’s IT Service Delivery Manager gave the following testimonial:“We opted for a leasing solution because it allowed us to streamline our administration and, inparticular, reduce costs thanks to the residual value absorbed by Econocom. Although we haveworked alongside Econocom for many years, we decided to launch a request for proposalsamongst other service providers. We still went with Econocom Financial Services in the endbecause it offered us the most effective service in terms of cost, while still providing extremelyflexible solutions that were perfectly adapted to our needs and those of our users. Econocom’ssolution also includes tools that facilitate management and transparency by allowing us tomonitor and verify contracts, budgets and leased assets. Finally, Econocom offers IAS 17 – IFRScompliant lease agreements, a vital requirement for our company.”


Other clients includeAir France • AMEC Spie • Bosch Rexroth • Bouygues • Brunswick European Group • Compagnie Générale de Géophysique • Decathlon • Deutsche Post • Eurocontrol • Gascogne • General Electric Medical Systems •IER Groupe Bolloré • Leaseplan Iris Holding NV • La Poste (Belgium) • La Poste (France) • La Redoute •Longchamp • Metro • Michelin • Norbert Dentressangle • Peugeot • Philip Morris Belgium NV • Renault Europe Automobiles • Sodiaal • Toyota M & M Europe NV • Volvo

manufacturinglogisticstransportationdistribution

Puratos / BELGIUM

Puratos is a Belgian family-run business specializing in the distribution of ingredients to bakeries,patisseries and chocolate makers. Puratos has over 140 sites in more than 70 countries and has becomeone of the world’s leading players in its field. Its IT infrastructure is vital to the management of its dataflow, and in 2002 it carried out a complete review of its IT purchasing and financing strategy, concludingthat Econocom’s operating lease agreement provided the best solution for its needs:• thanks to an ERP application, the international IT network can be controlled from the Puratos

headquarters in Brussels, allowing fast access to shared, standardized information; • the lease agreement for the IT portfolio allows the infrastructure to be continually upgraded

at a constant price;• costs, internal cross-billing, and the cataloging of IT assets are efficiently controlled with Econocom’s

Asset Reporting Tool;• purchasing processes are made simpler and investments are recorded off balance sheet. The financial conditions and the flexibility of Econocom’s system convinced Puratos.

24 •

Airbus / EUROPE

Airbus has been an Econocom client since 1995.Our services to Airbus mainly concern the supply and installation of IT equipment* for the Toulouse site,the Hamburg and Beijing training centers, and the Engineers Centers in Moscow and Beijing. We havealso provided user training for the Airbus computer-based flight simulation software for several years. These training modules are provided at Airbus’ customers sites for airlines companies like Emirates,Iberia, KLM, Lufthansa, Malaysia Airlines, Thaï Airways... 2005 saw a new turning point in our relationship with the aircraft manufacturer when we were chosento equip 2,000 VIP Airbuses with the Blackberry mobile data solution. The aircraft will be rolled out overtwo years in France, Germany, the UK and Spain. Econocom is responsible for the project’s level 3 support and will also be providing Airbus withproposals on developing the existing infrastructure.* PCs, servers, notebooks, etc.


telecommunicationsmedia technology

Thales Transportation Systems / EUROPE

Thales, a world leader in the defense, aeronautics and security’s electronic industry, has been an Econocom client for more than 10 years. Thales chose Econocom to supply its end clients – government and defense agencies and localauthorities – with IT platforms, on the basis of Econocom’s skills, adaptability and the commitmentof its teams to the day-to-day management of its clients’ projects.In 2005, Thales Transportation Systems tasked Econocom with setting up part of the ITinfrastructure involved in the rollout of a Dutch single transport ticket program for cities likeRotterdam, Amsterdam, and The Hague. A project was successfully executed in New Delhi,India, between 2002 and 2005.

26 •

Other clients includeAlcadis • AMP (Lagardère Group) • Atos Origin • Bull • France Telecom • HP • Kodak • Radio 100.7 • Schneider Electric • ST Microelectronics • Tekelec • Telenet •Transcom Worldwide • Vivendi Universal • Wendel Investissement • Xerox

Mobistar / BELGIUM

Mobistar is one of the main players in Belgium in fixed line and mobile communications, ADSL and other high growth potential markets (data transmission, etc.). Mobistar is part of the Orange Group, the umbrella for the majority of France Telecom’s mobilecommunications activities. It is listed on the Brussels stock exchange, and had almost three millionactive clients as of December 31, 2005.Mobistar joined forces with Econocom in 1998 for the management of its IT assets, whichencompass approximately 2,800 workstations over five sites.Econocom is responsible in particular for the Service Desk, technical installations and IT portfoliomanagement (IMAC), and IT support to Mobistar sales outlets (Mobistar Centers).“Mobistar is particularly appreciative of Econocom’s flexibility and adaptability in the face of aconstantly changing structure” says Alain Desaever, Head of Office Systems for the Mobistar Group.


energy & utilities

28 •

EDF / FRANCE

At the start of 2005 EDF entered into a three-year agreement with Econocom. This agreement stipulates performance targets with respect to:• support incidents and requests for 45,000 workstations; • support incidents for 1,600 servers.

This infrastructure is divided among the seven EDF Energy Branch regions in France.Econocom’s regional management is backed by management on a national level, alsoprovided by Econocom, which includes monitoring commitments and compliance withhealth and safety regulations for industrial production sites.

At EDF’s request, Econocom also provides services to 20 nuclear power stations in France.Within the scope of this agreement, Econocom received official certification for theprevention of risks, including risks from ionizing radiation.

Electrabel / BELGIUM

In 2002, Electrabel, one of the front-runners in the European energy sector and the market leader in Belgium and Luxembourg, entered into a five-year agreement with Econocom involving over 10,000 workstations.Electrabel chose Econocom on the strength of its reputation in IT infrastructuremanagement. The energy sector is constantly changing and highly competitive, which means Electrabel must be able to adapt to the continually changing needs of its internal clients.Given the significance of this agreement for both Econocom and Electrabel, the mainobjective for 2006 is the ongoing improvement of operational excellence and internalclient satisfaction.

Other clients includeAreva • Baltimore Aircoil International NV • Cegelec • Dalkia •Elia • Fabricom GTI (Suez Group) • Ineo (Suez Group) • Total


Carglass / BELGIUM

Econocom Financial Services provides Carglass, a specialist in the repair and replacement of windows and car windshields, with financial management services related to its IT assets.Since 2005 it has also held the lease agreement for the entire fleet of Carglass PCs.

According to Stefaan Hermans, IT Director of Carglass Belgium, “We decided to use offbalance sheet financing for our IT assets due to the positive impact it has on our investmentexpenses, the way it allows us to monitor budgets, and the technological adaptability it offersus. We chose Econocom because, like us, Econocom believes that a customized approachand quality customer service are essential. The transparency of the agreement, the competitive rates and the flexibility were also persuasive factors. And with Econocom we also benefit from associated services.”

services

Other clients includeAccor • Acerta Group • Adecco • ADP GSI• Automatic Systems SA • Cap Gemini Ernst &Young • CDS Engineering • Cegid • Compu Mark NV • Dornach International SA • Ducroire •Eurodisney • Expectra NV • Group 4 Falck • Hotels Marriott Holding GmbH • NATOMaintenance & Supply Agency • PMU • Ranstad Belgium NV • Securex

30 •

Accenture / BELGIUM & FRANCE

Accenture France, a major management consulting and technology services company, launched a request for proposals at the start of 2005, subsequently choosing Econocom Telecom to manage its cellular fleet.The agreement involves setting up and managing 2,700 lines in France as well as responsibility for the entire cellular fleet used by Accenture’s 600 employees in Belgium.Econocom was selected for:• its cutting-edge mobility management expertise;• its ability to work with several telecommunications operators;• its competitive edge.The acknowledged skills of the Econocom telecommunications teams, regarding project assistance(pre- and post-sale), rollout and Help desk services, gave Econocom the upper hand.


chemicalBristol Myers Squibb / BELGIUM

Bristol Myers Squibb, one of the world’s largest pharmaceutical groups, with 44,000 employeesand 50 subsidiaries, enjoys extreme flexibility regarding its IT requirements thanks to Econocom’s PC Lease solution. This lease contract provides Bristol Myers Squibb with the adaptability it needs in the management of its IT portfolio.

The group bases its IT choices on Econocom’s recommendations. It has the ability to replacecertain equipment whenever necessary, enabling it to perform its therapeutic research activitiesas efficiently as possible and under optimum conditions.The global IT budget is reviewed in conjunction with Econocom and broken down into periodiclease payments, allowing Bristol Myers Squibb to keep track of the exact amount of leasepayments to be made up to the end of the contract. Centralized management and reportingtools give the group’s IT and Finance Departments an overall view of payments made, duedates and remaining investment capacity. Assets that are no longer used by Bristol MyersSquibb are returned to Econocom for resale.Bristol Myers was won over by the transparency and ease of management offered by the PCLease solution.

Other clients includeBoehringer Ingelheim SA • Bristol Myers International Corporation • Burelle (Plastic Omnium Group) •GlaxoSmithKline Biologicals SA • Janssen Pharmaceutica NV (Johnson & Johnson Group) • KemiraGrowHow SA • Recticel NV • Reilly Chemicals SA • Syngenta • Yves Rocher

32 •

l


34 •

A communication-basedprogram

Communication is vital to Econocom’s relationshipwith its clients, sales agents, partners andemployees, and in 2005 it decided to embark on a project designed to improve this key area of its operations.

■ A program aimed at monitoring customersatisfaction was put in place in Belgium, in Franceand in the Netherlands, and will soon be extended toEconocom’s other sites.Its objective is to gauge client satisfaction on a bi-annual basis with a goal of providing timely andpertinent responses to any loss of or reduction in satisfaction. Following the initial surveys in Belgium and France,Econocom designed and implemented a CustomerCharter.

■ After the adoption of an internal charter onemployee communication rights in 2005,Econocom decided to regularly assess employeesatisfaction in each of its entities.

■ Several Key Performance Indicators related to good communication were also put in place and are examined each month in order to assessdevelopments. The indicators include factors suchas the number of agreements signed, the number of hits on Econocom’s website, the number of spontaneous job applications, and employeeabsentee rates.


FinancialStatements2005

FinancialServices

SupportServices


ManagedServices

FinancialServices

SupportServices


ManagedServices

FinancialServices

SupportServices


ManagedServices

FinancialServices

SupportServices


ManagedServices

FinancialServices

SupportServices


ManagedServices

36 •

Contents

37 • Organization of Econocom Group

38 • Econocom Group share performance

39 • Financial calendar

40 • Management report

46 • Corporate structure

47 • Ownership structure

48 • Corporate Governance

56 • Consolidated Financial Statements for the year endedDecember 31, 2005 – in IFRS standardsConsolidated income statement and result per share

Consolidated balance sheet

Consolidated cash flow statement

Consolidated statement of changes in equity

Notes to the Consolidated financial statements

133 • Company Financial Statements for the year ended December 31, 2005 – in Belgian GAAP

154 • Information about the company

155 • Competition and recruitment

157 • Recent developments and outlook

159 • 10-year consolidated highlights


ORGANIZATION OF ECONOCOM GROUP as of December 31, 2005

1. Board of Directors

Chairman and Chief Executive Officer Jean-Louis Bouchard

Chief Executive Officer, Financial Services Activity Charles de Water

Chief Executive Officer, Products and Solutions and Managed Services Activities Patrik Vandewalle

Directors Christian BretGaspard DürrlemanRafi KouyoumdjianLuc PintensJean-Philippe RoeschVincent Wajs

2. Statutory AuditorsPricewaterhouseCoopersReviseurs d’Entreprises S.C.C.R.L.Represented by Emmanuèle Attout

38 •

ECONOCOM GROUP SHARE PERFORMANCE on the Brussels stock exchange since January 1, 2003

Price (€) Volume

Month High Low Closing Average Number of Value (in €price price shares traded thousands)

January 4.25 3.90 4.06 4.06 219,952 892.10February 4.50 4.06 4.44 4.30 138,483 595.41March 5.00 4.20 4.74 4.51 254,962 1,150.39April 5.43 4.40 5.43 4.75 224,549 1,065.49May 5.50 5.02 5.48 5.32 140,345 747.31June 5.80 5.15 5.71 5.50 190,267 1,045.92July 5.90 5.50 5.50 5.77 283,546 1,634.96August 5.68 5.20 5.50 5.41 135,552 733.54September 5.58 4.63 4.82 5.09 220,956 1,125.37October 4.80 4.10 4.31 4.51 404,469 1,823.63November 4.68 4.40 4.49 4.49 261,111 1,173.17December 5.10 4.58 5.10 4.81 559,809 2,692.96Total 2003 5.90 3.90 5.10 4.84 3,034,001 14,680.24

January 5.78 5.03 5.60 5.47 733,406 4,014.88February 5.80 5.45 5.75 5.64 353,447 1,993.26March 6.10 5.44 5.91 5.87 655,510 3,850.66April 6.15 5.70 5.84 5.93 572,359 3,391.80May 5.85 5.10 5.40 5.47 220,812 1,206.78June 5.80 5.25 5.65 5.39 311,605 1,679.40July 6.12 5.65 6.10 5.88 569,325 3,348.14August 6.23 5.90 6.18 6.09 1,188,191 7,239.89September 6.15 5.90 6.15 6.05 406,066 2,456.33October 6.06 5.89 6.00 6.00 352,773 2,115.79November 6.00 5.71 5.89 5.91 175,040 1,034.33December 5.92 5.55 5.80 5.82 342,368 1,991.69Total 2004 6.23 5.03 5.80 5.84 5,880,902 34,322.96

January 6.50 5.70 6.25 5.98 471,871 2,821.55February 6.75 6.20 6.70 6.49 273,612 1,774.92March 6.92 6.60 6.75 6.76 219,985 1,487.93April 6.75 6.20 6.40 6.49 219,387 1,424.13May 6.69 6.38 6.38 6.53 496,245 3,238.69June 6.70 6.33 6.33 6.45 357,109 2,303.85July 6.69 6.40 6.60 6.54 552,694 3,614.90August 6.54 6.25 6.40 6.40 479,056 3,067.40September 6.40 6.23 6.29 6.32 562,985 3,555.76October 6.32 6.15 6.19 6.25 726,174 4,535.83November 6.24 5.97 6.19 6.16 423,233 2,607.33December 6.65 6.09 6.62 6.32 344,660 2,178.25Total 2005 6.92 5.70 6.62 6.42 5,127,011 32,610.54


FINANCIAL CALENDAR

Annual General MeetingMay 16, 2006 May 15, 2007

Dividend paymentEarly June 2006 Early June 2007

Press release on preliminary half-year resultsJuly 27, 2006 July 26, 2007

Press release on final half-year resultsSeptember 7, 2006 August 31, 2007

Press release on preliminary annual resultsJanuary 26, 2007 January 25, 2008

Investor Relations: Jean-Philippe Roesch, Parc Horizon, Chaussée de Louvain 510, Bte 801930 Zaventem, BelgiumE-mail: [email protected]

MANAGEMENT REPORT ON THE FINANCIAL STATEMENTS for the year ended December 31, 2005 presented to the Annual General Meeting of May 16, 2006

40 •

than 250 workstations), acquiring a 100% stake in A2Z Holding NV inAugust 2005. Operating in Belgiumand France via its two subsidiariesA2Z Solutions NV and DataNetworks France, this company has developed a vanguard approachto providing IT and telecom services to small- and medium-sizedcompanies, by invoicing on a monthly cost per user basis.

Following this acquisition, the twooperating subsidiaries, A2Z Solutionsand Data Networks France, carriedout capital increases in December2005.

The aggregate cost of the aboveacquisitions in 2005 totaled around€5 million.

Lastly, Econocom tightened itsgeographic structure to focus on fiveEuropean countries – Belgium, the Netherlands, France, Spain andItaly. It sold its subsidiary EconocomSuisse SA in July 2005, which

was deemed to be non-strategic,and discontinued its operations in the United States in December,having divested its stake in the UScompany Ace Computer in January2005.

In June 2005 the Group also soldCap Horn, a non-trading propertycompany located in Les Ulis.Econocom carried out the followingoperations during the year with agoal of streamlining its organizationalstructure and bolstering its operatingsubsidiaries: • Merger of Econocom Telecom SASand Signal Service SA intoEconocom Products and SolutionsSAS (France);• Absorbing Econocom.com'slosses by way of a capital reduction;• Capital increase followed by capitalreduction for Atlance France SA andEconocom Managed Services SA(France);• Merger of Atlance Nederland BVinto Econocom Nederland BV.

1. Scope of consolidation

In accordance with prevailing legislation and the Company’s bylaws, we submit to you for approval ourreport on the Company’s operations and the financial statements for the year ended December 31, 2005.

During the year, the EconocomGroup continued to roll out theShare Five strategic plan, aimed atachieving an operating margin of 5%by year-end 2007. This involvedstepping up the Group’s services tosmall- and medium-sized companiesand pursuing its development drivein the telecommunications market,while tightening its geographic focus.

In August 2005, the Group extendedits telecom offering from France and Belgium to Holland, acquiringthe entire capital of For ConnectedBV – a company specialized in datamobile services, including Goodlinkand One Bridge technologies.

Econocom subsequently acquiredthe B-to-B portfolio of JCA, a mobile services operator based in southwest France.

At the same time, it decided tostrengthen its position in the marketfor small- and medium-sizedcompanies (companies with fewer



mobile telecommunications services.As in 2004, all of the Group’sactivities were profitable. Profit for the year including minorityinterests rose 6% from ¤13.4 millionto ¤14.2 million.

Goodwill was higher as of December31, 2005 than one year earlier, due to the Group’s acquisitions. The allocation of goodwill is set forthin the table below.

Services posted double-digit growth,fueled by Telecom services, whichalso propelled the performance ofthe Products and Solutions business.

Operating profit climbed 7% to ¤19 million, representing anoperating margin of 3.4% comparedwith 3% in 2004. This total includes¤1 million in restructuring costs and a ¤2 million expense relating to investments in A2Z and B-to-B

The 2005 revenue figure of ¤550.9million does not include the revenuereported by the Swiss and USsubsidiaries, whose operations wererespectively sold and discontinuedduring the year. On a like-for-like basis, revenuedeclined 5%, reflecting a decrease in the sales price of IT equipmentwhich impacted the Group’sProducts and Solutions and FinancialServices activities. Managed

2. Results2.1. Consolidated results

(in € millions) 2005 2004 % changeRevenue from continuing operations 550.9 602.4 - 8.5%Operating profit 19.0 17.8 + 6.7%Operating margin 3.4% 3.0%Profit before tax 19.0 17.6 + 8.0%Income tax (5.1) (3.9)Share of profit/(loss) of companies accounted for by the equity method - 0.1Profit from continuing operations 13.9 13.8Discontinued operations 0.2 (0.5)Profit for the year excluding minority interests 14.1 13.3 + 6.0%Profit for the year including minority interests 14.2 13.4 + 6.0%

Goodwill

Net value as of Acquisition date(in € millions) Dec. 31, 2005JCA 0.8 2005A2Z Holding 3.1 2005For Connected BV 0.2 2005Signal Service SA 7.5 2004CHanSE SA 0.7 2004Synopse SAS 0.4 2003SX Consultants SA/NV 0.7 2002PLI 0.5 2000CSI 0.1 1999Econocom Location SAS and Econocom SAS 0.7 1996Total 14.7


42 •

Managed Services posted a buoyant top-line performance,especially in France, generating ¤111 million in revenue – up almost11% year-over-year (9% on a like-for-like basis). The operating marginwas lower, however, due to therenegotiation of the financial terms ofa contract in Belgium, start-up costsfor a major contract in France, and expenditures relating to theimplementation of a cost-savings planwhose benefits will be felt in 2006.

Overall revenue for Products andSolutions totaled ¤191 million,reflecting a mixed performance in France and the Benelux countries,with the Belgium-Luxembourgsubsidiary enjoying a dynamic firstsix months followed by a slow-downin the second half of the year.

Profitability picked up slightly,however, on the back of managementmeasures implemented during theyear. The French subsidiary reporteda robust showing in the second sixmonths of 2005, having experienceda decline in revenue during the first-half. Since the restructuring carriedout in 2003, this company'scontraction in growth seems to havebeen stemmed. At the same time,the cost reduction measures rolledout over the past eighteen monthshave led to a significant increase in profitability.

The geographic reach of theFinancial Services activity, whichposted ¤248 million in revenue, was refocused in 2005, through thesale of its Swiss subsidiary in July,followed by the discontinuation

of operations in the United States in December. Based on the Group'scurrent structure, the number of newcontracts was slightly higher than in 2004. Business eased back inSpain and the Netherlands, whereasBelgium enjoyed solid momentumand Italy posted strong growth.Operating margin continued toincrease, coming in at 5.7%, buoyedby the commercial success of a newasset management solution,especially in France.

2.3. Parent companybalance sheet and incomestatement (non consolidated)

Net profit for the parent companyEconocom Group SA/NV amounted to ¤11.4 million in 2005 compared

2.2. Results by activity

Revenue for the Group’s three activities was as follows:

(in € millions) 2005 2004Managed Services 111 (1) 100Products and Solutions 191 203Financial Services 248 299Total 550 602(1) Excluding A2Z revenue (€0.7 million).

The three activities made the following contributions to operating profit:

(in € millions) 2005 2004Managed Services 3.6 4.7Products and Solutions 1.9 -Financial Services 14.3 13.1Total 19.8 (1) 17.8(1) Excluding A2Z’s negative contribution of ¤0.8 million.



Econocom Group with other servicesnot included in its statutory auditengagement. These related to thereview of the Group’s IFRS accountsas of January 1, 2004 andDecember 31, 2004 (invoiced at ¤120,000), and legal work,representing a fee of ¤2,500.

3. Capitalincreases andstock optionplansAs of December 31, 2005, the Company’s share capitalamounted to ¤16,180,922.08,represented by 29,000,000 fullypaid-up shares held in registered or bearer form. Authorized unissuedcapital stood at ¤15,894,722.08.

On July 20, 2005, Econocom Groupissued 265,000 new shares,representing ¤143,100, for allocationon the exercise of stock options. The issue premium on these sharesamounted to ¤966,650. In addition,on December 22, 2005, the Groupcancelled 1,265,000 shares withoutany corresponding capital reduction.

At the Extraordinary General Meetingon May 17, 2005, shareholdersrenewed, for a five-year period, the authorization given to the Boardof Directors to increase the capitalon one or several occasions, by a maximum amount of¤16,037,822.08.

confirmed that the financialinformation contained in the report of the independent directors and the minutes of the Board ofDirectors’ meeting of May 13, 2005was true and fair; • the sale of Econocom Suisse (¤2 million);• the capital increase carried out by Econocom Locazione Italia SPA(¤0.8 million);• the acquisition of A2Z Holding(¤0.3 million);• a call for funds for Econocom Albis(¤0.2 million).

In 2005, Econocom Group investedan additional ¤1.3 million in theMBO Capital venture capital fund.

It also acquired 1,469,749 of its ownshares, sold 591,420 and cancelled1,265,000. As of December 31, 2005,the Company held 40,728 treasuryshares, representing 0.14% of itscapital. As a result, the undistributablereserves of Econocom Groupdecreased by ¤2.3 million (nonconsolidated amount).

As of December 31, 2005, parent company shareholders’ equity amounted to ¤86.6 million,stable versus 2004.Sales of goods and services forEconocom Group, all activitiescombined, came to ¤9.9 million, on par with the 2004 figure. This amount includes all royaltiesand services billed.

During 2005, the Statutory Auditors,PricewaterhouseCoopers, Reviseursd’Entreprises S.C.C.R.L., provided

with ¤12.4 million in 2004, and was mainly attributable to:• Dividends received fromsubsidiaries:- ¤0.7 million from EconocomProducts and Solutions Belux SA/NV,- ¤6 million from EconocomNederland BV,- ¤2.5 million from Econocom Suisse SA.• A ¤3.5 million provision reversalrelating to the current account with Econocom France SAS, which represented the majority of the exceptional items recorded by the Company during the year.

Investments in subsidiaries andaffiliates decreased by ¤9.1 million in 2005, reflecting the followingtransactions: • The sale of Signal Service (¤8.3 million) to Econocom ManagedServices SA/NV. This divestmentformed part of an internalreorganization program approved bythe Board of Directors in accordancewith Article 524 of the CommercialLaw, and which also concernedEconocom Telecom SAS, EconocomProducts and Solutions SAS,Econocom Managed Services SAand Synopse SAS. Having analyzedits characteristics, on April 29, 2005, the committee of three independent directorsappointed to investigate thetransaction in accordance withBelgian law concluded that in light ofthe Company’s strategy it would notgive rise to any significant prejudicefor Econocom Group or itsshareholders. In their report datedMay 2, 2005, the Statutory Auditors


44 •

During the year, 835,436 optionswere exercised for a total of¤2,940.736. This resulted in i) the transfer by Econocom Group of 570,436 shares to option holders,and ii) the issue of 265,000 newshares.

In accordance with the marketauthorities’ recommendations oncorporate governance, at its meetingof February 28, 2003, the Board of Directors set up a Stock OptionCommittee. This Committee,composed of three members, is tasked with ensuring that stockoption plans are carried out inaccordance with Board directivesand, in particular, with allocating an amount representing a maximumof 1% of the Company’s capitalannually. The Committee is requiredto report to the Board of Directors as often as it deems necessary and at least once each year. The Committee met on July 1, 2005and awarded 150,000 options during the year.

There were 1,435,912 unexercisedoptions as of December 31, 2005(5% of the Company’s outstandingshares), representing a potentialcapital increase (including issuepremiums) of ¤8.4 million.

4. Risk factorsDue to the nature of its business,Econocom Group is exposed tocertain financial and legal risks. A complete review of the Group’srisk exposure and managementstrategy is provided by type of risk in the notes to the consolidatedfinancial statements.

In view of its business model,Econocom Group is not significantlyexposed to exchange-rate, interest-rate or environmental risks.The Group’s dependency on clientsis limited, as no one client representsover 5% of the Group’s totalrevenue. In addition, it does not have a high liquidity risk as it has a significant cash surplus.

Econocom Group is, however,exposed to risks relating to:• doubtful accounts, which arelargely covered by factoring solutionsand refinancing of contracts on a non-recourse basis;• the termination of serviceagreements, as a significant portionof the Group’s employees havepermanent contracts. However, the majority of these agreementshave terms of over one year andinclude reciprocal notice periods.

The Group does not have anyspecific employee-related risks. Over 90% of its staff are employed in France and Belgium.

The IT services market is extremelycompetitive, and has been for a long

time. Econocom Group is thereforeaccustomed to having to changeand innovate in order to maintainand expand its client base.

5. Transition to IAS/IFRSIn accordance with EC regulation1606/2002 dated July 19, 2002applicable to companies listed on a regulated stock exchange in one of the European member states, the consolidated financial statementsof Econocom Group and itssubsidiaries (the “Econocom Group”)for the year ended December 31,2005 have been prepared inaccordance with InternationalFinancial Reporting Standards (IFRS)and International Financial ReportingInterpretations Committee (IFRIC)interpretations as adopted by theEuropean Union and applied by the Group since January 1, 2005.

The Econocom Group’s 2005financial statements contain an opening IFRS balance sheet as of January 1, 2004 prepared inaccordance with IFRS 1 – First-timeAdoption of International FinancialReporting Standards, as well as2004 pro forma information. The accounting options selected bythe Econocom Group in accordancewith IFRS 1, as well as a summary of significant accounting policies and IFRS-Belgian GAAPreconciliation tables for 2004, are presented in the notes to theconsolidated financial statements.



In addition, A2Z will be rolling out its business model in at least two European countries.

At the forthcoming Annual GeneralMeeting, the Board of Directors willrecommend raising the grossdividend per share to ¤0.16 (¤0.12 net). Amounts payable on shares held as treasury stock will be retained until disposal of the shares.

Brussels, March 9, 2006

The Board of Directors

With a goal of streamlining itsstructural base, on January 19, 2006,the Group’s management teamasked the Board of Directors to approve Econocom Group’sdelisting from the Paris stockexchange. This request wasaccepted and the practicalprocedures are currently beingexamined. It is planned to carry out this delisting by the end of September 2006.

8. Outlook for 2006 and dividendsEconocom aims to further improveits operating margin in 2006. The year will notably be devoted to winning market share in the mobile area. Econocom is particularly well positioned to leverage the take-off in voice/dataconvergence. Through its Mobileasyoffering, it can provide companieswith a comprehensive outsourcingsolution that encompassesconsulting services, supply ofequipment and lines, user support,maintenance, financing, andadministrative and operationalmanagement, at optimal rates in line with clients’ cost-containmentobjectives.

During 2006 the Econocom Groupwill also seek to enlarge its footprintin Italy, where its revenue increasedby 32% in 2005.

6. Treasury stockAt the Extraordinary General Meetingheld on December 22, 2005, the Board of Directors was authorizedto cancel 1,265,000 shares, reducingthe number of outstanding sharesfrom 30,265,000 to 29,000,000 withno corresponding capital reduction.This cancellation of treasury sharesled to an increase in the par value of the Company’s shares from¤0.534 to ¤0.558.

The Extraordinary General Meeting of May 17, 2005 granted the Boardof Directors an eighteen-monthauthorization to buy back amaximum of 3,000,000 shares(subject to a ceiling of 10% of theCompany’s total outstanding shares),at prices ranging from ¤2 to ¤18.

As of December 31, 2005,Econocom Group held 40,728treasury shares, purchased at an average price of ¤6.36 per share,representing 0.14% of the totalnumber of shares issued. The aggregate purchase price of these shares was ¤258,404.

7. Post balancesheet eventsEconocom Group shares have beenlisted on the Brussels stock marketsince 1986 and on Euronext Paris(eurozone equities) since September2000, following the purchase of Infopoint via a stock-for-stockexchange.

CORPORATE STRUCTUREas of December 31, 2005

46 •

Econocom Group SA/NV

ECONOCOM NEDERLAND BV

ECONOCOM SERVICES BV

ATLANCE SA/NV

ECONOCOM LOCATION SAS

ECONOCOM PRODUCTS & SOLUTIONS BELUX SA/NV

ATLANCE FRANCE SAS

A2Z SOLUTIONS NV

ECONOCOM EXPERT INTERNATIONAL HOLDING BV

G.I.E. ECONOCOM

ECONOCOM SAS

ECONOCOM LOCAZIONE ITALIA SPA

ECONOCOM ALBIS GmbH

ECONOCOM.COM SA

ECONOCOM PRODUCTS & SOLUTIONS LUXEMBOURG SAECONOCOM FRANCE SAS

ECONOCOM PRODUCTS SERVICES BV

ECONOCOM MANAGED SERVICES SA/NV

ECONOCOM TELECOM SERVICES SA/NV

ECONOCOM TELECOM SPRL

ECONOCOM LUXEMBOURG SA

ECONOCOM LEASE SA/NV

ECONOCOM PROMODATA FRANCE SA

PROMODATA SNC

100%

100%

99.99%

100%

FOR CONNECTED SERVICES BV100%

ECONOCOM MANAGED SERVICES SA99.99%

SCI ALEXANDRE99.90%

INFOCONSEIL SARL100%

100%

DATA NETWORKS FRANCE SARL100%

58.33%

6.43%

65%

ECONOCOM UK LTD.100%

ECONOCOM SA (ESPAGNE)99.99%

ECONOCOM USA INC.100%

93.57%

99.99%

41.67%

99.99%

50.10%

99.93%

74.57%

100%

100%

100%

ECONOCOM PRODUCTS & SOLUTIONS SAS99.56%

100%

100%

100%

0.07%

99.94%

95%

100%

100%

A2Z HOLDING NV100%

SYNOPSE SAS100%

APERLEASING100%

OWNERSHIP STRUCTUREas of December 31, 2005


ECONOCOMINTERNATIONAL NV

TREASURY STOCK

ECONOCOM GROUP SA/NV

PUBLIC

0.14% 43.13%

49.27% 7.46%

VALGESTV. WAJS

CORPORATE GOVERNANCE(management and supervision of the company)

48 •

1. Composition of the Board of Directors (as of December 31, 2005)

Jean-Louis Bouchard(term of office expiring at the May2010 Annual General Meeting)La Chaussée4, chemin du Viaduc60270 Gouvieux (France)Chairman of the Board of Directorsand Chief Executive Officer ofEconocom Group SA/NV, Chairmanof Econocom International NV.

Luc Pintens(term of office expiring at the May2006 Annual General Meeting)Lippeloseweg, 292890 Sint-Amands (Belgium)Director of Econocom Group SA/NVChairman of Econocom’ssubsidiaries in Belgium andLuxembourg.

Patrik Vandewalle(term of office expiring at the May2010 Annual General Meeting)Achiel Cleynhenslaan 133140 Keerbergen (Belgium)CEO of the Managed Services andProducts and Solutions activities –Econocom Group SA/NV (elected inJanuary 2005)Group Chief Operating Officer(elected in September 2005).

Jean-Philippe Roesch(term of office expiring at the May2008 Annual General Meeting)21, avenue de la Criolla92150 Suresnes (France)Director of Econocom Group SA/NVDeputy Managing Director.

Charles de Water(term of office expiring at the May2011 Annual General Meeting)Korte Veersteeg, 4d4157 GR Enspijk (Netherlands)CEO of the Financial Services activity– Econocom Group SA/NV (electedin December 2003).

Vincent Wajs(term of office expiring at the May2006 Annual General Meeting)40, rue du Village91530 Le Val Saint-Germain (France)Director of Econocom Group SA/NV.

Christian Bret(term of office expiring at the May2010 Annual General Meeting)19, rue de la Côte-d’Argent92410 Ville-d’Avray (France)Director of Econocom Group SA/NV.

Rafi Kouyoumdjian(term of office expiring at the May2007 Annual General Meeting)25, rue de Lubeck75016 Paris (France)Director of Econocom Group SA/NV.

Gaspard Dürrleman(term of office expiring at the May2011 Annual General Meeting)50, avenue Bosquet75007 Paris (France)Director of Econocom Group SA/NV.

Statutory AuditorsPricewaterhouseCoopersReviseurs d’Entreprises SCCRL(term of office expiring at the May2007 Annual General Meeting)Statutory Auditors of EconocomGroup SA/NV, represented by

Emmanuèle AttoutWoluwe Garden, Woluwedal, 181932 Sint-Stevens-Woluwe(Belgium).

The following five members of the Board of Directors served inan executive capacity during 2005:Jean-Louis Bouchard, Luc Pintens,Patrik Vandewalle, Jean-PhilippeRoesch and Charles de Water.Gaspard Dürrleman, Rafi Kouyoumdjian, Christian Bretand Vincent Wajs are non-executivedirectors and have no links with the majority shareholder. Accordingly,four of the nine members of theBoard are non-executive directors.

The Chairman of the Board ofDirectors owns controlling interestsin several non-Group companies,where he serves as a director orChairman. The other executivedirectors do not hold directorshipsoutside Econocom Group SA/NVand its subsidiaries, with the exception of Luc Pintens, who is a director of KeywareTechnologies (a companyincorporated in Belgium and listedon NASDAQ Europe) and the BelgianInternational Olympic Committee;Charles de Water, who is a directorof Econocom International NV; and Patrik Vandewalle, who is a director of BVBA XP1 SprL.

Gaspard Dürrleman is a member of Audevard’s ManagementCommittee and is also a director of APL International and Arthus-Bertrand SA.



Vincent Wajs is a director of Valgestand Cogefi, and Christian Bret is Managing Partner of Eulis.

The bylaws set the maximum term of office for directors at six years,and state that directors may be re-elected. No other specific rulesare laid down, including age limits.

2. Application of the Lippens Code on Corporate Governance

The Board of Directors has read the recommendations of the BelgianCode on Corporate Governance (the Lippens Code) and confirms that it adheres to the principles set out therein. Nevertheless, it considers that several of therecommendations are not applicableto the Econocom Group, in view of its size.

Measures have been taken tocomply with the recommendations of the Code, a number of whichhave already been implementedwithin Econocom Group. Themembers of the Board of Directorsare currently examining certain of the Code’s recommendations, setout below, which Econocom Grouphas not yet put into practice. A special Board Meeting will be heldon April 25, 2006 to study the measures and procedures to be applied within the Board of Directors and, more generally,within the Econocom Group.

• Concerning Principle 1 of theLippens Code, the recommendationsthat Econocom Group has not yetapplied are: i) “The Board’sresponsibilities should be defined inthe bylaws of the company and inthe terms of reference of the Board”,and ii) “The chairman of the Boardand the Chief Executive Officershould not be the same individual”.

The Board of Directors of Econocom Group operates in accordance with the rules setdown in the Company’s bylaws. A set of internal rules is currentlybeing drawn up. These rules, which provide more preciseguidelines than the bylaws, will be submitted to the Board for approval at its meeting scheduledfor April 25th, 2006.

In addition, Jean-Louis Bouchardperforms the duties of bothChairman and Chief ExecutiveOfficer. The reasons for thiscombination of roles are historic and relate to Econocom Group’sownership structure, as Jean-LouisBouchard indirectly owns 49.27% of the Company’s capital andtherefore exercises de facto control.However, in order to comply with the Code, Econocom Group is currently analyzing this issue. A number of decisions have alreadybeen made which will lead to the segregation of the powers of control exercised by the Board of Directors and the executivepowers of the ManagementCommittee.

For instance, Patrik Vandewalle –who was appointed CEO ofManaged Services and Products and Solutions on January 18, 2005,and nominated by the Board as Chief Operating Officer onSeptember 7, 2005 – has beenentrusted by Jean-Louis Bouchardto head up the ManagementCommittee. Jean-Louis Bouchard has notformed part of the ManagementCommittee since September 2005.

• Concerning Principle 2 of theLippens Code, the recommendationsthat Econocom Group has not yetapplied are: i) “At least half the Boardshould comprise non-executivedirectors”, and ii) “The Board should appoint a company secretaryreporting to the Board on how Boardprocedures, rules and regulations are followed and complied with”.

The Board of Directors of EconocomGroup comprises nine members, five of whom are executive and fournon-executive. Patrik Vandewalle’sappointment on December 22, 2004as an executive director resulted in the Board having a slight majorityof executive directors. The Companyintends to rectify this situation in 2006.

The duties of Corporate Secretaryare carried out on an informal basisby Jean-Philippe Roesch. His officialappointment as Corporate Secretaryis being studied.


50 •

• Concerning Principle 3 of theLippens Code, Econocom Grouprespects the principle of the followingtwo recommendations, but has yetto formally put them into practice: i)“The Board should establish a policyfor transactions or other contractualrelationships between the company,including its related companies, and its board members”, and ii)“The company should take allnecessary and useful measures to comply with Directive 2003/6/ECon insider dealing and marketmanipulation (market abuse).”

Transactions carried out andcontracts entered into betweencompanies of the Econocom Groupand the Group’s executive managersor directors of Econocom Group are on arm’s length terms. Rules and procedures regardingthese transactions and contracts are being drawn up and will besubmitted to the Board of Directorsfor approval at its meeting on April 25, 2006.

The Board of Directors will also be asked to approve a code of conduct and disclosure rulesrelating to transactions in the Company’s shares carried out by directors on their own behalf,executive managers, or any otherpersons designated by the Board of Directors as subject to these rules.

• Concerning Principle 4 of theLippens Code, the recommendationsthat Econocom Group has not yetapplied are: i) “The Board shoulddraw up nomination procedures and

selection criteria for Board members”,and ii) “The Nomination Committeeshould recommend suitablecandidates to the Board”. Principle 4 also provides for aperiodic assessment of each directorand the operation of the Board of Directors, in accordance withprocedures set by the Board.

To date, Econocom Group has not wished to set up a NominationCommittee, nor any formalprocedures for appointing membersof the Board of Directors and the Management Committee. The Company considers that thisrecommendation of the Code is not suitable for Econocom Groupin view of its size, and that itsimplementation would not currentlygenerate any added value for eitherthe Company or its shareholders.Nevertheless, the Board of Directorswill examine this recommendation of the Lippens Code on April 25th,2006.

Members of the Board of Directorsare continually assessed, but not on any specific formal basis. On April 25th, 2006, the Board will reflect on the interest to formalizeself-assessment, including a review of its operations and membershipstructure, in accordance with the provisions of the Code.

• Concerning Principle 5 dealing with specialist committees set up by the Board, the Board of Directorsof Econocom Group has formed a Management Committee, an Audit Committee, and a Stock

Option Committee. However, to date Econocom Group has not wished to set up aCompensation Committee, as it considers that it would not besuited to the Group’s organizationalstructure. Compensation paid to the members of the ManagementCommittee is set by the Chairman of the Board of Directors andcontrolling shareholder, who doesnot receive any remuneration fromEconocom Group. Any grants of stock options to members of the Management Committee haveto be approved by the Stock OptionCommittee, which was created in February 2003. Nevertheless, at its meeting on April 25, 2006 the Board of Directors will examinethe possibility of setting up aCompensation Committee andintroducing a formal policy regardingcompensation paid to executivemanagement.

In addition, the internal rules of the Audit Committee, which was set up by the Board of Directorson May 18, 2004, will be amendedin order to comply with the LippensCode. The proposed amendmentswill be submitted for approval to the Board of Directors at its April 25,2006 meeting. The Audit Committeeis currently composed of two non-executive directors whose terms of office expire in 2006. As the dutiesof Audit Committee members requiresignificant involvement and availability,the Board of Directors will determinewhether it is appropriate to increasethe number of Audit Committeemembers to three.



• Concerning Principle 9, whichrecommends that companiesprovide appropriate corporategovernance disclosures, EconocomGroup will publish its CorporateGovernance Charter on its website,once this charter is updated by theBoard of Directors on April 25, 2006.

3. Compensation,including social securitycharges, and benefits inkind granted by EconocomGroup SA/NV and itssubsidiaries to members of the management and supervisory bodies for 2005

Since 1999, the bylaws haveprovided for the compensation ofoffices held. Further to the AnnualGeneral Meeting of May 18, 2004,the attendance fees of independentdirectors have been set at ¤2,500per Board Meeting, subject to actualattendance at the meetings.

Non-executive directors who aremembers of the Audit Committee or the Stock Option Committeereceive an additional ¤1,000 per meeting, subject to actualattendance.

Compensation paid to executivedirectors exclusively corresponds to amounts payable under theiremployment contracts with the Group companies concerned. They do not receive attendance fees.

Non-executive directors do notreceive any payment other than theabove-described attendance fees.

Attendance fees paid to non-executive directors in 2005 were as follows:

Compensation paid to non-executivedirectors in 2005 (in €)

Christian Bret 7,500Gaspard Dürrleman 11,000Vincent Wajs 20,000Rafi Kouyoumdjian 15,000Total 53,500

Jean-Louis Bouchard performs the duties of Chairman and ChiefExecutive Officer but does notreceive any related compensation.Compensation paid to Econocom’sother executive directors totaledapproximately ¤2 million for 2005,including a variable portion of ¤0.8 million based on the achievement of individualobjectives.

Compensation paid to executivedirectors in 2005 (in €) (1)

Fixed portion 1,131,883Variable portion 856,042Total 1,987,925(1) Including social security charges but excludingattendance fees.

Compensation paid to executivemanagers (other than Boardmembers) in 2005 (in €) (1)

Fixed portion 2,923,000Variable portion 1,164,000Total 4,087,000(1) Including social security charges.

Stock options held by members ofEconocom’s corporate governancebodies

Number of options outstanding as of December 31, 2005 1,027,400

The Group has not entered into any contractual commitments withexecutive managers concerningemployment termination benefits that are not in line with standardpractices.

During 2005, the Group paid ¤0.1 million in fees to the StatutoryAuditors, PricewaterhouseCoopers,Reviseurs d’Entreprises S.C.C.R.L.,for their audit work, as well as¤120,000 for their review of the Group’s IFRS accounts as of January 1, 2004 and December 31, 2004 and ¤2,500 relating to legal work.


52 •

4. Information on the nature and scope of transactionsbetween Econocom Group SA/NV and its subsidiaries or members of its corporate governance bodies carriedout on other-than-arm’s-length terms

No such transactions were carried out in 2005 between Econocom Groupand its subsidiaries or members of the Board of Directors or ManagementCommittee. No loans or advances made to such parties were outstanding as of December 31, 2005.

6. Operation of the Boardof Directors

The Board of Directors meets as often as it deems necessary in the interests of the Company.

In 2005, the Board met on sevenoccasions, including two meetings to approve the interim and annualfinancial statements. The overallattendance rate was 66%.

The Board of Directors approves the Company’s overall strategyproposed by the Chairman,approves significant projects and oversees the provision ofresources for the attainment ofcorporate objectives. It is responsiblefor decision-making outside thescope of day-to-day management,and for development andrestructuring programs.

The Board is validly constituted only if at least half of its membersare present or represented.A director may represent one ormore other members of the Board.Decisions are adopted on the basisof a majority of votes. In the event of a split decision, the personchairing the meeting has the castingvote. In exceptional circumstances,when urgency and the best interestsof the Company so dictate,decisions may be adopted pursuantto the unanimous consent of thedirectors, expressed in writing.However, this procedure may notapply to meetings held to approvethe annual financial statements andthe issuance of authorized capital.

The Board of Directors hasimplemented an annual budgetprocedure and quarterly reviewprocess for all Group subsidiaries,including an examination of individual-entity data such as revenue, margins, costs, balancesheet items, cash flows and variousmanagement indicators.

The CEOs of the Group’s activitiesare responsible for overseeing theday-to-day management ofsubsidiaries. All subsidiaries transmitmonthly income statement andbalance sheet data to the Group onthe seventh and eighth working days,respectively, of the following month.

The data submitted are analyzed bya specialized reporting department,which submits a consolidatedsummary to Group Managementeach month.

5. Number of shares and stock options held by thedirectors and members of the Management Committeeof Econocom Group SA/NV (as of December 31, 2005)

Shares Options

Non-executive directors 2,467,358 0Executive directors• Jean-Louis Bouchard (indirectly) 14,288,550 0• Charles de Water 400,000 0• Luc Pintens 41,633 100,000• Jean-Philippe Roesch 217,222 200,000• Patrik Vandewalle 0 500,000Members of the Management Committee 0 0Total 17,414,763 800,000NB: The exercise price of options is determined on the basis of the same rules as described in section 10 (equal to or higher than the price published in the Moniteur Belge official gazette).



Annual budgets and condensedconsolidated results are submitted to the Board of Directors on a quarterly basis. The Internal AuditDepartment operates under theauthority of the Group’s DeputyManaging Director. Internal audits ofindividual subsidiaries are performedover a 12-month cycle. The findings of all internal control activities arecommunicated to the Company’sStatutory Auditors.

7. Committees of the Board of Directors

Pursuant to the bylaws, as amended by the ExtraordinaryGeneral Meeting on February 22,2000, the Board of Directors isauthorized to establish specificcommittees and to determine their tasks and operating rules.

The Management CommitteeThe Board of Directors used thisauthorization to set up a GroupManagement Committee, whosecreation was ratified by shareholdersat the Extraordinary General Meetingof May 18, 2004.

The role of this Committee is to implement the strategy defined bythe Board of Directors, recommendstrategic guidelines for the Group,coordinate the work of centralfunctional departments, and carryout any and all duties relating to day-to-day management.

On May 18, 2004, the Board ofDirectors appointed the followingpersons as members of theManagement Committee: Jean-Louis Bouchard, who acted as the Committee’s Chairman,Charles de Water, Jean-PhilippeRoesch, Patrik Vandewalle and Luc Pintens.

Charles de Water is Chief ExecutiveOfficer of the Financial ServicesActivity, and Patrik Vandewalle wasappointed Chief Executive Officer of Products and Solutions andManaged Services by the Board of Directors on January 18, 2005.

Jean-Philippe Roesch holds the position of Deputy ManagingDirector, and in this role heads upthe Group’s Financial Department.Patrik Vandewalle was appointed as Chief Operating Officer by the Board of Directors at its meetingon September 7, 2005.

Jean-Louis Bouchard has entrustedPatrik Vandewalle with the task of leading the ManagementCommittee as part of his duties as Chief Operating Officer. This decision not to participate inManagement Committee meetingssince September 2005 was madewith a goal of strengthening the Board of Directors’ supervisoryrole in relation to the Group’sexecutive management.

The Stock Option CommitteeA Stock Option Committee was set up in February 2003.

This Committee, which operatesunder the supervision of the Board of Directors, is responsible fordetermining the terms applicable to stock option grants and ensuringcompliance with plan requirements.

The Committee’s members comprise Rafi Kouyoumdjian,Gaspard Dürrleman and VincentWajs, appointed by the Board of Directors on May 18, 2004.

The Stock Option Committee met once in 2005 in order to authorize the grant of stockoptions to two Group managers, and to define the related terms and conditions. All of the Committeemembers attended this meeting.

The Audit CommitteeAt its May 18, 2004 meeting, the Board of Directors set up an Audit Committee, made up of two independent directors – Rafi Kouyoumdjian and Vincent Wajs.

The Audit Committee met four times in 2005, with all Committeemembers and the Group’s DeputyManaging Director in attendance.

Whenever it deems it appropriate,the Audit Committee invites the Statutory Auditors and the Head of Internal Audit to Committeemeetings.

The main responsibilities of the Audit Committee are to examine the quality and relevance of internal


54 •

and external audit engagements, as well as the suitability ofaccounting methods used, and the completeness and accuracy of financial information.One of the Committee’s tasks in 2005 was to assist the Board of Directors with selecting the Auditors of the Group and its subsidiaries.

8. Day-to-daymanagement

The Management Committee is responsible for the day-to-daymanagement of the Company. This Committee meets monthly to monitor performance data and assess the progress of the Group’s projects.

The subsidiaries also organizeManagement Committee meetingson a monthly basis. Participants at these meetings typically includethe CEO and CFO of the subsidiaryconcerned, and, where appropriate,the Technical Director, Sales &Marketing Director and HumanResources Director. Other partiesmay be invited to take part inmeetings to discuss specific issues,such as IT, public relations,corporate communications or legalmatters. In addition, in countrieswhere the Group’s three activities(Products and Solutions, ManagedServices, and Financial Services) areestablished, a monthly meeting isheld which is attended by the CEOsof the various local subsidiaries, to consider matters of commoninterest, such as finance, sales,

recruitment and corporatecommunications, and to fostersynergies among the differentactivities.

All major decisions concerningsubsidiaries are made by the Chairmen or CEOs of the subsidiaries, or jointly by twodirectors, or jointly by one directorand a member of the ManagementCommittee. In general, the subsidiaries have no significantdelegations of authority other than with respect to day-to-daymanagement. In 2005, the Groupissued a document setting out the limitations to the powers of Econocom’s senior managers.

9. Appropriation of netprofit and dividend policy

Econocom Group is committed to internally-financed development.Between 1995 and 2004, the dividend rose from ¤0.031 to ¤0.15, reflecting earnings growth.

The gross per share dividend to be recommended at the AnnualGeneral Meeting of May 16, 2006 is ¤0.16, up 6.7% over the previousyear, when the dividend rose 50%.This represents a payout rate of 33%.

10. Relations with majorshareholders

The transparency-related disclosuresmade to the Company designateEconocom International NV as the majority shareholder. To the bestof the Company’s knowledge, oneother shareholder, Vincent Wajs,

owns more than 5% of the capital(either directly or indirectly throughValgest). Relations with the majorityshareholder, Econocom InternationalNV, correspond to loans granted or received and the provision ofstandard services on arm’s-lengthterms.

11. Employee shareownership

Since November 1997, EconocomGroup and various subsidiaries andsub-subsidiaries have set up severalemployee stock option plans. An updated summary of the Group’srelated commitments as of December31, 2005 is provided next page.

These plans cover Econocom Groupshares listed on the Brussels stockexchange and Euronext Paris. For the purpose of allocating shares on the exercise of options,the Company may either sell the option holders’ existing shares or issue new shares by way of a capital increase.

The options are granted with a goal of involving employees,managers and executives moreclosely in the Group’s operations and business development.

Certain options are conditional uponthe achievement of the beneficiaries’personal objectives and may not be exercised if these objectivesare not met.

Options are granted under contractssigned between Econocom Groupand the beneficiary. These option



contracts are drawn up by the StockOption Committee and submitted for approval to the Board ofDirectors. Any directors who arebeneficiaries of a particular plan do not take part in this vote.

At its meeting on January 25, 2000,the Board of Directors approved the text of the option contracts. In application of Article 523 of theCommercial law, three directors whowere – or could become – optionbeneficiaries abstained from voting.The text of the standard stock optioncontract was amended to take into account the Belgian law of December 24, 2002. These amendments were approved by the Board of Directors on December 12, 2003.

The exercise price is set inaccordance with Article 45 of the law dated December 27,1984, and must represent at leastthe price published in the MoniteurBelge official gazette for the month

during which the option contract is signed (i.e., the average price for the preceding month).

Other than in certain specific cases,options may not be transferred and Econocom Group SA/NV doesnot hedge its exposure to changes in the share price.

During 2005, 835,436 options were exercised and 150,000 newoptions were granted to managers. Further to the exercise of stockoptions in 2005, the Board of Directors transferred 570,436existing shares held in treasury and issued 265,000 new shares. As of December 31, 2005, a total of1,435,912 options were outstanding,exercisable for the same number ofshares (5% of the Company’s totaloutstanding shares), andrepresenting a potential capitalincrease of ¤8.4 million (includingthe premiums on new sharesissued).

12. Treasury stock

The Extraordinary General Meeting of May 17, 2005 renewed the authorization given to the Boardof Directors to buy back a maximumof 3,000,000 of the Company’s own shares, in accordance with the applicable Belgian legislation, at prices ranging from ¤2 to ¤18,subject to a ceiling of 10% of total issued shares.

As of December 31, 2005,Econocom Group and itssubsidiaries held a total of 40,728 of the Company’s shares.

Number of unexercised options Expiration date Exercise price (in €)

1998 stock option plan 2,400 1.851999 228,000 November 2007 (*) 8.752001 3,240 February 2006 3.27

331,600 September 2006 Between 3.59 and 4.5024,000 January 2007 4.73

2003 60,000 January 2008 4.062004 100,000 December 2008 4.72

6,500 January 2009 5.31530,172 November 2009 Between 5.85 and 5.89

2005 50,000 January 2010 5.98100,000 May 2010 6.52

Total 1,435,912(*) Under the Belgian law of December 24, 2002, subject to the beneficiaries’ consent, the exercise period may be extended for a period not to exceed

three years, without any additional tax charge. Accordingly, the Stock Option Committee decided to extend the exercise period for options granted in 1999 by three years, thus amending the expiration date from November 2004 to November 2007.

56 •

CONSOLIDATED FINANCIAL STATEMENTS for the year ended December 31, 2005

Consolidated income statement and result per share

Consolidated balance sheet

Consolidated cash flow statement

Consolidated statement of changes in equity

Notes to the Consolidated financial statements


CONSOLIDATED INCOME STATEMENT – IFRS

Income statement for the year ended December 31, 2005

(in € thousands)

Note 12/31/2005 12/31/2004Revenue from continuing operations 2-4-1 550,944 602,393

Operating expenses (531,953) (584,559)Cost of sales (392,413) (447,264)Personnel costs 2-4-2 (79,493) (76,201)External expenses 2-4-3 (50,286) (50,198)Depreciation, amortization and provisions 2-4-4 (11,701) (12,890)Taxes (other than income taxes) (2,497) (2,043)Impairment losses on non-current assetsImpairment losses on current assets 2-4-5 3,826 4,615Other operating income 2-4-6 1,749 2,837Other operating expenses 2-4-6 (902) (3,700)Financial income/(expense), net – operating activities 2-4-7 (236) 285Impairment of goodwill

Operating profit 18,991 17,834Other financial income/(expense), net 2-4-8 38 (222)

Profit before tax 19,029 17,612Income tax 2-4-9 (5,168) (3,904)Share of profit of companies accounted for by the equity method 120

Profit from continuing operations 13,861 13,828Discontinued operations 2-2-6 239 (497)

Profit for the year excluding minority interests 14,100 13,331Minority interests 77 99

Profit for the year including minority interests 14,177 13,430Basic earnings per share - continuing operations 2-4-10 0.475 0.465Basic earnings per share - discontinued operations 0.008 (0.02)Basic earnings per share - total 0.483 0.448Diluted earnings per share - continuing operations 0.470 0.459Diluted earnings per share - discontinued operations 0.008 (0.02)Diluted earnings per share - total 0.478 0.442

58 •

CONSOLIDATED BALANCE SHEET – IFRS

Balance sheet for the year ended December 31, 2005

Assets(in € thousands)

Note 2005 2004 IFRS openingbalance sheet as

of Jan. 1, 2004A - Non-current assets 48,873 49,813 42,281

1 - Intangible assets 2-2-0 877 1,173 7662 - Goodwill 2-2-1 14,661 10,625 2,8753 - Property, plant and equipment 2-2-2 11,517 13,285 15,6303 - 1 Land and buildings 5,562 5,866 5,9803 - 2 Plant & equipment, fixtures & fittings 2,014 2,010 2,7383 - 3 Furniture and vehicles 883 1,083 1,6583 - 4 Other items of property, plant and equipment 340 70 8173 - 5 Non-current assets held under finance leases 2,718 4,256 4,4374 - Investment property 2-2-3 580 612 6435 - Financial assets 2-2-4 12,609 14,786 15,1975 - 1 Investments in subsidiaries accounted

for at historical cost 2 2 4505 - 2 Investments in companies accounted

for by the equity method 250 1285 - 3 Future value of refinanced equipment 4,567 5,777 9,2175 - 4 Other 8,040 8,757 5,4026 - Long-term receivables 2-2-5 6,295 6,993 8887 - Deferred tax assets 2-2-5 2,334 2,339 6,282

B - Current assets 227,921 243,350 300,4508 - Assets held for sale 2-2-6 324 10,775 12,0569 - Inventories 2-2-7 8,664 7,058 14,3109 - 1 Inventories of equipment

in the process of refinancing 5,033 3,526 9,1679 - 2 Other 3,631 3,532 5,14310 - Trade and other receivables 150,943 157,288 164,30410 - 1 Trade receivables 2-2-8 131,010 142,419 139,57410 - 2 Other receivables 2-2-9 19,933 14,869 24,73011 - Current tax assets 4,167 4,363 4,79612 - Prepayments 36 61 36713 - Cash and cash equivalents 2-2-10 60,065 60,048 100,99513 - 1 Short-term investments 18,700 14,368 17,50913 - 2 Cash at bank and on hand 41,365 45,680 83,48614 - Other current assets 2-2-9 3,722 3,757 3,622

Total assets 276,794 293,163 342,731

CONSOLIDATED BALANCE SHEET – IFRS

Balance sheet for the year ended December 31, 2005


Equity and liabilities(in € thousands)

Note 2005 2004 IFRS openingbalance sheet as

of Jan. 1, 2004Total equity 88,050 83,532 75,729

1 - Equity attributable to equity holders of the parent 2-3-1 87,686 83,182 74,969

1 - 1 Share capital 16,181 16,038 16,0381 - 2 Additional paid-in capital 55,038 54,072 54,0721 - 3 Reserves 2,548 2,168 20,4301 - 4 Treasury shares (258) (2,526) (8,091)1 - 5 Profit/(loss) for the year 14,177 13,430 (7,480)2 - Minority interests 2-3-1 364 350 760

Liabilities 188,744 209,631 267,002A - Non-current liabilities 10,652 12,821 26,273

3 - Non-current liabilities bearing interest 2-3-4 7,029 6,788 9,6013 - 1 Bank borrowings3 - 2 Finance lease liabilities 6,931 6,603 9,1913 - 3 Bank overdrafts 16 82 2363 - 4 Other borrowings 82 103 1744 - Non-current liabilities not bearing interest 75 20 145 - Long-term provisions 2-3-2 1,245 2,187 10,9366 - Long-term post-employment

benefit obligations 2-3-3 585 451 4897 - Deferred tax liabilities 1,718 3,375 5,233

B - Current liabilities 178,092 196,810 240,7298 - Liabilities held for sale 2-2-6 245 7,064 8,0499 - Current liabilities bearing interest 2-3-4 10,810 10,002 24,1579 - 1 Bank borrowings 1,123 4,092 12,6589 - 2 Finance lease liabilities 790 1,880 2,6759 - 3 Bank overdrafts 4,081 840 3,2059 - 4 Other borrowings 4,816 3,190 5,61910 - Short-term provisions 2-3-2 4,950 11,097 14,57811 - Current tax liabilities 2,702 4,243 8,25612 - Trade and other payables 129,842 123,591 140,87512 - 1 Trade payables 101,672 96,005 105,01612 - 2 Customer prepayments 1,530 1,680 1,11812 - 3 Other payables 2-3-5 26,640 25,906 34,74113 - Other current liabilities 2-3-5 29,543 40,813 44,814

Total equity and liabilities 276,794 293,163 342,731

60 •

CONSOLIDATED CASH FLOW STATEMENTFiscal years 2004 and 2005

(in € thousands)

2005 2004Profit for the year (including minority interests) 13,938 13,927Income tax expense 5,168 3,904Minority interests (77) (99)Amortization, depreciation and impairment 9,921 6,890Gains on sales of financial assets 1,287 272Share of profit of companies accounted for by the equity method (120)Change in provisions (7,243) (12,220)

Operating cash flow (a) 22,994 12,554

Change in inventories (1,537) 9,459Change in receivables due in more than 1 year 611 (6,657)Change in receivables due within 1 year 12,019 10,818Change in deferred charges 57 (134)Change in trade payables (460) (11,489)Change in other payables due within 1 year (3,046) (17,165)Change in deferred income and accrued charges (8,038) (5,262)

Change in working capital (b) (394) (20,430)

Income tax expense (c) (5,168) (3,904)

Net cash provided by/(used) in operating activities (a+b+c = d) 17,432 (11,780)

Cash flows from investing activitiesAcquisition of intangible and tangible fixed assets (2,218) (2,871)Disposal of intangible and tangible fixed assets 858 4,088Acquisition and disposal of lease assets (10,974) (7,890)Acquisition of long-term investments (1,738) (13,358)Disposal of long-term investments 3,762 14,840Acquisition of shares in related parties (1,126) (9,764)Disposal of shares in related parties 2,903 4,837

Net cash provided/(used) by investing activities (e) (8,533) (10,118)

Financing activitiesIssuance of shares and share premiums 1,215Change in long-term borrowings 177 (3,075)Change in short-term borrowings 1,074 (12,579)Acquisition of treasury stock (9,272) (6,728)Disposal of treasury stock 1,900 4,128Dividends paid during the year (4,452) (3,084)

Net cash by (used in) financing activities (f) (9,358) (21,338)

Discontinued operations 239 (497)Change in currency translation adjustments 236 (135)

Change in cash and cash equivalents (d+e+f) 16 (43,868)

Information on the cash flow statement set up in Note 2-5-1.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


(in € thousands, except for the number of shares)

Number Share Additional Treasury Other Reserves related to Minority Total of shares capital paid-in stock reserves employees benefit interests

capital obligations

December 31, 2003 31,500,000 16,038 54,072 12,950 (8,091) 74,969 761 75,730Adjustments at fair value 40 40 40Currency translation adjustments (240) (240) (240)Other changes 54 54 (312) (258)Net income/(expense) recognized directly in equity 0 0 (146) 0 (146) (312) (458)Result for the year 13,430 13,430 (99) 13,331Total of revenues and expenses 0 0 13,284 0 13,284 (411) 12,873Dividends paid (3,092) (3,092) (3,092)Changes related to employee benefits 60 60 60Increase in capital 0 0Treasury stock (1,500,000) (7,604) 5,565 (2,039) (2,039)December 31, 2004 30,000,000 16,038 54,072 15,598 (2,526) 83,182 350 83,532Adjustments at fair value 301 301 301Incurred loss linked to the exercise of stock-options (treasury stock) (1,794) (1,794) (1,794)Currency translation adjustments 423 423 423Other changes (32) (32) (14) (46)Net income/(expense)recognized directly in equity 0 0 (1,102) 0 (1,102) (14) (1,116)Result for the year 14,177 14,177 (77) 14,100Total recognized income for the year 0 0 13,075 0 13,075 (91) 12,984Dividends paid (4,452) (4,452) (4,452)Changes related to employee benefits 350 350 350Increase in capital 265,000 143 966 1,109 105 1,214Treasury stock (1,265,000) (7,846) 2,268 (5,578) (5,578)December 31, 2005 29,000,000 16,181 55,038 16,725 (258) 87,686 364 88,050

Reserves by category and profit 2005 Change 2004 Change 2004Unavailable reserves: 4,383 (2,267) 6,650 (1,630) 8,280

- legal reserves 1,604 1,604 1,604- treasury stock reserves 259 (2,267) 2,526 (1,630) 4,156- other unavailable reserves 2,520 2,520 2,520

Distributable reserves 807 349 458 40 418Reserves linked to employee benefits 410 350 60 60 0Currency translation adjustments 183 423 (240) (240) 0Other reserves 8,096 2,874 5,222 6,478 (1,256)Retained earnings 2,846 (602) 3,448 (2,060) 5,508Total reserves and profit 16,725 1,127 15,598 2,648 12,950Unavailable reserves limiting cash transfer between the subsidiaries and the parent company amount to ¤9,669,000.Changes in equity are commented in note 2-3-1.Adjustments at fair value are commented in note 2-5-3-3.

62 •

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the year ended December 31, 2005

63 • 2-1 Generalities2-1-1 Accounting policies

2-1-2 Impact of the first time adoption of IFRS

2-1-2-1 Methods used for the first time adoption of IFRS

2-1-2-2 Description of the main IFRS adjustments

2-1-2-3 Impact on equity as of January 1, 2004

2-1-2-4 Impact on the 2004 income statement

2-1-2-5 Impact on equity as of December 31, 2004

2-1-2-6 IAS/IFRS impact on the opening balance sheet

as of January 1, 2004

2-1-2-7 IAS/IFRS impact on the 2004 income statement

2-1-2-8 IAS/IFRS impact on the balance sheet

as of December 31, 2004

2-1-2-9 Impact on the cash flow statement

2-1-3-1 Changes in the scope of consolidation

2-1-3-2 List of consolidated companies

2-1-4 Segment information

93 • 2-2 Balance sheet - Assets2-2-0 Intangible assets

2-2-1 Goodwill

2-2-2 Property, plant and equipment

2-2-3 Investment property

2-2-4 Financial assets

2-2-5 Other non-current assets

2-2-6 Assets and liabilities held for sale

and discontinued operations

2-2-7 Inventories

2-2-8 Trade receivables

2-2-9 Other receivables and other current assets

2-2-10 Cash and cash equivalents

102 • 2-3 Balance sheet - Liabilities2-3-1 Equity

2-3-2 Long- and short-term provisions

2-3-3 Pension and other post-employment benefit

obligations

2-3-4 Current and non-current liabilities

2-3-5 Other payables and other current liabilities

109 • 2-4 Income statement2-4-1 Revenue from continuing operations

2-4-2 Personnel costs

2-4-3 External expenses

2-4-4 Depreciation, amortization and provisions

2-4-5 Impairment losses on current assets

2-4-6 Other operating income and expenses

2-4-7 Financial income and expense relating

to operating activities

2-4-8 Other financial income and expense

2-4-9 Income taxes

2-4-10 Earnings per share

118 • 2-5 Other information2-5-1 Notes to the cash flow statement

2-5-2 Risk factors

2-5-3 Off-balance sheet commitments

2-5-4 Contingent liabilities

2-5-5 Management remuneration

2-5-6 Related-party transactions

2-5-7 Events after the balance-sheet date

2-5-8 Assessments made by management

and sources of uncertainty


The consolidated financialstatements are presented inthousands of euros, unlessotherwise specified.

C. GoodwillIn accordance with IFRS 3, the assets, liabilities and contingentliabilities acquired/assumed as part of a business combinationare measured at fair value at the acquisition date.

Goodwill represents the excess ofthe cost of an acquisition over thefair value of the Econocom Group’sequity in the net identifiable assets,liabilities and contingent liabilities of the acquired company at theacquisition date.

The cost of an acquisitioncorresponds to the fair values, at the date of exchange, of assetsgiven, liabilities incurred or assumed,and equity instruments issued by the acquirer, plus any costs directlyattributable to the acquisition.

The Group applies the purchasemethod in accounting for goodwill,recording goodwill in the balancesheet at its cost less anyaccumulated impairment losses.

B. Scope and methods of consolidationCompanies over which the Econocom Group directly or indirectly exercises exclusivecontrol are fully consolidated.

Companies controlled and operatedjointly by the Econocom Group and a limited number of partners are proportionately consolidated.

Companies over which the Groupdirectly or indirectly exercisessignificant influence are accountedfor by the equity method. Significantinfluence is deemed to exist whenthe percentage of voting rights heldis equal to or more than 20%.

Consolidation and deconsolidationtake place on the date of acquisitionor sale of the related shares.

All of the companies in the Econocom Group are fullyconsolidated. A list of theseconsolidated companies is provided in note 2-1-3 – Scope of consolidation.

All intercompany balances and transactions are eliminated on consolidation.

Minority interests are reported as a separate component of equity,and are also presented separately in the income statement.

A. Basis of preparationIn accordance with EC regulation1606/2002 dated July 19, 2002applicable to companies listed on a regulated stock exchange inone of the European member states,the consolidated financial statementsof Econocom Group and itssubsidiaries (the “Econocom Group”)for the year ended December 31,2005 have been prepared inaccordance with InternationalFinancial Reporting Standards (IFRS)and International Financial ReportingInterpretations Committee (IFRIC), as adopted by the European Unionand applied by the Group sinceJanuary 1, 2005.

The consolidated financialstatements were previously preparedin accordance with Belgian GAAP(section II of the Royal Decree of January 30, 2001).

The Econocom Group’s 2005financial statements contain an opening IFRS balance sheet as of January 1, 2004 prepared inaccordance with IFRS 1 – First-timeAdoption of International FinancialReporting Standards, as well as2004 pro forma information.

Information on the accountingoptions selected by the EconocomGroup in accordance with IFRS 1 are described in note 2-1-2 – Impactof the first-time adoption of IFRS.


2-1-1 Summary of significant accounting policies


64 •

C.1. GoodwillAny excess of the cost of acquisitionover the Group’s interest in the netfair value of the identifiable assetsand liabilities of a company acquired,determined at the date of acquisition,is accounted for as “goodwill” in assets in the balance sheet.

Up until January 1, 2004, goodwillwas amortized over periods of five or ten years, in accordance withBelgian GAAP.

In accordance with IFRS 3 –Business Combinations, goodwill is no longer amortized but is testedfor impairment at least once a year and more often if there is an indication of impairment. For the purpose of these tests,goodwill is allocated to Cash-Generating Units (CGUs), which correspond to the smallestidentifiable groups of assetsgenerating cash inflows that arelargely independent of the cashinflows from other assets or groupsof assets.

The procedures for testing CGUs for goodwill impairment are described in note E.6.

Impairment losses recognized for goodwill may not be reversed.

C.2. Negative goodwill Any excess of the Group’s interest in the net fair value of the identifiableassets and liabilities of a companyacquired over the cost of the acquisition is accounted for as negative goodwill.

Negative goodwill is recognizedimmediately in the income statementduring the period in which the acquisition takes place.

D. Translation of the financial statements of foreign operationsBalance sheets denominated in currencies other than the euro aretranslated into euros at the year-endexchange rate. Income statementsare translated at the averageexchange rate for the year. The resulting translation differencesare recorded in equity until the activities of the foreign entity are sold, at which point they aretaken to the income statement.

E. Non-current assetsE.1. Intangible assets In accordance with IAS 38 –Intangible Assets, acquired intangibleassets are stated at cost less anyaccumulated amortization and anyaccumulated impairment losses.

The Econocom Group has two typesof intangible assets:• Licenses, which are identifiablenon-monetary assets without any physical substance, whoseeconomic benefits will flow to the enterprise. These assets aremeasured at cost. • Acquired software applications,which are recognized as intangibleassets except when they areindispensable for the operation of a computer, in which case they are recognized as computerhardware. Subsequent expenditure is recognized as incurred, unless itgenerates probable future economicbenefits that can be directlyattributed to the expenditure, and the asset arising as a result of the expenditure is identifiablewithin the meaning of IAS 38.

After initial recognition intangibleassets are carried at their cost lessany accumulated amortization andany accumulated impairment losses.

Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003Closing Average Closing Average Closing Average

rate rate rate rate rate rateUSA 0.842318 0.799955 0.734160 0.802752 0.791766 0.883517UK 1.472863 1.464372 1.418339 1.468497 1.418842 1.450110Switzerland 0.643956 0.647098 0.648130 0.647442 0.641890 0.659127



and recovers ownership at the endof the lease term by repurchasingthe equipment.

Refinanced contractsRefinanced contracts are accountedfor as follows:• related revenue corresponds to the present value of future minimumlease payments (corresponding to the payments that the lessee is required to make throughout the lease term);• the cost of sales represents the purchase cost of the asset;• the Company’s residual interest in the leased assets corresponds to an estimated market value at the end of the lease term, calculatedusing an accelerated diminishingbalance method of depreciation,based on the original purchase costof each item of equipment. The present value of this residualinterest is deducted from the cost of sales;• any positive difference between the residual interest and the residualvalue (repurchase commitment) is recorded as an asset under non-current financial assets. If thisdifference is negative, it is classifiedas a liability.

PC Leases and Budget LeasesPC Leases and Budget Leases are contracts whereby the lesseepays a fixed rental over the contractperiod for equipment, software andother services delivered progressivelyover the period of the contract.

B. DepreciationDepreciation is calculated using the diminishing balance method for computer equipment and thestraight-line basis for other assets, in both cases based on cost lessany residual value.

It starts from the date on which an asset is ready for use and iscalculated over the estimated usefullife of the asset concerned.

Useful lives (in years)

Buildings 20 - 50 Fixtures 10Computer equipment 3Vehicles 5Furniture 10

E.3. Leases

E.3.1. Finance leasesThe Group’s finance leases are mainly refinanced contracts,whereby equipment and relatedcontracts are sold to refinancinginstitutions at an all-inclusive pricerepresenting the present value offuture minimum lease payments andthe residual value of the equipment.The Group undertakes to repurchasethe equipment at the residual valueupon expiration of the lease. Leasepayments due by lessees are paiddirectly to the financing institutionson a non-recourse basis, whichmeans that the Group transfers the risk of payment default. From alegal standpoint, Econocom Grouprelinquishes ownership of theequipment on the date of sale

Intangible assets are amortized by the straight-line method over theiruseful lives, which range from one tothree years for software applicationsand licenses.

E.2. Property, plant and equipmentIn accordance with IAS 16 –Property, Plant and Equipment, itemsof property, plant and equipment arecarried at cost less any accumulateddepreciation and any accumulatedimpairment losses, except for land which is not depreciated.

A. Acquisition CostThe cost of items of property, plant and equipment corresponds to their purchase price, includingcosts directly attributable to theacquisition. Subsequent expenditureis recognized in the carrying amountof an item of property, plant andequipment if the recognitionprinciples under IAS 16 are met, i.e.,if it is probable that future economicbenefits associated with the recognized asset will flow to the entity and the cost of theasset can be measured reliably.Assets held under leases representnon-refinanced contract extensionswhich are accounted for as operatingleases. They are recorded in thebalance sheet and are depreciatedon a straight-line basis to write themdown to their residual value whichrepresents the Company’s residualinterest in the asset at the end of the lease term.


66 •

These contracts are also refinancedand are accounted for as follows:• Margins are deferred in the sameway as for other types of financeleases. • Contract margins are recognizedprogressively as assets are delivered,pro rata to the amount of eachdelivery. The Company’s residualinterest in the assets is recognizedas described above, in line with thedeliveries made.

Specific case of bridges on TROcontractsSubsidiaries in the Financial ServicesActivity developed sales of a newtype of lease contract, a TRO(Technology Refresh Option)contract, in 2005. These contracts,which authorize clients to renew partof their equipment each half year inreturn for a lengthening of the leasecommitment period, systematicallystart with an investment period –termed a “collection period” – which precedes the start of the initiallease period.In order to finance investments made during the collection period, a non-recourse sale is made (so that there is no longer any clientcredit risk) to a refinancing institution.This sale is either a sale of thestandalone investment or of theinvestment and the first “collection”lease payments. Econocom treatsthis refinancing transaction as a salegenerating revenues (without margin)and derecognizes the relatedequipment assets. On completion of the collectionperiod, the equipment will berepurchased by the leasing

subsidiary, then leased to the clientand, lastly, immediately resold on a non-recourse basis with the entireseries of lease payments acceptedby the client.

Recognition of revenue from ordinaryactivities during the collection periodis justified under IAS 18 by thetransfer to the refinancing institution of the risks and rewards inherent to ownership of the equipment. In the opinion of the Board ofDirectors, this presentationcorresponds best to the substanceof the transaction, which is dealt with for administrative reasons in two phases: a collection periodand a lease rental period. The factthat the equipment is repurchased at the end of the collection periodcould suggest that this transaction is purely a financing transaction but is, in the opinion of the Board of Directors, irrelevant in terms of the substance of the operation.Contracts in the collection period in respect of which such refinancinghas been put in place and in respectof which sale of future leasepayments had not taken place at December 31, 2005 represent¤10.3 million. This refinancing ofinvestments in the collection periodthus contributed ¤10.3 million to cash and cash equivalents(presented in note 2-2-10) at December 31, 2005.

Non-refinanced contractsNon-refinanced contracts mainlyconcern Promodata SNC and arebeing transferred progressively to Econocom Location SAS. They are accounted for as follows:

Balance sheetThe value of the lease receivables isrecorded in the balance sheet ratherthan the value of the equipment.Income statementIncome and expense is recognizedup-front for the following line items: • Revenue: present value of futureminimum lease payments • Cost of sales: fair value of assets(purchase cost)• The monthly financial income fromrefinancing contracts is recognizedon a periodic basis.

E.3.2. Operating leasesOperating leases – primarilyrepresenting contract extensions –are not material. The EconocomGroup retains all the risks relating to operating leases as the significantrisks and rewards incidental toownership of the assets concernedare not transferred.

Balance sheetThe leased equipment is recorded as an asset in the balance sheet and depreciated on a straight-linebasis to write it down to its residualvalue which represents theCompany’s residual interest in theasset at the end of the lease term.



recorded as an operating expenseand allocated in priority againstgoodwill. An impairment loss for a CGU isreversed, if, and only if, there hasbeen a change in the estimates usedto determine the CGU’s recoverableamount since the last impairmentloss was recognized.

In the case of the Econocom Group:a) Determination of CGUsCGUs correspond to the Group’sbusinesses by country. Goodwill is tested by business and by countryand by comparison between the carrying amount of the assets in the CGU and the recoverableamount of the CGU. Buildings are tested individually.

b) The manner in which the recoverable amount of CGUsis determined is as followsThe valuation is made by referenceto the net discounted future cashflows, taking a terminal value intoaccount, based on a constant futuregrowth rate of revenues generatedby the asset being valued. The projections are based over a maximum period of 4 years. The discount rate used for futurecash flows is the pre-tax WACC(weighted average cost of capital) of the business. The growth rate isadapted depending on the economicdevelopment of each of thebusinesses.If this valuation identifies animpairment loss, it is recognizedunder “Impairment of goodwill”.In accordance with IAS 36,provisions for impairment of goodwillare irreversible.

E.5. Other financial assetsInvestments in non-consolidatedcompanies are recorded at fair value.Any unrealized gains or losses are recognized directly in equity.When the investment is sold, theaccumulated gain or loss previouslyrecognized in equity is taken as profitor loss for the period.

E.6. Impairment of non-currentassetsIn accordance with IAS 36 –Impairment of Assets, property, plantand equipment and intangible assetsare tested for impairment wheneverthere is an indication that the assetmay be impaired. At each reportingdate the Group assesses whetherany such indication exists.Impairment tests are carried outannually for assets with indefiniteuseful lives, which for the EconocomGroup exclusively represent goodwill.Assets are grouped into CashGenerating Units (CGUs) for thepurpose of impairment testing. A CGU is the smallest identifiablegroup of assets that generates cashinflows that are largely independentof the cash inflows from other assetsor groups of assets.

The value in use of a CGU isdetermined based on the presentvalue of the future net cash flowsexpected to be derived from the CGU.

A CGU is impaired if its carryingamount exceeds its recoverableamount – which represents thehigher of its fair value less costs to sell and its value in use. In such a case an impairment loss is

Income statementIncome statement entries are madeon a periodic basis with the invoicedlease payment recorded as revenueand the depreciation describedabove recorded as an expense.

E.3.3. Residual valueAs stated above, leased equipmentis repurchased from refinancinginstitutions at the end of the leaseterm. The residual value of theseassets represents a liability – whichis generally long-term – and isdiscounted using the same methodas for the related lease. The Econocom Group’s residualinterest in the transferred assetscorresponds to an estimated marketvalue at the end of the lease termcalculated using an accelerateddiminishing balance method ofdepreciation, based on the originalpurchase cost of each item ofequipment.This residual interest represents along-term asset which is discountedusing the same method as for the related lease.

E.4. Investment propertyIn accordance with IAS 40 –Investment Property, investmentproperty is property held directly or under a finance lease to earnrentals and/or for capitalappreciation. Investment property is measuredinitially at its cost, includingtransaction costs. It is subsequentlymeasured at cost less accumulateddepreciation and accumulatedimpairment losses.


68 •

E.7. Non-current assets held forsale and discontinued operationsIn accordance with IFRS 5 – Non-current Assets Held for Saleand Discontinued Operations, assets held for sale are presented on a separate line of the balancesheet and are measured at the lowerof their carrying amount and fairvalue less costs to sell.

An asset is classified as “held for sale” only if the sale is highlyprobable within a reasonabletimeframe, if the asset is available for immediate sale in its presentcondition, and if Management hasdrawn up a plan to sell the asset.

F. InventoriesInventories are measured at the lower of cost and net realizablevalue as required under IAS 2 –Inventories. Net realizable value is the estimated selling price in the ordinary course of business lessthe estimated costs of completionand the estimated costs necessaryto make the sale. The cost of inventories is allocatedusing the first-in first-out (FIFO)method. It includes all costs ofpurchase (purchase price, importduties and other unrecoverabletaxes, and transport and handlingcosts, less trade discounts and rebates), costs of conversionand other costs incurred in bringingthe inventories to their presentlocation and condition.

For the Financial Services activity, the equipment or software purchasedand allocated to a contract is nowrecognized in inventories until the beginning of the leasing contract.

G. Prepaid expensesPrepaid expenses correspond toexpenses paid during a given periodthat relate to subsequent periods.Prepaid expenses are recordedunder “Other current assets”.

H. Personnel costsPersonnel costs include all sumspaid to and accrued by theCompany in relation to its salariedemployees, including employeeprofit-sharing and stock optionexpenses.

I. ProvisionsIn compliance with IAS 37 –Provisions, Contingent Liabilities and Contingent Assets, a provision is recognized when the Group has a present (legal or constructive)obligation as a result of a past event,it is probable that an outflow ofresources embodying economicbenefits will be required to settle the obligation, and a reliable estimatecan be made of the amount of the obligation.

An obligation to restructure ariseswhen an entity has a detailed formal plan for the restructuring and announced its main features to those affected by it or has startedto implement the plan.

The amount recognized as a provision represents the bestestimate of the present value of the expenditure expected to be required to settle the presentobligation at the balance sheet date. The discount rate reflects currentmarket assessments of the timevalue of money and the risks specific to the liability.

J. Employee benefitsThe Econocom Group’s employeesmay receive termination benefits on retirement in addition to statutorypension benefits payable inaccordance with the legislation in force in the countries concerned.These forms of employee benefitsare funded by the Econocom Groupunder defined contribution plans(pensions) and defined benefit plans(termination benefits).

The Econocom Group’s obligationunder defined contribution plans is limited to the payment of contributions provided for in the contract. Contributions that fall due more than 12 monthsafter the balance sheet date arediscounted, using a rate determinedby reference to market yields on highquality corporate bonds.

A defined benefit plan defines anamount of benefits that an employeewill receive. Under this form of plan,the actuarial risk (that benefits will cost more than expected) and investment risk (that assetsinvested will be insufficient to meetexpected benefits) fall to the Group.



Deferred tax assets are onlyrecognized to the extent that it is probable that taxable profit will be available against whichdeductible temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the local tax rates that are expected to apply to the period when the asset is realized or the liability is settled.

M. Share-based paymentStock purchase and subscriptionoptions are granted to Group senior management and certain non-managerial employees. As prescribed in IFRS 2 – Share-based Payment, stock options are measured at the grant date by reference to the fair value of the equity instruments granted.

The related expense is recognized in personnel costs over the vestingperiod, with a correspondingincrease in equity.

Only plans granted to employeesafter November 7, 2002 that had notvested as of January 1, 2005 havebeen measured at fair value andrecognized in personnel costs. Plans granted prior to November 7,2002 have not been measured or recognized.

In the income statement, incomeand expenses relating to non-monetary assets and liabilities aretranslated at historical cost. Otherincome and expenses are translatedat the average exchange rate of themonth of their recognition. Foreignexchange gains and losses arisingfrom application of this method aretaken to financial income / (expense)in the income statement.

L. Income taxesThe line “Income tax” includes bothcurrent taxes (payable on taxableprofit for the period and anyamendments from prior years) and deferred taxes.

In accordance with IAS 12 – IncomeTaxes, deferred taxes are recognizedfor all time differences between the carrying amount of assets and liabilities and their tax base, as well as for unused tax losses.Time differences are deemed to beso when it is probable that they willreverse in the foreseeable future.

No deferred taxes are recorded for temporary differences arising onthe following: i) the initial recognitionof goodwill, because goodwill ismeasured as a residual and therecognition of a deferred tax liabilitywould increase the carrying amountof goodwill, and ii) the initialrecognition of an asset or liability in a transaction which a) is not abusiness combination, and b) at thetime of the transaction affects neitheraccounting profit nor taxable profit.

The amount of the liability iscalculated by independent actuaries.

Retirement termination benefits and other long-term benefits are recorded under liabilities and are measured at their presentvalue at the balance sheet date. The contra-entry to all of the relatedmovements is recorded in expenses.The discount rate applied isdetermined by reference to marketyields on high quality corporatebonds.

K. Translation of foreigncurrency transactionsIn accordance with IAS 21 – The Effects of Changes in ForeignExchange Rates, transactionsdenominated in a foreign currencyare translated into the functionalcurrency at the exchange rateprevailing on the transaction date.

Foreign-currency monetary items are revalued at each balancesheet date using the closing rate. Non-monetary items that aremeasured in terms of historical costin a foreign currency are translatedusing the exchange rate at the dateof the transaction, and non-monetaryitems that are measured at fair valuein a foreign currency are translatedusing the exchange rates at the datewhen the fair value was determined. Exchange differences arising fromthese revaluations of monetary itemsare recorded in the incomestatement.


70 •

In the case of the Econocom Group:

a) Equity instrumentsIn accordance with IFRS 2, optionsare valued at the date of grant. To perform this valuation, theEconocom Group applied the Black& Scholes model. Changes in valuesubsequent to the date of grant haveno impact on this initial valuation.

The value of options notablydepends on their expected duration,as identified in the special purposecontracts signed between eachbeneficiary and the Group. This valueis weighted by the probability, at the balance sheet date, that thebeneficiary will attain the objectiveswhich determine, if applicable, his orher right to exercise the options. The value is then recognized inpersonnel costs on a straight-linebasis over the period between the date of grant and the vestingdate (i.e., the date at which rights to the options vest) with an equaland opposite double entry beingrecognized through equity.

b) International plan for the grantof Phantom SharesPhantom Shares are a bonus rightgranted to all persons who wereemployees of the Econocom Groupon April 30, 2005, payable on March31, 2008. This bonus will only bepayable if, firstly, the individual is still an employee of the EconocomGroup on March 31, 2008, and,secondly, the Econocom share pricereaches an average of at least ¤12 in March 2008.

The amount of the bonus due to the eligible employees is equal to the difference between theaverage share price on March 2008and ¤6. If the average share priceattains or exceeds ¤12, the bonuswill be equal to the differencebetween the average share price and ¤12. The amount obtained is then multiplied by 350.

Because this right is characterizedby an activation threshold and thusconstitutes a digital option, modelingwas entrusted to an independentfirm of actuaries which built aspecific binomial model enabling the amount of the bonus to bemeasured at that balance sheet date.

This bonus will be paid as standardcompensation on the employees’pay slips and is thus recognized in personnel costs, after taking intoaccount the social security costsspecific to each country, with a corresponding liability beingrecognized in the balance sheet.

N. Treasury stockAll treasury stock held by the Econocom Group is recorded as a deduction from equity atacquisition cost. Gains or losses on the disposal of treasury shares(net of tax) are recorded directly in equity and do not therefore impact profit for the period.

O. Financial instruments:recognition andmeasurementThe Group recognizes and measuresfinancial assets and liabilities inaccordance with IAS 39 – FinancialInstruments: Recognition andMeasurement.

Financial assets and liabilities includenon-current assets and currentassets, such as trade receivables,money market securities andsecurities held for sale, includingderivatives (which the EconocomGroup does not use), as well as cash and cash equivalents.

Financial liabilities encompass loans and other borrowings, bank overdrafts, derivatives and trade payables.

O.1. Financial assets and liabilitiesat fair value through profit or loss,and held-to-maturity investmentsFinancial assets and liabilities at fairvalue through profit or loss areclassified as held for trading – i.e.,they are acquired or incurredprincipally for the purpose ofgenerating gains through short-termfluctuations in the reference price.

Held-to-maturity investments are non-derivative financial assetswith fixed or determinable paymentsand fixed maturity that the entity has the positive intention and abilityto hold to maturity.

None of the Group’s financial assetsor liabilities are classified in thesetwo categories.



At each balance sheet date, they aremeasured at amortized cost usingthe effective interest method.

O.5. Derivatives and hedgingtransactions Derivatives may be designated ashedging instruments, correspondingeither to fair value hedges or cashflow hedges. A fair value hedgeenables an entity to hedge itsexposure to changes in fair value of an asset or liability that areattributable to a particular risk, such as fluctuations in exchangerates. A cash flow hedge is used to hedge the exposure to variabilityin cash flows associated with anexisting or future asset or liability.Hedge accounting is only applied if the related hedging relationship is clearly defined and documentedand if its effectiveness can bedemonstrated.

The Group does not use anyhedging instruments, as only a smallportion of its business is conductedin currencies other than the euro.

Equity derivatives are measured at fair value. They are classifiedunder equity if, and only if, it isstipulated in the contract that a fixedamount of shares will be exchangedfor a fixed amount of liquid assets.The premium on the derivative is charged against equity at the transaction date.

If the derecognition criteria are met, the accounting treatment is the same as for a disposal.

If the derecognition criteria are notmet, the assets are retained on thebalance sheet. In this case any fundsreceived from the transfer of theassets are considered as borrowingssecured by the transferred assets.

O.3. Available-for-sale financialassetsAvailable-for-sale financial assetsinclude money market funds and shares in non-consolidatedcompanies.

They are recognized at fair value at the transaction date, including any transaction costs. After initialrecognition, they are measured atmarket value, which the EconocomGroup deems to be their fair value.

Any changes in market value are recorded in equity. These assetsare tested for impairment when there is objective evidence that theyare impaired. Impairment losses are recorded in the incomestatement and may be reversedthrough profit or loss.

O.4. Bank borrowings and otherfinancial liabilitiesBank borrowings and other financialliabilities are recognized at fair valueat the transaction date. In mostcases, this corresponds to the priceagreed at the time of the transaction,plus any transaction costs.

O.2. Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an activemarket and which the entity doesnot intend to sell in the near term.Trade receivables form part of thiscategory.

These assets are recognized at fair value at the transaction date(or commitment date), including anytransaction costs. At each balancesheet date, they are measured atamortized cost using the effectiveinterest method. They are tested for impairment at each balance sheet date when there is objectiveevidence of impairment. Whereappropriate, provisions for the risk of non-recovery are recorded in the income statement, which may be subsequently reversed.

Derecognition Loans and receivables arederecognized when: • the contractual rights to the cashflows from the asset expire;• the asset has been transferred,i.e., the contractual rights to receivethe cash flows of the asset havebeen transferred as well assubstantially all the risks and rewardsof ownership, or control over the asset.

If the entity retains control over the asset, it retains in its balancesheet the portion of the asset that has not actually been sold.


72 •

P. Cash and cashequivalentsCash and cash equivalents consistof current account balances, units in money market funds and money-market securities which can be soldon short notice and which do notcarry a significant risk of impairmentin the event of changes in interestrates. Short-term investments aremarked to market at each balancesheet date.

Q. Presentation of theincome statementQ.1. RevenueIn accordance with IAS 18 –Revenue, the Group recognizesrevenue from the sale of goods and rendering of services when it is probable that future economicbenefits will flow to the entityconcerned and these benefits can be measured reliably. Revenue is measured at the fair value of the goods and/or services delivered,net of VAT, taking into account theamount of any trade discounts andvolume rebates allowed by the entity,and after eliminating inter-companytransactions.

The sale of goods is recognized onlywhen the entity has transferred tothe buyer the significant risks andrewards of ownership of the goods.

Revenue generated from therendering of services is recognizedby reference to the stage ofcompletion of the transaction at the balance sheet date. The stage of completion is assessedbased on the work performed. For Financial Services activities, IAS 17 is the standard applied forrevenue recognition. This dependson the type of contract as specifiedin policy E.3 above.

Q.2. Discontinued operationsThe income statement caption“Discontinued operations”corresponds to profit or loss for the period, net of taxes, of acompany or group of major assets(disposal group) that is held for sale,or of a business activity that has been discontinued.

R. Segment informationIn accordance with IAS 14 –Segment Information, the EconocomGroup uses business segments as its primary reporting format and geographical segments as its secondary reporting format.

In 2005 the Group’s operatingactivities were organized around the three following businesssegments:• Managed Services: modularoutsourcing solutions.• Products and Solutions: servicesranging from the sale of commodities(PCs, servers, printers and licenses)to systems integration. • Financial Services: the financing of ICT infrastructures.

The Group’s geographical segments correspond to the following six sectors: France, Belgium/Luxembourg, the Netherlands, Spain, Italy and other countries.

The Group’s segment reporting is prepared based on the sameaccounting methods as those used for the consolidated financialstatements.

S. Other informationCurrent assets and liabilities are those assets and liabilities that the entity expects to be able to realize/settle either in its normaloperating cycle or within twelvemonths after the balance sheet date.

Consolidated and non-consolidatedaccounts have been approved by the Board of Directors on March 9th 2006.

They are available for theshareholders as of May 1st 2006.The shareholders will be asked to approve the accounts during the General Annual Meeting ofShareholders of May 16th 2006.



This note describes the accountingpolicies applied to prepare theopening IFRS balance sheet as of January 1, 2004, as well as thedifferences identified compared withthe main policies previously appliedunder Belgian GAAP and theirimpact on the opening balance sheetand the 2004 income statement.

The 2004 IFRS accounts have beenprepared in accordance with IFRS 1– First-time Adoption of InternationalFinancial Reporting Standards,based on the IASs/IFRSs applicableas of January 1, 2005.

2-1-2-1 Methods used for the first-time adoptionof IFRS

A – General principles The Econocom Group has used the same accounting policies in its opening IFRS balance sheetand throughout all periods presentedin its first IFRS financial statements.The accounting policies used complywith each IFRS effective at the reporting date for its first IFRSfinancial statements.

Therefore, the opening IFRS balancesheet as of January 1, 2004 containsthe following differences comparedwith the balance sheet as ofDecember 31, 2003 presented in accordance with Belgian GAAP:• Assets and liabilities recognizedunder Belgian GAAP have been

eliminated in the balance sheetwhere they do not meet therecognition criteria under IFRS. • All assets and liabilities that meetthe definition and criteria forrecognition under IFRS have beenrecognized and measured inaccordance with IFRS, includingthose which were not recognizedunder Belgian GAAP. • Certain balance sheet items havebeen reclassified in accordance withIFRS.

The impact of these adjustments hasbeen recognized in opening equity.

B – Exemptions applied by the Group• Business combinations: The Group has elected not toretrospectively apply IFRS 3 –Business Combinations, and hastherefore not restated businesscombinations that occurred prior tothe transition date (January 1, 2004). • Translation differences arisingfrom foreign operations:Cumulative translation differences for all foreign operations weretransferred to “Other reserves” at the transition date, in the amount of?252,000. The cumulativetranslation adjustment in the openingIFRS balance sheet as of January 1,2004 is therefore equal to zero.

2-1-2 Impact of the first-timeadoption of IFRS

T. Developments in IFRSThe following standards,amendments and interpretations of existing and published standardswhose application is obligatory forperiods beginning on or after January1, 2006 have not been applied earlyby the Group:IAS 19 (Amendment) – EmployeeBenefits: this amendment introducesthe possibility to recognize actuarialgains and losses directly throughequity. It also introduces newdisclosure requirements. The Group did not elect for earlyapplication of this amendment. IAS 39 (Amendment): fair valueoption.IAS 39 and IFRS 4 (Amendment):financial guarantee contracts.IFRS 7 – Financial instruments,disclosures and an additionalamendment to IAS 1 – Presentationof financial statements – capitaldisclosures.IFRIC 4: determining whether an arrangement contains a lease.IFRIC 6: liabilities arising fromparticipating in a specific market -waste electrical and electronicequipment.


74 •

B – IAS 38 – Intangible assets• Under Belgian GAAP, the Grouprecognized certain costs asintangible assets, including start-upcosts, share issuance costs andexpenditures relating to trademarks,which it amortized over a period of five years. • Under IFRS these costs areexpensed as incurred.

In compliance with IFRS, the Grouphas restated all of its start-up costsand share issuance costs, eitherthrough equity or the incomestatement.

The application of IAS 38 had the following impact on the Group’sfinancial statements:

(in € thousands) IAS 38

Impact on equity as of January 1, 2004 (843)Impact on the 2004 income statement 435

C – IFRS 3 – Businesscombinations (Goodwill)• Under Belgian GAAP, goodwillwas amortized over a five-yearperiod for Products and Solutionsand over a ten-year period forFinancial Services and ManagedServices.• Under IFRS goodwill is no longeramortized. Instead, it is tested for impairment on an annual basis.Impairment losses recorded in the income statement in relation to goodwill are not reversed.

The application of IFRS 3 had the following impacts on the Group’sfinancial statements:

(in € thousands) IFRS 3

Impact on equity as of January 1, 2004 (951)Impact on the 2004 income statement 2,061

The impact on equity as of January1, 2004 reflects the impairment ofgoodwill recorded in relation toEconocom UK (295 k?), EconocomSuisse (323 k?) and EconocomExpert International Holding (333 k?).

D – IAS 16 – Property, plant and equipment• Under Belgian GAAP, items ofproperty, plant and equipment werestated at acquisition or productioncost and depreciated over theirestimated useful lives.• Under IFRS, the Group haselected not to use the optionsprovided in IFRS 1 – First-timeAdoption of International FinancialReporting Standards – and IAS 16whereby entities are permitted to revalue property, plant andequipment at the IFRS transitiondate and subsequently at eachbalance sheet date. Property, plantand equipment is therefore stated at cost less any accumulateddepreciation and any accumulatedimpairment losses.

• Share-based payment: IFRS 2 –Share-based Payment has beenapplied to all stock option plans andphantom shares incentive plans setup after November 7, 2002. • Non-current assets held for saleand discontinued operations: IFRS 5 – Non-current Assets Heldfor Sale and DiscontinuedOperations has been appliedretrospectively.

2-1-2-2 Description of the main IFRS adjustmentsA – IAS 10 – Events after the balance sheet date: dividends• Under Belgian GAAP the Group presented its consolidatedresults after appropriation of profit,and dividends were recognized as a liability. • Under IFRS it is mandatory to present the consolidated financialstatements before appropriation ofprofit, and dividends whose payoutis recommended or decided after the balance sheet date may not berecognized as a liability.


Impact on equity as of January 1, 2004 3,150

The impact on equity as ofDecember 31st, 2004 is mentioned in 2-1-2-5.



previously the case, and isdepreciated on a straight-line basis.• Margins on PC Lease and BudgetLease contracts are recorded on a monthly basis. • The positive or negative differencesbetween the future value ofequipment and the financial residualvalue are recognized on a contract-by-contract basis as financial assetsor borrowings respectively.

The application of IAS 17 had the following impacts on the Group’sfinancial statements:


Impact on equity as of January 1, 2004 (109)Impact on the 2004 income statement (1,029)

F – IAS 19 – Employee benefits /IFRS 2 – Share-based payment• Under Belgian GAAP, the Groupdid not record provisions for pensionand other post-employment benefitobligations. • Under IFRS:For post-employment benefits such as pensions and life insurance,IAS 19 defines two different types of plans:- Defined contribution plans, under which the Group pays fixedcontributions into a separate entityand will have no legal or constructiveobligation to pay further contributions.All of the plans in force within theGroup’s subsidiaries are definedcontribution plans, except for thoseset up in France.

- The asset acquired under thefinance lease is depreciated inaccordance with IAS 16 – Property,Plant and Equipment.



Impact on equity as of January 1, 2004 580Impact on the 2004 income statement 453

Leases used in the businessAs part of its Financial Servicesactivity, the Group acts as a lessorwithin the meaning of IFRS. The saleof leased assets is a simple financingtransaction which transfers clientdefault and interest-rate risks.

The following restatements havebeen made as a result of the first-time adoption of IFRS:• Only the margin and the amount of the new investment is now takeninto account in relation to contractamendments (“Cancel and Replace”contracts).• Financial residual values are no longer included in revenue.• Revenues and margins on self-financed contracts are recordedon signature of the contracts.• The future value of refinancedequipment and the financial residualvalue are discounted.• Equipment which is in the processof refinancing is classified underinventories rather than property, plant and equipment as was



Impact on equity as of January 1, 2004 (1,286)Impact résultat 2004 (50)

The impact on equity as of January 1,2004 concerned the Horizon buildingin Zaventem, Belgium. As this building is held under afinance lease, it falls within the scopeof application of IAS 17 – Leases. In compliance with that standard, it has been recognized on the assetsside of the balance sheet with the corresponding debt recorded as a liability.

E - IAS 17 – LeasesFinance leases relating to real estate• Under Belgian GAAP, the Grouprecorded lease payments on a monthly basis.• Under IFRS, where the Group is the lessee, finance leases arerecorded in the balance sheet bothas an asset and as an obligation to pay future lease payments.

The applicable accounting principlesare as follows:- At the commencement of the leaseterm, the finance lease is recognizedas an asset and a liability in thebalance sheet at equal amounts.- Lease payments are thenapportioned between the financecharge and the reduction of theoutstanding liability.


76 •

• Under IFRS, the cost of replacingitems of property, plant and equipmentmay not be recorded as a provisionfor major repairs. In accordance with IAS 16, the Group recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if the recognition criteria are met,based on the component approach.



Impact on equity as of January 1, 2004 156Impact on the 2004 income statement 39

H – IFRS 5 – Assets held for saleIFRS includes, unlike Belgian GAAP,a specific standard in respect ofnon-current assets held for sale and discontinued operations. The standard defines the manner in which non-current assets held for sale and discontinued operationsshould be recognized and presentedin the financial statements.

The application of IFRS 5 had the following impact on the Group’sfinancial statements:

(in € thousands) IFRS 5

Impact on equity as of January 1, 2004 (81)

In the context of the sale of the maintenance activity owned byEconocom Managed Services SA(France) to Alliance Support Services

SAS at the start of 2004, certainassets were remeasured at fair value,notably spare parts inventories.

IAS 32-39 – Financial InstrumentsThe Econocom Group buys back itsown equity instruments (the “treasuryshares”).

Under IFRS, no profit or loss shouldbe recognized in the EconocomGroup’s income statement on thepurchase, sale, issue or cancellationof its treasury shares.

The application of IAS 32 had the following impact on the Group’sfinancial statements:


Impact on the 2004 income statement (535)

IAS 12 – Income taxes• Under Belgian GAAP, the Grouprecognized deferred taxes on alltemporary differences between thecarrying amount of assets andliabilities and their tax basis.• Under IFRS: As a result ofapplying IAS 12, the Grouprecognized deferred taxes on itsIAS/IFRS restatements andmeasured its tax loss carryforwards.

The application of IAS 12 had thefollowing impacts on the Group’sfinancial statements:


Impact on equity as of January 1, 2004 3,149Impact on the 2004 income statement (2,772)

- Defined benefit plans, under whichthe Group is responsible for paying a defined amount of benefits toemployees at a future date. TheGroup’s obligations under theseplans are recognized in the financialstatements.

In accordance with IFRS 2,employee stock options grantedafter November 7, 2002 areexpensed over the vesting period of the plan concerned. The Grouphas elected to apply the exemptionavailable under IFRS 1 not to restateoptions granted prior to November 7,2002.

The application of IAS 19 and IFRS 2had the following impacts on the Group’s financial statements:

IAS 19/(in € thousands) IFRS 2

Impact on equity as of January 1, 2004 (1,596)Impact on the 2004 income statement 575

The impact on the 2004 incomestatement was due to the reversal of the provision for statutoryindemnities payable on retirement toemployees of Econocom ManagedServices SA’s Maintenance businessin France, which was sold to AllianceSupport Services SAS in 2004.

G – IAS 37 – Provisions• Under Belgian GAAP,the Group recorded provisions for major maintenance and repairs in order to cover the major futuremaintenance work required at the Horizon Zaventem building in Belgium.



2-1-2-3 Impact on equity as of January 1, 2004Attributable to equity

(in € thousands) Total holders of the parent Minority interestsShareholders’ equity – Belgian GAAP 73,560 72,805 755

A - Dividends 3,150 3,150B - Intangible assets (843) (843)C - Goodwill (951) (951)D - Property, plant and equipment (1,286) (1,286)E - Leases (used in the business) (109) (114) 5

- Leases (real estate) 580 580F - Employee benefits (1,596) (1,596)G - Provisions 156 156H - Assets held for sale (81) (81)I - Deferred taxes 3,149 3,149

Equity – IAS/IFRS 75,729 74,969 760

2-1-2-4 Impact on the 2004 income statementAttributable to equity

(in € thousands) Total holders of the parent Minority interestsNet profit – Belgian GAAP 14,154 14,259 (105)

B - Intangible assets 435 435C - Goodwill 2,061 2,061D - Property, plant and equipment (50) (50)E - Leases (used in the business) (1,029) (1,035) 6

- Leases (real estate) 453 453F - Employee benefits 575 575G - Provisions 39 39H - Financial instruments (535) (535)I - Deferred taxes (2,772) (2,772)

Profit for the year – IAS/IFRS 13,331 13,430 (99)

2-1-2-5 Impact on equity as of December 31, 2004Attributable to equity

(in € thousands) Total holders of the parent Minority interestsShareholders’ equity – Belgian GAAP 80,265 79,884 381

A - Dividends 4,500 4,500B - Intangible assets (408) (408)C - Goodwill 1,110 1,110D - Property, plant and equipment (1,336) (1,336)E - Leases (used in the business) (1,138) (1,149) 11

- Leases (real estate) 1,033 1,033F - Employee benefits (1,021) (1,021)G - Provisions 195 195H - Other (45) (3) (42)I - Deferred taxes 377 377

Equity – IAS/IFRS 83,532 83,182 350


78 •

(in € thousands)

Assets IAS 38 IAS 16 IAS 40 IAS 17 IAS 17 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRSBelgian GAAP Intangible Property, Plant Investment Leases Leases Business Non-current Financial Income Adjustments IFRSJan. 1, 2004 Assets and Equipment property (real estate) (used in Combinations Assets Held For Sale Instruments taxes Jan. 1, 2004

the business) and DiscontinuedOperations

Non-current assets 82,583 (843) (1,415) 5,066 (17,656) (951) (8,080) (9,307) 6,282 (13,398) 42,2811 - Intangible assets 1,631 (843) (22) 7662 - Goodwill 7,680 (951) (3,855) 2,8753 - Property, plant and equipment 56,967 (1,273) (785) 5,066 (26,873) (4,074) (13,398) 15,6303 - 1 Land and buildings 6,083 (1,273) (785) 5,066 (3,355) 244 5,9803 - 2 Other items of property, plant and equipment 7,207 (719) (1,275) 5,2133 - 5 Non-current assets held under finance leases 43,677 (26,873) (12,367) 4,4374 - Investment property (142) 785 6435 - Financial assets 15,416 9,217 (129) (9,307) 15,1975 - 1 Investments in subsidiaries accounted for at historical cost 450 4505 - 2 Investments in companies accounted for by the equity method 128 1285 - 3 Future value of refinanced equipment 9,217 9,2175 - 4 Other 14,838 (129) (9,307) 5,4026 - Long-term receivables 888 8887 - Deferred tax assets 6,282 6,282

Current assets 254,088 129 515 19,923 7,999 12,416 5,381 300,4508 - Assets held for sale 129 515 11,412 12,0569 - Inventories 8,426 3,583 (3,142) 5,443 14,3109 - 1 Inventories of equipment in the process of refinancing 17 3,707 5,443 9,1679 - 2 Other 8,409 (124) (3,142) 5,14310 - Trade and other receivables 139,927 16,145 (55) 13,513 (429) 169,10010 - 1 Trade receivables 110,359 16,084 (14) 13,513 (367) 139,57410 - 2 Other receivables 29,568 61 (41) (62) 29,52611 - Prepayments 367 36712 - Cash and cash equivalents 102,270 (178) (1,097) 100,99512 - 1 Short-term investments 17,509 17,50912 - 2 Cash at bank and in hand 84,761 (178) (1,097) 83,48613 - Other current assets 3,465 195 (38) 3,622

Total assets 336,671 (843) (1,286) 5,581 2,267 (951) (81) 3,109 6,282 (8,017) 342,731

2-1-2-6 IAS/IFRS impact on the opening balance sheet as of January 1, 2004



IAS 17 IAS 17 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRSLeases Leases Business Non-current Financial Income Adjustments IFRS

(real estate) (used in Combinations Assets Held For Sale Instruments taxes Jan. 1, 2004the business) and Discontinued

Operations

5,066 (17,656) (951) (8,080) (9,307) 6,282 (13,398) 42,281(22) 766

(951) (3,855) 2,8755,066 (26,873) (4,074) (13,398) 15,6305,066 (3,355) 244 5,980

(719) (1,275) 5,213(26,873) (12,367) 4,437

6439,217 (129) (9,307) 15,197

450128

9,217 9,217(129) (9,307) 5,402

8886,282 6,282

515 19,923 7,999 12,416 5,381 300,450515 11,412 12,056

3,583 (3,142) 5,443 14,3103,707 5,443 9,167(124) (3,142) 5,143

16,145 (55) 13,513 (429) 169,10016,084 (14) 13,513 (367) 139,574

61 (41) (62) 29,526367 367

(178) (1,097) 100,99517,509

(178) (1,097) 83,486195 (38) 3,622

5,581 2,267 (951) (81) 3,109 6,282 (8,017) 342,731


80 •

(in € thousands)

Total equity IAS 38 IAS 16 IAS 19 IAS 17 IAS 17 IAS 37 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRSBelgian GAAP Intangible Property, Plant Employee Leases Leases Provisions Business Non-current Financial Income Adjustments IFRSJan. 1, 2004 Assets and Equipment benefits (real estate) (used in combinations Assets Held for Sale Instruments Taxes Jan. 1, 2004

the business) and Discontinued Operations

Total equity 73,560 (843) (1,286) (1,596) 580 (109) 156 (951) (81) 3,149 3,150 75,7291 - Equity attributable to equity holders

of the parent 72,805 (843) (1,286) (1,596) 580 (114) 156 (951) (81) 3,149 3,150 74,9691 - 1 Share capital 16,038 16,0381 - 2 Additional paid-in capital 54,072 54,0721 - 3 Réserves 18,266 (843) (1,286) (1,596) 580 (114) 156 (951) (81) 3,149 3,150 20,4301 - 4 Treasury shares (8,091) (8,091)1 - 5 Profit/(loss) for the year (7,480) (7,480)2 - Minority interests 755 5 760

Liabilities 263,111 1,596 5,001 2,376 (156) 3,109 3,133 (11,167) 267,003A - Non-current liabilities 21,607 489 4,486 4,705 (156) (2,157) 3,133 (5,834) 26,273

3 - Non-current liabilities bearing interest 2,517 4,486 4,705 (2,107) 9,6013 - 1 Bank borrowings 03 - 2 Finance lease liabilities 4,486 4,705 9,1913 - 3 Bank overdrafts 2,343 (2,107) 2363 - 4 Other borrowings 174 1744 - Non-current liabilities not bearing interest 64 (50) 145 - Long-term provisions 16,926 (156) (5,834) 10,9366 - Long-term post-employment benefit 489 489

obligations 7 - Deferred tax liabilities 2,100 3,133 5,233

B - Current liabilities 241,504 1,107 515 (2,329) 2,157 3,109 (5,333) 240,7308 - Liabilities held for sale 382 515 7,152 8,0499 - Current liabilities bearing interest 18,675 346 (280) 3,109 2,307 24,1579 - 1 Bank borrowings 12,935 (277) 12,6589 - 2 Finance lease liabilities 346 2,329 2,6759 - 3 Bank overdrafts 3,208 (3) 3,2059 - 4 Other borrowings 2,532 3,109 (22) 5,61910 - Short-term provisions 13,509 178 (4,905) 5,796 14,57811 - Current tax liabilities 8,256 8,25612 - Trade and other payables 154,963 547 270 (1,529) (13,376) 140,87512 - 1 Trade payables 114,971 270 (10,225) 105,01612 - 2 Customer prepayments 1,117 1 1,11812 - 3 Other payables 38,875 547 (1,529) (3,152) 34,74113 - Other current liabilities 46,101 1,960 (3,186) (60) 44,814

Total equity and liabilities 336,671 (843) (1,286) 5,581 2,267 (951) (81) 3,109 6,282 (8,017) 342,731

2-1-2-6 IAS/IFRS balance sheet as of January 1, 2004 – Equity and liabilities



IAS 17 IAS 37 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRSLeases Provisions Business Non-current Financial Income Adjustments IFRS

(used in combinations Assets Held for Sale Instruments Taxes Jan. 1, 2004the business) and Discontinued

Operations

(109) 156 (951) (81) 3,149 3,150 75,729

(114) 156 (951) (81) 3,149 3,150 74,96916,03854,072

(114) 156 (951) (81) 3,149 3,150 20,430(8,091)(7,480)

5 7602,376 (156) 3,109 3,133 (11,167) 267,0034,705 (156) (2,157) 3,133 (5,834) 26,2734,705 (2,107) 9,601

04,705 9,191

(2,107) 236174

(50) 14(156) (5,834) 10,936

489

3,133 5,233(2,329) 2,157 3,109 (5,333) 240,730

7,152 8,049346 (280) 3,109 2,307 24,157

(277) 12,658346 2,329 2,675

(3) 3,2053,109 (22) 5,619

(4,905) 5,796 14,5788,256

270 (1,529) (13,376) 140,875270 (10,225) 105,016

1 1,118(1,529) (3,152) 34,741

1,960 (3,186) (60) 44,8142,267 (951) (81) 3,109 6,282 (8,017) 342,731


82 •

(in € thousands)

IAS 18 IAS 38 IAS 19 IAS 16 IAS 37 IAS 17 IAS 17 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRSBelgian GAAP Revenue Intangible Employee Property, Plant Provisions Leases Leases Business Non-current Assets Financial Income Adjustments IFRS

2004 Assets Benefits and Equipment (real estate) (used in Combinations Held for Sale and Instruments Taxes 2004the business) Discontinued

Operations

Revenue from continuing operations 821,785 (2,032) (204,978) (12,382) 602,393Operating expenses (801,946) 2,032 435 575 (50) 39 453 203,949 21 13,077 (40) 0 (3,104) (584,559)Operating profit 19,839 0 435 575 (50) 39 453 (1,029) 21 695 (40) 0 (3,104) 17,834

Other financial income/(expense), net (1,227) 2,040 34 (495) (574) (222)Profit before tax 18,612 0 435 575 (50) 39 453 (1,029) 2,061 729 (535) 0 (3,678) 17,612

Income tax (4,578) (232) (2,772) 3,678 (3,904)Share of profit of companies accounted for by the equity method 120 120

Profit from continuing operations 14,154 0 435 575 (50) 39 453 (1,029) 2,061 497 (535) (2,772) 0 13,828Discontinued operations (497) (497)

Profit fot the year excludind minority interests 14,154 0 435 575 (50) 39 453 (1,029) 2,061 0 (535) (2,772) 0 13,331Minority interests 105 (6) 99

Profit for the year including minority interests 14,259 0 435 575 (50) 39 453 (1,035) 2,061 0 (535) (2,772) 0 13,430

2-1-2-7 IAS/IFRS impact on the 2004 income statement



IAS 37 IAS 17 IAS 17 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRSProvisions Leases Leases Business Non-current Assets Financial Income Adjustments IFRS

(real estate) (used in Combinations Held for Sale and Instruments Taxes 2004the business) Discontinued

Operations

(204,978) (12,382) 602,39339 453 203,949 21 13,077 (40) 0 (3,104) (584,559)39 453 (1,029) 21 695 (40) 0 (3,104) 17,834

2,040 34 (495) (574) (222)39 453 (1,029) 2,061 729 (535) 0 (3,678) 17,612

(232) (2,772) 3,678 (3,904)

12039 453 (1,029) 2,061 497 (535) (2,772) 0 13,828

(497) (497)39 453 (1,029) 2,061 0 (535) (2,772) 0 13,331

(6) 9939 453 (1,035) 2,061 0 (535) (2,772) 0 13,430


84 •

(in € thousands)

Assets IAS 38 IAS 16 IAS 40 IAS 17 IAS 17 IAS 37 IFRS 3 IFRS 5 IAS 12 IFRSBelgian GAAP Intangible Property, Plant Investment Leases Leases Provisions Business Non-current Assets Income Adjustments IFRSDec. 31, 2004 Assets and Equipment property (real estate) (used in the Combinations Held For Sale and Taxes Dec. 31, 2004

business) DiscontinuedOperations

Non-current assets 85,651 (408) (1,678) 5,066 (13,000) 1,110 (4,204) 909 (23,632) 49,8131 - Intangible assets 1,582 (408) (1) 1,1732 - Goodwill 9,989 1,110 (461) (13) 10,6253 - Property, plant and equipment 54,131 (1,545) (745) 5,066 (18,820) (3,324) (21,477) 13,2853 - 1 Land and buildings 6,016 (1,545) (745) 5,066 (3,143) 217 5,8663 - 2 Other items of property, plant and equipment 3,506 (126) (216) 3,1633 - 5 Non-current assets held under finance leases 44,609 (18,820) (55) (21,478) 4,2564 - Investment property (133) 745 6125 - Financial assets 11,160 5,820 (90) (2,104) 14,7865 - 1 Investments in subsidiaries accounted for at historical cost 2 25 - 2 Investments in companies accounted for by the equity method 250 2505 - 3 Future value of refinanced equipment 5,854 (77) 5,7775 - 4 Other 10,908 (34) (13) (2,104) 8,7576 - Long-term receivables 6,905 88 6,9937 - Deferred tax assets 1,884 (329) 909 (125) 2,339

Current assets 221,123 342 515 14,457 (21) 4,205 2,730 243,3508 - Assets held for sale 342 515 9,918 10,7759 - Inventories 3,784 3,511 (237) 7,0589 - 1 Inventories of equipment in the process of refinancing 39 3,724 (237) 3,5269 - 2 Other 3,745 (213) 3,53210 - Trade and other receivables 151,017 10,038 (21) (3,081) 3,698 161,65110 - 1 Trade receivables 131,071 10,016 (2,385) 3,717 142,41910 - 2 Other receivables 19,946 23 (21) (696) (20) 19,23211 - Prepayments 61 6112 - Cash and cash equivalents 63,168 192 (2,283) (1,029) 60,04812 - 1 Short-term investments 14,368 14,36812 - 2 Cash at bank and in hand 48,800 192 (2,283) (1,029) 45,68013 - Other current assets 3,154 716 (113) 3,757

Total assets 306,774 (408) (1,336) 5,581 1,457 (21) 1,110 909 (20,903) 293,163

2-1-2-8 IAS/IFRS impact on the balance sheet as of December 31, 2004



IAS 17 IAS 17 IAS 37 IFRS 3 IFRS 5 IAS 12 IFRSLeases Leases Provisions Business Non-current Assets Income Adjustments IFRS

(real estate) (used in the Combinations Held For Sale and Taxes Dec. 31, 2004business) Discontinued

Operations

5,066 (13,000) 1,110 (4,204) 909 (23,632) 49,813(1) 1,173

1,110 (461) (13) 10,6255,066 (18,820) (3,324) (21,477) 13,2855,066 (3,143) 217 5,866

(126) (216) 3,163(18,820) (55) (21,478) 4,256

6125,820 (90) (2,104) 14,786

2250

5,854 (77) 5,777(34) (13) (2,104) 8,757

88 6,993(329) 909 (125) 2,339

515 14,457 (21) 4,205 2,730 243,350515 9,918 10,775

3,511 (237) 7,0583,724 (237) 3,526(213) 3,532

10,038 (21) (3,081) 3,698 161,65110,016 (2,385) 3,717 142,419

23 (21) (696) (20) 19,23261 61

192 (2,283) (1,029) 60,04814,368

192 (2,283) (1,029) 45,680716 (113) 3,757

5,581 1,457 (21) 1,110 909 (20,903) 293,163


86 •

(in € thousands)

Equity and liabilities IAS 38 IAS 16 IAS 19 IAS 17 IAS 17 IAS 37 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRS IFRSBelgian GAAP Intangible Property, Plant Employee Leases Leases Provisions Business Non-current Assets Financial Income Dividends Adjustments IFRSDec. 31, 2004 Assets and Equipment Benefits (real estate) (used in the Combinations Held For Sale and Instruments Taxes Dec. 31, 2004

business) DiscontinuedOperations

Total equity 80,265 (408) (1,336) (1,021) 1,033 (1,138) 195 1,110 377 4,500 (45) 83,5321 - Equity attributable to equity holders

of the parent 79,884 (408) (1,336) (1,021) 1,033 (1,149) 195 1,110 377 4,500 (3) 83,1821 - 1 Share capital 16,038 16,0381 - 2 Additional paid-in capital 54,072 54,0721 - 3 Reserves (2,026) (843) (1,286) (1,596) 580 (114) 156 (951) 602 3,149 4,500 (3) 2,1681 - 4 Treasury shares (2,459) (67) (2,526)1 - 5 Profit/(loss) for the year 14,259 435 (50) 575 453 (1,035) 39 2,061 (535) (2,772) 13,4302 - Minority interests 381 11 (42) 350

Liabilities 226,509 1,021 4,548 2,595 (216) 532 (4,500) (20,858) 209,631A - Non-current liabilities 13,497 451 4,276 2,500 (156) (2,354) 373 (5,766) 12,821

3 - Non-current liabilities bearing interest 2,002 4,276 2,500 (1,990) 6,7883 - 1 Bank borrowings 03 - 2 Finance lease liabilities 4,276 2,500 (173) 6,6033 - 3 Bank overdrafts 1,899 (1,817) 823 - 4 Other borrowings 103 1034 - Non-current liabilities not bearing interest 72 (52) 205 - Long-term provisions 8,165 (156) (56) (5,766) 2,1876 - Long-term post-employment benefit 451 451

obligations7 - Deferred tax liabilities 3,258 (256) 373 3,375

B - Current liabilities 213,012 570 272 95 (60) 2,354 159 (4,500) (15,092) 196,8108 - Liabilities held for sale 230 6,834 7,0649 - Current liabilities bearing interest 7,725 42 2,086 (496) 645 10,0029 - 1 Bank borrowings 4,340 42 (289) (1) 4,0929 - 2 Finance lease liabilities 2,086 (206) 1,8809 - 3 Bank overdrafts 841 (1) 8409 - 4 Other borrowings 2,544 646 3,19010 - Short-term provisions 11,037 (6,779) (323) 7,162 11,09711 - Current tax liabilities 4,173 (89) 159 4,24312 - Trade and other payables 150,752 570 2,231 (60) (2,573) (4,500) (22,829) 123,59112 - 1 Trade payables 119,218 2,237 (2,576) (22,874) 96,00512 - 2 Customer prepayments 1,681 (1) 1,68012 - 3 Other payables 29,853 570 (6) (60) 3 (4,500) 46 25,90613 - Other current liabilities 39,325 2,557 (999) (70) 40,813

Total equity and liabilities 306,774 (408) (1,336) 5,581 1,457 (21) 1,110 909 (20,903) 293,163

2-1-2-8 IAS/IFRS balance sheet as of December 31, 2004 – Equity and liabilities



IAS 17 IAS 37 IFRS 3 IFRS 5 IAS 32-39 IAS 12 IFRS IFRSLeases Provisions Business Non-current Assets Financial Income Dividends Adjustments IFRS

(used in the Combinations Held For Sale and Instruments Taxes Dec. 31, 2004business) Discontinued

Operations

(1,138) 195 1,110 377 4,500 (45) 83,532

(1,149) 195 1,110 377 4,500 (3) 83,18216,03854,072

(114) 156 (951) 602 3,149 4,500 (3) 2,168(67) (2,526)

(1,035) 39 2,061 (535) (2,772) 13,43011 (42) 350

2,595 (216) 532 (4,500) (20,858) 209,6312,500 (156) (2,354) 373 (5,766) 12,8212,500 (1,990) 6,788

02,500 (173) 6,603

(1,817) 82103

(52) 20(156) (56) (5,766) 2,187

451

(256) 373 3,37595 (60) 2,354 159 (4,500) (15,092) 196,810

6,834 7,0642,086 (496) 645 10,002

(289) (1) 4,0922,086 (206) 1,880

(1) 840646 3,190

(6,779) (323) 7,162 11,097(89) 159 4,243

2,231 (60) (2,573) (4,500) (22,829) 123,5912,237 (2,576) (22,874) 96,005

(1) 1,680(6) (60) 3 (4,500) 46 25,906

2,557 (999) (70) 40,8131,457 (21) 1,110 909 (20,903) 293,163


88 •

2-1-2-9 Impact on the cash flow statement

(in € thousands)

2004 IAS 17 IAS 12 IFRS 3 IAS 36-38 IAS 37 IAS 32-39 Other 2004 December Leases Deferred Business Intangible assets and property, Provisions Financial Belgian GAAP

IFRS taxes combinations plant and equipment Instruments

Profit from continuing operations – Group share 13,927 (582) (2,772) 2,061 385 39 (535) 1,072 14,259Income tax expense 3,904 (674) 4,578Minority interests (99) 6 (105)Depreciation, amortization and impairment 6,890 1,647 (2,040) (385) 29 7,639Gains and losses on sale of non-current assets 272 43 229Share of profit of companies accounted for by the equity method (120) (120)Change in provisions (12,220) (2,982) (39) (9,199)Operating cash flow (a) 12,554 17,281Change in inventories 9,459 4,411 5,048Change in receivables due in more than 1 year (6,657) (6,657)Change in receivables due within 1 year 10,818 9,965 (178) 4,616 (447) (3,138)Change in other current assets (134) (544) 410Change in trade payables (11,489) (11,396) (93)Change in other payables due within 1 year (Accrued taxes and personnel costs, etc.) (17,165) (1,814) 194 (60) 138 (15,623)Change in other current liabilities (5,262) (998) (4,264)Change in working capital (b) (20,430) (24,317)Income tax expense (c) (3,904) 674 (4,578)Net cash provided by (used in) operating activities (a+b+c=d) (11,780) (11,614)

A – Operating cash flowOperating cash flow decreases by ¤4.7 million (between Belgian GAAP and IFRS). The main impacts of the transition to IAS/IFRS on operating cash flow arise from the application of IAS 17 and IAS 12.Changes in provisions related to IAS 17 are the main factor generating a negative impact of ¤3 million. Recognition of deferred taxes on restatements to IAS/IFRS and the measurement of tax loss carryforwards negatively affected cash flow by ¤2.8 million.Furthermore, application of IAS 19 (included in the “Other” column) increased cash flow by ¤0.6 million.

B – Change in working capitalWorking capital decrease by ¤3.9 million.The main impact arises from the restatement of certain factoring receivables in an amount of ¤4.6 million.



IFRS 3 IAS 36-38 IAS 37 IAS 32-39 Other 2004 Business Intangible assets and property, Provisions Financial Belgian GAAP

combinations plant and equipment Instruments

2,061 385 39 (535) 1,072 14,2594,578(105)

(2,040) (385) 29 7,63943 229

(120)(39) (9,199)

17,2815,048

(6,657)4,616 (447) (3,138)

410(93)

(60) 138 (15,623)(4,264)

(24,317)(4,578)

(11,614)


90 •

Capital reductionEconocom.com SA reduced itscapital by ?572,000 in order toabsorb prior year losses.

MergersThe Group’s wholly-ownedsubsidiary Atlance Nederland BVwas merged into EconocomNederland BV in June 2005 with retroactive effect as of January 1, 2005.Also in June 2005, the wholly-ownedcompanies Signal Service SA and Econocom Telecom SAS weremerged into Econocom Products &Solutions SAS, with retroactive effectas of January 1, 2005.

DivestmentsEconocom Group SA /NV sold its Switzerland-based subsidiaryEconocom Suisse SA in July 2005. It also sold the business portfolio ofits US subsidiary in December 2005following the latter's sale of its33.33% stake in Ace Computer in January of that year.Econocom Products & SolutionsSAS sold the non-trading real estatecompany Cap Horn SCI on June 30,2005.

Acquisition of For Connected BVOn August 8, 2005, EconocomTelecom Services SA purchased the 383 shares making up the entirecapital of For Connected BV, a Dutch company specializing indata mobile services, for an amountof ¤224,000. For Connected BVwas consolidated by Econocom as of September 1, 2005. Goodwillrecognized in relation to thisacquisition amounted to ¤248,000.The breakdown of the ForConnected BV assets and liabilitiesacquired by category is provided in note 2-5-1. The contribution of For Connected BV to theEconocom Group’s profit for the yearto December 31, 2005 is negative in an amount of ¤28,000.

Capital increasesIn 2005, Econocom Group SA/NVissued shares with a par value of ?143,000 and an issue premiumof ?967,000 for allocation on the exercise of stock options.Atlance France SAS increased itscapital by ?739,000 during the yearby reducing current accountbalances.

Acquisition of A2Z Holding and subsidiariesOn July 27, 2005, the EconocomGroup acquired the 1,000 sharesmaking up the entire capital ofBelgium-based A2Z Holding NV,which specializes in providing IT and telecommunication services to SMEs. A2Z Holding NV whollyowns A2Z Solutions NV and DataNetworks France, whose capital is made up of 1,375 and 1,006 sharesrespectively. These companies wereconsolidated by Econocom as of August 1, 2005 for an amount of ?300,000. Goodwill recognized inrelation to this acquisition amountedto ?3,104,000. The breakdown of the A2Z assetsand liabilities acquired by category is provided in note 2-5-1. The contribution of A2Z Holding and its subsidiaries to the EconocomGroup’s profit for the year toDecember 31, 2005 is negative in an amount of ?825,000.A2Z Solutions and Data NetworksFrance subsequently issued newshares respectively representing¤2,102,000 and ¤1,622,000. The A2Z’ capital has been issued upto ¤925,000 and the capital of Data Networks France fully. Further to these capital increases,A2Z Holding owned 50,250 A2Z Solutions shares and 32,810Data Networks France shares.

2-1-3-1 Changes in the scope of consolidation



2-1-3-2 List of consolidated companies

Fully-consolidated companies

Company Registered VAT no. % interest Immediate holding companyoffice

2005 2004Econocom SAS Clichy 99.99% 99.99% Econocom Group SA/NVEconocom Location SA Clichy 99.99% 99.99% Econocom Lease SA/NVAtlance France SA Clichy 100% 100% Econocom Location SAG.I.E. Econocom Clichy 41.67% 41.67% Econocom Group SA/NV

58.33% 58.33% Econocom SASEconocom.com SA Clichy 99.99% 99.99% Econocom Group SA/NVEconocom Products & Solutions Belux SA/NV Brussels BE 426 851 567 99.99% 99.99% Econocom Group SA/NV

0.01% 0.01% Econocom Managed ServicesEconocom Managed Services SA/NV Brussels BE 432 093 428 100% 100% Econocom Group SA/NVEconocom Telecom Services Brussels 74.57% 74.57% Econocom Managed Services SA/NVEconocom Telecom Brussels 100% 100% Econocom Telecom ServicesAtlance SA/NV Brussels BE 476 489 635 99.93% 99.93% Econocom Lease SA/NV

0.07% 0.07% Econocom Services SA/NVEconocom Products & Solutions Luxembourg SA Luxembourg 100% 100% Econocom Products and Solutions Belux SA/NVEconocom Luxembourg SA Luxembourg 100% 100% Econocom Managed Services SAEconocom Lease SA/NV Brussels BE 431 321 782 100% 100% Econocom Group SA/NVEconocom Nederland BV (1) Houten 100% 100% Econocom Group SA/NVEconocom Albis GmbH (formerly Econocom NordLease GmbH) Hamburg 65% 65% Econocom Group SA/NVEconocom Expert International Holding Houten 50.1% 50.1% Econocom Group SA/NVEconocom Product Services BV Houten 99.94% 99.94% Econocom Nederland BVEconocom Services BV Houten 95% 95% Econocom Nederland BVEconocom UK Ltd Richmond 100% 100% Econocom Group SA/NVEconocom (Suisse) SA (2) Nyon 99.97% Econocom Group SA/NVEconocom SA (Spain) Madrid 99.98% 99.98% Econocom Group SA/NV

0.02% 0.02% Econocom SASEconocom Locazione Italia SPA Milan 93.57% 93.57% Econocom Group SA/NV

6.43% 6.43% Econocom SASAperleasing Milan 95% 93.57% Econocom Locazione Italia SPAEconocom USA Inc Memphis 100% 100% Econocom Group SA/NVEconocom Promodata France SA (formerly Comdisco France S.A.) Clichy 100% 95% Econocom Nederland BVPromodata SNC Clichy 100% 100% Econocom Promodata France SAEconocom Products and Solutions SAS (formerly Econocom Infopoint S.A.) (3) Les Ulis 99.95% Econocom France SAS

0.05% Econocom Group SA/NV99.56% Econocom Managed Services SA/NV

Econocom Managed Services SA Les Ulis 100% 99.99% Econocom Products and Solutions SASSynopse SARL Orsay 100% 100% Econocom Managed Services SA (France)SCI Alexandre Les Ulis 99.90% 99.90% Econocom Products and Solutions SASSCI Cap Horn (2) Les Ulis 100% Econocom Products and Solutions SASEconocom France SAS Clichy 100% 100% Econocom Group SA/NVInfoconseil SARL Les Ulis 100% 100% Econocom Products and Solutions SASFor Connected Eindhoven 100% Econocom Telecom ServicesA2Z Holding NV Wemmel 100% Econocom Group SA/NVA2Z Solutions NV Wemmel 100% A2Z Holding NVData Networks France Wemmel 100% A2Z Holding NV

(1) In June 2005, Atlance Nederland BV was merged into Econocom Nederland BV with retroactive effect as of January 1, 2005.(2) SCI Cap Horn and Econocom Suisse SA were sold in June and July 2005 respectively.(3) In June 2005, Signal Service SA and Econocom Telecom SAS were merged into Econocom Products & Solutions SAS,

with retroactive effect as of January 1, 2005.

Company accounted for by the equity method

Company Registered VAT no. % interest Immediate holding companyoffice

2005 2004

Ace Computer I, LLC Marietta, GA 33.33% Econocom USA, Inc.

Econocom USA, Inc. sold its stake in Ace Computer in January 2005.

To our knowledge, with the exception of the undistributable reserves (see section 1-4 consolidated statement of changes in equity), no significant restrictions exist on the ability of our subsidiaries to transfer funds to Econocom Group SA/NV in the form of cash dividends or the reimbursement of loans or advances.


92 •

2-1-4 Segment informationPrimary reporting format – Business segments

(in € thousands)

Financial Services Products and Solutions Managed Services Other companies Total 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

RevenueExternal revenue 247,792 298,650 191,068 203,080 111,363 99,705 721 958 550,944 602,393Inter-segment revenue 21,970 37,776 21,352 14,577 7,058 3,650 16,200 14,445 0 0

Total revenue 269,762 336,426 212,420 217,657 118,421 103,355 16,921 15,403 550,944 602,393Results of operations

Segment operating profit/(loss) 14,051 12,234 1,922 (455) 2,742 4,782 276 1,273 18,991 17,834Interest expense (46) (339) (52) (103) (148) (124) (5) (17) (251) (583)Interest income 5 117 17 236 219 48 8 289 361

Financial result (41) (222) (52) (86) 88 95 43 (9) 38 (222)

Share of profit of companies accounted for by the equity method 120 0 120

Income tax (4,695) (1,030) (192) (785) (222) (2,070) (59) (19) (5,168) (3,904)Discontinued operations (483) (728) 388 (778) (174) 1,014 508 (5) 239 (497)

Profit/(loss) for the year 8,832 10,374 2,066 (2,104) 2,434 3,821 768 1,239 14,100 13,330Other information

Current assets 128,435 148,524 40,359 44,497 15,714 12,642 43,412 37,688 227,920 243,351Total current assets 128,435 148,774 40,359 44,497 15,714 12,642 43,412 37,688 227,920 243,601

Investments in companies accounted for by the equity method 250 0 250

Total assets 117,441 140,616 28,936 31,169 56,970 13,638 73,447 107,740 276,794 293,163Total current liabilities 87,357 99,756 41,967 50,699 36,969 30,071 11,799 16,284 178,092 196,810Total liabilities 117,441 140,616 28,936 31,169 56,970 13,638 73,447 107,740 276,794 293,163

Capital expenditure (380) (742) (315) (305) (1,014) (599) (498) (1,226) (2,207) (2,872)Depreciation and amortization (11,560) (9,804) (465) (484) (901) (838) (749) (771) (13,675) (11,897)Other non-cash items 5,232 3,215 526 (775) 42 1,174 0 8 5,800 3,622

Other companies include the parent company Econocom Group and the non-trading real estate company SCI Alexandre,as well as Econocom France SAS, Econocom SAS, GIE Econocom, Econocom.com SA and Infoconseil.Segment information relating to the Telecom business is included in the data for Managed Services. It is determined using a statistical method based on a proportion of revenue.



2-2-0 Intangible assets(in € thousands) Franchises, patents, Other Total

licenses, etc.

Acquisition cost

Gross value at December 31, 2004 5,821 5,821• Acquisitions 344 344• Disposals (113) (113)• Changes in scope of consolidation 2 506 508• Translation adjustments 0• Transfers and other movements 1 1

Gross value at December 31, 2005 6,055 506 6,561

Amortization and impairment

Amortization (accumulated) at December 31, 2004 (4,648) (4,648)• Amortization expense (632) (632)• Impairment losses• Impairment reversals• Acquisitions• Disposals 103 103• Changes in scope of consolidation (1) (506) (507)• Translation adjustments• Transfers and other movements

Amortization (accumulated) at December 31, 2005 (5,178) (506) (5,684)

Carrying amount at December 31, 2004 1,173 0 1,173

Carrying amount at December 31, 2005 877 0 877

(in € thousands)

2°) by location of assetsCurrent assets Capital expenditures

2005 2004 2005 2004Belgium 59,603 46,960 (952) (1,620)The Netherlands 23,578 29,691 (291) (49)France 112,476 135,674 (852) (808)Southern Europe (Spain, Italy) 20,780 10,596 (81) (292)Other 11,483 20,430 (31) (103)

Secondary reporting format by geographic sector(in € thousands)

1°) by country of clientRevenue

2005 2004Belgium 161,076 155,670The Netherlands 69,074 77,645France 264,307 285,991Southern Europe (Spain, Italy) 35,038 34,016Other 21,448 49,071


94 •

2-2-1 Goodwill(in € thousands)

Year of Gross value Impairment Net value Changes Impairment Other Gross Impairment Netacquisition as of Dec. as of Dec. as of Dec. in scope of losses value as of Dec. value

31, 2004 31, 2004 31, 2004 consolidation in 2005 2005 31, 2005 2005

Products and Solutions 461 461 461 461

PLI 2000 461 461 461 461

Managed Services 9,420 9,420 4,109 13,529 13,529

JCA 2005 757 757 757A2Z Holding 2005 3,104 3,104 3,104For Connected 2005 248 248 248Signal 2004 7,502 7,502 7,502 7,502CHanSE 2004 744 744 744 744Synopse 2003 413 413 413 413SX Consultants NV/SA 2002 656 656 656 656CSI 2000 105 105 105 105

Financial Services 744 744 (73) 671 671

France Location 1996 671 671 671 671USA 1995 73 73 (73)Total 10,625 10,625 4,109 (73) 14,661 14,661

As of December 31, 2005, all goodwill items were tested for impairment by comparing the value of the assets of the companies acquired with the corresponding amount of discounted future cash flows. The applicable discount ratewas set at 8.1%. The results of these tests revealed that goodwill was not impaired and therefore no related impairmentlosses were recorded in 2005, as in 2004.

In November 2005, Econocom Products and Solutions SAS (France) acquired the “Businesses” activity of a companycalled JCA for a cost of ¤757,000.JCA is a significant player in the mobile telephone business in South-West region, managing a total of 15,000 mobiletelephone lines (large company and SME clients) with a team of eleven staff.The legal goodwill acquired (being the French legally protected asset) does not equate to goodwill within the meaningascribed to that term by IFRS 3 “Business combinations”; the net assets acquired constitute a business.

In July and August 2005, the companies A2Z Holding (and its subsidiaries) and For Connected were acquired for a total purchase price of ¤524,000. On account of the nature of the businesses and the size of these companies,the cost of the business combination was fully allocated to goodwill.

Off-balance sheet commitments (purchase of shares or additional purchase consideration) related to the companies listed in the table of goodwill balances are presented in note 2-5-3 “Off-balance sheet commitments”.



2-2-2 Property, plant and equipment(in € thousands)

Land and Plant and Furniture Other items of Non current Totalbuildings equipment, and property, plant asset held under

fixtures and vehicles and equipment finance leases (1)

fittingAcquisition costGross value at December 31, 2004 8,420 6,269 4,069 396 23,710 42,864Acquisitions 176 872 501 326 93,758 95,633Disposals (33) (497) (655) (186) (82,673) (84,044)Changes in scope of consolidation 125 162 12 299Translation adjustments 6 31 752 789Transfers and other movements (31) (103) (139) (273)Gross value at December 31, 2005 8,532 6,775 4,005 397 35,559 55,268Depreciation and impairmentDepreciation (accumulated) at December 31, 2004 (2,554) (4,259) (2,986) (326) (19,454) (29,579)Depreciation expense (585) (585) (565) (25) (11,469) (13,229)Depreciation reversals 12 1 2 202 217Impairment lossesImpairment reversalsAcquisitions (12) (83,389) (83,401)Disposals 8 307 475 178 81,886 82,854Changes in scope of consolidation (92) (74) (4) (170)Translation adjustments (5) (22) (596) (623)Transfers and other movements 149 (116) 48 116 (17) 180Depreciation (accumulated) at December 31, 2005 (2,970) (4,761) (3,122) (57) (32,841) (43,751)Carrying amount at December 31, 2004 5,866 2,010 1,083 70 4,256 13,285Carrying amount at December 31, 2005 5,562 2,014 883 340 2,718 11,517

(1) Non-current assets held under finance leases are comprised solely of computer equipment which is classified in furniture and vehicles when legally ownedby the Group.


96 •

(in € thousands)

2005 2004Gross value 1,279 1,279Accumulated depreciation (699) (667)Depreciation expense for the year (31) (31) Total 580 612

Econocom Group owns an investment property at the Les Ulis site.

(in € thousands)

Allocation Depreciation rateStructural frame 30% 2%Facades 15% 3.33%General and technical equipment 30% 6.66%Fixtures and fittings 25% 10%

Investment property is depreciated by the straight-line method.

(in € thousands)

2005 2004Rental income recorded in the income statement 123 115

One of the Group’s French subsidiaries owns a warehouse and office building at Les Ulis, in the Paris region. It is rented to non-Group companies.The carrying amount of the building, which has a useful surface of 780 m2 (with 28 parking places), is ¤580,000 at December 31, 2005.An independent valuation carried out in December 2000, valued the building at ¤900,000. In view of the generally positive orientation of the property market in the Paris region in the last five years, but taking account of the existence of unoccupied office space and warehouses in the zone in question, this valuation of the offices is considered to still be broadly accurate.

2-2-3 Investment property



2-2-4 Financial assets(in € thousands) Investments in Investments in Future value Other Total

subsidiaries accounted companies of refinancedfor at historical cost accounted for equipment (1)

by the equity method

As of December 31, 2004 2 250 5,777 8,757 14,786

Increases 427 1,598 2,025

Repayments (1,378) (2,480) (3,858)

Impairment, net (266) (266)

Changes in scope of consolidation (290) (6) 24 (272)

Translation adjustments 40 13 17 70

Other movements 124 124

As of December 31, 2005 2 0 4,567 8,040 12, 609

< 1 year - - 1,228 -

1 to 5 years - - 3,339 -

> 5 years - - -

(1) After deduction of the repurchase value.

Investments in companies accounted for by the equity method are split as follows:

Investments in companies accounted Ace Computer Receivables linked to Totalfor by the equity method investments in companies accounted

for by the equity method

As of December 31, 2004 190 60 250

Increases

Repayments

Impairment, net

Changes in scope of consolidation (218) (73) (291)

Translation adjustments 28 13 41

Other movements

As of December 31, 2005 0 0 0

33.33% of Ace Computer is held by Econocom USA Inc.Loans and advances to non-consolidated entities correspond to a receivable owed to Econocom USA Inc. by the equity accounted company Ace Computer.Investments in non-consolidated companies primarily correspond to Econocom Group’s units in the MBO Capital venture capital fund.Since October 2002, the Group has invested ¤3,180,000 in this fund and has irrevocably committed capital of up to ¤5,000,000.This represents a 10-year unsecured investment, which offers expected returns exceeding the risk-free rate.Funds are not accessible before the end of the term and further disbursements can be called for until March 2008. As of December 31, 2005, the maximum amount still to be called totaled ¤1,820,000.


98 •

(in € thousands)

Long-term receivables 12/31/2005 12/31/2004Long-term portion of the Alliance Support Services receivable 3,844 4,939Long-term tax receivables 1,297 1,297Other long-term receivables 1,154 757

Total 6,295 6,993

The Alliance Support Services receivable is subject to a comfort letter from its parent company, Econocom International NV.Alliance Support Services is a related company (see note 2-5-6).The maturity dates for repayment of this receivable (excluding the short-term portion) are set at December 15, 2007 and 2008.The long-term tax receivables correspond to a carry back receivable held by Econocom Products and Solutions Francewhose recovery is spread over the period until 2008.The other long-term receivables mainly correspond to regulated employee housing-related loans of ¤571,000 and a plan for settlement of a commercial claim for ¤360,000.

Deferred tax assets 12/31/2005 12/31/2004Deferred taxes on pension obligations 92 69Deferred taxes on tax loss carryforwards 1,569 557Deferred taxes on other transactions 673 1,713

Total 2,334 2,339

Details of deferred taxes are provided in Note 2-4-9.

2-2-5 Other non-current assets

Other financial assets MBO Capital Deposits Totalventure capital fund and guarantees

As of December 31, 2004 1,729 7,026 8,755

Increases 1,315 283 1,598

Repayments (2,480) (2,480)

Impairment, net

Changes in scope of consolidation 24 24

Translation adjustments 17 17

Other movements 136 (10) 126

December 31, 2005 3,180 4,860 8,040

< 1 year - 178

1 to 5 years - 4,446

> 5 years - 236



(in € thousands)

Type of assets and liabilities held for sale at December 31, 2005 Assets LiabilitiesEconocom USA Inc. 324 245Total 324 245

Type of assets and liabilities held for sale at December 31, 2004 Assets LiabilitiesEconocom Suisse SA 5,928 4,666SCI Cap Horn 3,764 2,168St Thibault building 622 230Ace Computer (Goodwill) 461Total 10,775 7,064

Assets and liabilities sold are broken down by category in note 2-5-1.

Discontinued operations at December 31, 2005 Gains (losses)on discontinued operations

Gain on disposal of SCI Cap Horn 388Gain on disposal of Econocom Suisse SA 581Income related to discontinued operations 969Lease contract portfolio of Econocom USA Inc. (498)Loss on disposal of Ace Computer (57)Disposal of St Thibault building (175)Expenses related to discontinued operations (730)Profit on discontinued operations before tax 239Income tax on discontinued operations 0Net profit on discontinued operations 239

Discontinued operations at December 31, 2004 Gains (losses)on discontinued operations

Maintenance of Econocom Services SA 1,014Income related to discontinued operations 1,014Econocom Suisse SA (497)SCI Cap Horn (783)Expenses related to discontinued operations (1,280)Loss on discontinued operations before tax (266)Income tax on discontinued operations (231)Net loss on discontinued operations (497)

2-2-6 Assets and liabilities held for sale anddiscontinued operations


100 •

(in € thousands)

2005 2004Net realizable value Net realizable value

Gross Provisions Net Gross Provisions NetEquipment in the process of refinancing 5,033 5,033 3,526 3,526Other inventories 4,246 (615) 3,631 3,967 (435) 3,532

IT and telephony equipment 3,024 (101) 2,923 3,068 (195) 2,873Spare parts 1,222 (514) 708 899 (240) 659

Total 9,279 (615) 8,664 7,493 (435) 7,058

Equipment in the process of refinancing corresponds to hardware and software purchased and allocated to leases. No impairment has been recorded in relation to these assets.

Changes in inventories At December 31, Change in Other At December 31,2004 inventories changes 2005

Equipment in the process of refinancing 3,526 1,497 10 5,033Other inventories 3,967 124 155 4,246

IT and telephony equipment 3,068 (44) 3,024Spare parts 899 168 155 1,222

Total 7,493 1,621 165 9,279

Provision for impairment At December 31, Additions Reversals Other At December 31,of inventories 2004 changes 2005Equipment in the process of refinancing 0 0Other inventories (435) (184) 101 (97) (615)

IT and telephony equipment (195) 34 (161)Spare parts (240) (184) 67 (97) (454)

Total (435) (184) 101 (97) (615)

The other changes mainly arise from companies acquired during 2005.

2-2-7 Inventories



(in € thousands)

2005 2004Gross 136,501 151,554Refinancing institutions 52,175 48,703Other 84,326 102,851Provisions for doubtful receivables (5,491) (9,135) Total 131,010 142,419

Refinancing institutions correspond to financial institutions, including bank subsidiaries. Payment for this equipment is received within two weeks of its sale. The significant amount recorded under receivables due from refinancing institutions is attributable to high levels of business in December, reflecting the seasonal nature of the Financial Services activity.

At December 31, Additions Reversals Other At December 31,2004 changes 2005

Provision for doubtful receivables 9,135 306 (4,132) 182 5,491

The other changes arise from companies acquired during 2005.

The self-financed contracts held by Promodata SNC which are being progressively transferred to Econocom Location SASare considered to be finance leases under IFRS, which leads to the recognition in revenues of the discounted value of leasepayments and recognition in costs of the carrying amount of the equipment.To take account of recovery risks in respect of these future lease payments, a rate of provision has been applied for each client.In 2005, one of the largest contracts was bought out early, which led to the related provision being released.

2-2-8 Trade receivables

(in € thousands)

2005 2004VAT 2,675 1,986Due from suppliers 3,786 2,869Advances to agents 1,418 2,204Factoring receivables 7,889 3,250Sundry receivables 4,165 4,560Other receivables 19,933 14,869

Prepaid expenses 3,680 3,610Miscellaneous current assets 42 147Other current assets 3,722 3,757

Other receivables primarily correspond to receivables due from related parties.Prepaid expenses relate to maintenance contracts within the Managed Services business.The rise in factoring receivables reflects an increase in the available drawdowns of Econocom Products & Solutions SASwhich were not used as of December 31, 2005.

2-2-9 Other receivables and other current assets


102 •

2-3-1-1 Share capital andadditional paid-in capital

On July 20, 2005, Econocom Groupissued 265,000 new shares for a total of ¤1,110,000, representing¤143,000 in share capital and an issue premium of ¤967,000.

As of December 31, 2005, the Company’s capital was made upof 29,000,000 fully paid-up ordinaryshares, representing ¤16,181,000. There is no mention of the shares’nominal value and all shares give the same right to vote and dividendpayment. There is no different typeof shares. There are 15,084,740bearer shares and 13,915,260registered shares.At the same date, total additionalpaid-in capital came to ¤55,038,000.The Company’s authorized capital,including subscribed capital,amounted to ¤15,895,000. This authorization is valid until 2010.

Movements in the number of shares outstanding were as follows during the year:

As of December 31, 2004 30,000,000Shares issued 265,000Shares cancelled (1,265,000)As of December 31, 2005 29,000,000

2-3-1-2 Translation adjustments

The translation adjustments are the consolidated amount of translationadjustments in all subsidiaries that do not use euro as main currency. The ¤423,000 recorded during the year in translation adjustments primarilyreflect the impact of the stronger dollar and pound sterling against the euro.Exchange differences recognized in equity break down as follows:

(in € thousands)

2005 2004Cash 41,364 45,680Cash in hand 10 39Demand accounts 41,354 45,641Cash equivalents 18,700 14,368Term accounts 4,634 8,295Marketable securities 14,066 6,073Cash and cash equivalents 60,064 60,048

Cash equivalents consist of investments with maturities of less than three months that are readily convertible into known amounts of cash and are not exposed to any material risk of impairment.None of the Group’s cash or cash equivalents are subject to any restrictions.

(in € thousands)

2005 2004CurrencySwiss franc (CHF) 28US dollar (USD) 103 (231)Pound sterling (GBP) 110 (7)

Total 213 (210)

2-2-10 Cash and cash equivalents

2-3-1 Equity



2-3-1-3 Stock option plans

Since 1998, certain employees, managers and officers have been awarded stock options based on agreed exerciseprices. The characteristics of the stock option plans in force are as follows:

Plan Number of options Expiration date Exercice priceoutstanding (in €)

1998 2,400 1.851999 228,000 November 2007 (*) 8.752001 3,240 February 2006 3.27

331,600 September 2006 Between 3.59 and 4.5024,000 January 2007 4.73

2003 60,000 January 2008 4.062004 100,000 December 2008 4.72

6,500 January 2009 5.31530,172 November 2009 Between 5.85 and 5.89

2005 50,000 January 2010 5.98100,000 May 2010 6.52

Total 1,435,912(*) Under the Belgian law of December 24, 2002, subject to the beneficiaries’ consent, the exercise period of stock options may be extended for a maximum

of three years, without any additional tax charge. Accordingly, the Stock Option Committee decided to extend the exercise period for options granted in 1999 by three years, thus amending the expiration date from November 2004 to November 2007.

General disclosures Specific factors for IFRS 2Plan Number of options Fair value (1) Volatility Duration Dividends RFIR (2)

outstanding (in e)1998 2,4001999 228,0002001 3,240

331,60024,000

2003 60,000 1.97 65% 5 years 0.10 4.0%2004 100,000 2.07 56% 5 years 0.10 3.5%

6,500 2.36 56% 5 years 0.10 3.5%530,172 2.10 43% 5 years 0.10 3.5%

2005 50,000 1.84 40% 5 years 0.15 2.8%100,000 1.98 38% 5 years 0.15 2.8%

Total 1,435,912(1) Fair value of the option in ¤.(2) RFIR: risk-free interest rate.

The weighted average price of the option is equal to the exercise price.The expected volatility is calculated by the stockbroker managing the share on a daily basis and over a durationconsistent with the duration of the options and the historical movements in the share price.A detailed description of these option plan grants is provided in section 11 of Corporate Governance.


104 •

2-3-1-4 Treasury shares

Movements in treasury shares were as follows during the year:

Number of shares Value (in € thousands)

As of December 31, 2004 427,399 2,526Acquisitions 1,469,749 9,272Disposals (591,420) (3,693)Cancellations (1,265,000) (7,846)As of December 31, 2005 40,728 258

These treasury shares are held by Econocom Group SA/NV for a maximum period of 18 months. The total amount of acquisitions cannot exceed 10 % of share capital.The acquisition cost of treasury shares purchased and disposal gains on shares sold were deducted from or added toequity, respectively.

2-3-1-5 Dividends

At the Annual General Meeting to be held on May 16, 2006, the Board of Directors willrecommend a gross dividend per share of ¤0.16 for 2005, to be paid in early June 2006.The financial statements in thisregistration document are presentedbefore the appropriation of profit and therefore do not include the above-mentioned dividend,which is subject to shareholderapproval.

2-3-1-6 Minority interests

(in € thousands)

As of December 31, 2004 3502005 profit attributable to minority interests (77)Corporate actions 105Purchase of minority interests (15)

As of December 31, 2005 364

During the year the capital of Albis GmbH – which is 65%-owned byEconocom Group SA/NV – was paid up, leading to an increase in minorityinterests.The merger between Econocom Telecom SAS, Signal Service SA and Econocom Products & Solutions SAS required Econocom Group to purchase minority interests in Econocom Telecom SAS.

Movements in the number of options outstanding during 2005 and 2004 can be analyzed as follows:

2005 2004Options outstanding as of January 1 2,074,992 1,608,548Options granted at the end of y-1 but accounted for in y 122,172Options granted during the year 150,000 506,500Options exercised during the year (856,420) (35,000)Options expiring during the year and forfeited (54,832) (5,056)Options outstanding as of December 31 1,435,912 2,074,992

In accordance with IFRS 2 – Share-based Payment, stock options granted after November 7, 2002 have been measured and recognized in the Group’s financial statements.Stock option plans had a ¤410,000 impact on the Group’s equity as of December 31, 2005, and the related charge for the year came to ¤350,000.



2-3-2 Long- and short-term provisions

(in € thousands)

Provisions Restructuring Business Employee- Tax and legal Deferred Other Totalcontingencies related contingencies commission contingencies

contingenciesAs of December 31, 2004 1,241 504 1,203 965 3,849 5,522 13,284Additions 2 4 334 4 299 73 716Reversals (542) (450) (893) (312) (388) (2,585)Utilizations (126) (17) (43) (3,928) (4,114)Changes in scope of consolidation 70 149 140 (323) 36Translation adjustments 4 5 9Other movements (1,397) 246 (1,151)As of December 31, 2005 645 41 750 1,109 2,443 1,207 6,195Short-term provisions 41 750 1,085 2,443 631 4,950Long-term provisions 645 24 576 1,245

2005 2004Long-term provisions 1,245 2,187Short-term provisions 4,950 11,097

Total provisions 6,195 13,284

Long-term provisionsThe restructuring provisions recorded in the balance sheet relate to various restructuring operations carried out in 2003 and 2004 concerning the French subsidiaries of Econocom Services SA and Econocom Products & Solutions SAS. Long-term provisions are not discontinued.

Short-term provisionsProvisions for employee-related contingencies primarily concern litigation before the labor courts with former French employees.The increase in provisions for tax and legal contingencies relates to the Group’s newly acquired companies.The decrease in provisions for other contingencies reflects the payment for the purchase of minority interests.

Provisions for deferred commissions are calculated, contract-by-contract, on the non-guaranteed future value of refinancedequipment, reduced as appropriate by the residual commercial value of contract.Provisions for other contingencies at December 31, 2005 mainly relate to:¤360,000 of provisions for rent on two unused buildings in the UK.¤320,000 of provisions related to a put option granted to a top manager of Econocom France SAS (see note 2-5-3).¤527,000 of provisions on Promodata. On the acquisition of this company in October 2002, four managers benefited froma share purchase plan in respect of its American parent company, Comdisco Inc. using out a loan from an American bank.As Comdisco Inc. has been declared bankrupt, the shares have lost all value. One of the managers initiated litigationagainst his employer, Promodata SNC. The provision corresponds to an estimate of the risk.


106 •

The mortality and staff turnoverassumptions for French subsidiariesare based on the assumptions set out in the “Syntec” collectivebargaining agreement which is applicable to service companies in France.

Movements in the Group’sobligations for pensions and otherpost-employment benefits for employees in France.

(in € thousands)

As of December 31, 2004 451Expense for the year 133 As of December 31, 2005 584

• The benefit is calculated by takingas a given the length of service thatthe employee would have had at 65years of age, whatever his actual ageon retirement between 60 and 65.• Once the employee has attainedfive years service, the benefit is equalto one month’s salary plus 1/5th of amonth per additional year of service. • There is no ceiling on the amountof the retirement benefit.

Assumptions

The following rates were used in 2005 and 2004 to measure the Group’s pension and other post-employment benefit obligations:

2005 2004Discount rate 5.5% 5.5%Average rate of salary increases 3% 3%

In certain countries, Groupemployees receive supplementarypensions either through definedcontribution plans or defined benefitplans.The Group’s obligation under defined contribution plans is limitedto the payment of contributions,which are expensed as incurred (see note 2-4-2).Only French subsidiaries are coveredby defined benefit plans. The Group’s obligations under these French plans are calculated in accordance with the “Syntec”collective bargaining agreement.

• The legal age of retirement is set at65, with the existence of a possibilityto leave as of 60 years of age.

2-3-3 Pension and other post-employment benefit obligations



2-3-4 Current and non-current financial liabilities(in € thousands)

2005 2004Finance lease liabilities 6,931 6,603

Liabilities relating to assets held under finance leases (where Econocom is the lessee) 4,255 4,299Finance lease liabilities (where Econocom is the lessor) 2,676 2,304

Bank overdrafts 16 82Other borrowings 82 103Long-term borrowings bearing interest 7,029 6,788Short-term portion of bank borrowings 1,123 4,092Finance lease liabilities 790 1,880

Liabilities relating to assets held under finance leases (where Econocom is the lessee) 129 0Finance lease liabilities (where Econocom is the lessor) 483 1,048Purchase commitments under finance leases 178 832

Bank overdrafts 4,081 840Other borrowings 4,816 3,190

Factoring payables 4,288 3,189Other 528 1

Short-term borrowings bearing interest 10,810 10,002

(in € thousands)

Long-term financial liabilities analyzed by maturity 2005 1 to 5 years > 5 yearsFinance lease liabilities 6,931 3,568 3,363

Finance lease liabilities (where Econocom is the lessee) 4,255 892 3,363Finance lease liabilities (where Econocom is the lessor) 2,676 2,676

Bank overdrafts 16 16Other 82 82

Total 7,029 3,666 3,363

Long-term financial liabilities analyzed by maturity 2004 1 to 5 years > 5 yearsFinance lease liabilities 6,603 3,077 3,526

Finance lease liabilities (where Econocom is the lessee) 4,299 773 3,526Finance lease liabilities (where Econocom is the lessor) 2,304 2,304

Bank overdrafts 82 82Other 103 103

Total 6,788 3,262 3,526

Average effective rate 2005 2004Bank borrowings 3.00% 3.00%Liabilities relating to assets held under finance leases 3.03% 2.98%Bank overdrafts 3.75% 3.75%Factoring payables 2.75% 2.75%

All long-term financial liabilities are denominated in euros.


108 •

2-3-5 Other payables and other current liabilities

The enclosed liabilities are not recorded in the balance sheet.

(in € thousands)

Lease liabilities analysed by maturity

Less than 1 to 5 More than Total Dec. Total Dec.1 year years 5 years 31, 2005 31, 2004

Minimum future paymentsLease liabilities: Buildings 804 2,923 2,178 5,905 496Lease liabilities: Cars 53 58 0 111 210Total 857 2,981 2,178 6,016 706

Lease charges over the period 2005 2004Lease liabilities: Buildings 759 818Lease liabilities: Cars 102 153Total 861 971

(in € thousands)

2005 2004Accrued taxes and personnel costs 24,597 22,571

Dividends payable 100 22

Customer prepayments 1,943 3,313

Other payables 26,640 25,906

Other 8,933 12,458

Deferred income 16,645 25,598

Miscellaneous current liabilities 3,965 2,757

Other current liabilities 29,543 40,813

2-4-1 Revenue from continuing operations



a bonus calculated as follows:(average price of the EconocomGroup share during March 2008 –benchmark value of the PhantomShares) x the number of PhantomShares granted.

Group share performance. If theaverage price of the EconocomGroup share on the EuronextBrussels market reaches ¤12 duringMarch 2008, and if the beneficiaryemployee is still a member of the Group, he or she will receive

The “Other” item primarilycorresponds to the ¤6,445,000 loan granted to Econocom ExpertInternational Holding BV by the holding company Econocom International NV.

Deferred income relates to maintenance contracts, up-front billing and the FinancialServices business in an amount of ¤11,411,000.

Accrued personnel costs include¤26,000 relating to the 2005International Phantom Share GrantPlan. This plan, which was set up in July 2005, provides each Groupemployee with an entitlement toreceive a bonus, as of March 31,2008, based on the Econocom

Revenue from sales of goods is recognized when it is probablethat the economic benefitsassociated with the transaction will flow to the Econocom Group.When an uncertainty arises aboutthe collectibility of an amount alreadyincluded in revenue from the sale

of goods, the uncollectible amount,or the amount in respect of whichrecovery has ceased to be probable,is recognized as an expense.

Revenue from sales of services isrecognized in the accounting periodin which the services are rendered

by reference to their stage of completion.

Claims, penalties or possible losses,which are monitored on a statisticalbasis, were not material as ofDecember 31, 2005.

(in € thousands)

2005 2004Sales of goods 191,068 203,080Finance leases 247,792 298,650Sales of services 111,363 99,705Other revenue from continuing operations 721 958Total 550,944 602,393

Date of grant April 30, 2005Exercise date March 31, 2008Valuation date December 31, 2005Price of underlying ¤ 6.62 Activation threshold ¤12.00Risk-free interest rate 3%Volatility 23%Estimated dividend ¤0.16Average turnover 13%Fair value (1)

¤96.61Valuation (2) at December 31, 2005: ¤26,000

1) Estimate for 350 options, being the amount per beneficiary.(2) Amount including social security, for all beneficiaries.

Disclosures concerning the valuation of the Phantom Shares


110 •

2-4-3 External expenses(in € thousands)

2005 2004Rent and rental charges (4,024) (3,672)

Repairs and maintenance (1,362) (1,573)

Supplies to the company (5,902) (5,080)

Remuneration of third parties (16,039) (15,211)

Agents’ commissions (15,819) (14,508)

Advertising and documentation (1,644) (1,904)

Sub-contractors (3,038) (2,802)

Other services and sundry goods (2,458) (5,448)

Total (50,286) (50,198)

2-4-2 Personnel costs(in € thousands)

2005 2004Wages and salaries (56,427) (54,332)

Payroll costs (18,403) (17,496)

Contributions to defined contribution supplementary pension plans (1,373) (1,707)

Provision expense for pension and other post-employment benefit obligations (133) (39)

Employee profit-sharing (401) (238)

Other (2,756) (2,389)

Total (79,493) (76,201)

Expenses relating to defined benefit plans only concern the Group’s French subsidiaries.Further details about these plans are provided in note 2-3-3.

The impact of share-based payment plans can be analyzed as follows:

2005 2004Stock options 350 60

Phantom shares 26

Total 376 60

Details relating to the Group’s stock option and Phantom Share plans are provided in notes 2-3-1 and 2-3-5 respectively.



2-4-4 Depreciation, amortization and provisions(in € thousands)

2005 2004Intangible assets - Franchises, patents, licenses etc. (632) (645)

Property, plant and equipment – Finance leases (11,267) (9,426)

Other items of property, plant and equipment (1,745) (1,795)

Investment property (31) (31)

Provisions against inventories (83) 1,401

Short-term and long-term provisions 2 057 (2,395)

Total (11,701) (12,891)

Additions to and reversals of restructuring provisions are included in operating profit.

2-4-5 Impairment losses on current assets(in € thousands)

2005 2004Impairment on doubtful receivables (306) (4,969)

Reversal of impairment on doubtful receivables 4,132 9,584

Total 3,826 4,615

2-4-6 Other operating income and expenses

(in € thousands)

2005 2004Gains on sales of property, plant and equipment and intangible assets – operating activities 106 107

Losses on sales of property, plant and equipment and intangible assets – operating activities (136) (1,164)

Losses on sales of trade receivables (208) (341)

Other operating income, net 1,086 534

Total 848 (864)


112 •

2-4-8 Other financial income and expense(in € thousands)

2005 2004Gains on disposal of financial assets 48 150Reversal of impairment of financial assets 4Dividends 62Other financial income 240 214Financial income 288 430

Losses on disposal of financial assets (69)Losses on disposal of shares (55)Expenses on long-term liabilities (250) (528)Financial expense (250) (652)

Gains on disposal of financial assets essentially arose on the sale of equity warrants and units in money-marketmutual funds.Other financial income corresponds to interest on loans and advances to related parties (see related party disclosuresin note 2-5-6).

The Econocom Group did not have any hedging instruments in place as of December 31, 2005.

2-4-7 Financial income and expense relating to operating activities(in € thousands)

2005 2004Financial income relating to operating activities 705 513Income from current assets 413 663Operating financial expenses relating to bank overdrafts (320) (266)Operating financial expenses relating to factoring (996) (924)Exchange (losses)/gains (38) 299Financial income/(expense), net – operating activities (236) 285

Net exchange gains/(losses) recorded in the income statement(in € thousands)

2005 2004CHF 7 19USD (23) 58GBP (22) 222Total (38) 299

The change in this item in 2005 reflects the impact of the stronger US dollar and pound sterling against the euro.



2-4-9 Income taxesIncome tax expense

Analysis of the income tax expense:

(in € thousands)

2005 2004Current taxes (6,821) (1,577)

Deferred taxes (1,653) (2,327)

Income tax expense – continuing operations (5,168) (3,904)

Income taxes related to discontinued operations 231

Total income tax expense (5,168) (3,673)

Profit before tax including profit (loss) on discontinued operations 19,268 17,371

Income tax expense (5,168) (3,673)

Effective tax rate derived from comparison of the Group’s income tax expense to its profit before tax 26.82% 21.14%

Tax proof between the income tax expense and the profit before tax:

(in € thousands)

2005 2004Net profit 14,177 13,430

Minority interests (77) (99)

Share of profit of companies accounted for by the equity method (120)

Income tax expense 5,168 3,673

Profit before tax 19,268 16,884

Theoretical tax expense at the Belgian standard tax rate (2005: 33.99%; 2004: 33.99%) (6,549) (5,739)

Tax proof:

Permanent differences (767) (881)

Change in unrecognized deferred tax assets 825 (227)

Transactions subject to reduced rates of tax

Differences in tax rates (between the standard Belgian tax rate and the tax rates of foreign subsidiaries) 230 (391)

Adjustments to deferred taxes recognized in prior periods 64 117

Deferred tax assets related to tax loss carryforwards 952 (90)

Tax credits and other taxes 77 3,539

Actual tax expense (5,168) (3,672)


114 •

The permanent differences are mainly related to the following items :

(in € thousands)

2005 2004Impairment

Goodwill and excess depreciation and amortization (54) (68)

Non-taxable profits

Other non-taxable or non-deductible income and expenses (713) (813)

Total (767) (881)

Deferred taxes

Change in deferred tax liabilities:

(in € thousands)

2005 2004At beginning of year (3,375) (5,233)

Income (expense) for the year 1,657 1,858

Effects of changes in foreign exchange rates, scope of consolidation and reclassifications

Deferred taxes on items recognized directly through equity

At end of year (1,718) (3,375)

Change in deferred tax assets:

(in € thousands)

2005 2004At beginning of year 2,339 6,282

Income (expense) for the year (5) (3,943)

Deferred tax assets related to tax loss carryforwards

Adjustments to deferred taxes recognized in prior periods

Effects of changes in foreign exchange rates, scope of consolidation and reclassifications

Deferred taxes on items recognized directly through equity

At end of year 2,334 2,339



Sources of deferred tax assets and liabilities:

(in € thousands)

Assets Liabilities Net12/31/05 12/31/04 12/31/05 12/31/04 12/31/05 12/31/04

Intangible assets 70 105 (100) 70 5

Property, plant and equipment 410 1,215 410 1,215

Inventories 47 0 47

Financial instruments 3 89 (126) (7) (123) 82

Other liabilities 230 167 (74) (1,664) 156 (1,497)

Provisions 26 (43) (51) (17) (51)

Other liabilities 26 159 (1,055) (442) (1,029) (283)

Tax loss carryforwards 1,569 557 (420) (1,111) 1,149 (554)

Deferred tax assets (liabilities), net 2,334 2,339 (1,718) (3,375) 616 (1,036)

Deferred tax assets in the balance sheet 2,334 2,339 2,334 2,339

Deferred tax liabilities in the balance sheet (1,718) (3,375) (1,718) (3,375)

Net balance 616 (1,036)

Reversing within 12 months 1,389 2,184 (1,718) (3,375) (329) (1,191)

Reversing more than 12 months hence 945 155 945 155

At December 31, 2005, the Group has tax loss carryforwards whose expiry dates are as follows:

(in € thousands)

2005 20042005 32,2792006 326 1,92720072008 267 6692009Thereafter 155 136No expiry date 61,609 65,332

Total 62,357 100,343

The tax loss carryforwards which expired in 2005 were not used by our American (32 048) and Italian (231) subsidiaries.It is recalled that, in 2005, the Group sold the portfolio of its American subsidiary and it is disengaging from the American market.


116 •

The Group’s unrecognized deferred tax assets at December 31, 2005 relate to the following items:

(in € thousands)

Gross value Total deferred Recognized Unrecognized tax assets deferred tax assets deferred tax assets

Tax loss carry forward 62,357 20,590 1,569 19,021

Other tax credit 6,626 994 994(long-term depreciation)

Other 943 283 283

Total 69,926 21,867 1,569 20,298

A – Current taxesCurrent tax expense is equal to the amounts of income taxes due to tax authorities for the year,calculated on the basis of the lawsand tax rates applicable in the different countries in which the Group operates.

Since its formation, EconocomNederland BV (Netherlands) hasopted for the tax consolidationsystem provided for by article 15 ofthe Dutch 1969 corporation tax law.

Its Dutch subsidiaries:Econocom Services BV and Econocom Products Services BVbenefit from this specific tax regime.

The legal tax rate in Belgium in 2005and 2004 is 33.99%.

Changes in tax rates between 2004and 2005 occurred in the followingcountries:• In the Netherlands2004 34.5% 2005 31.5%• In FranceThe basic corporation tax rate is 33.33% (2004 and 2005).

The Finance act, n° 2004-1484, of December 30, 2004 decided on the progressive removal of the additional corporation taxcontribution which had been set,since 2002, at 3% of the standardtax due. It was reduced to 1.5% at January 1, 2005 and will beeliminated on January 1, 2006.

The Social security finance act, n° 99-1140, of December 29, 1999created an additional tax equal to3.3% of the standard tax due forlarge companies whose corporationtax exceeded ¤763,000.

For Econocom Location SAS, the legal tax rate was thus increasedby 1.1%.

B – Deferred taxesDeferred tax expense is calculated in accordance with the accountingpolicy described in note L in the accounting policies section of the financial statements.

In application of the exemptionprovided by paragraph 39 of IAS 12“Income taxes”, the Group did notrecognize deferred taxes on the temporary differences arising for the undistributed reserves of its subsidiaries.

2-4-10 Earnings per share

Basic earnings per share

2005 2004Operating profit (in ¤ thousands) 18,991 17,834

Net profit for the year (in ¤ thousands) 14,100 13,331

Average number of shares outstanding 29,165,716 29,747,115

Operating profit per share 0.651 0.600

Net profit per share 0.483 0.448

Diluted earnings per share

2005 2004Diluted profit for the year (in ¤ thousands) 14,100 13,331

Average number of shares outstanding 29,165,716 29,747,115

Stock options impact 356,432 395,917

Diluted average number of shares outstanding 29,522,148 30,143,032

Diluted earnings per share 0.478 0.442



Net profit per share is calculated onthe basis of the weighted averagenumber of ordinary sharesoutstanding during the year.

This average takes into accountmovements in the number of ordinary shares during the year,adjusted for changes in the numberof treasury shares held. Changes in treasury shares are analyzed in note 2-3-1.

The diluted average number of shares outstanding represents the weighted average number ofordinary shares outstanding duringthe year, adjusted for changes in the number of treasury shares heldand the impact of the conversion ofall dilutive potential ordinary shares.The dilutive impact corresponds to the exercise of stock options andis calculated using the treasury stockmethod. In view of the nature ofthe Company’s stock option plans

(see note 2-3-1) only the 1999 planand the 2005 plan (which expires in May 2010) have an anti-dilutiveeffect.

No transactions have occurred since the balance sheet date relatingto the Company’s ordinary shares or dilutive potential ordinary sharesthat could have a material impact on the Group’s published earningsfigures.


118 •

2-5-1 Notes to the cash flow statement

The change in the Group’s cash and cash equivalents amounted to ¤16,000 in 2005 (see Note 2-2-10).

Other financial income and expense are set out in Note 2-4-8.

The income tax expense is broken down as follows:

(in € thousands)

Income tax expense 12/31/2005 12/31/2004Current tax expense (6,821) (1,577)

Deferred tax income (expense) 1,653 (2,327)Total (5,168) (3,904)

Movements on current and deferred taxes are set out in note 2-4-9.

Changes in the scope of consolidation had the following impacts on the consolidated cash flow statement:

(in € thousands)

Cash flows from operating activities 1,267Loss on disposal of Ace Computer 17Loss on disposal of Econocom Suisse SA 1,835Gain on disposal of SCI Cap Horn (585)Cash flows from investing activities 955Disposal of Ace Computer 585Disposal of Econocom Suisse SA (83)Disposal of SCI Cap Horn 838Acquisition of A2Z Holding and subsidiaries (257)Acquisition of For Connected (128)

The impact of the disposal of Econocom USA Inc.’s portfolio of activities amounted to:

(in € thousands)

Net cash used in investing activities Disposal of Econocom USA Inc.’s portfolio of activities 1,563



Changes in the scope of consolidation of the Econocom Group in 2005 had a ¤4,167,000 impact on current assetsand liabilities, with no effect on the cash flow statement.

(in € thousands)

Impact of changes in scope of consolidation in 2005Inventories (58)Receivables due within 1 year 7,940Other current assets (18)Trade payables due within 1 year (3,675)Other current liabilities 434Property, plant and equipment (130)Financial assets (21)Current financial liabilities (305)

Breakdown of acquisitions and disposals of companies and operations

Disposal of Ace Computer (equity accounted company)

Sale price $732,000 being ¤585,000Portion of price paid in cash or cash equivalents 100%Cash or cash equivalents of the subsidiary -Current assets and liabilities (included in the change in working capital requirements) -Assets related to the investment -Liabilities related to the financing -

Disposal of Econocom Suisse

Sale price ¤1,926,000Portion of price paid in cash or cash equivalents 100%Cash or cash equivalents of the subsidiary ¤2,009,000Current assets (included in the change in working capital requirements) ¤5,872,000Current liabilities ¤4,636,000


120 •

Disposal of Cap Horn

Sale price ¤838,000Portion of price paid in cash or cash equivalents 100%Cash or cash equivalents of the subsidiary 0Current assets (included in the change in working capital requirements) ¤3,764,000Current liabilities ¤3,512,000

Acquisition of A2Z Holding and its subsidiaries

Purchase price ¤300,000Portion of price paid in cash or cash equivalents 100%Cash or cash equivalents of the subsidiary ¤43,000Current assets (included in the change in working capital requirements) ¤1,690,000Current liabilities ¤4,754,000Assets related to the investment ¤150,000Liabilities related to the financing ¤(355,000)

Acquisition of For Connected

Purchase price ¤224,000Portion of price paid in cash or cash equivalents 100%Cash or cash equivalents of the subsidiary ¤97,000Current assets (included in the change in working capital requirements) ¤82,000Current liabilities ¤153,000Assets related to the investment ¤1,000Liabilities related to the financing ¤50,000



2-5-2 Risk factors

1. Financial risk

The Group’s activities are subject to certain financial risks: market risk (including currency risk),credit risk and interest rate risk. The Group’s overall risk managementprogram focuses on reducingexposure to credit risk and interestrisk by transferring finance leasereceivables to refinancing institutions.

Financial risk management is carriedout directly by Group management.

1.1. Market risk

1.1.1. Foreign exchange riskThe Group operates internationallybut over 95% of its transactions take place in the euro zone. Only the operations of the Group’sUK subsidiary are exposed to foreignexchange risk, relating to the poundsterling. This exposure is limited by purchases and sales beingdenominated in the same currency.The Econocom Group does nothedge its exposure to foreignexchange risk as it is not deemed to be material.

1.1.2. Price riskThe Econocom Group holds units in the MBO Capital venture capitalfund. These assets are held for saleand the funds invested are notaccessible. They are recorded at fairvalue in the financial statements.

1.2. Credit risk

The Group has no significantexposure to credit risk. It has policiesin place to ensure that sales ofgoods and services are made toclients with an appropriate credithistory. The Group’s exposure is alsolimited as it does not have anyconcentration of credit risk and usesfactoring solutions for the Products &Solutions and Managed Servicesbusinesses and non-recourserefinancing with bank subsidiaries in the Financial Services business.

1.3. Interest rate risk

The Group’s income and operatingcash flows are substantiallyindependent of changes in interestrates. Sales of leases to refinancinginstitutions are systematically basedon fixed rates. The income arising on these contracts is therefore set at the outset and only varies if the contract is amended.

The Group has a low level of long- and short-term debt. Variable-rate borrowings primarilyrelate to factoring.

1.4. Liquidity riskThe Group is able to maintainflexibility in terms of liquidity levels by using factoring solutions,systematically selling leases to banksubsidiaries and, where possible,making cash payments in return for discounts.

2. Specific risks related to operations

2.1. Risks relating toManaged Services contracts

The main risk in relation to ManagedServices contracts is the noticeperiod for contract terminations. This period is traditionally longenough to enable the Group to makethe appropriate staffing changes,particularly for significant contracts.However, in certain circumstancesthe notice period may be limited to one month, in which case the Group has to anticipate the possibility of the contract being terminated in order to take the necessary measures, particularlyin relation to redeploying employees.In addition, a portion of Econocom’srevenues are generated by sub-contractors, with a goal of increasing flexibility.


122 •

5. Environmental risks

The Group does not destroy the machines purchased fromrefinancing institutions at the term ofthe related contracts. The machinesare sold to brokers who areresponsible for managing theapplicable end-of-life procedures and who have provided the Groupwith guarantees that they respect the related regulations.

6. Insurance

The Group is covered against liabilityclaims and property damage viainsurance policies taken out withfirst-rate insurers. It has elected not to take out business interruptioninsurance.

3. Legal risks

The Group operates in variousWestern European countries and is therefore subject to numerousdifferent laws as well as customs, tax and labor regulations. In order to limit its exposure to legal risks, the Group ensures that it hassubsidiaries in each country withmanagers who are fully aware of theapplicable local laws and regulations.

Thanks to its headquarters in Brussels, Econocom is close to the source of new Europeanlegislation and regulations.

The Group is not aware of anyexceptional events or litigation likelyto have a substantial impact on itsfinancial position, assets, business or the results of its operations or those of its subsidiaries.

4. Employee-related risks

To the best of the Group’sknowledge, it is not exposed to anyemployee-related risks other thanthose arising in the normal course of business for companies of acomparable size based in Europe.The majority of the workforce is employed in the Group’s French or Belgian subsidiaries.

2.2. Dependency risk

The Econocom Group continuallystrives to broaden its client portfolioas part of its development strategyto gain market share. None of theGroup’s clients represents over 5%of total consolidated revenue, and no supplier represents morethan 25% of the Group’s totalpurchases. The Group’s operationsare not dependent on any specificpatent or on any licenses for brandswhich it does not own.

2.3. Competitive risk

The IT services market is extremelycompetitive, and has been for a longtime. There are a limited number of competitors at an internationallevel for all of the Group’sbusinesses. However, in eachcountry where it has operations and in each of its businesses, the Group faces strong competitionfrom international, national or localplayers.



2-5-3-1 Commitments to purchase shares

CHanSE

On October 29, 2004, EconocomManaged Services SA/NV (Belgium)acquired a 79.57% stake in the Belgian company CHanSE SA,with the long-term aim of holding a 100% interest in the company.CHanSE SA’s main activity is the management of mobile phonefleets and mobile and/or fixedtelephone lines.

CHanSE SA has a wholly-ownedsubsidiary, 2B Mobile SPRL, which is a retail specialist for mobilephones and accessories. During2005, CHanSE SA’s name waschanged to Econocom TelecomServices SAS (ETS) and 2B Mobilebecame Econocom Telecom SPRL.

Econocom Managed ServicesSA/NV has undertaken to acquirethe remaining shares in CHanSE SAin two phases: one-third of theshares not held by EconocomManaged Services SA/NV (Belgium)will be sold on June 30, 2006, and the remaining two-thirds on June 30, 2008. The purchaseprice for these additional interests

will be determined based on ETSSA’s consolidated operating profitfigures from 2004 through 2007. The total price may not be lowerthan ¤275,000 and may not exceed¤1,000,000. In November 2004,Econocom Managed ServicesSA/NV sold 5% of its interest in the company to one of its seniormanagers.

Further to this sale, EconocomManaged Services SA/NV undertookto buy back this 5% stake inaccordance with the same termsand conditions set out above. Based on these calculation methods,the total purchase price for this stakemay not be lower than ¤50,000 and may not exceed ¤196,000.

The contingent liability represents thecommitment to acquire shares whichis payable in June 2006. Its amountis estimated at ¤325,000.

Econocom Products and Solutions (EPS SAS) France

Econocom France SAS had granteda put option to one of the company’ssenior managers in relation to 375 shares (2.5% of the capital) that he held in Econocom Telecom SAS.

During 2005, Econocom TelecomSAS was sold to Belgium-basedEconocom Managed ServicesSA/NV, and subsequently mergedwith Signal Service into EconocomProducts and Solutions.

Following this merger, which was completed in May 2005, the above-mentioned 375 shares in Econocom Telecom SAS (or 2.5% of the company’s capital)were converted into 8,625 shares in Econocom Products andSolutions, representing 0.44% of that company’s capital.

A new agreement including a call option was signed betweenthe above-mentioned minorityshareholder and EconocomManaged Services SA/NV,exercisable from December 31, 2006through December 31, 2012. The price of the shares purchasedon the exercise of this call optionmay not be lower than ¤280,000and may not exceed ¤600,000.

A provision was recorded in the 2005 consolidated financialstatements for the estimatedfinancial consequences of this agreement.

2-5-3 Off-balance sheet commitments


124 •

The company has a good medium-term economic outlook and the telecommunications marketis in a strong development stage. However, as of December 31, 2005,For Connected Services had onlybeen operating for some fivemonths, making it impossible to accurately measure the additionalpurchase consideration which may be payable.

As of December 31, 2005, the additional purchaseconsideration was estimated to represent a contingent liability of¤510,000, provided the company’sprofitability improves significantlyover the next few years.

A2Z Holding

In August 2005, Econocom GroupSA/NV acquired the entire capital of the Belgian company A2Z Holdingwhich in turn held 100% of the Belgium-based company A2Z Solutions and France-basedData Networks France.

The management team of A2ZHolding has developed an innovativeapproach to providing IT andtelecommunications services to SMEs.

purchase consideration it would benecessary to obtain confirmation of the positive trend illustrated by the company’s 2005 results.

This additional purchaseconsideration, which would bepayable in 2007, represents acontingent liability of ¤165,000. The assumptions underlying the payment of this amount are thatSynopse SAS will achieve its budgettargets and forecasts for 2006 and2007 and that no events will occurprior to December 31, 2007 whichcould amend the applicable pricecalculation formula in accordancewith the specific clauses provided for in the sales contract.

For Connected Services

On August 8, 2005, EconocomTelecom Services SA acquired theentire capital of For ConnectedServices, a Dutch companyspecializing in Data Mobile services.The purchase price for this companymay include additional purchaseconsideration calculated based onthe company’s average operatingprofit for the period from September 1,2005 through December 31, 2008.The total purchase price may not be lower than ¤175,000 and maynot exceed ¤2,000,000. Only the minimum purchase price of ¤175,000 was taken into accountin the 2005 consolidated financialstatements.

2-5-3-2 Commitments to pay additional purchaseconsideration (earn-out clauses)(Goodwill is addressed in note 2-2-1 Goodwill)

Synopse SAS

Synopse SAS specializes in consulting and IT integration and has been at the forefront of the implementation of the ITInfrastructure Library (ITIL) in France.

Synopse SAS was acquired byEconocom Managed Services SA(France) in 2003. In accordance withan addendum to the sale agreementsigned on June 7, 2005, additionalpurchase consideration may be payable based on a multiple of the company’s average profit fromordinary activities for the period fromJanuary 1, 2005 through December31, 2007. The total purchase price of the company may not be lowerthan ¤400,000, which was the pricerecorded in the Econocom Group’sfinancial statements at the time of the acquisition in 2003.

As of December 31, 2005, afteranalyzing the past, present andfuture situation of Synopse SAS, the Group felt that in order to recorda provision for this additional



The sale agreement provides for additional purchase considerationto be calculated based on the A2Zgroup’s financial performance and the period of time the formershareholders occupy a managerialrole within the company. The purchase price will bedetermined based on a multiple ofA2Z Holding’s average consolidatedoperating profit over the period from September 1, 2005 throughDecember 31, 2008 or December31, 2009, depending on the optionchosen. Irrespective of which of these options is selected, the purchase price may not be lower than ¤300,000 and may not exceed ¤9,500,000.Only the minimum purchase price of ¤300,000 was taken into accountin the 2005 consolidated financialstatements.

The Econocom Group has beenrestructuring this Belgian start-upcompany over the last four monthsin order to maximize its chances of success. This has involved a significant amount of investmentover the four-month period, and the company made a negativecontribution to consolidated profitwhich is expected to continue into 2006.

The Group considers that too great a degree of uncertainty remains withrespect to the company’s outlook in order to be able to recognize aprovision for any possible additionalpurchase consideration.

Depending on the option chosen,the related contingent liability –calculated based on the company’sbusiness plan – represents eitherzero in 2008 or ¤650,000 in 2009.

2-5-3-3 Commitment to invest in a venturecapital fund

MBO Capital venture capital fund

Since October 2002, EconocomGroup has invested ¤3,180,000 in the MBO Capital venture capitalfund and has irrevocably committedcapital of up to ¤5,000,000 to the fund.

This represents a 10-year unsecuredinvestment, which offers expectedreturns exceeding the risk-free rate.

Funds are not accessible before the end of the term and furtherdisbursements can be called for untilMarch 2008. As of December 31,2005, the maximum amount still to be called totaled ¤1,820,000.

In 2005, the Group’s investment in this fund was recognized in the consolidated financial statementsat fair value as of December 31, in accordance with IAS 32 - 39relating to financial instruments (see note 1-4).


126 •

2-5-3-4 Guarantees

(in € thousands)

MortgagesBook value of buildings pledged as collateral 2,466Collateral value 3,332

Guarantees given 23,447• Book value of assets pledged by certain subsidiaries as guarantees for factors 3,928• Guarantees given (amounts authorized) by Econocom Group to third parties

(banks and/or suppliers) on behalf of subsidiaries 19,519

Seller’s warranties 877Granted to the acquirers of the following companies:• Inexis by Econocom Products and Solutions SAS (France) • SCI Cap Horn by Econocom Products and Solutions SAS (France), valid until June 30, 2006 • Econocom (Suisse) by Econocom Group SA, valid until February 28, 2007

2-5-3-5 Commitments under finance leases

(in € thousands)

Rental commitments (lease on company headquarters in Belgium) 4,138

2-5-3-6 Commitments to acquire property, plant and equipment

(in € thousands)

Lease contracts signed in prior years, for delivery in 2005 and subsequent years 15,912

2-5-3-7 Commitments to sell property, plant and equipment

(in € thousands)

Lease contracts signed in prior years, for delivery in 2005 and subsequent years 15,912



2-5-4-2 Statutory trainingentitlement

Under the French Act no. 2004-391of May 4, 2004 relating toprofessional training, the Group'sFrench subsidiaries grant theiremployees an individual entitlementto at least 20 hours’ training peryear, which may be carried forwardfor up to six years. If all or part of the entitlement is not used withinsix years, it is capped at 120 hours.

In accordance with Recommendation2004-F issued on October 13, 2004by the Emerging Issues Task Forceof the French National AccountingCouncil (Conseil National de laComptabilité, or CNC), no relatedcharge was recorded in 2005 by the French subsidiaries concerned.Individual training programs will be set up as of January 1, 2006.

2-5-4-1 Tax audits

Group companies may be subject to tax audits. Where taxreassessment notices are issued,adequate provisions are set aside in the financial statements to coverthe estimated back taxes that mayarise as a result of the audit.

2-5-4 Contingent liabilities

2-5-5 Management remuneration

2005 2004

Remuneration allocated to members of the Board of Directors 2,041,424 1,388,604(including attendance fees) (in €)Remuneration allocated to members of the Group’s management bodies (in €) 4,087,000 2,838,000Stock options held by members of Econocom’s administrative and management bodiesNumber of options outstanding as of December 31, 2005 1,027,400 1,762,828

2-5-6 Related-party transactions

Transactions between the parent company and its subsidiaries, who are related parties, have been eliminated on consolidation and are not presented in this note.

The transactions with related parties summarized below mainly concern the main transactions with the companies in which the Chairman and Chief Executive Officer is a Director.


128 •

(in € thousands)

ALLIANCE SUPPORT SERVICES ECONOCOM INTERNATIONAL NV SCI PERGOLESE AUDEVARD TOTAL2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

I. Asset balances with related parties 5,087 5,901 8 1,637 359 4 5,095 7,9011. Other financial assets 1,625 158 1,783

1.1. Securities other than shares1.2. Loans 1,625 1,6251.3. Other 158 158

2. Trade and other receivables 5,087 5,901 8 12 4 5,095 5,9172.1. Trade receivables 156 422 8 12 4 164 4382.2. Other receivables 4,931 5,479 4,931 5,479

3. Other assets 201 201II. Liability balances with related parties 345 340 6,472 9,461 6,817 9,8011. Liabilities bearing interest 6,445 9,445 6,445 9,445

1.1. Bank borrowings1.2. Finance leases1.3. Bank overdrafts1.4. Other borrowings 6,445 9,445 6,445 9,445

2. Liabilities not bearing interest3. Trade and other payables 345 340 21 16 366 356

3.1. Trade payables 345 340 21 16 366 3563.2. Other payables

4. Other liabilities 6III. Related-party transactions1. Sales of goods 15 119 15 1192. Purchases of goods (48) (189) (48) (189)3. Services provided 692 703 11 703 7034. Services received (2,684) (2,930) (723) (514) (850) (4,257) (3,444)

Econocom International NV is an unlisted holding company which has a 49.27% stake in Econocom Group. Alliance Support Services SA, Audevard and SCI Pergolèse are subsidiaries of Econocom International NV but are not included in the scope of consolidation of the Econocom Group.



SCI PERGOLESE AUDEVARD TOTAL2005 2004 2005 2004 2005 2004

359 4 5,095 7,901158 1,783

1,625158 158

4 5,095 5,9174 164 438

4,931 5,479201 201

6,817 9,8016,445 9,445

6,445 9,445

366 356366 356

6

15 119(48) (189)

11 703 703(850) (4,257) (3,444)


130 •

on self-financed contracts in France:in the absence of any recentpayment issues and of historicalstatistics – as Econocom’s usualprinciple is to put in place non-recourse refinancing of contracts –,provisions have been recognized on the basis of an assessment of the risk. Such provisions are reviewedeach half year as a minimum on thebasis of developments in the positionof the clients and the contracts.• In addition, in the context of the ongoing management of itsoperations, the Group is subject to various claims and litigation whichthe company considers will not leadto any material cost and will not haveany material impact on its financialposition, operations and/or results.

Apart from those related to the judgments made and listedabove, the principal sources of uncertainty are:• the ability to recover, over and above the amounts recognizedin the financial statements, thesubstantial tax loss carryforwards(¤62 million) which exist in severalsubsidiaries;• for amounts which are much lessmaterial, the possible consequencesof the calling on warranties of absence of unrecorded liabilitiesgranted on the small number of disposals made in recent years.

2-5-7 Events after the balancesheet date

Econocom Group shares have beenlisted on the Brussels stock marketsince 1986 and on Euronext Paris(eurozone equities) since September2000, following the purchase of Infopoint via a stock-for-stockexchange.With a goal of streamlining itsstructural base, on January 19,2006, the Group’s managementteam asked the Board of Directors to approve Econocom Group’sdelisting from the Paris stockexchange. This request wasaccepted and the practicalprocedures are currently beingexamined. It is planned to carry out this delisting by the end of September 2006.

For the 2005 fiscal year, the Board of Directors will recomend raising the gross dividend per share to ¤0.16 (i.e ¤0.12 net).The dividend payment will be madeat the begining of June 2006.

The main areas in which judgmentwas exercised by management wereas follows:• Decisions in respect of goodwillimpairment: the methodology appliedrequires taking account of futurecash flows and assumptions inrespect of growth and interest rates.The two main acquisitions in question are A2Z Holding NV and Signal Service SA.• The decision in respect of the valuation of the receivable duefrom Alliance Support Services SAS.The meeting of the first repaymentamount, the significant improvementin this company’s results and the support (existence of a comfortletter) of its shareholder led to it being considered that thisreceivable was recoverable in full.• Valuation of the International planfor the grant of Phantom Shares in 2005 and the stock-optionsgranted since November 2002: the actuarial formulae used areaffected by assumptions in respectof employee turnover, developmentsand volatility of the share price ofEconocom Group and the probabilitythat managers will achieve theirobjectives (see section 2.3.1.3).• Assessment of the probability of recovery of the tax losscarryforwards of our subsidiaries.• Determination of the risk of non-recovery of the lease payments

2-5-8 Assessments made by management and sources of uncertainty


REPORT OF THE STATUTORY AUDITORS ON THE CONSOLIDATEDFINANCIAL STATEMENTSfor the year ended December 31, 2005

132 •

COMPANY FINANCIAL STATEMENTS *for the year ended December 31, 2005


Balance sheet

Income statement

Notes to the company fiancial statements

Cash flow statements

Report of the statutory auditors

* Non consolidated accounts are presented in Belgian GAAP.

134 •

COMPANY FINANCIAL STATEMENTS

Balance sheet as of December 31, 2005

Assets(in € thousands)

2005 2004 2003Fixed assets 89,517 85,115 70,662

I. Start-up costs 153 424II. Intangible fixed assets 412 549 538III. Tangible fixed assets 740 778 826A. Land and buildings 538 563 587B. Plant & equipment, fixtures & fittings 179 192 216E. Other tangible fixed assets 23 23 23IV. Long-term investments 88,365 83,635 68,874A. Related parties 85,296 81,858 68,157

1. Shares 41,242 50,399 41,3132. Receivables 44,054 31,459 26,844

C. Other long-term investments 3,069 1,777 7171. Shares 3,015 1,729 6812. Cash receivables and guarantees 54 48 36

Current assets 18,597 15,458 25,396VII. Receivables due within one year 4,729 11,081 11,214A. Trade receivables 1,614 841 1,316B. Other receivables 3,115 10,240 9,898IX. Short-term investments 308 2,479 8,314A. Treasury stock 258 2,479 4,140B. Other investments 50 0 4,174X. Cash assets 13,458 1,810 5,787XI. Accruals and other assets 102 88 81

Total assets 108,114 100,573 96,058


Balance sheetas of December 31, 2005


Liabilities and shareholders’ equity(in € thousands)

2005 2004 2003Shareholders’ equity 86,623 86,633 86,916

I. Share capital 16,181 16,038 16,038A. Subscribed capital 16,181 16,038 16,038II. Additional paid-in capital 55,038 54,072 54,072III. Revaluation reserve 2,520 2,520 2,520IV. Other reserves 2,294 4,547 6,177A. Legal reserve 1,618 1,604 1,604B. Undistributable reserves 258 2,526 4,156

1. For treasury stock 258 2,526 4,156D. Distributable reserves 418 417 417V. Retained earnings 10,590 9,456 8,109

Provisions and deferred taxes 154 154 285VII. A. Provisions for contingencies and charges 154 154 285

4. Other contingencies and charges 154 154 285Liabilities 21,337 13,786 8,857

IX. Short-term liabilities (due within 1 year) 21,337 13,786 8,857A. Current portion of long-term liabilitiesB. Borrowings 14,028 7,119 2,606

1. Bank borrowings 107 199 1062. Other borrowings 13,921 6,920 2,500

C. Trade payables 1,735 1,897 2,7171. Amounts due to suppliers 1,735 1,897 2,717

E. Accrued taxes and personnel costs 833 247 2721. Taxes other than on income 82 81 962. Personnel costs (incl. social security charges) 751 166 176

F. Other liabilities 4,741 4,523 3,262XII. Accruals and other liabilities 0 0 0

Total liabilities and shareholders’ equity 108,114 100,573 96,058


Income statementfor the year ended December 31, 2005

136 •

Expenses(in € thousands)

2005 2004 2003II. Cost of sales 10,607 9,596 11,022

A. Materials and goods 81 131 1711. Purchases 81 131 171

B. Services and miscellaneous goods 6,578 6,804 8,231C. Personnel costs (incl. social security charges) and pensions 3,448 2,115 1,791D. Amortization/depreciation and write-downs 497 546 503

of start-up costs and of intangible and tangible fixed assets E. Write-downs of inventories, work-in-progress 9

and trade receivables (increases +, reversals -)F. Provisions for contingencies and charges 261

(increases +, utilizations and reversals -)G. Other operating expenses 3 56

V. Financial expense 2,100 361 683A. Interest expense 284 209 515B. Write-downs of current assets other than those

referred to in II E (increases +, reversals -) (47) 27 20C. Other financial expense 1,863 125 148

VIII. Exceptional expense 178 2 16,205B. Write-downs of long-term investments 40 15,755D. Losses on disposal of fixed assets 94E. Other exceptional expense 44 2 450

X.A. Income tax 46 42 63XI. Net profit for the year 11,367 12,382 7,624Total 24,298 22,383 35,597


Income statementfor the year ended December 31, 2005


Income(in € thousands)

2005 2004 2003I. Sales of services 9,940 9,911 9,391

A. Revenue 8,030 7,758 5,231C. Own work capitalizedD. Other operating revenues 1,910 2,153 4,160

IV. Financial income 10,499 12,235 2,236A. Income from long-term investments 10,264 11,500 1,459B. Income from current assets 176 648 551C. Other financial income 59 87 226

VII. Exceptional income 3,859 106 23,970B. Reversals of write-downs of long-term investments 3,682 40 53D. Gains on disposal of fixed assets 129 23,869E. Other exceptional income 48 66 48

X. Tax adjustments and reversals of tax provisions 0 131Total 24,298 22,383 35,597

Appropriation of net profitA. Total profit available for appropriation 20,823 20,491 15,122

1. Net profit for the year 11,367 12,382 7,6242. Retained earnings 9,456 8,109 7,498

C. Appropriations to shareholders’ equity (5,593) (6,535) (3,863)2. Legal reserve 14 0 03. Other reserves 5,579 6,535 3,863

D. Appropriation to retained earnings (10,590) (9,456) (8,109)1. Amount carried forward (10,590) (9,456) (8,109)

F. Profit available for distribution (4,640) (4,500) (3,150)1. Dividends 4,640 4,500 3,150

COMPANY FINANCIAL STATEMENTS for the year ended December 31, 2005

138 •

I. Start-up costs(in € thousands)

Net book value at beginning of year 153

Movements during the year:• New costs incurred• Amortization and write-downs (153)

Net book value at end of year 0

included:• Costs related to capital raising operationscosts related to debt raising operations and other corporate expenses

II. Intangible fixed assets

Franchises,patents,

(in € thousands) licenses, etc. Goodwill

a) Cost

At beginning of year 922 0Movements during the year:• Acquisitions, including own work capitalized 80• Disposals and retirements• Item-to-item transfersAt end of year 1,002

c) Amortization and write-downs

At beginning of year 373 0Movements during the year:• Amounts recorded 217• Amounts acquired from third parties• Amounts cancelled following disposals and retirements 0• Item-to-item transfersAt end of year 590 0

d) Net book value at end of year (a) - (c) 412 0

NOTES TO THE COMPANY FINANCIAL STATEMENTSfor the year ended December 31, 2005


III. Tangible fixed assets Land and Plant and equipment,

(in € thousands) buildings fixtures and fittings

a) Cost

At beginning of year 1,028 428Movements during the year:• Acquisitions, including own work capitalized 180• Acquired from third parties• Disposals and retirements (88)• Item-to-item transfersAt end of year 1,028 520

c) Depreciation and write-downs

At beginning of year 465 236Movements during the year:• Amounts recorded 25 103• Amounts acquired from third parties 12• Amounts cancelled following disposals and retirements (10)• Item-to-item transfersAt end of year 490 341

d) Net book value at end of year (a) - (c) 538 179

Othertangible fixed

(in € thousands) assets

a) Cost

At beginning of year 23Movements during the year:• Acquisitions, including own work capitalized• Disposals and retirementsAt end of year 23

c) Depreciation and write-downs

At beginning of year 0Movements during the year:• Amounts recorded• Amounts cancelled following disposals and retirementsAt end of year 0

d) Net book value at end of year 23


140 •

IV. Long-term investments

(in € thousands) Related parties Other

1. Shares

a) Cost

At beginning of year 49,967 5,000Movements during the year:• Acquisitions 1,051• Disposals (10,938) (165)• Item-to-item transfersAt end of year 40,080 4,835

b) Capital gains

At beginning of year 2,520At end of year 2,520 0

c) Write-downs

At beginning of year 1,779 135Movements during the year:• Amounts recorded 40• Unutilized amounts reversed (135)• Item-to-item transfers (572)At end of year 1,247 0

d) Uncalled commitments

At beginning of year 309 3,136Movements during the year: (198) (1,316) At end of year 111 1,820

Net book value at end of year (a) + (b) 41,242 3,015

2. Receivables

Net book value at end of year 31,459 49

Movements during the year:• Increases 42,952 5• Repayments (33,861)• Write-downs• Reversals of write-downs 3,547• Other movements (43)

Net book value at end of year 44,054 54



V. Holdings in other companiesName of company Shares held

Directly Via subsidiariesNumber % interest % interest

FRANCEEconocom SAS 94,156 99.99 -Econocom Location SAS - - 99.99Atlance France SAS - - 100.00G.I.E. Econocom 50 41.67 58.33Econocom.com SA 2,498 99.99 -Econocom Managed Services SA - - 99.99Infoconseil SARL - - 100.00Econocom France SAS 2,500 100.00 -Econocom Promodata France SA - - 100.00Promodata SNC - - 100.00Synopse SAS - - 100.00SCI Alexandre - - 99.90Econocom Products and Solutions SAS 2,004 0.44 99.56Data Network France - - 100.00BELGIUM - LUXEMBOURGEconocom Products and Solutions Belux SA 479,439 100.00 -Econocom Managed Services SA/NV 40,000 100.00 -Econocom Lease SA/NV 330,000 100.00 -Atlance SA - - 100.00Econocom Telecom Services (ex- Chanse) 2,625 - 74.57Econocom Telecom (ex- 2B Mobile) - - 100.00A2Z Holding 19,800 100.00 -A2Z Solutions - - 100.00Econocom Luxembourg SA - - 100.00Econocom Products and Solutions Luxembourg SA - - 100.00NETHERLANDSEconocom Nederland BV 35,000 100.00 -Econocom Product Services BV - - 99.94Econocom Services BV - - 95.00For Connected Services BV - - 100.00Econocom Expert International Holding BV 682,362 50.10 -OTHEREconocom Albis GmbH 6,500 65.00 -Econocom UK Ltd 8,200,000 100.00 -Econocom SA (Espagne) 62,113 99.99 -Econocom Locazione Italia Spa 145,555 93.57 6.43Aperleasing - - 100.00Econocom USA Inc 2,000,999 100.00 -


142 •

Name of company Data as per last published annual financial statementsYear Shareholders’ Net profit/

ended equity (loss)in thousands

FRANCEEconocom SAS 12.31.05 ¤4,803 ¤1 Econocom Location SAS 12.31.05 ¤21,677 ¤6,198 Atlance France SAS 12.31.05 ¤335 ¤327 G.I.E. Econocom 12.31.05 ¤245 ¤243 Econocom.com SA 12.31.05 ¤28 ¤25 Econocom Managed Services SA 12.31.05 ¤1,347 ¤259 Infoconseil SARL 12.31.05 ¤23 ¤(5) Econocom France SAS 12.31.05 ¤(11,368) ¤4,711 Econocom Promodata France SA 12.31.05 ¤11,334 ¤9,319 Promodata SNC 12.31.05 ¤24,714 ¤4,328 Synopse SAS 12.31.05 ¤136 ¤16 SCI Alexandre 12.31.05 ¤(156) ¤(85) Econocom Products and Solutions SAS 12.31.05 ¤8,507 ¤2,676 Data Network France 12.31.05 ¤335 ¤(197) BELGIUM - LUXEMBOURGEconocom Products and Solutions Belux SA 12.31.05 ¤2,446 ¤347 Econocom Managed Services SA/NV 12.31.05 ¤4,151 ¤1,261 Econocom Lease SA/NV 12.31.05 ¤9,949 ¤(35) Atlance SA 12.31.05 ¤853 ¤289 Econocom Telecom Services (ex. Chanse) 12.31.05 ¤203 ¤(13) Econocom Telecom (ex. 2B Mobile) 12.31.05 ¤51 ¤34 A2Z Holding 12.31.05 ¤233 ¤(189) A2Z Solutions 12.31.05 ¤(350) ¤(806) Econocom Luxembourg SA 12.31.05 ¤3,445 ¤438 Econocom Products and Solutions Luxembourg SA 12.31.05 ¤681 ¤279 NETHERLANDSEconocom Nederland BV 12.31.05 ¤22,711 ¤3,252 Econocom Product Services BV 12.31.05 ¤467 ¤(236) Econocom Services BV 12.31.05 ¤2,849 ¤110 For Connected Services BV 12.31.05 ¤(52) ¤(48) Econocom Expert International Holding BV 12.31.05 ¤223 ¤5 OTHEREconocom Albis GmbH 12.31.05 ¤51 ¤(361) Econocom UK Ltd 12.31.05 GBP3,897 GBP139Econocom SA (Espagne) 12.31.05 ¤1,247 ¤32 Econocom Locazione Italia SPA 12.31.05 ¤1,146 ¤(198) Aperleasing 12.31.05 ¤377 ¤6 Econocom USA Inc 12.31.05 USD3,456 USD(1,037)



VI. Short-term investments(in € thousands) 2005 2004

Term deposit accounts at banksWith a residual maturity or notice period of no more than 1 month 0 0

VII. Accruals and other assets (in € thousands)

Deferred charges 102 88

VIII. Capital(in € thousands) Amount Number of shares

A. Share capital

1. Subscribed capitalAt beginning of year 16,038 30,000,000Shares issued 143 265,000Cancellation of treasury stock (1,265,000)At end of year 16,181 29,000,000

2. Composition of share capital2.1 Ordinary shares 16,181 29,000,0002.2 Registered or bearer shares

Registered shares 13,915,260Bearer shares 15,084,740

Amount Corresponding of capital number of

held shares(in € thousands)

C. Treasury shares held by

The Company 23 40,728Subsidiaries 0 0

D. Share issuance commitments

1. Following the exercise of subscription rightsNumber of subscription rights outstanding 1,435,912Amount of capital to be subscribed 801Maximum corresponding number of shares to be issued 1,435,912

E. Authorized unsubscribed capital 15,895

G. Ownership structure of the Company at the balance sheet date:Econocom International NV 49.27%Treasury stock Econocom Group 0.14%Vincent Wajs and Valgest 7.46%Free float 43.13%


144 •

IX. Provisions for contingencies and charges (in € thousands) 2005 2004

Litigation 23Tax provisions 131

X. Liabilities (in € thousands)

C. Accrued taxes and personnel costs

1. Taxes other than on incomeb) Tax liabilities not yet duec) Estimated tax liabilities 82 81

2. Personnel costs (incl. social security charges)b) Other employee-related liabilities 751 166

D. Other liabilities

Dividends for the current and prior years 4,740 4,523

XI. Accruals and other liabilities (in € thousands)

Deferred income – –Expenses for the period



XII. Operating results (in € thousands) 2005 2004

C1. Employees listed in the personnel register

a) Total number at balance sheet date 46 34b) Average number of full-time equivalent employees 45.2 28.3c) Number of hours effectively worked 73,808 47,590

C2. Personnel costs

a) Wages and salaries, direct benefits 2,564 1,551b) Employer social security contributions 746 450c) Employer premiums for extra-legal insurance 84 84d) Other personnel costs 54 30

D. Write-downs

2. Of receivablesAmounts recordedAmounts reversed

E. Provisions for contingencies and charges

Amounts recordedAmounts utilized or reversed

F. Other operating expenses

Business taxOther 3

G. Temporary employees and secondments

Average number of full-time equivalent employees 1 2Number of hours effectively worked 2,441 2,991Related costs for the Company 75 97

XIII. Financial items (in € thousands)

A. Other financial income

Breakdown:Miscellaneous 59 87

D. Write-downs of current assets

Amounts recorded 27Reversals (47)

E. Other financial expense

Breakdown:Exchange losses and translation adjustments 1 3Miscellaneous expenses 68 54Capital losses on current assets 1,794 68

XV. Income tax(in € thousands)

A. Income tax

1. Related to current year 46 42a) Corporate income tax and withholding tax due or paid 46 42b) Excess corporate income tax or withholding tax paid,

recorded in assets

2. Related to prior yearsa. Additional tax due or paidc. Estimated additional tax

B. Reconciliation of accounting profit before tax to estimated taxable profit

• Profits exempted under tax treaties (66) (61)• Tax-exempt revenue or revenue subject to a definitive regime • (taxation in country of origin) (8,950) (10,826)• Capital gains on shares (176)• Non-deductible expenses 2,060 899• Use of reclaimable fiscal loss (4,234)

D. Deferred taxes

1. Deferred tax assets• Cumulated tax loss carryforwards 10,305 14,539


146 •

XIV. Exceptional items (in € thousands) 2005 2004

A. Other exceptional income

Other 48 66

B. Other exceptional expense

Other 43 2



XVI. Value added tax and tax claimed from third parties(in € thousands) 2005 2004

A. Value added tax

1. Charged to the Company (tax-deductible) 1,340 1,5272. Charged to the Company 1,650 1,723

B. Tax claimed from third parties

1. Professional withholding tax 670 5282. Dividend withholding tax 533 391

XVII. Off-balance sheet commitments (in € thousands)

Personal guarantees set up or irrevocably given by the Companywith respect to third-party debts or commitments of which: 23,657 16,730

• Maximum amount of other third-party commitments guaranteed 23,657 16,730• by the Company

Guarantees set up or irrevocably pledged by the Companyagainst its assets

Mortgages:• Book value of buildings pledged as collateral 538 563• Collateral value 1,692 1,692Pledges against other assets:• Book value of pledged assets 3,454 2,660

Litigation and other significant commitments

• Collective insurance policy taken out with a duly authorized insurance company, funded by employer and employeepremiums paid monthly to the insurer.

• Since October 2002, Econocom Group SA/NV has invested ¤3,180,000 in the MBO Capital venture capital fund and has irrevocably committed capital of up to ¤5,000,000 to the fund. This represents a 10-year unsecured investment,which offers expected returns exceeding the risk-free rate. Funds are not accessible before the end of the term and further investments can be called for until March 2008. As of December 31, 2005, the maximum amount still to be called totaled ¤1,820,000.

XVIII. Related-party transactions (in € thousands) 2005 2004

1. Long-term investments 85,296 81,858

Shares 41,242 50,399Receivables 44,054 31,459

2. Receivables due within one year 4,047 10,253

Trade receivables 1,491 619Other receivables 2,556 9,634

4. Payables due within 1 year 15,971 7,421

Trade payables 519 517Other payables 15,452 6,904

5. Personal and collateral guarantees

Set up or irrevocably given by the Company with respect 23,657 16,730to the debts or commitments of related parties

6. Personal and collateral guarantees

Set up or irrevocably given by related parties with respectto the debts or commitments of the Company

7. Financial items

Income from long-term investments 10,234 11,500Income from current assets 176 604Other financial incomeInterest expense 284 209Other financial expense

8. Disposal of fixed assets

Realized capital gains 128Realized capital losses 94

Accounting policiesThe Company’s financial statementshave been prepared in accordancewith prevailing legal provisions in Belgium. The specific valuationrules adopted by the Company are presented in the notes to the consolidated financialstatements.

The following matters concern onlythe Company’s financial statements:

B. Appropriation of net profitNet profit for the year of ¤11.4 millionand retained earnings of ¤9.4 millionare appropriated to the payment of dividends (¤4.6 million),undistributable reserves for treasurystock (¤5.6 million) and retainedearnings (¤10.6 million).An additional ¤0.01 million was paid into the legal reserve further to the capital increase carried out during the year.

A. Information to be provided by companies subject to theprovisions of the Belgian RoyalDecree of January 30, 2001concerning consolidatedfinancial statementsThe Company prepares and publishesconsolidated financial statements and a consolidated managementreport in accordance with the provisions of the Royal Decree of January 30, 2001 concerningconsolidated financial statements.


148 •



XXI. Employee informationI. Headcount

A. Employees listed in the personnel register

Full-time Part-time Total or total Total or totalemployees employees full-time full-time

(current year) (current year) equivalent equivalentemployees employees

(current year) (prior year)

1. During the yearAverage number of employees 43.8 2.0 45.2 28.3Number of hours effectively worked 70,557 3,251 73,808 47,590Personnel costs (e thousands) 3,377 71 3,448 2,115

2. At year end

a) Number of employees listed in the personnel register 43 3 45.3 34b) By type of employment contract: open-ended

employment contracts 43 3 45.3 34c) By gender:

Men 22 0 22 17Women 21 3 22.3 17

d) By professional category:Management 0 0 0 0Non-management 43 3 45.3 34

B. Temporary employees and secondments

During the year Tempory Secondmentsemployees

Average number of employees 1.3Number of hours effectively worked 2,441Related costs for the Company (e thousands) 75

II. Movements in headcount

A. ArrivalsFull-time Part-time Total full-time

employees employees equivalent (current year) (current year) employees

a) Number of employees listed in the personnel register during the year 16 3 18.3b) By type of employment contract:

open-ended contracts 16 3 18.3fixed-term contracts

c) By gender and level of education:Men:Secondary education 2 2.0Higher education (non-university) 7 7.0Higher education (university)Women:Secondary education 1 2 2.4Higher education (non-university) 5 1 5.9Higher education (university) 1 1.0

B. DeparturesFull-time Part-time Total full-time

employees employees equivalent (current year) (current year) employees

a) Number of employees listed in the personnel register during the year 7 7.0b) By type of employment contract:

open-ended contracts 7 7.0fixed-term contracts

c) By gender and level of education:Men:Secondary educationHigher education (non-university) 3 3.0Higher education (university) 1 1.0Women: Secondary educationHigher education (non-university) 3 3.0Higher education (university)

d) By reason for departure: DismissalOther reasons 7 7.0

III. Use during the year of pro-employment measures

Number Full-timeequivalent

employees

Number of employees concerned by at least one pro-employment measure:Total for the current year 50 49.3Total for the prior year 38 38.0


150 •



Comments on the principal balance sheet and income statement items

A. Balance sheet - Assets

I. Start-up costsCosts related to the various capitalincreases carried out by EconocomGroup SA/NV have been capitalizedand are being amortized over a period of five years.The decrease relative to 2004reflects the amortization charge for the year. Start-up costs were fully amortized in 2005.

IV.A.1 Related parties - sharesEconocom Group carried out a number of operations during the year:• Sale of Signal Service SA to

Econocom Managed Services SA(¤8.3 million).

• Sale of Econocom Suisse (¤2 million).

• Contribution to a capital increasecarried out by Econocom Italy(¤0.7 million).

• Acquisition of A2Z Holding (¤0.3 million).

• Contribution of ¤0.2 million furtherto a call for funds for EconocomAlbis.

• Investment of ¤1.3 million in theMBO Capital venture capital fund.

IV.A.2 Related parties -receivablesReceivables correspond to loansgranted to:• French subsidiaries in an amount

of ¤18 million, written down by¤11.5 million.

• Belgian subsidiaries in an amountof ¤37.5 million, including ¤33.4million to Econocom ManagedServices and ¤4.1 million to A2Z.

VII.B Other receivables duewithin one yearThese items are mainly currentaccount advances or short-termloans granted to the Company’sBelgian and foreign subsidiaries in an amount of ¤2.6 million.

IX.A Cash assetsThe increase in this item is primarilydue to the payment of dividends toEconocom Group by subsidiaries.

B. Balance sheet - Liabilitiesand shareholders’ equity

I. & II. Share capital andadditional paid-in capitalAs of December 31, 2005, the Company's share capital was on par with the previous year.Undistributable reserves for treasurystock decreased by ¤2.2 million due to the impact on reserves of

i) the cancellation of 1,265,000 sharesand ii) share purchase transactionscarried out during the year.Retained earnings increased by ¤1.2 million to ¤10.6 million as of December 31, 2005, versus¤9.4 million one year earlier.The legal reserve was increased by an amount representing 10% of the capital increase carried out in July 2005.

IX.B.2 Other borrowingsThe change in this item relates to loans received from Groupsubsidiaries.

IX.F Other liabilitiesOther liabilities represent dividends for the year amounting to ¤4.6 million, payable in June 2006.

C. Income statement

IV. & V. Financial income and expenseThese items relate to loans granted to and received from Group subsidiaries.

CASH FLOW STATEMENTFor the years ended December 31, 2004 and 2005

(in € thousands)

2005 2004Net profit 11,367 12,382

Income tax expense 46 42

Depreciation and amortization (3,145) 533

Proceeds from the disposal of long-term investments, tangible and intangible assets 1,761 89

Change in provisions 130

Operating cash flow (a) 10,029 12,916

Change in receivables due in more than 1 year (12,594) (4,615)

Change in receivables due within 1 year 6,352 133

Change in trade payables (164) (820)

Change in other liabilities due within 1 year (payments on account, accrued taxes and personnel costs [incl. social security charges], other liabilities) 587 (25)

Change in working capital (b) (5,819) (5,327)

Tax income (c) (46) (42)Net cash provided by operating activities (a+b+c = d) 4,164 7,589

Cash flows from investing activities

Acquisition of intangible and tangible fixed assets (261) (369)

Disposal of intangible and tangible fixed assets 88 142

Acquisition of long-term investments (1,315) (1,008)

Disposal of long-term investments 165

Acquisition of shares in related parties (498) (10,993)

Disposal of shares in related parties 10,939

Net cash provided/(used) by investing activities (e) 9,118 (12,228)

Financing activities

Issuance of shares and share premiums 1,110

Change in short-term borrowings 6,909 4,513

Acquisition of treasury stock (9,272) (6,728)

Disposal of treasury stock 1,900 126

Dividends paid during the year (4,452) (3,084)

Net cash by (used in) financing activities (f) (3,805) (5,173)

Change in cash and cash equivalents (d+e+f) 9,477 (9,812)

152 •


REPORT OF THE STATUTORY AUDITORS ON THE COMPANYFINANCIAL STATEMENTS for the year ended December 31, 2005

154 •

INFORMATION ABOUT THE COMPANY

1. General information• Company name: Econocom Group

SA/NV

• Registered office: Clos duParnasse 13 A/B, 1050 Brussels,Belgium. The registered office maybe transferred to any other locationin Belgium upon decision of theBoard of Directors.

• Legal form, constitution,consultation of legal documents.

Econocom Group is a sociétéanonyme governed by the laws of Belgium. It was incorporatedunder a deed filed by Jacques

Possoz, notary, on April 2, 1982,which was published in theappendices to the Moniteur Belge of April 22, 1982 (no. 820-11). Econocom Group is a company that publicly raises, or has publiclyraised, capital under the terms of company law.

The Company is registered with the Brussels corporate register under number 0422.646.816.

• Term: unlimited.• Financial year:

January 1 to December 31.Consultation of legal documents:

• The Company and consolidatedfinancial statements and relatedreports may be consulted at theBanque Nationale de Belgique.

• The bylaws and above-mentionedfinancial statements and relatedreports may be consulted at theregistry of the Commercial Court.

• All of the above-mentioneddocuments may be consulted at the Company’s registered officeat Clos du Parnasse 13 A/B –1050 Brussels, Belgium.

2. Corporate purpose (Article 3 of the bylaws)

The Company’s purpose, in Belgium and abroad, is:

• the purchase, sale, leasing and supply of computers and IT products generally, and all related financial operations;

• the negotiation of any and all business process engineeringcontracts with companies and the provision of any and alltechnical assistance in the field of information technologies;

• the design and implementation of electronic services and any andall related programming systems.

To this end, the Company mayacquire, manage, operate and sellpatents, trademarks, and technicaland industrial know-how.The Company may establish officesor subsidiaries in Belgium or abroad.The Company may deal with anyand all Belgian or foreign companieswith similar or complementary

activities by means of assettransfers, partial or total mergers,subscription to initial capital or capital increases, financialinvestments, disposals, loans or any other means.


COMPETITION AND RECRUITMENT

CompetitionEconocom Group stands out from its competition because of:• Its comprehensive offering

in the management of corporatedistributed infrastructures.

• Its dual skills in IT andtelecommunications services.

• Its independence from ITmanufacturers and financialcompanies.

• Its presence in 8 Europeancountries.

Comprehensive offering

At present, there is no otherindependent player in Europe that can design, supply, manage and finance corporate IT andtelecommunications infrastructures,and also provide all related services,including product supply and customization as well as the operational, administrative and financial management of IT and telecommunications assets and infrastructure.

In addition, Econocom launched a telecommunications offering as of 2000, well before its maincompetitors, and since then hasstepped up its presence by carryingout a number of acquisitions overthe past two years. The Group is well positioned to leverage the expected sharp growth in the market for mobile services and voice/data convergencesolutions. It has the requiredcapabilities to meet future strongdemand for mobile solutions

as well as for the management of telecommunications fleets and their related costs.

Lastly, Econocom can offer SMEs an innovative IT and telecomoffering, designed by A2Z, which the Group acquired in August 2005.Few of Econocom’s historiccompetitors have tapped thismarket, as it requires a specificapproach and resources.Econocom’s offering is diverse andcomprehensive, comprising productsupply combined with operational,administrative and financial services,and is invoiced based on a monthlycost per user.

International presence

Econocom Group’s extensiveEuropean reach, which it has built up over more than 20 years,has generated a truly internationalculture and broad expertise. Thanks to this operating footprint,Econocom Group is able to effectively serve internationalclients that are seeking a partner to meet their needs.

Independent advice

Econocom Group is independent of hardware and softwaremanufacturers and financialcompanies. This independenceenables it to act as a neutral advisorfor clients and to recommend

the best solution in a spirit of total impartiality.None of the Group’s competitors has as large a product and serviceoffering in as many countries.

Econocom’s main competitors• Managed Services: Cap Gemini, Atos, Steria, EDS,Unilog (Logica-CMG group), and GFI, which have an internationalpresence, but do not offerdistribution or flexible leasingservices. However, many servicecompanies develop applicationsoftware (accounting, inventorymanagement, sales management,etc.), which is not part ofEconocom’s current offering.

• Products and Solutions: Systemat and Dolmen (Belgium and Luxembourg), Computacenter(France, Belgium, Germany and the United Kingdom), SCC (France and the United Kingdom),and Ares (France).

• Financial Services: the financialsubsidiaries of manufacturers suchas IBM, HP and Dell, and banks’leasing subsidiaries (ECS, Arius) do not offer the same degree ofindependence or IT specialization as Econocom. Companies such asEMG (Belgium) and CHG (Germany)do not have a comparablegeographical coverage, or lackdistribution and/or service activities.

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COMPETITION AND RECRUITMENT

RecruitmentAs is the case for all service-basedactivities, the recruitment of qualifiedstaff is a key success factor.

Econocom Group has specializedrecruitment centers in each countrywhere it operates and all of theGroup’s subsidiaries are committedto a policy of recruiting and retainingskilled employees. The Group’srecruitment program is supported by:• an international database of vacant

positions at all of the Group’ssubsidiaries, displayed on the corporate website, and the circulation of all careeropportunities on a large number of specialized recruitmentwebsites;

• attendance at trade fairs and/or the presentation of careeropportunities at suitable teachingestablishments;

• annual individual staff appraisals to assess objectives attained and unfulfilled potential. These interviews are combinedwith skills enhancement programs.

The Group’s European presence,reputation in its market, broadbusiness base and inclusion in the Euronext stock exchange in Brussels and Paris all serve to attract graduates and experiencedstaff alike.

The number of Econocom Groupemployees increased by 90 during2005.

Econocom has few competitors in the telecommunications field.Mobile telephone operators are more often the Group’s partnersthan its competitors, and theirdistributors are above all companiesspecialized in the sale of mobiletelephone equipment and voicesubscriptions. Companies such as Telindus in Belgium, and CSC and EDS in France, are not directcompetitors of Econocom, as theyare positioned in the network sectorof the telecommunications market,Telindus being focused on networkintegration, and the others on network management.


RECENT DEVELOPMENTS AND OUTLOOK

The past four years have been marked by robust development, driven by an expanding market and investmentscentered on the acquisition of companies or business assets.

1. Principal investmentsIn addition to the recruitment of new sales agents, engineers and technicians, the principal investments made by Econocom Group were business acquisitions. The main transactions carried out in relation to investments and divestments between 2002 and 2005 are described below.

2002

The Group maintained its acquisitiongrowth policy and purchasedBelgium’s SX Consultants,specialized in IT asset managementprocesses and tools.

Other acquisitions were ComdiscoFrance/Promodata, whichstrengthened Econocom’s presencein the administrative and financialmanagement of IT assets, and the maintenance activity of TASQ in France. These acquisitionsrepresented a total investment of some ¤70 million, includingassumed debt.

2002 also saw the inception of the Group’s new activity-basedorganization. This move wasintended to ensure a closeralignment with the needs of clientslooking for a long-term partnercommitted to operational excellenceacross the board.

2003

In April 2003, Econocom acquiredSynopse SAS, a French IT consultingand integration services firmspecialized in maximizing theefficiency of corporate informationsystems.

In July 2003, the Group increased its stake in Econocom Telecom SASfrom 90% to 97.5% and formed ajoint venture, Econocom Nord Lease,in Germany in October. The objectiveof this 65%-owned joint venture

is to spearhead the development of Econocom Financial Services’operations in Germany.

2004On February 1, 2004, the Group sold its French maintenanceoperations to Alliance SupportServices SA. This activityrepresented around 450 employeesand generated ¤32 million in revenue.

As part of its 2003-2007 “Share Five” strategic plan, in 2004the Group stepped up the pace of its diversification into thebusiness-to-business (B-to-B)telecommunications market, which Econocom viewed as a newdirection for growth. The scope of consolidation was extendedduring the year due to the followingtransactions:

• the acquisition in August of SignalService SA, a B-to-B mobiletelephony specialist in France,

• the purchase in November of a 74.57% interest in CHanSE SA,a Belgium-based B-to-B mobiletelephony specialist, as well as inCHanSE’s wholly-owned subsidiary2B Mobile SprL.

These two acquisitions representedan aggregate investment of some¤10 million.

2005During 2005, the Group continued to step up its position in the B-to-B

telecommunication services market. • In August, the Group extended its

presence from France and Belgiumto the Netherlands, acquiring For Connected – a companyspecialized in data mobile services.This acquisition rounds out the data mobile offering alreadyprovided by the Group’s Frenchand Belgian subsidiaries.

• In October, the Group acquired the B-to-B business of JCA, a mobile services operator that enjoys a strong position in southwest France, therebystrengthening Econocom’scoverage of the French market for cellular fleet management.

In August, Econocom purchased the entire capital of A2Z Holding, a Belgian start-up company foundedin 2002, which has developed a vanguard approach to providing IT and telecom services to SMEs. A2Z provides a comprehensiveoffering in managing workstationsand telecommunications resources,including the purchase and financingof equipment, the handling ofsuppliers, the supply of user servicesand advice, offsite outsourcing of IT and telephony fleets, andmaintenance. The company billsthese services based on a monthlycost per user. The purchase of A2Zis in line with Econocom’s strategicgoal of targeting the SME market. The Group’s 2005 acquisitionsrepresented a total investment ofsome ¤5 million, including currentaccount advances.

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RECENT DEVELOPMENTS AND OUTLOOK

2. Changes in capitalMost of the Group’s development has been equity-financed. As of December 31, 2005, the Company’s share capital stood at¤16,180,922.08 and was composedof 29,000,000 ordinary shares with no stated par value held in registeredor bearer form, in units of one, five, ten and fifty shares.

At the Extraordinary General Meeting on May 17, 2005, the shareholders renewed, for a five-year period, the authorization given to the Board of Directors to increase the Company’s capital on one or several occasions, by a maximum amount of ¤16,037,822.08. Pursuant to its policy relating to treasury shares, Econocom Group SA/NV and its subsidiaries held 40,728Econocom Group SA/NV shares as of December 31, 2005, representing 0.14% of the total number of shares issued.

The capital is fully paid-up.As of December 31, 2005, authorized unissued capital stood at ¤15,894,722.08. Changes in the Company’s capitalsince 2002 correspond to capitalincreases carried out for the purposeof allocating shares on the exercise of employee stock options.

The Company cancelled shares in 2002, 2004 and 2005, with no impact on share capital. Changes in the Company’s sharecapital and number of shares sinceJanuary 1, 2002 are shown in the table below.

3. OutlookEconocom aims to further improveits operating margin in 2006. The year will notably be devoted towinning market share in the mobilearea. Econocom is particularly wellpositioned to leverage the take-off inthe voice/data convergence market.Through its Mobileasy offering, it can provide companies with

comprehensive mobility andoutsourcing solutions thatencompass consulting services,supply of equipment and lines, user support, maintenance, financingand administrative and operationalmanagement, at optimal rates in line with clients’ cost-containmentobjectives.

During 2006 the Econocom Groupwill also seek to enlarge its footprintin Italy, where its revenue increasedby 32% in 2005. In addition, A2Z is expected to rollout its business model to at leasttwo other European countries.

Date of Type of issue Change in Change in Issue Total amount Number Share operation the number the capital premium of the of shares capital

of shares (€) (€) operation (€) (€)

01/01/2002 8,149,105 16,018,319.08

04/30/2002 Exercise of stock options 9,900 19,503.00 96,087.36 115,590.36 8,159,005 16,037,822.08

06/27/2002 Four-for-one stock split 36,636,020 16,037,822.08

12/18/2002 Cancellation of treasury shares (1,136,020) 31,500,000 16,037,822.08

12/22/2004 Cancellation of treasury shares (1,500,000) 30,000,000

07/20/2005 Exercise of stock options 265,000 143,100.00 966,650.00 1,109,750.00 30,265,000 16,180,922.08

12/22/2005 Cancellation of treasury shares (1,265,000) 29,000,000 16,180,922.08

12/31/2005 29,000,000 16,180,922.08


10-YEAR CONSOLIDATED HIGHLIGHTS

(in € millions) Belgian GAAP IFRS

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Balance sheetFixed assets (excl. goodwill) 12.69 12.52 16.36 24.89 47.29 47.76 124.42 74.01 39.19 34.20Goodwill 8.85 7.56 12.00 10.52 8.92 7.68 10.35 7.68 10.62 14.66Current assets(excl. cash assets and short-term investments) 62.64 56.42 71.02 77.54 181.59 171.01 182.11 152.71 183.30 167.86Short-term investments 9.30 18.02 24.44 46.09 53.64 57.46 71.50 102.27 60.05 60.07

Total assets 93.48 94.52 123.82 159.04 291.44 283.91 388.39 336.67 293.16 276.79Shareholders’ equity attributable to the Group 14.90 17.29 27.24 57.01 74.28 84.48 87.27 72.80 83.18 87.69Minority interests 0 0.02 0 0 0 0.40 0.55 0.76 0.35 0.36Provisions 5.90 5.23 6.50 8.36 11.10 11.18 28.27 30.44 13.28 6.20Borrowings 14.50 11.45 12.27 16.14 23.43 17.08 20.12 21.19 16.79 17.84Other liabilities 58.18 60.53 77.81 77.53 182.63 170.77 252.19 211.48 179.56 164.70

Total liabilities 93.48 94.52 123.82 159.04 291.44 283.91 388.39 336.67 293.16 276.79

Income statement

Consolidated sales of products and services 274.79 309.87 413.36 630.77 730.15 968.99 976.59 1,041.74 602.39 550.94Profit from ordinary activities before amortization of goodwill 4.59 5.68 7.93 12.24 17.27 21.68 22.13 11.94 - -Operating profit 17.83 18.99Profit from ordinary activities 2.85 3.94 6.22 9.75 14.47 18.06 19.37 8.94 17.61 19.03Net profit/(loss) before amortization of goodwill 4.24 4.26 5.85 8.92 11.85 19.49 13.22 (4.48) - -Net profit/(loss) 2.50 2.53 4.14 6.43 9.05 15.86 10.47 (7.48) 13.43 14.18Cash flow (a) 7.21 6.67 9.07 14.48 15.22 26.11 32.50 22.57 8.16 21.99Return on equity (b) 19% 23% 23% 17% 19% 21% 22% 12% 21% 22%

Breakdown of revenue by activity

Products and Solutions 78 87 116 192 300 418 308 242 203 191Managed Services 21 25 37 56 87 123 119 149 100 111Financial Services 174 197 259 380 338 424 545 647 299 248

Total 273 309 412 628 725 965 972 1,038 602 550

Breakdown of revenue by geographical region

Belgium and Luxembourg 123 142 168 202 213 215 209 207 165 173Netherlands 31 39 51 156 87 153 198 232 78 69France 65 53 99 160 307 464 463 514 286 264U.K. 24 32 30 27 23 29 18 9 8 9Switzerland 23 28 43 58 58 36 21 22 - -Spain 4 9 11 11 9 13 20 38 17 13U.S.A. 3 6 10 14 28 55 39 12 31 -Italy - - - - - - 4 4 17 22

Total 273 309 412 628 725 965 972 1,038 602 550

a) Consolidated cash flow corresponds to net profit/(loss) + amortization/depreciation and write-downs (of fixed assets, inventories and receivables) + provisions for contingencies and charges + amortization of goodwill (ordinary and exceptional) + exceptional write-downs, provision charges and reversals– debt waivers (in 1994 and 1995).

b) Return on equity corresponds to profit from ordinary activities before tax/shareholders’ equity as of December 31.

10-YEAR CONSOLIDATED HIGHLIGHTS

(in € millions) Belgian GAAP IFRS

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Number of shares (as of December 31)

Ordinary shares 21,143,552 23,703,552 25,359,888 28,192,176 32,422,892 32,596,420 31,500,000 31,500,000 30,000,000 29,000,000AFV (preferred shares) 2,560,000 0 0 0 0 0 0 0 0 0Total 23,703,552 23,703,552 25,359,888 28,192,176 32,422,892 32,596,420 31,500,000 31,500,000 30,000,000 29,000,000Free float 17.90% 23.80% 31.05% 42.54% 49.21% 46.34% 44.70% 45.01% 43.19% 43.13%

Per share data (in €)

Net dividend (on ordinary shares) 0.023 0.025 0.028 0.038 0.053 0.075 0.075 0.075 0.112 0.12Gross dividend (on ordinary shares) 0.031 0.033 0.038 0.05 0.07 0.10 0.10 0.10 0.15 0.16Payout rate (c) 26% 20% 15% 14% 16% 22% 22% 41% - -Profit from ordinary activities before amortization of goodwill 0.194 0.239 0.313 0.435 0.535 0.65 0.70 0.38 - -Operating profit 0.60 0.65Profit from ordinary activities 0.12 0.166 0.245 0.345 0.445 0.555 0.61 0.28 0.59 0.66Net profit/(loss) before amortization of goodwill 0.179 0.18 0.231 0.318 0.388 0.585 0.42 (0.14) - -Net profit/(loss) 0.106 0.107 0.163 0.228 0.28 0.488 0.33 (0.24) 0.45 0.49Consolidated cash flow 0.305 0.283 0.358 0.513 0.47 0.695 1.03 0.72 0.27 0.76Shareholders’ equity attributable to the Group 0.629 0.729 1.078 2.023 2.29 2.593 2.77 2.31 2.77 3.02Price/earnings (before goodwill) 6 12 25 26 9 9 9 N/A - -Price/earnings (after goodwill) (d) 10 21 35 36 12 11 11 N/A 13 13Price/cash flow (d) 3.6 7.8 16.2 16.0 7.0 8.0 4.0 7.1 22 8Net yield (e) 2.14% 1.12% 0.49% 0.46% 1.57% 1.43% 2.00% 1.47% 1.93% 1.80%Gross yield (e) 2.86% 1.50% 0.65% 0.61% 2.09% 1.91% 2.66% 1.96% 2.59% 2.42%

Stock market data (in €)

Average share price 0.91 1.48 4.26 8.90 6.27 4.32 4.80 4.97 5.84 6.42As of December 31 1.09 2.21 5.80 8.20 3.34 5.24 3.75 5.10 5.80 6.62High 1.09 2.21 6.04 12.50 8.88 5.60 6.13 5.90 6.23 6.92Low 0.65 1.01 2.32 5.63 3.34 2.68 2.50 3.90 5.03 5.70Annual return (at end-December) (f) 42% 106% 164% 42% -58% 59% -27% 38% 16% 16%Annual market return (g) 25% 36% 44% -7.20% -5.02% -4.9% -22.50% 16.01% 38.19% 28.09%Annual trading volume (in units) 2,241,344 4,025,616 5,595,040 8,456,600 3,918,372 3,685,716 3,105,787 3,034,001 5,880,902 5,127,011Average daily trading volume 8,960 16,160 22,464 38,440 15,680 14,624 12,318 11,992 22,994 19,903Annual trading volume, in absolute value (in ¤ millions) 2.05 5.96 23.82 78.52 25.66 14.93 14.92 14.68 34.32 32.61Market capitalization as of December 31 (in ¤ millions) 25.70 52.30 146.95 231.18 108.21 170.72 118.13 160.65 174 192Listing market (h) SM/CSF CSF CDF TSC TC TC TC TC TC TCNumber of employees as of December 31 460 522 835 1,088 1,682 1,859 2,390 2,355 1,700 1,770

(c) Payout rate = gross dividend / consolidated profit from ordinary activities after tax and before amortization of goodwill.(d) Share price as of December 31 / net profit or cash flow.(e) Net/gross dividend / share price as of December 31.(f) Annual return = (Change in share price as of December 31 relative to December 31 of the prior year + net dividend) / share price as of December 31

of the prior year.(g) Return index (Belgian All Shares) of Euronext Brussels.(h) The listing market is Brussels. SM = Second Marché from June 9, 1988; CSF = Marché au Comptant Simple Fixing from December 13, 1996;

CDF = Marché au Comptant Double Fixing from March 11, 1998; TSC = Marché à Terme semi-continu from March 11, 1999. The shares have been listed on the Marché à terme continu (TC) since March 16, 2000.

160 •

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BelgiumClos du Parnasse, 13AB 1050 BrusselsEconocom Belgique

Parc Horizon Leuvensesteenweg 510, bus 801930 Zaventem

Tel.: 32 2 790 81 11Fax: 32 2 790 81 20

Luxembourg4, rue d’Arlon8399 Windhof

Tel.: 352 39 55 50Fax: 352 39 55 88

France France

42-46, rue Médéric92582 Clichy cedex

Tel.: 33 1 47 56 37 00Fax: 33 1 47 56 03 00

Italy Locazione Italia SpA

Via Giorgio Stephenson n. 43/A20157 Milan

Tel.: 39 02 39030411Fax: 39 02 39030400

Econocom Albis GmbH

GermanyIfflandstraße 422087 Hambourg

Tel.: 49 40 808 100 339Fax: 49 40 808 100 370

The NetherlandsKokermolen 113994 DG Houten

Tel.: 31 30 63 58 333Fax: 31 30 63 58 300

SpainC/ Josefa Valcarcel, N.42, 5° Planta28027 Madrid

Tel.: 34 91 411 91 20Fax: 34 91 563 92 33

United KingdomK

18-20, Kew Road, Richmond Surrey TW9 2NA

Tel.: 44 20 8948 83 77Fax: 44 20 8948 84 81

Econocomaddresses

www.econocom.com

Contents

1 • Group profile2 • Interview with Jean-Louis Bouchard,

Chairman of Econocom Group4 • Key figures6 • Econocom Group share performance8 • 2005 Highlights

12 • Econocom’s strategy16 • Customer references18 • Public sector & education

20 • Healthcare

22 • Finance & insurance

24 • Manufacturing, logistics, transportation, distribution

26 • Telecommunications, media, technology

28 • Energy & utilities

30 • Services

32 • Chemical

34 • Harmony, a communication-based program

35 • Financial Statements

Jean-Louis Bouchard Charles de Water Christian Bret Gaspard Dürrleman Rafi Kouyoumdjian

Luc Pintens Jean-Philippe Roesch Patrik Vandewalle Vincent Wajs

Board of Directors

Jean-Louis BouchardChairman and CEO

Charles de WaterCEO

Christian Bret

Gaspard Dürrleman

Rafi Kouyoumdjian

Luc Pintens

Jean-Philippe Roesch

Patrik VandewalleCEO

Vincent Wajs

Group Management Committee

Jean-Louis BouchardChairman

Charles de WaterCEO of the Financial Services Activity

Luc PintensCountry Manager Belgium

Jean-Philippe RoeschDeputy Managing Director

Patrik VandewalleChief Operating Officer

Statutory Auditors

PricewaterhouseCoopersReviseurs d’entreprises SCCRLrepresented by Emmanuèle Attout

Annual report

2005

Mastering your IT and

telecom resources

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