taking software services to the next level...porthus continued its profitable growth path with a...

AnnuAl RepoRt 2007

tAKInG softwARe seRvIces to the next level

Contents

1. Letter to the Shareholders 2

2. Business and Market 5

3. Corporate Governance 13

4. Management’s Discussion and Analysis

of Financial Condition and Results of Operations 27

finanCial statements

1. Consolidated Financial Statements 38

2. Statutory Financial Statements 68

appendix

Business Glossary 73

letter to the shareholders1

Thank you for your interest in Porthus and for taking the time to review our 2007 results.We are pleased to report that we have made important progress in our growth strategy. Our customer satisfaction levels remain outstanding and we continue to attract new customers. We further improved our financial performance that drives our overall growth and shareholder value.

The financial year 2007 was a milestone year for Porthus. In October 2006, we successfully completed our initial public offering, raising 1 7.5 million to support the company’s growth initiatives. Porthus’s IPO was oversubscribed 2 times. The offering attracted major interest from both retail and institutional investors. Porthus will use the proceeds to expand its current market share in the European OnDemand IT market.

Strong Performance in Financial Year 2007

In fiscal 2007, Porthus showed a continued strong growth in its core activities. Porthus achieved total consolidated revenues of 1 19,504K. Net revenues for fiscal 2007 increased by 49%, amounting to 1 15,899K compared to 1 10,707K in 2006. EBITA improved to 1 858K compared to 1 349K in the previous year.

Porthus’s business growth was primarily driven by higher contributions of its core service lines; Managed Services and Professional Services. The Managed Services revenues that underpin Porthus’s recurring business model increased by nearly 40%.

Porthus continued its profitable growth path with a growth of recurring revenues of 40%. This continued growth of recurring revenues is encouraging as they are an important driver for the consistent growth of the company and they provide strong visibility on future revenues.

Growth and Innovation

In order to drive our leadership in innovative OnDemand solutions, Porthus invested 1 901K in Research and Development compared to 1 330K the previous financial year. This investment resulted in new releases of our Porthus.net Integration Server and Message Viewer products and improved scalability of the Porthus.net platform. Porthus intends to continue to invest in its solutions to stay ahead of market evolutions and developments. In addition, Porthus will be establishing a Research and Development Center in Slovakia.

In fiscal 2007, we started the expansion of our Porthus.net platform by setting up an additional datacenter in Amsterdam (the Netherlands). This new datacenter connects to Porthus’s datacenters in Brussels and Namestovo (Slovakia). The additional datacenter provides a higher service level in terms of business continuity.

Focused on Evolving Market Opportunities

A significant growth opportunity continues to be in the OnDemand B2B services market for logistic business processes. Today, under pressure to reduce costs in terms of production and stocks, ‘efficiency’ is one of the main value drivers in the global supply chain. However, the essential condition for improvement is having all reliable information at every moment and every step of the logistics processes. This can only be accomplished with B2B integration solutions supporting a complete international supply chain. Furthermore, all EU Member States are in the process of integrating and operating secure and accessible electronic customs systems. As of July 2009, companies wishing to import and export goods into and out of the European Community

letter to the shareholders 3

will be required to perform all customs clearance processes in an electronic way. Now that companies are facing these EU compliance issues and acknowledge the benefits of electronic customs systems, the demand for integrated solutions is growing. Porthus is ready to respond to this increasing demand with its complete Porthus.net Customs solution. We are excited to establish a leadership position in this market segment over the coming years.

During the last six months of our fiscal 2007, we started to increase our focus and R&D efforts on the electronic customs solution. These efforts included the European rollout of our customs solution as well as a targeted acquisition to strengthen Porthus’s customer base and expand technology and industry expertise. In September 2007 Porthus acquired activities of Seagha, a marketleading service provider for the Logistics industry. Seagha has built an established name in the logistics industry and offers proven solutions, an impressive customer base and specific industry knowledge. The acquisition of Seagha accelerates Porthus’s strategy to establish an immediate footprint in the market of electronic customs solutions, allowing us to expand our customer references and focus on leveraging this competitive advantage on an international level.

Implementing our Strategy

Innovation and the ability to easily adapt to changing market conditions have always been important to Porthus’s success in the past. We will continue to focus on those aspects while maintaining our profitable growth path we have been able to achieve over the past few years. We will focus on successfully integrating Seagha’s offering and operations as we are convinced this acquisition represents an important competitive advantage that we believe will support our anticipated growth in this promising segment !

We would like to take this opportunity to thank our employees for their contribution to our excellent customer service level, innovative solutions and profitable growth. We are convinced that Porthus is well positioned to expand its current market share in the European OnDemand IT market and to continue to deliver increasing business growth and value for its shareholders.

Luc Burgelman, Chief Executive Officer Peter Hinssen, Chairman of the Board

“ In financial year 2007, Porthus continued its profitable

growth path with a growth of recurring revenues of 40%.

This continued growth of recurring revenues is encouraging

as they are an important driver for the consistent growth

of the company and they provide strong visibility on future

revenues. ”

2.1 porthus profile

2

Porthus is an OnDemand IT solution provider, enabling organizations to manage their complex business processes across company boundaries. Porthus leverages innovative technologies and solutions to enable its customers to interact and conduct business with their clients, employees, public authorities and business partners in a reliable, costeffective and secure way.

Porthus offers valueadded services and solutions to support business and supplychain processes for organizations in industries such as: retail, telecom, utility, logistics and media.

Porthus delivers its B2B OnDemand Solutions to over 500 companies covering customer locations throughout Europe and beyond (Belgium, Luxembourg, the Netherlands, France, Slovakia) as well as the Middle East.

2.2 the ondemand it solutions market

Companies rely more and more on sophisticated software applications to run their businesses but many organizations are not satisfied with the return on their investments. Developing new business applications, updating them and assuring the continued operation has taken them more effort, time and money than they had anticipated. The market of OnDemand solutions addresses this concern whereby, software applications are hosted by the OnDemand Solution provider and accessed by the customers through internet and consumed on a per transaction or per user basis (‘OnDemand model’).

Over the last few years, the adoption of the OnDemand model has steadily grown. In the early days, the OnDemand model suffered from the lack of infrastructure (bandwidth) necessary to allow remote access to software services, and the lack of proper application software that was capable of running in an OnDemand model.

This has changed significantly over the last few years, and the industry has seen an uplift since 2003. Since then, OnDemand business models have become profitable and strong players have emerged, such as salesforce.com.

Under the influence of new players such as Google, the software industry has seen that traditional players, such as Microsoft and Oracle, are all moving in the same direction, and are rapidly putting their software into a service offering environment.

The OnDemand model is following the expected adoption pattern of new technology, and is now becoming a standard option for accessing software functionality.

In today’s complex B2B environments, companies are constantly confronted with more and more intense B2B communication, of an ever increasing complexity. Companies must maintain flexible and secure communications and transactions with various types of business partners and are faced with an abundance of different protocols, different networking standards, different networks, and multiple interfaces and multiple points of failure. In such complex environments, OnDemand Solutions, tailored to meet the needs of specific industries, can be a great differentiator. It can be the difference that enables one company to easily adapt to change and succeed, while others fail.

Business and market

2.3 porthus ondemand it solutions

Porthus is positioned as an OnDemand Solution Provider, offering Softwareas–aService (SaaS), with a focus on applying this in a B2B integration context. Instead of companies having to purchase software, and implement solutions in their own IT environment and on their own premises, Porthus provides a centrally hosted and managed platform, allowing customers to access software remotely. In other words, Porthus offers the access to the Softwareas–aService. The advantages for customers of such a centralized offering: cost reduction, reduced complexity of IT systems, fewer IT Staff, increased security and increased faulttolerance.

Porthus provides a full range of services, ranging from analysis, consulting, project management, over implementation, installation, project configuration and custom development, to training, support and helpdesk.

As part of a typical customer project, Porthus offers a combination of different service types as listed below.

2.3.1 Professional Services

Porthus helps customers to build and integrate solutions, and to customize applications. This is typically done by supplying professional services to customers on a time/material basis, or on a project basis.

In order to integrate and customize the customers’ solutions and environments, Porthus has developed a proven approach that reduces risk, accelerates delivery, and ensures quality.

2.3.2 Managed Services

As an OnDemand Solution provider, Porthus hosts and manages software on a central platform, and provides this as a service to its customers. These services are collectively referred to as Porthus’s Managed Services.

The core solution that Porthus provides is the Porthus.net platform, which is tailored to the specific needs and demands of various industries. The structure of the Porthus.net platform is shown in the illustration below.

6 Business and market

PORTHUS.NET

Company A, B en Cpo

rthu

s.ne

t

Datacenter

Communication Hub(transaction based pricing)

Application Platform(per user/per month pricing)

Web 2.0 is considered to become the secondgeneration of webbased hosted services using the internet as a mature platform. The success of B2C Web 2.0 initiatives, such as You Tube and MySpace, has restored trust in internetbased solutions and the Internet in general. As a result, the usage of Internet technologies in B2B business solutions is also growing. A lot of CIO’s see the internet as a reliable and efficient way of collaborating with partners and customers in the value chain of their company’s businesses. Governments and legislations have embraced paperless processes, such as online tax declarations, einvoicing and customs declarations.

This development was preceded by a different technology evolution; while during the early eBusiness and ASP hype, connectivity, software and technology in general were not designed to build ’internetbased’ solutions, current software vendors have adopted web services and Service Oriented Architectures (SOA) in their strategic roadmaps, making the current evolution possible. As a netnative Software as a Service (SaaS) provider, Porthus has been among the early adopters of web services technologies and Service Oriented

Architectures, allowing customer to fully benefit from the possibilities these technology evolutions are offering.

The Porthus products follow the Software as a Service (SaaS) model. This model is a software application delivery model where Porthus develops a netnative software application and hosts and operates that application for use by its customers over the Internet. Customers don’t need to buy the software itself but they pay for using the software. This services approach is called an OnDemand solution.

The SaaS model eliminates the need for IT to plan, deploy, support, and modify the software inhouse. Next to that, other advantages include faster implementation (because there’s no onpremise deployment), easier access to current technology (because changes are made just to the one code base) and fewer bugs (because having one code base reduces the complexity that can lead to errors).

The strategic principles of our product Research and Development objectives are primarily based on the Software as a Service (SaaS) and OnDemand model.

Business and market 7

2.3.3 Software

Porthus builds its own software solutions such as specific messaging and communications software that is offered and sold to customers. Porthus uses specific components (modules) of partner software in its solutions in combination with owndeveloped software.

Along with the software license contracts, Porthus provides maintenance contracts on its software solutions.

Porthus’s proprietary Porthus.net Integration Server offers a complete B2B Integration platform delivering the exchange and transformation infrastructure required to connect to the partners of the Porthus.net platform.

CTO VISIONBy Frank Hamerlinck, Porthus cofounder and Chief Technology Officer

1. Multi-tenancy and ScalabilityThe major disadvantage of the ASP model was that providers typically hosted standard vendor products (e.g. Oracle and SAP) for singlecustomer execution environments — for singletenancy. Porthus engineers its applications to be multitenant. Customer implementations can be insulated from one another and still be stacked on shared computing resources. On the one hand, this sharing of resources is a costsaving element.

On the other hand, a SaaS system is scalable to an arbitrarily large number of customers, because the number of servers and transactions on the backend can be easily increased or decreased, without requiring additional rearchitecting of the application, and changes or fixes can be rolled out to thousands of tenants as easily as a single tenant.

2. Customization and ParameterizationA consequence of the singletenant architecture of the ASP era was that – since every customer was running in its own environment, customizations of that environment were possible. This way of working was costly, since no standard code set existed and the management of all the different implementations required a lot of application, expert knowledge and system administrators.

As SaaS aims to work with one code set for all customers in a multitenant model, the early SaaS implementations lacked flexibility and were only possible for 100% identical applications.

Because of the one code set limitation, SaaS is suited for standard processes with little customization, but with high parameterization. Porthus embeds those standard processes in its solution; customerspecific processes are implemented on top of the Porthus platform.

Porthus engineers its applications to accommodate limited customizations. A customization facility within the platform is essential for the delivery of core business applications to large

enterprises. Porthus keeps each customer’s data separate, and uses configurable metadata to provide a unique user experience and feature set for each customer.

3. Integration and CommunicationPorthus’s solutions support the business process of our customers. Consequently, they cannot operate in an isolated datacenter, they need to be integrated with the IT systems of our customers. Integrating the SaaS application with the onpremises backoffice systems as well as partner/supplier systems is key. Porthus builds its products with a strong focus towards this integration, using both the latest technologies such as web services and traditional technologies like EDI, secure FTP and SMTP communication.

4. Net-native applicationsWhile companies have long delivered application functionality to Web browsers, users are now coming to expect increasingly greater interactivity from this presentation tier.

While web applications have been around for a long time, user interfaces based on web browser technology show some limitations, no longer accepted by end users. Porthus embeds new user interface technologies, such as smart clients, in its solutions, to combine the fat client user interface benefits with the use of netnative distribution protocols.

5. Central and Distributed ManagementAs the SaaS architecture is multitenant, there is only one codeset used by various customers. Bug fixing and application upgrades can be implemented fast and at low cost, since it only has to be applied to one code set.

The platform must be able to model the multicompany/multilocation architecture. Each customer needs its own set of user profiles, configuration options and defaults. The platform accommodates these differences by setting up admin screens that expose the right options at the right level.


6. Governance and SecurityThe need to track and log user activity and transaction flows becomes all the more important — especially for publicly traded companies that fall under Sarbanes Oxley rules. The Porthus products log all transactions for analysis. In that sense, archiving is included in the roadmap of all products.

As the use of ondemand applications increases, so does the likelihood of attacks by cybercriminals. Our applications come with encryption, strong authentication and separate domain structures for our customers. Network security is implemented through extensive use of firewalls, intrusion detection and virus and spam protection.


2.4 strategiC opportunity

In order that the EU’s economy can continue to compete in a global context, it is essential that customs IT systems are able to exchange information in an electronic way. In addition, numerous developments, such as an increase of ecommerce activities on the one hand and the threat of terrorist attacks and the role of organized crime on the other, have altered the environment in which Customs operates.

Consequently, all Member States are currently adapting, existing or implementing new electronic customs systems. Although customs clearance procedures are the same in every Member State, the clearance systems contain different requirements. This creates confusion for companies dealing with customs activities in different Member States, and can create errors that inevitably lead to an increase of costs or penalties.

Not only will these EU regulations have a significant effect on Customs Authorities across Europe and the way they operate their clearance processes; they will also have a huge impact on companies who manage customs processes within the European Union.Apart from moving from a paperbased workflow process to an electronic one, customs processes in general will become more and more integrated in the corporate logistics and financial supply chain.

With simplified customs legislation, streamlined customs processes and procedures and convergence of IT systems, companies will be able to save money and time in their business transactions with customs.

This will maximize supply chain efficiency, enhance competitiveness and increase efficiency of business operations in general.


Porthus.net Customs

Porthus.net Customs is a single solution to handle all EU customs formalities, including issues such as Compliance, Integration and Efficiency. The solution integrates a customer’s backend system with the required software to manage electronic customs declarations. All transactions and communication will be processed by the Porthus.net central platform before reaching the relevant customs authorities. Once the shipment is customscleared, an approval message is sent back to the company through the Porthus.net central platform.

With Porthus.net Customs, Porthus offers a complete IT Business Process Outsourced solution which will increase overall efficiency and optimize financial expenditures related to customs and duty.

Different deployment options and Service Level Agreements are available; OnDemand, Hybrid or OnPremise. With the OnDemand valueadded managed service, Porthus monitors, maintains and manages sophisticated and fastevolving software applications for its customers. As such this service allows customers’ internal resources to remain focused on core competencies.

200,0

180,0

160,0

140,0

120,0

100,0

80,0

60,01990 1995 2000 2005 2010 2015 2020 2025 2030

Passenger transport Freight transport GOP

Source: European Energy and Transport Trends to 2030

Trade in Europa grows at approximately 8% per year E.g. Harbour of Antwerp: capacity will double in periode 20052013


Porthus.net Customs assists in gaining compliance with respect to EU requirements for customs management and customs declarations. The solution incorporates functionalities of multiple countries and is available in different languages.

Specialists are continuously monitoring the different initiatives in the European Member States to stay ahead of the latest customs program developments and ensure the solution stays uptodate.

Porthus.net Customs allows customers to integrate or ‘link’ the solution with their core business system. This provides the opportunity to dramatically save on data input requirements and enable the departments to produce required documentation as quickly and efficiently as possible in a ‘hands free’ environment.

Porthus.net Customs guarantees the endtoend delivery of messages with Customs and other authorities. The solution supports the complete message set – as specified by the European Commission or national authorities as far as import, export and NCTS are concerned.

Customer

Datacenter - eArchiving

CustomsAuthorities

“ Companies are facing EU compliance issues and

acknowledge the benefits of electronic customs systems.

Porthus is ready to respond to this increasing demand

with its Porthus.net Customs solution. ”

3.1 general

3

Porthus’s corporate governance charter is mainly adopted in accordance with the recommendations set out in the Belgian Code for Corporate Governance issued on 9 December 2004 by the Belgian Corporate Governance Committee.

In principle, Porthus is not subject to the Code, which only applies to companies listed on a regulated market. Porthus’s Board of Directors, however, generally intends to comply with the Belgian Code for Corporate Governance.

The recommendations of the Belgian Code for Corporate Governance were translated into three charters respectively dealing with the organization and functioning of the Board of Directors, the remuneration committee and the audit committee. All charters are available free of charge on Porthus’s corporate website (http://www.porthus.com) or at Porthus’s registered office.

3.2 Board of direCtors

3.2.1 General provisions

The role, duties and functioning of the Board of Directors and its powers and responsibilities are formalized in a charter, which is available on Porthus’s corporate website.

The Board of Directors is composed of a minimum of 5 and a maximum of 8 members, and must be composed of executive directors, independent directors and other nonexecutive directors. At least half the Board must comprise nonexecutive directors. At least two directors must be independent directors.

The directors are elected at general shareholders’ meetings for a renewable term of four years maximum. Resigning directors may be reappointed. Directors may be dismissed or suspended by the general shareholders’ meeting at all times. If a directorship becomes vacant before the expiry of its term, the remaining directors will have the right to temporarily appoint a new director to fill the vacancy until the shareholders resolve at a shareholders’ meeting to appoint a new director. This item must be put on the agenda of the next shareholders’ meeting. The new director completes the term of the director whose mandate becomes vacant.

In principle, the Board meets every quarter and as many times as is deemed necessary or advisable by one or several members of the Board for the proper functioning of the Board, it being understood that the Board will meet at least six times a year. The number of Board meetings and the individual attendance record of the directors are disclosed in the Corporate Governance Chapter of the annual report.

3.2.2 Chairman

The Board of Directors appoints one of its nonexecutive members as chairman of the board.

The chairman is responsible for the leadership of the board of directors and for the efficiency of the board of directors in all its aspects. The chairman must take the necessary measures to develop a climate of trust within the board of directors, which promotes open discussion, constructive dissent and support for the board’s decisions. The chairman should promote

Corporate governanCe

effective interaction between the board of directors and the executive management. He or she should establish a close relationship with the CEO, providing support and advice, while fully respecting the executive responsibilities of the CEO.Within the board of directors the chairman is primarily responsible for:

setting the agenda of the meetings of the board of directors, after consultation with the CEO; •ensuring that procedures relating to preparatory work, deliberations, passing of resolutions and •implementation of decisions are properly followed; ensuring that the directors receive accurate, timely and clear information before the meetings, •and where necessary, between meetings, and that all directors receive the same information; chairing the meetings of the board of directors and ensuring that the board operates and •takes decisions as a collegial body; monitoring the implementation of decisions taken and determining whether further •consultation within the board of directors with regard to the implementation is necessary; ensuring a regular review of the corporate structure and the corporate governance of the •Company and assessing whether their operation is satisfactory;ensuring that newly appointed directors receive an appropriate introduction; •leading the nomination process of directors, in consultation with the Nomination and •Remuneration Committee, and ensuring that the board of directors appoints Committee members and chairmen; andbeing accessible to the directors, the members of the executive management and the head of •the internal audit function to discuss issues relating to the management of the Company;

The board of directors may decide to entrust the chairman with additional responsibilities.

With regard to shareholders and third parties, the chairman is mainly responsible for chairing the general meeting and ensuring that relevant questions from shareholders are answered.

3.2.3 Independent Directors

A director can only be considered an independent director if he/she meets the criteria set out in article 524 of the Belgian Company Code, which can be summarized as follows:

an independent director may not have held a position as a director, a member of the •management committee or a higher management position in the Company or an affiliate during the twoyear period preceding his or her election to the board of directors;an independent director may not own shares representing 10% or more of the total share •capital of the Company or of a particular class of shares. If he/she owns less than 10%: (i) such shares, together with other Company shares held by companies controlled by the director concerned may not equal or exceed 10% or (ii) the disposal of such shares or the exercise of the rights attached thereto may not be subject to any contractual arrangement or unilateral undertaking from the independent directors;an independent director may not have a close family member, meaning a spouse or •partner or relative up to the second degree, holding a key position or a financial interest as described above; andan independent director may not maintain any relationship with a company which would •jeopardize his/her independent judgment.

14 Corporate governanCe

In considering a director’s independence, the criteria set out in the Belgian Code of Corporate Governance will also be taken into consideration. The board of directors will disclose in its annual report which directors it considers to be independent directors. If a director does not meet the criteria set out in the Belgian Code of Corporate Governance, the board of directors will set out its reasons for nevertheless considering this director as an independent director within the meaning of the Belgian Code of Corporate Governance. An independent director who no longer complies with the requirements of independence must immediately inform the board of directors.

3.2.4 Composition

Current composition1

On June 30, 2007 the Board of Directors was composed as follows :

Name and position

Peter Hinssen Chairman

Luc Burgelman CEO

Hilaire Saenen

Stijn Bijnens

Rendex NV represented by Paul de Vrée

EMOR BVBA represented by Francis Rome

Hilaire Saenen, Stijn Bijnens and EMOR BVBA are independent directors. Peter Hinssen is the chairman of the board of directors of Porthus.

All mandates of the directors end immediately after the annual shareholders’ meeting of 2010.

The curriculum vitaes of the members of the board of directors are given below:

PETER HINSSEN Chairman of the Board and cofounder of PorthusPeter Hinssen holds a Master’s degree in Telecommunications and Electronical Engineering from the State University of Gent, Belgium. After graduating, he joined Alcatel Telecom working in the Multimedia Research Centre. He was involved in the design and implementation of an Interactive Television Server, based on highspeed ATM networks, for a VideoOnDemand system. Peter Hinssen was later involved in the Interactive Television Trials for the Bermuda Telephone Company and British Telecom. In the beginning of 1995, Peter Hinssen left Alcatel and founded eCOM Interactive, one of the leading internet and ecommerce consultancy firms in Belgium, based in Gent. He was responsible for the implementation of largescale Internet, ecommerce projects and information systems for companies such as DHL Worldwide Express, S.W.I.F.T., ING, Alcatel, SONY Europe, Belgacom and Volvo. In 1998, Alcatel acquired the majority of the shares in eCOM, and the company was renamed Alcatel eCOM. Peter Hinssen remained as CEO,

1 Changes since the IPO: On 24 April 2007, Geert Noels resigned as Director. Emor BVBA, represented by Francis Rome was appointed

Independent Director by cooptation by the Board of Directors of 24/04/2007.

Corporate governanCe 15

responsible for both the local and international operations. In 1999, Alcatel eCOM itself acquired Net It Be, and grew to more than 300 employees. In 1999 he worked at Alcatel headquarters in Paris as VicePresident, responsible for marketing and business development of Alcatel Telecom Software and Services. Today, he is the chairman of Porthus, and founder of Across communications. Since 2000, he has been an EntrepreneurinResidence with the firm McKinsey & Company.Peter Hinssen is the managing partner of Across NV and a manager of Newton Engineering BVBA.

LuC BuRGELMAN Chief Executive Officer, cofounder and Member of the Board of DirectorsLuc Burgelman is cofounder of Porthus (see section 2.4 ‘Composition of the Board of Directors’) and is responsible for strategic planning and execution. Luc Burgelman holds a Master’s degree in Civil Engineering, a Master of Informatics, both from the University of Ghent and an MBA from the Flanders Business School in Antwerp. Before his appointment as CEO in 2001, Burgelman held the CFO position and was responsible for sales. Prior to cofounding Porthus in 1999, Burgelman held a variety of management roles in quality and operations at Corus, combining business and IT knowledge with experience.

PAuL DE VRéEDirectorPaul de Vrée holds a MSc degree in Engineering from Louvain University. In 1998 Paul de Vrée founded the venture capital fund Rendex. In 1980, he started his venture capital experience as an advisor to Advent in London, and pioneered venture capital in Belgium when in 1982 he set up Advent Management Belgium together with Sofina and Advent International. Paul de Vrée started his professional activities at the pharmaceutical division of AKZO Nobel, where after postings in Spain, Italy and the United States, he was appointed Group VicePresident Marketing and Sales of Organon Teknika. Paul de Vrée cofounded ICOS Vision Systems and Xeikon International and guided the companies to their Nasdaq quotation. Today, Paul De Vrée is managing partner of Rendex Partners CVBA and he serves on the board of several companies, including ICOS, Delia Systems SA.

HILAIRE SAENENIndependent DirectorHilaire Saenen holds a Master’s degree in Mathematics and Information Technology. Hilaire Saenen started as project leader of various IT projects at Agfa Gevaert and was sales consultant at Software AG., responsible for sales in Flanders. He held the position of technical field manager at Dataprocess Belgium, a subsidiary of Volmac, later Cap Sogeti. He later became managing director responsible for all sales and delivery operations. In 1989, Saenen founded Cimad Consultants, a systems integrator and services company specialized in the areas of computerintegrated manufacturing and financial administration. In 1995 Cimad Consultants was acquired by IBM. Hilaire Saenen was also cofounder of Evisor (1998), an IT services company specialized in the implementation of overall integrated Internet applications within large organizations. In 2001, Evisor was acquired by Price Waterhouse Coopers. Since 1999, Hilaire Saenen is active as investor and/or board member of several software and service companies. Actual investments include Möbius Business Redesign (consultancy and software products for business process optimization), Tinc Associates (products and services for shipping and air navigation), Voice Insight (voice control software) and Ubench International (collaborative software solutions for vehicle life cycle management). Hilaire Saenen is independent board member of Amplexor (content management solutions) and Entelec Control Systems (building management solutions). Hilaire Saenen actually holds mandates in the following companies: Entelec Control Systems NV, Möbius Business redesign NV, Tinc Associates NV, VoiceInsight NV, Ubench International NV and Amplexor NV.


STIjN BIjNENSIndependent DirectorStijn Bijnens is Chief Strategist Security Solutions at Verizon Business. Bijnens cofounded Ubizen in 1995 and was Chief Executive Officer and Member of the Board until the company’s shareholder Cybertrust was acquired by Verizon Business in July 2007. Stijn Bijnens has been widely recognized for his outstanding business and management skills, and was named Manager of the Year 1999 in Belgium by Trends Magazine. He also received the DataNews Award of Excellence for a Startup Company. As a researcher at the Department of Computer Science at KULeuven, Belgium’s largest university, and at Trinity College in Dublin, Ireland from 1992 through 1995, he investigated network security and objectoriented distributed systems. Bijnens holds a Master’s in Science in Computer Science from KULeuven.

FRANCIS ROMEIndependent DirectorDr. Rome holds a PhD in International Economics (Johns Hopkins University, School of Advanced International Studies, Washington DC) and a Master in International Relations (Johns Hopkins University, SAIS, BolognaItaly/Washington DC). Currently he is Director Business Development at the Flanders Institute for Logistics, a governmentsponsored Centre of Knowledge in Supply Chain Management. Dr. Rome has been the Global Commercial Director of DHL from January 1995 up to mid2001 based at the DHL World Headquarters in Brussels. He joined DHL in 1992 as Business Development Director for DHL’s Europe and Africa Region. Preceding his management career with DHL, he was Managing Director of Polaroid Belgium for 6 years. Other positions held during his career include Commercial Director of Quaker Oats Belgium and Brand Manager for P&G Benelux. Dr. Rome has been teaching Marketing at the Boston University (Brussels) and is currently professor at the Antwerp University (ITMMA). He is nonexecutive Director in a number of companies.

Functioning of the Board of Directors since the IPO

Until 30/06/2007 and since the IPO on 27/10/2006, the Board of Directors held 9 meetings.

The individual attendance of the Directors was as follows :

Peter Hinssen Chairman 9

Luc Burgelman CEO 9

Hilaire Saenen 6

Stijn Bijnens 7

Rendex NV represented by Paul de Vrée 9

EMOR BVBA represented by Francis Rome (1) 2

Geert Noels (2) 5

(1) The number of attendances were counted since the appointment of EMOR BVBA on 24/04/2007(2) Geert Noels attended all meetings prior to his resignation


3.3 Committees within the Board of direCtors

3.3.1 Audit Committee

The role and duties of the audit committeeThe audit committee consists of at least three directors; All members of the audit committee must be independent directors, unless there are not enough candidates among the independent directors. The audit committee assists the Board of Directors in fulfilling its monitoring responsibilities in respect of control in the broadest sense.

The audit committee will report regularly to the Board of Directors on the exercise of its duties and on any matters in respect of which the audit committee considers that action or improvement is needed, and may make recommendations as to the necessary steps to be taken.

It is entrusted with the development of a longterm audit program encompassing all activities of Porthus and is, in particular, entrusted with the oversight of:

FINANCIAL REPORTINGThe audit committee monitors the integrity of the financial information provided by Porthus. The audit committee assesses, through its communication with the Management and the External Auditor of Porthus , the correctness, completeness and consistency of the financial information both on a statutory and consolidated level.

This task also includes the reviewing of periodic information before this information is made public and the reviewing of the relevance and consistency of the accounting standards used.

The audit committee discusses significant financial reporting issues both with the Executive Management and with the External Auditor.

INTERNAL CONTROLS AND RISk MANAGEMENTAt least once a year, the audit committee must review the internal control and risk management processes, procedures and systems set up by the Executive Management. It must ensure that the main risks (including those relating to compliance with existing legislation and regulations) are properly identified, managed and disclosed.

Internal control also includes review and approval of the statements included in the annual report on internal control and risk management as well as review of the specific arrangements made by which staff members of Porthus may, in confidence, raise concerns about possible improprieties in financial reporting or other matters (whistleblowers’ order). The audit committee must ensure that this arrangement is brought to the notice of all staff members of the Company and its subsidiaries. If deemed necessary, the audit committee must make arrangements for independent investigation and appropriate followup of these matters in proportion to their alleged seriousness.

INTERNAL AuDITThe audit committee must annually review the need for or the preservation of the internal audit function.

If an independent audit function has been set up, the audit committee must ensure that the available resources and skills are adapted to Porthus’s nature, size and •complexity.


must approve the appointment and removal of the head of internal audit, as well •as the work program and the budget allocated to internal audit. It must review the effectiveness of the internal audit function, having regard to the complementary role of the internal and external audit functions.must be provided with internal audit reports or a periodic summary of such reports.•must discuss the performance of internal audit, the risk coverage and the quality of in•ternal controls and risk management with the head of internal audit at least twice a year.through the chairman of the audit committee, be available at all times to the head of •the internal audit function to discuss issues relating to Porthus’s internal audit.

ExTERNAL AuDITThe audit committee makes recommendations to the Board of Directors on the selection, appointment and reappointment of the External Auditor and on the terms of his or her engagement. These recommendations must be submitted to the general meeting.

The audit committee must monitor the External Auditor’s independence, in particular in view of the provisions of the Companies Code and the Royal Decree of 4 April, 2003. For that purpose, the External auditor provides the audit committee with a report describing all relationships between the independent External Auditor and Porthus and its group.

The audit committee must review the effectiveness of the external audit, taking into account the relevant legal and professional standards.

The audit committee must monitor the External Auditor’s work program and review the effectiveness of the external audit process and the responsiveness of the management to the recommendations made by the External auditor in his or her management letter.

The audit committee must ensure that the audit and the audit report cover the group as a whole.

The audit committee must determine the manner in which the External Auditor is involved in the content and the publication of financial information on Porthus other than the financial statements.

The audit committee must assist the Board of Directors in the development of a specific policy for the engagement of the External Auditor for nonaudit services, taking into account the specific provisions of the Companies Code and the application of this policy.The audit committee must investigate the issues giving rise to the resignation of the External Auditor and may make recommendations as to any required action.

The audit committee is the principal contact point for the head of the internal audit function and the External auditor.

Composition of the audit committeeThe audit committee consists of Stijn Bijnens, Hilaire Saenen and EMOR BVBA, represented by Francis Rome. The chairman of the Board of Directors also attends the meetings of the audit committee.


3.3.2 Remuneration Committee

The role and duties of the remuneration committeeThe remuneration committee of Porthus will consist of at least three members, all of which are nonexecutive directors and the majority of which are independent directors. The remuneration committee makes recommendations to the Board of Directors on the remuneration policy of Porthus and the remuneration of Board members and members of the Executive Management.

The remuneration committee has the following duties:making and evaluating proposals to the Board of Directors on the remuneration policy •for nonexecutive directors as well as the proposals to be submitted to the shareholders; making and evaluating proposals to the Board of Directors on the remuneration policy for •the executive management, at least with regard to

the main contractual terms, including the main characteristics of the pension schemes and termination arrangements;

the key elements of the remuneration, including (i) the relative importance of each component of the remuneration, (ii) the performance criteria applicable to the variable elements and (iii) the fringe benefits;

making recommendations on the individual remuneration of directors and of the mem•bers of the Executive Management including, depending on the situation, bonuses and longterm incentives whether or not stockrelated in the form of stock options or other financial instruments; andat least once a year, discussing with the CEO the operation and performance of the •executive management. The CEO should not be present at the discussion of his or her own evaluation;

Composition of the remuneration committeeThe remuneration committee consists of two independent directors of the Company: Stijn Bijnens and Hilaire Saenen and Porthus’s chairman, Peter Hinssen.

3.4 exeCutive management

General provisions

The Chief Executive Officer (CEO) is responsible for the daytoday management of Porthus. The CEO also exercises the specific management powers delegated by the board of directors to the CEO. These powers cannot relate to the general policy of Porthus or any other actions that are reserved for the Board of Directors on the basis of legal provisions or the articles of association or the corporate governance charter of Porthus.

Luc Burgelman is the chief executive officer (CEO) of Porthus under a management agreement (entered into on 25 April 2000 and updated during 2007) for an indefinite period of time.

The members of the Executive Management are appointed by the CEO.


3.4.1 Duties of the Executive ManagementThe Executive Management, chaired by the CEO, has the following tasks:

It manages Porthus by: proposing, developing, implementing and monitoring the company strategy, taking into •account the values of Porthus, its risk profile and key policies;supervising compliance with the legislation and regulations that apply to Porthus;•supporting the CEO in the daily management of Porthus and with the performance of its •other duties;organizing, managing and monitoring supporting functions, including those relating to •human resources, legal, compliance and fiscal affairs, internal and external reporting and communication with investors.reporting to the Board on the implementation of the policies in general and in particular •providing a balanced and understandable assessment of Porthus ‘s financial situation, and providing information to the Board that is necessary to enable it to carry out its duties;investigating, drawing up and developing policy proposals and strategic or structural •projects to be presented to the Board for approval;drawing up complete, timely, reliable and accurate financial statements of Porthus in •accordance with the accounting standards and policies of the Company, as well as assuming the responsibility for the financial statements drawn up in this manner;

3.4.2 Composition of the Executive Management

The executive management consists of Luc Burgelman (founder and chief executive officer), Frank Hamerlinck (founder, chief operations and technology officer), Joris Allaert (chief financial officer), Christophe Longueville (VicePresident Sales & Marketing), Jean Verheyen (VicePresident Business development) and Myriam Aerts (VicePresident Human Resources).

LuC BuRGELMAN Chief Executive OfficerLuc Burgelman is Chief Executive Officer and cofounder of Porthus and also a member of the company’s Board of Directors. Burgelman is responsible for strategic planning and execution. Before his appointment as CEO in 2001, Burgelman held the CFO position and was responsible for sales. Prior to cofounding Porthus in 1999, Burgelman held a variety of management responsibilities in quality and operations at Corus, combining business and IT knowledge and experience. Burgelman holds a Master’s degree in Civil Engineering and a Master of Informatics, both from the University of Ghent, and an MBA from the Flanders Business School in Antwerp.

FRANk HAMERLINCk Chief Operations Officer and Chief Technology OfficerIn his role as Chief Technology Officer, Frank Hamerlinck is responsible for shaping Porthus’s overall services offering and defining the technology agenda. Hamerlinck steers all research and development investments and defines the corporate technology strategy. As Chief Operations Officer, Hamerlinck manages Porthus’s global business operations. Before cofounding Porthus in 1999 and assuming his dual role of COO and CTO, Hamerlinck spent several years at Volvo where he was responsible for the management of Volvo’s desktop and open systems services for Western Europe.Hamerlinck holds a Master’s degree in Civil Engineering from the University of Ghent.


jORIS ALLAERT Chief Financial OfficerJoris Allaert is the company’s Chief Financial Officer, a position he has held since 2001. Allaert is responsible for Porthus’s overall financial activities and heads the finance and legal divisions. Previously, Allaert worked in IT management at Commercial Union and at the Delaware unit of Deloitte & Touche, primarily focusing on ERPrelated consultancy.Allaert holds a Master’s degree in Mathematics and Informatics from the University of Ghent.

CHRISTOPHE LONGuEVILLE Vice President of Sales and MarketingChristophe Longueville was appointed Vice President of Sales & Marketing when he joined Porthus in 2004. Longueville is responsible for global direct and indirect sales and drives all corporate and product marketing initiatives. Longueville brings more than ten years of commercial and management experience to Porthus. Prior to joining the company, Longueville was Field Operations Manager and Sales Director at SAP Belux. He held positions as corporate banker at BBL and ING and senior account executive for the financial industry at Belgacom.Longueville holds a Master’s degree in Civil Engineering in Electro technology and holds a Master‘s Degree in Finance from the Catholic University of Louvain.

jEAN VERHEYEN Vice President of Business DevelopmentWhen joining Porthus in 2000, Jean Verheyen was responsible for sales & marketing. Verheyen was then promoted to Business Unit Manager, Consolidated Outsourcing & Application Delivery. He was appointed Vice President of Business Development in 2005. In this role, Verheyen directs global new business development initiatives, which include both M&A activities as well as new investments. Before joining Porthus, Verheyen held sales positions at Xerox.Verheyen holds a Master’s degree in Physical Education, a Master of Applied Economic Sciences from K.U. Leuven and an Executive Master of Business Administration from the Flanders Business school in Antwerp.

MYRIAM AERTS Vice President Human ResourcesIn August 2007, Myriam Aerts joined Porthus’s Executive Management team. In her role as Vice President Human Resources, Myriam heads all corporate HR functions with a special focus on recruitment and the development of internal resources, as well as planning & integrating corporate HR processes as the company grows. Myriam has over 15 years of HR experience and has worked in various aspects of Human Resources Management. From defining and implementing a competence management strategy across all HR processes and managing employer brand campaigns to attract high quality professionals, to developing and managing global HR strategies in support of changing business objectives. Before joining Porthus, Myriam worked as Divisional HR Manager at Atlas Copco Airpower. Myriam also held positions at Wolf Oil Corporation and Chicago Metallic Continental. Myriam Aerts holds a Master’s degree in Political and Social Sciences from the University of Antwerp.

3.5 remuneration

3.5.1 Board of Directors

Porthus’s current remuneration policy for the independent directors (except the Chairman) is as follows: 1 5,000 per year plus (i) 1 1,000 per board of directors and (ii) 1 500 per meeting of a committee set up by the board of directors (with a maximum of 1 15,000 per year). The Chairman’s fixed remuneration as board member amounts to 1 30,000 per year.


The nonindependent directors are not remunerated pursuant to the exercise of their mandate as director.

For the financial year ending June 30, 2007, the total remuneration of the Directors amounts to 1 46,292 whereby the fixed annual remuneration was prorated over the period between 27/10/2006 and 30/06/2007.

3.5.2 Executive Management

The direct or indirect remuneration for the members of the executive management, including the CEO, during the financial year ending June 30, amounted to 1 892,000. 1 3,000 was paid by the Company for postemployment benefits.

3.6 shares and warrants held By direCtors and the exeCutive management

The table below provides an overview of the shares and warrants held directly or indirectly by the directors and executive management at June 30, 2007.

Name and position Shares Warrents (1)

Peter Hinssen (Chairman) 137,337 12,000

Luc Burgelman 137,337 12,000

Rendex NV 302,010 0

Hilaire Saenen 0 0

Stijn Bijnens 26,475 0

EMOR BVBA 0 0

joris Allaert 20,961 6,000

Frank Hamerlinck 105,756 12,000

Christophe Longueville 60,000 0

jean Verheyen 49,500 6,000

(1) each warrant will convert to three ordinary shares upon their execution.

Peter Hinssen, Luc Burgelman and Frank Hamerlinck have requested in August 2007 the execution of all of their warrants. 108,000 shares will be subsequently created.


3.7 statutory auditor

The statutory auditor of Porthus is BDO Atrio Bedrijfsrevisoren CVBA, a company incorporated under Belgian law, having its registered office at Guldensporenpark 14 Blok B, Merelbeke represented by Koen De Brabander and Lieven van Brussel. BDO Atrio Bedrijfsrevisoren CVBA is elected as statutory auditor of Porthus for a term of three years ending at the annual shareholders’ meeting approving the annual accounts as per June 30, 2009.

3.8 transaCtions with related parties

1. Subsidiaries and associated companies The newly founded subsidiary Porthus BV has been added to the related parties already

identified in the financial statements for the year ended at 30/06/2006.

Since February 2007, Desk Solutions NV is considered as an associated company with which Porthus NV has concluded an agreement formalizing the relationship.

The services rendered to the subsidiaries and associated companies are at arms length or market price conditions.

2. Relations with significant shareholders On 22 December 2000, Porthus entered into an agreement with VZW Sociaal Secretariaat

Securex relating to the provision of services with regard to the development, supply, hosting, operating and monitoring of the ‘Magistral Service’ application (payroll processing tool). This agreement completed its initial term on December 31, 2003 and was automatically renewed for subsequent periods of one year ever since. The revenue realized on this agreement was 1 756K against 1 735K in 2006.

In addition, a professional services contract concluded with Securex, generated 1 424K during the financial year 2007.

These services are rendered at arms length or market price conditions. February 27, 2004, Desk Solutions NV entered into a • 1 100,000.00 subordinated loan agreement (as borrower) with Securex Invest SA (as lender) for a duration of 5 years at an interest rate of EURIBOR + 2%.

February 27, 2004, Desk Solutions NV further entered into a • 1 150,000.00 subscription agreement of convertibles bonds with Securex Invest SA which grants Securex Invest SA the right to subscribe to 500 Bshares of Desk Solutions NV upon conversion. This agreement was entered into for a duration of 5 years at an interest rate of EURIBOR + 2%. In february 2007, the conversion was executed as part of the capital increase of Desk Solutions NV.


Porthus has entered into management agreements with the current shareholders who are directly or indirectly active in the Company.

Since 1 July 2001 the Company has entered into a consultancy agreement with Newton Engineering bvba (the management company of Peter Hinssen, Chairman of the Board). Under this agreement Newton Engineering bvba is available on an ad hoc basis. The consultancy fee is determined on a project basis. There were no services delivered during 2007.

Insider Trading

According to the applicable Belgian legislation in combination with the recommendations of the Belgian Code on Corporate Governance regarding insider dealing and market abuse, the Board of Directors of Porthus has issued an Insider Trading Protocol. This document aims at making insiders within the Company aware of the principles concerning Insider Trading under Belgian Law. This protocol is signed by all Directors, the Management and all members of staff (both permanent and those hired on a temporarily basis).

In addition a presentation concerning insider trading is given to all members of staff (including

the newly hired members). Furthermore, the Board of Directors has appointed Joris Allaert (Porthus CFO) as Compliance

Officer whose responsibilities include the supervision of Porthus’s compliance with the legislation. Since the IPO and until 30/06/2007, the compliance officer did not receive any notifications of any transaction violating the legislation on insider trading.


“ Innovation and the ability to easily adapt to

changing market conditions have always been

important to Porthus’s success in the past. We will

continue to focus on those aspects while maintaining

the profitable growth path we have been able to

achieve over the past few years. ”

4

The following discussions and analysis should be read in conjunction with the audited consolidated financial statements, including the notes to those financial statements. Certain statements in this section are forwardlooking statements that involve risk and uncertainty. Although the company believes its expectations reflected in such forwardlooking statements are based on reasonable assumptions, no assurance can be given that such projections will be fulfilled. Any such forwardlooking statement must be considered along with the knowledge that actual events or results may vary materially from such predictions due to, among other things, political, economic or legal changes in the markets in which Porthus does business, competitive developments or risks inherent in the company’s business plan.

4.1 overview

In the financial year 2007, Porthus achieved total consolidated revenues of 1 19,504K compared to 1 15,918K in 2006. Net revenues2 amounted to 1 15,899K, representing an increase of 48.5%.

Despite a slightly weaker gross profit margin, net profit (before tax) increases times 5 in absolute values, resulting in a growth of the net profit margin (before tax) from 1.5% in 2006 to 5.3% in 2007.

EBITA improved to 1 858K compared to 1 349K in the previous year.

EBITDA doubled compared to the previous financial year, and amounted to 12% of net revenue. The recurring revenue (Managed Services and software maintenance) increased from 1 4,987K to 1 6,962K, representing an increase of 39.6%.

For the financial year 2007 some of the most significant milestones were:Since September 2006 sales activities in The Netherlands have started. Porthus BV signed •a first reference contract with De Lage Landen (part of the Rabobank Group). DLL selected the Porthus.net Trading Hub Managed Service to integrate their B2B IT environment, allowing easy access and communication by 1200 customers, located in the Netherlands and at locations abroad.In October 2006, Porthus successfully completed its initial public offering, raising •1 7.5 million. The transaction resulted in 1 6.6 million extra cash to support the company’s growth initiatives.In December 2006 Porthus was granted the project for implementation of the backoffice •for the iDTV platform of iNDi. The solution connects different iNDi business partners and user groups from viewers, iNDi call center operators and back office personnel over to dealers and mobile technical operators.The majority participation in Desk Solutions NV was reduced in February 2007, following •the acquisition of the SME division of Dolmen Computer Applications NV in December 2006 and the subsequent capital increase. After the capital increase in Desk Solutions the participation of Porthus amounts to 44.4%.During the second half of the financial year 2007, Porthus signed up several customers •for the Porthus.net Customs solution for their customs clearance and management. These customers include Reynaers Aluminium (B), Puratos (B) and van den Anker (NL). Porthus.net Customs is considered a spearhead solution for Porthus’s international rollout and growth.

management’s disCussion and analysis of finanCial Condition and results of operations

2 Net revenue includes the revenue realized on reselling, net of its cost of sales.

4.2 results of operations

4.2.1 Net Revenue

As explained in the Business section of this report, the OnDemand solution delivery of Porthus consists of Managed Services, Software and Professional Services. The software solutions are offered and invoiced based on three different pricing structures: OnPremise or OnDemand, as part of a Managed Services solution.

The table below shows the evolution and the breakdown of the consolidated revenue for the financial years 20052007:

€’000 FY2007 FY2006 FY2005

Revenue 19,504 15,918 9,890

Net revenue 15,899 10,707 8,899

Managed Services 6,624 4,764 3,295

Professional Services 8,467 4,883 4,727

Software 678 834 471

Reselling & other (net of cost) 130 226 406

4.2.1.1 Managed ServicesThe growth of net revenue in Managed Services represented 39% and can mainly be attributed to new applications in operations over the last 2 years, which is the case with the number portability solution (started in November 2005) and remote management. In addition, there is a continued growth of business we generate from existing customers, specifically in B2B messaging services. New customers contributed 50% of the growth in Managed Services in 2007.

4.2.1.2 Professional ServicesCompared to 2006, Professional Services showed an increase of 1 3,584K. This significant growth is, partly, a result of a specific customer project. This project represented about 25% of the Professional Services revenues in 2007. We consider this growth as exceptional.Professional Services in all other activities was 20% higher compared to 2006, which can be considered as a normal course of growth for the Professional Services business.

4.2.1.3 SoftwareWith 1 678K, Software revenue is lower than initially expected. This weaker performance is mainly due to:

The delay of eCustoms (PLDA) in Belgium;•The OnDemand solutions are a combination of Managed Services and Software. •Certain projects are driven by higher Managed Services revenues, which compensate lower (one time) license prices.

Sales of Porthus.net Integration Server, representing the majority of the software revenues contribution, was in line with expectations and at the same level as the previous year.

28 management’s disCussion and analysis of finanCial Condition and results of operations

4.2.1.4 InternationalSince September 2006 sales operations in the Netherlands have started. Porthus BV signed several contracts for Porthus.net Trading Hub, Porthus.net Integration Server and a first reference contract with De Lage Landen (part of the Rabobank Group). DLL selected the Porthus.net Trading Hub Managed Service to integrate their B2B IT environment, allowing easy access and communication by 1200 customers, located in the Netherlands and at locations abroad.

4.2.1.5 AquisitionsApart from the acquisition of the SME division of Dolmen Computer Applications NV in December 2006 by Desk Solutions, Porthus did not acquire any companies in the financial year 2007. The operational result was purely generated by organic growth.

4.2.1.6 Typical Customer projects and Customer loyaltyA typical customer project can consist of different phases. Most new projects start in the design phase of the customer solution, where Porthus can deliver its consulting services. In a second phase, once the customer solution is identified, the customer purchases the specific software components and integration services (including training, project mgt, etc.) and, if necessary, dedicated hardware or software components will be delivered (Reselling). Finally, the customer enters into a Managed Services agreement, including fixed services, usagebased services, maintenance, support and helpdesk services.

Every new project, be it with an existing customer or with a new customer, goes through the same cycle of services.

Typically, an average integration phase for an average project will take anytime between one and six months. Porthus closes service contracts for Managed Services with a standard contractual term of 3 to 5 years.

Therefore, the relationship between Porthus and its customers is considered to be a longterm trusted partnership, rather than a common customersupplier relationship, resulting in high customer loyalty, as shown in the graph below. This graph shows the evolution of the customer base over the past 4 years. The illustration indicates the loyalty of the customer by the fact that the revenues (excluding Reselling) of the total customer base of financial year 2004 increase in 2005, 2006 and further in 2007. Within a timeframe of 4 years the customer portfolio from 2004 still represents 63% of the total revenues.

The initial customer base grew by 23% in 2007, compared to 2006.

CuSTOMER LOYALTY

management’s disCussion and analysis 29 of finanCial Condition and results of operations

15.000.000

10.000.000

5.000.000

0

FY2004 FY2005 FY2006 FY2007

2004 Revenue Base Total Revenue excl Reselling

4.2.2 Recurring RevenueIn general the services are delivered to the customers within a framework of long term contract ual agreements for a standard initial period of 3 to 5 years. Typically, part of the revenues become recurring over the years.

These recurring revenues provide a solid base for the implementation of the business plan. The longterm agreements with our customers also result into the fast(er) growth of the Company. The part of the revenues that can be considered as recurring income consists of:

Managed Services: 100% of the Managed Services income is considered as recurring Software: Maintenance contracts on software (typically 20% of standard license income)

The management states that this is a conservative approach, since a number of Professional Services could also be considered as recurring revenue. Typical examples are Professional Services performed within the framework of a longterm agreement with customers or related to a managed services contract.

With the Managed Services offering Porthus is building up a significant recurring revenue base. The graph below shows the evolution of the recurring part of the revenues over the years.

RECuRRING REVENuE

15.000

10.000

5.000

0

FY2005 FY2006 FY2007

2004 Revenue Total Net Revenue

Recurring revenues have grown from 1 4,987K in 2006 to 1 6,962K in 2007. This is an increase of 39.6%.

4.2.3 Gross ProfitCost of sales includes all costs which can be directly related to the different service lines:

Managed Services related costs: • Staff costs (including wages, fees and fringe benefits both for employees and

temporarily hired consultants); Infrastructure costs underlying the Porthus.net platform (such as depreciation of

the tangible and intangible assets, support and maintenance costs, license costs, operational lease costs, datacenterrelated costs and data connectivity).

Softwarerelated costs: • Purchase cost of both the license and the maintenance

Professional Services: • Staff costs (including wages, fees and fringe benefits both for employees and

temporarily hired consultants); Travel and accommodation costs which can be directly allocated to Professional

Services.


Compared to 2006 the gross profit increased by 45%, amounting to 1 5,732K. Over the past few years the growth of revenue has been stronger than the growth of the direct costs leading to an improvement of the gross profit margin (33.1% in 2004 to 36.1% in 2007).This positive evolution is mainly due to:

Increasing contribution of Managed Services in the total revenues;•The scalability of the solutions, resulting in lower marginal costs;•A continuous focus on optimization of costs and usage of resources.•

However, compared to 2006, the gross profit margin decreased by 0.8%. This is mainly due to:Additional investments in our operational service center in Slovakia. The total investment •amounted to 1 160K.Investments in security and redundancy of the Managed Services. Porthus started with •the deployment of new datacenter facilities in Amsterdam. Together with the facilities in Brussels and Slovakia this investment will increase our ability to guarantee business continuity of the services towards our customers. This investment will however have impact in the financial year 2008, since the project started in June 2007.The sales of software licenses, generating higher margins than Professional Services, •decreased compared to the previous year.

4.2.4 Operating Expenses

€’000 FY2007 FY2006 FY2005

Corporate costs 4,075 3,377 2,692

General and administrative expenses 2,428 2,088 1,790

Selling expenses 1,647 1,289 902

R&D 901 330 245

Total 4,976 3,707 2,937

Other operating expenses include all costs that are not directly related to the cost of selling the services. The operating expenses consist of:

Corporate costs: include general and administrative expenses, HR, selling and marketing •costs.Research and Development: All activities related to the maintenance and upgrades of •current software products and services, and the development of new solutions.

4.2.4.1 Corporate costsThe combined cost of G&A and S&M evolves from 30.2% of net revenue in 2005 over 30.6% in 2006 to 25.0% in 2007.Note that these costs also include Business development costs, for activities such as the startup in the Netherlands, International partnerships and M&A.


General and Administrative expensesSince the start of its international activities, Porthus has created a shared service center for legal services, HRrelated services, administration, finance and accounting and overall corporate management services.Corporate costs also include all additional costs related to the public listing.Despite a continued organic growth, Porthus managed to lower the relative part of these expenses.

HRHR related costs were higher than previous year, because of the recent evolution of the employers’ market. Additional investments were made with focus on Recruitment, HR Management and Retention.

The table shows staff evolution in full time equivalents.

FTE 30-06-2006 30-06-2007

Professional Services 46.5 72.4

Managed Services 38.9 42.9

Management 7.0 6.0

General & Administrative 5.0 9.0

Sales & Marketing 4.0 5.0

TOTAL 101.4 135.3

For 2007 the number of FTE includes an average amount of 13.2 FTE temporary staff during the year. This external staffing is mainly used for short term (and temporally) additional capacity in projects within Professional Services.

4.2.4.2 Research and DevelopmentDevelopment activities can be separated into two different categories of activities:

Customer specific developments:• These developments are mainly performed within the framework of a project and can be integrated into Porthus solutions. They are not specifically marketed as products and therefore, the associated costs are not activated and are considered direct costs to the Professional Services activities. Nevertheless, these developments are a key element in Porthus’s ability to deliver the right solutions to its customers and can be considered as a competitive advantage.Solutions: •Own solutions that can be generated as generic components from custom specific developments through internal development projects, or can be solutions that are completely developed internally.

Research is performed within the scope of both the market solutions and the operations platform, supporting all different service lines (except reselling).Grants are recognized as a deduction of the R&D costs. During 2006 Porthus obtained a grant of the IWT to support its research and development efforts in the customs line of service. 1 124.5K of this grant was recognized during 2007.


Compared to last year the R&D budget has increased from 1 330K to 1 900K. Relative to the net revenue this represents an increase from 3.1% to 5.7% over the same period. This increase is mainly due to the continued investments in Porthus.net Trading Hub and the Porthus.net Customs solution.

4.2.4.3 Profit from operations (EBITA)The table below shows the evolution of EBITA from 2005 to 2007.

2007€’000

2006€’000

2005€’000

Profit from Operations (EBITA) 858 349 356

Compared to 2006 EBITA increased from 1 349K to 1 858K, a growth of nearly 150%. Relative to the net revenue this is a growth from 3.3% to 5.4% over this period.This increase is mainly due to the company’s growth, in combination with the fact that the gross profit margin remained high and, on the other hand, corporate costs (relative to the net revenue) were nearly 6% lower.

4.2.4.4 Financial ResultThe financial result improved by 1 147K compared to last year as a result of the interests received on the short term deposit of the proceeds of the IPO.The group did not call upon any financial instruments since the economical environment in which the group operates only implies a marginal risk regarding currency and interest rates.

4.2.4.5 TaxesThe management refers to note 8 of the financial statements for details of the tax expenses.

4.2.4.6 Share of profit in associatesFollowing the reduction of the share of Porthus NV in Desk Solutions NV to 44.4% and the fact that Porthus NV is no longer holding a controlling position according to IAS 27, Desk Solutions NV is now consolidated according to the equity method and the share of Porthus NV into the results of Desk Solutions NV in accordance with IAS 28 shown as “share of profit in associates” in the company’s consolidated profit and loss statement.

4.2.4.7 Net ResultThe net result on June 30, 2007 amounted to 1 838K against 1 216K in 2006.

2007€’000

2006€’000

2005€’000

Net Result 838 216 149

The net result in 2007 was 4 times higher than in 2006. Where the margin evolves from 2.0% to 5.3%.


4.3 BalanCe sheet

4.3.1 Non-current assetsDuring 2007, important investments were done relating to the datacenter in Slovakia and relating to improvement of the security and redundancy of the operations. About 1 489K investments were done in tangible assets to support the increase of the managed services revenue. The carrying value of the intangible assets increased from 1 1,155K to 1 2,975K. This relates to the purchase of software underlying a specific customer project.

According to the equity method now used to consolidate Desk Solutions NV, the participation of Porthus NV is presented as a financial asset equal to the share of Porthus NV into the equity of Desk Solutions NV.

The previously recognized deferred tax assets written off in the year amount to 1 21K.Following a revision of the outlook in 2007, the deferred tax assets were increased by 1 21K.

4.3.2 Current assets

4.3.1.1 Trade and other receivablesThe observed evolution on trade debtors is in line with the growth of the business. The terms within which the customers pay their invoices remain within market practices.The company continues to endeavor to use direct debt collecting on small recurrent contracts.

4.3.1.2 Trade debt and other liabilitiesThe balance of the trade creditors follows in essence the growth of the company.A significant increase is observed on the deferred income (from 1 451K in 2006 to 1 1,701K in 2007) which is due to :

the deferral of a part of a grant paid in 2007 but which could not yet be offset against the cost•deferrals on three customer projects on which services were already invoiced but only partially •performed

4.3.1.3 Financial liabilitiesDuring 2007, the financial liabilities were reduced by 1 734K. The total debt of the company was thereby reduced to 1 1,047K composed of 1 295K of bank loans and 1 752K of financial leases.

4.4 Cashflow statement

The cashflow generated by the operating activities amounted to 1 2,355K in 2007 as compared to 1 1,170K in 2006.

Following the IPO, the company increasingly financed investments from the proper funds leading to 1 3,200K of investments in 2007 mainly due to the investment in the software underlying a specific customer project.

The deconsolidation of Desk Solutions NV generated a cashout of 1 382K. In line with the announced use of the proceeds of the IPO, the outstanding debt of the company was further repaid.


4.5 faCtors affeCting results of operations

According to the Belgian Company Code, the Board of Directors must inform shareholders on the most important risk factors and uncertainties. The factors described below should not be considered to be allinclusive. The evolution of the business of Porthus is affected by a number of factors, some of which might be currently considered as immaterial.

Porthus is active in the field of electronic customs declarations which is highly regulated by the European Union and the governments of the member states. Changing legislation or legislation of which the deadline for application is changed, can impact the operations of Porthus.

The results of Porthus could be materially adversely affected by the loss of significant contracts and/or the reduction of volumes and services provided to important clients as a result of, amongst other things, their merger or acquisition, contract expiration or nonrenewal, or business failure or deterioration.

Porthus calls upon specific knowledge to realize its specialized, knowledgeintensive projects. The timely realization of said projects therefore depends on the timely availability of the appropriate knowledge.

The ability of Porthus to realize its objectives can be impacted by the overall economical environment which typically affects the IT budgets of the customers, potentially leading to pressure on the selling prices.

4.6 suBsequent events

1. Customer Project The iNDi project has been fully delivered according to plan. Porthus still has an opportunity to

deliver a second phase in this project, including Managed Services. External circumstances, however, might affect this second phase of the project. iNDi is in court

proceedings with Telenet, of which the outcome might affect the use of the architecture and solution that Porthus delivered to iNDi.

At the time of publication of this annual report, the probability of the start of the second phase of the iNDi project was still uncertain.

2. Seagha Acquisition In view of the strategy to further develop the company towards a B2B OnDemand solution

provider with solutions in media and supply chain on a European level, the management actively investigated M&A opportunities.

On September 5, 2007 Porthus announced that it reached an agreement to acquire the

Seagha activities with respect to electronic data transmission for a total consideration on a cashfree basis of 1 3,850K in cash.

Seagha is a dominant player and has built an established name in electronic integration, development of software applications and consulting services in the logistics industry.


Given the compelling event of new services and solutions for logistics processes, Porthus focused on strengthening our knowledge and solutions in that area, in combination with opportunities to acquire new customers and establish external growth.

With the acquisition of the Seagha activities, Porthus will expand and strengthen its position in the high growth market of electronic customs solutions. As a result of this acquisition, Porthus covers over 80% of all electronic customs declarations currently submitted in Belgium. Porthus gains an installed base of nearly 500 customers, many of which are large international organizations.

The acquisition of Seagha accelerates Porthus’s strategy to establish an immediate footprint in the market of electronic customs solutions, allowing the company to expand its customer references and focus on leveraging this competitive advantage on an international level.

4.7 outlook

1. Product & Solution Development The main strategic areas for further development of the company will be the supply chain

integration solution Porthus.net Customs and B2B integration services in Media.

Given the compelling event due to governmental regulations in customs declarations, Porthus considers the market of electronic customs solutions as one of the key growth markets for its OnDemand IT solutions. These types of solutions are the spearhead to develop business on an international level. In view of this strategy Porthus will continue the development of Porthus.net Customs solution as an OnDemand Service, with an application covering multiple EU member states, integrated with customs authorities. The solution will provide the necessary flexibility for access to information and integration between production companies, logistics companies, other service providers and local and international authorities.

2. International Growth and Focus For international growth, the focus remains on the Benelux, UK, France and Germany, the

most important markets for logistics services in Europe. On a short term, our primary focus will be strengthening our position in Belgium and the Netherlands.

Porthus is convinced that its European deployment strategy, will allow its multinational custom

ers to gain significant benefits from the centralized service in the major western European countries. The management considers this as a strong competitive advantage. Furthermore, Porthus continues to invest in the acquisition of competences in tomorrow’s technologies and solutions and the establishment of its Competence Centers.

3. Financial Performance For the financial year 2008, Porthus expects net revenues between 1 19 million and

1 21 million. The management targets a continued improvement of EBITDA result, which is expected to amount to approximately 1 2,500K. The 8month contribution of Seagha activities will positively contibute to Porthus’s 2008 EBITDA.

Porthus will continue its focus on the scalability of its solutions and the recurring revenue which is expected to grow at a comparable rate compared to 2007. As stated in our 2007 report, the growth percentage in Professional Services should be considered as exeptional. Porthus expects its Professional Services business in 2008 to grow by approximately 20%.


Lorem ipsum doLor2

financiaL statements

1

1 corporate information

country of incorporation of parent company

Belgium

LegaL form

Naamloze VennootschapPublic limited company

directors

Hinssen Peter Chairman of the Board appointed till 12/10/2010

Burgelman Luc CEO appointed till 12/10/2010

Bijnens Stijn independent director appointed till 12/10/2010

Rendex NV represented by de Vrée Paul appointed till 12/10/2010

Saenen Hilaire independent director appointed till 12/10/2010

Geert Noels independent director resigned on 24/04/2007

EMOR BVBA represented by Rome Francis appointed on 24/04/2007 independent director till 9/10/2007

Hamerlinck Frank resigned on 30/10/2006

Osselaer Luc resigned on 30/10/2006

Rendex ICT NV represented by Geenen Paul resigned on 12/09/2006

Origo Management BVBA represented by Vercruyssen Philippe resigned on 12/09/2006

XANA BVBA represented by Burgelman Luc appointed on 12/09/2006 till 30/10/2006

Newton Engineering BVBA represented by Hinssen Peter appointed on 12/09/2006 till 30/10/2006

secretary and registered office

Duwijckstraat 172500 Lier

company number

RPR 0467.369.853

auditors

BDO Atrio Bedrijfsrevisoren Burg CVBA, represented by Koen De Brabander and Lieven van Brussel(appointed till 13/10/2009)

consoLidated financiaL statementsfor the year ended June 30, 2007

consoLidated financiaL statements 39

2 consoLidated income statement

2007 2006

NOTE 1’000 1’000

Revenue 2 19,504 15,918

Cost of sales 2 13,772 11,964

Gross Profit 5,732 3,954

Selling, general and administrative, R&D expenses

4,976 3,707

Profit (loss) from operations 3 756 247

Finance income 7 252 46

Finance costs 7 (191) (132)

Profit (loss) before tax 817 161

Tax expense 8 0 55

Profit (loss) for the year 817 216

Share of profit of associates 21

Net Profit (loss) for the year 838 216

Earnings (loss) per share

Non-diluted (euros) 9 0.43 0.15

Diluted (euros) 9 0.39 0.15

Weighted average number of shares

Number of shares (non diluted) 1,965,738 1,452,918

Number of shares (diluted) 2,163,294 1,452,918

40 consoLidated financiaL statements

3 consoLidated baLance sheet at June 30, 2007

2007 2006

NOTE 1’000 1’000

Assets

Non-current assets

Property, plant and equipment 10 1,070 623

Intangible assets 11 2,975 1,155

Financial fixed assets 151 2

Deferred tax assets 8 712 712

Total non-current assets 4,908 2,492

Current assets

Work in progress 306 192

Trade and other receivables 13 6,757 4,888

Cash and cash equivalents 5,467 1,072

Total current assets 12,530 6,152

Total assets 17,438 8,644

Liabilities

Current liabilities

Trade and other payables 14 6,534 4,651

Other financial liabilities 15 686 987

Total current liabilities 7,220 5,638

Non-current liabilities

Financial liabilities 16 361 794

Provisions 12 27

Total non-current liabilities 373 821

Total liabilities 7,593 6,459

TOTAL NET ASSETS 9,845 2,185


2007 2006

NOTE 1’000 1’000

Equity

Share capital 19 11,928 5,393

Uncalled capital 19 0 (19)

Warrant reserve 126 108

Retained earnings (2,459) (3,297)

Consolidation differences 250

Total Equity 9,845 2,185

4 consoLidated statement of equity

SHARE CAPITAL

WARRANT RESERVES

RETAINEd EARNINGS

TOTAL

1’000 1’000 1’000 1’000

Balance at June 30, 2006 5,374 108 (3,297) 2,185

Capital increase, net of cost

6,554 6,554

Profit for the year 838 838

Equity share options issued (warrants)

18 18

Consolidation differences 250 250

Balance at June 30, 2007 11,928 126 (2,209) 9,845


5 consoLidated cash fLow statement

30/06/2007 30/06/2006

1’000 1’000

Cash Flow from operating activities

Net earnings 838 216

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 1,153 662

Increase (decrease) in the allowance for bad debts 5 11

(Gain) / loss on disposal of fixed / intangible assets 1

Deferred income taxes (55)

Interest expense 191 132

Interest income (21)

Share of profit in associates (21)

Changes in operating assets and liabilities net of effects from acquisitions:

Receivables (2,431) (1,855)

Inventory (114) 28

Accounts payable 687 1,597

Accrued expenses and other current liabilities and assets

2,250 520

Provisions and other liabilities (15) 14

Warranty reserve 18 27

Interest paid/received (185) (128)

Net cash provided by/ (used in) operating activities

2,355 1,170


30/06/2007 30/06/2006

1’000 1’000

Cash flow from investing activities

Purchase of PP&E (514) (67)

Purchase of intangibles (2,713) (111)

Proceeds from disposal of PP&E / intangible assets 7

Deconsolidation of Desk Solutions NV (382)

Net cash provided by/ (used in) investing activities

(3,609) (171)

Cash flow from financing activities

Proceeds from borrowings 257 555

Repayments of debt (1,157) (1,068)

Capital increase 6,554

Net cash provided by/ (used in) financing activities

5,654 (513)

Cashflow effect of consolidated exchange rate differences

(5)

Net increase (decrease) in cash and cash equivalents

4,395 486

Cash and cash equivalents at beginning of year 1,072 586

Cash and cash equivalents at end of year 5,467 1,072


6 notes forming part of the financiaL statements

1 Accounting policies

Basis of preparationThe full year financial statements have been prepared in accordance with IAS 1.

RevenueRevenue from services is recognized if the following conditions have been satisfied:

The amount of revenue can be measured reliably;a. It is probable that the economic benefits associated with the transaction will flow to the entity;b. The stage of completion of the transaction at the balance sheet date can be measured reliably;c. The costs incurred for the transactions and the costs to complete the transaction can be d. measured reliably

Additionally, the following criteria must be met:

a. Managed ServicesThe revenue from managed services is recognized according to the contractual provisioning.

b. Professional ServicesRevenue from professional services, such as consultancy, project management and implementation, is recognized in the income statement according to the percentage of completion method in case of fixed price contracts. The stage of completion is measured in reference to the proportion of costs incurred to date over the estimated total costs for each project. In case of projects implemented on a time & material basis, the revenue is recognized based on the actual time spent on the project

c. Sale of software licencesRevenue from the sale of software on which the company either holds the property rights or for which it has been granted distribution rights, is recognized in the income statement when the software license agreement is accepted by the buyer and the significant risks and rewards of ownership have been transferred to the buyer.

d. Maintenance contractsRevenue from maintenance contracts is recognized on a straight-line basis over the term of the service contract.

e. Reselling Revenue from the reselling of services and goods is recognized in the income statement when the significant risks and rewards of ownership have been transferred to the buyer.

Government grantsA government grant is recognized when there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants related to assets (such as for capital expenditure) are credited to deferred income and released to the income statement on a straight-line basis over the expected useful life of the relevant asset. Grants relating to income (such as R&D related) are recognized in the income statement over the period necessary to match them with the costs. They are recognized as a deduction of the R&D costs.


Basis of consolidationWhere the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the company and its subsidiaries (“the group”) as if they formed a single entity. Inter-company transactions and balances between group companies are therefore eliminated in full.

Business combinationsThe consolidated financial statements incorporate the results of business combinations using the purchase method other than disclosed above (see ‘first-time adoption’). In the consolidated balance sheet, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognized at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. The company has early adopted IFRS 3, Business Combinations in application of IFRS 1, First Time adoption of IFRS.

Goodwill & Other intangible assetsGoodwill represents the excess of the cost of a business combination over the interest in the fair value of identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair values of assets given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition.

Goodwill is capitalized as an intangible asset with any impairment in carrying value being charged to the income statement.

Where the fair value of identifiable assets, liabilities and contingent liabilities exceed the fair value of consideration paid, the excess is credited in full to the income statement.

Other intangible assets include customer lists and capitalized development cost. These are recognized in accordance with the criteria under IAS 38 and IFRS 3.

Impairment of non-financial assetsImpairment tests on goodwill and other intangible assets with indefinite useful economic lives are undertaken annually on June 30. Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of an asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to sell), the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit (ie the lowest group of assets in which the asset belongs for which there are separately identifiable cash flows). Goodwill is allocated on initial recognition to each of the group’s cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill.

Impairment charges are included in the administrative expenses line item in the income statement, except to the extent they reverse gains previously recognized in the statement of recognized income and expense.

Foreign currencyTransactions entered into by group entities in a currency other than the currency of the primary economic environment in which it operates (the “functional currency”) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences arising on the retranslation of


unsettled monetary assets and liabilities are similarly recognized immediately in the income statement, except for foreign currency borrowings qualifying as a hedge of a net investment in a foreign operation.

On consolidation, the results of foreign operations are translated into Euros at rates approximating to those ruling when the transactions took place. All assets and liabilities of foreign operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the balance sheet date. Exchange differences arising on translating the opening net assets at opening rate and the results of foreign operations at actual rate are recognized directly in equity (the “foreign exchange reserve”).

Financial liabilitiesThe other financial liabilities include the following items:

Trade payables and other short-term monetary liabilities, which are recognized at amortized cost.•Bank borrowings, certain preference shares and the debt element of convertible debt issued by •the group are initially recognized at the amount advanced net of any transaction costs directly attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at amortized cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the balance sheet. “Interest expense” in this context includes initial transaction costs and premia payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Convertible debtThe proceeds received on issue of the group’s convertible debt are allocated into their liability and equity components. The amount initially attributed to the debt component equals the discounted cash flows using a market rate of interest that would be payable on a similar debt instrument that did not include an option to convert. Subsequently, the debt component is accounted for as a financial liability measured at amortized cost (see above).

Retirement benefits: defined contribution schemesContributions to defined contribution pension schemes are charged to the income statement in the year to which they relate.

Share-based paymentsWhere warrants are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether or not the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of warrants are modified before they vest, the increase in the fair value of the warrants, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received.


Leased assetsWhere substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the group (a “finance lease”), the asset is treated as if it had been purchased outright. The amount initially recognized as an asset is equal to the fair value of the assets or, if lower, the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Lease payments are analysed between capital and interest. The interest element is charged to the income statement over the period of the lease and is calculated so that it represents a constant proportion of the lease liability. The capital element reduces the balance owed to the lessor.

Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an “operating lease”), the total rentals payable under the lease are charged to the income statement on a straight-line basis over the lease term.

The land and buildings elements of property leases are considered separately for the purposes of lease classification.

Externally acquired intangible assetsExternally acquired intangible assets are initially recognized at cost and subsequently amortized on a straight-line basis over their useful economic lives. The amortization expense is included within the administrative expenses line in the income statement.

Intangible assets are recognized on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights, in accordance with IFRS 3,§ 45. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques.

In-process research and development programmes acquired in such combinations are recognized as an asset even if subsequent expenditure is written off because the criteria specified in the policy for research and development costs above are not met.

The significant intangibles recognized by the group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Intangible asset Useful economic life Valuation method Software 3 - 5 years Historical cost Software in leasing 5 years Historical cost Development 5 years Historical cost

Internally generated intangible assets (research and development costs)Expenditure on internally developed products is capitalized if it can be demonstrated that:

it is technically feasible to develop the product for it to be sold;•adequate resources are available to complete the development;•there is an intention to complete and sell the product;•the group is able to sell the product;•sale of the product will generate future economic benefits; and•expenditure on the project can be measured reliably.•

Capitalized development costs are amortized over the periods the group expects to benefit from selling the products developed. The amortization expense is included within the cost of sales line in the income statement.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognized in the income statement as incurred.


deferred taxationDeferred tax assets and liabilities are recognized where the carrying amount of an asset or liability in the balance sheet differs to its tax base, except for differences arising on:

the initial recognition of goodwill;•goodwill for which amortization is not tax deductible;•the initial recognition of an asset or liability in a transaction which is not a business combination •and at the time of the transaction affects neither accounting or taxable profit; andinvestments in subsidiaries and jointly controlled entities where the group is able to control the •timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available, against which the difference can be utilized.

The amount of the asset or liability is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered). Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

the same taxable group company; or•different group entities which intend either to settle current tax assets and liabilities on a net •basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Property, plant and equipmentItems of property, plant and equipment are initially recognized at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future costs of dismantling and removing items. The corresponding liability is recognized within provisions.

All items of property, plant and equipment are carried at depreciated cost.

Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items over their expected useful economic lives. It is applied at the following rates:

Office equipment 20% per annum straight line Computer equipment 33% per annum straight line Communication equipment 20% - 33% per annum straight line Vehicles 20% per annum straight line Leased hardware 33% per annum straight line Investments rented building 11,11% per annum straight line

Work in progressWork in progress is valued using the percentage-of-completion method.

ProvisionsProvisions are recognized for liabilities of uncertain timing or amount that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.


2 Revenue and cost of sales

2007 2006

1’000 1’000

Revenue consists of:

Sale of managed services 6,624 4,764

Sale of professional services 8,467 4,883

Sale of software 678 834

Reselling and other 3,735 5,437

19,504 15,918

Cost of sales consists of costs that can be directly imputed to the services sold:

Staff-related costs (including temporary staff and cost of fringe benefits)

7,203 4,571

Purchase of goods and services 5,742 6,998

Depreciation of tangible and intangibles assets 827 395

13,772 11,964

3 Profit from operations

2007 2006

1’000 1’000

The profit from operations has been obtained after charging/crediting

General & administrative expenses 2,428 2,088

Selling costs 1,647 1,289

R&D costs 901 330

4,976 3,707

The general & administrative expenses include 1 102K (1 102K for the year ending at 30/06/2006) amortization on the intangible asset constituted by the customer portfolio of Tie Belgium NV. During the fiscal year 2007, 1 124.5K was recognized of the grant granted by the IWT (Institute for the Promotion of Innovation by Science and Technology in Flanders) in 2006 to cover research and development costs made during the year (2006: 1 124.3K).


4 Staff costs

2007 2006

1’000 1’000

Staff costs comprise:

Wages and salaries 4,149 3,308

Interim 65 7

Share-based payment expense (see note 21) 18 26

Fringe benefits 130 103

Remuneration and other accruals 255 44

Employer’s national insurance contributions and similar taxes

1,205 925

Other staff costs 110 37

5,932 4,450

The group uses subcontractors, the cost of which is not included in the above.

5 Segment information

The group operates in one business segment and only has operations in the EU region. Therefore no business or geographic segment information can be presented or is relevant.


6 Operating expenses by nature

The breakdown of the operating expenses is as follows:

2007 2006

1’000 1’000

Staff costs 5,932 4,450

Cost of sales reselling & other 3,605 5,211

Purchases of goods and services 8,054 5,312

Depreciations, amortizations and provisions 1,157 697

Tangible assets 453 374

Intangible assets

Development 46 46

Customer portfolio 110 102

Other intangibles goodwill 542 140

Provisions for liabilities and charges 15

Amounts written off 6 20

Total 18,748 15,670

7 Finance income and expense

2007 2006

1’000 1’000

Finance income 252 46

Interest received 127 9

Other finance income 125 37

Finance expense 191 132

Bank borrowings 34 52

Finance leases 57 55

Other finance expense 100 25

61 (86)


8 Tax expense and deferred taxes

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in Belgium applied to profits for the year are as follows:

2007 2006

1’000 1’000

Profit before tax (excluding share in associates) 817 161

Expected tax charge based on the standard rate of

Corporation tax in Belgium of 33.99% (2006 - 33.99%) (278) (55)

Tax effect of expenses not deductible for tax purposes (80) (68)

Tax effect of notional interest relief (Belgium) 66

Utilization of previously unrecognized tax losses (at 33.99%) (292) (123)

Previously recognized deferred tax assets released in the year (21) (218)

Increase deferred tax asset according to business plan 21 273

Total tax charge 0 55

The company has recognized deferred tax assets based on its tax losses carried forward to the extent that it is probable that future taxable profits will be available in the foreseeable future and which the company will be able to use to offset profits realized.

No deferred tax assets were recognized on tax losses carried forward amounting to 1 975K

1’000

Balance at June 30, 2005 657

Utilization of tax losses in 2006 (218)

Increase of the deferred tax asset 273


Utilization of tax losses in 2007 (21)

Increase of the deferred tax asset 21



9 Earnings per share

2007 2006

1’000 1’000

Numerator

Profit / (loss) for the year 838 216

Earnings used in basic EPS 838 216

Earnings used in diluted EPS 838 216

Denominator

Weighted average number of shares used in non-diluted EPS

1,965,738 1,452,918

Weighted average number of shares used in diluted EPS 2,163,294 1,452,918

Following the IPO in October 2006, the company realized a share split whereby one existing share was converted into three shares. Subsequently, the number of shares used in the calculation of the EPS, was restated for the year ending at 30/06/2006 to ensure a comparable basis.

The calculation of the diluted earnings per share has taken into account that each warrant converts into three shares.


10 Property, plant and equipment

VEHICLES OFFICE & COMPUTER

EqUIP-MENT

LEASEHOLd IMPROVE-

MENTS

TOTAL

1’000 1’000 1’000 1’000

At June 30, 2006

Cost or valuation 12 2,527 80 2,619

Accumulated depreciation

(12) (1,944) (40) (1,996)

Net book value 0 583 40 623

At June 30, 2007

Cost or valuation 45 3,265 80 3,390

Accumulated depreciation

(17) (2,254) (49) (2,320)

Net book value 28 1,011 31 1,070

Year ended June 30, 2006

Opening net book value 12 694 48 754

Additions 251 1 252

Disposals (9) (9)

Depreciation (3) (362) (9) (374)

Closing net book value 0 583 40 623

Year ended June 30, 2007

Opening net book value 0 583 40 623

Additions 50 893 0 943

Disposals (18) (234) 0 (252)

Depreciation (6) (438) (9) (453)

Adj. depreciation disposals 2 208 210

Exchange rate differences (1) 1

Closing net book value 28 1,011 31 1,070

The group’s property, plant and equipment are all valued at historical cost. The directors are in the opinion that market values do not significantly defer from historical cost at balance sheet date.

The disposals include assets disposed of as a result of the deconsolidation of Desk Solutions NV.


The net carrying amount of property, plant and equipment includes the following amounts in respect of assets held under finance leases (see note 20):

30/06/2007 30/06/2006

1’000 1’000

Computer equipment 605 467

605 467

11 Intangible assets

GOOd-WILL

dEVELOP- MENT

COSTS

CUS- TOMER PORT-FOLIO

OTHER TOTAL

1’000 1’000 1’000 1’000 1’000

At June 30, 2006

Cost 404 229 510 929 2,072

Accumulated amortization (47) (79) (263) (528) (917)

Net book value 357 150 247 401 1,155

At June 30, 2007

Cost 404 229 510 3,439 4,582

Accumulated amortization (47) (124) (366) (1,070) (1,607)

Net book value 357 105 144 2,369 2,975

Year ended At June 30, 2006

Opening net book value 357 196 349 265 1,167

Additions

Internally developed

Externally acquired 276 276

Through business combinations

Disposals 0

Amortization (46) (102) (140) (288)

Adj. amortization disposals 0

Reclassification tangible assets

Closing net book value 357 150 247 401 1,155


GOOd-WILL

dEVELOP- MENT

COSTS

CUS- TOMER PORT-FOLIO

OTHER TOTAL

1’000 1’000 1’000 1’000 1’000

Year ended At June 30, 2007

Opening net book value 357 150 247 401 1,155

Additions

Internally developed

Externally acquired 2,510 2,510

Through business combinations

250 250

Disposals (250) (250)

Amortization (46) (110) (542) (698)

Adj. amortization disposals 8 8

Reclassification tangible assets

Closing net book value 357 104 145 2,369 2,975

The disposals include assets disposed of as a result of the deconsolidation of Desk Solutions NV.

All assets have a finite useful economic life, except for goodwill which is infinite.

12 Subsidiaries and associated companies

The principal subsidiaries of PORTHUS NV, all of which have been included in these consolidated financial statements, are as follows: Country of Proportion of Name incorporation ownership interest Tie Belgium Belgium 99.99% Desk Solutions Belgium 44.40% Porthus Slovakia Slovakia 100% PORTHUS BV Netherlands 100%

Porthus BV was founded on 6/12/2006.

On February 8, 2007, the share capital of Desk Solutions NV was increased by 1 375K in cash funded by the management of Desk Solutions NV, Dolmen Computer Solutions NV and through the conversion of the convertible loan granted by Securex Invest NV.

In line with IAS 27, Porthus NV no longer controls Desk Solutions NV and consequently, the results of Desk Solutions NV are recognized according to IAS 28, investments in associates as from February 2007.


13 Trade and other receivables

2007 2006

1’000 1’000

Trade debtors (net) 5,630 4,013

Accrued income 644 537

Deferred charges and other debtors 483 338

6,757 4,888

14 Trade and other payables - current

2007 2006

1’000 1’000

Trade creditors 3,352 3,164

Other tax and social security taxes 553 440

Remuneration and other accruals 885 555

Deferred income 1,701 451

Accrued charges and other creditors 43 41

6,534 4,651

15 Other financial liabilities - current

2007 2006

1’000 1’000

Bank loans 284 653

Finance lease creditor (note 20) 402 334

686 987

See also note 18 on interest rates payable. Bank loans are secured with a pledge on the commercial fund of the company for an amount of 1 550K. This includes trade receivables.


16 Non-current financial liabilities

2007 2006

1’000 1’000

Bank loans 10 196

Convertible debt 0 150

Finance lease creditor (note 20) 350 348

Other non-current liabilities 1 100

361 794

17 Financial instruments - Risk Management

The group is exposed through its operations to one or more of the following financial risks:Fair value or cash flow interest rate risk1. Foreign currency risk2. Liquidity risk3. Credit risk4.

Policy for managing these risks is set by the Board following recommendations from the Finance Director. The policy for each of the above risks is described in more detail below.

It is company policy not to enter into any type of speculative transactions or financial instruments such as shares, foreign currency, derivative financial instruments or other.

Fair value and cash flow interest rate riskIt is currently group policy that at least 70% of external group borrowings (excluding short-term overdraft facilities and finance lease payables) are agreed at fixed interest rates. This policy is managed by the group finance department. Local operations are not permitted to borrow long-term from external sources. Management is of the opinion that the group is not subject to exposure to material interest risks because of its policy to borrow at fixed interest rates.

Foreign currency riskForeign exchange risk is not considered material since the group currently mainly operates in the Euro zone and its transactions are in Euro or currencies pegged to the Euro. It is furthermore the group policy to match incoming cash flows in foreign currency to outgoing cashflows in the same foreign currency. However, in case the total revenue realized in foreign currencies exceeds 25% of the group’s total revenue, the company will use typical hedging transactions to manage and reduce its foreign currency risk. Liquidity riskThe liquidity risk of each group entity is managed centrally by the group treasury function. Each operation has a facility line with group treasury, the amount of the facility line being based on budgets. The budgets are set locally and agreed by the board annually in advance, enabling the group’s cash requirements to be anticipated. Where facilities of group entities need to be increased, approval must be sought from the group finance director. Where the amount of the facility is above a certain level, agreement of the board is needed.


Credit riskDepending on the size of a transaction and the reputation of the customer in the market, the company will perform a formal credit check before entering into the transaction.Management estimates that there is currently no material credit risk, taking into account the quality of its customers.

18 Financial liabilities – Numerical information

Maturity of financial liabilitiesThe carrying amounts of financial liabilities, all of which are exposed to cash flow or fair value interest rate risk, are repayable as follows:

2007 2006

1’000 1’000

In less than one year 284 653

In more than one year but not more than five years 10 446

294 1,099

2007 FIXEd RATE

2006 TOTAL

1’000 1’000

Expiry within one year 284 653

Expiry in more than one year 10 446

294 1,099

The weighted average interest rate of fixed rate liabilities and the weighted average remaining duration for which they are fixed is as follows:

2007 2006

Rate Weighted Remaining duration

Rate Weighted Remaining duration

% months % months

4.22 10 4.08 15

Fair valuesThe book value and fair value of financial liabilities do not differ materially.

Borrowing facilitiesThe group has an unused credit line of 1 800K granted by the IWT (Institute for the Promotion of Innovation by Science and Technology in Flanders) which expires on 31/12/2007.


19 Share Capital

Following an IPO, the company has been publicly listed on the Alternext segment of Euronext Brussels since 27/10/2006. Through the IPO the company increased its share capital by 1 6,554K (net of cost) represented by 2,222,148 shares. As part of the IPO, the company realized a share split whereby one existing share was converted into three shares.

SUBSCRIBEd

2007 NUMBER

2007 1’000

2006 NUMBER

2006 1’000

Ordinary shares without face value

2,222,148 11,932 484,306 5,374

ISSUEd ANd NOT FULLy PAId

2007 NUMBER

2007 1’000

2006 NUMBER

2006 1’000

Ordinary shares without face value

At beginning of the year and year-end

0 0 3,138 19

The number of shares not fully paid-up on 30/06/2006 was 1,046, without taking into account the share split executed during the IPO of October 2006.

20 Leases

Finance leasesThe group leases a considerable part of its computer hard- and software equipment. Such assets are generally classified as finance leases as the rental period amounts to the estimated useful economic life of the assets concerned and often the group has the right to purchase the assets outright at the end of the minimum lease term by paying a nominal amount.

Future lease payments are due as follows at 30/06/2007:

MINIMUMLEASE

PAyMENTS

INTEREST PRESENTVALUE

1’000 1’000 1’000

Not later than one year 447 46 401

Later than one year and not later than five years

372 21 351

819 67 752


At 30/06/2006, the status was as follows:

MINIMUMLEASE

PAyMENTS

INTEREST PRESENTVALUE

1’000 1’000 1’000

Not later than one year 371 37 334

Later than one year and not later than five years

365 17 348

736 54 682

The present value of future lease payments are as follows:

2007 2006

1’000 1’000

Not later than one year 401 334

Later than one year and not later than five years 351 348

752 682

Operating leases - lesseeThe group leases the majority of its vehicles and has rental contracts in place for its offices.

The total future of minimum lease payments are due as follows:

2007 2006

1’000 1’000

Not later than one year 862 590

Later than one year 1,348 620

2,210 1,210

21 Share-based payment

The company operates two equity-settled share-based remuneration schemes for employees. Certain employees are eligible to participate in the warrant scheme, the only vesting condition being that the individual remains an employee of the group over a certain period. Under the scheme, warrants vest over a period of five years from the date of grant.


2007 2006

WEIGHTEd AVERAGE EXERCISE

PRICE

NUMBER WEIGHTEd AVERAGE EXERCISE

PRICE

NUMBER

Outstanding at beginning of the year (1/7)

19.52 1 66,073 19.79 1 72,336

Forfeited/granted during the year (264) (6,263)

Outstanding at 30/06 19.53 1 65,809 19.52 1 66,073

The exercise price of warrants outstanding at 30/06 ranged between 1 25.29 and 1 17.76 (2006 - 1 25.29 and 1 17.76) and their weighted average contractual life was 1.6 years (2006 – 2.6 years).

Of the total number of options outstanding at 30/06, 65,809 (2006 – 61,136) had vested all of which were exercisable at the end of the year (2006 – 51,447).

No options were exercised during the year (2006 – none).

Following the share split executed during the IPO of October 2006, each warrant will convert upon its execution to three ordinary shares.

22 Acquisitions

On 7/12/2006, Desk Solutions NV acquired all assets and liabilities related to the small business solutions division from Dolmen Computer Solutions NV.

The cost of the acquisition was (1 186.7K) of which the breakdown is given in the table below:

1’000

Customer list 250.0

Tangible assets 45.4

Receivables 32.0

Remuneration related accruals (384.1)

Prepaid services (130.0)

It is impractical to disclose information on the impact of the acquisition on the group’s consolidated results as though the acquisition date had been at the beginning of the accounting year, in view of the fact that the acquisition is an asset deal and that therefore no sufficiently accurate information was available relating to the operations involving the acquired assets and liabilities for the period starting on 1/7/2006 until the date of the acquisition.

Said acquisition had no material impact on the consolidated results of the group between the acqui sition date and the moment Desk Solutions NV was consolidated according to the equity method.


23 Commitments and contingencies

In 2006, a provision of 1 15K was taken following a claim relating to a suggested unlawful hiring of an employee. This claim was settled between the parties in April 2007 with a net negative effect of 1 2,5K on the profit and loss statement.

Porthus NV has received a claim regarding a suggested conflict of company names for which no provisions were taken since the conditions imposed by IAS37 for the recognition of a provision are not fulfilled.

The group is not part of any other material litigation nor has received any other significant claims that the group should disclose or for which provisions should be taken in accordance with IAS 37.

24 Events after the balance sheet date

On 3/09/2007, Porthus NV concluded an agreement for the acquisition of all activities relating to the electronic business communication of Seagha CVBA. According to the legal procedure defined in article 770 of the Belgian Company Code, the group will only obtain control, and will therefore only be in a position to govern the operational and financial policies regarding to the acquisition, 6 weeks after the request for take-over has been deposited at the Commercial Court. Until such time, Seagha CVBA will continue to run its business as a going concern. Consequently, the disclosures required under IFRS 3 cannot yet been given, as the final inventory of assets and liabilities considered by the acquisition will only be definitively known at the end of the 6-week period.

25 Related Parties

Subsidiaries and associated companies The newly founded subsidiary Porthus BV has been added to the related parties already identified in the financial statements for the year ended at 30/06/2006.

Porthus NV concluded an agreement with its associated company Desk Solutions NV for the delivery of managed services. These services are rendered at arms length or market price conditions.

Key Management Personnela. directorsThe independent directors and the chairman of the board were granted a compensation totalling 1 46K during the reporting period.

At de board meeting of 11/08/2006 which decided on the remuneration of the management, a conflict of interest was reported by 2 directors in view of the fact that they were also member of the executive management.

At the board meeting of 12/09/2006 which decided on matters related to the IPO, a conflict of interest was reported by 4 directors in view of the fact that they were also shareholder of the company.

b. Executive ManagementThe remuneration of the executive management of Porthus NV during the reporting period (as disclosed in the financial statements for the year ended at 30/06/2006) can be detailed as follows.


2007 2006

1’000 1’000

Short term employee benefits 879 770

Post-employment benefits 3 5

Other-long term benefits

Termination benefits

Share-based payments 10 20

Total benefits 892 795

Number of warrants granted during the period 0 0

Number of warrants outstanding at the end of the period 48,000 48,000

Following the share-split executed during the IPO in october 2006, each warrant will convert to three ordinary shares upon execution.

No loans or other guarantees have been granted to the executive management.

In august 2007, the chairman of the Board of Directors and two members of the executive management requested the execution of all of their warrants (totalling 36,000 warrants).This will result in a capital increase of 639,360 euro. The warrants were granted before 7 November 2002 and therefore IFRS 2 did not apply to these warrants.


Significant shareholders• On22December2000,theCompanyenteredintoanagreementwithVZWSociaalSecretariaat

Securex (a company related to a shareholder of Porthus NV) relating to the provision of services with regard to the development, supply, hosting, operating and monitoring of the ‘Magistral Service’ application (payroll processing tool). This agreement completed its initial term on December 31, 2003 and has been automatically renewed for subsequent periods of one year ever since.

The revenue realized on this agreement was 1 756K against 1 735K in 2006.

In addition, a professional services contract concluded with Securex, generated 1 424K during the financial year 2007 (2006: 1 146K)

These services are rendered at arm’s length or market price conditions.

• OnFebruary27,2004,DeskSolutionsNVenteredintoa1 100,000.00 subordinated loan agreement (as borrower) with Securex Invest SA (as lender) for a duration of 5 years at an interest rate of EURIBOR + 2%.

On February 27, 2004, Desk Solutions NV further entered into a 1 150,000.00 subscription agreement of convertibles bonds with Securex Invest SA which grants Securex Invest SA the right to subscribe to 500 B-shares of Desk Solutions NV upon conversion. This agreement was entered into for a duration of 5 years at an interest rate of EURIBOR + 2%.

In february 2007, the conversion was executed as part of the capital increase of Desk Solutions NV.

• TheCompanyhasenteredintomanagementagreementswiththecurrentshareholderswhoaredirectly or indirectly active in the Company. Since 1 July 2001 the Company has entered into a consultancy agreement with Newton Engineering bvba (the management company of Peter Hinssen, Chairman of the Board). Under this agreement Newton Engineering bvba is available on an ad hoc basis. The consultancy fee is determined on a project basis. There were no services delivered during 2007.

The financial statements, including the notes, were approved and authorized for issue by the Board of Directors on 12/09/2007 and were signed on its behalf by:

Luc BurgelmanDirector


auditor’s opinion

In accordance with the legal requirements, we report to you on the performance of the mandate of statutory auditor, which has been entrusted to us. This report contains our opinion on the true and fair view of the consolidated financial statements as well as the required additional statements (and information). Unqualified audit opinion on the consolidated financial statements We have audited the consolidated financial statements for the year ended 30 June 2007, prepared in accordance or with International Financial Reporting Standards as adopted by the European Union, which show a balance sheet total of 1 17.438K and a profit for the year of 1 838K. Management is responsible for the preparation and the fair presentation of these consolidated financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting principles and making accounting estimates that are reasonable in the circumstances. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the legal requirements and the Auditing Standards applicable in Belgium, as issued by the Institute of Registered Auditors (Institut des Reviseurs d’Entreprises / Instituut der Bedrijfsrevisoren). Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statements are free from material misstatement, as to whether due to fraud or error.

In accordance with the above-mentioned auditing standards, we considered the group’s accounting system, as well as its internal control procedures. We have obtained from management and the company’s officials, the explanations and information necessary for executing our audit procedures. We have examined, on a test basis, the evidence supporting the amounts included in the consolidated financial statements. We have assessed the appropriateness of the accounting principles and consolidation principles, the reasonableness of the significant accounting estimates made by the company, as well as the overall presentation of the consolidated financial statements. We believe that these procedures provide a reasonable basis for our opinion. In our opinion the consolidated financial statements for the year ended 30 June 2007 give a true and fair view of the group’s assets and liabilities, its financial position , the results of its operations and cash flow in accordance with International Financial Reporting Standards as adopted by the European Union.


Additional statements (and information) The preparation of the consolidated Directors’ report and its content are the responsibility of management. Our responsibility is to supplement our report with the following additional statements (and information) which do not modify our audit opinion on the consolidated financial statements: The consolidated Directors’ report includes the information required by law and is consistent with the consolidated financial statements. We are, however, unable to comment on the description of the principal risks and uncertainties which the consolidated group is facing, and of its financial situation, its foreseeable evolution or the significant influence of certain facts on its future development. We can nevertheless confirm that the matters disclosed do not present any obvious inconsistencies with the information that we became aware of during the performance of our mandate. Antwerp, September 12, 2007 BDO Atrio Réviseurs d’Entreprises Soc. Civ. SCRLRepresented by Koen De Brabander Lieven van BrusselAudit Partner Audit Partner

2 statutory financiaL statements

1 introduction

The information presented in this chapter is a substract of the statutory financial statements of Porthus NV. These financial statements were prepared in accordance with the accounting principles generally accepted in Belgium (BE GAAP). The auditor has delivered an unqualified opinion with regard to these financial statements.

2 baLance sheet

30/06/2007 30/06/2006

1’000 1’000

ASSETS

Fixed Assets 3,448 2,005

I. Formation expenses 0 1

II. Intangible fixed assets 2,147 132

III. Tangible fixed assets 1,015 767

IV. Financial assets3 286 1,105

Current Assets 11,682 4,958

VI. Stocks and contracts in progress 136 192

VII. Amounts receivable within one year 5,664 3,371

A. Trade debtors 4,774 3,162

B. Other amounts receivable 890 209

VIII. Cash investments 3,000 0

IX. Cash at bank and in hands 1,874 577

X. Deferred charges and accrued income 1,008 818

Total assets 15,130 6,963

3 The decrease as compared to 2006 is caused by the recognition of a write off on the investment value

in Tie Belgium NV

statutory financiaL statements 69

30/06/2007 30/06/2006

1’000 1’000

LIABILITIES

Capital and Reserves 8,480 1,778

I. Capital 12,893 5,374

V. Accumulated profit/losses (4,413) (3,596)

Provisions for liabilities and charges 13 28

Creditors 6,637 5,157

VIII. Amounts payable after one year 327 526

A. Financial debts 327 526

1. Subordinated loans

3. Leasing and other similar obligations 317 330

4. Credit institutions 10 196

IX. Amounts payable within one year 4,919 4,430

A. Portion of amounts payable after one year 562 713

B. Financial debts 80 205

C. Trade debts 3,090 2,810

E. Taxes, remunerations and social security 1,188 701

F. Other debts 0 1

X. Accrued charges and deferred income 1,391 201

Total liabilities 15,130 6,963

70 statutory financiaL statements

3 profit & Loss statement

30/06/2007 30/06/2006

1’000 1’000

I. Operating income 18,011 14,839

A. Turnover 17,942 14,777

B. Incr.-decr. in stocks of fin. goods, etc (56) (28)

D. Other operating income 125 90

II. Operating charges 18,131 14,370

A. Raw mat., consom. and goods for resale 5,337 6,442

B. Services and other goods 6,187 3,850

C. Remuner. social sec. costs and pensions 4,691 3,526

D. Depr. & amounts wr. off form. exp., etc.4 1,909 526

E. Amounts written off stocks. contr., etc. 10

F. Provisions for risks & charges 15

G. Other operating charges 7 1

III. Operating profit/(loss) (120) 469

IV. Financial income 251 133

V. Financial charges 127 139

VI. Operating income (normal activities) 4 463

VII. Extraordinary income 18 17

VIII. Extraordinary charges5 839

TOTAL INCOME (817) 480

4 The amortization contain the costs related to IPO of Porthus NV in October 2006 and which were

written off entirely by 30/06/2007

5 Write down of the investment in Tie Belgium NV

statutory financiaL statements 71

4 appropriation account

30/06/2007 30/06/2006

1’000 1’000

A. Loss to be appropriated

1. Profit/(Loss) to be appropriated of the financial period

(817) 480

2. Loss brought forward from the previous financial period

(3,596) (4,076)

D. Result to be carried forward

1. Loss to be carried forward 4,413 3,596

appendiX

B2B - Business-to-Business

EdI - Electronic Data InterchangeElectronic Data Interchange (EDI) is the computer-to-computer exchange of structured information, by agreed message standards, from one computer application to another by electronic means and with a minimum of human intervention. In common usage, EDI is understood to mean specific interchange methods agreed upon by national or international standards bodies for the transfer of business transaction data, with one typical application being the automated purchase of goods and services.

LNP - Local Number PortabilityLocal number portability (LNP) is the ability to take an existing telephone number assigned by a local exchange carrier (LEC) or a mobile phone provider, and reassign it to another LEC or other telephony provider.

Number PortabilityRules have been put in place by governments across Europe enabling consumers to maintain their mobile or fixed number when changing from one operator to another. This process is called Number Portability. Local number portability (LNP) is the ability to take an existing telephone number assigned by a local exchange carrier (LEC) or a mobile phone provider, and reassign it to another LEC or other telephony provider.

OndemandOnDemand is a generally accepted term, describing the type of solutions that Porthus offers. The solution has two key criteria: (1) the service is paid for on a subscription (per user/per transaction) basis and (2) the software is hosted and managed by the vendor and accessed by the customer over the Internet.

Porthus.netPorthus.net is an infrastructure platform, consisting of an Application Platform, a Communications Hub and a Data Center. Porthus hosts and manages software on the Porthus.net platform and provides this as a service to its customers. Customers pay for these services on a per user or per transaction basis.

SaaS - Software as a ServiceSoftware as a Service (SaaS) is a model of software delivery where a company adopts specific activities that provide customers access to software alleviating that customer from the maintenance and daily technical operation and support of business and/or consumer software. SaaS is a model of software delivery rather than a market segment; software can be delivered using this method to any market segment including home consumers, small business, medium and large business.

SLA - Service Level AgreementAn SLA sets the expectations between the consumer and provider. It helps define the relationship between the two parties. It is the cornerstone of how the service provider sets and maintains commitments to the service consumer.

Web ServicesSoftware applications written in various programming languages and running on various platforms can use web services to exchange data over computer networks like the Internet. This interoperability is due to the use of open (internet based) standards.

business gLossary

www.porthus.com

taking software services to the next level...porthus continued its profitable growth path with a...

Documents