Exact Holding announces full year results 2006

Exact reports solid financial results for 2006 and a sound foundation for growth. Dutch home market shows sound revenue growth of 9.1% - Exact e-Synergy revenue growth accelerates to 52%.

* Total revenue grew by 7.8% to EUR242.1 million (2005: EUR224.5 million), despite negative foreign exchange rate effects in 2nd half 2006 (EUR2.6 million).
* EBIT increased by 12.6% to EUR45.9 million representing an EBIT margin of 19.0% (2005: 18.2%).
* Operating cash flow grew by 28.2% to EUR41.6 million (2005: EUR32.5 million).
* EPS increased to EUR1.42(2005: EUR1.34). Cash EPS increased to EUR1.73 (2005: EUR1.36).
* A dividend payout of EUR1.42 will be proposed representing a 100% payout of net earnings.

* The decisive action plan executed in the Dutch home market led to total revenue growth of 9.1%, licence revenue growth of 13.4% and continued EBIT margin improvement to 40.7%.
* Continued focus on profitability in North America led to an EBIT increase of 48%, representing an EBIT margin of 15.7%. Total revenue grew by 12.2% (at constant currencies 13.4%).
* Growth of Exact e-Synergy revenue accelerated to 52% due to increased management focus and strong market demand.
* Major contract wins with Exact e-Synergy: PCM Uitgevers (PCM Publishers), KPN, Arbo Unie, Ontario Power Authority and Movie Park.
* Exact Online continues to gain strong traction and was recognised as the best online accounting solution in the Netherlands.
* Technology acquisitions Easy Access and Vanguard Solutions successfully integrated into core products.
* Further strengthening of senior management by establishing executive management teams within each strategic group, and introducing a product and technology board.

* Exact reiterates its guidance for 2007 of EUR300 million revenue and at least 20% EBIT margin, subject to finding the right acquisition targets.
* Excluding acquisitions, the company gives a guidance for organic license revenue growth of 6-8% in 2007 (2006: 2.1%) and an EBIT margin of at least 20%.

Rajesh Patel, CEO, Exact Holding, says: "2006 has been a year in which Exact has focused on continued improvement of operational excellence in each of our strategic groups, leading to increased profitability in all areas, with one exception.

"While increasing operating income, new management has focused on gearing up the organisation for further growth in the coming years. This will be established by sound customer retention and intimacy, while directing focus to our key growth driver, Exact e-Synergy. This focus will ensure that Exact not only assists its customers with their administrative processes but also with solutions that empower them in boosting their businesses.

"In the past year our products, our organisation and our channel have made continued progress in this transition, which is tightly managed. The results of 2006 show that we have chosen the right direction and I am confident we will continue to execute diligently, and see continued profitable growth in the coming years."

Total revenue increased from EUR224.5 million in 2005 to EUR242.1 million in 2006, an increase of 7.8%. Foreign exchange rates negatively impacted revenue by EUR0.7 million.

Acquisitions added EUR13.8 million to revenue. The organic revenue growth - defined as total revenue development at constant currencies, excluding the contribution of acquisitions - was 2.0%. Revenue related to Exact e-Synergy grew strongly at 52% to EUR26 million (2005: EUR17 million).

Total licence revenue increased 7.5% to EUR71.4 million compared to EUR66.3 million in 2005. This increase is mainly due to the increased licence sales in the Netherlands and North America, and fuelled by Exact e-Synergy.

Maintenance revenue increased to EUR123.8 million compared to EUR119.8 million in 2005, an increase of 3.3%.

Service revenue increased 22.2% to EUR46.9 million, compared to EUR38.4 million in 2005. Service revenue increased in all strategic groups as a result of the increased activities of Exact in the value business, at the higher end of the mid-market. Service revenue over 2006 comprised 19.4% of total revenue (2005: 17.1%).

In 2006, the operating result (EBIT) increased by 12.6% to EUR45.9 million, compared to EUR40.8 million last year, due to operational leverage and continued prudent cost management. This represents an EBIT margin of 19.0% compared to 18.2% in the prior year.

Total operating expenses increased 6.8% to EUR196.2 million (2005: EUR183.7 million). Personnel expenses increased from EUR110.1 million to EUR122.5 million. Excluding acquisitions personnel expenses increased 3.6%.

Including the acquisitions of the second half of 2005, the average number of employees is the same. Marketing and sales expenses decreased by 14.5% from EUR15.9 to EUR13.6 million, due to a more efficient use of means. Total research and development (R&D) costs increased by 20% to EUR18 million (2005: EUR15.3 million).

The total financial income in 2006 amounted to EUR2.2 million, a decrease compared to the EUR3.8 million in 2005. This is the result of a more conservative liquid assets investment strategy. The tax expense in 2006 was EUR13.7 million, compared to EUR12.6 million in 2005. This resulted in a tax rate of 28.5% (2005: 28.2%).

Net income in 2006 attributable to shareholders amounted to EUR34.1 million, representing an increase of 6.4% compared to the previous year (2005: EUR32 million).

Earnings per share increased by 6% to EUR1.42 (2005: EUR1.34). At the next annual general meeting of shareholders, the board of managing directors will propose a change in the current dividend policy, which is a pay-out 50% of net income. The proposal will be to pay-out 100% of net income for any year the company did not execute any material acquisitions.

The rationale behind this proposal is the company has continuously demonstrated strong and sustainable cash-flow generation. The free cash flow generated in 2006 hit a record of EUR37 million, leading to a cash position EUR127.8 million. After the pay-out of the proposed dividend the company will hold a cash position of EUR93 million. With this cash position and its ungeared balance sheet, the company has a sound investment capacity for acquisition.

Exact further strengthened its sound balance sheet with a net cash position increase of EUR13.1 million to EUR124 million (year-end 2005: EUR110.8 million).

The average days sales outstanding increased from 63 in 2005 to 64 in 2006. The operating cash flow increased 28.2% to EUR41.6 million. Amortisation of intangible fixed assets increased from EUR0.8 million to EUR1.8 million, as a result of the depreciation of customer bases of the acquisitions made in 2005. Capital expenditures remained low at EUR4.1 million.

The decisive action plan executed over the last 18 months has re-established growth in Exact's important home market and led to the following financial results in 2006:

* Total revenue growth of 9.1% to EUR108.8 million (2005: EUR99.7 million).
* Acquisitions added EUR7.3 million in 2006, leading to an organic revenue growth of 1.7%.
* Licence revenue grew 13.4%, excluding acquisitions 5.7%.
* Due to further improved product quality, customer intimacy and strong licence sales, the negative trend in maintenance revenue has been reversed to show an increase of 1.4% organically for the full year.
* EBIT increased from EUR39.7 million in 2005 to EUR44.2 million in 2006.
* EBIT margin continued to improve to 40.7% in 2006 (2005: 39.8%), excluding acquisitions to 44.8% (2005: 42.1%).

* Major contract wins with Exact e-Synergy showing further traction in the higher end of the mid-market: PCM Uitgevers (PCM Publishers), KPN, Arbo Unie, Innovam and Freia.
* Exact Online continued to gain strong traction and was recognized as the best online accounting solution in the Netherlands.
* Received an award for "Best Software Company 2006" in the Netherlands by Computable Magazine.
* Business Made Easy marketing initiative resulted in an increased demand for Exact e-Synergy by smaller companies.
* Solid transition of larger partners to play a key role in the higher-end of the mid-market.

A strong focus on operational improvements in the North American operation has led to following major financial and operational achievements:

* Total revenue grew by 12.2 % to EUR59.6 million (2005: EUR53.1 million). Excluding acquisitions total revenue grew by 2.6% to EUR54.5 million (2005: EUR53.1 million).
* At constant currencies total revenue grew by 13.4% and organically by 3.8%.
* Inspired Solutions, which was acquired in December 2005, has been fully integrated and contributed to a services growth of 27.6%.
* Vanguard Solutions, which was acquired in October 2005, has been successfully integrated from a back-office perspective, leading to a new regional office in Chicago.
* Several major contract wins in North America that all include Exact e-Synergy in combination with Exact Globe or Exact Macola are Ontario Power Authority, Baker Drywall, Veritas Tools Inc and Short Bark Industries.
* Continued focus on profitability improvement in North America led to an EBIT increase of 48% from EUR6.3 million to EUR9.3 million, representing an EBIT margin of 15.7% (2005: 11.8%).

International Markets consist of the strategic groups Exact International and other national markets. International Markets showed a total revenue growth of 2.9%, from EUR71.7 million to EUR73.7 million. Acquisitions added EUR1.5 million. EBIT increased 25% to EUR11.0 million (2005: EUR8.8 million), representing an EBIT margin of 14.9%.

Exact International achieved a revenue growth of 6.8%. Targeting international organisations and the divisions of large multinationals globally, this business is becoming a true project-driven organization, and has continued to see strong service revenue growth of 16.4% in 2006. As a result of the sound transition over the last three years and a directed investment in 2005, Exact International nearly doubled its EBIT margin in 2006.

Other National Markets showed sound execution of corporate strategy and growth in 2006 with one exception resulting in a revenue decline by 2.2% compared to 2005.

* Spain has successfully integrated the business partners acquired in October 2005 and has again shown healthy organic growth. In addition, Spain generated 38% of its revenue in 2006 from Exact e-Synergy, demonstrating strong leveraging of the customer base and being a role model within the Exact organisation of adopting Exact e-Synergy.
* Belgium was going through a transition in 2006 to return its focus to its core markets. New management has been established and with the acquisition of Solid Data in January 2007, Exact has become the leading accounting software vendor for the SME market. All operations will be fully integrated to ensure full leverage capability of Exact Online and Exact e-Synergy.
* Colombia has achieved a revenue growth of 9.4%, fuelled by a new .net release of its flagship product Siigo and continued leverage of the installed base with Exact e-Synergy.
* Germany showed a disappointing FY2006 with declining revenue. Rapid action and decisive measures have been taken during the 2nd half of 2006 including a management change. Germany will resume growth again in 2007 by focusing on HRM solutions and leveraging its strong foothold in the German payroll market.

In November 2006, release 370 of Exact e-Synergy and Exact Globe 2003 were launched globally. With this major release both Exact Globe 2003 and Exact e-Synergy gained functionalities that enable companies to optimally parameterise their software environment to their specific needs.

Next to the flexibility and usability gain, this new release is geared towards business process improvement, particularly in the areas of HRM, CRM, reporting, and workflow management based on over 700 new features.

The technology upgrade of Exact e-Synergy to the most recent .NET platform has been made during 2006. The connectivity of this major release with Exact's back office products and the integration with Exact Business Analytics is currently being optimised for its launch in the 1st half of 2007. In addition, continued strong focus in 2007 will be paid on substantially enriching functionality of Exact e-Synergy around market-driven themes. As a result of the increased focus on Exact e-Synergy, additional R&D resources will be redirected from other product lines.

After the successful launch of Exact Online in the Netherlands in 2005, the growth in number of customers in the Netherlands in 2006 has surpassed management expectations. PCM Magazine has awarded Exact Online as the best online accounting solution in the Netherlands in August 2006.

Exact Online was also launched in Belgium during 2006 and is already showing traction. With the acquisition of Solid Data and its associated leveraging opportunities in Belgium, Exact Online will be a key driver for customer count growth in 2007.

The technology acquisitions made in the second half of 2005 have been successfully integrated into the core product offering:

* Exact Globe 2003 has been expanded with Pick-IT, the advanced barcode-scanning solution originally developed by Easy Access, which has been acquired in October 2005. Now, warehouse transactions can easily be processed with handheld terminals that synchronise with the inventory data in batches afterwards or real time using Radio Frequency.
* Exact Business Analytics - a result of the acquisition of Vanguard Solutions in November 2005 - has been defined as a corporate product line due to its leveraging capabilities and will be rolled out globally in 2007 as part of the Exact e-Synergy offering.

As part of the companies mid-to-long term product and technology roadmap, local product lines continue to invest in additional functionality to drive customer retention and satisfaction. Examples in 2006 are Exact JobBoss and Exact Informatica which have launched a new .net version of their products.

The set up of two innovation centres in Delft and Silicon Valley to address future technology trends has been successfully completed in 2006. This underlines together with the appointment of a dedicated Product and Technology Board Exact's increased focus on product development.

Exact reiterates its guidance for 2007 of EUR300 million revenue and at least 20% EBIT margin. This is subject to finding the right acquisition targets to facilitate its strategy in being a Business Empowerment Software provider. These acquisitions will be in line with its defined M&A strategy and be funded by using current cash availability and leverage on the balance sheet.

Acquisitions may initially have a limited negative impact on EBIT margin due to the required amortisation of acquired customer bases under IFRS. Excluding acquisitions, Exact gives guidance of organic licence revenue growth of 6-8% and an EBIT margin of at least 20% for 2007.

Certain statements in this document constitute forward-looking information. By their nature, such information generates risk and uncertainty because it concerns events in the future and depends on circumstances which then apply. Actual results could materially differ.