Letter to Shareholders, June 14, 2005

Dear Shareholders,

Accounts for the year 2004

The year 2004 was a very eventful one for the XRT Group.

The major event was the launch of Universe 2.0, our new solution for integrated financial flow management. This high-performance tool allows both mid-size companies and major international groups to take operational cash management into a new dimension. Using XRT Universe 2.0, our clients develop their markets, with a tool that unites in a single integrated package XRT’s expertise in cash management, simple financial transactions, liquidity management and forecasting, electronic banking communication and related payments as well as banking and accounting reconciliation. We rolled out this entirely revamped offer in the second half of 2004. It has already convinced 600 companies who have been able to appreciate its advanced functionality and highly innovative and intuitive user interface as well as its capacity to enhance team performance.

The year was also marked by the acquisition in August of Apsara, a company specializing in the distribution and integration of financial IT solutions for corporates such as ours. With this acquisition, we can now follow the needs of our French client base more closely. It will also generate synergy opportunities and enable the integration of complementary product offerings.

These efforts did not, however, translate into renewed growth for the group. One reason is certainly the fact that most major enterprises are focused on the adoption of the IFRS accounting standards in Europe and the adaptation of their systems to the obligations of the Sarbanes Oxley Act in the United States and the Financial Security Act (LSF) in France.

The Group’s activity thus remained stable as compared with 2003, with a consolidated revenue of €40.2 million, up 0.7% on comparable scope and exchange rates. For three years the Group has invested heavily in software development, and this investment was maintained in 2004, with expenses at the same level as in 2003 (approximately 24% of revenue). Operating income rose significantly to €4.1 million compared with the previous year, which was marked by non-recurring events. Our consolidated net income for 2004, after taxes and amortization of goodwill, stood at e1.1 million, representing 2.7% of revenue. Our free cash flow rose by €4.1 million during the year to reach €9.3 million on December 31, the lowest point of our annual liquidity cycle.

A look back, in order to better look forward…

After years of profitable growth, the poor results in 2000 put the Group in a very delicate financial position. Consequently, in 2001, we implemented strong restructuring measures that were necessary to turn the Group around. The effect was rapid and in 2001, XRT posted a positive operating income. This turnaround could not have been successful without the loyalty of our clients as well as the expertise, hard work and devotion of our employees.

After the financial operations of December 2002, the Group freed itself of all debt and has since shown a significant cash flow, enabling it to strengthen its cash position.

At the same time, we completely restructured the group’s organization (Marketing, Sales, Services, Finances, etc.) and replaced the management of our subsidiaries, with the exception of Benelux. We re-engineered and streamlined our management procedures, methods and tools. We also reinforced our controls following the difficulties encountered in Spain and Portugal in 2003.

However, the most radical change to the company came from our business positioning.

For the past four years, we had positioned our corporate strategy on the concept of Financial Value Chain Management. We have therefore heavily invested in software development in order to create a product offer based on two integrated solutions aimed at helping companies, both large and small, to master the scope of their financial flows:

• XRT Enterprise Suite for large enterprises,
• XRT Universe for companies looking for a simple, easily deployable operational solution.

Looking forward

The launch of XRT Universe 2.0 in 2004 marked the first important step in the achievement of our strategy. This solution, which will be further enhanced in the coming months and years, will most probably be phased in gradually by our clients who are using older versions. We are also convinced that it will win over new users in new markets.

The second critical stage will be the large-scale launch of XRT Enterprise Suite in the second half of 2005.

XRT Enterprise Suite is a highly innovative solution that processes all financial flows of extended enterprises and their subsidiaries on a single and global platform, regardless of the countries in which they operate and however complex their requirements may be. The Microsoft ® .NET technology, which works with our communication platform, XRT Business Exchange, makes it incredibly easy for users to communicate and integrate with other information systems, in particular with ERPs and financial institutions. XRT Enterprise Suite will ultimately cover the entire Financial Value Chain: cash management and liquidity management, stock exchange transaction, collection management, payments, electronic communication with banks, etc.

At the same time, we will continue to assist those clients who are satisfied with the products in our current range, Globe$ and TWS, for which new versions will be released in 2005.

On a more personal note, I had set a deadline to head the operational management of the Group and this deadline has arrived. Bruno Joseph, who’s many professional and human qualities I have appreciated over the last fifteen months, will be taking over for me as Chairman of the Executive Board. I have no doubt that he will continue the course of our Group’s steady development.

There is still much work to be done on the ambitious corporate project that we have undertaken, and I hope to continue to support our Group on the Supervisory Board.

I would like to thank all XRT employees for their teamwork and the hard work they do every day and you, the shareholders, for your support and loyalty.

Alain Fraiberger
President of the Executive Board