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DATASUL
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| 1. Our software development model, which uses technology platforms developed by leading international companies and is easily adaptable to technological environments used by a wide variety of companies throughout the world, allows us to support software with a large range of functionality. In terms of technology, our software can compete with global Enterprise Management Software developers in virtually any segment, mainly among large companies. As of the most recent survey performed by the IDC, in April 2006, our market share was 17.8% for the sale of Back-Office Software user and maintenance licenses among large Brazilian companies. Currently, 27.0% of our customer base belongs to the large companies segment, which represented 44.X% of our total net operating revenues in the first half of 2006. |
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| 2. We believe we are the leading Brazilian company in the Enterprise Management Software combined segments for large and medium-sized companies, collectively, based on a survey carried out by the IDC in April 2006, where our position represented 17.1% of the total market for user and maintenance licenses of Back-Office Software sold in Brazil during the same period. We believe that these segments also have strong growth potential due to (i) the intense growth of the need to use IT in these companies as a result of the internationalization of their markets; (ii) the relatively low Enterprise Management Software user rate, given that, according to the IDC, only approximately 45.0% of the Brazilian medium-sized companies use such software; and (iii) the market dynamics and the greater competition that require more efficiency from such companies in the management and control of their operations. In addition, we have a strong presence in the industrial sector, which, according to the IDC, is the segment that invests the most in Enterprise Management Software in Brazil. |
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| 3. We developed an overall business model that is ultimately executed by a number of different entities in the Datasul Network. These include specialized software development franchises and actors in our consolidated indirect distribution channels with comprehensive domestic coverage and an international presence, consisting of our FDES and FDIS, branches, subsidiaries and distributors. This business model creates an operating and revenue generation interdependence among Datasul Network members, fostering cooperation to seek forms of operating and financial growth by (i) taking advantage of existing synergies; (ii) encouraging Datasul Network member entrepreneurship that aligns members’ interests; (iii) reducing our fixed costs; and (iv) sharing our business risks. |
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| 4. We use a specific technology platform for each software application that we develop, which allows the same source code of software to be easily adapted and used both in small and large companies. Accordingly, the software that we develop is easily adaptable to the needs of customers of any size and operating in a variety of business segments and economic activities, without the need for special tailoring. We believe we are one of the few companies in Latin America developing software in this manner, which makes us highly competitive in the markets where we operate and enhances our customer retention. |
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| 5. One of our key strategies has been to concentrate our financial and human resources in the development and enhancement of our software and services, rather than divide our resources in order to develop and update our own technology platform. We have opted to develop our software using the technology platforms of well-known international companies, such as IBM, Microsoft, Adobe and Progress, which grant us the access to modern technologies in line with global trends. These platforms also integrate with and adapt to the most prevalent software, technological standards and operating systems throughout the world. In addition, we have been able to reduce the costs to our customers who can freely select the most flexible technological environment for their companies, without concern about integration and compatibility problems. |
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| 6. We have approximately 2,300 active business customers currently distributed over more than 40 economic segments. Our revenue generation is well distributed among our customers. For the year ended December 31, 2005, our 100 largest customers represented 31.0% of our total net operating revenues, and the net operating revenues of our largest customer for the same period represented 1.1% of our total net operating revenues. Additionally, since 1998 our customer base has experienced an average growth rate of 20% per annum. Such continued growth has allowed us to establish a large recurring revenue base, such as our revenues from maintenance services, which represented 69.0% of our total net operating revenues for the year ended December 31, 2005. This consistent revenue stream has contributed to more stability and predictability in our revenue generation. |
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| 7. Our net revenue has experienced significant and consistent growth (average annual growth of 17.7% over the last three years and 6.8% for the six-month periods ended June 30, 2005 and 2006), combined with the continued improvement of our operating margin, supporting our strong cash generation. For this reason, we have a healthy financial condition, which affords us a favorable position to secure financing in order to explore new investment opportunities. |
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| 8. We develop and market a wide variety of software and services, capable of fulfilling our clients’ multiple enterprise management needs, including ERP, HCM, BI, ECM, B2B, CRM, outsourcing and corporate education. Our software has more than 100 different modules, largely adaptable in functionality. We believe that this large variety of products, the quality of our software and services and our extensive experience in the Enterprise Management Software industry allow us to offer one of the best solutions available in the Latin American market, tailored to meet the unique characteristics of our customers. |
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| 9. We believe that our main asset is our employees. We have a well qualified management team and a team of highly capable employees, with broad knowledge of the IT sector. On average, our senior executives have 20 years of experience in IT and management or related segments, and 12 years of experience in our company. Our efforts in continued development and improvement of our employees’ skills are a priority for us, as confirmed by the annual survey carried out by the Revista Exame, where we were rated one of the best companies to work for in Brazil in 2003, 2004, 2005 and 2006. |
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