Our strategy, implemented and fine-tuned in recent years and aimed at realizing a strongly improved level of profitability, is based on three pillars: increased distributive power, a complete and competitive product portfolio and corporate operational excellence. Each of these pillars was
strengthened during the year under review.

Distributive power
We expanded our distributive strength further during the past year by investing in our sales organization and sales channels. Another important
step during the past year was starting to work together with colleague suppliers and distributors to sell several of our successful new products in countries and segments in which we ourselves do not yet have a sufficiently big presence.
In March 2007 we announced such partnerships with the Japanese business Fujifilm and with the Chinese Founder Group.
In January 2008 we were also able to report that we are intensifying our long-standing relationship with Konica Minolta. That company will be selling the Océ VarioPrint 6000 series. In return, Océ will have the opportunity of selling Konica Minolta printers as OEM machines not only
in the United States and Europe, but also in the rest of the world.
At the same time we announced a partnership with Fuji Xerox. They will be selling the successful Océ TCS color systems in Asia, formidably strengthening our position in that vast and highly competitive market.
We have made substantial efforts and investments to strengthen our position in the broad office segment in 2007. The sales organization that serves this important segment has been further professionalized and in Europe we have launched the new market approach that had already proved effective in the United States. Of crucial importance for achieving further growth are the activities in markets that are new to us. It has taken time to develop these, but we are now seeing that our efforts in
business services and the graphic arts market are being transformed into solid drivers of growth. Essentially, all of these markets are many times bigger than our traditional markets, which means that they offer high growth potential.

Product portfolio
Thanks to its direct sales and service organization, Océ has built up an intimate relationship with its customers based on a thorough knowledge of their document processes. This applies to all market segments,
both existing and new, and allows us to offer our customers a mix of in-house and OEM product solutions that are exactly tailored to their needs. During the past year and shortly after its close we again introduced a
number of products that are far superior to what had previously been available in the market. One of them, of course, is the high speed, duplex Océ VarioPrint 6000 series for the cutsheet segment, the deserved winner of various prestigious awards. But in the continuous feed segment, too, we have booked rapid advances with our new printers. A speed of over 1,500 pages per minute, as delivered by one of our Océ VarioStream 9000 systems, was inconceivable until recently. The same also applies to
the output of almost 2,200 pages per minute in color that are produced by the Océ JetStream 2200, launched in December 2007, and the 147 high quality full color pages per minute of the Océ ColorStream 10000, a machine that we first unveiled during the past year. For all markets that
demand high productivity we now offer ground-breaking new solutions that will substantially boost our position.
This also applies to the display graphics market, where the Océ Arizona 250 GT, our wide format color printer that was brought to market in 2007, is highly successful.
Besides the new printers, software also plays an important role. Our customers judge the performance of our hardware by its level of productivity, as that is where they achieve their margins. High productivity is only possible with good software, which prepares and steers the printing process and is capable of controlling an entire work environment. The Océ PRISMA program of integrated software packages provides us with strong advantages in this area. Besides this, we offer a complete range of consultancy and support services to help customers
through to full implementation of the document management process.
Océ Business Services, outsourcing services for document management, is steadily growing. This is an expanding market in which we are able to build a good profile for ourselves, for example with new, high value
document services closely connected to the core activities of our customers.

Corporate operational excellence
One of the most important factors in reducing the cost base and working
capital is optimizing our business processes. This covers a broad area that comprises all operational processes. In 2006 we initiated a number of projects that are being conducted in parallel and centrally coordinated. This relates to purchasing processes, optimization of the supply chain, harmonization of business processes and innovation of the supporting ICT systems. A reduction in the costs of accommodation was achieved by analyzing and renegotiating existing rental contracts. Savings were
also realized by centralizing the purchase of ICT and communications
infrastructure of our subsidiaries.
In the area of logistics we booked progress, for instance by bundling various seagoing transport operations. These projects will generate further savings in the years ahead.
During the second half of 2007 the Cash Conversion Cycle project was initiated. This project will lead to a significant reduction in working capital [as a % of total revenues] in 2008 and 2009. The harmonization of operational processes and the supporting ICT systems will take a few
years yet. By the end of the planned project period, in about 2010, the new ICT platform will facilitate structural savings in Europe. Just like the two other main strategic pillars, corporate operational excellence will then also form a solid foundation for profitable growth.