To what do you attribute the Company’s improved results?
Our strategy, which is focused on generating sales growth by gaining market share based on our strong market position and selling an increasingly wide selection of products to a larger part of our customer base, is starting to work. Buhrmann has highly qualified and dedicated employees. Thanks to them the Company is able to deliver on its promises.

How vital is the role of the employees?
People are making all the difference. As a service-oriented business, it is no surprise that a large proportion of our employees are customer-facing, in the field and inside selling positions. We can only thrive by their skills, dedication and commitment to the Company.

What do you see as other important elements contributing to Buhrmann?
Delivering sales growth! We have been concentrating on ways to grow our market share and bring profitable growth to the Company. We continue to win market share in the large account business and benefit from broadening our product range as we are satisfying a wider set of customer needs. At the same time we are preparing to gain solid ground in the mid-market segment.

How has positioning Buhrmann as a single-source supplier benefited the Company?
It means that our customers can have one supplier instead of many. And that means fewer invoices and less administration. As one supplier is convenient as well as cost and time efficient, our customers keep on buying into the idea. For Buhrmann it means we have a greater share of our customers’ procurement expenditure.

In what way is a broader product range important?
Offering a broader product assortment ties in with the single-source supplier concept. Instead of limiting ourselves to the supply of traditional office products we have looked at what other essential products are required in the office environment and beyond. The broader range means we are supplying print and forms, promotional articles, furniture and computer software, as well as facility and break room products. Conceptually, we are able to keep on adding, and most likely we will continue adding, new product categories to our product offering.

It has also led to our being able to offer more specialised supplies to companies and institutions that we already supply with office products.

What principles apply to our ‘global sourcing initiative’?
The same principles that apply to our preferred supplier programme apply to our global sourcing initiative. We seek the best value for our customers. We are a global company and we follow a balanced approach. We do that in local, regional and global marketplaces. In this way we leverage the advantages of being a global company without losing sight of local and regional solutions. We are also teaming up with suppliers in a number of product categories so as to grow those particular segments and create a win-win situation for our suppliers, our customers and ourselves.

Why do you see private brands as important?
We want to deliver value to our customers and our own brands help us achieve that. We can deliver comparable quality to well-known brands at competitive lower prices. The proposition of private brands has been successful and I believe we can raise the proportion considerably in the years to come.

In the United States for instance, Corporate Express added a ‘dated goods’ product line to its private brand programme this summer with products such as planners, calendars and organisers.

Another example was the agreement that Veenman reached with Konica Minolta to sell our own brand of multifunctional printer-copiers under our proprietary Linium^® brand. Such initiatives open all sorts of opportunities for us and our suppliers.

Why is Buhrmann looking for new customers among medium-sized companies?
These customers already represent some 20% of total office products sales. Selling our products to medium-sized companies creates opportunities for us to grow sales and further gain market share. These companies do not buy as much as our larger customers but the orders are often of a similar size, just less frequent. We already deliver on the routes where these companies are located and so they fit into our network.

I should also mention ASAP Software where we are expanding our reach to small- and medium-sized businesses as well as encouraging cross-selling between the office products and ASAP Software.

‘We keep investing in our logistic and IT infrastructure as well as our people to ensure that we are in a position to meet new challenges.’
Frans Koffrie
President and CEO

Indeed, ‘satisfying customer needs’ sounds like straightforward business logic.
Still, our business prospers or flounders on the value proposition we deliver to our customers, and that if our customers receive value this ultimately is also good for our shareholders.

The tactics and initiatives I have talked about such as the single-source supplier concept, the product range extension and private brand programme, are innovative and a desire to respond to our customers’ needs. It is not just the day-to-day business: it is putting more into the contact we all have with our customers and the service level we are able to deliver to them.

What do you mean by ‘operational excellence’? Only the most efficient, well-managed companies can survive the competitive pressures on their business.That is why we stress ‘operational excellence’.

The Company can be pleased with its achievements in the areas of technology and logistics. Over 40% of our total office products sales are made on our eCommerce platform.

This is complemented by the investment we have made in our logistics infrastructure ranging from the location of distribution centres to our computerised route planning.

What do you see as the challenges facing Buhrmann?
We keep on growing sales. Our private brands, preferred supplier and global sourcing initiatives will help us to increase gross contribution margin. However, there is competitive pressure; wage inflation and operational costs are trending up. I think pursuing operational excellence and satisfying customer needs goes a long way to addressing competitive pressures. Additionally, we have and will continue to have projects to improve our efficiency. In the U.S. we are centralising local administrative and customer care operations. In Europe we will continue to focus on a more integrated, European-wide operation. Clearly we keep investing in our logistic and IT infrastructure as well as our people to ensure that we are in a position to meet new challenges.

What is Buhrmann’s approach to corporate governance and accountability?
We see good corporate governance simply as best practice. It is important for all stakeholders. We believe that our level of compliance puts us among the top companies in the Netherlands, a country that already has one of the strictest codes in the world.

Increasingly, corporate governance is something to which investors are paying attention. We believe that our compliance and transparency gives them that assurance with regard to an investment in Buhrmann.

There is a growing emphasis on corporate social responsibilities. What role does Buhrmann assume?
We encourage our employees to be active in their communities and local charities. The contribution is driven by virtually every Buhrmann business and includes providing time for staff involvement as well as donations.

In the past year we have supported a number of initiatives for the preservation of cultural heritage, performing arts, disaster relief and health care. In this context I would like to mention the efforts of our employees who helped colleagues, customers and families get back on their feet after hurricane Katrina.

Talking about 2006 and beyond, what can we expect?
Building on the foundations laid over the past years, we face 2006 in a good position. With a future shaped by 18,000 dedicated employees, all the building blocks are in place. We are committed to further strengthening our competitive position in the industry and to play an active role in the industry consolidation that we anticipate.

We are poised to deliver sustainable growth by pursuing operational excellence and satisfying customer needs. In the years to come we will continue to grow the Company on the basis of our clear strategy. We will continue to provide businesses and institutions with everything they need to keep their offices running, to help our customers streamline their procurement processes and reduce their purchasing costs. Reinforcing our single-source supplier concept, we will supply the wider product ranges that are essential to the modern office environment.

4 We deliver everything from A to Z. From traditional office products to the wider range of supplies needed for the day-to-day running of the modern office environment.

4 By offering products such as facility and break room supplies we enable customers to further streamline procurement processes and reduce purchasing costs by consolidating vendors.

In adapting to ever-changing market conditions we have invested in the future, particularly in information technology. Buhrmann has built eCommerce platforms which currently process over 40% of orders for office products. We have developed a widespread logistics infrastructure that provides a hugely efficient system for the coordination and delivery of our products, on local, regional, national and global levels. Our sophisticated IT infrastructure puts us in a strong competitive position when dealing with large account customers who have multiple locations. Customers increasingly seek to control purchases of office products by streamlining their procurement processes. However, they also expect delivery to multiple national or international locations.

In adapting to changing market conditions, Buhrmann has become a global company. Our acquisition of Corporate Express in 1999 was a major step forward and into the global arena. We now operate throughout Europe, North America and Australia. Together with dedicated partners, Buhrmann is able to provide customers with consistency in service and sales support in other regions of the world as well. Our ties with South-East Asia, Latin America, Eastern Europe and other parts of the world are growing as we are continuously searching for quality products as part of our global sourcing initiative.

Buhrmann aims to deliver sustainable
profitable growth by gaining market share
and selling an increasingly wide selection
of products to its customer base.

How we do it
As a specialised services and distribution company, our focus is on servicing businesses and institutions by delivering an extensive range of products for their daily work. We have chosen to work on a purely business-to-business basis and we believe that direct distribution is a key value-added service helping our customers reduce their process-related procurement costs. We have a strong technological focus, being convinced that integrated IT solutions and intelligent eCommerce tools are key to streamline the supply chain.

We are committed to delivering sustainable and profitable growth. We aim to achieve this through generating organic sales growth and gaining market share in the large account segment that represents around 80% of our sales. Our strong market positions and our ongoing focus on cost control will drive profitability.

We have identified a number of initiatives that will help us achieve that ambition. One of the ways in which we are growing sales is to look beyond the successful penetration of the large account segment and to seek further opportunities in the more profitable, high-end of the mid-market segment. Supply to the mid-market is still highly fragmented and we offer mid-market companies an excellent service where they too can benefit from outsourcing procurement and contracting with a single-source supplier.

4  A clear and focused strategy
enables us to target sustainable
profitable growth.

4 Digital cameras are increasingly being
used in office environments for entry
passes and capturing company events.

As we focus on generating profitable sales growth we also have identified a number of margin-enhancement initiatives. We have developed a successful range of private label products, notably the Corporate Express brand, where we deliver customers competitive alternatives for well-known branded products.

Another way in which we are growing sales and securing a greater share of our customers’ spend is to broaden our product range. By offering traditional and non-traditional office products such as print and forms, promotional articles, office furniture, and computer software but also facility and break room products, we are meeting a wider set of needs among our customer base. This helps us in positioning Buhrmann as the preferred single-source supplier to our customers. By helping them streamline their ordering through Buhrmann they are removing the unnecessary hassle of multiple invoices and the additional administration of managing several suppliers. The proportion of our business from companies that have seen the value of this approach is growing steadily. We are taking advantage in this regard from the trend among large companies to outsource non-strategic tasks such as procurement.

Additionally, our preferred supplier programme is helping us to concentrate procurement towards a reduced group of suppliers. This process is being reinforced by our global sourcing initiative where we are sourcing high quality products at competitive prices from countries in the Far East.

The office products market is generally defined as a large variety of office supplies being used by industry, government or any other institution as well as private households.

Our markets
The office products market is served by thousands and thousands of participants with different business models and sizes. In terms of dedicated office products suppliers, the market is typically divided in three channels: contract stationery; retail outlets; and mail order.

Buhrmann – under the Corporate Express label –operates primarily as a contract stationer. Retail outlets require physical locations with sizeable lease obligations or investment in real estate. They mostly attract private households and small companies as a customer. Mail order is based on the distribution of catalogues in combination with database marketing. It attracts mainly small- and medium-sized companies as customers, but also private households.

The contract stationers’ channel is subdivided into large contract stationers and smaller ones. The key differentiator is geographical area spread and the reliance on wholesalers for fulfilment and stock-keeping functions. For contract stationers the relationship with large customers is often based on multi-year contracts, which tends to cover service levels, delivery set-up, prices and payment terms whereby a supplier is usually granted exclusivity.

4  Our IT and eCommerce systems can be integrated with any other business system enabling a customised solution uniquely geared to satisfy each customer’s needs.

In the top segment of the market, which has traditionally been the core strength of Buhrmann, concentration of customers is high among the few large players able to service those companies and institutions. However, Buhrmann also sees ample room for further growth in the mid-market which is more fragmented. This means growth possibilities in the mid-market, but also among institutions, like universities and hospitals, local and federal government. Many large and very large customers still buy from local or regional players, thereby missing out on the benefits we are able to deliver to them.

As one of a small number of large players in this fragmented market, Buhrmann expects to be one of the main beneficiaries of the ongoing consolidation that is expected to take place in the near future.

Procurement efficiency is becoming increasingly critical to virtually all businesses, large and small. Scale and size are getting more important as they provide logistical capabilities, geographical reach, purchasing power and eCapability. Companies who are unable to meet the demanding requirements of customers will lose to the competition. Continuous improvement of service is an absolute necessity.

2005 was a year of momentum towards sustainable, profitable growth for our Office Products business in North America. We focused our resources and expertise on the value drivers of enhancing our customers’ experience and pursuing operational excellence.

Organic sales grew from 3% in the first quarter to 9% in the fourth quarter compared to the same period in the previous year. In 2005 we gained market share in the competitive large account business and achieved growth in the fragmented mid-market segment.

Our first-ever gathering of all sales professionals throughout North America was a significant step in our transformation to a more customer-focused, sales-driven organisation.

Office Products North America continued to deliver and build on its highly competitive value proposition:

4  Our ‘dated goods’ product line contributed to the brand equity of the private brand programme.

4  Our people are key in our efforts to maximise customer loyalty.

Results were driven by the progress of several key initiatives:

Redefining the customer experience
While we continue to achieve high customer satisfaction, we recognise that customer loyalty, not just satisfaction, is the key to long-term customer relationships. This means creating a customer experience that transcends transactions.

To drive that improved customer experience, we undertook two significant actions in 2005. Firstly, we centralised certain functions to leverage technology, costs, specialisation and consistency, while continuing to maintain a local presence in markets with sales and operations. Secondly, we initiated the creation of a centralised, state-of-the-art Customer Experience Center.

We believe this investment in technology and training of our associates will allow us to deliver the highest rated customer interactions in our industry, with one consistent experience across all our customer locations, segments and industries. We plan to complete implementation of this approach during 2006.

Continuing success with Corporate Express brand
Launched in 2004, Corporate Express’ private brand programme saw high customer acceptance and now represents over 25% of traditional office products sales in the United States. We expanded this line to over 2,000 products with the launch of our main 2006 product catalogue in September.

Additionally, we launched a ‘dated goods’ product line with products such as calendars, planners and organisers in order to further expand on the success of the private brand programme.

4  A straightforward solution or many complex details, with national coverage and local experts Corporate Express is a comprehensive resource for all business interior needs.

Facility supplies sales drives double-digit growth
We continued strong, double-digit sales growth with our facility supplies offering in 2005. Made up of janitorial, safety, sanitary and break room products, this product line provides customers with a great opportunity to further concentrate their supply chain through fewer providers. We currently offer over 3,000 products in eight categories.

By partnering with national suppliers and hiring experienced industry experts we increased our internal product expertise and leveraged distribution capabilities to successfully convert strategic and large customers. In 2006 we plan to continue expanding our offering and developing a specialised facility supplies sales force to ensure greater expertise in assisting customers with their facility supply needs.

New look and feel for furniture offering
Furniture sales grew in 2005 as we continued to refine our structure to better assist customers and drive profitable growth. We continue to be one of North America’s largest furniture dealers with the combination of our catalogue furniture and full service contract furniture programmes.

To assist customers seeking expert furniture services in the contract furniture area, we launched Corporate Express Business Interiors. CEBI will act as the ‘one accountable source’ for our customers’ business furniture and interior needs. The CEBI team of expert space planning and reconfiguration consultants, project managers and installation professionals handle the details from start to finish. Our catalogue furniture business launched a programme called OfficeNow that is focused primarily on providing customers with the right selection of products along with convenience, reliability and value.

A comprehensive customer solution
The popularity of eCommerce sales continues to grow. eCommerce sales now represent 68% of our traditional office products and facility supplies sales. In 2005 we continued to enhance our proprietary eCommerce tool, E-Way^®, by launching online text chat for customer support. It was quickly embraced by our customers as a convenient alternative to making a phone call. In addition, a new workflow tool was launched that enables Corporate Express to map any customer order approval process into E-Way^®.

E-Way’s^® marketing capabilities were enhanced to allow Corporate Express to create a variety of targeted customer promotions such as ‘buy-one, get-one’ offers. OneShop Express™ provides customers with the ability to place one order, receive one invoice and process one payment over our multiple product lines. Last year use of OneShop Express™ rose dramatically and is now used with more than 40,000 being processed.

Focused sales force
Market share growth in our strategic and large size customer base was driven by our industry-leading strategic accounts sales organisation. We also saw significant success in the health care markets. In the mid-market segment we enhanced our sales effort by implementing integrated sales teams to deepen customer relationships by increasing both the quality and quantity of contacts with customers and prospects.

In addition, we introduced Salesforce.com, a fully integrated sales management and customer relationship tool, to all sales associates. Adoption and usage rates are very high. To support selling efforts across these segments, we expanded our direct mail and email marketing efforts. In 2006, we will continue to enhance our mid-market selling approach and tools to meet mid-market customer needs and drive growth in this category.

4  Offering facility and break room products is a successful element of Corporate Express’ product line expansion programme. We will continue to explore opportunities to expand our product range.

4 With our dedicated vehicles, customer service and inventory, we can operate as a local provider on a nationwide scale.

Enhancing operational excellence
In 2005 we continued to enhance the efficiency and quality of our warehouse and distribution operations. We completed implementation of roadnet dynamic routing that creates the most efficient delivery routes based on each day’s orders.

The activation of our pick-to-voice system realised major benefits with higher productivity and quality in our warehouse operations in a year that saw greater product movement due to sales growth. We converted four additional sites from conveyor to the more efficient and higher quality pick-to-cart order assembly process. In addition to the energy cost savings from the roadnet implementation and pick-to-cart conversions, we installed energy-efficient lighting in the majority of our distribution centres.

Our regional mixing centre distribution warehouses enabled high fill rates and improvement in the distribution of our Corporate Express brand products, many of which were sourced internationally. These enhancements also drove regional stocking to leverage our cost and buying power with preferred suppliers. They also improved the cost effectiveness of purchases to support our facility supplies growth.

Return to growth
2005 saw a return to growth in our Office Products business in Europe. Despite challenging market conditions, organic sales grew 4% over the course of the year. Contributing factors were market share gains and the broadening of our existing product range. By expanding our offering to include facility supplies, off-the-shelf furniture and print and forms management, we have become a single-source supplier to growing numbers of our customers. This allows us to reinforce customer loyalty which, in turn, is ensuring that we maintain and grow our market share.

Our customers are diverse in terms of size and in their varying needs regarding service, delivery and product assortment. A strong local presence, supported by our extensive pan-European network, helps us to deliver a value-adding solution to our customers.

Strength in local activities including logistics, IT implementation, customer care and sales, is being aligned with a more integrated and centralised approach in areas like merchandising, marketing, international tenders and eCommerce. Divisional management has been strengthened and expanded in order to further encourage this process.

4  In the age of handheld devices and
laptops, an office chair is still one of the
most important tools for those working
in the modern office environment.

4  In collaboration with Konica
Minolta,Veenman introduced their own
brand of multifunctional printer-copiers
named Linium^®.

Germany
Germany remains our largest European market. Our sales grew strongly as we capitalised on our market position. While customers are still reducing their spend, we were able to win market share by emphasising our customer focus, eCommerce and IT capabilities. We were also successful in winning new customers in the mid-market.

We are restructuring our office furniture activities, switching the focus from project furniture sales to off-the-shelf furniture. This has been achieved by reducing the number of furniture showrooms and integrating furniture as part of our overall product offering.

Benelux
In a challenging environment, our Benelux region has gained new customers and also balanced the customer portfolio with a growing number of customers from the medium-sized company segment. Our customer portfolio is skewed to large account customers that have been downsizing. However, the rate at which they were reducing their spending and workforce slowed during 2005.

United Kingdom
Our U.K. operations markedly improved sales year-on-year. The groundwork was laid during 2004 by our reinvigorated sales effort that resulted in new client wins. In contrast to Continental Europe, the economic environment in the U.K. has generally been more favourable.

Other European markets
France, historically focusing on small- and mid-sized customers has now been able to tender and win business from large, national customers as a result of establishing nationwide coverage.

Our operations in Sweden, Austria and Ireland showed good growth by winning new customers, mainly in the small- and mid-sized segment. Our local presence in Poland and Hungary resulted in strong sales growth supported by the benefits flowing from the accession to the European Union. We have expanded our pan-European network into the Baltics via a new partner.

Veenman
Veenman, supplier of products, services and complete solutions for the management of physical and electronic documents, introduced a private brand solution for the copier market. After reaching agreement with Konica Minolta, Veenman markets its products under the Linium^® brand.

Veenman Netherlands had another successful year with continued growth in sales and operating results that were driven by favourable market circumstances and a proactive marketing approach. Veenman Germany, established as a separate legal entity as of 1 January 2005, is headed by new local management and has adopted the business model of Veenman Netherlands.

Corporate Express Australia’s growth strategy is focused on being the single-source supplier of choice in order to gain a larger share of its customers’ business, ranging from the mid-market to the large account segment.

			Highlights in 2005
		•	Continued high growth rates
		•	Increased presence in mid-market
		•	Further expansion in new product categories
			Priorities for 2006
		•	Continue roll-out of single-source supplier business model
		•	Further expand mid- and small-customer segments
		•	Project One Source to maximise business efficiency
4   Our IT and eCommerce systems enable customers to benchmark their departments, locations and business units in order to control purchasing costs.			Weblink www.ce.com.au

Single-source supplier success
Office Products Australia continues to deliver growth in its businesses. By offering an expanded range of products we are successfully meeting our customers’ needs for the full complement of products that are essential in a modern office operation. Besides product categories such as facility supplies, IT solutions, promotional marketing, office furniture and print manage-ment,this also includes industrial and medical consumables and workplace safety supplies. The single-source supplier concept has taken root in our markets and is being welcomed by growing numbers of our customers.

We are continuing to experience robust performance from the large account segment. But we also enjoyed success in broadening our customer base by growing the number of small-to mid-sized customers. Already offering one of the most comprehensive distribution networks in its industry, Corporate Express Australia expanded its network and now operates through 45 locations, servicing over 45,000 customers.

In addition to organic growth, we expect acquisitions to remain an important source of future expansion. Acquisitions allow us to develop and grow new product categories and to consolidate our existing market position. In 2005 seven companies were acquired in the area of office supplies, promotional products, janitorial supplies and packaging, generating annualised revenue of about €19 million.