<PAGE>

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Report of the Board of Executive Directors                     Exhibit no. 1.02


------
Main outlines

Oce achieved a net income from ordinary activities - i.e. before deduction of
exceptional items - of (Euro) 132 million in 1999. This was slightly ahead of
the record income of the previous year. However, it does mean a weakening of
the income growth in 1999 following a prolonged period of strong growth. The
main cause is the rapid switch - in the office market - from analogue to
digital technologies, which is being accompanied by increased pressure on
prices, not only in the analogue but also in the digital segment. This
development has left its mark on the entire industry. It gave Oce a vigorous
impulse to tighten up the strategic policy thrusts that had been initiated in
the preceding financial year and to substantially speed up the pace of the
changes that had been set in motion. To promote the further growth of the
business, sales efforts are being intensified and the company will continue to
invest as strongly as ever in Research & Development and in building up the
system and software know-how needed for the successful penetration of growth
markets. Digital machines and the related revenues from software and service
meanwhile represent 60% of total machines and service revenues (1998: 57%). The
share of digital in total revenues, i.e. including Imaging Supplies, increased
from 48% in 1998 to 51% in 1999. A cost-reduction programme was drawn up, which
will result in the loss of some 1,000 jobs world-wide, chiefly in service,
manufacturing and logistics and in support departments. This number corresponds
to approximately 5% of the total number of employees. To cover the costs of
this programme a provision of (Euro) 55 million net was taken in the fourth
quarter, so that the net annual income after exceptional items worked out at
(Euro) 77 million (1998: (Euro) 129 million).

------
Results

Net revenues increased by 3% to (Euro) 2,838 million. Autonomous growth
accounted for 1% of this increase; exchange rates and acquisitions each
contributed 1% to the growth in total revenues. In the previous year net
revenues increased by 12% to (Euro) 2,753 million. Excluding exchange rate
effects (1%) and acquisitions (4%) the increase amounted to 7%.

  Operating income went up by 1% to (Euro) 248 million. Last year operating
profit climbed by 22% to (Euro) 245 million. On a per share basis, basic
earnings from ordinary activities increased by 1% to (Euro) 1.54 (1998:
(Euro) 1.53). After exceptional items, basic earnings per ordinary share
amounted to (Euro) 0.88, a decrease of 43%.

  Expenditure on Research & Development increased by (Euro) 12 million to
(Euro) 167 million. This is equivalent to 5.9% of total revenues (1998:
(Euro) 155 million, or 5.6%).

  Gross capital expenditure on `Property, plant and equipment' amounted to
(Euro) 115 million (1998: (Euro) 113 million). Depreciation and disposals
amounted to (Euro) 124 million (1998: (Euro) 110 million).

  In the market for Wide Format Printing Systems Oce booked total revenues of
(Euro) 782 million, an increase of 1%. After deduction of acquisitions and
exchange rate effects, revenues decreased by 2.5%. In the previous year revenues
went up by 6% to (Euro) 772 million. Autonomous growth amounted to 5%, the
share of exchange rate effects was 1%. Oce maintained its leading position. In
the growing, but competitive market for Display Graphics Oce is carving out a
position for itself with inkjet printers and the related supplies. In the market
for Document Printing Systems Oce's revenues increased by 2% to (Euro) 1,399
million.* Excluding exchange rate effects, the increase in


*Because of a reclassification of activities with effect from December 1, 1999,
 these revenues now include the revenues of Network Printing Solutions for both
 1998 and 1999. The revenues of Network Printing Solutions have therefore been
 eliminated from those of Production Printing Systems for both years.

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Report of the Board of Executive Directors


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revenues amounted to 1%. In the previous year revenues went up by 18% to
(Euro) 1,367 million and exclusive exchange rate effects (1%) and acquisitions
(8%), revenues grew by 9%. In the highly competitive digital segment of this
market Oce achieved a large number of placements, though these revealed a faster
than expected decline in the analogue segment. In terms of printing/copying
volume Oce's market share grew further in all areas. Network Printing Solutions
grew in line with the ongoing process of digitisation, thanks to newly
introduced printers, servers and software. In the market for Production
Printing Systems total revenues increased by 7% to (Euro) 657 million, of which
1% was the result of exchange rate effects. In 1998 revenues increased by 5% to
(Euro) 614. Autonomous growth amounted to 4%. Oce improved its strong global
position in this market. In the fast-growing Printing & Publishing segment Oce
doubled its revenues. In Facility Services Oce booked a strong increase in
revenues, both in the United States and in Europe. The continuing expansive
growth, which will also involve greater emphasis on consultancy, will cause
revenues to increase further. Though total revenues were slightly lower,
profitability of Imaging Supplies increased further, thanks in part to
successful new products and the rationalisation of manufacturing and logistics.

------
Dividend

For the 1999 financial year we propose to distribute a dividend of (Euro) 0.50
(1998: (Euro) 0.50) per ordinary share of (Euro) 0.50 nominal. This dividend
involves an amount of (Euro) 41.7 million (1998: (Euro) 41.2 million). If the
General Meeting of Shareholders adopts this proposal the final dividend will
amount to (Euro) 0.35; the interim dividend amounted to (Euro) 0.15. It is
proposed to make the final dividend available, at the option of shareholders,
either fully in cash or fully in shares to be charged to the (tax-free) paid-in
capital or, if desired, to the net income for 1999. The dividend in shares will
be determined on March 29, 2000 (after close of trading on the Amsterdam Stock
Exchange) and will be subject to a discount of at most 5% as compared to the
cash dividend. The newly issued shares will be entitled to those dividends that
are made available for payment over the new financial year and subsequent
financial years.

  The pay-out ratio of approximately 32.4% of the net income before exceptional
items (1998: 32.8%) is at a level that we consider necessary for a healthy and
balanced financing of our expansion.

------
Prospects

Oce is on track in handling the market shift from analogue to digital. We aim
to become one of the leading companies in supplying integrated document
solutions in professional environments. The present range is competitive and
new products and services are being added to it, also thanks to ongoing
innovation and new partnerships. In addition, we will continue to build up
digital know-how and specific organisations for the growth markets.

  The programme that has been initiated to strengthen and expand the company as
a supplier of digital products and services, together with the current extensive
cost-reduction programmes, which are aimed at countering the pressure on prices
and margins, is expected to result in an increase in total revenues and income.
In view of the market situation, provisional expectations for the new financial
year are that the growth in revenues and income will be limited.

  In 2000 the number of employees in manufacturing, logistics, service and
indirect services will decrease. At the same time the number of employees in
sales, software development, support and Facility Services will increase.

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Investments in property, plant and equipment and in rental copying equipment
will increase in 2000.

  Further expansion of the new markets by the Network Printing Solutions,
Display Graphics and Printing & Publishing business groups will result in an
increase in revenues. In due course this is expected to be followed by a
growing contribution to income.

------
Strategic outlook

The measures that Oce has taken to adapt itself to changing circumstances
strengthen each other. They relate to the realignment of the organisation to
meet the changing needs of the market as well as to specific measures to
improve efficiencies and control costs.

  The changing technology in Oce's markets, notably the switch from analogue to
digital, is leading to a number of radical changes. Stand-alone machines are
being replaced by digital machines linked together in networks. The information
flows that these generate both within companies and between companies have to
be translated into efficient document flows. Oce is involved in that process in
various ways, the main emphasis being on `products and services for the
reproduction, presentation, distribution and management of documents'. Oce has
repeatedly displayed its prowess in this field by launching innovative digital
machines and software. Slowly but surely, however, the new role means that the
organisation must acquire different competencies and skills. Not only as
regards the technical aspects, where technicians trained to work on analogue
machines have to make way for their digitally skilled successors, but also in
the area of sales and service, where the relationship with the customer is
changing. Today, it is no longer a matter of selling a machine, but of
supplying a tailor-made system that is subsequently given new and modified
functionalities at regular intervals. Specialists with a thorough knowledge of
a machine are making way for professionals who are highly familiar with the
customer's specific field of work. Oce is well positioned to translate these
changes into practical results. Thanks to its strong knowledge base, its close
relationship with customers and the resultant in-depth knowledge of their way
of working, the Oce organisation succeeds in moving forward in tune with the
changes in the market. Education, training and a policy specifically aimed at
ensuring mobility make a great contribution to this. Now that the change
processes are accelerating, these efforts will be further intensified.

Organisation

The structural changes in the organisation that were initiated during the year
under review will ensure a better link-up with the application areas for Oce's
products and services. The new structure comprises three strategic business
units, each divided into two business groups: one for the existing activities
and one for an operational area which will be further developed and which is
seen as a highly promising market. In addition there are two supporting
business groups, one for Imaging Supplies and the other for Facility Services
(see page 34).

  The distinct acceleration of the switch to digital systems, especially in the
office market, and the strong growth in competition in this area have further
strengthened the need for drastic adaptations. Price competition brings the
need for tighter cost control and a strong improvement in efficiency. One of
the causes, digitisation, is even providing a helping hand in this
restructuring operation because it greatly reduces the servicing requirements
of the equipment, whilst also enabling improved logistics and manufacturing
possibilities and new working methods. Though total employee numbers at Oce
will show a net decrease of around 1,000, this restructuring operation will in
fact involve many more employees. Technicians in particular will

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15
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Report of the Board of Executive Directors


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be retrained where possible, but in addition there will be an inflow of new,
highly qualified employees. As an employer, Oce will of course act with the
greatest social responsibility in implementing this operation.

Markets

In the market for Wide Format Printing Systems, which is growing by an average
of 2 to 4% a year, demand is as a rule structurally related to the level of
economic activity and the investment climate. The technology of the equipment
destined for this market has in recent years changed almost entirely from
analogue to digital. Oce was the first to respond to this development with a
series of digital machines and the related software, whose functionality is
constantly adapted to meet changing market requirements. At the moment some 90%
of the placements are digital. Oce holds a leading position in this market
world-wide and the company intends to expand this further. The range will be
strengthened in 2000 with new machines in the high and low volume segments and,
at least as importantly, with new application software for document management.
The innovation efforts are largely focused on developing wide format colour
printers which are based entirely on in-house technology and which will be
brought to market several years from now.

  The size and growth of the market for Display Graphics (wide format, short run
colour prints) are difficult to assess due to the heterogeneous nature of that
market. However, the multitude of applications and the related demand for speed
and quality indicate that this is a highly promising growth market. Oce
continues to build a prominent position in this market with bought-in printers
and controllers and a quality range of supplies developed in-house.

  Document Printing Systems is hardly dependent on the level of economic
activity and is growing annually by some 3%. In this market digital black-and-
white and colour printing is rapidly displacing analogue techniques. Competition
in the digital area has increased strongly over the past year due to a number of
new market entrants. In terms of printing/copying volume Oce is outpacing the
market growth. The company is concentrating in this market mainly on the medium
and high volume segments. In the European market for document printing systems
Oce plays a leading role with its copiers (analogue and digital) and printers.
In the American market the company's share is still relatively small.

  The market for Network Printing Solutions (mainly in office environments) is
growing by around 25% a year. This relates to printers (30-65 ppm) and servers
which operate in networks (Internet and Intranet) and which are equipped with
various functionalities for the management of document flows. In this market
Oce's direct sales, consultancy and service organisation concentrates on the
higher volume segments, in which reliability and productivity are important;
features which are to a considerable extent also supported by application
software. A central role will be played here by the range of digital
copiers/printers which will be further completed.

  The market for Production Printing Systems ((greater than)100 ppm) is growing
annually by 3% in the E D P segment and by some 15% in the Printing & Publishing
segment. For these markets Oce offers a complete and highly competitive range of
continuous-feed and cutsheet printers. These also offer excellent growth
prospects in the Printing & Publishing segment. In Europe Oce is market leader
for very high volume printers in the E D P segment. In the United States, too,
the company is a major force in this market. Oce will strengthen its leading
position in this market by continuously innovating its offerings in this area.
The range is being further expanded with application software to support the
document production process.

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In the market for Printing & Publishing the currently still relatively modest
position is being expanded at a faster rate, also via new partnerships.

  The market for Facility Services is showing an annual average growth rate of
around 30% because of the ever stronger trend towards outsourcing: in Europe
the market is even growing by 40%. Oce supplies a broad range of services,
ranging from the (re)production of documents to the management of complete data
and document flows, mainly within big companies and institutions.

  Oce aims to at least equal the growth in this market and is well equipped to
do so because of its strong presence in the market, its extensive range and its
knowledge of document flows.

  The market for Imaging Supplies (carrier materials and auxiliaries) is growing
annually by around 5% because of the growth in the printing and copying volume
and the increase in the number of applications. Oce, a leading supplier in
Europe, offers a broad and innovative range focusing primarily on Oce customers
with Oce machines, even if they also use third-party equipment. In this market
Oce seeks to further improve its profitability on the basis of the measures that
have already been taken in the area of manufacturing and logistics and also by
utilising the growing possibility of doing business via e-commerce.

  In realising the growth objectives in its markets Oce will primarily expand
its position via autonomous growth. In addition acquisitions will be sought
which help make the business bigger and stronger, both commercially and
technologically. The company is constantly alert to the possibility of
strengthening its position via partnerships in whatever form and/or via
acquisitions. In view of the size of the markets in which we operate, we mainly
seek acquisitions of a substantial size.

Yield objective

Oce continues to devote high priority to enhancing the overall profitability of
the business, both through autonomous growth and, where opportune, through
acquisitions, as well as via improved efficiencies and by reducing the capital
intensity. Oce seeks to improve the return on total assets from 9.0% in 1999
(9.6% in 1998) to 12%, to be achieved within a few years.

------
Risk management

Oce is faced with the commercial and technological risks of a company which
specialises in the development, manufacture and distribution of technologically
advanced products on a world-wide scale. Oce concentrates on the high-value
professional markets in which its unique technology allows the company to
profile itself clearly.

Market risks

Because of the fast-moving developments in technology and in the markets in
which Oce operates, the company has always placed great emphasis on managing the
residual value risks of our machines. To the extent that residual value risks
exist, they are mainly restricted to the lease/rental portfolio in the market
for document printing systems. By reducing the depreciation period it applies to
the analogue machines in this market, Oce has lowered the risk. Besides, the
risk is low because the machines - after a complete overhaul - are given a
second useful lifetime.

  Oce's broad technology base, the variety of markets on which the company
operates and its links, mostly on a long-term basis, with highly diverse
customer categories ensure a spread of the risks. The revenues from rentals,
leases, service and supplies, the highly diversified customer base and the
wide geographical spread of operations help to create stability in the total
revenue flow.

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Technological risks

Oce has deliberately invested heavily in R & D in recent years. That has
resulted in a range of self-developed core technologies and products and highly
market-focused innovations in the area of applications, operating concepts and
improved environmental and safety features. Those core technologies also
encompass a number of unique components and processes for new generations of
printers and copiers for both black-and-white and colour applications. However,
it has taken more time than expected to get the company's own colour technology
ripe for production. Oce also holds a leading position in printer technology for
continuous-feed applications. In addition to its strengths in hardware
technology Oce has expanded, partly through acquisitions, to become a software
business that develops programs and systems both for its own products and for
customers.

  To guarantee the closest possible contact with the market, service and sales
employees are involved in the development of hardware and software products at
an early stage. Over the course of the years this has steadily reduced the
learning curve further. Furthermore, recent changes in the way that product
development is steered have strongly boosted the company's reaction speed and
the flexibility of its response to new circumstances and customer needs.

Foreign exchange risks

Oce achieves its revenues all over the world, with particular emphasis on
Europe and the United States. A considerable proportion of the costs are
incurred in the currencies of the sales areas (US dollar, euro and pound
sterling). Oce also has costs denominated in Japanese yen for the purchase of
product sub-assemblies and complete machines to supplement its range. As
regards the revenues from service, the foreign exchange risk is limited because
most of the costs, consisting of the payroll expenses of the service
technicians, are in local currency. The effects of exchange rate fluctuations
over the long term are offset as much as possible by conducting buying
activities, where possible, in those currency areas in which the revenues are
also achieved (`matching principle') and by raising the local added value
content. In addition, endeavours are made to offset the short-term
consequences of foreign exchange fluctuations by pursuing an active currencies
management policy. Oce applies a central foreign exchange management policy and
a selective foreign currency policy aimed at controlling the company's
commercial and net asset exposures in various currencies. For this purpose Oce
uses a number of financial instruments, particularly forward foreign exchange
contracts. The policy and the plans based on it are implemented in close
consultation with the Board of Executive Directors.

Interest rate risks

Most of the interest revenues originate from market placements of machines under
financial lease contracts. Financial lease contracts usually comprise a fixed
interest which corresponds to the rates charged by external leasing businesses.
These contracts are mainly financed by interest-bearing capital whose interest
rate is generally fixed in line with the duration of the contracts. The interest
rate policy is largely executed centrally at corporate level through the use of
financial instruments. Implementation of this policy, which is subject to strict
rules, likewise takes place in close consultation with the Board of Executive
Directors.

Euro

Since January 1, 1999 Oce has been in a position to conclude contracts in euro.
For the benefit of the operating companies a conversion program has been
prepared which they can use to adapt their accounting system rapidly if they
decide to switch over to the new currency. In general Oce is ready to use the
euro as a currency in any form whatever.

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Financial review

Total revenues

In 1999 total revenues rose by 3% to (Euro) 2,838 million. Autonomous revenue
growth amounted to 1%. Acquisitions and exchange rates each had a positive
effect of 1% on revenues. In 1998 revenues increased by 12% to (Euro) 2,753
million. Disregarding acquisitions (4%) and exchange rate effects (1%), the
increase in revenues amounted to 7%.

  At (Euro) 1,647 million, revenues from sales remained practically the same as
in the previous year (1998: 15% to (Euro) 1,646 million). Earnings from rentals
and service went up by 7% to (Euro) 1,091 million (1998: 6% to (Euro) 1,017
million). Interest income from financial leases rose by 11% to (Euro) 100
million (1998: 22% to (Euro) 90 million).

  The growth in revenues was largely attributable to the following factors:

- the strongly increased sales of and service income from printers and digital
  copiers, which were slightly higher than the decline in revenues from analogue
  machines;

- the contribution made to revenues by Oce-Japan after its acquisition;

- net positive exchange rate effects.

  As a proportion of total revenues, revenues from rentals and service plus
interest income from financial leases amounted to 42% (1998: 40%).

  The share of digital in total earnings rose from 48% in 1998 to 51% in 1999. A
more relevant indication is: if calculated as a percentage of the total revenues
from machines and the related software and service - i.e. excluding Imaging
Supplies - the share of digital increased to 60% (1998: 57%).

Development of revenues by market

In the market for Wide Format Printing Systems revenues increased by 1% to
(Euro) 782 million (1998: 6% to (Euro) 772 million.) Revenues in the Document
Printing


<TABLE>
<CAPTION>
-----------------------     ----------------------------------------       -----------------------------------------
Development of              1999                                           1998
total revenues by           -------------------------------  -------       -------------------------------    ------
Strategic                   total revenues x (Euro) million    as%         total revenues x (Euro) million      as%
Business Unit
-----------------------     -------------------------------  -------       -------------------------------    ------
<S>                         <C>                              <C>           <C>                                <C>
Wide Format
Printing Systems                                       782       28                                    772        28
Document
Printing Systems                                     1,399       49                                  1,367        50
Production
Printing Systems                                       657       23                                    614        22
-----------------------     -------------------------------  -------       -------------------------------    ------
Total                                                2,838      100                                  2,753       100
</TABLE>

[Graph of Total revenues x (Euro) million]


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21
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Report of the Board of Executive Directors


<TABLE>
<CAPTION>
-----------------------     ----------------------------------------       -----------------------------------------
Total revenues              1999                                           1998
by geographical             -------------------------------  -------       -------------------------------    ------
areas                       total revenues x (Euro) million    as%         total revenues x (Euro) million      as%
-----------------------     -------------------------------  -------       -------------------------------    ------
<S>                         <C>                              <C>           <C>                                <C>
Germany                                                383       13                                    383        14
France                                                 213        8                                    214         8
United Kingdom                                         210        7                                    207         7
Netherlands                                            219        8                                    200         7
Rest of Europe                                         582       21                                    567        21
United States                                        1,049       37                                  1,018        37
Rest of the world                                      182        6                                    164         6
                            -------------------------------  -------       -------------------------------    ------
Total                                                2,838      100                                  2,753       100
</TABLE>

Systems market went up by 2% to (Euro) 1,399 million. In 1998 revenues went up
18% to (Euro) 1,367 million. In Production Printing Systems revenues increased
by 7% to (Euro) 657 million. In 1998 autonomous growth amounted to 4%.

Gross margin

The total gross margin increased slightly more than total revenues. As a
percentage of total revenues the gross margin increased to 42.8% (1998: 42.5%
and 1997: 41.9%). The principal reasons for this development are:

-  higher margins in Production Printing Systems and Wide Format Printing
   Systems because of more favourable margins on revenues from service,
   including software and consultancy;

-  lower margins in Document Printing Systems due to continuing pressure on the
   margins for both analogue copiers and digital printers/copiers.

  The average interest realised on the lease portfolio amounted to 10.4% (1998:
10.5% and 1997: 10.8%). In the financial lease contracts the interest percentage
is fixed for the entire duration of the contracts.

Operating income

Operating income increased by 1% to (Euro) 248 million (1998: (Euro) 245 million
and 1997: (Euro) 200 million). This is equivalent to 8.7% of total revenues
(1998: 8.9% and 1997: 8.1%) and corresponds to 9.0% of the average balance sheet
total (1998: 9.6% and 1997: 8.8%). The relative increase in selling expenses
meant that the increase in operating income lagged behind the growth in the
gross margin.


Research & Development (R&D)

Spending on R&D increased to (Euro) 167 million, or 5.9% of total revenues
(1998: (Euro) 155 million and 5.6% and 1997: (Euro) 139 million and 5.6%). In
1999 an amount of (Euro) 8

[Graph of Operating income x (Euro) million]

[Graph of Operating income as % of total revenues]

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million (1998 and 1997 (Euro) 15 million and (Euro) 13 million respectively) was
added to R&D expenditure to cover repayment liabilities in respect of
development credits. This, combined with the expansion of the R&D organisation,
meant that the R&D expenses in the Consolidated Statement of Operations slightly
increased to (Euro) 174 million, which is equivalent to 6.1% of total revenues
(1998: (Euro) 170 million and 6.2% of total revenues and 1997: (Euro) 152
million and 6.2%). At the end of the year under review full provision had been
made for the remaining repayment liabilities in respect of development credits
received in the past, with the exception of those for the colour printer/copier.

General administrative and
selling expenses

The general administrative and selling expenses increased by 5% from (Euro) 755
million in 1998 to (Euro) 793 million. In 1998 these costs increased by 10.7%
compared with 1997. Expressed as a percentage of total revenues these expenses
increased to 27.9% (1998: 27.4% and 1997: 27.6%).

Financial expense (net)

Financial expense (net) - the balance of interest paid and other interest
received - went down from (Euro) 61 million in 1998 to (Euro) 59 million in
1999. In the previous year financial expense (net) went up 14.5%. On the basis
of a lower average interest rate of 5.1% (1998: 5.6% and 1997: 5.6%) the
average interest-bearing capital increased by (Euro) 87 million. This is mainly
due to the financing of and the increase in the rental population and financial
lease receivables.

  Interest income from financial leases amounted to (Euro) 100 million in 1999
(1998: (Euro) 90 million and 1997: (Euro) 74 million).

Income taxes

The average taxation charge amounted to 29.0% (1998: 29.0% and 1997: 25.3%).

Net income

Net income before exceptional items increased by 2% to (Euro) 132 million
(1998: 20.1% to (Euro) 129 million). This corresponds to 17.1% of the average
shareholders' equity (1998: (Euro) 129 million and 18.1%). As a percentage of
total revenues, net income before exceptional items amounted to 4.6% (1998:
4.7%). Before exceptional items, basic earnings per share, calculated on the
basis of the weighted average number of ordinary shares outstanding, increased
by 1% to (Euro) 1.54 (1998: (Euro) 1.53 and 1997: (Euro) 1.30).

  After deduction of exceptional items amounting to (Euro) 55 million, net
income decreased by 41% to (Euro) 77 million.

  The net income attributable to ordinary shareholders, i.e. after deduction of
the dividend on the financing preference shares, decreased by 42% to (Euro) 73
million.

[Graph of Research & Development]

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Basic earnings per share, calculated on the basis of the weighted average
number of ordinary shares outstanding, decreased by 42% to (Euro) 0.88 (1998:
(Euro) 1.53 and 1997: (Euro) 1.30).

------
Commercial and financial activities

Oce's activities are characterised by a combination of commercial and financial
services, each with their own income profile and balance sheet characteristics.

  In assessing the financial position of the Company as a whole, a distinction
must be made between these two types of activities. As indicated below, the
assessment criteria for both activities differ widely.

  The revenue from financial activities is formed by the interest from financial
leases. The costs comprise the costs of financing the lease portfolio and the
selling and administrative expenses. Where the financial activities are financed
from interest-bearing capital, it has been assumed that this has been done fully
on a fixed-interest basis.

  The costs of financing are then allocated on the basis of the average amount
of fixed interest-bearing capital. The selling and administrative expenses,
including provisions for doubtful debtors, are allocated as far as possible on
the basis of origin. The cost level that is applied corresponds to that of
other `captive' lease companies with similar activities. After expiry of the
lease contracts the machines, provided they have not been written off in full,
are transferred to the commercial activities at their residual book value.

  For the financing of the financial activities a ratio of 0.15 between the
equity and the balance sheet total is used. This ratio is derived from `captive'
companies in the financial services industry which publish their own annual
accounts. It is seen as an extremely solid ratio. Under this method the
remaining part of the equity is allocated to the commercial activities.

  The table on the next page gives a breakdown of the salient financial figures
for the two company activities.

  As can be seen from that breakdown, both the commercial and the financial
activities have good profitability and solid balance sheet ratios. The net
income from the commercial activities remained practically at the same level as
last year. In the case of the financial activities the interest from financial
leases was maintained at the high level of 1998. Due to a decline in the average
interest costs, the yield of the financial activities (net income as a
percentage of the average equity) showed a clear increase.

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<TABLE>
<CAPTION>
------                                               --------------------        --------------------        --------------------
                                                     1999                        1998                        x (Euro) million
------                                               --------------------        --------------------        --------------------
<S>                                                  <C>                         <C>                         <C>
Commercial
Revenues                                                            2,738                       2,663
Gross margin                                                        1,115                       1,080
Operating income                                                      177                         181
Financial expense (net)                                                15                          17
Result before taxation                                                162                         164
Income taxes                                                           47                          48
Result after taxation                                                 115                         116
Net income                                                            112                         114

Shareholders' equity                                                  659                         584
Minority interest                                                      42                          40
                                                     --------------------        --------------------
Group equity                                                          701                         624
Interest-bearing liabilities                                          288                         273
Provisions and other liabilities                                      870                         775
                                                     --------------------        --------------------
Balance sheet total                                                 1,859                       1,672

Ratios
Operating income as % of
average balance sheet total                                          10.0                        11.0
Net income as % of
average shareholders' equity                                         18.1                        19.8
Shareholders' equity as % of
balance sheet total                                                  35.5                        34.9

Financial
Interest from financial leases                                        100                          90
Selling and general administrative expenses                            29                          26
Financial expense (net)                                                44                          44
Result before taxation                                                 27                          20
Income taxes                                                            8                           6
Result after taxation                                                  19                          14

Shareholders' equity                                                  159                         142
Interest-bearing liabilities                                          898                         806
                                                     --------------------        --------------------
Balance sheet total                                                 1,057                         948

Ratios
Interest from financial leases
as % of average balance sheet total                                  10.0                        10.0
Net income as % of average
shareholders' equity                                                 12.6                        10.9
Shareholders' equity as %
of balance sheet total                                               15.0                        15.0

</TABLE>

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25
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Report of the Board of Executive Directors


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Use of funds and finance

Gross capital expenditure

In 1999 Oce's gross capital expenditure on `Property, plant and equipment'
amounted to (Euro) 115 million (1998: (Euro) 113 million). This mainly relates
to investments in machines, plant and equipment for the production of machines
and the related supplies.

  An amount of (Euro) 124 million (1998: (Euro) 110 million) was released from
depreciation and disposals.

<TABLE>
<CAPTION>
------                                 -------------------------------------------     -------------------------------------------
Geographical                           1999                                            1998
spread of assets                       --------------------   --------------------     --------------------   --------------------
                                       x (Euro) million       as %                     x (Euro) million       as %
------                                 --------------------   --------------------     --------------------   --------------------
<S>                                    <C>                    <C>                      <C>                    <C>
  Germany                                               478                     17                      474                     18
  Netherlands                                           505                     17                      457                     17
  United Kingdom                                        254                      9                      234                      9
  France                                                204                      7                      204                      8
  Rest of Europe                                        449                     15                      427                     16
  United States                                         884                     30                      721                     28
  Rest of the world                                     142                      5                      103                      4
                                       --------------------   --------------------     --------------------   --------------------
  Total                                               2,916                    100                    2,620                    100

</TABLE>

Rental copying equipment and
financial lease receivables

After several years in which there was a move away from rentals and towards
financial leases, both rentals and financial leases have been on the increase
since 1995. The book value of rental copying equipment increased by (Euro) 16.5
million to (Euro) 257 million (an increase of 6.9%). In 1998 the book value of
rental copying equipment increased by (Euro) 21 million to (Euro) 241 million
(an increase of 10%). The capitalised value of financial lease receivables
(including short term accounts receivable) went up from (Euro) 907 million in
1998 to (Euro) 1,026 million (an increase of 13.1%). In 1998 compared with 1997
the capitalised value of financial leases increased by 13% to (Euro) 907
million. The aggregate value of rental copying equipment and financial lease
receivables increased by 11.8% and represented 44.0% of the balance sheet total
(1998: 43.8%).

  The balance sheet value of rental copying equipment is calculated on the basis
of the all-in costs, less depreciation. Financial lease receivables are valued
at the net present value of the contracted lease instalments plus the residual
value. Both these valuations give only a partial reflection of the economic
significance of the population of machines installed on rental and on lease. A
better assessment can be

[Graph of Rentals and leases]

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28
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Report of the Board of Executive Directors


------
obtained by comparing the balance sheet value of rental copying equipment and
financial lease receivables with their economic value, which consists of the
cash inflows expected to be generated on a contract basis.

<TABLE>
<CAPTION>
------                                    --------------------       --------------------       --------------------
                                          1999                       1998                       x (Euro) million
------                                    --------------------       --------------------       --------------------
<S>                                       <C>                        <C>                        <C>

Contractual cash inflows from:
Rental contracts                                           508                        452
Financial leases and the related
service contracts                                        2,063                      1,744
                                          --------------------       --------------------
Total                                                    2,571                      2,196

Balance sheet value of:
Rental copying equipment                                   257                        241
Financial lease receivables                              1,026                        907
                                          --------------------       --------------------
Total                                                    1,283                      1,148

</TABLE>

As the above table shows, the population of rented and leased machines and the
related service contracts generate a gross cash flow which is about 2.0 times
(1998: 1.9 times and 1997: 2.0 times) higher than their balance sheet valuation.
The average remaining duration of the lease contracts is about three years and
that of the rental contracts is about one-and-a-half year. The contractual
revenue from rentals, service and financial leases forms a stable basis for the
future. The rental copying equipment and financial lease receivables also have a
high liquidity value.

  The cash flows generated by rentals, financial leases and service also
contribute to the company's financial strength. To illustrate this, the table on
page 30 shows the relationship between the cash flows expected to arise from
the rental, financial lease and service contracts existing at balance sheet date
and the total interest-bearing capital. The contractual cash flows have been
reduced for this purpose by subtracting the relevant cash outflows. The latter
consist of the estimated service costs and financial expenses that have to be
incurred during the subsistence of the rental and financial lease contracts.
Calculated on this basis, the net resultant cash flow from rentals, financial
leases and service exceeds the total interest-bearing capital by 36% (1998 year
end: 28% and 1997 year end: 28%).

[Graph of Contracted cash inflows]

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29
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Report of the Board of Executive Directors


<TABLE>
<CAPTION>
------                                    --------------------       --------------------       --------------------
                                          1999                       1998                       x (Euro) million
------                                    --------------------       --------------------       --------------------
<S>                                       <C>                        <C>                        <C>

Contractual cash inflows from:
Rental contracts                                           508                        452
Financial leases and the related
service contracts                                        2,063                      1,744
                                          --------------------       --------------------
Total                                                    2,571                      2,196

Expected cash outflows from:
Operational cash flows                                     845                        714
Financial expense (net)                                    108                         96
                                          --------------------       --------------------
Total                                                      953                        810

Expected net cash flows                                  1,618                      1,386
Interest-bearing capital                                 1,187                      1,079
Excess as a %                                               36                         28

</TABLE>

Interest-bearing capital

At the 1999 year end the interest-bearing capital amounted to (Euro) 1,187
million (1998 year end: (Euro) 1,079 million). Of this amount, (Euro) 884
million (75%) had been taken out over the long term (1998: (Euro) 859 million).

Group equity

Group equity increased to (Euro) 860 million (1998: (Euro) 766 million and 1997:
(Euro) 740 million). This increase was the result of earnings retained
(+ (Euro) 31 million), foreign currency translations (+ (Euro) 47 million),
optional stock dividend (+ (Euro) 28 million), conversion of debentures
(+ (Euro) 2 million), goodwill paid upon acquisitions (- (Euro) 5 million) and
other movements (- (Euro) 9 million).

  Group equity as a percentage of the balance sheet total amounted to 29.5%
(1998: 29.2% and 1997: 29.8%). Including the convertible subordinated guilder
debenture loan, whose conversion price is lower than the share price, this ratio
amounted to 29.8% (1998: 29.7% and 1997: 30.9%). The ratio between interest-
bearing borrowings and Group equity was 138:100 (1998: 141:100 and 137:100 in
1997).

  The shareholders' equity per ordinary share, calculated on the basis of the
number of shares outstanding at the end of the financial year, amounted to
(Euro) 9.14 (1998 and 1997: (Euro) 8.09 and (Euro) 7.96 respectively).

[Graph of Basic earnings per share]

------
30
<PAGE>
------
Report of the Board of Executive Directors

<TABLE>
<CAPTION>
------                                    --------------------       --------------------       --------------------
                                          1999                       1998                       x (Euro) million
------                                    --------------------       --------------------       --------------------
<S>                                       <C>                        <C>                        <C>

Investments in:
Property, plant and equipment (net)                         81                         87
Rental copying equipment (net)                             107                        113
New financial lease receivables                            446                        432
                                          --------------------       --------------------
Total                                                      634                        632

</TABLE>

Cash flow

Cash flow from operating activities amounted to a positive (Euro) 53 million in
1999, compared with a positive (Euro) 77 million in 1998 and a positive
(Euro) 69 million in 1997.

  The lower outcome of 1999 is mainly attributable to the decrease in net
income, the increase of long term liabilities and the major increase of working
capital especially the accounts receivable component.

  The improvements in 1998 are attributable to the increase in net income,
higher depreciation and the better usage of working capital.

  Investing activities required a net cash outflow of (Euro) 90 million which
is (Euro) 61 million less compared with 1998. This development is caused by
lower needs for acquisitions.

  By comparison in 1998 the net cash outflow of (Euro) 151 million was
approximately (Euro) 55 less than in 1997. This reflects the lower consideration
for acquisitions.

  The needs of the financing activities in 1999 were on the same level compared
with 1998 of approximately (Euro) 63 million. In 1998 the cash flow from
financing activities were (Euro) 94 million lower compared with 1997.

Credit facilities

At the end of the financial year a total of (Euro) 702.2 million of unused
credit facilities were available to the Oce Group, most of which are available
under multi-year stand-by credit contracts.

[Graph of Dividend per share]

[Graph of Investments]

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31
<PAGE>

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Report of the Board of Executive Directors

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Lease

In the markets in which Oce operates, financing is an essential component of the
product offering. By actively offering this possibility, therefore, the company
takes on the role of a `one-stop supplier'. Oce offers financing via lease
programmes tailored to meet the specific wishes of each customer.

  This `one-stop shopping' concept has advantages for both the customer and Oce.
For Oce it means that the constant flow of revenues from maintenance and
supplies is accompanied by a steady profitable inflow of interest earnings.

  Oce's strength lies in the combination of leasing and the possibilities for
remarketing after expiry of the contract. The company operates remanufacturing
and remodelling programmes which extend the technical and economic lifetimes of
its machines. As a result Oce can keep its machines on the market for longer
periods, both via contract extension and via placement with other customers.

  The debtors risk is slight, not only thanks to the spread of customers across
many customer categories in many countries and the close relationship that
exists with customers via the provision of technical service, but also because
Oce can realise the value of the machines when they are remarketed.

Funding

Since almost all lease contracts are based on an interest rate that is fixed for
their entire duration, it is Oce's policy to finance its lease portfolio
predominantly with interest-bearing capital, with the interest rate generally
being fixed in line with the duration of the contracts (`matching principle') so
as to safeguard the interest `spread' during the full contractual period.


Accounting

The lease programmes that Oce offers can be split into `financial' and
`operational' leases. The latter type are also referred to as `rentals'. In the
case of `financial' leases the economic risk passes to the customer. The
duration of these lease contracts is three to six years and is usually equal to
and sometimes longer than the depreciation period applicable to the relevant
machines. In consequence, the residual value risk is very limited.

  At the moment when the financial lease contract is signed, the selling price
of the machine is recorded as revenue in the form of the discounted value of the


------
32
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Report of the Board of Executive Directors

------
financial lease instalments. During the subsistence of the contract the interest
received is booked to revenue. Revenues from maintenance and service are
accounted for separately.

  Machines for which an operational lease contract has been concluded are rented
to customers for durations of, normally, one to three years. In these contracts
the rental instalments are included in revenue for the reporting period in which
they fall due. The rental instalments represent a fee to cover the cost of use,
servicing and interest.

  In 1999 48% (1998: 47% and 1997: 45%) of all direct sales of machines were
installed on the basis of financial leases. In Document Printing Systems this
percentage was considerably higher than in Wide Format Printing Systems and
Production Printing Systems.

  Interest income from financial leases went up by 11.5% to (Euro) 100 million
(1998: (Euro) 90 million and 1997: (Euro) 74 million). The balance sheet value
of the financial lease receivables increased by 13.1% to (Euro) 1,026 million
and represented 35% of the total invested capital at the 1999 year end (1998
year end: 35% and 1997 year end: 32%). The aggregate balance sheet value of
financial and operational leases rose by 11.8% to (Euro) 1,284 million and
amounted to 44.0% (1998: 43.8% and 1997: 41.3%) of the total invested capital at
the 1999 year end.

  In view of the average interest rate of 10.4% (1998: 10.5% and 1997: 10.8%)
achieved on the lease portfolio, financial leases make a good contribution to
the result. The return on financial leases represents 12.6% (1998: 10.9% and
1997: 10.3%) of average shareholders' equity.


<PAGE>

<TABLE>
<CAPTION>
                             ------
                             Report of the Board of Executive Directors

                             -----------------------    -----------------       -------------------------   -----------------------

Business Units               Strategic Business Unit    Business Group          markets                     products/services
(markets,
products/services)
                             ------------------------------------------------------------------------------------------------------

<S>                          <C>                        <C>                     <C>                          <C>
                             WFPS-Wide Format           TDS-Technical           Technical environments,      Series LV, MV, HV
                             Printing Systems           Documentation           such as design               large format printers/
                                                        Systems                 engineering offices,         copiers, scanners,
                                                                                industrial companies,        folders. Scanning,
                                                                                construction companies,      printing and archiving
                                                                                job printers, architectural  software.
                                                                                design offices.
                                                        ---------------------------------------------------------------------------

                                                        DG-Display              Printing sector.             Large format colour
                                                        Graphics                Full colour posters and      printers and
                                                                                other wide format colour     -scanners. Raster
                                                                                printed matter. Wide         Image Processor (RIP),
                                                                                format print shops and       copying and scanning
                                                                                copy shops.                  software. Imaging
                                                                                                             Supplies.
                             ------------------------------------------------------------------------------------------------------

                             DPS-Document Printing      DP-Document Printing    Office environments.         Series LV, MV, HV and
                             Systems                                            Central Repro departments.   VHV copiers/printers/
                                                                                Electronic Data Processing   scanners. Server
                                                                                environments. Print-         software. Application
                                                                                for-pay market.              software.
                                                        ---------------------------------------------------------------------------

                                                        NPS-Network Printing    Office environments.         Series MV, HV and VHV
                                                        Solutions               Central Repro departments.   printers. Copiers/
                                                                                Electronic Data Processing   printers/scanners.
                                                                                environments. Print-for-     Server software.
                                                                                pay market.                  Application software.
                                                                                                             Consultancy.
                             ------------------------------------------------------------------------------------------------------

                             PPS-Production             EPP-Electronic          Banks. Insurance companies.  Series HV and VHV
                             Printing Systems           Production Printing     Public utilities.            fanfold printers
                                                                                Electronic Data Processing   (Pagestream) and
                                                                                environments.                cutsheet printers.
                                                                                                             Application software.
                                                                                                             Consultancy.
                                                        ---------------------------------------------------------------------------

                                                        P&P-Printing &          Printers.                    Series HV and VHV
                                                        Publishing              Publishers.                  fanfold printers
                                                                                                             (Demandstream) and
                                                                                                             cutsheet printers.
                                                                                                             Application software.
                                                                                                             Consultancy.
                                                        ---------------------------------------------------------------------------

                                                        IS-Imaging Supplies     All relevant Oce-markets,    Broad range of
                                                                                for both Oce and third-      supplies. Wide format
                                                                                party equipment.             rolls. A4 white bulk.
                                                                                                             Specialties. Colour
                                                                                                             copier supplies.
                                                                                                             Toners
                                                        ---------------------------------------------------------------------------

                                                        FS-Facility Services    Companies.                   Document Management
                                                                                Governments.                 Services: consultancy
                                                                                (Local) authorities.         and systems, document
                                                                                Non-profit organisations.    creation, production,
                                                                                                             distribution,
                                                                                                             archiving.
</TABLE>

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34
<PAGE>

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Report of the Board of Executive Directors


------
Wide Format Printing Systems

In the market for Wide Format Printing Systems Oce maintained its strong
position. The revenues of this Strategic Business Unit, including service,
supplies and Facility Services, increased by 1% from (Euro) 772 million to
(Euro) 782 million. After deduction of acquisitions and the effect of exchange
rate changes, revenues decreased by 2.5%. In 1998 the revenue increased by
about 6%. Of this increase in revenue, autonomous growth represented 5%, whilst
favourable exchange rate effects contributed 1%. Despite some pressure on
margins as a result of growing competition, profitability in this market was
maintained at a high level.

  In May 1999 Oce acquired a majority shareholding (85%) in the Japanese
business Nippon Steel Calcomp Corporation, which now operates under the name Oce
Japan Corporation. The business possesses a well-trained sales staff and has
much experience in transforming software for use in Japan. The acquisition has
given Oce a good bridgehead in a country which, when the economy picks up again,
is estimated to have 40% of the potential of the European market. The entire
digital (black-and-white) product line is being equipped with Japanese operating
software for this market. The markets in Europe and the United States grew
slightly, whilst the Far East market picked up somewhat. The strong growth
experienced by the successful Oce 9800 in recent years was followed by a slight
decline in the number of placements last year.

  The complete version of the Oce 9600, destined for the medium volume, became
available later than had been anticipated. During the year under review,
therefore, Oce was still unable to derive full benefit from the demand that
exists for this machine. However, a substantial portfolio of orders was built
up. Market shipments of the new machine started in the final months of 1999,
which means that the effects will only show through in full in the next
financial year. In the autumn a more powerful version of the Oce 9400 was
introduced. This is quickly expected find a place for itself in its segment:
smaller-size design engineering environments.


In the wide format market more than 71% (1998: 70% and 1997: 65%) of the
revenues (excluding Imaging Supplies) meanwhile originate from digital machines.
If supplies are included, almost 46% of the revenues are related to digital
technology (1998 and 1997: also 46%).

  However important the availability of good hardware may be, it is increasingly
clearer that market success hinges on the extent to which a supplier is able to
provide a total solution for the customer's complex problems. In those solutions
the role of software is already equally as important as that of hardware. Oce
software packages, such as EngineeringExec and ReproDesk, are in many cases just
as important as the machines that they serve. The specific application packages
that Oce offers link up


<PAGE>

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Report of the Board of Executive Directors


------
closely with the requirements of big companies which use extensive production
and business information systems and with the needs of job printers. In
connection with this, consultancy work relating to complex systems is also being
given an independent role, also as a separate source of revenues. The
combination of machines, consultancy and a more extensive arsenal of specialised
software is increasingly determining the image of Oce's offerings.

  During the year under review various partnership contracts were established
with systems suppliers, such as SAP and Dassault.

  In the wide format environment diazo technology has meanwhile declined
strongly. Only occasionally does demand still exist for new machines based on
this technology. That does not alter the fact that several tens of thousands of
such machines - mostly made by Oce - are still in use throughout the world,
whilst Oce is able, thanks to its relative size, to deliver the required
supplies and thus ensure an attractive contribution to operating income.

Display Graphics

The activities in display graphics have received new impulses now that they have
been given a place of their own within the organisation. Developments in this
area are progressing gradually, and Oce can build a good position for itself
thanks to a series of colour inkjet printers based on a bought-in engine and
equipped with controllers and application software. In the year under review two
new printers, the Oce CS 5050 and the Oce CS 5070, and a scanner, the Oce CS
4050, were added to the range.


  In this relatively new, heterogeneous market with its various, highly
differentiated segments there is a high level of competition. This is mainly
due to the large number of new entrants. By supplying complete solutions Oce is
largely able to escape the price-depressing impact of this. For the development
of this market the investments in sales, system consultancy and R&D are
initially still considerable. For some time now Oce has been working on its own
inkjet technology. Products based on this will be introduced in a few years'
time, in the first instance in the market for CAD systems.

------
Document Printing Systems

In the market for Document Printing Systems Oce's revenues, including service,
supplies and Facility Services, increased from (Euro) 1,367 million in 1998
(Euro) 1,399 million. Autonomous growth amounted to 1% and the effect of
exchange rates was also 1%. In the previous year revenues increased by 18% to
(Euro) 1,367 million. Of this increase in revenues, the automous growth is 9%.
The revenues for 1999 and those for 1998 comprise the revenues from Network
Printing which were previously included in the business unit Production Printing
Systems. The most striking


<PAGE>

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Report of the Board of Executive Directors


------
development in the Document Printing Systems market is the rapid shift from
analogue to digital copiers in the number of placements. In the fast-expanding
digital printer/copier market a number of rival suppliers are meanwhile actively
offering printers/copiers in the segment of around 60 ppm. Both these
developments have brought pressure to bear on prices and margins and hence on
profitability. In the meantime a number of specific measures have been taken to
achieve a substantial cost reduction in manufacturing, service and logistics and
this should largely compensate for the pressure on margins. A further strong
point of Oce in this market is formed by the regular introduction of new, unique
software releases.

  Oce's strength is founded on the direct relationship that its own sales and
service organisation has with customers and on its ability to ensure that the
machines will operate in complex environments with the aid of tailor-made
software solutions.

  In the United States, where Oce booked substantial growth in 1998 thanks in
part to its partner IKON, an excessive build-up of stocks at IKON caused that
company to limit its offtake from Oce in 1999. However, the year under review
saw continued good performances by Oce's own direct sales organisation in
America, which helped to offset the slower progress of IKON. In the autumn sales
by Oce to IKON picked up again. The business remains an important partner for
Oce.

Although Oce's unique position as the first supplier for the segment of around
60 ppm came under pressure because of the strong competition, the company
sustained its success, especially with the versatile Oce 3165. That was
reflected in a strong growth in copying volume and revenues. Similarly, the Oce
3155 met with a good reception, whilst the Oce 3145, whose launch was announced
last year, will give Oce its own strong series of digital machines in the medium
and high volume segment. That range will be further completed in the near future
by digital machines with speeds of 100 and 85 ppm. In the market for small
format printing and copying some 30% of Oce's revenues, including service but
excluding supplies, are meanwhile related to digital products (1998: 27% and
1997: 16%).

  Due to growing competition the pressure on prices in the digital market
segment increased strongly.

  In terms of printing and copying volume Oce's market share grew right across
the board, in the United States slightly more than in Europe. That is
attributable in part to the high productivity and great versatility of the
digital printers/copiers.

  Despite the spectacular growth of the digital machines there is still a
specific need for analogue copiers in a great many areas. The number of analogue
machines placed by Oce, less machines returned from the market, was negative but
this decrease was significantly smaller than the overall market decrease.
Expectations are that the analogue machines installed in the market will
continue to make a positive contribution to cash flow and income for many years
yet.

  The analogue copier for repro applications, the Oce 3100, which was still
being installed on a wide scale during the year under review, was the winner of
two major performance awards, as had also been the case in 1998. The Oce 3045
and 3055 also received accolades from British and American trade journals.

  In the colour segment Oce grew faster than the market. On the basis of the
bought-in machines a substantial customer base as well as a wealth of experience
has meanwhile been built up. When it puts its own colour printer/copier on the
market Oce will therefore not only have excellent machines but also
specialised sales and service staff. During the year under review Oce also
successfully started sales of colour copiers in the United States.

------
37
<PAGE>

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Report of the Board of Executive Directors

------
Network Printing Solutions

The activities in the area of medium and high volume printers for office
environments were amalgamated with the Document Printing Systems activities
during the year under review. Via its Network Printing Solutions Business Group
Oce offers complete network printing solutions for a wide variety of information
flows in complex office environments. Particular care is devoted here to
ensuring maximum connectivity within the systems of the leading systems
suppliers. Oce's product concepts are concentrated on office processes, on
central repro facilities and, more recently, on the interface between users and
the central repro department.


  The growth in the number of machines operating in networks is remarkable,
especially in the high volume segment. It is characteristic of the change-over
to a situation in which the stand-alone copier is disappearing within an office
environment that is predominantly served by networks and a wide variety of
printing and copying equipment. That change is also leading to the creation of a
new customer concept, in which the primary role is no longer played by the
equipment but by the complete solution to a specific customer problem. Against
this background Oce put various new software products on the market during the
year under review, including packages for print job management, workflow
management and system administration. This came in addition to a series of new
releases for existing software. In the applications area the partner programme
was also strongly extended.

  A growing proportion of earnings will in the near future be generated by the
consultancy services that Oce supplies to customers and potential customers.
Thanks to its extensive expertise Oce is effectively equipped for this.

  The mutual cooperation between Oce's German and the Dutch research centres has
resulted in innovations in the range of printers and servers thanks to an
exchange of functionalities between the machines.

------
Production Printing Systems

The Strategic Business Unit Production Printing Systems (high volume printers
and printing systems) increased its revenues in 1999. Revenues, including
service, supplies and Facility Services, went up by 7% to (Euro) 657 million
(1998: (Euro) 614 million). Of this increase, autonomous growth provided 6%,
whilst the remaining 1% was attributable to exchange rate effects. In 1998
autonomous growth amounted to 4% whilst 1% resulted from exchange rate changes.
Profitability was maintained at a high level.

  The market for high volume printing is dominated by a very limited number of
suppliers. An ongoing process of business concentration is also taking place in
this market. As a supplier of systems based on continuous-feed paper Oce
maintained its leading position world-wide and achieved a growth of more than
5%, well in


<PAGE>

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Report of the Board of Executive Directors


------
excess of the market growth. In cutsheet systems for high volume applications
Oce was likewise able to strengthen its position further, for instance by
offering such features as magnetically readable typeface and support colours. In
this market, too, a major strength is that Oce can supply the machines in
combination with an extensive series of applications for document production and
processing.

  The product range on offer for the high volume market was further strengthened
during the year under review. Oce therefore underlined its technological
leadership yet again. The product range - also including the servers and
software - offers the user great flexibility as regards speed, the number of
printer languages that can be processed and the range of print resolutions. As a
result the products can be used in combination with virtually any system that
the customer has installed, even if that is of less recent date or has been
designed with other print systems in mind.

  The Domain software developed by Oce has quickly proved its value as a
powerful tool in the production of documents.

  In the high volume market more than anywhere else, partnerships - in both the
hardware and the software field - are a critical success factor. All of Oce's
printers are installed in combination with computer systems whose output they
process, but also with finishing equipment with which they form an integral
whole. To ensure that it can actually supply the complete solution that the
customer demands, Oce operates a series of partnerships - some of them on an
exclusive basis - with the most important suppliers of systems and hardware.

  Since 1998 Oce has held a participation in the software development business
Siemens Software in Namur, Belgium. In October 1999 Oce increased its stake to
70%. The business, now called Oce Software Laboratories Namur, also develops
special application software for Oce customers. This currently involves 80
employees. The number of employees working for Oce will be expanded further in
future.

Printing & Publishing


The market for Printing & Publishing (complete publications in relatively small
print-runs) likewise consists of a small number of suppliers who work in close
cooperation with partners. This market, which has mainly evolved to meet the
needs of the printing and publishing industry, is dominated by players that have
a strong customer base in pre-press and printing technology. None the less Oce
was able to double its revenues in this market. That growth rate is much higher
than that of this already fast-growing market. Partnerships, such as a
substantial reseller contract with Agfa for the Chromapress system, further
reinforced the market position. The costs of developing this relatively new
market for Oce are high. By concentrating on several highly promising market
segments, especially the printing of books and manuals, the operation can be
done on a cost-effective basis. Since Oce, in cooperation with a number of
partners, focuses on the supply of complete systems and functional software
packages, a good margin is attainable in this market. During the year under
review this activity was given a separate place of its own in the form of a
special business group for Printing & Publishing.

  The Demandstream 8080 printer, specifically developed for Printing &
Publishing applications, was very well received by the market. The new Prisma
servers and software have also proved to offer excellent solutions for this
market. Their high productivity is a feature that is particularly appreciated in
the printing world. The machine's performances are directly reflected in the
commercial value of the output.

  In the market for Printing & Publishing Oce has, in cooperation with several
suppliers of finishing equipment, developed a complete system for the printing
of books in limited print-runs. At the Buchmesse in Frankfurt, Germany, the
leading

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Report of the Board of Executive Directors

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trade fair for the publishing world, Oce created much excitement with this
`Book-on-Demand' system. It is the first digital printing system whose print
quality and finishing can compete with traditional book-printing methods. At the
end of 1999 it saw its first deployment in practice at a printing firm in the
United Kingdom.

  The application of colour is also attracting more and more interest in the
world of high volume printing. For quite some time Oce has been supplying an
optional second print colour in a number of its models. The developments towards
more - and more varied - colours are in full swing and in a somewhat more
distant future four-colour printing will also become possible. During the year
under review Oce opened up the unique possibility of producing toner to match
the customer's exact house style colour.

------
Facility Services

The trend towards the outsourcing of printing and copying activities and, as an
extension of that, the contracting out of a series of other facility services is
now gaining more momentum in Europe as well. Oce, which has already been active
in this field for several years, therefore experienced a strong increase in
earnings from these activities during the year under review. Revenues increased
world-wide by 34% to (Euro) 197 million (1998: (Euro) 146 million). These
revenues are included in the revenues of the three Strategic Business Units:
Wide Format Printing Systems, Document Printing Systems and Production Printing
Systems.

  To focus on developing further in this attractive growth market (30% growth on
an annual basis) a separate Business Group, Oce Facility Services, was formed.

  By offering Facility Services, Oce is responding to a clear need amongst
customers. For each customer the company develops a tailor-made package of
services which, although based on Oce's own core competencies, encompasses an
ever wider spectrum. Following the addition of services such as postroom
activities, a strong demand is now arising mainly for activities involving the
management of document flows. This relates to the creation, production,
reproduction, distribution and archiving of (digital) documents. Specifically in
big companies with complex document flows Oce is able to make effective use of
its expertise.


  The demand for consultancy in this area is also growing. Here, just like in
the other business groups, Oce intends to acquire a clear - and profitable -
place for itself.

  Oce sees this activity primarily as the provision of a service that has its
own earnings-generating function, but the company will also make as much use as
possible of its own products (machines and supplies).


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Report of the Board of Executive Directors


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In the United States the activities of Archer Management Services, which was
acquired in 1998, have developed further at a rapid pace. This operation
represented a substantial proportion of the increased revenues in this region.

------

Imaging Supplies

Oce's revenues in Imaging Supplies (paper, other imaging materials and toner)
decreased in 1999 by 1% to (Euro) 414 million. In the previous year the revenue
went up by 3% to (Euro) 421 million. These revenues, which also comprise those
of Arkwright, are included in the revenues of the three Strategic Business Units
Wide Format Printing Systems, Document Printing Systems and Production Printing
Systems.

  The activities, which are housed within a separate Business Group, are mainly
successful in new materials for business graphics (paper for colour prints and
copies), display graphics (wide format) and multi-purpose CAD supplies. This
success is being achieved alongside the steady growth in the `core activities'
in the area of wide format plain paper media. Sales of diazo supplies continued
to fall steadily. To make the most effective possible use of the available
selling capacity, Oce concentrates in the first instance on the equipment
installed with Oce customers, both that of Oce and that of third parties.

  Against a background of static revenues, the margin developed favorably, in
particular because of the growing share of supplies with high margins and
continued rationalisation of the product portfolio. Profitability increased
further, also thanks to savings in logistics operations, which have meanwhile
largely been contracted out.

  In the sales of imaging supplies a growing role is played by e-commerce. In a
number of countries some 10% of the supplies are ordered via Internet and this
proportion is expected to increase quickly.

  When developing new carrier materials Oce makes ample use of the expertise
that the business has built up over the years, notably in the area of coating.
For instance, one of the new materials for display graphics was a paper coated
with an impermeable layer to accept the water-based ink that is customary in
inkjet printing. This innovation has its roots in diazo technology. A large
number of other carrier materials are based on the expertise of Oce's American
business Arkwright. The European and American activities are increasingly
working more closely together. Generally speaking, Oce is excellently qualified
to supply a broad range of materials that are precisely attuned to the machines
they are used on. Oce is a leading supplier of imaging supplies both in Europe
and in the United States.

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Research & Development (R&D)

The major changes that are currently taking place in the market and amongst
Oce's customers because of the switch to digital technology had already led to a
refocusing of the R&D programme many years ago. As a result Oce had been able
to anticipate these changes in full in its products. No substantial changes
therefore took place in technological developments during the year under review.
Practical development work was, however, brought into line with the rapidly
changing demand for new software products whose functionality also needs to be
continually expanded. To prevent possible tension between the need for
completely new developments and the expansion and updating of existing
functionalities, these development categories have been separated. Oce
applies a system of basic developments (known as root, branch and leaf
development), from which families of machines and systems are developed, each
with their own regular updates and new releases. In this way a faster time-to-
market is achieved for product variants that are needed by the market over the
short term, whilst still continuing to work on the innovation of basic
technologies. Many requests for adaptations and expansions are received from the
operating companies and also from, say, Oce Facility Services, which also serve
as sources of knowledge about specific customer processes. R&D's task is to
develop these further in terms of either customer-specific or generic
applications. Thanks to its direct sales organisation and the resultant close
involvement with the customer's processes, Oce is uniquely positioned to base
its work on those processes instead of on the approach of the individual user.

  Thinking up solutions for market demands and needs brings much work for the
internal and external (software) developers who develop and expand the products
for Oce.

  In the United States the cooperation with Groupware and PageMasters was
intensified. The R&D facilities in the Netherlands (Venlo), Germany (Poing),
France (Creteil) and Belgium (Namur) are working together to an increasingly
closer extent.


Machines and systems

During the year under review good progress was achieved with a number of
machines and systems whose launch is planned for the near future. In the
successful digital line of the Oce 3165 `family', for example, two machines for
100 and 85 ppm respectively have now reached the engineering phase. The Oce 3125
colour copier was given the required stability thanks to a newly designed drum
and a new toner that was totally redeveloped. Major steps forward were also
achieved in inkjet technology, with both water-based and solid inks. The
technology is destined for the production of Oce's wide format colour printers.
<PAGE>

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Report of the Board of Executive Directors


------
Important work was done at the Oce laboratory in Creteil, where the Next
Generation Controllers are being developed for the wide format printers/copiers.
The new controller has meanwhile been incorporated in the new Oce 9400 and 9600
and is being prepared for the Oce 9800. The cooperation between the R&D
activities in Germany and the Netherlands has been further intensified and is
beginning to yield tangible results. This was particularly the case in the area
of toners, organic photoconductors and techniques for duplex printing on cut
sheets.

  For the development of new imaging supplies the main emphasis has been shifted
to the R&D department at Arkwright, where a wealth of experience has been
built up mainly in the area of carrier materials and coatings.

  The cooperation with a large number of suppliers in the development phase of
new machines proved to be a success. This policy has meanwhile been refocused to
concentrate on a limited number of partners and co-developers of a higher
standard so as to enhance the ability to respond alertly to market needs.

  The Oce Software Academy has been a great success. In this academy some 50
graduates from higher vocational education are trained as IT specialists who can
play an active and high-calibre role within the organisation. Almost half of
those participants have meanwhile completed their studies with very good
results. A third intake class started in 1999.


------
Safety, Health and the Environment

Oce has a tradition of caring for the health and safety of its employees and the
users of its products. The company does this by attempting to minimise the
environmental impact of its activities as much as possible. Oce's commitment to
safety, health and the environment is laid down in a policy that plays a
prominent role in all the company's operations. In combination with this policy,
the endeavours to achieve continual innovation have led to a great many improved
characteristics, both in the products themselves and also in working methods and
processes, which are likewise being improved all the time. As a rule the
specifications are well in excess of the statutory requirements relating to
safety and the environment.


Sustainable development and the environment

Sustainable development has become an important element in present-day business
practice. Oce has clearly booked outstanding achievements in this field over
the past years and has taken a series of measures aimed at achieving
sustainability in all aspects of its operations. This is reflected in special
attention for the use and re-use of materials and a focus on the reduction of
energy consumption. Together with the KEMA research and inspection institute
Oce developed a system for safe and environmentally friendly design, a system
that plays a central role in every phase of the design process. Thanks to
rationalisation measures and the introduction of new processes in manufacturing
and storage operations Oce's environmental impact is gradually being further
reduced world-wide. The re-use and recycling processes and a self-contained
system of waste materials management are also reducing the impact even further.
The energy consumption of Oce machines decreases with each new model; the new
Oce 9600, for example, has an especially low energy usage. Almost all Oce
systems carry the American Energy Star seal of approval.

  During the year under review Oce introduced an environmental care system based
on ISO 14001 for all its manufacturing facilities in Venlo. Certification of
this system will take place at the beginning of 2000. The operating companies,
too, have shown an interest in obtaining such certification.


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Report of the Board of Executive Directors


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Manufacturing & Logistics

Machines

The start of the year under review brought a decline in demand for various
analogue product lines at the manufacturing locations. As a response to that,
the manufacturing capacity was adjusted by cutting back on flexible manpower
resources. The digital production lines continued to be fully utilised. Managing
the varying demand for products requires a great deal of attention, but the
flexi-system has again demonstrated its value. In the meantime the management
of stocks has been changed from a plan-driven to a consumption-driven system. In
addition, a Manufacturing Excellence programme has been initiated with the aim
of raising the efficiency, whilst at the same time enhancing the quality. This
is being supported by a number of factors, such as the simpler construction of
the machines thanks to digital technologies, the increased use of complete pre-
assembled modules sourced from premanufacturing and the transfer of part of the
work to the manufacturing facilities in the Czech Republic. The outcome will be
that the increase in assembly personnel will lag behind the anticipated growth
in production.

  The outsourcing of factory supply logistics which had been implemented in the
previous year proved successful, despite the rapid fluctuations in demand.


Logistics

In the logistics for service components, one of the most vital processes within
the Oce organisation, the centralisation that was started in 1998 was further
continued. In the new set-up the service technicians can now be supplied with
components before 07.00 hrs. provided that the orders were placed before 17.00
hrs. on the previous day. This applies not only in the Benelux but also in
Germany, France and the United Kingdom. The other countries in Europe will soon
follow.

  As regards the second major logistics outsourcing project, the logistics of
supplies, the first phase has been implemented. A new logistics centre in Venlo
and a number of local storage facilities in various countries will handle the
distribution under the leadership of an international provider of logistics
services. The project will yield immediate savings, thanks in part to the use of
a variable costing system.

  During the past year a start was made on direct deliveries of machines to
customers on the basis of customer specifications. Final assembly and pre-
installation take place centrally. Distribution, installation and instruction
will be handled in cooperation with partners. Partnerships have meanwhile become
essential in logistics, as they lead to improved performances and greater
flexibility.


Recycling

The re-use of reconditioned components from machines that have been returned
from the market has been developed by Oce into a permanent system over a series
of years. In designing new machines the re-use of components and modules is now
standard practice. Partly because of the switch from analogue to digital,
relatively large numbers of machines are currently being returned to the special
recycling plant that Oce built at the beginning of the 1990s. That plant,
located in the Czech Republic (Prague), also plays an increasingly important
role in the remanufacturing of machines.




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Report of the Board of Executive Directors


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Personnel & Organisation

Human resources management (HRM) was closely involved in the internal changes
in the Oce organisation at all levels. Based on the recognition that adequate
manpower is the main driver of Oce's success, HRM has also focused its policy on
the new requirements and has acquired new methods and techniques to help
accelerate the internal restructuring process that has already been set in
motion.

  This is governed by two key aspects: the switch from analogue to digital
technology, combined with a transition to a role as `supplier of complete
solutions', and the increasingly higher average education that is needed to
fulfil the functions effectively.

  The effect of the switch is particularly noticeable in product development,
manufacturing, service and sales, although its timing is phased differently in
all four areas. In R&D some 60% of the employees are trained in IT. The need
for IT specialists has grown strongly. The company's own IT training programme
filled part of that need by supplying motivated people of very high quality. In
the service area the number of digital machines and especially systems is now
increasing fast, particularly in the office market. That has intensified the
demand for digitally trained technicians, though the greatly reduced need for
service is keeping the number of service staff limited in absolute terms. In
sales, too, the switch from selling (often stand-alone) machines to selling
complex digital systems calls for a different type of salesman/consultant.

  The ever higher average level of education marks the transition from a
production-based to a knowledge-based organisation. Via a continuous education
and training programme Oce provides its own employees with additional training.
At the same time, however, the recruitment of highly trained new employees has
been intensified.

  To analyse the requirements for IT specialists as well as for personnel who
are familiar with it, an IT Master Plan has been drawn up in cooperation with
the Strategic Business Units.

  As part of the Management Development programme, a start was also made during
the year under review on monitoring and identifying young talent via the Young
Executive Programmes.

  Under the restructuring programme Oce has already had to take its leave of a
number of employees during the year under review, including many dozens who had
what was often a lengthy period of service. The company owes them a great debt
of gratitude for their contribution to the successful growth of Oce over the
years.

<PAGE>

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Report of the Board of Executive Directors



<TABLE>
<CAPTION>
------                                                                            ------------   ------------
Distribution of                                                                   1999           1998
employees by                                                                      ------  ----   ------  ----
geographical areas                                                                number  as %   number  as %
------                                                                            ------  ----   ------  ----
<S>                                                                               <C>     <C>    <C>     <C>
Netherlands                                                                        4,155    19    4,155    20
Germany                                                                            3,144    14    3,110    15
France                                                                             1,606     7    1,578     8
United Kingdom                                                                     1,104     5    1,239     6
Rest of Europe                                                                     3,454    16    3,449    16
United States                                                                      7,103    33    6,369    30
Rest of the world                                                                  1,191     6    1,078     5
                                                                                  ------  ----   ------  ----
Total                                                                             21,757   100   20,978   100
------                                                                            ------------   ------------
Distribution of                                                                   1999           1998
employees by                                                                      ------  ----   ------  ----
types of work                                                                     number   as %  number  as %
------                                                                            ------  ----   ------  ----
Research &
Development                                                                        1,780     8    1,614     8
Manufacturing &
Logistics                                                                          3,507    16    3,878    19
Facility Services                                                                  4,198    19    3,237    15
Sales                                                                              4,926    23    4,885    23
Service                                                                            5,322    25    5,415    26
Accounting and
other staff                                                                        2,024     9    1,949     9
                                                                                  ------  ----   ------  ----
Total                                                                             21,757   100   20,978   100
</TABLE>

Oce also undeniably grew again in many ways during the year under review. In a
number of new areas, too, Oce has gained ground and has taken steps that will
prove important for the future. To grow responsibly in this way calls for
dedication and effort but also for imagination and daring. Oce people have shown
that they possess these qualities in ample measure. That gives us the confidence
that - however much the world around us may change - Oce can continue to grow in
the future as well. We would like to convey our sincere thanks to everyone,
employees, customers, partners, for the contributions they made over the past
year.

Venlo, January 31, 2000

The Board of Executive Directors:

R.L. van Iperen, chairman
J.F. Dix
H.J.A.F. Meertens
G.B. Pelizzari


------
46
<PAGE>

------                                ------
February 2000                         Directors Central Services


                                      ------
                                      Strategic Business Units
Wide Format Printing Systems          G. Kraaijeveld

Document Printing Systems             P.J.J.G. Nabuurs

Production Printing Systems           W. Gemmel

                                      ------
                                      Business Groups
Imaging Supplies                      J. Dix

Facility Services                     J. Dix

                                      ------
                                      Corporate Staff
Secretariat of the Company,           J.M.M. van der Velden
Legal Affairs

Corporate Personnel and               P.H.G.M. Creemers
Organisation

Finance and Administration            C.F. Lindenhovius

                                      ------
                                      Central Operating Company Venlo
Venlo Executive Committee             J.C.A. Vercoulen, chairman
                                      N.J. Koole

Manufacturing and Logistics           N.J. Koole

Research and Development              J.C.A. Vercoulen


See also page 7.

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83
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<TABLE>
------            ------
February 2000     Principal companies and their chief executives*


<S>               <C>                               <C>                   <C>               <C>
                  ------
                  Europe
Belgium           Oce-Belgium N.V./S.A.             J. van Boerdonk       Brussels            (2)729.4811
                  Oce-Interservices N.V./S.A.       J. van Boerdonk       Brussels            (2)729.4992
                  Oce Software Laboratories         B. Hucq               Namur               (81)554.211
                  Namur S.A. (70%)
Denmark           Oce-Danmark A.S.                  H. Risor              Copenhagen          (43)29.7000
Germany           Oce-Holding Deutschland           A.A.J. van Driel and  Mulheim/Ruhr        (208)48.450
                  G.m.b.H.                          P. Feldweg
                  Oce-Deutschland G.m.b.H.          A.A.J. van Driel and  Mulheim/Ruhr        (208)48.450
                                                    S. Landesberger
                  Oce Printing Systems G.m.b.H.     P. Feldweg and        Poing             (8121)72.4031
                                                    W. Gemmel
France            Oce-France S.A.                   A. Gimenez            Noisy-le-Grand     (1)4592.5000
                  Oce-Industries S.A.               J.L. Desriac          Creteil            (1)4980.8000
Hungary           Oce-Hungaria Kft.                 G. Nemeth             Budapest            (1)236.1040
Ireland           Oce-Ireland Limited               R. Thompson           Dublin              (1)459.5411
Italy             Oce-Italia S.p.A.                 F. Calosso            Milan               (02)927.261
Netherlands       Oce-Technologies B.V.             J.C.A. Vercoulen      Venlo              (77)359.2222
                  Oce-Nederland B.V.                J.J. Kwaak            's-Hertogenbosch   (73)6815.815
                  Arkwright Europe B.V.             J.R. Marciano         Venlo              (77)382.5315
Norway            Oce-Norge A.S.                    O. Fondevik           Oslo                (2)202.7000
Austria           Oce-Osterreich Ges.m.b.H.         G. Schennet           Vienna               (1)865.336
Poland            Oce-Poland Limited, Sp. zz.o.     M. Kozlowski          Warsaw             (2)2846.7429
Portugal          Oce-Lima Mayer S.A.               Th. de Lima Mayer     Lisbon             (21)412.5700
Spain             Oce-Espana S.A.                   A. Aznar de Argumosa  Barcelona           (3)484.4800
Czech Republic    Oce-Czech republic s.r.o.         I. Konecny            Prague             (2)440.10111
United Kingdom    Oce (UK) Limited                  M.J. Cornish          Loughton          (181)508.5544
Sweden            Oce Svenska AB                    F.O. Nilsen           Stockholm           (8)703.4000
Switzerland       Oce (Schweiz) A.G.                H. Wurges             Glattbrugg          (1)829.1111

                  ------
                  North America
United States     Oce-USA Holding Inc.              G.B. Pelizzari        Chicago, ILL      (773)714.8500
                  Oce-USA Inc.                      G.B. Pelizzari        Chicago, ILL      (773)714.8500
                  Oce Printing Systems USA, Inc.    H.W. Krause           Boca Raton, FL    (561)997.3100
                  Arkwright Inc.                    J.R. Marciano         Fiskeville, RI    (401)821.1000
                  Archer Management                 M.D. Weiner           New York, NY      (212)502.2100
                  Services, Inc.
                  Oce Groupware                     D. Bower              Cleveland, OH     (216)687.9970
                  Technology, Inc.
Canada            Oce-Canada Inc.                   S. Goodall            Toronto           (416)224.5600
</TABLE>

* Where holdings are less than 95% of the equity, capital percentages are
  stated. A list of affiliated companies is available for public inspection at
  the Commercial Registry, Venlo, in conformity with the provisions of Article
  379, Book 2, of the Dutch Civil Code.



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84
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<TABLE>
                  ------
                  Principal companies and their chief executives

<S>               <C>                              <C>                <C>            <C>
                  ------
                  Far East
Hong Kong         Oce (Hong Kong China) Ltd.       N.W. Kooij         Hong Kong          2577.6064
China             Oce Office Equipment             N.W. Kooij         Beijing        (10)6528.1200
                  (Beijing) Co., Ltd.
Japan             Oce Japan Corporation (85%)      K. Mukozaka        Tokyo           (3)5402.6112
Singapore         Oce (Far East) Pte. Ltd.         N. Klitsie         Singapore         (8)46.2381
Malaysia          |  Oce Systems                   M. Sak             Petaling Jaya    (3)758.4088
                  |  (Malaysia) Sdn. Bhd.
Singapore         |  Oce (Singapore) Pte. Ltd.     N. Klitsie         Singapore         (8)46.2381
Taiwan            |  Oce (Taiwan) Ltd.             N. Klitsie         Taipei          (2)2651.6516
Thailand          |  Oce (Thailand) Ltd.           S. Santhidej       Bangkok          (2)260.7133

                  ------
                  Other countries
Australia         Oce-Australia Limited            P.W.M. Thomassen   Scoresby        (3)9730.3333
Brazil            Oce-Brasil Comercio e            S. Notermans       Sao Paulo      (11)3621.8444
                  Industria Ltda.
South Africa      Oce Printing Systems             T. Venediger       Johannesburg    (11)258.6000
                  (South Africa) (Pty.) Ltd.

                  ------
                  Direct Export
Netherlands       Oce Direct Export                W.J. Verheijen     Venlo           (77)359.2222

                  ------
                  Lease companies
Australia         Oce-Australia Finance Pty. Ltd.  P.W.M. Thomassen   Cheltenham      (3)9263.3333
Germany           Oce-Deutschland                  A. Hutter          Mulheim/Ruhr     (208)48.450
                  Leasing G.m.b.H.
France            Oce-France Financement S.A.      M. Gianfermi       Saint-Cloud     (1)4592.5055
Spain             Oce-Renting S.A.                 E. de Sus          Barcelona        (3)484.4800
United Kingdom    Oce (UK) Finance Limited         N. Anderson        Loughton       (181)508.5544
United States     Oce-Credit Corporation           S. Schulein        Purchase, NY   (914)694.1116

                  ------
                  Minority holdings
Cyprus            Heliozid Oce-Reprographics       25%
                  (Cyprus) Ltd.
Germany           InterFace Connection G.m.b.H.    11%
Hungary           Szenzor Szamitokozpont Kft.      34%
Singapore         Datapost Pte. Ltd.               30%
</TABLE>


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85
<PAGE>

<TABLE>
                           ------
                           List of terms and abbreviations

                           ------
<S>                        <C>
                 Analogue  In relation to copiers: producing a copy with the aid
                           of a photo-lens in a stand-alone machine; the opposite of
                           digital (see below).
    Book-on-Demand System  Digital printing system used for the
                           (short run) printing of books.
        Business Graphics  Materials (supplies) for making high quality
                           colour prints, especially on transparent film for
                           presentations (see also Display Graphics).
                      CAD  Computer Aided Design.
`Captive' lease companies  Lease companies which form part of
                           the Oce Group.
                  Coating  Applying a special (usually chemical) layer to paper or
                           polyester.
    Continuous-feed paper  Technology in which fanfold paper is fed
                           from a roll into the machine.
               Controller  In relation to printer systems: an electronic device
                           which converts input data into a format which can be
                           understood by the printer.
                Cut sheet  Loose sheets of paper for feeding into a printer (as
                           opposed to fanfold or roll feeding).
                    Diazo  Abbreviation of the word diazonium; a chemical compound
                           which is coated onto paper so that images can then be
                           developed on the paper after exposure to light; a process
                           formerly known as dyeline printing.
                  Digital  In relation to copiers and printers: producing a copy
                           or print by means of laser or LED exposure, in a machine which
                           can be linked up to a network; used here as the opposite to
                           analogue (see above).
             Digitisation  The conversion of information into digital codes.
         Display Graphics  Large format colour prints, e.g. on posters,
                           banners and billboards.
      Document management  All activities involved in the preparation,
                           copying/printing and finishing of documents.
        Document Printing  (Previously known as Office Systems). Used
                  Systems  by Oce to mean the market for copying and printing in
                           office environments.
               E-commerce  Buying and selling and paying for articles/products
                           via the Internet/Intranet
              EDP segment  Electronic Data Processing. Market segment in which
                           the processing of information by computers is the main
                           activity.
    Electronic Production  (Production) printing and processing of
                 Printing  documents in high volumes.
                   Engine  Complete driver and controller unit for a printer.
        Facility Services  Where the supplier of certain products
                           handles the work involved in the use of those products;
                           specifically in those cases where Oce performs copying and
                           printing activities on a customer's premises at that
                           customer's request.
          Fanfold printer  High volume printer for processing fanfold
                           (continuous-feed) forms.
              Full colour  Image reproduced entirely in colour.
          Human resources  The recruitment and development of personnel
               management  to fulfil posts within a business.
         Imaging Supplies  Materials which are used (mainly as
                           information carriers) in copying and printing, such as paper,
                           films, labels, etc.
        Inkjet technology  Specific printing technology in which fine
                           droplets of ink are used to build up the printed image.
                Interface  Communication system between users and systems and
                           between separate systems.
           IT Master Plan  Plan developed to recruit and develop
                           specialists who are trained in information technology.
           Job management  Managing and controlling the execution of preset
                           (print) jobs.
              Job printer  A business specialising in making copies and prints
                           for third parties.
        Multi-purpose CAD  Materials that can be used for several
                 supplies  different purposes in design work using CAD
                           (Computer Aided Design) technology.
         Network Printing  Using printers and servers to provide
                Solutions  solutions for the reproduction of documents in
                           networks (chiefly in office environments).
        One-stop shopping  Buying in as many products and services as
                           possible from one single supplier, such as copiers, printers,
                           system software, service support as well as their financing.
        One-stop supplier  A supplier who can provide as many services
                           as possible, including copiers, printers, system software,
                           service support as well as their financing.
              Outsourcing  Contracting out the total package of copying,
                           printing and finishing activities to the supplier (in this
                           case Oce).
    Pay-out/pay-out ratio  The proportion of the net income that is
                           distributed in the form of dividend.
              Plain paper  Ordinary (untreated) paper.
                      ppc  Plain paper copying: making copies on ordinary (untreated)
                           paper.
                      ppm  Prints per minute: used to denote the speed of a machine's
                           output.
                Pre-press  Preparatory activities prior to printing.
                 Printing  The (repeated) production by a printer of an original
                           document using data stored in a digital memory.
    Printing & Publishing  Printing and finishing complete publications in relatively
                           small print-runs for a client.
         Print resolution  Indicates the quality of a print. Resolution
                           is expressed in dots per inch (dpi).
      Production Printing  Used by Oce to refer to the market for high
                  Systems  and very high volume printing systems.
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<TABLE>
                           ------
                           List of terms and abbreviations

<S>                        <C>
                           ------
          Remanufacturing  Replacing certain machine components and making
                           the required adjustments to settings so that the machine will
                           operate as new when placed in the market again.
              Remodelling  Adding a different functionality to an existing
                           machine.
        Reseller contract  Contract for the resale of third-party
                           products.
                      SBU  Strategic Business Unit: the Oce business structure for
                           each application area.
                  Scanner  Machine that reads an image digitally and then stores
                           it in digital form in a memory.
                   Server  System that organises and controls the `traffic' between
                           computers and the printer(s) connected to them.
              Stand-alone  A copier or printer which is not coupled up to a
                           network.
                     Swap  Interest rate hedging instrument used to change the type
                           of interest rate (fixed or variable) attached to a loan. Also
                           used as a verb: to swap.
  Technical Documentation  The copying and printing of wide format
                  Systems  drawings in technical environments, such as design engineering
                           offices, factories and architectural design offices.
           Time-to-market  The time that is required to get a product ready
                           for market launch.
                  US GAAP  American accounting principles (United States Generally
                           Accepted Accounting Principles).
           Volume segment  Internationally accepted industrial standard for
                           classifying the copying and printing markets into segments
                           based on the number of copies or prints produced per machine
                           per month.
     Wide Format Printing  (Previously known as Engineering Systems).
                  Systems  Used by Oce to refer to the market for machines and supplies
                           for the printing and copying of wide format documents.
      Workflow management  The organisation and management of projects.
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