Essay

Summary of significant differences between International Financial Reporting Standards (IFRS) and accounting principles generally accepted in the United States of America (US GAAP) Currently all companies publicly traded on a regulated market in the European Union (“EU”) are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”). Since we will continue a secondary listing on the Stockholm Stock Exchange, we have posted this summary for your review on our website that highlights the primary differences under IFRS and US GAAP (hereafter referred to as GAAP differences) impacting our financial statements. This summary is intended to be used as a high level guide and does not describe all of the GAAP differences between IFRS and US GAAP, which may be significant for the preparation of our consolidated financial statements. The discussion below primarily focuses on GAAP differences in recognition and measurement requirements affecting the balance sheet and the income statement. Consequently, this summary does not describe differences related to the statement of cash flows, statement of equity, comprehensive income, and presentation and disclosure requirements. For purposes of this summary, the GAAP differences described are differences that exist during 2006. IFRS and US GAAP have moved towards convergence in their accounting principles in recent years. Accordingly, additional GAAP differences that existed prior to 2006 are not described below. Also, as accounting rules are further developed or changed over time, additional GAAP differences may arise in the future. Potential investors should consult with their own professional advisors for an understanding of the GAAP differences and how those differences might affect the financial information prepared under US GAAP included in the listing prospectus of Lawson Software. Conceptual differences US GAAP is more “rule-based” and gives more rigorous detailed guidance while IFRS provides more principle based standards with limited application guidance. Software revenue recognition Under US GAAP, there are specific requirements to analyze each component of multi- element arrangements to ensure that the corresponding revenues are appropriately recognized. The analysis for example needs to determine contracts where the implementation work is of such complexity that the license revenue may not be recognized immediately, but rather needs to be deferred. Further analysis includes the determination of vendor specific objective evidence (VSOE) of the fair value of delivered

and undelivered components included in the contract. The lack of VSOE for one or more components of the contractual arrangement may entail further deferrals of revenues, as may the existence of extended payments terms. IFRS is similar to US GAAP but is not prescriptive as to when to recognize revenue based on the arrangement as a whole compared to applying separate revenue recognition criteria to the individual deliverables. Goodwill Under US GAAP, goodwill is not amortized but is tested for impairment annually or more frequently if events or circumstances indicate that the asset might be impaired. The impairment testing is performed in a two-step test. In the first step, the fair value of the reporting unit is compared to the carrying value of the reporting unit including goodwill. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then the second step must be performed requiring the impairment be measured, and recorded, as the excess of recorded goodwill over the implied fair value of goodwill. The implied fair value of goodwill is calculated by allocating the fair value of the reporting unit to the assets and liabilities of the reporting unit. IFRS is similar to US GAAP as described above except for the annual impairment test for goodwill is performed in a one-step test as compared to the two-step test performed under US GAAP. In addition, under IFRS the impairment test is performed at the Cash Generating Unit level, which in some companies is different than the Reporting Unit level required under US GAAP. Reversal of Impairment Losses of Long Lived Assets Under US GAAP, impairment losses are permanent in nature and cannot be reversed. In certain circumstances under IFRS, previously recorded impairment losses related to tangible and intangible assets, excluding goodwill, may be reversed. Purchase Price Accounting Under US GAAP, the excess of the purchase price over the fair market value of tangible assets and liabilities is allocated first to identified intangibles with identifiable lives and any excess is allocated to goodwill. IFRS is similar to US GAAP in that the excess of purchase price over assets is considered goodwill; however under US GAAP more intangible assets may be identified that reduces the amount of goodwill recognized. Under IFRS intangible assets that do not meet the contractual-legal or separable criteria are not recognized as assets under IFRS. There are a number of other detailed differences related to purchase price accounting between IFRS and US GAAP; however they are related to specific facts and circumstances not encompassed in this discussion.

Purchase accounting – value of consideration Under US GAAP, the value of consideration is measured within a reasonable time frame before and after the date the terms of the acquisition was agreed and announced. Under IFRS, the value of consideration is measured at the date of acquisition, i.e. the date when the acquirer obtains control over the acquiree. Leases Under US GAAP, a lease is accounted for as a capital lease (financing lease) by the lessee if the lease satisfies one or more of the following criteria:

• The lease transfers ownership of the property to the lessee by the end of the lease term.

• The lease contains an option to purchase the leased property at a bargain price.

• the lease term is equal to or greater than 75 percent of the estimated economic life of the leased property.

• The present Value of the rental and other minimum lease payments equals or exceeds 90 percent of the fair value of the leased property less any investment tax credit retained by the lessor.

If none of the above criteria are met, the lessee accounts for the lease as an operating lease. In addition, US GAAP includes further prescriptive guidance on applying the above criteria to certain facts and circumstances which are largely based on the form of the contract. Under IFRS, a lease is classified as a financing lease by the lessee if it transfers substantially all risks and rewards incident to ownership to the lessee. A lease is classified as an operating lease by the lessee if it does not transfer substantially all the risks and rewards incident to ownership to the lessee. Under IFRS, whether a lease is a financing lease or an operating lease depends on substance of the transaction rather than the form of the contract. Accordingly, IFRS is less prescriptive than US GAAP and can result in differences in accounting for leases and sale leaseback transactions. Derivative Financial Instruments US GAAP and IFRS require that all derivative instruments, whether free-standing or embedded in non-derivative contracts, be recorded on the balance sheet as either an asset or liability measured at fair value. Changes in the fair values during a reporting period are recognized currently in earnings, unless specific hedge accounting criteria are met. For cash flow hedges and net investment hedges qualifying for hedge accounting, changes in the fair value of the derivative instrument are recognized directly in equity. As both US GAAP and IFRS are very prescriptive in regards to accounting for derivative

financial instruments, there are some minor differences related to specific facts and circumstances not encompassed in this discussion. Deferred income taxes Under US GAAP, deferred income tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred asset to the amount that is more likely than not to be realized. Deferred income tax assets and liabilities are measured based on tax rates enacted as of the balance sheet date. Under IFRS, deferred income tax assets carried forward are recognized to the extent that it is probable that future taxable income will be available against which the unused income tax losses can be utilized. Deferred income tax assets and liabilities are measured on tax rates enacted or substantively enacted as of the balance sheet date.