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The cash flow in the 2004/2005 financial year and the change in the Group’s asset and financial situation from 31 August 2004 to 31 August 2005 were characterised by the repayment of equity from the capital reserve to the shareholders in the amount of € 20.8 million and from the sale of a large part of the treasury stock at the same time.

The equity repayment was decided by the Annual General Meeting in January 2004 and was implemented in early November 2004 within the framework of a special dividend payment to shareholders. The cash flow statement shows the consumption of liquid funds in the amount of the special dividend in cash flow from financial activities. The funds needed for the special divided payment were provided by a sale of marketable securities with a corresponding effect on the cash flow from investment activities.

The corresponding reduction in equity had already been entered in the balance sheet of 31 August 2004 on the basis of the obligation to pay in return for entering liabilities vis-à-vis shareholders that came about in April 2004 with the entry of the Annual General Meeting’s decision. When the special dividend amount was transferred to the shareholders on 8 November 2004, the liability was met, the liquidity reserve reduced and thus the overall balance correspondingly depleted by a good € 20.8 million.

The sale of treasury stock on the stock exchange in the last two weeks before 8 November 2004 counteracted the outflow of funds and the balance sheet contraction resulting from the special dividend. After negotiations on taking over other companies in return for treasury stock could not be successfully completed by mid-October, 455,235 treasury stock shares were sold via the stock exchange at an average price of € 3.68 per share from the stock of 605,600 treasury stock shares on 31 August 2004. Furthermore, at various times in the 2004/2005 financial year, 19,018 shares were used to exercise employee options in return for payment of an average exercise price of € 2.76, which was exercised from the treasury stock. SinnerSchrader had acquired the shares via the stock exchange in previous years at an average price of € 1.53.

This resulted in an inflow of funds in the cash flow from financial activities in the amount of a total of € 1.7 million in the 2004/2005 financial year. In this amount, the sale of treasury stock also led to an increase in equity, which makes itself felt in a reduction of the withdrawal item for treasury stock by € 0.7 million and an increase in the capital reserve by € 1.0 million. Together with the increase in equity due to the annual profit, the equity rose by a total of € 2.3 million in the 2004/2005 financial year and as of 31 August 2005 reached a level of € 10.3 million in comparison to € 8.05 million as of 31 August 2004.

The cash flow from operating activity derived from the annual profit amounted to € 2.6 million in the 2004/2005 financial year. In addition to the depreciation and amortisation in the amount of € 0.5 million, a reduction of around € 0.4 million in tying up of funds in the asset items “accounts receivable” and “unbilled revenues” and a tax rebate of around € 0.4 million, it was mainly the fact that not all items with an impact on expenditure had become due for payment by 31 August 2005 and thus brought about an increase in the current liabilities by jointly around € 1.0 million, which resulted in cash inflow from operating activity well above the annual profit.

The investments in fixed assets in the 2004/2005 financial year amounted to € 0.2 million and mainly concerned computer software and hardware. Therefore, in comparison to the previous year just under € 0.1 million more were invested, which is in particular due to building up own computer capacity to operate customer websites. As in the previous years, however, the investment volume in 2004/2005 was well below the level of depreciations. In addition to restrictive investment behaviour, it can be seen that depreciation and amortisation in 2004/2005 were still marked by the leasehold improvements to the office space in Hamburg, which were not countered by alternative or new investments. Accordingly, the value of the Group’s fixed assets fell further from € 1.3 million on 31 August 2004 to € 1.0 million on 31 August 2005.

In summary, the asset and financial situation of the SinnerSchrader Group as of 31 August 2005 is still extremely sound, in spite of the considerable outflow of liquid funds and equity resulting from the repayment to the shareholders. Of the total assets of € 13.7 million, € 10.6 million or around 77 % were accounted for by the liquidity reserve from liquid funds and marketable securities. During the year and as of 31 August 2005 the funds were still invested in time deposits and money market and similar participation certificates with a good credit rating and an average tied-in interest period of no longer than three months.

As of 31 August 2005 75 % of the assets were financed by equity. As in previous years, the balance sheet does not contain any financial debts.