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After a return to positive operating territory in the fourth quarter of the previous year, in the 2004/2005 financial year SinnerSchrader completed every quarter with a positive result before interest, taxes and depreciation effects from acquisitions (EBITA). The EBITA itself also exhibited a growth trend over the last four quarters.

Overall, in 2004/2005 SinnerSchrader achieved an EBITA of just under € 0.2 million and thus improved its operating result by just under € 1.6 million in comparison to 2003/2004. The fact that almost 80 % of the rise in the (gross) revenue of € 2.0 million was able to impact on the operating result is due to the cost and efficiency improvements in all areas.

The gross margin, gross profit in ratio to (gross) revenue, rose by 3.2 percentage points from 29.6 % in the previous year to 32.8 % in the year of the report. On the one hand, this shows that the strong revenue growth in media business has not been bought with concessions on the margins. On the other hand, an improvement in the utilisation of the operating capacities by 2.5 percentage points and a further improvement of the daily rates effectively realised also took their effect. The positive development of the operating relations can be recognised in summary in the development of the (gross) revenue per productive full-time employee: with almost identical capacity (around 107 productive full-time employees in 2004/2005 in comparison to 108 in 2003/2004), the revenue per productive full-time employee rose by a good 17 % from € 114,000 in 2003/2004 to € 134,000 in the year of the report and, thus, by around one percentage point more than revenue.

The growth of € 1.0 million in the gross revenues was complemented by cost savings of € 0.1 million or just under € 0.2 million in the sales and administrative costs and supplemented by savings of € 0.2 million in the restructuring costs. Above all, the reduction in the number of dedicated sales employees in the wake of the introduction of the new organisational structure in April 2004 had a cost-reducing effect on sales costs. The removal of the one-off costs for the conception and implementation of this new organisational structure was a major contribution to reducing the administrative costs.

For the 2004/2005 financial year, too, restructuring costs in the extent of € 0.35 million occurred once again, however by € 0.2 million less than in the previous year. € 0.3 million of the restructuring costs in 2004/2005 were associated with the necessary reduction of costs on vacant rented property in Hamburg. A special right of notice as of 30 June 2006 for the Hamburg office, where only 50 % of over 6,000 square metres of office space can be used, is associated with a rental contract obligation to pay compensation in the amount of € 0.3 million. After the notice was issued in 2004/2005, the corresponding reserves had to be formed, which could not be accommodated earlier because of the specific structure of the office space and the relevant US-GAAP rules.

The remaining amount of € 0.05 million concerned reserve increases in association with labour court proceedings on personnel measures from previous financial years which had not yet been completed as of 31 August 2005. In the 2004/2005 financial year no new capacity adjustment measures were necessary. In the first half of the previous year SinnerSchrader had had to adjust personnel capacity downwards one last time and therefore had borne around € 0.55 million in restructuring costs in 2003/2004.

Research and development was the only field where SinnerSchrader spent more in 2004/2005 than in the previous year. Here, increased costs of just under € 0.05 million in comparison to the previous year were incurred. Also, the Interactive Software segment intensified its development efforts for reusable software components.

The other income and expenditure – mainly the dissolving of reserves and other income from outside the period – contributed a share of € 0.1 million to the rise in the EBITA.

In comparison to the previous year, the development of operating costs in the breakdown according to cost types shows that SinnerSchrader also achieved progress towards the goal of greater flexibility in the cost structure. Whereas personnel costs (without the relevant shares of restructuring costs of € 0.05 million in 2004/2005 and € 0.55 million in 2003/2004) did not greatly exceed the value of the previous year of € 7.8 million in the 2004/2005 financial year in spite of the revenue growth, the costs for bought-in services and goods (without media costs) rose by 25 % from a good € 0.6 million to € 0.8 million. Added to this is a clear increase in the media costs of around 42 %, which reflects the strong revenue growth in media services.

Depreciation and amortisation were further decreased by around 14 % to € 0.5 million in 2004/2005 as a result of the restrictive investment policy of the previous years. And at € 2.6 million in 2004/2005, even the other operating costs did not lead to any cost increases in comparison to the previous year (without restructuring elements of € 0.3 million in 2004/2005 and € 0.01 million in 2003/2004).

In spite of the pleasing overall development of the operating result, a satisfactory revenue return could not yet be achieved in the 2004/2005 financial year. The EBITA accounted only for 1.2 % of the (gross) revenue. This is largely due to the fact that in 2004/2005 SinnerSchrader still had to bear considerable expense for the oversized rented office space in Hamburg, which was further increased by the above-mentioned reserves for exercise of the special right of notice. The costs of office space including the formation of reserves and the depreciation of leasehold improvements amounted to a good € 1.8 million or 12.9 % of gross revenue in the 2004/2005 financial year. With adequately sized office space, which SinnerSchrader will only be able to achieve in the course of the next financial year after the special notice as of 30 June 2006, the rental costs will be approx. half of the current office space costs.

Since the vacant property costs are not allocated to the operating segments, but remain in the AG, the segment results give a better impression of the profitability already achieved: altogether, the operating segments achieved an operating revenue return (EBITA in ratio to the gross revenue with external customers) of 12.7 % in the 2004/2005 financial year, with Interactive Software earning 11.9 %, Interactive Marketing 8.5 % and Interactive Services 17.7 %.

After the disappearance of the depreciation effects from the acquisition of Netmatic in 2001, which occurred for the last time in the previous year in the form of amortisation of deferred compensation, the EBITA in 2004/2005 corresponded to the EBIT, i.e. the result before interest and taxes.