Unilog Integrata Training AG Integrata Training AG sharesare quoted on the Baden-Württemberg Stock...

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Annual report 2004

Unilog Integrata Training AG

Unilog Integrata Training AG shares are quoted on the Baden-WürttembergStock Exchange’s unofficial market in Stuttgart as well as in Frankfurt, Munichand Berlin under the securities identification number (WKN) 621310/ISIN DE 0006213101.

For more information, please contact our investor relations officer:Elmar ProbstUnilog Integrata Training AGSchleifmühleweg 68, D-72070 TübingenPhone +49 (0)7071/409-269, Fax +49 (0)7071/409-216e-mail: [email protected]

This annual report and the reports for previous years can be downloaded in PDFformat at www.unilog-integrata.de/training. The English version of the annualreport can also be downloaded from the same address. A printed version ofthe English language report is not available.

1

ContentForeword by the Board of Management 2

Qualification is a case of... 4

The figuresFinancial highlights: 7 year period 8

Key company performance figures 10

Annual financial statements 12

Profit and loss account 14

Notes to the annual financial statementsfor the business year 2004 16

Fixed-asset movement schedule 24

Management report for the business year 2004 26

Auditor’s opinion 37

Report by the Supervisory Board 38

Legal 40

2

Foreword by the Board of Management

To all our clients,business partnersand shareholders,

40 years of experience on the marketfor IT and qualification services – animpressive milestone in an industryrenowned for its short-term innova-tions and continuous processes oftechnological change, and an achie-vement which few other companies inour sector can match.

But of course even an establishedcompany, many of whose customershave been with it for a great manyyears, is dependent on the overalleconomic climate and demand on itschosen market. After a number ofyears of exponential growth Unilog Integrata Training AG is undoubtedlysuffering from a widespread reluctanceto invest in the qualification of ma-nagement and personnel. Accordingto Michael E. Porter, Professor at theHarvard Business School and authorof “Competitive Strategy”, externalforces such as these apply to allcompetitors, however. Michael E. Porterbelieves that what counts is the abilityof an enterprise to deal with these influences – and that certainly applies tous. It would therefore be tantamountto business irresponsibility to put ourtrust in a silver lining at the end of thecurrent economic malaise and simplyto assume that success will, as it were,turn up on its own when the time is ripe.We have looked forward throughout2004, consistently pressed aheadwith the change processes initiated inprevious periods, and have taken new

bearings which we believe offer thecompany, its employees and share-holders a real perspective for the future.

I have been responsible for this tasksince October 2004. My appointmentas a member of the Board of Manage-ment should not be interpreted as avote of no confidence in the company’sprevious long-standing board membersGerhard Wächter and Dr. Hans GünterHeilmann. I would like to take thisopportunity to thank – and expressthe respect in which I hold – both formerboard members, and I am especiallyglad that Dr. Heilmann will continueto serve the company in a high-profilecapacity. One of the successes of bothmen was the initial public offering ofthe company in 1997 – an event whichturned Unilog Integrata Training AGinto the first qualification provider inGermany to decide to “go public”. Theoutstanding results achieved by thecompany up to the year 2002 – aswell as its continuing positive liquidi-ty – provide ample proof of the valueof the previous Board’s work.

Nevertheless, it became importantduring the course of the previousfiscal year to consider how the com-pany could be given new impetus andhow processes could be optimizedand redesigned in order to return tothe path of profitability as quickly as

3

possible. There is nothing unusual incombining changes with new methodsand new people to provide employees –whose support is essential to achievethe company’s aims – with new orientation. Which explains why the Supervisory Board has entrusted theresponsibility which goes hand inhand with this difficult task to me. Iwill continue to exercise businessresponsibility in France and am amember of the Executive Committeeof Unilog S.A. The Group has pursuedits success story in Europe in 2004and reported an unusually high rateof sales growth for the industry – upby 10.8 percent to 657.4 million euros.As the success of the Unilog Group is based on the European-wide ex-ploitation of synergy effects across itsthree business lines I intend to makeexplicit use of my international expe-rience on behalf of Unilog IntegrataTraining AG. This strength will be consistently used on behalf of the Business Line Training in Germany toensure that everything possible isdone for the restructuring of the com-pany and an improvement in its salesand revenue position. I will act withthe management in the best interestsof all our shareholders and, naturally,of our employees whose jobs mustnow be secured after the inevitableshedding of personnel in our recentendeavors to cut costs.

The focus of our activities will of courseremain our clients. They are entitledto continue to expect optimum con-sulting and support as well as themost appropriate solutions to theirqualification needs tailored from ourfull service portfolio of standardizedand customized offerings. We are wellknown for the quality of our services

and must continue to pursue with vigor our objective of building evencloser long-term relationships withour clients on this basis. We intend toconcentrate our energies in this areaand pool existing resources even more effectively. We offer outstandingproducts and services and now havethe opportunity to secure and expandour position in a market which is in themidst of a process of consolidation.In order to achieve this objective wemust exploit the synergies from colla-boration with our German affiliateswhich represent the ManagementConsulting and System IntegrationBusiness Lines more intensively thanwe have done in the past.

We have motivated and competentemployees whose unwavering commit-ment to the company is an essentialelement of our strategy. Together weare working on our ambitious aim ofleading Unilog Integrata Training AGback to success. It would be daring in-deed to make a forecast for 2005 and2006 at this stage, however. Viewingthe present in the context of the pastand the future, one thing becomesabsolutely clear: the best way to pre-pare for the future is to combine thepositive elements of the company asit is with new ideas and energy. Nowis the time to consciously look to the future and to continue supportingus – as clients, business partners orshareholders – with your trust on thejourney ahead of us.

Martin LöchnerBoard of Management

4

Qualification is a case of...

Strong innovative ability and flexibilityare the hallmarks of long-term marketplayers. In 1965, just one year afterthe company was founded, there werea mere 1,600 data-processing systemsin operation in Germany. Seven yearslater this figure had increased to justunder 11,000 computer installations.Today, around two thirds of all privatehouseholds have their own PC or note-book. A study published by the GermanFederal Statistical Office in 2002 re-vealed that 71 percent of companiesdeployed computers for their workprocesses; 62 percent also used theinternet. Information and communica-tions technology is now an unspectac-ular everyday reality and most businessprocesses are no longer conceivablewithout IT. It goes without saying, ofcourse, that qualification requirementshave also changed accordingly overthe years.

We are constantly updating the topicsand know-how we offer our clients and –with a program of 800 topics in the formof public and in-house seminars – wenow provide the most comprehensive

range of continuing professional de-velopment in Germany. In 2004 alone,for example, we added 64 new semi-nars to our program – and not only inthe IT field, but also in the increasinglyimportant qualification area of per-sonnel and organization development.

Innovation does not stop at definingnew topics, however, it also includesthe design of new training proposals,services, and delivery channels. Theoptimum fit between business objecti-ves and employee know-how is a de-cisive factor in a company’s success.Bearing this in mind we offer servicesranging from personnel developmentconsultancy through to training pro-cess outsourcing (TPO) – options whichenable clients to transfer either specificaspects or all the activities involvedin long-term qualification processesto Unilog Integrata Training AG. In addition to traditional trainer-basedseminars our program also incorporatese-training components. Diverse coa-ching methods enable participants tosustain and consolidate new learnedmaterial.

Over 40 years in the market – more than 200 successfully completed customizedtraining solutions – an established network of around 1,200 trainers. Theseare just a few of the factors which demonstrate a wealth of experience whichmakes us the ideal partner to meet the qualification needs of our clients.

Innovation

Experience

5

Our clients are from a range of differentsectors of business and industry. Wehave proven our business and industryexpertise and successively enhancedour know-how over a number of years.We are now going a step further and,for the first time, are focusing a cam-paign specifically tailored for a parti-cular industry: Automotive

New demand realities and a competitiveenvironment have forced the automo-tive industry to embark on a processof profound change. This process invol-ves the optimization of development,production, quality, marketing andsales processes which also impactsmaller and medium-sized component

suppliers, IT and financial serviceproviders, and dealer organizations.As a result, the competence profilesof many employees will have to beadapted to take account of these newdevelopments.

We have responded by putting togethera package of apt qualification servicesespecially designed for the automotiveindustry – a package which combinesall the elements of our full service offering, and which draws on our collaborative relationship with coope-ration partners and trainers who areparticularly familiar with the idiosyn-cratic features of this industry.

Business and

industry expertise

6

Qualification is also a case of...

Qualification measures are always intended to contribute to achieving specificcorporate objectives. Relying on a cooperative relationship means trust. Knowingthat the partner will provide competent consulting and optimum support – intime and in budget. Whether considering the selection of suitable publicseminars or the design of customized solutions, as a qualification partner ourcontinuing development and knowledge-building activities often provide uswith deep insights into our clients’ strategies and processes. This in turn implies trust in our capabilities, know-how and our industry-specific expertise.

• ADIDAS-Salomon

• Allianz

• AXA

• Bundesamt für Wehrtechnik und Beschaffung

• BSH Bosch-Siemens Hausgeräte

• Commerzbank

• DaimlerChrysler

• Deutsche Börse

• Deutsche Bundesbank

• Deutsche Lufthansa

• Deutsche Post

• Deutsche Telekom

• DZ Bank

• FinanzIT GmbH

• GAD eG für Banken

• Henkel

• HUK-COBURG AG Versicherungs-gruppe

• LVM Landwirtschaftl. Versicherungs-verein Münster a.G.

• RCI Banque Deutschland

• SEW-EURODRIVE

• Stadt Leipzig

• Thyssen-Krupp

• Vodafone D2

• Volkswagen AG

• ZF Sachs

We would like to thank our clients, including those referred to specificallybelow, for placing their trust in us:

Trust

The figures 2004

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8

Unilog Integrata Training AG Financial Highlights: 7 year period

2004 1

Sales in million EUR 26.3

No. of employees 161

Expenditure for research and development in million EUR 1.9

Profit or loss on ordinary activities in million EUR -3.2

Net income in million EUR -3.2

Cash-Flow in million EUR -1.9

Capital in million EUR 4.3

Capital as a percentage of total assets 42.1%

Total assets in million EUR 10.2

Percentage return on sales before tax -12.1%

Income-to-equity ratio (before corporation tax) 2 -42.1%

Result according to DFVA/SG in million EUR -2.0

No. of shares in thousands 600

Result according to DFVA/SG per share in EUR -3.38

Result according to DFVA/SG per share in EUR (excluding own shares) -3.46

Dividend per share in EUR

Bonus per share in EUR

1 there was no group of companies in these business years: figures are from the individual financial statement of Unilog Integrata Training AG, Germany2 calculated on the basis of the shareholders’ equity disclosed last year minus dividends

9

2003 1 2002 2001 2000 1999 1998

31.2 51.4 55.6 47.1 39.3 32,8

189 222 265 214 213 207

2.3 2.7 2.5 2.5 2.0 2.0

-1.9 1.5 6.0 5.8 3.3 2.1

-1.7 0.8 3.9 3.0 1.6 1.0

0.4 5.3 6.8 4.9 3.1 2.6

7.5 9.6 9.5 6.4 4.0 2.9

55.3% 53.3% 43.9% 36.9% 31.9% 27.6%

13.6 18.1 21.6 17.5 12.5 10.6

-6.0% 2.9% 10.8% 12.3% 8.3% 6.4%

-20.1% 16.9% 103.1% 165.5% 134.0% 109.3%

-1.2 0.7 3.8 3.0 1.5 1.0

600 600 600 600 600 600

-1.97 1.12 6.40 4.92 2.56 1.69

-2.02 1.14 6.56 5.04 2.62 1.69

0.15 1.00 0.92 0.87 0.82

0.15

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Key company performance figures

Funds and Cash-Flow Statement 2004

2004KEUR

2003KEUR

I. Operative activities

1. Net loss -3,225.6 -1,728.1

2. Depreciation on fixed and financial assets 1,467.2 2,274.3

3. Reductions to long-term reserves -170.1 -133.1

4. Cash flow -1,928.5 413.1

5. Losses on disposal of fixed assets 13.1 11.8

6. Payments received from the sale of fixed assets 4.3 1.6

7. Accounts receivable trade 864.5 1.272.6

8. Accounts due from affiliated companies 262.7 -153.0

9. Other assets and prepaid expenses -132.7 438.8

10. Reserves 184.0 -361.1

11. Accounts due to associated companies -22.3 53.5

12. Advance payments 176.5 -470.1

13. Accounts payable trade -342.2 -698.4

14. Other liabilities 5.8 -238.9

15. Outflow (pr.y. inflow) of funds from current business activities -914.8 269.9

II. Investment activities

16. Investments in intangible and fixed assets -599.9 -781.9

17. Outflow of funds as a result of investment activities -599.9 -781.9

III. Financial activities

18. Investments in own shares -3.0 -7.3

19. Dividends 0.0 -87.8

20. Outflow of funds as a result of financial activities (dividends) -3.0 -95.1

IV. Changes in financial resources affecting payments (balance I-III) -1,517.7 -607.1

21. Financial resources at the beginning of the period 7,586.2 8,193.3

22. Financial resources at the end of the period 6,068.5 7,586.2

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DVFA/SG Results

2004KEUR

2003KEUR

Net result, according to P/L statement -3,225.6 -1,728.1

Change in deferred taxes (tax rate 39.1%)

accumulated deficit brought forward 1,162.9 559.4

reserves for part-time employment of pensioners -12.0 -0.7

for anticipated losses -13.2 -23.5

for provision for deferred repairs and maintenance -39.1 13.2

for reorganization 67.5 0.0

other changes 31.8 0.0

DVFA/SG results in KEUR -2,027.7 -1,179.7

DVFA/SG results per share in EUR

(excluding own shares/

number of shares = 585,260) -3.46 -2.02

DVFA/SG results per share in EUR

(including own shares/

number of shares = 600,000) -3.38 -1.97

Earning Ratios

2004%

2003%

Profit sales ratio -12.3 -5.5

DVFA/SG profit sales ratio -7.7 -3.8

Return on equity* -42.9 -18.7

DVFA/SG return on equity* -26.9 -12.8

All statements after taxes* Based of the shareholders’ equity disclosed last year

minus dividends

50

45

40

35

30

25

20January 2004 April July October January 2005

50

45

40

35

30

25

20

Unilog Integrata Training Stock – Development since 01/2004 (in Euros)

12

Annual financial statements at December 31, 2004

Assets

2004KEUR

2004KEUR

2003KEUR

A. Fixed Assets

I. Intangible assets

1. Licences and similar rights 541.4 852.3

2. Goodwill 576.0 674.9

1,117.4 1,527.2

II. Tangible fixed assets

1. Land and leasehold rights and buildings

including buildings on third-party land 27.2 76.0

2. Other fixtures and fittings, tools and equipment 436.2 775.4

463.4 851.4

B. Current Assets

I. Accounts receivable and other assets

1. Accounts receivable trade 1,462.6 2,327.1

2. Accounts due from affiliated companies 3,188.8 4,451.4

3. Other assets 482.3 316.9

5,133.7 7,095.4

II. Securities

Own shares 353.7 437.8

III. Cash on hand and banks 3,068.5 3,586.2

C. Prepaid Expenses 65.7 98.4

10,202.4 13,596.4

Balance sheet at December 31, 2004Unilog Integrata Training AG, Tübingen

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Liabilities

2004KEUR

2004KEUR

2003KEUR

A. Capital

I. Capital subscribed 1,536.0 1,536.0

II. Capital reserves 1,020.5 1,020.5

III. Earning reserves

1. Reserves for own shares 353.7 437.8

2. Other earnings reserves 6,185.0 6,188.1

IV. Retained losses -4,795.6 -1,657.1

4,299.6 7,525.3

B. Accrued Liabilities

1. Pension reserves 288.2 279.7

2. Tax reserves 227.5 121.8

3. Other reserves 2,585.6 2,685.9

3,101.3 3,087.4

C. Liabilities

1. Advance payments received on seminars 1,307.8 1,131.3

2. Trade accounts payable 965.4 1,307.6

3. Accounts due to affiliated companies 103.7 126.0

4. Other liabilities 424.6 418.8

2,801.5 2,983.7

10,202.4 13,596.4

14

Profit and loss account for the periodJanuary 1 to December 31, 2004Unilog Integrata Training AG, Tübingen

1. Sales

2. Other operating income

3. a) Cost of purchased material, supplies, services

b)External services

4. Personnel costs

4. a)Wages and salaries

4. b)Social insurance contributions and expenses for old age security

5. a) Depreciations on intangible and fixed assets

5. b) Depreciations on current assets in excess of normal depreciation

6. Other operating expenses

7. Other interest receivable and similar income

8. Depreciations on financial assets and current investments

9. Interest and similar expenses

10. Profit or loss on ordinary activities

11. Income taxes

12. Other taxes

13. Net loss

14. Accumulated losses brought forward

15. Withdrawal from own shares

16. Retained losses

15

2004KEUR

2004KEUR

2003KEUR

26,266.6 31,188.3

1,199.2 1,319.6

27,465.8 32,507.9

810.5 1,001.3

10,540.6 11,960.0

11,351.1 12,961.3

16,114.7 19,546.6

7,507.0 7,680.6

1,440.6 1,652.1

8,947.6 9,332.7

1,380.1 2,037.7

0.0 138.3

1,380.1 2,176.0

8,996.1 9,899.5

164.2 237.1

87.1 236.6

33.8 0.4

-3,165.8 -1,861.5

60.2 -134.9

-0.4 1.5

3,225.6 1,728.1

1,657.1 0.0

87.1 71.0

4,795.6 1,657.1

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Notes for the business year 2004Unilog Integrata Training AG, Tübingen

I. Preliminary remarks

The annual financial statements ofUnilog Integrata Training AG for thebusiness year from January 1, 2004 toDecember 31, 2004 were prepared according to the rules of the GermanCommercial Code and of the GermanStock Corporation Law (AktG). Thecost summary method is used for theprofit and loss statement.

Any differences in the figures presentedin the annual financial statementsand the management report are dueto rounding to the nearest decimalplace.

The Tübingen-based Unilog HoldingGmbH was the majority shareholderof Unilog Integrata Training AG at theend of 2004, holding 82.099% of thecompany’s shares (84.167% if thecompany’s own shares are deductedfrom the total number of shares).

In its letter dated August 29, 1996,Unilog Holding GmbH notified its ma-jority shareholding to Unilog IntegrataTraining AG pursuant to Section 20 ofthe German Stock Corporation Law.

The primary parent company whichpresents exempting group financialstatements for the largest group of con-solidated companies is UNILOG SA,which has its registered office in Paris/France. These group financial state-ments, including the auditor’s opinion,are published in German in the FederalGazette and are available from thecompany’s registered office in Parisand from Unilog Holding GmbH in Tübingen.

II. Information regarding the accountingand valuation methods

The intangible and tangible assetsare reported at the value on acquisi-tion or production costs, reduced byscheduled and non-scheduled depre-ciation. Scheduled depreciation ofassets is charged partly according tothe straight-line method and partlyaccording to the declining balancemethod at rates which are also allowedaccording to tax law. The major ele-ments relating to industrial propertyrights and similar rights are amortizedover a period of 2 to 6 years. Goodwillis written off over a period of 15 years.Depreciation is charged to other fixedassets over a useful life of between 3 and 15 years. Low value items arewritten off in full in the year of acqui-sition. Depreciation is charged precise-ly every month on a pro rata temporisbasis.

Accounts receivable and other assetsare valued at nominal value. Appro-priate value adjustments were madeto accounts receivable to secure spe-cific risks as well as the general riskof nonpayment.

The pension reserves have been setup in accordance with actuarial prin-ciples using the reference tables ofDr. Heubeck for 1998.

Other reserves to the amount ofthe anticipated claims have been setup for recognizable risks and contin-gent liabilities. Reserves for partialretirement (part-time employment ofold-age pensioners) were formed in accordance with actuarial principlesbased on the statement issued by theGerman Institute of Chartered Accoun-tants – RS HFA 3.

Liabilities are valuated at the amountpayable.

Insofar as the annual financial state-ments contain items which are basedupon amounts in foreign currencies,these are converted to euros at eitherthe historical rates or, for assets, atthe lower rates or, for liabilities, atthe higher rates effective on reportingdate.

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III. Notes on the balance sheet

AssetsThe movement of the fixed asset itemscan be seen in the appendix to thenotes entitled “Fixed-assets movementschedule” (cf. Appendix to notes).

Goodwill arose on the purchase of the ITZtraining division in the business year2001. This goodwill will be written offaccording to the straight-line methodover 15 years. Amortization charges inthe business year 2004 amounted toKEUR 17 and the book value as at De-cember 31, 2004 was thus KEUR 187.50.Goodwill also arose from the hiving-off of Unilog Holding GmbH in 1994.This goodwill will also be amortizedover its estimated useful life of 15years using the straight-line method.Annual amortization charges amountto KEUR 81,80 and the remainingbook value as at December 31, 2004is KEUR 388.60.

Depreciation charges on low valueitems amount to KEUR 42.40.

Accounts receivable and other assetsThe receivables as at December 31,2003 and December 31, 2004 maturewithin one year.

The receivables due from affiliatedcompanies mainly result from a short-term loan granted to Unilog HoldingGmbH which is secured by a letter ofcomfort issued by UNILOG SA. Theserepresent other accounts receivable.

Own sharesA resolution adopted by the sharehol-ders’ meeting on May 18, 2004 autho-rized Unilog Integrata Training AG toacquire own shares, in the period upto November 18, 2005, up to a valueof ten percent of the company’s sharecapital and to sell these shares, inspecific circumstances, to the exclu-sion of the subscription rights ofexisting shareholders. The Board ofManagement was also authorized, withthe approval of the Supervisory Board,to withdraw own shares acquired with-out requiring a further resolution fromthe shareholders’ meeting.

In 1999 Unilog Integrata Training AGacquired 14,350 own shares at a priceranging between EUR 31.50 and EUR38.00 equal to 2.39 % of the compa-ny's share capital and valued at EUR36,736.00 (EUR 2.56 per share). Anadditional 290 shares were acquiredin June 2003 at a price ranging bet-ween EUR 24.87 and EUR 25.20. Afurther 100 shares were acquired inJanuary 2004 at a price of EUR 30.35.

Own shares acquired in the period1999 to 2004 were posted at their value on the balance sheet date (EUR24.00) disclosing a value of KEUR353.7.

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Subscribed Capital

Unilog Integrata Training AG’s sub-scribed capital amounted to EUR1,536,000 on the reporting date. Themajority (82.099 %) is held by UnilogHolding GmbH, Tübingen.

The share capital is divided into600,000 no-par bearer shares.

Pursuant to the memorandum and articles of association, the Board ofManagement is authorized, with theapproval of the Supervisory Board, toincrease the company’s share capital,on one or several occasions, to a totalof EUR 230,400 by issuing new bearershares against cash contributions byMay 18, 2009 (approved capital I) andthereby, in accordance with Section 5(4) of the memorandum to determinethe time from which such shares par-ticipate in profits on a date which deviates from that stipulated by law.The Board of Management is authorized,with the approval of the SupervisoryBoard, to stipulate the conditions underwhich shares are issued in relation toeach capital increase.

The Board of Management is also authorized, with the approval of theSupervisory Board, to increase thecompany’s share capital, on one or several occasions, to a total ofEUR 384,000 by issuing new bearer shares against cash or non-cash con-tributions by May 18, 2009 (approvedcapital II) and thereby, in accordancewith Section 5 (4) of the memorandumto determine the time from which suchshares participate in profits on a datewhich deviates from that stipulatedby law. The Board of Management isauthorized, with the approval of the

Supervisory Board, to exclude share-holders’ statutory subscription rightsin the event of capital increases fornon-cash contributions in the contextof company mergers or in the eventof the acquisition of participatinginterests or companies and is likewiseauthorized to specify the further de-tails relating to the capital increaseand the conditions regarding the issue of shares.

The Board of Management is finallyauthorized, with the approval of theSupervisory Board, to increase thecompany’s share capital, on one orseveral occasions, to a total of EUR153,600 by issuing new bearer sharesagainst cash by May 18, 2009 (approvedcapital III) and thereby, in accordancewith Section 5 (4) of the memorandumto determine the time from whichsuch shares participate in profits on adate which deviates from that stipulatedby law. The Board of Management isauthorized, with the approval of theSupervisory Board, to exclude share-holders’ subscription rights providedthat the newly issued shares accountfor 10% or less of the company’s sharecapital at the time a resolution is takenby the Board of Management to exer-cise this authority and provided thatthe issue price is not significantlylower than the stock market tradingprice of other company shares of thesame class at the time such issueamount is decided by the Board ofManagement. The reference value forthe stock market trading price asreferred to in the above provisions isthe average value of the volume-weighted prices of the company’sshares trading on the unofficial

market on the FWB Frankfurt StockMarket during the last five days of tra-ding prior to stipulation of the issueamount by the Board of Management.

Capital reservesThe capital reserves result from theissue of the capital stock for a contri-bution in kind within the frameworkof the transformation of the companyfrom the legal form of a Kommandit-gesellschaft to an Aktiengesellschaftin 1994.

No additions or withdrawals were made to or from the capital reservesin the business year 2004.

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Earnings reservesEarnings reserves developed as follows during the business year:

KEUR KEUR

Reserve for own shares, Jan. 1, 2004 437.8

Increase owing to acquisition of own shares in the business year 2004 3.0

Withdrawal owing to devaluation of own shares in assets -87.1

Reserve for own shares, Dec. 31, 2004 353.7

Other earnings reserves Jan. 1, 2004 6,188.1

Withdrawal owing to acquisition of own shares in the business year 2004 (see above) -3.0

Other earnings reserves Dec. 31, 2004 6,185.1

Earnings reserves Dec. 31, 2004 6,538.8

Retained earnings/lossesThe retained earnings/losses disclosed in the annual financial statements ofUnilog Integrata Training AG developed as follows:

KEUR

Losses brought forward Jan. 1, 2004 -1,657.1

Net loss for the year 2004 -3,225.6

./. Withdrawals from reserves for own shares 87.1

Retained losses, Dec. 31, 2004 -4,795.6

20


Other reservesThe other reserves in the annual financial statements of Unilog Integrata Training AG are composed of the following:

Pension reservesThe pension reserves have been setup according to the rules of Section 6a of the German Income Tax Act(EStG) and in accordance with actuarial

principles based on the reference tables of Dr. Heubeck for 1998 at anassumed rate of interest of 6.0 %.

Item

Jan. 1, 2004KEUR

Use Release

KEUR

UR Allocation

KEURDec. 31, 2004

KEUR

Reserves for partial retirement 232.5 193.2 U 14.6 53.9

Holiday 30.0 30.0 U 32.6 32.6

Overtime 40.9 40.9 U 78.0 78.0

Employers’ liability insurance association etc. 138.0 102.3 U 101.4 101.4

35.7 R

Other personnel costs 128.3 53.7 U 31.2 31.2

74.6 R

Legal, consultancy and audit costs 87.3 69.4 U 80.3 80.3

17.9 R

Deferred repairs and maintainance 250.0 100.0 U 0.0 150.0

Outstanding invoices 932.7 755.7 U 748.9 885.4

40.5 R

Other 846.2 481.1 U 945.3 1,172.8

137.6 R

1,826.3 U

2,685.9 306.3 R 2,032.3 2,585.6

in %

Public seminars 51

In-house seminars 31

Qualification projects 17

Other services 1

100

21

LiabilitiesThe liabilities amount to KEUR 2,801.5as at December 31, 2004 and, as inthe previous year, are due within oneyear. The other liabilities include lia-bilities from taxes amounting to KEUR149.60 (KEUR 131.50 in the previousyear) as well as liabilities from socialsecurity amounting to KEUR 205.60(KEUR 206.50 in the previous year).

IV. Notes on the profit and lossaccount

SalesSales are achieved almost exclusivelyin Germany. Total sales reported byUnilog Integrata Training AG in 2004amounted to KEUR 26,266.60.

The total sales reported in the annualfinancial statements are distributedbetween public seminars, in-houseseminars and qualification projects.

The percentage breakdown is as follows:

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Other operating incomeOther operating income includes in-come relating to other accounting periods arising from the release ofreserves amounting to KEUR 306.3.Other significant items included under other operating income are rental income from the subletting ofseminar rooms and the invoicing ofentertainment allowances.

Cost of raw materials, supplies andpurchased servicesThese costs include entertainmentcosts for seminar participants incur-red during customer seminars.

Personnel expensesThe personnel expenses in the annualfinancial statements include pensioncosts to the amount of KEUR 8.50(previous year KEUR 13).

The average number of staffed em-ployed by the group in 2004 was 161(189 in the previous year). The head-count on December 31, 2004 was 154.

UNILOG SA, Paris awarded stock op-tions to the employees of Unilog Inte-grata Training AG. The stock optionswill be issued in several phases andissue is contingent on conditions(corporate goals, membership of thecorporate group). The stock optionswill be issued during a specific timeperiod. The expenditure for this pro-gram will be borne by UNILOG SA, Paris.

Expenses unrelated to accounting periodExpenses include KEUR 158.20 notidentified with the accounting period.

Other operating expensesThis item includes IT, building, publicrelations, offices and communications,entertainment expenses, supplemen-tary personnel costs and expensesrelating to the services received fromUnilog Holding GmbH.

Depreciation of fixed assetsDepreciation amounts include extra-ordinary depreciation of KEUR 17,20.

Write-offs on financial assets andmarketable securitiesThis item includes the devaluation ofown shares by KEUR 87.10.

Interest incomeThe annual financial statements ofUnilog Integrata Training AG includeinterest income of KEUR 113.5 fromUnilog Holding GmbH and KEUR 50.7interest income from monies investedin fixed-term deposits.

Withdrawals from reserves for ownsharesWithdrawals from reserves for ownshares results from the devaluation ofown shares to the value of KEUR 87.10.

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V. Information about the company'sexecutive bodies

Members of the Board of Management:Members of the Board of Managementin the business year under review:

• Didier Herrmann, Courbevoie, France,from January 1, 2004 to December 31,2004Businessman

• Martin Löchner, Munich (Spokes-man), as of October 1, 2004Masters Degree in Business Admi-nistration

• Gerhard Wächter, Neufahrn (Spokes-man), until October 1, 2004Graduate computer scientist(Diplom-Informatiker)Responsible for sales and marketing

• Dr. Hans Günter Heilmann, Tübingen,until October 1, 2004Graduate physicist (Diplom-Physiker)Responsible for administration, human resources, production andproduct management

Members of the Supervisory Board:Members of the Supervisory Board inthe business year under review:

• Gérard Philippot, Le Raincy (Chairman)Président du Directoire of UNILOG SA,Paris

• Dr. Christoph Binge, Berlin (Vice-Chairman)Lawyer and Notary

• Martin Hornbach, Neustadt/Wein-straßeExecutive Management

• Diplom-Kaufmann (MBA) Herbert-Franz Chilcott, ParisDirecteur Général (CEO), Head ofInternational Corporate Controlling,UNILOG SA, Paris

• Sonja Fell, MBA, ParisDirecteur au Développement(Corporate Development Director),Unilog SA, Paris

• Dipl.-Ing. Peter Kirn (graduate engineer), BöblingenExecutive Consultant

Total earnings of the Board of Mana-gement and of the Supervisory Board

The earnings of the Supervisory Boardamount to KEUR 80.00; the earningsof the Board of Management amountto KEUR 299.30.

Pension reserves amounting to KEUR140 were formed for former membersof the company’s executive bodies.Relating to particulars about earningsof one former member of the compa-ny’s executive bodies there is madeuse of the escape clause of Section286 (4) HGB.

VI.Contingencies and other financialobligations

The other financial obligations essen-tially concern obligations from leasingand tenancy agreements. They are ex-pected to amount to KEUR 3,150.70 in2005. Liabilities due to affiliated com-panies amounted to KEUR 2,309.90.Similar liabilities will arise in subse-quent years.

VII. Carrying forward of retained losses

The retained losses of KEUR 4,795.60disclosed in the annual financial state-ments of Unilog Integrata Training AGas at December 31, 2004 will be carried forward.

Tübingen, March 15, 2005


The Board of Management

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Fixed-assets movement scheduleof Unilog Integrata Training AG, Tübingenfor the period January 1 to December 31, 2004

Purchase cost KEUR

Fixed AssetsJan. 1, 2004 Additions Disposals Dec. 31, 2004

I. Intangible assets

1. Licences and similar rights 5,931.3 420.3 168.6 6,183.0

2. Goodwill 1,482.7 0.0 0.0 1,482.7

7,414.0 420.3 168.6 7,665.7

II. Tangible fixed assets

1. Land and leasehold rights and buildings

including buildings on third-party land 244.7 0.0 32.3 212.4

2. Other fixtures and fittings,

tools and equipment 4,649.3 179.6 190.0 4,638.9

4,894.0 179.6 222.3 4,851.3

12,308.0 599.9 390.9 12,517.0

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Accumulated depreciation KEUR Net book values KEUR

Jan. 1, 2004 Annual Disposals Dec. 31, 2004 Dec. 31, 2004 Dec. 31, 2003

5,079.0 728.8 166.2 5,641.6 541.4 852.3

807.8 98.9 0.0 906.7 576.0 674.9

5,886.8 827.7 166.2 6,548.3 1,117.4 1,527.2

168.7 39.3 22.8 185.2 27.2 76.0

3,873.9 513.1 184.3 4,202.7 436.2 775.4

4,042.6 552.4 207.1 4,387.9 463.4 851.4

9,929.4 1,380.1 373.3 10,936.2 1,580.8 2,378.6

depreciation

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Management report for the business year 2004Unilog Integrata Training AG

1. General framework, business trends

The continuing qualification marketwas marked by a process of consoli-dation in the year 2004. This wasundoubtedly due to the contractingvolume of business on the marketwhich has hit suppliers of IT trainingin particular since 2002. Insolvencyproceedings and company sales, re-newed redundancies and restructu-ring were all typical for the industry inthe business year under review andconfirm the process of market adjust-ment we predicted in our 2003 annualreport.

The entire industry suffered from thefailure of any signs of an upturn in thebusiness cycle – companies and go-vernment agencies continued to takea cautious approach to the continuingprofessional development of theirmanagement and staff. The situationwas exacerbated by cuts in the publicsubsidies available for retraining andcontinuing qualification activities(although thanks to its market strategythis does not affect Unilog IntegrataTraining AG).

15 of the 20 firms cited in the Lünen-donk list of “leading providers ofcontinuing professional qualificationin Germany” published in May 2004reported average drops in sales forthe year 2003 of 10 percent. Leadingqualification providers also expectedsales revenues in 2004 to fall by anaverage of 5 percent. Whether thisestimate is realistic or possibly over-optimistic as far as the IT trainingmarket is concerned cannot be finallyjudged at the time this report goes topress. The forecasts published bymarket research institutes such as

IDC and the META Group are veryinconsistent in this respect.

In the current difficult economicclimate in which companies are subject to relentless pressure oncosts, firms are bound to continue toexploit short-term savings potentialby trimming expenditure on adverti-sing, personnel and staff training. However, many companies neglectthe significance of the continuing development of their human capitalin the ongoing process of adding value. This is brought convincinglyhome by a European wide studyundertaken by the market researchinstitute Forrester on behalf of IBM.The study confirmed that 76 percentof surveyed German companies averthat continuing professional develop-ment plays a very important role withregard to competitive and innovativecapabilities. However, an official per-sonnel development and continuingqualification program is only run by36 percent of German firms participa-ting in the survey – easily the lowestvalue in comparison with other European firms, and a figure whicheloquently documents the problemsconfronting the continuing professionaldevelopment industry in Germany.

Against this backdrop, only providersof a handful of specialized niche products or enterprises which havesystematically developed a full serviceportfolio and are able to positionthemselves as solution providers,such as Unilog Integrata Training AG,will be able to survive on the marketfor qualification services in the longterm. Customers not only have to beconvinced of the benefits offered byinvestments in personnel develop-

ment, they must also be offered con-sulting and general support from thetraining idea through to its ultimateimplementation. This is an area whichoffers significant opportunities forUnilog Integrata Training AG.

It is not, however, possible to deriveprecise forecasts for 2005 based onthe experience of earlier years. Theforecast for the year 2005 by the IT industry association BITKOM, whichpredicts a 3.7% increase in IT invest-ments in Germany and a 5% increasein 2006, do however give cause forcautious optimism. This would be thefirst sign for a number of years ofrenewed positive developments andshould – after a certain delay – resultin greater demand for the relevantquality services on the IT trainingmarket.

2. Business situation of the company

The contraction in the market for qua-lification services, particularly in thefield of information technology againresulted in a reduction in sales. Noteven extensive restructuring measuresto take account of the changed mar-ket situation and across-the-board cost-cutting measures were able to compensate for this reduction, andthe company consequently reportednegative results for the second timesince Unilog Integrata Training AGwas hived off into an independententity in 1994.

As a consequence of this developmentchanges took place on the Board ofManagement. As decided by theSupervisory Board in December 2003,Didier Herrmann was appointed asthe third member of the board in

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2004. Long-standing board membersGerhard Wächter and Dr. Hans GünterHeilmann responded to negative bu-siness developments by standing downfrom their positions as of October 1,2004. At the same time the Supervi-sory Board appointed Martin Löchneras the new spokesman of the Boardof Management of which he was amember with Didier Herrmann untilthe end of the business year. DidierHerrmann departed from the Board ofManagement on December 31, 2004and took up a position as a memberof the company’s Supervisory Boardat the beginning of 2005.

Despite the difficult revenue situationthe company has continued to accentu-ate its profile as a full service providerfor its customers’ overall qualificationprocesses. Unilog Integrata TrainingAG continues to be the biggest manu-facturer-independent provider of ITtraining in Germany. This, togetherwith its good liquidity position, meansthat the company is well positionedto take advantage of a market envi-ronment undergoing a process of con-solidation.

2.1 Sales

Sales fell during the period under reviewby a total of 15.8 % to KEUR 26,266.60.

The picture for the various areas of activi-ty is as follows:

The trend which became apparent as ear-ly in 2003 for many companies to makeshort-term savings by cutting down onthe amount of training provided to theiremployees intensified in 2004.

The drop in sales in the public seminarsector was again accompanied by a fall inthe average number of participants ineach seminar in 2003.

2004KEUR

2003KEUR

Change%

Public seminars 13,452.3 16,356.0 -17.8

Corporate services 12,567.5 14,428.6 -12.9

in-house seminars 8,228.8 8,958.6 -8.1

in-house customized seminars 4,338.7 5,470.0 -20.7

Other services 246.8 403.7 -38.9

Total sales 26,266.6 31,188.3 -15.8

2.2 Investments

The volume of investments in fixedassets was much the same as in theprevious year. As well as investmentsin replacing our seminar room equip-ment, investments were also increa-singly made in licenses for seminarsoftware.

Investments in internal IT systemsmainly focused on the implementationof the CRM system and the continueddevelopment of specific moduleswhich make up our central internalseminar management system.

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In order to achieve the right fit bet-ween the company’s capacities andstructures and the changed circum-stances in the years 2003 and 2004 –drop in sales revenues, contraction ofthe market, increasing cost pressure– the training centers in Leipzig andTübingen were closed at the end ofthe year. The Berlin training centerassumed responsibility for looking after the company’s customers in theLeipzig sales and marketing area fromthe start of 2005; customers based inthe Tübingen sales and marketing areawill be supported from 2005 onwardsby the Stuttgart training center. Thetraining center in Hanover was alsoclosed at the end of 2004; the com-pany continues to operate a sales

branch from a new location in Hanover,however. The Nuremberg training cen-ter has continued to operate as a salesbranch since 2003.

A relatively moderate 8.1% drop in salesof in-house seminars was exceededhowever by a further significant 20.7%decline in the volume of in-housequalification projects. Despite a num-ber of promising customer contactsthe company has not so far managedto win large-scale orders in this field.

The other performances consist essen-tially of services provided to affiliatedcompanies.

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2.3 Research and development

The number of public seminars offeredby the company was streamlined frommore than 600 to around 500 topics.

As solution providers in the in-housefield we continue, however, to be con-fronted by a constant fluctuation inthe type of topics in demand. The needto adapt, even when dealing with re-latively small volumes, has increasedsignificantly in recent years, and ahighly customer-specific orientationhas now become a standard require-ment in the field of in-house seminars.

New developments in the productfields:“IT Service Management” in relationto our ITIL certification offering was atopic area which showed above averagepositive development. Our Java, Oracleand WebSphere offerings were exten-ded and modified to take account ofnew software releases.The company also launched on lear-ning process oriented coaching forthe “Work process oriented continuingprofessional development in the ITsector” (APO) qualification system.

Our .NET, UNIX/LINUX and internet/e-business seminar series were also expanded and revised. New develop-ments were implemented with regardto the new Office Version 2003 – in-cluding the creation of quick referen-ces. An interdisciplinary series ofseminars on the topics of hackingand security were also thoroughlyrevised. In connection with member-ship in CompTia the certification seminars on A+ and NET+ for user service personnel were integrated inour program.

SAP related activities were largelydetermined by the large number ofin-house seminars in this area in2004. Major SAP rollouts and the userqualification projects performed inthe past did not take place in the yearunder review. At the present time agreat deal of work is being expendedon the “Single production seminar”.Topics such as Delta training, optimi-zation and harmonization in SAP qua-lification as well as training courses onBW/BI (Business Information Ware-house and Business Intelligence) arecurrently in demand. The license re-strictions on the number of publicSAP seminars we are able to offer hashad a particularly negative impact onour business. New SAP technologiessuch as Netweaver, CRM or the move-ment from ABAP to Java offer consid-erable promise for 2005.

A key focus of our personnel and or-ganization development activities in2004 was the series of certificationsleading to the European BusinessCompetence License (EBDL), ProjectManagement Professional (PMI) certi-fication and GPM Project Manage-ment Professional; the GPM certifica-tion series is proving to be particularlysuccessful. Further activities includedthe development of a series on industryknow-how, the development of standardweb based training on the topic ofproject management in the frameworkof a blended learning approach, theincrease in the number of Englishlanguage seminars and a more inten-sive approach to PE consulting.

In the e-training field, the focus wasagain on the custom-tailored deve-

lopment of electronic learning media.Developments extended from electro-nically usable course materials throughto multimedia and interactive webbased training (WBT). These providedour qualification project customerswith the option of engaging in self-learning, undertaking training follow-up work, or as modules in a trainingmix consisting of self-learning andtraditional training and workshopunits.

2.4 Marketing

In the year 2004 we again needed toensure that our marketing activitieswere sharply concentrated on the twomost important communication chan-nels – direct marketing and onlinemarketing.

Work pressed ahead on the CRM pro-ject – which not only plays an essentialrole for direct marketing. AdditionalUIT specific features were integratedand were ready for use from the middleof the year onwards. The purchase ofexternal company profiles and theiraddition to the CRM system also enabledus to significantly expand our contactbasis. Work is in progress on supple-mentary expansion phases for this system.

The layout and design of UIT’s centralmedium at the present time, the se-minar catalog, were extensively modi-fied in 2004. This now plays a pioneeringrole for the continued layout migrationof all the company’s printed materialsthroughout 2005.

A new medium was developed in 2004to enable the company to present itsfull service offering more effectively.The new medium is more closely

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oriented towards the central issueswhich concern our customers and demonstrates, in the form of scenarios,the full range of solutions UIT is po-tentially able to offer. The first issuesof these “specials” concentrated onSAP related topics and UIT’s offeringsfor the automotive industry. This me-dium will be expanded to include ad-ditional topic areas in 2005 and is setto become a key element of integratedmarketing and sales campaigns.Online marketing continued to playan extremely important role. As in years

gone by the share of customers usingour seminar schedule planner to bookseminars directly via the internet in-creased from one six-month period tothe next. In the second half of 2004over 50% of all incoming orders werereceived online. This figures exceededthe 60% mark for the first time in January 2005. We are now able to makethe booking procedure even simplerfor our customers by offering themcustomized variants of the seminarschedule planner. But it is not onlythe seminar schedule planner which

is attracting so much attention – thenumber of people using other parts ofour website has also increased by30%. An analysis of requests receivedvia the website also offers us an out-standingly effective tool for monitoringmarket trends. Since last summer ourown website has been complementedby advertisements in search engines andby an increasing number of citations ofour seminar events with a diverse rangeof qualification related web portals.

2.5 Organization/data processing

The biggest project in 2004 was theimplementation of Pivotal CRM. Con-ceptualization began in April and thepilot launch took place on schedule in3 branch offices in November. In orderto guarantee an optimum system forall employees the pilot scheme willcontinue throughout the first quarterof 2005. The central Booking Serviceand Product Management departmentsare also participating in the pilotscheme.

Two preconditions needed to be metfor the launch of the new system.Each of these involve the performanceof an extensive project of their own:

1. The collation and centralization ofthe Pivotal, ACT and SVS customerand prospects databases

2. The development of a new hard-ware environment based on thenew ESX and SAN technologies

Other Org/IT projects focus on thecontinued development of internalapplications and the technical infra-structure.

14 new individual seminar scheduleplanners for a variety of customerssuch as Deutsche Post, Debitel, Thyssen,O2 or AXA have been installed andcustomized.

The ISO 9001 and TIP certificates havebeen renewed. The 3-yearly repeataudit was performed in 2004 in addi-tion to the annual monitoring audit.The trust audits were conducted inCologne and Munich.

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2.6 Personnel

The number of permanent employeesfell from 170 (as of January 1, 2004) to 154 (December 31, 2004). 2 new em-ployees were taken on and 2 employ-ees have resumed their employmentwith the company following a period ofparental leave. Fluctuation, taking ac-count of redundancies, amounted to7.6 %.

Measures were also taken to reducefixed costs. The short-time working

approved in 2003 was continued untilApril 30, 2004. In November 2004 a re-dundancy program and reconcilementof interests were agreed with the WorksCouncil. 7 employees were made redundant on March 31, 2005 and April 30, 2005.

Successful personnel developmentmeasures included internal salestraining and qualification activities forassistants.

2.7 Costs

Owing to short time working and therestructuring measures introduced in2003 and pursued in 2004 we wereagain able to reduce our personnelcosts by 6.6% following the 16.6% reduction achieved in 2003.

The fees paid to our freelance trainerswere reduced in absolute terms by12.4%. In relative terms, taking ac-count of the 15.8% drop in sales, theshare of sales revenue accounted forby freelance professional fees hasthus remained more or less stable.

Material costs were reduced by 14.0%thanks to cost savings in almost everycost area.

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2.8 Financing

The company had liquid resources atits disposal of KEUR 3,068.50 on thebalance sheet date with no bankloans. The company also granted ashort-term loan of KEUR 3,000 to Unilog

Holding GmbH which is secured by aletter of comfort issued by UNILOGSA, the total repayment of the loantook place in February/March 2005.

2004KEUR

2003KEUR

Change%

cash flow -1,928.5 413.1 -566.8

2004KEUR

2003KEUR

Change%

Year-end results -3,225.6 -1,728.1 -86.7

DVFA/SG results in EUR per no-par share* -3.38 -1.97 -71.9

DVFA/SG results in EUR per no-par share ** -3.46 -2.02 -71.9

2.9 Results

The post-tax net loss was KEUR -3,225.60(previous year: KEUR -1,728.10).

The DVFA/SG result developed similarly.The following picture can be drawn:

* Basis: Total of 600,000 shares** Basis: Excluding own shares (585,260 shares)

In 2004 Unilog Integrata Training AG therefore reported negative results for thesecond time since the company was hived off as an independent entity in1994.

The cash flow developed as follows:

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3. Riskmanagement

The risk management system hasbeen extended in recent years and in-tegrated in Unilog Integrata TrainingAG’s quality system. An additionalrisk management chapter added tothe training manual now enables thecompany’s risk portfolio to be demon-strated in the framework of its ISOcertification. Potential risks whichmay be encountered throughout thecompany have been added to and documented in the process descrip-tions. The high quality of our servicesis confirmed by regular seminar ap-praisals.

Financial risks are examined and mo-nitored in the framework of ongoingreporting and controlling by thosewith divisional and overall responsibi-lity. The detailed reporting and forecastsystem, updated every month or occa-sionally as required, enables relevantrisks to be detected at an early stage.

Apart from contracting business volume,there are no other discernible financialrisks at the present time: Unilog IntegrataTraining AG continues to have extremelylow bad debts and short accounts re-ceivable periods; the company's liquidfunds have been safely invested.

Covering transactions and derivativefinancial instruments was not used.

The business cycle risks which impactthe company have been hedgedagainst by ensuring that the majorityof seminars are taught by freelancepersonnel. This enables the companyto respond flexibly to a changing bu-siness climate. This strategy paid offin 2004 as the relative share of salesrevenue accounted for by trainercosts remained more or less stabledespite a substantial drop in the average number of people participa-ting in public seminars. Nonetheless,adjustments to structural costs take aconsiderable period of time to workthrough.

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4. Development of the stock value

Unilog Integrata Training AG shareshave been quoted on the Baden-Würt-temberg Stock Exchange's unofficialmarket in Stuttgart since April 22, 1997.The initial offering price was EUR 17.90.During the course of the year 2004the price moved from EUR 30.00(Stuttgart January 2, 2004) to EUR 24.00(Stuttgart December 30, 2004) at theend of the year. The 52-week high wasEUR 47.90 (Stuttgart March 4, 2004)and the lowest level EUR 22.00 (Stutt-gart October 26, 2004).

Unilog Integrata Training AG acquired100 own shares during the period under review.

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5. Outlook

There is still no sign of a decisivechange in the investment behavior ofcompanies operating in Germany.This is manifested by the persistentlysubdued demand for services in thequalification field. For this reason wedo not anticipate any fundamentalimpetus for significant growth on thequalification market in the businessyear 2005.

Despite this we still believe that evenan ailing market offers sufficientpotential for us to strengthen our ownposition. On the cost side we havemodified our structures to take account of the market situation with-out sacrificing the investments whichare necessary to prepare for a successful future. As already referredto, we have worked with fewer personnel from fewer locations in2005, the year under review. The re-structuring process will be continued;precautionary measures have alsobeen taken. The company organizationhas also been streamlined by reducingthe number of hierarchical levels.

On the revenue side, a plethora ofmeasures are currently being imple-mented which will enable the negativetrends of recent months to be sloweddown or stopped altogether and to beoverturned. The fact that the companyhas more orders on hand than at thesame time last year is one positivetrend. We will be concentrating ourenergies on boosting the efficiency ofour sales and marketing organizationand will initiate supporting measuressuch as a new incentive model or theimplementation of practice-relatedqualification series. The focus on “public seminars” will provide positivemomentum for both sales and revenues.

We not only intend to achieve a signi-ficant improvement in our profitability,we also aim to ensure that our com-pany is clearly positioned as a partnerfor the entire qualification process ofour customers. The fact that we arebeing asked for more and more quo-tations for medium and large-scalequalification projects confirms our viewthat we are heading the right way.

36


6. Report disclosing relations withaffiliated companies

The Tübingen-based Unilog HoldingGmbH (formerly Unilog Integrata AG)is the majority shareholder of UnilogIntegrata Training AG and holds82.099 % of the company’s shares(84.167 % taking account of own sharesheld by Unilog Integrata Training AG).The remainder of the stocks are floatedfreely. In July 1998, the French enter-prise UNILOG SA, Paris acquired a ma-jority shareholding in Unilog IntegrataAG, Tübingen. UNILOG SA became thesole shareholder following a squeeze-out in 2003. Unilog Integrata Aktien-gesellschaft entered the change in itscompany form and name to UnilogHolding GmbH in the commercialregister on January 13, 2004.

On the basis of these equity relation-ships Unilog Integrata Training AG isa dependent company within the meaning of German Stock CorporationLaw (AktG). According to Section 312AktG, the Board of Management hasdrawn up a report on the company’srelations with affiliated companies.At the end of this report the Board ofManagement declares that, to the bestof its knowledge, the company has re-ceived appropriate consideration inall legal transactions with affiliatedcompanies, and that no measures weretaken or omitted that would placeUnilog Integrata Training AG at a dis-advantage.

Tübingen, March 15, 2005


The Board of Management

Auditor’s Option

37

We have audited the annual financialstatements, taking account of thebookkeeping and management reportof “Unilog Integrata Training Aktien-gesellschaft, Tübingen”, for the busi-ness year from January 1, 2004 to December 31, 2004. The bookkeepingand preparation of both the annualfinancial statements and the manage-ment report in accordance with Germancommercial law and supplementaryprovisions in the memorandum andarticles of association are the respon-sibility of the company’s manage-ment. It is our responsibility to forman independent opinion, based onour audit, on the annual financialstatements, the accounts and the management report.

We conducted our audit in accordancewith Section 317 HGB (German Com-mercial Code) taking account of thegenerally accepted German auditingprinciples issued by the Institut derWirtschaftsprüfer (IDW). According tothese principles, the audit shall beplanned and conducted in such a way that any misstatements and irregularities will be identified which,taking account of generally acceptedaccounting principles, may result in adistorted view of the company’sassets, liabilities, financial positionand profit and loss being conveyed bythe annual financial statements andthe management report. Auditing pro-cedures were selected taking accountof the business activities and the economic and legal situation of thecompany as well as of any anticipatederrors. During the audit, sample in-spections were carried out to assessthe effectiveness of the company’sown accounting-related internal controlmechanisms as well as the accuracy

of the books and records used for the annual financial statements and management report. The audit alsoincluded an assessment of the app-lied accounting principles and of thesignificant assessments and judg-ments made by the directors of thecompany as well as an appraisal ofthe overall adequacy of the presenta-tion of information in the annualfinancial statements and the manage-ment report. In our opinion our auditwas based on sufficiently reliable evidence for us to form an opinion.

No objections are raised on the basisof our audit.

In our opinion, with due regard to generally accepted accounting princi-ples, the annual financial statementsgive a true and fair view of the com-pany’s assets, liabilities, financialposition and profit and loss. The management report provides an appropriate review of the situation ofthe company. The risks associatedwith future developments have beenappropriately outlined.

Stuttgart, March 15, 2005

Wirtschaftstreuhand GmbHChartered AccountantsTax Consultants

Sgd. Prof. Dr. Heni, Chartered AccountantSgd. Ernst, Chartered Accountant

38

Report by the Supervisory Boardof Unilog Integrata Training AG, Tübingen,for the business year 2004 presented to theshareholders’ meeting on May 27, 2004

Throughout the business year 2004 theSupervisory Board of UNILOG IntegrataTraining AG monitored the conduct ofthe company’s business and acted in anadvisory capacity as required by lawand the memorandum and articles ofassociation. The Supervisory Boarddiscussed the business and strategicdevelopment of the company, currentbusiness and fundamental issues atmeetings held throughout the yearunder review.

The Board of Management submitteddetailed reports on the general stateof the business, including sales trendsand the status of the company, priorto each meeting of the SupervisoryBoard. The Board of Management alsoreported to the Supervisory Board onits envisaged business policy, funda-mental corporate planning issues, andthe company’s earnings performance.All reports and documents requiredfor the preparation of SupervisoryBoard meetings were submitted to allmembers of the Supervisory Board.On the basis of these reports and documents the Supervisory Boardwas able to monitor and provide advi-sory support in all important busi-ness matters. The Chairman of theSupervisory Board was also regularlyinformed about business trends anddiscussed issues relating to businesspolicy with the Board of Management.

The Supervisory Board met four timesduring the course of the businessyear 2004. The Supervisory Board didnot form any committees.

Mr. Herbert Franz Chilcott resignedfrom the Supervisory Board on De-cember 31, 2004.

Mr. Gerhard Wächter and Dr. Hans GünterHeilmann resigned from their posi-tions on the Board of Management onOctober 1, 2004. On the same day theSupervisory Board appointed Mr. MartinLöchner to the Board of Management.The new Board of Management engagedin intensive discussion with theSupervisory Board with regard to thecontinuing development of the com-pany and, in particular, the way for-ward to improved sales and revenuesand the completion of the processalready introduced with this objectivein mind. The Supervisory Board wouldlike to express its thanks to Mr. Wächterand Dr. Heilmann during whose mem-bership of the Board of Managementthe company also enjoyed a numberof highly successful years of busi-ness. The Supervisory Board also wishes to thank Dr. Heilmann for con-tinuing – at the request of the Super-visory Board – to serve the companyin the future in the capacity of executivemanager.

At the end of his fixed one year periodof office Mr. Didier Herrmann vacatedhis position on the Board of Manage-ment on December 31, 2004. TheSupervisory Board would like to takethis opportunity to thank Mr. Herrmannfor the commitment he has shownthroughout a difficult period for thecompany. Mr. Herrmann will continueto support the company through therestructuring process and has beenappointed, on the basis of the decision of February 15, 2005, of theTübingen local court, to take the placeof Mr. Chilcott on the Supervisory Board.

The meeting of the Supervisory Boardto approve the balance sheet washeld in the presence of the auditor,

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certified accountants and tax consul-tants appointed by the shareholders’meeting – Wirtschaftstreuhand GmbH,Wir tschaftsprüfungsgesellschaft,Steuerberatungsgesellschaft, Stuttgart.The auditor issued a report on its keyfindings. The annual financial state-ments of UNILOG Integrata Training AGand the management report on UNILOGIntegrata Training AG have been examined by the auditor and an unqualified auditors’ opinion hasbeen issued. The Supervisory Boardis confident that the auditors have acted independently. The annual fi-nancial statements of UNILOG IntegrataTraining AG and the management re-port for UNILOG Integrata Training AGwere submitted to all the members ofthe Supervisory Board and examinedby the Supervisory Board in accordancewith Section 171 of the Stock CorporationLaw (AktG). The auditor answered allthe questions asked by the Supervi-sory Board as well as providing addi-tional explanations. The SupervisoryBoard examined the annual financialstatements, the management reportand the auditor’s report and has con-cluded that there are no grounds forobjections. The Supervisory Boardhas approved the annual financialstatements of UNILOG Integrata Training AG for the business year2004 as audited by the auditors Wirt-schaftstreuhand GmbH, Wirtschafts-prüfungsgesellschaft, Steuerberatungs-gesellschaft, Stuttgart, and the annualfinancial statements have thereforebeen established in compliance withSection 172 AktG.

The Supervisory Board has also exa-mined the report by the Board of Ma-nagement disclosing relations withaffiliated companies. The Supervisory

Board has not raised any objectionsto the declarations made in thisreport.

The report by the Board of Manage-ment has also been examined by thecompany's auditors and the followingunqualified opinion issued:

“Based on an assessment and auditperformed in accordance with ourprofessional duties, we confirm that

1.the statements made in the reportare correct,

2.with regard to the legal transactionsreferred to in the report, the perfor-mances rendered by the companywere not disproportionately high.”

The Supervisory Board has also de-clared its approval of the results ofthis audit. Having completed its ownexaminations, the Supervisory Boardhas not raised any objections to thedeclaration made by the Board ofManagement at the end of the reportdisclosing relations with affiliatedcompanies.

The Supervisory Board wishes to express its thanks to the ManagingBoard and to all the employees ofUNILOG Integrata Training AG for theirdedication and hard work in 2004.

Paris, March 2005The Supervisory Board

Gérard PhilippotChairman

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Legal

Published byUnilog Integrata Training AGSchleifmühleweg 68D-72070 Tübingen

Responsible for the contentsMartin Löchner

TextUnilog Integrata Training AGElmar Probst

Concept and layoutMelanie Schmidt

PhotographyUli Maier fotodesign bff

Printlogo Print GmbHD-72585 Riederich

www.unilog-integrata.de/training

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