At Software AG, we see a connection between profitable growth and social responsibility. The foundation of Software AG’s business success is the innovative power of the Company. Software AG therefore relies on intensive training, continuing education and knowledge management in our own Company while providing optimum conditions for education and research worldwide. As part of our cooperation with institutes of higher learning, we provide grants in countries such as Russia. In Chile, we support a university chair for administrative modernization and participation. We plan to expand our commitment to institutes of higher learning into a global program in 2007.

Software AG’s Executive Board is personally dedicated to ensuring future opportunities for Germany and Europe as a high-tech production location. In order to promote growth and innovation in Germany and the rest of Europe, Software AG favors closer cooperation between European software firms in order to ensure the future perspectives and competitive position of the European software industry. Software AG’s concept for a software alliance has resulted in a high level of public attention. The Chairman of the Board dealt closely with this subject during 2006 through his membership on the Presiding Committee of the German industry association BITKOM as well as his position as Deputy Chairman of the non-profit initiative D21 e.V. The Chairman of the Board is, moreover, a member of the Board of Trustees of the University of Applied Sciences in Darmstadt.

We would also like to mention the special circumstances surrounding the existence of the Software AG foundation headquartered in Darmstadt. In the 1990s, the Company founder, Dr. Peter M. Schnell, transferred all Software AG shares to this foundation, which today is among the largest charitable institutions in Germany with annual grants totaling approximately €20 million. It is devoted to education, therapeutic pedagogy, assistance to youth and senior citizens as well as the environment and research in the area of ecological agriculture and alternative medicine. The foundations share of Software AG stock was approximately 30 percent during 2006. The Software AG foundation received dividends in the amount of €6.8 million in fiscal 2005.