The European stock markets started 2006 on a positive note, the most important stimulus being the extremely high M&A activities. In February and March, these reached a historic high of USD 376 billion, exceeding the previous records set in October and November 1999. German blue chips were among the top performers in the European equity market. The DAX climbed 9.5 percent and closed the first quarter at 5,970. The TecDax was up an entire 21.0 percent to 727 points as of March 31, 2006. The decisive stimulus for the TecDax was the excellent performance of solar stocks.
In contrast, US stock indices hardly grew at all. The technology index NASDAQ 100 was only able to post a 3.6 percent gain and closed the first quarter at 1,704. The reason was growing interest rate fears, higher energy costs and the anticipated cooling of the US real estate market.

Software AG stock continues on upward trend
Our stock performed parallel to the DAX in the first quarter and gained more than 9 percent by the end of March 2006. After a low of €41.58 in late January 2006, the stock peaked at the end of February at more than €49 and closed at €46.05 in Xetra trading on March 31, 2006. At the end of the first quarter, the market capitalization of Software AG was €1.29 billion, reflecting a gain of €113.5 million. We also increased the trading volume of our stock. The average daily trading volume was €4.1 million (previous year: €2.4 million). We attained 8th place in market capitalization by the end of March 2006 and 10th place in trading volume in the TecDAX ranking of Deutsche Börse AG (the German Stock Exchange).

Analyst coverage expanded
Financial analysts took the performance of the fiscal year 2005 figures as an indication that Software AG would be able to achieve its mid-range growth and profit targets. Announcement of our annual targets for 2006, the good performance of our stock and our sound business model led to increased target prices and upgrades by financial analysts. The total coverage now comprises 20 global and regional analyst firms in Germany, the UK and France. In the first quarter of 2006, Dresdner Kleinwort Wasserstein in the UK and Bryan Garnier & Co in France initiated coverage of our company.

Investor relations activities strengthens US presence
Our rapidly growing market capitalization, which exceeded USD 1.5 billion in the first quarter, brought our stock to the attention of mid-cap and large-cap investors, particularly in the US. That is where our investor relations activities will be focused in 2006. After a break of four years, we were again on a roadshow in Dublin in March to access additional capital markets. Moreover, we visited investors in Frankfurt, London, Zurich, New York and Edinburgh. Software AG was also represented at two investor conferences in Frankfurt and London in the first quarter of 2006 and introduced the new crossvision product line at an investor conference at CeBIT in Hanover. The experiences of users with our products have a great impact on financial analysts’ ratings of Software AG. In April, we organized a workshop for analysts in London for the first time, in which customers from various industries presented concrete examples of how to use our software successfully. The response of the financial analysts was wholly positive. Through events like this and participation in investor conferences and roadshows, we intend to further increase direct contact with our investors and analysts.