Bechtle AG — Interim / Quarterly Report 2005

Nov 14, 2005

Bechtle – Your strong Partner. Today and Tommorrow.

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www.bechtle.com

Key figures overview of the Bechtle Group according to IFRS

		01.01. to 30.09.05	01.01. to 30.09.04 before special effects	Change in %	01.01. to 30.09.04 incl. special effects 1)	Change in %
Consolidated profit and loss account
Revenues	TEuro	817,883	751,222	8.9	751,222	8.9
EBITDA	TEuro	33,483	32,328	3.6	39,827	-15.9
EBITA (before establishedclientele
amortization/service contracts)	TEuro	26,656	25,273	5.5	32,772	-18.7
EBIT	TEuro	25,027	24,031	4.1	31,530	-20.6
EBT	TEuro	25,043	23,965	4.5	31,464	-20.4
Net result for the period	TEuro	16,160	15,892	1.7	23,391	-30.9
Financial position and liquidity
Cash Flow of operating activities	TEuro	9,730	15,198	-36.0	15,198	-36.0
Working Capital 2)	TEuro	110,471	103,838	6.4	103,838	6.4
Cash and cash equivalents
(incl. marketable securities)	TEuro	37,526	36,014	4.2	36,014	4.2
Business operating figures
Revenues per share	Euro	0.7606	0.7552	0.7	1.1123	-31.6
Cash Flow per share	Euro	0.4590	0.7236	-36.6	0.7236	-36.6
Return on equity 3)	%	9.9	11.3	-12.1	16.6	-40.3
Equity capital ratio	%	61.9	57.1	8.5	58.0	6.8
Number of employees at the end of the period 4)		3,745	3,137	19.4	3,137	19.4

1) compare to the transition (notes, II) and to the other operating income (Notes, III No. 15)

2) inventories, plus trade receivables, less trade payables, advance payments received and provisions for outstanding invoices

3) Net income without minority interests dividend through shareholders' equity without minority interests as at beginning of the period, adjusted by changes in the share capital, annualized and in percent

4) including trainees

Review by quarter 2005

	1st quarter	2nd quarter	3rd quarter	4th quarter	2005 financial year
	TEuro	TEuro	TEuro	TEuro	TEuro
Revenues	254,748	275,065	288,070		817,883
EBITDA	10,552	8,176	14,755		33,483
Depreciation	2,021	2,590	2,216		6,827
EBITA (before established clientele
amortization/ service contracts)	8,531	5,586	12,539		26,656
Established clientele and service contracts amortization	428	596	605		1,629
EBIT	8,103	4,990	11,934		25,027
EBT	8,095	5,029	11,919		25,043
Net income without minority interest	5,086	3,297	7,742		16,125

Segment disclosures

IT-System House		01.01. to 30.09.05	01.01. to 30.09.04 before special effects 1)	Change in %	01.01. to 30.09.04 incl. special effects 1)	Change in %
Profit and loss account
Revenues	TEuro	565,664	501,809	12.7	501,809	12.7
EBITDA	TEuro	15,895	17,196	-7.6	24,695	-35.6
EBIT	TEuro	9,476	10,529	-10.0	18,028	-47.4
Number of employees at the end of the period		3,241	2,643	22.6	2,643	22.6

IT-eCommerce		01.01. to 30.09.05	01.01. to 30.09.04 before special effects 1)	Change in %	01.01. to 30.09.04 incl. special effects 1)	Change in %
Profit and loss account
Revenues	TEuro	252,219	249,413	1.1	249,413	1.1
EBITDA	TEuro	17,588	15,132	16.2	15,132	16.2
EBIT	TEuro	15,551	13,502	15.2	13,502	15.2
Number of employees at the end of the period		504	494	2.0	494	2.0

1) compare to the transition (notes, II) and to the other operating income (notes, III No. 15)

The Share

Opening price on 03.01.2005 (XETRA)	Euro	16.5
Closing price on 30.09.2005 (XETRA)	Euro	17.96
Share price performance compared to TecDax as at 30.09.2005 (XETRA)	%-points	+8.0
Nine-months high (14.02.2005)	Euro	22.00
Nine-months low (29.04.2005)	Euro	16.26
Trading volume (XETRA) from 01.01. to 30.09.2005	Euro	170,991,033
Trading volume (XETRA) from 01.07. to 30.09.2005	Euro	62,134,383
September rankings on the German Stock Exchange market cap (previous month)		25 (24)
September rankings on the German Stock Exchange trade volume (previous month)		21 (20)
Market capitalization (Free Float) as at 30.09.2005	Mio. Euro	186.17
Market capitalization (total) as at 30.09.2005	Mio. Euro	380.75
Number of issued shares	Mio.	21.2
Freefloat (30.09.2005)	%	49.52
Number of outstanding and entitled of full dividend payout shares	Mio.	21.2
Segment		Prime Standard
Index		TecDAX
Security identification code		515 870
ISIN		DE 000 515 870 3
Date of listing		30.03.2000

	Key Figures Bechtle Group	2
	Group Management Report
1.	Business activity	5
2.	Change to the International Financial Reporting
	Standards IFRS	5
3.	General Situation	6
4.	Business development	7
5.	The share	11
6.	Outlook and forecast	11
	Consolidated Financial Statements as at 30 September 2005	15
	Notes to the Consolidated Financial Statements
I.	Basic Company Information	22
II.	Summary of Key Accounting, Valuation and
	Consolidation Principles	22
	General Information	22
	Consolidation principles	22
	Notes on Conversion to IFRS	23
	Notes on Relevant Differences between U.S. GAAP and IFRS	26
	Scope of Consolidation	26
	Use of Estimates	27
	Translation of Foreign Currency	27
	Accounting and Valuation Principles	27
	Intangible Assets and Goodwill	28
	Leasing	29
	Financial Instruments	29
	Accounts Receivable and Other Assets	30
	Inventories	30
	Treasury Stock	30
	Deferred Tax Assets	30
	Accrued Expenses	31
	Liabilities	31
	Preparation of Profit and Loss Account
	using the Cost-of-Sales Method	31
	Revenue Recognition	31
	Advertising Expenses	31
	Shipping Costs	31
	Research and Development Costs	32
	Earnings Per Share	32
	Corporate Governance	32

III.	Notes to the Group Balance Sheet
		and Profit and Loss Account	32
	(1)	Cash and Cash Equivalents	32
	(2)	Short-term Investments/
		Marketable Securities	32
	(3)	Trade Accounts Receivable	33
	(4)	Inventories	33
	(5)	Prepaid Expenses, Other Current Assets
		and Tax Rebate Claims	33
	(6)	Tangible Assets	34
	(7)	Intangible Assets	34
	(8)	Goodwill	35
	(9)	Loans	35
		(10) Accrued expenses	36
		(11) Other Current Liabilities	36
		(12) Financial Liabilities	37
		(13) Shareholders´ Equity	38
		(14) Revenues	40
		(15) Other Operating Income	40
		(16) Interest Income and Expenses	40
		(17) Income Tax / Deferred Tax	41
		(18) Earnings Per Share	43
IV.		Other explanatory notes	43
		Segment Disclosures	43
V.		Cash Flow Statement	46
VI.		Contingencies	47
VII.		Related Parties	48
		VIII. Remuneration of Executive Bodies	48
IX.		Acquisitions	48
X.		Pro-Forma Information	57
XI.		Workforce	57
XII.		Significant Differences between IFRS and German Accounting Principles	57
		XIII. Executive Bodies	59
		Financial Calendar	66

In the third quarter, Bechtle increases revenues and earnings but adjusts the forecast for the year to the weak general situation

• · Group revenues increased by 8.9 percent to 817.9 million euros
• · EBT increases by 4.5 percent
• · In the third quarter, too, only sluggish rise in demand at the system houses
• · Integration expenses place an additional strain on the system house segment
• · IT eCommerce increases considerably, especially in Germany
• · Shareholders' equity ratio at a respectable 61.9 percent
• · Acquisition of PP 2000 Business Integration AG
• · Takeover of the IBM Deskside Support Service division
• · Number of employees increased to 3,745
• · Based on the business development so far, in the fourth quarter, the Executive Board adjusts the earnings and revenues forecast

1. Business activity

Bechtle is active with over 60 system houses in Germany and Switzerland and ranks among the leading IT eCommerce suppliers throughout Europe with trading companies in nine countries. With this combination, Bechtle focuses on a business model unique in Europe that combines system house services with the direct sale of IT products. The company based in Neckarsulm and founded in 1983 offers its more than 24,000 predominantly medium-sized clientele from trade and industry, the public sector and from the financial markets a seamless supply of IT infrastructure products independent of manufacturer and all from one source. Bechtle has been quoted on the stock exchange since 2000 and is listed in the TecDAX technology index.

2. Change to the International Financial Reporting Standards IFRS

At the beginning of financial year 2005, Bechtle AG switched its accounting and financial reporting to the International Financial Reporting Standards (IFRS). The key changes for the Bechtle AG group financial accounts in contrast to the statements previously drawn up according to U.S. GAAP concern the balancing of negative goodwill of ALSO COMSYT AG, acquired in the first quarter of 2004, and the corresponding depreciation of fixed assets. This has substantial effects on the result for the first nine months of 2004, as well as on the shareholders' equity of the previous year.

In this report, the figures for the previous year have been adjusted in accordance with IFRS. To improve understanding and for the purpose of comparability, in individual cases, the figures stated for the previous year have been adjusted to take account of the special item as a result of the negative goodwill of ALSO COMSYT AG. In these cases, specific reference is made to these adjustments. The effects of the switch from U.S. GAAP to IFRS are explained in detail in the Appendix.

Note: for all percentages stated in the report, there may be slight differences in the figures stated in millions of Euros due to the rounding up/down of figures.

3. General situation

3.1 General economic situation

In the second half of the year, the economic situation in the Euro zone started to pick up slightly. Increasing entrepreneur confidence and increased industrial production are indicators for this. However, according to the European Commission, the high price of oil continues to impede the economy in the Euro zone. In addition, the energy prices that have risen sharply increase the risk of inflationary tensions. Furthermore, Euro zone retail trading data indicate that consumer reticence is continuing unabated.

In Germany, the general situation remained difficult. The elections – and the outcome of the elections with the subsequent tough coalition talks – generated uncertainty about future economic policy. In addition, the high energy prices in particular and the still weak domestic demand prevented a sustained economic recovery. Momentum for the growth of the German economy continued to come predominantly from exports. The economy did not experience a positive upturn until the end of the third quarter. For example, at the end of the quarter in September, the ifo Business Climate Index for Germany increased considerably much to the surprise of analysts. Overall, for the third quarter, the Bundesbank anticipates a significant growth in gross domestic product compared to the previous quarter.

(Source: the autumn economic expert's report of the six leading German economic research institutes, the European Commission, the German Bundesbank, the ifo-Institut)

3.2 IT sector

Throughout the previous year, the still unresolved backlog of investment projects placed a strain on the IT sector. This affects the markets of the large EU member states as a whole, as well as the German market in particular.

In keeping with this, the powerful upturn that is customary in the sector in the third quarter was weaker this year and was not discernable until September. Although company investments in IT increased in the third quarter, the ongoing defensive attitude is still apparent. As a result of the elections and the still unpredictable domestic policy of the new government, public clients in particular have thus far been extraordinarily restrained in their investment activity.

Against the background of the weaker than expected economic activity in the industry, in October, BITKOM, the German Association for Information Technology, Telecommunications and New Media, lowered its forecast for the development of the German IT market from 3.7 percent to 3.1 percent.

Growth drivers on the IT market are predominantly security and storage solutions, as well as the increasing demand for outsourcing solutions (outsourcing of IT tasks). In the product business, the margins remain under pressure: according to information from large distributors, during the reporting period, there was a one-figure drop in prices in Germany and Switzerland. In addition, the pressure on margins is also noticeable for IT services. This is due to the increasing price war on the system house market that is still in a process of consolidation.

Last but not least, a key indicator for the weak economic activity in the industry is the massive job cuts at manufacturers and IT service providers.

(For the sector development, see also 6. Outlook and forecast)

4. Business development

4.1 Revenue growth

From January to September 2005, the revenue of the Bechtle Group increased by 8.9 percent to 817.9 million euros (previous year: 751.2 million euros). Revenue for the third quarter was 288.1 million euros, which represents an increase of 11.2 percent compared to the previous year (259.1 million euros). For 2005, however, consolidation effects have to be taken into account as a result of the acquisition of companies from the fourth quarter of 2004 that were not yet fully integrated in the same quarter the previous year. In the nine-month period, the companies taken over in the current year, namely CDC, DELEC, Compartner Systems and PP 2000, as well as the recently founded system house in Bonn, together accounted for 51.6 million euros. Organically, with 718.8 million euros, the Bechtle Group almost achieved the previous year's level of 718.9 million euros.

IT-System House

In the first nine months, the IT-System House segment accounted for 69.2 percent of Group revenues. With 565.7 million euros, the Bechtle system houses outperformed the segment revenue of the reference period by 12.7 percent (previous year: 501.8 million euros). The acquisitions contributed exclusively to the increase in revenue. Adjusted by the segment revenues of the subsidiaries that had either not been consolidated or not fully consolidated in the reference period, revenues fell by 0.6 percent. During the quarter of this report, revenue was 204.3 million euros, which represents an increase of 16.7 percent compared with the previous year (175.1 million euros).

IT-eCommerce

Between January and September, the IT-eCommerce segment made up 30.8 percent of the Group revenue and recorded a slight increase of 1.1 percent to 252.2 million euros (previous year: 249.4 million euros). This is purely organic growth. The third quarter's share of revenue was 83.7 million euros and thus 0.3 percent below the previous year (84.0 million euros).

Compared with the previous year, the extraordinarily strong business development of the ARP Group was discernable; this was much higher than planned and, as expected, development in the current year could not keep up with this. As regards ARP management, the development of a scalable IT trading platform clearly commits capacities. The project is to go online in 2006 and the business activities of the ARP Group are to be expanded from the D-A-CH region to other European countries. The first target markets are France and Great Britain.

Regarding only the Bechtle direct companies within the eCommerce segment, there was a 10.6 percent growth in revenue during the reporting period from January to September. Activities in Germany in particular led to a clear increase of 26.5 percent. In terms of trade turnover, the foreign Bechtle direct companies increased by 4.2 percent.

4.2 Development of earnings

In the first nine months, earnings before tax (EBT) – the most important operative control variable of the Bechtle Group – stood at 25.0 million euros and were thus 4.5 percent above the previous year's result of 24.0 million euros that had been adjusted to take account of special items. In the third quarter, EBT was 11.9 million euros, which represents a growth of 18.6 percent compared with the reference period (previous year: 10.0 million euros).

(Annotation: when adjusting the comparable figures according to IFRS, as part of the acquisition of the Swiss company, ALSO COMSYT AG, in the first quarter of 2004, the one-off negative goodwill to the amount of 7.5 million euros is to be posted as

other operating income and thus reported in the pre-tax income. This increases the previous year's EBT to 31.5 million euros. By contrast, in 2004, the negative goodwill in accordance with U.S. GAAP of 3.8 million euros was initially offset with the fixed assets adopted and did not affect the operating result. The remaining 3.6 million euros were shown as extraordinary earnings. The negative goodwill was thus not included in the EBT; rather it was included in the quarterly income. For further explanations, see the Appendix.)

In the nine-month period, earnings before interest, tax, depreciation and amortisation of goodwill (EBITDA) stood at 33.5 million euros. This corresponds to an increase of 3.6 percent compared with the adjusted previous year's comparable value of 32.3 million euros. In the third quarter, EBITDA stood at 14.8 million euros, which is 17.9 percent more than in the reference period (12.5 million euros).

During the reporting period the operative earnings before interest and taxes (EBIT) amounted to 25.0 million euros and thus 4.1 percent above the adjusted previous year's earnings of 24.0 million euros. With regard to the third quarter, EBIT increased by 18.9 percent to 11.9 million euros (previous year: 10.0 million euros).

During the nine-month period, the income tax expense increased from 8.1 million euros to 8.9 million euros. The rate of taxation thus increased from 33.7 percent (adjusted base) to 35.5 percent. It is thus above the rate of taxation of 32.3 percent in financial year 2004. This is primarily attributable to tax expenses unusual for the period and depreciations of active latent taxes on losses brought forward. For 2005 as a whole, the rate of taxation should again approximate that of the previous year.

Based on an average of 21.2 million shares (corresponding period the previous year: 21.0 million shares), in the first nine months, Bechtle achieved earnings per share (EPS diluted/undiluted) of Euro 0.76 and thus attained exactly the same level as the previous year. This is based on a consolidated profit of 16.2 million euros that exceeded the earnings for the same period last year (adjusted for special items) of 15.9 million euros by 1.7 percent.

IT-System House

In the IT-System House segment, EBIT fell by 10.0 percent from 10.5 million euros to 9.5 million euros in the nine-month period. The main reason for the drop in earnings is the higher distribution costs for the development of a more specialised distribution structure. In addition, the cost of integrating the companies acquired in 2005 placed a strain on earnings. During the reporting period, EBITDA was reduced by 7.6 percent from an adjusted 17.2 million euros to 15.9 million euros.

For the quarter, EBIT improved by 32.1 percent from 4.6 million euros to 6.1 million euros. EBITDA increased by 19.5 percent to 7.9 million euros (previous year quarter: 6.6 million euros).

IT-eCommerce

Between January and September, EBIT increased by 15.2 percent in the IT-eCommerce segment. It was 15.6 million euros compared with 13.5 million euros during the same period the previous year. The continuous optimisation of process efficiency and the associated cost reductions had a positive effect on earnings. Whereas ARP earnings clearly declined, the earnings of the Bechtle direct companies increased considerably. They overcompensated for the drop in earnings of the ARP thanks to a remarkable increase in EBIT by 68.2 percent to 6.3 million euros (previous year: 3.7 million euros). During the current financial year, the development of the ARP came under particular strain as a result of the investments in the expansion of the trading platform in order to develop international activities. In addition, the clearly excess business development in the corresponding period the previous year has to be taken into account. As expected, this could not be repeated this year.

EBITDA improved in the eCommerce segment by 16.2 percent to 17.6 million euros (previous year: 15.1 million euros).

For the quarter, EBIT increased by 8.3 percent to 5.8 million euros (same quarter the previous year: 5.4 million euros), EBITDA increased by 16.2 percent from 5.9 million euros to 6.8 million euros.

4.3 Asset and capital structure

The non current assets increased by 9.3 percent in the first nine months of 2005 to 137.3 million euros. The background is essentially the increase in the goodwill to 88.5 million euros due to acquisitions (cut-off date 31 December 2004: 81.6 million euros). Its share in the balance sheet total increased accordingly from 21.2 percent to 24.4 percent.

At the end of the third quarter 2005, the liquid funds, including the current-asset securities, amounted to 37.5 million euros (31 December 2004: 65.8 million euros). The main reasons for the 43.0 percent decrease are the financing of the acquisitions carried out in the current financial year from company-generated funds and loan repayments. Combined with free credit lines to the sum of 48.3 million euros, Bechtle has a solid liquidity reserve of 85.8 million euros, which allows sufficient freedom to carry out further acquisitions and achieve future expansion. Out of the credit lines available at the end of the quarter Bechtle has only utilized 8.1 percent for guarantees.

The cash flow from operating activities led to an inflow of funds of 9.7 million euros in the period under review (previous year: 15.2 million euros). The reduction is primarily due to the significant higher tax prepayment. The outflow of funds from investing activities of 17.1 million euros (previous year: 40.5 million euros) is mainly due to the acquisition of subsidiaries (12.5 million euros). The investments in tangible assets fell from 6.8 million euros to 5.7 million euros.

The amount paid out from amortization of short and long-term loans conern with 5.9 million euros the almost entire repayment of short-term financing liabilities of the acquired subsidiaries and with 4.7 million euros the amortization of long-term loans.

As of 30 September 2005, Bechtle posted an increase in equity ratio from 57.1 percent to a solid 61.9 percent with a reduced balance sheet total. In absolute terms, the shareholders' equity increased due to the higher retained earnings from 217.2 million euros to 224.2 million euros. It is also important to bear in mind that shareholders' equity was adjusted by 3.2 million euros as of 31 December 2004 due to the conversion to IFRS. The background is the increase in the retained earnings arising from the collected negative goodwill affecting net income.

The equity return amounted to 9.9 percent (previous year adjusted: 11.3 percent). The influencing factors were the investments in the expansion of regional distribution and the reinforcement of the market position in the service-oriented system house segment carried out in 2005. Other factors included the integration and set-up costs connected with the five acquired or newly founded system houses with a total of 14 sites and over 500 employees in Germany and Switzerland as well as the costs regarding the establishment of a sectorally-focused distribution system. In addition, the expenses accumulated through the development and expansion of the eCommerce platform for the market launch of ARP in other European countries had an impact.

4.4 Workforce

The size of the Bechtle Group workforce increased in the first nine months of 2005 by 567 to 3,745. The increase by 17.8 percent is mainly due to the acquisitions carried out in this year.

Domestically Bechtle employed 2,624 people, namely 13.1 percent more than at the end of the financial year 2004 (2.320 employees). Abroad, 1,121 employees worked for Bechtle, i.e. a plus of 30.7 percent compared to the reference period (858 employees).

Broken down into segments, the IT-System House segment had a total workforce of 3,241 as of the quarterly cut-off date and the IT-eCommerce segment 504. Compared to 31 December 2004, the sharp increase by 556 employees due to acquisitions (plus 20.7 percent) with regard to system houses contrasts with an increase of 11 employees (plus 2.2 percent) in the eCommerce segment.

Staff costs increased by 14.1 percent to 130.6 million euros (previous year: 114.5 million euros). The staff costs ratio rose from 15.2 percent to 16.0 percent, in particular against the background of the new recruitment of staff in sales.

At the end of the third quarter, the number of trainees amounted to 193. At the end of the financial year 2004, the figure stood at 172. Thus, the training ratio at Bechtle increased to a good 5.2 percent.

4.5 Risk report

In the course of the financial year 2005 to date there have been no significant changes compared to the risks outlined in detail in the Annual Report 2004 (Page 35 to 38).

4.6 Special events in the third quarter 2005

On 13 July 2005, the Bechtle subsidiary PSB AG, Ober-Mörlen, acquired all the shares in the IT system house PP 2000 Business Integration AG, which is not listed on the stock exchange, backdated to 1 July. The service provider founded in 1991 is based in Stuttgart. With a region-wide service for IT infrastructure products, the service portfolio of PP 2000 in particular comprises services as well as the maintenance of printers, PCs and IT systems. Its customers include major corporations, regional and up-market small to medium-sized businesses and the public sector. With PP 2000 the Bechtle Group is particularly reinforcing its nationwide activities in the field of IT services.

On 29 July 2005, Bechtle announced the takeover of the Deskside Support Service division of IBM. The contract came into force as of 1 October 2005. Thus, around 100 employees from the Strategic Outsourcing division of IBM changed to the Bechtle Group. The employees mainly work on site at customers' premises. As part of the settlement Bechtle will take on the servicing of around 50,000 PC work stations. Thus, the Group is significantly expanding the Managed Services division within its IT-System House segment and is cementing its 20-year business relations with IBM. The Managed Services division is to form one of the key core competences of Bechtle AG.

4.7 Special events after the end of the period under review

No special events occurred after the end of the period under review.

5. The share

In the third quarter the stock markets continued their upward trend from the previous quarter. Above all, the upcoming general election in September and the prospect of a change of government stimulated investors' imagination. In addition, there was an increased focus on German securities due to their low valuation in some cases, in particular with respect to foreign investors. Persisting depressive factors, such as new record oil prices or interest fears, had no effect in the third quarter.

The Bechtle stock demonstrated a sideways shift overall in the third quarter. After a price of 18.38 euros at the start of the quarter on 1 July, the security closed at 17.96 euros on 30 September. While a clear upward trend was still noticeable in July, the share flagged again in August and stabilized in September at the level of the quarterly closing price. From the point of view of the year as a whole, the Bechtle stock was able to increase by 8.8 percent by 30 September after an opening price of 16.50 euros on 3 January. Bechtle marked its highest price for the year to date on 14 February with 22.00 euros; the lowest price for the year to date was recorded on 29 April when it stood at 16.26 euros.

The liquidity of the Bechtle stock reached a high level in the first nine months with an average Xetra daily turnover of 48,708 units or 918,124 euros. In total 9.1 million Bechtle shares with a value of 171.0 million euros were traded on Xetra between January and September. In terms of trading volume Bechtle ranked in 21st place amongst the TecDAX stocks as of the quarterly cut-off date and, at the end of 2004, the stock was still in 30th place. Market capitalisation stood at 380.8 million euros in absolute terms as of 30 September and in relation to the freefloat it amounted to 186.2 million euros. In this category Bechtle ranked 25 amongst the TecDAX stocks.

6. Outlook and Forecast

6.1 General economic climate

The economy in the euro zone is set to grow by 1.3 percent in 2005, according to the leading German economic research institutes. They have forecasted growth of 1.8 percent for 2006. The biggest obstacle to further growth is still the high oil price and low consumer confidence. These negative factors should, however, diminish in the course of next year. The devaluation of the euro and the low interest rates could provide impetus for higher growth. The European Central Bank and the Bundesbank are also expecting a large number of companies to step up their investments due to the improved financial situation. Nevertheless, the general trend in the euro zone remains cautious.

The German economic research institutes forecast a 0.8 percent increase in gross domestic product (GDP) in 2005 for Germany in their autumn survey. The forecast from spring has therefore been upped by 0.1 percentage points. The biggest growth factor remains exports, whereas consumption is stagnating or even on the decline. A VAT increase could have an even more detrimental effect on private consumer habits. A slight increase in capital expenditure on equipment is expected. The mood in companies has become brighter and the backlog in investment projects could slowly start to ease. In 2006, economic growth in Germany is expected to increase moderately to 1.2 percent.

(Sources: autumn surveys of the six leading German economic research institutes, the Bundesbank and the European Central Bank)

6.2 IT industry

The market research institutes European Information Technology Observatory (EITO) and IDC are forecasting growth of 3.7 percent for the IT market in Europe and growth of 3.3 percent for Germany. The industrial federation BITKOM, which corrected its growth forecast for the German IT market from 3.7 percent to 3.1 percent in October, is somewhat more restrained. The investment volume of German companies in IT (software, hardware, service) is put at 68.0 billion euros, of which around 14.0 billion can be attributed to so-called small office/home office and ultra-small companies. According to this, the addressable forecast investment volume for Bechtle amounts to around 54.0 billion euros.

The accumulated demand for hitherto delayed corporate investments in IT replacements and for IT services should support the market trend. Above all, public sector clients have been extremely defensive so far due to the elections, so that an investment backlog has formed here which could have a positive effect on yearend business. The not yet foreseeable budgetary policy of the new government still remains a risk factor.

In Germany the IT service market in particular is set to flourish over the coming years. Nevertheless, in a current study market analysts from IDC are only predicting growth of 2 percent for the German IT service market this year. The trend is only due to gain momentum from 2006. Market research institutes see the storage and security market as additional growth areas.

6.3 Future company development

After the sectoral trend turned out to be weaker than expected in the third quarter and Bechtle also refrained from increasing turnover to the detriment of income, organic growth in the first nine months failed to materialize overall. The Executive Board is therefore adjusting its sales forecast of 1.3 billion euros for the current financial year to the underlying situation and is now expecting revenue within a target range of between 1.15 and 1.18 billion euros. Compared to the previous year, turnover would therefore increase owing to acquisitions by between 5.7 and 8.5 percent, which is higher than the forecast sectoral growth of 3.1 percent.

Despite an increase in demand since the end of September, the tendency to invest in IT did not improve as drastically as expected up to the first half of November. The positive trend will probably not be sufficient to compensate for the low level in the first and second quarter. The positive impetus, based on an increasing intake of new orders up to 112 million euros in October (previous year: 100 million euros), which also includes organic growth of around 3 percent, thus pointing to an upturn in the order situation in the final quarter, is too weak to achieve this. Therefore, the Executive Board sees the originally forecast increase in the pre-tax result to at least 42 million euros for the current financial year as being too ambitious. It is now expecting an EBT in the order of 40 million euros for the year as a whole. This would be equivalent to a plus of 6.4 percent compared to the adjusted previous year. In any case, the strong final spurt that normally takes place in December will be very significant.

The acquisitions and measures to expand distribution carried out this year will initially generate start-up costs, but on the other hand they will guarantee market shares and improve the Group's competitive position. Thus, Bechtle is continuing to pursue a growth strategy that is directed more towards the medium to long-term and is aimed less at short-term results.

Based on the adjusted target range of between 1.15 and 1.18 billion euros, the share of revenues in total revenue is estimated at between 28.9 and 30.7 percent for the fourth quarter. Last year Bechtle achieved 31.0 percent of total revenues in the industry's normally highest-performing final quarter. On the earnings side, Bechtle is expecting an improvement in the fourth quarter of 10.3 percent compared to last year (Q4 2004: 13.6 million euros, Q4 2005: 15.0 million euros) based on the adjusted EBT forecast of 40 million euros.

Future-based statements

This quarterly report contains statements that relate to the future development of Bechtle AG. These statements are based on assumptions and estimates. Although the Executive Board is convinced that the forward-looking statements are realistic, no guarantee can be given. The assumptions hide risks and uncertainty which could cause actual events to vary considerably from those which are expected.

Neckarsulm, 11 November 2005

Consolidated Financial Statements as at 30 September 2005

Consolidated Profit and Loss Account in accordance with IFRS from 1 January to 30 September 2005

	Notes	01.07. to 30.09.05 TEuro	01.07. to 30.09.04 TEuro	01.01. to 30.09.05 TEuro	01.01. to 30.09.04 TEuro
Revenues	(14)	288,070	259,119	817,883	751,222
Cost of revenues		247,052	22,817	704,124	646,421
Gross profit		41,018	36,302	113,759	104,801
Selling and marketing expenses		17,446	14,290	51,530	44,324
General and administrative expenses		13,522	13,018	41,644	40,513
Other operating income	(15)	1,884	1,041	4,442	11,566
Operating income		11,934	10,035	25,027	31,530
Interest income and expenses	(16)	-15	18	16	-66
Earnings before taxes		11,919	10,053	25,043	31,464
Income tax	(17)	4,166	3,411	8,883	8,073
Net income		7,753	6,642	16,160	23,391
Minority interest		-11	-28	-35	-30
Net income without minority interest		7,742	6,614	16,125	23,361
Net income per share (undiluted) Euro	(18)	0.3652	0.3120	0.7606	1.1123
Net income per share (diluted) Euro	(18)	0.3652	0.3120	0.7606	1.1123
Weighted average shares outstanding (undiluted)		21,200	21,200	21,200	21,003
Weighted average shares outstanding (diluted)	21,200	21,200	21,200	21,003

Consolidated Balance Sheet according to IFRS as at 30 September 2005

Assets	Notes	30.09.05 TEuro	31.12.04 TEuro
Current assets
Cash and cash equivalents	(1)	33,680	61,497
Short-term investments / marketable securities	(2)	3,846	4,296
Trade accounts receivable, net	(3)	129,186	142,462
Inventories	(4) 46,111		36,541
Tax receivable	(5)	3,089	3,894
Prepaid expenses and other current assets	(5) 9,090		10,076
Total current assets		225,002	258,766
Non current assets
Tangible assets, net	(6)	19,987	17,433
Intangible assets, net	(7)	20,239	18,184
Goodwill, net	(8)	88,516	81,607
Loans	(9)	1,850	1,625
Deferred tax assets	(17)	6,720	6,813
Total non current assets		137,312	125,662
Total assets		362,314	384,428

Liabilities and shareholders' equity	Notes	30.09.05 TEuro	31.12.04 TEuro
Current liabilities
Short-term loan and current portion of long-term loan		6,450	6,854
Trade accounts payable		55,948	75,323
Advance payments received		108	3,931
Accrued expenses	(10)	27,142	29,454
Income tax payable		3,965	5,714
Other current liabilities	(11)	12,936	15,440
Deferred income		6,767	3,768
Total current liabilities		113,316	140,484
Non current liabilities
Long-term loan, less current portion	(12)	15,550	20,387
Deferred income		993	213
Accrued expenses	(10)	328	340
Deferred tax liabilities	(17)	7,916	5,843
Total non current liabilities		24,787	26,783
Shareholders' equity	(13)
Share capital		21,200	21,200
21,200,000 shares issued with par value of Euro 1.00
Additional paid-in capital		143,454	143,454
Retained earnings		60,109	52,464
Accumulated other comprehensive income / loss		-781	-462
Shareholders' equity without minority interest		223,982	216,656
Minority interest		229	505
Total shareholders' equity
Total liabilities and shareholders' equity	362,314	384,428

Statement of changes in shareholders' equity from 1 January to 30 September 2005

	Number of ordinary shares issued	Share capital	Additional paid-in capital	Treasury stock
		TEuro	TEuro	TEuro
Shareholders' equity as at 01 January 2004	20,200,000	20,200	134,515	0
Capital increase	1,000,000	1,000	9,000
Dividends paid 2003
Net Income 30.06.2004
Granted stock options			-37
Costs of capital increase			-24
Exchange adjustment
Adjustment for available-for-sale securities
Adjustment for derivative instruments
Adjustment for minority interest
Shareholders' equity as at 30 September 2004	21,200,000	21,200	143,454	0
Shareholders' equity as at 01 January 2005	21,200,000	21,200	143,454	0
Capial increase
Dividends paid 2004
Net Income 30.06.2005
Granted stock options			0
Costs of capital increase			0
Exchange adjustment
Adjustment for available-for-sale securities
Adjustment for derivative instruments
Adjustment for minority interest
Shareholders' equity as at 30 September 2005	21,200,000	21,200	143,454	0

Retained earnings Cumulative results TEuro	Retained earnings Revenue reserve TEuro	Accumulated other compre- hensive income/loss TEuro	Total shareholders' equity without minority Interest TEuro	Minority Interest TEuro	Total shareholders' equity TEuro	Compre- hensive income TEuro	Tax effect TEuro
20,064	6,005	-560	180,224	614	180,838
			10,000		10,000
-6,360			-6,360		-6,360
23,361			23,361	30	23,391	23,391
			-37		-37
			-24		-24
		-249	-249		-249	-249	-96
		-59	-59		-59	-59	-15
		10	10		10	10	3
			0		-182	-182
37,065	6,005	-858	206,866	462	207,328	23,093

43,456	9,008	-462	216,656	505	217,161
			0		0
-8,480			-8,480		-8,480
16,125			16,125	35	16,160	16,160
			0		0
			0		0
		-284	-284		-284	-284	-109
		0	0		0	0	0
		-35	-35		-35	-35	-21
			0	-311	-311
51,101	9,008	-781	223,982	229	224,211	15,841

Consolidated Cash Flow Statement to the Interim Accounts in accordance with IFRS

from 1 January to 30 September 2005

	01.01. to 30.09.05 TEuro	01.01. to 30.09.04 TEuro
Cash Flow from operating activities
Net income	16,160	23,391
The take of the negative goodwill as a other operating income	0	-7,499
Net income before the take of the negative goodwill	16,160	15,892
Adjustments for:
Depreciation and amortization	8,456	8,296
Losses on the disposal of tangible assets	42	137
Other company-produced additions to assets	-90	0
Increase in deffered tax liabilities	171	2
Decrease in deferred tax assets	809	1,150
Increase in net working capital incl. accrued expenses	-15,818	-10,172
Personnel costs of granted stock options	0	-38
Others	0	-69
Net cash provided by operating activities	9,730	15,198
Cash Flow from investing activities
Acquisition of subsidiaries, net of cash acquired	-12,463	-30,146
Purchase of property, plant and equipment	-5,682	-6,783
Proceeds from sale of equipment	597	2,473
Investment in financial assets	-43	0
Investment in short-term financial assets	0	-7,347
Proceeds from sale of short-term financial assets	449	1,262
Net cash used in investing activities	-17,142	-40,541
Cash Flow from financinig activities
Issuance of share capital	0	9,978
Proceeds from short or long-term borrowings	0	20,615
Cash repayments of amounts borrowed	-11,529	-2,686
Dividend payments	-8,480	-6,360
Net cash used in (provided by) financing activities	-20,009	21,547
Net effect of currency translation	-361	80
Adjustment for derivative instruments	-35	10
Adjustment for available-for-sale securities	0	-59
Decrease in cash and cash equivalents	-27,817	-3,765
Cash and cash equivalents at beginning of period	61,497	33,694
Cash and cash equivalents at end of period	33,680	29,929

Notes to the Consolidated Financial Statements

For the period 1 January to 30 September 2005

Notes to the Consolidated Financial Statements (IFRS) for the period 1 January to 30 September 2005 (2004)

I. Basic Company Information

The legal form of the Company, registered in Neckarsulm (Germany), Bechtle Platz 1, was changed in May 1999 from Bechtle GmbH into Bechtle Aktiengesellschaft (hereinafter referred to as "Bechtle" or "the Company"). On 30 March 2000 the shares of the Company were offered for trading on the Neuer Markt of the Frankfurt Stock Exchange. The shares are also traded on the stock exchanges in Berlin, Düsseldorf, Hamburg, Hanover, Munich and Stuttgart. The Company is listed under International Securities Identification Number (ISIN) DE0005158703.

The business in which Bechtle AG and the principal subsidiary companies included in the consolidated financial statements are involved is the distribution of IT and communication product applications including the necessary components (hardware and software), training courses, organization and application consultancy services, project management and the preparation of expert appraisals in the field of computer applications.

The business in which the parent company is involved also includes the acquisition, management and sale of shareholdings in other companies, plus the assumption of the personal liability and management of retail companies. The Company is also involved in financing, the handling of accounting, marketing, personnel management and training for the employees of companies within the group.

II. Summary of Key Accounting, Valuation and Consolidation Principles

General Information

For the financial years beginning at the 1 January 2005, as a stock market listed company, the parent company is obliged to prepare the consolidated accounts for the first time on the basis of international statutory accounting requirements, the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB), the interpretations of the Standing Interpretation Committee (SIC) and the International Financial Reporting Interpretation Committee (IFRIC) according to Article 315a (Section 1) of the German Commercial Code (HGB). The previous year's figures were calculated according to the same standards. The company made use of the possibility of premature application of all IFRS Standards which were adopted by 31 December 2004.

The German companies within the group have prepared their accounts and records in accordance with the provisions contained in the German Commercial Code (HGB). Foreign companies within the group have prepared their accounts and records in accordance with the local provisions. German commercial law and the local accounting principles applied in the foreign companies within the group deviate in key aspects from the International Financial Reporting Standards (IFRS). Any adjustments that were necessary to complete the financial statements in accordance with IFRS have been made.

The consolidated accounts were prepared, in principle, on the basis of historical acquisition cost or production cost. Exceptions were marketable securities and derivative financial instruments which were valued at their fair value. The consolidated accounts were prepared in the Euro currency and were rounded up to full thousands, unless otherwise stipulated.

Consolidation Principles

The consolidated accounts are based on the annual accounts of Bechtle Aktiengesellschaft and the included subsidiaries, which were prepared according to standard group accounting and valuation methods. Capital

consolidation was carried out by offsetting acquisition book values against the proportionately revalued shareholders' equity of the subsidiaries at the time of acquisition. Positive differences were capitalized according to IFRS 3 under intangible assets as goodwill. Negative differences were to be entered in the profit and loss account. The consolidated profit and loss account includes the results of acquired companies from the actual date of purchase.

Intragroup profits and losses, revenues, expenses and income, plus accounts receivables and liabilities have been eliminated. The necessary tax accrual and deferral for the consolidation transactions is made.

Notes on Conversion to IFRS

The transition from U.S. GAAP to IFRS was made by applying the procedures set out in IFRS 1. The date of transition to IFRS is the start of the financial year on 1 January 2004. As a basic principle, the assumption was made that the IFRSs in force on the date on which the financial statements were published had always been used. The simplifications specified under IFRS 1 regarding retrospective application were not applied.

With regard to the IFRS opening balance effective as at 1 January 2004, the adjustments to the previous balance sheet according to U.S. GAAP resulted only from the changes in the treatment of minority interests. Contrary to U.S. GAAP, minority interests must, according to IFRS, be declared as shareholders' equity. According to IFRS shareholders' equity as at 1 January 2004 increased by the minority interests (TEuro 614) totalled TEuro 180,838.

The net income was also affected by the different treatment of negative goodwill, this being the only relevant accounting and valuation difference between U.S. GAAP and IFRS for Bechtle in financial year 2004. As a result, the consolidated net income for 2004 (excluding net income of minority interests) according to IFRS was initially TEuro 3,206 higher than according to U.S. GAAP. In addition to the requirement that minority interests be declared as shareholders' equity, IFRS stipulates that the consolidated net income must be declared inclusive of the net income of minority interests. As a result, the consolidated net income rose by an additional TEuro 35 to TEuro 32,790. The shareholders' equity as at 31 December 2004 changed accordingly from TEuro 213,450 according to U.S. GAAP to TEuro 217,161 according to IFRS. The pre-tax earnings (EBT) for the financial year were to be reported as TEuro 45,080 according to IFRS, as compared to TEuro 38,326 according to U.S. GAAP.

Due to the transition from U.S. GAAP to IFRS, the net income for the period 1 January to 30 September 2004 increased by TEuro 3,402 whereby the different treatment of negative goodwill accounted for TEuro 3,372 and the inclusion of the net income of minority interests accounted for TEuro 30. Prior to this, the net income for the period according to U.S. GAAP had already increased by TEuro 24 over the figure originally disclosed in connection with recapitalization costs, which are offset against the capital reserves with no effect on net income. The shareholders' equity at 30 September 2004 according to IFRS increased accordingly to TEuro 207,328. According to IFRS, the earnings before taxes (EBT) for the period 1 January to 30 September 2004 were to be reported as TEuro 31,464, as compared to TEuro 24,593 according to U.S. GAAP.

The tables below show the relevant accounting and valuation differences between U.S. GAAP and IFRS in terms of the actual amounts and the transition for shareholders' equity, net income for the period and earnings before taxes (EBT).

Transition Shareholders' Equity

	01.01.2004 TEuro	30.09.2004 TEuro	31.12.2004 TEuro
Shareholders' equity under U.S. GAAP	180,224	203,505	213,450
No extraordinary income from recovery
of negative goodwill		-3,623	-3,631
Other operating income from recovery
of negative goodwill		3,623	3,631
Other operating income from recovery
of negative goodwill due to measurement
of fixed assets at fair value (no reduction)		3,876	3,886
Scheduled depreciation of unreduced fixed assets		-626	-763
Tax effect (deferred taxes) on scheduled depreciation
(reduced fixed assets)		124	83
Currency conversion differences		-13	0
Shareholders' equity under IFRS	180,224	206,866	216,656
without minority interest
Minority interest	614	462	505
Shareholders' equity under IFRS	180,838	207,328	217,161

Transition Net Income for the Period

	01.01.-30.09.2004 TEuro	01.01.-31.12.2004 TEuro
Net income for the period under U.S. GAAP	19,965	29,549
Costs of the capital increase (offset against the
capital reserves not affecting the operating result)	24	0
Net income for the period (revised) under U.S. GAAP	19,989	29,549
No extraordinary income from recovery of negative goodwill	-3,623	-3,631
Other operating income from recovery of negative goodwill	3,623	3,631
Other operating income from recovery of negative goodwill
due to measurement of fixed assets at fair value (no reduction)	3,876	3,886
Scheduled depreciation of unreduced fixed assets	-628	-763
Tax effect (deferred taxes) on scheduled depreciation
(reduced fixed assets)	124	83
Net income for the period under IFRS without minority interest	23,361	32,755
Minority interest	30	35
Net income for the period under IFRS	23,391	32,790

Transition Earnings before taxes (EBT)

	01.01.-30.09.2004	01.01.-31.12.2004
	TEuro	TEuro
EBT under U.S. GAAP	24,556	38,326
Costs of the capital increase (offset against the captial reserves
not affecting the operating result)	37	0
EBT (revised) under U.S. GAAP	24,593	38,326
Other operating income from recovery of negative goodwill	3,623	3,631
Other operating income from recovery of negative goodwill
due to measurement of fixed assets at fair value (no reduction)	3,876	3,886
Scheduled depreciation of unreduced fixed assets	-628	-763
EBT under IFRS	31,464	45,080

Notes on Relevant Differences between U.S. GAAP and IFRS

Measurement of Negative Goodwill

If there is any negative goodwill, the first thing to be done under IFRS 3 is to identify and measure the assets and liabilities once again. Any negative goodwill now remaining is to be recognized immediately in the income statement as a gain under other operating income and entered as earnings before tax (EBT). Under U.S. GAAP, in contrast, any negative goodwill is to be accounted for in so far as is possible initially by a reduction in the non-financial fixed assets entered into the accounts. Any amount of negative goodwill then remaining is to be recognized in the income statement as a gain as extraordinary income and thus not entered of earnings before tax (EBT).

Measurment of Minority Interest

The portion of the net income for the period and the net assets of a subsidiary applicable to interests held neither directly by the parent company nor indirectly by other subsidiaries (minority interests) must, according to IAS 1 and IAS 27, be stated separately from the shareholders' equity of the parent company in the consolidated balance sheet within the shareholders' equity section. Minority interests in the consolidated net income must likewise be stated separately. According to U.S. GAAP, on the other hand, minority interests do not count as shareholders' equity and, accordingly, must be stated separately between the shareholders' equity and the outside capital.

New Accounting Standards

Bechtle AG prematurely used all IFRS Standards which were adopted by 31 December 2004. No IFRS Standards having a major impact on the net worth, financial situation or profitability of the Group have been adopted since 1 January 2005.

Scope of Consolidation

The scope of consolidation includes Bechtle AG, Neckarsulm, and all its majority owned and controlled subsidiaries. Bechtle AG holds all shares in all of its affiliated companies directly or indirectly via the intermediate holding company Bechtle Beteiligungs-GmbH, Gaildorf, and ARP Holding AG, Rotkreuz, Switzerland. An exception is PSB AG für Programmierung und Systemberatung, Ober-Mörlen (PSB AG), and its subsidiary companies, in which Bechtle AG has a direct or indirect 98.3 percent shareholding.

The following companies were acquired or founded during the accounting period and included in the scope of consolidation for the first time:

Company	Registered Office	Date of first-time consolidation	Acquisition/ Founded
Bechtle GmbH & Co. KG	Bonn	31.01.2005	Founded
CDC IT Group *)	Pfäffikon,canton Schwyz, Switzerland	28.02.2005	Acquisition
DELEC AG *)	Gümligen, canton Bern, Switzerland	01.04.2005	Acquistion
compartner systems GmbH *)	Ratingen	01.04.2005	Acquisition
PP 2000 Business Integration AG *)	Stuttgart	01.07.2005	Acquisition

*) and the subsidiaries

The complete list of shareholdings will be submitted to the Commercial Register with the annual accounts of Bechtle AG.

Use of Estimates

The preparation of the consolidated financial statements requires the Executive Board to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities contingent. The actual results may differ, therefore, from the estimated figures.

Translation of Foreign Currency

The accounts of Bechtle's subsidiaries are prepared in the local currency.

Assets and liabilities are translated into Euros according to IAS 21, which is our reporting currency, at the mean exchange rate prevailing at the reporting date. Shareholders' equity is computed on the basis of historical rates of exchange. Revenue and expense accounts were translated at rates of exchange of the reporting period. Accounts receivable and liabilities in foreign currency were translated at the mean exchange rate prevailing at the reporting date. Gains of losses arising from fluctuations in exchange rates are reported with an effect on net income. In the period under review, a total of TEuro 340 (01.01.- 30.09.2004: TEuro 204 booked to expenses) has been booked to income.

Accounting and Valuation Principles

Tangible Assets

Tangible assets are stated at acquisition cost less accrued depreciation. Assets are depreciated over their estimated useful lifetime using planned depreciation methods based on the economic useful lifetime.

The useful lifetimes are as follows:

Office equipment:	3 - 5	years
Business equipment and fittings:	5 - 10	years
Vehicle fleet:	3 - 6	years
Buildings:	25 - 50	years

In line with German accounting practice, low-value tangible assets with an acquisition cost of less than Euro 410 in a total amount of TEuro 629 (01.01.-30.09.2004: TEuro 882) are fully depreciated in the year of acquisition. They are simultaneously treated as disposals in the changes in group fixed assets.

Intangible Assets and Goodwill

Intangible Assets

Intangible assets include established clientele and brands, plus bought-in and homegrown software, as well as service contracts.

Established Clientele

Established clientele are valued at acquisition cost. Established clientele acquired as part of corporate acquisitions are valued at an amount that represents the benefit to be obtained from the clientele. Established clientele are depreciated on a straight-line basis over a period dependent on the expected use for the Company. It is generally assumed that customer relations are of a long-term nature. The expected useful life is between five and twelve years.

Brands

Brand name rights acquired as part of corporate acquisitions are valued at an amount that represents the benefit to be obtained from the brand name rights. An unlimited useful life is assumed.

Bought-In Software and Online Shop

Bought-in software is valued at acquisition cost and depreciated on a straight-line basis over a useful life of three to five years. The online shop is to be treated as bought-in software.

Homegrown Software

In accordance with IAS 38, homegrown software and other product development costs must also be capitalized. Homegrown software can be intended for sale to third parties or used by the Company itself.

In both cases the costs for newly developed software were capitalized according to the provisions of IAS 38 if both the technical and commercial feasibility of the newly developed products were established and they generate future economic benefits for the Group. This capitalization takes place in the Bechtle Group at strictly defined production costs which contain directly attributable individual costs and appropriate allowances for overheads and depreciation. The costs incurred during the period before technical feasibility must be recognized immediately in "Expenses" as development costs. Scheduled depreciation is carried out according to the number of units or on a linear basis over the specific maximum expected utilization period of five years. The depreciations are included accordingly in the cost of sales, selling and marketing expenses and administrative expenses after their accrual.

Linear depreciation of these capitalized costs takes place from the date of commercial use of the asset over a utilization period of three to five years.

Service Contracts

Service contracts are valued at acquisition cost. Service contracts acquired as part of corporate acquisitions are valued at an amount that represents the benefit to be obtained from the service contracts. Service contracts are depreciated over the remaining time to maturity in accordance with the benefit obtained from them.

Goodwill

In accordance with the provisions of IFRS 3, goodwill is shown on the balance sheet on the basis of the impairment only approach and is regularly tested in regard to its impairment.

The impairment tests are performed for the defined cash generating units on the basis of the provisions of IAS 36 according to the discounted cash flow method. Corporate planning data are the basis on which the expected cash flow is determined. An interest rate is used for discounting the cash flow that reflects the current market price valuation.

Impairment of Fixed Assets

According to IAS 36, assets and certain intangible assets must be assessed for impairment if events or changes occur that can result in reduced recoverability. The recoverability of assets designated to remain in the hands of the Company is determined by comparing the book values of the asset with the estimated future influx of funds generated by the asset. The depreciation requirement corresponds to the amount by which the carrying amount of the asset exceeds the fair value. Assets that no longer serve the needs of the business are valued at book value or lower realizable value less costs of sale.

Maintenance costs are accounted for with effect on income at the time incurred.

Leasing

In the case of operating lease contracts, the leasing rates or leasing payments are entered directly into the profit and loss account. With regard to financing lease contracts, beneficial ownership is transferred to the lessee in cases in which he substantially bears all the rewards and risks associated with ownership (IAS 17).

Financial Instruments

Financial instruments are contracts which lead simultaneously in one company to a financial asset and in another company to a financial liability. They include both original financial instruments (e.g. accounts receivable or accounts payable) and derivative financial instruments (transactions for hedging against value change risks).

In accordance with IAS 39, a distinction is made between the following categories of financial instruments:

• Financial assets at fair value through profit or loss,
• Held-to-maturity investments,
• Loans and receivables,
• Available-for-sale financial assets.

Unless otherwise specified, financial instruments are shown at their market value. The market value of an original financial instrument is the price attainable on the market, i.e. the price at which the financial

instrument can be freely traded between parties independent of one another within a transaction. Extended credits and accounts receivable are reported in the balance sheet at net book value (e.g. loans).

Derivative financial instruments are financial contracts whose value is derived from the price of an asset or a reference rate (such as currencies, indices and interest). They require no or only little initial investment and are settled at a future date. Examples of derivative financial instruments include options, futures and interest rate swaps.

Derivative financial instruments are employed by Bechtle for hedging purposes only. The Company uses interest swaps to reduce the interest rate fluctuation risk related to interest on bank borrowing.

In accordance with IAS 39, all derivative financial instruments in the Bechtle Group are shown according to the accounting method on the settlement date at market values. The market values are calculated by means of standardized mathematical finance methods (Market-to-Market Method) or quoted prices. Profits and losses from the change in the market values of derivative financial instruments, which are not shown on the balance sheet according to hedge accounting rules, are also included immediately on the profit and loss account together with the change in the value of the basic transaction. In the case of any interest swaps of the company to be classified as a cash flow hedge, the changes in the fair market value of the financial derivatives are reported under shareholders' equity as "Other Comprehensive Income" after deduction of deferred taxes. The market value of interest swaps is determined by discounting the expected future cash flows over the remaining term of the contract on the basis of current market interest rates and the yield curve.

Accounts Receivable and Other Assets

Accounts receivable and other assets are reported at their nominal value net of adequate provisions for all identifiable credit risks. Besides these necessary allowances, a bad debt allowance is made to cover general credit risk.

Inventories

In accordance with IAS 2, merchandise was valued at average acquisition cost or the lower market price. Interest on loan capital is not capitalized. All recognizable inventory risks arising in connection with restricted usability or obsolescence are covered by appropriate markdowns. Reductions in value were made for items that were not readily marketable. If the reasons which led to a depreciation in inventories in the past no longer exist, a reversal of write-down will be carried out.

Treasury Stock

Treasury stock to the amount of the acquisition costs is reported separately as a reduction in shareholders' equity. The number of outstanding, i.e. publicly held shares of the Company, is reduced according to the number of shares held in treasury stock. The number of emitted shares remains unchanged. Gains or losses arising from the resale of treasury stock will be offset against the capital reserves.

Deferred Tax Assets

In accordance with IAS 12, deferred tax assets are created for all temporary differences between the carrying amounts in the group balance sheet and the tax valuations of assets and liabilities (Liability Method), as well as for tax loss carryforwards. Deferred tax assets for accounting and valuation differences as well as for tax loss carryforwards are only recognized if it can be assumed with sufficient probability that these differences will produce the corresponding benefit in future. Deferred tax assets are offset against deferred tax liabilities if the tax creditors and period congruence are identical. The tax rates applying in the year of reversal are used as the calculation basis. If passed, changes in the tax rates are taken into account.

Accrued Expenses

Accrued expenses are formed if there is a current liability towards third parties from a past event. It must be possible to reliably estimate this liability amount and it must lead more probably than improbably to an outflow of future resources. Provisions are only formed for legal and factual obligations towards third parties. No expense provisions were formed since there is no external liability in this case. If the interest effect was considerable, long-term provisions with a term of more than one year were discounted on the basis of the corresponding interest rates on the balance sheet date.

Liabilities

Liabilities are entered on the liabilities side of the balance sheet at continued acquisition cost.

Preparation of Profit and Loss Account using the Cost-of-Sales Method

The profit and loss account is prepared using the cost-of-sales method.

Revenue Recognition

Revenues are transacted in the segments IT-System House and IT-eCommerce. A distinction is made between service and products.

The revenues are recorded in accordance with IAS 18 after service has been rendered or after acceptance by the customer, with consideration given to revenues deductions. Revenues deductions, contractual penalties and discounts are deducted in this case. The revenue amount can be reliably measured at this time and the accrual of the economic benefit from the transaction is sufficiently probable.

Earnings and associated expenses are recorded independently of the underlying cash flows.

Revenues from maintenance contracts are collected on a pro rata temporis basis over the term of the contract.

For software maintenance contracts and warranty extensions, deferred income amounting to TEuro 7,760 (previous year: TEuro 3,981) was posted to the balance sheet and written back over the average term of the contracts.

Advertising Expenses

Expenditure for advertising and sales promotion activities are recorded as expenses as they are incurred. In the year under review TEuro 3,883 (01.01.-30.09.2004: TEuro 3,028) were included in the profit and loss account.

Shipping Costs

Costs relating to the delivery of products to customers are shown as selling and marketing expenses.

Research and Development Costs

With the exception of the development costs incurred in connection with the development of self-used or commercial software, no significant research and development costs were incurred. In this regard, we refer to our notes to homegrown software.

Earnings per Share

Earnings per share were calculated according to IAS 33. IAS 33 stipulates that earnings per share (EPS) be disclosed for all companies that have issued ordinary shares. Ordinary EPS is net income divided by the weighted average of the outstanding ordinary shares.

Corporate Governance

Bechtle AG publishes a declaration of compliance with the German Corporate Governance Code pursuant to Article 161 of the German Companies Act. The most recently updated declaration is published on the Company's website.

III. Notes to the Group Balance Sheet and Profit and Loss Account

(1) Cash and Cash-Equivalents

The cash assets amounting to TEuro 33,680 (previous year: TEuro 61,497) include current credit with banks and cash balances, as well as financial investments that can be translated into cash at short notice with original maturity dates of three months or less from date of acquisition.

(2) Short-term Investments / Marketable Securities

Marketable securities are classified as "available for sale" and are therefore no derivative financial assets. In accordance with IAS 39, they must be valued at the reconcilable fair value, the stock market price and market price.

	30.09.2005 TEuro	Previous year TEuro
Purchase costs	3,732	4,359
Market and fair value	3,846	4,296
Accrued interest	0	23
Unrealized gains	114	54
Unrealized losses	0	117

(3) Trade Accounts Receivable

	30.09.2005	Previous year
	TEuro	TEuro
Trade accounts receivable	132,317	145,685
Valuation adjustments	3,131	3,223
	129,186	142,462

To cover the general credit risk, appropriate valuation adjustments will be made based on past experience.

Accounts receivable by the Company are unsecured, and the Company therefore bears the risk of nonpayment of these amounts. In the past, the Company had to absorb minor defaults on payments by individual customers or groups of customers.

(4) Inventories

The Company's stock essentially consists of retail goods.

	30.09.2005	Previous year
	TEuro	TEuro
Inventories	48,909	38,790
Valuation adjustments	2,798	2,249
	46,111	36,541

(5) Prepaid Expenses, Other Current Assets and Tax Rebate Claims

	30.09.2005 TEuro	Previous year TEuro
Expected bonuses and advertising cost contributions	2,312	4,127
Credit notes outstanding	1,963	1,774
Accounts receivable from personnel	236	53
Accounts receivable from suppliers	123	1,388
Other	2,191	1,074
Other current assets	6,825	8,416
Prepaid expenses	2,265	1,660
	9,090	10,076
Tax rebate claims	3,089	3,894
	12,179	13,970

(6) Tangible Assets

	30.09.2005 TEuro	Previous year TEuro
Tools and equipment	11,850	8,989
Land, buildings	8,098	8,411
Plant and machinery	39	33
	19,987	17,433

(7) Intangible Assets

	30.09.2005 TEuro	Previous year TEuro
Established clientele	13,810	11,670
Brands	2,750	2,750
Online Shop	863	1,511
Homegrown software	412	333
Service contracts	190	272
Other intangible assets	2,214	1,648
	20,239	18,184

The brands do not have a defined lifetime, and must be assigned to the cash generating unit of IT-eCommerce.

Established Clientele	30.09.2005 TEuro
Book value (30.09.2005)	13,810
Amortization period (weighted average)	9.0 years
Remaining useful lifetime (weighted average)	6.7 years
Cumulative depreciations	5,986
Expenses for period (01.01.-30.09.2005)	1,481

Homegrown software	30.09.2005 TEuro	Previous year TEuro
Book value as at 01.01.	333	716
Additions	230	0
Depreciations during the accounting period	151	383
Book value as at 30.09./ 31.12.	412	333

(8) Goodwill

As of 30 September 2005 Bechtle reported goodwill of TEuro 88,516. This covers the status as of 31 December 2004 (TEuro 81,607) and the newly accrued goodwill from the acquisition of the CDC IT Group (Switzerland), the DELEC AG (Switzerland), the compartner systems GmbH, Ratingen, and the PP 2000 Business Integration AG, Stuttgart, in the period under review and the purchase of further shares in PSB AG, Ober-Mörlen to the total sum of TEuro 6,713. The goodwill also increased in the period under review by TEuro 196 due to a subsequent adjustment of the purchase price concerning the year 2004 (TEuro 260) and due to currency conversion differences (TEuro -64).

For the impairment test of reported goodwill, which has to be carried out on a regular basis, two cash generating units were identified that are identical with the two segments "IT-System House" and "ITeCommerce" from the segment reporting.

The goodwill is distributed as follows over the two cash generating units:

Cash Generating Unit	30.09.2005	Previous year
	TEuro	TEuro
IT-System House	71,388	64,479
IT-eCommerce	17,128	17,128
	88,516	81,607

The previous impairment test did not indicate an impairment for either the cash generating unit "IT-System House" or the cash generating unit "IT-eCommerce".

By 31 December 2001 goodwill was amortized according to schedule over 15 years.

(9) Loans

In accordance with IAS 39, loans are classified in a separate category as long-term receivables. They must be valued as financial assets at the reconcilable fair value when recorded for the first time and at their continued acquisition cost in the subsequent period. There was no need to make a value adjustment for this item. Loans amounting to TEuro 1,850 (previous year: TEuro 1,625) include tax-privileged job creation reserves in Switzerland, which are deposited on a blocked bank account (TEuro 1,031), and a loan made to a selected investment and leasing company (TEuro 819).

(10) Accrued Expenses

Accrued expenses for	30.09.2005 TEuro	Previous year TEuro
Commissions	4,940	5,817
Holiday payments	1,952	949
Renumerations	1,221	3,021
Other personnel expenses	2,551	1,744
Personnel	10,664	11,531
Outstanding invoices	8,770	8,395
Guarantees	2,238	1,856
Legal and consultation costs	1,255	1,209
Customer bonuses	398	605
Restructuring	222	813
Other accrued expenses	3,923	5,385
	27,470	29,794
Current accrued expenses	27,142	29,454
Non-current accrued expenses	328	340

(11) Other Current Liabilities

Other current liabilities are as follows:

	30.09.2005 TEuro	Previous year TEuro
Social security payments	3,632	3,318
Turnover tax	3,446	5,910
Liabilities to customers	2,723	944
Wage tax and church tax	1,831	1,798
Unrealized losses from financial derivatives	255	198
Amounts payable under purchase contracts	0	2,020
Other	1,049	1,252
	12,936	15,440

(12) Financial Liabilities

	30.09.2005 TEuro	Previous year TEuro
Deutsche Bank
– Loan to aquire ARP Holding AG	10,444	13,167
Baden-Württembergische Bank – Loan to aquire the IT-System House Division of Eurodis Switzerland AG	5,402	6,220
Sparkasse Schwäbisch Hall - Crailsheim – Loan to acquire ARP Holding AG	5,145	6,486
Long-term loans, total	20,991	25,873
Short-term portion	5,441	5,486
Long-term loans, less short-term portion	15,550	20,387

The loan granted by Deutsche Bank amounting to TEuro 10,444 was denominated in Swiss francs (TCHF 16,240) and is due to mature on 1 April 2009. It bears a floating interest rate (CHF-LIBOR-3M + 100 basis points) and is amortized with annual payments amounting to TEuro 2,611, payable on 1 April, beginning as of 1 April 2005. Security for the loan is provided in the negative covenant and in the equalization obligation in the provision of securities. The risks associated with the loan's floating interest rate have been eliminated by means of an interest swap. The interest swap, which has a reference amount of initially TCHF 20,300, has been designated as a cash flow hedge and is 100 percent effective in hedging against the interest rate risk. Bechtle pays a fixed interest rate of 1.50 percent and receives the CHF-LIBOR-6M as a floating interest rate. The expiration date has been fixed at 1 April 2009. The market value of the interest swap as at 30 September 2005 amounted to TEuro -45. Taking into account the use of the interest swap as a hedge against the risk of interest rate fluctuations the interest rate payable on the loan amounts to 2.50 percent.

Two loans granted by the Baden-Württembergische Bank amounting in total to TEuro 5,402 were denominated in Swiss francs and are due to mature on 30 December 2008; they bear a floating interest rate (CHF-LIBOR-6M + 90 basis points). The loans aren't secured. The risks associated with the floating interest rate on the two loans have been eliminated by means of two interest swaps. The interest swaps have been designated a cash flow hedge and are 100 percent effective in hedging against the risk of interest fluctuations. With the exception of the reference amounts (initially a total of TCHF 12,000), both interest swaps have identical conditions. Bechtle pays the fixed interest rate of 2.54 percent and is given CHF-LIBOR-6M as the floating interest rate. The expiration date has been fixed at 30 December 2008. The market value of the two interest swaps as at 30 September 2005 amounted to TEuro -155. Taking into account the use of the interest swap as a hedge against the risk of interest rate fluctuations the interest rate payable on the two loans amounts to 3.44 percent.

The loan granted by the Sparkasse Schwäbisch Hall – Crailsheim amounting to TEuro 5,145 was denominated in Swiss francs (TCHF 8,000) and is due to mature on 1 April 2009. It bears a floating interest rate (CHF-LIBOR-6M + 90 basis points) and is amortized with annual payments amounting to TEuro 1,286, payable on 1 April, beginning as of 1 April 2005. Security for the loan is provided in the negative covenant and in the equalization obligation in the provision of securities. The risks associated with the loan's floating interest rate have been eliminated by means of an interest swap. The interest swap, which has a reference amount of initially TCHF 10,000, has been designated as a cash flow hedge and is 100 percent effective in hedging against the interest rate risk. Bechtle pays a fixed interest rate of 1.49 percent and receives the

CHF-LIBOR-6M as a floating interest rate. The expiration date has been fixed at 1 April 2009. The market value of the interest swap as at 30 September 2005 amounted to TEuro -54. Taking into account the use of the interest swap as a hedge against the risk of interest rate fluctuations the interest rate payable on the loan amounts to 2.39 percent.

The Company has global lines of credit amounting to TEuro 51,635, plus lines of credit by way of bank guarantee to the amount of TEuro 910. At the balance-sheet date, cash loans amount to TEuro 276 and credits by way of bank guarantee amounting to TEuro 3,974, leaving an unused line of credit of TEuro 48,295.

Bechtle AG has provided group guarantees for its subsidiaries amounting to TEuro 23,469. In addition, there are unlimited group guarantees for ten company locations.

(13) Shareholders' Equity

Share Capital

The ordinary share capital of Bechtle AG as of 30 September 2005 is divided into 21,200,000 issued and outstanding ordinary shares with a nominal value for accounting purposes of EUR 1.00. Each share accords one vote. The ordinary share capital is thus unchanged in comparison with 31December 2004.

The number of outstanding shares remained totally unchanged in the period under review in comparison with 31December 2004, amounting to 21,200,000 shares. According to IAS 33, the weighted average calculated of the outstanding shares in the period under review consequently comes to 21,200,000 shares (01.01.2004 - 30.09.2004: 21,002,920 shares).

Authorized Capital

In accordance with Article 4 section 3 of Association of Bechtle AG, the Executive Board is authorized, with the consent of the Supervisory Board, to increase the share capital until 10 June 2009 by TEuro 10,600 through the issue of new shares made out to bearer (Authorized Capital).

The capital increases can be made in the form of cash contributions and/or non-cash contributions. The Executive Board is authorized, with the consent of the Supervisory Board to exclude fractional amounts from the shareholders' subscription right. The Executive Board is further authorized, with the consent of the Supervisory Board, to exclude the subscription right, if (case 1) the capital increase is made in the form of non-cash contributions tangible assets for the purchase of companies or interests in companies, or (case 2) the capital increase is in the form of cash contributions, does not exceed 10 percent of the subscribed share capital at the time of issue, and the issuing price is not significantly below the market price, or (case 3) the capital increase is for the purpose of issuing staff shares, if the pro rata amount does not exceed 10 percent of the subscribed share capital at the time of issue.

The Executive Board is authorized, with the consent of the Supervisory Board, to specify any further details relating to capital increases from authorized capital.

Contingent Capital

The General Shareholders' Meeting of 1 June, 2001 resolved to increase the Company's subscribed share capital by a nominal amount not exceeding TEuro 2,000 by issuing up to 2,000,000 new shares with profit entitlement from the beginning of the financial year in which the issue is made. This contingent capital

serves exclusively to exercise subscription rights which were granted in the content of the 2001/2008 stock option scheme in accordance with the General Shareholders' Meeting resolution of 1 June 2001 and may only be performed to the extent that the subscription rights are issued in the context of the 2001/2008 stock option scheme and the bearers of these subscription rights actually make use of them (Contingent Capital 2001).

Dividends

The General Shareholders' Meeting of June 22, 2005 decided to pay a dividend for 2004 amounting to TEuro 8,480 (Euro 0.40 per share with full dividend rights).

Dividends may only be paid from the retained earnings of the company as disclosed in the German annual financial statements of Bechtle AG. These amounts deviate from the total from the shareholders' equity as reported in the consolidated financial statements according to IFRS. The payment of future dividends is jointly proposed by the Company's Executive Board and the supervisory Board and approved by the General Shareholders' Meeting. The determining factors are, in particular, the profitability, the financial position, the capital requirements, the business outlook and the general economic conditions of the Company. As the Company's strategy is geared to internal and external growth, investments will be necessary and, where possible, will be financed internally.

Additional paid-in capital

Additional paid-in capital contains essentially the capital surplus (agio) arising from increases in share capital carried out, and remains unchanged compared with 31 December 2004 at TEuro 143,454.

Treasury Stock

The Executive Board was last authorised by a resolution of the General Shareholders' Meeting on 11 June 2004 as well as on 22 June 2005 to acquire company treasury stock with the consent of the Supervisory Board in accordance with article 71 section 1 no. 8 AktG (Companies Act). Acquisition of treasury stock is to meet the conditions contained in the resolution of the General Shareholders' Meeting.

In the period under review there were no transactions in treasury stock so that by 30 September 2005 like in the financial year 2004, the company held no treasury stock.

Other Comprehensive Income

The following table summarizes the information on the other comprehensive income on the balance sheet date.

	30.09.2005 TEuro	Previous year TEuro
Exchange differences	-548	-264
Derivative instruments	-170	-135
Unrealized gains/losses (securities)	-63	-63
	-781	-462

The enclosed statement of changes in the shareholders' equity shows in detail the development of the company's consolidated shareholders' equity.

(14) Revenues

Revenues amounting to TEuro 817,883 (01.01.-30.09.2004: TEuro 751,222) contain the amounts charged to customers for goods and services – less revenues deductions, contractual penalties and discounts.

The breakdown of revenues into segments and regions is shown in the segment report.

(15) Other Operating Income

Other operating income amounted to TEuro 4,442 in the period under review (01.01.-30.09.2004: TEuro 11,566), comprised essentially of advertising cost subsidies, income from currency conversion differentials as well as from the disposal of assets.

The other operating income of the previous year (TEuro 11,566) contained a special item amounting to TEuro 7,499 (originally TCHF 11,602), which resulted from the initial consolidation (1 February 2004) of the acquired company ALSO COMSYST AG, Switzerland.

On acquisition of ALSO COMSYT AG, Switzerland, the current value of the acquired net assets exceeded the costs of buying the holding, resulting in the creation of negative goodwill from the consolidation of capital. According to IFRS 3, in such a case the identification and valuation of the acquired assets and debts is first to be reassessed. Any remaining negative goodwill is then to be included as affecting net income. This is to be shown in other operating income, and hence in the earnings before tax (EBT).

Without this special item, other operating income amounted in the previous year to TEuro 4,067, and earnings before tax (EBT) correspondingly to TEuro 23,965.

Further explanations about the inclusion of negative goodwill as other operating income in the period of the previous year with an effect on net income are provided in the context of the transition arrangements from U.S. GAAP to IFRS (bullet point II).

(16) Interest Income and Expenses

	01.01.- 30.09.2005 TEuro	01.01.- 30.09.2004 TEuro
Other interest and similar income	711	546
Interest and similar expenses	695	612
	16	-66

According to IAS 23.29, interest is recorded in the period in which it is occurred based on the benchmark method.

(17) Income Tax / Deferred Tax

Paid and due taxes on income and earnings as well as the deferred taxes are reported as income taxes.

The tax expenses incurred in the accounting period are composed as follows:

	01.01.- 30.09.2005	01.01.- 30.09.2004
Current tax expenses	TEuro 8,890	TEuro 6,909
Deferred taxes	-7	1,164
Tax expenses	8,883	8,073

Information on actual and deferred tax assets are resulting from items which are directly charged or credited to shareholders' equity.

Tax effects	01.01.- 30.09.2005	01.01.- 30.09.2004
	TEuro	TEuro
Change in difference of currency conversion	-109	-96
Change in unrealized profits / losses securities	0	-15
Change in unrealized profits / losses financial derivatives	-21	3

The balance for the accounting period between the actual tax expenses and the amount arising from a weighted domestic and foreign tax rate of around 33 percent (01.01.-30.09.2004: 33 percent) on the earnings before income tax is as follows:

	01.01.- 30.09.2005 TEuro	01.01.- 30.09.2004 TEuro
Earnings before taxes on income	25,043	31,464
Expected tax expenses	8,475	9,738
Non tax-deductible trecovery of the negative goodwill	0	-1,500
Tax expenses from previous years	317	0
Only tax-deductible goodwill amortization	-652	-662
Depreciation of deferred tax assets	686	0
Apreciation of deferred tax assets	-470	0
Other	527	497
Actual tax expenses	8,883	8,073

The following table shows the deferred tax assets and liabilities. In addition to changes in the current year, it includes the deferred tax assets to be taken into account in the first-time consolidation of acquired companies as well as tax effects arising from changes in shareholders' equity not affecting the operating result.

Deferred tax assets	30.09.2005	Previous year
	TEuro	TEuro
Tax loss carryforwards	7,159	6,893
Tangible assets	446	149
Accrued Expenses	142	182
Interest swap	84	64
	7,831	7,288
Valuation adjustments	1,111	475
Deferred tax assets	6,720	6,813

Deferred tax liabilities	30.09.2005 TEuro	Previous year TEuro
Established clientele	2,630	2,222
Goodwill	1,964	1,644
Inventories	882	337
Tangible assets	395	242
Property	388	388
Accrued expenses	371	321
Accounts receivable	327	317
Capitalized software	158	127
Liabilities	79	79
Service contracts	68	104
Other	654	62
Deferred tax liabilities	7,916	5,843

The deferred tax assets mainly result from earnings tax loss carryforwards.

A valuation allowance is made against accrued deferred tax assets if it is not sufficiently likely that the deferred taxes will be realized. The evaluation made is subject to change over time. These changes can result in the reversal of valuation allowances in subsequent reporting periods. The valuation allowance in the amount of TEuro 1,111 relates to the accrued deferred taxes from loss carryforwards.

The basic tax rate used for the accrual of deferred taxes is approximately 38 percent.

The calculation of deferred tax rebate claims on foreign loss carryforwards is based on the actual taxrate.

Tax loss carryforwards amounting in total to TEuro 27,154 at 30 September 2005, on which the deferred tax assets were determined, refer to domestic and foreign subsidiaries. A total of TEuro 14,869 (previous year: TEuro 16,765) are accounted for foreign companies. Domestic tax loss carryforwards are in accordance with the present tax regulations currently regarded as having no time limitation. The changes in German tax legislation with regard to the use of tax loss carryforwards (minimum taxation) were taken into account when assessing the impairment of deferred tax assets on tax loss carryforwards. Tax loss carryforwards abroad expire in some cases in five years time.

(18) Earnings Per Share

The following table presents the computation of the net earnings per ordinary share:

	01.01.-	01.01.-
	30.09.2005	30.09.2004
	TEuro	TEuro
		(excepting quantity and amount per share)
Net income without minority interest	16,125	23,361
Weighted average shares outstanding	21,200,000	21,002,920
Earnings per share	0.7606	1.1123

In accordance with IAS 33, earnings per share are calculated from group profit after tax and the average number of shares in circulation during the year. The unwatered earnings per share are identical with the watered earnings per share.

IV. Other explanatory notes

Segment Disclosures

The individual annual accounts are segmented according to business segments and regions. Segmentation is based on internal reporting (Management Approach). The objective of segmentation is to show transparency in the profitability, success prospects, opportunities and risks of the different business segments of the Bechtle Group.

In accordance with IAS 14, the Group currently operates two business segments – IT-System House and IT-eCommerce. The segments differ from one another in their fields of activity and use different processes in the sale of IT products.

The IT-System House segment combines the provision of services and product procurement when designing the customer's IT infrastructure. The range of services extends from advice on hardware procurement, development of networks, peripheral hardware integration, service, maintenance and training through to complete technical support. The Bechtle Group is organized regionally and, with virtually nationwide IT-System House coverage, has built up an extensive network of consultancy centres in close proximity to the customer. To concentrate its know-how in individual specialist fields (e.g. IBMAS/400 and RS/6000, Lotus Notes, CAD/CAM), the Bechtle Group has set up competence centres whose knowledge can be accessed by every company location in the network for the benefit of the customer. In the course of its IT-System House activities, the Bechtle Group has set up training centres at several locations, offering customer employees a wide range of seminars which can be either of a general nature or tailored to the customer's specific requirements.

The IT-eCommerce segment concentrates purely on trading through direct selling to trade and public customers with over 20 PC workstations. The product line is designed to offer customers hardware and software products, peripheral equipment and the necessary consumables for all applications. It reflects the market in terms of its range and diversity. The focus is on brand-name products of all major suppliers including Hewlett Packard, IBM, Fujitsu Siemens, Cisco, Toshiba, Lexmark, Microsoft and Lotus. Approximately 24,000 articles are available in nine countries via an online shop and a main catalogue with over 800 pages which is published twice annually. The main catalogues have a circulation of over 150,000 and are sent to existing and prospective customers throughout Europe. The Bechtle Group is represented in nine European countries by thirteen direct-selling companies.

The Bechtle Group mainly operates offices in Germany. Foreign offices are located in Italy, Austria, the Netherlands, the United Kingdom, Switzerland, France, Belgium, Taiwan and Spain.

The administration of the group companies is centred primarily in Gaildorf.

There are no major inter-segment transactions.

Earnings before interest and taxes is the control variable of the segments. Interest is therefore not included, as the segments are financed primarily through Bechtle AG and external interest expenses and income basically arise here.

External revenues by segment	01.01.- 30.09.2005	01.01.- 30.09.2004
	TEuro	TEuro
IT-System House	565,664	501,809
IT-eCommerce	252,219	249,413
Company total	817,883	751,222
Depreciation and amortization	01.01.-	01.01.-
by segment	30.09.2005	30.09.2004
	TEuro	TEuro
IT-System House	5,909	6,027
IT-eCommerce	2,547	2,270
Company total	8,456	8,297
Operating income	01.01.-	01.01.-
by segment	30.09.2005 TEuro	30.09.2004 TEuro
IT-System House	9,476	18,028
IT-eCommerce	15,551	13,502
Total operating income	25,027	31,530
Financial result	16	-66
Earnings before taxes	25,043	31,464

Gross assets by segment	30.09.2005 TEuro	Previous year TEuro
IT-System House	247,888	267,118
IT-eCommerce	114,426	117,310
Balance sheet total	362,314	384,428

Liabilities		Previous
by segment	30.09.2005	year
	TEuro	TEuro
IT-System House	102,609	111,615
IT-eCommerce	35,494	55,652
Balance sheet total	138,103	167,267

Investments in long-lived assets *) by segment	01.01.- 30.09.2005 TEuro	01.01.- 30.09.2004 TEuro
IT-System House	4,826	8,670
IT-eCommerce	1,137	1,186
Company total	5,963	9,856

Investments in long-lived assets due to changes in scope of consolidation *) by segment	01.01.- 30.09.2005 TEuro	01.01.- 30.09.2004 TEuro
IT-System House	14,947	21,614
IT-eCommerce	0	0
Company total	14,947	21,614

*) Software, advance payments, established clientele, service contracts, loans and tangible assets.

Geographical Information

In the period under review, the following amounts can be assigned to geographical regions.

External revenues	01.01.-	01.01.-
by regions	30.09.2005	30.09.2004
	TEuro	TEuro
Domestic	548,066	518,763
Foreign	269,817	232,459
Company total	817,883	751,222

The following applies for the segmentation:

Revenues are assigned to the country in which the subsidiary's registered office is located. Seen from the subsidiary's viewpoint, revenues are generated only in its own domestic market. Group external revenues show the shares of the segments in consolidated group revenues. No substantial transactions were effected between the segments. Segment assets include all group assets plus participations. Segment liabilities contain all liability items of the Group. Investments relate to the additions to fixed assets and intangible assets. Depreciation refers to fixed assets and intangible assets.

V. Cash Flow Statement

In accordance with IAS 7, the Cash Flow Statement shows cash flow movements separated according to fund inflows and outflows from operating, investing and financing activities for the 2005 and 2004 financial years. Cash flow was calculated on the basis of the indirect method from the consolidated net income of the Bechtle Group. The cash in the Cash Flow Statement includes all liquid funds shown on the balance sheet, i.e. cash on hand, cheques and cash in banking institutes if it is available within three months. The cash is not subject to any disposal restrictions.

The cash flow from operating activities is indirectly calculated from the profit after taxes on income. During indirect calculation of this cash flow, the considered changes in balance sheet items relating to current operating activities are adjusted by effects from currency conversion and changes in the consolidation group. The following items are also contained in the outflow of funds from current operating activities: paid interest amounting to TEuro 646, received interest amounting to TEuro 711, no received dividends and paid income tax amounting to TEuro 10,367.

Cash Flow provided by Operating Activities

The cash inflow from operating activities during the period under review amounted to TEuro 9,730 (01.01.- 30.09.2004: TEuro 15,198). The cash inflow of the positive net income of the period and the not cash generating depreciation stands essentially against the cash outflow of the increase in net working capital including the accrued expenses.

Cash Flow used in Investing Activities

The outflow of funds arising from investment activity amounted to TEuro 17,142 (01.01.2004 - 30.09.2004: TEuro 40,541) and is essentially attributable to acquisition of companies.

Cash Flow used in Financing Activities

The outflow of funds arising from financing activity amounting to TEuro 20,009 (01.01.2004 - 30.09.2004: TEuro 21,547 inflow of funds) is essentially a result of the repayment of loans and the dividends paid.

Interest

	01.01.-	01.01.-
	30.09.2005	30.09.2004
	TEuro	TEuro
Cash Outflow	646	612
Cash Inflow	711	546

VI. Contingencies

Information on Leasing Contracts

If operating lease contracts occur in the Bechtle Group, leasing instalments or rents are recorded directly as expenses in the profit and loss account.

The Company concluded non-cancellable leasing contracts for office and storage space. The Company also leased buildings, vehicles and various services under operate-lease arrangements that are non-cancellable during the basic term of the contract. Expenses for leasing contracts include payments amounting to TEuro 10,865 (01.01.-30.09.2004: TEuro 11,001) accounted for as expenses.

Future commitments with respect to the above-mentioned agreements with an initial or remaining term of more than one year as at 30 September 2005 amount to TEuro 82,887 (01.01.-30.09.2004: TEuro 86,644).

	TEuro
due within one year	15,646
due between 1 and 5 years	33,413
due after 5 years	33,828
Minimum leasing payments total	82,887

Financial leasing commitments include TEuro 42,224 from a leasing contract for the central logistics and administration building in Neckarsulm, which was concluded in 2002. The owner of the building is Fabiana Grundstücksverwaltungsgesellschaft mbH, Mannheim (Fabiana). The only business in which the company is engaged is that of leasing the building to Bechtle AG through the Südleasing GmbH leasing agency. Fabiana has a share capital of TEuro 25 and has financed the investment of TEuro 31,150 primarily through loans. Bechtle AG has neither a direct nor indirect interest in Fabiana.

When the leasing contract expires in 2022, the Company has a purchase option on the building. There are no reasons according to IAS 27.13 or SIC 12 why the company should be consolidated with Fabiana. In addition, no losses from the leasing contract are expected, as the company is not compelled to exercise its option to buy.

Other Financial Liabilities

By purchasing the CDC IT Group, Pfäffikon, Canton of Schwyz, Switzerland, in the period under review, Bechtle has contractually committed itself to the payment of certain conditional subsequent purchase price increases. The extent of these purchase price increases to be paid subsequently will depend on the achievement of certain targets in relation to earnings before tax in the financial years 2005 and 2006, and may amount to a maximum of TEuro 1,299 in total.

As part of the acquisition of Gate Informatic AG, Berne, Switzerland, Bechtle is contractually committed to paying a number of subsequent increases in the purchase price. The amount of these subsequent increases in the purchase price is determined by specific targets being achieved with regard to earnings before tax in the 2005, 2006 and 2007 financial years, and can amount to a maximum of TEuro 1,824 in total.

With the acquisition of PP 2000 Business Integration AG, Stuttgart, Bechtle has undertaken a contractual obligation to pay a fixed subsequent increase in the purchase price. The amount of the increase in the purchase price which becomes subsequently payable is contingent upon the achievement of agreed

earnings targets in the financial years 2006, 2007 and 2008. However, the maximum total increase in the purchase price will in no event exceed TEuro 900.

As part of the acquisition of SGB Servicegesellschaft für Geld- and Banksysteme mbH, Aalen, Bechtle is contractually committed to paying a number of subsequent increases in the purchase price. The amount of these subsequent increases in the purchase price is determined by specific targets being achieved with regard to earnings before tax in the 2005, 2006 and 2007 financial years, and can amount to a maximum of TEuro 900 in total.

Litigation

The company is unaware of any proceedings that would have a substantial detrimental effect or had this effect in the last two years on its earnings, liquidity or financial position.

VII. Related Parties

Transactions with Related Parties

According to IAS 24, persons or companies who are influenced by or have an influence upon the reporting company must be named insofar as they have not already been incorporated as consolidated companies into the consolidated financial statement.

Related persons in the Bechtle Group include, in principle, members of the Executive Board and Supervisory Board, as well as their relatives.

In the year under review, there were no significant revenues and expenses from transactions with members of the executive or supervisory board and their relatives.

VIII. Remuneration of Executive Bodies

Remuneration of Executive Managers in Key Positions

Executive Board

The total benefits of the Executive Board of Bechtle AG in the period under review amounted to TEuro 710. The benefits of the Executive Board consisted of a fixed component and variable component. The fixed benefits amounted to TEuro 485 and the variable benefits amounted to TEuro 225.

IX. Acquisitions

In the accounting period, the following acquisitions were transacted:

PSB AG für Programmierung and Systemberatung, Ober-Mörlen (PSB AG)

On 17 January 2005, a further 2.8 percent of the shares in PSB AG were acquired, following the acquisition of 95.5 percent of the shares in PSB AG in 2003. The purchase price for the additional shares acquired in PSB during the accounting period, including a so-called "supplementary package", amounted to TEuro 954 (Euro 9.40 per share) plus TEuro 1 additional acquisition costs.

As a result of the acquisition of a further 2.8 percent of the shares in PSB AG, the amount stated in the accounts at 31 December 2004 for minority shares (TEuro 505) has been reduced by TEuro 311 to TEuro 194. Of PSB AG's net income for the accounting period, an amount of TEuro 35 was attributable to outstanding minority shares (1.69%), which finally results in minority shares amounting to TEuro 229 entered into the accounts as at 30 September 2005.

The total purchase price of TEuro 955 paid for the shares in PSB AG acquired in the accounting period, due to the TEuro 311 reduction in minority shares, results in goodwill amounting to TEuro 644.

CDC IT Group, Pfäffikon, Canton of Schwyz, Switzerland

On 28th February 2005, all shares in the CDC IT Group were acquired for a purchase price of TEuro 2,795. This purchase price will be subsequently increased if certain targets in relation to pre-tax profits are achieved in the financial years 2005 and 2006. The increase in the purchase price will not exceed TEuro 1,229, with the result that the final total purchase price will in the end be a maximum of TEuro 4,094. In the event of any price adjustment, the procurement costs will be increased accordingly.

The purchase of the company was shown on the balance sheet according to the purchase method. With the total purchase price to be set at the time, amounting to TEuro 2,795, there was a difference amounting to TEuro 1,077 resulting from the consolidation of capital, taking into account the net assets taken over (TEuro 1,718). In accordance with IFRS 3 in combination with IAS 38, TEuro 650 of that amount was accounted for by the established clientele, which will be written off over ten years. Deferred tax liabilities amounting to TEuro 57 were accumulated in the course of the capitalization of the established clientele, which increased the goodwill and will be eliminated again along with the scheduled writing off of the established clientele over its useful life. The remaining difference amounting to TEuro 484 could neither be allocated to an asset on the balance sheet nor included as a separate asset, so it was added as goodwill.

The CDC IT Group (100 employees) has offices in Basle, Bern, Lausanne, Pfäffikon and Thalwil, and is primarily active in the field of system house and hardware sales. With its purchase of CDC IT Group, Bechtle is further expanding its market position in Switzerland in the IT-System House segment, and getting closer to its objective of being able to work with system houses throughout Switzerland.

In balance sheet terms the acquisition at the time of initial consolidation is as follows:

	TEuro
Current assets
Cash and cash equivalents	1,230
Accounts receivable	2,277
Inventories	7
Other current assets	787
	4,301
Non-current assets
Tangible assets	739
Established clientele	650
Goodwill	484
Financial assets	32
Deferred tax assets	0
Other intangible assets	0
	1,905
Total assets	6,206
Current liabilities
Trade accounts payable	1,607
Other current liabilities	1,646
	3,253
Non-current liabilities
Deferred tax liabilities	158
Other non-current liabilities	0
	158
Total liabilities	3,411
Minority interests	0
Total assets -
Total liabilities -
Minority interests =	2,795

Customer Relations of taskarena AG, Unna, Bonn Office

On 01 March 2005, information was obtained from taskarena AG, Unna, on the customer relations of its office in Bonn. The price for obtaining this information amounted to TEuro 165, which was paid in cash.

With the purchase of this information on customer relations and the foundation of a new company - Bechtle GmbH & Co. KG, Bonn – Bechtle Group's IT-System House segment has enhanced its presence North-Rhine Westphalia.

DELEC AG, Gümligen, Canton of Berne, Switzerland

Pursuant to a purchase contract concluded on 14 April 2005, Bechtle AG acquired all shares in DELEC AG against payment of a purchase price of TEuro 10,333. The date of acquisition may be considered as 1 April 2005, since this was the date on which Bechtle AG began to exercise de facto control over the acquired company.

The acquisition was accounted for using the purchase method of accounting. The consolidation of capital resulted in a difference of TEuro 4,800 after allowing for the acquired net assets (TEuro 5,533). According to IFRS 3, which was applied together with IAS 38, TEuro 1,614 of this amount were allocated to acquired goodwill, which will be amortized over a five-year period, and TEuro 66 were allocated to the acquired customer service contracts, which will be amortized over their remaining term. The remainder of the difference amounting to TEuro 3,120 could not be allocated to a balance-sheet item or accounted for as a separate asset and was, therefore, recorded as goodwill. When the acquired goodwill and service contracts were capitalized, provision was made for deferred tax liabilities in the amount of TEuro 132, resulting in an increase in goodwill which will be written back parallel to the scheduled amortization of the goodwill and service contracts over their respective useful lives.

DELEC AG (194 employees) is represented at sites in Gümligen (Canton of Berne), Dällikon (Canton of Zurich), Frauenfeld (Canton of Thurgovia) and Liestal (Canton of Basle-Country) and is one of Switzerland's largest IT systems integrators. By acquiring DELEC AG Bechtle strengthens its position in the IT-System House segment particularly in the strategically important and rapidly growing IT solutions business, and specifically in the field of Enterprise Resource Planning (ERP). Bechtle has, with this acquisition, effectively concluded its expansion programme in Switzerland.

In balance sheet terms the acquisition at the time of initial consolidation is as follows:

	TEuro
Current assets
Cash and cash aquivalents	3,858
Accounts receivable	4,602
Inventories	2,054
Other current assets	466
	10,980
Non-current assets
Tangible assets	1,506
Established clientele	1,614
Customer service contracts	66
Goodwill	3,252
Financial assets	80
Deferred tax assets	389
Other intangible assets	0
	6,907
Total assets	17,887
Currtent liabilites
Trade accounts payable	1,562
Other current liabilities	4,806
	6,368
Non-current liabilities
Deferred tax liabilities	1,186
Other non-current liabilities	0
	1,186
Total liabilities	7,554
Minority interests	0
Total assets - Total liabilities -
Minority interests =	10,333

compartner systems GmbH, Ratingen

On 1 April 2005 Bechtle AG acquired all shares in compartner systems GmbH against payment of a purchase price of TEuro 2,480, not including incidental acquisition expenses in the amount of TEuro 13.

The acquisition was accounted for using the purchase method of accounting. Based on a total purchase price of TEuro 2,493, the consolidation of capital resulted in a difference of TEuro 2,232 after allowing for the acquired net assets (TEuro 261). According to IFRS 3, which was applied together with IAS 38, TEuro 1,000 of this amount were allocated to acquired established clientele, which will be amortized over a fiveyear period. When the established clientele was capitalized, provision was made for deferred tax liabilities amounting to TEuro 384, resulting in an increase in the remainder of the difference which will be written back parallel to the scheduled amortization of the established clientele over its useful life. The remainder of the difference amounting to TEuro 1,616 could not be allocated to a balance-sheet item or accounted for as a separate asset and was, therefore, recorded as goodwill.

Compartner systems GmbH, including all its subsidiaries, employs a total of 135 persons in its system house group at three locations in Ratingen, Rheinbach and Wangen i.A. With this acquisition, Bechtle takes a further step towards expanding its market position and increasing its share of the consolidating German system house market. The acquisition of compartner systems GmbH complements and strengthens Bechtle´s position in the IT-System House segment, particularly in the IT infrastructure solutions field, in all areas from project services to complete outsourcing.

In balance sheet terms the acquisition at the time of initial consolidation is as follows:

	TEuro
Current assets
Cash and cash equivalents	1,068
Accounts receivable	1,474
Inventories	871
Other current assets	3,060
	6,473
Non-current assets
Tangible assets	1,705
Goodwill	1,616
Established clientele	1,000
Deferred tax assets	422
Other intangible assets	148
	4,891
Total assets	11,364
Current liabilities
Trade accounts payable	1,270
Other current liabilities	6,887
	8,157
Non-current liabilities
Deferred tax liabilities	438
Other non-current liabilities	276
	714
Total liabilities	8,871
Minority interests	0
Total assets -
Total liabilities -
Minority interests =	2,493

PP 2000 Business Integration AG, Stuttgart

Pursuant to a purchase contract concluded on 13 July 2005, Bechtle AG acquired all shares in the non-listed company PP 2000 Business Integration AG against payment of a purchase price of TEuro 1,940, not including incidental acquisition expenses of 5 TEuro. The purchase price will be increased subsequently if certain pre-tax earnings targets are achieved in financial years 2006 to 2008. The maximum increase in the purchase price is limited to TEuro 900, with the maximum final purchase price being TEuro 2,845. If the purchase price is adjusted upwards, the incidental acquisition expenses will be increased accordingly.

The acquisition was accounted for using the purchase method of accounting. Based on the provisional total purchase price of TEuro 1,945, the acquired net assets (TEuro 1,253) resulted in a difference of TEuro 692. In accordance with IFRS 3, which was applied in conjunction with IAS 38, TEuro 220 was allocated to the acquired established clientele, which will be amortized over a five-year period. In the course of capitalizing the established clientele, provision was made for deferred tax liabilities amounting to TEuro 84, resulting in an increase of the remaining difference which will be written off again parallel to scheduled amortization of established clientele over its useful life. The remaining difference amounting to TEuro 556 could neither be allocated to a balance-sheet item nor accounted for as a separate asset, and therefore was carried as goodwill.

PP 2000 Business Integration AG (including subsidiary) with head offices in Stuttgart and a logistics center in Kornwestheim employs approximately 80 staff and, based on its annual revenues in 2004, is ranked 24th largest system house in Germany. With an area-wide IT infrastructure products service and its own logistics network, the PP 2000 portfolio includes, in particular, service packages as well as maintenance services for printers, PCs and IT systems. With this acquisition in the IT-System House segment, Bechtle has expanded its nationwide activities in the IT services sector.

In balance sheet terms the acquisition at the time of initial consolidation is as follows:

	TEuro
Current assets
Cash and cash equivalents	161
Accounts receivable	5,214
Inventories	3,151
Other currents assets	3,204
	11,730
Non-current assets
Tangible assets	275
Goodwill	556
Established clientele	220
Deferred tax assets	30
Other intangible assets	49
Other non-currents assets	71
	1,201
Total assets	12,931
Current liabilities
Trade accounts payable	2,949
Other current liabilities	7,697
	10,646
Non-current liabilities
Deferred tax liabilities	84
Other non-current liabilities	256
	340
Total liabilities	10,986
Minority interests	0
Total assets -
Total liabilities -
Minority interests =	1,945

X. Pro-Forma Information

If the companies acquired in the year under review had been acquired at the start of the financial year 2005, the Company's key data would have been as follows:

	01.01.-
	30.09.2005
	TEuro
Revenues	854,129
Net income	15,705
Earnings per share	0.7392

XI. Workforce

Personnel expenditure is comprised as follows:

	01.01.-	01.01.-
	30.09.2005	30.09.2004
	TEuro	TEuro
Wages and salaries	115,566	100,605
Statutory welfare contributions and expenditure
for staff pensions	15,064	13,850
Total personnel expenditure	130,630	114,455

XII. Significant Differences between IFRS and German Accounting Principles

The deviations from the accounting, valuation and consolidation methods according to German law relate essentially to the points listed below:

Content and the Representation of the Consolidated Financial Statements

The consolidated financial statements in accordance with Article 297 of the German Commercial Code (HGB) consist of the consolidated balance sheet, the consolidated profit and loss account and the notes to the consolidated financial statements. Companies listed on the stock exchange are required to extend the notes to the consolidated financial statements with a cash flow statement and segment results. According to U.S. GAAP, the consolidated financial statements must also include a separate statement of changes in shareholders' equity.

The consolidated balance sheet in accordance with the German Commercial Code (HGB) is to be structured in accordance with Article 266 HGB. This states that assets and debts are not to be reported separately in view of the commitment period or maturity. According to IFRS, assets and liabilities must, according to their commitment period or maturity, be distinguished from the long-term balance-sheet items as "current assets" or "current liabilities".

The profit and loss account according to the cost of sales method is structured in accordance with Article 275, section 3 of the German Commercial Code. According to IFRS, the undiluted and diluted number of shares and the associated earnings per share are stated additionally within the framework of the profit and loss account.

Capitalization of Homegrown Intangible Assets of the Fixed Assets

According to Article 248 HGB, intangible assets of the fixed assets that were not acquired against payment may not be capitalized. According to IFRS, expenses for homegrown software may, under certain conditions, be capitalized if such software is intended for sale to third parties or for internal use.

Costs of Capital Procurement

According to HGB, it is not permissible for the costs of capital procurement to be accrued or offset against borrowed funds. IFRS stipulates that costs incurred for the procurement of Shareholders' equity (e.g. flotation costs related to an initial public offering) less the effect of their tax deductibility are to be deducted from the gross amount of the borrowed funds, and thereby reduce the capital reserves.

Application of the Purchase Method (purchase accounting) in the Capital Consolidation

According to Article 301 HGB, options exist with respect to the methods to be applied in the capital consolidation of subsidiary companies included in the consolidated financial statements and the treatment of any difference arising on consolidation. In accordance with IFRS, the capital is consolidated according to the purchase method by offsetting the acquisition costs against the parent company's pro rata Shareholders' equity at the time of acquisition or first-time consolidation.

Goodwill and Intangible Assets

In contrast to HGB regulations, IFRS stipulates that specific intangible assets relating to corporate acquisitions are to be stated separately from derivative goodwill in the accounts, thus reducing the value of the derivative goodwill. According to HGB, derivative goodwill, as well as intangible assets, must be amortized on a scheduled basis and, if necessary, on a non-scheduled basis. IFRS, on the other hand, prohibits the scheduled amortization of goodwill as well as intangible assets with an undefined useful life. Instead, it prescribes an annual impairment test, which may lead to non-scheduled amortization. Intangible assets with a defined useful life are also amortized on a scheduled and non-scheduled basis in accordance with IFRS.

Treasury Stock

According to HGB, treasury stock must always be reported on the asset side of the balance sheet, under a separate item in current assets. In addition, a reserve for treasury stock must be established from the annual result, the profit carried forward or free reserves to the same amount on the liabilities side. Treasury stock is thus subject to the strict lowest value principle and is value-adjusted as required. Capital gains or losses are recorded as entered in the profit and loss account. According to U.S. GAAP, treasury stock may not be capitalized as a separate asset, but must be reported as a reduction in the Shareholders' equity to the amount of the acquisition costs. Valuation adjustments are not made. Gains or losses arising from the resale of treasury stock were offset against the capital reserves.

Financial Derivatives

Under German law, most derivative financial instruments are not recorded in the statement of accounts. Unrealized profits are not taken into consideration. An accrual must be established for unrealized losses, as this is not avoided through the formation of a valuation unit for the underlying transaction to be hedged. According to IFRS, derivative financial instruments must be stated in the accounts at their fair market value. If specific hedge criteria are met, then the profits and losses are initially reported after taking account of tax effects in the equity item "Cumulative other comprehensive income" and entered into the profit and loss account together with the profit or loss from the secured item or transaction.

Deferred Taxes

According to HGB, deferred taxes must be calculated using the so called "asset and liability method", but only remaining credit balances are accounted for in the consolidated financial statements. In addition, it is not permitted to account for deferred tax assets from tax loss carryforwards. According to IFRS, deferred taxes are determined for the period in which the differences are expected to reverse on the basis of temporary valuation differences between assets and liabilities stated in the tax balance sheet and consolidated financial statements, based on the expected tax rate at the end of the period under review. In addition to which any changes to the tax rate are only to be taken into account if the modified legislation has been passed or if it is highly probable that it will be passed. According to IFRS, deferred taxes on tax loss carryforwards are also to be calculated if the company has such tax loss carryforwards. If deferred tax assets are non-recoverable, they have to be value-adjusted. The decisive factor for an evaluation of impairment is an estimation of the probability that these items will actually be realizable in future.

XIII. Executive Bodies

Members of the Executive Board

Ralf Klenk, CEO, Dipl.-Ing. (FH)

Place of residence: Heilbronn

responsible for the "PSB" and "ARP" brands, plus the IT, Finances, Business Planning, Public Relations, Marketing and Personnel business segments.

• Member of the Supervisory Board of the Volksbank Heilbronn eG
• Member of the Executive Board of PSB AG für Programmierung und Systemberatung, Ober-Mörlen
• Member of the IHK general assembly Heilbronn-Franken

Gerhard Marz, COO, Dipl.-Ing

Place of residence: Speyer responsible for the IT-System House, Competence and Solutions Centres business segments.

– Member of the Executive Board of PSB AG für Programmierung und Systemberatung, Ober-Mörlen

Jürgen Schäfer, COO, Dipl.-Kfm.

Place of residence: Heilbronn responsible for European direct sales of the "Bechtle" brand and the Logistics & Service division.

Number of Shares held in Bechtle AG

Executive Board	30.09.2005	Previous year
Ralf Klenk	352,462	352,462
Gerhard Marz	6,916	6,916
Jürgen Schäfer	4,000	4,000

Members of the Supervisory Board

All details relating to the Supervisory Board, which must be published to comply with legal requirements or a recommendation of the German Corporate Governance Codex government commission are summarized in the attachment to these notes.

Neckarsulm, November 2005

Bechtle AG

The Executive Board

Members of the Supervisory Board

Attachment to the Notes

	Member since	Occupation
Shareholders´representatives
Beilharz, Otto	20 May 1999	CEO
Dobitsch, Kurt	20 May 1999	Entrepreneur
Schick, Gerhard Chairman of the Supervisory Board	22 March 2004	Professional Businessman
Schick-Krief, Karin	(02.10.03 - 22.03.04) since 9 August 2004	Magister
Winkler, Klaus	20 May 1999	CEO
Dr. Wolf, Jochen 2nd Deputy Chairman of the Supervisory Board	02 October 2003	CEO

Membership of supervisory boards on other executive bodies within the meaning of Article §125, section 1, line 3 of the German companies act	Shares held 30.09.2005	31.12.2004
Member of the Supervisory Board – of Kellner & Kunz AG, Vienna – of PSB AG für Programmierung und Systemberatung, Ober-Mörlen Chairman of the Advisory Council – of Karl Schüssler GmbH & Co.KG, Bodelshausen	4,248	4,248
Chairman of the Supervisory Board – of United Internet AG, Montabaur – and of Nemetschek AG, Munich Member of the Supervisory Board – of 1&1 Internet AG, Karlsruhe – of PSB AG für Programmierung und Systemberatung, Ober-Mörlen – and of DOCUWARE AG, Munich	0	0
Chairman of the Supervisory Board – of PSB AG für Programmierung und Systemberatung, Ober-Mörlen Chairman of the Administrative Board – of Bechtle Data AG, Regensdorf (Zürich/ Switzerland) Member of the Administrative Board – of ARP Holding AG, Rotkreuz (Switzerland) – of Bechtle Comsoft Direct S.A., Gland (Switzerland) – of Comsoft Direct S.A., Gland (Switzerland) – and of Gate Informatic AG, Bern (Switzerland)	– holds directly 200,000 – indirectly by usufruct 1,026,933	200,000 1,026,933
	– assignable shares, total 6,784,487 – including, as a gift from Mr Schick 1,026,933	6,784,487 1,026,933
Member of the Supervisory Board – of Sick AG, Waldkirch – of IMS Gear GmbH, Eisenach – of BW Venture Capital GmbH, Stuttgart Member of the Advisory Council – of Dieffenbacher GmbH & Co., Eppingen – of Joma Polytec GmbH, Bodelshausen – of Reich Spezialmaschinen GmbH, Nürtingen	725	725
Chairman of the Supervisory Board – of Storsack Holding GmbH, Viernheim Member of the Supervisory Board – of LTS Lohmann Therapie-Systeme AG, Andernach – of r-biopharm AG, Darmstadt Member of the Administrative Boards – of E.G.O. Blanc & Fischer-Firmengruppe, Oberderdingen Member of the Advisory Council – of Bardusch GmbH & Co., Ettlingen	– in personal ownership 0 – on behalf of BWK GmbH UnternehmensBeteiligungs Gesellschaft 3,916,507	0 3,916,507

Members of the Supervisory Board

Attachment to the Notes

	Member since	Occupation
Employee Representatives
Drautz, Uli	15 October 2003	Clerical Staff Member
Feeser, Ralf Deputy Chairman of the Supervisory Board	15 October 2003	Senior Clerical Staff Member
Greyer, Barbara	15 October 2003	Head of IT districts division of the German public service union (ver.di) Baden-Württemberg
Leweke, Peter	15 October 2003	Technical Staff Member
Ludewig, Daniela	15 October 2003	Clerical Staff member
Dr. Luz, Rudolf	15 October 2003	Chief Representative of the Metal Workers´Union (IG Metall) Heilbronn-Neckarsulm

Membership of supervisory boards	Shares held
on other executive bodies within the meaning of Article §125, section 1, line 3 of the German companies act	30.09.2005	31.12.2004
	1,644	1,644
	656	656
	0	0
	0	0
	0	0
Deputy Chairman of the Supervisory Board – of Kolbenschmidt Pierburg AG, Neckarsulm Member of the Supervisory Board – of Rheinmetall AG, Düsseldorf – of Wirtschaftsförderung Raum Heilbronn GmbH	0	0

Annual Report 2005 29 March 2006

DVFA-Analysts' Conference 30 March 2006

Interim Report 1st Quarter 2006 (1 January to 31 March) 12 May 2006

General Shareholders' Meeting 2006 20 June 2006

Interim Report 2nd Quarter 2006 (1 April to 30 June) 11 August 2006

Interim Report 3rd Quarter 2006 2006 (1 July to 30 September) 14 November 2006

Credits

Published by Bechtle AG, Neckarsulm

Investor Relations Bechtle AG Sabine Emich Head of Corporate Communications & Investor Relations Bechtle Platz 1 74172 Neckarsulm Phone +49 (0) 7132 / 981-4115 Telefax +49 (0) 7132 / 981-4116 E-Mail sabine.emich@bechtle.com

This report is printed in German and English. Both versions are available for download on the company's website. We will be glad to send you additional copies free of charge on request:

Bechtle AG, Martin Link Phone +49 (0) 7132 / 981-4149 Telefax +49 (0) 7132 / 981-4116 E-Mail ir@bechtle.com

Further information is available in the company's website: www.bechtle.com

Bechtle AG Bechtle Platz 1 74172 Neckarsulm Germany

68

Phone +49 (0) 7132 / 9 81-0 Telefax +49 (0) 7132 / 9 81-80 00 E-Mail ir@bechtle.com www.bechtle.com