S001 103 1. · Syzygy AG Bad Homburg vdH Offering Prospectus for 3,090,000 no-par value ordinary...

Non-binding Translation

Syzygy AGBad Homburg vdH

Offering Prospectus

for

3,090,000 no-par value ordinary bearer shares (the ªSharesº)issued under the cash capital increase of October 4, 2000

± German Securities Code Number 510 480 ±

and

136,824 Sharesfrom the holdings of an existing shareholder± German Securities Code Number 510 480 ±

and

up to 322,683 Sharesfrom existing shareholders

in consideration of the overallotment option granted to the lead managerwhich will be released by their German Securities Code Number


± each with a mathematical interest in the share capital of 5 1.00 per Share andcurrent dividend rights ±

and simultaneously

October 4, 2000

Company Report

for the admission of

12,000,000 Shares (the total registered share capital),

i. e.

3,090,000 Sharesissued under the cash capital increase of October 4, 2000,


and

136,824 Sharesfrom the holdings of an existing shareholder and


and

8,773,176 Sharesof existing shareholders and subject to sales prohibition


including

322,683 Sharesfrom existing shareholders



± each with a mathematical interest in the share capital of 5 1.00 per Share andcurrent dividend rights ±

of


to the Geregelter Markt to trade in the Neuer Markt of theFrankfurt Stock Exchange

± German Securities Code Numbers 510 480 and 510 482 ±± ISIN Code DE 000 510 480 6 ±

± Common Code 11419925 ±

HSBC Trinkaus & Burkhardt KGaAlead manager

Table of Contents

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

I. General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Responsibility for the Content of this Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Availability of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Subject of this Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Statements on Future Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

II. Syzygy AG in Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

III. The Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Overallotment Option (ªGreenshoeº) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Lead Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Consortium of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Determination of Purchase Price, Price Range, Notices and Number of Allotted Shares . . . 14Preferential Allotment to Employees and Business Associates . . . . . . . . . . . . . . . . . . . . . . . . . 15Admission to Listing on Stock Exchange and Quotation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Market Stabilisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Existing Shareholders and Transferring Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Market Protection Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Entitlement to Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Proceeds and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Abbreviation for the Neuer Markt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Delivery of Shares and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Notices, Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Designated Sponsors in the Neuer Markt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Securities Identification Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Principles for the Distribution of Share Issues to Private Investors . . . . . . . . . . . . . . . . . . . . . . 17

IV. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

V. General Information on Syzygy AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Formation, Firm, Seat and Head Office Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Structure of the Syzygy Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Purpose of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Capital Structure and Development of Share Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Corporate Bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Employee Stock Option Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Results per Share and Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Dividend Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Transferability of Shares and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

VI. Business Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Vertical Market Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Specialist Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Case Histories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Market and Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Patents, Trade Marks, Licenses, Major Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

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VII. Taxation in the Federal Republic of Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Taxation of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Taxation of Profits Made on Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Inheritance and Gift Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Other Taxes in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Law for the Reduction of Tax Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

VIII. Presentation and Analysis of the Financial and Earnings Situation . . . . . . . . . . . . . . . . . . . . . 51

IX. Financial Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

X. Business Trends and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

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Glossary

ASP ASP (Application Service Provider) is a company that offers individuals or enter-prises access over the Internet to application programmes and related servicesthat would otherwise have to be located in their own personal or enterprise com-puters.

Banner A banner is an advertisement in the form of a graphic element that is positionedon a Web site and provides a direct link to the advertiser's Web site.

BrandZ BrandZtm is a powerful diagnostic and predictive tool that analyses consumer loy-alty and predicts likely changes in market share. Commissioned by WPP Groupplc, the research to date has evaluated 8,000 brands in over 50 corporate andproduct categories through interviews with a broad spectrum of 180,000 consu-mers and professional decision-makers in 20 major world markets, and isupdated and expanded annually. BrandZ is available exclusively to WPP membercompanies and their clients.

B2B On the Internet, B2B (or ªbusiness-to-businessº) refers to the exchange of prod-ucts, services, or information between businesses rather than between busi-nesses and consumers (ªB2Cº). Typical B2B Web sites tend to be corporate Websites, product supply and procurement exchanges, specialised or vertical industryportals, brokering sites and information sites. An earlier and much more limitedkind of online B2B prior to the Internet was Electronic Data Interchange (EDI).

Client ªClientsº denote the customers specifically of Syzygy.

Contentmanagement

Content management provides the platform for the client to manage and sharecontent internally and amongst its partners and suppliers.

CRM CRM (Customer Relationship Management) is an information and marketingindustry term for methodologies, software and often Internet capabilities thathelp an enterprise to manage customer relationships in an organised way.

Customer ªCustomersª denote the customers of Syzygy's clients.

DECT DECT (Digital Enhanced Cordless Telecommunications) is a digital wireless tele-phone technology that is designed especially for a smaller area with a large num-ber of users, such as in cities and corporate complexes.

Digital medium Digital mediums describe new physical and non-physical communications media,such as satellite, wireless and fibre optic transmission, which use digital asopposed to analogue technologies.

Digital fast track An accelerated development process of Syzygy that seeks to deliver high qualitysolutions within a short time-frame, typically on a fixed-time, fixed-cost basis.

eBanking The provision of retail and wholesale banking and related financial services viathe Internet and other digital channels.

eBusiness The electronic process-oriented structuring of business processes within or be-tween companies.

eCommerce The term eCommerce applies to electronically processed transactions betweensuppliers and buyers.

eMail Electronic mail. The transmission of data via networks direct to a certain recipientor set of recipients.

5

ERP ERP (Enterprise Resource Planning) software integrates all manufacturing andrelated applications for an enterprise, including: financial, human resources,sales automation, data warehousing, document management, after-sales serviceand support.

European RolloutAccelerator

An accelerated development process of Syzygy that uses a template-drivenapproach to accelerate the process by which multi-country and multi-languageversions of sites can be built and launched.

Extranet An extranet is a closed, privately (usually a company's own) computer network. Itis an extension of a company's in-house computer network (intranet), which per-mits external users (for example business contacts) to gain (normally limited)access to the intranet.

GSM GSM (Global System for Mobile Communication) is the most widely used digitalmobile telephone system worldwide. GSM digitises, compresses and deliversdata to over 120 million users worldwide and is available in 120 countries, accord-ing to the GSM MoU Association. Since many GSM network operators haveroaming agreements with foreign operators, users can often continue to use theirmobile phones when they travel to other countries.

HTML HTML (Hyper Text Mark-up Language) is a programming language used for Websites.

IC Verify IC Verify, a payment processing software product from CyberCash.

Interface design Interface design describes the set of operating system commands, text and gra-phical display formats, icons, menus and other devices provided by a computeror a programme to allow the user to communicate and use the computer or pro-gramme.

Interactive TV Interactive TV allows the viewer to interact with a television set in ways other thansimply controlling the channel and the volume and handling videotapes. Typicalinteractive TV uses are selecting a video film to view from a central bank of films,playing games, voting or providing other immediate feedback through the televi-sion connection, banking from home, and shopping from home.

Internet A worldwide computer network consisting of interconnected networks.

Intranet This term is used for an in-house computer network that is based on Internet tech-nology and is maintained by companies or organisations.

Java Java is a programming language from Sun Microsystems designed primarily forwriting software to leave on Web sites and downloadable over the internet to aPC. Java was modelled after C++, and Java programmes can be called withinHTML documents or launched as standalone programmes. The first Web brow-sers to run Java applications were Sun's HotJava and Netscape Navigator's 2.0.Java was also designed to run in small amounts of memory and provides its ownmemory management.

mCommerce mCommerce or Mobile Commerce is eCommerce transacted via such mobileterminals as mobile telephones.

Personalisation Personalisation is the process of enhancing customer loyalty and value. Itinvolves customising some feature of a product or service so that the customerenjoys more convenience, lower cost, or some other benefit.

6

PDF PDF (Portable Document Format) is a file format that has captured all the elementsof a printed document as an electronic image that you can view, navigate, print, orforward to someone else. PDF files are created using Adobe Acrobat, or similarproducts. PDF files are especially useful for documents such as magazine articles,product brochures, or flyers in which you want to preserve the original graphicappearance online.

Platform A platform is a virtual basis for various interest groups to input and downloadinformation and services.

Portal A portal is a Web site providing access to the Internet. The term portal refers to aWeb site serving as a ªportal to the Internetº, a frequently used start address forsurfing in the World Wide Web. Portal operators often provide their users with thetechnical capability of accessing the Internet.

Protocol A protocol is a definition of a language determining the communication betweentechnical terminals.

SyCOMAX SyCOMAX is a Syzygy-designed and built content management product. XML-based, SyCOMAX allows business and communications professionals to use theInternet as part of their daily activities, and is especially relevant to firms using theInternet as a key media, investor, recruitment and supplier communications chan-nel.

WAP WAP stands for wireless application protocol ± a transmission standard for wire-less communications.

WCMS WCMS (Web Content Management System) is a content management system inthe Internet (See content management).

Web Web stands for World Wide Web.

Web content The content of an Internet site.

Web site A Web site is a virtual location on the Internet, at which one or more linked HTMLdocuments, so-called pages, can be found. This location acquires a uniqueaddress on the network through the URL (uniform resource locator), which distin-guishes it from all other Web sites and makes possible its access.

XML This abbreviation stands for extensible mark-up language. This is more or less astandard for the generation of structured documents on the World Wide Web.XML extends the capabilities of its predecessor language HTML.

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Abbreviations

Alfa Romeo S.p.A. A subsidiary of Fiat SPA, Turin, Italy.

AXA AXA SA, Paris, France

BAT Trustees BAT Trustees (Jersey) Limited, St Helier, Jersey

Boots The Boots Company PLC, Nottingham, United Kingdom

BP Amoco BP Amoco PLC, London, United Kingdom

Broadvision Broadvision Inc., Redwood City, USA

CAGR Compound Annual Growth Rate

Conquest Landsdown Conquest Ltd., London, United Kingdom, a subsidiary of WPP

Cyber Dialogue Cyber Dialogue Inc., New York, USA

CyberCash CyberCash Inc., Reston, USA

DaimlerChrysler DaimlerChrysler AG, Stuttgart, Germany

Datamonitor Datamonitor PLC, London, United Kingdom

DSB&K Diebitz, Stöppler, Braun & Kuhlmann Werbeagentur GmbH, Frankfurt am Main,Germany, a subsidiary of WPP

EBITA Earnings before Interest, Taxes and Amortisation of Goodwill

EIG Enterprise IG Ltd., London, United Kingdom, a subsidiary of WPP

E-Net Two E-Net Two LLC., Provo, USA

EsNet EsNet Ltd., Provo, USA

Fiat Fiat SPA., Turin, Italy

Fletcher Research Fletcher Research Ltd., the UK Research Centre of Forrester Research

Fleurop Fleurop GmbH Mitglied der Fleurop Interflora, Berlin, Germany

Forrester Forrester Research Inc., Cambridge, USA

HighCo HighCo SA, Aix-en-Provence, France

IDC International Data Corporation UK, London, United Kingdom

JWT J. Walter Thompson Group Ltd., London, United Kingdom, a subsidiary ofWPP

Lambie-Nairn Lambie-Nairn, London, United Kingdom, a division of The Brand Union Lim-ited, a subsidiary of WPP

Lloyds TSB Lloyds TSB Bank PLC, London, United Kingdom

Mannesmann VDO Mannesmann VDO AG, Frankfurt am Main, Germany

Mazda Mazda Motor Corp., Aki-Gun, Japan

MediaSurface MediaSurface Ltd., London, United Kingdom

Millward Brown Millward Brown International Ltd., Warwick, United Kingdom, a subsidiary ofWPP

MindShare Mindshare Media UK Ltd., London, United Kingdom, a subsidiary of WPP

Peppers andRogers Group

Peppers and Rogers Group / Marketing 1to1, Stamford, USA

QXL QXL.com. PLC, London, United Kingdom

ResearchInternational

RI Group Ltd., London, Untied Kingdom, a subsidiary of WPP

8

Rue du Commerce Rue du Commerce SA, Paris, France

SAP SAP AG, Walldorf, Germany

SBC The South Bank Centre, London, United Kingdom

Siemens Siemens AG, Munich, Germany

Telewest(Biz-Explore)

Telewest Communications PLC, Woking, United Kingdom

UUNet UUNet Holding BV, Diemen, Netherlands, a subsidiary of MCI Worldcom Inc.,Clinton, USA

VIAG Interkom VIAG Interkom GmbH & Co., Munich, Germany

Vivendi Vivendi SA, Paris, France

WPP WPP Group PLC, London

Zoomerang A division of MarketTools Inc., Sausalito, USA

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I. General Information

Responsibility for the Content of this Prospectus

Syzygy AG, Bad Homburg vdH (hereinafter also referred to as the ªCompanyº and together with itssubsidiaries ªSyzygyº, the ªSyzygy Groupº or the ªGroupº) and the underwriting banks listed at theend of this Offering Prospectus/Company Report (hereinafter also referred to as the ªProspectusº)assume the responsibility for the content of the Prospectus under Sec. 13 Offering Prospectus Act inconjunction with Sec. 45, 77 Stock Exchange Act and declare that, to their knowledge, the informationin this Prospectus is true and accurate and that no material facts have been omitted.

Availability of Documents

The documents concerning the Company mentioned in this Prospectus may be inspected during nor-mal business hours at the registered office of the Company, Im Atzelnest 3, D-61352 Bad HomburgvdH, and at the offices of HSBC Trinkaus & Burkhardt KGaA, Königsallee 21/23, D-40212 Duesseldorf.The most recent annual reports and interim reports of the Company shall also be available at theaforementioned addresses.

Subject of this Prospectus

Subject of this Prospectus as Offering Prospectus are the

3,090,000 Shares under the cash capital increase of 5 3,090,000.00 resolved by the extraordinaryshareholders' meeting on September 13, 2000. The capital increase was entered in the Commer-cial Register at the District Court of Bad Homburg vdH on October 4, 2000 (hereinafter referred toas ªNew Sharesº),

136,824 Shares from the holdings of an existing shareholder (hereinafter referred to as ªOldSharesº),

and

up to 322,683 Shares from the transferring shareholders (hereinafter referred to as ªGreenshoeSharesº) in consideration of the overallotment option (ªOverallotment Optionº, also calledªGreenshoeº) granted to the lead manager, HSBC Trinkaus & Burkhardt KGaA,

each with a mathematical interest in the registered share capital of 5 1.00 and each with full entitle-ment to profits for the fiscal year 2000 which commenced on January 1, 2000 (jointly referred to asthe ªOffered Sharesº).

The Offered Shares were subscribed by HSBC Trinkaus & Burkhardt KGaA for the account of theunderwriting banks and offered for sale.

The subject of this Prospectus as Company Report is the entire registered share capital of the Com-pany in the amount of 5 12,000,000.00, divided into 12,000,000 Shares each with a mathematical in-terest in the registered share capital of 5 1.00 and each with full entitlement to profits from the begin-ning of the current fiscal year, i.e starting January 1, 2000.

Statements on Future Developments

This Prospectus contains statements on future financial success and results and other statements notrelating to facts from the past. Such statements on future developments are primarily prefaced by thewords ªbelieveº, ªforeseeº, ªplanº, ªexpectº, ªpresumeº, ªestimateº, ªpredictº or similar expressions.These statements are made on the basis of assumptions and expectations which could prove to beincorrect although the Company held them to be reasonable at the given time. The risks and uncer-tainty which confront the Company in its further development and could influence the correctness ofthese statements on future developments include, amongst other things, the facts explained under

10

ªRisk Factorsº, ªPresentation and Analysis of Financial and Earnings Situationº and ªBusiness Activ-ityº and generally discussed in this Prospectus. Should one or more of these risks or uncertaintiesmaterialise or should the assumptions on which they are based prove to be incorrect, actual resultscould differ significantly from those indicated here.

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II. Overview

Syzygy AG

The following overview is supplemented by information and financial statements contained else-where in this Prospectus and must always be read in conjunction with this information. Prospectiveinvestors are therefore advised not to make any investment decisions on the basis of the followingoverview alone, but to read carefully the entire Prospectus including the ªFinancial Sectionº beforedoing so.

General

Syzygy is a full service eBusiness solutions provider, offering consulting and development servicesfrom centres of expertise in London, Frankfurt am Main and Paris to large European companies.

Syzygy is a holding company consisting of Syzygy UK Ltd, London, (ªSyzygy UKº), Syzygy FranceSA, Asnieres-sur-Seine, (ªSyzygy Franceº) and Syzygy Deutschland GmbH, Bad Homburg vdH,(ªSyzygy Deutschlandº) all amongst the leading eBusiness solutions providers in the United King-dom (ªUKº), France, and Germany, respectively. All three subsidiaries have a history of providingeCommerce solutions since at least early 1997. The European presence is the basis for the Group todevelop and implement profitable eBusiness for large European companies. Accordingly Syzygy cur-rently counts AXA, BP Amoco, British Airways DaimlerChrysler, Fiat, Lloyds TSB, L'Oreal, Siemens,VIAG Interkom and Vivendi among its clients. As the above selection of clients indicates Syzygy hasa focus on some key vertical markets already since 1998. Automotive, financial services, telecommu-nications and retail account for approximately 70% of Syzygy's revenues.

The full services offered typically comprise of four key functional areas: strategic consulting, creativedevelopment, technical development and systems integration, and operations management. Theseservices are deployed across all digital media, which include Internet, intranets and extranets as wellas interactive TV, WAP and other mobile devices.

Syzygy has developed a specialist service, the eBusiness solutions framework, which combines thecore components and methodologies of successful eBusiness. These are

· content management,

· eCommerce,

· personalisation and

· accelerated development process.

Content management provides the platform for the client to manage and share content internally andamongst its partners and suppliers. eCommerce is the process of building and managing integratedsales channels. Personalisation is the process of providing customised solutions to individual usersto enhance customer loyalty and value. Accelerated development facilitates competitive speed tomarket.

Syzygy has pursued a consistent business strategy since 1996 of acquiring and implementing pan-European projects, for instance for Siemens and Mazda. The merger of the three operative compa-nies to the Syzygy-Group has further strengthened this positioning.

Syzygy has an important strategic investor in WPP, according to sales in 1999 the leading marketing,services and advertising company in the world. Its relationship with WPP provides Syzygy with anumber of benefits, including direct assistance in sourcing and acquiring companies to expand itsnetwork, the facilitation of new client relationships, and the use of the group's infrastructure.

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Selected Reviewed Consolidated Financial Data on a Pro Forma Basis (US GAAP) (*)

1999 1998 19971. Half2000

1. Half1999

TEUR

Revenues . . . . . . . . . . . . . . . . . . . . 11,329 6,490 4,286 8,532 4,480Operating expenses . . . . . . . . . . 11,314 6,034 3,861 7,532 4,671Operating income . . . . . . . . . . . . 15 456 425 1,000 ± 191Goodwill amortisation . . . . . . . . ± 789 ± 789 ± 789 ± 395 ± 395Income before taxes . . . . . . . . . . ± 784 ± 312 ± 325 604 ± 605Net income . . . . . . . . . . . . . . . . . . ± 1,389 ± 648 ± 524 148 ± 967

Current assets . . . . . . . . . . . . . . . . 6,103 3,076 1,833 7,917 5,363Long-term assets . . . . . . . . . . . . . 6,839 7,222 7,598 6,514 6,925Total assets . . . . . . . . . . . . . . . . . . 12,942 10,298 9,431 14,431 12,288

Current liabilities . . . . . . . . . . . . . 5,685 2,068 614 4,788 4,758Long-term liabilities . . . . . . . . . . 150 16 0 0 16Total liabilities . . . . . . . . . . . . . . . 5,835 2,084 614 4,788 4,774Shareholders' equity . . . . . . . . . . 7,107 8,214 8,817 9,643 7,514Total liabilities and

shareholders'equity . . . . . . . . . 12,942 10,298 9,431 14,431 12,288

(*) Regarding the accounting principles applied and the data see ªPresentation and Analysis of the Financial and Earn-ings Situationº page 51, first paragraph.

The above table highlights the key financials of the Syzygy Group on a proforma basis. The Group isnow run by Christopher Robson and Marco Seiler who built up the profitable UK and German busi-nesses over the last four years. The third operating company, Syzygy France, belongs to the Groupsince July 1, 2000.

Syzygy has always been a fast growing and profitable (EBITA) organisation. This development hascontinued during the first six months of the current fiscal year with a growth of revenues of 90%compared to the previous year's period and of EBITA from 5 ± 191 thousand to 5 1,000 thousand.

The Group's revenues increased from 5 4,286 thousand in 1997 to 5 11,329 thousand in 1999, that isincrease of more than 63% p.a. Syzygy's strong revenue growth is the result of being successful inattracting new clients and in expanding business with existing clients. Some of the Group's largeclients have been clients for more than three years.

Syzygy UK and Syzygy Deutschland have been profitable businesses since their start. They had earn-ings before interst, taxes and amortisation of goodwill (EBITA)between 11% and 21% of turnoverthroughout the above period. In 1999, Syzygy UK and Syzygy Deutschland had EBITA of 12% and21%, respectively. Syzygy France incurred rapidly increasing operating losses in the period 1997 to1999 primarily due to the weak financial management of the founders, who subsequently sold thecompany and have been replaced by a new senior management team in the second half of 1999. TheGroup's EBITA increased by from 5 425 thousand in 1997 to 5 456 thousand in 1998, and declined to5 15 thousand in 1999.

The acquisition of Syzygy France resulted in a goodwill of 5 7,888 thousand to be amortised over10 years. For the purposes of the pro forma financial statements the amortisation of the fictionalgoodwill commenced in the balance sheets and the profit and loss statements already in 1997.

Syzygy's net loss increased from 5 ± 524 thousand in 1997 to 5 ± 1,389 thousand in 1999. The strongnet income of Syzygy Deutschland (5 337 thousand) Syzygy UK (5 393 thousand) of 5 721 thousandwas offset by Syzygy France's net loss of 5 1,299 thousand.

During the first six months of 2000, the Syzygy Group generated revenues of 5 8,532 (+ 90% yoy)thousand, an EBITA of 5 1,000 thousand and a profit for the period of 5 148 thousand. The develop-ment of business is positive and Syzygy expects to maintain growth at this level throughout this year.

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III. The OfferGeneral

The Offered Shares offered in this Prospectus by the Underwriting Banks were components of anoffer of a total of 3,226,824 Shares. In the event that the overallotment option described hereinafter isfully exercised, the offer will comprise 3,549,507 Shares.

The Offered Shares were publicly offered in the Federal Republic of Germany in the period fromSeptember 26 to October 4, 2000 (2.00 pm). The right to preemptively terminate the sale by limitingthe sales period was reserved.

3,090,000 of the Offered Shares originate from the cash capital increase of 5 3,090,000.00 upon theexclusion of statutory subscription rights resolved by the extraordinary General Meeting onSeptember 13, 2000. The registration of the execution of the cash capital increase occurred onOctober 4, 2000. 136,824 of the Offered Shares derive from the holdings of an existing shareholder(HighCo) and up to 322,683 of the Offered Shares originate from the transferring shareholders (theªTransferring Shareholdersº) in consideration of the overallotment option granted to the lead manager.

The Shares each have a mathematical interest in the registered share capital of 5 1.00 and full entitle-ment to profits for the fiscal year 2000 which commenced on January 1, 2000.

The offer comprised a public offering by the underwriting banks in the Federal Republic of Germanyand a private placement outside of Germany, with exception of the United States of America (ªUSAº),Canada and Japan.

Overallotment Option (ªGreenshoeº)

In the Underwriting Agreement dated October 2, 2000, the Transferring Shareholders have grantedthe lead manager, HSBC Trinkaus & Burkhardt KGaA the option to acquire up to 322,683 Shares fromthe Transferring Shareholders to cover the overallotment option within 30 calendar days of the quota-tion of the Shares on the Frankfurt Stock Exchange in order to cover additional allotments.

Lead Manager

Lead manager is HSBC Trinkaus & Burkhardt KGaA, Duesseldorf.

Consortium of Banks

The consortium of banks is comprised of HSBC Trinkaus & Burkhardt KGaA, Duesseldorf, and West-deutsche Landesbank Girozentrale, Duesseldorf, (The banks altogether hereinafter also referred to asªConsortium of Banksº or ªUnderwriting Banksº).

Determination of the Purchase Price, Price Range, Notices and Number of Allotted Shares

The price range of 5 17.00 to 5 20.00 per Offered Share within which purchase orders could be sub-mitted was announced in a press conference on September 25, 2000 and was obtainable from theUnderwriting Banks on the same day. The price range was published in the context of the offer in theBörsen-Zeitung on September 26, 2000. Pricing took place on the basis of an order book preparedusing the so-called book building procedure. The purchase price per Offered Share was be deter-mined at 5 20.00 by HSBC Trinkaus & Burkhardt KGaA in agreement with the Company and the Trans-ferring Shareholders on October 4, 2000. The purchase price is expected to be published in the Bör-sen-Zeitung on October 5, 2000. It is expected that investors who have submitted their purchaseorder by way of one of the Underwriting Banks may inquire regarding the number of Shares allottedto them as of October 5, 2000 by that Underwriting Bank. The price is expected to be payable onOctober 9, 2000.

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Preferential Allotment to Employees and Business Associates

In the framework of the offer of Shares a maximum number of 161,341 of the Offered Shares werereserved for a preferential allotment to employees and business associates.

Admission to Listing on the Stock Exchange and Quotation

The total registered share capital of the Company, which is 5 12,000,000.00 following the registrationof the cash capital increase resolved in the extraordinary General Meeting of September 13, 2000, hasbeen admitted on October 4, 2000 to the Geregelter Markt for trading in the Neuer Markt on the Frank-furt Stock Exchange. The start of quotation of the Shares booked under German Securities CodeNumber 510 480 is planned for October 6, 2000.

Market Stabilisation

It is possible that the lead manager or its related companies will intervene for the account of theUnderwriting Banks to avoid extreme price fluctuations of the Shares. Because of such measures themarket price for the Shares could vary from the price which would exist without such action.

Existing Shareholders and Transferring Shareholders

Following the placement of the New Shares and the Shares from the holdings of an existing share-holder (HighCo), the previous shareholders (ªExisting Shareholdersº) will hold interests in the regis-tered share capital of the Company of up to 73.1%. If the overallotment option is fully exercised, thisshare will fall to 70.4%. The remaining 26.9% (or up to 29.6% in the event that the overallotmentoption is fully exercised) will be broadly placed. The Transferring Shareholders will be WPP, EsNet,E-Net Two, BAT Trustees, Marco Seiler and Christopher Robson.

Market Protection Agreement

The Company has undertaken in relation to Deutsche Börse AG (ªDBAGº) upon compliance with theapplicable regulations of German stock corporation law, not to offer for sale, sell, announce such saleor take any other action economically equivalent to a sale of any Shares on or outside of the stockexchange directly or indirectly within a period of six months from the date of the listing of the Sharesto the Neuer Markt.

The Existing Shareholders have irrevocably undertaken in accordance with the Regulations of theNeuer Markt to the Company and in compliance with the applicable regulations of German stock cor-poration law not to offer for sale, sell, announce such sale or take any other action economicallyequivalent to a sale of any of the Shares still held by them on or outside of the stock exchange directlyor indirectly within a period of six months from the date of the admittance of the Shares to the NeuerMarkt. Not included in this restriction are Shares provided to the lead manager to stabilise the marketwithin the scope of a securities loan and which the Existing Shareholders sell within the scope of theoverallotment option, provided that such option is exercised by HSBC Trinkaus & Burkhardt KGaA.The Existing Shareholders have furthermore declared their consent to DBAG that their respectiveshareholdings shall be booked at the respective custodian bank and Clearstream Banking AG, Frank-furt am Main, under a separate securities identification number.

The Existing Shareholders have undertaken in relation to HSBC Trinkaus & Burkhardt KGaA not tooffer, sell, announce such sale or take any other action economically equivalent to a sale of anyShares held by them on or outside of the stock exchange directly or indirectly for a period of 12 to 24months from the date of the admittance of the Shares to the Neuer Markt without the consent ofHSBC Trinkaus & Burkhardt KGaA except as agreed upon according to the following table.

15

The following table shows the agreed upon sales restrictions for Shares:

Percentage of shareholding to be released of lock-up

at IPO

after

12 months 18 months 24 months

HighCo . . . . . . . . . . . . . . . . . . . . . . . . . . 15 20 15 50WPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 35 15 50DBS&K . . . . . . . . . . . . . . . . . . . . . . . . . . ± 35 15 50EsNet . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 35 15 50E-Net Two . . . . . . . . . . . . . . . . . . . . . . . ± 35 15 50BAT Trustees . . . . . . . . . . . . . . . . . . . . . ± 35 15 50Marco Seiler . . . . . . . . . . . . . . . . . . . . . ± 35 15 50Christopher Robson . . . . . . . . . . . . . . . ± 35 15 50Employees . . . . . . . . . . . . . . . . . . . . . . . ± 35 15 50

Entitlement to Profits

The offered Shares shall be fully entitled to profits as of the fiscal year 2000, that is, as of January 1,2000.

Voting Rights

Each Share shall give one vote.

Proceeds and Use of Proceeds

The net proceeds from the placement of the new 3,090,000 Shares of approximately 5 55.6 millionwill accrue to the Company and serve largely to finance its further growth, especially investment inthe expansion of its geographical presence in southern Europe as well as strengthening its positionin its present markets and service offering.

The issuing and placement costs are expected to total approximately 5 6.2 million, including totalfees paid to the Underwriting Banks of approximately 5 3.2 million.

The net proceeds from the placement of the 136,824 Shares held by the existing shareholder HighCoand of the 322,683 Shares by Transferring Shareholders will accrue to these shareholders.

Abbreviation for the Neuer Markt

The Abbreviation of the Shares for the Neuer Markt is SYZ.

Delivery of Shares and Payment

Delivery of the Shares in book entry form against payment is expected to take place on October 9,2000 through Clearstream Banking AG, Frankfurt am Main. The Shares shall be certificated in per-petual global certificates with global coupons deposited at Clearstream Banking AG, Frankfurt amMain. The investors' claim to the delivery of Share certificates is excluded.

Notices, Paying Agent

The notices of the Company appear in the Federal Gazette (Bundesanzeiger) and in at least one man-datory stock market newspaper with general circulation in Germany.

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HSBC Trinkaus & Burkhardt KGaA is the paying and depositary agent, at whose counters dividendsdue are paid, dividend coupon sheets, if any, can be claimed, subscription rights are exercised,Shares are deposited in connection with participations in General Meetings, and all other transac-tions relating to the Shares may be effected.

Designated Sponsors

The designated sponsors of the Company in the Neuer Markt are HSBC Trinkaus & Burkhardt KGaAand Westdeutsche Landesbank Girozentrale.

Securities Identification Numbers

Securities CodeNumber (WKN) ISIN-Code Common Code

Shares designated for placement anddeliverable from the beginning ofquotation . . . . . . . . . . . . . . . . . . . . . . . . . . 510 480 DE 000 510 480 6 11419925

Shares subject to sales prohibition andnon-tradable in accordance with themarket protection agreement . . . . . . . . . 510 482 ± ±

In order to fulfil the commitments under the market protection agreement two different GermanSecurities Code Numbers (Wertpapier-Kenn-Nummern ± WKN) have been assigned to the Shares ofSyzygy. The new 3,090,000 Shares from the cash capital increase and the 136,824 Shares from theholdings of an existing shareholder also determinded for placement carry WKN 510 480. The8,773,176 Shares subject to sales prohibition of existing shareholders carry WKN 510 482, includingup to 322,683 Shares in consideration of the overallotment option which will be released by theirWKN. Six months after expiration of the market protection agreement with DBAG starting with theday of admission of the Shares to trading in the Neuer Markt, all the Shares existing in securitiesportfolios will automatically be combined under WKN 510 480, while WKN 510 482 will cease to exist.

Principles for the Distribution of Share Issues to Private Investors

In the context of the Offering, the Company and the Underwriting Banks observed the ªPrinciples forthe Allotment of Share Issues to Private Investorsº issued by the Exchange Expert Commission at theFederal Ministry of Finance on June 7, 2000 with respect to private investors.

17

IV. Risk Factors

This Prospectus contains information on future developments, which are uncertain and subject torisk. Investors should therefore carefully read and consider the following risk factors together withthe other information and data in this Prospectus when evaluating the Company and its businessand deciding whether to acquire Shares in the Company.

Dependency on Client Relationships

Syzygy obtains a significant proportion of its revenues through a small number of key clients. In eachof the three countries where Syzygy's subsidiaries have their seat the top 10 clients account for about80% of revenues of the respective subsidiary. However, the top 10 clients of the Group account onlyfor approximately 52% of Group revenues. The loss of one or several of its larger clients could havean adverse effect on the Company's business, financial condition and results of operations.

Limited Accuracy of Future-oriented Statements, Opinions, and Forecasts

The Prospectus contains certain statements concerning future events and developments as well asstatements and assessments made by the Company. Such statements concerning the future assumeknown and unknown risks, uncertainties, and other factors that could result in actual future events,developments, and achievements of the Company or its environment differing significantly fromthose that are explicitly or implicitly assumed by these statements.

Dependency on Project Related Revenue Streams

Although Syzygy has been working with a number of its clients for more than 18 months, it workswith the majority of these clients on individual projects rather than on the basis of long-term con-tracts. Many of these projects may last several months. The number of the projects at any one timemay fluctuate quite dramatically and so lead to substantially fluctuating revenues and operating prof-its.

Syzygy sometimes establishes fixed price contracts with its clients. This bears the risk that the actualcosts of a project may exceed the estimated costs, thereby causing the project to be completed withno profit or even with a loss.

Dependency on Qualified Personnel

eBusiness solutions providers are dependent upon finding and retaining qualified employees. Thisincludes finding highly skilled software engineers and programmers for the technical implementa-tion of digital solutions, graphic designers with relevant design and art qualifications, trained projectmanagers and experienced strategy consultants.

There is an excess of demand for these type of skilled employees in the industry. This means thatthere is constant and destabilising pressure on staff to look at alternative offers, which are not subjectto any sort of traditional salary based inflation. The Company, however, is trying to provide itsemployees with an attractive working environment and various motivational incentives and hasbeen able to keep its fluctuation rate at a relatively low level.

The fierce competition for qualified and specialist personnel could also lead to increasing pressureon the compensation levels. Since personnel cost is one of the key cost drivers in this industry ingeneral and the Company in particular this could have an adverse effect on the Company's business,financial condition and results of operations.

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Dependency on Key Executives

Syzygy is dependent on certain key individuals who have been with the Company for more than 24months and who hold a high level of corporate knowledge relating to clients, projects and skills. Thisknowledge is critical for future business. Although Syzygy seeks to provide competitive salary andshare option packages, these key personnel are vulnerable to alternative offers.

For many clients speed to market is a critical success factor. This means that many projects areexpected to be developed very rapidly. This causes pressure that not all developers, designers andproject managers want to be subjected to and can cause resignations.

Intense Competition

Syzygy's market is the market for eBusiness and Internet services. Although this industry is growingvery rapidly, it is fiercely competitive. This competition is accentuated by the relative lack of barriersto entry, by the constant media hype and by the potential returns for the leading service companies.Syzygy finds itself in competition in particular with eBusiness architects, Web agencies, and increas-ingly with other organisations including systems integrators, management consultancies and soft-ware companies. The Company assumes that these competitive pressures will remain for the fore-seeable future. If the competition intensifies, this could have an adverse effect on the Company'sbusiness, financial condition and results of operations.

Rapid Technological Changes

A key factor in Syzygy 's success or failure as a business is its ability to understand and manage thechanging technologies. This requires the Company to select technologies and platforms upon whichto build client solutions. These technologies may not always survive as long-term propositions. TheCompany's future success is therefore largely dependent on its ability to develop and successfullybring to market services and solutions which are on the forefront of the technologies available. Sofar, the Company believes it has succeeded in providing these services and in establishing itself asone of the market leaders in terms of the quality and technology used for its services. However, noassurance can be given that the Company will be able in the future to satisfy client needs and rapidlyrespond to changing technologies.

Risks of System and Software Security

Syzygy provides eBusiness solutions for clients that need to deliver secure transactions and commu-nications. This is often dependent upon software and systems performing in a way in which theywere designed.

Syzygy can be liable for instances where products that it provides, whether created by Syzygy or byothers, fail and cause problems with client systems. Such liability claims could have a adverse effecton the Company's business, financial condition and results of operations. To reduce its risks the Com-pany has signed a professional indemnity insurance with a coverage of £ 3 million.

Dependency of Services and Products on Third Parties

As part of its offer, Syzygy needs to utilize third party products and services to give clients thebespoke solutions that they desire. The development of an adequately broadly diversified range ofproducts requires adequate human and financial resources, which could exceed the capacity of theCompany. Consequently Syzygy is interested to enter into cooperation agreements with other prod-uct developers and publishers in order to achieve its growth targets. The growth of Syzygy will to asignificant degree depend on the extent to which the Company is able to find suitable partners. Thisdependence on the security and performance of third party products and services is a business risk.

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Risk of Integration

The Company was recently formed through the merger of three individual companies (Syzygy Ltd.,London, United Media GmbH, Bad Homburg vdH, Netforce SA, Asnieres-sur-Seine). The manage-ment of Syzygy believes that it has undertaken all necessary actions to ensure a successful integra-tion of all operating companies. However, it cannot be ruled out that the Company will experiencedifficulties in the post merger integration process. Even though so far the Company has not experi-enced any significant fluctuation of employees due to the merger it cannot be concluded that thismay not occur during the further integration measures required.

Risk of Planned Acquisitions

One of the ways the Company plans to extend its operations in the next few years is through theacquisition of companies or businesses. The Company will plan and vet these acquisitions with thegreatest possible diligence. Nevertheless, all acquisitions involve a not inconsiderable business riskwhich could have an adverse effect on the Company's business, financial condition and results ofoperations.

Currency Risk

The Company has currently subsidiaries in countries which are part of the 5-zone (Germany, Franceand Ireland) as well as in the UK which does not belong to the European Monetary Union. Therefore,the financial statements of the UK subsidiary and of any possible future subsidiary outside the Euro-pean Monetary Union will be recorded in the relevant foreign currency and then converted into Euroat the appropriate exchange rate for consolidation purposes. The rates of these currencies versus theEuro may fluctuate and the effect of such fluctuations could have a adverse effect on the operatingprofit and asset values reported in Euro.

Controlled Growth

The market for Internet and eCommerce services is growing at a very fast rate. To stay competitiveSyzygy intends to grow at a rapid rate, without having in place the usual controls of multinationalenterprises.

The Company intends to continue to grow through organic growth as well as through strategic alli-ances and mergers with, and acquisitions of, companies or divisions of companies.

This growth puts considerable pressure on the management and requires talented and dedicatedmanagement staff across the business. It also necessitates the introduction of more formal processesand management information systems.

Syzygy provides its services within the context of projects that typically last for several months. Theimplementation of these projects requires tight project management, which is currently ensured by afew project managers. As the Company grows and takes on more clients with increasingly morecomplex and longer lasting projects, Syzygy needs to expand and upgrade its project control man-agement which will be critical to ensure tight control and the timely delivery of high-end services.

The Company believes it has currently sufficient systems in place to govern this growth, but is also inthe process of upgrading its reporting software to help manage this growth more effectively. It willfurther require recruitment of suitable management staff and employees, the selection of strategicpartners and candidates for mergers or acquisitions, as well as the procurement of the necessaryfinance. Furthermore, suitable organisational structures will have to be established, in particular inthe areas of accounting, cost accounting, financial and strategic planning, process controls and ade-quate internal financial control systems. Should the Company fail to develop and implement thenecessary managerial staff and control systems, this could have an adverse effect on its business,financial position and earnings potential.

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Protection of Intellectual Property

Syzygy develops a range of different solutions for clients. These solutions are sometimes provided toclients who expect to own the intellectual property rights. Syzygy tries to negotiate that it can con-tinue to use these solutions on other clients although this is not always possible.

Currently, the Company does not hold any patent for its software products nor has it applications forpatents pending. The Company tries to protect its own software developments, especially throughthe protection of the source code. However, the Company cannot ensure that customers agree withthe protection of the source code.

Lack of a Public Market for the Shares

No public market for the Shares existed prior to the listing of the Shares on the Frankfurt StockExchange. Although the Shares have been admitted to trading in the Neuer Markt, there is no guar-antee that active trading in the Shares will occur. If active trading fails to occur or to be maintained,this could have a negative impact on the liquidity and the price of the Shares. The issue price, whichwill possibly differ from the price at which the Shares will be traded following completion of theplacement, has been determined as a result of negotiations between the Company, the shareholderssubmitting Shares for sale, and the representatives of the Underwriting Banks on the basis of consid-erations that will perhaps have no significance for the future development of the Share price.

Volatility of the Share Price

The price of Shares offered to the public for the first time, especially in the Neuer Markt, is often sub-ject to considerable fluctuation during a certain period of time after the initial public offering. Further-more, at times substantial fluctuations in price and volume occur in the stock market, which can affectin particular the market price of the shares of innovative companies ± fluctuations that may notnecessarily be directly linked to the business results of these enterprises. Furthermore, the Shareprice could be subject to heavy fluctuation due to varied quarterly results ± whether the differencesare real or they differ from analyst's expectations ± or due to substantial discrepancies in other condi-tions, events, or factors mentioned elsewhere in this section of the Prospectus, which are beyond thecontrol of the Company.

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V. General Information on Syzygy AG

Formation, Firm, Seat and Head Office Location

Syzygy AG was established as an off-the shelf company under the name Zweite SIB Beteiligungs-Aktiengesellschaft with seat in Frankfurt am Main by Dresdner Bank Aktiengesellschaft on February 2,1999. Its share capital amounted to 5 50,000.00. It was registered under number HRB 46717 with theCommercial Register at the District Court of Frankfurt am Main on March 10, 1999. By virtue of a pur-chase agreement dated March, 9, 2000, the WPP Group (UK) Ltd., EsNet, BAT Trustees and MarcoSeiler acquired the share capital of the inoperative company. According to the resolution of itsextraordinary General Meeting on March 15, 2000, the name was changed to Syzygy AG and its seatmoved to Bad Homburg vdH. Syzygy AG was registered with the Commercial Register at the DistrictCourt of Bad Homburg vdH under No. HRB 6877 on May 24, 2000.

Syzygy AG's head office is located at Im Atzelnest 3, D-61352 Bad Homburg vdH.

On June 7, 2000, the extraordinary General Meeting of Syzygy AG approved the agreements regard-ing the contribution of all outstanding shares and participations of Mediopoly Ltd., St Helier, Jersey, aholding company and the 100%-parent company of Syzygy Ltd., London, of Netforce SA, Asnieres-sur-Seine, and of United Media GmbH, Bad Homburg vdH, and resolved to increase the registeredshare capital by 5 8,860,000.00 share to 5 8,910,000.00 share through contribution of subject shares.

Syzygy Deutschland GmbH, formerly United Media GmbH, was founded by Marco Seiler, DSB&K andEsNet as an on-line application specialist with a capital of DM 350,000.00 in June 1995. It was enteredin the Commercial Register with the District Court of Bad Homburg vdH under No. HRB 6009 onAugust 19, 1997.

Syzygy UK Ltd., formerly Syzygy Ltd., was founded by John Hunt, Yvonne Cavalier, Russell Sellers,Benjamin Sellers and William Cawley as a digital media agency in 1994. It started to trade actively inJune 1995. It is registered in England and Wales under No. 2948047.

Syzygy France SA, formerly Netforce SA, was founded by Christophe and Olivier Lombard inJuly 1996 as an agency which designed and realised Internet sites and intranets. It was entered in theCommercial Register of Nanterre under No. B 408 418 259 on December 3, 1998. HighCo bought 50%of Netforce in 1998 and acquired the remaining 50% less two Shares in 1999.

In April 1997, WPP bought an interest in Mediopoly Ltd. and in December 1997 in DSB&K. With theseacquisitions WPP became indirect shareholder of Syzygy Deutschland and of Syzygy UK thereby lay-ing the foundation for the future cooperation.

Structure of the Syzygy Group

Syzygy AG,Bad Homburg vdH

Mediopoly Ltd.,St Helier, Jersey

Syzygy UK Ltd.,(previously Syzygy Ltd.,

London)

Syzygy Deutschland GmbH,(previously United Media

GmbH, Bad Homburg vdH)

Syzygy France SA,(previously Netforce SA,

Asnieres-Sur-Seine)

100%

100% 100%100%

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Purpose of the Company

According to its Articles of Incorporation, the purpose of the Company is the acquisition, the manage-ment and the sale of assets of whatsoever kind in its own name and for its own account, in particularof shares in other companies as well as the management of own assets and the performance of anyand all transactions being useful to achieve and support such purposes. Excluded therefrom arebanking transactions within the meaning of sec. 1 of the German Act on the Credit System (Gesetzüber das Kreditwesen) as well as any and all other activities requiring a licence or court permission.

Fiscal Year

The fiscal year is the calendar year.

Capital Structure and Development of Share Capital

On August 3, 2000, the share capital of the Company amounted to 5 8,910,000.00, divided into8,910,000 Shares with a mathematical interest in the share capital of 5 1.00 per Share. All Shareshave been issued and fully paid up.

Development of Share Capital

(5)

February 2, 1999: Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000.00June 7, 2000: increases by contribution in kind

± United Media GmbH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,166,030.00± Mediopoly Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,758,420.00± Netforce SA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935,550.00

Balance as of August 3, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,910,000.00

On June 7, 2000, the extraordinary General Meeting approved unanimously to increase the sharecapital of Syzygy AG

± of 5 50,000.00 by 5 3,166,030.00 to 5 3,216,030.00 against contribution in kind consisting of all par-ticipations in United Media GmbH, Bad Homburg vdH;

± of 5 3,216,030.00 by 5 4,758,420.00 to 5 7,974,450.00 against contribution in kind consisting of allshares of Mediopoly Ltd., the 100% owner of Syzygy Ltd., London; and

± of 5 7,974,450.00 by 5 935,550.00 to 5 8,910,000.00 against contribution in kind consisting of allshares of Netforce SA, Asnieres-sur-Seine.

The capital increase was registered with the Commercial Register at the District Court of Bad Hom-burg vdH on August 3, 2000. BDO Deutsche Warentreuhand Aktiengesellschaft Wirtschaftsprüfungs-gesellschaft, Hamburg, appointed by the court as post formation and valuation auditor, confirmed inits post formation and valuation report of June 6, 2000 that the value of each of the contributions inkind equals at least the value of the mathematical interest in the share capital issued in considerationfor such contributions.

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Shareholders

Prior to the Listing

Number ofShares

% ofIssuedCapital

Following the Listingbefore Exercise of

Greenshoe

Number ofShares

% ofIssuedCapital

Following the Listingafter full Exercise of

Greenshoe

Number ofShares

% ofIssuedCapital

WPP indirectly through subsidiaryWPP Group (UK) Ltd. . . . . . . . . . . . . 1,957,039 22.0 1,957,039 16.3 1,842,862 15.4and DSB&K, a subsidiary of

WPP Group (UK) Ltd. . . . . . . . . . . 829,343 9.3 829,343 6.9 829,343 6.9

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 2,786,382 31.3 2,786,382 23.2 2,672,205 22.3EsNet . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,562,992 17.5 1,562,992 13.0 1,530,945 12.8E-Net Two . . . . . . . . . . . . . . . . . . . . . . . 1,272,967 14.3 1,272,967 10.6 1,220,805 10.2John Hunt indirectly through

BAT Trustees . . . . . . . . . . . . . . . . . . . 1,227,276 13.8 1,227,276 10.2 1,144,986 9.5HighCo . . . . . . . . . . . . . . . . . . . . . . . . . . 912,161 10.2 775,337 6.5 775,337 6.5Marco Seiler . . . . . . . . . . . . . . . . . . . . . 797,445 9.0 797,445 6.6 764,768 6.4Christopher Robson . . . . . . . . . . . . . . . 227,695 2.6 227,695 1.9 218,365 1.8Employees with interests of less

than 1% . . . . . . . . . . . . . . . . . . . . . . . 123,082 1.4 123,082 1.0 123,082 1.0Publicly held (maximum) . . . . . . . . . . ± ± 3,226,824 26.9 3,549,507 29.6

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,910,000 100.0 12,000,000 100.0 12,000,000 100.0

Authorised Capital

The extraordinary General Meeting on September 13, 2000 authorised the Board of Managing Direc-tors, with the approval of the Supervisory Board, for a period of five years after the registration of theauthorised capital with the Commercial Register, to increase the share capital of the Company againstcontributions in cash or in kind by up to 5 4,455,000.00 through one or more issuances of up to4,455,000 Shares (authorised capital). The statutory subscription rights of the shareholders may beexcluded:

± in respect of fractional Shares;

± to issue employee Shares (Belegschaftsaktien) to employees of the Company and of subsidiaries;

± to attract contributions in kind, in particular in form of enterprises, parts of enterprises or partici-pations;

± in the case of a capital increase against contributions in cash to a maximum of 10% of the sharecapital that is available upon first use of the authorised capital, if the issue price of the new Sharesis not significantly lower than the market price of Shares of the same class that are already listed.

Conditional Capital

By a resolution of the extraordinary General Meeting on September 13, 2000, the share capital of theCompany was increased by 5 891,000.00 through the issuance of up to 891,000 Shares with dividendrights as from the beginning of the fiscal year in which the issue is effected. The purpose of this capi-tal increase is the establishment of a stock option plan for the benefit of the members of the Board ofManaging Directors as well as employees of the Company and of affiliated enterprises.

The entry of the authorised and conditional capital in the Commercial Register occurred on October 2,2000.

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Capital Increase

The extraordinary General Meeting on September 13, 2000 resolved to increase the share capital ofthe Company against contributions in cash from 5 8,910,000.00 by 5 3,090,000.00 to 5 12,000,000.00through the issuance of 3,090,000 new no-par value ordinary bearer Shares with current dividendrights. The statutory subscription right of the shareholders was excluded. The new Shares were sub-scribed by HSBC Trinkaus & Burkhardt KGaA, Duesseldorf, for an issue price of 5 1.00 with the obliga-tion to offer such Shares to interested investors in the context of a public offering and to pay the dif-ference between the issue price and the offer price to the Company as a subsequent premium. Theregistration of the capital increase in the Commercial Register occurred on October 4, 2000.

Corporate Bodies

Supervisory Board

The Supervisory Board consists of six members. The members of the Supervisory Board are notelected for a longer term than till the end of the General Meeting that resolves on the approval of theconduct of affairs for the forth fiscal year after starting the office term. The fiscal year, in which theoffice term begins, does not count for this calculation. The present members are:

Michael Maedel, since March 2000, chairman; chairman of JWT EuropeEric Salama, since March 2000, deputy chairman; group head of strategy WPP and CEO of wpp.comDaniel W. Campbell, since June 2000; director of EsNetJohn Hunt, since June 2000; chairman of Obongo Inc., Redwood City, USAFrØdØric ChØvalier, since September 2000; PrØsident Directeur GØnØral of HighCoR. Duff Thompson, since March 2000; director of EsNet

The members of the Supervisory Board may receive a remuneration for their services upon approvalof the General Meeting.

The members of the Supervisory Board do not hold directly any Shares.

Board of Managing Directors

The Board of Managing Directors consists of two or more persons. The Company is represented bytwo managing directors or by one managing director together with a procurist. The SupervisoryBoard has exempted Messrs Robson, von Schilling and Seiler from the limitations of Section 181 ofthe German Civil Code and granted them sole representation.

The present managing directors are:

Christopher Robson, chief executive officerSven-Roger von Schilling, chief financial officerMarco Seiler, managing director

Christopher Robson, age 36Chief Executive Officer

Appointed Syzygy UK Ltd. CEO in late 1999, Mr. Robson had been Syzygy UK Ltd. managing directorfrom 1996. After joining the company in 1996, he developed it from a small start-up to a profitableeBusiness service provider with over 60 employees, multi-million pound revenues and offices in theUK and Germany. During this period Mr. Robson developed close relationships with blue chip clientsand won Best Agency of the Year in the 1998 BT/Yell Awards.

Prior to Syzygy, Mr. Robson was board member and new business director of advertising agencyDMB&B. He led strategic, creative and account teams on blue chip accounts. Formerly, Mr. Robson

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worked for Hanson plc on assignments including project management within their EverReady sub-sidiary.

Mr. Robson graduated in Modern History at Oxford University, and holds an MSc in Managementfrom the London Business School.

Sven-Roger von Schilling, age 33Chief Financial Officer

Mr. von Schilling joined United Media GmbH in April 2000 and was appointed CFO of Syzygy inJuly 2000. From 1998 to 2000, he was procurist of Lafarge Braas, where he headed the corporatedevelopment department with responsibilities for corporate planning/strategy, M&A and globalimplementation of value based management.

Before Lafarge Braas, Mr. von Schilling spent three and a half years in management consulting withCSC Index and McKinsey in both Europe and the USA. He started his professional career in commer-cial banking at Dresdner Bank.

Mr. von Schilling graduated in Business Administration/Finance at Berufsakademie Mannheim, andholds a Master of Management from the J.L. Kellogg Graduate School of Management.

Marco Seiler, age 33Managing Director

In 1995, Mr. Seiler founded United Media GmbH in Germany and developed a profitable eBusinesssolution firm with over 40 employees and multi-million DM revenues. During this period he devel-oped relationships with blue chip clients.

From 1987 to 1994, Mr. Seiler was managing director of the US software company, WordPerfect Cor-poration, with responsibility for Germany, Austria and Switzerland.

After WordPerfect, he had been managing director of 1&1 Holding GmbH (now United Internet AG),one of Germany's largest multimedia companies.

The members of the Board of Managing Directors will hold a total of 1,025,140 Shares before exerciseof Greenshoe (983,133 Shares after full exercise of Greenshoe) following the stock exchange listing.

The members of the Supervisory Board and of the Board of Managing Directors did not receive anyremuneration for 1999.

The members of the Supervisory Board and of the Board of Managing Directors may be reached atthe business address of the Company.

General Meeting

The General Meeting takes place within the first eight months of a financial year at the seat of theCompany, a German stock exchange center or in a German city having more than 250,000 inhab-itants.

Each Share gives one vote at the General Meeting.

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Employees

As at December 31, 1997, 1998 and 1999 and at June 30, 2000, the companies of the newly establishedGroup employed 41, 75, 118 and 166 employees, respectively.

Employees

As at December 31,

1997 1998 1999

As atJune 30,

2000

UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 23 46 83Germany . . . . . . . . . . . . . . . . . . . . . . . . 13 23 33 40France . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 29 39 40Group staff . . . . . . . . . . . . . . . . . . . . . . ± ± ± 3

Grand Total . . . . . . . . . . . . . . . . . . . . . . 41 75 118 166

As at December 31, 1999 and June 30, 2000, respectively, Syzygy employed in the UK, Germany andFrance 10, 3, and 3 and 17, 0, and 5 freelancers, respectively.

Employee Stock Option Programme

The Board of Managing Directors and in so far as members of the Board of Managing Directors areconcerned, the Supervisory Board are hereby authorised up to and including 2004 to grant optionrights pursuant to the following provisions.

The options may be granted over a period of 4 years, in annual tranches, with exercise periods of upto seven years.

The overall volume of options will be distributed as follows among the qualifying groups of indivi-duals:

± 35% for members of the Company's Board of Managing Directors or for the senior managementof affiliated companies;

± 65% for employees of the Company or of affiliated companies.

Members of the Company's Board of Managing Directors and senior management of affiliate compa-nies as well as employees of the Company or affiliated companies eligible to acquire options, whoare also members of the senior management of one or more affiliated companies, shall be grantedoptions only once. Namely, either as members of the Company's Board of Managing Directors or asmembers of the senior management of an affiliated company or as employees of the Company or theaffiliated company in each case only from the options allocated for the group of qualifying indivi-duals.

The Company's Board of Managing Directors will determine the precise range of qualifying indivi-duals and the range of stock options to be granted to each range. The exception is that the Company'sSupervisory Board will determine these rules as far as the Company's Board of Managing Directors isconcerned.

The first tranche will be granted on the day on which the conditional capital is registered in the com-mercial register. Subsequent tranches will be granted when the trading in the Shares on the NeuerMarkt commences. Subsequent tranches will be granted within a period of 21 days following the pub-lication of the first, second or third quarterly annual or annual report.

The optionholders will be entitled to subscribe for one Share per option right.

The exercise price for the first tranche of options is 5 12. The exercise price for later tranches will befor the tranche granted on the day on which the trading commences the offering price of the offeredshares plus a premium of 10% on the offering price as the profit target and for the subsequent

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tranches the average of the closing trading prices of the Shares on the electronic trading system ofthe Frankfurt Stock Exchange in the 10 day period immediately preceding the grant date of the rele-vant tranche (reference price) plus a premium of 10% on the reference price as the profit target.

The options are not transferable. The options may be exercised only while the optionholders areemployed by the Company or its affiliates. Exceptions may be applied, however, in the case of death,disability, retirement, termination of the employment relationship by mutual consent or a participat-ing affiliate's disassociation from the Company.

The option rights will be exercisable no sooner than two years after their issuance date. In addition,each optionholder may exercise up to 40% of his or her option rights in the third year after their issu-ance, up to 30% in the forth year after their issuance and the remaining option rights in the fifth yearafter their issuance and at each time only. The option rights may be exercised only within a period of21 days following the publication of the first, second or third quarterly annual or annual report. Theoption rights may only be exercised if the closing trading price of the Shares on the electronic tradingsystem of the Frankfurt Stock Exchange on the preceding day is at least equal to the exercise price forthe relevant tranche. Shares issued under the stock option plan are vested with full dividend rightsfrom the beginning of the financial year during which they are issued.

The Board of Managing Directors is authorised, with the consent of the Supervisory Board, to deter-mine further details for the stock option plan, including usual provisions to protect against dilution.Insofar as the details relate to the members of the Board of Managing Directors, the SupervisoryBoard acting alone is authorised to determine such details.

Results per Share and Dividends

On a pro forma basis losses per Share, based on 8,910,000 Shares, were in 1997, 1998 and 19995 ± 0.06, 5 ± 0.07 and 5 ± 0.16, respectively. The Company realised a profit per Share of 5 0.02 in thefirst half of 2000.

As the only Group company United Media GmbH paid dividends to their respective shareholdersonly in 1997 totaling 5 127 thousand. No dividends were paid by any Group company for the years1998 and 1999.

Dividend Policy

The Offered Shares are entitled to current dividend rights.

Up until now, the Company has not approved or made cash dividends on its share capital, and thereare no plans to pay dividends in the near future. Rather, until further notice surpluses are to beretained in order to finance the Company's business activities and expansion.

Auditors

The annual financial statements

± of Syzygy (only pro forma consolidated statements) for fiscal years 1997 ± 1999 were audited byArthur Andersen Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft mbH, Mergentha-lerallee10-12, 65760 Eschborn,

± of United Media GmbH for fiscal years 1997 and 1998 were prepared by h+b Revision und Treu-hand GmbH Wirtschaftsprüfungsgesellschaft, Parkstrasse 22, D-65189 Wiesbaden, and for fiscalyear 1999 were audited by Arthur Andersen Wirtschaftsprüfungsgesellschaft Steuerberatungsge-sellschaft mbH,

± of Mediopoly Ltd. for 1997 and 1998 were audited by The JMO Practice Chartered Accountants andRegistered Auditors, 7 Harley Street, London W1N 1DA, and for 1999 by Arthur Anderson Char-tered Accountants, Forum House, Grenville Street, St Helier. Jersey JE2 4UF,

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± of Syzygy Ltd. for 1997 were audited by Brebner Allen & Trapp, The Quadrangle, 180 WardourStreet, London W1V 4LB, for 1998 by The JMO Practice Chartered Accountants and RegisteredAuditors and for 1999 by Arthur Andersen Chartered Accountants and Registered Auditors, 1 Sur-rey Street, London WC2R 2PS,

± and of Netforce SA as of June 30, 1998 were audited by Yvonne Secnazi, Commissaire aux Comp-tes, 41, rue St Ferdinand, 75017 Paris and for 1998 and 1999 by Yvonne Secnazi and Ernst & YoungAudit, 34. boulevard Haussmann, 75009 Paris.

All auditors issued in each case an unqualified opinion.

Arthur Andersen, Eschborn, was appointed as the auditors for the current fiscal year of Syzygy.

Transferability of Shares and Notices

The Shares are bearer shares and freely transferable. The Shares are certificated in perpetual globalcertificates with global coupons and deposited at Clearstream Banking Aktiengesellschaft, Frankfurtam Main. The claims of the shareholders to the delivery of definitive Shares are excluded by the Arti-cles of Incorporation.

According to its Articles of Incorporation, notices of the Company are published in the Federal Gaz-ette (Bundesanzeiger). The notices will also be published in a mandatory stock market newspaperwith general circulation in Germany.

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VI. Business Activity

Overview

Syzygy is a full eBusiness solutions provider, offering consulting and development services from cen-tres of expertise in London, Frankfurt am Main and Paris to large European companies. Syzygy's mis-sion is to build profitable eBusiness for its clients across Europe.

Services

General

Syzygy pioneered the development of pan-European solutions for large organisations, as early as1996, with a multi market recruitment solution for a leading multinational. Syzygy subsequentlydevised and implemented very early eCommerce solutions across Europe, starting in 1997. SimilarlySyzygy started developing content management solutions in 1997. The entrance into internationaleCommerce has allowed Syzygy to evolve rapidly into a full service pan-European eBusiness solu-tions provider. As early as 1996, Syzygy recognised that digital channels could be used to add valueacross all functions of an organisation, rather than be simply a support to the marketing communica-tion function. Accordingly Syzygy proactively sought to extend its services into business strategyrecommendations as well as integration with enterprise resource planning systems. Accordingly;Syzygy has motivated clients to pioneer eBusiness. That is why Syzygy has been at the forefront ofthe market development away from static information provision to dynamic personalised and trans-actional sites.

Syzygy develops and implements strategies and solutions that enable different areas of its client'sorganisations to work together to engage and transact with their customers and partners. Syzygy'sfocus is on developing strategies and solutions that provide competitive advantage for these organi-sations. It does this by putting together crossfunctional teams with relevant specialist expertise. Typi-cally this involves the following phases; business exploration and strategy development, solutionsdevelopment, project planning and specification, implementation and the marketing and launchphase.

Core Skills

The teams' expertise comprises four key functional areas: strategic consulting, creative develop-ment, technical development and systems integration, and operations management. These servicesare deployed across all digital media, which include Internet, intranets and extranets as well as inter-active TV, WAP and other mobile devices.

These four functional areas consist of a range of skillsets:

Strategic Consulting

Syzygy helps clients to develop, and evolve strategies to build long-term profitable eBusinessesthrough new and digital channels. Syzygy does this through

± situation analysis, including audit of business processes, economic models, organisational struc-tures and skills, and technology infrastructure and identification of key client business issues,

± market and competitive benchmarking,

± customer analysis,

± identification of strategic options and business plans, including change management pro-grammes, scenario planning, partnership recommendations and return on investment analysis,

± development of strategic goals and plans,

± consumer research backed by access to proprietary materials from WPP's research companies,

± Customer Relationship Management (ªCRMº).

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Creative Development

The breadth of Syzygy's creative talent, drawing off a range of backgrounds, as diverse as journalism,architecture, graphic design and user research helps it to build creative brand visions, including inno-vative functionality, brand identity, and original and user responsive interface design. Specificallythese skills include

± development of brand concepts. Syzygy develops customer propositions for client brands thataim to deliver superior and relevant experiences to the target clients, that match with the overallvalues of the brand.

± development of brand identity. Syzygy builds new corporate identities for online businesses, aswell as interpreting existing brand guidelines in an impactful way through digital media.

± development of interface architecture. Syzygy has experience in developing information architec-tures that make it easy for clients to locate information and to manage and scale their offers andcontent.

± development of user interface design. Syzygy tests numerous designs with users to build effec-tive navigation as well as distinctive user experiences.

± copywriting. Syzygy provides copywriting skills to enhance the user experience.

± editorial and content development. Syzygy produces its own content for clients as well as sour-cing third party content.

Technical Development and Systems Integration

Syzygy consults and implements a range of technical solutions, across different hardware and soft-ware platforms. Its goal is to be able to implement a superior technical solution, regardless of plat-form. It provides the following specific services:

± technical consulting. Syzygy uses technical consultants to help establish the right platform andoverall system architecture to achieve the agreed upon strategic goals. These technical consul-tants are involved predominantly at the start of the project but will continue to advise through tocompletion. This frequently involves advising clients on appropriate platform choice and in nego-tiating contracts with third party suppliers.

± application and database development. Syzygy designs and develops a range of applications anddatabases (Informix, Oracle and Microsoft SQL server) across its client projects.

± systems integration. Syzygy has experience of integrating solutions with ERP systems like SAP aswell as with client intranets.

± professional hosting services. Syzygy hosts Web sites as well as offers professional applicationservice provision,

± knowledge and developing experience over a range of programming languages (Java, Perl, C++,C, XML, DHTML, HTML, Cold Fusion, Java Script, ASP and Lingo).

Operations Management

Operations consists of the development and management of client relationships, the development oftheir projects and management of their brands and comprises of

± account management. Syzygy's account management strive to understand and act on its knowl-edge of its client's business and objectives and to build mutually beneficial relationships based onsuccessful solutions.

± project management. Syzygy project managers are responsible for the detailed planning and spe-cification of projects, including functionality, timing and budgets, and for ensuring that all mem-bers of the team keep to the project plan.

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± interactive marketing. Syzygy provides a range of services to help clients market their services.These services predominantly cover online marketing and where traditional offline marketing isrequired, Syzygy will typically work with a WPP company like MindShare or JWT.

Vertical Market Expertise

Vertical market expertise is important to Syzygy and within the marketplace as a whole, because:

1. it enables the Company to build incremental business more easily rather than constantly ªpitchºfor business in sectors where it has less knowledge and experience.

2. it allows Syzygy to gain superior knowledge of what solutions are most effective for different busi-ness situations, and so to win more clients in that sector and to innovate more easily for them.

Syzygy's focus across four key industries, the automotive industry, financial services, retail, telecom-munications, is derived from the fact that these industries experience, according to a study publishedby IDC in 1999 (hereinafter referred to as (ªIDC,1999º), the fastest expenditure growth in the EuropeanInternet services market. As of June 2000, Syzygy achieves approximately 70% of its revenues inthese sectors.

In the automotive sector for example, by 2003 some 500,000 car purchase decisions, representingmore than one-fifth of all cars purchased, are forecast to be made online in the UK alone (Fletcher,2000). The European financial sector (combining banking, insurance and other financial services) isforecast to spend US$ 6 billion on Internet services by 2003. According to a recent study by Datamo-nitor, annual spending on eBanking implementation in Europe will have increased fourfold to US$ 1.4billion by the year 2004. By 2004, IDC estimates the European retail and communications sectors tobe worth approximately US$ 1.4 billion and US$ 1.3 billion, respectively.

Clients in these sectors are listed below:

automotive:Alfa Romeo, Continental AG, Fiat, DaimlerChrysler, Mannesmann VDO, Mazda

financial services:AXA, Groupe BNP Paribas, Lloyds TSB, Sicher Direct Versicherung AG

retail:Boots, Fleurop, Rue du Commerce, La Redoute, PhotoReflex.com

telecommunication:Siemens, Telewest, UUNet, VIAG Interkom

Syzygy's vertical market expertise is well demonstrated through its work on automotive clients.Syzygy has worked across several different clients in several European markets. It has provided stra-tegic and technical consulting as well as deploying a range of solutions including dealer facilitatedeCommerce through online test drive scheduling, application development like car configurators,supply chain management, customer relationship management and brand marketing. Syzygy hasover 40 people committed to automotive projects.

Syzygy's clients can be clustered according to two criteria; firstly via industry and secondly via a splitbetween B2B rather than B2C segments. Historically, Syzygy has carried out more B2C work thanB2B. In 1999, approximately 80% of revenues were from B2C solutions. However, Syzygy's businessmodel is based on building vertical market expertise rather than specifically focusing on B2C or B2B.This is because industry expertise requires companies to understand the full client value chain, bothat the supply side as well as the customer side.

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Specialist Services

Syzygy has developed a specialist service, the eBusiness solutions framework, which combines thecore components and methodologies of successful eBusiness. These are

± content management,

± eCommerce,

± personalisation as part of CRM and

± accelerated development.

The specific services are outlined in more detail below.

Content Management Solutions

Syzygy has seen the importance of this networking capability for clients and has been providing serv-ices in the area of content management assessment and deployment since 1997. It has developedexpertise across a range of content management products from a number of partner providers,including Broadvision and MediaSurface. Based on this experience Syzygy has developed a reusablecontent management solution, a professional XML-based Web Content Management System(WCMS), called SyComax.

Syzygy has sold SyComax in Europe to companies including Mannesmann VDO, Mazda, UUNet andVIAG Interkom. Syzygy is continuing to extend the functionalities of SyComax to support its extend-ing market demand. Syzygy also continues to strengthen further its relationships with other contentmanagement partners, like for example Broadvision and Vignette.

Standardisation permits for the absence of professional programming skills to place informationsuch as texts, graphics, videos, audio as well as hyperlinks effortlessly onto a Web site. The prede-fined design and the navigational concept determined for the Web site ensure the uniformity of theInternet presence. Predefined integrated workflows ensure that the quality assurance and approvalstandards for placing information onto the Web site are maintained. The publication of potentiallyincorrect information is thereby immensely reduced. A professional WCMS thus simplifies the com-plicated editing of a Web site, ensures workability, and enables the creation of a high quality, efficientInternet presence.

eCommerce Solutions

Syzygy defines eCommerce as the process of building and managing integrated sales channels.eCommerce solutions offer a sales channel for B2B and B2C clients. Among the benefits are the pos-sibility to offer and sell products and services 24 hours a day, seven days a week, to reach potentialcustomers without geographic limitations, to optimise inventories and stocks and introduce efficien-cies.

Syzygy deploys a full range of end to end eCommerce services including user interface design, prod-uct database design, credit card verification, systems integration, sales and user behaviour analysis.Syzygy has implemented eCommerce solutions across a range of international clients, includingBoots, Fleurop, Rue du Commerce, Siemens, VIAG Interkom and QXL.

Some of these eCommerce solutions include integration with ERP-Systems like SAP R/3, Navision,Oracle Financial and online-payment solutions from IC Verify and CyberCash.

Syzygy is working with CyberCash, among the leading online payment software providers in Europe,providing eBusiness solutions for clients like Fleurop. Based on this eCommerce experience, Cyber-Cash has contracted Syzygy to integrate the CyberCash payment solution into the Microsoft solutionset.

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Personalisation as part of CRM

The objective of personalisation as of CRM is to build enhanced customer loyalty and value. Theprocess of achieving this typically follows these key steps: identification of customers, analysis ofwhich customers are most valuable and therefore which customers a company should target, anddevelopment of plans to sell to/communicate with them and to look after them long-term.

Typically CRM via the Internet involves ªpersonalisationº. Personalisation refers to the methodologiesand technologies that help match solutions to customers based on knowledge of their historical transac-tions, psychographics and demographics. Personalisation fosters a stronger sense of relationship thatcan translate into higher retention rates and higher profit levels per customer. This is achieved by thecollection and analysis of information about, or the behaviour of, an individual using the platform, andits use, to provide a more relevant solution or service to that user on more than one occasion. Marketdata suggests that the personalisation of content and solutions on the Internet is more likely to satisfyusers' needs and wants and encourages information gathering and transactions rather than simplemass market approaches. Syzygy has had a consistent strategy of developing personalised solutionssince 1997 because of its potential to add value to clients' market approach and their customers.

Syzygy provides specialist knowledge of various software platforms which can be deployed to pro-vide more personalised user experiences and solutions. It uses this knowledge to give strategic, crea-tive and technical advice as well as to implement solutions in this area. Syzygy launched its firstbranded personalised solution in 1997 for Pedigree Livestock Foods & Requisites (Wholesale) Ltd., asubsidiary of Mars Inc. and since then has developed a number of solutions for clients like, Boots andCartoon Network, a brand of Time Warner Inc.

Syzygy is in the process of formalising its experience into a market tested methodology for buildingpersonalised solutions.

Syzygy is expanding its expertise into other areas of CRM, in particular into the process of integratingdifferent sales channels. For example, for VIAG Interkom Syzygy has built an eCommerce portal thatfully integrates 15 different sales channels, including all their existing telesales teams. This provides amore efficient process and can reduce costs, and perhaps more importantly ensures that a customeris recognised as a single individual and is given consistent treatment across channels. VIAG Interkomis able to update promotions and product information instantaneously and so to cross-sell to onlinecustomers on the basis of an application which Syzygy developed. This again ensures consistency ofservice to customers.

The Company tries to protect its own software developments, especially through the protection ofthe source code. However, the Company cannot ensure that customers agree with the protection ofthe source code.

Accelerated Development Processes

Accelerated development facilitates competitive speed to market. The Internet has revolutionisedcompanies' ability to launch services at speed and in different markets, by facilitating electronicrather than physical business transactions and by supporting rapid information exchange. This hasprovided an opportunity for those eBusiness solutions providers who can offer accelerated develop-ment services to gain competitive advantage. This service can be of additional value when it is pro-vided across markets.

Syzygy pioneered an accelerated development process, digital fast track in the UK in 1998 for BPAmoco, and has subsequently gone on to extend the range of these services for any clients. Syzygy'saccelerated development solutions include high volume production to meet event driven deadlines,and utilisation of ªoff the shelfº components. These solutions are becoming more commonplace inthe market. However, what still gives Syzygy competitive advantage is an unique service called ªEur-opean Rollout Acceleratorº. This service helps clients to implement multimarket solutions at speed.This model typically involves the development of one set of templated solutions for one market thatcan then be rapidly rolled out around other European markets. This has been deployed with Siemensand is currently being provided for Mazda.

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Case Histories

Outlined below are a number of case histories illustrating the scope of Syzygy's eBusiness solutions.The information herein has been received from the respective clients. The case histories cover largeand small organisations and projects as well as very different industries.

Siemens

Business Profile

Siemens Communications Devices, a unit of the German industrial conglomerate Siemens, developsand manufactures analogue and digital communications products, notably DECT cordless and GSMhandsets and GSM mobile phones and devices.

The Challenge

Siemens wanted to test its eCommerce potential via a pilot project selling its ªGigasetº digital cord-less telephony products. The pilot project was also to act as a scalable framework for the develop-ment of additional product ranges or country sites. If successful, the pilot project would be unrolledacross Europe.

Syzygy Solution

Syzygy's eCommerce solution proposed a department store format, with initial ªfloorsº ªGigastoreºand ªMobilestoreº selling Gigasets and mobile phones.The two floors provide an information-richand logical online shopping environment in which ªvisitorsº can explore products and process theirorders. It also enables Siemens to cross-sell products and accessories throughout the sales process.To give flexibility and enable Internet-time responsiveness, Syzygy also provided a design and onlinebanner campaign toolbox and a highly flexible navigational structure.

Business Value

The project was developed with the Accelerated Development Process methodology and tested initi-ally in Sweden where it proved to be successful, significantly exceeding its sales targets and deliver-ing a high percentage of multiple purchases through product cross sales. Within seven months Sie-mens had

± extended the trial to ten further markets across Europe and Asia: Austria, Denmark, Finland,France, Germany, Ireland, the Netherlands, Norway and the UK and China,

± expanded the product range to include digital mobile accessories and ISDN phones,

± significantly exceeded sales projections by 300%, and orders are growing at 10% per week and

± outstripped industry standard purchase rates by 300%,

± built customer loyalty with up to 30% of online visitors returning to the sites and

± buying on average 1.6 products per transaction.

VIAG Interkom

· B2C Market

Business Profile

VIAG Interkom is a European joint venture between VIAG Telecommunications, British Telecommuni-cations and the Norwegian company Telenor AS. VIAG Interkom provides voice, data und multimediaservices, virtual private networks and value-added services in communications management.

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The Challenge

VIAG Interkom wanted to expand its Web site which served only as information tool for its productsinto a dynamic online channel which would allow the selling of products for its fixed network andmobile phones and its Internet services to most differrent target groups. The eBusiness solutionshould enable VIAG Interkom to react fast on the constantly changing competitive situation of themarket for mobile phone products. In addition, it was intended to integrate this market place withthe existing order, payment and goods management programmes as well as to connect it with theparallel acting telesales team.

Syzygy Solution

Syzygy developed a fully integrated solution for the online order book which allowed VIAG Interkom to

· check customers' credit and bank account details

· accept and approve all types of payment (including delivery against payment, direct debit author-isation, invoicing, credit card, etc.)

· ensure rapid product delivery via local outlets and partners

· efficiently manage multi-channel online sales.

On the basis of the Microsoft Commerce Server 3.0 (offered by Syzygy) the Internet solution via ISDNleads to a IC payment confirmation and connects ultimately with a Navision product managementsystem which checks the availablility of the offered product.

The VIAG Interkom telesales team is integrated into the online business and services and updates thesites and the management of the various customer segments. A content management system whichwas adjusted by Syzygy enables the team for example to update fast at low cost product information.In addition, Syzygy developed an ªAD trackerº for VIAG Intercom which serves the company to followand guide the offsite eMarketing initiatives and calculate sales figures which result from the mouseclicks on the marketing banner.

Business Value

Since introduction in June 1999 significant proceeds and considerable internal cost reductions have beenrealised through the fully automated order chain and the integrated telesales customer service team.

· B2B Market

The Challenge

Syzygy was asked to design and develop an information gateway and eCommerce extranet support-ing mobile telephony hardware and package sales through its own-brand shops and third-party deal-ers. By creating a 'real-life' transactional environment for its many partners, with customised productinformation, prices, discounts, promotions and order systems for each type of partner, the servicewas intended to:

± increase margins by helping sell more products,

± reduce costs per transaction and

± develop a closer relationship with its dealers.

The extranet was also aimed at helping VIAG Interkom track sales and promotions more efficiently byfacilitating data collection and analysis. It would also provide VIAG Interkom with the tools to main-tain and update the service themselves, without agency interference.

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Syzygy Solution

Syzygy developed a fully integrated online order entry service that allows VIAG Interkom to:

± check customers' credit and bank account details,

± accept and approve all types of payment,

± ensure rapid product delivery via local outlets and partners and

± efficiently manage multi-channel online sales.

Business Value

Despite limited marketing to its national dealer base as yet, the site has:

± increased dealer loyalty: With 4,500 dealers regularly logging on, the service now accounts for amajor portion of VIAG Interkom's total business-to-business revenues.

± reduced significantly cost per transaction.

Fleurop

Business Profile

Fleurop is the world's most well-known flower ordering service. Last year the network, which com-prises more than 50,000 specialist shops in over 140 countries, processed somewhere in the regionof 30 million orders. In Germany alone, 7,000 florists guarantee that Fleurop greetings are deliveredfresh and on time ± some 4 million times a year.

The Challenge

The Online-Store, developed and maintained by Syzygy, went live back in 1997 and immediatelyachieved significant sales. In 1999 the eCommerce application was relaunched, with the aim of mak-ing the site more user-friendly and streamlining the order process.

Syzygy Solution

The distinguishing feature of the current Fleurop online service is the ªThree Click Designº. Only threemouse clicks are necessary to place an order. After the optional registration the user need only enter apassword and eMail address on subsequent visits ± all unchanged personal details are stored. Mod-ern real time technology and dependable hosting processes guarantee smooth and uninterruptedonline service 24 hours a day.

The Fleurop online store, hosted on the MS eCommerce Server 3.0, uses a secure Cybercash pay-ment solution which integrates credit card details in real time. The orders are then processed auto-matically in the Fleurop centre SAP R/3 system and forwarded immediately to a Fleurop partner localto the recipient. The floral greeting can then be delivered on the same day. Further developmentsimplemented by Syzygy allow Fleurop to track and process sales generated by co-operation partners.

A visitor to the Fleurop online store can find the shortest route to the flowers available either usingthe no-hierarchy navigation or with the efficient help of a virtual florist, who chooses the appropriatebouquet from the wide Fleurop range according to criteria such as colour, occasion or recipient.

Business Value

Since it 'opened' in 1997, fleurop.de has been successful. Sales in 1999 were triple those of the pre-vious year and reached 55,000 orders. A prospective100,000 surfers will use fleurop.de to order and

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send floral greetings in the year 2000. This makes fleurop.de the most successful CyberCash applica-tion in Germany.

The transaction productivity of an internet order increased significantly by 500% compared to anorder via the Fleurop Telephone Service. There are also other advantages to the user, such as beingable to see a picture of the floral greeting chosen.

The South Bank Centre

Business Profile

The South Bank Centre (ªSBCº) a large cultural centre in London, incorporates the Royal Festival Hall,the Queen Elizabeth Hall, the Purcell Room, the art gallery Hayward Gallery and UK's national PoetryLibrary.

The Challenge

Syzygy was asked to re-develop SBC's Web presence to increase online revenues from ticket salesand visibility of other commercial opportunities, while providing public education and interactivity inthe arts. Also important was the identification and delivery of cost efficiencies across the range ofSBC's Internet activities and to permit a dynamic and interactive dialogue with customers.

Syzygy Solution

Syzygy's site's core is a fully integrated online box office and events calendar with an upgraded book-ing system to include encrypted eMail and hourly updated seat availability data for every event andseat charting. Events are also broadcast to users via eMail according to seven sets of user interest andgenerically across the site itself. Audiences, performers and online visitors can exchange views inevent-specific discussion areas and can submit comments on architectural and other developmentsat SBC.

Business Value

Since its launch in September 1999, the site has

± increased the number of online tickets sales by 800% and the value of online sales by 700%,

± quadrupled repeat traffic, and

± delivered significant internal cost savings by reducing the amount of outsourced production work.

QXL

Business Profile

QXL.com is amongs the largest pan-European online auction communities, conducting consumer toconsumer and B2C auctions in many different European languages and currencies.

The Challenge

Syzygy was asked to develop a new brand identity and to redevelop its Web interface, more fullyintegrating its different auction models and producing a single flexible template to underpin its Euro-pean expansion.

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Syzygy Solution

Syzygy devised a distinctive new brand identity, a new user friendly site interface and a highly adap-table and scalable templating structure, which integrated with the Intershop commerce platform.

The site has received considerable media acclaim, and was rated No. 1 European eBusiness(March 2000 ) by Management Today and Bain & Company in their e25 table.

Business Value

Since its launch in September 1999, the site has:

± extended its service into seven other countries,

± accelerated the growth of new users. It had 1.1 million users as per end of July 2000.

± raised user loyalty.

± According to Internet research firm, NetValue, in November 1999, QXL.com outscored evenAmazon in terms of unique pages served per visitor, averaging 16.5 pages and 16.1 minutes peruser session. As a result repeat purchase rates doubled in the first three months since the relaunchto over 70%.

Market and Competition

eBusiness Solutions Providers

Syzygy specifically exists in the market for digital services and solutions, of which Internet-basedactivity account for the largest portion. This market is seeing rapid growth. According to a study pub-lished by IDC in September 1999 (hereinafter also referred to as ªIDC, 1999º), the European Internetservices market is to be worth US$ 23 billion by 2003. As a region in 2003, the research company alsopredicts Europe to account for 30% of total world-wide spending, a rise of 7%. Within Europe, thereare three key markets ± Germany, the UK and France. With its well-established offices in these mar-kets, Syzygy is ideally positioned to exploit the potential in these markets with the largest opportu-nities.

The largest European markets will also be the largest markets for eCommerce turnover. According tomarket data from Forrester Research published in 1999 (hereinafter referred to as ªForrester, 1999º),Germany, the UK and France will account for more than half (58%) for eCommerce turnover in Eu-rope on a combined basis, which equates to approximately US$ 1,700 billion by the year 2004. TheB2B sector will account for the biggest share of this turnover, by 2004 approximately US$ 1,500 bil-lion (88%).

Syzygy considers itself to be a full eBusiness solutions provider who offers clients end-to-end solu-tions. Clients increasingly require more complex and integrated services from experienced eBusinessarchitects as the Internet market develops from its infancy. The development of the market and itsimplications for eBusiness service providers can best be described by the clients' needs. SimplisticWeb presences, or so-called brochure ware, developed for company-marketing purposes are rapidlybeing replaced by highly sophisticated and integrated eBusiness solutions.

A range of different eService companies surrounds clients. For many it is difficult to identify which isthe right service provider for them. However, the client market in Europe can be broadly broken downinto four different types.

Type Key Need

digital novices marketing advice / ideaseCommerce trialists dependable service and processeBusiness developers end-to-end offer, including dependable processeInnovators delivering competitive advantage through innovation and process

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Digital novices for whom an Internet presence means merely displaying information on a Web siteare clearly not Syzygy's target clients. These ªbrochurewareº Web sites are usually static and do notfulfil any strategic goals. Many bricks and mortar companies have started their Internet presence inthis way but have soon thereafter realised the need to expand their Web presence into transactionoriented sites which do play an ever increasing role in their strategic development. Many of themhave since developed further and now fall into one of the categories described below.

Currently Europe is full of eCommerce trialists and their key requirement is for a dependable andaffordable process that allows them to launch and evolve their trial in a controlled manner. Althoughthey may hanker after an innovative service or product, they are constrained by lack of resources,time and experience from achieving this. eCommerce is therefore often a differentiator.

However, this situation changes, as clients become more experienced. They are looking for solutionsthat add measurable worth across the value chain, for example by removing costs, and as they dothis, so they become eBusiness developers. Once they have started to see business value in theironline efforts, these clients focus increasingly on finding genuine competitive advantage in every-thing that they do. At this stage they become eInnovators. Accordingly eService companies that cancombine speed of reaction, efficient process and understanding of the key building blocks of compe-titive advantage will prosper most.

Competitive advantage will increasingly dominate the Internet services marketplace as it has done inother markets. Syzygy targets companies that regard eBusiness as an integral part of their corporatestrategy as eBusiness solutions are becoming ever more mission-critical for traditional companies.This leads them to work with well established eBusiness solutions providers that are able to fulfil allof their needs. Therefore, full service providers will increasingly be able to leverage off these compa-nies' competitive advantage. Full service providers will build long-term relationships with their cli-ents since their insight into the clients' organisation processes leads to higher switching costs. Theincreased challenges that eBusiness solutions providers face also mean that larger, established pro-viders will have a competitive advantage and will therefore attract the big accounts.

Importance of Vertical Market Expertise

When analysing structures and processes to determine the maximum value added from transactionoriented Internet solutions, Internet services companies will require increasing insights into the mar-ket dynamics their clients face. Syzygy believes that its vertical market expertise, in particular in auto-motive, retail, telecoms and financial services, is a key strength to benefit from bespoke verticalindustry demands.

In the automotive sector for example, by 2003 some 500,000 car purchase decisions, representingmore than one-fifth of all cars purchased, are forecast to be made online in the UK alone (Fletcher,2000). The European financial sector (combining banking, insurance and other financial services) isforecast to spend US$ 6 billion on Internet services by 2003. According to a recent study by Datamo-nitor, annual spending on eBanking implementation in Europe will have increased fourfold to US$ 1.4billion by the year 2004. By 2004, IDC estimates the European retail and communications sectors tobe worth approximately US$ 1.4 billion and US$ 1.3 billion, respectively.

Requirement of an Integrated Solution Approach

A critical success factor for eBusiness service providers is the deployment of an integrated solutionapproach. Typical projects require consulting, creative, technological and project management skills.The Company's high technological, technical and project execution skills allow it to provide high-endservices that are increasingly targeted at eInnovators.

Strategy

The market for eBusiness strategic consulting services in Europe, a key component of the integratedsolutions approach, will grow to US$ 6 billion in 2003 (IDC, 1999). Consulting in an eBusiness contextinvolves analysing how the Internet technologies affect a company's business strategy and processes

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and how organisations can leverage the Internet deployment for their business. Syzygy believes it iswell positioned in this segment as its range of services offered vary from needs assessment, returnon investment analysis, process consulting, as well as external assessment activities such as cus-tomer segmentation, channel strategy evaluation and competitive analysis.

Creativity

Syzygy will also benefit from the growth in the market for creative services. Forrester estimates thedesign services segment of the US Internet Services market to grow to approximately US$ 12 billionby 2003, representing a CAGR of approximately 60% (Forrester, 1999). Design services for Web sitesrange from conceptualising and structuring a Web site to ensuring navigability through the site. Website design is broadly being described as creating the 'look-and-feel' of a Web site.

Technology

IDC sees initially the greatest opportunity in application development and integration services, whichcomprises the development of Internet-based applications and Web sites and linking Internet applica-tions to databases and other corporate systems, such as ERPs. More organisations recognise to theneed to integrate their front-end Internet presence with their back-end systems. This increases thecomplexity and costs of projects. As a result, this is forecast to grow in Europe to some US$ 2.9 bil-lion in 2003 (IDC, 1999). Syzygy has in-depth knowledge of how to integrate the front-end customerexperience with back-end systems. This is the result of having foreseen the potential in EuropeaneBusiness services in 1998 and thus having built in-house expertise in integrating the building blocksof eBusiness. This has included the recruitment of people with experience of designing and buildingscalable databases and knowledge of how these can integrate with ERP systems like SAP. Syzygy'stechnological know-how, gained in many successful projects, positions it as a leading player in thismarket segment.

Project Management

Syzygy believes it will also strongly benefit from the outsourcing trend of Web site development andmaintenance as a result of heavily stretched in-house resources at organisations. The organisationsseek to outsource the entire development process, ranging from development to implementation tomanagement and activities such as performance and content management. Internet managementand outsourcing provide the largest growth opportunities for Internet services and IDC estimates aEuropean market size of US$ 6.7 billion by the year 2003 (IDC, 1999).

Speed to Market

The ability to deliver the services in time and with the right quality will be the key success factor foreBusiness enablers. Syzygy is well equipped to deliver 'speed-to-market' solutions through its eBusi-ness Solution Framework, a set of reusable tools which are standardised to a certain degree andtherefore can be adapted and implemented according to clients' needs in a very short timeframe.Accelerated Development is the underlying element of the solution framework, which comprises con-tent management, personalisation and eCommerce solutions.

Developments regarding Content Management and Personalisation

With its XML-based content management solution SyComax, a professional Web Content Manage-ment System (WCMS), Syzygy will benefit from the trend of companies making use of WCMSs tosupport Web site management, which results in above-average growth for professional WCMSs. Ac-cording to an earlier study published by IDC, the market for professional Web management applica-tions is projected to grow by an average annual rate of approximately 89% between 1998 and 2002.

The extensible mark-up language (XML) has emerged as the key enabling technology for eCommercesolutions. The technology allows users to formalise data structures in a form that can be easily recog-

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nised by Web browsers, search engines and other applications. Within the industry, XML is increas-ingly being adopted and, moreover, seen as embodying the same notion for eCommerce that Javasymbolises for the Internet.

Another area in which the Company has significant specialist expertise is in the personalisation ofWeb sites. According to a study from Cyber Dialogue published in January 2000, 19 million US Inter-net users, or 29% of the total number of users, have personalised Web pages and 88% of usersbelieve that personalisation is the best way for companies to learn about consumers. According toFletcher Research (Fletcher, 2000), 68% of visitors that have personalised a Web site have also madea purchase online.

On behalf of the new Personalisation Consortium, the Peppers and Rogers Group used Zoomerang inJune 2000 to survey 4,520 randomly selected Web users about their Internet habits and preferences.Most (73%) want a Web site that remembers basic information about them, and 50% are willing toshare personal data to get a personalised online experience. Nearly two-thirds (62%) find it disturb-ing when a Web site asks them for personal information they have already given.

Key Market Drivers

The Company sees the following factors as the key market drivers whose importance is increasingrapidly:

± Speed to market. Duration of projects is constantly decreasing in the industry. As companies seehow easy it is to build international offers through the Internet, speed to market becomes morecritical for them to protect their business.

± The growing complexity of projects will continue to necessitate increased technical resources inthe future. This is the result of two key issues, the need to integrate systems to provide a seamlesscustomer experience, and the need to reduce costs in the supply chain.

± Successful management of customer relationships. As customers grow more sophisticated andthe Internet brings ever greater transparency in the business world, there is a need for companiesto strengthen their customer retention strategies. This calls for better CRM.

± Single market development in Europe. Although Europe is integrating slowly, there is still tremen-dous diversity amongst the different European markets, clients will increasingly expect servicecompanies to understand both the diversity as well as the similarity.

± Technology providing a vehicle for companies to expand across markets more cost efficiently. Cli-ents are increasingly demanding service companies who understand how to expand across differ-ent geographies.

± The need to use these new and developing channels like the Internet to drive competitive advan-tage.

Competitive Analysis

The market for Internet based solutions and services is a very young and dynamically growing mar-ket. The market is seeing a blurring of definitions between its players as they all seek to benefit fromthe Internet and eBusiness market growth. Therefore, the competitive environment can best bedescribed by the market players' origin.

± Marketing-led marketing agencies are putting increasing emphasis on consulting and movingoutside the traditional communications arena into the eCommerce arena.

± Business process-led systems integrators are moving into eBusiness solutions and ASP services,as the new eBusiness arena expands faster than traditional system integration services.

± Strategy-led management consultants are moving into this segment because it is becoming criti-cal to their clients, and because the implementation is essential to their clients' success. Theseconsultants are trying to expand their strategy-focused offer to cover some of related areas suchas eCRM. They are setting up Web labs to try to keep up with the new market developments.

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± IT suppliers develop and market total eBusiness software solutions and try to establish verticalmarket consulting expertise which can augment their traditional offer and keep them closer to cli-ents.

The eBusiness architects as pure Internet companies are trying to leverage off their understanding ofall of the functions or disciplines rather than by being tied to one specific area of expertise. Theyfocus to a much greater degree on business transformation, change and relationship managementas the core proposition in an 'end-to-end' offer. Other eBusiness architects in Germany are amongothers Concept! AG, GFT Technologies AG, Kabel New Media AG, Pixelpark AG, Sinner Schrader AGand outside of Germany among others Agency.com Ltd. (USA), Framfab AB (Sweden), Icon MedialabInternational AB (Sweden), marchFIRST Inc. (USA), Razorfish Inc. (USA). It is difficult for other com-petitors who have evolved from one discipline, to catch up the learning that has been accumulated byintegrating all the functions and by turning them into best practice models that can be rapidly imple-mented. The eBusiness architects also have greater understanding and experience of how to buildcustomer oriented solutions and leverage a brand. This is critical to success.

Syzygy competes in this new integrated cross-functional arena. Syzygy is positioned. as one of thefew companies in Europe who are both offering genuinely comprehensive eBusiness solutions aswell as proven cross-market deployment of solutions.

Business Strategy

Syzygy has two key business objectives. Firstly, to strengthen its position as one of Europe's leadingfull service eBusiness solution providers, and secondly, to achieve profitable growth. The Company'sstrategy will achieve these objectives by following its mission statement, which is to help Europeancompanies to become profitable eBusiness companies. It will do so by increasing its European pre-sence in terms of geographical coverage and services, its portfolio of pan-European clients in verticalmarkets and by building the Syzygy brand name across Europe as a synonym for high quality, tech-nological and creative eBusiness solutions. Through the combination of the key strengths of threecompanies in the three largest European Internet services markets Syzygy has laid the foundation toleverage off the rapid market growth. The Company will also expand its mission to encompass thedelivery of profitable business through all new and developing channels.

Syzygy envisages that it will achieve its strategic business objectives in the following six strategicareas:

1. Client development

2. Vertical market development

3. Extension of its range of services offered to clients

4. Geographical expansion

5. Extension of its relationship with the WPP group

6. Development of opportunities for employees

1. Client Development

The Company has already developed a portfolio of large European clients for whom it develops prof-itable eBusiness solutions. These are typically companies of the ªold economyº whose shares showless volatility than those from companies of the ªnew economyº. The expertise that it is gaining inbuilding profitable eBusiness for clients across Europe is providing Syzygy with the ability to attractclients who exhibit two philosophies. Firstly, they want to transform their business or sector throughthe use of new and developing channels, and secondly, they want to operate across borders. Syzygywill increasingly target these ªagents of changeº or eInnovators, for whom the opportunities in theEuropean new media market play a key strategic role.

Meeting and exceeding the client needs is the key to establishing long-term client relationships. Effi-ciency of process and good project management is therefore increasingly important to deliver this.Szyzgy will further strengthen its project management team and will therefore add to its reputation ofbeing able to deliver the defined results. Syzygy will continue to evolve its process on an ongoing

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basis to simplify the development of its clients' eBusiness. Intensifying relationships with clients andgrowing with them as they keep developing their eBusiness strategy is a major component of Syzy-gy's strategy. As the Company provides mission critical solutions for established clients the costs ofswitching to an alternative supplier of eBusiness solutions will become increasingly high for clientsand therefore represent a significant barrier to entry for competitors.

2. Vertical Market Development

Syzygy's strategy also reflects the growing importance of vertical market expertise. The knowledge ofindustry trends and industry specific client needs are key in developing successful eBusiness strate-gies. The Company will seek to further expand its know-how in the industries it currently focuses onand to identify market-specific issues and opportunities. These are financial services, automotive, tel-ecoms and retail. The Company will continue to evaluate other industries which show relevant eBusi-ness potential. The management will enhance its vertical market expertise by

1. recruiting industry experts,

2. by extending the range of solutions to clients in these markets,

3. seeking to create strategic alliances with relevant industry partners.

3. Extension of the Range of Services offered to Clients

Syzygy will continue to expand the range of services that it offers to clients to ensure that it can con-tinue to develop profitable business for its clients through new and developing channels.

Syzygy will significantly expand its management consulting expertise by hiring consulting specialistsand where appropriate by entering into formal co-operation agreements with well-established man-agement consultant groups. To strengthen its consulting know-how the Company plans to leverageoff the research expertise it has gained in partnership with WPP research companies. This researchexpertise will continually assist the strategic consultants to assess the best eBusiness strategy forclients and will give the Company a competitive advantage over many of its competitors who haveto rely on third party research information. Management consulting expertise and research knowl-edge will also facilitate R&D investment in new channel knowledge across borders and throughoutEurope. This will include assessing the opportunities of interactive TV, and mobile solutions / mCom-merce. Syzygy is already developing cross channel solutions for clients and is expanding itsresources in this area.

The Company will increasingly invest in R&D to enable the development of reusable customer solu-tions. Syzygy has already developed and will continue to develop reusable tools which help to speedup the implementation of eBusiness solutions. Syzygy will also further strengthen its co-operationwith technology providers and continue its best of breed concept which always guarantees the bestavailable technological solutions for clients. Where client needs cannot be satisfied fully by availabletechnological solutions, Syzygy will develop its own solutions which will be proprietary softwaremodules which can be reused in many client applications. This will mean the extension of its eBusi-ness solutions framework by building a range of synergistic eBusiness applications and methodolo-gies that leverage brand potential to bring immediate business value to clients. It will also meanstrengthening alliances with key strategic partners and partnerships that help develop superior serv-ice offers in content management, eCommerce and CRM.

Syzygy's own content management tool SyComax will also be further developed according toincreased client needs. The Company plans to add further functionalities to this very highly devel-oped solution and will continue to use this content management solution as the platform for eBusi-ness solutions. Syzygy will also continue to develop its personalisation expertise by building consult-ing models, which will help clients build higher levels of loyalty and profitability.

4. Geographical Expansion

Syzygy will actively seek to grow organically and through acquisitions across Europe to meet theobjective of having ªfull pan-European coverageº. Syzygy's key clients are increasingly looking forinternational services from their eBusiness service providers. The Company has already targeted the

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European markets (Spain, Italy) it will enter into mid-term. In each market it plans to enter, the Com-pany will very carefully weigh the decision to either enter by establishing an office organically or byacquiring local companies. Potential acquisition targets will have to complement the Company'sexisting skills and have the potential to significantly increase its geographical reach. Additionally, theCompany will investigate to build its centres of expertise in the three largest markets of Europethrough acquisitions. Mid- to long-term Syzygy will also investigate how best to begin its expansionoutside of Europe, so that it can move into becoming a global force.

5. Extension of its relationship with WPP

WPP's investment in Syzygy in early 1997 has allowed the Company to build strong relationships witha number of the WPP Group companies and their personnel across a number of different countriesover a period of time. This has given Syzygy an unique position within the WPP Group as an 'eEna-bler'. Syzygy helps different companies of the WPP Group to provide digital or eBusiness solutionsfor their clients.

Syzygy will continue to extend and formalise its relationships across the WPP Group as it expandsand so to drive mutual advantage for the WPP Group and for Syzygy. The WPP Group has some ofthe world's most successful marketing companies and Syzygy can benefit from leveraging thisknowledge both for itself and for its clients. The rapid transference of know-how is becoming increas-ingly important in an industry where time to market provides major competitive advantage. Exam-ples of formal relationships are illustrated below:

WPP, the parent company:

Syzygy works closely on the development of WPP's Web presence, having launched its site in late1997, and having continued to update and to extend it since. However, WPP provides Syzygy with anumber of different benefits that will be very important to achieve the Company's strategic objec-tives:

± proactive M&A support, by identifying acquisition and co-operation targets,

± general legal and transaction advice and the formalisation and standardisation of the acquisitionand integration process to ensure the successful integration of newly acquired companies in thefuture,

± advice in recruitment and staff retention policies, particularly developing and implementing shareoption and long-term incentive plans and employment contract advice,

± introduction and cross referral to Group clients,

± introduction to potential strategic and technology partners,

± access to WPP's international infrastructure to facilitate the and reduce costs of the internationalexpansion,

± access to proprietary research, e.g. Millward Brown's BrandZ,

± procurement discounts.

± access to Internet companies in which WPP has taken a minority stake (http://www.wpp.com/interactive).

JWT

Syzygy and the global advertising agency, JWT, have worked together on a number of different pro-jects since 1997. Client projects have extended across Europe (UK, Germany, Switzerland, and Italy)and the USA, and include Siemens, Wilkinson Sword Ltd. a subsidiary of Warner Lambert Inc.,Boots, and Mazda. A formal working relationship between JWT and Syzygy on a pan-European basishas now been established. Syzygy is now JWT Europe's exclusive partner for pan-European eBusi-ness solutions for its clients. Exclusivity refers to markets where Syzygy and JWT have a joint pre-sence. This relationship also encompasses the following:

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± Syzygy and JWT commit to building digital and eBusiness across Europe both with existing JWTclients and through new business.

± Syzygy will assign cross functional teams to partner with JWT in Syzygy's existing markets (UK,France, and Germany). They will be located in Syzygy offices but will establish an office in eachJWT building. Syzygy will establish teams across other markets as it recruits suitable staff.

± JWT commits to support Syzygy building its presence in markets across Europe, through clientintroductions, use of infrastructure and personnel in different offices. Syzygy is currently sharingspace with JWT in Ireland.

Conquest and The Henley Centre

In conjunction with Conquest, the WPP-owned network of advertising agencies in 18 European coun-tries, and The Henley Centre, the consumer consultancy, Syzygy has launched a unique pan-European service to build competitive advantage through the Internet for 'challenger brands'.

This combines the distinctive competencies of the three firms: Conquest, through its focus on help-ing 'challenger' or entrepreneur brands to build their business across Europe; The Henley Centre, inenabling clients to anticipate future demand through market and consumer trend analysis anddetailed studies of the economic impact of different marketing activities; and Syzygy, with its strongexperience in building profitable eBusiness for clients across Europe.

The partnership targets online challenger brands with pan-European aims, to help them define andbuild competitive advantage. Target clients are the online operations from established traditionalbusinesses and dot.coms.

The offer ranges from synchronised cross-media marketing strategy to full service online solutions,allowing clients to develop their Internet proposition and associated marketing communications pro-gramme through one core team.

Specific services include market strategy and situation analysis, solution development, planning androad-mapping, implementation and marketing.

Syzygy is in the process of defining formal relationships with some other WPP companies: like EIG,Lambie-Nairn, Millward Brown, MindShare and Research International.

6. Development of Opportunities for Employees

The Company recognises that its main asset is the quality of employees. Maintaining existing andrecruiting new employees will be one of the key success factors for the Company. Syzygy is devel-oping innovative people practices and will continue to work hard to be best of breed in this area. Itskey initiatives include:

Organic career path development. This provides for people to change location and function at anytime in their careers. This includes quarterly people swaps between offices. The Company's alreadyestablished presence in London, Frankfurt am Main, Paris and Dublin has a high appeal for employ-ees to spend time in the respective countries. This will also promote the working environment andspirit of the Group. It will also enable Szyzgy to establish standardised processes and proceduresacross all existing and new offices.

Best practice development. Employees are encouraged to take off time to explore projects of mutualinterest to them and to the Company. Innovation prizes exist for best practice cross-functional solu-tions for clients.

Syzygy is also investing in building a strong human-resources practice across the Group to help itmanage recruitment and retention.

46

Capital Expenditures

Syzygy's capital expenditures of the last three years on a proforma basis provided the foundation forits growth strategy. Predominantly, Syzygy invested in hardware (servers, workstations, etc.), soft-ware, office infrastructure and telecommunications technology. All investments were financed out ofcash flow, no debt financing was required.

The following table shows Syzygy's capital expenditures in the years 1997 to 1999:

1997 1998 1999

(T5)

Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 2 86Tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 666 665Financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 13 9

Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 681 760

In the current year Syzygy is planning capital expenditures of approx. 5 800 thousand to invest inadditionally rented office space in Germany, to fund the business start of the Company's Irish subsid-iary and to acquire hardware, software and office equipment reflecting the growth of the Company.These expenditures will be financed out of own cash flow.

Patents, Trade Marks, Licenses, Major Contracts

Syzygy and its subsidiaries take advantage of a number of customary licenses that do not expire andwhich, when obsolete, can be replaced by new licenses that must be acquired.

The management of Syzygy believes that the obsolence of one or several licenses and their neces-sary replacement would not have a significant negative influence on the business or economic situa-tion of the Company.

At present, Syzygy does not rely on any major contract. It has protected certain trade marks andapplied for the registration of a trade mark.

Research and Development

Syzygy carries out R&D as part of its normal course of business. The most significant R&D has beeninvested in building a content management product, SyComax. The SyComax product has been devel-oped in Germany. In the UK investment in R&D has been made in interactive TV and in mobile solutions.

Real Property

Syzygy leases all the premises that it uses and owns no other property.

Litigation

Since 1999 Syzygy has been involved in a dispute over the tradename ªSyzygyº in the UK. Syzygy hasseveral years of trading history whereas the litigant has a very limited trading history with this name.The management of Syzygy and its legal counsel are of the opinion that Szygy will win this litigation.

Otherwise neither Syzygy nor any of its subsidiaries is or has been during the last two fiscal yearsinvolved in, or has knowledge of, any threat of any legal, arbitrational, administrative or other pro-ceedings the result of which might have a material effect on the financial position of Syzygy and/orits subsidiaries.

47

VII. Taxation in the Federal Republic of Germany

This section is a summary of certain relevant German tax regulations. It does not make any claim asto the comprehensive nature of the information which may be necessary for the decision to purchasethe Shares on offer. This presentation is based on the tax regulations in Germany applicable on thedate this Prospectus goes to press and relates exclusively to the taxation of dividends, withholdingtax on capital gains, inheritance and gift tax and does not treat all aspects of these types of taxes. Incase of doubt, a tax adviser should be consulted.

Taxation of Dividends

Shareholders domiciled/with permanent residence in Germany

The distribution of dividends is generally subject to the full German income tax (including solidaritysurcharge and any church taxes). The dividends are not subject to income tax if equity within themeaning of Sec. 30 (2) No. 4 Corporation Tax is deemed to be applied. The capital gain for the share-holder is the gross amount of the dividend, that is the net amount accruing to him plus the withheldcapital gains tax (plus the solidarity surcharge on this) and the recoverable corporation tax (= taxcredit on corporation tax). The dividend is also taxed in accordance with the personal circumstancesof the shareholder, whereby the withheld capital gains tax and the corporation tax paid by the Com-pany are to be credited to the income tax or corporation tax.

The shareholder located in Germany and subject without restriction to German taxation will be paidout 51.54% as net of the gross dividend (100% gross dividend minus 30% corporate tax burden ondistributed profits minus 17.5% capital yield tax minus 0.96% solidarity surcharge). The recoverabletax credits thus amount to a total of 48.46%. If the personal income or corporation tax of the share-holder on the dividend is less than the amount of the tax credits of 48.46%, he is reimbursed theexcess tax credit; if his personal income or corporation tax is higher, he must make a back paymentof the difference. For individuals there is a tax allowance of DM 3,000 for single persons and DM 6,000for married couples (so-called ªsavings allowanceº), which may be deducted from income from capi-tal investments. In addition, individuals may claim their expenses for all of the income from capitalinvestments with a flat rate of DM 100 for single persons and DM 200 for married couples filing jointreturns. To the extent the distribution of profits is deemed to be equity applied within the meaning ofSec. 30 /2) No. 4 KStG (so-called EK 04), the dividend will be paid out without any deduction gross fornet and is not subject to an income taxation of the shareholder if the shareholder holds at least 10%of the shares and the dividend is not greater than the historic cost of the shares. A tax credit is notlinked to these distributions. No corporation tax credit exists for distributions within the meaning ofSec. 30 (2) No. 1 KStG (so-called EK 01).

Shareholders domiciled/with permanent residence outside of Germany

Shareholders domiciled in foreign countries do not receive any tax credit if the shares are not heldthrough a domestic permanent establishment.

Subject to the application of a double tax treaty the distribution of dividends of a German stock cor-poration to shareholders not domiciled in Germany are subject, however, to capital gains tax (with-holding tax) in the amount of 25% of the cash dividend plus a solidarity surcharge on the capitalgains tax. The capital gains tax is not charged in the case of the distribution of dividends afterJune 30, 1996 under the requirements of Sec. 44 d EStG (implementation of the so-called parent-subsidiary directive) upon application or will be reimbursed upon application by the shareholder tothe Federal Office of Finance (Bundesamt für Finanzen), Friedhofstraûe 1, D-53225 Bonn.

In the event that a double taxation treaty is applicable, the capital gains tax on the distribution ofdividends by a corporation domiciled in Germany to a shareholder not domiciled in Germany couldpossibly be lower. The reimbursement of the difference requires, however, an application for reim-bursement to the Federal Office of Finance under a double taxation treaty by the shareholder entitledto the reimbursement.

48

In the case of taxable distributions of dividends by German corporations, a solidarity surcharge of5.5% is charged on the capital gains tax. If the solidarity surcharge and the capital gains tax are inexcess of the maximum rate of the German withholding tax provided for under the double taxationtreaty, it will be reimbursed upon application.

If the shares are part of the domestic permanent establishment of a foreign company, the credit mod-alities applicable for a shareholder with a permanent residence in Germany shall apply. The corpora-tion tax, capital gains tax and the solidarity surcharge charged on this are thus creditable to the Ger-man tax obligations.

For shareholders subject to limited corporation tax who maintain a permanent establishment in Ger-many, the rate of corporation tax for earnings from shares which are part of a domestic permanentestablishment will be 40% (plus solidarity surcharge). The income tax is calculated in accordancewith the general rules of Sec. 32 as EStG, but will be a minimum of 25% of income. To the extent thecorporation tax (including solidarity charge) to be paid by the shareholder is less than the sum of theamount of creditable tax, the shareholder will be given a tax refund; otherwise, a back payment of theexcess amount of the corporation tax (including solidarity surcharge) is to be made. The passing onof the dividend paid through the German permanent establishment to its foreign headquarters is notsubject to German corporation tax.

Taxation of Profits Made on Sale

If a shareholder subject to unlimited taxation achieves a profit upon the sale of the shares held in hisprivate assets, this profit is generally subject to income tax, provided that the shares are sold withintwelve months of their being acquired. Losses from the sale of shares may only be set off by taxableprivate capital gains of the same year, but not with other income. To the extent the set-off is not pos-sible in the year of loss, the losses may first be set off by such profits made on sale relevant to taxa-tion of the immediately preceding year and then with those of the following years.

If the period between the acquisition of the shares and the date of their sale is more than twelvemonths, the profit made on sale is only to be taxed if the shareholders have held at least a 10% inter-est in the capital of the company within the last five years. A loss made on sale is only tax-relevantunder certain circumstances. This applies to both shareholders subject to unlimited taxation andthose subject to limited taxation.

If the shares are part of the business assets of a company domiciled in Germany or of a German per-manent establishment of a foreign company, profit earned upon the sale of the shares is always sub-ject to taxation.

Profit from the sale of the shares could possibly be subject, in the event of limited taxation, to taxa-tion in the country in which the shareholder is domiciled or has his permanent residence.

Inheritance and Gift Tax

Transfers of shares through an inheritance or gift from individuals subject to unlimited taxation aresubject to the taxation of the price of the shares on the date at which inheritance or gift tax is charge-able. Transfers by a shareholder subject to limited taxation are not subject to inheritance or gift taxunless

(i) the shares from the shareholder belong to the business assets of a permanent establishmentin Germany or

(ii) the heir, donee or beneficiary is a ªnationalº within the meaning of the German Inheritanceand Gift Tax Act or

(iii) (subject to the exemption under an applicable double taxation treaty) the shareholder directlyor indirectly holds an interest alone or with other individuals related to him in at least one-tenth of the registered share capital of the Company.

49

Other Taxes in Germany

The sale or transfer of shares is not subject in Germany to any securities turnover tax, stamp tax, orsimilar taxes. Capital tax is not levied for the taxation periods as of January 1, 1997.

Law for the Reduction of Tax Rates

The Federal legislators have passed the Law for the Reduction of Tax Rates (Steuersenkungsgesetz ±StSenkG). The law contains substantial changes in the taxation of corporations, which should be-come effective as of January 1, 2001.

The law provides for the replacement of the imputation credit system for corporation taxes by the so-called ªhalf of revenue procedureº. The tax rate for withheld and distributed profits of corporationsshall be reduced to 25%.

The marginal rate for personal income taxes will be reduced to 48.5% for the years 2001 and 2002, to47% for the years 2003 and 2004 and to 43% for the year 2005 and thereafter. A further reduction ofthe marginal rate for income taxes to 42% is being considered in a present legislative procedure inform of an amendment to the Law for the Reduction of Tax Rates.

Corporations shall collect tax free profits from investments in domestic and foreign subsidiary cor-porations as well as under certain circumstances from the sale of investments in domestic and for-eign corporations.

Distributions from corporations to natural persons residing in Germany shall be taxed at 50% of theamount without any tax credit balance. Only half of the expenses incurred in connection with the dis-tributions which will be only half taxable will also be deductible at 50% only. If the fiscal year equalsthe calendar year, this regulation will apply for the first time to distributions of profits, which will beresolved in 2002 for profits of 2001. If the fiscal year differs from the calendar year, the half of revenueprocedure will apply for the first time to distribution of profits, which will be resolved in 2003 for prof-its of the year 2002.

Profits from the sale of substantial interests in corporations, which are held privately by fully taxablenatural persons shall also be taxable at 50% in the future. Starting in 2002, a participation is consid-ered substantial if the natural person owns directly or indirectly at least 1% or more of a corporation.Is the participation less than 1%, profits from the sale of participations in a corporation, which areheld privately by fully taxable natural persons, are taxable only if the gains are considered specula-tive. Gains are considered speculative if the time between purchase and sale of the shares is less thantwelve months. Taxable is also the sale of investments in corporations which were subject to contri-butions in kind.

50

VIII. Presentation and Analysis of the Financial and Earnings Situation

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

The following discussion of the years 1997, 1998, 1999 and the first six months of 2000 are based onfinancial data presented elsewhere in this Prospectus and should be read in conjunction with thisdata. It should be particularly noted that the pro forma data includes Syzygy Ltd. (now Syzygy UKLtd.), United Media GmbH (now Syzygy Deutschland GmbH), and Netforce SA (now Syzygy FranceSA) as if they had been merged and acquired respectively since January 1, 1997. The annual financialstatements referred to were prepared in accordance with the respective local accounting and report-ing provisions of the covered entities and then restated according to US Generally Accepted Account-ing Principles (US GAAP).

As Syzygy France was part of the HighCo group prior to being acquired by Syzygy it had its fiscal yearin accordance with this group's. Its fiscal year ended in June. Only for the intended disposal, the fiscalyear was changed to the calendar year. This change was realised in 1999. There is no balance sheetfor year end 1997 available.

Profit & loss statements have been constructed for the fiscal years ending December 1997 and 1998on the following assumptions:

1998: 100% of the six months profit and loss statement ending December 1998 plus 50% of the12-months profit and loss statement covering the period from July 1, 1997 to June 30, 1998.

1997: 50% of the 12 months profit and loss statement covering the period from Juli 1, 1997 to June 30,1998 plus 55% of the 11 months profit and loss statement covering the period from August 1, 1996 toJune 30, 1997.

A consequence of the non-existence of Syzygy France's 1997 balance sheet is that the pro forma cashflow statements for 1997 and 1998 only cover Syzygy UK, Syzygy Deutschland and Mediopoly Ltd.(holding company of Syzygy UK) but not Syzygy France. The 1999 cash flow statement includes allfour entities.

Throughout the following discussion Mediopoly Ltd., the holding company of Syzygy UK Ltd., andSyzygy Ltd. have been combined and are referred to as Syzygy UK.

Income statement

Revenues

Total revenues rose from 5 4,286 thousand in 1997 to 5 6,490 thousand in 1998, an increase of morethan 51%. The increase in revenues is attributable to increased business with existing clients, theexpansion of the client base and the expansion of the Company's business. For example eCRM/per-sonalisation services have been expanded and the Company was able to establish new relationshipswith high profile clients such as BP Amoco, Boots, Siemens and VIAG Interkom.

From 1998 to 1999 total revenues increased by 5 4,839 thousand, or 75% from 5 6,490 thousand to5 11,329 thousand. The increase is the result of a further enlargement of the client base, strengthenedrelationships to existing clients as well as the expansion of the business into new areas such as con-tent management, end-to-end eBusiness and systems integration. Syzygy was able to win large newclients such as Lloyds TSB and Mazda Europe for pan-European projects.

Revenues in the first six months of 2000 amounted to 5 8,532 thousand, up more than 90% on thecomparable period in 1999. This positive development is due in particular to additional business withexisting clients such as Fiat, Lloyds TSB and Mannesmann as well as the acquisition of new clientssuch as L'INA. Regarding the expansion of the service offering, SyComax, Syzygy's proprietary con-tent management solution proved to be well received by the market.

51

Operating expenses

Cost of consultancy sold

One of the key characteristics of the consultancy industry is the requirement of qualified staff for driv-ing the business. As a result, personnel expenses usually constitute the largest item on the incomestatement.

Cost of consultancy sold in the past three years thus increased due to the increased revenues gener-ated by consultants by 5 3,875 thousand from 5 2,337 thousand in 1997 to 5 6,212 thousand in 1999.As a percentage of total revenues, cost of consultancy sold remained the same at almost 55% in 1999.Cost of consultancy was 5 5,304 thousand for the first six months of 2000, an increase of 77% com-pared to the same period in 1999.

In 1997, the Company employed 41 people at year end. In the two subsequent years, its staffincreased to 75 (+82%) and 118 employees (+57%), respectively. At June 30, 2000, Syzygy employed166 people.

Selling, general and administrative expenses

Selling, general and administrative expenses (SG&A) comprise predominantly expenses for admin-istrative staff, office locations, travel and entertainment and depreciation. In 1997, SG&A expenseswere 36% of total revenues, this ratio increased in 1999 due to investments in the management andadministrative function in order to facilitate adequately the strong growth of Syzygy's core business.In absolute figures, the cost of SG&A rose from 5 1,524 thousand in 1997 to 5 2,651 thousand in 1998and further to 5 5,102 thousand in 1999. During the first half of 2000, SG&A expenses were 5 2,228thousand, an increase of 33% versus the same period in 1999.

Operating income

In 1997, total operating revenue amounting to 5 4,286 thousand was partially offset by operatingexpenses of 5 3,861 thousand. This led to a positive operating result of 5 425 thousand, an operatingmargin of 9.9% of total revenues. Syzygy UK and Syzygy Deutschland showed strong operating prof-its of 5 190 thousand (11.0% of sales) and 5 295 thousand (17.0% of sales) respectively, while SyzygyFrance had an operating loss of 5 27 thousand (± 2.7% of sales).

This trend held on into 1998. Syzygy Deutschland and Syzygy UK were able to slightly increase theirprofitability, Syzygy UK with 5 531 thousand (+18.1% of sales) and Syzygy Deutschland with 5 284thousand (12.5% of sales). The operating losses at Syzygy France increased further to 5 274 thousand(± 18.3% of sales), putting the Group at an operating income of 5 456 thousand (7.0% of sales).

1999 proved to be another successful year for Syzygy Deutschland and Syzygy UK who increasedtheir operating profits by 141% and 19.4%, respectively to 5 685 thousand (21.1% of sales) and 5 634thousand (12.3% of sales), respectively. This strong development is primarily due to efficiency gainsin the project work. The losses at Syzygy France further increased to 5 1,250 thousand due to man-agement deficits which subsequently resulted in the dismissal of the founders of the French com-pany.

As a result, the Group's pro forma operating loss decreased to 5 15 thousand (0.1% of sales) in 1999.It is important to clearly differentiate between the very positive development of Syzygy UK andSyzygy Deutschland on the one hand and the operating profit deterioration at Syzygy France on theother hand.

Syzygy as a Group was also able to significantly improve its operating profitability in the first sixmonths of 2000. It recorded an operating result of 5 1,000 thousand (11.7% of sales). Syzygy Deutsch-land and Syzygy UK further improved their operating performance, raising their respective operatingincomes to 5 749 thousand and 5 519 thousand, respectively. Syzygy France's new management man-aged to stabilise the business and to realise a turn around; as at June 30, 2000, Syzygy France still

52

shows an operating loss of 5 262 thousand. Compared to last year's results, operating performanceincreased by 89% in the UK, 66% in France and 133% in Germany; on a Group level the operatingprofit increased from 5 ± 191 thousand to 5 1,000 thousand.

Amortisation of goodwill

The acquisition of Syzygy France resulted in a goodwill of 5 7,888 thousand which will be amortisedover ten years. For the purposes of the pro forma financial statements the goodwill was alreadyrecognised as ªfictionalº in the balance sheets for the years 1997 to 1999 and the respective amortisa-tion amounts of 5 789 thousand per annum were recognised in the profit and loss statements.

Financial result

The financial result of the Group (interest income less interest expenses) amounted to 5 39 thousandin 1997, 5 21 thousand in 1998 and 5 ± 10 thousand in 1999. Syzygy UK and Syzygy Deutschland hadpositive financial results throughout the last three years due to positive cash-flows, low working capi-tal requirements as well as the ability to manage the working capital cycle through the flexibility inconstructing the contractual relationships with clients and suppliers. Syzygy France had negativefinancial results. Syzygy France's utilisation of debt increased five-fold in 1999 (inter-company debts)which resulted in the negative financial result for the Group.

The Group managed to achieve an almost even financial result of 5 ± 1 thousand for the first sixmonths of 2000.

Provision for income taxes

As the operating income of Syzygy UK and Syzygy Deutschland increased from 1997 to 1999, theirrespective tax provisions increased accordingly. The tax provisions in 1999 amounted to 53% ofoperating income at Syzygy Deutschland and 40% at Syzygy UK. These rates are in line with local taxregimes.

Syzygy France did not provide for material tax provisions because of negative results during theyears 1997 to 1999.

Net income/net loss for the year

Without consideration of the amortisation of goodwill, Syzygy would have shown profits of 5 265thousand and 5 141 thousand in 1997 and 1998, respectively. However, in 1999 the Group showedlosses of 5 600 thousand because of the highly negative results of Syzygy France. Syzygy UK andSyzygy Deutschland were very profitable throughout this period; their combined net incomeincreased from 5 302 thousand in 1997 to 5 480 thousand in 1998 (+ 59%) and to 5 723 thousand(+ 51%) in 1999.

Considering the amortisation of goodwill of 5 789 thousand annually, a loss of 5 524 thousand wasrealised in 1997 which increased by close to 24% to 5 648 thousand in 1998 because of bad results ofSyzygy France. 1999 losses increased again to 5 1,389 thousand due to losses of the French company.

The net income for the first six months of 2000 amounts to 5 543 thousand before and to 5 148 thou-sand after amortisation of goodwill. This reflects a reversal of bad results of the first half of 1999 by5 ± 967 thousand.

Key balance sheet items

Due to the explained non-existence of a Syzygy France balance sheet for 1997, this section only coversthe years 1998 and 1999

53

Assets

Investments in fixed assets reached 5 666 thousand in 1998. The Group invested a further 5 665 thou-sand in 1999. These investments were mainly investments in computer hardware equipment. Gener-ally the level of investment for Syzygy is dependent on the number of employees since the Companyrequires mainly hardware and software for the employee's working stations. The tangible assets dis-closed in the balance sheet mainly comprise operating and office equipment as well as fittings andfixtures.

Trade receivables increased from 14% of total assets in 1998 to 35% in 1999. This increase is due tothe revenue growth of 75% in that period.

The increase in net fixed assets of 5 1,191 thousand to 5 1,331 thousand in the period from January 1to June 30, 2000 is primarily due to further investment in operating and office equipment for newemployees and other necessary technical enhancements.

Equity and liabilities

In 1999, liabiltites and provisons of the Group increased from 5 2,084 thousand to 5 5,835 thousand.This increase of 5 3,751 thousand reflects predominantly an increase of liabilities of 5 2,533 thousandof Netforce owed to HighCo. Equity of the Group decreased from 5 8,214 thousand in 1998 to 5 7,107thousand in 1999 due to losses. In the course of the merger into the Syzygy Group, the capital struc-ture of Syzygy France has been adjusted with the result that the liabiltities and provisions of theGroup amount to 5 4,788 thousand as at June 30, 2000. In this context, the registered share capital ofthe Group has been increased from 5 460 thousand to 5 1,401 thousand.

Cash flows from operating activities

In 1997, the cash provided by operating activities amounted to 5 311 thousand. The main reason forthis was the high level of depreciation and amortisation of 5 931 thousand.

1998 saw an increase in net cash provided by operating activities to 5 486 thousand.

The cash-flow provided by operating activities in 1999 increased by 24% versus 1998 and amountedto 5 601 thousand. 1999 is not really comparable to both previous years as Syzygy France contributedonly in 1999 to the Group's cash-flow for the reasons explained earlier. The main reasons for this levelof operating cash-flow are the accounts payable, increaes of provisions by 5 3,291 thousand and ofaccounts receivables by 5 2,788 thousand.

From January 1 to June 30 of this year cash-flow from operating activities amounted to 5 ± 937 thou-sand.

Cash flows from investing activities

Cash-flow from investing activities of 5 ± 374 thousand in 1997, 5 ± 695 thousand in 1998 and of 5 ± 760thousand in 1999 was mainly a result of investments in fixed assets. Major investments were made inoffice refurbishings, IT and office equipment. Cash-flow from investing activities was 5 ± 277 thou-sand as per June 30, 2000.

Cash flows from financing activities

Funding requirements were principally covered through the capital increase of 5 980 thousand in1997. This was partially set-off by a dividend payment of 5 127 thousand. In the first half of 2000HighCo forgave Syzygy France debt of 5 2,357 thousand in connection with the capital restructuringwhich led to a positive cash-flow from financing activities of 5 2,189 thousand.

Minor foreign exchange effects added to an overall cash-flow of 5 810 thousand in 1997, 5 105 thou-sand in 1998, 5 ± 116 thousand in 1999 and of 5 955 thousand as at June 30, 2000.

54

IX. Financial Section

SYZYGYAG

Certificate on the Pro-Forma Consolidated Financial Statements

We have critically reviewed the Pro-forma consolidated balance sheets of Syzygy AG, Bad Homburgv.d.H., as of December 31, 1999, 1998 and 1997, the accompanying Pro-forma consolidated incomestatements, the accompanying Pro-forma consolidated cash-flow statements and the changes inshareholdersÂ equity. This review was based on the audited financial statements of the companiesincluded in the Pro-forma consolidated financial statements.

The Pro-forma consolidated financial statements were prepared in order to present a comparativeanalysis of Syzygy Group as of December 31, 1999 for the period from January 1, 1997 untilDecember 31, 1999. In the Pro-forma consolidated financial statements Syzygy Group is presented asif it had been existing in its present structure over this period. The Pro-forma consolidated financialstatements were prepared in accordance with United States Generally Accepted Accounting Princi-ples (US-GAAP). The accompanying Notes were prepared in accordance with the requirements ofNotes to financials statements as a part of US-GAAP-financial statements.

The presentation of the Pro-forma consolidated financial statements is based on simplifying Pro-forma assumptions by Company`s management and permits only limited evidence how SyzygyGroup`s net worth, financial position and results of operations would have developed if the Grouphad existed in the present structure since January 1, 1997.

The legal representatives of the Company are responsible for the preparation of the Pro-forma conso-lidated financial statements. Our responsibility is to express an opinion, based on our critical review,on the assumptions made by CompanyÂs management, and to assess the presentation of the Pro-forma-accounting.

The scope of our critical review of the Pro-forma consolidated financial statements was substantiallyless than in an audit of consolidated financial statements. Our critical review of the Pro-forma conso-lidated financial statements was performed in order to express an opinion on the adequacy of thePro-forma assumptions and the resulting effects from applying those on the financial statements ofGroup companies.

On basis of our critical review we come to the conclusion that, except for the fact that no balancesheet of Netforce SA as of December 31, 1997 was prepared and therefore not included in the Pro-forma consolidated financial statements, we have no indications

± that the Pro-forma assumptions made by CompanyÂs management are inadequate,

± that the Pro-forma consolidated financial statements were not properly derived from the financialstatements of Group companies under application of the Pro-forma assumptions by CompanyÂsmanagement, and

± that cause us to believe that the Pro-forma consolidated financial statements are not suited to ade-quately present a true and fair view of the GroupÂs net worth, financial position, results of opera-tions and cash-flows.

ARTHUR ANDERSENWirtschaftsprüfungsgesellschaft

Steuerberatungsgesellschaft mbH

SecklerWirtschaftsprüfer

TurowskiWirtschaftsprüfer

Eschborn/Frankfurt/M., July 21, 2000

55

SYZYGYAG

PRO-FORMA CONSOLIDATED BALANCE SHEET

1999 1998 1997

5 000's 5 000's 5 000's

AssetsCurrent assetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 1,128 1,244 1,139Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . 4,253 1,459 656Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 159 0Prepaid expenses and other current assets . . . . . . . . . 702 214 38

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,103 3,076 1,833

Long-term assetsIntangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,020 7,890 7,888less: accumulated amortisation . . . . . . . . . . . . . . . . . . . ± 2,411 ± 1,578 ± 789

Net intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,609 6,312 7,099Property, plant and equipment . . . . . . . . . . . . . . . . . . . . 2,012 1,347 681less: accumulated depreciation . . . . . . . . . . . . . . . . . . . ± 821 ± 467 ± 199

Net property, plant and equipment . . . . . . . . . . . . . . . . 1,191 880 482Investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0 0Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 30 17

Total long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,839 7,222 7,598

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,942 10,298 9,431

Liabilities and shareholders' equityCurrent liabilitiesBank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 279 0Accounts payable and accrued expenses . . . . . . . . . . . 4,198 907 296Owed to affiliates and other payables . . . . . . . . . . . . . . 35 0 0Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,364 864 315Tax payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 18 3

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,685 2,068 614Long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 16 0

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,835 2,084 614

Shareholders' equityCommon stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460 460 387Additional paid in capital . . . . . . . . . . . . . . . . . . . . . . . . 965 965 965Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 243 81 41Cumulative translation adjustment . . . . . . . . . . . . . . . . 86 ± 34 20Goodwill on acquisition of Netforce . . . . . . . . . . . . . . . 7,888 7,888 7,888Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 2,535 ± 1,146 ± 484

Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . 7,107 8,214 8,817

Total liabilities and shareholders' equity . . . . . . . . . . . 12,942 10,298 9,431

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SYZYGYAG

PRO-FORMA CONSOLIDATED INCOME STATEMENT

1999 1998 1997

5 000's 5 000's 5 000's

RevenuesConsultancy sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,304 6,454 4,237Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 36 49

11,329 6,490 4,286Operating expensesCost of consultancy sold . . . . . . . . . . . . . . . . . . . . . . . . . ± 6,212 ± 3,383 ± 2,337Selling, general and administrative expenses . . . . . . . ± 5,102 ± 2,651 ± 1,524

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 456 425Goodwill amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 789 ± 789 ± 789Interest income/expense, net . . . . . . . . . . . . . . . . . . . . . ± 10 21 39

Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 784 ± 312 ± 325Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 605 ± 336 ± 199

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 1,389 ± 648 ± 524

Retained earnings at the beginning of the year . . . . . . ± 1,146 ± 498 153Dividend payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 127Addition of Netforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Retained earnings at the end of the year . . . . . . . . . . . ± 2,535 ± 1,146 ± 484

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SYZYGYAG

PRO-FORMA CONSOLIDATED STATEMENTS OF CASH-FLOW

1999 1998 1997

5 000's 5 000's 5 000's

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 1,389 ± 648 ± 524Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 162 40 41Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . 1,143 1,057 931Changes in accounts receivable . . . . . . . . . . . . . . . . . . . ± 2,788 ± 676 ± 150Changes in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 139 ± 159 1Changes in prepaid expenses and other current

assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 494 ± 303 ± 36Changes in deferred revenue . . . . . . . . . . . . . . . . . . . . . 35 0 ± 92Changes in accounts payable and accruals . . . . . . . . . 3,291 611 ± 39Changes in tax payables . . . . . . . . . . . . . . . . . . . . . . . . . 500 549 181Changes in other current liabilities . . . . . . . . . . . . . . . . 2 15 ± 2

Cash-flow from operating activities . . . . . . . . . . . . . . . 601 486 311

Investments in fixed assets . . . . . . . . . . . . . . . . . . . . . . . ± 665 ± 666 ± 426Software development . . . . . . . . . . . . . . . . . . . . . . . . . . ± 86 ± 2 0Effect from the addition of Netforce balance sheet . . . 0 ± 14 52Other long-term investments . . . . . . . . . . . . . . . . . . . . . ± 9 ± 13 0

Cash-flow from investing activities . . . . . . . . . . . . . . . . ± 760 ± 695 ± 374

Changes in long-term debt . . . . . . . . . . . . . . . . . . . . . . . 134 16 0Dividend payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 ± 127Changes in bank liabilities . . . . . . . . . . . . . . . . . . . . . . . ± 211 279 0Capital increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 73 980

Cash-flow from financing activities . . . . . . . . . . . . . . . . ± 77 368 853Effect of exchange rate changes on cash . . . . . . . . . . . 120 ± 54 20

Total cash-flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 116 105 810

Cash and cash equivalents at the beginningof the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,244 1,139 329

Cash and cash equivalents at the end of the year . . . . 1,128 1,244 1,139

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SYZYGYAG

PRO-FORMA CONSOLIDATED STATEMENT OF CHANGES INSHAREHOLDERSÂ EQUITY

Commonstock

Additio-nal paidin capital

Deferredcomm-pensa-

tion

Cumula-tive

trans-lationadjust-ment

GoodwillNetforce

Retainedearnings

Totalequity

5 000's 5 000's 5 000's 5 000's 5 000's 5 000's 5 000's

January 1, 1997 . . . . . . . . . . . . . . . 372 0 0 0 7,888 115 8,375Net income . . . . . . . . . . . . . . . . . . . ± 524 ± 524Capital increase . . . . . . . . . . . . . . . 15 965 980Dividend payment . . . . . . . . . . . . . ± 127 ± 127Addition of Netforce . . . . . . . . . . . 52 52Deferred compensation . . . . . . . . 41 41Exchange rate differences . . . . . . 20 20

December 31, 1997 . . . . . . . . . . . . 387 965 41 20 7,888 ± 484 8,817

Other comprehensive income . . . 61Comprehensive income, total . . . ± 463Net income . . . . . . . . . . . . . . . . . . . ± 648 ± 648Capital increase . . . . . . . . . . . . . . . 73 73Addition of Netforce . . . . . . . . . . . ± 14 ± 14Deferred compensation . . . . . . . . 40 40Exchange rate differences . . . . . . ± 54 ± 54

December 31, 1998 . . . . . . . . . . . . 460 965 81 ± 34 7,888 ± 1,146 8,214

Other comprehensive income . . . ± 14Comprehensive income, total . . . ± 662Net income . . . . . . . . . . . . . . . . . . . ± 1,389 ± 1,389Deferred compensation . . . . . . . . 162 162Exchange rate differences . . . . . . 120 120

December 31, 1999 . . . . . . . . . . . . 460 965 243 86 7,888 ± 2,535 7,107

Other comprehensive income . . . 282Comprehensive income, total . . . ± 1,107

59

SYZYGYAG

Notes to the Pro-Forma Consolidated Financial Statements

1. Description of CompanyÂs Business

Syzygy AG and its wholly owned subsidiaries, Mediopoly, Syzygy, United Media and Netforce pri-marily provide consultancy and content for digital media across the UK, Germany and France. Thecombination of the three businesses will establish a pan-European base for the continued provisionof this service.

2. Pro-Forma-Situation and Currency

To fulfil the requirements of the ªNeuer Marktº the pro-forma consolidated financial statements arebased on the assumption that the Company has been existing in its planned organisational structuresince January 1, 1997.

All monetary amounts are reflected in Euro. The financial statements for periods prior to January 1,1999 have been restated to Euro using the official fixed Deutsche Mark to Euro exchange rate as ofJanuary 1, 1999, of 5 1.00 = DM 0.511. The restated Euro pro-forma consolidated financial statementsdepict the same trends as would have been presented if the Company had continued to present itsfinancial statements in Deutsche Marks.

3. Consolidated Entities

The pro-forma consolidated financial statements of Syzygy AG include all subsidiaries in which theparent Company holds an indirect or direct majority of voting rights.

Name of company Share as %Local

Currency

Mediopoly Limited, Groûbritannien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% £Syzygy Limited, Groûbritannien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% £United Media GmbH, Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% DMNetforce SA, Frankreich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100% FF

The financial statements of Mediopoly Limited and Syzygy Limited as of December 31, 1999 wereaudited by Arthur Andersen, who rendered unqualified opinions on these. The financial statementsof these companies as of December 31, 1997 and 1998 were audited by other auditors, who renderedunqualified opinions on these.

The financial statements of United Media GmbH as of December 31, 1999 were audited by ArthurAndersen, who rendered an unqualified opinion on these. The financial statements as ofDecember 31, 1997 and 1998 were not audited.

The financial statements of Netforce SA as of December 31, 1998 and 1999 were audited by by otherauditors, who rendered unqualified opinions on these. The financial statements as of June 30, 1996,1997 and 1998 were not audited.

The above financial statements prepared in accordance with locally accepted accounting principleswere transformed to the United States Generally Accepted Accounting Policies (US-GAAP) whererequired.

4. Principles of Combination

In May 2000 the shares of Mediopoly Limited, the parent company of Syzygy Limited, and the sharesof United Media GmbH were contributed to Syzygy AG by a share for share exchange which gave

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Mediopoly shareholders 60% and United Media shareholders 40% of Syzygy AG. In accordance withUS-GAAP (APB Opinion No. 16 ªBusiness combinationsº) this transaction was accounted for as apooling of interest. Accordingly consolidation was carried out at book values, therefore, no recog-nition of a goodwill was required.

Effective in June 2000, Syzygy AG acquired all of the 164,816 outstanding common shares of Net-force SA for a consideration in shares of Syzygy AG. These had an equivalent transaction value of5 8,481 thousand. In accordance with US-GAAP (APB Opinion No. 16 ªBusiness combinationsº) thistransaction was accounted for under the purchase method, which resulted in a goodwill of 5 7,888thousand. The related goodwill acquired will be amortised over a period of ten years.

The assets and liabilities of Netforce SA are not included in the pro-forma consolidated financialstatements as of December 31, 1997, because the company, having had a fiscal year end as ofJune 30, 1998, did not prepare a balance sheet as of December 31, 1997.

The income statements of Netforce SA for the years 1997 and 1998 as included in the pro-forma con-solidated financial statements were derived from a proportional conversion of the income statementsfor the fiscal years from August 1, 1996 until June 30, 1997, from July 1, 1997 until June 30, 1998 andfrom the stub fiscal year from July 1, 1998 until December 1998.

The consolidation of the entities included in the pro-forma consolidated financial statements wasprepared on basis of US-GAAP, except as described with regards to the treatment of Netforce SA.

5. Accounting for Long-Lived Assets

The Company, at each balance date, evaluates the recoverability of the carrying amount of its long-lived assets in accordance with Statement of Financial Accounting Standard (SFAS) No. 121,ªAccounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed ofº.Whenever events of changes in circumstances indicate that the carrying amounts of those assets maynot be recoverable over the remaining amortisation period, the company will compare undiscountednet cash-flows estimated to be generated by those assets to the carrying amounts of those assets. Tothe extent that these cash-flows are less than the carrying amounts of the assets, the Company willrecord impairment losses to write the asset down to fair value. As of December 31, 1999, manage-ment believes that no such impairment exists.

6. Revenue Recognition

Substantially all revenues are derived from fees for manpower and production of content for digitalmedia. Revenue is realised when the service is performed, in accordance with the terms of the con-tractual agreement and collection is reasonably assured.

Under project fee arrangements, the Company is compensated only when a project has been com-pleted. In such cases, the Company recognises revenue when it has performed substantially all of itsduties in relation to the project. Some of these projects specify milestones during the life of the pro-ject and assign a portion of the total project revenue to those milestones. In such instances, revenueattached to a particular milestone is recognised when the Company has performed substantially all ofits duties in relation to the milestone and the client has accepted the deliverable.

7. Cash and Cash Equivalents

Cash equivalents include highly liquid investments with original maturities of three months or less.

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SYZYGYAG

8. Foreign Currency Translation

Trading activities denominated in foreign currencies are recorded in Euro at actual exchange rates asof the date of the transaction or at the contracted rate, if the transaction is covered by a forward for-eign exchange contract. Monetary assets, liabilities and commitments denominated in foreign cur-rencies at the year end are reported at the rates of exchange prevailing at the year end or, if hedged,at the appropriate hedged rate.

Subsidiaries which do not report in the functional currency have been translated into Deutsche Marksusing the spot rate (for assets and liabilities) and the average rate (for the operation statement).Results of these subsidiaries have subsequently been translated in Euros at the spot rate as ofDecember 31, 1999.

9. Property and Equipment

Property and equipment are recorded at historical cost and are depreciated for financial reportingpurposes over their estimated useful lives on a straight-line or reducing balance basis. Cost includesmajor expenditures and replacements which extend useful lives or increase capacity and interest costassociated with significant capital additions. For all periods presented, interest costs allocable tothese projects have been insignificant and have not been capitalised. When assets are sold or retired,their cost and related accumulated depreciation are removed from the appropriate accounts. Anygains or losses on disposition of such assets are recorded as other income or expense. Maintenanceand minor repairs are charged to operations as incurred. Leasehold improvements are depreciatedon a straight-line basis over their estimated useful lives or the term of the lease, whichever is shorter.The cost basis and estimated useful economic life of property and equipment at December 31, 1999,1998 and 1997 are as follows:

Life 1999 1998 1997

5 000'sProperty and equipment at cost:Leasehold improvements . . . . . . . . . . . . . . . . . .

Lease-term362 346 118

Operational and office equipment . . . . . . . . . . . 3 or 4 years 1,629 980 557

Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 years 21 21 6

2,012 1,347 681

Less:Accumulated depreciation . . . . . . . . . . . . . . . . . . ± 821 ± 467 ± 199

Property and equipment, net . . . . . . . . . . . . . . . . 1,191 880 482

10. Goodwill and Other Intangible Assets

Intangible Assets are being amortised over their usual operational life. Their historical costs andamortization periods are as follows:

Life 1999 1998 1997

5 000's

Goodwill recognised for Netforce in 1997 . . . . . 7,888 7,888 7,888Accumulated amortisation . . . . . . . . . . . . . . . . . 10 years ± 2,367 ± 1,578 ± 789

Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,521 6,310 7,099

Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 years 8 0 0Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 years 124 2 0Accumulated amortisation . . . . . . . . . . . . . . . . . ± 44 0 0

Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . 5,609 6,312 7,099

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SYZYGYAG

On an ongoing basis, the Company reviews intangible assets and other long-lived assets for impair-ment whenever events or circumstances indicate that carrying amounts may not be recoverable. Todate, no such events or changes in circumstances have occurred. If such events or changes in circum-stances occur, the Company will recognise an impairment loss if the undiscounted future cash flowsexpected to be generated by the asset (or acquired business) are less than the carrying value of therelated asset. The impairment loss would adjust the asset to its fair value.

11. Stock-Based Compensation

The Company has issued a stock-based compensation plan for employees of the Company. Theobjectives of the plan include attracting and retaining personnel and promoting the success of thecompany by providing employees the opportunity to acquire shares.

11.1 Employee Share Scheme

On September 23, 1998, Mediopoly introduced a stock based compensation plan which consisted ofthe allocation of a second class of equity term ªA sharesº.

The shares were allocated in 3 tranches. The first tranche of shares were granted to senior manage-ment. When this offer was made the Company was considered an immature business, valued bymanagement at £ 17.03 per ordinary share. The second and third tranches were made to additionalemployees. By this time, based on management's estimate of the fair market value, the companywas valued significantly in excess of that at January 1, 1997, at £ 68.11 per ordinary share onDecember 31, 1998 and £ 102.17 per ordinary share at September 30, 1999. The A shares grantedhave no expiration date as to their conversion into ordinary shares.

The A shares were allocated as follows:

Date Number Alloted

Tranche 1 January 1, 1997 6,000 September 23, 1998Tranche 2 December 31, 1998 3,221 April 14, 1999Tranche 3 June 30, 1999 408 June 30, 1999

30% of the A shares are convertible into ordinary shares 1 year after allocation, 30% after 2 years and40% after 3 years. At December 31, 1999, none of the shares granted had been converted into ordin-ary shares or forfeited.

11.2 Accounting for Stock-Based Compensation

The Company continues to account for stock-based compensation using the intrinsic value methodprescribed in Accounting Principles Board Opinion 25, ªAccounting for Stock Issued to Employeesº.Compensation cost for stock options is measured as the excess of the quoted market price of theCompany's stock on the measurement date over the amount an employee must pay to acquire thestock and is recognised over the vesting period. The intrinsic value of the options is measured on thebasis of the current market value of the Company's stock at the end of each period.

Statement of Financial Accounting Standards (ªSFASº) No. 123 ªAccounting for Stock-Based Com-pensationº, established accounting and disclosure requirements using a fair-value-based method ofaccounting for stock based employee compensation plans. The Company has elected to remain on itscurrent method of accounting as described above.

Under Accounting Principles Board Opinion No. 25, the Company recognised compensation expenseof 5 162 thousand, of 5 40 thousand and of 5 41 thousand in the periods ended December 31, 1999,1998 and 1997 respectively. This charge is equivalent to the cost that would have been recorded hadthe Company applied the provisions of SFAS 123, ªAccounting for Stock-Based Compensationº.

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SYZYGYAG

12. Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets,liabilities and disclosures of contingent assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from those estimates.

13. Advertising

Advertising costs are expensed as incurred. Advertising expenditure was 5 133 thousand, 5 70 thou-sand and 5 38 thousand for the years ended December 31, 1999, 1998 and 1997 respectively.

14. Software Development Costs

Internal and external costs incurred in the planning or conceptual development of the Company'sportal are expensed as incurred. Once the planning of conceptual development of a web siteenhancement project has been achieved, and the project has reached that application or develop-ment stage, the following costs are capitalised as intangible assets: External direct costs of materialsand services used in he project. Payroll and payroll related costs for employees who are directly asso-ciated with and who devote time to the project (to the extent of the time spent directly on the project)and interest costs incurred in the development of the project and training. Routine maintenance costsare expensed as incurred

Costs and estimated earnings in excess of billings on uncompleted contracts arise when revenueshave been recorded but the amounts cannot be billed under the terms of the contract. Such amountsare recoverable from the customer upon various measures of performance such as achievement ofvarious milestones. Costs and estimated earnings contain directly allocable costs (labour cost andcost of services provided by third parties) as well as the appropriate portion of overheads includingpro rata administrative expenses.

15. Investments in Affiliates

The Company has one affiliate accounted for under the cost method of accounting. The cost methodis used when the Company has an ownership of less than 20% and does not exercise significantinfluence over the operating and financial policies of the affiliate.

During the financial year to December 31, 1999, Netforce SA acquired 9.67% of the issued share capi-tal of Eurecrate for 5 8,375. The company is based in France. This acquisition was accounted for as aninvestment and, accordingly, the acquired shares have been recorded at their estimated fair marketvalues.

16. Bank Loans and Lines of Credit

Overdrafts consist mainly of the bank overdraft of Netforce SA.

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SYZYGYAG

17. Trade Accounts Receivable

The analysis of trade accounts receivables for the years ended December 31, 1999, 1998 and 1997consists of the following:

1999 1998 1997

5 000's

Accounts receivable, trade, gross . . . . . . . . . . . . . . . . . . . . . . . . . . 4,230 1,520 733Unbilled receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 135 8

4,371 1,655 741Less:Allowance for bad debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 118 ± 196 ± 85

Accounts receivable, trade, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,253 1,459 656

Receivables with recognisable risks are provided for by adequate allowances, while uncollectablereceivables are written off.

18. Prepaid Expenses and Other Current Assets

Other current assets for the years ended December 31, 1999, 1998 and 1997 consist of the following:

1999 1998 1997

5 000's

Amounts due from shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 26 26 0Tax receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 4 3Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 4Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 143 14Other ± identified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 36 17

702 214 38

19. Inventories

Finished goods consist of merchandise for re-sale and are stated at cost or market value, whichever islower. Work in progress is valued at production cost represented by material, overhead and labourincluding general and administrative expenses where applicable.

Inventories consist of the following for the years ended December 31, 1999, 1998 and 1997:

1999 1998 1997

5 000's

Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 159 0Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 0 0

20 159 0

20. Long-term Debt

1999 1998 1997

5 000's

Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 0 0Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 16 0

150 16 0

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SYZYGYAG

21. Employee Related Costs

The following table highlights the nature of employee related liabilities not separately identified onthe face of the balance sheet:

1999 1998 1997

5 000's

Salaries, wages and payrolls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 40 23Social security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 31 21Bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 127 74Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 5 0Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 22 8

165 225 126

22. Depreciation and Amortisation

Depreciation and amortisation was 5 1,143 thousand, 5 1,057 thousand and 5 931 thousand for theyears ended December 31, 1999, 1998 and 1997, respectively. The overall increase is mainly attribut-able to investments in leasehold improvements and hardware technology.

23. Income Taxes

Income taxes are accounted for under the asset and liability method of accounting. Deferred taxassets and liabilities are recognised for the future tax consequences attributable to differences be-tween the financial statement carrying amounts of existing assets and liabilities and their respectivetax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to applyto taxable income in the years in which those temporary differences are expected to be recovered orsettled. The effect on deferred tax assets and liabilities of a change in tax rates is recognised inincome in the period of enactment. Taxes are provided at the undistributed tax rate.

The provision for income taxes for the years ended December 31, 1999, 1998 and 1997 consists of thefollowing:

1999 1998 1997

5 000's

Domestic and foreign and income taxes . . . . . . . . . . . . . . . . . . . . 497 292 151Domestic trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 44 48

605 336 199

Current taxes± Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 160 148± Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 160 51

545 320 199Deferred taxes± Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0± Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 16 0

60 16 0

605 336 199

German corporate tax law applies a split-rate with regard to the taxation of the income of a corpora-tion and its shareholders. In accordance with the tax law in effect for 1999, retained corporate incomeis initially subject to a federal corporate tax rate of 40% (1998 and 1997: 45%) plus surcharges of 5.5%on corporate income taxes payable. Including the impact of the surcharges the federal corporate taxrate amounts to 42.2% (1998 and 1997: 47.5%).

66

SYZYGYAG

The tax rate for municipal trade taxes was 15.3%. Since municipal trade taxes are deductible from thecorporate income tax base this leads to a combined statutory rate of 53.0% in 1999 (1998 and 1997:57.7%):

1999 1998 1997

5 000's

Income before taxes and goodwill amortisation . . . . . . . . . . . . . ± 600 141 265German trade tax on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 22 41

Income after German trade tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 600 119 224

Corporate income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 54 101German trade tax on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 22 41Solidarity charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 3 8Tax effect on current year losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 459 150 4Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 94 33Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 14 12

605 336 199

Deferred income tax liabilities are summarised as follows:1999 1998 1997

5 000's

Non-current deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . 76 0 0Current deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 16 0

76 16 0

The Company has provided valuation allowances on the portion of deferred tax assets for which it isnot more likely than not that such assets will be realised. As of December 31, 1999, as well as in theprior years valuation allowances have been recorded on all deferred tax assets due to the continuedlosses sustained by the respective group company.

At December 31, 1999 the Group had no utilisable tax loss carryforwards.

24. Segment Reporting

The Company's wholly-owned businesses operate within the pan-European market. These businessprovide a variety of consultancy and content services for digital media to clients through severalworldwide, national and regional agency brands. The businesses exhibit similar economic character-istics driven by their efforts to create customer driven consultancy and content services that buildtheir client businesses. A summary of the Company's operation by geographic area as of Decem-ber 31, 1999, 1998 and 1997 and for the years then ended is presented below:

1999 1998 1997

5 000'sRevenues:Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,923 2,466 1,687France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,214 1,499 996UK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,122 1,759 1,603US . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 766 0

11,329 6,490 4,286

Assets have not been allocated by geographical location as the company has not allocated assets toany segment.

Besides operating in various geographic areas the Company is only active in a single segment ac-cording to the regulations of SFAS No. 131.

67

SYZYGYAG

25. Selling, General and Administrative Expenses

Expenses other than cost of goods sold for the years ended December 31, 1999, 1998 and 1997 can beanalysed as follows:

1999 1998 1997

5 000's

Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 217 178General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,229 2,306 1,176Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 70 38Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 14 90Additional social security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 39 24Maintenance and repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5 18

5,102 2,651 1,524

26. Commitments and Contingencies

26.1 Litigation

The Company is subject to occasional lawsuits, investigations and claims arising out of the normalconduct of business. Management does not believe that the outcome of any claims, asserted or unas-serted, will have a material adverse impact on the Company's financial position or results of opera-tions.

26.2 Operating Leases

The group companies have entered into lease rental agreements for various facilities and vehicles.The annual minimum payments from these agreements amount to 5 588 thousand for the financialyear 2000, 5 568 thousand for 2001, 5 552 thousand for 2002, 5 451 thousand for 2003 and 5 451 thou-sand for the financial year 2004. Thereafter, commitments of at least 5 451 thousand would be in-curred.

Total rental expense under operating leases amounted to 5 722 thousand for the financial year endedDecember 31, 1999, 5 519 thousand for the year ended December 31, 1998 and 5 115 thousand for theyear ended December 31, 1997.

26.3 Capital Leases

The Company leases some items of computer hardware and office equipment on a capital leasebasis. The lease terms for individual items range from one to four years. For the year endedDecember 31, 1999, the average effective borrowing rate was 5%. Currently the CompanyÂs totalfuture commitments from capital leases are below 5 60 thousand.

68

SYZYGYAG

SYZYGYAG

Certificate for the Pro-Forma Consolidated Interim Financal Statements

We have reviewed the pro-forma consolidated balance sheet of Syzygy AG, Bad Homburg vdH, andits subsidiaries as of June 30, 2000, and the related pro-forma consolidated statements of income,the pro-forma consolidated cash flow statement and the statement of changes in shareholdersÂequity for the half year from January 1, 2000 to June 30, 2000. These interim financial statements arethe responsibility of the Company's management.

We conducted our review in accordance with the standards established by the American Institute ofCertified Public Accountants (ªAICPAº). A review of interim financial statements consists principallyof applying analytical procedures to financial data and making inquiries of persons responsible forfinancial and accounting matters. It is substantially less in scope than an audit conducted in accord-ance with generally accepted auditing standards, the objective of which is the expression of an opi-nion regarding the financial statements taken as a whole. Accordingly, we do not express such anopinion.

Based on our review, we are not aware of any material modifications that should be made to theinterim financial statements referred to above for them to be in conformity with the generallyaccepted accounting principles in the United States.



SecklerWirtschaftsprüfer

TurowskiWirtschaftsprüfer

Eschborn/Frankfurt/M., July 21, 2000

69

SYZYGYAG

PRO-FORMA CONSOLIDATED BALANCE SHEET (Interim)

June 30,2000

June 30,1999

5 000's 5 000's

AssetsCurrent assetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,083 781Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,713 3,875Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 164Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . 1,117 543

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,917 5,363

Long-term assetsIntangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,898 7,894less: accumulated amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 2,762 ± 1,973

Net intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,136 5,921Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,359 1,586less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 1,028 ± 612

Net property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,331 974Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 30

6,514 6,925

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,431 12,288

Liabilities and shareholders' equityCurrent liabilitiesAccounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . 2,593 3,388Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 36Tax payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,104 1,334

Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,788 4,758Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 16

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,788 4,774

Shareholders' equityCommon stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,401 460Additional paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 965 965Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244 259Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 55Goodwill on acquisition of Netforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,888 7,888Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 921 ± 2,113

Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,643 7,514

Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . 14,431 12,288

70

SYZYGYAG

PRO-FORMA CONSOLIDATED INCOME STATEMENT (Interim)

January 1 to June 30,

5 000's 5 000's

RevenuesConsultancy sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,454 4,467Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 13

8,532 4,480Operating expensesCost of consultancy sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 5,304 ± 2,992Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . ± 2,228 ± 1,679

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 ± 191Goodwill amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 395 ± 395Interest income/expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 1 ± 19

Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604 ± 605Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 456 ± 362

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 ± 967

Retained earnings at the beginning of the year . . . . . . . . . . . . . . . . . . . . ± 2,535 ± 1,146Equity restructuring Netforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,466

Retained earnings at June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 921 ± 2,113

71

SYZYGYAG

PRO-FORMA CONSOLIDATED CASH-FLOW STATEMENT (Interim)

January 1 to June 30,

2000 1999

5 000's 5 000's

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148 ± 967Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 178Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602 540Changes in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 601 ± 2,551Changes in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ± 5Changes in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 726 ± 194Changes in deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 36Changes in accounts payable and accruals . . . . . . . . . . . . . . . . . . . . . . . ± 1,153 2,481Changes in tax payables and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 740 470Changes in other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 20 ± 18

Cash-flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 937 ± 30

Investments in fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 347 ± 239Software development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 ± 4Other long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 8 0

Cash-flow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 277 ± 243Changes in long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 150 0Netforce equity restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,357 0Changes in bank liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 68 ± 279Capital increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 0

Cash-flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,189 ± 279Effect of exchange rate differences on cash . . . . . . . . . . . . . . . . . . . . . . . ± 20 89

Total cash-flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 ± 463

Cash and cash equivalents at the beginning of the year . . . . . . . . . . . . 1,128 1,244

Cash and cash equivalents at June 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,083 781

72

SYZYGYAG

PRO-FORMA CONSOLIDATED STATEMENT OF CHANGES INSHAREHOLDERSÂ EQUITY (Interim)

Commonstock

Additio-nal paidin capital

Deferredcompen-

sation

Cumula-tive

trans-lationadjust-ment

GoodwillNetforce

Retainedearnings

Totalequity

5 000's 5 000's 5 000's 5 000's 5 000's 5 000's 5 000's

January 1, 1999 . . . . . . . . . . . . . . . 460 965 81 ± 34 7,888 ± 1,146 8,214Net income . . . . . . . . . . . . . . . . . . . ± 967 ± 967Deferred compensation . . . . . . . . 178 178Foreign exchange rate

differences . . . . . . . . . . . . . . . . . 89 89

June 30, 1999 . . . . . . . . . . . . . . . . . 460 965 259 55 7,888 ± 2,113 7,514

Other comprehensive income . . . 267Comprehensive income, total . . . ± 700

January 1, 2000 . . . . . . . . . . . . . . . 460 965 243 86 7,888 ± 2,535 7,107Net income . . . . . . . . . . . . . . . . . . . 148 148Netforce equity restructuring . . . 891 1,466 2,357Addition Syzygy AG . . . . . . . . . . . 50 50Deferred compensation . . . . . . . . 1 1Foreign exchange rate

differences . . . . . . . . . . . . . . . . . ± 20 ± 20

June 30, 2000 . . . . . . . . . . . . . . . . . 1,401 965 244 66 7,888 ± 921 9,643

Other comprehensive income . . . ± 19

Comprehensive income, total . . . 129

73

Mediopoly Limited

Auditors' report

To the Shareholders of Mediopoly Limited

We have audited the accounts on pages 78 to 84 which have been prepared under the historical costconvention and the accounting policies set out on page 80.

Respective responsibilities of directors and auditors

As described on page 75 the company's directors are responsible for the preparation of the accountsin accordance with applicable Jersey law and UK accounting standards. Our responsibilities, as inde-pendent auditors, are established by the UK Auditing Practices Board and by our profession's ethicalguidance.

Basis of opinion

We conducted our audit in accordance with Auditing Standards issued by the Auditing PracticesBoard. An audit includes examination, on a test basis, of evidence relevant to the amounts and dis-closures in the accounts. It also includes an assessment of the significant estimates and judgmentsmade by the directors in the preparation of the accounts and of whether the accounting policies areappropriate to the circumstances of the company, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurancethat the accounts are free from material misstatement, whether caused by fraud or other irregularityor error. In forming our opinion we also evaluated the overall adequacy of the presentation of infor-mation in the accounts.

Opinion

In our opinion the accounts give a true and fair view of the state of affairs of the company atDecember 31, 1999 and of the company's profit for the year then ended and have been properly pre-pared in accordance with the Companies (Jersey) Law 1991.

Arthur AndersenChartered Accountants

Forum HouseGrenville StreetSt HelierJerseyJE2 4UF

26 June 2000

74

Mediopoly Limited

Directors' responsibilities

Companies (Jersey) Law 1991 requires the directors to prepare accounts for each financial year whichgive a true and fair view of the state of affairs of the company and of the profit or loss of the companyfor that period. In preparing those accounts, the directors are required to:

± select suitable accounting policies and then apply them consistently;

± make judgements and estimates that are reasonable and prudent;

± state whether applicable accounting standards have been followed, subject to any material depar-tures disclosed and explained in the accounts; and

± prepare the accounts on the going concern basis unless it is inappropriate to presume that thecompany will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonableaccuracy at any time the financial position of the company and enable them to ensure that theaccounts comply with the Companies (Jersey) Law 1991. They are also responsible for safeguardingthe assets of the company and hence for taking reasonable steps for the prevention and detection offraud and other irregularities.

75

Mediopoly Limited

Directors' report

The directors present their annual report on the affairs of the company, together with the accountsand auditors' report, for the year ended 31 December 1999.

Principal activities

The principal activity of the company is to trade as a holding company. The principal activity of thesubsidiary company was to provide consultancy and content for digital media.

Consolidated accounts are not presented as the company takes advantage of the small companyexemption afforded by Financial Reporting Standard 2.

Business review

The Directors expect the general level of activity to continue in the forseeable future

Results and dividends

The audited accounts for the year ended 31 December 1999 are set out on pages 78 to 84. The profitfor the year after taxation was £ 3,592 (1998 ± £10,714).

The directors do not recommend a final dividend (1998 ± £nil).

Directors

The directors who served during the year were as follows:

P RichardsonJFW HuntE Salama (appointed 8 September 1999)B Huber (resigned 8 September 1999)

Directors' interests

The directors who held office at 31 December 1999 had the following interests in the shares anddebentures of the company:

Name of director Mediopoly Limited 31 December 1999 31 December 1998

J.F.W. Hunt . . . . . . . . . . . . . . . . . . .Ordinary shares of£ 0.01 each 32,340 95,000

As at 31 December 1999 The Wellington Trust whose potential beneficiary is its managing directorJ.F.W. Hunt, held 32,340 ordinary shares of £ 0.01 each of the company.

76

Mediopoly Limited

Auditors

The JMO Practice resigned as auditors of the company and on 8 September 1999, the directors ap-pointed Arthur Andersen in their place. The directors will place a resolution before the annual gener-al meeting to reappoint Arthur Andersen as auditors for the ensuing year.

31 Broad StreetSt HelierJerseyChannel IslandsJE4 8ZS

By order of the Board,

P RichardsonDirector

26 June 2000

77

Mediopoly Limited

Balance sheet

At 31 December 1999

Notes 1999 1998 1997

£ £ £

Current assetsDebtors± due within one year . . . . . . . . . . . . . . . . . . . . . . . . . 6 427,999 431,487 127,000Cash at bank and in hand . . . . . . . . . . . . . . . . . . . . . 210,978 210,181 497,538

638,977 641,668 624,538

Creditors: Amounts falling due within one year . . 7 (5,739) (12,057) (5,702)

Net current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,238 629,611 618,836

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,238 629,611 618,836

Capital and reservesCalled-up share capital . . . . . . . . . . . . . . . . . . . . . . . . 8 1,270 1,235 1,174Share premium account . . . . . . . . . . . . . . . . . . . . . . 9 598,846 598,846 598,846Profit and loss account . . . . . . . . . . . . . . . . . . . . . . . . 33,122 29,530 18,816

Shareholders' funds . . . . . . . . . . . . . . . . . . . . . . . . . . 633,238 629,611 618,836Shareholders' funds may be analysed as:Equity interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,142 629,550 618,836Non-equity interests . . . . . . . . . . . . . . . . . . . . . . . . . . 96 61 ±

633,238 629,611 618,836

The accounts on pages 78 to 84 were approved by the board of directors on 26 June 2000 and signedon its behalf by:

P Richardson ± Director

26 June 2000

The accompanying notes are an integral part of this balance sheet.

78

Mediopoly Limited

Profit and Loss Account

For the year ended 31 December 1999

Notes 1999 1998 1997

£ £ £

Administration expenses . . . . . . . . . . . . . . . . . . . . . . 2 (5,122) (4,243) (806)

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,122) (4,243) (806)Interest receivable and similar charges . . . . . . . . . . 1 9,669 18,238 24,624

Profit on ordinary activities before taxation . . . . . . 4,547 13,995 23,818Tax on profit on ordinary activities . . . . . . . . . . . . . . 4 (955) (3,281) (5,002)

Profit on ordinary activities after taxation . . . . . . . 3,592 10,714 18,816Dividends paid and proposed . . . . . . . . . . . . . . . . . . ± ± ±

Retained profit for the year . . . . . . . . . . . . . . . . . . . . 3,592 10,714 18,816

The accompanying notes are an integral part of this profit and loss account.

79

Mediopoly Limited

Accounting Policies

The principal accounting policies are summarised below. They have all been applied consistentlythroughout the year and the preceding year.

Basis of accounting

The accounts have been prepared under the historical cost convention and in accordance with theFinancial Reporting Standard for Smaller Entities (effective March 1999) and in accordance with appli-cable accounting standards.

80

Mediopoly Limited

Notes to the Accounts

1 Finance charges (net)

1999 1998 1997

£ £ £

Other interest receivable and similar income . . . . . . . . . . . . 9,669 18,238 24,624

2 Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging:

1999 1998 1997

£ £ £

Auditors' remuneration for audit services . . . . . . . . . . . . . . . 1,000 1,000 350

3 Directors' remuneration and transactions

The directors did not receive any remuneration from the company during the year. One directorreceived remuneration of £49,547 from the subsidiary company.

4 Tax on profit on ordinary activities

The tax charge comprises:

1999 1998 1997

£ £ £

UK Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 955 3,281 5,002

The company has been granted Jersey Exempt Company status by the Jersey taxation authorities. Itpays an exempt company fee of £600 per annum.

5 Fixed asset investments

Mediopoly holds the entire issued share capital of Syzygy Limited, a company incorporated in Eng-land and Wales, being 100,000 ordinary shares of 1p each. Group accounts have not been preparedas the group qualifies as small.

Financial information relating to Syzygy;

Profit for the financial year ended 31 December 1999 £ 334,134Aggregate capital and reserves at 31 December 1999 £ 763,017

81

6 Debtors

1999 1998 1997

£ £ £

Amounts falling due within one year:Amounts owed by subsidiary undertakings . . . . . . . . . . . . . . 412,004 415,790 127,000Amounts due from director . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,636 15,636 ±Unpaid share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 61 ±Other debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263 ± ±

427,999 431,487 127,000

No interest has been charged on the amount due from the director

7 Creditors: Amounts falling due within one year

1999 1998 1997

£ £ £

Other creditorsUK corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,739 8,283 5,002Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 3,774 700

5,739 12,057 5,702

8 Called-up share capital

1999 1998 1997

£ £ £

Authorised1,000,000 ordinary shares of £0.01 each . . . . . . . . . . . . . . . . . 10,000 10,000 10,00024,000 ªAº ordinary shares of £ 0.01 each . . . . . . . . . . . . . . . . 240 240 ±

10,240 10,240 10,000

Allotted, called-up and fully-paid117,454 ordinary shares of £ 0.01 each . . . . . . . . . . . . . . . . . . . 1,174 1,174 1,1749,629 ªAº ordinary shares of £0.01 each . . . . . . . . . . . . . . . . . 96 61 ±

1,270 1,235 1,174

Movements during the year

3,529 A ordinary shares of £ 0.01 were issued for cash at par during the year :

Date No14 April 1999 3,12130 June 1999 408

The rights attaching to the ªAº ordinary shares are: ±

As regards income

The ªAº ordinary shares shall not rank for any dividend payment from the company.

As regards capital

On a return of capital on a winding up or (other than a redemption of shares) otherwise the assets ofthe company available for distribution among the members are to be applied: ±

82

Mediopoly Limited

i) first, in repaying the capital paid up on the ªAº ordinary shares;

ii) secondly, in repaying the capital paid up on the ordinary shares; and

iii) thirdly, in distributing the balance amongst the holders of the ordinary shares in proportion to theamount of ordinary shares which at the time of the commencement of the winding up had beenactually paid up on their said ordinary shares respectively.

As regards voting

The holders of the ªAº ordinary shares shall not be entitled to receive notice of or to attend and voteat general meetings of the company, without prejudice to their rights to attend and vote at meetingsof holders of ªAº ordinary shares.

The holders of ªAº ordinary shares shall be entitled in the manner set out below to convert ªAº ordin-ary shares held by them into ordinary shares. On a written application being submitted to the com-pany by the holder of ªAº ordinary shares such shares shall be converted separately on the followingdates:±

i) up to 30 per cent shall be convertible on any date after the first anniversary of the date of alloca-tion;

ii) up to 60 per cent shall be convertible on any date after the second anniversary of the date of allo-cation; and

iii) up to 100 per cent shall be convertible on any date after the third anniversary of the date of alloca-tion.

On receipt of a valid application, the ªAº ordinary shares shall automatically be converted into ordin-ary shares and shall thereupon rank pari passu in all respects with the remaining ordinary shares forthe time being in the capital of the company.

The holders of the ªAº ordinary shares shall not be entitled to receive notice of or to attend and voteat general meetings of the company, without prejudice to their rights to attend and vote at meetingsof holders of ªAº ordinary shares.

9 Reserves

Sharepremiumaccount

Profit andloss

account Total

£ £ £

At 1 January 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,846 29,530 628,376Retained profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,592 3,592

At 31 December 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 598,846 33,122 631,968

10 Reconciliation of movements in shareholders' funds

1999 1998 1997

£ £ £

Profit for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,592 10,714 18,816

New shares issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 61 1,174Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± ± 598,846

Net additions to shareholders' funds . . . . . . . . . . . . . . . . . . . 3,627 10,775 618,836

Opening shareholders' funds . . . . . . . . . . . . . . . . . . . . . . . . . . 629,611 618,836 ±

Closing shareholders' funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,238 629,611 618,836

83

Mediopoly Limited

11 Related party transactions

Throughout the year the four directors of Mediopoly Limited as disclosed in the directors' report havealso been directors of Syzygy Limited.

The company has provided working capital funding to its subsidiary company during the period. Theamount is disclosed in note 6 to the accounts.

12 Ultimate controlling party

Effectively there is no ultimate controlling party of Mediopoly Limited.

13 Subsequent events

On 2nd February 2000 the directors announced their intention to merge with United Media GmbH, aGerman digital media agency. On the 4th May 2000 the directors announced their intention to list thenewly combined group on the Neuer Markt by the end of 2000.

84

Mediopoly Limited

SYZYGY LIMITED

Auditors' report

To the Shareholders of Syzygy Limited

We have audited the accounts on pages 89 to 95 which have been prepared in accordance with theFinancial Reporting Standard for Smaller Entities (effective March 1999) and under the historical costconvention and the accounting policies, set out on page 91.

Respective responsibilities of directors and auditors

As described on page 86 the company's directors are responsible for the preparation of the accountsin accordance with applicable United Kingdom law and accounting standards. Our responsibilities,as independent auditors, are established in the United Kingdom by statute, the Auditing PracticesBoard and by our profession's ethical guidance.

Basis of opinion

We conducted our audit in accordance with Auditing Standards issued by the Auditing PracticesBoard. An audit includes examination, on a test basis, of evidence relevant to the amounts and dis-closures in the accounts. It also includes an assessment of the significant estimates and judgmentsmade by the directors in the preparation of the accounts and of whether the accounting policies areappropriate to the circumstances of the company, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurancethat the accounts are free from material misstatement, whether caused by fraud or other irregularityor error. In forming our opinion we also evaluated the overall adequacy of the presentation of infor-mation in the accounts.

Opinion

In our opinion the accounts give a true and fair view of the state of affairs of the company at 31December 1999 and of the company's profit for the year then ended and have been properly preparedin accordance with the Companies Act 1985.

Arthur Andersen

Chartered Accountants and Registered Auditors

1 Surrey StreetLondonWC2R 2PS

24 May 2000

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SYZYGY LIMITED

Directors' responsibilities

Company law requires the directors to prepare accounts for each financial year which give a true andfair view of the state of affairs of the company and of the profit or loss of the company for that period.In preparing those accounts, the directors are required to:

± select suitable accounting policies and then apply them consistently;

± make judgements and estimates that are reasonable and prudent;

± state whether applicable accounting standards have been followed, subject to any material depar-tures disclosed and explained in the accounts; and

± prepare the accounts on the going concern basis unless it is inappropriate to presume that thecompany will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonableaccuracy at any time the financial position of the company and enable them to ensure that theaccounts comply with the Companies Act 1985. They are also responsible for safeguarding the assetsof the company and hence for taking reasonable steps for the prevention and detection of fraud andother irregularities.

These accounts have been prepared in accordance with the special provisions relating to small com-panies within Part VII of the Companies Act 1985 and with the Financial Reporting Standard for Smal-ler Entities (effective March 1999).

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SYZYGY LIMITED

Directors' report

The directors present their annual report on the affairs of the company, together with the accountsand auditors' report, for the year ended 31 December 1999.

Principal activities

The principal activities of the company comprise the provision of consultancy and content for digitalmedia.

Consolidated accounts are not presented as the company takes advantage of the exemption affordedby Section 228 of the Companies Act 1985.

Business review

The Directors expect the general level of activity to continue in the forseeable future.

Results and dividends

The audited accounts for the year ended 31 December 1999 are set out on pages 89 to 95. The profitfor the year after taxation was £334,134 (1998 ± £244,636).

The directors do not recommend a final dividend (1998 ± nil).

Directors

The directors who served during the year were as follows:

JFW HuntB Huber (resigned 8th September 1999)P Richardson (appointed 8th September 1999)C RobsonE Salama

The directors holding office at 31 December 1999 did not hold any beneficial interest in the issuedshare capital of the company at 1 January 1999 (or date of appointment if later) or at 31 Decem-ber 1999.

Directors' interests

The directors who held office at 31 December 1999 had the following interests in the shares anddebentures of the immediate holding company, Mediopoly Limited:

Name of director Mediopoly Limited31 December

199931 December

1998

JFW Hunt Ordinary shares of £0.01 each 32,340 95,000B Huber Ordinary shares of £0.01 each nil 5,000C Robson `A' ordinary shares of £0.01 each 6,000 5,000

87

During 1999 a loan was made to John Hunt, a director. The highest amount outstanding during theyear was £27,396. The company also owed this director £18,295 for business expenses. The balanceof £9,172 is included under 'Other debtors' at 31 December 1999 and was repaid in January 2000.

Auditors

During the year the JMO Practice resigned as auditors of the company and the directors appointedArthur Andersen in their place. The directors will place a resolution before the annual general meet-ing to reappoint Arthur Andersen as auditors for the ensuing year.

By order of the Board,

C Robson, Director

24 May 2000

88

SYZYGY LIMITED

SYZYGY LIMITED

Balance sheet

31 December 1999

Notes 1999 1998 1997

£ £ £

Fixed assetsTangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . 6 581,690 394,537 212,735

581,690 394,537 212,735

Current assetsDebtors± due within one year . . . . . . . . . . . . . . . . . . . . 7 1,278,832 442,521 286,035Cash at bank and in hand . . . . . . . . . . . . . . . . . 832 358,305 335

1,279,664 800,826 286,370Creditors: Amounts falling due within one year 8 (1,005,629) (756,022) (314,858)

Net current assets . . . . . . . . . . . . . . . . . . . . . . . 274,035 44,804 (28,488)

Total assets less current liabilities . . . . . . . . . . 855,725 439,341 184,247Creditors: Amounts falling due after morethan one year . . . . . . . . . . . . . . . . . . . . . . . . . . . (46,806) ± ±Provisions for liabilities and charges . . . . . . . 9 (45,902) (10,458) ±

Net assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 763,017 428,883 184,247

Capital and reservesCalled-up share capital . . . . . . . . . . . . . . . . . . . 10 1,000 1,000 1,000Profit and loss account . . . . . . . . . . . . . . . . . . . 762,017 427,883 183,247

Shareholders' funds . . . . . . . . . . . . . . . . . . . . . 763,017 428,883 184,247

The accompanying notes are an integral part of this balance sheet.

These accounts have been prepared in accordance with the special provisions relating to small com-panies within Part VII of the Companies Act 1985 and with the Financial Reporting Standard for Smal-ler Entities (effective March 1999).

The accounts were approved by the board of directors on 24 May 2000 and signed on its behalf by:

C Robson ± Director

89

SYZYGY LIMITED

Profit and Loss Account

For the year ended 31 December 1999

Notes 1999 1998 1997

£ £ £

Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,206,195 1,823,569 1,071,043Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,645,929) (686,693) (559,857)

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,560,266 1,136,876 511,186Administration expenses . . . . . . . . . . . . . . . . . (1,072,058) (778,209) (364,302)

Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . 488,208 358,667 146,884Interest receivable and similar charges . . . . . 5,425 2,276 3,307Interest payable and similar charges . . . . . . . (137) (873) (742)

Profit on ordinary activities before taxation . 2 493,496 360,070 149,449Tax on profit on ordinary activities . . . . . . . . . 5 (159,362) (115,434) (29,853)Profit on ordinary activities after taxation . . . 334,134 244,636 119,596Dividends paid and proposed . . . . . . . . . . . . . ± ± ±

Retained profit for the year . . . . . . . . . . . . . . . . 334,134 244,636 119,596

There were no recognised gains or losses in the period other than those shown above.

The accompanying notes are an integral part of this profit and loss account.

90

SYZYGY LIMITED

Notes to accountsFor the year ended 31 December 1999

1 Statement of accounting policies

The principal accounting policies are summarised below. They have all been applied consistentlythroughout the year and the preceding year.

Basis of accounting

The accounts have been prepared under the historical cost convention and in accordance with theFinancial Reporting standards for Smaller Entities (effective March 1999) and in accordance with ap-plicable accounting standards.

Tangible fixed assets

Tangible fixed assets are stated at cost or valuation, net of depreciation and any provision for impair-ment. Depreciation is provided on all tangible fixed assets, other than investment properties and free-hold land, at rates calculated to write off the cost or valuation, less estimated residual value, of eachasset on a straight-line or reducing balance basis over its expected useful life, as follows:

Leasehold property and improvements ± in accordance with the term of the lease

Fixtures and fittings ± 25% on reducing balanceMotor Vehicles ± 25% on costComputer equipment ± 33% on cost

Taxation

UK corporation tax is provided at amounts expected to be paid (or recovered) using the tax rates andlaws that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is provided using the liability method on all timing differences only to the extent thatthey are expected to reverse in the future without being replaced.

Turnover

Turnover represents amounts receivable for goods and services provided in the normal course ofbusiness, net of trade discounts, VATand other sales related taxes.

Leases

Rentals under operating leases are charged on a straight-line basis over the lease term, even if thepayments are not made on such a basis. Benefits received and receivable as an incentive to sign anoperating lease are similarly spread on a straight-line basis over the lease term, except where theperiod to the review date on which the rent is first expected to be adjusted to the prevailing marketrate is shorter than the full lease term, in which case the shorter period is used.

91

2 Profit on ordinary activities before taxation

Profit on ordinary activities before taxation is stated after charging (crediting):

1999 1998 1997

£ £ £

Depreciation and amounts written off tangible fixedassets ± owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,521 96,624 45,000

Profit on disposal of fixed assets . . . . . . . . . . . . . . . . . . . . . . . (3,611) ± ±Auditors' remuneration for audit services . . . . . . . . . . . . . . . 16,000 4,000 5,875

3 Staff costs

The average monthly number of employees (including executive directors) was:

1999 1998 1997

Number Number Number

Production and development . . . . . . . . . . . . . . . . . . . . . . . . . . 42 19 10Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 2

46 23 12

1999 1998 1997

£ £ £(as restated)

Their aggregate remuneration comprised:Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,293,169 601,693 339,975Social security costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130,631 72,913 38,320

1,423,800 674,606 378,295

4 Directors' remuneration and transactions

Remuneration

The remuneration of the directors was as follows:

1999 1998 1997

£ £ £

Emoluments and other benefits . . . . . . . . . . . . . . . . . . . . . . . . 120,547 103,000 49,167

Included in directors' emoluments was an amount for two paintings transferred to John Hunt, adirector, as part of the acquisition of the company by WPP Group plc. The fair value of the assetstransferred was £12,880.

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SYZYGY LIMITED

5 Tax on profit on ordinary activities

The tax charge comprises:

1999 1998 1997

£ £ £

UK Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,917 104,976 31,758Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,445 10,458 (1,905)

159,362 115,434 29,853

6 Tangible fixed assets

Land and Buildings

Leaseholdproperty

Improve-ments toproperty

ComputerEquip-ment

Fixturesand fit-tings

MotorVehicles Total

£ £ £ £ £ £

Cost or valuationAt 1 January 1999 . . . . . . . 12,627 189,947 205,181 127,621 12,939 548,315Additions . . . . . . . . . . . . . . 3,168 19,191 157,547 168,039 ± 347,945Disposals . . . . . . . . . . . . . . ± ± ± (12,880) ± (12,880)

At 31 December 1999 . . . . 15,795 209,138 362,728 282,780 12,939 883,380

DepreciationAt 1 January 1999 . . . . . . . 1,591 13,117 109,399 26,162 3,509 153,778Charge for the year . . . . . 1,374 24,474 75,180 47,255 3,240 151,523Disposals . . . . . . . . . . . . . . ± ± ± (3,611) ± (3,611)

At 31 December 1999 . . . . 2,965 37,591 184,579 69,806 6,749 301,690

Net book value

At 31 December 1999 . . . . 12,830 171,547 178,149 212,974 6,190 581,690

At 31 December 1998 . . . . 11,036 176,830 95,782 101.459 9,430 394,537

Two paintings, which were previously owned by the company, with a net book value of £9,269 weretransferred to John Hunt, a director, as part of the acquisition of the company by WPP Group PLC. Itwas agreed that the paintings would be transferred to Mr hunt at their fair market value of £12,880.This gave rise to a profit of £3,611, which was credited to the profit and loss account for the yearended 31 December 1999.

7 Debtors

1999 1998 1997

£ £ £

Amounts falling due within one year:Trade debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,203,785 369,420 274,753Other debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,037 ± 6,454Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,010 73,101 4,828

1,278,832 442,521 286,035

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SYZYGY LIMITED

8 Creditors: Amounts falling due within one year

1999 1998 1997

£ £ £

Other creditorsBank loans and overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,337 ± ±Trade creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266,999 60,908 77,497Director's current account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 68,872 34,478Amounts owed to parent company . . . . . . . . . . . . . . . . . . . . . 412,004 415,790 127,000UK corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123,917 102,350 29,784Other taxation and social security . . . . . . . . . . . . . . . . . . . . . . 50,505 25,104 13,894Other creditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 212 588Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,498 73,189 31,617VAT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,369 9,597 ±

1,005,629 756,022 314,858

9 Provisions for liabilities and charges

Deferredtaxation Total

£ £

At 1 January 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,458 10,458Accelerated capital allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,444 35,444

At 31 December 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,902 45,902

10 Called-up share capital

1999 1998 1997

£ £ £

Authorised1,000,000 ordinary shares of £ 0.01each . . . . . . . . . . . . . . . . . 10,000 10,000 10,000

10,000 10,000 10,000

Allotted, called-up and fully-paid100,000 ordinary shares of £ 0.01 each . . . . . . . . . . . . . . . . . . 1,000 1,000 1,000

1,000 1,000 1,000

11 Reserves

Profit andloss

account Total

£ £

At 1 January 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427,883 427,883Retained profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334,134 334,134

At 31 December 1999 762,017 762,017

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SYZYGY LIMITED

12 Reconciliation of movements in shareholders' funds

1999 1998 1997

£ £ £

Profit for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334,134 244,636 119,596

Net addition to shareholders' funds . . . . . . . . . . . . . . . . . . . . 334,134 244,636 119,596

Opening shareholders' funds . . . . . . . . . . . . . . . . . . . . . . . . . . 428,883 184,247 64,651

Closing shareholders' funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 763,017 428,883 184,247

13 Ultimate controlling party

The directors' regard Mediopoly Limited, a company incorporated in Jersey as the ultimate parentcompany and the ultimate controlling party.

14 Subsequent events

On 2nd February 2000 the directors announced their intention to merge with United Media GmbH, aGerman digital media agency. On the 4th May 2000 the directors announced their intention to list thenewly combined Group on the Neuer Markt by the end of 2000.

95

SYZYGY LIMITED

UNITED MEDIA GMBH

AUDITORÂS OPINION

ªWe have audited the financial statements, including the accounting, of United Media Gesellschaftzur Vermarktung von integrierten Informationssystemen mbH for the fiscal year from January 1, 1999to December 31, 1999. The legal representatives of the Company are responsible for the accountingand the preparation of the financial statements in compliance with German commercial law. Ourresponsibility is to express an opinion, based on our audit, on the financial statements, including theaccounting.

We conducted our audit of the financial statements pursuant to Sec. 317 HGB and in compliance withthe generally accepted auditing principles set down by the Institut der Wirtschaftsprüfer (IDW). Thoseprinciples require that we plan and perform the audit to obtain reasonable assurance that inaccura-cies and violations are recognized which significantly affect the presentation of the net worth, finan-cial position and results of operations as conveyed by the financial statements in compliance withgenerally accepted accounting principles. The scope of the audit was planned taking into accountour understanding of business operations, the Company's economic and legal environment, and anypotential errors anticipated. In the course of the audit, the effectiveness of the system of internal con-trols is assessed, and the disclosures in the accounting and financial statements are verified, mainlyon the basis of spot checks. The audit also includes assessing the accounting policies applied and thesignificant estimates made by the legal representatives as well as evaluating the overall presentationof information in the financial statements. We believe that our audit provides a reasonable basis forour opinion.

Our audit did not give any cause for qualification.

In our opinion, the financial statements are in compliance with generally accepted accounting princi-ples and present a true and fair view of the net worth, financial position and result of operations ofthe Company.º



(Siegel)

Seckler TurowskiWirtschaftsprüfer Wirtschaftsprüfer

Eschborn/Frankfurt/M., April 17, 2000

96

UNITED MEDIA GMBH

BALANCE SHEET

97

UNITED MEDIA

UNITED MEDIA GESELLSCHAFT ZUR VERMARKTUNG VONBAD HOMBURG

BALANCE SHEET AS

ASSETS

1999 1998 1997

DM DM DM

FIXED ASSETSIntangible assets

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,859.00 18,007.00 24,671.00Property, plant and equipment

Operational and office equipment . . . . . . . . . . . . . . . 254,357.00 231,600.00 271,143.00

269,216.00 249,607.00 295,814.00

CURRENT ASSETSReceivables and other assets

Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 911,115.00 730,704.42 447,460.00Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,455.34 82,444.23 61,353.50

1,013,570.34 813,148.65 508,813.50

Cash on hand, balances at banks . . . . . . . . . . . . . . . . . . 1,393,557.05 908,988.35 654,744.98

2,407,127.39 1,722,137.00 1,163,558.48

PREPAID EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,084.50 32,035.47 27,949.79

2,709,427.89 2,003,779.47 1,487,322.27

98

GMBH

INTEGRIERTEN INFORMATIONSSYSTEMEN MBHVOR DER HÖHE

OF DECEMBER 31, 1999

SHAREHOLDERS' EQUITYAND LIABILITIES

1999 1998 1997

DM DM DM

SHAREHOLDERS' EQUITYSubscribed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 750,000.00 750,000.00 750,000.00Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,012,367.43 355,123.55 104,290.66

1,762,367.43 1,105,123.55 854,290.66

ACCRUALSTax accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154,309.00 467,132.00 330,416.00Other accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144,600.00 98,400.00 84,180.00

298,909.00 565,532.00 414,596.00

LIABILITIESTrade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155,347.26 83,406.95 76,549.26Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492,804.20 249,716.97 141,886.35± thereof for taxes: DM 406,942.63 (prior year:

DM 179,882.73)± thereof in respect of social security:

DM 72,032.13 (prior year: DM 60,017.70)

648,151.46 333,123.92 218,435.61

2,709,427.89 2,003,779.47 1,487,322.27

99

UNITED MEDIA GMBH

UNITED MEDIA GESELLSCHAFT ZUR VERMARKTUNG VONINTEGRIERTEN INFORMATIONSSYSTEMEN MBH

BAD HOMBURG V.D. HÖHE

INCOME STATEMENTFOR FISCALYEAR 1999

1999 1998 1997

DM DM DM

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,313,230.44 4,380,966.94 3,301,203.70Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . 48,809.33 70,612.90 94,723.31Cost of materialsCost of purchased services . . . . . . . . . . . . . . . . . . . . . . . 385,782.60 441,893.45 473,392.11Personnel expensesWages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,615,186.57 1,986,997.93 1,318,616.63Social security contributions . . . . . . . . . . . . . . . . . . . . . 455,033.91 342,724.13 201,908.11Depreciation and amortization of intangible fixed

assets and property, plant and equipment . . . . . . . . 257,180.95 258,350.81 159,149.47Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . 1,310,538.60 874,181.30 641,586.94Other interest and similar income . . . . . . . . . . . . . . . . . 26,740.74 16,063.12 15,101.80

Result from ordinary activities . . . . . . . . . . . . . . . . . . . . 1,365,057.88 563,495.34 616,375.55

Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705,206.00 312,483.45 287,471.00Other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,608.00 179.00 3,012.91

Net income for the year . . . . . . . . . . . . . . . . . . . . . . . . . . 657,243.88 250,832.89 325,891.64

Retained Earnings, beginning . . . . . . . . . . . . . . . . . . . . 355,123.55 104,290.66 28,399.02Upfront Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.00 0.00 250,000.00

Retained Earnings, ending . . . . . . . . . . . . . . . . . . . . . . . 1,012,367.43 355,123.55 104,290.66

100

UNITED MEDIA GMBH

UNITED MEDIAGESELLSCHAFT ZUR VERMARKTUNG VON INTEGRIERTEN

INFORMATIONSSYSTEMEN MBH,BAD HOMBURG V.D. HÖHE

NOTES TO THE FINANCIAL STATEMENTS FOR FISCALYEAR 1999

Some of the simplification rules for small corporations prescribed by Sec. 288 HGB have been applied.Moreover, we have chosen not to prepare a management report pursuant to Sec. 264 (1) HGB.

(1) Fixed Assets

The development of the fixed assets in the fiscal year 1999 is shown in the exhibit to the notes to thefinancial statements.

The intangible assets and property, plant and equipment have been stated at acquisition cost lessregular depreciation. Depreciation is charged on the basis of the normal useful lives of the assetsusing either the straight-line or the declining balance method.

Additions during the fiscal year are depreciated in accordance with the simplification rule set out bytax law. Low-value items are written off completely in the year of acquisition pursuant to Sec. 6 (2) ofthe Income Tax Law (EStG).

Assets Depreciation Method Life

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . straight-line 3 yearsOperational and office equipment . . . . . . . . . . . . . . straight-line 3 to 5 years

(2) Current Assets

The receivables and other assets have been stated at nominal value. A lump-sum bad debt allowanceof 1% has been made to cover the general credit risk. Individual bad debt allowances of DM 89 thou-sand were made.

The receivables are due within one year.

(3) Accruals

Other accruals take all recognizable risks and contingent liabilities into account. They have been setup for outstanding incoming invoices and management bonus obligations, in particular.

(4) Liabilities

Liabilities have been stated at their repayment amount. No collateral has been furnished for any ofthe liabilities, they are all due within one year.

Receivables and liabilities denominated in foreign currency have been carried at the exchange rate onthe transaction date. Losses from exchange rate changes occurring until the balance sheet date aretaken into account. There were no foreign currency items as of balance sheet date.

(5) Income Statement

The income statement is arranged in accordance with the cost-summary method.

101

All sales are generated in Germany. There were no significant expenses and income not relating tothe period.

Other Disclosures

1. Number of Persons Employed

The Company employed an average of 32 persons during the year (prior year 23).

2. The Management

The following persons were managers:

Marco Seiler, Oberursel/Ts.

The general manager Martin Milautzcki had been removed on February 18, 1998 with effect fromFebruary 28, 1998 by virtue of a shareholders' resolution. His name has not yet been deleted from theCommercial Register.

3. Parent Company

The Company is a 54% subsidiary of EsNet Ltd, Provo, Utah, USA. Its financial statements areincluded in the consolidated financial statements of EsNet Ltd.

4. Contingent Liabilities and Other Financial Obligations

The Company has concluded a number of leases for motor vehicles with different terms and a rentagreement for the office building. The Company expects a total burden of DM 537 thousand fromthese contracts over the next three years.

There were no contingent liabilities as of the balance sheet date.

Bad Homburg v.d. Höhe, April 2000

The Management

102

UNITED MEDIA GMBH

Fixed Assets Movements Schedule for Fiscal Year 1999

103

104

UNITED MEDIA

UNITED MEDIA GESELLSCHAFT ZUR VERMARKTUNG VONFIXED ASSETS MOVEMENTS

ACQUISITION AND PRODUCTION COST

Jan. 1, 1999 Additions Retirements Dec. 31, 1999

DM DM DM DM

INTANGIBLE ASSETSSoftware . . . . . . . . . . . . . . . . . . . . . . 45,638.06 15,872.25 0.00 61,510.31

PROPERTY, PLANT ANDEQUIPMENT

Operational and officeequipment . . . . . . . . . . . . . . . . . 618,936.76 260,917.70 49,417.58 830,436.88

664,574.82 276,789.95 49,417.58 891,947.19

105

GMBH

INTEGRIERTEN INFORMATIONSSYSTEMEN MBHSCHEDULE FOR FISCALYEAR 1999

DEPRECIATION BOOK VALUES

Jan. 1, 1999 Provisions Reversals Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998

DM DM DM DM DM DM

27,631.06 19,020.25 0.00 46,651.31 14,859.00 18,007.00

387,336.76 238,160.70 49,417.58 576,079.88 254,357.00 231,600.00

414,967.82 257,180.95 49,417.58 622,731.19 269,216.00 249,607.00

Yvonne Secnazi41, rue St. Ferdinand, 75017 Paris

Statutory AuditorsMember of the Compagnie RØgionale de Paris

ERNST & YOUNG Audit4, rue Auber, 75009 Paris

French SociØtØ Anonyme with capital ofFRF 13,028,875

344 366 315 C.C.R. Paris

Statutory AuditorsMember of the Compagnie RØgionale de

Paris

NETFORCE SAFinancial year ended December 31, 1999

Audit opinionAnnual financial statements

In compliance with the assignment entrusted to us by the Annual General Meeting, we present here-after our report relating to the financial year ended on December 31, 1999, regarding:

· the audit of the annual financial statements of Netforce drawn up in French francs, accompanyingthis report,

· the specific verifications and information stipulated by the law.

The annual financial statements were closed by the Board of Directors. Our role is to express anopinion on these financial statements based on our audit.

I. Opinion on the annual financial statements

We conducted our audit in accordance with the standards of the profession; these standards requirethat we plan and perform the audit to obtain reasonable assurance as to whether the consolidatedfinancial statements are free of material misstatement. An audit consists in examining, on a testbasis, evidence supporting the amounts and disclosures in these consolidated financial statements.It also consists in assessing the accounting principles used and significant estimates agreed upon forthe financial statements as well as evaluating their overall presentation. We believe that our auditprovides a reasonable basis for the opinion expressed hereafter.

We certify that the annual financial statements, drawn up in accordance with generally acceptedaccounting principles in France, give a true and fair view of the results of its operations during thefinancial year as well as of the company's financial position and assets and liabilities at the end ofthis financial year.

II. Verifications and specific information

We also carried out the specific verification required by law, in accordance with the standards of theprofession.

We have no comments to make as to the fair presentation and consistency with the annual financialstatements of the information contained in the Board of Directors' management report and in thedocuments sent to the shareholders with respect to the financial position and the annual financialstatements.

April 4, 2000The Statutory Auditors

Yvonne Secnazi Ernst & Young Audit

Christine Blanc-Patin

106

NETFORCE SA

Balance Sheet

107

NETFORCE SA

Balance Sheet

Financial Year31 December 1999

31 Decem-ber 1998

GrossAmortisations,

provisions Net Net

FRF

ASSETSLicenses, patents and other similar

rights . . . . . . . . . . . . . . . . . . . . . . . . . . 1,107,474 300,574 806,900 32,276Machinery and equipment . . . . . . . . . . 4,804 3,234 1,570 3,171Other tangible fixed assets . . . . . . . . . 534,407 267,306 267,101 279,018Other equity interests . . . . . . . . . . . . . . 55,100 55,100Other financial fixed assets . . . . . . . . . 28,860 28,860 28,980

Total . . . . . . . . . . . . . . . . . . . . . . . 1,730,645 571,114 1,159,531 343,445

InventoriesRaw materials, supplies . . . . . . . . . . . . 50,565 50,565Services in-progress . . . . . . . . . . . . . . . 81,665 81,665 1,047,750

ReceivablesAdvances and down-payments to

suppliers . . . . . . . . . . . . . . . . . . . . . . . 352,147 352,147Accounts receivable and related

accounts . . . . . . . . . . . . . . . . . . . . . . . 11,485,101 54,100 11,431,001 3,628,498Other receivables . . . . . . . . . . . . . . . . . . 2,214,063 2,214,063 239,309

MiscellaneousCash and cash equivalents . . . . . . . . . 465,390 465,390 393,520Prepaid expenses . . . . . . . . . . . . . . . . . 1,513,540 1,513,540 58,128

Total . . . . . . . . . . . . . . . . . . . . . . . 16,162,471 54,100 16,108,371 5,367,205

AdjustmentsExpenses to be amortised over

several periods (III) . . . . . . . . . . . . . . 270,010 270,010

Total . . . . . . . . . . . . . . . . . . . . . . . 18,163,126 625,214 17,537,912 5,710,650

108

FinancialYear1999

FinancialYear1998

FRF FRF

LIABILITIES WITH APPROPRIATIONShare capital or personal capital, including 481, 600 which has

actually been paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481,600 481,600Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,157,561) (504,108)Net income or net loss for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,050,404) (1,653,453)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,726,365) (1,675,961)

Loss provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000

Bank borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,149 1,834,843Various debts (including equity loans) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,123,316 2,476,455Trade notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,932,754 1,245,707Tax and social liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,671,967 1,819,606Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,648Prepaid income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,443

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,254,277 7,376,611

Grand Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,537,912 5,710,650

Payables and prepaid income recorded less than one year previously 27,254,277 7,376,611Including current bank facilities and credit balances in banks and

postal checking accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,149 1,834,843

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NETFORCE SA

Income statement of the Financial Year (Listed)

1999 1998 (1) 1997 (2)FRF FRF FRF

Sales of goods/services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,147,713 8,756,522 6,391,908Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,147,713 8,756,522 6,391,908Change in finished goods and in-progress inventory . . . ± 966,087 917,750 130,000Fixed assets produced for use by the company . . . . . . . . 519,100Excess depreiciation and recovery on provisions

charged in prior periods, expense transfers . . . . . . . . . 703,695 186,517 29,795Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 728 2 3,274Total operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,405,149 9,860,791 6,554,977Operating chargesPurchase of raw materials and other supplies (including

customs tariffs and duties) . . . . . . . . . . . . . . . . . . . . . . . . 66,199 21,516 15,873Other purchases and external charges . . . . . . . . . . . . . . . . 12,686,309 4,617,312 3,375,189Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,774 93,280 69,919Wages and salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,601,493 4,757,562 2,281,944Social charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,561,091 1,867,763 782,890On fixed assets: depreciation charges . . . . . . . . . . . . . . . . 631,236 278,206 159,710On current assets: provisions . . . . . . . . . . . . . . . . . . . . . . . 54,100Contingency and loss provisions . . . . . . . . . . . . . . . . . . . . 10,000Other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,509 132 140Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,070,711 11,645,771 6,685,665OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 7,665,562 ± 1,784,980 ± 130,688Interest and related charges . . . . . . . . . . . . . . . . . . . . . . . . . 324,339 117,959 87,044Total financial charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324,339 117,959 87,044FINANCIAL INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ± 324,339 ± 117,959 ± 87,044CURRENT INCOME BEFORE TAXES . . . . . . . . . . . . . . . . . . ± 7,989,901 ± 1,902,939 ± 217,732Extraordinary income on management transactions . . . . 4,903 2,500 79,897Extraordinary income on capital transactions . . . . . . . . . 546,280 23,217Total extraordinary income . . . . . . . . . . . . . . . . . . . . . . . . . 551,183 25,717 79,897Extraordinary charges on management transactions . . . 65,406 15,400 5,900Extraordinary charges on capital transactions . . . . . . . . . 546,280 99,223 77,397Extraordinary charges for provisions and depreciation . 75,000 75,000Total extraordinary charges . . . . . . . . . . . . . . . . . . . . . . . . . 611,686 189,623 158,297EXTRAORDINARY INCOME . . . . . . . . . . . . . . . . . . . . . . . . . ± 60,503 ± 163,906 ± 78,400TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,956,332 9,886,508 6,634,874TOTAL CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,006,736 11,953,353 6,931,006Income-Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,993PROFIT OR LOSS (Total income ± total charges) . . . . . . . . ± 8,050,404 ± 2,066,845 ± 339,125Including property leasing . . . . . . . . . . . . . . . . . . . . . . . . . . 472,195 195,507 80,627Including interest from related entities . . . . . . . . . . . . . . . 269,450Including expense transfers . . . . . . . . . . . . . . . . . . . . . . . . . 703,695 36,517 29,630Including social charges for management . . . . . . . . . . . . . 2,493 2,493

Detail of non-recurring income and expenses(if there is insufficient space, attach a statementof the same form)

1999expenses income

AGESSA (French association which managesassignments on behalf of the Social Security)excess payment, differences in payment . . . . . . . . . . . . 4,903

NP Lease and HIGH CO reinvoicing computerequipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546,280 546,280

URSAAF (French organisation for the collection ofsocial security and family allowance contributions)

inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,042Repairing leased vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,847Irrecoverable trade receivables . . . . . . . . . . . . . . . . . . . . . . 5,517

(1) Figures for 1998 include 2nd half-year period 98 and 50% of the period 7/97 to 6/98.(2) Figures for 1997 include 50% of the period 7/97 to 6/98 and 6/11 of the period 8/96 to 6/87.

110

Appendix

Accounting Rules and Methods

These general accounting agreements have been applied, in compliance with the conservatism prin-ciple, according to the following basic hypotheses:

going concern assumptionconsistency principleaccrual basis principle

in accordance with the general rules for drawing up and presenting the annual financial statements.

The basic method adopted for valuing the items recorded in the accounts is the historical costsmethod.

Distinctive Facts

Comparing the current financial year with the previous financial year cannot provide any significantinformation, as the duration of the 1998 financial year was only six months.

I. Accounting Methods

The main methods adopted are as follows:

Intangible fixed assets

Intangible fixed assets are valued at their acquisition cost (purchase price and additional costs, notincluding costs relating to the acquisition of the fixed assets) or at their production cost.

Amortisation is calculated on a straight-line basis according to the anticipated useful asset life:

± Software 1 year

± Computer site 3 years

Tangible fixed assets

Tangible fixed assets are valued at their acquisition cost (purchase price and additional costs, notincluding costs relating to the acquisition of the fixed assets) or at their production cost.

Depreciation is calculated on a straight-line basis according to the anticipated useful asset life:

Machinery and equipment 4±5 years

Office and computer equipment 3 years

Furniture 6 years

Equity interests, other capitalised securities, short-term investment securities

The gross value is made up of the purchase price, not including additional costs. When the balancesheet value is less than the gross value, a provision for depreciation is set aside for the amount of thedifference.

111

NETFORCE SA

Inventories

Inventories are valued according to the first-in-first-out method.

The gross value of goods and supplies includes the purchase price and additional costs.

The work-in-progress is valued at the production cost including external charges and direct and indir-ect production expenses; below-capacity utilisation costs are excluded from the value of inventories.

A provision for depreciation of inventories equal to the difference between the gross value calculatedaccording to the methods set out above and the realisable value (less proportional sales costs) ismade when such value is less than the other limit stated.

Receivables

Receivables are valued at their par value. A provision for depreciation is set aside when the balancesheet value is less than the book value.

II. MISCELLANEOUS INFORMATION

Company preparing the consolidated accounts

NETFORCE is 99.9% owned by High Co (Siren ± French business registry ± No. 353 113 566 00031)

In this regard, High Co. consolidates NETFORCE's results.

Financial lease

As at December 31, 1999, the company's leasing commitments amounted to FRF 539,872.

Debts and receivables with related companies

The amount of accounts payable with companies of the group amounts to FRF 1,476,977.

The amount of accounts receivable with companies of the group amounts to FRF 3,697,745.

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NETFORCE SA

ACCRUED CHARGES

AMOUNT OF ACCRUED CHARGESINCLUDED IN THE FOLLOWING HEADINGS IN THE BALANCE SHEET Amount

FRF

Trade notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393,805.42Tax and social liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 726,717.00Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,816.94

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,261,339.36

ACCRUED INCOME

AMOUNT OF ACCRUED INCOMEINCLUDED IN THE FOLLOWING HEADINGS IN THE BALANCE SHEET Amount

FRFReceivablesAccounts receivable and related accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571,202.30Social security organisms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234,694.00Miscellaneous, accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500.00Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,851.74

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 827,248.04

EXPENSES TO BE AMORTISED OVER SEVERAL PERIODS

HEADINGS Amount Depreciation rate

FRF FRF

Expenses to be amortised . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,010.00 0.50

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270,010.00

Prepaid expenses and income

HEADINGS Expenses Income

FRF FRF

Operating expenses or income . . . . . . . . . . . . . . . . . . . . . . 1,513,540.89

TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,513,540.89

Composition of Share Capital

TYPES OF SECURITIES Number Par value

FRF

1 ± Shares and securities making up the share capital atthe beginning of the financial year . . . . . . . . . . . . . . . . 4,816 100

2 ± Shares and securities making up the companycapital at the end of the financial year . . . . . . . . . . . . . . 4,816 100

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NETFORCE SA

List of Subsidiaries and Equity Interests

SUBSIDIARIES AND EQUITY INTERESTS

Share-holders'equity

Proportionof capitalheld inpercent

Incomefrom lastfinancial

year

FRF

A. DETAILED INFORMATION ON THE SUBSIDIARIESAND EQUITY INTERESTS . . . . . . . . . . . . . . . . . . . . . .

B. 1. Equity interests (10 to 50% of capital held) . . . . .EUROCATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569,370.00 9.67

Average Workforce

WORKFORCESalaried

personnel

Personnelmade

availableto the

company

Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

TOTAL 44

114

NETFORCE SA

X. Business Trends and Prospects

The Company continued on its course of growth in July and August. The Group's revenues for thetwo months July and August were approx. 70% higher than for the corresponding months of lastyear. Operating profitability for July and August was approx. 40% below these two months of lastyear due to Syzygy France's loss of a large client. In the first eight months of the current year, theGroup's revenues were 90% higher than for last year's corresponding period and operating prof-itability has improved more than tenfold.

Syzygy opened an office in Dublin, Ireland; in order to be located in one of the European boomregions. The first weeks of active business in Ireland proved to be promising and Syzygy is optimisticfor the future. The expansion of the Munich office turned out to be successful, new employees havejoined in August. In the Bad Homburg location, a second floor has been rented and the refurnishinghas started.

In July and August Syzygy extended its relationship with DaimlerChrysler and Telewest, who bothasked the Company to take up additional projects. DaimlerChrysler engaged Syzygy to develop theGerman and international Web presence of the A-Class, Telewest engaged Syzygy for a six monthsperiod to develop a B2B Web application.

The Company has intensified its activities regarding geographical expansion. Syzygy currentlyscreens its home markets as well as further new markets such as Spain, Italy and Benelux for acquisi-tion targets and for opportunities to grow organically. The seeked acquisition targets either offer asimilar service offering as Syzygy does or they offer a complementary service offering, such as exper-tise in MIS, CRM or strategy consulting.

Syzygy's management believes that the Group's operating profitability (EBITA) for 2000 will be signif-icantly increased versus 1999. The set target of achieving break-even in France will be achieved in2001.

Bad Homburg vdH, in October 2000

Syzygy AG

115

On the basis of the forgoing Company Report, the

12,000,000 Shares (the total registered share capital) (the ªSharesº)

i. e.

3,090,000 Sharesissued under the cash capital increase of October 4, 2000,


and

136,824 Sharesfrom the holdings of an existing shareholder± German Securities Code Number 510 480 ±

and

8,773,176 Sharesof existing shareholders and subject to sales prohibition


including

322,683 Sharesfrom existing shareholders



each with a mathematical interest in the share capital of 5 1.00 per Share andcurrent dividend rights

of


have been admitted to listing to the Geregelter Markt to trade in theNeuer Markt of the Frankfurt Stock Exchange.

Düsseldorf, in October 2000

HSBC Trinkaus & Burkhardt KGaA

Westdeutsche Landesbank Girozentrale

S001 103 1. · Syzygy AG Bad Homburg vdH Offering Prospectus for 3,090,000 no-par value ordinary...

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