Q02. Quarterly Report 02/2010 Group Quarterly Report of CENTROTEC Sustainable AG, Brilon. CENTROTEC The European Energy Saving Company

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1 CENTROTEC The European Energy Saving Company Q02 Quarterly Report 02/2010 Group Quarterly Report of CENTROTEC Sustainable AG, Brilon A v e r a g e a n n u a l g r o u n d s o l a r 66.5 e n e r g y k W h / m 2 / d a y 7

2 Highlights > Another record revenue figure of EUR million for first half (+8 % on previous year and +2 % on record-breaking year 2008) > Revenue for all segments up on previous year's level > Revenue growth in domestic and international markets > Further increase in market share in German heating market > Another overproportional rise in earnings - EBITDA +37 % to EUR 19.1 million (previous year EUR 14.0 million) - EBIT almost doubles to EUR 10.1 million > Earnings per share (EPS) of EUR 0.46 (previous year EUR due to non-recurring effects) > Energy prices in first half of 2010 well up on prior-year level; further substantial rise in energy prices forecast over medium term > Further growth potential for range of heat pumps and integrated energy roof system highly encouraging response to participation in trade fairs confirms market potential > Re-introduction of market incentives scheme for renewables in Germany's heating sector > Full-year forecast for 2010 is resoundingly confirmed: - Revenue: EUR 480 to 500 million Q02 CENTROTEC Highlights - EBIT: EUR 30 to 32 million > The bandwidth for earnings per share (EPS) has been revised upward to EUR 1.30 to EUR 1.40 (previously EUR 1.10 to 1.20) Business Performance 2

3 Consolidated Key Figures 30/06/2010 [EUR '000] 30/06/2009 [EUR '000] Changes [Percent] Total revenue 217, , Climate Systems 144, , Gas Flue Systems 56,022 49, Medical Technology & Engineering Plastics 17,133 14, Earnings EBITDA 19,090 13, EBIT 10,118 5, EBIT yield (in %) EBT 10,817 (8,305) EAT 7,686 (9,589) EPS (in EUR; basic) 0.46 (0.58) Balance sheet structure* Balance sheet total 383, , Shareholders' equity 140, , Equity ratio (%) Property, plant and equipment 89,973 91,252 (1.4) Intangible assets 37,928 37, Goodwill 61,015 60, Net financial liabilities 99,102 86, Net working Capital 71,066 53, Cash flow statement Cash flow I (EAT & depreciation/ amortisation) 16,658 (1,532) Cash flow from operating activities (4,053) 9,823 Cash flow from investing activities (8,850) (4,890) 81.0 Employees Total (in FTE) 2,694 2, Q02 CENTROTEC Consolidated Key Figures Shares Number of shares*/** 16,717 16,610 Half-yearly-high quotation*** Half-yearly-low quotation*** Half-yearly-end quotation*** * Previous period is related to 31/12/2009 ** Weighted average shares outstanding (basic; in thousand) *** Quotation in EUR Consolidated Key Figures 3

4 30-40 %

5 Interim Group Management Report Development in revenue and earnings The second quarter of the 2010 financial year saw revenue growth for the group stabilise at approximately the level of the first quarter. Over the first half of 2010 as a whole, revenue for the CENTROTEC Group hereinafter also referred to as CENTROTEC grew year on year by 7.5 % to EUR million (previous year EUR million). As previously in the first three months of the year, all three group segments contributed to this revenue growth, which especially in the case of the heating technology market exceeded the market average. In regional terms, too, there was year-on-year revenue growth at group level both in Germany and internationally, notwithstanding variation between the individual segments and national markets. Revenue Q Q Change Q1 Q by segment EUR EUR EUR million million in % million Q1 Q2 Change 2009 EUR million in % Climate Systems % % Gas Flue Systems % % Medical Technology & Engineering Plastics % % Total % % Q02 CENTROTEC Interim Group Management Report The highest-revenue corporate segment Climate Systems posted revenue growth of 4.2 % and thus increased its rate of growth compared with the first quarter, which had been dominated by the long winter, in both relative and absolute terms. The second-largest segment Gas Flue Systems achieved the highest rate of revenue growth in the first half of 2010 in absolute terms, gaining EUR 7.0 million or 14.3 % on the prior-year reference period. With vigorous revenue growth of 16.0 %, the Medical Technology & Engineering Plastics segment built on the signs of a recovery that had been manifested in the previous two quarters. The first-half result was increased to well above the prior-year figure despite resurgent materials purchase prices. There was a slight decline in gross profit from 52.7 % in the prioryear period to 52.2 % in the first half of The impact of materials purchase prices was outweighed by existing volume contracts and the continuing earnings improvement programmes at the group companies. The operating results consequently improved at a faster rate than revenue. EBITDA for the first half was EUR 19.1 million and therefore 37 % up on the prior-year figure (EUR 14.0 million). Thanks to only a slight rise in depreciation and amortisation, EBIT actually rose by 71 % to EUR 10.1 million (previous year EUR 5.9 million). In particular the very good business performance of the equity investment CENTROSOLAR delivered a positive investment result of EUR 3.5 million (previous year EUR million) and, together with an unchanged interest result, produced earnings before tax (EBT) of EUR 10.8 million (previous year EUR -8.3 million). The effective tax rate, which was increased for the first half of 2010 due in particular to regional and seasonal non-recurring effects in the first quarter, Business Performance 5

6 will decrease over the year as a whole. Net income for the period (EAT) totalled EUR 7.7 million (previous year EUR -9.6 million) at the effective tax rate of approx. 43 % (following 50 % in the first quarter and 41 % in the same period in the previous year). On this basis, CENTROTEC generated first-half earnings per share (EPS) of EUR 0.46 (previous year EUR -0.58). Development of the segments Climate Systems Q02 CENTROTEC Interim Group Management Report In the Climate Systems segment, revenue for the first half of 2010 was up 4.2 % on the prioryear figure to EUR million (previous year EUR million). The rate of revenue growth thus further accelerated in the second quarter of While the impact of the long, hard winter had still noticeably hampered growth in the first few months of the year, revenue then grew by 6.3 % in the second quarter of As in the preceding quarters, this rise brought increased market shares in the key product areas, particularly in the area of heating technology in the core markets. This development was also aided by the fundamentally positive performance of international business, for all its regional variation. As was already the case at the start of the year, revenue growth has filtered through very disproportionately into the first-half result, even if a decline in the gross profit margin to 51.8 % (previous year 52.0 %) was observed as a result of the upturn in materials purchase prices that has been observed for some time compared with the preceding months. Until now, it has been possible to absorb the impact of this effect on earnings through a below-average rise in personnel expenses as well as unchanged depreciation and amortisation from the previous year's level. Overall, earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 14.0 % to EUR 10.8 million (previous year EUR 9.5 million). EBIT (earnings before interest and taxes) for the first half of 2010 likewise increased by 27.0 % to EUR 5.7 million, from the prior-year figure of EUR 4.5 million. Key figures Q1 - Q Q1 - Q Change Climate Systems EUR '000 EUR '000 Percent Revenue from third parties 144, , % Revenue from other segments Change in inventories (15) (483) Cost of materials (69,812) (66,392) 5.2 % Personnel expenses (44,818) (44,042) 1.8 % Other income and expense (19,299) (18,465) 4.5 % EBITDA 10,814 9, % Depreciation and amortisation (5,075) (4,968) 2.1 % EBIT 5,739 4, % Business Performance 6

7 Q02 CENTROTEC Interim Group Management Report Despite the generally restrained level of demand observed in the German heating, ventilation, climate control technology and solar thermal sectors, the Wolf Group the largest company in the segment once again posted a healthy rise in revenue thanks to its exceptionally good market and competitive position. This growth stemmed substantially from the heating technology area. To extend the basis for this positive development still further, the company has been systematically modernising and improving the performance of its range of innovative, user-friendly, efficient system solutions over the past few years. The highly efficient range of heat pumps developed entirely by Wolf itself and launched in the first quarter of 2010 the market leaders particularly in terms of their efficiency ratings and the integrated energy roof system developed in conjunction with the Gas Flue Systems segment are the major new developments of the first half. These met with a very positive response from customers e.g. at the Intersolar that took place in Munich in June, the world-leading solar industry exhibition. The positive business performance amid the lingering uncertainty affecting the German heating market demonstrates the aptness of the group companies' product policy of focusing on the highest possible quality standards. Wolf has succeeded in increasing its unit sales for a number of quarters in a row despite inconsistent subsidisation policies, the uncertainty about the general economic situation and a slump in the new construction market throughout Europe; it has consequently appreciably added to its market shares in the major core markets. The high level of energy prices compared with the previous year, the signs of a market recovery in many European countries and the revival of the renewables subsidy in the heating sector in Germany after the reporting period will continue to provide a healthy basis for a suitably good business performance. In order to benefit more than the norm from at least medium-term high growth in the market for energy-saving solutions for buildings, CENTROTEC invested the record amount of EUR 3.4 million (previous year EUR 3.2 million) in the Climate Systems segment in the first half of This investment in making the product range and production infrastructure of the CENTROTEC companies future-proof has been consistently high for many years, ensuring that CENTROTEC's Climate Systems segment has highly efficient solutions to implement the climate protection programmes that are now in force throughout Europe. Alongside a strong market position, this puts the company in a good position to achieve the forecast made at the start of the year. For the Climate Systems segment, CENTROTEC is thus targeting revenue of EUR 320 to 330 million for 2010 and an earnings margin slightly up on the previous year. In the medium term, it is aiming for annual organic revenue growth of 8 to 10 % coupled with a rise in the EBIT margin to 8 to 9 %. Gas Flue Systems The second quarter of 2010 brought the Gas Flue Systems segment another revenue record and a further improvement on the previous revenue record from the second quarter of Revenue for the entire first half of 2010 reached EUR 56.0 million (previous year EUR 49.0 million). This 14.3 % rise in revenue produced a disproportionately steep rise in the operating result at EBITDA level of 80 %, to EUR 6.5 million (previous year EUR 3.6 million) and a more than doubling of EBIT to EUR 3.8 million (previous year EUR 1.7 million). Business Performance 7

8 Key figures Q1 - Q Q1 - Q Change Gas Flue Systems EUR '000 EUR '000 Percent Revenue from third parties 56,022 49, % Revenue from other segments 1, Change in inventories 2,969 (1,059) Cost of materials (31,331) (24,719) 26.8 % Personnel expenses (13,747) (11,990) 14.7 % Other income and expense (8,478) (7,996) 6.0 % EBITDA 6,501 3, % Depreciation and amortisation (2,701) (1,928) 40.1 % EBIT 3,800 1,677 >100 % Q02 CENTROTEC Interim Group Management Report As already in the first quarter of 2010, this exceptionally positive development in business is based on the positive performance of technical roof products and the further spread of condensing boiler technology in all key markets of the group. In the area of gas flue systems for condensing boilers, CENTROTEC was able to acquire a major European heating technology supplier as a new customer. Also technical roof products again achieved substantial growth, most notably in the French market. To lend further stability to this positive development, the total invested in the Gas Flue Systems segment in the first half of 2012 of EUR 3.2 million was only slightly down on the record figure for the previous year (EUR 3.7 million). The priorities for capital expenditure were the segmentwide roll-out of a standard ERP system and an extension to the building at Brilon, which meets the tougher group guidelines thanks to the use of completely CO 2 -neutral building techniques. The fact that the level of capital expenditure remains high serves to further reinforce the business platform and thus create a broader basis or continuing growth. All major product and marketing areas provide further growth potential for the coming years, e.g. the integrated energy roof system developed by Ubbink in partnership with Wolf and the entry into the North American market. The full-year 2010 revenue forecast for the segment of EUR 130 to 140 million with an EBIT margin on a par with the previous year therefore remains readily attainable. In the second half of 2010 an uncertainty on the operating results exists by the rebound in material cost prices in some product areas. In addition, a comparison with last year s sales performance in the second half year has to take into account a former year boost by catch-up effects. Mediumterm targets for CENTROTEC s Gas Flue segment anticipate average organic growth of 10 to 12 % annually and a double-digit EBIT margin. Business Performance 8

9 Medical Technology & Engineering Plastics The smallest segment by revenue, Medical Technology & Engineering Plastics, kept up the recovery of the previous two quarters in the second quarter of First-half revenue for the segment grew 16.0 % on the prior-year reference period to EUR 17.1 million (previous year EUR 14.8 million) thanks to an upturn in both areas of the segment, but was still well below the figures for the record year Following the first signs of a stabilisation of the operating result in the course of the first quarter, this indicator now remained consistently in positive territory. This development confirms the success of the prompt action to further streamline processes and adjust structures, particularly within the Engineering Plastics area. EBTIDA for the segment reached EUR 1.7 million (previous year EUR 0.9 million) in the first half, and EBIT amounted to EUR 0.5 million (previous year EUR -0.2 million). Key figures Q1 - Q Q1 - Q Change Medical Technology & Engineer. Plastics EUR '000 EUR '000 Percent Revenue from third parties 17,133 14, Revenue from other segments Change in inventories 153 (260) Cost of materials (6,002) (4,359) 37.7 % Personnel expenses (7,326) (6,742) 8.7 % Other income and expense (2,498) (2,629) (5.0 %) EBITDA 1, % Depreciation and amortisation (1,196) (1,161) 3.0 % EBIT 523 (222) >100 % Q02 CENTROTEC Interim Group Management Report Alongside the ongoing development of the established medical technology products that it markets under its own brand name and as OEM products, the Medical Technology & Engineering Plastics segment is giving particular focus to the highly promising business area of spinal implants. Within the Engineering Plastics business area, the results of recent months serve to confirm the economic recovery in the relevant sales markets, from which the group companies are benefiting overproportionally thanks to having successfully implemented cost optimisation programmes. The further international expansion of the sales network and the ongoing efficient development of innovative products pave the way for the medimondi Group to make the most of attractive future opportunities. With progress on the new building at the segment's main location in Fulda fully on schedule, there will moreover be an improved production infrastructure available from the end of the third quarter. This will further improve the competitive position of the medical technology company based there and create an ideal basis for capitalising on the growth potential that is taking shape in the medical technology market. Overall, the segment invested EUR 1.5 million (previous year EUR 0.8 million) in the first half of the current financial year. With the performance of the Engineering Plastics sub-segment having stabilised at a significantly higher level than in the previous year as the current financial year has progressed, Business Performance 9

10 the annual revenue forecast of EUR 30 to 32 million should be readily achievable. The same is true of the earnings margin for the segment, which has returned to positive territory and is expected to reach a low single-digit range. Organic revenue growth in excess of 10 % with an EBIT margin in the high single-digit or low double-digit range remains the medium-term target. Development of investments Q02 CENTROTEC Interim Group Management Report The investment in the CENTROSOLAR Group, a listed company since 2005 hereinafter also referred to as CENTROSOLAR constitutes the most substantial investment of the CENTROTEC Group that is not comprehensively consolidated. The ownership interest has been % since last year (previously %). CENTROSOLAR again achieved a satisfying business performance in the second quarter of 2010, posting substantial revenue and earnings growth over the first half as a whole. Revenue for the first six months grew by 71 % to EUR 209 million (previous year EUR 122 million), the second-quarter figure of EUR 124 million was actually double the figure for the corresponding period of the previous year, and it was around 46 % up on the previous quarter. Earnings showed rising, positive figures at all levels for the fourth quarter in succession. EBIT for the full first half of 2010 was EUR 21.1 million (previous year EUR million). The EBIT margin consequently reached 10.1 %, as against -9.2 % for the corresponding period of the previous year. Of the resulting earnings after tax (EAT) of EUR 13.0 million (previous year EUR million), an amount of EUR 3.4 million accrues to the pre-tax profit of CENTROTEC in proportion to its 26.16% ownership interest in CENTROSOLAR. In the marketplace, CENTROSOLAR's consistent adherence to a value added strategy for fitters, backed by ever greater depth of customer service and patented technology components, is increasingly paying dividends and led to a positive performance in a wide range of regional markets. Despite particularly strong demand from Germany in response to plans to reduce the feed-in tariff mid-way through the year, the export share of revenue in the first half remained high at 45 %. It benefited in particular from good progress in France, Italy and the USA. The steadily rising level of export revenue will to a great extent compensate for the temporary dip in sales in Germany following the cutbacks in the feed-in tariff. In light of these developments, the CENTROSOLAR management decided to upgrade the forecast for the current financial year mid-way through the year. Thanks to the consistently healthy margins, the EBIT forecast was virtually doubled from a range of EUR 14 to 16 million to EUR 24 to 28 million, and the revenue bandwidth of EUR 340 to 370 million is likely to be exceeded. The company equally believes it is well prepared for 2011 which, according to many analysts, will be characterised by a fundamental oversupply, because further growth is predicted for the core area of photovoltaic roof systems and CENTROSOLAR stands to benefit particularly from an anticipated price war among solar cell manufacturers thanks to its flexible purchasing policy. Business Performance 10

11 Net worth and financial position Q02 CENTROTEC Interim Group Management Report There were only minor changes to the consolidated balance sheet during the first six months of the current financial year, compared with the position at the end of the 2009 financial year. The same applies in respect of the previous quarter. At June 30, 2010 the balance sheet total of the CENTROTEC Group was EUR million, and therefore 1.1 % up on the figure reported as at the end of The total was virtually unchanged from the previous quarter. On the assets side, the EUR 3.5 million increase in investments to now EUR 27.2 million, largely thanks to the positive result of CENTROSOLAR, is the most significant change among non-current assets. Within current assets, there was a rise in trade receivables of EUR 12.2 million as at the reporting date compared with the end of Meanwhile inventories were up EUR 3.5 million at the balance sheet date, while cash and cash equivalents were down EUR 16.5 million. This development is mainly attributable to the sharp rise in the business volume since the start of the year by much more than the usual seasonal variation. The business volume and therefore working capital moreover increased substantially compared with the first half of Net working capital (current assets less cash and cash equivalents less current, non-interest-bearing liabilities) consequently rose EUR 17.4 million since the start of the year to EUR 71.1 million. Key effects here were the inventory build-up in the Gas Flue Systems segment due to the introduction of a new ERP solution at two locations as well as higher customer receivables at the reporting date in the Climate Systems segment. In terms of annual revenue, net working capital at the end of the second quarter was on a par with the previous year and thus within the scope of expectations. The rise in the net financial liabilities, which were drastically reduced in the previous year, is to be viewed in the same context. The increase of EUR 12.7 million is exclusively attributable to the fall in cash and cash equivalents. Interest-bearing financial liabilities were reduced by EUR 3.8 million since the start of the year. The aim for the year as a whole is to achieve a further reduction in financial liabilities, albeit of not the same extent as in the previous year. The group's equity rose by EUR 7.6 million or 5.7 % to EUR million following the ploughback of the first-half profit; this was consequently the most significant change on the equity and liabilities side. The equity ratio at the reporting date for the first half therefore rose to 36.5 % compared with 34.9 % at the end of As already explained, cash and cash equivalents for the group rose by EUR 16.5 million to EUR 18.9 million at June 30, 2010 because of the rise in working capital. Thanks to its existing cash and cash equivalents and unutilised credit lines, the CENTROTEC Group continues to have sufficient liquidity reserves. The cash flow from operating activities amounted to EUR -4.1 million in the first half of 2010, having been EUR 9.8 million in the previous year. This development stems largely from the increase in working capital following the substantial increase in the business volume of CENTROTEC companies and the increased tax payments. Nor was it possible to counterbalance this development by the virtual doubling of EBIT and the slightly lower interest payments. The cash flow from investing activities reflects the substantial effort being made group-wide to Business Performance 11

12 maintain and extend the basis for further progress. This led to gross capital expenditure of EUR 8.9 million (previous year EUR 4.9 million). The cash flow from financing activities is essentially the net result of the raising and repayment of financial liabilities. In the first half of 2010 group-wide repayments of EUR 7.0 million contrasted with loans raised totalling EUR 3.9 million. Together with the receipts of EUR 0.1 million from the stock options scheme, the balance of financing activities is therefore EUR 3.0 million (previous year EUR 6.4 million). Personnel At June 30, 2010 the comprehensively consolidated companies of the CENTROTEC Group employed a total of 2,811 people (previous year 2,660). This figure represents 2,694 full time equivalents (FTE) and reflects an increase of 151 people or 177 FTEs on the corresponding point in It should also be considered that compared with one year earlier, the figures at June 30 of the current year include only a very small level of short-time in a marginal area of the group's activities and that the entire available capacity increased even more sharply than the statistics superficially indicate. After the period under review, short-time was halted altogether within the CENTROTEC Group. As an average for the first half of 2010 the number of people employed in the group was 2,701 and therefore 56 up on the first half of This development is largely attributable to the increased business volume of the Gas Flue Systems segment. Personnel expenses for the overall group rose by 5.0 % in the first half of 2010 from EUR 62.8 million to EUR 65.9 million and therefore once again by a much slower rate than revenue and aggregate operating performance. This brought the personnel expenses ratio down from 31.3 % in the same period of the previous year to 29.8 % in the first half of 2010, reflecting the success of continuing efforts to boost efficiency in all corporate divisions. Q02 CENTROTEC Interim Group Management Report Shares As at mid-august, the trading price of CENTROTEC shares had risen by around 45 % since the start of 2010 and therefore by five times the gain in the SDAX. In the second quarter of 2010 the shares largely performed a sideways shift after an initial gain of around 15 %, with the trading volume relatively low. The year-high of EUR was reached in mid-july, after the period under review. Measured against the lows of 2009, this development means the trading price has more than doubled, with the volume of shares being traded significantly up on the previous year. This development is moreover underlined by the level of interest among institutional investors. CENTROTEC again supported this positive trend in the second quarter of 2010 by holding a large number of investor meetings, often at board level, during roadshows in Germany and internationally. The Shareholders' Meeting at the company's headquarters in Brilon also gave a wide range of capital market players a fitting opportunity to find out more about the Business Performance 12

13 CENTROTEC Group. At the start of June there was in addition an Investors' Day at the Intersolar in Munich, where the biggest group subsidiary Wolf was exhibiting. This event helped to build on existing contacts and give those attending a deeper understanding of the CENTROTEC Group's companies and markets. Q02 CENTROTEC Interim Group Management Report CENTROTEC share price performance (Xetra) from January to August 2010, source: At June 30, 2010 there were 16,749,970 no-par value ordinary shares outstanding of CENTROTEC Sustainable AG. The company itself held 12,080 of these shares. The increase in the number of shares by 33,708 units compared with the balance sheet date of December 31, 2009 results solely from the exercising of stock options reaching maturity by employees or Management Board members of the CENTROTEC Group. At a closing price of EUR at the end of the quarter, the market capitalisation of the CENTROTEC Group was therefore approx. EUR 215 million. In the course of the second quarter of 2010 there were again several smaller notifiable changes in the investor structure, all of them close to the lowest reporting threshold of three percent; the latest versions of these can always be viewed on the homepage of CENTROTEC Sustainable AG ( The latest analysts' views on CENTROTEC shares can also be consulted at the same address. These included some marked increases in price targets in the course of the second quarter, with consistently positive verdicts. Opportunities and risks No material changes to the opportunities and risks for the group as presented for the 2009 financial year occurred during the period under review. Nor did the assessments, the methods of risk identification and the measures derived from them for the controlling of risks change materially compared with the view presented in the 2009 Group Management Report. Business Performance 13

14 Expectations Q02 CENTROTEC Interim Group Management Report The slight acceleration in economic activity worldwide means that the price of important primary supplied products and materials, and especially steel, aluminium and copper, has now started to rise again after reaching a low in At present, supply agreements already in place are still cushioning the effect of the price increases. However, a substantial rise in direct material costs is expected in certain areas as the year progresses. A further factor having an adverse effect is the weakening of the euro against important foreign currencies since the start of the year. On the other hand the year to date has seen energy prices stabilise at a level well up on last year, taking them back to the level of As a result, the energy-saving solutions of the CENTROTEC Group companies will continue to offer attractive payback periods and therefore enjoy increasingly bright sales prospects irrespective of whether or not there are national subsidy schemes available. In the second quarter of 2010 the CENTROTEC Group was able to maintain its good business performance from the previous quarter. The substantial jump in revenue for the first three months of 2010 compared with the prior-year period was increased yet further, albeit based on a comparatively weak first half in For the full year, the 2010 forecast for revenue (EUR 480 to 500 million) and the operating result (EBIT EUR 30 to 32 million) are fully confirmed and will likely be in the upper range of the bandwidth. Due to the uncertainty existing in the material area and an already strong level in the second half of 2009, lower growth rates than in the first half are expected for the second half of Key factors in an overall positive development of business in 2010 will be the new products that have been launched to a positive market response, but the existing, continually revised and optimised product portfolio will as always play a major role in market success. Only recently, the consumer test foundation Stiftung Warentest awarded positive overall ratings to the gas condensing boiler systems. These established products, too, are continually undergoing further development above all to make them more energy-efficient and customer-friendly. After the period under review, the lifting of the spending freeze on the market incentive scheme for renewables in the heating sector should furthermore support sales in the German market. The continuing positive operating performance of CENTROSOLAR Group AG in the second quarter of 2010 and the optimistic outlook for the full year prompted the CENTROTEC equity investment to virtually double its earnings forecast for 2010 as a whole at the start of the third business quarter. This likewise positively impacts the CENTROTEC investment result, making it possible to revise the forecast for earnings per share (EPS) upward to EUR 1.30 to 1.40 (previously EUR 1.10 to 1.20) based on the accompanying satisfying development in CENTROTEC s business. Brilon, August 2010 The Management Board Business Performance 14

15 0.0

16 Consolidated Statement of Financial Position Assets in EUR thousand Non-current assets Goodwill 61,015 60,914 Intangible assets 37,928 37,542 Property, plant and equipment 89,973 91,252 Financial investments accountend for using the equity method 27,234 23,699 Loans and investments 1, Other assets 1,621 1,531 Deferred tax assets 4,162 3,827 Current assets 30/06/ /12/ , ,480 Inventories 60,478 57,024 Trade Receivables 70,933 58,723 Income tax receivable Cash and cash equivalents 18,910 35,356 Other assets 9,573 8, , ,166 Assets 383, ,646 Q02 CENTROTEC Consolidated Statement of Financial Position Equity and Liabilities in EUR thousand Shareholders' equity 30/06/ /12/2009 Share Capital 16,750 16,716 Capital reserves 25,438 25,302 Treasury stock (112) (112) Retained earnings and profit carryforward 90,754 85,577 Profit attributable to shareholders of CENTROTEC Sustainable AG 7,727 5, , ,883 Minority interest presented within equity (291) (209) Non-current liabilities 140, ,674 Pension provisions 22,824 22,253 Other provisions 11,851 11,396 Financial liabilities 86,064 90,080 Other liabilities 4,194 3,621 Deferred tax liabilities 16,476 16,727 Current liabilities 141, ,077 Other provisions 1,462 1,708 Income tax payable 5,009 6,042 Financial liabilities 31,948 31,727 Trade liabilities 27,537 31,402 Other liabilities 36,182 32, , ,895 Equity and Liabilities 383, ,646 Consolidated Statement of Financial Position 16

17 Consolidated Income Statement in EUR thousand 01/04/ /06/ /04/ /06/ /01/ /06/ /01/ /06/2009 Revenues 114, , , ,482 Other income 1,906 1,501 4,045 3,055 Changes in inventories of finished goods and work in progress 578 (2,311) 3,107 (1,802) Production for own fixed assets capitalised 859 1,173 1,531 1,922 Cost of purchased materials and services (56,948) (49,380) (105,519) (94,836) Personnel expenses (33,322) (31,337) (65,891) (62,774) Other expenses (17,920) (16,815) (35,851) (34,067) EBITDA 9,744 8,565 19,090 13,980 Depreciation and amortisation (4,742) (4,009) (8,972) (8,057) Operating income (EBIT) 5,002 4,556 10,118 5,923 Interest income Interest expense (1,619) (1,657) (2,982) (3,331) Result from equity investments 2,284 (9,483) 3,535 (11,404) Result before income taxes (EBT) 5,743 (6,180) 10,817 (8,305) Income taxes (1,221) (1,050) (3,131) (1,284) Net income (EAT) 4,522 (7,230) 7,686 (9,589) Profit or loss attributable to minority interest (13) (13) (41) (37) Profit or loss attributable to shareholders of CENTROTEC Sustainable AG 4,535 (7,217) 7,727 (9,552) Q02 CENTROTEC Consolidated Income Statement EPS (Earnings per share in EUR) Earnings per share (basic) 0.27 (0.44) 0.46 (0.58) Earnings per share (diluted) 0.27 (0.43) 0.46 (0.57) Weighted average shares outstanding (in thousand units; basic) 16,730 16,430 16,717 16,573 Weighted average shares outstanding (in thousand units; diluted) 17,027 16,685 16,902 16,649 Consolidated Income Statement 17

18 Consolidated Statement of Comprehensive Income in EUR thousand 01/04/ /06/ /04/ /06/ /01/ /06/ /01/ /06/2009 Net income (EAT) 4,522 (7,230) 7,686 (9,589) Exchange Rate differences on translation (55) (26) Derivative financial instruments (33) 283 (804) (1,956) Income tax relating to components of other comprehensive income 19 (38) Other comprehensive income, net of tax (69) 263 (587) (1,459) Total comprehensive income 4,453 (6,967) 7,099 (11,048) Attributable to: Minority interest (38) (13) (82) (35) Shareholders of CENTROTEC Sustainable AG 4,491 (6,954) 7,181 (11,013) Q02 CENTROTEC Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income 18

19 Consolidated Statement of Cash Flows in EUR thousand 01/01/ /06/ /01/ /06/2009 Net income before interest and taxes (EBIT) 10,118 5,923 Depreciation and amortisation 8,972 8,057 Gain/ loss on disposal of fixed assets 22 (80) Other non-cash items (92) (477) Increase/ decrease in provisions Increase/ decrease in inventories, trade receivables and other assets that cannot be allocated to investing or financing activities (16,536) (2,589) Increase/ decrease in trade payables and other liabilities that cannot be allocated to investing or financing activities (1,716) 3,165 Interest paid (2,554) (2,868) Income tax paid (3,048) (1,607) Cash flow from operating activities (4,053) 9,823 Purchase of property, plant and equipment/ intangible assets/ investments/ finanical assets/ loans receivable (9,026) (7,727) Proceeds from disposal of property, plant and equipment/ intangilbe assets/ investments/ financial assets/ loans receivable 176 2,837 Cash flow from investing activities (8,850) (4,890) Proceeds from issuance of shares Proceeds from financial liabilities 3,916 2,851 Repayment of financial liabilities (7,039) (9,359) Cash flow from financing activities (2,979) (6,446) Change in financial resources* (15,882) (1,513) Financial resources at the beginning of the financial year 19,716 4,401 Financial resources at the end of the period 3,834 2,888 Q02 CENTROTEC Consolidated Statement of Cash Flows * Cash and cash equivalents deducted of credits current account Consolidated Statement of Cash Flows 19

20 Consolidated Statement of Changes in Equity in EUR thousand January 1, ,716 25,302 (112) 2, (237) (2,315) 85,390 85,577 5, ,883 (209) 132,674 Transfer to revenue reserves 5,400 5,400 (5,400) Change from exercise of options Stock option plan Comprehensive income (804) (546) 7,727 7,181 (82) 7,099 Other changes Share Capital Capital reserve Treasury stock Stock option reserve Deferred tax reserve Currency translation differences in shareholders' equity Fair Value adjustment of financial instruments Retained earnings and profit carryforward Sum other retained earnings and profit carryforward Profit attributable to shareholders of CENTROTEC Sustainable AG Total capital to shareholders of CENTROTEC Sustainable AG June 30, ,750 25,438 (112) 2, (172) (3,119) 90,790 90,754 7, ,557 (291) 140,266 Minority interest presented within euity Consolidated equity January 1, ,582 25,068 (112) 1, (321) (390) 66,768 67,719 18, ,879 (75) 127,804 Transfer to revenue reserves 18,622 18,622 (18,622) Change from exercise of options Stock option plan Comprehensive income 523 (28) (1,956) (1,461) (9,552) (11,013) (35) (11,048) Other changes June 30, ,595 25,117 (112) 1, (349) (2,346) 85,390 85,211 (9,552) 117,259 (60) 117,199 Q02 CENTROTEC Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity 20

21 Consolidated Segment Reporting Segment Structure in EUR thousand Income Statement Climate Systems 01/01/ /01/ /06/ /06/2009 Gas Flue Systems 01/01/ /01/ /06/ /06/2009 Medical Technology & Engineering Plastics 01/01/ /01/ /06/ /06/ /01/ /06/2010 Consolidation 01/01/ /06/ /01/ /06/2010 TOTAL 01/01/ /06/2009 Revenue from third parties 144, ,700 56,022 49,015 17,133 14, , ,482 Revenue from other segments , (1,570) (685) 0 0 Changes in inventories of finished goods and work in progress (15) (483) 2,969 (1,059) 153 (260) 0 0 3,107 (1,802) Cost of purchased materials (69,812) (66,392) (31,331) (24,719) (6,002) (4,359) 1, (105,519) (94,836) Personnel expenses (44,818) (44,042) (13,747) (11,990) (7,326) (6,742) 0 0 (65,891) (62,774) Other expenses and income (19,299) (18,465) (8,478) (7,996) (2,498) (2,629) 0 0 (30,275) (29,090) EBITDA 10,814 9,487 6,501 3,605 1, (51) 19,090 13,980 Depreciation and amortisation (5,075) (4,968) (2,701) (1,928) (1,196) (1,161) 0 0 (8,972) (8,057) Segment result (EBIT) 5,739 4,519 3,800 1, (222) 56 (51) 10,118 5,923 Interest income (107) (70) Interest expense (1,550) (2,004) (1,223) (1,059) (316) (338) (2,982) (3,331) Result from equity investments 0 0 3,535 (11,404) ,535 (11,404) EBT 4,307 2,947 6,245 (10,648) 209 (553) 56 (51) 10,817 (8,305) Income taxes (1,514) (1,081) (1,254) (280) (349) 63 (14) 14 (3,131) (1,284) Net income (EAT) 2,793 1,866 4,991 (10,928) (140) (490) 42 (37) 7,686 (9,589) Profit or loss attributable to minority interest 0 (1) (41) (36) 8 (22) (8) 22 (41) (37) Profit or loss attributable to shareholders CENTROTEC Sustainable AG 2,793 1,867 5,032 (10,892) (148) (468) 50 (59) 7,727 (9,552) Q02 CENTROTEC Consolidated Segment Reporting Balance sheet key figures* Assets** 221, ,569 94,096 98,937 34,463 33,191 (7) (61) 350, ,636 Financial investments accounted for using the equity method ,234 23, ,234 23,699 Loans and investmens , , Entitlement to income tax rebates*** 4,434 4,596 Liabilities 76,422 69,162 22,257 28,374 5,371 4, , ,396 Financial liabilities 118, ,807 Income tax payable*** 21,485 22,769 Investments Total investments in property, plant, equipment and intangible assetss **** 3,362 3,249 3,228 3,715 1, ,118 7,727 * Previous year is related to December 31, 2009 ** Excl. financial investments accounted for using the equity method, loans and investments as well as entitlement to income tax rebates *** *** Including deferred tax **** Incl. goodwill and figures out of business combinations Consolidated Segment Reporting 21

22 %

23 Notes to the Consolidated Financial Statements Corporate information The CENTROTEC Group hereinafter also referred to as CENTROTEC is an international group focusing on the development, manufacturing and sale of system solutions that promote energy efficiency and use renewable energies in buildings. In addition to its existing business activities, CENTROTEC regards its business purpose as including the establishment and acquisition of new business areas and companies. The group parent, CENTROTEC Sustainable AG with registered office in Brilon, is listed in the Prime Standard in the SDAX index under the stock exchange codes CEV, WKN and ISIN DE of the Frankfurt Stock Exchange. It is entered on the Commercial Register of the Local Court of Arnsberg, Germany, under the number HRB The company's head office is located at Am Patbergschen Dorn 9, Brilon, Germany. CENTROTEC Sustainable AG is not part of a superordinate group, and is the ultimate parent company of the group presented in these interim financial statements. Further financial and corporate information on CENTROTEC is available from the above address, or on the homepage Q02 CENTROTEC Notes to the Consolidated Financial Statements Accounting standards and policies These Interim Financial Statements at June 30, 2010 have been prepared in accordance with the International Financial Reporting Standards (IFRS) for interim financial reporting issued by the International Accounting Standards Board (IASB), as applicable within the European Union (EU), taking account of Section 315a (1) of German Commercial Code. All IFRS standards, and in particular IAS 34 (Interim Financial Reporting), that were valid at the reporting date and the application of which was mandatory at that date, have been applied. The accounting policies explained in the Consolidated Financial Statements for 2009 have likewise been applied in this First-Half Report, except in the case of amendments to standards to be applied for the first time, and apply correspondingly. The First-Half Report should therefore be read in conjunction with the audited Consolidated Financial Statements at December 31, These Interim Financial Statements and the Interim Management Report have not been audited in accordance with Section 317 of German Commercial Code, nor have they been subjected to any scrutiny by an independent auditor. The first-half reporting date for all companies included in the Interim Consolidated Financial Statements is June 30, The financial statements have been prepared in euros; unless otherwise indicated, the amounts quoted refer to thousand euros (EUR thousand). For mathematical reasons, there may be rounding differences of +/- one unit. Notes to the Consolidated Financial Statements 23

24 The Management Board points out that the forward-looking statements made in the first-half financial statements are based on current expectations, assumptions and estimates. These statements are not to be interpreted as guarantees that the forecasts made will prove correct. Rather, future developments and occurrences are dependent on a wide range of factors that are subject to risks and uncertainties, the influencing factors of which may lie outside the sphere of influence of CENTROTEC. Actual developments may therefore depart from any implicit or explicit future-related statements made. Corporate and investment structure All direct and indirect subsidiaries of the parent company and group parent are included in the Consolidated Financial Statements of CENTROTEC. There have been only minor changes in consolidation since the annual financial statements at December 31, The sales subsidiary Brink Climate Systems Ireland Ltd., Naas, Ireland, was established in may 2010 and allocated to the Climate Systems segment. The company is fully consolidated. The business activities of CENTROTEC are classified according to the segments Climate Systems, Gas Flue Systems, and Medical Technology & Engineering Plastics. Detailed information on the CENTROSOLAR Group, which is accounted for by the equity method, is contained in its Interim Report at June 30, That report is available at Q02 CENTROTEC Notes to the Consolidated Financial Statements Notes to the interim financial statements - Recognition and measurement aspects Compared with the position at December 31, 2009, investments and loans originated by the enterprise include the amount of EUR 1 million for a company that was purchased in the first quarter. No IFRS 3 accounting takes place because only intangible assets in the form of patents, and no business operations, were acquired. The company is not operational so for reasons of economy and in view of its lesser significance for the net worth, financial position and financial performance of the CENTROTEC Group it is recognised at cost and reported under investments and loans originated by the enterprise instead of being included in consolidation. Detailed notes on the income statement, balance sheet and cash flow statement can be found in the section "Development in revenue and earnings" and the section "Net worth and financial position" of the Interim Management Report of the group. - Related party disclosures Within CENTROTEC, goods and services are purchased by a large number of business Notes to the Consolidated Financial Statements 24

25 partners. They are also supplied by or to persons or companies who can be classified as related parties. Transactions with these persons or companies are conducted at arm's length. Transactions with related parties were presented comprehensively in the Consolidated Financial Statements for All reciprocated services such as the use of infrastructure are billed on generally accepted market terms (arm's length principle). The same applies to service relationships between CENTROTEC and companies which are accounted for using the equity method. The CENTROSOLAR Group procured goods and services to the value of approx. EUR 4 million from CENTROTEC, and CENTROTEC procured goods and services to the value of around EUR 1.6 million from the CENTROSOLAR Group. - Reportable security holdings and options The totals of reportable shares and stock options at June 30, 2010 are shown in the following table. Management Board Shares Options* Dr Gert-Jan Huisman 78, ,023 Anton Hans 0 53,593 Alfred Gaffal 7, ,931 Dr Christoph Traxler 5, ,456 Supervisory Board Shares Options* Guido A Krass 2,400,000 0 Q02 CENTROTEC Notes to the Consolidated Financial Statements Dr Bernhard Heiss 45,550 0 Christian C Pochtler, MA 0 0 CENTROTEC Shares Options* Ordinary shares 16,749,970 0 Treasury stock 12,080 0 * The maximum possible number of options has been indicated. How many options can actually be exercised depends on the attainment of specified targets. - Contingent liabilities There has been no significant change in contingent liabilities since the balance sheet date of December 31, Notes to the Consolidated Financial Statements 25

26 - Dividend payments No dividend payment was made for the 2009 financial year. Significant events occurring after the first-half reporting date There were no other changes after the reporting date for the first half. Management Board and Supervisory Board - The members of the Management Board at the reporting date were: Dr Gert-Jan Huisman, Nijkerk, Netherlands, merchant, CEO Anton Hans, Apeldoorn, Netherlands, merchant, CFO Alfred Gaffal, Mainburg, Germany, merchant Dr Christoph Traxler, Fulda, Germany, physicist - The members of the Supervisory Board at the reporting date were: Guido A Krass, Zurich, Switzerland, entrepreneur (Chairman) Dr Bernhard Heiss, Munich, Germany, entrepreneur Christian C Pochtler, MA, Vienna, Austria, entrepreneur Q02 CENTROTEC Notes to the Consolidated Financial Statements The remuneration of the Supervisory Board was raised at the annual stockholders meeting on May 20, 2010 the first time since 2005 to a total amount of EUR 108 thousand (formerly EUR 54 thousand). Other particulars - Corporate Governance Code The Management Board and Supervisory Board of CENTROTEC Sustainable AG have, pursuant to Section 161 of German Stock Corporation Law, declared the extent to which they have complied with and will comply with the recommendations of the Government Commission on the German Corporate Governance Code. The regularly submitted declarations and explanations are permanently available on the website of CENTROTEC Sustainable AG. Brilon, August 12, 2010 Notes to the Consolidated Financial Statements 26

27 Responsibility Statement by the Management In accordance with German Securities Trading Law (WpHG) in conjunction with German Commercial Code (HGB), the Management Board declares: To the best of our knowledge, and in accordance with the applicable reporting principles for interim financial reporting, the interim consolidated financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the group, and the interim management report of the group includes a fair review of the development and performance of the business and the position of the group, together with a description of the principal opportunities and risks associated with the expected development of the group for the remaining months of the financial year. The Management Board Brilon, August 12, 2010 Q02 CENTROTEC Responsibility Statement by the Management Responsibility Statement by the Management 27

28 > 30 %

29 Financial Calendar 2010 August 12 November 11 November Publication of Quarterly Report Publication of Quarterly Report German Equity Forum, Frankfurt am Main Q02 CENTROTEC Financial Calendar Financial Calendar 29

30