Quarterly Report Q2/2007 of CENTROTEC Sustainable AG

Transcription

1 [ ] Quarterly Report Q2/2007 of CENTROTEC Sustainable AG

2 Report of the Management Board Highlights: organic growth of 8 %; EBITDA up on previous year Revenue increases in first half to more than EUR 182 million (previous year, reported: EUR 142 million including Solar Systems, excluding Wolf Group). Organic revenue growth of 8 % (as-if figures excluding Solar Systems, Wolf Group included below on as-if basis) Drastic downturn in German heating market restricted revenue and earnings progress in first half, but growth in other European sales market well into double figures EBITDA up 14 % to EUR 13.7 million (as if); EBIT has risen as scheduled in the as-if accounts from EUR 4.6 million to EUR 5.9 million (prior-year reported figure EUR 8.0 million including Solar Systems and excluding Wolf Group) Net earnings (EAT) of EUR 1.0 million (prioryear, reported: EUR 11.8 million including one-off effects of EUR 7.9 million from gains from transactions with minorities) Earnings per share (EPS) of EUR 0.06 after doubling of the number of shares (prior-year reported figure excluding Wolf Group: EUR 0.70, of which EUR 0.49 from one-off effects) The typical seasonal substantial boost in the CENTROTEC industry which occurs in the second half of the year, has been intensified by the integration of the Wolf Group Extremely weak heating market in Germany with year-on-year downturn of over 21 % restricts growth for the Gas Flue Systems and Climate Systems segments Organic growth in the Gas Flue Systems segment exceeds 17 % in the first half, thanks in particular to successes in the Netherlands, Belgium, Italy and France Climate Systems segment characterised by weak domestic market but strong growth in other European countries and improved market position. Wolf Group improves market shares in a shrinking German market and boosts exports considerably High organic growth of more than 17 % in the Medical Technology & Engineering Plastics area, with above-average rise in earnings in the first six months Outlook: revenue forecast increased; earnings forecasts confirmed Based on the first half, the annual revenue forecast for 2007 of EUR 390 to 400 million has been revised upwards slightly to EUR 400 to 410 million The export share of revenue will continue to rise The group-wide programme to promote cross-company collaboration, including internationally, will bolster the growth strategy. The forecast earnings figures, with EBITDA of at least EUR 44 million, EBIT of at least EUR 29 million and EPS of over EUR 1.00 (following the increase in capital stock) are confirmed The development of the Wolf Group, acquired in 2006, is progressing according to plan and will also make a considerable contribution towards improving the earnings of the CENTROTEC Group in 2007; in view of the seasonal nature of its business, however, markedly positive contributions to earnings are not expected before September The Gas Flue Systems and Climate Systems segments will likewise enjoy significantly higher rates of return in the second half The Medical Technology & Engineering Plastics segment is achieving double-digit organic growth coupled with a disproportionately sharp rise in earnings. The expansion of the area continues 1 [Interim Group Management Report]

3 Report of the Management Board 1. Consolidated entities and segment structure The CENTROTEC Group is a systems supplier of integrated energy-saving concepts. The structure and scope of consolidation of the CENTROTEC Group have changed considerably compared with the financial statements at December 31, 2006 because the companies belonging to CENTROSOLAR Group AG are now accounted for using the equity method (comprehensively consolidated until December 31, 2006). CENTROTEC's interest nevertheless remains unchanged at %. The "Solar Systems" segment is consequently no longer included in the segment report. As in the previous Quarterly Report, the business activities of CENTROTEC fall into the segments Gas Flue Systems & Other, Climate Systems, and Medical Technology & Engineering Plastics. 2. Developments in revenue and earnings CENTROTEC posted revenue of EUR million in the first six months of the year which represents an increase of about 8 %. EUR 91.6 million of this total were generated in the second quarter. The prior-year revenue figure of EUR million includes revenue from solar operations of EUR 67.0 million. On the other hand the figure does not include revenue for the Wolf Group, which was able to post revenue of EUR 98.0 million in the first half of The following table therefore shows both the reported and as-if revenues in order to illustrate the development for the reorganised segments clearly compared with the previous year. Revenue (in EUR million) Q2 / 2007 cum. Q2 / 2006 cum. As-if* Q2 / 2006 cum. Reported Year-on-year change As-if* Gas Flue Systems % Climate Systems % Med. Technology & EP % Solar Systems Total % * Reallocation of Advanced Composites; including Wolf Group; excluding CENTROSOLAR Group AG The rise in revenue by 8 % in the first half compared with the cumulative as-if figure for Q2/2006 is attributable exclusively to organic growth. The EBITDA earnings are EUR 13.7 million up on the previous year (as-if for previous year EUR 12.0 million). This earnings indicator improved appreciably in the Gas Flue Systems segment (from EUR 4.2 to 5.1 million) and virtually doubled in the Medical Technology & Engineering Plastics segment (from EUR 1.0 to 2.0 million). Only the Climate Systems segment reveals a slight downturn of EUR 0.2 million to EUR 6.6 million. This figure is attributable to a high degree to the weak performance of the German heating market which, according to BDH calculations, experienced a downturn of more than 21 % in the first half of the year (without solar thermal systems and heating pumps). Even substantial revenue growth in its export business was unable to balance the earning 2 [Interim Group Management Report]

4 Report of the Management Board figures. The results of all CENTROTEC companies operating in the domestic market reflected this trend. The portion of revenues of the domestic market particularly because of the Wolf Group still accounts for 45 % of the latter company's overall sales. In this particular instance of the negative market development the companies in the Gas Flue Systems and Climate Systems segments were able to improve their market shares domesticly. reported: EUR 11.8 million, of which EUR 7.9 million from gains from transactions with minorities). The market operators cite a wide variety of reasons: the reduction in inventories within the trade, investment in heating systems brought forward to 2006 in anticipation of the VAT rate increase in Germany, the repercussions of the abolition of the owner-occupied housing subsidy, the delay in introducing the energy pass, uncertainty as to what technology should best be used for the medium and long term, and price developments in primary energy sources such as oil, gas, pellets and or electricity prices. Especially the wide discussion of advantages and disadvantages of various technologies seems to make the buyer more reluctant at present. EBIT of EUR 5.9 million is up EUR 1.3 million on the as-if figure for the previous year. The 2007 EBIT figure includes IFRS 3 depreciation and amortisation of EUR 1.0 million on the assets to be reported in the context of purchase price allocation (PPA) for the Wolf Group. Earnings before taxes (EBT) are reported as EUR 1.5 million. This figure has been diminished by the much higher result of EUR 4.3 million (previous year EUR 1.8 million), which stems substantially from the costs of financing the Wolf acquisition. Earnings after tax (EAT) at June 30, 2007 therefore amounted to EUR 1.0 million (previous year, With an average number of 16.4 million shares, earnings per share (EPS) were EUR 0.06 (previous year based on present capital stock: EUR 0.70, of which EUR 0.49 attributable to gains from transactions with minorities). 3. Development of the segments 3.1 Gas Flue Systems The revenue of the Gas Flue Systems segment rose by 18 % since the start of the year to EUR 44.7 million (previous year EUR 38.0 million). Of this total, the Advanced Composites area accounted for EUR 3.0 million (previous year EUR 1.6 million). The organic growth of Gas Flue activities reached 15 %. Despite the higher cost of materials (materials ratio 49.8 %; previous year 48.6 %) and the increase in personnel expenses (+ 11 %), it was possible to increase the return on earnings in the first half of the year. 3 [Interim Group Management Report]

5 Report of the Management Board Key figures Gas Flue Systems Q2 / 07 Q2 / 06* (in EUR '000) Revenue from third parties 22,182 19,903 Revenue from other segments Change in inventories of finished 249 (371) goods and work in progress Cost of materials (11,537) (9,628) Employee benefit costs (4,830) (4,565) Other income and expense (3,959) (3,882) EBITDA 2,228 2,018 Depreciation and amortisation (918) (793) EBIT 1,310 1,225 * Incl. Advanced Composites These positive developments in the first two quarters of the year contrasted with the extreme weakness of the German heating market across the entire industry. Due to the strong decrease in volume and revenue in the domestic market, the EBIT margins were down disproportionately given the fact that the fixed costs couldn t be reduced quickly enough to compensate. The segment totalled in EBIT EUR 3.4 million (previous year EUR 2.7 million) or an EBIT-margin of 7.5 % (previous year 7.0 %). With the exception of Germany and the UK, significant revenue growth was achieved in all other European countries. In the Netherlands, for instance, revenue rose by more than 15 % in the first six months, attributable among other factors to the clinching with wholesale companies. In addition major projects due to the contacts with housing developers generated new market potentials. In Belgium (growth in excess of 15 %) we are reaping the rewards of the investment in the new distribution centre, which can also handle projects. Thanks to an expanded sales network, market penetration both at trade level and among OEMs has been improved significantly in France, likewise yielding a double-digit growth rate. Ubbink France will in addition be selling CENTROSOLAR's integrated photovoltaic systems there in the future. The improved level of service and special product developments helped to boost revenue in Italy by almost 70 percent compared with the previous year. Sales also rose significantly in the markets in which the company is active in Eastern Europe, such as the Czech Republic, Slovakia, Romania, Hungary and the Baltic states. European expansion in the Gas Flue Systems segment continues both at the sales end and at the procurement and production end, and the network of functions in Europe is being intensified. As the procurement costs for certain materials and boughtin parts have risen further and are significantly diminishing the gross profit compared with the previous year, further measures to coordinate the procurement areas more intensively have been implemented. 4 [Interim Group Management Report]

6 Report of the Management Board At the start of this year the Advanced Composites area was assigned in Other to the Gas Flue Systems segment. This area focuses on the production of fibre composite parts and components for the automotive supply industry. As well as the existing product range, new developments in fibre composites for various sales markets are making headway. Revenue in this area for the first half amounted to EUR 3.0 million (previous year EUR 1.6 million). This also prompted a marked improvement in earnings. Overall, the Gas Flue Systems segment is expected to enjoy strong growth in the second half of the year, with the result that the forecast revenue for 2007 of EUR 88 to 91 million can be confirmed. 3.2 Climate Systems Total revenue for the Climate Systems segment in the first six months rose to EUR million (previous year, reported: EUR 22.4 million). As-if figures that include the revenues of the Wolf Group indicate a prior-year total of EUR million. The segment's organic growth is therefore still in excess of 3 % despite the weak domestic heating market. The largest business area in this segment is the Wolf Group, which generated revenue of almost EUR 98 million in the first half of the year. In view of the weak heating market in Germany, the domestic revenue of the Wolf Group for heating systems was down on the prior-year figures. However, the market share was increased both in Germany and internationally. The downturn in the domestic heating market in the first six months for free-standing and wall-mounted appliances, compared with the previous year, was around 25 % according to the BDH industry association. While sales of conventional oil and gas heating systems continued to slump as in the previous years (by more than 30 %), the trend also started to affect condensing boiler systems and heating systems using alternative energies in the second quarter. For instance, the domestic market for biomass boilers shrank to one-third of the previous year's volume. 5 [Interim Group Management Report]

7 Report of the Management Board Key figures Climate Systems Q2 / 2007 Q2 / 2006 Q2 / 2006 (in EUR '000) As-if * Reported Revenue from third parties 61,226 61,098 12,182 Revenue from other segments Change in inventories of finished goods and work in 1, (172) progress Cost of materials (32,650) (30,602) (5,417) Employee benefit costs (19,828) (19,132) (3,138) Other income and expense (6,554) (7,753) (1,410) EBITDA 3,398 3,905 2,087 Depreciation and amortisation (2,601) (2,569) (275) EBIT 797 1,336 1,812 * Incl. Wolf Group However, substantial rises in revenue of more than 30 % were posted for exports and by the Wolf Group's international companies. Revenue in Eastern European countries, and in particular Russia, rose particularly sharply. The market position in the Climate Control/Ventilation product group was consolidated and improved, with domestic demand increasing. The Wolf product group Solar Thermal likewise generated higher revenue. The launch of the new product line KG Top is expected to strengthen the market position yet further. These new generation of air conditioning systems show better performance figures, a better cost price relation and represent a more future orientated product of higher quality than comparable models. Hard pushed was the new development of the "Wolf Solar Heating", which uses intelligent control technology to combine the renewable energy source of the sun with in a single, highly efficient heating system. Integration and collaboration between the Wolf Group and the Ventilation area progressed highly positively. New systems for controlled domestic ventilation from Ned Air and Wolf were jointly optimised and already exhibited at the ISH in March. These "plug & play systems" offer high value added for the customer thanks to their innovative technology and considerable ease of installation. The systems are a great advantage for the end customer, too, as they take less time to install. The Wolf group was able to successfully enter the german market with its newly developed products for controlled dwelling ventilation. The Brink Group further consolidated and strengthened its market position in the Netherlands. The new systems for controlled domestic ventilation with heat recovery developed by Brink were brought onto the market and have got off to a good start. As well as the appliance itself, other components required for its installation are offered as a system set, which was positively received by the market. They are being sold to wholesalers that will receive the necessary support for fitters at Wolf's sales centres, in the 6 [Interim Group Management Report]

8 Report of the Management Board form of computer-aided configuration systems and installation aids. This system has met with a very positive reception. been commissioned. Various other projects are being negotiated. The repositioning of Innosource and its integration into the Staphorst location have been successfully completed. A double-digit EBIT return now supplies proof of how successfully Innosource's business operations have been restructured. The restructuring of the sales organisation under the umbrella of the Brink Group has likewise now been completed. In response to growing demand for energy-saving systems for residential buildings, CENTROTEC is pursuing a further important sales channel in the Netherlands. The target market is municipalities and housing associations that are seeking to achieve their energy-saving targets through largescale systems for rental properties or residential complexes and districts. CENTROTEC is the first systems supplier in this sector to be in a position to supply integrated climate control, heating and hot water concepts and has specialised in such business through the company Wolf EnergieSpaarSystemen B.V. As a full-service provider, the company plans integrated systems, supplies them completely with all the necessary components and can also step into the role of system operator. It is currently also conducting negotiations with potential partners on this topic. A major project for 27 residential units has already The result for the Climate Systems segment in the second quarter, with EBIT of EUR 1.3 million (previous year As-if: EUR 1,5 million) are relatively low, because they are strongly affected by the domestic market development. This also caused a small loss in business for the german Wolf company. The Wolf group as in every year was not able to generate positve results in the first half of year in the domestic business because of its dependence on a highly seasonal market. Therefore the first months of the year are scarcely representative of the financial year as a whole. The low absolute values lead to high relative differences in percentage. We believe that demand for integrated overall systems for heating, ventilation and cooling, with or without heat recovery, for residential and commercial buildings will continue to rise sharply. Saving energy remains "the" big issue. Conserving energy was a key topic not only at the G8 Summit this June. New ordinances such as the energy pass that will become mandatory in Germany from 2008 are also helping to generate fresh demand for CENTROTEC energy-saving systems. 7 [Interim Group Management Report]

9 Report of the Management Board Key figures for MT & EP Q2 / 2007 Q2 / 2006* (in EUR '000) Revenue from third parties 8,229 7,156 Revenue from other segments Change in inventories of finished goods and work in progress Cost of materials (3,132) (2,680) Employee benefit costs (3,256) (3,255) Other income and expense (1,321) (1,226) EBITDA Depreciation and amortisation (386) (301) EBIT * Excl. Advanced Composites The rise in revenue planned for the segment in 2007 has been revised upwards slightly to between EUR 280 and 285 million. 3.3 Medical Technology & Engineering Plastics The Medical Technology & Engineering Plastics segment has been identical to the activities of medimondi AG since the start of this year. EBITDA was doubled and EBIT actually tripled in the first half of the year, thanks to very steep, exclusively organic revenue growth of more than 17 % to EUR 17.2 million. All the three major companies in the segment (Möller Medical, Centroplast and Rolf Schmidt) are enjoying strong double-digit rates of growth with earnings rising by a disproportionately high rate. Compared with the prior-year period, the Advanced Composites area is not included in the segment. The Medical Technology area enjoyed the highest revenue growth in the segment, substantially thanks to the self-developed products that are sold in the market for neurosurgery, blood transfusion and aesthetic medicine products via the company's own expanded sales channels. As well as the neurosurgical products that have already been successfully launched, intensive development work continues on further medical technology systems. The experience that has now been acquired in products of this type is now being used to refine the products and improve the sales organisation. OEM customers have likewise come to appreciate the medical knowledge and user expertise of Möller Medical in the development of new products. 8 [Interim Group Management Report]

10 Report of the Management Board earnings target for the year of a double-digit EBITDA return will be achieved. medimondi AG continues to be systematically developed. We continue to look for scope for expanding the product and business portfolio, with the aim of developing a strong group of companies and then going public with it. 4. Development of affiliated companies Sales will continue to be expanded and the number of medical technology trading partners outside Germany increased. For example, sales of neurosurgical products for spinal implants ("Scient'x") were extended to cover all of Germany in recent months. The Engineering Plastics area likewise enjoyed substantial, profitable growth. Optimised production structures and processes have led to improved productivity and flexibility. New production facilities are also paving the way for the production of higher-quality materials. New materials e.g. exhibiting specific thermal and chemical resistance are also being constantly developed. We continue to specialise in market niches by adjusting the product range accordingly. In this area, too, further organic growth is set to produce a marked rise in revenue. Thanks to the positive development in revenue in the Medical Technology and Engineering Plastics areas, as matters stand the revenue target for the segment of more than EUR 34 million (excluding Advanced Composites) will be achieved. The EBIT margin, which is already appreciably better than in the previous year, is set to improve further, with the result that that as matters stand the The largest non-consolidated affiliated company of CENTROTEC is CENTROSOLAR Group AG. Revenue from solar business rose by 37 % year on year in the second quarter of 2007, to EUR 50.3 million, and is now cumulatively EUR 91.8 million for the year to date. The export ratio has risen to 31 % thanks to the very good sales performance in Southern European countries, above all in Spain. CENTROSOLAR's segments (Solar Integrated Systems and Solar Key Components) are achieving high, profitable growth. The Solar Integrated Systems segment is accessing fresh, additional potential for growth by developing the "solar roof projects business area, in which it independently develops projects for on-roof systems. Together with Pohlen Bedachungen, CENTROSOLAR is supplying solar energy systems for DCM Solar Fonds 1. This investment fund alone is expected to purchase systems from the CENTROSOLAR Group AG worth approx. EUR 20 million in the second half of the year, rising to an impressive EUR 50 million in The glass finishing area (patented nano-coating of glasses for solar modules) contributed towards the disproportionately high increase in gross profit and EBITDA (+ 67 % to EUR 6.0 million). In the reported 9 [Interim Group Management Report]

11 Report of the Management Board figures, the positive operating result is diminished by the non-cash IFRS 3 depreciation and amortisation of EUR 4.1 million, leaving an EBIT of EUR 1.1 million. Taxes and interest payments result in EAT of EUR -0.4 million, which is contained pro rata in the CENTROTEC result from investments recognised using the equity method. 5. Net worth, financial position and financial performance The marked contraction of the balance sheet and the change in the balance sheet structure compared with December 31, 2006 are attributable primarily to the fact that CENTROSOLAR Group AG is recognised using the equity method, with no effect on earnings, in the current financial year, whereas it accounted for some EUR 158 million of the balance sheet total in the 2006 annual financial statements. The effects were already described in detail in the first quarterly report of this year. Higher earnings margins are expected in subsequent quarters thanks to better capacity utilisation. Particularly outside Germany, sales structures that will not generate revenue until the next few months have been established. In particular, CENTROSOLAR is aiming to increase its export ratio from 31 % (first half of 2007) to over 50 % at the end of the year. Bond Laminates (CENTROTEC interest %) also developed very successfully in the first half of the year. It will better the prior-year earnings and continue its course of growth. The balance sheet total showed an increase of around 1 % at June 30, 2007 to EUR million (March 31, 2007: EUR million). This rise is substantially attributable to the higher current assets. Equity likewise rose slightly by EUR 1.2 million to EUR 93.3 million in the second quarter, with the equity structure changing as a result of the issue of bonus shares from the retained earnings. The equity ratio was 26.0 % at the firsthalf reporting date. Current assets were up EUR 4.1 million on the previous quarter to EUR million (EUR million at start of year, as-if). Whereas inventories edged up by around EUR 1 million to EUR 56.9 million, other current assets and cash and cash equivalents together rose by almost EUR 5 million, with receivables remaining virtually constant. The group had ample cash and cash equivalents as well as unutilised credit lines at the end of the quarter. The net working capital (current assets minus cash and cash equivalents minus current, non- 10 [Interim Group Management Report]

12 Report of the Management Board interest-bearing financial liabilities) amounted to EUR 64.3 million at the end of the first half and was therefore EUR 1.2 million up on the figure for the previous quarter (March 31, 2007: EUR 63.1 million). This is because the assets included rose slightly due to seasonal factors, whereas the equity and liabilities fell by around EUR 0.5 million. The total of current and non-current financial liabilities is EUR million and therefore 41.6 % of the balance sheet total. EUR 11.5 million of the amounts owed to bank was repaid in the first half and new loans totalling EUR 4.3 million raised. Cash flow I (EAT plus depreciation and amortisation), taking full account of the Wolf Group, is EUR 8.7 million at the six-month mark (previous year EUR 16.1 million including result from transactions with minorities of EUR 7.9 million, or EUR 4.5 million in the first quarter of 2007). Compared with the previous year and previous quarter, the positive effect on the cash flow from operating activities as a result of the higher depreciation and amortisation outweighs the negative effect of the higher interest payments, with the result that the overall cash flow rose to EUR 2.5 million (March 31, 2007: EUR 0.4 million). The cash flow from investing activities reached EUR 9.2 million at the end of the first half (previous year EUR 11.1 million; in this instance it was dominated by acquisition-related effects and capital measures within CENTROSOLAR). 6. Capital expenditure The total volume of all capital expenditure in the first six months was EUR 5.7 million. Spending on property, plant and equipment up to the reporting date amounted to EUR 4.4 million, and on intangible assets to EUR 1.3 million. A further EUR 0.8 million is attributable to loans originated by the enterprise and assets available for sale. The breakdown by segment was as follows: Capital expenditure (in EUR million) Cum. Q Cum. Q2 2006* Gas Flue Systems Climate Systems Med. Techn & Eng. Plast Solar Systems Total * Excluding capital expenditure of EUR 23.7 million from acquisitions Buildings and machinery accounted for a large portion of capital expenditure on property, plant and equipment during the first half of The largest individual investment projects were the acquisition of a building adjacent to the Fulda plant, extensions to the production facilities for 11 [Interim Group Management Report]

13 Report of the Management Board gas flue pipes at Brilon and technical extensions to the machine capacity and logistics at the Doesburg and Staphorst plants. Replacement investment at the Mainburg plant was in addition necessary. In addition to the investment projects mentioned, minor capital expenditure at the operating plants focused on the maintenance and extension of plant and machinery. The higher employee total compared with the previous year meant that personnel expenses were also well up, totalling EUR 55.1 million for the first six months (previous year EUR 26.5 million). The personnel expenses ratio thus rose to 30.2 % as a result of the appreciably higher value added (previous year 18.6 %), but decreased compared to the as-if calculation with 31,6 % at June 30, Development in employees The number of employees in the first half rose sharply as a result of the integration of the Wolf Group to 2,475 FTE (full time equivalents; previous year 1,331 FTE). In the current figures, the Wolf Group alone accounts for 1,417 employees (FTE), whereas the prior-year figures still included 313 FTE from the Solar Systems segment, which is no longer included in consolidation in At the reporting date, the Gas Flue Systems segment employed 453 employees, the Medical Technology segment 306 and the "old" Climate Systems segment (operations aside from Wolf) a further 299 employees. The proportion of employees based in Germany (as an FTE total) was up 53 % in the previous year to 73 % at the reporting date (in particular as a result of Wolf). The proportion of Dutch employees fell correspondingly to less than 20 %, compared with 35 % in the previous year. The employee structure has likewise shifted compared with the previous year; the proportion of industrial employees at June 30, 2007 was 86 % (previous year 61 %). 8. Other particulars CENTROTEC Sustainable AG is listed on the Regulated Market (Prime Standard) of Deutsche Börse. It is listed in the GEX segment under the stock exchange code CEV, securities identification number and ISIN DE The issued capital rose to EUR 16,424,164 at June 30, 2007 as a result of the exercise of stock options and in particular through the issue of bonus shares, compared with EUR 8,203,894 at the start of the year, and is divided into 16,424,164 bearer ordinary shares with no par value, each representing EUR 1 of capital stock. The Shareholders' Meeting authorised the Management Board to increase the company's capital stock by up to EUR 8,212,082 (approved 12 [Interim Group Management Report]

14 Report of the Management Board capital) by May 23, 2012, with the approval of the Supervisory Board, through the issue of new no par value bearer shares on one or more occasions in return for cash or non-cash contributions. The capital stock has been increased conditionally by EUR 445,380 ("conditional capital I"). The capital stock has furthermore been increased conditionally by EUR 548,814 ("conditional capital II"). There have been no other significant changes compared with the position presented in the annual financial statements for Share price developments Share price development, January to early August 2007 Source: The CENTROTEC share price rose quite markedly in the first few months of the year, and more steadily until the start of June. It reached a new all-time high of EUR (adjusted to reflect the new capital stock) at the Frankfurt Stock Exchange on June 4. The share price then closed at EUR on June 30, From mid-july on, the share price fell back again along with the significantly increased volatility of stock markets as a whole. The market capitalisation at June 30, 2007 was approx. EUR 285 million. 10. Opportunities and risks There have been no fundamental changes in the assessment of opportunities and risks in the core areas of business compared with the position outlined in the last Annual Report. Cyclical and one-off influences, such as those experienced in the German heating market in the first half of the year, and changes to the customer and competitor structure continue to be the dominant risks. Particularly the uncertainty as to how the German heating market will develop in the second half of the year renders it difficult to make an exact forecast for the end of the financial year, because non-recurring effects (e.g. VAT rate increase, abolition of the owner-occupied housing subsidy, rising interest rates) render reference figures from the past less meaningful. There are no other new or more prominent risks. The highly positive development in revenue in many countries, the current level of orders, the projects that are in development or already being 13 [Interim Group Management Report]

15 Report of the Management Board implemented and the expectations of a marked recovery in the German heating market continue to give us cause for optimism. 11. Expectations for 2007 With the exception of the German heating market, business progress in the first half of 2007 was as expected. The Management Board of CENTROTEC Sustainable AG therefore rates the business progress of the group as overall positive, because generally high demand for the its energysaving products and services is also expected over the coming months and years. The developments in the German heating market are moreover viewed with confidence. CENTROTEC expects that the situation there will stabilise, with a catch-up effect being manifested to some degree over the next few months. months, which are habitually strong thanks to seasonal factors. Reduced tax burdens in the core countries will facilitate attainment of the target earnings after tax. The forecast earnings figures, with EBITDA of at least EUR 44 million, EBIT of at least EUR 29 million and EPS of over EUR 1.00 (following the doubling of the capital stock) are confirmed. CENTROTEC plans to invest furtheron in expanding its core business to pave the way for further sustained growth. It will place the emphasis on the further development of existing products, the integration of single products, the development of new, innovative energy-saving concepts and the development and expansion of existing production capacities. On top of this, CENTROTEC will continue to invest specifically in building up existing markets and accessing new ones, in line with its strategy of expansion. The core objective of CENTROTEC in the 2007 financial year remains to achieve organic growth in its existing business areas and to improve earnings. The prospects of the CENTROTEC Group for achieving profitable growth in future years, too, remain very bright. The CENTROTEC Group and its three segments Gas Flue Systems, Climate Systems and Medical Technology & Engineering Plastics will be focusing even more closely on energy-saving concepts in the areas of ventilation, heating, climate control and solar thermal technology. Independently of this, cooperation with the corporate entities of the CENTROSOLAR Group will be intensified. Brilon, August 2007 The Management Board With revenue that is currently expected to reach a corridor of EUR 400 to 410 million, higher rates of return will moreover be achieved in the next few 14 [Interim Group Management Report]

16 KEY FIGURES GROUP in thousand EUR Changes Total revenue ,1% Gas Flue Systems ,6% Climate Systems ,7% Medical Technology & Engineering Plastics ,3% Solar Systems ,0% Earnings EBITDA ,0% EBIT ,3% EBIT Yield (in %) 3,2% 5,6% EBT ,3% EAT ,7% EPS (in EUR; basic) 0,06 0,70-91,5% Balance Structure*** Balance sheet total ,6% Shareholders' equity ,3% Equity ratio (in %) 26,0 30,3 Property, plant and equipment ,0% Intangible Assets ,2% Goodwill ,7% Net financial liabilities ,4% Net Working Capital ,4% Cash Flow Statement Cash flow I (EAT & depreciation/amortisation) ,6% Cash flow from operating activities (14.348) 100,0% Cash flow from investing activities (9.191) (11.081) -17,1% Employees Total (in FTE) ,9% Shares* Number of shares** ,6% Share price ,32 12,58 Year-high 18,36 17,85 Year-low 12,32 12,75 Share price ,55 14,76 * Quotation in EUR converted with factor 2 due to the issue of bonus shares ** Weighted average shares outstanding (basic; in thousand) *** Previous period is related to December,

17 CONSOLIDATED BALANCE SHEET in thousand EUR ASSETS Non current assets Current assets Goodwill Intangible assets Property, plant and equipment Financial investments accounted for using the equtiy method Loans and financial assets available for sale Other assets Deferred tax Inventories Trade account receivables Income tax receivable Cash and cash equivalents Other assets ASSETS

18 CONSOLIDATED BALANCE SHEET in thousand EUR EQUITY AND LIABILITIES Shareholders` equity Share capital Additional paid-in-capital Treasury stock (112) (112) Stock option reserve Deferred tax reserve Currency translation differences in shareholders' equity and fair value adjustment of interest rate derivatives Retained earnings Profit attributable to share capital holders of the CENTROTEC Sustainable AG Minority interest, present within equity Non current liabilities Pension accruals Other accruals Financial liabilities Other liabilities Deferred tax Current liabilities Other accruals Income tax payable Financial liabilities Trade accounts payable Other liabilities Equity and Liabilities

19 CONSOLIDATED INCOME STATEMENT from January 1 to June 30, 2007 in thousand EUR Revenues Other operating income Changes in inventories of finished goods and work in progress Production for own fixed assets capitalized Cost of purchased materials and services (89.929) (94.536) Personnel expenses (55.082) (26.464) Depreciation and amortisation (7.759) (4.301) Other operating expenses (30.033) (20.252) Operating income (EBIT) Interest income and expenses (4.269) (1.804) Profit from transactions with minorities Result of investments accounted for using the equity method (118) 32 Result before income taxes (EBT) Income tax (538) (2.342) Net income (EAT) Profit or loss attributable to minority interest (22) 494 Profit attributable to share capital holders of CENTROTEC Sustainable AG EPS (Earnings per share in EUR)* Earnings per share (basic) 0,06 0,70 Earnings per share (diluted) 0,06 0,68 Weighted average shares outstanding (in units; basic) Weighted average shares outstanding (in units; diluted) * Previous year converted with factor 2 due to the issue of bonus shares 18

20 CONSOLIDATED INCOME STATEMENT from April 1 to June 30, 2007 in thousand EUR Revenues Other operating income Changes in inventories of finished goods and work in progress Production for own fixed assets capitalized Cost of purchased materials and services (46.959) (53.886) Personnel expenses (27.914) (13.721) Depreciation and amortisation (3.905) (2.365) Other operating expenses (14.813) (10.195) Operating income (EBIT) Interest income and expenses (2.233) (1.090) Profit from transactions with minorities Result of investments accounted for using the equity method Result before income taxes (EBT) Income tax (176) (1.338) Net income (EAT) Profit or loss attributable to minority interest (43) 321 Profit attributable to share capital holders of CENTROTEC Sustainable AG

21 CONSOLIDATED CASH FLOW STATEMENT in thousand EUR Net income before taxes and interest (EBIT) Depreciation Gain/loss on disposal of non-current assets (156) (153) Other non-cash items (969) 902 Increase/decrease in accruals (436) 66 Increase/decrease in inventories, trade receivables and other assets that cannot be allocated to investing or financing activities (7.676) (27.470) Increase/decrease in trade payables and other liabilities that cannot be allocated to investing or financing activities Interest paid (4.156) (1.230) Income taxes paid (154) (2.014) Cash Flow from operating activities (14.348) Acquisition of share in participations - net of cash acquired and outstanding earn outs to be paid (383) (9.958) Cash received as a result of Transactions with Minorities Change in cash flow as a result of change full consolidation into At Equity (2.583) 0 Purchase of property, plant and equipment/ intangible assets/ investments/ financial assets/ loans receivable (6.538) (6.697) Proceeds from disposal of property, plant and equipment/ intangible assets/ investments/ financial assets/ loans receivable Cash Flow from investing activities (9.191) (11.081) Proceeds from issuance of shares Proceeds from borrowings; repayment of borrowings (6.351) Cash Flow from financing activities (6.275) Change in liquid funds (13.005) (17.761) Liquid funds at the beginning of the financial year (1.249) Liquid funds at the end of the period (14.254) (12.205) 20

22 STATEMENT OF MOVEMENTS IN EQUITY in thousand EUR Share capital Additional paid-in Treasury option Stock capital stock reserve Deferred tax reserve Revaluation reserves Retained Profit earnings and profit carryforward attributable to share capital holders of CENTROTEC Minority interest presented within equity Consolidated equity December 31, (112) (375) Transfer to revenue reserves (17.958) 0 Change from the exercise of options Share option plan (465) 44 Changes due to acquisition activities Fair Value adjustment interest rate derivatives Currency translation differences Profit attributable to sharholders of CENTROTEC Sustainable AG Profit or loss attributable to minority interest December 31, (112) Transfer to revenue reserves (14.316) 0 Changes due to the issue of bonus shares (8.212) 0 Change from the exercise of options Share option plan (85) 254 Fair Value adjustment interest rate derivatives Change in status of CENTROSOLAR GROUP AG 253 (71) (199) (370) (54.763) (55.150) Profit attributable to sharholders of CENTROTEC Sustainable AG Profit or loss attributable to minority interest (22) (22) June 30, (112)

23 SEGMENT REPORT from January 1 to June 30, 2007 in thousand EUR Segment Structure Gas Flue Systems & Other Climate Systems Medical Technology & Engineering Plastics Solar Systems Consolidation Statement of Earnings Revenue from third parties Revenue from other segments (881) (1.389) 0 0 Chang. in invent. of finished goods and work in progress (29) Cost of purchased materials (23.355) (18.932) (60.703) (10.003) (6.752) (5.298) 0 (61.692) (89.929) (94.536) Employee benefits costs (9.884) (8.899) (38.717) (6.142) (6.481) (6.420) 0 (5.003) 0 0 (55.082) (26.464) Depreciation and amortisation (1.787) (1.546) (5.226) (544) (746) (603) 0 (1.608) 0 0 (7.759) (4.301) Other income and expenses (7.677) (7.269) (15.065) (2.985) (2.708) (2.377) 0 (4.378) 0 0 (25.450) (17.009) Segment result (EBIT) Interest result (4.269) (1.804) Profit from transactions with minorities Result of investments accounted for using the equity method (118) (118) 32 EBT Income tax (538) (2.342) Net income (EAT) Profit or loss attributable to minority interest (22) 494 Profit attributable to shareholders CENTROTEC Sustainable AG Balance Sheet Key Figures Assets (15.933) (14.415) Investments accounted for using the equity method Loans and financial assets available for sale Entitlement to income tax rebates** Total liabilities (16.157) (14.415) Financial liabilities Income tax payable** Investments Total investments in property, plant, equipment and intangible assets Total * Previous year is related to December, ** Including deferred tax *** Incl. Goodwill and values out of business combinations; year to date 22

24 Q2 CENTROTEC First-Half Report at June 30, 2007 Explanatory Notes 1. The CENTROTEC Group mandatory at that date, have been applied. The accounting policies explained in the Consolidated The CENTROTEC Group is an international group, the focus of whose activities is on the development, production and sale of energy-saving products. 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, Brilon, is listed in the GEX trading segment under the stock exchange codes CEV and WKN 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 quarterly accounts. Further financial and corporate information on CENTROTEC is available from the above address, or on the homepage 2. Accounting standards and policies This First-Half Report at June 30, 2007 has 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 and IAS standards as well as IFRIC and SIC interpretations, and in particular IAS 34 (Interim Financial Reporting), that were valid at the reporting date and the application of which was Financial Statements for 2006 have likewise been applied in this Quarterly Report, unless otherwise indicated, and apply correspondingly. These interim financial statements have not been subjected to any scrutiny by an auditor. The first-half reporting date for all companies included in the 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). Responsibility Statement by the Management Pursuant to 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 also points out, however, that the forward-looking statements made in the Quarterly Report are based on current expectations, assumptions and estimates. These 23 [Notes]

25 Q2 CENTROTEC First-Half Report at June 30, 2007 Explanatory Notes statements are not to be interpreted as guarantees that the forecasts made have proved 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 lie outside the sphere of influence of the CENTROTEC Group. Actual developments may therefore depart from any implicit or explicit forward-looking statements made. Changing tax legislation may moreover affect individual items (in particular deferred tax) and therefore the net earnings. 3. Changes in the corporate and investment structure in the first half A total of 40 companies were comprehensively consolidated at June 30, The consolidated companies changed significantly from the position in the 2006 accounts as a result of the recognition of the CENTROSOLAR Group using the equity method from January 1, 2007, because the group coming under the Solar Systems segment has now been accounted for using the equity method since the start of the year. The Consolidated Financial Statements of CENTROTEC include all direct and indirect subsidiaries of the parent company as well as the group parent pursuant to IAS 27, and also joint ventures pursuant to IAS 31. The business activities of CENTROTEC are allocated to the segments Gas Flue Systems & Other, Climate Systems, and Medical Technology & Engineering Plastics. As well as the existing companies, the Gas Flue Systems & Other segment includes the corporate entities of the Advanced Composites sub-division that had still been allocated to the Medical Technology & Engineering Plastics segment until the end of [Notes] The Medical Technology & Engineering Plastics segment exclusively comprises companies that are comprehensively consolidated as part of medimondi AG. In France, Ned Air France S.A.S. was filed as a fully owned subsidiary of Ned Air Holding for entry on the company register. The company Torque Solutions & Electronics B.V., Sassenheim (Netherlands), was renamed Wolf EnergieSpaarSystemen B.V. There were the following changes in the CENTROSOLAR Group in the second quarter: CENTROSOLAR AG was renamed CENTRO- SOLAR Group AG; Solara AG including its subsidiary Solara Sonnenstromfabrik Wismar GmbH, Biohaus PV Handels GmbH and Solarstocc AG are being merged into one company: detailed information on CENTROSOLAR Group AG is provided in the Quarterly Report available at 4. Notes to the financial statements for the first half Recognition and measurement aspects CENTROSOLAR Group AG has been recognised as an investment using the equity method since January 1, 2007 (still comprehensively consolidated in 2006). The as-if figures for the second quarter of 2006 that are provided for greater ease of comparison (excluding Solar Systems segment, including Wolf Group) would have been obtained by the application of the key recognition and measurement rules and from the assumed distribution of earnings effects from the purchase price allocation correspondingly over the quarter.