First Sensor AG

Interim / Quarterly Report • Aug 26, 2010

SILICON SENSOR INTERNATIONAL AG

INTERIM REPORT

for the first six months of the 2010 business year (unaudited)

2010

QUARTERLY STATEMENT II/2010 FOR THE SILICON SENSOR GROUP

Ratios Jan. 1 – June 30th, 2010 (first six months of 2010)

	01/01/2010 -	1/01/2009 -	Change	Change
	6/30/2010	6/30/2009	in	in
	€ 1,000	€ 1,000	€ 1,000	%
Sales revenue	19,312	13,119	6,193	47
Backlog of orders	21,350	12,162	9,188	76
EBITDA	2,688	933	1,755	188
EBIT	1,083	-821	1,904	232
Mid-year surplus/loss	689	-1,000	1,689	169
Mid-year surplus/loss
€/individual share certificate	0.10	-0.23	0.33	145
Number of shares (weighted)	6,625,899	4,417,266	2,208,633	50
R&D expenditure	1,582	1,107	475	43
Headcount (6/30/2010)	325	300	25	8

Ratios Apr. 1 – June 30, 2010 (second quarter of 2010)

	4/1/2010 -	4/1/2009 -	Change	Change
	6/30/2010	6/30/2009	in	in
	€ 1,000	€ 1,000	€ 1,000	%
Sales revenue	10,415	6,180	4,235	69
Backlog of orders	21,350	12,162	9,188	76
EBITDA	1,415	-229	1,644	718
EBIT	592	-1,079	1,671	155
Mid-year surplus/loss	499	-1,059	1,558	147
Mid-year surplus/loss
€/individual share certificate	0.07	-0.24	0.31	131
Number of shares (weighted)	6,625,899	4,417,266	2,208,633	50
R&D expenditure	1,582	482	1,100	228
Headcount (6/30/2010)	325	300	25	8

Foreword

Sustainable profitable growth — further growth ensured — order backlog increases by 76 %

Dear shareholders, Dear business partners,

Compared to the reference period of the previous year, the Silicon Sensor Group was able to boost sales by 47 % in the first six months, to € 19.3 million. As a result, it has almost reached the level of 2008 — before the economic crisis when our sales during the first six months totaled € 20.6 million.

We were also able to considerably boost profits. Having coped with an operating loss of -€ 0.8 million in the first six months of 2009, we were able to record an operating profit (EBIT) of € 1.1 million in the first six months of this year. Our midyear surplus of € 0.7 million also significantly returned to the black (previous year period -€ 1.0 million).

EBIT in the second quarter amounted to € 0.6 million. This meant that the Group had achieved its third successive positive quarterly result, after 2009 — and the first six months of 2009 in particular — had been such a difficult year. The Silicon Sensor Group has therefore returned to its long-term profitable business trend.

As seen in the first quarter, we recorded increasing orders from our long-term regular customers. The upturn is also clearly visible by looking at the significantly increased order backlog: on 6/30/2009, it totaled € 12.1 million and by 6/30/2010 we had achieved an increase of 76 % to € 21.3 million.

Cost-cutting measures taken as early as 2008 and 2009 as well as measures to boost efficiency and capacity are showing their initial effects, even if there is more room for additional economies of scale in the latter. These measures include establishing of the state-of-the-art sensor plant in Berlin, streamlining the organization with mergers and reducing personnel and material costs.

Moreover, we have developed additional growth sectors in recent months. By purchasing First Sensor Technology GmbH this spring, we were able to expand our core competence in the development and production of high-end sensors to include the area of MEMS technologies, which is becoming increasingly important. These technologies are mainly used in the area of pressure sensors but also in acceleration and inclination sensors. In addition to securing those large orders for the automotive industry that had already been sealed by the Silicon Sensor Group,

the integration of First Sensor will lead to improved utilization of our Berlin plant and additional synergy effects, especially in production, purchasing and management.

After the closing date, we announced the general agreement on purchasing a minority stake in Vereta GmbH. The company specializes in the development of sensors to measure temperature differences and also operates in the business areas of flow control, humidity control and particulate matter measurement. This stake enables the Silicon Sensor Group to considerably extend its system solutions expertise: Vereta developed a mobile particulate matter measuring device about to reach market maturity, which shows a very high market potential. As from 2013, 11 million households in Germany alone will be legally required to have a particulate matter emission measurement carried out every three years. In contrast to competitors' products, this device offers direct measurement and onsite evaluation without having to analyze samples in a laboratory.

We expect further impulses for future growth from over 50 R&D projects, our distribution sector which we considerably expanded last year, the partnerships concluded in Asia (QSI in South Korea, Optrans in Japan), and the recently announced order to supply camera systems to the automotive industry.

With equity totaling over € 36 million (equity ratio 57 %) and liquid funds amounting to € 13 million on 6/30/2010, we are perfectly equipped for growth in the next few years.

At this years' general meeting, where we presented our strategy to the vast numbers of attending shareholders, we again received great encouragement for our approach. All resolutions were passed with majorities of between 95.94 % and 99.97 %. One of these resolutions affected our Supervisory Board: Mr. Götz Gollan was newly appointed to the Supervisory Board. He is replacing Dr. Rainer Marquart, to whom the Board is very grateful for all his commitment to the company.

The development in the first six months, our internal outlook for the second half of this year and future projects that have already been planned together with our customers back up our earnings forecast, which was revised upward in March 2010.

Dear shareholders and business partners, we thank you for your support so far and look forward to shaping the future of our Group together.

Silicon Sensor Group business areas

The Silicon Sensor Group is one of the world's leading manufacturers of customized, high-quality opto-electronic sensors (photodetectors). In addition, the company develops and manufactures non-optical sensors and sensor products, in particular pressure sensors based on MEMS technology (MEMS: Micro-Electro-Mechanical Systems). The Group also develops and manufactures highly reliable customized hybrid circuits and products for microsystem engineering and advanced packaging. Well-known industrial companies and research institutes are among Silicon Sensor Group's customers.

Products and solutions made by the Silicon Sensor Group can be found in countless products in a wide range of industrial applications, such as electronic yardsticks, tank pressure- and solar altitude sensors in motor vehicles, airconditioning systems, blood sugar measuring instruments, X-ray units for baggage inspection, machine control systems, space research, cancer operations, toll systems for trucks, and measuring instruments in the pharmaceuticals industry, to name but a few.

The Silicon Sensor Group's products form crucial basic components in the corresponding end customers' applications. Two leading products worldwide we design and manufacture are avalanche photodiodes (APDs) and avalanche photodiode arrays. Customers use these APDs for instance in high-precision distance measuring systems for a variety of applications.

Silicon Sensor develops and produces at five different sites. 2008 saw the completion of a state-of-the-art sensor plant in Berlin. We employ a total of 325 employees worldwide. Next year will be the Group's 20th anniversary.

Business trends

Sales reached € 10.4 million in the second quarter, which exceeds the value of the second quarter of 2009 by € 4.2 million (€ 6.2 million; +69 %). For the entire first six months, sales amount to € 19.3 million, exceeding the sales of the first six months of 2009 by 47 %.

Apart from new orders, Silicon Sensor recorded a considerable increase in requests and new orders from its regular customers in the first six months. The Group is also seeing additional signals for a continuous upturn in the increase in order backlog: compared to 06/30/2009, this figure increased by 76 % to € 21.3 million.

The gross margin (in relation to the total performance) decreased from 65 % to 61 % compared to the first half of last year. This is due to the fact that the product mix has been changed compared to the same period of last year. However, the

absolute gross income has increased by 33 % to € 12.5 million compared to the same period of last year.

The increased personnel costs in the first half of this year (€ 6.8 million compared to € 5.8 million last year) are reflected in the initial consolidation of First Sensor but also in the hiring of new, qualified personnel, in particular in the sales and technical divisions. Other operating costs rose by € 0.3 million to € 2.9 million, caused in particular by the initial consolidation of First Sector. As a result of the expiration of depreciation cycles, among other factors, depreciation reduced by € 0.1 million to € 1.6 million.

The six-month EBITDA increased by 188 % to € 2.7 million, EBIT increased by € 1.9 million to € 1.1 million (previous year -€ 0.8 million). The EBIT of the second quarter, amounting to € 0.6 million, has exceeded the figure for the first quarter of 2010 (€ 0.5 million) and also that of the previous year period (-€ 1.1 million).

In the first half of 2010, net interest expenses remained on last year's level, at € 0.4 million. This leads to a result for this six-month period of € 0.7 million (previous year -€ 1.0 million), amounting to a profit per share of € 0.10 (previous year -€ 0.23).

In comparison to 12/31/2009, the positive result increased the Group's equity by € 0.8 million, to € 36.5 million and equaling an equity ratio of 57 % (58 % on 12/31/2009). A high equity ratio is one of the particularly important factors for our customers when they are choosing service providers because development and production processes span several years and the financial stability of a business partner is essential, especially in times of crisis.

In the first six months, the Group achieved an operating cash flow of € 2.2 million (previous year -€ 0.5 million). The cash flow from investment activities was dominated by payouts for the purchase of First Sensor and additional investments, among others, in the state-of-the-art sensor plant in Berlin. It amounted to -€ 6.0 million (-€ 1.0 million). The cash flow from financing activities was just about positive at € 0.3 million (€ 2.0 million). Payments from financial loans totaled € 1.7 million, compared with repayments of € 2.0 million. Liquid funds decreased by € 3.5 million, in line with the schedule, compared to the start of the financial year, in particular due to the acquisition of First Sensor. With liquid funds amounting to € 13.1 million, the Silicon Sensor Group is perfectly equipped for future growth.

Our inventories increased by € 3.1 million, to € 10.8 million, which is mainly rooted in the initial consolidation of First Sensor.

Goodwill increased by € 1.0 million to a total of € 2.8 million and deferred taxes rose by € 1.1 million due to the purchase price allocation within the framework of the initial consolidation of First Sensor.

The Silicon Sensor Group's headcount at the end of the quarter increased by 25 employees when compared with the same date of previous year, to 325. The main cause for this increase was the initial incorporation of First Sensor into the Group's financial statement.

Outlook

The upward trend has continued for the third quarter in a row. Increasing requests by regular customers, an increase in backlog of orders of 76 % compared to the same date of the previous year, future results of our considerably enlarged sales department and our 50 research and development projects, the potential of our most recent acquisitions and the initial results of our cost-saving and efficiency programs give us reason to reaffirm our prognosis which we increased in spring. For the current business year, we expect to achieve sales of between € 38 million and € 40 million with a seven-digit EBIT. For the next three years, we are forecasting an annual organic growth rate of 20 % with a return on sales above 10 % by 2012 at the latest.

Berlin, August 2010 Silicon Sensor International AG

Dr. Hans-Georg Giering Dr. Ingo Stein CEO CFO

INTERIM BALANCE SHEET

ON JUNE 30TH, 2010 (IFRS)

Assets	6/30/2010 € 1,000	12/31/2009 € 1,000
SHORT-TERM ASSETS
Cash	13,115	17,102
Accounts receivable	5,350	4,868
Due from affiliated companies	40	55
Inventories	10,832	7,700
Tax refund claims	284	393
Payments and accrued income, other current assets	2,564	1,553
Short-term assets, total	32,185	31,671
LONG-TERM ASSETS
Tangible assets	26,835	26,638
Intangible assets	961	530
Shares in affiliated companies	124	124
Goodwill	2,846	1,846
Latent tax claims	1,306	163
Other long-term assets	23	20
Long-term assets, total	32,095	29,321
ASSETS, TOTAL	64,280	60,992

Capital stock, debts	6/30/2010	12/31/2009
	€ 1,000	€ 1,000
SHORT-TERM LIABILITIES
Short-term loans	5,523	6,112
Accounts payable	2,922	1,904
Advances from customers	1,917	1,222
Accrued liabilities	577	549
Liabilities from income tax	55	0
Other short-term liabilities	2,540	2,307
Short-term liabilities, total	13,534	12,094
LONG-TERM LIABILITIES
Long-term interest-bearing loans	7,800	7,385
Accrued liabilities	203	203
Latent taxes	984	408
Prepayments and accrued income	5,236	5,525
Long-term liabilities, total	14,223	13,521
MINORITY INTERESTS	85	-6
CAPITAL STOCK
Subscribed capital	33,130	33,130
Reserves	3,997	3,823
Exchange equalization items	-148	-339
Balance sheet loss/profit	-541	-1,231
Capital stock, total	36,523	35,377
CAPITAL STOCK AND DEBTS, TOTAL	64,280	60,992

GROUP INCOME STATEMENT

FOR THE PERIOD BETWEEN JANUARY 1 AND JUNE 30, 2010 (IFRS)

	01/01/ -	01/01/ -	4/1/ -	4/1/ -
	6/30/2010 € 1,000	6/30/2009 € 1,000	6/30/2010 € 1,000	6/30/2009 € 1,000
Sales revenue	19,312	13,119	10,415	6,180
Other operating income	731	708	425	328
Change in stocks of finished goods
and work-in-progress	195	682	-91	203
Internally produced and capitalized
assets	334	0	192	0
Cost of materials/ purchased
services	-8,111	-5,111	-4,219	-2,610
Personnel expenses	-6,833	-5,806	-3,693	-2,974
Depreciation of tangible and
intangible assets	-1,605	-1,754	-823	-850
Other operating expenses	-2,940	-2,659	-1,614	-1,356
OPERATING RESULT	1,083	-821	592	-1,079
Interest yield/cost	-382	-424	-192	-211
Exchange gains/losses	182	-12	133	-12
RESULT BEFORE TAX AND MINORITY
INTERESTS	883	-1,257	533	-1,302
Taxes on income	-117	257	-8	241
PERIOD PROFIT/LOSS	766	-1,000	525	-1,061
Period surplus attributable to
minorities	77	0	26	-2
SURPLUS/DEFICIT OF THE PERIOD
ATTRIBUTABLE TO SILICON SENSOR
AG SHAREHOLDERS	689	-1,000	499	-1,059
Expenditure/yields directly shown
as equity:
Differences from currency
conversion (after tax)	191	-29	126	-84
Net profits/losses from cash flow
hedges (after tax)	57	-39	77	18
Transaction costs
capital costs after taxes	0	-27	0	1
EXPENDITURE/YIELDS SHOWN DIRECTLY AS EQUITY, TOTAL
	248	-95	203	-65
TOTAL RESULT OF PERIOD Result for the period attributable to	1,014	-1,095	728	-1,126
minorities, total	77	0	26	-2
TOTAL RESULT FOR THE PERIOD
ATTRIBUTABLE TO SILICON SENSOR
AG SHAREHOLDERS	937	-1,095	702	-1,124
Net earnings per share (undiluted)	0.10	-0.23	0.07	-0.24
Average number of circulating
shares (undiluted)	6,626	4,417	6,626	4,417
Net earnings per share (diluted)	0.10	-0.23	0.07	-0.24
Average number of circulating shares (diluted)	6,626	4,417	6,626	4,417

GROUP FUNDS STATEMENT

FROM JANUARY 1 TO JUNE 30, 2010 (IFRS)

	01/01/ -	01/01/ -
	6/30/2010	6/30/2009
	€ 1,000	€ 1,000
PRE-TAX INCOME	883	-1,257
Adjustments for transferring operating result to operating
cash flow from current activities:
Depreciation of tangible and intangible assets	1,605	1,754
Other expenses/revenues not affecting payment	106	145
Revenues from investment grants	-289	-237
Interest income	-32	-27
Interest expenses	414	451
Income from asset disposal	-12
Increase/decrease of provisions	-147	-32
Increase/decrease of inventories, accounts receivables and other assets not assigned to investment/financing	-1,326	1,532
Increase/decrease of accounts payables and other
liabilities not assigned to investment/financing	1,291	-2,265
Interest paid	-389	-320
Income tax paid	59	-249
Other profits/losses	0	0
CASH FLOW FROM CURRENT BUSINESS ACTIVITIES	2,163	-505
Payments for investment into tangible and intangible
assets	-1,829	-1,188
Payments from tangible/intangible asset retirement	12	2
Payments, purchase of subsidiary after deducting
purchased funds	-4,241	0
Receipts from investment grants	0	140
Interest received	32	27
CASH FLOW FROM INVESTMENT	-6,026	-1,019
Proceeds from injection of equity finance	0	2,467
Payments for repaying financial credits	-1,660	-1,487
Transaction costs for issuing shares	0	-38
Proceeds from uptake of financial credit	1,951	1,084
CASH FLOW FROM FINANCING	291	2,026
CURRENCY DIFFERENCES FROM THE CONVERSION
OF FUNDS	35	28
CHANGES IN FUNDS AFFECTING PAYMENTS	-3,537	530
Funds at the beginning of the business year (1/1/10)	16,652	4,173
FUNDS ON REPORTING DATE (6/30/10)	13,115	4,703

EQUITY CHANGE STATEMENT

FOR THE PERIOD BETWEEN JANUARY 1, 2010 AND JUNE 30, 2010 (IFRS)

	Number	Subscribed	Share	Revenue	Unrealized	Group	Exchange	Minority	Sum of
	of	capital	premium	reserves	profit/loss	balance	equalization	interests	Equity
	shares					sheet	items		capital
						loss/profit
	´000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
As at January 1,
2009	3,903	11,710	16,130	-854	-109	-4,208	-261	50	22,458
Differences
from currency
conversion							-29		-29
Result shown directly as equity,
total					-66				-66
Period result						-1,000			-1,000
Use of balance
sheet loss			-4,208						-4,208
Share capital
increase without
issue of new shares		8,834	-8,834						0
Capital increase	514	1,542	925			4,208			6,675
As at June 30, 2009	4,417	22,086	4,013	-854	-175	-1,000	-290	50	23,830
As at January 1,
2010	6,626	33,130	4,618	-586	-209	-1,231	-339	-6	35,377
Period profit/loss						690	191	77	958
Result shown
directly as equity,
total					57				57
Total result of period					57	690	191	77	1,015
Additions to
Tangible assets				81				14	95
Share-based
remuneration				36					36
As at June 30,
2010	6,626	33,130	4,618	-469	-152	-541	-148	85	36,523

SILICON SENSOR INTERNATIONAL AG – GROUP NOTES ON THE GROUP'S INTERIM STATEMENT

FROM JANUARY 1 TO JUNE 30, 2010

1. General

Silicon Sensor International AG, Berlin, Germany, (hereinafter 'SIS', 'the Company' or 'the Silicon Sensor Group') is a listed corporation headquartered in Berlin, Germany.

2. Group's interim statement

The Group's interim statement as per 30 June 2010 complies with the requirements set out in the German Securities Trading Act (WpHG). Its compilation was performed in compliance with the requirements of IAS 34 in abridged form and by applying article 315a of the German Commercial Code (HGB) in compliance with the International Financial Reporting Standards (IFRS) valid on the reporting date and set out by the International Accounting Standards Board (IASB) and approved by the European Union (EU) as well as in compliance with IASB's interpretations of the International Financial Reporting Interpretations Committee (IFRIC).

All amounts are in euros; if not stated otherwise, all amounts are in € 1,000.

3. Accounting practices and valuation methods

The essential practices and methods used to prepare the interim consolidated statement are in compliance with those used for the 2009 annual statement. For a detailed description of the practices and methods please refer to the published financial statement for the 2009 business year. In addition to the practices and methods mentioned in our financial statement, we emphasize that within the course of inventory valuation for finished goods and work-in-progress, we evaluated the manufacturing costs on the basis of the retrograde evaluation method.

The Silicon Sensor Group has adapted the illustration of comparable periods in the interim report and various items of information in the attachment of the interim report. This procedure deviates from previously published interim statements. These changes are intended to increase comparability of interim statements and higher transparency for recipients of the interim statement.

Company mergers and transactions with non-controlling interests (minorities) concluded on or after 1 July 2009 were incorporated in accordance with regulations set out by IFRS 3 (revised version, 2008) "Company mergers" and the new IAS 27 (revised version, 2008) "Company and separate individual financial statements in compliance with IFRS". However, the premature application of this standard in the 2009 business year did not have any material consequences because there were

no respective transactions. These evaluation regulations were applied to the acquisition of First Sensor Technology GmbH, Berlin, Germany (First Sensor), concluded on 1 April 2010.

4. Course of consolidation

Silicon Sensor Group's course of consolidation was extended by First Sensor Technology GmbH (First Sensor) on 1 April 2010.

The cash purchase price for the acquisition of 100 % of First Sensor's shares and existing proprietor's loans with equity-like character amounted to a total of € 4,525,000. This amount was recorded as payments for company acquisitions in the cash flow statements together with the additional expenses of the acquisition (€ 45,000) minus First Sensor's liquid funds upon takeover (€ 230,000) and own shares (€ 55,000).

Capital stock at a book value of -€ 47,000 — comprising primarily of short-term assets and debts — is faced by a purchase price amounting to the purchased shares (€ 1,978,000). In the course of allocating the difference between the purchase price on the purchased capital stock and the book values brought forward by First Sensor, undisclosed reserves from assets that can be depreciated, tax credits and undisclosed reserves from goodwill were identified. These were uncovered in the amount of € 2,553,000 and passive deferred taxes totaling € 529,000 were recorded.

The performed purchase price split has temporary character, as various data analyses regarding purchased undisclosed reserves have not yet been finally concluded. For the purpose of the interim report, uncovered undisclosed reserves were allocated to deferred taxes (€ 1,095,000), goodwill (€ 1,000,000), and inventory (€ 458,000).

If First Sensor had already been part of the consolidated Group by 1 January 2010, the Group's sales would have increased by € 934,000 and the Group's result by € 26,000.

5. Long-term asset impairment

The Silicon Sensor Group constantly monitors the intrinsic value of long-term assets by comparing the planned and obtained operating results. In the first six months of 2010, there was no evidence of any depreciation in long-term assets to below the recorded book values.

6. Substantial events/changes

In the second quarter, the results of First Sensor Technology are incorporated into the Group's financial statement for the first time.

After the reporting date, on 7/1/2010, the company published the conclusion of a general agreement on the acquisition of a minority stake (24.9 %) in Vereta GmbH. Vereta GmbH is a company specializing in the development of particulate matter and climate sensors. The liquid funds injected by Silicon Sensor amount to a sixdigit figure and almost exclusively serve to finance the completion of a mobile particulate matter measuring device and further developments. A final conclusion of the transaction can be expected during the third quarter.

7. Segment information

	Business segment		Consolidation		Adjustment to IFRS		Group
	3/31/2010	3/31/2009	3/31/2010	3/31/2009	3/31/2010	3/31/2009	3/31/2010	3/31/2009
	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
Sales	10,331	7,447	-1,434	-508	0	0	8,897	6,939
Result
(before minorities)	259	-136	-226	148	207	49	241	61

Quarter I, 2010

As at June 30, 2010

	Business segment		Consolidation		Adjustment to IFRS		Group
	6/30/2010	6/30/2009	6/30/2010	6/30/2009	6/30/2010	6/30/2009	6/30/2010	6/30/2009
	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
Sales	21,806	14,058	-2,494	-939	0	0	19,312	13,119
Result (before minorities)	598	-1,190	381	242	-213	-52	766	-1,000

8. Assurance by legal representatives

We hereby affirm that, to the best of our knowledge, the picture presented in the consolidated statement using applicable accounting principles for interim statements portrays a realistic impression of the Group's financial and earnings status. We furthermore affirm that the business activities, including the operating result and the Group's situation, are presented in such a way as to give a realistic picture and describe the opportunities and risks of the Group's expected development for the rest of the business year.

Berlin, August 2010

Silicon Sensor International AG

Dr. Hans-Georg Giering Dr. Ingo Stein CEO CFO