First Sensor AG

Quarterly Report • Nov 29, 2007

BUSINESS REPORT

for the first nine months of the 2007 business year (unaudited)

2007

BUSINESS REPORT III/2007 SILICON SENSOR GROUP

Financial ratios January 01 - Sept. 30, 2007 (nine-month report 2007)

	Jan. 01, 2007 -	Jan. 01, 2006 -	Change	Change
	Sept. 30, 2007	Sept. 30, 2006	in	in
	€ 1,000	€ 1,000	€ 1,000	%
Sales revenue	27,472	24,351	3,121	13
Backlog of orders	22,122	21,662	460	2
EBITDA	7,924	5,640	2,284	40
EBIT	5,797	3,925	1,872	48
Nine-month surplus	3,904	2,231	1,673	75
Nine-month surplus € per
share	1.08	0.65	0.43	66
Number of shares (weighted)	3,628,399	3,457,900	170,499	5
R&D expenditure	3,335	2,931	404	14
Headcount (Sept. 30, 2007)	294	248	46	19

Financial ratios July 01 - Sept. 30, 2007 (third quarter 2007)

	July 01, 2006 -	July 01, 2005 -	Change	Change
	Sept. 30, 2006	Sept. 30, 2005	in	in
	€ 1,000	€ 1,000	€ 1,000	%
Sales revenue	8,653	8,731	-78	-1
Backlog of orders	22,122	21,662	460	2
EBITDA	2,003	2,022	-19	-1
EBIT	1,297	1,367	-70	-5
Third quarter surplus	1,327	706	621	88
Third quarter surplus € per
share	0.34	0.21	0.13	62
Number of shares	3,895,650	3,457,900	437,750	13
R&D expenditure	1,183	939	244	26
Headcount (Sept. 30, 2007)	294	248	46	19

Silicon Sensor confirms dynamic performance

To all shareholders and business partners,

in the first nine month of 2007 the Silicon Sensor Group performed very well. Sales increased compared to the previous year to 27.47 mn € (9/30/2006: € 24.35 mn), which is an increase by 13 %.

The EBITDA increased in the first nine month of 2007 by 40 % from € 5.64 mn (9/30/2006) to € 7.92 mn (9/30/2007). The Operating Income also rose by € 1.87 mn from € 3.93 mn (9/30/2006) to € 5.79 mn (9/30/2007), which is a increase by 48%. The Earnings after Interest and Tax grew by 75 %, from € 2.23 mn (9/30/2006) to € 3.90 mn. The Earnings per Share soared, taking into account the risen number of shares due to the rights issue in 2007, by € 0.43 from € 0.65 (9/30/2006) to € 1.08 (9/30/2007).

The headcount grew from 248 (9/30/2006) to 294 (9/30/2007). The order backlog rose by 2 % to € 22.12 mn (9/30/2007) compared to the last year's figure (9/30/2006: € 21.66 mn). Sales, which may result from the Nomination Letter received October 25, 2007 in the second half of 2008, are not reported as part of the order backlog until specified monthly release orders will be issued.

In the current and in the coming business year the company will further concentrate on preparing for future growth. The first milestone in this process was achieved by extending the production area in Dresden according to schedule at the beginning of the second quarter 2007. A further milestone is the erection of a new fab building for 6" sensor-manufacturing, to deal with the expected increase in demand for sensors. The cornerstone for the new site was laid in Berlin on March 21, 2007. Ready for production is planned for the second half of 2008.

The group's focus will be also in future on customized sensor products, some of them embodying a very high development effort, along with customized hybrid circuits, packaging and sensor solutions, and avalanche photodiodes.

The Silicon Sensor group is a supplier of customized optoelectronic sensors (photo detectors). These sensors detect and measure alpha-, beta-, gammaradiation as well as X-rays, and UV radiation, visible light and near-infrared radiation. In addition, the group develops and manufactures non-optical sensors. The group also develops and manufactures highly reliable customer-specific hybrid circuits and products of micro system technology as well as advanced packaging technology.

Customers include leading industrial groups and research establishments wishing to outsource highly specialized manufacturing processes which do not fit their production patterns or strategic orientation.

Products made by the group are used as basic components for the widest possible range of applications. This makes the Silicon Sensor group largely independent of the business cycles in the various industries. The market for these high-end products is generally seen as favorable, and so is the potential for further growth.

As one of the world's leaders in engineering, the Silicon Sensor group develops, manufactures and supplies optical and electronic high-end solutions for a very discerning market. It has developed avalanche photodiodes (APD) and avalanche photodiode arrays which have become the first choice of users worldwide. Customers use APDs and laser modules in high-precision distance measuring systems for a variety of applications.

Planning for the upcoming business years indicates that future growth has been secured. Cash planning for the group assumes further sales growth with the related positive development in operative cash flow. The Executive Board currently considers the cash situation of the group as sufficient to achieve defined growth targets.

Foreign developments

Beside the further increase of market share in Europe, Silicon Sensor identifies significant potential for future growth in the Asian and North American market. Therefore the group will strengthen their presence on these markets. The Pacific Silicon Sensor Inc. (sales € 1.29 mn (30/9/2007); € 1.25 mn (30/9/2006)), member of the Silicon Sensor group, will be granted an important role in this process.

Important Events after closing date

On October 25, 2007 the Silicon Micro Sensor GmbH (SMS) gain a Nomination Letter by a leading automotive manufacturer for the supply of high-quality sensors in the period second half 2008 to end of 2013. The Nomination Letter is referring to two platforms for vehicles in America, Europe and Asia. The targeted supply volume amounts to € 30 mn. Currently SMS is preparing for readiness for delivery until third quarter 2008. The binding assignments will be placed, depending on the production volume of the automotive manufacture, via monthly orders based on a three months rolling forecast.

P ersonnel

At the end of the quarter, the headcount of the Silicon Sensor group in total amounts to 294 (at the end of the 3rd quarter 2006 total headcount 248).

Outlook

The SIS group has established itself as a specialist supplier of high-quality customized solutions in the market for optical sensors, pressure and imaging sensors and hybrid electronics.

The group expects stable sales revenues in future and assumes that all of its subsidiaries will stay profitable. Apart from increased turnover and earnings, the current business year will also be devoted to creating the basis for future growth.

The market position of the group will be strengthened in 2007 further. The existing know-how will be used for further continuous growth in sales and earnings.

In the last two business years, the group's dependence on a few major clients was clearly reduced by widening the customer base. Developing the market presence in North America and Asia will further help to offset fluctuating demands and dependencies from large customers on the European market medium term. Risks resulting from general economic development are to be minimized by branching out into new business segments.

The major growth will be also in future in the sensor business segment, due to the multifunctional industrial applications of sensors. The company's development capability is vital for the high product quality that has been achieved in creating up-market problem solutions.

Berlin, November 2007

Silicon Sensor International AG

The Managing Board

Dr. Bernd Kriegel Dr. Hans-Georg Giering Chairman of the Executive Board Member of the Executive Board

CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2007 (IFRS)

TEuro TEuro CURRENT ASSETS Cash and cash equivalents 8,562 4,268 Short-term investments 123 519 Trade accounts receiveable 6,349 5,264 Accounts receivable from associated companies 25 64 Inventories 7,182 4,484 Tax assets 111 321 Prepaid expenses and other current assets 1,091 388 23,443 15,308 Total current assets NON-CURRENT ASSETS Property, plant and equipment 12,905 8,951 Intangible assets 5,914 6,178 Equity holdings in associated companies 99 416 Goodwill 11,142 11,158 Deferred taxes 16 15 Other assets 38 22 30,114 26,740 Total non current assets 53,557 42,048 TOTAL ASSETS Liabilities and shareholders' equity CURRENT LIABILITIES Short-term debt 4,480 2,162 Trade accounts payable 1,721 1,247 Equity holdings in associated companies 2 46 Advance payments received 420 66 Accrued expenses 524 354 Income tax payable 3,024 800 Other current liabilities 2,222 2,775 12,393 7,450 Total current liabilities NON-CURRENT LIABILITIES Long-term debt 4,064 5,260 Provisions 121 79 Deferred tax liabilities 1,911 2,590 Deferred income 1,267 1,246 Total non-current liabilities 7,363 9,175 MINORITY INTERESTS 70 1,328 EQUITY Share capital 11,687 10,410 Reserves 14,432 10,691 Translation reserve -276 -214 Retained earnings/loss 7,888 3,208 Total Equity 33,731 24,095	Assets	Sept. 30, 2007	Sept. 30, 2006
	TOTAL LIABILITIES AND EQUITY	53,557	42,048

CONSOLIDATED INCOME STATEMENTS

FOR THE FIRST NINE-MONTHS 2007 (IFRS)

	July 01 - Sept. 30,	July 01 - Sept. 30,	Jan. 01 - Sept. 30,	Jan. 01 – Sept. 30,
	2007 € 1,000	2006 € 1,000	2007 € 1,000	2006 € 1,000
Revenues	8,653	8,731	27,472	24,351
Other operating income	548	416	1,166	1,038
Changes in inventories of finished
goods and work in progress	427	-114	1.818	164
Production of own fixed assets capitalized	7	68	16	115
Cost of purchased materials and
services	-3,157	-2,953	-9,510	-8,734
Personnel expenses	-3,016	-3,067	-9,170	-8,063
Depreciation and amortization on intangible assets, and plant and
equipment	-706	-655	-2,127	-1,715
Other operating expenses	-1,459	-1,059	-3,868	-3,231
OPERATING INCOME	1,297	1,367	5,797	3,925
Interest income and expense	-81	-94	-345	-240
RESULT BEFORE INCOME TAXES
AND MINORITY INTEREST	1,216	1,273	5,452	3,685
Income tax	114	-522	-1,514	-1,332
RESULT BEFORE MINORITY
INTEREST	1,330	751	3,938	2,353
Minority interest	-3	-45	-34	-122
NET INCOME/ LOSS	1,327	706	3,904	2,231
Net income per share (basic)	0.34	0.21	1.08	0.65
Weighted average shares outstanding (basic)	3,896	3,458	3,628	3,458
Net income per share (diluted)	0.34	0.21	1.08	0.65
Weighted average shares
outstanding (diluted)	3,896	3,458	3,628	3,458

CONSOLIDATED CASH FLOW STATEMENT

FOR THE FIRST NINE-MONTHS 2007 (IFRS)

	Jan. 01 –	Jan. 01 –
	Sept. 30, 2007	Sept. 30, 2006
	€ 1,000	€ 1,000
CONSOLIDATED PROFIT	5,797	3,925
Depreciation of intangible assets and property,
plant and equipment	2,126	1,715
Other expenditure/ income not affecting payments Income from investment grants	122 -10	73 -212
Income from asset disposals	0	3
Changes in provisions	-1,156	89
Changes in assets not allocable to investing- or financing activities	-3,622	-2,292
Changes in liabilities not allocable to investing or
financing activities Paid interest	-262 -489	1,036 -333
Paid taxes	-594	-1,068
CASH FLOW FROM OPERATING ACTIVITIES	1,912	2,936
Investments in intangible assets and property, plant and equipment	-3,039	-1,617
Proceeds from the disposal of intangible assets,
property, plant and equipment	0	1
Investments in securities	0	-192
Proceeds from sale of securities	0	140
Investments in subsidiaries	0	-401
Net-proceeds investment grants	-96	212
Revenue from securities	0	44
Interest	159	65
CASH FLOW FROM INVESTING ACTIVITIES	-2,976	-1,748
Proceeds from rights issue	6,281	44
Loan repayments	-2,172	-1,734
Dividends	-352	0
Transaction costs from 2005 capital increase	0	-47
Deposits from financial borrowing	907	67
CASH FLOW FROM FINANCING ACTIVITIES	4,664	-1,670
NET EFFECT OF CURRENCY TRANSLATION IN
CASH AND CASH EQUIVALENTS	-18	-2
NET INCREASE IN CASH AND CASH EQUIVALENTS	3,582	-484
Cash and cash equivalents at beginning of the year	4,980	4,752
CASH AND CASH EQUIVALENTS AT END OF THE
REPORTING PERIOD	8,562	4,268

CHANGE IN EQUITY

FOR THE FIRST NINE-MONTHS 2007 (IFRS)

	Number	Share	Reserves	Retained	Translation	Minority	Total
	of shares	Capital		Earnings	Reserve	Interests
	in '000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
December 31, 2005	3,458	10,374	10,899	977	-140	1,381	23,491
Exercise of share options		36	8				44
Acquisition of minority
interests			-210			-175	-385
Currency effect					-74		-74
Total of results registered
directly in equity			-6				-6
Result for the period				2,231		122	2,353
September 30, 2006	3,458	10,410	10,691	3,208	-214	1,328	25,423

	Number of shares	Share Capital	Reserves	Retained Earnings	Translation Reserve	Minority Interests	Total
	in '000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
December 31, 2006	3,523	10,569	9,497	3,984	-214	36	23,872
Exercise of share options	21	61	56				117
Stock options			122				122
Dividends			-352				-352
Acquisition of
minority interests							0
Rights issue for cash	352	1,057	5,108				6,165
Currency translation
differences					-62		-62
Total of results registered
directly in equity			1				1
Result for the period				3,904		34	3,938
September 30, 2007	3,896	11,687	14,432	7,888	-276	70	33,801

SILICON SENSOR INTERNATIONAL AG – GROUP NOTES TO BUSINESS REPORT

FOR THE FIRST NINE MONTHS OF THE BUSINESS YEAR 2007

1. General

Silicon Sensor International AG, Berlin (hereinafter - SIS, the Company) and its subsidiaries are doing business at the sensor manufacturing and micro system technique industry. The business activities of the group are focused on developing, manufacturing and selling custom-designed optical and non-optical sensors-systems as well as the development and manufacturing of hybrid circuits. Within the SIS several subsidiaries operate as individual business units in the market. The Pacific Silicon Sensor Inc. is mainly responsible for the selling of sensor chips and sensor systems in North America but is also involved in the development and the customized packaging of sensors. The total headcount of the Silicon Sensor Group amounts to 294 by end of the third quarter 2007 (headcount by end of the third quarter 2006: 248).

The registered office address of the Group is Charlottenstraße 57, 10117 Berlin, Germany.

The object of SIS is the development, the production and the marketing of custom-designed optical sensors as well as the participation in companies.

2. Consolidated financial statement in accordance with art. 315a german commercial law

SIS group reports their consolidated financial statement for the third quarter of 2007 in correspondence with Section 315a German Commercial Law according International Financial Reporting Standards IFRS.

3. Summary of significant accounting policies

The principal accounting policies adopted in preparing the financial statements of SIS group for the third quarter of 2007 comply with the policies applied for the Annual Report of 2006.

In compliance with IAS 34 and IAS 12 latent taxes have been recorded by taking into consideration the change in tax rate based on the reform of tax law 2008, resolved on July 6, 2007. In compliance with IAS 12 the resulting tax relief in the amount of € 507 k was recorded affecting net income.

4. Notes to cash flow statements

SIS reports Cash Flow from Operating Activities in accordance with IAS 7 "Cash flow statement" using the indirect method.

5. Contingent liabilities

(1) Various legal actions and claims are pending or may be asserted in the future against Group companies from litigation and claims incident to the ordinary course of business. Related risks have been analysed as to likelihood of occurrence. Although the outcome of these matters cannot always be ascertained with precision, Management believes that no material liabilities are likely to result.

(2) Contingent liabilities furthermore result from office rental contracts, operating lease contracts for cars and from pension contracts. The lease contracts are operating lease contracts.

The contingent liabilities split up as follows:

As of December 31, 2006
-------------------------	--

	2007	2008 - 2012	as of 2013
	€ 1,000	€ 1,000	€ 1,000
Rent and lease	780	1,659	2,514
Premium-oriented
pension plans	191	792	840
	971	2,451	3,354

As of September 30, 2007

	2007	2008 - 2012	as of 2013
	€ 1,000	€ 1,000	€ 1,000
Rent and lease	276	3,219	5,977
Premium-oriented
pension plans	47	897	1,379
	323	4,116	7,357

6. Segment reporting

This is provided on the following basis:

(1) Application-oriented chip and component manufacture

In this segment, the group primarily develops and manufactures high-quality customer-specific silicon sensors. In addition, this segment also covers the assembling of chips into customized hybrid ICs and modules.

(2) Other products

These include clinical sensor applications for the extra/intraoperative detection of tumor cells. More particularly, the segment makes semiconductor radiation sensors for industrial and laboratory use and PC measuring systems for coating thickness measurement, PET radiochemistry and dosimetry.

First quarter 2007

	Custom-designed production			Other production		Consolidated
	March 31,	March 31,	March 31,	March 31,	March 31,	March 31,
	2007	2006	2007	2006	2007	2006
	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
Segment turnover	9,692	7,396	75	79	9,767	7,475
Segment result	1,295	733	18	20	1,313	753

First half-year 2007

	production	Custom-designed		Other production	Consolidated
	June 30,	June 30,	June 30,	June 30,	June 30,	June 30,
	2007	2006	2007	2006	2007	2006
	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
Segment turnover	18,651	15,455	168	165	18,819	15,620
Segment result	2,557	1,504	20	20	2,577	1,524

First nine-month 2007

		Custom-designed production		Other production		Consolidated
	Sept. 30,	Sept. 30,	Sept. 30,	Sept. 30,	Sept. 30,	Sept. 30,
	2007	2006	2007	2006	2007	2006
	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000	€ 1,000
Segment turnover	27,235	24,123	237	228	27,472	24,351
Segment result	3,888	2,211	16	20	3,904	2,231

7. Internal statement

Company's officers did not hold shares of the company as of September 30, 2007.

8. Affirmation by Management

To the best of our knowledge we assure, that according the applicable accounting standards for interim reporting the financial statement and the Interim Management Report (Konzernzwischenlagebericht) of the group gives a true and fair view on the financial situation of the group and describes all relevant prospects and hazards related with the future development of the group in the remaining fiscal year.

Berlin, November 2007

Dr. Bernd Kriegel Dr. Hans-Georg Giering Chairman of the Executive Board Member of the Executive Board