CeoTronics AG

Interim / Quarterly Report • Apr 13, 2007

CeoTronics Interim Report

1. Business Report

Dear Shareholders, Ladies and Gentlemen,

CeoTronics increased its consolidated revenues by 4.3% to a record €14,036 thousand in the first nine months of fiscal year 2006/2007, placing it within reach of its target consolidated annual revenues of €18.2 million in fiscal year 2006/2007.

This improvement in revenues is due among other things to continued government investment in digital radio technology in Spain (+61.7%) and France (+29.6%). CT Video GmbH increased its consolidated revenues by a substantial 28.7%.

The high level of revenues in the German market could not be maintained in the first nine months of fiscal year 2006/2007 (-5.4%). The planned investments in the switch to digital radio (expected launch in late 2007/early 2008) have led to temporary downturn in spending by German law enforcement customers.

Revenue levels in Switzerland returned to normal as of February 28, 2007 at – 35.9%. However, the high order backlog (+287.4%) confirms our assumption in the 2006/2007 half-yearly report that the country's government security and law enforcement agencies will continue the switch to digital radio in 2007.

Revenues in United Kingdom rose by 15.9% year-on-year in the period under review.

In Poland and the U.S.A., revenues fell from a low level by 15.9% and 28.4% respectively.

As a result of the optimization of its cost structure, lower depreciation, amortization, and impairment losses, and higher sales prices, CeoTronics U.S.A. reduced its losses for the nine-month period by 58.1% year-on-year. CeoTronics U.S.A.'s current revenues, cost, and earnings forecasts for the next six years do not dictate any further adjustments of goodwill and the carrying amount of the investment at present.

The consolidated order backlog as of February 28, 2007 fell by 15.9% as against the record level in the previous year. The order backlog is the second highest in the Company's history.

EBITDA (Earnings before Interest, Taxes, Depreciation and goodwill Amortization/impairment) increased by €190 thousand (+10.3%) compared with the Group's prior-year Q1-3 figure, from €1,845 thousand to €2,035 thousand; EBIT improved by €244 thousand (+17.3%) in the same period, from €1,411 thousand to €1,655 thousand; and the profit after tax for the first nine months rose by €197 thousand (+25.4), from €776 thousand in the previous year to €973 thousand.

Gross cash flow increased by €143 thousand (+11.8%) year-on-year in the ninemonth period under review, from €1,210 thousand to €1,353 thousand.

Investments rose by €2,599 thousand as against the previous year, from €267 thousand to €2,866 thousand. Even excluding real estate investments (which totaled €2,590 thousand including transaction costs), the level is somewhat higher than in the previous year.

The Group's extremely high equity ratio fell from 74.9% to 67.6%. The change is due in part to the real estate acquisition.

The consolidated key figures (IFRSs, unaudited) for the first nine months of fiscal year 2006/2007 in comparison to the previous year were as follows:

The decrease in the cost of sales was besides others due changes in the order structure, and the optimized production processes. The reduction in write-downs on inventories also contributed positively to this development.

The trend in research and development expenses reflects the increased effort involved in developing new products and modifying existing technologies increased expenditures for external laboratory services, and increased personnel capacity.

Selling and marketing expenses remained stable year-on-year. However, CeoTronics anticipates increased expenses in the fourth quarter of the current fiscal year, for example for participation at trade fairs that either took place "earlier" in fiscal year 2005/2006, or not at all.

Administrative expenses increased, primarily as a result of rising employee expenses and personnel capacity, as well as higher listing expenses and increased IR activities.

The CeoTronics Croup employs a total of 147 staff (+3). The proportion of vocational trainees at CeoTronics AG and CT-Video GmbH in Germany was 5.4%.

At +13.6%, CeoTronics' share price performed positively in the period under review (June 1, 2006 to February 28, 2007).

The Board of Management is satisfied with the Company's results for the first nine months and would like to thank the Company's employees for their achievements to date.

On April 2, 2007, CeoTronics announced its largest single order to date in an ad hoc disclosure. The German Armed Forces awarded an order to CeoTronics to supply a total of approximately 3,700 CT noise protection helmets with the accompanying communication technology, comprising the CT ContactCom (cranial microphone) and the CT-DECT digital radio system, worth approximately €5.5 million. CeoTronics plans to deliver and invoice approximately 2,000 of these CT-DECT JetCom systems (worth approximately €3.0 million) in fiscal year 2007/2008. The approximately 1,700 remaining systems from the order described above are expected to be delivered and invoiced by the end of September 2008, and thus in fiscal year 2007/2008.

As of April 2, 2007, the order backlog had risen by 134% year-on-year as a result of this order. The order backlog is at its highest level by far since CeoTronics was established.

CeoTronics is prepared for the smooth completion of the order, so that all other orders can be produced and delivered on schedule.

The tender won by CeoTronics also includes the option for a further approximately 2,200 systems. In the event that the German Armed Forces exercises this option during calendar year 2009, the entire order volume would increase by approximately €3.3 million to approximately €8.8 million.

The outlook for fiscal year 2007/2008, which begins on June 1, 2007, is positive due to the planed part-deliveries under this major order, among other things.

CeoTronics expects business to continue its positive trend in fiscal year 2008/2009 due to the aforementioned delivery of the remaining CT-DECT JetCom systems to the German Armed Forces and e.g. expected investments by German law enforcement customers in communications accessories for the new digital radios.

Rödermark, April 13, 2007

Thomas H. Günther Chairman of the Board of Management and Chief Executive Officer

Günther Thoma Member of the Board of Management Chief Operating Officer

Berthold Hemer Deputy Chairman of the Board of Management and Chief Technology Officer

2. Consolidated Balance Sheet (IFRS)

Assets	Quarterly Report	Annual Report
	(closing date of the current	(closing date of last annual report)
	quarter)	May 31, 2006
	February 28, 2007
	€ thousand	€ thousand
Current assets
Cash and cash equivalents	1,202	2,376
Trade receivables	3,810	2,571
Inventories	3,871	3,754
Other current assets	658	229
Total current assets	9,541	8,930
Noncurrent assets
Property, plant, and equipment	5,696	3,262
Intangible assets	191	180
Goodwill	1,329	1,364
Noncurrent financial assets	0	0
Deferred tax assets	437	535
Total noncurrent assets	7,653	5,341
Total assets	17,194	14,271

Equity and Liabilities	Quarterly Report	Annual Report
	(closing date of the current	(closing date of last annual report)
	quarter)	May 31, 2006
	February 28, 2007
	€ thousand	€ thousand
Current liabilities
Current financial liabilities	175	175
Trade payables	582	679
Advance payments received	1	147
Provisions	1,346	932
Current tax payables	640	219
Other current liabilities	479	347
Total current liabilities	3,223	2,499
Noncurrent liabilities
Noncurrent financial liabilities	2,356	429
Total noncurrent liabilities	2,356	429
Equity
Subscribed capital	6,600	6,600
Capital reserves	4,471	4,471
Retained earnings	16	16
Cumulative other recognized income and expense	-42	-13
Net retained profit	521	226
Equity attributable to shareholders of CeoTronics AG	11,566	11,300
Minority interest	49	43
Total equity	11,615	11,343
Total equity and liabilities	17,194	14,271

3. Consolidated Income Statement (IFRS)

Income Statement	Quarterly Report	Quarterly report	Year-to-date	Year-to-date
	(current quarter)	(comparative quarter	(current fiscal year)	(comparative period
		of previous year)		of previous year)
			June 1, 2007-February	June 1, 2005-
	December 1, 2006-	December 1, 2005-	28, 2007	February 28, 2006
	February 28, 2007	February 28, 2006
	€ thousand	€ thousand	€ thousand	€ thousand
Revenues	4,705	5,349	14,036	13,460
Cost of sales	-2,318	-3,116	-6,948	-7,037
Gross profit	2,387	2,233	7,088	6,423
Selling and marketing expenses	-1,107	-1,067	-3,071	-3,062
General and administrative expenses	-380	-334	-1,213	-1,060
Research and development expenses	-419	-342	-1,068	-873
Other operating income and expenses	-82	189	-67	87
Impairment of goodwill	0	-2	-14	-104
Operating profit (EBIT)	399	677	1,655	1,411
Interest income/expense	-32	-9	-47	-22
Profit before tax	367	668	1,608	1,389
Income tax expense	-110	-299	-635	-613
Consolidated profit	257	369	973	776
Consolidated profit attributable to:
Minority interest	1	9	5	16
Shareholders of CeoTronics AG	256	359	968	760
Earnings per share (basic) in €	0.12	0.16	0.44	0.35
Earnings per share (diluted) in €	0.12	0.16	0.44	0.35
Weighted average shares outstanding (basic)	2,199,998	2,199,998	2,199,998	2,199,998
Weighted average shares outstanding (diluted)	2,199,998	2,199,998	2,199,998	2,199,998

4. Consolidated Cash Flow statement (IFRS)

Cash Flow Statement	Year-to-date	Year-to-date
	(current fiscal year)	(comparative period of previous
	June 1, 2006-February 28, 2007	year)
		June 1, 2005-February 28, 2006
	€ thousand	€ thousand
Cash flow from operating activities
Profit before tax	1,608	1,389
Income tax expense	-635	-613
Consolidated profit	973	776
Depreciation, amortization, and impairment losses	380	434
Gross cash flow	1,353	1,210
Changes in assets and liabilities
Change in trade receivables	-1,239	-1,176
Change in inventories	-117	178
Change in other assets	-429	-66
Change in trade payables	-97	849
Change in advance payments received	-146	-29
Change in other provisions	414	-38
Change in tax payables	421	26
Change in other current liabilities	132	2
Change in deferred tax liabilities	98	371
Total changes in assets and liabilities	-963	117
Net cash provided by operating activities	390	1,327
Cash flow from investing activities
Payments to acquire intangible assets	-42	-11
Payments to acquire property, plant, and equipment	-2,826	-256
Change in noncurrent financial assets	0	6
Change in foreign currency differences	27	-35
Disposal of noncurrent assets (net carrying amounts)	51	1
Net cash used in investing activities	-2,790	-295
Cash flow from financing activities
Change in current financial liabilities	0	-198
Change in noncurrent financial liabilities	1,927	-6
Dividend payment to minority interest	-12	-111
Dividend payment to shareholders of CeoTronics AG	-660	-440
Net cash provided by/used in financing activities	1,255	-755
Change in cash and cash equivalents	-1,145	277
Effect of exchange rate changes on cash and cash equivalents	-29	9
Cash and cash equivalents at beginning of period	2,376	2,243
Cash and cash equivalents at end of period	1,202	2,529

5. IFRS Statement of Changes In Equity

	Equity attributable to shareholders of CeoTronics AG
	Subscribed capital	Capital reserves	Retained earnings	Net retained profit/net accumulated losses	Cumulative other recognized income and expense	Total	Minority interest	Total equity
	€ thousand	€ thousand	€ thousand	€ thousand	€ thousand	€ thousand		€ thousand
Current year
Balance at May 31, 2006	6,600	4,471	16	226	-13	11,300	43	11,343
Consolidated profit				968		968	5	973
Dividend distribution				-660		-660	-12	-672
Currency translation adjustments					-29	-29		-29
Change in minority interest				-13		-13	13	0
Balance at February 28, 2007	6,600	4,471	16	521	-42	11,566	49	11,615
Previous year's figures for comparison
Balance at May 31, 2005	6,600	4,471	16	-283	-33	10,771	49	10,819
Consolidated profit				760		760	16	776
Dividend distribution				-440		-440		-440
Currency translation adjustments				3	24	27		27
Change in minority interest							-22	-22
Balance at February 28, 2006	6,600	4,471	16	40	-9	11,118	42	11,160

The equity ratio of the CeoTronics Croup was 67.6% as of February 28, 2007 (previous year: 74.9%).This decrease can be attributed in particular to the real estate acquisition, which was partially funded by debt. There were no material changes to equity and stock option plans compared with the last annual financial statements.

6. Notes to the Consolidated Report of CeoTronics AG on the First Nine Months Ended February 28, 2007

The unaudited consolidated quarterly report of CeoTronics AG as of February 28, 2007 was prepared in accordance with the International Financial Reporting Standards (IFRSs). This interim report complies with IAS 34 Interim Financial Reporting.

The quarterly report was prepared using the accounting, measurement and consolidation principles applied in the preparation of the consolidated annual financial statements as of May 31, 2006. Further details can be found in the Annual Report for fiscal year 2005/2006.

As of November 1, 2006, the Company acquired a property it had previously been renting, together with an adjacent car park, in Rödermark. The purchase price totaled €2,490 thousand.

To finance the acquisition, the Company took out a loan in the amount of €2,100 thousand as of November 1, 2006. The amount of €390 thousand exceeding the financing was financed out of the Company's own funds. The loan agreed provides for annual redemption of 4%; the interest rate is fixed for 10 years.

The remaining amount of the loan as of February 28, 2007 is €2,072 thousand. The proportion attributable to current financial liabilities is €87 thousand; the remaining amount of €1,985 thousand was classified as noncurrent financial liabilities.

7. Consolidated Segment Reporting

The Company assesses the performance of the subsidiaries on the basis of their pre-tax profit. The accounting and reporting principles used for regional reporting comply with the group accounting principles. The subsidiaries in the individual countries are legally independent and have their own management teams.

The Company's product groups are comparable in terms of both the production process used and the marketing methods. Internal and external reporting primarily follows geographic criteria.

The information below is presented by region.

Revenues for the first nine months of 2006/2007 and 2005/2006 fiscal years are attributable as follows:

Country of origin (primary segment):

	Q1-3 2006/2007	Q1-3 2005/2006
Revenues	€ thousand	€ thousand
Germany	6,750	6,731
Rest of Europe	7,020	6,353
Rest of world	266	376
Third-party revenues	14,036	13,460

By customer country (secondary segment):

	Q1-3 2006/2007	Q1-3 2005/2006
Revenues	€ thousand	€ thousand
Germany	4,082	5,286
Rest of Europe	9,557	7,753
Rest of world	397	421
Third-party revenues	14,036	13,460

The profit or loss for the first nine months of fiscal years 2006/2007 and 2005/2006 is attributable as follows to the subsidiaries in the various regions:

	Q1-3 2006/2007	Q1-3 2005/2006
Profit/loss	€ thousand	€ thousand
Germany	513	807
Rest of Europe	697	519
Rest of world	-237	-566
Consolidated profit	973	760

Segment assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of February 28, 2007 and February 28, 2006:

	February 28, 2007	February 28, 2006
Segment assets	€ thousand	€ thousand
Germany	10,579	8,767
Rest of Europe	5,022	4,378
Rest of world	1,593	1,661
Total segment assets	17,194	14,806

Segment liabilities are attributable as follows to the subsidiaries in the various regions (primary segment) as of February 28, 2007 and February 28, 2006:

	February 28, 2007	February 28, 2006
Segment liabilities	€ thousand	€ thousand
Germany	4,633	2,910
Rest of Europe	908	730
Rest of world	38	8
Total segment liabilities	5,579	3,648

Noncurrent assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of February 28, 2007 and February 28, 2006:

	February 28, 2007	February 28, 2006
Noncurrent assets	€ thousand	€ thousand
Germany	5,746	3,169
Rest of Europe	588	618
Rest of world	882	978
Total noncurrent assets	7,216	4,765

Investments in the first nine months of fiscal years 2006/2007 and 2005/2006 are attributable to the subsidiaries in the various regions (primary segment) as follows:

	Q1-3 2006/2007	Q1-3 2005/2006
Investments	€ thousand	€ thousand
Germany	2,761	219
Rest of Europe	105	48
Rest of world	0	0
Total investments	2,866	267

Depreciation, amortization, and impairment losses are attributable as follows to the subsidiaries in the various regions (primary segment) in the first nine months of fiscal years 2006/2007 and 2005/2006:

	Q1-3 2006/2007	Q1-3 2005/2006
Depreciation, amortization, and impairment losses	€ thousand	€ thousand
Germany	327	281
Rest of Europe	38	35
Rest of world	15	118
Total depreciation, amortization, and impairment losses	380	434

8. Reportable Securities Holdings

Reportable securities holdings as of February 28, 2007		CeoTronics shares (ISIN DE0005407407/WKN 540740) (quantity)	Virtual CeoTronics stock options (quantity)
Board of Management
Chairman	Thomas H. Günther	9,498	2,000
Chief Technology Officer	Berthold Hemer	171,050	2,000
Chief Operating Officer	Günther Thoma	6,022	2,000
Supervisory Board
Chairman	Hans-Dieter Günther	371,200	0
Deputy Chairman	Horst Schöppner	218,470	0
Member of Supervisory Board	Stephan Haack	0	0

The total number of CeoTronics AG shares at the reporting date amounted to 2,199,998.

Dividends amounting to €659,999.40 were paid in the period under review in accordance with the resolution by the General Meeting on November 3, 2006.

At +13.6%, CeoTronics AG'S share price performed positively in the period under review. After adjustment for the dividend of €0.30 paid in the reporting period, the increase amounts to 17.9%.

The share price remained substantially behind expectations and, in our view, does not reflect the revenue and earnings trends in the current fiscal year 2006/2007.

The latest study by German Business Concepts GmbH dated January 2007 calculated a fair value of €10.38 for CeoTronics shares. The current share price (April 12, 2007) of €8.00 (Xetra) therefore offers long-term investors attractive growth potential.

If business continues to develop positively and the revenues and earnings targets are met, the Board of Management plans to propose a dividend for the fourth consecutive time.

10. Changes in the Consolidated Croup Structure

There were no changes in the consolidated Group structure in the first six months of fiscal year 2006/2007.

The following companies are included in the consolidated financial statements:

CeoTronics AG (Rotkreuz, Switzerland), CeoTronics Sarl (Brie Comte Robert, France), CeoTronics Ltd. (Bestwood Village, Nottingham, United Kingdom), CeoTronics Inc. (Virginia Beach, U.S.A.), CeoTronics S.L (Madrid, Spain), CT-Video GmbH (Lutherstadt Eisleben, Germany), AACOM-CeoTronics Sp.z.o.o. (Lodz, Poland).

Subsidiaries in which the parent directly or indirectly holds the majority of shares and hence of the voting power are consolidated in accordance with the principles of acquisition accounting under IFRSs.

We account for the 25% minority interest in AACOM-CeoTronics Sp.z.o.o. by deducting the minority interest and the resulting effects on profit or loss within equity in the balance sheet, in the income statement, the cash flow statement, and the statement of changes in equity.

11. Changes in the Company's Executive Bodies

There were no changes in the Company's executive bodies in the first six months of 2006/2007.

12. Current Financial Calendar (as of April 13, 2007)

Thursday, May 31, 2007
Calendar week 23
Friday, August 17, 2007
Thursday, August 30 2007
Thursday, August 30, 2007
Calendar week 36
Friday, October 12, 2007
Friday, November 2, 2007
Calendar week 49

13. Events after the Balance Sheet Date February 28, 2007

Report on Q2 2007/2008 Friday, January 11, 2008

The German Armed Forces awarded an order to CeoTronics to supply a total of approximately 3,700 CT-DECT JetCom systems (worth approximately €5.5 million), comprising the new CT noise protection helmet, the "CT-DECT" digital radio, and the CT-ContactCom.

These CT-DECT JetCom systems are used during ground handling, takeoff preparation, and maintenance of military aircraft, such as the Eurofighter and Tornado.

Without this internally developed CT system, the ground personnel involved in this work process would not be sufficiently protected against noise (up to approximately db (A)140), and would be unable to maintain the necessary voice communication.

CeoTronics AG Adam-Opel-Str. 663322 Rödermark (Germany) Tel. +49 6074 8751-722 Fax +49 6074 8751-720 E-mail: investor.relations@ceotronics.com

www.ceotronics.com