CeoTronics AG

Quarterly Report • Oct 13, 2006

1. Business Report

Ladies and Gentlemen, Dear Shareholders,

The CeoTronics Group's consolidated results for the first quarter of fiscal year 2006/2007 (from June 1 to August 31, 2006) in accordance with IFRSs exceeded the record quarter of the previous year.

We were almost able to match the previous year's record quarterly revenues (€3,483 thousand). In the first quarter of the current fiscal year 2006/2007, we performed preparatory work for larger orders to be delivered during the second quarter.

Consolidated profit for the first quarter increased year-on-year by €15 thousand to €210 thousand (+7.7%).

We significantly increased our order backlog compared with the reporting date for the prior-year period by 45.2%. This extremely high order backlog is another reason for our optimism with respect to future business developments.

EBITDA (Earnings before Interest, Taxes, Depreciation and goodwill Amortization/impairment) dropped by €110 thousand compared with the prioryear period, from €601 thousand to €491 thousand. EBIT decreased by €28 thousand, from €394 thousand to €366 thousand. In contrast to the previous year's consolidated net profit of €195 thousand, net profit of €210 thousand was generated. Consolidated net profit therefore improved by €15 thousand. Gross cash flow decreased by €67 thousand in the period under review, from €402 thousand in the prior-year period to €335 thousand. Earnings per share improved by €0.01 to €0.10 compared to €0.09 for the same period last year. Consolidated equity as of August 31, 2006 amounted to €11,554 thousand, while the equity ratio was 80.5% (previous year: 78.8%). The equity ratio thus reached a new record level.

CeoTronics increased its revenues in Germany, France, the United Kingdom, Poland, the rest of Europe, and the rest of the world, in some cases recording extremely significant growth in the first quarter as compared with the previous year.

Revenues in Switzerland, Spain, and the U.S.A. fell in the first quarter of 2006/2007. This was due to low volume in some cases (U.S.A.) and to extremely high prior-year revenues in others (Spain and Switzerland). In Spain and in Switzerland, however, order backlogs increased by 556% and 163% respectively, year on year.

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

The increase in the cost of sales was due to the rising proportion of highervalue components, the change in the order structure, increased personnel capacity, and an increased elimination of intragroup profits.

The trend in research and development expenses reflects the increased effort involved in developing new products and modifying existing technologies, as well as increased personnel capacity.

Selling and marketing expenses declined as planned due to lower trade fair expenses, among other things.

Administrative expenses increased, primarily as a result of rising employee expenses and personnel capacity.

The number of employees in the Group (including trainees) increased to 134 as of August 31, 2006 (August 31, 2005: 130). All new jobs were created in Germany.

At +3.4% in the period under review, CeoTronics' share price does not reflect the positive development of the company. Our extremely positive figures for fiscal year 2005/2006, which were published in detail in August, and the proposed dividend of €0.30 per share (+50%) did not have a sufficiently positive effect on our share price in the period up to the reporting date of August 31, 2006.

However, CeoTronics' shares clearly outperformed the TECDAX by 6.0% and the TAS (Technology All Share) by 6.8%.

The positive share price performance should also be bolstered by the positive results of the research by German Business Concepts GmbH (the study calculated a fair value of €10.38 for CeoTronics shares) and by designated sponsoring (including trading on the XETRA) by Gebhard & Co. Wertpapierhandelsbank AG.

In keeping with tradition, CeoTronics expects to issue its revenue and earnings targets for fiscal year 2006/2007 in January 2007, at the time of publication of its half-year results.

CeoTronics' results for the first quarter of 2006/2007 and its order backlog have met the expectations of the Board of Management, and the Company remains on course for success.

Thomas H. Günther Berthold Hemer Chairman of the Board of Management Chief Technology Officer

Rödermark, October 13, 2006

Deputy Chairman

2. Consolidated Balance Sheet (IFRS)

Assets	Quarterly Report	Annual Report
	(closing date of current quarter)	(closing date of last annual
	August 31, 2006	report)
		May 31, 2006
	€ thousand	€ thousand
Current assets
Cash and cash equivalents	1,564	2,376
Trade receivables	2,925	2,571
Inventories	4,009	3,754
Other current assets	532	229
Total current assets	9,030	8,930
Noncurrent assets
Property, plant, and equipment	3,225	3,262
Intangible assets	187	180
Goodwill	1,357	1,364
Noncurrent financial assets	0	0
Deferred tax assets	553	535
Total noncurrent assets	5,322	5,341
Total assets	14,352	14,271

Equity and Liabilities	Quarterly Report	Annual Report
	(closing date of current quarter)	(closing date of last annual
	August 31, 2006	report)
		May 31, 2006
	€ thousand	€ thousand
Current liabilities
Current finance lease obligations	260	175
Trade payables	530	679
Advance payments received	26	147
Provisions	579	932
Current tax payables	397	219
Other current liabilities	578	347
Total current liabilities	2,370	2,499
Noncurrent liabilities
Noncurrent financial liabilities	428	429
Total noncurrent liabilities	428	429
Equity
Subscribed capital	6,600	6,600
Capital reserves	4,471	4,471
Retained earnings	16	16
Cumulative other recognized income and expense	-13	-13
Net retained profit	436	226
Equity attributable to shareholders of CeoTronics AG	11,510	11,300
Minority interest	44	43
Total equity	11,554	11,343
Total equity and liabilities	14,352	14,271

3. Consolidated Income Statement (IFRS)

	Quarterly Report
Income Statement		Quarterly Report
	(current quarter)	(comparative quarter
		of previous year)
	June 1, 2006-	June 1, 2005-
	August 31, 2006	August 31, 2005
	€ thousand	€ thousand
Revenues	3,799	3,843
Cost of sales	-1,929	-1,872
Gross profit	1,870	1,971
Selling and marketing expenses	-869	-916
General and administrative expenses	-359	-310
Research and development expenses	-272	-245
Other operating income and expenses	5	-5
Impairment of goodwill	-9	-101
Operating profit (EBIT)	366	394
Interest income/expenses	5	-2
Profit before tax	371	392
Income tax expense	-161	-197
Consolidated profit	210	195
Consolidated profit attributable to:
Minority interest	0	-2
Shareholders of CeoTronics AG	210	197
Earnings per share (basic) in €	0.10	0.09
Earnings per share (diluted) in €	0.10	0.09
Weighted average shares outstanding (basic)	2,199,998	2,199,998
Weighted average shares outstanding (diluted)	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-August 31, 2006	year)
		June 1, 2005-August 31, 2005
	€ thousand	€ thousand
Cash flow from operating activities
Profit before tax	371	392
Income tax expense	-161	-197
Consolidated profit	210	195
Depreciation, amortization, and impairment losses	125	207
Gross cash flow	335	402
Changes in assets and liabilities
Change in trade receivables	-354	123
Change in inventories	-255	-39
Change in other assets	-303	-249
Change in trade payables	-149	0
Change in advance payments received	-121	-29
Change in other provisions	-353	-296
Change in tax payables	178	35
Change in other current liabilities	231	227
Change in deferred tax liabilities	-18	152
Total changes in assets and liabilities	-1,144	-76
Net cash provided by operating activities	-809	326
Cash flow from investing activities
Payments to acquire intangible assets	-18	-1
Payments to acquire property, plant, and equipment	-68	-113
Change in noncurrent financial assets	0	2
Change in foreign currency differences	-3	1
Disposal of noncurrent assets (net carrying amounts)	1	0
Net cash used in investing activities	-88	-111
Cash flow from financing activities
Change in current financial liabilities	85	-138
Change in noncurrent financial liabilities	-1	-14
Dividend payment to minority interest	0	0
Dividend payment to shareholders of CeoTronics AG	0	0
Net cash used in financing activities	84	-152
Change in cash and cash equivalents	-813	63
Effect of exchange rate changes on cash and cash equivalents	1	-20
Cash and cash equivalents at beginning of period	2,376	2,243
Cash and cash equivalents at end of period	1,564	2,286

5. IFRS Statement of Changes In Equity

	Equity attributable to shareholders of CeoTronics AG
€ thousand	Subscribed capital	Capital reserves	Retained earnings	Net retained profit/net accumulated losses	Cumulative other recognized income and expense	Total	Minority interest	Total equity
Current year
Balance at May 31, 2006	6,600	4,471	16	226	-13	11,300	43	11,343
Consolidated profit				210		210		210
Dividend distribution
Currency translation adjustments							1	1
Change in minority interest
August 31, 2006	6,600	4,471	16	436	-13	11,510	44	11,554
Previous year's figures for comparison
Balance at May 31, 2005	6,600	4,471	16	-283	-33	10,771	48	10,819
Consolidated profit				197		197	-2	195
Dividend distribution
Currency translation adjustments					2	2	0	2
Change in minority interest							-23
Balance at August 31, 2005	6,600	4,471	16	-86	-31	10,970	23	10,993

The equity ratio of the CeoTronics Group was 80.5% as of August 31, 2006 (previous year: 78.6%). 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 Three Months Ended August 31, 2006

The unaudited consolidated quarterly report of CeoTronics AG as of August 31, 2006 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.

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 production process and the marketing methods. Internal and external reporting primarily follows geographic criteria.

The information below is presented by region.

Revenues for the first quarter of 2006/2007 and 2005/2006 are attributable as follows:

Country of origin (primary segment):

	Q1 2006/2007	Q1 2005/2006
Revenues	€ thousand	€ thousand
Germany	2,453	1,903
Rest of Europe	1,276	1,836
Rest of world	70	104
Third-party revenues	3,799	3,843

By customer country (secondary segment):

	Q1 2006/2007	Q1 2005/2006
Revenues	€ thousand	€ thousand
Germany	1,494	1,238
Rest of Europe	2,227	2,481
Rest of world	78	124
Third-party revenues	3,799	3,843

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

	Q1 2006/2007	Q1 2005/2006
Profit/loss	€ thousand	€ thousand
Germany	232	217
Rest of Europe	49	128
Rest of world	-71	-151
Consolidated profit	210	194

Segment assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of August 31, 2006 and August 31, 2005:

	August 31, 2006	August 31, 2005
Segment assets	€ thousand	€ thousand
Germany	8,871	8,958
Rest of Europe	3,858	3,130
Rest of world	1,623	1,839
Total segment assets	14,352	13,927

Segment liabilities are attributable as follows to the subsidiaries in the various regions (primary segment) as of August 31, 2006 and August 31, 2005:

	August 31, 2006	August 31, 2005
Segment liabilities	€ thousand	€ thousand
Germany	2,262	2,351
Rest of Europe	543	566
Rest of world	41	16
Total segment liabilities	2,846	2,933

Noncurrent assets are attributable as follows to the subsidiaries in the various regions (primary segment) as of August 31, 2006 and August 31, 2005:

	August 31, 2006	August 31, 2005
Noncurrent assets	€ thousand	€ thousand
Germany	3,262	3,226
Rest of Europe	586	628
Rest of world	921	954
Total noncurrent assets	4,769	4,808

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

	Q1 2006/2007	Q1 2005/2006
Investments	€ thousand	€ thousand
Germany	61	68
Rest of Europe	25	46
Rest of world	0	0
Total investments	86	114

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

	Q1 2006/2007	Q1 2005/2006
Depreciation, amortization, and impairment losses	€ thousand	€ thousand
Germany	101	81
Rest of Europe	19	20
Rest of world	5	106
Total depreciation, amortization, and impairment losses	125	207

8. Reportable Securities Holdings

Reportable securities holdings as of August 31, 2006		CeoTronics shares (ISIN DE0005407407/WKN 540740) (quantity)	Virtual CeoTronics stock options (quantity)
Board of Management
Chairman of the Board of Management	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
Supervisory Board	Stephan Haack	0	0

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

9. CeoTronics Shares

At only +3.4% in the period under review, CeoTronics AG' share price performed well below the Board of Management's expectations, in view of the extremely positive figures for the 2005/2006 fiscal year and based on the actual positive business development. However, the share price did significantly better than the negative performance of the TECDAX and TAS (Technology All Share).

In fiscal year 2005/2006 and in Q4 of fiscal year 2005/2006, as well as in Q1 of the current fiscal year 2006/2007, CeoTronics beat almost all its previous records:

Consolidated profit for fiscal year 2005/2006 (year-on-year changes in %)

• ¾ Revenues (+13.7%)
• ¾ EBITDA (+11.5%)
• ¾ EBIT (+6.9%)
• ¾ Profit before tax (+9.7%)
• ¾ Gross cash flow (+3.2%)
• ¾ Order backlog (+10.1%)

Consolidated profit for Q4 of fiscal year 2005/2006 (year-on-year changes in %)

¾ Revenues (+57.4%)

It appears that the market has noticed CeoTronics' good key figures during the current second quarter of fiscal year 2006/2007. CeoTronics' share price performance improved significantly between June 1, 2006 and October 12, 2006, rising 16.0% (from €7.0 to € 8.12 per share). The start of designated sponsoring, including trading on the XETRA, by Gebhard & Co. Wertpapierhandelsbank AG in early September 2006, as well as the publication of German Business Concepts GmbH's CeoTronics study in mid September 2006 are also likely to have contributed to this share price development. The German Business Concepts GmbH study calculated a fair value of €10.38 for CeoTronics shares.

The record consolidated profit for the first quarter of the current 2006/2007 fiscal year and the extremely high order backlog as of August 31, 2006 should also bolster the positive development of the share price.

10. Changes in the Consolidated Group Structure

There were no changes in the scope of consolidation in the first quarter 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 quarter of 2006/2007.

12. Current Financial Calendar

General Meeting 2006 Friday, November 3, 2006 German Equity Forum Fall 2006 Tuesday, November 28, 2006 MKK Munich Capital Market Conference Wednesday, December 13, 2006 Report on Q2 2006/2007 Friday, January 12, 2007 Report on Q3 2006/2007 Friday, April 13, 2007 End of fiscal year 2006/2007 Thursday, May 31, 2007 4th Quarterly report and annual financial statement 2006/2007 Friday, August 17, 2007 Annual earnings press conference 2007 Thursday, August 30, 2007 Analyst meeting 2007 Thursday, August 30, 2007 Report on Q1 2007/2008 Friday, October 12, 2007 General Meeting 2007 Friday, November 2, 2007

13. New Edition of CT-NEWS

The new edition of CT-NEWS can be downloaded at www.ceotronics.com or is available in print upon request from CeoTronics AG, Marketing Service, Adam-Opel-Strasse 6, 63322 Rödermark, Germany (thomas.stamm@ceotronics.com).

CeoTronics AG 63322 Rödermark (Germany) Adam-Opel-Str. 6 Tel. +49 6074 8751-722 Fax +49 6074 8751-720 E-mail: investor.relations@ceotronics.com

www.ceotronics.com