First Sensor AG

Quarterly Report • Nov 27, 2008

COMPANY REPORT

for the first nine months of the 2008 business year (unaudited)

2008

QUARTERLY STATEMENT III/2008 SILICON SENSOR GROUP

Indices Jan. 1 – Sept. 30, 2008 (nine-month report)

	Jan. 1 - Sept. 30, 2008 €1,000	Jan. 1 - Sept. 30, 2007 €1,000	Change, €1,000	Change, %
Sales revenue	29,482	27,472	2,010	7
Orders on hand	18,477	22,122	-3,645	- 16
EBITDA	7,433	7,924	- 491	- 6
EBIT	5,240	5,797	- 557	-10
Annual surplus	2,976	3,904	- 928	- 24
Annual surplus, €/individual
share certificate	0.76	1.08	- 0.32	- 30
No. of shares (weighted)	3,896,150	3,628,399	267,751	7
R & D expenditure	3,328
		3,335	- 7	0
Workforce (Sept. 30, 2007)	330	294	36	12

Indices July 1 – Sept. 30 (3rd quarter 2008)

	July 1 - Sept. 30, 2008 €1,000	July 1 - Sept. 30, 2007 €1,000	Change, €1,000	Change, %
Sales revenue	8,857	8,653	204	2
Orders on hand	18,477	22,122	-3,645	-16
EBITDA	2,033	2,003	30	2
EBIT	1,288	1,297	- 9	0
Quarterly surplus	405	1,327	- 922	- 69
Quarterly surplus,
€/individual share certificate	0.10	0.34	- 0.24	- 71
No. of shares (weighted)	3,896,150	3,895,650	500	0
R & D expenditure	1,420	1,183	237	20
Workforce (Sept. 30, 2007)	330	294	36	12

Silicon Sensor stays on course in difficult times

Dear shareholders, dear business partners,

This is a year of transition for the Silicon Sensor group where we aim not at growth as such but seek to create conditions for further expansion. I have pointed this out for some time now and am all the more pleased to report that the group's operating business during the first nine months of the 2008 business year shaped up better than expected, despite the ongoing financial crises and a declining global economy.

Production at our old site in Berlin closed down in September as planned and equipment was moved to the new factory. Due to the exemplary commitment of the entire workforce, this move was completed as early as October. Equipment is now being recommissioned and I am confident that plant and equipment will be ready for production again in November. Despite this heavy workload, sales in the first nine months of the business year rose to €29.48m (compared with €27.47m as per Sept. 30, 2007), an increase of 7 %.

Both EBITDA and the operative result EBIT were almost unchanged in the 3rd quarter compared with the previous year and thus above plan. Unfortunately, a tax office investigation of the years 2001 - 2004 resulted in a considerable extra tax demand for which provisions had to be made in the 3rd quarter. A comparison of operative results is also difficult because the change of tax rates under the corporate tax reform adopted on July 6, 2007 affected the accounting for deferred taxes at the end of the 3rd quarter of 2007, as required by IAS 34 and IAS 12. Under the latter, the resulting tax benefits worth €507,000 had been collected and affected current results in the previous year. In sum, these tax effects of about €1m distort the operative net result.

This and higher interest costs during the first nine months of the business year have reduced the result after interest and tax by 24 % compared with last year, from €3.9m (Sept. 30, 2007) to €2.98m. Making allowance for the greater number of shares after the 2007 capital increase, earnings per share dropped by €0.32, from €1.08 (Sept. 30, 2007) to €0.76 (Sept. 30, 2008). Without the a.m. tax effects, Silicon Sensor group results for the current business year would have been almost the same as last year.

The labor force rose from 294 (Sept. 30, 2007) to 330 (Sept. 30, 2008), orders on hand remained almost constant at €18.48m (Sept. 30, 2008) compared with the previous quarter (June 30, 2008: €18.96m). In this connection, please note that sales which could result due to the Nomination Letter received on Oct. 25, 2007 from the end of 2008 will not be listed as orders on hand until specific monthly delivery demands have been received.

Production continues to focus on customized products. Some of these require enormous development efforts and include mainly custom-designed hybrid circuits, packaging and sensor solutions, and avalanche photodiodes.

Business development

Silicon Sensor makes customized opto-electronic sensors (photodetetors) which identify and measure alpha, beta, gamma and X rays, as well as UV and nearinfrared radiation and visible light. In addition, the group develops and manufactures non-optical sensors, highly reliable custom-designed hybrid circuits and products of microsystem technology and advanced packaging. Clients include leading industrial corporations and research establishments wishing to outsource highly specialized processes on grounds of production engineering and strategy.

The a.m. products serve as basic components in a wide range of applications, making the group mostly independent of business cycles in individual industries. Market conditions for these high-end products are generally seen as favorable, with good potential for future growth.

Silicon Sensor is one of the world's leading engineering concerns developing and manufacturing optical and electronic high-end solutions for maximum requirements. Its avalanche photodiodes (APD) and avalanche photodiode arrays have made a name for themselves worldwide. Clients use our APDs and laser modules in such products as a variety of high-precision distance measuring systems.

Planning for business years to come suggests further growth, with the group's liquidity planning assuming greater sales and related positive operative cash flows. The Board sees current liquidity as sufficient in order to reach growth targets.

Business abroad

Apart from seeking greater market shares in Europe, the group sees major growth potential in Asia and North America and will therefore move into these markets on a larger scale. An essential role will be played by Pacific Silicon Sensor Inc., a member of the group (sales of \$1.38m as per Sept. 30, 2008 with a clearly improved result, previous year \$1.29m).

Personnel

At the end of the quarter, the group had a total workforce of 330 (as against 294 at the end of Q3 in 2007).

Dr. Bernd Kriegel, member of the Board, left the company on Sept. 18, 2008.

Prospect

Silicon Sensor has established itself in the optical and non-optical sensors and hybrid electronics market as a leading specialist supplier of custom-designed high-quality products. The group expects stable sales and revenues, along with profitability on the part of all subsidiaries. While the current business year is focused on creating a basis for further growth, the next one is to put greater emphasis on the continuous expansion of sales and earnings.

I am convinced that 2009 will see the market significance of the group increase even further and that its know-how can serve as a strategic success factor for consistently expanding sales and earnings.

In view of multifunctional industry use, most growth will continue to come from sensor technology. The company's development skills and potential are vital in providing high-quality products for generally accepted problem solutions.

Berlin, November 2008

Silicon Sensor International AG

Dr. Hans-Georg Giering

CEO

INTERIM BALANCE SHEET

AS PER SEPT. 30, 2008 (IFRS)

Assets	Sept. 30, 2008 €1,000	Sept. 30, 2007 €1,000
SHORT-TERM ASSETS
Cash	6,876	8,562
Marketable securities	0	123
Trade debtors	5,175	6,349
Due from affiliated companies	34	25
Inventories	9,501	7,182
Tax refund claims	186	111
Prepaid expenses, deferred charges and other short
term assets	1,657	1,022
Interest heding instruments	73	69
Short-term assets, total	23,502	23,443
LONG-TERM ASSETS
Tangible assets	25,565	12,905
Intangible assets	5,589	5,914
Investments	124	99
Goodwill	11,142	11,142
Latent tax claims	16	16
Other long-term assets	30	38
Long-term assets, total	42,466	30,114
TOTAL ASSETS	65,968	53,557
Capital stock and liabilities SHORT-TERM LIABILITIES
Short-term loans	4,493	4,480
Accounts payable	1,887	1,721
Due to affiliated companies	0	2
Advances from customers	463	420
Provisions	498	524
Liabilities from income tax	3,864	3,024
Other short-term liabilities	2,385	2,222
Short-term liabilities, total	13,590	12,393
LONG-TERM LIABILITIES
Long-term interest-bearing loans	10,589	4,064
Provisions	111	121
Latent taxes	1,811	1,911
Prepaid expenses and deferred charges	2,830	1,267
Long-term liabilities, total	15,341	7,363
MINORITY INTERESTS	101	70
EQUITY
Subscribed capital	11,689	11,687
Reserves	15,092	14,432
Exchange equalization items	-326	-276
Net earnings	10,481	7,888
Equity, total	36,936	33,731
TOTAL EQUITY AND LIABILITIES	65,968	53,557

GROUP INCOME STATEMENT

JAN. 1 – SEPT. 30, 2008 (IFRS)

	July 1 - Sept. 30,	July 1 - Sept. 30,	Jan. 1 - Sept. 30,	Jan. 1 - Sept. 30,
	2008	2007	2008	2007
	€1,000	€1,000	€1,000	€1,000
Sales revenues	8,857	8,653	29,482	27,472
Other operating income	357	548	990	1,166
Increase or decrease in finished
goods inventories and work in	868	427	2,142	1,818
progress
Capitalized cost of self-constructed	8	7	63	16
assets Cost of materials/ Cost of
purchased services	-3,020	-3,157	-10,265	-9,510
Personnel expenses	-3,555	-3,016	-10,537	-9,170
Depreciation of fixed assets and
intangible fixed assets
	-745	-706	-2,193	-2,127
Other operating expenses	-1,482	-1,459	-4,442	-3,868
OPERATING RESULT	1,288	1,297	5,240	5,797
Interest yield/cost	-184	-81	-361	-345
Currency gain/loss	10	0	-24	0
PRE-TAX AND PRE-MINORITY INTEREST INCOME	1,114	1,216	4,855	5,452
Taxes on income	-724	114	-1,854	-1,514
PRE-MINORITY INTEREST
INCOME	390	1,330	3,001	3,938
Minority interest	15	-3	-25	-34
NET INCOME/NET LOSS FOR
THE PERIOD	405	1,327	2,976	3,904

Net earnings per share (undiluted)	0.10	0.34	0.76	1.08
Average outstanding shares
(undiluted)	3,896	3,896	3,896	3,628
Net earnings per share (diluted)	0.10	0.34	0.76	1.08
Average outstanding shares
(diluted)	3,896	3,896	3,896	3,628

7

GROUP FUNDS STATEMENT

JAN. 1 – SEPT. 30, 2008 (IFRS)

	Jan. 1 - Sept. 30,2008 €1,000	Jan. 1 - Sept. 30, 2007 €1,000
PRE-TAX INCOME	4,855	5,797
Depreciation of intangible assets and tangible assets	2,193	2,126
Other payment-ineffective expenses/revenue	187	122
Income from investment grants	-398	-10
Losses from asset retirement	0	0
Interest yields	-248	0
Interest costs	609	0
Other profit and loss	24	-1,156
Increase/decrease of provisions	23
Increase/decrease of inventories, trade debtors and other assets not assigned to investment/financing activity	-1,272	-3,622
Increase/decrease of accounts payable and other liabilities not assigned to investment/financing activity
	-94	-262
Interest paid Earnings tax paid	-590 -1,203	-489 -594
CASHFLOW FROM CURRENT BUSINESS
	4,086	1,912
Payments for investment into tangible and intangible assets	-13,205	-3,039
Payments for investment into affiliated companies	0
Proceeds from the retirement of tangible and intangible assets	0	0
Payments to affiliated companies	0	0
Proceeds from security sales	0	0
Investment grant net payments	0	-96
Proceeds from investment grants	1,455	0
Interest received	248	159
CASHFLOW FROM INVESTMENT ACTIVITY	-11,502	-2,976
Proceeds from injection of equity finance Payments for repaying financial credits	0 -2,365	6,281 -2,172
Dividends	-390	-352
Transaction costs for issue of shares	0	0
Proceeds from financial credit uptake	6,885	907
CASHFLOW FROM FINANCING ACTIVITY	4,130	4,664
CURRENCY DIFFERENCES FROM CONVERTING
FINANCIAL FACILITIES	-15	-18
PAYMENT-EFFECTIVE CHANGES IN FINANCIAL
FACILITIES	-3,301	3,582
Financial facilities at the beginning of the business year	10,177	4,980
FINANCIAL FACILITIES AS PER SEPT. 30, 2008	6,876	8,562

EQUITY CHANGE STATEMENT

JAN. 1 – SEPT. 30, 2008 (IFRS)

	No. of shares	Sub scribed capital	Reserves	Group net earnings	Currency compen sation items	Minority interests	Total equity
	'000	€1,000	€1,000	€1,000	€1,000	€1,000	€1,000
As of Dec. 31, 2006	3,523	10,569	9,497	3,984	-214	36	23,872
Net earnings from cash flow hedges			1				1
Exercise of share options	21	61	56				117
Share-based payment			122				122
Dividends				-352			-352
Cash capital increase	352	1,057	5,108				6,165
Differences from currency conversion					-62		-62
Period result				3,904		34	3,938
As of Sept. 30, 2007	3,896	11,687	14,784	7,536	-276	70	33,801

	No. of shares	Sub scribed capital	Reserves	Group net earnings	Currency compen sation items	Minority interests	Total equity
	'000	€1,000	€1,000	€1,000	€1,000	€1,000	€1,000
As of Dec. 31, 2007	3,896	11,689	14,935	7,895	-335	76	34,260
Exercise of share options							0
Share-based payment			187				187
Dividends				-390			-390
Differences from currency
conversion					9		9
Sum of result directly included
in equity			-30				-30
Period result				2,976		25	3,001
As of Sept. 30, 2008	3,896	11,689	15,092	10,481	-326	101	37,037

SILICON SENSOR INTERNATIONAL AG NOTES REGARDING THE GROUP'S INTERIM STATEMENT

JAN. 1 – SEPT. 30, 2008 (all amounts in €1,000 unless stated otherwise)

1. General

Silicon Sensor International AG, Berlin (hereafter "SIS", "the company") and its subsidiaries are active in the production of sensors and microsystems. Company business is focused on the development, production and marketing of all types of custom-designed optical and non-optical semiconductor sensor systems and the development and manufacture of hybrid circuits. A number of subsidiaries operate as independent business units under the SIS roof. Apart from customized development and optical sensor packaging, Pacific Silicon Sensor Inc. markets most sensor chips and sensor systems in North America. At the end of the quarter, the group had a total workforce of 330 (as against 294 at the end of Q3 in 2007).

The registered office of SIS is at Charlottenstraße 57, 10117 Berlin.

The object of the company is to develop, manufacture and market all types of sensor systems at home and abroad, and to acquire participations.

2. Group's financial statement pursuant to § 315a HGB

SIS has prepared the group's financial statement in keeping with § 315a HGB and IFRS (International Financial Reporting Standards).

3. Accounting and valuation techniques

These are the same for the interim statement as used in the SIS annual statement for 2007.

In 2007, the change in tax rates under the 2008 corporate tax reform adopted on July 6, 2007 was taken into account for latent taxes at the end of the reporting period, in keeping with IAS 34 and IAS 12. Pursuant to IAS 12, the resulting tax relief of €507,000 was shown as income as per Sept. 30, 2007.

4. Cash flow statement

SIS shows the cash flow from regular business in keeping with IAS 7 'cash flow analysis' using the indirect method.

5. Contingent liabilities

(1) In future, lawsuits and claims from litigation resulting in the normal conduct of business could be asserted vis-à-vis affiliated companies. Related risks are being analyzed for probability of occurrence. Even though the outcome of such disputes can not always be forecast in detail, the Board does not see any essential liabilities resulting therefrom.

(2) Financial commitments result from rentals of office space, car leasing and agreements with pension and welfare trusts. In keeping with the economic content of leases, they should be classified as operating leases.

Financial commitments were as follows:

	2008	2009 - 2013	from 2014
	€1,000	€1,000	€1,000
Rents, leases	1,080	3,377	5,640
Contribution-oriented
pensions plans	282	1,166	1,486
	1,362	4,543	7,126

As of Dec. 31, 2007

As of Sept. 30, 2008

	2008	2009 - 2013	ab 2014
	€1,000	€1,000	€1,000
Rents, leases	267	3,866	4,882
Contribution-oriented
pensions plans	66	1,166	1,486
	333	5,032	6,368

6. Divisional reporting

This has used the following basis:

(1) Order-related chip/component production

In this segment, the group essentially develops and manufactures high-quality, custom-designed silicon sensors and, in addition, assembles chips into complex customized hybrid circuits and components.

(2) Other products

These are largely sensor applications in the clinical field for the extra and intraoperative detection of tumor cells. The segment in particular includes semiconductor radiation sensors for routine industrial and laboratory use, and PC systems for layer thickness measurement, PET, radiochemistry and dosimetry.

1st quarter 2008

		Order-related chip/component production		Other products		Total
	March 31,	March 31,	March 31,	March 31,	March 31,	March 31,
	2008 €1,000	2007 €1,000	2008 €1,000	2007 €1,000	2008 €1,000	2007 €1,000
Segment sales	10,075	9,692	94	75	10,169	9,767
Segment result	1,034	1,295	19	18	1,053	1,313

1st half year 2008

	Order-related chip/component production		Other products		Total
	30.06.2008	30.06.2007	30.06.2008	30.06.2007	30.06.2008	30.06.2007
	€1,000	€1,000	€1,000	€1,000	€1,000	€1,000
Segment sales	20,465	18,651	160	168	20,625	18,819
Segment result	2,553	2,557	18	20	2,571	2,577

1st – 3rd quarter 2008

	Order-related chip/component production		Other products		Total
	30.09.2008	30.09.2007	30.09.2008	30.09.2007	30.09.2008	30.09.2007
	€1,000	€1,000	€1,000	€1,000	€1,000	€1,000
Segment sales	29,273	27,235	209	237	29,482	27,472
Segment result	2,967	3,888	9	16	2,976	3,904

7. Voluntary data

No company shares were held by officers as of Sept. 30, 2008.

8. Affirmation of legal representatives

I hereby affirm to the best of my knowledge that, in keeping with the accounting principles applying to interim statements, the group statement presents a realistic picture of the group's actual assets, liabilities, financial position and profit or loss and shows the course of business, trading results and the group's situation so as to reflect the actual conditions and describe the opportunities and risks of the group's expected development during the remainder of the business year.

Berlin, November 2008

Dr. Hans-Georg Giering CEO