InTiCa Systems AG — Interim / Quarterly Report 2006

Aug 30, 2006

Half-year report 2006 of InTiCom Systems AG

unaudited according to IFRS 1 January 2006 – 30 June 2006

Successful start to automotive serial production at the new production location in Prachatice (Czech Republic)

InTiCom Systems in Q2 2006 and the first half 2006

The Group	Q2 2005 EUR (000)	Q2 2006 EUR (000)	H1 2005 EUR (000)	H1 2006 EUR (000)	Change in %
Sales	6,067	10,330	15,219	20,541	35,0
Return on sales (net income)	8.3 %	3.1 %	6.6 %	4.3 %
EBITDA	954	743	1,835	1,845	0.5
EBIT	786	510	1,532	1,378	-10.1
EBT	809	516	1,584	1,431	-9.7
Net income of the period	504	316	1,008	875	-13.2
Earnings per share (EUR) based on 4,287,000 shares	0.12	0.07	0.24	0.20	-16.7
Earnings per share (EUR) undiluted and based on 4,287,000 shares	0.12	0.07	0.24	0.20	-16.7
Cash flow from operating activities per share (EUR)	0.66	0.31	0.66	0.31	-53.0
Cash flow from operating activities	2,809	1,311	2,809	1,311	-53.3
Capital expenditures	1,705	2,274	2,583	4,064	57.3
	30.6.2005 EUR (000)	30.6.2006 EUR (000)	31.12.2005 EUR (000)	30.6.2006 EUR (000)	Change in %
Balance sheet total	18,965	33,687	24,532	33,687	37.3
Liquidity*)	10,551	15,978	10,702	15,978	49.3
Equity	12,147	23,722	13,480	23,722	76.0
Equity ratio	64 %	70 %	55 %	70 %
Employees	91	137	102	137	34.3

The share **)	2005 XETRA in EUR	(up to 30 June) 2006 XETRA in EUR
Year end share price	20.08	16.19
Year high	22.53	30.33
Year low	6.00	16.19
Market capitalisation at year end (in million EUR)	78.3	69.4
Number of shares	3,900,000	4,287,000

*) The liquid funds equal the sum of the two balance sheet positions securities and cash and cash equivalents.

**) Share prices have been adjusted retroactively due to the capital increase from the company's own resources and the resulting allocation of "bonus shares" with a ratio of 1:2 on 12 June 2006 to the shareholders of the company.

Foreword

The Management Board: Maria Grohs, Dr. Paul Grohs, Dieter Schopf

Dear shareholders, customers and business partners!

InTiCom Systems began serial production of our RFID products for the automotive sector at our new production location in Prachatice (Czech Republic) in mid-May 2006. The highly automated serial production, which was tested and audited by our customers, meets the highest quality standards of the automotive industry. The first components for keyless go and tyre pressure monitoring systems are currently being produced for five systems suppliers and automotive manufacturers from Asia and Germany. In the current third quarter and in Q4

of the 2006 fiscal year, another three lines will be added to the already existing production line to complete the serial production for the automotive sector.

The early integration of the new employees already in the start-up phase of serial production and their simultaneous training were a precondition to this successful production start and innovative processes in serial production of automobile electronics. This allowed for a rapid auditing and clearance for production by our automotive customers. This successful strategy shortened the start-up phase of production and resulted in a virtual doubling of sales in Q2 despite this additional amount of work. Sales in the first half of 2006 soared 35 % compared to the same period of the previous year.

The early training of the new employees already hired in mid-February 2006 as well as the parallel rise in inventories to assure a smooth production start-up caused a temporary hike in start-up costs in terms of material and personnel.

The high expectations in the rapid expansion of the VDSL network in Germany – particularly in the scope of the football World Cup – have yet to

be met. Furthermore, there is a political dispute between the EU and the German Federal Government on the issue of whether this new high-speed telecommunications technology should be regulated and if so, to what extent. We expect a decision on the issue as early as in the current year 2006. The resulting enormous potential of this growth market should then be reflected in higher sales and earnings of InTiCom Systems in the 2007 fiscal year.

Despite delays in the VDSL network expansion in Germany in the past, the expansions in the field of DSL technology up to now have primarily been based on the steady growth of foreign business and the development of new DSL networks in more and more countries around the globe.

The resolution of the AGM on 18 May 2006 to increase the share capital of EUR 1,429,000 from the company's own resources through the conversion of a part of the capital reserve of EUR 2,858,000 yields a new share capital of EUR 4,287,000. New bonus shares with a ratio of 1:2 were allocated to the shareholders. Individually this means that each shareholder now owns three times more shares. As the adjusted share price only amounts to a third of the previous

value, the value of each portfolio of shares as well as of InTiCom Systems AG itself has remained the same.

As of the end of the first half (30 June 2006), the Group's equity nearly doubled compared to the value of 30 June 2005 from EUR 12.1 million to EUR 23.7 million (2005 financial accounts: EUR 13.5 million). This resulted in a strengthened and rock-solid equity ratio of 70 % (31 December 2005: just under 55 %).

Passau, August 2006

InTiCom Systems AG The Management Board

Maria Grohs Management Board

Dr. Paul Grohs Management Board

Dieter Schopf Management Board

Management report

InTiCom Systems – 2006 share price performance

The issue of bonus shares as a result of the capital increase with a ratio of 1:2 from the company's own resources pursuant to the resolution of the AGM on 18 May 2006 has resulted in a purely calculative reduction in the share price by two-thirds. For this reason the share price of InTiCom Systems has correspondingly been retroactively adjusted.

The positive market expectations in regard to the company's ongoing sales and earnings growth were also reflected in the share price performance of the first four months of the

year 2006. Compared to the 2005 year-end price of EUR 20.08, the share had increased by more than 38 % to EUR 27.77 at the end of the quarter (31 March 2006). The declining trend of the capital market since the beginning of May 2006, which also affected technology stocks, resulted in a highly volatile share price decline through the end of the first half (30 June 2006) to EUR 16.19. The virtually equal performance of the share price compared to the benchmark TecDAX is still characterised by a highly volatile development. After a strong rise, the share price returned to its year-opening level from the beginning of August.

Some 150 shareholders took advantage of the company's AGM on 18 May 2006 in Passau to take part in an active dialogue with the Management Board. The shareholder presence of around 24 % also included the shares of the company's bodies. All issues on the agenda were resolved with an almost 100 % majority. At the subsequent constituents' meeting of the Supervisory Board, Dr. Wulfdieter Braun was elected as the new Chairman and Mr. Karl Kindl as the Vice Chairman of the Supervisory Board.

The Management and Supervisory Boards do not possess stock options according to section 160 sub.1 No. 2 and 5 Stock Corporation Act (AktG).

Key share data for InTiCom Systems

ISIN	DE0005874846
Ticker	IS7
Market segment	Prime Standard
Key industrie	Technology
Industry Group	Communications Technology
Indices	Prime All Share, Tec All Share, CDAX, GEX
Designated Sponsor	Concord Effekten AG
Capital stock	EUR 4,287,000
Share class	non-par common shares

Shareholdings subject to reporting requirements

Share of capital stock as of 30 June 2006	no. of shares	in %
Board of Management (incl. immediate family)
Maria Grohs and Dr. Paul Grohs combined	124,500	2.9
Dieter Schopf	120,000	2.8
Supervisory Board (incl. immediate family)
Karl Kindl	150,264	3.5
Dr. Wulfdieter Braun	6,015	0.1
Harald Nöth	3,486	0.1

35 % sales increase in the first half year in spite of production establishment in the Czech Republic and delay of the VDSL network extension in Germany

InTiCom Systems generated sales of EUR 10.3 million in Q2 after EUR 10.2 million in the first three months of the 2006 fiscal year. For H1 2006 this yields sales growth of 35 % to EUR 20.5 million (previous year EUR 15.2 million). DSL splitters for subscribers and national telecommunications companies remained the main sales drivers. The most pronounced growth was again generated abroad as well as initial sales from the automotive electronics segment.

Earnings in the second quarter 2006 fell short of the previous

year's quarter for the first time. This was due to start-up costs through the start of serial production in the automotive electronics segment

Increased personnel and material expenses to secure the smooth start of serial production in automotive electronics early on at the new production location in Prachatice (Czech Republic) and the marked-to-market valuation of fixed-interest securities according to IAS/IFRS as of 30 June 2006 resulted in an imputed book loss of a good EUR 0.3 million. This alone caused lower profits from ordinary activities (EBT) of EUR 0.3 million in the second quarter 2006 for the first time compared to the same quarter of the previous year of EUR 0.5 million. H1 earnings (EBT) totalling

EUR 1.4 million were thus only about 10 % lower than the previous year's figure of EUR 1.5 million. Under the constant assumption of a tax rate of some 38 %, H1 net income of EUR 0.9 million results (previous year EUR 1.0 million). InTiCom Systems thus generated earnings per share of EUR 0.20 in H1 2006 (previous year EUR 0.24).

Improvements in productivity and moderate rise in material expenses further confirm the Group's profit thinking

A material expense ratio only slightly higher in H1 2006 (due to the start of serial production of the new automotive electronics plant in the Czech Republic) to the tune of 80.2 % compared to 78.2 % in the same period

InTiCom Systems AG shareholder structure

Start of serial production in the Czech Republic impacts the employee trend

	30 June 2006	31 Dec. 2005	30 June 2005
Employees in the Group	137	102	91
thereof in Germany	34	33	25
thereof rest of world	103	69	66

Free Float of which: UBS Fund Management (Switzerland) AG 7,6 % KST Beteiligungs AG 5,1%

of the previous year documents the ongoing, consistent profit thinking of the company.

The personnel expense ratio in H1 2006 increases slightly to 9.5 % (previous year 8.4 %) due to the early personnel expansion to secure the successful production start in automotive electronics in the Czech Republic. It is also an impressive indication of the advantages of the fully-automated production facilities.

Research and development opens up new production fields in automotive electronics

Development expenses after six months of the fiscal year 2006 amounted to EUR 0.9 million (previous year EUR 0.5 million). The increase is primarily the result of the included development expenses of the newly founded location in Austria from the end of April 2005, which serves as a location for the development and manufacture of the company's own production technology. The increase also results from the personnel expansion of DSL development at the Passau location.

Additional customer-specific developments in access and driver detection systems as well as tyre pressure monitor systems are being implemented especially in the field of RFID applications and additional developments have begun for hybrid technology and for new customers.

Capital expenditures allow for the establishment of serial production in automotive electronics

Capital expenditures in H1 2006 amounted to some EUR 4.1 million (previous year EUR 2.6 million) and allowed for the further establishment of serial production for automotive electronics at the modern and highly automated production facility in the Czech Republic. Production there began in mid-May of this year for the handling of already existing serial orders for components of keyless go and tyre pressure monitor systems, immobiliser modules and filter applications of multiple systems suppliers and automobile manufacturers from Asia and Germany.

Significant increases in liquid funds due to the capital increase despite strong rise in capital expenditures

Liquid funds as of 30 June 2006 came out to EUR 16.0 million (previous year EUR 10.6 million) versus EUR 10.7 million on the balance sheet date in 2005. The strong rise in liquid funds was primarily the result of the cash inflow from the capital increase in Q1 to the tune of some EUR 9.4 million as well as from a continuously stringent working capital management.

DSL order coverage remains constant at around 3 months

InTiCom Systems' order backlog as of 30 June 2006 amounted to some EUR 12.6 million (previous year EUR 8.0 million), thus exceeding the previous year's figure significantly. In light of the annual sales in 2005, this results in continuous order coverage of some 3 months.

Outlook

The year 2006 will be heavily impacted by the decision of the German Federal Government on the regulation of the VDSL network in Germany or the lack thereof. The speed of the further expansion of this innovative communications technology in Germany will critically depend on this. Irrespective of when the government makes the decision, the growth potential of this future market will remain a significant driver for additional growth spurts in the DSL business of InTiCom Systems in the coming years.

The current challenge lies in securing the successful start of production and the expansion of serial production of the company's own products for the automotive industry with the quality as well as reliability in process and delivery demanded by the customers.

InTiCom Systems expects a moderate growth in sales and profit for 2006 compared to the past fiscal year. The full-year effect from the automotive division will first be seen in 2007.

Interim report according to IFRS

The interim report from 30 June 2006 was prepared according to the International Financial Reporting Standards (IFRS).

The Group's interim report includes all necessary accruals, and gives a true and fair view of the actual earnings, financial and asset situation according to the Management Board.

Consolidated Financial Statements of InTiCom Systems AG in H1 2006

from 1 January 2006 through 30 June 2006.

Consolidated statement of income

of InTiCom Systems according to IFRS/IAS

	01.04.2006 -30.06.2006 EUR (000)	01.04.2005 -30.06.2005 EUR (000)	01.01.2006 -30.06.2006 EUR (000)	01.01.2005 -30.06.2005 EUR (000)	Change*) 2006 to 2005 in %
Sales	10,330	6,067	20,541	15,219	35.0
Other income	158	20	222	40	455.0
Change in finished/unfinished goods	-149	31	-236	31	–
Other capitalised company-produced services	614	413	900	498	80.7
Raw materials and supplies	8,405	4,503	16,467	11,902	38.4
Personnel expenses	1,116	682	1,948	1,285	51.6
Depreciation	233	168	467	303	54.1
Other expenditures	689	392	1,167	766	52.3
Operating profit (EBIT)	510	786	1,378	1,532	-10.1
Financial expenses	53	2	95	5	1,800.0
Other financial income	59	25	148	57	159.7
Earnings before taxes	516	809	1,431	1,584	-9.7
Income taxes	200	305	556	576	-3.5
Profit from ordinary activities	316	504	875	1,008	-13.2
Net income of the period	316	504	875	1,008	-13.2

*) The changes are based on exact figures.

Consolidated cash flow statement

of InTiCom Systems

	01.01.2006 -30.06.2006 EUR (000)	01.01.2005 -30.06.2005 EUR (000)
Net income	875	1,008
+ Depreciation of fixed assets	467	303
- Write-ups on financial assets	0	0
- Decreases in provisions	-30	935
- Increase/ + decrease in current assets and other assets
Inventory	93	886
Trade receivables	472	-694
Other assets	-847	-244
+ Increase / - decrease in liabilities and other liabilities Accounts payable	-121	452
Other liabilities	402	163
Cash flow from operating activities	1,311	2,809
- Payments for investments in intangible assets	-809	-149
- Payments for investments in fixed assets	-3,255	-2,434
- Increase in financial assets in the scope of the short-term liquidity planning	-4,440
Cash flow for investing activities	-8,504	-2,583
+ Proceeds from the intake of loans and finance leases	0	0
- Payments for the amortisation of loans and finance leases	-1,389	-10
+ Proceeds from capital increase	9,435	0
Cash flow from financing activities	8,046	-10
Cash flow total	853	216
Cash and cash equivalents at the beginning of the period	1,529	10,335
Cash and cash equivalents at the end of the period	2,382	10,551

Consolidated balance sheet

of InTiCom Systems according to IFRS/IAS

ASSETS	30.06.2006 EUR (000)	31.12.2005 EUR (000)
Long-term assets
Intangible assets
Other intangible assets	1,905	1,180
Property, plant and equipment	9,171	6,299
Financial assets	33	33
Deferred tax assets	524	412
Total long-term assets	11,633	7,924
Current assets
Securities	13,596	9,156
Inventory	537	630
Trade receivables	2,492	2,964
Other current receivables	3,047	2,312
Cash and cash equivalents	2,382	1,546
Total current assets	22,054	16,608
Total assets	33,687	24,532

Consolidated balance sheet

of InTiCom Systems according to IFRS/IAS

EQUITY AND LIABILITIES	30.06.2006 EUR (000)	31.12.2005 EUR (000)
Equity
Subscribed capital	4,287	1,300
Capital reserve	15,088	8,640
Revenue reserve	4,269	3,394
Currency translation reserve	78	146
Total equity	23,722	13,480
Long-term liabilities
Other long-term liabilitiess	2,706	3,134
Deferred tax liabilities	1,027	776
Total long-term liabilities	3,733	3,910
Short-term liabilities
Other short-term provisions	106	136
Tax liabilities	882	1,045
Short-term interest-bearing debt	1,039	2,017
Trade payables	2,714	2,835
Other short-term liabilities	1,491	1,109
Total short-term liabilities	6,232	7,142
Total equity and liabilities	33,687	24,532

Statement of changes in shareholders' equity

of InTiCom Systems according to IFRS/IAS

	Subscribed EUR (000)	Outstanding capital contributions EUR (000)	Capital reserve EUR (000)	Revenue reserve EUR (000)	Currency translation reserve EUR (000)	Total equity EUR (000)
As of 01.01.2005	1,300	0	8,640	1,199	0	11,139
Allocation to revenue reserve						0
Capital increase from company funds						0
Currency translation reserve					146	146
Net income 2005				2,195		2,195
As of 31.12.2005	1,300	0	8,640	3,394	146	13,480
Allocation to revenue reserve						0
Capital increase	129		9,306			9,435
Capital increase from company funds	2,858		-2,858
Currency translation reserve					-68	-68
Net income of the period 01.01.-30.06.2006				875		875
As of 30.06.2006	4,287	0	15,088	4,269	78	23,722

Financial calendar

30 Aug 2006 Release of the half-year report 2006

30 Nov 2006 Release of the nine-month report 2006

Publisher: InTiCom Systems AG, Spitalhofstrasse 94, 94032 Passau Telefon + 49 851 9 66 92 - 0, Fax + 49 851 9 66 92-15 www.inticom-systems.de; info@inticom-systems.de

Concept: PvF Investor Relations; www.pvf.de Photos: Uwe Dettmar, Frankfurt / Main

Graphic Design: Sieler Kommunikation und Gestaltung GmbH; www.sieler-kom.de

Security Identification Number (WKN) 587 484 International Security Identification Number (ISIN) DE0005874846 Stock exchange symbol IS7