Plenum AG

Quarterly Report • Aug 31, 2006

Quarterly Report 2/2006

Q2 as of June 30, 2006 according to the International Financial Reporting Standards (IFRS)

Overview

plenum Group – key fi gures € thousands	Q2 2006	Q2 2005	Jan. 1 – June 30, 2006	Jan. 1 – June 30, 2005
Sales revenues	6,521	8,194	12,753	16,599
Gross profi t	1,109	911	1,949	1,585
EBITDA	– 179	– 839	– 305	– 1,336
EBIT	– 335	– 1,032	– 611	– 1,694
Group net loss	– 329	– 810	– 642	– 1,605
Earnings per share in € (undiluted/diluted)	– 0.04	– 0.09	– 0.07	– 0.17
Shares outstanding (undiluted, in thousands)	9,577	9,577	9,577	9,577
Shares outstanding (diluted, in thousands)	9,650	9,577	9,621	9,577

Key fi gures € thousands June 30, 2006	Dec. 31, 2005
42 % Equity ratio	42 %
3,622 Net liquidity*	5,477
193 Employees	195

* Cash and cash equivalents / securities less short-term bank liabilities and advance payments received

plenum AG
plenum Management Consulting® GmbH Wiesbaden	plenum Systems® GmbH Wiesbaden and Leinfelden	plenum stoll & fischbach GmbH Herrenberg	DOM Digital Online Media® GmbH Cologne
plenum Institut® Wiesbaden

Organizational structure of the plenum Group as of March 2006

Revenues development (€ million)

Revenues structure Jan. 1 – June 30, 2006

Letter to our Shareholders

We are getting there faster than scheduled!

Hartmut Skubch Chairman of the Management Board of plenum AG

This is the core of my message to you, dear shareholders, for the second quarter 2006, which is also confi rmed by the perspectives for the second half of 2006.

With sales revenues of EUR 6.5 million in Q2 (Q1: EUR 6.2 million) in 2006, our company continues to be on a growth trend at 5 % at the quarter level since the beginning of 2006.

Compared to Q4 2005 (EUR 5.2 million), growth is already at 25 %.

The scheduled exit from the margin-weak implementation business, which represented about 50 % of our revenues in 2004, has been more than compensated by growth in our core segments: consulting and communications. The consulting business reported a rise of 12 % versus Q1 and 3.7 % versus Q2 2005; the communications business grew by 3.7% versus Q1 and 11.5% versus Q2 2005.

Strategic growth remains to be the primary topics of consideration for our customers. Together with our thematic focus on issues regarding strategic business optimization by using innovative potential from information technology (IT), we are excellently prepared to face this demand.

After acquiring the Lead Agency for the "Dubai Metro Campaign" against leading international competitors, plenum stoll & fi schbach opened the market for plenum in the Middle East. Due to the high volume of this project and the realistic opportunities for obtaining further orders, even in the consulting business, preparations are underway for establishing a subsidiary of plenum AG in the United Arabic Emirates.

As part of implementing the Refocusing strategy, an effi ciency program was launched in the past months. Along with reducing overhead costs, the administrative structures have been adapted to the changed business realignment. Subsequently, the number of full and part time employees in the head administration offi ce has been reduced by 42 %. Consequently, we anticipate total annual savings of at least EUR 0.9 million starting 2007.

The measures undertaken for the Refocusing strategy have signifi cantly affected the earnings side of our company. Including the restructuring costs incurred

from the staff downsizing, our earnings (EBIT) of EUR – 0.3 million for Q2 2006 were substantially above our budget.

3 My management board colleagues and I regard our company to have returned to the path towards growth. Owing to the satisfying development, we have raised the sales and earnings forecast to EUR 25 million (previously: EUR 24 million) and EUR – 1 million (previously: EUR – 1.9 million), respectively. The return to profi tability in 2007 announced in the medium term plan at the end of 2004 has been strongly confi rmed.

Dear ladies and gentlemen, shareholders and business partners, the results reached thus far encourage us and confi rm our strategic alignment. I look forward to your further support along our path into the future.

Wiesbaden, August 2006

Hartmut Skubch

Management's Discussion and Analysis

Market and Industry Development

Sales revenues and new orders

Market and Industry Development	Sales revenues and new orders
			Order	New	Sales	Order	Calculated lifespan of the
Benefi ted by the worldwide, dynamic developments in	Compared to the prior period, sales revenues declined		backlog	orders	revenues	backlog	order backlog
the economy, the economic activities in Germany also	from EUR 8,194 thousand by 20.4 % or EUR 1,673	€ thousands	Jan. 1, 2006			June 30, 2006	in month
accelerated and expanded in the second quarter 2006.	thousand to EUR 6,521 thousand during Q2. Even on a	Consulting	2,235	6,413	5,022	3,626	4.1
According to current calculations by the German	six-month basis, sales revenues fell by a comparable	Communications	2,102	7,514	5,452	4,164	4.6
Institute of Economic Research (Deutsche Instituts für	percentage rate. Hence, sales revenues for the fi rst half	Implementation	1,123	2,022	2,279	866	2.3
Wirtschaftsforschung (DIW)) growth of 0.7 % is anticipated in the second quarter 2006 compared to	of the year declined by 23.2 % or EUR 3,846 thousand from EUR 16,599 thousand to EUR 12,753 thousand	Total	5,460	15,949	12,753	8,656	4.0
0.4 % in the fi rst quarter 2006. Driven by a strong domestic economy, the Federal Ministry of Economics anticipates that the German	compared to the same prior year period. The drop arose from reduced sales from implementation business as was announced already in the past year. Net sales from the consulting business and from communications		Following the signifi cant rise in Q1 2006, the order backlog rose once again by 13.1 % or EUR 1,003 thousand		Earnings performance and cost development
national economy will show economic growth of 1.8 % for the entire year 2006, which is more than twice the rate in the previous year. Following a substantial recovery in the second quarter, the German Association for Information Technology, Telecommunications and new Media e.V. (BITCOM) expects the ITC sector to grow by 2.4 % for the entire	slightly climbed – in the consulting business by 0.8 % and in communications by 2.8 %. Compared to the fi rst quarter 2006, sales revenues rose in Q2 2006 by 4.6 % or EUR 289 thousand from EUR 6,232 thousand to EUR 6,521 thousand. The rise is primarily due to the development of the consulting business. Sales revenues in communications rose	the current year as was expected.	compared to EUR 8,656 thousand as of June 30, 2006 compared to March 31, 2006. This represents the highest balance since March 2005; and this is the result of the high order backlog from communications in Q2, particularly from the project in Dubai. The order backlog for implementation has slumped since the beginning of		Despite the fallen sales revenues versus the second quarter 2005, gross profi t rose by EUR 198 thousand in Q2 2006 compared with Q2 2005. The gross profi t margin climbed from 11 % to 17 %. When comparing Q2 2006 with Q1 2006, gross profi t rose by EUR 269 thousand to EUR 1,109 thousand and the margin rose from 13 % to 17 %. Overall, gross profi t for the fi rst half of 2006 increased by EUR 364 thousand to EUR 1,949
4 year. The German Advertising Federation (ZAW) also anticipates double growth for 2006 and a rise of 2 %.	by 1.2 % and in implementation sales revenues declined by 4.5 %.				thousand and the margin rose from 10 % to 15 % compared to the fi rst half of 2005. This was mainly due to higher prices on the market and to a substantial decline in projects with lower contribution margins.
						Management's Discussion and Analysis	4

Earnings performance and cost development

Selling and marketing expenses dropped by EUR 517 thousand to EUR 1,213 thousand versus the prior period. The reason for lower selling costs is mostly due to the withdrawal from the implementation business, causing participation in major bids to decline.

As a result of the improved orders situation, project utilization has risen. Administrative costs declined by EUR 374 thousand to EUR 1,245 thousand during the fi rst half of 2006 compared to the prior period. Administrative costs rose from EUR 409 thousand to EUR 836 thousand between the fi rst and second quarter 2006. This resulted from employee downsizing and to seasonal cycles.

The development of new topics as part of refocusing the core business to consulting led to higher research and development costs. Compared to the prior period, such costs more than tripled and amounted to EUR 392 thousand as of the fi rst half of 2006. Research and development costs increased already during the course of 2005 totaling EUR 206 thousand in the fourth quarter 2005.

Based on a by EUR 19 thousand lower fi nancial result of EUR 40 thousand and tax expenses of EUR 71 thousand, which arose from subsequent payments resulting from the fi nal external tax fi eld audit and from deferred taxes, the Group net result amounted to EUR – 642 thousand for the fi rst half of 2006 representing a rise of EUR 963 thousand over the comparative prior period. Compared to Q1 2006, the Group net result for Q2 2006 was lower by EUR 16 thousand amounting to EUR – 329 thousand.

Group allocations have been recalculated for 2006. This was necessary due to organizational changes within the Group and an overall change in the size of the segments and companies. Such measures have not affected the Group's results. However, the segment results have been affected, which will be relieved by a total of about EUR 1.4 million for 2006.

Consulting

The rise in gross sales revenues of EUR 148 thousand or 5.5 % from EUR 2,668 thousand to EUR 2,816 thousand is the result of a comparison between Q2 2005 and Q2 2006. A comparison of the second and fi rst quarter 2006 results in a rise of EUR 322 thousand or 12.9 %. Gross sales revenues from consulting for the fi rst half of 2006 rose by EUR 241 thousand or 4.8% to EUR 5,310 thousand versus the comparative prior period.

The share of the consulting segment from total gross sales revenues represents 40.2 %, which is signifi cantly higher than the prior year's share of 30.2 %. The share from consulting from total gross sales revenues in Q2 2006 represents 41.4 %.

Segment results rose by EUR 203 thousand to EUR 230 thousand during Q2 2006 versus Q1 2006. The results for the fi rst half of 2006 improved by EUR 637 thousand totaling EUR 257 thousand in relation to the comparative prior period.

The second quarter continued to show a very good acceptance by our clients of plenum's consultancy core topics. In particular, IT-Governance, IT-Architecture and IT-Effi ciency led to high demand.

Hence, several orders were acquired from well-known regional banks following subsequent measures in IT-Strategy. Effi ciency projects to generate synergy in applications development have been acquired in operations and processing with current notable bank fusions.

For example, synergy potential was procured from two integrated credit institutions. Furthermore, plenum supports a large savings institution by optimizing its credit transactions by standardizing and consolidating processes. Also, the IT migration was supported from a large savings institution to an IT-provider.

New topics have also been positively accepted by our customers. Consequently, we were able to generate orders to launch "IT-Value Management". Project contents include the identifi cation of service indicators and metrics in IT with respect to the company's contribution value.

Consequently, plenum Management Consulting gained a high number of notable projects in core areas and in new innovative topics thereby confi rming its thematic alignment.

Communications

5 When comparing the gross sales revenues of Q2 2005 with Q2 2006, an increase arises of EUR 242 thousand or 9.2 % amounting to EUR 2,866 thousand. Compared to Q1 2006 gross sales revenues rose by 4.8 %. The communications segment also reported a rise in gross sales revenues to EUR 5,602 thousand. This represents an increase of EUR 179 thousand versus the fi rst half of 2005.

The communications segment's ratio in total gross sales revenues represented 42.5 % for the fi rst half of 2006 (fi rst half 2005: 32.3 %). The second quarter represents a ratio of 42.2 % in total gross sales revenues.

Segment results declined from EUR 69 thousand to EUR 10 thousand when comparing the fi rst two quarters in 2006. Segment results for the fi rst half of 2006 totaled EUR 89 thousand, which represents an improvement of EUR 788 thousand over the fi rst half of 2005.

Following plenum stoll & fi schbach's high success in the Pitch in Dubai in the fi rst quarter 2006, budgeted profi ts can now be reported. plenum stoll & fi schbach is the international Lead Agency for the traffi c project "Dubai Metro" thus prevailing against top-notch competitors. This portrays one of the largest orders for the agency in the history of the company.

Implementation

Assets and Financial Position

A comparison between Q2 2006 and Q2 2005 results in a drop in gross sales revenues of EUR 1,931 thousand to EUR 1,113 thousand caused by the planned exit from the implementation business. Gross sales revenues declined by EUR 53 thousand from EUR 1,166 thousand in Q1 2006 to EUR 1.113 thousand in Q2 2006. Compared to the fi rst half of 2005, gross sales revenues for the fi rst half of 2006 fell by EUR 4,036 thousand to EUR 2,279 thousand.

The share in gross sales revenues for the fi rst half of 2006 represents 17.3 % (fi rst half 2005: 37.6 %). Despite the strong sales drop, gross profi t rose by EUR 397 thousand to minus EUR 13 thousand.

The cash and cash equivalents balance at the end of the second quarter 2006 (EUR 3,707 thousand) decreased by EUR 2,127 thousand compared to December 31, 2005. Compared to the end of the fi rst quarter, cash and cash equivalents declined by EUR 620 thousand.

Non-current assets decreased by EUR 215 thousand, which was mainly due to depreciation. The intensity of investments (non-current assets in relation to total assets) slightly rose versus the most recent balance sheet date due to the lower balance sheet total.

Overall, the balance sheet total declined by 11.6 % versus December 31, 2005 and by 9.2 % at the end of the fi rst quarter amounting to EUR 10,917 thousand.

The equity ratio slightly rose from 42% to 43 %. The non-current fi nancial position (the relation of noncurrent asset to non-current equity) minimally increased from 0.4 to 0.5. The current fi nancial position (the relation of current assets to current equity) slightly declined from 1.8 to 1.5.

The reduction in cash and cash equivalents of EUR 2,127 thousand compared to the end of the previous fi nancial year corresponds to the cash outfl ows for operating activities of EUR 1,948 thousand. The cash outfl ows for operating activities mainly corresponds to the rise in receivables of EUR 765 thousand and payments from other provisions of EUR 710 thousand. The cash outfl ows for operating activities signifi cantly declined in Q2 2006 compared to Q1 2006. This was mainly due to the decrease in trade accounts receivables as of June 30, 2006 compared to March 31, 2006, while the receivables considerably increased in the fi rst quarter 2006. The cash outfl ows in the second quarter 2006 mainly resulted from the payments of variable salary components for consultants for the fi nancial year 2005.

Only minimal replacement investments were conducted in the fi rst quarter 2006. As announced in 2005, material capital expenditures are not planned for the remainder of 2006.

plenum AG did not pay or propose to pay any interim dividends or make any other distributions for the reporting period from January 1 through June 30, 2006.

Employees

As a result of staff downsizing in 2005, the number of employees dropped by 33 to 193 as of June 30, 2006 compared to June 30, 2005. Therefore, the average number of employees fell from 231 to 196. Compared to the end of 2005, the number of employees only slightly dropped by 5 persons. The effect on the number of employees from staff downsizing measures during the second quarter 2006 will fi rst be noticeable during the course of the fi nancial year.

Risk development

Compared to the detailed risk situation of plenum AG and its affi liated companies in the Annual report 2005, material changes have not occurred.

Outlook

The plenum Stock

Based on the positive development in the fi rst two quarters of 2006, the very favorable order backlog in the consulting segment and the million-Euro's worth of orders in Dubai in the communications segment allows plenum AG's management to elevate sales expectations for 2006 by 4.2 % from EUR 24 million to EUR 25 million and the results (EBIT) for 2006 by 47.4 % from minus EUR 1.9 million to minus EUR 1 million. The Refocusing strategy implemented at the end of 2004 with the following areas of emphasis

• concentration on consulting business
• creating an image in the communications business
• exit from the pure implementation business

has brought the company back to a growth course in the core business areas.

Subsequent events

Signifi cant events requiring disclosure after the close of the reporting period have not occurred.

Overall, plenum's stock trend developed positively during the fi rst half of 2006. Management considers this as an indication of the increasing trust of the capital market in the refocusing strategy of plenum AG.

During the fi rst half of the year, the stock rose by 47 % from EUR 1.17 at the beginning of the year to EUR 1.72 as of June 30, 2006 (high/low: EUR 1.87/1.03).

Despite a very weak stock exchange environment in the meantime, the stock continued to develop positively after the six-month closing date and occasionally closing at EUR 1.90.

plenum AG continued its discussions with shareholders and analysts during the current year. Institutional investors were able to directly address management in individual meetings about the success of the refocusing strategy, milestones in operative developments and the business strategy.

plenum AG will continue to inform the Financial Community about the development of the company in a timely and comprehensive manner and intensively continue discussions with the shareholders.

Private investors can continue to obtain all relevant information via the Investor Relations Internet website: www. plenum.de/investorrelations.

The plenum Stock

Price move and trading volume from August 2005 through July 2006

Price move from January 2006 through July 2006 (index-linked)

Consolidated Income Statement

(unaudited)

			Jan. 1 –	Jan. 1 –
€ thousands	Q 2 2006	Q 2 2005	June 30, 2006	June 30, 2005
Sales revenues	6,521	8,194	12,753	16,599
Cost of revenues	– 5,412	– 7,283	– 10,804	– 15,014
Gross profi t	1,109	911	1,949	1,585
Selling and marketing expenses	– 595	– 755	– 1,213	– 1,730
General and administrative expenses	– 836	– 1,206	– 1,245	– 1,619
Research and development expenses	– 155	– 108	– 392	– 123
Other operating income and expenses	142	126	290	193
Operating result	– 335	– 1,032	– 611	– 1,694
Financial result	16	31	40	58
Result from ordinary activities	– 319	– 1,001	– 571	– 1,636
Income taxes	– 10	191	– 71	31
Group net loss	–329	– 810	– 642	– 1,605
Earnings per share
(in €, diluted and undiluted)	– 0.04	– 0.09	– 0.07	– 0.17
Average number of shares outstanding
(in thousands, undiluted)	9,577	9,577	9,577	9,577
Average number of shares outstanding
(in thousands, diluted)	9,650	9,577	9,621	9,577

Consolidated Balance Sheet

(unaudited)

Assets
€ thousands	June 30, 2006	Dec. 31, 2005
Cash and cash equivalents/securities	3,707	5,834
Trade accounts receivables	4,229	3,464
Inventories	45	60
Prepaid expenses and other current assets	463	337
Total current assets	8,444	9,695
Property, plant and equipment	926	1,067
Intangible assets	170	244
Financial assets	123	123
Loans	1,182	1,157
Deferred tax assets	72	65
Total non-current assets	2,473	2,656
Total assets	10,917	12,351

Liabilities and stockholders' equity
€ thousands	June 30, 2006	Dec. 31, 2005
Current portion of debt and current portion of long-term debt	0	18
Trade accounts payable	813	858
Advance payments received	85	339
Current provisions	3,956	3,747
Other current liabilities	647	528
Total current liabilities	5,501	5,490
Long-term debt	0	44
Deferred tax liabilities	0	855
Non-current provisions	58	8
Pension provisions	792	770
Total non-current liabilities	850	1,677
Capital stock	9,577	9,577
Capital reserves	14,201	14,177
Treasury stock	– 83	– 83
Accumulated defi cit	– 19,129	– 18,487
Total stockholders' equity	4,566	5,184
Total liabilities and stockholders' equity	10,917	12,351

Consolidated Cash Flow Statement

(unaudited)

€ thousands	Jan. 1 – June 30, 2006	Jan. 1 – June 30, 2005
Group net loss	– 642	– 1,605
Depreciation and amortization	306	358
Income taxes	71	– 31
Results from the disposal of intangible assets and property,
plant and equipment	0	6
Financial result	– 40	– 58
Other non-cash expenditures and income	24	0
Changes in working capital
Inventories	15	80
Receivables	– 765	1,605
Prepaid expenses and other assets	– 76	– 176
Trade accounts payable	– 45	– 36
Other liabilities	– 135	– 108
Change in provisions	– 624	– 897
Change in other assets and liabilities	– 28	– 11
Proceeds from interest	15	41
Payments / proceeds from income taxes	– 24	1
Cash outfl ows / infl ows from operating activities	– 1,948	– 831
Proceeds from the disposal of intangible assets and property,
plant and equipment	0	1
Purchases of intangible assets and property, plant and equipment	– 118	– 207
Cash outfl ows for investing activities	– 118	– 206
Repayment of debt	– 61	– 10
Cash outfl ows for fi nancing activities	– 61	– 10
Movement in cash and cash equivalents/securities	– 2,127	– 1,047
Cash and cash equivalents/securities at the beginning of the period	5,834	6,632
Cash and cash equivalents/securities at the end of the period	3,707	5,585

Statement of Changes in Stockholders' Equity

(unaudited)

€ thousands	Number of shares in thousands	Group Net loss	Capital stock	Capital reserves	Treasury stock	Accumula ted defi cit	Total stock holders' equity
January 1, 2005	9,577		9,577	14,151	– 83	– 15,324	8,321
Group Net loss		– 1,605				– 1,605	– 1,605
June 30, 2005	9,577		9,577	14,151	– 83	– 16,929	6,716
January 1, 2006	9,577		9,577	14,177	– 83	– 18,487	5,184
Stock Options				24			24
Group net loss		– 642				– 642	– 642
June 30, 2006	9,577		9,577	14,201	– 83	– 19,129	4,566

Segment Information

(unaudited)

			Communi	Implemen
€ thousands		Consulting	cations	tation	Total 1
Gross sales revenues	Q2 2006	2,816	2,866	1,113	6,795
	Q2 2005	2,668	2,624	3,044	8,336
	First half 2006	5,310	5,602	2,279	13,191
	First half 2005	5,069	5,423	6,315	16,807
Internal sales	Q2 2006	150	124	0	274
	Q2 2005	51	76	1	128
	First half 2006	288	150	0	438
	First half 2005	89	118	1	208
Net sales revenues	Q2 2006	2,666	2,742	1,113	6,521
	Q2 2005	2,617	2,548	3,043	8,208
	First half 2006	5,022	5,452	2,279	12,753
	First half 2005	4,980	5,305	6,314	16,599
Depreciation	Q2 2006	– 50	– 58	0	– 108
	Q2 2005	– 55	– 84	0	– 139
	First half 2006	– 101	– 109	0	– 210
	First half 2005	– 113	– 138	0	– 251
Segment costs	Q2 2006	– 2,386	– 2,674	– 1,129	– 6,189
	Q2 2005	– 2,682	– 3,092	– 3,259	– 9,033
	First half 2006	– 4,664	– 5,254	– 2,292	– 12,210
	First half2005	– 5,247	– 5,866	– 6,724	– 17,837
Segment results (EBIT)	Q2 2006	230	10	– 16	224
	Q2 2005	– 65	– 544	– 216	– 825
	First half 2006	257	89	– 13	333
	First half 2005	– 380	– 699	– 410	– 1,489
EBITDA	Q2 2006	280	68	– 16	332
	Q2 2005	– 10	– 460	– 216	– 686
	First half 2006	358	198	– 13	543
	First half 2005	– 267	– 561	– 410	– 1,238
Segment investments	Q2 2006	3	33	0	36
	Q2 2005	4	139	0	143
	First half 2006	13	78	0	91
	First half 2005	8	167	0	175
Segment assets	June 30, 2006	3,852	1,965	954	6,771
	Dec. 31, 2005	3,460	1,931	670	6,061
Segment liabilities	June 30, 2006	– 2,461	– 1,701	– 2,129	– 6,291
	Dec. 31, 2005	– 2,035	– 2,299	– 2,691	– 7,025

1 Reconciliation to Group fi gures under note D. 5 to the notes to the interim fi nancial statements

Notes to the Interim Financial Statements

A. General principles

10 10 The consolidated fi nancial statements of plenum AG as of December 31, 2005 were prepared in conformity with International Financial Reporting Standards (IFRS) in effect as of the balance sheet date as applicable in the EU. The consolidated interim fi nancial statements (interim report) as at June 30, 2006, which have been prepared according to International Accounting Standard (IAS) 34 "Interim Financial Reporting", primarily apply the same accounting principles as applied to the consolidated fi nancial statements for the fi nancial year ended 2005. Necessary adjustments arising from new or revised Standards have been explained below. All binding Interpretations of the International Financial Reporting Interpretations Committee (IFRIC) have been recognized as at June 30, 2006. In addition, this interim report is consistent with the German Accounting Standard No. 6 (DRS 6) – Interim reporting of the German Accounting Standards Committee e.V. (DRSC). The interim fi nancial statements have been neither audited nor reviewed by the Group auditors, Deloitte & Touche GmbH, Wirtschaftsprüfungsgesellschaft. Regarding further information to the individual accounting and valuation principles, please refer to the consolidated fi nancial statements of plenum AG as at December 31, 2005.

The consolidated fi nancial statements of plenum AG for the fi rst half of 2006 include plenum AG and four German subsidiaries.

Amended accounting principles applicable for the fi rst half 2006

The following revised or supplemented Standard is applicable for the fi rst time to the consolidated fi nancial statements as at June 30, 2006:

– Amendment to IAS 21 ("Effects of Changes in Foreign Exchange Rates")

Since all consolidated companies of the plenum Group are in Germany, this Standard does not affect the consolidated fi nancial statements of plenum AG.

New accounting principles issued in the fi rst half of 2006

IASB issued the following new Interpretations during the fi rst half of 2006:

– IFRIC 8 ("Scope of IFRS 2")

– IFRIC 9 ("Reassessment of Embedded Derivatives")

IFRIC 8 is applicable starting May 1, 2006 and IFRIC 9 starting June 1, 2006. These Interpretations do not materially affect the plenum Group.

B. Notes to the Consolidated Income Statement

B1. Other operating income and expenses

The other operating income comprises of the following positions:

			Jan. 1–	Jan. 1–
€ thousands	Q2 2006	Q2 2005	June 30, 2006	June 30, 2005
Income from the release
of provisions	64	62	187	91
Income from the reduction of valuation
allowances on receivables	6	64	28	77
Other	74	4	78	29
	144	130	293	197

B2. Financial result

			Jan. 1–	Jan. 1–	the addition of potential shares issued from option rights in 2005 thus resulted in 2006 in the following
€ thousands	Q2 2006	Q2 2005	June 30, 2006	June 30, 2005	rights. dilution effect:
Income from the release
of provisions	64	62	187	91
Income from the reduction of valuation							Earnings
allowances on receivables	6	64	28	77	Earnings	Shares	per share
Other	74	4	78	29	Profi t attributable to ordinary equity holders
	144	130	293	197	of the parent entity in Q2 2006 (€ thousands) – 329
					Weighted average shares outstanding during Q2 2006,
The other operating expenses amount to EUR 3 thousand (Q2 2006: EUR 2 thousand; 1st Half 2005:					undiluted (thousands)	9,577
EUR 7 thousand; Q2 2005: EUR 4 thousand).					Basic earnings per share (undiluted) (€)		– 0.04
					Weighted average number of shares under option in Q2 2006
B2. Financial result					causing a dilution effect (thousands)	310
					Weighted average number of shares under option in Q2 2006
The fi nancial result is broken down as follows:					that would have been issued at average market price (thousands)	– 237
			Jan. 1–	Jan. 1–	Weighted average shares outstanding during Q2 2006,
€ thousands	Q2 2006	Q2 2005	June 30, 2006	June 30, 2005	diluted (thousands)	9,650
					Earnings per share, diluted (€)		– 0.04
Income from other loans	12	12	25	25
Other interest and similar income	40	22	55	41	Profi t attributable to ordinary equity holders of the parent entity
Intererst and similar expenses	– 36	– 3	– 40	– 8	for the fi rst half of Q2 2006 (€ thousands) – 642
	16	31	40	58	Weighted average shares outstanding for the fi rst half of 2006,
					undiluted (thousands)	9,577
B3. Income taxes					Basic earnings per share (undiluted) (€)		– 0.07
					Weighted average number of shares under option in the fi rst half of
Income taxes of the Group are broken down as follows:					2006 that would have been issued at average market price (thousands)	317
			Jan. 1–	Jan. 1–	Weighted average number of shares under option for the fi rst half of
€ thousands	Q2 2006	Q2 2005	June 30, 2006	June 30, 2005	2006 that would have been issued at average market price (thousands)	– 273
Current taxes	– 28	0	– 28	0	Weighted average shares outstanding in the fi rst half of Q2 2006,
Deferred taxes	18	191	– 43	31	diluted (thousands)	9,621
	– 10	191	– 71	31	Earnings per share, diluted (€)		– 0.07
The current taxes relate to back payments arising from the most recent external tax fi eld audit.
1				1
					Notes to the Interim Financial Statements		11

B4. Earnings per share

The earnings per share is calculated by dividing the Group net results by the weighted average number of shares issued. The earnings per share are diluted when the average number of shares increase from the addition of potential shares issued from option rights.

In 2005 option rights were issued to employees. The average stock price of the plenum stock in Q2 2006 was EUR 1.71 and in the fi rst half of 2006 EUR 1.52 and the subscription price was EUR 1.31. The issuance of the option rights in 2005 thus resulted in 2006 in the following dilution effect:

			Earnings
	Earnings	Shares	per share
Profi t attributable to ordinary equity holders
of the parent entity in Q2 2006 (€ thousands)	– 329
Weighted average shares outstanding during Q2 2006,
undiluted (thousands)		9,577
Basic earnings per share (undiluted) (€)			– 0.04
Weighted average number of shares under option in Q2 2006
causing a dilution effect (thousands)		310
Weighted average number of shares under option in Q2 2006
that would have been issued at average market price (thousands)		– 237
Weighted average shares outstanding during Q2 2006,
diluted (thousands)		9,650
Earnings per share, diluted (€)			– 0.04

Profi t attributable to ordinary equity holders of the parent entity
for the fi rst half of Q2 2006 (€ thousands)	– 642
Weighted average shares outstanding for the fi rst half of 2006,
undiluted (thousands)	9,577
Basic earnings per share (undiluted) (€)		– 0.07
Weighted average number of shares under option in the fi rst half of
2006 that would have been issued at average market price (thousands)	317
Weighted average number of shares under option for the fi rst half of
2006 that would have been issued at average market price (thousands)	– 273
Weighted average shares outstanding in the fi rst half of Q2 2006,
diluted (thousands)	9,621
Earnings per share, diluted (€)		– 0.07

C. Notes to the Consolidated Balance Sheet

C1. Cash and cash equivalents / securities

The cash and cash equivalents comprise of cash and bank balances with original maturities of less than three months.

The securities of current assets include a short term deposit in a money market fund in the amount of EUR 1,342 thousand.

C2. Non-current assets

Capital expenditures were conducted in the amount of EUR 118 thousand during the reporting period. Noncurrent assets declined during the same reporting period by EUR 306 thousand for depreciation and amortization.

C3. Provisions

The prior year's non-current provisions in the amount of EUR 855 thousand relate to warranty provisions created for two years. According to management's estimates, claims from the respective warranties are no longer expected starting after June 30, 2007. Therefore, this position was reclassifi ed to current provisions as of June 30, 2006.

C4. Liabilities

The loan with a credit institute still existing as at December 31, 2005 was prematurely repaid without incurring premature payment penalties.

C5. Stockholders' equity

Capital stock, capital authorized for issue and conditional capital at the beginning and end of the fi nancial year is as follows:

€ thousands

Capital stock	9,577
Capital authorized for issue	4,789
Conditional capital	957

plenum held 16,790 treasury shares as of June 30, 2006, which were acquired at a total price of EUR 83 thousand in 2001 and are offset against equity. In the fi rst half of 2006 no treasury shares were acquired, used or drawn.

In the prior year, new option rights were issued to employees of plenum AG and employees of affi liated companies at a grant date of June 14, 2005. The capital reserves increased by the amount of personnel expenses of EUR 24 thousand during the fi rst half of 2006.

D. Other Disclosures to the Consolidated Income Statement, Balance Sheet and Cash Flow Statement

D1. Costs of purchased merchandise and services

The costs for purchased merchandise and services amounted to EUR 1,984 thousand in the second quarter 2006 (Q2 2005: EUR 3,109 thousand).

D2. Personnel expenses

Jan. 1– June 30, 2006 June 30, 2005 Q2 2006 Q2 2005 3,259 3,684 6,378 7,370 445 562 874 1,097 30 25 62 50 3,734 4,271 7,314 8,517 Notes to the Interim Financial Statements	1 2 Jan. 1– thousands Expenses for pension benefits The average number of employees in the fi rst half of 2006 represented 196 (fi rst half 2005: 231). D3. Stock-based compensation Stock options were not issued in the second quarter D4. Consolidated cash fl ow statement The cash fl ow statement does not take into account non-cash increases in the capital reserve of EUR 24 thousand (fi rst half 2005: EUR 0 thousand). 12	The personnel expenses are broken down as follows:
		€
		Wages and salaries
		Social security costs
		2006.

D3. Stock-based compensation

D4. Consolidated cash fl ow statement

D5. Segment information

The segment fi gures are derived from the Group fi gures as follows:

		Segments
€ thousands		Total	Reconciliation	Group
Gross sales revenues	Q2 2006	6,795	– 274	6,521
	Q2 2005	8,322	– 128	8,194
	First half 2006	13,191	– 438	12,753
	First half 2005	16,807	– 208	16,599
Internal sales	Q2 2006	274	– 274	0
	Q2 2005	128	– 128	0
	First half 2006	438	– 438	0
	First half 2005	208	– 208	0
Net sales revenues	Q2 2006	6,521	0	6,521
	Q2 2005	8,194	0	8,194
	First half 2006	12,753	0	12,753
	First half 2005	16,599	0	16,599
Depreciation	Q2 2006	– 108	– 48	– 156
	Q2 2005	– 139	– 53	– 192
	First half 2006	– 210	– 96	– 306
	First half 2005	– 251	– 107	– 358
Other expenses	Q2 2006	– 6,189	– 510	– 6,699
	Q2 2005	– 8,880	– 153	– 9,033
	First half 2006	– 12,210	– 847	– 13,057
	First half 2005	– 17,837	– 100	– 17,937
Earnings before interest and taxes (EBIT)	Q2 2006	224	– 558	– 334
	Q2 2005	– 825	– 206	– 1,031
	First half 2006	333	– 943	– 610
	First half 2005	– 1,489	– 207	– 1,696
Internal Operating Profit (IOP) (EBITDA)	Q2 2006	322	– 510	– 178
	Q2 2005	– 686	– 153	– 839
	First half 2006	543	– 847	– 304
	First half 2005	– 1,238	– 98	– 1,336
Investments	Q2 2006	36	26	62
	Q2 2005	143	4	147
	First half 2006	91	27	118
	First half 2005	175	7	182
Assets	June 6, .2006	6,771	4,146	10,917
	Dec. 31, 2005	6,061	6,290	12,351
Liabilities	June 6, .2006	– 6,291	– 60	– 6,351
	Dec. 31, 2005	– 7,025	– 591	– 7,616

The Group allocations were recalculated at the beginning of the fi nancial year 2006. As a result of the recalculation, the segments will be relieved by EUR 1.4 million for the fi nancial year 2006 compared to 2005. The Group's customer structure did not result in any major concentration of any given geographical region. Revenues of 13.7 % were generated from one major customer in the implementation segment in the fi rst half of 2006 (fi rst half 2005: 35.5 %).

Important subsequent events did not arise after the close of the fi rst half of 2006.

D6. Executive bodies of the company

The shares and stock options held by the executive bodies of plenum AG are presented as follows:

Shares held by the Management Board Number of shares	Hartmut Skubch	Klaus Gröne	Michael Rohde	Andreas Janssen	Gesamt
Jan. 1, 2006	1,891,253	20,453	0	0	1,911,706
June 30, 2006	1,891,253	20,453	0	0	1,911,706

1 3 Jan. 1, 2006 50,000 20,000 10,000 3,900 83,900 – 50,000 – 20,000 – 10,000 – 3,900 – 83,900 expired June 30, 2006 0 0 0 0 0 Shares held by the Supervisory Board Michael Dr. Wolfgang Norbert Number of shares Bauer Händel Rohrig Gesamt Jan. 1, 2006 370,360 1,000 700 372,060 June 30, 2006 370,360 1,000 700 372,060 shares held indirectly 13 Notes to the Interim Financial Statements	Stock options of the Management Board Number of shares	Hartmut Skubch	Klaus Gröne	Michael Rohde	Andreas Janssen	Gesamt

Shares held by the Supervisory Board Number of shares	Michael Bauer*	Dr. Wolfgang Händel	Norbert Rohrig	Gesamt
Jan. 1, 2006	370,360	1,000	700	372,060
June 30, 2006	370,360	1,000	700	372,060

Corporate calendar

November 29, 2006 Publication of report for the fi rst three quarters 2006

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