SFC Energy AG — Earnings Release 2012

Aug 1, 2012

SFC Energy AG

Recommendation: BUY(HOLD)

Risk: HIGH (HIGH) Price Target: EUR 7.50 (6.00)

EBITDA breakeven already achieved in 1H instead of 2H 2012

• SFC Energy AG's strong performance in the Industry segment provided for solid 2Q figures, even though group sales were affected by a weak Consumer market, and EBITDA was burdened by front-loaded project costs in the Defense & Security segment. In 2Q 2012, the original SFC part of the business (excluding PBF) showed a revenue decline of 5.2%, but still grew by 3.5% in 1H 2012. 2Q sales of the entire group, however, were boosted on a YOY basis by the sales contribution of the acquired PBF of almost EUR 3.6m.
• Even though the three business segments show a somewhat mixed picture, the overall Group has developed very well and is half a year ahead of the original budget in terms of EBITDA breakeven. This breakeven had been planned for 2H 2012 but has already been reached in 1H 2012. Besides the strong improvement in gross margin (Q2: 41.6% compared to 33.7% in 2011), it is a great achievement that operating cash flow before working capital changes reached EUR 0.4m in 1H 2012 compared to EUR -1.4m in the first half of 2011.
• We expect a surge in sales and a much better EBITDA margin in the Defense segment in 2H 2012 due to the execution of a major Bundeswehr order worth EUR 5m (ELENA energy networks). Together with a strong expected performance in the Industry segment in 4Q, SFC should be able to cope with the currently weak demand in the Consumer segment. The guidance for FY 2012 (sales of EUR 30m, sustainably positive EBITDA in 2H) was confirmed. We leave our sales estimates unchanged, but revised several cost-related assumptions as well as our capital expenditure forecasts. As a result of all changes, our earnings estimates are slightly higher now than before, and capex forecasts are lower.
• ^A valuation now yields a fair value per share of EUR 7.52. We increase our price target for SFC Energy from EUR 6.00 to EUR 7.50. Even though the share has already shown a strong performance recently, we still see further upside potential. We change our recommendation from HOLD to BUY.

Y/E 31 Dec, EUR m	2009	2010	2011	2012E	2013E	2014E
Sales revenues	11.7	13.3	15.4	30.0	33.8	38.5
Gross profit	3.2	4.0	5.4	12.3	14.1	16.4
EBITDA	-3.6	-3.5	-4.6	0.4	2.0	3.4
EBITA	-4.0	-3.9	-5.2	0.2	1.7	3.0
EBIT	-4.5	-4.5	-6.6	-0.9	0.0	1.5
Net income/loss	-3.8	-4.1	-6.2	-0.8	-0.1	1.2
EPS	-0.53	-0.58	-0.87	-0.11	-0.01	0.17
CPS	-0.51	-0.65	-0.60	-0.18	0.11	0.24
EBITDA margin	-30.6%	-26.2%	-30.1%	1.3%	5.8%	8.7%
EBIT margin	-38.6%	-33.8%	-42.9%	-2.9%	0.1%	3.8%
EV/Sales	2.7	2.4	2.0	1.0	0.9	0.8
EV/EBITDA	neg.	neg.	neg.	82.7	15.9	9.3

Source: SFC Energy AG; CBS Research AG

01 August 2012

Short company profile:

SFC Energy AG is a market leader for off grid and stationary power generation and distribution. The Company has established fully commercialized fuel cells in the Consumer, Industry, and Defense & Security sectors and furthermore develops, produces and globally distributes higher level power management components. The products increasingly are delivered as customised power supply system solutions.

Share data: Share price (EUR, latest closing price): Shares outstanding (m): Market capitalisation (EUR m): Enterprise value (EUR m): Ø daily trading volume (6 m., no. of shares):	6.78 7.5 50.9 31.4 8,147
Performance data: High 52 weeks (EUR): Low 52 weeks (EUR): Absolute performance (12 months): Relative performance vs. CDAX: 1 month 3 months 6 months 12 months	7.20 3.49 41.2% 4.8% 35.9% 60.5% 48.6%
Shareholders: HPE Conduit Ventures Havensight Previous owners of PBF (lock-up agreement) Management and Supervisory Board DWS Other free float	25.70% 10.15% 10.22% 4.66% 3.48% 4.92% 40.87%
Financial calendar: 9M report:	31 October 2012
Author: Martin Decot (Analyst) Close Brothers Seydler Research AG Phone: +49 (0) 69-977 84 56 0 Email: research@cbseydlerresearch.ag www.cbseydlerresearch.ag

Please notice the information on the preparation of this document, the disclaimer, the advice regarding possible conflicts of interests, and the mandatory information required by § 34b WpHG (Securities Trading Law) at the end of this document. This financial analysis in accordance with § 34b WpHG is exclusively intended for distribution to individuals that buy or sell financial instruments at their own account or at the account of others in connection with their trading activities, occupation, or employment.

Analysis of 2Q figures and outlook on 3Q 2012

In 2Q 2012, the original SFC part of the business (excluding PBF) showed a revenue decline of 5.2%, but still grew by 3.5% in 1H 2012. 2Q sales of the entire group, however, were boosted on a YOY basis by the sales contribution of the acquired PBF of almost EUR 3.6m.

First consolidation of PBF boosted group sales

Quarterly figures with YOY comparison

IFRS EURm		2Q 2012 2Q 2011	1H 2012	1H 2011
Total sales	7.41	4.06	14.97	7.78
YOY grow th	82.8%	35.9%	92.5%	18.2%
Industry	5.35	1.22	9.66	1.88
as % of total sales	72.2%	30.1%	64.5%	24.1%
Defense & Security	0.90	1.37	2.34	2.20
as % of total sales	12.1%	33.9%	15.6%	28.3%
Consumer	1.17	1.46	2.97	3.70
as % of total sales	15.7%	36.0%	19.8%	47.6%
Gross profit	3.08	1.37	6.15	2.44
as % of sales	41.6%	33.7%	41.1%	31.4%
Gross profit - Industry	2.16	0.53	3.74	0.78
as % of segment sales	40.4%	43.1%	38.7%	41.7%
Gross profit - Defense & Security	0.52	0.51	1.29	0.82
as % of segment sales	57.7%	36.8%	54.9%	37.2%
Gross profit - Consumer	0.40	0.33	1.12	0.84
as % of segment sales	34.5%	22.9%	37.7%	22.7%
EBITDA	0.29	-0.61	0.48	-1.58
as % of sales	3.9%	-14.9%	3.2%	-20.3%
EBITDA - Industry	0.52	-0.12	0.48	-0.61
as % of segment sales	9.6%	-9.8%	5.0%	-32.3%
EBITDA - Defense & Security	-0.14	-0.13	-0.13	-0.50
as % of segment sales	-15.7%	-9.5%	-5.7%	-22.9%
EBITDA - Consumer	-0.08	-0.36	0.13	-0.47
as % of segment sales	-7.0%	-24.4%	4.4%	-12.6%
Adjusted EBITDA	0.32	-0.61	0.51	-1.58
as % of sales	4.4%	-14.9%	3.4%	-20.3%
EBIT	-0.15	-0.92	0.16	-2.20
as % of sales	-2.1%	-22.8%	1.1%	-28.3%
Adjusted EBIT	-0.12	-0.92	-0.34	-2.20
as % of sales	-1.7%	-22.8%	-2.3%	-28.3%
Net income after minorities	-0.15	-0.84	0.19	-2.01
as % of sales	-2.0%	-20.7%	1.3%	-25.9%
Basic earnings per share (EUR)	-0.02	-0.12	0.03	-0.28
Cash flow from operating activities	-1.58	-2.19	-2.18	-4.61
Free cash flow (incl. interest received)	-1.70	-2.64	-2.44	-5.17
Source: SFC Energy AG, CBS Research AG
99% or EUR 3.5m of PBF's sales accrued in the Industry segment of the Group. We
expect 3Q 2012 to be a bit weaker than 2Q in this segment as the annual holiday downtimes at PBF's industrial customers will result in lower deliveries in the third

Industry segment also showed strong organic growth

quarter. The organic growth of the original SFC business in the Industry segment contributed a plus in revenues of EUR 0.6m (growth: 49.8% YOY).

2Q sales in the Defense & Security segment decreased by 34.6% YOY which still resulted in a YOY growth of 6.5% in 1H 2012. Quarterly sales in this segment are strongly dependent on the timing of SFC's deliveries. In 1Q 2012, sales had been boosted by the delivery of fifty FC 100 systems to the U.S. Army, while 2Q segment sales only included a smaller order from German Bundeswehr (38 EMILY fuel cells). We expect very strong sales and a much better EBITDA margin in this segment in 2H 2012 due to the execution of a major Bundeswehr order worth EUR 5m (ELENA energy networks). This order had entailed significant front-loaded costs which resulted in a negative segment EBITDA in 2Q.

Just like in 1Q 2012, sales in the Consumer segment showed a YOY decline of roughly 20%. The main reason for this decline was the weaker demand in France and Italy. Nevertheless, the gross profit in this segment increased, due to costs savings in the EFOY COMFORT Series and in the areas of sales and marketing. The gross margin soared from 22.9% in 2Q 2011 to 34.5% in 2Q 2012. We expect relatively weak demand for EFOY COMFORT fuel cells also in 3Q 2012 due to the usual seasonality (customers use caravans and yachts in the summer and usually do not buy the related equipment during this time of year), but a relatively milder impact of the sales decline on segment profits.

Even though the three business segments show a somewhat mixed picture, the overall Group has developed very well and is half a year ahead of the original budget in terms of EBITDA breakeven which had been planned for 2H 2012 but has already been reached in 1H 2012. Besides the additional improvement in gross margin (see chart below), it is a great achievement that operating cash flow before working capital changes reached EUR 0.4m in 1H 2012 compared to EUR -1.4m in the first half of 2011.

We expect very strong sales in the Defense & Security segment in 2H

Consumer segment suffers from weaker demand from Southern Europe…

…but gross margin was boosted

Overall solid performance in 1H 2012

Gross margin development

Changes in our estimates

The guidance for FY 2012 (sales of EUR 30m, sustainably positive EBITDA in 2H) was confirmed. In the Consumer segment, however, Management now sees a risk of not reaching sales at last year's level (previous wording: segment sales were expected to reach 'nearly' last year's level). However, this is supposed to be compensated by over-achieving sales expectations in the Defense & Security and Industry segments on a group level. The Management once again underlined that acquisitive steps are considered in addition. Regarding the previous guidance for 2013, SFC's Management did not want to confirm anymore that revenue growth will be 10 % to 15 % in each of the three segments, but only for the group as a whole.

We leave our sales estimates unchanged, but revised several cost-related assumptions as well as our capital expenditure forecasts and the resulting depreciation schedule. It is striking that the Group's capital expenditure declined in 1H 2012 by almost 50% YOY, even though PBF is now part of the group. We therefore reduced our estimates regarding the future capitalisation of R&D costs, but lifted forecasted R&D costs in the P&L. As a result of all changes, our earnings estimates are slightly higher now than before.

Guidance confirmed except for expected segment sales growth in 2013

Slightly increased CBSR estimates

Changes in financial estimates of CBS Research

	2012E		2013E		2014E
	new	old	new	old	new	old
Sales	-	30.0	-	33.8	-	38.5
Gross profit	12.3	11.9	14.1	13.9	16.4	16.3
EBIT	-0.9	-1.5	0.0	-0.1	1.5	1.4
Net result after minorities	-0.8	-1.6	-0.1	-0.3	1.2	1.1
EPS	-0.11	-0.22	-0.01	-0.04	0.17	0.14

Source: CBS Research AG

Valuation and price target

On basis of our new estimates and long-term margin assumptions, we adjusted our Discounted Cash Flow model. The valuation now yields a fair value per share of EUR 7.52. We increase our price target for SFC Energy from EUR 6.00 to EUR 7.50.

Even though the share has already shown a strong performance recently, we still see further upside potential. We change our recommendation from HOLD to BUY.

New PT: EUR 7.50

BUY

Profit and loss account

IFRS EURm	2009	2010	2011	2012E	2013E	2014E
Sales YoY grow th	11.69 -19.7%	13.33 14.1%	15.43 15.7%	29.96 94.2%	33.78 12.8%	38.54 14.1%
Cost of sales	-8.49	-9.29	-10.06	-17.66	-19.65	-22.10
as % of sales	-72.7%	-69.7%	-65.2%	-59.0%	-58.2%	-57.4%
Gross profit	3.19	4.04	5.37	12.29	14.13	16.43
as % of sales	27.3%	30.3%	34.8%	41.0%	41.8%	42.6%
Research and development expenses	-1.51	-1.89	-2.54	-4.10	-4.15	-4.24
as % of sales	-12.9%	-14.2%	-16.4%	-13.7%	-12.3%	-11.0%
Selling expenses	-4.45	-4.75	-4.90	-5.66	-5.84	-6.36
as % of sales	-38.0%	-35.6%	-31.7%	-18.9%	-17.3%	-16.5%
General and administrative expenses	-2.13	-2.05	-2.68	-3.77	-3.90	-4.16
as % of sales	-18.2%	-15.4%	-17.4%	-12.6%	-11.6%	-10.8%
Other operating income	0.42	0.23	0.20	1.02	0.52	0.59
as % of sales	3.6%	1.7%	1.3%	3.4%	1.5%	1.5%
Other operating expenses	-0.04	-0.09	-1.60	-0.63	-0.71	-0.81
as % of sales	-0.3%	-0.6%	-10.4%	-2.1%	-2.1%	-2.1%
EBIT before restructuring expenses	-4.51	-4.51	-6.14	-0.86	0.04	1.46
as % of sales	-38.6%	-33.8%	-39.8%	-2.9%	0.1%	3.8%
Restructuring expenses	0.0	0.0	-0.47	0.0	0.0	0.0
as % of sales	0.0%	0.0%	-3.1%	0.0%	0.0%	0.0%
EBIT	-4.51	-4.51	-6.61	-0.86	0.04	1.46
as % of sales	-38.6%	-33.8%	-42.9%	-2.9%	0.1%	3.8%
Net financial result	0.72	0.39	0.39	0.13	0.20	0.20
EBT (Earnings before income taxes)	-3.78	-4.12	-6.22	-0.73	0.24	1.66
as % of sales	-32.4%	-30.9%	-40.4%	-2.4%	0.7%	4.3%
Income taxes	0.00	0.00	0.01	-0.10	-0.30	-0.41
as % of EBT	0.0%	0.0%	-0.1%	14.2%	-123.3%	-24.8%
Income from continuing operations	-3.78	-4.12	-6.22	-0.83	-0.06	1.25
Income from discontinued operations, net of taxes	0.00	0.00	0.00	0.00	0.00	0.00
Group net income including minorities	-3.78	-4.12	-6.22	-0.83	-0.06	1.25
as % of sales	-32.4%	-30.9%	-40.3%	-2.8%	-0.2%	3.2%
Minority interests	0.00	0.00	0.00	0.00	0.00	0.00
Net income attributable to shareholders	-3.78	-4.12	-6.22	-0.83	-0.06	1.25
Shares outstanding (m)	7.15	7.15	7.15	7.50	7.50	7.50
Basic earnings per share (EUR)	-0.53	-0.58	-0.87	-0.11	-0.01	0.17
EBITDA	-3.58	-3.49	-4.64	0.38	1.97	3.37
EBITA	-4.02	-3.89	-5.15	0.15	1.67	2.97

Balance sheet

IFRS EURm	2009	2010	2011	2012E	2013E	2014E
Assets
Current assets as % of total assets	45.60 90.4%	40.17 86.7%	33.47 68.6%	35.18 69.9%	36.96 72.2%	40.10 74.9%
Inventories and prepayments	1.33	1.94	4.91	5.36	5.88	6.63
Trade accounts receivable	2.20	2.71	4.47	7.39	8.33	10.03
Other assets incl. tax and PoC receivables	1.48	1.39	1.36	1.76	2.69	3.14
Cash and cash equivalents	40.54	33.56	22.44	20.57	19.96	20.21
Cash and cash equival. with limitation on disposal	0.05	0.57	0.29	0.10	0.10	0.10
Noncurrent assets as % of total assets	4.85 9.6%	6.15 13.3%	15.31 31.4%	15.13 30.1%	14.21 27.8%	13.42 25.1%
Intangible assets excl. goodwill	2.41	2.95	4.89	4.42	3.33	2.37
Goodwill	0.00	0.00	6.02	6.02	6.02	6.02
Property, plant and equipment	1.68	2.34	2.75	2.97	3.12	3.28
Other non-current assets	0.06	0.07	0.05	0.13	0.14	0.16
Deferred taxes	0.69	0.80	1.59	1.59	1.59	1.59
Total assets	50.44	46.31	48.78	50.31	51.17	53.53
Shareholders´ equity and liabilities
Current liabilities as % of total equity and liabilities	3.44 6.8%	3.18 6.9%	6.78 13.9%	9.04 18.0%	9.75 19.1%	10.66 19.9%
Provisions	0.57	0.55	0.87	1.71	1.89	2.08
Advance payments received	0.02	0.00	0.20	0.25	0.25	0.25
Trade accounts payable	1.96	1.38	3.17	3.39	3.64	4.04
Liabilities from finance leases	0.00	0.00	0.56	0.70	0.73	0.76
Other liabilities	0.90	1.24	1.98	2.99	3.24	3.52
Noncurrent liabilities	1.14	1.41	5.22	5.31	5.52	5.72
as % of total equity and liabilities	2.3%	3.1%	10.7%	10.6%	10.8%	10.7%
Other noncurrent provisions	0.26	0.50	1.41	1.47	1.53	1.59
Other noncurrent liabilities	0.18	0.12	1.46	1.50	1.64	1.78
Deferred tax liabilities	0.69	0.80	2.15	2.15	2.15	2.15
Shareholders´ equity as % of total equity and liabilities	45.86 90.9%	41.72 90.1%	36.79 75.4%	35.96 71.5%	35.90 70.2%	37.15 69.4%
Subscribed capital	7.15	7.15	7.50	7.50	7.50	7.50
Capital reserve	66.88	66.88	67.88	67.88	67.88	67.88
Other changes in equity not effecting profit or loss	0.01	0.00	-0.07	-0.07	-0.07	-0.07
Accumulated loss brought forward	-24.40	-28.18	-32.31	-38.53	-39.36	-39.41
Net result of the year	-3.78	-4.12	-6.22	-0.83	-0.06	1.25
Total equity and liabilities	50.44	46.31	48.78	50.31	51.17	53.53

Cash flow statement

IFRS EURm	2009	2010	2011	2012E	2013E	2014E
Income/loss before interest and taxes	-4.51	-4.51	-6.61	-0.86	0.04	1.46
Depreciation of PP&E	0.49	0.62	1.46	1.01	1.63	1.51
Amortisation of intangible assets incl. assets from PPA	0.44	0.40	0.51	0.23	0.30	0.40
Other expenses / income with no effect on liquidity	-0.12	-0.11	0.25	-0.51	-0.26	-0.30
Increase/decrease in inventories, trade receivables, and other assets	-0.07	-1.01	-0.99	-3.33	-2.14	-2.63
Increase/decrease in trade accounts payable and other liabilities	-0.41	-0.13	1.10	2.22	1.56	1.76
Cash taxes paid	0.51	0.11	-0.03	-0.10	-0.30	-0.41
Cash flow from operating activities	-3.68	-4.64	-4.32	-1.35	0.84	1.79
Net cash outflows from the purchase and
retirement of noncurrent assets	-2.05	-2.22	-1.13	-0.98	-1.00	-1.10
Bank balances released/pledged	0.00	-0.52	0.29	0.19	0.00	0.00
Interests received	0.82	0.39	0.43	0.30	0.30	0.30
Purchase of consolidated companies	0.00	0.00	-6.00	0.00	-0.68	-0.68
Cash flow from investing activities	-1.23	-2.35	-6.42	-0.50	-1.38	-1.48
Net cash inflow from capital stock increases
deducting expenses	0.00	0.00	-0.05	0.00	0.00	0.00
Net cash flow from financial debt incl. leasing	-0.12	0.00	-0.35	0.14	0.03	0.03
Interests paid	0.00	0.00	0.00	-0.17	-0.10	-0.10
Cash flow from financing activities	-0.12	0.00	-0.40	-0.03	-0.07	-0.07
Total change in cash and cash equivalents	-5.02	-6.98	-11.14	-1.87	-0.61	0.24
Currency effects on cash and cash equivalents	0.00	0.00	0.01	0.00	0.00	0.00
Cash and cash equiv. at the start of the period	45.57	40.54	33.56	22.44	20.57	19.96
Cash and cash equiv. at the end of the period	40.54	33.56	22.44	20.57	19.96	20.21

Discounted Cash Flow Model

		PHASE 1					PHASE 2				PHASE 3
EURm	2012E	2013E	2014E	2015E	2016E	2017E	2018E	2019E	2020E	2021E	8
Sales	30.0	33.8	38.5	43.0	47.2	52.0	57.2	61.5	64.5	66.1
Sales grow th	94.2%	12.8%	14.1%	11.5%	10.0%	10.0%	10.0%	7.5%	5.0%	2.5%
EBIT	-0.9	0.0	1.5	2.5	3.8	4.9	5.9	6.8	7.1	7.3
EBIT margin	-2.9%	0.1%	3.8%	5.9%	8.0%	9.5%	10.3%	11.0%	11.0%	11.0%
Cash taxes on EBIT	-0.4	-0.4	-0.5	-0.5	-0.7	-0.9	-1.1	-1.2	-1.3	-1.9
Depreciation and amortisation	1.2	1.9	1.9	1.3	1.2	1.1	1.0	0.9	0.7	0.4
Change in long-term provisions	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1	0.1
Other non-cash items	-0.5	-0.3	-0.3	-0.1	-0.1	0.0	0.0	0.0	0.0	0.0
Change in net working capital	-1.1	-0.6	-0.9	-0.8	-0.7	-0.7	-0.6	-0.5	-0.4	-0.2
Net capital expenditure	-1.0	-1.0	-1.1	-0.9	-0.9	-0.8	-0.6	-0.4	-0.4	-0.4
Purchase of consolidated companies	0.0	-0.7	-0.7	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Free cash flow	-2.5	-0.9	0.0	1.7	2.8	3.8	4.7	5.7	5.9	5.3
Present values	-2.4	-0.8	0.0	1.2	1.8	2.1	2.4	2.6	2.5	2.0	25.5
Present value Phase 1	-3.2				Risk free rate:		3.5%		Target equity ratio:		90.0%
Present value Phase 2	14.6				Equity risk premium:		6.0%		Beta:		1.3
Present value Phase 3 Total present value	25.5 36.9				Debt risk premium: Tax shield:		3.0% 26.5%		WACC: Terminal growth:		10.5% 2.5%
+ Cash and non-operating assets	20.2							Sensitivity analysis
- Financial debt	-0.7								Terminal growth (Phase 3)
- Minority interest	0.0						1.5%	2.0%	2.5%	3.0%	3.5%
						9.46%	7.95	8.21	8.52	8.87	9.29
Fair value of equity	56.4					9.96%	7.50	7.73	7.98	8.28	8.61
					WACC	10.46%	7.11	7.30	7.52	7.76	8.04
Number of shares (m)	7.5					10.96%	6.76	6.92	7.11	7.31	7.55
						11.46%	6.44	6.58	6.74	6.92	7.12
Fair value per share (EUR)	7.52

Source: CBS Research AG

Research

Schillerstrasse 27 - 29 60313 Frankfurt am Main

Phone: +49 (0)69 – 977 8456-0

Roger Peeters Member of the Board	+49 (0)69 -977 8456- 12 Roger.Peeters@cbseydlerresearch.ag
Martin Decot	+49 (0)69 -977 8456- 13 Martin.Decot@cbseydlerresearch.ag	Igor Kim	+49 (0)69 -977 8456- 15 Igor.Kim@cbseydlerresearch.ag
Anna von Klopmann	+49 (0)69 -977 8456- 10 Anna.Klopmann@cbseydlerresearch.ag	Gennadij Kremer	+49 (0)69 – 977 8456- 23 Gennadij.Kremer@cbseydlerresearch.ag
Daniel Kukalj	+49 (0)69 – 977 8456- 21 Daniel.Kukalj@cbseydlerresearch.ag	Ralf Marinoni	+49 (0)69 -977 8456- 17 Ralf.Marinoni@cbseydlerresearch.ag
Manuel Martin	+49 (0)69 -977 8456- 16 Manuel.Martin@cbseydlerresearch.ag	Felix Parmantier	+49 (0)69 -977 8456- 22 Felix.Parmantier@cbseydlerresearch.ag
Marcus Silbe	+49 (0)69 -977 8456- 14 Marcus.Silbe@cbseydlerresearch.ag	Veysel Taze	+49 (0)69 -977 8456- 18 Veysel.Taze@cbseydlerresearch.ag
Ivo Višić	+49 (0)69 -977 8456- 19 Ivo.Visic@cbseydlerresearch.ag

Institutional Sales

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Phone: +49 (0)69 – 9 20 54-400

Raimar Bock +49 (0)69 -9 20 54-115 Head of Sales Raimar.Bock@cbseydler.com

Rüdiger Eich +49 (0)69 -9 20 54-119 Sule Erkan +49 (0)69 -9 20 54-107 (Germany, Switzerland) Ruediger.Eich@cbseydler.com (Sales-Support) Sule.Erkan@cbseydler.com

Dr. James Jackson +49 (0)69 -9 20 54-113 Klaus Korzilius +49 (0)69 -9 20 54-114 (UK) James.Jackson@cbseydler.com (Benelux, Germany) Klaus.Korzilius@cbseydler.com

Stefan Krewinkel +49 (0)69 -9 20 54-118 Markus Laifle +49 (0)69 -9 20 54-120 (Execution, UK) Stefan.Krewinkel@cbseydler.com (Execution) Markus.Laifle@cbseydler.com

Michael Laufenberg +49 (0)69 -9 20 54-112 Bruno de Lencquesaing +49 (0)69 -9 20 54-116

Christopher Seedorf +49 (0)69 -9 20 54-110 Janine Theobald +49 (0)69 -9 20 54-106 (Sales-Support) Christopher.Seedorf@cbseydler.com (Austria, Germany) Janine.Theobald@cbseydler.com

Bas-Jan Walhof +49 (0)69 -9 20 54-105 (Benelux) Bas-Jan.Walhof@cbseydler.com

(Germany) Michael.Laufenberg@cbseydler.com (Benelux, France) Bruno.deLencquesaing@cbseydler.com

Disclaimer and statement according to § 34b German Securities Trading Act ("Wertpapierhandelsgesetz") in combination with the provisions on financial analysis ("Finanzanalyseverordnung" FinAnV)

This report has been prepared independently of the company analysed by Close Brothers Seydler Research AG and/ or its cooperation partners and the analyst(s) mentioned on the front page (hereafter all are jointly and/or individually called the 'author'). None of Close Brothers Seydler Research AG, Close Brothers Seydler Bank AG or its cooperation partners, the Company or its shareholders has independently verified any of the information given in this document.

Section 34b of the German Securities Trading Act in combination with the FinAnV requires an enterprise preparing a security analysis to point out possible conflicts of interest with respect to the company that is the subject of the analysis.

Close Brothers Seydler Research AG is a majority owned subsidiary of Close Brothers Seydler Bank AG (hereafter ´CBS´). However, Close Brothers Seydler Research AG (hereafter ´CBSR´) provides its research work independent from CBS. CBS is offering a wide range of Services not only including investment banking services and liquidity providing services (designated sponsoring). CBS or CBSR may possess relations to the covered companies as follows (additional information and disclosures will be made available upon request):

• a. CBS holds more than 5% interest in the capital stock of the company that is subject of the analysis.
• b. CBS was a participant in the management of a (co)consortium in a selling agent function for the issuance of financial instruments, which themselves or their issuer is the subject of this financial analysis within the last twelve months.
• c. CBS has provided investment banking and/or consulting services during the last 12 months for the company analysed for which compensation has been or will be paid for.
• d. CBS acts as designated sponsor for the company's securities on the basis of an existing designated sponsorship contract. The services include the provision of bid and ask offers. Due to the designated sponsoring service agreement CBS may regularly possess shares of the company and receives a compensation and/ or provision for its services.
• e. The designated sponsor service agreement includes a contractually agreed provision for research services.
• f. CBSR and the analysed company have a contractual agreement about the preparation of research reports. CBSR receives a compensation in return.
• g. CBS has a significant financial interest in relation to the company that is subject of this analysis.

In this report, the following conflicts of interests are given at the time, when the report has been published: d, f

CBS and/or its employees or clients may take positions in, and may make purchases and/ or sales as principal or agent in the securities or related financial instruments discussed in this analysis. CBS may provide investment banking, consulting, and/ or other services to and/ or serve as directors of the companies referred to in this analysis. No part of the authors compensation was, is or will be directly or indirectly related to the recommendations or views expressed.

Recommendation System:

Close Brothers Seydler Research AG uses a 3-level absolute share rating system. The ratings pertain to a time horizon of up to 12 months:

BUY: The expected performance of the share price is above +10%. HOLD: The expected performance of the share price is between 0% and +10%. SELL: The expected performance of the share price is below 0%.

Recommendation history over the last 12 months for the company analysed in this report:

Date	Recommendation	Price at change date	Price Target
08 August 2011	BUY)	EUR 4.49	EUR 6.50
02 November 2011	BUY	EUR 4.10	EUR 5.50
26 January 2012	BUY	EUR 4.00	EUR 5.50
30 March 2012	BUY	EUR 3.95	EUR 5.50
11 April 2012	BUY	EUR 4.74	EUR 5.50
4 May 2012	HOLD	EUR 5.55	EUR 6.00
1 August 2012	BUY	EUR 6.78	EUR 7.50

Risk-scaling System:

Close Brothers Seydler Research AG uses a 3-level risk-scaling system. The ratings pertain to a time horizon of up to 12 months:

LOW: The volatility is expected to be lower than the volatility of the benchmark MEDIUM: The volatility is expected to be equal to the volatility of the benchmark HIGH: The volatility is expected to be higher than the volatility of the benchmark

The following valuation methods are used when valuing companies: Multiplier models (price/earnings, price/cash flow, price/book value, EV/Sales, EV/EBIT, EV/EBITA, EV/EBITDA), peer group comparisons, historical valuation approaches, discounting models (DCF, DDM), break-up value approaches or asset valuation approaches. The valuation models are dependent upon macroeconomic measures such as interest, currencies, raw materials and assumptions concerning the economy. In addition, market moods influence the valuation of companies. The figures taken from the income statement, the cash flow statement and the balance sheet upon which the evaluation of companies is based are estimates referring to given dates and therefore subject to risks. These may change at any time without prior notice.

The opinions and forecasts contained in this report are those of the author alone. Material sources of information for preparing this report are publications in domestic and foreign media such as information services (including but not limited to Reuters, VWD, Bloomberg, DPA-AFX), business press (including but not limited to Börsenzeitung, Handelsblatt, Frankfurter Allgemeine Zeitung, Financial Times), professional publications, published statistics, rating agencies as well as publications of the analysed issuers. Furthermore, discussions were held with the management for the purpose of preparing the analysis. Potentially parts of the analysis have been provided to the issuer prior to going to press; no significant changes were made afterwards, however. Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by the author with regard to the accuracy or completeness of the data. The opinions and estimates contained herein constitute our best judgment at this date and time, and are subject to change without notice. Possible errors or incompleteness of the information do not constitute grounds for liability, neither with regard to indirect nor to direct or consequential damages. The views presented on the covered company accurately reflect the personal views of the author. All employees of the author's company who are involved with the preparation and/or the offering of financial analyzes are subject to internal compliance regulations.

The report is for information purposes, it is not intended to be and should not be construed as a recommendation, offer or solicitation to acquire, or dispose of, any of the securities mentioned in this report. Any reference to past performance should not be taken as indication of future performance. The author does not accept any liability whatsoever for any direct or consequential loss arising from any use of material contained in this report. The report is confidential and it is submitted to selected recipients only. The report is prepared for professional investors only and it is not intended for private investors. Consequently, it should not be distributed to any such persons. Also, the report may be communicated electronically before physical copies are available. It may not be reproduced (in whole or in part) to any other investment firm or any other individual person without the prior written approval from the author. The author is not registered in the United Kingdom nor with any U.S. regulatory body.

It has not been determined in advance whether and in what intervals this report will be updated. Unless otherwise stated current prices refer to the closing price of the previous trading day. Any reference to past performance should not be taken as indication of future performance. The author maintains the right to change his opinions without notice, i.e. the opinions given reflect the author's judgment on the date of this report.

This analysis is intended to provide information to assist institutional investors in making their own investment decisions, not to provide investment advice to any specific investor.

By accepting this report the recipient accepts that the above restrictions are binding. German law shall be applicable and court of jurisdiction for all disputes shall be Frankfurt am Main (Germany).

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