WashTec AG — Interim / Quarterly Report 2005

Nov 2, 2005

washtec ag – Interim Report for the period from January 1 to September 30, 2005 Unaudited translation for convenience purposes only

Continued dynamic development in the first nine months of 2005

• Return target for 2005 reached ahead of plan: operating EBIT margin at 10%
• Sales up € 8.3 m to € 161.0 m (+ 5.4%)
• Equity ratio surges to 26% following successful capital increase
• More innovative products to be launched soon

Economic Activity and Market

The economic environment remained unchanged in the course of the year. The general economic development and the rising oil prices had no adverse impact on the spending activity of oil companies and car wash operators in the first nine months of the year. WashTec AG's key customer groups continued to invest in equipment in line with their capex targets.

Business Performance

The highly positive performance of WashTec, the market leader in vehicle washes, continued in the third quarter. Following the successful streamlining of WashTec's operating structures, the capital increase in early August marked the completion of the company's capital restructuring. Both revenues and earnings have developed positively. The 10% targeted operating EBIT margin for the full year has now already been reached after nine months only. Revenues for the first nine months increased by 5.4%, while earnings before taxes (EBT) rose by € 10.6m to € 10.8m.

Economic environment unchanged

Full-year operating return target of 10% reached after nine months only

The construction of a new production plant in Augsburg's Argonstrasse in the third quarter marked the implementation of another step in the company's plant restructuring concept; as of the end of the quarter, most production activities have now been consolidated at one single location, where the new assembly methods are applied. The restructuring of the production plants is to be completed by the end of the year.

At the same time, the company continued its product and marketing campaign in Germany and abroad. The development of quarterly sales reflects the success of this initiative. While revenues increased by € 4.9m or 4.9% in the first half of the year, third-quarter sales increased by € 3.3 m to € 55.2m in the previous year period.

Successful development of Austrian subsidiary as a bridge to Eastern Europe

Following the takeover of the Austrian activities by a WashTec organisation in the second quarter, the subsidiary's positive development continued in the third quarter. WashTec's own local organisation can now serve the market much more professionally. Customers' response to WashTec's local presence has been very positive, which is not least reflected in increasing new order intake especially in services. Building on its presence in Austria, WashTec as the local market leader aims to better exploit the potential offered by emerging markets in Eastern Europe and to benefit from the positive market development.

Presentation of SoftCare Bravo; more product launches to follow in 2006

While the SoftCare Takt rollover system in the premium segment has been introduced in the second quarter, SoftCare Bravo complemented the SoftCare family in the third quarter. SoftCare Bravo replaces the CK30 in the basic segment. It is particularly suited for car dealerships, garages and smaller gas stations wishing to offer their customers a lower-cost quality car wash.

The successful capital increase with a subscription ratio of 99.9% marked the end of the company's capital restructuring effort. The proceeds from this approximately € 36m transaction allowed almost full repayment of the subordinated loan. An equity ratio of 26% means that WashTec's balance sheet structure is sound again and gives the company greater scope for future growth investments. The operating cash flow for the first nine months of € 17.0m was primarily used to further reduce bank liabilities as well as for investments in the expansion of the Austrian sales organisation, the plant restructuring concept and the new ERP system. Equity ratio at 26% following successful capital increase

Revenues

in € m, IFRS	Jan. 1 – Sep. 30, 2005	Jan. 1 – Sep. 30, 2004
Abroad	92.6	87.7
Germany	68.4	65.0
Total revenues	161.0	152.7

Revenues increased by € 8.3m (+5.4%) to € 161.0m in the first nine months and by € 3.3m to € 55.2m in the third quarter. The positive development of rollover washes continued, while service revenues were down on the previous year due to the weak first quarter. A regional breakdown shows that revenue growth was driven by foreign markets, where business grew by 5.6%. The Austrian and Italian subsidiaries also contributed to the increase in revenues over the previous year. Domestic revenues rose by 5.2%

Successful product and marketing campaign sends revenues up by 5.4%

Earnings

in € m, IFRS	Jan.1 – Sep. 30, 2005	Jan.1 – Sep. 30, 2004
Adjusted EBT*	12.9	1.3
EBT	10.8	0.2

*adjusted for non-recurring expenses

In conjunction with the greatly improved cost structures, the non-recurrence of goodwill amortisation and the reduced interest expenses, the increased revenues led to disproportionate earnings growth over the previous year. Personnel expenses as a percentage of revenues declined by 0.5 percentage points to 34.2%. As of September 30, 2005 provicions for an additional virtual stock option plan were included within personnel expenses. The virtual stock option plan provides for payments of virtual stock options depending on the share price only [(share price minus € 5) x 350,000]. Payment is due in 2006 based on the conditions of the current virtual stock option program. The cost of materials as a percentage of revenues declined by a moderate 0.1 percentage points to 42.5%. At € 18.6m, other operating expenses/income were also down on the previous year (€ 19.1m). The € 1.7m cost of the capital increase was reclassified to equity with no effect on income.

The decline in amortisation and depreciation is mainly attributable to the fact that goodwill is no longer amortised under International Financial Reporting Standards (IFRS). In the same period of the previous year, amortisation and depreciation as well as extraordinary write-downs amounted to € 3.9m.

As a result of the greatly improved cost structures, earnings before interest and taxes (EBIT) rose from € 6.8m (+ € 7.4m) to € 14.2m in the first nine months and by € 2.4m to € 6.7m in the third quarter. Financial expenses were almost halved by € 3.2m to € 3.4m through the repayment of bank liabilities and the refinancing of working capital. Earnings before taxes (EBT) rose by € 10.6m to € 10.8m in the nine-month period and by € 3.7m to € 5.9m in the third quarter.

Operating EBIT margin reaches 10% after nine months only

Non-recurring expenses resulting from extraordinary expenses in conjunction with the refinancing and provisions for further optimisation programmes totalled € 2.1m in the nine-month period. Accordingly, the operating profit before taxes amounted to € 12.9m.

The profit after tax rose by € 8.0m to € 6.5m and by € 2.5m to € 3.5m in the third quarter, respectively.

Balance Sheet

Assets
in € m, IFRS	Sep. 30, 2005	Dec. 31, 2004
Non-current assets	77.6	75.1
Current assets	69.8	62.8
Prepaid expenses and deferred taxes	31.4	32.2
Total assets	178.8	170.1

Non-current assets climbed by a moderate € 2.5m as a result of the investments made in conjunction with the plant restructuring concept and the introduction of the ERP system. Current assets increased due to a € 7.0m rise in liquid funds.

Equity and liabilities
in € m, IFRS	Sep. 30, 2005	Dec. 31, 2004
Equity	47.1	4.0
Bank liabilities	55.9	60.1
Other liabilities and provisions	71.9	101.4
Deferred income	3.9	4.6
Total equity and liabilities	178.8	170.1

Fundamental improvement of the balance sheet structure

The successful capital increase resulted in a fundamental improvement of the balance sheet structure. As of September 30, 2005, equity was up by € 43.1m to € 47.1m, resulting in an equity ratio of 26.4%, compared to 2.4% prior to the capital increase. The subordinated loan (other liabilities) has almost almost fully been repaid. The operating cash flow was used to greatly reduce bank liabilities as compared to the previous year. As a result, WashTec now has a sound balance sheet structure again.

Cash Flow Statement

Cash flow from operating activities (net cash flow) totalled € 17.0m in the ninemonth period (previous year period: € 13.7m). Cash flow from investment activities amounted to € 6.3m (previous year: € 1.4m). The cash flow from financing activities comprises mainly the cash flow from the capital increase and the repayment of the subordinated loan in almost the same amount.

Capital Expenditure

Investments by the WashTec Group in the nine-month period totalled € 6.3m (previous year: € 1.4m). Capital expenditure focused on the implementation of the plant restructuring concept, the development of the Austrian sales organisation and the introduction of the ERP system.

Employees

As of September 30, 2005, the WashTec Group employed 1,304 people, 29 less than a year earlier.

The Share

In the third quarter of 2005, WashTec AG completed the € 20m capital increase approved by the Shareholders' Meeting on June 15, 2005, increasing the share capital from € 20m to € 40m through the issue of 7.6m new bearer shares. Cazenove AG and Commerzbank underwrote 4,761,970 shares at a subscription price of € 5.00 and placed them with retail and institutional investors. 2,838,030 shares shareholders Achernar Vermögensverwaltung GmbH received against a contribution in kind, Augias Vermögensverwaltung GmbH and Edlmar Vermögensverwaltung GmbH against contributions in kind. The subscription ratio was 99.9%.

The positive performance of the WashTec share continued after the capital increase. Since the beginning of the year, the WashTec share has gained 124% to € 7.07. After the capital increase, the share has been admitted to the Prime Standard as of September 20. The admission to the SDAX index is planned for the medium term. As of September 30, 2005, the shareholder structure was as follows:

Admission to the Prime Standard as of September 20, 2005

Voting rights in %

	Sep. 30, 2005
Edelmar Vermögensverwaltung GmbH	20.2
Achernar Vermögensverwaltung GmbH	11.8
IED – International Equity Development GmbH	8.9
Henderson Global Investors Ltd.	7.9
Cycladic Capital management	7.6
Powe Capital Ltd.	6.2
Augias Vermögensverwaltung GmbH	5.4
Free float	32.0

Source: Reports under WpHG (German Securities Trading Act) and shareholder reports

Risks

Compared to the risks and rewards outlined in the management report and the Group management report in the 2004 financial statements as well as in the offering memorandum, no major changes occurred in the first nine months of 2005.

Events after the End of the Reporting Period

In view of the continued negative earnings performance of the Canadian subsidiary, SSI Corp., WashTec is conducting a comprehensive analysis of the subsidiary's suitability for reorganisation. Subject to the analysis result this could lead to non-recurring expenses of up to € 2m in 2005.

Outlook

Well-filled product pipeline: more innovations in 2006

In the last quarter of the fiscal year, the consolidation of the production plants in Augsburg is to be completed. The implementation of the ERP system and the national and international product and marketing campaign will be continued. The Management Board expects dynamic earnings development in the last quarter 2005.

Given, that the balance sheet structures have clearly improved and the scope for investments in products and market has been enlarged as a result of the successful capital increase, the company's strategic focus will shift to the development of new markets and the more effective exploitation of existing market potential, especially in Eastern Europe. The potential for growth in North America and Asia is currently being analysed and is expected to contribute to revenue growth in the medium term.

At the same time, cost-cutting measures will be identified and initiated throughout the company to improve its cost structures.

The Management Board aims for a further improvement of the results in fiscal 2006.

WashTec: innovation and market leader, as well as the leader for return on investment.

Consolidated profit and loss account of WashTec AG

	Jan – Sep 2005	Jan – Sep 2004	July – Sep 2005	July – Sep 2004
	K€	K€	K€	K€
Sales	161,012	152,732	55,171	51,847
Change in inventory	881	802	879	1,153
Other capitalised own account services	0	0	0	0
Other operating income	2,302	3,452	518	943
Total	164,194	156,987	56,568	53,943
Cost of materials	68,433	65,100	24,196	22,969
Gross margin	95,762	91,887	32,372	30,974
Personnel expenses	55,111	52,994	17,643	16,135
Other operaating expenses/other taxes	21,296	22,940	6,316	8,130
EBITDA	19,355	15,953	8,414	6,308
Amortisation and depreciation of intangible assets and property, plant and equipment	5,158	5,302	1,730	1,699
Depreciation of goodwill	–	3,884	–	753
Operating Result (EBIT)	14,198	6,766	6,683	4,256
Financial result (net financial expenses)	–3,404	–6,579	–807	–2,062
Result from ordinary business activitites (EBT)	10,794	188	5,876	2,195
Income taxes	–4,317	–1,663	–2,350	–1,235
Net result	6,476	–1,475	3,526	959
Earnings per share (basic = diluted)	0.43	–0.19	0.23	–0.32

Consolidated balance sheet of WashTec AG

Assets	Sep 30, 2005	Dec 31, 2004
	K€	K€
Non current assets
Intangible assets	39,708	40,684
Property, plant and equipment	37,809	34,295
Financial assets
Investments	87	87
Other loans	11	11
Financial assets	99	99
	77,617	75,079
Deferred tax assets	28,167	30,947
Non current receivables and other assets (due in over one year)
Trade receivables	0	0
Other assets	99	99
	99	99
Total non-current assets	105,883	106,124
Current assets
Inventories	28,507	30,236
Current receivables and other assets (due within one year)
Trade receivables	32,795	28,439
Receivables from investees	63	110
Receivables from the tax office	354	231
Other assets	506	2,827
	33,719	31,607
Balances at banks and cash	7,491	815
Total current assets	69,717	62,658
Prepaid expenses	3,192	1,295
Total assets	178,792	170,078

Equity and liabilities	Sep 30, 2005	Dec 31, 2004
	K€	K€
Equity
Subscribed capital	40,000	20,000
Capital reserves	45,402	27,384
Loss caried forward	–46,359	–41,452
Consolidated net loss	6,476	–3,207
Currency translation adjustments	1,617	1,300
	47,136	4,025
Non-current liablitites and provisions
Non-current liabilities
To banks and similar institutions	50,329	296
Other	6,248	4,705
	62,077	5,002
Non-current provisions
Provisions for pensions	5,560	5,575
Other non-current provisions	8,172	8,459
	13,731	14,034
Total non-current liabilities and provisions	75,807	19,035
Current liabilities and provisions
Current liabilities
Convertible bonds	51	51
To banks and similar institutions	5,542	59,756
Payments received on accounts of orders	3,165	3,814
Trade payables	9,277	5,730
Other (from taxes and levies)	1,898	3,209
Other (for social security)	1.274	1,607
Other	12,952	47,838
	28,658	122,004
Current provision
Tax provision	3,880	2,548
Other current provisions	19,401	17,818
	23,281	20,366
Total current liabilities and provisions	50,372	142,370
Deferred income	3,909	4,647
Total equity and liabilities	178,792	170,078

Consolidated cash flow statement of WashTec AG

	Sep 30, 2005	Sep 30, 2004
	K€	K€
Operating result (EBIT)	14,198	6,766
Interest and dividends received	314	218
Interest paid	–3,718	–6,796
Interest subordinated loan	0	1,366
costs of rights issue	–1,700	0
Amortisation and depreciation of non-current assets	5,158	9,186
Change in non-current provisions	–303	193
Gain/loss from disposals of non-current assets	–602	–930
Gross Cash Flow	13,347	10,003
Decrease in inventories	1,730	4,695
Decrease in trade receivables	–4,356	10,969
Decrease/increase in trade payables	3,547	–3,338
Change in other non-current assets	2,719	–8,594
Net-cash provided from operating activities (net cashflow)	16,986	13,735
Cash paid for investments in non-current assets	–6,310	–1,446
Net-cash used for investing activities	–6,310	–1,446
Funds from cash capital increase	23,828	0
Repayment of subordinated loan	–21,909	0
Repayment of non-current liabilitites from finance lease	–1,237	–1,300
Repayment of non-current liabilitites to banks	500	–3,352
Net-cash used for financing activities	182	–4,652
Net increase/decrease in cash and cash equivalents	10,858	7,637
Cash and cash equivalents as of January 1	–59,238	–80,173
Cash and cash equivalents as of September 30	–48,380	–72,537
Balances at banks	7,491	3,127
Current bank liabilities	–55,871	–75,663

Equity statement of WashTec AG

	subscribed capital	capital reserve	accumulated profit	Currency translation adjustment	Total
	K€	K€	K€	K€	K€
As of December 31, 2004	20,000	27,384	–44,659	1,300	4,025
Costs of capital increase			–1,700		–1,700
Capital increase	20,000	18,018			38,018
Net profit January 1, 2005 to September 30, 2005			6,476		6,476
Currency changes				317	317
As of September 30, 2005	40,000	45,402	–39,883	1,617	47,136

Segment report to IFRS from January 1 to September 30, 2005

	Cleaning Technology		System Business		Consolidation		Group
	2005	2004	2005	2004	2005	2004	2005	2004
	K€	K€	K€	K€	K€	K€	K€	K€
External sales	158,305	150,101	2,707	2,631			161,012	152,732
Other income	2,328	3,480	3	1	–29	–29	2,302	3,452
Operating result	13,644	6,238	554	528			14,198	6,766
Income from interest and financial investments	314	218		0	0		314	218
Interest and similar expenditures	–3,574	–6,652	–144	–144			–3,718	–6,796
Profit from usual business activities	10,384	–196	410	384			10,794	188
Taxes from income and yield							–4,317	–1,663
Annual consolidated net deficit/earnings							6,476	–1,475

Notes

Accounting and Valuation Policies

The present interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS) as of September 30, 2005. The accounting and valuation policies have not changed as compared to those applied in the consolidated financial statements for the period ended December 31, 2004.

Individual items have been grouped to improve the clarity and legibility of the balance sheet, the income statement and the cash flow statement of the WashTec Group.

Consolidated Group

The consolidated Group has remained unchanged as compared to the consolidated financial statements for the period ended December 31, 2004.

Balance Sheet/Equity

After the August 2005 capital increase by a nominal amount of € 20,000,000, the share capital of WashTec AG amounted to € 40,000,000 and was divided into 15,200,000 no-par bearer shares as of September 30, 2005.

Earnings per Share

Earnings per share are calculated by dividing the net consolidated result by the number of shares:

	Sep. 30, 2005	Sep. 30, 2004
Net result	6.5 Mio. €	–1.5 Mio. €
Number of shares	15,200,000	7,600,000
Earnings per share	0.43 €	–0.19 €

Notes on the Parent Company

WashTec AG does not have any operations of its own. It is the ultimate Group parent company. WashTec AG has a Management Board and performs Group controlling and risk management functions; it also has a legal department. The company provides advisory services in the area of law, finance, marketing, development and production. WashTec AG's most important assets are its direct and indirect investments. The results of WashTec AG are largely determined by the income from these investments. As of September 30, 2004, WashTec AG employed 4 people (previous year: 6 people). No changes occurred in the management and supervisory bodies.

Financial Calendar

Eigenkapitalforum	November 22, 2005
Annual Report 2005	March 31, 2006
Q1 Report	May 2006
Shareholders' Meeting	May 31, 2006
Q2 Report	August 2006
Q3 Report	November 2006

Contact

WashTec AG Karoline Kalb Argonstrasse 7 86153 Augsburg Phone: +49 821/5584-0 Fax: +49 821/5584-1135 www.washtec.de washtec@washtec.de

WashTec AG Argonstrasse 7 D-86153 Augsburg Telephone (+49 821) 55 84-0 Telefax (+49 821) 55 84-1410