Funkwerk increases sales and earnings by more than 25 per cent

13 november 2007- Third quarter significantly better than previous year - EBIT as at the end of September improves to 4.0 mill. Euro (2006: 1.6 mill. Euro) - Order volume of 150 mill. Euro (2006: 90 mill. Euro) promises sales of over 100 mill. Euro in fourth quarter - Sales and earnings targets likely to be achieved Kölleda, 13 November 2007. In the third quarter of 2007, Funkwerk AG (ISIN: DE0005753149) performed significantly better in terms of overall sales and earnings than in the previous year. According to the nine-month figures presented today, quarterly sales rose by a good 25 per cent on the previous year, to 66.8 mill. Euro (2006: 53.3 mill. Euro). The result of operations (EBIT) improved to 2.3 mill. Euro (2006: 0.2 mill. Euro). "In the third quarter, Funkwerk pushed ahead with its change of strategies previously initiated, turning from its former niche policy to expanding the market to comprehensive problem solutions. Due to the completion of major projects by the end of the year, we anticipate sales to top 100 mill. Euro in the last quarter of fiscal 2007," explained Funkwerk Chairman Dr. Hans Grundner. This would in all likelihood enable Funkwerk to reach its targets set for 2007, with sales of 300 mill. Euro and earnings (EBIT) of 15 mill. Euro. Reorganisation of TCC bears fruit Over the nine-month period, sales of the Thuringian technology group listed in the Prime Standard rose to over 193 mill. Euro (2006: 164 mill. Euro). "The integration of acquisitions made early in the year are progressing according to plan and will largely be finalised by the year-end. The positive completion of critical projects taken over still remains a risk for the group's earnings situation. However, we can currently assume that despite the integration-related burdens, these acquisitions will make a positive contribution to our consolidated earnings, " stated Dr. Grundner. The earnings from operations before interest and taxes on income (EBIT) increased to 4.0 mill. Euro by the end of September (2006: 1.6 mill. Euro). The consolidated net income improved on the previous year, from 0.1 mill. Euro in 2006 to 0.5 mill. Euro. The earnings per share stood at 0.06 Euro (2006: 0.01 Euro). This significant improvement in the earnings position was due, predominantly, to Traffic & Control Communication. While still reporting a deficit in the previous year, this segment generated the lion share of revenues in 2007 (EBIT of 3.7 mill. Euro, 2006: -3.1 mill. Euro). Dr. Grundner: "The successes of restructuring measures introduced in the previous year and the smooth integration of our acquisitions, along with satisfactory progress in major projects played a key role here." Trend in individual segments uneven In the third quarter, the business trend by segment proved uneven. While Traffic & Control Communication (communication solutions for transport and industry), after completion of its reorganisation measures commenced in 2006, was back on course for profitable growth, Enterprise Communication (messaging and network solutions for companies and institutions) once again failed to achieve its sales target. Thus, TCC doubled its sales on the previous year from just under 17 mill. Euro to over 34 mill. Euro, while revenues at EC fell to 18 mill. Euro (2006: 23 mill. Euro). "In our Enterprise Communication segment, delays in the conclusion of cooperation contracts and in product placement have resulted in the loss of a sizeable number of orders. Consequently, this segment will now also be restructured. The negative impact on earnings (EBIT of -0.5 mill. Euro, 2006: 1.6 mill. Euro) resulting from missing our targets here can, however, be compensated by the positive development of TCC," explained Dr. Grundner. In the Automotive Communication segment (communication equipment for vehicles), delays in product placement led to margin pressures (EBIT of 0.9 mill. Euro, 2006: 3.2 mill. Euro), while the revenues (14 mill. Euro, 2006: 14 mill. Euro) largely developed according to plan. "A restructuring of the organisation into individual profit centres for the OEM and after-sales markets should in future keep us even closer to the market and help us focus more strongly on results." Disproportionate earnings rise anticipated for last quarter While the inflow of orders slackened somewhat in the third quarter, new contracts worth around 60 mill. Euro still exceeded the prior-year figure (50 mill. Euro) quite significantly. As at the end of September, the volume of orders thus totalled 150 mill. Euro, which is over 60 per cent more than in the same period last year (2006: 90 mill. Euro). By the end of the year, around 100 mill. Euro of this amount will be realised as planned, so that the sales targets for the last quarter are already virtually secured. Dr. Grundner: "Since many start-up expenses and advance payments have already been posted, the operating result in the last quarter is likely to rise disproportionately." The lion share will be contributed by the Traffic & Control Communication segment. The growth driver here, to an increasing degree, is the video systems product sector. The current major projects involving property protection, in particular, will affect both sales and earnings largely before the end of the year. Cash flow in third quarter positive again - further improvement by year-end In terms of cash flow, the company reported an equally positive trend. On balance, the inflow of funds from operations in the third quarter totalled 1.2 mill. Euro. The cash flow made up of the consolidated net profit plus depreciation amounted to 11.4 mill. Euro as at the end of September and thus was well above the prior-year figure (9.8 mill. Euro). Dr. Grundner: "Due to the high potential of orders to be processed, we expect to see a further significant improvement in our cash flow." The full nine-month report of Funkwerk AG is available for downloading on the Internet at www.funkwerk.com. For further information contact Funkwerk AG Im Funkwerk 5 99625 Kölleda/Thüringen Germany Jörg Reichenbach Investor Relations Telephone: 0 36 35/458-356 Fax: 0 36 35/6 00 -507 reichenbach@funkwerk.com rw konzept GmbH Emil-Riedel-Straße 18 80538 München Germany Sebastian Brunner Tel: 0 89/13 95 96 -33 Fax: 0 89/13 95 96 -34 Mobile: 01 75/5 60 46 73 brunner@rw-konzept.de --- End of Message --- Funkwerk AG Im Funkwerk 5 Kölleda Germany WKN: 575314; ISIN: DE0005753149; Index: HDAX, MIDCAP, CDAX, Prime All Share, TECH All Share; Listed: Geregelter Markt in Frankfurter Wertpapierbörse, Prime Standard in Frankfurter Wertpapierbörse, Freiverkehr in Börse Berlin, Freiverkehr in Bayerische Börse München, Freiverkehr in Börse Düsseldorf, Freiverkehr in Börse Stuttgart, Freiverkehr in Hanseatische Wertpapierbörse zu Hamburg, Freiverkehr in Niedersächsische Börse zu Hannover;