Funkwerk AG defines radical reorientation in first half of 2011

PRESS RELEASE

Funkwerk AG defines radical reorientation in first half of 2011

- Consolidated sales reduced to EUR 94.3m (2010: EUR 100.7m); EBIT at EUR -4.2m (2010: EUR -2.8m)

- Focus on core areas requires discontinuation of peripheral activities

- Forecast for 2011 revised: moderate sales growth and marginally negative operating result expected

Kölleda, 12 August 2011 - In the first six months of 2011, Funkwerk AG initiated an extensive reorientation program to focus rigorously on its three core segments Traffic & Control Communication (TCC), Security Communication (SC) and Automotive Communication (AC) in the future. Within these segments, the company will limit itself to growth fields with strong margins and split off more peripheral activities. Appropriate sell-offs are currently in preparation. The preparatory efforts to set the future direction of the company and the continuing investment restraint had a detrimental effect on the company's performance in the reporting period, which on the whole lagged behind expectations.

Overall, consolidated sales in the first six months of 2011 reduced to EUR 94.3m (2010: EUR 100.7m) due also to the loss of sales shares as a result of adjustments to the company's product portfolio since 2010. The TCC segment, which is rigorously centred on train and rail transport within the framework of the group's focusing strategy, produced some 48 per cent (EUR 45.2m) of the total consolidated sales volume; around 24 per cent (EUR 22.6m) were added by SC. Reorientation measures here are focused on unifying the segment units currently operating independently, along with its product lines. The AC segment, which will in future concentrate solely on supplying the automobile and lorry industry, generated a share of around 13 per cent (EUR 12.6m) in total sales. In Enterprise Communications (EC), sales totalled EUR 13.9m, or 15 per cent of consolidated sales.

The necessary reorientation, which aims to reposition the group more efficiently and give it a clearer direction, led to extraordinary burdens in the reporting period, which could be compensated only proportionally through increases in efficiency and cost cutting measures. This was aggravated by considerable advance performances for new projects. The group EBIT aggregated EUR -4.2m in the reporting period (2010: EUR -2.8m), with a period deficit of EUR -6.3m compared to EUR -3.5m in the first half of 2010. This produced net earnings per share of EUR -0.79 (2010: EUR -0.44).

Funkwerk has revised its forecast for the full 2011 financial year, now expecting but a minor increase in sales on 2010 (EUR 211.0m) based on the current group structure. The company is facing major challenges and needs to implement radical restructuring measures to allow it to grow profitably again in the future. The necessary changes have been made and key points of the company's strategic reorientation defined to help it step in a new direction. This includes scrutinising all operations and rigorously discontinuing a number of subsectors. The operating result for 2011 without allowing for restructuring costs and impairments will likely be slightly negative. How high the expenditure required for these measures will be depends largely on the progress of currently ongoing sales negotiations.

The full interim report for the first six months of 2011 is available on the Internet at www.funkwerk.com and on the website of Deutschen Börse.

Funkwerk AG
Im Funkwerk 5
99625 Kölleda/Thuringia
Germany
Jörg Reichenbach
Investor Relations
Phone: 0 36 35/6 00 -3 46
Fax: 0 36 35/6 00 -5 07