CHRIST Reports Strong Growth

Order receipts for the first half of the year were on target at € 110.6 million almost matching the prior year's figure of € 117.4 million, which had been based on a greater number of orders for municipal drinking and wastewater projects. At € 147.8 million, orders on hand were up 25% on the prior year (€ 118.1 million).

Sales increased by 25% from € 87.1 million in the first half of 2005 to € 109.2 million in 2006.

The upward trend in the Pharma & Life Science segment apparent in the first quarter of this year continued and sales rose by 18% to € 22.5 million. In particular, the healthy state of European domestic markets, together with the project-related support of key CHRIST customers throughout the world, proved to be crucial factors for this growth.

As a major market participant in the Ultrapure Water segment, CHRIST is benefiting from buoyant market conditions in the microelectronics sector (semiconductor, printed circuit board, flat-screen industry) particularly in Asia, as well as from the growing investment in power plants in Europe and the Middle East. Sales in this segment rose to € 52.5 million, 39% above the prior year.

Following a downturn last year, sales in the Food & Beverage segment increased by 13% to € 11.4 million this year (prior year: € 10.1 million). This figure does not include the majority shareholding acquired in KF Service GmbH, for which a letter of intent has been issued.

The Municipal Water Treatment segment is continuing to benefit from the high demand for drinking water, desalination and wastewater treatment systems in many regions around the globe. Orders from China, Eastern Europe and the Middle East increased sales by a further 14.4% to € 22.7 million (prior year: € 19.9 million).

Sales growth in the service and spare parts business was 26.5% outperforming the increase in group sales and at € 16.3 million accounting for 15% of total sales.

Operating profit (EBIT) improved considerably increasing from € 628 thousand in 2005 to € 3,027 thousand in the first six months 2006. This represents a four-fold increase in the EBIT margin from 0.7% to 2.8% in relation to sales.

Profit growth in the Pharma & Life Science is welcome but is tarnished somewhat by negative contributions to results from the joint ventures in China and the USA. EBIT of € 816 thousand (prior year: € 511 thousand) means an EBIT margin of 3.6% and despite the competitive market environment is not reaching its potential.

Following a loss of € 829 thousand last year in the Ultrapure Water business sector, EBIT of € 2,349 thousand is a major factor in the Group result. By concentrating on its core competences and on a global strategy, CHRIST can benefit from economic conditions in booming microelectronics markets in the Far East. The power plant business is also providing an important impetus. Some projects have already been commissioned in Europe and the Middle East and the high number of enquiries and requests for quotes reveal the high potential for investment.

Operating losses in the Food & Beverage segment increased from € -317 thousand in 2005 to € -640 thousand in the course of the current period of adjustment. Current order receipts together with new projects that are nearing completion lead us to expect a significant improvement in earnings in the second half of the year.

The Municipal Water Treatment segment suffered a project-related decline in its operating result, falling from € 1,263 thousand to € 502 thousand. This resulted primarily from a higher volume of consortium operations at a low return together with losses in earnings at our South African and Dubai sites where however new projects in the second half of the year should lead to a recovery.

At 843, the number of employees in the Group as of 30 June 2006 remains almost unchanged compared with the number employed as of 31 December 2005 (842) but has increased compared with the number employed as of 30 June 2005 (821 employees).

The financial result of € -647.6 thousand represented a slight increase on the prior year (€ 613.3 thousand). Increased interest expenditure, arising in particular from the issuing of a corporate bond at the end of April 2006, compares with higher income from financial participations.

Earnings before tax for the first half of 2006 amounted to € 2,379 thousand compared to a prior year value of € 15 thousand. Profit after tax improved from € 137 thousand to € 1,661 thousand. The overall tax ratio for the first half of the year therefore amounted to 30%.

Following the issuing of the bond and the increase in the volume of business, the balance sheet total rose from € 144.4 million to € 165.8 million. Group equity (including minority shares) increased from € 41.2 million, as of 31 December 2005, to € 42.4 million. The equity ratio, on the other hand, declined from 28.5% to 25.6 % due to the balance sheet extension.

The cash flow from operating activities improved by € 8.1 million compared with the first half of 2005. Liquid assets increased from € 7.4 million on 30 June 2005 to € 23 million as of the end of the first half of this year.

Outlook

The first half of the year represents a solid basis for the continued positive development of the Group in the current year. The CHRIST Group management team expects the second half of the year to continue in a similarly successful vein. We expect Group sales to exceed € 200 million in the 2006 financial year accompanied by a further improvement in the EBIT margins compared with the prior year.

The appointment of Harald Wegscheider as CFO reflects management's approach to the further planned growth of the CHRIST Group. The development of new products for core components will be accelerated further. Further, to complement organic growth, strategically reasonable acquisition opportunities are being considered.