Robust sales and highest quarterly profit

The Eckert & Ziegler Group equaled the sales level of prior quarters and recorded sales of EUR 27.2 million in the second quarter of 2010 (average per quarter 2009: EUR 25.3 million). Compared to the second quarter of 2009, net income after tax and minority interests increased by 44% to EUR 2.6 million. This means that the past quarter recorded the highest profit in the history of the company. Despite a 38% increase in the number of shares compared to the previous year’s quarter, the income per share was increased by 4% to EUR 0.50/share.

In the first half of 2010, sales of EUR 52.9 million were achieved, an increase of EUR 0.5 million or 1% over the same period the previous year. Over the same period, the net income after tax and minority interests increased by EUR 1.2 million, or 29%, to EUR 5.1 million. However, since the number of shares increased by 42%, the earnings per share fell by 8% to EUR 0.99/share.

In order to correctly assess the results of the first half of 2010 compared to 2009, the following sections refer to the average quarterly figures of 2009 excluding special effects. This levels out effects from the integration of Nuclitec during the year and from the Russian project of the Therapy segment, for example.

Once again, the most successful segment was the Industry segment, which we have renamed “Isotope Products” going forward in order to bring it in line with the company names of the operating subsidiaries. For comparison purposes, in 2010 the following explanations once again add sales and income from the new Environmental Services segment to the Isotope Products segment, in which the values were still included in 2009. Revenue increased by 9%, the unadjusted margin by 25% and the EBIT by 65%. The successful integration of Nuclitec continues. The synergies will become more obvious once restructuring expenses no longer apply. Compared to the first half of 2009, the segment was also able to report another increase in sales in the area of industrial components.

Environmental Services, which relate to taking back, reprocessing, recycling and disposal of low level radioactive waste, are included in the notes above on the Isotope Products segment for comparison purposes. No new business was expected here in the first half of 2010, and with EUR 2.7 million in sales and expenses for preparations for new business that led to a small loss of EUR 0.1 million, this area developed within the framework of expectations. The annual sales target of the existing business (taking back sources and disposal of low level radioactive hospital waste) is EUR 5 million.

With sales of EUR 14.8 million and an EBIT of EUR 2.4 million, the Therapy segment achieved a very good result in the first half of the year. Compared to halved figures excluding special effects for the previous year, the 2010 figures amount to a 2% sales decrease and an 11% increase in the EBIT. The reduced minority interests had a significant positive effect after the takeover bid. In the second quarter of 2009, these still amounted to 59%, while in the second quarter of 2010, minority shareholders of IBt. S.A. only accounted for 28% of the revenue after tax. For detailed information about the Therapy segment, refer to the IBt S.A. quarterly report, which is published at the same time. In the profit and loss statement, there are minor shifts and valuation differences between the Eckert & Ziegler and the IBt financial statements, which are listed in the following table.

Compared to the first half of 2009, the Radiopharma segment managed to increase sales by 3% to EUR 10.0 million while keeping costs almost constant. In addition, there was extraordinary revenue of several hundred thousand euros from transfers of shares and borrowing of Eckert & Ziegler EURO-PET Berlin GmbH. Overall, the EBIT increased from EUR 0.5 million to EUR 1.1 million.

We have seen the emergence of a trend across all segments in which revenues have continued to rise sharply even as the pace of growth in sales volume has slowed significantly.

The brief segment statistics (in thousands of euros) on the next page illustrate the sources of sales and revenue.

Liquidity

For the first half of 2010, the cash flow statement shows a P&L cash result of EUR 9.7 million, which exceeds the corresponding previous year‘s value by 4%. In contrast to 2009, however, net current assets increased by EUR 4.1 million, so that cash inflow from operating activities of only EUR 5.6 million remains. In 2010, the investments contain the payments for the purchase of additional IBt shares for EUR 22.5 million. The previous year included the purchase price of EUR 4.5 million for Nuclitec. The other investments amounted to EUR 2.4 million compared to the EUR 3.0 million in the same period in the previous year. In May, 37% of the purchase price paid for the additional IBT shares in April was refinanced by means of a long-term loan of EUR 8.25 million. In the first half of 2010, loan repayments amounted to EUR 2.5 million. In addition to that, the EUR 2.3 million dividend paid in May was more than twice as high as the previous year‘s. Overall, cash and cash equivalents were reduced by EUR 14.5 million compared to December 31, 2009 and amounted to EUR 29.2 million on June 30, 2010.

Balance sheet

The IBt takeover bid has major effects on the balance sheet. Since IBt has already been consolidated since the first quarter of 2008, there is no change on the asset side of the consolidated balance sheet in accordance with IFRS 3 (2008). Instead, the offsetting posting for the payout of approx. EUR 22.5 million is made in the equity: On the one hand, the acceptance quote of 55% halves the minority interests from EUR 10 million to EUR 5 million. On the other hand, retained earnings are summarily reduced in accordance with IFRS.

After the shareholders’ equity ratio was again above 50% following the capital increase and the very good annual results for December 31, 2009, the ratio of shareholders’ equity to total assets fell to 48% on June 30,2010. After the negative effects of the posting of the IBt takeover bid, the dividend paid in May 2010 also reduced the equity ratio.

The loan of USD 2.0 million granted to Core Oncology at the end of the year 2009 was due for repayment on June 30, 2010. Interest payments made in the meantime were made according to the contract. The scheduled repayment, however, has been postponed with the effect that the loan granted was restructured from short-term to long-term receivables.

Research and development

In the Therapy segment, work on developing a complete system for manufacturing prostrate cancer implants for Russia is entering the final phase. After the already delivered packaging system and the accepted system for producing seed chains, additional components for the seed production line were set up in the Berlin test lab and entered into non-production operation. For the tumor irradiation equipment of the MultiSource® type, a new, more user-friendly software version for clinical users was launched on the market.

A new version of the best-selling “Featherlite” flood source used for medical imaging was developed in the Isotope Products segment. The new product was presented for the first time at the Annual Congress of the German Association of Nuclear Medicine.

Staff

As of June 30, 2010, the Eckert & Ziegler Group had 357 employees in Germany, and a total of 534 employees worldwide. Compared with the end of 2009, the number of staff increased by 8 (December 31, 2009: 526). This change mainly affects the Isotope Products segment. The number of staff at the sites in the USA and the Czech Republic increased by 5.

Outlook

For the financial year 2010, the target for sales is EUR 105 million. The Executive Board is keeping its profit forecast at EUR 9.5 million (EUR 1.80 per share). This goal can be achieved from the operating business without acquisitions, assuming the US dollar/euro exchange rate stays within its range of the last few months so that the annual average for 2010 does not exceed the exchange rate benchmark of USD 1.34 per euro shown for the half-year.

1. General information

These unaudited interim consolidated financial statements as of June 30, 2010, comprise the financial statements of Eckert & Ziegler Strahlen- und Medizintechnik AG and its subsidiaries (also referred to hereinafter as “Eckert & Ziegler AG”).

2. Accounting and valuation methods

The consolidated financial statements (interim financial statements) of Eckert & Ziegler AG as of June 30, 2010, have been prepared, like the annual financial statements for 2009, in accordance with the International Financial Reporting Standards (IFRS). All of the standards of the London-based International Accounting Standards Board (IASB) which were applicable in the EU on the balance sheet date, as well as the relevant interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC), have been observed. The accounting policies described in the appendix to the annual financial statements for 2009 have been applied unchanged. For the preparation of the consolidated financial statements in compliance with the IFRS, it is necessary for estimates and assumptions to be made that have an impact on the amount and disclosure of recognized asset values and liabilities, income and expenditures. The actual values may differ from the estimates. Significant assumptions and estimates are made concerning useful lives, earnings attainable from goodwill and non-current assets, the realizability of receivables, and the recognition and measurement of provisions. This interim report contains all of the necessary information and adjustments required to produce a picture which reflects the actual circumstances in respect to the assets, financial situation and earnings position of Eckert & Ziegler AG at the time the interim report was produced. The earnings achieved during the course of the current fiscal year do not necessarily allow conclusions to be drawn about the development of future earnings.

3. Companies included in the consolidation

In the consolidated financial statements of Eckert & Ziegler AG, all companies are included where Eckert & Ziegler AG, either indirectly or directly, is able to determine the financial and business policies (control concept).

Company acquisitions and disposals

Regarding acquisitions and disposals, please refer to the notes under section 4.

4. Limited comparability of group financial statements
with the previous year

In January 2009, shares were bought in the companies nuclitec GmbH, nuclitec sarl and nuclitec Inc. In March 2010, the takeover bid for the shares of IBt S.A. that were not in possession of Eckert & Ziegler AG ended, whereupon Eckert & Ziegler increased its holdings in the IBt shares eligible for dividends to 72%. In March 2010, the Eckert & Ziegler Group increased its stake in Eckert & Ziegler EURO-PET Berlin GmbH from 70% to 100%. In March 2010, the Eckert & Ziegler Group increased its stake in Eckert & Ziegler f-con Europe GmbH from 74% to 77%. Compared with the first six months of 2009, this has impacted substantially on the financial situation and earnings position of the Group, which means that it is difficult to compare the Group report with the previous year’s report.

5. Currency translation

The financial statements for the companies outside the European Monetary Union are translated based on the concept of functional currency. The following exchange rates were used for the currency translation: Refer to the table below.

6. Portfolio of own shares

As of June 30, 2010, Eckert & Ziegler AG held 71,485 own shares. This equates to a share of 1.4% of the Company’s nominal capital.

7. Substantial transactions with affiliated persons

In respect to substantial transactions with affiliated persons, we refer to the publications made in the consolidated financial statements dated December 31, 2009.

8. Declaration in accordance with § 37y of the Securities Trading Act in conjunction with § 37w para. 2 no. 3 of the Securities Trading Act

To the best of our knowledge, we provide an assurance that, in accordance with the applied principles of proper interim financial results reporting, the consolidated interim financial statements give a true and fair picture of the assets, financial position and earnings position of the Group, that the interim Group management report outlines the development and performance of the business and the position of the Group, that a picture which reflects the actual circumstances is conveyed and that the principal opportunities and risks associated with the expected development of the Group in the rest of the fiscal year are described.