SFC ENERGY AG INTERIM

Letter to Shareholders

LETTER TO SHAREHOLDERS DEAR SHAREHOLDERS, BUSINESS PARTNERS AND EMPLOYEES OF SFC, SFC Energy AG continued to focus on value-oriented growth and penetrating its existing exciting end markets in the first half of 2019. Sales and the operating results developed in line with our expectations. In particular, in the Clean Energy & Mobility and Industry segments we succeeded in exploiting and continuing the positive impetus from the previous quarters. This is particularly pleasing, as we are in a period of great social and macroeconomic change entailing decar- bonization in all areas of industry and the economy, the replacement of key energy sources such as coal and nuclear energy, and the decentralization of power supplies, together with digital change and steadily increasing demand for wireless data transfer volumes, as well as significantly increased security requirements due to far-reaching geopolitical changes. We view these challenges as an opportunity, as our fuel cell solutions are a key to meeting these requirements: They provide for a clean, reliable and environmentally sustainable energy supply that is independent of the power grid. Due to our focus on issues of high social relevance and our techno- logical strength, we believe we are well positioned to accompany these megatrends, to shape them and to benefit substantially from them. In the first half of 2019, the SFC Energy Group generated sales of € 31,076k, thus slightly exceeding sales in the prior-year period (first half of 2018: € 30,860k). Group EBITDA adjusted for non-recurring effects amounted to € 2,199k over this six-month period compared with € 2,131k in the first half of 2018. As expected, adjusted EBIT was below the prior-year figure of € 1,571k at € 584k, as earnings in the first six months of 2018 reflected the extraordinary positive effect resulting from the delivery of a major order to the German armed forces (Bundes- wehr). At 33.5 %, the EBITDA margin in this six-month period was only slightly below the figure for the same six months of the previous year (34.3 %). This was due, in particular, to the customer mix in the Defense & Security segment as well as start-up costs for the new product platform in the Industry segment. The equity ratio was 32.8 % as of the end of the first half of 2019 (end of the 2018 reporting period: 43.3 %). Available cash and cash equivalents amounted to € 4