MEDION AG, ESSEN

Ad-hoc statement pursuant to section 15 of the German Securities Trading Act (WpHG)

MEDION AG:
Restructuring costs of €20.5 million in 2005
2005 EBIT of €22 million
Proposed dividend of €0.19 per share
2006: Sales of €2.0 billion and EBIT margin of 1 - 1.5 percent

MEDION generated sales of €2.526 billion in 2005 (2004: €2.624 billion). The increase in sales in the last three quarters of 2005 was not sufficient to compensate fully for the fall in the first quarter of 2005. Earnings before tax and interest (EBIT), adjusted for one-off items due to restructuring, were €42.5 million. EBIT including restructuring costs was €22.02 million. Net financial income was equal to that of the previous year at €-4.1 million and the taxation ratio was slightly higher, resulting in net income for the year of €9.2 million (2004: €48.8 million). The Supervisory Board approved the proposed dividend payment of €0.19 per share at its meeting on Monday evening. Despite the reduction in earnings, free cash flow improved by around €27 million to €72.4 million in fiscal 2005 as a result of active working capital management. The capital ratio as at December 31, 2005 rose from 52.6 percent to 53.2 percent.
 
The outlook for 2006 is driven by the positive stimuli anticipated from the football World Cup in the middle of the year and the introduction by Microsoft of the new operating system "Vista" at the end of the year. On the down side, however, forecasts for trends in consumer spending in the key European core markets remain cautious and prices are expected to continue to fall in the PC/multimedia sector. However, MEDION still expects gross margins to stabilize during the year due to the benefits derived from streamlining the product range and improving the cost base.

Overall, MEDION anticipates sales for 2006 to be in the order of €2 billion as a result of the decision to pull out of businesses whose contribution to earnings is low. Because the sales base will be immediately reduced as a result of streamlining the range of products and customers, whilst the reduction in fixed costs will not take effect until the second half of 2006, MEDION expects its EBIT margin to be between 1 and 1.5 percent.