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Geratherm Medical AG

Quarterly Report Nov 20, 2014

178_10-q_2014-11-20_f872e6f2-3f88-49f8-9c4c-2ede6cf31780.pdf

Quarterly Report

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GERATHERM AT A GLANCE

Group financial ratio January-Sept.
2014
January-Sept.
2013
Change
Turnover 14,022 kEUR 12,918 kEUR 8.5 %
Including export share 11,569 kEUR 11,436 kEUR 1.2 %
Export rate 83 % 89 % -6.7 %
Gross result (EBITDA) 2,245 kEUR 1,376 kEUR 63.2 %
EBITDA-Margin 16.0 % 10.7 % 49.5 %
Depreciation -534 kEUR -613 kEUR -12.8 %
Operating results (EBIT) 1,711 kEUR 763 kEUR 124.3 %
EBIT margin 12.2 % 5.9 % 106.8 %
Financial results -136 kEUR 89 kEUR -
Result of ordinary activities 1,575 kEUR 852 kEUR 84.9 %
Net earnings of the parent
company`s shareholders in the
period concerned
1,096 kEUR 624 kEUR 75.7 %
Long-term assets 5,108 kEUR 5,261 kEUR -2.9 %
Short-term assets 23,680 kEUR 22,608 kEUR 4.7 %
Balance sheet total 28,788 kEUR 27,869 kEUR 3.3 %
Equity capital 20,048 kEUR 19,225 kEUR 4.3 %
Return on equity 7.3 % 4.3 % 68.4 %
Equity ratio 69.6 % 69.0 % 0.9 %
Cash and securities 13,071 kEUR 14,164 kEUR -7.7 %
Result per share pursurant to
IFRS (EPS)*
0.22 EUR 0.13 EUR 69.2 %
Result per share pursurant to
DVFA*
0.22 EUR 0.13 EUR 69.2 %
Number of employees at end of the
period
149 115 29.6 %
No-par value shares 4,949,999 4,949,999 -
* compared to registered shares in 4,949,999 4,949,999 -
circulation

Business Performance from January 1 to September 30, 2014

  • Sales revenues EUR 14.0 million +8.5%
  • Gross earnings for first nine months (EBITDA) EUR 2.3 million +63.2%
  • Operating result (EBIT) EUR 1.7 million +124.3%
  • Results of ordinary business activity EUR 1.6 million +84.9%
  • Earnings after taxes (EAT) EUR 1.1 million +75.7%
  • Acquisition of LMT Medical, Lübeck, extends the Warming Systems segment

Dear Shareholders and Parties Interested in Geratherm Medical,

The positive sales and earnings performance of Geratherm Medical continued during the 3rd quarter of 2014. The sales for the first nine months increased by 8.5%.

The Respiratory segment, posting a 105.8% growth in sales, enjoyed an aboveaverage development. The sales in the Cardio/Stroke segment increased by 38.2%. The Medical Warming Systems segment also finished the period positively with +32.9% growth in sales. The sales of the Healthcare Diagnostic segment declined by 10.4%. The export ratio was 83%.

The EBITDA margin of business operations attained 16.0% (2013: 10.7%). The EBIT margin doubled, amounting to 12.2% (2013: 5.9%).

The 3rd quarter performed considerably better with a sales growth of +22.0% compared to the prior quarter. The gross profit EBITDA increased during the last three months to 863 kEUR (2013: 367 kEUR). The operating result EBIT amounted to 646 kEUR (2013: 161 kEUR). The financial result was slightly negative with -50 kEUR (2013: -53 kEUR). During the 3rd quarter, the result from ordinary activities amounted to 596 kEUR (2013: 108 kEUR). After deducting income tax, the company reported during the 3rd quarter a consolidated net profit of 381 kEUR (2013: 63 TEUR).

Less the minority interests, the result after taxes amounted during the third quarter to 8 EUR cents per share (2013: 1 EUR cent).

III/14 II/14 I/14 IV/13 III/13
Sales 5,148 5,027 3,847 3,909 4,220
EBITDA margin 16.8% 17.5% 13.0% 5.8% 8.7%
EBIT 646 719 346 30 161
EPS (EUR) 0.08 0.10 0.04 0.14 0.01
Cash flow 853 854 479 179 266

Sales Development

The sales development of Geratherm Medical varied greatly in the individual markets. We posted strong growth on the European market with a 16.8% increase in sales. On the German market, sales increased by +65.5% as a result of acquisition effects.

The drop in sales noted in South America at the outset of the year has been made up in the meantime, still we had to report a decline of -14.7% for this market on an accumulative basis. For the Middle East region we posted a weaker sales performance with a drop of 13.3%. The sales of Geratherm products on the US market also exhibited a similarly weak performance. The sales in the Other countries segment developed favorably with a growth of 24.1%. This group of countries essentially includes Africa and Asia.

Sales by regions 1/1 to 9/30/2014

Products from the Healthcare Diagnostic segment represent the main source of revenue for Geratherm with a 64.6% share (2013: 78.3%) and include, e.g., different types of clinical thermometers, blood pressure monitors, etc., which are sold in pharmacies, hospitals and clinics. Sales generated by the segment decreased by -10.4%. This decrease was essentially affected by the even weaker performance on the South American market. We have taken this segment's decline in relative and absolute terms into consideration in our corporate strategy.

It is encouraging that we have succeeded in achieving an increasingly healthier development in the new business segments. These now represent a 35.4% share of the entire company (2013: 21.7%).

Sales by segments 1/1 to 9/30/2014

The healthy growth posted in the Respiratory segment was positively influenced by incorporating the Geratherm subsidiary Sensor Systems. This business unit produces, among other things, sensors for monitoring pulmonary function. One sensor is needed for every measurement with a patient. We assume that the increasing placement of more devices will increase the share of sales for the disposable sector in the Respiratory segment.

The Medical Warming Systems segment exhibited an increase in sales of 32.9% for the first nine months. That is an encouraging development. The increase in sales is due to the sale of Medical Warming Systems to a variety of hospitals and clinics in South America and Japan.

As of July 1, 2014, Geratherm Medical assumed the operations of LMT Medical, Lübeck, as part of an asset deal. The company develops, produces and markets incubator systems with integrated MRI diagnostics for newborn and premature babies. The acquisition is expected to strengthen the Warming Systems segment in the future. Due to the start-up curve, LMT's contribution to sales was still insignificant during the 3rd quarter. This will change during the 4th quarter.

The Cardio/Stroke segment also posted a similarly encouraging development with its 38.2% increase in sales. The affiliation with new hospitals and clinics in Germany has proved to be less dynamic than expected. Compared to last year, we did manage to win an additional 10 hospitals and clinics, which have decided to permanently install our technology for monitoring stroke patients. We are pleased that among the 10 new hospitals and clinics to join the network we managed to win over Universitätsklinikum Freiburg, Klinikum rechts der Isar, Munich and Nordwestkrankenhaus, Frankfurt/Main. Currently 47 hospitals and clinics have joined the network. In the registered doctors' sector, promising progress has been made with internationally oriented cooperation partners, which are interested in a large-scale deployment of apoplex technology in clinics specializing in cardiology and neurological services.

Earnings Situation

The quality of operating earnings improved considerably during the first nine months compared to last year. The result was supported by our export activities, which are primarily denominated in US dollars. Due to the rise in the value of the US dollar we reported exchange gains in the amount of 178 kEUR (2013: -112 kEUR).

With an EBITDA margin of 16.0% and an EBIT margin of 12.2%, we are above our original margin targets. The overall operating performance increased by 20.1% compared to the prior year. The overall operating performance recorded in the group during the 3rd quarter increased by 31.7% compared to the same period last year.

The gross profit exhibited an above-average increase of 26.4%. The gross margin amounts to 57.5% of the overall performance.

Personnel expenses increased by an above-average level of 26.8% during the first nine months of the year, and over the last three months by 35.3%. This can be primarily attributed in addition to the growth reported in almost all segments to the acquisition of LMT Medical on July 1, 2014. The staff costs for the 16 employees were not offset by any significant sales during the 3rd quarter. The situation is expected to change during the 4th quarter.

The gross result (EBITDA) was for the first nine months of the current fiscal year 2,245 kEUR (2013: 1,376 kEUR). The EBITDA margin increased from 10.7% to 16.0% compared to the same period last year. Amortization and depreciation decreased by 12.8% to 534 kEUR during the first nine months.

The operating income EBIT increased significantly to 1,711 kEUR (2013: 763 kEUR). The EBIT margin doubled to 12.2% during the currect fiscal year.

The financial result of the Geratherm Group amounted to -136 kEUR (2013: +89 kEUR). The financial result was unfavorably affected by interest paid in the amount of 204 kEUR. The interest charges of our subsidiary in Brazil, which refinanced itself with a loan based on the local credit market, accounted for more than 154 kEUR.

Geratherm Medical posted for the first nine months of the current fiscal year a result from ordinary business activities of 1,575 kEUR (2013: 852 kEUR). Income taxes weighed on the result with 480 kEUR (2013: 203 kEUR). The effective taxes amounted to only 151 kEUR, with Sensor Systems GmbH accounting for 118 kEUR. The remaining amount of 329 kEUR accounted for the decrease of non-cash effective deferred tax assets due to the use of losses carried forward.

The consolidated net profit for the first nine months was 1,096 kEUR (2013: 649 kEUR), an increase of 68.7%. After considering the results attributable to minority interests, the shareholders of the parent company enjoyed for the first nine months a net income of 1,096 kEUR (2013: 624 kEUR), an increase of 75.7%. The result per share for the first nine months is 22 EUR cents (2013: 13 EUR cents).

Net Assets and Financial Situation

In spite of the healthy growth in the overall operating performance of the company and the two acquisitions carried out during the past six months, Geratherm Medical boasts a favorable asset and financial situation. The balance sheet total amounts to EUR 28.8 million (2013: EUR 28.7 million) and is essentially formed by equity capital in the amount of EUR 20.0 million (2013: EUR 20.1 million).

On the balance sheet as of Sept. 30, 2014, the company had cash, cash equivalents and securities in the amount of EUR 13.1 million.

The equity-to-assets ratio was 69.6% as of the reporting date (2013: 69.0%). The return on equity amounted to 7.3% (2013: 4.3%). The overall return on equity was for the first nine months 8.6% (2013: 5.5%).

The long-term assets amount to EUR 5.1 million (2013: EUR 5.2 million). The intangible assets increased by +26.3% to 875 kEUR.

The tangible assets remained essentially at the same level as last year and amounted to EUR 3.4 million. The deferred taxes decreased by the reported profits to 754 kEUR (2013: 1,084 kEUR).

The short-term assets increased slightly by 0.6% to EUR 23.7 million. The inventories item increased significantly from EUR 4.5 million to EUR 6.0 million. The increase can be mainly attributed to the acquisition of the inventories of LMT Medical amounting to approx. 600 kEUR.

The accounts receivable rose by 29.7% to EUR 4.6 million. The increase in the accounts receivable can be primarily attributed to the business activities of our subsidiary in Brazil.

The gross cash flow for the first nine months increased to 2,186 kEUR (2013: 1,093 kEUR). The cash flow from operations was 72 kEUR (2013: 1,856 kEUR). The cash flow from investments was -1,111 kEUR (2013: -168 kEUR).

The cash and cash equivalents at the end of the period under review amounted to 9,021 kEUR (2013: 9,282 kEUR).

Research and Development

The research and development activities of Geratherm Medical are based on medium to long-term objectives. The Respiratory and Cardio/Stroke segments did not experience any significant changes during the past three months.

With the acquisition of LMT Medical, Lübeck, we will increase our research and development activities significantly in the Warming Systems segment. LMT Medical is a medtec enterprise that focuses mainly on development. Nearly half of the employees are involved in the development and licensing of medical products.

Geratherm is right now in the process of becoming a premium product medtec company. In this context, the acquisition of LMT Medical represents an important building block. The enterprise has with its MRI Incubator product for premature babies a unique solution that is without parallel worldwide. LMT's products are already used in more than 80 hospitals and clinics with an export share of 90%. In light of this, the enterprise fits in well with Geratherm Medical's strategic focus for the future.

Geratherm's overall strategy is to establish for the future good distinguishing characteristics with highly innovative products that are associated with complex regulatory hurdles in order to allow us to hold our own in competition with significant product advantages.

Staff

The Geratherm Group had a staff of 149 persons in total as of September 30, 2014 (2013: 115). 128 employees are in Germany.

Outlook

We anticipate for the 4th quarter that business will continue to develop favorably. In our core business we have increased production capacities for gallium-filled clinical thermometers at our Geschwenda plant on October 1 due to the increase in demand. The start-up curve with the higher production volume is likely to have a noticeable favorable impact on sales and income during the 4th quarter. The capacity increase is initially planned through to the end of 2015.

The Warming Systems segment should also post a considerable increase in terms of sales during the 4th quarter. Besides the good order situation for our emergency response and operating room systems, we also expect that the newly acquired LMT Medical will make a positive contribution to sales.

Due to the current underlying conditions, we expect the positive business performance will continue.

Geschwenda, November 2014

Dr. Gert Frank Thomas Robst Chairman of the Board Head of Sales

Statement of comprehensive income for the period January 1, 2014 to September 30, 2014

July-Sept.
2014
July-Sept.
2013
Change Jan.-Sept.
2014
Jan.-Sept.
2013
Change
EUR EUR EUR EUR
Sales revenue 5,147,555 4,219,268 22.0% 14,021,856 12,917,640 8.5%
Change in stocks of finished and
unfinished goods
23,723 -127,232 - 462,303 -655,798 -
Other own work capitalized 24,329 5,656 >100.0% 24,329 27,437 -11.3%
Other operating income 389,440 142,030 >100.0% 611,629 297,252 >100.0%
5,585,047 4,239,722 31.7% 15,120,117 12,586,531 20.1%
Material costs
Costs for consumables, supplies and
goods and for specific products
-2,146,174 -1,865,277 15.1% -6,019,123 -5,359,949 12.3%
Costs of purchased services -183,955 -118,546 55.2% -410,502 -350,667 17.1%
-2,330,129 -1,983,823 17.5% -6,429,625 -5,710,616 12.6%
Gross profit 3,254,918 2,255,899 44.3% 8,690,492 6,875,915 26.4%
Personnel expenses
Wages and salaries -911,810 -673,751 35.3% -2,561,476 -2,001,575 28.0%
Social contributions and expenditures for -209,858 -155,486 35.0% -563,033 -462,320 21.8%
pensions -1,121,668 -829,237 35.3% -3,124,509 -2,463,895 26.8%
Depreciation of intangible assets and
tangible fixed assets
-217,299 -205,847 5.6% -534,305 -613,053 12.8%
Other operating expenditure -1,270,024 -1,060,058 19.8% -3,320,723 -3,036,104 9.4%
Operating results 645,927 160,757 >100.0% 1,710,955 762,863 >100.0%
Income from dividends 0 0 - 36,000 54,145 -33.5%
Income from sale of securities 18,641 52,614 -64.6% 18,641 347,858 -94.6%
Depreciation of securities 0 0 - 0 0 -
Expenses from securities -2,746 -54,466 -95.0% -3,555 -156,926 -97.7%
Other interest and related income 4,055 4,884 -17.0% 17,568 16,384 7.2%
Interests and similar expenses -69,632 -55,962 24.4% -204,146 -172,196 18.6%
Financial result -49,682 -52,930 -6.1% -135,492 89,265 -
Result of normal business activity 596,245 107,827 >100.0% 1,575,463 852,128 84.9%
Taxes on income and profit -214,980 -45,126 >100.0% -479,758 -202,797 >100.0%
Group net profit for the period 381,265 62,701 >100.0% 1,095,705 649,331 68.7%
Result of non-controlling shareholders for
the period
-17,204 27,506 - -292 25,555 -
Net earnings of the parent company`s
shareholders in the period concerned
398,469 35,195 >100.0% 1,095,997 623,776 75.7%
Gross result for first quarter of year
(EBITDA)
863,226 366,604 >100.0% 2,245,260 1,375,916 63.2%

Statement of financial position as at the end of the period by September 30, 2014

Assets 30. September 2014
EUR
31. December 2013
EUR
Change
A. Long-term assets
I. Intangible assets
1. Development costs 160,577 160,215 0.2%
2. Other intangible assets 526,795 456,845 15.3%
3. Goodwill 187,788 75,750 >100.0%
875,160 692,810 26.3%
II. Tangible assets
1. Land and buildings
1,103,601 1,152,585 -4.2%
2. Plant and machinery 1,945,337 1,994,532 -2.5%
3. Other plants, operating and office equipment 349,979 169,047 >100.0%
4. Assets under construction 14,738 16,663 -11.6%
3,413,655 3,332,827 2.4%
III. Other assets 64,709 50,003 29.4%
IV. Deferred taxes 754,376 1,083,646 -30.4%
5,107,900 5,159,286 -1.0%
B. Current assets
I. Inventories
1. Raw, auxiliary and operating materials 1,839,459 1,260,058 46.0%
2. Unfinished products 1,539,258 1,185,681 29.8%
3. Finished products and goods 2,633,185 2,089,779 26.0%
II. Receivables and other assets 6,011,902 4,535,518 32.6%
1. Trade accounts receivable 3,770,545 2,866,920 31.5%
2. Tax claims 375,236 380,903 -1.5%
3. Other assets 450,751 296,250 52.2%
4,596,532 3,544,073 29.7%
III. Securities 4,049,772 4,346,104 -6.8%
IV. Means of payment 9,021,693 11,112,484 -18.8%
23,679,899 23,538,179 0.6%
28,787,799 28,697,465 0.3%
Equity and Liabilities
A. Equity
I.
Subscribed capital
4,949,999 4,949,999 -
II. Capital reserves 11,035,367 10,711,677 3.0%
III. Other reserves 4,352,374 5,043,049 -13.7%
Attributable to parent company shareholders 20,337,740 20,704,725 -1.8%
Non-controlling shareholders -289,802 -624,334 -53.6%
20,047,938 20,080,391 -0.2%
B. Non-current liabilities
1. Liabilities to banks 2,303,316 2,934,852 -21.5%
2. Accrued investment subsidies 613,726 697,787 -12.0%
3. Other long-term liabilities 653,079
3,570,121
596,079
4,228,718
9.6%
-15.6%
C. Current liabilities
1. Amounts owed to credit institutions 2,193,759 2,143,250 2.4%
2. Advances received 81,659 48,104 69.8%
3. Trade accounts payable 1,256,515 1,358,482 -7.5%
4. Tax liabilities 221,639 84,127 >100.0%
5. Other current liabilities 1,416,168 754,393 87.7%
5,169,740 4,388,356 17.8%
28,787,799 28,697,465 0.3%

Statement of cash flow for the period January 1, 2014 to September 30, 2014

January – September
2014
kEUR
January – September
2013
kEUR
Group net profit for the period 1,096 649
Other non-cash expenses -3 -43
Dividend income -36 -54
Interest income -18 -16
Interest paid 204 172
Decrease in deferred taxes 329 156
Expenditure from income taxes 151 46
Depreciation of fixed assets 534 613
Income from the sale of securities -19 -348
Losses from securities trading 0 0
Depreciation of securities 0 0
Amortization of allowances and subsidies -84 -82
Loss on disposal of fixed assets 32 0
Gross cash flow 2,186 1,093
Increase/decrease in inventories -1,476 839
Increase in trade receivables and other assets -1,176 -110
Increase in current and other liabilities 611 178
Cash from dividends 36 54
Inflow from interest 18 16
Outflow from interest -204 -172
Inflow/Outflow of taxes 77 -42
Cash flow from operations 72 1,856
Outflow for investment in fixed assets -844 -456
Inflow from funds for investments 15 107
Payments from financial investments 1,251 1,589
Cash for financial investment -1,533 -1,408
Cash flow from investments -1,111 -168
Cash inflow from increase in capital 324 0
Cash inflow from non-controlling shareholders 336 0
Distribution of profits to non-controlling shareholders 0 -10
Dividend distribution -1,188 -990
Proceeds from the repayment of loans 990 0
Outflows for the repayment of loans -1,571 -216
Decrease/increase in fixed liabilities 57 0
Cash flow from financing activities -1,052 -1,216
Change in cash and cash equivalents -2,091 472
Cash and cash equivalents at the start of the reporting
period
11,112 8,810
Cash and cash equivalents at the end of the reporting
period
9,021 9,282

Statement of changes in equity for the period by September 30, 2014

Other reserves
Subscribed
capital
Capital
reserves
Market
valuation
reserve
Currency
conversion
reserves
Accumulat
ed
earnings
To be
assigned to
the
shareholders
of the parent
company
Non-con
trolling
interests
Equity
capital
EUR EUR EUR EUR EUR EUR EUR EUR
As of January 1,
2013
4,949,999 10,711,677 144,916 17,968 3,209,505 19,034,065 -412,790 18,621,275
Dividend payment
to shareholders
0 0 0 0 -990,000 -990,000 -9,591 -999,591
Transaction with
associates and
shareholders
0 0 0 0 -990,000 -990,000 -9,591 -999,591
Group period result 0 0 0 0 623,776 623,776 25,555 649,331
Unrealized profits
and losses from
valuation of
securities
0 0 997,014 0 0 997,014 0 997,014
Currency translation
in group
0 0 0 -21,868 0 -21,868 -21,010 -42,878
Total consolidated
income
0 0 997,014 -21,868 623,776 1,598,922 4,545 1,603,467
As of September
30, 2013
4,949,999 10,711,677 1,141,930 -3,900 2,843,281 19,642,987 -417,836 19,225,151
As of January 1,
2014
4,949,999 10,711,677 1,477,897 11,865 3,553,287 20,704,725 -624,334 20,080,391
Acquisition of
business shares in
LMT Medical
Systems GmbH
0 0 0 0 0 0 100,000 100,000
Increase in share
capital of subsidiary
apoplex medical
technologies GmbH
0 323,690 0 0 0 323,690 236,311 560,001
Dividend payment
to shareholders
0 0 0 0 -1,188,000 -1,188,000 0 -1,188,000
Transaction with
associates and
shareholders
0 323,690 0 0 -1,188,000 -864,310 336,311 -527,999
Group period result 0 0 0 0 1,095,997 1,095,997 -292 1,095,705
Unrealized profits
and losses from
valuation of
securities
0 0 -597,123 0 0 -597,123 0 -597,123
Currency translation
in group
0 0 0 -1,549 0 -1,549 -1,487 -3,036
Total consolidated
income
0 0 -597,123 -1,549 1,095,997 497,325 -1,779 495,546

Consolidated Statement of Comprehensive Income (IFRS) for the period from January 1, 2014 to September 30, 2014

01.01.-30.09.2014
EUR
01.01.-30.09.2013
EUR
Net earnings of the parent company`s shareholders in the period
concerned
1,095,705 649,331
Income and expenses directly included in equity capital
Which are reclassified under specific conditions to profit or loss:
Profit and losses from the revaluation of securities -597,123 997,014
Difference resulting from currency translation -3,036 -42,878
Income and expenses directly included in equity capital -600,159 954,136
Total consolidated income 495,546 1,603,467
Of which for non-controlling shareholders -1,779 4,545
Of which for parent company shareholders 497,325 1,598,922

Segment Report for the period from January 1, 2014 to September 30, 2014

The following market segment report is based on our own internal reports in accordance with IFRS 8. The effects of consolidation and reconciliation of the individual companies are stated separately.

According to product
segments
Healthcare
Diagnostic
Respiratory Med. Warming
Systems
Cardio/
Stroke
Consolidation Reconciliation Total
2014 Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Segment revenues 10,236 3,174 551 393 -332 0 14,022
Elimination of intragroup
sales and reconciliation
-1,179 271 576 0 332 0 0
Sales revenues to third
parties
9,057 3,445 1,127 393 0 0 14,022
Operating results 1,375 548 -267 -51 34 72 1,711
of which:
Amortization of intangible
assets and depreciation
of tangible assets
437 25 34 5 -29 62 534
Segment assets 10,926 2,077 2,327 376 0 12,328 28,034
Segment liabilities 6,911 731 554 544 0 0 8,740
According to product Healthcare Respiratory Med. Warming Cardio/ Consolidation Reconciliation Total
segments
2013
Diagnostic
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Systems
Jan.- Sept.
kEUR
Stroke
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Jan.- Sept.
kEUR
Segment revenues 11,505 1,350 610 290 -832 -5 12,918
Elimination of intragroup
sales and reconciliation
-1,394 324 238 -5 832 5 0
Sales revenues to third
parties
10,111 1,674 848 285 0 0 12,918
Operating results 1,172 188 -50 -65 -408 -74 763
of which:
Amortization of intangible
assets and depreciation
of tangible assets
582 8 13 4 -58 64 613
Segment assets 10,909 937 729 163 0 14,057 26,795
Segment liabilities 8,239 92 245 68 0 0 8,644
According to regions
2014
Europe
Jan.- Sept.
kEUR
South America
Jan.- Sept.
kEUR
Germany
Jan.- Sept.
kEUR
Middle East
Jan.- Sept.
kEUR
USA
Jan.- Sept.
kEUR
Others
Jan.- Sept.
kEUR
Total
Jan.- Sept.
kEUR
Sales revenue 6,122 2,965 2,660 1,118 711 778 14,354
Elimination of
intercompany Sales
0 -125 -207 0 0 0 -332
Sales revenue to third
parties
6,122 2,840 2,453 1,118 711 778 14,022
Gross profit or loss 3,882 1,586 1,569 709 451 493 8,690
Operating results 783 278 317 143 91 99 1,711
of which:
Amortization/depreciation
of intangible assets and
tangible assets
286 10 116 52 33 37 534
Amortization of public
grants and subsidies
46 0 19 8 5 6 84
Acquisition costs of
fixed assets for the
period
0 14 816 0 0 0 830
Segment assets 0 2,859 25,175 0 0 0 28,034
According to regions Europe South America Germany Middle East USA Others Total
Jan.- Sept. Jan.- Sept. Jan.- Sept. Jan.- Sept. Jan.- Sept. Jan.- Sept. Jan.- Sept.
2013 kEUR kEUR kEUR kEUR kEUR kEUR kEUR
Sales revenue 5,243 3,813 1,831 1,288 947 628 13,750
Elimination of
intercompany Sales
0 -483 -349 0 0 0 -832
Sales revenue to third
parties
5,243 3,330 1,482 1,288 947 628 12,918
Gross profit or loss 2,712 1,903 778 666 490 324 6,873
Operating results 270 268 77 66 49 33 763
of which:
Amortization/depreciation
of intangible assets and
tangible assets
323 21 93 79 58 39 613
Amortization of public
grants and subsidies
45 0 13 11 8 5 82
Acquisition costs of
fixed assets for the
period
0 8 448 0 0 0 456
Segment assets 0 2,534 24,261 0 0 0 26,795

Notes on Interim Consolidated Financial Statements for the Period from Jan. 1, 2014 to Sept. 30, 2014

Accounting and Valuation Methods

The interim consolidated financial statements of Geratherm Medical AG as at Sept. 30, 2014 were prepared in accordance with the rules of the International Financial Reporting Standards (IFRS) valid on the date of the financial statements and in consideration of the guidance provided by the International Financial Reporting Interpretations Committee (IFRIC), as is mandatory in the European Union.

The accounting, evaluation and consolidation principles were maintained, as shown in the Notes to Consolidated Financial Statements for 2013 Fiscal Year.

The valuation of assets and liabilities is based in part on estimates and/or assumptions about future developments. For instance, the statements on economic useful life for long-term assets are based on estimates and assumptions. In addition, the assessment of the intrinsic value of deferred taxation allocated to the losses carried forward and the impairment tests of the cash-generating units and the assets is based on the corporate planning, which of course involves uncertainties such that the actual values may deviate from the made assumptions and estimates in individual cases. Estimates and the underlying assumptions are regularly checked and evaluated with regard to possible impact on accounting.

Consolidated Group

The following changes occurred in the consolidated group as of Sept. 30, 2014:

Share quota Share quota
Company 9/30/2014 9/30/2013
GME Rechte und Beteiligungen GmbH, Geschwenda, Germany 100.00% 100.00%
Sensor Systems GmbH, Steinbach Hallenberg / Germany 100.00% -
apoplex medical technologies GmbH,
Pirmasens, Germany 57.92% 59.11%
Geratherm Respiratory GmbH, 61.27% 61.27%
Bad Kissingen, Germany
Geratherm Medical do Brasil Ltda., 51.00% 51.00%
Sao Paulo, Brazil
LMT Medical Systems GmbH, Lübeck, Germany 66.67% -

Sensor Systems GmbH was founded with the Articles of Association from February 25, 2014. The nominal capital is € 25,000 and has been paid in full. The formation was entered in the Commercial Register on March 14, 2014. Sensor Systems GmbH is a wholly owned subsidiary of Geratherm Medical AG and started its activities on April 1, 2014. The company is engaged in the development, production and distribution of sensors, filters, connecting elements, electronic components and similar products for different industries, especially for the medical technology segment.

In accordance with the resolution of the shareholders' meeting from July 22, 2014, the share capital of apoplex medical technologies GmbH was increased by EUR 12,367 to EUR 618,367 by creating a new company share. The new share capital was paid in full in July. Entry in the Commercial Register was carried out on August 6, 2014. Geratherm's share in apoplex medical technologies GmbH thus changed from 59.11% to 57.92%.

Geratherm Medical AG participated in LMT Medical Systems GmbH with a stake of EUR 200,000. The share capital of LMT Medical Systems GmbH was increased to EUR 300,000 in accordance with the resolution of the shareholders' meeting from June 20, 2014. Geratherm Medical's share amounts to 66.67%. The share capital has been paid in full. Entry in the Commercial Register was carried out on July 4, 2014. LMT Medical Systems GmbH acquired a business unit of LMT Lammers Medical Technology GmbH, which is presently in bankruptcy proceedings, based on a purchase agreement from June 17, 2014, within the framework of an asset deal. Business operations commenced on July 1, 2014. LMT Medical Systems GmbH focuses primarily on the development and production of medical systems, such as incubators for premature babies with MRI diagnostics, and their sales. The purchase price allocation of LMT Medical Systems GmbH is tentative, since all assets and debts have not been assigned yet conclusively. The difference between the paid purchase price and the acquired net assets have been shown as goodwill for the time being.

Equity Capital

The development of the equity capital is shown in the consolidated statement of change to the shareholders' equity.

The subscribed capital of Geratherm Medical AG amounts all in all to EUR 4,949,999 as at Sept. 30, 2014 (2013: EUR 4,949,999) and is divided into 4,949,999 (2013: 4,949,999) share certificates issued to the bearers. The subscribed capital has been paid in full. As of the reporting date there were no shares held by the company.

Geschwenda, November 2014

Dr. Gert Frank Thomas Robst Chairman of the Board Head of Sales

COMPANY CALENDAR 2015

Publication Annual Report 2014 23. April
Annual General Meeting in Frankfurt/Main 05. June
3-Month Report 21. May
6-Month Report 20. August
9-Month Report 19. November

Geratherm Medical AG

Fahrenheitstraße 1 98716 Geschwenda Telefon: +49 36205 980 Fax: +49 36205/98 115 E-Mail: [email protected] Internet:www. geratherm.com

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