Geratherm Medical AG

Earnings Release • May 23, 2013

GERATHERM AT A GLANCE

Group financial ratio	January March 2013	January March 2012	Change
Turnover	4,374 TEUR	4,118 TEUR	6.2 %
Including export share	3,792 TEUR	3,696 TEUR	2.6 %
Export rate	87 %	90 %	-3.3 %
Gross result (EBITDA)	623 TEUR	320 TEUR	94.5 %
EBITDA-Margin	14.2 %	7.8 %	82.1 %
Depreciation	-201 TEUR	-172 TEUR	16.7 %
Operating results (EBIT)	422 TEUR	148 TEUR	>100.0 %
EBIT margin	9.6 %	3.6 %	>100.0 %
Financial results	-51 TEUR	42 TEUR	-
Result of ordinary activities	371 TEUR	190 TEUR	94.9 %
Net earnings of the parent company`s shareholders in the period concerned	255 TEUR	133 TEUR	92.4 %
Long-term assets	5,512 TEUR	5,881 TEUR	-6.3 %
Short-term assets	22,193 TEUR	19,352 TEUR	14.7 %
Balance sheet total	27,705 TEUR	25,233 TEUR	9.8 %
Equity capital	19,147 TEUR	19,454 TEUR	-1.6 %
Return on equity	5.3 %	2.7 %	94.8 %
Equity ratio	69.1 %	77.1 %	-10.4 %
Cash and securities	13,480 TEUR	9,674 TEUR	39.3 %
Result per share pursurant to IFRS (EPS)*	0.05 EUR	0.03 EUR	66.7 %
Result per share pursurant to DVFA*	0.05 EUR	0.03 EUR	66.7 %
Number of employees at end of the period	116	135	-14.1 %
No-par shares	4,949,999	4,949,999	-
* compared to registered shares in	4,949,999	4,949,999	-
circulation

Business performance from 1 January to 31 March 2013

• Sales revenue 4.4 m EUR +6.2 %
• Gross period earnings (EBITDA) 623 TEUR +94.5 %
• Operating profit (EBIT) 422 TEUR +185.1 %
• Result of normal business activity 371 TEUR +94.9 %
• Net earnings (EAT) 255 TEUR +92.4 %
• New business fields gain momentum

Dear shareholders and interested parties of Geratherm Medical,

Geratherm Medical turnover and earnings performance in particular significantly improved in the 1st quarter. The flu epidemic in Europe as well as the USA boosted sales of Geratherm products, while also most of the new business fields showed substantial increases in sales. With an EBITDA margin of 14.2 % or an EBIT margin of 9.6 %, the 1st quarter was satisfactory from a profit perspective. The cash flow in the 1st quarter was 1,154 TEUR.

Turnover increased in the 1st quarter by 6.2 % to 4.4 m EUR and this growth was mainly driven by the clear increase in sales volume (+66.9 %) of products in the pulmonary function monitoring field.

At 2,311 TEUR, the gross profit was at the level of the previous year, which means a gross company-wide margin for the first quarter of 55.8 % (p.y. 55.5 %). A significantly reduced cost base enabled higher reported income.

The operating profit (EBIT) for the 1st quarter was 422 TEUR (p.y. 148 TEUR), while the result of normal business activity was 371 TEUR (p.y. 190 TEUR). The earnings after tax for shareholders totalled 255 TEUR or 5 cent per share (p.y. 3 cent).

Facts and figures		I/13	IV/12	III/12	II/12	I/12
(in TEUR)	Turnover	4,374	4,276	3,834	3,742	4,118
	EBITDA	14.2%	23.7%	4.1%	6.0%	7.8%
	EBIT	422	822	-38	25	148
	EPS (EUR)	0.05	0.12	0.03	0.06	0.03
	Cash flow	1,154	977	135	250	222

Sales trend

The sales trend for Geratherm Medical differed in the individual regions. Unlike the comparable period of the previous year and due to the significant flu epidemic, which particularly affected Europe and the USA, we again saw substantial increases in sales.

The portion of Geratherm products exported was 87 %, representing a -3.3% decline compared to the period the previous year. In Germany, sales of Geratherm products increased by 37.7 %, while in Europe, first-quarter sales volume rose by 29.3 %. The flu epidemic in the USA meant here also, sales increased in comparison to the quarter the previous year by 71.3 %. South America was weaker in comparison, showing negative growth of -19.7 %, while the Middle East region also showed a decline of -32.5 % for the first quarter. However, we view this as fluctuating orders based on timing, rather than a key decline in the sales volume. The same also applies for the Other Countries region with a drop of 41.3%.

Turnover based on region 1.01. - 31.03.2013

Sales in the healthcare diagnostic sector declined slightly in the first quarter. Due to weaker sales in Latin America, the sector showed a drop in revenue of 2.5 %, while for pricesensitive products in particular, such as digital clinical thermometers, sales declined by 17.5 %, while blood pressure monitors showed a drop of 24.4 %. High-end products, such as contactless clinical thermometers showed increased turnover of 14.4 %, while similar growth was observed in the product range of environmentally friendly Gallium thermometers with sales increasing by 16.7 %.

The Respiratory sector, in which we supply products for pulmonary function monitoring, showed dynamic growth, with sales soaring by 66.9 %, based on today's predictions, development will continue into the coming quarters.

The Medical Warming Systems sector also developed positively. For the first quarter, the sector showed an increase in turnover of + 25.3 %.

While at a low level, the Cardio/Stroke sector was able to boost quarterly sales by +43.2 % and the dynamic growth in this sector looks likely to be sustained in coming quarters. The number of primary stroke centres linked up with the SRAclinic product increased to 26 (p.y. 17).

Turnover by sector 1.01. - 31.03.2013

Profit situation

The operating profit improved considerably in the 1st quarter of 2013. This was due to the elimination of exceptional items, such as short-time work in the Geschwenda/Thuringia factory and the increased sales of clinical thermometers as well as the increased profitability of new business fields.

With gross profit remaining virtually constant at 2,311 TEUR and reduced personnel costs amounting to 13.3 %, the gross profit (EBITDA) earned for the first quarter of the fiscal year was 623 TEUR (p.y. 320 TEUR).

Write-offs increased by 16.7 % to 201 TEUR, while other operating expenses declined by 17.2 % to 912 TEUR (p.y. 1,102 TEUR).

The operating profit (EBIT) virtually trebled in the first quarter of the current fiscal year to 422 TEUR (p.y. 148 TEUR), while the EBIT margin increased from 3.6 % to 9.6 %. Although this is a positive development, the minimum target return of at least 10 % for the reported operating earnings has not yet been reached. The financial result was negative at -51 TEUR, 40 TEUR of which went on interest payments for the subsidiary Geratherm do Brasil. Earnings from dividends and securities were not received by the 1st quarter. The result of normal business activity for the first quarter of the current year was 371 TEUR (p.y. 190 TEUR).

Taxes on income and revenue reduced the reported result by 124 TEUR, although actual taxes only amounted to 12 TEUR. The remaining amount of 112 TEUR comprised the reduction of non-cash effective deferred tax assets by carrying forward losses. In total, a group net result for the first quarter of 247 TEUR (p.y. 136 TEUR) was recorded.

For the 1st quarter 2013, a net result for the parent company shareholders of 255 TEUR (p.y. 133 TEUR) was earned. The earning per share for the 1st quarter was 5 cent (p.y. 3 cent).

Assets and financial position

Geratherm Medical enjoys solid funding. The balance sheet total of 27.7 m EUR mainly comprises equity capital of 19.1 m EUR, and the portion of equity capital stood at 69.1 % as of the balance sheet date (p.y. 77.1 %).

As of 31.03.2013, the company had liquid assets and securities amounting to 13.5 m EUR (p.y. 9.7 m EUR). The company thus finds itself in an exceptionally strong financial position.

The non-current assets fell by -1.1 % to 5.5 m EUR, while intangible assets increased by 18.1 % to 628 TEUR. This was mainly due to the capitalisation of costs for product approvals and the partial invoicing of clinical studies. For the assets of property, amounting to 3.7 m EUR, there were no significant changes overall, while the figure for deferred taxes declined to 1.1 m EUR.

For current assets, the reduction of inventories led to a significant decline in funds absorption to 4.7 m EUR (31.12.12: 5.5 m EUR). This included raw, auxiliary and operating materials, unfinished products as well as finished products and goods.

Receivables and other assets increased slightly by 4.4 % to 4.0 m EUR.

As of 31.03.2013, securities valued at 4.1 m EUR (+10.6 %) were held, while currency increased by 6.3 % to 9.4 m EUR (p.y. 8.8 m EUR).

The gross cash flow for the first quarter 2013 increased to 611 TEUR (p.y. 306 TEUR), while the cash flow from operating activities amounted to 1,154 TEUR (p.y. 222 TEUR). The cash flow from investments was -383 TEUR (p.y. -36 TEUR).

Research and development

The focal points in the research and development field were mainly the new business fields.

In the warming systems sector, we focused on the further development of products already introduced to the market to date and the development of a new generation of cryotherapy products.

In the diagnostics field, we are currently conducting various clinical studies for the new "Woman Care" product line.

The overall Geratherm strategy is to establish unique future selling points via highly innovative products, which are linked to complex approval hurdles, to ensure a market placement with clear product advantages compared to the competition.

Employees

As of 31 March 2013, the Geratherm group employed a total of 116 employees (p.y. 135), 85 of whom were employed domestically.

Overview

The growth dynamic of the premium medical products we have developed in the OP/heating systems, pulmonary function monitoring and cardio/stroke fields is set to continue. For the healthcare diagnostic sector, we predict a weaker 1st quarter, since new CE approvals could lead to delays in the supply of products. The new "Woman Care" product range should provide new impetus for growth in the 2nd half of the year in the healthcare diagnostic sector.

Geschwenda, May 2013

Dr. Gert Frank Thomas Robst Executive Chairman Head of Sales

Statement of comprehensive income for the period January 1, 2013 to March 31, 2013

	Jan.-March	Jan.-March	Change
	2013 EUR	2012 EUR
Sales revenue	4,373,804	4,117,509	6.2 %
Change in stocks of finished and unfinished goods	-397,170	-3,448	>100.0 %
Other own work capitalized	7,702	0	-
Other operating income	160,354	61,139	>100.0 %
	4,144,690	4,175,200	-0.7 %
Material costs
Costs for consumables, supplies and goods
and for specific products	-1,728,855	-1,764,603	-2.0 %
Costs of purchased services	-105,294	-93,219	13.0 %
	-1,834,149	-1,857,822	-1.3 %
Gross profit	2,310,541	2,317,378	-0.3 %
Personnel expenses
Wages and salaries	-628,667	-691,500	-9.1 %
Social contributions and expenditures for pensions	-147,160	-203,798	-27.8 %
	-775,827	-895,298	-13.3 %
Depreciation of intangible assets and tangible fixed assets	-200,531	-171,891	16.7 %
Other operating expenditure	-912,089	-1,102,037	-17.2 %
Operating results	422,094	148,152	>100.0 %
Income from dividends	0	8,544	-
Income from sale of securities	0	39,983	-
Depreciation of securities	0	0	-
Expenses from securities	-499	-1,200	-
Other interest and related income	7,438	9,556	-
Interests and similar expenses	-57,491	-14,428	-
Financial result	-50,552	42,455	-
Result of normal business activity	371,542	190,607	94.9 %
Taxes on income and profit	-124,079	-54,444	>100.0 %
Group net profit for the period	247,463	136,163	81.7 %
Result of non-controlling shareholders for the period	-7,615	3,565	-
Net earnings of the parent company`s shareholders in the period concerned	255,078	132,598	92.4 %
Gross result for first quarter of year (EBITDA)	622,625	320,043	94.5 %
Earnings per share undiluted	0.05	0.03	66.7 %

Statement of financial position as at the end of the period by March 31, 2013

Assets	31. March 2013 EUR	31. December 2012 EUR	Change
A. Long-term assets
I. Intangible assets
1. Development costs	222,262	254,051	-12.5 %
2. Other intangible assets	330,151	202,041	63.4 %
3. Goodwill	75,750	75,750	0.0 %
	628,163	531,842	18.1 %
II. Tangible assets
1. Land and buildings	1,201,568	1,217,897	-1.3 %
2. Plant and machinery	2,258,582	2,033,047	11.1 %
3. Other plants, operating and office equipment	203,175	208,557	-2.6 %
4. Assets under construction	52,446	302,799	-82.7 %
	3,715,771	3,762,300	-1.2 %
III. Other assets	50,004	50,004	0.0 %
IV. Deferred taxes	1,118,144	1,230,609	-9.1 %
	5,512,082	5,574,755	-1.1 %
B. Current assets
I. Inventories
1. Raw, auxiliary and operating materials	1,042,586	1,236,130	-15.7 %
2. Unfinished products	1,241,396	1,497,963	-17.1 %
3. Finished products and goods	2,437,678	2,725,996	-10.6 %
II. Receivables and other assets	4,721,660	5,460,089	-13.5 %
1. Trade accounts receivable	3,389,852	3,205,877	5.7 %
2. Tax claims	218,405	232,540	-6.1 %
3. Other assets	383,226	383,334	0.0 %
	3,991,483	3,821,751	4.4 %
III. Securities	4,113,844	3,718,382	10.6 %
IV. Means of payment	9,366,306	8,809,871	6.3 %
	22,193,293	21,810,093	1.8 %
	27,705,375	27,384,848	1.2 %
Equity and Liabilities
A. Equity I. Subscribed capital	4,949,999	4,949,999	0.0 %
II. Capital reserves	10,711,677	10,711,677	0.0 %
III. Other reserves	3,898,156	3,372,389	15.6 %
Attributable to parent company shareholders	19,559,832	19,034,065	2.8 %
Non-controlling shareholders	-412,459	-412,790	-0.1 %
	19,147,373	18,621,275	2.8 %
B. Non-current liabilities
1. Liabilities to banks	3,600,000	3,700,000	-2.7 %
2. Accrued investment subsidies	767,493	794,830	-3.4 %
3. Other long-term liabilities	596,079	596,079	0.0 %
	4,963,572	5,090,909	-2.5 %
C. Current liabilities
1. Amounts owed to credit institutions	1,549,056	1,663,869	-6.9 %
2. Advances received	147,631	72,739	>100.0 %
3. Trade accounts payable	1,066,974	1,171,275	-8.9 %
4. Tax liabilities	222,228	108,993	>100.0 %
5. Other current liabilities	608,541	655,788	-7.2 %
	3,594,430	3,672,664	-2.1 %
	27,705,375	27,384,848	1.2 %

Statement of cash flow for the period January 1, 2013 to March 31, 2013

Cash and cash equivalents at the end of the reporting period	9,366	3,974
period
Cash and cash equivalents at the start of the reporting	8,810	4,224
Change in cash and cash equivalents	556	-250
Cash flow from financing activities	-215	-436
Increase in fixed liabilities	0	-13
Outflows for the repayment of loans	-215	-423
Proceeds from the repayment of loans	0	0
Dividend distribution	0	0
Distribution of profits to non-controlling shareholders	0	0
Cash inflow from non-controlling shareholders	0	0
Cash flow from investments	-383	-36
Cash for financial investment	-133	0
Payments from financial investments	0	295
Outflow for investment in fixed assets	-250	-331
Cash flow from operations	1,154	222
Outflow of taxes on income and earnings	-23	0
Outflow from interest	-57	-14
Inflow from interest	7	9
Cash from dividends	0	9
Increase in current and other liabilities	20	282
Increase in trade receivables and other assets	-142	-184
Decrease/increase in inventories	738	-186
Gross cash flow	611	306
Loss on disposal of fixed assets	0	0
Amortisation of allowances and subsidies	-27	-19
Depreciation of securities	0	0
Losses from securities trading	0	0
Income from the sale of securities	0	-40
Depreciation of fixed assets	201	172
Expenditure from income taxes	12	34
Decrease in deferred taxes	112	20
Interest paid	57	14
Interest income	-7	-9
Dividend income	0	-9
Other non-sash expenses	16	7
Group net profit for the period	247	136
	2013 TEUR	2012 TEUR
	January – March	January – March

Statement of changes in equity for the period by March 31, 2013

				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, 2012	4,949,999	10,672,874	-92,385	27,232	3,500,315	19,058,035	-393,150	18,664,885
Dividend payment to shareholders	0	0	0	0	0	0	0	0
Transaction with associates and shareholders	0	0	0	0	0	0	0	0
Group period result	0	0	0	0	132,598	132,598	3,565	136,163
Unrealised profits and losses from valuation of securities	0	0	646,835	0	0	646,835	0	646,835
Currency translation in group	0	0	0	3,326	0	3,326	3,196	6,522
Total consolidated income	0	0	646,835	3,326	132,598	782,759	6,761	789,520
As of March 31, 2012	4,949,999	10,672,874	554,450	30,558	3,632,913	19,840,794	-386,389	19,454,405
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	0	0	0	0
Transaction with associates and shareholders	0	0	0	0	0	0	0	0
Group period result	0	0	0	0	255,078	255,078	-7,615	247,463
Unrealised profits and losses from valuation of securities	0	0	262,418	0	0	262,418	0	262,418
Currency translation in group	0	0	0	8,271	0	8,271	7,946	16,217
Total consolidated income	0	0	262,418	8,271	255,078	525,767	331	526,098

Consolidated Statement of Comprehensive Income (IFRS) for the period from January 1, 2013 to March 31, 2013

	01.01.-31.03.2013 EUR	01.01.-31.03.2012 EUR
Net earnings of the parent company`s shareholders in the period concerned	255,078	132,598
Profit of non-controlling shareholders	-7,615	3,565
Group net profit for the period	247,463	136,163
Profit and losses from the revaluation of securities	262,418	646,835
Difference resulting from currency translation	16,217	6,522
Income and expenses directly included in equity capital	278,635	653,357
Total consolidated income	526,098	789,520
Of which for non-controlling shareholders	331	6,761
Of which for parent company shareholders	525,767	782,759

Segment Report for the period from January 1, 2013 to March 31, 2013

According to product segments 2013	Healthcare Diagnostic Jan.-March TEUR	Med. Warming Systems Jan.-March TEUR	Cardio/ Stroke Jan.-March TEUR	Respiratory Jan.-March TEUR	Consolidation Jan.-March TEUR	Reconciliation Jan.-March TEUR	Total Jan.-March TEUR
Segment revenues	3,765	245	85	456	-189	12	4,374
Operating results	582	9	-28	68	-173	-36	422
of which:
Amortisation of intangible assets and depreciation of tangible assets	191	6	1	2	-21	22	201
Segment assets	11,265	902	156	771	0	13,493	26,587
Segment liabilities	7,535	162	583	278	0	0	8,558

According to product segments	Healthcare Diagnostic	Med. Warming Systems	Cardio/ Stroke	Respiratory	Consolidation	Reconciliation	Total
	Jan.-March	Jan.-March	Jan.-March	Jan.-March	Jan.-March	Jan.-March	Jan.-March
2012	TEUR	TEUR	TEUR	TEUR	TEUR	TEUR	TEUR
Segment revenues	3,900	221	60	281	-344	0	4,118
Operating results	226	40	-52	11	-189	112	148
of which:
Amortisation of intangible assets and depreciation of tangible assets	168	6	1	2	-32	27	172
Segment assets	12,273	990	201	626	0	9,661	23,751
Segment liabilities	4,798	252	522	207	0	0	5,779

According to regions	Germany	Europe	USA	South America	Others	Total
2013	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR
Sales revenue	693	1,957	375	1,107	431	4,563
Elimination of intercompany Sales	-111	0	0	-78	0	-189
Sales revenue to third parties	582	1,957	375	1,029	431	4,374
Gross profit or loss	314	1,041	200	527	229	2,311
Operating results	62	208	40	66	46	422
of which:
Amortisation/depreciation of intangible assets and tangible assets	34	113	22	7	25	201
Amortisation of public grants and subsidies	5	16	3	0	3	27
Acquisition costs of fixed assets for the period	242	0	0	8	0	250
Segment assets	24,167	0	0	2,420	0	26,587

According to regions	Germany	Europe	USA	South America	Others	Total
2012	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR	Jan.-March TEUR
Sales revenue	562	1,514	219	1,485	682	4,462
Elimination of intercompany Sales	-140	0	0	-204	0	-344
Sales revenue to third parties	422	1,514	219	1,281	682	4,118
Gross profit or loss	232	832	120	758	375	2,317
Operating results	8	30	4	92	14	148
of which:
Amortisation/depreciation of intangible assets and tangible assets	24	87	13	9	39	172
Amortisation of public grants and subsidies	3	10	1	0	5	19
Acquisition costs of fixed assets for the period	316	0	0	15	0	331
Segment assets	21,867	0	0	1,884	0	23,751

Notes to the consolidated interim financial statement for the period from 1 January 2013 to 31 March 2013

Accounting and valuation methods

The consolidated interim financial statement of Geratherm Medical AG as of 31 March 2013 was drawn up in accordance with the valid International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as of the balance sheet date, the application of which is compulsory in the European Union.

The accounting, valuation and consolidation principles were retained, as shown in the annex of the consolidated financial statement 2012.

The valuation of assets and liabilities is partially based on estimates and assumptions on future developments, meaning the specification of economic useful lives for non-current assets in particular is also based on such assumptions and estimates. In addition, an impairment test is performed on deferred taxes levied on tax losses carried forward as well as impairment tests for cash-generating units and assets on the corporate planning, which naturally involves uncertainties, meaning that in individual cases, the actual values may vary from the assumptions and estimates made. Estimates and the underlying assumptions are regularly checked and assessed for possible impacts on the accounting.

Consolidated companies

As of 31 March 2013 there were no changes in the consolidated companies:

	Holding	Holding
Company	31.03.2013	31.12.2012
GME Rechte und Beteiligungen GmbH, Geschwenda / Germany	100.00 %	100.00 %
apoplex medical technologies GmbH, Pirmasens / Germany	59.11 %	59.11 %
Geratherm Respiratory GmbH, Bad Kissingen / Germany	61.27 %	61.27 %
Geratherm Medical do Brasil Ltda., Sao Paulo / Brazil	51.00 %	51.00 %

Equity capital

Growth in equity capital was shown in the consolidated equity capital alterations statement.

The subscribed capital of Geratherm Medical AG as of 31.03.2013 amounted to 4,949,999 EUR in total (p.y. 4,949,999 EUR), which was divided into 4,949,999 (p.y. 4,949,999) non-par bearer shares. The subscribed capital is fully paid-up. As of the balance sheet date, no treasury stock was held by the company.

CORPORATE CALENDER 2013

Annual General Meeting in Ilmenau, "Hotel Tanne", 14.00 Uhr	07. June
Investor/ Analysts`Conference in Hamburg	21. November
Interim Report 2nd quarter	22. August
Interim Report 3rd quarter	21. November

Geratherm Medical AG

Fahrenheitstraße 1 98716 Geschwenda Telefon: +49 36205 980 Fax: +49 36205/98 115 info@geratherm.com www. geratherm.com