Geratherm Medical AG

Quarterly Report • Nov 22, 2012

GERATHERM AT A GLANCE

Group financial ratio	January September 2012	January September 2011	Change
Sales revenues	11,694 kEUR	13,286 kEUR	-12.0 %
Export share	10,198 kEUR	11,761 kEUR	-13.3 %
Export ratio	87 %	89 %	-2.2 %
Gross result for first quarter of year (EBITDA)	701 kEUR	1,937 kEUR	-63.8 %
EBITDA-Margin	6.0 %	14.6 %	-58.9 %
Amortization or depreciation	-566 kEUR	-501 kEUR	13.0 %
Operating results (EBIT)	135 kEUR	1,436 kEUR	-90.6 %
EBIT margin	1.2 %	10.8 %	-88.9 %
Financial results	466 kEUR	455 kEUR	2.4 %
Result of ordinary activities	601 kEUR	1,891 kEUR	-68.2 %
Net earnings of the parent company`s shareholders in the period concerned	615 kEUR	1,582 kEUR	-61.1 %
Long-term assets	5,612 kEUR	5,739 kEUR	-2.2 %
Short-term assets	17,780 kEUR	18,424 kEUR	-3.5 %
Total assets	23,392 kEUR	24,163 kEUR	-3.2 %
Equity capital	17,910 kEUR	17,823 kEUR	0.5 %
Return on equity	4.6 %	11.8 %	-61.3 %
Equity ratio	76.6 %	73.8 %	3.8 %
Cash, cash equivalents and securities	8,379 kEUR	9,030 kEUR	-7.2 %
Earnings per share according to IFRS (EPS)*	0.12 EUR	0.32 EUR	-62.5 %
Earnings per share according to DVFA*	0.12 EUR	0.32 EUR	-62.5 %
Number of employees at end of the period	111	138	-19.6 %
Total shares issued * based on total shares issued	4,949,999 4,949,999	4,949,999 4,949,999	- -

Business Performance from Jan. 1 to Sept. 30, 2012

• Sales revenues EUR 11.7 million -12.0 %
• Gross result for first nine months (EBITDA) 701 kEUR -63.8 %
• Results from ordinary business activities 601 kEUR -68.2 %
• Earnings after taxes (EAT) 615 kEUR or 12 EUR cents per share
• Weak demand for gallium-filled thermometers also noted in 3rd Qtr.
• Exceptional items pull down operating result

Dear Shareholders and Parties Interested in Geratherm Medical,

The sales and earnings of Geratherm Medical failed to develop satisfactorily during the third quarter of 2012. Sales decreased by -19.4 % compared to the same quarter of the prior year. The earnings performance was still significantly weaker. During the 3rd quarter we had to report an EBIT of -37 kEUR in terms of business operations.

The unsatisfactory operating result has essentially led to a reduction in the production capacity at the plant in Thuringia. The sales of gallium-filled thermometers are currently 42.2 % less than compared to the reference period of 2011. The capacity adjustment has been completed and will no longer adversely affect the operating result during the following quarters. We consider the current market demand for gallium-filled thermometers as positive once again for the 4th quarter.

The other business segments developed for the most part in accordance with the underlying economic conditions. We have noted a substantial double-digit growth in the Middle East and South America. Even the product segments Respiratory and Medical Warming Systems managed to show a good double-digit increase in sales during the 3rd quarter of 2012. Respiratory showed weaker development in terms of earnings during the 3rd quarter, with a negative profit contribution of -43 kEUR. Due to supply problems, our activities in Brazil were not able to avoid posting a loss for the 3rd quarter amounting to -50 kEUR.

The negative operating results reported for the 3rd quarter were offset with a positive financial result of 96 kEUR such that we managed to show a result from ordinary business activities in the amount of 59 kEUR (2011: 333 kEUR) during the 3rd quarter. The net income for the period after minority interest is 161 kEUR or 3 EUR cents per share in the 3rd quarter.

For the first nine months of 2012 we reported a sales of EUR 11.7 million (-12.0 %) and a result for ordinary business activities in the amount of 601 kEUR (2011: EUR 1.891 million). The net earnings after taxes (EAT) amounted to 615 kEUR (2011: EUR 1.582 million) for the nine month period of the current fiscal year. The result per share is 12 EUR cents (2011: 32 EUR cents).

Facts and Figures		III/12	II/12	I/12	IV/11	III/11
(in kEUR)	Sales	3,834	3,742	4,118	3,843	4,756
	EBITDA	4.1 %	6.0 %	7.8 %	12.0 %	14.2 %
	EBIT	-38	25	148	284	506
	EPS (EUR)	0.03	0.06	0.03	-0.03	0.05
	Cashflow	135	250	222	439	615

Sales Development

Sales development during the first 9 months was influenced primarily by the sharp drop in the sales of gallium-filled thermometers in Europe. The absence of a flu epidemic last winter and the high inventory levels still held by our customers resulted in significantly weaker sales. Compared to the prior year, we experienced a -12.0 % decrease in sales at the group level. The export share of Geratherm products amounted to 87.2 %. The German market exhibited only a slight decline of -1.9 %.

We noted the greatest drop in sales of -36.7 % in Europe. Here our sales declined by EUR 2.6 million to EUR 4.5 million. The sales on the US market showed a weaker development with -23.2 % compared to the prior year. This can be mainly attributed to seasonal fluctuations in product orders. The sales in South America continues to be favorable with a sales increase of 28.5 %. The area designated as Other Countries, which essentially encompasses the Middle East and Africa, also developed at an above-average rate.

The sales generated in the Middle East increased by +57.3 % compared to the same period last year and the sales recorded for Africa tripled. We see good growth opportunities for Geratherm products here in the future.

The main generator of sales at Geratherm Medical with a share of 83.2 % comprises products of the Healthcare Diagnostic segment, which are sold internationally in hospitals, clinics and pharmacies. The share reduced by 5.7 % compared to the prior year in favor of the new business segments. The most important products in the Healthcare segment, with a share of 32.9 % (2011: 50.1 %), include clinical thermometers with gallium filling and blood pressure monitors with a share of 27.6 % (2011: 19.0 %). The overall sales generated by this segment decreased by 17.5 % compared to the year before. The segments Medical Warming Systems (+17.6 %), Cardio/Stroke (+7.6 %) and Respiratory (+46.9 %) showed significant positive developments.

Sales by segments 1/1 to 9/30/2012

Earnings situation

Geratherm Medical's earnings situation from business operations experienced a below-average development during the first nine months of the current fiscal year. With a 12.0 % decrease in sales, the gross profit dropped at an above-average rate by 21.5 % to EUR 6.575 million.

The personnel expenses decreased by 12.9 % due to the necessary adjustment of capacity levels at the plant in Thuringia.

The write-offs increased by 13.0 % to 566 kEUR.

The other operating expenses exhibited a slight decrease of only 5.0 % to EUR 3.192 million.

The operating result was adversely affected by one-time expenses such as approval costs, legal counsel fees, short-time work costs for 4 weeks, costs for adapting capacity levels at the Geschwenda plant and valuation adjustment of inventories due to lower gallium prices in the amount of 388 kEUR.

As a result of the above-cited factors, the operating result (EBIT) decreased for the first nine months to 135 kEUR (2011: EUR 1.436 million).

As of September 30, 2012, the company posted positive financial results in the amount of 466 kEUR (2011: 455 kEUR).

Together with the operating result, the result from ordinary business activities amounted to 601 kEUR (2011: EUR 1.891 million) during the first nine months of the current fiscal year. Income taxes amounted to 95 kEUR (2011: 553 kEUR). The consolidated net profit after deducting minority interests was 615 kEUR (2011: EUR 1.582 million). The result per share for the first nine months is 12 EUR cents (2011: 32 EUR cents).

Net Assets and Financial Situation

Geratherm Medical enjoys a stable asset situation. The balance sheet total as at September 30, 2012 amounted to EUR 23.4 million (2011: EUR 24.6 million). Geratherm Medical's equity capital as of September 30, 2012 was in total EUR 17.9 million (2011: EUR 18.7 million). The equity capital in the balance sheet total is 76.6 %.

The reported weaker operating result yields a return on the equity capital of 4.6 % (2011: 11.8 %) for the first nine months of the current fiscal year. As of the end of September 2012, the company had cash, cash equivalents and securities in the amount of EUR 8.4 million (2011: EUR 9.0 million). Geratherm therefore has a solid financial position and is thus well equipped to implement its medium- to long-term strategies.

With regard to long-term assets, development costs were written off in the amount of 181 kEUR (2011: 181 kEUR). The write-offs were implemented together with the launch of new products. The increased investments made in tangible assets resulted in amortization and depreciation amounting to 62 kEUR.

With regard to the short-term assets, the inventories decreased slightly from EUR 5.963 million to EUR 5.784 million. The accounts receivable and other assets increased by 8.2 % to EUR 3.617 million. The increase is essentially due to an increased tax claim.

As of the end of September, the company held securities worth EUR 5.3 million (2011: EUR 6.2 million). The cash and cash equivalents at the end of the period under review amounted to EUR 3.1 million (2011: EUR 2.8 million).

The gross cash flow for the first nine months was 607 kEUR (2011: EUR 1.790 million). The cash flow from operations was 667 kEUR (2011: 987 kEUR). The cash flow from investments amounted to 39 kEUR (2011: EUR -1.918 million). The cash flow from financing activities amounted to EUR -1.861 million (2011: EUR -1.774 million).

Research and Development

Research and development focused primarily on the new business segments. In the Medical Warming Systems segment, we have been developing a new generation of products for cold therapy, which we will unveil for the first time at the Medica trade show in Düsseldorf in November 2012.

In the Cardio/Stroke segment, we published the results of a large scale study conducted by Universität Heidelberg in "Stroke", the official publication of the American Heart Association, in August. We anticipate a recovery in the demand for our SRAclinic product thanks to the positive results of the study.

So far, 22 clinics and hospitals (2011: 13) have decided in favor of a long-term integration of apoplex Technologie. In German-speaking countries, there are approx. 500 stroke prevention centers.

In the Respiratory segment, the B. A. D (Berufsgenossenschaftlicher Arbeitsmedizinischer Dienst) has decided to use exclusively Geratherm's "Spirostik" in Germany and to replace all existing products by 2014. The B. A. D Group is the market leader in Europe for health care and on-the-job safety and supports 250,000 business operations with 4 million employees.

In the Diagnostic segment we are planning diverse clinical studies for the new "Woman Care" product line in the next few months.

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 111 persons in total as of September 30, 2012 (2011: 138). 79.5 % of the employees are in Germany.

Outlook

The weak operating results so far of Geratherm Medical for 2012 has hopefully reached rock bottom for 2012 during the 3rd quarter of the year. Our order situation for the fourth quarter is currently good. In light of this, we are expecting to be able to report a healthier fourth quarter in terms of sales and earnings.

Geschwenda, November 2012

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

Statement of comprehensive income for the period January 1, 2012 to September 30, 2012

	July- Sept.	July- Sept.	Change	Jan.-Sept.	Jan.-Sept.	Change
	2012 EUR	2011 EUR		2012 EUR	2011 EUR
Sales revenue	3,833,950	4,756,125	-19.4 %	11,693,810	13,286,066	-12.0 %
Change in inventories of semi-finished and finish products	-344,085	127,945	-	-16,906	580,680	-
Other capitalized own work	0	0	-	0	0	-
Other operating income	109,169	86,512	26.2 %	288,814	334,129	-13.6 %
	3,599,034	4,970,582	-27.6 %	11,965,718	14,200,875	-15.7 %
Cost of Materials
Cost of raw materials, consumables
and goods for resale	-1,551,701	-2,079,407	-25.4 %	-5,152,991	-5,555,850	-7.3 %
Costs of purchased services	-70,725	-90,025	-21.4 %	-237,708	-266,731	-10.9 %
	-1,622,426	-2,169,432	-25.2 %	5,390,699	-5,822,581	-7.4 %
Gross profit or loss	1,976,608	2,801,150	-29.4 %	6,575,019	8,378,294	-21.5 %
Personnel expenses
Wages and salaries	-694,431	-819,875	-15.3 %	-2,150,512	-2,538,457	-15.3 %
Social security, pension and other benefits	-149,468	-176,851	-15.5 %	-531,492	-542,349	-2.0 %
	-843,899	-996,726	-15.3 %	-2,682,004	-3,080,806	-12.9 %
Amortization of intangible assets and depreciation of tangible assets	-193,409	-169,837	13.9 %	-565,798	-500,619	13.0 %
Other operating expenses	-976,594	-1,129,003	-13.5 %	-3,191,771	-3,361,270	-5.0 %
Operating results	-37,294	505,584	-107.4%	135,446	1,435,599	-90.6 %
Dividend income	0	6,497	-100.0 %	121,626	112,045	8.6 %
Income from securities trading	120,947	0	-	411,502	908,021	-54.7 %
Losses from securities	-11,972	-173,281	-93.1 %	-11,972	-512,086	-97.7 %
Securities-related expenses	-2,226	-3,053	-27.1 %	-28,032	-33,331	-15.9 %
Other interest and similar income	3,695	11,016	-66.5 %	19,981	35,183	-43.2 %
Interests and similar expenses	-14,164	-14,050	0.8 %	-47,088	-54,527	-13.6 %
Financial results	96,280	-172,871	-	466,017	455,305	2.4 %
Result of ordinary activities	58,986	332,713	-82.3 %	601,463	1,890,904	-68.2 %
Income taxes	2,887	-196,445	-	-95,212	-552,570	-82.8 %
Group net profit for the period	61,873	136,268	-54.6 %	506,251	1,338,334	-62.2 %
Minority interests result	-99,509	-112,069	-11.2 %	-108,560	-244,023	-55.5 %
Net earnings of the parent company`s shareholders in the period concerned	161,382	248,337	-35.0 %	614,811	1,582,357	-61.1 %
EBITDA	156,115	675,421	-76.9 %	701,244	1,936,218	-63.8 %
Earnings per share undiluted	0.03	0.05	-40.0 %	0.12	0.32	-62.5 %

Statement of financial position as at the end of the period by September 30, 2012

Assets	30. September 2012 EUR	31. December 2011 EUR	Change
A. Long-term assets
I. Intangible assets
1. Development costs	246,460	427,043	-42.3 %
2. Software	18,064	26,342	-31.4 %
3. Goodwill	75,750	75,750	0.0 %
	340,274	529,135	-35.7 %
II. Tangible assets
1. Land, land rights and buildings	1,234,225	1,051,726	17.4 %
2. Technical equipment and machinery	2,089,485	1,719,117	21.5 %
3. Other equipment, factory and office equipment	223,914	249,529	-10.3 %
4. Construction in process	302,639	691,035	-56.2 %
	3,850,263	3,711,407	3.7 %
III. Deferred taxes	1,421,470	1,502,384	-5.4 %
	5,612,007	5,742,926	-2.3 %
B. Short-term assets
I. Inventories
1. Raw materials and supplies	1,085,520	1,473,887	-26.3 %
2. Unfinished goods	1,803,408	1,364,390	32.2 %
3. Finished goods and merchandise	2,894,795	3,124,793	-7.4 %
	5,783,723	5,963,070	-3.0 %
II. Receivables and other assets
1. Trade receivables	3,084,371	2,890,938	6.7 %
2. Tax receivables	208,490	98,069	>100.0 %
3. Other assets	324,221	354,226	-8.5 %
	3,617,082	3,343,233	8.2 %
III. Securities	5,309,890	5,309,329	0.0 %
IV. Cash and cash equivalents	3,069,139	4,224,480	-27.3 %
	17,779,834	18,840,112	-5.6 %
	23,391,841	24,583,038	-4.8 %
Equity and Liabilities
A. Equity capital
I. Subscribed capital	4,949,999	4,949,999	0.0 %
II. Capital reserves	10,711,677	10,672,874	0.4 %
III. Other reserves	2,721,971	3,435,162	-20.8 %
Minority interests assigned to the shareholders of the parent	18,383,647	19,058,035	-3.5 %
Non-controlling interests	-473,407	-393,150	20.4 %
	17,910,240	18,664,885	-4.0 %
B. Long-term debts
1. Liabilities to banks	800,000	1,100,000	-27.3 %
2. Accrued investment subsidies	719,541	782,680	-8.1 %
3. Other long-term liabilities	596,079	609,444	-2.2 %
	2,115,620	2,492,124	-15.1 %
C. Short-term debts
1. Liabilities to banks	1,329,123	1,463,485	-9.2 %
2. Payment on accounts	31,120	41,825	-25.6 %
3. Trade payables	1,192,965	1,131,346	5.4 %
4. Tax liabilities	74,576	136,096	-45.2 %
5. Other short-term liabilities	738,197	653,277	13.0 %
	3,365,981	3,426,029	-1.8 %
	23,391,841	24,583,038	-4.8 %

Statement of cash flow for the period January 1, 2012 to September 30, 2012

	January – September	January – September
	2012 kEUR	2011 kEUR
Group net profit for the period	506	1,338
Other costs affecting income/expenses	-8	-61
Dividend income	-122	-112
Interest earnings	-20	-35
Interest expenses	47	55
Decrease in deferred taxes	81	430
Income tax expenditure	14	123
Depreciation of fixed assets	566	501
Income from securities trading	-411	-908
Losses from securities trading	0	0
Losses from valuation of securities	12	512
Amortisation of public grants and subsidies	-63	-53
Loss from disposal of fixed assets	5	0
Gross cash flow	607	1,790
Decrease/increase in loan liabilities	179	-248
Increasein trade receivables and other assets	-274	-344
Increase/decrease in current liabilities and other liabilities	131	-18
Monies received from dividends	122	112
Monies received from interest	20	35
Cash outflow from interest	-47	-55
Cash outflow for income taxes	-71	-285
Cash flow from operations	667	987
Cash outflow for investments in fixed assets	-521	-593
Monies received based on financial assets	1,453	1,515
Cash outflow based on financial assets	-893	-2,840
Cash flow from investments	39	-1,918
Cash inflow from minority interests	71	39
Dividend payout to minority interests	0	-22
Dividend payments	-1,485	-1,980
Decrease/increase in loan liabilities	-134	115
Decrease/increase of long-term liabilities	-313	74
Cash flow from financing activities	-1,861	-1,774
Change in cash and cash equivalents	-1,155	-2,705
Cash and cash equivalents at the start of the reporting period	4,224	5,519
Cash and cash equivalents at the end of the reporting
period	3,069	2,814

Statement of changes in equity for the period by September 30, 2012

				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, 2011	4,949,999	10,577,354	1,004,598	55,346	4,029,635	20,616,932	-100,176	20,516,756
Increase in share capital apoplexy medical technologies GmbH	0	0	0	0	0	0	39,000	39,000
Dividend payment to shareholders	0	0	0	0	-1,979,999	-1,979,999	-22,273	-2,002,272
Transaction with shareholders and member partners	0	0	0	0	-1,979,999	-1,979,999	16,727	-1,963,272
Group period result	0	0	0	0	1,582,357	1,582,357	-244,023	1,338,334
Unrealised profits and losses from valuation of securities	0	0	-2,007,750	0	0	-2,007,750	0	-2,007,750
Currency translation in group	0	0	0	-31,181	0	-31,181	-29,958	-61,139
Total consolidated income	0	0	-2,007,750	-31,181	1,582,357	-456,574	-273,981	-730,555
As of Sept. 30, 2011	4,949,999	10,577,354	-1,003,152	24,165	3,631,993	18,180,359	-357,430	17,822,929
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
Increase in share capital apoplexy medical technologies GmbH	0	38,803	0	0	0	38,803	32,197	71,000
Dividend payment to shareholders	0	0	0	0	-1,484,999	-1,484,999	0	-1,484,999
Transaction with shareholders and member partners	0	38,803	0	0	-1,484,999	-1,446,196	32,197	-1,413,999
Group period result	0	0	0	0	614,811	614,811	-108,560	506,251
Unrealised profits and losses from valuation of securities	0	0	161,049	0	0	161,049	0	161,049
Currency translation in group	0	0	0	-4,052	0	-4,052	-3,894	-7,946
Total consolidated income	0	0	161,049	-4,052	614,811	771,808	-112,454	659,354
As of Sept. 30, 2012	4,949,999	10,711,677	68,664	23,180	2,630,127	18,383,647	-473,407	17,910,240

Consolidated Statement of Earnings (IFRS) for the period from January 1, 2012 to September 30, 2012

	01/1-09/30/2012 EUR	01/1-09/30/2011 EUR
Net earnings of the parent company`s shareholders in the period concerned	614,811	1,582,357
Result of the minority interests	-108,560	-244,023
Group net profit for the period	506,251	1,338,334
Profit and losses from the revaluation of securities	161,049	-2,007,750
Difference resulting from currency translation	-7,946	-61,139
Income and expenses directly included in equity capital	153,103	-2,068,889
Total consolidated income	659,354	-730,555
of which assignable to minority interests	-112,454	-273,981
of which assignable to shareholders of parent company	771,808	-456,574

Segment Report for the period from January 1, 2012 to September 30, 2012

According to product segments	Healthcare Diagnostic Jan.-Sept.	Med. Warming Systems Jan.-Sept.	Cardio/ Stroke Jan.-Sept.	Respiratory Jan.-Sept.	Consolidation Jan.-Sept.	Reconciliation Jan.-Sept.	Total Jan.-Sept.
2012	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR
Segment sales	10,728	523	183	929	-669	0	11,694
Operating results	548	17	-135	-7	-223	-65	135
of which:
Amortisation of intangible assets and depreciation of tangible assets	560	18	3	7	-95	74	567
Segment assets	11,867	906	158	702	0	8,338	21,971
Segment debts	4,465	180	567	270	0	0	5,482

According to product segments	Healthcare Diagnostic	Med. Warming Systems	Cardio/ Stroke	Respiratory	Consolidation	Reconciliation	Total
2011	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR
Segment sales	12,763	474	170	813	-963	29	13,286
Operating results	1,896	-2	-213	-34	305	-517	1,435
of which:
Amortisation of intangible assets and depreciation of tangible assets	498	25	3	7	-248	216	501
Segment assets	11,772	955	252	653	0	8,870	22,502
Segment debts	5,170	121	735	314	0	0	6,340

According to regions	Germany	Europe	USA	South America	Others	Total
2012	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR
Sales revenue	1,921	4,453	768	3,707	1,514	12,363
Elimination of intercompany Sales	-425	0	0	-244	0	-669
Sales revenue to third parties	1,496	4,453	768	3,463	1,514	11,694
Gross profit or loss	841	2,503	432	1,948	851	6,575
Operating results	34	102	17	-53	35	135
of which:
Amortisation/depreciation of intangible assets and tangible assets	98	292	50	27	99	566
Amortisation of public grants and subsidies	11	34	6	0	12	63
Acquisition costs of fixed assets for the period	495	0	0	26	0	521
Segment assets	19,631	0	0	2,340	0	21,971

According to regions	Germany	Europe	USA	South America	Others	Total
2011	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR	Jan.-Sept. kEUR
Sales revenue	1,856	7,033	1,000	3,327	1,033	14,249
Elimination of intercompany Sales	-331	0	0	-632	0	-963
Sales revenue to third parties	1,525	7,033	1,000	2,695	1,033	13,286
Gross profit or loss	1,003	4,627	658	1,411	679	8,378
Operating results	217	1,002	143	-73	147	1,436
of which:
Amortisation/depreciation of intangible assets and tangible assets	69	317	45	24	47	502
Amortisation of public grants and subsidies	8	35	5	0	5	53
Acquisition costs of fixed assets for the period	491	0	0	10	0	501
Segment assets	20,781	0	0	1,721	0	22,502

Notes on Interim Consolidated Financial Statements for the Period from January 1, 2012 to September 30, 2012

Accounting and Valuation Methods

The interim consolidated financial statements of Geratherm Medical AG were prepared for the nine months of the 2012 fiscal year 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 2011 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 share quotas of the consolidation group as of September 30, 2012:

Company	Percentage of shares held in 2012	Percentage of shares held in 2011
GME Rechte und Beteiligungen GmbH, Geschwenda, Germany	100.00 %	100.00 %
apoplex medical technologies GmbH, Pirmasens, Germany	59.11 %	59.70 %
Geratherm Respiratory GmbH, Bad Kissingen, Germany	61.27 %	61.27 %
Geratherm Medical do Brasil Ltda., Sao Paulo, Brazil	51.00 %	51.00 %

In accordance with the resolution of the shareholders' meeting from October 4, 2011, the share capital of apoplex medical technologies GmbH was increased by an additional EUR 6,000 with regard to the newly created business share in 2011 on September 18, 2012. The share capital was paid in full in September. Entry in the Commercial Register was carried out on October 5, 2012. The share quota thus changed from 59.70 % to 59.11 %.

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 9/30/2012 (2011: EUR 4,949,999) and is divided into 4,949,999 (2011: 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.

The shareholders of Geratherm Medical AG have agreed during the annual general meeting of the company on June 8, 2012 in Munich to distribute a dividend of 0.30 EUR per individual share. The dividend is disbursed in full from the tax contribution account in accordance with Art. 27 of KStG (not contributions to nominal capital) without any deduction of capital gains tax and solidarity surcharge. The dividend was distributed in the amount of EUR 1,484,999.70 on June 11, 2012.

KEY DATES FOR 2012/2013

• Analysts Conference November 29, 2012 in Hamburg
• Publication of 2012 Financial Report April 24, 2013
• Interim Report 1st Quarter May 23, 2013
• Interim Report 2nd Quarter August 22, 2013
• Interim Report 3rd Quarter November 21, 2013

Geratherm Medical AG

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