Geratherm Medical AG

Earnings Release • May 23, 2007

Course of Business from 1 January to 31 March 2007

• turnover decreased slightly (-4.4%)
• lower operating result
• EPS 4 cents (previous year: 5 cents)
• new divisions on a good course

Dear shareholders of and interested parties in Geratherm Medical,

The business started off in the 1st quarter of 2007 with some difficulties. The development of the Geratherm Medical turnover was impacted negatively by the sharp drop in the value of the dollar and our high export share. The dollar exchange rate dropped by 10%, as compared to the previous year's quarter. Furthermore, there was no pronounced flu epidemic in the first quarter of 2007, due to the very mild winter. In total, the turnover of the first quarter decreased by 4.4 % to reach EUR 2.1 million.

The turnover in Germany fell over-proportionately by 13.6 %. Sales throughout Europe remained more or less stable. The turnover decrease of 5.5 % in the USA is mainly due to the negative development of the dollar. We expect that the second quarter of 2007 will provide more positive impulses, in particular, as some large-scale orders could not be delivered to the customer in March anymore. The first half of the year will thus correspond with our targets for 2007.

The gross profit or loss dwindled in line with the turnover development, by minus 4.3 % to reach EUR 1.2 million. The gross margin of 56 % stands at the same level as the previous year.

The expenditure for our subsidiary apoplex medical technologies GmbH also burdened the earning quality of the overall enterprise with a minus of kEUR 49. The staff numbers were increased both in apoplex as well as in the Sales & Marketing division of Geratherm, so that the staff costs rose by 6.0 % as compared to the previous year. The EBIT operating result decreased by 36.1 % to kEUR 131 as compared to the strong previous year's quarter.

The financial results reported amounted to kEUR 64 (previous year: kEUR 31). The investment performance with regard to securities of the healthcare sector increased significantly over the first three months, so that an upward revaluation of non-realised securities gains could be recorded in the amount of kEUR 533. These are not included in the profit and loss account but in the equity capital – the so-called market valuation reserve.

The result of ordinary business operations was lowered by 17.4 % to kEUR 195 (previous year: kEUR 236). The Period Group Result (EAT) was reduced by 12.2 % to kEUR 202 (previous year: kEUR 230). The result of 4 cents per share was 1 cent lower than the same quarter of the previous year.

The equity capital in the amount of EUR 18.2 million amounts to 92.2 % of the balance sheet total or EUR 4.05 per share. The return on the equity invested stood at 4.4 % and thus slightly lower than the level of the previous year's quarter. As of 31 March 2007, the cash and securities held by the company amounted to EUR 10.0 Mio (previous year: EUR 10.3 million). The cash resources in the amount of EUR 3.6 million are invested with banks in the short term at interest rates usual in the market.

The investment in marketable securities increased significantly from EUR 3.8 million to EUR 6.3 million.

The investment allocations received are written off continuously. They amounted to kEUR 596 by the end of the quarter. There are no amounts owed to credit institutions. Trade accounts payable amounted to kEUR 228 (-19.1 %). The short-term liabilities amounted to kEUR 947 or 4.8 % of the balance sheet total. The relatively high amount of receivables due to the large turnover at the end of the year 2006 was reduced by 24.3 % to EUR 1.7 million by the end of the first quarter of 2007.

Once again, the analogue diagnostics products on the basis of gallium provided the mainstay of turnover with 42.9 % (previous year: 44.3 %). The turnover was reduced by 7.4 % to kEUR 894 in the first quarter of 2007, due to exchange rate developments. The Digital Diagnostics segment was able to latch on to the previous growth and recorded a turnover plus of 3.6 % to reach altogether kEUR 860 also in the first quarter.

Turnover by segments 01.01.-31.03.2007

The turnover share of the Other Products segment saw an absolute drop by kEUR 54 to kEUR 332. The share of the Warming Systems remained at the very good level of the previous year with kEUR 135.

The apoplex medical technologies subsidiary was able to record smaller billed turnover items in the first quarter of 2007. We expect significantly higher turnover contributions for the coming months.

Turnover by regions 01.01.-31.03.2007

82.5 % of the turnover in the amount of EUR 2.1 million was achieved in exports during the first quarter of 2007. The slightly weaker domestic demand could be compensated by increasing the export share. The turnover split across the respective markets remained more or less the same. The turnover of our subsidiary Geratherm do Brasil rose to reach kEUR 168 (previous year: kEUR 132).

			I/07	IV/06	III/06	II/06	I/06
Data and facts		Turnover	2,086	2,709	1,668	2,031	2,182
(kEUR)		EBITDA	9.6%	15.0%	12.4%	5.4%	12.8%
	EBIT	131	314	116	23	205
	EPS (EUR)	0.04	0.18	0.16	0.03	0.05
		Cashflow	187	215	187	88	262

Our efforts continue to be concentrated on building the new product segments of Warming Systems and Arrhythmia. Meanwhile the apoplex subsidiary has a mature technology, which is being offered to doctors starting from the end of the first quarter 2007 via sales partners. Respective contracts have been signed. The second quarter will focus on the training of the sales force. Furthermore, there will be the publication of supplementary clinical trials around the end of the second quarter.

Furthermore, we presume to receive a positive answer concerning the US military license for Geratherm Warming Systems in the next few months. The license for the civilian sector has already been granted. We expect orders for warming systems from the US Coast Guard in the second quarter of 2007.

We look forward to welcoming our shareholders to this year's General Meeting at the Hotel "Hessischer Hof" in Frankfurt am Main on 11 June 2007, at 2 p.m. We are happy to answer any additional questions you may have on that day.

Geschwenda, May 2007

Dr. Gert Frank Thomas Robst

Chairman of the Board Director of Sales & Marketing

GERATHERM AT A GLANCE

Group financial ratio	Jan.-March 2007	Jan.-March 2006	Change
Sales revenues	2,086 kEUR	2,182 kEUR	-4.4%
Export share	1,720 kEUR	1,758 kEUR	-2.2%
Export ratio	82 %	81 %	1.2%
Gross profit (EBITDA)	201 kEUR	280 kEUR	-28.0%
EBITDA - Margin	9.6 %	12.8 %	-25.0%
Amortization and depreciation	-70 kEUR	-75 kEUR	-5.9%
Operating results (EBIT)	131 kEUR	205 kEUR	-36.1%
Result of ordinary activities	195 kEUR	236 kEUR	-17.4%
Financial results	64 kEUR	31 kEUR	104.9%
Group period result (EAT)	202 kEUR	230 kEUR	-12.2%
Long-term assets	5,159 kEUR	5,230 kEUR	-1.4%
Short-term assets	14,606 kEUR	14,299 kEUR	2.1%
Total assets	19,765 kEUR	19,529 kEUR	1.2%
Equity capital	18,222 kEUR	18,104 kEUR	0.7%
Return on equity	4.4 %	5.1 %	-12.7%
Equity ratio	92.2 %	92.7 %	-0.5%
Cash, cash equivalents and securities	9,965 kEUR	10,278 kEUR	-3.0%
Earnings per share according to IFRS (EPS)*	0.04 EUR	0.05 EUR	-20.0%
Earnings per Share according to DVFA*	0.04 EUR	0.05 EUR	-20.0%
Number of employees at end of the period	76	69	10.1%
Individual shares	4,500,000	4,500,000
* based on individual shares in circulation	4,500,000	4,500,000

Consolidated profit and loss statement of 1 January 2007 to 31 March 2007

	Jan.- March	Jan.- March	Change
	2007 EUR	2006 EUR
Sales revenues	2,086,072	2,181,526	-4.4%
Change in inventory of semi-finished and finished products	64,670	16,317	296.3%
Other capitalized own work	28,731	27,770	3.5%
Other operating income	29,921	37,626	-20.5%
	2,209,394	2,263,239	-2.4%
Cost of materials
Cost of raw materials, consumables and
goods for resale	-963,215	-997,588	-3.4%
Costs of purchased services	-78,381	-45,083	73.9%
	-1,041,596	-1,042,671	-0.1%
Gross profit or loss	1,167,798	1,220,568	-4.3%
Personnel expenses
Wages and salaries	-457,957	-421,230	8.7%
Social security, pension and other benefits	-89,790	-95,637	-6.1%
	-547,747	-516,867	6.0%
Amortization of intangible assets and depreciation of tangible assets	-70,426	-74,845	-5.9%
Other operating expenses	-418,464	-423,747	-1.2%
Operating results	131,161	205,109	-36.1%
Dividend income	1,421	3,605	-60.6%
Income from securities trading	32,019	28,500	12.3%
Losses from securities trading	0	-35,069	-100.0%
Securities-related expenses	-7,995	0
Other interest and similar income	38,685	34,732	11.4%
Interests and similar expenses	-2	-478	-99.6%
Financial results	64,128	31,290	104.9%
Profit (loss) on ordinary activities	195,289	236,399	-17.4%
Income taxes	-16,760	-17,235	-2.8%
Net profit for the period	178,529	219,164	-18.5%
Result allotted to other shareholders	-23,707	-11,073	114.1%
Group period result	202,236	230,237	-12.2%
EBITDA	201,587	279,954	-28.0%
Earnings per share undiluted	0.04	0.05	-20.0%

Consolidated balance sheet 31 March 2007

Assets	31. March 2007 EUR	31. December 2006 EUR	Change
A. Long-term assets
I. Intangible assets
1. Development costs	356,526	356,150	0.1%
2. Software	32,786	34,951	-6.2%
3. Goodwill	75,750	75,750	0.0%
	465,062	466,851	-0.4%
II. Tangible assets
1. Land, land rights and buildings	1,404,917	1,423,559	-1.3%
2. Technical equipment and machinery	245,177	229,035	7.0%
3. Other equipment, factory and office equipment	143,762	127,586	12.7%
4. Prepayments	10,994	10,895	0.9%
	1,804,850	1,791,075	0.8%
III. Deferred taxation	2,889,138	2,905,898	-0.6%
	5,159,050	5,163,824	-0.1%
B. Short-term assets
I. Inventories
1. Raw materials and supplies	894,715	979,283	-8.6%
2. Unfinished goods	656,982	673,780	-2.5%
3. Finished goods and merchandise	1,200,362	918,701	30.7%
	2,752,059	2,571,764	7.0%
II. Receivables and other assets
1. Trade receivables	1,661,286	2,195,113	-24.3%
2. Tax receivables	178,540	116,133	53.7%
3. Other assets	49,296	56,876	-13.3%
	1,889,122	2,368,122	-20.2%
III. Securities	6,260,172	3,786,646	65.3%
IV. Cash and cash equivalents	3,704,338	5,129,570	-27.8%
	14,605,691	13,856,102	5.4%
	19,764,741	19,019,926	3.9%
Equity and Liabilities
A. Equity capital
I. Subscribed capital	4,500,000	4,500,000	0.0%
II. Capital reserves	7,570,000	7,570,000	0.0%
III. Other reserves	6,116,174	5,378,250	13.7%
IV. Minority interest	35,463	56,616	-37.4%
	18,221,637	17,504,866	4.1%
B. Investments subsidies received	595,999	608,031	-2.0%
C. Short-term debts
1. Payments on accounts	30,357	22,451	35.2%
2. Trade payables	228,240	282,251	-19.1%
3. Tax liabilities	27,532	47,286	-41.8%
4. Other liabilities	660,976	555,041	19.1%
	947,105	907,029	4.4%
	19,764,741	19,019,926	3.9%

Group cash flow statement of 01 January 2007 to 31 March 2007

	Jan.- March 2007 kEUR	Jan.- March 2006 kEUR
Group period result	202	230
Earnings Minority interests	-24	-11
Other costs affecting income/expenses	5	2
Dividend income	-1	-4
Interest earnings	-39	-34
Interest expenses	0	0
Decrease of deferred taxes	17	17
Depreciation of fixed assets	70	75
Income from securities trading	-32	-28
Losses from securities trading	0	35
Amortization of public grants and subsidies	-12	-20
Losses from disposal of fixed assets	1	0
Gross cash flow	187	262
Decrease / increase of inventories	-180	75
Decrease / increase of trade receivables and other assets	479	2
Increase in current liabilities and other liabilities	40	14
Monies received from dividends	1	4
Monies received from interest	39	34
Cash outflow from interest	0	0
Cash flow from operations	566	391
Cash outflow for investments in fixed assets	-83	-51
Monies received based on financial assets	244	944
Cash outflow based on financial assets	-2,152	-1,160
Cash flow from investments	-1,991	-267
Cash inflow from minority interest	0	0
Dividend payments	0	0
Cash flow from financing activities	0	0
Change in cash and cash equivalents	-1,425	124
Cash and cash equivalents at beginning of the reporting period	5,129	5,965
Cash and cash equivalents at the end of the reporting period	3,704	6,089

Group equity change calculation by 31. March 2007

	Subscribed capital	Capital reserves	Market valuation reserve	Currency conversion reserve	Accumula ted earnings	Minority interests	Equity capital
	EUR	EUR	EUR	EUR	EUR	EUR	EUR
1. January 2006	4,500,000	7,570,000	150,816	4,542	4,834,408	62,522	17,122,288
Unrealized profits and losses from valuation of securities			760,801				760,801
Currency translation in the group				1,036		995	2,031
Income and expenses included in equity capital			760,801	1,036		995	762,832
Group period result					230,237	-11,073	219,164
31. March 2006	4,500,000	7,570,000	911,617	5,578	5,064,645	52,444	18,104,284
1. January 2007	4,500,000	7,570,000	78,591	2,205	5,297,454	56,616	17,504,866
Unrealized profits and losses from valuation of securities			533,028				533,028
Currency translation in the group				2,660		2,554	5,214
Income and expenses included in equity capital			533,028	2,660		2,554	538,242
Group period result					202,236	-23,707	178,529
31. March 2007	4,500,000	7,570,000	611,619	4,865	5,499,690	35,463	18,221,637

Segment reporting of 1 January 2007 to 31 March 2007

By Region	Germany		Europe		USA		Others		Total
	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006
	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	KEUR
Sales revenues	366	424	1,104	1,124	266	281	350	353	2,086	2,182
Gross profit or loss	230	265	602	611	145	153	191	192	1,168	1,221
Operating results	26	45	68	102	16	26	21	32	131	205
including:
Armortization of intangible assets and depreciation of tangible assets	14	16	36	38	9	9	11	12	70	75
Amortization of public grants and subsidies	2	4	6	10	2	3	2	3	12	20
Acquisition costs of fixed assets for the period	63	50	0	0	0	0	21	1	84	51
Book value of fixed assets	2,215	2,277	0	0	0	0	55	7	2,270	2,284

According to areas of activity	Analogue Diagnostic Products		Digital Diagnostic Products		Others		Total
	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006	Jan.- March 2007	Jan.- March 2006
	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	kEUR	KEUR
Sales revenues	894	966	860	830	332	386	2,086	2,182
Gross profit or loss	637	661	350	316	181	244	1,168	1,221
Operating results	173	178	67	58	-109	-31	131	205
Financial results							64	31
Taxes							-17	-17
Minority share in results							24	11
Group period result							202	230
including:
Amortization of intangible assets and depreciation of tangible assets	20	27	18	14	32	34	70	75
Amortisation of public grants and subsidies	5	9	5	8	2	4	12	20
Acquisition cost of fixed assets for the period	9	3	30	1	45	47	84	51
Book value of fixed assets	765	853	305	298	1,200	1,133	2,270	2,284
Deferred taxes					2,889	2,946	2,889	2,946
Short- term assets	2,256	1,973	1,331	1,200	11,019	11,126	14,606	14,299
Total assets	3,021	2,826	1,636	1,498	15,108	15,205	19,765	19,529
Short-term liabilities	98	86	94	74	755	602	947	762
Investment subsidies received					596	663	596	663

Explanation of the Interim Group Financial Statement for the period of 1 January 2007 – 31 March 2007

Accounting and valuation methods

The Interim Group Financial Statement of Geratherm Medical AG for the first quarter of 2007 was prepared according to the rules of the International Financial Reporting Standards (IFRS) valid on the balance sheet closing date, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as they are compulsory in the European Union.

All accounting, valuation and consolidation principles were maintained, as detailed in the Annex of the 2006 Group Financial Statement.

Consolidated companies

There were no changes in the group of consolidated companies during the first quarter of 2007.

Explanations

Long-term assets

As per 30 March 2007, development cost for the further development of the Stroke Risk Analyser SRA IV for the prevention of strokes in the amount of kEUR 29 (previous year: kEUR 28) were capitalised.

There were further additions to the long-term assets in the amount of kEUR 54 (previous year: kEUR 23), which relate mainly to replacement investments in production plant as well as other furniture and fixtures.

Short-term assets

The short-term assets display greater changes mainly in the item of Securities and Cash Resources. As per 31 March 2007, the securities holdings were increased through purchase by kEUR 2,152 (previous year: kEUR 1,160). There were disposals through sale in the amount of kEUR 244 (previous year: kEUR 944). Thus, a profit contribution was realized in the amount of kEUR 32 (previous year: kEUR 28). The purchasing cost as per 31 March 2007 in the amount of kEUR 5,649 (previous year: kEUR 3,277) is matched by a stock valuated on the basis of the prices of 31 March 2007 in the amount of kEUR 6,260 (previous year: kEUR 4,189). This results in profits not realised in the amount of kEUR 611 (previous year: kEUR 912). These are included in the item of Market Valuation Reserve of the equity capital.

The available cash was reduced by altogether kEUR 1,425. This is due mainly to the investment in the form of securities and a cash inflow from the reduction of the receivables in the amount of kEUR 479.

Equity capital

The subscribed capital of Geratherm AG amounted to EUR 4,500,000 on 31 March 2007 and is split into 4,500,000 individual bearer share certificates. The subscribed capital has been fully paid in. The company did not hold any shares of its own on 31 March 2007.

The development of the equity capital was presented in the Group's Statement of Changes in Equity.

The Board of Management and the Supervisory Board will suggest to the General Meeting of Shareholders on 11 June 2007 to pay out a tax-free dividend of EUR 0.40 per share, again availing of the tax-relevant "dormant" partner account.

Dates for futher reporting 2007

General Meeting of Shareholders 11 June 2007 Hotel "Hessischer Hof" in Frankfurt/Main

Interim Report 2nd Quarter 2007 23 August 2007

Interim Report 3rd Quarter 2007 22 November 2007