Dr Hönle : Q1 Report 2022/2023

First Quarterly Statement

for the period from 1 October 2022 to 31 December 2022

Earnings Development	01.10.2022-	01.10.2021-
in T€		31.12.2022		31.12.2021		+/- %
Revenue		27,618		30,727		-10.1
Gross profit		17,233		19,924		-13.5
Operating result/EBIT		2,348		4,849		-51.6
Earning before tax/EBT		2,028		4,553		-55.5
Consolidated net income from continued operations		1,597		3,419		-53.3
Result from discontinued operations		327		-221		248.0
Consolidated profit for the year		1,924		3,198		-39.8
Earnings per share in €		0.32		0.53		-39.6
Number of shares	6,062,930	6,062,930	0.0
Statement of Financial Position
in T€		31.12.2022		30.09.2022		+/- %
Non-current assets		112,760		114,810		-1.8
Current assets		75,139		80,652		-6.8
Equity		108,778		107,239		1.4
Non-current liabilities		36,588		37,202		-1.7
Current liabilities		42,533		51,021		-16.6
Total assets		187,899		195,462		-3.9
Equity ratio as a %		57.9		54.9		5.5
Liquidity Development	01.10.2022-	01.10.2021-
(continuing and discontinued operations)
in T€		31.12.2022		31.12.2021		+/- %
Cash generated from operations		4,471		-5,140		187.0
Cash flow from operating activities		2,627		-6,591		139.9
Cash flow from investing activities		932		792		17.7
Cash flow from financing activities		-3,144		803		-491.5
Change in cash and cash equivalents	408	-4,934	108.3
	01.10.2022-	01.10.2021-
Staff	31.12.2022	31.12.2021	+/- %
Average number of employees		636		657		-3.2

Dr. Hönle AG Nicolaus-Otto-Straße 2 82205 Gilching · Tel. [phone] · Mail [e-mail]· Web www.hoenle.de

Market Development

The global economy weakened in general over the course of 2022 under the impact of the Russian attack on Ukraine, volatile energy prices and fears about supply. Monetary policy, which was tightened extremely quickly in view of high inflationary pressure across the board and led to sharply rising interest rates, is also having an increasing braking effect. The general economic conditions have deteriorated as a result. Production continued to rise well into the autumn, with the first positive impetus coming from the easing of supply bottlenecks in some places. Towards the end of the year, economic momentum has increasingly weakened. The large advanced economies in particular are currently in a phase of weak economic activity, despite considerable fiscal support measures. In Germany, the economy is in stagflation.

Course of Business

At T€ 27,618, the Hönle Group's sales in the first three months of the 2022/2023 financial year were 10.1% below the previous year's figure. In particular, sales of air disinfection devices fell from € 5.2 million in the previous year to € 0.7 million in the reporting year as the pandemic situation eased. However, sales in the adhesives segment increased. The sales development in France and the USA was encouraging. As a result of the sale and deconsolidation of Raesch Quarz (Germany) GmbH, this quarterly statement is based on continued operations. Sales including discontinued operations amounted to T€ 30,609 (previous year: T€ 33,418).

The operating result (EBIT) for the period from October 2022 to December 2022 was T€ 2,348, down on the previous year at T€ 4,849. It should be noted here that the operating result for the previous year includes a one-time effect from the sale of the company building of the former Aladin GmbH in Rott am Inn in the amount of T€ 1,825. The operating result including discontinued operations amounted to T€ 2,677 (previous year:

T€ 4,526).

Business development by Segments

Sales in the adhesives segment increased in the first quarter from T€ 6,513 in the previous year to T€ 7,316 in the year under review. Both the French and the US sales company were able to increase sales in their sales markets. The sales of the largest individual company in the Adhesives segment in the first quarter were at the level of the previous year and thus below the expectations of the Management Board. The increase in personnel together with a changed product mix contributed to the fact that the operating result in the adhesives segment in the first quarter of T€ 650 was below the same period of the previous year of T€ 740.

In the Devices & Systems segment, the significant drop in sales of air disinfection systems was noticeable. The sales of the previous year amounted to T€ 19,389 and included sales in the field of air sterilization in the amount of € 5.2 million. In the first quarter of this fiscal year, sales were T€ 16,041; they included sales of air disinfection systems in the amount of € 0.7 million.

Adjusted for the air disinfection business area, sales increased. The main growth driver was the medical technology sector.

The operating result for the segment was T€ 1,189 in the first three months of the 2022/2023 financial year. The operating result of the previous year of T€ 3,443 included other operating income from the sale of a property amounting to T€ 1,825 and significant earnings contributions from the sale of the air disinfection systems.

Sales generated from continuing operations in the Glass & Lamps segment amounted to T€ 4,262. They were therefore below the previous year's figure of T€ 4,825. Raesch Quarz (Germany) GmbH was sold on December 1st, 2022 due to poor business prospects. As expected, uv-technik Speziallampen GmbH had a somewhat weaker start to the new financial year due to the postponement of orders.

The operating result from continuing operations of the Glass & Lamps segment decreased from T€ 669 in the previous year to T€ 509 in the current financial year.

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Results of Operations

At T€ 27,618, the Hönle Group's sales revenues in the first quarter were 10.1% below those of the same period of the previous year. The gross profit fell by 13.5% to T€ 17,233. The cost of materials ratio fell by 5.3 percentage points to 39.3%. The cost of materials ratio of the Dr. Hönle AG and uv-technik Speziallampen GmbH here fell significantly due to sales price increases. At T€ 9,358, personnel expenses were at the previous year's level. The personnel expenses ratio was 33.9% (previous year: 29.4%). The ratio of other operating expenses was 14.7% in the current financial year (previous year: 12.8%).

The operating result (EBIT) fell by 51.6% to T€ 2.348. This corresponds to an EBIT margin of 8.5% after 15.2% in the previous year. Earnings before taxes (EBT) were T€ 2.028 after T€ 4.553 in the same period of the previous year. After income taxes, the consolidated result was T€ 1.923 (previous year: T€ 3.198). Earnings per share fell from € 0.53 to € 0.36. The net return on sales in the first quarter was 7.0% (previous year: 10.4%).

Earnings Development	01.10.2022-	01.10.2021-
in T€		31.12.2022		31.12.2021		+/- %
Revenue		27,618		30,727		-10.1
Gross profit		17,233		19,924		-13.5
Operating result/EBIT		2,348		4,849		-51.6
Earning before tax/EBT		2,028		4,553		-55.5
Consolidated net income from continued operations		1,597		3,419		-53.3
Result from discontinued operations		327		-221		248.0
Consolidated profit for the year		1,924		3,198		-39.8
Earnings per share in €		0.32		0.53		-39.6
Number of shares		6,062,930		6,062,930		0.0

Financial Position

In the first quarter of the 2022/2023 financial year, the Hönle Group generated an operating cash flow of

T€ 4,471 (previous year: T€ -5,140). After paying interest and taxes on income, there was from continuing and

discontinued operations a cash flow from operating activities of T€ 2.627 (previous year: T€ -6.591).

The cash flow from investing activities is characterized by payments for the acquisition of property, plant and equipment and partial payments from the disposal of the Raesch Quartz Germany GmbH business unit. In the second quarter, further payments of T€ 2,500 will be made from the sale of this company. The cash flow from investing activities from continued and discontinued operations overall was positive at T€ 932 (previous year: T€ 792).

The cash flow from financing activities amounted to T€ -3.144 (previous year: T€ 803). It is mainly due to the repayment of bank loans.

Overall, cash and cash equivalents increased by T€ 408 in the first three months of the current fiscal year (previous year: T€ -4,935).

Liquidity Development

(continuing and discontinued operations)

in T€

Cash generated from operations

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

Change in cash and cash equivalents

01.10.2022-	01.10.2021-
31.12.2022		31.12.2021		+/- %
4,471		-5,140		187.0
2,627		-6,591		139.9
932		792		17.7
-3,144		803		-491.5
408		-4,934		108.3

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Net Assets

Raesch Quarz (Germany) GmbH was sold on December 1st, 2022. The deconsolidation of the company made a significant contribution to the fact that property, plant and equipment on the assets side of the balance sheet fell by T€ 2.364 to T€ 77.204. In this context, inventories also fell by T€ 1.231 to T€ 45.140.

The other current assets of T€ 4.134 include an outstanding purchase price payment of T€ 2,500 for the sale of Raesch Quarz (Germany) GmbH.

As of December 31, 2022, cash and cash equivalents amounted to T€ 7.539 (previous year: T€ 7.131).

Due to the positive quarterly result, equity increased by T€ 1.540 to T€ 108.778. With an equity ratio of 57.9%, the Hönle Group continues to be solidly financed. Current liabilities were significantly reduced in the first three months of the current fiscal year from T€ 51,021 to T€ 42,533.

Statement of Financial Position
in T€		31.12.2022		30.09.2022		+/- %
Non-current assets		112,759		114,810		-1.8
Current assets		75,139		80,652		-6.8
Equity		108,778		107,239		1.4
Non-current liabilities		36,588		37,202		-1.7
Current liabilities		42,533		51,021		-16.6
Total assets		187,899		195,462		-3.9
Equity ratio as a %		57.9		54.9		5.5

Outlook

Overall Market

The global economy is entering the year 2023 weakened. The Russian attack on Ukraine and a mix of high inflation rates and sharply rising interest rates have led to a significant deterioration in the economic environment. In Germany, the economy is in a phase of stagflation. Growth momentum is also declining in the USA, but in relative terms the USA is the winner of the current crisis. In China, lockdown easing is raising hopes of a recovery in growth and easing supply chain concerns, but near-term risks of lower value creation from high sick leave are increasing. The risk of a global recession remains high. Tighter monetary policy and geopolitical risks continue to create headwinds for the global economy. Inflation is likely to have passed its peak and is falling significantly thanks to lower commodity prices and easing economic tensions. In its most recent economic outlook, the International Monetary Fund is less pessimistic about the future and even revised its growth forecast for this year slightly upwards by 0.2% to 2.9% (previous year: 3.4%). Other experts, such as the Institute for the World Economy, are less optimistic and expect economic growth of 2.2% in 2023, which will be well below that of the previous year.

The Hönle Group - Outlook

Adhesives Segment

The Management Board assumes that in the last quarter of the 2022/2023 financial year, high-volume adhesive projects will be implemented in the areas of photovoltaics and electromobility, which will be of great importance for the medium and long-term development of the adhesives segment. The realization of these projects has been delayed due to extensive tests on the customer side. There are also promising projects in the areas of consumer electronics and 5G mobile networks.

Due to the lifted travel restrictions to China and the expansion of personnel in application technology, ongoing projects can be better managed and implemented again. The aim is to use existing and future projects to significantly increase sales, particularly in the areas of consumer electronics and electromobility.

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Equipment § Systems Segment

In the Devices & Systems segment, the Management Board expects good business development in the second half of the year due to the continued good order backlog and stable demand. The second quarter will still be characterized by difficulties on the procurement markets and postponements of delivery dates. Additional impetus will arise in the second half of the year with the introduction of a new product line for the printing machine industry. In electronics production, increasing demands on the quality of the products and at the same time the demand for ever higher production speeds make the use of fast-curing adhesives indispensable. Hönle has developed both the required special adhesives and the UV devices for drying these adhesives specifically for this purpose. In order to be able to identify developments on the market at an early stage and tap new sales potential, the business development area is being further expanded.

Glass & Lamps Segment

The disinfection of water using UV technology is a sustainable growth market. The environmentally friendly process is being used more and more often in the treatment of ballast water, drinking water, process water and waste water. Here, the Hönle Group supplies leading manufacturers of water treatment systems with lamps and components. The Executive Board expects further increases in sales and earnings in this area of application in the 2022/2023 financial year.

Due to the sale of Raesch Quarz (Germany) GmbH in December 2022, segment sales in the 2022/2023 financial year are expected to be below those of the previous year. However, the sale of this company will lead to sustained positive earnings and liquidity effects at Group level. Overall, the Management Board expects a jump in earnings in the Glass & Lamps segment, also due to the sale of Raesch Quarz (Germany) GmbH.

Group Outlook

Promising customer projects covering all three business segments and a favourable orders position provide the basis for Hönle Group's positive development although the contribution to sales and earnings in the second quarter is expected to be lower than in the first quarter. The adjustment of sales prices will help to improve gross profit margins in the course of financial year 2022/2023. Moreover, the sale of Raesch Quarz (Germany) GmbH will lead to positive earnings and liquidity effects at Group level.

In all, the Management Board expects Hönle Group's sales revenues in financial year 2022/2023 to be below the previous year's level (€ 126.5 million) and the operating result to be significantly above the adjusted operating result for the previous year (€ 8.9 million).

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