Dr Hönle : Q3 2022/2023

Third Quarterly Statement

for the period from 1 October 2022 to 30 June 2023

Earnings Development	01.10.2022-	01.10.2021-
in T€	30.06.2023	30.06.2022	+/- %
Revenue	79,740	87,172	-8.5
Gross profit	38,778	55,414	-30.0
Operating result/EBIT	-6,827	9,571	-171.3
Operating result/EBIT (adjusted)	5,030	9,046	-44.4
Earnings before tax/EBT from continued operations	-7,834	8,500	-192.2
Consolidated net income from continued operations	-6,875	6,279	-209.5
Result from discontinued operations	327	-1,544	-121.2
Consolidated profit for the year	-6,548	4,736	-238.3
Earnings per share in €	-1.09	0.77	-241.6
Number of shares	6,062,930	6,062,930	0.0
Statement of Financial Position
in T€	30.06.2023	30.09.2022	+/- %
Non-current assets	113,283	114,810	-1.3
Current assets	64,085	80,652	-20.5
Equity	99,801	107,239	-6.9
Non-current liabilities	47,131	37,202	26.7
Current liabilities	30,437	51,021	-40.3
Total assets	177,368	195,462	-9.3
Equity ratio as a %	56.3	54.9	2.6
Liquidity Development
(continued and discontinued operations)	01.10.2022-	01.10.2021-
in T€	30.06.2023	30.06.2022	+/- %
Cash generated from operations		5,003		395		1,166.6
Cash flow from operating activities	966	-4,336	122.3
Cash flow from investing activities	3,143	-2,721	215.5
Cash flow from financing activities	-4,107	1,092	-476.1
Change in cash and cash equivalents	-181	-5,743	96.8
	01.10.2022-	01.10.2021-
Staff	30.06.2023	30.06.2022	+/- %
Average member	581	587	-1.0
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Market Development

The world economy enters the year 2023 in a rather weak state. The Russia-Ukraine war as well as a mix of high inflation rates and sharply rising interest rates led to a deterioration in general economic conditions. With a decline in gross domestic product in two consecutive quarters, Germany met the criterion of a technical recession. Sentiment in the German economy has deteriorated markedly, with the ifo business climate index falling to 88.5 points in June. Expectations of importance for the willingness of German companies to invest were even more pessimistic. The current weakness in industry is putting the German economy in difficult waters.

The US-labour market, by contrast, continues to be very robust and there are easing signals from the real estate market and the banking sector. Recovery in China is subdued despite the expiry of corona restrictions. Inflationary pressures continue to ease but are still high. After 3.5% in the prior year, the International Monetary Fund expects global economic growth to slow down to 3.0% in 2023 overall. For Germany, a 0.3% decline in gross domestic product and, thus, a recession is expected for 2023.

Course of Business

The reluctance to invest observed in many companies also had an impact on the Hönle Group's business development. Moreover, the end of the pandemic situation led to a significant decline in sales in the air disinfection business. In all, sales revenues in the first nine months of financial year 2022/2023 were T€ 79,740, which is 8.5% down from the previous year's period.

The earnings development was marked by several one-off effects in the third quarter. Following the change of the Management Board Chairman, Dr. Hönle AG's Management Board worked intensively on all of the Hönle Group's segments and business fields. In this context it was decided, among other things, to discontinue the product line of the mobile SteriWhite Air sterilization systems due to a lack of prospects for success after the corona pandemic had subsided. As a consequence, the inventory of air disinfection devices and related components was completely written off.

The negative one-off effects, to a large extent associated with the discontinuation of the mobile air sterilization systems product line amounted to € 11.9 million including the personnel expenses of T€ 770 resulting from the resignation of the former Management Board Chairman.

Consequently, at T€ -6,827, the operating result (EBIT) was clearly below the result generated in the amount of T€ 9,571 in the previous year. Adjusted for one-off effects, the operating result came to T€ 5,030 (PY: T€ 9,046).

Due to the sale of all shares in Raesch Quarz (Germany) GmbH in the first quarter of financial year 2022/2023, the income statement in the reporting year and in the previous year represents the continued and discontinued operations

The Hönle Group's Reorientation

On 1 May 2023, Dr. Franz Richter temporarily assumed the position of Chairman of the Management Board at Dr. Hönle AG. The Management Board's strategy is now aimed at sustained strong business development and a return to Hönle Group's high profitability. Consequently, the past months were characterized by a review and analysis of business activities in the individual segments. Within the scope of strategic corporate management, strategy meetings were held in all of the Group's major business units. In the future, business activities will be oriented more strongly on a growth strategy and the development of future-oriented application fields and markets. Another focus is on exploiting synergies between individual segments and business units of the Hönle Group. The objective is to generate new sales potential and opening up these synergies while making use of the resulting cost advantages at the same time.

Business Development by Segments

Revenues in the Adhesives segment came to T€ 21,549 in the first nine months of financial year 2022/2023 and were thus above the previous year's figure of T€ 20,661. Both the French and the US-American sales company succeeded in increasing sales revenues in their respective sales markets. Sales revenues generated by the

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German company in the Adhesives segment, were below the previous year's level and thus fell short of the Management Board's expectations.

The segment operating result declined from T€ 2,776 in the previous year to T€ 1,547 in the current financial year. The main reason for the lower period result is to be seen in higher personnel expenses associated with the workforce expansion. In the course of the planned sales growth, the personnel strength in the areas of development and sales was further expanded. In addition, a change in the product mix as well as exchange rate differences impacted adversely on operating profit.

The decline in sales of air disinfection systems in the Equipment & Systems segment made itself felt due to the waning of the corona pandemic. Segment sales fell from T€ 51,248 in the previous year to T€ 44,586 in the reporting year. By contrast, the sale of UV systems for drying industrial adhesives saw favourable development. The systems are used, among other things, in automated production processes in medical technology, such as the bonding of needles in syringes.

The segment operating result came to T€ -9,984 whereby the negative one-off effects, mainly associated with the discontinuation of the mobile air disinfection systems product line, amounted to € 11.9 million. The operating result for the previous year was T€ 4,345; it included one-off other operating income from the sale of a property in the amount of T€ 1,825.

Sales in the Glass & Lamps segment amounted to T€ 13,606, down on the previous year's figure of T€ 15,084. As in the Equipment & Systems segment, the end of the corona pandemic also impacted on the Glass & Lamps segment. Sales generated with uv lamps in the air disinfection business declined significantly. The sales revenues at uv-technik Speziallampen GmbH, in particular, were down from the previous year's level.

The operating result of the Glass & Lamps segment came to T€ 1,610. In the previous year, the operating result was T€ 2,449 and the operating result from continued and discontinued operations, which included the business activities of Raesch Quarz (Germany) was T€ 93.

Results of Operations

The Hönle Group's sales revenues for the period from 01.10.2022 to 30.06.2023 amounted to T€ 79,740, and thus declined by 8.5% compared to the previous year's period.

The cost of materials was significantly influenced by one-off effects: The product line of mobile air disinfection systems is discontinued after the corona pandemic has subsided due to a lack of prospects of success. Inventories of equipment and related components were fully written down in the third quarter. The negative one-off effects, mainly associated with the discontinuation of this product line, increased the cost of materials by €12.7 million. The cost of materials ratio was therefore temporarily higher at 53.5 % (PY: 44.2 %). Gross profit decreased by 30.0% to T€ 38,778.

Personnel expenses were also impacted by one-off effects. They include expenses in connection with the departure of a member of the Board of Management in the amount of T€ 770 (PY: T€ 1,300). Overall, the Hönle Group's personnel expenses declined slightly from T€ 30,030 in the previous year to T€ 29,674 in the reporting year, corresponding to a personnel expense ratio 31.9 % or 36.7 %, respectively. Other operating expenses increased slightly from T€ 11,205 in the current financial year to T€ 11,461.

The operating result (EBIT) for the nine-month period amounted to T€ -6,827 (PY: T€ 9,571). Earnings before

taxes (EBT) stood at T€ -7,834 (PY: T€ 8,500). After income taxes, the consolidated result was T€ -6,548 (PY:

T€ 4,736), which corresponds to earnings per share of -1.09 € (PY: 0.77 €).

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Earnings Development	01.10.2022-	01.10.2021-
in T€	30.06.2023	30.06.2022	+/- %
Revenue	79,740	87,172	-8.5
Gross profit	38,778	55,414	-30.0
Operating result (EBIT)	-6,827	9,571	-171.3
Operating result/EBIT (adjusted)	5,030	9,046	-44.4
Earnings before tax (EBT) from continued operations	-7,834	8,500	-192.2
Consolidated net income from continued operations	-6,875	6,279	-209.5
Result from discontinued operations	327	-1,544	-121.2
Consolidated profit for the year	-6,548	4,736	-238.3
Earnings per share in €	-1.09	0.77	-241.6
Number of shares	6,062,930	6,062,930	0.0

Financial Position

In the first three quarters of financial year 2022/2023, the Hönle Group generated cash flow from operations in the amount of T€ 5,003 (PY: T€ 395). After payment of interest and income taxes, the cash flow from operating activities attributable to continued and discontinues operations came to T€ 966 (PY: T€ -4,336).

The cash flow from investing activities is characterized by proceeds from the disposal of the Raesch Quarz (Germany) GmbH business unit and payments for the acquisition of property, plant and equipment. The cash flow from investing activities from continued and discontinued operations was thus positive overall at

T€ 3,143 (PY: T€ -2,721).

The cash flow from financing activities amounted to T€ -4,107 (PY: T€ 1,092). It largely resulted from the repayment of bank liabilities.

In all, cash and cash equivalents declined by T€ 181 in the first nine months of the current financial year (PY: decline of T€ 5,743).

Liquidity Development

(continued 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-
30.06.2023	30.06.2022	+/- %
5,003		395		1,166.6
966	-4,336	122.3
3,143	-2,721	215.5
-4,107	1,092	-476.1
-181	-5,743	96.8

Net Assets

Raesch Quarz (Germany) GmbH was sold with effect as of 1 December 2022. The deconsolidation of the company contributed significantly to the decrease of T€ 3,739 to T€ 75,829 in property, plant and equipment on the assets side of the statement of financial position. The write-down of inventories concerning air sterilization equipment and related components played a major role in the decrease in inventories by

T€ 10,299 to T€ 36,072.

Cash and cash equivalents stood at T€ 6,950 (PY: T€ 7,131) as at 30.06.2023.

Liabilities to banks, which comprise non-current loans (T€ 40,698) and current liabilities to banks (T€ 12,876) were reduced by T€ 2,662 in the first nine months of the current year.

Revenue reserves declined by T€ 7,515 to T€ 51,333. Based on an equity capital ratio of 56.3 %, the Hönle Group continues to be solidly financed.

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Statement of Financial Position
in T€	30.06.2023	30.09.2022	+/- %
Non-current assets	113,283	114,810	-1.3
Current assets	64,085	80,652	-20.5
Equity	99,801	107,239	-6.9
Non-current liabilities	47,131	37,202	26.7
Current liabilities	30,437	51,021	-40.3
Total assets	177,368	195,462	-9.3
Equity ratio as a %	56.3	54.9	2.6

Outlook

Overall Market

The basic underlying conditions that were largely responsible for a slowdown in global economic activities have improved recently. Energy prices have fallen again, supply bottlenecks are easing, and the outlook in China is also brightening thanks to the discontinuation of the zero-covid policy. However, the tightened monetary policy has a slowing effect, leading to significantly higher financing costs and hampering the willingness to invest. Although inflation will fall significantly in the coming months thanks to lower commodity prices, the underlying price buoyancy is likely to persist for the time being although it is expected to decrease over time. Inflationary pressures are expected to ease further, but are still high.

The risk of the global economy slipping into recession has decreased. The International Monetary Fund expects the global economy to grow moderately next year. After 3.0% in the current year, growth of 3.0% is forecast for 2024. In the advanced economies, business activities are expected to stagnate at a low level. Growth impetus will be provided by emerging and developing countries, however.

The Hönle Group

Following the change concerning the Management Board Chairman, the Dr. Hönle AG Management Board has intensively dealt with all of the Hönle Group's segments and business fields. The past months were characterized by a review and analysis of its business activities. Within the scope of strategic corporate management, strategy meetings were held in all major business units of the corporate group. The Management Board's strategy is aimed at sustained strong business development and a return to high profitability. In addition to the targeted development of future-oriented fields of application, emphasis will be placed on making use of the synergies between the Hönle Group's individual segments and business units.

As already communicated in the report as at 1 June 2023, the Management Board reassessed both the Hönle Group's situation and outlook for financial year 2022/2023. It was decided in this context to discontinue the product line of mobile SteriWhite-Air air sterilization systems after the end of the corona pandemic due to a lack of prospects of success. In addition, the Management Board expects sales revenues and earnings in the current financial year to be below the figures initially planned, and an increase in personnel expenses at Dr. Hönle AG, mainly in the context of the resignation of a former Management Board member.

Overall, the Management Board expects sales revenues of € 100 million to € 105 million for the Hönle Group in financial year 2022/2023. Furthermore, it expects an operating result (EBIT) excluding one-off effects in the amount of € 5.5 million to € 6.5 million. Including negative one-off effects largely as a result of the discontinuation of the mobile air disinfection systems product line, the Management Board expects an operating result (EBIT) of between € -7 million to € -8 million.

All business segments of the Hönle Group are expected to generate positive adjusted operating results and a positive operating cash flow as a whole.

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