LIMES Schlosskliniken : Annual Report 2023

Annual Report 2023

LIMES Schlosskliniken

Annual Report 2023

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LIMES Schlosskliniken			AT A GLANCE
			January -		January -	Change
			December		December
Group performance indicators
2023	2022
Total revenues	37,956 kEUR		30,050 kEUR	26.3%
Patient days	46,641	37,031			26.0%
Gross earnings (EBITDA)	7,672 kEUR		8,653 kEUR	-11.3%
EBITDA margin	20.2 %	28.8%			-29.8%
Amortisation	2,646 kEUR		2,655 kEUR	-0.3%
Operating result (EBIT)	5,026 kEUR		5,998 kEUR	-16.2%
EBIT margin	13.2%	20.0%			-31.6%

Financial result

Pre-tax profit

Consolidated net income for the period

Result for shareholders of the parent company during the period

-441 kEUR		-392 kEUR	12.5%
4,585 kEUR		5,607 kEUR		-18.2%
3,909 kEUR		4,864 kEUR		-19.6%
3,396 kEUR		4,203 kEUR	-19.2%

Long-term assets		18,211 kEUR		11,062 kEUR	64.6%
Short-term assets	15,037 kEUR		15,588 kEUR		-3.5%
Balance sheet total	33,248 kEUR		26,650 kEUR	24.8%
Equity	16,643 kEUR		11,196 kEUR	48.7%
Equity ratio	50.1%	42.0%	19.1%
Return on equity			20.4%	37.5%	-45.6%
Return on assets			10.2%		15.8%		-35.2%
Liquid assets	8,519 kEUR		10,926 kEUR	-22.0%

Result per share as per DVFA* (German Association for Financial Analysis and Asset Management)

Employees at end of period

Revenue per employee

No-par value shares

• based on number of no-par value shares in circulation

11.58 EUR		14.34 EUR	-19.2%
207	175	18.3%
183 kEUR		172 kEUR		6.8%
293,192	293,192	0.0%
293,192		293,192		0.0%

LIMES Schlosskliniken

Annual Report 2023

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CONTENTS

Report of the Supervisory Board	4-5
Report of the Board of Directors	6
The LIMES share	7
GROUP STATUS REPORT
Basic structurs of the group	8
Economic report	9-13
Forecast, opportunity and risk report	13-18
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheet	19
Consolidated income statement	20
Consolidated cash flow statement……………………………………………………………………………………21
Consolidated notes for the financial year	22-26
Certification by the auditor	27-30
2023 CORPORATE CALENDAR	31

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Report of the Supervisory Board

Dear shareholders,

the LIMES Schlossklinik Group was able to continue on its growth path in the past financial year. A total of two new clinic locations were added. The number of patients treated increased by + 26 %. The same applies to total revenues. We actively accompanied and supported the operational development of the company and the acquisitions made in the 2023 financial year.

The Supervisory Board of LIMES Schlosskliniken AG has appointed Dr. Brolund-Spaether to the Management Board with effect from 01.01.2024. Dr. Brolund-Spaether will be responsible for the medical-therapeutic segment of the LIMES Group. With the expansion of the Management Board, the Supervisory Board has created the personnel requirements for the planned further strong growth of the LIMES Group.

In the 2023 financial year, the Supervisory Board of LIMES Schlosskliniken AG properly performed the duties incumbent upon it in accordance with the law and the Articles of Association. The Supervisory Board monitored and advised the Management Board in its activities. The Supervisory Board was involved by the Management Board in all decisions that were of material importance to the company. It was informed regularly and promptly about all important company-relevant transactions.

Company-specific key figures and potential acquisition targets were prepared for the Supervisory Board meetings and made available to the Supervisory Board. A total of four Supervisory Board meetings were held during the reporting period. The Supervisory Board also regularly exchanged information with the Management Board outside of the meetings. Cooperation with the Management Board was always constructive and based on trust.

The Management Board fully complied with its information and reporting obligations. The members of the Supervisory Board were regularly informed about the company's business, asset, financial and risk situation. Other key areas of consultation included the strategic development of the company.

There were no conflicts of interest on the part of members of the Management Board or Supervisory Board that should have been disclosed to the Supervisory Board without delay.

The focus of the Supervisory Board meeting on April 26, 2024 was on the presentation and discussion of the business figures for the 2023 financial year for the Group and the company. The consolidated financial statements for the 2023 financial year prepared in accordance with the German Commercial Code (HGB) were audited by the appointed auditor, B-S-H Collegen GmbH Wirtschaftsprüfungsgesellschaft, Cologne, including the accounting, and issued with an unrestricted audit opinion.

The auditor took part virtually in the Supervisory Board's discussion of the annual and consolidated financial statements for 2023 and reported on the key findings of the audit.

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The Supervisory Board examined the annual financial statements and the consolidated financial statements, including the management report, following the submission of the final reports and raised no objections based on the final results of its examination. We have approved the annual financial statements and consolidated financial statements prepared by the Executive Board as at December 31, 2023. The annual financial statements are therefore approved.

In the period from January 1, 2023 to December 31, 2023, the Supervisory Board consisted of the Supervisory Board members Mr. Dirk Isenberg (Chairman), Mr. Bruno Schoch (Deputy Chairman) and Mr. Halim Boustani.

The Supervisory Board and Management Board have decided to hold the Annual General Meeting on June 10, 2024 as an in-person event again.

We look forward to welcoming our shareholders again in person on June 10, 2024 in Frankfurt, Sofitel Opera at 2 p.m.

The Supervisory Board would like to thank the Management Board and all employees of the LIMES Schlosskliniken Group for their commitment and excellent performance in the 2023 financial year.

Cologne, 26 April 2024

Dirk Isenberg

Chair of the Supervisory Board

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Report of the Board of Directors

Dear shareholders and interested parties of LIMES Schlosskliniken,

LIMES Schlosskliniken continued to develop positively in the 2023 financial year. After a weaker first half of the year, we recorded a significant increase in patient occupancy in the second half. We were largely able to offset the impact of the reduction in staff at the Lindlar site and inflation-related cost increases in the first six months. 60 % of earnings (EBITDA) were generated in the second half of the year. In terms of earnings, we were not quite able to match the previous year. Though, this also includes investment costs for new locations.

The acquisition of the Abtsee site near Salzburg and the majority acquisition of CLINICUM ALPINUM in Liechtenstein were certainly the highlights of the financial year for us. With an increase in sales of 26%, we were able to generate total revenues of EUR 38.0 million. The net profit for the year will once again be used to strengthen the company so that we are well positioned for the opportunities that present themselves.

The positive results achieved were only possible because patients placed their trust in us and accepted the psychiatric care concept offered by LIMES. We remain committed to investing in the quality of therapeutic treatment and in the framework conditions that enable the best possible recovery process.

In the 2024 financial year, we will focus on the renovation and opening of the new Abtsee clinic location in Berchtesgadener Land. The new partnership with CLINICUM ALPINUM and patient occupancy are developing very positively. Unfortunately, we have not yet been able to move into the planned Lindlar site as the problems with the general contractor have not yet been resolved. In the meantime, however, these have been resolved and the new French property owner will complete the property by the beginning of 2025 and hand it over to LIMES as the operator.

The current financial year 2024 is currently ahead of our targets, which means that we expect double-digit sales and earnings growth once again. We will examine further clinic locations and acquisitions if they fit in conceptually with LIMES.

Together with my new colleague on the Management Board, I look forward to continuing the successful development of the LIMES Group. I would like to thank all employees of the LIMES Group for their great commitment to achieving our corporate goals. The satisfaction of our patients is an incentive for us to continue on the path we have taken so far.

With best regards your

Dr. Gert-M. Frank

Board of Directors

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The LIMES Share

The starting position for the stock market year 2023 was anything but favorable. Nevertheless, shares performed very well. The German share index DAX, which started January at 13,923, closed at 16,751 points on the last day of trading, an increase of 20.3 %. The Euro-Stoxx-50 also recovered to 4,521 points at the end of the year, an increase of 17.5 %. The US S&P 500 closed 2023 at 4,769 points, an increase of 25.7 %. Despite high inflation rates and the dominance of the war in Ukraine, 2023 was a very successful year from a capital market perspective.

The stock markets in the healthcare sector underperformed in 2023. The MSCI Healthcare Index rose only slightly by + 4.3 %. The same trend applied to the Nasdaq Biotec Index, which closed up 4.6 %. The Euro-Stoxx Healthcare closed down 1.7 %. German pharmaceutical and healthcare shares, which are included in the Pharma & Healthcare primary standard, fell by - 10 %.

The LIMES share was unable to buck the trend in the healthcare sector and ended 2023 at EUR 284, a fall of - 11.2 %.

The LIMES share is traded on the Open Market (Freiverkehr) in Düsseldorf in the primary market and is included in the electronic platform XETRA. The trading volume on XETRA amounted to 13,719 LIMES shares in 2023 (p.y.: 15,596). The highest daily turnover amounted to 1,208 shares (p.y.: 776). The average daily turnover amounted to 68 shares (p.y.: 61).

A total of 293,192 LIMES shares have been issued under the securities identification number WKNA0JDBC. The free float amounted to 23.1% at the end of the year.

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Group status report

A. Basic structure of the group

1. Business model of the group

LIMES Schlosskliniken operates in the market for high-quality private clinics for psychiatry, psychotherapy and psychosomatics in Germany, Switzerland and Liechtenstein. The growing LIMES Schlosskliniken specialize in the treatment of stress-related illnesses, mental and psychological disorders such as depression, acute burnout, affective disorders and trauma.

The mission statement of the LIMES Schlosskliniken is to treat patients holistically, to provide them with first-class medical care and, in addition, to offer them a mental and physical space that can promote the healing of mental disorders.

LIMES Schlosskliniken is a provider of exclusive private clinics with the aim of providing its patients with top-quality medical care. Special places in the sense of a "healing environment" form a further element of the business model.

The services offered by the LIMES Schlosskliniken are primarily aimed at privately insured patients, self-paying patients, patients entitled to benefits and international clientele, but also patients with state health insurance by way of reimbursement.

2. Company and organisation

The first clinic in Mecklenburg Switzerland with a capacity of 85 patient rooms and a spacious infrastructure opened in April 2016. The second site in Bad Brückenau, the "LIMES Schlossklinik Fürstenhof", started operations on June 1, 2020. In November 2021, the majority stake in the Swiss clinic Paracelsus Recovery Group, Zurich, was acquired. In June 2023, the stake was increased by a further 5%. The Paracelsus Recovery Group primarily serves international clientele with a high need for safety, therapy intensity and exclusivity.

In May 2023, the LIMES Schlossklinik Abtsee was added as a further site. The clinic is nestled in a nature reserve and has a 2.5-hectare lakeside property. All patient rooms have a unique view of the Berchtesgaden mountains. The Mozart city of Salzburg with its international airport is 21 km away. The property is currently being renovated. The clinic is scheduled to open in October 2024.

In July 2023, the majority of the Liechtenstein private clinic CLINICUM ALPINUM was acquired. The clinic is located in alpine surroundings at 1,483 m above sea level and offers an individualized treatment plan, high-frequency psychotherapy and a wide range of individually tailored special therapies. Nestled in the Liechtenstein mountains, the healing environment concept for mental illnesses has been implemented to the highest quality.

The planned clinic location in Lindlar near Cologne has not yet been able to open due to problems with the previous general contractor. In the meantime, the new property owner has

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promised to complete the property by the beginning of 2025 and hand it over to LIMES as the operator.

The current locations provide the LIMES Group with around 400 high-quality treatment places. The clinic operations are managed from the central department in Cologne.

LIMES Schlosskliniken AG is the central parent company from which the individual clinics are managed strategically, financially and operationally. LIMES Schlosskliniken AG also provides all services relating to central brand development, marketing and acquisition as well as the development of new clinic sites.

LIMES Schlosskliniken AG is the parent company of the four operating subsidiaries. The shares of LIMES Schlosskliniken AG have been listed on the Düsseldorf Stock Exchange since October 12, 2018. Since March 18, 2019, the shares have been traded on the Xetra platform in Frankfurt and on the primary market of the Düsseldorf Stock Exchange.

B. Economic report

1. General economic conditions

General economic conditions

According to previous forecasts, the global economy is expected to grow by around 3% in 2023. The IMF expects a slight decrease for 2024. The eurozone is likely to record an increase in gross domestic product of + 0.6 %. Germany is likely to be the only major economy in the eurozone to shrink in 2023. According to previous forecasts, this trend will continue in 2024.

According to provisional data from the Federal Statistical Office, the inflation rate in 2023 was +5.9 %. This means that life in Germany has once again become significantly more expensive in 2023. In addition to the high inflation rate, the current economic challenges include the shortage of qualified employees, the strong rise in interest rates and planning uncertainties resulting from political guidelines.

Outlook

The current framework conditions are likely to remain largely valid in 2024. In addition to the significant rise in financing costs, inflation is still likely to be the main topic of the macroeconomic outlook for 2024.

Sector-specific conditions

Compared to other sectors, the healthcare market is largely independent of short-term fluctuations in economic conditions and has experienced above-average growth in recent years.

Within the development of the healthcare sector, LIMES Schlosskliniken is active in the mental illness sub-segment. This sub-segment has positive growth rates in the medium term. Mental

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illnesses currently account for around 19% of total sick days, and the trend is rising (source: Deutsche Angestellten Krankenkasse). This makes mental illnesses the second most common type of illness.

The LIMES Schlosskliniken mainly treat private patients. These are generally self-pay patients who usually receive reimbursement from a private health insurance company or a state subsidy. LIMES Schlosskliniken therefore operates in a different market segment and does not compete with providers for patients with statutory health insurance due to the higher intensity of treatment.

The sector-specific framework conditions for clinics are currently characterized above all by the availability of staff and the ongoing cost pressure on health insurance companies.

LIMES Schlosskliniken is also affected by these industry-specific conditions. We are taking various measures to try and manage the challenges, which are not always easy.

2. Financial and non-financial performance indicators

LIMES Schlosskliniken uses various key performance indicators to manage performance with regard to corporate objectives. In the financial area, the key figures correspond to those used to manage the clinic/clinics. The central objectives of growth and profitability relate to the key performance indicators of revenue and earnings before interest, taxes, depreciation and amortization (EBITDA). In the non-financial area, the key figures of occupancy and length of stay are also used. The equity ratio and liquidity indicators are also used for capital management in the clinics.

3. Business performance

General overview

LIMES Schlosskliniken was once again able to continue its growth path in the 2023 financial year. Including the CLINICUM ALPINUM, total revenues increased by + 26 %. All clinics in the LIMES Group are developing positively and are profitable. Overall, occupancy amounted to 46,641 patient days (p.y. 37,031) + 26 %.

We had a slightly weaker performance in the first half of 2023, influenced by extraordinary factors. However, this was compensated for over the course of the second half of the year, enabling us to match the previous year's good level in terms of sales and income. The Paracelsus Recovery Clinic Zurich recorded a slightly weaker performance.

The two new additions, LIMES Schlossklinik Abtsee and CLINICUM ALPINUM, have enabled the LIMES Group to expand its range of therapy places. In the second half of 2023, CLINICUM ALPINUM performed significantly better than planned in terms of occupancy and earnings. The Schlossklinik Abtsee property in Berchtesgadener Land is currently being renovated. The clinic is scheduled to open on October 1, 2024.