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Management will continue to monitor market conditions

CeramTec considers refinancing involving new Bond Issuance

Plochingen, 2015-11-11

CeramTec has been approached by various parties regarding the possible refinancing of part of its shareholder provided capital via a bond issuance. CeramTec is currently in the process to further evaluate such a bond issuance and will continue to monitor market conditions.

In connection with reviewing the possibility of such a bond issuance, CeramTec has analysed updated hip replacement procedure market data. Based on market studies, CeramTec believes that the number of hip replacement procedures has increased from 1.5 million in 2010 to 1.9 million in 2014 and is further estimated to increase to 2.4 million in 2020. The estimated global ceramic hip components penetration in percent (including primary and revision hip replacements, but excluding partial hip replacements) is estimated to increase from 47% in 2014 to 53% in 2020 for ceramic-on-ceramic and ceramic-on-plastic hip components, which is principally due to further substitution of traditional materials (metal). The sub-market for ceramic-on-ceramic components is estimated to remain at 15% between 2014 and 2020. CeramTec thus estimates that nearly one in two hip implants used worldwide include ceramics products with CeramTec BIOLOX products, of which more than 11 million have been implanted so far. This represents more than 90% of ceramics components used in hip joints implant systems globally. CeramTec's BIOLOX units sold in the Medical Applications segment increased from 1,009 thousand in 2012 to 1,152 thousand in 2013, to 1,259 thousand in 2014 and 1,303 thousand in 12 month period ended June 30, 2015.

CeramTec continues to make excellent progress deleveraging the CeramTec Group by growing its business and thus continues to make progress towards an IPO, which is the strategy for CeramTec and its sponsor Cinven. CeramTec's revenues increased from EUR 246 million in the first six months of 2014 to EUR 260 million in the first six months of 2015 and Adjusted EBTIDA increased from EUR 82 million in the first six months of 2014 to EUR 89 million in the first six months of 2015. Our Medical Applications segment continues to contribute the majority of Adjusted EBITDA as it benefits from relatively higher EBITDA margins compared to the Industrial Applications segment. The Group's Cash Conversion Ratio, defined as Adjusted EBITDA minus capital expenditures divided by Adjusted EBITDA, increased from approximately 80% in the first six months of 2014 to approximately 90% in the first six months of 2015. This was principally due to the wind-down in capital expenditures following the Marktredwitz plant expansion in 2014, which increased production capacity from 1.2 million units to 1.6 million units per annum. CeramTec continues to be highly innovative with New Products (products introduced to the market and existing products modified for new customers within the last five years) contributed approximately EUR 110 million or 23% of revenues in 2014). After the completion of the Marktredwitz expansion, maintenance capital expenditure returned to annual capital expenditures levels prior to the expansion.

According to preliminary results, current trading in the third quarter of 2015 remained strong and the growth trend of CeramTec continued: (i) Medical Applications revenues are estimated to remain stable year-on-year, and (ii) Industrial Applications revenues estimated to increase year-on-year. This development was driven by a strong performance of foundry cores for automotive diesel engine pistons (Emil Müller) and electronic applications, as well the acquisition and integration of DAI Ceramics Inc. Current order intake is on a good trend in both Medical and Industrial Applications division. Adjusted EBITDA in the third quarter of 2015 is estimated to remain stable year-on-year.

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