2008-03-06 12:00:00 CET
2008-03-06 12:00:01 CET
REGULATED INFORMATION
Suomen Terveystalo Oyj - Financial Statement Release
Terveystalo's January-December turnover increased by 58.4 percent and was EUR 140.7 million, operating profit was EUR 0.4 million
SUOMEN TERVEYSTALO OYJ STOCK EXCHANGE RELEASE March 6, 2008 at 1.00 p.m. Terveystalo's January-December turnover increased by 58.4 percent and was EUR 140.7 million, operating profit was EUR 0.4 million. January-December 2007 (January-December 2006): - Turnover EUR 140.7 million (88.9) - Operating profit EUR 0.4 million (5.1) -- Turnover for the Clinics and Hospitals segment was EUR 77.7 million (45.2) and operating profit was EUR -1.3 million (-0.9) -- Turnover for the Diagnostics segment was EUR 60.3 million (41.6) and operating profit was EUR 13.9 million (13.4) -- Turnover for others, i.e., items not allocated to the segments, was EUR 2.7 million (2.0) and operating profit was EUR -12.2 million (-7.4). - Operating profit was below last year's level due to the costs from an integration program initiated in September and a weaker second half of the year than expected in terms of earnings. Operating profit was also affected by higher than expected salary increase implemented in October. There effect was not yet fully transferred to customer prices in the last quarter of 2007. - Group turnover is expected to grow in the first quarter of 2008 and then in the entire financial year 2008 and be significantly higher than in the corresponding period in 2007. - Operating profit for 2008 is expected to be significantly above the 2007 operating profit level. Suomen Terveystalo Group's (Terveystalo) turnover increased in January-December 2007 by 58.4 percent compared to the corresponding period in the previous year and amounted to EUR 140.7 million (EUR 88.9 million in January-December 2006). Organic growth in turnover was 12.3 percent. Operating profit was EUR 0.4 million (5.1). The operating profit decreased by 92.1 percent compared to January-December 2006. Terveystalo's operations are reported in two segments until December 31, 2007 so that occupational healthcare services are included in the Clinics and Hospitals segment. -------------------------------------------------------------------------------- | KEY FIGURES | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Turnover, EUR 1,000 | 140,719 | 88,852 | -------------------------------------------------------------------------------- | Operating profit, EUR 1,000 | 401 | 5,106 | -------------------------------------------------------------------------------- | Earnings per share, EUR | -0.05 | 0.04 | -------------------------------------------------------------------------------- | Equity per share, EUR | 1.17 | 0.81 | -------------------------------------------------------------------------------- | Net gearing, % | 184.8 | 134.7 | -------------------------------------------------------------------------------- | Return on investment, % | 0.6 | 6.5 | -------------------------------------------------------------------------------- | Return on equity, % | -5.0 | 6.0 | -------------------------------------------------------------------------------- | Equity ratio, % | 27.5 | 31.7 | -------------------------------------------------------------------------------- | Operating profit / turnover, % | 0.3 | 5.7 | -------------------------------------------------------------------------------- SUOMEN TERVEYSTALO OYJ'S FINANCIAL STATEMENT 1.1. - 31.12.2007 Business operations Measured by turnover and the extent of its operations, Terveystalo is Finland's leading healthcare company. The company operates in private healthcare service markets and offers its corporate, private and community customers comprehensive healthcare services. The company's operations are divided into two segments: the Clinics and Hospitals segment and the Diagnostics segment. Occupational healthcare services are included in the Clinics and Hospitals segment. In addition, the company's holding in the business operations of AVA clinics that specialize in infertility treatments is reported under the heading Other Operations Not Allocated to Segments (Other). Nationwide, regional and local operations are supported through Group functions. The Clinics and Hospitals segment was, until the end of 2007, responsible for occupational healthcare, private practice and hospital services. In the fourth quarter the Group continued separating the occupational healthcare from the Clinics and Hospitals segment into an Occupational Healthcare segment which has been implemented from the beginning of 2008. At the beginning of September 2007, Suomen Terveystalo Group became the leading provider of occupational healthcare services in Finland both measured by turnover and extent of the network when it acquired Medivire Työterveyspalvelut Oy. At the end of 2007, the Group was responsible for the occupational healthcare services of more than 12,000 companies and more than 365,000 individuals. The Group has grown considerably and integration of its services and internal operating methods lead to a reorganization of operations in the fall of 2007. The aim of the integration that will continue until the end of 2008 is to clarify operating procedures, boost the efficiency of the unit network, reduce overlaps and simplify support and administration services so that they better correspond to the needs of the Group's extended business operations. In the fourth quarter of 2007, the company continued developing its clinic hospitals and clinics, taking into account the need for local and service request and regional service offerings. The aim is that the clinic hospitals will support the service offering of smaller units and ensure the availability of Terveystalo's services regionally and nationally. A standardized and extensive service network is expected to have a positive effect on Terveystalo's market position in the long term. Terveystalo's specialty system was strengthened in the last quarter. The company's specialty managers appointed for the main medical specialty fields coordinate and nationally develop the operations in their specialty, monitor the quality of services and operations in the field of specialty and introduce new innovations and service entities into use. In December, Terveystalo was the first healthcare service provider in the Nordic region to introduce the balloon sinuplasty treatment. This treatment is more patient-friendly than conventional endoscopic sinus surgery. The company wants to be a forerunner in the future as well and launch new treatment forms that benefit customers. Terveystalo strengthened its neurological expertise and the services offered by the company in Turku and its surrounding areas by acquiring the business operations of Turun Päänsärkykeskus in October. The deal included Päänsärkykeskus' reception operations and the entire stock of Suomen Erikoisneurologikeskus Oy, which it owns in full and which specializes in drug research operations related to clinical neurology. The acquired operations will be utilized by organizing clinical drug research and development operations based on it that covers the entire Group. In November, Terveystalo strengthened its position in the Kouvola and Mikkeli regions by acquiring the clinic operations in Kouvola and Mikkeli and 50 per cent of the stock in Kouvolan Lääkäritalon Röntgen Oy from the Finnish Red Cross' South-East Finland District. A directed issue subscribed by the Finnish Red Cross' South-East Finland District was carried out in connection with the acquisition. The Diagnostics segment offers imaging, mobile imaging, laboratory and screening services to external customers and internally within the Group to complement the services offered to the customers of the Clinics and Hospitals and Occupational Healthcare segments. Imaging or radiology services include X-rays and ultrasonography, magnetic resonance imaging (MRI), computed tomography (CT) scans, mammography and bone mineral density measurement. At the end of 2007, Terveystalo had 57 imaging units, which included 10 fixed MRI machines and five mobile MRI units. X-rays were taken in 38 units in 28 towns. Ultrasound tests were carried out in 60 units. Ten of these had 4D ultrasound machines, which can be used, for instance, for demanding fetal structure tests during pregnancy. Bone-density tests were carried out in 20 towns. Teleradiology services are offered to the public sector, in addition to Group units. By the end of 2007, Terveystalo had several considerable hospitals and health centers as teleradiology service customers. During the review period, in October-December 2007, the construction of a new imaging unit in Joensuu was completed as well as the restructuring of an MRI unit in Lappeenranta. Construction of a new imaging unit at Terveystalo's clinic hospital in Turku that will be completed in March 2008 also started. A 3-tesla MRI device that represents the latest technology will be taken into use in Turku. The equipment can be used to detect illness alterations at an earlier stage and to test smaller tissue structures. Considerable added value can be gained in particular in neurological and orthopedic imaging from the higher filed strength. The number of customers in screening services increased as planned in 2007. Screening services offered by Terveystalo include mammography, Pap smear and fetal screening services. At the end of 2007 screening mammography tests were carried out in nearly 30 towns and with mobile units in almost one hundred other locations across Finland. During 2007, Terveystalo called approximately 250,000 women to screening mammography tests. Cervical cancer screening tests (Pap screens) was included in the company's services in 2006. The Pap screening process was transferred to a new electronic system that ensures the efficiency of this screening process. Municipalities' interest towards fetal screenings will already be increased in 2008 by a statutory fetal screening obligation that will become effective in 2010. Terveystalo has the most extensive laboratory test-taking network in the private sector in Finland. In its diagnostics operations, the company focuses on sample-taking laboratory operations and related services close to the customer interface. Group functions support Group level, regional and local business operations. At the beginning of 2008, the Group's operational structure was strengthened by adding quality to Group functions which already included HR, sales, finances, ICT and communications. Suomen Terveystalo Oyj has been granted an SFS-EN ISO 9001:2000 quality certificate. Insurance services-related operations are also the responsibility of Group functions at the Group level. Strategy In 2008, Terveystalo will focus on profitable growth, innovation of new solutions and services and on unification and increasing efficiency in operations. The strategy is based on Suomen Terveystalo's values: expertise and caring. The main strategic lines are: 1) innovative solutions and services, 2) organic growth and acquisitions, 3) joint operating procedures, 4) utilization of Group synergies, and 5) the right people in the right place. Group structure Mergers that aim at simplifying Terveystalo's Group structure were finished and entered into the trade register on December 31, 2007. In the mergers Chiasma Oy, Forssan Lääkärikeskus Mediris Oy, Hemo Oy, Hämeenlinnan Lääkärikeskus Oy, Hämeentien Lääkärikeskus Oy, Kemin Röntgen Oy, Keski-Suomen Sydäntutkimusasema Oy, Kuntohovin Lääkäriasema Oy, Lahden Röntgenpalvelu Oy, Lauttasaaren Foksimetri Oy, Lipram Oy, Lääkäriasema Alfa-Med Oy, Lääkärikeskus Sanator Oy, Professional Management Services of Finland Oy, Rexis Oy, Sairaala Laseri Oy, Suomen Terveystalo Lääkäriasemat Oy, Tammerscan Oy, Tammer-Sinus Oy and Vammalan Lääkäri- ja Hammaslääkärikeskus Oy merged with Suomen Terveystalo Lääkäriasema Oy. Karhulan Röntgen Oy, Kotkan Röntgen Oy, MagneettiORTON Oy and Pohjois-Kymen Ultra-Tutko Oy merged with Suomen Terveystalo Diagnostiikka Oy. Roha Medical Oy merged with Tesla-Yhtiöt Oy. Turnover In January-December 2007 turnover grew by 58.4 percent compared to the corresponding period last year and amounted to EUR 140.7 million (EUR 88.9 million in January-December 2006). The Clinics and Hospitals segment's share of turnover was 55.2 percent and Diagnostics segment's share was 42.9 percent. Turnover by segment -------------------------------------------------------------------------------- | Turnover by segment | | -------------------------------------------------------------------------------- | 1,000 EUR | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Clinics and Hospitals segment | 85,433 | 49,330 | -------------------------------------------------------------------------------- | Diagnostics segment | 65,760 | 44,523 | -------------------------------------------------------------------------------- | Group eliminations | -13,142 | -6,992 | -------------------------------------------------------------------------------- | Other | 2 667 | 1,992 | -------------------------------------------------------------------------------- | Group total | 140,719 | 88,853 | -------------------------------------------------------------------------------- In addition to Group functions, the 'Other' item contains the Group share of the operations of the AVA clinic that focuses on fertilization treatment and is not included in the business segments. Earnings In January-December 2007 the operating profit was EUR 0.4 million, i.e. 0.3 percent of turnover (EUR 5.1 million, i.e. 5.7 % of turnover in January-December 2006). The operating profit decreased by 92.1 percent compared to the corresponding period in the previous year. The Group's fourth quarter turnover was lower than expected due to continued strong development of Group functions, the Medivire Työterveyspalvelut's integration program and salary increases implemented in the period, which could not yet be fully transferred to customer prices in the last quarter of 2007. The main development targets where IT and phone systems as well as actions related to the unification of occupational healthcare services and the Group. The one-off costs during the second half of the year relating to merging of clinics, occupational healthcare agreements and write-off on old accounts receivables amounted to EUR 1.5 million. The salary raises as of October 2006 affected the result by EUR 0.7 million. The earnings belonging to the owners of the parent company was EUR -3.1 million, i.e., -2.2 percent of turnover (EUR 1.9 million, 2.2 %). Earnings per share calculated from earnings belonging to the owners of the parent company were EUR -0.05 (EUR 0.04). Operating profit by segment -------------------------------------------------------------------------------- | Operating profit by segment | | -------------------------------------------------------------------------------- | 1,000 EUR | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Clinics and Hospitals segment | -1,253 | -906 | -------------------------------------------------------------------------------- | Diagnostics segment | 13,858 | 13,446 | -------------------------------------------------------------------------------- | Other | -12,204 | -7,434 | -------------------------------------------------------------------------------- | Group total | 401 | 5,106 | -------------------------------------------------------------------------------- Return on assets Return on investments (ROI) in January-December 2007 was 0.6 percent (6.5 % in January-December 2006). Return on equity (ROE) was -5.0 percent (6.0%). Investments In the fourth quarter of 2007, Terveystalo acquired the clinic operations in Kouvola and Mikkeli from the Finnish Red Cross' South-East Finland District. The same entity also included 50 percent of Kouvolan Lääkäritalon Röntgen Oy's stock of which Terveystalo already owned 50 percent. These acquisitions strengthen the occupational healthcare and private doctor services offered by the company in the Kouvola and Mikkeli regions. The deals were completed on November 20, 2007 and the deal price, EUR 800,000 was paid in cash. In connection with the acquisition and in accordance with the terms of the sales contract a total of 97,000 new Suomen Terveystalo Oyj shares were offered for subscription to the Finnish Red Cross' South-East Finland District at a subscription price of EUR 2.47 per share. During the review period, Terveystalo acquired the operations of Turun Päänsärkykeskus. The deal included Päänsärkykeskus' reception operations and the entire stock of Suomen Erikoisneurologikeskus Oy, which it owns in full and that specializes in drug research operations related to clinical neurology. The deal strengthens the neurological expertise and versatile service offering of Terveystalo's Clinics and Hospitals segment in Turku and its surrounding areas in particular. In addition, Terveystalo acquired 50 percent of Itä-Suomen Kuvantamiskeskus Oy's stock of which it already owned 50 percent. Itä-Suomen Kuvantamiskeskus Oy owns 100 percent of Joensuun Röntgen Oy. The deal strengthens the service offering of the Diagnostics segment in the Joensuu region. The deal price for the above mentioned business operation and share deals was paid in cash, EUR 700,001 in total. In connection with the Medivire Työterveyspalvelut Oy acquisition carried out in the third quarter, Medivire TTP Holding Oy made a redemption offer to all minority shareholders in September 2007 for the 5,475 (2.33% of the stock) Medivire Työterveyspalvelut Oy's shares they owned. The redemption offer was accepted by all 124 minority shareholders of Medivire Työterveyspalvelut Oy. The Board of Directors of Medivire TTP Holding Oy confirmed the outcome of the redemption offer on October 5, 2007. The total value of Medivire TTP Holding Oy's redemption offer amounted to EUR 3,051,600.75. The redemption price was paid to the shareholders on October 11, 2007. Thus Medivire TTP Holding Oy, which is fully owned by Suomen Terveystalo Oyj, owns 100 percent of Medivire Työterveyspalvelut Oy. Medivire Työterveyspalvelut Oy's business name was changed to Suomen Terveystalo Työterveys Oy in December. In the fourth quarter of 2007, the company continued its investments in modernizing and developing its premises and in imaging equipment. In October-December for instance the new imaging unit in Lappeenranta, the premises of the Nainen&Terveys know-how centre in Kuopio, the new imaging unit in Joensuu, and the new clinic premises in Iisalmi were furnished. The furnishing of the new clinic hospital in Turku that will be opened in March 2008 also began. The financial year's investments in tangible assets amounted to EUR 14.4 million and in intangible assets to EUR 1.5 million. The sales proceeds from tangible assets amounted to EUR 0.3 million. Balance sheet and financing At the end of December 2007 the balance sheet total was EUR 296.9 million (EUR 121.6 million at the end of December 2006). Liquidity remained good in January-December 2007. The Group's liquid assets, including financial securities, amounted to EUR 13.5 million (6.9) at the end of the period. The growth in liquid assets was mainly due to the fact that Medivire Työterveyspalvelut Oy was included in the Group from September 1, 2007. To finance the Medivire acquisition, the parent company signed a EUR 160 million financing package with OKO Bank plc. The company withdrew EUR 134 million in loan capital from the package during 2007. The financing package includes covenants which are checked quarterly starting at the end of 2007. In the 2007 financial statements it has been agreed with financers that the EBITDA/net debt covenant's level is exceeded. This was due to the weaker than estimated earnings development in the second half of the year. The financers announced their decision not to utilize their right to change the repayment schedule of loans and Terveystalo has agreed on new covenant levels for 2008 with the financers. However, in accordance with IAS 1.65-67 Terveystalo has entered the loans under the financing agreement in full in current liabilities. Net gearing was 184.8 percent (134.5 %) at the end of the fourth quarter. Cash flow In January-December 2007 operational cash flow was EUR 7.2 million (EUR 5.5 million in January-December 2006). Personnel The average personnel in January-December 2007 was 1,689 (1,085 in January-December 2006) and 2,398 at the end of the financial year (1,253 at the end of 2006). The increase in personnel was in particular due to the Medivire Työterveyspalvelut Oy acquisition. In addition, opening of new clinics and founding of joint Group services like Call Centers increased the personnel. At the end of the period, approximately 2,100 professional independent entrepreneurs (practitioners) received patients on the Group companies' premises. In its meeting on November 19, 2007, Suomen Terveystalo Oyj's Board of Directors approved an integration plan which will result in operations in many towns being partly or fully integrated into larger entities in order to increase efficiency and cost savings. As part of its integration plan, the company combines Medivire's and Terveystalo's offices in cities such as Iisalmi, Kokkola, Pori, Savonlinna and Turku and in the Pirkanmaa and Pohjanmaa regions. Organization The Group Management Team consisted of the following people during the review period: Managing Director Martti Kiuru, business segment Directors Kimmo Karvonen (Occupational Healthcare segment), Veli-Pekka Joki-Erkkilä (Clinics and Hospitals segment) and Ilkka Lehto (Diagnostics segment), Head of Human Resources Johanna Karppi, Chief Sales Officer Jukka-Pekka Kuokkanen, CFO Timo Leinonen, Chief Communications Officer Marja-Terttu Verho and CIO Juha Wilkman. On November 29, 2007 the Board of Directors of Suomen Terveystalo Oyj appointed Tanja Vuorela, Lic. Med., specialist in occupational healthcare and general medicine, MBA, as business segment Director of Suomen Terveystalo's Occupational Healthcare segment and member of the Group Management Team, effective from January 1, 2008. The business segment Director Kimmo Karvonen, resigned from Terveystalo at the beginning of 2008 in accordance with his agreement. Shares and share capital At the end of 2007, Suomen Terveystalo Oyj's share capital was EUR 681,416.63 and the total number of shares was 68,141,663. The share ticker in the book-entry system is SUT1V. In the last quarter of the fiscal year 97,000 new shares were registered. Equity/share at the end of the review period was EUR 1.17 (EUR 0.81 at the end of December 2006). The company was listed on the OMX Nordic Exchange in Helsinki on April 4, 2007. In April-December the highest share price was EUR 2.75 and the lowest was EUR 1.90. In April-December trading-weighted average share price was EUR 2.42 and the closing price on December 28, 2007 was EUR 1.94. During the review period, 18,192,109 shares were exchanged, which corresponds with 26.6 percent of the number of shares at the end of the period. The market value of the stock using the closing price for the review period on December 28, 2007 was EUR 132,194,826. At the end of the review period the company had 6,510 shareholders (6,440 shareholders on September 30, 2007). The parent company Suomen Terveystalo Oyj does not own any company shares. The Group's subsidiaries Keski-Suomen Sydäntutkimusasema Oy and Nova Clinic Oy own a total of 55,691 parent company shares. This corresponds with 0.08 percent of the entire stock and votes. On May 28, 2007, the Annual General Meeting authorized the Board of Directors to decide upon the issuance of a maximum of 15,000,000 new shares and transferring a maximum of 3,000,000 of the company's own shares in one or several rounds, either against payment or free of charge. New shares may be issued and the shares held by the company can be transferred either to the company's shareholders in relation to their share ownership, or, deviating from the shareowners' pre-emptive right, with a targeted share issue, if there is a weighty financial reason from the company's point of view, such as enabled corporate arrangements and acquisitions, personnel incentives or other reasons dealing with the development of the company's operations. The share subscription price can be paid in cash, by transferring capital contribution property or by using subscriber-held claims in order to compensate for the subscription price. The authorization also includes the right to decide upon a free-of-charge share issue targeted at the company itself. Shares issued to the company can, together with the number of shares obtained by the company by virtue of the authorization, the number of company's shares obtained earlier or shares held by the company's subsidiary communities or pledged shares, amount to a maximum of 10 per cent of all of the company's shares. The Board was also authorized to decide on other issues dealing with share issues or the personnel incentive system. The above-mentioned authorizations are valid until the Annual General Meeting of 2009. The Annual General Meeting on May 28, 2007 granted the Board of Directors an authorization, as defined in Chapter 15, Clause 5 of the Companies Act, to decide upon obtaining a maximum of 3,000,000 of the company's own shares. The company's own shares will not be acquired in relation to the shareholder-owned shares, but by using the company's unrestricted equity at the shares' market price in effect on the Helsinki Stock Exchange during the acquisition. The company's own shares acquired for the company can be held by the company, declared null and void or transferred further. The authorization is valid for 18 months. The Annual General Meeting decided on May 28, 2007, that according to the company's balance sheet on 31 December 2006, the share premium account be reduced by EUR 31,211,419.45 in November 2007. The reduction amount was transferred into the unrestricted equity reserve after which the amount of the share premium account in the balance sheet is EUR 458,832.75. The Board of Directors used the authorization granted by the Annual General Meeting on May 28, 2007 to issue new shares during the review period, when in connection with an acquisition, a total of 97,000 new Suomen Terveystalo Oyj shares were offered for subscription to the Finnish Red Cross' South-East Finland District at a subscription price of EUR 2.47 per share. The subscription price was based on the terms of the sales contract and corresponded with the trading-weighted average share price of Suomen Terveystalo Oyj's share at the OMX Nordic Exchange in Helsinki between October 1, 2007 and October 30, 2007. Related party transactions The company's related parties consist of the Board members, Managing Director, members of the Group Management Team and associates of Suomen Terveystalo Oyj. The company has had an agreement with Media Invest Oy, partly owned by Ari Ahola, to map Finnish clinics and their market situation and to assist in corporate arrangements and acquisitions. The original date of termination for this agreement was July 30, 2007 but with a separate agreement the contractual relationship was discontinued on April 30, 2007. Media Invest Oy's invoicing to Suomen Terveystalo Oyj for the fiscal period 2007 is EUR 85,400. The company and Imaging & Archiving Oy partly owned by Ilkka Lehto have had a fixed-term ASP service agreement for PACS/RIS systems related to radiology imaging that is valid until February 10, 2011. The companies agreed to terminate this agreement on May 31, 2007, after which the use of PACS/RIS systems will be managed by Suomen Terveystalo. Imaging & Archiving Oy's invoicing for the fiscal period 2007 is approximately EUR 458,000. On 2007 the company has bought services amounting to approximately EUR 200,000 relating to LIS-Laboratory Information System used by Terveystalo's central laboratory from Starnet innovations which is indirectly partially owned by Media Invest Int Oy. The number of personnel included in Terveystalo's related parties grew considerably between the second half of 2005 and the year 2007. Salaries and fees paid to the related parties and short-term employee benefits amounted in 2007 to EUR 1,325,673 in January-December (EUR 768,798). Events after the review period Terveystalo's operations are reported in three business segments from January 1, 2008; Occupational Healthcare segment, the Clinics and Hospitals segment and the Diagnostics segment. Suomen Terveystalo Oyj's CFO and member of the Group Management Team, Timo Leinonen resigned on January 29, 2008. He will leave his post during spring 2008 to start working for another employer. In February 2008, Suomen Terveystalo Oyj sold its central laboratory operations to Medix Laboratoriopalvelut Oy. Terveystalo estimates that the new strategic partnership with Medix Laboratoriot Oy related to mass analytics and special sample research operations will generate at least EUR 0.5 million annual savings for Terveystalo. The laboratories that operate in clinic hospitals, clinics and occupational healthcare centers were not included in the deal. They will continue to perform express analytics. Less urgent analytics and special sample tests will in the future be carried out with Medix Laboratoriot as an outsourcing service based on strategic partnership. Terveystalo Group has the most extensive sample taking laboratory network in Finland. A stock exchange release was published on February 21, 2008. The Board of Directors of Suomen Terveystalo Oyj resolved on February 21, 2008, by authorization of the Annual General Meeting on May 28, 2007, that stock options be issued to the key personnel of Suomen Terveystalo Oyj and its subsidiaries. In the same meeting, the Board approved the annual rewarding scheme based on target-setting for the entire Group personnel for 2008. The purpose of the stock options is to encourage the key personnel to work on a long-term basis to increase shareholder value and to commit the key personnel to the Company. The total number of stock options is 3,644,500. They entitle their holders to subscribe for a maximum total of 3,644,500 new shares in the Company. The stock options now issued can be exchanged for shares constituting a maximum total of 5.1 per cent of the Company's shares and votes of the shares, after the potential share subscription. The share subscription price will be based on the prevailing market price of the Suomen Terveystalo Oyj share on the OMX Nordic Exchange Helsinki in January—March 2008, 2009 and 2010. The share subscription price for stock options 2008A is, however, at least EUR 2.16 which corresponds to the share subscription price at which the personnel subscribed for shares in the initial public offering 2007. The share subscription period for stock options 2008A will be 2 January 2011—31 December 2012, for stock options 2008B 2 January 2012—31 December 2013 and for stock options 2008C 2 January 2013—31 December 2014. Short-term risks and uncertainty factors Terveystalo takes manageable risks related to its strategy and objectives. The risks are managed and minimized as far as possible using a variety of means. The company is not prepared to take risks that might endanger the continuity of operations, be uncontrollable or substantially impair its operations. The purpose of the company's risk management is to systematically and comprehensively identify risks associated with the operations, maintain risk-awareness and ensure that risks are managed appropriately when making business decisions. The most significant risks related to Terveystalo's operations include risks related to growth and acquisitions, social and legislative risks, risks related to malpractice cases and liability for damages, risks related to agreements, customer relationships and personnel as well as the risks related to technology, functionality of IT systems and information security. The aim is to manage these risks through operating guidelines and rules or transfer them to another party through agreements and insurance policies. The main short-term risks are related to the effects of the launch of new clinics and hospitals on the company's profitability in the short term if the implementation of operations in the new premises does not progress as planned. The biggest risks of this type are related to the operations starting up in the new clinic hospital in Turku in March 2008 and the operations of the clinic hospital in Rovaniemi that will start later in the spring. The integration of Suomen Terveystalo Työterveys Oy's (formerly Medivire Työterveyspalvelut Oy) and Terveystalo's operations and systems can, if they are prolonged, have a significant effect on the benefits reaped from the integration and on Group operations. In August 2007, the company raised its debt financing by EUR 134 million to finance the Medivire Työterveyspalvelut Oy acquisition. There are risks related to financing costs and loan repayments if the operational cash flow is low and/or interest rates rise considerably. The company manages its financing risks with an operational profitability program, interest rate hedging and continuous communication with the financers. In October-December 2007, the company continued the systematic risk management and development of internal supervision processes and systems together with an external audit partner that was initiated in the first quarter. Outlook According to published studies, the private healthcare services are expected to increase annually by nine per cent on average in the coming years. The company will continue to strive for faster growth than the market on average. The growth in demand for occupational healthcare services is expected to continue. The general growth outlook in private doctor services is seen as good and, based on this, the company expects the growth in the Clinics and Hospitals segment to continue. The sale of the Diagnostics segment's services in particular to the public sector will continue growing according to the company's view. Terveystalo reached the market leader position nearly 18 months prior to what the company had estimated. Based on the general market growth and implemented and planned acquisitions, the 2008 turnover is expected to clearly exceed the 2007 turnover level. The company has, as part of the Group's integration program, initiated a program to improve operational efficiency. It aims at considerable efficiency improvements and thus improved profitability during 2008. The operating profit for the whole year 2008 is expected to significantly exceed the 2007 operating profit. Board of Directors' dividend proposal to the Annual General Meeting The parent company's loss for the period was EUR 10.2 million and the assets subject to profit distribution totaled EUR 67.9 million. The Board of Directors proposes that the loss for the period is transferred to the company's unrestricted equity and no dividend is distributed. Annual General Meeting Suomen Terveystalo Oyj's Annual General Meeting will be held on April 17, 2008 at 10 am in Helsinki at Suomen Messut, Helsingin Messukeskus, Messuaukio 1, 00521 Helsinki. Terveystalo's printed financial statement for the financial year January 1 to December 31, 2007 will be ready in week 13. It can be read on the company's Web pages at www.terveystalo.com and ordered from Suomen Terveystalo Oyj, Viestintä, Ratapihantie 11, 00520 Helsinki. Financial reports 2008 In 2008, Suomen Terveystalo will publish the following interim reports: interim report for January-March May 15, 2008 interim report for January-June August 14, 2008 interim report for January-September November 13, 2008 SUOMEN TERVEYSTALO GROUP, FINANCIAL STATEMENT SUMMARY JANURAY 1 TO DECEMBER 31, 2007 Suomen Terveystalo Oyj's 1.1.-31.12.2007 financial statement has been compiled in accordance with the recognition and measurement principles set out in the International Financial Reporting Standards (IFRS). The Group has adopted the IFRS 7 Financial instruments and the revised IAS 1 standard from the beginning of 2007. The figures in the income statement and balance sheet are Group figures. All integral Group companies are consolidated in the Group's balance sheet. The Group companies acquired in the financial year 2007 have been consolidated from the time of acquisition. Compiling the financial statements in accordance with IFRS standards requires Suomen Terveystalo's management to use estimates and assumptions which affect the amount of assets and liabilities at the time of balance sheet compilation. In addition, the management must use discretion in application of accounting principles in the financial statement. The actual outcome may deviate from the estimates and assumptions. The financial statement is unaudited. The original financial statement is in Finnish. The English financial statement is a translation. -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET, EUR 1,000 | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LONG-TERM ASSETS | | | -------------------------------------------------------------------------------- | Property, plant and equipment | 58,926 | 43,937 | -------------------------------------------------------------------------------- | Goodwill | 147,042 | 40,946 | -------------------------------------------------------------------------------- | Other intangible assets | 42,932 | 8,074 | -------------------------------------------------------------------------------- | Investment property | 45 | 171 | -------------------------------------------------------------------------------- | Investments in associates | 1,262 | 345 | -------------------------------------------------------------------------------- | Receivables from associates | 17 | 26 | -------------------------------------------------------------------------------- | Financial assets available for sale | 1,231 | 1,103 | -------------------------------------------------------------------------------- | Deferred tax receivables | 4,924 | 2,006 | -------------------------------------------------------------------------------- | TOTAL LONG-TERM ASSETS | 256,380 | 96,607 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT ASSETS | | | -------------------------------------------------------------------------------- | Inventories | 2,102 | 1,644 | -------------------------------------------------------------------------------- | Accounts receivable and other | 24,928 | 16,423 | | receivables | | | -------------------------------------------------------------------------------- | Financial assets at fair value | 397 | 375 | | through profit or loss | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 13,088 | 6,571 | -------------------------------------------------------------------------------- | TOTAL CURRENT ASSETS | 40,516 | 25,013 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | 296,896 | 121,621 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND LIABILITIES | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | | | -------------------------------------------------------------------------------- | Share capital | 681 | 472 | -------------------------------------------------------------------------------- | Share issue | 0 | 315 | -------------------------------------------------------------------------------- | Share premium account | 459 | 31,211 | -------------------------------------------------------------------------------- | Unrestricted equity reserve | 77,809 | 630 | -------------------------------------------------------------------------------- | Retained earnings | 889 | 4,022 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minority interest | 1,682 | 1,892 | -------------------------------------------------------------------------------- | TOTAL SHAREHOLDERS' EQUITY | 81,520 | 38,542 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LONG-TERM LIABILITIES | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 12,492 | 3,561 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 21,292 | 45,131 | -------------------------------------------------------------------------------- | Other liabilities | 459 | 454 | -------------------------------------------------------------------------------- | TOTAL LONG-TERM LIABILITIES | 34,243 | 49,146 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT LIABILITIES | | | -------------------------------------------------------------------------------- | Accounts payable and other | 38,428 | 20,550 | | liabilities | | | -------------------------------------------------------------------------------- | Current tax liabilities | 229 | 93 | -------------------------------------------------------------------------------- | Current interest-bearing liabilities | 142,476 | 13,290 | -------------------------------------------------------------------------------- | TOTAL CURRENT LIABILITIES | 181,133 | 33,933 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL EQUITY AND LIABILITIES | 296,896 | 121,621 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED PROFIT | 1.10.- | 1.1.- | 1.10.- | 1.1- | | AND | 31.12.2007 | 31.12.2007 | 31.12.2006 | 31.12.2006 | | LOSS ACCOUNT, EUR | | | | | | 1,000 | | | | | -------------------------------------------------------------------------------- | Turnover | 52,923 | 140,719 | 27,070 | 88,852 | -------------------------------------------------------------------------------- | Other operating income | 321 | 1,049 | 1,850 | 2,244 | -------------------------------------------------------------------------------- | Share of profit of | -50 | 365 | 121 | 390 | | associates | | | | | -------------------------------------------------------------------------------- | Raw material and | -9,780 | -23,955 | -4,460 | -13,828 | | consumables used | | | | | -------------------------------------------------------------------------------- | Employee benefit costs | -24,271 | -63,476 | -11,496 | -36,449 | -------------------------------------------------------------------------------- | Depreciation and | -5,290 | -14,134 | -3,466 | -8,899 | | impairment | | | | | -------------------------------------------------------------------------------- | Other operating | -13,766 | -40,166 | -7,796 | -27,206 | | expenses | | | | | -------------------------------------------------------------------------------- | OPERATING PROFIT | 88 | 402 | 1,822 | 5,106 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | 141 | 564 | 65 | 195 | -------------------------------------------------------------------------------- | Financial expenses | -2,771 | -5,092 | -679 | -2,105 | -------------------------------------------------------------------------------- | PROFIT BEFORE TAXES | -2,542 | -4,126 | 1,208 | 3,195 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes | 679 | 1,146 | 79 | -1,021 | -------------------------------------------------------------------------------- | PROFIT FOR THE PERIOD | -1,862 | -2,980 | 1,288 | 2,175 | -------------------------------------------------------------------------------- | Attributable to: | | | | | -------------------------------------------------------------------------------- | Parent group owners | -1,810 | -3,088 | 1,334 | 1,937 | -------------------------------------------------------------------------------- | Minority interest | -52 | 107 | -46 | 238 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share calculated on the earnings belonging to the owners of | | the parent company (EUR) | -------------------------------------------------------------------------------- | Undiluted | -0.03 | -0.05 | 0.03 | 0.04 | -------------------------------------------------------------------------------- | Diluted | -0.03 | -0.05 | 0.03 | 0.04 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONDENSED CASH FLOW STATEMENT | | -------------------------------------------------------------------------------- | EUR 1,000 | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operations | | -------------------------------------------------------------------------------- | Profit for the period | -2,980 | 2,175 | -------------------------------------------------------------------------------- | Adjustments to the profit for | 17,052 | 11,403 | | the period | | | -------------------------------------------------------------------------------- | Change in working capital | -3,231 | -5,130 | -------------------------------------------------------------------------------- | Interest paid | -2,327 | -1,696 | -------------------------------------------------------------------------------- | Interest received | 514 | 140 | -------------------------------------------------------------------------------- | Taxes paid | -1,870 | -2,403 | -------------------------------------------------------------------------------- | Net cash flow from operations | 7,158 | 4,489 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from investments | | -------------------------------------------------------------------------------- | Acquired operations | -130,236 | -11,409 | -------------------------------------------------------------------------------- | Investments in tangible and | -15,455 | -4,113 | | intangible assets | | | -------------------------------------------------------------------------------- | Sale of associated companies | 123 | | -------------------------------------------------------------------------------- | Gains on disposal of assets | 335 | 396 | -------------------------------------------------------------------------------- | Dividends received | 465 | 292 | -------------------------------------------------------------------------------- | Net cash flow from investments | -144,768 | -14,834 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing | | | -------------------------------------------------------------------------------- | Share issue payments | 48,187 | 606 | -------------------------------------------------------------------------------- | Costs of issuing equity | -2,065 | -1,017 | -------------------------------------------------------------------------------- | Withdrawals of loans | 134,829 | 14,679 | -------------------------------------------------------------------------------- | Repayment of loans | -33,191 | -3,962 | -------------------------------------------------------------------------------- | Repayment of finance lease | -3,603 | -2,825 | | liabilities | | | -------------------------------------------------------------------------------- | Dividends paid | -29 | 0 | -------------------------------------------------------------------------------- | Net cash flow from financing | 144,127 | 7,481 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets at beginning of | 6,571 | 9,436 | | period | | | -------------------------------------------------------------------------------- | Liquid assets at end of period | 13,088 | 6,571 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CALCULATION OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY 1.1. - | | 31.12.2007 | -------------------------------------------------------------------------------- | 1,000 EUR | Sha- | Share | Share | Un- | Retai- | Mino- | Total | | | re | prem- | issue | rest- | ned | rity | | | | cap- | ium | | ricted | earni- | inte- | | | | ital | account | | equity | ngs | rest | | | | | | | reser- | | | | | | | | | ve | | | | -------------------------------------------------------------------------------- | Shareholders' | 472 | 31,211 | 315 | 630 | 4,021 | 1,892 | 38,542 | | equity Jan 1, | | | | | | | | | 2007 | | | | | | | | -------------------------------------------------------------------------------- | Costs of | 0 | 0 | 0 | -2,727 | 0 | 0 | -2,727 | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Deferred tax | 0 | 0 | 0 | 709 | 0 | 0 | 709 | | on costs of | | | | | | | | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Rights issue | 201 | 0 | 0 | 47,984 | 0 | 0 | 48 185 | -------------------------------------------------------------------------------- | Conversion of | 8 | 459 | 0 | 0 | 0 | 0 | 467 | | convertible | | | | | | | | | loan into | | | | | | | | | shares | | | | | | | | -------------------------------------------------------------------------------- | Divident | 0 | 0 | 0 | 0 | -44 | 0 | -44 | -------------------------------------------------------------------------------- | Unsubscribed | 0 | 0 | -315 | 0 | 0 | 0 | -315 | | share issue | | | | | | | | -------------------------------------------------------------------------------- | Transfer from | 0 | -31,211 | 0 | 31,211 | 0 | 0 | 0 | | share premium | | | | | | | | | account to | | | | | | | | | Unrestricted | | | | | | | | | equity | | | | | | | | | reserve | | | | | | | | -------------------------------------------------------------------------------- | Minority | 0 | 0 | 0 | 0 | 0 | -317 | -317 | | interests in | | | | | | | | | acquisitions | | | | | | | | | and other | | | | | | | | | changes | | | | | | | | -------------------------------------------------------------------------------- | Profit for | 0 | 0 | 0 | 0 | -3,088 | 107 | -2,981 | | the period | | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 681 | 459 | 0 | 77,807 | 889 | 1,682 | 81,520 | | equity Dec | | | | | | | | | 31, 2006 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CALCULATION OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY 1.1. - | | 31.12.2006 | -------------------------------------------------------------------------------- | 1,000 EUR | Sha- | Share | Share | Un- | Retai- | Mino- | Total | | | re | prem- | issue | rest- | ned | rity | | | | cap- | ium | | ricted | earni- | inte- | | | | ital | account | | equity | ngs | rest | | | | | | | reser- | | | | | | | | | ve | | | | -------------------------------------------------------------------------------- | Shareholders' | 464 | 30,753 | 1 | 0 | 2,139 | 362 | 33,719 | | equity Jan 1, | | | | | | | | | 2006 | | | | | | | | -------------------------------------------------------------------------------- | Rights issue | 1 | 0 | -1 | 0 | 0 | 0 | 0 | | from previous | | | | | | | | | period | | | | | | | | -------------------------------------------------------------------------------- | Rights issue | 8 | 556 | 315 | 1,685 | 0 | 0 | 2,564 | -------------------------------------------------------------------------------- | Costs of | 0 | -98 | 0 | -1,017 | 0 | 0 | -1,115 | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Purchases of | 0 | 0 | 0 | -37 | 0 | 0 | -37 | | treasury | | | | | | | | | shares in | | | | | | | | | connection | | | | | | | | | with | | | | | | | | | acquisitions | | | | | | | | -------------------------------------------------------------------------------- | Minority | 0 | 0 | 0 | 0 | 0 | 1,292 | 1,292 | | interests in | | | | | | | | | acquisitions | | | | | | | | | and other | | | | | | | | | changes | | | | | | | | -------------------------------------------------------------------------------- | Minority | 0 | 0 | 0 | 0 | -55 | 0 | -55 | | interest in | | | | | | | | | losses of | | | | | | | | | acquired | | | | | | | | | subsidiaries | | | | | | | | -------------------------------------------------------------------------------- | Result for | 0 | 0 | 0 | 0 | 1,937 | 238 | 2,175 | | the period | | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 472 | 31,211 | 315 | 630 | 4,021 | 1,892 | 38,542 | | equity Dec | | | | | | | | | 31, 2006 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SEGMENT REPORTING, 1,000 EUR | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Turnover by segment | | -------------------------------------------------------------------------------- | Clinics and Hospitals segment | 85,433 | 49,330 | -------------------------------------------------------------------------------- | Diagnostics segment | 65,760 | 44,523 | -------------------------------------------------------------------------------- | Other | 2,667 | 1,992 | -------------------------------------------------------------------------------- | Eliminations | -13,142 | -6,992 | -------------------------------------------------------------------------------- | Total turnover | 140,719 | 88,853 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit by segment | | -------------------------------------------------------------------------------- | Clinics and Hospitals segment | -1,253 | -906 | -------------------------------------------------------------------------------- | Diagnostics segment | 13,858 | 13,446 | -------------------------------------------------------------------------------- | Other | -12,204 | -7,434 | -------------------------------------------------------------------------------- | Total operating profit | 401 | 5,106 | -------------------------------------------------------------------------------- | Operating profit of turnover, % | 0,3 | 5.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income and expenses | -4,528 | -1,910 | -------------------------------------------------------------------------------- | Profit before tax | -4,127 | 3,196 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Taxes | 1,146 | -1,021 | -------------------------------------------------------------------------------- | PROFIT FOR THE PERIOD | -2,981 | 2,175 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED PROFIT AND LOSS ACCOUNT, BY QUARTER, EUR 1,000 | | -------------------------------------------------------------------------------- | | 1.10.- | 1.7.- | 1.4- | 1.1.- | 1.10.- | | | 31.12.2007 |30.9.2007 | 30.6.2007 | 31.3.2007 | 31.12.2006 | | | | | | | | -------------------------------------------------------------------------------- | Turnover | 52,923 | 30,236 | 28,297 | 29,264 | 27,070 | -------------------------------------------------------------------------------- | Other | 321 | 164 | 399 | 164 | 1,850 | | operating | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Share in | -50 | 83 | 143 | 189 | 121 | | associated | | | | | | | companies | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Raw material | -9,780 | -4,879 | -4,686 | -4,609 | -4,460 | | and | | | | | | | consumables | | | | | | | used | | | | | | -------------------------------------------------------------------------------- | Employee | -24,271 | -14,854 | -12,396 | -11,954 | -10,853 | | benefit costs | | | | | | -------------------------------------------------------------------------------- | Depreciation | -5,290 | -3,707 | -2,678 | -2,459 | -3,466 | -------------------------------------------------------------------------------- | Other | -13,766 | -9,579 | -8,825 | -8,000 | -8,440 | | operating | | | | | | | expenses | | | | | | -------------------------------------------------------------------------------- | OPERATING | 87 | -2,536 | 254 | 2,595 | 1,822 | | PROFIT | | | | | | -------------------------------------------------------------------------------- | Financial | 141 | 101 | 302 | 20 | 64 | | income | | | | | | -------------------------------------------------------------------------------- | Financial | -2,771 | -1,025 | -421 | -875 | -679 | | expenses | | | | | | -------------------------------------------------------------------------------- | Profit before | -2,542 | -3,459 | 135 | 1,739 | 1,208 | | tax | | | | | | -------------------------------------------------------------------------------- | Income taxes | 680 | 938 | -49 | -423 | 80 | -------------------------------------------------------------------------------- | PROFIT FOR | -1 862 | -2 522 | 87 | 1,316 | 1,288 | | THE PERIOD | | | | | | -------------------------------------------------------------------------------- | Attributable | | | | | | | to: | | | | | | -------------------------------------------------------------------------------- | Parent | -1,810 | -2,527 | 31 | 1,218 | 1,334 | | company | | | | | | | shareholders | | | | | | -------------------------------------------------------------------------------- | Minority | -52 | 5 | 56 | 98 | -46 | | interest | | | | | | -------------------------------------------------------------------------------- Acquired operations In business mergers, tangible fixed assets are valued at fair value based on the market price of corresponding assets. Tangible assets are depreciated during their financial lifetime based on management estimates, taking into account the Group's depreciation principles. Intangible assets acquired in business mergers are recognized separately from the goodwill at the fair value at the time of acquisition if the assets fair value can be determined reliably. In acquired operations the Group has mainly acquired customers and customer agreements. Their fair value has been determined using the multi-earning-excess model. Intangible items are depreciated based on their financial lifetime estimated by the management. The goodwill created in business mergers carried out in 2007 consisted, in addition to the expertise of the acquired companies, of other intangible items that cannot be itemized according to IAS 38. These items do not meet the criteria determined by IAS 38 as they cannot be assorted, are not based on an agreement or legal right, and thus no reliable value can determined for them. In addition, synergy benefits are generated from every business merger. There may be changes to the goodwill/acquisition cost of acquired businesses based on the information on the deal price in the purchase deed. Part of the deal price may be tied to short or long term events. The effect of acquired operations on the assets and liabilities in the balance sheet In January-December 2007 Suomen Terveystalo Oyj acquired seven companies and two business operations whose turnover amounts to less than one million euro. In addition, Suomen Terveystalo Oyj or its subsidiary acquired a 50 percent share in two companies, of which Suomen Terveystalo Oyj directly or indirectly already owned 50 percent of stocks. The acquisitions of the business operations of Keski-Suomen Sydäntutkimusasema Oy, Forssan Lääkärikeskus Mediris Oy, Lääkäriasema Septum Oy, Petosen Lääkärikeskus Medina Oy, Lääkäriasema Linikka Oy, Suomen Erikoisneurologiakeskus Oy and Päänsärkeskus were related to the expansion of the Clinics and Hospitals segment's operations. The acquisition of Clini-Sonic Oy, Kouvolan Lääkäritalon Röntgen Oy and Itä-Suomen Kuvantamiskeskus Oy and its subsidiary Joensuun Röntgen Oy strengthens the Diagnostics segment. The acquisition of I&A Imaging & Archiving Oy's PACS/RIS operations transfers the management of the PACS/RIS system ASP service agreement related to radiology imaging to Suomen Terveystalo Oyj. The effect of acquisitions on the Group's turnover in the financial year 2007 from the time of consolidation is approximately EUR 1.4 million and on operation profit approximately EUR 0.1 million. EUR 41,000 of the acquisition cost has been entered as debt and the rest has been paid in cash. -------------------------------------------------------------------------------- | Company | | Date of | Location | Acquired | | | | acquisition | | holding | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Keski-Suomen | | 14.2.2007 | Jyväskylä | 100% | | Sydäntutkimusasema Oy | | | | | -------------------------------------------------------------------------------- | Clini-Sonic Oy | | 14.2.2007 | Turku | 100% | -------------------------------------------------------------------------------- | Forssan Lääkärikeskus | | 14.2.2007 | Forssa | 100% | | Mediris Oy | | | | | -------------------------------------------------------------------------------- | Lääkäriasema Septum Oy | | 14.5.2007 | Turku | 100% | -------------------------------------------------------------------------------- | I&A Imaging&Archiving Oy | | 1.6.2007 | Helsinki | | | PACS/RIS -liiketoiminta | | | | | -------------------------------------------------------------------------------- | Petosen Lääkärikeskus | | 2.7.2007 | Kuopio | 100% | | Medina Oy | | | | | -------------------------------------------------------------------------------- | Lääkäriasema Linikka Oy | | 14.7.2007 | Forssa | 100% | -------------------------------------------------------------------------------- | Suomen | | 28.9.2007 | Turku | 100% | | Erikoisneurologiakeskus Oy | | | | | -------------------------------------------------------------------------------- | Päänsärkykeskuksen | | 28.9.2007* | Turku | | | liiketoiminta | | | | | -------------------------------------------------------------------------------- | Itä-Suomen | | 20.12.2007 | Joensuu | 50%** | | Kuvantamiskeskus Oy*** | | | | | -------------------------------------------------------------------------------- **** * Only the balance sheet values on September 30, 2007 of the acquired operations have been consolidated from Päänsärkykeskus' operations. The income statement and balance sheet information for October 1 to December 31, 2007 were not available. This has no significance for the consolidated financial report. ** Suomen Terveystalo Oyj has previously owned 50% of the stock directly or indirectly. *** Itä-Suomen Kuvantamiskeskus Oy owns 100% of Joensuun Röntgen Oy. After the acquisition, Suomen Terveystalo Oyj indirectly owns 100% of Joensuun Röntgen Oy. **** IFRS 3 is not applied on acquisition of 50% of Kouvolan Lääkäritalon Röntgen Oy. -------------------------------------------------------------------------------- | Paid in cash (EUR 1,000) | 1,925 | -------------------------------------------------------------------------------- | Paid in shares of Suomen Terveystalo Oyj | 0 | -------------------------------------------------------------------------------- | Recognized as purchase price liability | 41 | -------------------------------------------------------------------------------- | Costs allocated to the acquisitions | 52 | -------------------------------------------------------------------------------- | Total consideration | 2,019 | -------------------------------------------------------------------------------- | Fair value of the acquired assets | 928 | -------------------------------------------------------------------------------- | Goodwill | 1,091 | -------------------------------------------------------------------------------- The goodwill arising from the acquisitions is mainly attributable to the synergy benefits from the business combinations. Breakdown of acquired net assets -------------------------------------------------------------------------------- | | IFRS book | Fair value | Fair | | | value | adjustment | value | | | immediately | | | | | prior to | | | | | consolidation | | | -------------------------------------------------------------------------------- | EUR 1,000 | | | | -------------------------------------------------------------------------------- | Intangible assets | 227 | 256 | 483 | -------------------------------------------------------------------------------- | Tangible fixed assets | 235 | 0 | 235 | -------------------------------------------------------------------------------- | Investments | 433 | 0 | 433 | -------------------------------------------------------------------------------- | Inventories | 22 | 0 | 22 | -------------------------------------------------------------------------------- | Receivables | 813 | 0 | 813 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 590 | 0 | 590 | -------------------------------------------------------------------------------- | Total assets | 2,320 | 256 | 2,576 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing | 88 | 0 | 87 | | liabilities | | | | -------------------------------------------------------------------------------- | Other liabilities | 1,494 | 0 | 1,494 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 0 | 67 | 66 | -------------------------------------------------------------------------------- | Total liabilities | 1,581 | 67 | 1,647 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquired net assets | 739 | 189 | 928 | -------------------------------------------------------------------------------- The fair value adjustment of intangible assets mainly consists of fair value measurement of the acquired businesses' customer relationships. The sales contract to acquire the entire stock of Medivire TTP Holding Oy was signed on June 29, 2007. The deal was completed on August 31, 2007. At the time of acquisition, on August 31, 2007 Medivire TTP Holding owned 97.63 percent of Medivire Työterveyspalvelut Oy's stock. In October 2007, Medivire TTP Holding Oy redeemed the stocks owned by the minority totaling 2.33% of the stock. Thus the Group owns 100% of both Medivire TTP Holding Oy and Medivire Työterveyspalvelut Oy. Medivire Työterveyspalvelut Oy offers national occupational healthcare services and is the leading provider of national occupational healthcare services. The deal strengthens the Clinics and Hospitals segment. After the acquisition Medivire Työterveyspalvelut Oy's trade name was registered as Suomen Terveystalo Työterveys Oy. The effect of the acquisition on the Group's 2007 turnover from the time of consolidation was EUR 27.5 million and EUR 0.9 million on operating profit. The purchase price was paid completely in cash. The acquisition has been handled as one entity in the calculation below that also includes the acquisition of the minority share in October 2007. -------------------------------------------------------------------------------- | Company | | Date of | Location | Holding | | | | acquisition | | acquired, | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Medivire TTP Holding Oy | | | | | -------------------------------------------------------------------------------- | and Medivire | | 31.8.2007 | Helsinki | 100% | | Työterveyspalvelut Oy | | | | | -------------------------------------------------------------------------------- | EUR 1,000 | | | | | -------------------------------------------------------------------------------- | Paid in cash | | | | 131,247 | -------------------------------------------------------------------------------- | Costs allocated to the | | | | 2,513 | | acquisition | | | | | -------------------------------------------------------------------------------- | Total consideration | | | | 133,760 | -------------------------------------------------------------------------------- | Fair value of the | | | | 29,765 | | acquired assets | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | | | | 103,995 | -------------------------------------------------------------------------------- The goodwill arising from the acquisition is mainly attributable to the synergy benefits from the business combination. Synergy benefits are estimated to amount to approximately EUR 3-5 million annually and consist of savings in administration and increase in revenues of diagnostic services and improved efficiency in occupational health care. Breakdown of acquired net assets -------------------------------------------------------------------------------- | | IFRS book value | Fair value | Fair | | | immediately | adjustment | value | | | prior to | | | | | consolidation | | | -------------------------------------------------------------------------------- | EUR 1,000 | | | | -------------------------------------------------------------------------------- | Intangible assets | 1,276 | 35,100 | 36,377 | -------------------------------------------------------------------------------- | Tangible fixed assets | 4,901 | 0 | 4,901 | -------------------------------------------------------------------------------- | Investments | 10 | 0 | 10 | -------------------------------------------------------------------------------- | Inventories | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Receivables | 7,953 | 0 | 7,953 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 2,683 | 0 | 2,683 | -------------------------------------------------------------------------------- | Total assets | 16,823 | 35,100 | 51,924 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing | 3,069 | 0 | 3,069 | | liabilities | | | | -------------------------------------------------------------------------------- | Other liabilities | 9,841 | 0 | 9,841 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 121 | 9,126 | 9,248 | -------------------------------------------------------------------------------- | Total liabilities | 13,032 | 9,126 | 22,158 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquired net assets | 3,791 | 25,974 | 29,765 | -------------------------------------------------------------------------------- The fair value adjustment of intangible assets consists of a fair value measurement of the company's customer relationships. Suomen Terveystalo Oyj's subsidiary Suomen Terveystalo Lääkäriasema Oy acquired the Finnish Red Cross' clinic operations in Kouvola and Mikkeli with a sales contract dated November 20, 2007. The deal strengthens the Group's Clinics and Hospitals segment by increasing the clinic and hospital services offered by the Group in the Kouvola and Mikkeli regions. The acquisition had an effect of EUR 0.1 million on the consolidated turnover for 2007 and EUR 0,0 million on earnings. The acquisition cost was paid completely in cash. -------------------------------------------------------------------------------- | Business operations | | Date of | Location | | | | | acquisition | | | -------------------------------------------------------------------------------- | Finnish Red Cross' clinic | | 20.11.2007 | Kouvola | | operations in Kouvola and | | | and | | Mikkeli | | | Mikkeli | -------------------------------------------------------------------------------- | EUR 1,000 | | | | | -------------------------------------------------------------------------------- | Paid in cash | | | | 600 | -------------------------------------------------------------------------------- | Recognized as purchase | | | | 0 | | price liability | | | | | -------------------------------------------------------------------------------- | Costs allocated to the | | | | 28 | | acquisition | | | | | -------------------------------------------------------------------------------- | Total consideration | | | | 628 | -------------------------------------------------------------------------------- | Fair value of the acquired | | | | 329 | | assets | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Goodwill | | | | 298 | -------------------------------------------------------------------------------- The goodwill arising from the acquisitions is mainly attributable to the value of the company's personnel based on replacement and training costs, as well as synergies created by the consolidations of operations. -------------------------------------------------------------------------------- | Breakdown of acquired net | | | | | assets | | | | -------------------------------------------------------------------------------- | | IFRS book value | Fair value | Fair | | | immediately | adjustment | value | | | prior to | | | | | consolidation | | | -------------------------------------------------------------------------------- | Intangible assets | 25 | 35 | 60 | -------------------------------------------------------------------------------- | Tangible fixed assets | 263 | 0 | 263 | -------------------------------------------------------------------------------- | Investments | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Inventories | 15 | 0 | 15 | -------------------------------------------------------------------------------- | Receivables | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Total assets | 304 | 35 | 338 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing | 0 | 0 | 0 | | liabilities | | | | -------------------------------------------------------------------------------- | Other liabilities | 0 | 0 | 0 | -------------------------------------------------------------------------------- | Deferred tax liabilities | 0 | 9 | 9 | -------------------------------------------------------------------------------- | Total liabilities | 0 | 9 | 9 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquired net assets | 304 | 26 | 329 | -------------------------------------------------------------------------------- The fair value adjustment of intangible assets consists of fair value measurement of the company's customer relationships. -------------------------------------------------------------------------------- | OTHER INFORMATION | 1.1.- | 1.1.- | | | 31.12.2007 | 31.12.2006 | -------------------------------------------------------------------------------- | Average personnel | 1,689 | 1,038 | -------------------------------------------------------------------------------- | Personnel at end of period | 2,398 | 1,058 | -------------------------------------------------------------------------------- Calculation of financial ratios: Return on equity, % = 100 x (Profit before tax - direct taxes)/ (Shareholders' equity + minority interest (average)) Return on investment, % = 100x (Profit before tax + interest expenses + other financial expenses)/ (Balance sheet total - non-interest-bearing liabilities (average)) Net gearing = (Interest-bearing liabilities - liquid assets) / (Shareholders' equity + minority interest) Undiluted earnings per share = (Profit before tax - minority interest - income taxes) / Weighted average number of outstanding shares Diluted earnings per share = (Profit before tax - minority interest - income taxes) / Weighted average number of outstanding shares adjusted for dilution Equity per share = Shareholders' equity / Number of shares SUOMEN TERVEYSTALO OYJ Board of Directors FOR ADDITIONAL INFORMATION, PLEASE CONTACT: Managing Director Martti Kiuru, tel. +358 30 63 311, martti.kiuru@terveystalo.com CFO Timo Leinonen, tel. +358 400 793 073, timo.leinonen@terveystalo.com The bulletin and tables are available at: http://www.terveystalo.com Terveystalo: Suomen Terveystalo is the leading company producing healthcare services in Finland. The company offers healthcare, occupational healthcare and hospital services to private individuals, companies and the public sector through more than 150 offices across Finland. The company, which was founded in 2001, has grown strongly. The company share is listed on the OMX Nordic Exchange Helsinki under the code SUT1V. The statements about the future are based on the situation when the bulletin was published and the actual outcome may differ from the statements. Anything in this bulletin that is not historical fact is a statement about the future. Statements about the future contain known and unknown risks, uncertainties and other factors that may lead to considerable deviation in Suomen Terveystalo Group's actual earnings, operations and accomplishments compared to any statements related to future earnings, operations and accomplishments included in such a statement on the future. Such factors include general economic and operating environment-related conditions, additions and changes to the competitive situation, the company's ability to implement and utilize its investment program, the success of the unification program for operations initiated in September 2007 and the company's ability to continue expanding its operations. Distribution: OMX Nordic Exchange Helsinki Principal media
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