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2007-08-14 08:00:00 CEST 2007-08-14 08:00:00 CEST REGULATED INFORMATION Suomen Terveystalo Oyj - Quarterly reportSuomen Terveystalo's January-June turnover increased by 36.4 per cent and was EUR 57.6 million, operating profit was EUR 2.8 millionJanuary-June 2007 (January-June 2006): - Turnover EUR 57.6 million (42.2) - Operating profit EUR 2.8 million (3.8) - Turnover for the Clinics and Hospitals segment was EUR 32.4 million (22.8) and operating profit was EUR 3.0 million (2.0) - Turnover for the Diagnostics segment was EUR 29.8 million (19.9) and operating profit was EUR 7.6 million (6.1) - Turnover for other, i.e. items not unallocated to the segments, was EUR 2.0 million (1.8) and operating profit was EUR -7.8 million (-4.4). - Full year 2007 turnover is estimated to increase considerably compared to the year before. - Operating profit for the whole year is expected to be at least at the same level as in the previous year. Suomen Terveystalo Oyj's turnover increased in January-June 2007 by 36.4 per cent compared to the corresponding period in the previous year and amounted to EUR 57.6 million (EUR 42.2 million in January-June 2006). Operating profit was EUR 2.8 million (3.8). The operating profit decreased by 24.3 per cent compared to January-June 2006. One acquisition was carried out in the second quarter of 2007. No considerable costs are expected to arise from integrating the acquired company and operations with Suomen Terveystalo. In addition, on 29 June the company announced an agreement to acquire Medivire Työterveyspalvelut. The realization of this acquisition will make Suomen Terveystalo Finland's largest company producing occupational healthcare services responsible for the healthcare services of more than 11,000 corporate customers and more than 350,000 individuals. The ownership is expected to be transferred and the acquisition price to be paid on 1 September 2007. -------------------------------------------------------------------------------- | KEY RATIOS | 1-6/07 | 1-6/06 | 1-12/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Turnover, 1,000 EUR | 57,561 | 42,192 | 88,852 | -------------------------------------------------------------------------------- | Operating profit, 1,000 EUR | 2,849 | 3,766 | 5,106 | -------------------------------------------------------------------------------- | Earnigns per share, EUR | 0.02 | 0.04 | 0.04 | -------------------------------------------------------------------------------- | Equity per share, EUR | 1.26 | 0.75 | 0.81 | -------------------------------------------------------------------------------- | Net Gearing, % | 10.6 | 100.8 | 134.7 | -------------------------------------------------------------------------------- | Return on investment, % | 6.6 | 9.7 | 6.5 | -------------------------------------------------------------------------------- | Return on equity, % | 4.6 | 13.8 | 6.0 | -------------------------------------------------------------------------------- | Operating profit-% | 4.9 | 8.9 | 5.7 | -------------------------------------------------------------------------------- The income statement figures used to calculate ROI and ROE have been annualized. SUOMEN TERVEYSTALO OYJ'S INTERIM REPORT January 1 - June 30, 2007 Business operations Measured by the number of clinics, Suomen Terveystalo is Finland's most extensive private clinic and hospital group. The company operates in private healthcare service markets and offers its corporate, private and community customers comprehensive healthcare services. The operations are arranged in two segments. 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. Nationwide, regional and local operations are supported through Group functions. The Clinics and Hospitals segment is responsible for occupational healthcare, private practice and hospital services. In the second quarter of 2007 the company continued developing its clinics and occupational healthcare units to operate as centralized customer service units, through which customers are directed to receive all services produced by the company. A standardized and extensive service network is expected to have a positive effect on Suomen Terveystalo's market position in the long term. A new clinic-hospital started operating in Oulu. In Kristiinankaupunki the company won a bidding competition for special healthcare services, which the company will start to produce during the fall of 2007. The Diagnostics segment offers imaging, laboratory and screening services, which complement the services offered to the customers of the Clinics and Hospitals segment and the diagnosis services sold to external clients. In the second quarter of 2007 the company continued developing teleradiology. Teleradiology services are primarily offered to the public sector, in addition to group units. By the end of June the company already had several considerable regional hospitals and health centers as teleradiology service customers. In laboratory services the company's central laboratory's track line machine implementation progressed as planned. The customer volumes in screening services grew as expected in April-June. During 2007 Suomen Terveystalo will invite close to 250,000 women for screening mammography. Group functions support group-level, regional and local business operations. The main group functions are HR, ICT, finance and communications. The group's nationwide Call Center and centralized telephone appointment reservation service was strengthened in April-June 2007 by launching regional call center points in Southeast Finland, Pirkanmaa, Northern Finland and Savo. Development of the web-based online appointment reservation system continued as part of the on-going extensive electronic service development project and improvement of functionality of the existing IT systems. Related to the listing of the company, the company's Internet pages opened a section for IR. Turnover In January-June 2007 turnover increased by 36.4 per cent compared to the corresponding period last year and amounted to EUR 57.6 million (EUR 42.2 million in January-June 2006). The Clinics and Hospitals segment's share of turnover was 48.7 per cent and Diagnostics segment's share was 47.7 per cent. Turnover continued growing potently in April-May. In June the seasonal drop in patient visits was higher than expected and led to a lower than estimated turnover in the second quarter. Turnover by segment -------------------------------------------------------------------------------- | 1,000 EUR | 1-6/07 | 1-6/06 | 1-12/06 | -------------------------------------------------------------------------------- | Clinics and Hospitals | 32,392 | 22,760 | 49,330 | | segment | | | | -------------------------------------------------------------------------------- | Diagnostics segment | 29,843 | 19,868 | 44,523 | -------------------------------------------------------------------------------- | Group eliminations | -6,708 | -2,245 | -6,992 | -------------------------------------------------------------------------------- | Other | 2,034 | 1,809 | 1,992 | -------------------------------------------------------------------------------- | Group total | 57,561 | 42,192 | 88,853 | -------------------------------------------------------------------------------- In addition to group operations, the Other item contains the operations of the AVA clinic that focuses on fertilization treatment and is not included in either of the segments. Earnings In January-June 2007 the operating profit was EUR 2.8 million, i.e. 4.9 per cent of turnover (EUR 3.8 million, i.e. 8.9% of turnover in January-June 2006). The operating profit decreased by 24.3 per cent compared to corresponding period last year. The lower than expected turnover in June combined with the heavy development in the unit network that continued in the second quarter, the launching of the national Call Center and the development of IT systems and Group functions resulted in the operating profit falling below the level of the previous year in the second quarter. The earnings belonging to the owners of the parent company was EUR 1.2 million, i.e. 2.2 per cent of turnover (EUR 2.0 million, 4.7%). The profit for the period decreased by 37.7 per cent. Earnings per share calculated from earnings belonging to the owners of the parent company was EUR 0.02 (EUR 0.04). Operating profit by segment -------------------------------------------------------------------------------- | 1 000 EUR | 1-6/07 | 1-6/06 | 1-12/06 | -------------------------------------------------------------------------------- | Clinics and Hospitals | 3,015 | 2,043 | -906 | | segment | | | | -------------------------------------------------------------------------------- | Diagnostics segment | 7,605 | 6,148 | 13,446 | -------------------------------------------------------------------------------- | Other | -7,770 | -4,425 | -7,434 | -------------------------------------------------------------------------------- | Group total | 2,849 | 3,766 | 5,106 | -------------------------------------------------------------------------------- Return on assets Annualized return on investments (ROI) in January-June 2007 was 6.6 per cent (9.7% in January-June 2006). Annualized return on equity (ROE) was 4.6 per cent (13.8%). Investments Medivire Työterveyspalvelut On 29 June 2007 the company announced that it had signed an agreement to acquire Medivire Työterveyspalvelut, the leading national provider of occupational healthcare services in Finland. Medivire Työterveyspalvelut was founded in 1995 and employs more than 900 healthcare professionals in some 40 towns. Medivire's occupational healthcare services offer an extensive range of preventive and medical occupational health care for both the public and the corporate sectors. The 2006 turnover of Medivire Työterveyspalvelut Oy amounted to approximately EUR 75 million, and operating profit to EUR 3.5 million. The 2007 turnover is estimated to increase to over EUR 80 million and operating profit to exceed EUR 7 million. The current Medivire Oy will be spun off into two companies, and Medivire Oy's 96.76 per cent holding in Medivire Työterveyspalvelut Oy will be transferred to Medivire TTP Holding Oy, a new company to be established. Suomen Terveystalo will make a redemption offer to acquire the remaining 2.33 per cent of the stocks, owned by a total of 124 private investors. Suomen Terveystalo Oyj will acquire Medivire TTP Holding Oy's entire stock. The sellers are MB-Funds Ltd, Ilmarinen Mutual Pension Insurance Company and the company's executive management. Suomen Terveystalo Oyj will pay EUR 127 million less or plus Medivire Työterveyspalvelut Oy's net debt on 30 June 2007 as a deal price for Medivire TTP Holding Oy's shares. Ownership will be transferred and the deal price paid when the splitting of Medivire Oy is completed on or about 1 September 2007. Other investments In January-June 2007 Suomen Terveystalo Oyj acquired four companies and one business operation whose total turnover amounts to less than one million euro. In the second quarter of 2007 the Lääkäriasema Septum Oy acquisition was completed, which will strengthen the occupational healthcare services offered by the Clinics and Hospitals segment in the Turku region in particular. The acquisition was completed on 14 May and paid in cash. The acquisition of I&A Imaging & Archiving Oy's PACS/RIS operations on 1 June 2007 transfers the management of the PACS/RIS system ASP service agreement related to radiology imaging to Suomen Terveystalo Oyj. The prize paid of these acquisitions was in total EUR 360,000. The combined effect on group turnover of acquisitions carried out in January-June is from the date of consolidation until the end of June approximately EUR 552,000 and the effect on profit is approximately EUR 73,000. EUR 41,000 of the acquisition costs were recognized as liabilities, while the rest was paid in cash. -------------------------------------------------------------------------------- | Company | Date of | Date of | Location | Holding | | | acquisi- | consoli- | | acquired, % | | | tion | dation | | | -------------------------------------------------------------------------------- | Keski-Suomen | Feb 14 2007 | Dec 31 2006 | Jyväskylä | 100% | | Sydäntutkimusasema Oy | | | | | -------------------------------------------------------------------------------- | Clini-Sonic Oy | Feb 14 2007 | Feb 28 2007 | Turku | 100% | -------------------------------------------------------------------------------- | Forssan Lääkärikeskus | Feb 14 2007 | Jan 31 2007 | Forssa | 100% | | Mediris Oy | | | | | -------------------------------------------------------------------------------- | Lääkäriasema Septum | May 14 2007 | May 31 2007 | Turku | 100% | | Oy | | | | | -------------------------------------------------------------------------------- | I&A Imaging&Archiving | June 1 2007 | June 1 2007 | Helsinki | | | Oy PACS/RIS | | | | | | -operations | | | | | -------------------------------------------------------------------------------- January-June acquisitions total: -------------------------------------------------------------------------------- | | | | | EUR | -------------------------------------------------------------------------------- | Paid in cash | | | | 1,141,998 | -------------------------------------------------------------------------------- | Paid in shares of Suomen Terveystalo Oyj | | 0 | -------------------------------------------------------------------------------- | Recognizes as purchase price liability | | 41,117 | -------------------------------------------------------------------------------- | Costs allocated to the acquisitions | | 15,730 | -------------------------------------------------------------------------------- | Total | | | | 1,198,845 | -------------------------------------------------------------------------------- | Fair value of the acquired assets | | 666,104 | -------------------------------------------------------------------------------- | Goodwill | | | | 532,741 | -------------------------------------------------------------------------------- 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 business combination. Breakdown of the acquired net assets: -------------------------------------------------------------------------------- | | IFRS book value | Fair value | Fair value | | | immediately | adjustment | | | | prior to | | | | | consolidation | | | -------------------------------------------------------------------------------- | EUR | | | | -------------------------------------------------------------------------------- | Intangible assets | 133,742 | 190,690 | 324,432 | -------------------------------------------------------------------------------- | Property, plant and | 164,088 | 0 | 164,088 | | equipment | | | | -------------------------------------------------------------------------------- | Investments | 186,052 | 0 | 186,052 | -------------------------------------------------------------------------------- | Inventories | 12,826 | 0 | 12,826 | -------------------------------------------------------------------------------- | Receivables | 255,913 | 0 | 255,913 | -------------------------------------------------------------------------------- | Cash and cash equivalents | 229,087 | 0 | 229,087 | -------------------------------------------------------------------------------- | Total assets | 981,708 | 190,690 | 1,172,398 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Interest-bearing | 62,232 | 0 | 62,232 | | liabilities | | | | -------------------------------------------------------------------------------- | Other liabilities | 394,844 | 0 | 394,844 | -------------------------------------------------------------------------------- | Deferred tax liabilities | -361 | 49,579 | 49,218 | -------------------------------------------------------------------------------- | Total liabilities | 456,715 | 49,579 | 506,294 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Acquired net assets | 524,993 | 141,111 | 666,104 | -------------------------------------------------------------------------------- No impairment losses have been booked in January-June 2007. The company continued its investments in modernizing and developing its premises and in imaging equipment. In April-June for instance the new clinic-hospital in Oulu that started operating in June, the Iisalmi clinic and the Savonlinna clinic-hospital's extension were furnished and equipped, and the furnishing and equipping of the new clinic-hospital in Tampere that will open its doors in August began. Investment on property, plant and equipment amounted to EUR 7.1 million and on intangible assets to EUR 1.5 million during the review period. Proceedings on sale of fixed assets amounted to EUR 0.1 million. Listing In a meeting on 2 April 2007 Suomen Terveystalo Oyj's Board of Directors decided that the share price of the share issue related to the listing of the company shares arranged on 19 to 30 March 2007 would be EUR 2.40 per share in the public and institutional offering and EUR 2.16 per share in the employee offering. The increase in share capital based on the subscriptions in the share issue during 19-30 March 2007 approved by the Board of Directors on 2 April 2007 was entered into the trade register on 2 April 2007. Based on the share issue, the number of shares increased by 20,000,000 to 67,194,663 shares and the increase in share capital based on the increase in the number of shares was EUR 200,000. Quotation of Suomen Terveystalo Oyj's shares began on the Helsinki Stock Exchange's pre list on 3 April 2007 and on the main list on 10 April 2007. The company gained approximately EUR 47.9 million gross income from the share issue and approximately EUR 46.6 million profit after the manager fees. The collected capital will be used to develop company operations and to implement the growth strategy. After the listing, Suomen Terveystalo Oyj had 4,744 shareholders on 5 April 2007. Balance sheet and financing At the end of June 2007 the balance sheet total was EUR 138.8 million (EUR 98.5 million at the end of June 2006). Liquidity remained good in January-June 2007. The Group's liquid assets, including financial securities, amounted to EUR 17.5 million (9.7) at the end of the period. The increase in liquid assets was mainly due to the listing carried out in the review period. The company amortized outside debt by a total of approximately EUR 29.7 million on 23 May 2007. Simultaneously, negotiations were initiated for a new financing package to implement the growth strategy. On 27 June 2007 Suomen Terveystalo Oyj agreed a financing package with OKO Bank plc to finance the Medivire acquisition. Net gearing was 10.6 per cent (100.8%) at the end of the second quarter. Cash flow In January-June 2007 operational cash flow was EUR 5.5 million (EUR 4.6 million in January-June 2006). Personnel The average number of personnel in January-June 2007 was 1.354 (995 in January-June 2006; 1,085 in 2006) and 1,447 at the end of the period (1,092 at the end of June 2006 and 1,253 at the end of 2006). At the end of the period, 1,870 independent entrepreneurs received patients in the company's premises. Organization The Annual General Meeting on 28 May 2007 confirmed the number of Board members to be seven. Investor Ari Ahola, Pentti Kuronen M.D., Pentti Parkkinen Lic. Med. University Lecturer, Pekka Roto M.D. Surgeon and Petteri Walldén M.Sc. were reappointed as Board members and Kari Puro M.D. Surgeon, Dr.Pol.Sc. and Kaija Pöysti M.Sc. were appointed as new members. The Chairman of the Board is Pentti Parkkinen. Pentti Kuronen resigned from his position as a Board member on 1 July 2007. The subsidiary mergers that were ongoing in the Group during the first quarter of 2007 were completed in April 2007 and the mergers were entered into the trade register on 30 April 2007. In the mergers, Vaajakosken Lääkäriasema Oy, Tuuranmäki Oy, EP:n Lääkäripalvelu Oy, Etelä-Pohjanmaan Fysioterapia Oy, Hyvinkään Lääkärikeskus Oy, Kainuun Työvireys Oy, Kokkolan Kliininen Laboratorio Oy, Korson Lääkärikeskus Oy, Liikekeskuksen Lääkäriasema Oy, Länsi-Pohjan Lääkärikeskus Oy, Lääkärikeskus Vire Oy, Mikkelin Röntgenlaitos Oy, Pohjanmaan Kirurgikeskus Oy, Kemin Spesialistipalvelut Oy, Turun Korvacenter Oy, Turun seudun Allergiakeskus Oy, Rovaniemen Sairasapu ja Laboratorio Oy and Ponticulus Oy merged with Medishuntti Oy (currently called Suomen Terveystalon Lääkäriasemat Oy) and Helsingin Silmälaseri Oy with Sairaala Laseri Oy, which are Suomen Terveystalo Oyj's fully owned subsidiaries. Helsingin Hammaslaseri Oy, Suomen Terveystalo Oyj's fully owned subsidiary, sold its dental clinic operations to Oral Hammaslääkärit Oyj on 1 June 2007. In practice, this means that Suomen Terveystalo gives up its dental operations as the company focuses on its core business areas, the Clinics and Hospitals segment and Diagnostics segment. EUR 0.2 million of the deal price was recognized as income in the review period. The final deal price will be specified during the first quarter of 2008. Shares and share capital At the end of the second quarter 2007, Suomen Terveystalo Oyj's share capital was EUR 680,446.63 and the total number of shares was 68,044,663. The share ticker in the book-entry system is SUT1V. The number of shares increased by a total of 20,850,000 shares and the share capital by EUR 208,500.00 in April-June 2007. Equity per share amounted to EUR 1.26 (EUR 0.75 in June 30 2006). The increase in share capital based on the subscriptions in the share issue during 19-30 March 2007 approved by the board of directors on 2 April 2007 was entered into the trade register on 2 April 2007. As a result of the share issue the number of shares increased by 20,000,000 shares and the share capital increased by EUR 200,000.00. Quotation of Suomen Terveystalo Oyj's shares began on the Helsinki Stock Exchange's pre list on 3 April 2007 and on the main list on 10 April 2007. The starting price for trading in the company share was EUR 2.40 on 3 April 2007 and the closing price at the end of the review period was EUR 2.58. In January-June 2007 the highest share price was EUR 2.75 and the lowest was EUR 2.10. In January-June 2007 the trading-weighted average share price was EUR 2.47. In the second quarter Finnvera Oyj traded a EUR 501,500.00 convertible bond-based capital loan dated 14 March 2003 for Suomen Terveystalo Oyj's shares in accordance with the loan terms and conditions. The loan was convertible into 850,000 shares at a subscription price of EUR 0.59 per share. The increase in the share capital, EUR 8,500.00, was entered into the trade register on 24 May 2007. At the end of the January-June 2007 review period Suomen Terveystalo Oyj had a total of 6,014 shareholders (905 shareholders on 31 March 2007). 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 authorization issued by the Annual General Meeting to the Board of Directors on 21 June 2006 to increase the share capital by a maximum of EUR 92,843.52 ended on 21 June 2007. EUR 83,807.43 of the authorization remained unused. The Annual General Meeting on 28 May 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 authorizations issued by the Annual General Meeting on 28 May 2007 have not been utilized during the review period. The Annual General Meeting on 28 May 2007 approved the Board's proposal that according to the company's balance sheet on 31 December 2006, the share premium account be reduced by EUR 31,211,419.45. The reduction amount will be transferred to the unrestricted equity reserve. After the reduction the share premium account in the balance sheet amounts to EUR 458,832.75. The share premium account can be reduced after 13 November 2007, by which time the company's debtors must state whether they wish to object to the decision. Parent company does not hold own shares. Subsidiries Keski-Suomen Sydäntutkimusasema Oy and Nova Clinic Oy hold a total of 55,691 shares of Suomen Terveystalo Oyj. This amount is equivalent to 0.08 per cent of the capital stock and vote. Related party transactions The company's related parties consist of the Board members, Managing Director, Group Management Team and associates of Suomen Terveystalo Oyj. The company has had an agreement with Media Invest Oy (owners Ari Ahola and Matti Roto) 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 30 July 2007 but with a separate agreement the contractual relationship was discontinued on 30 April 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 have had a fixed-term ASP service agreement for PACS/RIS systems related to radiology imaging that is valid until 10 February 2011. The companies have agreed to terminate this agreement on 31 May 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. The wages, salaries and fees, and short-term employee benefits paid by Suomen Terveystalo Oyj to its related parties in January-June 2007 amounted to EUR 656,000. Events after the review period In July 2007 Suomen Terveystalo carried out two acquisitions. The acquisition of Petosen Lääkärikeskus Medina Oy strengthened the company's Clinics and Hospitals segment in Kuopio and Lääkäriasema Linikka Oy's acquisition in Forssa. The combined turnover of the acquired companies was approximately EUR 424,000 and operating profit EUR 9,000 in the fiscal period that ended on 31 December 2006. At their meeting on 14 August 2007, Suomen Terveystalo Oyj's Board of Directors decided to implement merger processes for the subsidiaries listed below. Lauttasaaren Foksimetri Oy (formerly Helsingin Hammaslaseri Oy), Hämeenlinnan Lääkärikeskus Oy, Kemin Röntgen Oy, Lääkärikeskus Sanator Oy, Professionals Management Services of Finland Oy, Suomen Terveystalo Lääkäriasemat Oy, Tammerscan Oy and Vammalan Lääkäri- ja Hammaslääkäriasema Oy will merge with Makkaratalon Foksimetri Oy, Karhula Röntgen Oy will merge with Kotkan Röntgen Oy, Kotkan Röntgen will merge with Pohjois-Kymen Ultra-Tutko Oy, MagneettiOrton Oy and Pohjois-Kymen Ultra-Tutko Oy will merge with Suomen Terveystutkimus Oy and Roha Medical Oy will merge with Tesla-Yhtiöt Oy. All of the above-mentioned mergers are planned to be completed on 1 January 2008. Master of Laws trained on the bench Johanna Karppi will start work as the Group's Head of Human Resources and member of the Group Management Team on 10 September 2007. Short-term risks and uncertainty factors Suomen Terveystalo takes 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 the company's 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 include risks related to growth and acquisitions, social and legislative risks, risks related to malpractice cases and liability for damages, risks related to customer relationships, risks related to personnel and risks related to technology 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 stabilization of the new premises does not progress as planned. The main such near-term start-up is Tampere's new clinic-hospital, whose operations will start in August 2007. In addition, the integration of Medivire Työterveyspalvelut Oy into Suomen Terveystalo planned for the second half of the year may, if prolonged, have a considerable effect on the benefits from the integration and on the group's operations. In April-June 2007 the company continued the systematic risk management and development of internal supervision processes and systems together with an external internal 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. Suomen Terveystalo's objective as a group is to be the leading manufacturer of private healthcare services in Finland measured by turnover by the end of 2008 and to grow profitably. The company aims to grow faster than the market, on average. The general growth outlook in private doctor's 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 to the public sector will also continue to grow according to the company's view. Based on the general market growth and implemented and planned acquisitions, the 2007 turnover is expected to exceed the turnover in 2006 significantly. The company's operating profit in 2007 is expected to be at least at the same level as in 2006. SUOMEN TERVEYSTALO GROUP Suomen Terveystalo Oyj's 1.1.-30.6.2007 interim report has been compiled in accordance with the recognition and measurement principles set out in the International Financial Reporting Standards (IFRS) and the IAS 34 standard. When compiling this interim report the company has applied the same principles as in the financial statement for the fiscal year that ended on 31 December 2006. 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 interim report is unaudited. -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET, 1,000 EUR | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | 30 June | 30 June | 31 Dec | | | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT ASSETS | | | | -------------------------------------------------------------------------------- | Property, plant and equipment | 47,748 | 35,416 | 43,937 | -------------------------------------------------------------------------------- | Goodwill | 41,943 | 34,563 | 40,946 | -------------------------------------------------------------------------------- | Other intagible assets | 8,398 | 3,456 | 8,074 | -------------------------------------------------------------------------------- | Investment property | 47 | 173 | 171 | -------------------------------------------------------------------------------- | Investment in associates | 1,414 | 58 | 345 | -------------------------------------------------------------------------------- | Receivables from affiliates | 17 | 0 | 26 | -------------------------------------------------------------------------------- | Investments available for sale | 1,212 | 2,223 | 1,103 | -------------------------------------------------------------------------------- | Deferred tax assets | 2,826 | 725 | 2,006 | -------------------------------------------------------------------------------- | TOTAL NON-CURRENT ASSETS | 103,605 | 76,614 | 96,607 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT ASSETS | | | | -------------------------------------------------------------------------------- | Inventories | 1,780 | 1,325 | 1,644 | -------------------------------------------------------------------------------- | Accounts receivable and other | 15,936 | 10,849 | 16,423 | | receivables | | | | -------------------------------------------------------------------------------- | Financial assets ar fair value | 391 | 1,068 | 375 | | through profit or loss | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 17,102 | 8,681 | 6,571 | -------------------------------------------------------------------------------- | TOTAL CURRENT ASSETS | 35,209 | 21,923 | 25,013 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | 138,814 | 98,537 | 121,621 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | 30 June | 30 June | 31 Dec | | LIABILITIES | 2007 | 2006 | 2006 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Shareholders' equity | | | | -------------------------------------------------------------------------------- | Share Capital | 680 | 464 | 472 | -------------------------------------------------------------------------------- | Share issue | 0 | 1 | 315 | -------------------------------------------------------------------------------- | Share premium account | 31,670 | 30,804 | 31,211 | -------------------------------------------------------------------------------- | Unrestricted equity reserve | 46,357 | 0 | 630 | -------------------------------------------------------------------------------- | Retained earnings | 5,268 | 4,144 | 4,022 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minority interest | 2,011 | 893 | 1,892 | -------------------------------------------------------------------------------- | TOTAL EQUITY | 85,986 | 36,306 | 38,542 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 3,637 | 1,853 | 3,561 | -------------------------------------------------------------------------------- | Interest-bearing liabilities | 19,230 | 34,413 | 45,131 | -------------------------------------------------------------------------------- | Other liabilities | 446 | 372 | 454 | -------------------------------------------------------------------------------- | NON-CURRENT LIABILITIES TOTAL | 23,313 | 36,638 | 49,146 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT LIABILITIES | | | | -------------------------------------------------------------------------------- | Accounts payable and other | 22,190 | 16,687 | 20,550 | | liabilities | | | | -------------------------------------------------------------------------------- | Current tax liabilities | 333 | 124 | 93 | -------------------------------------------------------------------------------- | Other current liabilities | 6,991 | 8,782 | 13,290 | -------------------------------------------------------------------------------- | CURRENT LIABILITIES TOTAL | 29,514 | 25,593 | 33,933 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL EQUITY AND LIABILITIES | 138,814 | 98,537 | 121,621 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED INCOME | 4-6/2007 | 1-6/2007 | 4-6/2006 | 1-6/2006 | 1-12/2006 | | STATEMENT 1,000 EUR | | | | | | -------------------------------------------------------------------------------- | Turnover | 28,297 | 57,561 | 21,868 | 42,192 | 88,852 | -------------------------------------------------------------------------------- | Other operating | 399 | 564 | 147 | 283 | 2,244 | | income | | | | | | -------------------------------------------------------------------------------- | Share of profit of | 143 | 331 | 47 | 157 | 390 | | associates | | | | | | -------------------------------------------------------------------------------- | Raw material and | -4,686 | -9,296 | -3,477 | -6,123 | -13,828 | | consumables used | | | | | | -------------------------------------------------------------------------------- | Employee benefit | -12,396 | -24,338 | -9,039 | -16,845 | -36,449 | | costs | | | | | | -------------------------------------------------------------------------------- | Depreciation and | -2,678 | -5,137 | -1,762 | -3,212 | -8,899 | | impairment | | | | | | -------------------------------------------------------------------------------- | Other operating | -8,825 | -16,835 | -6,481 | -12,686 | -27,206 | | expenses | | | | | | -------------------------------------------------------------------------------- | OPERATING PROFIT | 254 | 2,849 | 1,303 | 3,766 | 5,106 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | 302 | 321 | 33 | 45 | 195 | -------------------------------------------------------------------------------- | Financial expenses | -421 | -1,296 | -581 | -945 | -2,105 | -------------------------------------------------------------------------------- | PROFIT BEFORE TAXES | 135 | 1,875 | 755 | 2,866 | 3,195 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes | -49 | -472 | -539 | -748 | -1,021 | -------------------------------------------------------------------------------- | PROFIT FOR THE | 87 | 1,403 | 216 | 2,118 | 2,175 | | PERIOD | | | | | | -------------------------------------------------------------------------------- | Attributable to: | | | | | | -------------------------------------------------------------------------------- | Parent company | 31 | 1,249 | 122 | 2,005 | 1,937 | | shareholders | | | | | | -------------------------------------------------------------------------------- | Minority | 56 | 154 | 94 | 113 | 238 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share calculated on earnings belonging to the parent company's | | shareholders (EUR) | -------------------------------------------------------------------------------- | Undiluted | 0.00 | 0.02 | 0.00 | 0.04 | 0.04 | -------------------------------------------------------------------------------- | Diluted | 0.00 | 0.02 | 0.00 | 0.04 | 0.04 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CASH FLOW STATEMENT | | | | -------------------------------------------------------------------------------- | 1,000 EUR | 1-6/07 | 1-6/06 | 1-12/06 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operations | | | | -------------------------------------------------------------------------------- | Profit for the period | 1,403 | 2,118 | 2,175 | -------------------------------------------------------------------------------- | Adjustments | 6,229 | 4,696 | 11,403 | -------------------------------------------------------------------------------- | Changes in working capital | 179 | -205 | -5,130 | -------------------------------------------------------------------------------- | Interest paid | -1,496 | -813 | -1,696 | -------------------------------------------------------------------------------- | Interest received | 309 | 42 | 140 | -------------------------------------------------------------------------------- | Taxes paid | -1,108 | -1,275 | -2,403 | -------------------------------------------------------------------------------- | Net cash flow from operations | 5,516 | 4,563 | 4,489 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from investments | | | | -------------------------------------------------------------------------------- | Acquisitions of subsidiaries | -728 | -4,219 | -11,409 | | and associates | | | | -------------------------------------------------------------------------------- | Investments in property, plant | -8,377 | -3,593 | -4,113 | | and equipment and intagible | | | | | assets | | | | -------------------------------------------------------------------------------- | Disposal of assets | 100 | 7 | 396 | -------------------------------------------------------------------------------- | Dividends paid | 388 | 254 | 292 | -------------------------------------------------------------------------------- | Net cash flow from investments | -8,617 | -7,551 | -14,834 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing | | | | -------------------------------------------------------------------------------- | Share issue payments | 48,413 | 39 | 606 | -------------------------------------------------------------------------------- | Costs of issuing equity | -2,020 | 0 | -1,017 | -------------------------------------------------------------------------------- | Withdrawals of loans | 1,462 | 6,054 | 14,679 | -------------------------------------------------------------------------------- | Repayment of loans | -32,351 | -2,931 | -3,962 | -------------------------------------------------------------------------------- | Repayment of finance lease | -1,871 | -929 | -2,825 | | liabilities | | | | -------------------------------------------------------------------------------- | Dividends paid | -2 | 0 | 0 | -------------------------------------------------------------------------------- | Net cash flow from financing | 13,631 | 2,233 | 7,481 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets at the beginning | 6,571 | 9,436 | 9,436 | | of period | | | | -------------------------------------------------------------------------------- | Liquid assets at the end of | 17,102 | 8,680 | 6,571 | | period | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | STATEMENT OF CHANGES IN CONSOLIDATED EQUITY Jan 1 - June 30 2007 | -------------------------------------------------------------------------------- | 1,000 EUR | Share- | Share | Share | Unre- | Retai- | Minor- | Total | | | capi- | pre- | issue | stri- | ned | ity | | | | tal | mium | | cted | earn- | inter- | | | | | accou- | | equity | igns | est | | | | | nt | | reser- | | | | | | | | | ve | | | | -------------------------------------------------------------------------------- | Share- | 472 | 31,211 | 315 | 630 | 4,021 | 1,892 | 38,541 | | holders' | | | | | | | | | equity Jan | | | | | | | | | 1 2007 | | | | | | | | -------------------------------------------------------------------------------- | Costs of | 0 | 0 | 0 | -2,019 | 0 | 0 | -2,019 | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Rights | 200 | 0 | 0 | 47,746 | 0 | 0 | 47,946 | | issues | | | | | | | | -------------------------------------------------------------------------------- | Exchange of | 8 | 459 | 0 | 0 | 0 | 0 | 467 | | Convertible | | | | | | | | | bond | | | | | | | | -------------------------------------------------------------------------------- | Dividends | 0 | 0 | 0 | 0 | -2 | 0 | -2 | -------------------------------------------------------------------------------- | Unsubcribed | 0 | 0 | -315 | 0 | 0 | 0 | -315 | | share issue | | | | | | | | -------------------------------------------------------------------------------- | Profit for | 0 | 0 | 0 | 0 | 1,249 | 154 | 1,402 | | the period | | | | | | | | -------------------------------------------------------------------------------- | Minority | 0 | 0 | 0 | 0 | 0 | -35 | -35 | | interest in | | | | | | | | | acquisiti- | | | | | | | | | ons and | | | | | | | | | other | | | | | | | | | changes | | | | | | | | -------------------------------------------------------------------------------- | Share- | 680 | 31,670 | 0 | 46,357 | 5,268 | 2,011 | 85,986 | | holders' | | | | | | | | | equity June | | | | | | | | | 30 2007 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | STATEMENT OF CHANGES IN CONSOLIDATED EQUITY Jan 1 - June 30 2006 | -------------------------------------------------------------------------------- | 1,000 EUR | Share- | Share | Share | Unre- | Retai- | Minor- | Total | | | capi- | pre- | issue | stri- | ned | ity | | | | tal | mium | | cted | earn- | inter- | | | | | accou- | | equity | igns | est | | | | | nt | | reser- | | | | | | | | | ve | | | | -------------------------------------------------------------------------------- | Share- | 464 | 30,753 | 1 | 0 | 2,139 | 362 | 33,719 | | holders' | | | | | | | | | equity Jan | | | | | | | | | 1 2006 | | | | | | | | -------------------------------------------------------------------------------- | Rights | 0 | 51 | 0 | 0 | 0 | 0 | 51 | | issues | | | | | | | | -------------------------------------------------------------------------------- | Profit for | 0 | 0 | 0 | 0 | 2,005 | 113 | 2,118 | | the period | | | | | | | | -------------------------------------------------------------------------------- | Minority | 0 | 0 | 0 | 0 | 0 | 418 | 418 | | interest in | | | | | | | | | acquisiti- | | | | | | | | | ons and | | | | | | | | | other | | | | | | | | | changes | | | | | | | | -------------------------------------------------------------------------------- | Share- | 464 | 30,804 | 1 | 0 | 4,144 | 893 | 36,306 | | holders' | | | | | | | | | equity June | | | | | | | | | 30 2006 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SEGMENT INFORMATION, | 1-6/07 | 1-6/06 | 1-12/06 | | 1,000 EUR | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Turnover by segment | | | | -------------------------------------------------------------------------------- | Clinics and Hospitals | 32,392 | 22,760 | 49,330 | | segment | | | | -------------------------------------------------------------------------------- | Diagnostics segment | 29,843 | 19,868 | 44,523 | -------------------------------------------------------------------------------- | Other | 2,034 | 1,809 | 1,992 | -------------------------------------------------------------------------------- | Group eliminations | -6,708 | -2,245 | -6,992 | -------------------------------------------------------------------------------- | Total turnover | 57,561 | 42,192 | 88,853 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating profit by | | | | segment | | | -------------------------------------------------------------------------------- | Clinics and Hospitals | 3,015 | 2,043 | -906 | | segment | | | | -------------------------------------------------------------------------------- | Diagnostics segment | 7,605 | 6,148 | 13,446 | -------------------------------------------------------------------------------- | Other | -7,770 | -4,425 | -7,434 | -------------------------------------------------------------------------------- | Total operating profit | 2,849 | 3,766 | 5,106 | -------------------------------------------------------------------------------- | Operating profit-% | 4.9 | 8.9 | 5.7 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income and | -975 | -900 | -1 910 | | expenses | | | | -------------------------------------------------------------------------------- | Profit before taxes | 1,875 | 2,866 | 3,196 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes | -472 | -748 | -1,021 | -------------------------------------------------------------------------------- | PROFIT FOR THE PERIOD | 1,403 | 2,118 | 2,175 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | QUARTELTY CONSOLIDATED INCOME STATEMENT, 1,000 EUR | | | -------------------------------------------------------------------------------- | | 4-6/07 | 1-3/07 | 10-12/06 | 7-9/06 | 4-6/06 | 1-3/06 | -------------------------------------------------------------------------------- | Turnover | 28,297 | 29,264 | 27,070 | 19,590 | 21,868 | 20,324 | -------------------------------------------------------------------------------- | Other | 399 | 164 | 1,850 | 113 | 147 | 136 | | operating | | | | | | | | income | | | | | | | -------------------------------------------------------------------------------- | Share of | 143 | 189 | 121 | 111 | 47 | 110 | | profit of | | | | | | | | associates | | | | | | | -------------------------------------------------------------------------------- | Raw | -4,686 | -4,609 | -4,460 | -3,244 | -3,477 | -2,646 | | material | | | | | | | | and | | | | | | | | consumab- | | | | | | | | les used | | | | | | | -------------------------------------------------------------------------------- | Employee | -12,396 | -11,942 | -10,853 | -8,561 | -9,039 | -7,806 | | benefit | | | | | | | | costs | | | | | | | -------------------------------------------------------------------------------- | Deprecia- | -2,678 | -2,459 | -3,466 | -2,220 | -1,762 | -1,450 | | tion and | | | | | | | | impairment | | | | | | | -------------------------------------------------------------------------------- | Other | -8,825 | -8,012 | -8,440 | -6,272 | -6,481 | -6,205 | | operating | | | | | | | | expenses | | | | | | | -------------------------------------------------------------------------------- | OPERATING | 254 | 2,595 | 1,822 | -483 | 1,303 | 2,463 | | PROFIT | | | | | | | -------------------------------------------------------------------------------- | Financial | 302 | 20 | 64 | 85 | 33 | 12 | | income | | | | | | | -------------------------------------------------------------------------------- | Financial | -421 | -875 | -679 | -482 | -581 | -365 | | expenses | | | | | | | -------------------------------------------------------------------------------- | Profit | 135 | 1,739 | 1,208 | -880 | 755 | 2,110 | | before | | | | | | | | taxes | | | | | | | -------------------------------------------------------------------------------- | Income | -49 | -423 | 80 | -353 | -539 | -209 | | taxes | | | | | | | -------------------------------------------------------------------------------- | PROFIT FOR | 87 | 1,316 | 1,288 | -1,233 | 216 | 1,901 | | THE PERIOD | | | | | | | -------------------------------------------------------------------------------- | Attributable to | | | | | | -------------------------------------------------------------------------------- | Parent | 31 | 1,218 | 1,334 | -1,402 | 122 | 1,882 | | company | | | | | | | | share- | | | | | | | | holders | | | | | | | -------------------------------------------------------------------------------- | Minority | 56 | 98 | -46 | 170 | 94 | 19 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OTHER INFORMATION | 1-6/07 | 1-6/06 | 1-6/12 | -------------------------------------------------------------------------------- | Personnel on average | 1354 | 995 | 1085 | -------------------------------------------------------------------------------- | Personnel at end of period | 1447 | 1092 | 1253 | -------------------------------------------------------------------------------- Calculation of financial ratios: Return on equity, % = 100 x (Profit before taxes - direct taxes) / (Shareholders' equity + minority interest (average)) Return on investment, % = 100 x(Profit before taxes + interest expenses+ other financial expenses) / (Balance sheet total - non-interest-bearing liabilities (average)) Net gearing = (Interest-bearing liabilities - liquid assets) / (Shareholders' equity - advances received) Undiluted earnings per share = (Profit before taxes - minority interest - income taxes) / Weighted average number of outstanding shares Diluted earnings per share = (Profit before taxes - minority interest - income taxes)/ Weighted average number of outstanding shares adjusted for dilution Equity per share = Shareholders' equity / Diluted number of shares SUOMEN TERVEYSTALO OYJ Board of Directors MORE INFORMATION: Suomen Terveystalo Oyj, CEO Martti Kiuru, tel. +358 9 2310 6100, martti.kiuru@terveystalo.com Suomen Terveystalo Oyj, CFO Timo Leinonen, tel. +358 400 793073, timo.leinonen@terveystalo.com Suomen Terveystalo in brief: Suomen Terveystalo, which has 100 offices across Finland, is Finland's largest comprehensive healthcare clinics and hospitals chain. The company offers healthcare, occupational healthcare and medical treatment services to private persons, corporations and communities. The company that was founded in 2001 has strongly grown throughout its history. In 2006, the turnover was MEUR 88.9 and operative profit MEUR 5.1. The company has about 1.820 practising doctors and some 50 other health care professionals. At the end of June 2007 the company employed 1,447 people. Suomen Terveystalo's share (SUT1V) is listed in the Helsinki Stock Exchange. 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. All 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 and the company's ability to continue expanding its operations. DISTRIBUTION The Helsinki Stock Exchange Main Media |
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