2008-11-13 12:00:00 CET
2008-11-13 12:00:01 CET
REGULATED INFORMATION
Suomen Terveystalo Oyj - Interim report (Q1 and Q3)
Terveystalo's interim report January 1 - September 30, 2008
SUOMEN TERVEYSTALO OYJ INTERIM REPORT November 13, 2008 at 1.00 p.m. Terveystalo's interim report January 1 - September 30, 2008 Suomen Terveystalo Oyj´s January-September 2008 turnover and operating result increased considerably; turnover was EUR 154.5 million and operating result was EUR 5.0 million. - January-September 2008 (January-September 2007): -- Turnover EUR 154.5 million (87.8). Growth is mainly due to a large acquisition carried out in September 2007. -- Operating result EUR 5.0 million (0.3). Operating result excluding one-off items was EUR 3.7 million. - In July-September, operating result grew by 38.2 percent from the corresponding period last year, in line with normal seasonality, operating result was negative due to the vacation season. - Terveystalo still expects its full-year 2008 turnover and operating result to be clearly above the 2007 turnover and operating result. -------------------------------------------------------------------------------- | KEY FIGURES | 1.7.- | 1.7.- | 1.1.- | 1.1.- | 1.1.- | | | 30.9.2008| 30.9.2007| 30.9.2008| 30.9.2007 | 31.12.2007| | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Turnover, EUR 1,000 | 45,821 | 30,236 | 154,534 | 87,796 | 140,719 | -------------------------------------------------------------------------------- | Operating result, | -1,567 | -2,536 | 5,026 | 313 | 401 | | EUR 1,000 | | | | | | -------------------------------------------------------------------------------- | Earnings per share, | -0.09 | -0.04 | -0.07 | -0.02 | -0.05 | | EUR | | | | | | -------------------------------------------------------------------------------- | Equity per share, | 1.22 | 1.24 | 1.22 | 1.24 | 1.20 | | EUR | | | | | | -------------------------------------------------------------------------------- | Net gearing, % | 189.3 | 173.2 | 189.3 | 173.2 | 184.8 | -------------------------------------------------------------------------------- | Return on | -4.4 | -5.7 | 2.9 | 0.6 | 0.6 | | investment, % | | | | | | | (ROI)* | | | | | | -------------------------------------------------------------------------------- | Return on equity, % | -29.4 | -16.9 | -7.7 | -2.5 | -5.0 | | (ROE)* | | | | | | -------------------------------------------------------------------------------- | Capital adequacy, % | 27.2 | 29.1 | 27.2 | 29.1 | 27.5 | -------------------------------------------------------------------------------- | Operating result / | -3.4 | -8.4 | 3.3 | 0.4 | 0.3 | | turnover, % | | | | | | -------------------------------------------------------------------------------- * The income statement figures used to calculate ROI and ROE have been annualized. Suomen Terveystalo Oyj Group's (Terveystalo) turnover increased in January-September 2008 by 76.0 percent compared to the corresponding period in the previous year and amounted to EUR 154.5 million (EUR 87.8 million in January-September 2007). Turnover growth is mainly due to a large acquisition carried out in September 2007. Operating result grew by 1,505.8 percent and amounted to EUR 5.0 million (0.3). Excluding one-off items operating result grew by 1,096.8 percent and was EUR 3.7 million. Managing Director Martti Kiuru: ”Our business continued to grow and we managed to further improve our profitability in July-September. In line with normal seasonality, operating result in the third quarter was negative due to the vacation season. The integration program that we launched in fall 2007 progressed as planned. Slowing economy did not impact the demand for Terveystalo´s healthcare services in July-September.” Market situation The value of the Finnish healthcare service market is approximately EUR 12 billion. Traditionally the public sector has been the biggest producer of healthcare services. The market share of private sector players has increased heavily in the past years and the market share of private service providers is expected to continue growing. The demand for private healthcare services is affected, for instance, by the ageing of the population, the increase in wealth and general interest towards health, an increase in outsourcing services (such as specialist consultations, surgery, imaging, screening and other research services), regard for occupational healthcare services, a demand for flexibility and the outsourcing trend as the requirements of working life increase. Increased efficiency in service production as medical technology develops and insurance products becoming more common in the healthcare sector also affect Terveystalo's market environment. Terveystalo, which was founded in 2001, became in 2007 Finland's leading healthcare sector company in terms of turnover and the extent of operations. 1.7.-30.9.2008 In July-September 2008, Terveystalo's turnover grew by 51.5 percent compared to the corresponding period last year and amounted to EUR 45.8 million (EUR 30.2 million in July-September 2007). The growth in turnover was mainly contributable to the operations of Medivire Työterveyspalvelut Oy, which merged with Terveystalo Group in September 2007. Operating result grew by 38.2 percent from the corresponding period last year and was EUR -1.6 million, i.e. -3.4 percent of turnover (EUR -2.5 million, -8.4 % in July-September 2007). Growth in operating result was affected by turnover growth and the implemented integration measures that have included increased efficiency and unification of procedures as well as merging of units. Operating result includes one-off expense item on subscription rights issue amounting to EUR 0.2 million. In July-September 2008, a total of EUR -1.3 million in net financial costs from interest rate hedging instruments was recognized in financial items. Cost item has been presented in financial income where net financial income of the instruments in question has been presented in January-June 2008. 1.1.-30.9.2008 In January-September 2008, Terveystalo's turnover grew by 76.0 percent compared to the corresponding period last year and amounted to EUR 154.5 million (EUR 87.8 million in January-September 2007). The growth in turnover was mainly contributable to the operations of Medivire Työterveyspalvelut Oy, which merged with the Group in September 2007. Operating result grew by 1,505.8 percent from the corresponding period last year and was EUR 5.0 million, i.e. 3.3 percent of turnover (EUR 0.3 million, 0,4% in January-September 2007). Excluding one-off items, operating result grew by 1,096.8 percent and amounted to EUR 3.7 million representing 2.4 percent of turnover. One-off items during the period included a EUR 2.1 million sales gain reported in January-March from the sale of the central laboratory business, and a EUR 0.7 million cost item reported in April-June mainly related to an arbitration case of a copyright dispute related to the patient information system and an expense item on subscription rights issue amounting to EUR 0.2 million reported in July-September. In January-September 2008, a total of EUR 0.2 million in net financial income from interest rate hedging instruments was recognized in financial items. Earnings' belonging to the parent company owners was EUR -4.8 million, or -3.1 percent of turnover (EUR -1.3 million, -1.5%). Earnings per share calculated from earnings belonging to the owners of the parent company were EUR -0.07 (EUR -0.02). Business segments As of January 1, 2008 the Group's business operations are divided into three business segments: Occupational Healthcare segment, the Clinics and Hospitals segment and the Diagnostics segment. Until the end of 2007 all imaging and laboratory services were reported as part of the Diagnostics segment. As of January 1, 2008 sample-taking laboratory operations and express analytics as well as imaging services are reported as part of the Clinics and Hospitals segment, in terms of clinic hospitals and clinics, and as part of the Occupational Healthcare segment in terms of occupational healthcare clinics. Business operations not allocated to any particular segment, which mainly consists of the company's holding in the business operations of AVA clinics specializing in infertility treatments are reported as Unallocated items. Unallocated items also includes the costs from Group functions (HR, quality, sales, finance, ICT and communications) and national call center (appointment and customer service operations), as well as costs deriving from group structure creation and the Group's integration program. Occupational Healthcare segment In January-September, Terveystalo continued renewing and unifying of the occupational healthcare processes, operations model and agreement templates. Clinics and Hospitals segment In January-September, Terveystalo continued developing its GP and specialist and hospital services and unifying the operational models for instance by opening new clinics according to the company´s clinic concept in connection with its clinic-hospitals and largest clinics. In August, surgery operations began in the new clinic-hospital opened in Rovaniemi in April. Diagnostics segment In January-September, Terveystalo continued the unification of the diagnostic service processes and operational models. Turnover by segment In January-September 2008 the Occupational Healthcare segment's share of turnover was 56.4 percent, the Clinics and Hospitals segment's share was 29.9 percent and the Diagnostics segment's share was 12.0 percent. -------------------------------------------------------------------------------- | Turnover by segment | | | | | -------------------------------------------------------------------------------- | EUR 1,000 | 1.7.- | 1.7.- | 1.1.- | 1.1.- | 1.1.- | | | 30.9.2008| 30.9.2007| 30.9.2008| 30.9.2007 | 31.12.2007| | | | | | | | -------------------------------------------------------------------------------- | Occupational | 28,624 | 12,757 | 97,492 | 30,834 | 63,808 | | Healthcare segment | | | | | | -------------------------------------------------------------------------------- | Clinics and | 15,518 | 14,973 | 51,705 | 42,582 | 54,897 | | Hospitals segment | | | | | | -------------------------------------------------------------------------------- | Diagnostics segment | 6,270 | 5,128 | 20,672 | 21,686 | 32,489 | -------------------------------------------------------------------------------- | Unallocated | 869 | 587 | 2,904 | 2,612 | 2,667 | -------------------------------------------------------------------------------- | Group eliminations | -5,461 | -3,208 | -18,241 | -9,916 | -13,142 | -------------------------------------------------------------------------------- | Group total | 45,821 | 30,236 | 154,534 | 87,796 | 140,719 | -------------------------------------------------------------------------------- The reference data for the segments has been adjusted to correspond with the segment division adopted from the beginning of 2008. In 2007, the business operations were divided into two segments: the Clinics and Hospitals segment and the Diagnostics segment. Starting from the beginning of 2008, the business operations have been divided into three business segments: Occupational Healthcare segment, Clinics and Hospitals segment and Diagnostics segment. The Unallocated items include the Group's share of the operations of the AVA clinic that focuses on fertilization treatment. Operating result by segment -------------------------------------------------------------------------------- | Operating result by segment | | | | | -------------------------------------------------------------------------------- | EUR 1,000 | 1.7.- | 1.7.- | 1.1.- | 1.1.- | 1.1.- | | | 30.9.2008| 30.9.2007| 30.9.2008| 30.9.2007 | 31.12.2007| | | | | | | | -------------------------------------------------------------------------------- | Occupational | 706 | -561 | 6,774 | -1,001 | -2,929 | | Healthcare segment | | | | | | -------------------------------------------------------------------------------- | Clinics and | 853 | 793 | 7,139 | 8,120 | 11,310 | | Hospitals segment | | | | | | -------------------------------------------------------------------------------- | Diagnostics segment | 484 | 651 | 5,438 | 2,507 | 4,225 | -------------------------------------------------------------------------------- | Unallocated | -3,608 | -3,419 | -14,324 | -9,312 | -12,204 | -------------------------------------------------------------------------------- | Group total | -1,567 | -2,536 | 5,026 | 313 | 401 | -------------------------------------------------------------------------------- The reference data for the segments has been adjusted to correspond with the segment division adopted from the beginning of 2008. In 2007, the business operations were divided into two segments: the Clinics and Hospitals segment and the Diagnostics segment. Starting from the beginning of 2008, the business operations have been divided into three business segments: Occupational Healthcare segment, Clinics and Hospitals segment and Diagnostics segment. The operating result for January-September 2008 of the Occupational Healthcare segment includes a EUR 0.5 million one-off expense item and the operating result of the Clinics and Hospitals segment includes a EUR 0.2 million one-off expense item. The January-September 2008 operating result of the Diagnostics segment includes a EUR 2.1 million one-off sales gain. Unallocated items in July-September includes a EUR 0.2 million expense item related to the subscription rights issue. The costs from Group functions (HR, quality, finance, IT and communications), the national call center (booking and customer service) operations, formation of Group structure and the Group's integration program are reported as Unallocated items. The biggest cost items causing the EUR 14.3 million operating loss in Unallocated items came from invoicing, appointment and customer service operations' costs, costs from the Group's centralized sales and marketing operations, and costs related to centralized patient information and other IT systems. The fertilization treatment operations reported as an Unallocated item did not have a significant effect on the operating result in January-September 2008. Return on assets Annualized return on investments (ROI) in January-September 2008 was 2.9 percent (0.6% in January-September 2007). Annualized return on equity (ROE) was -7.7 percent (-2.5%). Investments In January-September 2008, Terveystalo continued investing in developing its offices. In July-September 2008, the Group equipped for instance the surgery ward at the Rovaniemi clinic-hospital opened in April and the premises of the national Call Center located in Kristiinankaupunki. Balance sheet and financing At the end of September 2008, the balance sheet total was EUR 305.4 million (EUR 288.7 million at the end of September 2007). On September-October 2008 Terveystalo carried out a subscription rights issue. Total equity on September 30, 2008 includes EUR 6.2 million of the net funds raised on the subscription rights issue. At the end of September 2008, Terveystalo Group's Quick Ratio was 0.7 (0.8 at the end of September 2007). The Group's liquid assets, including financial securities, amounted to EUR 17.2 million (12.1) at the end of September. During January-September 2008, the company withdrew new interest bearing loans of EUR 18.0 million, repaid interest bearing loans by EUR 11.7 million and paid EUR 13.3 million of interests. Net gearing was 189.3 percent at the end of the review period (173.2%). The company has agreed on the covenant levels related to its financing agreements with its principal financers in June 2008. The capital in financial liabilities to which the covenants apply was EUR 134.5 million on September 30, 2008. The company's interest margin from October 1, 2008 is 2.25 percent. The average rate percentage during the period January 1 - September 30, 2008 was 6.90. Cash flow In January-September 2008, operational cash flow was EUR 9.2 million (EUR 2.5 million in January-September 2007). In accordance with the presentation allowed by IAS 7, paid interest has been presented in cash flow from financing, deviating from the reporting practices in the previous fiscal period, and the comparison data for January 1 - September 30, 2008 and 2007 have been adjusted accordingly. Personnel The average number of personnel in January-September 2008 was 2,350 (1,461 in average in January-September 2007 and 1,689 in average in 2007). At the end of September 2008, the number of personnel was 2,316 (2,338 at the end of September 2007 and 2,398 at the end of 2007). In connection with the integration program initiated in Terveystalo Group in the fall of 2007, the Group's man-years in administrative positions and in support functions in regional and unit-level organizations had decreased by approximately 90 man-years by the end of September 2008. At the end of September 2008, more than 2,000 private practitioners operated on the company's premises. Group structure At the end of September 2008, Terveystalo Group consisted of the parent company, Suomen Terveystalo Oyj, and its 34 subsidiaries. No acquisitions of businesses or business operations outside the Group were made in July-September 2008. The Group is continuing to simplify the Group structure and lighten the administrative structure through the merging of subsidiaries. The goal is to centralize operative business into one subsidiary in the future. The mergers are expected to be completed on January 2, 2009, when a total of 17 Terveystalo Group companies will be merged with another Group company as follows: Suomen Terveystalo Työterveys Oy will merge with Medivire TTP Holding Oy, Pohjanmaan Röntgen Oy with Oy Työterveyshuolto Medicentra Företagshälsovård Ab, Magneettikymi Oy with Tietotomo Oy, Joensuun Röntgen Oy with Itä-Suomen Kuvantamiskeskus Oy, and Kouvolan Lääkäritalon Röntgen Oy, Espoontorin Lääkäriasema Oy, Lääkäriasema Septum Oy, Lääkäriasema Linikka Oy, Petosen Lääkärikeskus Medina Oy, Lääketieteellinen Tutkimuslaitos Toritutkain Oy, Lääkäri- ja laboratoriopalvelu Tammer Tutka Oy, Tampereen Gynekologiakeskuksen Laboratorio- ja konsultaatiopalvelut Oy, Seinäjoen Työterveyskeskus Oy, Oy Työterveyshuolto Medicentra Företagshälsovård Ab, Suomen Terveystalo Lääkäriasema Oy, Medivire TTP Holding Oy and Lappeenrannan Lääkäriasema Oy with Suomen Terveystalo Diagnostiikka Oy. Simultaneously, Suomen Terveystalo Oyj's operative business is to be transferred to Suomen Terveystalo Diagnostiikka Oy in a business operation transaction. Organization As part of an integration plan that began in the fall of 2007 and will continue until the end of 2008, Terveystalo's operations in many towns have been or will be partly or fully integrated into larger entities in order to ensure service availability, increase efficiency and generate cost savings. At the end of September 2008, Terveystalo had over 100 units in over 50 cities across Finland. A year before, there were over 150 units. Subscription Rights issue On September 1, 2008, Suomen Terveystalo Oyj's Extraordinary General Meeting (EGM) unanimously authorized the Board of Directors to decide on a share issue and granting options and other special rights entitling to shares in accordance with Chapter 10 Section 1 of the Companies Act so that, based on the authorization, a total of 30,000,000 new shares are issued at most. The Board of Directors, within the limits of the above-mentioned authorization, was granted the right to decide on all the terms related to the share issue and special rights entitling to shares, on whether the subscription price will be registered as an increase in the share capital partly or in full in the invested unrestricted equity fund. In accordance with the authorization, and deviating from the shareholders' pre-emptive subscription right, the share issue and granting of special rights entitling to shares can also be directed towards the company's current shareholders and new investors in order to expand the company's ownership base, finance investments and maintain and increase the company's capital adequacy, based on which the deviation from the pre-emptive subscription right has a weighty financial reason from the company's viewpoint. The authorizations granted to the Board of Directors by the Annual General Meeting (AGM) on May 28, 2007, remain valid for unutilized parts. The authorizations are valid until the Annual General Meeting to be held in 2009. The Financial Supervision Authority approved Suomen Terveystalo Oyj's Securities Markets Act accordant Registration Document on September 5, 2008. On September 15, 2008, the Board of Directors of Suomen Terveystalo Oyj decided upon a subscription right issue of approximately EUR 30.0 million. Terveystalo offered a maximum of 27,256,665 new shares in the Share Issue based on its shareholders' subscription privilege. The subscription price was EUR 1.10 per share. The Financial Supervision Authority approved Suomen Terveystalo Oyj's Securities Markets Act accordant securities notes and summaries related to the subscription right issue on September 19, 2008. The subscription period for the subscription right issue was September 24 - October 8, 2008. In July-September 2008, items relating to subscription rights issue was expensed by EUR 0.2 million and EUR 0.8 were booked on deduction of unrestricted equity reserve. Shares and share capital At the end of September, Suomen Terveystalo Oyj's share capital was EUR 681,416.63 (EUR 681,416.63 at the end of 2007) and the total number of shares was 68,141,663. The share ticker in the book-entry system is SUT1V. In January-September 2008, the highest share price was EUR 1.99 and the lowest was EUR 1.05. In January-September, the trading-weighted average share price was EUR 1.59 and the closing price on September 30, 2008, was EUR 1.10. In January-September, 6,012,385 shares were exchanged, which corresponds to 8.8 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 September 30, 2008, was EUR 75.0 million. At the end of the review period in September, the company had a total of 6,888 share holders (6,510 at the end of 2007). Suomen Terveystalo Oyj owns 40,400 of its own shares. In addition, the subsidiary Nova Clinic Oy owns a total of 15,291 parent company shares. The total number of these shares corresponds with 0.08 percent of all shares and votes at the end of the review period. Changes to the terms of option rights On September 15, 2008, in order to ensure equal treatment of option holders and shareholders, Terveystalo's Board of Directors decided upon changes to the terms and conditions of options because of the Share Issue arranged in September-October. The number of options was changed so that each option 2008A, 2008B and 2008C entitles subscription for 1.40 shares. The subscription price of a share to be subscribed for on the basis of an option is based on the prevailing market price of the Company's share on the Helsinki Stock Exchange in January-March 2008, 2009 and 2010. However, the subscription price of a share to be subscribed for based on the option 2008A will be at least EUR 1.8571. In the share subscription, the total number of shares subscribed for by option holders will be rounded downwards into full shares. The total subscription price is calculated using the rounded number of shares and rounded off to the closest cent. The changes to the terms of the option rights presented above were registered in the trade register on October 15, 2008. Events after the review period A total of 12,964,758 shares were subscribed for in Suomen Terveystalo Oyj's share issue that ended on October 8, 2008. Of these, 7,510,922 were subscribed for with primary subscription rights and 198,373 with secondary subscription rights. In addition, Ilmarinen Mutual Pension Insurance Company and Varma Mutual Pension Insurance Company, in accordance with their subscription guarantee, subscribed for unsubscribed Shares on the basis of the Primary Subscription Right and the Secondary Subscription Right. Ilmarinen Mutual Pension Insurance Company subscribed for a total of 1,994,608 shares and Varma Mutual Pension Insurance Company subscribed for a total of 3,260,855 shares. The shares issued correspond with approximately 19 percent of Suomen Terveystalo Oyj's total number of shares and the votes they generate prior to the issue and approximately 16 percent after the issue. Terveystalo collected a total gross sum of EUR 14.3 million in the share issue. On October 13, 2008, the Board of Directors of Suomen Terveystalo Oyj approved all primary and secondary subscriptions made in the share issue arranged between September 24 and October 8, 2008, as well as the subscriptions based on subscription guarantees made by Ilmarinen Mutual Pension Insurance Company and Varma Mutual Pension Insurance Company in accordance with the terms of the share issue. As a result of the subscription rights issue after the new shares were entered into the trade register on October 15, 2008, the company's share capital is EUR 811,064.21 and the number of shares is 81,106,421. After the subscription rights issue, Varma Mutual Pension Insurance Company's share of Suomen Terveystalo Oyj's entire stock and votes rose above one-tenth (1/10). Varma Mutual Pension Insurance Company owns 11,354,899 Suomen Terveystalo Oyj shares, which represents 14.0 percent of Suomen Terveystalo Oyj's total shares and the votes they generate. After the subscription rights issue, Ilmarinen Mutual Pension Insurance Company's share of Suomen Terveystalo Oyj's entire stock and votes rose above one-tenth (1/10). Ilmarinen Mutual Pension Insurance Company owns 11,354,899 Suomen Terveystalo Oyj shares, which represents 14.0 percent of Suomen Terveystalo Oyj's total shares and the votes they generate. After the subscription rights issue, Infosto Research & Development Oy Ltd's share of Suomen Terveystalo Oyj's entire stock and votes rose above one-twentieth (1/20) Infosto Research & Development Oy Ltd owns 3,543,827 Suomen Terveystalo Oyj shares, which represents 4.37 percent of Suomen Terveystalo Oyj's total shares and the votes they generate All shares subscribed for in the share issue were entered into the trade register on October 15, 2008, after which the temporary shares were combined with Suomen Terveystalo's share type. On October 15, 2008, Suomen Terveystalo Oyj had a total of 6,932 shareholders. The temporary shares and the shares subscribed for based on secondary subscription rights are traded on NASDAQ OMX in Helsinki together with the old shares, starting on October 16, 2008. After the subscription rights issue, a total of 12,544,035 shares of the authorizations concerning a share issue and granting of special rights entitling to shares given to the Board of the Directors by the AGM on May 28, 2007, and the EGM on September 1, 2008, remain unutilized. Short-term risks and uncertainty factors The most significant risks related to Terveystalo's operations include risks related to growth and acquisitions, like the risk of unrealized growth expectations which could lead to impairment of the goodwill in the consolidated balance sheet. Risks also include financing related risks, social and legislative risks, risks related to malpractice cases and liability for damages, risks related to contracts, risks related to customer relationships, risks related to personnel and risks related to technology - including functionality of IT systems and information security. The aim is to manage these risks through operation guidelines and rules or to transfer them to another party through agreements and insurance policies. The company manages risks related to financial costs and loan repayments for instance with interest rate hedging and continued communication with the financers. Short-term risks are also 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 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 in making of business decisions. In January-September 2008 the company continued developing its systematic risk management and internal supervision processes and systems. Outlook According to published research, private healthcare services are expected to continue growing in future years at an average annual rate of nine percent. Based on the company´s view, the continued deterioration of the over-all economic situation could possibly also affect the demand for the private healthcare services in Finland. Terveystalo will continue striving to grow faster than the average market growth in private healthcare sector. In the fall of 2007, Terveystalo launched an integration program to improve its operational efficiency and profitability and expected to reach annual synergy benefits of EUR 3-5 million starting mainly as of 2008. The integration program progressed as planned also in July-September. From the end of September 2007 to the end of September 2008, the Group's man-years mainly in administrative positions and in support functions in regional and unit-level organizations had decreased by approximately 90 man-years. From the end of September 2007 by the end of 2008, the company continues to expect the reduction of operational overlaps and restructuring of units and operations to result in a total reduction of Group man-years by approximately 100 man-years. The synergy benefits from the reduction in man-years realized by the end of September 2008 will materialize in full first once all terms of notice have ended in the first half of 2009. Terveystalo still expects its 2008 turnover and operational result to clearly exceed the 2007 turnover and operational result. Turnover growth is mainly due to a large acquisition carried out in September 2007. SUOMEN TERVEYSTALO GROUP Suomen Terveystalo Oyj's 1.1.-30.9.2008 interim report has been compiled in accordance with the recognition and measurement principles set out in the International Financial Reporting Standards (IFRS) but not all of the requirements set by the IAS 34, Interim Financial Reporting standard have been applied. When compiling this interim report the company has applied the same principles as in the financial statement for the fiscal year that ended on December 31, 2007 apart from the interest rate costs presented in cash flow from financing in the cash flow statement. The reference data for the segments has been adjusted to correspond with the segment division adopted from the beginning of 2008. The figures in the income statement and balance sheet are Group figures. All significant Group companies are consolidated in the Group's interim report. The information included in the interim report is unaudited. -------------------------------------------------------------------------------- | CONSOLIDATED BALANCE SHEET, EUR 1,000 | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | ASSETS | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LONG-TERM ASSETS | | | | -------------------------------------------------------------------------------- | Property, plant and | 58,446 | 52,801 | 58,926 | | equipment | | | | -------------------------------------------------------------------------------- | Goodwill | 146,724 | 143,031 | 147,042 | -------------------------------------------------------------------------------- | Other intangible assets | 38,654 | 44,661 | 42,932 | -------------------------------------------------------------------------------- | Investment property | 45 | 46 | 45 | -------------------------------------------------------------------------------- | Investments in associates | 1,391 | 1,415 | 1,262 | -------------------------------------------------------------------------------- | Receivables from | 17 | 17 | 17 | | associates | | | | -------------------------------------------------------------------------------- | Financial assets | 1,237 | 1,224 | 1,231 | | available for sale | | | | -------------------------------------------------------------------------------- | Deferred tax receivables | 4,618 | 4,018 | 4,924 | -------------------------------------------------------------------------------- | TOTAL LONG-TERM ASSETS | 251,132 | 247,214 | 256,380 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT ASSETS | | | | -------------------------------------------------------------------------------- | Inventories | 2,475 | 1,772 | 2,102 | -------------------------------------------------------------------------------- | Accounts receivable and | 34,371 | 27,655 | 24,928 | | other receivables | | | | -------------------------------------------------------------------------------- | Financial assets at fair | 371 | 393 | 397 | | value through profit or | | | | | loss | | | | -------------------------------------------------------------------------------- | Cash and cash equivalents | 17,059 | 11,669 | 13,088 | -------------------------------------------------------------------------------- | TOTAL CURRENT ASSETS | 54,276 | 41,489 | 40,516 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL ASSETS | 305,408 | 288,704 | 296,896 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY AND | 30.9.2008 | 30.9.2007 | 31.12.2007 | | LIABILITIES | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SHAREHOLDERS' EQUITY | | | | -------------------------------------------------------------------------------- | Share capital | 681 | 680 | 681 | -------------------------------------------------------------------------------- | Share issue | 6,995 | 0 | 0 | -------------------------------------------------------------------------------- | Share premium account | 459 | 31,670 | 459 | -------------------------------------------------------------------------------- | Unrestricted equity | 77,052 | 46,323 | 77,809 | | reserve | | | | -------------------------------------------------------------------------------- | Retained earnings | -3,924 | 2,741 | 889 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Minority interest | 1,638 | 2,726 | 1,682 | -------------------------------------------------------------------------------- | TOTAL SHAREHOLDERS' | 82,902 | 84,140 | 81,520 | | EQUITY | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | LONG-TERM LIABILITIES | | | | -------------------------------------------------------------------------------- | Deferred tax liabilities | 12,046 | 12,783 | 12,492 | -------------------------------------------------------------------------------- | Interest-bearing | 138,092 | 142,665 | 21,292 | | liabilities | | | | -------------------------------------------------------------------------------- | Other liabilities | 415 | 392 | 459 | -------------------------------------------------------------------------------- | TOTAL LONG-TERM | 150,554 | 155,840 | 34,243 | | LIABILITIES | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CURRENT LIABILITIES | | | | -------------------------------------------------------------------------------- | Accounts payable and | 35,542 | 33,894 | 38,462 | | other liabilities | | | | -------------------------------------------------------------------------------- | Current tax liabilities | 481 | 105 | 195 | -------------------------------------------------------------------------------- | Current interest-bearing | 35,928 | 14,724 | 142,476 | | liabilities | | | | -------------------------------------------------------------------------------- | TOTAL CURRENT LIABILITIES | 71,951 | 48,723 | 181,133 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | TOTAL EQUITY AND | 305,408 | 288,704 | 296,896 | | LIABILITIES | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED | 1.7.- | 1.7.- | 1.1.- | 1.1.- | 1.1.- | | PROFIT AND LOSS | 30.9.2008| 30.9.2007| 30.9.2008 | 30.9.2007 | 31.12.2007| | ACCOUNT, EUR 1,000 | | | | | | -------------------------------------------------------------------------------- | Turnover | 45,821 | 30,236 | 154,534 | 87,796 | 140,719 | -------------------------------------------------------------------------------- | Other operating | 213 | 164 | 3,119 | 727 | 1,049 | | income | | | | | | -------------------------------------------------------------------------------- | Share of profit of | 61 | 83 | 492 | 415 | 365 | | associates | | | | | | -------------------------------------------------------------------------------- | Raw material and | -8,447 | -4,879 | -24,903 | -14,175 | -23,955 | | consumables used | | | | | | -------------------------------------------------------------------------------- | Employee benefit | -19,958 | -14,584 | -70,435 | -39,205 | -63,476 | | costs | | | | | | -------------------------------------------------------------------------------- | Depreciation and | -5,255 | -3,707 | -15,294 | -8,844 | -14,134 | | impairment | | | | | | -------------------------------------------------------------------------------- | Other operating | -14,002 | -9,579 | -42,486 | -26,401 | -40,166 | | expenses | | | | | | -------------------------------------------------------------------------------- | OPERATING RESULT | -1,567 | -2,536 | 5,026 | 313 | 401 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | -1,203 | 101 | 333 | 423 | 564 | -------------------------------------------------------------------------------- | Financial expenses | -3,334 | -1,025 | -9,644 | -2,321 | -5,092 | -------------------------------------------------------------------------------- | RESULT BEFORE | -6,104 | -3,459 | -4,284 | -1,585 | -4,126 | | TAXES | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Income taxes | -44 | 938 | -524 | 466 | 1,146 | -------------------------------------------------------------------------------- | RESULT FOR THE | -6,148 | -2,522 | -4,826 | -1,119 | -2,980 | | PERIOD | | | | | | -------------------------------------------------------------------------------- | Attributable to: | | | | | | -------------------------------------------------------------------------------- | Parent group | -6,081 | -2,527 | -4,795 | -1,278 | -3,088 | | owners | | | | | | -------------------------------------------------------------------------------- | Minority interest | -67 | 5 | -31 | 159 | 107 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Earnings per share calculated on the earnings belonging to the owners of | | the parent company (EUR) | -------------------------------------------------------------------------------- | Undiluted | -0.09 | -0.04 | -0.07 | -0.02 | -0.05 | -------------------------------------------------------------------------------- | Diluted | -0.09 | -0.04 | -0.07 | -0.02 | -0.05 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONDENSED CASH FLOW STATEMENT | | | -------------------------------------------------------------------------------- | EUR 1,000 | 1.1.- | 1.1.- | 1.1.- | | | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from operations | | | | -------------------------------------------------------------------------------- | Result for the period | -4,826 | -1,119 | -2,980 | -------------------------------------------------------------------------------- | Adjustments to the result for | 22,638 | 9,840 | 17,052 | | the period | | | | -------------------------------------------------------------------------------- | Change in working capital | -8,505 | -4,729 | -3,231 | -------------------------------------------------------------------------------- | Interest received | 124 | 392 | 514 | -------------------------------------------------------------------------------- | Taxes paid | -254 | -1,906 | -1,870 | -------------------------------------------------------------------------------- | Net cash flow from operations | 9,176 | 2,478 | 9,485 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from investments | | | | -------------------------------------------------------------------------------- | Acquired operations | 0 | -128,351 | -130,236 | -------------------------------------------------------------------------------- | Investments in tangible and | -7,691 | -10,583 | -15,455 | | intangible assets | | | | -------------------------------------------------------------------------------- | Disposal of associates | 0 | 0 | 123 | -------------------------------------------------------------------------------- | Income from business operation | 3,399 | 0 | 0 | | divestments | | | | -------------------------------------------------------------------------------- | Gains on disposal of assets | 459 | 83 | 335 | -------------------------------------------------------------------------------- | Dividends received | 371 | 402 | 465 | -------------------------------------------------------------------------------- | Net cash flow from investments | -3,462 | -138,448 | -144,768 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Cash flow from financing | | | | -------------------------------------------------------------------------------- | Share issue payments | 6,300 | 48,413 | 48,187 | -------------------------------------------------------------------------------- | Costs of issuing equity | -956 | -2,065 | -2,065 | -------------------------------------------------------------------------------- | Withdrawals of loans | 18,000 | 131,105 | 134,829 | -------------------------------------------------------------------------------- | Repayment of loans | -8,407 | -32,154 | -33,191 | -------------------------------------------------------------------------------- | Interest paid | -13,343 | -1,787 | -2,327 | -------------------------------------------------------------------------------- | Repayment of finance lease | -3,305 | -2,443 | -3,603 | | liabilities | | | | -------------------------------------------------------------------------------- | Dividends paid | -33 | -2 | -29 | -------------------------------------------------------------------------------- | Net cash flow from financing | -1,744 | 141,067 | 141,800 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Liquid assets at beginning of | 13,088 | 6,571 | 6,571 | | period | | | | -------------------------------------------------------------------------------- | Liquid assets at end of period | 17,059 | 11,669 | 13,088 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CALCULATION OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY 1.1. - 30.9.2008 | -------------------------------------------------------------------------------- | EUR 1,000 | Share | Share | Share | Unrestr | Retain | Minori | Total | | | capit | premium | issue | icted | ed | ty | | | | al | account | | equity | earnin | intere | | | | | | | reserve | gs | st | | -------------------------------------------------------------------------------- | Shareholders' | 681 | 459 | 0 | 77,809 | 889 | 1,682 | 81,520 | | equity Jan 1, | | | | | | | | | 2008 | | | | | | | | -------------------------------------------------------------------------------- | Option | 0 | 0 | 0 | 36 | 0 | 0 | 36 | | program | | | | | | | | -------------------------------------------------------------------------------- | Subscription | 0 | 0 | 6,994 | 0 | 0 | 0 | 6,994 | | rights issue | | | | | | | | -------------------------------------------------------------------------------- | Costs of | 0 | 0 | 0 | -793 | 0 | 0 | -793 | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Redeemed | 0 | 0 | 0 | 0 | 0 | -12 | -12 | | subsidiary | | | | | | | | | minorities | | | | | | | | -------------------------------------------------------------------------------- | Result for | 0 | 0 | 0 | 0 | -4,795 | 0 | -4,795 | | the period | | | | | | | | -------------------------------------------------------------------------------- | Dividend | 0 | 0 | 0 | 0 | -18 | 0 | -18 | -------------------------------------------------------------------------------- | Shareholders' | 681 | 459 | 6,994 | 77,052 | -3,924 | 1,639 | 82,901 | | equity | | | | | | | | | September 30, | | | | | | | | | 2008 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CALCULATION OF CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY 1.1. - 30.9.2007 | -------------------------------------------------------------------------------- | EUR 1,000 | Share | Share | Share | Unrestr | Retain | Minori | Total | | | capit | premium | issue | icted | ed | ty | | | | al | account | | equity | earnin | intere | | | | | | | reserve | gs | st | | -------------------------------------------------------------------------------- | Shareholders' | 472 | 31,211 | 315 | 630 | 4,021 | 1,892 | 38,541 | | equity Jan 1, | | | | | | | | | 2007 | | | | | | | | -------------------------------------------------------------------------------- | Costs of | 0 | 0 | 0 | -2,775 | 0 | 0 | -2,775 | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Deferred tax | 0 | 0 | 0 | 722 | 0 | 0 | 722 | | on costs of | | | | | | | | | issuing | | | | | | | | | equity | | | | | | | | -------------------------------------------------------------------------------- | Rights issue | 200 | 0 | 0 | 47,746 | 0 | 0 | 47,946 | -------------------------------------------------------------------------------- | Dividend | 0 | 0 | 0 | 0 | -2 | 0 | -2 | -------------------------------------------------------------------------------- | Unsubscribed | 0 | 0 | -315 | 0 | 0 | 0 | -315 | | share issue | | | | | | | | -------------------------------------------------------------------------------- | Conversion of | 8 | 459 | 0 | 0 | 0 | 0 | 467 | | convertible | | | | | | | | | bond into | | | | | | | | | shares | | | | | | | | -------------------------------------------------------------------------------- | Result for the| 0 | 0 | 0 | 0 | -1,278 | 159 | -1,119 | | period | | | | | | | | -------------------------------------------------------------------------------- | Minority | 0 | 0 | 0 | 0 | 0 | 674 | 674 | | interests in | | | | | | | | | acquisitions | | | | | | | | | and other | | | | | | | | | changes | | | | | | | | -------------------------------------------------------------------------------- | Shareholders' | 680 | 31,670 | 0 | 46,323 | 2,741 | 2,726 | 84,140 | | equity | | | | | | | | | September 30, | | | | | | | | | 2007 | | | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | SEGMENT | 1.7.- | 1.7.- | 1.1.- | 1.1.- | 1.1.- | | REPORTING, | 30.9.2008| 30.9.2007| 30.9.2008| 30.9.2007 | 31.12.2007 | | 1,000 EUR | | | | | | -------------------------------------------------------------------------------- | Turnover by segment | | | | | -------------------------------------------------------------------------------- | Occupational | 28,624 | 12,757 | 97,492 | 30,834 | 63,808 | | Healthcare | | | | | | | segment | | | | | | -------------------------------------------------------------------------------- | Clinics and | 15,518 | 14,973 | 51,705 | 42,582 | 54,897 | | Hospitals segment | | | | | | -------------------------------------------------------------------------------- | Diagnostics | 6,270 | 5,128 | 20,672 | 21,686 | 32,489 | | segment | | | | | | -------------------------------------------------------------------------------- | Unallocated | 869 | 587 | 2,904 | 2,612 | 2,667 | -------------------------------------------------------------------------------- | Eliminations | -5,461 | -3,208 | -18,241 | -9,916 | -13,142 | -------------------------------------------------------------------------------- | Total turnover | 45,821 | 30,236 | 154,534 | 87,796 | 140,719 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Operating result by segment | | | | | -------------------------------------------------------------------------------- | Occupational | 706 | -561 | 6,774 | -1,001 | -2,929 | | Healthcare | | | | | | | segment | | | | | | -------------------------------------------------------------------------------- | Clinics and | 853 | 793 | 7,139 | 8,120 | 11,310 | | Hospitals segment | | | | | | -------------------------------------------------------------------------------- | Diagnostics | 484 | 651 | 5,438 | 2,507 | 4,225 | | segment | | | | | | -------------------------------------------------------------------------------- | Others | -3,608 | -3,419 | -14,324 | -9,312 | -12,204 | -------------------------------------------------------------------------------- | Total operating | -1,567 | -2,536 | 5,026 | 313 | 401 | | result | | | | | | -------------------------------------------------------------------------------- | Operating result | -3.4 | -8.4 | 3.3 | 0.4 | 0.3 | | /turnover, % | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Financial income | -4,537 | -924 | -9,311 | -1,898 | -4,528 | | and expenses | | | | | | -------------------------------------------------------------------------------- | Result before tax | -6,104 | -3,459 | -4,284 | -1,585 | -4,126 | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | Taxes | -44 | 938 | -542 | 466 | 1,146 | -------------------------------------------------------------------------------- | RESULT FOR THE | -6,148 | -2,522 | 4,826 | -1,119 | -2,980 | | PERIOD | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | CONSOLIDATED PROFIT AND LOSS ACCOUNT, BY QUARTER, EUR 1,000 | | -------------------------------------------------------------------------------- | | 1.7.- | 1.4.- | 1.1.- | 1.10.- | 1.7.- | | | 30.9.2008 | 30.6.2008| 31.3.2008 | 31.12.2007 | 30.9.2007 | | | | | | | | -------------------------------------------------------------------------------- | Turnover | 45,821 | 55,844 | 52,868 | 52,923 | 30,236 | -------------------------------------------------------------------------------- | Other | 213 | 253 | 2,653 | 321 | 164 | | operating | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Share in | 61 | 309 | 122 | -50 | 83 | | associated | | | | | | | companies | | | | | | | income | | | | | | -------------------------------------------------------------------------------- | Raw material | -8,447 | -9,194 | -7,262 | -9,780 | -4,879 | | and | | | | | | | consumables | | | | | | | used | | | | | | -------------------------------------------------------------------------------- | Employee | -19,958 | -24,980 | -25,497 | -24,271 | -14,854 | | benefit | | | | | | | costs | | | | | | -------------------------------------------------------------------------------- | Depreciation | -5,255 | -4,703 | -5,336 | -5,290 | -3,707 | -------------------------------------------------------------------------------- | Other | -14,002 | -15,377 | -13,107 | -13,766 | -9,579 | | operating | | | | | | | expenses | | | | | | -------------------------------------------------------------------------------- | OPERATING | -1,567 | 2,151 | 4,442 | 87 | -2,536 | | RESULT | | | | | | -------------------------------------------------------------------------------- | Financial | -1,203 | 2,211 | 93 | 141 | 101 | | income | | | | | | -------------------------------------------------------------------------------- | Financial | -3,334 | -3,054 | -4,022 | -2,771 | -1,025 | | expenses | | | | | | -------------------------------------------------------------------------------- | Result | -6,104 | 1,307 | 513 | -2,542 | -3,459 | | before tax | | | | | | -------------------------------------------------------------------------------- | Income taxes | -44 | -804 | -1,371 | 680 | 938 | -------------------------------------------------------------------------------- | RESULT FOR | -6,148 | 502 | -858 | -1,862 | -2,522 | | THE PERIOD | | | | | | -------------------------------------------------------------------------------- | Attributable | | | | | | | to: | | | | | | -------------------------------------------------------------------------------- | Parent | -6,081 | 377 | -769 | -1,810 | -2,527 | | company | | | | | | | shareholders | | | | | | -------------------------------------------------------------------------------- | Minority | -67 | 125 | -89 | -52 | 5 | | interest | | | | | | -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- | OTHER INFORMATION | 1.1.- | 1.1.- | 1.1.- | | | 30.9.2008 | 30.9.2007 | 31.12.2007 | -------------------------------------------------------------------------------- | Average personnel | 2,350 | 1,461 | 1,689 | -------------------------------------------------------------------------------- | Personnel at end of period | 2,316 | 2,338 | 2,398 | -------------------------------------------------------------------------------- Calculation of financial ratios: Return on equity, % = 100 x (Result before tax - direct taxes)/ (Shareholders' equity + minority interest (average)) Return on investment, % = 100 x (Result before tax + interest expenses + other financial expenses)/ (Balance sheet total - non-interest-bearing liabilities (average)) Capital adequacy, % = 100 x (shareholders' equity + minority interest) / (Balance sheet total - advances received) Net gearing = (Interest-bearing liabilities - liquid assets) / (Shareholders' equity + minority interest) Undiluted earnings per share = (Result before tax - minority interest - income taxes) / Weighted average number of outstanding shares Diluted earnings per share = (Result before tax - minority interest - income taxes) / Weighted average number of outstanding shares adjusted for dilution Equity per share = Shareholders' equity / Undiluted number of shares at end of the review period Quick ratio = Financial assets / (Short term liabilities - advances received) SUOMEN TERVEYSTALO OYJ Board of Directors FOR ADDITIONAL INFORMATION, PLEASE CONTACT: Managing Director Martti Kiuru, tel. 030 63 311, martti.kiuru@terveystalo.com CFO Jukka Yli-Hankala, tel. +358 400 96 2212, jukka.yli-hankala@terveystalo.com The bulletin and tables are available at: http://www.terveystalo.com Terveystalo: Terveystalo is Finland's leading healthcare service company offering versatile healthcare, occupational healthcare, diagnostic and hospital services. The company has more than 100 units across the country. Terveystalo, which was founded in 2001, has grown strongly. The company share is listed on the NASDAQ OMX Helsinki Ltd. under the code SUT1V. The statements about the future are based on the situation when this 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 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 utilize its investments and implement its integration program and its business strategy. Distribution: NASDAQ OMX Helsinki Ltd. Principal media www.terveystalo.com
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