Capio Interim Report Jan-Sep 2001

[ I N T E R I M R E P O R T ] JANUARY - SEPTEMBER 2001 Strong volume growth for the Group · Net sales rose by 48 per cent to SEK 3,600 M (2,440). Organic growth amounted to 11 per cent in local currencies. · Operating earnings before goodwill amortisation (EBITA), and excluding items affecting comparability, amounted to SEK 228 M (111), corresponding to an operating margin of 6.3 per cent (4.5). · Earnings after financial items amounted to SEK 124 M (245), including items affecting comparability totalling SEK 16 M (147). Pension fee repayments from Alecta were included in the figure for the preceding year. · Community Hospitals Group is continuing to develop favourably and integration work is progressing as planned. · Radiology operations reported weak earnings due to the start-up of a number of new units, the restructuring of St. Göran Röntgen (X-ray) and low compensation levels in Norway. · Medocular, the Nordic region's largest private company in the eye healthcare (ophthalmological) field, was acquired during the period. Events since the close of the report period: · Actica, Capio's Elderly Care business area, established operations in the Stockholm area and sold properties used for operations to a value of SEK 200 M. INVITATION TO ATTEND A TELEPHONE CONFERENCE On Wednesday 24 Oktober 2001, Capio will present their nine-months 2001 Interim Report. In conjunction with this, we will be arranging a telephone conference in English at 14:00 CET, 13:00 GMT. The meeting will include a presentation of Capio's Report by President and CEO Per Båtelson and Executive Vice President and CFO Martin Svalstedt. This invitation is extended to journalists and professionals active in the capital market. To connect to the conference, please dial +44 (0)20 8240 8246 just before the conference, and specify "Capio". You may listen to an Instant Replay directly after the conference and until October 30, please dial +44 (0)20 8288 4459 access code 626112. January - September 2001 The Capio Group has expanded significantly following the acquisition of the Community Hospitals Group (CHG) in the UK, which is consolidated in Capio's accounts as of June 2001. During the third quarter, Capio's units and the healthcare market as a whole have a lower production. Seasonal variations are also affecting operations in the UK, but not to the same extent as in Scandinavia. The Group's organic growth during the period was favourable and corresponded to 11 per cent in local currencies. Consolidated net sales increased by 48 per cent and amounted to SEK 3,600 M (2,440). EBITA, excluding items affecting comparability, amounted to SEK 228 M (111). The Group's operating margin, before items affecting comparability, was 6.3 per cent (4.5). Earnings after financial items totalled SEK 124 M (245), including items affecting comparability of SEK 16 M (147). CHG has annual sales of more than SEK 2,000 M and owns its hospital properties. These are reported separately as an independent operation based on an assessed market rent level. Excluding properties, the CHG operating margin lies at the upper end of Capio's corporate margin objective of 7- 9 per cent. Work to refinance the property portfolio is in progress Organisation Capio has three business sectors: Healthcare services, Diagnostic services and Elderly Care services. The Group has operating units in Sweden, Norway, Denmark, the United Kingdom, Switzerland and Poland. Healthcare Services The acquisition of CHG has generated very strong growth for this business sector. Net sales rose by 58 per cent to SEK 2,848 M (1,804). Expressed in local currencies, organic growth during the period was 11 per cent. Excluding items affecting comparability, EBITA totalled SEK 161 M (90), corresponding to an operating margin of 5.7 per cent (5.0). During the third quarter, the margin rose by 2.2 percentage points to 4.9 per cent, compared with Q3 in 2000. The business sector has been reorganised as a result of the CHG acquisition, whereby there is now an Occupational Health business area, plus separate business areas for the sector's Nordic and UK operations. St. Göran's Hospital noted improved productivity during the third quarter, as reflected in the hospital's contribution to earnings. A new care department will be started later in the autumn to relieve the flow of patients who have completed their medical treatment and are waiting for geriatric care, or residential elderly care. The hospital will take over responsibility for geriatric care operations at Löwenströmska Hospital as of 2002. The contract is worth approximately SEK 60 M per year. A new five-year care contract with Lundby Hospital took effect in September 2001, which corresponds to annual sales of approximately SEK 100 M. Svenska Cityklinikerna signed a number of care contracts, equivalent to an annual volume increase of about SEK 40 M, which included the development of operations in Lund into a local community hospital. During the period, a high volume of patients were treated by the psychiatry units, including newly established operations. The integration of CHG in the UK is progressing wholly in line with plan and operations continue to show strong growth. Several small long-term care contracts have been entered into with the National Health Service in the UK. Although demand for occupational healthcare remained strong during the period and created favourable volume growth for the Group's units, the future trend in this segment is uncertain. Medocular, the largest ophthalmological company in the Nordic region, was acquired during the period. Medocular, which is consolidated in Capio as of October, principally conducts operations on behalf of the public healthcare sector. Each year, the company performs about 10 per cent of all cataract operations in Sweden. Medocular has annual sales of slightly more than SEK 70 M. Diagnostic Services Net sales for this business sector amounted to SEK 650 M (478). Excluding items affecting comparability, EBITA totalled SEK 28 M (38). Organic growth was 13 per cent in local currencies. Laboratory medicine operations developed more favourably than anticipated during the period. As of August, the laboratory medicine operations of Bielany Hospital in Warsaw, Poland, were taken over by Group unit. It is expected that this unit will generate sales of about SEK 10 M on an annual basis. Initially, the Polish venture is creating temporarily increased costs as a result of integration work. This is the first time that hospital laboratory operations have been outsourced in Poland. Radiology operations continued to show good volume growth, both in Sweden and in Norway, but earnings were weak. St. Göran Röntgen (X-ray) is currently being restructured and is largely conducting inpatient care operations, which have low patient volumes during the summer. It takes longer than anticipated for Globen Röntgen (X-ray) to achieve a satisfactory volume. Certain marginal upgrades in the rates charged for MR were implemented in Norway but margins remain depressed by the low compensation levels in this market. A new, digital radiology unit was opened in Sandefjord, Norway, in September. During the year, two radiology units were also started up in Sweden, which resulted in combined start-up costs of about SEK 9 M. Elderly Care Services Sales for elderly care operations amounted to SEK 208 M (186), reflecting organic growth of 10 per cent, expressed in local currencies. EBITA totalled SEK 13 M (17). During the third quarter, patient volume was lower than in the corresponding quarter of 2000, which had an adverse effect on earnings. This was due to new capacity being added in the Gothenburg area at the beginning of the quarter, whereby full capacity could not be utilised during the summer months. Start-up costs during the period amounted to approximately SEK 2 M. During September, Actica Omsorg acquired Borgmästaregården, which conducts residential and home help services the elderly in Norrköping. These operations will be formally taken over in October 2001. Parent Company sales and earnings The Group Parent Company, Capio AB, reported sales of SEK 15 (9) during the period and an operating loss of SEK 49 M (loss: 42) before goodwill amortisation and excluding items affecting comparability. Earnings before appropriations and taxes amounted to SEK 113 M (loss:42). The Parent Company reported investments of SEK 1 M (2) for the period. The Capio share The Capio share was listed on the Stockholm Exchange on October 16, 2000, with an initial closing price of SEK 49 per share. The closing price on October 16, 2001, was SEK 71.50 per share. A private placement of 19 million shares at a price of SEK 79 per share was made to institutional investors in June, to partly finance the CHG acquisition. Financial position Due to the CHG acquisition in June, the Group's financing situation has changed significantly. The acquisition was financed through a new share issue in a net amount of SEK 1,385 M, including the issue costs, and through the raising of a long-term loan amounting to SEK 3,500 M. The loan, which also covers the refinancing of Capio's and CHG's earlier loans, was placed in mainly Swedish and UK banks, syndicated by Deutsche Bank. The Group has assets pledged and contingent liabilities of SEK 4 837 M. Last December 31 these amounted to SEK 435 M. The Group's equity/assets ratio at September 30 was 30 per cent. At the end of the third quarter, the Group had net debt of SEK 3 298 M and liquid funds of SEK 279 M. Personnel At the end of the period, the number of Group employees was 7 339. The average number of employees during the period totalled 5 917. Events since the close of the report period Actica acquired the Rosengården facility, which provides residential care for the elderly, and its subsidiary Crebona, thereby establishing itself in the Stockholm area. At the same time, Actica sold all of its elderly care properties to Bokbacken in the form of a non-cash issue. Accordingly, Actica obtained a 37.5-per cent stake in Bokbacken, which already owns seven properties and specialises in nursing-care for elderly residents. Capio's properties for elderly care operations have a book value of SEK 200 M and, as a result of this divestment the Group reduces the loans connected to properties by SEK 150 M. Per Båtelson President and Chief Executive Officer Gothenburg, October 24, 2001 Capio AB (publ ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/24/20011024BIT00650/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/10/24/20011024BIT00650/bit0002.pdf The full report