Capio's Preliminary Accounts Report 2000

CAPIO'S PRELIMINARY ACCOUNTS REPORT 2000 Capio listed on the Stockholm Stock Exchange's O list on 16 October * Net sales increased by 48% to SEK 3,357M (2,267). Organic growth was 10%. * EBITA increased by 38% to SEK 170M (123), excluding items affecting comparability. This is equivalent to an operating margin of 5.1% (5.4%). * Earnings after financial items totalled SEK 310M, including items affecting comparability in the amount of SEK 152M. * S:t Görans Sjukhus has extended its care agreement until 2006. * Marsh Health, Britain's third largest occupational health company, was acquired at the end of the year. The GroupWork during the year focused on developing the existing business, which has seen strong growth in the past few years. All of the Group's business areas boosted their competitiveness, leading to healthy volume development. There were a number of start-ups in the autumn and decisions have been taken regarding further start-ups due in spring 2001. Bure Equity distributed shares in Capio to its shareholders at the beginning of October. Capio was listed on the Stockholm Stock Exchange's O list on 16 October. Bure merged the companies within the Healthcare business area into a single legal Group ahead of this distribution. This restructuring began in 1999 and was concluded in spring 2000. Net sales totalled SEK 3,357M (2,267), an increase of 48 percent on the previous year. The increase is mostly attributable to the acquisition of S:t Görans Sjukhus at the end of 1999. Organic growth was strong, totalling 10 per cent. The EBITA totalled SEK 170M (123), excluding items affecting comparability in the amount of SEK 152M. This item includes a repayment of SPP funds in a net amount of SEK 170M after a provision for non-recurring expenses for pensions. The item also comprises the costs associated with the listing on the stock exchange, i.e. SEK 8M, as well as SEK 10M in the form of a non- recurring provision to Capio's research foundation. The operating margin was 5.1 percent (5.4). The decrease is mainly due to lower margins in the Norwegian diagnostic business because of drastic cuts in MR charges. The relative size of S:t Görans Sjukhus within the Group also reduces the margins somewhat. The hospital's performance is healthy and is following the acquisition plan. The Group's earnings after financial items totalled SEK 310M. The Norwegian Rikstrygdeverket´s decision concerning a substantial reduction in reimbursements for certain types of X-ray examinations (MR) has led to a significant decrease in earnings for Capio's Norwegian radiology business this year compared with the previous year. The question of equal opportunities for private and public producers in Norway is currently being investigated, and the decision concerning equal reimbursement terms has therefore been postponed. Despite this, volumes have developed well in the radiology business, although the difficult pricing situation has had a negative impact on net sales and earnings of around SEK 41M during the year. A freeze on investments in additional MR equipment has been introduced in Capio's Norwegian radiology business. During the autumn, the remaining 30 percent of the shares in AB Previa and the remaining 50 percent of the shares in the Volvat Group were acquired through two non-cash issues. The subscription level for Capio's first co-ownership included 1,700 employees. A total of 2,050,300 warrants were subscribed for. Each warrant entitles the holder to subscribe for a share in Capio at a price of SEK 50 per share by 31 May 2004 at the latest. Marsh Health Limited was acquired in December. The company is the third largest occupational healthcare company in Britain. The acquisition will help consolidate Capio's position in the UK market. The company will be included in the Group's financial results as of 2001. A new operational organisation was introduced in 2000 when the organisation was divided into six business areas that were integrated into three overall business sectors. The central divisions are at the parent company. Business Sector Healthcare Services Provides both planned and emergency outpatient and in-patient medical care within around thirty medical specialist areas. Business Area Hospitals S:t Görans Sjukhus in Stockholm was acquired in December 1999 and is the Group's largest unit. During the year, major restructuring work has begun. This includes a review and modification of the organisation, production control, production processes, IT structure etc. The hospital is gradually being streamlined and developments have proceeded according to plan. In December, Sweden's Parliament decided to introduce legislation to halt the sale of emergency hospitals to profit-making companies. This legislation applies until the end of 2002. It is not retroactive, which means that neither S:t Görans Sjukhus nor other units within the Group are affected. S:t Görans Sjukhus has concluded an extension of its care agreement with the Stockholm county council until 2006. The agreement also includes an extended future geographical catchment area. Lundby hospital has signed a dialysis agreement with the Västra Götaland region. The dialysis operations began in September. Business Area Outpatient Healthcare The market for services within occupational care and other medical specialist areas is looking healthy in Scandinavia, which has led to increased sales and improved financial results. During the year, smaller units in Sweden and Norway have been incorporated into the existing operations. Marsh Health, the UK's third largest occupational health company, was acquired in December, opening the way for expansion in a large and fragmented market with excellent growth. Business Area Psychiatry The operations have expanded during the year. The Anorexia Centre in Varberg was acquired in May, consolidating Capio's position within anorexia treatment in Sweden. New units have been started during the year in London, Liverpool and Lausanne. Two major new agreements have been signed for psychiatric care in Stockholm and Malmö. Business Sector Diagnostic Services Comprises laboratory medicine and diagnostic radiology for outpatient and inpatient medical care. Clinical tests for the pharmaceutical industry are also performed. Business Area Laboratories The operations have performed very well during the year. Profitability has improved significantly thanks to ongoing streamlining efforts, as well as investments in IT systems. The operations in Denmark report healthy organic growth, due, amongst other things, to a stong intake of orders for clinical tests. Fifty percent of Professional Genetics Laboratory in Uppsala was acquired in December. Business Area Radiology Volume development is good and demand is substantial. The EBITA has however fallen considerably because of the Norwegian Rikstrygdeverket´s decision to make drastic cuts in reimbursement levels for MR examinations. Increased volumes have partly compensated for this. Margins in the Norwegian MR operations are expected to remain on the present level in 2001. Preparations for the integration of S:t Görans Röntgen into the business area were made during the year. As of 2001, the company will be included in the business area. Investments in new MR capacity have been made in Stockholm and Gothenburg. Decisions have been taken and preliminary activities conducted ahead of the impending opening of Globen Röntgen. In addition, a smaller X-ray business was opened in Solna during the autumn. Lundby Röntgen has signed a four-year agreement covering mammography in Skaraborg starting in February 2001. Business Sector Elderly Care Services Provides nursing and care services focusing on the healthcare-intensive segment. Business Area Elderly Care Elderly care has continued to perform well. The EBITA has been boosted significantly thanks to high occupancy rates and efficiency-enhancing efforts. Occupancy levels in all operations have been good. Newly started operations, however, have reported lower occupancy levels. The business area has concluded an agreement with the Halmstad municipality for elderly housing for 72 residents starting in 2002. In Norway, a four-year agreement has been signed covering the running of a new establishment in Baerum, Norway, whose operations are due to commence in March 2001. Key events at the Capio Group between October and December 2000 The fourth quarter was marked by a high level of activity in all business areas. An agreement was signed extending the care agreement at S:t Görans Sjukhus to 2006. Outpatient Healthcare signed several new occupational health care contracts and acquired the remaining outstanding shares in Örebrohälsan. Marsh Health, the British occupational health company, was acquired in December. An agreement has been signed covering dialysis operations in Malmö. The Psychiatry business area signed new care agreements in Stockholm and Malmö. The Radiology business area signed a four-year contract covering all mammography operations in Skaraborg. The Laboratories business area acquired 50 percent of Professional Genetics Laboratory. The Elderly Care business area has signed an agreement covering the running of a new establishment in Baerum, Norway. Financial position The Capio Group's financial position is healthy. The equity/assets ratio was 39 percent. By the end of the year, the Group had a net dept of SEK 20M and liquid assets of SEK 186M. Total investments amounted to SEK 301M, of which acquisition investments constituted SEK 107M. The biggest acquisition investment of the year was Marsh Health. Of the remaining SEK 194M in net investments, expansion investments accounted for SEK 57M. Employees The average number of employees at the Capio Group in 2000 was 4,480 (2,965). The total number of employees was around 5,700. The parent company had 21 employees at the end of the year. The parent company's net sales and financial results The net sales of the parent company, Capio AB, totalled SEK 21M (24). The earnings after financial items totalled SEK -8M (-40). Liquid assets totalled SEK 47M (3) and shareholders' equity SEK 531M (327). The parent company's investments totalled SEK 2M (3). The shares Since its listing, Capio has had an ownership group of around 19,000 people and institutions. During the final months of the year, the foreign- owned percentage increased to around 38 percent. The biggest shareholder is the Swedish Sixth Fund Board with a 15.3 percent holding. The last price paid in 2000 was SEK 70 per share, which is equivalent to a market value of SEK 4,141M. On 2 February 2001, the last price paid was SEK 65 per share. Dividend The Board proposes, according to the listing particulars, that no dividend should be paid for the current financial year since future expansion opportunities are regarded as excellent. Buy-back of shares The Board will be proposing to the 2001 AGM, according to the listing particulars, that it should enable a share buy-back. Since the Group's expansion is by and large due to be gradual and take place through acquisitions, shares that are bought back may be used as payment for acquisitions. Future performance The healthcare market in Europe is characterised by a strong underlying demand, regardless of the business cycle trend. In addition, public sector buyers in several countries have announced an increased need for co- operation with private producers. This will lead to more and larger procurements. Capio's strong position in the market guarantees continued healthy growth in 2001. Capio's AGM The AGM is scheduled for 27 March 2001 in Gothenburg. The annual report will be available from Capio's head office and from the Capio web site from 13 March. A review of the financial year will be sent to the shareholders in the middle of March. Gothenburg, February 6, 2001 Capio AB (publ) Board of Directors ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/02/06/20010206BIT00700/bit0001.doc The full report http://www.bit.se/bitonline/2001/02/06/20010206BIT00700/bit0002.pdf The full report