january - june 2001

Strong operations established in UK market * Net sales rose by 28 per cent to SEK 2,186 M (1,705). Organic growth amounted to 10 per cent in local currencies. * Operating earnings before goodwill amortisation (EBITA) and excluding items affecting comparability amounted to SEK 130.2 M (90.4), corresponding to an operating margin of 6.0 per cent (5.3). * Earnings after financial items amounted to SEK 102 M (197), including items affecting comparability totalling SEK 19 M (117). * Community Hospitals Group, the UK's fourth largest healthcare company, was acquired during the period. * New share issue of approximately SEK 1,400 M successfully placed to partly finance acquisition of Community Hospitals Group. * St. Göran's Hospital in Stockholm selected to take over geriatric operations at Löwenströmska Hospital as of January 1, 2002. * Björnbo residential home for the elderly in Stockholm acquired by Capio subsidiary. Capio January - June 2001 The Group has expanded rapidly. The first half of the current year was characterised by intensive work to acquire the Community Hospitals Group (CHG) in the UK. CHG is consolidated in Capio's accounts as of June 1, 2001. During recent months, the new operations established during the preceding year achieved satisfactory volumes. Organic growth during the period was favourable and corresponded to 10 percent in local currencies. Consolidated net sales increased by 28 per cent and amounted to SEK 2,186 M (1,705). EBITA excluding items affecting comparability, amounted to SEK 130.2 M (90.4). The Group's operating margin, before items affecting comparability, was 6.0 per cent (5.3). Earnings after financial items totalled SEK 102 M (197), including items affecting comparability of SEK 19 M (117). Community Hospitals Group (CHG) owns the properties in which it conducts its healthcare operations and to maintain continuity in the accounts, these are reported as a separately operation based on an assessed market rent level. CHG has 21 hospitals in the UK and annual sales corresponding to approximately SEK 2,000 M. Excluding properties, the CHG operating margin lies in the upper part of Capio's corporate margin objective of 7-9 per cent. A placement of slightly more than 19 million new shares to institutions was undertaken during June to partly finance the acquisition of CHG in the UK. The issue generated funds of approximately SEK 1,400 M for Capio. Following this, the number of shares outstanding amounts to 77.6 million Capio's participation in the staffing company Proffice Care was sold during the period generating a capital gain of SEK 17 M. Events since the end of the report period Nova Medical has signed a contract to take over the laboratory medicine operations of the hospital of the Bielany Hospital in Warsaw, Poland, as of August 1, 2001. The laboratory has slightly more than 30 employees and annual sales of approximately SEK 10 M. This is the first time that laboratory medicine operations have been outsourced in Poland. Capio's Cityklinikerna operations signed a number of care contracts in southern Sweden, including the development of operations in Lund to a local hospital. Several of the contracts become effective at mid-year and provide a volume increase of about SEK 40 M per year. BUSINESS SECTORS Capio is active in three main business sectors: · Healthcare services. · Diagnostic services. · Elderly Care services. The Group has operating units in Sweden, Norway, Denmark, the United Kingdom, Switzerland and Poland. Healthcare Services The operations of this business sector continue to grow. Net sales rose by 32 per cent to SEK 1,674 M (1,266). Expressed in local currencies, organic growth during the period was 11 per cent. Excluding items affecting comparability, EBITA totalled SEK 103 M (75). St. Göran's Hospital noted lower productivity during the beginning of the second quarter, mainly due to difficulties in finding places within geriatric care for patients whose medical treatment had been completed. Earnings for the hospital were weak during the second quarter. As a result, a new care department will be opened to relieve the flow of patients who have completed their medical treatment and are waiting for geriatric care or residential elderly care. The hospital has also signed a contract with the Stockholm County Council to assume responsibility for geriatric care operations at Löwenströmska Hospital as of January 1, 2002. The contract is worth an estimated SEK 60 M per year. The care contract with Lundby Hospital has been renewed and will take effect as of September 1. The contract is for a five-year period and corresponds to annual sales of approximately SEK 100 M. Demand for occupational healthcare remained strong in Scandinavia and the UK, with favourable volume growth noted by the Group's units. New operational support system was installed during the second quarter. The installation has resulted in a slight temporary decrease in production. The substantial demand within psychiatry operations also led to high patient volumes in newly established operations. Diagnostic Services Net sales for this business sector amounted to SEK 448 M (336). Excluding items affecting comparability, EBITA totalled SEK 28 M (30). Organic growth was 12 per cent in local currencies. Laboratory operations developed well during the first half of the year, with structural benefits in the areas of purchasing, methodology and quality development, plus a common IT system, making a positive contribution. Radiology operations showed good volume growth. Substantial demand was noted in Norway and several units extended their opening times. 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. Negotiations are in progress to achieve acceptable rates as of January 1, 2002. Sales and margins are affected by St. Göran Röntgen (X- ray) being included in the sector as of this year. During the second quarter, start-up costs for Globen Röntgen (X-ray) and the mammography operations in Skaraborg amounted to about SEK 6 M. The decision was made to establish a new radiology unit in Sandefjord, Norway, with start up during the third quarter of 2001. Elderly Care Services Elderly care operations noted sales of SEK 137 M (122), reflecting organic growth of 10 per cent, expressed in local currencies. Excluding items affecting comparability, EBITA totalled SEK 8.7 M (8.5). The sector company Actica Omsorg acquired the Björnbo residential home for the elderly in Stockholm during the period. Operational responsibility will be assumed in October. This operation has annual sales of slightly more than SEK 30 M. In April, Capio took over responsibility for elderly care services in Bærum, just outside Oslo, Norway. Operations at this facility are developing according to plan. Parent Company sales and earnings The Group Parent Company, Capio AB, reported sales of SEK 11 M (7) during the period and an operating loss of SEK 34 M (loss: 28) before goodwill amortisation (EBITA) and excluding items affecting comparability. The Parent Company reported investments of SEK 1 M (0) for the period. Financial position Due to the CHG acquisition, the Group´s financing situation has changed significantly. The acquisition was financed through a new share issue of about SEK 1,400 M and through the raising of a long-term loan amounting to SEK 3,400 M. The loan,which also covers the refinancing Capio´s and CHG´s earlier loans, was placed with mainly Swedish and British banks, syndicated by Deutsche Bank. A disproportionate level of interest costs were charged against earnings for the period, since funds from the equity issue were not received until the end of June. Thus, the acquisition of CHG had only a limited effect on earnings per share during the period. The Group's equity to assets ratio at June 30 was 28 per cent. At the end of the second quarter, the Group had net debt of SEK 3,118 M and liquid funds of SEK 398 M. Personnel At the end of the period, the number of employees was 7,135. Per Båtelson President and Chief Executive Officer Gothenburg, August 16, 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/2001/08/16/20010816BIT00470/bit0001.doc The full report http://www.waymaker.net/bitonline/2001/08/16/20010816BIT00470/bit0001.pdf The full report