Pihlajalinna Oyj: INTERIM REPORT 1 JANUARY - 30 JUNE 2015 (6 months)

PIHLAJALINNA INTERIM REPORT  18 August 2015 at 8:00

PIHLAJALINNA: INTERIM REPORT 1 JANUARY - 30 JUNE 2015 (6 months)

STRONG REVENUE GROWTH CONTINUED, INVESTING IN GROWTH AFFECTED THE RESULT

BRIEF LOOK AT APRIL-JUNE:

• Revenues amounted to EUR 51.9 (32.8) million - an increase of 58 per cent
• EBITDA excluding non-recurring items amounted to EUR 3.0 (3.5) million, investing in taking over outsourcing contracts and development of the operations affected the result
• Operating profit excluding non-recurring items amounted to EUR 1.0 (2.0) million

• Operating profit (EBIT) amounted to EUR 0.1 (1.6) million. The operating profit of the quarter included EUR 0.9 million non-recurring costs relating to the Initial Public Offering of the Company
• Net cash flow from operating activities amounted to EUR 2.6 (2.5) million

• The provision of healthcare and social care services in Kihniö started on 1 May, 2015

BRIEF LOOK AT JANUARY-JUNE:

• Revenues amounted to EUR 99.8(64.3) million - an increase of 55 per cent
• EBITDA excluding non-recurring items amounted to EUR 6.1 (6.7) million. Operating profit excluding non-recurring items amounted to EUR 2.3 (3.9) million
• Net cash flow from operating activities amounted to EUR 9.5 (4.3) million
• Gross investments in the reporting period amounted to EUR 15.9 (13.0) million
• Number of personnel at the end of the reporting period 2,525 (1,649)
• Earnings per share EUR -0.02 (0.08)

Mikko Wirén, CEO of Pihlajalinna:

Pihlajalinna Group is at the strongest growth stage in its operational history. During the first six months of 2015 revenue grew by 55 per cent reaching EUR 99.8 million. Majority of this came through organic growth, such as the start of service provision under the Parkano healthcare and social care outsourcing contract (since 1 January 2015).

All business areas of the Group are growing, but most of the short-term increase in revenue is due to complete outsourcings of healthcare and social care in municipalities and in federations of municipalities. During 1 January 2015 - 1 January 2016 there has begun and will begin new contracts, which will generate an aggregate revenue exceeding the whole Group's revenue in 2014. Nearly 80 per cent of the revenue from the new contracts will be generated after 1 September 2015.

The profitability during the period was significantly influenced by reinforcement of the supporting functions, opening of the new private clinics, which at launching still had lower capacity utilisation rates, and costs from taking over the above-mentioned forthcoming large outsourcings. Since the spring in 2015 Pihlajalinna has been preparing future healthcare and social care outsourcings in Jämsä, Kuusiokunnat and Soini. Revenue and profit from these contracts will, however, be generated only after taking over. Healthcare and social care outsourcings in Parkano (since 1 January 2015) and in Kihniö (since 1 May 2015) have started according to the contracts.

Increases in resources and significant development projects are crucial for strengthening the Group for strong future growth in accordance with the strategy. Listing of the company on OMX Helsinki caused considerable non-recurring costs in the reporting period. I am especially pleased by the improvement in cash flow from operating activities and by the notable decrease in financial costs since the listing in June.

Our Initial Public Offering was in all successful and the issue of shares were oversubscribed multifold. As a result of the Initial Public Offering we strengthened our balance sheet, raised equity for future growth investments and increased our awareness in all interest groups. The number of our shareholders at the end of the reporting period was 2,869 (174).

In 2015 Pihlajalinna will focus in taking over large complete healthcare and social care outsourcings and developing our operations widely. During the present financial year we have expanded the ERP-system to complete outsourcings that will enable much more precise follow up resources, patient care chains and costs. With the ERP-system we can both make our operations more efficient and offer better service quality.

During the past ten years, Pihlajalinna has executed dozens of acquisitions. Since 1 January 2014 the activity in acquisitions has been especially high (21 acquisitions). Regardless of the strong and on-going growth, overlapping functions have developed due to numerous acquisitions and taking over outsourcing contracts. Restructuring of the Group will be carried out during the autumn in 2015. The objective of the restructuring is to simplify the corporate structure and to reduce the amount of the overlapping functions.

Restructuring of the Group will be carried out during autumn 2015. Its objective is to simplify the company structure and to reduce the amount of overlapping functions. In connection to the restructuring, the management and administration structure as well as a correct level of personnel resources of various branches, that best serves business operations and segment division, will be implemented. Possible administrative and operational overlaps will be discussed in cooperation with the personnel. We will proceed already in August 2015 in Dental Care and Care -services units and concentrate the private and public operations under the same management. The objective of the planned adjustment measures is approximately EUR 3 million in annual cost savings. Savings are expected to realize during 2016.

The outlook in the market for Pihlajalinna maintain positive, and the company's market position is strong. In the complete healthcare and social care outsourcings the company is the market leader, and it is delightful to see, that the positive results in the outsourcings that have already taken place, have also stimulated interest in complete outsourcings in medium-sized municipalities. Numerous smaller municipalities have already become active in decision making.

GUIDANCE ON GROUP OUTLOOK

Pihlajalinna's consolidated revenue is expected to exceed EUR 200 million in 2015.  

PUBLICATION OF FINANCIAL INFORMATION

The interim report for January-September 2015 will be published on Wednesday, 11 November 2015.

Helsinki, 18 August 2015

Pihlajalinna Oyj's Board of Directors

PRESS AND ANALYST MEETING
The press and analyst meeting for the announcement of financial results of the second quarter 2015 will be held on August 18, 2015 at 10:00 the Kämp hotel congress center, meeting room Paavo Nurmi, Pohjoisesplanadi 29, 00100, Helsinki.

An audio webcast and teleconference in English will be held on the same day starting at 13.30 p.m. EET.

UK:                      020 3059 8125

International:         +44 20 3059 8125

Participant password:  Pihlajalinna

The event can be followed live as an audio webcast at investors.pihlajalinna-konserni.fi. The event will be recorded and can be accessed on the website later the same day.

FURTHER INFORMATION:
Mikko Wirén, CEO, tel. +358 50 3220 927
Virpi Holmqvist, CFO, tel. +358 40 537 6133 Terhi Kivinen, SVP, Communications, Marketing and IR, tel. +358 40 848 4001

DISTRIBUTION
NASDAQ OMX Helsinki
Major media
www.pihlajalinna-konserni.fi

Pihlajalinna in brief
Pihlajalinna is one of the leading private social and healthcare services providers in Finland. The Company provides social and healthcare services for households, companies, insurance companies and public sector entities in private clinics, health centres, dental clinics and hospitals around Finland. Pihlajalinna provides general practitioner and specialised care services, including emergency and on-call services, a wide range of surgical services as well as occupational healthcare and dental care services, in private clinics and hospitals operating under the Dextra brand. Under the Pihlajalinna brand the Company, in cooperation with the public sector, offers social and healthcare service provision models to public sector entities with the aim of providing high quality services for public pay healthcare customers.