Rhön-Klinikum AG — Earnings Release 2003

May 7, 2003

News Details

Corporate | 7 May 2003 10:00

Rhön-Klinikum AG part 2

RHÖN-KLINIKUM AG – Part 2 – Press Conference – First Quarter 2003 and Outlook Corporate-news announcement sent by DGAP. The sender is solely responsible for the contents of this announcement. ——————————————————————————– First quarter of 2003: Solid improvement over last year Q1 / Revenues increased by 9.6 % to EURO 233.2 million / 128,311 patient treatments /Operating cash flow 14.3 % higher at EURO 32.0 million /Earnings per share improved by 24.6 % to EURO 0.71 Outlook – Prospects in 2003 … and more: Continued decline of revenues per treatment requires compensation through cost cutting programme / Realisation of Tele-Portal Clinic concept accelerated / 2003 revenues forecast at EURO 924 million excluding further acquisitions / Earnings of EURO 70million plus considered to be feasible 7 May 2003: First quarter of 2003 – Strong growth compared to the same period in 2002. During the first quarter of 2003, RHÖN-KLINIKUM Group posted revenues of EURO 233.2 million (previous year: 212.8 million), up EURO 20.4 million or 9.6 % from the first quarter of 2002. Q1 earnings increased to EURO 18.4 million, compared to EURO 14.8 million in the first quarter of 2002. Almost all our hospitals contributed to this improvement, and this they achieved largely through cost containment, explained Manfred Wiehl. Q1 investments (less grants under KHG) totalled EURO 19.3 million (Q1 2002: EURO 98.4 million), of which EURO 2.5 million were accounted for by the acquisition of the facility in Dohna-Heidenau. Material costs increased by 10.5 % to EURO 57.8 million (Q1 2002: EURO 52.3 million); the material cost ratio was 24.8 % (Q1 2002: 24.6 %). Personnel expenses rose by 9 % to EURO 120.7 million (Q1 2002: EURO 110.7 million); the personnel cost ratio decreased slightly to 51.8 % (Q1 2002: 52.0 %). Operating cash flow improved by 14.3 % to EURO 32.0 million (Q1 2002: EURO 28.0 million). 95.3 % (Q1 2002: 91,6 %) of long-term assets totalling EURO 758.1 million (Q1 2002: EURO 719.,4 million) were covered by equity and long-term loan capital totalling EURO 722.3 million (Q1 2002: EURO 658.8 million). The improved financial result reflects the increase in the cash flow which was used to reduce long-term and short term debts (besides financing investments). During the first quarter of 2003, RHÖN-KLINIKUM hospitals treated a total of 128,311 patients (Q1 2002: 114,403), an increase of 12 % compared to the year- earlier figure. This increase resulted from the first inclusion of patients treated at the newly acquired hospitals in Pirna and Dohna-Heidenau (+ 6,674 treatments) and increases in patient numbers at other Group hospitals (+7,234 treatments). As of 31 March 2003, the Group employed 13,005 persons. Outlook – Prospects in 2003 … and more: Regarding the Company s Statement of Corporate Governance pursuant to Section 161 of the Companies Act (AktG), Eugen Münch, chairman of the Board of Management of RHÖN-KLINIKUM AG, took up an offensive stance when explaining the differing positions of the Board of Management and the Supervisory Board, on the one side, and the Group auditors, PWC, on the other side. The auditors certificate includes an evaluating though not qualifying supplementary paragraph, indicating that the above statement on the adoption of the German Corporate Governance Code was limited to business year 2002. We saw no necessity for unlimited blank acceptance of an unsatisfactory code that requires further developing or amending, as its issuers themselves recognise. We understand that such opinion should not be included in an auditors certificate especially not in the form of an evaluation. The auditors have stated that they did so, following a recommendation issued by the IDW, which apparently recommends this reading in concert with the Ministry of Justice, although the law does not require any statements going beyond one year. At the beginning of this year, the Board of Management decided to continue to apply the code in 2003, and the Supervisory Board will discuss this subject at its meeting on 15 July 2003, commented Münch. In his remarks on the political and competitive environment, Münch pointed out the urgent need for solutions to the gap between contributions to insurance funds and healthcare costs, caused by continuous narrowing of the contribution basis and just as continuous growth of around 1.5 % to 2.5 % in the demand for medical services, driven by the service requirements of an ageing population. As a result, waiting lists for elective treatments in German hospitals are likely to build up or grow further, stated Münch and added that, at RHÖN-KLINIKUM AG, the entrepreneurial conclusion from this was an innovative rationalisation model that will enable additional cost-effective capacities to be created and used to serve a wider market. The Group has pressed ahead with its proprietary Tele-Portal Clinic concept, designed to deliver broad-based patient care that will ensure both moderate costs and top-quality services for patients. By extending the process chain to include several hospital care levels and by cooperative linking with local specialists in the areas of outpatient and day clinic services, this concept offers significant potential for rationalising patient care provision, making Tele-Portal Clinics an ideal gate (portal ) to major centres, while guaranteeing good quality patient care in less densely populated regions, which to provide would otherwise no longer be profitable. This concept entails considerable, though highly standardised investments at new and existing locations because only through investing will it be possible to effectively realise rationalisation gains. At the same time, it opens up new opportunities for internal growth which under the present system of statutory limits to hospital budgets has almost ceased to exist. This development in combination with lacking investment strength on the part of public hospital owners/operators will continue to significantly intensify the already existing privatisation pressures. Of course, political developments have an influence on our business, too, but contrary to other participants within the system, we see ourselves in a very favourable competitive position thanks to our capabilities we have the law of action on our side, concluded Münch. While there s a rapidly increasing number of district hospitals on offer for privatisation, for which our Tele-Portal Clinic concept puts us in an optimal starting position, it s now the very big players that are beginning to suffer from growing privatisation pressures. As always, we ll carefully review such offers and start negotiations only if we can be sure that restructuring problems can be solved satisfactorily. Experience shows that the larger an operation the stronger its links to labour unions; this often leads to staff ideologisation and this, in turn, might entail particularly high barriers to change. Since we ve kept well in training, I think, Mr. Wiehl s earnings forecast of EURO 70 million for the whole of 2003 is realistic. I believe that especially last year s learning curve has made us top fit even for the big challenges that go with exceptional growth, stated Münch. end of message, (c)DGAP 07.05.2003 ——————————————————————————– WKN: 704230; ISIN: DE0007042301; Index: MDAX Listed: Amtlicher Markt in Frankfurt (Prime Standard) und München; Freiverkehr in Berlin-Bremen, Düsseldorf, Hamburg und Stuttgart 071000 Mai 03