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2015-08-18

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

PIHLAJALINNA
INTERIM REPORT
18August 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)

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| KEY FIGURES AND RATIOS 4-6/ 4-6/ change% 1-6/ 1-6/ change% 2014 |
| |
| 2015 2014 2015 2014 |
| 3 mths 3 mths 6 mths 6 mths 12 mths |
| INCOME STATEMENT |
| Revenue, EUR million 51.9 32.8 58 99.8 64.3 55 148.9 |
| EBITDA excluding non-recurring items, 3.0 3.5 -13 6.1 6.7 -9 14.0 |
| |
|EUR million |
| EBITDA % excluding non-recurring items 5.8 % 10.5 % -45 6.1 % 10.4 % -41 9.4 % |
| EBITDA, EUR million 2.1 3.0 -31 5.1 6.2 -18 11.8 |
| EBITDA % 4.0 % 9.1 % -56 5.1 % 9.7 % -47 7.9 % |
| Operating profit excluding non-recurring items (EBIT), EUR million 1.0 2.0 -50 2.3 3.9 -41 8.2 |
| Operating profit % excluding non-recurring items 1.9 % 6.1 % -68 2.3 % 6.1 % -62 5.5 % |
| Operating profit (EBIT), EUR million 0.1 1.6 -96 1.3 3.5 -62 6.0 |
| Operating profit % 0.1 % 4.7 % -97 1.3 % 5.4 % -76 4.0 % |
| Profit before tax, EUR million -0.7 0.4 -253 -0.1 1.9 -106 2.9 |
| |
| SHARE RELATED INFORMATION |
| Earnings per share, EUR -0.05 0.00 -2056 -0.02 0.08 -129 0.11 |
| Equity per share, EUR 3.46 0.67 419 0.70 |
| |
| OTHER INFORMATION |
| Return on capital employed, %( ROCE) 2.6 8.6 7.1 |
| Return on equity, % (ROE) 0.1 11.9 7.7 |
| Equity ratio, % 39.8 8.8 8.0 |
| Gearing, % 36.6 655.1 691.1 |
| Net debt / adjusted EBITDA, 12 mths 1.8 5.1 5.1 |
| Interest bearing net debt, EUR million 24.5 65.0 -62 71.6 |
| Gross investments, EUR million 15.9 13.0 22 28.3 |
| Cash flow from operating activities 2.6 2.5 9.5 4.3 123 9.4 |
| Cash flow after investments -1.8 -2.6 1.0 -3.9 -8.1 |
| Average number of personnel 2,247 1,524 47 1,619 |
| Personnel at the end of the period 2,525 1,649 53 1,714 |
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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 D...

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