Management Board of Mediclin presents Annual Report 2008

The Management Board of MEDICLIN Aktiengesellschaft is satisfied with the results of the financial year 2008.

Frankfurt am Main, 25 March 2009 – The Management Board of MEDICLIN Aktiengesellschaft (MediClin) said at this year’s balance sheet press conference that he is satisfied with the results of the year 2008. "Despite the financial crisis and its initial impact on the German economy, our business activity remained stable. It certainly helped that the health care sector is less cyclical in nature than other industries", said Dr. Ulrich Wandschneider, CEO of MediClin.

In 2008 external and internal growth − proposal of a dividend payment

In the 2008 financial year, MediClin recorded sales of EUR 456.8 mill. This is an increase of EUR 64.8 mill. compared to the previous year, whereby EUR 51.7 mill. is attributable to the Kraichgau-Klinik Group. An operating result of EUR 15.8 mill. was achieved while this is EUR 3.1 mill. less than in the previous year, it contains approximately EUR 8 mill. higher rental expenses for real estate. The result attributable to shareholders totals EUR 7.1 mill.

Based on the satisfactory development in 2008 and the over all ordinary outlooks for MediClin the Management Board and the Supervisory Board will propose a dividend of EUR 0.05 per share for the 2008 financial year at the Annual General Meeting on 27 May 2009.

Success factors in 2008

The Kraichgau-Klinik Group was completely integrated into the Group. This includes the Herzzentrum in Lahr as well as the post-acute clinics, whose offerings were optimised according to our regional concept.

MediClin has introduced the online reservation system of the Deutsche Rentenvensicherung (German Pension Fund) almost nationwide and thus simplifies the registration process for both sides and speeds up the admission of patients.

The results of the medical services were made measurable through the support of electronic techniques and thus more transparent. The self-control of medical and therapeutic services and performance measurement are absolute requirements for the continuous delivery of high-quality medical care in the facilities.

The service companies have almost reached their goals like increased efficiency, the standardisation of offerings and cost reductions to the extent targeted.

Number of nursing days and number of cases increased further

The number of nursing days increased in 2008 Group-wide by 8.4% to 2,459,236 nursing days (2007: 2,268,797 nursing days), thereof 5.7% is attributable to the Kraichgau-Klinik Group. The number of cases rose by 10.7% up to 120.698 cases (2007: 108.994 cases) without the Kraichgau-Klinik Group it would have raised by 2.9%. In the nursing care segment no case numbers are defined.

Very good occupancy rate in the segments but results were influenced by higher costs

The occupancy rate in the post-acute segment was 87.0% (2007: 84.8%). The result was influenced by about EUR 8.0 mill. of higher rent for real estate but still a slightly positive result of EUR 0.2 mill. (2007: EUR 3.2 mill.) could be achieved. The occupancy rate in the acute segment was 81.5% (2007: 80.0%). In 2008 the segment result was burdened by EUR 0.5 mill. mainly due to nonrecurring personnel expenses, whereby the result was EUR 0.5 mill. below the previous year’s figure despite significantly increased sales (2008: EUR 15.6 mill.; 2007: EUR 16,1 mill.). The nursing care segment shows a break-even result, thus EUR 0.4 mill. above the previous year’s value (2007: -0.4 Mio. Euro) and an occupancy rate of 90.5% (2007: 88.5%).

Cash flow und cash and cash equivalents are clearly above previous years’ figures

In all expense items one part of the increase is due to acquisition. In 2008 material expenses increased to EUR 105.6 to mill. (2007: EUR 84.4 mill.). The material expense ratio was 23.1% (2007: 21.5%). Personnel expenses increased to EUR 249.3 mill. (2007: EUR 217.6 mill.); the staff expense ratio decreased to 54.6% (2007: 55.5%) due to increased sales.

In 2008, on average, the number of staff accounted in full-time employees was 5,816 (2007: 5,277 full-time employees). Other operating expenses were up to EUR 83.4 mill. (2007: EUR 68.6 mill.) mainly in consequence of higher rent and acquisition. The cash flow from operating activities was EUR 21.5 mill (2006: EUR 11.3 mill), cash and cash equivalents at end of period increased to EUR 57.4 mill. (2007: EUR 21.4 mill.), predominantly as a result of the capital increase.

In 2008 investments (gross additions to property, plant and equipment) amounted to EUR 18.0 mill. (2007: EUR 27,6 mill.). They apply to the new construction of the MediClin Müritz-Klinikums in Waren as well as renovation, maintenance and reconstruction measures in other facilities, medical devices and equipment and IT and telecommunication equipment.

No precise forecast possible for 2009

It is currently impossible to predict reliably to what extent the economic slump and the worsening of the labour market situation will impact the German health care sector and its care facilities. At the present, it is also impossible to estimate to what extent a decline in employment levels will impact the budgets of coverage providers and their tendering practices. However, it is clear that the financial situation of public authorities will significantly worsen, which will again accelerate the privatisation process in the hospital sector.

For the 2009 financial year, Management Board anticipates sales on the previous year’s level. A decrease in the third and fourth quarter of 2009 is not to be excluded in case of a continuing economic slowdown. It is intended to achieve a result comparable with the previous year, mainly through efficiency gains and stringent cost management. Related to external growth acquisition efforts in the acute sector are the main focus.