Corporate News | 20.06.2002

RHÖN-KLINIKUM AG - Move indicated at the Companys press conference now to be re

Corporate-news announcement sent by DGAP.The sender is solely responsible for the contents of this announcement.
RHÖN-KLINIKUM AG, Bad Neustadt/Saale:Move indicated at the Companys press conference now to be realisedBad Neustadt/Saale, 19 June 2002 ------ As already indicated at its recentpress conference (presentation of 2001 results), RHÖN-KLINIKUM AG has nowdecided towrite off its South African subsidiary that was from the beginning judgedto bea high though calculable risk, and to stop the outflow of further funds.Group results for May 2002 are still 10 per cent (March results: 16 percent)off the monthly results for the same period in the previous year; thesefiguresshow that the negative trend that characterised the first quarter of 2002hasslowed down during the past eight weeks, however, they do not yet signal aclear change in trend. Taking into account the one-time effect resulting fromthewrite-off of the South African subsidiary in the amount of EUR 3.5 million,Management has revised its published 2002 earnings forecast of EUR 70millionand now expects 2002 consolidated earnings at the 2001 level of EUR 66million.Efforts to realise higher earnings, as had been planned, will continue aswillthe stringent measures initiated to this end, however, improvements on2001 canno longer be considered as being secured.The hospital in Cape Town whose operating concept was focused on abroad-basedsupply of hospital services lacked the right positioning by its managementinthat countrys health care market. As a result, it had to compete forprivatepatients with established private hospitals that already suffer from excesscapacity. Our goal to make this clinic a centre offering blanket-coveragemedical services at low flat rates has not been reached, as managementfailed to enforce our strategy and the reforms agreed with the Cape authoritiesprovidetoo little support for the necessary changes in the existing price system.Theresulting, and discernible, die-hard financing is judged to be wasteful inviewof the considerable operating risk and the Groups limited possibilities tointervene. The Board of Management had made clear from the beginning thatit was prepared to take a limited economic risk only and has now taken thenecessarysteps against unacceptable risk: the venture has been taken off the balancesheet in order to facilitate its transfer to an alternative use. No finaldecision has yet been made on the future use of this investment that isbeingvalued as extremely functional by both the Board of RHÖN-KLINIKUM AG andlocalSouth African professionals. It is intended to check and verify in how farandin which way this clinic could serve a broad-based supply of hospitalservicesto the population.To support the positive change in trend at Park-Krankenhaus LeipzigSüd-Ost,Herz- und Gefäß-Klinik in Bad Neustadt and at DKD - Deutsche Klinik fürDiagnostik in Wiesbaden, cost cutting and restructuring programmes havebeeninitiated. This is anything else but easy in an environment overshadowedby badnews from all sectors, in which employees and even executives look atslow-downs or stagnation of earnings growth as being normal and earnings growthseems tobe a target out of this world. Our hospital in Attendorn has not yet beenableto make up for the negative effects of the recent strike at that locationbut is coming close to returning to the level of capacity utilisation before thestrike.At its forthcoming Annual General Meeting on 17 July in Frankfurt/Main,RHÖN-KLINIKUM AG will present its 2002 half-year results along with furtherdetailsof business developments within the Group. At this point, Managementexpects its revised forecast to stabilise, while its positive long-term forecastremainsunchanged.end of message, (c)DGAP 19.06.2002

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