2021
ANNUAL REPORT 2021
NET DEBT/ADJUSTED EBITDA
3.0
(2020: 3.6)
target below 3
ADJUSTED EBITDA
EUR
65.3
million
(2020: 54.8)
REVENUE:
EUR 577.8
million
(2020: 508.7)
+13.6%
ADJUSTED
OPERATING PROFIT (EBIT)
EUR 30.3
million/5.3%
(2020: EUR 20.9 million, 4.1%)
target over 7%
Key figures
• The Group pays all of its taxes to Finland
• Headquartered in Kehräsaari, Tampere
• Extensive range of on-site, remote and digital services
for both private and public sector customers
• Strong geographical presence in Pirkanmaa, South
and North Ostrobothnia, Central Finland, North Savo
and the Helsinki Metropolitan Area
• Values: energy, ethics, open-mindedness
• Listed on the main list of Nasdaq Helsinki in 2015
(HEL: PIHLIS)
EARNINGS PER SHARE
EUR
0.89
(2020: 0,38)
NUMBER OF PERSONNEL
6,297
(2020: 5,550)
Pihlajalinna
Pihlajalinna is one of the leading
providers of social, healthcare
and wellbeing services in
Finland. The Group´s customers
include private individuals,
companies, insurance
companies and public sector
entities, such as municipalities
and joint municipal authorities.
This is voluntary published pdf report, so it does not fulfill the disclosure obligation
pursuant to Section 7:5§ of the Securities Markets Act.
ANNUAL REPORT 2021
Contents
Pihlajalinna 2021 ................................................... 2
CEO’s Review ........................................................4
Business and strategy ................................. 5
Operating environment ......................................6
Trends and megatrends ....................................8
Diverse remote services ....................................10
Mental Care health service ...............................12
Exercise referral ....................................................13
Customer groups ................................................. 14
Insurance company accounts .........................15
A year of development in 2021 ......................16
Sustainability ............................................... 18
Personnel, the most important resource ....20
Data protection and information security . 21
Tax liability and footprint ..................................22
A trusted partner for municipalities .............23
Impact maps ..........................................................24
Board of Directors ............................................... 28
Management Team ..............................................29
Action report by the Board of Directors .. 31
Audited financial statements ..................... 54
Auditor’s report ....................................................96
Information for shareholders ..........................100
2
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Timeline 2021
1 JAN
Bottenhavets Hälsa − Selkämeren Terveys
starts operations
25 JAN
Pihlajalinna and Sasky, a municipal education
and training consortium expand their training
cooperation
17 MAR
Pihlajalinna starts cooperation with NONNA
Group
Selkämeren Terveys, a joint venture between
Pihlajalinna, Kristiinankaupunki and the Hospital
District of Vaasa produces healthcare services
for approximately 6,600 residents of Kristiinan
-
kaupunki. The joint venture is responsible for
physician and nurse appointments, dental care,
rehabilitation services, the maternity and child
health clinic and physical therapy. The term of
the outsourcing agreement will be from the mini
-
mum of 15 years to maximum of 20 years.
“Partnership with the 2022 IIHF Ice Hockey World
Championship works us perfectly. We have a strong
track record in supporting sports, and it was easy
to find shared goals and values with the event. The
Finnish team will play all of its games at the newly built
arena in Tampere, so I am eagerly looking forward to
the tournament myself,” says CEO Joni Aaltonen.
In response to the ageing of the popula
-
tion, Pihlajalinna invests in NONNA Group, a
developer and provider of modern housing
solutions. The cooperation provides us with
the opportunity to be involved in developing
services for safe living at home and a new
concept of home delivery services.
The acquisition is an important element of Pihlajalin-
na´s growth strategy, and it strengthens the Group’s
service portfolio in all healthcare specialties. The
business combination also enables the geographical
expansion of the service network, especially in the
Helsinki Metropolitan Area and other growth centers.
Growth potential is further increased by the new five-
year service agreement signed with Pohjola Insurance
in connection with the deal.
“We want to oer the best possible service to
families with children. Through the Pihlajalinna
Health App (Terveyssovellus) health appli-
cation, parents can quickly get professional
help with their child’s ailment, and the service
can be used from anywhere, even from the
summer cabin or while on a holiday trip,” says
Nina-Maria Tigerstedt, Business Director,
Pihlajalinna Remote Clinic.
29 MAR
Pihlajalinna lauches new remote service for
patients with diabetes
30 MAR
Pihlajalinna organizes Capital Markets Day
1 MAY
Työterveys Virta Oy becomes a part of Pihla-
jalinna Group
19 MAY
Pihlajalinna is selected as an ocial partner of
the 2022 IIHF Ice Hockey World Championship
20 MAY
Pihlajalinna´s 24 hour customer service is launched
21 MAY
Pihlajalinna Mental Care (Mielen huoli) mental
health help line is launced
1 JUN
Pihlajalinna becomes the healthcare service provider
of Hailuoto municipality
11 JUN
The District Court of Kanta-Häme issues a decision
on the dispute between Pihlajalinna and the munici-
pality of Hattula
21 JUN
Pihlajalinna acquires Digital Health Solutions Oy
1 JUL
Pihlajalinna signs an extension contract as UPM´s
occupational healthcare service provider
2 JUL
Pihlajalinna announces its intention to acquire Poh-
jola Hospital
9 JUL
Pihlajalinna´s remote consultation service Health App
(Terveyssovellus) becomes available around the clock
17 AUG
Pihlajalinna signs an extension contract as Stora Enso´s
occupational healthcare service provider
19 AUG
Pihlajalinna announces opening of a private clinic in
Lahti
23 AUG
Pihlajalinna launches Pediatrician chat service
3 SEP
Pihlajalinna becomes as an ocial main
partner of the Finnish Ski Association
8 SEP
Uniikki, a special housing unit opens in Lohja
8 OCT
Pihlajalinna wins a public bidding competition
for Piispanportti health centre in Espoo
1 NOV
Finla´s occupational health care unit in Mänttä
becomes part of Pihlajalinna Group
9 NOV
Pihlajalinna´s weight management clinic starts
operations
3
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
How would you
describe 2021?
The year 2021
was characterised by
the healthcare challenges
brought with the prolonged
COVID-19 epidemic. These chal
-
lenges also had an impact on Pihlajalin-
na. We adapted our services in response to
the new needs created by the epidemic; for
example, by performing COVID-19 testing
throughout the year and participating in the
vaccination eort. We kept a close eye on the
development of the situation. Our employees
did very well in adapting to the changing
circumstances. During the epidemic, we have
shown to be a significant and flexible part of
the Finnish healthcare.
We launched our updated strategy at our
Capital Markets Day in March. We focus on
the renewal of private customer services,
strengthening cooperation in social and
healthcare services and our relationships with
the upcoming wellbeing services counties,
and promote the development of digital
services.
Our strategic choices and our eciency
improvement program have been reflected in
our operations. Our revenue increased strongly
in 2021 and our profitability improved clearly.
What were the highlights of 2021?
At the beginning of July, we announced that
we will acquire the entire share capital of
Pohjola Hospital Ltd. The transaction was
approved by the Finnish Competition and
From the CEO
Consumer Authority at the beginning of
2022 and completed on 1 February 2022. In
connection with the acquisition, we signed
a new five-year service agreement with
Pohjola Insurance. Our goal is to expand
our network of operating locations and our
range of specialised care services regionally,
especially in the Helsinki Metropolitan Area
and other growth centers.
The integration of Työterveys Virta,
which was acquired by Pihlajalinna in 2021,
progressed according to plan. The acquisi
-
tion strengthened our position in Northern
Ostrobothnia and Oulu region. We are also
very satisfied with the development of
our occupational healthcare services. Our
customer base has grown and, within the
year, we signed extensions to our contracts
with Stora Enso and UPM, for example. The
number of people currently within the scope
of Pihlajalinna’s occupational healthcare
services is approximately 250,000.
We invested in digitalization in 2021,
which significantly improves our competi
-
tiveness. This development is also reflected
in our day-to-day operations: approximately
40 per cent of our customers in catego
-
ries other than municipal outsourcing use
our services digitally. We have developed
entirely new types of services where remote
services are an essential part of the care
path. One concrete example is the re
-
mote service model for diabetes, which is
described in more detail on page 10 of this
Annual Report.
Mental health problems and related dis
-
ability have increased alarmingly over the
past few years. This trend has intensified
during the COVID-19 epidemic. An anonymic
analysis of Pihlajalinna occupational health
care visits was used to evaluate the exten
-
tion of the problem in Finland in terms of
mental health issues. The rate of sickness-re
-
lated absences caused by reasons related
to mental health per 1,000 employees have
increased by 24 per cent compared to last
year. Correlation to the pre-epidemic period
in 2019, the increase is as high as 36 per
cent. In 2021, we developed low-threshold
mental health services, such as the Mental
Care (Mielen huoli) help line, which is de
-
scribed in more detail on page 12 of this An-
nual Report. Our goal is eective prevention
and early intervention to avoid extended
disability and human suering.
The COVID-19 epidemic has burdened the
healthcare system in many ways, and the
care backlog has increased for many illness
-
es. Our new service concepts enable us to
produce healthcare services more ecient
-
ly and make them available to a growing
number of private customers, also through
remote channels.
How do you see Pihlajalinna’s future?
Our strategic choices, the acquisition of
Pohjola Hospital and our five-year agree
-
ment with Pohjola Insurance are welltimed.
In addition to the care backlog created
by COVID-19, the entire Finnish social and
healthcare service system is in the midst of
historic reforms. In June 2021, the Finnish Par
-
liament approved the new legislation govern-
ing the organization of social and healthcare
services. Consequently, from the beginning of
2023, the responsibility for organizing social,
healthcare and rescue services will be trans
-
ferred to 21 wellbeing services counties.
Clinical quality has always been at the core
of Pihlajalinna’s operations. In 2022, we will
update our strategy concerning quality and
impact and will also define and publish new
performance measures for our operations.
We are seeking revenue growth of EUR 250
million by the end of 2025, using 2021 as the
baseline. One third of the growth is expected
to arise from the public sector and the rest
two thirds from corporate and private cus
-
tomers. We expect to further accelerate our
growth in 2022.
At the same time, the demand for our
services is increasing due to the needs of the
ageing population and the growing health
trend among consumers. The use of data in
health monitoring will create new expecta
-
tions for healthcare providers, and digitali-
zation will increasingly be a driver of service
development. Our goal for the future is to
continue to be a significant part of Finn
-
ish healthcare and to be at the forefront of
developing and producing new impact-based
services.
JONI AALTONEN
Toimitusjohtaja
4
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Pihlajalinna’s strategy 2021–2025
BUSINESS AND STRATEGY
Strategic priorities
1. The renewal of services for private
customers
Pihlajalinna will strengthen its multichannel
services and consumer business through new
service concepts and digital innovation.
2. Cooperation in social and
healthcare services
Pihlajalinna will engage in close cooperation with
the future wellbeing services counties and build
a strong market position in public healthcare.
3. Enhancing digitalisation
Pihlajalinna has a strong focus on digitalisation
in the development of personnel, the customer
experience and operational performance.
Mission
We help Finns to live a better life
Vision
We bring wellbeing to everyone
Values
Ethics, energy, open-mindedness
Objectives for the strategy
period
• Pihlajalinna oers the most attractive and
diverse range of services.
• Pihlajalinna is the number one choice of con-
sumers and professionals.
• Pihlajalinna services are easy to access and
available without delay.
• Revenue growth of EUR 250 million by the
end of 2025, using 2021 as the baseline. One
third of the growth is expected to arise from
the public sector and the rest two thirds from
corporate and private customers.
• Adjusted operating profit before the amor-
tisation and impairment of intangible assets
(EBITA) over 9 per cent of revenue in the long
term.
• Long term target for net debt is less than 3x
adjusted EBITDA. In the beginning of strategy
period due to Pohjola Hospital acquisition the
net debt will decline close to to 5.
• Distributing at least one-third of the profit for
each financial year to shareholders as divi-
dends or capital repayment.
Performance indicators
The achievement of goals is measured by, for
example, financial indicators, an increase in
the number of appointment times and pro-
cedures available to customers, and in the
Net Promoter Score (NPS), which measures
the customer and employee experience.
5
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
BUSINESS AND STRATEGY
T
he Finnish social and healthcare
sector is undergoing a historic
transformation. In June 2021, the
Finnish Parliament approved a new pack-
age of legislation on social and healthcare
services. As a result, the responsibility for
organising social, healthcare and rescue
services will be transferred from munici-
palities and joint municipal authorities to
21 wellbeing services counties, the City of
Helsinki and partially to the joint county
authority for the Hospital District of Hel-
sinki eective from the beginning of 2023.
The COVID-19 epidemic continued
throughout 2021, creating waves of in-
fection early in the year, after the sum-
mer and late in the year. The seven-day
averages for new cases and the number of
hospitalized patients peaked in Finland in
January 2022. Pandemic-related restric-
tions were in place throughout 2021, and
extensive restrictions were imposed at the
turn of the year due to the Omicron vari-
ant. While infection numbers are still high
nationally, the number of cases requiring
intensive care has decreased substantially.
In negotiations held on 2 February 2022,
The operating
environment
the Finnish Government determined that
the extensive restrictions can be gradually
relinquished while taking the epidemio-
logical situation into consideration. The
extensive restrictions have included, for
example, the complete closure of indoor
facilities used for individual sports and
physical exercise by adults. The sec-
ond-dose vaccination coverage in
Finland stood at 74.5 per cent of the
entire population at the beginning of
February 2022.
Due to the COVID-19 restrictions
and the burden placed on the
healthcare system by the epidemic,
the treatment backlog for oth-
er illnesses continues to grow.
According to the Finnish Institute
for Health and Welfare statistics,
queues for treatment in public
healthcare have increased in gen-
eral due to COVID-19. At the end
of November, a total of 150,392
patients were waiting for access
to care at hospitals operated by
the hospital districts. This repre-
sented a year-on-year increase
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Pihlajalinna business
locations 2021
Private clinic surgical operation
dental clinic
Social and healthcare outsourcing
Residential service
Fitness centre
Responsible doctor service
of nearly 9,000 patients. Of these, 9,499
patients (6.3 per cent) had waited for
access to non-urgent specialised care for
more than six months, which is an increase
of nearly 1,900 patients compared to
the beginning of 2021. Care queues have
grown especially in surgery and psychia-
try.
In primary care, non-urgent outpatient
appointments with physicians were avail-
able within one week of the assessment of
the need for treatment in approximately
60 per cent of cases in October 2021 in
all of the Regional State Administrative
Agency regions. The increased use of re-
mote consultations has expedited access
to care at health centers. In October 2021,
the number of non-urgent visits to dental
care was still lower than in 2019.
The number of voluntary medical
expenses insurance policies increased
significantly between 2009 and 2020.
According to Finance Finland, over 1.26
million Finns had private medical expenses
insurance at the end of June 2021. Growth
has been seen in insurance policies taken
out by adult private individuals, children’s
insurance policies as well as medical
expenses insurance policies taken out by
companies for their employees.
The new social and
healthcare service
system will significantly
reshape health care
structures and needs
as the responsibility
for organising services
is transferred from
municipalities to
larger wellbeing
services counties.
7
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
BUSINESS AND STRATEGY
T
he trends, megatrends and drivers of
change in our society are reflected
in the operations and development
needs of social services and healthcare.
We keep a close eye on their development
and impacts and we anticipate the future.
This is crucial for our ability to respond
to the future challenges of the social and
healthcare services sector and help peo-
ple in Finland to live a better life.
Trends and megatrends have a very
concrete impact on Pihlajalinna’s devel-
opment. This is reflected in our business
operations in various ways, including the
continuous development of extensive
remote services, comprehensive occupa-
tional healthcare services, eective social
and healthcare service solutions devel-
oped in cooperation with the public sector
and the creation of other care paths that
support wellbeing. These are discussed in
more detail in this Annual Report.
The rapid and unpredictable changes in
society caused by the COVID-19 pandem-
ic challenge the prevailing trends. For
example, the COVID-19 crisis is consid-
ered to have aected the megatrend of
urbanization at least temporarily, with
migration in Finland being increasingly
Trends and megatrends
influencing our industry
The rapid and
unpredictable
changes in society
caused by the
COVID-19 pandemic
challenge the
prevailing trends.
directed towards more rural municipalities
and municipalities surrounding growth
centers. However, the actual impact on
megatrends of the changes caused by
the epidemic can be assessed only after
a longer period of time. In a short term,
the significant care backlog caused by the
COVID-19 epidemic presents a challenge
to the Finnish healthcare system.
Sustainability (social and
ecological sustainability)
In addition to the ecological sustain-
ability crisis, we need to respond to
questions concerning the future of
social sustainability. In addition to par-
ticipation, a sense of community and
accessibility, social
sustainability is a matter of the fair
distribution of benefits and disadvan-
tages. Social sustainability is reflected
in, for example, the wellbeing of com-
panies’ employees and maintaining the
vitality of dierent regions.
BUSINESS AND STRATEGY
Growth and concentration of wealth
The growth of total wealth contributes to
the growth of consumption. However, there
is a clear concentration of wealth among
the older generations, who also have an
increased need for healthcare services.
Indeed, their wealth is reflected in invest-
ments in their own health. More and more
people have the ability to take out voluntary
medical expenses insurance, for example.
According to Finance Finland, over 1.26
million Finns had a private medical expenses
insurance at the end of June 2021.
Lifestyle diseases are increasing
The most common causes of death among work-
ing-age people in Finland are tumors, cardio-
vascular diseases, dementia and causes related
to alcohol consumption. However, standardized
mortality in the working-age population, relative
to the age structure and size of the entire popu-
lation, is declining. Although recreational exercise
that promotes wellbeing has increased, the level
of fitness especially among young age groups has
declined and overweight is an increasingly com-
mon issue. The period of the COVID-19 epidemic
has also had a negative impact on the physical
fitness of people in Finland.
Increasing inequality
The health of Finns has improved on the
whole, but the dierences between socio-
economic groups are among the largest
in the Western world. For example, the life
expectancy of a Finnish man with a higher
education is approximately six years longer
than that of a man with only a basic edu-
cation completed. The dierences between
socioeconomic groups are related to, for
example, the use of health services and life-
style choices that are relevant to health.
Health remains a strong trend
Interest in personal health and well-
being is increasing, especially among
younger people. The self-monitoring
of health has become increasingly
common as technology has devel-
oped. The health trend is also re-
flected in statistics: people in Finland
smoke less, eat healthier food, exer-
cise more and are more active users
of health and wellbeing services.
The population is ageing
The ageing of the population continues,
and the biggest changes in the age struc-
ture are still to come. They will have a sig-
nificant impact on the dependency ratio
in Finland and the increasing prevalence
of age-related illnesses. According to
population forecasts, there will be seven
non-working-age persons per 10 work-
ing-age persons in Finland by 2050. The
ageing of the large generations will pose
unprecedented challenges to the econom-
ics of our society.
Urbanization continues
The population concentrates in
growth centers. According to
forecasts, jobs will be concentrated
mainly in cities, which also oer the
best study opportunities. In munic-
ipalities with a negative net migra-
tion rate, the population is ageing
and the challenges related to the
availability of healthcare services
are becoming deeper. .
Healthcare reform
Finnish social and healthcare services
are in the midst of historic reforms. The
new social and healthcare service system
will significantly reshape healthcare
structures and needs as the responsibil-
ity for organizing services is transferred
from municipalities to larger wellbeing
services counties. The reforms will have
significant impacts on municipalities’
resources and economic situation, as
social and healthcare services have
previously accounted for a majority of
municipalities’ expenses.
The digital transformation continues
The rapid development of technological
solutions continues, and the COVID-19
epidemic has only increased the demand
for virtual operating environments and
services. Health technology is becoming
part of daily life, remote consultations are
becoming common and people are mea-
suring their health in various ways. The
use of artificial intelligence in predicting
and diagnosing illnesses is increasingly
becoming a part of the care chain.
9
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
A
lthough the general wellbeing
of Finns has improved, statistics
show that half a million Finns have
diabetes, more than half of the population
is overweight, and mental health problems
have become the most common cause
of disability pensions, with the number
of pensions having risen by as much as
10–20 per cent. The ageing of the popula-
tion also brings other health issues, such
as tumors, Alzheimer’s disease and cardio-
vascular diseases. The focus of healthcare
should be shifted increasingly towards
prevention. Allocating resources based
on the impact of care makes care chains
more eective in terms of both wellbeing
and costs.
Pihlajalinna has done long-term work
around development in areas such
as remote services, digital solu-
tions and comprehensive occu-
pational healthcare services.
The COVID-19 epidemic has
accelerated digitalization
and further increased the
number of remote consul-
tations. Pihlajalinna has also
launched new data-driven
services based on remote
consultations, such as the Pih-
lajalinna Diabetes Clinic and the
Pihlajalinna Weight Management Clinic.
They help patients achieve better balance
by integrating monitoring and measure-
ment into care paths Pihlajalinna strength-
ened its position as pediatric service
provider by launching a new pediatrician
chat service in the Pihlajalinna Health App
application in August. Pediatrician chat
service is available without an appoint-
ment. Many acute ailments not requiring
physical examination, can be treated
through the application. A pediatrician
can also prescribe medication, renew
prescription or issue a referral for further
examinations.
Pihlajalinna will further develop its
network of operating locations and its
range of specialized care services as well
as continue to expand its service network
geographically, especially in the Helsin-
ki Metropolitan Area and other growth
centers.
Monitoring the impact of services is an
important aspect of service development.
Pihlajalinna has initiated a strategy eort
to assess performance indicators that
measure service quality and impact. The
need for healthcare services is growing,
and it is important to find solutions for
both prevention and treatment with the
most impact.
BUSINESS AND STRATEGY
Diverse remote services
The pediatrician
chat service is
available without an
appointment.
55 %
Growth of Pihlajalinna
remote appointments
service volume in percen-
tage in 2021.
39 %
Percentage of remote
consultations in 2021.
BUSINESS AND STRATEGY
Remote services and new treatment models
P
ihlajalinna improves the availability
and accessibility of its services by
introducing new service innovations
and by developing digital services in par-
ticular. In recent years, Pihlajalinna has sig-
nificantly expanded the range of remote
services. Remote services help equalise
regional dierences in service provision
and have enabled the flexible and safe use
of services during the COVID-19 epidemic.
163
SPECIALISTS
Number of specialists who
provided appointments
via the Pihlajalinna health
application in 2021.
10
SECONDS
The median waiting time of
customers using the Pihla-
jalinna health application
in 2021.
15 500
RESPONSIBLE DOCTOR SERVICE
CUSTOMERS
Number of customers treated via Pihlajalin-
na’s responsible doctor service in 2021. In
Pihlajalinna’s responsible doctor model, a
physician who is familiar with the patient’s
overall situation is responsible for their day-
to-day care in cooperation with nursing sta.
The model is part of our range of services
oered to municipal customers.
72
MUNICIPALITIES
Pihlajalinna’s responsible doctor service is
used by 72 municipalities
across Finland. The customers include
municipalities as well as joint municipal
authorities.
98%
Growth of Pihlajalinna
Health App
service volume in
percentage in 2021.
11
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
BUSINESS AND STRATEGY
The growing demand for mental health
services and the challenges related to
access to care make frequent headlines.
Pihlajalinna responded to the challenge
by developing Mental Care (Mielen huoli),
a mental health helpline that oers quick
and convenient access to professional
help.
The need for mental health services is
growing in Finland. Statistics show that
the number of Finns receiving sickness
allowance paid on the basis of mental
health increased throughout the 2010s
(Finnish Institute for Health and Welfare),
and mental health and behavioral prob-
lems have become the most important
basis for disability pension (Finnish Asso-
ciation for Mental Health, Finnish Centre
for Pensions). According to the OECD,
the costs of mental health treatment in
Finland amount to roughly EUR 11 billion
per year, including the labor market costs,
healthcare service costs and social securi-
ty (Finnish Association for Mental Health).
“Mental health services are often
congested and access to care can be
slow. The prolonged COVID-19 epidemic
and isolation from other people has only
aggravated the situation for people who
struggle with their mental health. This
Low-threshold help for mental
health concerns – without queuing
means there is a great demand for the
Mental Care helpline that was launched
in May 2021,” says Marika Pöyri-Pirkola,
Team Leader for the Mental Care helpline
at Pihlajalinna.
Help for small and large concerns
The Metal Care helpline oers help with a
wide range of mental health issues, such
as anxiety, depression, fatigue, insomnia,
problems with coping at work and sud-
den stressful life changes. The customer
is initially connected to a nurse with
completed training on short-term therapy.
Together with the customer, the nurse
plans the appropriate treatment path.
The customer can get acute discussion
help from the Mental Care nurse, pro-
ceed to short-term therapy or proceed to
longer-term treatment. If necessary, the
customer is oered a consultation with a
specialist in psychiatry.
“The customer benefits from close
collaboration between the nurse and
the specialist in psychiatry. At the same
time, the cost of care remains moderate
because the specialist’s services are used
only as necessary. The Mental Care help-
line has been well received. The number
of customers is growing and the feedback
from our customers has been very posi-
tive. We will also continue to develop the
service further,” Pöyri-Pirkola adds.
Secure healthcare services remotely
from the comfort of your living room
The Mental Care helpline is implemented
entirely through initial remote consulta-
tions. Customers can get assistance from
the comfort of their living room, anywhere
in Finland. The remote service model also
makes ecient use of the resources of
mental health professionals.
“The Mental Care helpline, like all Pih-
lajalinna´s digital services, is based on an
uncompromised information security. The
Visiba Care reception platform we use has
been developed specifically for patient
use. It uses communication methods which
ensure the information sent between
the customer and Pihlajalinna´s servers
remains confidential and encrypted using
the TLS encryption protocol. The Swedish
Medical Products Agency has awarded the
CE mark to Visiba Care in recognition as a
first-class product in terms of its medical
and technical security. All patient data is
processed in accordance with the General
Data Protection Regulation (GDPR) and the
Act on the Electronic Processing of Client
Data in Healthcare and Social Welfare,”
Pöyri-Pirkola concludes.
The need for mental
health services is
growing in Finland.
12
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Pihlajalinna mission is to help its cus-
tomers to live a better life. As a concrete
example of this, Pihlajalinna launched the
exercise referral concept in the summer
of 2021. This completely new operating
model in Finland supports comprehensive
customer care.
The service is based on comprehensive
scientific evidence regarding the benefits
of physical activity in the treatment of
illnesses. Exercise can play a crucial role
in the success of treatment and it can be
used either alone or to support medical
treatment. At Pihlajalinna, the exercise
referral is seen particularly useful in the
areas of healthcare where physical exer-
cise has thus far been a less-used form of
treatment.
“Exercise can be recommended in
various situations as part of a treatment. It
has been shown to be useful in the treat-
ment of high blood pressure, diabetes,
depression, musculoskeletal disorders and
many other conditions. When a customer
makes exercise part of their lifestyle, the
impact can be tremendously positive. For
example, type 2 diabetes can be prevent-
ed or controlled with appropriate exercise
and diet, so that the patient’s medication
can be even discontinued altogether,” says
Regional Director, specialist in geriatrics
Arvo Haapanen from Pihlajalinna.
Pihlajalinna`s Exercise Referral (Liikun-
talähete) concept and its seamless func-
tionality of the service is guaranteed by
cooperation between Pihlajalinna´s private
clinics and Forever fitness centers also
being part of the Group. When deemed
necessary, the exercise referral is sent to
Forever with the customer’s consent, and
Forever then contacts the customer to
make an appointment with a physiothera-
pist. At the initial meeting, the customer’s
starting level is assessed and goals are set,
considering any physical or psychological
barriers to exercise allowing the physio-
therapist to recommend a customized and
safe exercise plan for the customer.
“To support the customer, we gather a
multidiciplinary team that may include not
only the treating physician and phys-
iotherapist but also a personal trainer,
motivation trainer, Fustra trainer, nutrition-
ist and massage therapist. The physio-
therapist closely supports the customer in
putting the exercise plan into action and
refers the customer to a follow-up with
the physician at appropriate intervals. The
aim is for the customer to succeed – to
get help for their health problems and
adopt a physically active lifestyle,” says
Mikko Mustala, Managing Director of For-
ever fitness centres.
The annual cost of physical inactiv-
ity adds up to several billion euros
As many as 80% of Finns are not physi-
cally active enough with regard to their
health, which leads to costs to society that
amount to at least EUR 3 billion annually
(UKK Institute). The costs are expected
to only increase due to the ageing of the
population and increasing morbidity. One
in two members of the working-age pop-
ulation in Finland have a lifestyle illness or
an elevated risk of one. For example,
over two million people in Finland
are overweight, and half a million
Finns have been diagnosed
with type 2 diabetes.
“There is only one cure
to physical inactivity: you
need to get moving! Our
exercise referral concept
is a highly refined, per-
sonalised, safe and easy
way to make exercise
part of your life,” Arvo
Haapanen concludes.
Exercise Referral - a personalized and safe
solution to promote physical activity
BUSINESS AND STRATEGY
As many as 80%
of Finns are not
physically active
enough with regard
to their health.
Customer groups
BUSINESS AND STRATEGY
(included in corporate customers) (included in public sector)
SHARE OF
CONSOLIDATED
REVENUE
13%
(14%)
SHARE OF
CONSOLIDATED
REVENUE
5%
(5 %)
SHARE OF
CONSOLIDATED
REVENUE
46%
(50%)
REVENUE M€
85.3
(81.1)
+5.1%
REVENUE M€
34.8
(31.4)
+ 10.9%
REVENUE M€
300.8
(287.9)
+4.5%
REVENUE M€
137.8
(120.7)
+14.1%
Private customers
Insurance company customers Complete and partial outsourcings
Corporate customers
Pihlajalinna’s customer groups are corporate customers,
private customers and public sector customers.
The Group’s corporate customer group consists of Pihlajalin-
na’s occupational healthcare customers, insurance company
customers and other corporate contract customers.
The Group has approximately 250 000 occupational
health care customers.
The Group’s private customers are private individuals who
pay for services themselves and may subsequently seek
compensation from their insurance company.
The Group’s public sector customer group consists of
public sector organizations in Finland, such as municipalities,
joint municipal authorities, parishes, hospital districts and
public administration when purchasing social and health-
care outsourcing services, residential services, occupational
healthcare services and stang services.
SHARE OF
CONSOLIDATED
REVENUE
21%
(21 %)
REVENUE M€
427.7
(372.4)
+14.8%
Public sector
SHARE OF
CONSOLIDATED
REVENUE
66%
(65%)
14
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Pihlajalinna is a partner to all insurance
companies and treats a significant por-
tion of the illnesses and accidents of their
customers.
Pihlajalinna’s cooperation with insurance
companies has been intensifying year by
year. Pihlajalinna has developed a unique
care chain model that ensures the high
quality and cost-eectiveness of custom-
er care. The model is based on Pihlajalin-
na’s extensive experience of public sector
partnerships.
The care chain model has been further
developed in cooperation with insurance
companies. The purpose of the model is
to ensure quick access to treatment for
employees and private customers. This
allows the customer to get an appoint-
ment with a specialist on the day of
the accident and is referred to further
examinations if needed, which typically
are X-ray and MRI imaging. If the accident
is severe and requires surgical treatment,
the procedure enables to proceed without
Deeper cooperation with
insurance companies
a delay from the initial appointment. The
aim is to get the customer back to work
and normal life as soon as possible, which
is beneficial to the customer, their employ-
er and whole society.
Pihlajalinna measures the impact of
treatment by reporting to insurance
companies on service promise times and
the time spent on providing care through
a specific scheme. Systematic action and
monitoring aim to ensure the start and im-
plementation of treatment to be prompt
and cost-eective, also from the employ-
er’s point of view. The measurement of the
impact of the care chain is planned to be
further developed.
In the cooperation Pihlajalinna places a
key emphasis on delivering a good cus-
tomer experience to the user of the ser-
vices. At the heart of the process is high
quality treatment and functioning care
chain following all agreed steps, from start
to finish. It is also important for employees
to get their sickness absence certificates
recorded and delivered to their insurance
company
in a timely
manner to
avoid any delay
in compensation
for lost earnings.
Pihlajalinna has
taken significant steps in
cooperation, with the latest
being the acquisition of Pohjo-
la Hospital sealed in January 2022
to be part of the Group. The acquisi-
tion improves service availability and the
service oering and expands the provi-
sion of orthopedic services in particular.
Pohjola Hospital is known especially for its
high-quality expertise in orthopedics and
hand surgery.
Pihlajalinna expects to significantly
grow its business operations with the
customer flow through insurance compa-
nies. Also the national reform of social and
healthcare services as well as the grow-
ing popularity of medical insurances are
expected to accelerate the growth.
The customer gets
an appointment with
a specialist on the
day of the accident
and are referred to
further examinations if
needed.
BUSINESS AND STRATEGY
15
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
BUSINESS AND STRATEGY
2021, a year of development
With the service renewal, Pihlajalinna enables 24 hour
access to remote consultation for private customers
whenever they need it. The remote consultations are
available through Pihlajalinna Health App (Terveyssovel-
lus) health application.
At night (between 11 p.m. and 7 a.m.) a nurse assesses
the need and urgency of a treatment through a remote
consultation. This ensures that the customer can be
directed to the appropriate care path immediately. The
nurse may also consult a physician and the physician will
contact the customer if necessary. During the day time,
various acute conditions not requiring a physical exam-
ination can be treated through remote consultations, as
well as prescribe medication, issue referrals for further
examinations and issue short sickness absences.
Remote
consultations
around the
clock
Pihlajalinna’s three-year partnership agreement
with the Finnish Ski Association (FSA) covers wo-
men’s, men’s, girls’ and boys’ national teams in all
of the FSA’s sports, namely cross-country skiing, ski
jumping and the Nordic combined.
As a leading expert in medicine and health,
Pihlajalinna wants to work together with the FSA to
support the success of top sports and the potential
of Nordic winter sports to inspire people to exercise.
The partnership agreement includes extensive health
cooperation, with Pihlajalinna ensuring the national
teams having access to physicians and physiother-
apists at their training camps and on competition
trips. Pihlajalinna also provides the COVID-19 testing
services required by the FSA.
As the COVID-19 epidemic prolonged, Pihlajalinna
continued to actively develop and conceptualize
services related to the epidemic management, such
as COVID-19 testing. Pihlajalinna helped to ensure
a safe organization of the Ruka Nordic ski event in
November through systematic testing.
A total of 385 athletes and 821 team members
joined the event in Ruka. Pihlajalinna’s well-honed
testing process and experienced testing team ensu-
red smooth and quick service for athletes and their
support teams.
Obesity is a long-term condition causing significant
physical, psychological, social and financial conse-
quences. Pihlajalinna´s Weight Management Clinic pro-
vides its customers with comprehensive, specialist-led
treatment to support weight management. The Clinic
operates nationally as a remote service, but customers
can also visit the clinic in person in Munkkivuori, Helsinki.
The care path starts with an assessment consultation.
The potential need for medical or surgical intervention
is evaluated by an experienced specialist. Dieticians,
physiotherapists from Forever fitness centers together
with the therapy and sleep coaching services support
the customer’s success.
Diverse
services
related to the
epidemic
Main partner
of the
Finnish Ski
Association
Comprehen-
sive support
for weight
management
16
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
BUSINESS AND STRATEGY
2021, a year of development
Pihlajalinna acquired a part of Digital Health Soluti-
ons Ltd and agreed on the future acquisition of the
company’s entire share capital from its current owners.
The company’s main product is the Digiterveys digital
health service concept, which includes a digital service
platform.
The service concept has been developed to support
the wellbeing of the personnel of organizations in vari-
ous ways. It helps organizations to look after individuals
in times of change. The concept is unique, as it is not
focused only on physiological health and nutrition, but
also on work performance, stress tolerance and recovery.
A new Uniikki spot, a special housing unit with capacity
for 14 residents opened in Lohja in September. Pihla-
jalinna Uniikki is a concept for service housing with 24-
hour assistance for people with developmental disabili-
ties and those on the autism spectrum.
Uniikki’s goal is to develop new customer-oriented
service models, and the focus of operations is on the
equal encounter with customers. “Uniikki’s operations are
focused on individual functional daily life and support-
ing the residents’ right to self-determination. At Uniikki,
service housing with 24-hour assistance is based on the
engagement of the residents and the idea of everyone
having the right to live a life of dignity that suits their
individual circumstances,” says Miina Laru, Managing
Director of Pihlajalinna Special Housing Services.
Pihlajalinna Diabetes Clinic aims to oer high-quality treatment
and the monitoring of diabetes regardless of the customer’s
habitation. The clinic’s new remote service is aimed particularly at
patients with type 2 diabetes.
The service is used via the Pihlajalinna Health App (Terveys-
sovellus) health application. The customer is initially connected to
a diabetes nurse and subsequently to a remote consultation with
a specialist in internal medicine. The customer is always served by
diabetes specialists, and the treatment plans are made on the basis
of the latest international treatment recommendations in addition
to the national Current Care Guidelines used in Finland. Treatment
of type 2 diabetes is currently being revolutionized by new and
eective medications that can significantly reduce the risk of dia-
betes comorbidities and support the patient’s weight management.
Digital
health
Expansion of
special housing
services
Remote service
for patients
with diabetes
In July 2021, Pihlajalinna Terveys Oy announced its intent to ac-
quire the entire share capital of Pohjola Hospital. The transaction
was completed on 1 February 2022 after the Finnish Competition
and Consumer Authority approved the acquisition.
The business combination strengthens Pihlajalinna´s service
portfolio and enables the geographical expansion of the service
network, especially in the Helsinki Metropolitan Area and other
growth centers. The acquisition also further improves Pihlajalinna’s
opportunities for the development, digitalization and conceptual-
ization of services. The acquisition not only improves the availabil-
ity of our services and our service portfolio, but also expands the
provision especially in the orthopedic services. Pohjola Hospital
is known for its high-quality expertise in orthopedics and hand
surgery. Growth potential is further increased by the new five-year
service agreement signed with Pohjola Insurance in connection
with the deal.
Top-tier
hospital
17
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
P
Pihlajalinna
publishes its GRI
sustainability re-
port Pihlajalinnabegan
an eort to develop its
sustainability strategy in
autumn 2021. As a part
of the process, Pihlajalin-
na made a materiality as-
sessment of its impacts on
society as well as defined the
key sustainability themes, risks
and stakeholders. The results
are presented in the Sustainability
Report published in 2022, which
marks the first time the report applies
the international GRI Standards (Global
Reporting Initiative) framework.
Pihlajalinna will continue to develop its
sustainability reporting further and pre-
pare for the revised reporting obligations
arising from a Regulation issued by the
European Commission, for example.
The three main themes of sustain-
ability were identified on the ba-
sis of a materiality assessment
As part of the adoption of the GRI Stan-
Sustainability in Pihlajalinna
dards reporting framework, a working
group comprised of representatives of
Pihlajalinna’s management carried out
Pihlajalinna’s first GRI-compliant ma-
teriality assessment in December 2021.
The assessment is based on interviews
conducted in autumn 2021 to identify key
sustainability impacts in Pihlajalinna busi-
ness operations. The assessment also took
into account stakeholder feedback and
the stakeholder survey conducted in late
2019. The materiality assessment serves
as the foundation for Pihlajalinna’s future
sustainability eorts, including the process
of defining the company’s sustainability
strategy.
In the materiality assessment, a total of
15 topics were identified as being signifi-
cant with regard to the company’s impact
and stakeholder views. These topics
were grouped under three main themes:
responsibility for health and wellbeing,
sustainable business and responsibility for
personnel.
Responsibility for health and wellbeing
Patient safety and the prevention of illness
are at the core of Pihlajalinna’s sustainabil-
ity. The impact and quality of services, as
well as their availability and accessibility,
were also identified as key sustainability
topics. Pihlajalinna also emphasizes the
importance of processing patient and
personal data securely and ensuring the
uninterrupted operation of information
systems.
Sustainable business
For Pihlajalinna, sustainable business
means striving for good corporate citizen-
ship. Operating ethically and sustainably is
key to achieving the Group’s strategic ob-
jectives. Pihlajalinna also creates economic
value for society by producing ecient
social and healthcare services, purchasing
services and goods from local suppliers
and paying all of its taxes to Finland.
Responsibility for personnel
Pihlajalinna wants to be the first choice
among professionals in its industry. The
company aims to deliver an excellent
employee experience, where the key
sustainability-related elements include oc-
cupational safety, looking after employee
wellbeing, and competence development.
SUSTAINABILITY
Patient safety and
the prevention of
illness are at the
core of Pihlajalinna’s
sustainability.
18
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
SUSTAINABILITY
Pihlajalinna aims to ensure regulatory compliance,
high quality, safety and impactful treatment every day.
Patient safety and the secure processing of patient and
personal data are basic preconditions for the compa-
ny’s operations.
The professional competence of employees consti-
tutes the foundation of quality and patient safety. The
professional qualifications of employees are verified
during recruitment, and new employees are trained for
their duties in accordance with an induction training
programme. Pihlajalinna actively develops employee
competence.
Over the years, Pihlajalinna’s service network has grown
in scale and now covers entire Finland. With over 150
operating locations, the significance of the Group’s
environmental responsibility has increased.
Pihlajalinna’s operations create environmental
impacts in the form of energy consumption, CO2
emissions and waste. Pihlajalinna will start to develop
its environmental management systems in 2022 with
the aim of seeking ISO 14001 certification for selected
businesses.
Development of
environmental
management sys-
tems to commence
in 2022
Employee
competence is
the foundation for
quality and patient
safety
Medical key figures 2021
16,34
COMPLAINTS*
0,08 %
PATIENT INJURY
NOTIFICATIONS
FILED IN 2021*
0,39
OFFICIAL COMPLAINTS*
0
SURGICAL
INFECTIONS**
DEEP INFECTIONS
1 267 010
TOTAL NUMBER OF VISITS
+75
PRIVATE
CLINICS
+91
HOSPITALS
+85
DENTAL
CLINICS
+67
TELEPHONE
SERVICES
The number of appointments, complaints, ocial complaints and patient injury notifications include Pihlajalinna’s private
healthcare services
(private clinics, private hospitals, occupational health centres and dental clinics) and cases that occurred in those ser-
vices and which the Group was informed of. The Group does not necessarily receive information about complaints, o-
cial complaints or patient injury notifications related to the operations of practitioners working at Pihlajalinna’s clinics.
* The number of complaints, ocial complaints and patient injury notifications is expressed per 100,000 appointments.
Since January 2021, it has also been possible to submit complaints via Pihlajalinna’s website.
**The figure for patient injuries reflects the number of compensable injuries according to decisions issued by the Patient
Insurance Centre in 2021.
The total amount of feedback received in 2021 was 121,818
(81,582). Net Promoter Score (NPS) is expressed in a range of
-100 to +100.
NPS INDEX
+70
MUNICIPAL
JOINT VENTURES
+73
PIHLAJALINNA
HEALHT APP
19
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Personnel, the most
important resource
SUSTAINABILITY
Key sustainability
themes in 2021
• Clear targets
• Implementation of team development discussions
• Development of leadership and supervisory work
• Enhancing collaboration in statutory employ-
er-employee cooperation and the management of
occupational wellbeing at various levels
• Occupational safety and health especially with
regard to the COVID-19 pandemic and the threat
of violence
Channels of
engagement
• Personal interaction
• Personnel briefings
• Development discussions
• Training and coaching
• Intranet
• Pihlis Pulse personnel survey
• statutory employer-employee coopera-
tion and occupational safety meetings
• Pihlajalinna Academy
Pihlajalinna wants to be the first choice among professionals in its industry.
In 2021, Pihlajalinna had 6,297 (5,550) employees and 1,070 (1,056) practitioners.
The departure turnover of employees was 16.2% (11.1%).
Pihlajalinna uses the international eNPS (Em-
ployee Net Promoter Score) index to measure
the employee experience. The eNPS index is
expressed in a range of +100 to -100.
COMPLETE
AND PARTIAL
OUTSOURCINGS
eNPS
2021
-14
(-7)
GROUP EXCLUDING
COMPLETE AND PAR
-
TIAL OUTSOURCINGS
eNPS
2021
+15
(-1)
20
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Training
The personnel receive regular training on data protection
and information security. All Pihlajalinna professionals are
required to complete general training on data protection,
including a test. Those who process patient data also need
to take an additional test on patient data. The personnel
have access to up to date guidelines.
Risk assessment
Data protection and information security risks are assessed
and analysed on a regular basis as well as always in the
specification phase of a new system and when ever signifi-
cant changes are made.
Access management
In all systems, user rights and access management are
centralised. System administrators determine the principles
for granting user rights.
Control and monitoring
The status of data protection and information security is
reported as part of internal and external audits. IT security
technology solutions are constantly assessed and separate
IT security inspections are made to the most critical envi-
ronments. Data protection related work in supervised by
a steering group and operational action is led by the data
protection and IT security team.
Service provider monitoring
Suppliers and external service providers must comply with
information security requirements defined by the Group
and suppliers are subject to regular audits. Inconnection
with external services change, information security require-
ments are reviewed.
Processing of IT security deviations
Pihlajalinna Group has defined procedures and tools for
detecting information security deviations. Additionaly,
action plans are in place for exceptional situations. Each
information security deviation is recorded and processed
for further action.
Connecting to the network
Connection to the Group network and associated ser-
vices can be allowed using only devices and applications
approved by the Group IT management. In order to ensure
IT security, applications and file formats are monitored and
when nesessary, limited. The most crucial systems can be
accessed only from the internal network. When accessing
from an external network, multi-factor authentication is
required.
Information security practices
Data protection and
information security
SUSTAINABILITY
Pihlajalinna’s information security indicators
Target
Number of intrusion attempts
Number of detected viruses and
malware programs
Devices are clean from
viruses and malware
programs
automatically
removed viruses
automatically removed
malware programs
automatically
removed viruses
automatically removed
malware programs
Volume of junk mail Less than of junk mail
gets through
Target achieved Target achieved
IT security updates are completed All IT security updates are
installed within hours
from the release
of updates are
installed within one week
from the release
of updates are
installed within one week
from the release
A
t Pihlajalinna, the purpose of data protection
and the management of information security
is to ensure the secure processing of patient
and personal data as well as the protection of the
privacy of patients, customers and the company’s
personnel. A further goal of information security
management is the prevention of disruptions in the
functioning of critical information systems endan-
gering service functionality or availability.
Pihlajalinna takes into account the continuously
increasing information security requirements in
its operations as the provision of digital services
grows. The Group develops and improves informa-
tion security by means of up-to-date and secure
methods, such as strong authentication practices,
external monitoring and continuous testing. Data
protection and information security are an import-
ant part of Pihlajalinna’s ISO 9001 certified quality
management system.
All Pihlajalinna professionals are required to
complete general training on data protection,
including a test. Employees who process patient
data are also required to pass a test on patient
data and its processing. The Group administration
ensures that the guidelines pertaining to data
protection and information security are up-to-date
and provides training and support to supervisors
on matters related to data protection and informa-
tion security as well as their implementation at the
unit level. Compliance with the operating guide-
lines concerning data protection and information
security is monitored in internal audits.
21
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
R
eporting our tax footprint in connection with the
annual report is already an established practice
since 2016. The Group pays all its taxes to Finland.
The Group has also a significant local impact in various ar-
eas of the country, especially on those, where Pihlajalinna
is responsible of the total outsourcing of public social and
healthcare services.
Pihlajalinna’s tax footprint describes the tax and other
tax related income the society accrues through the
Group’s business operations. The vast majority of taxes
consist of withholding taxes and employer liabilities. Ad-
ditionally Pihlajalinna paid EUR 73,0 (71,9) million in total
to professional practitioners, out of which they further ac-
counted their own individual taxes. Corporate tax portion
of Pihlajalinna’s tax foorprint is EUR 5,3 (4,2) million.
Tax liability and
footprint
SUSTAINABILITY
On 2021 the society
gained EUR 131,9
(110,4) million from
Pihlajalinna.
T
he Group public sector customers
consist of public sector organisa-
tions in Finland, such as municipal-
ities, joint municipal authorities, congre-
gations, hospital districts and the public
administration when purchasing either
social and healthcare outsourcing services
or residential, occupational healthcare and
stang services.
Pihlajalinna can oer an impactful chain
of care not only for individuals but also for
the wellbeing services counties that are
responsible for organising service provi-
sion. The company has a long track record
of extensive and pioneering cooperation
with municipalities and there is strong
evidence of its eectiveness. In 2021,
Pihlajalinna had cooperation agreements
of varying scope with nearly a hundred
Finnish municipalities.
Social and healthcare services provided
via outsourcing have helped municipalities
and joint municipal authorities improve
the quality and availability of services,
keep the growth of costs under control
and expedite access to care. The overall
economic impacts of the cooperation are
also reflected in the positive development
of the annual margins of the partner mu-
SUSTAINABILITY
A trusted partner for
municipalities
nicipalities. The annual margin represents
the cash generated from operations that
remains after operating costs are paid,
and is available for purposes such as
the municipality’s investments and loan
repayments.
In addition to cost eciency and ser-
vice availability, Pihlajalinna focuses on
the continuous development of customer
satisfaction, which is reflected in the cus-
tomer satisfaction surveys of the partner
municipalities. Customer satisfaction has
remained at an excellent level in all of
Pihlajalinna’s joint ventures.
Pihlajalinna has success-
fully strengthened the
local services of its partner
municipalities while also
making modern remote con-
sultation services available
to the residents.
Data from 1 Jan - 31 Dec 2021
Jämsän Terveys (JT) is a joint venture established
between Pihlajalinna and the municipality of Jämsä.
It has produced social and healthcare services for
Jämsä starting from 1 September 2015 under an
outsourcing agreement signed in spring 2015.
The agreement period is 10 years. The company
is responsible for providing primary and special-
ised care to approximately 20,000 inhabitants in
Jämsä.
Jokilaakso Hospital is a hospital that provides
public specialised care. The hospital is part of
the Pihlajalinna Group. The hospital’s services are
produced by Jokilaakson Terveys (JLT), estab-
lished in 2010, a joint venture between Pihlajalin-
na and the Central Finland Hospital District.
PERSONNEL
ECONOMICAL IMPACT
OWNERSHIP
SPECIALISED CARE AND
SERVICES
APPOINTMENTS
WITH PHYSICIANS
JÄMSÄN TERVEYS
Pihlajalinna 51 %
Jämsä municipality49 %
BOARD OF DIRECTORS
Pihlajalinna representatives 50 % (3)
Jämsä municipality representatives 50 % (3)
OWNERSHIP, JOKILAAKSON TERVEYS
Pihlajalinna 90 %
Keski-Suomen sairaanhoitopiiri 10 %
COMPLAINTS AND OFFICIAL COMPLAINTS
11
Jämsän Terveys • Jokilaakson Terveys
LOCAL SUBCONTRACTORS
109 51
VALUE OF COOPERATION
758 392 € 113 278,27 €
Jämsän Terveys • Jokilaakson Terveys
CORPORATE TAXES TO THE
MUNICIPALITY
0 € 805 920 €
WITHHOLDING
TAXES TO THE
MUNICIPALITY
3 278 732 € 1 709 607 €
DIVIDENS TO THE CENTRAL
FINLAND HOSPITAL
DISTRICT
0 € 200 000 €
PIHLAJALINNA GROUP’S
WITHHOLDING TAXES TO THE
REGIONAL GOVERNMENT:
CENTRAL FINLAND
PIHLAJALINNA’S JOINT VENTURE
DIVIDENDS, EQUITY REPAYMENT AND
PURCHASE PRICES FOR SHARES TO
PARTNER MUNICIPALITY AND HEALTH
CARE DISTRICT DURING THE PERIOD
2014-2021
6 076 945 €
6 814 000 €
Jämsän Terveys • Jokilaakson Terveys
NUMBER OF
EMPLOYEES
489 270
FIXED-TERM
17% 15%
PERMANENT
83% 85%
AVERAGE AGE OF
PERSONNEL
45.9 44.4
LARGEST AGE GOUP
56–60 56–60
THE WORK ABILITY INDEX
average total score
7.8 7.8
SPECIALITIES
NEARLY
2,000 SURGICAL
OPERATIONS ANNUALL
MOST SIGNIFICANT SPECIALITIES:
22
• OPAEDICS AND SURGERY
• INTERNAL MEDICINE
• NEUROLOGY
• CARDIOLOGY
DAYS OF
CARE
78 568
Jämsän Terveys and
Jokilaakso Hospital
63 939
EMERGENCY AND
ON-CALL SERVICES 9 743
SPECIALISED CARE 18 178
DENTAL CARE
14 935
ADULT PSYCHIATRY 1 958
ADOLESCENT PSYCHIATRY 311
CHILD PSYCHIATRY 176
SUBSTANCE ABUSE CLINIC 141
FAMILY SERVICE
CENTRE 2 444
PRIMARY CARE
(Jämsä, Koskenpää
Länkipohja, Kuorevesi) 16 053
TOTAL
24
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Data from 1 Jan - 31 Dec 2021
Mäntänvuoren Terveys Oy is a joint
venture established in 2013 between the
municipality and Pihlajalinna. The cur-
rent agreement between the municipal-
ity and Pihlajalinna is valid until 2026,
followed by a five-year option period.
Mäntänvuoren Terveys is responsible for
providing social and healthcare services
to 11,700 customers in Mänttä-Vilppula
and Juupajoki.
PERSONNEL
ECONOMICAL IMPACT
OWNERSHIP
SPECIALISED CARE AND
SERVICES
APPOINTMENTS
WITH PHYSICIANS
COMPLAINTS AND OFFICIAL COMPLAINTS 13
LOCAL SUBCONTRACTORS
81
VALUE OF
COOPERATION
2 392 946 €
CORPORATE TAXES TO THE
MUNICIPALITY
716 838 €
WITHHOLDING TAXES TO
THE MUNICIPALITY
PIHLAJALINNA GROUP’S
WITHHOLDING TAXES TO THE
REGIONAL GOVERNMENT:
PIRKANMAA
PIHLAJALINNA’S JOINT
VENTURE DIVIDENDS,EQUITY
REPAYMENT AND PURCHASE
PRICE FOR SHARES TO
PARTNER MUNICIPALITY
DURING THE PERIOD 2016-2020
2 729 413 €
DIVIDENDS TO THE
MUNICIPALITY
0 €
14 814 584 €
10 892 810 €
NUMBER OF EMPLOYEES
366
FIXED-TERM
11 %
PERMANENT
89 %
AVERAGE AGE OF PERSONNEL
44,5
LARGEST AGE GOUP
56–60
THE WORK ABILITY INDEX
average total score
7,4
MOST SIGNIFICANT SPECIALITIES:
• GERIATRICS
• SURGERY
• PLASTIC SURGERY
• PSYCHIATRY
• INTERNAL MEDICINE
CARDIOLOGY
• LUNG DISEASES
• DIALYSIS UNI
Mäntänvuoren Terveys
MÄNTÄNVUOREN TERVEYS
Pihlajalinna 91 %
Mänttä-Vilppula municipality 9 %
BOARD OF DIRECTORS
Pihlajalinna representatives 60 % (3)
Mänttä-Vilppula municipality
representatives 40 % (2)
DAYS OF
CARE
76 908
27 158
DENTIST
APPOINTMENTS 7 517
APPOINTMENTS WITH
PHYSICIANS 19 641
TOTAL
25
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Data from 1 Jan – 31 Dec 2021
Kuusiolinna Terveys Oy is a joint ven-
ture established by Pihlajalinna and the
municipalities of Alavus, Ähtäri, Kuor-
tane and Soini. The agreement period is
10 years and the agreement includes a
five-year option. It has produced social
and healthcare services for Alavus,
Kuortane and Ähtäri since 1 January
2016, and for Soini since 1 January 2017.
The company is responsible for provid-
ing primary care to 22,400 inhabitants
in total.
PERSONNEL
ECONOMICAL IMPACT
OWNERSHIP
SPECIALISED CARE AND
SERVICES
APPOINTMENTS
WITH PHYSICIANS
COMPLAINTS AND OFFICIAL COMPLAINTS 12
LOCAL SUBCONTRACTORS
251
VALUE OF
COOPERATION
2 394 283 €
CORPORATE TAXES TO THE
MUNICIPALITY
924 €
WITHHOLDING TAXES TO
THE MUNICIPALITY
PIHLAJALINNA GROUP’S
WITHHOLDING TAXES TO THE
REGIONAL GOVERNMENT:
SOUTH OSTROBOTHNIA
PIHLAJALINNA’S JOINT VENTURE
DIVIDENDS ANS PURCHASE
PRICES FOR SHARES TO PARTNER
MUNICIPALITIES (MUNICIPALITIES,
TOTAL)
7 463 285 €
DIVIDENDS TO THE
MUNICIPALITY
539 000 €
8 217 661€
26 697 874 €
NUMBER OF EMPLOYEES
1 106
FIXED-TERM
11 %
PERMANENT
89 %
AVERAGE AGE OF PERSONNEL
44,0
LARGEST AGE GOUP
56–60
THE WORK ABILITY INDEX
average total score
8,0
SPECIALITIES
MOST SIGNIFICANT SPECIALITIES:
14
• INTERNAL MEDICINE
• GERIATRICS
• CARDIOLOGY
• ORTHOPAEDICS AND SURGERY
• UROLOGY
• ENT
DAYS OF
CARE
180 525
Kuusiolinna
KUUSIOLINNA TERVEYS
Pihlajalinna 97 %
Alavus, Kuortane, Ähtäri ja Soini
total 3 %
BOARD OF DIRECTORS
Pihlajalinna representatives 50 % (4)
The municipality representatives 50 % (4)
TOTAL
Primary care, emergency and
on-call services
34 131
SPECIALISED CARE
4 716
DENTAL CARE
17 829
PSYCHIATRIC
POLYCLINIC 1 660
FAMILY SERVICES 3 637
26
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Data from 1 Jan – 31 Dec 2021
Kolmostien Terveys is a joint venture
established between Pihlajalinna and
the municipality of Parkano. It has
produced social and healthcare services
for Parkano and Kihniö starting from 1
September 2015. The agreement period
is 10 years and the agreement includes
a five-year option. The company is re-
sponsible for providing primary care to
8,300 inhabitants in Parkano and Kihniö.
PERSONNEL
ECONOMICAL IMPACT
OWNERSHIP
SPECIALISED CARE AND
SERVICES
APPOINTMENTS
WITH PHYSICIANS
TOTAL
23 113
COMPLAINTS AND OFFICIAL COMPLAINTS 11
LOCAL SUBCONTRACTORS
73
VALUE OF
COOPERATION
461 864 €
CORPORATE TAXES TO THE
MUNICIPALITY
0 €
WITHHOLDING TAXES TO
THE MUNICIPALITY
PIHLAJALINNA GROUP’S
WITHHOLDING TAXES TO THE
REGIONAL GOVERNMENT:
PIRKANMAA
PIHLAJALINNA’S JOINT VENTURE
DIVIDENDS TO PARTNER
MUNICIPALITIES (MUNICIPALITIES,
TOTAL) 2016-2020
2 688 074 €
DIVIDENDS TO THE
MUNICIPALITY
0 €
14 814 584 €
5 090 000 €
NUMBER OF EMPLOYEES
455
PERMANENT
13 %
FIXED-TERM
87 %
AVERAGE AGE OF PERSONNEL
43,3
LARGEST AGE GOUP
56–60
THE WORK ABILITY INDEX
average total score
7,9
MOST SIGNIFICANT SPECIALITIES:
• GERIATRICS
• GYNECOLOGY
• PSYCHIATRY
• YOUTH PSYCHIATRY
• NEUROLOGY
• INTERNAL MEDICINE
• RADIOLOGY AND GENERAL
MEDICIN
DAYS OF
CARE
66 462
Kolmostien Terveys
KOLMOSTIEN TERVEYS
Pihlajalinna 96 %
Parkano municipality 4 %
BOARD OF DIRECTORS
Pihlajalinna reprentatives 50 % (3)
Parkano municipality representatives 50 % (3)
APPOINTMENTS WITH
PHYSICIANS
DENTIST
APPOINTMENTS
17 176
5 936
27
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Board of Directors
Mikko Wirén
Chairman of the Board of Directors
b. 1972, Lic.Med.,
Member of the Board of Directors since 2016
Mika Manninen
b. 1975, M.Sc. (Econ.),
Member of the Board of Directors since 2019
Group CFO, Fennia Group
Independent of the Company
Kati Sulin
b. 1974, Master of Arts,
Member of the Board of Directors since 2018
Managing Director, Ifolor Oy
Independent of the Company
Seija Turunen
b. 1953, M.Sc. (Econ.),
Member of the Board of Directors since 2016
Board Professional
Independent of the Company and
its major shareholders
Leena Niemistö
Vice Chairman of the Board of Directors
b. b. 1963, D.Med.Sc., Specialist in Physiatrics,
Member of the Board of Directors since 2014
Board Professional
Independent of the Company and
its major shareholders
Hannu Juvonen
b. 1955, Lic.Med., Specialist, MBA,
Member of the Board of Directors since 2019
Practitioner, management consultant
Independent of the Company and
its major shareholders
For more
information on the
members of Pihlajalinna
Plc´s Board of Directors
and Management Team,
please refer to Corporate
Governance in the Investors
section at: http://investors.
pihlajalinna.fi/corporate-
governance
28
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Sanna Määttänen was
a member of Pihlajalinna´s
Management Team, in the role
of Chief Business Development
Ocer and Chief Information
Ocer, until March 2021.
Sari Nevanlinna was appointed
Pihlajalinna´s Chief Commercial
Ocer (CCO) in December 2021.
Nevanlinna took up her post and
joined the Management Team in
March 2022.
Management Team
Joni Aaltonen
Group CEO
b. 1970, BBA
Employed by the Company since 2008
Antti-Jussi Aro
Chief Information Ocer
b. 1983, M.Sc. in Technology
Employed by the Company since 2021
(from 3 May 2021)
Marko Savolainen
Chief Legal Ocer
b. 1967, LL.M with court training
Employed by the Company since 2017
Juha-Pekka Halttunen
Sales Director
b. 1969, Vocational Qualification in Business
Employed by the Company since 2005
Teija Kulmala
Group COO, CEO of Jämsän Terveys Oy
and Jokilaakson Terveys Oy
b. 1969, D.Med.Sc., Specialist in obstetrics
and gynaecology, eMBA
Employed by the Company since 2016
Tarja Rantala
Chief Finance Ocer
b. 1972, M.Sc. (Econ.)
Employed by the company since 2014
Sari Riihijärvi
Chief Medical Ocer
b. 1977, D.Med.Sc., oncologist
Employed by the Company since 2021
(from 2 July 2021)
Elina Heliö
Chief People and Culture Ocer
b. 1972, LL.M with court training
Employed by the Company since 2019
29
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
2021
REPORT BY THE BOARD OF DIRECTORS
AND FINANCIAL STATEMENTS 2021
Report by the Board of Directors for the
financial year 1 Jan - 31 Dec 2021
Pihlajalinna’s CEO Joni Aaltonen ................................................................................................32
Pihlajalinna’s strategy 2021–2025 ...............................................................................................33
Revenue by customer group ........................................................................................................33
Seasonal variation .............................................................................................................................35
Consolidated revenue and result ................................................................................................35
The operating environment ......................................................................................................... 36
Consolidated statement of financial position and cash flow ...........................................37
Financing arrangements ................................................................................................................37
Acquisitions and capital expenditure ...................................................................................... 38
Complete and partial outsourcing agreements ................................................................... 38
Research and development ........................................................................................................ 39
Personnel............................................................................................................................................. 39
Changes in Group structure ......................................................................................................... 39
Management Team .......................................................................................................................... 39
Board of Directors ........................................................................................................................... 39
Shareholders’ Nomination Board ............................................................................................... 39
Committees nominated by the Board ..................................................................................... 39
Remuneration of the members of the Board of Directors ...............................................40
Board authorisations ......................................................................................................................40
Auditors and auditing ....................................................................................................................40
Shares and shareholders ............................................................................................................... 40
Risk management ................................................................................................................................... 41
Risks and uncertainties in business operations ..........................................................................41
Flagging notifications ..........................................................................................................................43
Tax liability and footprint ....................................................................................................................43
Share-based incentive schemes .......................................................................................................43
Repurchase of own shares .................................................................................................................44
The Board of Directors’ proposal for profit distribution and the
Annual General Meeting 2022 ..........................................................................................................44
Pihlajalinna’s outlook for 2022..........................................................................................................44
Corporate Governance Statement ..................................................................................................44
Statement of non-financial information ........................................................................................44
Events after the financial period ......................................................................................................44
Key financial figures ..............................................................................................................................45
Share-related information, tables ....................................................................................................46
Quarterly information ...........................................................................................................................47
Calculation of key financial figures and alternative performance measures .................. 48
Reconciliations of alternative performance measures ............................................................49
Shares and shareholders ..................................................................................................................... 52
Shareholding of the management .................................................................................................. 53
Signatures to the Report by the Board of Directors and the Financial Statements ...96
CONTENTS
31
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Joni Aaltonen, CEO of Pihlajalinna
Growth in the fourth quarter was strong. Revenue increased
by 12.8 per cent to EUR 154.7 (137.2) million. Profitability was
weighed down in the final quarter by the higher costs of to-
tal outsourcing arrangements, which led to adjusted EBITA
declining by 12.5 per cent to EUR 7.8 (9.0) million.
Negotiations concerning compensation of the increased
expenses with municipal clients have not led into the
desired outcomes by the end of the financial year. Negoti-
ations are still ongoing with Parkano and Mänttä-Vilppula.
The district court hearing with the City of Jämsä concerning
the price adjustment provision in the service agreement,
increased expenses due to authority requirements and the
financing of the investements of the hospital districts has
begun. Negotiations with the Kuusiokunnat joint municipal
social and health authority concerning adjustments to the
annual price reached a settlement in June 2021.
Nationwide COVID-19 testing reached another peak late in
the year, and COVID-19 services accounted for a significant
share of revenue during the fourth quarter. The customer
volumes of Pihlajalinna private clinics increased by 17 per
cent year-on-year and were 9 per cent higher compared to
2019 level. Some 39 per cent of all customer appointments,
excluding municipal outsourcing and COVID-19 testing, took
place via remote services. The volume of surgical services
grew by 34 per cent.
The sales of occupational healthcare services contin-
ued to see strong growth, and Pihlajalinna has also been
successful in terms of customer retention. The key drivers
of growth are digital services, competitive pricing and
successful acquisitions. The number of people within the
scope of Pihlajalinna occupational healthcare services was
approximately 240,000 at the end of the financial year. Due
Report by the Board of Directors for the
financial year 1 Jan–31 Dec 2021
to new contracts starting 2022 we expect this number to
increase to 250,000. The proportion of preventive activ-
ities in occupational healthcare services grew in line with
targets, increasing by over 6 per cent year-on-year.
Disability is a significant problem in society. Disability
is most commonly caused by mental health and muscu-
loskeletal disorders. An anonymic analysis of Pihlajalinna
occupational health care visits was used to evaluate the
extention of the problem in Finland in terms of men-
tal health issues. The rate of sickness-related absences
caused by reasons related to mental health per 1,000
employees have increased by 24 per cent compared to
last year. Correlation to the pre-pandemic period in 2019,
the increase is as high as 36 per cent. Due to the serious-
ness of the situation, we launched the Pihlajalinna Mental
Care (Mielen Huoli), a remote mental care helpline service
in early 2021 to provide with assistance and treatment for
mental health issues at an early stage. Our goal is eec-
tive prevention and early intervention to avoid extended
disability and human suering.
In the early summer, we launched the Pihlajalinna
Exercise Referral (Liikuntalähete) as part of our new
service selection. The exercise referral is a comprehensive
service that improves the customer’s quality of life and
is produced in partnership with our fitness centers. The
foundation for this service concept lies in the scientific
evidence on the benefits of physical activity on wellbeing
and health. Timely intervention in musculoskeletal disor-
ders through physiotherapy, occupational physiotherapy,
and – where necessary – surgical treatment, also reduces
sickness-related absences and costs.
According to the Finnish Institute for Health and Wel-
fare statistics, at the end of November 2021, a total of
150,392 people (31 December 2020: 141,469) were waiting
for access to care at hospitals operated by the hospital
districts. Of these, 9,539 (7,617) people, or 6.3 (5.4) per
cent, had waited for access to non-urgent specialised
care for more than six months. In specialised care, con-
gestion is highest in surgery and psychiatry. Our job at
Pihlajalinna is to provide people with a channel through
which they can access the service they need without a
delay. The most eective solution for working through
the waiting lists for treatment is increased purchasing
from private-sector service providers.
In the coming years, Finnish healthcare will face sig-
nificant reforms. Concrete progress will be seen in the
national reform of healthcare and social services when
the councils in charge of the wellbeing services counties
become operational on 1 March 2022. Private sector has
developed new service models and care paths to ensure
high quality care and quick access to treatment in all
circumstances. Pihlajalinna is a pioneer on this transition
with a proved track record. We expect the development
of digital services to continue to significantly improve
Pihlajalinna’s competitiveness. Where necessary, we have
the agility and capacity to adapt to quick changes. Pih-
lajalinna will engage in close cooperation with the future
wellbeing services counties.
At the beginning of July, we announced our intention
to acquire the entire share capital of Pohjola Hospital Ltd.
The transaction was approved by the Finnish Competi-
tion and Consumer Authority at the beginning of 2022
and completed on 1 February 2022. In connection with
the acquisition, we also signed a new five-year service
agreement with Pohjola Insurance. The acquisition not
only improves the availability of our services and our ser-
32
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Mission
We help Finns to live a
better life
Vision
We bring wellbeing to
everyone
Values
Ethics, energy,
open-mindedness
vice portfolio, but also expands the provision especially in
the orthopedic services. Pohjola Hospital is known for its
high-quality expertise in orthopedics and hand surgery.
Following the acquisition of Pohjola Hospital, we have
further refined our strategy and long-term targets. We
expect the customer flow through insurance companies
to significantly grow Pihlajalinna business operations.
Growth will also be accelerated by the national reform
of social and healthcare services as well as the growing
popularity of medical insurance.
Our goal is to expand our network of operating loca-
tions and our range of specialized care services, espe-
cially in the Helsinki Metropolitan Area and other growth
centers. Pihlajalinna will strengthen its network of private
clinics by opening new clinics in Lahti, Espoo and Vantaa
in early 2022.
We are seeking revenue growth of EUR 250 million by
the end of 2025, using 2021 as the baseline. One third of
the growth is expected to arise from the public sector
and the rest two thirds from corporate and private cus-
tomers. The long-term target for adjusted operating prof-
it before the amortisation and impairment of intangible
assets (EBITA) is over 9 per cent of revenue. The long-
term target for net debt is less than 3x adjusted EBITDA.
In the beginning of the strategy period due to Pohjola
Hospital acquisition the net debt will decline close to 5.
Pihlajalinna aims to distribute each financial year at least
one-third of its profits to shareholders as dividends or
capital repayment.
Pihlajalinna is publishing its first sustainability report
according to GRI-standard (Global Reporting Initiative),
with topics being the economical value of the company
to the society among others. Open and transparent com-
munication is critical for Pihlajalinna, when it comes to tax
responsibility. Reporting our tax footprint in connection
with the annual report is already an established practice
since 2016. The Group pays all its taxes to Finland. The
Group has also a significant local impact in various areas
of the country, especially on those, where Pihlajalinna is
responsible of the total outsourcing of public social and
healthcare services.
Pihlajalinna’s strategy 2021–2025
Strategic priorities
1. The renewal of services for private customers
Pihlajalinna will strengthen its multichannel ser-
vices and consumer business through new ser-
vice concepts and digital innovation.
2. Cooperation in social and healthcare services
Pihlajalinna will engage in close cooperation with
the future wellbeing services counties and build
a strong market position in public healthcare.
3. Enhancing digitalisation
Pihlajalinna has a strong focus on digitalisation
in the development of personnel, the custom-
er experience and operational performance.
Objectives for the strategy period
• Pihlajalinna oers the most attractive and diverse
range of services.
• Pihlajalinna is the number one choice of consumers
and professionals.
• Pihlajalinna services are easy to access and available
without delay.
• Revenue growth of EUR 250 million by the end of
2025, using 2021 as the baseline. One third of the
growth is expected to arise from the public sector
and the rest two thirds from corporate and private
customers.
• Adjusted operating profit before the amortisation and
impairment of intangible assets (EBITA) over 9 per
cent of revenue in the long term.
• Long term target for net debt is less than 3x adjusted
EBITDA. In the beginning of the strategy period due to
Pohjola Hospital acquisition the net debt will decline
close to 5.
• Distributing at least one-third of the profit for each
financial year to shareholders as dividends or capital
repayment.
Performance indicators
The achievement of goals is measured by, for example,
financial indicators, an increase in the number of appoint-
ment times and procedures available to customers, and
in the Net Promoter Score (NPS), which measures the
customer and employee experience.
Revenue by customer group
Pihlajalinna customer groups are corporate customers,
private customers and public sector customers.
• The Group corporate customers consist of Pihlajalinna
occupational healthcare customers, insurance compa-
ny customers and other corporate customers.
• The Group private customers are private individuals
who pay for services themselves and may subsequent-
ly seek compensation from their insurance company.
• The Group public sector customers consist of public
sector organisations in Finland, such as municipalities,
joint municipal authorities, congregations, hospital
districts and the public administration when purchas-
ing either social and healthcare outsourcing services
or residential, occupational healthcare and stang
services.
Pihlajalinna’s tax footprint describes the tax and other
tax related income the society accrues through the
Group’s business operations. On 2021 the society gained
EUR 131,9 (110,4) million from Pihlajalinna.
33
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
October–December 2021
EUR million 10-12/2021 10-12/2020 change change %
Corporate customers 38.8 35.7 3.1 8.6 %
of which insurance company
customers
9.8 9.0 0.7 8.2 %
Private customers 23.3 22.4 0.9 3.9 %
Public sector 111.3 97.5 13.8 14.2 %
of which complete outsourcing 76.8 73.6 3.2 4.3 %
of which stang 6.4 5.9 0.5 7.7 %
of which occupational heal-
thcare and other services 28.1 17.9 10.2 56.8 %
Intra-Group sales -18.7 -18.4 -0.3 1.4 %
Total consolidated revenue 154.7 137.2 17.5 12.8 %
January–December 2021
EUR million 1–12/2021 1–12/2020 change % change %
Corporate customers 137.8 120.7 17.1 14.1 %
of which insurance company cus-
tomers
34.8 31.4 3.4 10.9 %
Private customers 85.3 81.1 4.2 5.1 %
Public sector 427.7 372.4 55.2 14.8 %
of which complete and partial out-
sourcing agreements
300.8 287.9 12.9 4.5 %
of which stang 26.1 23.0 3.0 13.2 %
of which occupational healthcare
and other services 100.8 61.5 39.3 63.8 %
Intra-Group sales -73.0 -65.6 -7.4 11.2 %
Total consolidated revenue 577.8 508.7 69.1 13.6 %
Q4 2021 Q4 2021
Revenue by custom-
er group 2021, %
2020 2021
+50 %
+13,6 %
509 578
+4 %
+5 %
+14 %
127
85
301
288
85
81
138
121
Q4/2020 Q4/2021
+45 %
+12,8 %
155137
+4 %
+4 %
+9 %
24
35
74
77
22
23
36
39
Corporate customers
Private customers
Complete and partial outsourcings
Other private sector services
Revenue by customer group,
2021, M€
44 %
20 %
14 %
22 %
46 %
20 %
13 %
21 %
October–December 2021
Revenue from corporate customers amounted to EUR 38.8 (35.7) million, an increase of
EUR 3.1 million, or 8.6 per cent. Sales to insurance company customers increased by EUR
0.7 million, or 8.2 per cent. Revenue from occupational healthcare services and remote
services increased. In the corporate customer group, revenue from COVID-19 services
amounted to EUR 2.3 (3.5) million, a decrease of EUR 1.2 million. The customer volumes
of Pihlajalinna’s private clinics increased by 9 per cent year-on-year and were 3 per cent
higher than in 2019.
Revenue from private customers amounted to EUR 23.3 (22.4) million, an increase of
EUR 0.9 million, or 3.9 per cent. In the private customer group, revenue from COVID-19
services amounted to EUR 0.8 (0.4) million, an increase of EUR 0.4 million. The customer
volumes of Pihlajalinna’s private clinics increased by 5 per cent year-on-year and were 13
per cent lower than in 2019.
Revenue from the public sector amounted to EUR 111.3 (97.5) million, an increase of
EUR 13.8 million, or 14.2 per cent. Revenue from COVID-19 services amounted to EUR 7.0
(3.4) million, an increase of EUR 3.5 million. The partial outsourcing agreement with Kris-
tiinankaupunki, index adjustments to complete outsourcing agreements and additional
invoicing increased revenue by a total of EUR 3.2 million. The acquisition of Työterveys
Virta increased revenue from the public sector by EUR 3.2 million. The customer volumes
of Pihlajalinna’s private clinics increased by 64 per cent year-on-year and were 63 per
cent higher than in 2019 due to Työterveys Virta acquisition. Without the acquisition of
Työterveys Virta, customer volumes would have increased by 4 per cent year-on-year
and by 4 per cent compared to 2019.
January–December 2021
Revenue from corporate customers amounted to EUR 137.8 (120.7) million, an increase
of EUR 17.1 million, or 14.1 per cent. Sales to insurance company customers increased
by EUR 3.4 million, or 10.9 per cent. Revenue from occupational healthcare services
34
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
increased by EUR 6.0 million. In the corporate customer
group, revenue from COVID-19 services amounted to EUR
9.4 (5.9) million, an increase of EUR 3.5 million. Revenue
from surgical services and remote services increased. The
customer volumes of Pihlajalinna’s private clinics in-
creased by 5 per cent year-on-year but were one per cent
lower than in 2019.
Revenue from private customers amounted to EUR
85.3 (81.1) million, an increase of EUR 4.2 million, or 5.1
per cent. Revenue from fitness centre services, fertility
treatments and surgical services increased by a combined
EUR 2.0 million. In the private customer group, revenue
from COVID-19 services amounted to EUR 2.2 (1.0) mil-
lion, an increase of EUR 1.2 million. The customer volumes
of Pihlajalinna’s private clinics decreased by 2 per cent
year-on-year and were 22 per cent lower than in 2019.
This was due to the COVID-19 pandemic still.
Revenue from the public sector amounted to EUR 427.7
(372.4) million, an increase of EUR 55.2 million, or 14.8 per
cent. Revenue from COVID-19 services amounted to EUR
27.3 (4.6) million, an increase of EUR 22.7 million. The
partial outsourcing agreement with Kristiinankaupunki,
index adjustments to complete outsourcing agreements
and additional invoicing increased revenue by a total
of EUR 12.6 million. The acquisition of Työterveys Virta
increased revenue from the public sector by EUR 9.9
million. The customer volumes of Pihlajalinna’s private
clinics increased by 54 per cent year-on-year and were 55
per cent higher than in 2019. Without the acquisition of
Työterveys Virta, customer volumes would have increased
by 7 per cent year-on-year and by 8 per cent compared
to 2019.
Seasonal variation
Pihlajalinna’s business operations are to a certain extent
influenced by seasonal fluctuations. Pihlajalinna’s com-
plete outsourcing for social and healthcare services and
other fixed-price invoicing is accompanied by a steady
period of recognition of revenue as income. During the
summer holidays, especially in July, sta costs related to
such agreements are reduced and profitability improves
mainly due to wage accruals. On the other hand, service
demand by Pihlajalinna’s private and corporate custom-
ers is lower and profitability is weaker during holiday
seasons, especially in July–August and December. At the
quarterly level, seasonal fluctuations have historically had
a positive eect on profitability for the third quarter of
the year.
Consolidated revenue and result
October–December 2021
Pihlajalinna’s revenue totalled EUR 154.7 (137.2) million, an
increase of EUR 17.5 million, or 12.8 per cent. M&A trans-
actions accounted for EUR 3.6 million, or 2.6 per cent, of
the growth in revenue. Organic revenue growth was EUR
13.9 million, or 10.1 per cent.
Revenue from complete and partial outsourcing
agreements increased by EUR 3.2 million. Revenue from
COVID-19 services amounted to EUR 10.1 (7.4) million, an
increase of EUR 2.7 million. Other organic growth con-
sisted mainly of growth in private clinic services of EUR
2.2 million, growth in occupational healthcare services of
EUR 1.5 million and growth in remote services of EUR 1.2
million.
The customer volumes of Pihlajalinna’s private clin-
ics increased by 17 per cent year-on-year and were 9
per cent higher than in 2019. Without the acquisition of
Työterveys Virta, customer volumes would have increased
by 6 per cent year-on-year and they would have been 2
per cent lower than in 2019 due to the decrease in the
volume of private customers. Some 39 (30) per cent of all
customer appointments, excluding municipal outsourc-
ing and COVID-19 testing, took place via remote services
during the quarter.
EBITDA was EUR 14.5 (15.1) million, a decrease of EUR
-0.5 million, or -3.5 per cent. Adjusted EBITDA was EUR
14.9 (15.8) million. EBITDA adjustments amounted to EUR
0.3 (0.7) million. The profitability of private clinic services
improved due to COVID-19 services. The profitability of
fitness centre services improved as the operating condi-
tions returned closer to normal in the final quarter of the
year. Fitness centres also received retrospective financial
support from the government in the amount of EUR 0.5
million in November.
The profitability of occupational healthcare services
remained good, although it was significantly lower than in
the comparison period due to the decrease in COVID-19
services. Profitability was reduced by the increased costs
of specialised care under complete outsourcing agree-
ments and the Group’s increased general expenses.
Depreciation, amortisation and impairment amounted
to EUR 9.0 (8.3) million. Adjustments to depreciation,
amortisation and impairment amounted to EUR 0.1 (-0.1)
million. Depreciation of intangible assets amounted to
EUR 1.7 (1.6) million, of which depreciation related to pur-
chase price allocations amounted to EUR 0.7 (0.7) million.
Depreciation, amortisation and impairment of property,
plant and equipment amounted to EUR 2.4 (2.1) million,
and depreciation and impairment of right-of-use assets
totalled EUR 4.8 (4.6) million.
Pihlajalinna’s operating profit (EBIT) was EUR 5.6 (6.8)
million, a decrease of EUR -1.2 million. The EBIT-to-reve-
nue ratio (EBIT margin) was 3.6 (4.9) per cent. Adjusted
operating profit before the amortisation and impairment
of intangible assets (EBITA) was EUR 7.8 (9.0) million.
The adjusted EBITA margin was 4.9 (6.5) per cent. Ad-
justments to EBIT amounted to EUR 0.4 (0.6) million.
The Group’s net financial expenses amounted to EUR
-1.0 (-1.0) million. Profit before taxes came to EUR 4.6
(5.7) million. Taxes in the income statement amounted to
EUR -1.2 (-2.8) million. Profit came to EUR 3.3 (2.9) mil-
lion. Earnings per share (EPS) was EUR 0.19 (0.15).
January–December 2021
Pihlajalinna’s revenue totalled EUR 577.8 (508.7) million,
an increase of EUR 69.1 million, or 13.6 per cent. M&A
transactions accounted for EUR 11.0 million, or 2.2 per
cent, of the growth in revenue. Organic revenue growth
was EUR 58.1 million, or 11.4 per cent.
Revenue from complete and partial outsourcing
agreements increased by EUR 12.6 million. Revenue from
COVID-19 services amounted to EUR 38.9 (11.4) million, an
increase of EUR 27.5 million. Other organic growth con-
sisted mainly of growth in private clinic services of EUR
5.9 million, growth in occupational healthcare services
of EUR 5.5 million, growth in surgical services of EUR 3.2
million and growth in remote services of EUR 2.7 million.
35
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
The customer volumes of Pihlajalinna’s private clinics
increased by 11 per cent year-on-year and were on a par
with 2019. Without the acquisition of Työterveys Virta,
customer volumes would have increased by 3 per cent
year-on-year and would have declined 7 per cent from
2019, mainly due to the decrease in the volume of private
customers. The figures do not incorporate the number
of customer appointments under municipal outsourc-
ing agreements. Some 39 (28) per cent of all customer
appointments, excluding municipal outsourcing and
COVID-19 testing, took place via remote services during
the period. The capacity utilisation rates of surgical oper-
ations improved. The proportion of preventive activities
in occupational healthcare services grew. The volume
of surgical services at Jokilaakso hospital grew by 9 per
cent. The number of freedom-of-choice patients in public
healthcare at Jokilaakso hospital increased by 13 per cent.
The demand for fitness centres and dental care services
improved, but revenue from these areas was still signifi-
cantly below the level of 2019.
EBITDA was EUR 62.6 (52.2) million, an increase of
EUR 10.5 million, or 20,1 per cent. Adjusted EBITDA was
EUR 65.3 (54.8) million, an increase of EUR 10.6 million,
or 19.3 per cent. EBITDA adjustments amounted to EUR
2.7 (2.6) million. The profitability of private clinic services
improved due to COVID-19 services. The profitability of
occupational healthcare services remained good and
improved due to higher volumes. The profitability of fit-
ness centres improved. The capacity utilisation rates and
profitability of surgical operations improved.
Profitability was significantly reduced by the increased
costs of specialised care under total outsourcing agree-
ments, social services, dental care services and services
for the elderly.
Depreciation, amortisation and impairment amounted
to EUR 34.7 (34.0) million. Adjustments to depreciation,
amortisation and impairment amounted to EUR -0.3 (0.1)
million. Depreciation of intangible assets amounted to
EUR 6.7 (6.3) million, of which depreciation related to
purchase price allocations amounted to EUR 3.0 (3.1)
million. Depreciation, amortisation and impairment of
property, plant and equipment amounted to EUR 9.2
(8.8) million, and depreciation and impairment of right-
of-use assets totalled EUR 18.8 (18.9) million.
Pihlajalinna’s operating profit amounted to EUR 27.9
(18.1) million, an increase of EUR 9.8 million, or 54.0 per
cent. The EBIT-to-revenue ratio (EBIT margin) was 4.8
(3.6) per cent. Adjusted operating profit before the amor-
tisation and impairment of intangible assets (EBITA) was
EUR 37.3 (27.4) million. The adjusted EBITA margin was
6.5 (5.4) per cent. Adjustments to EBIT amounted to EUR
2.4 (2.8) million.
The Group’s net financial expenses amounted to EUR
-3.7 (-4.4) million. In the comparison period, net financial
expenses were increased on a non-recurring basis by a
waiver expense associated with the financing arrange-
ment. Profit before taxes came to EUR 24.2 (13.7) million.
Taxes in the income statement amounted to EUR -5.1
(-4.8) million. Profit came to EUR 19.1 (8.9) million. Earn-
ings per share (EPS) was EUR 0.89 (0.38).
The operating environment
The COVID-19 pandemic continued throughout 2021, cre-
ating waves of infection early in the year, after the sum-
mer and late in the year. The seven-day averages for new
cases and the number of hospitalized patients peaked in
Finland in January 2022. Pandemic-related restrictions
were in place throughout 2021, and extensive restrictions
were imposed at the turn of the year due to the Omicron
variant. While infection numbers are still high nationally,
the number of cases requiring intensive care has de-
creased substantially. In negotiations held on 2 Febru-
ary 2022, the Finnish Government determined that the
extensive restrictions can be gradually relinquished while
taking the epidemiological situation into consideration.
The extensive restrictions have included, for example, the
complete closure of indoor facilities used for individual
sports and physical exercise by adults. The second-dose
vaccination coverage in Finland stood at 74.5 per cent of
the entire population at the beginning of February 2022.
Due to the COVID-19 restrictions and the burden placed
on the healthcare system by the pandemic, the treatment
backlog for other illnesses continues to grow. According
to the Finnish Institute for Health and Welfare statistics,
queues for treatment in public healthcare have increased
in general due to COVID-19. At the end of November, a
total of 150,392 patients were waiting for access to care
at hospitals operated by the hospital districts. This repre-
sented a year-on-year increase of nearly 9,000 patients.
Of these, 9,499 patients (6.3 per cent) had waited for
access to non-urgent specialised care for more than six
months, which is an increase of nearly 1,900 patients
compared to the beginning of 2021. Care queues have
grown especially in surgery and psychiatry.
In primary care, non-urgent outpatient appointments
with physicians were available within one week of the as-
sessment of the need for treatment in approximately 60
per cent of cases in October 2021 in all of the Regional
State Administrative Agency regions. The increased use
of remote consultations has expedited access to care at
health centers. In October 2021, the number of non-ur-
gent visits to dental care was still lower than in 2019.
The number of voluntary medical expenses insurance
policies increased significantly between 2009 and 2020.
According to Finance Finland, over 1.26 million Finns had
private medical expenses insurance at the end of June
2021. Growth has been seen in insurance policies taken
out by adult private individuals, children’s insurance poli-
cies as well as medical expenses insurance policies taken
out by companies for their employees.
The reform of healthcare and social welfare services
will see the responsibility for the organisation of health-
care, social welfare and rescue services transferred from
municipalities to 21 wellbeing services counties, the City
of Helsinki and partially to the joint county authority
for the Hospital District of Helsinki. The results of the
regional elections were confirmed on 26 January 2022
and the councils will start their work on 1 March 2022. The
new social and healthcare service system will significantly
reshape health care structures and needs as the responsi-
bility for organizing services is transferred from munici-
palities to larger wellbeing services counties.
The ageing of the population continues, and the big-
gest changes in the age structure are still to come. They
will have a significant impact on the dependency ratio
36
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
in Finland and the increasing prevalence of age-related
illnesses. According to population forecasts, there will
be seven non-working-age persons per 10 working-age
persons in Finland by 2050. The ageing of the large gen-
erations will pose unprecedented challenges to finances
in society.
According to the Ministry of Finance latest economic
report, the Finnish GDP was expected to have grown by
3.4 per cent in 2021. The deterioration of the COVID-19
pandemic in late 2021 increased uncertainty among
economic decision-makers and temporarily slowed
down economic growth around the turn of the year. In
2022, GDP growth is expected to be in 3.0 per cent and
consumer demand is expected to remain at a good level.
Economic growth is expected to subsequently slow
down, with the growth forecast being 1.5 per cent in 2023
and 1.4 per cent in 2024.
Consolidated statement of financial
position and cash flow
Pihlajalinna Group’s total statement of financial position
amounted to EUR 457.1 (441.3) million. Consolidated cash
and cash equivalents amounted to EUR 4.3 (13.3) million.
Net cash flow from operating activities in the quarter
amounted to EUR 24.8 (18.5) million. Taxes paid amount-
ed to EUR 0.6 (-0.6) million. The change in net working
capital was EUR 9.6 (4.0) million.
Net cash flow from operating activities during the
financial year amounted to EUR 56.9 (46.9) million. Taxes
paid amounted to EUR -2.6 (-3.6) million. The change in
net working capital was EUR -3.3 (-1.8) million. Working
capital totalling EUR 14.7 (27.8) million was released from
trade and other payables. Working capital amounting to
EUR 16.8 (27.5) million was tied up in trade receivables
and other receivables and EUR 0.3 (1.1) million in invento-
ries. Changes in provisions tied up EUR 0.9 (1.0) million in
working capital.
Net cash flow from investing activities totalled EUR -5.8
(-1.9) million during the quarter. Investments in tangi-
ble and intangible assets amounted to EUR -5.8 (-2.0)
million, and the proceeds from the disposal of tangible
assets amounted to EUR 0.2 (0.1) million. Pihlajalinna
acquired the business operations of Finla Työterveys Oy’s
Mänttä-Vilppula unit in November 2021.
Net cash flow from investing activities totalled EUR
-32.1 (-4.1) million for the financial year. Acquisitions of
subsidiaries (mainly Työterveys Virta Oy on 1 April 2021)
had an impact of EUR -16.4 (-1.4) million on net cash flow
from investing activities. Investments in tangible and
intangible assets amounted to EUR -14.8 (-9.6) million,
and the proceeds from the disposal of tangible assets
amounted to EUR 0.5 (6.8) million. Pihlajalinna sold and
leased back two care properties in Laihia in May 2020.
Investments in NONNA Group Oy and Digital Health Solu-
tions Oy were EUR -1.3 million.
The Group’s cash flow after investments (free cash
flow) was EUR 19.0 (16.7) million for the quarter and EUR
24.9 (42.8) million for the financial year.
Net cash flow from financing activities totalled EUR
-21.5 (-9.5) million for the quarter. The change in financial
liabilities, including changes in credit limits, amounted
to EUR -15.4 (-3.2) million. Payments for financial lease
liabilities amounted to EUR -5.1 (-5.4) million, and interest
paid and other financial expenses amounted to EUR -1.1
(-0.9) million.
Net cash flow from financing activities during the finan-
cial year totalled EUR -33.9 (-56.5) million. The change
in financial liabilities, including changes in credit limits,
amounted to EUR -1.6 (-12.2) million. Payments for finan-
cial lease liabilities amounted to EUR -19.8 (-20.6) million,
and interest paid and other financial expenses amounted
to EUR -4.0 (-4.5) million. The net eect of the change
in non-controlling interests on cash flow was EUR -3.0
(-18.3) million. Pihlajalinna acquired 7.2 per cent of the
share capital of Kuusiolinna Terveys from the municipality
of Kuortane in August 2021. The transaction price, paid in
cash, was EUR 3.0 million. In January 2020, Pihlajalinna
paid EUR 16.3 million in total for shares in Kuusiolinna Ter-
veys to the municipalities of Alavus, Ähtäri and Soini as
well as EUR 2.0 million to the city of Mänttä-Vilppula for
shares in Mäntänvuoren Terveys. A total of EUR 0.4 (0.2)
million in dividends was paid to non-controlling interests.
Pihlajalinna Plc distributed dividends of EUR 4.5 (0.0)
million for the financial year 2020 in accordance with the
decision of the Annual General Meeting. The Group has
acquired its own shares for its incentive scheme and the
remuneration of the Board of Directors in the amount of
EUR 0.6 (0.7) million.
The Group’s gearing was 158.8 (170.6) per cent. In-
terest-bearing net debt amounted to EUR 194.7 (194.8)
million.
Return on capital employed was 8.8 (5.7) per cent and
return on equity was 16.1 (8.1) per cent.
Financing arrangements
Pihlajalinna has a five-year EUR 120 million unsecured
financing arrangement with Danske Bank and Nordea.
The agreement is valid until 9 March 2023. Pihlajalinna
has started refinancing negotiations that are intended to
be completed before the end of March 2022. The current
arrangement comprises a EUR 50 million revolving credit
facility and a long-term bullet loan of EUR 70 million. It
also includes an opportunity to increase the total amount
by EUR 60 million (to EUR 180 million), subject to sepa-
rate decisions on a supplementary loan from the funding
providers.
The financing arrangement includes the customary
financial covenants concerning leverage (ratio of net
debt to pro forma EBITDA) and gearing. The calculation
of covenants will continue with the creditor banks in ac-
cordance with the accounting principles confirmed in the
original financing arrangement (frozen GAAP, i.e. exclud-
ing the IFRS 16 impact and the IFRS Interpretations Com-
mittee’s Agenda Decision concerning the configuration or
customisation costs in cloud computing arrangements).
The Group met the set covenants on 31 December 2021.
Due to the changes in the operating environment
caused by the COVID-19 panpidemic, Pihlajalinna and the
funding providers agreed on a temporary adjustment to
the covenants of the financing arrangement for the first
two quarters of 2020 at the end of March 2020. The orig-
inal covenants of the financing arrangement – leverage of
3.75 and gearing of 115 per cent – took eect again when
the covenants were reviewed in the third quarter of 2020.
In connection with this, a permanent new margin ceil-
ing was added to the financing arrangement. The margin
37
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Complete and partial outsourcing agreements
Company
Pihlajalinna’s holding,
31 December 2020
Pihlajalinna’s holding,
31 December 2021
First year of service produc-
tion under the current contract
Duration of contract
(years)
Jokilaakson Terveys Oy
90% 90% internal service provision internal service provision
Jämsän Terveys Oy
51% 51% 2015 10
Kuusiolinna Terveys Oy
90% 97% 2016 15
Mäntänvuoren Terveys Oy
91% 91% 2016 15
Kolmostien Terveys Oy
96% 96% 2015 15
Bottenhavets Hälsa Ab -
Selkämeren Terveys Oy
83% 75% 2021 15–20 years
Summary of the revenue and profitability of complete and partial outsourcing agreements (intra-Group sales eliminated). More informa-
tion on the profitability of complete outsourcing agreements is presented in this report in the section Items that may, according to the
management estimate, influence the profitability of complete outsourcing agreements with a delay.
Complete and partial outsourcing agreements
10–12/2021
3 months
10–12/2020
3 months
2021 2020 2019
INCOME STATEMENT
Revenue, EUR million 71.2 66.9 277.0 264.2 262.4
EBITDA, EUR million 0.2 1.4 6.6 11.0 15.3
EBITDA, % 0.3 2.0 2.4 4.2 5.8
Adjusted EBITDA, EUR million* 0.2 1.4 6.7 11.0 17.5
Adjusted EBITDA, %* 0.3 2.0 2.4 4.2 6.7
Operating profit (EBIT), EUR million -0.5 0.7 3.6 8.2 13.0
Operating profit (EBIT), % -0.8 1.0 1.3 3.1 4.9
Adjusted operating profit (EBIT), EUR million* -0.5 0.7 3.7 8.2 15.1
Adjusted operating profit (EBIT), %* -0.8 1.0 1.3 3.1 5.8
Adjusted operating profit before the amortisation and
impairment of intangible assets (EBITA), EUR million*
-0.5 0.7 4.1 8.5 15.4
Adjusted operating profit before the amortisation and
impairment of intangible assets (EBITA), %*
-0.6 1.1 1.5 3.2 5.9
Profit before tax (EBT), EUR million -0.6 0.6 3.6 8.1 12.8
ceiling will enter into eect if leverage exceeds 3.50.
On 31 December 2021, leverage in accordance with the
financing arrangement stood at 2.30 and gearing at 91
per cent.
Due to the acquisition of Pohjola Hospital Ltd, Pihlaja-
linna and the funding providers agreed, before the end
of the year, on temporarily increasing the gearing cove-
nant to 140 per cent for the first and second quarters of
2022.
The Group has credit limit agreements valid until fur-
ther notice, totalling EUR 10 million. The notice period of
the credit limit agreements is one month. At the end of
the financial period, Pihlajalinna had a total of EUR 45.0
million in unused committed credit limits. In addition,
EUR 45.0 million of an additional credit limit, which is
subject to separate credit decisions, was unused at the
year end.
Pihlajalinna and the funding providers agreed on the
acquisition of Pohjola Hospital Ltd and the financing of
the transaction in a timely manner, before the turn of the
year. The transaction was financed from the additional
credit limit in February 2022.
Acquisitions and capital expenditure
Gross investments, including acquisitions, amounted to
EUR 44.8 (25.4) million. Gross investments in M&A trans-
actions amounted to EUR 20.0 (0.0) million. The Group’s
gross investments in property, plant and equipment
and intangible assets, which consisted of development
investments, additional investments and replacement
investments required for growth, amounted to EUR 13.8
(10.4) million. Gross investments in connection with the
opening of new units amounted to EUR 1.1 (0.4) million.
Gross investments in right-of-use assets amounted to
EUR 9.8 (14.6) million, including the opening of new
units in Lohja (Uniikki special needs residential services)
and, in the comparison period, in Helsinki (Pihlajalinna
Tavastia private clinic) and Riihimäki (Uniikki special
needs residential services).
Investment commitments for the Group’s devel-
opment, additional and replacement investments
amounted to approximately EUR 2.0 (2.5) million. The
investment commitments are related to additional and
replacement investments in clinical equipment and infor-
mation system projects.
On 1 February 2022, Pihlajalinna acquired the entire
share capital of Pohjola Hospital Ltd from Pohjola Insur-
ance Ltd. The net debt-free purchase price, paid in cash,
was EUR 31.8 million.
38
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Changes in Group structure
The following changes in group structure were imple-
mented during the financial year:
Merged company
Target company
Month of
acquisition
Pihlajalinna Seinäjoki Oy
Pihlajalinna
Lääkärikeskukset Oy
9 April 2021
Terveyspalvelu Verso Oy
Pihlajalinna
Lääkärikeskukset Oy
1 May 2021
Työterveys Virta Oy
Pihlajalinna Oulu Oy 1 September 2021
Research and development
Increases to intangible assets totalled EUR 4.0 (3.6) mil-
lion during the financial year.
During the financial year 2021, the development of
the digital appointment booking system progressed as
planned in parallel with the improvements of the assess-
ment of the need for treatment. A wider range of pre-
ventive services was added into the remote clinic service
selection.
The service oering through the occupational health
portal was further expanded and more analytics was de-
ployed to even better serve our occupational healthcare
customers. Care chain service for our insurance custom-
ers was enhanced. A development of a new mobile appli-
cation for professionals targeted to our own employees
and professional medical practitionists was started. Other
deployments were a new ERP system of our fitness cen-
ters, a new invoice work flow system and a new imaging
archive and communications system (PACS) in addition
with the lauch of a new patient information system for
dental care customers.
During the financial year 2022 the Pihlajalinna website
and Pihlajalinna Health App (Terveyssovellus) -mobile
application will be in the main focus, when developing
the private sector customer services like the digital ap-
pointment booking system to enhance the service level.
Remote appointment service will be aligned and service
oering further expanded.
New features will be added into our portal for the
occupational healthcare care customers to benefit. To
mention some of them, expanding possibilities of analyt-
ics and reporting capabilities. A new mobile application
for professionals will be launched for our employees and
professional medical practitioners. Enhancements will be
made also to our HR and document management sys-
tems. A new ERP system will be deployed in our surgical
business area.
Personnel
At the end of the financial year, the number of personnel
was 6,297 (5,550), an increase of 747 persons, or 13 per
cent. The Group personnel averaged 4,746 (4,308) per-
sons as full-time equivalents, an increase of 438 persons,
or 10 per cent. The Group employee benefit expenses
totalled EUR 255.2 (214.2) million, an increase of EUR
40.9 million, or 19.1 per cent. The growth in the number
of personnel was attributable to COVID-19 services,
the acquisition of Työterveys Virta and the start of the
partial outsourcing agreement with Kristiinankaupunki.
The increase in employee expenses was also attributable
to general increases, the elimination of the temporary
reduction in TyEL insurance contributions and person-
nel-related flexibility during the comparison period, i.e.
the COVID-19 spring of 2020.
Pihlajalinna fitness centers held cooperation negoti-
ations due to the impacts of the COVID-19 epidemic in
March. The outcome of the negotiations made it possible
to temporarily lay o all employees for the maximum
period of 90 days if necessary. The part-time or full-time
temporary layos of some of the employees began in the
second half of March and lasted through the COVID-19
closure in April.
Management Team
CEO Joni Aaltonen serves as the Chairman of the Man-
agement Team. The Management Team also includes
COO Teija Kulmala, CFO Tarja Rantala, Chief Legal Ocer
Marko Savolainen, Chief People and Culture Ocer Elina
Heliö and Sales Director Juha-Pekka Halttunen. Antti-Jus-
si Aro, M.Sc. (Tech.), joined Pihlajalinna on 3 May 2021 as
the new CIO and a member of the Group Management
Team. Medical specialist Sari Riihijärvi, PhD, became
Pihlajalinna’s Chief Medical Ocer (CMO) and a member
of the Management Team on 2 July 2021. Sari Nevanlinna,
M.Sc. (Econ.), M.Soc.Sc. was appointed as Pihlajalinna’s
Chief Commercial Ocer (CCO). She will join the Group
Management Team on 1 March 2022.
Board of Directors
The Annual General Meeting on 15 April 2021 resolved
that the number of the members of the Board of Direc-
tors shall be six instead of the previous seven. Hannu
Juvonen, Mika Manninen, Leena Niemistö, Kati Sulin, Seija
Turunen and Mikko Wirén were re-elected to the Board of
Directors for a term of oce ending at the conclusion of
the next Annual General Meeting.
The Annual General Meeting elected Mikko Wirén as
the Chairman of the Board and Leena Niemistö as the
Vice-Chairman.
Shareholders’ Nomination Board
The Shareholders’ Nomination Board is comprised of the
following representatives:
• Juha Koponen, Group Director and Board member,
LocalTapiola General Mutual Insurance Company and
LocalTapiola Mutual Life Insurance Company
• Mikko Wirén, Managing Director, MWW Yhtiö Oy
• Antti Kuljukka, CEO, Fennia Mutual Insurance Company
• Hanna Hiidenpalo, deputy CEO, Elo Mutual Pension
Insurance Company
Committees nominated by the Board
Pihlajalinna Plc Board of Directors appointed the follow-
ing members to its committees at its constitutive meeting
on 15 April 2021:
• Audit Committee: Seija Turunen (chairman), Mika Man-
ninen and Hannu Juvonen
• People Committee: Mikko Wirén (chairman), Leena
Niemistö and Kati Sulin
It was agreed that all members of the Board of Direc-
tors may join any of the committee meetings.
39
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Share-related information, outstanding shares 10-12/2021 10-12/2020 2021 2020
No. of shares outstanding at the end of the period 22,594,235 22,617,841 22,594,235 22,617,841
Average no. of shares outstanding during the period 22,594,235 22,574,207 22,589,383 22,586,212
Highest price, EUR 12.92 10.45 12.98 15.66
Lowest price, EUR 11.54 8.72 9.26 8.72
Average price, EUR* 12.23 9.31 11.18 12.09
Closing price, EUR 12.64 9.38 12.64 9.38
Share turnover, 1,000 shares 1,061 2,628 6,929 6,620
Share turnover, % 4.7 11.6 30.7 29.3
Market capitalisation at the end of the period, EUR million 285.6 212.2 285.6 212.2
* average rate weighted by trading level
Remuneration of the members of the
Board of Directors
The Annual General Meeting of 15 April 2021 resolved
that the remuneration of the members of the Board of
Directors other than the Chairman of the Audit Commit-
tee will remain unchanged, and that the following annual
remuneration will be paid to the members of the Board
of Directors elected for the term of oce ending at the
2022 Annual General Meeting: EUR 250,000 per year to
the full-time Chairman of the Board of Directors, EUR
36,000 per year to the Vice-Chairman and to the Chair-
man of the Audit Committee, and EUR 24,000 per year to
the other members.
The AGM resolved that annual remuneration shall be
paid in company shares and in cash, with approximately
40 per cent of the remuneration used to acquire shares in
the name and on behalf of the members of the Board of
Directors, and the remainder paid in cash. The remunera-
tion could be paid either entirely or partially in cash if the
member of the Board of Directors was, on the day of the
AGM, 15 April 2021, in possession of over EUR 1,000,000
worth of company shares. The company was responsible
for the expenses and transfer tax arising from the acqui-
sition of the shares. The share-based remuneration was
paid by transferring treasury shares held by the company
to the members of the Board of Directors in the total
amount of 9,848 shares on 11 May 2021, immediately after
the release of the interim report for 1 January–31 March
2021. The remainder of the annual remuneration was paid
concurrently as a one-o cash payment. If the term of a
Board member ends before the Annual General Meeting
of 2022, the Board is entitled to decide on the possi-
ble recovery of the remuneration in a manner it deems
appropriate.
Of the annual remuneration paid in shares, a total of
5,000 shares were transferred to the Chairman of the
Board of Directors, with 1,212 shares transferred to the
Vice Chairman and the Chairman of the Audit Committee
each, and 808 shares to each member of the Board of
Directors.
The AGM decided that each Board member shall be
paid a meeting fee of EUR 500 for each Board and Com-
mittee meeting. Reasonable travel expenses will also be
reimbursed to the members of the Board in accordance
with the company’s travel policy.
Board authorisations
The Annual General Meeting of 15 April 2021 authorised
the Board of Directors to decide on the acquisition of a
maximum of 2,061,314 shares, which is approximately 9
per cent of the Group’s current number of shares. Own
shares may be repurchased on the basis of the authori-
sation only by using unrestricted equity. Targeted share
acquisition is possible. The authorisation is eective until
the next Annual General Meeting, or until 30 June 2022 at
the latest.
The Annual General Meeting also authorised the Board
of Directors to decide on a share issue and other special
rights conferring an entitlement to shares under Chapter
10, Section 1 of the Limited Liability Companies Act. The
number of shares to be issued cannot exceed 3,091,971
shares, which corresponds to approximately 14 per cent
of all the shares in the Group. The authorisation concerns
both the issuance of new shares and the sale or transfer
of the Group’s own shares. The authorisation permits a
targeted share issue. The authorisation is eective until
the next Annual General Meeting, or until 30 June 2022 at
the latest.
Auditors and auditing
At Pihlajalinna’s Annual General Meeting held on 15 April
2021, KPMG Oy Ab, a firm of authorised public accoun-
tants, was elected as the company’s auditor for the finan-
cial year 1 January–31 December 2021. Lotta Nurminen,
APA, is the principal auditor.
Shares and shareholders
At the end of the financial period, Pihlajalinna Plc’s share
capital entered in the Trade Register amounted to EUR
80,000 and the total number of shares was 22,620,135,
of which 22,594,235 were outstanding and 25,900 were
held by the company. The company has one share series,
with each share entitling its holder to one vote at the
Annual General Meeting. All of the outstanding shares
bestow their holders with equal rights to dividends and
other distribution of the company’s assets. At the end of
the review period, the company had 15,126 (14,141) share-
holders. A list of the largest shareholders is available on
the company’s investor website at investors.pihlajalinna.fi.
The trading code for the shares on the Nasdaq Helsinki
main market is PIHLIS. Pihlajalinna Plc has been classified
as a Mid Cap company in the Healthcare sector.
40
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Risk management
PIn its risk management, Pihlajalinna’s aim is to oper-
ate as systematically as possible and incorporate risk
management in normal business processes. Further-
more, the group invests in quality management systems
and the management of occupational safety and health
risks. Pihlajalinna’s Risk Management Policy defines and
categorises the group’s risks and describes the goals of
risk management. In addition, it defines risk management
principles, operating methods and responsibilities.
Pihlajalinna sharpened its management system in
response to the COVID-19 pandemic. The Group Man-
agement Team actively monitors the epidemiological
situation and operational indicators and assesses what
measures are necessary. The Medical Management Team
meets weekly and issues instructions to the Group’s units
in accordance with the guidelines and policies issued by
the national and regional authorities. While the COVID-19
pandemic continues, the safety and health of the Group’s
personnel and customers remain the first priority in
Pihlajalinna’s management system. Regional manage-
ment, personnel and practitioners are kept up to date on
the situation through continuous communication on the
intranet despite the fact that daily crisis management has
been discontinued.
Internal risk reporting is included in the regular busi-
ness reporting as well as in business planning and deci-
sion-making. The material risks and their management are
reported to stakeholders regularly and, when necessary,
on a case-by-case basis.
In 2021, Pihlajalinna applied the previously developed
and implemented Enterprise Risk Management process,
which involves classifying risks as strategic, operational,
financial and damage risks. Enterprise Risk Management
processes will be developed further in 2022.
Strategic risks refer to uncertainty related to the im-
plementation of the Group’s short-term and long-term
strategy. An example is structural changes in society.
The role of the private sector as a provider of social and
healthcare services as well as structural changes in the
public sector have a material impact on the company’s
business.
Operational risks are risks that are caused by external
factors, technology, actions of employees, the operations
of the organisation or the functionality of processes.
These risks are managed by, for instance, monitoring the
competitive situation systematically and reacting to its
changes.
Financial risks refer to risks that are related to the
Group’s financial position, such as profitability, the man-
agement of financing risks (interest rate risk, liquidity risk,
refinancing risk, counterparty risk and receivables risk)
and taxation. For instance, changes in tax legislation may
have an impact on the company’s business.
Damage risks are related to accidents or other damage
that may occur to the Group’s assets, personnel, cus-
tomers, stakeholders or environment. The company has
liability and patient insurance to cover potential malprac-
tice caused by the company’s own personnel.
A factor that links all risk categories together is the
reputational risk that may aect the reputation of the
Group’s brands or the entire Group. Breaches of informa-
tion security and data protection may lead to financial
losses, claims for compensation and loss of reputation.
The goal of Pihlajalinna risk management is to promote
the achievement the Group’s strategic and operation-
al targets, shareholder value, the Group’s operational
profitability and the realisation of responsible operating
methods. Risk management seeks to ensure that the risks
aecting the company’s business operations are known,
assessed and monitored. This is followed by the planning
and implementation of practical measures and continu-
ous monitoring.
The Group and operative management are responsible
for risk management according to reporting responsibil-
ities. In addition, risk management specialists guide and
develop the group’s risk management. The Group Man-
agement Team regularly discusses the key risks related
to the Group’s business operations. Everyone working at
Pihlajalinna must also know and manage risks related to
their responsibilities. The internal audit function evaluates
the appropriateness and performance of the Company’s
risk management as part of its annual audit plan.
Risks and uncertainties in business
operations
The COVID-19 pandemic has a twofold impact on Pih-
lajalinna’s business: on the one hand, the demand for
COVID-19 services has led to the growth of Pihlajalinna’s
business but, on the other hand, COVID-19 restrictions
have at times led to weaker demand for services. The
service provision and customer volumes of private clinics
and dental care units have yet to recover to the pre-pan-
demic levels of 2019. The fitness centre business has par-
ticularly suered from the extensive restrictions that have
included the complete closure of indoor facilities used for
individual sports and physical exercise by adults.
In addition to the impacts of the COVID-19 pandem-
ic, the significant risks and uncertainties aecting the
Group’s operations are connected to the complete out-
sourcing agreements on social and healthcare services,
material amendments to legislation, opening new loca-
tions, the success of acquisitions, digital service devel-
opment and information system projects as well as risks
related to taxation and the commitment and recruitment
of competent management.
A tax audit of the Group’s main companies began in
the spring 2017. The tax audit was completed in its entire-
ty in February 2021. No additional taxes became payable
as a result of the tax audit with regard to income taxation
(the Act on the Taxation of Business Profits) and with-
holding taxes (Tax Prepayment Act). No notable sanc-
tions arose from the tax audit with regard to value added
taxes (Value Added Tax Act).
The reforms concerning the organisation of social,
healthcare and rescue services, when implemented, may
lead to changes in Pihlajalinna’s outsourcing agreements
for social and healthcare services. Processes stipulated
by the legislation concerning the reform of healthcare
and social services will be carried out in cooperation with
the wellbeing services counties to ensure the application
of the service agreements as part of the organisation
and production of services in the wellbeing services
counties. This may aect the term of validity of Pihlaja-
linna’s service agreements and the scope of the services
provided. Pihlajalinna expects that its fixed-term service
41
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
agreements will remain in eect, as agreed, with the
wellbeing services counties until the end of the term for
each agreement.
Determining the annual profitability of the Group’s
fixed-term complete social and healthcare services out-
sourcing agreements may become accurate with a delay.
The Group may not always be aware of the actual costs
of the agreements at the time of preparing the financial
statements, and the agreements may involve variable ele-
ments of compensation. The cost accumulation of public
specialised care involves random fluctuation. In addition,
individual cases falling within the scope of the hospital
districts’ pooling system for high-cost care may influence
the cost liability of specialised care considerably during
the financial year, and between financial periods, in Pihla-
jalinna’s municipal companies.
The fixed-term service agreements for all of the
Group’s complete outsourcing arrangements are highly
similar with regard to their principles and basic terms.
Pihlajalinna has calculated and recognised the variable
compensation components and cost compensation under
the agreements using the same criteria and model for all
clients. Demands for the compensation of cost increases
due to changes in services corresponding to the actual
costs and investment costs that serve operations after
the end of the term of the contract being the client’s
responsibility constitute the majority of costs and vari-
able compensation components that are specified with a
delay. For 2021, the assessment of investment costs and
COVID-19 related costs included in invoicing by hospital
districts can only be carried out with finality after the
hospital districts have published their financial state-
ments.
Pihlajalinna has recognised only part of these legally
justified claims in its income statement. The parties to the
agreements are bound by an obligation to negotiate and
negotiation is the primary procedure. If the obligation to
negotiate does not lead to payment, the receivables are
sought through legal action, which may further delay the
collection of items presented in current receivables in the
financial statements.
Items that may, according to the management
estimate, influence the profitability of complete
outsourcing agreements with a delay:
The City of Jämsä has taken legal action against Jämsän
Terveys Oy regarding a matter concerning the price
adjustment provision in the service agreement. The
dierence in views regarding whether the fixed annual
price for social and healthcare services can decrease due
to price adjustments amounted to approximately EUR
3.7 (2.6) million at the end of the financial year. Jämsän
Terveys filed an additional counterclaim against the City
of Jämsä. The additional counterclaim concerns the eect
of changes in the services under the service agreement
on price and the service provider’s liability for financing
investments by the Pirkanmaa Hospital District insofar
as such investments serve operations after the term of
the service agreement. The service provider is entitled
to price adjustments corresponding to increases in costs
and the contractual parties are under an obligation to
negotiate and try to reach an agreement. In its counter-
claim, Jämsän Terveys claims a total of approximately
EUR 16 million from the City of Jämsä. The total amount
of variable compensation under the counterclaim that
Jämsän Terveys has recognised as revenue and recorded
in its receivables amounts to EUR 3.9 (3.8) million.
The total amount of contractually and legally justified
variable compensation from the City of Mänttä-Vilppula
that Mäntänvuoren Terveys Oy has recognised as revenue
and recorded in its receivables amounts to EUR 4.1 (3.5)
million. The variable compensation recognised as revenue
in accordance with the agreement includes an estimate
of compensation for specialised care costs to the service
provider of the Pirkanmaa Hospital District’s investment
costs allocated to the client. The receivables from vari-
able compensation components are also related to cost
increases caused by service changes and compensating
such increases in accordance with the actual costs.
The total amount of contractually and legally justified
variable compensation from the City of Parkano that
Kolmostien Terveys Oy has recognised as revenue and
recorded in its receivables amounts to EUR 1.7 (0.6)
million. The variable compensation recognised as revenue
in accordance with the agreement includes an estimate
of compensation for specialised care costs to the service
provider of the Pirkanmaa Hospital District’s investment
costs allocated to the client. The receivables from vari-
able compensation components are also related to cost
increases caused by service changes and compensating
such increases in accordance with the actual costs. The
client approved cost increases arising from changes to
services for the elderly as part of the annual fee under
the service agreement.
As regards Kuusiolinna Terveys Oy, the disputes con-
cerning the annual price and other separate charges were
settled with all of the clients during the financial year. The
decisions of the City Boards of Alavus and Ähtäri and
the Municipal Boards of Soini and Kuortane pertaining to
the agreed-upon matters became legally valid in August
2021.
Pending legal processes:
The City of Jämsä has taken legal action against Jämsän
Terveys Oy regarding a matter concerning the price ad-
justment provision in the service agreement as mentioned
above under Items that may, according to the manage-
ment estimate, influence the profitability of complete
outsourcing agreements with a delay. The district court
hearing was held in January 2022. The district court has
announced to reach a decision in the beginning of March.
The District Court of Kanta-Häme issued a decision on
the dispute between Pihlajalinna and the municipality
of Hattula on 11 June 2021. The District Court found that
Hattula did not have the right to terminate the agree-
ment. Nevertheless, Pihlajalinna was ordered to pay
compensation totalling EUR 123,175, including interest, to
Hattula as contractual penalties and damages for breach-
es during the contract period. Pihlajalinna’s counterclaim
was approved with regard to its basis but rejected with
regard to its amount. Each party was responsible for its
legal costs.
On 31 August 2021, in arbitration proceedings brought
against a subsidiary of Pihlajalinna Group regarding a
breach of contract, an arbitration court found that the
claimant had suered damages of EUR 295,800 due to
42
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
the unfounded termination of an agreement. The court
of arbitration ordered Pihlajalinna to pay compensation
for damages and the claimant’s legal expenses, totalling
EUR 82,943, and, under joint and several liability, pay for
the costs of the arbitration proceedings, totalling EUR
98,694.
Pihlajalinna has a few employment related cases with
legal proceedings ongoing. No major financial impacts
are expected onthe Group of these disputes.
Impairment testing of goodwill
At the end of the financial year, goodwill on Pihlajalinna
statement of financial position amounted to EUR 188.9
(173.6) million. Pihlajalinna checks annually and, if neces-
sary, quarterly, that the carrying amount of goodwill does
not exceed the fair value. The annual impairment testing
was conducted on the situation on 30 November 2021. Pi-
hlajalinna observed no indications of the carrying amount
of goodwill being greater than its estimated recoverable
amount. If negative changes were to occur in the develop-
ment of Pihlajalinna’s profit and growth, this could lead to
an impairment of goodwill. This could have an unfavour-
able impact on Pihlajalinna’s operating result and equity.
Flagging notifications
The company did not receive any flagging notifications
under Chapter 9, Section 5 of the Securities Markets Act
during the financial year.
Tax liablility and footprint
Pihlajalinna’s tax footprint describes the tax and other tax
related income the society accrues through The Group
business operations. On 2021 the society gained EUR
131,9 (110,4) million from Pihlajalinna. The vast majority of
taxes consist of withholding taxes and employer liabili-
ties. Additionally Pihlajalinna paid EUR 73,0 (71,9) million
in total to professional practitioners, out of which they
further accounted their own individual taxes. Corporate
tax portion of Pihlajalinna’s tax foorprint is EUR 5,3 (4,2)
million.
Tax footprint
EUR million
31 December
2021
31 December
2020
Direct tax payable for the period
Income tax 5.3 4.2
Employer’s pension contributions 35.3 27.0
Social security contributions 3.2 2.5
Employer’s unemployment insu-
rance contributions
3.5 2.5
Contribution to accident insurance
and group life insurance
1.6 1.3
Employer contributions, total 43.7 33.3
Property taxes 0.1 0.1
Transfer taxes 0.4 0.4
Direct tax payable for the period,
total
49.5 37.9
Value added tax of acquisitions pay-
able by the company
Value added taxes, estimate 14.3 11.3
Tax for the period
Withholding taxes 48.0 43.3
Employee pension contributions 15.8 13.7
Employee unemployment insurance
contributions
2.9 2.2
Payroll tax, total 66.7 59.2
Net value-added tax 1.4 1.9
Taxes collected for the period, total 68.1 61.1
Tax footprint 131.9 110.4
Share-based incentive schemes
At its meeting on 14 February 2019, the Board of Di-
rectors approved the terms of a share-based long-term
incentive programme for Pihlajalinna Group’s senior
management (LTIP 2019). The incentive programme is
eective from 1 January 2019 onwards and it is aimed at
the CEO, the Management Team and other key employ-
ees selected for inclusion in the programme. LTIP 2019
constitutes a five-year plan period. None of the share
rewards received by the key employees thereunder
may be sold or transferred prior to 2022, and the share
rewards are subject to a two-year transfer restriction for
each performance period. In the event that a beneficiary’s
employment ends during the transfer restriction period,
shares that have already been received must be returned.
The key employee is required to have made an invest-
ment in Pihlajalinna shares as a precondition for partici-
pation in the programme. At the end of the financial year,
the incentive programme included 27 key employees.
The fixed matching share programme (commitment
shares) consisted of a commitment period from the be-
ginning of 2019 to the payment of the fixed share reward
at the end of 2020. In this scheme, the company matched
each key employee’s share investments with additional
shares at a fixed rate. A total of 97,000 matching shares
were awarded. This figure is the gross reward, from which
the applicable taxes were deducted, leaving a net amount
of 45,105 shares that were transferred to the participants
on 28 December 2020. The shares are subject to a trans-
fer restriction, but they are not subject to the obligation
to return the shares in the event of termination.
The performance- and quality-based matching share
plan included three one-year performance periods (the
calendar years 2019–2021), during which the participants
could earn performance-based additional shares, provid-
ed that the company reached the performance objectives
set by the Board of Directors. Based on each individual
performance period, the participant can earn a maximum
of two additional shares for three shares invested without
consideration (gross before the deduction of the appli-
cable payroll tax). The performance-based share rewards
will be delivered after the respective performance periods
according to the programme in the spring of 2020, 2021
and 2022.
No performance- and quality-based share rewards ma-
terialised for the first performance period 2019 pursuant
to the matching share plan, as the minimum objectives
set for the programme were not achieved.
For the second performance period 2020, the gross
reward for the Group’s management was 56,583 shares.
The net amount of 26,546 shares were paid to the partic-
ipants on 25 February 2021. These shares are subject to a
transfer restriction, but they are not subject to the obliga-
tion to return the shares in the event of termination.
43
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
The performance targets for the performance period
2021 were related to the achievement of the consolidat-
ed adjusted operating profit target for 2021, the devel-
opment of the customer satisfaction index (NPS) and
employee net promoter score (eNPS), the growth of the
share of internal production in specialised care, the im-
plementation of the eciency improvement programme
for municipal companies and items that may, according
to the management estimate, have a delayed impact on
the profitability of complete outsourcing agreements.
For the performance period 2021, the gross reward for
the Group’s management is 18,816 shares. The shares are
expected to be transferred to the participants in February
2022. The shares are subject to a transfer restriction.
Repurchase of own shares
During the period 15 January–21 January 2021, Pihlajalinna
acquired a total of 60,000 of its own shares for an aver-
age price of EUR 9.70 per share.
Following the repurchase, Pihlajalinna held a total of
62,294 of its own shares, which was approximately 0.28
per cent of the total number of shares. On 25 February
2021, Pihlajalinna conveyed 26,546 shares held by the
company to key employees in accordance with the incen-
tive programme. On 11 May 2021, Pihlajalinna conveyed
9,848 shares held by the company as part of the fees of
the Board of Directors in accordance with the decision
of the Annual General Meeting. After the share transfers,
the number of treasury shares held by the company was
25,900 shares at the end of the financial period.
The treasury shares can be used for payments under
the incentive scheme currently in eect.
The Board of Directors’ proposal for
profit distribution and the Annual
General Meeting 2022
The Board of Directors proposes that a dividend of EUR
0.30 per share be paid for the financial year that ended
on 31 December 2021. Calculation of the parent compa-
ny’s distributable funds:
EUR 31.12.2021
Reserve for invested unrestricted equity
183,190,483.50
Retained earnings 26,152,278.97
Profit for the period 13,893,203.86
Capitalised development costs -488,602.20
Total 222,747,364.13
On the balance sheet date, the number of shares entitling
their holder to dividend was 22,594,235, and consequent-
ly, the total dividend amount would be EUR 6,778,270.50.
No material changes have taken place in the company’s
financial position after the end of the financial year. The
company’s liquidity position is good and, in the view of
the Board of Directors, the proposed distribution does
not jeopardise the company’s ability to fulfil its obliga-
tions.
Earnings per share for the financial year was EUR 0.89.
The proposed dividend of EUR 0.30 is 33.7 per cent of
earnings per share.
Pihlajalinna Plc’s Annual General Meeting will be held
on 13 April 2022 in Tampere. The Board of Directors will
decide on the notice of the General Meeting and the
included proposals at a later date.
The annual report for 2021, including the Board of
Directors’ report and the financial statements, will be
published on the company’s investor website at investors.
pihlajalinna.fi in week 12.
Pihlajalinna’s outlook for 2022
Pihlajalinna’s full year consolidated revenue is expected
to increase substantially, and full year adjusted operating
profit before the amortisation and impairment of intangi-
ble assets (EBITA) is expected to be on a par with 2021.
Due to Pohjola Hospital integration and potential ecien-
cy improvement plans in municipal companies, the first
half of the year will be below the bar of the previous year.
The acquisition of Pohjola Hospital will increase consol-
idated revenue by at least EUR 50 million in the financial
year 2022. Revenue from COVID-19 services is expected
to decline from the level of 2021. In 2022, Pihlajalinna will
focus on the integration of Pohjola Hospital operations to
be a seamless part of its Medical Center for All of Finland
-concept. Maintaining profitability on a par with 2021
will require success in increasing supply, realization of
the planned synergies of the acquisition, and successfull
implementation of potential eciency improvements in
municipal companies.
Corporate Governance Statement
Pihlajalinna publishes its Corporate Governance State-
ment separately on the company’s investor website at
investors.pihlajalinna.fi at the same time as the Board of
Directors’ report during week 12. Up-to-date information
about compliance with and deviations from the Corpo-
rate Governance Code is maintained on the investor site
at investors.pihlajalinna.fi.
Statement of non-financial information
Pihlajalinna’s first sustainability report according to
GRI-standard (Global Reporting Initiative) includes state-
ment of non-financial information. Sustainability report is
published on the company’s investor website at investors.
pihlajalinna.fi at the same time as the Board of Directors’
report during week 12.
Events after the financial period
Pihlajalinna and Pohjola Hospital were combined
The Finnish Competition and Consumer Authority (FCCA)
unconditionally approved the combining of Pihlajalinna
and Pohjola Hospital. The acquisition is an important el-
ement of Pihlajalinna growth strategy, and it strengthens
the combined entity’s service portfolio in all healthcare
specialities. The business combination also enables the
geographical expansion of the service network, espe-
cially in the Helsinki Metropolitan Area and other growth
centers. Growth potential is further strengthened by the
new five-year service agreement signed with Pohjola In-
surance in connection with the deal. The transaction was
completed on 1 February 2022.
As previously announced, the net debt-free purchase
price, paid in cash, was EUR 31.8 million. Pohjola Hos-
44
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
pital revenue was EUR 62.5 million in 2021 and EUR 59.4 million
in 2020. Established in 2013, Pohjola Hospital is a hospital chain
specialising in orthopedics, i.e. a treatment of musculoskeletal dis-
orders and accidents. Pohjola Hospital operates in five university
hospital cities: Helsinki, Tampere, Turku, Oulu and Kuopio.
The company had an average of 295 employees and over 300
practitioners in 2021.
The proposals of Pihlajalinna Plc’s Shareholders’ Nomina-
tion Board to the Annual General Meeting 2022
The number of members and composition of the Board of Directors
The Nomination Board proposes to the Annual General Meeting
of Pihlajalinna Plc, scheduled to be held on 13 April 2022, that the
number of the members of the Board be confirmed to be seven
instead of the current six. The Nomination Board proposes that
Hannu Juvonen, Mika Manninen, Leena Niemistö, Kati Sulin, Seija
Turunen and Mikko Wirén, currently members of the Board of
Directors, be re-elected as members of the Board of Directors. The
Nomination Board proposes that Heli Iisakka be elected as a new
member of the Board of Directors. Heli Iisakka, born 1968, M.Sc.
(Econ.), is the CFO of Colliers Finland Oy. Iisakka is independent of
the company and its major shareholders.
With regard to the procedure for the election of the members of
the Board of Directors, the Shareholders’ Nomination Board rec-
ommends that the shareholders vote on the proposal as a whole
at the Annual General Meeting. The Nomination Board proposes
that the Annual General Meeting elect Mikko Wirén as the Chair-
man of the Board and Leena Niemistö as the Vice-Chairman.
The Shareholders’ Nomination Board proposes that, due to the
ongoing significant changes in the social services and healthcare
sector and the company’s significant ongoing strategic develop-
ment, the role of the Chairman of the Board of Directors should
still be a full-time role for the next term of oce. The Nomination
Board’s shared will is that, after this term, the role of the Chairman
of the Board of Directors will no longer be a full-time role.
Remuneration of the members of the Board of Directors
The Shareholders’ Nomination Board proposes that the remunera-
tion of the Chairman of the Board of Directors be kept unchanged,
and that the remuneration of the Vice-Chairman, the Chairman of
the Audit Committee and the members of the Board of Direc-
Scope of operations 2021
2020
restated ** 2019 2018
2017
without
IFRS 16
Revenue, EUR million 577,8 508,7 518,6 487,8 424,0
Change, % 13,6 -1,9 6,3 15,0 6,2
* Organic revenue growth, EUR million 58,1 -11,3 13,4 -2,0 10,1
Change, % 11,4 -2,2 2,8 -0,5 2,5
* Gross investments, EUR million 44,8 25,4 44,1 160,0 30,4
% of revenue 7,8 5,0 8,5 32,8 7,2
* Capitalised development costs, EUR million 0,0 0,4 0,5 1,3 1,2
% of revenue 0,0 0,1 0,1 0,3 0,3
Employee benefit expenses, EUR million 255,2 214,2 222,0 208,4 175,4
Personnel at the end of the period (NOE) 6 297 5 550 5 815 5 850 4 753
Average number of personnel (FTE) 4 746 4 308 4 515 4 618 3 879
Profitability
* EBITDA, EUR million 62,6 52,2 47,8 44,8 33,3
* EBITDA, % 10,8 10,3 9,2 9,2 7,9
* Adjusted EBITDA, EUR million 65,3 54,8 55,7 45,9 34,4
* Adjusted EBITDA, % 11,3 10,8 10,7 9,4 8,1
* Operating profit (EBIT), EUR million 27,9 18,1 10,2 13,2 19,1
* Operating profit, % 4,8 3,6 2,0 2,7 4,5
* Adjusted operating profit (EBIT), EUR million 30,3 20,9 21,4 14,4 16,9
* Adjusted operating profit, % 5,3 4,1 4,1 3,0 4,0
* Adjusted operating profit before the amor-
tisation and impairment of intangible assets
(EBITA), EUR million
37,3 27,4 28,9 19,6 23,8
* Adjusted EBITA, % 6,5 5,4 5,6 4,0 5,6
Net financial expenses, EUR million -3,7 -4,4 -3,9 -3,8 -1,7
% of revenue -0,6 -0,9 -0,8 -0,8 -0,4
* Profit before tax, EUR million 24,2 13,7 6,3 9,5 17,4
% of revenue 4,2 2,7 1,2 1,9 4,1
Income tax, EUR million -5,1 -4,8 -1,8 -2,7 -3,4
Profit for the period 19,1 8,9 4,5 6,8 14,1
Cash flow after investments, EUR million 24,9 42,8 17,4 -18,8 -25,1
* Return on equity (ROE), % 16,1 8,1 3,8 5,7 13,6
* Return on capital employed (ROCE), % 8,8 5,7 3,1 4,7 11,8
Key financial figures
45
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Share related information
2021
2020
restated ** 2019 2018 2017
Earnings per share (EPS) 0,89 0,38 0,15 0,16 0,46
* Equity per share, EUR 5,27 4,82 4,47 5,36 4,87
Dividend per share, EUR (the Board of Directors’ pro-
posal)
0,30 0,20 0,10 0,16
* Dividend per share, % (the Board of Directors’ pro-
posal)
33,72 51,80 64,0 34,7
* Eective dividend yield, % (the Board of Directors’
proposal)
2,37 2,13 1,2 1,2
Number of shares at year-end 22 594 235 22 617 841 22 620 135 22 620 135 20 613 146
Average number of shares 22 589 383 22 586 212 22 620 135 22 224 236 20 613 146
Market capitalisation, EUR million 285,6 212,2 345,6 195,0 274,0
Dividends paid, EUR million (the Board of Directors’
proposal)
6,8 4,5 2,3 3,3
* P/E ratio 14,21 24,39 102,71 55,1 28,9
Highest quotation, EUR 12,98 15,66 15,88 15,28 18,42
Lowest quotation, EUR 9,26 8,72 8,70 8,56 12,60
Average quotation, EUR 11,18 12,09 12,77 12,18 16,30
Closing price at year-end, EUR 12,64 9,38 15,28 8,62 13,34
* Trading volume of shares, 1,000 shares 6 929 6 620 4 062 6 182 5 189
* Trading volume of shares, % 30,7 29,3 18,0 27,8 25,2
* Alternative performance measure
** Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations
Committee’s Agenda Decision published in April 2021 regarding the recognition of configuration or customisation costs in a cloud computing
arrangement (Software as a Service, SaaS).
Funding and financial position
2021
2020
restated ** 2019 2018
2017
without
IFRS 16
Interest-bearing net financial debt, EUR million 194,7 194,8 192,7 178,0 34,2
% of revenue 33,7 38,3 37,2 36,5 8,1
* Equity ratio, % 26,9 25,9 24,3 29,9 41,8
* Gearing, % 158,8 170,6 181,7 136,6 32,3
* Net debt/adjusted EBITDA 3,0 3,6 3,5 3,9 1,0
tors be increased, with the following annual
remuneration to be paid to the members of the
Board of Directors to be elected at the Annual
General Meeting for the term of oce ending at
the close of the Annual General Meeting 2023:
to the Chairman of the Board of Directors EUR
250,000; to the Vice-Chairman EUR 39,000, and
to members EUR 26,000.
The proposal is that the annual remuneration
to be paid in company shares and cash so that
about 40 per cent of the remuneration is used
to purchase the company’s shares on behalf of
the members and the remaining share of the
remuneration is paid in cash. The remuneration
can be paid either entirely or partially in cash if
the member of the Board of Directors has, on
the day of the General Meeting, 13 April 2022,
been in possession of over EUR 1,000,000 worth
of company shares. The company is responsible
for the expenses and transfer tax arising from
the acquisition of the shares. The remuneration
to be paid in shares can be paid by transferring
company shares in possession of the company
to the members of the Board of Directors or by
purchasing shares directly on behalf of the Board
members within three weeks after the interim
report for the period of 1 January–31 March 2022
has been published. If this is not possible due to
legal or other regulatory reasons, such as insider
regulations, the shares will be transferred or
purchased at the earliest possible time thereafter
or, alternatively, the remuneration will be paid in
cash. If the term of a Board member ends before
the Annual General Meeting of 2023, the Board is
entitled to decide on the possible recovery of the
remuneration in a manner it deems appropriate.
The Nomination Board proposes that each
member of the Board of Directors be paid a cash
attendance fee of EUR 500 per Board or Com-
mittee meeting. Reasonable travel expenses will
also be reimbursed to the members of the Board
in accordance with the company’s travel policy.
46
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
EUR 1,000 Q4/21 Q3/21* Q2/21* Q1/21* Q4/20* Q3/20* Q2/20* Q1/20*
Income statement
Revenue 154 721 140 622 142 545 139 887 137 194 123 855 114 659 132 974
Other operating income 1 644 698 241 1 121 472 634 937 336
Materials and services -56 325 -49 273 -50 719 -53 201 -53 539 -47 496 -44 202 -52 740
"Employee benefit
expenses"
-69 278 -60 536 -64 100 -61 250 -55 478 -50 093 -52 296 -56 368
Other operating expenses -16 221 -13 303 -12 941 -11 695 -13 580 -10 408 -10 605 -12 092
EBITDA 14 542 18 208 15 025 14 862 15 068 16 491 8 493 12 111
Adjusted EBITDA 14 889 19 339 15 884 15 223 15 780 17 240 9 060 12 693
Adjusted EBITDA, % 9,6 13,8 11,1 10,9 11,5 13,9 7,9 9,5
Depreciation, amortisation and impairment -8 961 -8 797 -8 478 -8 465 -8 314 -8 623 -8 336 -8 750
Operating profit (EBIT) 5 581 9 411 6 547 6 397 6 754 7 869 157 3 361
Adjusted operating profit (EBIT) 6 030 10 470 7 155 6 691 7 331 8 656 668 4 243
Adjusted operating profit (EBIT), % 3,9 7, 4 5,0 4,8 5,3 7,0 0,6 3,2
Adjusted operating profit before the amortisation
and impairment of intangible assets (EBITA)
7 837 12 252 8 929 8 317 8 956 10 289 2 272 5 908
Adjusted EBITA, % 5,1 8,7 6,3 5,9 6,5 8,3 2,0 4,4
Financial income 58 64 62 58 50 73 64 46
Financial expenses -1 063 -935 -1 006 -952 -1 066 -1 100 -1 075 -1 396
Profit before taxes 4 576 8 539 5 603 5 502 5 738 6 842 -854 2 011
Income taxes -1 234 -1 702 -1 107 -1 088 -2 789 -1 511 53 -589
Profit for the period 3 342 6 838 4 496 4 415 2 949 5 331 -801 1 422
Share of the result for the financial year attribu-
table to owners of the parent company
4 257 6 978 4 335 4 524 3 400 4 531 -531 1 287
Share of the result for the financial year attribu-
table to non-controlling interests
-915 -140 161 -110 -452 800 -269 136
EPS 0,19 0,31 0,19 0,20 0,15 0,20 -0,02 0,06
Personnel at the end of the period (NOE) 6 297 5 750 6 000 5 783 5 550 5 882 5 640 5 535
Change in personnel during the quarter 547 -250 217 233 -332 243 105 21
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021 regarding the
r
ecognition of configuration or customisation costs in a cloud computing arrangement (Software as a Service, SaaS).
Quarterly information
47
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Key figures
Earnings per share (EPS)
Profit for the financial period attributable to owners of the
parent company
Average number of shares during the financial year
Alternative performance measures
Equity per share
Equity attributable to owners of the parent company
Number of shares at the end of the financial period
Dividend per share
Dividend distribution for the financial year (or proposal)
Number of shares at the end of the financial period
Dividend/result, %
Dividend per share
x 100
Earnings per share (EPS)
Eective dividend yield, %
Dividend per share
x 100
Closing price for the financial year
P/E ratio
Closing price for the financial year
Earnings per share (EPS)
Share turnover, %
Number of shares traded during the period
x 100
Average number of shares
Return on equity (ROE), %
Profit for the period (rolling 12 months)
x 100
Equity (average)
Return on capital employed,
% (ROCE)
Profit before taxes (rolling 12 months) + financial expenses
(rolling 12 months)
x 100
Total statement of financial position – non-interest-bearing
liabilities (average)
Equity ratio, %
Equity
x 100
Total statement of financial position – prepayments received
Gearing, %
Interest-bearing net debt – cash and cash equivalents
x 100
Equity
EBITDA
Operating profit + depreciation, amortisation and
impairment
EBITDA, %
Operating profit + depreciation, amortisation and
impairment
x 100
Revenue
Adjusted EBITDA*
Operating profit + depreciation, amortisation and
impairment + adjustment items
Adjusted EBITDA, %*
Operating profit + depreciation, amortisation and
impairment + adjustment items
x 100
Revenue
Adjusted operating profit before
the amortisation and impairment
of intangible assets (EBITA)*
Operating profit + adjustment items + amortisation
and impairment of intangible assets
Adjusted EBITA, %*
Adjusted operating profit before the amortisation and
impairment of intangible assets (EBITA)
x 100
Revenue
Net debt/Adjusted EBITDA*, rol-
ling 12 months
Interest-bearing net debt - cash and cash equivalents
Adjusted EBITDA (rolling 12 months)
Cash flow after investments
Net cash flow from operating activities + net cash
flow from investing activities
Adjusted operating profit (EBIT)*
Operating profit + adjustment items
Adjusted operating profit, %* Adjusted operating profit (EBIT)
x 100
Revenue
Profit before taxes
Profit for the financial year + income tax
Gross investments
Increase in tangible and intangible assets and in right-
of-use assets
Organic revenue growth, %
Revenue for the period - revenue from M&A transac-
tions for the period - revenue for the previous period
x 100
Revenue for the previous period
Calculation of key financial figures and alternative performance measures
* Significant transactions that are not part of the normal course of business, are related to business acquisition costs (IFRS 3), are infrequently occurring events or valuation items that do not aect cash flow
are treated as adjustment items aecting comparability between review periods. According to Pihlajalinna’s definition, such items include, for example, restructuring measures, impairment of assets and the
remeasurement of previous assets held by subsidiaries, the costs of closing down businesses and business locations, gains and losses on the sale of businesses, costs arising from operational restructuring and
the integration of acquired businesses, costs related to the termination of employment relationships, as well as fines and corresponding compensation payments. Pihlajalinna also presents costs according to the
IFRS Interpretations Committee’s new Agenda Decision concerning cloud computing arrangements, and reversals of amortisation, as adjustment items. Adjusted operating profit before the amortisation and
impairment of intangible assets (EBITA) is presented as a new alternative performance measure.
48
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
2021 2020*
Return on equity (ROE), %
Profit for the period (rolling 12 months)/ 19 091 8 901
Equity at beginning of period 114 190 105 323
Equity at end of period 122 611 114 190
Equity (average) x 100 118 400 109 756
Return on equity (ROE), % 16,1 8,1
Return on equity is one of the most important indicators of a company’s profitability used by sha-
reholders and investors. The indicator illustrates the company’s ability to look after the capital
invested by shareholders in the company. The figure indicates how much return was accumulated on
equity during the financial year.
Return on capital employed (ROCE), %
2021 2020*
Profit before taxes (rolling 12 months) + 24 222 13 737
Financial expenses (rolling 12 months) 3 956 4 637
/ 28 178 18 373
Total statement of financial position at beginning of period - 441 337 437 685
non-interest-bearing liabilities at beginning of period 119 031 112 655
322 306 325 030
Total statement of financial position at end of period - 457 066 441 337
Non-interest-bearing liabilities at end of period 135 479 119 031
321 587 322 306
Average x 100 321 947 323 668
Return on capital employed (ROCE), % 8,8 5,7
Return on capital employed is one of the most important indicators produced by financial state-
ments analysis. It measures the company’s relative profitability, or the return on capital invested in
the company that requires interest or other returns.
Equity ratio, %
2021 2020*
Equity/ 122 611 114 190
Total statement of financial position – 457 066 441 337
Advances received x 100 938 1 158
Equity ratio, % 26,9 25,9
The equity ratio measures the company’s solvency, the capacity to tolerate losses and the ability
to manage commitments in the long term. The indicator shows the percentage of the company’s
assets that are financed by equity.
Gearing, %
2021 2020*
Interest-bearing financial liabilities – 198 977 208 117
Cash and cash equivalents/ 4 257 13 306
Equity x 100 122 611 114 190
Gearing, % 158,8 170,6
Gearing illustrates the company’s indebtedness. The figure reveals the ratio between the equity
invested in the company by shareholders and the interest-bearing debt borrowed from lenders. The
second financial covenant of the Group’s financing arrangements is the gearing ratio. The maximum
value of this key figure is 115% excluding the eect of IFRS 16 (frozen GAAP). On the financial state-
ments date, gearing calculated according to the financing agreement was 91%.
Net debt/adjusted EBITDA, rolling 12 months
2021 2020*
Interest-bearing financial liabilities - 198 977 208 117
Cash and cash equivalents 4 257 13 306
Net debt/ 194 720 194 810
Adjusted EBITDA (rolling 12 months) 65 336 54 773
Net debt/adjusted EBITDA, rolling 12 months 3,0 3,6
This figure illustrates how quickly, at the current profit rate, the company would have paid o
its debts if the EBITDA were to be used in full to repay the debts, if the company does not, for
example, invest or distribute any dividend. The second financial covenant linked to the Group’s
financing arrangement is based on the ratio of the Group’s net debt to pro forma EBITDA (leve-
rage). The maximum value of the covenant linked to the financing arrangement is 3.75. The closer
the value of the covenant is to the maximum value, the higher the loan margin. The Group’s mana-
gement and Board of Directors monitor the fulfilment of the covenant on a monthly basis and the
covenant is reported to the lenders on a quarterly basis. The covenant calculations are also updated
with forecasts whenever the Group is about to carry out a significant acquisition. On the financial
statements date, leverage calculated according to the financing agreement was 2.30.
Reconciliations with alternative key figures and ratios
Pihlajalinna publishes a wide range of alternative performance measures, i.e. key figures
that are not based on financial reporting standards, because they are considered to be
significant for investors, the management and the Board of Directors in assessing the
group’s financial position and profitability. The alternative performance measures should
not be considered to be replacements for the key figures defined in IFRS standards. The
table below presents the reconciliation calculations for the alternative performance mea-
sures and the justifications for their presentation.
Reading notes:
/divide by the next number/numbers
- deduct the next number/numbers
+ add the next number/numbers
49
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
EBITDA and Adjusted EBITDA 2021 2020*
Profit for the period 19 091 8 901
Income taxes -5 130 -4 835
Financial expenses -3 956 -4 637
Financial income 242 232
Depreciation, amortisation and impairment -34 701 -34 023
EBITDA 62 638 52 164
IFRS 3 costs 1 428 124
Entries related to the IFRIC Agenda Decision concerning cloud
computing arrangements
563 282
Other EBITDA adjustments 707 2 204
Total EBITDA adjustments 2 698 2 609
Adjusted EBITDA 65 336 54 773
EBITDA indicates how much is left of the company’s revenue after deducting operating expenses.
Assessments of whether EBITDA is suciently high should take into account the company’s finan-
cial expenses, depreciation requirements and intended profit distribution. Adjusted EBITDA provides
significant additional information on profitability by eliminating items that do not necessarily reflect
the profitability of the company’s operative business. Adjusted EBITDA improves comparability
between periods and is frequently used by analysts, investors and other parties.
The Group Management Team and operative management monitor and forecast adjusted EBITDA on a
monthly basis.
EBITDA, % 2021 2020*
EBITDA/ 62 638 52 164
Revenue x 100 577 774 508 682
EBITDA, % 10,8 10,3
Adjusted EBITDA, % 2021 2020*
Adjusted EBITDA/ 65 336 54 773
Revenue x 100 577 774 508 682
Adjusted EBITDA, % 11,3 10,8
Operating profit (EBIT), adjusted EBIT and adjusted EBITA 2021 2020*
Profit for the period 19 091 8 901
Income taxes -5 130 -4 835
Financial expenses -3 956 -4 637
Financial income 242 232
Operating profit (EBIT) 27 936 18 141
Entries related to the IFRIC Agenda Decision concerning cloud
computing arrangements
-290 -232
Other adjustments to amortisation and impairment, total** 1 381
Total EBITDA adjustments* 2 698 2 609
Total operating profit (EBIT) adjustments 2 410 2 758
Operating profit (EBIT), % 2021 2020*
Operating profit/ 27 936 18 141
Revenue x 100 577 774 508 682
Operating profit (EBIT), % 4,8 3,6
Adjusted operating profit (EBIT), % 2021 2020*
Adjusted operating profit/ 30 346 20 899
Revenue x 100 577 774 508 682
Adjusted operating profit (EBIT), % 5,3 4,1
Adjusted operating profit before the amortisation and impairment of
intangible assets (EBITA), %
2021 2020*
Adjusted operating profit before the amortisation and impairment of
intangible assets (EBITA)/
37 335 27 424
Revenue x 100 577 774 508 682
Adjusted EBITA, % 6,5 5,4
Cash flow after investments 2021 2020*
Net cash flow from operating activities 56 936 46 904
Net cash flow from investing activities -32 064 -4 124
Cash flow after investments 24 873 42 780
Cash flow after investments (free cash flow) indicates how much cash is left for the company
after deducting the cash tied up in operative business and investments. It indicates how much the
company has left for its shareholders and creditors. Free cash flow indicates how sustainable the
foundation of the company’s profitability is, and it is used as the basis of the company’s valuation.
Adjusted operating profit (EBIT) 30 346 20 899
PPA amortisation 2 985 3 097
Amortisation and impairment of other intangible assets 3 714 3 197
Entries related to the IFRIC Agenda Decision concerning cloud
computing arrangements
290 232
Adjusted operating profit before the amortisation and impair-
ment of intangible assets (EBITA)
37 335 27 424
Operating profit indicates how much is left of the proceeds of actual business operations before finan-
cial items and taxes. With operating profit, the company must cover, among other things, financial
e
xpenses, taxes and the distribution of dividends. Adjusted operating profit provides significant addi-
tional information on profitability by eliminating items that do not necessarily reflect the profitabi-
lity of the company’s operative business. Adjusted operating profit improves comparability between
periods and is fr
equently used by analysts, investors and other parties.
The Group Management Team and operative management monitor and forecast adjusted opera
-
ting profit (EBIT) and adjusted operating profit before the amortisation and impairment of intangible
as
sets (EBITA) on a monthly basis.
50
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Organic revenue growth, % 2021 2020*
Revenue for the period - 577 774 508 682
Revenue from M&A transactions during the period 11 008 1 424
Revenue for the previous period 508 682 518 596
Organic revenue growth/ 58 084 -11 338
Revenue for the previous period x 100 508 682 518 596
Organic revenue growth, % 11,4 -2,2
Revenue growth due to M&A transactions, % 2,2 0,3
Revenue growth 69 092 -9 914
Revenue growth, % 13,6 -1,9
Organic revenue growth is growth in existing business operations that has not come about as a
result of M&A transactions. Organic growth can be achieved through increasing the service oering,
new customer acquisition, growth in custom from existing customers, price increases and digitalisa-
tion. Social and healthcare outsourcing contracts won through public competitive bidding and new
business locations established by the group itself are included in organic growth.
The adjustment items** are presented in the income statement items as follows:
2021 2020*
Employee benefit expenses 414 1 457
Other operating expenses 2 285 1 152
EBITDA adjustment items total 2 698 2 609
Depreciation, amortisation and impairment -288 149
Operating profit adjustment items total 2 410 2 758
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1
January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021 regar-
ding the recognition of configuration or customisation costs in a cloud computing arrangement
(Software as a Service, SaaS).
* The definition of adjustment items has changed: in addition to the former definition, adjustment
items include costs of business acquisitions, costs recognised in relation to the IFRS Interpreta-
tions Committee’s new Agenda Decision regarding cloud services, and reversals of depreciation.
2021 2020*
EBITDA 62 638 52 164
Adjustments to EBITDA
Dismissal-related expenses 414 -60
Compensation under the share-based incentive scheme in relation to
the expired tender oer
1 517
Onerous contracts -225
IFRS 3 costs 1 428 124
Entries related to the IFRIC Agenda Decision concerning cloud compu-
ting arrangements
563 282
Other 518 747
Adjustments to EBITDA in total 2 698 2 609
Adjusted EBITDA 65 335 54 772
Depreciation, amortisation and impairment -34 701 -34 023
Adjustments to depreciation, amortisation and impairment
Double depreciation arising from a merger with no cash flow eect
354
Entries related to the IFRIC Agenda Decision concerning cloud compu-
ting arrangements
-290 -232
Closure of operating locations 1 26
Adjustments to depreciation, amortisation and impairment in total -288 149
PPA amortisation 2 985 3 097
Amortisation and impairment of other intangible assets, excluding
cloud services
4 004 3 428
Amortisation and impairment of intangible assets, total 6 988 6 525
Adjusted operating profit before the amortisation and impairment of
intangible assets (EBITA)
37 335 27 424
Operating profit (EBIT) 27 936 18 141
Financial income 242 232
Financial expenses -3 956 -4 637
Income taxes -5 130 -4 835
Profit for the period 19 091 8 901
Profit before taxes 2021 2020*
Profit for the period 19 091 8 901
Income tax -5 130 -4 835
Profit before taxes 24 222 13 737
Gross investments 2021 2020*
Property, plant and equipment at the end of the period 44 989 43 996
Right-of-use assets at the end of the period 95 586 102 832
Other intangible assets at end of period 14 866 15 336
Goodwill at end of period 188 909 173 607
Depreciation, amortisation and impairment for the period are added 34 701 34 023
-
Property, plant and equipment at the start of the period 43 996 53 237
Right-of-use assets at the start of the period 102 832 108 109
Other intangible assets at beginning of the period 15 336 18 133
Goodwill at beginning of the period 173 607 173 607
Proceeds from the sale of property, plant and equipment during the
period
-1 503 -8 700
Gross investments 44 784 25 409
Gross investments refers to the acquisition of long-term factors of production, including M&A
transactions. Divestments and proceeds from the sale of property, plant and equipment are not
deducted from investments. Investments are also presented on a cash flow basis in the cash flow
statement.
51
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Shares and shareholders
Major shareholders, 31 Dec. 2021
Number of
shares
Percentage of shares
and votes
1 LOCALTAPIOLA GENERAL MUTUAL INSURANCE COMPANY 3 481 641 15,4 %
2 MWW YHTIÖ OY 2 309 010 10,2 %
3 FENNIA MUTUAL INSURANCE COMPANY 1 998 965 8,8 %
4 LOCALTAPIOLA MUTUAL LIFE INSURANCE COMPANY 1 893 985 8,4 %
5 ELO MUTUAL PENSION INSURANCE COMPANY 1 267 161 5,6 %
6 NIEMISTÖ LEENA KATRIINA 704 687 3,1 %
7 ILMARINEN MUTUAL PENSION INSURANCE COMPANY 628 431 2,8 %
8 SKANDINAVISKA ENSKILDA BANKEN AB (PUBL), HELSINKI BRANCH 497 093 2,2 %
9 FONDITA NORDIC MICRO CAP MUTUAL FUND 470 000 2,1 %
10 OP-FINLAND SMALL CAP FUND 383 175 1,7 %
10 largest, total 13 634 148 60,3 %
Other shareholders 8 985 987 39,7 %
Total 22 620 135 100,0 %
Distribution of shareholding by size range, 31 Dec. 2021
Shares per shareholder Number of shareholders % of shareholders Number of shares Percentage of shares, %
1 - 100 8 307 54,9 % 370 257 1,6 %
101 - 1 000 5 938 39,3 % 2 057 759 9,1 %
1 001 - 10 000 771 5,1 % 2 133 191 9,4 %
10 001 - 100 000 90 0,6 % 2 617 582 11,6 %
100 001 - 500 000 13 0,1 % 3 157 466 14,0 %
500 001 - 7 0,0 % 12 283 880 54,3 %
Total 100,0 % 22 620 135 100,0 %
of which nominee-registered shares 867 727 3,8 %
Outstanding shares 22 620 135 100,0 %
1–100 Shares per shareholder 1,6%
101–1000 9,1%
1001–10000 9,4%
10001–100000 11,6 %
100001–500000 14,0%
500001– 54,3%
Distribution of shareholding by size
range, 31 Dec. 2021
52
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Distribution of shareholding by sector, 31 Dec. 2021
Number of shareholders % of shareholders Number of sharesl Percentage of shares, %
Private companies 534 3,5 % 4 360 877 20,0 %
Financial and insurance institutions 46 0,3 % 9 391 463 43,2 %
Public entities 6 0,0 % 2 047 965 9,4 %
Households 14 469 95,7 % 5 792 445 26,6 %
Non-profit organisations 39 0,3 % 133 408 0,6 %
Foreign shareholders 32 0,2 % 26 250 0,1 %
Total 15 126 100,0 % 21 752 408 96,2 %
Nominee registered 867 727 3,8 %
Outstanding shares 22 620 135 100,0 %
Shareholding by the management
Direct holding Indirect holdings
Number of shares
Percentage of shares
and votes
Number of
shares
Percentage of shares
and votes
Board of Directors
Mikko Wirén (MWW Yhtiö Oy) 2 309 010 10,2 %
Mikko Wirén 5 000 0,0%
Leena Niemistö 704 687 3,1 %
Hannu Juvonen 808 0,0 %
Mika Manninen 808 0,0 %
Kati Sulin 808 0,0 %
Seija Turunen 1 212 0,0 %
Management Team
Joni Aaltonen 37 524 0,2 %
Teija Kulmala 14 819 0,1 %
Tarja Rantala 16 270 0,1 %
Elina Heliö 1 743 0,0 %
Marko Savolainen 9 815 0,0 %
Juha-Pekka Halttunen 6 094 0,0 %
Antti-Jussi Aro 500 0,0 %
Riihijärvi Sari 0 0,0 %
Private companies 20,0%
Financial and insurance institutions 43,2%
Public entities 9,4%
Households 26,6%
Non-profit organisations 0,6%
Foreign shareholders 0,1%
Distribution of shareholding by
sector, 31 Dec. 2021
53
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Financial statements 1 Jan–31 Dec 2021
CONTENTS
Main statements included in the consolidated financial statements, IFRS
Consolidated statement of comprehensive income,
IFRS
55
Consolidated statement of financial position, IFRS 55
Consolidated statement of cash flows, IFRS 56
Consolidated statement of changes in equity, IFRS 57
Notes to the consolidated financial statements, IFRS
Category No. Description
Accounting policies 58
New and revised standards and interpretations applied
in the past financial year
58
New and revised standards and interpretations to be
applied in future financial years
60
Income statement 1
Revenue from contracts with customers and segment
information
62
Income statement 2 Other operating income 64
Income statement 3 Materials and services 65
Income statement 4
Employee benefit expenses and the number of person-
nel
65
Income statement 5 Share-based incentive scheme for key personnel 66
Income statement 6 Other operating expenses and audit fees 66
Income statement 7 Depreciation, amortisation and impairment 67
Income statement 8 Financial income 68
Income statement 9 Financial expenses 68
Income statement, taxes 10 Income taxes 68
EPS 11 Earnings per share 69
Statement of financial position 12 Property, plant and equipment 69
Statement of financial position 13 Intangible assets 71
Statement of financial position 14 Right-of-use assets 74
Statement of financial position 15 Other non-current receivables 75
Statement of financial position 16 Trade receivables and other receivables (current) 75
Statement of financial position 17 Provisions 76
Statement of financial position 18 Trade and other payables 77
Balance sheet, taxes 19 Deferred tax assets and liabilities 77
Equity 20
Financial assets and liabilities by measurement cate-
gory
79
Equity 21 Notes on equity 81
Equity 22 Financial liabilities 81
Equity 23
Changes in financial liabilities with no impact on cash
flow
82
Equity 24 Capital management 82
Risk management 25 Financial risk management 82
Group structure 26 Business combinations 84
Group structure 27 Subsidiaries and material non-controlling interests 85
Group structure 28 Interests in associates and joint arrangements 86
Other 29 Contingent assets and liabilities and commitments 86
Other 30
Related party transactions 87
Other 31 Events after the balance sheet date 88
Parent company financial statements, FAS
Parent company balance sheet FAS 90
Parent company income statement FAS 90
Parent company cash flow statement FAS 90
Parent company notes to financial statements, FAS
Parent company notes to financial statements, FAS 91
Date of and signatures to the report by the board of directors and the financial statements 96
Auditor’s report 97
Information for shareholders 101
54
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Consolidated statement of comprehensive income, IFRS
EUR 1,000 note 1.1.-31.12.2021
1.1.-31.12.2020
Restated*
Revenue
1 577 774 508 682
Other operating income 2 3 704 2 379
Materials and services 3 -209 516 -197 977
Employee benefit expenses 4 -255 164 -214 235
Other operating expenses 6 -54 151 -46 678
Share of profit in associated companies and joint
ventures
28 -9 -7
EBITDA
Depreciation, amortisation and impairment 7 -34 701 -34 023
Operating profit (EBIT)
Financial income 8 242 232
Financial expenses 9 -3 956 -4 637
Financial income and expenses
-3 715 -4 404
Profit before taxes
Income tax 10 -5 130 -4 835
Profit for the period
Total comprehensive income for the
period
To the owners of the parent company 20 095 8 687
To non-controlling interests
Earnings per share for profit attributable to
owners of the parent company, EUR
-1 004 214
Basic 11
Diluted
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective
from 1 January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021
regarding the recognition of configuration or customisation costs in a cloud computing arrangement
(Software as a Service, SaaS).
Consolidated statement of financial position, IFRS
EUR 1,000
note 31.12.2021
31.12.2020
*Restated
Property, plant and equipment 12 44 989 43 996
Goodwill 13 188 909 173 607
Other intangible assets 13 14 866 15 336
Right-of-use assets 14 95 586 102 832
Interests in associates 28 308 17
Other investments 1 176 126
Other receivables 15 5 211 5 503
Deferred tax assets 19 5 484 5 555
note 31.12.2021 31.12.2020
Inventories 3 705 3 400
Trade and other receivables 16 92 143 75 771
Current tax assets 433 1 886
Cash and cash equivalents 4 257 13 306
Total assets
Share capital 80 80
Reserve for invested unrestricted equity 116 520 116 520
Retained earnings 2 501 -7 633
Non-controlling interests 3 510 5 223
Total equity 122 611 114 190
Deferred tax liabilities 19 5 884 5 761
Provisions 17 134 114
Lease liabilities 22 87 857 95 475
Financial liabilities 20 91 445 92 523
Other non-current liabilities 1 002 1 152
Trade and other payables 18 125 107 109 352
Current tax liabilities 3 282 2 004
Provisions 17 71 648
Lease liabilities 22 18 392 18 705
Financial liabilities 20 1 283 1 415
Total liabilities
Total equity and liabilities
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective
from 1 January 2020, the IFRS Int
erpretations Committee’s Agenda Decision published in April 2021
regarding the recognition of configuration or customisation costs in a cloud computing arrangement
(Software as a Service, SaaS).
55
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Consolidated statement of cash flows, IFRS
EUR 1,000 note 1.1. - 31.12.2021
1.1. - 31.12.2020
*Restated
Profit for the period 19 091 8 901
Taxes 5 130 4 835
Depreciation, amortisation and impairment 34 701 34 023
Financial income and expenses 3 724 4 411
Other -45 -66
Net cash generated from operating activities before change in working capital 62 601 52 105
Change in working capital -3 336 -1 830
Interest received 235 223
Taxes paid -2 564 -3 594
Net cash flow from operating activities 56 936 46 904
Investments in property, plant and equipment and intangible assets -14 833 -9 597
Proceeds from disposal of property, plant and equipment and intangible assets 526 6 843
Changes in other investments -1 350 20
Dividends received 7 10
Acquisition of subsidiaries less cash and cash equivalents at date of acquisition 26 -16 414 -1 400
Net cash flow from investing activities -32 064 -4 124
Acquisitions of non-controlling interests -3 017 -18 282
Acquisition of own shares -582 -692
Repayment of short-term borrowings 23 0 -501
Proceeds from long-term borrowings 23 20 000 0
Repayment of long-term borrowings 23 -21 584 -11 675
Repayment of lease liabilities 23 -19 822 -20 604
Interest and other operational financial expenses -3 986 -4 512
Dividends paid and other profit distribution -4 932 -212
Net cash flow from financing activities -33 923 -56 477
Changes in cash and cash equivalents -9 050 -13 697
Cash at the beginning of the financial year 13 306 27 004
Cash at the end of the financial year 4 257 13 306
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations
Committee’s Agenda Decision published in April 2021 regarding the recognition of configuration or customisation costs in a cloud computing
arrangement (Software as a Service, SaaS).
56
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Consolidated statement of changes in equity, IFRS
Equity attributable to owners of the parent company
Share capital
Reserve for invested
unrestricted equity Retained earnings
Non-controlling
interests Total equity
Total equity, 1 Jan. 2020 80 116 520 -15 481 4 965 106 083
IFRIC Agenda Decision concerning the customisation and configuration costs
of cloud computing arrangements*
-761 -761
Restated equity, 1 Jan. 2020 80 116 520 -16 242 4 965 105 323
Profit for the period, reported 8 687 214 8 901
Total comprehensive income for the period 8 687 214 8 901
Dividends paid -312 -312
Acquisition of own shares -692 -692
Share-based benefits 1 312 0 1 312
Total transactions with owners 620 -312 308
Changes in NCI without a change in control -698 356 -342
Total changes in subsidiary shareholdings -698 356 -342
Total equity, 31 Dec. 2020 80 116 520 -7 633 5 223 114 190
Equity attributable to owners of the parent company
Share capital
Reserve for invested
unrestricted equity Retained earnings
Non-controlling
interests Total equity
Total equity, 1 Jan. 2021 80 116 520 -7 633 5 223 114 190
Profit for the financial year 20 095 -1 004 19 091
Total comprehensive income for the period 20 095 -1 004 19 091
Dividends paid -4 517 -315 -4 832
Acquisition of own shares -582 -582
Share-based benefits 14 14
Total transactions with owners -5 085 -315 -5 400
Changes in NCI without a change in control -4 875 -395 -5 270
Total changes in subsidiary shareholdings -4 875 -395 -5 270
Total equity, 31 Dec. 2021 80 116 520 2 501 3 510 122 611
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations Committee’s Agenda Deci-sion published in April 2021 regarding the
recognition of configuration or customisation costs in a cloud computing arrangement (Software as a Service, SaaS).
57
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Accounting policies
Company profile
vate persons, companies, insurance companies and public
sector entities, such as municipalities and hospital districts.
services as well as wellbeing services. The service selection
includes general practitioner and medical specialist services,
occupational healthcare, social and healthcare outsourcing,
fitness centre services, responsible doctor and remote con-
sultation services as well as residential services and stang
services.
At the end of the financial year, the total number of
Pihlajalinna’s private clinics, hospitals, dental clinics, fitness
centres and service housing units with 24-hour assistance
was approximately 140. In addition, Pihlajalinna has four ma-
jor complete social and healthcare outsourcing agreements
that collectively cover some 60 locations (including health
centres, maternity and child health clinics, service housing
units with 24-hour assistance and daytime activity centres).
The Group’s parent company, Pihlajalinna Plc, is a Finnish
public limited company established under the laws of
Finland, whose Business ID is 2617455-1. The company is do-
miciled in Tampere, and its registered address is K ehr äsaari
listed on the NASDAQ OMX Helsinki main market. A copy
of the consolidated financial statements is available on the
internet at investors.pihlajalinna.fi or can be obtained at the
head oce of the Group’s parent company, address Keh-
räsaari B, 33200 Tampere, Finland.
The Board of Directors of Pihlajalinna Plc approved these
financial statements in its meeting on 17 February 2022. In
accordance with the Finnish Limited Liability Companies
Act, the shareholders may adopt or reject the financial
statements at the Annual General Meeting held after their
publication. The Annual General Meeting can also decide on
modifications to be made to the financial statements.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with the International Financial Reporting Stan-
dards (IFRS), and their preparation complies with the IAS and
IFRS as well as SIC and IFRIC interpretations eective on 31
December 2021. International Financial Reporting Standards,
as intended in the Finnish Accounting Act and the regulations
issued pursuant to the Act, refer to the standards that have
been approved for application within the EU in accordance
with Regulation (EC) No. 1606/2002 and interpretations
thereof. The notes to the consolidated financial statements
also comply with the Finnish accounting and company legisla-
tion that complements the IFRS regulations.
Accounting policies that influence a particular note to
the consolidated financial statements are indicated with the
heading Accounting policies in the note in question.
The consolidated financial statements are presented in
euros and all figures are rounded to the nearest thousand,
unless otherwise specified.
New accounting policies applied in the finan-
cial year that ended on 31 december 2021
Configuration or customisation costs in a cloud computing
arrangement – IAS 38 Intangible assets (eective immediately)
The Agenda Decision issued by the IFRS Interpretations Com-
mittee in April 2021 clarifies the accounting of the costs of
configuring or customising a supplier’s application software
in a Software as a Service (SaaS) arrangement. The Agenda
Decision addresses whether the company that purchases the
service can recognise an intangible asset in its balance sheet,
and if not, how the configuration or customisation costs are
to be treated in accounting. Agenda Decisions are intend-
ed to be applied as soon as possible after their publication.
Pihlajalinna has changed its accounting policies and begun
to retrospectively apply, eective from 1 January 2020, this
Agenda Decision regarding the recognition of configuration
or customisation costs in a cloud computing arrangement.
Retrospective eect on the 2020 financial
statements of the IFRIC agenda decision
2020
reported
figures
Eect of
the IFRIC
Agenda
Decision
2020
restated
ASSETS
Other intangible assets 16.3 -1.0 15.3
Deferred tax assets 5.4 0.2 5.6
Total non-current assets 347.8 -0.8 347.0
Total Assets 442.1 -0.8 441.3
EQUITY
Retained earnings -15.6 -0.8 -16.3
Profit for the period 8.7 0.0 8.7
Total 109.8 -0.8 109.0
Non-controlling interests 5.2 0.0 5.2
Total Equity 115.0 -0.8 114.2
Total Equity and liabilities 442.1 -0.8 441.3
INCOME STATEMENT
Other operating expenses -46.4 -0.3 -46.7
EBITDA 52.4 -0.3 52.2
Depreciation, amortisation and
impairment
-34.3 0.2 -34.0
Operating profit (EBIT) 18.2 0.0 18.1
Profit before taxes 13.8 0.0 13.7
Income tax -4.8 0.0 -4.8
Total comprehensive income
for the period
8.9 0.0 8.9
Total comprehensive income
for the period attributable:
To the owners of the parent
company
8,7 0,0 8,7
To non-controlling interests 0.2 0.0 0.2
Cash flow from operating activities decreased and cash
58
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
flow from investing activities increased by EUR 0.6 million
due to the application of the Agenda Decision.
New and amended standards applied in
the past financial year
In 2021, the Group has adopted the following amended
standards published by the IASB. They are not, however,
estimated to have a material eect on Pihlajalinna’s finan-
cial statements.
COVID-19-related Rent Concessions after 30 June
2021 – Amendments to IFRS 16 Leases (eective from
1 April 2021 for financial years beginning on or after 1
January 2021)
The amendment allows lessees to not recognise rent
concessions as changes in leases, provided that the con-
cessions are a direct consequence of COVID-19 and meet
certain conditions. The expedient was not applied to the
financial statements for 2021.
Interest Rate Benchmark Reform – Phase 2 – Amend-
ments to IFRS 9 Financial Instruments, IAS 39 Financial
Instruments: Recognition and Measurement, IFRS 7
Financial Instruments: Disclosures, IFRS 4 Insurance
Contracts and IFRS 16 Leases (eective for annual peri-
ods beginning on or after 1 January 2021)
The amendments address issues aecting financial
statements when changes are made to contractual cash
flows and hedging relationships as a result of interest rate
benchmark reform. The amendments assist companies in
providing useful information about the eects of interest
rate benchmark reform on financial statements.
Consolidation principles
Subsidiaries
Subsidiaries are entities in which the Group exercises
control. The Group has control of an entity when it is ex-
posed, or has rights, to variable returns from its involve-
ment with the entity and has the ability to aect those
returns through its power over the entity.
Intragroup shareholdings are eliminated using the
acquisition method. The consideration transferred and
the acquired entity’s identifiable assets and assumed
liabilities are measured at fair value at the date of ac-
quisition. Acquisition-related costs are expensed. Any
contingent consideration is measured at fair value at the
date of acquisition and classified as a liability. If the initial
accounting for a business combination is incomplete by
the end of the reporting period in which the combina-
tion occurs, the Group reports in its financial statements
provisional amounts for the items for which the account-
ing is incomplete. During the measurement period, the
Group retrospectively adjusts the provisional amounts
recognised at the acquisition date to reflect any new
information. The measurement period may not exceed
one year from the acquisition date. A contingent consid-
eration classified as a liability is measured at fair value at
the end of each reporting period, and any resulting gain
or loss is recognised in profit or loss after the end of the
measurement period.
Non-controlling interests in the acquiree are recognised
either at fair value or an amount that corresponds to their
pro rata share of the acquiree’s net assets. The amount
by which the consideration transferred, non-controlling
interests in the acquiree and previously owned holding
combined exceed the fair value of the acquired net assets
is recognised as goodwill in the consolidated statement
of financial position. If the combined value of the consid-
eration, non-controlling interests and previously owned
holding is lower than the fair value of the acquiree’s net
assets, the dierence is recognised in the statement of
comprehensive income.
Acquired subsidiaries are consolidated from the date
when the Group obtained control, and disposed subsid-
iaries are consolidated until the date when the Group lost
control. All intragroup transactions, receivables, liabili-
ties, unrealised profits and internal profit distribution are
eliminated in the preparation of the consolidated financial
statements. Unrealised losses will not be eliminated in
case of impairment losses. Profit or loss for the financial
year attributable to the owners of the parent compa-
ny and to the non-controlling interests is presented in
the consolidated statement of comprehensive income.
Comprehensive income is attributed to the owners of
the parent company and to the non-controlling interests,
even if this would lead to a situation where the portion
attributable to the non-controlling interests is negative.
The portion of equity attributable to the non-controlling
interests is presented as a separate item under equity in
the consolidated statement of financial position. Such
changes in the parent company’s ownership interest in a
subsidiary that do not lead to loss of control are treated
as equity transactions.
In connection with step-by-step acquisitions, the for-
mer ownership interest is measured at fair value, and the
resulting gain or loss is recognised in profit or loss. When
the Group loses control of a subsidiary, any remaining
interest is measured at fair value at the date of loss of
control, and the resulting dierence is recognised in
profit or loss.
Associates and joint arrangements
Associates are companies over which the Group has
significant influence. As a rule, significant influence is
established when the Group holds more than 20% of a
company’s voting power or otherwise has significant
influence but no control.
A joint arrangement is an arrangement of which two
or more parties have joint control. Joint control involves
contractually agreed sharing of control of an arrange-
ment, which exists only when decisions about relevant
activities require the unanimous consent of the parties
sharing control. A joint arrangement is either a joint
operation or a joint venture. A joint venture is an arrange-
ment whereby the Group has rights to the net assets of
the arrangement, whereas in a joint operation the Group
has rights to the assets, and obligations for the liabilities,
relating to the arrangement.
Associates and joint ventures are consolidated using
the equity method. If the Group’s share of the loss of an
associate or a joint venture exceeds the carrying amount
of the investment, then the investment is carried at zero
value, and the losses exceeding the carrying amount
are not consolidated, unless the Group is committed to
fulfilling the obligations of the associate or joint venture.
An investment in an associate or a joint venture includes
59
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
the goodwill generated through the acquisition. Unre-
alised profits between the Group and an associate or a
joint venture are eliminated in proportion to the Group’s
ownership interest. The Group’s pro rata share of an as-
sociate’s or a joint venture’s profit for the financial year is
included in operating profit.
The Group owns 31% in Kiinteistö Oy Levin Pihlaja,
which is consolidated as a joint operation according to
the pro rata share, using the proportionate consolidation
method.
Foreign currency translation
The consolidated financial statements are presented
in euros, which is the functional currency and presen-
tation currency of the Group’s parent company and of
the subsidiaries engaged in business activities. In their
own accounting, Group companies translate day-to-day
transactions denominated in foreign currency into their
functional currency applying the exchange rates of the
transaction date. Foreign exchange gains and losses
related to the business are included in the corresponding
expense items.
Segment reporting
Pihlajalinna’s CEO makes significant operational decisions
at the Group level. The Group operates only in Finland
and its management system is based on a regional organ-
isation structure. Under Pihlajalinna’s operating structure,
the Group’s CEO, with the help of the Chief Operating
Ocer (COO) and the other members of the Manage-
ment Team, is responsible for the Group’s business
operations and service oering to both the private and
public sectors. The COO is responsible for preparing the
Group businesses’ budgets with the help of the Regional
Directors. The Group CEO is responsible for the resourc-
es, investments and profitability of the Group’s business-
es. Pihlajalinna’s cash-generating unit corresponds to the
reporting segment, i.e. the Group. The senior operating
decision-maker, Pihlajalinna’s CEO, monitors the Group’s
result. Group-level figures are reported as segment infor-
mation.
Accounting policies requiring manage-
ment judgement and major sources of
estimation uncertainty
In the course of preparing the financial statements, it is
necessary to make estimates and assumptions about the
future. However, such estimates and assumptions may lat-
er prove inaccurate compared with actual outcomes. The
Group regularly monitors the realisation of the estimates
and assumptions and changes in the underlying factors
together with the business units by using several, both
internal and external, sources of information. Any chang-
es in estimates and assumptions are recognised in the
financial year during which the estimate or assumption is
corrected and in all subsequent financial years. Addition-
ally, it is necessary to exercise judgement in the appli-
cation of the accounting policies. The most significant
estimates and assumptions are presented under the note
in question under the heading Key accounting estimates
and decisions based on management judgement.
New and revised standards and interpre-
tations to be applied in future financial
years
* = The regulation in question was not approved for appli-
cation in the EU by 31 December 2021.
Costs of Fulfilling a Contract – Amendments to IAS 37
Provisions, Contingent Liabilities and Contingent Assets
(eective for annual periods beginning on or after 1 Jan-
uary 2022)
When an onerous contract is accounted for based on
the costs of fulfilling the contract, the amendments clarify
that these costs comprise both the incremental costs and
an allocation of other direct costs.
Annual Improvements to IFRS Standards 2018–2020
(eective for annual periods beginning on or after 1 Jan-
uary 2022).
The Annual Improvements process provides a mecha-
nism for minor and non-urgent amendments to IFRSs to
be grouped together and issued in one package annually.
The amendments clarify the following standards:
• IFRS 1 First-time Adoption of International Finan-
cial Reporting Standards – Subsidiary as a first-time
adopter: The amendment simplifies the application
of IFRS 1 in a subsidiary that becomes a first-time
adopter later than its parent. The subsidiary may
elect to measure cumulative translation dierences
at the amounts included in the consolidated financial
statements of the parent.
• IFRS 9 Financial Instruments – Fees in the ‘10 per
cent’ test for derecognition of financial liabilities:
This amendment clarifies that – for the purpose of
performing the ‘10 per cent test’ for derecognition
of financial liabilities – in determining those fees
paid net of fees received, a borrower includes only
fees paid or received between the borrower and the
lender, including fees paid or received by either the
borrower or lender on the other’s behalf.
• IFRS 16 Leases – Lease incentives – example 13: The
amendment removes the illustration of payments
from the lessor relating to leasehold improvements.
The example was not clear as to why such payments
are not a lease incentive.
• IAS 41 Agriculture – Taxation in fair value measure-
ments: The amendment removes a requirement to
exclude cash flows from taxation when measuring fair
value, thereby aligning the fair value measurement
requirements in IAS 41 with those of IFRS 13 Fair Val-
ue Measurement. Assumptions concerning cash flows
and discount rates should be consistent when using
the present value method to measure fair value, i.e.
both should be based on either a pre-tax or post-tax
discount rate and pre-tax or post-tax cash flows.
Property, Plant and Equipment — Proceeds before
Intended Use – Amendments to IAS 16 Property, Plant
and Equipment (eective for annual periods beginning
on or after 1 January 2022)
Under the amendments, proceeds from selling items
before the related item of PPE is available for use should
be recognised in profit or loss, together with the costs
of producing those items.
Reference to the Conceptual Framework – Amend-
ments to IFRS 3 Business Combinations (eective for
60
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
financial years beginning on or after 1 January 2022).
The amendments update a reference in IFRS 3 and
include further specifications related to updating the
reference.
IFRS 17 Insurance Contracts (eective for financial
years beginning on or after 1 January 2023, early applica-
tion permitted for companies that also apply IFRS 9 Fi-
nancial Instruments and IFRS 15 Revenue from Contracts
with Customers).
The new standard for insurance contracts helps inves-
tors and other parties better understand insurers’ risk ex-
posure, profitability and financial position. This standard
replaces the IFRS 4 standard.
Classification of Liabilities as Current or Non-current –
Amendments to IAS 1 Presentation of Financial State-
ments * (eective for financial years beginning on or after
1 January 2023, early application is permitted).
The amendments aim to promote consistency in
application and clarify the requirements on determining
whether a liability is current or non-current.
Disclosure of Accounting Policies – Amendments to
IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 Making Materiality Judgements *
(eective for financial years beginning on or after 1 Janu-
ary 2023, early application is permitted).
The amendments clarify the application of the material-
ity principle to disclosures of accounting policies.
Definition of Accounting Estimates – Amendments to
IAS 8 Accounting Policies, Changes in Accounting Esti-
mates and Errors * (eective for financial years beginning
on or after 1 January 2023, early application is permitted).
61
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
1. Revenue from contracts with customers
Accounting policies
The Group’s revenue consists of payments related to the
sale of healthcare services, social services and wellbeing
services measured at fair value, adjusted by any discounts
and other adjustment items. The healthcare services
provided by the Group consist of occupational health
services, services provided at private clinics and hospi-
tals, responsible doctor services, diagnostics services,
rehabilitation services and dental care services. The social
services provided by the Group consist of services for
the elderly and the disabled, mental health services and
substance abuse group services. A significant part of
the consolidated revenue consists complete social and
healthcare outsourcing, which also includes the provider’s
liability for the costs of specialised care. The Group pro-
duces recruitment services related to healthcare profes-
sionals. The Group’s Forever fitness centres oer diverse
wellbeing services for adults who exercise. Fitness centre
services complement Pihlajalinna’s preventive occupa-
tional healthcare services and rehabilitation services
carried out after specialised care procedures. Pihlaja-
linna’s services are also extensively available via digital
channels.
The Group recognises the remuneration of employed
healthcare professionals and contract-based practitioners
in revenue on a gross basis, i.e. based on total customer
invoicing. According to the management’s view, Pihlaja-
linna has primary responsibility for the provision of ser-
vices to its customers. Therefore, the Group is involved in
a contractual relationship as a principal which is exposed
to significant risks and benefits related to the sale of
services. The Group records the remuneration of con-
tract-based practitioners in the income statement under
the item External services.
IFRS 15 Revenue from Contracts with Customers
includes a five-step model for recognising revenue from
contracts with customers: when to recognise revenue,
and at what amount. Revenue can be recognised over
time or at a point in time, and the passing of control is
a key criterion. Pihlajalinna has identified the following
principal performance obligations:
Social and healthcare outsourcing
• statutory social and healthcare services for a munici-
pality’s residents, separately described in contracts with
customers, including possible public specialised care
• individual social and healthcare service visits by resi-
dents of other municipalities
Private clinics and dental care
• individual customer visits to healthcare services at op-
erating locations or digitally, including related support
services
Surgical operations
• individual visits and related support services (e.g. pri-
vate individuals who pay for their services themselves
or through insurance companies)
Occupational healthcare
• individual occupational healthcare customer visits (e.g.
appointments with occupational healthcare nurses and
doctors, laboratory tests) at operating locations or
digitally
• preventive and health-promoting separately agreed
services (e.g. occupational health check-ups, work-
place-specific occupational health surveys)
• other additional services agreed upon with the cus-
tomer (e.g. first aid course)
Fitness centre services
• obligations related to monthly and annual fees for
fitness centre services
• individual separately charged additional services
Recruitment services
• customer-specific monthly fees for recruitment ser-
vices
• individual separately charged recruitment services
Responsible doctor services
• location-specific daily charges described in the cus-
tomer agreement
Stang service
• selling a healthcare professional’s labour event-specifi-
cally or based on time
• customer-specific monthly fees for emergency and
on-call services
Residential services
• elderly care home services on each day covered by the
agreement
• individual separately charged additional services or
health centre visits
Digital services
• Remote doctor services
• Remote nurse services
• Other digital services related to appointment booking
and assessing the need for care, other digital services
ordered by the customer
Notes to the consolidated
financial statements, IFRS
62
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
The transaction price primarily comprises individual
services according to the price list or annual, monthly,
daily or hourly rates based on customer agreements. In
most cases, the price concerns an individual performance
obligation. In some cases, the price includes a variable
element of consideration (e.g. discount, penalty charge,
bonus, additional price, additional service), which is
allocated to one or more performance obligations. The
performance obligations are fulfilled either over time (e.g.
outsourcing, residential services, fitness centre services,
recruitment services, responsible doctor services, fixed-
price occupational health services) or at a point in time
(e.g. occupational healthcare services, individual customer
visits, additional services).
The performance obligation in social and healthcare
outsourcings is the municipality’s statutory social and
healthcare service operations described in the custom-
er agreement. Outsourcing arrangements are primarily
based on a fixed annual price, and they are recognised as
revenue based on the passage of time. The recognition of
revenue from the Group’s complete social and healthcare
services outsourcing agreements may become more ac-
curate with a delay and may also include variable consid-
eration. The Group may not always be aware of the actual
costs of the agreements, which may also aect revenue
recognition.
Revenue from individual services is recognised on a
treatment visit-specific or service--specific basis based on
service use.
Key accounting estimates and decisions based on
management judgement
Determining the annual profitability of the Group’s fixed-
term complete social and healthcare services outsourc-
ing agreements may become accurate with a delay. The
Group may not always be aware of the actual costs of the
agreements at the time of preparing the financial state-
ments, and the agreements may involve variable elements
of compensation. The cost accumulation of public special-
ised care involves random fluctuation. In addition, individ-
ual cases falling within the scope of the hospital districts’
pooling system for high-cost care may influence the cost
liability of specialised care considerably during the finan-
cial year, and between financial periods, in Pihlajalinna’s
municipal companies.The fixed-term service agreements
for all of the Group’s complete outsourcing arrangements
are highly similar with regard to their principles and basic
terms. Pihlajalinna has calculated and recognised the vari-
able compensation components and cost compensation
under the agreements using the same criteria and model
for all clients. Demands for the compensation of cost
increases due to changes in services corresponding to the
actual costs and investment costs that serve operations
after the end of the term of the contract being the client’s
responsibility constitute the majority of costs and variable
compensation components that are specified with a
delay. For 2021, the assessment of investment costs and
COVID-19 related costs included in invoicing by hospital
districts can only be carried out after the hospital districts
have published their financial statements.
Pihlajalinna has recognised only part of these legally
justified claims in its income statement. The parties to the
agreements are bound by an obligation to negotiate and
negotiation is the primary procedure. If the obligation to
negotiate does not lead to payment, the receivables are
sought through legal action, which may further delay the
collection of items presented in current receivables in the
financial statements.
Items that may, according to the management’s
estimate, influence the profitability of complete
outsourcing agreements with a delay:
The City of Jämsä has taken legal action against Jämsän
Terveys Oy regarding a matter concerning the price
adjustment provision in the service agreement. The
dierence in views regarding whether the fixed annual
price for social and healthcare services can decrease due
to price adjustments amounted to approximately EUR
3.7 (2.6) million at the end of the financial year. Jämsän
Terveys filed an additional counterclaim against the City
of Jämsä. The additional counterclaim concerns the eect
of changes in the services under the service agreement
on price and the service provider’s liability for financing
investments by the Pirkanmaa Hospital District insofar
as such investments serve operations after the term of
the service agreement. The service provider is entitled to
price adjustments corresponding to increases in costs and
the contractual parties are under an obligation to nego-
tiate and try to reach an agreement. In its counterclaim,
Jämsän Terveys claims a total of approximately EUR 16
million from the City of Jämsä. The total amount of vari-
able compensation under the counterclaim that Jämsän
Terveys has recognised as revenue and recorded in its
receivables amounts to EUR 3.9 (3.8) million.
As regards Kuusiolinna Terveys Oy, the disputes con-
cerning the annual price and other separate charges were
settled with all of the clients during the financial year. The
decisions of the City Boards of Alavus and Ähtäri and the
Municipal Boards of Soini and Kuortane pertaining to the
agreed-upon matters became legally valid in August 2021.
The total amount of contractually and legally justified
variable compensation from the City of Mänttä-Vilppula
that Mäntänvuoren Terveys Oy has recognised as revenue
and recorded in its receivables amounts to EUR 4.1 (3.5)
million. The variable compensation recognised as revenue
in accordance with the agreement includes an estimate
of compensation for specialised care costs to the service
provider of the Pirkanmaa Hospital District’s investment
costs allocated to the client. The receivables from variable
compensation components are also related to cost inc-
reases caused by service changes and compensating such
increases in accordance with the actual costs.
The total amount of contractually and legally justified
variable compensation from the City of Parkano that
Kolmostien Terveys Oy has recognised as revenue and
recorded in its receivables amounts to EUR 1.7 (0.6)
million. The variable compensation recognised as revenue
in accordance with the agreement includes an estimate
of compensation for specialised care costs to the service
provider of the Pirkanmaa Hospital District’s investment
costs allocated to the client. The receivables from variable
compensation components are also related to cost inc-
reases caused by service changes and compensating such
increases in accordance with the actual costs. The client
approved cost increases arising from changes to services
for the elderly as part of the annual fee under the service
agreement.
63
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Revenue by region
Pihlajalinna reports its sales revenue divided into the following geographical regions:
• Southern Finland includes Pihlajalinna’s business operations in the regions of Uusi-
maa, South West Finland, Päijät-Häme, Kymenlaakso and South Karelia.
• Mid-Finland includes Pihlajalinna’s business operations in the regions of Pirkanmaa,
Satakunta, Kanta-Häme, Central Finland, South Savo, North Karelia and North Savo.
• Ostrobothnia includes Pihlajalinna’s business operations in the regions of Southern
Ostrobothnia, Ostrobothnia and Central Ostrobothnia.
• Northern Finland includes Pihlajalinna’s business operations in the regions of North
Ostrobothnia, Kainuu and Lapland.
EUR 1,000 2021 % 2020 %
Southern Finland 148 291 23 114 749 20
Mid-Finland 330 820 51 316 810 56
Ostrobothnia 128 335 20 116 808 20
Northern Finland 29 934 5 16 176 3
Other operations 13 374 2 9 755 1
Intra-Group sales -72 980 -65 617
Consolidated revenue 577 774 100 508 682 100
Sales revenue by customer group
Pihlajalinna’s customer groups are corporate customers, private customers and public
sector customers.
• The Group’s corporate customer group consists of Pihlajalinna’s occupational health
customers, insurance company customers and other corporate contract customers.
• The Group’s private customers are private individuals who pay for services themselves
and may subsequently seek compensation from their insurance company.
• The Group’s public sector customer group consists of public sector organisations in
Finland, such as municipalities, joint municipal authorities, congregations, hospital dis-
tricts and the public administration when purchasing social and healthcare outsourc-
ing services, residential services, occupational health services and stang services.
EUR 1,000 2021 % 2020 %
Corporate customers 137 773 21 120 719 21
of which insurance company customers 34 798 5 31 378 5
Private customers 85 320 13 81 150 14
Public sector 427 661 66 372 430 65
of which complete outsourcing 300 813 46 287 897 50
of which stang 26 073 4 23 027 4
of which occupational healthcare and other services 100 775 15 61 507 11
Intra-Group sales -72 980 -65 617
Consolidated revenue 577 774 100 508 682 100
Information on key customers
The Group’s sales revenue from the four largest municipal customers totalled approx-
imately EUR 277.9 (272.5) million, representing 48% (54%) of the Group’s eliminated
revenue.
Estimate of unsatisfied performance obligations related to fixed-term service
agreements on the provision of social and healthcare services, EUR million
EUR 1,000 31.12.2021 31.12.2020 1000 € 31.12.2021 31.12.2021
2021 259 2030 167 158
2022 263 260 2031 37 36
2023 266 262 2032 6 6
2024 269 263 2033 6 6
2025 247 240 2034 6 6
2026 199 192 2035 6 6
2027 201 193
2028 204 194
2029 206 195 2 085 2 276
Summary of the Group’s complete outsourcing agreements and their
agreement periods
Service provider – client
First year of service production
under the current contract
Duration of contract
(years)
Jämsän Terveys Oy – City of Jämsä 2015 10
Kuusiolinna Terveys Oy – KuusSote 2016 15
Mäntänvuoren Terveys Oy – City of Mänt-
tä-Vilppula
2016 15
Kolmostien Terveys Oy – City of Parkano 2015 15
Bottenhavets Hälsa Ab (Selkämeren Ter-
veys Oy) – Kristiinankaupunki
2021 15 – 20 years
2. Other operating income
Accounting policies
Government grants received as compensation for expenses already incurred are rec-
ognised in profit or loss for the period in which they become receivable. These grants
are presented under other operating income.
64
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Government grants related to capitalised development projects are recognised as
deductions from the carrying amounts of intangible assets, when there is reasonable
assurance that such grants will be received and that the Group will comply with the con-
ditions for receiving them. The grants will be recognised as income over the useful life of
an asset by way of reduced depreciation.
The Group has subleased certain premises that are not used for business operations.
Income from these leases is presented under other operating income.
Sale and leaseback
With regard to sale and leaseback agreements completed prior to the adoption of IFRS
16, the Group will continue the allocation of capital gains as before in accordance with
the transition provision of IFRS 16.
If a finance lease is created as a result of a sale and leaseback agreement, the dier-
ence between the carrying amount and the sales price will be recognised in the con-
solidated statement of financial position and recognised as income over the lease term
under other operating income. The unrecognised portion of the dierence between the
carrying amount and the sales price is presented as Other liabilities in the statement of
financial position.
EUR 1,000 2021 2020
Capital gains on property, plant and equipment 209 235
Rental income 528 550
Government grants 1 160 1 379
Other income items 1 807 215
Total 3 704 2 379
Eects of COVID-19
In June 2020, the Finnish Government decided on support for business costs for compa-
nies that had suered a significant decrease in revenue due to the COVID-19 pandemic
and that have had costs that are dicult to adjust. In 2021, the Finnish Government car-
ried out the fourth round of cost support for companies. In the financial year 2021, Pihla-
jalinna recognised a total of EUR 628 thousand in financial support intended to cover the
fixed costs of the Group’s fitness centres in other operating income under government
grants. In 2020, Pihlajalinna received EUR 800 thousand in cost support, which was the
Group-specific maximum amount.
Compensation for the costs of pandemic-related services under the Group’s complete
outsourcing agreements is presented in other operating income under other income
items. Agreement on the compensation principles was reached with the client munici-
palities in 2021. Municipalities and joint municipal authorities are compensated for costs
directly related to the COVID-19 pandemic by means of government grants.
3. Materials and services
Accounting policies
Inventories are measured at the lower of cost and probable net realisable value.
EUR 1,000 2021 2020
Materials -20 452 -19 967
Change in inventories 153 1 092
External services, practitioners -73 042 -71 931
External services, other -116 176 -107 171
Total -209 516 -197 977
Eects of COVID-19
The Group’s purchases of personal protective equipment and other hygiene precau-
tions taken in response to the COVID-19 pandemic increased the value of inventories in
2021.
4. Employee benefit expenses
Accounting policies
Pension plans are classified as defined benefit plans and defined contribution plans.
The Group only has defined contribution plans. In defined contribution plans, the Group
makes fixed payments to a separate unit. The Group has no legal or constructive obliga-
tion to make additional payments if the recipient of the payments is incapable of paying
out said retirement benefits. Payments made into the defined contribution plans are
recognised in profit or loss for the financial year for which they are charged.
The long-term share-based incentive scheme is recognised as an expense over its
accrual period. The gross amount of the incentive scheme includes the share component
and the cash component. Approximately half of the gross remuneration, corresponding
to withholding taxes, is paid in cash.
EUR 1,000 2021 2020
Wages and salaries -211 095 -179 381
Share-based incentive schemes
- implemented as shares -357 -1 517
Pension costs – defined contribution plans -35 344 -27 009
Other social security expenses -8 368 -6 327
Total -255 164 -214 235
The employer’s TyEL pension contributions were reduced by 2.6 percentage points
for the period 1 May–31 December 2020. The pension insurance company will not pay
customer compensation for the period during which the reduced rate was in eect. The
65
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
eect of the temporary reduction in the employer’s TyEL pension contributions will be
compensated in full during the period 2022–2025 through an increase in the employer’s
TyEL pension contributions.
2021 2020
Personnel on average (FTE) 4 746 4 308
Personnel at the end of the period (NOE) 6 297 5 550
Information on the employee benefits and loans of members of management considered
to be related parties is presented in Note 30 Related party transactions.
5. Share-based incentive scheme for key personnel
At its meeting on 14 February 2019, the Board of Directors approved the terms of a
share-based long-term incentive programme for Pihlajalinna Group’s senior manage-
ment (LTIP 2019). The incentive programme is eective from 1 January 2019 onwards
and it is aimed at the CEO, the Management Team and other key employees selected
for inclusion in the programme. LTIP 2019 constitutes a five-year plan period. None of
the share rewards received by the key employees thereunder may be sold or transferred
prior to 2022, and the share rewards are subject to a two-year transfer restriction for
each performance period. In the event that a beneficiary’s employment ends during the
transfer restriction period, shares that have already been received must be returned. The
key employee is required to have made an investment in Pihlajalinna shares as a precon-
dition for participation in the programme. At the end of the financial year, the incentive
programme included 27 key employees.
The fixed matching share programme (commitment shares) consisted of a commit-
ment period from the beginning of 2019 to the payment of the fixed share reward at the
end of 2020. In this scheme, the company matched each key employee’s share invest-
ments with additional shares at a fixed rate. A total of 97,000 matching shares were
awarded. This figure is the gross reward, from which the applicable taxes were deducted,
leaving a net amount of 45,105 shares that were transferred to the participants on 28
December 2020. The shares are subject to a transfer restriction, but they are not subject
to the obligation to return the shares in the event of termination.
The performance- and quality-based matching share plan included three one-year
performance periods (the calendar years 2019–2021), during which the participants
could earn performance-based additional shares, provided that the company reached
the performance objectives set by the Board of Directors. Based on each individual per-
formance period, the participant can earn a maximum of two additional shares for three
shares invested without consideration (gross before the deduction of the applicable
payroll tax). The performance-based share rewards will be delivered after the respective
performance periods according to the programme in the spring of 2020, 2021 and 2022
No performance- and quality-based share rewards materialised for the first perfor-
mance period 2019 pursuant to the matching share plan, as the minimum objectives set
for the programme were not achieved.
For the second performance period 2020, the gross reward for the Group’s manage-
ment was 56,583 shares. The net amount of 26,546 shares were paid to the participants
on 25 February 2021. These shares are subject to a transfer restriction, but they are not
subject to the obligation to return the shares in the event of termination.
The performance targets for the performance period 2021 were related to the achieve-
ment of the consolidated adjusted operating profit target for 2021, the development of
the customer satisfaction index (NPS) and employee net promoter score (eNPS), the
growth of the share of internal production in specialised care, the implementation of the
eciency improvement programme for municipal companies and items that, according
to the management’s estimate, may have a delayed impact on the profitability of com-
plete outsourcing agreements. For the performance period 2021, the gross reward for
the Group’s management is 18,816 shares. The shares are expected to be transferred to
the participants in February 2022. The shares are subject to the normal transfer restric-
tion.
6. Other operating expenses
EUR 1,000 2021 2020 restated*
Facility expenses -9 907 -9 600
Equipment and information management expenses -23 235 -20 707
Sales and marketing expenses -7 832 -6 065
Other expenses -13 177 -10 307
Total -54 151 -46 678
Auditor’s fees
Auditing, BDO -122
Auditing, KPMG Oy Ab -288 -225
Statements, KPMG Oy Ab -10 -7
Non-audit services, KPMG Oy Ab -16
Total -298 -370
*Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from
1 January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021
regarding the recognition of configuration or customisation costs in a cloud computing arrangement
(Software as a Service, SaaS).
66
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
7. Depreciation and impairment
Accounting policies
Property, plant and equipment will be depreciated using the straight-line method over
their estimated economic useful lives. The estimated economic useful lives are as follows:
Buildings 10–25 years
Renovation expenses on real estate 5–10 years
Machinery and equipment 3–10 years
Other tangible assets 3–5 years
For the magnetic imaging equipment at new private clinics, the Group adopted a
units-of-production based depreciation method eective from 1 January 2018. The
amount of depreciation is based on the units of production derived from the equipment.
For the Group’s other machinery and equipment, the Group still uses straight-line depre-
ciation. As the utilisation rate of imaging capacity is low during the first years of a new
operating location, the units-of-production method provides a more accurate reflection
of the actual economic use of the magnetic imaging equipment in question.
For intangible assets with finite economic useful lives, the amortisation periods are as
follows:
Trademarks 10 years
Development costs 3–10 years
Other intangible assets
Customer agreements 4 years
Patient database 4 years
Non-competition agreements 2–5 years
Intellectual property rights 3–7 years
Property, plant and equipment is depreciated on a straight-line basis over the shorter of
economic useful life or lease term.
The planned depreciation periods of property, plant and equipment are as follows:
Right-of-use plots 25 years
Right-of-use buildings
and business premises 1–15 years
Right-of-use equipment 3–10 years
Impairment is recognised pursuant to IAS 36 for onerous right-of-use buildings and busi-
ness premises.
67
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
EUR 1,000 2021 2020 restated*
Depreciation, amortisation and impairment by asset type
Intangible assets
Trademarks -776 -776
Capitalised development costs -961 -924
Customer relationship value -1 622 -1 479
Non-competition agreements -355 -536
Patient database -232 -306
Other intangible assets -2 752 -2 272
-6 699 -6 293
Property, plant and equipment
Buildings -96 -170
Renovation expenses on real estate -2 463 -2 620
Machinery and equipment -6 604 -6 012
Other tangible assets -1 -1
-9 163 -8 803
Right-of-use assets
Right-of-use plots -91 -120
Right-of-use business premises and buildings -17 885 -17 578
Right-of-use business premises and buildings, impairment -26
Right-of-use equipment -863 -1 202
-18 840 -18 927
Total depreciation, amortisation and impairment -34 701 -34 023
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1
January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021 regard-
ing the recognition of configuration or customisation costs in a cloud computing arrangement (Soft-
ware as a Service, SaaS).
8. Financial income
EUR 1,000 2021 2020
Dividend income from financial assets measured at fair value
through profit or loss
7 10
Interest income from loans and receivables 118 94
Interest income from financial lease receivables 83 94
Other financial income 35 34
Total 242 232
9. Financial expenses
EUR 1,000 2021 2020
Interest expenses from financial liabilities carried at amortised cost -1 726 -2 128
Interest expenses on lease liabilities -1 706 -1 900
Other financial expenses -524 -609
Total -3 956 -4 637
Due to the changes in the operating environment caused by the COVID-19 epidemic,
Pihlajalinna and the creditor banks agreed on a temporary adjustment to the covenants
of the financing arrangement at the end of March 2020. As part of the agreement, a per-
manent new margin ceiling was added to the financing arrangement. The margin ceiling
will enter into eect if leverage exceeds 3.50. Financial expenses in 2020 were increased
by a waiver expense associated with the financing arrangement and higher interest rate
margins. .
10. Income taxes
Accounting policies
The income taxes on the consolidated income statement consist of current tax, adjust-
ments to taxes for previous periods, and deferred taxes. Taxes are recognised in profit
or loss, except when they are directly attributable to items recognised under equity or
other comprehensive income. In such cases, also the tax is recognised under the item in
question. Current tax is calculated on taxable profit, based on the enacted tax rate. Tax is
adjusted with any taxes associated with prior financial years. Any penal interests related
to said taxes are recognised under financial expenses. The share of associates’ profit is
presented in the statement of comprehensive income as calculated from net profit and
thus including the income tax charge.
EUR 1,000 2021 2020
Current taxes -5 291 -4 159
Taxes for the previous financial years 2 -2
Deferred taxes:
Origination and reversal of temporary dierences 159 -675
Total -5 130 -4 835
68
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Reconciliation of eective tax rate
EUR 1,000 2021 2020
Profit before taxes 24 222 13 737
Taxes calculated on the basis of the Finnish tax rate (20%) -4 844 -2 747
Income not subject to tax 2 2
Non-deductible expenses -284 67
Unrecorded deferred tax assets from tax losses -635 -318
Utilised prior losses with unrecognised tax benefits 495 81
Share of associated company’s profit -2 -1
Share-based remuneration 24 -59
Payment of liability to B series shareholders (end of arrangement) -1 938
Other items 112 80
Taxes for prior financial years 2 -2
Taxes in the income statement -5 130 -4 835
Eective tax rate -21,2 % -35,2 %
11. Earnings per share
Accounting policies
Earnings per share is calculated by dividing the profit for the financial year attributable
to owners of the parent by the weighted average number of shares outstanding during
the financial year.
Earnings per share for the financial year attributable to owners of the parent are cal-
culated by dividing the profit for the financial year attributable to owners of the parent
by the weighted average number of shares outstanding during the financial year.
When calculating diluted earnings per share, the average number of shares is adjust-
ed by the dilution eect of the share-based incentive scheme.
2021 2020
Profit for the financial year attributable to owners of the parent, EUR 20 094 607,63 8 686 658,43
Number of shares outstanding, weighted average 22 589 383 22 586 212
Earnings per share (EPS), EUR/share 0,89 0,38
Diluted earnings per share, EUR/share 0,89 0,38
12. Property, plant and equipment
Accounting policies
Property, plant and equipment are measured at cost less accumulated depreciation and
impairment losses. Cost includes expenditures incurred directly from the acquisition of
an item of property, plant and equipment. Costs incurred subsequently are included in
the carrying amount of an asset only if it is deemed probable that any future economic
benefits related to the asset will flow to the Group and that the cost of the asset can be
reliably determined. Other repair and maintenance costs will be expensed at the time
they are incurred.
The residual value, the useful life of an asset and the depreciation method applied are
reviewed at least at the end of each financial year and adjusted as necessary to reflect
the changes in the expectations concerning the economic benefits attached to the asset.
Capital gains generated from decommissioning and disposing of property, plant and
equipment are included under other operating income, and capital losses are included
under other operating expenses.
Assets are depreciated from the time when they are ready for use; i.e. when their loca-
tion and condition allow them to be applied as intended by the management.
In 2018, the Group opened private clinics in Turku, Oulu and Seinäjoki. The Group
acquired 3 Tesla high-field magnetic imaging equipment for the clinics in Oulu and
Turku and a 1.5 Tesla high-field magnetic imaging device for the clinic in Seinäjoki. For
the magnetic imaging equipment at these green field private clinics, the Group adopted
a units-of-production based depreciation method eective from 1 January 2018. The
amount of depreciation is based on the units of production derived from the magnet-
ic imaging equipment. For the Group’s other machinery and equipment, the Group
still uses straight-line depreciation. As the utilisation rate of imaging capacity is very
low during the first years of a new operating location, the units-of-production method
provides a more accurate reflection of the actual economic use of the magnetic imaging
equipment in question than straight-line depreciation.
69
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Property, plant and equipment
EUR 1,000 Land areas Buildings
Renovation expenses
on real estate
Shares in real
estate companies
Machinery and
equipment
Other tangible
assets
Construction in
progress Total
Cost at 1 January 2021 36 2 937 29 370 5 572 55 584 172 539 94 209
Additions 0 792 8 337 0 1 793 10 921
Business combinations 4 39 43
Transfers between items 89 384 101 -785 -212
Disposals -564 -202 -766
Cost at 31 December 2021 36 3 026 30 549 5 572 63 496 172 1 344 104 195
Accumulated depreciation at 1January 2021 -410 -16 665 -33 130 -7 -50 212
Depreciation and amortisation -96 -2 463 -6 604 -1 -9 163
Transfers between items -3 -112 -116
Disposals 0 0 286 286
Accumulated depreciation at 31December 2021 -506 -19 131 -39 560 -8 -59 206
Carrying amount at 1 January 2021 36 2 527 12 703 5 572 22 454 165 539 43 996
Carrying amount at 31 December 2021 36 2 521 11 417 5 572 23 936 164 1 344 44 989
EUR 1,000 Land areas Buildings
Renovation expenses
on real estate
Shares in real
estate companies
Machinery and
equipment
Other tangible
assets
Construction in
progress Total
Cost at 1 January 2020 36 9 512 26 604 5 579 53 237 179 2 223 97 370
Additions 136 458 5 455 0 1 171 7 220
Transfers between items -27 2 625 -7 391 -7 -1 835 1 139
Disposals -6 683 -317 -3 499 0 -1 020 -11 519
Cost at 31 December 2020 36 2 937 29 370 5 572 55 584 172 539 94 209
Accumulated depreciation at 1January 2020 -404 -13 678 -30 039 -12 -44 133
Depreciation and amortisation -170 -2 620 -6 012 -1 -8 803
Transfers between items 22 -684 -364 5 -1 020
Disposals 141 317 3 284 3 742
Accumulated depreciation at 31December 2020 -410 -16 665 -33 130 -7 -50 212
Carrying amount at 1 January 2020 36 9 108 12 925 5 579 23 199 167 2 223 53 237
Carrying amount at 31 December 2020 36 2 527 12 704 5 572 22 454 165 539 43 996
70
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
13. Intangible assets
Accounting policies
Goodwill
Goodwill generated through business combinations is measured at the amount by which
the consideration transferred, non-controlling interests in the acquiree and previously
owned holding combined exceed the fair value of the identifiable acquired net assets.
Goodwill typically reflects the value of acquired market share, business expertise and
synergies.
Goodwill is not amortised, but it is tested for impairment annually and whenever there
is an indication that the asset may be impaired. Goodwill is allocated to cash-generating
units (CGUs). Goodwill is measured at original cost less accumulated impairment.
Cloud computing arrangement
Accounting treatment of cloud service arrangements depends on whether the
cloud-based software is classified as an intangible asset or a service contract. The
arrangements in which the the Group has no authority on the software are ac-
counted as service agreements which entitle the Group to utilize the cloud ser-
vice provider's application software during the contract period. Application
software license fees and related configuration or customization costs are rec-
ognized (for example, in other operating expenses) when the services are re-
ceived. Prepayments to the cloud service provider for software customization that
are not separable are recognized as an expense during the contract period.
Capitalised development costs
Assets are amortised from the time when they are ready for use. Assets that are not yet
available for use are tested annually for impairment. Subsequent to their initial recogni-
tion, capitalised development costs are measured at cost less accumulated amortisation
and impairment. The amortisation period for development costs is 3 to 10 years, during
which capitalised development costs are amortised using the straight-line method.
The Group’s capitalised development costs that have not been amortised are associat-
ed with the following projects:
• New operating model for fixed-price occupational healthcare agreements and a relat-
ed occupational healthcare portal
• Renewal of primary care service models, involving remote service models for munici-
pal residents and mobile solutions (social and healthcare service centre concept)
• Sports clinic concept
• Pihlajalinna mobile application and website development with the aim of making
AI-assisted digital services available to all customers.
• Specialised care referral forwarding and coordination operating model developed for
the Parkano social and healthcare partnership area
• Takeover of social and healthcare services in Mänttä-Vilppula and the development of
operating models
• The three-year SYKKI project, funded with Tekes subsidies, aimed at creating an ef-
fective and cost-ecient model for public social and healthcare services
71
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Intangible assets
EUR 1,000 Goodwill Trademarks
Development
costs
Customer rela-
tionship value
Non-competi-
tion agreement
Patient
database
Other intangible
assets
Other long-term
expenditures
Pre-
payments Total
Cost at 1 January 2021 173 607 7 762 6 348 8 397 7 507 5 677 6 605 10 404 47 226 355
Additions 21 232 2 775 985 4 011
Business combinations 15 301 2 175 9 8 17 493
Transfers between items 48 358 -316 89
Cost at 31 December 2021 188 909 7 762 6 369 10 572 7 507 5 677 6 894 13 543 715 247 949
Accumulated depreciation at 1January 2021 -5 479 -3 057 -6 893 -7 142 -5 411 -5 511 -3 919 -37 410
Depreciation and amortisation -776 -961 -1 622 -355 -232 -538 -2 215 -6 699
Transfers between items -48 -16 -64
Accumulated depreciation at 31December 2021 -6 255 -4 019 -8 515 -7 497 -5 642 -6 096 -6 149 -44 173
Carrying amount at 1 January 2021 173 607 2 284 3 289 1 505 365 267 1 095 6 483 47 188 944
Carrying amount at 31 December 2021 188 909 1 508 2 349 2 057 10 35 798 7 394 715 203 775
EUR 1,000 Goodwill Trademarks
Development
costs
Customer rela-
tionship value
Non-competi-
tion agreement
Patient
database
Other intangible
assets
Other long-term
expenditures
Pre-
payments Total
Cost at 1 January 2020 173 607 7 762 5 968 8 397 7 507 5 677 7 650 7 751 443 224 763
IFRIC Agenda Decision concerning the custo-
misation and configuration costs of cloud com-
puting arrangements*
-755 -648 -1 403
Restated cost at 1 January 2020 173 607 7 762 5 968 8 397 7 507 5 677 6 895 7 103 443 223 360
Additions 380 114 2 796 311 3 603
Transfers between items 10 507 -708 -191
Disposals -414 -2 -417
Cost at 31 December 2020 173 607 7 762 6 348 8 397 7 507 5 677 6 605 10 404 47 226 355
Accumulated depreciation at 1January 2020 -4 702 -2 133 -5 414 -6 606 -5 105 -5 601 -2 511 -32 071
IFRIC Agenda Decision concerning the custo-
misation and configuration costs of cloud com-
puting arrangements*
350 102 452
Restated accumulated depreciation at 1January
2020
0 -4 702 -2 133 -5 414 -6 606 -5 105 -5 251 -2 408 -31 618
Depreciation and amortisation -776 -924 -1 479 -536 -306 -688 -1 584 -6 293
Transfers between items 14 71 85
Disposals 414 2 417
Accumulated depreciation at 31December 2020 -5 479 -3 057 -6 893 -7 142 -5 411 -5 511 -3 919 -37 410
Carrying amount at 1 January 2020 173 607 3 060 3 835 2 984 901 572 1 644 4 694 443 191 740
Carrying amount at 31 December 2020 173 607 2 284 3 289 1 505 365 267 1 095 6 483 47 188 944
Other intangible assets include licences and computer software.
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021 regarding the
recognition of configuration or customisation costs in a cloud computing arrangement (Software as a Service, SaaS).
72
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Impairment testing of goodwill
Accounting policies
Goodwill generated in M&A transactions is allocated to cash-generating units (CGU).
Under Pihlajalinna’s operating structure, the Group’s CEO, with the help of the Chief Op-
erating Ocer (COO) and the other members of the Management Team, is responsible
for the Group’s business operations and service oering to both the private and public
sectors. The COO is responsible for preparing the Group businesses’ budgets with the
help of the Regional Directors. The Group CEO is responsible for the resources, invest-
ments and profitability of the Group’s businesses. Pihlajalinna’s cash-generating unit
corresponds to the reporting segment, i.e. the Group.
The recoverable amount is determined by value-in-use calculations. Cash flow-based
value-in-use is determined by calculating the discounted present value of expected cash
flows. The discount rate used in the calculations is determined using the weighted aver-
age cost of capital (WACC), which describes the total cost of equity and liabilities, taking
into account the time value of money and the specific risks associated with Pihlajalinna’s
business. The discount rate is a pre-tax rate. The risk-free interest rate, risk multiplier
(beta) and risk premium parameters used in determining the discount rate are based
on information obtained from the market. Cash flow estimates have been validated by
comparing them to Pihlajalinna’s market capitalisation.
Potential impairment loss on goodwill is recognised immediately in the income state-
ment. Previously recognised impairment losses on goodwill are not reversed.
2021 2020
Discount rate (pre tax WACC) 7,68 % 7,59 %
Discount rate (after tax WACC) 6,36 % 6,39 %
Terminal growth rate after the forecast period (5 years) 1,30 % 2,00 %
The terminal period’s share of the amount of expected cash flows: 73 % 75 %
The Group carried out its annual impairment testing of goodwill based on the situation
on 30 November 2021 (30 November 2020). The result of the testing was that no im-
pairment losses were recognised for the Group’s cash-generating unit, i.e. the Group as
a whole, for the financial year that ended on 31 December 2021. The Group’s recoverable
amount exceeded the carrying amount.
EUR 1,000 2021 2020
Tested goodwill in total, Group 188 909 173 607
Goodwill as per the statement of financial position at the end of
the financial year
188 909 173 607
Sensitivity analyses in impairment testing
Based on the testing calculations, there is no need to recognise impairment. The CGU’s
recoverable amount exceeded the carrying amount.
The table below shows the required change in assumptions that would lead to the
recoverable amount falling below the carrying amount.
2021 2020
Decline in EBIT margin more than 2 percentage points more than 2 percentage points
Decline in volume more than 21 percentage points more than 19 percentage points
Increase in discount rate more than 4 percentage points more than 4 percentage points
Key accounting estimates and decisions based on
management judgement
The cash flow forecasts used in calculating value-in-use in impairment testing are based
on the budget for 2022 approved by the Board of Directors. The budgeted growth of
revenue and cash flow in 2022 is based on a market growth assumption of 4% based on
economic forecasts for the Finnish economy and the management’s business targets,
taking into account the declining trend in services related to COVID-19. Cash flows for
the forecast period 2023–2026 are estimated in impairment testing using a moderate
market growth assumption of 2%. The terminal growth rate applied after the forecast
period is 1.3%, which corresponds to the long-term inflation forecast for the Finnish
economy. The acquisition of Pohjola Hospital Ltd was not taken into account in impair-
ment testing on the financial statements date. The date of the acquisition’s completion, 1
February 2022, was only confirmed after the end of the financial year.
The assumptions of the development of prices and costs used in the cash flow esti-
mates are based on the management’s estimates of the development of demand and the
markets, which are compared with external information sources. The productivity and ef-
ficiency assumptions used in the calculations are based on internal targets, with previous
actual development taken into account in their estimation.
73
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
14. Right-of-use assets
Accounting policies
Most of the Pihlajalinna rental arrangements in line with
the IFRS 16 are leases for business premises. The other
lease arrangements in line with the standard concern land
areas, machinery and equipment (exercise equipment,
clinical equipment, cars and other equipment). Pihlaja-
linna applies the IFRS 16 exemption that allows lessees
to elect not to recognise a right-of-use asset and corre-
sponding lease liability for assets with a lease term of 12
months or less as well as assets of low value. Assets of
low value include, for example, IT equipment and oce
furniture. Furthermore, to make the accounting of leases
easier, Pihlajalinna elects not to separate service compo-
nents from leases, instead treating the entire agreement
as a lease in its consolidated financial statements. For
lease arrangements valid until further notice, with a short
notice period, Pihlajalinna will estimate the probable lease
term.
Right-of-use assets are measured at cost, which in-
cludes the following items:
• original amount of the lease liability
• direct expenses of the initial phase and
• expenses due to restoring to original condition
Right-of-use assets are presented under property, plant
and equipment and lease liabilities are presented under
financial liabilities. The right-of-use asset is initially mea-
sured at cost and depreciated over the economic life of
the asset. The right-of-use asset is also subject to IAS 36
Impairment of Assets. The lease liability is initially mea-
sured at the present value of future lease payments. In
later periods, the lease liability is measured using the ef-
fective interest rate method, according to which the lease
liability is measured at amortised cost and the interest
expense is amortised over the lease term. The standard
allows the lessee to also include non-lease elements of an
agreement (typically services) in the lease liability.
EUR 1,000 Right-of-use plots
Right-of-use buildings
and business premises
Right-of-use
equipment Total
Cost at 1 January 2021 756 176 820 5 350 182 926
Additions 84 8 917 805 9 807
Business combinations 2 802 2 802
Transfers between items -670 -77 -747
Disposals -1 972 -491 -2 463
Cost at 31 December 2021 840 185 897 5 587 192 325
Accumulated depreciation at 1January 2021 -393 -75 838 -3 863 -80 094
Depreciation and amortisation -91 -17 885 -863 -18 840
Transfers between items 670 77 747
Disposals 1 112 336 1 448
Accumulated depreciation at 31December 2021 -484 -91 941 -4 314 -96 738
Carrying amount at 1 January 2021 363 100 981 1 487 102 832
Carrying amount at 31 December 2021 357 93 956 1 273 95 586
EUR 1,000 Right-of-use plots
Right-of-use buildings
and business premises
Right-of-use
equipment Total
Cost at 1 January 2020 561 166 200 5 903 172 664
Additions 239 13 558 792 14 589
Disposals -44 -2 938 -1 345 -4 328
Cost at 31 December 2020 756 176 820 5 350 182 926
Accumulated depreciation at 1January 2020 -287 -60 562 -3 706 -64 555
Depreciation and amortisation -120 -17 604 -1 202 -18 927
Disposals 15 2 328 1 045 3 388
Accumulated depreciation at 31December 2020 -393 -75 838 -3 863 -80 094
Carrying amount at 1 January 2020 274 105 638 2 197 108 109
Carrying amount at 31 December 2020 363 100 981 1 487 102 832
Short-term leases recognised in the income statement, totalling EUR 115 (91) thousand, and minor leases recognised in
the income statement, totalling EUR 734 (723) thousand, are practical exemptions provided by IFRS 16 applied by the
Group.
Lease liabilities relating to right-of-use items are specified in Note 22 Financial liabilities.
74
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
15. Other non-current receivables
Accounting policies
Right-of-use assets that have been transferred to a lessee under a sublease and classi-
fied as financial leases have been derecognised from fixed assets and presented on the
balance sheet as net investments in a sublease.
EUR 1,000 2021 2020
Lease deposits paid 535 545
Non-current subleases 4 586 4 868
Other receivables 90 90
Total 5 211 5 503
Pihlajalinna subleased two care homes that it sold and leased back in May 2020.
The table below presents the contractual maturity analysis of subleases. The figures are
undiscounted and they include both future interest payments and repayments of the net
investment.
Maturity distribution of sublease receivables
less than
1 year 1–2 years 2–3 years 3–4 years
over 4
years
Carrying amount at 31 Dec. 2021 5 187 601 502 431 341 3 313
16. Trade and other receivables
Accounting policies
At the end of each reporting period, the Group assesses whether or not there is objec-
tive evidence of impairment regarding any individual financial asset. Objective evidence
of impairment of loans and other receivables includes significant financial distress of the
debtor and payments being delinquent or substantially delayed. Impairment of loans
is recognised in financial expenses in the income statement and impairment of other
receivables is recognised in other operating expenses for the period in which the impair-
ment was identified.
The expected credit loss model is based on the amount of historical credit losses. The
lifetime expected credit losses are calculated by multiplying the gross carrying amount
of unpaid trade receivables by the expected loss.
Key accounting estimates and decisions based on management judgement
Determining the annual profitability of the Group’s fixed-term complete social and
healthcare services outsourcing agreements may become accurate with a delay. The
Group may not always be aware of the actual costs of the agreements at the time of
preparing the financial statements, and the agreements may involve variable elements of
compensation. The cost accumulation of public specialised care involves random fluctua-
tion. In addition, individual cases falling within the scope of the hospital districts’ pooling
system for high-cost care may influence the cost liability of specialised care consider-
ably during the financial year, and between financial periods, in Pihlajalinna’s municipal
companies.
The fixed-term service agreements for all of the Group’s complete outsourcing
arrangements are highly similar with regard to their principles and basic terms. Pihlaja-
linna has calculated and recognised the variable compensation components and cost
compensation under the agreements using the same criteria and model for all clients.
Demands for the compensation of cost increases due to changes in services correspond-
ing to the actual costs and investment costs that serve operations after the end of the
term of the contract being the client’s responsibility constitute the majority of costs and
variable compensation components that are specified with a delay. For 2021, the assess-
ment of investment costs and COVID-19 related costs included in invoicing by hospital
districts can only be carried out after the hospital districts have published their financial
statements.
Pihlajalinna has recognised only part of these legally justified claims in its income
statement. The parties to the agreements are bound by an obligation to negotiate and
negotiation is the primary procedure. If the obligation to negotiate does not lead to
payment, the receivables are sought through legal action, which may further delay the
collection of items presented in current receivables in the financial statements.
EUR 1,000 2021 2020
Trade receivables 79 701 59 071
Prepayments and accrued income 11 362 15 734
Current subleases 601 518
Other receivables 479 448
Total 92 143 75 771
The carrying amount of trade receivables and other receivables corresponds to the max-
imum credit risk involved at the end of the reporting period.
Due to the COVID-19 epidemic, Pihlajalinna has reviewed the credit risk of receivables
and the procedures used to estimate the credit risk. No significant changes have been
observed in customers’ payment behaviour. The collection of trade receivables has been
enhanced. The amount of receivables more than 90 days past due is significantly in-
creased by withheld payments concerning trade receivables and trade payables between
75
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Jämsän Terveys and Mäntänvuoren Terveys and the cities of Jämsä and Mänttä-Vilppula.
As described under ‘Risks and uncertainties in business operations’, if the negotiation
obligation does not lead to payment, the receivables will be collected through legal
action. This may further delay the collection of items presented in current receivables in
the financial statements.
The Group recognised EUR 547 thousand (EUR 316 thousand) in impairment losses on
trade receivables during the financial year.
Age distribution of trade receivables
EUR 1,000 2021
Impairment
losses
Share of expected
impairment losses Net 2021
Past due 25 897 -8 0,0 % 25 889
Less than 30 days 4 152 -12 0,3 % 4 140
30–60 days 2 333 -67 2,9 % 2 266
61–90 days 1 965 -133 6,8 % 1 832
More than 90 days 46 053 -479 1,0 % 45 574
Total 80 399 -698 79 701
2020
Impairment
losses
Share of expected
impairment losses Net 2020
Past due 23 646 -8 0,0 % 23 638
Less than 30 days 3 783 -12 0,3 % 3 771
30–60 days 1 853 -66 3,6 % 1 787
61–90 days 2 216 -131 5,9 % 2 085
More than 90 days 28 263 -473 1,7 % 27 790
Total 59 760 -689 59 071
Key accounting estimates and the use of management judgement are discussed in Note
1 Revenue from contracts with customers.
The management of credit risks related to trade receivables is discussed in more detail
in Note 25 Financial risk management.
EUR 1,000 2021 2020
Credit loss provision at 1 January 689 674
Credit losses recorded -547 -316
Change in credit loss provision 556 330
Credit loss provision at 31 December 698 689
Material items included in prepayments and accrued income
EUR 1,000 2021 2020
Sales and income accruals 4 361 4 006
Personnel expenses 1 876 1 575
Expenses paid in advance 4 115 6 782
Other 1 009 3 371
11 362 15 734
The carrying amounts of the receivables correspond substantially to their fair values.
17. Provisions
Accounting policies
A provision is recognised when the Group has a legal or constructive obligation resulting
from a past event, when it is probable that the payment obligation will materialise and
when the amount of the obligation can be reliably estimated. The amount recognised as
a provision equals the best estimate of the costs required to fulfil the present obligation
on the date of the financial statements.
A restructuring provision is recognised when the Group has in place a detailed plan for
such restructuring and its implementation has commenced or the interested parties have
been informed of the main points of such a plan.
The Group recognises a provision for onerous contracts when the expected benefits
to be derived from a contract are less than the unavoidable expenses of meeting the
obligations under the contract.
EUR 1,000 2021 2020
Current provisions 71 648
Non-current provisions 134 114
Total 205 762
76
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
EUR 1,000
Onerous
contracts
Restructuring
provision
Total
1.1.2020 1 359 448 1 807
Increases in provisions 100 0 100
Provisions used -597 -448 -1 045
Reversals of unused provisions -100 -100
31.12.2020 762 0 762
Increases in provisions 20 300 320
Provisions used -645 -232 -877
Reversals of unused provisions 0
31.12.2021 137 68 205
18. Trade and other payables
EUR 1,000
2021 2020
Trade payables 52 571 45 262
Accrued liabilities 65 915 57 572
Pre-payments 938 1 158
Other liabilities 5 683 5 359
Total 125 107 109 352
Material items included under Accrued liabilities:
Wages and salaries and social security payments 42 425 32 675
Doctor’s fee liability 8 261 7 269
Allocation of sales 18 82
Allocation of purchase invoices 11 057 15 943
Financial items 65 191
Other accrued liabilities 4 087 1 412
65 915 57 572
The amount of trade payables is increased by withheld payments concerning trade
receivables and trade payables between Jämsän Terveys and the City of Jämsä and
Mäntänvuoren Terveys and the City of Mänttä-Vilppula, which are discussed in Note 16.
19. Deferred tax assets and liabilities
Accounting policies
Deferred taxes are calculated on temporary dierences between the carrying amount
and the tax base. However, a deferred tax liability shall not be recognised on the initial
recognition of goodwill, or on the initial recognition of an asset or liability in a trans-
action which is a business combination and, at the time of transaction, aects neither
accounting profit nor taxable profit.
In the Group, the most significant temporary dierences result from depreciation and
amortisation of property, plant and equipment and intangible assets, fair value-based
adjustments made in connection with business combinations, and unused tax losses.
Deferred taxes are calculated by applying tax rates enacted or substantively enacted
by the end of the reporting period.
A deferred tax asset is only recognised to the extent that it is probable that taxable
profit will be available against which the temporary dierence can be utilised. However, a
deferred tax asset is not recognised if it arises from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time of the trans-
action, aects neither accounting profit nor taxable profit. Whether or not deferred tax
assets can be recognised in this respect is always estimated at the end of each reporting
period.
The Group shall oset deferred tax assets and liabilities where these relate to the same
taxation authority and the same taxable entity.
77
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Changes in deferred taxes during 2021:
Deferred tax assets (EUR 1,000) 1 January 2021
Recognised in profit
and loss
Subsidiaries
acquired 31.12.2021
Tax losses carried forward confirmed by tax authorities 2 438 108 2 546
Sales proceeds from sale and leaseback arrangements 253 -30 223
Provisions 590 -297 293
Share-based incentive scheme 122 -62 60
IAS 37, contingent assets 527 223 749
Eect of IFRS 16 715 58 774
Entries related to the IFRIC Agenda Decision concerning cloud computing arrangements 200 55 255
Other items 710 -209 83 584
Deferred tax assets on the statement of financial position 5 555 -154 83 5 484
Deferred tax liabilities
Property, plant and equipment and intangible assets 4 498 304 4 803
Recognition of property, plant and equipment and intangible assets at fair value in business combinations 884 -597 435 722
Eect of IFRS 16 337 -1 336
Other items 42 -19 22
Deferred tax liabilities on the statement of financial position 5 761 -312 435 5 884
Changes in deferred taxes during 2020:
Deferred tax assets (EUR 1,000) Restated 1.1.2020*
Recognised in profit
and loss
Subsidiaries
acquired
Restated
31.12.2020*
Tax losses carried forward confirmed by tax authorities 2 017 421 2 438
Liability to holders of Series B shares 1 557 -1 557 0
Sales proceeds from sale and leaseback arrangements 283 -30 253
Provisions 942 -352 590
Share-based incentive scheme 53 69 122
IAS 37, contingent assets 369 157 527
Eect of IFRS 16 452 263 715
Entries related to the IFRIC Agenda Decision concerning cloud computing arrangements 200 0 200
Other items 333 376 710
Deferred tax assets on the statement of financial position 6 206 -651 0 5 555
Deferred tax liabilities
Property, plant and equipment and intangible assets 3 969 529 4 498
Recognition of property, plant and equipment and intangible assets at fair value in business combinations 1 503 -619 884
Eect of IFRS 16 192 145 337
Other items 61 -19 42
Deferred tax liabilities on the statement of financial position 5 726 35 0 5 761
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations Committee’s Agenda Decision published in
April 2021 regarding the recognition of configuration or customisation costs in a cloud computing arrangement (Software as a Service, SaaS).
78
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
The recognition of deferred tax assets on the statement of financial position is justified
when the Group is likely to accrue taxable income against which the losses in question
can be used before they expire.
The Group will primarily apply for the right to deduct all confirmed losses of its ac-
quired subsidiaries. The Tax Authority has granted the right to deduct confirmed losses
in spite of changes in ownership.
20. Financial assets and liabilities by measurement category
Accounting policies
When a financial asset or liability is recognised on the transaction date, the Group mea-
sures it at its acquisition cost, which is equal to the fair value of the consideration given
or received.
Financial assets
For the purpose of measurement after initial recognition, the Group’s financial assets are
classified as financial assets measured at amortised cost and financial assets measured
at fair value through profit or loss. The Group has no financial instruments classified
as derivatives nor financial assets measured at fair value through other comprehensive
income. Financial assets are derecognised when the Group has lost its contractual right
for the financial assets in question or has transferred substantially all risks and rewards
outside the Group.
The Group’s trade receivables, loan receivables, lease deposits and cash and cash
equivalents have been classified as financial assets measured at amortised cost using the
eective interest method, taking any impairment into account.
Financial assets measured at fair value through profit or loss consist of quoted and
unquoted shares. The Group has no holdings of shares quoted in public markets.
Cash and cash equivalents
Cash and cash equivalents consist of cash at hand and demand deposits. The account
with credit limit in use is included in current financial liabilities.
Financial liabilities
The Group classifies loans from financial institutions, accounts with credit limits, lease
liabilities, trade payables and other liabilities as financial liabilities measured at amortised
cost using the eective interest method. Transaction costs are included in the initial car-
rying amount. Arrangement fees for loan commitments are treated as transaction costs.
The Group classifies contingent considerations arising from M&A transactions as finan-
cial liabilities measured at fair value through profit or loss. No interest is paid on liabilities
arising from contingent considerations. Any contingent consideration is measured at fair
value at the date of acquisition and classified as a liability. A contingent consideration
classified as a liability is measured at fair value at the end of each reporting period, and
any resulting gain or loss is recognised in profit or loss after the end of the measurement
period. The Group has no financial instruments classified as derivatives.
Financial liabilities are classified as current liabilities, unless the Group has an uncondi-
tional right to postpone their repayment to a date that is at least 12 months subsequent
to the end of the reporting period.
Available tax losses Tax values recorded Tax values not recorded
Tax losses 2021 2020 2021 2020 2021 2020
Maturing within five years 1 944 3 681 736
Maturing later than within five years 21 916 18 752 2 547 2 438 2 225 1 312
Total 23 860 22 432 2 547 2 438 2 225 2 048
Taxes calculated on the basis of the Finnish tax rate (20%) 4 772 4 486
79
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Fair value assessment
Financial assets and liabilities recognised at fair value on the consolidated statement of
financial position are classified according to their valuation-based hierarchy levels and
measurement methods as follows:
Fair value hierarchy levels
Level 1: Fair values are based on quoted prices in active markets for identical assets and
liabilities. The Group has no financial assets or liabilities measured according to level 1 of
the hierarchy.
Level 2: The fair value is determined using valuation methods. The financial assets and
liabilities are not subject to trading in active and liquid markets. The fair values can be
determined based on quoted market prices and deduced valuation. The carrying amount
of the trade receivables and financial assets essentially corresponds to their fair value,
as the eect of discounting is not significant taking the maturity of the receivables into
consideration. The fair values of lease liabilities are based on discounted cash flows. The
fair values of loans essentially correspond to their carrying amount since they have a
floating interest rate and the Group’s risk premium has not materially changed.
The carrying amount of other financial liabilities essentially corresponds to their fair
value, as the eect of discounting is not significant taking the maturity of the receivables
into consideration.
Level 3: The fair value is not based on verifiable market information, and information on
other circumstances aecting the value of the financial asset or liability is not available
or verifiable.
The Group’s other shares and participations consist solely of shares in unlisted compa-
nies.
EUR 1,000
31.12.2021 Note
Fair
value
hierarchy
Fair value
through
profit or
loss
Amortised
cost
Total
carrying
amounts
Fair
values
total
Impairment of financial assets
Non-current financial assets
Other shares and participations level 3 1 476 1 476 1 476
Lease deposits 15 level 2 535 535 535
Other receivables 15 level 2 90 90 90
Current financial assets
Trade receivables 16 79 701 79 701 79 701
Other receivables 16 level 2 479 479 479
Cash and cash equivalents 4 257 4 257 4 257
Total 1 476 85 062 86 538 86 538
Carrying amounts of financial liabilities
Non-current financial liabilities
Loans from financial institutions 22 level 2 90 838 90 838 90 838
Lease liabilities 22 level 2 87 857 87 857 87 857
Other liabilities 22 level 2 607 607 607
Current financial liabilities
Loans from financial institutions 22 level 2 1 283 1 283 1 283
Cheque account with credit limit 22 0 0 0
Lease liabilities 22 level 2 18 392 18 392 18 392
Trade and other payables 18 52 571 52 571 52 571
Total 251 548 251 548 251 548
EUR 1,000
31.12.2020 Note
Fair
value
hierarchy
Fair value
through
profit or
loss
Amortised
cost
Total
carrying
amounts
Fair
values
total
Impairment of financial assets
Non-current financial assets
Other shares and participations level 3 126 126 126
Lease deposits 15 level 2 545 545 545
Other receivables 15 level 2 90 90 90
Current financial assets
Trade receivables 16 59 071 59 071 59 071
Other receivables 16 level 2 448 448 448
Cash and cash equivalents 13 306 13 306 13 306
Total 126 73 460 73 586 73 586
Carrying amounts of financial liabilities
Non-current financial liabilities
Loans from financial institutions 22 level 2 91 879 91 879 91 879
Lease liabilities 22 level 2 95 475 95 475 95 475
Other liabilities 22 level 2 644 644 644
Current financial liabilities
Loans from financial institutions 22 level 2 1 415 1 415 1 415
Cheque account with credit limit 22 0 0 0
Lease liabilities 22 level 2 18 705 18 705 18 705
Trade and other payables 18 45 262 45 262 45 262
Total 253 379 253 379 253 379
80
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
21. Notes on equity
Accounting policies
The Group classifies all instruments it issues either as an equity instrument or a financial
liability, depending on their nature. Equity instruments are any contracts evidencing a
residual interest in the assets of the company after deducting all of its liabilities. Costs
relating to the issue or purchase of equity instruments are presented as a deduction
from equity.
Reconciliation of the number of shares
EUR 1,000
Number of
shares
Share
capital
Reserve for invested
unrestricted equity Total
Shares, total, 1 January 2020 22 620 135 80 116 520 116 600
Treasury shares held by the parent
company on 31 December 2020
2 294
Outstanding shares on 31 December 2020 22 617 841 80 116 520 116 600
Shares, total, 1 January 2021 22 620 135 80 116 520 116 600
Treasury shares held by the parent
company on 31 December 2021
25 900
Outstanding shares on 31 December 2021 22 594 235 80 116 520 116 600
Pihlajalinna has one share series, with each share entitling its holder to one vote at a
General Meeting of shareholders. The company’s shares have no nominal value. All shares
bestow their holders with equal rights to dividends and other distribution of the compa-
ny’s assets. The shares belong to the book-entry system.
Reserve for invested unrestricted equity
The reserve for invested unrestricted equity contains other equity-like investments and
the share subscription price to the extent that this is not entered in share capital under a
specific decision.
Distributable funds
The parent company’s total distributable funds amount to EUR 222,747,364.13, of which
the profit for the financial year accounts for EUR 13,893,203.86.
Dividends
The Board of Directors proposes that a dividend of EUR 0.30 per share be paid for the
financial year that ended on 31 December 2021.
22. Financial liabilities
EUR 1,000 2021 2020
Non-current interest-bearing liabilities
Bank loans 90 838 91 879
Other liabilities 607 644
Lease liabilities 87 857 95 475
179 302
187 997
Current interest-bearing liabilities
Bank loans 1 283 1 415
Cheque accounts with credit limit 0 0
Lease liabilities 18 392 18 705
19 675 20 119
Interest-bearing financial liabilities total 198 977 208 117
At the end of the financial year, the Group had EUR 45.0 (40.0) million of unused
committed short-term credit limits. In addition, EUR 45.0 (60.0) million of an additional
credit limit, which is subject to a separate credit decision, was unused on the financial
statements date.
Drawdowns from the Group’s revolving credit facility are actually long-term by nature,
although their maturity is 1, 3 or 6 months.
Lease liabilities
EUR 1,000 2021 2020
Non-current lease liabilities
Right-of-use plots 305 286
Right-of-use business premises and buildings 86 963 94 605
Right-of-use equipment 588 583
87 857 95 475
Current lease liabilities
Right-of-use plots 63 88
Right-of-use business premises and buildings 17 715 17 723
Right-of-use equipment 614 894
18 392 18 705
81
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
23. Changes in interest-bearing liabilities with no impact on
cash flow
EUR 1,000 2020 Cash flow
Acquired
business
operations
New instal-
ments and
lease liabilities
Eective
interest
rate 2021
Non-current interest-
bearing liabilities 92 523 -1 323 149 96 91 445
Current interest-bearing
liabilities 1 415 -261 130 1 283
Lease liabilities 114 179 -19 822 2 801 9 090 106 248
Total liabilities from
financing
208 117
-21 406 2 801 9 369 96 198 976
24. Capital management
The goal of the Group’s capital management is to ensure that the normal requirements
of business operations are met, enable investments in line with the Group’s strategy and
increase long-term shareholder value. The Group influences its capital structure mainly
through the distribution of dividend and share issues.
The key indicators concerning capital management are the equity ratio, the ratio of net
debt to adjusted EBITDA and gearing.
EUR 1,000 Note 2021 2020 Restated*
Equity 122 611 114 190
Total statement of financial position – prepayments received 456 127 440 179
Equity ratio 1) 26,9 % 25,9 %
Interest-bearing financial liabilities 22 198 977 208 117
Cash and cash equivalents -4 257 -13 306
Interest-bearing net debt 194 720 194 810
Gearing 2) 158,8 % 170,6 %
EBITDA 62 638 52 164
Adjustment items** 2 698 2 609
Adjusted EBITDA 65 336 54 773
Net debt/adjusted EBITDA 3,0 3,6
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from
1 January 2020, the IFRS Interpretations Committee’s Agenda Decision published in April 2021
regarding the recognition of configuration or customisation costs in a cloud computing arrangement
(Software as a Service, SaaS).
** Significant transactions that are not part of the normal course of business, are related to business
acquisition costs (IFRS 3), are infrequently occurring events or valuation items that do not aect cash
flow are treated as adjustment items aecting comparability between review periods. According to
Pihlajalinna’s definition, such items include, for example, restructuring measures, impairment of assets
and the remeasurement of previous assets held by subsidiaries, the costs of closing down business-
es and business locations, gains and losses on the sale of businesses, costs arising from operational
restructuring and the integration of acquired businesses, costs related to the termination of employ-
ment relationships, as well as fines and corresponding compensation payments. Pihlajalinna also pres-
ents costs according to the IFRS Interpretations Committee’s new Agenda Decision concerning cloud
computing arrangements as adjustment items. Adjusted operating profit before the amortisation and
impairment of intangible assets (EBITA) is presented as a new alternative performance measure.
During the financial year, the Group acquired 60,000 of its own shares based on an
authorisation granted by the Annual General Meeting on 15 April 2020. The shares were
acquired in public trading on Nasdaq Helsinki Ltd at the market price prevailing at the
time of purchase. The shares were used as part of the Group’s incentive scheme. On the
financial statements date, the Group held 25,900 treasury shares.
1) The formula for calculating the equity ratio is 100 x Equity / (Total statement of finan-
cial position – prepayments received)
2) The formula for calculating gearing is 100 x Interest-bearing net debt / Equity
25. Financial risk management
The Group’s main financial risks consist of credit and counterparty risk as well as inter-
est rate and liquidity risks. The Group operates in Finland and is therefore not exposed to
material foreign exchange risks in its operations. The Group’s general risk management
policies are approved by the Board of Directors. The Group’s Chief Financial Ocer,
together with the operative management, is responsible for identifying financial risks
and for practical risk management. The goal of the Group’s risk management is to ensure
sucient liquidity, minimise financing costs and regularly inform the management about
the Group’s financial position and risks.
Group’s financial administration actively monitors compliance with the financial cove-
nants and assesses financial leeway in relation to the covenant maximums as part of the
Group’s business planning.
Interest rate risk
The Group is exposed to interest rate risk through its external financing arrangement. In
accordance with the Group’s risk management principles, the Board of Directors decides
on the need for, and extent of, interest rate hedging for the Group’s loan portfolio. The
Group had no interest rate hedging arrangements in place on the financial statements
date. However, due to inflation and the upward pressure on interest rates, the Board of
Directors is considering hedging against interest rate risk.
On the financial statements date, 54% (56%) of the interest-bearing liabilities were
subject to fixed interest rates. During the financial year, the average annual interest rate
82
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
on the Group’s interest-bearing liabilities was approximately 1.68% (1.87%). The duration,
i.e. the fixed interest rate period, of the financing portfolio was 3.2 (3.6) years.
The table below presents the Group’s interest rate position at the end of the reporting
period.
EUR 1,000 2021 2020
Fixed rate financial liabilities 107 567 115 790
Variable rate financial liabilities 91 521 92 535
Total variable rate position 91 521 92 535
The table below presents the eects on consolidated profit before tax should market
interest rates rise or fall, all other things being equal. The sensitivity analysis is based on
the interest rate position at the closing date of the reporting period.
2021 2021 2020 2020
Change
0.5 percentage
points higher
0.5 percentage
points lower
0.5 percentage
units higher
0.5 percentage
units lower
Eect on profit before tax -458 0 -463 0
Since the Group has no material interest-bearing assets, its income and operating cash
flows are not materially exposed to changes in market interest rates.
Liquidity risk
The Group monitors the amount of financing required by business operations by analys-
ing cash flow forecasts in order to make sure the Group has a sucient amount of liquid
assets for financing operations and repaying maturing loans.
The Group aims to ensure the availability and flexibility of financing with adequate
credit limits, a balanced maturity profile and suciently long maturities for borrowings,
as well as by obtaining financing through several financial instruments.
Pihlajalinna has a five-year EUR 120 million unsecured financing arrangement with
Danske Bank and Nordea. The agreement is valid until 9 March 2023. Pihlajalinna has
started refinancing negotiations that are intended to be completed before the end
of March 2022. The current arrangement comprises a EUR 50 million revolving credit
facility and a long-term bullet loan of EUR 70 million. It also includes an opportunity to
increase the total amount by EUR 60 million (to EUR 180 million), subject to separate
decisions on a supplementary loan from the funding providers.
On the financial statements date, the Group’s cash and cash equivalents amounted
to EUR 4.3 (13.3) million, in addition to which the Group had EUR 45.0 (40,0) million in
unused committed credit limits available.
In addition, EUR 45.0 million of an additional credit limit, which is subject to a separate
credit decision, was unused on the financial statements date.
The Group’s equity ratio at the end of the financial year was 26.9 (25.9) per cent.
The Group has good financial standing and its business operations are profitable, and
therefore the company has not identified any significant risks related to the availability
of additional financing.
Financial liabilities repayment schedule
The table below presents the contractual maturity of financial liabilities. The figures are
undiscounted and they include both future interest payments and repayments of princi-
pal.
EUR 1,000
Carrying
amount at 31
Dec. 2021
less than
1 year 1–2 years 2–3 years
3–4
years
over 4
years
Loans from financial institutions 92 121 -2 958 -90 984 -265 0 0
Lease liabilities 106 248 -19 934 -16 175 -14 029 -11 942 -51 236
Other interest-bearing liabilities 607 -20 -57 -57 -57 -738
Trade payables 52 571 -52 571
Total 251 548 -75 483 -107 216 -14 351 -11 999 -51 974
EUR 1,000
Carrying
amount at 31
Dec. 2020
less than
1 year 1–2 years 2–3 years
3–4
years
over 4
years
Loans from financial institutions 93 293 -3 526 -3 337 -90 960 -249 0
Lease liabilities 114 179 -20 387 -17 314 -13 626 -12 181 -59 060
Other interest-bearing liabilities 644 -20 -57 -57 -57 -794
Trade payables 45 262 -45 262
Total 253 379 -69 196 -20 708 -104 642 -12 486 -59 854
Loan covenants
The Group’s key loan covenants are reported to the financiers on a quarterly basis. If the
Group breaches the loan covenant terms, the creditors may accelerate the repayment of
the loans. The management monitors the fulfilment of loan covenant terms and reports
on them to the Board of Directors on a regular basis.
The financing arrangement includes the customary financial covenants concerning
leverage (ratio of net debt to pro forma EBITDA) and gearing. The calculation of cove-
nants will continue with the creditor banks in accordance with the accounting principles
confirmed in the original financing arrangement (frozen GAAP, i.e. excluding the IFRS 16
impact). The Group met the set covenants on 31 December 2021.
Due to the changes in the operating environment caused by the COVID-19 epidemic,
Pihlajalinna and the creditor banks agreed on a temporary adjustment to the covenants
of the financing arrangement at the end of March 2020. The temporary covenants for
the first and second quarter of the year were as follows: leverage must not exceed 4.25
and gearing must not exceed 140 per cent. The covenants of the financing arrangement
– leverage of 3.75 and gearing of 115 per cent – took eect again when the covenants
were reviewed in the third quarter of 2020.
In connection with this, a permanent new margin ceiling was added to the financing
83
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
arrangement. The margin ceiling will enter into eect if leverage exceeds 3.50. On 31
December 2021, leverage in accordance with the financing arrangement stood at 2.30
(2.78) and gearing was 91% (94%).
Pihlajalinna and the creditor banks agreed on the acquisition of Pohjola Hospital Ltd
and the financing of the transaction in a timely manner, before the turn of the year in
addition to a temporary raise in gearing-covenant level to 140 per cent in the first half
of the year 2022. The transaction was financed by means of the additional credit limit in
February 2022.
At the end of the reporting period, 31 December 2021, the loan amount to which the
covenants apply was EUR 90.0 (90.0) million.
Credit risk
The Group’s credit risk mostly consists of credit risks involved in customer receivables
related to business operations. The Group’s largest customers are municipalities, joint
municipal authorities or large and solvent listed companies. The Group’s key credit risks
are presented in Note 16 Trade and other receivables.
The payment information of corporate and private customers is checked at every
appointment. For the collection of payments, the Group uses an external collections
agency. The Group oers private customers financing via SveaRahoitus. This arrange-
ment includes a check of the customer’s creditworthiness.
The age distribution of trade receivables is presented in Note 16 Trade receivables
and other receivables. The amount of credit losses recorded in profit or loss during the
financial year was not significant. The maximum amount of the Group’s credit risk equals
to the carrying amount of financial assets at the end of the financial year (see Note 20
Financial assets and liabilities by measurement category).
Currency risk
The Group operates mainly in Finland and is not therefore exposed to material foreign
exchange risks in its operations. The Group’s annual procurements in foreign currencies
are insignificant.
26. Acquired business operations
Acquisitions during the financial year 2021
EUR 1,000
Acquired entity
Month of
acquisition Industry Domicile
Työterveys Virta Oy 4/2021 Occupational health
services
Oulu
The business operations of Finla Työter-
veys Oy’s Mänttä-Vilppula unit.
11/2021 Occupational health
services
Mänttä-Vilppula
Accounting policies
With respect to significant business combinations, the Group has relied on an external
advisor on the estimates of the fair value of property, plant and equipment and intangi-
ble assets. With property, plant and equipment, comparisons are made with the market
prices of corresponding assets, and it is estimated how much the value of the acquired
assets has decreased due to age, wear and tear and other such factors. With intangible
assets, fair value measurement is based on estimated cash flows related to the assets.
Since the acquisitions are not material individually, the following information has been
consolidated:
EUR 1,000 2021
Consideration
Cash, basic transaction price 17 941
Total cost of the combination 17 941
On the date of acquisition, the values of assets acquired and liabilities assumed were as
follows:
EUR 1,000 Note 2021
Property, plant and equipment 12 30
Intangible assets 13 2 195
Right-of-use assets 14 2 801
Available-for-sale financial assets 1
Deferred tax assets 83
Trade and other receivables 1 552
Cash and cash equivalents 1 527
Total assets 8 188
Deferred tax liabilities 435
Restructuring provision 300
Lease liabilities 22 2 801
Other liabilities 2 012
Total liabilities 5 549
Acquired net assets 2 640
Goodwill generated in the acquisition:
EUR 1,000 Note 2021
Consideration transferred 17 941
Net identifiable assets of acquirees -2 640
Goodwill
13 15 301
Transaction price paid in cash 17 941
Cash and cash equivalents of acquiree -1 527
Eect on cash flow* 16 414
Customer contracts, non-compete agreements and patient databases were recognised
in the acquisition as intangible assets separate from goodwill. The fair value of intangible
84
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
assets has been determined on the basis of the
standardised price level in business combina-
tions and the discounted values of future cash
flows.
The remaining goodwill consists of expecta-
tions about returns, the skilled workforce of
the acquired companies and synergy benefits.
The acquisition-related expenses, a total of
EUR 366 thousand, have been recorded under
other operating expenses.
Had the acquired business operations
been consolidated since the beginning of the
financial year, the consolidated revenue for the
review period would have amounted to EUR
616.3 million and operating profit would have
totalled EUR 27.4 million.
Acquisition of non-controlling interests du-
ring the financial year 2021
In August 2021, Pihlajalinna increased its
holding in Kuusiolinna Terveys Oy, a joint ven-
ture with the municipalities of Alavus, Ähtäri,
Kuortane and Soini. The transaction was made
with the municipality of Kuortane. After the
transaction, the Group owns 97 per cent of the
company.
27. Subsidiaries and material
non-controlling interests
The Group’s structure
The Group had 28 (30) subsidiaries in 2021. Of
these subsidiaries, 14 (16) are wholly-owned
and 14 (14) are partially owned. A list of all of
the Group’s subsidiaries is presented in Note
30 Related party transactions. In 2021, the
Group had 2 (1) associated companies and 1 (1)
joint operation.
Breakdown of material non-controlling interests in the Group
EUR 1,000
Subsidiary
Main business
location
Non-controlling inte-
rests’ share of the votes
Non-controlling interests’
share of profit or loss
Non-controlling interests’
share of equity
2021 2020 2021 2020* 2021 2020
Jämsän Terveys Oy Jämsä 49 % 49 % -1 653 -289 -1 422 231
Pihlajalinna Erityisasumispalvelut Oy Hämeenlinna 30 % 30 % -72 10 -209 -137
Dextra Lapsettomuusklinikka Oy Helsinki 49 % 49 % 414 436 851 653
Pihlajalinna Liikuntakeskukset Group several 30 % 30 % -245 -604 1 854 2 099
Suomen Yksityiset Hammaslääkärit Group several 37 % 45 % -3 -23 393 477
-1 559 -469 1 467 3 322
Summary of financial information on subsidiaries with a material non-controlling interest
Jämsän Terveys Oy
Pihlajalinna Erityi-
sasumispalvelut Oy
Dextra Lapsetto-
muusklinikka Oy
Pihlajalinna Liikunta-
keskukset Group
Suomen Yksityiset
Hammaslääkärit
Group
EUR 1,000 2021 2020 2021 2020 2021 2020 2021 2020* 2021 2020
Current assets 42 550 30 919 544 415 1 715 1 166 1 326 1 272 270 700
Non-current assets 1 808 1 810 4 524 2 582 1 369 1 712 37 694 40 725 2 087 2 070
Current liabilities 46 686 31 517 1 672 1 026 695 797 15 392 14 510 1 193 1 504
Non-current liabilities 481 647 4 062 2 421 18 168 18 239 21 246 20 84
Revenue 75 022 73 997 4 302 3 650 5 980 5 425 12 579 11 797 4 392 4 478
Operating profit -3 576 -698 -214 82 1 149 1 149 -458 -1 921 12 -80
Profit/loss -3 374 -591 -238 35 897 889 -823 -2 028 -7 -51
Share of profit/loss attributable
to owners of the parent -1 721 -301 -167 24 483 453 -578 -1 425 -4 -28
Non-controlling interests’ share
of profit/loss -1 653 -289 -72 10 414 436 -245 -604 -3 -23
Net cash flow from operating
activities -3 911 -2 537 18 283 1 386 1 401 4 158 3 737 155 360
Net cash flow from investing
activities -137 -125 -2 164 -126 -600 -772 -1 512 -286 118 -176
Net cash flow from financing
activities -201 -209 2 146 -157 -793 -623 -2 620 -7 015 -255 -214
of which dividends paid to
non-controlling interests -215 -123 -89
* Pihlajalinna has changed its accounting policies and begun to retrospectively apply, eective from 1 January 2020, the IFRS Interpretations Com-
mittee’s Agenda Decision published in April 2021 regarding the recognition of configuration or customisation costs in a cloud computing arrange-
ment (Software as a Service, SaaS).
85
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
28. Interests in associates and joint arrangements
Accounting policies
Associates are companies over which the Group has significant influence. As a rule,
significant influence is established when the Group holds more than 20% of a company’s
voting power or otherwise has significant influence but no control.
A joint arrangement is an arrangement of which two or more parties have joint control.
Joint control involves contractually agreed sharing of control of an arrangement, which
exists only when decisions about relevant activities require the unanimous consent of
the parties sharing control. A joint arrangement is either a joint operation or a joint ven-
ture. A joint venture is an arrangement whereby the Group has rights to the net assets
of the arrangement, whereas in a joint operation the Group has rights to the assets, and
obligations for the liabilities, relating to the arrangement.
Associates and joint ventures are consolidated using the equity method. If the Group’s
share of the loss of an associate or a joint venture exceeds the carrying amount of the
investment, then the investment is carried at zero value, and the losses exceeding the
carrying amount are not consolidated, unless the Group is committed to fulfilling the
obligations of the associate or joint venture. An investment in an associate or a joint ven-
ture includes the goodwill generated through the acquisition. Unrealised profits between
the Group and an associate or a joint venture are eliminated in proportion to the Group’s
ownership interest. The Group’s pro rata share of an associate’s or a joint venture’s
profit for the financial year is included in operating profit.
EUR 1,000 2021 2020
Interests in associates Ullanlinnan Silmälääkärit Oy 20 17
Digital Health Solutions Oy 288
Interests in joint operations Koy Levinpihlaja 40 40
Total carrying amount 348 57
Interests in associates
Holding, %
Name
Main business
location Industry 2021 2020
Ullanlinnan Silmälääkärit Oy Helsinki Healthcare services 37 % 37 %
Digital Health Solutions Oy Sotkamo All legal business 18 %
The Group's pro rata share of an associate's or a joint venture's profit for the financial year is
presented separately in operating profit up to the carrying amount of the Group’s invest-
ment in their shares.
Interests in joint operations
The Group owns 31% in Kiinteistö Oy Levin Pihlaja, which is consolidated as a joint opera-
tion according to the pro rata share.
29. Contingent assets and liabilities and commitments
Collateral given on own behalf 2021 2020
Sureties 4 407 4 401
Properties’ VAT refund liability 59 85
Lease commitments for o-balance sheet leases 849 794
Lease deposits 535 545
Lawsuits and ocial proceedings
The City of Jämsä has taken legal action against Jämsän Terveys Oy regarding a matter
concerning the price adjustment provision in the service agreement. The dierence in
views regarding whether the fixed annual price for social and healthcare services can
decrease due to price adjustments amounted to approximately EUR 3.7 (2.6) million at
the end of the financial year. Jämsän Terveys filed an additional counterclaim against the
City of Jämsä. The additional counterclaim concerns the eect of changes in the services
under the service agreement on price and the service provider’s liability for financing
investments by the Pirkanmaa Hospital District insofar as such investments serve oper-
ations after the term of the service agreement. The service provider is entitled to price
adjustments corresponding to increases in costs and the contractual parties are under
an obligation to negotiate and try to reach an agreement. In its counterclaim, Jämsän
Terveys claims a total of approximately EUR 16 million from the City of Jämsä. The total
amount of variable compensation under the counterclaim that Jämsän Terveys has rec-
ognised as revenue and recorded in its receivables amounts to EUR 3.9 (3.8) million. The
District Court hearings were held in January 2022. The District Court has announced that
it will hand down its decision at the beginning of March.
The District Court of Kanta-Häme issued a decision on the dispute between Pihla-
jalinna and the municipality of Hattula on 11 June 2021. The District Court found that
Hattula did not have the right to terminate the agreement. Nevertheless, Pihlajalinna
was ordered to pay compensation totalling EUR 123,175, including interest, to Hattula as
contractual penalties and damages for breaches during the contract period. Pihlajalin-
na’s counterclaim was approved with regard to its basis but rejected with regard to its
amount. Each party was responsible for its legal costs.
On 31 August 2021, in arbitration proceedings brought against a subsidiary of Pihlaja-
linna Group regarding a breach of contract, an arbitration court found that the claimant
had suered damages of EUR 295,800 due to the unfounded termination of an agree-
ment. The court of arbitration ordered Pihlajalinna to pay compensation for damages
and the claimant’s legal expenses, totalling EUR 82,943, and, under joint and several
liability, pay for the costs of the arbitration proceedings, totalling EUR 98,694.
Pihlajalinna still has certain employment-related legal proceedings pending. These are
not expected to have a significant financial impact on the Group.
86
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Company Domicile Holding % of votes
Parent company Pihlajalinna Plc T ampere
Pihlajalinna Terveys Oy Parkano 100 % 100 %
Ikipihlaja Johanna Oy Jämsä 100 % 100 %
Jokilaakson Terveys Oy Jämsä 90 % 90 %
Pihlajalinna Lääkärikeskukset Oy Helsinki 100 % 100 %
Mäntänvuoren Terveys Oy Mänttä-Vilppula 91 % 91 %
Ikipihlaja Kuusama Oy Kokemäki 100 % 100 %
Ikipihlaja Sofianhovi Oy Mänttä-Vilppula 100 % 100 %
Wiisuri Oy Jyväskylä 100 % 100 %
Ikipihlaja Matinkartano Oy Lieto 100 % 100 %
Ikipihlaja Setälänpiha Oy Lieto 100 % 100 %
Ikipihlaja Oiva Oy Raisio 100 % 100 %
Kolmostien Terveys Oy Parkano 96 % 96 %
Jämsän Terveys Oy Jämsä 51 % 51 %
Kuusiolinna Terveys Oy Alavus 97 % 97 %
Lääkäriasema DokTori Oy Lappeenranta 100 % 100 %
Kompassi Lääkärikeskus Oy Seinäjoki 100 % 100 %
Mediapu Oy Oulu 100 % 100 %
Pihlajalinna Turku Oy Turku 92 % 92 %
Pihlajalinna Erityisasumispalvelut Oy Hämeenlinna 70 % 70 %
Pihlajalinna Oulu Oy Oulu 100 % 100 %
Dextra Lapsettomuusklinikka Oy Helsinki 51 % 51 %
Bottenhavets Hälsa Ab - Selkämeren Terveys Oy Kristiinankaupunki 75 % 75 %
Linnan Klinikka Oy Hämeenlinna 100 % 100 %
Pihlajalinna Liikuntakeskukset Oy Tampere 70 % 70 %
Forever Helsinki Oy Helsinki 70 % 70 %
Suomen Yksityiset Hammaslääkärit Oy Tampere 63 % 63 %
Pihlajalinna Hammasklinikat Oy Tampere 63 % 63 %
Laihian Hyvinvointi Oy Laihia 81 % 81 %
Information on the associates is presented in Note 28 Interests in associates and joint ar-
rangements.
Changes in Group structure
The following changes in group structure were implemented during the financial year:
Merged company Target company Month of acquisition
Pihlajalinna Seinäjoki Oy Pihlajalinna Lääkärikeskukset Oy 9.4.2021
Terveyspalvelu Verso Oy Pihlajalinna Lääkärikeskukset Oy 1.5.2021
Työterveys Virta Oy Pihlajalinna Oulu Oy 1.9.2021
Employee benefits of management
EUR 1,000 2021 2020
Monetary salaries, Management Team 1 054 1 120
Share-based rewards, Management Team 226 381
Fringe benefits, Management Team 16 25
Salaries and other short-term employee benefits, Management Team, total 1 297 1 526
Salaries and remuneration
EUR 1,000 2021 2020
Joni Aaltonen, CEO
Monetary salaries 283 285
Share-based rewards 100 136
Fringe benefits 21 13
Total 405 433
Board of Directors
Vice-Chairman of the Board Leena Niemistö 58 45
Chairman of the Board Mikko Wirén 345 259
Chairman of the Audit Committee Seija Turunen 53 35
Board member Kati Sulin 42 31
Board member Matti Jaakola (until 15 April 2021) 9 34
Board member Hannu Juvonen 41 35
Board member Mika Manninen 41 35
Total 588 473
Of the annual remuneration paid in shares, a total of 5,000 shares held by the company
were transferred to the Chairman of the Board of Directors, with 1,212 shares transferred to
the Vice Chairman and the Chairman of the Audit Committee each, and 808 shares to each
member of the Board of Directors.
30. Related party transactions
The Group’s related parties consist of the subsidiaries, associates and joint ventures. Key
management personnel considered related parties consist of the members of the Board
of Directors and the Management Team, including the CEO.
The Group’s parent company and subsidiary relationships
The Group’s parent company is Pihlajalinna Plc, which owns all of Pihlajalinna Terveys
Oy’s Series A shares.
87
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
According to the CEO’s contract, the notice period for dismissal is 3 months. The com-
pany is liable to pay the CEO one-time compensation for termination amounting to six
months’ total salary.
The CEO’s pension benefits are according to the statutory pension scheme. The CEO is
not a member of the Board of Directors.
Related party transactions and related party receivables and liabilities:
2021 2020
Key management personnel
Rents paid 834 892
Services procured 958 945
Trade payables 83 -3
The Group has leased several of its business premises from a member of the key man-
agement personnel: the premises in Nokia, Karkku, Tampere and Kangasala.
A Group company has an agreement with a member of the key management person-
nel, under which the Group buys healthcare professionals’ services.
31. Events after the balance sheet date
Pihlajalinna and Pohjola Hospital were combined
The Finnish Competition and Consumer Authority (FCCA) unconditionally approved the
combining of Pihlajalinna and Pohjola Hospital. The acquisition is an important element
of Pihlajalinna’s growth strategy, and it strengthens the combined entity’s service portfo-
lio in all healthcare specialities. The business combination also enables the geographical
expansion of the service network, especially in the Helsinki Metropolitan Area and other
growth centres. Growth potential is further strengthened by the new five-year service
agreement signed with Pohjola Insurance in connection with the deal. The transaction
was completed on 1 February 2022.
As previously announced, the net debt-free purchase price, paid in cash, was EUR 31.8
million. Pohjola Hospital’s revenue was EUR 62.5 million in 2021 and EUR 59.4 million in
2020. Established in 2013, Pohjola Hospital is a chain of hospitals specialising in ortho-
paedics, i.e. the treatment of musculoskeletal disorders and accidents. Pohjola Hospi-
tal operates in five cities with university hospitals: Helsinki, Tampere, Turku, Oulu and
Kuopio.
The company had an average of 295 employees and over 300 practitioners in 2021.
The purchase price allocation for the Pohjola Hospital acquisition is still being finalised.
The calculation will be completed within one year of the date of acquisition, by 31 Janu-
ary 2023. Pihlajalinna presents a preliminary purchase price allocation. Adjustments have
been made to the opening balance sheet of Pohjola Hospital on 31 January 2022 based
on the calculation. The fair value adjustments mainly concern right-of-use assets, other
provisions and deferred taxes.
EUR 1,000
Consideration
Cash, basic transaction price 31 800
Total cost of the combination 31 800
The preliminary values of the assets and liabilities acquired for consideration at the time of acquisi-
tion were as follows:
Property, plant and equipment 358
Intangible assets 6 037
Right-of-use assets 112 771
Other receivables 4 612
Deferred tax assets 3 848
Trade and other receivables 8 584
Cash and cash equivalents 1 809
Total assets 138 019
Deferred tax liabilities 1 095
Other provisions 4 881
Lease liabilities 131 744
Other liabilities 8 458
Total liabilities 146 178
Preliminary net assets -8 159
Goodwill generated in the acquisition:
Consideration transferred 31 800
Net identifiable assets of acquirees 8 159
Goodwill 39 959
Transaction price paid in cash 31 800
Cash and cash equivalents of acquiree -1 809
Eect on cash flow* 29 991
EUR 953 thousand of the costs related to the foregoing acquisitions have been rec-
ognised in other operating expenses (IFRS 3 costs). The preparation of the acquisition
cost calculation requires management estimates concerning the fair values of the ac-
quired assets and liabilities. The preliminary acquisition cost calculation may be subse-
quently adjusted based on further analyses and additional information. Adjustments to
the fair values of the acquired assets and liabilities will aect the preliminary estimate of
goodwill. These adjustments may be material.
88
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
PARENT COMPANY FINANCIAL STATEMENTS, FAS
Parent company income statement, FAS
EUR 1,000 note 1.1. - 31.12.2021 1.1. - 31.12.2020
Revenue
1.1. 5 205 4 224
Other operating income 1.2. 459 464
Personnel expenses 1.3. -1 350 -1 625
Depreciation, amortisation and impairment 1.4. -2 004 -1 825
Other operating expenses 1.5. -4 795 -4 303
Operating profit (loss)
-2 486 -3 065
Financial income and expenses 1.6. -565 -1 216
Profit (loss) before appropriations
and taxes
-3 051 -4 281
Appropriations 1.7.
Change in depreciation dierence -32 -199
Group contribution 20 350 14 000
Income taxes 1.8. -3 373 -1 821
Profit (loss) for the financial year
13 893 7 698
The Shareholders’ Nomination Board’s proposals to the Annual General
Meeting 2022
The number of members and composition of the Board of Directors:
The Nomination Board proposes to the Annual General Meeting of Pihlajalinna Plc,
scheduled to be held on 13 April 2022, that the number of the members of the Board be
confirmed to be seven instead of the current six.
The Nomination Board proposes that Hannu Juvonen, Mika Manninen, Leena Niemistö,
Kati Sulin, Seija Turunen and Mikko Wirén, currently members of the Board of Directors,
be re-elected as members of the Board of Directors. The Nomination Board proposes that
Heli Iisakka be elected as a new member of the Board of Directors. Heli Iisakka, born 1968,
M.Sc. (Econ.), is the CFO of Colliers Finland Oy. Iisakka is independent of the company
and its major shareholders.
With regard to the procedure for the election of the members of the Board of Direc-
tors, the Shareholders’ Nomination Board recommends that the shareholders vote on the
proposal as a whole at the Annual General Meeting. This recommendation is based on
Pihlajalinna having, in accordance with the Nordic model of good corporate governance, a
Shareholders’ Nomination Board that is external to the Board of Directors. The task of the
Nomination Board is to ensure that, in addition to the qualifications of the individual can-
didates for Board membership, the proposed Board of Directors as a whole has the best
possible expertise and experience from the Group’s perspective, and that the composition
of the Board of Directors also meets the other requirements stipulated by the Corporate
Governance Code for listed companies.
The personal details of the current members of the Board and the details of their posi-
tions of trust are available at investors.pihlajalinna.fi/corporate-governance/board-of-di-
rectors.
The Nomination Board further proposes that the Annual General Meeting elect Mikko
Wirén as the Chairman of the Board and Leena Niemistö as the Vice-Chairman.
The Shareholders’ Nomination Board proposes that, due to the ongoing significant
changes in the social services and healthcare sector and the company’s significant ongo-
ing strategic development, the role of the Chairman of the Board of Directors should still
be a full-time role for the next term of oce. The Nomination Board’s shared will is that,
after this term, the role of the Chairman of the Board of Directors will no longer be a full-
time role.
Remuneration of the members of the Board of Directors
The Shareholders’ Nomination Board proposes that the remuneration of the Chairman of
the Board of Directors be kept unchanged, and that the remuneration of the Vice-Chair-
man, the Chairman of the Audit Committee and the members of the Board of Directors
be increased, with the following annual remuneration to be paid to the members of the
Board of Directors to be elected at the Annual General Meeting for the term of oce
ending at the close of the Annual General Meeting 2023: to the Chairman of the Board
of Directors EUR 250,000; to the Vice-Chairman EUR 39,000, and to members EUR
26,000.
The proposal is that the annual remuneration to be paid in company shares and cash so
that about 40 per cent of the remuneration is used to purchase the company’s shares on
behalf of the members and the remaining share of the remuneration is paid in cash. The
remuneration can be paid either entirely or partially in cash if the member of the Board of
Directors has, on the day of the General Meeting, 13 April 2022, been in possession of over
EUR 1,000,000 worth of company shares. The company is responsible for the expenses
and transfer tax arising from the acquisition of the shares. The remuneration to be paid in
shares can be paid by transferring company shares in possession of the company to the
members of the Board of Directors or by purchasing shares directly on behalf of the Board
members within three weeks after the interim report for the period of 1 January–31 March
2022 has been published. If this is not possible due to legal or other regulatory reasons,
such as insider regulations, the shares will be transferred or purchased at the earliest pos-
sible time thereafter or, alternatively, the remuneration will be paid in cash. If the term of a
Board member ends before the Annual General Meeting of 2023, the Board is entitled to
decide on the possible recovery of the remuneration in a manner it deems appropriate.
The Nomination Board proposes that each member of the Board of Directors be paid
a cash attendance fee of EUR 500 per Board or Committee meeting. Reasonable travel
expenses will also be reimbursed to the members of the Board in accordance with the
Company’s travel policy.
89
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Parent company balance sheet, FAS
EUR 1,000 note 31.12.2021 31.12.2020
Assets
Non-current assets
Intangible assets 2.1. 4 048 4 739
Property, plant and equipment 2.2. 2 155 2 454
Investments 2.3. 284 835 284 485
291 038 291 677
Current assets
Non-current receivables 2.4. 37 39
Current receivables 2.5. 82 787 58 056
Cash and cash equivalents 2 179 7 840
85 002 65 936
Total assets
376 040 357 613
Equity and liabilities
Equity
2.6.
Share capital 80 80
Reserve for invested unrestricted equity 183 190 183 190
Retained earnings 26 152 23 553
Profit/loss for the financial year 13 893 7 698
223 316 214 522
Accumulated appropriations 2.7 1 018 986
Mandatory provisions 2.8 21 48
Liabilities
2.9
Non-current liabilities 90 368 91 066
Current liabilities 61 316 50 992
151 685 142 058
Total equity and liabilities
376 040 357 613
Parent company cash flow statement, FAS
EUR 1,000 31.12.2021 31.12.2020
Cash flow from operating activities
Profit for the period 13 893 7 698
Depreciation, amortisation and impairment 2 004 1 825
Financial income and expenses 565 1 216
Other adjustments (appropriations and taxes) -16 944 -11 999
Cash flow before change in working capital -482 -1 259
Change in net working capital -2 699 641
Cash flows from operating activities before financial items and taxes -3 181 -618
Interest received 1 449 1 154
Direct taxes paid -2 416 -70
Cash flow from operating activities -4 149 466
Cash flow from investing activities
Investments in tangible and intangible assets -904 -769
Other investments -350
Cash flow from investing activities -1 254 -769
Cash flow from financing activities
Proceeds from short-term borrowings from group companies 11 724 22 929
Loans granted to Group companies -17 973 -6 532
Repayment of short-term borrowings -501
Proceeds from long-term borrowings 20 000
Repayment of long-term borrowings -20 771 -10 734
Group contributions received 14 000 6 000
Interest paid -2 139 -2 344
Dividends paid -4 517
Omien osakkeiden hankinta -582 -692
Cash flow from financing activities -258 8 127
Change in cash and cash equivalents
-5 661 7 824
Cash at the beginning of the financial year 7 840 16
Cash at the end of the financial year 2 179 7 840
90
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Notes to the financial statements 31 december 2021
Accounting policies
Group. The company was established on 15 April 2014.
Valuation of non-current assets
Intangible assets and tangible assets have been recognised in the balance sheet at cost.
Depreciation and amortisation according to plan is calculated using the straight-line
method over the economic useful lives of the assets.
The planned depreciation periods are as follows:
Development costs 5–7 years
Other intellectual property rights 5–7 years
Other long-term expenditures 5–7 years
Machinery and equipment 3–10 years
Acquisition costs of assets included in non-current assets with a probable economic
useful life of less than 3 years, and small-scale acquisitions (value under EUR 850) have
been expensed in the financial year during which they were acquired in full. Financial
assets are measured at the lower of cost or fair market, if the impairment is considered
to be permanent.
Recognition of deferred taxes
Deferred tax liabilities or assets have been calculated on the temporary dierences
between taxation and the financial statements, using the prevailing tax base at balance
sheet date. The balance sheet includes deferred tax liabilities in their entirety and de-
ferred tax assets in the amount of the estimated probable receivables.
Revenue recognition
The sale of products and services is recognised in connection with their delivery.
Capitalised development costs (Accounting Ordinance 2:4, 3-4)
The company’s capitalised product development expenditure relating to the Pihlajalin-
na mobile application and the company website will be amortised over their economic
useful lives. Unamortised development expenditure included in intangible assets, which
restricts profit distribution, amounted to EUR 489 (753) thousand at the end of the
financial year.
Recognition of pension schemes
The personnel’s statutory pension security is handled by an external pension insurance
company. Pension costs are recognised as expenses during the year of their accrual.
1.1. Revenue
EUR 1,000 2021 2020
Revenues by sector 5 205 4 224
Sale of services 5 205 4 224
1.2. Other operating income
EUR 1,000 2021 2020
Rental income 116 116
Lease income from equipment 328 328
Insurance indemnities received 0 1
Capital gains on property, plant and equipment 19
Government grants received 14 0
459 464
1.3. Personnel expenses
EUR 1,000 2021 2020
Wages and salaries -1 234 -1 514
Pension costs -100 -96
Other social security expenses -16 -16
Total -1 350 -1 625
Average number of employees during the financial year 3 3
The remuneration of the Board of Directors of Pihlajalinna Plc is included in the com-
pany’s personnel expenses. The Annual General Meeting of 15 April 2021 decided that
remuneration shall be paid to the members of the Board of Directors as follows: to the
full-time Chairman of the Board of Directors EUR 250,000 per year; to the Vice-Chair-
man of the Board and the Chairman of the Audit Committee EUR 36,000 per year, and
to members EUR 24,000 per year. In addition, the Annual General Meeting decided that
each Board member shall be paid a meeting fee of EUR 500 for each Board and Com-
mittee meeting.
The annual remuneration shall be paid in company shares and in cash, with approx-
imately 40 per cent of the remuneration used to acquire shares in the name and on
behalf of the members of the Board of Directors, and the remainder paid in cash. The
remuneration can be paid either entirely or partially in cash if the member of the Board
of Directors has, on the day of the General Meeting, 15 April 2021, been in possession
91
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
of over EUR 1,000,000 worth of company shares. The company is responsible for the
expenses and transfer tax arising from the acquisition of the shares. The remuneration to
be paid in company's own shares was executed 11 May 2021, immediately after publish-
ing the interim report, by relinquishing 9,848 of the company's own shares. Rest of the
annual remuneration was paid at the same time in cash. If the term of a Board member
ends before the Annual General Meeting of 2022, the Board is entitled to decide on the
possible recovery of the remuneration in a manner it deems appropriate.
A total of 5,000 shares were transferred to the Chairman of the Board, 1,212 shares to the
Vice-Chairman of the Board and the Chairman of the Audit Committee, and 808 shares
to the members of the Board of Directors. In addition, the reasonable travel expenses of
the members of the Board of Directors are reimbursed in accordance with the Com-
pany's travel policy. A summary of the remuneration of the Board of Directors and the
Management Team is included in the Remuneration Report.
1.4. Depreciation and impairment
EUR 1,000 2021 2020
Depreciation according to plan
Intangible assets -1 593 -1 458
Property, plant and equipment -411 -367
-2 004 -1 825
1.5. Other operating expenses
EUR 1,000 2021 2020
Voluntary social security expenses -111 -49
Facility expenses -120 -105
Vehicle expenses -19 -24
ICT expenses -3 560 -2 757
Machinery and equipment expenses -1 0
Sales, marketing and travel expenses -77 -36
Administrative expenses -848 -1 331
Other operating expenses, total -4 735 -4 303
Auditor’s fees
audit fees 113 92
auxiliary services 6 5
119 97
1.6. Financial income and expenses
EUR 1,000 2021 2020
Interest income from non-current investments
From Group companies 1 449 1 154
From others 0 0
Interest income from non-current investments, total 1 449 1 154
Interest expenses and other financial expenses
To others -2 013 -2 370
Interest expenses and other financial expenses, total -2 013 -2 370
Financial income and expenses, total -565 -1 216
1.7. Appropriations
EUR 1,000 2021 2020
Dierence between depreciation according to plan and dep-
reciation in taxation
-32 -199
Group contributions received 20 350 14 000
20 318 13 801
1.8. Income taxes
EUR 1,000 2021 2020
Change in deferred tax assets
Income taxes on actual operations during the financial year -3 373 -1 821
Income taxes total -3 373 -1 821
92
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Notes to the balance sheet
EUR 1,000 31.12.2021
31.12.2020
2.1. Intangible assets
Development costs
Acquisition cost at the start of the financial year 1 607 1 607
Acquisition cost at the end of the period 1 607 1 607
Accumulated amortisation according to plan during the financial year -854 -590
Accumulated amortisation according to plan during the financial year -264 -264
Carrying amount at the end of the period 489 753
Other intellectual property rights
Acquisition cost at the start of the financial year 1 615 1 615
Additions 43
Acquisition cost at the end of the period 1 658 1 615
Accumulated amortisation according to plan during the financial year -1 028 -789
Accumulated amortisation according to plan during the financial year -221 -240
Carrying amount at the end of the period 409 587
Other long-term expenditures
Acquisition cost at the start of the financial year 5 264 4 082
Additions 787 645
Transfers between items 536
Acquisition cost at the end of the period 6 051 5 264
Accumulated amortisation according to plan during the financial year -1 871 -917
Accumulated amortisation according to plan during the financial year -1 108 -954
Carrying amount at the end of the period 3 072 3 393
Prepayments for intangible assets
Acquisition cost at the beginning 6 440
Additions 73 103
Transfers between items -536
Carrying amount at the end of the period 79 6
Intangible assets, total
Acquisition cost at the start of the financial year 8 492 7 743
Additions 903 749
Transfers between items
Acquisition cost at the end of the period 9 394 8 492
Accumulated amortisation according to plan during the financial year -3 753 -2 295
Accumulated amortisation according to plan during the financial year -1 593 -1 458
Carrying amount at the end of the period 4 048 4 739
EUR 1,000
31.12.2021
31.12.2020
2.2. Property, plant and equipment
Machinery and equipment
Acquisition cost at the start of the financial year 3 472 3 411
Additions 112 172
Disposals -111
Acquisition cost at the end of the period 3 584 3 472
Accumulated amortisation according to plan during the financial year -1 018 -716
Accumulated depreciation on disposals and transfers 65
Accumulated amortisation according to plan during the financial year -411 -367
Carrying amount at the end of the period 2 155 2 454
Property, plant and equipment, total
Acquisition cost at the start of the financial year 3 472 3 411
Additions 112 172
Disposals 0 -111
Acquisition cost at the end of the period 3 584 3 472
Accumulated amortisation according to plan during the financial year -1 018 -716
Accumulated depreciation on disposals and transfers 0 65
Accumulated amortisation according to plan during the financial year -411 -367
Carrying amount at the end of the period 2 155 2 454
2.3. Investments
Other shares and participations
Additions 350
Acquisition cost at the end of the period 350
Shares in subsidiaries
Acquisition cost at the start of the financial year 284 485 284 485
Acquisition cost at the end of the period 284 485 284 485
Total investments 284 835 284 485
A full list of the Group’s subsidiaries is presented in Note 30 “Related party transactions” to
the consolidated financial statements.
93
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
EUR 1,000 31.12.2021 31.12.2020
2.4. Non-current receivables
Receivables from others
Lease deposits given 37 39
37 39
Total non-current receivables 37 39
2.5. Current receivables
Receivables from others
Other receivables 376 303
Prepayments and accrued income 2 195 1 483
2 570 1 786
Receivables from Group companies
Trade receivables -43 30
Loan receivables 59 788 41 815
Prepayments and accrued income 20 445 14 426
80 190 56 271
Material items included under Prepayments and accrued income
Group contribution 20 350 14 000
Allocation of sales 95 426
Accrued social security expenses 85
Other 2 109 1 483
22 639 15 909
Total current receivables 82 760 58 056
2.6. Equity
Restricted equity
Share capital at the beginning 80 80
Share capital at the end 80 80
Total restricted equity 80 80
Unrestricted equity
Reserve for invested unrestricted equity at the beginning 183 190 183 190
Reserve for invested unrestricted equity at the end 183 190 183 190
Retained earnings at the beginning 31 251 24 244
Dividends paid -4 517
Acquisition of own shares -582 -692
Retained earnings 26 152 23 553
Profit for the period 13 893 7 698
Total unrestricted equity 223 236 214 442
Total equity 223 316 214 522
EUR 1,000 31.12.2021 31.12.2020
Retained earnings 26 152 23 553
Profit for the period 13 893 7 698
Reserve for invested unrestricted equity 183 190 183 190
Capitalised development costs -489 -753
Distributable unrestricted equity 222 747 213 689
Number of shares 22 620 135 22 620 135
of which treasury shares 25 900 2 294
Number of outstanding shares 22 594 235 22 617 841
2.7. Accumulated appropriations
Accumulated depreciation dierence 1 018 986
2.8. Mandatory provisions
Onerous contracts 21 48
2.9. Liabilities
2.9.1 Non-current liabilities
Liabilities to others
Loans from financial institutions 90 000 90 000
Other non-current liabilities 332 1 030
Lease deposits received 36 36
90 368 91 066
Non-current liabilities, total 90 368 91 066
2.9.2 Current liabilities
Liabilities to others
Trade payables 297 2 056
Other liabilities 811 1 256
Accrued liabilities 3 062 2 297
4 170 5 609
Liabilities to Group companies
Trade payables 1 72
Accrued liabilities 111
Other liabilities 57 035 45 311
57 147 45 383
Material items included under Accrued liabilities
Personnel expense allocations 149 134
Interest allocations 65 191
Taxes 2 769 1 812
Other items 189 160
3 172 2 297
Current liabilities, total 61 316 50 992
94
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Other notes
EUR 1,000 31.12.2021 31.12.2020
Collaterals and contingent liabilities
Collaterals given on behalf of Group companies
Other sureties 121 121
Pihlajalinna’s financing arrangements
Pihlajalinna has a five-year EUR 120 million unsecured financing arrangement with
Danske Bank and Nordea. The arrangement comprises a EUR 50 million revolving credit
facility and a long-term bullet loan of EUR 70 million. It also includes an opportunity to
increase the total amount by EUR 60 million (to EUR 180 million), subject to separate
decisions on a supplementary loan from the funding providers.
The financing arrangement includes the customary leverage (ratio of net debt to pro
forma EBITDA) and gearing covenants. The calculation of covenants will continue with
the creditor banks in accordance with the accounting principles confirmed in the original
financing arrangement (frozen GAAP, i.e. excluding the IFRS 16 impact and IFRS Inter-
pretations Committee's agenda decision on the accounting of the costs of configuring
or customising a cloud computing arrangement). The Group met the set covenants on 31
December 2021.
Due to the changes in the operating environment caused by the COVID-19 epidemic,
Pihlajalinna and the creditor banks agreed on a temporary adjustment to the covenants
of the financing arrangement for the first two quarters of 2020 at the end of March
2020. The original covenants of the financing arrangement – leverage of 3.75 and gear-
ing of 115 per cent – took eect again when the covenants were reviewed in the third
quarter of 2020.
In connection with this, a permanent new margin ceiling was added to the financing
arrangement. The margin ceiling will enter into eect if leverage exceeds 3.50. On 31
December 2021, leverage in accordance with the financing arrangement stood at 2.30
and gearing at 91 per cent.
Due to the acquisition of Pohjola Hospital Ltd, Pihlajalinna and the creditor banks
agreed, before the end of the year, on temporarily increasing the gearing covenant to
140 per cent for the first and second quarters of 2022.
The Group has credit limit agreements valid until further notice, totalling EUR 10
million. The notice period of the credit limit agreements is one month. At the end of the
financial year, Pihlajalinna had EUR 45.0 million (EUR 40.0 million) in unused committed
credit limits. In addition, EUR 45.0 million of an additional credit limit, which is subject to
a separate credit decision, was unused on the financial statements date.
Pihlajalinna and the creditor banks agreed on the acquisition of Pohjola Hospital Ltd
and the financing of the transaction in a timely manner, before the turn of the year. The
transaction was financed by means of the additional credit limit in February 2022. At the
end of the reporting period, 31 December 2021, the withdrawn loan amount to which the
covenants apply was EUR 90.0 million (EUR 90.0 million).
EUR 1,000 31.12.2021 31.12.2020
Lease commitments
Within one year
Between one and five years 569 451
Over five years later 71 214
95
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Auditor’s Note
A report on the performed audit has been issued today.
Tampere, on the date of the electronic signature
KPMG Oy Ab
Lotta Nurminen
Authorised Public Accountant
Dates and signatures to the report by the Board of Directors and the financial statements
Tampere, 17 February 2022
Mikko Wirén
Chairman
Leena Niemistö
Hannu Juvonen
Kati Sulin Seija Turunen
Mika Manninen Joni Aaltonen
CEO
96
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Auditor’s Report
To the Annual General Meeting of Pihlajalinna Plc
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Pihlajalinna Plc (business identity code
2617455-1) for the year ended 31 December 2021. The financial statements comprise
the consolidated statement of financial position, statement of comprehensive income,
statement of changes in equity, statement of cash flows and notes, including a summary
of significant accounting policies, as well as the parent company’s balance sheet, income
statement, cash flow statement and notes.
In our opinion
• the consolidated financial statements give a true and fair view of the group’s financial
position, financial performance and cash flows in accordance with International Finan-
cial Reporting Standards (IFRS) as adopted by the EU
• the financial statements give a true and fair view of the parent company’s financial
performance and financial position in accordance with the laws and regulations gov-
erning the preparation of financial statements in Finland and comply with statutory
requirements.
Our opinion is consistent with the additional report submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing practice in Finland. Our
responsibilities under good auditing practice are further described in the Auditor’s Re-
sponsibilities for the Audit of the Financial Statements section of our report.
We are independent of the parent company and of the group companies in accor-
dance with the ethical requirements that are applicable in Finland and are relevant to
our audit, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
In our best knowledge and understanding, the non-audit services that we have pro-
vided to the parent company and group companies are in compliance with laws and
regulations applicable in Finland regarding these services, and we have not provided any
prohibited non-audit services referred to in Article 5(1) of regulation (EU) 537/2014. We
have not provided any non-audit services to the parent company or group companies.
We believe that the audit evidence we have obtained is sucient and appropriate to
provide a basis for our opinion.
Materiality
TThe scope of our audit was influenced by our application of materiality. The materi-
ality is determined based on our professional judgement and is used to determine the
nature, timing and extent of our audit procedures and to evaluate the eect of identified
misstatements on the financial statements as a whole. The level of materiality we set
is based on our assessment of the magnitude of misstatements that, individually or in
aggregate, could reasonably be expected to have influence on the economic decisions
of the users of the financial statements. We have also taken into account misstatements
and/or possible misstatements that in our opinion are material for qualitative reasons for
the users of the financial statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters
were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these mat-
ters. The significant risks of material misstatement referred to in the EU Regulation No
537/2014 point (c) of Article 10(2) are included in the description of key audit matters
below.
We have also addressed the risk of management override of internal controls. This
includes consideration of whether there was evidence of management bias that repre-
sented a risk of material misstatement due to fraud.
AUDITED FINANCIAL STATEMENTS
97
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
The key audit matter How the matter was addressed in the audit
Judgmental items relating to municipality outsourcing contracts (refer to notes 1, 16 and 29 in the consolidated financial statements) and emphasis of matter
We draw attention to note 1 and the receivables totaling EUR 9.7 million presented in sections Key accounting estimates and decisions based on management judgement and Items that may, according to
the management’s estimate, influence the profitability of complete outsourcing agreements with a delay. Circumstances described in the notes may aect the payments to be received for these receivables.
Our opinion is not modified in respect of this matter.
• A notable proportion of the Group’s reve-nue is based on long-term outsourcing contracts with municipalities. These
in-clude both complete outsourcing con-tracts for social and healthcare services as well as other outsourcing contracts.
• The Group’s profitability of complete out-sourcing contracts for social and healthcare services may become more accu-
rate with a delay. The Group may not always be aware of the actual costs of the agreements during the financial year
and there may be variable considerations in-cluded.
• High level of management judgement, which can have a significant impact on the consolidated result and statement of
financial position, is involved in the ac-counting for outsourcing contracts due to the extent of the contracts, definitions
of contractual obligations and amendment clauses for changed situations.
• In note 1 section Items that may, accord-ing to the management’s estimate, influ-ence the profitability of complete
out-sourcing agreements with a delay the fol-lowing items relating to outsourcing con-tracts with municipalities are
presented:
• The City of Jämsä has taken legal action against Jämsän Terveys Oy regarding a matter concerning the price
adjustment provision in the service agreement.The dierence of opinion regarding the determination of the annual
price totalled approximately EUR 3.7 million at the time of the financial statements. Jämsän Terveys filed an addi-
tional counterclaim against the City of Jämsä. Jämsän Terveys Oy has included in its receivables a total of EUR 3.9
million from the city of Jämsä, associated with the eect of changes in the services under the service agreement
on price and the service provider’s liability for fi-nancing investments by the hospi-tal district insofar as such invest-
ments serve operations after the term of the service agreement.
• Mäntänvuoren Terveys Oy has receivables totaling EUR 4.1 million from a client. The receivables are associated with
an estimate of the investment cost li-ability in specialised care and cost increases caused by service changes.
• Kolmostien Terveys Oy has receivables of EUR 1.7 million from a client. The receivables are associated with an esti-
mate of the investment cost liability in special-ised care and cost increases caused by service changes
• Due to the significant amount of account-ing estimates in relation to the result for the period and equity and the recei-
vables being past due, recognized judgmental items relating to the municipality outsourc-ing contracts are considered
a key audit matter.
• We observed the judgmental items rec-orded in the consolidated financial
state-ments through discussions with manage-ment, analytically and by per-
forming sub-stantive testing. We obtained related agreements, calculations
and administra-tive documents.
• We obtained legal opinions on the ser-vice agreements and juridical basis
for recognizing these items as well as their amounts from a law firm used by
the Group. In addition, we inquired a repre-sentative from the law firm on
these mat-ters in more detail.
• We obtained legal representation letters about the legal dispute in district
court.
• We assessed the recognition principles applied to judgmental income and
ex-pense items against IFRS principles and considered the appropriateness
of the Group’s disclosures in respect of judg-mental items.
• We assessed how the Group has re-ceived payments relating to previously
recognized judgmental items and ob-tained a representation letter from the
management about the collectability of these receivables.
• We reported in more detail about the contents of these judgmental items to
the Audit Committee and the Board of Direc-tors.
Goodwill impairment assessment (refer to note 13 to the consolidated financial statements)
• The Group has expanded its activities through acquisition of companies. As a result, the consolidated statement of financial
position 31 December 2021 includes goodwill totaling EUR 188.9 million.
• Goodwill is not amortized but is tested at least annually for impairment. Determining the cash flow forecasts underlying the
impairment tests requires management make judgments over certain key inputs, for example revenue growth rate, discount
rate, long-term growth rate and inflation rates.
• Due to the high level of judgement related to the forecasts used, and the significant carrying amounts involved, goodwill
impairment assessment is considered a key audit matter.
• Our audit procedures included, among others, assessing key inputs in the
calcu-lations such as revenue growth rate, prof-itability and discount rate, by
reference to the parent company’s Board approved budgets, data external to
the Group and our own views.
• We assessed the historical accuracy of forecasts prepared by management
by comparing the actual results for the year with the original forecasts.
• We involved KPMG valuation specialists that assessed the technical accu-
racy of the calculations and compared the as-sumptions used to market and
industry in-formation.
• Furthermore, we considered the appropri-ateness of the Group’s disclosures
in re-spect of goodwill and impairment testing.
98
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Responsibilities of the Board of Directors and the Man-
aging Director for the Financial Statements
The Board of Directors and the Managing Director are responsible for the preparation of
consolidated financial statements that give a true and fair view in accordance with In-
ternational Financial Reporting Standards (IFRS) as adopted by the EU, and of financial
statements that give a true and fair view in accordance with the laws and regulations
governing the preparation of financial statements in Finland and comply with statutory
requirements. The Board of Directors and the Managing Director are also responsible for
such internal control as they determine is necessary to enable the preparation of finan-
cial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors and the Managing
Director are responsible for assessing the parent company’s and the group’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern
and using the going concern basis of accounting. The financial statements are prepared
using the going concern basis of accounting unless there is an intention to liquidate the
parent company or the group or cease operations, or there is no realistic alternative but
to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial state-
ments as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with
good auditing practice will always detect a material misstatement when it exists. Mis-
statements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of the financial statements.
As part of an audit in accordance with good auditing practice, we exercise profession-
al judgment and maintain professional skepticism throughout the audit. We also:
• TIdentify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sucient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forg-
ery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the eectiveness of the parent company’s or the group’s
internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of the Board of Directors’ and the Managing Direc-
tor’s use of the going concern basis of accounting and based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the parent company’s or the group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclu-
sions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the parent company or the group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the under-
lying transactions and events so that the financial statements give a true and fair view.
• Obtain sucient appropriate audit evidence regarding the financial information of the
entities or business activities within the group to express an opinion on the consol-
idated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have com-
plied with relevant ethical requirements regarding independence, and communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
99
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General Meeting when Pihlajalinna Plc
was established on 15 April 2014 and our appointment represents a total period of unin-
terrupted engagement of eight years. In Pihlajalinna Terveys Oy we were first appointed
as auditors for the financial year ended 31 December 2010. Pihlajalinna Plc became a
public interest entity on 8 June 2015. We have been the company’s auditors since it be-
came a public interest entity.
Other Information
The Board of Directors and the Managing Director are responsible for the other infor-
mation. The other information comprises the report of the Board of Directors and the
information included in the Annual Report, but does not include the financial statements
and our auditor’s report thereon. We have obtained the report of the Board of Directors
prior to the date of this auditor’s report, and the Annual Report is expected to be made
available to us after that date. Our opinion on the financial statements does not cover
the other information.
In connection with our audit of the financial statements, our responsibility is to read
the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. With respect to
the report of the Board of Directors, our responsibility also includes considering whether
the report of the Board of Directors has been prepared in accordance with the applica-
ble laws and regulations.
In our opinion, the information in the report of the Board of Directors is consistent
with the information in the financial statements and the report of the Board of Directors
has been prepared in accordance with the applicable laws and regulations.
If, based on the work we have performed on the other information that we obtained
prior to the date of this auditor’s report, we conclude that there is a material misstate-
ment of this other information, we are required to report that fact. We have nothing to
report in this regard.
Tampere 21 February 2022
KPMG OY AB
Lotta Nurminen
Authorised Public Accountant, KHT
100
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Information for shareholders
Interim report
January–September:
Friday, 4 November 2022
Financial Statements Release,
January–December
In February 2023
Half-year financial
report January–June:
Friday, 12 August 2022
Interim report
January–March:
Thursday, 5 May 2022
Q4 Q3
Q1
2022
Q2
Pihlajalinna’s financial reporting in 2022
The interim reports will be published at approximately 8:00 a.m. in Finnish and En-
glish, and they will be available on Pihlajalinna’s website at investors.pihlajalinna.fi.
Pihlajalinna’s management organises information events for analysts and the media
on a regular basis. Pihlajalinna complies with a silent period of 30 days and a closed
window before the publication of results
General meeting
The Annual General Meeting of Pihlajalinna Plc will be held on Wensday, 13 April 2022 at
2:00 p.m.. The meeting will be held exceptionally without the presence of shareholders
or their proxy representatives at Pihlajalinna's head oce at Kehräsaari B, 33200 Tam-
pere.
Right to participate
The right to participate in the Annual General Meeting will rest with shareholders who,
on the Annual General Meeting record date of 1 April 2022, are registered in the compa-
ny’s shareholders’ register maintained by Euroclear Finland Oy
Registration
A shareholder who is registered in the company’s shareholders’ register and who
wants to participate in the meeting by voting in advance must register and vote in
advance by 7 April 2022 at 15 p.m. at the latest, by which time the registration will be
completed and votes must have been received. Registration and voting in advance is
possible at Pihlajalinna's website investors.pihlajalinna.fi/?sc_lang=en or a shareholder
may submit the advance voting form available on Pihlajalinna’s Annual General Meeting
webpages as of 25 March 2022, or equivalent information, to Innovatics Oy by email to
the address agm@innovatics.fi or by post to the address Innovatics Oy, Annual General
Meeting/Pihlajalinna Plc, Ratamestarinkatu 13 A, 00520 Helsinki. If a shareholder partic-
ipates in the meeting by submitting his/her advance votes to Innovatics Oy by post or
email prior to the deadline for registration and advance voting, this will be deemed to
constitute due registration for the Annual General Meeting, provided that it includes all
information required for the registration and advance voting as set out above.
The instructions concerning advanced voting are also available on Pihlajalinna’s Annual
General Meeting webpages. Additional information about registration and advance
voting is also available during the registration period by calling the number +358 10 2818
909 on weekdays from 9.00 a.m. to 12.00 noon and 1.00 p.m. to 4.00 p.m.
Possible powers of attorney must be submitted either at the time of online registration
and advance voting or by email to the address agm@pihlajalinna.fi, or by post to the
address Pihlajalinna Plc/AGM, PL Kehräsaari B, 33200 Tampere before the end of the
registration period and voting period, by which time the above-mentioned powers of
attorney must have been received.
Payment of dividend
The Board of Directors proposes to the AGMeeting that, based on the balance sheet
confirmed for the financial period ending 31 December 2021, EUR 0.30 per share will be
distributed as a dividend. As the amount of the dividend proposed by the Board of Di-
rectors is lower than the minority dividend according to Chapter 13, Section 7 of the Lim-
ited Liability Companies Act, the shareholders are entitled to claim the minority dividend
referred to above. The minority dividend shall be distributed if the claim is supported by
shareholders holding at least one tenth of all the shares in the company in a preliminary
vote. The amount of the minority dividend corresponds to half of the profit of the parent
company for the financial year, i.e. EUR 0.307 per share. A shareholder requesting a mi-
nority dividend may vote in favour of the minority dividend in the advance vote, without
having to make a separate request or counter-proposal.
The dividend will be paid to shareholders who, on the dividend payment record date
of 19 April 2022, are registered in the company’s shareholders’ register maintained by
Euroclear Finland Oy. The Board of Directors proposes that the dividend be paid on 26
April 2022.
101
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
Investment survey
As far as Pihlajalinna is aware, the following investment banks and stockbrokers monitor
Pihlajalinna and publish reports on the company: Pihlajalinna is not liable for the esti-
mates presented in the analyses.
• Danske Bank
• Carnegie
• Inderes
• OP
• SEB
• Evli
• Nordea
Contact details
Marko Savolainen, Chief Legal Ocer, +358 400 195213, marko.savolainen@pihlajalinna.fi
Tarja Rantala, CFO, +358 40 7749290, tarja.rantala@pihlajalinna.fi
Additional information is available in the investor section at investors.pihlajalinna.fi
Pihlajalinna share price development 2021
4.2.2021
4.5.2021
4.10.2021
4.3.2021
4.8.2021
4.6.2021
4.11.2021
4.4.2021
4.9.2021
4.7.2021
4.12.2021
4.1.2022
4.2.2022
4.1.2021
14
13
12
11
10
9
8
Pihlajalinna
OMX Helsinki
102
BUSINESS AND STRATEGY | SUSTAINABILITY | REPORT BY THE BOARD OF DIRECTORS | AUDITED FINANCIAL STATEMENTS
pihlajalinna.fi
KPMG Oy Ab
Hämeenkatu 9, 4.krs
33100 TAMPERE
Puhelin 020 760 3000
www.kpmg.fi
KPMG Oy Ab, a Finnish limited liability company and a member firm of the KPMG global organization of
independent member firms affiliated with KPMG International Limited, a private English company limited by
guarantee.
Y-tunnus 1805485-9
DomicileKotipaikka Helsinki
Independent Auditor’s Reasonable Assurance Report
on Pihlajalinna Plc’s ESEF Financial Statements
To the Board of Directors of Pihlajalinna Plc
We have undertaken a reasonable assurance engagement on the iXBRL marking up of the consolidated
financial statements for the year ended 31 December, 2021, included in the Pihlajalinna Plc’s digital files
[74370058MTRLEDOCHV67-2021-12-31-en.zip] prepared in accordance with the requirements of Article 4
of EU Delegated Regulation 2018/815 (ESEF RTS).
The Responsibility of the Board of Directors and Managing Director
The Board of Directors and Managing Director are responsible for preparing the report of the Board of
Directors and financial statements (ESEF financial statements) that comply with the requirements of ESEF
RTS. This responsibility includes:
— preparation of ESEF financial statements in XHTML format in accordance with Article 3 of the ESEF
RTS
— marking up the consolidated financial statements included in the ESEF financial statements with
iXBRL tags in accordance with Article 4 of the ESEF RTS; and
— ensuring consistency between ESEF financial statements and audited financial statements.
The Board of Directors and the Managing Director are also responsible for such internal control as they deem
necessary to prepare the ESEF financial statements in accordance with the requirements of the ESEF RTS.
Auditor’s Independence and Quality Control
We are independent of the company in accordance with the ethical requirements applicable in Finland, which
apply to the engagement we have performed, and we have fulfilled our other ethical obligations in accordance
with these requirements.
The auditor applies International Standard on Quality Control 1 and accordingly maintains a comprehensive
system of quality control including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
Auditor’s Responsibility
In accordance with the Engagement Letter our responsibility is to express an opinion on whether the marking
up of the consolidated financial statements included in the ESEF financial statements comply in all material
respects with the Article 4 of the ESEF RTS. We conducted our reasonable assurance engagement in
accordance with International Standard on Assurance Engagements 3000.
The engagement involves procedures to obtain evidence whether;
— the consolidated financial statements included in the ESEF financial statements are, in all material
respects, marked up with iXBRL tags in accordance with Article 4 of the ESEF RTS, and;
— the ESEF financial statements and the audited financial statements are consistent with each other.
The nature, timing and the extent of procedures selected depend on practitioner’s judgement. This includes
the assessment of the risks of material departures from the requirements set out in the ESEF RTS, whether
due to fraud or error.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Pihlajalinna Plc
Independent Auditor’s Reasonable Assurance Report on
ESEF Financial Statements
18 March, 2022
2
Opinion
In our opinion, the consolidated financial statements included in the ESEF financial statements of Pihlajalinna
Plc identified as [74370058MTRLEDOCHV67-2021-12-31-en.zip] for the year ended 31 December, 2021 are
marked up, in all material respects, in compliance with the ESEF Regulatory Technical Standard.
Our audit opinion relating to the consolidated financial statements of Pihlajalinna Plc for the year ended 31
December, 2021 is set out in our Auditor’s Report dated 18 February, 2022. In this report, we do not express
an audit opinion, review conclusion or any other assurance conclusion on the consolidated financial
statements.
Tampere 18 March, 2022
KPMG OY AB
LOTTA NURMINEN
Authori
sed Public Accountant, KHT