5. Formation of the profit/loss for the financial period

In addition to the shortage of raw materials, rapid inflation, rising interest rates and Russia’s war of aggression, the operating environment of the Turku economic area was strained by the coronavirus pandemic that has continued for three years already. Despite this, the financial period ended with a surplus of EUR 18.2 million. The positive revenue development was influenced by better-than-expected development of corporation tax and municipal tax revenue as well as revenue from the transfer of assets. Achieving the financial objectives of the adaptation programme approved by the City Council in 2019 proved unrealistic as a result of the above-mentioned changes in the operating environment.  On 16 January 2023, the City Board decided to start working on a new adaptation programme, section 13.

At the beginning of the financial period on 1 January 2022, the Turku Centre for Occupational Health’s business operations were handed over to the city’s associated company Länsirannikon Työterveys Oy. This has been taken into consideration in the comparison data in the text.

 

Operating income totalled EUR 318.4 million, EUR 22.0 million (6.5%) less than in the previous year. Sales revenue increased by EUR 6.7 million (7.3%), while payment revenue decreased by EUR 7.2 million (8.6%). The most significant increase in sales revenues was EUR 5.6 million in public transport. Other community services payments saw the greatest decrease in payment revenue, EUR 16.3 million. Home service fees, on the other hand, increased by EUR 5.2 million and other health care fees by EUR 3.2 million. Allowances and subsidies, EUR 57.3 million, decreased by EUR 22.5 million (28.2%), mainly due to a decrease in central government coronavirus subsidies. The city received a total of EUR 20.9 million in COVID-19 support. The largest amount of COVID-19 support was EUR 14.8 million in welfare services. Public transport received a total of EUR 4.1 million in COVID-19 support, of which Turku accounted for EUR 3.6 million. A total of EUR 2.5 million in COVID-19 support was granted for the operation of education services. Other operating income decreased by EUR 3.6 million, which was affected the most by a decrease in revenue on the sale of assets by EUR 3.2 million (total EUR 28.9 million).

 

Operating expenses amounted to a total of EUR 1,545.2 million, being EUR 70.8 million (4.8%) more than the previous year. The operating expenditure, adjusted for self-construction, were EUR 1,543.8 million.

Several functions of welfare services were already transferred to the wellbeing services county in 2022. Comparable personnel costs adjusted with these, and the aforementioned transfers of business increased by EUR 22.5 million (4.1%) compared to the previous year. The increase in wages and remunerations was EUR 18.1 million (4.2%). The overall impact of contractual increases on personnel costs in 2022 was approximately EUR 11.9 million (1.7%). In addition, as agreed in the contract, personnel costs include EUR 1.3 million in one-off COVID-19 remunerations for personnel participating in the treatment of coronavirus patients.  Additionally, the city paid approximately EUR 2.5 million in commitment fees to the employees of Turku welfare services (excluding employers’ contributions). They were used to commit the employees to working for the city and support the units that have struggled the most with recruitments. The increase was also due to an increase in the use of labour force by 31 person-years (0.3%). 

The amount used for service purchases was EUR 43.6 million (6.0%) more than in the previous year. The corresponding increase in the previous year was EUR 44.8 million. Purchases of customer services increased by EUR 30.6 million (7.4%), which is explained by the increase in outpatient and institutional care services, totalling EUR 22.6 million. Other service purchases increased by EUR 13.0 million (4.1%), which was affected the most by the growth in public transport services and the use of rental labour.  On the other hand, the growth in the purchases of services was decelerated by the decrease in the purchases of laboratory services as coronavirus testing decreased. The increase is explained by both the increase in prices and the increase in the need for services. Purchases of services of the Southwest Finland Hospital District increased by EUR 13.3 million from the previous year.

Purchases of materials and supplies increased by EUR 8.7 million (13.7%). The greatest increase was in energy costs, EUR 4.3 million (44.2%). Subsidies decreased by EUR 6.1 million. Subsidies include EUR 1.8 million in coverage of the deficits of joint municipal authorities transferred to the wellbeing services county at the beginning of 2023.

The operating margin (net operating expenditure) amounted to EUR -1,225.4 million. The comparable growth from the previous year was EUR 93.4 million (8.2%). Operating revenue covered 20.6% of operating expenditure (23.1% in 2021 financial statements). 79.4% (76.9% in 2021 financial statements) remained to be financed by tax revenue and central government transfers. 

Financial revenue and expenditure increased in net by EUR 6.0 million (20.3%). Revenue from dividends was EUR 3.5 million more than in the previous year, and in addition, the returns of surpluses of joint municipal authorities transferred under the wellbeing services county in the beginning of 2023 amounted to EUR 1.5 million and interest revenue to EUR 0.6 million.

Tax revenue totalled EUR 59.0 million (6.6%) more than in the previous year. The amount of municipal tax accrued was EUR 32.2 million more than last year. The national growth was 5.1% and the growth in Turku’s municipal tax was 4.8%. Corporation tax revenue increased by EUR 22.0 million from the previous year. Growth at national level was 6.6% and 13.9% in Turku. Property tax revenue totalled EUR 4.8 million (7.4%) more than in the previous year. Central government transfers
were received EUR 13.4 million more than in the previous year (4.4%), most of which was due to compensation for tax losses and a reduction in the recovery of tax deferrals by EUR 2.0 million. The instalments are not central government transfers, but they are paid in connection with central government transfers.

Annual margin amounted to EUR 77.5 million, which covers the annual fixed asset depreciations and impairments of EUR 61.5 million. Comparable annual margin decreased by EUR 15.0 million (16.2%) and annual margin per inhabitant decreased by EUR 76. Of the result of EUR 16.0 million for the financial period, EUR 2.2 million has been recognised as a depreciation difference deduction.