Good day, and thank you for standing by. Welcome to the Ambea Interim Report Fourth Quarter 2022 Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star one one on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our speaker today, Mark Jensen. Please go ahead.
Thank you, good morning, everyone, and welcome to Ambea's fourth quarter 2022 report presentation. Speaking is Mark Jensen, CEO of Ambea, and presenting with me today is Benno Eliasson, CFO. Last quarter, we did a presentation of Klara. Today I will spend a little more time on presenting Ambea's focus on continuously improving quality as part of the introduction before we get to the financials of the quarter. Benno will describe the development of the financials for the group and for the different segments in Ambea. I will summarize the quarter and compare to our financial targets before we open up for questions. I would like to begin with a brief overview of Ambea. Ambea is the leading Scandinavian care provider. We have about 31,000 employees across Sweden, Norway, and Denmark, and revenues of more than 12 billion SEK.
We offer a full range of services within elderly care, disability care, psychosocial support, and staffing solutions. We have more than 450 municipalities as our clients. We are an important partner in solving challenges in the welfare system. Before we turn to our work on quality, let's have a look at some of the reasons to invest in Ambea. Ambea deliver value to society. We aspire to be the most attractive investment in the care sector. From a distance, care providers can look somewhat similar. At a closer look, there are distinct differences. We have listed the most important for Ambea here. We are the market leader in all of our markets, Sweden, Norway, and Denmark. We have a competency advantage through unique in-house competency solutions in Klara and Lära. We focus on quality and invest in our employees and our quality system.
We create growth by actively building up a pipeline of new care homes and through bolt-on acquisitions. We have a balanced risk as our customers are 450 municipalities in three different countries and because we provide multiple services through five business areas. Ambea has attractive financial targets and a stable dividend history. In general, this is how Ambea differentiates and can provide an attractive investment in the Scandinavian care sector. On the next slide, we will go through our work on quality management. Our quality management aims at consistently meeting regulatory requirements as well as the expectations of our customers, meaning the care receiver, their relatives, and the municipalities. High quality and continuous quality improvement is fundamental to Ambea. On this slide, I would like to give you examples on some of the elements we consider important for improving quality.
Twice per year, all units perform self-assessments with about 200 questions to identify areas for improvement. The result of the assessment is reported in our quality system and used for action planning and further follow-up. We update the questionnaire with a certain frequency to improve focus and ensure that the self-assessment is better tailored to recent learnings and the specific needs of each segment and type of care. Every month, we follow up all of our units using eight selected quality and HR metrics. This gives us an an overview of the situation in all units and the ability to identify higher risks at an early stage. Monitoring of risks is based on existing data, for example, employee engagement and sick leave, as well as on our own self-assessment. Together, the data generates a QHR Index score.
This is one of the cornerstones within our quality management, the purpose is to identify units with a negative trend at an early stage and provide adequate support to achieve consistently quality across the organization. We flag and follow up units that need closer support, this includes all new units. The startup phase of a new care home implies higher risk when it comes to ensuring quality. To reduce the risk, we add a lot of resources into the startup process. Over the last year, Vardaga made an extra investment in the startup process have selected and trained a number of project managers to be able to further focus and improve the process. In parallel, we transfer the gained knowledge to Altiden in Denmark to achieve further group synergies within quality.
We will use the newly updated startup process from Vardaga when we open up our second home managed elderly care home in Denmark Q2 this year. When it comes to whistleblowing, our employees should always feel safe to report suspected deviations of our code of conduct. Reports should initially be made to the line manager for quick response and action, but it's also possible to make anonymous reports through our whistleblowing function. In June 2022, we have implemented an external whistleblowing channel in all countries. The function is in line with the new EU directive, and all reports are investigated and followed through. Our quality model is built bottom up, where each and every employee plays an important role. We have operational line managers that frequently visit our care homes and interact with our staff and care receivers as their primary responsibility.
They measure and are themselves measured on a range of quality KPIs. We also have central quality teams in all countries conducting both online and on-site quality assessments to both audit our processes and support the local teams and motivate constant quality improvement. As a last defense line, we have the national authorities granting us permits to operate and to control we live up to local legislation and to the permits granted. Permits are most often linked to a specific care home. We always work from the principle that any control or follow-up process from the municipalities or the authorities is welcomed. We take all chances we can get to learn and improve.
Every quarter, we have more than 50 inspections or controls from the authorities. To us, this is usual business. We also believe in transparency and doing all our quality reports, highlight number and status of authorities reports and quality inspections. A consistent high-quality care is always delivered through a lot of smaller and larger actions and activities. Through attention to both detail and the bigger picture. Through constant work and priority on organizational culture, we strive to foster an open and transparent environment where reporting of deviations are prioritized and welcomed. This will help us to learn and capture smaller issues before they become big, and to avoid repetitions of similar deviations. We also know on quality we can never rest. Need to work with passion and determination every day across the entire organization. Feel free to ask questions regarding our quality work later in the session.
Now let's turn to the results of the latest customer satisfaction surveys. The care receiver's experience of Ambea is one of the most important measures of how well we have succeeded with our business. During quarter four, all business areas have participated in care receiver surveys, and we continue to have high results in all segments. Altiden, Stendi, and Vardaga has conducted Ambea's own survey, and Nytida has been part of the Swedish Association of Local Authorities and Regions' national care receiver survey. In parallel, Stendi also conducted a client survey, 97% of the clients answered that they are satisfied with the cooperation with Stendi. A fantastic result. The care receiver survey, a natural part of our quality improvement process, all units are now turning the results into action plans to further develop the quality.
On the next slide, I will give you an update on Ambea's sustainability agenda. Sustainability is an integral part of our updated strategy. Our reduced climate footprint and our positive contribution to society through our care services are a constant area of focus combined with robust governance. During the fourth quarter of 2022, we signed a sustainability partnership agreement with the real estate company Vectura, that in Sweden lease 14 large properties to us today. A green appendix for all leases ensure future-proofing of buildings to deal with changes in climate and commit us to take joint energy efficiency measures. We welcome more real estate companies to engage in such partnerships, so we can jointly turn our sustainability commitments into real action. Regarding social sustainability, during the past quarter, we have joined Diversity Charter, part of an international network focused on improving organizations' work within diversity and inclusion.
We are very proud of the rich diversity we see in our workforce across Scandinavia and look forward through this membership to contribute with our expertise, as well as continuing to learn more. I'm also very proud to announce that for the second year in a row, Ambea is among the top 50 employers in Sweden in Universum's ranking, and we are first in the care sector. We work hard to ensure attractive workplaces with a secure working environment for all employees, where capability development is always in focus. It's fabulous to see those efforts reflected in this external recognition. Let's turn to organic growth. In quarter four, the pipeline remained strong, and we have almost 1,500 new beds or placements in pipeline, most of them in Sweden.
In Norway and in Denmark, we are building a pipeline in segments with good potential and fair commercial terms in line with our updated strategy. The pipeline decreased a bit compared to the previous quarter as we opened up two new Vardaga units with 120 beds. We will continue the work to develop good access to new care homes to meet the increasing demand. Demographic change requires the construction of many new nursing homes and care facilities. We continue to actively seek opportunities for organic growth within elderly care in Sweden and Denmark and within social care in all three markets. We are pleased to have an active pipeline in all three markets, with Stendi in Norway again being more active in prioritized market segments.
We are in dialogue with many municipality as society needs to increase the pace of planning and construction of new elderly care homes in both Denmark and Sweden to meet the demand. In Denmark, the discussions center around fair and predictable commercial terms, which is currently the largest hinder for new elderly care projects in Denmark. Let's look at acquisitions. During 2022, we made five acquisitions with an annual turnover of SEK 263 million. We are satisfied with the progress of all acquisitions and the ongoing work to integrate and further develop the businesses. We continue to see M&A as a key driver of our growth and as an essential part of our strategy. Ambea has a strong cash generation that gives us the opportunity to seek for bolt-on acquisitions.
We are active in all our markets evaluating potential opportunities for further value creation. In the short term, we pay higher attention to acquisitions within social care in Sweden, the segment where Nytida operates. Now to the highlights of the fourth quarter. In local currency, all segments deliver net revenue growth compared to last year, apart from Stendi. In total, sales grew by 8% compared to quarter four last year, mainly driven by 4% organic growth. Adjusted EBIT amounted to SEK 170 million, a decrease of 21% versus last year. The decrease was mainly driven by higher costs for food, energy, and sick leave, and costs connected to the reorganization in Altiden. Vardaga continued to show a positive development in occupancy and opened two new nursing homes in the fourth quarter. Stendi's underlying earnings improvement continued this quarter.
Klara showed strong performance and increased its contribution to group EBITDA. In Altiden, we saw high operating costs and costs from the reorganization. By the end of the fourth quarter, Ambea had bought back 3.9 million own shares of the maximum 5 million shares mandate granted by the board of directors according to our share repurchase program. The objective of the program is to optimize the company's capital structure and contribute to increased shareholder value. Now over to you, Benno, for a presentation of the financial summary.
Thank you, Mark. The strong growth numbers we saw last quarter continues in this quarter, and all business areas contribute to the growth like in previous quarter, plus 8% year-over-year. Of this 8% growth in this quarter, 4% was organic growth, 2% came from acquisitions earlier this year, and 2% came from currency effects. If we then look into how the different business area have affected the group numbers, we can see that Nytida is up 4% driven by acquisitions and new contract management operations. Vardaga increased 12% versus last year. Like in the previous quarters, there are an increased occupancy trend throughout this quarter, which is very satisfying from our point of view. Furthermore, Vardaga opened two new nursing homes in the quarter.
Stendi showed growth in SEK, but had a negative growth in local currency by 1%, versus last year as Stendi gradually are leaving the elderly care segment. Altiden is up 16% as an effect from both start-up of new contracts, increased occupancy in our own managed nursing home, and the acquisition of Reflekt. In local currency, Altiden grew by 7%. Klara increased 30% and continue with growth in all sub-segments and due to the acquisition of SkolPool. This slide shows how the different business area have affected the EBITDA of the group. In Nytida, we had lower occupancy in some of our own managed facilities and higher costs for food and energy. In Vardaga, we saw improved occupancy but also higher costs, especially like in Nytida for food and energy, which led to slightly lower EBITDA than last year.
EBITDA was positively affected by government reimbursement for sick leave in both Nytida and Vardaga last year as a comparison. In Stendi, we had positive effects last year that affects comparability of the Q4 figures. We continue to see positive underlying earnings improvement in Q4 this year. Altiden is behind expectations as we saw higher operating costs and higher than expected costs linked to the reorganization. We will continue to work to build a stable and scalable platform in Denmark. Further, we are confident our vigorous measures will improve operational efficiency going forward. Altiden's costs for reorganization are accounted for at group level in order to enhance comparability of the underlying business in Altiden. The strong demand within all of Klara sub-segments continue, and Klara generated a high result in the same quarter last year with more than 100% growth of EBITDA.
Acquired SkolPool was the key driver for the growth. The EBITDA in all business area were negatively affected by high costs for food and energy with a total of SEK 30 million for the quarter. All in all, the EBITDA margin was 5.3%. Operating cash flow increased compared to the same quarter last year, both including and excluding leasing. Rolling 12 operating cash flow is still very high and above 95% of EBITDA, and this gives Ambea good financial flexibility going forward. This slide shows the way from the rolling 12 reported EBITDA of SEK 953 million to the SEK 869 million in EBITDA, excluding IFRS 16, down to the free cash flow post-tax.
We can see that we have invested SEK 105 million in fixed assets, have paid SEK 89 million in interest, and SEK 123 million in taxes. Other non-cash items are mainly changes in provisions from the litigations in Norway. We have gained SEK 116 million from sale of real estate in the second quarter, and during the year, we have had minor negative effect from working capital. All in all, we have generated SEK 536 million in free cash flow post-tax based on the old accounting standard. On this slide, we can see how we use this generated SEK 536 million in free cash flow. SEK 109 was distributed to our shareholders as dividend.
SEK 225 was spent on the five acquisitions we made earlier this year, and SEK 179 was spent on the share buyback program. At the end of the fourth quarter, we have a net debt ratio of three times EBITDA excluding IFRS 16, which is slightly higher than last quarters but lower than last year. A higher adjusted EBITDA have affected the leverage ratio positively compared to the same period last year. Now I wanna go through the business areas, starting with Nytida. Sales in Nytida increased by 4%. It was mainly driven by acquisitions and growth in our own contract managed portfolio. Our own managed homes showed a slightly lower occupancy than last year, around 1 percentage point.
EBITDA decreased by 9% due to lower occupancy rates in some units, more important due to higher costs for food and energy. As said earlier, last year's quarter was also positively affected by the government reimbursement for sick leave costs, which affects the comparison. EBITDA in this quarter landed at 11.7%, rolling 12 EBITDA was still at high 13%. In Vardaga, net sales increased by 12% year-on-year, driven by higher occupancy and by newly opened nursing homes. Occupancy in mature units were in the fourth quarter higher than last year, units started 2019 and 2020, which are included within mature units, had 33% higher occupancy compared to last year. Very good development there.
EBITDA decreased with 10% to SEK 53 million, mainly driven by higher costs for food, energy and cost for sick leave. As I said, last year's quarters was also positive affected by the government reimbursement for sick leave, which affects the comparison. Stendi, net sales increased by 3% in SEK, but decreased 1% in local currency. We are gradually reducing our business within elderly care as we are leaving the segment, but the other segments are now showing growth, which is not the fact previous. In Q4 last year, we saw positive effects from retroactive salary revisions. With this in mind, the underlying EBITDA increased this quarter. The reported EBITDA decreased by 14% and was affected by higher costs for food and energy as well. Altiden.
Net sales grew by 16% due to new management contracts and increased occupancy at our own managed nursing home. Further net sales was positively affected by the acquisitions. The EBITDA in Altiden was behind expectations in the fourth quarter, and EBITDA was down SEK 17 million to minus SEK 16 million, and we saw higher operating costs for food, energy, and sick leave, as well as higher staffing costs in some units. We are now making a total reorganization of the business and are integrating all units acquired during the last years into a new platform. This work has proven to be more difficult than anticipated, and most of the management team has been shifted. We will see improvements going forward, but it will take some quarters of continued work before Altiden is at full speed again. In Klara, net sales increased by 30%.
We continue to grow in all Klara sub-segments, thanks to the increased demand and acquisition of SkolPool. Klara delivers growth in the external market as well as through services delivered to Vardaga and Nytida. The strong growth give us the opportunity to gain scale in more geographies, which in return provide better staff efficiency and margin improvements. EBITDA margin was in the quarter at strong 13.8% and rolling 12 at 10.9%. Our strategic repositioning of Klara with the acquisition of SkolPool and the divestment of the staffing solution for doctors has proven to be successful in terms of growth potential, and also in terms of better margins. With that, back to you, Mark.
Thank you so much, Benno. To sum up our financial development versus our targets, our growth target is 8%-10% through a combination of organic and acquired growth. We have reached our growth target in 2022 with 10% growth. In 2022, we completed 5 acquisitions and had a strong organic growth and high occupancy rates. To summarize the year, organic growth amounted to 5%, acquired growth to 3%, and exchange rate affected growth by 2%. Looking at the profitability target, we have a midterm adjusted EBITDA target of 9.5%, which we have not reached. Achieving the profitability target implies fair revenue index adjustments over time, continued improvements in Norway, and getting the new platform in Altiden established. In Sweden, our last business areas must continue to grow through increased occupancy, establishing new care homes, and continual on acquisitions.
All of this in line with our updated strategy. Finally, leverage is still at low 3 times EBITDA at year-end. We expect our solid cash conversion to continue, which gives us potential to grow and leads to financial flexibility. That brings us to the final page of the presentation. Ambea continued to show good overall growth and good organic growth in the fourth quarter. The positive occupancy development within Vardaga has continued month-on-month throughout the quarter and into quarter one this year. We plan to open several new homes for social care in quarter one, 2023. Higher costs for food and energy of approximately SEK 30 million affected EBITDA negatively in the fourth quarter. Cost inflation is a matter of fact, and we have during the year worked with several initiatives to dampen the effects.
This included investments in central procurement, an energy efficiency program, staff awareness, and good overall cost control. We will continue this work in 2023. Municipalities across Scandinavia continue to prioritize care as one of their main tasks, even though many are under pressure from the overall financial situation. To maintain the established model of equal care for everyone, the revenue index adjustments must reflect changes in relevant costs over time. This is important for the quality and the stability of the Scandinavian welfare system and for fair treatment of all operators in the system. Over time, we will get compensated for a majority of the cost increases through revenue index adjustments, but short term, it affects our profitability negatively, as we saw in the quarter, in Q4. We continue to see underlying earnings improvement in Stendi. Further improvements are expected in 2023.
In Altiden, we continue to establish the right future platform and have special focus on improving profitability. Our share buyback program initiated in quarter four will be concluded in quarter one, 2023. The board of directors proposes a slightly higher dividend compared to last year of 1.25 SEK per share. Finally, I want to thank each and every one in our 31,000 large staff, employees for their personal contribution to a good and independent life for more than 16,500 care receivers. With that, I conclude our presentation and open up for questions. Can we have the first question, please?
Dear participants, as a reminder, to ask a question, you need to press slowly star one one on your telephone and wait for a name to be announced. We're going to take our first question. The first question comes to line of Kristofer Liljeberg from Carnegie. Your line is open. Please ask the question.
Hi, Kristofer from Carnegie. I have four questions. First one on Denmark. Could you give any indication how many quarters it might take until you're profitable again in Denmark? Staffing positively surprised here by earnings in the fourth quarter. I thought there would have been more seasonality, i.e., that the third quarter should have been stronger than Q4. Does this mean what we saw now in Q4, is this a good run rate going forward? Then I just want to confirm in Norway that there were no positive one-offs this quarter, something we have seen from time to time before.
Finally, on Vardaga, do you think this continued improved occupancy rate is enough to compensate margins in 2023 versus 2022 for the negative effects you at the same time see from cost inflation? Thank you.
Thank you, Kristofer. In terms of your first question, how many quarters it will take, before we reach profitability, positive result again in Denmark, I would say 2-3. The second question was around the staffing run rate. Did I understand that correctly in the fourth quarter? Staffing cost run rate.
Yeah, exactly. If this, if this the level of earnings this business should do now per quarter going forward.
Okay, I can take that one. As you, as you said, we have some seasonality, and normally, the third quarter is the strongest in, also in the staffing segment. We had a very strong Q4, and you shouldn't probably take that as a, as a standard for all quarters going forward. We will have definitely higher margins that than we are used to in the staffing segment.
Were there any positive one-offs in Q4 or?
No, no.
It went down the line.
Strong performance and growth in all sub-segments. Your third question on one-offs in Norway, there are no such one-offs in quarter four numbers. Your fourth question was around the margins in Vardaga, whether the increased occupancy can compensate, we don't think that. There will be an impact on margins in 2023 in Vardaga.
Okay, good. Thank you.
Thank you. Now we're going to take our next question. The question comes to line of Jakob Lembke from SEB. Your line is open, please ask your question.
Hi, good morning. My first question is on the unallocated items in the quarter which are quite high. Can you give some more detail from that, please?
The unallocated is the SEK 70 million for the restructuring program in Denmark that is reported as unallocated. It is a one-off for Denmark, but it's not a one-off for the group. That is how we have reported that.
Okay. Then my second question is on the sort of the inflation impact you see in 2023, if it's possible to quantify the magnitude and also if there are any segments that will be less impacted?
The main driver for cost inflation is of course our wages and salaries. That we have no visibility of in, well, as any of the countries. We have from March up till June, we have salary increases in all countries. We don't have no by now, no visibility in that so far.
Okay, I have no further questions. Thank you.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Now we're going to take our next question. The next question comes to line of Victor Forssell from Nordea. Your line is open, please ask your question.
Yes, thank you very much. Good morning. Starting off, on a previous question as well, since you do not expect, let's say, occupancy improvements in Vardaga to compensate, I would rephrase the question a little bit. At what levels are your current sort of indications for the indexations within your Swedish units, landing at, and the divisional sort of variances from Vardaga to Nytida that place? That would be interesting to see or to hear.
The index in Sweden are different systems. We have the so-called OPI, that is care price index, and that goes for the majority of our businesses, some for the going year and some for last year. We know that there is a preliminary index number of 3.5% which we now have invoiced in January for some of the contracts. We also know that some large municipalities used last year's index, so we have a one-year lag in that. Last year's index is 1.9, so there is a lag for compensation. We also have a portion of contracts where there is a political decision on what index to use and at which level.
What you can see right now is that that is probably a little bit lower in these cases than the OPI index. That is the information we have as of now.
Okay. The weighted sort of average is a touch below than, 3.5 in general.
Yeah.
Is that how it is?
Yeah. The average is below the 3.5. Correct.
Yes. Does that mean that, you know, when you're saying that the Vardaga won't be able to compensate, do you expect sort of a negative margining of, I don't know, 100 basis points? Is that a good start to model for us? Is that how you view your progress in that division as well in 2023?
I want to give you a number there. What we have in Vardaga, where it's especially hurt is because we have a very much long lease, new lease contracts with high indexes from 1st of January. We, that is hurting Vardaga a little bit more than the other business areas because real estate cost is a higher portion in own managed Vardaga units. That's why Vardaga a little bit more. Also in Nytida, we have a little bit more individual contracts, and we're a little bit more churn of users making a possibility to renegotiate during the year. That is not the case in Vardaga. That's more or less price is set once a year.
Understood. It's more that you think you can defend the margins in Nytida, then? That's your ambition here?
We have a little bit better possibilities there than in Vardaga. Much I can say.
All right. All right. All right. Just to squeeze one in on Denmark as well, thanks for providing the sort of outlook in 2 to 3 quarters of being unprofitable. What is the current visibility for you in that region? Also how much of today's cost is it that you actually can or see can be taken out in the coming, I don't know, 6 to 12 months?
I mean, they are both operational costs that we are working on in terms of applying our models to the Danish business. We have had higher staffing costs, as we said, in Denmark, and we are working on them continuously. Of course in balance with quality. We need to do it at the right pace in the right way. We also have initiated an administrative efficiency program, which is already showing some early results, and where we are taking benefits from now integrating a number of acquired companies over the last 3, 4 years into one new platform. Of course, while doing that, costs go up, but when you have them integrated, costs come down.
That's why we are quite confident that the costs will come down now during the coming quarters also in the administrative part, in the overheads will drop also from today's level. It's worth both on the back end and on the front end in the care environment, so to speak.
All right. Thanks, Mark. Let me just squeeze in a final one, a technical question on the differences here between Q4 and Q1. Anything that's worthwhile keeping in mind on both cost and sales, throughout your divisions?
You can say that prices come up from Q4 to Q1. Wages normally don't, but other costs go up as rents, for example, come up. There is this kind of cutoff in the year. The most important costs are of course, when the staff costs come in at a higher level in the second quarter.
All right. Thank you.
Thank you. Dear participants, as a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. Just give us a moment. Now we're going to take our next question. The question comes to line of Jakob Lembke from SEB. Your line is open. Please ask your question.
Yes. Hi. A follow-up relating to Klara. Just wondering sort of how much of revenues you have lost or how much revenues are off from the business that you have divested? If you can give some guidance on the timing on how those will be excluded from your reporting?
The doctor business had a turnover of around SEK 120 million. That's SEK 30 million each each quarter. For the Q4, half of that was still there. Say around SEK 15-20 million was still there. From Q1 2023, everything will be out of the, out of our books.
Okay, thanks.
Thank you. Now we're going to take our next question. The question comes to line of Karl-Johan Bonnevier from DNB Markets. Your line is open. Please ask your question.
Yes. Good morning, Mark and Benno. Sorry if you have already alluded to this. I came in a little late on the call and had a connection problem there. If you look at Vardaga's pipeline, there are still quite a few units that are not, say, with an opening date. Given the environment we are in for the moment, how do you see those then when it would be logical to maybe, say, have them open, if you put it like that?
As you know, there was an election in Sweden in the autumn, and we have new political majority in the municipalities established now at the back end of 2022. We are of course engaging with them to see what opportunities there are to open the care homes that we still have on the list without an opening date. It's a little early to say how that will play out. Of course, as demand is going up and in some places the political majority has shifted, there will be opportunities going forward. There are no, today, no solutions for any of them as we can't put an opening date to any of them yet.
Of course, we're working, with each and every one of them quite intensively.
When you look at the units that has been open most recently, how do you see the capacity utilization building in them?
We see a good ramp up in the units that we have opened recently. That plays out well. We are satisfied with that.
Perfect. Perfect. Yeah. wonderful then.
When you look at 2023 with the general uncertainty, the cost inflation elements you have alluded to and discussed, how do you see your capital allocation considerations for the year? Looking at, say, maybe the gearing contra, growth and contra acquisition and so on. We are still looking at a pipeline on bolt-on acquisitions. We are primarily looking in the Nytida segment. We have made a couple of acquisitions in Denmark earlier year, but that is a little bit put on hold. We have a pipeline, and we are still looking for smaller bolt-on acquisitions in, primarily in Nytida. We aren't stopping that by any how.
We have a strong cash flow, and we think we have the possibility to both give the dividend according to the dividend policy and to make smaller acquisitions and still have some money left to other. You can, yeah, deal with that in different ways.
In the current interest rate environment we have, you still think, the gearing target of staying below 3.75 is a logical one? Do you perceive that in reality it's something that you would, you would like to be slightly lower at this stage?
SEK 325 is the target.
Oh.
Yeah. The target is still there, and we are, yeah, working with that target as previous.
Excellent. Thank you very much.
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star one one on your telephone keypad. Dear speakers, there are no further questions at this time. I would now like to hand the conference over to your speaker today, Mark Jensen, for closing remarks.
Thank you very much, thank you all for calling in. The annual report will be published March 28th, the quarter one report for 2023 will be published on May 4th. I wish you all a very nice day. Stay safe and healthy.
That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.