Good morning, everyone, and welcome to this conference call, where we will present Attendo's results for the fourth quarter of 2017. My name is Andreas Koch. I am Communications and IR Director at Attendo. Today's presentation is hosted by Attendo CEO, Henrik Borelius, and Attendo Acting CFO, Rebecca Ericsson Birck. After the presentation, we will open up for questions. Over to you, Henrik.
Thank you, Andreas. Good morning, everyone, and welcome to the presentation of Attendo's fourth quarter results for 2017. Before entering into the results presentation, I would like to mention that this is my last financial report to release as CEO of Attendo. I feel this is the right time to hand over the responsibility after having closed the books for 2017. On the 1st of March, my longtime colleague and friend, Pertti Karjalainen, will assume the role of acting CEO, in addition to the role as Business Area Director. Pertti will do this until a permanent CEO is in place, and I will remain at the board's disposal until the end of my employment period. Pertti has great knowledge about our industry.
He knows Attendo and has been extremely successful as Business Area Director for Attendo's Finnish care operations the last 10 years, and the founder of the origins of our Finnish business before that. Turning to the results presentation. I will start by presenting the results in brief and by sharing some business and market highlights. Rebecca Ericsson Birck, our acting CFO, will take you through the numbers in more detail. Next slide, please. The fourth quarter 2017 was a quarter with high growth and a high number of openings and beds under construction. The main part of growth stems from the acquisition of Mikeva. The high number of construction starts in recent and coming quarters lay a solid foundation for future growth. Net sales amounted to SEK 3 billion. Growth was 14%, adjusted for currency effects.
Operating profit amounted to SEK 240 million, which was SEK 1 million lower than Q4 last year. The EBITDA margin amounted to 8.0%, 1.1 percentage points lower than last year. Improvements in planning and processes and acquisitions contributed positively to profits. However, compared to Q4 2016, the result was negatively affected by impact from the Danish home care operations and lower contribution from integration care. In addition, the number of newly opened beds in the quarter within own operations was on a high level, which had a negative impact on profit. Attendo reported an operating cash flow of SEK 252 million. By the end of the fourth quarter, Attendo reached 13,262 own beds under operations. At the same time, we had a record high number of beds under construction, amounting to 2,903, all in line with our strategy to grow in own operations. Next slide, please.
Let's look at our three contract models: own operations, outsourcing, and staffing. You can see that the quarter reflects continued growth in own operations. Net sales increased by 20% compared to Q4 2016. The increase is explained by acquisitions, new care homes, and higher occupancy in units that were under startup during the corresponding quarter of last year. Lower occupancy and discontinuation of units within integration care and home care had a negative impact on sales. Attendo opened 14 new own units in the fourth quarter with a total of around 470 beds, a historically high number. One of our key strategic focus areas is to continue to grow our business within own operations. During the fourth quarter, we started construction of 12 new units that will add 410 new beds in total. The total number of beds under construction reached 2,903 by the end of the quarter.
Attendo has been successful in identifying demand for new beds and rapidly translating this into construction starts. After the 1st of November 2017, Mikeva is part of Attendo and is consolidated into the financial reports. With the acquisition of Mikeva, Attendo is strengthening the expertise in social psychiatry and widening the presence in care for older people in northern and western Finland. Mikeva had sales of EUR 114 million for the full year 2017, around 2,900 beds in operation, and 230 beds under construction. Turning to the other contract models. Net sales in outsourcing operations increased by 6% as a result of us starting two outsourcing combination contracts earlier 2017, Sulkava and Sysmä in Finland. Looking at the results of tendering processes in Q4, Attendo won contracts totaling SEK 60 million and lost volumes of SEK 160 million.
Net sales in the contract model staffing were down 7%, a result of ended contracts and lower sales in existing contracts. Next slide, please. Attendo now has 13,262 own beds in operation, an increase by 43% from the corresponding period of 2016. Through the consolidation of Mikeva, we gained 2,900 beds in own operations. Attendo is now larger in own nursing and care home beds than the three nearest Nordic competitors combined. The number of beds under construction was 2,903 at the end of the fourth quarter, which is the highest number achieved so far. All in all, 77 new units were being built at the end of the fourth quarter. This is a result of our own dedicated work to get new projects started, our strong relations with local authorities, and favorable market conditions.
We expect continued good underlying demand for new capacity, and we have a strong pipeline in both Finland and Sweden. This is a solid foundation for future growth, even though this high activity level is not likely to remain over time. On the right-hand side of the slide, you can see photos of some of our own nursing homes that opened in Q4 2017. The picture at the bottom shows the recently opened nursing home, Attendo Hovsjövägen, in the city of Södertälje, close to Stockholm. This is Attendo's first own nursing home in the city. The nursing home is being welcomed by the citizens, and we have a constant flow of people that come to visit the home. Attendo Hovsjövägen is a lifestyle nursing home with a focus on culture and entertainment. We are cooperating with cultural institutions in the local area, such as the library.
Together with the local library, we're planning to offer digital tours to Stockholm's main museums for our residents. Next slide, please. Let's then turn to the overall market trends. I already commented that Attendo continues to see strong interest in own operations in both Sweden and Finland. There is an underlying need for nursing home beds, and the public sector needs new solutions to get access to new capacity and replace outdated facilities. At the same time, we expect that the competition in the market will remain high, and in certain locations, we have seen that the time to fill new homes has increased. The outsourcing market in Sweden remains challenging. Volumes were up versus the previous quarter, but still lower than the corresponding period of 2016.
Demand may have been affected by the new permit requirements for private providers, which have created new uncertainties for local authorities wanting to outsource operations. Demand for outsourcing solutions for care homes for people with disabilities was good due to retained volumes, while the demand for individual and family care services was almost non-existent. In Finland, higher activity in the outsourcing market is seen due to delays in the SOTE reform. In addition, demand for staffing is stable and is expected to gradually improve. During the start of 2018, the Swedish government sent its profit limitation proposals to the Council on Legislation. We expect sharp criticism from the Council on Legislation as, according to legal experts, the proposal is in breach of current law and the EU legislation. The government plans to present the proposal to Parliament in spring. There is no parliamentary majority behind the proposal.
The overall process to implement the SOTE reform in Finland moves forward. The Finnish government recently proposed some changes in the reform, but they were mainly related to specialist care. The proposals will be submitted to Parliament for debate and decision in the spring. Attendo remains optimistic about the opportunities that the reform offers for private providers. With that, I hand over to Rebecca for a financial review of the quarter.
Thank you, Henrik. Looking at slide six, we see that net sales in the quarter were approximately 3 billion SEK, up by 13.8% compared to last year, where up 12.9% from acquisitions. The FX effect was minor in the quarter. The high growth from acquisitions is a result from the consolidation of Mikeva during the fourth quarter and a high number of bolt-on acquisitions in both Sweden and Finland during 2017. Our new units contributed positively to sales but could not compensate for the weak development in the integration and home care business during this quarter, which explains the low organic growth. During 2018, we expect organic growth to gradually improve. Operating profit for the quarter was SEK 240 million, which is in line with last year. We continue to see a profit development from our work with planning and processes, and the acquired units contributed positively to the results.
However, we are experiencing a rapidly reduced demand for integration services and a weak result in the Danish home care business, which pressures our profit in the quarter. I will get back to some more details on the profit development on the next slide. In terms of margins, there has been a negative impact both from the home care and integration business, as well as from Mikeva coming in with a lower margin than Attendo's. Financial net was minus SEK 23 million compared to minus SEK 16 million in Q4 2016, and the higher interest expenses are explainable by higher debts and higher interest margins after the Mikeva acquisition. Income tax for the quarter was minus SEK 47 million, which equals a tax rate of 25.8%. The highest tax rate is, among other, related to non-deductible items such as acquisition costs.
Going forward, we don't expect the tax rate to stay on this high level. Net profit for the quarter was SEK 135 million, which equals an EPS after dilution of SEK 0.84. Next slide, please. As you saw on the previous slide, the operating profit for the quarter was SEK 240 million, SEK 1 million lower than last year. The main profit driver this quarter was our continuous work with planning and processes, including lower administration costs. We could also see that our acquisitions contributed well to the profit, together with an improved occupancy in the units that were on the startup in Q4 last year. As we communicated during the Q3 presentation, we are experiencing some challenges in the Danish home care business, which is also affecting the results for the fourth quarter.
We expect that the majority of the losses are isolated to 2017, but home care continues to be challenging on some local markets. We are taking action to address this by closing down subscale units and to focus on areas with high customer density and healthy conditions. In addition, we continue to see a declining demand for integration care, and the lower occupancy in the integration units and discontinued operations have had a negative impact on our profits this quarter. To adjust our operations to the lower demand, we are closing down units that are no longer needed and converting some units into other care homes. Our assessment is that the challenges we have seen in the integration home care business during 2017 will not have any major impact on the profit in 2018.
However, I would like to highlight that there will be some negative impact on sales from the units that we close down. We also continue to open a large number of new beds during this quarter, which has a negative impact on the results. We have started to see that new units are taking longer time to fill in certain locations, and the number of new establishments is on a record level, and we expect this high opening pace to remain also during the first half of 2018, increasing the profit pressure. Long term, this is positive for Attendo's profit growth, but short term, it has a negative impact. This quarter, we also had a calendar effect from more paid holidays during this year's Christmas and New Year compared to Q4 2016.
Going into 2018, it is worth bearing in mind that Q1 2017 was a very strong comparison quarter due to a delay in salary increases in the collective agreement in Sweden, that the Easter effect will partly impact the first quarter in 2018. Next slide, please. Some comments on the cash flow in the quarter. Operating profit for the quarter amounted to SEK 240 million, change in working capital, pay tax, and other non-cash items had a slight positive impact of SEK 62 million. Net investment in CapEx amounted to minus SEK 50 million, mainly related to fixed assets in the new owned nursing homes. This takes us to an operating cash flow in the quarter of SEK 252 million. Interest payments amounted to SEK 31 million. Attendo continues to selectively invest in real estate projects this quarter, and we have had cash outs of SEK 134 million related to these projects.
Our strategy is still to be an asset-light company, and we expect that during the first half of 2018, we will start to free up cash from these investments. This quarter, we completed the acquisition of Mikeva, which explains main part of the cash flow in the acquisition and financing activities. The purchase price for the share amounted to about SEK 900 million, explaining main part of the minus SEK 1 billion in net acquisitions. Net change in other financing activities consists of new debts related to the Mikeva acquisition of close to SEK 1 billion. Total cash flow for the quarter amounted to SEK 164 million. Net debt amounted to SEK 4.8 billion, which equals a net debt to EBITDA of 3.9. This is slightly above our financial goals, and we expect this to gradually decline during 2018. With that, I hand back to you, Henrik.
Thank you, Rebecca. Next slide, please. Attendo is continuously working to improve and develop its quality. In the fourth quarter of 2017, Attendo achieved good results in the Swedish National Board of Health and Welfare's annual customer survey of recipients of care for older people. In the area of owned nursing homes, Attendo had higher score than the national average in 11 out of 13 parameters. In home care, Attendo had higher score than the national average in 10 out of 14 parameters. Attendo's lifestyle homes also had high customer satisfaction scores in the same survey, well above the average for both public and private providers. Attendo had the highest scores in areas such as safety, personal treatment, and activities. For a long time, Attendo has measured customer satisfaction in disability care.
This is key for our vision, empowering the individual, but also entails certain challenges as some learning disabilities can make it harder for customers to express their views. Therefore, Attendo has pioneered the use of a visual tool for evaluation and communications named Pictosol. This tool is easy to use for the customer and gives reliable results. Now, for the first time in disability care, there is a national survey in Sweden that enables a comparison between our results and the local authority units. Attendo's results are on a high level and clearly above the results for local authorities. It is essential for Attendo to be an attractive employer, and we are continuously measuring the employees' job satisfaction. The measurements performed in the fourth quarter of 2017 show that job satisfaction and satisfaction with leaders remain high and stable.
The acquisition of Mikeva was finalized in the fourth quarter, and 2,600 new colleagues were welcomed to Attendo. The work to integrate systems and processes began immediately. We are putting great effort in making employees at Mikeva feel welcome and understand Attendo's culture and approach, the Attendo model. Next slide, please. I would now like to make a short summary of the full year 2017. First, if we look at financials, net sales in 2017 amounted to SEK 11.2 billion, and adjusted growth was 8%, which exceeds our long-term financial target of 7%. Operating profit amounted to SEK 1,084 million, which corresponds to an EBITDA margin of 9.7%, slightly lower than in 2016. Operating cash flow was stable, amounting to SEK 763 million.
The board of directors proposes a dividend of SEK 1.27 per share, which is in line with Attendo's dividend policy to distribute 30% of net profit. Behind the financials, there is so much more. We had a very high activity level in Attendo last year. During the year, we opened 54 nursing and care homes with a total of 1,886 beds in Sweden and Finland. At the same time, we have acquired and integrated 27 companies, including two multi-site businesses, Mikeva and Lumana home care business, which entails us welcoming almost 4,000 new colleagues to Attendo. Attendo's organic pipeline development has also been strong. At the end of 2016, we had 1,936 beds under construction. By the end of 2017, we had taken that up to a new record number, 2,903 beds.
To put this into perspective, this means that Attendo is establishing 50% more new nursing homes than the local authorities in Sweden and Finland taken together. In parallel to this, we have maintained stable customer satisfaction, quality results and employee satisfaction, all of which enables us to attract customers and colleagues and grow. This is a remarkable achievement by the organization, and I'm very impressed by the strong commitment and drive we have throughout the company. Our culture and our values help us do a better job and create competitive advantage. Going into 2018, we will continue to increase the number of openings, something that short term has a negative impact on profitability, at the same time it's the foundation for future growth. If we look at the overall market 2017, it continued to be strong in own operations with an increase in the number of beds under construction.
Attendo has been the most active Nordic company in establishing new nursing homes during the past years, building one out of every four new nursing home beds open in Sweden and Finland since 2013. The private providers have gradually increased their share of new nursing homes in Finland and Sweden. As an example, in 2012, around 15% of new nursing home beds were built by private providers in Sweden. In 2017, the private provider share had increased to nearly 50%, more than three times as much. This development is in line with what we see in the rest of Europe. Finland and Sweden are still lagging, the trend is clear. Private operators have a vital role to play in developing the industry. Our strategy remains the same: to provide new solutions and help local authorities reduce waiting lines.
We expect to remain a leading developer for years to come. Finally, I would also like to thank all my colleagues throughout the company for 18 fantastic years together. You drive Attendo forward every day through committed and long-term efforts. I would also like to thank all customers, local authorities, and shareholders for choosing Attendo throughout all these years that I worked here. Your trust is key for our development. I also wish Pertti all the best in his part in new role. I'm convinced that Attendo has a strong platform for continuing to develop care using innovative solutions for the benefit of individuals and society for a long time to come. Thank you for your attention. Over to you, Andreas.
Yes. Thank you, Henrik. We'll now open up for questions. Please state one question at a time. Operator, please go ahead.
Thank you. Ladies and gentlemen, if you would like to ask a question for the speakers, please press zero one on your telephone keypad now. Our first question comes from the line of Daniel Tüchsen from ABG. Please go ahead. Your line is now open. Hello, Daniel, the line is now open. Daniel Tüchsen from ABG, your line is now open. We'll move to the next question. That's from Christopher Lederberg from Carnegie. Please go ahead. Your line is now open.
Thank you. Can you hear me?
Yep. Yes.
Okay, good. Yeah. My question is really about the negative impact you had there on organic growth from lower migration volumes and the home care. It was mentioned it was a drag on organic growth in the quarter. Maybe you could specify that a little bit. Related to that, how much of an impact will the lower migration volumes have on organic growth in 2018?
What we're saying, you're right, it had a negative impact in the fourth quarter. What we're saying for 2018 is that it will have a negative impact. Close down in home care will have a negative impact for 2018 of SEK 140 million on revenues, not so much on the EBITDA. Integration for 2018 will have a negative impact on revenues of about SEK 180 million and relatively limited impact on EBITDA.
Okay. Do you have the impact for the quarter as well?
No, we don't specify that.
Okay. The number of migration beds, or what I should call it, that were closed down in the quarter, is that a figure you can give out?
No. Now we have very few of those units left, basically. It's been a big transformation for us during 2017.
Okay.
As we said in the last quarter, it's been going down, which is bad of course, but we were actually quite happy that we managed to maintain the business for as long as we could given the rapid decrease in demand.
The reason I'm asking, if I adjust sequentially the number of beds Q4 versus per quarter and remove the Mikeva 2,900 beds, it seems it's flat despite opening 470 new ones. Is it something else going on than the migration?
It is the integration effect. You're right. The reason that we haven't seen a more rapid uptake in the installed base, if you take out the big acquisition, is because of the integration business. That's exactly the case. It's not the other close downs, it is that.
Okay. From here, the number of beds will go up with the number of openings, more or less.
Pretty much. The short answer is yes. Over time we will see some cases where we have done maybe smaller bolt-on acquisitions where the facilities can be a bit older. We keep them for a while and after a while we will transfer those customers to other units. That's going to be a marginal factor. Pretty much over time it should be pretty good correlation between the shovels in the ground and the installed base.
Great. Thank you very much.
Thank you, Christopher.
Thank you. Our next question comes from the line of Stephan Andersson from SEB. Please go ahead. Your line is now open.
Thank you. First on the ramp up, you're opening quite a lot of beds and have done for a while, and of course you have an idea of how that ramp up would go. I guess your easiest answer to me would be that it's going according to plan. To give us a little bit more feeling and flavor, are all the regions, all the places you're opening up, are they receiving this well or are you seeing differences in different regions? Are things going according to plan or you see some over capacity anywhere at all? If you could give me a little bit more flavor on that, I would be happy.
No, you're right. This is an area we focus a lot on. I think as we've indicated earlier quarters, we've said that we see a strong underlying demand, we expect startup times in certain locations to take longer due to new local authorities, due to increased competition in some cases. We are seeing that in certain places. It's still limited. It's not overall everywhere, there are certain places where it can take longer to get buyer mechanisms in place for the local authorities or there is more capacity from competitors. Sometimes we have based it on a local authority shutting down an old unit, that can take a bit longer. For various different reasons. As we said before, we're kind of expecting fill up time to go from something like 12 months to 18 months. It's that type of shift.
We are seeing it in certain locations. It's something we've expected and something we're working actively with. I think we will have to get used to that type of pattern in certain areas.
On the staffing business, it's been in decline I think every quarter year since 2014. If you take a longer perspective on that, is it a structural issue in the whole market or do you have issues? What is your thinking about that portion of your business? How core is it to your other businesses? Apparently it's not performing that well, do you need it or does it match, so to speak, your other business?
The staffing business is very important to support our healthcare business because there's a clear link between running the large combination contracts and outsourced health centers where we have a strong position and finding the doctors. You're right that we have not been happy with the performance in our staffing business over the last couple of quarters. It's been going down. It is tough to find the doctors, we've had also some cases where actually there's been less buying from the purchasers. We are seeing a bit better outlook going forward because now, even though the SOTE counties are not in place, the precursors to the SOTE counties are starting to be formed, so kind of like voluntary associations of local authorities. There we are starting to see an increasing interest within services.
We remain strongly convinced that with the strong emphasis that the Finnish healthcare system has on primary care, which makes a lot of sense from a health economic perspective to try to meet the patient early in the healthcare chain, there will be a need for primary care doctors, and a share of those will come from us as a staffing company where we are by far the market leader. We're a bit more positive on this going forward. It's not a major business for us, but we see that there is more stuff to do there and we're starting to see more interest from certain payers.
On the home care business
Give an indication on the magnitude of that in the quarter. You highlighted on top there. I don't know if that's a ranking order, but if you could give some flavor on the cost.
It is a ranking order. When we state the profit drivers, they are in order of magnitude. Yeah, it's very specified to the Danish market, where we are sub-critical in some areas, and we have some complicated contracts where the terms are not good. We also have certain complicated administrative procedures with lots of manual handling. That has been a hit in the third quarter and fourth quarter. We are now putting processes and routines in place to handle that in a better way. We expect that to have a much lesser of an impact going into Q1.
Okay, thank you.
Thank you. Our next question comes from the line of Christian Reinhold from Småkap. Please go ahead, your line is now open.
Yes. Christian Reinhold from Småkap in Copenhagen. I'd like to go back to the Danish operation. Could you be specific about the magnitude of the loss in 2017?
We don't specify the loss, but it has been costly, so we're not happy with the performance there. Therefore, we are putting actions in place to handle our contracts in a better way, both in terms of planning and processes to work with efficiency, but also to make sure that, especially one situation, we have a fairly complex system with lots of manual interaction to ensure that we handle that in a better way.
Yeah. In the media in Denmark, there's constantly very negative stories about Attendo's operations in Denmark, and it's just 2% of your turnover. I asked the same question in the last quarter. Why are you still operating in Denmark? Why don't you leave the Danish market?
I think we look at it in a very long-term perspective in terms of how we see both Denmark and the rest of Attendo. We have been in Denmark for 20 years. In this specific situation, in this local authority where we have gotten negative publicity, we've had a very long-term relationship there. I think our customer satisfaction scores are still high. All the people are still very happy with the services we provide. Of course, we're not happy with the financial development. We can't just be in an area because all people like it. It has to make financial sense. We have to sort that out. We think the Danish market has opportunities. Danish home care has been tough in general, we think there are opportunities longer term in Denmark. We work on.
Yeah, the stories that you're telling now and the stories I hear in the media, they are in two different worlds, I would say. I expect the way people see Attendo in Denmark is extremely negative. Isn't it impossible to turn that business around, really?
No, I think we need to work on. As I said, we're happy with the scores we get from the customer satisfaction surveys, we need to work to improve it.
Okay. Thank you, Christian Reinhold. Do I have the next speaker?
Thank you. Our next question comes from Lars Hevreng from Danske Bank. Please go ahead. Your line is now open.
Thanks. Can you say anything about the consolidation of Mikeva from November? Whether there was any profit contribution in the quarter or any restructuring costs associated with that consolidation, and also about the 2,900 beds you had in own operations. If you could, how you would characterize the occupancy rate in Mikeva relative your other own operations?
The contribution from Mikeva in November, December was EUR 19 million in revenues and EUR 700,000 EBITDA. When it comes to the occupancy, as we've stated before, Mikeva has lower occupancy than Attendo, because there's been an active work in terms of starting new units and then also Mikeva done a lot of acquisitions that were units with low occupancy. Part of our plan for improving performance in Mikeva is basically three steps in a sense. It's first taking out overhead synergies. It's also improving occupancy and then working with planning and processes. That's something we've already started with, but it's going to take time, and as we said before, we say that Mikeva will reach Attendo's margins in three years' time.
There were no one-off, so to say, included in the fourth quarter costs?
There were no major integration costs related to it in the fourth quarter, no. Going forward, we don't expect any major integration costs to come either.
Okay, thank you.
Thank you. Our next question comes from the line of Hans Boström from Credit Suisse. Please go ahead. Your line is now open.
Good morning. I had a question regarding the potential new requirements for the outsourcing business in Sweden, to clarify that the SEK 140 million you mentioned earlier, Henrik, actually relates to outsourcing, and not mixing that up with the migration business. Could you give us a perspective of whether the SEK 140 million actually takes into account potential changes relating to changes in regulation, or this is simply loss of contracts until now, and we can perhaps see further losses throughout 2018? That would be very helpful.
That's a good question, Hans. To clarify, the SEK 140 million in home care closings, the revenue effect there is not related to the permit requirement. It is related to us restructuring home care. Us deciding to exit areas where we cannot reach the critical mass that we need, or we don't have the right kind of contract terms. The same for integration impact into 2018 of SEK 180 million lower revenues is not related to the permit requirement. This is about us, integration is the market going away, and the home care impact is more about us exiting certain areas where we don't want to be.
Do you have any sense of what the impact might be for the permit requirement? Is this related to the renegotiated business, or does it impact all your business?
That is a good question. To try to clarify that then. The permit requirements are about the outsourcing business. It's primarily about nursing homes for older people. It's a part of our outsourcing business in Sweden. If we look at the broad picture in Attendo, we focus mostly on own units, then we have about 30% outsourcing. Part of that is affected by this. For instance, in disability care outsourcing, we already have permits since many years back. We are working actively in those cases to ensure that as those permit requirements become that we have to apply for permits, we try to manage that. We've had positive responses in some cases so far. There's been some other, also in new outsourcings we won, we've gotten positive responses.
It's something we have to work with, and it might impact the local authorities' willingness to outsource new units. It's related to outsourcing of nursing homes. That's the key area.
Is this about raising the standards and that you would have to incur further expenses in order to match the new requirements? Or is it effectively the reverting back to public ownership of the facilities? What might be the potential outcomes of these licensing requirements?
It could be both. It could be both higher costs on certain staffing requirements. It could be units reverting back to the public sector. That's why we're working actively with it, but it's hard to say exactly what the impact could be. We think, so far actually it's gone quite well for us in terms of applying for those permits, but it's an area we have to work with actively.
If I may just ask in clarification again, the comment, Rebecca, you made about tax, not being, if I understood correctly, at this 26% level. Are we reverting back to the traditional level in 2018 already, or are we talking about a longer transition phase?
I'm sorry, can you repeat what you were referring to?
I understood that the 25.8% tax rate that you referred to would not be sustainable. That was my understanding, first of all, that's to clarify that. The timing of the reverting back to the old level or any other level that you might want to indicate, that will be helpful to know.
Yes. Sorry, Hans, I didn't catch that. Yes, I expect for 2018, we will go back to a level which we show for the full year, around the 22%. That's what I'm expecting.
Okay, great.
Thank you. Should we take the next question in line?
Thank you, as another reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. We have a follow-up question from Christian Reinhold. Please go ahead. Your line is now open.
Yes, thank you. I have a question regarding the margins. You have here two very important issues in 2018. The Mikeva, of course, consolidated in the figures and also the Danish operation. If we take these two out, can you then comment on the margins? Are they stable at the levels you have had here historically, or are they also under pressure?
I think if we look at profit development overall in 2018, the way we see that is that the biggest thing that's going to affect profit development for 2018 is going to be the high increase in openings. Especially in the first half of 2018, I think that's the first thing I'd like to say. In the first quarter in particular, one should remember that we had a strong comparison quarter in 2017 due to this delay in salary increases. Seasonality was a bit more positive in 2017 due to the fact that the whole of Easter came in Q2. If we look at the second half of 2018, we will see a more positive profit development due to units ramping up. New units that have opened will ramp up, and that will more compensate for the effects of the high number of openings.
We will have positive impact from Mikeva coming in.
Okay.
Profit growth will be well in line with our financial targets for 2018, we expect. You're right. If you just look at the optical margins, of course, Mikeva will have a slightly dilutive effect because it comes in with a lower margin, it will generate profit growth in SEK in 2018.
Still they have a margin of 3.3% and you are substantially higher.
Yes, as I said before, it will have a dilutive effect in that sense, it will generate a profit improvement in 2018.
Okay.
Okay. Thank you, Christian. Next question.
We have a question from the line of Daniel Tüchsen from ABG. Please go ahead. Your line is now open.
Hi. Thank you very much for taking my question. I missed the first part of the call, so sorry for that. I just have one question. How much was acquired growth in own operations? You have mentioned that before, and if you have already answered, I apologize for that, but that's my only question now.
If you look on the fourth quarter in particular, the big impact there was Mikeva, and Mikeva contributed with EUR 90 million, and that's 100% own operation revenues.
Thank you very much. Very clear.
Thank you. We do have another follow-up question from the line of Christian Reinhold. Please go ahead. Your line is now open.
Yes, thank you. My last question is really regarding these new IFRS standards regarding leases. I don't know if you know how big the impact would be on Attendo, but could you please comment a bit on that, how much it's going to affect the figures, and also if it's going to impact the way you are doing your business?
We are analyzing that right now, and we will come back to a more accurate figure later during the autumn or present in Q4, but it will have an effect on our balance sheet, of course.
Yeah. Well in line for the Q1 report as next year, we will definitely talk about how it looks like in the past year and also going forward.
It doesn't affect the way we think about our business.
Okay. That's very important.
We continue to believe strongly in our nursing homes, and we will continue to drive that.
Okay. Thank you.
Okay. Thank you. Do I have a final question?
We do have a final question, a follow-up from Hans Boström. Please go ahead. Your line is now open.
Yeah. Going back to Henrik's point about the profit development in the first half, does this mean regarding the collective wage agreement, does this mean that we're talking about a 2-year of wage increases in Q1? We're talking about 2% times 2%, or what type of impact are you actually suggesting we should take into account?
What I meant was that in the first quarter of 2017, we had a positive impact, not just us, but our industry, on the fact that the wage increases came later than the price increases.
We kind of had a positive mismatch. Now they kind of match each other. When you do a year-on-year comparison, that affects it.
For the years, yeah, minor.
That quarter, it has a specific impact.
Okay. Finally, regarding the working capital development in Q4, which was meaningfully weaker than last year, could you give some more detail on that, please?
Yes. Working capital in our business is mainly related to how we pay out salaries and how we get paid from our customers. This is basically a timing effect. It's not a shift in our working capital structure.
It doesn't have to do anything with Mikeva or anything like that?
No, it doesn't. This is timing.
From that follows that we should expect a much stronger Q1, this is effectively, or has it been anticipated in Q3? I haven't looked at the Q3 numbers, but I just want to make sure I understand where this cash, when this cash is turning up.
I think it's very difficult to say between the quarters how the working capital will play out. On an overall level, on an annual level, the working capital is fairly stable. The timing effect can make this to vary a bit between quarters.
Okay. Thank you.
Thank you.
Thank you. There appear to be no further questions, I'll return the conference to you.
Okay. Well, let me conclude this conference call, and thank you for participating. I'm looking forward to the next one. Thank you.
Thank you. This now concludes our conference call. Thank you for attending. You may now disconnect your lines.