Earnings Call: Q4 2017

Feb 14, 2018

Good morning, everyone, and welcome to this conference call where we will present Attena's results for the 2017. My name is Andreas Kotch. I'm communication and IR Director at Ascendov. Today's presentation is hosted by Attena's CEO, Anna Karelis and Tenno's acting CFO, Rebecca Eriksandberg. After the presentation, we will open up for questions. By that, over to you, Henrik. Thank you, Andreas. Good morning, everyone, and welcome to the presentation of Atendo'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 Atendo. I feel this is the right time to hand over the responsibility after having closed the books for 2017. On the March 1, my long time colleague and friend, Perthi Karjalainen, will assume the role as acting CEO in addition to the role as Business Area Director. Perthi 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. Perthi has great knowledge about our industry. He knows Atendo and has been extremely successful as Business Area Director for Atendo's Finnish share operations for the last ten years and the founder of the origins of our Finnish business before that. Now turning to the results presentation. I will start by presenting the results in brief and by sharing some business and market highlights. Then Rebecca Erickson Bieck, our acting CFO, will take you through the numbers in more detail. Next slide, please. The fourth quarter twenty seventeen 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 Mick Eva. The high number of construction starts in recent and coming quarters laid a solid foundation for future growth. Net sales amounted to SEK3 billion. Growth was 14% adjusted for currency effects. Operating profit amounted to SEK $240,000,000, which was SEK 1,000,000 lower than Q4 last year. The EBITDA margin amounted to 8%, 1.1 percentage points lower than last year. Improvements in planning and processes and acquisitions contributed positively to profit. However, compared to Q4 twenty sixteen, 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. Reported an operating cash flow of SEK $252,000,000. By the end of the fourth quarter, Atendo reached 13,262 owned 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 owned operations. Next slide, please. Let's then 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 twenty sixteen. The increase is explained by acquisitions, new care homes and higher occupancy in units that were on the start up 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. Atendo opened 14 new owned units in the fourth quarter with a total of around four seventy 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 four ten new beds in total. The total number of beds under construction reached 2,903 by the end of the quarter. Atendo has been successful in identifying demand for new beds and rapidly translating this into construction starts. As of the 11/01/2017, Mykiva is part of Atendo and is consolidated into the financial reports. With the acquisition of Mikiva, Atendo is strengthening the expertise in social psychiatry and widening the presence in care for older people in Northern And Western Finland. Mikiva had sales of EUR114 €14,000,000 for the full year 2017, around 2,900 beds in operation and two thirty beds under construction. Now 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, Solkava and Sushma in Finland. Looking at the results of tendering processes in Q4, a tender of one contract totaling SEK60 million and lost volumes of SEK160 million. Net sales in the contract model staffing were down 7%, a result of ended contract and lower sales in existing contracts. Next slide, please. Atendo now has 13,262 owned beds in operation, and increased by 43% from the corresponding period of 2016. Through the consolidation of Mickova, we gained 2,900 beds in own operations. Atamba 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 twenty seventeen. The picture at the bottom shows the recently opened nursing home Atendo Hofschewagen in the city of Serno Tellia, close to Stockholm. This is Atendo's first owned nursing home in the city. The nursing home is being welcomed by the citizens and we have a concert flow of people that come to visit the home. Atendohorstrewergen is a lifestyle nursing home with a focus on culture and entertainment. We cooperate we are cooperating with cultural institutions in the local areas 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 Atendo 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 previous quarter, but still lower than 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 re channel volumes, while the demand for integration care services was almost non existing. In Finland, higher activity in the outsourcing market is seen due to delays in the software 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 of Legislation. We expect sharp criticism from the Council of 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 Sotter 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. Atendo remains optimistic about the opportunities that the reform offers for climate providers. With that, I hand over to Rebecca for a financial review of the quarter. Thank you, Henrik. So looking at Slide six, we see that net sales in the quarter were approximately SEK3 billion, up by 13.8% compared to last year, were 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 Miskila during the fourth quarter and the 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 the organic growth to gradually improve. Operating profit for the quarter was 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 profits in the quarter. I will get back to some more details on the profit development on next slide. In terms of margins, there has been a negative impact both from the Home Care and Integration business as well as from Mickova coming in with a lower margin than Atendel's. Financial net was minus SEK23 million compared to minus SEK16 million in Q4 twenty sixteen. And the higher interest expenses are explained both by higher debt and higher interest margins after the Mikve acquisition. Income tax for the quarter was minus SEK47 million, which equals a tax rate of 25.8%. The higher tax rate is, among other, related to non deductible items such as acquisition costs. And going forward, we don't expect the tax rate to stay on this high level. Net profit for the quarter was SEK135 million, which equals an EPS after dilution of SEK0.84. Slide, please. As you saw on the previous slide, the operating profit for the quarter was SEK240 million, 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 start up 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 closed down. We also continued to open a large number of new beds during this quarter, which had 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 2018, increasing the profit pressure. Long term, this is positive for Atanlos 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 twenty sixteen. And going into 2018, it's worth bearing in mind that Q1 twenty seventeen was a very strong comparison quarter due to a delay in salary increases in the collective agreement in Sweden and that the Easter effect will partly impact the first quarter in twenty eighteen. Next slide, please. And then some comments on the cash flow in the quarter. Operating profit for the quarter amounted to SEK240 million and change in working capital, pay tax and other non cash items had a slight positive impact of SEK62 million. Net investment in CapEx amounted to minus SEK50 million, mainly related to fixed assets in the new owned nursing homes. This takes us to an operating cash flow in the quarter of SEK252 million. Interest payments amounted to SEK31 million. Atendo continues to selectively invest in real estate projects this quarter, and we have had cash outs of SEK 134,000,000 related to these projects. Our strategy is still to be an asset light company, and we expect that during the 2018, we'll start to free up cash from these investments. This quarter, we completed the acquisition of Micklav, which explains main part of the cash flow in the acquisition and financing activities. The purchase price for the share amounted to about SEK900 million, explaining main part of the minus SEK1 billion in net acquisitions. Net change in other financing activities consists of new debt related to the Micra acquisition of close to SEK1 billion. Total cash flow for the quarter amounted to SEK164 million. Net debt amounted to SEK4.8 billion, which equals a net debt to EBITDA of SEK 3,900,000,000.0. This is slightly above our financial goal, and we expect this to gradually decline during 2018. And with that, I hand back to you, Henrik. Thank you, Rebecca. Next slide, please. At Sando is continuously working to improve and develop its quality. In the 2017, At Sando achieved good results in the Swedish National Board of Health and Welfare's annual customer survey of recipients of care for all the people. In the area of own nursing homes, Atendo had higher score than the national average in 11 out of 13 parameters. In Home Care, Atendo had higher score than the national average in 10 out of 14 parameters. Atendo's Lifestyle Homes also had high customer satisfaction scores in the same survey, well above the average for both public and private providers. Atendo had the highest scores in areas such as safety, personal treatments and activities. For a long time, Atender has measured customer satisfaction in disabled 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, Atendo has pioneered the use of a visual tool for evaluation and communications named PictoStop. This tool is easy to use for the customer and gives reliable results. Now, for the first time in disabled care, there is a national survey in Sweden that enables a comparison between our results and the local authority units. Atendo's results are on a high level and clearly above the results for local authorities. It's essential for Atendo to be an attractive employer, and we're continuously measuring the employees' job satisfaction. The measurements performed in the 2017 show that job satisfaction and satisfaction with leaders remain high and stable. The acquisition of Mickiva was finalized in the fourth quarter and 2600 new colleagues were welcomed to Atendo. The work to integrate systems and processes began immediately. We are putting great efforts in making employees at Mitte Wasser welcome and understand Atendo's culture and approach, the Atendo model. Next slide, please. So 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 11,200,000,000.0 and adjusted growth was 8%, which exceeds our long term financial target of 7%. Operating profit amounted to SEK 1,084,000,000.000, which corresponds to an EBITDA margin of 9.7%, slightly lower than in 2016. Operating cash flow was stable amounting to SEK $763,000,000. The Board of Directors proposes a dividend of SEK 1.27 per share, which is in line with Atendo's dividend policy to distribute 30% of net profit. But behind the financials, there is so much more. We had a very high activity level in Netendo last year. During the year, we opened 54 nursing and care homes with a total of eighteen eighty six beds in Sweden and Finland. At the same time, we have acquired and integrated 27 companies, including two multi site businesses, Mitkeva and Lumana's Home Care business, which entailed us welcoming almost 4,000 new colleagues to Atendo. Atendo's organic pipeline development has also been strong. At the 2016, we had nineteen thirty six beds under construction. By the 2017, we have taken that up to a new record number, 2,903 beds. To put this into perspective, this means that Atendo 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 the 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, but 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. Atendo 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 opened 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%, so nearly so more than 3x as much. This development is in line with what we see in the rest of Europe. Finland and Sweden are still lagging, but 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. And 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 eighteen fantastic years together. You drive Atendo forward every day through committed and long term efforts. I would also like to thank all customers, local authorities and shareholders for choosing Etando throughout all these years that I worked here. Your trust is key for our development. I also wish Perthi all the best in his part in your role. I'm convinced that Atendo 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, Anrik. We'll now open up for questions. Operator, please go ahead. And our first question comes from the line of Daniel Kushan from ABG. Hello, Daniel. Your line is now open. Daniel Tushan from ABG. Your line is now open. Okay. Then we'll move to the next question. That's from Christopher Liederberg from Carnegie. Please go ahead. Your line is now open. Thank you. Can you hear me? Yes. Yes. Okay, good. Yes. So my question is really about the negative impact you had there on organic growth from lower migration volumes and the home carries. It was mentioned it was a drag on organic growth in the quarter. Maybe you could specify that a little bit. And also 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 downs in Home Care will have a negative impact for 2018 of SEK 140,000,000 on revenues, not so much on EBITDA. Integration for 2018 will have a negative impact on revenues of about SEK 180,000,000 and relatively limited impact on EBITDA. Okay. And what was the do you have the impact for the quarter as well? No, we don't specify that. Okay. The number of migration, perhaps, or what I should call it, were closed down in the quarter. Is that a figure you can give up? No. We now we have very few of those units left, basically. But it's been a big transformation for us during 2017. We are as we said in the last quarter, we were actually I mean, 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, so Because the reason I'm asking, if I adjust sequentially the number of beds in Q4 versus third quarter and remove the Mitkiva 2,900 beds, It seems it's flat despite opening four seventy new ones. So is that is it something else going on than the migration? It is the integration effect. So the reason 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. So it's not the other close downs, it is that. Okay. So from here, the number of beds will go up to the number of openings, more Pretty much. Then we can have cases where yes, I mean, the short answer is yes. Then 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 then after a while, we will transfer those customers to other units. But that's going be a marginal factor. So pretty much, over time, it should be a 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 Stefan Anderson from SEB. Please go ahead. Your line is now open. Thank you. First, on the ramp up. I mean 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. And I guess your easiest answer to me would be that it's going according to plan. But 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 overcapacity anywhere at all? Or if you could give a little bit more flavor on that, I would be happy. Yes. No, you're right. I mean this is exactly this is an area we focus a lot on. And I think as we've indicated earlier quarters, we've said that we see a strong underlying demand, but we expect start up times in certain locations to take longer due to new local authorities, due to increased competition in some cases. And we are seeing that in certain places. It's still limited. It's not overall everywhere, but 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, so for various different reasons. But as we said before, we're kind of expecting fill up time to go from something like twelve months to eighteen months. So it's that type of shift. And so we are seeing it in certain locations. It's something we've expected and something we're working actively with. With them, I think we will have to get used to that type of pattern in certain areas. Then on the stocking business, it's been in decline, I think, every quarter year on year since 2014. If you take a longer perspective on that, is there a structural issue? Or is it you for in whole market? Or do you have issues? What is your thinking about that portion of your business? And how core is it to your other businesses? Apparently, it's not performing that well. So do you need it or do you 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. And it is a tough place it's tough to find the doctors, and 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 so the counties are not in place, the precursors to the so the counties are starting to be formed, so kind of like voluntary associations of local authorities. And there, we are starting to see an increased interest within services. So we remain strongly that with the strong emphasis that the Finnish health care 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 health care chain, there will be a need for primary care doctors and a share of those will come from us as a starting company where we are by far the market leader. So 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 here, and we're starting to see more interest from certain payers. And then on the Home Care business, are you willing to say give an indication on the magnitude of that in the quarter? I mean, you highlighted on top there. So I don't know if that's a ranking order, but if you could give some It flavor on the is a ranking order. So we are when we state the profit drivers, we are they are in order of magnitude. Yes, it's very specified to the Danish market where we are subcritical 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. So 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. So we expect that to have a much, much less of an impact going into Q1. Okay. Thank you. Thank you. Our next question comes from the line of Christian Reinhold from Please go ahead. Your line is now open. Yes. Christian Reinhold from SmallCapDenmark in Copenhagen. I'd like to go back to the Danish operation. Could you be specific about the loss 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. And 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 in one situation, we have a fairly complex system with lots of manual interaction to ensure that we handle that in a better way. In the media in Denmark, there's constantly very negative stories about Atento's operations in Denmark. And it's just 2% of your turnover. So 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 Atendo. We have been in Denmark for twenty years. And 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. So the older people are still very happy with the services we provide. Of course, we're not happy with the financial development. I mean, we can't just be in an area because old people like it. It has to make financial sense. So we have to sort that out, and then we think the Danish market has opportunities. Danish home care has been tough in general, but we think there are opportunities longer term with them. So we work on. Yes. But the stories that you're telling now and the stories I hear in the media, they are in two different worlds, I would say. So I expect your the way people see it at Tendo in Denmark is extremely negative. So isn't it impossible to turn that business around really? No, I think we need to work on. And as I said, we're happy with the scores we get from the customer satisfaction service, and then we need to work to improve it. Okay. Thanks, Christian. Go ahead. Next speaker. Thank you. Our next question comes from Lars Herring from Danske Bank. Please go ahead. Your line is now open. Yes, thanks. Can you say anything about the consolidation of Mick Eva from November, whether I mean, 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 operations, if you could, how you would characterize the occupancy rate in Mykiva relative your other own operations? Yes. The contribution from Mykiva in November, December was €19,000,000 in revenues and €700,000 EBITDA. The when it comes to the occupancy, as we stated before, Mykiva has lower occupancy than Atendo because there's been an active work in terms of starting new units. And then also Mykiva has done a lot of acquisitions, several units with lower occupancy. So part of our plan for improving performance in Mickiewicz, 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. And that's something we've already started with, but it's going to take time. And as we said before, we say that Mickiewa will reach a 10% of margins in three years' time. But there were no one offs, so to say, included in the fourth quarter in There terms of were no major integration costs related to it in the fourth quarter, no. And 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 Bundstrom 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 and also to clarify that the €140,000,000 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 140,000,000 actually takes into account potential changes relating to changes in regulation? Or this is simply lots of contracts until now and we can perhaps see further losses throughout 2018? That would be very helpful. Yes. No, that's a good question, Hans. Now to clarify, the SEK 140,000,000 in Home Care closings is not the revenue effect there is not related to the permit requirements. It is related to us restructuring Home Care, so us deciding to exit areas where we cannot reach the critical mass that we need or we don't have the right requirements the right kind of contract terms. And the same for integration impact into 2018 of SEK 180,000,000 lower revenues is not related to the permit requirements. So this is both Us integration is kind of the market going away, and the Home Care impact is more about us exiting certain areas where we don't want to be. And do you have any sense of what the impact might be for the permit requirement? I mean, is this related to the negotiate renegotiated business or does it impact all your business? No. No, the permits to be a bit to try to clarify that then. The permits requirements are about the outsourcing business. So it's primarily about nursing homes for older people. So it's a part of our outsourcing business in Sweden. So if we look at the broad picture in Natando, we focus mostly on own units, then we have about 30% outsourcing. Part of that is affected by this. For instance, in disabled care outsourcing, we already have permits since many, many years back. So 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. And 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, but it's something we have to work with, and it might impact the local authorities' willingness to outsource new units. So it's kind of it's related to outsourcing of nursing homes. That's the key area. And what might be I mean, 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. But it's so 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 actually. And if I may just ask in clarification again, the comment, Rebecca, you made about tax not being, if I understood it 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. And 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 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. You. Shall we take the next question, Lars? Thank you. And we have a follow-up question from Christian Reinhold. I have a question regarding the margins. Have here two very important issues in 2018. The Mikhevah, of course, consolidated in the figures and also the Danish operation. But 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? No, 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 of in openings. So especially in the 2018, I think that's the first thing I'd like to say. And then in the first quarter in particular, once you remember that we had a strong comparison quarter in 2017 due to this delay in salary increases. Also 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 2018, we will see a more positive profit development due to units ramping up. So new units that have opened will ramp up and that will more kind of compensate for the effects of the high number of openings. Also, we will have impact from positive impact from Mick coming in. So profit growth will be well in line with our financial targets for 2018, we expect. But you're right, if you just look at the optical margins, of course, Mickeva will have a slightly dilutive effect because it can't come in with a lower margin, but it will generate profit growth in SEK in 2018. Okay. But still, they have a margin of 3.3% and you are substantially higher, so Yes. As I said before, so it will have a dilutive effect in that sense, but it will generate a profit improvement in 2018. Okay. Thank you, Christian. What's the next question? Yes. We have a question from the line of Daniel Tushan from ABG. Please go ahead. Your line is now open. Yes. Hi. Thank you very much for taking my question. I missed the first part of the call, so sorry for that. I just had one question. How much was acquired growth in own operations? You have mentioned that before. And if you have already answered it, 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 Mykiva. And Mykiva contributed with EUR 19,000,000, and that's 100 percent 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 have if you know how big the impact would be on Atendo, 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. Yes. So 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. So that's But it doesn't affect the way we think about our business. Okay. That's very important. So we continue to believe strongly in our nursing homes, and we will continue to drive that. Okay. Thank you. Okay. Thank you. Do you have a do have a final question, a follow-up from Hans Boersson. Please go ahead. Your line is now open. Yes. 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 two year of wage increases in Q1? So we're talking about 2% times 2%? Or what type of impact are you actually suggesting we should take No. Into What I meant was that in the 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. So we kind of had a positive mismatch. Now they kind of match each other. So when you do a year on year comparison, that affected. But for the years, yes, minor. So for that quarter, it has a specific impact. Okay. And 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. So this is basically a timing effect. It's not a shift in our working capital structure. And it doesn't have to do anything with Mikkelau or anything like that? No, it doesn't. This is timing. So from that follows, that we should expect a much stronger Q1 then, but 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. Overall, this on an overall level, on an annual level, this this the working capital is fairly stable. But but the timing effect can can make this to vary a bit between quarters. Okay. Thank you. Thank you. You. As there appears 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 all for attending. You may now disconnect your lines.