Good morning, everyone, and welcome to this conference call where we will present Attendo's results for the second quarter of 2017. My name is Andreas Koch. I'm Communications and IR Director at Attendo. Today's presentation is hosted by Attendo's CEO, Henrik Borelius, and Attendo's CFO, Tomas Björksiöö. 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 second quarter results for 2017. I will start by presenting the results in brief and by sharing some business and market highlights. Tomas, our CFO, will take you through the numbers in more detail. Next slide, please. The second quarter 2017 was a solid quarter with stable growth, stable profit development, high number of beds under construction, and high M&A activity. Net sales amounted to SEK 2.7 billion. Growth was 7% adjusted for currency. Operating profit amounted to SEK 228 million, which was SEK 4 million higher than Q2 last year. The operating profit margin was 8.3%, slightly lower than in Q1 2016, but higher excluding calendar effects. Attendo reported an operating cash flow of SEK 262 million, SEK 105 million higher than last year. This was explained mainly by positive changes in working capital.
Attendo has continued to increase the number of beds under construction, and by the end of Q2 2017, the number of beds was 2,378. This quarter was also characterized by high M&A activity. Next slide, please. Let's look at our three contract models: own operations, outsourcing, and staffing. You can see that the quarter reflects continued stable development in our own operations. Net sales increased by 11%. The increase is explained by new homes and higher occupancy in units that were under startup during the corresponding quarter of last year, as well as acquisitions. Attendo opened 11 new own units in the second quarter with a total of around 400 beds. One of our key strategic focus areas is to continue to grow our business within own operations. During the second quarter, we started the construction of 20 new units that will add 630 new beds in total.
The total number of beds under construction reached 2,378 by the end of the quarter. Attendo has been successful in identifying demand for new beds and rapidly translating this into construction starts. In addition, we were active in acquiring companies during the second quarter, and in total, nine companies were acquired. Finnish Mikeva was by far the largest acquisition in the quarter, and I will shortly talk more about this. 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 this year, Sulkava and Sysmä in Finland. Looking at the results of tendering processes in Q2, we won contracts totaling SEK 110 million and lost volumes of SEK 280 million. This is mainly related to the local authority of Stockholm's decision to insource well-functioning nursing homes.
Net sales in the contract model staffing were down 3%, a result of ended contracts. Let's look more closely at some of the companies that we acquired during the quarter. Next slide, please. Attendo has a clear strategy to grow in own operations, primarily through own new units, but also through acquisitions. This quarter, we made several acquisitions, of which Mikeva was the most substantial. With the acquisition of Mikeva, we are strengthening our expertise, particularly in social psychiatry and widening our presence in care in northern and western Finland. Together, we will have a better ability to contribute to customers and payers in the whole of Finland. In 2016, Mikeva had sales of over EUR 100 million and around 2,800 beds in operation. We expect to increase profitability in Mikeva as the company has shown strong growth.
Mikeva currently has approximately 300 beds under startup and more than 100 beds under construction. We have also identified synergies and improvement opportunities in both administration and operations. The Mikeva transaction is subject to approval from the relevant authorities. Another interesting acquisition, though much smaller, is the Norwegian company Nøstet. It's Attendo's first entry into the Norwegian market for social psychiatry. Nøstet is operating outside of Oslo and will form a platform for further growth in Norway. Lastly, I would like to mention the acquisition of Humana's home care in Sweden. Through this acquisition, we will strengthen our high-quality home care service offering in Sweden and get a denser customer base in a number of regions. We also see opportunities for synergies. Takes us to the next slide, please. As I already mentioned, there was solid growth in own operations.
The number of beds under construction was 2,378 at the end of the second quarter, which is the highest number achieved so far. This is a consequence of both our own dedicated work to get new projects started and of the acquisitions in 2016. We expect continued strong 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. In total, we had around 9,550 beds in operation by the end of the quarter. On the right-hand side of the slide, you can see photos of some of our new owned nursing homes. The photo in the middle shows the new nursing home, Attendo Nissabogatan, located in the city of Halmstad in Sweden. Attendo Nissabogatan has a lifestyle concept with focus on sports and spa.
The residents can enjoy spa treatments and the unit has a gym. The opening took place with pomp and circumstance with the participation of Leif Mannerström, one of Sweden's master chefs, who served a delicious lunch of fried herring and chopped steak for residents and relatives. The kitchen at Attendo Nissabogatan will also serve meals for customers in home care and in other nursing homes in the local area. Turn to the overall market trends on the next slide, please. I already commented that Attendo continues to see strong interest in owned operations in both Sweden and Finland. There is a shortage of nursing homes in several local authorities, and the public sector needs new solutions. At the same time, we expect the activity level in the market to remain high and that the time taken to fill new homes will increase going forward.
The outsourcing market in Sweden remains challenging and the level of competition remains high. Tended volumes fluctuate and were down in the quarter. The Swedish government has previously appointed a commission that presented the first part of its report in November 2016. The second part of the report was presented in May 2017. If the commission's proposals were implemented, they would lead to reduced diversity and lower quality in health and social care. The commission has been strongly criticized, and there is no majority in the Swedish Parliament to implement the proposals. Over to Finland, where the level of activity in the outsourcing market continued to be low during the second quarter. Attendo won one re-tender for a health center. The process to implement the social and healthcare reform, SOTE in Finland, moves forward. During the second quarter, the Constitutional Law Committee issued its statement about the reform.
As a consequence of the committee statement, the reform will be implemented somewhat later than the original schedule. The new starting date is set to be January 1, 2020. That is one year later than previously planned. The changes do not alter our view of the reform. Our assessment remains that the SOTE reform as a whole is positive for Attendo's opportunities to develop its operations in Finland, not the least in the field of healthcare. With that, I hand over to Tomas for a financial review of the quarter.
Thank you, Henrik. Next slide, please. Net sales in the quarter were SEK 2.7 million, up by 8.7% compared to last year. Adjusted for FX, the growth was 6.5%. Acquisitions contributed by 4.3%. As in previous quarters, growth is mainly driven by our own operations, which was up by 11.3% in the quarter. During the quarter, Attendo opened 11 new nursing homes with a total of 400 beds. We also saw positive revenue effects from units under startup filling up and from acquisitions. Our operating profit in the quarter was SEK 228 million, which is SEK 4 million up compared to last year. Second quarter results is negatively affected by calendar effects of around SEK 25 million.
One should bear in mind that we will open more nursing homes than before in the coming quarters, which will be positive long term, but could put pressure on profit in the short term.
I'll get back to more details on the profit development on next slide. Financial net was minus SEK 16 million, which is in line with current run rates. Income tax was SEK 38 million, which equals a tax rate of 21.2%. Net profit for the quarter was SEK 141 million, which equals an EPS after dilution of SEK 0.88. Next slide, please. As you saw on previous slide, operating profit for the quarter was up by SEK 4 million compared to last year, or if excluding the calendar effects, up by SEK 29 million. In the quarter, we saw continued improvements in planning and processes, including lower administrational costs. Acquisition also had a positive contribution in the quarter, as well as improved occupancy in the owned homes that were under startup in Q2 last year.
The profit in the quarter was negatively impacted by a calendar effect and by lower profitability in our integration and home care operations. We also had a negative effect from owned unit startups and net change in the outsourcing portfolio. Next slide, please. A few comments on the cash flow in the quarter. Cash flow continues to be stable. Operating profit in Q2 amounted to SEK 228 million. Change in working capital, paid tax, and other non-cash items had a positive impact of SEK 88 million in the quarter. Largest driver being improved working capital linked to increased personal related liabilities. Net investment in CapEx amounted to minus SEK 54 million. CapEx largely relates to fixed assets in our own nursing home business. This takes us to an operating cash flow in the quarter of SEK 262 million. Interest payments amounted to SEK 16 million.
In the quarter, we invested SEK 171 million in real estate projects. These are building projects that will be sold after the completion of construction. We also had cash outs linked to acquisitions of SEK 89 million in the quarter. Cash flow from financing amounted to minus SEK 26 million. This takes us to a total cash flow of minus SEK 40 million for the quarter. Net debt amounts to SEK 2.9 billion, which equals a net debt to EBITDA of 2.4, down from 2.5 last year. With that, I hand back to you, Henrik.
Thank you, Tomas. Next slide, please. Quality is key for Attendo. As part of the quality work, Attendo offers a wide range of activities for its customers. During the quarter, the focus of Attendo's nursing homes has been on outdoor activities with the recurring Attendo Fitness Walk taking place at several locations in Scandinavia. In the picture to the left, you see the Fitness Walk at Attendo Nissastrand in Halmstad. In society as a whole, falls among older people is a major problem. Attendo works actively to analyze the risks to older people in different everyday environments. During the second quarter, Attendo's home care in Sweden launched the Safe and Secure at Home project, which focuses specifically on identifying risks in the domestic environments of older people, and then especially on fall prevention.
Attendo offers a special safety review to all its home care customers to ensure that the most common causes of accidents are avoided as far as possible. With that, I would like to summarize the quarter. Attendo showed stable growth and profit development. In addition, we increased the number of construction starts and completed a number of acquisitions. We have a solid platform from which we will continue to build new care homes to the benefit of customers, local authorities, and to society as a whole. Thank you for your attention. Over to you, Andreas.
Okay, now we'll open up for questions. Operator, please go ahead.
Thank you. Ladies and gentlemen, if you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. If you find your question is answered before it's your turn to speak, you can dial 02 to cancel. There'll be a brief pause now whilst we register your questions. Our first question comes from Hans Forsström of Credit Suisse. Please go ahead. Your line is open.
Good morning, Henrik and Andreas and Tomas. I had a couple questions, if I may. First, could you give us a bit more background to the Constitutional Law Committee, I understand, in Finland about their reasoning for delaying the SOTE reform. Secondly, would you be able to give us an idea of the actual phasing of the bed deployment over the next three quarters, such that we get a better sense of what the margin impact will be in the coming few quarters? Thank you.
If we start with the first question, the Constitutional Law Committee in Finland, their main focus has been on two areas, we can say. There's been a lot of things because this is such a complex reform package. It has been on that in the SOTE region, there has to be a public producer even in the future. The second thing is that they've said that there cannot be a forced corporatization. It cannot be mandatory that they should be put into limited companies. There is nothing in that ruling that says that they are against level playing field. We know from other markets that you can create level playing field in other ways. If a SOTE region wants to put its public producer in a corporation, it can do so, but it cannot be part of the law.
Those are the main changes that came up. It's very complex, there were many things, but I think those are the ones worth highlighting from Attendo's point of view. In terms of new openings in the coming quarters, it is right to say that the number of openings is increasing rapidly. I think the best way to get a feeling for that is to look at how we started the shovels in the ground, the slide five in this presentation. Basically the rapid increase we saw between Q1 and Q2 in 2016 from the 700, 800 level to the 1,400 level and then upwards. That is then mirrored 12 to 15 months going forward because that's the construction time in what we're going into now. Basically we saw more openings, 400 openings in the second quarter this year versus 140 openings last year.
That's the first indication. We will continue to see more openings in the latter half of this year and the beginning of 2018.
Maybe I should add on that it also talks about the slightly later implementation, Hans, that's basically related to that the Constitutional Law Committee acknowledged the complexity of the reform, such nothing other than-
Yeah.
They could have need for some more time.
Yes.
To understand you correctly, we are looking at the correct data here. It is the delta change of beds under development 12 to 15 months prior that actually gives us an understanding of how many new beds will be opening in a given quarter.
Yes. That is the best approximation. There can be variations depending on the single construction projects, that is the best approximation.
Okay.
Thank you, Hans.
Thank you. Our next question comes from Kristofer Levin of Carnegie. Please go ahead. Your line is open.
Thank you. Kristofer from Carnegie. Three questions from me. First, is it possible to say a little bit more about the impact on the margin in the quarter from the 400 new openings and the 300 openings you have in Q1? I think if we adjust for the calendar effect, it actually seems margin were up somewhat year-over-year, at least it wasn't down. My second question relates to the number of beds. It seems that with 400 new openings, you must have closed around 100 beds in the quarter. If you could just confirm that. Also finally, what type of acquisition capacity you think you have now after also closing the Mikeva deal later this year. Thank you.
The first one Tomas. Do you want to take that?
Looking at the first quarter and second quarter, I would say that we have still seen that the startups is coming on pretty well, the margin impact has been relatively low, even though we saw in Q2 a slight negative impact of the units that were under startup. That's what I can talk about, how the startups is impacting P&L.
Could I ask, would you say that they are filling up maybe faster than what you had planned or what you feared?
I think we are happy with the startups we have seen coming on Q1, Q2.
Okay. If I take the two other questions then. Yes, that is correct. We have closed down some beds. That is mainly in our integration business in Sweden due to reduced market demand beds and also reduced reimbursement rates. When it comes to acquisition capacity, Mikeva will increase our leverage, but we still have room to do acquisitions. We will continue to maintain, of course, to have a healthy bottom pipeline, and we see opportunities there in the smaller acquisitions. If we want to do a really big acquisition in the near term, we can go up a bit more in leverage. Our long-term goal, as you know, or long-term ceiling, so to speak, is 3.75x EBITDA, but we can actually, I think, short-term be above that if we have a solid case.
If there would be even bigger opportunities, then it might be necessary for us to raise new equity. Of course, we will always use debt first as long as we can.
Henrik, your interest in expanding geographically outside the Nordics, is that still the case?
Yes, that is still there. I think M&A is by definition opportunity driven, so we have a clear strategy focusing on own units. We are active in processes in the Nordics, that's where we look the most because that's where we have the strongest relations. There are interesting opportunities in other markets as well. I think it will be opportunity driven. If we have a case that is strong enough and attractive enough, we might want to do something outside of Europe in the near term. There are opportunities both in the Nordics and outside.
Okay. Thank you very much.
Thank you. Our next question comes from Karl Mellby of Nordea. Please go ahead, your line is open.
Yes, hi. Thank you for taking my questions. On the Mikeva acquisition, could you elaborate a bit more on timeframe for the productivity improvements which you have identified? If it's possible for Mikeva to reach margin more in line with Attendo over time? Secondly, regarding home care operations. You mentioned that the profit in Q2 was lower than in the comparable period last year, and if you could elaborate a bit more on this, and also what kind of measures you will undertake to improve profitability in the operations which you acquired from Humana. Thank you.
Yes. Mikeva, we think that's a very exciting opportunity, and I think it's important to say when we look at the profit potential in Mikeva, this is a company that has grown very rapidly over the last couple of years. So the EUR 100 million in revenues and the margins you see for 2016 are not really representative of the potential we see in the future for a number of reasons. First of all, the company has 300 beds under startup out of the 2,800 beds. Secondly, there is another 100 beds under development that have not started yet. Also, we see opportunities for planning and processes, both in terms of reducing overheads, extracting synergies, but also working with operational improvement in the units.
We say that within three years, this will be an acquisition that has a multiple that is lower than Attendo's current multiple, and basically, we're saying that this company will have the same types of margins as Attendo. So that's on Mikeva. Secondly, on home care, there were two questions there. When it comes to our current home care operations, we have challenges. There are local authorities that are continuing to make the terms tougher. So it is tougher and tougher, and we have to match that all the time by improved planning and processes using digitalization, being better at group planning and things like that. And one area here that is important is that with these tougher market conditions, density becomes even more important. So local density of operations, having more customers clustered in the same part of a local authority or of a city.
This is where these small add-on acquisitions and Humana come into play. We've done smaller home care acquisitions during the beginning of the year, as you've seen, and some of them have actually been just takeovers where we don't pay anything. When we pay, we pay very low multiples, also for the Humana acquisition. The measures we will take in Humana will be combining our operations with Humana in the regions where we are active because we have very good overlap between Humana's operations and Attendo's operations, and we expect that to give positive effects. Home care will continue poor margins than the rest of Attendo, but we do see that we can create value out of these smaller types of add-on acquisitions, given the very low multiples we take.
Okay. Thank you.
Thank you. Our next question comes from Daniel Thorsson of ABG. Please go ahead. Your line is open.
Thank you very much for taking my question. The first one on the CapEx level. Do you expect that to increase in terms of CapEx to sales when you open new nursing homes in the coming quarters?
Hello, this is Tomas. Over time we have been very stable on the CapEx side, being between 1.5%-2% sales. Of course, opening up more units require more CapEx. Even though we don't invest in the real estate, we spend money or invest money in furniture, et cetera. That's not a big increase we are expecting, but a slight increase, yes.
Okay. Thank you. Regarding the Mikeva acquisition, was there a large interest from other companies in the bidding process? What could you add on to pay the multiple that you actually paid?
Yes. There was a significant interest for Mikeva because I think many players are recognizing that Finland is a very strong nursing home market. Finland has the most rapidly aging population in the whole of Europe. A lot of the infrastructure of the real estate is quite old in Finland. There's a shortage of beds and there's many beds that need to be replaced. There was strong interest. I think our value added in this type of situation is a lot about the Attendo model, our opportunity to work with improving all three parts of the Attendo model. Mikeva is a great company. It has a great track record with very high customer or payer satisfaction, strong relationships in northern and western Finland, and also in social psychiatry.
I think working with improving the organization, getting the role of the local manager right, improving the organization, working with vision and values, working with our toolbox. Improving how we work with planning, how we work with occupancy management and things like that. There are a number of areas where we see that we can have a positive impact on Mikeva.
Do you consider the Mikeva acquisition to be a medium one or a large one?
Large.
Okay. A final question. Given that you and some of your competitors are building new nursing homes in some overlapping regions, what are your expectations on reimbursement levels going forward in Sweden, for example? Is there any risk of oversupply in some regions that could cause price pressure?
I think it's a good question. I think the way we see it is that we primarily see that going forward it will take longer to fill up new nursing homes. Firstly in Finland, because that's where we have the most activity from our competitors and of course from ourselves. Going forward in Sweden as well. We think firstly there is a risk that it impacts occupancy rates during the startups. Of course it could impact reimbursement levels as well. We haven't seen that, but it's something we're always aware of and that's why we have to continue working with planning and processes all the time to improve our offering to stay competitive.
Okay. Thank you. What has been the past development?
We should allow for some other questions as well.
Okay.
Sorry.
Thank you. Our next question comes from Lars Sjögren of Danske Bank. Please go ahead. Your line is open.
Yes, thanks. Can you about the investments in real estate and also on the background of all the construction activity ongoing, can you give any indication of the value you today have, so to say, in your books and if you could give some indication of the future P&L effect when you will sell these assets?
Yes. I think we described last quarter. First of all, we have not changed our strategy when it comes to real estate. We don't own the real estate, but we lease them, and we would like to be involved in the development phase in different ways. One way what we are doing now is that we are actually developing the real estate in our own books. We own the real estate during the construction phase. Already today we have real estate owners together in the project to take over when the construction is completed. Those real estate that we are investing in now will be sold directly after the completion. Sorry, what was your-
Sorry. If you please can give any indication of the future P&L effects from the-
We don't expect any P&L. The reason for doing this is one, that we would like to increase the speed because we have more control over the building project. B, we think that this will give us lower rent cost going forward.
We don't expect any P&L from the sales process or from the transaction as such. It is more long-term, making sure that we have competitive rents.
Okay. Thanks. Also, the comments you typically add in about opening activity and the effect near-term on profitability. That's something you have added, of course, for a while since opening activity continued to accelerate. Should we expect something extraordinary in the next few quarters, or is this more what we have seen in first half 2017 and also towards late 2016?
I think the difference is that we haven't really seen the increase in openings yet because it comes back to that it takes 12 to 15 months from the shovels in the ground. If you look on our history, we were at around 700 to 800 shovels in the ground year in, year out up until Q1 last year. From Q2 going forward last year, we have increased the number of units under development quite radically. It's actually now that we start to see the number of new openings. We do expect to see more P&L impact from the openings in the latter half of this year. We're not saying it's going to be extraordinary, but there's going to be more impact than before, yes.
Okay. [Henrik], that's going to be consolidated fourth quarter?
It depends on the approval process from the relevant authorities, but that's our best estimate, yes.
Okay. Thank you.
Thank you, Lars.
Thank you. Our next question comes from Peter Testa of One Investments. Please go ahead. Your line is open.
Hi. Thank you for taking the questions. Just following on from those two. You made the point it is 12 to 15 months after you start, and that could be delayed based upon development and so on. It is not a linear exercise. If you look at the progression sequentially, it would suggest that you should be opening on average about 400, 500 a quarter for the next couple of quarters. Is that more or less right, or is it a different number?
I think we saw an increase in Q2 from 140 Q2 last year to 400 now, and in the coming quarters it is going to be more than 400.
Okay. When you think about the process of fill rate and how that works its way through, because obviously, they do not all fill in a quarter, so it has an accrual effect for a while. How long do you think it will take before running at that higher pace that you start to see the impact of beds filling versus beds opening, that balance shift the other way?
Yeah. No, that is what is a bit hard for us to gauge. I think historically we saw that these units filled within about 12 months. Now we are expecting it to take longer because there is more activity in the market. We are going into newer local authorities that have not always been so accustomed to using private operators and just the sheer scale. We are opening more new units than we have done ever before. We expect the startup period to be longer. It is very hard to be precise and say exactly when that is going to come, because so far, actually, this year, the startups have filled up pretty much according to history. Which is perfectly in line with our strategy. This is exactly the direction we want to take Attendo, we are opening new units on a totally different scale from before.
Yes. Then you mentioned the point on rents and the fact that you're selling on units which you're now developing. There's been a pretty good, say, development in the Scandinavian market on rental yields in general. Can you give a sense as to how over time the rental terms have been changing when you look at the base of beds you have vis-à-vis the pipeline?
Could you rephrase the question? There were many questions. What was your key question there?
Okay. Yeah. Over time, rental yields on property in Scandinavia have been coming down. You're also taking more on your own development, which allows you to, say, manage the rental outcome better than perhaps in the past.
Okay. Yeah, okay.
I'm trying to understand how both of those trends are working to improve the rental terms that you're paying.
Okay. Yeah. Basically when we look at new units and their lease costs now compared to a couple of years ago, I think the key thing for us has been that we are better at handling the process, and we are better at developing more efficient nursing homes so that we can reduce the square meters and we can find better construction processes. I think that has been one thing that has helped us. The other thing, obviously, as you allude to, there is more interest in general in real estate in the Nordics, but the nursing home market is more interesting. In general, we are getting better terms. I would say there is another factor which makes it a bit hard to see a common pattern because it depends a lot on the location.
We still have this factor that we will see more interest and lower yields for a location in a larger metropolitan area, obviously, among real estate investors than we will in a smaller, more rural area. We can still see some projects in smaller places, the lease cost can be higher still. All in all, we factor this in. When we look at establishing new locations, we do a thorough analysis. We look at local supply demand, we look at the P&L, and obviously we factor in the rent cost in our risk assessment, whether we should go into the project or not. In our pricing.
Okay. Are you able to quantify the trend at all? Sorry.
Maybe we should allow for additional questions.
Thank you. The next question comes from Hans Bostrom of Credit Suisse. Please go ahead. Your line is open.
Yeah. Hi. A couple of follow-up questions. I just want to understand a bit more about the topic on property. If I understand it correctly, you are temporarily holding property on the books while being constructed. Given that we're talking about such an increase in bed numbers, is this a potential significant number of the amount of capital that you will be temporarily tying up? If you give us a sense of how much that might be. Secondly, would you be able to give us a sense of what are the effective startup costs of a 50-bed nursing home, just to give us an idea of what type of numbers we're talking about for the modeling of the margin impact? Thank you.
Yes. This is Tomas. The first question when it comes to the scale of this, how much project we are taking on. This is just one way. We don't do this on all our projects, of course. This is just selective. Where we think that this is the right strategy, we do it. It's very hard now to comment on how much would we see in the cash flow and balance sheet going forward. We are trying this project now and this kind of project now, but we are still not doing it in a small part of the real estate program. Second question, when it comes to Typically, you would expect to see a negative value during the first 12-month period.
Given that we will start up a new nursing home, we will start with typically it takes, let's say, 18 months to fill the nursing home, the first year would be a loss-making. What numbers, I can't give you any specific numbers because that varies considerably from unit to unit.
Is there any sort of set number on startup costs? Obviously, I understand this is varied by nursing home, is there a minimum startup cost?
It's totally dependent on how quickly you fill the house. If you have a very rapid fill-up, you are pretty quickly passes through the point where you have a loss-making unit. It's more when you strike the break even in terms of occupancy level. That is what matters.
Finally, short question on this Stockholm cancellation. Is this something you expect will continue throughout the year? Has this got immediate effect, the SEK 280 million in annualized revenue that you lost?
No, it does not have immediate effect. We continue to run these nursing homes until the latter part of 2018. We don't see a broad pattern of insourcing in Sweden. The local authority of Stockholm has done some insourcing since the last election, and this time we were badly affected. Previous times, it has affected some of our competitors. This happens now and then, but we don't see a big trend right now in Stockholm or other places.
Okay. Thanks.
Yep.
Thank you once again. Once again, if there are any further questions on the line, please dial 01 on your telephone keypads now. Okay, as no one is coming forward, I'll hand back to our speakers for the closing comments.
Okay. Thank you very much, everyone, for participating at today's call. If you have any add-on questions, please contact us and our team directly afterwards, and we'll make sure to answer those. Thank you.