Earnings Call: Q2 2017

Jul 26, 2017

Good morning, everyone, and welcome to this conference call where we will present Atenda's Results for the 2017. My name is Nir Skotz. I'm Communications and IR Director at Atenda. Today's presentation is hosted by Atendo's CEO, Henrik Borodius and Atendo's CFO, Thomas Bjorkke. And 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 second quarter results for 2017. I will start by presenting the results in brief and by sharing some business and market highlights. Then Thomas, our CFO will take you through the numbers in more detail. Next slide please. The second quarter twenty seventeen was a solid quarter with stable growth, stable profit development, high number of beds under construction and high M and A activity. Net sales amounted to SEK2.7 billion. Growth was 7% adjusted for currency. Operating profit amounted to SEK228 million, which was SEK4 million higher than Q2 last year. The operating profit margin was 8.3%, slightly lower than in Q1 twenty sixteen, but higher excluding calendar effects. Atendo reported an operating cash flow of SEK262 million, SEK105 million higher than last year. This was explained mainly by positive changes in working capital. Atento has continued to increase the number of beds under construction and by the end of Q2 twenty seventeen, the number of beds was 2,378. This quarter was also characterized by high M and 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 on the startup during the corresponding quarter of last year as well as acquisitions. Atendo opened 11 new owned 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 six thirty new beds in total. The total number of beds under construction reached 2,378 by the end of the quarter. Atender 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 Mika was by far the largest acquisition in the quarter and I will shortly talk more about this. 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 this year, Solkava and Sussma in Finland. Looking at the results of tendering processes in Q2, we won contracts totaling SEK110 million and lost volumes of SEK280 million. This is mainly related to the local authority of Stockholm's decision to in source well functioning nursing homes. Net sales in the contract model staffing were down 3%, a result of ended contracts. Now let's look more closely at some of the companies that we acquired during the quarter. Next slide, please. Atendo 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 Mickiewa was the most substantial. With the acquisition of Mickiewa, 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, MikaVA had sales of over EUR 100,000,000 and around 2,800 beds in operation. We expect to increase profitability in Mykiva as the company has shown strong growth. Mykiva 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 Mikkevak transaction is subject to approval from the relevant authorities. Another interesting acquisition, though much smaller is the Norwegian company Nustreth. It's Atendo's first entry into the Norwegian market for social psychiatry. Nustreth is operating outside of Oslo and we 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. That 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 at Ambrunis Saburgaten located in the city of Hallstatt in Sweden. Ambrunis Saburgaten 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 ponder circumstance with the participation of Leif Manasjem, one of Sweden's master chefs, who served the delicious lunch of fried herring and chopped steak for residents and relatives. The kitchen at Atendo Nissabogata will also serve meals for customers in home care and in other nursing homes in the local area. Let's then turn to the overall market trends on the next slide, please. I already commented that Atendo continues to see strong interest in own 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. Tender 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, a tender won one retender for a health center. The process to implement the Social and Healthcare Reform, SOTA in Finland moves forward. During the second quarter, the Finnish Constitutional Committee issued its statements 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 01/01/2020. That is one year later than previously planned. The changes do not alter our view of the reforms. Our assessment remains that the Sothe reform as a whole is positive for Exandos opportunities to develop its operations in Finland, not the least in the field of Healthcare. With that, I hand over to Thomas for a financial review of the quarter. Thank you, Henrik. Next slide, please. So net sales in the quarter were SEK 2,700,000,000.0, 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, Atendo 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 $228,000,000, which is SEK 4,000,000 up compared to last year. Second quarter result is negatively affected by calendar effects of around SEK 25,000,000. 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 60,000,000, which is in line with current run rates. Income tax was SEK 38,000,000, which equals a tax rate of 21.2%. Net profit for the quarter was SEK 141,000,000, 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 4,000,000 compared to last year or if excluding the calendar effects, up by SEK 29,000,000. 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 own homes that were on the 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 own unit start ups 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 SEK228 million. Change in working capital, paid tax and other non cash items had a positive impact of SEK 88,000,000 in the quarter, largest driver being improved working capital linked to increased personnel related liabilities. Net investment in CapEx amounted to minus SEK 54,000,000. 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 $262,000,000. Interest payments amounted to SEK 16,000,000. In the quarter, we invested SEK 171,000,000 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 89,000,000 in the quarter. Cash flow from financing amounted to minus SEK26 million, and this takes us to a total cash flow of minus SEK40 million for the quarter. Net debt amounts to SEK2.9 billion, which equals a net debt to EBITDA of SEK 2,400,000,000.0, down from SEK 2,500,000,000.0 last year. And with that, I hand back to you Henrik. Thank you, Thomas. Next slide, please. Quality is key for Atendo. As part of the quality work, Atendo offers a wide range of activities for its customers. During the quarter, the focus of Atendo's nursing homes has been on outdoor activities with the recurring Atendo Fitness Walk taking place at several locations in Scandinavia. In the picture to the left, you see the fitness walk at Atendo Nisasthan in Hamzah. In society as a whole, falls among older people is a major problem. Atendo works actively to analyze the risks to all the 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. Atendo 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. Atemdo 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. So now we'll open up for questions. And operator, please go ahead. Thank please dial 01 on your telephone keypad 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 Wollstrom of Credit Suisse. Please go ahead. Your line is open. Morning, Henrik and Andreas and Thomas. I had a couple of questions, if I may. First, could you give us a bit more background to the constitutional court, I understand, in Finland about the what the reasoning for delaying the SATA reform? And secondly, would you be able to give us an idea of the actual phasing of the bad 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 committee in Finland has 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. But it has been on that in the softer region, there has to be a public producer, even in the future. And the second thing is that they've said that there cannot be a forced corporatization so that the public sector providers cannot cannot be mandatory that they should be put into limited companies. But there is nothing in that ruling that says that they are kind of against level playing field. And we know from other markets that you can create level playing field in other ways. If a softer 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. But it's very complex. So there were many things, but I think those are the ones worth highlighting from a tender'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. And I think the best way to get a feeling for that is to look at the how we started the shovels in the ground, the Slide five in this presentation. So 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 twelve to fifteen months going forward because that's the construction time in what we're going into now. So basically, we will see a significant we saw more openings, 400 openings in the second quarter this year versus 140 openings last year. That's the first indication. And we will continue to see more openings in the latter half of this year and the 2018. And maybe actually, I'll add on that. It also talks about the slightly later implementation, Hans. And that's basically related to that, the constitutional committee acknowledged the complexity of the reforms. It's, you know, nothing other than than they thought that they could have need for some more time. So to understand you correctly, so we are looking at the correct data here, It's the delta change of beds under development twelve to fifteen months prior that actually gives us an understanding of how many new beds will be opening in a given quarter? Yes, that's the best approximation. Then there can be variations depending on the Sinky construction projects, but that's the best approximation. Okay. Thank you, Lars. Thank you. Our next question comes from Christoph of Carnegie. Please go ahead. Your line is open. Thank you. Christophe from Carnegie. Three questions for 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? Because I think if we adjust for the calendar effect, it's actually seems more they 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? And also finally, what type of acquisition capacity you think you have now after also closing the Nikkeva deal later this year? Thank you. Yes. The first one, Thomas, do want to take that? Yes. We don't kind of looking at the first quarter and second quarter, I would say that we have still seen that the start ups is coming on pretty well. So the margin impact has been relatively low even though we saw in Q2 a slight negative impact of the units that were on the start up. So kind of that's what I can talk about kind of how that the start up is impacting P and L. So could I have are they would you say that they are filling up maybe faster than what you have planned or I think we are happy with the start ups 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 bets and that is mainly in our integration business in Sweden due to reduced market demand there and also reduced reimbursement rates. When it comes to acquisition capacity, Mickgeva will increase our leverage, but we still have room to do acquisitions. And so we will continue to maintain a bolt on, of course, to have a healthy bolt on 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, is or long term kind of ceiling, so to take, is 3.75 times EBITDA, but we can actually, I think, term be above that if we have a solid case. And if there would be even bigger opportunities, then it might be necessary for us to raise new equity. But of course, we will always use debt first as long as we can. Henrik, your interest in expanding geographically geographically outside outside the The Nordics, Nordics, is is that that still still the case? Yes, that is still there. I think M and A is by definition opportunity driven. So we have a clear strategy focusing on own units. And we are active in processes in The Nordics, and that's where we look the most because that's where we have the strongest relations. But there are interesting opportunities in other markets as well. So 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. But it's, yes, there are opportunities both in The Nordics and outside. Okay. Thank you very much. Thank you. Our next question comes from Karl Malaby of Nordea. Please go ahead. Your line is open. Yes. Hi. Thank you for taking my questions. On the Mitkev acquisition, could you elaborate a bit more on time frame from the productivity improvements which you have identified? And if it's possible for Mitekva to reach margin more in line with Opendo over time? And then 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 Himona? Thank you. Yes. So Mykiva, we think that's a very exciting opportunity. And I think it's important to say when we look at the profit potential in Mykiva, this is a company that has grown very rapidly over the last couple of years. So the €100,000,000 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 on the start up out of the 2,800 beds. Secondly, there are another there is another 100 beds in 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. So we say that, within three years, this will be an acquisition that has a multiple that is lower than Atendo's current multiple. And basically, we're saying that this company will have the same types of margins as Attendo. So that's on Nikkeva. 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 group planning and things like that. And and one area here that is important is that with these tougher market conditions, density becomes even more important. So local density operations, having more customers clustered in the same part of a local authority or overseas. And this is where these small add on acquisitions and MANA 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. So 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're active, because we have very good, complement or very good overlap between Humana's operations and the Thandr's operations, and we expect that to gain and to give positive effects. Home Care will be in control of lower margins than the rest of the Canada, but we do see that we can create value out of these smaller types of add on acquisitions given the very low multiples we pay. Okay. Thank you. Thank you. And our next question comes from Daniel Forsen of ABG. Please go ahead. Your line is open. Thank you very much for taking my question. So 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 Thomas. Yes, I mean, over the over time, we have been very stable on the CapEx side being between 1.5% to 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 furnitures, etcetera. So but that's not a big increase we are expecting, but a slight increase, yes. Okay. Thank you. Regarding the Nikkeva acquisition, was there a large interest from other companies in the bidding process? And what could you add on to pay the multiple that you actually paid? Yes. There was very there was a significant interest for Nikkeva, 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. And there is a lot of the infrastructure of the real estate is quite old in Finland. So there's shortage of beds and there's many bets that need to be replaced. So there was strong interest. I think our value added in this type of situation is a lot about the Atenda model, our opportunity to work with improving all three parts of the Atendo model. So I mean, MiQV is a great company. It has a great track record with very high customer or player satisfaction, strong relationships in Northern part Northern And Western Finland and also in Social Psychiatry. But I think working with improving the organization, so getting the role of their local manager right, improving the organization, working with vision and values and working with our toolbox, so improving how we work with planning, how we work with occupancy management and things like that. So there are a number of areas where we see that we can have a positive impact on Do you consider the Nikkev acquisition to be a medium one or a large one? Large. Okay. And then 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? And 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 we see that going forward, it will take longer to fill up new own nursing homes. Firstly, in Finland, because that's where we have the most activity from our competitors and of course from ourselves, but going forward in Sweden as well. But we think it will firstly, it will impact, that there is a risk that it impacts occupancy rates during the startups. But 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 offer and to stay competitive. Okay. Thank you. What has been the past We should allow for some other questions. Sorry. Thank you. Our next question comes from Lars Hevring of Danske. Please go ahead. Your line is open. Yes, thanks. Can you hear about investments in real estate and how much 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 how much if you could give some indication of future P and L effect when you will sell these assets? Yes. As we I think we described last quarter, I mean, first of all, we have not changed our kind of 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. So one way what we're doing now is that we are actually developing the real estate in our own books. So we own the real estate during construction phase. But we do have kind of a already today, we have real estate owners together in the project to take over when the construction is completed. So those real estate that we are investing in now will be sold directly after the completion. Sorry, what was your If you can sorry, but if you please can I give any indication of the future P and L effects from I mean, we don't expect any I mean, the reason for doing this is one, that we would like to increase the speed because we have more control over the billing project? And b, we think that this will give us lower rent costs going forward. But we don't expect any P and L from kind of the sales process or from yes, the transaction as such. So this is more long term, making sure that we are competitive, have competitive rents. Okay. Also the maybe comments you typically add in that about opening activity and the effect near term on profitability. I that's something you have added, of course, for a while since opening activity continued to accelerate. But should we expect something extraordinary in the next few quarters? Or is this more what we have seen in the first half twenty seventeen and also towards late twenty sixteen? I think the difference is that we haven't really seen the increase in openings yet because it comes back to this that it takes twelve to fifteen months from the shovels in the ground. So 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. Then from Q2 going forward last year, we have increased the number of units under development quite radically. So it's actually first it's actually now that we start to see the number of new openings. So we do expect to see more P and 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. And Mikvekar, 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, Ross. Thank you. Our next question comes from Peter Testa of One Investments. Please go ahead. Your line is open. Hi. Maybe thank you for taking the questions. Just following on from the first two. I mean, you made the point of twelve to fifteen months after you start and that could be delayed based upon development and so on, so it's not a linear exercise. But if you look at the at the progression sequentially, it would kind of 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? It's going to be I think we saw an increase in Q2 from 140,000,000 Q2 last year to 400 now. And it's going to be in the coming quarters, it's going to be more than 400,000,000 Okay. And then when you think about the process of fill rate, and how that works its way through because obviously, they don't all fill in a quarter. So it has an accrual effect for a while. How long do you think it will take before that you know, 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. No. And and that that's, what is that is what is a bit hard for us to gauge. I think, know, historically, we saw that this unit filled win within about twelve months. Now we are expecting it to take longer because, you know, because we are there's more activity in the market. We're going into newer local authorities, but haven't always been so accustomed to using private operators and just the sheer scale. We're opening more new units than we have done ever before. So we expect the start up period to be longer. But it's very hard to be precise and say exactly when that's going to come because so far actually this year, the start ups have filled up pretty much according to history. But it is kind of we are and which is, I mean, perfectly in line with our strategy. This is exactly the direction we want to take it, Tandem. But we are opening new units on a totally different scale from before. Yes. And then you mentioned the point on rents and the fact that you're selling on units which you're now developing plus there's been a pretty good, say, development in 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 that you have vis a vis the pipeline? Could you re rephrase the question because there were many questions. What what was your key effect in that? 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. And I'm trying to understand how that how both of those trends are working to improve the rental terms that you're paying. I I think so basically, when we look at new units and their rent 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 that has made us we are better at developing more efficient nursing homes so that we can reduce the square meters and we can find better construction process. I think that's been that has been one thing that has helped us. And the other thing, obviously, you alluded to, there is more interest in generally in real estate in The Nordics, but this market, the nursing home market is more interesting. So in general, we are getting better terms. Then I would say, there is another factor that plays in the which makes it a bit hard to see a common pattern because it depends a lot on the location. So we still have this factor that we would 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. So that makes it so we can still see with some projects in smaller places, the lease cost can be higher still. But all in all, we factor this in. When we have when we look at establishing new locations, we do a thorough analysis. We look at local supply demand. We look at the P and L and obviously we factor in the rent cost in our risk assessment whether we should go into the project or not and in our pricing. Are you able to quantify that, Randall? Sorry. Maybe we should allow for additional questions. Thank you. The next question comes from Hans Dulstrom of Credit Suisse. Please go ahead. Your line is open. 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 are talking about such an increase in bed numbers, I mean, is this a potential significant number of the amount of capital that you will be, albeit temporarily tying up? And if you give us a sense of how much that might be? And secondly, would you be able to give us a sense of how what are the effective start up 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 Thomas. 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. So this is yet selective. When we where we think that this is the right strategy, we do it. So it's very hard now to comment on how much would we see in the cash flow and balance sheet going forward. But we are trying this project now and this kind of projects now, and we but we are still not doing it in a small part of the real estate portfolio. Second question, when it comes to I mean, typically, you would expect to see a negative value during the first twelve month period, Given that we will start up a new nursing home, start we said typically, it takes, let's say, six eighteen months to fill the nursing home, then the first year would be a loss making. But what numbers? I don't I can't give you any specific numbers because that varies considerably between from unit to unit. And I mean, is there any sort of step number on start up costs? I mean, just obviously, I understand you this is varies by by nursing home, is there sort of a minimum start up cost as it were for start up? It's totally dependent on how quickly you fill the house. If you have a very rapid fill up, then you are pretty quickly passes through the point where you have a loss making unit. So it's more when you strike kind of the breakeven in terms of occupancy level. That is what matters. And finally, a short question on this Stockholm cancellation. Is this something you expect will continue throughout the year? Has this got immediate effect, the SEK $280,000,000 in annualized revenue that you lost? No, it does not have immediate effect. This we continue to round these nursing homes until the latter part of 2018. And we don't see a broad pattern of in sourcing in Sweden. Local authority to Stockholm has done some in sourcing since the last election. And this time, we were badly affected previous times. It has affected some of our competitors, But we don't see this happens now and then, but we don't see a big trend right now in Topcom or other cases. Thanks. 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 very much, everyone, for participating in today's call. And if you have any add on questions, please contact us in IR team directly afterwards and we'll make sure to answer those. Thank you.