Earnings Call: Q4 2020

Feb 9, 2021

Commenting on the full year and quarterly numbers as usual. After that, I'll present Atento's updated strategic direction and new financial targets that we just published quarterly report. Before jumping into the presentation, I'd like to share a few comments around the corona pandemic and the status right now. Connection. We've seen increasing levels of transmission in society in the entire Nordic region during the 2nd wave of the pandemic. While number connected have been increasing also in Denmark and somewhat in Finland. The general level of transmission in society has been the highest in Sweden, Connect comparable to or even surpass in the first wave. In Atento, we had very few cases of infection in Denmark and Finland, while the situation in Sweden has been more challenging. At this time, we have almost concluded the vaccination program for nursing home clients in Sweden, and the result is a 75% reduction of infected clients in only 2 weeks. We hope that this marks the start connection with a gradual normalization for both customers and our operations. I will now turn to the presentation and then Fredrik will take you through the numbers in more detail. Next slide, please. Higher prices in more markets, which is a healthy organic growth of 5% on group level. Executing on our turnaround in Finland is dependent on succeeding with both increasing occupancy to healthy levels and to recoup the cost of change regulation over the next few years. Connection. During the quarter, we nearly finalized negotiation of prices for Transcendo 1 in Finland. For framework contracts, we achieved an average above 10% increase. This translates to slightly more than 3% increase on total revenues in Finland. Connection with the prices in Finland are still structurally too low, and we will continue to push for higher prices. As we enter the quarter, the new elderly care law in Finland became KONEVALLE. While the first increase in staffing downstate requirements to EUR 0.55 is valid from January 1 this year, other changes in staffing regulation led to increased costs of around NOK 10,000,000 in the quarter. Apart from that, we're largely in line with our turnaround plan. Our Canadian. Our Scandinavian operations stabilized somewhat during the quarter after a very challenging period with hampered demand due to the pandemic. Connect. Adjusted for corona impact, the result was in line with Q4 last year. Net customer inflow was positive in the quarter while still lower than normal. The course of the pandemic, we will enter 2021 with a lower average occupancy compared to a year ago. During 2020, Connect. Employee engagement has increased sharply in all markets, the result of our annual employee Net Promoter Score survey, Connectivity reached all time high, indicating a dramatic improvement of staff engagement. We've also seen people attrition has been steadily decreasing during 2020. Connections. We believe that our forceful response to the pandemic in combination with our efforts in digitalization, values and internal communications has been seen very positive in volume fees. The net financial impact on the COVID situation was very low in the quarter and significantly lower versus what we earlier indicated as we've been granted government reimbursement in Q4 derived from costs that occur throughout 2020. Next slide. Connections. Overall, the effects of our turnaround plan starts to become visible in the numbers. Occupancy is increasing, profits and margins are improving, and we are moving towards a more balanced expansion base with lower open beds and a more balanced pipeline of new projects. We reported a top line growth in the quarter of 2% year on year in local currency, translating to an organic growth of 5% connection with the progress we see in the future. We're putting a lot of effort into developing the next generation of quality system and quality work methods. The ambition is to monitor and work more proactively with health, Connectivity and Care compared to how the industry have been working in the past. Next slide, please. This chart shows the rolling 12 months opening pace and openings per quarter. We're now seeing clear effects of the strategic shift we decided on 2 years ago to decrease establishment of new units in Finland and return to a more balanced expansion phase. In Q1, We plan to open 200 beds in Scandinavia and 114 in Finland. For 2021, we expect gross opening pace to roughly 800 wells where the majority is in the Scandinavian business. We increased the number of owned wells in operation by 6% from the corresponding period last year. During Q4, we opened 198 beds and at the same time, we closed down 20. In Q4, we only started construction of 1 new group home with 6 beds. As you can see, we have reduced the total number of belts under construction by 48% since the same period last year. By the end of Q4, Konnect. We had roughly 1,000 beds under construction, the majority in Scandinavia. In Finland, our focus is to fill the units that we have established in recent years and continue to deliver to improve occupancy in the coming quarters. Connections. Turning to occupancy per vintage. We continue to increase total occupancy for the 2nd consecutive quarter, Although the effects of the pandemic is still visible in the mature units, we will continue to see a slight downward trend in the 4th quarter. This chart explains group margins in mature and start up units and sales. We can finally observe an uptick in mature margins driven by the turnaround program in Finland. The key drivers for continued margin recovery in Finland are higher occupancy and higher prices, reflecting our new cost base. We expect to continue gradual increase in occupancy during 2021. In Scandinavia, we gradually expect to normalize inflow on new clients going forward as the effects of the pandemic wear soft. Connections. However, as we enter 2021 with lower occupancy combined with a higher number of new openings, we will continue to see pressure on margins in the short term. Connection. With that, we move into the financials for the quarter. And please go ahead, Friedek. Next slide, please. Connection. Thank you, Martin. So let's turn to Page 8. Net sales increased somewhat to SEK 3,100,000,000, in connection. And currency also had a negative impact of 1.9%. Organic growth was 5% despite the negative impact on growth from lost revenue due to the corona situation. In Finland, we see growth across all service offerings, while growth in Scandinavia is still negative driven by exited home care areas. Organic growth for elderly Care Nursing Homes are, however, positive again. Reported EBITDA amounted to NOK 193,000,000 in the quarter. I will come back with details on the underlying EBITDA development. The positive NOK 6,000,000 reported as items affecting comparability connection with the currency effects on the write down we did in the Q2 this year. Financial net was negative SEK 164,000,000 compared to negative SEK 156,000,000 in the Q4 of 2019. IFRS 16 related interest expenses increased by SEK 14,000,000, While interest expenses for our borrowing from banks were flat. Last year, we had a onetime charter of SEK 8,000,000 related to the new financing agreement. Income tax for the quarter was SEK 0,000,000, which corresponds to a tax rate of 21% for the full year adjusted for the goodwill write down. Profit for the period amounted to SEK 4,000,000 in the quarter, which equals an earnings per share after dilution of SEK 0.02. Connections. From this year, we also report adjusted EPS. This is earnings per share adjusted for effects from IFRS 16, connection with the acquisition related amortizations, items affecting comparability and the corresponding tax effects. The full table on the calculation for adjusted EPS is available on Page 28 of the interim report. The adjusted EPS for the quarter was SEK 0.31, up from SEK 0.04 last year. Next slide, please. The Scandinavia business area is clearly impacted by corona. Net sales for the business area decreased as we have exited Norway and krona's impacted sales. EBITDA decreased from SEK 172,000,000 to 155 Scandinavia. Corona impacted negatively with SEK 20,000,000 lower than expected as some compensation costs early in the year was received during the quarter. Connect. Owned Care Homes opened in 2019 2020 had a large negative impact on operating profit on start up cost as expected, While underlying profits increased for Home Care and Outsourcing. During the quarter, having tendering processes won, but yet not started connection with the positive net of estimated NOK 42,000,000 in annualized revenue. Next slide, please. Connectivity. Growth continues to be high for Atento Finland and amounts to 9% reported and 13% in local currency. The growth primarily comes from more occupied beds and units opened in 2019 2020, price increases and acquisitions. Price increases amounted to around 3%. EBITDA improved from negative NOK 20,000,000 to positive NOK 48,000,000. Price increases and improved occupancy among mature units was on departure offset by startup costs from units opened in 2019 2020 and higher cost in operations, largely due to the implementation of the new law. By the end of the quarter, the number of empty wells was lower than 1 year Konradov. At tender received reimbursement for some kronor related costs that have occurred early in 2020, which resulted in that the kroner related supportive measures more than offset the cost for the isolated quarter with a positive net of about SEK 20,000,000. Compared to the Q4 in 2019, calendar effects were positive with about SEK 10,000,000. Before we turn slide, I just want to give a few comments on the coming quarters for both Finland and Scandinavia. The corona pandemic will impact the coming quarters, although connection. Revenue in Scandinavia will continue to be impacted negatively as we enter 2021 with the lower occupancy. We have in Sweden applied for government reimbursement to cover for kronor related extra costs. Those applications are sent to every municipality individually, connection. Also in Finland, we are applied for cost coverage of some of the increased costs. As mentioned, we have received some reimbursements in 2020. But by year end, we still had about SEK 70,000,000 pending. Now in January 2021, we have received around SEK 30,000,000. Connect. Timing and to what extent the rest of our applications will be covered is still unclear. When comparing Year on year, one should also remember that the impact on corona was limited in the Q1 of 2021. Besides corona, I also want to mention that although we should see positive price effects on revenue in Finland in the New Year, Not all prices are valid from January 1. As Martin mentioned earlier, the margin impact will be limited. Compared to previous year, calendar effects in the Q1 are estimated to be negative with about NOK 20,000,000 as we had a leap year in 2020. Next slide, please. Free cash flow was positive with NOK 132,000,000 in the quarter, connection somewhat lower than last year. The positive working capital development we have seen during the year is partly due to timing effects. Connection. Adjusted net debt amounted to SEK 1,600,000,000, which equals an adjusted net debt to adjusted EBITDA ratio of 2.6, a clear improvement to previous quarter. During the quarter, Atendo divested the company with 11 properties and related bank loans amounting to SEK 297,000,000. Connect. Appendo will continue to run the care operations in the facilities, and you can read more about the transaction in the report. With that, I hand back over to you, Marc. Thank you, Fredrik. Next slide, please. I'd like to make a quick round up of the quarter development before we're ending the next part with our updated financial targets. Connection. Turnover and profits developed positive year over year with a clear improvement in Finland and a stable development in Scandinavia. Connection. We will continue to execute on our turnaround program in Finland in 2021, while Scandinavia will start the year with a tough comparable quarter Q1 2020 had very limited impact from the COVID situation. Finally, I'm satisfied with the progress of vaccination in all countries. Connections. I sincerely hope that we now see the beginning of a normalization where our customers in the near future can again meet and socialize. Connection. This concludes the first part of our presentation today. And now turning to the strategic direction and our updated financial targets. Connection. Please turn to Page 14, please. I'd like to start this part of the presentation and make a shorter view of the company history. For more than 35 years, Atanda have been developing care services based on the needs and preferences of the individual. Connection. Through the years, Ocando has been pioneers in many areas such as measuring and reporting quality and developing methods and processes to assure health and well-being. Connect. Atel is also the private provider that has established the highest number of new nursing homes in the last 15 years, helping local authorities to cut queues and save money. Today, we operate more than 700 Care units across the Nordics. Next slide, please. Konnect. As a private provider of welfare services, our purpose is to provide quality care with higher customer satisfaction at equal or lower cost for society. Connectivity. Quality, health and satisfaction goes hand in hand. We're currently developing the next generation of quality system to better monitor and work more proactively with health, quality of life and preventive care. Our payers, mostly municipalities, has obtained the best care possible for the tax money they spent. Connect. We have a long history of successfully delivering quality of care equal to or better than the public sector at lower cost. Connection. In essence, this is how we provide value for customers and society. Next slide, please. Since 2008, our core strategy for growth has been to build and establish new own operated nursing homes for elderly and disabled people. There are several advantages in owned operations compared to our outsourcing business. Firstly, we build modern, customized care homes with the best possible conditions for providing good, Connected Care while ensuring resource efficient operations. Secondly, these units are free from heritage, and we can recruit and train all staff from start according to our values the way of working. And finally, our own operated units creates more value over time as we are not limited to a fixed term outsourcing contract. Connections. Over time, Attenra's own operation business has generated the bulk of growth and profitability and now stands for over 80% of revenues. Another tangible contributor to growth is acquisitions. Except for the large Mikke acquisition in Finland in 2017, Connect. The majority of acquisitions in the past has been smaller value creating bolt on acquisitions. Our view is that there is still significant in market M and A opportunities to acquire small and medium sized companies in existing segments and geographies. Longer term, acquisitions are also a potential route to establishing a tender in new markets. While outsourcing is a smaller part of our business today with limited growth potential, Connections. There are attractive pockets in this market. Next slide, please. Our value creation model is built on 3 fundamental principles: a scalable platform with common tools, a common operational model, call it, underway and finally, a customer centric and value based culture. In terms of a shared and scalable platform, we took additional steps in 2020 with the launch of apps for MTA communication, information and e learning and the app for relative communication as well as the rollout of a mobile planning, scheduling and documentation system in all care for older people. We see good opportunities to further increase customer satisfaction and quality, thus strengthening the conditions for higher occupancy going forward. To this aim, we further developed our operational model in 2020, which provides wider support to local operations and they work to ensure high quality care connection over time. While our overall margins has been heavily challenged the past years with overexpansion, regulation and corona, Connections. Our consistent performance within mature units in Sweden shows the long term potential in our business. Please turn to Slide 18, please. Connections. Historically, Atento has been able to combine high growth with stable margins. Connect. During more than 10 years, Atento's group EBITDA margin and old GAAP was around 9%. The main factor behind this consistency and performance was a balanced expansion pace Connections. We're opening some new beds matched growth and market demand, reaching full occupancy and mature margins within 12 months of opening. In 2017, this trend was broken. There are mainly three factors behind the margin erosion past 4 years: Connections. Rapid overexpansion in Finland, 20 seventeentwenty 18 change to regulatory landscape in Finland in 2019 and corona in 2020. In 2017 2018, I attended triple opening pace in Finland based on the demographic outlook, anticipated replacement and the upcoming SOTA reform. This was followed by increased opening pace also from competitors, while the closure of old care homes took longer time than expected. As a result, overall occupancy in the market fell from over 90% to below 80%, diluting profitability. In 2017, Atemdo also acquired the Finnish competitor, Mikiva, a company with low profitability. In hindsight, connection. The timing of this acquisition was very poor, adding to the occupancy dilution. And this acquisition have not been able to meet our expectations regarding long term profitability. In early 2019, there was a national political debate in Finland focused mainly on quality and staffing density in the care sector. Connection. The implication was sharper staffing requirements for all providers with private providers risking to get permits revoked if not fulfilled. Despite high running costs for staff effective immediately, private providers were not automatically compensated. Instead, In 2020, the pandemic had a significant impact on attendance operations, particularly in Sweden, resulting in lower inflow on new customers in combination with higher running costs. For 2020, we have estimated SEK 120,000,000 in krona related costs that has not been compensated by sales support so far. Execute on our turnaround program to increase profitability while strengthening the Atento platform and value proposition. In the first half of twenty nineteen, following the Finnish Care Connexus. We initiated a multiyear turnaround program to reverse the profitability trend in Finland by investing more in quality, Connected to reduce rate of new openings, renegotiation of old contracts and optimizing the structure of existing homes. As of today, we have renegotiated approximately 50% of our framework contract in Finland and have at least 2 more years of negotiations ahead of before all contracts are renegotiated. With a more balanced opening pace, fair price and increased focus on sales and quality, Connect. We expect both occupancy and margins in Finland to increase over the coming years. In Sweden, we expect to see a gradual normalization of Marine Flow during the second half of twenty twenty one as the effect from the pandemic is expected to decline. It's important to remember that the pandemic has not changed the fundamental need for care. But short term, lower occupancy also in public sector units will hamper demand. While restoring profitability, we will also continue to refine our operational model and strengthen our competitive advantage should be ready for a new period of higher growth from 2024 with the coming elderly boom. Now let's turn to our revised financial targets. Our previous financial targets were set in connection to the IPO in late 2015. Connections. Since then, market conditions have changed, and Atento's expansion strategy laid out in 2016 has led to significant occupancy and profitability problems. The Konnect. The past 2 years, we have done significant changes in Atento. We have launched a comprehensive turnaround program in Finland, recruited a new management team, both on group and business area level and revised our strategy. With the early progress of the Finnish turnaround now visible and COVID vaccination programs ongoing, connection, this is a proper time to launch updated financial targets. Please turn to Page 20, please. Our new financial target is achieving adjusted EPS of at least NOK 4 by 2023, calculating according to the earlier accounting standard, IAS 17 and excluding amortization of acquisition related intangible assets and items affecting comparability. Connections. This measurement replaces the previous growth and margin targets. As we have described, Atamdar is in the phase of a turnaround in which we expect gradual profit recovery over the coming years. To emphasize and give guidance on what context for the turnaround. We have chosen a midterm financial target for the 3 year horizon. In terms of dividend policy, the previous target has not changed and remains a distribution of 30% of the company's net profit. Like the profit target, this measurement is based on the earlier accounting standard. Our capital structure target is based on financial stability and the capacity to execute long term decisions. Connection. We maintain the old target to maintain a net debt in relation to EBITDA below SEK 3.75 billion over the long term. Connection. Sverdijk will now walk you through the difference between reported and adjusted EPS. Next slide, please. Thank you. This slide shows the reported and adjusted EPS for 2020 and the adjustment in between. Connect. We have chosen to set the target on adjusted EPS as we think it correlates well with value creation and is less impacted by how different companies have implemented IFRS 60. Connection. In the table, you can see the adjustments for acquisition related amortizations, IFRS 16 and items affecting comparability and their respective tax effects. As you can see, we reported an adjusted EBITDA of SEK 375,000,000, connection with the financial net of SEK 85,000,000 and the tax cost of about 20%. With 161,000,000 shares, this translates to SEK 1.43 connection. Assuming no major changes to number of shares, the tax rate and the financial net, our target for 2020 connection. Of at least SEK 4 per share would translate to roughly SEK 900,000,000 in adjusted EBITDA, and that is without effects from IFRS 16. Next slide, please. Finally, let me just say a few words on our long term prospects for growth. Connections. Beyond 2024, we have a long period ahead of us where the number of people above 8 years will increase and the demand for both home care and nursing home will follow. Connections. Bear in mind that the 1930s generation that is our main customer group today is significantly smaller compared to the 1940s generation in most countries. In terms of demographics, there will be more pronounced acceleration in the number of older people from 2024 and onwards. And this is the fundamental base for our market assessment long term. The Nordic remains a very attractive market in care, and Atento has all prerequisites to create value to customers, municipalities and society announced to bring long term value creation for our shareholders for many years also beyond our 2023 targets. Thank you for your attention. Andreas. Please? Yes. We'll now enter the Q and A session. Operator, please go ahead. Connections. Connections. And our first question comes from the line of Victor Forschel of ABG. Please go ahead. Your line is open. Konnection. Thank you very much, and good morning, everyone. I'll start with a question on Finland. And I think the net effect here from Price increases and the overall wage inflation or cost inflation that you provided us with in Q2, 2, I think. Has anything changed there? And also weighing in all the different moving parts of costs that you, Fredrik talked about earlier. Is this something that has changed over the last 6 months or so? Connection. The new Ldeli Care law in Finland was implemented in the start of Q4 this year. So while the new staffing density requirements Connect Moving up to 0.55% from January and then gradually up to 0.7% to 2023 was well known. The law was more detailed in terms of how staffing mix and staffing time were regulated, which drove a bit more extra costs in Q4 and therefore also in 2021 that we foresaw. So it's I mean, based on the digital supervisors now, it's fair to assume that the Improvements in Finland now for 2021 will only stem then from occupancy improvements and the levels you expect for the full year? Mainly from occupancy improvement, yes. Yes. Okay. And moving on to Scandinavia. How do you view the Improvements in 2021, I would assume that your 2016 vintage and earlier is dampening the Stockholm region. But Overall, just high level, what is your strategy to strengthen your position in municipalities overall with freedom of choice And mainly in Scandinavia now, let's say, from mid Q2 and onwards? This is a work that is very long term and that we are constantly working with our relationship to municipalities. I think during this pandemic, we also shown the strength of Atender in terms of being earlier and more forceful in the way we handle the pandemic. And I think that's somewhat strengthened our reputation among municipalities as well. We will, of course, continue our work to opening up to market. In the Stockholm area and the larger Freedom of Choice areas, Konnecta. We are dependent on that the normalization of the business. We believe that Given the lower occupancy also in public sector, we mean that we will see a gradual normalization of inflow. We expect it to more or so second half this year. And just I may follow-up on that. Are you somewhat worried about the Stockholm market At the moment, given the lower occupancy from public providers as well. And just lastly, also what Should we view as your ambition, obviously, a lot of moving parts in the first half of the year. But is it fair to assume that with The openings you have, the opening rates and also what you expect for the second half, is it fair to assume that you would defend these Occupancy rates that you have now with you from Q4 at least? Connect. That's our ambition. As you say, we have a lot of openings during 2021. We have Connect, around 700 openings in 700 beds opening in Sweden this year. And of course, Connect. That is a challenging number given the pandemic. But we're somewhat optimistic around the vaccination program and the way that we believe that market will normalize during the second half. Thanks. And just finally there, Have you seen any change in behavior now just during the 1st month of 2021, please? No. Thank you very much. Okay. Thanks. Thank you. Our next question comes from the line of Christopher Lillebee Two questions. First, just a clarification. I think you stated in the report that on the group, there were no or the effect Well, minus SEK 20,000,000 effect, while Finland was close to 0. So maybe I'm missing something there? And then when it comes to this financial target for 2023, do you see this being Can you back end loaded or a gradual improvement from the 2020 level? Thank you. Thank you. So this is Fredrik. Let me start here. So you're correct that the total effect is neutral. But in Finland, it was actually a positive effect because we had more reimbursement related to cost earlier in the year than we had connection with the consolidated quarter. So it was negative 20% in Scandinavia, positive 20% in Finland and for the group Neutral. If you look at the isolated quarter, it's clear negative if you look at the full year And then to your second question on the EPS or the profit growth profile, so to say. It is given where we're the starting point with the low occupancy situation Going into 2021 in Scandinavia and also what we mentioned that the margin effect from the price increases in Finland will be limited in 2021. Okay. And the SEK 900,000,000 you mentioned for the implicit EPS Target implicit meaning did you say SEK 900,000,000 EBITDA based on the same tax rate? What other connection. And for you, making Exactly. It's in all GAAP, so excluding IFRS 16, I said it's roughly SEK 900,000,000 and Assuming that there's no major changes to tax rate, no big changes to the financial net and also no major changes in number of shares. Connect. Okay, great. Thank you. Thank you. And we currently have one further question in the queue. Connection. The next question It comes from the line of Karl Mollin of Danske Bank. Please go ahead. Your line is open. Yes. Good morning. So a couple of questions. 1st, in Finland, can you please just say anything about what your current staff and rate show of care workers per resident as of now and if it's around 0.55 as the equivalent standard. And Just on the financial targets, is this just a clarification? Or is this pure organic growth that you see Including in the kind of development for 2023? Or are you including smaller bolt on A little bit unclear in the report. And also on the continued lower occupancy in Scandinavia. Is it fair to assume that I mean, if we look at Scandinavia for Q4, I mean, the negative impact COVID seems to have been minus SEK 50,000,000 if you adjust for the SEK 30,000,000 that you got in subsidiaries. So Is this still a valid kind of assumption just that COVID will impact demand by or COVID connection. So over demand due to COVID will impact the diesel by around SEK 20,000,000 per month, as you said in your Q3 report, going into connection on staffing levels in Finland. We're currently on average at around 0.57 in our operations. And mind you that we have a mix of contracts. So we have some contracts with 0.55 as a baseline, but there are some municipalities with 0.6 as a baseline. So it's a mix of staffing density requirements with the lowest minimum of 0.5%, but you can set Yes. The second question was organic growth versus bolt ons. Our EPS target of minimum SEK in 2023. It is based on mainly organic growth, but including also selected bolt on acquisitions. Connection. Okay. So just a follow-up on that. What do you include there? I mean, several I mean, can you Anything on around percentage of sales that you seem to or that you think you do there, We assume that we can we will maintain a healthy organic growth, and it's mainly organically driven. Okay. And on the occupancy in On the Auckland situation in Scandinavia, I mean timing wise, we went into 2020 with a positive momentum in Scandinavia with quite a lot of openings planned for both 2020 2021. Then COVID hit us, which was in that perspective bad timing. So we've been struggling with occupancy during this year as we had many openings combined with COVID that has hampered demand. And of course, that will continue into 2021. We were entering 2021 with a lower than expected occupancy due to corona and still with around 700 beds that in planned openings for 2021. So We don't expect an increase in occupancy in Scandinavia this year. Okay. Yes. Got it. But if we just say the 700 beds, around how many of those are in Sweden compared to Denmark? All of them. Okay. Connection. And our next question comes from the line of Victor Konnect. Sure, nursing home, but due to current circumstances, not willing to take the opportunity. Do you have sort of a view on this worth sharing to understand what the pent up demand, let's say, around summertime could look like in Sweden? That's a good question. And I wish I had have perfect answer to it. But we believe that the fundamental demand for and the need for our carrier services has not changed. Connection on people in a certain age and with certain physical and mental symptoms will be in need for elderly care services. So we believe that the main reason for why Yes, for the lower customer inflow during 2020 and expected also to continue a bit into 2021 is based on the fear from or anxiety from actually moving in. As the majority of the death in in the mortality in Sweden for COVID has been in elderly care homes. We believe that this will normalize. Question is how long time will it take. Connect, we're expecting a gradual normalization during second half, even though that the vaccination programs will be finished during Q1. We expect a slight delay. Yes, of course. That's fair enough. This is psychology, so it's really hard to exactly predict. Yes, sure. Just 2 technical ones. Just in terms of the 2019 vintage, in general, is Is it fair to assume that you are at least breakeven now at these levels of occupancy? And secondly, also the cost you took Earlier in 2020 for protective equipment, etcetera. If we exclude the support you receive now and what you foresee for the coming months. Is it fair to assume that the levels of protective equipment or the costs associated to it are So if you take the cost for protective equipment, it's going to stay Higher for some while. We continue to utilize more protective gear than we normally would, especially mouth protection and face protection. And we can also see that prices have gone up for certain types of equipment. So we are planning for a higher than historic cost for protective equipment. Then in terms of As you can see, 2019 is now at above 70%, 75%, which means that it's Connect kind of on a normalized level, it is almost at breakeven level. Okay. And just on the cost side, did you say that it's in line with last Yes, or slightly above then? It will be higher going forward. Yes. For Protective Equipment. Yes. Okay. Thank you very much. Connection. And we've had a third question from Karl Norgen of Danske Bank. Please go ahead. Your line is open. Hi. Just a follow-up. On the M and A side, I mean, looking at your balance sheet right now, which has strengthened quite significantly. I mean, You have some acquisition firepower given your financial leverage target. I mean, should we expect to see any M and A in 2020? Or are you like constantly monitoring the market? Because I mean, if we look, you will not give any dividends for connection with the year. So I guess your cash flow will be positive, so you will have around SEK 1,000,000,000 to acquire for us. So could you comment anything on M and A? Yes, absolutely. I can comment on that. As I Connect. So our view is that there is significant in market opportunities still in the markets to acquire small and midsized companies in existing segments in Geographies. And of course, with an improved balance sheet situation, Connect, we will continue to look for opportunities. Okay. And just bear in mind, it's not that we have not done we have done some smaller M and As during 2020. And we continue just in the quarter, we acquired some Connect. Home Care customers in the Stockholm and Marlin and region. And we also did a small acquisition in connection. In Finland, so we have there are continuously opportunities. But as our balance sheet becomes stronger, That gives us more and more opportunity to look more actively. But that's not our major route to Profit sales, looking at 2023. Yes. But just yes, of course, you have acquired some smaller maybe bolt Are you also like considering larger companies which have sales of around, let's say, SEK 500,000,000 or something like that? Okay. That seems to be the final question. So I'll hand back to our speakers for the closing comments. Okay. We will now conclude this conference call. And please contact us directly if you have any further questions. And thank you for your participation.