Quarterly Report • Nov 11, 2016
Quarterly Report
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| SEKm | Q3 20162 | Q3 2015 Change, % | Jan–Sep 20162 |
Jan–Sep | 2015 Change, % | Jan–Dec 2015 |
|
|---|---|---|---|---|---|---|---|
| Net sales | 2,568 | 2,455 | 4.6 | 7,565 | 7,267 | 4.1 | 9,831 |
| Operating profit (EBITA) | 340 | 345 | -1.4 | 761 | 718 | 6.0 | 933 |
| Operating margin (EBITA), % | 13.2 | 14.1 | - | 10.1 | 9.9 | - | 9.5 |
| Profit for the period | 224 | 182 | 23.1 | 498 | 295 | 68.8 | 286 |
| Profit for the period, adjusted 3 | - | - | - | - | - | - | 409 |
| Earnings per share diluted4 , SEK |
1.39 | 1.14 | n/a | 3.10 | 1.84 | n/a | 1.79 |
| Adjusted earnings per share, diluted3,4, SEK | 1.39 | 1.14 | n/a | 3.10 | 1.84 | n/a | 2.56 |
| Operating cash flow | 101 | 207 | -51.2 | 401 | 442 | -9.3 | 765 |
| Average number of employees | 15,781 | 15,294 | 3.2 | 14,715 | 14,590 | 0.9 | 14,512 |
1 Growth split is presented in the table Key Data on page 22.
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2 Deconsolidation of subsidiary Terveyden Tuottajat Oy (TT) as per December 31, 2015. See comments and table on page 23.
3 Profit for the full year 2015 is adjusted for costs related to the refinancing of SEK 123m, net of tax.
Interim report January - September 2016 2 (28) 4 Earnings per share in the comparable period have been calculated based on the number of shares after the listing. See definitions page 27.
There was continued stable growth and margin performance in the third quarter. Growth was driven mainly by the opening of new own nursing homes and by acquisitions. Attendo is increasing the pace at which it is establishing new units, and increased the number of beds under construction during the quarter from an already high level. Although there is a substantial need for new beds in elderly care, a commission appointed by the Swedish government has presented proposals that could reduce the incentive to establish new nursing homes and to develop care solutions of tomorrow.
Own Operations showed continued good growth, both organically and through acquisitions. The increase is explained mainly by new own nursing homes, by higher occupancy in our units that were under start-up during the same quarter last year, and by acquisitions. Attendo continued to invest in new nursing homes, and five units were opened in Finland during the third quarter. Construction began on a total of 14 units in Sweden and Finland, which will provide 490 new beds. The total number of beds under construction is 1,716. This is partly an effect of acquisitions, but mainly because Attendo has been successful in identifying demand and rapidly translating this into construction starts.
Net sales in Outsourcing operations decreased slightly compared to the third quarter of 2015, as a result of ended contracts. During the third quarter of this year, Attendo won new contracts in care of older people that will provide estimated annual revenue of SEK 70 million, and lost contracts with annual revenue of SEK 100 million. Underlying net sales in Staffing operations were slightly higher in the quarter compared to the corresponding period in 2015. Demand for doctors staffing is still good, but the availability of doctors to employ is a limiting factor. The markets for Outsourcing and Staffing are expected to remain challenging but stable.
A commission appointed by the Swedish government recently submitted a proposal that would result in limitations for freedom of choice in schools, and in health and social care, by restricting the opportunities for private providers. This would reduce the ability of clients to choose their own care, and would make things more difficult for local authorities that engage private providers to meet their care needs. Attendo does not believe the proposal will be implemented since there is no majority in the Swedish parliament, the proposal is probably in breach of EU legislation, and local authorities around the country require the services of private providers in the field of social welfare. The ongoing debate in Sweden stands in contrast with that in Finland, where the forthcoming SOTE reform aims to expand the proportion of private providers in health and social care in order to improve quality and freedom of choice.
Attendo's quality work in the third quarter was particularly focused on activities to meet the needs of older people for exercise and spending time outdoors. The recurring fitness "jog", called Attendolunken had record number of participants – more than 2,100 older people participated. In Finland, Attendo has arranged a concert tour – Sydämeni Tango. These concerts have become very popular and, in all, around 3,000 older people and their families have attended. Attendo has carried out values weeks, aiming to increase quality and employee engagement. Attendo also launched the care industry's first share-savings programme during the quarter. Engagement in Attendo's development work and broad co-ownership are important parts of Attendo's culture and success, and it is positive that more than 500 employees chose to participate in the programme.
In summary, Attendo demonstrated good financial performance during the quarter. The high number of beds under construction shows that we are well positioned to achieve our growth targets in the coming years.
Net sales increased by 4.6 percent to SEK 2,568m (2,455) in the third quarter. Adjusted for currency effects net sales increased by 4.2 percent and adjusted for currency effects and deconsolidation of subsidiary the increase was 6.7 percent. Adjusted for currency effects and deconsolidation of subsidiary net sales increased in all geographical markets, except Denmark.
The growth is explained by new units in own operations, higher occupancy in own units which were under start-up during the comparable quarter, and acquisitions.
Net sales in own operations increased by 13.3 percent and in staffing by 9.3 percent adjusted for deconsolidation of subsidiary. Net sales in outsourcing operations decreased by 4.1 percent.
Operating profit (EBITA) amounted to SEK 340m (345) and the operating margin was 13.2 percent (14.1). During the third quarter 2015 real-estate was divested, resulting in a capital gain of SEK 15m. Adjusted for this gain, operating profit increased in the current quarter compared to the same quarter last year. The profit increase is explained by higher occupancy in own units which were under start-up during the comparable quarter, higher profitability in existing own units as a result of better planning and improved processes, as well as profits from acquired units. Several new own units have opened and the earnings from these units had a positive effect on the operating profit.
The profit loss due to ended contracts in outsourcing and staffing operations was larger than earnings from new units in these contract models. Home care operations had lower profits than during the same quarter last year.
Changes in currency exchange rates had an effect on operating profit of SEK +1m compared to the same quarter last year.
EBIT decreased to SEK 310m (333). Amortization on acquisition related intangible assets was SEK 18m higher compared to the third quarter 2015.
At the end of the third quarter, Attendo had 531 (490) units in operation, of which 382 own units. The number of beds in operation was 12,718 (11,718), of which 9,012 own units. Own units and beds under construction were 43 and 1,716 respectively.
Net sales per contract model, Q3 2016
Net financial items amounted to SEK -25m (-98) in the quarter, of which net interest amounted to SEK -15m (-87). The net interest improved, following the new share issue and refinancing in connection to the IPO, which resulted in significantly reduced borrowings and lower interest margins.
Income tax for the quarter was SEK -61m (-53), corresponding to a tax rate of 21.4 percent (22.6).
Profit for the period was SEK 224m (182), representing an EPS1 basic of SEK 1.40 (1.14) and EPS1 diluted of SEK 1.39 (1.14).
1 Earnings per share in the comparable period have been calculated based on the number of shares after the listing. See definitions on page 27.
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Net sales increased by 4.1 percent to SEK 7,565m (7,267) during the first nine months. Adjusted for currency effects the increase was 4.3 percent and adjusted for currency effects and deconsolidation of subsidiary the increase was 7.4 percent. Adjusted for currency effects and deconsolidation of subsidiary, net sales increased in all geographical markets.
The growth is mainly explained by new units primarily in own operations, higher occupancy in own units which were under start-up in the comparable period and acquisitions.
Net sales in own operations increased by 14.2 percent and in staffing operations by 6.5 percent adjusted for deconsolidation of subsidiary. Net sales in outsourcing operations decreased by 4.5 percent.
Operating profit (EBITA) increased by 6.0 percent to SEK 761m (718) and the operating margin increased to 10.1 percent (9.9). The profit increase is mainly explained by higher occupancy in own units which were under startup during the comparable period, higher profitability in existing own units as a result of better planning and improved processes, as well as profits from acquired units. New units had an overall positive contribution to the earnings.
The profit loss due to ended contracts in outsourcing and staffing operations was larger than earnings from new units in these contract models.
During the third quarter 2015 real-estate was divested, resulting in a capital gain of SEK 15m in the comparable period.
Seasonal effect, primarily due to leap day, had a positive effect on operating profit during the first nine months. Changes in currency exchange rates had an effect on operating profit of SEK -1m compared to the same period last year.
EBIT increased to SEK 701m (686). Amortization on acquisition related intangible assets was SEK 28m higher than in the comparable period.
Net financial items amounted to SEK -67m (-306) in the period, where of net interest amounted to SEK -46m (-264). The change is mainly explained by the same items described in the section regarding the third quarter.
Income tax amounted to SEK -136m (-85), corresponding to a tax rate of 21.5 percent (22.4).
Profit for the period was SEK 498m (295), representing an EPS1 basic of SEK 3.11 (1.84) and EPS1 diluted of SEK 3.10 (1.84).
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1 Earnings per share in the comparable period have been calculated based on the number of shares after the listing. See definitions on page 27.
Operating cash flow was SEK 101m (207) during the third quarter, where of changes in working capital amounted to SEK -202m (-125). The negative change in working capital is mainly explained by holiday payments.
Cash flow from net investments amounted to SEK -25m (-25) and cash flow from acquisitions was SEK -307m (-19). Cash flow from financing activities was SEK 213m (-8), following a net increase in utilization of credit facilities of SEK 215m mainly in connection to acquisitions.
Total cash flow for the third quarter was SEK -7m (-114).
Consolidated equity as of September 30, 2016 amounted to SEK 4,718m (2,772), which represents a diluted equity per share of SEK 29.38 (17.33).
Net debt amounted to SEK 3,035m (4,081). Following the IPO on November 30, 2015 a refinancing transaction and new share issue of SEK 1,200m was completed, reducing Attendo's borrowings, which explains the reduced net debt.
| SEKm | Sep 30, 2016 |
Sep 30, 2015 |
Dec 31, 2015 |
|---|---|---|---|
| Interest-bearing liabilities | 3,504 | 5,114 | 3,580 |
| Provisions for post-employment benefits | 39 | 55 | 29 |
| Cash and cash equivalents | -508 | -1,088 | -782 |
| Net debt | 3,035 | 4,081 | 2,827 |
Interest-bearing liabilities, excluding provisions for post-employment benefits, amounted to SEK 3,504m (5,114) as of September 30, 2016. Net utilization of credit facilities has increased with SEK 215m during the third quarter.
Liquid funds as per September 30, 2016 amounted to SEK 508m (1,088) and unutilized committed credit facilities amounted to SEK 891m (500).
As per September 30, 2016 the number of shares outstanding was 160,000,000.
The average number of employees was 15,781 (15,294) in the third quarter.
Net sales in own operations amounted to SEK 1,603m (1,415) in the third quarter. The increase was 13.3 percent, of which acquired growth was 4.2 percentage points. The increase is mainly explained by new homes, higher occupancy in units that were under start-up during the comparable quarter and acquisitions.
During the quarter, Attendo opened five nursing homes in Finland with approximately 230 beds.
The number of beds under construction continued to increase during the quarter. Construction started of several new homes; two homes in Sweden with approximately 60 beds and 12 homes in Finland with a total of 430 beds, primarily care for older people.
| Own units | Total | Sweden | Finland | Norway | Denmark |
|---|---|---|---|---|---|
| Units in operation* | 382 | 200 | 171 | 2 | 9 |
| Beds in operation** | 9,012 | 4,084 | 4,784 | 84 | 60 |
| Beds under construction*** | 1,716 | 439 | 1,277 | - | - |
| Home care clients | 11,160 | 8,830 | - | 140 | 2,190 |
* All own units - including nursing homes, care homes, home care units and other units.
** Own nursing homes (CoP) and own care homes (care for people with disabilities, social psychiatry and individuals and families).
*** Own nursing homes (CoP) and own care homes (care for people with disabilities and social psychiatry).
Net sales in outsourcing operations amounted to SEK 777m (810) in the third quarter. The decrease in net sales is explained by ended contracts.
During the quarter, Attendo won new, still not started contracts, with estimated annual revenue of approximately SEK 70m. Attendo lost on-going, not yet ended, contracts with estimated annual revenue of approximately SEK 100m.
During the quarter, Attendo was entrusted with the responsibility to continue operating two existing units for care for older people in Sweden with a total of 80 beds.
| Outsourcing | Total | Sweden | Finland | Norway | Denmark |
|---|---|---|---|---|---|
| Units in operations* | 128 | 91 | 31 | 5 | 1 |
| Beds in operations** | 3,706 | 2,898 | 470 | 310 | 28 |
| Home care clients | 1,050 | 500 | 550 | - | - |
* All outsourced units including nursing homes, care homes and home care units and other units.
** Nursing homes (CoP) and care homes (care for people with disabilities, social psychiatry and individuals and families).
30% of Net sales Operations in Sweden, Finland, Norway and Denmark
Net sales in staffing operations amounted to SEK 188m (230) in the third quarter. Net sales in the third quarter 2015 amounted to SEK 172m excluding the deconsolidated subsidiary Terveyden Tuottajat Oy. For further information see page 23.
Attendo's quality improvement work in Sweden, Norway and Denmark in the third quarter was particularly focused on activities to meet the needs of older people for exercise and spending time outdoors. The recurring Attendolunken fitness activity, was held at 52 units, and was welcomed by residents, their families and the local communities. All in all, 2,100 residents participated, which is a new record.
In Finland, Attendo has arranged a special Tango concert tour, "Sydämeni Tango", catering to older people. These concerts have become very popular and, in all, around 3,000 older people and their families have attended. The tour will continue during the autumn and winter.
Quality is often a key consideration in public procurement. During the quarter, a new contract was won on quality in Ekerö Municipality, and Attendo also won re-tenders in Linköping and on the island of Gotland, where the company has operated the units on outsourcing basis.
Attendo's values weeks continued during the third quarter. The aim is to raise employee awareness of the company's vision and values, and to improve their insight into the care work at the heart of Attendo's business. The values weeks are tailored to the different areas of Attendo, but normally involve activities for employees, care users, residents and patients of Attendo's operations. In Finland the theme was "Everyone wants to be seen, heard and understood". The content was designed specifically to connect with Attendo's values of Competence, Commitment and Care.
Values weeks were held in Sweden, Norway and Denmark with the theme "What do our vision and values mean for people who work at Attendo?". These weeks were preceded by an employee survey into what associations they make with each value. The corresponding values weeks in Attendo's social care operations dealt with the importance of service and going "the extra mile" for each individual.
The Attendo+ share-savings programme was launched in August. This gives permanent employees the opportunity to save into Attendo shares for a year through payroll deductions. Employees who remain in their job for three years can receive matching shares as a benefit. A total of 520 employees in four countries joined the programme. This programme is the first of its kind for Nordic care companies. In addition, a total of more than 1,000 Attendo employees are shareholders.
Attendo's quality model rests on three pillars: satisfied individuals, systematic improvements and best available knowledge. Ongoing development and monitoring of the necessary procedures, processes and documentation are of great importance for the quality of all health and social care. The work is conducted by local quality coaches with the support of specialized quality functions. Recurring quality audits are conducted by Attendo, their customers and authorities.
As one of the leading social and health care companies, Attendo is a stable employer with collective agreements, contract insurance and good opportunities for personal development. Attendo values education and encourages higher education. At the same time other experiences and that the candidate shares our core values plays a big role in recruitment. To capture how satisfied the employees are with their work and their manager, regular employee surveys are conducted. The results provide important information about what works well and what needs to be improved.
Attendo's Quality reports are available on: http://www.attendo.com/aboutattendo/focus-on-quality
The demand for Attendo's own operations offering was strong during the quarter, with continued strong interest from Swedish local authorities to expand the number of nursing home beds. Contracted volumes in the outsourcing market continued to increase slightly, albeit from a low level.
A commission appointed by the Swedish government recently submitted a proposal that would result in limitations for freedom of choice in schools, and in health and social care, by restricting the opportunities for private providers. The proposals of the commission include new methods to limit freedom of choice and diversity, to regulate use of resources in private companies and to limit possibilities to participate in public tenders. Another proposal is a model for limitation of profit. The model is based on any operating profit exceeding a randomly chosen percentage of the company's contributed capital, under certain conditions, is not allowed. The proposal has met with harsh criticism from lawyers, economists and business organisations, as well as from a number of opinion leaders. Even the researcher who developed the model for the commission has distanced himself from it. A majority in the Swedish parliament has already announced its intention not to support the proposal, which aims to restrict freedom of choice. Legal investigations have shown that the profit limits proposed by the commission are not compatible with EU law.
Own operations experienced continued high demand in Finland during the quarter. There was a low level of activity in the outsourcing market during the third quarter, but there are some of large combination contracts out for tender.
A consultation process has been launched regarding the key areas of the SOTE reform, which from 1 January 2019 will bring together responsibility for all health and social care to 18 newly created regional authorities with political autonomy. Private providers will play an important role in the new system since freedom of choice and equal terms for the private and public sectors are cornerstones of the reform. The reform will be implemented in several stages. Initially, citizens will be able to choose their provider for health and social care for a number of defined services. Any provider that wishes to participate in the market must be able to offer these services. Each individual will receive a budget to use from their provider, based on a needs assessment by each SOTE. There are a number of outstanding issues with SOTE, including how the pricing systems should be designed.
The government has adopted a long-term welfare programme that extends until 2025. Part of the programme aims to increase the range and choice of welfare services in local authorities.
Activity in the Norwegian market remains low.
The Swedish social and health care system is decentralized with local authorities (290 LAs) responsible for social care and regional authorities (20 RAs) providing primary and specialist health care. Attendo's customers in Sweden are LAs responsible for providing care for older people, disabled care and social care. LAs are also responsible for the financing.
The Finnish health care system is decentralized with local authorities (317 LAs) providing primary health care and social care and hospital districts (20) providing specialist care to several municipalities. Attendo's customers in Finland are LAs providing primary health care and social care, and some additional private clients in dental care and occupational health care. LAs are largely responsible for public health care financing.
Samsa AB was acquired on 1 July 2016. Samsa operates homes and daytime activities for people with disabilities (LSS), care or residential homes (HVB), and one school business in grades 7-9 for students with special needs. Samsa AB has sales of approximately SEK 150 million and provides a total of 107 places in LSS and HVB, plus 5 places in a group home that will open in the autumn.
Attendo has transactions with three related parties, which in all material aspects refer to property leases from companies in which those parties are shareholders. Related party transactions amounted to SEK 7m during the first nine months. All related party transactions are based on market conditions.
For further details, see Attendo's annual report 2015, page 73.
Attendo AB's main operation is to provide management services to subsidiaries within the group and to manage shares in subsidiaries. Parent company expenses are mainly holding costs including expenses for Attendo's executive Management, board of directors and external consultancy fees.
Net sales for the first nine months were SEK 9m, all referring to management services to subsidiaries. Profit after financial items was SEK -26m. At the end of the quarter, cash and cash equivalents amounted to SEK 0m, shares in subsidiaries was SEK 6,494m and unrestricted equity amounted to SEK 6,356m at the end of the period.
Attendo's profitability is subject to seasonal variations, weekend and holiday effects. For Attendo, public holidays as well as weekends and other 'red' calendar days have negative effects on profitability mainly as an effect of wage compensation for inconvenient working hours. For example, profitability in the first and second quarters is affected by the Easter holiday, depending on in which quarter it occurs, and the fourth quarter is affected by Christmas holidays.
On 22 August 2016, Andreas Koch was appointed Communications and Investor Relations Director and joined Attendo's executive management team.
On 1 September 2016, Johan Spångö was appointed Business Development Director and joined Attendo's executive management, replacing Fredrik Mossberg.
On 14 September 2016, Attendo announced an organisational change, gathering all its operations in care for older people in Scandinavia under the Business Area Director Ammy Wehlin. Following the reorganisation, Margareta Nyström left her role on Attendo's executive management team and her position at Attendo.
During the third quarter the board decided to repurchase shares, in accordance with the resolution of the annual general meeting, in order to ensure delivery under the Attendo+ share-savings programme
Attendo has appointed Matias Pälve as Business Area Director for Attendo Finland Health Care and as a member of the executive management team. Matias Pälve succeeds Antti Ylikorkala, who has decided to leave Attendo. Matias Pälve took up his new position on 1 November 2016.
During the period October 5-17, 200,000 shares were purchased as part of assuring Attendo's undertaking in accordance with the Attendo+ sharesavings programme.
Following the purchases, Attendo's holding of its own shares amounted to 200,000. The total number of shares in Attendo is 160,000,000.
The repurchases were administered by Skandinaviska Enskilda Banken, which took trading decisions independently of Attendo with regard to the timings.
Risks are inherent in Attendo's business and it is part of the daily work to manage these risks, to prevent damage and to limit the damage that does occur. Attendo operates within the care and health care sector in competition with a number of major and several smaller operators, which entails risk both related to price development and growth. This requires that Attendo continuously develops its business in order to offer the clients best possible care and health care from a quality perspective to a for the customers competitive price.
The majority of the care and health care conducted on the market where Attendo operates are provided by local authorities. The choice of production model is dependent on political decisions, which means that opportunities for future growth are controlled by politicians' view of how care and health care should be provided. Political decisions resulting in a change in legislation can have a significant impact on Attendo's business. The legislative process in the countries where Attendo operates is transparent and changes are well known prior to implementation.
A commission appointed by the Swedish government recently submitted a proposal that would result in limitations for freedom of choice in schools, and in health and social care, by restricting the opportunities for private providers. The proposals of the commission include new methods to limit freedom of choice and diversity, to regulate use of resources in private companies and to limit possibilities to participate in public tenders. Another proposal is a model for limitation of profit. The model is based on any operating profit exceeding a randomly chosen percentage of the company's contributed capital, under certain conditions, is not allowed. Attendo does not believe the proposal will be implemented since there is no majority in the Swedish parliament, the proposal is probably in breach of EU legislation, and local authorities around the country require the services of private providers in the field of social welfare.
The Finnish care and health care system will undergo a significant change when the planned SOTE reform comes into force as per January 1, 2019. This implies that a new administrative level with 18 regions with responsibility for care and health care is implemented. Attendo follows the work with the SOTE reform but it is still difficult to assess its impact on Attendo's operation, result and financial position.
Quality and safety requirements within care and health care are demanded by various stakeholders, in particular clients, relatives and customers. In addition Attendo has very high internal quality requirements on its operations. Constant work with quality and safety improvements for clients and patients is crucial for Attendo's success and is a key area within the Group's strategic activities. A large number of Attendo's customer contracts extend over several years why the pricing of these contracts are deemed as a financial risk. The own units operations are conducted in own homes and premises which means that Attendo enters the long rental agreements. If the demand for Attendo's services is low the long rental agreements are deemed as a financial risk. Attendo uses internally developed proven models and processes aiming to minimize risk both for pricing errors and that Attendo enter rental agreements in regions with unfavorable demand.
Attendo is in its operations exposed to various financial risks, including the effects of changes in prices on the credit and capital markets and currency risks. Financial risks are managed by a central finance department.
For further information of risks see Attendo's annual report 2015 page 48.
The group applies International Financial Reporting Standards (IFRS) as adopted by the European Union, the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's standard RFR 1 Supplementary Accounting Rules for Groups.
This interim report has been prepared according to IAS 34 Interim Financial Reporting and the Swedish Annual Accounts Act and shall be read together with the annual report for 2015. The accounting policies adopted are consistent with those in the annual report for 2015.
The interim information on page 1-16 is an integrated part of this financial report.
The parent company applies the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities. The accounting policies adopted are consistent with those in the annual report for 2015.
Attendo AB (publ) was adopted as parent company in October 2015 why income statement and balance sheet for some of the comparable periods are missing.
Attendo does not report any forecast.
Danderyd, November 11, 2016
Henrik Borelius
CEO
Attendo's Annual reports are available on www.attendo.com
This is a translation of the Swedish interim report. In the event of differences the Swedish interim report shall prevail.
Review report over Interim Financial Statements (Interim report) prepared in accordance with IAS 34 and Chapter 9 of the Swedish Annual Accounts Act.
We have reviewed the condensed interim financial information (interim report) of Attendo AB (publ) (corporate ID nr 559026-7885) as of 30 September 2016 and the nine-month period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We have conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, 11 November 2016
PricewaterhouseCoopers AB
Patrik Adolfson Authorized public accountant
| SEKm | Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | |||
|---|---|---|---|---|---|
| Net sales | 2,568 | 2,455 | 7,565 | 7,267 | 9,831 |
| Other operating income | 4 | 23 | 14 | 34 | 39 |
| Total revenue | 2,572 | 2,478 | 7,579 | 7,301 | 9,870 |
| Personnel costs | -1,573 | -1,577 | -4,833 | -4,892 | - 6,552 |
| Other external costs | -626 | -520 | -1,888 | -1,585 | -2,241 |
| Amortization, depreciation and impairment of tangible and | |||||
| intangible assets | -33 | -36 | -97 | -106 | -144 |
| Operating profit (EBITA) | 340 | 345 | 761 | 718 | 933 |
| Operating margin (EBITA) % | 13.2 | 14.1 | 10.1 | 9.9 | 9.5 |
| Amortization and impairment of acquisition related intangible | |||||
| assets | -30 | -12 | -60 | -32 | -46 |
| Operating profit (EBIT) | 310 | 333 | 701 | 686 | 887 |
| Operating margin (EBIT), % | 12.1 | 13.6 | 9.3 | 9.4 | 9.0 |
| Net financial items | -25 | -98 | -67 | -306 | -537 |
| Profit before tax | 285 | 235 | 634 | 380 | 350 |
| Income tax | -61 | -53 | -136 | -85 | -64 |
| Profit for the period | 224 | 182 | 498 | 295 | 286 |
| Profit margin % | 8.7 | 7.4 | 6.6 | 4.1 | 2.9 |
| Profit for the period attributable to the parent company | |||||
| shareholders | 224 | 182 | 498 | 295 | 286 |
| Basic earnings per share1 , SEK |
1.40 | 1.14 | 3.11 | 1.84 | 1.79 |
| Diluted earnings per share1 , SEK |
1.39 | 1.14 | 3.10 | 1.84 | 1.79 |
| Basic average number of shares1 , thousands |
160,000 | 160,000 | 160,000 | 160,000 | 160,000 |
| Diluted average number of shares1 , thousands |
160,842 | 160,000 | 160,609 | 160,000 | 160,083 |
| SEKm | Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | |||
|---|---|---|---|---|---|
| Profit for the period | 224 | 182 | 498 | 295 | 286 |
| Items that will not be reclassified to profit or loss Remeasurements of defined benefit pension plans, net of tax |
1 | 9 | -7 | 9 | 10 |
| Items that may be reclassified to profit or loss | |||||
| Cash flow hedges, net of tax | - | 6 | - | 13 | 15 |
| Exchange rate differences on translating foreign operations | 47 | 16 | 98 | -11 | -44 |
| Other comprehensive income for the period | 48 | 31 | 91 | 11 | -19 |
| Total comprehensive income for the period | 272 | 213 | 589 | 306 | 267 |
| Total comprehensive income attributable to the Parent company shareholders |
272 | 213 | 589 | 306 | 267 |
__________________________________________________________________________________ 1 Earnings per share in the comparable period have been calculated based on the number of shares after the listing. See definitions on page 27.
| SEKm | Sep 30, 2016 | Sep 30, 2015 | Dec 31, 2015 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Goodwill | 6,883 | 6,544 | 6,472 |
| Other intangible assets | 589 | 318 | 304 |
| Property, Plant and Equipment | 418 | 447 | 382 |
| Other non-current assets | 107 | 84 | 89 |
| Total non-current assets | 7,997 | 7,393 | 7,247 |
| Current assets | |||
| Trade receivables | 834 | 774 | 901 |
| Other current assets | 587 | 720 | 357 |
| Cash and cash equivalents | 508 | 977 | 782 |
| Total current assets | 1,929 | 2,471 | 2,040 |
| Total assets | 9,926 | 9,864 | 9,287 |
| EQUITY AND LIABILITIES Equity |
4,718 | 2,772 | 4,219 |
| Non-current liabilities Liabilities to credit institutions |
3,438 | 4,818 | 3,554 |
| Provisions for post-employment benefits | 39 | 55 | 29 |
| Other provisions | 10 | 7 | 9 |
| Other non-current liabilities | 124 | 408 | 62 |
| Total non-current liabilities | 3,611 | 5,288 | 3,654 |
| Current liabilities | |||
| Liabilities to credit institutions | 66 | 293 | 26 |
| Trade payables | 130 | 152 | 205 |
| Other current liabilities | 1,401 | 1,359 | 1,183 |
| Total current liabilities | 1,597 | 1,804 | 1,414 |
| Total equity and liabilities | 9,926 | 9,864 | 9,287 |
| Operational cash flow, SEKm | Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | |||
|---|---|---|---|---|---|
| Operating profit (EBITA) | 340 | 345 | 761 | 718 | 933 |
| Depreciation and amortization of tangible and intangible | |||||
| assets | 33 | 36 | 97 | 106 | 144 |
| Changes in working capital and other items | -202 | -125 | -192 | -195 | -4 |
| Paid income tax | -46 | -16 | -148 | -51 | -86 |
| Other non-cash items | 1 | -8 | -2 | -17 | -57 |
| Cash flow after change in working capital | 126 | 232 | 516 | 561 | 930 |
| Investments in tangible and intangible assets | -33 | -36 | -132 | -159 | -212 |
| Divestment of tangible and intangible assets | 8 | 11 | 17 | 40 | 47 |
| Operating cash flow | 101 | 207 | 401 | 442 | 765 |
| Interest received/paid | -14 | -74 | -44 | -218 | -292 |
| Free cash flow | 87 | 133 | 357 | 224 | 473 |
| Acquisition of operations | -307 | -19 | -398 | -112 | -128 |
| Divestment of operations | - | 8 | - | 8 | 15 |
| Share redemption TT (cash and cash equivalents) | - | -8 | - | -217 | -139 |
| New share issue | - | - | - | - | 1,160 |
| Warrants | -4 | - | -4 | - | 12 |
| Dividends paid | - | - | -86 | - | - |
| Repayment of loans | -73 | - | -458 | - | -5,202 |
| New borrowings | 290 | - | 290 | - | 3,531 |
| Total cash flow | -7 | 114 | -299 | -97 | -278 |
| Cash and cash equivalents at the beginning of the period | 504 | 856 | 782 | 1 084 | 1 084 |
| Effect of exchange rate changes on cash | 11 | 7 | 25 | -10 | -24 |
| Cash and cash equivalents at the end of the period | 508 | 977 | 508 | 977 | 782 |
| Cash flow, SEKm | Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | |||
| Cash flow from operations | 112 | 158 | 472 | 343 | 638 |
| Cash flow from investing activities | -332 | -36 | -513 | -223 | -417 |
| Cash flow from financing activities | 213 | -8 | -258 | -217 | -499 |
| Total cash flow | -7 | 114 | -299 | -97 | -278 |
| SEKm | Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | ||
|---|---|---|---|
| Opening balance | 4,219 | 2,569 | 2,569 |
| Total comprehensive income | 589 | 306 | 267 |
| Transactions with owners | |||
| Share issue | - | - | 1,169 |
| Warrants | -4 | - | 9 |
| Share save plan | 0 | - | - |
| Dividends paid | -86 | - | - |
| Total transactions with owners | -90 | - | 1,178 |
| Transactions with non-controlling interests | |||
| Revaluation of share option liability | - | -103 | 205 |
| Total Transactions with non-controlling interests | - | -103 | 205 |
| Closing balance | 4,718 | 2,772 | 4,219 |
| SEKm | Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | |||
|---|---|---|---|---|---|
| Investments | |||||
| Investments in intangible assets | 4 | 4 | 18 | 24 | 34 |
| Investments in tangible assets | 29 | 32 | 114 | 135 | 178 |
| Divestments of tangible and intangible assets | -8 | -11 | -17 | -40 | -47 |
| Total net investments | 25 | 25 | 115 | 119 | 165 |
| Intangible assets acquired through business combination | |||||
| Goodwill | 224 | - | 280 | 16 | 17 |
| Customer relations | 68 | 22 | 327 | 104 | 109 |
| Other | 2 | - | 2 | - | - |
| Total intangible assets acquired through business | 294 | 22 | 609 | 120 | 126 |
| combination |
For further information regarding acquisitions, see page 13.
| SEKm | Level | Sep 30, 2016 | Sep 30, 2015 | Dec 31, 2015 |
|---|---|---|---|---|
| ASSETS | ||||
| Financial assets at fair value through profit or loss | ||||
| Derivatives (currency swap) | 2 | - | 111 | - |
| Loans and receivables | ||||
| Trade receivables | 834 | 774 | 901 | |
| Cash and cash equivalents | 508 | 977 | 782 | |
| Total financial assets | 1,342 | 1,862 | 1,683 | |
| LIABILITIES | ||||
| Derivatives used for hedge-accounting | ||||
| Derivatives (interest swap) | 2 | - | 3 | - |
| Financial liabilities at fair value through profit or loss | ||||
| Share option liability | 3 | - | 313 | - |
| Contingent considerations | 3 | 26 | 54 | 43 |
| Other financial liabilities | ||||
| Borrowings | 3,504 | 5,111 | 3,580 | |
| Trade payables | 130 | 152 | 205 | |
| Total financial liabilities | 3,660 | 5,633 | 3,828 |
The table shows the Group's significant financial assets and liabilities. Asset and liabilities accounted for as loans and receivables, and other financial liabilities are carried at amortized cost. Fair value for all financial assets and liabilities are equal to the carrying value. For complete table and further information see Attendo's Annual report 2015, note 23.
Level 2: The fair value of interest rate and currency swaps is determined by discounting the estimated cash flows. Discounting is based on quoted market rates on comparable instruments at the balance sheet date.
Level 3: The fair value of option liability is determined by the valuation principles established by the European Venture Capital Association (EVCA). The option liability was settled in connection to the listing. Fair value of contingent considerations are based on estimated outcome from the contractual clauses in the share purchase agreement.
| SEKm | Sep 30, 2016 | Sep 30, 2015 | Dec 31, 2015 |
|---|---|---|---|
| Assets pledged as collateral | 201 | 6,749 | 141 |
| Contingent liabilities | - | - | - |
| Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 Jan-Dec 2015 | |||||
|---|---|---|---|---|---|---|
| Net sales | SEKm | 2,568 | 2,455 | 7,565 | 7,267 | 9,831 |
| Organic growth | % | 1.8 | 4.8 | 2.8 | 4.4 | 5.6 |
| Acquired growth | % | 2.4 | 1.9 | 1.5 | 1.9 | 1.9 |
| Changes in currencies | % | 0.4 | 0.9 | -0.2 | 1.7 | 1.2 |
| Operating profit (EBITA) | SEKm | 340 | 345 | 761 | 718 | 933 |
| Operating margin (EBITA) | % | 13.2 | 14.1 | 10.1 | 9.9 | 9.5 |
| Profit for the period | SEKm | 224 | 182 | 498 | 295 | 286 |
| Profit margin | % | 8.7 | 7.4 | 6.6 | 4.1 | 2.9 |
| Working capital | SEKm | -110 | -125 | -110 | -125 | -130 |
| Return on capital employed2 | % | 11.2 | 10.6 | 11.2 | 10.6 | 11,4 |
| Net debt to equity ratio | times | 0.6 | 1.5 | 0.6 | 1.5 | 0.7 |
| Equity to asset ratio | % | 48 | 28 | 48 | 28 | 45 |
| Operating cash flow | SEKm | 101 | 207 | 401 | 442 | 765 |
| Net investments | SEKm | -25 | -25 | -115 | -119 | -165 |
| Average number of employees | 15,781 | 15,294 | 14,715 | 14,590 | 14,512 | |
| Key data per share | ||||||
| Earnings per share1 . basic |
SEK | 1.40 | 1.14 | 3.11 | 1.84 | 1.79 |
| Earnings per share1 . diluted |
SEK | 1.39 | 1.14 | 3.10 | 1.84 | 1.79 |
| Equity per share1 , basic |
SEK | - | - | 29.49 | 17.33 | 26.37 |
| Equity per share1 , diluted |
SEK | - | - | 29.38 | 17.33 | 26.36 |
| Average number of outstanding | ||||||
| shares1 , basic |
thousands | 160,000 | 160,000 | 160,000 | 160,000 | 160,000 |
| Average number of outstanding | ||||||
| shares1 , diluted |
thousands | 160,842 | 160,000 | 160,609 | 160,000 | 160,083 |
| Number of outstanding shares1 at |
||||||
| end of the period | thousands | 160,000 | 160,000 | 160,000 | 160,000 | 160,000 |
| SEKm | Q4 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | Q1 2016 | Q2 2016 | Q3 2016 |
|---|---|---|---|---|---|---|---|---|
| Total net sales | 2,316 | 2,391 | 2,421 | 2,455 | 2,564 | 2,472 | 2,525 | 2,568 |
| - Net sales, own operations | 1,280 | 1,322 | 1,354 | 1,415 | 1,498 | 1,511 | 1,557 | 1,603 |
| - Net sales, outsourcing | 776 | 818 | 803 | 810 | 805 | 769 | 775 | 777 |
| - Net sales, staffing | 260 | 251 | 264 | 230 | 261 | 192 | 193 | 188 |
| SEKm | Q4 2014 | Q1 2015 | Q2 2015 | Q3 2015 | Q4 2015 | Q1 2016 | Q2 2016 | Q3 2016 |
|---|---|---|---|---|---|---|---|---|
| Total net sales | 2,316 | 2,391 | 2,421 | 2,455 | 2,564 | 2,472 | 2,525 | 2,568 |
| - Net sales Sweden | 1,238 | 1,248 | 1,257 | 1,282 | 1,339 | 1,332 | 1,369 | 1,392 |
| - Net sales Finland | 972 | 1,037 | 1,049 | 1,051 | 1,088 | 1,009 | 1,024 | 1,038 |
| - Net sales Norway | 60 | 60 | 61 | 65 | 78 | 77 | 78 | 82 |
| - Net sales Denmark | 46 | 46 | 54 | 57 | 59 | 54 | 54 | 56 |
| Operating profit (EBITA) | 153 | 187 | 186 | 345 | 215 | 197 | 224 | 340 |
| Operating margin (EBITA). % | 6.6 | 7.8 | 7.7 | 14.1 | 8.4 | 8.0 | 8.9 | 13.2 |
| Profit for the period | -27 | 57 | 56 | 182 | -9 | 128 | 146 | 224 |
| Profit margin. % | -1.2 | 2.4 | 2.3 | 7.4 | -0.4 | 5.2 | 5.8 | 8.7 |
| Earnings per share1 basic, SEK |
-0.17 | 0.36 | 0.35 | 1.14 | -0.06 | 0.80 | 0.91 | 1.40 |
| Earnings per share1 . diluted, SEK |
-0.17 | 0.36 | 0.35 | 1.14 | -0.06 | 0.80 | 0.91 | 1.39 |
| Average number of employees | 13,918 | 14,097 | 14,378 | 15,294 | 14,285 | 14,061 | 14,304 | 15,781 |
_________________________________________________________________________________ 1 Earnings per share in the comparable period have been calculated based on the number of shares after the listing. See definitions page 27.
2 As from the first quarter 2016 return on capital employed is calculated based on EBIT, see definition on page 27. To improve comparison, the comparable periods previously calculated on EBITA has been restated.
The subsidiary Terveyden Tuottajat Oy (TT) was deconsolidated as of 31 December 2015, which means that TT is included in the Group's income statement during the full year 2015, but not in the balance sheet as of 31 December 2015. Net sales from TT were fully recognized in the contract model Staffing. The table below shows the impact on key measures with TT fully consolidated and deconsolidated.
| SEKm | Q3 2015 | Jan-Sep 2015 | Jan-Dec 2015 | |||
|---|---|---|---|---|---|---|
| Excl. TT | Incl. TT | Excl. TT | Incl. TT | Excl. TT | Incl. TT | |
| Net sales | 2,397 | 2,455 | 7,060 | 7,267 | 9,546 | 9,831 |
| Operating profit (EBITDA) | 373 | 381 | 800 | 824 | 1,044 | 1,077 |
| Operating profit (EBITA) | 345 | 345 | 717 | 718 | 931 | 933 |
| Operating margin (EBITA,) % | 14.4 | 14.1 | 10.2 | 9.9 | 9.8 | 9.5 |
| Operating profit (EBIT) | 332 | 333 | 684 | 686 | 885 | 887 |
| Profit for the period | 182 | 182 | 295 | 295 | 286 | 286 |
| Net debt | 4,096 | 4,081 | 4,096 | 4,081 | 2,827 | 2,756 |
| Working capital | -35 | -125 | -35 | -125 | -130 | - 270 |
| Net investments | -23 | -25 | -109 | -119 | 152 | 165 |
| SEKm | Q3 2016 | Q3 2015 Jan-Sep 2016 Jan-Sep 2015 | 17 Sep- 31 Dec 2015 |
||
|---|---|---|---|---|---|
| Net sales | 2 | - | 9 | - | 3 |
| Employee costs | -5 | - | -15 | - | -5 |
| Other external costs | -4 | - | -19 | - | -32 |
| Operating profit | -7 | - | -25 | - | -34 |
| Finance net | 0 | - | -1 | - | - |
| Profit before tax | -7 | - | -26 | - | -34 |
| Tax on profit for the period | 0 | - | 0 | - | 7 |
| Profit for the period | -7 | - | -26 | - | -27 |
Attendo AB (publ) was incorporated on September 17, 2015 and became the ultimate parent company of the Group on October 23, 2015. The company has not conducted any operation prior to the acquisition of Attendo Group and thus lacks history and income statement and balance sheet for the comparable periods in this interim report.
| SEKm | Sep 30, 2016 | Sep 30, 2015 | Dec 31, 2015 |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Shares in subsidiaries | 6,494 | - | 6,494 |
| Deferred tax asset | 16 | - | 16 |
| Total non-current assets | 6,510 | - | 6,510 |
| Current assets | |||
| Receivables on group companies | 5 | 0 | |
| Other receivables | 2 | - | 7 |
| Cash and cash equivalents | 0 | - | 0 |
| Total current assets | 7 | - | 7 |
| Total assets | 6,517 | - | 6,517 |
| EQUITY AND LIABILITIES | |||
| Equity | 6,357 | - | 6,472 |
| Current liabilities | |||
| Liabilities to group companies | 144 | - | 23 |
| Other liabilities | 16 | - | 22 |
| Total current liabilities | 160 | - | 45 |
| Total equity and liability | 6,517 | - | 6,517 |
Henrik Borelius CEO Tel. +46 8 586 252 00
Tomas Björksiöö CFO Tel. +46 8 586 252 00
Andreas Koch Communications and IR Director Tel. +46 70 509 77 61
The information in this report is what Attendo is required to disclose under Sweden's Securities Market Act and/or the Financial Instruments Trading Act.
This report contains forward-looking information based on current expectations of the Attendo's management. Although management deems that the expectations presented by such forward-looking information are reasonable, no guarantee can be given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably compared to what is stated in the forward-looking information, due to such factors as changed market conditions for Attendo's services and more general conditions regarding business cycles, market and competition, changes in legal requirements and other political measures, and fluctuation in exchange rates.
Vendevägen 85A 182 91 Danderyd
Tel +46 8 586 251 00 Fax +46 8 586 250 01 www.attendo.com
Company number: 559026-7885
Attendo is the leading private provider of care services in the Nordics. The company has operations in Sweden, Finland, Norway and Denmark. Attendo is the largest private provider of care for older people in Sweden and Finland, and outsourced health care in Finland. Attendo is a locally based company and has more than 500 units in operation, in more than 200 municipalities. The company has more than 19,000 employees. With the vision of empowering the individual Attendo provides services within care for older people, care for people with disabilities, individual and families and health care.
Attendo provides care and health care through three contract models:
Local authorities (mainly municipalities) are Attendo's customers for a large majority of the service offerings, but contract types and duration of contracts vary depending on service model and service offering. Own operations are based on framework agreements and outsourcing operations are based on outsourcing contracts, following a tender process. The customer contract period is typically 2-5 years. Staffing operations are normally based on framework agreements or direct contracts with durations of up to 4 years.
| Acquired growth | Increase in net sales related to companies or operations acquired the last 12 months. |
|---|---|
| Capital employed | Total assets less non-interest bearing liabilities. |
| Earnings per share | Profit for the period in relation to the average number of shares. |
| Equity/asset ratio | Equity as a percentage of total assets. |
| Equity per share | Equity in relation to the average number of shares. |
| Liquid funds | Cash/cash equivalents, short term investments and derivatives with a positive fair value. |
| Net debt | Interest bearing liabilities and provisions for post-employment benefits less liquid funds. |
| Net debt to equity ratio | Net debt as a percentage of total equity. |
| Net investments | Net of investments and disposals of intangible and tangible assets excluding acquisition related assets. |
| Number of shares | Shares outstanding as of September 30, 2016. In order to facilitate comparisons, all key measures in the comparable periods have been calculated based on the number of shares after the listing. |
| Operating margin (EBIT) | Operating profit (EBIT) as a percentage of net sales. |
| Operating margin (EBITA) | Operating profit (EBITA) as a percentage of net sales. |
| Operating profit (EBIT) | Profit before net financial items and income tax. |
| Operating profit (EBITA) | Profit before amortization of acquisition related intangible assets, net financial items and income tax. |
| Organic growth | Increase of net sales excluding acquisitions and currency effects. |
| Profit for the period | Profit/loss for the period attributable to parent company shareholders. |
| Profit for the period adjusted | Profit/loss for the period adjusted for financing costs in connection with the initial public offering. |
| Profit margin | Profit for the period as a percentage of net sales. |
| Return on equity | Profit for the period (LTM) in relation to average equity. |
| Return on capital employed | Operating profit (EBIT) as a percentage of average capital employed. |
| Working capital | Current assets less liquid funds and interest bearing assets, less short term liabilities and non- interest bearing provisions. |
| Home care client | An individual that receives planned and unplanned support such as service and personal care connected to the everyday life and health care at home. |
|---|---|
| New unit | Unit in operation <12 months. |
| Existing unit | Unit in operation >12 months. |
| LA | Local Authority |
| CoP | Care for Older People |
The financial reports of the Attendo Group are prepared according to IFRS. See further information regarding accounting principles on page 16 in this interim report. According to IFRS there are only a few financial measures that are defined. As from the second quarter 2016, Attendo has applied ESMA's (European Securities and Markets Authority) new guidelines for Alternative Performance Measures.
An Alternative Performance Measure is, in short, a financial measure of historical or future profit development, financial position or cash flow that are not defined or specified in IFRS. To support the Executive Managements' and other stakeholders analysis of the Groups development, Attendo presents some financial measures not defined in IFRS. This information is complementary information to IFRS and does not replace financial measures defined in IFRS. Attendos definitions of financial measures not defined in IFRS can differ from other companies' definitions. All Attendo's definitions are included above. Calculation of all financial measures can be reconciled to items in the income statement and balance sheet, and information on page 22.
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