Aevis Victoria SA (AEVS) Earnings Call Transcript & Summary

Hello, everybody. Antoine Hubert, I'm a Delegate of the Board of AEVIS VICTORIA. Welcome to this conference about '19 -- 2019 annual result. I will begin with some intels on the COVID-19 crisis. We -- I think that's the most important topic right now. I'd like to have the slide, please. Sorry. It seems we have a technical problem with the slide, I will be back in 1 minute.

[Operator Instructions]

Okay. Here we are. So the assessment of the current situation in Switzerland, as you see, these are the number of COVID case and new cases in Switzerland. That was the situation on the 25th March. We can see that the growth is slowly reducing. That means we still have more case every day, but the increase of case is decreasing. There is more than 10,000 cases. There've been more than 91,000 tests. Only 14% of the people tested are positive, which are basically the same number that we can see in the U.S. now. Means also that people are really worried about this. And so they are also mistaking some common flu and common colds with COVID disease. 161 dead as of 26 March. The median age of death is 85 years. And most of the dead, like 95% of the dead, had also other disease. So the Swiss medical system remains intact. So there is a lot of beds availability in the hospital, because on the 16 of March, the Swiss government has issued an ordinance to ask all hospital, private and public, to stop all elective procedure, to be ready to have these COVID patients. So even in a region like Ticino, the -- even in the region like Ticino, we see that the medical systems or the sanitary system in Switzerland is not overflowed from now. There is still a lot of capacity. And I hope that we have made this capacity for nothing, and that we will not have this -- such a wave as we had seen in other countries. I think Switzerland has very early made the right measure, and the Swiss people are following this measure. So we are pretty optimistic that we will go through this crisis with no overloading the Swiss sanitary system. For AEVIS, so we were very well prepared for such situation because since a few years we were already working with home office. We did turn all our administration into digital and home office 4 years ago. So for all companies of AEVIS group, it was very easy to put more people in home office and to have this -- all our personnel taking care of the federal measure of social distancing. We are financially sound. We have sufficient liquidity reserves. And we will, of course, also use all the possible measure to weather the COVID-19 crisis. Safety for patient, guest, doctors and employees are the highest priority. Until -- Swiss Medical Network, until end of February, all hospitals were running 3% above last year. Since mid-March following the federal decree, all health care facility are instructed to postpone elective, nonurgent intervention in order to free up capacity. Most hospital of the group are working closely with the cantons to provide care during the crisis. Assets are being used by the canton in all this crisis organization. It's different in each canton. So in some cantons, we have COVID hospitals. So that means we have COVID patient coming into our hospital. And in some cantons, we are COVID-free hospital. That means that all patients without COVID are directed to our hospital to have urgent surgery. We are convinced that all the canton and the state will fully compensate the costs and the potential loss of COVID-19. We have seen that in canton Bern. Yesterday, they declared that the loss of turnover of all hospital, private and public, will be compensated -- fully compensated by the canton. We also expect that all these elective surgeries will be performed in the second half year. Our doctors have already asked us to be open -- to have the surgery room open on Sunday, on Saturday, also late in the afternoon. We also had information from the doctor that they will not take any holiday during the summer to be able to catch up with this -- now this backlog of elective surgery that is currently building up. So we expect a very strong second half year. For Medgate, since the beginning of the crisis, Medgate has been playing a key role in this crisis because -- has been used by the Swiss Confederation as the official hotline. Medgate had to increase the team to over 100 people, doctors, nurses and also IT people, to be able to increase the capacity of Medgate. We think this COVID-19 crisis is showing the importance of telemedicine and will be a clear booster for the telemedicine in the future. Several countries have adopt new tarification for telemedicine performance. So this will be very positive for Medgate. On the hospitality side, so Victoria-Jungfrau, the winter season sales until end of February were 16 -- or 15.8% above last year. The winter hotels in Zermatt, Davos and Crans Montana have closed the season 2 weeks ahead of schedule. The financial impact is expected to be minimal in these hotels because most of the winter season is December, January, February, and then it's slowly decreasing during March. So the hotel were scheduled to close on March 23, and they have been closed on March 16. The Q2 -- the hotel in Interlaken, Zurich and Bern are also closed during the ongoing lockdown. The strategy for the summer season will be evaluated over the next few weeks, depending of the evolution of this crisis. We don't know yet how the summer will be, if the travel ban will be lifted. So it is also possible that some of the hotel remain closed during the summer. And we will take profit from this period to prepare the reopening for the winter season. The financial impact is difficult to assess at this moment. But we don't know also what will be the compensation for the hospitality industry and tourism industry in Switzerland. There are a lot of talk going on. Of course, this is a very important industry in Switzerland and something will be done. In the hospitality, we have Swiss Hotel Properties. That's the real estate company. So we don't expect a material impact on the asset value. And there is no CapEx backlog in our hotel. So no CapEx will be done in 2020 anyway. So the measure we have taken for COVID-19 is, of course, we have stopped all CapEx. These CapEx have been also stopped because of closure of a lot of company. All available tools, so short-time work, state-backed financing, will be used. Of course, we want to strongly focus on management of the liquidity through the group to be able also to seize any opportunity and maximize flexibility. We have decided not to pay any dividend for 2019 because -- I mean the outlook is almost impossible now to precisely assess, and we really want to focus on our liquidity. For 2019, so highlights are CHF 933.2 million total revenue, CHF 266.5 million EBITDA. The equity on the 31st December '19 was CHF 443 million. Net debt CHF 455.2 million. So equity ratio 37.3%, 41.6% leverage ratio. We made CHF 193.8 million capital gain on the sale of Infracore. Swiss Medical Network has made a 4% organic growth in '19. So we have been able to recruit a lot of new doctors. And -- so despite tariff reduction and pressure on the cost, we have been able to have a very strong organic growth. Our long-term vision is always the same, investing for a better life. We invest in service to people, so mostly health care and hospitality. We grow and manage company for long-term value as we did for Infracore, as we are doing for Swiss Medical Network and Victoria-Jungfrau. And we try to use our expertise to build up partnership. Our focus sector is health care. So with Swiss Medical Network, Medgate, Nescens, Swiss Ambulance Rescue, Ava and AIDA, which are indirect investment through Medgate. On the hospitality, we have the Victoria-Jungfrau with 4 hotels, Seiler Hotel with 3 hotels and Weriwald AG, which is the operating company of InterContinental, Davos. On the infrastructure side, so we still have 30% of Infracore, and we have 100% of Swiss Hotel Properties. The shareholding structure. We have 24.1% of free float, 75.9% in the shareholder group, Reybier/Hubert/M.R.S.I. MPT is an important partner on the operating side, the size they have is 4.9% in AEVIS, but they have 40% in Infracore, and MPT is a very strong partner to our future growth in the health care division. Board of Director, we have -- so Christian Wenger, Chairman; Raymond Loretan, Vice Chairman; Michel Reybier, Antoine Kohler and Cédric George, Member; and I'm Delegate of the Board. We planned since 2018 the transformation of AEVIS in a pure-play investment company. So the vision is: to invest in health care, hospitality, lifestyle, infrastructure; to have an actively managed portfolio with participation of 20% to 50%; and we want to combine capital gain and stable annual return for shareholders. So the first step was the deconsolidation of Infracore after the sale of 70% to MPT and Bâloise in a 2-step private placement. We have continued to grow our health care activities with the acquisition of Klinik Belair in 2019. 2020, we'll have a stronger focus on development of hospitality activities, both in opco and propco. We also made our first acquisition in a public hospital. We have 30% -- 35% shareholding in Hôpital du Jura bernois with an option to buy an additional 17% to be a major shareholder -- majority shareholder. And we are also discussing with several partners to enter into Swiss Medical Network in order to form a real integrated care provider for Switzerland. So we are also planning to have other strategic investor in other subsidiaries like Swiss Hotel Properties or Victoria-Jungfrau. Health care. So Swiss Medical Networks, this is the picture of Swiss Medical Network as now. So in March 2020, we have now 21 hospitals. So including the 2 hospital in Jura bernois, we have 26 medical center -- health center, 2,200 physician, 55,000 inpatients staying, 100 -- more than 160,000 outpatients and 1,119 beds. So we had a very strong growth in Swiss Medical Network with turnover reaching CHF 613 million. Organic growth was 4%, despite the decrease in the tariff. So that means we have higher growth in volume. We have reopened a few facilities in the beginning of this year, so Centre Médical des Eaux-Vives in Geneva, Centre Médical de la Gare in Fribourg. So we have also recruited a lot of new doctor, young doctor -- younger doctors. So we have an excellent growth, and the growth will pursue in the following year. Also, the partnership with the public sector, so that's really a milestone. So that's the first privatization in Switzerland. So we acquired 35%. We have the option to acquire 17% end of 2021. That means that Hôpital du Jura bernois will be fully consolidated in 2022. We will use these 2 years, so '20 and '21, to also help Hôpital du Jura bernois to restructure, reorganize this hospital. We have already identified a lot of synergy between the group and Hôpital du Jura bernois. We have pursued our acquisition activity in '19 with 40% of Rosenklinik in Rapperswil. It's also intended to consolidate this clinic in 2023. Also, the integration of the Privatklinik Belair in Schaffhausen. And so that means we have increased the number of hospital to 21. And that was part of our vision that we established back in 2006 when we said we want to establish a major national player with Swiss Medical Network with between 20 and 25 hospitals on majority of cantons. So we are actually on 13 cantons in Switzerland on all the linguistic region. If we look at the nonconsolidated entities, so Jura bernois and Rosenklinik, so the gross revenue of the group is around CHF 750 million. We have 2,275 physicians, 60 -- more than 60,000 interventions and 1,237 beds. Our vision for Swiss Medical Network is to create an integrated care platform. That means we want to have a partner in Swiss Medical Network that will help us to provide the full scope of medical care from the home care, so GPs to elderly care and the [ speed tech ], so home care. And also, what we want is to create an insurance product that will be dedicated to our company, where the model will be that we are focusing on maintaining good health instead of increasing volume of procedure; developing accompanying measure, so prevention and proactivity; aligning the incentive and interest to avoid unnecessary treatment; and promoting digitalization through the system. In an integrated care system, of course, the digitalization is easier to understand for all the players, but it's also a key point to achieve this. So this new organization will comprise hospital for inpatient care, medical center, clinic, general practitioner group and also an insurance infrastructure and a strong technology partner. That's what we are currently looking for Swiss Medical Network. The idea to create this ecosystem with all these care provider, large hospital, small hospital, clinics, specialists, therapy center, rehabilitation, also home care, pharmacy, so everything integrated in 1 organization. The example for such organization is, of course, Kaiser Permanente in the U.S. which is the biggest integrated player. But there's a lot of other players, also hybrid players, like UPMC, so University of Pennsylvania Medical Center (sic) [ University of Pittsburgh Medical Center ]. That's an organization, which is currently working with insurance like we are doing now, but which has also its own insurance system. And so it's an organization that shows the way how you can transit from the fee-for-service, payer-provider system that we have now to an integrated health care provider. Medgate. We have 40% shareholding in Medgate. Currently, Medgate has up to 60 -- 600 employees worldwide. We have also operation in Asia, in Australia and Middle East. Among them, 150 physicians. In '19, we achieved 1 million teleconsultation, since 2000, more than 9 million. The availability is, of course, 24/7. And Medgate has a partner network in Switzerland with more than 2,400 partners. So partner are hospitals, doctors, medical centers. Medgate is the partner of the BAG, Bundesamtes für Gesundheit, for the coronavirus. Medgate is currently operating the hotline and performing tests for the Bundes. On the hospitality side, so Victoria-Jungfrau is the holding for hotels. We have now 847 rooms in operation, 124,000 overnight stays. We have more than 2,500 food and beverage seats. Average room rate is increasing to CHF 412, and a total of 835 employees. Highlight in '19 was the expansion of hotel activities with Seiler Hotel, Hotel InterContinental in Davos. The reopening of La Réserve the January 8, so was scheduled before Christmas, but then due to some technical problem, we had to postpone the opening to January 8. The hotel was performing very well until end of February with the 2 restaurants, Eden Kitchen and La Muña. The roof terrace were not open due to the winter. So we are looking for -- to be able to reopen and relaunch this hotel at the end of the coronavirus crisis. We had strong operational result in the hospitality. Sales increased by 11.3% the past year. All 3 hotels contributed to a positive result with all of them reporting higher turnover. Gross profit rose almost in step with the increase of sales driven by rising occupancy rate. The winter '19/'20 was excellent, so with more than 15% increase. So winter season is -- was very strong, and by chains -- I mean the COVID-19 crisis does not affect the winter season. Our current hotel portfolio. So we have fully owned hotels operation with Victoria-Jungfrau in Interlaken, La Réserve Eden au Lac in Zurich, Bellevue Palace in Bern, Crans Ambassador in Montana, the Mont Cervin Palace in Zermatt, Petit Cervin in Zermatt and Monte Rosa in Zermatt and also Hotel InterContinental, Davos. And we manage all these hotel together with Michel Reybier Hospitality, so La Réserve Hotel in Geneva and the Schweizerhof in Zermatt. The effect of COVID-19 on the winter hotels can be seen on the next slide. So you have on the left the winter season with the revenue and EBITDAR and then the summer period, so April through November. You will see that the revenue in April-November are really low compared to the winter. And both InterContinental and Seiler Hotel, Zermatt had negative EBITDAR during the summer. That means that the result without summer season will be better than with the summer season for the mountain hotels. So we plan to keep InterContinental in Davos closed anyway. We will see for Zermatt if we open 1 hotel, depending of the booking. So that will be decided when we will have more intel on how this crisis would evolve. On the infrastructure side, so we have Swiss Hotel Properties with currently properties, including development project -- 9 properties including development project, CHF 305 million value. Net revenue was CHF 10 million in the '19 and in 4 sites with a surface of more than 63,000 square meter. One summer destination, which is Victoria-Jungfrau in Interlaken, 1 city and 2 Alpine destination -- 3 Alpine destination -- no 2 Alpine destination, Zermatt and Davos. So next slide, you'll see the footprint, but I'm not sure that the slide appears right on the webcast. But so in Crans Montana, we have a land reserve where we can build something; in Interlaken, the Hotel Victoria-Jungfrau plus 6 additional property in Interlaken; La Réserve Eden au Lac in Zurich; and the Hotel InterContinental acquired in January 2020 in Davos. Infracore, we still have 30% participation in Infracore. The market value is -- of property is above CHF 1 billion with CHF 1.1 billion, 38 properties on 16 sites. Net revenue '19 is CHF 46 million. The annual report of Infracore is available online with all the detail about Infracore. If you make a case study on Infracore, you see that we sold in Q4 '18 a 20% shareholding to Bâloise. In '19 -- in Q2 '19, we sold an additional share to Bâloise and a share to MPT with sale proceed of CHF 313 million. And end of '19, in Q4, we have sold Générale-Beaulieu Immobilière to Infracore, which has increased our participation from 19% to 30% and with a sale proceed of CHF 163 million. The sale proceed was half in share and half in cash. So Infracore and Swiss Medical Network are partnering on the long term. That means the -- it is intended that -- and medium or long term also the property in Belair, Schaffhausen will also go to Infracore in a later stage. Also Infracore and its shareholder, MPT, are committed to support the Swiss Medical Network growth. So in case of acquisition opportunity, Infracore and both shareholder, MPT and Bâloise, will be supporting the vision and the acquisition. Financial of AEVIS VICTORIA. So the balance sheet has decreased significantly with the sale of 70% of Infracore. Total assets are now CHF 1.2 billion compared to CHF 1.8 billion in '18. Liability decreased from CHF 1.4 billion to CHF 746 million. Financial liability are CHF 495 million. So net debt was CHF 455 million. Share capital is CHF 80 million. Reserve and retained earning CHF 305 million. So equity is CHF 443 million, so 41 -- a 37.3% equity and 41.6% leverage ratio. On the P&L side, you see the total revenue, CHF 933 million, net revenue CHF 844 million, EBITDAR CHF 308 million. Rental expense, EBITDA is CHF 266 million and EBIT of CHF 179 million. We've made some additional amortization in '19. We have amortized most of the intangible in the Swiss Medical Network. The brands -- the individual brands of the clinic have been fully amortized because we are transiting to this integrated care vision. And integrated care vision means a global brand and less importance for the local brands. So that's why we did this extraordinary amortization in 2019, which will also reduce the amortization in the future. We will have a reduction of the ordinary amortization in the future. Segment reporting. So hospitals net revenue. EBITDAR margin is decreasing 8%, is due to the new acquisition. We have acquired a few new operations back in 2018 and 2019, which are less profitable than the mature operations that we have. So that's why we had this decrease of percentage from 17.2% to 16.4%. On the hospitality, we also had a reduction of EBITDAR. This is mainly driven by CHF 2 million opening cost for Eden au Lac. Of course, we have opened on the January 8, 2020, but we had to staff the hotel before the opening. So beginning in July '19, we have begun to hire the staff for Eden au Lac progressively to be ready for this opening. And that has driven a CHF 2 million cost for this opening, which has not been activated. So that's why the EBITDAR margin in hospitality has slightly reduced in 2019. The real estate segment in '19 include -- so Infracore for 5 months because Infracore has been consolidated until end of May and includes the real estate of the hotels. Other segments, that includes Nescens, that include Paris Spontini, and also the ambulance company in Geneva. And then we have to cooperate with all the participation gains, as you can see CHF 222 million revenue on the corporate level. The outlook. So for 2020, it's really difficult to make an outlook. We don't know how long this crisis will be -- will last. We don't know how the compensation will be for the hospitality. We begin to see the compensation for the hospital and health care segments. It seems that we will be fully compensated. We'll see -- we have seen yesterday with the canton Bern. They will compense the loss of turnover based on the 2 years before, based on '18 and '19. And we think that the other cantons will follow this lead. But also, I think the federal level has to -- if some compensation is missing on the canton level, then the federal will have to compensate because all hospitals in Switzerland have stopped their activity on March 16 due to this federal decree. So we are pretty confident on this. We will work in Swiss Medical Network to ramp up the newly acquired hospital. In consolidating the minority participation, we will add CHF 160 million of revenue with the condition that we have now. We are developing Swiss Medical Network into an integrated care provider. So consolidating further care provider to an ecosystem like the Hôpital du Jura bernois, but there will be other such integration. And also, we are discussing with several strategic shareholders as we have done with Infracore, we want to have in Swiss Medical Network strategic shareholders that will help us to achieve this integrated care model. Victoria-Jungfrau. So we are restructuring all the hotel operating entity as one group. So Victoria-Jungfrau will be the holding with all operations for hotels and Swiss Hotel Properties will be the holding company for the properties. We aim to increase the size of the total properties to around CHF 1 billion in the midterm. We're also discussing with several strategic investors currently operating in hospitality to be partner in Swiss Hotel Properties. So thank you for your attention, and we can open the floor for questions.

We have the first question from André Lehmann.

Mr. Hubert, André Lehmann from AWP. I have a couple of questions for you. First of all, I would like to know if you would resume the dividend payment in 2021 if the situation normalizes.

Yes. Of course, I think this measure for the dividend is a preventive measure. We don't know how it will -- we are optimistic. And the first sign now shows that it will be better soon but you never know. So I think at this moment, if we want to seize opportunity in the market and be assured that our operations are sound, we have to prioritize the liquidity inside the company. And that's also a guidance, I think, from the FINMA for all the financial companies to suspend dividend in '19. But the idea, of course, is to remain a dividend company in the future.

Okay. Is it possible to detail the loss of revenue since the beginning of the corona crisis?

It's difficult to detail the loss of revenue. Because, first of all -- so we don't know the price for the coronavirus patients. DRG, SwissDRG is currently working on the new DRG for this. So we don't know which will be the income that we will have from these. And as you see in Bern, so we will be fully compensated by the canton Bern. So we think that all cantons will follow more or less this view, but for now it's really difficult. It's a day-to-day situation. We have daily meeting in each canton with the [Foreign Language] to see how the situation evolve. For now, all the hospitals in Switzerland have a lot of capacity because they have stopped the elective surgery, which is around 70% of all surgery. So there is now a lot of capacity in Switzerland. And we will see what's happening, if the federal government will resume the elective surgery because the nonurgent surgery of today will be the urgent surgery of tomorrow. So we don't want also to wait too much to begin with this backlog.

And the last question, if possible. I've read that the -- in Fribourg, the Clinique Générale was closed by authorities. Is it something that could happen in other cantons as well?

So in Fribourg, we had the requisition of the full -- of the whole clinic. So that means that the canton Fribourg will pay for the whole clinic including building. But we have decided to transfer all the floors into the canton hospital, that's part of the COVID is positive. So the -- all material and people of Clinique Générale have been transferred to the canton hospital to be able to increase the capacity of the canton hospital by 50 beds. So that's one solution. I mean each canton has a different setting depending of the canton infrastructure, the geography and the need of each cantons.

So there is no revenue loss due to this seizure?

No, in Fribourg and Bern, there is no -- we know now that there will be no revenue loss because in Fribourg, we had this requisition. And in Bern, there was this ordinance taken. But we are pretty confident that with all the health care system, which shows its importance during this crisis, will be compensated because of this -- I mean, we have to be ready for a surge and for a wave. If this wave is coming, we are ready. If this wave is not coming, that's a security buffer for the population.

Next question is from [ Mark Crown ].

Antoine, it's Mark. Since the presentation, just rather than sort of obviously -- a lot of the -- as you were saying, a lot of the immediate issues to do with the virus and so on and so forth are still up in the air. So maybe I'll focus more on sort of the longer-term strategic consideration that you haven't touched upon. I mean the first one, just to my understanding, your comments about potential external investment into the hospitality segment. Can we take that as perhaps to mean that you'll be looking to do something similar with the real estate part of that business as you did on the health care side? Or would it be perhaps something more integrated where you perhaps partner up with a larger international group?

No, I think the -- we want to focus on Switzerland. So the idea is more to have as a partner as we have MPT in the Infracore, to have a partner, might be an international partner that brings us some pieces of the puzzle for this integrated care system. So insurance, we are discussing with insurance right now to have insurance entering our shareholder -- yes, our capital and to propose a dedicated insurance product for this integrated care product. We are discussing also with other operator in Switzerland, could be a hospital, but also home care operator like Spitex, Ärztezentrum so medical center. We are discussing now acquisition of several medical centers, which will be part of the primary care distinctive of the group. And so such integration are going to be done also with share exchange on Swiss Medical Network level. The aim for AEVIS is in the medium term to be only a minority shareholder in all our companies. A strong minority shareholder with less operating responsibility and more strategic hospitality responsibility. So it means that -- so in each company of AEVIS, we are looking for partner, not only financial partner, but really a strategic partner that can help the development of those companies.

Understood. I mean I think obviously, as you've sort of hinted that the sort of move to more of a sort of subscription-type model is very powerful. And then clearly, Switzerland is a premium health care market and one where the individual is very conscious of the financial burden of his insurance premiums. So as I say, that would resonate, I guess, quite strongly with the population. Just to get it clear, you talked about partners. Presumably then, the insurance part of that continuum would be something that you would prefer or, perhaps from a regulatory perspective be required to bring in, if you will, from a partner, it wouldn't be something that you would develop in-house?

Yes, of course, insurance, we don't want to develop in-house insurance company. So for sure, we -- for the insurance, we will team with an insurance, which can be health care insurance, but can also be a nonhealth care insurance which has health care experience elsewhere in the world, but not in Switzerland and want to enter the Swiss market. So that's also a possibility.

Yes, I think it's -- from my own personal experience, I can say it's very fertile territory, Antoine, and if you can go horizontal into other segments of insurance, I think you'll find some very interesting territory there. Perhaps just one last question, if I may, more specifically to the current situation. I mean how much of a problem has it been for you or how have you been coping with the issue of your cross-border personnel? Because I understand in some of your hospitals, you have a number of perhaps nursing staff who are based outside of Switzerland, France, for example. How are you coping with those challenges at the moment?

So we had a lot of problem in the beginning of the crisis because this personnel have to organize themselves for the kids because schools are closed in both Italy and France and Germany. So one week was pretty messy, especially in Geneva, with more than 6,000 people also for the hospital -- the University Hospital of Geneva. So -- but now the situation is pretty fluid, and we don't have problem with the cross-border personnel. They have a special line at the border, so they can cross the border easily. And they have also organized themselves at home for their kids and everything. So at this level, on our side, everything is good.

We have another question. The next question is from [ Andreas Trilling ].

AEVIS has a cash position of only CHF 40 million and probably now a negative cash flow -- cash outflow in this time. So how do you want to repay the bonds amounting to CHF 55 million due in -- due to end of June?

So we have enough liquidity on the credit line to repay the CHF 55,000 -- CHF 55 million bond in June. So we had -- at the end of the year, we had a total cash and credit line of CHF 130 million available. So we are on the safe side for the liquidity and for this bond.

So it means that you have a credit line from CHF 90 million, correct?

Yes. We -- yes, right.

[Operator Instructions] We have another question from [indiscernible].

My name is [indiscernible]. I have a question for the compensation you're expecting from the state. Do you think that there would be a maximum compensation or they will be willing to go as far as they can? Is there a maximum amount that is fixed at the moment?

So I think there is 2 level or maybe 3 level of compensation. So we have what we call [Foreign Language] for the people that are not working now currently. On the hospitality side, everybody is in [Foreign Language]. In the hospital, we have also closed all restaurants and noncore activity. That means we have people in [Foreign Language], mostly physiotherapist. That's an example because physiotherapy is a physical contact. So it can spread the virus. So we have halted all these activities. So that's one part of the compensation. Then you have some cantons, like canton Bern, that state okay, we will see the turnover that you will achieve during this month, and we will compensate that to the amount of the -- the average of the turnover from the same month in '18 and '19. And so that will be -- of course, they will deduct the payment from the [Foreign Language], but that will result in a full compensation. And we think that all the cantons will follow this lead. I think usually, Bern is leading the way in this. In cantons like Fribourg, where we had a requisition, an official requisition like in also in Valais, that will -- we will have a full compensation of the loss because of this requisition and then if -- in case there is not sufficient compensation, we will have a compensation of the Bundes because they had this ordinance in March -- on March 16 that said all hospitals have to stop their elective surgeries so that -- to be ready for eventually having an overflow of patient -- of COVID patient. And the law clearly state that when there is such order, all the economic player have to be compensated. So that's for the health care. On the health care part, we are pretty confident. We also see that the -- maybe the perception of health care in the world will change. I'm sure that we will not talk about overcapacity anymore. Because we're seeing that in Switzerland, we have a lot of case, but our daily rates are under the other countries because we have enough capacity, and we have a very good health care structure that can take care of everybody. So we hope to be fully compensated on the health care. On the hospitality, we will have talk in the next weeks with hotelleriesuisse and also the Bundes, the Swiss Confederation to see how this industry will be compensated. But also there, it's so important industry for Switzerland. I'm pretty convinced and the early talks that we had, that we will have a fair compensation. And for now, I mean, if the crisis does not last until -- after June, I mean, we have no damage on the hospitality side or almost no damage on the hospitality side. We will be -- we will have a loss if we cannot open Victoria-Jungfrau during the summer because that's a very strong season, of course, but for now we are pretty confident.

I have another question regarding the COVID-19. Are you actually turning beds into specialized beds into your hospitals? Are you in need to equip your facilities with ventilators or specialized equipments? Or they are -- you're ready to...

So it depends the cantons. We have more than 100 ventilators in the group. In some case, like take the example of Clinique de Genolier. Clinique de Genolier has maybe 30% elective surgery because the rest of the activity is mostly oncology. And so we cannot stop this activity because an oncology case is always urgent. So we have converted one floor in Genolier for COVID, and we are teaming with Hôpital de Nyon, so the state hospital next to us. So the COVID patient which does not need ventilator are in Genolier. And when they need ventilator, they go to Nyon. We have given all our ventilators to Hôpital de Nyon. So they were able to increase their capacity. And so that's how we proceed in this region. In Fribourg, it's something else. So we have closed the Clinique Générale and all the health care personnel is at hôpital fribourgeois. Also the ventilator and the material has been transferred to hôpital fribourgeois. In Ticino, our 2 clinics are non-COVID clinic. That means we receive all the case from the COVID hospital. So COVID hospital send us all the non-COVID case in obstetric, in orthopedic, in surgery. So each canton has a different setup. But I must say that in each canton, they have made sufficient capacity. We see even in Ticino the most difficult situation and they are still in -- they had no transfer of patients in other hospital in Switzerland. So they are able to cope with the wave in Ticino. And we see in Ticino now sign of reducing, so less case and people going out of the hospitals also.

Another question. It's on Medgate. So AEVIS VICTORIA owns a 40% share. I would like to know who owns the rest of equity. And I would like to also know the main financial metrics of Medgate, what kind of revenue and profitability it makes. And also last question on Medgate. Will it play a role in the integrated business model you want to implement under this Swiss Medical Network?

Of course. So Medgate, we have 40% shareholding and the 60% remaining percent are in hands of the founders, Andy Fischer and Lorenz Fitzi, the 2 founders that are still working. So that's CEO and CFO of the company. Of course, Medgate Switzerland will be a key component of the integrated care organization because the telehealth is the first point of contact in such organization. Currently, Medgate is doing roughly CHF 40 million turnover and with 10% to 15% EBITDA for Medgate.

Okay. And the last question I have...

And Medgate has an international strategy. So for instance, in Germany, Medgate has a joint venture with Rhon-Klinikum, 50%-50% joint venture with Rhon-Klinikum for telemedicine in Germany. And the strategy at Medgate is in each country to have a partner like they have us in Switzerland, Rhon-Klinikum in Germany. They will have other partners in other countries to develop the telemedicine.

Okay. Last question is on the profitability of the hotel business. It's still relatively low, looking at the EBITDA margin, it's near to breakeven. I would like to know what's your vision in terms of -- what can you achieve at least at an individual level? Or if you want to mention maybe at the group level for VJC, but yes, what kind of productivity you're aiming at?

So hospitality EBITDA and EBITDAR. So we are owning most of the hotel properties. So I think we have to focus on EBITDAR. And I think EBITDAR of 20% has been achieved in '18 and '17 also. So 20% is really the topic. And if you exclude Eden au Lac, the opening cost of Eden au Lac, you would have also a 20% EBITDA in '19. So '19, this 17.2% EBITDAR is because of this preopening cost in Eden au Lac in Zurich. So the goal is 20% EBITDAR in hospitality and 10% EBITDA after rent.

Okay. And last question, maybe on -- you mentioned in the presentation that you -- in 2020, you will consolidate minority participations of -- in Swiss Medical Network that will add around CHF 160 million additional revenues. Is it linked to further consolidation of Jura Hôpital bernois (sic) [ Hôpital du Jura bernois ] and Rosenklinik?

Yes, exactly. So I mean Hôpital du Jura bernois and Rosenklinik are going to be integrated in 2021 -- end of 2021 and end of 2022. And so this is the CHF 160 million we are talking about.

Will it be in 2020 or will be later, later on?

No, no. The consolidated -- the full consolidation will be in 2022 for Hôpital du Jura bernois and 2023 for Rosenklinik, which allow us -- we have 2 years for Jura bernois to restructure the operation and bring the operation to the same level as our other hospitals.

Okay. So okay. No consolidation in 2020. We have to wait a few years more. Okay.

Yes. But we have a firm option for 17% to the same price as we pay in 2020 for the 35%. So we know now that we are going to consolidate and at which price we are going to consolidate. And Hôpital du Jura bernois include also the property of Hôpital du Jura bernois. So there is 2 hospitals that belongs to the Hôpital du Jura bernois company.

Okay. When you say a full consolidation, is it 100% or it can be just a majority participation?

No, I think it's going to be 52%. So the option that we have is 17%. Then we'll see how -- what the canton Bern will want to do in 2022, if they want to stay. I think for this operation Jura bernois, for us, canton Bern is a really good partner because Hôpital du Jura bernois has to be integrated further in the whole sanitary network in Bern. So including hôpital de Bienne which belongs 100% to canton Bern. So we are very happy to have them as a minority shareholder.

Okay. And the last question. On this CHF 160 million, what is the share of Hôpital du Jura bernois? And what is the share of Rosenklinik?

So Hôpital du Jura bernois is something like CHF 130 million and Rosenklinik will be CHF 20 million and then there is some additional smaller operation.

The last question comes from the line of [indiscernible].

I was just -- will it be -- was wondering about the hospitality business. Will it -- is it -- should we expect a loss there? I mean as it was mentioned, the EBITDA margin was fairly thin. So could it be below 0? I'm talking really of the EBITDA margin in 2020. First question. And second question, how nervous are actually your [indiscernible], I mean who might not have really much of an income at the moment? And could we see even some go out of business if this crisis lasts for longer? And just again, I mean, what makes you really so confident that your revenue loss in hospitals will be really fully compensated by the state? I mean would this not put you in a really privileged position?

I think that why we are confident is because we have no revenue loss because -- direct revenue loss because of the crisis. The revenue loss is because the Federal Council made a decree on March 16, saying that all hospitals have to stop their activity to be ready in case of a wave of COVID. So that's not the same as in other industry. I mean -- and these nonurgent care are nonurgent, but they will be urgent next month. So I mean this situation will not last too long for the hospital because I'm pretty convinced that the major -- the social avoidance, et cetera are fruitful. And so we will have COVID patients, but we will not be submerged. And so in a few weeks, I think we are going to resume the elective surgery. And so for our doctors, of course, they have -- few of these doctors have difficulties, but they are also useful, even if there are specialists in such crisis, there are -- basically an orthopedic surgeon has first base is PhD in medicine -- general medicine and then the specialty. So all doctors are doctors so they can help in this crisis. They are fully motivated and they're ready to work, I mean, more after resuming the surgical operations. So I don't see a problem for our doctors. Maybe more problem for the general practitioner, which are in the city. So the self-employed general practitioner in the city. Because, of course, the patient are afraid to move, so they do mostly teleconsultation, so they have reduced their activity. So I think the GPs in Switzerland, I'm pretty sure that they will have some rescue package from the Bundes. Because probably for such doctors, it's more difficult for -- as for our doctor operating in a hospital and clinic because they're still things to do.

And the question was -- can you still hear me? About the hospitality business, will it be lossmaking this year?

So hospitality business will not be lossmaking if we can resume in the summer for -- especially for Victoria-Jungfrau and Eden au Lac and Bellevue Palace. The mountain hotels are not making loss when they are closed. And we plan to remain closed in the summer with the exception of Zermatt, where we have 3 hotels, and we might open 1 of these 3 hotels if we have sufficient booking.

Thank you. There are no further questions. I hand back to the speaker for the closing remarks.

Okay. So thank you, everybody. So I remain available if you have additional questions or if you want one-to-one discussion, you can go through Dynamics or through our Investor Relations service. And I'm fully available by a teleconference or by phone, of course, because we still have to respect this social distancing concept. Thank you all, and I hope that everybody is in good shape, and stay away from the coronavirus. Thank you.