Good afternoon, and welcome to this Q2 presentation with Movinn. With us today, we have the CEO of Movinn, Patrick Blok. First, there will be a presentation, and afterwards, a Q&A, where the CEO will answer all questions submitted via Stokk.io. There have already been pre-submitted questions on Stokk.io for the Q&A, and the Q&A is still open so that you can submit questions live as well. I will now hand over the mic to Movinn for the presentation. Your line is now open.
Thank you, Anas. Thank you for the introduction. Thank you for listening, guys, and attending. Really appreciate it. Let's jump into it. We have recently published our H1 report. A report of a continued quarter of kind of mixed emotions, mostly kind of negative emotions to be completely candid and frank. But this highlight slide kind of summarizes it in a pretty good way. We continue to deliver decent top-line growth. We've upped the revenue by 21%. We have added a couple of units in Sweden, in an existing property where we were already operating. And we have added zero in Denmark.
Totally in line with that strategy we kind of earlier have communicated on, doing these larger bulks and instead of the incremental unit growth. There's different reasons for that, and I've kind of explained it earlier, but they remain the same. It's a very capital-intensive, very kind of working capital-intensive way to grow, and it is a. And it's also fatiguing, you know, the organization, and it's tearing on bottom-line margins. So it's completely in line with the expectations that we are not continuing to pour smaller increments of units into Denmark, and instead doing these bigger growth bulks when we see a project that we like and that fits our criteria. The Swedish subsidiary is approaching breakeven.
I'll come back to that a bit later. They broke even in June, so that is very good. And other than that, you know, we have underperformance in Denmark, which is unexpected and frustrating for sure. We've had too much vacancy in the markets, especially in the secondary markets. We have Aarhus underperforming and Odense underperforming. Copenhagen is running fairly stably and is kind of ramped up at the moment, back to, like, where we normally are at this point in the year.
So even if Q1 is a slow quarter and that's kind of affecting the H1 performance, we've seen a Q2 underperforming as well, which is unexpected and, of course, super frustrating to me and to everyone around me, and to all of you guys who have an interest in us performing well. So, yeah, the EBITDA is below expectations. The EBITDA margins is below expectations. And that trickles down to all the bottom-line metrics that we like to present. Both, you know, P&L margins, be that EBIT or EBITDA, but also return on invested capital and et cetera.
So we see some unexpected performance at the moment, which we're working super hard on just getting back on track, because we know what the portfolio can do, and what it's doing right now is not at all what we expect. But we know where to look, and we know where to set in. And that's mainly on bringing the demand back up to normal levels in secondary markets. So yeah, going to the group structure, it's unchanged from the last time we met and the time before. We have the commercial subsidiary in Sweden, where there's activity and revenue and, you know, a portfolio and staff and that sort of thing.
And then we have the subsidiary in Germany, which remain kind of dormant. All the legal stuff has been made ready to launch, and we continue to hold negotiations with different stakeholders in the markets in Germany that we like. But again, it's kind of a side gig at the moment, to be honest, because where my primary focus, you know, if you went back six months in time, my primary focus would be on doing all these international negotiations, and now I'm kind of reverting back to just the core business in Denmark, focusing very strictly on that.
So the financial highlights, we segment this so you can see how activity is progressing across the different countries, and then it's compiled into the group level, and then compared to the same period of last year. And growth on top line, but also, but not enough, I would say, and also growth on variable costs and fixed costs and those sorts of things, which makes for a underperforming bottom line for sure.... We were expecting to do more. We haven't been able to do that.
I'll come into it in detail later on, but it has full focus to kind of get the existing portfolio just to perform as we know it can. If you look at H1 last year, yes, the revenue was up, but the EBITDA and the EBIT and that sort of thing was way more interesting last year than it is this year. So, the explanation is, of course, some of the demand and vacancy issues we had in the secondary domestic markets, but it's also, you know, a cost base that has increased. Most of it has been totally planned out and kind of making ourselves ready to do the next step.
We hired some good operating people to make sure that Denmark was just, you know, running smoothly and tightly. So I would have more time to focus on the international launches. And now our cost base is not really matching up with how we're performing, to be honest, even if our revenue is up and fairly close to the guided targets. But in general, a bottom-line performance that we do not like to see, and that has all my focus at the moment. The balance sheet is fairly unchanged. Our equity has gone a bit down, and our debt has gone a bit up.
We have added some credit lines and things like that to have more firepower and to strengthen our cash holdings and working capital. If you look at the cash flow, I actually have the more kind of detailed one, so I'll jump to that. Here you can see that the operating cash flow from H1 was deteriorated. If you compare it to last year, it's deteriorated. A big kind of explanation of this is obviously, you know, a Swedish market that has been chasing its break-even point. There has been a continued cash burn on the Swedish operations. This goes into the free cash flow. This is affecting the free cash flow.
This is totally expected, but the cash flow from Denmark is underperforming, no doubt about that. We've also isolated the Q2 figures, so you can see that we have some improvement on the operating cash flow. We are limiting investments, and we are. And then we took changed some of the credit facilities to kind of have more firepower and to be stronger going forward. Jumping to the key ratios again, Sweden has a negative EBITDA of DKK 24.6. Again, fairly expected. Again, you can always argue, do you want to see the break-even point sooner rather than later? Of course we do.
But they have reached it now, which is super positive, and hopefully they can keep up the momentum and in the long run, and it will also, you know, allow us to build the local presence in Sweden without having, you know, a cash burn from the operations. So that's positive. But Denmark is again 4.3 EBITDA. It's low, and even if Q1 is always a bit boring, Q2 is historically super strong. And Q2 has not been as strong as it is historically, to be frank. That's also why the EBITDA margin is down from 11.8% to 4.3%.
That kind of trickles down all the way on the bottom lines, the EBIT margins, the ROICs, the cash conversion ratios, all those sorts of things that normally are stronger is affected by this in the midterm. Quick ratios and equity ratios remain strong, so the financial stability is still fine and great. Our cost of debt has deteriorated a bit, which is good. We've taken that down from 5.6 to 3.8. We have exchanged some more expensive loans to some less expensive loans, and that's the main reason for that. The operational data, and this was kind of the big, kind of part of the master plan, was to...
Because we, the ones of you who've been listening in, a couple times before, will know that last year was a fairly steep growth year, measured in units. We were meant to do, let's say, 70, 80 units, and we did 142, so way above any guided target. And my sinister plan was then to kind of say, "Okay, we've done a super substantial growth in 2022 measured in units. Let's utilize that platform and not take in more like incremental small unit stuff, and then get the full, you know, revenue, full margin effect on all these units." And that plan completely fell flat because we are now just underperforming on top line.
So, but that was the idea, and that's also why we have not added any units. It's completely according to kind of the learnings we did last year, that it is a kind of working capital-intensive way to grow, and it's also killing your margins, your bottom-line margins. Doing so many units, having so many units being put into operations, it's inefficient. You know, purchasing operating equipment, that sort of thing. It's a beehive of a lot of stuff that can be done way smarter if you concentrate it in fewer projects instead of having many smaller projects.
That is why, you know, there's no kind of unit growth in Denmark, and a little bit in Sweden, but that was kind of planned out because it's in a property we're already in. So, kind of fairly, within the plan. Then you have the revenue per unit. In Copenhagen, it's DKK 198 thousand per unit, and in Sweden, it's DKK 88 thousand per unit. So Sweden is, of course, still affected by this break-in period that we had in the first parts of the year. You know, getting kind of the season to play with us, but also getting the client base ramped up. And Sweden is doing super well in June.
I have another slide, a quick one to show you, but that comes to a total of DKK 186,000 per unit, which is higher than last year. And then we have the vacancy, which is higher than last year, and then you can say, "What? What's up with that? It makes no sense. Why is there an inverse relationship between the two? That shouldn't be the case." And the reason for this is that, you know, last year in the same period, we had an 83-unit increase, and the 83 units, they come in May and March, and June and April, and that sort of thing. And so they won't have a full revenue effect.
They won't have a revenue—either they're not even in operations yet in that six-month period, or they have been in operations for one month or two months or whatever. So now we've had a six-month period with the full revenue effect of all the units, so that's why it's improved, but it can be better. It can be way better, and that's why the vacancy rate that's what the vacancy rate will also kind of tell you. It was 9.5 in the comparable period last year, now it's 16.3, so a massive kind of deterioration on bottom line performance in that number alone.
And the second part of the explanation is also that, inflation, of course, plays a factor, and I've... Actually, after we've launched the report, we're probably gonna do some kind of time value of money in these brackets so we can keep them more comparable, because obviously a guided target in 2021 with inflation of, compounded inflation of around 4, 2 years straight now, that has an effect as well. So we need to cleanse that out going forward, and we will do. It's not cleansed out here, but we will do in the future
We still expect Sweden and Germany to progress as guided originally, but Denmark is just underperforming, which is extremely frustrating, and something that has my full focus at the moment. So that is obviously not good and not something we're happy with. We have the current product portfolio. It's the same as it has looked the same for some time. We've had the furniture rental side brand kind of increasing its stake, but we're not gonna do, you know, big jumps or we're not gonna take huge risks in new products or ramping up secondary product groups. The core focus right now is just to get everything running smoothly as we know it can.
So, you know, why spend energy and time on doing a new product or a new revenue stream when you need your core product to kind of act normally, so to say? But the corporate housing continue to be the big segment. The co-living is still growing a lot, which is, of course, good. But again, no short-term focus in ramping these up dramatically because if we can get the core, we just need the core, the core vacancy to be at the right level, and then we will have, you know, then we will have no issues, and then it will be that has to be the core focus. Our client concentration.
We report on this, where you can see that top 5 clients are kind of upping their share, which is still fine. The largest client we have has a 5.11 revenue share. It's a Danish C25 company. We can also see that there's more you know, diversification among the smaller clients, so the top 10 and the top 20 brackets are lower than they were last period. And here there's a big future learning because one thing is the strategic outlook, and yeah, if we have a good and well-diversified client portfolio, then we're not exposed to single clients. We can manage losing a client and replacing it.
But the future learnings is a big kind of part of the explanation here in this H1, and that's the fact that, you know, in a city like Odense, we've had a lot of undetected, correlated demand. So even though at face value, the portfolio looked extremely diversified and with very low, like, kind of share brackets. Some of the underlying projects that were driving that demand either got canceled or were completed. So there were some big infrastructure projects that were completed. There were big, another big project that were canceled unexpectedly.
And a lot of these kind of companies, international companies mainly, they were kind of correlated on the same underlying demand source, so to say. And we haven't been good enough at detecting that. That's totally my responsibility, but we haven't been good enough at looking, seeing that coming, and we have not been fast enough to offset it. So what we've done is we've, you know, upped our local game in the secondary markets. We've hired a local rep who can, you know, who kind of knows the cities and can manage the local client base.
We are doing a lot of local efforts in getting big because there is a big untapped local market in both Odense and Aarhus, but we haven't really tapped into them because we've just been blessed with a lot of international demand that has gone on for years. So yeah, we've probably become a bit complacent on that and taken our eyes a bit off the ball of the secondary markets, which is, again, my responsibility. And I can assure you that this is what we're currently working on fixing. So this was the quick break-even slide. It's also in the full reporting.
So it's just to say that in Sweden, in June, they did a revenue of SEK 672. That came to a contribution margin, and that was enough to cover both the fixed costs and the staff costs. So we lost SEK 19 on EBITDA, which is as close to the break-even point as it gets, like, I guess. The technology slide, I've shown this before. It's and it's totally unchanged from before, and one could say: "Why do you still yap on about tech development?" And the reason I keep doing that is because our industry is really changing. There's a lot of internationalization happening, meaning that the big, big clients, also the big Danish clients, they... It's being more centralized into these big international players.
Both on, you know, advisor sides, relocation sides, and provider sides. You can stay relevant in two ways here. You can either be a global player with a global presence, and obviously we don't do that yet. Or you can do the right tech development, which will make your kind of user experience extremely efficient. And if you do that, then you can kind of remain relevant with the big international shifts going on. So that's what we're doing.
We keep doing that and keep improving the system, keep improving, doing some very key integrations into other parts of this entire industry pipeline in the corporate housing market that you need to do to stay on top of things. And the other thing is, it's also, you know, we are kind of still working on maturing all the products to a point where we can utilize it in a better, in a better and different way, and again, maybe commercialize it. Maybe, offer licensing, maybe offer traffic, maybe offer something like that. That doesn't necessarily mean that we have to take all the risk and all the operational headaches, but be more of a, of a... Just use what's already there.
It doesn't take, it won't take. We have the in-house capabilities already, so why not use that in a better way? We're really working on seeing if we can kind of mature the products to that point. This slide is also unchanged. You've seen it before. It's the entire FF&E concept. We do this in-house. We design it in-house, we get it manufactured from factories, and get it shipped directly in large bulks. The downside is that when you're kind of putting your foot off the speeder and don't have a lot of short-term units in place or in the pipeline, then you mean you will be accumulating your inventory a bit, and then that is hurting our working capital.
I'm super aware of this and I have some stuff that we are setting out to do to kind of manage that. But creating this kind of concept is a differentiating factor for us, both with the clients but also when we're doing negotiations with developers and landlords who have, you know, prestigious projects and stuff like that. They don't wanna have full-blown IKEA stuff in their apartments. They don't wanna have plywood from top to bottom. They want something that looks good and feels and matches the quality of the development. And we can do this.
We can deliver this for sure with our in-house, in-house designs, because we can keep the unit prices low, because we, we kind of do these, direct sourcing from factories with in-house design. So yeah, we can keep that marble vibe, leather vibe going, Nordic vibe going, but at very low unit prices. It sets us aside, it makes us tricky to copy. There's a lot of good stuff to this. And it also, it also allows us to create this, this universe of, of, you know, the experience. It, it, you have to take... Your, being in this-... corporate housing market, mainly. We are also doing different stuff, but this is the core segment.
How do you take the product away from being just a functional box with a bed and 10 knives and a plate and, you know, Wi-Fi? There has to be more to it, and that's what we are trying to create, on the back of our core business, and this is an important tool in that process. It can also allow you to sell the stuff to your clients if they fall in love with it. We get that a lot. "Where can I get the coffee table?" Yeah, it's something we do in-house. The retail price is the... You know, it's not that efficient. You need a universe. You need to tell the story.
So that's, that's something that will come, and will kind of brand us and position us, as a quality provider. So coming back to that sourcing strategy thing I've been ranting on about for some time now, if luckily, it was an event that happened after the quarter ended, but, the negotiations has been onwards for since like November last year. This is also some of the stuff we're looking at in a country like Germany.
So this is why we kind of took our experience from Germany back home and said, "Okay, this is way more efficient if we change our incremental, you know, 5 units here, 10 units there stuff monthly, if we change that and convert it into these bigger chunks in the same location." You know, this project, if you take the project, it's a 94-unit project. It's, it has a full basement with a wellness area and storage and stuff, so linen and cleaning utensils and that sort of thing is in the same house. You don't need any logistics. You don't need any cars driving from A to B to C to kind of support your operations.
The wellness stuff is part of the concept to create this holistic living experience, where you can stay short term or long term, and you can go to the gym in the morning and go to the sauna and, you know, jump in the ocean. And if you come home, and you don't want to sit in your apartment, and then you can go to the communal area in the ground floor and have a coffee and work a bit from a working station. And then when you need to seclude yourself to your super nice apartment, you can do that.
So high quality, good operating concept, strong branding potential, and also these sorts of deals are interesting in the way that they are more, they are more kind of valuable and you have more options to negotiate on. If you're kind of running around begging for five units, seven units, whatever, it's your kind of bargaining chip is extremely limited. So with this sort of project, there's way much more that you can discuss with the developer or the landlord. Because the value drivers of doing real estate development and the value drivers of doing operations, especially when you wanna report a good working capital or a good free cash flow, those sorts of value drivers are completely different.
So for the developer, it's about capitalizing the property. For us, it's about the cash. So you can a small grip, like a rent-free period, goes a long way. So when you get the building handed over, you'll have a rent-free period. You'll have time to kind of get it ramped up, because it goes without saying that you're not gonna have a ninety-four-unit project at, you know, 90% occupancy in a month or whatever. So it'll give you time to kind of get it ramped up without burning cash. So it's just to give you an example. I can't share all the details on the deal because we are in different talks as well.
So, you know, don't wanna give too much away, but it goes to show that there is a lot of deal structure in here that you can do, which is extremely interesting to us. The current markets is the same as they were last quarter. And the pipeline is shown in the box or in the table to the far right. You can see that the unit number is the same, but the pipeline is of course ramped up, and the 94 units is the main answer to this. And then we have 2 units, which is part of a property we're already in. So we can take some of the stuff we have lying on the inventory and deploy in a better way than it just sitting in the warehouse.
So, that's the pipeline in Copenhagen. So fairly strong. Working on improving it, but fairly strong. In Aarhus, we are letting go of seven, sorry, four units, and again, Aarhus is not a major market for us, but of course, it makes little sense that the second-largest city in Denmark are not fit for bigger things. There's been some demand shifts, sorry, some supply shifts in Aarhus. There's a lot of construction activity, a lot of available apartments. And even though it's not a complete and direct competitor to the service, flexible product that we deliver, it is a substitute product. And it will have a...
There is a substitute effect to it that cannot be ignored, and Aarhus is just really crazy on supply right now. So we have the majority of our properties are in some very, very good location, and we're gonna keep them. But some of the units we've taken in that were in like subpar locations, we are letting some of them go. No need to carry them around. It'll have an immediate positive effect on the bottom line, that you don't kind of have to compete on units that are underperforming anyway. And the fixture or the equipment, the operating equipment, can then be deployed somewhere else where it makes more sense.
It can either go into a unit which needs a bit of a revamp, if it's an older unit and it needs a new couch or whatever. So, we can either do that, or we can deploy it in new apartments, where it will have a positive impact on the bottom line and not a negative impact on the bottom line. Kind of goes without saying, but my reason for showing you this, because, you know, four units in the major scheme of things is not substantial or anything like that, but just goes to show that it's obviously a tool in our toolbox to reshape the portfolio if we deem it necessary.
So if we decide that, okay, in Aarhus there's a structural thing on the supply side, so secondary locations in Aarhus are not going to fly, it's only going to be the most central locations we're going to keep, then let's of course reshape it and let's redeploy the equipment in a Copenhagen unit where demand is stable and crazy as always. Similarly in Odense, if Odense structurally, if demand structurally is going to be adjusted, I'm never that kind of guy who will say that, "Oh, it's the market that's not with us." We need to do whatever we can in sales, but if the efforts turn out futile in whatever, a few months, then of course we can reshape the portfolio in Odense as well.
Deploy it in a market where it makes more sense, either in Sweden or in Copenhagen. So the operating equipment, again, playing that sort of super, super, you know, structured, bottom line focused, working capital focused, game, we can do that. It's not my favorite tool because, of course, you need to find the growth elsewhere, but it can be done fairly quickly. And this brings me to the next markets. They're also unchanged from last time. It's, it's the two major cities in Sweden and the two major cities in northern Germany. It's close to home, synergy, transport, logistics, all that, all that kind of business school related strategy stuff.
The pipeline looks meager, as you can see, and the reason for that is that, you know, if you read the newspaper, you know that, you know, the Swedish real estate market, for example, is a bit shaky at the moment. There's a lot of short-term debt that has to get refinanced. There's some companies who are not really that keen on doing more and, you know, increasing their balance sheet. That trickles down to a developer. A developer with a plot or with a building they want to reshape or build and create a new build product, that's also affecting, you know, that activity.
So it, we can definitely feel that there's, you know, just going back a year and till today, there's more hesitation for sure in a country like Sweden due to the general state of the real estate market. And looking south, you'll see a similar trend. It's not as big a news story as the Swedish real estate market is in Denmark, but the German developers are not super, you know, happy either. They have been hurt with high inflation numbers, rising construction costs, higher financing costs. So everybody is a bit hesitant as well.
We had a case in Hamburg where we had done all the negotiations and the contracts was completely done, and we were meant to go sign it, and then now it's kind of postponed until the developer gets some of their stuff together in their end, which is outside our control. So a bit frustrating. It's not that we don't have talks or potential projects in the cities, but we can definitely feel the hesitation that is kind of outside our control, and that's obviously also something that promptly triggers me to be like, "How can we control that pipeline?
Can we team up with a real estate partner that can just buy up these sorts of things so we're not reliant on a developer we don't really know?" But hesitation for sure, but we still have some good talks going on. The roadmap is unchanged. We have these value driver guidance. That is the long-term guidance. It's unchanged from the get-go, and it... this will allow you to kind of track our performance in relation to the long-term roadmap and value drivers. And these value drivers, you can really model with them if you want to. So it should give you a projection, some sort of projection on where we are going. The portfolio growth, that's the 20% compounded annual thing. That's been...
That's one of the things we've changed. So yes, let's say in 2025, if you compound 20% and it gives you a number, I'm still at that number. I'm just not doing it linearly because it's killing our working capital, doing it linearly. So I'm gonna. I'll prefer to do it in these big jumps. 1-2 new markets is still the plan, to open 1-2 new markets. This year, we probably won't, to be totally honest with you, and that's mainly due to the hesitation I mentioned earlier. We've seen projects that were, you know, where the racehorse was in the box, and then the race was canceled.
It's, it's there is some hesitation in these sorts of markets and in the real estate sector right now, and I guess it's prudent and it's you know due diligence and all that thing. So it is what it is. We still wanna keep at it and do this in the longer run, but we probably won't, there probably won't be a new market in 2023. The unit metrics are the same one. This is the bracket of the revenue. You have the EBITDA margin above, you have the ROIC above a bracket, and the vacancy below a bracket. Tracking performance, you can see that we are a bit off at the moment, which is frustrating.
The unit growth, I put that in yellow, and that's because, you know, it's not the linear thing, but it's gonna be... it, I think will be, you know, on the, on the, in the, in the large scheme of things, it's gonna be a more profitable way to do these big jumps. So it's, it's yellow. The revenue per unit is within the bracket, and the other ones are failing the guided targets. And again, it's, it's that all this has my core focus. I'm less focused on new markets too, than I am on the bottom line metrics at the moment. That is my-- that's all I'm interested in at, at, at, for the time being.
I'm not, I'm not kind of jumping into something, if I don't feel comfortable that we have the foundation and if we're not totally right that that asset is gonna be the right one, we're not gonna feel pressured to do a market. We're not gonna feel pressured to take an asset that we end up not liking because we feel pressured to be, to kind of, deliver on a linear track. We're gonna, we're gonna be careful and on our criteria and make sure we get the right products in. So more focused on improving on the fundamentals, less focused on jumping into new markets because I feel like I have a gun to my head. So that was it, for now. Happily take your questions.
Thank you for listening.
Perfect. Thank you for that, Patrick. Let's jump directly into the questions. So, the first question here: It seems you have a lot of challenges filling your apartments in Odense and especially Aarhus. If hiring a new coordinator for these cities does not help, do you consider downscaling or even closing your activities in the cities?
Excellent question. I kind of feel like I kind of answered it, you know, but when we went through the, the unit thing, but I'll be totally frank and, yes, if it doesn't, if we can't... We have been doing a lot of good stuff, me and the local reps in, and the local, the existing team. We have gotten some new clients, good local clients in, big, very big, local industries, mainly in Odense. But of course, we need, that's not enough, you know, we need, we need, we need more of that sort of stuff.
We've jumped into the local football club and kind of because they have a very strong kind of business network as well, that we will tap into and create the relationship needed. But the answer is that yes, if it doesn't work out with the sales rep or with all the efforts that we've kind of done, we will definitely look at rescaling. We're not gonna close any market down because it's strategically a good idea to be present in multiple markets. There are clients who has a demand across different cities, so that gives us kind of an edge that we can deliver in several locations.
But of course, the supply has to fit the demand, and if we can't get demand up, then we need to look at the supply, and we need to look at the cost base. That's for sure. Coming out of the thing I said just before, let's then take the operating assets and put them into some units in the markets where stuff is totally stable and growing, instead of chasing, you know, demand around that that might not be there.
So, yeah, it's not, you know, and when I looked at my growth plan, it's not my favorite tool to use or the ideal scenario, because you have to find the growth elsewhere just to keep you at par, you know. But it's a tool we can use, and we will use it if we fail on the commercial stuff, for sure.
The next question: With the projects you are looking at in Hamburg and the recent agreement with AG Gruppen, does these bigger projects change anything in the business, the operations, or the technology that you need?
Ah, fantastic great question! It, it kind of does, because, these sorts of projects we've been doing now, or, one, the one we have signed and the ones we're looking at, it'll, it will allow us to do, more short-term stuff than we've been doing in the past. We can't, we've not really tapped into leisure at all. And these sorts of projects allows us to do that. And then you say, "Okay, what are you talking about leisure?" But our core strength is, of course, the corporate housing thing, and that's gonna continue, totally unchanged.
But if you, those of you who've been following for a while knows that we have some, we have a seasonality, and we, we have this super illogical seasonality pattern that kind of goes down in July, and, and in the end of June, and then it kind of picks up in the, in, in the early, in early August. But from like end of June to, like, early August, we have a, a bit of a slump, and it's not, it's just simple, rotations. And, you know, people are on holiday. Who wants to go to a new country, you know, when you can be in Mallorca, what do I know?
So they're like, "Yeah, after the holidays, we'll come back, and we're looking forward to it." Having this sort of asset, allowing us to do short-term stuff, we could do tourism in July and then kind of offset our seasonality pattern in a period of the year that is normally a bit boring. So I hope that that answered the how it'll change the operations a bit. We have the infrastructure in place with the in-house linen laundry, we have the warehouse stuff. We have right now a ton of cars driving around, servicing all the properties we're in, in different cities and in different countries and all that thing.
So from an operational angle, having 94 units under one roof, you know, in the basement, take the elevator down, get all your linen and all your cleaning stuff out, go to unit Y, check it, you know, make sure. So quality and operational efficiency is gonna improve in these sorts of projects. These big, bold projects under one roof will be way more efficient than we're used to. So we can deliver better quality, in my opinion, and we can still stay super competitive, because of how we normally do stuff with the tech ability. And then coming to that part of the question on the technology, we need to create a bit more of a booking engine. We're working on doing instant bookings.
Right now, we are kind of having it behind a wall of, yeah, you can send the request, and then we have the sales team kind of screening clients. It's not that everybody's welcome, that's not the point. The point is that we don't want, you know, from the website, we don't want someone to request an apartment three months into the future, because then it increases the risk of that apartment not being rented out in the interim period. You have to find the client then, who can go into that interim period in a perfect sense. So that's why we don't have instant booking at the moment. We need that added layer of kind of a person who is looking at the booking. Is the dates right?
If they're right, we can have it done in a jiffy, but if it's not right, we kind of work with the client and say, "Listen, we have another apartment that's better for you." But with this product, we'll need an instant booking platform. People can basically go in, they can order, you know, 30 days, 45 days, 20 days. It's all-- it'll become a matter of yielding. It's called revenue management, you know. Pricing is going to be different from different times of the year. It's going to be way more dynamic the way we price stuff. When the demand is super high, pricing is going to go up. So that will should create some very good months and some very profitable months.
When demand is kind of more boring, we'll have that long-stay corporate segment to kind of sustain, you know, supply, sorry, demand across the year. So we need, technology-wise, an instant booking engine. We'll also probably need some channel management, as it's called. If you want to be visible , we have our platform, that's great, but if maybe you want to be in different platforms as well to up your traffic game. So that's basically it. Other than that, we can move with, it's business as usual.
Perfect. The next question: You already now have a very low rate of empty apartments in Copenhagen, and the AG Gruppen expansion will only happen in several years. Do you plan to expand your portfolio with more apartments in smaller chunks in the meantime, or will you fully transition to fewer but larger expansions with long delivery times?
Not completely. And again, it's kind of about constantly looking at your portfolio, and you are right. You know, we have one available unit in Copenhagen and something like that, so that instantly just add more, you know, and I get it. I'm more into that where we can if we are in a lot of properties where we're not kind of filling everything out, and we can grow into these fairly easily. But you have to consider of do you want to open up a small number of units in a property somewhere where you don't have activity yet? There is a lot of logistics and a lot of transportation and a lot of handheld stuff that we still need to deliver.
And that's why I'm kind of reluctant on doing... I'm getting-- I have these talks, like, once a week with real estate people, and every time I'm like, "Well, you know, we would really like, you know, bigger chunks." That being said, you know, there is opportunities, of course, and there is-- we're not going to just shut our doors and, "No, no, we're not." You know, if the opportunities arise, and we have talks, and there's a project, there is a project, I'm not going to tell you where, but whatever, it's in Copenhagen, it's in a kind of sub-part location. It's a smaller, it's a 20-unit thing, potentially bigger.
And I'm kind of like, "you know, the location's not fantastic." So it's also a matter of do you wanna, do you wanna-- just because you want to deliver the units and the units and the units, do you wanna do, you know, stupid growth, to be honest? You know, do you want to take in units that, in locations that you know is probably not going to be perfect for you in the long run, just to-- because you are eager to, to up your unit number, or do you do it more wisely? So yeah, the long delivery times is the, is the trade-off. But we are looking to do more in the interim period and hopefully can find some good-- a good little thing, you know, happening next year that's kind of similar, not necessarily in the, in the size.
A 94-unit jump is also kind of big, and it's not all locations that can take that level of supply. But whatever, 30 units would also be work fantastically well. That's fairly the same, also fairly efficient. So we're not going to close the doors, and we're not going to say no to obvious opportunities, but we are going to say no to things that we know from the bottom of our kind of minds and hearts that won't work in the long run, just because we feel pressured to do that, you know, if it makes sense.
Yeah, it does. And then there's a question more here: With the new deal with AG Gruppen, the EBITDA margin expected from this is around 15%-22%. Do you have other deals in the pipeline of this size, and what do you expect the ramp-up time to be before fully operational?
Yeah, great question. We don't have more, unfortunately, just lying around. It's the psychology of that, this sort of thing is that it's... There's this bandwagon effect, so, you know, when we've done this, we like this, we've been totally focused on this deal... because, you know, after a certain point of time when you kind of bid and there's some iterations on, you have to up your whatever, rent or something like that, there's some negotiations happening before you get into the negotiations room. And from a psychological angle, you kind of, you're not really attached to the project until it's like, "Okay, now we go into final negotiations. Now we start talking details." And we've done that since, you know, November.
I would say that the point of no return for me was somewhere in March, where I was like, "Okay, now I really want to do it, and right now I really like it, so let's get the details right." So we've been approached on projects in Valby, in this Åbyhøj, like, the far outskirts of the city. We've been approached in the northwest of Copenhagen, northwest, in Vejle, 2,400. We've been approached in South Harbor. And, you know, we were committed to get this right, this one with A, because this was, in my opinion, the best one. And again, you know, I feel like the other projects had some flaws, different flaws. Some were location driven, some were more project driven.
It's a constant balance. You're constantly looking, but... and all of a sudden, a good opportunity will arise. It's the same thing in the new markets. Some stuff you like, and then it kind of doesn't pan out. And then you have to just keep at it, and it's a tricky one. So no, I don't have it. I don't have another one lying around on the shelf for you, like a little surprise in the short term, but we are looking to do more. And talking about the EBITDA levels and that sort of thing, it's again, everything's under the same roof, so you know, all the unit kind of the cost per unit is gonna be lower than what we're used to.
And we have that yielding option that we don't really have on our core product. We have that option to do short stays in July, where we're normally just, "Okay, we know July kind of sucks, so we just have to wait until August." And of course, we are doing all sorts of things in June and May to kind of ramp up July, but we know it's structurally just kind of slow. So in this setting, you can yield, you can do revenue management, you can do more dynamic pricing. Your average stays is gonna be shorter than the ones we're used to, but your kind of prices per day is also gonna go up.
So that's why we expect that sort of thing to happen.
And then the-
I feel like I've missed some part of the question.
Yeah, of that question.
Yeah.
Yeah, it was about the ramp-up time before it's fully operational.
That's true. Yeah, that's true. That's true. In this, I'm not gonna. Again, please forgive me. Trust me that, you know, I think we did a good deal. I'm not gonna, I'm not going into details because, you know, the details are kind of affecting other potential negotiations. But we have, as I kind of mentioned, we have this rent-free period, which is a fantastic tool because from a developer's angle or from the for the real estate value, the rent-free period is, it does not have a significant impact on that, as long as you know that, you know, okay, you're gonna get a good, a good strong revenue when that period kind of ends. So that gives us six months of starting operations and starting to rent stuff out.
Sorry, now I kind of said it anyway, idiot. Okay, it's six months. But, and it's fairly normal, it's not, I don't feel like it's out of the ordinary, but it's a six-month period, and it kind of gives us the time to, to, ramp up, sales and, make sure that there's not any mistakes with the building that's gonna upset the clients. So if there's, like, low water pressure, we can fix it without having a full house and full and all that thing. So we calculate on a ramp-up period that is fairly linear on, that sort of thing.
So we hope to launch with, let's say, 20% or 15%, I can't remember—actually, it's 0% in month one, then it goes up to 20% in month two, then it goes up to 40%, and then dum, dum, up, and then at some point you reach full capacity. And then, of course, your occupancy levels are gonna be different than if you just do long, long stay. So you are gonna have higher occupancy on a product like that than you would have on the core concept, but the pricing is equally higher. So that's kind of the gist of that. The ramp-up period, we expect to utilize the full 6 months that we've kind of negotiated on. That's why we needed that one.
But basically, we won't have any big rent commitment in that period, because it's rent-free. So and it's, again, for me, not burning cash, not having big working capital shifts from reporting to reporting. We're gonna get super busy in the quarter when that property launches. Everybody's gonna be on deck. We're also gonna hire some different profiles to manage that and those sort of things. But we can plan it fairly efficiently because we know, you know, in this date, 94 units are gonna pop up. So we don't have to guess, and we don't have to chase, and we don't have to say, "Maybe 10 will come tomorrow, and maybe 20 will come in three months." We know, and that's what makes this an extremely fascinating way to evolve Movinn. So yeah.
Perfect. Then, there's a follow-up question on the AG Gruppen deal: Do you expect other deals from AG Gruppen like this project, or is it a one-time collaboration?
We've had a really good process with AG Gruppen. They're extremely pro, and it's very impressive, the setup they have. And I'm just being me. You know, I'm kind of a 10% street lad and 90% trying to be in a suit. So some people like that and some people don't, and our chemistry with AG Gruppen has been extremely good so far. For them, we are an interesting partner because when you're doing these big developments like AG Gruppen are doing, they, you know, let's say a 20,000 square meter development in some plot somewhere. They, the municipality and the, and, you know, regulation, how much parking space do you need? How much free area do you need? That sort of thing.
We can be a pretty good partner in that sense because regulation-wise, there's some, like, noise levels you have to adhere to that can kind of be taken a bit down if you do commercial, a commercial part of your build. And from the municipality's angle, mixed-use schemes is extremely interesting. Everybody's talking about mixed-use developments when you're doing big stuff. So forget about, like, one property of 2,000 square meters, but if you have a massive plot of, you know, the Sydhavnen or, you know, the Nordhavnen, these sorts of places where there's a lot of square meters going up, then you want some leisure, you want some cafés, you want some offices, you want residential.
You don't want it to look like, you know, the early stage of Ørestad, where it's just like residential apartments as far as the eye can see. You want this mixed-use scheme. And we fit in very well in that because in these big projects, there'll always be this little, "Okay, here is gonna be something that we don't really know about." And I'm sure AG Gruppen has other projects in the pipeline. I don't know yet, and let's kind of get this working very well. But I can say that the chemistry is really good. AG Gruppen is extremely professional, and it's very impressive, the setup they have. So hopefully we can, we can develop this into a long-term partnership. There's no other kind of specific projects lying around, but who knows? If everything pans out, then why not, you know?
Why not just do a partnership, indefinitely, in theory?
Perfect. Then, can you provide some insights into the smaller categories, Collective Yoyo and co-living? They experienced the highest growth. How do you see those categories moving forward?
I see, I see co-living growing at lower rates than they are now. And the reason for that is that we really, we want to focus on the core, and we want to. The co-living apartments, it's a fantastic concept. It's being hailed around Europe as, you know, a massive contributor to solving housing crisis. And you're battling loneliness from these young international people that are here for different reasons. If they're here for six months, forget about kind of getting Danish friends, you know. All of us, and I don't know, I guess there's some Danes listening in, forget this.
You know, we have our own little, you know, I have to pick up my kids, and then I have to go home, and I don't even have time for my own friends, so why would I make time for one who's in the country for six months? So there's a lot of good stories to tell, and it's super popular. Everybody loves it. But it's the furnishing demand is crazy. So now, you know, we have lower-hanging fruits and just getting the core concept back on track and back in normal levels is way more valuable for me than to do, like, a super aggressive growth jump in a concept like co-living.
Much rather just have it working super efficiently. They also have, like, vacancy and available rooms from time to time. I think that more or less all the rooms are rented out at the moment, so that's great. But you know, just making sure the fundamentals are right before jumping into more stupid stuff, more or less. We will be adding, but not as aggressively as we did last year or the year before. And Collective Yoyo, to be totally honest, it's a very good product. The business model is ridiculous.
You know, we have, we had a couple of clients in working in Femern who were struggling to find serviced housing and but they then found just some regular apartments, and we could deliver the furniture, and they're paying us. You know, looking at it from just, like, a financial angle, they're paying us a pretty good kind of monthly rent for that. And unfortunately, they're not gonna, it's not gonna be a long-term contract for us. And it kind of comes back to the other thing. Instead of running around and ramping up co-living, or sorry, Yoyo furniture rentals, we need to in the short, short term, we need to focus on our core. So I see Collective Yoyo plateauing or going down in the short term.
It is something that will be ramped up for sure, because it's a good way of managing our inventory, so we don't have too much on stock. It can be out and working. But right now we simply don't have all the technology resources. We spend right now is going into to the core business and honing that, making that fantastic. We don't have the big kind of Yoyo launch. All the kind of people we have on staff is running around on the service staff, is running around making sure that the existing stuff is working well. I think I mentioned this in the report as well. We are updating our access system. It's taking a bit longer than we want it to be. We have this in-house developed thing.
We've made a upgrade to it, which is out of this world, but it's, it takes some manpower. So all the manpower we kind of have available at the moment is being focused around the core business and the existing business. So we don't spend too much time driving to Femern, you know, furnishing apartments and that sort of thing.... Yeah, so that's the honest answer, yeah.
Perfect. Then there's a question about the Swedish krona: Are you in Sweden sensitive to changes in Swedish krona, or are both your revenue and all costs in Sweden derived in Swedish krona, so that fluctuations in currency has no impact on the Swedish margins? Or can we expect a positive effect to margins in Sweden if Swedish krona rises again?
Yeah, in Danish numbers, you know, we do the - it's everything is in Sweden. Everything is in Swedish krona. Everything is local. So in that sense, and, you know, the wages and all that sort of stuff is in the Swedish krona, so in that sense, there's no discrepancy. We don't do any transfer pricing this year. So there's not - we're not gonna kinda - so there's no currency effect on that. That being said, you know, the investments, the original investments made in Sweden, in whatever, 2021, 2022, 2022, they were made at a higher krona value than Swedish krona value than it is now. So there's this currency loss.
It's not a loss because it's not like we're trading the currency or things like that, but in the end of the day, we have a Swedish bank account, and it has a number in it, and when we then transform that into Danish krona and delivers reports, it has a negative impact. But it doesn't have any kind of currency impact as such, because there's no trading across the countries, and everything is held in Swedish kronas. It's just because the Swedish bank account today is in Danish krona worse than it was a year ago.
Yeah. Perfect. Then the last question here is a bit of a practical question: How do you handle smoking? I can imagine that many people would not like to move into furniture that some others have been smoking in, which must be a challenge with short-term rentals.
You're right. It's an industry, it's an industry peer who's answered that question. I can imagine. No, it's super rare that we have people doing it, you know. It says everywhere, "Don't smoke," you know, "You'll be fined. It's not allowed." But you'll still have people doing it. And unfortunately, of course, we are not perfect, and we have the cleaners on all the time there, and they kind of, "Ah, there's been... They're smoking in the apartment." And then we'll tell them, "Don't smoke," you know, and we'll do all sorts of odor management and vinegar spray and that sort of thing. But it's...
Of course, sometimes when time is scarce between bookings, we've actually had one recently, so that's why it's kind of fresh in my memory. Other than that, it's not a massive problem for us. There is this product out there. I've seen it. It's fairly clever. It's an IoT product where you can put a sensor in the apartment, and then you can detect if people are smoking in real time, and then you can really act on it or do whatever you want to do. It's not a big issue. If it were a big issue, we would probably figure out a way to create an IoT tool that could do a similar thing.
Some measure if there's smoking or dampness or anything like that in the unit, and then report it in real time, so we could really set in while the person smoking is smoking. So, and before a new person comes into an apartment that has a smoky smell to it. So it's we don't have a perfect system in place as it is, but it's luckily fairly rare, I would say, in my opinion. It's very rare that we hear about it, but we did have a recent case, so in that sense, it was a good question and very, very, what do you call it? Aktuelt.
Perfect. That was it for all the questions, so before we end this webcast, I will hand over the mic for you to end with some final remarks.
Final remarks. No, you know, it's not... Denmark has not been as expected. There's a lot of... We know exactly where to set in. It's just, it just takes some time, and we know what the portfolio can do, so we just need to ramp that up to normal stuff, and then happy days. We are super strong. The mode is strong. Our competitive ability is strong. As long as that's the case, I think we'll be okay. Other than that, we will take the measures needed. So thank you so much for listening in. See you next quarter. Thank you for the questions. Always a pleasure. Bye.