Welcome to the Ambea Q2, 2022 Results. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Just to remind you, this session is being recorded. Today, I'm pleased to present Mark Jensen, the CEO. Please begin your meeting.
Good morning, everyone, and welcome to Ambea's Q2, 2022 report presentation. Speaking is Mark Jensen, CEO of Ambea, and presenting with me today is Benno Eliasson, CFO. Last quarter, we provided an overview of Vardaga segments and the Swedish elderly care business. Today, I will give an overview of our updated strategy before we present an overview of the Q2. Benno will then describe the development of the financials for the group and for the different segments in Ambea. After that, I will summarize the quarter and compare to our financial targets before we open up for questions. I would like to begin with a brief overview of Ambea. Ambea is the leading Scandinavian care provider. We have about 26,000 employees across Sweden, Norway, and Denmark, and revenues of more than SEK 12 billion.
We offer a full range of services within elderly care, disability care, psychosocial support, and staffing solutions. We have more than 350 municipalities as our clients, and we are an important partner in solving challenges in the welfare system. Nytida, Vardaga, and Klara all operate in Sweden, where Nytida offers social care, Vardaga provides elderly care, and Klara offers various staffing solutions. Stendi in Norway and Altiden in Denmark both primarily operate within social care. On the next slides, we will turn to a brief presentation of Ambea's updated strategy. Ambea was listed at the Nasdaq Stockholm Stock Exchange in March 2017, and a lot has happened since then. The company has almost doubled its turnover, and today we are present in three countries.
We have invested in our business and employees and developed clear concepts and frameworks, which makes it possible to deliver an individual, qualitative, and cost-effective care. The need for care is expected to increase in the coming years due to an aging and growing population. Further, the care sector was significantly impacted by the pandemic, which gave us new learnings and areas to consider. All in all, this made it a very good time to evaluate and update our strategy. The updated strategy is based on the client's needs and was co-created in a solid process with 50 managers and specialists from our three markets. The work was conducted over six months and took base in our existing strategic framework, where we have evaluated the past, looked at the present, and discussed new future opportunities, both from the inside and from the outside, and all driven by insights and data.
Based on this, we have prioritized four strategic areas and want to strengthen our focus on sustainability. The strong internal commitment has been important to use all the knowledge that exists within the organization and to cater for a smooth implementation and effective strategy execution. The updated strategy is primarily a map for internal alignment and clarity as it sets out the direction and priorities, which is important for the organization. We launched the strategy internally in May after first being approved by Ambea's board of directors. The strategy will form the basis of our priorities and be an integrated part of our planning and execution across all of our operations. We call it Strategy for Future-Proof Care. Let's have a look at how the parts fit together in what we call our world. Our world provides a stable platform for all Ambea's employees.
It consists of our vision: We make the world a better place one person at a time. Our mission: Together we create a safe, secure, and sustainable care for everyone. Our values: Respect, simplicity, responsibility, and knowledge. Our world is an important foundation for the organization. It reminds us of why our company exists, the core of our mission, and how we should treat each other. Not least, our world provides practical guidance in our everyday life, something that every employee can relate to, and together with clear routines, processes, and concepts, ensure we deliver upon our promises and make the right priorities, also in challenging situations. With the updated strategy, we have renewed our world and highlight a number of important external factors that affect us and create opportunities.
The cloud contains three challenges in the society that are creating the conditions for Ambea and the care sector over the coming five to 10 years. These are largely due to demographic changes that will put pressure on municipalities across Scandinavia. These are also challenges that create opportunities for Ambea to offer assistance and ease the burden for society. We refer to those trends as the welfare challenge. We have also added our four updated strategic focus areas in the flag to clarify our priorities. Together, we get a simple and clear map that will guide us forward and help us to reach our goals and realize our vision: We make the world a better place one person at a time. Now let's look briefly at our four strategic focus areas as shown on the flag on this slide.
The updated strategy has evolved naturally from the needs of our clients. The strategy clarifies our position that we want to be the leading care company in the markets which we operate. That means that we will continue to invest in development and profitable growth in the segments where we are strong while excluding areas with lower development potential such as elderly care in Norway or home care in Denmark. Ambea has identified four strategic focus areas. First, we offer care services with our customers in focus. Ambea's previous strategy was primarily focused on the development of residential care. The updated strategy will make us more adaptable by also enabling the inclusion of related service areas when they strengthen our business and operations. That will better enable Ambea to meet our customers where they are and thereby develop our business and create added value.
Examples of this include Klara's focus on student health services through the acquisition of SkolPool earlier this year, and Altiden's acquisition of SK Reflekt, which provides an entry into the operational area of social services in Denmark. Second, we deliver quality through competence. The success of our company depends on our 26,000 employees. By investing in skills development, language development, and leadership, we are growing our levels of knowledge, which in turn will lead to higher quality and improve customer satisfaction and staff retention. In this area, our training organization, Lära, will play a key role in all markets for building and developing skills and competence within the organization. Thirdly, we make time for care. Our time is one of the most important things we can give to our care receivers. Processes and tools will support our employees so that everyone feels confident and spend time on the right things.
Well-functioning systems and procedures are also a prerequisite for systematic quality control and continuous learning. That means that we'll be working to reduce administration and have systems that are modern, mobile, and meet the needs of our employees. Fourth, we accelerate innovation and welfare technology. Technology is evolving fast, and expectations from care receivers, loved ones, and clients are increasing. Welfare technology can contribute to better care and a better work environment for employees. It can also improve efficiency. We will work with our own initiatives, seek collaborations, and be an innovative care provider in order to accelerate the development and use of welfare technology in the care sector. Innovation will also help society overcome the challenge of a growing shortage of care workers. Last but not least, we provide sustainable care for everyone.
In the updated strategy, sustainability has been given a clear role, and we will make efforts in all areas of sustainability. Briefly summarized, Ambea should be a responsible provider of both care and care jobs, adapt our operations to climate change, and become fossil-free. This in a context with robust governance and a high level of trust, which generates clear value for our stakeholders and for society. With the updated strategy, we are ready for the next stage of Ambea's development. The need for care is expected to rise sharply in the coming years, and we are ready to help society overcome the challenge. You can read more about our strategy, focus areas, and sustainability work in the quarterly report. Now over to Vardaga and the latest National Care Receiver Survey. The care receivers' experience of Ambea is an important measure of how well we have succeeded.
Most of all, it is a strong foundation for our quality improvement processes. External care receiver surveys are also conducted in Norway and Denmark, but less frequently and not as comprehensively as in Sweden. In addition to the external care receiver surveys, such as the Swedish National Board of Health and Welfare's annual survey regarding elderly care or the Swedish Association of Local Authorities and Regions Survey within social care, at Ambea, we also conduct our own care receiver surveys to achieve frequent and comparable results in all countries. Within elderly care in Vardaga, we do the most measurements with a total of three surveys per year. During the spring, the Swedish National Board of Health and Welfare carried out a survey, "What do the elderly think about elderly care?" In this year's survey, general satisfaction decreases somewhat in nursing homes on a national level.
This also counts for Vardaga. Vardaga continues to be the largest private care provider with the most satisfied care receivers. At seven of Vardaga's nursing homes, responses were 100% positive to the questions of overall satisfaction and respect and dignity, which means that all respondents are fully satisfied with the facility and how they're met and treated by employees. A fantastic result. Another highlight from the survey is our home care service that received top marks. Positive responses on overall satisfaction reached 90% and landed well above the average in the municipalities where we offer home care. We are grateful and proud of the trust we receive from our home care customers as a result of the dedicated work Vardaga's home care team carry out, and we will continue to work for high customer satisfaction throughout our business. Now let's look at growth.
At the start of the pandemic, overall group revenue was impacted negatively as occupancy dropped, especially within elderly care in Sweden. Since Q2, 2021, the trend has reversed, and we see an increase in the number of care receivers, higher occupancy rates, and increased revenue quarter- on- quarter. Over the last five quarters, the growth has been increasing substantially and amounted to 10% in the Q2 of 2022. The growth rate was slightly lower in Q2 compared to Q1 , but on top of an also growing Q2 in 2021. We maintain a high commercial focus to fill vacancies in existing facilities and look positively at our overall growth potential in the coming quarters. On the next slide, we will have a look at organic growth.
Since the beginning of 2020, we have added almost 1,200 new beds or placements, and as partners to the municipalities, we will continue the work to further develop good access to new care homes to meet the increasing demand. In Q2 , the pipeline is again growing as we have signed new contracts, so we now have almost 1,500 new beds in pipeline, most of them in Sweden and some in Denmark. We still see an ongoing occupancy improvement within Vardaga, and Nytida opened a new unit with a total of six beds in Gothenburg. More openings are planned years ago. Both Vardaga and Nytida won several tenders, which is an acknowledgment of our good quality concept. Vardaga won two new management contracts with a net volume of SEK 110 million, and Nytida won four contracts worth SEK 25 million.
As the demographic change requires construction of more nursing homes and care facilities, we continue to actively seek opportunities for organic growth within elderly care in Sweden and Denmark and within social care in all three markets. Let's look at acquisitions. In the Q2 of 2022, we made three acquisitions. Two acquisitions in May and one acquisition in June. Nytida acquired Alternatus Familia, which provides family care in Sweden. Revenue for the financial year 2020, 2021 was SEK 24 million. The second acquisition was made by Klara that acquired SkolPool. SkolPool is market leader in student health services with care provider responsibility. Through the acquisition, the two leading actors merged into one operation under Klara. The revenue of SkolPool during the financial year 2020, 2021 amounted to SEK 68 million. Both transactions were closed on May 2nd, 2022.
In the latest and third acquisition, Altiden acquired two companies, SK Reflekt and Huset Reflekt. SK Reflekt provides consulting within social services for children, adults, and families. The company also has training apartments. Huset Reflekt provides supported living facilities for children and youth with special needs. The 2021 revenue for SK Reflekt was DKK 60 million and DKK 10 million for Huset Reflekt. The acquisitions were closed on June 30th, 2022. If we look into the future, Ambea has a strong cash generation that gives us the opportunity to seek for bolt-on acquisitions, which we see as an essential part of our strategy. We are active in all our markets evaluating potential opportunities for value creation and continue to see M&A as a key driver of growth. Now to the highlights of the Q2.
In local currency, all segments apart from Stendi deliver net revenue growth compared to last year. In total, sales grew by 10% compared to Q2 last year, primarily driven by organic growth, but also M&A activities. Adjusted EBIT amounted to SEK 229 million, an increase of 57% versus last year. The increase was mainly driven by Vardaga's positive occupancy trend and one-off effects. Our free cash flow improved significantly and amounts to SEK 540 million. The improvement of cash flow is mainly due to the increased financial result and sale of real estate amounting to SEK 160 million in the Q2. The positive occupancy development within Vardaga has continued month-on-month throughout the quarter. We will continue our increased commercial investments behind relevant information and activities within Vardaga to reach future care receivers and their relatives.
We will also continue to seek for M&A opportunities and aim to maintain the current pace of quality acquisitions during the H2 of the year. The divestment of our elderly care business in Norway is ongoing and will improve focus and strengthen profitability in Norway going forward. Now over to you, Benno, for a presentation of the financial summary.
Thank you, Mark. The strong growth numbers we saw last quarter continues +10% year-on-year and 2% versus last quarter. Of the 10% in this quarter, 6% was organic growth, 3% came from acquisitions, and 1% came from currency effects. If we look into how the different business areas have affected the group numbers, we can see that like in previous quarter, all business areas contributed to the growth in this quarter. Vardaga increased 16% versus last year. We again had increased occupancy throughout the quarter. Nytida is up 5% driven by acquisitions and increased contracts management portfolio. Stendi showed growth in SEK, but had a negative growth in local currency by 3% as we continue to adjust our capacity versus last year.
Altiden is up 36% as an effect from the acquisition of EKKOfonden, a good occupancy development in Altiden's own managed nursing home, Prästholmen, which opened one year ago, as well as strong growth with new contracts within elderly care segment. Last, Klara increased 33% with growth in all sub-segments and due to the acquisition of SkolPool. EBITDA. This slide shows how the different business area have affected the EBITDA of the group. We can see in Vardaga that we have improved occupancy and the operational improvements have generated a higher profitability than previous year. Vardaga also received a retroactive reimbursement of pension funds of SEK 23 million in the quarter. In Nytida, we have lower occupancy in some of our own managed facilities.
The EBITDA in both Vardaga and Nytida were negatively affected by higher cost for sick leave, food, and energy. Stendi was still affected by high cost for sick leave and energy, but we were able to match last year's numbers. In Altiden, we saw higher cost for close down of our own home care business, high cost for integration for the EKKOfonden acquisition, and higher startup costs for contracts within elderly care. Outside the business area, we included some one-off effects in order not to affect the comparability of the segment numbers. These are, first, gains to the sale of real estate of SEK 44 million. Last year, we also reported a real estate in the Q2, but only of SEK 9 million. The final purchase price set for the Aleris acquisition in Älvdalen with a positive P&L effect of SEK 39 million.
Third, a partly divestment of the elderly care business in Norway with a negative effect of -SEK 13 million. All in all, EBITDA grew by 57% versus Q2 last year. Operating cash flow, excluding IFRS 16, increased by 42% in line with the strong earnings growth and the real estate sale of SEK 160 million. This puts the Rolling Twelve operating cash flow almost at 100% of EBITDA. Seen in a longer perspective, the cash flow is very strong, and this gives Ambea good opportunities for future growth. This slide shows the way from the Rolling Twelve reported EBITDA of SEK 837 million to the SEK 769 million in EBITDA, excluding IFRS 16, down to the free cash flow post-tax.
We can see that, for example, we have paid SEK 124 million in taxes, SEK 71 million in interest, and invested SEK 102 million in fixed assets. We can also see that we have gained SEK 160 million from the sale of real estate and had a negative effect from working capital by SEK 133 million. All in all, we have generated SEK 540 million in free cash flow post-tax based on the old accounting standard. In the next slide, we can see how we have used the generated SEK 540 million. SEK 109 million was distributed to our shareholders as dividend, SEK 205 million was spent on the five acquisitions we made the last four quarters, and the rest reduced our interest-bearing debts.
The increased EBITDA in combination with a strong quality cash flow has affected the leverage rate, ratio positively, and we are now down from 3.3 last quarter to 2.8 x. This is excluding IFRS 16. Turning to the different business areas. We start with Nytida. Sales increased by 5%, mainly driven by acquisitions and growth in our own contract portfolio. Our own managed homes show slightly lower occupancy than last year. We opened one new assisted living facility with six beds in a quarter and have the last four quarters opened nine new units with a total of 54 beds. Nytida won four new contracts in the quarter, net of SEK 25 million in contract management. EBITDA decreased due to lower occupancy rates in some units and higher costs for sick leave, food, fuel and energy.
This is the Q1 with no government reimbursement for sick leave costs, and that affects the comparison versus Q1 and last year. EBITDA in the quarter landed at 10.6%, and Rolling Twelve EBITDA is still at high 13.8. Vardaga. In Vardaga, net sales increased by 16% year-on-year and by 4% versus last quarter. Occupancy in mature units, which now also includes units started 2019 and 2020, were in the Q2 higher than last year and shows a month-on-month growing trend throughout the quarter. Own managed portfolio kept growing with high pace, now with 23% increase. In contract management, Vardaga won two new contracts, net of SEK 125 million during the Q2, and this is for startup next year.
EBITDA increased with 176% to SEK 69 million, mainly driven by high occupancy. We had also startup of three large units in Q1, which led to higher costs in Q2. EBITDA was positively affected by a one-off effect of SEK 23 million on retroactive repayment of pension payments, but negatively affected by higher sick leave costs as well as higher costs for fuel and for food and energy. We have still around 10 nursing homes that we not yet have opened up for care receivers. We evaluate the local market very carefully and are ready to open most of them within a short period of time. A few of these homes are now rented out on short-term contracts to municipalities to house refugees from Ukraine or as replacement accommodation for municipality care homes being renovated.
To further improve occupancy, we continue to invest in commercial activities based on local needs and opportunities. This work already delivered good results in terms of increased occupancy rates. Stendi. Net sales increased by 1% in SEK, but decreased by 3% in local currency. We saw rather stable demand from last quarter, but compared to last year, we have reduced the capacity in our own management portfolio. One unit in elderly care was returned back to Oslo municipality during the Q2, and we have closed an agreement regarding divestment of another elderly care home effective from September, 1st. EBITDA was stable compared to last year. EBITDA was negatively affected by lower occupancy, slightly higher sick leave rates, as well as higher costs for food and energy. Cost reductions from the ongoing program have to a limited extent affected EBITDA positively.
We are working with different profit improvement measures, both to further adapt our capacity to the demand in the market and other initiatives such as right manning on an entity level, renegotiation of contracts, and relocation of units. This work has been ongoing since Q4 last year, and the effects of the improvement measures will be shown gradually from the H2 this year. EBITDA Rolling Twelve was still at 3.6%. Altiden. Net sales grew by 36% and was affected positively by the acquisition of EKKOfonden, start-up of new contracts, as well as increased occupancy at our own managed nursing home, and on the negative side, our exit of home care contracts. Profitability-wise, the Q2 is the weakest in Denmark. A majority of all bank holidays are in Q2 with much higher staffing costs than other quarters.
This year, however, the Q2 was even weaker than normal. EBITDA was down SEK 14 million to -SEK 18 million. We saw higher costs related to the closure of the home care business, as well as higher costs for start-up of new contracts and cost for integration of the EKKOfonden organization with the old, existing Altiden organization. EBITDA Rolling Twelve is now at low 1%. The final purchase price for EKKOfonden acquisition was set in the quarter, and the positive P&L effect of SEK 39 million is not included in these Altiden numbers, but are reported only on group level to enhance comparability of Altiden's numbers over time. At the very last day of the quarter, Altiden acquired two legal entities within social care.
With that acquisition, we are strengthening our position within social care. To conclude Altiden, it was a disappointing quarter in Denmark, but we expect stronger profitability in the H2 of the year. Last, Klara. Net sales increased by 33%. We are growing our business towards external public and private operators, as well as towards our Vardaga and Nytida. The strong growth that gives us the opportunity to gain scale in more geographies, which in return provide better staff efficiency and margin improvements. In the quarter, Klara acquired SkolPool, the market leader in student health services to private and public schools. This acquisition follows strategy and helps to position Klara as a solution service provider rather than an ordinary staffing service provider. EBITA was in the quarter at 7.5% and at rolling twelve at 8%.
With that, back to you, Mark.
Thank you so much, Benno. To sum up our financial development versus our targets, our growth target is 8%-10% through a combination of acquired and organic growth. We are on track with 9% growth Rolling Twelve. In 2022, we have done five acquisitions already, and that together with strong organic growth, have improved our opportunities to fulfil our financial revenue growth target in 2022. Looking at profitability target, we have a midterm Adjusted EBITDA target of 9.5%. Since Q2, 2021, we have seen improving occupancy, which in turn will support an increased margin going forward. Also, the efforts to improve profitability in Norway is expected to positively contribute to the margin development during H2 of 2022. Finally, leverage has improved a lot in the quarter, and this will give us more potential to grow.
We expect that our solid cash conversion will continue to reduce leverage over time. Summarizing the Q2 of 2022, Ambea is showing good organic growth in the quarter and see an ongoing positive occupancy trend in our elderly care segment in Sweden. EBITDA was strong, but also driven by one-off effects. Free cash flow was at SEK 540 million, which will give us opportunities for further quality acquisitions. We have completed three acquisitions during the Q2 and five acquisitions year to date. In Norway, continued to adjust capacity and focus on social care where we have scale, high competence and growth opportunities. We have a strong pipeline for new beds and placements, which will contribute to future growth. Both Vardaga and Nytida won several new contracts in contract management as an outcome of public tenders.
The successful tender win rate is a result of the quality focus we have and which we are proud of. A consistent high quality is our license to operate and what we aim to deliver every day. Our updated strategy was launched internally as, and is now incorporated into the annual short and midterm planning processes. The strategy builds on our strengths and will guide us to capture new opportunities in areas where we want to grow and can contribute to society. In a constantly changing environment, adaptability and agility is important. At Ambea, we continue to look optimistic at the opportunities to support our clients, 350 municipalities across three countries. Together, we will follow our vision to make the world a better place one person at a time. This is only possible with a committed team of professional care workers.
Therefore, I want to send a special thank you to all our employees again this quarter. With that, I conclude our presentation and open up for questions. Operator, can we have the first question, please?
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Kristofer Liljeberg of Carnegie. Please go ahead.
Yeah, thank you. Three questions for me. First on Norway. It's now three years since you acquired Aleris Norwegian business. Nothing has improved. Of course, the pandemic has had a large negative impact and delayed everything b ut what's needed and what could you do here in the short term to have this business starting to generate any meaningful earnings? And you comment about the savings should start to impact in the H2. How confident are you in that comment given that we have seen constant delays previously? Second question related to the weakness in Denmark, surprisingly big loss for me here in the quarter. It seems that you have had some different costs here as well for integrating, closing the last part of the home care business, etc.
Is it possible to try to quantify how these different factors are impacting? Final question on the divestments you're doing in Norway, if you could quantify how much of sales has been divesting and whether you planning here and think you will continue to divest units in the near term? Thank you.
Thank you, Kristofer. I will start with answering your first questions in terms of the development in Norway. You're right. We have had quite some time to turn around the business in Norway. We have also had the well-known challenges along the road, such as the pandemic, which impacted Norway quite significantly and our business in particular, and other bumps as well. Turnarounds are never kind of a straight line, and there will be ups and downs. But the measures that we have put in place since Q4 we can see are starting to bite. What we have done is that we have adjusted capacity.
You can see that we have reduced number of beds with around 8% since Q2 last year. That means, of course, also reductions in staff. We have looked at merging some of the care facilities. We have renegotiated certain contracts, and some of these things just take time before they actually get into the P&L. We have been saying for some time that we will start to see the results of this gradually from the H2 of this year, and we hold on to that, and we feel confident that that will happen. That's my comment to the development in Norway. Also on Norway.
Can I ask you when you?
Maybe I should.
Sorry.
Sorry.
When you say that you feel confident about starting to see these effects, is this a very gradual effect or is it more of a step change in audience?
It's a gradual effect.
Okay.
It will be a gradual effect. Yeah.
Okay. Thanks.
Your third question in terms of the investments of the Elderly Care segment in Norway, which we have announced previously and which is ongoing. We have divested and handed back around half of our Elderly Care business in Norway, and we will continue to seek opportunities to also divest or hand back the remaining half of the Elderly Care segment in Norway. We feel we are progressing well in terms of exiting that segment, and we will continue to update you on that when we have news. The question on Denmark, maybe you can take that, Benno.
Yeah. As you said, Denmark is the business area where we are disappointed this quarter. We had SEK 14 million loss more than last year. We know that Q2 is challenging, but this year we had these three items that, the closing down of home care, and we have more startup costs than estimated for new contracts, and we also are now integrated EKKOfonden organization with all the Altiden. It's a little bit hard to say how much these parts are total, but we have.
I can say that maybe half of the total loss versus last year is a bit of one-off effect, and half is that we have some worse operation, you can say, or extra challenges in the quarter with extra sickness rates and these kind of things that are more ongoing, you can say. We see for the H2 of the year that this negative deviation versus last year is not going to be at this point at all. We see that we have higher profitability coming from Q3 and going forward.
In Denmark, do you expect earnings to be up year-over-year in the H2 or more flattish?
I won't give an estimate of that, but it would be much better than this quarter, I can say.
Okay. Thank you.
Our next question comes from the line of Karl-Johan Bonnevier of DNB Markets. Please go ahead.
Yes, good afternoon, or good morning, Mark and Benno. Just to continue on Kristofer's question on Denmark and your answer to that. When you look at also the quite a big change to the payment that you now got from the EKKOfonden acquisition, has that changed your view on the opportunity in Denmark or anything as you see going forward and how that can become a big profit generating unit for you?
No, I wouldn't say. We. This extra purchase price agreement we had with EKKOfonden and its owner was that it could get SEK 49 million. We now, the set was SEK 10 million, so the SEK 39 million was positive effect to the P&L. We are rather pleased with that operations that we bought. There is good profitability and there is good structure for the future in both organizations. We are looking positive to the future, even if we had a bad quarter this quarter.
More a teething problem at the early part of the integration and then getting things sorted than something that changed your view for the future?
Yeah, I would say so.
Good. Looking at Vardaga and the continued, say, growth in occupants sounds very promising. Could you give us some feel for where you now stand in the mature units compared to pre-pandemic and looking at occupancy levels?
Yeah, we can. I mean, if we look at the mature units, we are not back exactly at the level we were before the pandemic, but we are closing in. We are not far away from that level. We hope we can see the trend to continue and both in mature and also in new opened homes. Yeah, not exactly there, but close.
When you look at, say, the demand pattern you see out of the municipalities that you have most of these units in, are we now looking at also, say, new kind of client flows being, say, back to more normal? You should expect that occupancy difference to close during the H2 of this year. Is that too early?
I think that's too early to say. I mean, to increase occupancy, we need a flow which is higher than normal. We have had that since the Q2 last year. It has been going on for quite some time. It might slow down at a certain period in time, but we know that demographic trends underlying will of course support the occupancy going forward. It could be, you know, from a quarter to another quarter, there will not be a lot of movement. Now we have kind of, you know, come so close to the level we had before the pandemic. Underlying, I mean, long term, midterm, long term, we still see good growth opportunities.
That's also why we are again signing new contracts for future care homes.
Yeah. Looking at that, the pipeline of the units that you now have taken control of but still not open under your own brands or managed pipeline, those 10 units. When you're looking at those shorter measures, using them as refugee hosting places and helping local municipalities in their own pipeline with temporary measures. Is that basically taking out the cost for you? Where are you getting a contribution from those units when you look at those arrangements rather than having them as it was before?
You can say that we are covering our costs in these units. In these units that we are subleasing to municipalities. Long term, we of course want to open our own operations in these real estates, of course.
Of course. Do you see that occupancy now is coming up to level in these municipalities that, so you would be looking for getting them into your timeline for opening in maybe 2023?
We are looking very carefully, and it's a little bit shifting from municipality to municipality. We have decided to open up one of them in Q4 in the municipality of Laholm in southern part of Sweden. That's one of them that we have decided now to open. We are looking very carefully in each municipality, and we are of course ready to open most of them, but not any more decisions than one.
When you now sign new contracts as well, have you changed the way how you close up to the municipalities in what say, pre guarantees you want or to be able to help the municipalities adding capacity compared to how it looked pre-pandemic?
Yes. We have done that for sure. The contracts we are signing now are in municipalities where we have LOV, so like the freedom of choice legislation and, or we have a contract simply. Nothing signed on speculation, so to speak, or hopes on the underlying demand that would then lead to a change in legislation or contract signed later. Those are secure contracts so to speak.
Excellent. Sounds much more logical. Looking at the big real estate sale you did in the quarter, is there any meaningful real estate portfolio still left on your balance sheet after the quarter?
We have still some, but we think. We gathered up most of our real estate in this big sale, you can say. It's not any big numbers left. There is some, and we will still evaluate if it's meaningful to sell them as well. It depends on how secure we are to sign a long-term contract in these different real estates. That are the decisions.
Thank you. Good luck out there.
Thank you so much.
Our next question comes from the line of Victor Forssell of Nordea. Please go ahead.
Thank you so much for taking my questions. I'll start with one. If you could just quantify here, perhaps it's I've just missed the numbers, but your estimates on how much the above average sick leave costs have impacted your P&L this quarter and the net effect, please, and also the other inflationary pressures from food, fuel, energy, et cetera?
The first question, we don't have any numbers. It has affected versus Q2 last year and versus Q1. We don't have any numbers of that. The second question was regarding higher costs for food, fuel, and energy, and that is in this quarter compared to normal levels and last year is 20 million SEK. It was, we also said it, that it's around the same number as in Q1. In Q1, it was not so much food, it was more fuel and heating because of the winter, of course. Now we see more extra costs for food because the inflation rate in that category has increased.
Okay. Thank you. On Vardaga then, it's positive to hear the month-over-month improvements throughout the quarter that you talk about in occupancy development, which should imply a decent start to Q3 as well. We've seen some spread of COVID into nursing homes in Sweden, or we heard of them at least. Just in terms of what you hear from your organization, has anything changed in the patterns from families and a sort of inertia of getting people to move back into nursing homes? Could you please spend a minute here on what you hear if that could be a risk for a slowdown in occupancy for the H2 of the year?
Yeah, I can do that. I've visited a lot of our facilities here over the spring and summer, and there are no such signs that people are getting worried about moving in their relatives to nursing home facilities.
In general. We of course see from time to time COVID also in some of our units. You have seen the reports as well from other also municipality-run units. The people that are getting affected are only getting you know very mild symptoms, and the vaccination program is working very well. People that are vaccinated, and almost all our care receivers have accepted and are vaccinated with four doses, they don't get you know severely ill by COVID. It's not affecting our occupancy, it's not affecting the sentiment around moving in. I think we will probably have to deal with this for the time to come.
The good news is that the vaccination program is working very well, and our staff is now very experienced in managing these situations.
Thank you. Sounds good. Moving over to Nytida. You mentioned the slightly lower occupancy. If you could just describe what you're seeing there and why that is in this quarter?
I don't think there's any bigger changes there. I mean, sometimes we see slight changes in occupancy from quarter- to- quarter. We don't see anything dramatic in Nytida at all. Also when we look at occupancy over the quarter, it's not like there is a declining trend from month to month. It has been slightly lower in the quarter. We have also been affected, of course, in Nytida by higher costs, inflation, as Benno just described, and also by the fact that we're not getting any significant compensation from the government this year, which we did last year, and also in Q1.
Yep. Okay, sounds good. Two more, please, if I may. I n Stendi, we talked about a lot last quarter about the seasonal effects that would be enhanced, and you talked about them in Denmark in this quarter. I guess you have a view on how much that impacted negatively the Stendi division here. Just to get the grasp of the magnitude would be interesting.
If you mean the change between Q2 and Q3, Q2 is by far the weakest quarter because all the bank holidays, and Q3 is by far the strongest because of the effects of vacation and other things that are lower cost and no bank holidays in Q3. This is a normal standard, yeah, seasonality.
Yeah.
I don't-
Yeah. No, I think that was understood. I think you emphasized the fact that Q2 this year would be much more dramatically impacted by seasonal effects than Q2 last year, so I'm just curious to hear the year-over-year impact.
No, no. No, I don't think that is the case. I think we had the Easter in April last year, and the number of bank holidays, I think, is the same. No, no, I don't see that change between years.
Okay. Maybe that was my misinterpretation. Sorry about that.
Yeah, maybe.
Just finally on Denmark, just circling back to some of the previous questions. You talk about the stronger profitability in H2 of the year. I just would like to hear what you are comparing that to, because obviously it was a very weak Q2. When you say stronger profitability, what are you comparing that to, please?
Yeah. I don't make any estimates on EBITDA for the Q3 . The SEK 14 million we had lower than last year, we will definitely not see in the Q3 . In the Q3 is always better than the Q2. I won't give you any number and a number. We see that the underlying profitability, if we can count out all the seasonality effects, is getting better and better in Q3 and Q4.
Compared to Q2 then? Or what? I mean, what's the base?
Yeah.
Okay.
Compared to Q2.
Okay. Thanks.
Just to remind everyone, if you wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. We have a further question from Karl-Johan Bonnevier of DNB Markets. Please go ahead.
Yes. We have heard some of your colleagues in the sector saying that there is an increasing fight for talent, and even growth initiatives are being held back and can't really be delivered due to staff shortage. I guess that sounds to be more of a permanent issue than sick leaves and similar challenges that you seem to have been alluded to. Are you better off in that perspective when it comes to hiring people to get up to where you should be? Or what do you see out there for the moment?
Yeah. We can only comment on our own situation, obviously. Whether we are better or worse off, I don't know. What we can say is that we have, of course, seen this for a long time, that there will be a growing shortage of care workers as the demand is increasing and the active workforce is not increasing at the same pace. Obviously, this is something that has been on our radar for a long time. We have seen over summer that has been a little more tense, I would say, environment in terms of getting people in for covering up for ordinary staff. We have managed that, and we have done that in all three markets.
We are not holding back any growth initiatives because of staff shortage. Of course, this is something we are working on from many different angles. As you also saw in our updated strategy, it's a challenge that we are well aware of and which we are addressing also very concretely in our updated strategy. We also believe here that we have a very good asset in our competence development center, which is called Lära, that are providing very high quality training and competence development for our staff. Also, we need to work, of course, also on good career paths in our businesses. We see the challenge. We are addressing it from many different angles, but it's not holding us back.
That's good to hear that you seem to have found a place of being a preferred employer or something like that in the market. Good luck with that. Thank you.
Thank you.
We have no further questions on the telephone lines. Please go ahead, speakers.
Thank you very much for listening in to today's presentation. We will have the quarter three report being published on November 3rd. I wish you a nice day, and stay safe and healthy. Thank you.