Good day, and thank you for standing by. Welcome to the Ambea interim report second quarter 2021. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand over the call to our first speaker today, Mr. Mark Jensen. Thank you. Please go ahead.
Thank you so much. Good morning, everyone, and welcome to Ambea's second quarter 2021 report presentation. Speaking is Mark Jensen, CEO of Ambea, and presenting with me today is Benno Eliasson, CFO. I'll start today's presentation by giving an overview of the quarter, learnings from the pandemic, and overall status on occupancy for Vardaga in Sweden. I will also cover the status of our growth drivers and some of our business fundamentals. Benno will then describe the development of the financials for the group and for the different segments in Ambea. I will summarize the quarter and compare to our financial targets before we open up for questions. Starting off with a brief overview of Ambea. As you probably know already, Ambea is the leading Scandinavian care provider. We have about 26,000 employees across Sweden, Norway, and Denmark, and revenues of about SEK 11 billion.
We have a complete service offering within elderly care, disability care, psychosocial support, and staffing solutions. We have more than 350 municipalities as our clients and are important partner in the solution of the welfare challenge. Vardaga, Nytida, and Klara all operate in Sweden, where Vardaga offers elderly care, Nytida offers disabled care, and finally, Klara offers staffing solutions. Over to the highlights of the quarter. The coronavirus continues to have a negative impact on our business and affected EBITDA by minus SEK 40 million in quarter two. Even though occupancy increased during the quarter, which I will come back to later in the presentation, sales was negatively impacted by SEK 85 million. In total, sales grew 3% compared to quarter two last year, driven by our active M&A agenda.
Keeping in mind that termination of contracts pressured sales growth affecting the quarter by SEK 37 million plus 3% is a solid figure. Adjusted EBITDA came in at SEK 146 million, a decrease of 16%. The decrease was mainly explained by Stendi and Nytida. Both business areas received less government support than same quarter last year and saw a slightly lower occupancy trend. As we will see later in the presentation, Vardaga showed positive occupancy development, and we are happy to report that this has continued after the quarter ended. As quality is at the heart of everything we do and also our license to operate, I would like to begin by taking some time to describe our well-developed quality model.
Through clear concepts and concrete guidelines, we make it easy for employees to make the right choices and provide high quality, efficient care in accordance with the current regulations and Ambea's care model. Our quality system provides measurable results which are closely monitored and continuously evaluated. These results are the basis for improvement projects and business development. Every month, we analyze the results on a unit-by-unit basis. The weaker units are followed even more meticulously every other week and receives a detailed action plan. The quality and HR department then works together with the business area and unit manager to ensure needed activities are carried out to deliver the improvements targeted. Our quality and HR index focuses on four main areas: care receiver satisfaction, routines and processes, systematic efforts on improvement, and lastly, a number of HR KPIs.
We are happy to report that the index showed improving results in Q2. Based on a scale from 1 to 10, it reached 7.37 in Q2, compared to 7.28 in Q1. With 900 units for elderly and disabled care, of course, we from time to time have units where a lift in quality is needed. With a quality system in place, we aim to identify these units fast and put measures in place that will take the units to the quality level we want. We flag them for follow-up. We put support in place. We raise it at our internal quality boards. We communicate with our stakeholders to keep them informed. We measure impact, and we follow up until we're satisfied. We also have whistleblower function in place and take every whistleblower seriously.
Quality is in focus at all our operations and has been the most important area when fighting the spread of COVID-19. By that, I would like to continue presenting some of the learnings from the pandemic. Here are some of the important lessons learned after more than one year with the pandemic. We have through a detailed analysis of our elderly care business in Sweden, identified the following areas as examples of potential improvements. First, the Swedish society was neither ready nor prepared for a pandemic. As examples, there was a shortage of personal protection equipment, lack of national guidelines from authorities, and insufficient COVID testing. As an example from the business, there was a lack of contingency plans for high levels of sick leaves across multiple units. To avoid repeating mistakes within areas we control, our crisis management systems are being improved.
We have clarified responsibility for how we plan and prepare ourselves, which will help us manage similar situations better. Examples are regional storages of protective equipment and regular crisis management practices. Second, working as a nurse at a care home is a challenging task under normal circumstances. Under a pandemic, even more so. We must therefore improve our ability to attract and retain nurses qualified within elderly care and give them the right support to perform the role. For this, we have established a specific program. As further examples, this means representation of the responsible nurse in the management team of every unit and access to tailor-made and specialized training and competence development. Third, for basic employment or employee competency and language skills, we rely on the Swedish system for public education.
We see a need to nationally develop and streamline the education for assistant nurses to ensure that all employees have the right competence. We intend to formalize the general language training in accordance with the European language scale. For this, we have initiated four pilots already ongoing. It will be highly beneficial for all if the authorities will put more emphasis on language introduction for people not being native Swedes. Lastly, we aim to evaluate and set a plan for the development of enhanced mobile and digital tools for operational staff. This as a part of a general and ongoing effort to improve the digital workplace. With this, we will increase efficiency and also operational excellence. We have, during the quarter, started to execute our post-analysis action plan for Vardaga in Sweden, and will going forward include the activities in our operational business plans.
All of this said, I'm proud of our employees and want to extend my sincere thanks to all of them, who day after day have worked in the best interest of our caretakers during a pandemic that has brought very challenging conditions. The dedication and commitment shown are admirable. Moving on to the next slide, where we show updated figures for the occupancy development of nursing residents in Sweden. This is publicly available data on the number of residents living in nursing homes from January 2020 until April 2021. This is the latest public data available. We showed this graph in our Quarter One presentation, and I want to comment on the continued development this quarter as well. The positive occupancy development have continued both on a national and regional level in Sweden, as well as in our nursing homes, where the trend has been strongest in our mature units.
The recently started units have shown improving occupancy, although at a somewhat slower pace. From Stockholm municipality statistics, we see that the positive trend continues into May and June, which is promising. It is important to remember that most municipalities aim to fill vacancies in their own nursing homes first, then nursing homes on contract management, and lastly, nursing homes in the private sector. Finally, I want to stress the fact that the demographic trend continues to be favorable. Over to the greenfield development. As the municipalities continue to fill the beds at their own nursing homes, we see an improving occupancy in most of our open units.
We continue to be cautious about opening new units and want to ensure that we have a high likelihood of filling up a unit within 12- 18 months timeframe once opened. If we do not see the condition being met, we initiate discussions with the real estate owners to delay construction or decide to keep them empty with no staff cost until the occupancy situation is back to normal again in the local market. We currently have eight to 10 such situations. In Quarter Two, Vardaga opened two nursing homes with 60 beds each, one opened in Eskilstuna and one opened in Östervåla, north of Stockholm. Altiden opened their first own management nursing home, Fribo Holte. The nursing home has 72 beds and has got off to a good start with many seniors showing interest in moving in.
Looking ahead, Nytida will open five new units with a total of 30 beds in quarter three. We're really excited about the continued organic growth of Nytida and are looking forward to opening the units in Norrköping, Helsingborg, Göteborg, Munkedal, and Tingsryd. Let's turn to acquisitions. Ambea closed the acquisition of EKKOfonden's care operations in Denmark. EKKOfonden's care operations has 166 beds in total and offers residential accommodation within adult disabled care and has about SEK 330 million in annual sales. The EKKOfonden acquisition is in line with our strategy for the Danish market, where we focus to shift the business mix to segments with better long-term profitability, meaning own management residential care for elderly and individuals with disabilities. I'm happy to report that the acquisition has continued to perform well and in line with our expectations.
Strong cash generation 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 future value creation. For Ambea, social sustainability as a natural part of our value-driven care business. In 2020, however, a major approach was taken in the area of sustainability with ambitious goals in the environmental area that, among other things, are aimed at the industry's lowest climate footprint to lead the way and hopefully inspire others to follow. In 2020, we reduced our footprint with 26% versus 2019, which is promising. Our 2025 target is more ambitious than the target agreed in the Paris Agreement or recently among the EU members.
We see it as possible to reach our target and work after the principle to take responsibility for the climate footprint we generate and take action to lower it. For our three defined specific focus areas, activities are progressing as planned. Examples are the rollout of the new fleet management model for our company cars and adjustments of our food concept to ensure it meets the preferences of our care receivers, but with a lower total carbon footprint. To further accelerate the work, we have assigned sustainability to our HR director, now director of HR and sustainability. We are recruiting a head of sustainability and preparing for 2022, where targets will be broken down to each business area and corresponding activities cascaded down the line.
As for most companies, we have the vast majority of our emissions in the so-called Scope 3, i.e., the result of activities from assets not owned or controlled by us, but where we can impact. As we are progressing well reducing emissions in Scope 1 and 2, we will allocate more focus to Scope 3, as an example, by raising demands on our suppliers and work closer with them to reach ambitious targets. Now, let's look at the financial development in the quarter. Benno, over to you.
Thank you, Mark . We look at the net sales, next slide, please. This quarter, we are, as said, back to growth again. We are +3% or SEK 75 million. Helped, of course, by the acquisitions made this year earlier. We look into how the different business areas have affected the group numbers, we can see that Vardaga is up 4% or SEK 33 million versus last year. We have opened five new nursing homes since Q2 last year and have had an increasing occupancy throughout the quarter. Nytida is rather flat versus last year. Stendi has a negative growth of 1%. We have returned one nursing home contract to a municipality, as well as reduced our capacity in our own managed portfolio in the quarter. In local currency, the decline is 4%. Altiden is affected by the acquisition of EKKO.
On the positive side, by SEK 64 million, and on the negative side, by exiting home care contracts and returning one nursing home contract, totaling SEK 26 million. Klara is continuing to expand geographically and has won several new contracts in the first half of this year and is up SEK 10 million versus last year. Turning to EBITDA. If we look into how EBITDA in the different business areas have affected the group, one must remember how COVID hit the different business areas in Q2 last year. We then saw a rapid decrease in occupancy in Vardaga, but very small effects on revenue in the other business areas. It took some time in Vardaga to adapt the cost base to the lower occupancy.
Government program with reduced payroll taxes and compensation of sickness costs were, at that point, much more generous than later in the year and affected especially Nytida, but also Stendi positively in that quarter. In Norway, we have, in this quarter, more costs connected to COVID-related absence than previously, and Altiden was affected negatively by SEK 5 million in transactions cost, but improved EBITDA by SEK 3 million even so. The item other includes a gain from a real estate sale of SEK 9 million. Turning to cash flow. The strong cash flow continued in the quarter with SEK +500 million in operating cash flow. We have on a rolling 12 basis generated more than SEK 1.7 billion and SEK 849 million if we exclude the IFRS 16 effect. This is still more than 100% of EBITDA in the same period.
Despite the good cash flow, the leverage increased to 3.7 times in the quarter. The dividend paid out of SEK 109 million and the closing of the EKKOfonden acquisition in Denmark temporarily increased the net debt. Together with a slightly weaker EBITDA in the quarter, the leverage increased 0.2 times. As you can see in the graph, we are financing around two-thirds of our debt by our own commercial paper program, where credit spreads now are back to the levels they were in early 2020. Turning to the different business areas, starting with Vardaga. Net sales increased, as said, by 4%. We have opened 5 new nursing homes since Q2 last year. Occupancy in mature units were on average in the quarter still a bit lower than last year, but shows a month-on-month good trend.
Many of these units are located in the Stockholm region, where LOV, the freedom of choice legislation, are in place in most municipalities. In the more newly opened units, which are located in various other locations in Sweden, the trend is yet not as positive as in the mature units. EBITDA increased from SEK 15 million-SEK 25 million. Q2 last year was harder impacted by COVID-19. Now we have adjusted our cost base in units with decreased occupancy in a better way. To further improve the occupancy, we are increasing our marketing activities based on the local needs and opportunities we see. Turning to Nytida. Nytida sales was in line with last year. Contract management was up 4%. Own management, slightly lower occupancy than last year. We continue to win new contracts.
In this quarter, the net win was SEK 61 million in annual turnover. That will, together with the five new assisted living facilities that we plan to start in Q3, increase the growth going forward. EBITDA was down 18% or SEK 25 million to SEK 130 million. Q2 last year was positively affected by government support program, which were in place at that time. This is the most important factor to the low EBITDA this quarter compared to last year. On a rolling 12 basis, EBITDA is down from last quarter, still at 15.2%. Stendi in Norway. Net sales decreased by 1% in SEK or 4% in local currency. We, as said, returned one nursing home to a municipality in 2020 and reduced the capacity in our own management portfolio in the quarter. EBITDA was down from SEK 31 million to SEK 4 million.
Last year was highly affected by the temporarily lower payroll taxes in May and June. This year, we have been affected by the strict Norwegian quarantine rules, where we have had hundreds of employees not being able to go to work, but still on our payroll. For our operational staff, working from home is, of course, not an option. We saw at the end of the quarter, however, that the impact from COVID-19 was lower as the vaccination program has been rolled out in Norway. The second quarter is normally the weakest quarter profitability-wise in Norway, with a majority of the yearly bank holidays. Having said that, we are not pleased with underlying profitability in Stendi. We are now rolling 12 at 3.8% and will, in the second part of the year, increase our efforts to further improve the Norwegian business.
This initiative will not pay out in P&L until next year. Altiden. The repositioning of Altiden is progressing according to plan in the quarter. Net sales were affected positively by the acquisition of EKKO by SEK 64 million, and on the negative side of closing down home care contracts and returning one nursing home, adding to SEK -26 million. In the later part of the quarter, we opened up our first own managed nursing home, Fribo Holte, and took over the first of two large contracts from the municipality of Frederiksberg. Both these are developing well and will, over time, contribute to the profitable growth of Altiden. EBITDA increased by SEK 3 million versus last year to SEK -4 million. This number includes SEK 5 million in one-time transaction costs related to the EKKO acquisition, which means that we would have had a full profit in the quarter without that transaction cost.
Last, Klara. Net sales increased by 13%. We are growing our business towards external public and private operators, as well as towards internal Ambea units. Compared to last year, we have expanded our nursing patrols geographically to three new cities in Sweden and expanded our business in several existing geographies as well. The business model of Klara delivering nursing services on-site in evenings and weekends only when needed, has proven to be very attractive for smaller care units. EBITA margin was rather stable at 6.7%, and rolling 12, we are now above 8%. With that, back to you, Mark.
Thank you, Benno. To sum up our financial development versus our targets, our growth target is 8% to 10% through a combination of acquired and organic growth. 2021 shows the negative effects from COVID-19, but we have announced 2 acquisitions in the first half of the year, LSS Omsorgen in Sweden and EKKOfonden care homes in Denmark. Acquisitions are an important growth driver, and we continue to actively explore attractive M&A possibilities in all our markets. We also pursue new greenfield opportunities in relevant locations. Profitability-wise, we have a midterm adjusted EBITDA target of 9.5%. In Q2 2021, we saw clear signs of improving occupancy, which in turn will support an increased margin going forward. We are well-positioned to meet an increase in demand post the pandemic, and Q3 has started well.
Finally, regarding leverage, due to acquisitions, dividend payout, and a somewhat weaker profitability, we had a higher leverage in quarter two, but our solid cash conversion will reduce leverage over time. Summarizing the second quarter of 2021, it was another challenging quarter, but we're happy to see the continued positive occupancy trend in Vardaga. The continued fast rollout of the vaccination program across the Nordic countries also helps us. As we move out of the pandemic, we maintain our constant focus on quality and employee engagement to make sure our care receivers are given the best possible quality of care. We will also use our learnings from the pandemic to strengthen our everyday operation and ensure we are better prepared for other major future crises.
Based on my field visits and conversations so far, I am impressed by the way our employees have handled the pandemic and the engagement they show for our care receivers. The strategic repositioning of Altiden is moving on according to plan. We are happy to see the acquisition of EKKOfonden performing in line with our expectations, and that the newly opened Fribo Holte filled up faster than anticipated. The development in Stendi is addressed, and efforts to improve the profitability will be intensified after the summer. The initiatives will strengthen Stendi's market-leading position and improve profitability, but as Benno explained, the initiatives will first show up in the P&L next year. There is work being initiated also within the extended management team to develop and update the long-term strategy during the second half of this year to successfully meet the new normal post the pandemic.
Finally, as we now see the business recover from the pandemic, guidance on impact from the pandemic will cease, and our build-back activities will be reflected as ordinary events. With that, I conclude our presentation and open up for questions. Operator, can we have the first question, please?
Thank you. Our first question is from the line of Kristofer Liljeberg from Carnegie. Thank you. Please ask your question.
Yeah. Hi, good morning. I was a bit late, so sorry if you have described this, but I am interested to hear a little bit what's going on in Norway. You had a pretty good earnings trend there with often the cost savings and efficiency work. Of course, now you have the negative COVID-19 impact, but it seems to be not that can't be the only explanation for the weak results. What has happened and what can you do now to improve profitability and reach the full potential in Norway? Thank you.
First of all, our Norwegian business has been heavily impacted by the pandemic in this quarter. It has developed very differently across our Scandinavian markets, especially the quarantine rules have hit us hard in Norway, where we have had at times more than 200 employees in quarantine, which we've had to pay for, also have to pay for temporary staff to replace them. That said, of course, also the pandemic has taken a lot of resource and attention from our Nordic Norwegian management, which means that some of the improvement efforts that were in place, and we were working on when we entered the pandemic, has been somewhat put on hold, simply because we've had to put a lot of attention and focus to the pandemic. We need to bring back these activities to the table. We need to accelerate them.
It is addressed, and we are working already now very hard to do so. Some examples are full implementation of Ambea's operating model across the Norwegian business. We're also looking at some slight organizational changes, and we're looking in general also what we can do in order to improve our mix in Norway towards more profitable contracts and business segments.
of the SEK 40 million negative impact from COVID-19 in the quarter, how much of that was Norway?
We are not specifying that business area by business area, but it was a rather big part of it, you can say.
Okay, was it almost half of it or?
No, it wasn't.
Okay.
It's still most effect from COVID is lower occupancy in Vardaga. We have had extra costs in Stendi. That is the two main drivers for the COVID effects.
Okay. Thank you.
Thank you. Our next question is from the line of K.J. Bonnevier from DNB Markets. Thank you. Please ask your question.
To balance the development in Vardaga, you previously moved a lot of units from being timed when they were supposed to be open, now to be unspecified. I guess with occupancy now starting to come back, at least even if you are not back to normal, how do you see those units that have been put on hold and then put in sleeping mode, or what you should call it, coming back into being open and being able to support growth?
It's very different from unit to unit. In some units, we do not see a potential right now, and we don't see in the coming two quarters either. In some other municipalities, we hope that we will maybe later this year or beginning of 2022 open these units if the occupancy levels improves in the municipality-driven care homes. It is a little bit different from municipality to municipality. It's a very local market.
It can't be as quick to basically be a question already for second half of this year?
Yeah, we say that we have three or four months from decision made until open to staff them and to make them ready. Something like that.
Excellent. Just on Altiden in Denmark as well. Looking at the reshaping of the business portfolio, how much of businesses that you want to get out of is still generating revenues in this quarter? Where are you in the phase out?
When we ended last year, we had 10 municipality contracts in home care. We have now ended four of them. We still have six. We have decision made to end two of them. We have still four that we are negotiating with the local municipalities to end. Right now it's six out of 10 that we still have revenues in.
When you look at the success of your own unit in Denmark, so to say, on the elderly care side, do you see any good opportunities for speeding up the opportunity to find more projects in Denmark?
Yeah, that's absolutely an opportunity. It's still early days with Friplejehjemmet. We only opened mid-June. The start has been good. Obviously we are looking for other opportunities in the Danish market to establish more own managed care homes. Absolutely.
We have one signed contract that we will open in late 2022. Of course from decision to start, there is a time frame.
Excellent. Thank you very much, and good luck out there.
Thank you.
Thank you. For participants who would like to ask questions, press star and one. Again, for participants who would like to ask questions over the phone, if you could just press star and one. Looks like there are no further questions. Please continue.
Thank you so much. No more questions. Thank you all for calling in. The quarter three report will be published on November 4th. I wish you all a nice day. Stay safe and healthy.
That does conclude our conference for today. Thank you all for participating. You may all disconnect.