Good morning, everyone, and welcome to Ambea's third quarter 2020 interim report presentation. Speaking is Fredrik Gren, CEO, and presented with me today is our CFO, Benno Eliasson, and Jacob Persson, Ambea Head of Business Control and Investor Relations. Ambea delivers a strong quarter with four out of five business units improving results versus last year. Vardaga continues to be impacted by COVID, with lower occupancy than normal, but has during the quarter improved efficiency to mitigate revenue losses. I will start today's presentation by giving an overview of the quarter and also cover the status of our growth drivers. Benno will take you through the financials for the group and will also describe the financial development for the segments. We will also be more specific around corona and its likely effects on the fourth quarter. I will then summarize the quarter before we open up for questions.
Starting off with some highlights for the quarter. The negative effects from corona in the third quarter is in line with what we said in our Q2 report, around SEK -50 million on EBITDA. We also estimate a SEK 90 million negative effect on sales since occupancy has stayed roughly flat during the quarter until the end of the September. Sales is down 4% versus Q3 last year, driven by currency effects and lower occupancy in Vardaga, but also due to a few contracted units came to an end. In the third quarter, we also open up 68 new beds. Adjusted EBITDA came in on SEK 319 million, which is 2% above last year, and margin strengthened from 11.0% to 11.7% versus same quarter last year. Four out of five business units show strengthened profitability versus last year, and especially Norway and Denmark show substantial improvements in the quarter.
The restructuring program in Norway was completed during Q3. Synergies came in SEK 10 million higher than earlier communicated. In total, SEK 40 million of savings, which have been realized gradually since Q2 and will have full effect by Q4. We have minor effects from COVID in four out of five business units. Elderly care in Sweden is where we see material financial impact. We currently only have a few homes with spread of infection, but we closely, and not without worries, follow the increased spread of the virus in society. All staff are on high alert to stop the virus from coming into our homes. If we identify an affected resident, we quickly isolate the individual and rapidly test all other residents and staff. These procedures so far work better than during spring and are important to avoid further spread of the virus.
The negative EBIT effect from COVID is minus SEK 50 million in Q3 and is predominantly shown in Vardaga. Occupancy continued to be lower than normal. Major effects have been done to bring down our operating costs during the quarter to mitigate lost revenues. Efficiency metrics are actually close to pre-COVID levels when it comes to, for example, personnel costs in relation to sales. When Vardaga occupancy starts to improve again, these efficiency measures will help up to speed up margin recovery. Every week since the removal of the visitor ban on October 1st, we have seen a small net increase of number of occupied beds. We hope that the positive trend will remain, and we work hard to protect our residents from the virus. Our Contract Management units in Vardaga are now almost back on normal occupancy levels and actually have only a few empty beds.
We are low on occupancy in our own managed units, and we are also cautious when it comes to opening up and staffing of new units until we feel certain that demand is there. Given all this, we estimate a lower COVID effect in Q4 than in Q3. We forecast that the negative COVID effect for Q4 will go down to SEK 70-80 million in sales and minus SEK 30-40 million in EBITDA. Turning over to our profitability development, where we continue to deliver improvements. Despite the negative effect from COVID, Ambea's total EBITDA margin has improved. Nytida had yet another strong quarter. In fact, it is the strongest quarter we have ever reported. Excluding the effect from COVID on Vardaga, the profitability improvements would have been significant.
Important measures have been taken to generate savings in former Aleris units and efficiency improving actions also in other units. Both Altiden in Denmark and Stendi in Norway has improved EBITDA significantly versus last year. Cost improvement, implementation of Ambea's operating model, and strong local leadership are behind these improvements. We are proud of the positive momentum in both Denmark and Norway, but our efforts will continue to bring both countries to their full potential. The LTM margin is continuing to climb upwards and reach 7.5% adjusted EBITDA in the quarter. It is fair to say that opening up new nursing homes in Sweden is challenging, as many municipalities have empty beds at the moment. Ambea takes a cautious approach, and we will only open up and staff new nursing homes if we feel comfortable that they have a high likelihood of filling up within 12-18 months timeframe.
If not, we are taking discussions with our real estate owners to delay construction or just keep them empty with no staff cost until the occupancy situation is back to normal again. We currently have a handful of such situations. In Q3, we only open up one nursing home in Tyresö, Stockholm, which after two months already are at the 60%+ occupancy. In Q4, we plan to open up in Tierp and the second one in Solna, Stockholm, where we are moving residents from an old subscale facility called Böholmen, which helped the Solna unit to a good occupancy start. The old Böholmen facility will be turned into a Nytida home. Over to acquisitions. There were no acquisitions in the quarter, only one acquisition in Denmark year to date, Vivamus, which is continuing to develop financially better than planned.
With that, over to financials in our next session. Benno, will you take over?
Thank you, Fredrik. We have said, we are rather pleased with the financial performance in all business areas given the challenging circumstances. If we look into how the different business unit areas have affected the group numbers, we can see that starting with Vardaga, sales was down SEK 44 million. Important to remember is that most of the SEK 90 million that we reported as COVID effect was just in Vardaga, where occupation were lower than normal and rather flat throughout the quarter. In total, the decline in sales was 5% versus last year. Nytida sales declined by SEK 17 million or 2%. The comparison versus last year is affected by both the adjustment of capacity after the Aleris acquisition last year as well as an increase in Contract Management. Sales is only marginally affected by COVID.
In Norway Stendi, the rapid weakening NOK in the first quarter this year has affected the reported SEK numbers, of course. The average NOK/SEK rate is down 10% versus last year, which means that the sales in local currency is more or less flat versus last year, but down SEK 80 million reported in SEK. In Altiden Denmark, we made two acquisitions around New Year, which have added on SEK 41 million in sales in a quarter. Last, Klara, who is still hurt by the Swedish VAT regulation that changed for healthcare staffing services in Q3 2019. They cooled down the market for these services significantly. Turning to the profit numbers. Overall, we are pleased that we managed to increase our EBITDA and EBITDA margin under these challenging circumstances in four out of five business areas, as well as for the group in total.
Vardaga has a decline in EBITDA by SEK 32 million or in margin by 3.3 percentage points and was, as said, hurt the most by the negative COVID effect. The Nytida margin is benefiting from the capacity adjustment made in 2019, as well as the productivity increases, and EBITDA was even higher than last year despite the lower sales. In Stendi, the restructuring program started to have an effect already in Q2, and now in Q3, we saw further improvements and reported a double-digit EBITDA margin in the quarter. Altiden is still in a build-up phase. We are improving our capacity and competence. Altiden had a very weak Q3 last year as comparison, but nevertheless performed a very strong Q3 this year. The Q3 seasonality is more obvious in Denmark than in other segments. Finally, Klara continues to deliver stable margins. IFRS 16 effects.
We have since the beginning of 2019 been reporting including the new leasing standard. This means that all reported quarterly and year-to-date data 2020 are comparable with the reported number for 2019. However, data that includes quarters from 2018, like rolling 12 data up to Q3 2019, is still affected by the different reporting standards. In this slide, you can see the effect of this. We can see that the rolling 12 margins excluding IFRS 16 is increasing as well for three quarters in a row. Turning to cash flow. The strong operating cash flow continued in the quarter. This was the fifth consecutive quarter that we increased versus last year, now to SEK 369 million versus SEK 318 last year. If we exclude the IFRS 16 effect, we are at the operating cash flow at SEK 163 in the quarter versus SEK 117 last year.
Q2 and to some extent Q3 were positively affected by the government program in Norway, where tax payments in Q2 and Q3 were moved into Q4. This means that the Q4 cash flow will be in some way affected negatively by this. If we measure our cash conversion rate, which is the operating cash flow versus the EBITDA on a rolling 12 basis, we can see that for the second quarter in a row, we were above 100%. The leveraging of the group is continuing, of course, in line with the good cash flow. If we look back and compare with the third quarter last year, we have decreased our net debt by almost SEK 600 million and come from a net debt ratio of 4.6 to below 3.6 as of now, and we are getting closer to our financial target at 3.25 times.
As COVID stroke the financial market in late Q1, the market for unrated commercial papers like ours more or less vanished, which means that we, at that time, shifted the financing to more traditional bank financing. In the third quarter, we can see that the markets are normalizing again and are almost back to the credit spreads we saw before COVID, we can again utilize our program fully and benefit from lower financing costs going forward. The increase in lease debt of SEK 949 million year to date reflects the fact that we have increased the number of startups of new units under Own Management, these units comes with longer rental conditions than the average portfolio. Turning into the different business areas, starting with Vardaga. We see the total sales reach SEK 860 in the quarter, was down 5% versus last year.
This is, of course, mostly driven by the lower occupancy rates in mature units, but also a decline in Contract Management due to ceased contracts. If you compare quarter-on-quarter with Q2, we see a decline of 1% if we adjust for one more invoicing day in Q3. New units in ramp-up have, of course, affected the sales number versus last year positively, but not as much as expected. We have seen a slower ramp-up pace in these new units due to the COVID-19 situation. In the later part of the quarter, we saw an improving occupancy in our care homes under Contract Management, as well as an increased demand in our home care business. In the beginning of the fourth quarter, we now see many of our homes under Contract Management showing almost the same occupancy as before corona.
EBITDA for Vardaga reached SEK 50 million versus last year, SEK 82 million. Most of the negative COVID effect of the SEK 50 million in EBITDA, of course, stroke Vardaga. However, we also saw improved operational cost KPIs in the former Aleris units and better efficiency ratios, which indicates that the margin improvements can come rather rapidly when the occupancy rates are raising again in our Own Management portfolio.
Newly started and ramp-up units is now representing 18% of the total Vardaga portfolio. The EBITDA margin of mature units went from 15.5% last year to 11.1% this year in Q3. This decline is both driven from low occupancy, as said, unit by unit, but as well as we're now reporting the former Aleris units as mature, and these units came in with lower profitability on average. If we turn to Nytida, where we have total sales reach SEK 915 million in the quarter.
It was down 2% versus last year, and Own Management were down 6%, which is 757 in the quarter. This is an effect of the adjustment of the capacity that we did in 2019, and that we have relatively few new startups this year. Contract Management sales reached 159, which is 29% up versus last year, and we see that the strong win rates in 2019 are now clearly turning around the negative sales trend in Contract Management that we had earlier for some time. EBITDA reached 177 million SEK in the quarter, or 19.3% margin. This is an increase by 0.7 percentage points, and it's actually the seventh consecutive quarter that we've seen EBITDA margin growth in Nytida. We saw effects of Aleris synergy realization as well as from taking out the overlapping capacity. We also have fewer startups, of course, as said, that helps the EBITDA margin.
The rolling 12 EBITDA margin now reach 15.4, up 0.2 percentage point from last quarter. Turning to Norway and Stendi. Sales decrease in SEK by 10% and reach SEK 733 million. Currency effects had a major impact in the quarter, and sales in local currency were more or less flat. In local currency, the Own Management sales were actually increased by 4% but were down 6% in SEK and reached SEK 679 million. Contract Management sales reached SEK 54 million versus last year, SEK 87 million, and decline is explained by returning of a nursing home contract in late 2019. EBITDA reached SEK 79 million or a margin of 10.7% in the quarter versus 7.6% last year. We saw both a better sales mix, but mostly the profit increase comes from the cost improvement program that we launched in Q1.
The adjusted rolling 12 EBITDA margin increased by 0.7 percentage points from last quarter. We are now at 4% rolling 12. The announced program to reduce the administrative cost and strengthen the operational leadership in the organization was finalized now in Q3. We saw more potential than first communicated, we increased the program. We now recorded SEK 27 million in realization cost in the quarter and totally SEK 50 million in the whole program, with annual expected savings of SEK 40 million realized from next quarter. Some of the savings have already been realized since the start of the program in Q2. Over to Denmark and Altiden. Sales amounted to SEK 166 million, which is up 31% versus last year, explained by the two acquisitions made around Christmas. In local currency, the sales increase was even higher by 34%.
The acquisitions called Vivamus and Casablanca have performed well in line with expectations and contributed positively on the profitability. In the seasonal strong third quarter, Altiden had an EBITDA of 11 million SEK or an EBITDA margin of 6.6%. We are comparing, as said, with a very weak Q3 last year, which were affected by some one-offs. We are now for the first time in positive rolling 12 EBITDA numbers, slightly, but nevertheless. We have invested in overhead both for building up our own support organization as an independent company after the carve-out from the former Aleris organization in Denmark, and also strengthen both disabled care management and resources to support the organic growth going forward. We plan to continue our strategy to grow in more profitable segments of disabled care or owned managed nursing homes.
We are actually starting our first Greenfield nursing home in Q2 next year in the municipality of Holte. In Klara, net sales were down 13%, reaching SEK 59 million in the quarter, SEK 1 million down versus the previous two quarters. Sales decline versus last year is predominantly in the staffing business towards private operators impacted by the change to VAT regulation introduced last summer. Total revenue, which includes internal sales, were flat versus Q3 last year. We continue to grow our Klara Teamtjänster, and with favorable mix development and administrative savings, we continue to grow our EBITDA as well, now from SEK 7 million to SEK 8 million. If we look at the rolling 12-month EBITDA margin on total revenue, we are now at a decent level of 8%. On that note, back to you, Fredrik.
Thank you. To sum up our financial development, our growth target is 8%-10% through a combination of acquired and organic growth. 2020 year- to- date shows only marginal growth given the Corona effect on Vardaga and also low M&A activities and a cautious approach to Greenfield opening. Profitability-wise, we have a midterm adjusted EBITDA target of 9.5%. We have seen small EBITDA margin improvements three quarters in a row. We also need to have the negative effect from Corona on Vardaga behind us, and also further margin improvement in both Norway and Denmark coming from delivering on the plans that are put in place in both these countries. These improvements are necessary to reach the midterm target margin level. Finally, regarding leverage, where we have seen improvement in many consecutive quarters.
Cash flow is normally weak in the third quarter, but our cash flow actually came in better than expected, and leverage is likely to continue to go down in the coming quarter, excluding effects from potential M&A activities. Over to sustainability. Since many years, Ambea has had a strong focus on sustainability and how we as a company can support the 17 global sustainability goals set up by the United Nations. We have presented details around targets and activities in our annual reports over several years. During the last year, we have strengthened our work around environment and reduction of our CO2 footprint, both in terms of broader tracking, but also raised our target for CO2 reduction. Our new target is a 50% reduction of CO2 emission by 2025. Actions have been initiated around electricity, travel, food to ensure a rapid impact.
Summarizing the third quarter, we believe Ambea did a strong Q3 despite the Corona difficulties in Vardaga. Profitability improved in all other four business units, and the profitability improvement momentum in Denmark and Norway are of course, especially important. The increased spread of the virus in the last few weeks will, of course, mean negative effect on Ambea. However, we believe that the negative impact is likely to be lower going forward due to both slightly improved occupants in October and early November and the efficiency measures taken. We are also starting to see some municipality compensation or increased cost earlier this year being paid out, even if we're still taking a cautious view when it comes to forecasting the effect on such payments. Thanks to Ambea's high cash conversion, our debt position is improving. Compared to 12 months ago, our leverage is actually down one turn.
Net debt to adjusted EBITDA is 1.0 lower year-on-year. Debt has been reduced by approximately SEK 600 million. On an ending note, I'm very proud to tell you that Stendi in Norway won a very prestigious award last week. We were awarded a prize as the service company of the year by NHO, the Norwegian Enterprise Confederation. The prize was awarded to us for our responsible and industry guiding work in the COVID pandemic. Another important sign on the positive momentum of Ambea's Norwegian business unit, Stendi. With that, I conclude our presentation and open up for questions. Operators, please could we have the first question?
Ladies and gentlemen, as a reminder, that is star and one if you wish to ask a question. To cancel your request is the hash key. Your first question comes from the line of Christopher Lindberg from Carnegie. Please ask your question.
Hi, can you hear me?
Yes, we hear you.
Great. Two topics I would like to discuss. First is the COVID situation in Sweden. Now just in the last couple of weeks, what have you seen happening with the moving rate as the spread of the virus is accelerating again, and there are more alarming news around that? Also related to the virus, when you talk about SEK 40 million in negative impact on the EBITDA in the fourth quarter, does this also include the negative effect you're having from generally slower ramp-up of new homes? I guess that's maybe difficult to break out, but that's interesting to see that. Then regarding the margin improvements in Norway and Denmark, just to make sure there were no extraordinary positive things in the quarter.
I'm also interested to hear how much of the SEK 40 million in savings in Norway have been achieved in the second and the third quarter. I'll stop there.
If we start with the COVID situation. Since the visitor ban in October 1, we have seen a small, but still a net increase in number of occupied beds in Own Management every week. The other thing is that what we have also seen is that the Contract Management units are showing same level of occupancy as we normally have. That means that there are very few empty beds to be moved into in the Contract Management units, and thereby the empty beds are in Own Management. I think that is also one of the things that are driving that. That has been since October 1, and it's clear that the general spread in society has taken off in the last couple of weeks. That small increase week by week has actually continued the last two weeks as well.
Does that mean that we can be certain that will continue? No, it doesn't. We are of course carefully following the general trends in society, and it's hard to see exactly what the impact is going to be on a nursing home. That's basically what we see up until now.
Could I follow up what you said about the Contract Management units? How much was occupancy down before, and how much has it improved?
I don't have the exact number of that. When we saw in Q2, we saw impact hitting both our elderly care in Own Management as well as the elderly care in Contract Management. We feel it's pretty natural that the municipalities are filling up the Contract Management units before, because that's where they have costs anyway. It's pretty clear that the return to normal occupancy levels started already this summer on Contract Management, and has built up since then. I know that wasn't exact the full answer to you, but I don't have-
The reason I'm asking you, that sounds like a very positive signal as if that capacity is gone now, then the next step would be to fill up your own management beds. That should be a good leading indicator for the coming quarters. Do you agree?
Yes. That's what we see. The difficulty is, of course, to fully project what is going to happen with the increased society spread. Apart from that, absolutely.
Okay. On Norway and Denmark.
On the negative 40, that includes impact of slower ramp-up on new units. That negative impact is on like for like, but also slower growth of both new units and units under ramp-up. That's the full effect. Norway and Denmark, you want to take that, Benno?
We can say that we started the program in Norway in late Q1. We saw effects in Q2 and Q3. Of course, we took the most obvious things in Q1 already, and the more difficult things, if you can call it like that, late Q3. We say at least half of the total savings were already achieved in Q2 and Q3, and we have the full savings from Q4.
Okay. What's the next step then to bring the margin from here to maybe a more normalized, I don't know what that is in Norway, but maybe 8% or so?
The next step is a lot of smaller activities, because that comes down to being more efficient in staffing, making sure that all new tenders that we submit are done with the right margin and pricing strategy, and then, of course, continued initiatives to do normal savings in procurement. You shouldn't expect a stepwise improvement, but rather a continued gradual improvement.
Okay. Thank you very much.
Regarding if there are extraordinary positive effects impacting Q3. I think that you had a question, Christopher, regarding if there are extraordinary positive aspects.
I'm not asking about one-offs, but from time to time, you have those type of effects that we learn about afterwards that has impacted quarters. Just curious to see if there were any.
Oh, we can't see.
Temporary things helping.
Any material effect that wasn't supposed to be in the quarter.
No.
No.
I think the financials in Q3 are very representative on where we are.
On underlying performance.
Yes.
Thank you. That's all from me.
Your next question comes from the line of Clas By from Nordea. Please ask your question.
Hi, thank you for taking my questions. Two, if I may. The first one is on your guidance for Q4. You say that negative sales impact of SEK 70 million-SEK 80 million and negative EBITA impact of SEK 30 million-SEK 40 million. I thought the drop-through from sales to EBITA was higher. Can you elaborate a bit on how you calculate that or the expected impact? Are there any cushions in that that is extraordinary? That's my first question. Thank you.
We have been working, of course, with the staff cost when the occupancy is down. To start with, when the occupancy go down rather rapidly, there is not so much in short term that you can do with staffing. If the occupancies stay low for a period of time, then you can work with the staff cost in another way. We have structurally been saving more costs over time. That's one of the factors that we have not seen so much drop-down on the revenue loss. The other factor is that we see some money coming in from the municipalities in extra cost coverage that we are starting to get now in Q4.
Okay. Thank you very much. My second question relates to Norway. Q4 last year was a disappointment in Norway owing to lower volumes due to budget constraints, if I'm not mistaken. Can you say anything about how your view is on this for this year? Thank you.
I think that there is, of course, a seasonality with Q3 being strong and Q4 being weaker, and that is likely to happen this year as well. However, we do not see that kind of negative impact on occupancy as we saw last year. The savings coming from the child welfare services were not as big as last year. You shouldn't expect that similar negative impact this year as we saw last year.
Okay. Thank you very much. That's it for me. Thank you.
Your next question comes from the line of Karl Norén from Danske Bank. Please ask your question.
Hello. Good morning, guys. Just a follow-up on the Q4. What kind of estimates have you done to conclude that the minus SEK 70 million-SEK 80 million on top line? Is it based on the trends you're seeing now with occupancy increasing week per week, or can you say anything about that?
Yeah. Correct. We see that we have a little bit smaller impact than we saw in Q3, and we hope that this small increase in occupancy is going to make that number a little bit lower than we saw in Q3.
Okay. You expect the occupancy through the quarter to gradually increase in the same levels as you're seeing right now?
Yeah, something like that.
Okay, great. Also, second question on Altiden in Denmark. Can we say that this is the new normal if we exclude, of course, the seasonality effects and stuff, but can you say that you have reached a new level in Denmark? Could you elaborate a bit on the development there?
The seasonality effect in Denmark is probably higher than in the other Nordic countries. We have no bank holidays in Q3, and the vacation effect is bigger in Denmark than in other countries, we can say. There is a stronger seasonality in Denmark that we haven't been in Denmark for so long time, but we have seen that now. This is not the new normal, but we will of course foresee that we have a better performance going forward in Denmark than we have seen before given the underlying performance.
The other thing I think is important is that we were very explicit also last year in Q3. There was a one-off negative from a closure of a Home services contract. That is the increase versus last year is impacted by that as well.
Yeah. Great. That's all for me. Thank you, guys.
Okay.
Your next question comes from the line of Kristofer Olsson from DNB Markets. Please ask your question.
Yes. Good morning, Fredrik, Benno. Fredrik, you mentioned that the municipalities placements looking at the elderly care is pretty low for the moment. Maybe if you could give some sort of more color to that, how you see it playing out over your footprint and maybe what kind of hurdles we need to pass before we can get some sort of normalization into that.
I think that one of the hurdles have been a lot of negative media attention on spring around the difficulties in nursing homes. I think when we passed the summer and a little bit more over to this autumn, the message in media has been slightly adjusted. I think they have the difficulties around the healthcare system and elderly care as well. We see less negative media coverage, which of course impacts the reluctance for elderly and for their relatives to move into homes. We see an increased traffic on our website regarding an increased contacts through our system from relatives trying to understand what it means to move in. Also the fact that some of the routines are put in place that we can communicate around those has also gradually improved confidence. I think we are not back to normal.
Now that the spread in society is increasing again, I think we will continue and have to work hard to make sure that we don't see the same situation in our nursing homes as we saw this spring. Regarding the dialogue with the municipalities, I think that's been very positive all along and constructive. There seem to be no limitations financially or so it's more to do with basically the trust for elderly to feel fully comfortable with moving into a nursing home. That is what needs to come back to normal until we can count on that the occupancy is back on normal again. I don't know if that was a full answer to your questions.
Yeah. If you look at it from, obviously you're involved in a number of municipalities across your footprint, and we can get data on a couple of these looking at their net placing needs. How do you see? Is this something that is similar across the whole footprint, or it's some of the larger municipalities that really have this net no placing need, if you put it like that?
I think that may be one difference. We don't really see a difference in different parts of Sweden driven by COVID and the view from the elderly. What we do see is of course where we have municipalities that have a LOV or a full ability for elderly to choose, there we have a better chance of quickly recouping occupancy. Where we have municipality who themselves are deciding on where individuals should move in, they of course prioritize their own homes and secondly prioritize Contract Management homes and our Own Management home come in third because that's where they're going to have extra costs. Maybe that is the thing that will impact.
Coming back a little bit to Christopher's question there, it's important for us that the Contract Management homes are now starting to be fully occupied again, because then the empty beds are more going to be on the Own Management side, and hopefully that will help occupancy to recoup soon.
Thanks. Exactly. If you take that, give us an indication of how much of your own bed capacity are in municipalities where you have, say, now fully loaded Contract Management part or in LOV kind of municipalities.
I think a good over 50% would be in the larger Stockholm area of our Own Management capacity. We are also seeing actually LOV legislation being passed in more and more municipalities around Sweden. I also heard that the city of Gothenburg, even though given the COVID, they are not going to put in a new LOV legislation now. They are opening up for freedom of choice with the current framework agreement situation they have there. Despite the whole COVID situation, I see in more and more municipalities in Sweden that they are actually opening up for freedom of choice.
That's very encouraging. Looking at when you now model part of the opening pipeline, what kind of costs would you still incur? Would you be able to mitigate lease costs with the property owners during this time to some extent, or would you still feel that that part of the cost equation will hit you.
I think that in all the new homes we have right now, there's only a few of them that we have been able to mitigate through actually later move-ins. If that's possible, we do that, but that could be a maximum up to the six months, perhaps, delayed opening. The rent cost is likely to hit us, but what we of course can do is to avoid hiring any staff. That we do when we feel that we are not seeing a rather quick start of the homes. The ones we are opening now are typically ones where we either have an occupancy guarantee so that we know we're going to get it filled up quite quickly, or a situation where we see that the municipality is closing down an older home.
If, like in the case of southern Stockholm now, that we ourselves can actually close down one of our smaller homes and move in residents and staff and get a quick start. Those are the ones we continue to open as planned. The others we will delay.
When you look at the pipeline that you earlier indicated for, say, opening in the second half of 2021, which was quite a few units. Do you see maybe half of those may sliding into 2022 instead?
I don't have the number, but maybe something like that. We will be explicit on that on our website regarding each and every one of the new startups if we are delaying.
Excellent. One final, Fredrik. How long will you still be with us? When is your contract term ending, so to say?
I will end at the last of December, but Ambea is in very good hands with a strong management team, so you shouldn't worry about that.
Oh, I'm always worrying. Good luck out with your next assignment then because I guess this is your last quarterly call then.
Thank you.
Your next question comes from the line of Thomas Gessner from Handelsbanken. Please ask your question.
Yes. Hello, Fredrik and Benno. Just one question regarding the outlook for Q4. Much has been said, but I just wanted to know the difference between your assessment and Attendo's assessment earlier. To me, as I see it, you had now impacted earnings from COVID in your elderly homes and so on with SEK 50 million, according to your early estimates. Now you expect them to be SEK 30 million for Q4, while Attendo had that they expected earnings to be affected by SEK 10 million per month, first in Q2, but now they have increased that to SEK 20 million per month for the rest of 2020. Could you just elaborate on which one should we trust and what's the difference between your two situations and so on? Thank you.
We can of course not comment on Attendo's assessment. There might be differences in the share of business that they are in the elderly care segment versus others, and we of course have a slightly different mix both in terms of countries and business focus. When we look at Q3 versus Q4, we saw that Q3 didn't really have an improvement in occupancy, but it was roughly flat during the whole quarter. What we do see in Q4 is a slight increase in the first five, six weeks after the visitor ban was lifted on October 1. We are in our forecast, think that improvement, although small, will continue to improve. The second thing that is important is of course that we didn't get almost no governmental support in Q2.
We are expecting in Q4 that we are seeing municipalities starting to acknowledge our application for support. We think that that is going to be more in Q4 than in Q3. I think those are the two things that make us slightly more positive on the negative impact in Q4 than in Q3.
All right. Okay. I just try to understand the puzzle because of the increase versus decrease. I understand with the subsidies and so on that it might improve. Still the occupancy rate and would you say that after the ban was lifted, would you say it's still a disappointment in the rate that people have been moving in? Or would you say it was according to your expectations?
I think what we do now it is of course extremely hard to forecast week by week what is happening. We are just every Monday when we summarize last week's performance, we look through and follow the development. So far we have seen a slight improvement every week since the visitor ban. We are of course also seeing an increase of the virus spreading in society and the coming weeks will of course be very important to the occupancy development in the end of November and December. It is difficult to judge exactly where this will go from here.
Yeah. All right. Thank you from me, and good luck in the future, Fredrik.
Thanks.
There are no further questions at this time. Please go ahead.
No more questions, I say thank you all for calling in. The Q4 report will be published on February 16th. Wish you all a nice day.