Good morning, everyone, and welcome to this conference call, where we will present Attendo's results for the fourth quarter of 2018. My name is Andreas Carlsson, Communication and IR Director at Attendo. Today's presentation is hosted by Attendo's CEO, Martin Tivéus, and Attendo's CFO, Fredrik Lagercrantz. After the presentation, we will open up for questions. Over to you, Martin.
Thank you, Andreas. Good morning, everyone. Welcome to the presentation of our fourth quarter results for 2018. I've now been at Attendo for almost six months. I've spent significant part of my time to get to know the units, the staff, and management. As I talked about last quarter results presentation, what I've seen is a strong commitment and entrepreneurial spirit in Attendo on all levels. I also believe that given our capabilities to provide high-quality care, and given the market trends, our growth opportunities long-term are very strong. Having said that, the results in Q4 and for full year 2018 was not satisfying. We've seen a significant impact by the many openings in combination with cost related to closure of units, predominantly within individual and family care. The high rate of openings will continue in the coming years.
That also means that we foresee limited opportunities to improve margins this and next year. Apart from the many openings, we also see some headwind over 2019 and 2020, mainly within three areas: outsourcing, continuously negatively impacted by cost for opening up new units. Project and facility-related costs were significantly higher versus last year, and this is a number of smaller items that together adds up to a larger sum. Fredrik will walk you through that more in detail. As we have indicated before, the lost remembered outsourcing contracts had a negative impact in Q4, as well as some calendar effects. In addition, we increased provisions during the fourth quarter of 2018 by SEK 60 million in relation to a few individual old units that we are closing and operations expected to be loss-making in coming periods.
We reported an operating cash flow of SEK 155 million, and as previously announced, we finalized the divestment of our health care operations in Finland just before year-end. The proceeds have significantly strengthened our balance sheet and will support our growth ambitions long-term. Next slide, please. Let's take a closer look at our contract models. We can see that the quarter reflects continued growth in own operations. Net sales in own operations increased by 21% compared to Q4 2017. This is explained by acquisitions, new nursing homes, and higher occupancy in units that were under start-up during the corresponding quarter of last year. During the fourth quarter, we opened 11 new own units with a total of close to 400 beds, higher versus previous quarter, but lower versus the average in 2018. The number is expected to be high in the coming quarters.
For 2018 full year, we opened 76 care homes with 2,409 beds. Turning to outsourcing. Outsourcing accounts for less than 20% of sales in Attendo, and it will continue to decrease as part of the group as we are growing in own operations. Net sales and profits in outsourcing declined due to ended contracts in Q4. We have recently ended contracts with good profitability, something that will have a continued negative impact on the comparison numbers in 2019. We estimate the negative impact of up to minus SEK 50 million on EBITDA year-on-year. Looking at the results of tendering processes in Q4, Attendo lost contracts net of an annualized sales value of SEK 50 million. For the full year, however, Attendo won and lost contract volumes are in balance. Next slide, please. This chart shows the rolling 12 month opening pace.
As I just mentioned, we opened close to 400 beds in Q4 isolated. The number of open beds rolling 12 months around Q4 was 2,409 beds, almost 30% higher than the same period last year, but clearly below the peak level of 2,900 beds. The high number of openings have had a clear negative impact on profit and margin in 2018. The high rate of openings will continue in 2019 and 2020, even if the level will be lower versus the peak in Q2 2018. Our mature units in own operations continue to demonstrate stable development related to occupancy and profitability, and we predict a good profit growth during the coming years. However, given the ongoing expansion and expected lower contribution from outsourcing, the possibility to increase the margins from the existing level is expected to be limited during this period.
We are carefully assessing the balance between growth opportunities and the increased exposure that the expansion entails. In hindsight, we have taken too high risk historically in some projects where we haven't been able to secure a contract with Local Authorities before an opening. Going forward, we are reducing our risk exposure in connection with new projects. In this context, bear in mind that units that were currently open up are based on decisions several years ago as there are long lead times. Finally, I'd like to mention that while we are stepping up our sales efforts and are on record high sales levels, open beds still exceeds net sold beds. We have not yet reached the inflection point. Later in the year, we will provide more color on the long-term projections.
We will update the long-term financial targets based on our strategic plans and reflecting the new accounting standard, IFRS 16. Next slide, please. Attendo now has around 15,700 owned beds in operation. That's an increase by almost 20% from the corresponding period 2017. We have continued to find new opportunities, and we started construction of 10 new units that will add 379 new beds. In total, we had almost 2,500 beds under construction by end of Q4. This is a slight decline versus previous quarter, and we are on the lower level versus the peak in end 2017. Next slide, please. Let's turn to the overall market trend. I'll focus on situation in Finland. An intense debate about the conditions in care of older people has arisen recently with a focus on private providers.
In recent days, we have received critique relating to newly opened nursing home, Attendo Pelimanni in Alavus. This new unit received about 50 new residents with intensive care needs in only a few weeks. The unit has temporarily got its permit suspended by the local supervisory authority in Western Finland. We take this event very seriously, and relevant measures have been taken. I want to emphasize that Attendo Finland is operating according to the Attendo model. This implies continuous internal quality monitoring at every single unit, a value-driven culture, and clear accountability on all levels. Attendo has about 400 care homes in Finland, and we have historically had fewer incidents in relation to our size compared to the care sector as a whole. Now turning to Sweden.
After a long government formation process, the Social Democrats and the Greens were able to form a centric government early in the first quarter of 2019 with support from the Liberal Party and the Center Party. As part of the agreement between these parties, the question regarding profit limitation for private operators is taken out of the political agenda. On local level, we can see that the results from the election has increased the number of local authorities governed by center or right-wing coalitions. This could long term open up for more outsourcing contracts and own operation establishment. With that, I hand over to Fredrik for a financial review of the quarter.
Thank you, Martin. As you remember from last quarter, all figures related to the income statement are presented without the healthcare operation in Finland, unless we state otherwise. Let's turn to page seven. We can see that the net sales continue to be strong. Total net sales amounted to SEK 2.8 billion, up by 50% compared to the corresponding quarter last year. Adjusted to currency, net sales increased 12%. Acquisitions contributed with approximately 7%, a bit lower than previous quarters as a consequence of Mikeva being consolidated into Attendo in November 2017. Organic growth improved to 4.5% in the quarter, and is over time expected to further increase due to our many openings. The fourth quarter was, as earlier announced, negatively impacted by ended outsourcing contracts.
You should also bear in mind that net sales is still negatively affected by the closed units within home care and the individual and family care business. In the coming quarter, we expect a small acquisition effect as there will be no year-on-year effect from the Mikeva acquisition. Reported EBITDA amounted to SEK 98 million in the fourth quarter, including increased provision for closure operations and loss-making contracts. EBITDA, excluding the increased provisions, was SEK 158 million with a margin of 5.6%. The cost for provisions of SEK 60 million relates to an increase of existing provision. In accordance with accounting standards, Attendo regularly, on a unit-by-unit basis, makes assessment of potential future costs to close the unit or anticipated losses for units that have passed the startup phase. The assessment during the fourth quarter resulted in a need to increase the existing provisions by SEK 60 million.
The increase relates to closure of an old nursing home in Southern Sweden, two individual and family care units, home care operations in Denmark being terminated, and to continued losses post-startup phase for a nursing home in Sweden, where we lack a contract with the local authority. We believe that new situations may arise also going forward, which would need a provision, but the total amount provided for should not increase. Hence, we forecast no further profit impact in 2019.
Excluding the provisions, we see that also the underlying margin has declined compared to last year. The margin is pressured both by the large startup cost and by Mikeva coming in with clearly lower margins than Attendo. You also see that with this quarter, I've had unusually high cost for a number of facility and project-related items. I will come back with details on the underlying EBITDA development on next page.
Financial net was negative SEK 38 million compared to negative SEK 23 million in Q4 2017. The higher interest expenses are explained both by higher debt and higher interest margins after the Mikeva acquisition. Income tax for the quarter was SEK 6 million, which equals a tax rate of 35%. The high tax rate is mainly explained by the losses in the Danish home care business, and to some extent, of a lower share of remaining business in Finland.
Net profit from continuing operations amounted to SEK 18 million a quarter, which equals an earnings per share after dilution of SEK 0.11. Profit from divested operations amounted to SEK 605 million, of which SEK 579 million is related to capital gain of the divestiture. The capital gain was positively affected by currency effects. Next slide, please. As I mentioned, the underlying operating profit for the quarter was SEK 158 million, SEK 30 million lower than last year.
The largest improvement comes from units that were on the start-up last year and now are entering into more mature phase. We continue to see positive development for our home care operations. Our efforts to improve planning and routing and to increase client concentration in the areas we operate have given results. Acquisitions also contribute positively, but with a smaller effect this quarter as there's only one month of Mikeva effect. Looking at the items crushing our profits, we see the continued large impact from start-ups, although somewhat lower sequentially compared to the second and the third quarter of 2018. As mentioned, we also have higher cost than usually this quarter for facility and project-related items. A high activity level in combination with timing effect has led to high cost in the quarter. For example, transfer costs for acquired real estate, facility maintenance costs, and M&A related costs.
We also have a negative development in outsourcing, mainly driven by a negative balance between started and annual contracts. The fourth quarter has also included negative calendar effects, partially due to the number of public holiday, but also a consequence of many days in a sequence. Usually, we schedule recurring but not daily tasks to normal workdays. This holiday season, some of those activities were scheduled during public holidays. Before we turn slide, I just want to give a few comments on the coming quarters. First, you should note that we last year did write downs of real estate of SEK 20 million in the first quarter. Further, we expect positive impact from units that were under start-up last year.
As Easter this year occurs in the second half of April, we will on a year-on-year comparison have a positive calendar effect in the first quarter and a negative effect in the second quarter. Openings will at the same time have continued negative year-on-year effects. The negative effect on outsourcing we have experienced in the fourth quarter will remain. We will also have overhead dis-synergies following the divestment in Finland to a magnitude of about SEK 50 million for 2019. Next slide, please. On this slide, you can see the complete cash flow statement. First, bear in mind that cash flow includes the healthcare operations in Finland. The large positive cash flow in the quarter is due to the divestment of the healthcare operations in Finland. After the quarterly close, we have repaid external debt corresponding to an amount of about SEK 2 billion.
At the end of the quarter, net debt amounted to SEK 2.5 billion, which equals a net debt to EBITDA of 2.7. Next slide, please. From January 2019, Attendo is applying the new accounting standard IFRS 16. As Attendo has chosen to apply the full retrospective approach, we together with this quarterly report also show restated income statements and balance sheets for 2018. Quarterly statements for 2018 can be found on our website. The implementation of the standard means that essentially all leases will be recognized on the balance sheet, as there's no longer any distinction between operating leases and finance leases. For Attendo, it is the rental agreements for premises where we operate with own operations that has material effect. External benchmarks of yield for public properties are used as the discount rate to calculate the lease liability.
For our most important geographies, yield varies between 4% and 6% for 2018. As you can see, both lease-related assets and liabilities increase significantly. Liabilities increase more than assets, and hence we also see a negative effect on equity. On the income statement, EBITDA increases as most rents now are excluded. EBITDA also increases, but not to the same degree, while net income is negatively impacted. Over the life cycle of a single contract, there will be no positive or negative effect on net income, which also will be the case for a company with a fully balanced profile of rental maturities and steady state. As from the Q1 release, we will report according to the new standard, but we will also disclose information to enable comparability with the old accounting standard. With that, I hand back over to you, Martin.
Thank you, Fredrik. Next slide, please. Attendo's quality work is carried out continuously in all local units according to a thoroughly tested model. We call it the Quality Wheel. During 2018, our operations scored an average quality index of 84%, a small increase from 2017, adjusted for the divested Finnish healthcare operations. The annual MPE survey was carried out during the fourth quarter to take the temperature on MPE satisfaction. The year's survey showed stable figures, both for job satisfaction and satisfaction with immediate manager results were 3.9 on a scale of one to five. The first new home designed according to the new AttendoHem concept was opened at Attendo in Enköping. AttendoHem is an assisted living housing form for people who receive home care and who want more security and social community in their everyday lives.
Attendo initiated a program during the quarter aimed at enhancing the mealtime experience at nursing homes in Scandinavia. The idea is to transition to more locally produced food and increase the share of food that is prepared locally at individual homes. I would now like to make a short summary of the full year 2018. If we look at financials, net sales in 2018 amounted to SEK 11 billion. Adjusted gross was 19%. Operating profit, excluding non-recurring, amounted to SEK 844 million, corresponding to an EBITDA margin of 7.7%. The lower margin versus 2017 is mainly due to three factors: high opening costs, lower margins from the acquired company Mikeva unit, and lower contributions from outsourcing. We've had non-recurring items of SEK 133 million. Including these costs, EBITDA amounted to SEK 711 million. Operating cash flow was stable, amounting to SEK 709 million.
The board of directors proposes a dividend of SEK 0.60 per share. This is 30% on net profit from continuing operations. To sum it up, Attendo has stable margins in the mature business. The expansion has had a significant impact on our profit, it's at the same time the base for our future organic growth. The market activity is high, Attendo has underestimated the impact of the very many openings. Going forward, we are reducing our overall risk level in new projects. This means that we expect to see healthy income and profit growth in the coming period, but there will be limited possibilities to increase margins. Thank you for your attention, over to you, Andreas. Okay. We will now open up for questions. Please state one question at a time. Operator, please go ahead.
Thank you. Ladies and gentlemen, if you have questions for the speakers, please press zero one on your telephone keypad now. We have a question from Kristofer. Please go ahead.
It's Kristofer Liljeberg from Carnegie. Question regarding your comment here about margin. I could understand what you say about 2019, the fact that you don't see much upside potential in the margin for 2020, I think that must either signal that the startup phase is longer than 18 months or and that there are some problems with the Mikeva acquisition. Home care in Denmark, you said, has that been sold now completely or is that still a drag on margins here going forward?
Home care in Denmark is still a drag on margins until the end of this year. Our largest loss-making contract in home care in Denmark is expiring in November this year. Let me come to that. I think it's a good question. First, I think that we have underestimated the impact from the ongoing expansion. There is more activity in the market as a whole. We have tripled opening pace over the past two years, and it does take a longer time to fill the homes. We are in some areas creating a temporary local overcapacity, which takes a longer time to fill. Secondly, we have a challenge from other areas. Individual and Family Care we talked about, and lower profits from outsourcing. That's a significant impact. We expect that to be around SEK 40 million this year.
Mikeva acquisition that was a big acquisition in Finland we did the end of 2017. It came in with significantly lower margins than Attendo as a whole. It does take longer time than expected to raise margins to Attendo level. Thirdly, we have the synergies from the divestment of the Finnish healthcare operations, which we expect to roughly SEK 20 million.
Okay. Coming-
The synergies also takes time to adapt to.
Given the fact that the margin trend has been more negative here in the last few quarters than early 2018. Going forward, coming quarters, do you see further downside risk in margins or will margins start to stabilize here?
Kristofer, this is Fredrik. As we say is that we don't expect margins to increase from the current underlying level
We think about the full year 2018, excluding the one-off items or the non-recurring items. That's the information we give, and we're not talking about specific quarters or decimals, exactly if it goes up and down, but that's the level where we anticipate the margin will be for the coming two years.
Okay, you don't see it becoming much worse first in the first half of 2019, and then getting better in 2019 and stabilize there?
We don't give guidance on specific quarters. This is the statement we've given.
Okay, thanks.
I think what Martin is.
Thank you.
Yeah.
Martin
Yeah, just to add on that, Kristofer, that we see a strong organic growth in the portfolio, in normal operations. An overall strong top-line growth. We do anticipate a profit growth over this period, even though that we see it will be challenging to increase margin from current level over this year and the next.
On that, could you say anything what type of organic growth you foresee for 2019 and 2020? Approximate figure.
We don't give an exact guidance yet, you can see that our organic growth has been going up for several consecutive quarters now. We'll continue to opening on a high pace.
Okay. Thank you.
Thank you. Next question.
Thank you. Our next question from Peter. Over to you.
Hi, can you hear me?
Yes.
Okay. Yeah, just following on from Kristofer's question. I'm not sure you really answered the 2020 question, to be fair. When you look at the fact that you'll have a similar number of beds opening or even lower number of beds opening in 2019 and 2020 versus 2018, you're going to have a maturing base of beds, that there'll be a larger pool, Mikeva margins, I guess, shouldn't go down. Can you please explain why in 2020 the margins should not go up? Very clearly. Just explain that point clearly, please.
Yeah. This is Fredrik. If we look at what we think will happen and our pipeline and our ongoing construction projects and what will open, it's not only about the number of openings, but it's also geographically where they are located and the size of each unit. It's also so that as we discussed that the fill up times are beyond one year. We've been talking about 18 months, and that also differs on the local level. When we do our estimates for 2020, the sum of this is that we will have a continued high pressure from the openings. As Martin mentioned, although our ability to fill the units are steadily increasing, it's still so that we're opening more beds than we are selling or filling new beds. We are still on a negative balance on that.
We see that to continuing with having effect on our margin in 2020.
Okay. With that, given that this has been a topic you've as a group known about for a while in terms of the longer fill rate, is there anything you can do to work on, I would call it in the broadest sense, marketing, especially in the agreements with the Local Authorities who help direct beds, the patients to beds, to try and improve that fill rate rather than just accept it as a deteriorating factor?
We don't accept it as a deteriorating factor per se. We are working on improving our sales capacity. We can also see net filled beds are going up. We are actually selling more beds now than we have ever done before. Still, the opening rate is very high, so we're still not on balance.
Okay. You basically run with the organizational structure that you have and work through this opening rate. Is that what you're saying?
We have added sales capacity. We are adding sales capacity still.
Okay. You are adding. Okay. Then you mentioned on the pipeline that you needed to decrease the overall risk in new projects. Can you just talk a bit about what's working its way through and what are the risk factors in particular from size of openings, geography of openings. What is the negative risk factor in the pipeline that you've identified?
Yeah. I think that in hindsight, we have taken too high risk in the past in some projects where we haven't been able to secure contracts with Local Authorities before an opening, and they have, after completion, continued not to buy from us. Going forward, we are reducing the risk-taking somewhat by, among other things, more clearly securing the contractual situation with the municipality before establishment.
Right.
The high rate of establishment is a prerequisite for good long-term profit growth and future value creation as well.
Right. Is that something you think you can work on with the existing pipeline, or is that only with new units that you start to develop?
Standards under construction are under construction, even though I must say that if you look at the increase of loss provisions that we did during Q4, parts of that was related to individual projects where we hadn't secured the contract situation before opening. Looking at the pipeline, those kind of projects are very limited going forward, and we are sharpening our requirements in that respect going forward.
Okay. The exercise of not having that relationship established is something which you don't think is a significant issue going forward as you just had, or I didn't fully understand how you answered the point is how you can manage that going forward.
The way we manage that going forward is that we don't accept any new projects where we don't have a clear contract situation with the local authority.
Okay. Two questions. One, is there any aspect of this in terms of staffing cost or staffing ratio assumption in the startup phasing that you also have made an assumption, or is it merely a fill rate point?
Merely a fill rate point.
Okay. Last thing is just.
It's good to get some more perspective on that, I think we mentioned that before as well. There is an underlying strong demographic growth of elderly people in the Nordic region. We estimate 66% increase in plus 85 year-olds over the coming 10- 12 years. The bigger demographic growth is though still a couple of years ahead, which we're building for. Over the past two years, we have tripled opening pace. We are in some areas slightly before the demand curve, so to speak. We are not the only ones who have increased activity in the market. Has also competition. That means that there is more activity in terms of building new capacity overall in the market. What we have seen is that this is creating in some LAs temporary overcapacity that will be filled over time.
It is hurting fill-up times in the short run. That has a definite impact on fill-up times and margins in those units.
Okay, Peter, maybe we should let some other entrants also in the queue in.
Just okay, I'll go back in the queue.
Last one. Let's take another question on operator, please.
Thank you. Our next question is from Tom. Over to you.
Yes, good morning. A follow-up question on this new approach on our risk profile in the pipeline. If we take your pipeline of 2,500 beds, how many of these beds are in locations where you don't have a contract in place, and how does this deviate between Finland and Sweden? Also how will this affect your pace to grow pipeline going forward? Will this clearly affect the growth rate in how you will fill the pipeline of beds under construction?
The pipeline that we have, 2,500 beds, is a pretty solid half of the pipeline. We have maybe a single project where we don't have a contract in place. Pipeline going forward is in less risk in Attendo than what we have been building so far. The shorten that we're doing now, which we will see an effect of basically two years from now is, or 18- 24 months from now, is on the contract situation is one thing, but it's also an assessment of the supply-demand situation.
I guess.
Sorry. It's important to note that overall, we want to take down our risk exposure within our new projects, the contract situation is part of the assessment. We do an overall holistic assessment whenever we look at a new project. Contract situation, also relationship with the local politicians and civil servants in that municipality are important. It's also how we see the supply-demand situation and estimates and judgments on what is happening on the competitive side. There are other things like what's existing capacity, are there other homes that are about to should be closed, and indications like that. It is an overall assessment, we see that in hindsight, we have taken too high risk in some cases, and we want to take down our risk exposure going forward. The contract situation is one part of that.
It's a concrete part, so it's more easy to mention, it is still an holistic situation.
Understand. If it's easy to mention, how much of the pipeline is without contract?
It's a few cases. It's clearly less than 10% of the pipeline if you talk about beds.
Okay.
Even more or less.
Understand. Secondly, what have you discovered in connection with the divestment of the Finnish healthcare that you didn't know at the time of the transaction in terms of these synergies? It was really nothing you mentioned at the time of the transaction. What is new?
We have worked through more in detail which part of the overhead cost on overhead functions is it that we really need to save, what needs to be in place to operate our ongoing business. As we grow, then we get the negative scale effect, so to say now when we are divesting. As we grow, we will get the positive scale effect back because the overhead is not developing in the same rate as revenue. I see this as more of a temporary midterm problem. Over time, we will come back to good scalability also in terms of overhead costs.
This is something you've discovered after you closed the transaction?
No, I wouldn't say it's something we discovered after.
Okay. All right. Thank you so much. I get back in queue. Thanks.
Thank you. Our next question we have Kristofer, over to you.
Thanks. I must follow up then on Hans' question. You're saying the current pipeline seems much better than what you have opened in the past few years. Then again, I don't understand your comment about the margin in 2020. Is that a continued drag from homes that has already been opened or what? It's a bit difficult to understand it.
I don't think we have stated that the current pipeline is much better than what we have seen now.
I think you just said that the pipeline is pretty solid, clearly less than 10% of all the projects that doesn't have contracts. There's nothing wrong with the pipeline, I think you said also.
What we said is that when we do the risk assessment, we take a holistic picture and weigh in several different factors and parameters. The contract situation is one part of it. Where we can see the difference between sometimes within the contract situation and some other parameters is that if we don't have a contract, it can mean that the unit can be fully empty for some time, or for some time before we sold that, a very low occupancy. If there are other more supply and demand issues, it means that the fill rate can be slower than anticipated, but still is gradually increasing. It's more a binary risk when it comes to contract situation. I think what we're saying is that we are adjusting our risk exposure, but based on that we have an existing pipeline that is a consequence of earlier decisions.
The existing pipeline is more in par in terms of risk profile with openings that we've done over the last one to two years.
One should just remember that as Martin pointed out, this basically idea about margin projection and assumptions, of course, there are many factors. One is the openings. Another is, as we talked about, the outsourcing situation also in the integration and the progression of Mikeva and other factors together. Also as Fredrik pointed out, also where the openings are the bias actually towards more of Sweden than Finland. They're different profiles.
Okay. When you talk about lowering the risk going forward, that's one about making sure you have contracts, it also sounds it's about opening in the right areas where you know that there is a strong demand immediately.
It's a combination of factors. Yes. Correct.
Okay.
Correct.
Thanks. Okay. Makes sense. Thank you.
Thank you. All right there?
Thank you. Our next question, we have Peter, over to you.
Hi. A couple left, please. One, on the fill rate, do you have a sense as to what extent the fill rate is extending beyond 18 months in the pipeline?
As we mentioned many times, the fill rate is very individual in cases or every local market is different. The units we open now, for obvious reasons, we can't answer what the fill rate will be in 18 or 12 or 24 months. The fill rate has extended, and what we said is that if you go back two years, our expectation when we opened the units was that they would be at good occupancy after 12 months. Our current expectation is that it will be on good occupancy after around 18 months. It has been extension. That's where we stand currently. Yes.
Okay. Then on the margin profile, can you give some sort of sense as to when you think the margins will bottom?
I think we stay with what we've said, that we don't expect to increase or improve the margins from the current level. i.e., the underlying margin we've seen for 2018.
Do you expect them to be down in 2019, therefore?
No, that's not what I said. I said we don't expect them to increase from current level.
Okay. Last question, you gave the pluses and minuses on the quarter, and you mentioned that facility and project item cost, M&A, et cetera, was an item, and negative calendar was an item. Can you give some sort of quantification? These seem to be more timing factors which can happen quarter to quarter. Is there any way just to try to understand how significant they are so we can try and bridge what happened versus the forecast? Obviously analysts can't forecast these items.
Yeah. If we start with the calendar effect, if you just look at the number of public holidays, that impact is around SEK 10 million. As was mentioned, we also had this issue, we could say, of many days in a sequence. That estimate is harder to quantify. We can see that we have had overall high cost, and we have estimated that effect is somewhere between SEK 5 million-SEK 10 million. If you talk about the other unusually high cost related to project and facilities, I would say that the pure smaller items, but the pure, if we should call it one time, is around maybe SEK 10 million. Then we have maybe similar amount of timing effects, which is not necessarily one times, but it was many of them in the quarter.
That's fine. Thank you very much.
Thank you, Peter. Okay. Next question.
Thank you. Just a gentle reminder, if you'd like to raise a question, please press zero one. I'll move on to the next. Hi, Daniel. Over to you.
Yeah. Thank you. Just wondering if you can elaborate a bit further on the halted operations in Finland and the potential or the next step going forward, and also are there some structural shift happening that we are missing out of in terms of requirement of increased staffing due to the issues?
There is a political debate on increasing staffing or national minimum recommended level of staffing in Finland. It's a bit too early to say what the conclusions can be drawn from that debate. I think staffing requirements in Finland may change. It's an election year in Finland. It's a political debate. Finland is spending significantly less per capita on elderly care than the other Nordic countries. If those staffing requirements would change, we also expect that prices would be adjusted accordingly. On this specific unit, I think it's important to say we have some 400 units in Finland. We have remarks from the authorities in one of our units. Overall, remarks from the Finnish regulator in Finland, we are at a significantly lower level than the market as a whole.
Thank you.
Thank you, Daniel. Operator?
Thank you. There are no questions in queue at the moment. If you'd like to raise a question, please press zero followed by one. We have the next question from Victor. Over to you, please.
Yes, good morning. Victor Forssell from ABG. I have a short one on the maturity levels in Sweden and Finland. Clearly, you are not growing the top line in Sweden in own operations as much currently. Is that more a mature level, you'd say, in Sweden, or how should we interpret it then? You can also compare to Finland.
We're adding much more of the openings are related to Finland, and as we talked about the profile, is that we have more openings late this year and next year actually in Sweden. It's a bit different profile of openings, and that's the main explanation.
The utilization rate?
Also some of the closures in own operations, individual, family, et cetera, and also in home care are also reported in own operations. That's also one explanation for the development where you see the revenues in Sweden.
If you look at the installed base of mature units in Finland that we're continuing with, there we have healthy occupancy above 90%.
Overall, both occupancy and margins in our mature operations are very stable, both in Sweden and Finland.
All right.
However, around 70% of the growth is related to Finland, and that was a lot of factors. There is an ongoing healthcare reform in Finland. More than 50% of the market in Finland is already privatized. The public sector is building a lot less in Finland than in Sweden. Over the past year, almost nothing at all. Private operators have to build up the capacity. If you look at the demographic curve in Finland, they foresee the largest growth. It's a 69% increase of 85 plus people in Finland projected for the next 10 years. There is a big demand in Finland, and that's mainly built by the private sector. That was the underlying sort of market reasons for us investing more in Finland than in Sweden currently.
Yes, of course. Regarding the risk that you mentioned earlier, is top-line growth in Sweden also hampered by units not being filled up due to these risks of no contract with local authorities, et cetera?
Nothing short two individual cases. The main thing affecting fill up times in Sweden is that on a general level, we have more than 290 local authorities in Sweden, and there is still a very limited amount of those. We have 21 authorities with freedom of choice. We have about a similar amount of authorities where we have framework agreements. Most of the construction works, openings, both from us and from competition, is currently made in those local authorities, even though they are pretty big. Some of those are Stockholm and Gothenburg, for example. That also means that what we have seen is that both us and the market as such is in some of these LAs currently building a bit ahead of the demand curve. That means that we are creating temporary overcapacity, which will be filled over time as demographic takes care of it.
It does hurt fill up times. Also, yes, looking at the optics of the revenue number in Sweden, please remember that we have closed down units in Sweden related to individual and family care and home care. That's the main reason why you don't see the same organic growth development in operations Sweden. Yeah.
All right. Perfect. Thank you.
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