Good morning, everyone, and welcome to this conference call where we will present Attendo results for the second quarter for 2020. My name is Andreas Koch. I'm Communications and IR-Director at Attendo. Today's presentation is hosted by our CEO, Martin Tivéus, and our CFO, Fredrik Lagercrantz, and after the presentation, we will open up for questions. Over to you, Martin.
Thank you, Andreas, and good morning, everyone. We've been through one of the toughest periods in the history of Attendo. A period where the coronavirus pandemic and the COVID-19 illness has threatened life and health of both our clients and employees in all our markets. The situation in Sweden, and especially Stockholm, was very challenging from March until May. Today, we're in a much better situation with lots of learnings and very few cases. We now have zero infected regular residents besides the customers we have admitted from hospitals. I'm sincerely grateful for all the hard work by our amazing staff since the start of the pandemic. I'll start with an update about the corona situation, followed by the ordinary operational and financial updates. Next slide, please. The corona pandemic has had an impact on all of us working in the care industry.
Our main focus has been to prevent the virus from entering our units and to protect customers and employees. In early March, we took strong actions, including visitor ban for all units and introduction of health checks before the start of every shift for all care employees. Even with these strong measures, number of infected clients continued to increase in several nursing homes in Sweden, indicating that the virus could spread asymptomatic. Later on, this has been verified in both internal and external studies. Based on these experiences, we decided to introduce the use of protective equipment in all care-related instances for all care staff, regardless of symptoms, to further strengthen the barrier to the infection. In mid-May, mouth protection was fully introduced at every unit, and since then, number of infected clients at nursing homes has declined drastically.
Except for a handful of clients that have been admitted from hospitals with COVID-19, we have zero infected regular residents in our nursing homes across the Nordics. We estimate that the financial impact of the pandemic in Q2 was SEK 60 million, a combination of higher costs and profit impact from lower occupancy. The corona specific costs relates primarily to PPE and sick leaves, while the impact on occupancy is an effect of the general anxiety about the pandemic in combination with visiting restrictions, making most clients and their relatives reluctant to move into a nursing home. For the remaining part of the year, we do not expect any further cost impact, as we assume that known state support will fully offset further higher costs related to the pandemic.
In terms of revenue impact, we expect the impact of lower net sold beds from Q2 to remain in the second half of 2020 as we are entering the third quarter with lower occupancy, especially in Scandinavia. We estimate a negative run rate profit effect from lower occupancy going into Q3 to around SEK 10 million per month, or SEK 60 million in Q3 and Q4 combined. This assumes a normalized demand for new beds in the coming period as restrictions are being lifted, but we don't assume a catch-up effect in this estimate. Our Scandinavian operations displayed an underlying stable result, but we see a clear negative impact on occupancy. We have managed to improve performance in outsourcing operations and home care, but negatively impacted by start-up costs for new units and impact from the COVID-19. In Finland, we report a small drop in profit versus last year.
The positive impact from higher prices and more occupied beds were offset by the corona effect, continued high number of openings, and higher overhead costs. The turnaround plan in Finland moves forward. We are happy to see some more clarity from the two of the external factors during the quarter, the new staffing requirements and the salary negotiations. The transition steps in the staffing reform have been clarified, which is expected to simplify the process to renegotiate new contracts with local authorities. Slide, please. We reported a top-line growth in the quarter of 4% year-on-year excluding currency, mainly a result of the high number of openings past 12 months in Finland. We have no help from acquisitions this quarter. Number of sold beds has been clearly impacted by the corona situation. Reported EBITDA amounted to SEK 153 million, corresponding to a margin of 4.9%.
In old GAAP without IFRS 16, this translates to an EBITDA of SEK 42 million. This number includes a capital gain of SEK 41 million and a negative impact from the pandemic of SEK 60 million. Net of these effects, we deliver an EBITDA in old GAAP of SEK 61 million. Profit in Attendo Scandinavia was higher versus the previous year, excluding corona and capital gains, while Attendo Finland reported a small drop versus last year for reasons explained earlier. In the context of the pandemic, Attendo carried out an updated impairment test for goodwill. This resulted in the write-down of goodwill related to the Finnish operations with an amount of SEK 834 million. In addition, we made an impairment of right-of-use assets by SEK 137 million, also related to the Finnish operations.
Fredrik will describe this in more detail later. During Q2, we opened additional 481 beds, bringing us up to 17,615 beds in all operations.
Occupancy declined 1 percentage point versus last year overall and 2 percentage points versus last quarter in mature units, the largest down as an effect of the pandemic. Next slide, please. This chart shows the rolling 12-month opening pace and openings per quarter. We still had a very high number of openings in Q2. From next quarter onwards, the opening pace will be sharply reduced. Towards the end of the year, we will return to an opening pace similar to what we had in 2016. Number of openings in Finland will decrease drastically, while we maintain a relatively high opening pace in Scandinavia in 2021. In the second half of 2020, we expect to open around 200 new beds. Next year, we expect to open around 1,000 beds, where the majority will be in Scandinavia. Slide, please.
As I just mentioned, we now have around 17,615 owned beds in operation, an increase by 9% from the corresponding period last year. We added 480 beds this quarter, the net increase was around 400 beds, as we are selectively working to exit some contracts in areas with poor prospects, mainly in Finland. In the second quarter, we started construction of two new nursing homes in Scandinavia that will add roughly 120 new beds. No new projects in Finland, as you can see, the number of beds under construction has been reduced by more than 60% from the same period last year. This is an effect to our decision to sharply reduce new projects in Finland as part of our turnaround plan for Attendo Finland, we now have 1,100 beds under construction, the majority in Scandinavia.
Our pipeline in Finland is now only around 200 beds, the lowest number for many years, and a reduction with almost 90% in two years. The focus from now on is to fill the units that have been established in the recent years, and to show an improved occupancy in Finland coming quarters. Next slide, please. This chart explains group margins in mature and startup units and sales. The downward trend since 2019 relates primarily to the higher cost level and more empty beds in Finland. In Q2, we also see the impact of the corona pandemic. We are now in an inflection point, where we see a stabilization, and from this point, we should see a gradual improvement. The key drivers to turn the margin are higher prices and higher occupancy.
Prices started to increase from Q1 this year. As I mentioned, the number of open beds will now decline, and we could focus our resources on filling empty beds. Slide seven, please. Turning to occupancy for vintage. As you can see on the top green line, the occupancy in mature units has dropped this quarter. This is something very unusual and related to lower sales for beds, and in some regions, higher mortality in the context of the pandemic. Inflow has been low, also in regions where there has been very few affected by the virus. In July, we have seen a more normalized inflow of new residents in all markets, especially in Finland and Denmark, where the visitor ban has been canceled. Having said that, it's hard to estimate when we will be back on the Q1 occupancy levels.
With that, we move into the financials for the quarter. Please go ahead, Fredrik.
Thank you, Martin. Let's turn to page eight. Net sales increased to SEK 3.1 billion , up by 4% compared to the corresponding quarter last year. Adjusted for currency, net sales increased by 4.3%. Acquisitions contributed with 0.4%, and organic growth amounted to 3.9% in the quarter. The organic growth was negatively impacted by lost revenues due to the corona situation. In Finland, we still see growth across all service offerings, while growth in Scandinavia is clearly hampered in elderly care nursing homes and home care. Reported EBITDA amounted to SEK 153 million in the quarter, and I will come back with details on the underlying EBITDA development. In the quarter, we reported negative items affecting comparability of SEK 971 million, all related to Finland. This is mainly attributable to a goodwill impairment and partly impairment of right-of-use assets.
Given the corona situation, we concluded that a renewed goodwill impairment test was required. In the renewed test, we used the same long-term lease-adjusted margin of 7% EBITDA, but given the new situation with more uncertainty, a higher risk premium and weighted cost of capital was utilized. The new post-tax WACC utilized is 8.7% compared to 7.3% in the previous test. The renewed test resulted in a goodwill impairment of SEK 834 million. Also for Attendo Scandinavia, a renewed test was performed with the higher WACC, but concluded that no impairment was needed. Further, we have also written down the carrying value of IFRS 16-related right-of-use assets. These are assets that are booked when we enter new lease agreements. As the corona situation has led to a lower inflow of customers and more empty beds, we concluded that the value in use for Attendo was lower than the carrying value.
The assets were impaired by SEK 136 million. The running cost for the empty beds will also going forward be reported as part of the quarterly results. Just to be very clear, it is only the impairment of goodwill and right-of-use assets that has been reported as items affecting comparability. The real estate gain and corona effects are reported as part of regular EBITDA. Financial net was -SEK 168 million compared to a -SEK 137 million in 2019. IFRS 16-related interest expenses increased by SEK 26 million, while interest expenses for our borrowing from banks increased by SEK 2 million. The higher bank-related interest expenses are explained by somewhat higher interest margin. Income tax for the quarter was +SEK 42 million, which corresponds to a tax rate of 23%, excluding the goodwill impairment.
Profit for the period amounted to -SEK 975 million in the quarter, which equals an earnings per share after dilution of - SEK 6.06. From this year, we also report adjusted EPS. This is earnings per share adjusted for effects from IFRS 16, acquisitions related amortization, items affecting comparability, and corresponding tax effects. The adjusted EPS for the quarter was SEK 0.11, down from SEK 0.13 last year. Next slide, please. Overall, our Scandinavian business area is stable with profits improvements in outsourcing and home care. Net sales for the business area decreased somewhat as more sold beds in startup units and price increases could not offset Corona effects and exited home care areas. Organic growth was negative.
EBITDA increased from SEK 130 million to SEK 175 million. Capital gain on the sold real estate contributed positively with SEK 41 million, while Corona impacted negatively with about SEK 40 million.
Underlying profit increased from outsourcing, home care, and own care homes opened 2017 and 2018. Our outsourcing units displayed better profitability this year compared to weak 2019. Own care homes had a large negative impact on operating profit from startup losses in homes opened in late 2019 and 2020 as expected, but this was to some extent offset by increased profits from more mature homes. As from July 2020, our Norwegian operations have been divested. Trailing 12 months revenue has been around SEK 370 million, but bottom-line contribution only marginal. During the quarter, we have in tendering processes lost, but yet not exited, contracts with an annualized estimated revenue of SEK 10 million. We still have a small positive balance between won and lost contracts for 2020 year to date. Next slide, please.
Growth continues to be high for Attendo Finland and amounts to 12% reported and 11% in local currency. The growth primarily comes from more occupied beds in units opened in 2019 and 2020, price increases, and acquisitions. Price increases amounted to around 3%. EBITDA decreased from SEK 7 million to -SEK 5 million. Corona is estimated to have impacted the results negatively with about SEK 20 million. Excluding both corona effects and impact from IFRS 16, the result development is close to flat. Price increases and improved occupancy among mature units was offset by startup costs from units opened in 2019 and 2020, higher overhead costs, and higher costs in operations. The new law regarding staffing requirements in Finland was passed by the parliament in June. In the final valid version, the increase to 0.7 staff index will take place in four different steps until April 2023.
Financing from the state towards the municipality is also supposed to increase gradually. Attendo thinks that those adjustments were a clear improvement. Before we press live, I just want to give a few comments on the coming quarters for both Finland and Scandinavia. The corona pandemic will impact the coming quarters. The development is uncertain and exact estimates are challenging. Our best estimate is that currently known support from the government will offset estimated additional increased costs. Revenue will, however, be impacted negatively as we enter the third quarter with a lower occupancy. As Martin mentioned, we expect a more normalized inflow of clients going forward, but no catch-up effect from the loss of occupancy in the second quarter. We forecast that the profit effect for lost revenue during the second half of the year will be around SEK 10 million per month.
Besides corona, we can anticipate positive seasonality effects for the third quarter with about SEK 100 million in profit impact. We now know that salaries in Finland will increase with 1.3% from August 1st, and as mentioned before, opening pace in Finland will decline sharply going forward. Please also remember that in the third quarter of 2019, reported capital gain from sold real estate amounting to SEK 31 million. Next slide, please. On this slide, you can see the complete cash flow statement. Cash flow is strong this quarter, supported by strong development of personnel-related liabilities, accounts payables, and the sale of real estate in Sweden, which contributed with more than SEK 200 million. Adjusted net debt amounted to SEK 1.9 billion, which equals an adjusted net debt to adjusted EBITDA ratio of 3.3. Both liquidity and leverage has improved sequentially from the first quarter.
This is a result of more stable EBITDA development and strong cash flows. We have substantial unutilized credit lines and no maturities until early 2022. With that, I hand back over to you, Martin.
Thank you, Fredrik. Next slide, please. I'd like to make a quick roundup before we go into the Q&A session. We've been through an extreme period this spring, we still have many challenges ahead of us. The situation has improved significantly in our operations lately, we must be prepared that this could change quickly. One lesson learned from the pandemic is that it's critical that all actors in society take their responsibility for suppressing the virus and reducing its negative impact.
We have mainly positive experience of cooperation with authorities and the effects of government measures in Denmark, Finland, and Norway. With regard to care of older people in Sweden, we believe that authorities and government's measures have been inadequate. More specifically, they have called for more testing, more infection tracing, and a higher level of usage of protective gear. We're currently sharing our Nordic experiences of the pandemic with public authorities and politicians in Sweden so that we as a society will be better able to protect human lives and health in the next phase. I'm incredibly proud of our care staff, of all our managers and colleagues in support functions for their outstanding efforts during the first month of the pandemic.
Their efforts to combat this invisible enemy and limit the effects of the pandemic have made a real difference for our customers and their relatives, but also for society as a whole. Thank you for your attention, and over to you, Andreas.
Thank you, Martin. We are now entering Q&A session, and please state one question at a time. Operator, please go ahead.
Thank you, sir. Ladies and gentlemen, if you have a question for the speaker, please press zero one on your telephone keypad. We have a question from Kristofer Liljeberg from Carnegie. Please go ahead.
Thank you.
Please go ahead.
Kristofer?
Do you hear me?
Yes.
Can you hear me?
Yes, go ahead.
Question related to Finland and the sales increase. I did a quick calculation. It seems on average you have increased sales SEK 45 million per quarter or so in the past 12 months. You still have a lot of empty beds, how much slower do you think that increase will be when sales will only come from empty bed in existing homes?
Hello, Kristofer. This is Fredrik. Of course, you're right that over time, a lower opening pace will impact also the rate of sales. That will take some time before we see that. One thing is that we have had the price effects. Of course, that is not impacted from the amount of openings. Then we have so many empty beds now, we foresee that we can have a good sales development also going forward. We haven't externally quantified exactly how the lower opening pace will impact sales going forward. The number of empty beds we have currently is a very good potential of continued sales growth for a long time without having to increase the opening pace again.
Okay. It's not so that the beds that you have been filling in Finland recently is just from new homes and the ones you're sitting with are more difficult to fill?
No, it's not that black and white. In the presentation, you can see how occupants have developed per vintage of openings. Until the corona pandemic, you can see that we have had a positive trend also in the openings 2017 and 2018 also coming into this year. That shows that we have a potential to continue increase the occupancy also for units that has been open for a few years.
The 200 beds or so you still have under construction in Finland, when are they planned to open?
Some of them or the majority of them will open in the second half of 2020.
Okay. The 1,000 bed next year, does that include any new projects in Finland, or will you be close to zero in Finland for some time?
The clear majority is for Scandinavia, but it will be something in Finland as well.
Okay. Thank you.
Thank you. The next question go to Caroline Lézardière from Danske Bank . Please go ahead with your question.
Good morning. Just a clarification on the SEK 10 million negative impact that you estimate going forward. The cost will be completely compensated by government support, and this SEK 10 million negative impact per month, that is under the assumption that occupancy is what it was at the end of Q2, or how should we view that?
Yes. This basically assumes that inflow is coming back to normal levels, but there is no catch-up effect on lost occupancy due to the pandemic.
Okay. Thank you. That would translate then to SEK 30 million in Q3 negative?
Yes. Correct.
Yeah. Okay. This fact that the elderly are waiting to move into homes and impacting new sales, could you give some color on differences between regions there? How does Attendo Finland compare to rest of Sweden, for example?
Yeah. When it comes to this queue of people waiting to move in, that's very hard to quantify exactly. What we have seen during the pandemic is that the absolute majority of loss of occupancy has been due to the people are anxious about moving in. The smaller part is mortality effect. The major part is that people are not moving in the same pace as they used to, because they're anxious about the virus and because of the visiting restrictions. What we've seen in Finland and Denmark is that when visiting restrictions are lifted, inflow is coming back. People are moving back in. We expect the same thing to happen in Sweden as well. Whether or not there will be a catch-up effect or not, that's very hard to estimate what will happen with that curve. We estimate no catch-up effect in the summary investment.
Okay, thank you. Just a broader question. During the crisis, the cost has gone up for example, medical supplies. Do you have any reason to believe that the costs are structurally higher in the long term? Or do you have any reflection on what the long-term effects of this pandemic might be on your business?
We don't believe that there will be a long-term effect on the pandemic. No. Of course, we have taken a lot of cost in Q2 for protective equipment and so forth. Filled our stocks to maintain the current protection level for the autumn. As this pandemic has been global, of course, prices for protective equipment has gone up somewhat during this crisis. We expect that to normalize as the pandemic wears off. Okay, Caroline. I have one more.
Okay. Thank you.
Thank you.
Thank you. The next question is from Kristofer Liljeberg . Please go ahead, please.
Oh, great. Thanks. Just follow up on those, the SEK 10 million. I must say I don't totally understand. Is this an average figure you expect for the second half? As Caroline asked it should be more than SEK 40 million in the third quarter and less than that in the fourth quarter. Could you just clarify what you mean?
That's basically the run rate going into Q3. It's very difficult to estimate an exact numbers because there are uncertainties regarding potential catch-up effects and so forth. Most that drive occupancy. To give an exact estimate for the remaining part of the year it's impossible. We can see that the run rate effect currently is around SEK 10 million per month.
Okay.
Which translates to 60 million for the second half. That's sort of the best guesstimate we can give at the moment.
It should be lower, I guess, than SEK 10 million per month in Q4, most likely if things continue to stabilize.
Depending on what happens with catch-up effects and inflows of course.
Yes. You commented about the inflows improving in Denmark and Finland here in July. Have you seen any signs of improvement in Sweden?
There's a slight improvement we can see in Sweden, but we still have the visiting restrictions. We can see that the clear improvement that we saw in Finland and Denmark happened when they lifted the visiting restrictions. That has not yet happened in Sweden, i t's on an improved level versus April and May.
Do you still have visiting restrictions all over Sweden? I read about some maybe public homes that have removed that now.
There are visiting restrictions imposed by the government for the entire elderly care in Sweden. We allow visits outside in sort of a controlled environment where there are barriers so you can't get too close to the clients and where the visitors are wearing mask protection. There are some guidelines around how visits can be enabled in and outside in a controlled environment. That we're doing on a continuous basis.
Why do you think visitor restrictions are so important? Is it practicality that relatives are not able to see the home before moving in, help them moving in, et cetera? Is this psychology?
What we have concluded through our both studies together with Karolinska Institutet and their own experience is that the main risk for virus spread inside nursing home is asymptomatic bearers of the virus. We conducted a research study with Karolinska during the summer where we tested healthy or seemingly healthy employees that have passed our health checks that were in duty in 30 nursing homes in Stockholm, and 7% of those were asymptomatic spreaders of the virus. Now they were wearing protection gear, so they didn't spread the virus. This is what we could expect, that during the summer 7% of all the staff, meaning that most likely at least 7% of visitors will carry the virus asymptomatic.
That's the major risk, and that's also the major reason behind why visiting restrictions are important, and to keep those visits that we have in an outside environment in a controlled manner.
You said, was this in June?
Yes. It was end of May, early June.
Okay.
It was concluded June 18th.
Okay. Thank you.
Thank you. The next question from Mr. Victor Forssell. Please go ahead, sir.
Thank you very much. I hope you can hear me well. I'll just start with one question just so I understood it right. You will open up roughly 200 new beds in Finland during the second half of 2020. Was that correct?
I would say our remaining pipeline of openings currently in Finland is around that level. We will open a bit more than half of that during the second half.
Okay, great. Just regarding the discussions here with the run rate going into Q3 and lost volumes, what do you see now in July? Would you dare to say that you think that you've reached a trough in terms of empty beds in Finland? Also how that translates into Scandinavia, given that you will be a bit more aggressive in the openings there still.
Yes, that's correct. We believe that we're in a low point in occupancy in Finland, that from now on, where we will sharply reduce opening base, we will start build up occupancy levels in Finland. That's correct.
I mean, Yeah, exactly.
We maintain a higher opening base.
That includes the Sorry.
I was saying that in Scandinavia, I think we're on a sort of balanced opening base going forward. The majority of the openings will be in Scandinavia for sure.
Yep. Okay, fair enough. Thanks. Just the last one. In terms of, I think that you've been managing your working capital well here in the last couple of quarters. Just to give a sense of what to expect in the coming quarters for the year here, and the overall cash flows that you think you could generate during H2.
This is Fredrik. You're absolutely correct that we've been very focused on managing cash flows and also managing working capital. I think we had a particularly strong quarter here in the second quarter for several reasons. One is that the second quarter is often good from a seasonality point of view, and then we have had extra focus on how we're managing different parts. I would agree that partly it's timing driven. We will not see the same type of development going forward.
Would you call the development going forward as more sort of normalized levels, or how should we look at it?
Yeah, more normalized going forward.
Okay. Thank you very much.
Thank you. The next question go to Oliver Flank from Nordea. Please go ahead.
Yes, hi. Thank you for taking my questions. My first relates to the government support. In conjunction with your Q1 report, you flagged for additional net cost of around SEK 100 million for the rest of the year. In this report, you say that COVID-19 has reduced profit by around SEK 60 million, which also include lower sales. You now say that COVID-19 related costs will be fully offset by the government support for the rest of the year. Could you elaborate a bit on the differences in your assessment in Q1 compared to your current estimate? That's my first question. Thank you.
Yes. When we released the Q1 report, or since then, government support has been extended, both in Scandinavia and both in Sweden and Finland. What we can see now that the effect on the cost side will be substantially lower than what we estimated in Q1.
Okay. Can you elaborate a bit on the differences? Which part has been extended?
This is Fredrik. Yeah. The support comes in different shapes and forms. In Sweden, the big thing has been that the government covers the cost for sick leave salaries. That was initially only for April and May, then it was extended to include also June and July. Also in Finland, it's a different structure on it's reduced pension payments, and there was also added an additional month of reduced pension payments. We have gotten more support than anticipated earlier in the spring. Also we have some lower costs. The sick leave numbers went back to more normalized level earlier f orecast that during the spring when they saw very high sick leave numbers. That's the two biggest differences from the earlier statement.
Okay. Thank you. My second question is just on the change staffing requirements in Finland. Taking the most near-term staff increase as an example, are you from 1st of January 2021, where you will increase it from 0.5 to 0.55? Could you please elaborate a bit on how that financing will come down to you given that you are currently in contracts with the municipalities?
First of all, on a general comment around the clarification of the 0.7 law, we are very positive around the way that they've clarified it, and we've been actively working on supporting the government with data and views on how to clarify the law proposal. The clarification on the stepwise transition towards 0.7, we view as very positive. On the change now, 1st of January, from 0.5 to 0.55, that is not a very dramatic change as we are currently in Finland, close to 0.58 on average already. A lot of local authorities or municipalities in Finland actually have the local permit level already at 0.6. The change from 0.5 to 0.55, we deemed that as fairly easy to comply with in terms of managing the schedule changes necessary in certain units.
It also enabled us to get paid for the 0.55 level from January 1st. That was a good clarification. The next step will be to 0.6 one year later. We're going into the negotiations of the contracts this fall for January 21 and onwards, we view these clarifications as very positive. It enables much more clarity in the contract negotiations from both parties.
Okay. Thank you very much.
Thank you. The next question go to Thomas Graf from Handelsbanken. Please go ahead.
Hi, everyone. Thanks for taking my call. I came in a bit late in the call, so sorry if I'm repeating anything. Regarding the one-off in Finland, are you worried about that from a balance sheet perspective or cash flow perspective? Also, any risk for this repeating itself or is this sufficient? If you can just give some clarity on that would be great. Thanks.
Yeah. This is Fredrik. The items we report as items affecting comparability does not have a cash flow effect, and it doesn't impact our financing agreement. From that perspective, it doesn't impact the balance sheet. Of course, it reduces the equity of the company. There we still have a good equity position. When we've done these assessments, you look at multi-year forecast looking forward. Of course, it's based on our best estimate and also best estimate of what we think going forward. As we currently see the world in our future, we don't foresee additional impairments.
Okay. Finland is basically Okay. That has been written off then.
Yeah. Just to be clear, I don't know if you heard that, but the goodwill impairment test is based on a DCF valuation model where you compare the value with your booked goodwill, and we use the same long-term margin for Finland as before. The difference here from the previous test we did in the fall is that we have a higher risk premium, which results in a higher weighted cost of capital, and that's the big delta. We also have some smaller short-term impact on profits due to the corona situation. The big delta here is that it's a highly utilized weighted cost of capital.
All right. Thanks for that.
Thank you. The next question comes from Karl Malmström from SEB. Please go ahead.
Yes, good morning. Two questions from me, please. Firstly, on Attendo Finland, how large was the effect from the delayed salary negotiations now in Q2 year-over-year? Secondly, also, in regards to the acquisitions you made now in Q2, can you comment on the expected annual sales contribution from these, just for modeling purposes? Thank you.
Yeah. In terms of union negotiations in Finland, they have been delayed due to the corona pandemic. They were concluded very recently and ended up in a salary increase of 1.3% starting August 1st this year, then a second increase of 1.5% in July next year. The next negotiation is in 2022. We view this as a good outcome of the union negotiations. It was a lower mark than we had expected. Could you repeat the second question, please?
Yeah. In regards to the acquisitions you made in Q2, if you just comment on the expected annual sales contribution from this?
I don't think we've reported that externally. No, we haven't. The small acquisitions, we don't report exactly the numbers externally.
Okay. Fair enough. Thank you.
It's a smaller home care acquisition with a few hundred customers. Given that our total home care business is around 10,000 customers, it's not a big number.
Okay. Thanks.
Thank you. I remind you that if you want to ask a question, you will have to press zero one on your telephone keypad. There are no further questions at this time. Please go ahead, speakers.
Okay. Well, thank you very much all for participating in this call. Please call us directly if you have any further questions now. We wish you a good remainder of the summer and looking forward to speak to you next time. Thank you.