We present both present numbers and comparisons to last year now exclude our healthcare business in Finland unless stated otherwise. As you know, we have agreed to divest this operation, and we expect to finalize the transaction in the fall. Next. The second quarter 2018 was a quarter with an all-time high number of openings and a continued high number of construction starts. This builds a strong foundation for future value creation. We added close to 200 beds in this quarter, which is an exceptional high number. Net sales amounted to SEK 2.7 billion. Growth was 22%, adjusted for currency effects, a result of openings recent quarters and acquisitions. Operating profit, EBITDA, amounted to SEK 128 million. This includes SEK 53 million in non-recurring costs for closing down units in individual and family care.
Following the changes in the market dynamics, we have made a comprehensive review of all units within individual and family care. We have concluded that a number of units are not expected to be long-term profitable, and therefore, we have taken the decision to close them. Fredrik will come back to this subject later in this presentation. The underlying EBITDA amounted to SEK 181 million, corresponding to a margin of 6.6%, which is almost two percentage points lower than last year. Acquisitions and improved occupancy this year in units which were under startup in Q2 last year contributed positively to profits. This was offset by the costs for opening up new units and, in addition to the closed down costs, the lower profit contribution from individual and family care. Attendo reported an operating cash flow of SEK 267 million.
As I just mentioned, we signed an agreement during the second quarter to divest Attendo's healthcare operations. This is the operations that I co-founded in the year 2000. I am pleased to see that we found a solid new owner for this business in the Finnish company Terveystalo. Following the finalization of the divestment, Attendo will be pure care company, and we will get financial strength to capture future opportunities through acquisitions and further organic growth. Next slide. Let's take a closer look at our contract models. You can see that the quarter reflects continued growth in own operations. Net sales increased by 32% compared to Q2 2017. The increase is mainly explained by acquisitions, but also from new nursing homes and higher occupancy in units that were under startup during the corresponding quarter of last year.
The largest part of the sales growth in own operations is derived from the acquisition of Mikeva, which was consolidated into Attendo in November 2017. Attendo opened 34 new own units in the first quarter with a total of 1,155 beds, an all-time high number and the highest expected in our short and midterm plan. At the same time, we continue to find new opportunities, and we've started construction of 20 new units that will add 770 new beds. In total, we had 2,463 beds under construction by the end of Q2. This is a decrease versus previous quarter due to the many openings, yet a high number in a historical perspective. Now turning to outsourcing. Net sales in outsourcing operations increased by 6% as a result of slightly higher sales in existing contracts and contractual price adjustments.
Looking at the results of tendering processes in Q2, Attendo won contracts totaling SEK 100 million and lost volumes of 70. We are not reporting sales for staffing in Q2 as this contract model is part of healthcare operations that will be divested. Next slide, please. This is a new chart that shows the rolling 12-month opening pace. As I just mentioned, we opened 1,155 beds in Q2 isolated. The number of open beds rolling 12 months per end Q2 was 2,887 beds. This is more than a double amount compared to the same period last year and more than 30% higher than last quarter. This is the fundamental driver behind our future organic growth and future value creation. The high number of openings has an impact on profits and margins. Before we reach a sufficient occupancy, open units are loss-making.
With the high activity in the market, the expected time to reach full occupancy has increased from earlier 12 months to around 18 months. Many openings also mean higher demand on the organization to sell more beds. We are putting more efforts to sales and marketing, and we are pleased to see that we have never been selling more beds on a 12-month basis, but still below the exceptional high opening rate. Q2 is expected to be the peak in terms of number of openings, even if the rolling 12 months' openings will remain on a high level the next quarters. On the right-hand side of the slide, you can see photos of some of our own nursing homes that opened in Q2 2018. Next slide, please.
Attendo now has 15,064 own beds in operation, an increase by more than 50% from the corresponding period 2017 and plus 10% versus the first quarter. As we have opened up a record high number of units in this quarter, the number of beds under construction had declined versus last quarter. However, we are still on a higher level than a year ago with 2,463 beds under construction per end of Q2. We expect continued good underlying demand for new capacity, and we have a strong pipeline in both Finland and Sweden. Next slide, please. Let's turn to the overall market trends. I already commented that Attendo continues to see strong interest in own operations in both Sweden and Finland. The public sector needs new solutions to get access to new capacity and replace outdated facilities, especially in Finland.
We have seen higher interest from local authorities to divest outdated nursing homes to private providers in order to get access to modern care homes and to secure local services and local jobs. One example from the second quarter was that the local authority of Imatra in Eastern Finland chose to sell care facilities to Attendo in order to get a long-term solution that secures access to local care for the citizens. The outsourcing market in Sweden improved slightly in the second quarter. Volumes were up versus the previous quarter and versus last year in both care for older people and in care for people with disabilities. The main explanation is that old contracts are being put out in the market for retender. During the quarter, the Swedish parliament voted down the bill from the government to impose a profit cap on private providers of welfare services.
This was an expected outcome. The overall process to prepare for the social and healthcare reform in Finland moves forward on a local level, and 17 out of 18 Sote counties have already started voluntary operations based on current law. On the national level, the parliament has not yet voted for the reform. Attendo remains optimistic about the opportunities that the reform offers for private providers. The reform had a relatively smaller impact on care services versus the changes on the healthcare market. I hand over to Fredrik for financial review of the quarter.
Thank you, Perrti. Before going into the numbers and explanations, I would like to remind everyone that if not stated otherwise, all figures related to the income statement are presented without the healthcare operations in Finland. With that clarified, we can take a look at slide seven. We continued to see strong sales growth this quarter. Total net sales amounted to SEK 2.7 billion, up by 25% compared to the corresponding quarter last year. Acquisitions contributed with 18.8%, currency 3.6%, and the remaining 2.9% were organic growth. Main part of the growth from acquisitions is a result from the consolidation of Mikeva during the fourth quarter 2017, but also a high number of bolt-on acquisitions during last year.
Organic growth continues to increase from last year, and we see good sales growth in our new own units, which are exceeding the lost sales from the closed units within IOF care. EBITDA, including the closed down cost, was SEK 128 million in the second quarter, and EBITDA excluding the closed down cost was SEK 181 million, with a margin of 6.6%. I will start with some details around the closure cost, and after that, I will come back with the comments on the underlying EBITDA development. As can be seen in the report, we have during the second quarter decided to close down units within individual and family care, also called IOF. This decision is based on a thorough review of the total IOF service offering during the first half of 2018, and it's resulting in a one-time cost of SEK 53 million.
If we first return to 2017, we experienced a rapid decline in demand for integration care services during the autumn, and we started to close down main part of our integration care units. At that point, we expected to see demand for so-called HVB homes, while the decision was taken to convert a number of integration care units to traditional HVB homes. HVB is a Swedish abbreviation for Homes for Care and for Living. During 2018, we have experienced an oversupply also in the HVB market, likely as a result from demanding converted integration care units. As we now are facing a lower demand from the local authorities also for HVB solutions.
Given this change in the market, we have taken a new decision to not only close down all remaining integration care units, but also to close down an additional 150 beds in HVB units that are lacking good prospects for future value creation. In total, we have in this quarter taken the full cost to close down 250 beds, which had net sales of approximately SEK 60 million in the quarter. The profit impact on this unit has been negative during 2018. After the close down of this unit, Attendo will continue to operate 340 beds in HVB homes with total annual net sales of approximately SEK 240 million. The one-time effect of SEK 53 million consists of both close down and phase out cost for the current as well as coming quarter for these units.
The future profit impact from the units affected by the close down decision will be close to zero. We then look at the underlying EBITDA, we have had a positive impact from acquisitions and higher profits from units that were under startup in the second quarter last year. This quarter was also affected by the Easter holiday, but with fewer days than prior year, while the year-on-year calendar effect was positive. The positive effects could not compensate for the record number of openings we have right now. The openings, in combination with lower profit contribution from IOF care, also excluding the close down costs, results in an overall lower underlying EBITDA for the second quarter 2018 compared to last year. I will return to this with some further details on the underlying profit development on next slide.
Financial net was negative SEK 39 million compared to negative SEK 60 million in Q2 2017. The higher interest expenses are explained both by higher debt and higher interest margins after the Mikeva acquisition, but also to some extent, currency effects on interest in Europe. Income tax for the quarter was minus SEK 13 million, which equals a tax rate of 24.5%. The higher tax rate is mainly explained by the losses in the Danish home care business and the lower share of remaining business in Finland. Net profit for the quarter was SEK 40 million, which equals an EPS after dilution of SEK 0.25. Next slide, please. As I mentioned, the underlying operating profit for the quarter was SEK 181 million, SEK 5 million lower than last year. The largest profit contribution in this quarter comes from acquisitions, where our main part relates to the acquisition of Mikeva.
We are also pleased to see that the profit contribution from occupancy in units that were under startup during the comparison quarter is improving. As presented on the previous slide, we have a positive year-on-year effect from the Easter holiday in this quarter. The extreme opening pace that we have had during the past 12 to 15 months is pressuring the profit heavily in this quarter. This quarter, we have almost 2,900 beds in startup phase, which is an all-time high number that shall be compared with approximately 1,100 beds during the same period last year. We expect that the rolling 12-month number of open beds now will stabilize or slightly decrease during the second half of 2018. The high number of startups will continue to put significant pressure on the result also going forward.
In the longer term, the profit impact on the units that have passed the startup phase will more than offset the startup costs. It is, however, difficult to say an amount or exact quarter when this profit contribution will be higher than the total initial losses in the startup units. We are still confident that there is a need for new nursing homes and that we will be able to fill these homes. Going to the last bullet, we notice that we have some negative year-on-year effects from IOF care also when excluding the close down costs. Main part of this relates to negative year-on-year effect from integration care units that still had a positive contribution to the result in Q2 2017, and some refers to slightly lower result in other IOF units.
As we have communicated earlier, we expect this to be a year with an extreme amount of new openings, a good foundation for future growth, but with initial profit pressure. Next slide, please. Then some comments on the cash flow in the quarter. Please note that the cash flow and the net debt is based on total business, including the Finnish healthcare operations. Operating cash flow remains stable. Operating profit for the total business amounted to SEK 172 million. Change in working capital, paid tax, and other non-cash items had a positive impact of SEK 162 million, with the largest driver being improved working capital related to increased personnel-related liabilities. Net investment in CapEx amounted to SEK 67 million, mainly due to fixed assets in the new own nursing homes. This take us to an operating cash flow in the quarter of SEK 267 million. Interest payments amounted to SEK 22 million.
Cash flow from investment in real estate projects continues to be positive with a total contribution of SEK 159 million in this quarter. We're now down from the very high investment level that we had during the end of 2017. As the summer period is an active time for construction projects, we're expecting negative cash flows in the third quarter. Cash flow from acquisitions amounted to minus SEK 147 million. Cash flow from financing activities, minus SEK 219 million. Total cash flow from the quarter amounted to positive SEK 38 million. Net debt amounted to SEK 4.8 billion, which equals the net debt to EBITDA of 4.0. Excluding the closed down cost, net debt EBITDA amounts to 3.8, which is more in line with Attendo's financial target. With that, I hand back over to you, Perrti.
Thank you, Fredrik. Next slide, please. As part of the quality work, Attendo offers a wide range of activities for its customers. During the quarter, the focus of Attendo's nursing homes has been on outdoor activities, with the recurring Attendo Fitness Walk taking place at several locations in Scandinavia. In the picture to the left, you see some examples of outdoor activities. We at Attendo see great value in identifying and rewarding good efforts, both by individual employees and by units or entire regions. The awards help us to create internal pride and enable us to spread best practices between different parts of the company. During the first quarter, we named the best units in Scandinavia: the disabled care unit, Attendo Skolgårdsgatan in Gävle, and the home care unit in Västerås.
As we have mentioned before, Attendo has an ongoing project to recruit and train nurses in the Philippines to Attendo's nursing homes in Finland and Sweden. This quarter, the first nurse got the formal Swedish nurse license, something that shows progress of the project. With that, I would like to conclude the presentation. The result in Q2 was disappointing given the need to continue to restructure individual and family care. The underlying development follows the long-term plan: to open more units and to continue to identify new business opportunities. The fast pace of opening new units have a clear negative impact on profitability, short and mid-term, but is also the foundation for the growth. Our strategy is very clear: to provide new nursing homes to the benefit of the people in need of care and to help local authorities reduce waiting lists.
With the divestment of the healthcare operations, Attendo will be a focused care company with financial strength to further capitalize from opportunities in the market. Thank you for your attention. Over to you, Andreas.
Thank you, Perrti. We are now opening up for questions. Please state one question at a time. Operator, please go ahead.
Thank you. Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad. We have a question from Karl Emil Thulstrup from Nordea Markets. Please go ahead. Your line is now open.
Yes, hi. Thank you for taking my question. Concerning the high number of new openings now in Q2, can you provide some type of guidance in regards to exactly how many beds you plan to open in Q3 and Q4 this year? Thank you.
Well, we don't give specific numbers, but as you can see the number of shovel in the ground and how many beds we have under construction. You can basically do an easy math that it must be around 500 beds per quarter, plus, minus something.
Okay, thank you.
The next question comes from the line of Kristofer Liljeberg from Carnegie. Please go ahead. Your line is now open.
Yes. Good morning and thank you. Is it possible in any way to quantify the impact on the EBITDA from the number of units in startup phase? Also related to that, considering that you were almost flat on EBITDA here, despite Q2 should be the peak with number of openings, is it fair to assume you should be able to start grow EBITDA again in the second half of the year, although, of course, margins will continue to be impacted? Thank you.
We don't give a specific guidance on coming year, we expect second half of 2018 to be better than H1 in terms of margins and profits.
Is that also so if we adjust for seasonality with third quarter always being the strongest?
That explains partly that. Yes. Also on a year-on-year comparison, we expect the second half to be better than the first half. In terms of the impact of openings, we can say that now in the second quarter, the cost, so to say, on new openings is slightly below the one of cost we had for closure in IOF.
Okay. the year-over-year impact, so to say.
Correct. Yes.
Okay. Is it also possible to quantify the calendar impact in the quarter year-over-year?
I think it's a similar magnitude as the negative impact we had in Q1, it's in that ballpark. At that point in time, we stated roughly SEK 10 million.
Great. Thank you.
The next question comes from the line of Peter Testa from 18 Investments. Please go ahead. Your line is now open.
Yes. Thank you. There are a couple of questions. I go one at a time. If you look at the new units which have been coming on over the last 12 months, I was wondering if you could give some sort of sense of how the fill-up rate has come in versus your expectation, and maybe some comment on how the rate performance versus, say, average rates for the group has performed on the new units as they come in?
We have good effort on sales, and we are pleased that we have never been selling this much in rolling 12 months as we see now looking at the last 12 months. We are happy about the pace of how we fill up the houses, but we don't give specific numbers around that.
Okay.
I can comment that obviously the number we sell new beds is below the number of openings.
No, of course.
The pace is lower.
Yeah. I was trying to understand the path, because you've been working on an assumption that this would take longer because it's a good cautious assumption to take given the supply. I was wondering whether that was the case, but also the associated rate performance that's coming with that. Obviously, you can fill quicker if you have lower prices, slower if you have higher prices. Just trying to put the two together to understand together the fill rate performance.
I can comment on the prices that we have seen price increases evenly across the business. We don't see any price pressure at the moment. That's not an issue.
Fine. Okay. Then on your comments upon the 18 months, that's 18 months to fill the beds and they become units, and they become relatively profitable at that stage. If you looked at the time to break even, do you have any comments you could give the time to break even on the beds, new units?
Well, break even is of course shorter than 18 months. If 18 months is to fill the house. We don't specify when do we have a break even. It varies house by house quite a lot, but we are happy that we have been able to squeeze down the break even, the level over the years with best practice solutions. Historically we said around nine months, but obviously that is higher now given the longer lead times.
Yeah. Okay. Then the last thing was just you made your comment at the end about obviously the strong balance sheet, which you have post the closure, the disposals, and you essentially focus down the activity quite a lot down onto the nursing home market. You talked about also better pipeline in Sweden at the same time, I was wondering if you could give some sort of sense in terms of the opportunities that you see in the balance sheet, how to take advantage of it, whether you see more coming now in Sweden than before, or whether we should look at more opportunities in Finland and whether that's M&A, bolt-on larger units or how you might think about it.
Well, overall, considering what is the current situation, it is obvious that the opportunities in Finland are stronger currently as in Sweden, but Sweden gradually paces up.
Okay. Are you looking more, this is on new units, that comment, or also on M&A of some form?
Comment on new units, but on bolt-ons it is quite similar.
Okay.
More activity in Finland.
Okay. Very last, in the past there've been some discussion about looking continent to Europe, but I know you obviously have management changes and so on ongoing. I was wondering how the view on continental Europe may be evolving, if it's possible to say at this stage?
We are actively looking at Europe, but we are really picky about the opportunities, considering prices, geographics, and business models. We are actively seeking possible opportunities.
Great. Thank you very much. Thanks for the answers.
Thank you, Peter.
The next question comes from the line of Mikael Milhøj from Danske Bank. Please go ahead. Your line is now open.
Yes. I have two questions. The first is regarding the time to fill the units. Is it similar, the market characteristics both in Sweden and Finland, that it takes 18 months currently? That's the first question.
As long as we know from competitors, we think it's very similar.
Okay. The second question is related to seasonality when you fill the beds. For example, in Finland, you have 11% more beds in operation than in Q1, but it seems like sales in local currency actually is slightly down from Q1. Is it that you normally fill the beds after the summer and in the beginning of the year? Is that the reason, or why else don't we see any sales pickup quarter-on-quarter for own operations in Finland?
We don't specify the Finnish numbers, overall, I can assure that the sales of net new beds sold also in Finland is all-time high rolling 12 months. The pace we are selling is a record number as well in Finland.
You have the breakdown on page 20 in the report that own operations in Finland was SEK 1,088 million. That was SEK 990 million. No, sorry, that was SEK 1,074 million in Q1. You do break that down and it doesn't grow.
On sales, yeah. That's correct.
Is there a specific explanation for beds growing 11% and then sales in local currency in Finland slightly declining quarter-on-quarter? In own operations.
Just a second
In page 20, own operations in Finland was SEK 1,088,000,000.
Yes.
I think that number.
Q1
Q1 was SEK 1,074,000,000. The currency moves a bit, in local currency, I guess it's a decline of 2% quarter on quarter.
Yeah
on 11% more beds in operation.
Well, overall, still I can only comment that we have sold more net new beds in Finland as well in Q2. There might be some single units, I don't know if there are some single cases that influence this. Overall, it doesn't reflect the reality that we have sold more net new beds in Finland as well. Also, come back to the Q1 report. We still had part of dental operations, part of healthcare. We had some own operations in Q1 as well. Yes. That's now taken out.
Okay. I understand. Thank you.
Andreas can comment on that. We can double-check that. Yeah. I just stick to my comment that we have positive trend in net new beds. Yeah. In Finland as well.
Thank you.
The next question comes from the line of Hans Boström from Credit Suisse. Please go ahead. Your line is now open.
Good morning. I would like to understand better why the closure costs for these individual care units are so high. They are over SEK 3 million per bed, which sounds a very high number. Could you give some clarity on what actually is going into these significant costs? Are we talking about costs for transferring patients to other providers? I cannot imagine redundancy costs are anything like this. That would be helpful. I suppose the follow-up question is the 250 beds you still have there, are you confident that this is a robust business or is there a concern that this could also go in a year or two's time?
This is Fredrik. Let me comment. The closure cost, as I mentioned, is both closed down and phased out costs. What we've done is that we've done a comprehensive review of all units and see which have the long-term ability to run a healthy operation and come to the conclusion that a number then needs to close down. In these units, one is personnel restructuring, but it's also so that we sit with rental agreements that some are shorter term, but some are a couple of years longer. Also, there's a phase-out process where we have certain obligations to the local authorities. We cannot transfer the clients immediately. That means also that during the phase-out period, we will have lower revenue but still have a large share of cost base in place. It will be negative profits during that phase-out period.
There's some other things like we need to make sure that the facilities are at a good standard when we leave them, and there's some smaller assets that we need to write down. I can comment this, the vice versa situation. When you open a new nursing home, you don't open it if you have one client. You basically want to collect a few clients before you open it, because the initial losses are even higher if you run the house with, let's say, three clients.
How robust do you think the remaining 250 beds are? Are you confident that this is a viable business? What differentiates the ones you have closed with the ones you retain?
Yes. Now we are confident that this is now done. We have gone through all the units, locations, competitive landscape, prices, everything. Now these units which will be left inside Attendo will reach Attendo's margins. The shift we have seen in what has happened in the market is both on the supply and the demand side. There is much more supply after what has shifted in the Swedish migration, also we see different buying pattern from local authorities. What we can see on the units that we have decided to keep, they have more of a specialized concept on how to run the operations and a better quality [worked out in-house] . It could be some different specializations. It's not that they're all in one, because there are different flavors also within this segment.
They are more specialized and then have a much better ability to be attractive when local authorities needs to place different clients.
Could you give us a sense of how big have the losses been from this business? Because clearly, I suppose the upside from this is that you are effectively removing a considerable source of margin pressure in the group, especially if you are effectively forestalling losses that would be made in the second half of the year by taking this charge.
Yeah. It's clear it would have been involving profits. The thing is that these units are in different Some of them, if we take integration care, we know have been winding out for a while. Some of them are actually still running with profits and good occupancy because we have still agreements with local authorities. That has been already, we've received a notice of termination, so we know that in the fall they will be empty. If we don't close them, there will be big losses, but it's not necessarily that they have big losses. Some of the units have been in a phase where we've been during a conversion from an integration unit to what we call a normal HVB, which means that in the conversion period it could have been only some rental costs.
It's not big profits and losses, while other ones have had larger losses. I understand you're looking for a number to correct your models, but it's slightly above the SEK 53 million of course will not come. Then it's some more losses that we have had in the beginning of 2018, but it's not huge additional amount. We see trend wise, this is definitely the right decision.
I suppose my final question on this, and then I'll jump back in the queue is, you've had a revision or a reassessment of your Finnish healthcare business. You now have this strategically motivated decision as well. Are there other businesses within Attendo that you also are considering to disband or reduce significantly?
Yeah. As we have stated previously, we have had challenges in Danish home care business. We are still running Danish operations with some losses. We have been able to cut them smaller. We are still looking at how do we proceed with Danish home care. First we try to improve the current business. On the other hand, we can comment that our contract, the biggest contract in Denmark has been now agreed to be terminated by the end of 2019.
How significant that in revenue terms or profit terms?
We were not specifying the Danish business, but it's been loss-making for the last year, as you know, then we took quite a hit in Q4. On an ongoing basis we are still running on losses, but one shouldn't expect any negative year-on-year effect more for this quarter. Denmark in total is SEK 50 million in revenue in this quarter.
In revenue.
It would be a significant part of that business, presumably that will be removed by the end of 2019 then?
By the end of 2019. Yes. It's the largest contract. Correct.
Okay. Jump back in the queue. Thank you.
Thank you.
We have a follow-up question from Kristofer Liljeberg from Carnegie. Please go ahead. Your line is now open.
Yeah. Thank you. Two follow-up questions. Do you have any write-downs in depreciations in the quarter related to properties? I was thinking maybe about the individual and family beds that were closed down, also in the financial net, were there any FX impacts on balance sheet items in the quarter? Thank you.
We had SEK 5 million of write-downs as part of the SEK 53 million. Can you repeat the question on FX on balance sheet?
In the financial net, of course you have a translation effect as you have interest rates in Euro, were there also other balance sheet items that impacted the financial net in the quarter?
I need to check that and come back. There shouldn't be any significant effect, but I'll make sure.
Okay.
I'll verify that.
Great. Thank you.
Thank you, Kristofer.
We have a follow-up question as well from Hans Boström from Credit Suisse. Please go ahead. Your line is open.
Yes. Some financial questions. The tax rate increase, is this something you see as a sustainable impact for this year? Clearly you are stating what is the reason for it, but how should we model this for the second half of the year? It's obviously noticeably higher than it has been. The second point is also financial relating to the increase in interest margin, which certainly was higher than I had expected. Could you specify that and why you see that being on a year-on-year basis versus last year?
Yeah, I think that 24.5% is a good estimate on tax rate for the full year. The reasons we stated are the losses in Denmark and also now that we have our remaining business since the healthcare business in Finland is reported on a separate line that puts our average tax rate up. On the financial net, that is a consequence of both higher debt and higher interest.
Margins following the Mikeva acquisition. That did not have a full impact in the first quarter because on how our financing is structured. The second quarter now is a good proxy for where we will be as long as we have this type of leverage.
What is the lower threshold, at what point you might be returning to your previous interest margin? Could you give us some numbers on how much higher the interest margin is at the moment? We can calculate it, but it would be interesting to get your perspective on that.
In our agreement, our interest margin is dependent on the amount of debt we have. Of course, the trigger point to get the lower interest margins would be to go down in leverage. To have a meaningful change in that would be when we receive the cash from the healthcare transaction.
Remind us, what is your latest thinking on the timing of that?
We think it end of 2018.
Okay.
Sorry, Q4.
I had a question regarding the comment you, Pat, had made about your opportunities to buy privatized nursing homes and the one you mentioned in Imatra. I suppose we've learned in the past that you've been talking about existing public facilities being rather inefficient to operate. Is this a concern that we should have that you're now taking on potentially a significant stock of not terribly efficient units that might have lower structural margins, or is this just a one-off? How would you view that potential concern?
Yes. Commenting on Imatra, for example, as a case, which was relatively big case, is that the facilities that we are involved now, half of those are modern. Let's say built or remodeled during the last five or six years, and half of the units we will see that we have to replace. Of course, we are not willing to pay much for those that we rebuild, and we rather give a market price for those premises that are modern. But roughly in this case, half modern keeping, half we will replace in upcoming years. Actually, the first construction project starts already this year. Of course, we don't want to run old facilities which are inefficient. That one we don't do.
Of course, Hans, we were running according to Attendo model, implementing that as we do with all acquisitions and all units we're taking over. Our efficient way of working will also follow this.
Could you give us a sense of, maybe this relates particular to Finland or maybe it does to Sweden as well, in which case, please let us know, how significant is this sort of acquisition of legacy facilities in the overall expansion in each of the countries? Is it 10%, 50%? Just give us a sense of how important it is in terms of your growth expansion.
Of course, the opportunity is more in Finland at the moment because of the social and healthcare reform. We will see the real impact during the social and healthcare reform process. We get back to this, let's say, next year when we know that the new legislation is in place and how does the local authorities see their opportunities to run their houses in the future. The overall local authorities in Finland have roughly 25,000 beds.
Okay. Thank you.
Do we have any last question, Hans?
Yes. I would actually be interested, I know it's going to be a tricky one to answer, but could you give us a sense, and certainly for the future would be extremely helpful to have a trailing occupancy rate development for the group, given the extraordinary variations in new bed development. Is that a figure you could give us?
Well, thank you, Hans. We'll take that into consideration, but we don't have that right now. As you know, we have in the mature units a good occupancy of about 90%, and we will think about if we can find some metrics for the startups as well.
Thank you.
Thank you, Hans. Operator, do we have any final questions?
No further questions registered.
Okay. Thank you all for your participation, and please feel free to contact us afterwards with comments or questions. Our next interim report will be published on 9th of November, and we hope to hear from you at that point of time. Thank you.
This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.