Good morning, everyone, welcome to this conference call. We will present Attendo's results for the first quarter. My name is Andreas Skott. I'm Communication and IR Director at Attendo. Today's presentation is hosted by our CEO, Martin Tivéus, and our CFO, Fredrik Lagercrantz. After the presentation, we'll open up for questions, and we'll focus this on the financial report. For media questions on other topics, please contact us afterwards. By that, over to you, Martin.
Thank you, Andreas. Good morning, everyone. Before we start the presentation, let me make a short comment on the media attention in Sweden in the past week related to one of our care homes. We have initiated a number of immediate actions in response to what has been reported. We also started the comprehensive work on learnings from the pandemic and to more in-depth investigate what has happened related to the media criticism in order to take necessary actions, learn, and improve going forward. With this, let me now turn to the presentation, then Fredrik Lagercrantz will take you through the numbers in more detail. Next slide, please. Overall, we have a mixed situation in the group.
While Finland continues to improve occupancy and margins from a low level and corona impact is relatively limited, Scandinavia is severely affected by the corona pandemic and has negative development year-on-year. In Finland, the turnaround development continues. Occupancy and margins are positively impacted by net sold beds and relatively few beds in the startup phase. As we previously have communicated, price negotiations for 2021 are finalized, and for the framework contracts, we achieved over 10% increase. All in all, we have obtained more than three percent increase for total net sales. These are largely offset by increased costs due to the new elderly care law in Finland implemented late last year, as well as annual cost inflation. Given the new elderly care law, prices in Finland are still structurally too low, and we will continue to push for higher prices over the next few years.
In Scandinavia, we entered the year with a low occupancy due to the pandemic, and the inflow of customers has continued to be low in Q1, but increasing. The low occupancy level have affected margins during the quarter. On group level, negative corona effects have been largely compensated by public reimbursement for some of the additional corona-related costs that were incurred in 2020. Furthermore, in relation to the comparison quarter, Attendo's profits were negatively affected by leap day of 20 million SEK and legal costs of 20 million SEK. Throughout the quarter, our employees have been committed to provide as good care situation as possible, and our customer service shows that their hard work has been appreciated by the customers. The customer survey Attendo carried out during the quarter indicate high and increased customer satisfaction in both Scandinavia and Finland. Slide three, please.
We reported top-line growth in the quarter of one percent year-on-year. The organic growth, adjusted for last year's leap year effect, amounted to three percent, despite negative effect of the COVID pandemic. Lease-adjusted EBITDA amounted to SEK 75 million, corresponding to a margin of two point four percent. Fredrik will provide more details on the financial development shortly. Quality remains at a high level. We are continuously working with improving quality through various activities and audits. Next slide, please. This chart shows the opening per quarter and rolling 12 months opening pace. The development is a result of the strategic shift we decided on two years ago to decrease establishment of new units in Finland and return to a more balanced expansion pace. In Q2, we will plan to open 200 beds in Scandinavia and 30 in Finland.
For 2021, we expect gross opening pace to roughly 800 beds, where the majority is in the Scandinavian business area. Next slide, please. In the upper chart, we present the number of beds in operation. As of Q1 2021, we're presenting the number of beds in all Attendo's units, including outsourcing. We increased the number of beds in operation by two percent from the corresponding period last year. During Q1, we opened 250 new beds, added 480 acquired beds, and closed or ended roughly 200 beds, owned and outsourced. As you can see indicated in the chart, the share of own operated units in Scandinavia have increased during the period. In line with our strategy, we continue to reduce the number of openings, and by end of Q1, we had close to 800 own beds under construction, the majority in Scandinavia.
In Finland, our focus is to fill the units that we have established in recent years and continue to deliver improved occupancy in coming quarters. Next slide, please. Now turning to occupancy in our homes. As of Q1, we're presenting occupancy for all Attendo's homes. As previously mentioned, the occupancy situation is mixed. Finland is improving occupancy through more sold beds and lower opening pace, while Scandinavia has a negative development due to the COVID situation. Newly opened units in Q1 explain the drop from Scandinavia since Q4. Compared to the comparison quarter, Finland has improved overall occupancy by 3 percentage points, while Scandinavia has lost roughly 10 percentage points occupancy. We expect net inflow in new customers to gradually normalize during the second half of 2021 as municipalities' own capacity situation improves and general anxiety about COVID subside. Slide seven, please.
This chart presents the occupancy development of own operated units by opening year. We have excluded the larger acquisitions, Mikeva and the recent UMSK, so that we can isolate the development of our own initiated projects over time and present how fill up in openings are proceeding. It's clear that openings 2016 and earlier are decreasing as a result of the COVID pandemic, while occupancy in more recent entities are continuously improving. Going forward, we expect occupancy to gradually increase during the year as the COVID situation improves, at least during the second half of the year. Slide eight please. This chart presents on a group level net sales and margins divided into mature units and startup units. We have historically presented the mature margin, including all administration costs.
To give a better view on the mature margin, we now calculate the margin for the mature units with a proportionate share of the administration costs. As you can see from the yellow line, mature margin is stable despite the COVID situation. Improved margin in Finland almost offsets lower margin in nursing homes in Scandinavia. Let's take a closer look into the financials for the quarter. Please go, Fredrik.
Thank you, Martin. Let's turn to page nine. Net sales decreased somewhat to SEK 3.1 billion, down by two percent compared to the corresponding quarter last year. The exit from Norway impacted the comparison with about SEK 90 million. Currencies had a negative impact with two point nine percent, and last year's leap day impacted the comparison with about one percent. Adjusted for last year's leap day, the organic growth was about three percent, despite the negative impact from lost revenue due to the COVID situation. In Finland, we continued to see growth across all service offerings. While growth in Scandinavia is still negative, affected by ended outsourcing contracts, exited home care areas, and lost occupancy in nursing homes due to COVID. Lease-adjusted EBITDA amounted to SEK 75 million, down from SEK 84 last year.
The negative effects from COVID are estimated to around SEK 50 million, which have been offset by received government reimbursement of in total SEK 50 million, but relating to additional cost in 2020. The comparison between the years are further impacted by the leap day last year with about SEK 20 million. We also had a negative one-time cost of SEK 20 million related to real estate following a legal proceeding stemming from 2017. A fixed effect on reported EBITDA was larger than last year due to new openings. Financial net was negative SEK 164 million compared to negative SEK 146 million in the first quarter of 2020. IFRS 16 related interest expenses increased by SEK 7 million, while interest expenses for our borrowing from banks decreased by SEK 4 million. Currency effects on financial costs were negative by SEK 4 million, while positive with SEK 10 million last year.
Income tax for the quarter was positive SEK 1 million. The adjusted earnings per share for the quarter was SEK 0.26, down from SEK 0.37 last year. Next slide, please. The Scandinavia business area is clearly impacted by COVID. Net sales for the business area decreased as we have exited Norway and COVID impacted sales. Lease-adjusted EBITDA decreased from SEK 135 million to SEK 91 million. Adjusted for a leap day effect of SEK 10 million, government cost reimbursements of SEK 36 million, and negative one-offs of SEK 20 million, the result is down by SEK 40 million. This is fully driven by negative COVID effects. During the quarter, we have in tendering processes won, but yet not started contracts with an annualized revenue of SEK 25 million. Next slide, please. Growth continues to be high for Attendo Finland and amounts to five percent reported and 11% in local currency.
Adjusted also for leap day, growth was 12%. The growth primarily comes from more occupied beds in units opened since 2019, price increases, as well as acquisitions. Price increases amount to more than three percent. Lease-adjusted EBITDA improved from negative SEK 22 million last year to positive SEK 2 million. Price increases and improved occupancy was partially offset by high cost in operations, largely due to the implementation of the new law. By the end of the quarter, the number of empty beds was lower than one year ago. Attendo received reimbursements for some COVID-related costs that occurred in 2020, which resulted in that COVID-related supportive measures more than offset the costs for the isolated quarter. Compared to the first quarter in 2020, calendar effects were negative at about SEK 10 million.
The acquisition of UMSK had a very marginal impact in March as the profit generated from the nursing homes were offset by transaction costs. Before we turn slide, I just want to give a few comments on the coming quarters for both Finland and Scandinavia. The COVID pandemic will impact the coming quarters, although the magnitude is still uncertain. The net sales in Scandinavia will continue to be impacted negatively as we're operating with a significantly lower average occupancy than normal. At the same time, the cost level in Scandinavia will continue to be higher than normal due to protective measures and absorption issues. We expect COVID reimbursements to be much lower in the second quarter.
The acquisitions we made during the quarter will contribute positively for the second half of the year with an accretive effect on adjusted earnings per share. Free cash flow was positive with SEK 138 million, somewhat lower than last year. The positive working capital development in the first quarter is mostly related to employee accruals and due to seasonal effects. Net cash flow from acquisitions was higher than normal in the quarter. Adjusted net debt amounted to SEK 1.6 billion, which equals an adjusted net debt to adjusted EBITDA ratio of two point eight, a clear improvement to last year and well below our maximum target. With that, I hand back over to you, Martin.
Thank you, Fredrik. A few words before the Q&A session to summarize. We have now closed another quarter affected by the COVID pandemic, which have impacted both operations as well as financials. Financially, the development in the business areas is mixed. Scandinavia is deeply affected by the COVID pandemic, which has led to clearly reduced occupancy and margins. Meanwhile, we see continued progress in Finland as a result of the turnaround program. Operationally, we have during the quarter completed the vaccinations of residents in our nursing homes, and as the vaccination program in society continues, we expect general anxiety about the pandemic to gradually subside. We expect this in combination with the steady improvement of the public sector capacity situation to lead to a gradual normalization of customer inflow during the second half of 2021.
With regards to the past week's criticism in media in Sweden, we also started the comprehensive work, both on learnings from the pandemic and to investigate what has happened related to the criticism in order to take necessary actions, learn, and improve going forward. Thank you for listening, and over to you, Andreas.
Yes, we will now open up for questions. Operator, please go ahead.
Ladies and gentlemen, if you have a question for the speakers, please press zero one on your telephone keypad now. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Once again, if you have a question for the speakers, please press zero one on your telephone keypad now. Our first question comes from the line of Kristofer Liljeberg of Carnegie. Please go ahead. Your line is now open.
Thank you, and good morning. First on the occupancy levels in Sweden, have you changed the definition here versus before?
Yes, we have. Before we looked at own management units only, but now we included all type of units, also the outsourcing units. It's clear that also occupancy and outsourcing has been impacted by the COVID situation.
Okay. Is this the way you're going to continue to do it?
Yes, it is.
Okay. When it comes to the occupancy rate in Sweden, I guess it's the average you report. Can you say anything about the run rate when you ended the quarter, and whether you have seen any gradual improvements there?
Yes, we have. The situation has gradually improved during the quarter.
Is it possible to quantify what the occupancy rate was when you ended the quarter?
The reported occupancy rate is the average for the last month.
Okay.
We see a gradual, as Martin stated, we see a gradual improvement of the inflow of customers. Of course, if you discuss occupancy in percentages also impacted on exactly when we open new capacity. Overall, there is a gradual improvement in terms of customer inflow.
Okay. Given the discussion or debate in Swedish media, have you seen that impacting the moving rate in any way the last two weeks?
No, that's too early to be visible.
Okay. Last question. The financial net seems to be down quite a lot now year-over-year when you adjust for the lease effects. You mentioned about the SEK 4 million improvements. I guess there's some moving parts here as well, but what do you think is a normalized level now for net financials if we remove the lease effects per quarter?
I think this quarter is a good representation of a normalized level. If we look at our bank borrowings, the main driver is the size of our net debt, and that in combination, of course, with our leverage ratio. The higher leverage we have, the higher interest margin we pay. The cost for the quarter is quite representative, but we always get some currency effects that can impact the financial net.
Okay, great. Thank you very much.
Thank you. Our next question comes from the line of Hans von der Luft of Trinity Delta. Please go ahead.
Good morning. Two questions, please. Maybe this relates to Kristofer's question on the inclusion of the outsourced business. The occupancy in the pre-2016 units, is this a reflection of the Well, relative to the other vintages, I mean, is this related to lacking competitivity of these units, or is it the geographic location of them, in particular COVID areas? Could you elaborate on that, why that is going in the wrong direction relative to other vintages? Secondly, on the Norway exit, what would be the profit impact from that in the quarter? Thank you.
For the first question, Hans, hi, this is Martin. We've seen on mature units, which is you're referring to as 2016 and earlier, we can see that the occupancy effect is related to the corona pandemic. Whereas in generally in the market, a lower inflow to homes, nursing homes based on general anxiety about the corona situation. The difference between the mature units and the start ups is that the more recent vintages have an inherent ramp-up effect because they are new build. Of course, we try to open units where we see there is a demand in the market. Of course, we think that the ramp-up of the more recent units could have been better without the corona effect. They are also negatively impacted, but it's not visible when we track it over time.
The profitability effect on Norway, your second question, that is much more marginal effect because Norwegian business wasn't that profitable.
Can I go back to the first point? Obviously, your mature units are likely the most profitable units. This would have a disproportionate impact on your profitability. Are there any particular measures you will be taking to shore up the occupancy in these units? Is there anything you particularly can do to that?
As I said earlier, this is in our view the effect of the corona situation. We have looked at the total inflow to the market, not only Attendo's inflow. You can see that the inflow to our homes is pretty much in line with the overall market. We do expect that there will be a gradual improvement of customers seeking placement in nursing home as anxiety of corona subsides. The vaccination program for residents in nursing homes has been completed during Q1 not only at Attendo, but overall in the market, in combination with that the municipality capacity situation also improves. We expect a gradual normalization from the second half this year because we also expect that municipality operations also have a lot of free capacity at the moment. It will be a delayed effect. That's our expectation at the moment.
Okay. Thank you very much.
Our next question comes from the line of Viktor Forssell of ABG.
Yes. Thank you very much for that. Just starting off with a question. Martin, I think that you mentioned this in the report that you've seen or you estimate that the number of people that were eligible for or actually seek a grant to enter elderly care in Sweden was down by some 8%, if I understand it correctly last year. Just to understand the dynamics, is this including the people that actually declined that position or that grant?
I think that that figure represents people seeking grants because there is no reason to believe that a less proportion of people seeking grants has been not granted.
Okay. That would perhaps include all the dynamics in that question then?
Yeah. If you look at general statistics what is available is number of people being granted support.
It's your view that perhaps people were a bit more hesitant to actually accept that as well and have declined their opportunity throughout the year, and if so, how do you see that play out?
That might be the case. There has been a general anxiety in society given all the media reporting, but also given the situation within elderly care during the pandemic. I think it's not surprising that we're seeing a lower demand for these services during the corona year. That was also the situation going into the quarter where Sweden was in the middle of the second wave of the pandemic. With the vaccination program that started around Christmas time and was ended in Attendo units, we ended the vaccination program in February. Of course, that is something that would ease and we're seeing is easing general anxiety about moving into nursing home as well. We have seen a gradual improvement during Q1, but from a low level.
Okay. That's fair enough. Just finally from my side, in terms of the grants you received here in Q1, around SEK 35 million in Sweden or Scandinavia.
What do you expect for Q2 as well? I think that's a figure you alluded to previously, and also if you see those grants that you had in Finland coming back in Q2 as well, please.
As with these processes, it's many parties involved. It's both the governments and the municipalities. The rules are different. As I said, we expect a significantly lower number for the second quarter.
Both in Sweden and in Finland.
Okay. Thank you very much.
Our next question comes from the line of Christofer Nilsson of Aftonbladet. Please go ahead.
Good morning, and thank you. My question is directed to Martin Tivéus. Attendo has received financial aid for corona-related expenses like cohort care. Still, you admit that you haven't succeeded in full. Meanwhile, you and other top executives have been awarded with high bonuses. Do you intend to pay back the bonus?
Compensation for management is something that is decided by the board, not by management itself. For further questions around that, you're welcome to contact us after this call, which is a financial call.
Okay. This is a financially related question, if you intend to pay back the bonus.
As I said, I think you have to talk to our Chairman. We can answer your question afterwards.
Okay. For this quarter, you have received more financial aid due to corona. Will you still have the same bonus system related to this year's results for top executives?
That is not a question for management. That's a question for the board.
Yeah. Okay, next question, please.
How much have you paid out in bonuses for operations managers for 2020, and will you have the same system for this year's results?
I think this type of question, we said we can answer you afterwards. We'll go on with questions related to the financial report right now.
Okay. In the statement that goes on with the financial report now, you address the reprisals from employees, and more employees are telling about reprisals. How do you see your own responsibility, and can you promise that no more employees will be subjected to reprisals?
Attendo is a large company where people work with people. We have 25,000 employees in Sweden, and I think that's about 1,000 managers. When and if wrong things happen, it's our duty to make sure that we do all that we can to make sure that this doesn't happen again. These single events that have been reported, we take very seriously, and we have set forth a number of actions to make sure that this doesn't happen again. It is an ongoing work.
Yeah. Okay, thank you. Operator, we need to move to the next question.
Our next question comes from the line of Viktor Jansson of Sveriges Radio. Please go ahead. Your line is now open.
Thank you. First, I would like to ask you if you think that the recent criticism can affect the financial results in the future?
My focus now is to make sure that we take the criticism seriously and that we set forth the actions necessary, both to investigate what has happened and make sure that we take the necessary actions going forward.
How are you going to make sure that that happens?
We have started a comprehensive work in the company as we speak, both the last couple of days with both training and communication, but also talks with both managers and employees. As I said, we have started the comprehensive work on these topics. This is a learning organization, and we have to work for things to become better if we find problems in the organization. That's our responsibility.
The fact that employees have said that they've been subject to what they call retaliation after sounding alarm about problems in the elder care, do you think that you have a problem with the corporate culture?
One of these reports is one too many. Those kind of reports are of course unacceptable in this organization. That's my firm view. This is something that we're now working with. The past year since I've been there, not during the corona year because of natural reasons, but when I've been out in the organization, I also met with a lot of amazing both employees and managers, and I found a lot of engagement in this company.
As I said before, this is a large company with 25,000 employees and with more than 1,000 managers. If you look in a corporation this large, we will find situations where things have not been done or handled correctly. What is important to me now is that we do all that we can to make sure that these kinds of situations are not repeated.
One last question. In which way has the pandemic still affected the financial results? Can you give a concrete example of that?
Absolutely. Okay, this is Fredrik. I can give more details on the financial impact of that. We have several types of impacts. We have had extra costs related to buying protective gear. We have had extra costs to sometimes change our facilities to make them better from a disease prevention perspective. We have also had extra costs for personnel because we need a higher staff ratio in many instances. We've also seen effects like home care customers who want to have less support because they've been afraid. Also, we have had a lower occupancy. There are a number of types of negative impacts that have partly been reimbursed through public systems. Okay. Operator, we take the next questions.
Thank you once again, ladies and gentlemen. I remind you, if you do have a question for the speakers, please press zero one on your telephone keypad. Our next question comes from the line of Johanna Sireblad from TT. Please go ahead. Your line is now open.
Hello. I wonder about the impact on your business because of the pandemic. You talk a lot about numbers and lower occupancy, but how many people died and how big is that impact in your homes? How many people died in your homes?
This is Fredrik. Inherently in what we do is that we provide a nursing home, which is the last home for many of our clients. It's a very normal part of what we do that unfortunately people decease. We don't have the responsibility to define what is the reason that they passed away. That's something for the healthcare regions to find out. We have seen during some time periods over the last one and a half years that the number of people who decease in our nursing homes has been higher than normal. That of course is an indication that this has had an impact, but we can't give an exact number, and I don't think we are allowed to give it either.
You think that the pandemic will have an impact on your business, but how much will it impact your business in the future? How much the media affairs about the weaknesses and so how much will it impact your business in the future?
That's an impossible question to answer. What we can do now is take what has been reported in it seriously, and we do. We are running 700 units. As I said, this is a large operation. On top of a lot of the good things that we are doing, and that our employees are doing on a day-to-day basis in our operation, when individual mistakes happen, we need to be able to tackle them, find out what has gone wrong, and then make sure that we do better going forward. That I think is our clear responsibility.
Your Attendo, your finance, the money comes from taxpayers. It's our taxpayers' money, and your revenue is all from tax money. What's your thoughts about this bonus you got because of satisfied employees? Now it's been known that they are not so satisfied everywhere.
Generally, both customer satisfaction and employee satisfaction have been going up over the past, not only for the past year, but also the past two years. We've seen that staff attrition has gone down significantly, and employee engagement has also been moving up, which is something of course I am glad to see because it's an indication that all our efforts in these areas are having an effect. If we find individual examples of things that have been reported, we need to make sure that we tackle those and learn and improve. When it comes to the remuneration system of management, which has a long history in this company, that is something for the board to decide on.
Johanna, please be aware that Attendo is present in three countries and last year in four countries. Of course this is a mix of all countries and especially the turnaround on the Finnish situation has been a big contributor to this. As we talked about very much, the turnaround program has been very successful throughout 2020. That's actually the vast majority is about what's happening in our Finnish operations as Attendo is a big company.
Okay.
Okay. Thank you, Johanna.
Thank you.
Operator, we now conclude the call. Please don't hesitate to contact us directly if you have further questions, and thank you for this participation this time. Thank you.