Welcome to the Careium audio cast with teleconference Q1 2022. Throughout the call, all participants will be in listen-only mode, and afterwards there will be a question and answer session. Just to remind you, this conference call is being recorded. Today, I'm pleased to present CEO Carl-Johan Zetterberg Boudrie. Please begin your meeting.
Thank you very much for the introduction. Good morning and welcome, everyone. I hope you can hear me loud and clear. As I said, today I am to present Careium's Q1 results for 2022. After the presentation, we will give you an opportunity for a Q&A session. As you know, you have the opportunity to also write questions in the chat forum that then we can read out. Together with me here today, I also have our CFO, Mathias Carlsson. Next slide, please. Let me start to give you some highlights from the quarter. I would say the Q1 for Careium of 2022, and actually the full Q1 as a standalone company, has been a mixed picture.
We've taken several positive steps, but of course not without some key areas that needed our attention during the quarter and still will in the quarters to come. One thing that's very positive is the sales development that we saw in the quarter, which is a continued sales growth in the Q1, Both compared to the same quarter last year, but also to the Q3 , actually achieving the highest quarterly sales in a single quarter for Careium. We also continued our efforts to broaden and strengthen our product portfolio with the launch of new products such as Eliza S, which is a slim version of our leading welfare hub, Eliza, and also a few different sensors that I will tell you more about. The first real external version of our service platform is also ready for the market with customer activities ongoing.
The restructuring that we initiated during the Q4, we have continued with sort of enhanced efforts during the quarter, where activities in the quarter have included largely a new management team. We have consolidated our offices, and reduced the number of sites we have in the UK, and also implement one common contact center platform with, of course, aim to finalize the integration of our acquisitions and ensure long-term profitability in the region of United Kingdom. I'd also would like to say that we are, of course, very concerned and troubled by the situation in Ukraine, and our thoughts go to all the individuals, both in and outside Ukraine, that are suffering as a consequence. From a business perspective, we do not have any direct or indirect operations in Ukraine or Russia, and as a result, a limited impact.
The main impact for us to date is more from a supply chain perspective, where the situation in Ukraine has put extra pressure on what was already, to some extent, a fragile global supply chain situation. Next slide, please. Sales and gross margin in the quarter. Net sales in the quarter was SEK 178.5 million, which is an increase of close to 30% compared to the same period last year and around 10% above the Q4 of last year. As you can see from the graph, the Q4 last year was the best sales quarter ever in the history of Careium. This quarter, we beat that with, as I said, close to 10%.
What's very positive, of course, that we managed to accelerate our growth, which had been hampered in recent quarters by the pandemic. We also saw a very good organic growth in the quarter of 80.4%, which is also at a historical high. Especially in the Nordics, we grew strongly organically in the quarter. What's also positive from a sales perspective is both all regions and also both products and services contributed to the growth. We did see a growth, sort of you could say, across all aspects, both from a regional and from an operating perspective. Sales of services increased by close to 24% to SEK 139.4 million, with a number of new contracts implemented in the Nordics and then also, of course, with the acquisition of Innocom in the Q3 of last year.
In services sales, also we saw a good growth in number of connections, where connections increased by 8.1% to also a new all time high for Careium, with a total of 401,000 connections at the end of the quarter. Sales of products was SEK 39.1 million, which is a clear improvement by 54.2% compared to the Q1 of 2021, which is driven by mainly a good growth in United Kingdom in product sales, as we start to see increasing sales of digital equipment as a digital shift is increasing its pace. Gross margin, we managed to keep at 39.2%, with maintained good quality in our service delivery.
This is despite that we in the quarter have faced some continued challenges with higher costs of goods sold due both higher component costs and higher transportation costs. Also due to higher costs in both our contact centers and field services as a consequence of, I would say, hopefully the final wave of the pandemic, at least from a European perspective in the quarter, resulting in higher sick costs and overtime. Also a sales mix where the good sales in the quarter have given us some difference in sales mix, also impacting the margin. I said despite those elements that we sort of needed to ensure that we managed in the quarter, we kept gross margin at a reasonable level of 39.2%. Next slide, please.
We continue to focus on strengthening our portfolio and our offering to the market. In the quarter we launched a number of new products. This includes both smart detectors for safer environment in home, including smoke, heat, and carbon monoxide detectors, which can be serially connected for improved coverage and safety at home. We also launched Eliza S, which is a slim version with a different form factor of our market leading welfare hub, the Eliza. The Eliza S is based on the same powerful platform as Eliza and of course as a consequence, ready for both today's and tomorrow's solutions in technology-enabled care.
We have also during the quarter, and I would say in the last few quarters, put significant effort and successfully done so to make sure that we manage those component challenges, keeping our products up to date, in order to mitigate component shortage and component changes and different or new regulations in market compliance, making sure that we manage sort of a steady, supply and high quality products to the market and to our customers throughout this quarter and also previous quarters. Next slide. Some market highlights then from our regions, starting with Nordic and United Kingdom. In Nordic, sales increased with 22.3%, equaling SEK 82.3 million, which is driven by implementation of new service contracts in Sweden and continued market success, especially in Sweden, where we won all tenders that we participated in during the quarter.
In Sweden, we also started to implement our second major customer in assisted living. As I commented in the Q1 , we started to implement our first major customer in the Q4 of last year, and this quarter we continued with our second major customer in assisted living. We continue to build our offering and presence in this segment in line with our strategy. Cost of service delivery have been impacted in the Nordics by the pandemic, especially with high sick leave and overtime as a result. We managed to continue to maintain our high quality in service delivery in the region.
We saw good growth in number of connections in the quarter, equaling 128,900 connections at the end of the quarter, which is 5.1% up from Q1 of last year, but also a good growth compared to the Q4 of last year. In United Kingdom and as I mentioned earlier, and we'll come back to that a bit later, we are undergoing a significant restructuring of the region. Sort of despite this restructuring, we managed to increase revenue by close to 13% in the region, up to SEK 69.4 million. Especially product sales was good in the quarter, with increased deliveries of digital equipment as we start to see that the pace of the digital shift is increasing, accelerating.
As I mentioned, we are sort of undertaking a significant restructuring of the region, and we have continued that transformation in the Q1 to address the profitability in the region and to finalize the integration of our acquisitions. We have in the quarter, to a large extent, replaced the management teams. Offices have been consolidated. A common platform for our alarm receiving centers have been implemented in quarter, just to name a few of the activities that we have implemented and carried out during the Q1 . Connections in United Kingdom and Ireland equal 244,100, which is unfortunately a slight decrease compared to the same quarter last year. It is an improvement from the Q4 of last year, where connections equaled 238,100 connections.
We actually managed to grow connections in the region over the Q4 with 6,000 connections. Next slide. Continue with market highlights by focusing on Central Europe and other markets. Sales in Central Europe also showed good increase in the quarter, growing by 208.4% to SEK 25.1 million compared to the same quarter last year. The sales increase is mainly a result of the acquisition of Innocom that was completed in the Q3 last year. Also a general good demand for our products in the region, and especially from the German market, where we continue to have a strong market position and good development of product sales in that country. Our first major customer for our software-as-a-service platform is ready to go live.
I touched upon it when we presented our Q1 . Sort of everything is ready to go live, but the customer have decided to slightly postpone the go-live date, to ensure that they manage all the activities they have in regards to or towards their service users to ensure a smooth implementation. The number of connections at the end of the period in Central Europe was 28,300, which is also just as in Sweden, in the Nordics and in the United Kingdom, an increase from the Q4 of last year, where the number of connections totaled 27,800. In the other markets, sales grew by 79.4% compared to the Q1 of last year. This is still a small region.
Total sales in the quarter equaled SEK 1.8 million. Next slide, please. The profitability in the quarter has, of course, been significantly impacted by the restructuring that we are committed to succeed with of the United Kingdom and Ireland region. Also, to some extent, the effects from increased cost of goods sold and higher cost of service delivery that impacted the gross profit margin negatively in the quarter. If we look at EBITDA, and we adjust for restructuring costs in the United Kingdom and other costs impacting comparability, which also is predominantly related to the transformation that we're undertaking in the UK, equaled SEK 22.3 million, which is actually an increase compared to the same period last year.
This includes, as I said, the restructuring costs in for the United Kingdom of SEK 20.9 million , which includes the write-down of accounts receivable of SEK 50 million , but as well also the other items impacting comparability, which is mainly related to United Kingdom of SEK 6.9 million . As I said, if we adjust for the restructuring costs and the other costs impacting comparability, EBITDA was roughly SEK 4 million higher Q1 2022 compared to the Q1 of 2021. If we adjust operating profit, or EBIT, for restructuring costs and other costs impacting comparability, that number was SEK 3.5 million in the quarter.
If we exclude, I would say, the intense efforts that we are putting in place and that we're driving to build an integrated and profitable region in the United Kingdom, and to the resulting restructuring costs and transformation costs, we delivered an operating profit that was roughly in line with last year. Next slide. To give you some more sort of, meat on the bone on the UK restructuring, which of course is a big focus area for us at the moment. We communicated during the Q4 that we had initiated a significant restructure of our UK operations.
It's sad to say that unfortunately, local management have not managed to integrate and build one business after the acquisitions that we've done throughout the last four years, in the region. This has been sort of increasingly challenging during a pandemic situation where especially if we look at United Kingdom, the country has been in complete lockdown for a large period of the last two and a half years. We have not managed to undertake the task as we wanted to. The pandemic, as I said, a lot of the focus has been on making sure that we focus on the safety and wellbeing of both our service users and our employees. Now we are addressing this issue and making sure that we are restructuring United Kingdom.
We aim to complete the integration of our acquisitions and to create long-term profitability in the region to sort of maintain and strengthen our position as the leader in the digital shift in the market. Our ambition as a consequence of the restructuring is that we will improve profitability with approximately SEK 35 million to SEK 40 million on a yearly basis. In order to do so, we expect that this will result in transformation costs of approximately SEK 15 million to SEK 20 million, excluding the write-down of accounts receivables in 2022. Of this SEK 15 million to SEK 20 million in restructuring costs, the Q1 had been affected by SEK 12.4 million of the total restructuring costs.
Activities completed during the Q1 includes consolidation of our offices, implementation of one common system for alarm handling, and a new and strengthened management team. The focus for sort of our restructuring in the UK, we expect that the total sort of cost for transformation will be completed during Q3 this year, with the complete sort of integration and transformation of our UK entity to be finalized in the beginning of the Q4 this year. Next slide. Cash flow from current activities during the quarter was SEK 22.1 million, which is a clear improvement from the same period last year. Improvement in cash flow, and actually both current activities, but also if you look at the free cash flow, which was SEK 5.5 million in the quarter, also a clear improvement from the same quarter last year.
Most of the quarters last year is a result of efforts we've taken to improve working capital. Net debt at the end of the quarter amounted to SEK 158.4 million. Next slide, please. As I said in the beginning, the Q1 for Careium was sort of a quarter with a mixed picture. A lot of positive elements with strong sales and good organic growth in the quarter. Total sales almost 30% above the same quarter last year, and a clear improvement from also the Q1, reaching the highest quarterly sales number in Careium's history. We've managed to maintain a decent gross margin despite the challenges we've seen with higher costs for components and for service delivery.
We strengthen our offering with launch of several new products, both different smart detectors and the slimmed-down version of our welfare hub. Our platform is ready for deployment at external customers, and several market activities have been initiated during the quarter. It's not a quarter without a few challenges. I think the key one, as we mentioned and our focus area is development in the UK and the challenges to sort of integrate the acquisitions we've made and ensure that we capture the synergies to create the long-term profitability in the region, which we are now addressing heavily. Of course, we also see continued increased costs for components and service delivery, especially due to UK, we've had to take a number of both restructuring costs and other costs sort of affecting comparability in the quarter.
The focus going forward is, of course, making sure that we get the United Kingdom to where United Kingdom should be, integrating our acquisitions, creating a strong entity in the UK that can lead the digital shift and the digital transformation and ensure long-term profitability in the region. We'll continue to grow in our offering and be present in assisted living. As I mentioned, we are already in the Q1 , started to implement our second largest large customer in this area in Sweden. Of course, we'll continue to carry out our strategy and purpose to become the market leader in technology-enabled care in Europe. Thank you very much for attending and listening. We now open up for Q&A session.
Thank you. If you have a question for our speaker, please press zero and one on your telephone keypad. The first question we've received comes from Rebecca Jadrup, ABG. The line is now open. Please go ahead.
Yes. Good morning, everyone. I have one question regarding the strong organic growth in the quarter, where you largely grew the number of subscribers. Are there any contracts pending now waiting to be rolled out? Or, have you been able to catch up on that area?
Sorry about that. Maybe I rephrase just so I heard your question. You said, are we up to date with implementing won tenders or are we still sort of n a catch up mode?
Exactly.[crosstalk]
Exactly.
I think we managed to catch up better. I wouldn't say that we're completely caught up yet with all the contracts that we won. We managed to deliver quite a lot in Q1 of the contracts that we won the second half year last year.
All right. Okay. There's a few left, if I understand correctly.
Yeah.
Yep. A question regarding the price increases and the transportation costs. Do you expect continued price increases and component shortage going forward?
It's a very good question, and I think that's a big debate for every company. Our view is there is still sort of a challenge with components. We have sort of seen or heard that there might be sort of continued price increases in certain areas, certain components. Having that said, we're not out of the woods yet, but I would say that we're starting to see some light at the end of the tunnel, if you would express it in that way.
A lot of sort of people we talk to in the market, more from a supply chain perspective, they now are starting to see that we are, probably not this year, but if we look sort of beyond this year, seeing that, okay, we will end up in a situation where there might be more components than there are demand, and we need to sort of find the soft landing to find a good balance between demand and supply.
Okay. Understood. Thank you.
There are no further questions at this time. As a reminder to ask a question, you have to press zero and one.
We have a few questions here, sort of in digital questions. One is regarding our service platform, and I would say it's ready for deployment of external customers, and if we can give some more, sort of more light on this. Of course, it's our software platform is something that we continue to develop over time, making it sort of more complete, offering new type of services, new functionality. We now have a good base offering where we see that our platform is competitive, and I would say in certain areas, better than other offerings in the market that we can take to the market and implement with external customers. Our platform can be used in several ways.
One way is, of course, it's a platform that could be used as a software as a service, supporting other service providers and then our customers to deliver their services and taking care of the sort of the alarm handling and alarm management. But it's also an offering where we can, you say, bundle both hardware, connectivity and the platform from our perspective, giving sort of a full solution to other service providers. And of course, if we take the total European market, there are sort of roughly 5.5 million connections in Europe that need some sort of platform to be sort of maintained and managed. Then there's a second question, given the write-down of 50 million SEK. It sort of gives some more highlight.
The question is sort of if it's related to one customer, several customers, if it's related to sales of products or services. And if we could give some more detail on that and also some more details around the savings of SEK 35 million-SEK 40 million. If we start with the write down, I would say it's related to not a specific customer, not sort of any specific element. It's sort of in general, because we did sort of identify and when we started the overview of these operations, that we've experienced problems with invoicing processes and claim procedures in our sort of UK subsidiaries. We increased the amount of overdue receivables.
During this quarter, we've taken sort of a very close look at it and make sort of an audit of our accounts receivable, resulting in sort of a prudent approach in writing down our accounts receivable of SEK 50 million. The second question relating the savings from SEK 35 million to SEK 40 million, and I said that's savings from profit or savings. That's improvement from a profitability perspective. Because what we want to achieve is a more efficient service delivery as a result of that, as we said, creating one common platform, one sort of consolidating our offices, improving service delivery and efficiency in general that will drive gross profit margin improvements, but also integrating streamlining operations and processes in the UK, which we're reducing in sort of operating cost increases.
That's elements that we're driving to make sure that we will improve our profitability on a yearly basis with SEK 35 million to SEK 40 million. Another question, there are more digital questions today. It's related to the increased product sales in the UK, in the corporate, and it's sort of that we say it's due to the transformation from analog to digital, and if we could give some more flavor. Yes, we have started to see that our customers are starting to ask more and more for digital equipment instead of analog equipment, and also that new customers are coming to us buying our digital equipment as they have initiated the digital shift. Okay, a few other questions. I'll keep on going. Next question was related to the platform.
I think we already answered that one. Question regarding Norway, if there's any major change. I think Norway in the quarter, they managed the quarter well to a large extent. From a sales perspective, they've been very in line with last year in the region. They have suffered from, as we mentioned in the region, Nordics and also Norway, some you could say pandemic effects with high sick leave and overtime in service delivery. Just trying to read all the questions. I think there's a question, when you look back, what did you go wrong answering in the UK? What did you underestimate? A sort of a good question. I think we just need to look ourselves in the mirror.
Did we do sort of a well enough job making sure that we integrated the entities in the UK? It sort of is not good enough explanation, and now we need to make sure that we do the job to get our UK entity to where we want it to be. I am still confident that being in the UK, having a strong UK entity is strategically the right thing to do, and that we will have a strong and profitable UK region. Sort of another question, why prices? Since you have long contracts, are they open to adjust prices to inflation, increased costs? I would say you could break that down in two elements.
There's one element where a lot of contracts, we have the opportunity to adjust pricing typically based on different sort of you could call it inflationary measures. If it's general consumer price index or other indexes that we can increase prices with, and that we've done. The second element, of course, that we have continuous dialogues with our customers saying there are a lot of increased costs in our operations and our service delivery that are sort of not yet visible in, for example, general consumer price indexes or other indexes. To take a discussion with our customers how we can find a good way for both us and our customers to try to mitigate and compensate for those increased costs. Then there's a question from the comment on the covenant or covenant we have with the bank.
I think the only thing we can say, we're not in a situation now where we have problems with our covenants with our bank. I think that's, or was that the final question? If there's no questions from any participants on the phone. Okay. It looks like there's no further questions. I thank you very much for listening in. As we said, this is, it's been a quarter where we've experienced the highest sales in the history of Careium. It's a sales where all regions and both products and services contributed to the high sales growth. We managed to maintain a decent gross margin despite some challenges, so putting pressure on the gross margin in the quarter.
We are making significant efforts to restructure our UK operations. If we exclude the cost that we've taken in the quarter in restructuring our UK business, the EBITDA is actually higher than the Q1 of last year, and also our operating profit is in line with last year. I think with those concluding remarks from my side, I thank you very much for listening in and have a great Friday and a great weekend when it comes.