Good day, and welcome to Careium's second quarter 2022 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Carl-Johan Zetterberg Boudrie. Please go ahead.
Thank you very much. I hope I'm loud and clear. Good day, everyone, and welcome. Today we are to present Careium's second quarter result for 2022. As mentioned after the presentation, we will give you an opportunity for a Q&A session. You also have the opportunity to write questions in the digital chat room. Together with me here today, I also have our CFO, Mathias Carlsson. We can take next slide, please. Quarterly highlights for the second quarter for Careium. The positive sales development continued for us in the second quarter, achieving the second-highest quarterly sales in a single quarter, only beaten by the first quarter of this year, which results in a record first half year sales.
We continue to take market shares in the Nordic region after several contract wins in Sweden, both new and existing contracts, reaching a new all-time high number of connections in the region. The demand for digital solutions continued to increase in the second quarter with strong product sales, which is an evidence of the digital transformation pace starting to pick up in the United Kingdom. The restructuring initiative that was initiated in the fourth quarter have continued with activities in the second quarter to improve service delivery, quality, and efficiency. Financially, the transformation has still burdened our profitability in the second quarter. We are still confident that we will achieve our targeted improvements by the end of the year.
Strong focus to restore profitability for the group through the ongoing transformation in the United Kingdom, as well as initiatives for improved profitability throughout the rest of the group. Next slide. Let me give you some more information regarding sales and gross margin for the second quarter. Net sales in the quarter was the second-highest in the history of Careium, with sales in the quarter equal to SEK 174.4 million, which is an increase of 19% compared to the same period last year. For the first six months, sales equaled SEK 353 million, which is 24% above the same period last year. It's positive that a good sales growth continued in the second quarter and across all our main regions, just as we saw in the first quarter.
Also, we continue to see growth in both products and services. Organic growth was at a good level of 8.2%, especially in the Nordics, we saw strong organic growth in the quarter. Sales of services increased by 16.1% to SEK 132 million, with a number of new contracts implemented in Nordics and the acquisition of InnoCom in the third quarter of last year. All told slightly below the first quarter due to lower service sales in the United Kingdom. Sales of products was SEK 42.2 million, which is an improvement of 28%, and also above the first quarter this year, which is driven by good growth in United Kingdom as we start to see increase in sales of digital equipment as the digital shift in the region is increasing its pace.
The gross margin was 37.4% in the quarter, which is a bit lower than the level that we've seen in recent quarters. We've been burdened by higher costs of goods sold due to freight and components, but also high service delivery costs, especially in the United Kingdom, to ensure we maintain service levels throughout the quarter during the transformation. The number of connections increased by 9% to 401,000 connections, which is the same level as the first quarter this year. Next slide, please. The market highlights starting with Nordics and United Kingdom. Nordics had a continued good development also in second quarter, as we saw in the first quarter this year as well.
Sales increased with 17% to SEK 81.3 million, driven by implementation of new contracts in Sweden, where we continue to take market share through new contract wins. Also Norway increased sales in the quarter compared to the same period last year, as well as compared to the first quarter of 2021. Cost of service delivery in the region have been impacted by the pandemic, especially with high sick leave and overtime as a result of this in especially the first part of the quarter. We have managed to maintain a high service quality level that we have in the Nordic region.
Number of connections equal the new all-time high of 130,500 connections in the region for the quarter, which is a good growth of 5.2% the number of connections, and also up from 128,900 in the first quarter this year. In United Kingdom, we grew our revenue with 6% to SEK 67.4 million, despite the ongoing restructuring of the region and challenges in our service delivery. Especially in products, we saw good sales in the quarter with increased deliveries of digital equipment as the digital shift is starting to accelerate in the region. This resulted in product sales increasing by 83% in the quarter compared to last year, but also a solid increase compared to the first quarter of 2022.
Connections in the region equal 241,900, which is a slight decrease of 0.9% compared to the same quarter last year, as we have faced some challenges in our service delivery and service business as a result. Next slide, please. Continuing with the market highlights for Central Europe and our other markets. Sales in Central Europe also showed good increase in the quarter of 103%, with sales equaling SEK 24.2 million compared to the same quarter last year. The sales increase is predominantly a result of the acquisition of InnoCom that we did in the third quarter of last year, but also, a good and maintained market position in Germany.
With our service, Software as a Servic e platform, we target to go live with the first larger external customers in the Central Europe region during or towards the end of the third quarter. We have received good feedback from a number of customers, especially in Central Europe, as we presented and demoed our new Software as a Service platform. The number of connections at the end of the period in Central Europe was 28,600, which is an increase also from the first quarter, where number of connections equaled 28,300. Other markets decreased by 18.8%, but from small numbers, with sales equaling SEK 1.5 million. This is a result of slightly lower product sales in France. Next slide, please. Looking at profitability for the second quarter.
The profitability in the quarter is of course significantly impacted by the restructuring we are committed to succeed with in the United Kingdom, and also to some extent effects from increased cost of goods sold and higher cost of service delivery impacting the gross profit margin. Adjusted EBITDA amounted to SEK 32.2 million. This includes SEK 27.8 million relating to the revaluation of estimated additional purchase price for the acquisition of Victrix, as well as restructuring costs and other items impacting comparability, all mainly from the ongoing restructuring in the United Kingdom. With the software platform and the Victrix software platform, we did a revaluation.
It's now becoming an important part of our internal offering and one of the core elements in our services that we develop, but also as a service of its own as a Software as a Service. Its commercialization has been delayed compared to the plan at the time of the acquisition, which have affected the additional purchase price consideration, and as a result, a revaluation have been done in the quarter. Adjusted EBIT amounted to SEK 14.1 million compared to SEK 6.2 million in the same period last year. Operating software EBIT, adjusted for restructuring costs and other costs impacting comparability, including the revaluation of Victrix, was -SEK 6.9 million, which is mainly burdened by the ongoing restructuring in the United Kingdom.
What we did see in the quarter as well was, I would say constant improvement throughout the quarter after a bit tougher start in the quarter in general. As we mentioned, we did see negative effects from COVID in the beginning of the quarter, especially in the Nordics. We've seen a gradual improvement in the quarter with a stronger finish of the quarter than beginning of the quarter. You can take next slide, please. To give you some update on the U.K. restructuring as well as our focus on making sure that we restore profitability for the group. As we communicated during the first quarter of last year, we have initiated a significant restructure of our United Kingdom operations.
Unfortunately, we've suffered from local management historically not being sort of managed to integrate and build a strong business for us in the U.K. That we are now committed in making sure we accomplish and get back to a profitable and strong business, being ready to become the leader in the digital transformation in the United Kingdom. In addition to the transformation program, we have identified and initiated initiatives to strengthen the profitability throughout the group and for the group in total. This includes measures both to improve gross profit margin as well as reduce operating costs. Including the U.K. restructuring, we expect to increase our operating profit from current levels by SEK 60 million-SEK 80 million on an annual basis with total transformation costs of SEK 25 million-SEK 30 million. Next slide, please. Cash flow in the second quarter.
Cash flow from current activities during the quarter was SEK 10.3 million, which is a clear improvement from the same period last year, and mainly due to a positive change in working capital. Free cash flow in the quarter amounted to -SEK 3.9 million, and our net debt amounted to SEK 167.1 million at the end of the second quarter. Next slide, please. A few concluding remarks. It's positive that we've seen a continued strong sales growth within the business and good organic growth. It's also positive that the growth is, I would say, across all parts of the business. It's growth within all our main regions, and it's growth both in products and in services.
We continue to take market share in the Nordic region, especially in Sweden, where we won a number of new contracts and retained a number of existing contracts in the quarter, and continued to sort of hit new highs with the number of connections that we have. Also positive that we see the demand for our digital offering in the United Kingdom is strong and that we see the digital transformation is starting to pick up pace, where we saw strong growth of product sales in the United Kingdom in the quarter and also continued growth quarter-over-quarter in product sales and digital product sales in the region. From a sort of challenges perspective, of course, the U.K. transformation is a challenge, is progressing as we expect.
We are confident that that work that we're doing in the United Kingdom, where the big focus in the second quarter to lay a strong foundation for service delivery quality and service delivery efficiency will result in in the improvements that we target. It still have had a significantly negative burden on the operating profit for the second quarter for the group. Of course, we will still continue to see increased costs for components, and also we've experienced some increasing costs for service delivery. Also excluding the United Kingdom and the sort of big transformation work, we're committed to in the region. Also as mentioned, we did see, and we did face challenges due to COVID in the beginning of the quarter, especially in the Nordics.
Our focus ahead is, of course, to finalize the transformation program and improve quality and efficiency in the United Kingdom together with working on other identified group initiatives to restore profit and improve profitability in both United Kingdom and in the group as a whole. This, of course, in line with our strategy, where we are committed to continue to carry out that defined strategy that we have with the purpose and aim to be the true market leader in technology-enabled care in Europe. Okay. Thank you very much for listening to our summary of the second quarter. I now open up for a Q&A session.
Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Since there appears to be no question, I would now like to turn the call back over to Mr. Zetterberg Boudrie for any closing remarks.
Thank you. Actually, we do have a few questions here in the digital chat room that I'll ensure that we cover. The first question is: in Q4 2021, accounts receivable, you report a high share of accounts receivables being overdue, more than 60 days. How has this developed since when taking recent write-downs into account? I think as some of this would have evidenced in the report, we have seen a clear improvement in receivables, and especially in overdue receivables. We collected a lot of the overdue receivables, if we sort of take into account the write down as mentioned. I would say receivables, then of course, including cash collection and overdue receivables, have significantly improved both in the quarter and during the first half of the year.
Second question is relating to services in the U.K. The quarter we're looking at the services sales decline in U.K. and Ireland. How does this impact your outlook for this region going forward as a sales driver for the company? It is true that we did see slight decline in number of connections in the United Kingdom in the quarter and also slight decline in services sales. This is sort of hugely correlated to some of the challenges we've faced in service delivery quality and efficiency during this year. We do see an improving trend in both quality and efficiency, and plan and we're confident that we continue to do so throughout the rest of the year.
Why we still believe U.K. and Ireland will be one of the clear growth drivers for the company going forward, both because of a market with a lot of opportunities for growth in services with being the largest market in Europe. Secondly, as we do see the digital transformation picking up pace where our products have been well received in the market, we see our product base increasing. Where actually product sales could be a good sort of step towards growing services sales as well as we get a strong relationship or foothold with the customers utilizing our digital products. Next question was, or actually a few questions.
It was first on the Software as a Service solution on the typical customer to this solution and sort of what the pipeline is looking like, and if any customers have signed up for a bundle offering with hardware connectivity and the platform. Okay. If we start sort of with Software as a Service , and this is relating to another question that we received as well about the Software as a Service customers. A typical customer for us, for Software as a Service customer, we say it's a customer in one of the markets where we've not actively engaged ourselves with service delivery. Where for example, Germany, France, other markets are highly relevant examples. The typical customer for us is another service delivery entity like us, for example, in Sweden.
Maybe not with their own hardware and platform, but utilizing others' hardware, connectivity and software to deliver technology-enabled care services. This is a typical customer for us. I would say in terms of number of connections, it depends on market. A lot of markets are still fragmented. We're looking at customers both with sort of low thousands of connections, but we're also looking at customers with 20, 25, 30 thousand connections in different markets.
When it comes to bundles, of course, certain customers that we are engaging with are either already customers for our products and/or connectivity today, or are potential customers for a broader offering, as well, where we see both products and/or the Software as a Service platform being a good spearhead into creating a good platform for broader engagement with the customer. Just looking at the questions. The only question, I think, there is no common system for the service delivery process in the U.K. Do you see any efficiency gains or quality improvements already? As I said, we have now implemented one common service delivery or ARC platform throughout the U.K. We're now utilizing the same platform throughout the entirety of the U.K. It's the same platform as we're using in the majority of the Nordics as well.
This means that we have greater opportunities to work with service delivery in an efficient way and with improved quality. This is already implemented in the U.K., and yes, we are starting to see improvements during the latter part of the quarter as a result of this, and we are confident we continue to see further improvements both in quality and efficiency during the third quarter. Product sales in the U.K. continue to show strength. How goes the talk among customers? I think I said, we do see that the digital shift is picking up pace. Customers are starting to realize that sort of going digital is inevitable.
It's also been published tests during the quarter, where Openreach, sort of a test entity, have tested different solutions when it comes to analog to digital or digital to analog, so trying to sort of maintain existing hardware by converting signals, and recommended that this is not the solution to go for. Their recommendation is that you need to go fully digital. We believe that will further sort of aid the drive for the digital transformation now in the U.K. We believe it will continue to pick up pace until the shutdown of the analog network in 2025. Because if you think about this, 1.8, 1.9 million connections in the U.K., and that's a quite daunting task to replace all of that hardware units during this period of time.
On the gross margin, the challenge in the supply chain with higher freight cost and component costs, do you see any light in the tunnel? We have sort of I would say cost-wise, we don't see any real improvements. If anything, during the first half year, there's been some continued price increases when it comes to components. I think when it comes to availability, the situation has stabilized a bit. Availability is still, it's still challenging, but it's more stable and maybe slightly improving.
I do think it will continue to improve, especially from an availability perspective, as we move further into the end of this year and beginning of next year, especially as we looked at the economic climate, and I think we all see the sales of electronic goods is starting to decline, which will lead to improved availability of components in the end. Final question here from Redeye. It seems like some parts of Europe are experiencing another wave of COVID. Have you noticed anything in your alarm receiving centers? Is the sick leave increasing anywhere, or are you working to limit the impact?
As you say, yes, COVID is unfortunately starting to rise again in many countries, especially we've seen it in southern parts of Europe, where we don't have any service delivery to date. We do have experienced some cases of COVID in our other countries, like Sweden and the U.K. So far, knock on wood, limited. Now sort of few cases or limited few. It's of course something that we're monitoring closely. COVID has taught us to manage sort of service delivery also from a distance. We hope that we can continue to do that in a good way and hopefully maintain low levels of sick leave also if we start to see increasing levels of COVID.
I think that was all the questions that we received in the digital chat room as well. Thank you very much for good and insightful questions. Thank you very much for listening in. As I mentioned, it's positive that we continue to see good growth in all main regions, in both products and services. Now we focus on maintaining good growth for the company, continue to grow our business, continue to take market share, while we ensure we get back to profitability. That will be our continued focus during the third quarter of this year. With that said, I wish you a great summer, and looking forward to speak to you again. Thank you and bye.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.