Ladies and gentlemen, welcome to the Coor Service Management Q4 report 2021. For the first part of this call, all participants will be in listen only mode, and afterwards, there will be a question-and-answer session. Today, I am pleased to present President and CEO AnnaCarin Grandin and CFO and IR Director Klas Elmberg. Please go ahead with your meeting.
Thank you and good morning. Welcome and thank you for listening in to our Q4 and full year report at Coor. As usual, we will start with a brief introduction of Coor and then continue with a business and market update, followed by some more details around the financials before a sum up and Q&A. Coor is the Nordic market leader in integrated facility management. We have a customer-centric business model with a decentralized organization. We are providing our customers with a broad range of services, and we have a clear ambition of becoming truly sustainable. We drive and we steer Coor from a triple bottom line perspective, meaning that we are taking a business, a social, and an environmental responsibility to future proof our company. You can look at Coor and our portfolio in several ways.
In the geographical perspective, Sweden is our largest country with 50% of total turnover. Norway accounts for 23%, Denmark 21%, and Finland 6%. Looking at Coor from a contract perspective, we see that the split continues to be stable with 60% IFM contracts and 40% single service contracts. Slicing the turnover by service line, we see that cleaning is the largest service line with 37%. Property is the second with 32%. Workplace includes several services like reception, conference service, and office supplies. Together that adds up to 19%, and food and beverage is at 8%. Our top three customer segments are public customers by 28%, manufacturing by 23%, and oil and gas by 18%. All in all, Coor has a well-balanced portfolio. 2021 was a year with high business activity.
A year when the pandemic continued to impact both our society, our customers, as well as Coor. During 2021, we had many great wins, but also some losses. I'm very pleased with our performance, and we delivered another successful year. I'm not just pleased from a financial perspective, but also from how we have worked together with our customers and internally kept building an even stronger organization. Looking at some of the key financial metrics. Q4 is a quarter with high growth. We have an organic growth at 8% and an acquired growth at also 8%. We have the largest organic growth in Denmark and Sweden, mainly driven by new contracts. We start to see the effects from the acquisitions of Veolia Technical Management and Inspira in this quarter. Adjusted EBITA margin is 6.0%.
From a margin perspective, Q4 is impacted by a positive one-off from the repayment from the Afa Försäkring sickness insurance policy of approximately SEK 40 million. The quarter also included temporarily increased costs at both central and country levels as a result of starting up new contracts, integrating the acquired business, and high development activity. Adjusted for the positive non-recurring effect and the temporarily increased costs, the underlying margin for the quarter is in line with our long-term financial targets. As we have mentioned before, margin levels above 6% is likely not to be sustainable over time, especially not with the growth levels we see in Q4. Cash conversion is an LTM number, and it continues to be strong at 98% and well in line with the target of being above 90%. Leverage is also an LTM number.
With 2.0, we are well in line with our target of staying below 3. From an LTM perspective, organic growth is 3%. The acquired growth in the LTM period is also 3%, and the LTM EBITA margin is 6.2%. The board proposed a total dividend of SEK 4.8 per share to be paid out in 2 installments. The ordinary dividend of SEK 2.4 per share to be paid out in May, and an extraordinary dividend of additional SEK 2.4 per share to be paid out in October. This is an increase of 9% compared to the dividend last year and still provides Coor with a financial capacity to continue making value-adding acquisitions going forward.
In Q3, we presented the yearly results for customer satisfaction and employee motivation, which are both at an all-time high level. From a trust perspective, we continue to improve, but we are still behind our targets. Within equal opportunities, we continue to have a 50/50 balance between female and male managers in the company. From an environmental perspective, we have started the transition to a fossil-free vehicle fleet. So far, we don't see an impact in the numbers. We do see positive impact within scope two as we are shifting to renewable energy on our sites. Over to our business and market updates. In Q4, we won the IFM contract with the Danish Building and Property Agency. It is a seven-year contract with a total value of over SEK 3 billion, and the contract starts in May 2022.
In addition to this, we signed a food and beverage contract with GoCo and a property service contract with Coop, both in Sweden, and also an IFM contract with Lingnes in Norway. We are also happy to have secured the prolongations with GKN and Øresundsbron in Sweden, SR Bank in Norway, and a biotech company in Denmark. As mentioned in the beginning, we did not succeed in all prolongations, meaning that the contract with AB Volvo will be phased out by the end of April. On a very positive note, we have had a great start of 2022 in terms of new business, where we have won a sizable cleaning contract with the Gothenburg Municipality in Sweden. We have also prolonged two IFM contracts, one Scandinavian contract with SAS for five years and one with Tele2 in Sweden for three years.
Continuing on the positive side, we completed the acquisition of Inspira, meaning that we are now very busy with integration work in Sweden, where we also integrate Veolia Technical Management. Focus on sustainability continues to be high, and our ambitions are increasing within this important area. We are happy to see that our efforts are paying off by receiving improved ratings from various rating institutes. Last quarter, we saw this from EcoVadis, and now we see it from CDP. In Q1 last year, we committed to a science-based target initiative, and in Q4, we submitted our targets, and we are now awaiting on approval. For the third year in a row, Coor won the Nordic IFMA Innovation Award with Coor Smart Cleaning powered by Mimbly, an innovation that saves water, reduces microplastics, and saves energy when we are washing cleaning clothes.
We continue to see growth opportunities ahead, both from a solid pipeline across the Nordics and have financial capacity for additional MNAs. With that, I will let Klas continue with some more details on the financials.
Thank you very much, AnnaCarin. Continuing with a look at our P&L statement, we see that net sales is now up to SEK 2.9 billion, and that means that we are approximately SEK 400 million above Q4 last year. That equals a total growth of 17%, and as AnnaCarin mentioned, divided in the organic growth of 8% and an additional 8% from acquired growth, and then also a small positive FX effect. The adjusted EBITDA ended up at SEK 174 million, and as you heard, that includes a positive one-off, but also some temporarily higher cost levels driven by large integrations, for example, and also high project activity, both in countries and at the central level.
The underlying margin is more or less in line with the external target that we have communicated before at around 5.5% rather than the 6% that you see in the P&L statement. There are no major differences in the financial net or the taxes for the quarter if you compare with last year. Net income ended up at SEK 62 million, and the adjusted net income when adding back the amortization amounts to SEK 113 million. On the full year numbers, we see that net sales is slightly above SEK 10 billion, meaning that we're close to the all-time high levels from 2019. Organic growth for 2021, 3%. Acquired growth, 3%. The FX effect is more or less neutral for the full year.
The LTM adjusted EBITDA level is up to SEK 631 million, well above last year. Even if you were to exclude the full effect of the repayment of the SEK 40 million, this is an all-time high EBITDA level for Coor. The adjusted net income for the LTM period is SEK 455 million. You just heard AnnaCarin describe the dividend level of SEK 4.8 per share, meaning that we're basically returning the full level of the adjusted net income to our shareholders. Moving on a country-by-country view, we are of course very happy with the organic growth levels, especially in Denmark and Sweden. Also pleased to see that Norway managed to deliver positive organic growth in the quarter, despite the fact that we phased out the Equinor office contract by the end of October.
As you heard, we also see a very positive effect from the acquisitions of the Veolia and Inspira in Sweden. The organic growth in Sweden mainly related to new contracts, for example, PostNord, Micasa, and also a security contract with Borealis. There was also an increase of variable volumes from food and beverage and conference services in Q4, especially in October and November. As you have heard, the repayment from the AGS is impacting the Swedish numbers. Also if you exclude that part and take away the unusually high cost levels for certain items, the underlying margin for Sweden is more or less on par with Q4 last year. In Norway, we continue to see a high level of variable volumes from the oil and gas sector, related to maintenance works.
However, the margins in Norway are lower this year compared to last year, and this is mainly related to the effect of the lost Equinor office contract. Denmark delivered a fantastic growth in the quarter, mainly driven by DSB, but also PostNord. We also saw a partial recovery of food and beverage and property-related project volumes in the quarter. We did also see a decrease of the additional cleaning volumes that we experienced in Q4 last year, and this change in the volume mix and the pressure from newly started contracts impacts the margins in the quarter. However, on the full year perspective, we see an improvement in margins in Denmark, and we also see an EBITDA growth for SEK 22 million for the full year, which we're very happy with.
In Finland, margins are somewhat lower than Q4 last year, and that's mainly related to higher personnel costs, driven by COVID-related sick leave. This is something that we also saw a little bit of in the other countries and something that we can expect to continue also in Q1. Looking at the contract portfolio, and this is the picture that we show every six months. You see that we had a total inflow of new organic business of SEK 927 million. This is actually the highest number since the IPO. As you also can see from the chart, there were also contracts that were terminated during the year with the Equinor offices being the largest one.
However, the net effect of the contract portfolio, excluding acquisition, is that it's a positive net effect of SEK 350 million or close to SEK 350 million in 2021. Customer concentration is similar to what we have seen in the last few years, with approximately 45% of the total turnover coming from the 10 largest contracts. We will, of course, always try to win the really large contracts like the Danish Building and Property Agency. We're also very happy when we see that we can add new contracts in the size of SEK 50 million-SEK 100 million, similar to the contract with the Gothenburg Municipality of SEK 80 million, and thereby even out the customer concentration a little bit.
Continuing with the cash flow, you see that we had an ingoing cash balance of SEK 396 million. Operations contributed with SEK 788 million. Financing flows, reflecting interest, loans, and leasing adds up to SEK +569 million. Taxes paid, SEK -61 million, and cash out from the three acquisition adds up to SEK -646 million. You also have the dividend paid out of, in total, SEK 470 million. That gives us an outgoing cash balance that equals SEK 628 million. Finally, from my side, a short look at some of the details from the balance sheet and our cash conversion. We see the cash conversion continues to be very strong at 98%.
We have a continued low CapEx and we have an improvement in working capital. We continue to see stable payments from our customers as we have seen in the past as well. Net working capital negative by SEK 940 million, and that equals -9.3% of net sales. Net debt is SEK 1.7 billion, and the leverage is 2.0. With that, AnnaCarin, I'll hand it over to you.
Thanks, Klas. Yes, we will shortly go into a Q&A. Before that, I would like to sum up our Q4 and 2021. In Q4 and 2021 has been characterized by high business activity. We have a successful year behind us with good organic growth level from Q2 and onwards. We have high activity in M&As, and we acquired three value-added companies. EBITDA is at an all-time high level. Dividends to our shareholders have increased, while we still have good financial capacity for future M&As. I really would like to thank all my colleagues at Coor for the great performance and the very strong work you put in. With that, we will open up for questions.
Ladies and gentlemen, if you do wish to ask a question, 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. Our first question comes from the line of Karl-Johan Bonnevier from DNB Markets. Please go ahead. Your line is now open.
Yes, good morning. Congratulations to solid development. I appreciate there are so many moving parts here, and it would be good to get a little more feel for it. When you look at the margin development in Q4 underlying, you highlight these projects and contract migration costs. You're giving quite a good indirect guidance on how big they were. Looking at the continuous impact of those, say, in the first half of this year, given the changes you see in the contract portfolio, do you see them to be on the more elevated level, or should they normalize again already during the first half of this year?
I think we will continue to see some effects, Karl-Johan, especially when it comes to the integration of new contracts. I mean, we started DSB during Q4, and we're now mobilizing the contract with the Danish Building and Property Agency as well. We will continue to see some impact, but it will not be as high, because there were also some, you know, really high project activity in the last quarter that we don't expect to see going forward.
Excellent. Looking at the impact of sick leave costs that you also highlighted, could you give us a broad kind of a feel for what kind of extra costs you have seen in this quarter? I appreciate that they say the kind of compensation you get in the different geographies are quite different here with, I guess, easier to manage this in Sweden than it might be in the other Nordic countries, for example.
I mean, first of all, this is more related to December than the entire quarter. It's not the biggest, you know, explanatory factor in the quarter. We wanted to highlight it because it became evident that it's actually something that we really need to look into also going forward. I can give you a, you know, a firm figure saying that it's SEK X million, but it's not a huge impact in the quarter. Probably be a bigger impact though in January. From a Q1 perspective, it's still a little bit early to say. There are so many things happening also right now in terms of, you know, released restrictions and things like that.
I see your comment also on variable volumes helping you in a year-on-year perspective, but then also normalizing and then maybe being at lower levels in some part of it. If you take and compare the variable volumes that you saw in Q4 towards more of a normal year, how would you describe them? Are they back to normal level? Are they below or higher?
From a total perspective, they are not back to the normal level if we say that 2019 was more of a, you know, normal level pre-COVID. We see some positive signs in certain service lines. As we also highlight, the really high demand for additional cleaning is now decreasing. As we have said throughout the pandemic, we do expect a normalization. We do expect food and beverage margins to continue to come back. We do expect property volumes to increase going forward, but at the same time, probably not keep the high cleaning volumes like we had in the past during the pandemic.
Sounds very reasonable. When you look at 2022, you highlighted, AnnaCarin, that you have been off to a good start when you look at contract renewals and signing also, say, new contracts. If you take the view on where we are in the cycle, I guess this should be a good year for signing new volumes, I guess, as then your client base is coming out of or maybe a short, more short-term, amiss kind of management of their business and maybe now want to look for longer term opportunities. If you could elaborate a little on that and what you see and what you feel about the contract portfolio, it would be nice.
Also maybe add what kind of renewal risk you see for the rest of the year.
Okay. Yes. Thank you, KJ. Yes. As I mentioned, I think 2021 was a year with high business activity, and we will see that activity continue into 2022. As we mentioned, we have one really large contract coming up to start up the Danish Building and Property Agency in Denmark that will start in May. That will be high activity within Denmark but also integrate our acquired business. As we mentioned, we have also prolonged many contracts during 2021, and of course, there is always new contracts coming up in terms of prolongations. Roughly, I think we will see a more normal prolongation years ahead of 2022, of course.
We always work really close to our customers, trying to have prolongations in exclusivity as we had with, for example, SAS as we prolonged for five more years this year. I think, yes, looking at 2022, we think the business activity, the high business activity will continue. I think we have a really solid pipeline of new business coming up. As we mentioned, we still see potentials for doing some more added value acquisitions as well.
When you look at, say, you alluded to us also, Claes, the high concentration on towards larger customers. If you take the top 2025 contracts you have, are there a big proportion of those still that need to be renegotiated during 2022? Or is that now pushed into 2024?
There are a few contracts of larger size that needs to be prolonged in 2022. It's not, you know, a dramatic year from a prolongation perspective. From the top 2025 list, of course, there are a few contracts that needs to be prolonged this year as well.
You wouldn't describe it as above normal?
No.
Normal to the below normal?
More or less a normal year, I would say.
Yeah. Excellent. Thank you very much.
Thanks, KJ.
Thank you. Once again, I remind you, if you do wish to ask a question, please press zero one on your telephone keypad now. There are no further questions at this time. I'll hand back to the speakers.
Thank you for listening to our Q4 and 2021 report. I hope you will take care, and I hope to see you soon. Thank you and bye.