Bonava AB (publ) (BONAVB) Earnings Call Transcript & Summary

Good morning, and very welcome to Bonava's Capital Markets Day 2021. My name is Sofia Rudbeck, and I'm part of the executive management team and responsible for sales and marketing and communication. I will be your guy today and moderator, and I will guide you through the next coming 3 hours. Very welcome all. A month ago, we presented our strategic review as well as our updated strategy and objectives. Today, we will focus on giving you an increased understanding of our midterm targets as well as how we will achieve profitable growth going forward. Let's have a look at the agenda. We will start off with our CEO, presenting our market dynamics and starting position. We will then have a break. And after the break, our CEO will continue to talk about the targets and the strategy followed by our CFO, who will go through the financial road map and then our CEO and I will have a discussion regarding our sustainable foundation. Then it's time for another break. And after the second break, we will have a deep dive into one of our business units, Germany, and talk about the growth potential in Germany, followed by a case of the Swedish single-family house business and then we will open up for a panel and Q&A discussion, and we will close with some final remarks of our CEO. With me in the studio, I have my colleagues. In addition, I also have Helena Nordman-Knutson. Welcome, Helena.

Thank you very much. I look forward to this morning, and I hope you send in a lot of interesting questions.

Exactly because Helena will help us with receiving all your good questions. So during today, you will be able to send in questions. You can post them. You can see the green button on the right-hand corner. Press there, and you can post any questions. After each presenter, we will open up for a few questions. And then during the panel discussion, which Helena will moderate, we will also make sure to address all your questions. So please just send in questions throughout the day. With that said, I would like to welcome up and kick off the day with our CEO and President, Peter Wallin, please welcome up on stage.

Good morning, everyone. We are happy to have you all here today. I hope you're safe and safe in this very challenging world we are experiencing. And I'm very excited to be standing in front of you today together with my great team to talk about our revised strategy. So let me kick off by starting with introducing a little bit of flavor of Bonava. We have 8 countries in 22 different regions. We have a strong financial position, SEK 16 billion in net sales, and we have 2,100 employees. And you can see the beautiful map there. First and foremost, we have a great purpose. We create happy neighborhoods for the many. In that way, we know that we want to make a customer promised home as well as building sustainable homes in the society. So if we start by looking into the timescale of Bonava. Bonava as a separate entity has been here since 2016, when we were spun off from NCC. But long before that we have developed homes in all of our markets for many, many years. So it's not that we are basing everything we are talking about here today on the last 5 years. The portfolio of businesses we have is also offering a number of diversities. We have a broad geographical reach. We have a balanced product portfolio, and we are driven by customer insights. In all of that, we have built in the sustainable part. And we also have a very solid financial position, which is supporting great fundaments for growing this business going forward. Yes, we have struggled with profitability if you take a look over the past couple of years, and this has been the cause of a drop in market in a Swedish context and also very quickly falling volumes in the German market, for example, and then quite volatile performance in many of the other markets and regions. And because we are reporting numbers of completed contracts, it takes some time before this is visible. As you also can see, we have starting to turn that corner, but we are not performing at a level we should perform as a group and as a company. So when I started as the CEO in February, we embarked upon a very rigorous review of the business. We were looking into the macro trends impacting our type of business. We were looking into each and every specific business unit and region and the conditions for them. And lastly, we were also looking into the gaps, where are we performing in -- from the bottom all the way up. So this was a great fact-based part of taking -- knowing what next steps to be taken in order to improve performance. So we came to a number of insights based on this. Firstly, all of our markets are attractive. The need for sustainable homes is tremendous out there. And actually, how you play is more important on where you play. Our markets differ if you compare them. So we need to have different delivery models and operating models. We can't do one size fit all. And thirdly, our markets are in transition. This is a highly competitive industry, and we need to stay on our toes to stay relevant. And the best way to stay relevant is really to focus on our customers. So we have a clear understanding on how to become a top-performing player. We need firstly, a well-managed and strategically refined land bank in each and every one of the regions we have selected, we need to have a footprint to offer us with continuous volume over time that will offer stable and solid margins over time. Another part of this is regarding efficiency. To be efficient when it comes to costs and other resources, we need to increase the degree of repetitiveness. The more you train, the better you become is a well-known fact in sports, and it's the same thing when developing new homes. Customer focus, I've talked about, being relevant in the marketplace and offering customer satisfaction is key to be successful. And to do all of that, we need the fifth pillar, which is a very clear operating model. We need a more decentralized way of operating in order to leverage the -- all the other parts we have in the group. So let me talk a little bit on the market dynamics, which we can capitalize upon. Firstly, we know that the underlying fundamentals are strong. The graph that you can see here depicts GDP growth weighted proportionately by the net sales we have in the various marketplaces. And we have seen the markets come back after the first COVID implications in 2020. And we also know that we have a low interest rate environment. And lastly, unemployment is decreasing since the first implications of the pandemic overall on a very low level. So all of that beds in the disposable income and the level of robustness into the fundamentals. Another part, which we have mentioned before, and which is very strong, of course, the very favorable demographic trends. The growth in population per se, the urbanization and the low historic supply. In many of our markets, we have a pent-up demand where demand is far outstripping that of supply. When we talk about urbanization what you can take a look on here, it shows the graphs represent from 2000 up until 2030 in forecast. But you can see how quickly the urbanization percentage is increasing across very developed countries. And this trend means that the supply on a national level needs to be looked into the larger city areas where we are living and working. Another part, which my colleague, Sabine, will talk about in a while is this doughnut city concept, where people are moving away from the absolute city centers outside, where you are supported by good transport and infrastructure. That has caused the term doughnut city because you grow in a doughnut around the inner-city centers. This is something we clearly see developing, and it's been even more so during the pandemic. No one has been able to escape the fact that we have had shortages of material and quick increases in costs. These graphs represent Sweden and Germany. And the darker upper line is representing the growth in sales prices on average and the average cost increases. So on average in these 2 markets, you can see a threefold increase of sales prices over that of cost increases. If you take a look on the whole Bonava Group, the same is true. Now our business models are different. Sometimes you need to fix the sales prices before you actually conduct and start the project. And other times, you are able to move the sales prices along with the market. In essence, this has meant that we have been able to mitigate the cost increases to a far degree in the ongoing projects, and we also believe that we are in a robust level when it comes to starting the new projects. When we start a new project today, we will need to have certainty into the sales strategy and the sales situation. We need to have super secured cost estimates for the project. And thirdly, we need the right team to be in place for the project. It's only then we will start the project regardless of having the building permit or not. So those are really strong for us going forward because this will make it much more credible when we start the project and see the final outcome of the project. Then look -- take a look at some of the global trends that we believe that we are successfully addressing. ESG at the core. This is extremely important for our customers, our employees and our partners. And this is something which is something which we need to address big time today. The way we have responded to this is that we was the first developer that adopted the science-based targets in measuring the climate and climate actions. Another way we are looking into this is also more and more going over to brownfield development in order to save greenfield land development. The digital part is something which we have worked with over a long period of time an official for us during the pandemic, of course, where we are offering a digital customer journey for our customers. And we are also for the production and selling part using virtual design and construction. This is also making it possible to do some things within the science-based targets and the sustainability part on environmental issues. Then we also have been able to adapt quite quickly to the changed customer preferences on the back of the pandemic because this has been built on the customer insights. The way that we have laid out the floor plates in the projects and in the homes. And then, of course, having access to green areas. Now all of this needs to be built in how we are choosing the land bank we are investing in as well. Taking a look into the housing dynamics. Let's first revisit the 2 major parts of the projects. We have the multifamily houses and the single-family houses. The multifamily houses we are developing and selling across our 6 different operating units. When it comes to the single-family houses, that is 3 of the markets. That's Germany, Sweden and Norway. Another part of our business is also then selling to investors. That's more business to business. This is a great source of mitigating risks when we are starting the project or building up a project over time. And also because of the growth in value in this part of the market, it's also meant that the pricing and value in the business to business is very much equal to that of business to consumer. This is, of course, meaning that we have much greater room to move in between the 2 different segments. And within all of this, with investors and consumers with multi- and single-family housing and with various countries. That is why we say that we have a balanced portfolio. We are offering a balance, which I think makes us unique and stand out in the marketplace looking across our competitors. When I spoke about repetition, one thing which is key in repetition is that of having a standard system. You can say a ready lego on how to build the projects we have. And if you take a look on across our markets in Germany, in Baltics, St. Petersburg, and the single-family houses in Sweden, we have progressed and we have very standardized and well working system. Whereas in the Nordic region, Finland, Norway and Sweden, on the multifamily housing, we are less advanced. And we need to recognize the fact that we are -- have various local demands and expertise levels in these markets. We will hear more about Germany and the single-family housing in Sweden later on. But when we talk about standardizing and repetition, it sounds boring perhaps. And it is a tedious process, but I can promise you that the rewards are so much greater, not only to the cost and economies of scale, but also into sustainability and health and safety, given that we look so different across the markets we need to operate differently in our markets. So if you take a look on the screen behind me here, you have the design and build contractor that is buying external services building our homes completely. That requires a certain set of skills, a certain set of expertise. The middle part here, it's divided contract where we are having the management. We are taking the responsibility that normally a general contractor would take to coordinate, procure and to manage the various subcontractors. And this offers, I would say, much higher level of expertise and know-how because all the things that falls in between we need to manage. And I think this is something we only can start and embark upon when we have the needed expertise level. And lastly, we have our own resource actually on the blue collar side partly. When looking at the various markets, we have categorized them. So we have categorized them depending on the level there, the status of the business. So starting with Finland and Norway, they have struggled quite a bit with profitability. High deviations in project margins. So here, we need to have a -- getting the things and the basics right to start with. So it's an attention to leadership and management and building up the necessary know-how and getting stability in. The next step where Sweden is, we have ensured profitability. We have the major part of the know-how. We know what to do, and we are on a higher level. We just need to increase consistency and we need to increase the level of profitability. And then lastly, we have grow business, where you have Germany, St. Petersburg and the Baltics. Here, we have well-functioning systems well -- and good track records over many years. So when you are in this last bucket, you can drive growth and a growth agenda because you have the prerequisites to grow. So let me go into each every one of the various markets we have now. I will touch shortly base on Germany. We will hear more from Sabine coming on in a while. It's a very attractive market where we are in 8 regions. We are building both single and multifamily housing. And you can see that the share of Germany is actually 44 -- 46% of the group's net sales. So this is a very important part of Bonava in many, many respects. As I said, this part is in the growth business. And if you take a look on the top right-hand side of the graph here, you're going to see the volumes. And we are quite far away from the numbers that we posted on the number of levels up until 2018. This was also one of the comments I made when I commented on the struggling profitability. So we will get up here again gradually and perhaps even above that, those numbers. And the nice thing about this from a business model point of view, we can adapt the sales prices as we go along in the projects. That's number one. And number two, we invest in the land bank, but when we start the project. It's actually co-funded with our customers. So that is a very cash lean part when we start the project, which is not the case in the other markets, which we will see. Our second largest market is Sweden. It accounts for 22% of our group net sales. So here again, we are doing both single and multifamily housing. And then we have -- the payment system is that you pay a very small part when you sign the agreement, but then you make the large payment when you take ownership of your home. So here, we have a large balance sheet as we're building the project, and then we have a large cash inflow as we are handing over the keys. Here, we have ensured profitability. Sweden has been performing extremely well in the past, and I'm sure that we have the right prerequisites to come back to that. But part of it is coming back also in the terms of the volume as we have -- we'll be talking about a little bit. Coming into Finland and Norway. And those 2 markets then is accounting for 23% of our group net sales. Here, we are doing predominantly multifamily housing but also in Norway, some single-family housing. The payment model here is either down payments on getting the ownership or gradual payment as you go along. But it's very much similar cash flow pattern to that of the Swedish business. So all the Nordic business are very similar with that regard. These 2 countries, they are stabilizing business. And I would like to make a few comments here when it comes to these markets. So we have Oslo here, which we acquired back end of 2019. And since then, we have had the pandemic. So for this business, it's very much to getting them integrated into Bonava and getting them going. In Finland, we are active in 3 different regions right now, and we have closed 1 region during the course of this time. So now we are getting the right geographical mix and gradually, we will see us growing accordingly. But it takes time, and it's absolutely right for this business to focus on the stabilizing part. Lastly, but not least, is the St. Petersburg Baltics part. So here, we have a quite small net sales, but please don't only look at that but also look at the numbers up here. The number of units shows that this is a very large business. A business where we are doing multifamily housing. And here, we have a mix of business models. In St. Pete, we are investing our money into the land bank. But then as we are starting the project, the same business model as in the German operations, we are then getting proceeds and building it for money from our customers. So it's cash efficient. And in the Baltics, it's a down payment system with a larger component when we are handing over the keys. In these markets, we are also more offering gray and white finishes. What does that mean? Well, it means that we're not building them and specing them out with kitchens and toilets and everything there, we're handing more into the structure and our customers is doing the last parts themselves. This is part of the growth. So to summarize that of the market, today, the license to operate is divided into the way I've talked about Norway, Finland in stabilizing Sweden inshore profitability and St. Petersburg, Baltics and Germany into the growth part. Mid-2024, we should have stabilized the businesses in Norway and Finland. And in 2026, all of our businesses in the portfolio then will be in the growth part. We should be stable, ready to take on to grow the business, and that is how we need to set out for growth.

Thank you, Peter. That was really interesting. I will now follow up with a few questions for you. And we also open up soon for the audience. I'll have the first question. And it's regarding competition. So we see that there are new competitors entering our playing field. And my question to you is how do we make sure that we are competitive in this changing market situation?

That's a very good question, Sofia. Firstly, I love competition because it makes us stay on our toes, and it also creates a good benchmark where we need to be. And at the end of the day, the customer is going to decide because they are the ones that are actually conducting and doing the buy. And we know whether we've done a good job or not with all the metrics that we have. So that's very good. And I would say the addressing competitiveness is how we're addressing our sort of 3 strategic themes that we will talk about in terms of land bank, repetitiveness and being commercial excellent.

Exactly. And I thought now let's invite Helena as well. Do you have any questions from the audience?

Yes, I do have one here.

Great.

I have several. I have one from Stefan Andersson at SEB. He's asking on a market-related question. The cement issue in Sweden is only temporarily solved. And if Slite will not be able to deliver cement after 2022, in what position are you then? And do you already now have alternatives? Or is this still on the agenda to solve? Or do you calculate with Slite remaining open?

So Slite is the production site in Gotland. So we are talking a part of the Swedish business. And for our -- for the Swedish construction industry, at large, this is an extremely important question to be able to provide a very large and important input factor of cement, of course. For Bonava, as you saw from my map here, Sweden is accounting for 22% of net sales. So yes, we will be impacted if we are not, this situation is not solved on a long-term basis to a smaller degree in the group level. Then coming into the Swedish context, we are looking into alternative deliveries and methods. All of it being, of course, challenging in different degrees because moving prefabricated with the transportation cost right now, is a challenge. And also the same is true for ready-mix because you will need to move it for a long period of time. But we are very much active on that part. And also remember, we are a client to the client. We are not a big construction company with direct contact in all kinds of cement into the production. It is extremely important for a Swedish context, and we are working hard to resolve it.

Thank you. I have another one relating to the market dynamics, which you partly answered already in your presentation. But -- and again, from Stefan Andersson at SEB. Is the price inflation on material a concern? Or is it the increase of end prices more than well covering for this? Just to repeat me.

I would say that we are in balance. I'm still very confident that we are able to mitigate the cost increases and still hitting the margins that we need to hit in our business. But as I said, we need the 3 fundaments in place. We need the sales status and sales strategy. We need to have super secured cost estimates, and we need to have the right team in place.

I still have one here from Stefan, and that is on actually on prices as well. Could you elaborate on your view on access to land and prices right now?

I would say that when you saw the graphs on the prices and the cost increases, you can see that the gap widens. What kind of implications will that mean? Well, it will mean actually that the cost of land is still increasing. And so land will always be viewed -- could be viewed as always being expensive. So we need to be investing in land bank over time and not at the one go approach, of course. But we should always be in the market and buying land. Buying land is that it may need to be suited to the concept for our building system and the customer demand that we find in the specific market segment.

Then I have one other as well. If you look at the market dynamics and so on, what do you consider are the 3 major drivers to optimize Bonava's overall return to shareholders and other stakeholders, of course, both in the short-term, midterm and long-term perspective.

Growing the regions and markets where we have the best performance according to this stabilized ensuring profitability in growth mode. So in the short term, we have the land bank, and we have the project pipeline and everything. So midterm, we are fine. So that comes into the second part, and that is shoring up the land bank. We need to have a land bank with offer us robust buffers to the changes we are seeing in the permitting processes and developments. So we are able to offset so that we are not depending upon starting the projects without having the right prerequisites. So that is very important. And the last thing is the team, the quality of the team. We need to further recruit and attract expertise people.

I have one other then from Stefan on this theme. Are there differences in the need of land in different regions or markets? And if so, how does it differ?

It differs a lot. And if Stefan could wait for a few minutes, Lars, our CFO, will talk more about that.

Thank you. Yes. Well, that was the questions that we have.

Well, thank you very much. And now we will go on with a coffee break. So please have a coffee break and be back here at 9:45. See you all then back here again in the studio. Thank you very much. [Break]

Welcome back. I hope that you all got the chance to grab a cup of coffee. Now we are ready for our next presentation, where we will connect the market dynamics and Bonava's starting point, we're looking into the future of our targets and also the road map strategy to get there. I would also like to remind you to continue to send in questions because after each presentation, we will have a short Q&A. So just send in your questions throughout the interface. You find the green button on your right-hand corner on your screen. With that said, I would like to hand over to CEO of Bonava, Peter Wallin, welcome.

Thank you very much, Sofia. Great to see that summer pictures on the film here now in the current darkness outside. As you also are aware of, after the -- all the things I've been talking about now is the importance of handing over the keys. That is a great moment for our customers, and it's also a great moment for us, partly because we can report the net sales, but also partly because we can see the happiness, taking control and ownership of your new home. So let me take you a little bit through our revised objectives and strategy of Bonava. So we are using this symbol to hone in of the various bits and components. In the center rests our purpose, happy -- creating happy neighborhoods for the many. They rest upon 3 strategic themes: land bank, repetition and commercial excellence. I will talk about that later on. And they are built upon our foundation. They will result in the strategic objectives you can see on the right-hand side of this symbol. So firstly, we have profit, and we have the growth, health and safety, customer satisfaction, climate action and last but not least, the employee engagement. If we dig a little bit deeper into these 6 objectives, our profitability metric is earnings before tax because with that, we also get the interest component, which is so important when you have a big balance sheet. So the 2026 objective is to reach SEK 2.2 billion, an increase of 120% over full year 2020. Secondly, growth component, we're going to hit 8,000 homes sold in 2026. I said sold, which means not started. The sold part is when you have a binding contract. It is, of course, a function of the projects that you start, but this also shows the continuous level we're going to be at. Thirdly, health and safety. Everybody that works within Bonava with Bonava needs to come home safe every day from our sites and offices. This is both in the short term and in the long term. Fourthly, customer satisfaction, and we are measuring this at a very tough level at wanting to be over and above 50. So that means that the super positive customer scores that we get is out ramping all the others being 50 and over. So that's a very tall task, but we know that it will give a lot of impact to the profit and loss and the continued sustainability in our business. Fifthly, climate action. We have embarked on the science-based targets as the only Nordic residential developer. And then we are going to hit the Paris Accord with reducing the greenhouse gas emission by 50% to 2030. 2030 tastes that year. It's not too far ahead. And I get extremely competitive when I hear that because I really want to be successful there as well. And then the sixth part is the employee engagement. And we should be on the -- in line with the top-performing companies, no matter what business, no matter what industry. All of this will rest, of course, on the equity assets, target of 30% and then the dividend policy, 40% of our business cycle, not each year of the business cycle. So let's take another step into what I've just talked about. Starting with the first part, the earnings before tax. So these bars represent the history. And when you look at this, you're going to find the lilac part is sale of land, and the rest is the other operating profit or at profit before tax in the business. And at the bottom part, you're going to find the percentage where we have related the operating income EBIT to net sales and the same for EBT, including sale of land and including items affecting comparability. And as you can see, the lilac part has in our history been quite large until 2020. And that has, of course, manifested itself that the company has left and changed a number of markets, but also the fact that the company has been moving towards a much lighter balance sheet. So if we look into the business plan period of '24 and '26. Sale of land will be a part, but not as a big part as we have seen in the past. And when we are at 2024, we want to hit SEK 1.6 billion in earnings before tax. That equates to an EBIT margin between 9% and 10% and an EBT margin, earnings before tax of 8% to 9%. And if you compare that to the history, we have been at those levels, albeit with land -- sale of land. So I think it will symbolize 2 things. One, we know how to do it. And secondly, it's a little bit different quality of the numbers going forward. And then the end game for the business plan is 2026 is the SEK 2.2 billion, and then we are talking about operating income margins of around 10% to 12% and an EBIT margin between 9% and 11%. So Lars will then talk more about how we underpin this trip. So it will become visible course of gradual increase as we go along. Because as you already saw from the graph I showed previously, where we are turning the corner, the words I put to that. We have taken steps to improve efficiencies we have taken steps to improve profitability. And gradually, we will build this up. So we are not starting from scratch here. If we take a look on the volumes, this year's history represent a number of thousands sold, which is the light green bar and then the dark green bar is the started. And you can see how it fluctuates. When this fluctuates, it's very hard to be efficient when you are developing new homes. So we need to be on our consistent level. So if I then take a look into the target levels. In 2024, we should be in 7,000 and in 2026, 8,000, and the way it will happen is that the lead, of course, will have to be started projects. When you start a project, you do that with a certain presale hurdle. So roughly 30% to 40% is sold already when you start the project. Then you will sell some 30% to 40% during production. And then at the very end, when it's completed, you set the more the curve is very much visible if we look across our different markets that when people can see and feel the project, then you're selling the last homes. So this is going to be led by increase in starts and then the sold units going to come afterwards. Then, of course, over time, these 2 will be in balance. If I turn into the Net Promoter Score as we have as a target you can see the journey that we have taken, and this should not be confused by only looking at the index of happy customers. This is much tougher because here, we are taking away the customer that is medium happy and not happy at all. So this is a tougher metric. We believe it's the right metric because we need to be on our toes as we talked about previously in order to stand out for the competition. And the only way we can stand out is meeting our customer demands and wishes. Again, this metric also will give us a good economic development in our projects because happy customers are also leading to that we have less claims and less costs of rectifying issues in projects. And the word of mouth, you can just recognize how you were sitting around the dinner table and talking about this experience you've had with the developer Health and Safety, as I said, extremely important to us to have all our partners, employees, subcontractors to walk home safely from sites and offices. The bars on the left-hand side is showing the frequency rate. So the number of people being hurt on sites or in the offices, but predominantly on the sites. That has to be away from the side for at least one full working day over 1 million working hours. And I would say that this frequency rate is not acceptable because it actually exposes the people we have on our sites to a far degree. We need to be better than this. we can be better than this. And the way we are dealing with it during the strategic plan is working with 2 parts. One part being a proactive measurement making sure that we're getting the right culture and actions into place in our businesses and our sites and offices. So that we show everyone plan fulfillment. Everyone is also showing that we all have a responsibility to work for a safe work environment. Then we are looking in the mirror and looking at the reactive target. So then it's the severity rate that we need to be reduced. It's a little bit similar to this frequency rate, which is adopted across the various industries across the globe as the metric for whether you're good on health and safety or not. The severity weighs in also on how serious the accident is, i.e., how many number of days is someone staying at home. So this is not a situation where we are not injuries lightly, but it's also reducing the bigger implications for people hurting -- being hurt and damaged over a long period of time, impaired. Then we have this science-based target and it's complex. So let me try to explain it a little bit. It measures 2 part. Scope 1 and 2 are -- is all the actions, all the missions that we are responsible for in our work sites, offices, travel and the likes. And you can see how small proportion we can actually control. It's 2%. The rest, 98% is Scope 3. That is before we have bought the material and get the material to our sites and when the actual home is being used over 50, 60, 70, 100 years. So here, we need tough measurements because we are actually measuring both of these. We need to reduce both of these by 50% to 2030. And we are using 2018 as the base year. So how are we faring right now? When it comes to Scope 1 and 2, the target is reducing the emissions from 13 to 7. That's 50%. In 2020, we were at 10%. So we have taken roughly 24% reduction. So half of the half. Now I'm not so proud to talk about our achievement on the Scope 3, the bigger part because here, we have actually lost 2% since 2018. Now I'm not saying this as an excuse, I'm saying this as an explanation because we are producing, you can say, export regions per business. And it also means that some part you are sharing all across the units we are selling and having under production. When our volume is shrinking, it means that the emissions we have gets distributed on a smaller number of projects, which means that we are working off. And if you take a look on our volumes in 2020, they shrunk. So that means that the number has increased. So I'm very sure of the -- all the work that is going into our new projects and our new homes will also manifest itself that we are starting to hit back on track when it comes to the reduction of Scope 3 as well. This is a tough measurement and it should be a tough measurement. So this is how we need to continue to report our success and failures when it comes to increasing the emissions. Then you remember engaged employees. I remember it very much because I think about 24 hours per day, and you can see that the energy and clarity here when it comes to the way we are portraying the engagement level in our employees. As in all matrixes, you should be in the top in this graph, right? So at Bonava last -- in this year, 2021, we hit 85% in score and the top high-performing 10% of companies at 87%. So we are quite close here. And the target is that we should be. -- the global benchmark is here. So we should be happy and proud, but not satisfied. So let's talk a little bit about our 3 strategic themes. And you're going to find them listed up here as well to the reference to the model I showed previously. Firstly, we need to optimize capital allocation in the group to get the most bang for the buck to get the capital invested where it needs best return given a certain risk level. And we need to also shore up the land bank in the various regions to be able to hit this consistent volume I've been talking about. This is to ensure economies of sale and also being efficient when it comes to resource usage. And then securing the land bank here is something which we will need to do over time. It never ends. We need to replenish the land bank over time and suited to the concepts that we have. And something which we will also do much more of is investing in land bank with a higher footprint where we can develop a part of the city, a part of a region over many years in different phases. Because here, we are building up a value, which we can leverage in our own business. Repetition is key I've been talking about. And here, we have 2 examples behind me. So it starts by having a system, a solution, a lego in place. And the examples we have here is the building system we are doing in St. Petersburg. When you have a standard system, you know the exact time it will take. You know the costs it will take. You know the resources it will demand, and you know how to plan the procurement in time. So everything sort of builds into being a very efficient process. The other example is that of single-family housing. And here, my colleague, Fredrik, will talk about this concept a little bit more to detail in a while. But here, we have reduced production lead time big time, and we have a really good concept which we now can leverage out with the large demand that we have for having larger areas, and we also have greenery nearby. And we all know now during the pandemic that the rush for single-family housing is huge. We have the solution here. Third part of the strategic things is that of commercial excellence. And what is commercial excellence about? It's about on having the right product for the customer needs. We need to meet or exceed the customers' expectations because otherwise, there's going to be unhappy claims and a lot of costs. When it comes to commercial excellence, we also need to look into different variants of business models. And the drive experience, we have this great Bonava brand. We need to leverage it much more, both digitally and also the way we are existing and present in our great projects in our happen neighborhoods. Switching gears a little bit, talking about new business models. We are looking into starting a build to hold, building and then managing rental properties. And why are we doing that? Firstly, we increased the learning of our great products. And it also adds another tool in the tool box when it comes to how we can choose to develop the different parts because all in all, we see that when you go into the brownfields I talked about, you do get into more complex situations, and we can address this much more if we have the 2 box. We are still seeing a huge interest for sustainable, well-built rental properties. So that is meaning that the yields are compressing even further when you can see the secure cash flow. And now if you build up a portfolio of these projects, we believe that you can get an even better yield than just project by project. So diving a little bit into the nitty gritty details here. Where? Well, in the Baltics, we have a leasing market and a tenant market that has formed and stabilized, and we have a huge demand from tenants and for investors. And we believe that this is a very good opportunistic time to start investing in these projects. Other markets where we are looking into this is the well tested markets of Sweden and Germany. And we can build a portfolio of the existing pipeline, where we have already identified the right types of projects. So imminently, we are prepared to start with the first project into the financial principles. The development of the property itself will be in the normal course of business. Then we'll come back to that. But I think the principle of transferring a completed project is on a market value basis. So the development business makes its margin based on an external market valuation. And then management entity is taking over the property at the market value. So the new items that will appear then in our profit and loss will be rental income and then you will also have mark-to-market value changes on a quarterly basis. We will come back with more details of this, but this will be the principal foundations. When it comes to size, we aim to build up a portfolio of SEK 2 billion to SEK 3 billion in market value over the course of 3 years, and we will report these units as sold units when we're conducting a project like this. And we will be transparent when we start these projects. When it comes to competencies, we already have these competencies in-house to a large degree when it comes to designing these kind of projects, but also the leasing part because we are leasing to some of our clients that we are selling to. So it's more coming into the asset the hard FM, the hard facilities management issue. So we will gradually grow the organization where it is relevant. So I'm very excited to have this opportunity for Bonava.

Thank you very much, Peter. And now it's time for a few questions. And I would like to ask you a question regarding the targets. So how would you consider them? If I on the one slide, talk about them as conservative or on the other hand, talk about the mass challenging and with quite some risk built into them. How would you respond to that?

I will respond to that the thorough business plan that we have been working with our businesses now is we have created a bottom-up approach, which means that there is a lot of commitment to the numbers up the line. Now we are all dependent on how the market is developing and so forth. So I would view them as a good balance of challenge and being on the safe side. So all in all, I think they are realistic but ambitious.

Thank you, Peter. And let's also open up for some questions from the audience. Helena?

Thank you very much. I have one here from Stefan Andersson from SEB again. That is regarding the dividend. Should we interpret your comments on dividend as if there will be no dividend from now on or that the dividend will be adjusted depending on investment levels reached and then gradually being reduced.

I would say that the way we have portrayed this is over a business cycle. You can always debate how long is the business cycle, but it lends itself to -- if you look on our investments, it is over a longer period of time. So it is 6, 7 years when we have the inception of land to selling and completing an investment. So perhaps shorter than that, but in that range, it will mean that depending on the investment opportunities, the stability, the macro and everything weighted in, the annual part can sort of be moved, of course, at over the whole period of time, we should have reached 40% in dividend out of the net income. So it's a little bit more flex built in, and that is to address, of course, the investment opportunities that we see in our markets.

Then we have a question regarding the unit's target for 2024 and 8,000 for 2026 coming from Fredrik Stensved at ABG. The B2B projects have historically often been divested early in the project phase, while B2C units are sold gradually. Should we interpret this target as 708,000 completed recognized units in these years? Or is there a difference here between sold units and completed recognized units we should be aware of?

Thank you very much. Yes, it's good that we're asking the basic question. So the answer is, yes, there is a difference between sold that's the signed agreement binding contract, whereas the handover is the key I showed behind that. So that is the basis for recognizing net sales. So in other words, could there be a lag between the numbers and the bars I showed on the numbers of sold and started definitely. So it's a gradual buildup.

Do we have time for one more?

A short one.

Short one. Well, the thing is that this one is quite long, but let's see if we can take it anyway. If you complete recognize 8,000 units in 2026, and we assume that the average price per unit is some SEK 3 million. This leads to a top line of SEK 24 billion. The EBT target of EUR 2.2 billion, hence means that the EBT margin is some 9%, which is lower than the EBT margin in 2016 and '18. So how should we view top line growth versus margin expansion in order to reach the target? And how does your goal of 8,000 units tied to the sales top line. of this needed to reach the EBT target. It's partly for the finance, but...

Absolutely. I will hand over a big chunk of that part to Lars, which will come after me. Long question, short answer. I would say that profit is the #1, #2, #3 when it comes to when we start the project. We need to be sustainable here for the long run and then the profitable level needs to be there. So top line is not what we are focusing on big timing. Of course, as I said, the levels that we hit in each of the regions need to be on a consistent level in order to be efficient in that submarket, but that's a different story.

Thank you very much.

Thank you, Peter. And now it's time to go to the next section. I think we're all ready to get into the financial numbers and the financial road map ahead. So with that said, I would like to welcome on stage Lars Granlöf, CFO of Bonava.

Good morning. Yes, as Peter was elaborating on he was reiterating our targets for 2026 that we launched by the end of October. He was also giving you some of the figures, the midterm targets that we have for 2024. So I would like to take you through a bit how we reach the 2024 and the 2026 figures as we have reported. So let's start with the profitability. We are going to increase that, as we said, with 120% over the years up to 2026. And the main part of that is coming from improved profitability, i.e., gross margins, in particular, in same volumes that we have today. In addition to that, we are going to add more volume, growing our business at higher margins, which is also then a very important part of adding to profitability. But in order to reach that, we also need to invest, both in more organization, more people but also that we are going to borrow more funds, of course, to finance this growth. So if you look at the margins in our segments, you see that all of our segments are moving in the right direction, but from different starting points, of course. You have the Nordic where we are going to stabilize. We have the Swedish segment, ensuring profitability at lower margins, but increasing. And then in the growth segments, we are going, of course, to grow that business and also then adding on more profitability. So there will be a mix effect with them growing more than the others. Looking at what do we mean with a changing, improving profitability in the business, in the current volumes, of course, with our circle -- cycle of projects, about 2 years on average from start to completion means that none of what we have in the portfolio of ongoing production today will be there in 2024. But going back, we have too many projects in different levels of profitability. We also have a number of projects, of course, where we have margin erosion even though we have a number of products that are on a good level in terms of profitability today. So we need to reduce this into a future state. We need to see too that we are carefully selecting the projects that we are going to run that we have strong requirements for profitability. We have the cost control. We have the competence in place, and we are running the projects with a clear mandate. So if we're looking at the situation as it was by the end of Q3 this year, we had 9,900 units in production. And if you look at that, more than 75% of those units will be completed before the end of next year then 2022, an additional 16% will be completed in the first half of '23, which means that there will be a very little portion of the ongoing production today that will still be in production in 2024. If we then move over to what Peter was mentioning, the replenishing of our building rights of our land bank. And starting with the land bank as it was by the end of Q3, we had about 35,000 building rights altogether, an increase compared to where we started the year. But it's about 19,000 of those building rights that we have in the balance sheet on balance. And the rest, they are either options or they are conditional agreements that we are not recognizing in the balance sheet, but that is not to be interpreted as that these will be utilized far out from now, they will be utilized in the near term as well when there are the right opportunities. And you see we have about SEK 7 billion in book value of land bank, and we're coming back to that. So if we try to dissect, try to analyze what we have in the land bank today then, the 35,000 building rights that we have, they have been acquired, of course, at different points in time. And we can see that about 45% of our land bank today actually were acquired before 2018, and it's also 60% that actually were required before 2020. If you then look at how are we going to utilize that the way that we are planning it today based on zoning and building rights, et cetera, we estimate that almost 60% of the current land bank will be utilized up until the end of 2024, i.e., starts up till the end of 2024. And we have some 15% for starts in 2025 and 2026. So here, we need, of course, to add more land in order for us to deliver on our business plan and our targets. And if we look at the 60% that we are going to utilize up to 2024, about 20,500 building rights. -- split in the segment, they are 15% single-family and 85% multifamily. But then please remember what Peter then showed you that we are not in the single-family segment in all our business units in all our segments. Germany, Sweden and Norway. So if we look at those, we have a stronger, of course, a larger part of their land bank being single-family houses. And another dissection is the consumer versus the investor market. And it's 85% consumer, 15% investor. But also here, remember that these tend to change over time. Sometimes, we are planning it as a B2C project, and we are converting it before we start to a B2B project. So it's not something that is absolutely rock solid. Moving over to then how do we target the starts. And the start, like Peter was also mentioning, 6,000 now in 2022, more than 6,500 in '23 and more than 7,000 in '24. And it -- I think it's good to reiterate here that when we look at starts and sold units and net sales, they are different. It's different terminology. Typically, we see that about 30% to 40% of the units are actually sold before we start the project. So it's a presale. And then additional 30% to 40% are typically sold during the production time and the rest of the units are being sold after completion of the projects. And hence, that means, of course, that we have less units in completion than units sold normally. So when you look at the 8,000 units by the end of 2026, that is not correlating to the number of completed units that year, of course. So 2024, we are not targeting and looking at net sales, as Peter said, but you can actually, based on the figures that he gave you calculate roughly what will be the net sales in 2024. And we said that about SEK 18 billion of net sales based on our targets and our figures we will realize in 2024. And you see that started before starting 2022 and before '22 represents 60% of that. So we have a good visibility of the net sale that way because the rest is also then coming from 40% of starts coming from 2023. And in the starts before '22 and in '22, we have 100% coverage in the land bank and the starts in 2023, 80% and working on it. So that will be coming in more building rights, of course, to build up that for us to be able to realize the figures for 2024. Then I'm going to move away from the '24 and the target and comment a bit on what we mentioned in connection with us releasing the strategy and the objectives for '26 -- We said that one part here will be that we are going to realize some additional costs, some items affecting comparability now in the fourth quarter. And it's SEK 15 200 million, as we said, by the end of October. And they will be coming in these buckets. 65% of that is write-down of land, meaning land that is not suitable for our building systems for the repetitive cost-efficient processes that we are going to work with. About 20% of it is coming from projects, some cost in projects where we totally have to revise these projects to adapt them to our strategy going forward. And then some 15% is coming from write-down of intangible assets, i.e., capitalized development costs from the past that is not in accordance with the strategy then going forward. So going from land bank and the income statement and how that looks and looking into the prerequisites and looking at the balance sheet where we now are heading for the growth. Peter showed you this slide earlier on. I think it's important to reiterate it. We see that our businesses are in different stages. We have the stabilized business in our Nordic segment. We have the ensuring profitability in Sweden, and we are going for growth already now in Germany, St. Petersburg and Baltics. But over time, when we come to the midterm, we will not have any of our businesses in the stabilizing mode. Everything should have been stabilized, should be stabilized by then. And of course, when we come up to 2026, all of our businesses should be in the growth mode, continuously delivering on the number of sold units and also improved profitability where we are, should be then on the SEK 2.2 billion by the end of 2026. So one of the prerequisites and this was also the mention in connection with us releasing our strategy, our revised strategy by the end of October, is that we need a step change in the land bank. We have under-invested in that land bank over the last few years. So there need to be a step-up of about SEK 3 billion. But it's not to be interpreted as that we are now to go out in the market and buy everything that we can get hold of at this point in time. We'll do a careful selection. Most of it will be coming in our growth segments, but of course, we need to continue to invest also in our segments, ensuring profitability and stabilizing the business to grow these businesses for the future. So probably ask for a bit, maybe messy, a lot of information in this slide. But this is try to give you a picture of how will the balance sheet develop in terms of the assets and in terms of the equity and liabilities. So starting off with assets. If we add on the SEK 3 billion in the step change that I just talked about in terms of the land bank, we are moving from a balance sheet of SEK 26 billion in assets in 2020 plus, up to, by the end of '26, growing that to SEK 41 billion. And one part of the growth is that we are going to add additional SEK 3 billion in the land bank, growing up to SEK 13 billion. And the SEK 25 billion, the main part of that, going from SEK 16 billion to SEK 25 billion, is going into the ongoing production, i.e., us than being in production of more units than we are today. And on top of that, we are also adding to build the whole element that Peter was mentioning, that we are targeting a SEK 2 billion to SEK 3 billion volume in a few years' time. So that is something that we estimate, that we will have an ongoing volume of that going forward. If you look at the financing, similar step over to the SEK 41 billion. How should we then finance that? One part is, of course, that we are estimating to retain certain part of equity. The part that is not dividended out, will -- adding to our stability, adding to our strength of the balance sheet even further. We are then, of course, adding loans into this. We have, as I will show you in the coming slides, we have got significant facilities, credit facilities unutilized today. We will, of course, utilize them. But we also will need to negotiate further funding, looking into other ways of funding as well. But we have the prerequisites for that. And also when we're looking at the net working capital, we are growing the net working capital in ongoing production. And the major part of the interest-free debt is, of course, increase of advances from customers that is funding the business as well. So if we look at the equity to assets ratio, which is one of our KPIs and one of our covenants in our funding agreements. Our target level is to be over and above the 30%. By the end of 2020, we are on the 35% level. So at that point in time, we could have added SEK 3.5 billion more. Over time, when we are adding equity through increased net income, through increased profitability, we are then, of course, increasing the potential of adding more assets, and thereby funding to our business. And also just to mention that there is a hurdle rate. We are far from that when we are looking into our objectives and where we are, but there is a hurdle rate of 25% in the covenants in most of our funding agreements. Looking into the financing, we are of course, looking into the green financing as a prerequisite. We are going to look at it in a long-term financing. We are looking at it in the short-term financing as well, because we need then to be able to mitigate the seasonality in the cash flow in our business. And we're also looking into project financing, of course, which we have in Sweden, in Finland and in St. Petersburg. So in terms of the green financing, we have the framework established last year. We are now looking into the taxonomy and to integrate that into it. We have SEK 1.8 billion of our funding outstanding in green financing. And just also to remember, we are actually consolidating the loans for the housing cooperatives in Sweden and Finland that we are working with. So that's SEK 1.5 billion of our funding. And then to finalize, this is the way that our facilities are looking right now. They have maturity a number of years out. We have significant portions, SEK 3 billion of revolving credit facility and some short-term facilities as well unutilized at this point in time.

Thank you very much, Lars. And I will also take the chance to ask your question. And I thought I'd pick up the profitability. It seems like a large part of the improvement of the profitability is about gross margin. And my question to you then is, what tools do you have in your toolbox to ensure the increase in the project profitability?

Yes, Sofia. The #1 thing is, of course, the project. All the projects, as I said, that we are running today, they wouldn't have been handled -- completed in handover long before we come to the 2026 timeframe and even '24 timeframe. And what we are doing is, of course, ascertaining that the new projects that we're entering into are at the higher level of profitability. We have the right people. We have secured the cost. We have tighter cost control, et cetera. Securing that, when we are actually delivering them, we are delivering better margins.

Thank you. And let's also see if we have any questions from the audience. Helena?

Yes. So I want to start with one that is, what level of return on capital employed would you be satisfied within the group level over the next 5 years?

Do you have any comments?

Yes, absolutely. It's a great question because return on capital employed was our previous one of our previous financial targets. With the current situation where we need to invest more going forward, I think even though we're not expressing this as a target, the lower level of the range, 10% to 15%, is probably the right level for the coming years.

So you would agree that you will surpass the 10% then until 2025?

It depends on the, as I said, the investments, but we are in a heavy investment period. And as you know, investing in land bank, that is really having a negative impact on return on capital employed because we're adding to the assets, and we are not getting a return right away on them.

Well, if you then add the new potential strategy of whole real estate assets coming from [indiscernible], what is the rationale in terms of ROCE here? And how competitive will ROCE be here versus the rest of the development operations?

I think it's a bit too early to really get into the details of that. It's like Peter was telling you, that we are in the early days of this. We are sorting out organization structure, et cetera, et cetera. But of course, we need to be in a competitive stage in this area as well, knowing that this is also a fierce market in terms of competition.

There was one question also on the gross margin. What profitability in terms of EBIT, EBIT margin -- or on EBIT first, do you expect in '22, '23? This is Staffan Bulow from Nordea asking that question.

Good question. Peter showed that the '24 and the '26 margins where we estimate to be in order to deliver on that. And what we are going to see now in '22 and '23 is a gradual improvement from where we stand right now, coming to what we showed you in terms of '24 and up to '26. So we are not foreseeing step changes. We are foreseeing a gradual improvement when we are renewing the project in our project portfolio at higher levels.

We had from Fredrik Stensved at ABG also, that you mentioned that gross margin taking up that [ 120% ] will be the main driver for your EBT target. And he would like to have, could you please give us a gross margin range?

Yes. We have carefully chosen not to get into the gross margin range. We have given the EBIT. We have given the EBT, of course, in that. And as I showed you earlier on here, our segments are in different stages. And we are changing that over time, improving that over time. So we have to come back to that. We haven't got any gross margin targets for the external market right now.

Thank you very much, Lars. It's now time to get to the next agenda point, the sustainable foundation. At Bonava, we've had a comprehensive sustainability agenda since the birth of Bonava 5 years ago. And 2 years ago, we actually got an approval from the science-based target initiative. And we were the first residential developer to do that. And I would like to welcome back on stage, Peter Wallin, that will have a discussion with me regarding the sustainable foundation. So welcome back, Peter. You will start with showing a few slides to explain how we work with the foundation at Bonava.

Thank you, Sofia. I will be happy to do so. I can't speak without my slides. If we first look into the foundation, it's a beautiful word because it means that we would rest steadily on our feets in order to go into the future. And the clear and stable foundation, I will talk about what that means for us. So starting off with the model that I have showed you previously, where we can also see the strategic objectives. And the purpose of in part is actually in the center, and it's all the way out to how we work in creating this foundation. Now you -- this is a Capital Markets Day. So sort of the questions and some of the comments we make are very much focused on the profit part and the growth part. We have chosen 6 different objectives because we think that these 6 objectives in unison describes how we are performing as a company. The other objectives then profit and sold are not soft product -- objectives at all. They are also extremely hard. So the terminology ESG, the environment, society and governance is actually depicted in the model as well, as you can see from this slide. And when I talk about these parts as being hard, it is, for example, we need to be sustainable over the long run. That is why we need to hit all of these 6. If you look into the health and safety metrics, the happy customer and engaged employees, for example, and the environment, it all builds into how well we are performing also in the projects. If you have a poor safety record, I'm sure you're going to have a quite poor financial performance in that project. If you have a poor customer rating of the project, I know for a fact, you're going to have a poor financial record. And the same is true for not having engaged employees. So all in all, it's all embedded into this. And then the resource efficiency, that is all about looking into the environmental impact and footprint that we have, again, coming back to how we are performing over the long period of time. So here, we can see where we have climate action, sustainable use of land, circular production models, sustainable materials and efficient buildings as part of this. As for society, the health and safety is very important. The engagement, as I alluded to, the labor conditions that we offer. And the diversity, making sure that we have a good atmosphere in the offices and on our sites. And diversity is also a very good sign of if we are representing the customers, the customers do not look like me, thankfully. They look like Sofia and others in the studio. And we need to reflect on how our own customers look we like because it's their values and it's their perspective, what is a good home that we need to address to. And the way we're going to run this is, we're going to decentralize the business in order to leverage on the local market conditions. We need to be absolutely in control over the customers and the situation in our local markets. That will need to be balanced with an integrated approach where we know we have this great Bonava brand. We have the great set of values. We have the great opportunity to work with our financial allocation of resources across segments and markets. And then also, we have the opportunity to develop our employees with this very diverse type of business. Thirdly, we will need to increase the skills when it comes to production and cost control. That's for sure. And overall, we need to develop a learning culture and we need to build on what the group can offer. And I would also very much draw on the fact that, very much when we talk about the digital journey and the way on how we are both addressing production, design and our customers, the demand steroid is developing very quickly. So without having that know-how, that we can't take the necessary steps. So although, this chain of different parts is the solution on how we're going to address this going forward.

Thank you, Peter. So the foundation is really about how we operate on a daily basis. And then sustainability is embedded into our daily business. Well, we talked about the science-based targets. We talked about that we have targets for 2030. It seems like very far off. It's not. We know that. So my question to you is, how have we divided the targets, on an annual basis or on a BU level basis? How can we work with this?

Well, you can see, the beauty of a very strict and rigorous system that the science-based target is, is that we have broken it down to, you can say, budgets, budget levels for the businesses, for the projects, et cetera. So we know what levels to hit and what levels to improve upon. So that also means that we are very proactive in the way we are looking into designing new projects, looking into new suppliers, looking into new materials, because we know what it all sort of is about. So that is why it's very visible for everybody. Look, we're working in the system what to achieve.

And if we then think about -- we will have quite tough targets on the sustainability side. And how is that then balanced with the value creation and the financial targets that we have?

Yes. It's a commonly asked question. But hopefully, with my -- the address here I've been able to respond somewhere with, I think there is no other way to become a sustainable company. And a sustainable company, it's not only talking about the environment. That is being here over the long period of run. And then you need to integrate and build in a lot of the things that we have built in when it comes to environment, employees, and customers and so forth over the long run. So we use the term, it's built-in, not bolt-on.

Exactly. And if we look at the facts, 40% of the carbon emissions globally come from the built environment. And we also saw your slide previously about that it's also for us and for the whole built environment, it's a lot about Scope 3. So it's about when you build, and it's when you operate, or when our customers actually move in and live. And how can we then make sure that we focus? And how do we focus into Scope 3? What can we do?

Well, we can't do everything. I think we -- it shows that we can't do this alone. We need the right partners and we need the right type of behaviors. But this is the beauty of being customer-focused because our customers demand it. And then the employees that joined this journey of Bonava, they want it as well. And the funding slide that Lars showed, they are our funders and shareholders. They are also requiring it. So the pressure is here. And we as a chain in the industry need to work with solutions. A lot of the solutions, of course, on the sites is regarding, will we reduce resource when it comes to traveling, moving material? It has to do with how we are creating energy for the sites and so forth. But then it's also the long-term energy usages. And there is a lot of development here. So -- and then sort of co-sharing bicycles and cars and what have you. So there's a lot of things going in. And then you need to build that in already when you start to develop the concept. It will look very strange if you put it at the very back end.

Exactly. So thank you, Peter. That was very helpful. As you see, we really embed sustainability as part of our business. It's now time for a break, a well-deserved break. Go out and grab a coffee. Be back again at 11. Thank you very much. [Break]

Welcome back from the coffee break. I hope you have the chance to stretch your legs. Now it's time for the next agenda point, and we will get some further insights into the German business. So with me here in the studio, I have Sabine Helterhoff, BU President, Germany. Welcome, Sabine.

Thank you, Sofia.

But before we let Sabine take over the stage, I would like to invite you to one of our Bonava neighborhoods. And to be a bit more precise, I will take you to Berlin. Outside Berlin to a neighborhood and Schoenefeld, not far from the airport, where we will have a chance to look into how a Bonava neighborhood develops. Please enjoy the film. [Presentation]

Good morning. I'm really glad to get the opportunity to present Bonava Germany's business. I would like to start with presenting what Maria is already explaining, how we are handling larger projects? You can see here that we split the investment into project. The original plan for the Schoenefeld project was that we wanted to build just single-family houses and row houses for private customers. And with that, we started Project #1. And then as Maria also outlined, we started to ask our investors if they were interested in rental flats in multifamily houses on that location. And in parallel, we also tested multifamily houses with condominiums for private customers. And both worked. And then we switched the whole project to -- or the whole investment into multifamily houses and selling to investors rental flats and condominiums to private customers. With that, we increased the living space. We have sold and constructed. And we improved the financial performance of the whole project or the whole investment rapidly. And as already also said, when we execute a project within a larger investment, we divide that into smaller sales and construction phases. That allows us to adapt our product to the market demands, to have the sales speed under control and adapt the sales -- the construction speed to the sales speed. But starting with the market fundamental in Germany. We have a very stable market, very strong economy, as Peter already outlined. The GDP growth was increasing after start of the pandemic, the average unemployment rate is stable below 6%, and the interest rate for loans is still on a stable level, also intended to be very low. Going a bit deeper into the real estate and the market for housing. You can see here the large drop caused by the pandemic 2020. And you can also see that both indices recovered. And the real estate climate index, less than the residential one. And the residential reached a level like before the pandemic. What is also really important to know is that we in Germany have a yearly demand of 400,000 rental newly built -- rental or owned newly builds per year. And we have never reached that level during the last 19 years and with that we have built up a gap of 1 million flats. What differs our Germany market from the other, for example, this Swedish one. One fact is, we have a really huge rental market, 22 million rental households in Germany was a low ownership rate. We have also this trend of this counterurbanization, Peter already mentioned and that is mainly caused by the price development, especially in the larger cities, and also supported by the pandemic and the development on that. In our segment, for the many, building a new home is very often a once-in-a-lifetime decision in order to be on the safe side when entering the retirement age. On the other hand, our customers very seldom has to sell their current apartment in order to be able to buy a new one. And that makes our newly built housing market in Germany much more independent from the general real estate market. Which market trends do we see in Germany? We have a fragmented market with large potential. As a market leader within the top 7 cities, you have a market share of 2% to 3%. We also are faced with a harsh competition on plots and on people over several years now. And we also see that our competitors and other players extend their business models, for example, by implementing development and construction capabilities, but also by entering new markets or new market segments. And we have visualized that on that slide. You see here the number of households and the household income. And you can see here also marked the Bonava market for the many. So we are targeting the majority of the German households with middle income. And we have also competitors following us into entering into that market. And as Peter also outlined, we are also, of course, face this rising costs of plots and building materials and supply, but that has been outperformed by the rising sales prices in Germany over the last year. So all in all, we have very good and very stable market conditions in Germany, but we also have some challenges. And our largest challenging -- challenge currently is the longer-lasting zoning and permitting process. That is caused by the always understaffed local authorities being faced, on the other hand, with an increasing number of zoning and permitting processes. We have increased influence of the politics on zoning processes, and all this has been boosted by the pandemic. Being faced with that, we have adapted our sales process over the years. Until 2019 -- 2018, we started selling when we have handed in the building application because we knew that we will get the building permit within 3 to 6 months. '19, we started sales by -- yes, at the moment, where we have been much more secured about the timing of getting the building permit. And from '20 now, we just sell when we have the building permit within our hands. And on the left side here, you can see an example of a master plan procedure in Berlin. And there's a long-lasting zoning process. Then you -- when the master plan is granted, you can apply for the building permit and then you will receive the building permit. That process can last between 2 and 8 years. In earlier times, some years ago, it took us 2 to 3 years. And now it is more than tending to 4 to 5 or 6 years. And with that, it is really important that you have a really well balanced land bank which covers every single step of this zoning and permitting phase. And that is shown here on the right side. So we have 46% of our current land bank portfolio in master plan or zoning processes. Meaning also that we have 57% -- 54% of our building rights in -- with a granted master plan or applied or already received the building permit. Talking a bit more about Bonava Germany. 2012, we decided to grow our business. And during the time, we have tripled our net sales and we have increased our EBIT by 4%. But we also have been faced with a drop of the EBIT margin, as you can see here. And that is caused by the 2 early sales in '17 and '18, where we waited for the building permit, had the prices fixed and the costs were running out. And both years, '19 and '20, were also influenced by larger legal disputes and that also influenced the results. Our land bank over the year, changed rapidly. So we have more multifamily houses, 68% of our current portfolios, multifamily houses. We are going into larger projects, and we have also more projects in master plan procedures, which has a huge size as well. We have delivered a stable development with an average of EBIT growth over 5 years by 8%. And comparing 2020 with '21, you can see that gross margin as well as EBIT margin are back on track on the right level, in the right direction. When Peter talked a lot about value creation, and we, in Germany, we have the key elements in place. So we have a land bank with 8,400 building rights as outlined in several stages of permitting and zoning process that is sufficient for the next 2 to 3 years, and we will extend that. We have a footprint in 8 regions where the demand is. We have the full value chain under control, with in-house capacities. And key for us in Germany is repetition. So we have built up a technical platform, complemented by a process platform and a design platform, that makes us cost efficient and fast in our preparations and project execution. When it comes to market offering, based on customer insight, we are guiding our customers through the whole process until the handover. And it is very important to mention that we have increased our customer satisfaction, but this is very inconsistent. And that is one of our improvement areas for the coming years. And we also have a clear operational model, meaning that we have our processes in place. We have a given framework. We give trust to the organization with the freedom to act within this framework. And we also take decisions as close as possible to our projects. I already talked about the whole value chain. Starting '91, being a production unit, a construction company, which was bought by Siab, we extended our value chain. And now we are covering everything, from the plot acquisition, over the development of the project, designing it internally, marketing and sales, bringing on the market, selling it, producing it with own capacities and handing it over to the customers and guiding the customers through the whole process. And very important for us is that the internal design is steered and led by the production that leads to the fact that the development managers can develop his or her ideas. And then the internal design secures that we always use our technical platform, and that we have control about our repetitive processes, and that we have secured our costs and that we also have the time schedule under control. We are operating in 8 attractive regions, as you can see on the right side. On the left side, it is shown where demographic increase or growth will take place until 2030, marked in green there. And we have also marked our regions. So we are there where the demographic growth will take place in Germany also in the future. Operating in 8 regions means that we have different regions in different stages, with different sizes, as outlined in the PowerPoint or -- and in the -- in this slide, in this row, the percentage share of net sales 2020 and '21. All regions have the potential and also the opportunity and also the plan to grow organically. And we have different focus areas as well for some regions. For example, Hamburg, Rhine-Ruhr and Rhine Neckar, Stuttgart, need to focus even more in improving their project performance, especially when it comes to infrastructure works, soil handling and so on. And Hamburg and Rhine-Main, they have the largest gap when it comes to the current land bank portfolio. And those regions have even more to focus to get the right plots board. And we have 3 regions. These are the -- beside Hamburg, the largest regions. And these are the regions with a stable growth development and good financial performance over the last years. And those regions have also comment they have already a very well balanced land bank for the coming 2 to 3 years and that they have extra potential for further growth. Talking a bit more about Berlin. With 5.3 million inhabitants, Berlin is our largest region. And Berlin is also our region which is key for our success in Germany. We have our headquarters here for more than 30 years. We are well connected within the area we are operating in. We are a market leader there in Berlin. And Berlin as a city has not reached really the potential of a -- being a European capital when it comes to the price -- sales price development. So there's room for much more. And that trend also leads to this counterurbanization, I already mentioned. And this counterurbanization goes into the federal state of Brandenburg. And in Brandenburg, we have our headquarter, and we are already there with several projects in execution and also in preparation. Region Cologne/Bonn, consisting of 3 individual markets with high purchasing prices, very mature markets, which large companies having their seats there, for example, Deutsche Bahn and Bayer. And in Cologne/Bonn, we have the right land bank. We have the right people on board. And there, we see a huge potential for additional growth and especially for dealing with larger projects than in the past, both in B2C and also in B2B. When it comes to the region Saxony. Region Saxony consists of 2 different markets: Dresden with a small office, a few people, a few projects to be developed; but we see Leipzig as a rising star in Germany as well as in our business, it is a hotspot. Leipzig has increased their inhabitants by 20% over the last 10 years, and it is still growing. We have BMW, we have Porsche, we have DHL there. And Leipzig is now on the way really stepping up to a level like other university cities like Stuttgart or Dresden or Dortmund. And we see huge potential, and we are preparing the Leipzig organization for further sustainable and larger growth with already some projects in preparation. When it comes to our strategic positioning for Bonava in Germany, it consists of 2 pillars. The first one is our core strategy, organic growth in existing markets. We have 128 current investments under development. And we have there -- we will there focus on some improvement areas like, as already mentioned, customer satisfaction, customer journey, but also the preparation process of projects. It is very important to be really good prepared before starting selling the projects. We are also focusing on strategic procurement and also on further development of our technical platform, steady improvement and also building up a second platform. And furthermore, that core strategy -- or it is really important for that core strategy, as already mentioned, that we extend our land bank in order to get a land bank which is very well balanced in all phases of the development of master plan procedures and permitting procedures and that we have a predictable status of building right within our land bank. And on the other hand, we will at that core strategy by further acquisitions, meaning we are targeting to invest in other companies. And we think that our competitive landscape offers a lot of potential for doing that such kind of business. And with that, we think that we can even more increase our existing market performance and also potentially enter into new markets. And very important is also what we are calling Bonavarisation, meaning that before implementing these acquired companies into our portfolio or into our organization, we need to adapt them and onboard them when it comes to culture, when it comes to processes, tools and so on. So summarizing, I would like to mention that Bonava Germany is very well equipped to deliver on continued profitable growth. We are well-established in a promising and strong market with strong potential. We have a legal payment plan, as Peter already mentioned, which ensures our financing. And we are market leader for 10 years there with a proven record of growth. We also are always learning company, always improving, and we have the people on board and also our processes. Thank you very much.

Thank you, Sabine. And Sabine, I have a few questions for you as well. And I thought we would ask a question regarding the newly election and the political landscape. I think we -- many of us have followed, of course, and after 16 years, now a new Chancellor is taking office. And my question to you is really how will this new political landscape impact the housing business and market and in particular then, of course, Bonava?

Very interesting questions, Sofia. Yes, we are coming from a grand coalition with Chris Democrats and Social Democrats and 16 years, as you already said, 16 years, Chancellor, Chris Democratic Chancellor. And now we have a Social Democratic Chancellor, and we have the Green Party and Free Democrats in the government. And they have put a really tough agenda on their table. And what is important for us for our market, get a building ministry and housing ministry back, that is really important. And that also shows the importance of this kind of question. They also have this -- put this 400,000 newly built per year on their agenda with a plan really to make that happen. And they also decided to bring all market players or important stakeholders for the housing development on the table discussing how to improve processes, especially these very complicated application process and zoning process. So a lot is ongoing. We have also a new tax regulations. We have subsidies promised, and they are also, of course, looking what they can do for the tenants. So a huge package, which is on the paper, promising, we'll see how they execute on that.

Very interesting, indeed. I think we will also see if there are any questions from the audience. Helena?

Yes. So I want to pick up on that 400,000 new housing units. Do you view this as a threat to price levels or as an opportunity for Bonava to grow?

Of course, I see it as an opportunity for Bonava to grow. Since we are stable in the market, we have our footprint there, so we know our markets. We have our processes, as conditions for us to further growth.

And this is a question from David Flemming. And he also asks, what has to be done from a regulatory perspective in order to increase the volumes towards this 400,000? What is your opinion on that?

I think most of all, yes, create a dialogue on a same eye's level to really get to know the different -- yes, opinions and needs, and then try to shorten and deregulate the zoning process.

Yes. So that is actually also an answer on the question, what can be done to mitigate the importance of achieving building permits in time in the German market, just to avoid the lumpiness in it.

It's the same. So you can -- what we can do is to provide the best possible material to the authorities and also to continue to have a dialogue with them.

Yes. Then we had one also from Simen Mortensen at DNB. Asking about digitalization, which I know that we talked about as well. And how that has been developed in Germany during the pandemic? And are there any progresses in that sort of way in zoning process as well, of course?

Definitely, we progressed a lot. So we all have been -- have got more digital, even in our way of working together since we had to. And we also have digitalized our communication with the customer. So we are much more digital when it comes to the customer journey, when it comes to how are we reacting with the customers, communicating with the customers. And that has been improved a lot over the pandemic. Where we are working on and focusing on is to being much more digitalized when it comes to our project preparation and execution. There is our focus on. And what we think is that digitalization is even more as just to use digital tools. It's much more. And it will change our whole way of working over time. And we are starting to do that now.

Thank you. Okay. Thank you very much, Sabine. It has been really interesting to follow the growth journey in Germany. And now it's time to move on. Going from Germany over to Sweden, to the single-family house business case. And this time, I would like to bring you with me to housing site and the Bonava neighborhood outside Stockholm, in Nacka, Ältadalen. Please enjoy the film. [Presentation]

[indiscernible] Studio. It was great to see the Swedish single-family house case in Älta, and we will now continue to talk about the Swedish single-family house business. And in here with me, I have Fredrik Hemborg, BU President, Sweden. And before we dig into the single-family house business in particular, I would like to ask you a little bit more about the Swedish housing market in general. So what is your view? And please, elaborate a little bit more, also, on how well Bonava is positioned?

Okay. Thank you, Sofia. The housing market in Sweden is really strong. We have had a good price development. And although we have seen the prices -- the price development flattened out a little during the autumn, we do see a great demand in all our markets, and we expect the price development to continue also next year. During the pandemic, we have seen some consumer trends that will be really interesting to follow. The home is getting more important to many people. We have seen an increased interest for single-family housing. I think we have 15% price increase, rolling 12 months, and we have also seen the interest increase for larger apartments. So -- And our offering, with happy neighborhoods, really meet this demand in many ways. When it comes to our position in the market, Bonava can improve our position in Greater Stockholm and also Uppsala. Here, we need to grow to be a stronger player. In the other markets, we have the main markets, Gothenburg, Umeå and also Linköping, do have a strong position and a good market share also. And this, we can use as a platform to expand our business in a wider footprint, but also with a greater part of our product portfolio. And actually, one example of that is the recent deal we did when we bought building rights in Linköping, 300 building rights, almost 300 single-family building rights. And this is a good example of how we can work. We have the know-how, we have -- we know the market also, and we have the systematic and very structured way of working within our single-family concept. And then, it's easy to export it to new markets, and we see these opportunities in other places also.

Exactly. And that seems so interesting with this single-family house business. And how do you see that the single family house business can actually support the strategy, going forward, in Sweden for Bonava?

But -- from a strategic point of view, I see single-family and multifamily as 2 parts of our business, which really complement each other. We can add on more business opportunities, working with these 2 offerings, and we can also combine them and do mixed offerings in a project, which is really strong and unique, I would say. So that's good. The main advantage with single-family business is the speed, as we do it. We are super fast. From when we started to sign, to when we hand over the units to the customers, hand over the keys, we have approximately 1 year, and that's almost half of multifamily. So, we can be really fast, because we have this internal in-house design studio, where we designed ourselves, mainly, landscaping actually, because everything else is set, and then we have a very prefabricated production scheme. So, we can be fast, and that makes small risks on site, a scalable business, but also very cost efficient. And being cost efficient and fast, having good speed in internal processes, that is really a competitive edge when it comes to land acquisition, buying more building rights.

Exactly. And also, you're talking about repetition. We saw it here in the film from Ältadalen. And could you give some more examples and especially if you can link it to the profitability?

Yes. But we saw it on the movie. We have a very defined building system. We have a repeatability when it comes to the product, but also the processes around it. And because of that, we can work with the small adjustments, the small improvements, rather than inventing the wheel in every project. And this gives us cost efficiency. This gives us better customer satisfaction. We reduce the lead times, and we can also improve quality. And that is the basis to be profitable. So, it's really interesting to work with this -- with a single-family concept, which we have the -- Yes.

Thank you, Fredrik. Very interesting to follow this with a single-family house business, both from a profitability and growth perspective. So, now it's time to move on to the next agenda point. And I would like to open up for a Q&A and panel discussion. And I will ask [ Illeana ] to come up here on stage, who will facilitate the panel discussion. Welcome.

Thank you very much. I look forward to this. We have plenty of questions to answer.

That sounds good. And for the ones of you who haven't sent any questions, please go ahead and do that now. And with that said, we're ready to go, right?

Yes, we are.

Okay.

This will be fun.

How nice to see you all here again. I will ask you a few questions, there are a few coming in here. And I will actually start with you, Fredrik, because you were there. It's quite a long one, so, breathe. Volume growth is an important factor for improving profitability in Sweden. Where do you see the main growth? And are Bonava looking at geographical expansion? That's one. What split between co-op and rentals should we expect in Sweden, ahead? And, looks like the demand for single-family homes is strong across all geographies in Sweden. Couldn't expansion to smaller cities in the proximity to existing market be a way to improve volumes and ultimately, profitability, given less competition? I'll stop there. There's more to follow.

Good, but long question.

Yes, it's not finished yet.

But if I remember correctly from the start, yes, volume, we need to increase the volumes. And as I said just recently, we see that we need to improve our position, mainly in the Stockholm region or also Uppsala. We are quite strong in the other markets we are working in. But based on that, we can also expand our footprint, working in more locations, more submarkets where we are actually situated today. And then, we can utilize on the competence we have, the resources we have when working in more locations. And single family, yes, very interesting. And there are more markets which we can tangle, but we need also to keep our systematic way of working when we address new [ class ]. We need the resources in place, the production management in place, and we need a lot of things to do this the way we have found out to be so good.

This -- It's David Flemme, who is asking from Nordea, and he still has one question there, I would like to ask you is, we have seen other residential developers expanding into development of care homes and other and schools, et cetera. Is that something that you would consider?

To consider what?

If that's something you would expect, also, Bonava going into? Would that be something...

We develop happy neighborhoods. We need all sorts of things, not only housing. So, we work with partners to create schools and whatever needed to support a good living environment.

So that would be, then, one of the things that you would go into. Then, we have a finance question for you, too, maybe. Is it reasonable to expect you to become a frequent issuer on the bond market in order to finance future growth? And if so, is it only the domestic Swedish market or SEK market interesting? Or do you want to broaden the funding also to the Eurobond market? And this is [ Gustav, Johansson ] from SEB, who is asking that one.

Thank you. Very good question. You know that we are, already, in the green bond, we have issue, we have a tap issue, we're looking into our framework here. So it's very interesting, and I think we have both have the capacity and the interest to expand, not only in Sweden. But of course, we have not got a rating today. So, if we are going to go for more international, I think we also need to look into the rating perspective of this.

We have one that is both for you and for you, Sabine. And that is the fact of the -- sort of the German market. Given the fact that you have to ramp up the land bank in a very competitive market where building rights currently are fairly expensive, especially here in the Nordics. Do you see more attractive levels to acquire building rights in your main growth market, Germany? And will you drive more early-stage development plans to be able to achieve lower building right cost per square meter and in turn, higher project margins? This is[ John Hendricks ] from [indiscernible] are asking.

Very good question. So should we start with ladies first or...

Thank you very much, Peter. Yes, I would definitely say yes, and that is a development we already have gone through over the past several years. So yes, we will definitely invest in more early-stage zoning processes. But as I also said, is -- we need a balanced land bank. So, in every stage of the zoning process and permitting process, so we will take care of that, yes.

And for me, I mean, I'm looking like -- at Germany from a market point of view, as this steady, stable machine so -- which we saw from the market slides, you can see very steady growth, which also means that we have a very steady condition on how to base your investment decision on. So, I think we need to be in the marketplace the whole time. Land is always expensive. And then, after a few years, it becomes cheap if you bought it a few years ago. So, we need to always be in the marketplace.

Then we had one from Simen Mortensen again. How is the sold unit target also depending on the potential build-to-hold strategy?

Yes -- I mean, it's an add-on that we are currently investigating what we are going to do. So it's an add-on to the business. We haven't factored in a significant portion of our profitability in that, yet.

But then I will come to Peter, again. If you think about -- I mean, the -- how will you break down -- if you go back to the 6 targets that you have, how will you break down the targets, internally, for execution purposes? And how will you follow up them internally?

Exactly the way we have presented it here. So, this actually is showing the balanced scorecard we will use for the group. It also comes for the same balanced scorecard I will use for Germany and Sweden and for the other business units. And in respect, Sabine talked about the regions. So, when she looks at Leipzig, her favorite region of -- sometimes -- she started in Leipzig. That's why it's a...

Yes.

You need to know that. She will look at the regional managers and look at the very same balanced scorecard. So, you have, sort of, a line of sight. And then, tracking is one thing. Then, when you track, you can also act and adjust as you go along.

That's interesting. But I was thinking that the -- what is the business rationale by having all these markets, so many markets? Or is it so that the gross margin expansion for -- and profitability, the expansion for '24 and '26 is partly achieved by excluding the so-called worst performance?

Yes, it's a worst performance, but also expanding and growing what is performing extremely well. So, it's the combination, right, of driving what is the average performance, up. And that is exactly why we are doing that. So -- and when I spoke about the opportunities we have on the integrated approach, the learning curve, we can take so many steps up here on the value chain.

So you don't say that -- does both Finland and Norway have the potential to stabilize the business? Or is it Norway only?

Both Norway and Finland. That's the first step of the ladder. Of course, when you are in the stabilized part, you will need to prove -- That's why we use the term license to operate. It's not until you have proven that you can take the next steps and join Fredrik. But then, Fredrik has already progressed into the growth part. So, this is the evolvement we are looking for in our business units.

That sounds promising. I also have one for you. How much did the pandemic -- because you were also touching upon the pandemic and I suppose you, too, have it in you. How much of the -- how much did the pandemic impact the number of starts in 2021? And in terms of 2022, are you assuming back to normal? Are we safe now?

Very good question. I mean, we haven't finalized 2021 yet, even though it's only 2.5 weeks to go, I mean it's a very hectic period of our business. I think, you are all handing over and going for starts, still, in this period. So, of course, the processes -- the authorities have been affected and still are affected by this. So -- but there are also other reasons for sort of things being delayed. A few hundred units, maybe, when we end the year, but it's still possibilities, and there are risks, of course, going into this figure. If we move into 2022, we are foreseeing or we are building this on a gradual improvement, of course. We are seeing the Omicron, we are seeing all the things happening right now. So, we don't think that everything is over. And we don't think that the processes for building permit, the zoning, et cetera, will be back to more normal again by the end of 2022.

Then I still have a question on Germany and for both of you and maybe, Peter would start on growing the German business. What is actually the major upside here, potential, the upside potential in the German market? And what is the potential in expanding the business in Germany within the existing footprint? Or let's say, why is Germany so important? Maybe it is only to mitigate the Swedish volume and the EBIT underperformance, may I say so?

You may. But let me talk a little bit about Germany, because I really like that topic. If you look on the German business and the way it's built up its volume over time, its presence, we have the building system in place. We have the land bank in the near future in place. We have much more attractive margins than in the Nordic markets on average, and then, you have a fantastic team in place. So why not going into Germany? And then, when you enter into Germany, the culture, the play fields, everything is very well defined, and it's not a novelty for us to enter into that market. So I really like it.

Because we have one issue, which is always coming up when it comes to Germany. And you know, you had one of your competitors revising its guidance for 2022, commenting on delays in building rights. And I mean, you've been talking about the building permit approvals and all of that, also related to the corona situation, as well as a reduction in -- I mean, construction speed because of supply issues. Are you expecting or experiencing the same challenges? And will this impact you for 2022? And could you elaborate a little bit about that, please?

Of course, we are also faced with the same facts. We are operating in the same market and that comes to the conclusion, we are faced with the same facts. We have managed to deal with it in the past. And we have, as I said, adapted, for example, our sales process, our processes in general. And until now, we also have managed to work with these price increases and material shortages. And I think one of our advantages is that we have these production capacities and these purchasing capacities in-house, and that we are always working with, you call it, divided contracts. So, we don't have a need to look to a general contractor offering something without being precise when it comes to the price of their work. So -- and it is a difficult situation. Nobody can, as Lars mentioned, nobody can foresee how the pandemic situation will develop. What we can do is, be prepared on the current situation. What do we see now, and how can we react on what we are faced with, currently.

Thank you very much. If you want to -- we want to sum it up a little bit. Maybe you could start with the key takeaways, and I'll go through you all in once. But if you start with that, what is the key takeaways that you would like us to remember when we leave this screen?

Key for Bonava Sweden is to secure the project execution, to be really in control over our projects. And through that, we also get the profitability and the ongoing production. After that, of course, securing a stable big land bank for future project opportunities. And I would also like to highlight the benefits of repetition. How we can work with a very repetitive product and processes. We have a great learnings in single-family, which I talked about. And we shall, of course, use that in the multifamily business also.

That sounds interesting. What about you, Sabine?

Yes, I repeat myself now. The key takeaway is, BU Germany is ready for further sustainable growth, with more profitability. So we have the people and processes in place. We have the land bank secured for the shorter period. We will secure it for the longer period, and we are operating in a very stable market with very large possibilities. And so, we are ready.

Sounds good. And Lars, you're the last one, but not the least.

I think, definitely, we have the land bank in place on the group level for delivering in the midterm perspective, up to '24 . We have the visibility of the project and the profit improvement that we see in the project. But of course, we need to add land bank for the coming years, '25, '26 in particular and to grow from there. But also, we have a very strong balance sheet. We have facilities today that we are not utilizing and we have the capacity right now to negotiate more, to issue more green financing. And with the growing balance sheet, with the growing profitability, we will increase this capacity.

Thank you very much, all of you.

Thank you.

Thank you.

Thank you.

Welcome back. And now, we are zooming in on the end of this Capital Markets Day. And we would like to hear what we should -- how we should conclude this day. And to do that, I have with me here, Peter Wallin, CEO of Bonava, who will give some closing remarks and summarize the day's sessions.

Thank you very much, Sofia. Well, it's been a pleasure standing here together with this great team in front of the cameras talking about our revised strategy. I'm also very grateful for, of course, you, joining us here and watching this. I'm also grateful for all the work that has gone into preparing this Capital Markets Day, including those that are behind the cameras and in the production. So, what I've hoped that you have heard, is we have the market fundamentals that are in our favor. The demand for sustainable homes is very robust across the markets. We can continue to expand the fact that we are in a good position, in a leading position as a sustainable developer of homes. With the updated strategy and revised strategy, we have high ambitions, but I see them as fully reachable. We have the people, we have the project near-term, and we need to shore up the long-term land bank. So, when it comes to the focus areas, it sits on the land bank, the repetition and resource effectiveness, and the commercial excellence, all of it underpinned by a solid financial position. So, let me just repeat our targets for '24 and '26. In '24, we are aiming to reach and beat SEK 1.6 billion in earnings before tax. That will equate to some 8% to 9% in EBIT margin in relation to net sales. That will mean that we are up to 7,000 sold units. In '26, we are at SEK 2.2 billion in earnings before tax. And then we are at an EBIT level, in relation to revenue, of 9% to 11%. The sold units are 8,000 then at that point in time. All of this is based on growing the assets by SEK 15 billion to SEK 18 billion, including that to buy to hold, with the ambition of SEK 2 billion to SEK 3 billion. So, SEK 6 billion into building rights, roughly, and SEK 9 billion to SEK 12 billion into project investments. And that is the situation at the end of the business plan period and not the accumulated portion. So, I thank you very much for spending the time with us here today.

Thank you, Peter, and thank you all who have followed us throughout the day. It has been a pleasure to be your moderator, and I hope that we see you again for the year-end report presentation on February 3. But before that, I wish you all a wonderful holiday season. And with that said, thank you all and take care.