Koninklijke BAM Groep nv (BAMNB) Earnings Call Transcript & Summary

Good morning, and welcome to this analyst meeting for Royal BAM Group. I'm Ruud Joosten, CEO; and with me today are Frans den Houter, our CFO; and Michel Aupers, our Investor Relations Manager. It's good to meet some of you again in person here today. And also welcome, of course, to everyone who follows this presentation via the webcast. On the opening slide, you see a beautiful photo of the apartment building, The George, right next to where we are now. The George has 47 apartments and penthouses, a project with our property developer, AM, and BAM Wonen. Just like the nearby project, The Gustav, with 29 apartments and 115 studios, spread over 2 buildings, developed for young professionals at the start of their career, who want to live in a cosmopolitan and business environment of Amsterdam, Zuidas. As you've seen from our press release this morning, Dutch residential made an excellent contribution to the results. I will come back to this later. In February, we launched our strategy, Building a sustainable tomorrow, to create a platform for future growth. We are just 6 months into the implementation, and progress is encouraging. Looking at our financial performance in the first half year, our revenue was broadly back to the pre-COVID levels. Our adjusted EBITDA was EUR 157 million and a margin of 4.3%, which is a substantial improvement versus the negative adjusted EBITDA reported in the first half year of 2020. Part of the increase came from higher activity and revenue levels and part of the positive effect of the cost-reduction program initiated in last September. Overall, we delivered a strong operational performance, with the exception of Dutch Civil engineering. The manage for value businesses in Belgium and Germany improved, which is encouraging to see. PPP performance was good, and BAM International stabilized in the second quarter. Our liquidity position remains high, while we repaid the RCF and the convertible bonds. Our order book for the next 5 years remains at a high level, and demand in most of our market segments is positive, supported by our clients' growing emphasis on sustainability. The recent report from the UN about climate change confirmed the importance of sustainability as a key element of our strategy. Our group is made up of expert professionals who can design, build and run net zero buildings and create resilient lower-carbon infrastructure. We are working to get our own business to net zero, and we are supporting public and private sector clients to do the same. Many people across the group are involved in co-creating the strategy implementation, and we are on track with the transformation of the company. Our cost-reduction program has strengthened the business and supported our operational performance. We are fully focused on the portfolio reshaping, and we made some small divestments and acquisitions in the first half year. We are getting into better shape, and we can report a positive result with a respectable margin over the second quarter of 2021. Balanced with that, today, large single-stage lump-sum projects are still part of our portfolio and have impact on our results. As mentioned in February, in the past, BAM has been too exposed to procurement routes, where it took an unfair share of the risk as a result of single-stage lump-sum tendering. Under the new strategy, we have chosen to focus on segments with healthier procurement routes. On a project level, we are moving away from unrewarded risk by making explicit choices of which projects we tender for. As a result, we recently withdraw for some major civil tenders in the Netherlands, like A27 motorway near Utrecht and Zuidas here in Amsterdam. As such, we are making good progress to further derisk BAM operationally and financially. Let's look at the business line, starting with Construction and Property. Many COVID-19 restrictions have reduced or ended since the first half year of 2020. Although there was a hold of construction activity in Ireland during a part of this year, overall revenue for Construction and Property rebounded by 21% when compared to the first half year of 2020 and was broadly in line with the first half year of 2019. Construction and Property generated adjusted EBITDA of EUR 93.5 million in the first half year, up from a loss of EUR 19.8 million in the prior period. The platform for growth businesses had a strong first half year, led by Dutch residential development and construction. BAM sold 46 homes in the Netherlands, which is 40% higher than last year and 5% above the first half year of 2019. Solving the shortage of houses in the Dutch market is a major challenge for the coming years. In our opinion, this should be done through vigorous planning both in and outside the cities. Governments, both local, provincial and national, will have to work together with the private sector to solve this problem, whereby the long and slow procedures and the political preferences for building primarily within the cities should be reconsidered. The U.K. had a good result, which was supported by a claim settlements. Ireland delivered a positive result despite the renewed challenge of COVID. The new children's hospital in Dublin is now at 50% of completion, and we are making good progress. We are managing our construction activities in Germany and Belgium for value, and results were better in the last year, which is encouraging. In both countries, we have a firm focus on operational improvement and risk reduction. The overall order book for Construction and Property reduced but remains at a good level. The order backlog in the United Kingdom expanded because of project wins, including Co-op Live arena in Manchester and a positive effect from the stronger British pound. Turning to Civil engineering. Revenues in Civil engineering increased by 20%, mainly driven by the U.K., which was helped by a high demand for public infrastructure. The business line reported adjusted EBITDA of EUR 39.3 million compared with a negative EUR 15.2 million in the first half year of 2020. The Netherlands was held back by a cost overrun in the large projects division. There are ongoing discussions with our clients regarding the timing and settlement regarding larger claims. In my view, it's positive that the performance of the other Dutch Civil engineering activities improved. The U.K. activities had a satisfactory contribution. Some provisions lowered the result in the first half year of 2021, whereas the result in the comparable period last year had included some positive claim settlements. As mentioned previously, we are managing the Belgium and German businesses for value, and this showed improvement after the COVID impacted first half year of 2020. In Germany, the results were also supported by a smaller claim settlement and modest profits on the divestments of plant and equipment, whereas the first half year 2020 had included the EUR 36 million cost of the Cologne metro settlement. Civil engineering order book increased by 5% during the first half year of 2021. Now Frans will take you through the financials.

Thank you, Ruud, and good morning, everybody. Let me start with an overview of the changes in our reporting to the financial markets, changes we made to increase transparency and provide insight in the progress we make with the implementation of our new strategy, Building a sustainable tomorrow. We just changed 3 main elements. First of all, we introduced reporting on adjusted EBITDA. This is more in line with industry standards and makes it easier to compare our performance with industry peers. The second change is that we, in the business section, also report the performance of our platforms for growth and our activities in the managed for value markets. Thirdly, we aligned the presentation of the cash flow with the IFRS cash flow, as presented in the annexes of the press release. In the first half year, the group generated a revenue of EUR 3.6 billion, a EUR 500 million increase versus last year, and it's good to see that our activity level is back to pre-COVID levels. Our revenue from joint ventures, which is not consolidated in the group level -- in the group numbers, was EUR 213 million. The majority of this revenue is generated in Germany. As already mentioned by Ruud, BAM delivers a strong operational performance in the first half year, with the exception of the Dutch Civil engineering. The business lines Construction and Property and Civil engineering combined reported an adjusted EBITDA of EUR 133 million, which is a significant improvement versus the EUR 35 million negative we reported last year. The drivers behind the improvements are discussed already by Ruud in the business line sections, and we will now provide more background on the other main elements in our profit and loss account. Let's take a closer look at the performance and reporting of BAM PPP. Since January 1, BAM PPP has operated as a 50-50 joint venture between Royal BAM Group and PGGM Infrastructure Fund. This means that starting this year, we are presenting the net result of the joint venture as part of the adjusted EBITDA in our income statement. In the first half year, BAM PPP had a good start, and we showed a solid performance. Our share of the net result of this joint venture came at EUR 9 million, supported by a transaction. For the second half, the contribution is expected to be lower. BAM PPP has a healthy pipeline of prospects and active bids. Recently, the consortium was selected as a preferred bidder for the first project with a larger Belgium school building program, which will see 40 schools procured through the public-private partnerships. Then over to BAM International. For the first half of the year, International reported an adjusted EBITDA of negative EUR 11.5 million. This means an around breakeven result in the second quarter of the year. The wind-down is progressing, and the remaining order book stands at EUR 39 million. The line item eliminations and miscellaneous showed a positive EBITDA of EUR 26.7 million. The positive delta is mainly explained by over-coverage of holding costs and that is supported by the benefits of the cost-reduction program. All in all, the total group adjusted EBITDA was EUR 157.1 million, equaling a margin of 4.3%. Now I will go through the main developments below the adjusted EBITDA level. First of all, the depreciation and amortization charge came at EUR 73 million, which is a normal level for BAM in a half year. In the first half of 2021, the reported net result was impacted by EUR 10.6 million noncash impairments, mainly related to a handful of property positions. The reported tax of EUR 46 million is substantially above our normal corporate tax run rate, and this number includes a EUR 29.8 million noncash deferred tax charge that mainly relates to the changes of the tax regimes in the Netherlands and in the U.K. In the Netherlands, starting from 2022, losses will not expire anymore, whereas in the old regime, they would expire within 6 years. Going forward, BAM should be able to use roughly EUR 550 million of losses in the coming 8 to 12 years, of course, depending on the profitability. We are expected to pay a corporate tax rate of roughly half our Dutch profits, so this change is positive for BAM. But in the first half of the year, the impact on the tax line is EUR 28 million negative, noncash, of course. Now over to the situation in the U.K. In March this year, the U.K. introduced a corporate income tax exchange rate from 19% to 25% for the year 2023 onwards. The increase in the corporate income tax rate in the U.K. had a negative impact of minus EUR 2.9 million and the net deferred tax position -- on the net deferred tax position, of which minus EUR 11.8 million was charged to the P&L and was offset by a EUR 9 million positive effect via equity. Finally, the good performance of the activities in the Netherlands and Germany resulted in a EUR 6.5 million and EUR 3.5 million addition to the deferred tax asset lines. The overall net results for the first half year was EUR 20 million, a sharp improvement versus the EUR 234 million loss reported last year. Now let's look at the cash flow. As explained, we have modified the format of the cash flow presentation to align to the IFRS cash flow table. The details can be found in the annexes of the press release. In the first half year, you would expect to see a significant seasonal cash-out on working capital. But this time, this was only limited to EUR 22 million, and let me explain why. First, looking at the development of the trade working capital. Our trade working capital efficiency further improved from 13.9% end of 2020 to 15.7%, resulting in a positive cash flow of approximately EUR 50 million in the first half year. This was mainly driven by advanced payments received from large projects. BAM continued to pay the supply chain on time. Other working capital resulted in a cash outflow of almost EUR 70 million, mainly due to a EUR 40 million repayment of COVID-19-related support of deferred VAT and salary taxes from last year. The negative cash flow from finance activities in the first half of 2021 mainly came from the repayment of the RCF, EUR 400 million, and the outstanding convertible bonds of EUR 120 million from the group's cash resources. Over the first half year of 2021, our shareholders' equity increased due to the net results, the positive movement in foreign exchange rates and some actuarial items. The overall capital base reduced because of the repayment of the convertible bond, meaning that, today, our capital base equals shareholders' equity. Taking into account the lower balance sheet, the capital ratio arrived at 13.2%, only slightly below the 2020 level, and with the convertible now repaid. Based on our strategy, we anticipate a further improvement of the capital ratio. This will be driven by a further improvement of operational performance and efficient balance sheet and possible divestments. Looking at our current capital structure and the underlying performance of the group, we see no need to strengthen the capital base. Finally, the group is well within the limits of its recourse banking covenants as per June 2021. As Ruud already concluded, we are getting into better shape. And from my role as CFO, I can fully support this conclusion based on the financials presented. Back to you, Ruud.

Yes, looking ahead, thank you, Frans. Some final remarks before Frans and I take your questions. Our markets are generally positive, and the order book remains high at nearly EUR 14 billion. I would highlight a couple of areas. First, Dutch Construction and Property, which has been the main edge in -- of our results in recent quarters. The residential market is strong, underpinned by interest rates staying low and positive consumer confidence. Sales prices for newly built homes grew by almost 10% compared to a year ago, but also construction prices have increased. We expect the tight market for homes as well as in materials and labor to continue. Second, the U.K. Civil engineering order book increased to EUR 4 billion. The U.K. government continues to support the infrastructure market, seeing it as a central to general economic recovery, rebalancing the U.K. economy geographically more towards the north and decarbonization. Our main clients are investing in line with these broad objectives, and this fits well with our strong capabilities in essential infrastructure and sustainable construction techniques. As I said at the start, we are just 6 months into the implementation of our new strategy for '21 to 2023, Building a sustainable tomorrow. I'm pleased that we are on track in transforming the company. It's early days, but the progress is encouraging. Market circumstances are generally positive. However, BAM is experiencing industry-wide pressure in some parts of the supply chain. We are working very closely with suppliers, subcontractors and customers to mitigate and manage these effects. We are in an ongoing discussions with clients regarding the timing and settlement of some substantial claims on projects. And there are still uncertainty about the evolution of COVID-19. We are fully focused on maintaining COVID-secure working practices as part of our fundamental commitment to safety across the Royal BAM Group. Taking everything into account for full year 2021, we anticipate an adjusted EBITDA margin of around 3.5%. Now we will take your questions.

Tijs Hollestelle, ING. Yes, quite impressed by the first half performance. I said that was a positive surprise. But indeed, I am reading your outlook and connecting that to your comments in the Dutch infrastructure market. I'm a bit puzzled because how should we look at that? You probably have to deal with old projects, which are in execution and probably have been acquired before you tightened your risk management and your business control systems. Then you probably have in the last 12 months also acquired new projects. For both categories, how is the organization providing you information on this? And are they willing to give you the bad news quickly? And then, yes, your comments on the decision to not tender, that's, in principle, a good decision. But I'm hearing in the -- from other construction companies in the Netherlands that also some larger construction companies are pulling out of tenders which they already started. And yes, that is something else because then you already spend money on your tender costs, which can be significant in this division. So a bit more insight in what's going on in the Dutch infrastructure business will be helpful. And then also on top of that, BAM has always, let's say, positive and negative claims settlement outcomes, but what are the big ones which you're currently dealing with? Are you willing to name those projects or maybe the size? I imagine there are negatives and positives again. And how have you incorporated that in your outlook? That's the first question.

Well, I think there are probably 4 questions, so let's try. Smart move. But maybe I can start, Frans, and maybe you can help me with some of the detailing and support in answering these questions. I hear a couple of things. First of all, Civil Netherlands, indeed, clearly, in this quarter, holding us back in results. I think it's important to give a little bit of context looking at Civil Netherlands because it's not one business. It's a big project part of that business, which is around EUR 300 million to -- EUR 250 million to EUR 300 million of the EUR 1.2 billion, let's say, annual business for the total Civil Netherlands, so it's only a part. We see good development in the rest of that organization with well-supported, especially regional projects. Smaller regional projects, we're doing fine. So you really have to look at a small number of big projects in this larger part of the business that are causing these problems. Some of them were started indeed 4, 5 years ago. And we need to -- and we will, of course, respect our contracts and conclude these projects. What you do see is that we are a bit cautious or more cautious in looking at cost levels and taking these into our books today. And of course, big differences per project, and I'm not going into the details on these smaller projects and not -- that will not improve our position in some of these discussions with our customer. But that's where we are. And I think it's also honest to say that half year in implementation of strategy, this is not soft. This will take a few years to run out of these contracts. And again, we will commit to the contracts we've signed. That's absolutely logical. But of course, we also ask for some patience here. And a very clear signal from our side is not to tender anymore on these bigger projects. And we are much, I think, closer. We are very close, Frans and myself, on these tendering processes to be in time to stop if we think it's not fitting to our -- the level of risk we want for this company. And that's why we have withdrawn, indeed, from A27, which is probably the biggest tender there is today in the Dutch market. Big decision internally and externally. But we think these kind of risks are not acceptable anymore for a stock-listed company like Royal BAM for the future. And I hope that everybody understands that's a big decision, and that's where we are. And I think that's a fact. And it's the same one for -- the same decision for here at Zuidas, where there's a big tender going on for a new station, Zuid, where we did the same. And these are tough decisions, as you can imagine, but it's, I think, an important signal. Regarding your question, do we get the right information? I think we're improving a lot. Frans can explain a little bit more about that one, but the decisions are improving. We have better project data coming through. Frans worked on that now for a couple of years, so we see the good results of that. But of course, it all starts with not going into this very risky project anymore. And of course, if you don't do that, you preserve yourself from a lot of problems. But maybe, Frans, you can give some more color to that one.

Yes, gladly. And indeed, in line with what you said, so we've been working for a couple of years on the quality of the reporting, and that is partly technical about data management and getting your data fast on the table and getting it accurate also for your decision-making. But there's also a cultural component. Yes, how do we discuss the results with each other? And absolutely, there, we have a very open atmosphere. There are a lot of new people in the company that helps. John Wilkinson leading the Civil division; Carla Mahieu (sic) [ Carla Rodenburg], the MD for Infra Netherlands, if we speak about specifically the Dutch situation. Yes, and we, of course, are together in very, very frequent contact. And that is supported by the group's quality of the reporting. Also, teams like risk management, variation order and claim management do have a lot of attention and are on a mature level. I think on your second point, Tijs, on the tender cost there, you also asked, okay, how is this with tender cost. I think that it's better to take that to the P&L and make that decision and not have that be a consideration in these kind of contracts and risks. So that is not a mature consider -- a significant consideration in deciding to stop these tenders.

Maybe on Carla, it's Carla Rodenburg, yes, not...

Sorry. Carla Rodenburg, yes. Sorry.

Okay. That's so much appreciated. And then, yes, a more general question on -- I mean, cost inflation is also a big theme for the stock market globally. In your cost structure, there's, of course, labor cost materials, subcontractors. How are you dealing with that? And also the length of contracts, it's even more challenging for a contractor than for an industrial company. Have you sharpened also that...

Yes. There are, indeed, some very high increases coming through. Luckily, well, luckily, it is a fact that on most of our contracts, these costs are, let's say, indexed in the bigger contracts. So in that sense, we are protected at this moment in time, which you see in the margins we are delivering today. What you do see now is that in some of the tendering processes, there is hesitation because costs are increasing dramatically sometimes. And then suddenly, the project is 25% more expensive. Of course, we have to be very careful not to be too commercial and say, well, let's do it anyway, we'll make it happen. That's one of the cultural changes, of course, we want to make here. And in fact, even last week, we have withdrawn from a bigger project somewhere in the group, where the customer said, "Yes, sorry, guys, but you have to decrease 25% or 20% because, yes, the materials are more expensive." Then we said, "Yes. Sorry, but then let's do somebody else." I think if you look at exactly like you are saying, there is a shortage of material but also a shortage of people in this market. And that means that we have a valuable product to sell as a very experienced and very strong construction company with a good image in the market. So we need to sell our product for the right prices, I think, and not to try to give it away. But that can lead to some delay of some of the tenders that we are discussing with customers at this moment in time.

Yes. Luuk from Banque Degroof Petercam. First question, a follow-up question basically on the supply chain because we talked about cost inflation, but I can imagine that the capacity, so the availability of materials, but maybe also of subcontractors and people is an issue. Is that something that you can still manage or very worried about?

Maybe you can answer, Frans.

Yes. No, we see impact of that, specifically also the war on talent. If you speak about people, it's also very valid for BAM, of course. So we see that's reflected in a high number of vacancies, higher than normal. And then basically, also, it's not only isolated to one specific trade. We see it in all areas in the direct process but also in the support functions. Yes, it's difficult to attract people. And I think with resources and material supplies, yes, physical you see in projects, sometimes stress to get the materials on site in time. So yes, there is a clear reflection in our operations as well.

And my second question is on claims. You mentioned one in the U.K. that was the impact, I think, one in Germany as well. Can you give a rough indication of how important that was for your results? And also, you mentioned several times in the press release that you're in negotiations on settlements with customers. Is there anything -- should we expect anything significant in the coming year? Is there anything you can say about timing of big discussions?

No, I think the latter remark is just, yes, remembering that also under IFRS 15, when can we recognize revenue coming out of discussions with clients is always uncertain. So it's more -- yes, that's not to a specific discussions. On your first point, in the U.K., that is a double-digit number, low double-digit number. And in Germany, that's a single-digit -- high single-digit number, order of magnitude. So those are relevant to mention.

Okay. And my final question for now is on the working capital, which was -- or the efficiency was much higher than expected, and that is probably also related to the low interest rate environment where customers have an incentive to do advanced payments. How do you look now at a target of 10%? Is it still -- do you consider that a minimum? And would you like to push it as far negative as possible? Or would you say, well, in this environment, we think we've reached the limit? So how do you look at that?

Yes. So we're not pushing it. So we would be happy with around minus 10%. We always said we are now minus 15.9%, which is much better for us because it provides us with a lot of liquidity. Going forward, we expect it to stabilize and maybe slightly return to normal levels at some point. And of course, the interest rate environment is making clients also really eager to pay their invoices on time that's helping us. But we also have a lot of favorable financing agreements, cash profiles agreed on tenders. And yes, with that, we are in a good place, but we're not pushing for further increasing. So stabilizing in the long term coming down a little bit to more normal levels, that would be my expectation.

Maarten Verbeek, the IDEA! Getting back to a question which was asked previously, but I don't think it was answered. For the full year, you guide for an adjusted EBITDA margin of 3.5%. And in the first half, you have achieved 4.3%. And I'm a bit puzzled why, more or less, if I assume the same revenue, you predict a margin of some 2.7%. There might be some pressure on inflation cost, but also seasonality shows that within construction companies, the second half tends to be better than the first half. So I'm a bit puzzled by that outlook statement and what you already have realized in the first half of this year.

Yes, I think it's a very valid and good question. You can imagine we had some discussions on that one, too. But you also have to realize that we are now 6 months into strategy implementation that was only presented on February 18. And that will be a 3-year implementation of strategy, starting with a long phase of derisking of the company. So 6 months is really early days, and we are encouraged and satisfied with the progress we made in the first half year. But the derisking, in all honesty, is not done yet because of the long-term context of these contracts. It's not solved within a few weeks. So in that environment, we came to this percentage. Indeed, also looking a bit at some uncertainties in the market with regard to increase of raw material prices, people, difficult to get people inside the company. COVID is not over yet as well. And then we have some claims that we need to discuss with customers in. But I think more the derisking phase of the company, I think, forces us to some humbleness looking at the results of the company over the last years. Yes, we try to be a bit humble here and first show the market that, yes, that we can realize these kind of percentages longer term. I think that's the context where you have to look at if you talk about 3.5%.

BAM International went from a loss in Q1 to a neutral position in the second quarter. Is it also something we should expect for the second half of this year?

So the current position reflects everything we now see in the portfolio, still 5 projects in there, EUR 39 million of backlog. So yes, you can read in there that we are working our way to the finish in terms of finishing those projects. And the current position reflects how we see that evolving. So yes, breakeven after a number of quarters with, yes, some significant negative results. This is, yes, giving encouraging, I think is the right word.

PPP saw the result of 9.1% in the presentation. You mentioned it was influenced by a transactional result. Could you break that down in an operational result and then transactional result?

No. So let's say it's around 50-50. We don't disclose the details of the transaction on the request of the client.

And then lastly, for the moment. Firstly, a very brief question. What do you -- how do you define a bigger project? What kind of sales level do we have to think about?

Well, we defined a definition in our strategy presentation, where we said a project of EUR 150 million single stage are not part anymore of our future within this company. So that gives you kind of a direction. But it's not so black and white. A big project can also be EUR 110 million or EUR 90 million if, yes, we look at it also from a risk profile point of view. But, let's say, the formal definition within the strategic outline is EUR 150 million.

Could you now more or less break down how much of revenue percentage is still in that bracket of big projects compared to the smaller, manageable projects you would like to do and fully focus on?

Well, maybe, Frans, you can help me there. But like I said before, in the Civil business, only 1/4 is big, big projects. And then there is a handful of projects where we talk about this lump sum over EUR 150 million project. So that's also a bit -- they are reflecting sometimes the difficult situation of having hundreds of projects that are doing okay and only -- it's only indeed a few projects that are causing big and bigger problems for the group. That gives you a bit of an idea on the total group level of, let's say, around EUR 7 billion, how big that division of the group of big projects is in our total revenue.

Okay. And for us, it's important because there are still the risk areas within BAM. So therefore...

Yes. But I think we gave the number before, Frans, on...

No, we never disclosed it. So maybe it's also good to distinguish, there are also larger projects that do not have single-stage, lump-sum nature that are really profitable for us and that are in the portfolio important anchor points. So let's distinguish also there from not labeling every large project as a problem project. But as such, we have never disclosed it, and we try to refrain from that.

Andre Mulder, Kepler. Question on the cost overrun. You said it is a cost overrun. I assume it's just one project in Netherlands that has been faced with that cost overrun. Any indication of the size of that? I picked up the low double digits for the U.K. There's also a positive in the U.K. How large is that? Same for Germany. There are these 2 items for claims settlement and book profit. How would the result look without those numbers? Question on the sales guidance or the lack of sales guidance. You gave a margin, but without mentioning the absolute number for sales or any indication, that makes the margins look a bit meaningless, so to say. So why not give a sales guidance, maybe even split it between, let's say, the core operations and the noncore operations? I assume that you've just started repairing things like Germany and Belgium, so maybe too early to already look for disposal there. So that means that the overall structure, like it was in 2020, would be basically the same. So why not give the sales guidance for the group as a whole?

Well, that's a series of questions in one. So maybe, Frans, we can divide a little bit. Maybe I can start with indeed some remarks on the Dutch Civil cost overrun. That's not on one project, indeed. There are, let's say, a handful of these bigger projects still in that portfolio where we see risks. And yes, not to go into the detail and specifically per project because that will not really help our commercial position. But that's a bit the scope where you have to think about. It's only a small number of these bigger projects that caused these overruns and where we are prudent looking forward. Maybe to have a few words on the sales outlook, and then maybe, Frans, you can help me a bit with the other questions on Germany and the U.K. Yes, a bit cautious there as well. We were, I think, luckily, happily surprised by the revenue development in the first half year, especially also in the second quarter where we had extremely good performance in the Dutch C&P business caused by a big demand for -- in general but also especially for homes. So we have to see how that develops in the second half of the year. The shortage of homes in the Netherlands is really extreme as we see it at this moment in time where projects are, before they start, are almost sold already, which is a very specific situation. And we try to be a bit cautious there. And that's one of the reasons I think we need to be a bit cautious on revenue for that business. In general, looking at the business back order and order book, yes, the markets are good, especially in our growth markets, the U.K., Ireland and the Netherlands, which is the good news because that's the future of this company, but also, indeed, stabilizing in Belgium and in Germany. So maybe a bit cautious on saying that having a guess on the total revenue for this year, but that's a bit cost, indeed, on our happily surprising numbers, especially in Q2. And the question is, can we make that line automatically until the end of the year? I think that's a bit the discussions we had internally about that one.

That shows the sort of still positive influence in the second half. So why not say then that sales will be at least the same?

No, because, indeed, the question is, can we draw that line automatically from Q2 to Q3, Q4? That was more the question mark.

Yes. And then maybe on the 2 settlements which were positive, Andre, so positive outcomes on discussions with clients in the U.K. in C&P and in Germany in Civil. And as I said, I tried to give a bit of insight for you guys to understand the underlying performance of the business. But yes, we also agreed that we not disclose the exact numbers. So with that, you have to do your model. Was that -- did we answer all your questions? Or did we -- yes? Thank you.

A question for -- [indiscernible], ABN AMRO-ODDO BHF. A question for the CFO regarding the cash positions and related to, of course, the trade working capital. In the current situation where you said that clients like to pay you as soon as possible because of -- they have to cash out their balance. How do you manage your cash position? And what's in the interest cost that impact there?

Yes. So it's hard to predict. So how do you manage it, of course, predicting liquidity in a construction company is a very difficult element of our forecast. But we -- yes, we do that bottom-up throughout the whole organization, and our people have good views on what project profiles are. Sometimes, clients, of course, tend to pay a little bit earlier than expected. So that sometimes gives a bit of positive upswing.

That gives you a little bit of, I would say, a challenge to manage that lowest cost.

Yes, and that was your second question. So the challenge reflects then in sometimes some negative interest rate payments. But yes, and we have those. And you see that in the interest cost. But yes, with that, we also enjoy sufficient liquidity, which is also an anchor point of our resilience. So yes, we are happy with that.

Are there other ways to manage that with your clients via guarantees or something and that you can maybe go on a lower trade working capital going forward?

No. So there's always decisions to our tendering. That's where it starts. If you go into new contracts, what's the balance between margin and the payment profile, of course, that's early in the project. Later on, sometimes in joint ventures or joint operations, then you can make active decisions on bonding versus cash. That's what you referred to. But also, the impact there is quite limited. You're also with joint venture partners, so you need to agree then on the approach.

Okay. So I would say, strengthened liquidity, which is a priority versus the potential cost?

Yes, yes, yes.

Okay, clear. And a question on the Dutch property. You had a value impairment there. What kind of projects or what kind of land or locations do now need write-downs in this marketplace?

Yes. So we had 2 specific positions in the Netherlands, where, yes, we have some issues with permitting and, therefore, delays in the opportunity to develop the land position into property. And that resulted in these 2 -- so it's several impairments, 2 specific ones are -- the largest ones are related to licensing.

Okay. But the Dutch state or the local states are not really helping there and more flexible on the permitting?

No, I think the Dutch state is committed to build a lot of many houses, but there is licensing of the careers also, the [indiscernible] and the nitrogen discussions that sometimes delay. And of course, also the government machine to produce the permits that are required has difficulty to catch up or to keep up to speed. And we have a large portfolio, so we have -- on, yes, EUR 500 million land bank, sometimes you have some positions where there are specific situations where permits are delayed. That's also quite normal.

[indiscernible], ABN AMRO. Looking a bit further ahead, what are your thoughts on the EU taxonomy on sustainable investments? For example, large companies like BAM in the future will be obliged to report which part of their, yes, net income expenditures, et cetera, will fall under the EU taxonomy. How does that impact your reporting?

Yes. So shall I start maybe? Because...

Yes, please do start on the reporting part, and I can add a few words later on strategy, yes.

Exactly. I think that's a good -- so let me first answer your question, the real challenges took in the strategy, Building a sustainable tomorrow, this is an important theme. Also, there's a new directive coming at 2023, new reporting standards on sustainability, and also the quality of the nonfinancial data, yes, needs to meet those standards. Of course, we are very proactive and committed to make sure we will comply. And as, yes, today, also in our, yes, CDP climate reporting, yes, we have a lot of focus on the quality also of the sustainability data that we disclose. So we see that as a positive thing that there is increased intention for that. Also, the insurance that will need to be provided by the auditor also there, of course, that is a very important dialogue for the industry, I would say.

Yes. Maybe on the strategy, I think that's spot on. Our 3-year strategy, let's say, is phased a bit this year and maybe half of next year. Maybe even the whole year next year is still heavily focusing on this derisking element of strategy. We discussed creating a platform for growth. First, you need to be able to have that platform in place, and that means more predictable financial outcomes. So that's our first priority. That's why we also are a bit cautious and humble in our results. And I think that's justified after many years of disappointments. But then, of course, yes, the big opportunity is there. There will be a lot of investment in infrastructure, but also in homes and buildings to get them sustainable or make them more sustainable. And there, as a bigger company in this world, I mean, construction company, we have an advantage. We have a lot of skills and, yes, creativity within the group to play a big role there. So I don't think the problem is for this company is there enough work in the next, let's say, 10 years. It's more how can we differentiate ourselves, especially in this field, and that can have, for example, a specialization on needs on the new -- on the major homes, so homes with completely autonomous in energy. That will be a big opportunity for us, but also having a completely different way of the maintenance of the infrastructure, much more digital, for example, much more efficient. For these 2, we have some very good plans already in the portfolio. But yes, I think this is the opportunity for BAM going forward. And maybe I can tell you some of the things we're doing here is to co-create with -- in the first half of the year with more than 400 people within the group, especially, let's say, the younger engineers coming into the company, to create this portfolio of opportunity here going forward. I'm not trying to -- or not willing to explain and tell you a lot more about it right now because that would be a bit in contradiction to the derisking story we're telling. But of course, we are preparing that and because we see that opportunity coming. And again, I think BAM can play a very nice role there. We always play a good role in sustainability. But the next challenge is much, much bigger. It's not only our own process of construction to get that, let's say, more sustainable circular, but also the world of our customers. And there, of course, it's much more complicated, and that challenge is much bigger. But if you look at the report that was published last week on climate change, yes, I think everybody understands there is no way back. And this stream of investments will come and probably earlier than later. So we see that as an opportunity.

So you are quite confident about your business model and the opportunities? I'm still wondering, will this have an administrative impact in terms of you will have to change your reporting? What kind of complexity does that bring?