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

Ladies and gentlemen, thank you for holding and welcome to the Royal BAM Group event call. [Operator Instructions] I would like to hand over the conference to Mr. Ruud Joosten, CEO, Royal BAM Group. Go ahead, please, sir.

Good morning, and welcome to this analyst call for Royal BAM Group. I'm Ruud Joosten, CEO. With me are Frans den Houter our CFO; and Michel Aupers, our Investor Relations Manager. I will comment on the key points of the trading update we published this morning, and then we will take your questions. Looking at our financial performance in the first 9 months, our revenue of EUR 5.36 billion, was above the pre-COVID level we reported in 2019. Adjusted EBITDA for the 9 months was EUR 222.3 million, a strong recovery from last year when we were impacted severely by COVID. This results in an adjusted EBITDA margin of 4.2%. For the third quarter, the adjusted EBITDA was EUR 66 million at a margin of 3.8%. In all our markets, we are seeing strong increase in prices of materials, like steel, timber and cement, as well as shortages from labor and skills. We are monitoring developments very closely and so far are largely successful in managing and mitigating these pressures on cost and delivery times. The highlight of the group performance in the third quarter and year-to-date has been Dutch Construction and Property. In the first 9 months, we sold 7% more homes. We target to sell 70% of the homes before start of construction. But nowadays, we are almost completely sold out. The recent milestone was that Zalmhaven project, the largest residential building in the Benelux, which reached its highest point. The finalization of this landmark for Skyline of Rotterdam are celebrated with an impressive light chip. It's clear that the availability of affordable housing is a problem in the Netherlands. Part of the solution should come from vigorous planning, both inside 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. Another part of the solution comes from the construction industry using innovative techniques to bring more sustainable and affordable homes to the market. You may have seen our press release last week, announcing our investment for additional production capacity for modular homes in the Netherlands. When this is operational in 2023 with an annual capacity of 1,000 timber frame homes and facade elements for another 1,200 homes. The large contracts division of Civil engineering in the Netherlands continued to underperform in the third quarter, which offset better results from the other segments of Dutch Infra business. We continue to have constructive dialogues with our customers. Our other platform of growth activities, the United Kingdom and Ireland delivered a satisfactory contribution in the third quarter. And on non-PPP, our joint venture with PGGM, there was a stable operational performance across the portfolio. No new projects were added, but there is an attractive pipeline on investment opportunities across our markets. A few words about our financial position. Our cash position was approximately EUR 1 billion at the end of the third quarter. The decline versus the situation in mid-2021 is mainly explained by the deconsolidation of cash allocated to BAM Deutschland. In addition and to a lesser extent, there is the normal seasonal development of trade working capital. The capital ratio improved during the quarter by 0.7 percentage points to 13.9%, mainly due to the development of our net results. This is excluding the expected positive effect on our capital ratio related to the completed divestment of BAM Deutschland. Turning to our strategy. We are making good progress with the implementation of our strategy, building a sustainable tomorrow. Transfer of the BAM Deutschland to the Zech Group and Gustav Zech Stiftung completed in October. Looking at the past performance of BAM Deutschland, we consider this divestment as a reduction of our risk profile. We're actively pursuing other divestments from the managed portfolio businesses. In our management from growth activities, we are concentrating on markets with attractive outlooks where we can use scale and innovation to distinguish as from competitors. For example, in July, BAM Telecom closed the framework agreement with Open Dutch Fiber to design, install and maintain fiber-to-the-home networks in inner city areas. This agreement has a duration of 5.5 years and BAM will start with the realization of approximately 28,000 connections in [ Highland ]. This contract fits well in our ambition to create long-term partnerships and offer life cycle solutions. Another excellent project win in the third quarter was Cross Tay Link Road in Scotland. We will mobilize teams from BAM Nuttall and BAM Ireland, showing our ability to provide clients with a comprehensive delivery capability. The first phase is a 1-year early contractor involvement stage. This allows the design to be completed before construction starts, and it's an important facet of how we derisk the business and provide predictability for BAM and our clients. Looking ahead, markets are generally favorable, underpinning -- underpinned by strong public investments. It's only half year since we presented our new strategy. I'm pleased that we are fully on track. We are further derisking the portfolio, improving our operational -- our operations and assessing the opportunities in our platform for growth markets. We have positive momentum in our businesses and a strong order book. Let me conclude with the full year outlook. BAM is making good progress, operationally and strategically. Discussions with clients regarding the timing and settlement of some substantial claims are ongoing, and there is an industry-wide supply chain pressure. BAM reiterate the full year outlook of an adjusted EBITDA margin of around 3.5%. Now let's open the line for questions

[Operator Instructions] The first question is from Mr. Luuk Van Beek from Banque Degroof Petercam.

First of all, a question about your guidance. For the first 3 quarters, you're at 4.2% margin. And for the full year, you guide for around 3.5%. So that indicates a substantially lower margin in Q4. So could you explain the reason for this conservatism? Is this related to the discussions you have on claims? Or is there any seasonal effect to that stronger than normal? So could you comment on that? My second -- do you take them one by one or...

Yes, maybe that's better for understanding. I think it's a very valid question at this moment in time. Indeed, we reiterate the 3.5% at this moment in time. Normally, in Q1 and Q3, we don't go into the underlying details of the businesses. But what we see is indeed the positive development, let's say, for the first 9 months. But on the other hand, we're still pretty early days in the implementation of our strategy. BAM the past has, let's say, not overdelivered on some promises. And what we now try to do is set a realistic target for the year. And looking at where we are, I think that's a valid point of view. On the other hand, we also have to give some detail with the fact that last year, there was a very positive claim settlement from Belgium coming into the results, that also had an impact on the comparison.

Yes. Okay. You say realistic, but this is -- I'm still puzzling why Q4 would be so much lower than the previous 3 quarters, even adjusting for seasonality?

Yes. Well, again, that has to do indeed with our humble position at this moment in time. Indeed, only 8 or 9 months into strategy implementation. We feel that that's the right thing to do at this moment and hopefully, overdeliver instead of underdeliver at this time.

Okay. And then one question about the -- you mentioned that the government needs to change its policies regarding the permitting and the demand that they put on new inner city homes and so on. Do you think that there are sufficient permits in the pipeline to maintain your current volumes going forward? Or do -- is it really urgent that something changes before to keep up this production level basically?

Yes. I think that's, again, a very good question because there are 2 ways of looking at it. I think we are confident in maintaining the production we are realizing at this moment in time. But on the other hand, if you look at the problem in the Netherlands and maybe that's why I made that remark. The problem is, of course, much bigger. There is an deficit of 1 million houses. Some people say 0.5 million. But anyhow, it's pretty big. There needs to be a change to accelerate. And that was more, let's say, the way I answered that question or made a remark. If in the Netherlands, we need to come to higher numbers, there needs to be a different look at this permitting. And then, of course, we can upscale our production as well.

The next question is from Martijn den Drijver from ABN AMRO.

My first question would also be on the Dutch operations, but then on Civil engineering. The large projects still hampering the overall performance. What type of projects are we talking about? And when do you expect those to be completed? Is that still in 2021? Will they be completed in 2022? Or will they linger on even more than beyond 2022? That would be my first question.

Yes. Maybe it's good to realize that looking at our Infra business in the Netherlands, 1/4 of that business is indeed focus on these larger projects. So 75% of the business is in pretty healthy condition. But indeed, we were faced with the portfolio of some, let's say, a larger project with higher risk profiles that we want to, of course, finalize with our customers in the right way. But we still need to solve a few of these. And maybe also a bit coming back to the outlook discussion, I think we have to be humble there indeed and say, "Well, let's derisk the company further. Maybe you've seen in Q2 that we did not step into some, let's say, some more of these bigger projects in the Netherlands. We withdrew from a few of these big tenders, A27, but also the [indiscernible] station. And that is clearly focused on this issue to derisk the company further. Not saying that we are not active in infra not at all, and 75% of the business is in pretty good shape. But indeed, we need to solve a very small number of these bigger projects in the coming period.

Could you say something about how long this could go on? Is this something that we should take into account in 2022 or even 2023? Or is there some light, if you will, at the end of the tunnel in this respect?

Well, you always have to be very careful. We're talking about tunnels in our business. But indeed, there is a light at the end of the tunnel because it also has to do with the total company derisking its profile by divesting some of the, let's say, worst performing parts of the company in Belgium and in Germany. In these divestments, of course, some of the bigger projects are included. So that helps that helps. And I think that will partly take place next year already. So the number of these risk projects is getting smaller anyhow. And of course, automatically, if you don't step into new ones, in the end, this will solve itself. Maybe not a good example here is BAM International and that we started to wind down last year. And now you see indeed, yes, the total backlog there is getting smaller and smaller to a pretty small amount by the end of this year. So we're not there yet. I'm not saying that at all, but we're making good progress.

Okay. And then a follow-up on those discussions with claim -- under the claim settlements. Perhaps are they all negative, meaning that the outcome can be a loss or a loss provision? Or is there -- are those claims settlements also could they also end up in a more positive outcome, meaning, for example, a payment, for example, in the Rijkswaterstaat or perhaps even more speculative in the projects in the Middle East? Would that be the right way to look at it?

Yes. This is very good because our IFRS reporting, of course, forces us to be conservative there. So if the settlement turns out positive, it can also be an upside indeed. I'm looking at Frans here on my right side.

Yes. So good morning, everybody. And as you say, Ruud, so IFRS 15, we take the cost there as we are working on the project. So if we have a dispute with a client on a certain scope, we will take the foreseen cost into the project. In parallel, there's a claim or a variation with the client that we can only recognize if we can prove, it's highly probable that the client will compensate us. So there's always in the short term, yes, an effect of the cost first and then the upside at the end of the discussion. And also normally at the end of the project, where you're in that stage that you turn the project to the client and have the final commercial settlement discussions.

Okay. Moving on. Germany, you mentioned that in the first 9 months, it's loss making. It was profitable in the first half. Is that loss-making position? Is that due to BAM Deutschland? Or is it a combination of Rijkswaterstaat and BAM Deutschland?

So for BAM Deutschland, the company that we sold basically in Q3, we reported a small loss. And on top of that, we said in the book where there will be a small impact on the P&L, basically also a small loss there on the transaction. And with that, in Q4, the transaction is completed mid-October, that will be out of the books by year-end.

Okay. So can I infer from that [indiscernible] was positive in terms of EBITDA?

Yes. I mean we're happy with -- satisfied with the performance of [indiscernible] .

Okay. And then on the rising energy and raw material prices. Would there be any way for you to quantify that impact in terms of EBITDA in those first 9 months? Just a rough ballpark number in relation to that? What would be, obviously, over time, hopefully, this will ease? But what should we be taking into account for the remainder of 2021 and possibly even 2022? Just a rough just to give us a bit of a sense of what the materiality is of this?

Yes. I think it's -- the question is very valid. But in practice for us, it works a bit differently because in longer-term contracts, it's indexed. So in that sense, we don't feel it so much in our margins. In short-term projects, of course, it's also, let's say, a part of the tender process. So until now, the financial impact is for us as a company, not so big, not so material. Of course, that's not a total story because a little bit more holistically this has an inflation effect on the total industry. And customers, of course, can be very worried about it and delay projects or start discussions about projects. And of course, that is happening if you think you can build for [ 100 ]and suddenly it's [ 130], you started discussion with us, and that is happening. And the impact of that is difficult to see because this delaying effect is compensated by right now by very strong demand, the shortage of homes, but also big investments in infrastructure, for example, in the U.K. that overcompensated that delaying effect. So the quantification is difficult for the demand. If you look at our order still very strong at EUR 13.5 billion. I think there will be the coming years a very strong investment stream coming because of the sustainability market that will be opening up even more. And I think we can play a very strong role there as well in electrification, but also in the home renovation part, especially in the U.K., but also in the Netherlands. So these things are very difficult to quantify what will then be the impact on our order book of this inflation part. I think it's pretty severe, probably it's a bit longer than we expected at the start. But I think nobody really predicted during COVID, or at the beginning of COVID that the demand would come back how strongly so soon. And that the value chains were really surprised by that as well, and I can understand that, and that's where we are right now. First 9 months, we are still able to build what we want to build. So we don't have the supply problems to a large extent, but that's where we are.

Okay. Got it. And then my final question. Just you mentioned that Belgium was positive. Was that the margin in the third quarter better or equal or lower than what it was in the first half?

We're not giving you data points in the call other than we put in the press release, Martijin.

The next question is from Mr. Tijs Hollestelle from ING.

Yes, also a question on the earlier discussed topic on the outlook. I'm aware that the construction companies do not like to disclose the size of the potential loss provisions on individual contracts or individual dispute with clients gives away, let's say, your leverage only a negotiation table. But if I look at your -- indeed, at your 9-month performance and then the outlook, basically, you're giving an immense profit warning on these loss provisions because if I understand it correctly, the seasonality in the fourth quarter is in favor of a construction company like BAM can have EBITDA margin of about 6%. So yes, we all -- this crowd here is trying to make a story about the investment case, but yes, would it not be possible, let's say, to provide the kind of a bandwidth that you put all the loss-making or risky projects in 1 portfolio and give some guidance on what your expectations are? Because I know from experience in the sector that it is possible to say at least something about the potential danger of loss provisions on individual contracts because, yes, this outlook is not conservative. It's basically not very useful translating into the equity markets. And maybe it's our problem, but -- then I also like to know that because, yes, this will linger room forever, and we're trying to track, of course, the underlying performance of BAM.

Thank you, Tijs. I think I'm happy that you already gave the answer yourself on your own question because that is in the fact that what we did in February is say, okay, in 3 years' time, this company will perform at a 5% EBITDA level in a company for around EUR 5.5 billion by the end of 2023. We are now 8, 9 months in implementation of the strategy, and we are now looking at an outlook of 3.5%. So that's why, I think, try to bear with me a little bit here on this 3-year pathway to the 5% EBITDA. So in that sense, I don't agree with your point of a profit warning. We gave an outlook in the summer of 3.5%. We are now confirming that outlook. So we look at it a bit differently at that in the 3-year kind of scope. And that's where we are. And indeed, I can fully understand the impatience there. But I think it's not only humble, but it's also a smart thing to do after many years of disappointing capital markets to focus on this 3-year scope of building up to the 5%. And that's where you can -- yes, question us, I think, every quarter on.

Yes, but you're creating your own problem, because you can also note the time, let's say, the outcome of the settlement. So if nothing happens in the fourth quarter, you're going to report a 4.5% EBITDA margin, then you have the same problem in the outlook for next year. But that's what I'm trying to get a feel for. And also more in a theoretical example, if you would have, let's say, won a contract yesterday, and that contract turns out to be a potentially loss-making projects somewhere next year. Would you disclose that with us? Or also, basically, you are not updating us on that?

I can repeat the answer that we have a 3-year scope on building up profitability to the 5% EBITDA. And on a quarterly basis, of course, we'll give an update on that one. But I'm not going here, let's say, having discussion on claims or things that can happen. I think that would not be helpful as well.

Okay. That's very clear. I will stop asking about it. And then yes, a more specific question on the solvency rate. So it went up by 70 bps in -- from the second quarter to the third quarter. But if I look at the EBITDA in the third quarter was quite firm. So if I translate that to the net profit, it seems to be limited. And I spoke to Michel about this morning, I think that BAM Deutschland is still in the balance sheet in assets held for sale. So if you exclude, let's say, the assets from BAM Deutschland then the solvency rate would have been more like 14% or 15%. Or are there any, let's say, lower down the line P&L items like impairments or restructuring charges that limit the net profit contribution in the third quarter?

No. So there were no impairments or other effects there. In the first half, we reported EUR 10 million noncash impairment on property and EUR 30 million on deferred taxes, as you remember, and that limited the net profit that we could add to the equity and that improved in Q3 as we had no one-offs, shorter balance sheet, also driven by the lower cash position. We are quite happy with the 13.9%. Indeed, Germany is still in there, and that will give us further uplift in the fourth quarter.

Yes, in that range?

In the range of more than 0.5%.

Yes. Okay. That's clear. And a final question. Yes, BAM Deutschland So that's quite successfully because it brings more focus, and I think it's a big fall from your plate, derisking the BAM Group, but that leaves, let's say, the German infra business, and does this including Rijkswaterstaat? And if I recall correctly, then Rijkswaterstaat is also very often used by the other infra business in the U.K. or in Denmark or even near in Amsterdam with the North-South line. if you would be able to sell this business, does this not have a major impact on the, let's say, the competitive position of BAM's other European infra activities?

Yes, very solid question. Indeed, we are very happy with the divestment of the selling of BAM Deutschland to Zech because it gives the people in BAM Deutschland the opportunity to that to be part of a bigger, stronger German unit. And in that sense, I think being more credible in the big German market. So that's a very good point that comes on top of the divestment of BAM Switzerland that we did earlier this year, end of last year. So we're making big progress there, I think, in derisking the company. Looking at Rijkswaterstaat indeed, very well known also for their tunneling expertise, but it doesn't take away the opportunity for our companies, of course, to work together with the company even in a JV kind of participation in the future. Looking at our, let's say, big business in the U.K. and Infra, BAM Nuttall, they have proven to be very successful on independently from Rijkswaterstaat. So I don't see there a big risk going forward. For the Dutch market, we have to derisk the company ourselves and sometimes they're indeed cooperations with Rijkswaterstaat. But strategically, I don't see a big risk for these companies. We also have to be clear here that we are selling our activities in Belgium as well. So in that sense, there is a real future focus on the Netherlands and the U.K. also in infra. And yes, with the winding down of BAM International, we don't see -- well, we don't see there will not be big infrastructural projects anymore outside these markets. So that's a consequence of the strategy as well.

And do you see -- I can also imagine that there is real interest for this German tunnel asset. It probably also has equipment of value and a lot of expertise in terms of the engineering capacity. And are there the potential bidders interested in only Rijkswaterstaat? Or are also willing to be able to take over the complete German Infra business of BAM?

Well, after the divestment of BAM Deutschland, the only activity we have in Germany is Rijkswaterstaat. So that would mean, let's say, the end of activities of BAM in Germany with our own companies. So that's included in that deal. But again, always very difficult to make statements on M&A activities. We are fully on it. Frans and myself are focusing a part of our time on this activity. And we are happy with progress, especially BAM Deutschland. When you look at the results over the years, it was clear there was not a big profit maker for the company. So yes, we are extremely happy with that we succeeded in doing that. But indeed, Rijkswaterstaat is a very good company with a lot of expertise. So let's see where we get to.

The next question is from Andre Mulder, Kepler.

Again on Germany, can you tell us what amount of sales and possibly margins will disappear in Q4 compared to last year?

Yes. So we will transfer the company or have transferred the company mid-October, so you will miss 3 months of -- 2.5 months of revenue. It's a company that does EUR 500 million per year. So you can do the math on that. And we already said earlier in the interview what the results were. A small loss in Q3, and a small loss on the transaction. And those are the data points for now. Of course, at year-end, we will be giving you more information.

Yes. How did that transaction develop? It seems quite early in the process that you dispose of this company. Was that so to say good interest from the outside? And how would you then feel the possibilities, the opportunities to sell Rijkswaterstaat and also the Belgian operation?

Yes. Again, it's speculation, I think, to thing what will happen in this M&A market. It's not an easy market, I think, in the construction world, talking about opportunities in M&A, mergers and acquisitions, I think. But indeed, we were happy to find a very strong partner for BAM Deutschland. And I think this local strong partners, I think, are probably the best players to create a bigger platform for themselves in that local market. What I see now is that these markets are pretty local. So being -- having this strong basis is very important. That's why we indeed focus on the U.K., Ireland and the Netherlands where we have that base is that market share, yes, to really profit from our size and our innovation levels. And I think that will happen as well with our companies as part of a bigger group, bigger company within these markets in Belgium and Germany. And there is interest there. BAM has a very good reputation. But again, let's not speculate on where we get to.

Then a question on the Dutch Infra. Do you plan to implement further measures there, possibly maybe lowering the ceiling a bit further, maybe to [ 150 ]to [ 100 ]or so? Or any other measures there?

Yes, that's a very good question, of course, that we are also sometimes struggling with to say, well, is it about [ 150 ]? Or is it really about the risk profile of these projects? And probably the latter is more the case. So we are more and more critical on do we accept substantial tenders, whether it's a risk profile that doesn't fit anymore to a company like BAM. And I mentioned the example in the U.K. just now in the offer, where we are working on a project with this 2-stage approach. And that should be also the future, I think in infra in the Netherlands, doing this risk profiling before you come to the final contract. And maybe that's even more important than the [ 150 ] or the [ 100 ]or the [ 125]. I think it was good to set to make it clear that we set that number. But you can be sure that we will look at the risk profile question very carefully with any tenure going forward.

Okay. Then a question on the backlog, slightly down compared to midyear. Can you give a bit more color on how the development of divisions have been?

Sorry, the development of which division?

Of the divisions. So the backlog was slightly down from [indiscernible] interested in the trends in the 2 divisions.

Okay. Yes, I think in general -- as I said, it's always difficult to now give more details than we do in the press release, but there is an even spread and it's more general trends that the order intake was a bit lower, coming down EUR 300 million as Ruud already said in the opening. And also linked to the previous answer of Ruud focus is, of course, on quality and the risk profile and not so much on the volume. So we're not disturbed by this.

The next question is from Mr. Christophe Beghin, Kempen.

I think most have been answered, but I have maybe a high-level question. Looking at the strong momentum, especially, of course, in Dutch residential property, and all other elements that have been discussed on sustainability, governmental infrastructure spending in the U.K., for instance. To what extent now 9 to 10 months later after you have shared the new strategy of the company, to what extent in the 2023, EUR 5.5 billion revenue expectations? Have you taken this all into consideration? Of course, you have, but to the same extent that we see now the acceleration of the last 6 to 12 months?

Yes. Indeed, very valid, I think. One year ago, we made that 3-year plan, indeed calculating a bit what will happen if we have the divestment plan completely -- completed. And that would lead to that number with a pretty conservative growth percentage then on the remaining businesses. I think that's a fair assessment of what we did last year. Very difficult to say what will happen in 2 years' time. What I do see is an acceleration of the sustainability focus of governments. You see this week as well in the north of the U.K. Glasgow conference, I think that will lead again to a further acceleration of investments and focus from all parties, including banks, governments, consumers. And probably that can accelerate going forward to when it will exactly lead to a big impact on our business, difficult to say, but I'm really optimistic there. And with our size in the U.K. and in the Netherlands and with our level of innovation, I mentioned the example of the timber industry we are investing in. Electrification, digital opportunities as well linked to that data management linked to sustainability. Fantastic opportunities for the companies that can invest and work together with big entities like governments, for example, but also other companies. There's a big future for us in these markets where we have a strong position. So maybe a bit sake. But for now, we stick to the EUR 5.5 billion. But especially, I think in the years after, there can be an acceleration there. And we call it a platform for growth. We're very confident that we made the right choices going for these big successful markets in the Netherlands and the U.K., Ireland. And that will give us that opportunity. And the size will be very, very substantial.

Okay. And I think I can simply conclude everything has been answered and that yes, you're doing so far a great job and executing to the strategic plan accordingly. So no problem from my end anymore.

Thank you. Good to hear.

The next question is from Mr. Martjin [indiscernible]

It's [indiscernible]. A couple of questions. Firstly, has the seasonality on profitability changed? Or will it change in the future when you have a new profile? So when Belgium and Germany have been divested?

Well, I don't think that happened this year, to be honest. I'm looking at Frans as well, but I don't see that impact this year. When we have the divestment completed. I don't think there is a different seasonality for these businesses than our remaining businesses.

No, we -- not specifically, we do see -- and we discussed in Q2, we had an impact on the cash -- the normal cash pattern throughout the year, which was different in the previous 2 years, but that was driven by COVID. So we see a little bit -- we also made a comment on that -- on the trade working capital, a bit of the normal seasonal pattern coming back there. So that's only for cash, but it also reflects a little bit, of course, the production that is behind it. So that is more a general observation. Other than that, the divestments will not have impact on that pattern.

So more less Q1, the weakest, Q4 the strongest?

Yes, yes. That is what we tend to see.

Okay. And secondly, just for clarification, BAM Deutschland has been consolidated still in this third quarter in the P&L, order book and trade working capital.

Correct.

Not in the cash position.

Correct. Yes.

Okay. And when talking about this cash position, which declined by some EUR 250 million from Q2, Q3. You more or less blame it just to BAM Deutschland, but didn't the trade [ working ] capital also have negative impact on the cash position?

Absolutely. So the drivers for the lower cash position, which, in our view, is still very strong, EUR 1 billion. But we see this coming down by over EUR 200 million. Half of that explained by Germany and the deconsolidation of that cash position. On the other side -- and I made a comment basically linked to the previous question where I hinted that trade working capital came down quarter-on-quarter, which is in line with the normal seasonal pattern, and that explains the remainder. The trade working capital efficiency as a number has improved, but that is because the Q3 last year was lower than this quarter.

And then lastly, year-to-date, sold homes was more or less at the same level, slightly better. But if you just look at Q3, it was down by 50%. Is that just because it's a lumpy business? Or is it also impacted by what you also mentioned permits, et cetera?

Yes. I think it's good there to indeed look at the total year development because, indeed, sometimes there are ups and downs per month in the delivery of finalized homes. So really, we look here at a longer period, they are rolling number, and there we see a nice increase in delivered homes. And so no reason to be nervous about the Q3 number.

But it has a negative impact in this quarter compared to last year?

No, I don't think that

[Operator Instructions] There's another question from Mr. Christophe Beghin from Kempen & Co.

A very quick question. I might have missed it, but did you mentioned already on the performance of BAM PPP?

No, we made a general remark that we are happy with the performance of BAM PPP. And we saw a very good number in the first half, but that was driven by 1 specific transaction that was in there. But in normal operations, we see -- we're good with BAM PPP.

It's just the continuing performance as it has been in the past, let's say?

Yes, where Ruud also made a comment on the order intake that was a bit -- that is on the low side disappointing, but we have enough opportunities in the pipeline that is -- was in the voice overstated by Ruud to repeat that message.

There are no further questions, so please continue.

Okay. Well, maybe it's a good moment to thank everybody, ladies and gentlemen, for your questions and your presence. This brings us to the end of the call. Thanks for your attention, and I wish you a good day.

Ladies and gentlemen, this concludes the Royal BAM Group event call. You may now disconnect your lines. Thank you, and have a nice day.