Koninklijke Heijmans N.V. (HEIJM) Earnings Call Transcript & Summary

Welcome at the presentation of the annual figures Heijmans 2019. But before we start with the presentation, as usual, we'd like to show you a video on today's theme. The time pressure was enormous. It was an enormous challenge. So what we accomplished is quite extraordinary. When we landed the tender, we started to elaborate and to work on the design, and we decided to go for the slipforming application because this is a technology that can continue 24 hours a day, and we really wanted to start off immediately. And we did that project, along with Dura Vermeer, and we leveraged the strong points of both companies, which has proven to be very, very successful. And what I really find so attractive about this building is that we paid so much attention to the roof garden. And from the roof garden, you see the beginning of this enormous vertical wall, the green wall, which, as far as I'm concerned, is the eye-catcher of the building. And I think -- I don't think we've ever seen this ever in Europe or in the world. It's become a colossal, beautiful green wall. Well, 70 meters of green wall with 50,000 little planks on the wall, which is actually what we're talking about. This is an enormous eye-catcher in the building. So I think we can look back on an excellent process. Also, thanks to the excellent collaboration with Dura Vermeer, but also all the suppliers, and perhaps last but not least, the governmental agency, property agency. And if you have such an enormous assignment, it's so important to collaborate. And with this excellent collaboration, I think that we can look back on an excellent project, and as I said, excellent cooperation. This morning, we presented our results for last year. Strong rise in results, 2019. We resumed the dividend payout. The increase of EUR 43 million EBITDA 2018 to EUR 54 million in 2019, in excess of 25% is the increase. And if you look at the net profit, an increase of 25% to EUR 20 million to EUR 30 million. And also, that we are resuming the dividend or proposing the resumption of dividend to the AGM. The last time we did that payout dividend was in 2013, so that's quite extraordinary as well. And we're looking back on 2019 as being a very successful year. We were able to live up to our positive expectations. But before I proceed to the numbers, to discuss the numbers, I think that as usual, we would like to pay a bit of attention to safety. Year-end last year in the Porseleinhaven project in Loosdrecht, there was a casualty, an accident with a casualty, which affected me personally enormously. And furthermore, I'm disappointed that despite all our efforts, we've not been able to make sufficient progress with respect to safety. Heijmans has been focusing on safety. For years, it's the foundation of what we do, but with 84 accidents and with the injury rates that we see here. Last year, it was 3.9%. This year, it's 3.3%. But I still am personally quite disappointed. And we tried to take into account the vulnerability of the building sector, and we tried to disclose this also with a video, a video that shows the actual life of the building site, which can possibly also make a contribution to make our people aware, but also our clients and suppliers and contractors and to hold them accountable for their behavior, not only during the realization of the building, but also in the design and tender stages so that together, we can create a safer building environment or working environment for all those people that work on the site. Now I'd like to move on to the highlights of 2019. As I said, 2019 was a good year -- good financial year for Heijmans, and we lived up to our expectations. And on the basis of the improved profitability, we propose to resume our dividend, a payout ratio of 20%, which means that 80% of profit has been added to the reserves. It is modest, but it is a sign of our confidence in the future, and we'll be discussing the details of this later on. And it's wonderful to see that all our business areas have contributed to this positive result. In infrastructure and nonresidential, we see that in the past few years, we've been adjusting things, and we are reaping the fruits of all those efforts and measures that we took at the time. And so with the new work that we are landing and tender processes and with our selections, we are making a deliberate choice between accepting risk and the profitability of an assignment. I can't repeat it enough, we constantly focus on discipline, excellence. And we do the projects that we can do, not those that we think that we can do. Because if you think you can do something, it doesn't mean you can do it. And particularly now, also as a consequence of nitrogen, the PFAS, this can have an effect on the order book in due course. So this is something that deserves our attention. And we do see that the order book is increasing -- has increased this past year, and we can also see -- and hence, I'm sure we're discussing that the average debt utilization has decreased further. And if we then look at the main figures for 2019, in around halfway of the year, we thought the revenues will be slightly lower, but ultimately, we had quite a strong fourth quarter. And we -- our revenue was a bit higher than expected. EBITDA 3.4 overall. And in property, we see that we have a margin of 5.7% and also the production companies, output companies, 2.5%, 3%. So that means that we are moving towards the margins that we have formulated in our annual report as being our objective. So as I said, we're making headway. And before I give Hans the floor, I'd like to just highlight and explain some items. Let me start with PFAS and nitrogen. This past year, obviously, there's been quite a bit of debate about this, and it has forced us to join the manifestations in the Hague in order to make sure that politicians become aware of the concerns that we have. We're very much in favor of reducing nitrogen in our country. We have a mission. We want to create a healthy living environment. That's not for nothing. So really, we want to make headway there, but we also want to make sure that we reflect on matters and that we don't just make U-turns all of a sudden. We need to go gradually. The developments have had only limited consequences for Heijmans. Where there were consequences last year that mainly had to do with a reduction of the number of tenders, particularly in infrastructure companies. There were more companies participating, so there was more of a risk for greater price pressure. And in property, for instance, we see that in some projects, residential, it took a bit longer to get the licenses. So it took longer for us to start building. And with respect to the larger tenders of the government, you see that there's sort of -- they're not appearing in the market in the longer term. So towards 2021, we are somewhat concerned about the sector. We don't really see any major tenders being published by the government. So it's important that we take measures in the short term in order to make sure that the infrastructure market in the longer-term experience a reduction. So we think that the standards, the PFAS standard, should be established at a higher level, and there must be more clarity for an annual threshold value for nitrogen, nitrogen so that the situation becomes clearer. And so we subscribe the letters sent to the government by the employers' association to introduce a national threshold and to have a very robust nature recovery program, and we agree with that because with nitrogen, we want to create a healthier living environment. We want to see how we can move forward here, but we should also take into account a transition period. So I would call for that. And if we then zoom in on a number of projects, it may be a good idea to comment on the Zuidasdok. Last year in November, we conducted the operation in which we removed the deck and then slipped in a new deck and renovated it. And well, personally, I look back on this as quite an accomplishment. On Monday morning, we needed to reopen the motorway. It was open at 2 in the morning without any major issues. We've been able to accomplish a lot. As far as the integrated predesign that was submitted end 2019, it has been evaluated, and this predesign phase has now been concluded. And also, the government, Rijkswaterstaat, on the website of the Zuidasdok has reported as much yesterday. Ms. Dekker, who is the Minister of State, has -- is looking into the financials. And the second professor, Marcel Hertogh, is looking into the cooperation between the principal and the contractor, and the results are expected at the end of Q1 2020. And Professor Marcel Hertogh, while in January, an agreement was reached with respect to the consequences in terms of time and cost of the excesses from the past, the excess cost and all the cost and revenue so far are incorporated in the figures of last year as being presented here, but also in previous years. And then as far as tenant is concerned, this past year, Heijmans started the arbitration proceedings internally and externally. We've gathered financial and legal advice, and tenant has responded to our claims. And so far, that hasn't changed our views, and that doesn't mean to say that this will lead to an outcome soon. We expect that this year -- I don't really expect there to be a judgment this year. Furthermore, last week, we received a positive notice from the ACM. So we can merge the asphalt plants of BAM and Heijmans, which is fantastic news. And over the next few months, we will take further steps in order to substantiate this cooperation. We have the volume now and the capacity to respond to the demand for sustainable asphalt because that's what we want. Perhaps a few words about the markets. Let's start with the residential market, residential and property markets. The demand for residential units is still very high, and affordability is a concern, and also a necessity to industrialize to have prefab constructions in order to reduce cost to make things safer and to build with a better quality is quite clear. But for that, we need consistency in policy and rules and regulations, and the production processes should not be distorted and interrupted. And the transition to gas-free building has affected Heijmans. It's led to a delay of 3, 4 months in our building activities, and there's also lack of new development locations. As far as I'm concerned, it's important to have a sort of central management in terms of spatial planning from the Hague. I really miss the times in which we had a Ministry of -- called VROM, and it was a very professional ministry. I think that we're reaching a point in which we should have national locations being earmarked. We cannot resolve all the problems, the housing problems in city centers. We have to look into mobility. And we also perhaps have to find larger locations, venues such as Almere Pampus or whatever, other sites that we were talking about. And we really need to need to make some headway here. And we may need a helping hand from the Hague. We've seen this in the past, the Phoenix situation. Now we have NOVI, which is a document on the environmental vision. We can turn that into NOVI. And if we then look at nonresidential, the realization of utility projects in city centers are not really affected as much by nitrogen. These locations are further way from the Natura 2000 areas. One caveat in the Hague, we do have a vulnerable situation there because it's close to the [ dunes ]. But in general, in urban areas, rather, we see less vulnerability. For 2020, we have a well-stocked order book. We have data centers, growing office market and also the intercity projects, residential projects, such as Vertical in Sloterdijk. We started with that. So we are hardly affected in maintenance item by PFAS, and we see an increase of revenue and margin. And we can really service this market well with existing clients, but also with new clients. And there, we can land long-term maintenance contracts. If we then look at infrastructure here, we see PFAs and nitrogen have a big effect for Heijmans. Last year, we saw regional tenders dwindle. There's more pressure, price pressure, and more companies participating in tenders. And there's more pressure also because the large tenders are being delayed and postponed. But for 2020, infra -- the portfolio for infrastructure is doing rather well, but I do think that guiding measures have to be taken by the government. Otherwise, after 2020, we do foresee a further stagnation. Over the past few years, we've succeeded in getting a more balanced order book, more asset management and service contracts. And as a consequence, for instance, energy transition, we've landed assignments from Liander, for instance, decentralized energy, utility companies, new players in the market, and also the dike protection program or the bridge program give us sufficient confidence in the future. And the ratio between risk, acceptation and profitability continues to be very important as a criteria in accepting work. So we are not going to go for volume, absolutely not, and we're going to continue to be very selective in accepting work margin over volume. And that is what we've been focusing on over the past few years, and we will continue to do so. So Hans, I'd like to give you the floor now.

Yes. Okay. I'll take you through the different sectors. First of all, property, the revenue in 2019 declined to EUR 459 million coming from EUR 503 million in 2018, but the margin was still okay. And we saw that in the second half of the year, there was clearly a better performance than in the first half. In the first half, we were really lagging behind on 2018. The second half of the year, we reached the level of 2018. In 2019, we sold 2,128 residential units, which is not as much as last year. And out of the 2,128, 58% was sold to private buyers. And in absolute terms, this is the same as in 2018. So the decline was mainly to be seen in the sale to investors and cooperatives. This is a B2B segment, bulky deals, and it all depends when the deal goes through. The fact that the -- that we're seeing a delay in the new development venues and also rules and regulations lead to the fact that there isn't a big supply, and supply is lagging behind with respect to demand. And also, affordability is under pressure. If we then look at the selling prices of the residential units that we sold, the units to private persons, the sale price increased further from EUR 341,000 to EUR 352,000 or EUR 353,000. Order book remains at a comfortable level, EUR 454 million, and the pipeline looks good. If we then look at our inventory, our stock, you see that it's more or less at the same level. And we see that the land bank, land holdings, declining the strategic positions. And land operation is declining, but that is offset by residential units that are being built, which is more or less comparable in 2018. The unconditional liabilities also declined EUR 16 million, EUR 41 million to EUR 25 million. And the conditional liabilities or entitlements increased with EUR 3 million to EUR 130 million. And here, you see a picture of Fenixlofts in Rotterdam, Katendrecht, which we delivered last year. We're very proud of that, and it won an architecture award in Rotterdam from the jury and from the public at large. And it's part of a number of projects in the Katendrecht area. We are focusing on the development of the entire area, and we see Cobana, which is the brown building on the right-hand side, and we delivered that over the past few years as well. On to building and technology. Here, we saw good results in 2019. Revenues increased by 13%, EUR 817 million, and also underlying EBITDA in 2019 was a lot higher, EUR 21 million. And overall, order book also increased. And by the end of 2019, it amounted to 1,000 -- or EUR 1,268 million. Residential activities contributed most so the -- really, nonresidential, sorry. I'm talking about services company or the maintenance company mainly, which is growing year after year also with robust margins. And last year, we saw an increase of just over 10%. And the biggest growth was in the project business, we see a growth of 60% approximately. On this slide, you see a picture of the European Medicines Agency. We just saw the video. And the next picture is a picture of Willemspoort, which is the development in Den Bosch, and this is Willemspoort Noord. We just delivered that, and now we're developing Willemspoort South, which is parking deck opposite this building, next to the Jeroen Bosch Hospital, and also quite next to the Natura 2000 area that you see on the picture. So that just goes to show how big the challenge is in developing this project. Let's move on to infra, infrastructure. Here, we focused on a more balanced order book between larger and smaller projects. And we see that this is bearing fruit, and the percentage of large projects has decreased, which also meant a decrease in the risk profile and increase the predictability. And we also saw an effect of nitrogen and PFAS, particularly in the regional business and also selective acceptance criteria led to the fact that revenues decreased slightly with EUR 619 million in 2019, EUR 654 million in 2018. Underlying EBITDA increased from EUR 8 million '18 to EUR 17 million in 2019. And here, we see that the order book is robust, slightly -- slight increase as compared to 2018, EUR 791 million. As Ton just said, we're quite excited that the ACM has approved the merger of the asphalt plants, and we're going to move forward now. We don't know exactly what the timing is going to be, but it all depends what happens next, but somewhere in 2020. Just for the order of magnitude for you, about 50 people are working in the asphalt plant. The assets that we have there or the book value thereof is not very high, EUR 4 million. So that will be transferred to the new asphalt plant. We have 3 plants. BAM has 7. So that means that some goodwill will have to be paid, which will take place this year, but these amounts are not gigantic. Here, a picture of the A1 motorway, which is a major project for us. And this past year, we landed the project for the expansion of the motorway. And also in 2020, the A1 motorway will continue to be an important project for us. Now the financials. Well, actually, we more or less discussed the different sectors just now. And now I'd like to highlight a number of items, such as EBITDA and then particularly the write-down in property assets, EUR 5 million write-down in a number of property assets, and this has to do with land that we have sold in which we suffered a book loss, but we did generate cash. And there were a number of positions in which -- in the neighborhood transactions were done at certain prices. And as a consequence, we also had to adjust our value. Restructuring costs, EUR 3 million. We included EUR 3 million in restructuring costs, and this has to do with quality improvement that we're carrying out across the company. There are certain skills for which -- well, we need more people. For instance, we've employed just a number of data analysts, but there are other skills that we don't really need that many people for, and we've moved forward in terms of quality. And this has to do -- and this is why we see the restructuring cost. The interest charges have also declined considerably, but we also see a tax charge of EUR 5 million. In 2018, it was 0. This year, we decided to bring 50% of this charge to the nonvalue -- unvalued taxes, and the rest is charged to the tax assets. And as a consequence, in 2019, we had 13.8% tax effect. And then we also have losses carried forward, EUR 132 million thereof has been highlighted as such. Cash flow now, funding and dividend. Interest has declined, EUR 8 million to EUR 3 million, as we said, in 2019. We also generated a positive cash flow in 2019. And actually, there are a number of factors that led to the fact that the interest charges declined, so considerably the cum pref holders. Well, we entered into a deal with them, and we've reviewed interest coupon, and we've also been able to reduce the debt utilization. I'll show you a slide about this later on. And the interest coupon for our ordinary funding is also lower. It's 2.25 now. So overall, we've been able to reduce interest cost. And also, the cost of the refinancing 2016, 2017 was booked in 2018. There was a significant amount. And in 2019, we no longer have that amount. And so therefore, the interest charges were reduced considerably. And all these facilities have been committed to at least in mid-2022. Strong focus on working capital throughout the company, and you also see that the working capital is at a stable and low level. So we're quite pleased with the development of our cash in 2019. As we just highlighted, we will propose to the AGM that we resume dividend payout in the form of an optional dividend payout of 20%. Now should that be taken entirely in cash, that would mean EUR 6 million in cash-out. And we also made arrangements with the cum pref holders that for every euro dividend, that EUR 0.50 be repaid to the cum pref holders in order to reduce the principal amount, and that means the cash out of EUR 3 million. So we can reduce the amount of cum pref outstanding. Here, an overview of our average debt, a 12-month average in 1 and 2. You see our facility of EUR 156 million has been reduced to EUR 121 million, and the red line is the utilization of this debt. And you see that the headroom has improved, which is 0.5, approximately EUR 100 million now. And you see the reduction, which is item 4, from EUR 45 million to EUR 14 million. This is the average utilization, which has declined. The net debt, which is the line above it, that you see the number 3, has also declined, but less so. IFRS 16 is included, but also compressed, and also cash in joint ventures. So that accounts for some discrepancy, but there's also a reduction here. Now the financial covenants. I'm not going to go into the details, but we comply with all the covenants as we indicated when we disclosed our half year figures. I'd like to leave it at that. And just this one, IFRS 16, as from next year, our underlying EBITDA after -- will be after -- or according to IFRS 16, and we added this so that everybody can become acquainted with the numbers according to IFRS 16. Back to you.

Excellent. I have a few words about strategy and outlook. Last year in the annual report, we explained the details of our outlook and also our 3 pillars that we have for our mission makers of a healthy living environment. And better obviously means that we focus on excellence -- disciplined excellence, safety, 0 incidents. It's what we're focusing on. If you look at where we came from, you know that there's still some ground to be covered. Improving profitability and predictability in projects, and we have our own grid program, no risks in projects. And then we have the lean program, which is a sort of improvement method across our organization. In the sector as such, it's important to evaluate things, and I think it's important that all of us focus more on that. And that we also reduce our absenteeism, and strengthen our leadership and improve engagement of employees. That is also something we've been focusing on over the past few years. So we see an improvement in engagement as well. Smarter and digitization, which means that we need to reduce the number of failure costs. We have to find the hiccups in the projects, make the digital twins, and we would like to realize value positions from data-driven services and be successful in marketing them. We see a number of interesting examples thereof, and I'll be discussing that at a later point in time. And these data-driven services have to be linked to the manufacturing industry. We have to standardize our processes and also our project -- our products, sorry, and have prefab products. And also making -- building more sustainable. This is very important to Heijmans. In 2023, we have said that we want to be -- have a CO2 neutral footprint. We really want to reflect on our materials. Circular packaging last week was the work of circular -- the week of circularity at Heijmans. People reflected on what we were doing, how we're moving forward, and also, creating this living environment. Biodiversity needs to be fostered, and safety. These are all elements that we are looking into now. And this is just one of these examples, the data-driven services. This is the N279. What you see is a trucky -- a truck, that the truck can see what the tire pressure is of this lorry, and we can measure whether or not it's safe. Lots of accidents, 4 out of the 10 accidents on motorways had to do with the tire pressure. And if there's not enough pressure, then of course, your exhaust is much higher. But second thing is that if you have a flat tire, you can have enormous consequences for traffic, economic damages. And so by measuring this and feeding back this information to the driver, we can feed it back to the company. And this is just one of those examples of looking in our business in a different way with knowledge and data, realizing new services. In 2020, we're going to continue on this path. Obviously, safety will be an area in which we'll really have to make further progress. Last year, we've worked on awareness. And now we have what we call a GO compass. We want to constantly improve safety. We're not looking away. We're going to hold each other accountable, and we're always going to work according to plan. We're not going to start improvising, and so we are going to take time to discuss safety. And then diversity is also a very important thing, diversity policy, also for the attractiveness of the building sector. But it also means that we have to look at the labor market, gender diversity, and we really have an ambition to grow 10% a year. And if you want to grow -- and out of the 4,500 people, 50% of these people work on the building site, and there are very few women there. So an ambition of 10% also means that we need to achieve a growth of 20% in this other population. And also cultural diversity. Can we use asylum seekers with the status? Can we employ them? Can we give them a new future? And also in the video, the Jongens van de Bouw, you saw that the heavy work is something that we need to focus on. We need to attract younger workers. Value creation strengthened by means of data-driven services. I just gave you an example. Smart City at Vijfsluizen, but also Maanwijk in Leusden, where we really want to make neighborhoods healthy innovations that we do ourselves, smart grids, for instance. We want to introduce by biodiversity in order to create a healthy living environment. And it's important that we have -- that we're opening a business concept center in Rosmalen, which is the building next to the head office of Heijmans. And all those people who are working on digitization, data analysts, we want to put them together, residential, nonresidential and infra so that we can really have a cross-fertilization and leverage intelligence and obviously sustainability. And we are offering different energy propositions. For instance,in Feyenoord city where the local energy supply needs to be elaborated, but also reusable asphalt as part of that plan, and that's why we really wanted to strengthen our asphalt plants, along with BAM. We want to move to a sustainable asphalt, and I'm sure that this will also play a part in concrete in the future. And so there are a number of elements that we are looking into, and nature is very important. As I said, this transition of nature, the A1 motorway, you saw a picture of that, this is one of the examples of nature-inclusive development. This brings us to the outlook. Heijmans expects that revenue and underlying results for 2020 will be at a comparable level to 2019. On the one hand, the order book is well stocked. On the other hand, there still is uncertainty with respect to the nitrogen issues and especially in the infrastructure market, but we do see a stabilization of revenue development. And if there are no further tenders in infrastructure, we expect that the infra activities towards 2021 may be impacted. Despite all this, Heijmans looks at 2020 with a great deal of confidence and faith, and we also see that there's an enormous sustainability wave in the Netherlands. There are macroeconomic factors such as low interest rates, low unemployment rates, and these are foundations that are important to us. And therefore, we believe that these foundations are good and beneficial to the sector, and that means that we have a long-term positive outlook. We've said this a couple of times, we propose to resume dividend, 20% payout ratio adding to the reserves, 80%, and we've thought long and hard about the point in time and the level of the dividend. We've given an outlook for 2020 in which revenue and underlying result will remain the same -- at the same level as past year. And so therefore, it's obvious that for 2020, we should pay out dividend. But in terms of the level of the payout, that is something we'll decide on in due course. I'll leave it at that, and I'd like to offer you the floor.

ABN AMRO. First question concerns. And you said the margin -- the target margins that you have in your annual report, could you share that with us now?

Oh, absolutely. That was 6% to 8% of property. And for the manufacturing companies, 3% to 4% EBITDA. There was no secret about it.

And the substantiation of the guidance for 2020, could you perhaps explain this in more detail per operation, per business area? That was my second question. And then did I understand you correctly when you said, let me see, that there was an agreement on the cost and time components of Zuidasdok and that in 29 -- that had been incorporated in the numbers for 2019? So what was that element in euros EBITDA profit? That was question three. Fourth question, quality of the order book, 3.4% EBITDA margin 2019. What would the order book look like per business area then?

Well, perhaps I can tackle the Zuidasdok. You're quite right that we've been spending quite a long time in the preliminary phases when there were higher costs, but there were also revenues that were paid for not only 2019, but in proceeding, is all the costs and revenues have been incorporated. So I'm not going to disclose anything in terms of the levels of the amounts, but it has been incorporated in the numbers.

[A question off mic. The interpreter can't hear the question.]

No, I don't think it's sensible to go into that, and these are arrangements that we made with the principal, the client.

Yes. Perhaps, a question about -- sorry, an answer with respect to the outlook. We're not going to go into the different sectors. But if you look at the order book, it does give you an interesting idea. You see that the -- in the order book -- that the order book looks good and sound, but that is the overall order book. And obviously, you could say that in the phasing also for 2020, but it really looks good also for all sectors. And as Ton just explained, we're starting the year with a well-stocked order book. Obviously, we do have some concerns about PFAS and what's going to happen because we don't have all the revenue for 2020. In our order book already, that's just not the case. So towards 2021, you may see that. You may notice that.

Perhaps I can add something from infrastructure. What I'm concerned about these -- all these large works, I mean if they don't happen, you're getting the erosion of the labor market in that sector, and that is something I'm especially concerned about in the infrastructure. We're also capable of landing other projects such as the Quebec track and Schiphol airport, the Piet Heintunnel here in Amsterdam, for instance. So we have full confidence in 2020 in terms of the order book. But in the long term, we think it's sensible to avoid this gap in tenders and people leaving this sector. And then all of a sudden, that we would have to say, "Okay, now we have to accelerate." The same thing is happening in the residential market. They said, "Okay, we're going to build fewer residential homes." And then after 3, 4 years, you want to accelerate it. So people leave the sector. You can't realize that acceleration after a certain period of time. So let's be realistic about this. In residential, you could say there are fewer homes that you can build, there's wage inflation, cost increase. And if in infra, your revenue declines, then you would have to compensate somewhere and try to find out where your sensibilities lie.

[Foreign Language]

I understand that, but you see the guideline that we're giving is that if PFAS, if this uncertainty prevails in the market. You'll especially see the infra business affected. Any other questions?

Bart Cuypers, KBC. Perhaps we can zoom in on infrastructure, PFAS, nitrogen. The tenders in the market utilization is going down. But what about the margins of those projects? Do you see that the margins are lower? And can you pass that on to the subcontractors? Can you see that already?

Well, as I said, we continue to be selective, margin over volume. So we're very selective about selecting the tenders and see whether it's all about prices or about clever solutions, and we would prefer the latter. So we're not going to offer and the cost price and things like that. We don't want that. We don't want to do that, and we manage for that, and those tenders will be looked into by the Executive Board.

[Question off mic.] Question. [ Petercam ]. The order book, you said that 2020 has been covered for a large part. Could you indicate how much is covered in 2020?

Well, I can point out that if we compare where we were last year. This time last year, we have a couple of percentage points more in our order book than we had last year.

And about PFAS, do you get the impression that the government is taking the necessary steps to address this nitrogen problem and to release sufficient tenders?

Well, they're 2 different case files. The PFAS case file, which came up around the summer last year with strict standards, and there has been -- there is more leeway, but it's not enough. And especially in the waterways, we still see problems. But if you want to realize -- in a city building, if you want a parking garage, if you need to go underground, you have to deal with water. So we're talking to the ministry to look into this standard, and it's not only Heijmans that is doing this, but the entire sector building in the Netherlands is doing that. As far as nitrogen is concerned, you see that the employers' organization, the VNO-NCW, but also the Association of Dutch Municipalities have a common interest. And we're very much in favor of reducing nitrogen and that we work towards achieving a healthier living environment. But you cannot take a U-turn, and this is what is happening if we're not careful. We want good threshold values. We want clarity in terms of the authorities that issue licenses. They need to know what the standards are. And you also have to keep an eye on nature. You have to realize in a nature-inclusive way. But you also need a transition period. For instance, if we want to use electrical equipment, but what we see is that the equipment is not a Dutch market, it's a European or rather a global market. If you look at those countries that are working on energy-neutral production, the Netherlands, Norway, not many, many countries. So that's one thing. And that also means that electrical equipment is substantially more expensive, and it's very difficult to acquire. And we're dealing with companies that already have a fleet, equipment fleet, and you can't just set that aside and all of a sudden introduce electrical equipment. So you will have to introduce a transition period. Just now we showed you a picture, for instance, the Willemspoort South. You saw the parking lot, and you saw all these cars on it. If we're going to make a plan, the plan will be energy neutral because the residential units are gas-free, energy neutral. So these cars will be for the inhabitants, but there'll be a few inhabitants, the number of parking spaces over there. So we've got to be very pragmatic about it. We need to put -- to focus on a point on the horizon, something we want to work towards, but we need to do this step-by-step, and that is my appeal. And that is what the letter of the employers' association and the Association of Dutch Municipalities have highlighted.

Andre Mulder, Kepler. Could you point out how large your regional infrastructure is? And then I have two questions that tie in with that. If you say there are fewer tenders, could you give us numbers? And the same applies to price pressure.

Regional project is about 30% of the overall infra business. What we saw in the tenders was from -- in the period, September, October and also in part November, that the number of tenders went down from 30 a week to 10 a week, which is substantial. And you see that everybody was rather critical about this. What we see is that regionally, the enormous differences in the south of the country, they're concerned. But in the northwest, in the center of the country, not -- no concerns anymore. So the big difference is in price pressure. We see there's price pressure in the market, but we're not going to go along with it. So we simply don't want our people to work under cost price. We don't want that. We simply have a cost structure. That's one thing we want to realize the margin, and we want fair work for a fair price. And that is our perspective, and that may mean that perhaps we have slightly less volume, but I no longer want to end up in a situation in which we're using is we have to deal with projects with major losses. So we see an improvement. We've seen improvement in January, but not at the same level. I have to be honest about that.

ING, Tijs Hollestelle. I have a question or a comment about tenant. I don't want to be a nuisance here. But for investor, it is nice to know that in 2020, there's not going to be a ruling on the arbitration proceedings. Why do you think there's going to be no ruling this year?

I know from experience, we're talking about the -- the grounds for defense are being submitted. So I don't really expect there to be a ruling, but then again, that's not my thing here. Let me be honest about this. I'm trying to manage the expectations. I'm not expecting that this process, which is quite a complex case file, that we have a ruling within a couple of months. It's simply not realistic. And so I -- that's why I'm saying I expect, given my experience from other proceedings, that chances are that it will be next year instead of this year. I wish it were different, but that's simply not the case.

Are there any other upcoming major arbitration cases? Or are they just smaller cases?

No, no major cases.

So you're not afraid for major shifts in revenue in this respect?

No, no major arbitration cases. Now well, I didn't think that was the case, but hey, you never know.

And I also have a question about the joint venture with the asphalt plants. If you'd apply that on your numbers for infrastructure in 2019, what would the situation be? Would there be any major shift?