Bonava AB (publ)

Good morning, everyone, and welcome to Bonava's Q1 2020 report presentation. Speaking is Louise Cheddar, head of IR, and with me is Joakim Hallengren, CEO, and Ann-Sofie Danielsson, CFO. Joakim will begin and take you through the highlights of the quarter, including an update on the effects and risks to Bonava related to COVID-19. And Ann-Sofie will then take you through the financials for the group and the segments. After the presentation, we will open up for a Q&A session. So with this, I will hand over the word to you, Joakim.

Thank you very much. Good morning, all. Looking at the first quarter for us at Bonava in 2020, I think it's fair to say that we had a really good start, especially when it comes to sales. And then, of course, this quarter is, as you already know, twofold. But strong introduction. We increased the number of sold units. We sold more in all of our segments but St. Petersburg. Maybe most important, we sold more in our main markets, both in Germany and in Sweden. We also sold more on an aggregated level and we sold investor units that we did not sell in the quarter last year. Looking at the number of starts, we were slightly down from last year. However, the majority of the started units last year came out of the St. Petersburg region. It was almost 600 out of the 700-ish started units that came out of there. And of course, that's the dynamic in the St. Petersburg market with huge projects. But the takeaway from the starts is that we have started more numbers in Germany and in Sweden. And this is something that we have communicated for a while now, that we would see increasing starts in 2020 in those two markets. However, the EBIT was lower, mainly due to two reasons. We have a pretty challenging benchmark where last year's result came out of, or the majority of it came from St. Petersburg, who contributed with both large volume, but also an exceptionally good margin in the units that were handed over. But nevertheless, we are also impacted by the challenges that we have had in the past with projects in the nordic sentiment both in denmark but also in finland there are no new projects that has affected us at this point but it's old well-known bad performing projects that now is entering into a completion phase and we have had A few of those, especially in Denmark, being completed this quarter. And, of course, they come in with a top line, with a net sales, but with none or, in some cases, a slight negative margin in the quarter. And, of course, that affects our EBIT result and also the margin. I think it's also important to remind you that we have communicated earlier that we will have more completions both in the second quarter and the third quarter of this sort of dead turnover projects, especially in the Nordic segment. Looking at key figures for Q1, we have net sales more or less on par. EBIT is down, as we said, as is the unit in production. However, the strong sales thoughts of the year has given us a substantially higher number of value of sold but not yet recognized units. We're up from 20.2 billion Swedish to 21.8. And also, we have increased the sales rate in the portfolio from 66% to 77%. And of course, that's a sort of a guarantee stamp on the Bonava development portfolio. Having 77% secured already in these insecure times is a really strong signal that Bonava is a company with a really solid performance in that type of sense. The number of units sold, as I said before, we had a flying start of the quarter. We have sold 1,129 units compared to 731. We sold more, both in the investment and the consumer segment. Slightly lower numbers of starts, but out of the 723, almost 600 were out of the large St. Petersburg projects last year. So 531, but the takeaway is good starts in both Germany and in the Swedish segment. The COVID-19 effects, and I will get back to sort of a longer outlook in a few slides, but the effects on our operations in the first quarter were actually pretty limited. Of course, we were impacted as everybody else by rules and restrictions made by authorities and governments to try to prevent the spreading of the virus. However, we had all our sites up and running throughout the quarter. They are not as efficiently run as they could be, but that's due to all these rules and regulations, not least the social distancing part, which makes it pretty difficult actually to drive a construction site with full throttle. But the good news is that they are up and running. However, there are challenges. We've seen already small disturbances when it comes to supply of people and material. I will get back to that. We had a financial impact due to a delayed handover in Germany. That was an investment project, small student homes that were delayed. And that will now be recognized in the second quarter instead. And then when we talk about the actions that we at Benava have taken, we have done a lot of mitigating actions. First of all, our employees and our customers and our partners' health and safety is extremely important for us. So that was the first things that we did. starting to protect all these groups, working mobile, introducing all kinds of social distancing activities. We went quickly over to things like digital sales starts. We had digital signing processes and so on. But then, of course, also we focus very hard on protecting our cash flow. It's so important for any company entering into an uncertain situation to protect the cash flow. And we do that by trying to lower costs. We have stopped development projects. I'm not talking about construction sites. I'm more talking about strategic development projects. And we have also introduced short-term work programs and other kinds of activities to lower our costs. And, of course, we want to do that to increase our agility and flexibility and to be quicker developers. to adjust in a very unsecure environment. But overall, the effects taken all the activities apart on the first quarter has been pretty limited. These are two examples of projects that has affected our business this quarter. To the left, you have one of the started projects, consumer project in Helsinki. To the right is an investment project in Lund in Sweden, which was already earlier started, but it was sold in this quarter. Many of you recognize this. This is the expected completions and sales rate. We have developed this graph a bit. We have introduced more periods. And as you can see now, it covers the full year of 2020, but also the full year of 2021. And then we also have a later bar, which is beyond 2021, so 2022 and forward. We want to give a bit more transparency on this, but we also realized that many of our projects are pretty complex and with long production time. So that means that it was obvious for us that we needed to be more transparent when it comes to the expectations of the projects in a later phase. And it will be even more obvious when I change the picture to the investor side, where you can say that, We are really backloaded here and with more than 1,000 units with an expected completion time beyond 2021. And all the numbers out of which this graph is built is, of course, as usual, available on our corporate website. Looking at the risk then regarding COVID-19 forward, It is very difficult to foresee, but I think that we have to look upon this in two dimensions. The first dimension is sort of the regulatory part with all the mitigating actions taken to stop the spread of the virus. And of course, that threatens our production in our sites due to very complex and delicate supply chains. Supply chain of material, But also the supply chain of people. And as you most likely know, if you follow this industry, the construction industry all over the world, and not least in Europe, are dependent on labor that is actually migrating in from other countries to perform work somewhere else. And with our profit recognition model, or principle, the completed contract model, Of course, we are very sensitive to postponements, postponements of completions. Then we might also, due to all these restrictions, see postponement of handovers. Even if the units are ready, it's not evident that the consumers, due to local registration, can actually physically take those over. And then we might see postponed production stops. And of course, if we have a postponement, that will also delay the recognition of those projects. It might be from a quarter to another, but it might also be from 2020 to 2021 and so forward. But that has nothing to do with the profitability as such or eroding margins. It is 100% correlation to the way that we recognize our projects. However, the first phase with all the actions to mitigate the spread of the virus will be followed by a much larger uncertainty. How had this shutdown affected the economy? And probably we are seeing a period now where the regulations are slowly but surely lifted. But it will leave us with some uncharted territory when it comes to the impact on the macroeconomy, but also on the personal economy. So we foresee that we will have a lower volume of sold units until we have more clarity or until the consumers have more clarity regarding their financial status and whether they have a job or not. And of course, if we sell less, then we will start less units. And again, there might be, there is significant risk that we will have delayed profits due to disruptions in our sites or handovers. But that is not erosion. It's just parallelization. With that, I would like to invite our CFO, Ansipi Danielsson, to share the quarter more in detail. figures and details.

Thank you very much, Joachim. Yes, I will give some more details regarding our income statement, the different segments, balance sheet, financial position, and last but not least, our cash flow. Income statement then, to start with that. First of all, I will again comment what Joakim commented upon, that we have a net sales. If you take the currency effects into consideration, we are on par with the net sales from last year. But of course, there are a number of different explanations why it has developed as it has. And I will come back to that. EBIT, 31 million compared to 165. And again, I will come back to that, what has happened during 2020 compared to 2019. Just in a couple of seconds, yes. So net financial items... Almost the same as last year, and also tax rate 25%, which is normal for a business. We end up the first quarter with a net profit of 2 million for the first quarter of 2020. So if we look a little bit deeper into the EBIT development, 31 million compared to 165. If you look a little bit deeper into this, you can see that the biggest deviations are in St. Petersburg, Baltics, and in the Nordics. And to make it short here, St. Petersburg, Baltics, that's most of all volume-driven, We have substantially fewer units recognized in St. Petersburg 2020. We had very high numbers of units recognized last year and also with a very good margin. And now we have fewer units due to the fact that we have fewer to sell. And the Nordics lower a bit, even negative. And as Joakim stated in the beginning here, there are no negative surprises. We have some low performing projects, both in Copenhagen, but also in Helsinki. And some of them have been recognized in this quarter, giving us this EBIT of minus 64 compared to two last year. So that's the two biggest reasons why we have an EBIT of 31 compared to 165 last year. So let's go further on with some comments regarding our segment stand, starting with our biggest one, Germany. What you see here is that we have recognized 180 units quarter one 2020 compared to all in all 217 last year. And here I would like to take the opportunity to say that quarter one is actually a rather small or short period. We have substantially more units recognized all over the years. So if we have, as we now have in Germany, Some projects with somewhat lower gross profit, gross margin, and they are quite few this quarter, and also with lower gross profit margin than last year, that will give an effect on the EBIT result as we have here, 7 compared to 28, and also a lower EBIT margin. We have a very good portfolio in Germany with... with good margins in the ongoing production that we have here. So the deviation here compared to last year is mostly connected to the fact that we have quite a few units recognized in one specific quarter giving us this result due to the fact that there are a few units with... somewhat lower gross profit margin to cover the ongoing running costs that we have in the business in Germany. I also take the opportunity to comment upon And what we always estimate, Joachim showed you the big picture previously, and here are some more details regarding Germany. And what I want to say here is that when we completed 2019, we said that we expected to have 351 units to complete in the first quarter. 167 to investors and 184 for consumer. And what has happened? Well, first of all, those units that we expected to hand over to investors, they have been delayed. And that is actually an effect of COVID-19. The authorities were not allowed to go out and visit our project and give the... to say okay to finalize the project and to hand it over to the investors. So that project in Heidelberg has been delayed and will be handed over in quarter two instead. And the other thing here is that not so big deviation, but still something to comment upon, just to say some words about the revenue recognition method. We have completed 169. However, we have recognized 180 units. That means that we have sold and handed over some units from our stock and from our balance sheet. So more units recognized than we have completed in the first quarter here. And a strong sales start in Germany. We have also started more units than we did last year before the COVID-19 breakout. That was something that we commented a lot about last year. We said that the sales and also the starts in 2019 were a little bit lower than previous years and we said that we expect starts and sales to catch up in 2020 and when we started the year. That was also what has happened. We see a very strong interest for our housing units in Germany with good sales start and also good production, high production starts in the first quarter. However, we still see what we also saw last year, that we have delays to get the building permits. The authorities are overwhelmed with requests for building permits, and we were hit by that last year, and we still see some effects of that. So we have one project in Cologne that we expected to start in quarter one, but that will... be delayed and started the coming quarters when we've received the building permit. Sweden then, we have handed over more units than last year and also for consumers and this has given us a good EBIT development and also a decent and good EBIT margin. Driven by this volume effects more units to consumers, higher net sales and also with decent good EBIT margin. So 114 compared to 81 thanks to this. The year started well in Sweden as well. Market catched up late 2019 and that is also what we see here. It continued to be strong before COVID-19. A good number of sales. 169 units here to investors. As Joakim said, that was the project in Lund that we started already in quarter four. Normally, we sell and start units to investors in the same quarter, but this one we started already in quarter four. But now it is sold in Lund. But we have also sold... more units to consumers in 2020 than last year. And we have also sold our stock from our balance sheet in Sweden. That means that we have reduced the number of unsold units also in Sweden. And then the Nordics then. We said already in quarter four that we will have rather low performing units to recognize in 2020, and that is what you see here. So no negative surprises, but low performing projects that have impacted the impact both in Copenhagen and in Finland. We did restructure in Finland, as you may remember, where we had this effect of 159 million that we set up for this reorganization and the close down of some regions in Finland. Finland is developing according to that plan that we set up then, but we still have some low-performing projects ongoing in Finland. in Finland and then we also have some in Copenhagen and that is something that we expect to continue to be in quarter two and quarter three as well. One thing I also want to point out here is that we have somewhat higher selling and admin expenses here in the Nordics. And the reason for that is that we acquired operations in Oslo in quarter four last year. And the Oslo operations... Well, we have ongoing projects there, but we will not be able to recognize those for profit in 2020, probably not. And that means that we will have some somewhat higher selling and admin expenses in the Nordic segment without having the top line coming from the Oslo business. So that is something to consider. that I want to remind about, that will be an effect of that acquisition. But also in the Nordics, we saw improved sales in the first quarter, and also here we have sold from our stock and from our balance sheet, and by that reduced the number of unsold units on our balance sheet. So a good sales development also there. In the Nordics, and we also see that the peak supply that we saw last year, especially in Finland and also in Copenhagen, that high level has begun to come down to more decent levels. So that is also something that we have seen on that part of the market. St. Petersburg Baltics here, yeah, here you see last year we recognized 519 units, this year 167. And, of course, that impacts top line net sales lower, and it also impacts EBIT. What we can also say is that the projects that we recognized for profit in St. Petersburg last year gave us... a very good margin. So it was an exceptional first quarter of 2019. Many units handed over and also with high EBIT margin. Now we have fewer units and also to a more normalized, stable margin level. So here again, Worthwhile to comment upon that also here we estimated more units to be completed in quarter one than we actually did. And the reason is that we have one project in Riga, Maskeva, that is somewhat delayed. It will be completed and recognized in April instead. And also here we have sold units from our stock. We have recognized units from our stock and reduced the number of units unsold in our balance sheet. So that's why we have recognized 167 units, although we have completed only 116. And we have also... Sold and started fewer units. We have started some in the Baltics, but we still have a rather big portfolio to work with, especially in St. Petersburg, with a very strong sales rate also. So that's the reason why we are on a lower level than last year, but still on a very good level, taking our portfolio into consideration. So that leads us to this balance sheet, or this is the balance sheet that we have, the assets that we have when we ended the quarter one here. We have increased total assets. And what have we done? Well, we have invested into land or properties held for future development in Germany, Sweden and in Norway. One other thing that I want to comment up in here is that we have an equity to assets ratio when we ended the quarter of almost 30%. We have an objective to be around 30%. So to be very close to that is, well, that's a very solid financial position when you look at our balance sheet. And all this has given us this cash flow, negative outflow, which I will soon show you or comment upon that or just repeat that. But we have a negative outflow of cash in the first quarter. However, this year, 200 minus instead of a little bit more than 1 billion. And the main reason for this improvement is that we have a positive outflow a very strong positive inflow from how we have worked with our working capital. We have more interest-free financing and also high advance payments from our customers, so 1.7 billion here in change of working capital. And this is actually maybe the number one task for us now in this world that we are in now to protect our cash flow, to be cautious with our debt situation. So just to remind you here that being this low in quarter one, that is good. We normally have an outflow of cash flow quarter one to quarter three. and an inflow in the fourth quarter. I just want to add to what Joakim said about the effects of COVID-19. If handovers are delayed from quarter four to next year, that will also, at least in some parts of our business, affect the cash flow as well, since in some countries... the final installment is paid when you lay your hands on your new housing unit. So that means that the cash flow comes from our customers when the unit is handed over. So if that is delayed, that will, of course, impact also the cash flow in the fourth quarter. So net debt stable, 7.1 billion. And I just want to repeat here that Bonava includes all debt. We have nothing outside our balance sheet. We include net debt in tenant owner association housing companies, 2.4 billion. That is the project financing that we have. And that financing... is there for us as long as the project is ongoing. So it's very important to bear that in mind when we look at us, and especially in these circumstances that we are in now. We have everything in our balance sheet, we have everything in our net debt that we present here, so that's really important to bear in mind. when you look at the financial position of Bonava. And I also take the opportunity just to share with you our facilities that we have at the moment. And in quarter one, we had financing facilities of 8.1 billion. We used 5.5, which means that we still have 2.6 billion assets. to utilize going forward. And that is together with the project financing of 2.4 billion. That's a very solid financing position for us. In addition to this, what we have achieved during this first quarter is that we have a green financing framework established and we are very glad for this because this is something that we can use for financing going forward and it's also actually good for our brand that we have projects, we have housing units that are of so high eco-label standards so that we can use this financing from framework to finance these projects as well. So that's very important for us and this is a framework that is validated through a assist analytics which we also think is very positive for for us and for our business finally then i have commented upon our equity to assets ratio the objective that we have here so uh finally just to see where we are with the other financial objective and return on capital employed to be between 10 to 15 percent and with the capital employed ending quarter one of a little bit more than 15 billion due to the fact that we've had that we had EBIT, not giving us the EBIT that we've had. We are below that target at the end of quarter one here, 7%. So we have a way to go here going forward. Of course, we don't change our objective is still to have a return on capital employed to be between 10% to to 15%. That is our financial objective also going forward. Important to remember. So by concluding these financial objectives, cash flow, some words about the segments and also the development of our income statement during the quarter, I hand over to you Joakim to summarize this first quarter.

Thank you very much. And Sophie, and to wrap up, again, a very strong start of 2020, especially when it comes to sales and started units. But then somewhere in the beginning of March, the tempo decreased due to the COVID-19 effect. The numbers of starts were lower than last year, but that was... partly because the volume of started units in St. Petersburg were so large last year, but the most important factor is that we started more on all our main markets, both in Sweden and in Germany. We had a few units handed over. It's a seasonality pattern, of course, and that means that individual projects might actually – be pretty visible if their margin is either very high or very low as we saw the impact of for instance two projects in Germany they were visible with that low volume EBIT impact, as we said, old news from Nordics. We still need to take care of that. It was Denmark and partly also Finland with old projects that are now materializing as completed and handed over. They carry their net sales, but they don't carry any profit. And then, as Anne-Sophie talked about, the financial position of Bonava is very strong, and we also guard it. and protect our cash flow like hawks. It's so important to be agile and to be proactive in this situation. We have a solid financial position from the beginning with a good equity over assets ratio, but we also have unused financing opportunities. In the end of the tunnel, there will always be opportunities for those who can be in a position to navigate that has dry gunpowder. And my intention is that Bonava should be one of those companies. And then again, COVID-19, what will the future bring? Well, it's very, very difficult to say. We are now in a period where it looks like authorities are slowly but surely lifting the rules and regulations. That means that we will have a better We can hopefully run the business as such a bit more smooth. But the big question after that is what impact has the COVID-19 virus had on the macro economy and also on the local economies when it comes to us, on our customers' economy? And what's the consumer confidence? What's the job situation and unemployment rate in every market? And I think it would take time before the fog clears in that area. So challenges ahead regarding COVID-19, but it's way too early to state or even try to forecast any effects at this point. And with that said, I would like to hand over to Louise Schader to moderate the Q1 Q&A.

Thank you, Joachim and Sophie. Yes, we will now open up for questions. Operator, please, can we have the first question? Thank you.

Ladies and gentlemen, if you have a question for the speaker, please press 01 on your telephone keypad and you'll enter a queue. After you are announced, please ask your question. The first question comes from the line of Stefan Andersson from SEB. Please go ahead.

Thank you. First, a question on Germany there and the margin. If you could elaborate a little bit on what happened there. You talk about some projects now where you had poor performance. Is there anything else affecting the margin on those projects? What do you mean by this? This is the first time I hear about poor performance in Germany. It's always been a success story before, so I would like some more details there.

No, there is nothing special that has happened. But as I said, when the units that we recognize for profit are few, as it was in the first quarter here, it can happen that we have some projects that are of low margin quality or low margin level. So it's nothing exceptional. We have had these levels of margins in the portfolio in Germany also previously. However, the number of units that we recognized in those quarters we've had this had been higher. And that means that these... these units have been combined with higher performing projects. So it hasn't been so obvious as it is now. So there is nothing special that has happened. So that's why I really wanted to say that we have a very good and sound portfolio of projects in Germany still. So it is an effect of rather few units recognized and Also, these units that were recognized now in quarter one, it was actually a couple of projects in the Rurine area where the margin was somewhat lower than what is normal in our German portfolio. So nothing special, but a coincidence that few units and low margin in those units that were recognized in this first quarter.

Okay, good. And then the second question. On starts, you comment that you had a good performance on start in key markets like Sweden and Germany, and that's good in Q1. And of course, you don't want to make any prognosis going forward. I could do that for you. I think you will have very, very low sales March, April, May. So there will be slow bookings. So my question then would be, how are you planning to act in such a scenario where you have low bookings? Are you willing to start projects on speculations or are you fully following the market when it comes to the sold units or booked units?

I think that's an excellent question. I mean, that is something that we have to consider every day. Let me give you a few sort of dimensions on that. We have projects in some of our markets, for instance, in Germany, that are waiting for building permits that already has a high sales rate in binding contracts. Of course, that's easier for us to start such a project because then the risk in that is not that big. Then we have 77%. sales rate in our portfolio. And that also gives us room to maneuver. So of course, in some cases, we can take a lower pre-sales to start a project. I would argue if we, for instance, works in a development area where we already had developed one, two or three phases earlier, then we know the market very well. Then we wouldn't probably hesitate. However, opening up a project in a completely new area we would probably be more reluctant. But then it's also the financial side. I mean, it's very different starting a project in Germany or in St. Petersburg, where we have a totally different cash flow profile. It's very different from starting something in Sweden, where we have heavy or backloaded payments. So I would argue that with our footprint and our financial strength and the sales ratio of the portfolio we have, a lot of variety. We have a lot of options and room to maneuver in that question more than some of our competitors, I would argue. But I can't give you a solid answer, but it's not either black or white. I think we can be more forward-leaning than others. But of course, every day you need to try to assess where will the market be.

Yep. Okay, good. And then on Norway, I fully understand this might be early question to raise, but I raise it anyhow. You made some big acquisitions of land in the end of last year in Norway. You talked about the Norwegian company you bought and then also some land. Norway, you have impact of COVID and the oil price. So I guess that market could be a little bit more problematic than Is there any risk to the land value there, you think, risk for you to have a write-down of that land?

No, I can't see that, really. The land that we bought in Oslo was an off-market deal, and we entered it. It was a good deal for us. It's a small operating business. We have around 10 employees. So, I mean, the running costs are pretty low. And we bought a land bank with a good maturity. It's 1,000 building rights approximately. And we have sorted one project and we are within two quarters able to sort more projects. So, on the contrary, I think that it's a fantastic opportunity to act quickly when the market bounces back. But to be pretty, you know, to the point to your question, I don't see any risk of write-downs in Norway.

Okay, thanks. And then my final question. I could be wrong now, but if I remember correctly, the German business is not fully owned by you. There's still an ownership there from NTC. And is there a payment to come this year or is that next year? And how is that calculated? Is that fixed from before?

No, it's not. If I understood you correctly, we have an agreement with NCC. That is what you said, with the German business. Is that what you asked, Stefan? Yes. And actually, yes, that is correct. And that is also stated in a report. And that we have... I think it is... We have... We still have 29 million to pay to NCC regarding this, and that is done in ratios where we pay 150. It was from 2016, so it is divided into five years. So we still have, I think it's... two years to come so all in all it's uh it's uh it's around uh well i think it is 29 million swedish krona for us still to pay so not more than that and that is divided between the different years okay that's good okay thank you so very much thank you the next question comes from the line of frederick from carnegie please go ahead

Good morning, a few questions from my side. Starting off with the Nordics, you're mentioning that the losses in the first quarters is partly related to projects with poor margins. Shall we expect a similar effect for Q2, Q3, or is it back and loaded? Just to get a flavor for how bad it will look for the next two, three quarters.

Yeah, well, what we've said is that we will still have some low-performing projects also in quarter two and quarter three. However, what impacted quarter one a little bit more was the development or the projects that we handed over in Denmark. So by saying that, what I'm saying is that you cannot expect... high-performing projects to be recognized quarter two, quarter three in the Nordics, but with a more decent level, so to say, in quarter two and quarter three than what you saw in quarter one.

And that's clear. And then on handover delays, you had one project in Q1 that was a lead. Now we are three weeks into The second quarter, do you see any risks of project delays hitting the second quarter?

That was in Germany, but that is already handed over, so that will be in quarter two.

Yeah, but I meant if there are any other projects that... were expected to be handed over in the second quarter where you see risks that they might be postponed and delayed?

No, that's the one that we have commented on in the report. No, we haven't seen that yet. That is not what you can expect. That is not what we have in the portfolio that we ended the quarter one with.

And then my final question is, Obviously, very foggy circumstances at the moment, and you still had a fairly good Q1 in terms of sales. Can you give some flavor on how large proportion of those sold units occurred during January, February? And can you give some hints on development so far in April versus the end of the first quarter?

Well, I mean, it's obvious that, you know, when the COVID broke out somewhere there week 10, 11, the sales plummeted. However, we have a, both in Germany and in St. Petersburg, we have a system where you have to go through the notary office or the registration office. So we still have a backlog of contracts which have to sort of formally be notarized or registered. But if you look on the top funnel, it's very, very quiet. And of course, that is expected. So it's a substantial difference between the two first months where we actually were overperforming and then somewhere in March. I wouldn't say it's a standstill because that wouldn't be true, but it's a substantial difference in interest and conversions. And I do understand that because nobody knows what the future looks like.

And you're not seeing any early signs of change among customers or that's perhaps too early to expect?

What we're seeing is that, Wanda mentioned that we were a bit sort of thinking about or concerned about was whether the customers would show up to pay for the completed units so we can do the handovers that we have had I mean, very few that hasn't done that. And in all cases, it has been because they have been quarantined, some of them abroad. But that has all been settled. So the cash flow has been secured. We can see now that the last couple of weeks, there is more activity on our webs in the early sort of in the top funnel. But we are not sure what that means. Maybe people have a lot of time on their hands and sitting at home and, you know, just browsing the web. But it's way too early to say. I think that it's so difficult now because I think that many people actually, by mistake, think that this is over once the regulations are lifted. But the impact of this, that will materialize maybe, you know, summer vacation afterwards. So it's early to say more activities on the webs, but we don't know really what that means.

Thanks for the clarification, Joachim. Those were my questions. Thank you. Thank you.

The next question comes from the line of Tobias Kain from ABG. Please go ahead.

Yes, thank you. I have a couple of questions. First of all, regarding starch in Germany, I think you mentioned roughly 1,500 starch as a target for this year. Do you still think that's realistic given your comments on previous in Germany where you had some projects where satisfying booking ratios but not the building right in place?

I would say that it would have been very realistic before the COVID-19. It's still realistic if the market allows it. But where's the market? I don't know. But with the sales speed that we see for the moment, if that continues, then it's not possible.

But can you give an indication of how big volume of projects you have with satisfying booking ratio that you're that you are confident to start as soon as you get the permissions?

I don't want to do that because there might actually be other challenges to that. It might be challenges to get those projects started by other reasons. As I said, disturbance in value chains, correct pricing. So I'd rather not... We will keep you updated every quarter how the market develops. And I do understand that you want to understand better the future. So do I. It's really unclear. I'm sorry.

Okay, thank you. And on slide 25, where you... Divide your net debt, you have other net debt which has increased by 2.7 billion in one year. And the capital employed in building rights has increased by 2.2 billion, so that seems to be the main driver. Can you give any indication what we should expect for capital tied in building rights in one year from now, for example?

Well, one thing I want to say is that, yes, we have increased net debt, not project financing. And that is because we have at the moment fewer projects in Sweden and in Finland. So that's the main reason for that, where we have this kind of financing. But then to say what the volume will be, I think what we can say is that we are very cautious with what we invest into. And at the moment, we have a portfolio and also building rights that covers what we are producing at the moment. So I would say that what you can expect is that the level that we have today will prevail for the next coming, the year that we are in, in 2020. Okay, thank you.

Those were all my questions.

Thank you. I'm now handing back to the speakers for web questions.

Yes, thank you. We have three questions on the web. The first question comes from Simon Mortensen, the EMB. How comprehensive is the completion guidance? Will it be raised in like Germany with new projects with shorter starts? Please Joachim, can you respond to that one?

Yes. And again, let's take the COVID-19 out of the picture because that puts a cloud on everything. But if we talk about our ability to start new projects and still recognize them within the near future, I would say that it would be pretty unlikely that we can have any more recognitions in 2020. However, there is still a possibility that we can increase the volumes in 2021. But if we want to drive volume, then we're looking at larger projects. And we only have 21 months now left to produce that if we should have them in 2021. And that means that most likely all our bigger projects will end up with handovers in 2022. So yes, there's a possibility to somewhat build in 2021. Large volumes will materialize beyond 2021, and very limited volumes that can still enter into 2020. And, of course, that's our strategy. We're working with both single-family and multifamily, but the spread between them, the majority, is larger projects.

We have two questions also coming from Johan Ståhl. The first question, what is your view on the interest from the investor market?

Well, as far as we see, and I got an update already late this morning, there is still a huge interest from the investor markets, from investors. What we've seen, but this is short term, anything can happen, but what we see is that The yield expectations on commercial properties has gone up. However, the yields on residential properties are still on the same level. I don't know if that's temporary or if it will change over time. I do understand that in COVID-19 times, it is more risk to invest in commercial with tenants than with housing. So we knew before the crisis there was enormous amounts of money waiting at the sideline looking for solid, low-risk investments. And real estate is a classic fallback. when you want to have a good investment with low risk, especially residential properties. So, I mean, Intel just a few hours ago tells us that that market is still wide open. And in all contexts we have with our partners and investors out there, they are still very interested. Short term, of course, as you understand, it's always a question of financing. But in the midterm perspective, This market is still very, very attractive and strong, and we are a major player there. So I think that what we can do now to mitigate part of the COVID-19 effect would be to see if we can fast track some of our investor projects instead of consumer projects, instead of shifting the weight a bit. I want to be very clear that converting consumer projects into business-to-business projects, that's not a good idea because that is a terrible sort of conversion ratio. But it can be done as a last resort if you want to have things out of the balance sheet, but it's not very profitable, actually.

Thank you. And the second question from Johan Ståhl to Johan Svi. Is the selling and admin cost equally split between the quarters over the year?

More and less. It can differ from one quarter to another, but not substantially. So we have here 229 in the first quarter and... and 230 last year. So more or less equally spread, split between the different quarters.

Yes. Okay, thank you. So we'll continue on the phone with the next question, please, operator.

The next question comes from the line of Niklas Höglund from Nordea. Please, go ahead.

Thank you. We can't hear you, Niklas.

It seems the question has been withdrawn. Once again, ladies and gentlemen, if you would like to ask a question, please press 01 on your telephone keypad. It seems there are no further questions from the phone.

Okay, thank you. So this ends our presentation for today. Next interim report will be published 16th of July. Thank you all for listening in and have a very nice day.