Bonava AB (publ)

Good morning everyone and welcome to Bonava's Q4 report for 2021. My name is Anna Falk Fyrlund and I am the new head of investor relations here at Bonava. And with me here today I have our CEO Peter Wallin and our CFO Lars Granlöf and they will take you through the highlights of this report. And we will end this session by a Q&A. And you will today be able to ask questions over the phone and you will also be able to post them online. So with that short introduction, I leave the word over to you, Peter.

Thank you very much, Anna. Thank you. And good morning, everyone. Happy to stand here and present my first report for the full year. So continuing and starting then with the market conditions. We are still seeing a high demand and a strong interest in our markets. So we have stable and favorable market conditions. We can also see that the price level is stable across our markets and we are actually seeing an increase of prices even though the rate of increase has abated somewhat as expected compared to the beginning of the year. We are seeing a strong interest across the board. That means from both private customers as well as from investors. Moving into the profit and loss. We are seeing net sales and EBIT down compared to the fourth quarter of 2020. That is because 2020 was very backloaded. On a full year basis, we are improving the operating income, the EBIT, and the margin. So we are moving up by 10%, excluding items affecting comparability for the full year. And that is also increasing the margin because of the net sales being lower. So we moved up the operating margin from 6.6% to 8%. I would like to point out that the major business unit has improved the result and I'm very happy to see the improvement from Germany bouncing back to 12.6%. We are seeing increased margins in both our consumer and our investor part. So that is also very promising. One of the prerequisites for our revised strategy is growing the land bank. And over the years, we have shown that we have grown the building right portfolio by 11% or 3,500 units. And that is despite the fact that we, during the fourth quarter, divested the land bank in Denmark and that accounted for 500 units. So despite that, up by 3,500. Closing the year, we are also closing with an even stronger financial position. And on the back of all of this, the board are proposing a dividend of 350 up from 325 last year. Coming into the number of units. As you have seen from our numbers, we are not reaching the guidance of starts that we have mentioned in our reports. And we are missing it and actually seeing a decrease of starts. And these starts is actually a postponement and where we're closing into year end and they are moving into the other part of year and we are seeing that the Omicron spread during the last part of 2021 impacted the permitting situation in across our markets. Another part which is extremely important to mention is the fact that the profitability is in focus when we start starting a project. Profitability and customer promise. So that means that we have to have the right team in place, we have to verify our cost estimates and we have to verify the sales and market status. So all of that is more important sometimes to have in place. So even if we have a building permit, we will actually not start until we have these three prerequisites in place. So the projects are moving into 2022. And our guidance now for starts is looking at 6,000 starts in 2022, which is an increase by 20%. So a chunk of it is, of course, the movement of projects into 2022. And we are still sort of very much tracking what we have stated in the revised strategy and business plan. Two of the projects I would like to mention is one project in Bergen in Norway, where we have started a swan and eco-labeled houses with a fantastic view over the ocean, Klepekollen. And then another great project in Riga, Latvia, where we started 120 units. So you can follow and track all the projects we are starting on our website. So this is part of our business. We are going to create many happy neighborhoods continuously. So the focus for me as a new CEO in this first year has of course of landing the review of the business and the strategy review. We have launched this full-fledged during the fourth quarter. We executed and completed the divestment of the land bank in Denmark. And we are rolling out now the strategy locally in the whole group and in the various business units. So I'm seeing a very strong and positive reaction from the organization. And lastly, as you saw in the beginning of the week, we are also reshuffling a little bit on the leadership part in order to secure the fruition of the business plan. So with that, I would like to hand over the word to our CFO, Lars.

Thank you, Peter. Good morning, everyone. As always, I would like to start with taking you through the bridge of the recognized units compared to how we were guiding in the Q3 report for the fourth quarter. We said that 2150 units we were estimating to complete during the fourth quarter. We actually managed to complete 69 more than that. So out of the 2,219 completed units, 49 were unsold by the end of the fourth quarter. And we have then managed to sell out of the stock of completed unsold from previous periods 53 units. And a major factor outside the number of completed in the period is, as we were speaking about in the Q3 report, that we actually then are recognizing units that have been completed and sold in the prior periods, in particular in St. Petersburg, which was also part of our guidance in the third quarter. So 2,352 units in the fourth quarter completed. And then moving over to the full income statement, as Peter was mentioning, we had a very backloaded quarter, fourth quarter last year. And as you know, we are very conservative in the way that we are accounting for our sales and profit based on a completed contract methodology, which is then creating a lot of seasonality in our reporting. And the fourth quarters are normally the strongest ones. So even though we had a good quarter in 2021, we could not compare that to the fourth quarter of 2020, where a lot of activities and completions were actually delayed into the fourth quarter, the first year of the COVID pandemic. Lower sales level in the fourth quarter, of course, creating less in absolute terms in terms of margin. Slightly lower gross margin in the quarter due to a mix effect. But on the full year basis, even though we have a lower volume in sales, we actually managed to create a gross profit increasing over the prior year as well as the margin. A slight increase in our selling and admin expenses in the quarter. We are comparing again to a COVID year where everything was sort of locked down and the cost was coming down to a minimum level. Now we see increases in particular in recruitment and starting to build our organization again. But then we're delivering almost 10% EBIT margin in the fourth quarter, a slight reduction from the 12% in the prior year. But on a full year basis, we are on 8% level compared to the 6.6% level that we were posting in 2020. I come back to the items affecting comparability in the next slide. So I jump that and we go all the way down to our EBT or profit loss before tax. We are on for a full year basis on 1 billion 20 adding back the items affecting comparability. We are on 1.1 billion level, i.e. 100 million up over 2020. the 2020. And the final thing I would like to mention here is that you see a rather low tax. Our underlying tax percent is still in the 26% level, but in the fourth quarter, the sale of the land bank in Denmark was made significantly as a sale of a company and therefore that is tax exempt and that is done creating a lower tax in the quarter. Coming back to the items affecting comparability, in the quarter we guided for 150 to 200 million in charges downstream the Static Review and it came out at 188 in charges and we also had a plus from the sale of the land bank that was reported already in the beginning of the quarter. So if we try to divide the 188, you see 44 is in Sweden. It's mainly write-down of land, write-down of intangible assets, and some sunk costs in projects that we have to sort of reshape and restructure to make that in accordance with the new strategy. And we also have some staff-related expenses there. In the Nordic, the 140 is, of course, a mix of the 226 in capital gain from the divestment of land in Denmark. Minus 86 million is basically write-down of land in the Nordic segment. And then we have the parent company part, which is basically write-down of assets, capitalized development cost in prior periods. And some relating to organization as well in the parent company. So that's all in all a positive done in the fourth quarter of 38 and the full year. We have a minus 80 because we have the cost for the wind down of Denmark that we announced in the second quarter. Let's move over to our business segment starting with Germany. Here you can see from the graph that we have lower recognized units both in the quarter as well as for the full year. Mainly coming from a lower activity level in the investor segment in the B2B segment. We have an improvement in profitability both in the quarter as well as in full year. And we are very happy to see that we are having good margins, good margin improvements for the full year on the EBIT margin, 12.6 versus 10.1 percent in the per year. Looking at the starts and sold units, here we are affected, of course, as we have been reporting before, from the delay of getting building rights, building permits. So the reduction in starts is very much coming from the delays and thereby we also have a lower volume of sold units in the German market. Still high demand, stable sales development in Germany. And what we are seeing are, of course, shifts of starts into the next year. So it's not something that we lost. It will be coming later on. And as you see, we have a lower activity in the investor area. But there was one project on Solon started in Dusseldorf during the period. Moving over to Sweden, we actually see higher volumes of recognized units, both in the quarter and for the full year. And a lot of that is coming from the investor area. So that is typically an area where we have slightly lower profitability and that's impacting the margins, of course. More in the quarter than in the full year because we had, as we were reporting in Q3, rather decent margins in the investor segment that we recognized at that point in time. And items affecting comparability I've been speaking about earlier on. Looking at starts and sold units, we have a slight improvement here and coming both in the consumer segment as well as in the investor segment. So there is a strong demand and sales development and a stable price level now in Sweden. There is strong interest in the market, in the investor market, and we have one project sold and started in Umeå up north in Sweden during the fourth quarter. The Nordic segment is a bit of a mixture, as you have seen. We have less recognized units than in the prior year. And it's also so in particular, if we look at the fourth quarter, we had some projects, in particular one project with very strong margins recognized in that period. Nothing comparable in this fourth quarter. On the other hand, instead, we have in particular B2B investor projects with very low margins recognized impacting us significantly. And we are still building up of course the Norwegian business unit on a standalone basis from the Danish unit that is creating additional cost in this segment. And here we have the most significant part of the items affecting comparability of course. Looking at starts and sold units, you see that we are lagging in terms of starts and thereby we are also lagging in terms of sold units. So that will of course be the focus for our business in the Nordic segment going forward. We see a strong underlying demand in all of our markets in the Nordic segment. And here we have taken part of the starts that we are lacking in the fourth quarter. It's due to that, as Peter was mentioning, that we are purposely delaying when we haven't got all the prerequisites in place and this segment is of course the one that we need to stabilize and we should not start projects until we have the prerequisites in place. It's very interesting to see that we have a strong investor market in Finland in particular. Four projects sold and started in Finland during the period. And as you probably saw, we also released just the other day that we have added one more investor project here. St. Petersburg Baltics, here we have a product mix that is affecting profitability. We have a stable level of recognized units but a higher level coming from the investor segment which is impacting both the level of sales as well as the profitability. So from a very strong level of profitability, we are on a slightly lower level in the fourth quarter and also for the full year in this segment. Looking at starts and sold units, we have a lower level of starter units. And as you see, the main reason for this is that we have then experienced delays in building permits also in St. Petersburg during this period. And that is affecting also the potential of selling more units. Continuous high demand, good market conditions. We have, of course, a geopolitical situation that we are following, but there is no impact, as we can see, short term in this segment. And it's very interesting to see that we now have the two first projects for the built-to-hold segment started in the Baltics in this period. And we are reporting them as investor deals until we actually make the transaction when we have finalized the buildings and moving that over to the asset management segment. Okay, going from the segment over to a quick view of our balance sheet. You see that our assets have increased over the year, and this is mainly coming from the ongoing housing projects. And you see also that we have strengthened our financial position even further. We have now an equity assets ratio that is exceeding 35%, well above our 30% threshold level that we are going for. Looking at our building right portfolio, Peter was mentioning the increase in our building right portfolio. Still, the book value of our building right portfolio is on the same level as in the prior year. The increase is mainly coming from off-balance sheet building rights that have been added to the portfolio. And you see that we have an increase in Q421 over Q420 in three out of four of our segments. It's the Nordic that is lower. And that is then due to, of course, that 500 units have been divested in Denmark. And then we have started new projects, of course, for the other part of it. And for those of you that were following us on the Kaplan Markets Day, we started then to add more of reporting of building rights. And this is how it looked like now by the end of 2021. We have 35,300 building rights in total, 18,400 of them on balance and the rest off balance. And off balance means that we have option agreements or we have conditional agreements where we are in control of the situation, when to execute, and most of them we can execute rather swiftly if we want to do that. And you see that the signed agreement, about 50% of our agreements are signed in 2020 and 2021, but 25% actually before 2018. Looking at how are we planning to utilize this, almost 60% of the Bill & Write portfolio we're estimating to use for starts in 2022-2024. So we have secured a land bank for our starts 2022-2024 basically. And if we then look at the starts, the 59%, 20,750 building rights, most of them are going to be utilized for multifamily houses. But then also we should be aware of that we are not producing single-family houses in more than Germany, Sweden, and Norway. So you cannot apply that on the whole portfolio. So in those markets, those segments, that will be a higher proportion, of course. And right now, we have a B2C of 84%, B2B of 16%. And that can, of course, change over time if we think that it's more advantage, better for us to move from one area to the other. Return on capital employed. This is probably the last time that we're going to have a slide for return on capital employed since we are now moving into other financial targets. But it's very good to see that we are still on the level of about 10% even though we have increased actual capital employed return has increased over the prior year significantly. Looking at the cash flow, again going back to the seasonality that we see in our business, of course the fourth quarter we see most of the handovers, i.e. most of the payments that we're receiving on the handovers are coming in the fourth quarter. Very strong fourth quarter last year, a strong fourth quarter this year as well. But as you see, we have not handed over that much in relation to what we have invested in housing project as we did in the prior year. But the most significant impact on our cash flow, if we compare the two years, 3 billion less cash flow from before financing than 2020 on a full year basis. It's due to timing differences in advances, in particular in Germany with the payment system that the market is operating there. The timing has not been the same as in the prior year and hence we have not received as much advances in 2021. If you look at our net debt, we see that we are exactly on the same level as one year ago. We have, however, received about half a billion Swedish crowns, of course, in the fourth quarter for the divestiture of the land bank. So everything else, there is an increase, underlying increase. And that is, of course, due to that we have a higher volume of ongoing projects by the end of 2021 compared to 2020. And then I'm rounding off just with the information that you have in the report, i.e. these completion graphs that we are putting in there to guide you for what are our expectations for the coming quarters in terms of completions. You see that we have added about 1,400 units coming from Q4 starts that we start to complete from Q4 2022 and ongoing. You also see that we have added 64 more to the Q4 2021 and that is primarily then coming from earlier completions of what we were estimating in Q1 2022. And you see that we also have some delays Q4, Q22 and Q1, Q23 that is then moved more into the Q2, Q3, Q23. And same for the investor segment. Here we see that we have five more units than we were estimating. There is a change then between the Q1 and Q2 being delayed 40 units. And we have a similar mix, similar change between Q4 22 and Q1 23. And here we have added some 600 units from starts in Q4 that we start to complete then in Q1 23. So by that, I give the word back to Peter.