Bonava AB (publ)

Good morning everyone and welcome to Bonava's year-end report for 2023. I'm back and my name is Anna Falk Filund and I'm head of investor relations here at Bonava. It has been a busy quarter and here with me to take you through the highlights I have our CEO Peter Wallin and an extra welcome to our new interim CFO Lars Ingman. They will go through the report and after that we will open up for questions and you can already now start to type in your question if you wish to ask them online and you will also be able to ask them through the phone. And with that short introduction I leave the word over to you Peter.

Thank you very much, Anna, and great to have you back. And also great to be here together with Lars. So almost three weeks now, as I see, for Ombulnova. We are very happy to guide you through the main points in the report. And just starting off with the main highlights here. We have increased the sale to consumers year over year in the consumer part. we are seeing a gradual stabilization of market. Activities picking up, there are coming more people to the viewings, there are more searches on the internet, and there are more reservations and then consequently sales. So it's a little bit early to see that we are seeing the change and the turn in the market, but clearly the market is stabilized and the signs of an improvement is much more concrete now than before. If we look on the strongest markets, it is Berlin, a very important market to Bonava, as you know. Dortmund and Cologne and Riga also continues to be very strong. Then if we look into the number parts, we are reporting an underlying gross margin of 13.6 and that is of course impacted by some selective price reductions. We have to be extremely active in the market and very much focused on selling, controlling cash flow and making sure that we're not tying up too much capital. We are also seeing increasing impacts of all the measures that we have taken to reduce costs and the combined indirect and S&A costs is reduced by 16% in the quarters and these effects will gradually pick up and we will see a full year impact from Jan 1st 2025. Lars will come more into those numbers. We have a strong cash flow in the quarter. Of course, the operating cash flow is improving, but also then the proceeds from the sale of St. Pete that we talked about in conjunction with the Q3 report is reported now in the fourth quarter, thus creating a cash flow of close to one billion. We have significantly on the back of this cash flow then reduced net debt from the third quarter number. by 1.3 billion. Lars will dig into those effects. And just before Christmas, just before Santa Claus came to us, we also presented the financing package that will sort of lay the foundation for Bonava going into taking on an improving market. And also in conjunction with the report, we have updated our financial targets to clarify our ambitions. So just spending a few minutes on the financing package, it consists of three integrated parts. So the first part is the shareholder part and we're going to have an equity issue of one billion and this equity issue is guaranteed and underwritten by our main shareholders. The second part is the bank part. It's an extension of the credit facilities by three years from March 24 until March 27. And the total credit volume is 4.5 billion SEK. and we have agreed the heads of terms with the banks. And the third and last important step of this is the bondholders, the extension of the outstanding 1.2 billion in bonds until March 27. And here we have achieved the approvals as you also saw in a separate press release. So all in all, these three steps ties together and a lot of things going to happen after this report. So let me walk you through the dates. So today is the Q4. After the close of the market tomorrow, we're going to make public the complete terms and conditions of the rights issue. We then have called and summoned to an extraordinary general meeting on Wednesday next week on the 7th and we will publish the prospectus on the 9th of Feb. Then the subscription period will start on the 13th until the 22nd of Feb and we will announce the final outcome of the rights issue on Feb 29th. So all in all this will be wrapped up in the beginning of March. Then we will hold the annual general meeting on April 10 and then the first quarter result. We will be standing here again on April 24th and I'm sure that time will run very quickly until we get to April. Spending a few moments on the financial targets. We earlier have released the EBIT margin from 2026 of being at 10% or higher. And I think this is a very good target to aim for, and also a target which we really want to beat. And it's really good to relate this to the underlying profitability in the projects and the new investment decisions. So it's a very good target that we can both use publicly, like we're doing on a course like this, but also internally. So it's a very strong red line through the organization. Then if you look further to the right hand side, the dividend policy of the 40% of net income over time is very important to keep for us. But as you know, as we have talked about in the financing package, the board has not proposed any dividend for 2023. And under the new financing package, there are restrictions to leave dividends over the next coming years. And then the middle part, the return on equity target is a new target and we want to achieve 15% or higher. And this is to give you an indication of where we are aiming to give you as shareholders and interested and potential shareholders of Bonalla. And of course, we will not be there short term. We will need to ramp up the business volume and profitability in Bonava. But this is very important to give you both an indication of where we will do on a size basis, given the size of equity and the size of the Bonava as a group, and also to assure you that we will create values going forward. These three points rests upon a financial framework to both indicate what we are looking in internally and also how we are managing risks in the company. So firstly a new target which we call the net asset value compared to the net debt. So the net debt is not to exceed the net project assets and that means in other terms that we are showing really clearly that indebtedness should be linked to the project volume and not to investments into the building rights. The second part of it is to remain and retain the equity to asset ratio target of 30% or higher. And as you know, this target will fluctuate over the quarters of the year. It's strongest in Q4 and weakest in Q3 when we have a high business volume and not have reported and recognized the ongoing projects that we're handing over in the fourth quarter. And that volume in the fourth quarter is proportionately quite big. Finally, on my first section here, let me just show two very nice projects that we've started here. One project in Berlin, Parkstatt Karlshorst, and then Rupacu, phase three in Riga. So these two constitute 220 homes for consumers, and there's a large interest, and there is a very promising sales in these projects. With that Lars, please take the stage.

Thank you, Peter. Good morning, everyone. I will now try to take you through the more detail of the Q4 report. Let's start with this one. And this is about the recognized unit during Q4. In the Q3 report, we mentioned that the completions will be 1651. And as you can see, the completion in the quarter four was 1579, and of which 217 unsold, but you can also see that we have reduced the number of previously unsold and now recognized with 83. So in total, the recognized units during Q4 was 1,444, which actually If we count that together, the 1,444 units ending up with a net sales of around 5 billion. And you can see if we go down on the gross profit, it's a certain point or the gross margin, we should put it like 13.5% versus the 10.3. And the 10.3 is not fully comparable with the 13.5, so a little bit higher. and and if you could continue further on you can see that the selling and admin expenses is down with around 20 million and the reason for that is of course the ongoing cost saving program that was announced last year and we continue going down on the operator profit in total 427 versus the versus the 295 which is then up with around is it 45 percent up and and what we can see the negative side if it was good on the abta is of course the higher interest or the financial items 132 versus 76 last year And that's, of course, to do with the underlying market rates going up compared with last year, around double then from 2% to 4%. So in total, a good result, 294 before tax compared with last year, 290. So that's the summary of the P&L. Going to the next slide. This is Peter mentioned this one and it was about that we are having the cost saving programs, which is we have established that we should save and gross savings of about 1 billion. And we are getting close to 300 million on that one. And until the end of 2004, we will have full effect of this program. So that more to come. next page is again talking about the completion and as you can see on the left side you have the completion 1035 which is the actual q4 and you see the completion coming the next quarter until q3 25 and later and we can see here is everybody can see that it's we have 430 coming the next quarter with a sales rate of around half of that and you can see how it's going to continue during the next coming quarters and then if we continue to the next slide that's this is the one illustrating the same but for the investor market and it's looked quite different as you can see all of it is sold to the investors so let's go continue And then we go into the business units and we start as always with the main market or the biggest market. It's Germany with the 55% of the total net sales. And here we can see that the number of recognized units is down compared with last year and subsequently also the net sales. But as also you can see, it's good or stable gross margin going up to 14.8% versus the 14.9% last year. Selling and expense is stable, while the operating profit is also stable with Q4 last year. And the operating margin is actually a little bit stronger. And one of the reasons we have this strong market was a project in Germany with a healthy margin that was recognized. Continue then with our next market. It's Sweden. As you see, the low volume, a little bit lower than last year. It's 300 compared to 78. And the net sales is then... 8.58, which is, yeah, it's compared with that one. And if you look on the gross margin, you have an extremely high gross margin improvement to 11.5 versus minus 4.9, which of course is, and the 4.9 last year is due to some one-off cost during that year. So if you compare, 11.5 is slightly the same gross margin. a little bit lower one one percent better this year actually also the selling and expense here is down which is as i said mentioned earlier is related to the fact that we have in this cost reduction program going on and the operating profit is 60 million versus 85 or the 80 sorry but of course that's also the 80 last year is is not as It's not as bad as 10.76. It's basically last year it was around 5% the operating margin or the EBIT margin. So let's move to the next business unit. That's Finland. And in Finland, we also have a little bit lower recognized volumes during the period, which actually reduced the net sales, but we have a stable and good gross margin and a stable and slightly lower selling expense. and good operating margin out from that. So we can see here that all efforts made last year to get a good grip of the Finnish business are now turning out in the figures. So we can see a nice improvement in the figures for Finland this year. And then next is then the final market, it's the Baltic. And in Baltic, we also have a little bit lower recognized units, as you can see. And subsequently, net sales is down. The gross margin is still on a healthy margin of 15.5. A little bit higher last year, 18.7, but still a good margin. and stable operating profit and we have these two major business to management projects was completed during the year and we also can see that the started units it's up quite significantly in the market or in the Baltic market this period. so that was the all the units and let's look on the balance sheet from the asset side and as you can see here from the q4 In 2022, the balance sheet is reduced from 6.5 billion to 19.5 billion, which of course has to do with the primary reason for this is divestment of the operation in St. Petersburg and divestment also in Norway. And of course, as you can see here, the ongoing housing project is also making the decrease of the balance sheet with this 6.5 billion. Going on to the next page, talking about the long-term financing package that Peter also mentioned. And today, at the year end, we have facilities of 2.7 billion. And you can see the composition here between RCF and bond and bilateral loans with banks. and per year end we have a utilization of around 5 billion and unutilized was then around 2.2 billion and in the days as mentioned also in the report we're having we're having discussions or we're having a we don't have a discussion we are agreement with the banks about a new package financing package coming back to that and Going forward to the cash flow, which is, as we have a strong cash flow, as you can see here from the cash flow before financing was 940 million compared with the last year, then we have a minus. And this is, of course, driven by strong cash flow from the operating activities, but also sale of St. Petersburg operation and the Norwegian operation. And... And on the next side, it's a net debt, basically. And here you can see, also corresponding to the asset side, you can see that the net debt is going down from the Q4 22 with around 2.3 billion, which is also related to the better cash flow coming from the activities or the operation and also from the divestment in St. Petersburg and Norway. Next one is the next one is actually the building right portfolio. And you can see that on the right side, you can see the building right portfolio, the value in the balance sheet. And you can see how it's distributed between the different units, Germany, Sweden, Finland and Baltics. and also on the on the lower part on the slide you can see that we have the number of building right which is quite similar or in the same region from q4 until q4 23. one small remark is the fact that we have 700 more billion rights in Sweden and that is after making a review here in Sweden of what we can do with our building right we were able to see or locate that we have or identify that we have could build 700 more units without any investment so that's increased the land back with this 700. And the next slide is about how we manage this portfolio. And if we look on the total bank then of the 28,000, we see and we estimate that we will start around 40% of the land back will be used for production during the next until 27. And of that is our estimation to have multifamily houses of 88% and single family houses of 12%. But with this said, of course, we are always adjusted the mixed, whatever is happening on the market. So we changed, if needed, we listen to the market and we change accordingly. Thank you, Peter. Over to you.