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Bonava Annual Report 2019 This Is Bonava

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Bonava Annual Report 2019 This Is Bonava Annual Report 2019 Annual Report 2019 Contents OVERVIEW This is Bonava ......................................................................... 2 The year in brief ...................................................................... 4 Comments from the CEO ..................................................... 6 REPORT OF THE BOARD OF DIRECTORS Report of the Board of Directors .....................................12 Segments ................................................................................15 Risks and risk management ..............................................17 FINANCIAL REPORTING Consolidated accounts and notes ...................................20 Parent Company accounts and notes ............................52 Appropriation of profit ........................................................61 Audit Report ...........................................................................62 GOVERNANCE Corporate Governance Report .........................................66 Board of Directors ................................................................72 Executive Management Group .........................................74 Auditor’s limited assurance report ..................................76 SUSTAINABILITY Disclosures .............................................................................78 GRI index .................................................................................98 Auditor’s limited assurance report ............................... 103 OTHER INFORMATION Bonava in the capital market .......................................... 104 Definitions ........................................................................... 109 Annual General Meeting .................................................. 110 Read more about Bonava and the past year in the online version of our 2019 Annual Overview and at bonava.com. This is Bonava This is Bonava Bonava is a leading residential developer in Northern Europe that has been creating homes and neighbourhoods since the 1930s. Bonava has 2,300 co-workers and operates in Germany, Sweden, Finland, Denmark, Norway, St. Petersburg, Estonia and Latvia, with sales of SEK 15.5 billion in 2019. Bonava’s shares are listed on Nasdaq Stockholm. Our vision is to create happy neighbourhoods where people have the highest quality of life. Our mission is to challenge ourselves every day to change the housing game, creating better homes and lives for the many. SWEDEN SEK 3,861 M Net sales 25 % of net sales SEK 450 M Operating profit ST. PETERSBURG–BALTICS NORDIC SEK 1,252 M Net sales SEK 4,000 M Net sales 8 % of net sales 26 % of net sales SEK 194 M Operating profit SEK –23 M Operating profit* GERMANY SEK 6,361 M Net sales 41 % of net sales SEK 829 M Operating profit * Before items affecting comparability 2 Bonava Annual Report 2019 This is Bonava Bonava aims to be a residential developer in carefully selected markets that are characterised by strong under- lying demand and to hold a leading position in these mar- kets. The selection of markets is continuously assessed so that available capital can be allocated in order to optimise profitability and diversify the portfolio. The project port- folio should be diverse in terms of geography, forms of tenure and types of products. The strategic vision is based on the insight that the similarities between our markets are strong enough for us to benefit from acting as one company, with joint processes and systems. Bonava sells housing units to consumers (70 per cent) and investors (30 per cent), with a specific focus on and target for the affordable segment. Lowering costs while increasing productivity is essential for building homes that ordinary people can afford, while maintaining profit- ability. We achieve this by building up our own design and production capacity while investing in digital tools. This creates possibilities for enhancing efficiency in design, production and purchasing. The aim is to achieve a high degree of repetition in building engineering solu- tions and processes, and to benefit from economies of scale between our markets by coordinating purchasing. Read more in our 2019 Annual Overview/Strategic initiatives Bonava’s vision is to create happy neighbourhoods where people have the highest quality of life. Achieving our vision requires a genuine understanding of our customers’ needs and underlying drives. By systematically working through our existing offering from a target audience perspective, we ensure the relevancy and continual improvement of our customer offering. With these data-driven insights, we can continuously identify similarities between our markets and pinpoint synergies and economies of scale that are crucial to streamlining operations and increasing cost efficiency. This is what ultimately enables us to offer affordable and competitive housing units to our customers. In addition to local insights and monitoring the business environment, we develop shared measurements and tools that underpin Bonava’s insight-based work. Read more in our 2019 Annual Overview/Offering based on data-driven customer insights Bonava Annual Report 2019 3 The year in brief The year in brief Key performance indicators SEK M unless otherwise stated 2019 2018 2017 Net sales 15,474 14,008 14,479 Operating profit1) 1,202 1,654 1,946 Operating margin, %1) 7.8 11.8 13.4 Profit after financial items 834 1,513 1,721 Profit for the period after tax 615 1,265 1,402 Earnings per share adjusted for items affecting comparability, SEK2) 7.54 11.74 12.99 Earnings per share, SEK2) 5.71 11.74 12.99 Cash flow before financing –138 –764 –26 Net debt3) 6,873 5,542 4,165 Capital employed at end of period4) 14,933 13,332 12,003 Return on capital employed, %1) 8.1 12.8 16.6 Equity/assets ratio, % 32.1 34.9 33.7 Housing units sold during the period 5,162 6,009 5,702 Sale value of housing units sold 14,477 14,919 N/A Housing starts during the period 4,451 6,478 6,702 Housing units under construction at end of period 9,732 10,712 9,880 Sales rate for housing units in ongoing production, % 72 68 68 Value of housing units sold not yet recognised in profit, SEK Bn 21.1 21.1 N/A Number of housing units recognised in profit during the period 5,511 5,225 5,464 N/A = Not Applicable / Not Available 1) Excluding items affecting comparability. 2) Before and after dilution. 3) Net debt as of 31 December 2019 excluding effects of IFRS 16 Leases, was SEK 6,616 M. 4) Capital employed at period end 31 December 2019, excluding effects of IFRS 16 Leases, was SEK 14,679 M. Significant events • Bonava acquired Urbanium, a leading residential devel- oper in the Oslo region. With this acquisition, Bonava has returned to Oslo and strengthened its operations in Norway. • Bonava conducted a strategic review of the Finnish opera- tions in the autumn and, as a result, proposed a range of restructuring measures including leaving Oulu, a region that has shown a weak earnings trend over time. The total cost of SEK 159 M was recognised as an item affecting comparability in the fourth quarter of 2019. • Over 8,000 people in Bonava’s markets responded to the Happy Quest survey about what makes them happy about where they live. • Bonava adopted goals from the Science Based Target ini- tiative to reduce its climate impact by 2030 in line with the Paris Agreement’s goal of limiting global warming to 1.5°C. The goals cover both Bonava’s direct emissions in Scope 1 and 2, and its indirect carbon footprint in Scope 3. • During the year, Bonava reached a settlement with HDM, a former hotel developer, in a legal dispute originating from a construction contract completed in 2006. The total cost for Bonava of SEK 100 M including legal expenses was recognised as an item affecting comparability in the third quarter of 2019. • The largest branding campaign since the launch of the Bonava brand was conducted in all eight markets. The message was that a home is so much more than the square metres we occupy. 4 Bonava Annual Report 2019 The year in brief Financial targets Return on capital employed (%) Equity/assets ratio (%) Dividend policy (SEK) Target: 10–15% Target: >30% Target: at least 40 per cent of consolidated profit after tax should be distributed to shareholders % % SEK/share 20 40 6 35 33.7% 34.9% 40% 44% 16.6% 32.1% 5 15 30 4 12.8% 25 10 20 3 53% 8.1% 15 2 5 10 1 5 0 0 0 2017 2018 2019 2017 2018 2019 2017 2018 2019 Dividend in April Dividend in October Sustainability targets SCIENCE BASED TARGETS By 2020, 50 per cent of Bonava commits to reducing its Bonava’s housing starts Scope 1 and Scope 2 emis- 56% will be in the affordable 50% sions in line with the 1.5°C goal segment. by reducing its absolute emis- Outcome 2019 Absolute emissions sions by 50 per cent by 2030 compared with 2018. By 2020, 50 per cent of Bonava’s housing starts in Bonava also commits to reduc- 54% markets with Nordic Swan ing its carbon footprint over the eco-labelling or Green life cycle of a Bonava home by Outcome 2019 Zoom certification will be 50% halving the Group’s Scope 3 subject to environmental Emissions intensity emissions per started home certification or labelling. under construction by 2030 compared with 2018. compliance with this year’s “zero harm” 100% activities Read more about our sustainability initiatives on page 78. Bonava Annual Report 2019 5 Comments from the CEO “We have left 2019, which was in many ways a challenging year, behind us and entered 2020 with a strong financial position and favourable demand in the majority of our markets.” Joachim Hallengren, President and CEO
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