Focus on Construction and Civil Engineering Operations
Total Page:16
File Type:pdf, Size:1020Kb
ANNUAL REPORT 2018 ANNUAL REPORT 2018 On behalf of AB Eidar, 177 rental apartments were finished during the year in the Mars block in Trollhättan. The block is Nordic Ecolabeled – the first multi-family dwellings in the city to receive the label. The project also included a parking garage and center functions, such as retailing, offices and restaurants. Contents About Serneke .....................................................2 2018 in brief .........................................................4 Development in business areas ...................6 CEO Statement ....................................................8 Objectives, strategy and values ...........12 Financial objectives .........................................13 Strategy for profitable growth ...................14 Business model ..................................................15 Platform for growth ......................................16 Value creation ...................................................18 Market ....................................................................20 Market forces ......................................................22 Sustainability.....................................................25 Governance and Framework.......................28 A safe working environment .......................29 A stimulating workplace ................................30 Financial objectives .........................................32 Major focus on ethics and anti-corruption .........................................34 Auditor’s opinion regarding the statutory sustainability report ..........34 Business areas ..................................................36 Business Area Construction ........................37 Business Area Civil Engineering ................38 Business Area Project Development ......42 Business Area Property Management.....46 The share ..............................................................48 Board of Director’s Report .......................50 Risks and risk management ........................53 Corporate governance ...................................56 Multi-year summary ....................................... 68 Financial definitions.........................................69 Financial reports ................................................72 Notes ........................................................................84 Auditor’s report ................................................111 Annual general meeting .............................115 The audited Annual Report of Serneke Group AB (publ), 556669-4153, consists of pages 50–110. The Annual Report is published in Swedish and English, and the Swedish is the original version. Sustainability priorities are integrated into the entire Annual Report. ABOUT SERNEKE Next generation construction group Serneke is an innovative construction group with a strong endeavor to belong and to add something new. For the customers, the community and the next generation. Serneke provides comprehensive services in construction and property development with the goal of being perceived as the most innovative, committed and dynamic company in the industry. Focus is on large and more challenging projects where Serneke’s competitive advantages make the biggest difference. Stable customers The customers consist of the state, municipalities and county councils, state and INCOME, SEK MILLION municipal property companies, as well as private property companies and industrial 6,516 and commercial companies. Four regions GROWTH 2018 Operations are focused on the three metropolitan areas of Gothenburg (Region West), Stockholm (Region East) and Malmö (Region South). In 2018, Region Central Sweden was also established with a focus on Örebro County, Värmland and Dalarna. The number of 16% employees at the end of 2018 amounted to 1,150. NUMBER OF EMPLOYEES Milestones 2018 Sale of Säve Airport to Castellum, acquisition of outstanding share of Karlastaden Holding AB, establishment of Region Central Sweden 1,150 2017 Detailed development plan for Karlastaden gains legal force 2016 Serneke’s share listed on Nasdaq Stockholm 2015 Inauguration of Prioritet Serneke Arena 2014 Establishment in Stockholm through acquisition of Värmdö Bygg 2012 Sales of SEK 1 billion reached 2011 Wins contract to construct Göteborgs Energi’s new office complex 2010 Opens office in Malmö 2008 Wins contract to construct Vattenfall’s office at Ringhals 2004 Group structure established 2002 Serneke founded SALES TREND 2003-2018 SEK MILLION 8,000 6,000 4,000 Between 2003 and 2018, Serneke’s income increased from SEK 14 million to approxi- 2,000 mately SEK 6.5 billion, which corresponds to an average 0 annual growth rate of approximately 50 percent. 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 2 ABOUT SERNEKE Focus on construction and civil engineering operations Serneke’s operations are conducted within the four business areas Construction, Civil Engineering, Project Development and Property Management. A high level of collaboration between the business areas enables both a strong customer offering as well as operational and financial synergies. Most of the income comes from the contracting operations business in the Construction and Civil Engineering business areas. CONSTRUCTION, 81% Business Area Construction pro- vides comprehensive services in the construction industry, ranging from major construction contracts to smaller maintenance and repair work. Focus is on larger projects, including the construction of homes, offices, schools, hospitals, sports facilities, shopping centers PERCENTAGE and industrial premises. OF SALES PROJECT DEVELOPMENT, 4% Business Area Project Development is responsible for the acquisition, devel- opment and sale of developable land and development rights, primarily for housing, offices and retail space. CIVIL ENGINEERING, 13% The Civil Engineering business area offers all kinds of services in the civil PROPERTY MANAGEMENT, 2% engineering sector. Focus is on excava- Business Area Property Management tion work, foundations, infrastructure, develops and manages properties for grids, power plants, port contracts, long-term capital appreciation. In close industrial projects and concrete con- collaboration with Business Area Project tracts. Customers mainly consist of Development, properties are acquired and municipalities, the Swedish Transport developed with good potential to increase Administration as well as customers in value. The management takes place in industry and property companies. in wholly owned companies or in The Business Area works with both cooperation with partners through the Group as its client and directly associated companies. with external customers. 3 THE YEAR IN BRIEF 2018 in brief Sale of outstanding interest in Geographic expansion Karlastaden Holding AB Serneke’s operations have to-date been INCOME, SEK MILLION During the year, Serneke acquired all of organized into three regions: South, West NREP’s shares in Karlastaden Holding AB and East, with a main focus in and around 6,516 for a purchase consideration of SEK 600 the three metropolitan areas of Malmö, million. The acquisition is made in light of Gothenburg and Stockholm. During the OPERATING PROFIT, the project entering a new phase with pro- year, a new region was established, Central SEK MILLION duction and continued development, which Sweden, with a focus on Örebro County, has entailed a greater need for simplified Värmland and Dalarna. management and faster decision pathways. 595 The acquisition makes it possible for Slightly subdued construction Serneke to continue to control and drive and civil engineering market OPERATING MARGIN, % the project forward and be responsible Activity in large parts of the Swedish con- for the completion. struction and civil engineering market remained high during 2018. The main driving 9.1 Divestment of Säve Airport forces included major infrastructure invest- ORDER BOOKINGS, During the year, Säve Airport was sold to ments and continued extensive construction SEK MILLION Castellum for a purchase consideration of housing, offices and civil engineering of SEK 1.1 billion. The transaction includes work. In some segments, mainly housing in a total of five adjacent properties, which the Stockholm region, a somewhat subdued 4,692 contain a larger number of buildings and development was seen compared with the around three million square meters of record number of construction and projects ORDER BACKLOG DECEMBER developable land. begun in the previous year. 31, 2018, SEK MILLION Large projects in the order backlog Impairments in construction projects The order backlog at year-end amounted to Impairment losses in two projects in the 6,382 SEK 6,382 million (7,965). At year-end, 30 Construction business area affected the INCREASED SALES AND percent of the value of Construction’s order consolidated operating profit by around IMPROVED EARNINGS backlog consisted of projects with an order SEK 70 million during the year. The impair- Consolidated income amounted value of more than SEK 300 million and more ments were made as a result of significant to SEK 6,516 million (5,605), an than 55 percent with an order value of more cost increases related to bankruptcies increase of 16 percent. Operating than SEK 100 million. 29 percent of Con- among subcontractors. The added costs profit amounted to SEK 595 mil- lion (419) and was impacted posi- struction’s customers and 27 percent of were mainly due to renovations and addi- tively by the sale of Säve Airport of Civil Engineering’s customers consisted of