Annual Review 2010
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Review of 2010 – EUR version Contents Group overview 2010 in brief 2 Comments by the President and CEO 4 Mission, goals and strategy 6 Profitable Growth, 2011–2015 9 Segment reporting 10 Financial and qualitative targets 12 Risk management 14 New Karolinska Solna 16 Green Refurbishments 17 Employees 18 Share data 20 Business streams Construction 22 Residential Development 34 Commercial Property Development 42 Infrastructure Development 50 Sustainable development 60 Financial information Report of the Directors 69 Corporate governance report 76 Consolidated income statement 83 Consolidated statement of comprehensive income 84 Consolidated statement of financial position 85 Consolidated statement of changes in equity 87 Consolidated cash flow statement 88 Notes, table of contents 90 Statement by the President and Chief Executive Officer 157 Independent Auditors’ Report 158 Senior Executive Team 162 Board of Directors 164 Major events during 2010 166 Definitions and abbreviations 170 More information about Skanska 171 Addresses 172 Annual Shareholders’ Meeting 173 Investors 173 The financial statements presented in this Review have been prepared in EUR (euros) as the presentation currency. As the functional currency of the Parent Company is SEK (Swedish kronor), Skanska’s statutory Annual Report including the consolidated financial statements and the financial statements of the Parent Company has been prepared using Swedish kronor (SEK) as the presentation currency. For currency exchange rates, see page 140. Reporting of earnings, revenue and key ratios in the first part of the Review of 2010 (pages 1–68) complies with the segment reporting method described on page 10. The Skanska Group Senior Executive Team Skanska Financial Services Group Staff Units Construction Residential Development Commercial Property Development Infrastructure Development Skanska Sweden Skanska Residential Development Skanska Commercial Skanska Nordic Development Nordic Infrastructure Development Skanska Norway Skanska Finland Skanska Poland Skanska Resid. Development Poland Skanska Commercial Development Europe Skanska Czech Republic Skanska UK Skanska Resid. Development UK Skanska USA Building Skanska Commercial Development USA Skanska USA Civil Skanska Latin America Construction refers to building con- The Residential Development business Commercial Property Development Infrastructure Development develops, struction (both non-residential and stream initiates and develops residential initiates, develops, leases and divests manages and divests privately financed residential) and civil construction. It is projects for sale. Homes are designed commercial property projects, with infrastructure projects such as high- Skanska’s largest business stream. for selected customer categories. a focus on office buildings, shopping ways, hospitals, schools and power The Construction business stream Skanska, one of the leading residential malls and logistics properties. generating plants. operates through nine business units developers in the Nordic countries, The business stream operates in The business stream focuses on in selected home markets − Sweden, also has a sizeable presence in the markets where Skanska has construc- creating new potential for projects in Norway, Finland, Estonia, Poland, the Czech Republic and Slovakia. tion business units in the Nordic markets where Skanska has construc- Czech Republic and Slovakia, the The business stream operates in countries, Central Europe and the tion business units. It works through United Kingdom, the United States and Sweden, Norway, Finland and Estonia, United States, as well as in Denmark the Skanska Infrastructure Develop- Latin America. In addition, there is a the Czech Republic and Slovakia. Resi- and Hungary. ment business unit. pan-Nordic business unit for construc- dential Development business units are tion-related industrial production. now also being started in the United Kingdom and Poland. Revenue EUR 11,854 M Revenue EUR 794 M Revenue EUR 487 M Revenue EUR 33 M USD 15,707 M USD 1,052 M USD 645 M USD 44 M SEK 113,213 M SEK 7,581 M SEK 4,648 M SEK 319 M Share of Group 90% Share of Group 6% Share of Group 4% Share of Group 0% Operating income EUR 459 M Operating income EUR 59 M Operating income EUR 96 M Operating income EUR 31 M USD 609 M USD 78 M USD 128 M USD 41 M SEK 4,388 M SEK 559 M SEK 920 M SEK 297 M Share of Group 71% Share of Group 9% Share of Group 15% Share of Group 5% About Skanska Sweden 23% Business streams: Construction, Residential Development, 41 Commercial Property Development, Infrastructure Development Project: Page Gårda, Gothenburg 13, 44 New Karolinska Solna 16, 54 Norra Länken, Stockholm 24, 65 Skanska is one of the world’s leading Bromma Blocks, Stockholm 25 Hallandsås (Halland Ridge) 26 project development and construction Lomma Hamn, Lomma 37 BoKlok Radhus, Linköping 38 groups, with expertise in construction, Passive houses, Ellös, Orust 39 development of commercial properties Ullstorps Gårdar, Gothenburg 41 Universitetsholmen, Malmö 48–49 and residential projects as well as public- Blå Jungfrun, Stockholm 64 private partnerships. Based on the Illustration Group’s global environmental know-how, 16 Skanska aims to be a leader in the develop- ment and construction of green projects. The Group currently has 52,000 employees Other Nordic countries 16% in selected home markets in Europe, the U.S. and Latin America. Skanska’s revenue Norway, Finland, Estonia, Denmark in 2010 totaled EUR 13 billion. 27 Business streams: Construction, Residential Development, Commercial Property Development, Key ratios – segment reporting Infrastructure Development EUR M USD M SEK M Project: Page Revenue 12,738 3 16,879 3 121,663 Bjørvika Tunnel, Oslo 24 Operating income 559 3 741 3 5,339 Sandøyna, Brandangersundet 27 Income after financial items 555 3 736 3 5,304 Pilestredet Park, Oslo 34 Earnings for the period per share, Fjordspeilet, Stavanger 37 EUR/USD/SEK 1 1.00 1.32 9.54 Leppävaara Tower, Espoo 38 Return on equity, % 21.0 20.9 21.1 38 Order bookings 2 13,761 3 18,234 3 131,433 Order backlog 2 16,318 4 21,619 4 147,077 1 Earnings for the period attributable to equity holders divided by the average number of shares outstanding after repurchases 2 Refers to Construction operations 3 Average 2010 exchange rates: EUR 1 = SEK 9.55, USD 1 = SEK 7.21 4 Exchange rates on 2010 balance sheet day: EUR 1 = SEK 9.01, USD 1 = SEK 6.80 Other European countries 28% Norway Poland, Czech Republic, Slovakia, Finland 50 United Kingdom, Hungary Estonia Business streams: United Kingdom Construction, Residential Development, Sweden Geografisk fördelning av intäkter Denmark Commercial Property Development, United States Poland Infrastructure Development • Sverige, 23%Czech Republic Slovakia Övriga Norden, 16% Project: Page • Hungary • Övriga Europa, 28% A1, Gdansk, Poland 7 • USA, 28% Dashwood House, London, U.K. 17 Latin• AmericaLatinamerika, 5% Expressway, Biecz, Poland 24 Ring road, Prague, Czech Republic 28 Heron Tower, London, U.K. 28 Botanica neighborhood, Prague, 28 Czech Republic 40 Deloitte House, Warsaw, Poland 42 City Green Court, Prague, Czech Republic 45 Surrey Street Lighting, U.K. 50 Revenue by geographic areas M25 Orbital Motorway, London, U.K. 56 Barts and the London Hospitals, London, U.K. 57 • Sweden, 23% Grunwaldzki Center, Wrocław, Poland 64 • Other Nordic countries, 16% • Other European countries, 28% • United States, 28% • Latin America, 5% United States 28% Business streams: Construction, Commercial Property Development 22 Project: Page Manhattan Bridge, New York City 22 Tampa Museum of Art, Florida 28 New Meadowlands Stadium, New Jersey 30–31 Alaskan Highway Viaduct, Seattle 32–33 Solar panels, Skanska Koch, Carteret, NJ 62 733 10th Street, Washington, D.C. 65 Skanska’s business plan for 2011–2015 Solar panels, Cortez, Colorado 68 focuses on profitable growth. After 30 several years of successful consolidation, the Group has a stable base for growth in its four business streams. The Group’s strategy is to maintain a strong focus on profitability and capital efficiency, while growing in construction and project development. Skanska will step up the pace of reinvestments of cash flow from construction in order to grow its project development business streams. Financial targets Skanska’s target for annual return on equity during the period is 18–20 percent. Its dividend policy is to distribute 40–70 percent of net income. Latin America 5% Investments in project development − residential, commercial property and infrastructure development − Argentina, Brazil, Chile, Colombia, will increase, with a continued high asset turnover rate. Peru, Venezuela 58 Skanska’s target for its three investment business streams Business streams: combined is that their return on capital employed shall Construction and Infrastructure Development amount to 10–15 percent annually. Project: Page Petrochemical Complex, Rio de Janeiro, Brazil 29 Construction Autopista Central, Santiago, Chile 58–59 Construction operations shall increase in volume by capturing market share while maintaining good margins. 29 The targeted margin for the Construction business stream is being set at an average of 3.5–4 percent over an business cycle, which will place Skanska among the best in the construction industry. Residential Development Residential Development shall expand, aiming to become the leading residential developer in the Nordic countries, increase volume in the Czech Republic and Slovakia and also start operations in the United