Jm Annual Report 2001
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JM ANNUAL REPORT 2001 Cover: JM’s Uppsala Parkstad project includes the construction of multi- family dwellings with big windows, rendered facades and spacious balconies. Welcome to JM’s Annual General Meeting TIME AND PLACE JM’s 2002 Annual General Meeting will be held at 5 p.m. on Thursday, 18 April 2002 at JM’s head office, Telegrafgatan 4, Solna. NOTIFICATION, ETC. Shareholders who wish to participate in the meeting must be entered in the register of shareholders maintained by VPC AB by Monday, 8 April 2002, and must have informed the Company of their intention to participate by 4 p.m. on Monday, 15 April 2002, using one of the following channels: E-mail: [email protected] Fax: +46 8 782 8612 Telephone: +46 8 782 87 00 Mail: JM AB, SE-169 82 Stockholm Shareholders whose shares are registered in the name of a nominee must, in order to be entitled to participate in the Meeting, request that their shares be temporarily registered in their own name well in advance of 8 April 2002. DIVIDEND The Board of Directors proposes that a dividend be paid to shareholders of SEK 14 per share. The proposed record date is Tuesday, 23 April 2002. If the proposal is approved by the Meeting, dividends are expected to be distributed by VPC on Friday, 26 April 2002. FINANCIAL CALENDAR 18 April 2002: Annual General Meeting 18 April 2002: Interim Report for the period January–March 2002 15 August 2002: Interim Report for the period January–June 2002 17 October 2002: Interim Report for the period January–September 2002 February 2003: Year-End Report for 2002 Reports are available in both Swedish and English and can be ordered from JM AB, Corporate Communications, telephone +46 8 782 87 00, fax +46 8 782 86 10 or via www.jm.se JM AB (publ) has its registered office in Stockholm Company reg.no.556045-2103 CONTENTS –1 Contents 2 JM IN BRIEF 4 CEO’S COMMENTS 6 SHARE DATA 10 BUSINESS CONCEPT, GOALS AND STRATEGY 12 JM’S CORE BUSINESS 16 RESIDENTIAL PROPERTIES 22 COMMERCIAL PREMISES 30 OPPORTUNITIES AND RISKS 34 JM’S BUSINESS UNITS 40 FINANCE OPERATIONS 42 THE JM BRAND 44 ENVIRONMENT 50 HUMAN RESOURCES 52 THE WORK OF THE BOARD 54 BOARD OF DIRECTORS’ REPORT 59 INCOME STATEMENT 60 BALANCE SHEET 62 CASH FLOW STATEMENT 64 ACCOUNTING AND VALUATION PRINCIPLES 66 NOTES TO THE FINANCIAL STATEMENTS 79 PROPOSED DISPOSITION OF EARNINGS 80 AUDITORS’ REPORT 81 QUARTERLY OVERVIEW 82 SIX-YEAR SUMMARY 86 BOARD OF DIRECTORS 88 SENIOR EXECUTIVES 91 JM’S PROPERTIES 98 DEFINITIONS 100 TABLES, ILLUSTRATIONS AND DIAGRAMS JM ANNUAL REPORT 2001 2–JM IN BRIEF JM in brief • Profit after financial items rose 35% to SEK 1,629m (1,209). • Return on equity was 30% (24) and earnings per share increased 43% to SEK 36 (25). • Profit in project development increased by 50% to SEK 957m (637) and the margin improved to 11.8% (10.3). • Property sales of SEK 4,074m (2,213) generated capital gains of SEK 928m (535). • Shares were repurchased for SEK 841m. • The Board proposes that the dividend be raised from SEK 10 to SEK 14 per share. EARNINGS AND DIVIDEND PER SHARE NET SALES AND PROFIT AFTER TAX SEK SEKm SEKm 40 12,000 1,200 35 10,000 1,000 30 8,000 800 25 20 6,000 600 15 4,000 400 10 2,000 200 5 0 0 0 1997 1998 1999 2000 2001 1997 1998 1999 2000 2001 Earnings per share, SEK Net sales, SEKm Dividend per share, SEK Profit after tax, SEKm 2001 dividend as proposed by the Board. 1997 1998 1999 2000 200I • Major property sales • Establishment in Norway. • Operations focused to • Property portfolio in • Continued successful enable increased • Property portfolio in project development. Gothenburg liquidated. project development. investment in projects. southern Sweden sold. • Establishment in Denmark. • Growth-oriented • Continued major prop- • Investments in major • New financial targets and operating targets. erty sales. housing projects. change of name to JM AB. • Principal owner Skanska • Major share buy-back. • Convertibles made avail- sells its shareholding. • Stock options to able to employees. employees. JM AB is a public limited company listed on the Stockholm Stock Exchange. JM has around 2,600 employees in Sweden, Norway,Denmark and Belgium and sales in 2001 amounted to approximately SEK 9 billion.The company is Sweden’s leading housing developer,and the core business is project development of residential and commercial properties in central areas of growth markets. JM’s operations are characterised by a focus on quality and the environment. JM ANNUAL REPORT 2001 JM IN BRIEF –3 Project development Residential Commercial Fully developed management properties • Building rights portfolio – 27,000 building • Building rights portfolio – 200,000 sq.m. • Target – properties with a book value of SEK rights. • Production starts – adjusted to the business 2 billion. • Target – production starts of at least 4,500 climate. • Support for project development – can be homes per year. used for exchange deals. THE GROUP’S PROJECT DEVELOPMENT SEKm % 1,000 15 900 13 800 700 11 600 500 9 400 7 300 200 5 100 0 3 1 2 3 4 1 2 3 4 1 2 3 4 1999 2000 2001 Profit per quarter, SEKm 12-month rolling profit, SEKm 12-month rolling margin, % GEOGRAPHIC BREAKDOWN OF NET SALES Stockholm, 60% Rest of Sweden, 23% Sweden Norway Belgium, Denmark,Norway, 17 % Denmark Belgium Phase one of Nåntuna Villastad in Uppsala comprises some 20 functionalist- inspired detached freehold homes. JM ANNUAL REPORT 2001 4–CEO’S COMMENTS “Another successful year – continued favourable conditions for JM’s project development” JM has enjoyed strong development in recent years and the have only just started. One of our goals is that every cus- past year was no exception. A large part of this positive tomer and every project should be a good reference. For profit trend stems from the strategy that we initiated this to happen our entire organisation must be permeated about three years ago. JM has been gradually changed by even more customer and market oriented activities. from a traditional construction and property company into Quality, environment and ethics are our watchwords and a pure-play project developer of homes and commercial we want this, our image, to be even stronger. JM’s own premises. We have managed to achieve a substantial earn- sales team provides vital market feedback and we are ings improvement by focusing on cash flow and the income therefore opening a homes shop on Stureplan in central statement instead of on net asset value and the balance Stockholm. The aim is to allow customers to influence the sheet. design of their homes as much as possible as early as possi- Demand for JM’s housing remained stable in 2001. ble. Despite a weaker economic climate and greater uncer- JM works with various operational management proj- tainty in the business environment, prices could be kept at ects designed to persuade the entire organisation to think unchanged favourable levels. We sold more homes in 2001 and act in terms of greater customer satisfaction. than ever before. We were also able to improve the margins We will continue to streamline our organisation and in our project development and this, combined with a high adapt it still further to our role as project developer. Activ- sales rate for management properties, contributed to the ities which are not part of the core business, or do not sup- strong result. port it, will be phased out. At the same time, it is extremely Through consistent streamlining we further secured important that we have good control of both quality and and strengthened our position as a project developer dur- our costs. By keeping certain relevant operations within the ing the year. Success in project development requires the Group we can exercise control and retain competence and consolidated balance sheet to be utilised as effectively as knowledge. We apply the best practice principle as part of possible, and from a stock market perspective effective use our efforts to be efficient in everything we do. of capital is particularly important. The dynamics of proj- ect development demand a clear focus on cash flows. We CONTINUED GOOD DEMAND have therefore continued to reduce our property portfolio JM concentrates its activities to cities and locations where and sold fully developed management properties for SEK 4 demographic growth and demand for high-standard homes billion during the year. At year-end the book value of the are greatest. Today these areas are Greater Stockholm, fully developed portfolio was SEK 3.7 billion. The goal is a Gothenburg, Malmö/Lund and Uppsala in Sweden, as well portfolio with a book value of approximately SEK 2 billion, as Oslo, Copenhagen and Brussels outside Sweden. Reloca- which can be used in exchange deals. tion and demand for attractive homes in these city centres The property sales and the good result from project are substantial, while housing starts are low. This means development enabled JM to transfer capital to its share- that demand for JM’s homes, with their high standard in holders. During the year a total of SEK 1,173m was trans- attractive locations, is high and will probably remain so in ferred to shareholders through buy-backs and dividends. the foreseeable future. A dividend of SEK 14 per share is proposed for 2001. We also noted some price increases in our international The Board will also ask the Annual General Meeting for markets during the year. In our view, the greatest threat a renewed mandate to repurchase shares.