Administration Report 2017 CONTENT
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LOREM IPSUM Administration Report 2017 CONTENT Content Aministration Report Operations for the year 3 Financial results for the year 8 Five-year summary, Group 10 Definitions 11 Risk and sensitivity analysis 12 Proposed allocation of unappropriated earnings and Outlook for 2018 15 Corporate governance 16 Financial reports and notes Consolidated Statement of Comprehensive Income 20 Consolidated statement of Financial Position 21 Consolidated Statement of Changes in Equity 23 Consolidated Statement of Cash Flows 24 Income Statements and Statement of Comprehensive Income, Parent Company 25 Balance Sheets, Parent Company 26 Changes in Equity, Parent Company 28 Cash Flow Statements, Parent Company 29 Notes 30 Auditor’s Report 60 Lay Auditors’ Report for 2017 63 FRAMTIDEN 2 CONTENT OPERATIONS FOR THE YEAR The Board of Directors and CEO of Förvaltnings AB Framtiden, Administration Report 556012-6012, hereby present the Annual Report and Consoli- dated Financial Statements for the 2017 financial year. Operations for the year Ownership Control Förvaltnings AB Framtiden is wholly owned by The work of the Framtiden Group is governed by Göteborgs Stadshus AB, registration number objectives and a number of areas have been 556537-0888, which is in turn owned by the defined that describe our role in the construction City of Gothenburg. Göteborgs Stadshus AB of the sustainable city. In the short term and owns all the City’s companies, directly or long term, we will achieve good and better indirectly. Within Göteborgs Stadshus AB, the results within areas such as living environment, companies are arranged into different areas working conditions, housing range, environmental according to operating focus, including impact, a cohesive Gothenburg and finances. residential and non-residential properties. Group metrics established using the owner’s Förvaltnings AB Framtiden is the parent objectives as a starting point are followed up on company for the housing group. In addition to an ongoing basis at scheduled reconciliation the four public housing companies, the Group meetings with subsidiaries, and are reported in also owns companies specialising in building the Group system. A report is presented to the homes for rent and sole ownership, as well as City Authority. the provision of disruption services. It is the opinion of the Board of Directors and the CEO that operations are being run in line Operations with the municipal authority’s reason for owning The Framtiden Group works to reinforce the role the Company and that the Company has of Gothenburg as a regional centre and the complied with the principles set forth in the development of the city in general. This takes Articles of Association. place through the construction of new homes, the renovation and development of existing Market areas, and a good level of maintenance of Finance market properties and facilities. There is also extensive The global economy developed positively during development work, particularly in the suburbs. 2017 and the stock markets rose to new record The operational focus is laid down in the levels. Concern during the year about major Ownership Charter for the Parent Company. The political events with a number of elections in aims and focal areas adopted by Gothenburg Europe, alongside the geopolitical concern in City Council also form the basis for the Group’s North Korea, the Middle East and other regions, joint objectives and plans. had a marginal impact on the financial markets. During the year, work continued to increase This resulted in the central banks pursuing a the rate of new production within Framtiden slightly less expansive monetary policy. Despite Byggutveckling AB, and continuing the work on a strong global economy, inflation remained low, joint processes. which had a dampening effect on interest rates. Key rate, three-month interest rate and five-month interest rate 2007–2017, % 6 5 4 3 2 1 0 -1 31.12.2007 31.12.2008 31.12.2009 31.12.2010 31.12.2011 31.12.2012 31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 Five-year interest rate Three-month interest rate Key rate 2007-12-312008-01-312008-02-292008-03-312008-04-302008-05-312008-06-302008-07-312008-08-312008-09-302008-10-312008-11-302008-12-312009-01-312009-02-282009-03-312009-04-302009-05-312009-06-302009-07-312009-08-312009-09-302009-10-312009-11-302009-12-312010-01-312010-02-282010-03-312010-04-302010-05-312010-06-302010-07-312010-08-312010-09-302010-10-312010-11-302010-12-312011-01-312011-02-282011-03-312011-04-302011-05-312011-06-302011-07-312011-08-312011-09-302011-10-312011-11-302011-12-312012-01-312012-02-292012-03-312012-04-302012-05-312012-06-302012-07-312012-08-312012-09-302012-10-312012-11-302012-12-312013-01-312013-02-282013-03-312013-04-302013-05-312013-06-302013-07-312013-08-312013-09-302013-10-312013-11-302013-12-312014-01-312014-02-282014-03-312014-04-302014-05-312014-06-302014-07-312014-08-312014-09-302014-10-312014-11-302014-12-312015-01-312015-02-282015-03-312015-04-302015-05-312015-06-302015-07-312015-08-312015-09-302015-10-312015-11-302015-12-312016-01-312016-02-282016-03-312016-04-302016-05-312016-06-302016-07-312016-08-312016-09-302016-10-312016-11-302016-12-312017-01-312017-02-282017-03-312017-04-302017-05-312017-06-302017-07-312017-08-312017-09-302017-10-312017-11-302017-12-31 3 ADMINISTRATION REPORT 2017 OPERATIONS FOR THE YEAR In the USA, growth during the autumn gathered the year was in the housing and office segments momentum after a weak start during the first and public-sector properties. half of the year and there was a fall in unemploy- Property investment in recent years has ment. The US central bank, the Federal Reserve, generated a higher yield compared with other raised the key rate three times during 2017, asset categories. Interest in housing continues following a stable period of economic growth to be high and according to NAI Svefa, the and a strong labour market, even if inflation investors are listed property companies, as well remained low. The Eurozone economy also as institutional investors and pension funds. The developed well, with an improved labour market. vendors include municipal-owned housing The European Central bank, the ECB, continued companies. The proportion of the total to pursue an expansive monetary policy with a transaction volume attributable to the zero rate of interest and a major bond support Gothenburg market was around 8 per cent. purchase programme, Based on completed transactions in 2017 The Swedish economy also developed involving housing properties in Gothenburg, the positively during the year, with growth driven view held by the market regarding yield mainly by increasing housing investment and requirements reveals a span of 1.5-4.0 per cent. domestic consumption. During the autumn, The high level of demand and low availability however, the housing market lost momentum of residential properties in Gothenburg has despite several years of rapidly rising house continued to push up prices. Due to growth on prices, and as a result the prospects for housing the property market, the Group’s yield investment declined. The labour market was the requirements have been reduced for homes in strongest in Europe, with the highest level of all locations by 0.05-0.35 per cent. employment in over 20 years. Demand for homes in Gothenburg has During the year, the krona fell against the continued to be high. More than 218,000 people euro, closing the year at 9.85 kronor, although it were registered as applicants on the Boplats site strengthened against the dollar, closing the year at the end of 2017. However, the housing market at 8.20 kronor. The weak krona boosted Swedish slowed down during the autumn after several export industry This was good for the years of rapidly rising housing prices. During the Gothenburg region, as it is highly dependent on year, the price increase for cooperative-owned exports, with the Eurozone and the USA among homes and detached single-family dwellings in its largest markets. Greater Gothenburg was 6 per cent and 4 per The Swedish Central Bank kept the key rate cent law respectively compared with 12 per cent at the same level – 0.50 per cent – throughout and 11 per cent respectively in 2016. the year, despite a more stable level of inflation around the two per cent target, coupled with a Properties weak krona and a strong economy. The three- Property holdings total 4.9 million square month interest rate was negative throughout metres, of which 4.6 million square metres are the year, whilst the more long-term interest residential, and 0.3 million square metres are rates rose as risk propensity increased on the non-residential. There are 72,466 apartments, market, driven by growth in the global economy. of which just over half are in Angered, Majorna- The three-month interest rate varied from Linné, City Centre, Kortedala (part of East around -0.3 per cent at the beginning the year to Gothenburg) and Högsbo (part of Askim-Frölunda- around -0.5 per cent during the latter half of the Högsbo). The majority of apartments are in what year, which had a positive impact on loans with a the market classes as B-locations. Nine out of short fixed interest term. The five-year interest ten apartments comprise one, two or three rate rose by around 0.25 percentage points rooms plus a kitchen. The average apartment in during the year, and stood at 0.5 per cent at the the Group is 63 square metres in size with an year-end.