NCC Annual Report 2020
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Annual Report 2020 Our core is construction Annual Report 2020 INTRODUCTION THIS IS NCC Our core is construction Each construction process and project has its own unique conditions. By utilizing the company’s collective experiences, our employees can guide customers through a process while maintaining good control over schedules and budgets, right up to the end result, which is positive for all stakeholders. NCC is a knowledge-based company whose core is the ability to manage the complexity of a construction process. Our operations comprise commercial property development, construction and infrastructure projects, and production of asphalt and stone materials. We need to be experts in the various aspects of the process, but we must also have the ability to get them to work together. NCC is currently pursuing development initia- tives in the areas of skills development, digitization and an increased utilization of expertise and data from all parts of the company. CONTENTS Introduction Multi-year review ......................................................... 74 About the report NCC’s Annual Report on 2020 is submitted This is NCC ................................................................................ 1 Quarterly data ............................................................... 77 by the Board and the President of NCC AB Review by the President ........................................... 2 Definitions/glossary ................................................. 78 (publ). The statutory annual accounts are presented on pp. 10–69 and have been Strategy ........................................................................................ 4 audited by NCC’s external auditor. The Climate and Energy ...................................................... 6 Sustainability report Sustainability Report is presented on pp. 6–9 and 80–97 and has been prepared in Employees ................................................................................. 8 Sustainability strategy .......................................... 80 accordance with Chapter 6 of the Swedish Annual Accounts Act. NCC reports accord- Sustainability governance .............................. 83 ing to GRI Standards, Core level. Financial report Focus areas ......................................................................... 84 Cover photo: Våghuset – a sustainable Report of the Board of Directors .............. 10 Stakeholder dialogue & part of Gothenburg materiality analysis .................................................. 93 At Masthuggskajen in Gothenburg, NCC is Business areas .................................................................... 12 developing and building two offices, one GRI index ................................................................................ 95 Appropriation of profits .......................................... 20 of which is Våghuset. The building will be certified at the BREEAM Excellent level. This ................................................................................................... Risk 21 is the second highest level, which requires Corporate governance Consolidated income statement .............. 24 a major focus on choices of materials, use Corporate Governance Report ................. 98 of natural light, air quality, etc. The façade Consolidated balance sheet ......................... 25 will have a spectacular wave-shaped form. Internal control .............................................................. 102 In the photo, heights are being measured Parent Company income statement .... 27 for the attachment of façade elements. Board of Directors and auditors ............... 104 Parent Company balance sheet ............... 28 A curved glass façade of such a magnitude Senior Management Team ............................. 106 is unusual and demands great precision. Changes in shareholders’ equity ........... 29 Safety is always the first priority and fall Cash-flow statements ............................................. 30 protection and cordons are in place, as is Financial information/contacts ............. 108 the requisite personal safety equipment. Notes ............................................................................................ 32 Auditors’ Report ............................................................ 70 INTRODUCTION 1 THIS IS NCC Building for the future NCC is one of the leading construction companies in the Nordics. Based on its expertise in managing complex construction processes, NCC contributes to a positive impact of construction for its customers and society. Operations include commercial property development, building and infrastructure project contracting, and asphalt and stone materials production. In 2020, NCC had sales of SEK 54 billion, and 14,500 employees. CONSTRUCTION AND CIVIL INDUSTRY DEVELOPMENT ENGINEERING NCC Infrastructure NCC Industry NCC Property Development Builds infrastructure for travel, trans- Offers products and services for construc- Develops, lets and sells commercial and portation, energy and water in Sweden, tion and infrastructure projects in Sweden, community service properties in growth Norway and Denmark. Operations com- Norway, Denmark and Finland. Operations markets in the Nordic region. Operations prise projects of all sizes and encompass comprise production of stone materials are characterized by close cooperation solutions ranging from roads, railways, and asphalt products. These components with the customers to create flexible, bridges and tunnels to water and sewage form a natural supply chain that is well customized and sustainable workplaces. treatment, and hydropower and wind power. integrated into NCC’s construction and The business area undertakes earth and civil engineering operations. groundwork and foundation engineering assignments for all types of buildings. NCC Building Sweden FINANCIAL TARGETS Builds and renovates sustainable housing, offices, healthcare buildings, schools, AND OUTCOMES sports facilities and public buildings for public and private customers in Sweden. With advanced skills in sustainability, Operating margin: ≥4% 51,199 Orders received (SEK M) digitalization and partnering, NCC Build- Outcome 2020: 2.5% ing Sweden develops projects jointly with customers from the early stages. Annual return on equity after tax: ≥20% 53,922 Outcome 2020: 37% Net sales (SEK M) NCC Building Nordics Builds and renovates sustainable housing, Corporate net debt: <2.5 times EBITDA offices, healthcare buildings, schools, Outcome 2020: –0.03 x EBITDA 1, 360 sports facilities and public buildings for Dividend policy: ≥40% of after-tax Operating profit (SEK M) public and private customers in Denmark, profit is to be distributed to shareholders Finland and Norway. Renovation of 1) existing housing and offices has become Outcome 2020: 43% an increasingly important part of the 1) According to the Board of Directors’ motion 11. 6 8 to the 2021 AGM Earnings per share (SEK) operations in recent years. 2 INTRODUCTION REVIEW BY THE PRESIDENT Focus on our core competency The coronavirus pandemic defined 2020. For NCC, however, it was not only the pandemic that characterized the year. Our operations functioned well despite the limitations that existed and the actions we have taken to be able to work safely. In 2020, we improved our profitability and implemented the measures we had planned in order to create increased stability in the company. We also devoted time and focus to the company’s long-term development. During the year, following an extensive process involving many employees, we completed work on a new strategic direction and started work on introducing a Group-wide operational model. Performance during the year need to establish a clear, sustainable and consistent platform in In autumn 2018, we established a new plan with three phases. order to capitalize on being a large company with a broad profile. The first was to stabilize the company through better controls We have done that now. and clearer processes. We have achieved this. The second phase One key insight is that the change we want to achieve requires was to initiate a stable and sustainable profitability improvement. widespread commitment and a shared culture in the company. We are currently in this phase. In 2020, the Group’s operating Accordingly, we have launched a process to place the focus on profit improved 5 percent to SEK 1,360 M, equal to an operating culture and corporate values. We plan to implement Group- margin of 2.5 percent. Operating profit increased in four of the wide exercises and training in behavior and values for all NCC five business areas. In the fifth, the Industry business area, we employees in 2021. I am pleased that our annual employee survey have formulated a plan for improving earnings, which entails a shows rising commitment, and we intend to build on this trend. new organization and new ways of working. Costs for this change NCC aims to be the best employer in the industry for all who are were charged against the business area in 2020, but we expect to attracted by the complexity of a construction process. For this note positive results as early as 2021. reason, one of our strategic initiatives entails training, in such Orders received during the year declined slightly. It is normal areas as project management and leadership. Employee commit- that orders received show variations. We assess the underlying ment is decisive in a knowledge-based company. market as being favorable. The year is also influenced by how We have also