ANNUAL REPORT 2004 - Skanska

Divestments of a number of properties
and the completion of a BOT project meant
that eliminations of internal profits carried
out earlier in construction operations
were dissolved, yielding positive income
of SEK 45 M (–65).
Discontinuing operations showed an
operating income of SEK 768 M (169).
Operating income includes SEK 1,378 M
in capital gains from divestments of businesses.
Operating income also includes
65 percent of the writedown on a large
loss-making project in the U.K.
Income after financial items
Net financial items totaled SEK –34 M
(– 460). As a consequence of lower average
debt, net interest items improved from SEK
–393 M to SEK – 48 M. During the year,
Skanska also capitalized SEK 39 M (84) in
interest on project development for its own
account. Other financial items amounted
to SEK 14 M (–67) and included currency
hedging and currency exchange loss expenses
as well as the gain on the liquidation of an
aircraft leasing company.
Net profit for the year
After subtracting the year’s tax expenses of
SEK 1,158 M (1,303) and minority interests
of SEK –13 M (–8), net profit for the year
amounted to SEK 2,648 M (2,761). The
effective tax rate amounted to 30 percent,
which is somewhat lower than the aggregate
statutory tax rate for the Group. Among the
reasons for this were losses in U.S. operations
as well as certain divestments of properties
and businesses with low taxation or
none at all.
Earnings per share totaled SEK 6.33
(6.60).
Earnings per share
Contribution from each business stream
SEK 2004 2003
Construction 1.99 2.55
Residential Project Development 0.86 0.26
Commercial Project Development 2.49 4.64
BOT –0.01 –0.03
Central and eliminations –0.66 –0.93
Discontinuing operations 1.67 0.11
Earnings per share 6.33 6.60
SEK
14
12
10
8
6
4
2
0
Earnings per share
-2
-4 2000 2001 2002 2003 2004
14
12
10
8
6
4
2
0
-2
-4
Residential Project Development,
Commercial Project Development
and other commercial properties
Residential Project Development
At year-end, there were 6,800 (6,140) residential
units under construction. Of these,
5,060 (4,340) were pre-sold. The number of
unsold completed residential units was 299
(465). During the year, construction started
on 4,570 (4,230) units. During 2004 the
number of residential units sold was about
4,670 (4,700).
The book value of current-asset properties
in Residential Project Development
totaled SEK 3.3 billion (3.4). Of this, undeveloped
land and development properties
for housing construction totaled SEK 2.0
billion (2.0). This represented building
rights for about 16,200 residential units.
There were also more than 3,300 building
rights in associated companies.
Residential Project Development,
Commercial Project Development and
other commercial properties
Book value, SEK M 2004 2003
Commercial Project Development 7,256 9,249
Other commercial properties 1,272 1,051
Residential Project Development 3,268 3,394
11,796 13,694
Commercial Project Development
Commercial Project Development has four
projects underway, two of them in Sweden.
Ongoing projects represent leasable space of
about 39,000 sq. m (420,000 sq. ft.) and are
17 percent pre-leased. If the seven ongoing
projects sold during the year are included,
the pre-leasing rate was 86 percent, measured
in area.
At year-end, the book value of ongoing
projects amounted to SEK 0.2 billion (0.5).
Their book value upon completion is
expected to total SEK 0.6 billion, with an
estimated market value of SEK 0.7 billion.
The degree of completion in ongoing projects
was about 26 percent.
Expected yield, based on book value, was
estimated at 10 percent. Operating net for
completed commercial space amounted to
SEK 504 M (750), which was equivalent to
an operating net margin of about 62 (66)
percent.
Skanska’s estimate of the market value of
finished properties on December 31, 2004,
which was partially carried out in collaboration
with external appraisers, indicated a
market value of approximately SEK 6.6
billion (8.8), including partly owned properties.
The corresponding book value in
the consolidated financial statements was
SEK 4.4 billion (5.7).
The occupancy rate in terms of rent was
81 (87) percent.
Including properties that were reported
as completed on January 1, 2005, estimated
total market value amounted to some SEK
6.9 billion (9.4), with a corresponding book
value of SEK 4.6 billion (6.2).
The book value of Skanska’s undeveloped
land and development properties for
commercial construction totaled about
SEK 2.4 billion (2.6).
Other commercial properties
“Other commercial properties” are part
of the Construction business stream. Their
book value totaled SEK 1,272 M (1,051),
and gain on property divestments was
SEK 150 M (72).
Investments
The Group’s investments totaled SEK 6,765 M
(6,927) during the year, while divestments
totaled SEK 12,534 M (13,841). Net divestments
for the year thus amounted to SEK
5,769 M (6,914).
Investments/Divestments
SEK M 2004 2003
Operations − Investments
Intangible fixed assets –38 –51
Tangible fixed assets –1,131 –1,309
Assets in BOT operations –188 –115
Shares –6 15
Current-asset properties –5,266 –5,372
of which Residential
Project Development –3,665 –3,772
of which Commercial
Project Development –1,331 –1,219
of which other
commercial properties –270 –381
Investments –6,629 –6,832
Operations − Divestments
Intangible fixed assets 2 4
Tangible fixed assets 635 381
Assets in BOT operations 7 1
Shares 12 0
Current-asset properties 9,321 12,956
of which Residential
Project Development 4,143 4,581
of which Commercial
Project Development 4,645 7,571
of which other
commercial properties 533 804
Divestments 9,977 13,342
Net investments in operations 3,348 6,510
Strategic investments
Acquisitions of businesses –135 –90
Shares –1 –5
Strategic investments total –136 –95
Strategic divestments
Divestments of businesses 2,078 66
Shares 479 433
Strategic divestments 2,557 499
Net strategic divestments 2,421 404
Total divestments 5,769 6,914
34
Report of the Directors – Skanska Annual Report 2004