ANNUAL REPORT 2004 - Skanska

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Strategy for profitability Skanska’s strategy for achieving its operative and financial targets is to: • focus on the core business carried out by four business streams − Construction, Residential Project Development, Commercial Project Development and BOT, • be an international company with local businesses that have leading positions in selected home markets, • take advantage of the collective resources and strengths of the Group − brand, employees and financial strength, • foresee and manage risks in its construction business with the help of wellfunctioning risk management systems, • be an industry leader in technology as well as safety, ethics and the environment. Mission Skanska’s mission is to develop, build and maintain the physical environment for living, traveling and working. Vision Skanska shall be a world leader – the customer’s first choice – in construction-related services and project development. Goals Skanska’s overall goal is to generate customer and shareholder value. Projects are the core of Group operations and value is generated in well-implemented and profitable projects. Skanska will strive to be number 1 or 2, in terms of size and profitability, in the home markets of its construction business units. Skanska shall be the leading project developer in local markets and in selected product areas such as residential, office, retail and selected types of BOT projects. Construction − a complex business Construction differs from other industrial operations in a number of ways. Unlike industrial production at fixed plants, in construction most projects are unique. In principle, each project is implemented in a new location, in a new environment and with a unique design. Many projects are carried out for new customers. Market conditions also vary between both countries and regions. As a rule, construction projects are large. It is not unusual for them to be the customer’s biggest single investment. Another distinguishing feature of construction operations is the large number of local players involved in each project − public agencies, architects and pre-construction designers, financiers, various consultants, suppliers and subcontractors. This is why Skanska consists of local units in a global network. Construction and project development − Skanska’s core businesses Skanska operates in four business streams: • Construction handles the construction of non-residential and residential buildings, as well as civil construction projects, and is Skanska’s largest business stream. It performs construction assignments for external customers as well as Skanska’s other business streams. • Residential Project Development develops residential projects for immediate sale. Its homes are tailored for selected customer categories. • Commercial Project Development initiates, develops, leases and divests commercial real estate projects, with a focus on office space, shopping centers and logistics properties in Stockholm, Gothenburg, Öresund (Malmö and Copenhagen), Warsaw, Prague and Budapest. • BOT develops, invests and operates in privately financed infrastructure projects, for example roads, hospitals and power generation plants. 4 Strategy for profitability – Skanska Annual Report 2004
The units of the Skanska Group collaborate in their specialized roles − as project developers, investors and builders. In this way, the Group’s strategy can be maximized, both in terms of customer focus and of benefiting from the Group’s capital, employee resources and synergies. Collaboration creates leverage The units of the Skanska Group collaborate in their specialized roles − as project developers, investors and builders. In this way, the Group’s strategy can be maximized, both in terms of customer focus and the Group’s capital, employee resources and synergies. By being active in several roles in the development process, Skanska can minimize risks and improve both quality and financial results. This collaboration leverages both earning potential and the ability of the Group to satisfy the needs of its customers. Investment operations − development of commercial, residential and privately financed infrastructure projects − focus on some of the markets where the Company is engaged in construction work. In these projects, Skanska assumes a comprehensive responsibility, from concept and design to land purchase, construction, operation and finally divestment of the project. Skanska’s local construction companies are hired to build the projects. Construction and investment operations must each yield a good economic return. Selected home markets Skanska performs construction operations in nine selected home markets: Sweden, Norway, Denmark, Finland (and Estonia), Poland, the Czech Republic (and Slovakia), the United Kingdom, the United States and Latin America. A major Nordic residential developer Residential Project Development focuses on selected markets where Skanska has a permanent presence: Sweden, Finland (and Estonia), Norway and the Czech Republic plus St. Petersburg, Russia. Skanska is one of the largest residential developers in the Nordic countries. Operations focus primarily on small and medium-sized residential units in attractive locations. Developing commercial space Commercial Project Development focuses on six selected markets – the Swedish metropolitan regions of Stockholm and Gothenburg, the Öresund region (Malmö/ Copenhagen, Denmark) plus Budapest (Hungary), Prague (Czech Republic) and Warsaw (Poland) − that are expected to offer a continuous flow of tenants and investors, i.e. buyers of completed projects. The selected product area is commercial space – mainly office buildings, shopping centers and logistics centers. Public-private partnerships Skanska BOT identifies, develops and invests in privately financed infrastructure − such as roads, hospitals and power plants − which are built and operated as public-private partnerships. BOT operations focus on selected home markets and are carried out in collaboration with Skanska’s construction units. Size provides competitive advantages By being a market leader, Skanska is a natural first choice for the most demanding customers. Skanska’s position also provides access to the best suppliers, which can live up to Skanska’s promises to its customers regarding project dates and quality as well as safety and ethics. Skanska’s size gives it an advantage in the most complex assignments, where it utilizes its collective experience and know-how to meet the demands of customers. Only a few companies can compete for the type of project where, aside from price, comprehensive solutions and life-cycle costs are of crucial importance. Both a local and a global actor The Group’s operations are based on local business units, which have good knowledge of their respective markets, customers and suppliers. These local units are backed by Skanska’s brand, financial strength and Groupwide expertise. Skanska is thereby both a local construction company with global strength and an international builder with strong local roots. The organization is both decentralized and integrated. The global strength comes from: • The Skanska brand, built up over more than a century of working in many different countries. One important element of the brand is the Group’s Code of Skanska Annual Report 2004 – Strategy for profitability 5
Page 1 and 2: ANNUAL REPORT 2004
Page 3 and 4: The year in brief Nordic residentia
Page 5 and 6: Skanska’s four business streams C
Page 7: STRONG RESULTS IN PROJECT DEVELOPME
Page 11 and 12: Financial targets and their fulfill
Page 13 and 14: Non-residential building and civil
Page 15 and 16: Currently under construction in sub
Page 17 and 18: International energy companies are
Page 19 and 20: Skanska is one of the largest resid
Page 21 and 22: Botanica, a new residential area in
Page 23 and 24: Commercial Project Development is o
Page 25 and 26: Skanska Project Development - Book
Page 27 and 28: In Derby, construction is underway
Page 29 and 30: Sustainable development Our vision
Page 31 and 32: Employees It is the thousands of in
Page 33 and 34: Skanska’s Series B shares are als
Page 35 and 36: the Group’s core business will be
Page 37 and 38: Net sales and percentage outside Sw
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Page 41 and 42: employees. Of the members elected b
Page 43 and 44: Consolidated income statement Conti
Page 45 and 46: SEK M Note 2004 2003 SHAREHOLDERS
Page 47 and 48: Consolidated cash flow statement SE
Page 49 and 50: Parent Company balance sheet SEK M
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Note 3 Segment reporting The divisi
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Credit risk Credit and counterparty
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Note 42 Five-year Group financial s
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Note 43 Definitions Interest-bearin
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Auditors’ Report To the Annual Me
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Corporate governance Skanska AB is
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Annual Shareholders’ Meeting The
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Addresses Skanska AB SE-169 83 Soln
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Production: Skanska Investor Relati
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