Annual Report 2008 - Skanska

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Note 14 Net financial items 2008 2007 Financial income Interest income 403 535 Net interest in pensions 101 92 Gain on distributions of shares 1 Gain on divestments of shares 1 1 Change in fair value 30 4 Net other financial items 14 536 646 Financial expenses Interest expenses –264 –226 Capitalized interest expenses 193 61 Change in fair value –15 –108 Net exchange rate differences –50 –43 Impairment losses –17 –11 Net other financial items –59 –58 –212 –385 Total 324 261 Disclosures on how large a portion of income and expenses in net financial items comes from financial instruments are presented in Note 6, “Financial instruments.” Net interest items In 2008, net interest items amounted to SEK 324 M (261) altogether. Net interest items declined by SEK 433 (462). Interest income declined to SEK 403 M (535), among other things because the volume of interest-bearing assets declined. Interest expenses including capitalized interest increased to SEK –264 M (–226). This is explained, among other things, by significantly rising interest rates on foreign currencies, especially in Latin America, where Skanska is a net borrower. During the year, Skanska capitalized interest expenses of SEK 193 M (61) in ongoing projects for its own account. Interest income was received at an average interest rate of 3.15 (3.63) percent. Interest expenses, excluding interest on pension liability, were paid at an average interest rate of 5.03 (3.73) percent. Net interest on pensions increased to SEK 101 M (92). The item consists of the estimate net amount on January 1 of interest on revenue and expenses on plan assets and pension liabilities related to defined-benefit pension plans. The Group had net interest items of SEK 33 M (6) that were recognized in the income statement. See “Accounting and valuation principles,” Note 1. Change in fair value Change in fair value amounted to SEK 15 M (–104). This was primarily related to positive interest rate differences in currency hedging of investments in Skanska’s development operations as well as currency hedging of equity mainly in USD and CZK. Note 16 Income taxes Income taxes are reported in compliance with IAS 12, “Income Taxes.” See “Accounting and valuation principles,” Note 1. Tax expenses 2008 2007 Current taxes –1,734 –1,363 Deferred tax benefits/expenses from change in temporary differences 6 –141 Deferred tax benefit from change in loss carry-forwards 533 9 Taxes in joint ventures –56 –49 Taxes in associated companies –2 –2 Total –1,253 –1,546 Tax items recognized directly in equity 2008 2007 Deferred taxes attributable to cash flow hedging 14 14 Deferred taxes attributable to pensions 735 –38 Total 749 –24 There was no deferred tax attributable to financial assets classified as held for sale. Income taxes paid in 2008 amounted to SEK –1,926 M (–1,197). Relation between taxes calculated at weighted average tax rate and taxes recognized The Group’s recognized taxes amounted to 28 (27) percent. The Group’s weighted nominal tax rate was estimated at 31 (29) percent. The average nominal tax rate in Skanska’s home markets in Europe amounted to about 25 (26) percent and in the United States about 40 (40) percent. The relation between taxes calculated according to an aggregation of nominal tax rates and recognized taxes of 28 (27) percent is explained in the table below. 2008 2007 Income after financial items 4,410 5,667 Tax according to aggregation of nominal tax rates, 31 (29) percent –1,367 –1,643 Tax effect of: Property divestments 185 121 Losses not offset by deferred tax assets –61 –10 Other items 1 –10 –14 Recognized tax expenses –1,253 –1,546 1 The tax rate in Sweden was changed from 28 percent to 26.3 percent effective from January 1, 2009. Deferred tax assets and deferred tax liabilities for Group companies in Sweden were adjusted to the new tax rate. The change in deferred taxes due to the change in tax rate resulted in a positive net tax effect of about SEK 60 M (0) and is included in “Other items.” Net other financial items These items amounted to SEK –59 M (–44) and mainly consisted of various financial fees. Note 15 Borrowing costs Borrowing costs related to investments that require a substantial period for completion are capitalized. See “Accounting and valuation principles,” Note 1. During 2008, borrowing costs were capitalized at an interest rate of about 4 percent. Interest capitalized during the year Total accumulated capitalized interest included in cost 2008 2007 2008 2007 Intangible assets 94 94 Current-asset properties 193 61 312 193 Total 193 61 406 287 102 Notes, including accounting and valuation principles Skanska Annual Report 2008
Note 16 Continued The net amount of deferred tax assets and deferred tax liabilities changed by SEK 1,323 M. The change was largely due to increased deferred tax assets from loss carry-forwards and increased deferred tax assets for pensions. Tax assets and tax liabilities 2008 2007 Tax assets 812 411 Tax liabilities 864 891 Net liability 52 480 Tax assets and tax liabilities refer to the difference between estimated income tax for the year and preliminary tax paid as well as income taxes for prior years that have not yet been settled. Deferred tax assets and deferred tax liabilities 2008 2007 Deferred tax assets according to the balance sheet 1,970 956 Deferred tax liabilities according to the balance sheet 1,760 2,069 Net deferred tax assets (+), deferred tax liabilities (–) 210 –1,113 2008 2007 Deferred tax assets for loss carry-forwards 599 73 Deferred tax assets for other assets 480 333 Deferred tax assets for provisions for pensions 853 441 Deferred tax assets for ongoing projects 272 197 Other deferred tax assets 1,268 1,040 Total before net accounting 3,472 2,084 Net accounting of offsettable deferred tax assets/liabilities –1,502 –1,128 Deferred tax assets according to the balance sheet 1,970 956 Deferred tax assets other than for loss carry-forwards refer to temporary differences between carrying amounts for tax purposes and carrying amounts recognized in the balance sheet. These differences arise, among other things, when the Group’s valuation principles diverge from those applied locally by a subsidiary. These deferred tax assets are mostly realized within five years. Deferred tax assets arise, for example, when a recognized depreciation/amortization/ impairment loss on assets becomes deductible for tax purposes only in a later period, when eliminating intra-Group profits, when the provisions for defined-benefit pensions differ between local rules and IAS 19, when the required provisions become taxdeductible in a later period and when advance payments to ongoing projects are taxed according to the cash principle. Deferred tax liabilities on other assets and other deferred tax liabilities refer to temporary differences between carrying amounts for tax purposes and carrying amounts in the balance sheet. These differences arise, among other things, when the Group’s valuation principles diverge from those applied locally by a Group company. These deferred tax liabilities are mostly realized within five years. For example, deferred tax liabilities arise when depreciation/amortization for tax purposes in the current period is larger than the required economic depreciation/amortization and when accrued profits in ongoing projects are taxed only when the project is completed. Temporary differences attributable to investments in Group companies, branches, associated companies and joint ventures for which deferred tax liabilities were not recognized totaled SEK 0 M (0). In Sweden and a number of other countries, divestments of holdings in limited companies are tax-exempt under certain circumstances. Temporary differences thus do not normally exist for shareholdings by the Group’s companies in these countries. 2008 2007 Deferred tax liabilities for shares and participations 294 309 Deferred tax liabilities for other non-current assets 320 389 Deferred tax liabilities for other current assets 501 333 Deferred tax liabilities for ongoing projects 1,385 1,265 Other deferred tax liabilities 762 901 Total before net accounting 3,262 3,197 Net accounting of offsettable deferred tax assets/liabilities –1,502 –1,128 Deferred tax liabilities according to the balance sheet 1,760 2,069 Change in net deferred tax assets (+), liabilities (–) 2008 2007 Net deferred tax liabilities, January 1 –1,113 –916 Recognized in equity 749 –24 Deferred tax expenses 539 –132 Deferred taxes, acquisitions of companies –13 Deferred taxes, divestments of companies –19 Exchange rate differences 35 –9 Net deferred tax assets/liabilities, December 31 210 –1,113 Temporary differences and loss carry-forwards that are not recognized as deferred tax assets Loss carry-forwards that expire within one year 52 2008 2007 Loss carry-forwards that expire in more than one year but within three years 37 188 Loss carry-forwards that expire in more than three years 2,059 2,024 Total 2,148 2,212 Skanska has loss carry-forwards in a number of different countries. In some of these countries, Skanska currently has no operations or limited ones. In certain countries, current earnings generation is at such a level that the likelihood that a loss carry-forward can be utilized is difficult to assess. There may also be limitations on the right to offset loss carry-forwards against income. In these cases, no deferred tax asset is reported for these loss carry-forwards. Skanska Annual Report 2008 Notes, including accounting and valuation principles 103
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Annual Report 2008
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Contents President and CEO “Our a
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“Our ambition is to be the leadin
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In the “Group overview” section
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Infrastructure Development Skanska
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New initiatives in 2008 Skanska too
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Risk management procedures Risk man
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Green construction is booming Green
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To facilitate recruitment work, a G
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• SIX Bygg- & Anläggningsrelater
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20 23 26 New railroad hub in Prague
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Project opportunities are also crea
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Water is one of the basic necessiti
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The United States The American cons
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Skanska Annual Report 2008 Construc
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30 32 33 A sedate, small-scale neig
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Product platforms In residential co
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Ullstorps Gårdar attracting famili
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36 39 40 First LEED building in the
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property investors. Land value also
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In Poland, vacancies fell to 2 perc
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Skanska Annual Report 2008 Commerci
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46 47 49 Stimulating school environ
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The availability model In the avail
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Public-private partnership projects
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A much-anticipated highway opened T
Page 53 and 54: 52 53 56 Safety training and awaren
Page 55 and 56: Posters promoting training and awar
Page 57 and 58: What a supplier says: ”As part of
Page 59 and 60: Report of the Directors Skanska Ann
Page 61 and 62: American (North and Latin America),
Page 63 and 64: Commercial Development had 18 proje
Page 65 and 66: Return on equity and return on capi
Page 67 and 68: Skanska’s first Global Trainee Pr
Page 69 and 70: Consolidated income statement SEK M
Page 71 and 72: Consolidated balance sheet SEK M No
Page 73 and 74: Consolidated cash flow statement SE
Page 75 and 76: Parent Company balance sheet SEK M
Page 77 and 78: Notes including accounting and valu
Page 79 and 80: only when cashed. Cash and cash equ
Page 81 and 82: operating expenses. If the amount h
Page 83 and 84: A provision is made for disputes re
Page 85 and 86: IFRS 7, “Financial Instruments: D
Page 87 and 88: Note 04 Segment reporting The divis
Page 89 and 90: Note 04 Continued B. Secondary segm
Page 91 and 92: Note 06 Financial instruments Finan
Page 93 and 94: Note 06 Continued Reconciliation wi
Page 95 and 96: Note 06 Continued Collateral The Gr
Page 97 and 98: Note 06 Continued Liquidity reserve
Page 99 and 100: Note 07 Acquisitions of shares/busi
Page 101 and 102: Note 10 Operating income Operating
Page 103: Note 13 Impairment losses/Reversals
Page 107 and 108: Note 17 Continued Information about
Page 109 and 110: Note 18 Continued Goodwill impairme
Page 111 and 112: Note 20 Continued Specification of
Page 113 and 114: Note 22 Current-asset properties/Pr
Page 115 and 116: Note 23 Inventories etc. Note Equit
Page 117 and 118: Note 26 Continued Equity attributab
Page 119 and 120: Note 28 Continued The ITP 1 occupat
Page 121 and 122: Note Provisions are reported in com
Page 123 and 124: Note 32 Expected recovery periods o
Page 125 and 126: Note 34 Effect of changes in foreig
Page 127 and 128: Note 34 Continued Consolidated bala
Page 129 and 130: Not 35 Continued Relation between c
Page 131 and 132: 37 Note Remuneration to senior exec
Page 133 and 134: Note 37 Continued tion based on the
Page 135 and 136: Note 40 Continued B. Skanska as les
Page 137 and 138: Note 43 Five-year Group financial s
Page 139 and 140: Note 43 Continued Financial ratios
Page 141 and 142: Parent Company notes Note 45 Financ
Page 143 and 144: Note 51 Financial non-current asset
Page 145 and 146: Note 58 Liabilities, Parent Company
Page 147 and 148: Note 63 Related party disclosures,
Page 149 and 150: Auditors’ Report To the Annual Sh
Page 151 and 152: Corporate governance report of Skan
Page 153 and 154: For more detailed information about
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mation on the President and CEO and
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Senior Executive Team Johan Karlstr
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Sir Adrian Montague United Kingdom,
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For about SEK 1.8 billion, Skanska
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146.9 M, about SEK 900 M, which wil
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More information about Skanska Worl
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Annual Shareholders’ Meeting Cale
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