Annual Report 2008 - Skanska

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Business streams Infrastructure Development Continued interest and large surplus value 42 Construction Skanska Annual Report 2008
46 47 49 Stimulating school environment in Bristol More than 1,100 beds at Derby City General Hospital A much-anticipated highway in Poland Despite higher yield requirements when appraising assets, the project portfolio in the Infrastructure Development business stream contains surplus value of about SEK 6 billion. During 2008 the estimated unrealized development gain in Skanska’s Infrastructure Development portfolio fell by SEK 0.3 billion to SEK 5.8 (6.1) billion. This decline was due to the divestment of the Ponte de Pedra hydropower plant in Brazil, the increase in the discount rate, adjusted assumptions about reduced traffic flows on the Autopista Central toll highway in Chile as well as positive effects related to time value and investments. During 2008, the divestment of Skanska’s stake in Ponte de Pedra was recognized as income. In conjunction with this, development gains totaling SEK 684 M were realized. Earnings were also reduced by a net impairment loss related to the Breitener power plant in Brazil amounting to SEK 58 M. Public-private partnerships Public-private partnerships mean that private market players provide facilities and buildings to public agencies. This often implies a number of macroeconomic advantages for customers, taxpayers, users and builders. The model makes more room for investments in public facilities by spreading the cost of large public works investments over longer time periods. It lowers life-cycle costs and also increases the benefit to users because the service or facility becomes available earlier than would be the case with traditional procurement and financing. Public-private partnership projects create valueadded for Skanska by generating large construction assignments as well as continuous revenue and cash flows during the lengthy operation phase. In addition to construction assignments, in many cases Skanska is also responsible for long-term service and maintenance contracts. From an investor perspective, Skanska Infrastructure Development (Skanska) creates assets characterized by reliable cash flows over a service life lasting many years, once the operation phase begins. The development process In public-private partnership projects, Skanska is involved in the entire development chain from design and financing to construction, operation and maintenance. By assuming an overall responsibility, Skanska optimizes both construction and operating costs. Skanska-led consortia are awarded these projects not only because of price but, above all, on the basis of how well the product they offer meets the needs of the customer today and in the future. During the development process, which is led by Skanska, Årligt bedömt the customer, kassaflöde i owners Skanska (Skanska IDs projektportfölj and its partners), per december Skanska’s 2008construction 1) units and suppliers of operating and maintenance services are integrated into the Mkr 2 000 task from the start, which reduces the overall risks 1 500 to Skanska. 1 000 Risk management – generating value-added 500 The investment, which is Skanska’s part of the value 0 chain, must meet ordinary commercial financial return targets. In order to create commercially attractive longterm assets, Skanska must efficiently manage risks 2014 2019 2024 2029 2034 2039 and –500 2009 • 2044 2048 Inflöde: 30,4 Mdr kr (räntor, utdelningar och återbetalningar) Utflöde: –0,7 Mdr kr (framtida kontrakterade investeringar) 1) Kassaflödena är omräknade till valutakurserna per den sista december 2008. The London Hospital is one of two large hospitals included in The Barts and The London Hospitals, Skanska’s largest public-private partnership contract. The project includes many elements that will be completed successively over several years. The first large new building at The London Hospital has a floor area of 142,000 sq. m (1.53 million sq ft.). SEK M 2008 2007 Revenue 55 116 Operating income 396 –107 Investments –396 –73 Divestments 1,283 178 Operating cash flow from business operations 1 749 –13 Capital employed, SEK bn 1.8 2.5 Gross present value, project portfolio 8,363 9,361 Return on capital employed, % 2 16.2 58.0 Employees 133 121 1 Before taxes, financing operations and dividends 2 Calculated in accordance with the definition of financial targets Estimated annual cash flow in Skanska ID's project portfolio, December 2008 1 SEK M 2,000 1,500 1,000 500 0 –500 2009 2014 2019 2024 2029 2034 2039 Inflow: SEK 30.4 bn (interest, dividends and repayments) • Outflow: SEK –0.7 bn (contracted future investments) 1 Cash flows have been translated into SEK at the exchange rates prevailing on December 31, 2008. 2044 2048 Skanska Annual Report 2008 Infrastructure Development 43
Page 1 and 2: Annual Report 2008
Page 3 and 4: Contents President and CEO “Our a
Page 5 and 6: “Our ambition is to be the leadin
Page 7 and 8: In the “Group overview” section
Page 9 and 10: Infrastructure Development Skanska
Page 11 and 12: New initiatives in 2008 Skanska too
Page 13 and 14: Risk management procedures Risk man
Page 15 and 16: Green construction is booming Green
Page 17 and 18: To facilitate recruitment work, a G
Page 19 and 20: • SIX Bygg- & Anläggningsrelater
Page 21 and 22: 20 23 26 New railroad hub in Prague
Page 23 and 24: Project opportunities are also crea
Page 25 and 26: Water is one of the basic necessiti
Page 27 and 28: The United States The American cons
Page 29 and 30: Skanska Annual Report 2008 Construc
Page 31 and 32: 30 32 33 A sedate, small-scale neig
Page 33 and 34: Product platforms In residential co
Page 35 and 36: Ullstorps Gårdar attracting famili
Page 37 and 38: 36 39 40 First LEED building in the
Page 39 and 40: property investors. Land value also
Page 41 and 42: In Poland, vacancies fell to 2 perc
Page 43: Skanska Annual Report 2008 Commerci
Page 47 and 48: The availability model In the avail
Page 49 and 50: Public-private partnership projects
Page 51 and 52: 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
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Note 06 Continued Liquidity reserve
Page 99 and 100:
Note 07 Acquisitions of shares/busi
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Note 10 Operating income Operating
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Note 13 Impairment losses/Reversals
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Note 16 Continued The net amount of
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Note 17 Continued Information about
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Note 18 Continued Goodwill impairme
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Note 20 Continued Specification of
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Note 22 Current-asset properties/Pr
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Note 23 Inventories etc. Note Equit
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Note 26 Continued Equity attributab
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Note 28 Continued The ITP 1 occupat
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Note Provisions are reported in com
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Note 32 Expected recovery periods o
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Note 34 Effect of changes in foreig
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Note 34 Continued Consolidated bala
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Not 35 Continued Relation between c
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37 Note Remuneration to senior exec
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Note 37 Continued tion based on the
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Note 40 Continued B. Skanska as les
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Note 43 Five-year Group financial s
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Note 43 Continued Financial ratios
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Parent Company notes Note 45 Financ
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Note 51 Financial non-current asset
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Note 58 Liabilities, Parent Company
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Note 63 Related party disclosures,
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Auditors’ Report To the Annual Sh
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Corporate governance report of Skan
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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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