Annual Report 2008 - Skanska

The costs of the programs are presented in the following table.
Total
Employee-related costs for the long-term Skanska share award plan (SAP)
and the Skanska employee ownership program (SEOP)
Employee-related costs for share awards 1
SEK M SAP SEOP 2 programs
Total preliminary cost for the program 146 167 313
Expensed January 1 –78 0 –78
Cost for the year –30 –34 –64
Total expensed December 31 –108 –34 –142
Remaining to be expensed 38 133 171
Of which expensed in
2009 25 56 81
2010 13 55 68
2011 22 22
Total 38 133 171
Dilution through 2008, % 0.22 0.09 0.31
Share awards earned through 2008
Number of shares 910,649 357,129 1,267,778
Maximum dilution at end of program, % 0.32 0.45 0.77
Share awards earned at end of program
Number of shares 1,352,361 1,876,951 3,229,312
1 In compliance with IFRS 2.
2 Refers to 2008 program, excluding social insurance contributions.
For further information, see Note 26, “Equity/Earnings per share,” and
Note 37, “Remuneration to executive officers and Board members.”
Repurchases of shares
In order to ensure delivery of shares to the participants in Skanska’s
share incentive programs, the 2008 Annual Meeting gave the Board of
Directors a mandate to repurchase Skanska’s own shares. The decision
means that the Company may buy a maximum of 4,500,000 of Skanska’s
own Series B shares.
Skanska has repurchased a total of 2,795,000 shares at an average
price of SEK 96.97.
Annual Meeting
The Annual Shareholders’ Meeting will be held at 4:00 p.m. on April 6,
2009 at the Berwaldhallen concert hall in Stockholm, Sweden.
Proposed dividend
The Board of Directors proposes a regular dividend of SEK 5.25 (5.25)
per share for the 2008 financial year. Last year, Skanska also paid an
extra dividend of SEK 3.00 per share. The dividend for 2008 totals an
estimated SEK 2,183 M (3,453).
No dividend is paid for the Parent Company’s holding of its own
Series B shares. The total dividend amount may change by the record
date, depending on repurchases of shares and transfers of shares to
participants in Skanska’s long-term Share Award Plan for 2005.
The Board’s reasons for its proposed dividend
The nature and scale of Skanska’s operations can be seen in the Articles
of Association and this Annual Report. The operations carried out in
the Group do not pose risks beyond those that occur or can be assumed
to occur in its industry or the risks that are otherwise associated with
carrying out business operations. The Group’s dependence on the economic
does not deviate from what otherwise occurs in its industry.
The equity/assets ratio of the Group amounts to 23.1 (26.3) percent.
The proposed dividend does not jeopardize the investments that have
been deemed necessary. The financial position of the Group does not
give rise to any judgment except that the Group can continue its operations
and that the Group can be expected to meet its short- and longterm
obligations.
With reference to the above and what has otherwise come to the
Board’s attention, it is the judgment of the Board that the dividend is
justified with reference to the demands that the nature, scale and risks of
its operations place on the size of the Company’s and the Group’s equity
and the Group’s consolidation requirements, liquidity and position
otherwise.
Parent Company
The Parent Company carries out administrative work and includes the
Senior Executive Team and management units.
Profit for the year amounted to SEK 3,027 M (3,121). The average
number of employees was 87 (79).
Market outlook
Construction
In all markets, the demand for building construction is weakening − in
the Nordic countries primarily as a consequence of decreased residential
construction. Building construction accounts for about 60 percent
of Skanska’s contracting operations. Requests for new projects from private
customers represent a sharply declining proportion of the overall
building construction market.
Civil construction markets, where the public sector represents a significantly
higher proportion of total volume, have not been affected as
obviously by the turmoil in financial markets. In addition, government
stimulus packages in Europe and the United States are expected to contribute
to stability in the civil construction market. Civil construction
represents about 40 percent of Skanska’s contracting operations.
Residential Development
In several markets, home prices have fallen. Due to uncertainty in the
labor market and restrictive lending practices, fewer people are buying a
new home. In Finland, the slowdown is more noticeable and the supply
of newly constructed homes is larger than in Sweden and Norway. Sales
in all Nordic markets remain weak, and there are very few project startups.
The Czech Republic and Slovakia are also showing a slowdown.
Commercial Development
Vacancy rates in modern properties in the Nordic and Central European
office markets are expected to increase. Demand for high-volume
retail space is weaker. Property investors are increasing their yield
requirements, and investors are expected to be more selective in choosing
properties to invest in. Modern green properties in good locations
with creditworthy tenants on long-term leases are expected to be the
properties that investors are primarily interested in, but few property
transactions are being implemented at present.
Infrastructure Development
The volume of public-private partnership (PPP) projects in the United
Kingdom is still large. In Skanska’s other European markets, the supply
of projects is more limited, although interest in PPP solutions has
increased in Skanska’s Central European markets. The turbulence in
financial markets is making it more difficult and more expensive to
arrange financing for new projects.
Events after the end of the financial year
To ensure delivery of Series B shares pursuant to Skanska’s 2005 longterm
Share Award Plan, 560,000 Series D shares were converted to
Series B shares.
Disclosure requirements in compliance with the Annual Accounts
Act, Chapter 6, Section 2 a
Disclosure in compliance with the Swedish Annual Accounts Act,
Chapter 6, Section 2 a concerning information about certain circumstances
that may affect the possibility of taking over the Company
through a public buyout offer is provided in Note 64, “Disclosures in
compliance with the Annual Accounts Act, Chapter 6, Section 2 a.”
66 Report of the Directors Skanska Annual Report 2008