Annual Report 2000 - Skanska

Financing and liquidityOver time, the Group’s need for loan financingis primarily related to its real estate operationsand project development. The fixed-interestperiod of financing is adjusted continuously,among other things by using derivative instruments.Interest-bearing net indebtedness includingprovisions amounted to SEK 3,678 M(615) and underwent major changes duringthe year, for example due to large acquisitionsof companies and divestments of businesses.The Group’s net interest items amountedto SEK –397 M (–338). The change was due togreater net indebtedness.The Group’s interest-bearing assets rose toSEK 10,119 M (7,775). Of these, receivables inforeign currencies accounted for 74 percent(58). The average fixed-interest period for allinterest-bearing assets was 0.5 year (0.5), andthe interest rate averaged 4.9 percent (4.2).The Group’s interest-bearing liabilities andprovisions increased to SEK 13,797 M (8,390).The average fixed-interest period for theGroup’s interest-bearing liabilities was 1 year(0.5), and the average maturity for the Group’sinterest-bearing liabilities was 1.5 years (3).The average interest rate for all interest-bearingliabilities amounted to 6.0 percent (5.0) atyear-end. The proportion of loans in foreigncurrencies rose to 48 (46) percent.Most pension liabilities reported during1999 under the heading “Provisions forpensions” was transferred during the year toSkanska’s pension funds. The transferredamount was related, among other things, to theamount reported as liabilities for obligationsunder the ITP occupational pension system.At year-end, the Group had unutilizedcredit facilities totaling SEK 3,099 M (3,029).In addition, a commercial paper program wasestablished during the year, enabling Skanskato borrow up to SEK 6 billion. There is a previouslyestablished medium-term note programthat enables Skanska to borrow SEK 5 billionfor up to 10 years in SEK and EUR.DividendsDividend revenues, excluding dividends fromcompanies that are reported according to theequity method of accounting, totaled SEK 41M (282). The decrease in dividend revenues isexplained by Skanska’s divestments of noncoreshareholdings.ReturnReturn on capital employed rose from 31.5percent to 32.3 percent. During 2000 as well,gains on the sale of financial assets and itemsaffecting comparability had a relatively largepositive impact on return. Excluding theseitems, return on capital employed amountedto 18.2 percent (17.3).Return on equity increased to 34.3 percent(28.6).%4035302520151050Capital employed,by business areaEquity/assets and debt ratioThe visible equity/assets ratio fell from 32.5percent to 24.5 percent. One contributing factorbehind the lower equity/assets ratio is theinfluence of acquired units on the size of thebalance sheet. The debt/equity ratio amountedto 0.2 (0.0).Equity/assets and debt ratio%times360.42718Europe57%USA9%Services1%Project Developmentand Real Estate 25%Sweden8%90Return on equity andcapital employed1998 1999 2000Return on equityReturn on capitalemployed199819981999199920002000Equity/assets ratio, %Debt/equity ratio, %0.30.20.10.0Shareholders’ equityAt year-end 2000, the shareholders’ equity of theSkanska Group amounted to SEK 18,358 M,divided into SEK 13,638 in unrestricted equityand SEK 4,720 M in restricted equity.Proposed provisions to restricted equityamounted to SEK 2 M (0).Changes in the BoardThe Annual Shareholders’ Meeting in May2000 elected Eliot R. Cutler as a member of theBoard. Among the Board members appointedby the trade unions as employee representatives,deputy member Eva Elofsson-Merila,Swedish Union of Clerical and TechnicalEmployees in Industry (SIF), resigned and wasreplaced by Christina Palm, SIF.The work of the BoardDuring 2000, the Board of Directors held sixregular meetings plus three extra meetings. Atits statutory meeting after the Annual Shareholders’Meeting in May 2000, for the firsttime the Board appointed an auditing committee,consisting of two Board members. TheBoard had previously also established a salarycommittee. The work mechanisms of bothcommittees are regulated by the Board’s rulesof procedure.At its October 2000 meeting, the Board visitedthe Group’s operations in Norway, includinga field trip to a Selmer Skanska constructionsite in Oslo.The Board revised its rules of procedureduring the year, among other things due to theestablishment of the auditing committee.Other revisions to the rules of proceduremainly concerned what items of business areto be submitted to the Board for decisions.Research and developmentSkanska pursues research and developmentfor the purpose of strengthening strategicknowledge in the Group’s fields of operations.Skanska utilizes research and development ina number of ways, for example as:• A tool for building strategic knowledge inselected fields of operations.• A way of identifying client requirements,trends and potential service needs.• A source for the development of new methods,systems and business operations.• A way of identifying fields of operations andindividuals with special knowledge.• A central point for internal and external networks.• A tool for raising efficiency by transferringknowledge to Skanska’s employees.Transfer of knowledge occurs via the SkanskaInstitute of Technology and via six Centers ofExcellence. The Skanska Institute of Technologydevelops and operates various types ofcourses that are not available in the education6 REPORT OF THE DIRECTORS Skanska Annual Report 2000