Annual Report 1999 - Skanska

Comments onthe balance sheetThe balance sheet total rose by about 14percent to SEK 51.3 billion (44.9), while netsales rose by about 27 percent.AssetsINTANGIBLE FIXED ASSETSIntangible fixed assets, SEK 2.0 billion,mainly consisted of goodwill arising fromthe purchase of the Skåne-Gripen Groupplus supplementary acquisitions in the componentgroup.TANGIBLE FIXED ASSETSTangible fixed assets increased by SEK 2.3billion compared to 1998. Among tangiblefixed assets, “Properties in real estate operations”and “Other buildings and land” arereported separately in order to make real estateoperations more transparent.Book value of properties in real estate operationsProject DevelopmentSEK and Real Estate Sweden TotalInvestmentproperties 6,919 116 7,035Investmentpropertiesunder construction 2,173 2,173Developmentproperties 1,028 1,028Properties in realestate operations 10,120 116 10,236OTHER BUILDINGS AND LANDThe item “Other buildings and land” includedbusiness properties used in the Group’sown operations, mainly factory buildings,warehouses and gravel pits. Machinery andequipment increased by about SEK 0.6 billion,due to higher net investments and acquiredassets in connection with purchasesof companies.CURRENT RECEIVABLESCurrent receivables increased by about SEK4.9 billion to SEK 18.8 billion. Higher accountsreceivable, proceeds from the sale ofproperties which had not yet fallen due forpayment and tax claims, as well as acquiredreceivables, were the most important reasonsfor the increase in this item.SHORT-TERM INVESTMENTS AND CASH AND BANKBALANCESThe proceeds from the sale of Scancem arebeing used, among other things, to pay offloan liabilities as they fall due for payment.In addition, the seasonally strong cash flowduring the final quarter affected the increase,which totaled SEK 2.1 billion.Shareholders’ equity and liabilities● 54 Skanska Annual Report 1999PROPERTIES IN REAL ESTATE OPERATIONSOne central feature of the Group’s strategyis a focus on the development of projectsand properties. Investments in such projectsmay be both long-lasting and long-term, butSkanska’s ambition is to maintain a highturnover rate by continuously realizing thevalue of its fully developed property holdings.In order to develop properties, Skanskaitself must own a certain proportion ofproperties with development potential.The item “Properties in real estate operations,”which includes properties in differentstages of improvement – from derelict propertiesto fully developed investment properties– increased by about SEK 1.6 billion toSEK 10.2 billion. During 1999, about SEK2.5 billion was invested, while older, fullyimproved property holdings with low bookvalues, SEK 0.6 billion, were sold. Thismeant that despite a high turnover rate, thebook value of “Properties in real estate operations”increased.FINANCIAL FIXED ASSETSFinancial fixed assets, which mainly includedshares and participations, decreased bySEK 4.5 billion compared to 1998. The divestmentof Skanska’s shareholding inScancem decreased book value by SEK 4.8billion, while participation in Piren’s newshare issue increased book value by SEK 0.2billion. In terms of value, the largest holdingswere in SKF, JM, Piren, Norrporten,Pandox, Rörvik Timber and Costain.CURRENT-ASSET PROPERTIESThe book value of current-asset propertiesincreased by SEK 1.4 billion. Current-assetproperties, which comprise project developmentunder Skanska’s own auspices intendedto be sold close to the time of completion,showed continued strong expansionduring the year and are still in a growthstage. Book values (SEK M) can be seen inthe table below.Current-asset properties, SEK M 1999 1998Business areaUSA 435 168Sweden 1,827 1,321Europe 1,716 1,114Total 3,978 2,603SHAREHOLDERS’ EQUITYShareholders’ equity amounted to SEK 16.4billion at year-end, of which SEK 12.1 billionconsisted of unrestricted equity.PROVISIONSTotal provisions increased by SEK 0.2 billionto SEK 7.4 billion. Provisions for pensionsrose by about SEK 0.2 billion, mainly due toprovisions for pensions in connection withthe long-term bonus program. Provisionsfor taxes rose by about SEK 0.2 billion.“Other provisions” declined by about SEK0.3 billion, due to the withdrawal of portionsof the provisions for restructuringmeasures and the transformation of previousprovisions for the bonus program intoprovisions for pensions or other liabilities.LIABILITIESThe item “Liabilities” rose by SEK 3.4 billionto SEK 27.3 billion. Interest-bearing liabilitiesincreased by about SEK 0.5 billion, whileinterest-free liabilities rose by about SEK 2.9billion. The increase in interest-free liabilitieswas due to the tax liability related to thesale of Scancem shares and to an increase inliabilities related to larger business volume.