Quarterly Report • Jul 19, 2017
Quarterly Report
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| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | |
|---|---|---|---|---|---|---|
| Group, SEK M | Apr. - Jun. | Apr. - Jun. | Jan. -Jun. | Jan. -Jun. | Jun. 17 | Jan. -Dec. |
| Orders received | 16,431 | 17, 123 | 27,913 | 27,661 | 56,758 | 56,506 |
| Order backlog | 52,265 | 47,177 | 52,265 | 47,177 | 52,265 | 47,940 |
| Net sales | 13,382 | 13,646 | 25,188 | 22,843 | 55,279 | 52,934 |
| Operating profit/loss | 548 | 572 | 850 | 289 | 2,014 | 1,453 |
| Profit/loss after financial items | 522 | 548 | 805 | 240 | 1,906 | 1,341 |
| Net profit/loss for the period | 435 | 441 | 672 | 197 | 1,591 | 1,116 |
| Net profit/loss for the period after tax for | ||||||
| continuing and discontinued operations * | 435 | 7,250 | 672 | 7,095 | 1,560 | 7,983 |
| Profit/loss per share after dilution, SEK * | 3.99 | 66.81 | 6.20 | 65.61 | 14.38 | 73.81 |
| Cashflow before financing | $-2,064$ | $-1,215$ | $-326$ | $-2,427$ | 2,091 | $-11$ |
| Equity/asset ratio, % | 19 | 17 | 19 | 17 | 19 | 22 |
| Net cash +/net indebtedness - | $-1,232$ | $-2,166$ | $-1,232$ | $-2,166$ | $-1,232$ | $-222$ |
| For definitions of key figures, see www.ncc.group/Investor-relations/Financial-data/Financial-definitions |
In this report, Bonava is reported as a discontinued operation according to IFRS 5 (see accounting policies on page 16 and Note 4) and is included in NCC's income statement up to June 7, 2016. Earnings from discontinued operation comprise Bonava's profit for the period January 1 to June 7 plus the difference between Bonava's market capitalization on the listing date and Bonava's shareholders' equity on the spinoff date.
Lower profit from our construction and civil engineering operations led to slightly lower second-quarter earnings for NCC. However, earnings were on a par with the year-earlier period if the positive non-recurring effects resulting from the distribution of Bonava are taken into account. Earnings for the first half of 2017 improved because of a favorable first-quarter outcome for the property development business. Profit after financial items amounted to SEK 522 M (548) for the second quarter and to SEK 805 M $(240)$ for the first half of 2017.
Market conditions in the Nordic construction market are generally favorable. As in the year-earlier period, orders received were high in the second quarter and exceeded net sales, which resulted in our further adding to the order backlog. The order backlog at the end of the quarter was SEK 52.3 billion, just over 10 percent higher than a year earlier.
Sales in the Swedish market increased but a low workup rate in Finland and Denmark led to lower sales in the second quarter. Orders received were favorable and the order backlog grew SEK 3 billion in the quarter. thus creating prerequisites for growth in the future. The operating margin improved during the quarter despite lower sales.
The business area increased its net sales in the quarter and for the first half of the year. Operating profit deteriorated, primarily due to low margins in old projects at the same time as the work-up rate for new projects generating better profitability was low. Orders received were on a par with sales but were lower than in the vear-earlier period, when more large-scale orders were registered.
Although NCC Property Development had no property projects recognized in profit during the quarter, earnings almost matched the year-earlier level as a result of sales of land and earnings from previously profitrecognized projects. It is gratifying that we have now been able to start the first two phases of our large-scale development area in Solna, outside Stockholm. We also started a logistics project in Mölndal and entered into cooperation with Platzer for two forthcoming projects in Gothenburg.
NCC Industry improved its sales and earnings during both the second quarter and the first half of the year. In the second quarter, asphalt operations in particular accounted for an earnings improvement. Sales increased in all divisions.
In the preceding quarter, I talked about a number of challenges that we need to manage to achieve our strategic objectives for both sales growth and margin improvements. We have made some progress in respect of, for example, our overhead costs, which were at a lower level during the quarter. Looking at the first half of the year, both earnings and sales increased, but some work remains. Although NCC Industry and NCC Property Development are delivering according to the set targets, the construction and civil engineering operations have to show improvements in both profitability and sales.
Peter Wågström, President and CEO Solna, July 19, 2017
Net sales and result after financial items
The period January-June 2017
Orders received amounted to SEK 16,431 M (17,123) in the second quarter and to SEK $27,913$ M $(27,661)$ in the first half of the year. In the second quarter, orders received by NCC Building rose, due to favorable orders received in such areas as housing construction, but this did not fully offset the decline in NCC Infrastructure. Orders received by NCC Industry were higher, mainly for asphalt operations. Changes in exchange rates increased orders received in the first half of the year by SEK 341 M, year-on-year.
The Group's order backlog totaled SEK 52,265 M (47,177). Changes in exchange rates reduced the value of the order backlog by SEK 212 M.
Net sales amounted to SEK 13,382 M (13,646) in the second quarter and to SEK 25,188 M (22,843) in the first half of the year. The decrease during the quarter was due to NCC Building showing lower sales in Finland and Denmark. NCC Property Development reported higher sales for the first half of the year because more property projects were recognized in profit compared with the yearearlier period. NCC Infrastructure and NCC Industry also reported increased sales. Changes in exchange rates increased sales in the first half of the year by SEK 362 M, year-on-year.
Revenue growth (net sales)* SEK M 4.1% (average yearly growth 2.7%) 60,000 50,000 40.000 30,000 20,000 10,000 $\Omega$ 2016 Q2 2017, R12 2015 *Target: 5% average yearly growth.
NCC's operating profit amounted to SEK 548 M (572) in the second quarter and SEK 850 M (289) for the first half of the year. The improvement in the first half of the year was mainly attributable to NCC Property Development, which reported higher profit from property sales. NCC Building's operating profit deteriorated, due mainly to impairment losses on projects in its Finnish operations in the first quarter and lower volumes in the Finnish and Danish operations. NCC Infrastructure's operating profit declined, due mainly to weak profitability in older projects and a low work-up rate and thus cautious recognition of earnings from new projects. NCC Industry's operating profit improved as a result of increased sales of stone materials and improved earnings from the Finnish and Swedish asphalt operations.
Net financial items amounted to an expense of SEK 45 M (expense: 49). Lower loans, lower interest rates and exchange-rate differences had a favorable impact on net financial items.
Net indebtedness (excl. pension debt)/EBITDA
Cash flow from operating activities for the first half of the year totaled SEK $0 \text{ M}$ (neg: 1,553). Positive earnings from operations in the first half of the year and profit recognition and handover of four projects in Property Development were offset by negative cash flow from other working capital, which was seasonally impacted primarily by increases in accounts receivable. Cash and cash equivalents at June 30, 2017 totaled SEK 2,237 M $(2,492)$ .
The Group's net indebtedness at June 30 amounted to SEK 1,232 M (2,166). The year-on-year improvement was mainly attributable to lower opening net indebtedness and improved cash flow during the first half of 2017.
The Group's total assets at June 30 amounted to SEK 26,212 M (27,155).
The average maturity period for interest-bearing liabilities, excluding pension debt according to IAS 19, was 35 months (37) at the end of the quarter. At the same date, NCC's unutilized committed lines of credit totaled SEK 3.4 billion $(4.1)$ , with an average remaining maturity of 49 $(49)$ months.
Capital employed at June 30 totaled SEK 9,097 M (9,618), with the decline primarily due to an increase in the number of property projects recognized in profit. The return on capital employed was 21 percent (18).
| 2017 | 2017 | $Jul. -16$ | 2016 | |
|---|---|---|---|---|
| Net indebtedness, SEK M | Jan. -Jun. | Jan. - Jun | Jun. 17 | Jan. -Dec. |
| Net indebtedness, opening balance | $-222$ | $-4,552$ | $-2,166$ | $-4,552$ |
| Cash flow before financing | $-326$ | $-2,427$ | 2,091 | $-11$ |
| Acquisition/Sale of treasury shares | $-4$ | 134 | $-78$ | 60 |
| Change of provisions for pensions | $-337$ | $-657$ | $-350$ | $-670$ |
| Dividend costs | -76 | -76 | ||
| Currency exchange differences in cash and cash equivalents 1) | $-19$ | $-4$ | 15 | |
| Paid dividend | $-324$ | $-648$ | $-324$ | |
| Dividend Bonava | 5,336 | 5,336 | ||
| Net cash + /net indebtedness - closing balance | $-1,232$ | $-2,166$ | $-1,232$ | $-222$ |
1) For the comparative period and the period Jul.-16 Jun.-17, currency exchange differences in cash and cash equivalent is included in cash flow before financing
The Nordic construction market is showing high growth. It is expected to grow by 4.8 percent in 2017 and 2.6 percent in 2018. Major projects in the Nordic region are attracting international interest and competition. In cities showing growth, the battle for competencies is intensive. GDP in the Nordic region is expected to grow by 2 percent annually in 2017 and 2018.
Infrastructure initiatives are market drivers in Norway and Sweden. The Norwegian market is expected to grow by 7.5–11 percent annually up to 2019, while the Swedish market is expected to grow 3 percent annually during 2018–19. The civil engineering market in Finland is expected to decline by 2 percent in 2017 and to show zero growth in 2018. Denmark will have negative growth in 2017.
The growth expectations for new production in the Nordic region have been raised sharply for 2017. In 2018, the growth rate will normalize. The Swedish construction market is expected to grow by a full 8 percent in 2017 and by 3 percent in 2018. The Norwegian market is expected to grow by 4 percent in 2017 and the growth will mainly occur in the Oslo region. In Finland, the market will grow by 4 percent in 2017. In 2018, a reduction in new housing production will coincide with lower public-sector spending, and new production in Finland is expected to decline by 2 percent. In Denmark, a 10-percent increase in new production of housing will contribute to estimated growth of slightly more than 2 percent in 2017.
A strong civil engineering market in 2017 is driving growth in demand for asphalt and stone materials in the Nordic region. The market for both stone materials and asphalt is expected to grow, driven mainly by infrastructure and housing projects in Sweden and Norway, while lower growth is expected in Finland and Denmark. Within asphalt, market growth in Finland is expected to approach 10 percent in 2017. The Danish market will show weak growth until 2018. The market for foundation engineering is expected to grow by more than 5 percent in 2017.
Keen international interest, urbanization and the quest for yield are the activity drivers in the market. The Stockholm and Gothenburg property markets remain highly active, with low vacancy rates and rising rents. The capacity ceiling is approaching in such countries as Sweden, which is expected to increase inflation. This should reduce activity somewhat and increase sensitivity in the future. In the Stockholm Central Business District (CBD), the vield is about to rise from a very low level, while it continues to dedecline or remains unchanged in CBDs in other markets in the Nordic region. In the Danish market, marginally increasing yield requirements and an increase in new investments are expected during 2017. In Oslo, economic uncertainty moving forward will result in a slowdown in the increase in rent levels. The rent levels in central Helsinki are rising slightly and the level of vacancies is expected to decline moving forward.
The period January-June 2017
Orders received by NCC Building in the second quarter increased to SEK 9,058 M (7,843) and amounted to SEK 12,808 M (13,225) for the first half of the year. In the second quarter, orders received increased in the Swedish and Danish markets, but this did not fully offset the lower level reported in the first quarter. In Finland, the market is challenging with intense competition. During the second quarter, a number of large-scale projects were secured, including housing and office projects in Sweden.
The order backlog rose SEK 3,375 M in the first half of the year to SEK 30,153 M at the end of the period.
Net sales declined to SEK 6,147 M (6,849) in the second quarter and to SEK 11,821 M (12,238) for the first half of the year. The decrease during the quarter was due to lower sales in Denmark and Finland. NCC Building's net sales consist mainly of housing production, followed by refurbishment. In terms of sales, Sweden is the largest market and the Swedish proportion of orders received also increased in the first half of the year.
Operating profit totaled SEK 144 M (150) in the second quarter and SEK 200 M (220) for the first half of the year. Earnings during the quarter declined due to lower sales but the operating margin improved somewhat. Earnings for the first half of the year were lower year-on-year, due mainly to the first quarter's impairment losses of SEK 50 M on housing projects in the Finnish market. Earnings in Norway improved but remain negative, primarily due to a nonexistent margin on ongoing previously impaired projects.
Other 4 (8)%
■ Offices 7 (9)% Residential 35 (31)%
Retail 2 (1)%
Industry/Logistics 4 (2)%
Health Care 4 (20)%
· Educational 6 (9)%
Refurbishment/Conversion 28 (19)%
Net sales
| NCC Building, SEK M | 2017 Apr. - Jun. |
2016 Apr. Jun. |
2017 Jan. -Jun. |
2016 Jan. -Jun. |
Jul. 16- Jun. 17 |
2016 Jan. -Dec. |
|---|---|---|---|---|---|---|
| Orders received | 9,058 | 7,843 | 12,808 | 13,225 | 28,321 | 28,738 |
| Order backlog | 30, 153 | 26,778 | 30,153 | 26,778 | 30,153 | 29,159 |
| Net sales | 6,147 | 6,849 | 11,821 | 12,238 | 25,264 | 25,681 |
| Operating profit/loss | 144 | 150 | 200 | 220 | 469 | 489 |
| Financial target: | ||||||
| Operating margin, % 1) | 2.3 | 2.2 | 1.7 | 1.8 | 1.9 | 1.9 |
| $\mathbf{1}$ |
1) Target: operating margin $\geq 3.5\%$
The period January-June 2017
Orders received by NCC Infrastructure decreased to SEK 4,483 M (6,540) in the second quarter and amounted to SEK 9,511 M (9,406) for the first half of the year. The Civil Engineering division and the Infraservices division both reported declines in orders received during the quarter, primarily due to postponement of projects in the Swedish operation. Projects secured in the second quarter mainly comprised groundworks and road works.
The order backlog rose SEK 1,529 M in the first half of the year to SEK 18,019 M at the end of the period.
Net sales amounted to SEK 4,539 M (4,250) in the second quarter and to SEK 7,943 M (7,615) for the first half of the year. The increase in the second quarter derived from higher sales in the Infraservices division.
NCC Infrastructure's net sales largely comprise earth and groundworks and road contracts, which have a major impact on net sales, accounting for more than half.
Operating profit declined year-on-year to SEK 70 M (93) in the second quarter and SEK 43 M (82) for the first half of the year. The weak result for the first half of the year was mainly due to the completion of projects with weaker profitability combined with a low work-up rate and thus cautious recognition of profit from new projects.
| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | |
|---|---|---|---|---|---|---|
| NCC Infrastructure, SEK M | Apr. - Jun. | Apr. - Jun. | Jan. Jun. | Jan. -Jun. | Jun. 17 | Jan. -Dec. |
| Orders received | 4,483 | 6,540 | 9,511 | 9,406 | 18,769 | 18,664 |
| Order backlog | 18,019 | 16,490 | 18,019 | 16,490 | 18,019 | 16,423 |
| Net sales | 4,539 | 4,250 | 7,943 | 7,615 | 17,335 | 17,007 |
| Operating profit/loss | 70 | 93 | 43 | 82 | 123 | 162 |
| Financial target: | ||||||
| Operating margin, % 1) | 1.5 | 2.2 | 0.5 | 1.1 | 0.7 | 1.0 |
| $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{I}$ $\mathbb{$ |
Target: operating margin $\geq 3.5\%$
The period January-June 2017
Net sales increased year-on-year to SEK 3,416 M (3,039) in the second quarter and SEK 4,503 M (3,927) for the first half of the year. Sold volumes of stone materials were higher in all markets during the period. The volume of asphalt sold matched the year-earlier level and increased in Finland, Denmark and Sweden but declined in Norway. Sales of foundation engineering were higher vear-on-vear. due to high activity in the Swedish market.
Earnings improved year-on-year to SEK 336 M (290) for the second quarter and SEK 26 M (loss: 35) for the first half of the year. Earnings in the first half of the year improved in stone materials and asphalt operations but were slightly lower for foundation engineering. Earnings from stone materials operations improved, primarily as a result of high construction activity in Sweden. Profit from asphalt operations improved in Sweden and Finland. Earnings from foundation engineering declined due to lower activity in Denmark and Norway.
Capital employed has increased seasonally by SEK 0.9 billion since year-end and amounted to SEK 4.9 billion.
| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | |
|---|---|---|---|---|---|---|
| NCC Industry, SEK M | Apr. - Jun. | Apr. - Jun. | Jan. - Jun. | Jan. -Jun. | Jun. 17 | Jan. -Dec. |
| Orders received | 3,614 | 3,228 | 6,862 | 5,692 | 12,422 | 11,252 |
| Order backlog | 5,251 | 4,160 | 5,251 | 4,160 | 5,251 | 2,883 |
| Net sales | 3,416 | 3,039 | 4,503 | 3,927 | 11,336 | 10,760 |
| Operating profit/loss | 336 | 290 | 26 | $-35$ | 594 | 533 |
| Capital employed | 4,855 | 4,356 | 4,855 | 4,356 | 4,855 | 3,975 |
| Stone materials, tons 1) | 8,329 | 8,110 | 14,112 | 13,022 | 29,200 | 28,110 |
| Asphalt, tons 1) | 1,994 | 2,092 | 2,153 | 2,196 | 6,307 | 6,350 |
| Financial targets: | ||||||
| Operating margin, % 2) | 9.8 | 9.6 | 0.6 | $-0.9$ | 5.2 | 4.9 |
| Return on capital employed, $% ^{3}$ | 13.9 | 13.5 |
1) Sold volume
2) Target: operating margin $\geq 4\%$
3) Target: return on capital employed ≥ 10%
Net sales totaled SEK 184 M (458) in the second quarter and SEK 2,358 M (550) for the first half of the year. In the first quarter, four projects were recognized in profit: the Torsplan 2 office project (Stockholm); the Vattenbrunnen logistics project (Upplands-Bro) and the Aitio Verdi and Vivaldi office projects (Helsinki). One project was recognized in profit in the first quarter of 2016: Hyllie in Malmö.
Operating profit amounted to SEK 65 M (71) in the second quarter and to SEK 658 M (93) for the first half of the year. Earnings from profit-recognized projects, sales of land and previous sales contributed to profit for the first half of the year. In the year-earlier period, earnings derived from one profit-recognized project, previous sales and sales of land.
One project was started in the first quarter, the Laajasalo retail project in Helsinki, Finland, and three more were added in the second quarter: two phases of NCC's new head office and a logistics project in Gothenburg.
Leasing in the first half of the year totaled 38,700 square meters (37,000), including 28,300 (17,900) in the second quarter.
At the end of the quarter, 19 projects (17) were either ongoing or completed but not yet recognized in profit. Costs incurred in all projects totaled SEK 1.8 billion (3.5), corresponding to a completion rate of 39 (70) percent. The leasing rate was 51 (73) percent. Operating profit was SEK 28 M (43) for the first half of the year and SEK 12 M (24) for the second quarter.
Capital employed increased SEK 0.4 billion in the second quarter, when investments in ongoing projects exceeded the value of sales of land. Capital employed totaled SEK 3.7 billion.
Net sales
| NCC Property Development, SEK M | 2017 Apr. - Jun. |
2016 Apr. - Jun. |
2017 Jan. -Jun. |
2016 Jan. -Jun. |
Jul. 16- Jun. 17 |
2016 Jan. -Dec. |
|---|---|---|---|---|---|---|
| Net sales | 184 | 458 | 2,358 | 550 | 4,630 | 2,823 |
| Operating profit/loss | 65 | 71 | 658 | 93 | 892 | 327 |
| Capital employed | 3,727 | 4,817 | 3,727 | 4,817 | 3,727 | 4,450 |
| Financial targets: | ||||||
| Operating margin, % 1) | 35.4 | 15.5 | 27.9 | 16.9 | 19.3 | 11.6 |
| Return on capital employed, $\%$ 2) | 21.0 | 7.0 |
1) Target: operating margin ≥ 10%
2) Target: return on capital employed ≥ 10%
| Sold, | ||||||
|---|---|---|---|---|---|---|
| estimated | Comple- | Lettable | Letting | |||
| recognition in | tion | area | ratio, | |||
| Project | Type | Location | profit | ratio, % | (sqm) | % |
| CH Vallensbæk 4.1 | Office | Vallensbæk | 80 | 6,100 | $\overline{7}$ | |
| Frederiks Plads 1 | Office | Århus | 33 | 5,000 | 0 | |
| Total Denmark | 53 | 11,100 | $\overline{\mathbf{3}}$ | |||
| Alberga E | Office | Espoo | 72 | 5,800 | 33 | |
| Fredriksberg 1 | Office | Helsinki | 33 | 9,000 | 17 | |
| Laajasalo | Retail | Helsinki | 11 | 8,600 | 84 | |
| Suurpelto 1 | Retail | Espoo | 67 | 4,500 | 99 | |
| Total Finland | 40 | 27,900 | 54 | |||
| Lysaker PP11 | Office | Bærum | 34 | 6,400 | 78 | |
| Valle 1 | Office | Oslo | 17 | 6,300 | $\circ$ | |
| Total Norway | 27 | 12,700 | 42 | |||
| K11 | Office | Solna | 13 | 11,900 | $\Omega$ | |
| K12 | Office | Solna | 14 | 20,000 | 99 | |
| Arendal 3 | Logistics | Gothenburg | Q 2 2018 | 9 | 6,800 | 76 |
| Multihuset | Other | Malmö | 14 | 19,700 | 52 | |
| Mölndal Galleria | Retail | Mölndal | 2) | 66 | 13,800 | 57 |
| Önskebrunnen | Logistics | Upplands-Bro | Q3 2017 | 83 | 14,400 | 23 |
| Total Sweden | 28 | 86,600 | 57 | |||
| Total | 32 | 138,300 | 51 |
| Project | Type | Location | Sold, estimated recognition in profit |
Lettable area (sqm) |
Letting ratio, % |
|---|---|---|---|---|---|
| Kolding Retailpark | Retail | Kolding | 4,000 | 54 | |
| Roskildevej | Retail | Taastrup | 4,000 | 100 | |
| Viborg Retail II+III | Retail | Viborg | 900 | $\circ$ | |
| Zenit 2 | Office | Århus | 3,600 | 63 | |
| Total Denmark | 12,500 | 68 | |||
| Stavanger Business Park 1 | Office | Stavanger | 9,200 | 44 | |
| Total Norway | 9,200 | 44 | |||
| Total | 21,700 | 54 |
1) The table refers to ongoing or completed property projects that have not yet been recognized as revenue. In addition to these projects, NCC also focuses on rental (rental guarantees / additional purchase) in four previously sold and revenue recognized property projects, a maximum of approximately SEK 30 M.
2) The project covers approximately 25,000 square meters of leasable area and is implemented together with Citycon, a Finnish listed real estate company, in a jointly owned company. The data in the table refer to NCC's share of the project.
An account of the risks to which NCC may be exposed is presented in the 2016 Annual Report (pages 51–53). This description remains relevant.
Related parties are the Nordstjernan Group (including the associated company Bonava), NCC's subsidiaries, associated companies and joint arrangements. Related-party transactions were of a production character. Related-company sales in the second quarter totaled SEK 823 M (1,489) and purchases SEK 1 M (116). Relatedcompany sales in the first half of the year totaled SEK 1,690 M $(1,979)$ and purchases SEK 156 M $(263)$ .
NCC Industry's operations and certain operations in NCC Building and NCC Infrastructure are impacted by seasonal variations due to cold weather. Earnings in the first quarter are normally weaker than during the rest of the year.
In the second quarter, 25,144 Series B shares were transferred to participants of LTI 2014. 37,987 Series B shares were sold and 54,232 Series B shares were bought back. Following these transactions, NCC AB holds 353,323 Series B treasury shares to meet its obligations pursuant to long-term incentive programs.
NCC has been awarded the assignment to build a police station in Stockholm's Rinkeby district on behalf of Familjebostäder. The project involves the redevelopment of a residential building into a police station. The assignment is a turnkey contract and the order value is SEK 520 M, which is expected to be registered among orders in the third quarter of 2017.
NCC has been commissioned by PensionDanmark Ejendomme to build a complex of 17,000 square meters, comprising housing units, offices and a parking facility. The contract is valued at approximately SEK 330 M.
NCC has been commissioned by Bonava to build Kapellgärdet Arena, comprising 152 tenant-owner apartments in Uppsala city center. The order value is some SEK 250 M, with SEK 160 M to be registered in the third quarter of 2017 when planning permission has been received and SEK 90 M in the second quarter of 2018.
NCC has been commissioned to construct an additional 644 apartments in central Uppsala for Magnolia Bostad. The construction assignment marks the second phase of the Senapsfabriken property block. The order value is about SEK 650 M.
NCC, in consortium with the Spanish firm OHL, has been awarded an assignment to construct a new section of railway between Lund and Arlöv in Skåne, Sweden, for the Swedish Transport Administration. The order value totals some SEK 2 billion, of which half
accrues to NCC. The contract includes an option valued at an additional SEK 1 billion. The award decision has been appealed and the contract is not registered among orders.
NCC has been commissioned by Bonava to build 124 apartments in the Tollare area of Nacka, Stockholm. The order is worth SEK 339 M.
NCC has been commissioned to construct a new train maintenance depot for Öresund trains. The project will be performed in two phases; in the first phase, the partners will focus on preparing construction documents and a target price for the project. Once this is completed, the parties will sign a construction contract with an estimated order value of some SEK 550 M, which is expected to be registered among orders in the fourth quarter of 2017.
NCC has been commissioned by Vasakronan to refurbish part of the Hästskon 12 property block, also known as Sergelhuset, converting it from office space to a hotel and apartments. The assignment is a turnkey contract in the form of a partnering arrangement and the order value is SEK 550 M.
NCC has started construction of two office buildings (of which, one will be NCC's new headquarters) in Solna, signaling the start of the development of a new, sustainable and attractive city district in Solna. The contract has an order value of some SEK 1,050 M. Construction work on the office building that will become NCC's headquarters is expected to be completed in 2019 and the second office building in 2020.
NCC is divesting the Önskebrunnen logistics project in Brunna for an agreed property value of some SEK 150 M. The buyer is NREP Logicenters. No rental guarantees are included in the divestment, which is expected to have a positive impact on NCC Property Development's earnings in the third quarter of 2017.
NCC and Platzer have signed an agreement for a transaction involving joint development of a project in Gårda and they also intend to implement a property deal in central Mölndal. The transaction in Gårda will be performed in the form of a company transaction where the parties have agreed that NCC will acquire 50 percent of the property-owning company from Platzer when the detailed development plan gains legal force at an underlying property value of about SEK 300 M as well as a supplementary purchase consideration of some SEK 45 M upon completion. The parties also agreed that Platzer will repurchase NCC's 50-percent share when the property is completed. Construction is scheduled to start in the first quarter of 2018 with completion scheduled for the fourth quarter of 2020. A prerequisite for the transaction is that the detailed development plan gains legal force. The transaction also entails that Platzer intends to acquire future NCC's projects in central Mölndal.
Interim report, Jan-Sep 2017 Year-end report Jan-Dec 2017
October 26, 2017 January 24, 2018
| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | ||
|---|---|---|---|---|---|---|---|
| SEK M | Note 1 | Apr. - Jun. | Apr. - Jun. | Jan. - Jun. | Jan. - Jun. | Jun. 17 | Jan. -Dec. |
| CONTINUING OPERATIONS | |||||||
| Net sales | 13,382 | 13,646 | 25,188 | 22,843 | 55,279 | 52,934 | |
| Production costs | Note 2 | $-12,092$ | $-12,135$ | $-22,876$ | $-20,906$ | $-50,454$ | $-48,484$ |
| Gross profit | 1,290 | 1,511 | 2,312 | 1,937 | 4,825 | 4,450 | |
| Selling and administrative expenses | Note 2 | $-751$ | $-838$ | $-1,467$ | $-1,547$ | $-2,832$ | $-2,912$ |
| Other operating income/expenses | 9 | $-100$ | 6 | $-101$ | 22 | $-85$ | |
| Operating profit/loss | 548 | 572 | 850 | 289 | 2,014 | 1,453 | |
| Financial income | 6 | $\overline{7}$ | 23 | 14 | 35 | 26 | |
| Financial expense 1) | $-32$ | $-31$ | $-68$ | $-63$ | $-143$ | $-138$ | |
| Net financial items | $-26$ | $-24$ | $-45$ | $-49$ | $-108$ | $-112$ | |
| Profit/loss after financial items | 522 | 548 | 805 | 240 | 1,906 | 1,341 | |
| Tax | $-87$ | $-108$ | $-133$ | -43 | $-315$ | $-225$ | |
| Net profit/ loss for the period from continuing operations | 435 | 441 | 672 | 197 | 1,591 | 1,116 | |
| DISCONTINUED OPERATION | |||||||
| Discontinued operation, net after tax | 6,810 | 6,898 | $-31$ | 6,867 | |||
| Net profit/loss for the period from discontinued operation | Note 4 | 6,810 | 6,898 | $-31$ | 6,867 | ||
| CONTINUING AND DISCONTINUED OPERATIONS | |||||||
| Net profit/loss for the period from continuing and discontinued operations | 435 | 7,250 | 672 | 7,095 | 1,560 | 7,983 | |
| Attributable to: | |||||||
| NCC's shareholders | 431 | 7,245 | 670 | 7,096 | 1,554 | 7,980 | |
| Non-controlling interests | $\Delta$ | 5 | $\overline{2}$ | -1 | 6 | 3 | |
| Net profit/loss for the period | 435 | 7,250 | 672 | 7,095 | 1,560 | 7,983 | |
| Earnings per share | |||||||
| Before dilution | |||||||
| Net profit/loss for the period, SEK | 3.99 | 66.81 | 6.20 | 65.61 | 14.38 | 73.81 | |
| After dilution | |||||||
| Net profit/loss for the period, SEK | 3.99 | 66.81 | 6.20 | 65.61 | 14.38 | 73.81 | |
| Earnings per share from continuing operations | |||||||
| Before dilution | |||||||
| Net profit/loss for the period, SEK | 3.99 | 4.06 | 6.20 | 1.82 | 14.67 | 10.30 | |
| After dilution | |||||||
| Net profit/loss for the period, SEK | 3.99 | 4.06 | 6.20 | 1.82 | 14.67 | 10.30 | |
| Number of shares, millions | |||||||
| Total number of issued shares | 108.4 | 108.4 | 108.4 | 108.4 | 108.4 | 108.4 | |
| Average number of shares outstanding before and after dilution during the period | 108.1 | 108.4 | 108.1 | 108.2 | 108.1 | 108.1 | |
| Number of shares outstanding before dilution at the end of the period | 108.1 | 108.4 | 108.1 | 108.4 | 108.1 | 108.1 |
1) Whereof interest expenses for the period Jul.16 Jun.17, amounting to SEK 129 M and for the period Jan.- Dec. 2016 amounting to SEK 118 M.
For information about discontinued operations, refer to note 4.
| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | ||
|---|---|---|---|---|---|---|---|
| SEK M | Note 1 | Apr. - Jun. | Apr. -Jun. | Jan. -Jun. | Jan. - Jun. | Jun. 17 | Jan. -Dec. |
| Net profit/loss for the period | 435 | 7,250 | 672 | 7,095 | 1,560 | 7,983 | |
| ltems that have been recycled or should be recycled to net profit/loss for the period | |||||||
| Exchange differences on translating foreign operations | 56 | $-7$ | 115 | 43 | 165 | ||
| Change in hedging/fair value reserve | $-13$ | $-39$ | $-34$ | ||||
| Cash flow hedges | $-20$ | 60 | $-41$ | 56 | Ó | 103 | |
| Income tax relating to items that have been or should be recycled to net profit/loss for the period |
5 | $-11$ | 9 | -4 | $-2$ | $-15$ | |
| $-14$ | 92 | $-39$ | 128 | 52 | 219 | ||
| Items that cannot be recycled to net profit/loss for the period | |||||||
| Revaluation of defined benefit pension plans | $-340$ | $-282$ | $-304$ | $-639$ | $-255$ | $-590$ | |
| Income tax relating to items that cannot be recycled to net profit/loss for the period | 75 | 52 | 67 | 131 | 66 | 130 | |
| $-265$ | $-231$ | $-237$ | $-509$ | $-189$ | $-460$ | ||
| Other comprehensive income | $-279$ | $-139$ | $-276$ | $-381$ | $-137$ | $-242$ | |
| Total comprehensive income | 156 | 7,112 | 396 | 6,714 | 1,423 | 7,742 | |
| Attributable to: | |||||||
| NCC's shareholders | 152 | 7,106 | 394 | 6,715 | 1,417 | 7,738 | |
| Non-controlling interests | 5 | -1 | 6 | 3 | |||
| Total comprehensive income | 156 | 7,112 | 396 | 6,714 | 1,423 | 7,742 |
| 2017 | 2016 | 2016 | ||
|---|---|---|---|---|
| SEK M | Note 1 | Jun. 30 | Jun. 30 | Dec. 31 |
| ASSETS | ||||
| Fixed assets | ||||
| Goodwill | 1,837 | 1,819 | 1,851 | |
| Other intangible assets | 269 | 298 | 275 | |
| Owner-occupied properties | 799 | 780 | 814 | |
| Machinery and equipment | 2,665 | 2,460 | 2,569 | |
| Long-term holdings of securities | 127 | 125 | 125 | |
| Long-term interest-bearing receivables | 429 | 281 | 361 | |
| Other long-term receivables | 65 | 190 | 62 | |
| Deferred tax assets | 106 | 280 | 97 | |
| Total fixed assets | 6,298 | 6,233 | 6,154 | |
| Current assets | ||||
| Properties held for future development | 1,649 | 2,002 | 1,780 | |
| Ongoing property projects | 986 | 2,690 | 1,440 | |
| Completed property projects | 435 | 384 | 808 | |
| Housing properties held for future development | 54 | 16 | ||
| Materials and inventories | 816 | 789 | 713 | |
| Tax receivables | 288 | 259 | 42 | |
| Accounts receivable | 8,955 | 8,246 | 7,682 | |
| Worked-up, non-invoiced revenues | 2,534 | 2,356 | 1,737 | |
| Prepaid expenses and accrued income | 1,133 | 1,067 | 1,061 | |
| Current interest-bearing receivables | 106 | 69 | 152 | |
| Other receivables | 775 | 513 | 446 | |
| Short-term investments 1) | 91 | 186 | 190 | |
| Cash and cash equivalents | 2,146 | 2,307 | 3,093 | |
| Total current assets | 19,914 | 20,922 | 19,161 | |
| Total assets | 26,212 | 27,155 | 25,315 | |
| EQUITY | ||||
| Share capital | 867 | 867 | 867 | |
| Other capital contributions | 1,844 | 1,844 | 1,844 | |
| Reserves | $-164$ | $-216$ | $-125$ | |
| Profit/loss brought forward, including current-year profit/loss | 2,530 | 2,105 | 2,967 | |
| Shareholders' equity | 5,078 | 4,600 | 5,553 | |
| Non-controlling interests | 15 | 10 | 13 | |
| Total shareholders' equity | 5,093 | 4,609 | 5,566 | |
| LIABILITIES | ||||
| Long-term liabilities | ||||
| Long-term interest-bearing liabilities | 2,168 | 3,364 | 2,288 | |
| Other long-term liabilities | 34 | 105 | 54 | |
| Provisions for pensions and similar obligations | 1,345 | 995 | 1,008 | |
| Deferred tax liabilities | 574 | 983 | 407 | |
| Other provisions | 1,693 | 1,591 | 1,686 | |
| Total long-term liabilities | 5,815 | 7,038 | 5,443 | |
| Current liabilities | ||||
| Current interest-bearing liabilities | 490 | 649 | 723 | |
| Accounts payable | 4,255 | 4,247 | 4,427 | |
| Tax liabilities | 25 | 19 | 115 | |
| Invoiced revenues not worked-up | 6,050 | 5,368 | 4,355 | |
| Accrued expenses and prepaid income | 2,810 | 2,999 | 3,205 | |
| Provisions | 7 | 37 | 21 | |
| Other current liabilities | 1,666 | 2,188 | 1,460 | |
| Total current liabilities | 15,304 | 15,507 | 14,306 | |
| Total liabilities | 21,119 | 22,544 | 19,749 | |
| Total shareholders' equity and liabilities | 26,212 | 27,155 | 25,315 | |
$^{\mathrm{1)}}$ Includes short-term investments with maturities exceeding three months, see also cash-flow statement.
| Jun. 30, 2017 | Jun. 30, 2016 | ||||||
|---|---|---|---|---|---|---|---|
| Total | Total | ||||||
| Shareholders' | Non-controlling | shareholders' Shareholders' Non-controlling | shareholders' | ||||
| SEK M | equity | interests | equity | eauity | interests | equity | |
| Opening balance, January 1st | 5,553 | 13 | 5,566 | 9,691 | 23 | 9,714 | |
| Total comprehensive income | 394 | 396 | 6.715 | - 1 | 6,714 | ||
| Dividend | -864 | $-864$ | $-325$ | -11 | $-336$ | ||
| Dividend, Bonava | $-11,563$ | $-11,563$ | |||||
| Listing costs | -56 | -56 | |||||
| Sale of treasury shares | -4 | -4 | 134 | 134 | |||
| Performance based incentive program | ٠. | - 5 | |||||
| Closing balance | 5,078 | 15 | 5,093 | 4,600 | 10 | 4,609 |
If the principles for accounting for pensions, IAS19, applied before 1 January 2013, had been used, the equity would have been SEK 1,928 M higher and net indebtedness SEK 1,345 M lower at June 30 2017.
| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | |
|---|---|---|---|---|---|---|
| SEK M | Apr. - Jun. | Apr. - Jun. | Jan. - Jun | Jan. - Jun. | Jun. 17 | Jan. -Dec. |
| OPERATING ACTIVITIES | ||||||
| Profit / loss after financial items, continuing operations | 521 | 548 | 805 | 240 | 1,906 | 1,341 |
| Profit / loss after financial items, discontinued operations | 6,821 | 6,934 | $-31$ | 6,902 | ||
| Adjustments for items not included in cash flow | $-65$ | $-6,881$ | 435 | $-6,600$ | 699 | $-6,336$ |
| Taxes paid | $-87$ | $-78$ | $-233$ | $-236$ | $-398$ | $-401$ |
| Cash flow from operating activities before changes in working capital |
369 | 410 | 1,007 | 337 | 2,176 | 1,506 |
| Cash flow from changes in working capital | ||||||
| Divestment of property projects | 71 | 304 | 1,461 | 305 | 3,274 | 2,118 |
| Gross investments in property projects | $-316$ | $-537$ | $-505$ | $-908$ | $-1,208$ | $-1,612$ |
| Divestment of housing projects | 1,047 | 2,532 | 16 | 2,548 | ||
| Gross investments in housing projects | $-809$ | $-3,171$ | 17 | $-3,154$ | ||
| Other changes in working capital | $-1,993$ | $-959$ | $-1,962$ | $-648$ | $-1,551$ | $-237$ |
| Cash flow from changes in working capital | $-2,238$ | $-954$ | $-1,006$ | $-1,890$ | 548 | $-336$ |
| Cash flow from operating activities | $-1,869$ | $-544$ | $\mathbf 0$ | $-1,553$ | 2,724 | 1,170 |
| INVESTING ACTIVITIES | ||||||
| Acquisition/Sale of subsidiaries and other holdings 11 | $-469$ | -4 | $-500$ | -496 | ||
| Acquisition/Sale of tangible fixed assets | $-179$ | $-198$ | $-292$ | $-328$ | $-577$ | $-613$ |
| Acquisition/Sale of other fixed assets | $-15$ | $\mathbf{3}$ | $-30$ | -46 | $-56$ | $-72$ |
| Cash flow from investing activities | $-194$ | $-670$ | $-326$ | $-874$ | $-633$ | $-1,181$ |
| Cash flow before financing | $-2,064$ | $-1,215$ | $-326$ | $-2,427$ | 2,091 | $-11$ |
| FINANCING ACTIVITIES | ||||||
| Cash flow from financing activities | $-235$ | 160 | $-602$ | 550 | $-2,240$ | $-1,087$ |
| Cash flow during the period | $-2,299$ | $-1,055$ | $-928$ | $-1,877$ | $-150$ | $-1,099$ |
| Cash and cash equivalents at beginning of period | 4,447 | 3,361 | 3,093 | 4,177 | 2,307 | 4,177 |
| Effects of exchange rate changes on cash and cash equivalents | $-2$ | $-19$ | 6 | $-11$ | 15 | |
| Cash and cash equivalents at end of period | 2,146 | 2,307 | 2,146 | 2,307 | 2,146 | 3,093 |
| Short-term investments due later than three months | 91 | 186 | 91 | 186 | 91 | 190 |
| Total liquid assets at end of period | 2.237 | 2.492 | 2.237 | 2.492 | 2.237 | 3.283 |
For information about Bonava's impact on the Group's cash flow in each section, see note 4 Dicontinued operations.
1) Bonava's cash and cash equivalents are included with SEK -658 M for the Jan-Dec 2016.
| 2017 | 2016 | 2017 | 2016 | Jul. 16- | 2016 | ||
|---|---|---|---|---|---|---|---|
| SEK M | Note 1 | Apr. - Jun. | Apr. - Jun. | Jan. -Jun. | Jan. -Jun. | Jun. 17 | Jan. -Dec. |
| Net sales | 40 | 5,594 | 77 | 11,279 | 9,671 | 20,873 | |
| Production costs | $-4,869$ | $-10,393$ | $-8,774$ | $-19,167$ | |||
| Gross profit | 40 | 725 | 77 | 886 | 897 | 1,706 | |
| Selling and administrative expenses | $-89$ | $-393$ | $-169$ | $-718$ | $-695$ | $-1,244$ | |
| Impairment losses | -88 | $-88$ | $-88$ | ||||
| Operating profit | $-49$ | 244 | $-92$ | 80 | 202 | 374 | |
| Result from financial investment | |||||||
| Result from participations in Group companies | 618 | 225 | 618 | 740 | 701 | 823 | |
| Result from participations in associated companies | 16 | 16 | 14 | 30 | |||
| Result from other financial fixed assets | 12 | 12 | |||||
| Result from financial current assets | 4 | 9 | 9 | ||||
| Interest expense and similar items | -6 | $-24$ | $-11$ | $-54$ | $-65$ | $-109$ | |
| Result after financial items | 574 | 461 | 530 | 786 | 873 | 1,129 | |
| Appropriations | 527 | 814 | 287 | ||||
| Tax on net profit for the period | 15 | -40 | -92 | $\overline{2}$ | $-205$ | $-110$ | |
| Net profit for the period | 589 | 421 | 965 | 788 | 1,483 | 1,306 |
The commission relationship between NCC AB and NCC Sverige AB was discontinued on January 1, 2017. Assets, liabilities, revenues and costs are currently recognized in both NCC Sverige AB and NCC AB. Accordingly, the employees' employment has been transferred from NCC AB to NCC Sverige AB. Appropriations for the operations no longer conducted in the Parent Company were reversed to the Parent Company during the first quarter. The Parent Company currently consists primarily of head office functions plus a branch in Norway. Net sales pertain to charges to other Group companies. The average number of employees was 65 (5,956).
The first dividend to shareholders of SEK 3 per share was paid in April. The second dividend of SEK 5 per share will be paid in November. Dividends from subsidiaries have been received in an amount of SEK 629 M.
In 2016, NCC Sweden AB was included in the Parent Company, when it conducted operations on a commission basis on behalf of NCC AB. The projects were recognized in profit on completion.
| 2017 | 2016 | 2016 | ||
|---|---|---|---|---|
| SEK M | Note 1 | Jun. 30 | Jun. 30 | Dec. 31 |
| ASSETS | ||||
| Fixed assets | ||||
| Intangible fixed assets | 37 | 116 | 108 | |
| Tangible fixed assets | 93 | 86 | ||
| Financial fixed assets | 4,428 | 4,403 | 4,595 | |
| Total fixed assets | 4,470 | 4,612 | 4,789 | |
| Current assets | ||||
| Materials and inventories | 41 | 57 | ||
| Current receivables | 246 | 4,085 | 4,338 | |
| Cash and bank balances | 700 | 3 | $\overline{2}$ | |
| Treasury balances | 1,893 | 6,262 | 5,833 | |
| Total current assets | 2,839 | 10,391 | 10,231 | |
| Total assets | 7,309 | 15,003 | 15,020 | |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||
| Shareholders' equity | 3,771 | 3,235 | 3,677 | |
| Untaxed reserves | 441 | 527 | ||
| Provisions | 9 | 457 | 569 | |
| Long term liabilities | 2,057 | 2,565 | 2,072 | |
| Current liabilities | 1,471 | 8,304 | 8,175 | |
| Total shareholders' equity and liabilities | 7,309 | 15,003 | 15,020 |
This interim report has been compiled pursuant to IAS 34 Interim Financial Reporting. The interim report has been prepared in accordance with the International Financial Reporting Standards (IFRS) and the interpretations of prevailing accounting standards issued by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the EU.
The interim report has been prepared pursuant to the same accounting policies and methods of calculation as the 2016 Annual Report (Note 1, pages 64-70).
During 2016, the operations of Bonava were recognized in accordance with IFRS 5, Fixed assets held for sale and discontinued operations. Accordingly, inter-company volumes from Bonava have not been eliminated from the income statement, nor have inter-company gains between Building and Bonava. Neither are internal volumes from Bonava eliminated from the order backlog and orders received.
Bonava's net after-tax profit is recognized on one line in the income statement.
Bonava's profit after net financial items is recognized separately in the cash flow statement, following which Bonava as a whole is included.
The Parent Company has prepared its interim report pursuant to the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.
The interim report for the Parent Company has been prepared in accordance with the same accounting policies and methods of calculation as the 2016 Annual Report (Note 1, pages 64-70).
| 2017 | 2016 | 2017 | 2016 | Jul.-16 | 2016 | |
|---|---|---|---|---|---|---|
| SEK M | Apr. Jun. | Apr. -Jun. | Jan. -Jun. | Jan. -Jun. | Jun. 17 | Jan. -Dec. |
| Other intangible assets | $-17$ | $-17$ | $-33$ | $-33$ | $-82$ | $-82$ |
| Owner-occupied properties | $-13$ | $-26$ | $-24$ | |||
| Machinery and equipment | $-163$ | $-159$ | $-317$ | $-301$ | $-636$ | $-620$ |
| Total depreciation 1 | $-187$ | $-182$ | $-363$ | $-345$ | -744 | $-726$ |
1) Excluding impairments. Impairments for the period Jul. -16 - Jun. -17 amounts to SEK 13 M and for the period Jan. - Dec. 2016 to SEK 97 M.
| April - June 2017 | NCC. Building |
NCC Infrastructure |
Industry | NCC NCC Property Development |
Total segments |
Other and eliminations 1 |
Group |
|---|---|---|---|---|---|---|---|
| Net sales, external | 5.933 | 4,402 | 2.876 | 166 | 13,378 | 4 | 13,382 |
| Net sales, internal | 214 | 137 | 540 | 18 | 908 | $-908$ | |
| Net sales, total | 6.147 | 4.539 | 3.416 | 84 | 14.286 | $-904$ | 13,382 |
| Operating profit | 44 | 70 | 336 | 65 | 615 | -67 | 548 |
| Net financial items | $-26$ | ||||||
| Profit/loss after financial items | 522 |
| NCC. | NCC. | NCC NCC Property | Total | Other and | |||
|---|---|---|---|---|---|---|---|
| April- June 2016 | Buildina | Infrastructure | Industry | Development | seaments | eliminations 11 | Group |
| Net sales, external | 6.488 | 4.158 | 2.560 | 441 | 13.646 | 13,646 | |
| Net sales, internal | 361 | 92 | 479 | 7 | 949 | $-949$ | |
| Net sales, total | 6.849 | 4.250 | 3.039 | 458 | 4.595 | $-949$ | 13,646 |
| Operating profit | 150 | 93 | 290 | 71 | 604 | $-32$ | 572 |
| Net financial items | $-24$ | ||||||
| Profit/loss after financial items | 548 |
| NCC | NCC | NCC NCC Property | Total | Other and | |||
|---|---|---|---|---|---|---|---|
| January - June 2017 | Buildina | Infrastructure | Industry | Development | seaments | eliminations 21 | Group |
| Net sales, external | 1.428 | 7.699 | 3.734 | 2.323 | 25.184 | 4 | 25,188 |
| Net sales, internal | 393 | 244 | 769 | 35 | ا 44. ا | -1,441 | |
| Net sales, total | 1.821 | 7.943 | 4.503 | 2.358 | 26.625 | $-1.437$ | 25,188 |
| Operating profit | 200 | 43 | 26 | 658 | 927 | -77 | 850 |
| Net financial items | $-45$ | ||||||
| Profit/loss after financial items | 805 |
| NCC | NCC. | NCC NCC Property | Total | Other and | |||
|---|---|---|---|---|---|---|---|
| January - June 2016 | Building | Infrastructure | Industry | Development | seaments | eliminations 2) | Group |
| Net sales, external | 11.596 | 7.436 | 3.295 | 517 | 22,843 | 22,843 | |
| Net sales, internal | 642 | 180 | 632 | 33 | 1.487 | $-1,487$ | |
| Net sales, total | 12.238 | 7.615 | 3.927 | 550 | 24,330 | -1,487 | 22,843 |
| Operating profit | 220 | 82 | $-35$ | 93 | 361 | $-72$ | 289 |
| Net financial items | $-49$ | ||||||
| Profit/loss after financial items | 240 |
1) The figures for the quarter include among others NCC's head office, results from small subsidiaries and associated companies and remaining parts of NCC International Projects, totalling an expense of SEK 42 M (expense: 171) whereof SEK 88 MSEK relates to discontinued development of implementation of a common HR-system. Further, the figures for the quarter includes eliminations of internal profits amounting to an income of SEK 1 M (income: 128) and other Group adjustments, mainly consisting of differences of accounting policy between the segments and the Group (including pensions) amounting to an expence of SEK 26 M (income: 12).
2) The figures for the period include among others NCC's head office, results from small subsidiaries and associated companies and remaining parts of NCC International Projects, totalling an expense of SEK 70 M (expense: 196), whereof SEK 88 M relates to discontinued development and implementation of a commom HR system. Further, the figures for the quarter includes eliminations of internal profits amounting to an income of SEK 42 M (income: 101) and other Group adjustments, mainly consisting of differences of accounting policy between the segments and the Group (including pensions) amounting to an expense of SEK 49 M (income: 24).
In June 2016, NCC spun off the shares in Bonava to the shareholders. The first day of trading on Nasdaq Stockholm was June 9, 2016, and the final prices paid were SEK 106.50 per Series B share and SEK 107.50
per Series A share, resulting in market capitalization of some SEK 11.5 billion. This generated a capital gain on the spinoff of Bonava of SEK 6,724 M.
| 2016 Jan-7 Jun |
2016 Jan-Dec |
|
|---|---|---|
| Net sales | 3,243 | 3,243 |
| Production costs | $-2,710$ | $-2,710$ |
| Selling and administrative expenses | $-231$ | $-231$ |
| Operating profit/loss | 303 | 303 |
| Net financial items | $-124$ | $-124$ |
| Profit/loss after financial items | 179 | 179 |
| Tax | $-36$ | -36 |
| Net profit/loss for the period from discontinued operation | 143 | 143 |
| Capital gain from disposal of discontinued operation | 6,755 | 6,724 |
| Net profit from discontinued operation after tax | 6,898 | 6,867 |
| Comprehensive income for operation available for distribution | 4 | 4 |
| Earnings per share | 1.32 | 1.32 |
| 2016 | 2016 | |
|---|---|---|
| Below the effects on cashflow from discontinued operations are stated: | Jan-ZJun- | Jan-Dec |
| Cash flow from operating activities before changes in working capital | 105 | 105 |
| Cash flow from operating activities | $-708$ | $-708$ |
| Cash flow from investing activities | -81 | -81 |
| Cash flow from financing activities | 754 | 754 |
| Cash flow during the period from discontinued operations | 70 | 70 |
In the tables below, disclosures are made concerning how fair value has been determined for the financial instruments that are continuously measured at fair value in NCC's balance sheet. When determining fair value, assets have been divided into three levels. No transfers were made between the levels during the period.
In level 1, measurement complies with prices quoted on an active market for the same instruments. Derivatives in level 2 comprise currency forward contracts, crosscurrency swaps, interest-rate swaps, oil forward contracts, as well as electricity forward contracts used for hedging purposes. The measurement to fair value of currency-forward contracts, cross-currency swaps, oil forward contracts and electricity forward contracts is based on accepted models with observable input data such as interest rates, exchange rates and commodity prices. The measurement of interestrate swaps is based on forward interest rates based on observable yield curves. NCC has no financial instruments in level 3.
| SEK M | J un. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| evel 1. | Level 2 | Totall | Level 1 Level 2 | Totall | Level 1 | Level 2 | Total | ||
| Financial as sets measured at fair value through profit | |||||||||
| and los s | |||||||||
| Securities held for trading | 10 | 10 | 95 | 95 | 99 | 99 | |||
| Derivative instruments | 76 | 76 | 24 | 24 | 70 | 70 | |||
| Derivative instruments used for hedge accounting | 10 | 10 1 | 36 | 36 | |||||
| Total as s ets | 10 | 86 | 96 | 95 | 29 | 124. | 99 | 106 | 205 |
| Financial liabilities meas ured at fair value through | |||||||||
| profit and loss | |||||||||
| Derivative instruments | 4 | 51 | 51 | 14 | 14 | ||||
| Derivative instruments used for hedge accounting | 59 | 59 | 79 | 791 | 35 | 35 | |||
| Total liabilities | 63 | 63 | 130 | 30 | 49 | 49 |
In the tables below, disclosures are made concerning fair value for the financial instruments that are not recognized at fair value in NCC's balance sheet.
| SEK M | J un. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |||
|---|---|---|---|---|---|---|
| Carrying | Fairl | Carrying | Fair | Carrying | Fair | |
| amount | valuel | amount | valuel | amount | value | |
| Long-term interest-bearing receivables held to maturity | 73 | 73 1 | 62 | 63 | 63 | 63 |
| Short-term investments held to maturity | 81 | 81 | 92 | 91 | 92 | |
| Long-term interest-bearing liabilities | 2,168 | 2.187 | 3.364 | 3.388 | 2.288 | 2.311 |
| Current interest-bearing liabilities | 490 | 493 | 649 | 653 | 723 | 726 |
For financial instruments recognized at amortized cost - accounts receivables, other receivables, cash and cash equivalents, accounts payable and other interest-free liabilities - the fair value does not materially deviate from the carrying amount.
| SEK M | 2017 | 2016 | 2016 |
|---|---|---|---|
| Group | Jun. 30 | Jun. 30 | Dec. 31 |
| Assets pledged | 443 | 346 | 377 |
| Contingent liabilities and guarantee obligations 11 | 748 | 5.347 | 768 |
| Parent company | |||
| Contingent liabilities and guarantee obligations | 20,381 | 16.587 | 11,882 |
1) Since sureties for former wholly owned subsidiaries of NCC AB in the Bonava Group have not been eliminated, sureties still remaining as outstanding in NCC AB on behalf of Bonava companies have been included in this item. The remaining volume, which includes collateral for agreements concerning future development and has beneficiaries in the form of municipalities and private-sector companies, will continue to be managed during 2017. As a result of agreements between NCC AB and Bonava AB, however, NCC AB will be indemnified by Bonava AB for all undertakings. NCC AB has also received collateral from credit insurance companies for undertakings that remain outstanding pertaining to Bonava's wholly owned companies.
| 1) Calculations are based on the rolling 12 month period. | |||||
|---|---|---|---|---|---|
| 2) All shares issued by NCC are common shares. | |||||
| 3) The amounts are adjusted for change in accounting policy regarding IAS 19. 4) When calculating the key figure the profit arising from the dividend of Bonava, SEK -31 M has been excluded. |
|||||
| 5) When calculating the key figure the profit arising from the dividend of Bonava, SEK -31 M has been included. |
5) When calculating the key figure the profit arising from the dividend of Bonava, SEK -31 M has been included.
6) M arket value December 2016 excludes NCC´s housing business, Bonava. Including Bonava the maket value amounts to SEK 39 563 M .
For definitions of key figures, see www.ncc.group/investor-relations/financial-data/financial-definitions.
The Board of Directors and the CEO provide their assurance that the interim report gives a true and fair view of the Parent Company's and the Group's operations, position and results and describes the significant risks and uncertainties facing the Parent Company and the companies included in the Group.
Solna, July 19, 2017
Tomas Billing Chairman of the Board Viveca Ax:son Johnson Board member
Carina Edblad Board member
Mats Jönsson Board member
Ulla Litzén Board member Geir Magne Aarstad Board member
Birgit Nørgaard Board member
Karl-Johan Andersson Board member Employee representative
Lars Bergqvist Board member Employee representative
Karl G Sivertsson Board member Employee representative
Peter Wågström President and CEO
This report is unaudited.
NCC is one of the leading Nordic construction and property development companies. With the Nordic region as its home market, NCC is active throughout the value chain – developing and building commercial properties and constructing housing, offices, industrial facilities and public buildings, roads, civil engineering structures and other types of infrastructure. NCC also offers input materials used in construction and accounts for paving and road services. NCC creates future environments for working, living and communication based on responsible construction operations that result in sustainable interaction between people and the environment.
We will renew our industry providing superior sustainable solutions.
The company's values and Code of Conduct function as the backbone for the way NCC works and operates. They also jointly serve as a compass for how employees are to conduct themselves and act in everyday situations, and provide guidance when decisions have to be made
Business concept – responsible enterprise NCC develops and builds future environments for working, living and communication. Supported by its values, NCC and its customers jointly identify needs-based, cost-effective and high-quality solutions that generate added value for all of NCC's stakeholders and contribute to sustainable social development.
NCC conducts integrated construction and development operations in the Nordic region. The company has three businesses - Industrial, Construction and civil engineering and Development - and as of January 1, 2016 is organized in four business areas.
NCC Building
NCC Infrastructure
NCC Industry
NCC Property Development
Chief Financial Officer Mattias Lundgren Tel. +46 70 228 88 81
IR Manager Johan Bergman Tel. +46 8 585 523 53, +46 70 354 80 35
An information meeting with an integrated Internet and telephone conference will be held on July 19 at 10:00 a.m. at Tändstickspalatset, Västra Trädgårdsgatan 15 in Stockholm. The presentation will be held in English. To participate in this teleconference, call +46 8 519 993 55 (SE), +44 203 194 05 50 (UK), +1 855 269 26 05 (US) or +49 211 971 900 86 (DE) five minutes prior to the start of the conference. State "NCC."
This is the type of information that NCC AB could be obligated to disclose pursuant to the EU Market Abuse Regulation and the Securites Market Act. The information was issued for publication through the contact person above, on July 19, 2017, at 08:00 CET.
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Vallgatan 3 SE-170 67 Solna, Sweden
NCC AB SE-170 80 Solna, Sweden
+46 8 585 510 00
www.ncc.se
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