Quarterly Report • Jul 18, 2017
Quarterly Report
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| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 1,464 | 1,209 | 2,602 | 1,910 | 4,670 | 3,978 |
| Operating profit | 95 | 318 | 142 | 312 | 241 | 411 |
| Operating margin, % | 6.5 | 26.3 | 5.5 | 16.3 | 5.2 | 10.3 |
| Profit/loss for the period | 87 | 321 | 120 | 316 | 198 | 394 |
| Earnings per share, SEK, before dilution | 3.74 | 19.38 | 5.20 | 19.08 | 9.50 | 22.40 |
| Earnings per share, SEK, after dilution | 3.72 | 18.27 | 5.13 | 17.99 | 9.22 | 21.22 |
| Equity per share, SEK, after dilution | 69.33 | 43.78 | 69.33 | 43.78 | 69.33 | 62.83 |
| Equity/assets ratio, % | 42.8 | 30.7 | 42.8 | 30.7 | 42.8 | 42.7 |
| Net debt | -123 | 409 | -123 | 409 | -123 | -37 |
| Net debt/equity ratio, % | -7.6 | 53.2 | -7.6 | 53.2 | -7.6 | -2.5 |
| Order bookings | 1,742 | 1,724 | 3,811 | 2,969 | 6,381 | 5,539 |
| Order backlog | 8,308 | 6,480 | 8,308 | 6,480 | 8,308 | 7,041 |
* Operating profit for the second quarter of 2016 included the sale of 50 percent of the Karlastaden project to NREP, generating income of SEK 318 million and operating profit of SEK 444 million.
The second quarter of 2017 showed continued strong growth with improved profitability in the contracting operations. I feel particularly proud that all four business areas now have a strong wind in their sails and that our business model, with turnkey solutions from start to finish, is appreciated in the market. I often meet with customers, who confirm that our culture is reflected in the commitment and pride shown by Serneke's employees. Moving
ahead, I consider two of our most important tasks to be continuing to utilize the strength of the entire group and maintaining the strength of our corporate culture.
As you read this quarterly report, I would like to underscore the fact that the sale of half of the Karlastaden project, which occurred in the corresponding quarter last year, had a considerable impact on the Group's earnings. It is important to have this factor in mind when comparing the quarters. It is clear that the Group as a whole is continuing to grow, and I would like to highlight the contracting element in particular. Construction increased its income for the second quarter by 60percent over the period to SEK1,292million (809) and Civil Engineering increased its income for the second quarter by 63percent to SEK152million (93). For both business areas, the explanation is increased production capacity combined with strong demand. The operations currently have more and larger projects in progress than they did in the corresponding quarter last year. The order book continues to grow in pace with the increased rate of production and the order book for the entire Group now amounts to SEK8,308million (6,480). The increase of 28percent is explained by continued good order bookings. The consolidated operating margin for the quarter was 6.5percent, with Construction increasing to 3.4percent (1.6) in the second quarter and Civil Engineering improving its results strongly for the second quarter, from a negative 12.9percent to a negative 1.3percent.
The average number of employees increased by 160 on the corresponding quarter last year to 919 employees today.
We have strong cash and bank balances and are well equipped for continued growth and to meeting any challenges from changing external conditions. Our cash and bank balances also enable us to seize the appropriate opportunities when offered by the market.
The contracting operations within Construction and Civil Engineering continued to grow, with improved profitability and strong order bookings. With a clear objective of focusing on larger and more complex projects, we have established processes and systems that allow us to specialize our activities towards our selected market. The model of establishing ourselves organically in identified growth areas when a suitable entry-level project appears, grants us the opportunity to grow in a controlled and cost-effective manner. Over the past quarter, Construction has established itself in Växjö, Eskilstuna and Västerås. Additional locations have been identified, but we will go there when the right project comes along, not on speculation.
While Stockholm, Gothenburg and Malmö remain our individual largest markets, in the past quarter, Trollhättan has stood out. We have long been a well-established actor here and have now signed a contract for the construction of a new school for SEK485million with the municipally-owned Trollhättan Tomt AB as our appreciated partner. This is a brilliant example, not only of the breadth of our offer, but also of the strength exerted by being specialized in major projects for large-scale, professional clients. It is equally enjoyable to now see Civil Engineering embark on its first project in Stockholm where the market is very good and where collaboration, with Construction and Project Development in particular, is offering considerable development potential and access to attractive projects.
With established operations in Project Development and Property Management, we are not only opening up favorable business opportunities for our respective business areas, but also creating conditions for turnkey transactions that are unlikely to be possible for players who are merely property developers or contractors. With control of the entire value chain and a
genuine team spirit, we can create turnkey solutions that are also appreciated by partners such as the Municipality of Järfälla. Through an agreement with the Municipality of Järfälla, we have created an opportunity for ourselves over the next few years, alongside the Municipality, to develop the next-generation of urban development, where housing, sports, retail and public services meet in mixed urban environment that is sustainable in the long term. For me personally, this is a project that is particularly dear to my heart. We combine the knowledge of the entire organization to become engaged and to affect our community positively.
Each business area should, in itself, be profit generating in its core operations, although synergies also generate added value for other parts of the Group. Mälardalen University, which Project Development has sold to Hemsö and which generated profit for Project Development in the second quarter, is a good example, where Construction will also have a contract in the order of SEK643million over the next few years. The same applies to our joint venture Karlastaden project, for which the City of Gothenburg adopted the new detailed development plan on June 15. With the trend now moving in the direction of signing agreements with operators, as in the case of Choice Hotels for the unique hotel to be built in the area, or to preparing the construction contracts for the area, all business areas are involved to the highest degree and are contributing to the whole. Serneke Property Management recently acquired the property neighboring Karlstaden to better utilize the opportunities that a partnership within the Group opens up.
This was also a significant factor in the second quarter's other major transaction when Property Management entered into an agreement to acquire Säve Depå, which, together with our existing holdings, gives us control of more than threemillion square meters of land at the old Säve airport site. We are already seeing great interest from a large number of operations and I am convinced that this area has the potential to become an amazing business involving the entire Group.
The first half of 2017 was characterized by continued strong demand in the market and an internal focus on delivering profitable growth. We continue to be selective, choosing projects that build long-term sustainable customer relationships and a stable order book. The concept of Group collaboration will be central to our continued success and we are already seeing clear examples of how commitment and a lack of prestige, without internal impediments, enables Serneke to deliver costeffective transactions in close partnership with customers. The strategy of four collaborative business areas pushing jointly towards challenging and clear objectives forms a crucial part of our success, although the company's culture is even more important to me.
Serneke will continue to be a company lacking in internal prestige and that encourages innovation and develops committed and motivated employees. Our strong order bookings, frequently from repeat customers, demonstrates that our approach is appreciated and I am proud of all of the employees currently representing our brand. Together we are building the Serneke that our customers appreciate and with which more people seek employment.
We still have a lot to do, but for me as founder and CEO, it is particularly important that we continue to protect our unique culture and that all employees also feel proud of what we are creating and contributing together.
Ola Serneke, President and CEO
On July 18, 2017 at 10:00 a.m. (CET), Serneke Group will comment on this Interim Report in a conference call with an online presentation for investors, analysts and the media. The presentation will be in Swedish and can be followed live via webcast at www.serneke.group. Presentation materials for the presentation will be available on the website about one hour before the webcast begins.
To participate, please dial: From Sweden: +46 (0)8-5664 2699 From the UK: +44 20 3008 9803
Order bookings for the second quarter of the year amounted to SEK1,742million (1,724). The Group is experiencing continued high demand in the market and order bookings for the second quarter of 2017 consisted primarily of housing projects in urban areas. The metropolitan areas, Stockholm and Gothenburg, continue to be the Group's most important markets.
The order backlog is continuing to increase steadily and amounts to SEK8,308million (6,480) for the Group as per June 30, 2017.
| Order bookings | Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Construction | 1,606 | 1,576 | 3,436 | 2,807 | 5,658 | 5,029 |
| Civil Engineering | 136 | 148 | 375 | 162 | 723 | 510 |
| Group | 1,742 | 1,724 | 3,811 | 2,969 | 6,381 | 5,539 |
| Order backlog | June 30 | June 30 | Dec 31 | |||
| SEK million | 2017 | 2016 | 2016 | |||
| Construction | 7,894 | 6,290 | 6,753 | |||
| Civil Engineering | 414 | 190 | 288 | |||
| Group | 8,308 | 6,480 | 7,041 |
Listed below are the Group's new assignments for more than SEK100million:
| Assignment | Location | Client | Order value (SEK million) |
Anticipated start of construction |
|---|---|---|---|---|
| New production, school | Trollhättan | Trollhättan Tomt AB |
485 | Construction in progress |
| New production, apartments | Malmö | MKB Fastighets AB |
161 | In the third quarter |
| New production, apartments | Gothenburg | HSB Göteborg | 116 | In the third quarter |
| New production, apartments | Lund | Lunds kommun Fastighets AB |
208 | In the fourth quarter |
The operations of the Serneke Group are organized into four business areas: Construction, Civil Engineering, Project Development and Property Management.
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 1,464 | 1,209 | 2,602 | 1,910 | 4,670 | 3,978 |
| Operating profit | 95 | 318 | 142 | 312 | 241 | 411 |
| Net financial items | -2 | -5 | -9 | -7 | -19 | -17 |
| Earnings after financial items | 93 | 313 | 133 | 305 | 222 | 394 |
| Profit/loss for the period | 87 | 321 | 120 | 316 | 198 | 394 |
Consolidated income for the second quarter of 2017 amounted to SEK1,464million (1,209), an increase of 21percent compared with the corresponding quarter in the preceding year. Operating profit amounted to SEK95million (318). In the second quarter of the previous year, 50percent of the Karlastaden project was sold – however, excluding that transaction, all business areas improved their sales and operating profit compared with the corresponding quarter in 2016.
The share in the profit of associated companies and joint ventures amounted to SEK42million (negative 13), consisting mainly of capital gains of SEK38million attributable to the sale of the Mälardalen University project through a joint venture company and SEK4million from the share in the profits of associated companies and joint ventures.
Net financial items amounted to negative SEK2million (negative 5) and the Group reported a tax expense of a negative SEK6million (positive 8), mainly due to changes in deferred tax.
Consolidated income for the period January-June 2017 amounted to SEK2,602million (1,910), an increase of 36percent compared with the corresponding period in the preceding year. Operating profit amounted to SEK142million (312), mainly consisting of the business areas Construction and Project Development, which accounted for SEK85million and SEK47million respectively.
During the period, changes in value of investment properties affected operating income positively by SEK18million (0), of which SEK8million refers to changes in existing investment properties and SEK10million to changes in value in the reclassification of project– and development properties to investment properties. The share in profit of associates and joint ventures amounted to SEK49million (negative 10).
Net financial items amounted to negative SEK9million (negative 7) and the Group reported a tax expense of a negative SEK13million (positive 11), mainly due to changes in deferred tax. Tax income for the period last year relates to capitalized tax loss carryforwards.
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Construction | 1,292 | 809 | 2,295 | 1,457 | 4,067 | 3,229 |
| Civil Engineering | 152 | 93 | 275 | 172 | 558 | 455 |
| Project development | 53 | 323 | 103 | 325 | 151 | 373 |
| Property | 9 | 2 | 21 | 3 | 33 | 15 |
| Group-wide | 33 | 20 | 41 | 38 | 102 | 99 |
| Elimination | -75 | -38 | -133 | -85 | -241 | -193 |
| Total | 1,464 | 1,209 | 2,602 | 1,910 | 4,670 | 3,978 |
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Construction | 44 | 13 | 85 | 27 | 144 | 86 |
| Civil Engineering | -2 | -12 | -6 | –20 | -22 | -36 |
| Project development | 47 | 343 | 47 | 335 | 46 | 334 |
| Property | 3 | -19 | 14 | -19 | 70 | 37 |
| Group-wide | 3 | -7 | 2 | -11 | 3 | -10 |
| Total | 95 | 318 | 142 | 312 | 241 | 411 |
| Net financial items | -2 | -5 | -9 | -7 | -19 | -17 |
| Profit/loss before tax | 93 | 313 | 133 | 305 | 222 | 394 |
Serneke's operations largely lack clear seasonal effects. The contracting operations (Business Areas Construction and Civil Engineering) normally experience lower activity in the first quarter of the year due to fewer production days and, to a greater extent than normal, the effects of weather during the winter months. Profits are also affected by public holidays falling within a certain interim period, leading to fewer production days.
Serneke will construct the final 47 apartments for tenant-owner housing association HSB brf Skaftö in Västra Eriksberg in Gothenburg. Construction will commence in the summer of 2017 and the project is expected to be completed in the summer of 2019.
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK million | 2017 | 2016 | 2016 |
| Total assets | 3,788 | 2,506 | 3,437 |
| Total equity | 1,621 | 769 | 1,469 |
| Net debt | -123 | 409 | -37 |
| Cash and cash equivalents | 558 | 25 | 571 |
| Equity/assets ratio, % | 42.8 | 30.7 | 42.7 |
At June 30, 2017, the equity/assets ratio was 42.8percent (42.7). At the end of the period, the Group's cash and cash equivalents, including unutilized credit facilities, amounted to SEK760million (771).
Shareholders' equity has increased during the period and amounted to SEK1,621million on June 30, 2017, compared with SEK1,469million at December 31, 2016. Of this increase, profit for the period amounted to SEK120million, conversion of convertible bonds SEK28million and positive effects from company acquisitions SEK4million.
At June 30, 2017, net borrowing amounted to SEK123million (37). The net debt/equity ratio was a negative 7.6percent (negative 2.5) and the average interest rate was 4.85percent (4.49). Unutilized committed credit facilities amounted to SEK202million (200) at the end of the period. The bank overdraft with Nordea carries a covenant, which means that the Group shall have an equity/assets ratio of 25percent.
Cash flow from operating activities amounted to a negative SEK39million (215). The change is explained partly by acquisitions of development properties, as well as a greater amount of capital being tied up compared with the corresponding quarter of the previous year.
Cash flow from investments amounted to negative SEK28million (negative 141). The main reason for the change is that an investment property was acquired in the second quarter of 2016, while the change in investing activities this year is primarily attributable to investments in other tangible fixed assets.
Cash flow from financing activities amounted to a negative SEK73million (negative 58) and mainly relates to changes in borrowing.
Cash flow for the period amounted to a negative SEK140million (16).
Cash flow from operating activities amounted to SEK101million (156). Changes in working capital mainly explain differences against the corresponding period in the preceding year.
Cash flow from investments amounted to negative SEK57million (negative 144). The main reason for the change is that an investment property was acquired in the second quarter of 2016, while the change in investing activities this year is primarily attributable to investments in other tangible fixed assets.
Cash flow from financing activities amounted to a negative SEK57million (2) and mainly relates to changes in borrowing.
Cash flow for the period amounted to a negative SEK13million (14).
The Group had an average 919 employees in the period January–June 2017, compared with 759 in the corresponding period last year.
All the Group's construction-related operations are conducted within Business Area Construction. The business area performs works for both external customers, as well as with Business Areas Project Development and Property Management.
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 1,292 | 809 | 2,295 | 1,457 | 4,067 | 3,229 |
| Operating profit | 44 | 13 | 85 | 27 | 144 | 86 |
| Operating margin, % | 3.4 | 1.6 | 3.7 | 1.9 | 3.5 | 2.7 |
| Order bookings | 1,606 | 1,576 | 3,436 | 2,807 | 5,658 | 5,029 |
| Order backlog | 7,894 | 6,290 | 7,894 | 6,290 | 7,894 | 6,753 |
| Average number of employees | 681 | 577 | 670 | 561 | - | 593 |
Income amounted to SEK1,292million (809), an increase of 60percent, and operating profit amounted to SEK44million (13), corresponding to an increase of 238percent. The operating margin for the second quarter was 3.4percent (1.6). The improvement in earnings and margin compared with the corresponding quarter in 2016 is mainly explained by a larger number of major projects being in full production with better project margins.
Order bookings in April–June 2017 remained strong. Business Area Construction is adhering to the strategic plan and competing with the market leaders for major projects. New assignments in the second quarter were mainly in the housing sector but also in municipal services. The largest assignments won in terms of scale are the construction of the Sylteskolan School in Trollhättan for SEK485million, the construction of apartments in Lund for SEK208million, the construction of apartments in Malmö for SEK161million and the construction of apartments in Gothenburg for SEK116million.
Income amounted to SEK2,295million (1,457), an increase of 58percent, and operating profit amounted to SEK 85million (27), corresponding to an increase of 215percent. The operating margin for the period was 3.7percent (1.9). The improvement in earnings and margin compared with the corresponding period in 2016 is mainly explained by a larger number of major projects being in full production with better project margins.
Order bookings in the period January–June 2017 amounted to SEK3,436million (2,807) and at the end of the period, total order backlog amounted to SEK7,894million (6,290).
All the Group's civil engineering and infrastructure-related operations are conducted within Business Area Civil Engineering. The business area operates in local markets with both national and regional infrastructure projects and maintenance services. The business area performs works for both external customers, as well as the Group's other business areas.
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 152 | 93 | 275 | 172 | 558 | 455 |
| Operating profit | -2 | -12 | -6 | –20 | -22 | -36 |
| Operating margin, % | -1.3 | -12.9 | -2.2 | -11.6 | -3.9 | -7.9 |
| Order bookings | 136 | 148 | 375 | 162 | 723 | 510 |
| Order backlog | 414 | 190 | 414 | 190 | 414 | 288 |
| Average number of employees | 137 | 122 | 132 | 116 | - | 118 |
Income amounted to SEK152million (93), an increase of 63percent compared with the second quarter of 2016. The operating loss amounted to SEK2 M (12), which, although not satisfactory, demonstrates that the action program is beginning to take effect with a gradual improvement of the margin in the projects. There remains a clear trend for current projects to show better profitability than those completed in previous years.
Order bookings in the period April–June 2017 amounted to SEK136million (148) and, at the end of the period, the order backlog totaled SEK414million (190). New assignments in the second quarter were mainly in the public sector and municipal services. The largest assignments won during the quarter in terms of scale were road and utilities work for the Municipality of Haninge for SEK42million and production of pedestrian and bike paths for the Municipality of Kungälv with an order value of SEK17million.
Income amounted to SEK275million (172), an increase of 60percent compared with the same period in 2016. The increase in income is due to more major projects being in production compared with the corresponding period the previous year. The operating loss for the period amounted to SEK6million (20).
Order bookings during the period January-June 2017 amounted to SEK375million (162) and, at the end of the period, the order backlog totaled SEK414million (190), an increase of 118percent. The business area has a strategic focus on major orders, which starts to yield results when several contracts for major projects have been won during the year.
Business Area Project Development includes Serneke's development of housing and commercial properties. Project development is performed through wholly owned projects or in collaboration with third parties through associates.
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 53 | 323 | 103 | 325 | 151 | 373 |
| Share in profit of associates and joint ventures |
38 | - | 38 | - | 38 | - |
| Operating profit | 47 | 343 | 47 | 335 | 46 | 334 |
| Average number of employees | 31 | 19 | 29 | 18 | - | 20 |
Income for the second quarter amounted to SEK53million (323) and operating profit amounted to SEK47million (343). In the second quarter of 2016, Serneke completed its largest transaction so far, when 50percent of the Karlastaden project was sold, generating income of SEK 318 million and operating profit of SEK 444 million.
Operating profit for the period amounted to SEK 47 million, with the sale of the Mälardalen University project affecting profit by SEK 52 million. The transaction was implemented through the sale of Serneke's wholly-owned project company to a company jointly owned with Pareto. The jointly owned company was subsequently sold to Hemsö. Serneke has reported the profit partly as a share in the profit of associated companies and joint ventures (SEK 38 million) and partly as gross profit (SEK 14 million).
In May, Project Development acquired the Trollhättan Real Estate AB Group, which consists of 10 subsidiaries mainly containing project properties. Acquired companies comprise approximately 40,000 square meters of building rights that are located geographically in Trollhättan, Vänersborg and Strömstad. Serneke's ambition is for several of the developments to enter into production in 2017 and 2018. The acquisition did not affect earnings in the second quarter.
Over the period, income amounted to SEK103million (325) and operating profit amounted to SEK47million (335). The income is attributable to project income, mainly regarding housing projects, the sale of the Mälardalen University project and internal sales to the Property Management business area, which affected income positively by SEK20million. Operating profit for the first half of the year was affected positively by ongoing projects, the sale of the Mälardalen University project and by the group-internal sale of a company. The business area's expenses have increased compared with the previous year because of a growing organization that has been built up both in terms of competence and the number of individuals to handle future projects.
In the second quarter of 2016, half of the Karlastaden project was divested and Serneke accordingly became a partner in a joint venture with private equity company NREP, with an ownership of 50percent each. Serneke recognizes its holdings as a participation in joint ventures in the consolidated balance sheet.
Karlastaden will contain some 2,000 homes and 70,000 square meters of commercial space. The area will also be the site of the Nordic region's tallest residential building, Karlatornet. The project is in an intensive phase with Gothenburg City Council having adopted the detailed plan for Karlastaden and the Karlatornet tower on June 16, 2017. Construction is expected to commence in the second half of 2017. The estimated project value is approximately SEK13 billion over a five-year period. Via the joint venture company, sales of development rights will begin in 2017.
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK million | 2017 | 2016 | 2016 |
| Ownership share % | 50 | 50 | 50 |
| Share of equity | 331 | 318 | 330 |
| Share of profit | 0 | 0 | 0 |
| Apr–Jun | Apr–Jun | |
|---|---|---|
| SEK million | 2017 | 2016 |
| Rental income | 1 | 1 |
| Profit for the year | 0 | 0 |
| SEK million | June 30 2017 |
Dec 31 2016 |
|---|---|---|
| ASSETS | ||
| Property | 427 | 333 |
| Other assets | 60 | 19 |
| Total assets | 487 | 352 |
| Other liabilities Total equity and liabilities |
37 487 |
40 352 |
|---|---|---|
| Interest-bearing liabilities | 417 | 302 |
| Shareholders' equity | 33 | 10 |
| EQUITY AND LIABILITIES |
Karlastaden and the Karlatornet tower at Lindholmen in Gothenburg.
Estimated areas are explained by new detailed development plans not yet being adopted
| Project | Municipality | Estimated area (m2 GFA) |
Type | Planning phase | Type of asset | Proportion of capital (%) |
|---|---|---|---|---|---|---|
| Utby 20:1 (part) | Ale | 8,130 | Housing | Planning in progress | Agreed development rights not yet taken into possession |
100 |
| Ingared 5:274 and 5:240 (part) |
Alingsås | 1,483 | Housing | Detailed development plan |
Development rights on own balance sheet |
100 |
| Jägaren 10 | Alingsås | 2,720 | Housing | Planning in progress | Agreed development rights not yet taken into possession |
100 |
| Björnflokan 5 | Borås | 17,000 | Housing | Planning in progress | Development rights on own balance sheet |
100 |
| Karlastaden | Gothenburg | 238,799 | Housing/ Commercial |
Planning in progress | joint venture | 50 |
| Gårdsten 7:1, 45:1 (part) and 10:10 (part) |
Gothenburg | 26,500 | Housing/ Commercial |
Planning in progress | Agreed development rights not yet taken into possession |
100 |
| Gårdsten 45:24 | Gothenburg | 82,100 | Industry/ warehousing |
Detailed development plan |
Development rights on own balance sheet |
100 |
| Lorensberg 706:32 |
Gothenburg | 25,000 | Housing/ Commercial |
Pre-planning | Agreed development rights not yet taken into possession |
100 |
| Oceanhamnen, Kvarter 3A |
Helsingborg | 4,750 | Housing | Detailed development plan |
Agreed development rights not yet taken into possession |
100 |
| Jäntan 2 | Landskrona | 19,700 | Housing/ Commercial |
Planning in progress | Agreed development rights not yet taken into possession |
100 |
| Tomaten 1 (part) | Landskrona | 8,000 | Housing | Detailed development plan |
Agreed development rights not yet taken into possession |
100 |
| Vägeröd 1:69 | Lysekil | 20,000 | Housing | Planning in progress | Agreed development rights not yet taken into possession |
100 |
| Törnskogen 4:14 and Törnskogen 4:15 |
Sollentuna | 8,396 | Housing | Planning in progress | Development rights on own balance sheet |
100 |
| Fjällbacka 136:2 and 136:3 |
Tanum | 2,500 | Housing | Planning in progress | Associated companies | 6 |
| Koholmen 1:89 | Tjörn | 300 | Housing | Detailed development plan |
Development rights on own balance sheet |
100 |
| Järfälla Idrottsstad |
Järfälla | 134,000 | Housing/ Commercial |
Pre-planning | Agreed development rights not yet taken into possession |
100 |
| Fotkvarnen | Trollhättan | 3,000 | Housing | Planning in progress | Development rights on own balance sheet |
100 |
| Gullön 8 | Trollhättan | 2,000 | Housing | Detailed development plan |
Development rights on own balance sheet |
100 |
| Gullön 10 | Trollhättan | 3,000 | Housing | Planning in progress | Agreed development rights not yet taken into possession |
100 |
| Nabbensberg | Vänersborg | 1,900 | Housing | Detailed development plan |
Development rights on own balance sheet |
100 |
| Offerhällsparken park |
Trollhättan | 1,700 | Housing | Detailed development plan appealed |
Agreed development rights not yet taken into possession |
100 |
| Sadelmakaren | Strömstad | 4,000 | Housing | Detailed development plan |
Development rights partly on own balance sheet |
100 |
| Kv Haren | Vänersborg | 4,400 | Housing | Detailed development plan appealed |
Agreed development rights not yet taken into possession |
100 |
| Onsjö | Vänersborg | 9,000 | Housing | Detailed development plan |
Agreed development rights not yet taken into possession |
100 |
At June 30, 2017, the total book value of the project development portfolio amounted to SEK297million, which is recognized as project and development properties in the balance sheet. The holding of Project Karlastaden is recognized as a joint venture in participations in associated companies and joint ventures on the balance sheet at a value of SEK331million at June 30, 2017. Serneke's estimated value of the project portfolio amounts to approximately SEK1,702million, based on an external valuation made during the third quarter of 2016, with additions for acquisitions and subsequent activations. As a principle, Serneke includes an external valuation of the project development portfolio at least once a year, and this will take place during the second half of 2017.
Of the assessed value of the project portfolio of SEK1,702million, SEK190million represents the value of development rights on the Company's own balance sheet, agreed development rights of which the Company has yet to take possession are estimated at about SEK660million and development rights held through joint ventures or associates are estimated at approximately SEK852million.
Of the total project development portfolio of an estimated 628,378 square meters of gross floor area, options on development rights, that is, agreed development rights of which the Company has yet to take possession, accounted for 43percent. The options pertain to properties located in different parts of the country, and agreements have been signed with various parties. The options can be exercised when the detailed development plan for the relevant property gains legal force or a building permit is granted. Only then is access gained and payment made.
The Tomaten block in Borstahusen, outside Landskrona. Three multidwelling buildings, tenantowner apartments, 2-4 rooms. Sales have just commenced and the apartments have begun to be allocated among those early to register an interest. View of the island of Ven and the Sound.
Business Area Property Management manages and develops properties for long-term capital appreciation. Commercial properties are managed. The business area is working actively to acquire properties with development potential and generate growth by investing, developing, streamlining and rationalizing property management. Investment properties are managed through wholly owned companies or in collaboration with third parties through associates.
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 9 | 2 | 21 | 3 | 33 | 15 |
| Earnings from Property | 0 | -6 | -5 | -9 | -5 | -9 |
| Changes in value of properties | -1 | 0 | 8 | 0 | 50 | 42 |
| Share in profit of associates/ joint ventures |
4 | -13 | 11 | -10 | 25 | 4 |
| Operating profit | 3 | -19 | 14 | -19 | 70 | 37 |
| Average number of employees | 14 | 0 | 14 | 0 | - | 3 |
In the period April-June 2017, income amounted to SEK9million (2). The increase in income is primarily due to increased rental income for completed acquisitions of Säve flygplats and surrounding properties. The management result amounted to SEK0million (loss 6).
The properties are valued internally in connection with each quarterly report by means of a ten-year cash flow model for all properties. An external valuation of all properties is conducted annually to quality assure the internal valuation. The latest external valuation was made in the third quarter of 2016 and the internal property valuation made for the second quarter has resulted in a net change of value of a negative SEK1million (0).
The quarter's share in profit of associates amounted to SEK4million (negative 13) and is primarily attributable to the associate Änglagården Holding AB, which manages Prioritet Serneke Arena. Of the share in profit, the total amount of SEK4million is attributable to the management result.
As at June 30, 2017, the total book value of the investment properties amounted to SEK365million, compared with SEK188million in June 2016.
Income for the period amounted to SEK21million (3). The increase in income is primarily due to increased rental income for completed acquisitions of Säve flygplats and surrounding properties. Management income amounted to negative SEK5million (negative 9), of which a non-recurring expense of SEK10million relating to a provision for guaranteed net operating earnings attributable to associate Änglagården burdening the quarter. Adjusted for the provision for guaranteed net operating earnings, Property generated a positive operating profit.
Changes in value of properties amounted to SEK8million (0) and relate to the adjustment of an acquisition analysis, which resulted in a positive effect for the Group. The share of profit from associated companies amounted to SEK11million (negative 10) for the period, mainly attributable to Änglagården Holding AB.
| Project | Property | Municipality | Land area (m2) |
Housing | Commercial | Letting ratio (%) |
Ownership share (%) |
|---|---|---|---|---|---|---|---|
| Consinum | Kinna 24:133 | Mark | 39,866 | 0 | 4,722 | 50 | 75 |
| Serneke Industrifastigheter | Krattan 1 | Alingsås | 7,250 | 0 | 2,429 | 11 | 100 |
| Säve flygplats Property | Åseby | Gothenburg | 2,100,225 | 0 | 22,799 | 80 | 100 |
| Änglagården | Kviberg 741:191 |
Gothenburg | 20,248 | 0 | 44,769 | 98 | 40 |
| Härbärget | Åseby 9:1 | Gothenburg | 17,470 | 0 | 6,325 | 61 | 100 |
| HB Nolvik | Nolvik 9:1 | Gothenburg | 15,470 | 0 | 15,470 | 0 | 100 |
| Tallhyddan | Sörhaga 2:1 | Alingsås | 5,100 | 0 | 350 | 0 | 100 |
| Conpol | Golczewo | Poland | 46,686 | 0 | 0 | 0 | 100 |
| Project | Property | Municipality | Land area (m2) |
Housing | Commercial | Letting ratio (%) |
Ownership share (%) |
|---|---|---|---|---|---|---|---|
| Alingsås Plåtmekano | Bulten 7 | Alingsås | 7,419 | 0 | 1,074 | 100 | 100 |
| Nyberggruppens Fastighet | Bulten 13 | Alingsås | 18,449 | 0 | 2,800 | 100 | 100 |
| 7H Bil AB | Kinna 24:191 | Mark | 6,529 | 0 | 2,502 | 100 | 30 |
Income statement
Business Area Property owns 40percent of Änglagården Holding AB, which, in turn, owns Prioritet Serneke Arena. Other shareholders are Prioritet Finans, which holds 50percent, and Lommen Holding, which holds 10percent.
| The Group's share of Änglagården Holding AB SEK million |
June 30 2017 |
June 30 2016 |
Dec 31 2016 |
|---|---|---|---|
| Ownership as apercentage | 40 | 40 | 40 |
| Share in associated companies* | 101 | 78 | 91 |
| Share in profit for the period | 10 | -10 | 3 |
| Of which: | |||
| Earnings from property management |
10 | 10 | 18 |
| Change in value of property | 0 | –20 | -15 |
Änglagården Holding AB Apr–Jun Jan-Jun SEK million 2017 2017 Rental income 26 40 Profit for the year 8 26 *) The Group's participation in the associate Änglagården Holding is calculated based on shareholders' equity less the preferential dividend right of SEK55million (77) which applies to the other shareholders. The closing value is subsequently reduced by an internal profit of SEK19million (12).
| Balance sheet Änglagården Holding AB SEK million |
June 30 2017 |
June 30 2016 |
Dec 31 2016 |
|---|---|---|---|
| ASSETS | |||
| Property | 888 | 872 | 888 |
| Other assets | 186 | 199 | 215 |
| Total assets | 1,074 | 1,071 | 1,103 |
| Total equity and liabilities | 1,074 | 1,071 | 1,103 |
|---|---|---|---|
| Other liabilities | 240 | 245 | 263 |
| Interest-bearing liabilities | 478 | 495 | 488 |
| Shareholders' equity | 356 | 331 | 352 |
Within the business area, some smaller properties are managed whereby warehouses, garages and industrial premises are leased to municipal and private operations through wholly-owned subsidiaries.
The operations of Serneke Group AB (publ) consist mainly of Group Management and Group-wide services. Sales for the period April–June 2017 amounted to SEK30million (17). Operating profit for the same period amounted to SEK1million (loss: 8).
Related party transactions in the Serneke Group are normally attributed to contracting assignments, financing and purchasing of consulting services. Remuneration approved by the Annual General Meeting for Board work is not reported as related party transaction. The main objective is to generate more transactions, primarily in the form of construction projects. These vary depending on the level of activity in the project operations.
The nature and extent of transactions by related parties can be found in the 2016 Annual Report, Note 34. No significant new transactions occurred during the quarter, except for transactions with property company Adapta AB. Transactions with Adapta have taken place on market terms and are considered to be related party transactions since the principal owner, Ludwig Mattsson, is a member of the Board of Serneke Group AB. The transactions consist mainly of contracting income and rental of Serneke's headquarters and, as of June 30, 2017, sales amounted to SEK170million and purchases to SEK6million.
All business operations are associated with risk. Risks that are well-managed can lead to opportunities and create value, while risks that are not managed properly can result in damage and losses. Controlled risk taking is essential for good profitability. Serneke works with risk management from both a Group perspective and an operational perspective. The capacity to identify, assess, manage and follow up risks is an important part of the governance and control of Serneke's business operations.
Certain significant risks are accounted for below.
o Political decisions, such as amended tax regulations, conditions of tenure, changed regulations on housing construction, infrastructure investments and municipal planning, could change the conditions of the market and of Serneke's operations.
For further information on risks and uncertainties, see the published Annual Report for 2016 at www.serneke.group.
In June, Serneke acquired a property at Säve Depå, with an underlying property value of approximately SEK100million. The relevant area at Säve, which covers about onemillion square meters, is directly adjacent to the property that Serneke acquired in May 2016. Serneke's total contiguous land holdings now comprise about threemillion square meters of developable land. The property was acquired through a company acquisition of AB Platzer Åseby 7:2, with Serneke gaining access will on September 1, 2017.
Serneke Fastighet AB has acquired the property Göteborg Lindholmen 1:22 via a wholly owned subsidiary. The property is adjacent to the upcoming Karlastaden district and is strategically important to further development of the area. The purchase price amounts to SEK127million and the property comprises about 9,000 square meters of land and the premises area amounts to approximately 10,000 square meters. Serneke will gain access on October 2, 2017.
Serneke Group is strengthening Group Management with a new staff function in the form of Business Development, which will work to exploit the strength of the entire Group to achieve its long-term goals. Robin Gerum has been appointed as manager and comes to Serneke from Carnegie Investment Bank, where he has been responsible for a number of market launches, acquisitions and mergers. Robin will take office by October 2017. In October, Jonas Fjellman will assume the position as new HR Director and will also become a member of Group Management. Jonas Fjellman has worked in senior positions in HR for more than ten years and comes to Serneke from his role as HR Director Europe for one of the IAC Group's regions in Europe.
Serneke Group AB (publ) has two share series, Series A and B. On November 24, 2016, the Company's Series B shares were introduced on Nasdaq Stockholm, Mid Cap. Serneke had over 5,500 shareholders at June 30, 2017 and the closing price on June 30, 2017 was SEK117.
| Name | Shares of Series A |
Shares of Series B |
Total number of shares |
Proportion of shares, % |
Percentage of votes, % |
|---|---|---|---|---|---|
| Ola Serneke Invest AB | 3,710,000 | 2,231,887 | 5,941,887 | 25.6 | 55.0 |
| Lommen Holding AB | 540,000 | 3,457,803 | 3,997,803 | 17.2 | 12.4 |
| Christer Larsson i Trollhättan AB |
380,000 | 497,000 | 877,000 | 3.8 | 6.0 |
| Ledge Ing AB | 330,000 | 450,000 | 780,000 | 3.4 | 5.3 |
| Vision Group i väst AB | 250,000 | 536,000 | 786,000 | 3.4 | 4.3 |
| AB Stratio | 150,000 | 21,060 | 171,060 | 0.7 | 2.1 |
| Carnegie Fonder | 0 | 1,364,126 | 1,364,126 | 5.9 | 1.9 |
| Svolder Aktiebolag | 0 | 1,150,000 | 1,150,000 | 4.9 | 1.6 |
| Cliens funds | 0 | 914,574 | 914,574 | 3.9 | 1.3 |
| AMF Aktiefond småbolag (small cap share fund) |
0 | 396,855 | 396,855 | 1.7 | 0.6 |
| Total, ten largest | 5,360,000 | 11,019,305 | 16,379,305 | 70.5 | 90.4 |
| Other shareholders | 0 | 6,862,647 | 6,862,647 | 29.5 | 9.6 |
| Total | 5,360,000 | 17,881,952 | 23,241,952 | 100.0 | 100.0 |
Source: Euroclear and Serneke
| Class of shares | Shares | Votes |
|---|---|---|
| Series A shares | 5,360,000 | 5,360,000.0 |
| Series B shares | 17,881,952 | 1,788,195.2 |
| Total | 23,241,952 | 7,148,195.2 |
The Annual General Meeting of June 29, 2016, resolved to issue convertibles with a nominal value of approximately SEK15.9million. The convertibles are valid up to and including August 26, 2019, carry 1.6percent annual interest and have a conversion price of SEK120. Upon conversion, a maximum of 132,350 Series B shares may be added and share capital may increase by a maximum of SEK13,235. During the term of the convertibles, holders are entitled, on certain occasions, to request conversion into new Series B shares. At June 30, 2017, a total of 850 convertibles were converted to B shares and 131,500 convertibles remained.
At the Annual General Meeting on May 3, 2017, it was decided to adopt a long-term incentive program in the form of employee convertibles in the Group. The Board proposes that the Company raise a convertible loan of at most SEK20million through an issue of convertible debentures. The subscription price for each debenture shall correspond to its nominal amount. Participants shall, with exception from the shareholders' rights, be employees of the Serneke Group who have not at the end of the subscription period given or been given notice of termination of employment.
Each debenture shall be able to be converted to shares of series B on the following dates: (i) ten business days following the publication of the Company's financial statement for the fiscal year 2017, 2018 and 2019, respectively, and (ii) during the period from August 3, 2020 to, and including, August 25, 2020. The conversion price will be set at 125percent of the average volume-weighted price paid for class B shares in the Company on the Nasdaq Stockholm during the period August 8, 2017 to, and including, August 22, 2017, but not less than SEK100. The convertible debentures fall due September 8, 2020, provided conversion has not taken place before this date. The convertible debentures will carry an annual interest rate of 2.60percent.
Interim Report January–September 2017 October 27, 2017 Year-end report 2017 February 8, 2018 Interim report January-March 2018 May 3, 2018 Interim Report January-June 2018 July 17, 2018
Serneke Group AB (publ), Corp. ID No. 556669-4153 July 18, 2017
This report has not been reviewed by the Company's auditors.
The Board of Directors and the CEO certify that this Interim Report provides a fair overview of the Parent Company and Group's operations, position and performance and describes significant risks and uncertainties facing Serneke.
Gothenburg, July 18, 2017 Serneke Group AB (publ)
Board
Kent Sander Chairman
Mari Broman Member
Ludwig Mattsson Member
Ola Serneke CEO
Anders Wennergren Member
Kristina Willgård Member
Michael Berglin, Deputy CEO Camilla Heyman, CFO Anders Antonsson, Investor Relations e-mail: [email protected] e-mail: [email protected] e-mail: [email protected] Phone: + 46 (0)31712 97 00 Phone: + 46 (0)31712 97 00 Phone: +46 (0)709 994970
This information is such that Serneke Group AB (publ) is obliged to publish pursuant to the EU Market Abuse Regulation. The information was submitted for publication on July 18, 2017, at 08:00 a.m. (CET).
| Apr–Jun | Jan–Mar | Oct–Dec | Jul-Sep | Apr–Jun | Jan–Mar | Oct–Dec | Jul-Sep | |
|---|---|---|---|---|---|---|---|---|
| SEK million | 2017 | 2017 | 2016 | 2016 | 2016 | 2016 | 2015 | 2015 |
| Income | ||||||||
| Construction | 1,292 | 1,003 | 1,089 | 683 | 809 | 648 | 701 | 558 |
| Civil Engineering | 152 | 123 | 162 | 121 | 93 | 79 | 117 | 111 |
| Project Development | 53 | 50 | 37 | 11 | 323 | 2 | 363 | 165 |
| Property Management | 9 | 12 | 8 | 4 | 2 | 1 | 1 | 0 |
| Group-wide | 33 | 8 | 27 | 34 | 20 | 18 | 3 | 28 |
| Elimination | -75 | -58 | -57 | -51 | -38 | -47 | -175 | -47 |
| Total | 1,464 | 1,138 | 1,266 | 802 | 1,209 | 701 | 1,010 | 815 |
| Operating profit | ||||||||
| Construction | 44 | 41 | 40 | 19 | 13 | 14 | 14 | 22 |
| Civil Engineering | -2 | -4 | -9 | -7 | -12 | -8 | -16 | 2 |
| Project Development | 47 | 0 | 5 | -6 | 343 | -8 | 172 | -7 |
| Property Management | 3 | 11 | 10 | 46 | -19 | 0 | -1 | 2 |
| Group-wide | 3 | -1 | -12 | 13 | -7 | -4 | -47 | -7 |
| Total | 95 | 47 | 34 | 65 | 318 | -6 | 122 | 12 |
| Operating margin, % | 6.5 | 4.1 | 2.7 | 8.1 | 26.3 | -0.9 | 12.1 | 1.5 |
| Profit after net financial items |
93 | 40 | 29 | 60 | 313 | -8 | 119 | 8 |
| Profit/loss for the period | 87 | 33 | 26 | 52 | 321 | -5 | 138 | 13 |
| Balance sheet | ||||||||
| Fixed assets | 1,264 | 1,212 | 1,160 | 1,032 | 986 | 340 | 408 | 223 |
| Current assets | 2,513 | 2,393 | 2,277 | 1,826 | 1,520 | 1,405 | 1,244 | 1,224 |
| Total assets | 3,777 | 3,605 | 3,437 | 2,858 | 2,506 | 1,745 | 1,652 | 1,447 |
| Shareholders' equity | 1,610 | 1,530 | 1,469 | 822 | 769 | 448 | 453 | 316 |
| Non-current liabilities | 738 | 725 | 764 | 919 | 662 | 403 | 398 | 225 |
| Current liabilities | 1,429 | 1,350 | 1,204 | 1,117 | 1,075 | 894 | 801 | 906 |
| Total equity and liabilities |
3,777 | 3,605 | 3,437 | 2,858 | 2,506 | 1,745 | 1,652 | 1,447 |
| Orders | ||||||||
| Order bookings | 1,742 | 2,069 | 1,650 | 920 | 1,724 | 1,245 | 1,988 | 702 |
| Order backlog | 8,308 | 7,995 | 7,041 | 6,629 | 6,480 | 5,666 | 5,125 | 3,953 |
| Employees | ||||||||
| Average number of employees |
919 | 878 | 847 | 800 | 759 | 713 | 665 | 640 |
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 1,464 | 1,209 | 2,602 | 1,910 | 4,670 | 3,978 |
| Earnings per share, SEK, before dilution | 3.74 | 19.38 | 5.20 | 19.08 | 9.50 | 22.40 |
| Earnings per share, SEK, after dilution | 3.72 | 18.27 | 5.13 | 17.99 | 9.22 | 21.22 |
| Weighted average number of shares before dilution |
23,248,452 | 16,565,785 | 23,090,335 | 16,565,785 | 20,852,905 | 17,590,630 |
| Weighted average number of shares after dilution |
23,379,953 | 17,565,785 | 23,379,953 | 17,565,785 | 21,474,984 | 18,567,901 |
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Operating profit | 95 | 318 | 142 | 312 | 241 | 411 |
| Growth, % | 21.1 | 56.8 | 36.2 | 49.0 | 25.0 | 28.0 |
| Order bookings | 1,742 | 1,724 | 3,811 | 2,969 | 6,381 | 5,539 |
| Order backlog | 8,308 | 6,480 | 8,308 | 6,480 | 8,308 | 7,041 |
| Organic growth, % | 19.9 | 56.8 | 35.4 | 49.0 | 24.6 | 28.0 |
| Operating margin, % | 6.5 | 26.3 | 5.5 | 16.3 | 5.2 | 10.3 |
| Cash flow before financing | -67 | 74 | 44 | 12 | -124 | -156 |
| Cash flow from operations per share, before dilution |
-1.68 | 12.98 | 4.37 | 9.42 | -0.48 | 2.56 |
| Cash flow from operations per share, after dilution |
-1.67 | 12.24 | 4.32 | 8.88 | -0.47 | 2.42 |
| Equity per share, SEK, before dilution | 69.73 | 46.42 | 69.73 | 46.42 | 69.73 | 64.67 |
| Equity per share, SEK, after dilution | 69.33 | 43.78 | 69.33 | 43.78 | 69.33 | 62.83 |
| Working capital | 1,085 | 445 | 1,085 | 445 | 1,085 | 1,073 |
| Capital employed | 2,076 | 1,173 | 2,076 | 1,173 | 2,076 | 1,985 |
| Return on capital employed, % | 16.4 | 47.3 | 16.4 | 47.3 | 16.4 | 31.8 |
| Return on equity after taxes, % | 16.6 | 90.2 | 16.6 | 90.2 | 16.6 | 41.0 |
| Equity/assets ratio, % | 42.8 | 30.7 | 42.8 | 30.7 | 42.8 | 42.7 |
| Net debt | -123 | 409 | -123 | 409 | -123 | -37 |
| Net debt/equity ratio, % | -7.6 | 53.2 | -7.6 | 53.2 | -7.6 | -2.5 |
| Apr–Jun | Apr–Jun | Jan–Mar | Jan–Mar | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Profit/loss for the period | 87 | 321 | 120 | 316 | 198 | 394 |
| Other comprehensive income | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive income | 87 | 321 | 120 | 316 | 198 | 394 |
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK million | 2017 | 2016 | 2016 |
| Assets | |||
| Fixed assets | |||
| Intangible fixed assets | 23 | 23 | 23 |
| Investment properties | 365 | 188 | 329 |
| Other tangible fixed assets | 88 | 75 | 75 |
| Investments in associates/joint ventures | 477 | 401 | 424 |
| Deferred tax assets | 34 | 51 | 48 |
| Non-current interest-bearing receivables | 54 | 21 | 30 |
| Other non-current receivables | 233 | 227 | 231 |
| Total non-current assets | 1,274 | 986 | 1,160 |
| Current assets | |||
| Project and development properties | 297 | 220 | 242 |
| Inventories | 2 | 4 | 2 |
| Accounts receivable | 770 | 446 | 589 |
| Accrued but not invoiced income | 249 | 239 | 252 |
| Other current receivables | 638 | 586 | 621 |
| Cash and bank balances | 558 | 25 | 571 |
| Total current assets | 2,514 | 1,520 | 2,277 |
| Total assets | 3,788 | 2,506 | 3,437 |
| Equity and liabilities | |||
| Shareholders' equity | 1,621 | 769 | 1,469 |
| Non-current liabilities | |||
| Non-current interest-bearing liabilities | 389 | 236 | 436 |
| Other non-current liabilities | 224 | 321 | 208 |
| Other provisions | 125 | 105 | 120 |
| Total long-term liabilities | 738 | 662 | 764 |
| Current liabilities | |||
| Current interest-bearing liabilities | 100 | 219 | 128 |
| Current tax liabilities | 5 | 13 | 10 |
| Accounts payable | 669 | 435 | 541 |
| Invoiced but not accrued income | 311 | 169 | 172 |
| Other current liabilities | 344 | 239 | 353 |
| Total current liabilities | 1,429 | 1,075 | 1,204 |
| Total equity and liabilities | 3,788 | 2,506 | 3,437 |
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK million | 2017 | 2016 | 2016 |
| Equity attributable to Parent Company shareholders | |||
| Balance at beginning of period | 1,469 | 453 | 453 |
| New share issue | - | - | 598 |
| Conversion, convertible debenture loans | 27 | - | 23 |
| Convertible debentures – equity portion | 1 | - | 1 |
| Other | 4 | - | - |
| Comprehensive income for the period | 120 | 316 | 394 |
| Balance at end of period | 1,621 | 769 | 1,469 |
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Operating activities | ||||||
| Cash flow before change in working capital |
43 | -47 | 71 | -55 | 115 | -11 |
| Change in working capital | -82 | 262 | 30 | 211 | -125 | 56 |
| Cash flow from operating activities |
-39 | 215 | 101 | 156 | -10 | 45 |
| Investment activities | ||||||
| Acquisitions of investment properties | 0 | -130 | 0 | -130 | -45 | -175 |
| Acquisitions of businesses | -8 | -10 | -8 | -10 | -8 | -10 |
| Increase/decrease in investing activities |
–20 | -1 | -49 | -4 | -61 | -16 |
| Cash flow from investment activities |
-28 | -141 | -57 | -144 | -114 | -201 |
| Cash flow before financing | -67 | 74 | 44 | 12 | -124 | -156 |
| Financing activities | ||||||
| Convertible loan | 0 | 0 | 0 | 0 | 16 | 16 |
| Newly raised borrowings | 18 | 242 | 18 | 242 | 323 | 547 |
| New share issue | 0 | 0 | 0 | 0 | 598 | 598 |
| Amortization of liabilities | -70 | -256 | -70 | -256 | -241 | -427 |
| Increase/decrease in financing activities |
-21 | -44 | -5 | 16 | -39 | -18 |
| Cash flow from financing activities |
-73 | -58 | -57 | 2 | 657 | 716 |
| Cash flow for the period | -140 | 16 | -13 | 14 | 533 | 560 |
| Cash and cash equivalents at beginning of period |
698 | 9 | 571 | 11 | 25 | 11 |
| Cash and cash equivalents at end of period |
558 | 25 | 558 | 25 | 558 | 571 |
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Income | 30 | 17 | 56 | 33 | 111 | 88 |
| Sales and administration expenses | -29 | -25 | -55 | -44 | -108 | –97 |
| Operating profit | 1 | -8 | 1 | -11 | 3 | -9 |
| Net financial items | -5 | -2 | -11 | -4 | -16 | -9 |
| Earnings after financial items | -4 | -10 | -10 | -15 | -13 | -18 |
| Appropriations | 0 | 0 | 0 | 0 | -39 | -39 |
| Profit/loss before tax | -4 | -10 | -10 | -15 | -52 | -57 |
| Tax | 1 | 2 | 2 | 3 | 8 | 9 |
| Profit/loss for the period | -3 | -8 | -8 | -12 | -44 | -48 |
| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Apr–Mar | Jan–Dec | |
|---|---|---|---|---|---|---|
| SEK million | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 |
| Profit/loss for the period | -3 | -8 | -8 | -12 | -44 | -48 |
| Other comprehensive income | 0 | 0 | 0 | 0 | 0 | 0 |
| Total comprehensive income | -3 | -8 | -8 | -12 | -44 | -48 |
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| SEK million | 2017 | 2016 | 2016 |
| Assets | |||
| Fixed assets | |||
| Tangible fixed assets | 5 | 9 | 6 |
| Participations in Group companies | 98 | 34 | 75 |
| Deferred tax assets | 56 | 40 | 54 |
| Other non-current receivables | 1 | 1 | 1 |
| Total non-current assets | 160 | 84 | 136 |
| Current assets | |||
| Project and development properties | 3 | 3 | 3 |
| Other current receivables | 768 | 762 | 721 |
| Cash and bank balances | 525 | 0 | 476 |
| Total current assets | 1,296 | 765 | 1,200 |
| Total assets | 1,456 | 849 | 1,336 |
| Equity and liabilities | |||
| Shareholders' equity | 704 | 98 | 683 |
| Non-current liabilities | |||
| Non-current interest-bearing liabilities | 312 | 55 | 312 |
| Total long-term liabilities | 312 | 55 | 312 |
| Current liabilities | |||
| Current interest-bearing liabilities | 1 | 20 | 27 |
| Accounts payable | 12 | 6 | 15 |
| Other current liabilities | 427 | 670 | 299 |
| Total current liabilities | 440 | 696 | 341 |
| Total equity and liabilities | 1,456 | 849 | 1,336 |
This Interim Report has been prepared in accordance with IAS 34, Interim Financial Reporting. The Interim Report has been prepared in accordance with International Financial Reporting Standards (IFRS), as well as interpretations of current International Financial Reporting Interpretations Committee (IFRIC) standards as adopted by the EU. The Parent Company's reports have been prepared in compliance with the Annual Accounts Act and the Financial Reporting Board's recommendation RFR 2, Accounting for Legal Entities. New standards and interpretations have not had any material impact on the consolidated accounts. From June 2016, ESMA's guidelines on alternative key ratios are applied.
During the period, the Group acquired and sold assets through companies that were not deemed to be corporate acquisitions/disposals of business. IFRS lacks specific guidance for such transactions. The Group has therefore, in adopting an accounting policy that provides a fair picture of these transactions and reflects their implications, sought guidance in other standards addressing similar transactions, in accordance with IAS 8. Against this background, the Group has chosen to apply the relevant parts of the standard for business combinations, IFRS 3, in accounting for acquisitions and sales of assets through companies.
In addition, the Interim Report has been prepared in accordance with the same accounting principles and calculation methods as in the Annual Report for 2016. For detailed information regarding accounting policies, see Serneke's 2016 Annual Report, see www.serneke.group.
Financial assets and financial liabilities measured at fair value in the balance sheet are classified according to one of three levels based on the information used to establish the fair value. The Group only holds financial assets and liabilities valued in level 3, which is why levels 1 and 2 have been omitted in the table below. No transfers have been made between the levels during the periods. A more detailed description of the levels can be found in Note 4 of the 2016 Annual Report.
Level 1 – Valuation is made according to prices in active markets for identical instruments.
Level 2 – Financial instruments for which the fair value is established based on valuation models that are based on observable data for the asset or liability other than quoted prices included in Level 1.
Level 3 – Financial instruments for which fair value is established based on valuation models where significant inputs are based on non-observable data.
| Group SEK million |
June 30 2017 |
Dec 31 2016 |
|---|---|---|
| Financial assets | ||
| Available-for-sale financial assets* | 1 | 1 |
| Total financial assets | 1 | 1 |
| Financial liabilities | ||
| Other short– and long-term liabilities | 31 | 31 |
| Of which, additional purchase considerations** | 31 | 31 |
| Total financial liabilities | 31 | 31 |
* In the fair value calculation of available-for-sale financial assets at level 3, the market price method has been applied.
** In the fair value calculation of the additional purchase considerations at level 3, project estimates, budgets and forecasts have been applied.
For the Group's other financial assets and financial liabilities, the reported values are assessed as corresponding to the actual values. No significant changes in valuation models, assumptions or inputs were made during the period.
The Group pledges collateral for external loans. The Group's contingent liabilities arise primarily in connection with different property disposals, whereby various operational guarantees may occur, as well as performance guarantees for future contracts. Serneke Group AB (publ) has also entered into a guarantee undertaking, which means that the co-owners in Prioritet Serneke Arena are jointly responsible for the correct fulfillment of interest and repayment of the associate's liabilities to credit institutions in the event that the associate is unable to pay.
Pledged assets and contingent liabilities in the consolidated balance sheet:
| June 30 | June 30 | Dec 31 | |
|---|---|---|---|
| Group | 2017 | 2016 | 2016 |
| Pledged assets | 541 | 820 | 920 |
| Contingent liabilities/contingent liabilities | 398 | 236 | 243 |
| Parent Company | |||
| Pledged assets | 321 | 226 | 222 |
| Contingent liabilities/contingent liabilities | 789 | 615 | 519 |
| Key indicators | Definition | Purpose | ||||||
|---|---|---|---|---|---|---|---|---|
| Income | Within the construction operations, income is reported in accordance with thepercentage-of-completion method. This income is recognized in pace with construction projects within the Company being completed. For project development, income and gains on disposals of land and development rights are recognized at the point in time at which the material risks and benefits are transferred to the buyer, which normally coincides with the transfer of ownership, as well as other income, such as rental income. In the Parent Company, income corresponds to invoiced sales of Group-wide services and rental income. |
In the Company's view, the key indicator allows investors, who so wish, to assess the Company's earnings capacity. |
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| Growth | Income for the period less income for the previous period divided by income for the previous period. |
In the Company's view, the key indicator allows investors, who so wish, to assess the Company's capacity to increase its earnings. |
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| Organic growth | Income for the period, adjusted for acquired growth, less income for the previous period, adjusted for acquired growth, divided by income for the previous period, adjusted for acquired growth. |
In the Company's view, the key indicator allows investors, who so wish, to assess the Company's capacity to increase its income without acquiring operating companies. |
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| Apr–Jun | Apr–Jun | Jan-Jun | Jan-Jun | Jul-Jun | Jan–Dec | |||
| Calculation of organic growth | 2017 | 2016 | 2017 | 2016 | 2016/2017 | 2016 | ||
| Income current period | 1,464 | 1,209 | 2,602 | 1,910 | 4,670 | 3,978 | ||
| Income corresponding period previous period |
1,209 | 771 | 1,910 | 1,282 | 3,735 | 3,107 | ||
| Income change | 255 | 438 | 692 | 628 | 935 | 871 | ||
| Adjustment for structural effect | -15 | 0 | -15 | 0 | -15 | 0 | ||
| Total organic growth | 240 | 438 | 677 | 628 | 920 | 871 | ||
| Total organic growth (%) | 19.9% | 56.8% | 35.4% | 49.0% | 24.6% | 28.0% | ||
| Order bookings | The value of new projects and changes in existing projects during the period. |
In Serneke's view, the key indicator allows investors, who so wish, to assess the Group's sales by Business Area Construction and Business Area Civil Engineering for the current period. |
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|---|---|---|---|---|---|---|---|
| Order backlog | The value of the Company's undelivered orders at the end of the period. |
In the Company's view, the key indicator allows investors, who so wish, to assess the Company's income through Business Area Construction and Business Area Civil Engineering in future periods. |
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| Operating margin |
Operating profit divided by income. | profitability. | In the Company's view, the key indicator allows investors, who so wish, to assess the Company's |
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| Working capital | Current assets less current liabilities. | In the Company's view, the key indicator allows investors, who so wish, to assess the Company's tied-up capital in relation to its competitors. |
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| Capital employed |
Consolidated total assets less deferred tax assets less non interest-bearing liabilities including deferred tax liabilities. For the business areas, the net of Group-internal receivables and liabilities is also deducted. |
In the Company's view, the key indicator allows investors, who so wish, to assess the total capital placed at the Company's disposal by shareholders and creditors. |
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| June 30 | June 30 | Dec 31 | |||||
| Calculation of capital employed | 2017 | 2016 | 2016 | ||||
| Total assets | 2,506 | 3,437 | |||||
| Deferred tax assets | -51 | -48 | |||||
| Less non-interest-bearing liabilities including deferred tax liabilities | -1,678 | -1,282 | -1,404 | ||||
| Capital employed | 2,076 | 1,173 | 1,985 | ||||
| Return on capital employed |
Profit after net financial items plus financial expenses divided by average capital employed for the period. Accumulated interim periods are based on rolling 12-month earnings. |
In the Company's view, the key indicator allows investors, who so wish, to assess the Company's capacity to generate a return on the total capital placed at the Company's disposal by shareholders and creditors. |
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| June 30 | June 30 | Dec 31 | |||||
| Calculation of average capital employed | 2017 | 2016 | 2016 | ||||
| June 30, 2017 (2,076) + June 30, 2016 (1,173) / 2 | 1,625 | ||||||
| June 30, 2016 (1,173) + June 30, 2015 (731) / 2 | 952 | ||||||
| December 31, 2016 (1,985) + December 31, 2015 (670) / 2 | 1,328 | ||||||
| June 30 | June 30 | Dec 31 | |||||
| Calculation of return on capital employed | 2017 | 2016 | 2016 | ||||
| Profit after net financial items | 222 | 432 | 394 | ||||
| Plus financial expenses | 44 | 18 | 28 | ||||
| Average capital employed | 1,625 | 952 | 1,328 | ||||
| Return on capital employed | 16.4% | 47.3% | 31.8% |
| Return on equity | Profit for the period as apercentage of average shareholders' equity. Accumulated interim periods are based on rolling 12-month earnings. |
the Company's disposal. | In the Company's view, the key indicator allows investors, who so wish, to assess the Company's capacity to generate a return on the capital shareholders have placed at |
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|---|---|---|---|---|---|
| June 30 | June 30 | Dec 31 | |||
| Calculation of average shareholders' equity | 2017 | 2016 | 2016 | ||
| June 30, 2017 (1,621) + June 30, 2016 (769) / 2 | 1,195 | ||||
| June 30, 2016 (769) + June 30, 2015 (266) / 2 | |||||
| December 31, 2016 (1469) + December 31, 2015 (453) / 2 | 961 | ||||
| Calculation of return on shareholders' equity | June 30 | Dec 31 2016 |
|||
| Profit/loss for the period | 394 | ||||
| Average shareholders' equity | 518 | 961 | |||
| Return on equity | 16.6% | 90.2% | 41.0% | ||
| Equity/assets ratio | Shareholders' equity less minority interests as apercentage of total assets. |
The equity/assets ratio shows the proportion of total assets represented by shareholders' equity and has been included to allow investors to be able to assess the Company's capital structure. |
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| Net debt | Interest-bearing liabilities less liquid assets less interest-bearing receivables. |
Net debt is a measure deemed relevant for creditors and credit rating agencies. |
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| Net debt/equity ratio | Interest-bearing net debt divided by shareholders' equity. |
Net debt/equity ratio is a measure deemed relevant for creditors and credit rating agencies. |
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| Equity per share | Total equity according to the balance sheet divided by the number of shares outstanding on the closing date. |
The Company believes that key ratios give investors a better understanding of historical return per share at the closing date. |
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| Cash flow from operations per share |
Cash flow from operating activities divided by the average number of shares during the period. |
It is the Company's view that the key indicator gives investors a better understanding of the operations' cash flow in relation to the number of shares, adjusted for changes in the number of shares during the period. |
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| Earnings per share | Profit for the period divided by the average number of shares during the period. |
It is the Company's view that the key indicator gives investors a better understanding of profit per share. |
Serneke is a rapidly growing corporate group active in construction, civil engineering, projectdevelopment and property management with around 950 employees. Through novel thinking, we drive development and create more effective and more innovative solutions for responsible construction. The business has a good mix of public and commercial assignments, providing strength over economic cycles.
Serneke's annual reports and other financial information are available under the tab Investors at www.serneke.group.
Headquarters: Kvarnbergsgatan 2 SE-411 05 Gothenburg, Sweden Phone: +46 (0)31 712 97 00 | [email protected]
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