Annual Report • Mar 24, 2016
Annual Report
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| CONTENTS | |
|---|---|
| Sweco in brief | 1 |
| Message from the CEO | 2 |
| Market & external environment | 4 |
| Market strategy | 10 |
| Human resources | 14 |
| Business ethics and social responsibility | 16 |
| Our expertise | 18 |
| Board of Director's report including | |
| corporate governance report | 31 |
| Consolidated income statement | 43 |
| Consolidated balance sheet | 44 |
| Consolidated cash flow statement | 45 |
| Consolidated statement of changes in equity | 46 |
| Parent Company income statement | 47 |
| Parent Company balance sheet | 48 |
| Parent Company cash flow statement | 49 |
| Parent Company statement of changes in equity | 50 |
| Notes including Auditors' Report | 51 |
| The Sweco share | 85 |
| Five-year overview | 88 |
| Risks and risk management | 90 |
| Board of Directors and auditors | 92 |
| Executive team | 94 |
| Annual General Meeting | 96 |
11 May 2016 Interim report Jan–Mar 2016 18 July 2016 Interim report Jan–Jun 2016 28 October 2016 Interim report Jan–Sep 2016 14 February 2017 Year-end report 2016
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The future may seem remote to others, but it is very much alive at Sweco. Our building service systems consultants are currently working on the indoor environment for a new hospital that will be admitting patients in five years' time. Our traffic engineers are analysing a new underground metro line that will open to passengers in ten years. And our architects are designing what will be a vibrant, dynamic new city district in around 15 years. It is Sweco's job to be one step ahead. The results of our work become the future reality for others.
Come to Sweco with high expectations. We want to be your most approachable and committed partner, with recognised expertise. It's easy to do business with Sweco, and we do our utmost to understand your needs better than anyone else. We deliver expertise tailored to your situation. Whatever challenge you're facing, you can count on Sweco to solve it.
Sweco plans and designs the communities and cities of the future. The results of our work are sustainable buildings, efficient infrastructure and access to electricity and clean water. With 14,500 employees in Europe, we offer our customers the right expertise for every situation.
CUSTOMERS Sales by customer category in 2015, %
Public administrations and agencies, 23 (24) Industrial companies, 24 (21) Municipal and county governments, 19 (21) Other private sector companies, 21 (19) Housing, real estate and construction companies, 13 (15)
SERVICES Share of consolidated sales in 2015, %
Buildings and urban districts, 40 (41) Water, energy and industry, 30 (29) Transport infrastructure, 30 (30)
NET SALES BY BUSINESS AREA Share of consolidated sales in 2015, %
| 2015 | 2014 | |
|---|---|---|
| Net sales, SEK M | 11,389 | 9,214 |
| EBITA excl. extraordinary items, SEK M | 991 | 826 |
| EBITA margin excl. extraordinary items, % | 8.7 | 9.0 |
| EBITA, SEK M | 740 | 814 |
| EBITA margin, % | 6.5 | 8.8 |
| Profit before tax, SEK M | 640 | 718 |
| Billing ratio, pro forma, % | 74.2 | 73.4 |
| 2015 | 2014 | |
|---|---|---|
| Net debt/Equity, % | 34.4 | 66.9 |
| Net debt/EBITDA | 1.8 | 1.3 |
| Earnings per share, SEK2 | 4.36 | 5.74 |
| Equity per share, SEK2 | 40.98 | 19.89 |
| Distribution to shareholders, per share, SEK2 | 3.501 | 3.37 |
| Number of full-time employees | 10,188 | 8,535 |
| 1) Proposed dividend of SEK 3.50 per share. | ||
2) Historical share data is restated in accordance with IAS 33 in view of the preferential rights issue conducted during Q4 2015.
Historical share data is restated in accordance with IAS 33 in view of the preferential rights issue conducted during Q4 2015.
EARNINGS PER SHARE, SEK DIVIDEND PER SHARE, SEK
Historical share data is restated in accordance with IAS 33 in view of the preferential rights issue conducted during Q4 2015.
1) Proposed dividend of SEK 3.50 per share.
2015 was the year that Sweco, in one huge step, became the European market leader. The acquisition of Grontmij is a milestone that positions Sweco for continued growth for a long time to come. It is logical, grounded in a well-prepared plan, and has already produced results.
Grontmij is by far Sweco's largest acquisition to date. It is also a natural step in a strategy that has produced successful growth through the years and is now positioning Sweco to continue growing for a long time to come. We believe in Europe and in the continued development needs of growing cities. We are growing in our own neighbourhood rather than in growth markets in other parts of the world. Sweco's model works best in Northern Europe. Mature, strong and stable markets that buy high knowledge-content services are well-suited to our business.
We also see clear potential in terms of continued consolidation. The capacity to grow through acquisitions has taken Sweco to leading positions, first in Sweden and then in the Nordic region. As European leader, we are now meeting several markets that are still quite fragmented. By striking a good balance between organic growth and acquisitions, Sweco will hold a leading position in all of our markets over the long term.
The process leading up to the acquisition proceeded according to plan. At the close of the public bid process, 97.4 per cent of Grontmij's shareholders had accepted the bid. We quickly received approval from all competition authorities, de-listed the Grontmij share and conducted a fully subscribed preferential rights issue. Grontmij has been part of Sweco since 1 October 2015, and the acquisition is now fully completed.
Integration planning began long before the acquisition was settled, and that produced results. We have already changed brand in several countries, consolidated head offices and checked the first common IT system off the list. We expect to achieve annual synergies of SEK 250 million within four years' time. Our first priority going forward is the continued successful integration of Grontmij.
Sweco and Grontmij complement each other – not only in terms of geographic presence, but also similar corporate cultures and recognised expertise. Work has begun to improve Grontmij's results, based essentially on simplicity, increased customer focus and internal efficiency – in other words, the same well-tested methods that have made Sweco successful. Sweco's decentralised organisation has been creating engaged employees, satisfied customers and profitable growth for many years.
RECORD PROFIT AND A RECORD ACQUISITION – IN PARALLEL Sweco achieved record profits in 2015 – while simultaneously acquiring and initiating integration of our biggest acquisition to date.
The market for Sweco's services is good overall and the trend is stable. The Swedish market is strong. The Norwegian market is good but has weakened. Markets in our business areas Denmark, Western Europe and Central Europe are good and are developing positively. Markets in Finland and the Netherlands remain challenging.
The Swedish operations, Sweco's largest by far, performed well. When customers from the pulp and paper industry make major investments and select Sweco as partner, this is solid confirmation of approachable and committed, customeroriented experts at their very best. Two years have gone by since Vectura became part of Sweco – an acquisition that contributed significantly to Sweco's current assignments designing Sweden's first high-speed railway and the Norwegian rail triangle for the rapidly growing City of Oslo. Sweco is now involved as expert in designing railways of the future at several locations throughout the Nordic region.
Strong leadership becomes more important during market slumps. The Norwegian market remains good, but has weakened. Just as Norwegian society is adapting to the effects of lower oil prices, Sweco is also adapting its operations in Norway. With a new president at the helm, experienced in leading companies in fluctuating market conditions, Sweco is taking the necessary steps to ensure profitability.
Finland has not seen real GDP growth for several years. The fact that the Finnish operations increased its sales despite an extremely challenging market is confirmation that the Finnish organisation is functioning well. When the most important urban projects do come along, it is Sweco who wins the contracts.
We cannot control market fluctuations, but we can ensure that we make the most of the circumstances. Good results come from working hard every day and knowing that every customer meeting and every delivery counts. In Central Europe, continual improvements produced strong results, although demand remains weak in several markets. We decided to withdraw from Russia and Slovakia during the year.
Since 1 October, the number of business areas has increased to seven with the addition of the Netherlands, Denmark and Western Europe. Both the Netherlands and Denmark have been impacted by a longer period of declining economic performance. In Denmark, changes have been implemented to improve internal efficiency, and profits improved during the latter part of the year.
Although the Dutch market remains weak, Sweco Netherlands has great potential due to its recognised expertise. The way forward will pass through a new decentralised, customer-focused organisation with lower administrative costs. Measures will continue in 2016, and the capacity to improve profitability will be in place during 2017.
The market for Western Europe is satisfactory on the whole, and the operations developed stably during the year.
Being European leader presents even more opportunities. Tomorrow's cities need a skilled advisor. There is widespread consensus on the societal trends that are setting the ground rules for the future – these involve climate change, urbanisation and IT development. This highlights the need for new solutions for the future. Flood protection for coastal cities, more housing and expanded public transport in growing urban areas, and the transition from analogue to connected cities – Sweco manages these types of challenges for its customers every day. With nearly 15,000 experts, Sweco is an advisor on society's development with unique expertise that shapes the communities and cities of the future.
Stockholm, February 2016
Tomas Carlsson President and CEO
Societal trends that are setting the ground rules for the future include climate change, urbanisation and IT development. This highlights the need for new solutions. Sweco is well-positioned to be the first choice of customers and employees for planning and designing communities and cities of the future.
National borders are becoming less important in terms of labour force, information and ideas. For cities, this involves some degree of standardisation, with universal solutions that are sustainable and cost efficient. At the same time, every city and district has its own unique characteristics that need to be addressed intelligently. Balance needs to be maintained between global opportunities and local characteristics.
The pace of urbanisation is increasing throughout the world. Tomorrow's cities need more of everything. Attractive places to live and work require sustainable, integrated solutions for housing, transport systems, energy and water.
Society is increasingly connected and interconnected, presenting opportunities to use resources more efficiently and to optimise traffic and energy flows, among other things. To create value, huge amounts of data need to analysed and used tangibly in the appropriate way. This involves everything from simplifying road maintenance with real-time data to creating broader-based decision-making data through digital citizen dialogue.
The past three decades have been the warmest since the 1850s. Changes in precipitation patterns, higher temperatures and extreme weather are increasingly common. These new conditions call for sustainable solutions that reduce climate impact and adapt society to a changing climate.
An increasing number of Sweco's customers are moving away from having in-house technology departments and are focusing on their core business. This trend, which has been underway for many years, is galvanising the technical consulting sector as a whole. Consulting engineers are now playing a key role in all aspects of the development of society. Customers need consultants who create solutions based on the external environment's challenges and opportunities.
Customers today do not allow themselves to be limited by the selection of local consultants. It is essential to have access to the right expertise – even if it's located across the globe. Similarly, it is important to the customer that the consultant working on the project understands the unique characteristics of the particular city or district. Consultants who offer local presence combined with international strength are in high demand.
Engineers and architects have the expertise it takes to plan and design tomorrow's cities and communities in a positive direction. The knowledge that their work produces meaningful results is an important driving force for consultancy firm employees.
An environment in which customers have high expectations and colleagues collaborate and share knowledge creates an attractive and dynamic work environment. Working as a consultant means working on projects, which is itself synonymous with personal development. Participating in the most challenging projects involves maximum personal development.
The consulting engineering sector has long been characterised by consolidation. Acquisitions create large international players that can offer a wide range of specialised expertise. Holding a leading position in each local market is a key factor in becoming the first choice for customers and employees.
Specialisation – advisors with a unrivalled knowledge bank The consultant's role is evolving as customers focus increasingly on their core business. This produces added value that did not exist when each customer did the job in-house. Consultants who design everything from schools and hospitals to roads and power plants – not just occasionally, but on a daily basis – build a knowledge bank that is unparalleled in society. The consulting firms that offer recognised expertise within a wide range of areas will be key advisors for tomorrow's communities and cities.
Sweco's 2015 results were the strongest to date. In parallel with this, Sweco conducted the major acquisition of Grontmij, with 6,000 employees. Sweco is now the European market leader, with 14,500 employees and operations in seven geographically based business areas.
– What a record year it's been! We welcomed 600 new colleagues while also delivering our best results to date. Our ability to maintain our strong customer focus and perform at a high level while simultaneously implementing a major integration signifies a great deal. The market is strong, and we were commissioned for several major projects during the year. In Stockholm, we will be planning the city's future wastewater treatment to ensure a clean water supply even as the population grows and the climate changes.
Åsa Bergman, President Sweco Sweden
– The Norwegian market is good, but has weakened. Just as Norwegian society is adapting to the effects of lower oil prices, Sweco is also adapting its operations in Norway. Efforts to improve profitability are proceeding. It became evident during the year that Sweco is attaining an increasingly strong position in Norway within infrastructure. Oslo is Europe's fastest-growing capital city, and we are seeing sharp demand related to this. We are currently modernising several railways that will strengthen communications in the capital.
Grete Aspelund, President Sweco Norway Markku Varis, President Sweco Finland
– The Finnish market remains challenging. Even so, we succeeded in increasing sales and generating good organic growth. We achieved this through our recognised expertise and by striving to always be the best at understanding and meeting the needs of every customer. This produces results. We were engaged during the year for several important projects that strengthen and develop society, such as managing the construction of Helsinki's new metro and the planning and design of a major new hospital. We also have a lead role in the design and planning of a next generation bioproduct mill.
The acquisition of Grontmij is a milestone that positions Sweco for continued growth for a long time to come. Under Sweco's growth strategy, operations are conducted in mature markets in Northern Europe with the objective of holding a leading position in each local market. With its decentralised, customer-focused operations, Sweco aims to be the first choice for customers and employees.
– We saw a gradual strengthening of the market during the year. This resulted in our being commissioned for several important construction and real estate as well as infrastructure projects. We are now involved in expanding the Frederikshavn port facility, one of Jutland's busiest ports. The year was also distinguished by the changes we implemented to improve internal efficiency. Profit was strong during the latter part of the year.
– The market in the Netherlands remains challenging. As of 1 October we have been implementing measures to adapt the organisation to market conditions. A new decentralised, customer-focused organisation with lower administrative costs has been introduced. Thanks to our recognised expertise within infrastructure and energy, we have been commissioned for projects including the renovation of Holland's gas distribution infrastructure. We are also working on improving navigability for freight transport on two Dutch rivers.
John Chubb, President Sweco Denmark Ton de Jong, President Sweco Netherlands
– Earnings improved during the year, mainly due to good growth in the UK. London's construction and real estate sector is strong, and we are now involved in developing and modernising several tall buildings and skyscrapers. The Belgian market is also strong. Sweco's model – with its strong customer focus, internal efficiency and decentralised organisation – is the way forward.
– Initiatives to improve internal efficiency and customer focus have produced strong results in Central Europe, despite continued weak demand in several markets due to delayed EU investments. During the year we decided to withdraw from Russia and Slovakia. The German market is good and is developing positively. We play a prominent role in designing tomorrow's infrastructure and are working on several projects to improve rail, air and road traffic.
Bo Carlsson, President Sweco Western Europe Ina Brandes, President Sweco Central Europe
Sweco aims to take a leading position in the markets where we choose to operate. We do this so that our customers have access to the most approachable and committed experts. Sweco's growth platform is Northern Europe, where our skilled consultants are entrusted to plan and design tomorrow's communities and cities.
Whatever the challenge, count on Sweco to solve it Sweco's customers should have high expectations. We promise to be their most approachable, committed partner, with recognised expertise. By this we mean that we are easy to work with, truly committed to our customers' needs, and that we offer the right expertise for every situation. Challenges change, but our customers can always count on Sweco to solve the particular one they're facing.
Sweco is distinguished by simplicity. With its decentralised organisation, each consultant is fully focused on his or her own customers. We measure customer satisfaction levels on a regular basis. This allows us to strengthen our relationship with each customer and, over time, to ensure even better results.
Sweco's goal is to hold a leading position in all the markets where we operate. We take an active role in the consolidation of the industry with the aim of being the first choice for customers and employees. With the acquisition of Grontmij we gained additional home markets in Northern Europe, creating a platform for continued growth for many years to come.
Sweco's leading position gives our customers access to the broadest-based specialist expertise. With 14,500 experts, Sweco is an advisor on society's development with unique expertise that shapes the communities and cities of the future.
Profitable growth always begins with satisfied customers Sweco is made up of the expertise, commitment and customer relationships of its employees. Good results are produced by working hard every day and knowing that each customer meeting and each delivery counts. By using time and resources prudently, Sweco is able to increase both value for customers and the company's profitability.
Profitable growth remains one of Sweco's distinguishing characteristics. This always starts with satisfied customers. When our customers are satisfied, we can continue to grow and invest in developing our employees and the company – which in turn results in satisfied customers.
Billing ratio is a key parameter for continuously evaluating demand for our services in the market. It also shows how effectively Sweco is using its resources. Highly sought-after consultants produce high billing ratios.
The most approachable and committed employees Every Sweco employee strives to understand and meet the needs of his or her customers better than anyone else. Sweco stands out from the crowd by having the most approachable and committed experts. Sweco offers a unique breadth of specialist expertise. Our ambition to always offer the right expertise is also a pillar of Sweco's acquisition strategy.
Not just anyone can be entrusted to plan and design tomorrow's communities and cities. It needs to be someone who truly understands the challenges and opportunities faced by society – and someone who produces solutions. With 14,500 experts throughout Europe, we are wellequipped to solve all of our customers' challenges.
It's easy to do business with Sweco. We are where our customers are, with the local knowledge needed to identify the right solutions. We are told that what distinguishes Sweco is that our consultants are given full responsibility for their assignments early on. We do not find this strange. If you recruit committed, skilled people, they should be given the authority to do a good job. Our decentralised model remains the foundation of how we do business at Sweco.
To be Europe's most respected knowledge company in the fields of consulting engineering, environmental technology and architecture.
To be the most approachable and committed partner with recognised expertise.
Sweco's target is an EBITA margin of at least 12 per cent.
Sweco aims to maintain a net debt position over time. Sweco's net debt should not exceed 2.0 times EBITDA.
At least half of profit after tax shall be distributed to the shareholders. The company must maintain a capital structure that permits development of and investments in the company's core business.
With one move, Sweco has become the European leader. Grontmij is by far Sweco's largest acquisition to date. It is also a natural step in a strategy that has produced successful growth over the years, and that now positions Sweco to continue growing for many years to come.
On 1 June 2015 Sweco announced its intention to acquire Grontmij, a consulting engineering company with 6,000 employees and headquarters in the Netherlands. Following a public bid process, the company became part of Sweco on 1 October 2015. Sweco is now the leader in the European market, with 14,500 employees and annual sales of SEK 16 billion (pro forma 2015).
The acquisition of Grontmij is a milestone that positions Sweco for continued growth for a long time to come. Under Sweco's growth strategy, operations are conducted in mature markets in Northern Europe with the objective of holding a leading position in each local market. With its decentralised, customer-focused operations, Sweco aims to be the first choice for customers and employees.
Sweco and Grontmij are a virtually perfect match – operationally, geographically and culturally.
Sweco's 100-plus acquisitions over the past decade have been driven by the goal of always offering our customers the right expertise for every situation. With Grontmij, Sweco has expanded dramatically in Europe and offers the industry's broadest specialist expertise. Together, we are taking an even more prominent role in planning and designing tomorrow's communities and cities.
Through the acquisition, Sweco acquired three additional business areas covering countries such as the Netherlands, Denmark, the UK and Germany. With the new organisation, Sweco holds leading positions in six European countries. At the same time, several of the Northern European markets are highly fragmented. Sweco has taken an active role in
consolidating Nordic consulting engineering companies, and a similar development is possible in the new markets. Sweco therefore sees good long-term opportunities for complementary acquisitions to strengthen our positions.
Sweco and Grontmij have similar corporate cultures. Both companies are known for their expertise and for being easy to work with. These qualities will continue to be strengthened. Local presence and an in-depth understanding of each customer's specific needs are the only keys to real success – even when you are largest in Europe.
Synergies and operational improvements are the key elements of the logic behind the acquisition. These involve IT, head offices and administration – areas presenting clear benefits for large companies. In operational terms, underperforming parts of the operations will be adapted to Sweco's business model. Sweco is dedicated to being the most approachable and committed partner, with recognised expertise. The acquisition is expected to generate annual synergies of SEK 250 million within four years.
In order to grow through acquisition, a company needs to be serious about integration. Planning for the Grontmij integration began long before the acquisition was settled. This produced results. Sweco has already changed brand in several countries, consolidated head offices and checked the first common IT system off the list. The careful yet effective merging of two companies, where the sum is greater than its parts, is something Sweco has developed into a core competence.
COMMITTED EMPLOYEES WITH THE RIGHT EXPER-TISE IN ALL SITUATIONS
Sweco stands out from the crowd by having the most approachable and committed experts. This is why our customers entrust us to plan and design the best solutions for communities and cities of the future. With the acquisition of Grontmij, Sweco offers the broadest specialist expertise in Europe.
Sweco welcomed 6,000 smart new colleagues during the year. As a result of the Grontmij acquisition, our employees are able to take on even more complex and challenging projects.
Sweco and Grontmij complement each other perfectly. Both companies are known for their expertise and for being easy to work with. Together, we sell knowledge. We don't build houses and we don't lay cable. What we offer our customers is the expertise, experience and commitment of our employees. Nearly all of Sweco's employees hold university degrees in architecture or engineering.
Not just anyone can be entrusted to plan and design tomorrow's communities and cities. It needs to be someone who truly understands the challenges and opportunities faced by society – and someone who produces solutions.
Sweco's employees are united by a driving motivation to make a real difference to those we work for. Regardless of whether we're working on a bicycle path, a district heating plant or a new residential district, our customers must always feel confident that Sweco has understood and can meet their needs to achieve the best possible end result.
We make it easy to work with Sweco. We are told that what distinguishes Sweco is that our consultants are given full responsibility for their projects early on. This is entirely natural for us. If you recruit approachable and committed, responsible, highly skilled people, they should be given the authority to make the decisions that produce the right end result for the customer.
Sweco needs to always offer its customers the right expertise. Development at Sweco isn't just a possibility – it's a requirement. Constantly evolving and being the best at meeting our customers' needs is a prerequisite for Sweco's continued existence and success. Only then do our customers entrust us with the most challenging assignments. Profitable growth, satisfied customers and motivated employees are all connected. Sweco's employees are passionate about being part of the most exciting projects. By working with attractive projects, Sweco becomes an attractive employer and has access to more skilled employees. This allows us to continue offering our customers the right expertise, resulting in more satisfied customers and opportunities to continue growing and developing.
Sweco is a company that shapes the leaders of tomorrow. Identifying talented people and giving them the opportunity to succeed has always been a crucial component of Sweco's corporate culture. As a result, most of the company's managers are recruited internally. Annual employee surveys give high marks to Sweco's managers and highlight the ability to develop the business as well as employees.
Career paths. The primary career paths at Sweco are line manager, specialist and project manager.
Sweco Academy. Comprehensive term for our joint training programmes. Includes everything from introductory training for new employees to management training.
Sweco Talk. Our process for guaranteeing that each employee's work efforts and personal development are monitored carefully and thoroughly every year.
Sweco Employee Survey. Annual employee survey, used to further develop the business.
Talent Review. Our process for identifying Sweco employees who have the potential to take on greater responsibility.
RESPONSIBILITY IS A PREREQUISITE FOR LONG-TERM SUCCESS Sweco's decentralised organisation results in maximum customer understanding and also sets high standards for individual business ethics awareness. Every Sweco employee is required to comply with applicable laws, regulations and our own business ethics guidelines. We also set high standards for our business partners.
Being an ethical and responsible company is an explicit prerequisite for long-term success. As experts in planning and designing tomorrow's communities and cities, we need to set high standards – for ourselves, naturally, but also for the people we work with. This involves taking responsibility for the projects we carry out and the business methods we use. We also set high standards for our business partners. For instance, we work only with business partners who have business ethics standards on par with our own, just as we work only with projects that we consider to have been procured correctly with regard to business ethics. Sweco's customers, employees and shareholders can rely on our ability to run the business in a transparent, responsible way.
Sweco is a decentralised company. In our daily work with customers, each of our employees assumes major responsibility for their specific projects. This generates good customer understanding, and also places high demands on individual awareness and our procedures. This is why Sweco has a framework of business ethics guidelines. It helps Sweco's employees become familiar with the rules, and enables them to act appropriately. All Sweco employees sign Sweco's CSR Policy and Code of Conduct and undergo training in business ethics. Sweco's business areas may also have supplementary guidelines based on local regulations. Business ethics awareness underpins the entire operations. It is a standing item on management group meeting agendas, and CSR risks are reported to Sweco's Board of Directors on a quarterly basis.
Sweco's engineers and architects work on projects that impact society and people's everyday lives – things like efficient public transport, access to electricity and clean
water, and sustainable buildings. End results are important, as are the methods we use to achieve them. Transparency and accountability are prerequisites for continued success.
Sweco's CSR Policy forms the basis of Sweco's business ethics framework. Among other things, it clarifies that Sweco has zero tolerance for bribes, corruption, fraud and unpermitted competition-restricting practices.
Sweco's Code of Conduct is the collective ethical guidelines to ensure responsible conduct on the part of Sweco's employees and business partners.
Sweco has guidelines for anti-corruption and bribes, gifts and business entertainment, and sponsorship. All employees are responsible for familiarising themselves and complying with these guidelines.
Sweco Ethics Line is a phone- and web-based service that provides the option of anonymously reporting suspected non-compliance with business ethics standards.
Sweco's procedures for risk management with regard to tenders regulates whether or not Sweco will submit a tender for an assignment and ensures responsible conduct throughout the course of the assignment.
INDUSTRY
Tomorrow's communities and cities are facing changes related to climate adaptation, urbanisation and digitalisation – changes that can only be managed by an experienced advisor with recognised expertise. The results of Sweco's work are sustainable buildings, efficient infrastructure and access to electricity and clean water. With 14,500 engineering, environment and architecture experts, we offer our customers the right expertise for every situation.
Never before have the cities of the world been growing as quickly as today. Regardless of whether it's a brand new city district or a building in need of modernisation, having a holistic perspective is imperative. Sweco plan and designs buildings and city districts with the aim of being aesthetically pleasing, energy efficient and safe, as well as having a comfortable atmosphere. Working closely alongside our customers is key to a successful outcome. We always want to be the best at understanding our customers' needs and will not rest until the very last detail is in place.
Sweco's architects design buildings and environments for people to live, work and thrive in.
Sweco's building service systems consultants create comfortable indoor climates in cities' buildings and facilities.
Examples of services:
Sweco's structural engineers create buildings with a focus on safety and functionality, with load-bearing structures that harmonise with the design, the indoor environment and the customer's business.
Examples of services:
Sweco's urban planning experts harness the possibilities of tomorrow, providing everything from analyses and forecasts, to completed master plans for new city districts.
Examples of services:
Sweco's project managers are the link between the customer's vision and the tangible implementation of complex urban development projects.
Examples of services:
Sweco's IT experts manage and process data produced by the city, to streamline everything from transportation to water flows.
Examples of services:
Frankfurt is one of Europe's most heavily trafficked airports and is in need of a larger central terminal to manage the rising number of passengers. Sweco is in charge of designing a new terminal, and is also a member of a partnership that is tasked with planning and designing a new road that will connect with the new terminal.
In a Stockholm plagued by a housing shortage, 17 wooden link-detached houses will be completed by autumn 2016 on a previously undeveloped site. Sweco's architects have developed the innovative housing area in southern Stockholm in collaboration with a modular housing supplier. Sweco's landscape architects have used the surrounding greenery to create a proximity to nature throughout the area. The houses will be open plan and have access to light through a narrow opening that runs throughout the house.
A transformation is under way in the Fiskehamnen district of Helsinki. The idle port area will be completely transformed by 2023, when 20,000 people will live there. Part of the transformation involves creating the new REDI lifestyle centre, which features soaring towers that create a new skyline. Sweco is the principal structural engineer for the innovative urban development project, and is designing buildings of up to 35 stories.
When relocating the entire northern Swedish city of Kiruna to provide more space for mining, the city commissioned Sweco. The massive undertaking for Sweco includes designing the infrastructure, energy supply and water access for the entire city. To gain a broader perspective and support the local development, Sweco has created a virtual city model to represent an ideal city for the arctic climate. The model envisions tomorrow's Kiruna as a sustainable and interwoven city, where nature is never more than three blocks away.
NEW OFFICE BUILDING WITH ENVIRONMENTAL FOCUS The new Gullfaks office building in the Norwegian city of Stavanger will soon be completed. Using its HVAC and sanitation and electrical engineering expertise, Sweco can meet the customer's ambitious environmental goal: an "excellent" rating under BREEAM NOR's sustainable buildings classification. Despite featuring 18,000 square metres of floor space, low energy consumption and a pleasant indoor climate have been achieved by using an airtight outer shell, district cooling from the nearby fjord, central heating and two indoor atruims. In keeping with a sustainable future environment, space for electric cars and bicycles has been included.
Big cities continue to grow vertically and in the new Hagastaden district of Stockholm, the Norra Tornen towers measuring more than 100 metres high are being planned. Sweco has been put in charge of the complex structural engineering of the first tower and has an option for the second one. The towers' height and columned facades are challenges that require an advanced pile foundation. When the first tower is completed in 2018, it will house both public spaces and residences, and give Stockholm a new Skyline.
Half the energy consumption of a standard hospital. The new psychiatric building that Sweco is creating for Linköping University Hospital in Sweden will feature record-setting energy performance. The 30,000-square metre building will be one of very few passive buildings of that size. A substantial share of the energy will come from solar panels on the roof, and particularly robust insulation enables a comfortable temperature to be achieved from just the heat generated by the people, lights and other equipment in the building.
The city of Kajaani in central Finland is getting a new 47,000-square metre central hospital. Formerly scattered healthcare services and laboratories will be housed under the same roof and streamline the healthcare process. There is a substantial focus on smart logistics and new digital solutions, with systems communicating with each other. Sweco is providing experts in everything from architecture and structural engineering, to building services systems and logistics. Virtual models including BIM and Cave are being used to create an environment that is as realistic as possible during the development process.
Shanghai is one of the world's fastest growing cities. The five-year plan for the city's continued development includes building seven brand new city districts. Sweco has been commissioned by the state-run company Shanghai Jinxun to plan one of these in the vast Baoshan suburb, where Sweco previously designed the Luodian city district. The commission also encompasses the conceptual design of offices, residences, hotels and commercial space.
What was formerly only a partially utilised 31-story building by the River Thames in central London has now risen by 11 stories and will house luxury apartments, and attractive retail and office space. Its new name is South Bank Tower and Sweco has been in charge of all services related to building systems and thus created a comfortable indoor climate and maximised the building's energy efficiency. Sweco's strategy to use prefabricated construction components has yielded savings in energy, construction time and costs.
Roughly 50 years ago, Sweco's architects designed the water towers in Kuwait – marking the start of a reliable and comprehensive water supply for the country. Today, the towers serve as a key national symbol that Kuwait want's to preserve and highlight the significance of, which is why the Kuwaiti government has once again commissioned Sweco as its architect. The goals are to enable classification as a world heritage site, to highlight the towers' symbolic significance as the centre of Kuwait's water supply, and to give the entire region the capacity to remain a key tourist attraction and national symbol.
The driving forces behind the creation of sustainable urban development cause a demand for modern technical solutions. Access to clean water, a reliable energy supply and resource-efficient industrial facilities are examples of what Sweco's efforts yield. Sweco's experts have what it takes to handle challenges under evolving circumstances – even as standards rise due to climate change and growing cities. Transforming complexity into simplicity for our customers is among Sweco's foremost specialties.
Sweco's experts manage water for a variety of situations, ranging from providing access to clean water to protecting societies from flooding.
Examples of services:
Sweco's energy experts know how energy is produced, distributed where it's needed and consumed as efficiently as possible.
Examples of services:
Sweco's environmental specialists create inhabitable environments that are not harmful to man or nature through measures including reducing the presence of toxins and effective waste management.
Examples of services:
Sweco's industrial consultants improve effective and resourceefficient production in all industrial operations.
Examples of services:
Sweco's IT experts manage and process data produced by the city to streamline everything from transportation to water flows.
Examples of services:
AN ISLAND PROTECTED FROM FLOODING In the 1200s, the town of Marken outside Amsterdam, was separated from the mainland by a severe storm. Today, the peninsula is connected to the mainland by a dam, and a levee protects the island against flooding. Now, the levee requires reinforcement to ensure the safety of life on the island, and to preserve the island's important cultural and natural heritage. Sweco will draft three alternatives to serve as the basis for deciding how to proceed. The environmental impact and costs are being considered in the alternatives, and the interests of its residents and tourists are being studied and taken into account.
In Chittagong, the second-largest city in Bangladesh, less than half of the nearly three million residents are connected to the water network. Sweco is part of a project to increase access to clean water by expanding the development of the water management systems. Sweco's leakage-control experience was of particular interest to our customer, CWASA, which is the city's water authority. Once the expansion is completed in 2017, the water supply will have increased by two-thirds, creating a positive impact on both public health and the local environment.
MAJOR INITIATIVE CREATING SWEDEN'S LARGEST PULP MILL Sweco is involved in multiple major paper and pulp initiatives throughout the Nordic region. One of the latest ventures involves overseeing land use and construction planning as SCA expands its Östrand pulp mill in Timrå. The investment is meant to double production of bleached needle-sulphate pulp and will create Sweden's largest pulp mill. Sweco has worked on assignments in Östrand since the 1920s.
Sweco has been commissioned by Poland's largest power company, the state-run Polska Energy Group, to manage the construction of a waste-fired CHP plant. Every year, 100,000 tonnes of municipal waste will generate electricity and district heating for the entire region surrounding the city of Rzeszów in southern Poland, and will significantly contribute to reducing fossil fuel consumption. Sweco's extensive energy and network infrastructure experience enables the company to offer expertise tailored to the project, which will be completed by 2018.
Metsä Group is investing 1.2 billion EUR in the construction of a new bio-product facility – the largest forest industry investment ever in Finland. Sweco's industrial experts and structural engineers have a prominent role in the work of creating the next generation of bio-products and bioenergy. Synergies and resource efficiency are in focus, and the final product will be the most efficient and modern bioproduct plant in the world.
In just five years, the Nordic countries want half of all energy to be renewable. Sweco has thus been enlisted by the Nordic Council of Ministers to offer guidance in the pursuit of greater sustainability in the Nordic region. The assignment includes giving recommendations on how to achieve the climate goal, and to design public support mechanisms. Sweco has compared actions taken by other countries and analysed sustainable energy resources for transportation, industry and electricity production.
Sweco's hydropower and geoengineering experts have conducted a feasibility study for a hydropower plant near the city of Khorugh in southern Tajikistan. Khorugh is a university town with around 30,000 residents. The initiative aims to give residents and the business community a reliable electricity supply and promote increased growth in the region. The solution involves directing water from the Shokh Dara River via a 3-kilometre canal to a power station. The facility is subsequently connected by a 20-kilometre powerline to the region's transmission network.
FACILITY FOR TRANSPORTING EXTREMELY HEAVY LOADS In the Belgian port city of Antwerp, a project is underway that will result in new facilities for Europe's second-largest refinery. Sweco has been commissioned to design the construction site and a road (including two bridges) for transporting extremely heavy loads. The project requires precision time-planning and is rife with challenges due to ground instability. Sweco will provide expertise in project and construction management, electricity and automation. Using 3D models, Sweco will simulate transport and create solutions.
One of the world's largest offshore wind farms is being planned in the Netherlands. It will be 12 times larger than what is now the country's largest wind farm. This is one step toward the goal of 14 per cent of the country's energy being renewable by 2020. Sweco has been commissioned for the feasibility study and the environmental impact assessments, which will form the basis for its continued development. Sweco is enlisted as an expert in offshore wind power in several fronts in Europe.
The city of Plzeň in the western Czech Republic is most famous for inventing "pilsner" beer. Also located there is one of the country's largest water treatment plants, whose outdated technology could no longer rid the water of pesticides. The task of solving this problem was given to Sweco, which was responsible for design of the pumping station for untreated water, redesigned the filtration process and upgraded the control system for the entire facility. Today, it meets all quality standards and provides more than 200,000 residents in the region with clean water.
The city of Konin in Poland is building a new Waste to Energy plant that converts household waste into energy. The facility will provide the city's 80,000 residents with electricity and district heating. Sweco is providing a broad range of expertise including everything from tender evalution, to design and structural engineering.
In an accessible society, people and goods can move about safely and efficiently. Modern technology and IT development lay the foundation for an accessible future. Sweco's experts are planning and designing transportation systems that will help tomorrow's cities cope with a wide range of issues, including growing populations and climate change. Achieving this requires a profound understanding of not only the customer's needs, but also those of society and the end users – and requires us to approach every project with the same steadfast commitment from the very beginning to the very end. We won't rest until the very last detail is in place, whether it involves new routes for a high-speed train, or tunnels for frogs.
Sweco's civil engineering specialists plan and design everything from roads and tunnels to bridges and ports for an even more accessible society.
Examples of services:
Sweco's project managers are the link between the customer's vision and the actual implementation of complex construction projects.
Examples of services:
Sweco's experts have technical expertise in areas ranging from studies and plans for new tracks and railways to operation and maintenance of those already in place.
Examples of services: Planning for
IT
Sweco's traffic planners are involved in planning and
TRAFFIC PLANNING
strategies at an early stage for everything from public transportation to freight traffic, to ensure smooth and safe travel for all road and rail users.
Examples of services:
transportation to water flows.
Examples of services:
In ten years, Nacka and Stockholm's Central Station will be connected by a new, 11-kilometre metro line – the largest initiative in Stockholm's metro in modern times. Sweco's extensive assignment involves designing the entire new line, and seven new stations. From a technical perspective, this assignment is in a league of its own. The new line will pass through the bedrock under Saltsjön Bay and one of the stations will be located as deep as 100 metres underground. The initiative is a key component in a rapidly expanding Stockholm and will lead to a substantial improvement in public transportation.
The world's most northerly underground metro in Helsinki is expanding with a new line that will transport 100,000 passengers daily. Sweco is in charge of managing the construction of seven kilometres of underground railway, five connecting stations and a train depo. Sweco has previously managed the development of the 14-kilometre underground route that will open for traffic in autumn 2016. The current assignment sees the line continue even further west, and will be open for efficient travel to the suburb of Esbo – Finland's second largest municipality – in 2020.
The ring road around the Dutch city of Utrecht connects three heavily congested highways. Sweco, which has extensive infrastructure experience from projects throughout Europe, has been commissioned to increase access and improve quality of life for the city's residents. The commission involves outlining organic and socially sustainable solutions to reduce congestion and noise. The plans include a green bridge, featuring grass and trees, over the A27, as a link between the vibrancy of the city and the surrounding parklands.
The busy ring road circling the Belgian city of Antwerp may be placed underground in future, thus reducing air pollution and freeing up lucrative city space. Sweco has been commissioned to design immersed tunnels where the ring road crosses the Scheldt River, and so-called cut-and-cover tunnels that will be connected to the existing ring road. The project is a key component of a new infrastructure plan for the entire Antwerp region and also improves European connections with the Netherlands and France.
The main rail line between the Dutch cities Rotterdam and Amsterdam passes through Delft. To increase capacity on this heavily trafficked rail line, Sweco has been commissioned to design a 2.3-kilometre tunnel under Delft's historic city centre. The tunnel and the station have been adapted to allow for the addition of two more tracks at a later stage.
A cross connection through a mountain all the way to Fyllingsdalen, the burgeoning suburb of Bergen, Norway, is the goal of the city's new sustainable public transportation. Sweco has been commissioned to make the Bybanan railway a reality – a venture that will significantly increase access for the city's residents. It is Sweco's largest public transportation assignment to date in Norway, and, backed by its rock excavation, railway engineering and landscape design expertise, Sweco can fulfil the city's lofty ambitions.
There is potential for improvement in freight and passenger traffic on the railway between Gothenburg and Oslo, in terms of enhanced operational reliability and shorter travel time. Sweco has been enlisted by the Norwegian National Rail Administration and the Swedish Transport Administration to analyse how the railway could take on a more important role on this route. Based on marketrelated traffic conditions, Sweco will draft conceivable timetables and proposals for both administrative and engineering measures for the coming 35 years.
The A1 motorway connecting London and Edinburgh is one of the most important in the UK and can be traced back to the Roman Empire. Sweco has been commissioned to upgrade a 24 km stretch in Yorkshire from the existing two lanes to a dual three lane motorway. This has benefits on safety, capacity and rejuvenation of the area. The use of BIM is crucial in the design and construction, as the virtual creation helps Sweco provide a more integrated solution ahead of construction.
In Skagen in northern Denmark, the port was in need of expansion to accommodate the docking of significantly larger vessels, including cruise ships more than 300 metres long and freight vessels. This required 600 metres of new quay, greater port depth, breakwaters and supporting infrastructure. Sweco was in charge of the detailed design of the new port area, as well as oversight of the structural engineering work. The new port became operational in 2015.
The Board of Directors and the President & CEO of Sweco AB hereby submit the Annual Report and consolidated financial statements for financial year 2015.
SWECO AB (publ), corporate identity number 556542-9841, is headquartered in Stockholm, Sweden and is the Sweco Group's parent company. The company's engineers, architects and environmental experts work together to plan and design tomorrow's communities and cities. Sweco delivers qualified consulting services with high knowledge content throughout the customer's entire project chain: from feasibility studies, analyses and strategic planning through construction, design and project management. With approximately 14,500 employees, Sweco is the largest player in the European market. Sweco operates its business in seven business areas and conducts project exports to some 70 countries worldwide.
Sweco has an efficient, customer-focused organisation. With Sweco Group's decentralised, achievement-driven business model, all energy is focused on the business and the client's project. The parent company is responsible for group-wide functions. The business is run in seven business areas:
Sweco Sweden Sweco Norway Sweco Finland: Finland and Estonia Sweco Denmark Sweco Netherlands Sweco Western Europe: UK, Belgium, Bulgaria and Turkey Sweco Central Europe: Germany, Poland, Lithuania and Czech Republic
Sweco is well-positioned for profitable growth. The Group holds marketleading positions in Sweden, Norway, Finland, Denmark, the Netherlands and Belgium and strong niche positions in several European countries. Sweco's home markets generally have greater GNP growth and stronger public finances than the European average. With top-class profitability in the industry, Sweco is able to grow faster than the market average – both organically and through acquisitions.
Overall, the market for Sweco's services is good and development is stable. The Swedish market is strong. The market in Norway is good but has weakened. Markets in Denmark, Western Europe and Central Europe are good and are developing positively. Markets in Finland and the Netherlands remain challenging.
Powerful drivers are increasing the long-term need for consulting engineering services. Trends like urbanisation and rising living standards are fuelling a need for infrastructure, industrial production, energy production, construction, etc. At the same time, there is greater demand for sustainable urban development and adaptations in response to climate change, which increases demand for services in areas such as energy
efficiency, environmental impact assessments, renewable energy solutions, effective traffic planning, water supply, wastewater treatment and soil/site remediation.
Net sales increased 24 per cent to SEK 11,389 million (9,214). Organic growth totalled 6 per cent.
Adjusted for extraordinary expenses related to the Grontmij acquisition, EBITA totalled SEK 991 million (826), Sweco's best full-year result to date.
Sweco's original operations contributed approximately SEK 894 million to EBITA, adjusted for extraordinary expenses (826). Irrespective of Grontmij, this is Sweco's best full-year result to date. Grontmij was consolidated into the Group's financial statements on 1 October and contributed approximately SEK 97 million to EBITA before extraordinary expenses.
Extraordinary expenses related to the Grontmij acquisition totalled SEK 250 million. EBITA thus totalled SEK 740 million (814).
| Key ratios | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 11,389 | 9,214 |
| Organic growth, % | 6 | 3 |
| Acquisition-related growth, % | 18 | 10 |
| Currency, % | 0 | 0 |
| EBITA, SEK M | 740 | 814 |
| Margin, % | 6.5 | 8.8 |
| EBITA excl. extraordinary items, SEK M | 991 | 826 |
| Margin excl. extraordinary items, % | 8.7 | 9.0 |
| Profit after tax, SEK M | 439 | 545 |
| Earnings per share, SEK | 4.36 | 5.74 |
| Number of full-time employees | 10,188 | 8,535 |
| Net debt/EBITDA | 1.8 | 1.3 |
The European economy has strengthened, and GNP growth improved in all of Sweco's home markets with the exception of Norway. Geopolitical turbulence, the global economic situation and financial market developments are risks that may interfere with the improvement trend.
Demand for Sweco's services largely follows the general economic trend in Sweco's submarkets, with some degree of lag. Sweco does not produce forecasts.
Sweco's Board of Directors decided to introduce EBITA as the primary earnings measure, to replace EBIT (operating profit). Accordingly, EBITA is the primary earnings measure used for internal and external results monitoring as of Q4 2015.
The primary purpose of the change is to focus on operational business performance without interference from accounting-related amortisation/
| Pro forma Net sales, SEK M |
Pro forma EBITA, SEK M |
Pro forma EBITA margin, % |
Pro forma Number of full-time employees |
|||||
|---|---|---|---|---|---|---|---|---|
| Business area | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| Sweco Sweden | 6,838 | 6,453 | 672 | 604 | 9.8 | 9.4 | 5,375 | 5,289 |
| Sweco Norway | 1,991 | 1,918 | 161 | 179 | 8.1 | 9.3 | 1,326 | 1,250 |
| Sweco Finland | 1,663 | 1,525 | 89 | 83 | 5.4 | 5.5 | 1,913 | 1,890 |
| Sweco Denmark | 1,350 | 1,264 | 39 | 15 | 2.9 | 1.2 | 1,109 | 1,057 |
| Sweco Netherlands | 1,831 | 1,905 | 24 | 76 | 1.3 | 4.0 | 1,666 | 1,794 |
| Sweco Western Europe | 1,594 | 1,420 | 83 | 71 | 5.2 | 5.0 | 1,618 | 1,585 |
| Sweco Central Europe | 951 | 902 | 49 | 51 | 5.1 | 5.7 | 1,402 | 1,394 |
| Group-wide, eliminations, etc. | -221 | -178 | -336 | -205 | – | – | 142 | 113 |
| TOTAL SWECO GROUP | 15,998 | 15,209 | 781 | 874 | 4.9 | 5.7 | 14,552 | 14,371 |
depreciation and impairments of intangible assets. EBITA provides a better assessment of cash flow-generating operational earnings.
In accordance with this, Sweco also adjusted its long-term profitability targets. Sweco Group's new target is to achieve an EBITA margin in excess of 12 per cent. The revised target formulation does not entail any change to profitability goals.
Grontmij – with some 6,000 employees in 9 countries – was acquired on 1 October. Sweco is now Europe's leading engineering and architecture consultancy. In 2014 Grontmij had annual sales of approximately SEK 6.0 billion and EBITA (as per Sweco's definition) of approximately SEK 203 million, excluding extraordinary expenses and the divested business in France. Sales for the combined company total approximately SEK 16 billion. Following the acquisition, Sweco has around 14,500 employees (pro forma 2015).
The acquisition of Grontmij creates value for all stakeholders – customers, employees, shareholders and society in general:
Sweco has completed around 100 acquisitions over the past 10 years. The acquisition of Grontmij is fully in line with Sweco's growth strategy and vision to be Europe's most respected architecture, engineering and environmental consultancy.
Integration is underway and proceeding according to plan, in some areas more rapidly than originally planned. Focus is on implementing profitability improvements and facilitating joint business opportunities.
When the transaction was announced, the acquisition was expected to improve annual profitability by approximately SEK 250 million through cost savings in the joint operations. Ninety per cent of the savings are expected to be realised within four years, and most within two years.
Measures were taken during the fourth quarter to realise this potential. The current assessment is that savings can be achieved as planned. As at the close of Q4 these measures have produced annual total cost savings of approximately SEK 100 million compared to 2014 cost levels. During Q4 2015 the measures had an impact on earnings of approximately SEK 17 million.
The improvement potential is chiefly found in four areas:
support has been implemented and reductions will be made during the first quarter. Co-location of the consultant operations is underway. Grontmij's Stockholm operations, with approximately 275 employees, will move into Sweco's offices during the first quarter and be integrated into all of Sweco's divisions.
• Country-specific operational improvements (approximately 30 per cent of cost-saving potential): The new business support organisation in the Netherlands and Denmark is established and being implemented during Q1. A new decentralised, customer-focused organisational model has been introduced in the Netherlands. The divestment of ancillary operations and restructuring of unprofitable units are underway. Reductions to the Dutch consultant organisation were commenced during Q4 2015 and will continue in 2016. Measures taken in the Netherlands are expected to involve a downsizing of operations as compared to 2015, although profitability may improve during 2017.
A reduction of approximately 200 positions is anticipated within the Group due to integration and restructuring. Notice has been given in most cases, and approximately 120 employees have left the Group as at the end of the period.
Extraordinary transactional, integration and restructuring expenses were initially estimated at approximately SEK 450 million and expected to arise mostly during late 2015 and early 2016. Extraordinary expenses developed according to plan, and integration is expected to be completed within the previously announced margin of expenditure. Accumulated extraordinary expenses totalled SEK 250 million at the close of the period. All extraordinary expenses are reported in the Group-wide segment.
Additional value-creating opportunities can be achieved in the longer term by increasing Grontmij's customer focus and internal operating efficiency and through organic and acquisition-based growth in Sweco's new home markets.
The purchase sum for 100 per cent of Grontmij's shares is approximately SEK 3,337 million, of which approximately SEK 1,537 million in cash and SEK 1,800 million in 14,949,247 newly issued Sweco Class B shares. Approximately SEK 94 million of the cash component remains to be paid in conjunction with the upcoming compulsory redemption process. The residual purchase sum is reported as a liability and is included in net debt.
The Enterprise Value is approximately SEK 3,953 million based on the above-referenced purchase sum and Grontmij's net debt of approximately SEK 616 million as at 30 September 2015.
The cash component of the acquisition was initially financed with a bridge loan, most of which has been repaid through the preferential rights issue conducted during Q4. The remainder of the bridge loan has been rolled over to Sweco's long-term loan financing.
Under the rights has been rolled over to Sweco's 13,294,945 new shares were issued at SEK 81 per share, raising approximately SEK 1,062 million of equity for Sweco net of issue expenses of SEK 15 million. The preferential rights issue was oversubscribed by 57.6 per cent. Of the issued shares, 99.4 per cent were allocated through exercise of subscription rights and 0.6 per cent through exercise of subsidiary subscription rights.
Grontmij's long-term loans were refinanced during Q4 with a new 5-year EUR 110 million revolving credit facility. The terms of the new credit facility are in line with Sweco's existing loan financing. The refinancing will save up to SEK 19 million annually in net financial income, as compared with Grontmij's original financing costs.
Sweco holds 97.36 per cent of all Grontmij shares as at the balance sheet date and has initiated a compulsory redemption process for the remaining shares. The acquisition is expected to improve earnings per share within two years following finalisation.
Acquisition-related intangible assets amount to a preliminary SEK 267 million. Approximately SEK 46 million of this amount will be written off annually over the coming three years, after which amortisation will decrease.
The subsidiary NIPI TRTI in St. Petersburg, Russia was divested during Q2, and subsidiary HYDROCOOP in Slovakia during Q3. These transactions had no significant impact on business area or Group profit and position.
On 17 December it was announced that Sweco would be moved to Nasdaq Stockholm's Large Cap segment. This took place on 4 January 2016.
On 1 January Grontmij Sweden was integrated into Sweco Sweden's organisation and is now operating under the Sweco brand. Grontmij's operations in Turkey switched to the Sweco brand on 16 January.
On 1 January Grete Aspelund took over as the new President of Sweco Norway.
Group cash flow from operating activities totalled SEK 1,140 million (595) during the period. Interest-bearing net debt totalled SEK 1,688 million (1,262).
The net debt/EBITDA ratio was 1.8 times (1.3). Pro forma and adjusted for extraordinary expenses, the net debt/EBITDA ratio was 1.2 times.
Available cash and cash equivalents, including unutilised credit lines, totalled SEK 2,229 million (1,142) at the end of the reporting period.
The number of employees at the end of the period was 15,151 (8,943), an increase of 6,208. During the year 2,095 employees (1,286) were hired, 1,929 (1,356) ended their employment, 111 (147) ended their employment in conjunction with the divestment of companies and 6,153 (129) were added via acquired companies. Personnel turnover was 16 per cent (15). The Group had a total of 10,188 full-time employees (8,535).
Sweco Norway won its largest-ever infrastructure project during the year. The Bergen Light Rail will add a tunnelled track connection to the suburb of Fyllningsdalen, with Sweco responsible for detailed planning and design. The extension, scheduled to open in 2021, will promote socially sustainable travel. The assignment was commissioned by Bergen Municipality and Bergen Light Rail Development and is valued at approximately SEK 190 million.
Sweco was commissioned by Metsä Fibre Oy to design the world's most modern and efficient bioproduct plant in Äänekoski, Finland, scheduled to begin operation in 2017. The value of the assignment corresponds to approximately 200 annual full-time equivalents.The assignments at the plant were expanded during the year with the signing of a contract with Andritz for design of the plant's fibre line.
Sweco was commissioned by Helse Fonna for detail design of the new Haugesund Hospital in Norway. The total value of the assignment is approximately SEK 55 million.
Sweco will participate in the construction of Kainuu, a new hospital in Kajaani. Sweco is responsible for project management and design. The assignment, carried out in Finland on behalf of the Kainuu Social and Health Care Joint Authority, is valued at approximately SEK 47 million for the initial development phase.
Sweco was commissioned by the Norwegian National Rail Administration to produce a detailed construction plan for the Sørlandet Line, a 549-km track running between Oslo and Stavanger. Sweco is responsible for a new overhead line and augmented electrical systems. The assignment is valued at approximately SEK 29 million.
In Sweden, Sweco will modernise the Hammarby Plant by planning a new control system. The plant is the world's largest heat pump plant for producing district heating and cooling from purified waste water. The end result of the assignment will supply reliable district heating for southern Stockholm. The assignment, commissioned by Fortum Värme, is valued at approximately SEK 26 million.
Sweco will expand and convert the port facilities in Fredrikshavn, Denmark, one of Jutland's busiest ports. The assignment, carried out in collaboration with Per Aarsleff A/S, is valued at approximately SEK 19 million for Sweco.
Sweco was commissioned during the year to develop methods to improve energy efficiency at the ESS research facility in Lund, Sweden. The end result will be the capacity to re-use an amount of energy corresponding to the annual energy consumption of around 10,000 households. The assignment, one of several Sweco is carrying out for ESS, is valued at approximately SEK 15 million.
In Bulgaria, Sweco will modernise the railway line between Sofia and Plovdiv, Bulgaria's most important industrial area. Sweco is responsible for analysis and design of the railway crossings and a 6-km tunnel as well as for renovation of buildings. The customer is Bulgaria's state-owned railway company. The assignment is valued at approximately SEK 10 million.
Sweco will improve the navigability of the Nether Rhine and Lek rivers, used for freight transport, on behalf of BSB Staalbouw. Sweco is responsible for hydraulic engineering and for renovating dams using steel and concrete structures. The assignment is being carried out in the Netherlands and is valued at approximately SEK 8 million.
As of 1 October Sweco is organised into 7 geographic business areas as follows (relative to the previous organisation):
Personnel costs, 71 (72) Subconsultants and expenses, 14 (13) Overhead expenses, 8 (8) Cost for premises, 5 (5) Amortisation/depreciation, 2 (2)
<1 year, 15 (12) 1–3 years, 28 (30) 4–9 years, 32 (29) >10 years, 25 (29)
Board of Directors' Report 33
Segments are reported on a pro forma basis following the new organisation. To facilitate the analysis of developments in operational activities, Grontmij has been included pro forma as if the acquisition had taken place on 31 December 2013.
Sales increased 6 per cent to SEK 6,838 million (6,453). EBITA increased SEK 68 million. Organic growth was 6 per cent.
The Swedish market improved gradually during the year and is strong at year-end, with stable demand for Sweco's services. There is strong demand in the construction and real estate sector. The infrastructure market is also strong, supported by major public investments. The industrial market is developing positively. The market for power transmission-related services is strong, while the energy sector is cautious.
| Pro forma net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 6,838 | 6,453 |
| Organic growth, % | 6 | |
| Acquisition-related growth, % | 0 | |
| Currency, % | 0 | |
| EBITA, SEK M | 672 | 604 |
| EBITA, % | 9.8 | 9.4 |
| Number of full-time employees | 5,375 | 5,289 |
Sales increased to SEK 1,991 million (1,918). EBITA decreased SEK 18 million. Organic growth was 8 per cent.
The Norwegian market is good, although it weakened during the year. This trend is in line with the softening of the Norwegian economy in the wake of falling oil prices.
The Norwegian economy is undergoing change, and demand is distributed unevenly. The construction and real estate market in particular has weakened in the western and northern regions of Norway. Markets in the Oslo region and within infrastructure remain strong. The market for energy-related services is weak.
| Net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 1,991 | 1,918 |
| Organic growth, % | 8 | 8 |
| Acquisition-related growth, % | 0 | 0 |
| Currency, % | -4 | -2 |
| EBITA, SEK M | 161 | 179 |
| EBITA, % | 8.1 | 9.3 |
| Number of full-time employees | 1,326 | 1,250 |
Sales for Sweco Finland increased to SEK 1,663 million (1,525). Organic growth was 6 per cent. EBITA increased to SEK 89 million (83).
The Finnish market remains challenging. The Finnish economy has basically had zero growth since 2011. Despite this, demand for construction and real estate-related services is satisfactory, while the infrastructure and industry markets remain challenging.
| Net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 1,663 | 1,525 |
| Organic growth, % | 6 | 7 |
| Acquisition-related growth, % | 0 | 4 |
| Currency, % | 2 | 5 |
| EBITA, SEK M | 89 | 83 |
| EBITA, % | 5.4 | 5.5 |
| Number of full-time employees | 1,913 | 1,890 |
Sales increased to SEK 1,350 million (1,264) and organic growth was 5 per cent. EBITA increased SEK 24 million to SEK 39 million. The improvement is mainly due to a reduction in project write-downs.
The market in Denmark is generally good and is developing positively. The construction and real estate sector is evolving well and is particularly strong on Zealand. The infrastructure market is solid and has positive prospects in railways. Demand in the water and energy sector is stable.
| Pro forma net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 1,350 | 1,264 |
| Organic growth, % | 5 | |
| Acquisition-related growth, % | -1 | |
| Currency, % | 3 | |
| EBITA, SEK M | 39 | 15 |
| EBITA, % | 2.9 | 1.2 |
| Number of full-time employees | 1,109 | 1,057 |
Sales fell to SEK 1,831 million (1,905). EBITA fell to SEK 24 million (76). The decrease is mainly due to the weak market and the ongoing restructuring of operations.
The market in the Netherlands has been challenging for several years due to the country's real estate and financial crises. 2015 was also a year of negative market growth, although some market segments (particularly within private building construction) show signs of stabilisation.
Sweco Netherlands delivers services primarily in the areas of infrastructure, water and public sector building construction. The market remains challenging.
| Pro forma net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 1,831 | 1,905 |
| Organic growth, % | -7 | |
| Acquisition-related growth, % | 0 | |
| Currency, % | 3 | |
| EBITA, SEK M | 24 | 76 |
| EBITA, % | 1.3 | 4.0 |
| Number of full-time employees | 1,666 | 1,794 |
Sales improved to SEK 1,594 million (1,420). EBITA increased to SEK 83 million (71). Organic growth was 5 per cent. The improvement in sales and EBITA is mainly due to strong performance in the UK.
The market in the UK is good and the general market climate improved during the year. The construction and real estate market in London is particularly strong. The infrastructure market is good, while demand varies in the energy and water market. The market in Belgium is generally stable within all market segments.
| Pro forma net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 1,594 | 1,420 |
| Organic growth, % | 5 | |
| Acquisition-related growth, % | 0 | |
| Currency, % | 7 | |
| EBITA, SEK M | 83 | 71 |
| EBITA, % | 5.2 | 5.0 |
| Number of full-time employees | 1,618 | 1,585 |
Sales increased to SEK 951 million (902) and organic growth was 7 per cent. EBIT totalled SEK 49 million (51).
The German market is good overall and is developing positively. The construction and real estate market is good and evolving well. Demand is solid in the transport and environmental sector due to public investments, while the energy market is challenging. The Polish and Lithuanian markets are seeing weak development due to delayed EU investments in public infrastructure, water and environment. The Czech market remains challenging, although there is good demand for Sweco's services.
| Pro forma net sales and profit | 2015 | 2014 |
|---|---|---|
| Net sales, SEK M | 951 | 902 |
| Organic growth, % | 7 | |
| Acquisition-related growth, % | -3 | |
| Currency, % | 1 | |
| EBITA, SEK M | 49 | 51 |
| EBITA, % | 5.1 | 5.7 |
| Number of full-time employees | 1,402 | 1,394 |
Investments in equipment totalled SEK 179 million (137) and were primarily attributable to IT investments. Depreciation of equipment totalled SEK 168 million (139) and amortisation of intangible assets totalled SEK 75 million (57).
Purchase consideration paid to acquire companies totalled SEK 3,368 million (91) and had a negative impact of SEK 1,246 million (-79) on Group cash and cash equivalents. Purchase consideration received for the divestment of companies totalled SEK 6 million (44) and had a positive impact of SEK 2 million (41) on Group cash and cash equivalents.
Dividends totalling SEK 318 million (296) were distributed to Sweco AB shareholders during the year.
Parent company net sales totalled SEK 355 million (344) and were attributable to intra-group services. Earnings after financial items totalled SEK 464 million (504). Investments in equipment totalled SEK 36 million (25) and cash and cash equivalents at the end of the period totalled SEK 13 million (2).
Sweco is listed on Nasdaq Stockholm. The share price of the Sweco Class B share was SEK 124.25 at the end of the period, representing a 21 per cent year-on-year increase. Nasdaq Stockholm rose by 7 per cent over the same period.
During the fourth quarter Sweco conducted a preferential rights issue of 1,171,020 Class A shares and 12,123,925 Class B shares.
The total number of shares at year-end was 121,094,830, of which 10,539,184 were Class A shares, 109,655,646 Class B shares and 900,000 Class C shares. After the allowance for treasury shares, the total number of outstanding shares at year-end was 119,537,510, of which 10,539,184 were Class A shares and 108,998,326 Class B shares.
The 2015 Annual General Meeting (AGM) resolved to implement a longterm share savings scheme for Sweco Group senior executives. Through the scheme, 59 senior executives have acquired some 37,000 shares. Pursuant to IFRS 2 provisions, the cost of the 2015 Share Savings Scheme is estimated at approximately SEK 9.1 million (including social fees) and will be expensed on a straight-line basis over the retention period. Sweco transferred 54,673 Class B treasury shares to participants in the 2011 Share Savings Scheme during the period.
Resolutions were made by the 2012, 2013 and 2014 AGMs on corresponding schemes, under which slightly more than 30,000, 27,000 and 33,000 shares were acquired, respectively. Under the four Share Savings Schemes, a total of approximately 430,000 shares may be issued if established targets are met.
The 2015 AGM resolved to implement the 2015 Share-based Incentive Scheme for all employees in Sweden, under which payment will once again be made in shares (as opposed to the previous cash payment). The AGM resolved to issue 900,000 Class C shares to carry out the 2015 Share Bonus Scheme.
Sweco Group's objective is to offer a competitive and market-based level of remuneration that facilitates the recruitment and retention of senior executives. Compensation for senior executives is comprised of basic salary, variable compensation, pension, other remuneration and sharebased incentive schemes.
Compensation levels are based on factors such as work duties, qualifications, experience, position and performance. In addition, the breakdown between basic salary and variable compensation is proportionate to the employee's position and work duties. Variable compensation is linked to predetermined, measurable criteria that are devised to comply with the company's long-term value creation. Variable compensation for the President & CEO and the CFO may not exceed 75 per cent of basic salary. For other senior executives, variable compensation may not exceed 50 per cent of basic salary. Variable compensation is determined based on results in relation to predetermined profitability targets. Targets for the President & CEO and other senior executives are set by the Board of Directors.
The terms and conditions for pensions for Sweco's President & CEO and senior executives are market-based relative to what generally applies to comparable senior executives in the market, and are normally based on defined contribution pension solutions.
Other compensation may be awarded, primarily in the form of company car and mobile phone benefits.
Sweco Group senior executives may be offered various forms of incentive schemes on market-based terms. The rationale for share-based incentive schemes is to increase/diversify senior executives' share ownership/ exposure and to more closely align the interests of the company's decision-makers and shareholders. A long-term, personal shareholder commitment among key personnel is expected to stimulate greater interest in the company's operations and earnings trend and to increase motivation and solidarity with the company.
Decisions on share-based incentive schemes are always resolved by the Annual General Meeting or Extraordinary General Meeting.
In the event of dismissal by the company, the President & CEO has a maximum notice period of 18 months. In the event of the President & CEO's resignation, the notice period is six months.
For other senior executives, the term of notice is normally 12 months in the event of dismissal by the company and six months in the event of the executive's resignation.
These principles shall apply to agreements entered into subsequent to AGM resolutions and to any changes or alterations made to existing agreements after this date, to the extent permitted under the terms of the existing agreements. The Board of Directors is authorised to deviate from the principles if warranted by special circumstances in individual cases.
| The Board of Directors and the President & CEO propose that profit carried forward and non-restricted reserves |
3,927 SEK M |
|---|---|
| along with net profit for the year | 383 SEK M |
| or, in aggregate, | 4,311 SEK M |
| be appropriated for the distribution of a dividend | |
| to the shareholders of SEK 3.50 per share | 421 SEK M1 |
| and that the remaining amount be carried forward. | 3,890 SEK M |
1) The dividend amount will be a maximum of SEK 421 million, calculated by the number of shares outstanding at 4 March 2016, including shares held in treasury. The dividend amount will change in the event the Board exercises the authority granted it by the 2015 AGM to buy back additional shares or to transfer treasury shares.
The estimated record date for dividend distribution is 18 April 2016.
The income statements and balance sheets of the Group and the Parent Company will be submitted to the Annual General Meeting for adoption on 14 April 2016.
Sweco's dividend policy specifies that at least half of profit after tax shall be distributed to the shareholders, while also requiring that the company maintain a capital structure that provides scope to develop and make investments in the company's core business. Pursuant to
Sweco's financial targets, net debt shall not exceed 2.0 times EBITDA. In view of the Board's proposed dividend (above), the Board hereby issues the following statement pursuant to Chapter 18, Paragraph 4 and Chapter 19, Paragraph 22 of the Swedish Companies Act.
The Board of Directors is of the opinion that the proposed distribution to shareholders does not constitute an impediment to the company's capacity to meet its obligations in the short or long term, and that the company's financial position allows for continued investments and expansion.
In light of the above, the Board deems that the proposed dividend to shareholders is warranted considering the amount of shareholder equity required due to the nature, scope and risks associated with the company's operations, and by the company's consolidation requirements, liquidity and overall financial position.
The Board of Directors has proposed that the 2016 AGM resolve to implement a long-term share savings scheme for up to 100 senior executives and other key people within the Sweco Group. The proposal is mainly on the same terms as previous programs to previous years.
The Board of Directors has proposed that the 2016 AGM resolve to implement a share bonus scheme for employees in Sweden. The proposal is virtually identical to previous years.
The Annual General Meeting will be held at 3:00 PM on Thursday, 14 April 2016 at Näringslivets Hus, Storgatan 19, Stockholm.
Sweco AB is a public limited liability company headquartered in Stockholm, Sweden. Sweco's corporate governance is based on the Swedish Companies Act, Sweco's Articles of Association, Nasdaq Stockholm's Rule Book for Issuers, the Swedish Code of Corporate Governance, other applicable Swedish and international laws and regulations, and Sweco's own policies, procedures and guidelines. Sweco's Board of Directors and management strive to live up to the requirements of the shareholders, other stakeholders and Nasdaq Stockholm regarding sound and effective corporate governance. In accordance with the Swedish Companies Act and Sweco's Articles of Association, Sweco's governance, management and control are divided between the shareholders at the Shareholders' Meeting, the Board of Directors and the President & CEO. Sweco's Corporate Governance Report has been prepared in compliance with the Swedish Code of Corporate Governance and the Swedish Annual Accounts Act, and has been examined by the company's auditors.
Sweco's business model is to create value through the delivery of professional consulting services. In Sweco's decentralised organisation, individual consultants form the hub of operations. Since every individual is responsible for generating business, the company's operations must be permeated by a strong entrepreneurial attitude and approach. Sweco's core values of curiosity, commitment and responsibility reflect the corporate culture and serve to promote good conduct and uniform decisionmaking.
Sweco's activities are largely carried out as assignments. The project teams vary depending on project size, location and complexity. Each project is headed by a responsible assignment manager whose day-to-day work is facilitated by Sweco's group-wide business system. All operating countries are certified in accordance with ISO 9001, and most are also certified in accordance with ISO 14001 and OHSAS 18001. These management standards promote effective project management and a consistent approach to the project process. They also help Sweco comply with legislation, improve projects' environmental aspects, identify potential risks, and measure and improve customer satisfaction. The system and its usage are audited every year by the independent quality assurance organisation. The system is also monitored internally on a continuous basis.
The consultants' task is to deliver sustainable and customer-adapted solutions that have high knowledge content, are of the appropriate quality and that benefit the customer's business. The Group's business system includes guidelines, policies and procedures focused on project results, and is accessible to the consultants at all times. Sweco works continuously with improvement measures to develop the company's working methods, promote sustainability and support employees. Strategic skills development programmes are used to meet the consultants' need for ongoing education and training. Knowledge and experience gained by the consultants in their assignments is preserved and developed for future use.
Sweco's work with CSR (Corporate Social Responsibility), defined as the company's responsibility to society, and the company's contribution to society is based on the results it achieves in its assignments. The end results of Sweco's work are often highly appreciated. Results are important, but so are the methods used to achieve them. Sweco is continuously involved with and actively influences CSR performance, both indirectly through customer projects and directly through its own initiatives. Sweco's vision is to become Europe's most respected knowledge company in the fields of consulting engineering, environmental technology and architecture. Sweco's long-term profitability and growth are driven by solutions that promote the sustainable development of society from an ecological, social and economic perspective. As consultants, Sweco's employees are often deeply involved in customer projects, frequently in an early stage, which gives them an opportunity to exert an influence but also carries an obligation to take responsibility for aspects within their control. Sweco's employees are obligated to comply with the company's CSR policy and compliance programme. See page 17 for additional information on Sweco's compliance programme.
Sweco complies with the laws, regulations and other requirements applicable to operations in countries where the company is active. Sweco also follows the Code of Ethics prepared by the International Federation of Consulting Engineers (FIDIC), and works according to the principles of the UN's Global Compact and the UN Declaration of Human Rights.
Sweco has high standards for conduct and business ethics, with objective and independent employees who act professionally in the best interest of the customer. Sweco has zero tolerance for fraud and collusion, corruption, bribes or unpermitted competition-restricting practises. No one at Sweco may, directly or indirectly, request, accept, or accept a promise of improper payment or other types of improper gifts, nor may anyone at Sweco, directly or indirectly, offer, provide or promise payment or other types of compensation that may be regarded as improper to individuals, organisations, companies or persons closely associated thereto. No one at Sweco may provide cash or other assets to anyone representing Sweco in a particular matter who consequently promotes handling with influence or the giving or taking of bribes. Employees may not engage in activities in which there is a risk of conflict with Sweco's interests. No employee may exploit his or her position for personal gain at the expense of the company, its customers or its business partners. A Sweco employee who suspects business ethics improprieties is obligated to report this, in the first instance, to his or her manager, manager's manager, HR or group Legal Affairs staff and, in cases where anonymity is called for, via Sweco's whistle-blower function (Sweco Ethics Line).
Sweco views diversity as essential in creating an innovative and inspiring working environment and actively promotes equal rights and opportunities in the workplace regardless of gender, ethnic origin, nationality, religious belief, disability, sexual orientation, age, etc.
In its CSR policy, Sweco has established the company's and employees' basic outlook on the company's responsibilities in society. The CSR policy covers the areas of business ethics, quality and assurance, employee development, human rights, equality and diversity, and occupational health and safety. Group-wide and local guidelines specify responsibility in each area in greater detail. Examples of this include ethics guidelines concerning anti-corruption, gifts and business entertainment.
All managers are responsible for ensuring that they and their employees comply with the CSR policy and guidelines. All employees are obligated to familiarise themselves and comply with the provisions of the policy and guidelines and to encourage external partners to apply these principles. The President & CEO holds ultimate responsibility for ensuring that the policy is monitored; this is monitored through internal and external audits, etc.
The Shareholders' Meeting is jointly Sweco's highest decision-making body, where all shareholders are entitled to make decisions on Sweco AB's affairs. Shareholders who are recorded in the share register on the record day and who provided notification of their participation by the specified date are entitled to participate in the AGM and vote for all of their shares. Annual General Meeting (AGM) or Extraordinary General Meeting (EGM) resolutions are normally made by simple majority. In certain issues, however, the provisions of the Swedish Companies Act stipulate a certain level of attendance to achieve a quorum or a specific majority of votes.
The AGM must be held in Stockholm within six months following the close of the financial year. Resolutions made by the AGM include adoption of Parent Company and Group income statements and balance sheets; approval of dividends; discharge from liability for the Board of Directors and President; determination of fees for the Board of Directors and auditors; election of Board members, Board Chairman and auditor; decisions regarding the Nominating Committee; and other matters as required by the Swedish Companies Act. At Sweco's AGM, each shareholder has the opportunity to ask questions about the company and its performance during the past year. The Board of Directors, Executive Team and auditors are present to answer these questions.
The 2015 Annual General Meeting was held on 16 April in Stockholm and
was attended by 120 shareholders, representing 71.5 per cent of the votes and 80.5 per cent of the share capital. Johan Nordström was elected chairman of the AGM. In his address to the AGM, President & CEO Tomas Carlsson commented on Sweco's performance in 2014, Sweco's development in recent years and the outlook for 2015. The auditor in charge reported on audit-related work conducted during 2014. The submitted income statements and balance sheets were adopted, and the Board of Directors and President & CEO were discharged from liability for financial year 2014. The AGM approved an ordinary dividend of SEK 3.50 per share which was recalculated to SEK 3.37 per share pursuant to IAS 33 due to the rights issue. The AGM also approved the election of the Board members, Chairman of the Board and auditors, and fees for the Board of Directors, Audit Committee, Remuneration Committee and auditors in accordance with the Nominating Committee's proposal. The AGM also adopted the Board's proposed guidelines for remuneration to senior executives and instructions to the Nominating Committee.
Based on the Board's proposal, the AGM resolved to implement the 2015 Share Bonus Scheme. The scheme, which covers employees in Sweden and does not entail any change to the 2014 scheme, stipulates that bonuses are paid in shares rather than cash. The resolution included decisions to implement the 2015 Share Bonus Scheme per se, as well as decisions related thereto – i.e., to conduct a directed share issue of Class C shares; to authorise the Board of Directors to repurchase newly issued Class C shares and Class B treasury shares; and to authorise the Board to transfer Class B treasury shares to security obligations under the 2015 Share Bonus Scheme and cover social security contributions.
The Share Bonus Scheme comprises a maximum of 1,200,000 Sweco Class B shares (no more than 910,000 for delivery to participants and no more than 290,000 to cover social security contributions). Of the 1,200,000 Class B shares, a maximum of 900,000 will be newly issued. The remaining shares will be acquired on the stock exchange or, alternatively, the company will use the treasury shares it currently holds. The share issue consists of 900,000 Class C shares at an issue price of SEK 1 per share, corresponding to the shares' quota value. Deviating from shareholders' preferential rights, a bank or financial institution (that has made previous arrangements to do so) is entitled to subscribe for the directed share issue. The issue price is based on the share's quota value. The AGM resolved to authorise the Board of Directors, during the period preceding the 2016 AGM, to repurchase the newly issued Class C shares at SEK 1 per share for a total of SEK 900,000; to acquire no more than 1,200,000 Class B treasury shares to security obligations under the 2015 Share Bonus Scheme; to transfer no more than 910,000 Class B treasury shares to employees under the 2015 Share Bonus Scheme; and to transfer no more than 290,000 Class B shares to cover social security contributions. The number of shares to be received by each employee corresponds to the employee's earned bonus for financial year 2015 divided by a base share price (corresponding to the average volume-weighted price paid for the Sweco Class B share during the period 23–30 March 2015) less the amount of the AGM-approved dividend per share for 2014. The base share price is restated in accordance with usual terms and conditions if events occur that affect the value of the share, including but not limited to any decision on share splits, bonus issues, redemptions and the like during the scheme's duration. Bonus per employee is based on the participating business units' operating profit per employee. The maximum bonus per employee is three months' salary. Shares will be allocated to employees free-of-charge during the first six months of 2016, premised upon continued employment.
The AGM resolved to renew the Board's authority to decide on the transfer of Class B shares on Nasdaq Stockholm to ensure payment of social security contributions under the 2014 Share Bonus Scheme. Transfers may also take place outside of Nasdaq Stockholm to a bank or financial institution, deviating from existing shareholders' preferential rights. Such transfers may be made at a price corresponding to market value, with market-based deviations as deemed appropriate by the Board. The Board's authority may be exercised on one or more occasions during the period preceding the 2016 AGM.
The AGM approved a long-term share savings scheme (the 2015 Share
Savings Scheme) for Sweco Group senior executives. The scheme comprises a maximum of 159,000 Sweco Class B shares (no more than 126,000 for delivery to participants and no more than 33,000 to cover social security contributions). The AGM authorised the Board of Directors, during the period preceding the 2016 AGM, to decide on the purchase of a maximum of 126,000 Class B treasury shares on the stock exchange to ensure delivery of Matching and Performance Shares to scheme participants, and on the purchase and transfer of no more than 33,000 Class B treasury shares on the stock exchange to cover the cost of social security contributions. The AGM also approved the free-of-charge transfer of no more than 126,000 Class B treasury shares to participants in the 2015 Share Savings Scheme during the period they are entitled to receive Matching and Performance Shares.
Finally, the AGM authorised the Board of Directors to decide on the transfer of Class B treasury shares on the stock exchange under the 2012 Share Savings Scheme. This authority, which may be exercised on one or more occasions during the period preceding the 2016 AGM, applies to the number of Class B shares required to cover social fees under the 2012 Share Savings Scheme, not to exceed 16,603 shares.
The Board decided at the statutory Board meeting to exercise its authority as granted by the AGM.
The AGM approved the sale of all shares held by Sweco in the indirectly owned Russian subsidiary Cabix Consulting CJSC JV ("Cabix"), corresponding to 55 per cent of Cabix's issued shares. It was proposed that the Cabix shares be transferred to Cabix's board chairman, President & CEO and certain key employees (minority shareholders in Cabix). It was proposed that Sweco's shares in Cabix be sold for a total sales price of 41,250 RUB and in accordance with market conditions.
The EGM held on 24 August 2015 was attended by 50 shareholders, representing 77.4 per cent of the votes and 66.4 per cent of the share capital. Johan Nordström was elected chairman of the EGM. The EGM resolved to approve all proposals presented by the Board.
The EGM authorised the Board to decide, on one or more occasions, to issue new Class B shares to constitute share consideration in the public takeover bid to Grontmij shareholders or merger consideration in a subsequent merger with Grontmij. Share issues under this authorisation were not expected to exceed 17 million new Class B shares.
The EGM resolved to approve the merger terms and conditions as adopted by Sweco's and Grontmij's Boards of Directors on 30 June 2015 for the merger of Sweco and Grontmij, with Sweco as the acquiring company. The merger, an alternative to a compulsory redemption, was contingent upon the fulfilment of certain conditions, including Sweco achieving an acceptance level in the public bid process of at least 80 but not more than 95 per cent of all issued Grontmij shares. Sweco's bid achieved an acceptance level exceeding 95 per cent; accordingly, the merger terms and conditions were not meterialized.
The EGM also resolved to authorise the Board to decide, during the period preceding the next AGM, to issue new Class A and Class B shares with preferential rights for existing shareholders and to utilise the issue proceeds, in whole or in part, to repay the bank financing taken up by Sweco in connection with the acquisitions of Grontmij. This authorisation gave the Board the right to decide to issue shares for a total maximum value, as at the date such authority is exercised, of EUR 140 million.
The EGM resolved to approve the sale of all shares held by Sweco in the indirectly owned Slovakian subsidiary HYDROCOOP, spol. s r.o. (HYDROCOOP), corresponding to 80 per cent of HYDROCOOP's issued shares. The resolution entails the transfer of shares to certain key HYDROCOOP employees (minority shareholders in the company) for a total sales price of EUR 5.
The Nominating Committee is the AGM's body for preparing resolutions related to appointments, and is tasked with preparing material to assist the AGM with these matters. Apart from proposing the composition of the Board, the Nominating Committee submits recommendations on AGM chairman, Board members, Chairman of the Board, Board fees (broken down per Chairman, other Board members and committee membership) and election and remuneration of auditors.
The 2015 AGM resolved on instructions for the Nominating Committee ahead of the 2016 Annual General Meeting. Among other things, these instructions specify that the Board Chairman shall convene a Nominating Committee comprised of one representative from each of company's largest shareholders (at least three and at most four) and of the Chairman if he/she is not a member in the capacity of shareholder representative. The names of the committee members, together with the names of the shareholders they represent, were published on the company's website on 1 October 2015.
The Nominating Committee held five meetings in 2015. For the period preceding the 16 April 2015 AGM, the Nominating Committee was comprised of Gustaf Douglas (subsequently replaced by Eric Douglas), representing Investment AB Latour; Birgitta Resvik, representing the J. Gust. Richert Memorial Foundation; and Board Chairman Johan Nordström, representing the Nordström family. The Nominating Committee is chaired by Johan Nordström.
The Board of Directors is responsible for the company's organisation and management of the company's business. The Board continuously monitors the financial situation of the company and the Group, and ensures that the company is organised in such a way that its accounting, cash management and other financial circumstances can be adequately controlled. The Board also ensures that its performance is evaluated on an annual basis through a systematic and structured process.
The Board's rules of procedures, including instructions for the division of duties between the Board and the President, are updated and adopted annually. The rules of procedure regulate the Board's obligations, the division of duties within the Board, the number of Board meetings, the annual agenda and main topic of each meeting, instructions for preparing the agenda and background documentation for decisions, etc.
The Chairman supervises the work of the Board and is responsible for ensuring that the Board carries out its duties in an organised and efficient manner. The Chairman continuously monitors the Group's development through ongoing contact with the President & CEO. The Chairman represents the company in matters related to ownership structure. In accordance with Sweco's Articles of Association, the Board of Directors is comprised of at least three and not more than nine members. These members are elected by the Annual General Meeting to serve for the period through the conclusion of the next AGM.
Sweco's Board of Directors is comprised of eight ordinary members elected by the AGM to serve for a period of one year through the conclusion of next year's AGM. The Board has also included three employee representatives and three employee-appointed deputies. With the exception of the President & CEO (Tomas Carlsson), none of the AGMelected Board members have an operational role in the company. All Board members but one are from Sweden. Four of the eight directors are men. All AGM-elected directors, aside from the President & CEO (Tomas
Carlsson) are independent in relation to Sweco. All directors aside from Johan Nordström, Tomas Carlsson, Johan Hjertonsson and Anders G. Carlberg are independent in relation to the major shareholders.
The 2015 Annual General Meeting re-elected Johan Nordström as Board Chairman. The other ordinary Board members re-elected by the 2015 AGM are Anders G. Carlberg, Tomas Carlsson, Gunnel Duveblad, Eva Lindqvist, Pernilla Ström and Carola Teir-Lehtinen. Johan Hjertonsson was elected as new Board member. The employee representatives are Thomas Holm, Göran Karloja and Anna Leonsson as ordinary members, with Görgen Edenhagen, Sverker Hanson and Maria Ekh (who replaced Christer Åberg in May 2015) as deputies.
See pages 92–93 for further information on members of the Board of Directors.
Apart from the statutory Board meeting held immediately following the AGM, the Board meets at least six times per year. In 2015 the Board held seventeen meetings, four of which were held in conjunction with publication of interim reports. The meeting held in conjunction with publication of the Q2 report was held via telephone, with all documentation distributed in advance. The Board made a railway station study visit in connection with the September meeting in Amsterdam. Two Dutch assignments were presented to the Board during this visit.
In addition to reporting on the development of Sweco's operations and finances, the Board meetings in 2015 devoted considerable attention to organic and acquisition-driven growth, the company's strategic focus, management and HR issues, CSR, risk management, internal control issues and other matters for which decision responsibility is assigned to the Board by the rules of procedure. Excecutive Team members other than the President & CEO participate in Board meetings to present reports when necessary. The Board Secretary is the company's General Counsel. The company's auditor takes part in at least one Board meeting per year. Attendance at Board, Audit Committee and Remuneration Committee meetings in 2015 is presented in the following table.
| Board meetings |
Audit Committee |
Remuneration Committee |
|
|---|---|---|---|
| Number of meetings | 17 | 6 | 7 |
| Johan Nordström | 17 | – | 7 |
| Anders G. Carlberg | 16 | 6 | – |
| Tomas Carlsson | 17 | – | – |
| Gunnel Duveblad | 16 | 6 | – |
| Johan Hjertonsson1 | 10 | – | – |
| Eva Lindqvist | 14 | 6 | – |
| Pernilla Ström | 17 | – | 7 |
| Carola Teir-Lehtinen | 16 | – | 7 |
| Thomas Holm | 15 | – | – |
| Göran Karloja | 17 | – | – |
| Anna Leonsson | 16 | – | – |
| Görgen Edenhagen | 12 | – | – |
| Sverker Hanson | 1 | – | – |
| Christer Åberg2 | 0 | – | – |
| Maria Ekh3 | 1 | – | – |
1) Joined the Board of Directors after 2015 AGM.
2) Resigned as deputy employee representative in May 2015.
3) Joined as deputy employee representative in May 2015.
| Position | Year of birth |
Nationality | Elected in | Independent | Board and committee fees, SEK2 |
|
|---|---|---|---|---|---|---|
| Johan Nordström | Chairman of the Board, chairman of the Remuneration Committee | 1966 | Swedish | 2012 | no | 570,000 |
| Anders G. Carlberg | Board member, member of the Audit Committee | 1943 | Swedish | 2009 | no | 320,000 |
| Tomas Carlsson | Board member, President & CEO | 1965 | Swedish | 2013 | no | – |
| Gunnel Duveblad | Board member, chairman of the Audit Committee | 1955 | Swedish | 2008 | yes | 380,000 |
| Eva Lindqvist | Board member, member of the Audit Committee | 1958 | Swedish | 2013 | yes | 320,000 |
| Pernilla Ström | Board member, member of the Remuneration Committee | 1962 | Swedish | 2009 | yes | 290,000 |
| Carola Teir-Lehtinen Board member, member of the Remuneration Committee | 1952 | Finnish | 2011 | yes | 290,000 | |
| Johan Hjertonsson | Board member | 1968 | Swedish | 2015 | no | 250,000 |
| Thomas Holm | Employee representative, appointed by employees | 1953 | Swedish | 2007 | – | – |
| Göran Karloja | Employee representative, appointed by employees | 1953 | Swedish | 2008 | – | – |
| Anna Leonsson | Employee representative, appointed by employees | 1971 | Swedish | 2005 | – | – |
| Görgen Edenhagen | Deputy, appointed by employees | 1964 | Swedish | 2011 | – | – |
| Sverker Hanson | Deputy, appointed by employees | 1963 | Swedish | 2011 | – | – |
| Maria Ekh3 | Deputy, appointed by employees | 1974 | Swedish | 2015 | – | – |
1) For the period from the 2015 AGM through the 2016 AGM. 2) Fees for work on the Board and the Audit and Remuneration Committees pursuant to the resolution of the 2015 AGM. Fees refer to remuneration paid during the period from the 2015 AGM through the 2016 AGM.
For fees expensed during 2015, see Note 6 on page 60.
3) Maria Ekh replaced Christer Åberg as deputy employee representative in May 2015.
An annual evaluation is conducted of the Board and its members to ensure that the Board meets the requisite performance criteria. Such an evaluation was also conducted in 2015. The results of the evaluation are discussed by the Board and reported to the Nominating Committee. The performance of the President & CEO and Excecutive Team is also regularly evaluated and is discussed during at least one Board meeting at which the Excecutive Team is not present.
The statutory meeting of the Board appoints the Remuneration Committee. The members of the Committee are Johan Nordström (chairman), Pernilla Ström and Carola Teir-Lehtinen. The tasks of the Remuneration Committee include drafting proposals for principles for remuneration, terms of employment, pension benefits and bonus systems for the President & CEO and other senior executives, and presentation of these proposals to the Board for decision. The Remuneration Committee meets at least twice per year, and held seven meetings in 2015.
The statutory meeting of the Board also appoints the Audit Committee. Audit Committee members are Gunnel Duveblad (chairman), Eva Lindqvist and Anders G. Carlberg. The company's independent auditor attended all committee meetings but one. The tasks of the Audit Committee include supporting the work of the Board to ensure the quality of the company's financial reporting, meeting regularly with the company's auditors, assisting the Board in preparing a report on internal control and risk management, monitoring significant disputes and damage claims, establishing guidelines on which non-auditing services the company may procure from its auditor, and evaluating the auditor's performance. The Audit Committee meets at least three times per year. In 2015 the Audit Committee held six meetings.
The auditor is appointed on an annual basis by the AGM. The task of the auditor is to examine, on behalf of the shareholders, the company's accounting records and annual report and the administration of the company by the Board of Directors and the President & CEO.
The auditing firm PricewaterhouseCoopers AB (PwC) was re-elected by the 2015 AGM to serve as Sweco's auditor through the conclusion of the 2016 AGM. Authorised Public Accountant Michael Bengtsson was elected chief auditor for financial year 2015. For financial year 2015, fees for audit services totalled SEK 5 million (5) and fees for non-audit services totalled SEK 13 million (2). Apart from audit services, Sweco consulted PwC on various matters related to financial accounting and mergers. PwC also
assisted in due diligence processes in connection with acquisitions. The amount of fees paid to all accounting firms is shown in Note 4 on page 59.
The Board of Directors has delegated to the President & CEO responsibility for day-to-day operations of the company and the Group. The President & CEO supervises operations within the framework determined by the Board of Directors. The Board has also established instructions governing the division of duties between the Board of Directors and the President & CEO, which are updated and adopted annually. Sweco's Excecutive Team was formed in 2014 and added three business area managers in 2015 after the acquisition of Grontmij. The Excecutive Team is comprised of the President & CEO, the CFO, the seven business area managers, the General Counsel, the HR Director and the Communications Director.
For more information on the Excecutive Team, see pages 94–95.
Three new business areas were established following the acquisition of Grontmij. Sweco Group's business activities are now organised in seven business areas, each of which is headed by a group manager and a financial manager: Sweco Sweden, Sweco Norway, Sweco Finland, Sweco Denmark, Sweco Netherlands, Sweco Western Europe and Sweco Central Europe.
Each business area is led by business area managers that meets at least four times a year. Apart from ongoing contacts, Sweco's President & CEO and CFO monitor the business areas by holding management meetings with business area managers and by serving as members of the business areas' boards of directors. Sweco's President & CEO is chairman of the board of each business area. All business areas are subject to the same rules for division of responsibilities between the board of directors and the president as those applicable at the Group level. Each business area is made up of underlying companies or business divisions that are organised by area of expertise. Business areas Sweco Western Europe and Sweco Central Europe are organised into one company per country. Each division/company may then be organised by region, department or group, depending on the number of employees.
Sweco has a customer-driven organisation distinguished by far-reaching decentralisation, with a high degree of autonomy for each unit. Under the Group's business model, business momentum is generated by the entire organisation and all employees take part in working with customers. With Sweco's policies and guidelines as a framework, managers at every level in the Group have explicit responsibility and authority to make autonomous decisions and develop their respective operations in line with customer needs.
Sweco's size and international breadth place rigorous demands on leadership. Employee dedication and development are critical for Sweco's growth. All employee development is focused on performance, customer understanding and knowledge sharing. This work is supported by the annual Sweco Talk performance review. Sweco's continued success relies on strong leaders at all levels and in all of the Group's operating and administrative areas. To ensure strong leadership Sweco uses the Sweco Leadership Compass, which defines the company's leadership culture and links leadership with Sweco's business culture. Effective management succession is ensured through Talent Review, a process and programme for continuous identification and development of good leaders.
Internal control (over financial reporting and in general) is based on the overall control environment established by the Board and the Excecutive Team. This includes the culture and values communicated and practiced by the Board and Excecutive Team. Key components of the control environment are the organisational structure, management philosophy and style, and responsibilities and powers that are clearly defined and communicated for all levels in the organisation.
Sweco's Board of Directors has formulated explicit decision-making procedures, rules of procedure and instructions for its own work and that of the Remuneration Committee, Audit Committee and President & CEO in order to facilitate effective management of operational risks. Every year, the Board updates and adopts the rules of procedure, instructions to the President & CEO, authorisation and signatory rules and a finance policy, and reviews the Group's other policy documents. Rules of procedure for the board and instructions to the president are found in every company in the Group, and are based on the same principles as those that apply for Sweco AB's Board of Directors. Sweco also has a number of policies for financial information, corporate communication, IT security, CSR, crisis management, HR, and quality and environment. These policies are the foundation for good internal control.
Sweco has signatory and authorisation rules that clearly regulate the allocation of powers at every level, from the individual consultant to the Sweco AB Board of Directors. The areas covered include tenders, investments, rental and lease agreements, expenditures and guarantees, etc.
Through the Audit Committee, the Board adopts and monitors policies and procedures on financial reporting and reporting to the Board to ensure that internal control activities focused on these issues are functioning properly.
The goal of Sweco's risk management is to secure the Group's long-term earnings growth and guarantee that Sweco's operations in the various business units are able to achieve their objectives. The company's Board of Directors and top management are responsible for risk management.
Sweco's risk management is an ongoing process. Large parts of Sweco's operations consist of work in progress. In view of this, there is a special emphasis on continuously monitoring risks and risk management for work in progress in order to further improve risk management and internal control activities.
Based on the mapping of the Group's risks and risk management, during 2015 Sweco further developed and reinforced its routines for dayto-day risk monitoring. As in 2014, these activities during 2015 were reported regularly to the Audit Committee and the Board. Within each business area, a risk map is continuously monitored at business area board meetings, where the agenda also includes a standing item on risk management. A report on risk management and internal control within the Group – covering the areas of market and business risks, CSR, QA (Quality Assurance), HR, Accounting, IT and Corporate Communications – was discussed by the Board of Directors, the Audit Committee and the Excecutive Team.
The business ethics compliance programme based on Sweco's CSR policy was further developed during the year. This included the revision of the CSR policy, new procedures and training.
All employees will receive individual e-learning training during 2016, including a "team learning" section where groups can gather to discuss business ethical dilemmas. Training for new employees includes participation in these sessions. Dilemma discussions were also held in Sweco's Excecutive Team and top management groups in each country. The training programme and dilemma discussions will continue through 2016. A group-wide evaluation will also be conducted of business partners in countries that have a higher risk of non-compliance. A whistleblower function (Sweco Ethics Line) enables the anonymous reporting of suspected improprieties. The purpose of the compliance programme is to increase awareness, ensure that adequate risk management procedures are in place, and monitor compliance within the Group.
Sweco's risk process: risks are identified, necessary guidelines and policies are created, these are implemented in the organisation and monitored at several different levels, and a report is submitted annually to Sweco's Excecutive Team, the Audit Committee and the Board of Directors.
Information on Sweco's governing documents (including group policies, manuals, guidelines and routines) is available on the Sweco Group intranet. Important guidelines, manuals, etc., are continuously updated and communicated to the relevant employees. The goal is for all employees to complete an e-learning course on the Sweco Group – which includes details on the Group's overall objectives, values and policies (including its CSR policy) – as new employees and on an on-going basis every second year.
Guidelines and policies have been implemented at different levels in the organisation and are regularly monitored through internal follow-up, external audits and other measures.
Each business area has a financial manager responsible for ensuring compliance with policies, guidelines and routines for financial reporting. Financial managers are also responsible for ensuring the accuracy and completeness of the reported financial information. To further enhance internal control of financial reporting, a self-assessment questionnaire on financial reporting is produced each year and circulated to all financial managers in the Group. The purpose of the questionnaire is to ensure the effectiveness of all significant internal controls related to the company's financial reporting. The submitted answers are analysed and any shortcomings are identified and corrected.
The Group's business system includes a number of functions for financial management, control and monitoring. There is a web-based project reporting system where project managers can continuously monitor their projects and track monthly earnings and key ratios at the group, region, company/division and business area levels. Operationally relevant key ratios can also be followed up weekly on all of these levels. A group-wide consolidation is carried out every month to measure actual results against budgets and internal forecasts.
Communication about financial reporting also takes place in connection with controller meetings that are held regularly within the Group. For external communication, a corporate communication policy defines the responsibilities and rules for communication with external parties.
Sweco has a simple and uniform operational structure throughout the Group. Financial managers at the Group and business area levels regularly monitor compliance with Sweco's established operating and internal control systems. Financial managers also conduct ongoing analyses of the companies' reporting and financial results in order to ensure development.
Grontmij had a centralised internal audit unit on the group level, responsible for regular ad hoc monitoring as well as auditing compliance with Grontmij's policies, procedures and standards. An audit and analysis of the operational excellence programme and the business ethics and financial framework was conducted in 2015. The internal audit unit also conducted ad hoc audits at the request of management. The results of these audits were discussed by Grontmij's executive management team and audit committee and by Sweco's Audit Committee. Risks and control
procedures were discussed with the external auditor as part of the audit of the Annual Report.
Given the company's size following the merger, Grontmij's internal audit unit will remain in place within Sweco. The unit's scope and responsibilities will be evaluated in early 2016. Planning for audit activities will be based on potential risks with a focus on significant risks within the new organisation.
Read more about Sweco's risks and risk management on pages 90–91.
Sweco strives to provide shareholders, financial analysts, investors, the media and other interested parties with simultaneous, timely, clear and consistent information about the Group's operations, financial position and development. Sweco has a corporate communication policy that is part of the internal control environment and ensures that Sweco meets the requirements imposed on listed companies.
Sweco regularly provides the market with financial information in the form of:
When interim reports, annual reports and press releases are published in printed form, the material is simultaneously published on the corporate website (www.swecogroup.com), which also contains a large volume of other information that is updated on a regular basis.
Board remuneration is determined by the Annual General Meeting. Board fees for 2015/16 were set at SEK 2,000,000, of which SEK 500,000 is payable to the Chairman and SEK 250,000 to each of the five AGM-elected Board members not employed in the company. No Board fees are paid to the President & CEO or the employee representatives. Board fees are
paid on two occasions during each period. The chairman of the Remuneration Committee is paid an additional fee of SEK 70,000 and the other members of the Remuneration Committee each receive an additional fee of SEK 40,000. The chairman of the Audit Committee is paid an additional fee of SEK 130,000 and the other mem-
bers of the Audit Committee each receive an additional fee of SEK 70,000. Principles for salary and other remuneration to senior executives pursuant to the 2015 AGM resolution are shown in Note 6 on pages 59–61.
Sweco AB's shares have been traded on Nasdaq Stockholm since 21 September 1998. Sweco AB's total market capitalisation at 31 December 2015 was SEK 14.9 billion. Share capital totalled SEK 121.1 million, divided between 10,539,184 Class A shares, 109,655,646 Class B shares and 900,000 Class C shares, representing 21,594,748.6 votes in the company. The Class A and Class B shares are listed; the Class C shares are not. The Class C shares were issued as per resolution of the 2015 AGM and in order to enable the company to deliver shares (i.e., following conversion of the Class C shares to Class B shares) to employees under the 2015 Share Bonus Scheme. In May 2015, 433,791 of the 900,000 Class C shares issued in 2014 in connection with the 2014 Share Bonus Scheme were converted to Class B shares; the remaining 466,209 Class C shares were redeemed. In September and October 2015, a total of 14,949,247 Class B shares were issued in accordance with the 2015 EGM resolution for utilisation as share consideration to Grontmij shareholders in Sweco's public offer. In December 2015, Sweco issued a total of 1,171,020 Class A shares and 12,123,925 Class B shares to repay the bank loan taken out to finance the acquisition of Grontmij. Class A
shares carry one vote and Class B and C shares each carry 1/10 of one vote. Class A and Class B shares carry entitlement to dividends; Class C shares do not. Sweco's Articles of Association grant shareholders the right to convert Class A shares to Class B shares. No Class A shares were converted to Class B shares during financial year 2015 pursuant to the conversion clause in the Articles of Association. As of 31 December 2015, Sweco held a total of 1,557,320 treasury shares: 657,320 Class B shares and 900,000 Class C shares. Sweco's treasury shares do not carry voting rights.
Sweco AB had 11,519 shareholders at year-end 2015. The largest shareholders are the Nordström family (with 13.4 per cent of the share capital and 32.3 per cent of the votes), Investment AB Latour (with 26.9 per cent of the share capital and 20.6 per cent of the votes) and the J. Gust. Richert Memorial Foundation (with 1.7 per cent of the share capital and 9.3 per cent of the votes). Foreign investors held 28.0 per cent of the share capital and 15.8 per cent of the votes. Together, the ten largest shareholders control the equivalent of 64.9 per cent of the share capital and 75.23 per cent of the votes. The company is not aware of any agreements between shareholders that could lead to limitations in the right to transfer shares in the company.
Sweco's dividend policy specifies that at least half of profit after tax shall be distributed to the shareholders, while also requiring that the company maintain a capital structure that provides scope to develop and make investments in the company's core business.
The Chairman of the Board of Directors also chairs the Nominating Committee. The principal shareholders represented on the Nominating Committee in accordance with the committee's instructions deem it desirable that the committee be chaired by the representative for the largest shareholder in terms of voting power.
| SEK M | Note | 2015 | 2014 |
|---|---|---|---|
| Net sales | 2, 3, 33 | 11,389 | 9,214 |
| Other operating income | 0 | 0 | |
| Other external expenses | 4, 5, 33 | -2,877 | -2,234 |
| Personnel costs | 6, 27 | -7,581 | -6,015 |
| EBITDA | 931 | 965 | |
| Amortisation/depreciation and impairment losses | 3, 7 | -190 | -150 |
| EBITA | 3 | 740 | 814 |
| Acquisition-related items1 | 7 | -60 | -53 |
| Operating profit (EBIT) | 3 | 681 | 762 |
| Financial income | 8, 33 | 7 | 5 |
| Financial expenses | 8, 33 | -48 | -48 |
| Profit from participations in associated companies and joint ventures | 8 | 1 | 1 |
| Net financial items | 8 | -41 | -43 |
| Profit before tax | 640 | 718 | |
| Income tax expense | 10 | -200 | -174 |
| PROFIT FOR THE YEAR | 439 | 545 | |
| Profit for the year attributable to: | |||
| Owners of the Parent Company | 438 | 542 | |
| Non-controlling interests | 1 | 3 | |
| Earnings per share attributable to owners of the Parent Company2 | 11 | ||
| Basic earnings per share, SEK | 4.36 | 5.74 | |
| Diluted earnings per share, SEK | 4.30 | 5.67 | |
| 1) Acquisition-related items are defined as depreciation/amortisation and impairment of goodwill and acquisition-related intangible assets, revaluation of additional purchase prices, |
and gains/losses on the sale of companies and businesses.
2) Due to the preferential rights issue conducted during Q4 2015, all historical share data has been restated in accordance with IAS 33.
| SEK M | 2015 | 2014 |
|---|---|---|
| Profit for the year | 439 | 545 |
| Items that will not be reclassified to profit or loss | ||
| Revaluation of defined benefit pensions, net after tax | 45 | -56 |
| Total items that will not be reclassified to profit or loss | 45 | -56 |
| Items that may be subsequently reclassified to profit or loss | ||
| Revaluation of holding in Grontmij NV, net after tax | 12 | – |
| Exchange difference on translation of foreign operations | -140 | 79 |
| Hedge of net investment in subsidiary, net after tax | 48 | -36 |
| Exchange difference transferred to profit for the year | 5 | 8 |
| Total items that may be subsequently reclassified to profit or loss | -75 | 51 |
| COMPREHENSIVE INCOME FOR THE YEAR | 410 | 540 |
| Comprehensive income attributable to: | ||
| Owners of the Parent Company | 409 | 537 |
| Non-controlling interests | 1 | 3 |
| SEK M | Note | 31 Dec 2015 | 31 Dec 2014 |
|---|---|---|---|
| ASSETS | 3, 32 | ||
| Non-current assets | |||
| Goodwill | 13 | 5,752 | 2,162 |
| Other intangible assets | 13 | 416 | 121 |
| Property, plant and equipment | 14 | 639 | 399 |
| Investments in associates | 16 | 6 | 5 |
| Investments in joint ventures | 17 | 2 | 4 |
| Financial investments | 18 | 14 | 13 |
| Deferred tax assets | 10 | 35 | 47 |
| Other non-current receivables | 21, 27 | 100 | 7 |
| Total non-current assets | 6,964 | 2,759 | |
| Current assets | |||
| Trade receivables | 33 | 2,441 | 1,515 |
| Work in progress less progress billings | 22 | 2,021 | 998 |
| Inventories | 43 | 6 | |
| Current tax assets | 17 | 2 | |
| Other current receivables | 248 | 208 | |
| Prepaid expenses and accrued income | 23 | 298 | 257 |
| Cash and cash equivalents | 24 | 544 | 174 |
| Total current assets | 5,612 | 3,158 | |
| TOTAL ASSETS | 12,575 | 5,917 | |
| EQUITY AND LIABILITIES | |||
| Equity | 25 | ||
| Share capital | 121 | 92 | |
| Other contributed capital | 3,088 | 239 | |
| Reserves | -105 | -30 | |
| Retained earnings, including profit for the year | 1,795 | 1,573 | |
| Equity attributable to owners of the Parent Company | 4,899 | 1,874 | |
| Non-controlling interests | 9 | 14 | |
| Total equity | 4,907 | 1,888 | |
| Liabilities | 3, 32 | ||
| Non-current liabilities | |||
| Non-current interest-bearing liabilities | 26, 29 | 1,985 | 1,086 |
| Provisions for pensions | 27 | 113 | 134 |
| Other non-current provisions | 28 | 194 | – |
| Deferred tax liabilities | 10 | 382 | 161 |
| Other non-current liabilities | 26 | 27 | |
| Total non-current liabilities | 2,700 | 1,408 | |
| Current liabilities | |||
| Current interest-bearing liabilities | 26, 29 | 246 | 350 |
| Provisions for pensions | 27 | 17 | – |
| Other current provisions | 28 | 85 | – |
| Progress billings in excess of work in progress | 22 | 1,436 | 481 |
| Trade receivables | 33 | 655 | 338 |
| Current tax liabilities | 133 | 42 | |
| Other current liabilities | 30 | 750 | 449 |
| Accrued expenses and prepaid income | 30 | 1,644 | 963 |
| Total current liabilities | 4,968 | 2,622 | |
| Total liabilities | 7,668 | 4,029 | |
| TOTAL EQUITY AND LIABILITIES | 12,575 | 5,917 | |
For information about the Group's pledged assets and contingent liabilities, see Note 31.
| SEK M | Note | 2015 | 2014 |
|---|---|---|---|
| Operating activities | |||
| Profit before tax | 8 | 640 | 718 |
| Adjustments for non-cash items | |||
| Capital gains/losses | 4 | 7 | |
| Amortisation/depreciation and impairment losses | 3, 7 | 251 | 208 |
| Difference between pension premiums expensed and paid | -17 | -16 | |
| Other items | 74 | 25 | |
| Total non-cash items | 312 | 224 | |
| Income taxes paid | -157 | -200 | |
| Cash flow from operating activities before changes in working capital | 795 | 742 | |
| Changes in working capital | |||
| Change in current receivables | -14 | -27 | |
| Change in current liabilities | 359 | -121 | |
| Cash flow from operating activities | 1,140 | 595 | |
| Investing activities | |||
| Purchase of intangible assets | -27 | -6 | |
| Disposal of intangible assets | 1 | 0 | |
| Purchase of property, plant and equipment | -179 | -137 | |
| Disposal of property, plant and equipment | 6 | 1 | |
| Acquisition of subsidiaries and operations, net cash effect | 12 | -1,246 | -79 |
| Disposal of subsidiaries and operations, net cash effect | 12 | 2 | 41 |
| Disposal of associated companies | 9 | – | |
| Acquisition of financial investments | -1 | – | |
| Disposal of financial investments | 0 | 0 | |
| Change in non-current receivables | -4 | 2 | |
| Cash flow from investing activities | -1,440 | -177 | |
| Financing activities | |||
| Preferential rights issue | 25 | 1,077 | – |
| Issue expenses | 25 | -15 | – |
| Repurchase of treasury shares | 25 | -14 | -37 |
| Sale of treasury shares | 25 | 17 | – |
| Capital distribution to owners of the Parent Company | 25 | -318 | -296 |
| Capital distribution to non-controlling interests | -1 | -4 | |
| Borrowings | 2,361 | 1,158 | |
| Repayment of borrowings | -2,400 | -1,403 | |
| Cash flow from financing activities | 707 | -582 | |
| CASH FLOW FOR THE YEAR | 407 | -164 | |
| Cash and cash equivalents at beginning of year | 24 | 174 | 319 |
| Foreign exchange differences in cash and cash equivalents | -37 | 19 | |
| Cash and cash equivalents at end of year | 24 | 544 | 174 |
| SEK M | Note | Share capital |
Other contributed equity |
Reserves | Retained earnings |
Equity attributable to owners of the Parent Company |
Non-controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|
| Equity at 1 January 2014 | 91 | 239 | -81 | 1,368 | 1,618 | 15 | 1,633 | |
| Profit for the year | – | – | – | 542 | 542 | 3 | 545 | |
| Other comprehensive income for the year | – | – | 51 | -56 | -5 | 0 | -5 | |
| Comprehensive income for the year | 51 | 486 | 537 | 3 | 540 | |||
| Capital distribution to the shareholders – dividend |
25 | – | – | – | -296 | -296 | -4 | -299 |
| Non-controlling interests in acquired companies |
12 | – | – | – | – | – | 1 | 1 |
| Acquisition of non-controlling interests | 12 | – | – | – | -5 | -5 | -2 | -7 |
| Disposal of non-controlling interests | 12 | – | – | – | – | – | 0 | 0 |
| Share bonus scheme – new share issue | 1 | – | – | – | 1 | – | 1 | |
| Share bonus scheme – value of employee service |
– | – | – | 54 | 54 | – | 54 | |
| Share savings scheme – value of employee service |
– | – | – | 3 | 3 | – | 3 | |
| Repurchase of treasury shares | – | – | – | -37 | -37 | – | -37 | |
| EQUITY AT 31 DECEMBER 2014 | 92 | 239 | -30 | 1,573 | 1,874 | 14 | 1,888 | |
| Profit for the year | – | – | – | 438 | 438 | 1 | 439 | |
| Other comprehensive income for the year | – | – | -75 | 45 | -30 | 0 | -30 | |
| Comprehensive income for the year | -75 | 483 | 409 | 1 | 410 | |||
| Capital distribution to the shareholders – dividend |
25 | – | – | – | -318 | -318 | -1 | -319 |
| Issue in kind | 25 | 15 | 1,785 | – | – | 1,800 | – | 1,800 |
| Preferential rights issue | 25 | 13 | 1,064 | – | -15 | 1,062 | – | 1,062 |
| Non-controlling interests in acquired companies |
12 | – | – | – | – | – | -1 | -1 |
| Acquisition of non-controlling interests | 12 | – | – | – | -12 | -12 | -4 | -16 |
| Share bonus scheme – new share issue | 1 | – | – | -1 | – | – | – | |
| Share bonus scheme – value of employee service |
0 | – | – | 76 | 76 | – | 76 | |
| Share savings scheme – value of employee service |
– | – | – | 5 | 5 | – | 5 | |
| Sale of treasury shares | – | – | – | 17 | 17 | – | 17 | |
| Repurchase of treasury shares | – | – | – | -14 | -14 | – | -14 | |
| EQUITY AT 31 DECEMBER 2015 | 121 | 3,088 | -105 | 1,795 | 4,899 | 9 | 4,907 | |
| Proposed capital distribution to the shareholders |
-421 | -421 | – | -421 | ||||
| Dividend | -421 | -421 | – | -421 |
| SEK M | Note | 2015 | 2014 |
|---|---|---|---|
| Net sales | 3, 33 | 355 | 344 |
| Total operating income | 355 | 344 | |
| Other external expenses | 3, 4 ,5, 33 | -312 | -291 |
| Personnel costs | 6 | -58 | -54 |
| Amortisation/depreciation and impairment losses | 3, 7 | -29 | -20 |
| Total operating expenses | -399 | -364 | |
| Operating profit/loss | 3 | -44 | -21 |
| Profit from investments in group companies | 8 | 548 | 553 |
| Financial income | 8, 33 | 3 | 3 |
| Financial expenses | 8, 33 | -43 | -31 |
| Net financial items | 8 | 508 | 525 |
| Profit after net financial items | 464 | 504 | |
| Appropriations | 9 | -20 | -2 |
| Profit before tax | 444 | 503 | |
| Income tax expense | 10 | -61 | -67 |
| PROFIT FOR THE YEAR | 383 | 435 |
| SEK M | 2015 | 2014 |
|---|---|---|
| Profit for the year | 383 | 435 |
| COMPREHENSIVE INCOME FOR THE YEAR | 383 | 435 |
| SEK M | Note | 31 Dec 2015 | 31 Dec 2014 |
|---|---|---|---|
| ASSETS | 3, 32 | ||
| Intangible assets | 13 | 81 | 2 |
| Property, plant and equipment | 14 | 50 | 38 |
| Financial assets | |||
| Investments in group companies | 15 | 4,508 | 1,098 |
| Receivables from group companies | 20 | 1,837 | 961 |
| Other non-current securities | 19 | 1 | 1 |
| Other non-current receivables | 2 | – | |
| Total financial assets | 6,348 | 2,059 | |
| Total non-current assets | 6,479 | 2,100 | |
| Current assets | |||
| Receivables from group companies | 20 | 1,841 | 1,696 |
| Current tax assets | 12 | 5 | |
| Other receivables | 5 | 11 | |
| Prepaid expenses and accrued income | 23 | 89 | 76 |
| Cash and bank | 24 | 13 | 2 |
| Total current assets | 1,960 | 1,790 | |
| TOTAL ASSETS | 8,440 | 3,890 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Restricted equity | 25 | ||
| Share capital | 121 | 92 | |
| Statutory reserve | 188 | 188 | |
| Total restricted equity | 309 | 280 | |
| Non-restricted equity | 25 | ||
| Share premium reserve | 2,900 | 52 | |
| Retained earnings | 1,027 | 839 | |
| Profit for the year | 383 | 435 | |
| Total non-restricted equity | 4,311 | 1,326 | |
| Total equity | 4,619 | 1,606 | |
| Untaxed reserves | 9 | 23 | 3 |
| LIABILITIES | 3, 32 | ||
| Non-current liabilities | |||
| Liabilities to group companies | 193 | 10 | |
| Liabilities to credit institutions | 26 | 1,890 | 962 |
| Total non-current liabilities | 2,083 | 972 | |
| Current liabilities | |||
| Current interest-bearing liabilities | 26 | 201 | 276 |
| Trade payables | 62 | 50 | |
| Liabilities to group companies | 1,413 | 959 | |
| Other current liabilities | 30 | 6 | 3 |
| Accrued expenses and prepaid income | 30 | 32 | 22 |
| Total current liabilities | 1,715 | 1,310 | |
| Total liabilities | 3,820 | 2,284 | |
| TOTAL EQUITY AND LIABILITIES | 8,440 | 3,890 | |
| Contingent liabilities | 31 | 221 | 201 |
| SEK M | Note | 2015 | 2014 |
|---|---|---|---|
| Operating activities | |||
| Profit after net financial items | 464 | 504 | |
| Adjustments for non-cash items | |||
| Capital gains/losses | |||
| Amortisation/depreciation and impairment losses | 7 | 29 | 20 |
| Dividends and group contributions | 8 | -380 | -357 |
| Difference between interest recognised and received/paid | 8 | 1 | -4 |
| Other items | 11 | 56 | |
| Total non-cash items | -339 | -285 | |
| Income taxes paid | -68 | -58 | |
| Cash flow from operating activities before changes in working capital | 57 | 161 | |
| Changes in working capital | |||
| Change in current receivables | -45 | -116 | |
| Change in current liabilities | 479 | 290 | |
| Cash flow from operating activities | 491 | 335 | |
| Investing activities | |||
| Shareholder contributions | -38 | -23 | |
| Purchase of intangible assets | 13 | -84 | -0 |
| Purchase of property, plant and equipment | 14 | -36 | -25 |
| Acquisition of subsidiaries, net cash effect | -1,478 | -1 | |
| Cash flow from investing activities | -1,636 | -50 | |
| Financing activities | |||
| Group contributions | 357 | 299 | |
| Change in non-current receivables | -694 | -1 | |
| Preferential rights issue | 1,077 | – | |
| Issue expenses | -15 | – | |
| Capital distribution to owners of the Parent Company | 25 | -318 | -296 |
| Sale of treasury shares | 17 | – | |
| Repurchase of treasury shares | -14 | -37 | |
| Borrowings | 2,325 | 1,153 | |
| Repayment of borrowings | -1,579 | -1,400 | |
| Cash flow from financing activities | 1,156 | -283 | |
| CASH FLOW FOR THE YEAR | 11 | 2 | |
| Cash and cash equivalents at beginning of year | 24 | 2 | 0 |
| Cash and cash equivalents at end of year | 24 | 13 | 2 |
| Share | Statutory | Total | Share premium |
Retained | Total non | |||
|---|---|---|---|---|---|---|---|---|
| SEK M | Note | capital | reserve | restricted | reserve | earnings | restricted | Total equity |
| Equity at 1 January 2014 | 25 | 91 | 188 | 279 | 52 | 1,114 | 1,166 | 1,445 |
| Profit for the year | – | – | – | – | 435 | 435 | 435 | |
| Comprehensive income for the year | – | – | – | – | 435 | 435 | 435 | |
| Capital distribution to the shareholders – dividend | – | – | – | – | -296 | -296 | -296 | |
| Share bonus scheme – new share issue | 1 | – | 1 | – | – | – | 1 | |
| Share bonus scheme – value of employee service | – | – | – | – | 54 | 54 | 54 | |
| Share savings scheme | – | – | – | – | 4 | 4 | 4 | |
| Repurchase of treasury shares | – | – | – | – | -37 | -37 | -37 | |
| Equity at 31 December 2014/1 January 2015 | 25 | 92 | 188 | 280 | 52 | 1,274 | 1,326 | 1,606 |
| Profit for the year | – | – | – | – | 383 | 383 | 383 | |
| Comprehensive income for the year | – | – | – | – | 383 | 383 | 383 | |
| Capital distribution to the shareholders – dividend | – | – | – | – | -318 | -318 | -318 | |
| Issue in kind | 15 | – | 15 | 1,785 | – | 1,785 | 1,800 | |
| Preferential rights issue | 13 | – | 13 | 1,064 | -15 | 1,049 | 1,062 | |
| Share bonus scheme – new share issue | 1 | – | 1 | – | -1 | -1 | – | |
| Share bonus scheme – value of employee service | 0 | – | 0 | – | 76 | 76 | 76 | |
| Share savings scheme | – | – | – | – | 8 | 8 | 8 | |
| Sale of treasury shares | – | – | – | – | 17 | 17 | 17 | |
| Repurchase of treasury shares | – | – | – | – | -14 | -14 | -14 | |
| EQUITY AT 31 DECEMBER 2015 | 25 | 121 | 188 | 309 | 2,900 | 1,410 | 4,311 | 4,619 |
| Proposed capital distribution to the shareholders | ||||||||
| Dividend | 25, 35 | -421 | -421 | -421 |
The consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRS) established by the International Accounting Standards Board (IASB) and the interpretations issued by the IFRS Interpretations Committee (IFRIC) as endorsed by the European Commission for application in the EU. The Annual Accounts Act and RFR 1, Supplementary Accounting Rules for Groups, have also been applied.
The Parent Company applies the same accounting policies as the Group, except in those cases described under "Parent Company accounting policies".
The annual report and consolidated financial statements were approved for publication by the Board of Directors on 4 March 2016. The income statements and balance sheets of the Parent Company and the Group will be presented to the Annual General Meeting for adoption on 14 April 2016.
Amounts in brackets refer to the corresponding period of the previous year. Because table items are individually rounded off, table figures do not always tally.
Assets and liabilities are recognised at historical cost, with the exception of certain financial assets and liabilities that are reported at fair value. Financial assets and liabilities reported at fair value consist of derivatives, financial assets classified as financial assets at fair value through profit or loss, and available-for-sale (AFS) financial assets.
The functional currency of the Parent Company is Swedish kronor (SEK), which is also the presentation currency of the Group. The financial statements are therefore presented in SEK.
The preparation of financial statements in conformity with IFRS requires Sweco's senior management to make judgements, estimates and assumptions that affect the application of the accounting policies and the recognised amounts of assets, liabilities, income and expenses. The actual outcome may differ from these estimates and assumptions.
Estimates and assumptions are evaluated on a regular basis. Changes in estimates are recognised during the period the change occurs (if the change affects only that period) or during the period the change occurs and subsequent periods (if the change affects both).
Note 36 provides details on the inputs and assessments used by Sweco's senior management that have a significant impact on the financial reports, as well as estimates that may result in significant adjustments to subsequent financial statements.
The following accounting policies for the Group have been consistently applied in the periods presented in the consolidated financial statements, unless otherwise stated below. The Group's accounting policies have been consistently applied by all companies in the Group; when necessary, following alignment with Group policies on the part of associated companies.
Changes in accounting policies resulting from new, revised or amended IFRSs No revisions of or amendments to IFRS taking effect as of 2015 have had any significant impact on the consolidated financial statements.
A number of new, revised or amended IFRSs take effect in future financial years and have not been adopted in advance in preparing this year's financial statements. Sweco does not plan to adopt new features or changes for future application in advance of the effective date.
IFRS 9, Financial Instruments, is intended to supersede IAS 39, Financial Instruments: Recognition and Measurement. The IASB has now completed an entire "package" of changes concerning the reporting of financial instruments. The package includes a model for classification and measurement of financial instruments, a forward-looking ("expected loss") impairment model and a significantly revised approach to hedge accounting. IFRS 9 takes effect on 1 January 2018; earlier application is permitted provided that the EU adopts the standard. No official schedule is yet available in terms of when adoption may occur.
The categories of financial assets in IAS 39 will be replaced by two categories: those reported at fair value and those recognised at amortised cost. Amortised cost is used for instruments held in a business model that focuses on collecting contractual cash flows, to be comprised of payments of principal and interest on the principal outstanding on specified dates. Other financial assets are reported at fair value, and the option of applying the "Fair Value Option" as in IAS 39 remains in place. Changes in fair value are recognised in profit or loss, with the exception of changes in the value of equity instruments held for trading and for which an initial choice is made to recognise value changes in other comprehensive income.
As for the language on financial liabilities, the greater portion corresponds to the previous IAS 39 rules with the exception of provisions concerning financial liabilities that are voluntarily reported at fair value under the "Fair Value Option". For these liabilities, the change in value is divided between changes attributable to the entity's own creditworthiness and changes in the reference rate.
The new impairment model will require more consistent impairment of "expected credit losses", which are to be recognised as of the initial recognition of the asset.
The new rules for hedge accounting include a simplification of efficiency tests and an expanded definition of permissible hedging instruments and hedged items. The Group has not yet evaluated the effects of the introduction of the standard.
IFRS 15, Revenue from Contracts with Customers, regulates the recognition of revenue. IFRS 15's core provisions will provide users of financial statements with more useful information concerning the company's revenues. Under the expanded disclosure requirements, information on revenue type, settlement date, uncertainties associated with revenue recognition, and cash flow attributable to the company's customer contracts must be provided. Revenue is recognised under IFRS 15 when control of a good or service transfers to the customer. IFRS 15 supersedes IAS 18, Revenue, and IAS 11, Accounting for Construction Contracts, and the SICs and IFRICs related thereto. IFRS 15 takes effect on 1 January 2017. Early adoption is permitted. The Group has not yet evaluated the effects of the introduction of the standard.
IFRS 16, Leases, is a new leasing standard meant to replace IAS 17, Lease contracts, and associated interpretations IFRIC 4, SIC-15 and SIC-27. The standard requires that all assets and liabilities attributable to lease contracts (with a few exceptions) be recognised in the balance sheet. Reporting requirements are based on the viewpoint that the lessee has the right to use the asset during a specified period of time and is also obligated to pay for this right of use. Reporting requirements for lessors remain essentially unchanged. The standard takes effect for financial years beginning 1 January 2019 or later. Early adoption is permitted. The EU has not yet adopted the standard. The Group has not yet evaluated the effects of IFRS 16.
No other IFRSs or IFRIC interpretations that are not yet effective are expected to have any significant impact on the Group.
Sweco has decided to specify income/expense related to items of an extraordinary nature in order to facilitate the analysis of the business and underlying earnings, as it is important to highlight the impact of these items on earnings when comparing net profit to previous periods. Extraordinary items refer to transaction expenses and primary expenses associated with restructuring and/or integrating acquired businesses into the Group. In addition to acquisition-related items, extraordinary items may include significant write-downs, bad debt losses, disputes and insurance matters. Classification as an "extraordinary item" requires fulfilment of several criteria, including whether the item would have arisen if the acquisition had not taken place and whether the item should be attributed to a project/ event identified by senior management.
Non-current assets and non-current liabilities are essentially comprised of amounts expected to be recovered or settled later than 12 months after the balance sheet date. Current assets and current liabilities are essentially comprised of amounts that are expected to be recovered or settled within 12 months of the balance sheet date.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses and for which discrete financial information is available. Operating segment results are reviewed regularly by the Excecutive Team, which makes decisions on resources to be allocated to the segment and assesses its performance. For additional information about the division into and presentation of operating segments, see Note 3.
Subsidiaries are all entities over which Sweco AB has a controlling interest, meaning that Sweco AB has influence over the investment object, is exposed to or has the right to variable return by virtue of its involvement, and can exert its control over the investment to influence returns. Potential share voting rights and the existence or nonexistence of de facto control are factors in determining whether controlling interest exists.
All subsidiaries are consolidated pursuant to the acquisition method of accounting, whereby the acquisition of a subsidiary is regarded as a transaction in which the Group indirectly acquires the subsidiary's assets and assumes its liabilities and contingent liabilities. An acquisition analysis establishes the fair value of the identifiable assets acquired date and liabilities assumed as at acquisition, as well as any non-controlling interest in the acquiree. Acquisition-related costs, with the exception of those associated with the issue of equity or debt instruments, are recognised as Other External Expenses.
In business combinations where the fair value of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previously held equity interest in the acquiree (for step acquisitions) exceeds the Group's share in the fair value of net identifiable assets acquired and liabilities assumed, the difference is recorded as goodwill. When the difference is negative, the resulting gain is recognised as a bargain purchase directly in profit or loss.
Consideration transferred for the acquisition of a subsidiary does not include amounts related to the settlement of pre-existing business relationships. Such amounts are recognised in profit or loss.
Any payable contingent purchase consideration is reported at fair value at the acquisition date. If the contingent consideration is classified as an equity instrument, it is not remeasured and settlement is recognised in equity. Otherwise, the fair value of contingent purchase consideration is remeasured at each reporting date and the change is recognised in profit or loss.
Non-controlling interest refers to acquisitions in which less than 100 per cent of the subsidiary is acquired. There are two alternative methods for reporting non-controlling interests: 1) as proportional share of net assets, or 2) at fair value (signifying that the non-controlling interests have a share in goodwill). The choice between these two methods can be made on an acquisition-by-acquisition basis.
For step acquisitions, the amount of goodwill is determined on the date when control is obtained. Any previously held equity interests are reported at fair value and changes in value are recognised in profit or loss.
Partial divestments of investments in subsidiaries that result in loss of control are reported at fair value and changes in value are recognised in profit or loss.
For acquisitions conducted between 1 January 2004 and 31 December 2009 in which the acquisition cost exceeded the fair value of identifiable assets acquired and liabilities and contingent liabilities assumed, the difference was recognised as goodwill. When the difference was negative, it was recognised directly in profit or loss. Acquisition-related costs (other than those associated with the issue of equity or debt instruments) incurred by the Group in connection with business combinations were capitalised as part of the acquisition cost.
For acquisitions conducted prior to 1 January 2004, impairment-tested goodwill was recognised as acquisition cost corresponding to the carrying amount pursuant to previously applied accounting policies. As at 1 January 2004, in preparing the Group's opening balance in accordance with IFRS the classification and accounting treatment of business combinations prior to 1 January 2004 were not restated in accordance with IFRS 3.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.
Subsidiaries' accounting policies have been changed when necessary to align them with the policies adopted by the Group.
Losses attributable to non-controlling interests are allocated even in the event that doing so results in a deficit equity balance.
Acquisitions from non-controlling interests are recognised as equity transactions; i.e., transactions between owners of the Parent Company (retained earnings) and non-controlling interests. As a result, no goodwill arises in these transactions. Changes in non-controlling interests are based on their proportionate share in net assets.
A change in the ownership interest of a subsidiary, without loss of control, is reported as an equity transaction; i.e., a transaction between owners of the Parent Company and non-controlling interests. The difference between the consideration received and the non-controlling interests' proportionate share in acquired net assets is recognised in retained earnings.
Associated companies are entities over which the Group has significant, but not controlling, influence over operating and financial policies, normally through ownership of 20 to 50 per cent of the voting power. From the date on which the significant influence passes to the Group, investments in associates are reported according to the equity method of accounting, whereby the Group's carrying amount for the investment in an associate corresponds to the Group's share in the fair value of net assets of the associated company as well as goodwill and the effects of any fair value adjustments. In the consolidated income statement, shares in profit or loss attributable to Parent Company shareholders (adjusted for amortisation, impairment losses or reversals on goodwill or negative goodwill) are reported in "Share in profit of associates". These shares in profit, less dividends received from associated companies, constitute the main change in the carrying amount of investments in associates. The Group's share in other comprehensive income of associates is reported on a separate line in the Group's comprehensive income.
Upon acquisition of the investment in an associate, any difference (whether positive or negative) between the acquisition cost and the investor's share of the fair value of the net identifiable assets including contingent liabilities of the associated company is reported in accordance with same principles applied for the acquisition of subsidiaries.
Transaction costs, other than those attributable to the issue of equity or debt instruments, are reported as other external costs. When the Group's share in reported losses of an associated company exceeds the carrying amount of the Group's investment in the associated company, the value of the investment is reduced to zero. Losses are also deducted from long-term interests that, in substance, form part of the investor's net investment in the associated company. Additional losses are recognised to the extent the Group has furnished guarantees to cover associated company losses. The equity method is applied until the date on which the significant influence ceases.
Joint arrangements are classified either as joint operations or joint ventures, depending on the contractual rights and obligations of each investor. Sweco AB has evaluated its joint arrangements and determined that Sweco ÅF Healthcare Systems AB is a joint operation and that the Group has only insignificant joint ventures. Joint ventures are reported under the equity method, while joint operations are reported using the Group's share of the operation's income, expenses, assets and liabilities. Under the equity method, joint ventures are initially reported at cost in the consolidated statement of financial position. The carrying amount is then increased or decreased to reflect the Group's share in the profit and other comprehensive income of its joint ventures after the acquisition date. The Group's share of profit is included in consolidated income and its share of other comprehensive income in other comprehensive income. The equity method is applied from the date on which joint control ceases.
All intra-group receivables and liabilities, income or expenses, and unrealised gains or losses arising on intra-group transactions are eliminated in full in presentation of the consolidated financial statements. Unrealised gains arising on transactions with associated companies and joint ventures are eliminated to the extent corresponding to the Group's interest in the company. Unrealised losses are similarly eliminated unless they provide evidence of impairment.
Transactions in foreign currencies are translated to the functional currency at the rate of exchange on the transaction date. The functional currency is the currency of the primary economic environment in which the company operates. Monetary assets and liabilities in foreign currency are translated to the functional currency at the closing day rate. Translation differences arising on translation are recognised in profit or loss.
Assets and liabilities in foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated from the foreign operation's functional currency to the Group's presentation currency (SEK) at the closing day rate of exchange. Income and expenses in foreign operations are translated to SEK at an average rate that is a reasonable approximation of actual rates on the respective transaction dates. Translation differences arising on translation of foreign operations are recognised in the statement of comprehensive income and accumulated as a separate component of equity (reserves). When a foreign operation is disposed of, the cumulative amount of the exchange differences recognised in other comprehensive income and accumulated in the separate component of equity relating to that foreign operation is recognised in profit or loss when the gain or loss on disposal is recognised. Sweco has no group companies in countries with hyperinflationary economies.
The following exchange rates were used for translation of the most significant currencies:
| 2015 | 2014 | |||
|---|---|---|---|---|
| Closing | Average | Closing | Average | |
| EUR | 9.17 | 9.36 | 9.52 | 9.10 |
| NOK | 0.96 | 1.05 | 1.05 | 1.09 |
On consolidation, translation differences arising from the translation of net investments in foreign operations and other currency instruments designated as hedges of such investments are recognised in the statement of comprehensive income and accumulated in other reserves in equity, to the extent that the hedge is effective. The ineffective portion is recognised in the consolidated income statement. When a foreign operation is disposed of, the cumulative amount of the exchange differences relating to that foreign operation, after deduction of any currency hedges, is reclassified from equity to profit or loss.
Cumulative translation differences arising before 1 January 2004 (transition to IFRS) have been recognised as a translation reserve in equity.
Monetary non-current receivables from a foreign operation for which settlement is neither planned nor likely to occur in the foreseeable future are, in substance, part of Sweco's net investment in the foreign operation. Exchange differences arising on monetary non-current items are recognised in other comprehensive income and accumulated in a separate component of equity (translation reserve). When a foreign operation is disposed of, the cumulative amount of the exchange differences attributable to monetary non-current items is included in the cumulative exchange differences that are reclassified from the translation reserve in equity to profit or loss.
Revenue is recognised at the fair value of the consideration received for services rendered in the Group's operating activities. The Group recognises revenue when the amount can be measured reliably and it is probable that the economic benefits will flow to the company.
The Group reports service contracts (work in progress) in accordance with the percentage of completion method, under which contract revenue is recognised in pace with completion of the contract. In the consolidated income statements, the year's generated contract revenue for service contracts carried out on both a cost plus and fixed price basis is recognised in operating income. For cost plus contracts, contract revenue refers to work completed that is invoiced to the customer. For fixed price contracts, contract revenue is determined by reference to the stage of completion. The stage of completion of a contract is determined by comparing the proportion of contract costs incurred on the balance sheet date with the estimated total contract costs. In the balance sheet, service contracts are recognised at the value of the contract revenue less confirmed losses and anticipated loss risks. Service contracts where the value of work in progress exceeds progress billings are reported among receivables as work in progress less progress billings. Service contracts in which the value of progress billings exceeds the value of work in progress are reported among liabilities as progress billings in excess of work in progress.
If the outcome of a service contract cannot be estimated reliably, contract revenue is recognised only to the extent that contract costs incurred are expected to be recoverable. An anticipated loss on a contract is recognised immediately as an expense.
Financial income consists of interest income on invested funds, dividend income, revaluation gains on financial assets at fair value through profit or loss and gains on derivatives that are recognised through profit or loss.
Interest income on financial instruments is calculated using the effective interest method. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or liability. The calculation includes all fees paid or received between the parties to the contract, transaction costs and any other discounts and premiums. Dividend income is recognised when the right to payment has been established. Gains on the sale of financial instruments are recognised when the risks and rewards of ownership of the instrument have been transferred to the buyer and the Group no longer has control over the instrument.
Financial expenses consist of interest expenses on loans, effects arising from writebacks of present value calculations for provisions, revaluation losses on financial assets at fair value through profit or loss, and impairment losses on financial assets. All borrowing costs are recognised in the income statement through application of the effective interest method, regardless of how the borrowed funds were utilised. Exchange gains and losses are reported net. Exchange gains and losses arising on operating receivables and liabilities are recognised in operating profit, while those arising on financial assets and liabilities are recognised in net financial items.
Financial instruments recognised on the asset side of the balance sheet include cash and cash equivalents, loans and receivables, financial investments and derivatives. On the liability side, these include trade payables, borrowings and derivatives.
A financial asset or liability is recognised in the balance sheet when the company initially becomes party to the contractual provisions of the instrument. Trade receivables are recorded in the balance sheet when an invoice has been issued. Financial liabilities are recognised when the counterparty has performed and there is contractual obligation to pay, even if no invoice has been received. Trade payables are recorded when an invoice has been received.
A financial asset is derecognised from the balance sheet when the company's rights under the agreement are realised, expire or the company has relinquished control of the asset. The same applies to a part of a financial asset. A financial liability is derecognised from the balance sheet when the obligation specified in the agreement is discharged or otherwise extinguished. The same applies to a part of a financial liability.
A financial asset and a financial liability are set off and netted in the balance sheet only when a legal right of setoff exists and there is an intent and ability to set off and net these items or to simultaneously realise the asset and settle the liability.
The purchase or sale of a financial asset is recognised on the trade date, which is the date on which the transaction takes place, except when the company acquires or sells listed securities, in which case settlement date accounting is applied.
The fair value of a listed financial asset corresponds to the asset's quoted market price on the balance sheet date. The fair value of unlisted financial assets is established by using different valuation techniques such as recent transactions, prices for similar instruments and discounted cash flows.
Non-derivative financial instruments are initially reported at cost, corresponding to fair value including transaction costs for all financial assets and liabilities not reported at fair value through profit or loss, which are reported at fair value less transaction costs. On initial recognition, a financial instrument is classified based on the intent for acquisition of the financial instrument. Subsequent to initial recognition, the accounting treatment of financial liabilities depends on how they are classified, as described below.
Cash and cash equivalents comprise cash in hand and at bank and other highly liquid short-term investments with original maturities of less than three months which are exposed to insignificant risk for value fluctuations. Highly liquid short-term investments are investments that are readily convertible to known amounts of cash and for which a buyer is not required for sale to be effectuated.
Financial investments comprise either financial assets or short-term investments, depending on the period or intent of the holding. If the maturity or expected holding period is longer than one year the investments are recognised as financial assets; if shorter, they are recognised as short-term investments.
This category consists of financial assets held for trading. Financial instruments in this category are valued at fair value, with changes in value recognised in profit or loss. This category consists mainly of derivatives with a positive fair value, but may also include financial investments.
Loan receivables and trade receivables are non-derivative financial assets that have fixed or determinable payments and are not quoted on an active market. Such receivables arise when Sweco provides goods or services directly to a debtor with no intent of trading the resulting receivables. Assets in this category are subsequently recognised at amortised cost. Amortised cost is calculated using the effective interest rate on the acquisition date. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of those receivables. Significant financial difficulties of the debtor and default or delinquency of payments are considered objective evidence of impairment. Non-current receivables are those with an anticipated holding period of more than one year. Other receivables have anticipated holding periods of less than one year.
Investments that the Group intends and is able to hold over their entire maturity are classified as held-to-maturity. Held-to-maturity investments are initially reported at fair value including directly attributable costs, and are subsequently recognised at amortised cost using the effective interest method less impairment losses.
Available-for-sale financial assets are assets that cannot be allocated to any other category or that are classified in this category. Shareholdings and participations that are not recognised as subsidiaries, associated companies or joint ventures are recognised here. Availablefor-sale assets are reported at fair value. The period's gains/losses arising from changes in fair value are recognised in other comprehensive income and cumulative gains/losses as a separate component of equity. Fair value changes due to impairment are recognised in profit or loss. On disposal of such assets, the cumulative gains/losses that were previously recognised in other comprehensive income are recycled into profit or loss. An impairment loss is recognised when there is evidence of a lasting decrease in value.
This category consists of financial liabilities held for trading. Financial instruments in this category are subsequently reported at fair value with changes in value recognised in operating profit or loss. This category includes the Group's derivatives with negative fair values.
This category includes borrowings and other financial liabilities, such as trade payables. These liabilities are reported at amortised cost, which is calculated using the effective interest rate on the transaction date. Non-current liabilities have an expected maturity of more than one year, while current liabilities have a maturity of less than one year.
The categories in which the Group's financial assets and liabilities are grouped are presented in Note 32, Financial instruments by category.
Sweco Group derivative instruments are comprised of currency forward contracts that reduce the risk of exchange rate fluctuations. All derivatives are initially reported at fair value, signifying that transaction costs are charged to profit or loss for the current period. Derivatives are subsequently reported at fair value, and changes in fair value are recognised directly in the income statement within operating profit or loss when the criteria for hedge accounting have not been met.
Hedge accounting is applied to investments made by the FMC Group and the Grontmij Group, and associated loan financing. Net investments in foreign operations are hedged by raising foreign currency loans that are reported at the closing day rate on the reporting date. Translation differences in the foreign currency loan are recognised as hedges of the net investment in a subsidiary and are included in other comprehensive income. Through hedge accounting, the asset (net investment in a foreign operation) and liability (foreign currency loan) are linked to each other; accordingly, only net changes in value are recognised in other comprehensive income.
Currency forward contracts are used to hedge assets and liabilities against currency risk. Hedge accounting is not used. The underlying asset or liability and the hedge instrument are both translated at the rate of exchange on the balance sheet date, and exchange gains and losses are recognised through profit or loss. Changes in the fair value of operating receivables and liabilities are recognised in operating profit, while changes in the fair value of financial assets and liabilities are recognised in net financial items.
An item of property, plant and equipment is recognised as an asset in the balance sheet when it is probable that the economic benefits attributable to the asset will flow to the company and the cost of the asset can be measured reliably.
Items of property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment losses.
Historical cost includes the costs of purchase and all directly attributable costs necessary to bring the asset to its required working condition. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that takes a substantial amount of time to prepare for its intended use or sale is included as part of the cost of that asset.
Items of property, plant and equipment consisting of identifiable parts with different useful lives are treated as separate components of property, plant and equipment.
The carrying amount of an item of property, plant and equipment is derecognised in the balance sheet on disposal or when it is withdrawn from use and no future economic benefits are expected from its disposal. The gain or loss on sale arising from disposal of an asset is the difference between any disposal proceeds and the carrying amount of the asset less direct sales costs, and is recognised in other operating income/expenses.
In the consolidated financial statements, leases are classified as either finance or operating leases. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recorded as assets in the consolidated balance sheet. The obligation to pay future lease payments is reported in the balance sheet under current and non-current liabilities. The leased assets are depreciated on a straight-line basis, while the lease payments are recognised in interest expenses and repayment of borrowings. Interest expense is allocated throughout the lease term to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Variable charges are expensed as incurred.
For operating leases, leasing fees are recognised in profit or loss over the lease term according to the pattern of benefit, which may differ from the de facto amount of lease payments during the year. Incentives for the agreement of a new or renewed operating lease are recognised in the income statement as a reduction of the lease fees on a straight-line basis over the lease term. Variable charges are expensed as incurred.
Subsequent expenditure is added to the recorded value of the asset or recognised as a separate asset when it is probable that the future economic benefits associated with the asset will flow to Group and the cost of the asset can be measured reliably.
The decisive factor in determining whether subsequent expenditure should be added to historical cost is whether the expenditure refers to replacement of an identified component or part(s) thereof, in which case it is capitalised. In cases where a new component is created, the resulting expenditure is added to historical cost. Any residual carrying value of a replaced component or part(s) is retired and expensed in connection with replacement. Repairs and maintenance are expensed as incurred.
Assets are depreciated to residual value on a straight-line basis over the estimated useful life of the asset. Land is not depreciated. The Group applies component depreciation, whereby depreciation is based on the estimated useful life of the components.
The estimated useful lives are:
| – buildings, operating properties | 50 years |
|---|---|
| – IT and computer equipment | 3 years |
| – other equipment | 5 years |
The residual value and useful life of an asset are evaluated yearly.
Goodwill represents the difference between the historical cost of the acquisition and the fair value of the Group's share of the acquired assets, assumed liabilities and contingent liabilities. For goodwill arising from acquisitions conducted prior to 1 January 2004, the carrying
amount is the Group's historical cost. Goodwill is recognised at cost less accumulated impairment losses.
Goodwill is allocated to cash-generating units and is no longer amortised; rather, it is tested for impairment annually (see section on impairment). Goodwill arising on acquisition of associated companies is included in the carrying amount of the shares in the associated company.
Costs for research aimed at obtaining new scientific or technical knowledge are expensed as incurred.
Costs for development (where knowledge is used to achieve new or improved products or processes) are recognised as an asset in the balance sheet only when the technical and commercial feasibility of the product or process has been established, the Group has adequate resources to complete development, and the Group intends and is able to complete development of the intangible asset and either use it or sell it. It must also be possible to demonstrate how the asset will generate probable future economic benefits and to reliably measure expenditure attributable to the asset during its development. The carrying amount includes the costs of materials, direct employment costs and indirect costs that can be attributed to the asset in a reasonable and consistent manner. Other development expenditures are recognised as costs in the balance sheet as incurred. Capitalised development expenditures are carried at cost less any accumulated amortisation and impairment losses.
The value of the order backlog, customer relationships and brands/trademarks is recognised in conjunction with an acquisition. The capitalised order backlog refers to operating profit on fixed orders. Customer relationships and brands/trademarks are reported at fair value at acquisition date less accumulated depreciation.
Subsequent expenditure on a capitalised intangible asset is recognised as an asset in the balance sheet only when the expenditure increases future economic benefits of the specific asset and the expense can be measured reliably.
Borrowing costs attributable to the acquisition, construction or production of "qualifying assets" are capitalised as part of the cost of the asset. A qualifying asset is an asset that takes a substantial period of time to prepare for its intended use or sale. The Group capitalises borrowing costs primarily on borrowings that are specific to the qualifying asset and, alternatively, on borrowing costs arising from general borrowings that are not specific to any other qualifying asset. The Group's centrally set internal interest rate is used to determine the interest rate for capitalised borrowing costs.
Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of the intangible asset, unless the useful life is indefinite. Goodwill and intangible assets not yet ready for use are impairment tested annually or when circumstances indicate that the asset has decreased in value. Amortisable intangible assets are amortised from the date on which they become available for use. The estimated useful lives are:
| – capitalised development expenditures | 5 years |
|---|---|
| – licences | 3 years |
| – customer relationships | 5–8 years |
| – trademarks | 1–3 years |
| – order backlog | as order is realised |
The carrying amounts of the Group's assets are reviewed at each balance sheet date for any indication of a write-down requirement. The asset's recoverable value is calculated if such a requirement is indicated. The carrying amounts of deferred tax assets are reviewed according to the applicable standards (see section on taxes).
For goodwill and intangible assets not yet ready for use, the recoverable value is calculated annually.
If it is not possible to establish material independent cash flows for an individual asset, these assets are grouped at the lowest level at which it is possible to identify material independent cash flows (a "cash generating unit"). When the carrying amount of an asset or cash-generating unit exceeds its recoverable value, an impairment loss is recognised in the income statement.
The impairment of assets attributable to a cash-generating unit (group of units) is allocated first to goodwill. A proportional impairment of other assets in the unit (group of units) is conducted thereafter.
The recoverable amount is the fair value less selling expenses or value in use, whichever is higher. In measuring value in use, future cash flows are discounted with a discounting factor that reflects risk-free rates and the risks specific to the asset. For assets that do not generate cash flows that are essentially independent in relation to other assets, the recoverable amount is calculated for the cash-generating unit to which the asset belongs.
Impairment losses are reversed when there is an indication that a write-down requirement no longer exists and there has been a change in the assumptions on which the calculation of recoverable amount is based. Reversal of impairment losses on goodwill is prohibited. An impairment loss is reversed only when the asset's carrying amount after reversal does not exceed the carrying amount that would have been reported, less amortisation, if the impairment had not been recognised.
Impairment losses on trade receivables recognised at amortised cost are reversed if a later increase in the recoverable amount can be objectively attributed to an event occurring after the date of the impairment loss.
Inventories are comprised primarily of projects (building constructions) and are valued at historical cost or net realisable value, whichever is lower. Net realisable value is the estimated sales price in the ordinary course of business, less estimated costs of completion and selling expenses.
Land development projects and projects in which buyers have only a limited impact on the main elements of the assets' design are reported under inventories. The transfer of risks and benefits vary depending on the contractual provisions. If management and the key risks associated with ownership are transferred to the buyer gradually during the course of the project, revenues and earnings are reported in line with the project's development and valuation then follows the accounting method applied to services.
Upon the repurchase of shares (treasury shares), the purchase sum is recognised as a reduction in equity. Proceeds from the sale of treasury shares are recognised as an increase in equity. Transaction costs are recognised directly in equity.
Dividends are recognised as a liability when they have been approved by the Annual General Meeting.
Earnings per share are calculated by dividing profit or loss attributable to owners of the Parent Company by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share are calculated by adjusting profit or loss and the average number of shares for the effects of dilutive potential ordinary shares.
The pension plans are financed through payment of premiums to insurance companies or pension funds, according to periodic actuarial computations. A defined benefit plan is based on a formula indicating the exact amount of benefit to be received by the employee after retiring, normally based on one or more factors such as age, duration of employment or salary. In a defined contribution plan, the employer pays a fixed contribution to a separate legal entity (insurance company). Sweco has both defined contribution and defined benefit plans.
A defined contribution plan is classified as a plan in which the company's obligation is limited to the amount that it agrees to contribute. The amount of the post-employment benefits received by the employee is thus determined by the amount of contributions paid by the company to the pension plan or to an insurance company, together with investment returns on the accumulated contributions. Consequently, it is the employee who bears both the actuarial risk (that the amount of benefits will be lower than anticipated) and the investment risk (that the invested assets will not be adequate to provide the anticipated benefits). For defined benefit plans, the expense to be recognised in the income statement for the period is the contribution payable in exchange for services rendered by employees during the period.
Defined benefit plans are plans for post-employment benefits other than defined contribution plans. The Group's net obligation under defined benefit plans is determined separately for each plan by estimating expected future payments required to settle the obligation resulting from employee service in the current and prior periods. This obligation is discounted to a present value. The discount rate is the interest rate at the balance sheet date for high-quality corporate bonds, including mortgage bonds, with a maturity term corresponding to the Group's pension obligations. Calculations are done by a qualified actuary using the Projected Unit Credit Method. The fair value of plan assets is also calculated on the reporting date. The Group's net obligation consists of the present value of the obligation, reduced by the fair value of plan assets and adjusted for any asset ceiling.
All of the components included in a period's cost for a defined benefit plan are recognised in operating profit or loss.
Revaluation effects are comprised of actuarial gains and losses, the difference between actual return on plan assets and the amount included in net interest income/expense and any changes in the effects of the asset ceiling (excluding interest included in net interest income/expense). Revaluation effects are recognised in other comprehensive income.
When the calculation results in an asset for the Group, the recognised value of the asset is limited to the plan surplus or the asset ceiling (calculated by applying the discount rate), whichever is lower. The asset ceiling is the present value of future economic benefits in the form of lower future employer contributions or cash refunds. Minimum funding requirements are taken into account in calculating the present value of future refunds or contributions.
Changes or curtailments in a defined benefit plan are recognised at the earliest of the following dates: a) when a change in the plan or a curtailment occurs, or b) when the company recognises related restructuring costs and termination benefits. Changes/curtailments are recognised directly in profit or loss.
An expense is recognised on the termination of employees only if the company is demonstrably obliged to terminate an employee or group of employees prior to the normal retirement date.
For short-term employee benefits, the undiscounted amount of benefits expected to be paid for services rendered by employees during a period is recognised in that period.
Other long-term employee benefits such as jubilee benefits are valued at the current actuarial value. The discount rate used is the yield on high quality corporate bonds with maturity terms corresponding to the Group's obligations. Actuarial gains and losses are recognised in the income statement during the period incurred.
The 2012, 2013, 2014 and 2015 Annual General Meetings resolved to implement long-term share savings schemes for Sweco Group senior executives. Under the share savings schemes, participants may use their own funds to acquire Class B shares in Sweco ("Savings Shares"). If the Savings Shares are held until the announcement of the year-end report for the 2015 financial year for the 2012 share savings scheme, the 2016 financial year for the 2013 share savings scheme, the 2017 financial year for the 2014 share savings scheme, and the 2018 financial year for the 2015 share savings scheme (the "Retention Period") and the participant remains employed in his/her position or an equivalent position in the Sweco Group throughout the Retention Period, each Savings Share shall thereafter grant entitlement to one Class B share in Sweco without consideration ("Matching Share") and – provided that the performance criteria have been met – to an additional number of not more than one to four Class B shares in Sweco ("Performance Shares"). The granting of Performance Shares is conditional on a positive total yield for the Sweco share, and is also dependent on the Sweco share's total yield in relation to a group of benchmark companies. The cost is expensed on a straight-line basis over the Retention Period as a personnel cost, with a corresponding increase in equity. The cost of the Matching Share is based on the fair value of the share on the acquisition date; the cost of the Performance Share is based on the fair value of the share as calculated by an external party through a "Monte Carlo simulation".
In connection with the grant, social fees are paid for the value of the employee benefit. Provisions for these estimated social fees are therefore made during the Retention Period.
Sweco Group currently offers a share bonus scheme (the 2015 Share Bonus Scheme) under which bonuses are paid to employees in Sweden in the form of Sweco shares. Under this
equity-managed scheme, the number of shares to be received by each employee is calculated based on a fixed base share price (corresponding to the average volume-weighted price paid for the Sweco Class B share during a specified period). The base share price is restated in accordance with standard terms in the event the Sweco AGM resolves to conduct a share split, preferential rights issue or similar during the duration of the scheme. Estimated bonuses are expensed on a straight-line basis during the vesting period as a personnel cost, with a corresponding increase in equity. The expense recognised corresponds to the fair value of the estimated number of shares expected to vest. This expense is adjusted in subsequent periods to reflect the actual number of vested shares.
Social fees relating to share-based compensation to employees as payment for services rendered are expensed during the periods in which such services are rendered. Provisions for social fees are based on the fair value of the share at the reporting date.
A provision is recognised in the balance sheet when the Group has a present obligation (legal or constructive) that has arisen as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be estimated reliably. When the timing effect of payment is significant, provisions are reported at discounted present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the liability. The Group's provisions consist of pension provisions, provisions for soil/site remediation, restructuring provisions and other provisions.
The Group is responsible for the after-care of waste sites in the Netherlands and ensuring that waste products are processed for storage, and for securing long-term waste product maintenance. The provisions for landfill sites are calculated pursuant to IPO's RIINAS model (umbrella organisation for the twelve provinces in the Netherlands). These provisions are increased in proportion to waste disposal per sector.
The provision is valued at present value of estimated future costs based on past experience. Key assumptions in this valuation are the discount rate, inflation, cost price of materials and wastewater fees. The current market and the risks associated with the obligation were taken into account when determining future cash flows.
A restructuring provision is recognised when a formal detailed restructuring plan is in place and restructuring has begun or been publicly announced. No provision is made for future operating costs.
Other provisions are primarily related to provisions for restoration of office space.
Income taxes are comprised of current tax and deferred tax. Income taxes are recognised in profit or loss.
Current tax refers to tax payable or receivable with respect to the year's profit or loss, with the application of the tax rates that have been enacted or substantively enacted as at the balance sheet date. This also includes adjustments in current tax from earlier periods.
Deferred tax is calculated in accordance with the balance sheet method based on temporary differences between the carrying amount of an asset or liability and its tax base. The following temporary differences are not recognised: temporary differences arising on initial recognition of goodwill; the initial recognition of assets and liabilities that are not business combinations and at the time of the transaction affect neither reported nor taxable profit; and temporary differences attributable to investments in subsidiaries and associated companies not likely to be recovered in the foreseeable future and for which the Group can control the date for recovery. The measurement of deferred tax reflects the manner in which the carrying amounts of assets or liabilities are expected to be realised or settled. Deferred tax is computed with the application of the rates/laws that have been enacted or substantively enacted as at the balance sheet date.
Deferred tax assets for deductible temporary differences and tax loss carry-forwards are recognised to the extent it is probable that they can be utilised. The value of deferred tax assets is reduced when it is no longer considered probable that they can be utilised.
Any additional income tax arising from dividends from subsidiaries is recorded on the date the dividend is recognised as a liability.
A contingent liability is recognised when an obligation may arise due to the occurrence of an uncertain future event, or which will arise only through the occurrence or non-occurrence of one or more uncertain future events, or when an obligation is not recognised as a liability or provision due to the remote nature of the possibility of an outflow of economic resources.
The Parent Company's annual financial statements were prepared in accordance with the Swedish Annual Accounts Act (1995:1554); RFR 2, Accounting for Legal Entities; and rules for listed companies issued by the Swedish Accounting Standards Board's Urgent Issues Task Force. RFR 2 specifies that in the report for the legal entity, the Parent Company shall apply all EU-endorsed IFRSs and interpretations as far as possible within the framework of
the Annual Accounts Act and the Pension Obligations Vesting Act, with respect to the connection between accounting and taxation. This recommendation defines exceptions to and additional disclosures to be made under IFRS provisions.
Differences between the accounting policies of the Group and the Parent Company The differences between the accounting policies applied by the Group and the Parent Company are described below. The following accounting policies for the Parent Company have been applied consistently for all periods presented in the Parent Company financial statements.
Unless otherwise specified, the accounting policies applied by the Parent Company in 2015 were adjusted in accordance with changes made by the Group, as described above.
In the Parent Company, investments in subsidiaries, associated companies and joint ventures are reported in accordance with the cost method of accounting. Accordingly, acquisition-related costs are included in the carrying amount of the investment in a subsidiary, associated company or joint venture. In the consolidated financial statements, acquisition-related costs are expensed as incurred.
The value of contingent purchase consideration is measured based on the probability that the consideration will be paid. Any changes in the provision/receivable are added to/ reduce the historical cost. In the consolidated financial statements, contingent purchase consideration is reported at fair value with value changes through profit or loss.
A bargain purchase (negative goodwill) corresponding to anticipated future losses and expenses is recognised during the periods when the expected losses and expenses occur. Negative goodwill arising for other reasons is recognised as a provision to the extent it does not exceed the aggregate fair value of acquired identifiable non-monetary assets. The portion exceeding this value is recognised directly in profit or loss. The portion that does not exceed the aggregate fair value of acquired identifiable non-monetary assets is recognised as income on a systematic basis over the remaining weighted average useful life of the acquired identifiable depreciable/amortisable assets. In the consolidated financial statements, bargain purchases are recognised directly in profit or loss.
In accordance with Chapter 2, Paragraph 4 of the Annual Accounts Act, the Parent Company recognises revenue from the sale of services when the performance of the service is completed. Work in progress is recognised at cost or at net realisable value, whichever is lower. The Parent Company's invoicing of group-wide administration and other operations is
recognised in net sales in the income statement.
Dividends are recognised when the right to receive payment is deemed certain. This requirement also applies to subsidiaries. Any profits distributed by subsidiaries must be earned after Sweco's acquisition date. Dividends can also be anticipated if the decision to distribute the dividend has been taken or if Sweco can ensure distribution via its holding in the company.
In the balance sheet, work at a fixed price is reported at cost or fair value, whichever is lower.
The Parent Company recognised all lease agreements (both financial and operational) as operational.
The Parent Company applies different bases for calculating defined benefit pension plans than those specified in IAS 19. The Parent Company complies with the provisions in the Pension Obligations Vesting Act and the regulations of the Swedish Financial Supervisory Authority, as doing so is a requirement for tax deductibility. The most significant differences compared to IAS 19 are the manner in which the discount rate is determined, the calculation of the defined benefit obligation based on current salary level with no assumption about future salary increases, and the recognition of actuarial gains and losses in the income statement for the period during which they arise.
In the Parent Company, untaxed reserves are reported including deferred tax liabilities. In the consolidated financial statements, however, untaxed reserves are divided between a deferred tax liability and equity.
RFR 2, IAS 21, item 4, specifies that liabilities in foreign currency may be recognised at historical cost rather than being translated according to the exchange rate on the balance sheet date when the hedge is deemed effective. Historical cost may be used for liabilities that constitute hedging instruments to hedge net investments in subsidiaries. Accordingly, both the hedging instrument (the liability) and the hedged item (the investment) are translated at historical exchange rates.
In the Parent Company, loans raised to finance a net investment in a foreign operation are recognised at historical cost. In the Group, hedge accounting is applied and the foreign currency loan is translated at the closing day rate with translation effects in the statement of comprehensive income.
The Parent Company's financial guarantee contracts consist of guarantees issued on behalf of subsidiaries. A financial guarantee contract is a contract that requires the company to reimburse the holder for a loss it incurs due to a specified debtor's failure to make payment when due or as agreed. The Parent Company reports financial guarantee contracts in accordance with an optional exception to IAS 39 permitted by the Swedish Financial Accounting Standards Council. This relief provision applies to financial guarantee contracts on behalf of subsidiaries, associated companies and joint ventures. The Parent Company reports financial guarantees as a provision in the balance sheet when there is an obligation for which it is probable that settlement will require an outflow of resources.
Shareholder contributions are recognised directly in equity by the recipient and are capitalised in shares and participating interests by the giver, to the extent that no impairment charge is required. Group contributions received by the Parent Company from a subsidiary are recognised in the Parent Company in accordance with customary principles for dividend distributions from subsidiaries. Group contributions paid by the Parent Company to a subsidiary are recognised through profit or loss.
The Group's net sales are essentially attributable to service contracts.
The Group's operations are divided into operating segments on the basis of the components of the Group that are reviewed by the President & CEO and the CFO. In the Group, the operating segments are defined as business areas. Each business area has a president who is responsible for day-to-day operations and reports regularly to the Excecutive Team on the business area's performance.
To establish an operational performance metric for the business areas, acquisition-related items are concentrated in the Group-wide segment. The business areas' performance metric therefore corresponds with operating profit before acquisition-related items (EBITA). Operating profit as reported below is the same performance metric as that monitored internally.
| Sweco Sweden | Sweco and Grontmij's operations in Sweden. |
|---|---|
| Sweco Norway | Sweco's operations in Norway. |
| Sweco Finland | Sweco's operations in Finland and Estonia. |
| Sweco Denmark | Grontmij's operations in Denmark. |
| Sweco Netherlands | Grontmij's operations in the Netherlands. |
| Sweco Western Europe | Comprised mainly of Grontmij's operations in the UK and Belgium and, to a lesser extent, Bulgaria and Turkey. |
| Sweco Central Europe | Grontmij's operations in Germany and Poland and Sweco's operations in Lithuania, Czech Republic and Poland. |
| Group-wide | Group-wide staff functions and IT |
Sales, operating profit (EBITA) and amortisation/depreciation and impairments per business area are reported pro forma as if Grontmij had been acquired on 1 January 2014, and show the consolidated Group as per Sweco's new organisational structure. Financial pro forma information has been prepared and presented in accordance with Sweco's accounting policies; accordingly, figures for Grontmij have been adjusted to reflect Sweco's income statement presentation format. The material pro forma adjustments to Grontmij's financial statements are: • Other income is included in Net sales
Pro forma information only includes operations acquired by Sweco and therefore does not include Grontmij's operations in France which were divested in 2015 prior to Sweco's acquisition. These operations were previously reported by Grontmij as Assets attributable to divested operations.
| External sales | Internal sales | Total sales | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Actual 2015 |
Pro forma 2015 |
Pro forma 2014 |
Actual 2015 |
Pro forma 2015 |
Pro forma 2014 |
Actual 2015 |
Pro forma 2015 |
Pro forma 2014 |
||
| Sweco Sweden | 6,118 | 6,621 | 6,313 | 189 | 217 | 140 | 6,307 | 6,838 | 6,453 | |
| Sweco Norway | 1,958 | 1,958 | 1,891 | 33 | 33 | 27 | 1,991 | 1,991 | 1,918 | |
| Sweco Finland | 1,621 | 1,621 | 1,488 | 42 | 42 | 37 | 1,663 | 1,663 | 1,525 | |
| Sweco Denmark | 362 | 1,343 | 1,258 | 3 | 7 | 6 | 365 | 1,350 | 1,264 | |
| Sweco Netherlands | 442 | 1,818 | 1,873 | 8 | 13 | 32 | 450 | 1,831 | 1,905 | |
| Sweco Western Europe | 433 | 1,558 | 1,377 | 10 | 36 | 43 | 443 | 1,594 | 1,420 | |
| Sweco Central Europe | 404 | 920 | 870 | 30 | 31 | 32 | 434 | 951 | 902 | |
| Group-wide and eliminations | 51 | 159 | -139 | -315 | -380 | -317 | -264 | -221 | -178 | |
| Total Group | 11,389 | 15,998 | 15,209 | – | – | – | 11,389 | 15,998 | 15,209 |
| EBITA | Amortisation/depreciation and impairments | |||||
|---|---|---|---|---|---|---|
| Actual 2015 |
Pro forma 2015 |
Pro forma 2014 |
Actual 2015 |
Pro forma 2015 |
Pro forma 2014 |
|
| Sweco Sweden | 652 | 672 | 604 | -75 | -80 | -74 |
| Sweco Norway | 161 | 161 | 179 | -19 | -19 | -18 |
| Sweco Finland | 89 | 89 | 83 | -13 | -13 | -12 |
| Sweco Denmark | 28 | 39 | 15 | -7 | -30 | -24 |
| Sweco Netherlands | -1 | 24 | 76 | -6 | -27 | -28 |
| Sweco Western Europe | 27 | 83 | 71 | -6 | -19 | -20 |
| Sweco Central Europe | 25 | 49 | 51 | -7 | -13 | -12 |
| Group-wide and eliminations1 | -241 | -336 | -205 | -58 | -70 | -65 |
| Total Group | 740 | 781 | 874 | -190 | -271 | -253 |
1) Extraordinary items are fully reported in Group-wide.
| Actual 2015 |
Actual 2014 |
|
|---|---|---|
| Pro forma EBITA | 781 | 874 |
| EBITA Grontmij NV group | -41 | -60 |
| EBITA result | 740 | 814 |
| Acquisition-related items1 | -60 | -53 |
| EBIT | 681 | 762 |
| Financial income | 7 | 5 |
| Financial expenses | -48 | -48 |
| Profit from participations in associated companies and joint ventures |
1 | 1 |
| Profit before tax | 640 | 718 |
1) Acquisition-related items are defined as depreciation/amortisation and impairment of goodwill and acquisitionrelated intangible assets, revaluation of additional purchase prices, and gains and losses on the sale of companies and businesses. The Group's impairments totalled SEK 0 million (5), of which SEK 0 million (5) was attributable to Sweco Central Europe.
Net financial items are not monitored at the business area level since they are affected by measures taken by Group Treasury, which handles the Group's cash liquidity.
Parent Company net sales totalled SEK 355 million (344). One hundred per cent (100) of Parent Company net sales were comprised of sales to group companies. Thirty-four per cent (34) of the Parent Company's other external expenses was comprised of purchases from group companies.
| Assets | Investments Property, plant and equipment |
Investments Intangible assets |
Liabilities | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||
| Sweco Sweden | 4,733 | 3,012 | 155 | 102 | 1,224 | 20 | 3,891 | 2,636 | |
| Sweco Norway | 950 | 947 | 18 | 33 | – | 3 | 501 | 568 | |
| Sweco Finland | 1,523 | 1,545 | 7 | 13 | 4 | 59 | 467 | 422 | |
| Sweco Denmark | 1,772 | – | 48 | – | 1,006 | – | 1,147 | – | |
| Sweco Netherlands | 1,369 | – | 54 | – | 278 | – | 689 | – | |
| Sweco Western Europe | 2,112 | 34 | 32 | 1 | 1,057 | 0 | 460 | 16 | |
| Sweco Central Europe | 1,230 | 275 | 17 | 2 | 411 | 1 | 572 | 379 | |
| Group-wide | 9,819 | 3,897 | 123 | 25 | 87 | 0 | 6,039 | 2,596 | |
| Eliminations | -10,968 | -3,841 | -6,480 | -2,749 | |||||
| Unallocated | 35 | 47 | 382 | 161 | |||||
| Total Group | 12,575 | 5,917 | 455 | 176 | 4,067 | 83 | 7,668 | 4,029 |
1) Historical values have been adjusted to reflect the new organisation; however, values from the Grontmij Group were not included. Acquisition balance sheets for the 2015 Grontmij acquisition are preliminary.
Assets are comprised of receivables, IT equipment and office equipment. The breakdown of intangible assets is shown in Note 13. Group-wide items include cash and cash equivalents of SEK 13 million (2).
The business areas' profits, assets and liabilities include directly attributable items and items that can be allocated to the business areas in a reasonable and reliable manner. The reported items in the operating segments' profits, assets and liabilities are in accordance with the profits, assets and liabilities regularly reviewed by the Excecutive Team.
Transfer prices between the Group's various operating segments are set according to the "arm's length" principle (i.e., market-based prices).
Group-wide items are comprised of gains and losses on the sale of financial investments, tax expenses, and general administrative expenses. Unallocated group-wide assets and liabilities are comprised of deferred tax assets and deferred tax liabilities.
| Group | ||
|---|---|---|
| 2015 | 2014 | |
| Buildings and urban districts | 4,530 | 3,818 |
| Water, energy and industry | 3,450 | 2,641 |
| Transport infrastructure | 3,410 | 2,755 |
| TOTAL | 11,389 | 9,214 |
| External sales | Non-current assets1 | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| Sweden | 5,801 | 5,483 | 2,510 | 1,206 | |
| Norway | 1,960 | 1,918 | 397 | 443 | |
| Finland | 1,605 | 1,335 | 906 | 960 | |
| Denmark | 372 | 41 | 1,034 | 9 | |
| Netherlands | 595 | – | 319 | – | |
| UK | 191 | – | 700 | – | |
| Estonia | 41 | 26 | 17 | 20 | |
| Lithuania | 64 | 56 | 13 | 13 | |
| Germany | 163 | – | 411 | – | |
| Belgium | 214 | – | 460 | – | |
| Czech Republic | 89 | 82 | 36 | 34 | |
| Slovakia | 13 | 9 | – | – | |
| Bulgaria | 19 | 17 | 6 | 7 | |
| Poland | 91 | 76 | 25 | 29 | |
| Rest of EU | 30 | 8 | 0 | 0 | |
| Turkey | 22 | – | 2 | – | |
| Russia | 6 | 75 | 0 | 0 | |
| Rest of Europe | 46 | 15 | – | – | |
| Africa | 1 | 3 | – | – | |
| Asia | 58 | 38 | 1 | 0 | |
| Oceania | 0 | 9 | – | – | |
| North America | 6 | 15 | – | – | |
| South and Central America | 2 | 8 | – | – | |
| Eliminations | – | – | -29 | -30 | |
| TOTAL | 11,389 | 9,214 | 6,807 | 2,690 |
1) Refers to non-current assets that are not financial instruments, held-to-maturity investments, deferred tax assets, assets pertaining to post-retirement benefits and rights arising under insurance agreements.
OPERATING SEGMENTS – GEOGRAPHIC AREAS
The Group's 2015 earned income from the Swedish Transport Administration totalled SEK 1,290 million, which was reported in business area Sweco Sweden. See also the section on credit risk in Note 33.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| PricewaterhouseCoopers AB | |||||
| – audit services | 5 | 5 | 1 | 0 | |
| – audit services other than statutory audit |
1 | 1 | 0 | 0 | |
| – tax consulting | 0 | 0 | 0 | 0 | |
| – non-audit services1 | 12 | 2 | 12 | 2 | |
| Total | 18 | 8 | 13 | 2 | |
| Other auditing firms | |||||
| – audit services | 1 | 1 | – | – | |
| Total | 1 | 1 | – | – | |
| TOTAL | 20 | 9 | 13 | 2 |
1) Of which, issue expenses of SEK 2 million were reported against equity as issue expenses.
Audit services refer to examination of the consolidated financial statements, the accounts and the administration of the Board of Directors and the President & CEO of the company; other tasks incumbent on the company's auditor; and advice or other assistance prompted by observations from such audits or the performance of other such tasks. Non-audit services refer to advice on accounting and merger issues and due diligence processes for mergers and acquisitions.
| Charges under signed | Group | Parent Company | |||
|---|---|---|---|---|---|
| leases and rental contracts | 2015 | 2014 | 2015 | 2014 | |
| TOTAL CHANGES PAID DURING THE YEAR |
376 | 320 | 7 | 4 | |
| Future minimum lease pay ments and rents to be paid |
|||||
| – within one year | 545 | 304 | 6 | 3 | |
| – between one and five years | 1,710 | 1,035 | 14 | 14 | |
| – in more than five years | 300 | 807 | 14 | 17 | |
| TOTAL FUTURE LEASE PAYMENTS |
2,554 | 2,146 | 34 | 34 |
Future minimum lease payments refer to the nominal amount stipulated in non-cancellable leases and rental contracts. Most future minimum payments are comprised of rents for premises. Other minimum lease charges refer primarily to office equipment and IT equipment. Future finance lease payments of SEK 0.4 million (0.3) are included for the Parent Company.
| Group | Parent Company | |||
|---|---|---|---|---|
| Personnel costs | 2015 | 2014 | 2015 | 2014 |
| Salaries and remuneration, other employees |
5,299 | 4,164 | 12 | 11 |
| Salaries and remuneration, senior executives |
84 | 76 | 21 | 19 |
| Total salaries and remuneration1 |
5,383 | 4,241 | 33 | 30 |
| Social fees, excl. pension costs | 1,144 | 965 | 12 | 11 |
| Pension costs, senior executives2, 3 |
11 | 11 | 4 | 0 |
| Pension costs, others2 | 579 | 460 | 3 | 4 |
| Agency staff | 60 | – | – | – |
| Other personnel costs | 404 | 337 | 6 | 9 |
| TOTAL PERSONNEL COSTS | 7,581 | 6,015 | 58 | 54 |
1) Senior executives refer to the Excecutive Team, board members and presidents of the Parent Company and all subsidiaries – a total of 72 individuals (65) in the Group and 13 individuals (12) in the Parent Company.
2) See also Note 27, Provisions for Pensions. 3) A total of 65 (56) senior executives in the Group and 6 (5) in the Parent Company received pension contributions.
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| Number of full-time | Of which, | Of which, | |||
| employees | Total | % men | Total | % men | |
| Sweden | |||||
| Parent Company | 21 | 29 | 18 | 44 | |
| Subsidiaries | 4,825 | 69 | 4,526 | 70 | |
| Total Sweden | 4,846 | 69 | 4,544 | 70 | |
| Outside Sweden | |||||
| Norway | 1,327 | 72 | 1,251 | 72 | |
| Finland | 1,873 | 76 | 1,789 | 76 | |
| Denmark | 289 | 96 | 29 | 48 | |
| Netherlands | 431 | 83 | – | – | |
| UK | 190 | 75 | – | – | |
| Germany | 160 | 59 | – | – | |
| Belgium | 187 | 67 | – | – | |
| Estonia | 78 | 68 | 71 | 69 | |
| Lithuania | 234 | 60 | 232 | 54 | |
| Russia | 36 | 61 | 141 | 60 | |
| Czech Republic | 225 | 61 | 219 | 59 | |
| Slovakia | 12 | 67 | 18 | 67 | |
| Bulgaria | 62 | 50 | 60 | 50 | |
| Poland | 174 | 57 | 128 | 67 | |
| Turkey | 25 | 61 | – | – | |
| Rest of Europe | – | – | 17 | 71 | |
| Africa | 1 | 100 | 9 | 100 | |
| Asia | 38 | 81 | 25 | 92 | |
| North America | – | – | 2 | 100 | |
| Total, outside Sweden | 5,342 | 73 | 3,991 | 71 | |
| TOTAL GROUP | 10,188 | 71 | 8,535 | 70 | |
| Percentage of women | 2015 | 2014 | |||
| Parent Company | |||||
| Board members | 50 | 57 | |||
| Other senior executives, 6 (6) individuals | 50 | 50 | |||
| Group | |||||
| Board members in all companies | 17 | 19 | |||
| Other senior executives, 65 (55) individuals | 16 | 18 |
| Group | Parent Company | |||
|---|---|---|---|---|
| Sickness absence, % | 2015 | 2014 | 2015 | 2014 |
| Total sickness absence | 2.7 | 2.8 | 1.6 | 0.6 |
| – long-term sickness absence | 0.8 | 1.1 | ||
| – sickness absence for men | 2.1 | 2.3 | ||
| – sickness absence for women | 4.1 | 4.0 | ||
| – employees – 29 years | 2.2 | 2.2 | ||
| – employees 30 – 49 years | 2.6 | 2.8 | ||
| – employees 50 – years | 3.0 | 3.1 |
The Board of Directors appoints a Remuneration Committee which is tasked with addressing matters related to employment terms, pension benefits and bonus systems for senior executives. The Remuneration Committee also deals with general employment terms and remunerative matters affecting all employees in the company. Senior executives include the President & CEO, members of the Excecutive Team and all managers who report directly to the President & CEO.
Sweco Group's objective is to offer a competitive and market-based level of remuneration that enables the recruitment and retention of qualified senior executives. Remuneration to senior executives is comprised of basic salary, variable salary, pension, other remuneration and share-based incentive schemes.
Remuneration is based on factors such as work duties, expertise, experience, position and performance. In addition, the breakdown between basic and variable salary is proportionate to the employee's position and work duties. The variable salary component is based on predetermined and measurable criteria that are designed to promote the company's long-term value creation. Variable compensation for the President & CEO and the CFO may not exceed 75 per cent of basic salary. For other senior executives, variable compensation may not exceed 50 per cent of basic salary. Variable compensation is determined based on results in relation to predetermined profitability targets. Targets for the President & CEO and other senior executives are set by the Board of Directors.
The terms and conditions for pensions for Sweco's President & CEO and senior executives are market-based relative to what generally applies to comparable senior executives in the market, and are normally based on defined contribution pension solutions.
Other compensation may be awarded, primarily in the form of company car and mobile phone benefits.
Sweco Group senior executives may be offered various forms of incentive schemes on market-based terms. The rationale for share-based incentive schemes is to increase/diversify senior executives' share ownership/exposure and to more closely align the interests of the company's decision-makers and shareholders. A long-term, personal shareholder commitment among key personnel is expected to stimulate greater interest in the company's operations and earnings trend and to increase motivation and solidarity with the company.
Decisions on share-based incentive schemes are always resolved by the Annual General Meeting or Extraordinary General Meeting.
In the event of dismissal by the company, the President & CEO shall have a maximum notice period of 18 months. In the event of the President & CEO's resignation, the notice period is six months.
For other senior executives, the term of notice is normally 12 months in the event of dismissal by the company and six months in the event of the executive's resignation.
These principles apply to agreements entered into subsequent to AGM resolutions and to any changes or alterations made to existing agreements after this date, to the extent permitted under the terms of the existing agreements. The Board of Directors is authorised to deviate from the principles if warranted by special circumstances in individual cases.
| Result | Basic salary/ board fee |
Variable salary2 |
Other benefits |
Pension cost | TOTAL |
|---|---|---|---|---|---|
| Board Chairman Johan Nordström |
563 | – | – | – | 563 |
| Board member Anders G. Carlberg |
313 | – | – | – | 313 |
| Board member Gunnel Duveblad |
370 | – | – | – | 370 |
| Board member Eva Lindqvist |
313 | – | – | – | 313 |
| Board member Pernilla Ström |
285 | – | – | – | 285 |
| Board member Carola Teir-Lehtinen |
285 | – | – | – | 285 |
| Board member Johan Hjertonsson1 |
167 | – | – | – | 167 |
| President & CEO | 5,695 | 2,746 | 58 | 1,923 | 10,422 |
| Total Board members and President & CEO |
7,991 | 2,746 | 58 | 1,923 | 12,718 |
| Other senior execu tives (11 individuals) |
15,931 | 2,378 | 1,193 | 3,591 | 23,093 |
| TOTAL | 23,922 | 5,124 | 1,251 | 5,514 | 35,811 |
1) As of 2015 AGM.
2) Variable salary includes provisions for share-based payments of SEK 1,069,000 to the President & CEO and SEK 936,000 to other senior executives. The cost of share-related payments corresponds to the cost reported in the Group pursuant to IFRS 2.
| Basic salary/ board fee |
Variable salary |
Other benefits |
Pension cost | TOTAL | |
|---|---|---|---|---|---|
| Total Board members and President & CEO |
7,991 | 2,746 | 58 | 1,923 | 12,718 |
| Other senior execu tives (11 individuals) |
21,189 | 3,548 | 2,957 | 4,170 | 31,864 |
| TOTAL PRO FORMA | 29,180 | 6,294 | 3,015 | 6,093 | 44,582 |
1) Pro forma has been produced to reflect what remuneration to other senior executives would have been if the new organisation (with the new business area presidents) had applied as of 1 January 2015. The pro forma information includes the new business presidents' remuneration and other benefits as of 1 January 2015, rather than as from 1 October 2015.
| Basic salary/ board fee |
Variable salary3 |
Other benefits |
Pension cost | TOTAL | |
|---|---|---|---|---|---|
| Board Chairman Johan Nordström1 |
450 | – | – | – | 450 |
| Board Chairman Olle Nordström2 |
150 | – | – | – | 150 |
| Board member Anders G. Carlberg |
283 | – | – | – | 283 |
| Board member Gunnel Duveblad |
334 | – | – | – | 334 |
| Board member Eva Lindqvist |
267 | – | – | – | 267 |
| Board member Pernilla Ström |
258 | – | – | – | 258 |
| Board member Carola Teir-Lehtinen |
258 | – | – | – | 258 |
| President & CEO | 5,085 | 2,083 | 65 | 1,887 | 9,120 |
| Other senior execu tives (8 individuals) |
13,443 | 3,294 | 510 | 3,176 | 20,423 |
| TOTAL | 20,528 | 5,377 | 575 | 5,063 | 31,543 |
1) As of 2014 AGM.
2) Until 2014 AGM. 3) Variable salary includes provisions for share-based payments of SEK 657,000 to the President & CEO and SEK 846,000 to other senior executives.
The Chairman and other Board members receive board fees and compensation for committee work in accordance with AGM resolution. Employee representatives receive no board fees.
In the above table, other senior executives are members of the Excecutive Team excluding the President of Sweco AB.
Variable salary refers to bonuses and share-based payments that were expensed in 2015 and 2014.
The 2012, 2013, 2014 and 2015 Annual General Meetings resolved to implement long-term share savings schemes directed at senior executives in the Sweco Group.
Under the share savings schemes, participants may use their own funds to acquire Class B shares in Sweco ("Savings Shares") over NASDAQ Stockholm for an amount equivalent to a maximum of 5-10 per cent of the participant's annual basic salary for that year. If the Saving Shares are held until the announcement of the year-end report for the 2015 financial year for the 2012 share savings scheme, the 2016 financial year for the 2013 share savings scheme, the 2017 financial year for the 2014 share savings scheme, and the 2018 financial year for the 2015 share savings scheme (the "Retention Period") and the participant remains employed in his/her position or an equivalent position in the Sweco Group throughout the Retention Period, each Savings Share shall thereafter grant entitlement to one Class B share in Sweco without consideration ("Matching Share") and – provided that the performance criteria have been met – to an additional number of not more than one to four Class B shares in Sweco ("Performance Shares"). The granting of Performance Shares is conditional on a positive total yield for the Sweco share, and is also dependent on the Sweco share's total yield in relation to a group of benchmark companies. The cost is expensed on a straight-line basis over the Retention Period.
| Group | Parent Company | |||||||
|---|---|---|---|---|---|---|---|---|
| Share savings scheme3 | 2015 | 2014 | 2013 | 2012 | 2015 | 2014 | 2013 | 2012 |
| No. of participants still employed | 59 | 49 | 32 | 25 | 10 | 11 | 7 | 6 |
| No. of shares acquired | 36,393 | 33,126 | 27,214 | 29,931 | 9,996 | 11,790 | 10,524 | 13,498 |
| No. of Matching Shares granted per Savings Share | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
| Maximum no. of Matching Shares | 36,393 | 33,126 | 27,214 | 29,931 | 9,996 | 11,790 | 10,524 | 13,498 |
| No. of Performance Shares granted per Savings Share1 | 1–4 | 1–4 | 1–4 | 1–4 | 1–4 | 1–4 | 1–4 | 1–4 |
| Maximum no. of Performance Shares | 82,527 | 74,607 | 67,817 | 79,082 | 30,024 | 34,256 | 36,251 | 47,434 |
| Provision for the year, SEK M2, 4 | 0.5 | 2.3 | 1.7 | 1.6 | 0.2 | 1.0 | 0.8 | 0.7 |
| Accumulated provision, SEK M2, 4 | 0.5 | 2.7 | 3.6 | 5.0 | 0.2 | 1.2 | 1.6 | 2.2 |
| Estimated total cost, SEK M2, 4 | 9.1 | 7.6 | 5.7 | 5.3 | 3.1 | 3.2 | 2.5 | 2.3 |
| Retention period | Nov 2015– Feb 2019 |
Nov 2014– Feb 2018 |
Nov 2013– Feb 2017 |
Nov 2012– Feb 2016 |
Nov 2015– Feb 2019 |
Nov 2014– Feb 2018 |
Nov 2013– Feb 2017 |
Nov 2012– Feb 2016 |
1) The President & CEO and the CFO may receive no more than four performance shares, business area presidents no more than three shares, subsidiary presidents and divisional managers no more than two shares, and key employees in staff functions no more than one share.
2) Including social fees.
3) Due to the preferential rights issue conducted during Q4, the number of shares for the 2012, 2013 and 2014 share savings schemes were adjusted in accordance with the schemes' terms and conditions.
4) Provision is updated annually and is affected mainly by changes in employee turnover.
| Group | Parent Company | |||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Other intangible assets, depreciation and impairments |
-19 | -7 | -4 | -3 |
| Buildings, depreciation and impairments |
-3 | -4 | – | – |
| Equipment, depreciation and impairments |
-168 | -139 | -24 | -16 |
| Total amortisation/deprecia tion and impairments |
-190 | -150 | -28 | -20 |
| Impairment of goodwill1 | – | -5 | – | – |
| Intangible assets capitalised on acquisition, impairment |
-57 | -49 | -2 | – |
| Revaluation of purchase price | 3 | 1 | – | – |
| Profit/loss on sale | -5 | -0 | – | – |
| Total acquisition-related items | -60 | -53 | -2 | – |
| TOTAL | -250 | -203 | -30 | -20 |
1) Group impairment losses totalled SEK 0 million (5), of which SEK 0 million (5) is attributable to Sweco Central Europe.
| 2015 | 2014 | |
|---|---|---|
| Financial income | ||
| Interest income – trade receivables | 2 | 1 |
| Interest income – bank | 3 | 3 |
| Other financial income | 2 | 1 |
| Total financial income | 7 | 5 |
| Financial expenses | ||
| Interest expenses – trade payables | -1 | -1 |
| Interest expenses – bank | -26 | -35 |
| Other financial expenses | -12 | -4 |
| Net exchange rate fluctuations | -10 | -9 |
| Other financial expenses | -48 | -48 |
| Profit from participations in associated companies and joint ventures |
1 | 1 |
| TOTAL NET FINANCIAL ITEMS | -41 | -43 |
| Interest income received during the year | 11 | 4 |
| Interest expenses paid during the year | -39 | -39 |
| Profit from participations in group companies | 168 | |
|---|---|---|
| Dividends | 196 | |
| Group contributions | 380 | 357 |
| Total profit from participations in group companies | 548 | 553 |
| Financial income | ||
| Interest income from group companies | 3 | 2 |
| Other interest income | 0 | 1 |
| Total financial income | 3 | 3 |
| Financial expenses | ||
| Interest expenses to group companies | 0 | -1 |
| Other interest expenses | -23 | -27 |
| Exchange losses | -14 | – |
| Other financial expenses | -7 | -3 |
| Total financial expenses | -43 | -31 |
| TOTAL NET FINANCIAL ITEMS | 508 | 525 |
| Interest income received during the year | 3 | 2 |
| Interest expenses paid during the year | -27 | -32 |
| Appropriations | 2015 | 2014 |
|---|---|---|
| Accelerated depreciation | -20 | -2 |
| TOTAL | -20 | -2 |
| Untaxed reserves | 2015 | 2014 |
| Accelerated depreciation | 23 | 3 |
| TOTAL | 23 | 3 |
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| Current tax expense | 2015 | 2014 | 2015 | 2014 | |
| Tax expense for the period | -195 | -152 | -60 | -67 | |
| Adjustment of tax attributable to prior years |
-6 | -3 | -1 | – | |
| Total current tax expense | -201 | -155 | -61 | -67 | |
| Deferred tax income/expense | |||||
| Deferred tax – temporary disparities |
39 | 0 | – | – | |
| Deferred tax income – capitalised rateable value of loss carry-forwards during the year |
-3 | 0 | – | – | |
| Deferred tax expense – utilisation of previously capitalised rateable value of loss carry-forwards |
-5 | -7 | – | – | |
| Deferred tax income/expense – change in untaxed reserves |
-30 | -12 | – | – | |
| Total deferred tax income/ expense |
1 | -19 | – | – | |
| TOTAL REPORTED TAX EXPENSE |
-200 | -174 | -61 | -67 |
No tax is recognised for translation differences arising from translation of foreign operations, which total SEK -140 million (79).
| Group | Parent Company | |||||||
|---|---|---|---|---|---|---|---|---|
| Reconciliation of effective tax rate | 2015, % | 2015 | 2014, % | 2014 | 2015, % | 2015 | 2014, % | 2014 |
| Profit before tax | 640 | 718 | 444 | 503 | ||||
| Income tax calculated pursuant to national profit tax rates in each country |
23 | 146 | 23 | 168 | 22 | 98 | 22 | 111 |
| Tax effects of: | ||||||||
| – Non-taxable dividends | 0 | 0 | – | – | -8 | -37 | -9 | -43 |
| – Other non-taxable income | -1 | -5 | -1 | -7 | – | – | – | – |
| – Non-deductible expenses | 4 | 27 | 1 | 10 | 0 | -1 | 0 | 0 |
| Utilisation of previously uncapitalised loss carry-forwards | 0 | -1 | 0 | 0 | – | – | – | – |
| Tax effect of uncapitalised loss carry-forwards | 7 | 44 | – | – | – | – | – | – |
| Effect on deferred tax – reduced tax rate | -2 | -12 | 0 | 0 | – | – | – | – |
| Adjustment of previous years' tax expense | 0 | 1 | 0 | 3 | 0 | 1 | 0 | 0 |
| TAX EXPENSE FOR THE YEAR | 31 | 200 | 24 | 174 | 14 | 61 | 13 | 67 |
| 2014 | ||||||
|---|---|---|---|---|---|---|
| Tax attributable to other comprehensive income | Pre-tax | Tax | After tax | Pre-tax | Tax | After tax |
| Translation differences – translation of foreign operations | -140 | -140 | 79 | 79 | ||
| Hedges of net investments in subsidiaries | 61 | -13 | 48 | -46 | 10 | -36 |
| Revaluation of defined-benefit pensions | 61 | -16 | 45 | -76 | 21 | -56 |
| Revaluation of holding in Grontmij NV | 16 | -3 | 12 | – | – | – |
| TOTAL | -2 | -32 | -35 | -43 | 31 | -13 |
| Group | ||
|---|---|---|
| Change in carrying amount for the year | 2015 | 2014 |
| Opening carrying amount – deferred tax assets | 47 | 26 |
| Change due to acquisitions | 26 | 0 |
| Reclassification to deferred tax liability | -3 | 1 |
| Other deferred tax expense in the income statement | -13 | -10 |
| Deferred tax expense in other comprehensive income | -21 | 31 |
| Foreign currency translation differences | -1 | 0 |
| Closing carrying amount – deferred tax assets | 35 | 47 |
| Opening carrying amount – deferred tax liabilities | -161 | -147 |
| Increase due to acquisitions | -229 | -3 |
| Reclassification from deferred tax asset | 3 | -1 |
| Change in component of untaxed reserves in the income statement | -30 | -12 |
| Other deferred tax expenses in the income statement | 45 | 4 |
| Deferred tax expenses in other comprehensive income | -11 | 0 |
| Foreign currency translation differences | 2 | -2 |
| Closing carrying amount – deferred tax liabilities | -382 | -161 |
| Deferred tax at year end | ||
| Deferred tax asset – loss carry-forwards | 2 | 1 |
| Deferred tax asset – consolidated pension deficits | 4 | 35 |
| Deferred tax asset – temporary disparities | 28 | 11 |
| Total deferred tax assets | 35 | 47 |
| Deferred tax component of companies' reported untaxed reserves | -140 | -98 |
| Deferred tax liability – temporary disparities | -242 | -63 |
| Total deferred tax liabilities | -382 | -161 |
| TOTAL DEFERRED TAX, NET | -347 | -114 |
Of total deferred tax assets, SEK 1 million is expected to be utilised within 12 months. Of total deferred tax liabilities, SEK 14 million is expected to be paid within 12 months. Uncapitalised loss carry-forwards in the Group total SEK 1,187 million (8); these are not expected to be utilised against future profits, and the majority do not carry a time limit for utilisation.
| Deferred tax assets | Deferred tax liabilities | Net | |||||
|---|---|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||
| Property, plant and equipment | 12 | 3 | 1 | -4 | 13 | -2 | |
| Intangible assets | 0 | 1 | -120 | -87 | -120 | -86 | |
| Financial assets | 5 | 10 | -11 | 1 | -6 | 11 | |
| Current assets | 1 | 31 | -121 | -6 | -120 | 25 | |
| Current liabilities | 11 | – | -1 | – | 9 | – | |
| Untaxed reserves | – | – | -140 | -98 | -140 | -98 | |
| Pensions | 4 | 35 | 7 | – | 11 | 35 | |
| Other provisions | 0 | – | 0 | – | 0 | – | |
| Loss carry-forwards | 2 | 1 | 2 | – | 4 | 1 | |
| Netting of deferred tax assets and liabilities | 0 | -33 | 0 | 33 | 0 | 0 | |
| TOTAL | 35 | 47 | -382 | -161 | -347 | -114 |
| 2015 | Opening balance 2015 |
Recognised through profit or loss |
Recognised in other comprehensive income |
Acquisitions | Reclassifications | Foreign currency translation differences |
Closing balance 2015 |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment | -2 | 2 | 0 | 10 | 3 | 0 | 13 |
| Intangible assets | -86 | -10 | 0 | -54 | 32 | -1 | -119 |
| Financial assets | 11 | 0 | -17 | 1 | -1 | 0 | -6 |
| Current assets | 25 | 46 | 0 | -169 | -24 | 2 | -120 |
| Current liabilities | 0 | 1 | 0 | 4 | 4 | 0 | 9 |
| Untaxed reserves | -98 | -32 | 0 | -9 | 0 | 0 | -139 |
| Pensions | 35 | 2 | -16 | 5 | -14 | 0 | 12 |
| Other provisions | – | 0 | 0 | 0 | -1 | 1 | 0 |
| Loss carry-forwards | 1 | -7 | 0 | 10 | 1 | 0 | 5 |
| TOTAL | -114 | 1 | -33 | -202 | – | 1 | -347 |
| 2014 | Opening balance 2014 |
Recognised through profit or loss |
Recognised in other comprehensive income |
Acquisitions | Reclassifications | Foreign currency translation differences |
Closing balance 2014 |
|---|---|---|---|---|---|---|---|
| Property, plant and equipment | -3 | 2 | – | – | 0 | 0 | -2 |
| Intangible assets | -58 | 1 | – | -3 | -25 | -1 | -86 |
| Financial assets | 0 | 1 | 10 | – | – | 0 | 11 |
| Current assets | -1 | 0 | – | – | 26 | 0 | 25 |
| Untaxed reserves | -86 | -12 | – | – | – | 0 | -98 |
| Pensions | 19 | -4 | 21 | – | – | -1 | 35 |
| Loss carry-forwards | 8 | -7 | – | – | 0 | 0 | 1 |
| TOTAL | -121 | -19 | 31 | -3 | – | -1 | -114 |
| 2015 | 2014 | |
|---|---|---|
| Average number of shares before dilution | 100,445,122 | 94,415,642 |
| Effect of anticipated utilisation of share bonus scheme and share savings scheme |
1,451,144 | 1,093,392 |
| Average number of shares after dilution | 101,896,266 | 95,509,034 |
| Earnings per share on profit attributable to owners of the Parent Company |
||
| Basic earnings per share, SEK | 4.36 | 5.74 |
| Diluted earnings per share, SEK | 4.30 | 5.67 |
Earnings per share were calculated on profit for the year attributable to Parent Company shareholders, divided by the average number of shares as specified in the table. For calculation of diluted earnings per share, the weighted average number of common shares outstanding is adjusted for the dilutive effect of all potential common shares. For additional information about the repurchase of treasury shares, see Note 25. Historical values and current period values were restated in accordance with IAS 33 due to the preferential rights issue conducted by Sweco during the year at a subscription price that was below the current share price. The adjustment does not have a dilutive effect and thus does not affect earnings per share before and after dilution.
| Date | Holding, %1 | Holding, post-transaction, %1 |
Purchase price | |
|---|---|---|---|---|
| Acquisitions, 2015 | ||||
| Rapcon Oy, acquisition of assets | 28 February 2015 | 100 | 100 | 2 |
| Siltanylund Oy, acquisition of minority share | 28 February 2015 | 40 | 100 | 11 |
| Contesta Oy, acquisition of minority share | 28 February 2015 | 28 | 100 | 3 |
| OTEC Elkonsult AB | 2 March 2015 | 100 | 100 | 15 |
| Sweco Architects A/S, acquisition of minority share | 7 April 2015 | 0 | 96 | 0 |
| Valcon Oy, acquisition of minority share | 28 September 2015 | 20 | 100 | 0 |
| Grontmij N.V. | 1 October 2015 | 100 | 100 | 3,337 |
| TOTAL ACQUISITIONS, 2015 | 3,368 | |||
| Acquisitions, 2014 | ||||
| Tocoman Services Oy, Finland | 10 January 2014 | 100 | 100 | 32 |
| Alfakonsult AB | 1 March 2014 | 100 | 100 | 12 |
| Sweco Germany GmbH, Germany | 28 March 2014 | 100 | 100 | 0 |
| Metro Arkitekter AB, acquisition of assets | 1 April 2014 | 100 | 100 | 4 |
| Metro Arkitekter AB | 1 April 2014 | 100 | 100 | 4 |
| Helsingborg Energikonsult AB, acquisition of assets | 1 April 2014 | 100 | 100 | 1 |
| Insinööritoimisto Savon Controlteam Oy, Finland | 4 April 2014 | 86 | 86 | 11 |
| Profil-Bau Consulting Oy, Finland, acquisition of assets | 30 May 2014 | 100 | 100 | 18 |
| Sweco Lietuva, Lithuania, acquisition of minority share | 4 June 2014 | 0.1 | 99.9 | 0 |
| Sweco Hidroprojektas, Lithuania, acquisition of minority share | 16 June 2014 | 0.1 | 99.5 | 0 |
| B&B VVS Konsult AB, correction of additional purchase price | 3 July 2014 | 100 | 0 | |
| RS Nylund, Finland, acquisition of minority share | 13 October 2014 | 30 | 100 | 7 |
| BIM Consult AS, Norway, acquisition of assets | 1 November 2014 | 100 | 100 | 2 |
| TOTAL ACQUISITIONS, 2014 | 91 |
1) Ownership share corresponds to equity interest.
During 2015 Sweco acquired the Dutch company Grontmij, one of Northern Europe's largest technical consulting companies with broad-based engineering and design expertise. Grontmij was founded in the Netherlands in 1915 and has expanded since then, mainly to Sweden, Denmark, Germany, Belgium and the UK. Grontmij had 6,133 employees at the acquisition date.
At the balance sheet date Sweco owned 97.36 per cent of all Grontmij shares and had initiated a compulsory redemption process for the remaining shares.
The acquisition of Grontmij creates value for all stakeholders – customers, employees, shareholders and society in general:
Grontmij reported 2014 annual net sales of SEK 6.0 billion and EBITA (as per Sweco's definition) of approximately SEK 203 million, excluding extraordinary costs and the divested business in France.
The purchase price for 100 per cent of Grontmij's shares is SEK 3,337 million, of which approximately SEK 1,537 million in cash and SEK 1,800 million in 14,949,247 newly issued Sweco Class B shares. Approximately SEK 94 million of the cash component remains to be paid in conjunction with the upcoming compulsory redemption process. The residual purchase price is reported as a liability and is included in net debt; accordingly, Sweco will consolidate 100 per cent of Grontmij.
The Enterprise Value is approximately SEK 3,953 million based on the above-referenced purchase price and Grontmij's net debt of approximately SEK 616 million as at 30 September 2015.
During the year Sweco Sweden acquired OTEC Elkonsult AB with 15 employees and a minority share in Sweco Architects A/S.
During the year Sweco Finland acquired minority shares in Siltanylund Oy, Contesta Oy and Insinööritoimisto Valcon Oy and operations in Rapcon Oy with 5 employees.
Acquisition-related costs for the above acquisitions during this period and previous periods total SEK 59 million (2) and are chiefly comprised of financial advisor and consultant fees associated with due diligence and transaction tax of SEK 0 million (1). These expenses, totalling SEK 57 million (2) this period, were reported in other external expenses in the income statement.
Central Europe divested NIPI TRTI with 73 employees, HYDROCOOP with 16 employees and IKTP and Sweco Germany GmbH with 0 employees. Finland divested Cabix Consulting CJSC JV with 22 employees. The year's divestitures had an impact on profit of SEK -6 million.
| Grontmij Group 334 238 |
Other acquisitions 6 |
Acquired value 340 |
Divested value | Acquired value | Divested value |
|---|---|---|---|---|---|
| – | 17 | 36 | |||
| – | 238 | 1 | 2 | 1 | |
| – | 118 | – | 0 | 0 | |
| 2,123 | 6 | 2,129 | 15 | 18 | 17 |
| 206 | 4 | 210 | 4 | 12 | 3 |
| -388 | – | -388 | -1 | 0 | 0 |
| -227 | -2 | -229 | - | -3 | – |
| -2,760 | -7 | -2,767 | -7 | -22 | -12 |
| 1 | 4 | 5 | – | -1 | – |
| 3,692 | 8 | 3,700 | – | 60 | – |
| – | – | – | – | 2 | – |
| – | 12 | 12 | – | 5 | – |
| – | – | – | 0 | – | 0 |
| – | – | – | -6 | – | -0 |
| 3,337 | 31 | 3,368 | 6 | 91 | 44 |
| -94 | -2 | -96 | – | -3 | – |
| – | 1 | 1 | – | 3 | – |
| -1,800 | – | -1,800 | – | – | – |
| -17 | – | -17 | – | – | – |
| -206 | -4 | -210 | -4 | -12 | -3 |
| 1,220 | 26 | 1,246 | 2 | 79 | 41 |
| 118 |
1) Of which, receivables total SEK 2,233 million (17).
2) Of which, SEK 2 million (21) is attributable to acquisition of assets and tax deductions for future write-downs.
3) Revaluation of shares in Grontmij acquired in July 2015.
With the exception of the acquisition of Grontmij Group, acquisitions completed in 2015 and 2014 are reported in aggregate form in the table above. Separate reporting of each acquisition is not warranted due to the size of the companies acquired. For 2015 acquisitions, the acquisition analysis for Grontmij is preliminary.
The acquired companies had a negative impact of SEK 1,246 million (79) on Group cash and cash equivalents. Divested operations improved the Group's cash and cash equivalents by SEK 2 million (41). The net impact on Group cash and cash equivalents is SEK -1,224 million (-38).
Acquired values correspond to fair value in accordance with IFRS 3 (i.e., following completion of an acquisition analysis). Acquired goodwill is attributable to synergy effects and geographic expansion.
The unsettled purchase price commitment of SEK 96 million refers to conditional purchase consideration of SEK 0 million,
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| Acquisition | Divestiture | Acquisition | Divestiture | ||
| Contribution to net sales in the year's accounts |
1,659 | 9 | 110 | 11 | |
| Contribution to net sales if acquired company had been owned for the full year |
6,277 | 149 | |||
| Contribution to operating profit in the year's accounts |
95 | 2 | 7 | -2 | |
| Contribution to operating profit if acquired company had been owned for the full year |
191 | 15 |
Sweco acquired non-controlling interests during the year. The effects of these acquisitions are shown below in aggregate form.
| Effects of changes in ownership in the company's holdings: | Total |
|---|---|
| Company's holdings at beginning of the year | 4 |
| Dividend | 0 |
| Effect of increased holdings | -4 |
| Share of profit for the year | 0 |
| Foreign currency translation differences | 0 |
| Company's holdings at year end | 0 |
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| Other intangible | Other intangible | |||||
| Goodwill | assets | Total | Goodwill | assets | Total | |
| Opening acquisition costs | 2,258 | 406 | 2,664 | 2,183 | 377 | 2,560 |
| Purchases | – | 27 | 27 | – | 6 | 6 |
| Developed internally | – | 4 | 4 | – | – | – |
| Increase through acquisitions | 3,700 | 340 | 4,040 | 60 | 17 | 77 |
| Increase through recalculated acquisition analysis | – | – | – | -35 | 0 | -36 |
| Decrease through divestiture of companies | 0 | 0 | 0 | – | 0 | 0 |
| Reclassification | – | 3 | 3 | – | 0 | 0 |
| Sales/disposals | -23 | – | -23 | – | -2 | -2 |
| Foreign currency translation differences | -112 | -17 | -129 | 50 | 8 | 59 |
| Closing accumulated acquisition costs | 5,823 | 763 | 6,586 | 2,258 | 406 | 2,664 |
| Opening accumulated amortisation/depreciation and impairments | -96 | -285 | -381 | -95 | -226 | -321 |
| Reclassification | – | – | – | – | 0 | 0 |
| Sales/disposals | 23 | – | 23 | – | 2 | 2 |
| Foreign currency translation differences | 2 | 12 | 14 | 3 | -4 | -1 |
| Impairments for the year | – | 0 | 0 | -5 | – | -5 |
| Amortisation/depreciation for the year | – | -75 | -75 | – | -57 | -57 |
| Closing accumulated amortisation/depreciation and impairments | -71 | -348 | -419 | -96 | -285 | -381 |
| CLOSING CARRYING AMOUNT | 5,752 | 416 | 6,168 | 2,163 | 121 | 2,283 |
| By business area | ||||||
| Sweco Sweden | 2,033 | 870 | ||||
| Sweco Norway | 352 | 388 | ||||
| Sweco Finland | 830 | 845 | ||||
| Sweco Denmark | 933 | – | ||||
| Sweco Netherlands | 250 | – | ||||
| Sweco Western Europe | 956 | 6 | ||||
| Sweco Central Europe | 399 | 54 | ||||
| Capitalised development costs for software | 89 | 10 | ||||
| Assets capitalised on acquisition | 327 | 110 | ||||
| CLOSING CARRYING AMOUNT | 5,752 | 416 | 2,163 | 121 |
Self-developed software of SEK 4 million was capitalised in the Netherlands during the year, while other intangible assets were acquired through acquisition or purchase. See also Note 7 regarding impairment of goodwill. In the above table, borrowing costs are not included in asset acquisition costs.
| Other intangible assets | 2015 | 2014 |
|---|---|---|
| Opening acquisition costs | 16 | 15 |
| Purchases from Group companies | 64 | – |
| Purchases | 20 | 1 |
| Closing accumulated acquisition costs | 100 | 16 |
| Opening accumulated amortisation | -14 | -10 |
| Amortisation for the year | -6 | -3 |
| Closing accumulated amortisation | -20 | -14 |
| CLOSING CARRYING AMOUNT | 81 | 2 |
Sweco's goodwill is allocated among the seven business areas in accordance with the table above and values are tested on an annual basis. Recoverable amounts for the cash-generating units are established based on value in use calculations. These calculations are based on five-year cash flow forecasts that reflect past experience and on external information sources. After the first five years, cash flow forecasts are based on an annual growth rate of 1 per cent, which is deemed equivalent to the long-term growth rate of the business areas' market.
The key variables that have a major impact on value in use calculations are sales growth, EBITA margin and the discount rate.
Demand for consulting services follows the general economic trend, particularly growth in GDP and fixed investments. Projected market growth is based on a transition from the prevailing market situation to the anticipated long-term growth rate. Sales growth is based on assumptions about market growth and assumptions about Sweco's market shares.
The EBITA margin is forecast based on an assessment of future profitability with reference to historical outcomes, concrete action plans and an assessment of future potential.
The discount rate was calculated as the weighted average cost of debt and equity, taking into consideration each country's specific market conditions relating to risk-free rates of interest and risk premiums.
Based on the results of this test, no write-down is needed.
The table "Impairment tests for cash-generating units with goodwill" shows the (assumed) values used to determine value in use and the (adjusted) values that result in a recoverable amount that is equal to the carrying amount, assuming that all other variables are held constant.
Impairment tests for cash-generating units with goodwill, years 1-5
| 2015 | Sweco Sweden | Sweco Norway | Sweco Finland | Sweco Central Europe | ||||
|---|---|---|---|---|---|---|---|---|
| Variable | Assumed value | Adjusted value | Assumed value | Adjusted value | Assumed value | Adjusted value | Assumed value | Adjusted value |
| Average sales growth, % | 4.0 | -22.2 | 2.0 | -34.2 | 2.1 | -14.6 | 1.7 | -10.1 |
| Average EBITA margin, % | 8.7 | 3.0 | 8.5 | 1.7 | 7.9 | 3.8 | 7.2 | 5.3 |
| Pre-tax discount rate, % | 8.0 | 24.6 | 8.5 | 58.4 | 7.7 | 14.9 | 8.0 | 11.4 |
| 2015 | Sweco Denmark | Sweco Netherlands | Sweco Western Europe | |||
|---|---|---|---|---|---|---|
| Variable | Assumed value | Adjusted value | Assumed value | Adjusted value | Assumed value | Adjusted value |
| Average sales growth, % | 3.2 | -8.2 | 1.1 | -25.4 | 3.0 | -2.6 |
| Average EBITA margin, % | 5.5 | 3.9 | 2.2 | 0.0 | 7.3 | 6.4 |
| Pre-tax discount rate, % | 6.7 | 10.6 | 7.2 | 109.8 | 9.1 | 10.9 |
| 2014 | Sweco Sweden | Sweco Norway | Sweco Finland | Sweco Central Europe | ||||
|---|---|---|---|---|---|---|---|---|
| Variable | Assumed value | Adjusted value | Assumed value | Adjusted value | Assumed value | Adjusted value | Assumed value | Adjusted value |
| Average sales growth, % | 4.0 | -36.9 | 4.2 | -34.6 | 3.6 | -18.2 | 1.3 | -7.8 |
| Average EBITA margin, % | 9.5 | 2.0 | 9.6 | 1.6 | 8.5 | 3.1 | 6.8 | 5.5 |
| Pre-tax discount rate, % | 7.7 | 43.5 | 8.3 | 62.6 | 7.4 | 18.3 | 10.8 | 13.4 |
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| Buildings and land | Equipment | Total | Buildings and land | Equipment | Total | |
| Opening acquisition costs | 55 | 958 | 1,014 | 53 | 862 | 915 |
| Purchases | 0 | 217 | 217 | 0 | 174 | 174 |
| Increase through acquisitions | 96 | 142 | 238 | – | 2 | 2 |
| Decrease through divestiture of companies | – | -1 | -1 | – | -1 | -1 |
| Reclassification | – | -31 | -31 | – | 0 | 0 |
| Sales/disposals | -1 | -202 | -203 | – | -81 | -81 |
| Foreign currency translation differences | -3 | -8 | -11 | 2 | 2 | 4 |
| Closing accumulated acquisition costs | 147 | 1,075 | 1,222 | 55 | 958 | 1,014 |
| Opening accumulated amortisation/depreciation and impairments | -14 | -601 | -614 | -9 | -511 | -520 |
| Reclassification | – | 27 | 27 | 0 | 0 | 0 |
| Sales/disposals | 0 | 179 | 179 | – | 54 | 54 |
| Foreign currency translation differences | 0 | 1 | 1 | -1 | 0 | -1 |
| Impairments | -4 | -1 | -5 | – | -4 | -4 |
| Impairments for the year | -3 | -168 | -171 | -4 | -139 | -143 |
| Closing accumulated depreciation | -20 | -563 | -583 | -14 | -601 | -614 |
| CLOSING CARRYING AMOUNT | 127 | 512 | 639 | 42 | 358 | 399 |
| Of which, land: | ||||||
| Opening acquisition costs | 0 | – | 0 | 0 | – | 0 |
| Foreign currency translation differences | 0 | – | 0 | 0 | – | 0 |
| Increase through acquisitions | 13 | – | 13 | – | – | – |
| Closing carrying amount, land | 13 | – | 13 | 0 | – | 0 |
| Of which, equipment financed through finance leases: | ||||||
| Closing accumulated acquisition costs | 32 | 148 | 180 | – | 144 | 144 |
| Closing accumulated depreciation | 0 | -61 | -61 | – | -52 | -52 |
| Closing carrying amount of finance leases | 32 | 87 | 119 | – | 92 | 92 |
| Of which, closing carrying amount of property, plant and equipment under construction |
– | 7 | 7 | – | – | – |
| Finance lease purchases for the year | – | 37 | 37 | – | 37 | 37 |
| Other purchases of property, plant and equipment for the year | – | 179 | 179 | – | 137 | 137 |
| Total property, plant and equipment purchases for the year | – | 217 | 217 | – | 174 | 174 |
| Equipment | 2015 | 2014 |
|---|---|---|
| Opening acquisition costs | 78 | 52 |
| Purchases | 36 | 25 |
| Purchases from other group companies | – | 0 |
| Closing accumulated acquisition costs | 113 | 78 |
| Opening accumulated depreciation | -40 | -24 |
| Depreciation for the year | -24 | -16 |
| Closing accumulated depreciation | -64 | -40 |
| CLOSING CARRYING AMOUNT | 50 | 38 |
1) Holding company 2) Dormant company 3) Real estate company
| Change in carrying amount for the year | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| Opening carrying amount | 1,098 | 1,073 | ||||
| Shareholders' contribution | 38 | 23 | ||||
| Acquisition of subsidiaries | 3,372 | – | ||||
| Acquisition from other group companies | – | 1 | ||||
| CLOSING CARRYING AMOUNT | 4,508 | 1,098 | ||||
| Shareholdings at year end | Corp. ID number | Domicile | Share of equity, % | No. of shares | Carrying amount | |
| Directly owned companies | ||||||
| Sweco Central Europe AB1 | 556633-5831 | Stockholm | 100 | 1,000 | 0 | |
| Sweco Elektronik AB | 556301-1765 | Västerås | 100 | 2,000 | 42 | |
| Sweco Norge AS | 967032271 | Norway | 100 | 152,349 | 112 | |
| Sweco Finland Oy1 | 0871165-9 | Finland | 100 | 21,000 | 905 | |
| Sweco Western Europe AB1 | 556221-1689 | Stockholm | 100 | 4,005 | 64 | |
| Sweco Sverige AB1 | 556032-2496 | Stockholm | 100 | 100,000 | 10 | |
| Vattenbyggnadsbyrån AB2 | 556077-9471 | Stockholm | 100 | 1,000 | 1 | |
| Vattenbyggnadsbyrån Export AB2 | 556079-1336 | Stockholm | 100 | 4,500 | 1 | |
| Sweco International AB | 556862-9918 | Stockholm | 100 | 500 | 1 | |
| Grontmij N.V.1 | 30029428 | Netherlands | 100 | 74,143,622 | 3,372 | |
| Total shareholdings and participations in group companies | 4,508 | |||||
| Indirectly owned companies | ||||||
| Through Sweco Central Europe AB | ||||||
| Sweco Hydroprojekt a.s. | 26475081 | Czech Republic | 100 | 10 | ||
| UAB Sweco Lietuva | 301135783 | Lithuania | 99 | 6,104,021 | ||
| UAB Energy Consulting | 135906643 | Lithuania | 100 | 400 | ||
| UAB Sweco Hidroprojektas | 132118698 | Lithuania | 99 | 1,000,702 | ||
| Sweco Polska sp.z o.o. | 56155 | Poland | 100 | 266,384 | ||
| Sweco Energoproekt JSC | 1305488081 | Bulgaria | 73 | 400 | ||
| Sweco Projekt AS | 11304200 | Estonia | 100 | 355,463 | ||
| Sweco EST OÜ | 10633373 | Estonia | 100 | 1 | ||
| SIA Büvuzraudziba Latvija2 | 40103203346 | Latvia | 100 | 1 | ||
| Through Sweco Finland Oy | ||||||
| Sweco Asiantuntijapalvelut Oy | 2635440-5 | Finland | 100 | 10,000 | ||
| Contesta Oy | 1712699-6 | Finland | 100 | 10,000 | ||
| FMC Laskentapalvelut Oy | 1013429-9 | Finland | 100 | 16,667 | ||
| Insinööritoimisto Savon Controlteam Oy | 1054205-7 | Finland | 100 | 100 | ||
| Sweco Industry Oy | 0350941-9 | Finland | 100 | 1,920,000 | ||
| Kiinteistö Oy Sammonpiha3 | 0770284-4 | Finland | 75 | 166 | ||
| Sweco Mecaplan Oy | 1648295-6 | Finland | 57 | 54 | ||
| Sweco PIC Engenharia LTDA2 | 07.984.459/001-16 | Brazil | 100 | 34,999 | ||
| Insinööritoimisto Valcon Oy | 0772679-5 | Finland | 100 | 1,200 | ||
| Sweco International Oy | 2635445-6 | Finland | 100 | 10,000 | ||
| Sweco India Pvt. Ltd. | AABCF0979RST001 | India | 100 | 10,000 | ||
| OOO Sweco Stroiproject | 7806311117 | Russia | 100 | |||
| Sweco PM Oy | 2635438-4 | Finland | 100 | 10,000 | ||
| Fennopro-Consulting Oy | 0928019-2 | Finland | 100 | 60 | ||
| Rakennuttajatoimisto Demaco Oy | 0989011-8 | Finland | 100 | 80 | ||
Sweco Rakenntekniikka Oy 2635439-2 Finland 100 10,000 Sweco Projekt Oy1 2627577-4 Finland 100 100 Sweco Talotekniikka Oy 0957613-7 Finland 100 1,000 Sweco Ympäristö Oy 0564810-5 Finland 100 1,000
| Shareholdings at year end | Corp. ID number | Domicile | Share of equity, % | No. of shares |
|---|---|---|---|---|
| Through Sweco Sverige AB | ||||
| Sweco Architects AB | 556173-0606 | Stockholm | 100 | 20,000 |
| Aros Arkitekter AB2 | 556665-0700 | Stockholm | 100 | 10,000 |
| Metro Arkitekter AB2 | 556756-2516 | Gothenburg | 100 | 7,000 |
| Sweco Architects A/S | 13 64 20 01 | Denmark | 96 | 11,814 |
| Sweco Architects Oy | 0635637-4 | Finland | 100 | 100 |
| Arkkitehtitoimisto Brunow & Maunula Oy | 0399591-2 | Finland | 100 | 100 |
| Sweco China Holding AB2 | 556730-8167 | Stockholm | 100 | 102 |
| Sweco Connect AB2 | 556083-8624 | Stockholm | 100 | 15,000 |
| Sweco Energuide AB | 556007-5573 | Stockholm | 100 | 60,000 |
| Sweco Environment AB | 556346-0327 | Stockholm | 100 | 20,000 |
| Sweco-COWI Joint Venture AB2 | 556085-5867 | Stockholm | 100 | 1,000 |
| Sweco Strategy AB | 556342-6559 | Stockholm | 100 | 3,000 |
| Stockholms stads Utrednings- och Statistikkontor AB | 556740-1640 | Stockholm | 100 | 1,000 |
| Sweco Industry AB | 556341-2476 | Stockholm | 100 | 20,000 |
| Alfakonsult AB2 | 556189-0418 | Gothenburg | 100 | 5,000 |
| Alfakonsult AS2 | 991 393 714 | Norway | 100 | 100 |
| Prows Industry & Management AB2 | 556415-9688 | Örebro | 100 | 2,000 |
| Sweco Civil AB | 556507-0868 | Stockholm | 100 | 120,000 |
| Sweco Management AB | 556140-0283 | Stockholm | 100 | 5,000 |
| Sweco Position AB | 556337-7364 | Stockholm | 100 | 1,250 |
| Sweco Structures AB | 556140-9557 | Stockholm | 100 | 20,000 |
| Sweco Systems AB | 556030-9733 | Stockholm | 100 | 1,500,000 |
| Wona AB1 | 556587-1497 | Gothenburg | 100 | 1,114 |
| Axro Holding AB1 | 556049-7330 | Gothenburg | 100 | 5,300 |
| Axro Consult AB | 556250-8480 | Gothenburg | 100 | 1,000 |
| Sweco TransportSystem AB | 556949-1698 | Stockholm | 100 | 500 |
| Inmind Scandinavia AB2 | 556701-0987 | Gothenburg | 100 | 2,500 |
| Sweco Rail AB | 556767-9849 | Solna | 100 | 1,000 |
| OTEC Elkonsult AB | 556581-1816 | Sollentuna | 100 | 1,000 |
| Grontmij Sverige AB | 556013-2341 | Stockholm | 100 | 53,000 |
| Grontmij AB | 556563-7237 | Stockholm | 100 | 18,000 |
| Teldako i Sundsvall AB | 556609-4990 | Stockholm | 100 | 1,000 |
| Through Grontmij N.V. | ||||
| Grontmij Nederland Holding B.V.1 | 30161447 | Netherlands | 100 | 5,000 |
| Grontmij Capital Consultants B.V. | 27091285 | Netherlands | 100 | 32,305 |
| Stoel Partners Holding B.V.1 | 05031421 | Netherlands | 100 | 240 |
| Stoel Partners Bouwtechniek B.V. | 05070722 | Netherlands | 100 | 180 |
| Verhoeven Raadgevende Ingenieurs B.V. | 31016314 | Netherlands | 100 | 250 |
| Grontmij Nederland B.V. | 30129769 | Netherlands | 100 | 1,816 |
| Grontmij Inc. | USA | 100 | 3,000 | |
| Grontmij Maunsell Holding B.V. | 30164459 | Netherlands | 100 | 102 |
| Grontmij Maunsell Infrastr. Consultancy Srv BV | 30164468 | Netherlands | 100 | 102 |
| Grontmij Vastgoedmanagement B.V. | 23064728 | Netherlands | 100 | 1,816 |
| Grontmij Assetmanagement Holding B.V.1 | 30136340 | Netherlands | 100 | 182 |
| Grontmij Beheer Reststoffenprojecten B.V.1 | 30078590 | Netherlands | 100 | 100 |
| Afvalverwerking IJssel-Vecht B.V.5 | 30103098 | Netherlands | 100 | 100 |
| Afvalverwerking Regio Oost-Groningen B.V.5 | 04079356 | Netherlands | 100 | 180 |
| Afvalverwerking Stainkoeln B.V.5 | 30097382 | Netherlands | 100 | 100 |
| Grontmij BRP International B.V.5 | 30156457 | Netherlands | 100 | 454 |
| Schenkenschans I B.V.5 | 30087893 | Netherlands | 100 | 100 |
| Secundaire Bouwstoffen Unie B.V.5 | 30093454 | Netherlands | 100 | 250 |
| Specie Bewerking Delfzijl B.V.5 | 30157433 | Netherlands | 100 | 182 |
| Top Gaarkeuken B.V.5 | 30139289 | Netherlands | 100 | 182 |
| Vagroen B.V.5 | 30132624 | Netherlands | 100 | 250 |
| Waterzuivering Milieuboulevard Groningen B.V.5 | 30158802 | Netherlands | 100 | 40 |
| Grontmij Nederland Projecten B.V.3 | 30163316 | Netherlands | 100 | 200 |
| Golfexploitatiemaatschappij Naarderbos B.V.3 | 53984595 | Netherlands | 100 | 18,000 |
| Grontmij Nederland Ontwikkeling B.V.3 | 30217429 | Netherlands | 100 | 1,800 |
| Grontmij Real Estate Nederland B.V.3 | 30149254 | Netherlands | 100 | 454 |
| MaasBilt B.V.3 | 30039313 | Netherlands | 100 | 45,379 |
| Naarderbos Ontwikkeling B.V.3 | 37105570 | Netherlands | 100 | 18,000 |
| Park Frederiksoord B.V.3 | 04062318 | Netherlands | 65 | 460 |
| Grontmij Vastgoed Holding B.V.1 | 30146673 | Netherlands | 100 | 5,000 |
| Coman Holding B.V.2 | 14627570 | Netherlands | 100 | 320 |
| Grontmij Vastgoed Contracting B.V.1 | 14626661 | Netherlands | 100 | 100 |
| Grontmij Business Services B.V.1 | 30116897 | Netherlands | 100 | 4,550 |
| Assutex C.V.4 | 30122026 | Netherlands | 100 | |
| Grontmij International B.V.1 | 30223584 | Netherlands | 100 | 180 |
| Shareholdings at year end | Corp. ID number | Domicile | Share of equity, % | No. of shares |
|---|---|---|---|---|
| Through Grontmij N.V., cont'd. | ||||
| Sweco Denmark Holding ApS1 | 31862671 | Denmark | 100 | 600,000 |
| Sweco Denmark A/S | 48233511 | Denmark | 100 | 62,800,896 |
| A/S af 20/11 19802 | 83049316 | Denmark | 100 | 1 |
| GSA Gesellschaft für Strassenanalyse GmbH | HRB 2231 | Germany | 100 | 1 |
| Sweco Pavement Consultants AS | 961 168 848 | Norway | 100 | 1,500 |
| Sweco Pavement Consultants AB | 556228-0361 | Sweden | 100 | 10,006 |
| Grontmij Belgium Holding NV1 | BE0423285828 | Belgium | 100 | 3,944,591 |
| BnS Contracting nv | BE0456066086 | Belgium | 100 | 250 |
| Grontmij Belgium NV | BE0405647664 | Belgium | 100 | 218,248 |
| Grontmij Contracting NV | BE0419330703 | Belgium | 100 | 18,252 |
| Grontmij Group Ltd.1 | 2237772 | UK | 100 | 31,243,690 |
| Grontmij Ireland Ltd. | 120358 | Ireland | 100 | 175,100 |
| Grontmij Ltd. | 2888385 | Ireland | 100 | 8,214,013 |
| RP+K International Ltd2 | 2749020 | UK | 100 | 2 |
| Roger Preston & Partners Ltd2 | 2748664 | UK | 100 | 56 |
| Roger Preston Ltd2 | 1207754 | UK | 100 | 24 |
| Grontmij Services Ltd.1 | 2707426 | UK | 100 | 200 |
| Roger Preston Group Ltd1 | 6546246 | UK | 100 | 1 |
| Whitelaw Turkington Landscape Architects Ltd2 | 4369622 | UK | 100 | 11,500 |
| Grontmij Holding France SNC1 | 523637593 | France | 100 | 2,080,360 |
| Grontmij Mühendislik Müsavirlik ve T. LTD Sir | 662694 | Turkey | 100 | 100 |
| Grontmij China B.V.1 | 4084398 | Netherlands | 100 | 200 |
| Grontmij Hubei Engineering Consulting Co. Ltd | 91420100568398 | China | 100 | 8,081,686 |
| Grontmij GmbH | HRB21768HB | Germany | 100 | 200 |
| Grontmij Polska Sp. z o.o. | 0000140225 | Poland | 100 | 30,469 |
| Grontmij Participations B.V.1 | 31034252 | Netherlands | 100 | 11,350 |
| 1) Holding company |
2) Dormant company
3) Real estate company 4) Insurance company
5) Waste treatment company
Most of the Group's subsidiaries are consulting firms. Group subsidiaries also include holding companies, dormant companies, real estate companies, insurance companies and waste management companies, as shown in the table above. All material subsidiaries are owned by a majority of the votes. No non-controlling interests are material to the Group.
Financial information for non-material shareholdings in associated companies, based on amounts included in the consolidated financial statements, is detailed below.
| Group's share of: | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| Profit for the year | 4 | 0 | ||||
| Capital gain on sale of associated company | -2 | – | ||||
| Other comprehensive income | 0 | 0 | ||||
| TOTAL COMPREHENSIVE INCOME | 2 | 0 | ||||
| Shareholdings at year end | Corp. ID number | Domicile | Share of equity, % | No. of shares | Carrying amount | |
| 2015 | ||||||
| Through Sweco Finland Oy | ||||||
| Geotek Oy | 0923058-2 | Finland | 45 | 45 | 5 | |
| Betonialan Ohuthiekeskus FMC OY | 1713909-2 | Finland | 33 | 33 | 0 | |
| Through Sweco Danmark A/S | ||||||
| Odeon A/S | 26391253 | Denmark | 22 | 600,000 | 1 | |
| PavEx Consulting s.r.o. | cz63487624 | Czech Republic | 50 | 0 | ||
| Through Grontmij Belgium NV | ||||||
| Arteum Architects BVBA | BE0896004242 | Belgium | 40 | 100 | 0 | |
| Through Grontmij GmbH | ||||||
| Concept Ingenerie S.A. | B155341997 | Tunisia | 34 | 0 | ||
| Through Grontmij NV | ||||||
| Aerosat Surveys Ltd. | Ghana | 33 | 0 | |||
| Total shares and participations | 6 | |||||
| 2014 | ||||||
| Through Sweco Finland Oy | ||||||
| Rapcon Oy | 0944024-8 | Finland | 40 | 40 | 0 | |
| Geotek Oy | 0923058-2 | Finland | 45 | 45 | 4 | |
| Betonialan Ohuthiekeskus FMC OY | 1713909-2 | Finland | 33 | 33 | 0 | |
| Total shares and participations | 5 |
In 2015 the joint venture company 12E Energisystemintegration AB was liquidated and the holding in SWECO Sojyz Engineering was reclassified to Other holdings with 10 per cent ownership share. Remaining joint ventures are holdings gained through acquisitions. Holdings mainly operate within real estate development and none are of a significant size.
| GROUP | ||||||
|---|---|---|---|---|---|---|
| Holdings in joint ventures at year end | Corp. ID number | Domicile | Share of equity, % | Carrying amount | ||
| 2015 | ||||||
| Other holdings in joint ventures | 2 | |||||
| Total | 2 | |||||
| 2014 | ||||||
| SWECO Sojyz Engineering (owned through Sweco Industry Oy) | 5077746846920 | Russia | 45 | 3 | ||
| I2E Energisystemintegration AB (owned through Sweco Energuide AB) | 556211-9684 | Stockholm | 50 | 1 | ||
| Total | 4 | |||||
| Group's share of: | 2015 | 2014 | ||||
| Profit for the year | -1 | 0 | ||||
| Other comprehensive income | 0 | -0 | ||||
| TOTAL COMPREHENSIVE INCOME | -1 | -0 | ||||
| Holdings in joint operations at year end | Corp. ID number | Domicile | Share of equity, % | |||
| 2015 | ||||||
| Sweco ÅF Healthcare Systems AB (owned through Sweco Systems AB) | 556881-5764 | Sweden | 50 | |||
| 2014 | ||||||
| Sweco ÅF Healthcare Systems AB (owned through Sweco Systems AB) | 556881-5764 | Sweden | 50 | |||
| Group's shareholdings in joint operations | 2015 | 2014 | ||||
| Operating income | 27 | 29 | ||||
| Operating costs | -27 | -29 | ||||
| PROFIT FOR THE YEAR | 0 | 0 | ||||
| Current assets | 231 | 216 | ||||
| Total assets | 231 | 216 | ||||
| Current liabilities | -231 | -216 | ||||
| Total liabilities | -231 | -216 | ||||
| NET ASSETS | 0 | 0 |
There are no pledged assets or contingent liabilities.
| Change in carrying amount for the year | 2015 | 2014 |
|---|---|---|
| Opening carrying amount | 13 | 12 |
| Acquisition of other shares | 274 | 0 |
| Reclassification | -290 | – |
| Gained through acquisition | 1 | 0 |
| Revaluation of holding in Grontmij NV | 16 | – |
| Foreign currency translation difference | 0 | 1 |
| CLOSING CARRYING AMOUNT | 14 | 13 |
Financial investments are classified as available-for-sale financial assets. Assets in this category are regularly measured at fair value with changes in value reported in other comprehensive income. An impairment loss is recognised in the income statement when necessary. See also Note 8.
| Domicile | Share of equity, % | No. of shares | Carrying amount | |
|---|---|---|---|---|
| 716414-8764 | Åre | 1 | ||
| 1709135-9 | Finland | 3 | 1 | |
| 0235274-7 | Finland | 15 | 397 | 3 |
| 0575992-1 | Finland | 13 | 444 | 5 |
| 5077746846920 | Russia | 10 | 0 | |
| 4 | ||||
| 14 | ||||
| BRF Störtloppet | 716414-8764 | Åre | 1 | ||
|---|---|---|---|---|---|
| Hirsala Golf Oy | 1709135-9 | Finland | 3 | 1 | |
| Kiinteistöosakeyhtiö Kuopion Puijonkatu 26-28 | 0235274-7 | Finland | 15 | 397 | 3 |
| Kiinteistö Oy Paalupuisto | 0575992-1 | Finland | 13 | 444 | 5 |
| Other shares and participations | 3 | ||||
| Total shares and participations | 13 |
| Change in carrying amount for the year | 2015 | 2014 | |
|---|---|---|---|
| Opening carrying amount | 1 | 1 | |
| CLOSING CARRYING AMOUNT | 1 | 1 | |
| Shareholdings at year end | Corp. ID number | Domicile | Carrying amount |
| 2015 | |||
| BRF Störtloppet | 716414-8764 | Åre | 1 |
| Total shares and participations | 1 | ||
| 2014 | |||
| BRF Störtloppet | 716414-8764 | Åre | 1 |
| Total shares and participations | 1 |
| Change in carrying amount for the year | 2015 | 2014 |
|---|---|---|
| Non-current assets | ||
| Opening carrying amount | 961 | 957 |
| Lending to group companies | 878 | 2 |
| Capitalised interest | – | 2 |
| Recovered receivables | – | -0 |
| Foreign currency translation difference | -1 | 1 |
| Closing carrying amount | 1,837 | 961 |
| Current assets | ||
| Opening carrying amount | 1,696 | 1,560 |
| Change for the year | 145 | 136 |
| Closing carrying amount | 1,841 | 1,696 |
| TOTAL RECEIVABLES FROM GROUP COMPANIES | 3,678 | 2,657 |
| 2015 | |||||
|---|---|---|---|---|---|
| Change in carrying amount for the year | Held-to-maturity investments |
Other non-current receivables |
Total | Other non-current receivables |
Total |
| Opening non-current receivables | – | 7 | 7 | 8 | 8 |
| Increase in receivables | 1 | 9 | 10 | – | – |
| Increase through acquisitions | 82 | 6 | 88 | – | – |
| Decrease in receivables | – | -3 | -3 | -1 | -1 |
| Foreign currency translation difference | -1 | 0 | -1 | 0 | 0 |
| CLOSING NON-CURRENT RECEIVABLES | 82 | 19 | 100 | 7 | 7 |
| Non-current receivables at year end | |||||
| Pension receivables as per Note 28 | – | 1 | 1 | – | – |
| Other receivables | 82 | 18 | 99 | 7 | 7 |
| TOTAL NON-CURRENT RECEIVABLES | 82 | 19 | 100 | 7 | 7 |
Held-to-maturity investments refer to a bank deposit to cover future cash outflows in connection with costs associated with one of the Group's landfills. The balance serves as collateral for the landfill licensee.
GROUP
| 2015 | 2014 | |
|---|---|---|
| Work in progress less progress billings | ||
| Value of work completed | 6,835 | 3,141 |
| Progress billings | -4,814 | -2,143 |
| NET WORK IN PROGRESS LESS PROGRESS BILLINGS | 2,021 | 998 |
| Progress billings in excess of work in progress | ||
| Value of work completed | 3,495 | 1,050 |
| Progress billings | -4,931 | -1,531 |
| NET WORK IN PROGRESS IN EXCESS OF PROGRESS BILLINGS | -1,436 | -481 |
| Group | Parent Company | |||
|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | |
| Prepaid rents | 75 | 56 | – | – |
| Prepaid insurance premiums | 21 | 6 | – | – |
| Prepaid IT expenses | 16 | – | – | – |
| Accrued interest income | 6 | – | 0 | – |
| Other accrued income | 2 | 3 | – | 0 |
| Prepaid licence expenses | 43 | 21 | 43 | 21 |
| Other prepaid expenses | 135 | 172 | 47 | 55 |
| TOTAL | 298 | 257 | 89 | 76 |
Surplus cash is invested in fixed-income securities such as commercial paper or certificates of deposit, where the funds are held for a predetermined period of time. Commercial paper is recognised in the balance sheet and the cash flow statement as short-term investments, which are included in current receivables. Commercial paper is classified as financial assets at fair value through profit or loss. Deposits are recognised as short-term liquid investments, which are included in cash and cash equivalents. Sweco always has the option of immediately withdrawing the deposited funds prior to the maturity date, but could then lose part of the higher interest payable on the funds.
Short-term investments have been classified as cash and cash equivalents on the basis that:
| Cash and cash equivalents in the balance sheet |
Group | Parent Company | |||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| Cash/bank | 544 | 173 | 13 | 2 | |
| Short-term liquid investments | – | 1 | – | – | |
| TOTAL CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS |
544 | 174 | 13 | 2 |
There was no commercial paper in Sweco Group at 31 December 2015 or 2014.
| Change in number of shares1 | A shares | B shares | C shares | Total |
|---|---|---|---|---|
| Number of shares at 1 January 2014 |
9,372,364 | 81,740,518 | 91,112,882 | |
| Issuance of treasury shares | – | – | 900,000 | 900,000 |
| Repurchase of treasury shares |
– | -349,472 | -900,000 | -1,249,472 |
| Conversion of A shares to B shares |
-4,200 | 4,200 | – | – |
| NUMBER OF SHARES AT 31 DECEMBER 2014 |
9,368,164 | 81,395,246 | – | 90,763,410 |
| Preferential rights issue | 1,171,020 | 12,123,925 | – | 13,294,945 |
| Issue in kind | – | 14,949,247 | – | 14,949,247 |
| Issuance of treasury shares – share savings scheme |
– | 57,122 | – | 57,122 |
| Issuance of treasury shares – share bonus scheme |
– | 449,961 | – | 449,961 |
| Sale of treasury shares | – | 139,825 | – | 139,825 |
| Issuance of treasury shares | – | – | 900,000 | 900,000 |
| Repurchase of treasury shares |
– | -117,000 | -900,000 | -1,017,000 |
| NUMBER OF SHARES AT 31 DECEMBER 2015 |
10,539,184 | 108,998,326 | – | 119,537,510 |
1) After deduction for treasury shares.
A statement of changes in equity is found on page 46 for the Group and on page 50 for the Parent Company. Additional information about the Sweco share is provided on pages 85–87.
The purchase price for 100 per cent of Grontmij's shares was SEK 3,337 million, of which approximately SEK 1,537 million in cash and SEK 1,800 million in newly issued Sweco Class B shares. An issue in kind of 14,949,247 Sweco Class B shares was therefore conducted.
The cash component of the acquisition was initially financed with a bridge loan, most of which has been repaid through the preferential rights issue conducted during the fourth quarter. Under the rights issue, 13,294,945 new shares were issued at SEK 81 per share. Issue proceeds totalled SEK 1,077 million, raising SEK 1,062 million of equity for Sweco net of issue expenses of SEK 15 million.
The total number of votes is 21,594,748.6: 10,539,184 represented by Class A shares, 10,965,564.6 by Class B shares and 90,000 by Class C shares. Sweco repurchased 117,000 Class B shares during the year for SEK 14 million, corresponding to SEK 120.46 per share. During the year 900,000 Class C shares were issued for settlement of the 2015 Share Bonus Scheme. Sweco sold 139,825 Class B shares for SEK 17 million during the year, corresponding to SEK 118.87 per share.
The quota value per share is 1. All shares carry entitlement to dividends, which are determined yearly at the Annual General Meeting. Class A shares carry one vote and Class B shares carry 1/10 of one vote. All shares grant equal entitlement to the company's remaining net assets. With regard to treasury shares, all rights are suspended until these shares are reissued.
Other contributed capital is comprised of equity contributed by the shareholders in the form of shares and other equity instruments issued at a premium, meaning that the amount paid exceeds the quota value of the shares.
Reserves are comprised of a translation reserve containing all exchange differences arising on the translation of foreign operations to another currency.
Retained earnings including profit for the year are comprised of profits earned in the Parent Company and its subsidiaries, associated companies and joint ventures. Retained earnings have been charged with the historical cost of treasury shares held by the Parent Company, its subsidiaries and associated companies. Upon utilisation of treasury shares, an amount equal to the market value of the shares is transferred to retained earnings. At 31 December 2015 the Group's holding of treasury shares amounted to 657,320 (753,437) Class B shares. The treasury shares were purchased at an average price of SEK 84.16 each, for a total of SEK 55 million. The market value at 31 December 2015 was SEK 82 million. Sweco holds 900,000 Class C shares to enable delivery of shares to employees participating in the 2015 Share Bonus Scheme. These shares will be converted to Class B shares prior to delivery. The repurchased shares correspond to 1.3 per cent of the total number of shares and 0.7 per cent of the votes.
dividend per share – were restated in accordance with IAS 33.
After the balance sheet date, the Board of Directors proposed the following capital distribution to shareholders for resolution by the Annual General Meeting on 14 April 2016.
| 2015 | 2014 | ||||
|---|---|---|---|---|---|
| Dividend of SEK 3.50 per common share (3.37 SEK1 ) |
421 | 318 | |||
| 1) Due to the preferential rights issue conducted during Q4 2015, all historical share-related key ratios – including |
Amounts for 2015 were calculated including treasury shares. Accordingly, the change in value may be lower if the shares remain in treasury. Should the Board exercise the authority granted it by the April 2015 AGM to acquire additional treasury shares, the amount distributed to the shareholders may be further reduced.
Restricted reserves
Restricted reserves may not be reduced through distribution to shareholders.
The purpose of the statutory reserve is to set aside a portion of net profit that is not used to cover an accumulated deficit. This includes the part of the share premium reserve that was transferred on 31 December 2005. The share premium reserve arose through the issue of equity instruments (shares and subscription warrants) at a premium, meaning that the amount paid exceeded the quota value of the shares.
The share premium reserve arose through the issue of shares and subscription warrants at a premium, meaning that the amount paid exceeded the quota value of the shares.
Retained earnings are comprised of the previous year's non-restricted equity after deduction of dividends. Retained earnings together with profit for the year, the share premium reserve and any fair value reserves comprise total non-restricted equity; ie, the amount available for distribution to shareholders.
| Change in carrying amount | Group | Parent Company | |||
|---|---|---|---|---|---|
| for the year | 2015 | 2014 | 2015 | 2014 | |
| Non-current interest-bearing liabilities |
|||||
| Liabilities to credit institutions | 1,879 | 1,009 | 1,890 | 962 | |
| Liabilities under finance leases as per Note 29 |
107 | 77 | – | – | |
| Total | 1,985 | 1,086 | 1,890 | 962 | |
| Current interest-bearing liabilities |
|||||
| Bank overdraft facilities | 94 | 325 | 201 | 276 | |
| Other liabilities to credit institutions |
130 | – | – | – | |
| Liabilities under finance leases as per Note 29 |
23 | 25 | – | – | |
| Total | 246 | 350 | 201 | 276 | |
| TOTAL INTEREST-BEARING LIABILITIES |
2,232 | 1,436 | 2,092 | 1,238 |
All financial liabilities are recognised at amortised cost. Other liabilities to credit institutions essentially refer to financing of acquisitions. The most important covenant in the loan agreements refers to net debt/EBITDA. All covenants were met by a wide margin at the end of the reporting period. The bank overdraft facilities are renewed yearly and are not associated with any special conditions or obligations.
| Group | Parent Company | |||
|---|---|---|---|---|
| Loan maturity structure | 2015 | 2014 | 2015 | 2014 |
| 0–1 year | 248 | 350 | 201 | 276 |
| 1–5 years | 1,943 | 1,080 | 1,891 | 962 |
| 5 years and later | 41 | 5 | – | – |
| 2,232 | 1,436 | 2,092 | 1,238 |
The fixed interest period for all loans is less than one year.
The cash component of the Grontmij acquisition was initially financed with a bridge loan, most of which has been repaid through the preferential rights issue conducted during the fourth quarter. The remainder of the bridge loan was transferred to Sweco's long-term financing. Grontmij's long-term loans were refinanced with a new 5-year EUR 110 million revolving credit facility. The terms of the new credit facility are in line with Sweco's existing loan financing. The refinancing will save up to SEK 19 million annually in net financial income, as compared with Grontmij's original financing costs.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| Credits granted | 3,823 | 2,404 | 3,593 | 2,224 | |
| Credits unutilised on balance sheet date |
-2,232 | -1,436 | -2,092 | -1,238 | |
| UNUTILISED CREDITS | 1,591 | 969 | 1,501 | 986 | |
| Average interest rate, % | 1.14 | 1.76 | 1.09 | 1.71 |
The Group's retirement pension obligations for salaried employees in Sweden are secured through insurance in Alecta and AI Pension (AIP). According to statement UFR 3 from the Swedish Accounting Standards Board's Urgent Issues Task Force, Alecta is a "multi-employer" plan. The AIP pension plan is similarly structured and is therefore reported in the same manner. The Group has not had access to sufficient information to report these as defined benefit pension plans. Consequently, the ITP-based pension plans which are secured through insurance in Alecta and AIP are reported as defined contribution plans. Surpluses in Alecta and AIP can be refunded to the policyholders and/or the insureds. At the end of 2015 Alecta's surplus measured as a collective consolidation ratio was 171 per cent (143) and AIP's was 144 per cent (131). The collective consolidation ratio is the market value of Alecta's and AIP's plan assets as a percentage of insurance obligations computed according to their own actuarial assumptions, which are not consistent with IAS 19.
Sweco Norge AS has several defined benefit pension plans with similar demographic and financial assumptions. Assets and liabilities in these plans are therefore computed according to the same actuarial assumptions. In 2014 the Norwegian Accounting Standards Board (NASB) changed its recommendation for future life expectancy, resulting in a SEK 76 million increase in the pension obligation.
Most of the Dutch pension plan is comprised of a collective defined contribution plan. Contribution is based on a fixed premium. The plan has no provisions covering additional funding by the Netherlands in the event of a deficit. According to pension fund estimates, the fund has reserves totalling 104.7 per cent as at 31 December 2015.
The Dutch defined benefit pension plan relates to a conditional early retirement plan for approximately 650 participants. The plan is only applicable to active employees who were younger than 56 years at 1 January 2006 and 31 December 2005. The plan is effective through 31 December 2020. The employer contribution through 31 December 2020 is a fixed annual amount of EUR 1.8 million.
Both plans are administered by Stichting Pensioenfonds Grontmij, a fund that is legally separated from the Group.
A curtailment gain of SEK 11 million is recognised in the income statement. This is attributable to the joint restructuring plans announced and partially implemented during 2015 in the Netherlands, which resulted in a significant reduction in staff.
The Netherlands previously contributed pension premiums for its employees to "Stichting Uittreding Werknemers Agrarische Sectoren (SUWAS)". SUWAS is under liquidation, and the remaining balance has been transferred in part to the pension funds belonging to companies that previously participated. The final amount of the reimbursement is set at EUR 2.3 million. This amount was received by the Dutch defined benefit pension plan in December 2015 and was recognised as pension cost earnings in the income statement in December 2015. The refund is used as additional funding for the defined benefit pension plan, in line with SUWAS liquidation documents provisions. The additional financing is reported as part of the employer's contribution in the change to the present value of plan assets.
Employees in Finland are covered by defined contribution pension plans. There is a defined benefit pension plan for supplementary pensions for employees added through the acquisition of Kemira Engineering Oy in 2004.
Germany and the UK participate in defined contribution pension plans with local pension funds or insurance companies. Both countries have limited defined benefit pension plans. The German plan is unfunded.
The Group participates in defined benefit pensions plans with local pension funds or insurance companies in Belgium, Poland and Denmark.
| 2015 | |||||
|---|---|---|---|---|---|
| Breakdown of net asset/ liability for defined benefit plans by country |
Norway Netherlands | Germany | Other | Total | |
| Present value of defined benefit pension obligations |
-482 | -68 | -34 | -40 | -625 |
| Fair value of plan assets | 427 | 51 | – | 36 | 514 |
| Liability for jubilee benefits | – | -14 | – | -4 | -18 |
| NET ASSET/LIABILITY FOR DEFINED BENEFIT PLANS |
-55 | -31 | -34 | -8 | -128 |
The scope of the defined benefit pension plans, more limited in previous periods, is expanding due to the acquisition of Grontmij. Gross amounts for the present value of defined benefit obligations and the fair value of defined benefit pension assets for the previous year relate primarily to Norway and total SEK -597 million and 463 million, respectively.
| Defined benefit pension plans in the balance sheet | 2015 | 2014 |
|---|---|---|
| Present value of defined benefit pension obligations | -625 | -597 |
| Fair value of plan assets | 514 | 463 |
| Liability for jubilee benefits | -18 | – |
| NET ASSET/LIABILITY FOR DEFINED BENEFIT PLANS | -128 | -134 |
| Other non-current receivables | 1 | – |
| Non-current pension provisions | -113 | -134 |
| Current pension provisions | -17 | – |
| NET BALANCE SHEET AMOUNT | -128 | -134 |
| Change in defined benefit pension obligations for the year | 2015 | 2014 |
| Defined benefit pension obligation at beginning of year | -597 | -487 |
| Current service costs | -25 | -13 |
| Curtailment gain | 11 | – |
| Interest expense | -15 | -20 |
| Revaluations: | ||
| – Actuarial gains and losses on changed demographic assumptions |
2 | – |
| – Actuarial gains and losses on changed financial assumptions | 58 | -93 |
| – Experienced-based adjustments | -6 | 0 |
| Adjustments and changes in the pension plan | 0 | 0 |
| Reclassification | 0 | -8 |
| Benefits paid | 33 | 18 |
| Increase through acquisitions | -137 | – |
| Foreign currency translation difference | 51 | 5 |
| Defined benefit pension obligation at year end | -625 | -597 |
| Change in fair value of plan assets for the year | 2015 | 2014 |
| Fair value of plan assets at beginning of year | 463 | 418 |
| Employer contributions | 27 | 31 |
|---|---|---|
| Contributions from plan participants | -16 | -16 |
| Interest income | 11 | 16 |
| Return on plan assets, excluding interest income | -1 | 1 |
| Actuarial gains and losses | 8 | 17 |
| Additional contributions | 26 | -2 |
| Benefits paid | -9 | – |
| Increase through acquisitions | 50 | – |
| Foreign currency translation difference | -45 | -3 |
| Fair value of plan assets at year end | 514 | 463 |
The Group's defined benefit obligation is distributed relatively equally between active members and retired employees. In Norway (which has the largest plan from a gross claim/liability perspective), the distribution is 50/50 between active and retired plan members.
| Plan assets are comprised of | 2015 | 2014 |
|---|---|---|
| Cash and cash equivalents and short-term investments | 5 | 8 |
| Shares | 24 | 43 |
| Private equity | 12 | 12 |
| Alternative investments (hedge funds) | 9 | 12 |
| Credits | 106 | 97 |
| Government bonds | 234 | 233 |
| Fixed-income securities | 19 | 18 |
| Real estate | 52 | 41 |
| Other | 53 | – |
| TOTAL PLAN ASSETS | 514 | 463 |
| Defined benefit pension plans | 2015 | 2014 |
|---|---|---|
| Net expense in the income statement | ||
| Current service costs | -25 | -13 |
| Curtailment gain | 11 | – |
| Net interest income/interest expense | -4 | -3 |
| TOTAL NET EXPENSE | -17 | -16 |
| Net expense is recognised in the income statement as | ||
| Personnel costs | -17 | -16 |
| Net expense in profit for the year | -17 | -16 |
| Expense recognised in other comprehensive income | ||
| Revaluations: | ||
| Actuarial gains (-) and losses (+) | 61 | -76 |
| Net expense recognised in other comprehensive income | 61 | -76 |
| NET EXPENSE RECOGNISED IN COMPREHENSIVE INCOME | 40 | -92 |
The defined benefit plans are exposed to actuarial risks such as life expectancy, currency, interest rate and investment risks.
| Norway | Netherlands | Germany | ||
|---|---|---|---|---|
| Actuarial assumptions, % | 2015 | 2014 | 2015 | 2015 |
| Discount rate | 2.7 | 2.3 | 2.4 | 2.2 |
| Anticipated return on plan assets |
2.7 | 2.3 | 2.4 | |
| Annual rate of salary increase | 2.5 | 2.8 | 0-1.5 | 2.0 |
| Annual rate of pension increase |
0.0 | 0.0 | 1.7 | 1.5-4.0 |
| Inflation | 2.3 | 2.8 | ||
| Life expectancy assumption | ||||
| – pensioned at end of period: | ||||
| Men | 21.0 | 20.7 | 21.0 | 15.0 |
| Women | 24.1 | 23.9 | 24.0 | 18.0 |
| Life expectancy assumption | ||||
| – pensioned 20 years after end of period: |
||||
| Men | 23.2 | 23.0 | 23.0 | 21.0 |
| Women | 26.5 | 26.3 | 25.0 | 25.0 |
The assumptions regarding future life expectancy are based on official statistics and historical experience in each country. At 31 December 2015 the weighted average maturity of the defined benefit plans was 15 years.
The provision for obligations arising due to jubilee benefits is calculated with a 1.6 per cent discount rate.
The table below presents possible changes in actuarial assumption on the balance sheet date (all other assumptions remaining constant) and how these would affect the defined benefit obligation.
| Defined benefit obligation, SEK M | Increase | Decrease |
|---|---|---|
| Discount rate (1% change) | 72 | 92 |
| Annual rate of salary increase (1% change) | 30 | 27 |
| Annual rate of pension increase (1% change) | 23 | 18 |
For financial year 2016, contributions to plans for post-retirement benefits are estimated at around SEK 20 million. The Group estimates that approximately SEK 21 million will be paid to defined benefit pension plans during 2016.
| Defined contribution pension plans | 2015 | 2014 |
|---|---|---|
| Allocation of expenses by pension plan | ||
| Sweden, Alecta | -258 | -224 |
| Sweden, AIP | -20 | -22 |
| Finland | -165 | -148 |
| Norway | -65 | -60 |
| Other countries | -35 | -2 |
| TOTAL | -543 | -456 |
| 2015 | |||||
|---|---|---|---|---|---|
| Change in fair value for the year | After-care | liabilities Restructuring | Other provisions |
Total | |
| Other provisions | |||||
| Opening balance, other provisions | – | – | – | – | |
| Increase through acquisition | 176 | 21 | 33 | 230 | |
| Provision for the year | 0 | 68 | 6 | 74 | |
| Utilised provision | 0 | -19 | -2 | -22 | |
| Reversal of unutilised provision | 2 | 0 | – | 2 | |
| Interest | 0 | 0 | – | 0 | |
| Foreign currency translation difference | -3 | -1 | -1 | -6 | |
| TOTAL OTHER PROVISIONS | 174 | 69 | 35 | 279 | |
| OF WHICH, CURRENT OTHER PROVISIONS |
1 | 68 | 16 | 85 |
The Group is responsible for the after-care of waste sites in the Netherlands and ensuring that waste products are processed for storage, and for securing long-term waste product maintenance. The provisions for landfill sites are calculated pursuant to IPO's RIINAS model (umbrella organisation for twelve provinces in the Netherlands) at a 4.00 to 5.00 per cent (4.00–5.00) discount rate.
SEK 5 million of the provision is attributable to the period 2017–20 and SEK 168 million to periods after 2020.
Provisions include the anticipated costs incurred as a result of the Group's decision to conduct restructuring activities, primarily related to operations in the Netherlands. Provisions for restructuring are only recognised when Sweco has a formal detailed restructuring plan in place and has notified those impacted by the plan as at 31 December 2015. Amounts are based on management's best estimates and are adjusted if there are changes to these estimates. Most of the provision as at 31 December 2015 will be used during the period 2016–17.
Other provisions refer primarily to the restoration of office space and future costs associated with disputes that have not been established.
| 2015 | 2014 | |||
|---|---|---|---|---|
| Present value |
Nominal amount |
Present value |
Nominal amount |
|
| In current interest-bearing liabilities |
||||
| Due within one year | 23 | 27 | 25 | 32 |
| Total current liabilities | 23 | 27 | 25 | 32 |
| In liabilities to credit institutions |
||||
| Due within more than one but less than five years |
73 | 74 | 73 | 85 |
| Due within more than five years |
34 | 34 | 4 | 5 |
| Total non-current liabilities | 107 | 108 | 77 | 90 |
| TOTAL LIABILITIES UNDER FINANCE LEASES |
130 | 135 | 101 | 122 |
Liabilities under finance leases are recognised in the balance sheet at present value. The above table also shows nominal liabilities, comprising the sum of future lease payments and residual value at the end of the lease period. Liabilities under finance leases arose during the year regarding the Naarderbos golf course in the Netherlands, a result of the acquisition of the Grontmij Group.
| Accrued expenses | Group | Parent Company | |||
|---|---|---|---|---|---|
| and prepaid income | 2015 | 2014 | 2015 | 2014 | |
| Accrued payroll costs | 148 | 69 | 3 | 4 | |
| Accrued holiday and overtime pay |
698 | 450 | 2 | 2 | |
| Accrued social fees | 387 | 297 | 6 | 6 | |
| Other personnel-related costs1 |
141 | – | 12 | – | |
| Accrued IT expenses | 4 | – | – | – | |
| Accrued audit and consulting costs |
14 | – | – | – | |
| Accrued rents | 17 | – | – | – | |
| Accrued waste management costs |
45 | – | – | – | |
| Accrued interest | 8 | 2 | 3 | 2 | |
| Prepaid income | 6 | – | – | – | |
| Other | 176 | 146 | 8 | 10 | |
| TOTAL ACCRUED EXPENSES AND PREPAID INCOME |
1,644 | 963 | 32 | 22 | |
| Other current liabilities | |||||
| VAT | 442 | 240 | – | – | |
| Employee withholding tax | 133 | 127 | 1 | 1 | |
| Derivatives | – | 4 | – | – | |
| Other | 175 | 78 | 5 | 2 | |
| TOTAL OTHER CURRENT LIABILITIES |
750 | 449 | 6 | 3 |
1) Other personnel-related costs include costs for personnel downsizing, particularly in the Netherlands.
| Group | Parent Company | ||||
|---|---|---|---|---|---|
| 2015 | 2014 | 2015 | 2014 | ||
| Contingent liabilities | |||||
| Guarantees for subsidiary liability |
– | – | 38 | 30 | |
| Performance bonds | 704 | 223 | 183 | 171 | |
| TOTAL | 704 | 223 | 221 | 201 |
Sweco AB has issued a guarantee pursuant to Article 2:403 of the Dutch Civil Law (Burgerlijk Wetboek) under which the Parent Company is the guarantor for liabilities and obligations of Dutch subsidiaries.
The fair value and carrying amount are recognised in the balance sheet as shown below. Carrying amount is considered a good approximation of fair value.
| Carrying amount | Fair value | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2015 | Assets held for trading |
Loans and receivables |
Available-for sale financial |
assets Other liabilities | Total carrying amount |
Level 1 | Level 2 | Level 3 | Total |
| Financial assets measured at fair value | |||||||||
| Shares | – | – | 14 | – | 14 | – | – | 14 | 14 |
| TOTAL | – | – | 14 | – | 14 | – | – | 14 | 14 |
| Financial assets not carried at fair value | |||||||||
| Non-current receivables | – | 99 | – | – | 99 | – | – | – | – |
| Trade receivables | – | 2,441 | – | – | 2,441 | – | – | – | – |
| Cash and cash equivalents | – | 544 | – | – | 544 | – | – | – | – |
| TOTAL | – | 3,084 | – | – | 3,084 | – | – | – | – |
| Financial liabilities measured at fair value | |||||||||
| Currency forwards for hedging | 2 | – | – | – | 2 | – | 2 | – | 2 |
| TOTAL | 2 | – | – | – | 2 | – | 2 | – | 2 |
| Financial liabilities not carried at fair value | |||||||||
| Liabilities to credit institutions | – | – | – | 2,102 | 2,102 | – | – | – | – |
| Liabilities under finance leases | – | – | – | 130 | 130 | – | – | – | – |
| Other non-current liabilities | – | – | – | 26 | 26 | – | – | – | – |
| Trade payables | – | – | – | 655 | 655 | – | – | – | – |
| TOTAL | – | – | – | 2,913 | 2,913 | – | – | – | – |
| 2014 | Assets held for trading |
Loans and receivables |
Carrying amount Available-for sale financial |
assets Other liabilities | Total carrying amount |
Level 1 | Fair value Level 2 |
Level 3 | Total |
| Financial assets measured at fair value | |||||||||
| Shares | – | – | 13 | – | 13 | – | – | 13 | 13 |
| TOTAL | – | – | 13 | – | 13 | – | – | 13 | 13 |
| Financial assets not carried at fair value | |||||||||
| Non-current receivables | – | 7 | – | – | 7 | – | – | – | – |
| Trade receivables | – | 1,515 | – | – | 1,515 | – | – | – | – |
| Cash and cash equivalents | – | 173 | – | – | 173 | – | – | – | – |
| TOTAL | – | 1,695 | – | – | 1,695 | – | – | – | – |
| Financial liabilities measured at fair value | |||||||||
| Currency forwards for hedging | 4 | – | – | – | 4 | – | 4 | – | 4 |
| TOTAL | 4 | – | – | – | 4 | – | 4 | – | 4 |
| Financial liabilities not carried at fair value | |||||||||
| Liabilities to credit institutions | – | – | – | 1,334 | 1,334 | – | – | – | – |
| Finance lease liability | – | – | – | 101 | 101 | – | – | – | – |
| Other non-current liabilities | – | – | – | 27 | 27 | – | – | – | – |
| Trade payables | – | – | – | 338 | 338 | – | – | – | – |
| TOTAL | – | – | – | 1,800 | 1,800 | – | – | – | – |
In the above table, non-current receivables are comprised of held-to-maturity investments and "Other non-current receivables" with the exception of pension assets. See also Note 21.
Fair value and carrying amount are recognised in the balance sheet as shown below:
| Carrying amount | Fair value | |||||
|---|---|---|---|---|---|---|
| 2015 | Loan and trade receivables |
Available-for-sale financial assets |
Other liabilities | Total carrying amount |
Level 3 | Total |
| Other non-current securities | – | 1 | – | 1 | 1 | 1 |
| Other non-current receivables | 2 | – | – | 2 | – | – |
| Cash and cash equivalents | 13 | – | – | 13 | – | – |
| TOTAL | 15 | 1 | – | 16 | 1 | 1 |
| Non-current interest-bearing liabilities | – | – | 1,890 | 1,890 | – | – |
| Current interest-bearing liabilities | – | – | 201 | 201 | – | – |
| Trade payables | – | – | 62 | 62 | – | – |
| TOTAL | – | – | 2,154 | 2,154 | – | – |
| Carrying amount | Fair value | |||||
|---|---|---|---|---|---|---|
| 2014 | Loan and trade receivables |
Available-for-sale financial assets |
Other liabilities | Total carrying amount |
Level 3 | Total |
| Other non-current securities | – | 1 | – | 1 | 1 | 1 |
| Cash and cash equivalents | 2 | – | – | 2 | – | – |
| TOTAL | 2 | 1 | – | 3 | 1 | 1 |
| Non-current interest-bearing liabilities | – | – | 962 | 962 | – | – |
| Current interest-bearing liabilities | – | – | 276 | 276 | – | – |
| Trade payables | – | – | 50 | 50 | – | – |
| TOTAL | – | – | 1,288 | 1,288 | – | – |
The table above provides information about the method for determining the fair value of financial instruments measured at fair value in the balance sheet. The hierarchy for determining fair value is based on the following three levels.
Level 1: according to quoted market prices in active markets for identical instruments Level 2: according to directly or indirectly observable market inputs that are not included in level 1
Level 3: according to inputs that are not based on observable market data
No transfers between any of the levels took place during the year.
Below is a summary of the primary methods and assumptions used to determine the fair values of the financial instruments reported in the above tables.
The fair value of a listed financial asset is equal to the asset's quoted market price on the balance sheet date. The fair value of unlisted financial assets is determined through market valuation, such as recently completed transactions, the price of similar instruments and discounted cash flows. When there is no reliable basis for determining fair value, financial assets are measured at amortised cost.
For forward exchange contracts, fair value is determined on the basis of quoted market prices for forward exchange contracts on the balance sheet date.
The value of long-term loans is recognised as accrued amortised cost, which is considered a good approximation of fair value.
The fair value of finance lease liabilities is based on the present value of future cash flows discounted at the market rate of interest for similar lease contracts (Level 2).
For trade receivables and payables with a remaining life of less than one year, the carrying amount is assessed to reflect fair value.
The table below presents a reconciliation between the opening and closing balances for financial instruments that are measured at fair value in the report in the balance sheet based on a valuation technique that uses unobservable market data (Level 3).
| Financial investments | |
|---|---|
| Opening balance at 1 January 2014 | 12 |
| Total reported gains and losses | |
| – recognised in profit for the year | – |
| – recognised in other comprehensive income | 1 |
| Cost of acquisitions | 0 |
| Proceeds from divestitures | 0 |
| CLOSING BALANCE AT 31 DECEMBER 2014 | 13 |
| Gains and losses recognised in profit for the year for assets included in the closing balance at 31 December 2014 |
– |
| Opening balance at 1 January 2015 | 13 |
| Total reported gains and losses | |
| – recognised in profit for the year | – |
| – recognised in other comprehensive income | 16 |
| Cost of acquisitions | 274 |
| Reclassification | -290 |
| Gained through acquisition | 1 |
| CLOSING BALANCE AT 31 DECEMBER 2015 | 14 |
| Gains and losses recognised in profit for the year for assets included in the closing balance at 31 December 2015 |
– |
Through its operations, the Group is exposed to various types of financial risk arising from fluctuations in earnings and cash flow due to changes in exchange rates, interest rates, refinancing and credit risks.
To control and minimise the financial risks to which the Group is exposed, the Board of Directors has drawn up a finance policy that is revised and adopted at least once a year. The policy regulates the division of responsibilities between the local companies and the corporate finance department, which financial risks the Group is permitted to take, and how these risks are to be managed. Surplus cash is invested primarily in fixed-income instruments in the money market, where low credit risk and high liquidity are required criteria. Transaction exposure is hedged mainly through forward exchange contracts.
Market risk is the risk for fluctuations in the value of financial instruments due to changes in market prices. Sweco's policy minimises this risk by limiting the average duration of financial instruments to 120 days.
The Group's exposure to currency risk is primarily related to potential exchange rate fluctuations in contracted and anticipated payment flows in foreign currency. The objective in management of currency risk is to minimise the effects of exchange rate movements on the Group's profit and financial position. The Group normally has natural risk coverage in that both sales and expenses are denominated in local currency. In cases where contracts are entered into in a non-local currency, the contracted and anticipated payment flows are hedged through forward exchange contracts after matching incoming and outgoing payments in the same currency.
The Group's transaction exposure from exports in 2015 can be broken down into the following significant currencies:
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| SEK M | EUR | USD | NOK | EUR | USD | NOK |
| Income | 151 | 62 | 32 | 104 | 20 | 10 |
| Expenses | -242 | -94 | -51 | -95 | -10 | -53 |
| NET | -91 | -32 | -19 | 9 | 10 | -43 |
On the balance sheet date, the Group had the following open forward exchange contracts with a remaining time to maturity of between 0 and 78 months (previous year: 0 and 90 months).
| Contract amount | Unrealised gain + / losses - |
Average rate | ||||
|---|---|---|---|---|---|---|
| Currency | 2015 | 2014 | 2015 | 2014 | 2015 | 2014 |
| EUR | -37 | 79 | 0 | -2 | 9.24 | 9.35 |
| USD | 10 | 1 | 0 | 0 | 8.35 | 7.41 |
| Other | -12 | 8 | -1 | -1 |
Hedge accounting was not applied for the forward exchange contracts outstanding on the balance sheet date. Valuation gains/losses on forward exchange contracts are recognised in other external expenses in the income statement and fair value is recognised in other current receivables/liabilities in the balance sheet.
When the balance sheets of foreign subsidiaries are translated to SEK, a foreign currency translation difference arises due to the fact that the current year is translated at a different rate than the preceding year, and that the income statement is translated at the average exchange rate during the year while the balance sheet is translated at the closing day rate.
Translation exposure is comprised of the risk for changes in equity resulting from translation differences. For the significant currencies, translation exposure at 31 December 2015 was NOK 473 million (387) and EUR 315 million (123.6). Substantial exposure to the British pound and the Danish krone also arose with the acquisition of the Grontmij Group and totalled GBP 132 million and DKK 764 million on the balance sheet date. The Group's policy is to not hedge translation exposure in foreign currencies except in connection with major acquisitions. Sweco previously decided to hedge the net investment in FMC Group with a foreign currency loan denominated in EUR, which totalled EUR 74 million (74) as at the balance sheet date. During the year the Group also took out a foreign currency loan to hedge the investment in Grontmij; this loan totalled EUR 112 million at the balance sheet date.
On the translation of assets and liabilities in intra-group transactions, balance sheet exposure arises in the difference between exchange rates on the transaction date and the closing day rate. The resulting exchange difference is recognised over the income statement. The Group's policy is to eliminate balance sheet exposure by taking up loans in the exposed currency to the extent that this exposure is not seen as part of the net investment and does not refer to normal trade receivables or payables.
| Foreign exchange differ | Group | Parent Company | |||
|---|---|---|---|---|---|
| ences recognised in profit | 2015 | 2014 | 2015 | 2014 | |
| Net sales | – | 3 | – | 0 | |
| Other operating expenses | -9 | -9 | – | – | |
| Total foreign exchange differ ences in operating profit |
-9 | -6 | – | 0 | |
| Financial income | – | – | – | 0 | |
| Financial expenses | -10 | -9 | -14 | – | |
| Total foreign exchange differ ences in net financial items |
-10 | -9 | -14 | 0 | |
| TOTAL FOREIGN EXCHANGE DIFFERENCES IN PROFIT |
-19 | -15 | -14 | 0 |
Interest rate risk refers to the effects of interest rate movements on the Group's net financial items and fluctuations in the value of financial instruments due to changes in market interest rates. All loans carry interest with short fixed-interest periods. The company's assessment is that loans with variable interest result in the lowest risk and financing cost over time.
Liquidity risk (the risk that the Group will incur higher costs due to insufficient liquidity), cash flow risk (the risk for variations in the size of future cash flows generated by financial instruments) and refinancing risk (the risk for costly refinancing of matured loans) are deemed minor in view of the Group's financial position with unutilised bank overdraft facilities which, including cash and cash equivalents, total SEK 2,229 million (1,142). There are cash pools in place to minimise the borrowing requirement through the use of surplus liquidity in the Group. The bank overdraft facilities are renewed every year and are not associated with any special conditions or obligations; see also Note 26. An age analysis of financial liabilities is shown in the table below:
| 2015 | Nominal amount in original currency | Total | 0–1 years | 1–5 years | >5 years |
|---|---|---|---|---|---|
| Interest-bearing liabilities | 2,009 | 130 | 1,879 | – | |
| Forward exchange contracts, EUR | 0 | -37 | -33 | -20 | 16 |
| Forward exchange contracts, USD | 2 | 11 | 8 | 3 | – |
| Forward exchange contracts, other | -12 | -12 | – | – | |
| Finance lease liabilities, SEK | 124 | 124 | 24 | 67 | 33 |
| Trade payables | 655 | 650 | 5 | – | |
| Other liabilities | 776 | 750 | 26 | – | |
| TOTAL | 3,526 | 1,517 | 1,960 | 49 | |
| 2014 | Nominal amount in original currency | Total | 0–1 years | 1–5 years | >5 years |
| Interest-bearing liabilities | 1,009 | 0 | 1,008 | 1 | |
| Forward exchange contracts, EUR | 8 | 79 | 8 | 51 | 20 |
| Forward exchange contracts, USD | 0 | 1 | 1 | – | – |
| Forward exchange contracts, other | 8 | 8 | – | – | |
| Finance lease liabilities, SEK | 122 | 122 | 32 | 85 | 5 |
| Trade payables | 338 | 337 | 1 | – | |
| Other liabilities | 472 | 445 | 27 | – | |
| TOTAL | 2,030 | 832 | 1,172 | 26 | |
The risk that the Group's customers will not meet their obligations (ie, that payment will not be received from the customers), constitutes a customer credit risk. The Group carries out regular credit assessment of new customers.
Sweco currently has around 23,000 customers in both the private and public sectors. The public sector accounts for 42 per cent, property and construction companies for 13 per cent, industrial companies for 24 per cent and other private sector companies for 21 per cent.
The ten largest customers account for 22 per cent of total sales. Since Sweco is not dependent on any individual customers, there is little risk that trade receivable losses will have a significant impact on the company. Historically, such losses have been minor.
| Age analysis, trade | 2015 | 2014 | |||||
|---|---|---|---|---|---|---|---|
| receivables | Gross | Reserve | Net | Gross | Reserve | Gross | |
| Trade receivables not yet due |
1,895 | – | 1,895 | 1,225 | – | 1,225 | |
| Overdue trade receiva bles 0–30 days |
271 | -3 | 268 | 152 | -1 | 151 | |
| Overdue trade receiva bles > 31–90 days |
101 | -2 | 99 | 56 | -7 | 49 | |
| Overdue trade receiva bles > 91–180 days |
67 | -4 | 63 | 33 | -7 | 26 | |
| Overdue trade receiva bles > 180 days |
180 | -65 | 115 | 76 | -13 | 64 | |
| TOTAL | 2,513 | -74 | 2,441 | 1,542 | -27 | 1,515 |
At 31 December 2015, trade receivables amounting to SEK 545 million (290) were overdue without any assessed need to recognise an impairment loss. These apply to a number of independent customers that have not previously had any solvency problems.
| Trade receivables by currency | 2015 | 2014 |
|---|---|---|
| SEK | 841 | 859 |
| EUR | 937 | 329 |
| USD | 31 | 5 |
| NOK | 242 | 256 |
| GBP | 99 | – |
| DKK | 197 | – |
| CZK | 26 | 15 |
| RUB | – | 13 |
| Other currencies | 67 | 37 |
| TOTAL | 2,441 | 1,515 |
| Changes in reserve for doubtful trade receivables | 2015 | 2014 |
| Opening reserve for doubtful trade receivables | -27 | -37 |
| Increase through acquisitions | -51 | – |
| Provisions to reserve for doubtful trade receivables | -15 | -11 |
| Write-offs of non-collectible receivables for the year | 7 | 7 |
| Reversal of unutilised amount | 14 | 12 |
| Translation difference | -2 | 2 |
| CLOSING RESERVE FOR DOUBTFUL TRADE RECEIVABLES | -74 | -27 |
Sweco PM Oy filed a claim against a customer for non-payment of overdue trade receivables. A countersuit was also filed against the company in Finnish court in which the counterparty is seeking damages of EUR 16.7 million on the grounds that Sweco PM showed gross negligence in an assignment. In order for the plaintiff to be considered entitled to such damages, in which case the contractual limitations of liability would not apply, the alleged gross negligence must be proven. Until further notice, the dispute is covered by consulting liability insurance. In the event that gross negligence is finally determined by the court, however, the insurance will not be valid. Sweco PM contends that it acted with neither negligence nor gross negligence. The district court in Helsinki announced its ruling on the case on 2 July 2013, whereby the court found that the claim of gross negligence lacked grounds. Sweco PM was found to have been negligent in certain aspects and was therefore liable for damage claims amounting to EUR 393,310 (excluding interest) to the counterparty. The case was appealed to the Helsinki Court of Appeal which announced its decision on 30 January 2015, finding that Sweco PM was not negligent or grossly negligent in performing its duties under the contract. The counterparty's claim was dismissed in its entirety. The court ordered (i) the customer to pay the unpaid fee of approximately EUR 685,000, plus interest, to Sweco PM and (ii) the counterparty to pay Sweco PM's legal expenses. SATO appealed the decision to the Supreme Court, which denied the appeal on 4 March 2016. The Court of Appeal's decison therefore remains in effect. The provison made for the dispute was not adjusted in the 2015 results; this will be done in March 2016.
To manage currency risks, the Group strives to minimise the impact of short-term fluctuations in profit and cash flows. In a longer perspective, however, profit, cash flows and equity will be affected by more lasting changes in exchange rates and interest rates.
| Factor | Change +/- | 2015 Impact on earnings +/- |
2014 Impact on earnings +/- |
|---|---|---|---|
| Currency | SEK M | SEK M | |
| EUR | 10% | 1 | 6 |
| USD | 10% | 2 | 0 |
| NOK | 10% | 10 | 10 |
| Interest rate on lending/borrowing | 1%-point | 8 | 6 |
The sensitivity analysis is based on the assumption that currency translation and transaction exposure, and all other factors, are constant. The effect is calculated based on a standard tax rate of 26 per cent.
Sweco Group's financial objective is to uphold a good capital structure and financial stability in order to maintain the confidence of investors, creditors and the market. A good capital structure also creates a foundation for ongoing development of the Group's business operations. Capital is defined as total equity and non-controlling interests.
| Capital | 2015 | 2014 |
|---|---|---|
| Equity | 4,899 | 1,874 |
| Non-controlling interests | 9 | 14 |
| TOTAL | 4,907 | 1,888 |
Sweco Group's capital is used to finance acquisitions, to maintain a high level of financial flexibility and to provide competitive dividends to Sweco's shareholders.
The Group's dividend policy is to distribute at least half of profit after tax to the shareholders while also maintaining a capital structure that provides scope for development of and investment in the company's core operations. The Board of Directors has proposed that the 2016 Annual General Meeting approve a dividend of SEK 3.50 per share, equal to a dividend share of approximately 96 per cent of profit after tax. Through the dividend, a maximum of SEK 421 million will be distributed to the shareholders.
Sweco's financial target is to maintain a level of net debt over time that does not exceed 2.0 times EBITDA. During the past five years, ordinary dividends totalled an average of around 73 per cent of profit after tax. The Group's policy is to pay an extra dividend or conduct a share redemption when this is permitted by the capital structure and financing requirements.
Sweco acquired Grontmij N.V. in 2015. The purchase price for 100 per cent of Grontmij's shares totals SEK 3,337 million, of which approximately SEK 1,537 million in cash and SEK 1,800 million in 14,949,247 newly issued Sweco Class B shares.
Approximately SEK 94 million of the cash component remains to be paid in conjunction with the upcoming compulsory redemption process.
The cash component of the Grontmij acquisition was initially financed with a bridge loan, most of which has been repaid through the preferential rights issue conducted during the fourth quarter.
Sweco's 2015 Annual General Meeting granted authorisation for the Board to repurchase treasury shares. The aim of the proposed repurchase is to create scope to optimise the company's capital structure and provide opportunities to use Sweco shares as consideration in connection with future acquisitions. The AGM also authorised the Board to decide on the transfer of treasury shares. Such transfers may take place in connection with acquisitions. The AGM also authorised the Board to repurchase treasury shares to enable delivery of shares under the 2015 Share Savings Scheme and the 2015 Share Bonus Scheme (under which bonuses are paid in shares rather in cash for operations in Sweden).
The Board proposes that the 2016 AGM authorise the Board to decide on the repurchase and transfer of treasury shares and to enable delivery of shares for the 2016 Share Savings Scheme and the 2016 Share Bonus Scheme.
The Group's related parties are major shareholders, joint ventures, associated companies, the Board of Directors and other senior executives.
Sales to related parties are carried out on market-based terms.
Goods and services totalling SEK 1 million (1) were sold to companies owned by the Nordström family (a shareholder controlling approximately 32.3 per cent of the votes in Sweco). Consulting service totalling SEK 2 million (2) were sold to companies owned by the Douglas family (which has a controlling interest in Investment AB Latour, a shareholder controlling approximately 20.8 per cent of the votes in Sweco). The related trade receivable at 31 December 2015 amounted to SEK 1 million (0). Consulting services totalling SEK 0 million (0) were sold to companies owned jointly by the Nordström and Douglas families.
The Group had insignificant sales to associated companies and joint ventures. Dividends from associated companies totalled SEK 1 million (1).
For information on remuneration to the Board of Directors and senior executives, see Note 6.
On 10 February 2016 the Board of Directors proposed that the Annual General Meeting resolve on a distribution to the shareholders in the form of a dividend totalling a maximum of SEK 421 million (see Note 25).
Sweco acquired operations in Petro Team Engineering AB with 5 employees after the close of the year, thereby strengthening its position within rock engineering and mechanics.
Preparation of the financial statements in accordance with EU IFRS requires the company to make estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expenses. Estimates and underlying assumptions are based on historical experience and on several other factors that may be considered probable based on the specific conditions. The result of this process forms the basis for evaluating reported assets and obligations that may be difficult to identify from other sources. Actual results may deviate from these estimates.
Significant estimates and underlying assumptions are reviewed periodically. Revised estimates are reported during the period in which the estimate was revised if the revision affects only that year. Otherwise, they are reported during the year under review and future periods if the revision affects both the year under review and future periods.
Provisions for pensions are based on Sweco's best actuarial assumptions about the future (see Note 27). Deviations in the actual outcome of these parameters are recognised in other comprehensive income.
In determining the recoverable amount of cash-generating units for impairment testing of goodwill, the company made assumptions about future conditions and estimated key variables (see Note 13). As illustrated in Note 13, significant changes in these estimates and assumptions may affect the value of goodwill.
Approximately 23 per cent of Sweco's sales are generated in fixed price service contracts. Assets and liabilities in these contracts represent significant amounts. Work in progress is recognised at the value of contract revenue less confirmed losses and anticipated loss risks. Revenue is recognised based on the estimated stage of completion. If the stage of completion cannot be estimated reliably, the contract is valued on the basis of contract costs incurred. Determination of the risks in the assignments and the percentage of completion is based on prior experience of similar projects and the specific conditions of each assignment. The balance sheet item is comprised of multiple contracts, none of which makes up a substantial share of the total. While miscalculation of an individual contract would not have a significant impact on the value of work in progress, a general miscalculation could have a significant impact, although this is not probable.
The Group has made a number of acquisitions in different countries over the years and has taken over certain contingent liabilities attributable to the acquired companies. Companies within the Group are also involved in various other legal proceedings arising in the ordinary course of business. For further information, see Note 31 and Note 33.
Reporting of income tax, VAT and other taxes is based on applicable regulations in the countries where the Group operates. Due to the overall complexity of tax and tax accounting regulations, application and reporting are based on interpretations and on estimates and assessments of possible outcomes. Deferred tax is calculated on temporary differences between the reported and taxable values of assets and liabilities. There are two main types of assumptions and assessments that affect reported deferred tax: assumptions and assessments (i) to determine the carrying amount of various assets and liabilities and (ii) regarding future taxable profit, in cases where future utilisation of reported and non-reported deferred tax assets is dependent on this in addition to existing deferred tax liabilities. Significant assessments and assumptions are also made when reporting provisions and contingent liabilities with respect to tax risks. For additional information on taxes, please see Note 10.
SWECO AB (publ), corporate identification number 556542-9841, is a Swedish-registerred public limited company domiciled in Stockholm. The Parent Company's shares are listed on Nasdaq Stockholm. The headquarter address is: Sweco AB, Gjörwellsgatan 22, Box 34044, SE-100 26 Stockholm.
The Board of Directors and the President & CEO give their assurance that the consolidated accounts have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and give a true and fair view of the Group's financial position and results of operations. The annual accounts have been prepared in accordance with generally accepted accounting standards and give a true and fair view of the financial position and results of operations of the Parent Company.
The Board of Directors' report for the Group and the Parent Company gives a true and fair view of the business activities, financial position and results of operations of the Group and the Parent Company, and describes the significant risks and uncertainties to which the Parent Company and the Group companies are exposed.
Stockholm, 4 March 2016
Johan Nordström Anders G. Carlberg Gunnel Duveblad Board chairman Board member Board member
Eva Lindqvist Pernilla Ström Carola Teir-Lehtinen Board member Board member Board member
Johan Hjertonsson Board member
Employee representative Employee representative Employee representative
Thomas Holm Göran Karloja Anna Leonsson
Tomas Carlsson President & CEO
Our audit report was submitted on 4 March 2016 PricewaterhouseCoopers AB
Michael Bengtsson Authorised Public Accountant
We have audited the annual accounts and consolidated accounts of SWECO AB (publ) for the year 2015. The annual accounts and consolidated accounts of the company are included in the printed version of this document on pages 31–83.
The Board of Directors and the President & CEO are responsible for the preparation and fair presentation of these annual accounts and consolidated accounts in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act, and for such internal control as the Board of Directors and the President & CEO determine is necessary to enable the preparation of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these annual accounts and consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the annual accounts and consolidated accounts are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual accounts and consolidated accounts. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the annual accounts and consolidated accounts in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors and the President & CEO, as well as evaluating the overall presentation of the annual accounts and consolidated accounts.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2015 and of its financial performance and its cash flows for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all
material respects, the financial position of the group as of 31 December 2015 and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, as adopted by the EU, and the Annual Accounts Act. A corporate governance report has been prepared. The statutory administration report and the corporate governance report are consistent with the other parts of the annual accounts and consolidated accounts.
We therefore recommend that the annual meeting of shareholders adopt the income statement and balance sheet for the parent company and the group.
In addition to our audit of the annual accounts and consolidated accounts, we have also audited the proposed appropriations of the company's profit or loss and the administration of the Board of Directors and the President & CEO of SWECO AB (publ) for the year 2015.
The Board of Directors is responsible for the proposal for appropriations of the company's profit or loss, and the Board of Directors and the President & CEO are responsible for administration under the Companies Act.
Our responsibility is to express an opinion with reasonable assurance on the proposed appropriations of the company's profit or loss and on the administration based on our audit. We conducted the audit in accordance with generally accepted auditing standards in Sweden.
As a basis for our opinion on the Board of Directors' proposed appropriations of the company's profit or loss, we examined the Board of Directors' reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act.
As a basis for our opinion concerning discharge from liability, in addition to our audit of the annual accounts and consolidated accounts, we examined significant decisions, actions taken and circumstances of the company in order to determine whether any member of the Board of Directors or the President & CEO is liable to the company. We also examined whether any member of the Board of Directors or the President & CEO has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions.
We recommend to the annual meeting of shareholders that the profit be appropriated in accordance with the proposal in the statutory administration report and that the members of the Board of Directors and the President & CEO be discharged from liability for the financial year.
Stockholm, 4 March 2016 PricewaterhouseCoopers AB
Michael Bengtsson Authorised Public Accountant
Sweco AB's shares have been listed on NASDAQ Stockholm since 21 September 1998. Sweco's share capital is divided into Class A, Class B and Class C shares. Class A and B shares grant equal entitlement to dividends; Class C shares do not. Class A shares grant entitlement to one vote and Class B and C shares to one-tenth of one vote. Class A and B shares are listed. Class C shares were issued as per resolution of the 2015 AGM. The Class C shares were issued to enable the company to deliver shares (following conversion of the Class C shares to Class B shares) to employees under the 2015 Share Bonus Scheme. Sweco's Articles of Association grant shareholders the right to convert Class A shares to Class B shares. The combined market capitalisation of Sweco shares at year-end was SEK 14,926 million.
The closing price for the Sweco B share was SEK 124.25 at year-end 2015, representing an increase of 21 per cent during the year. Over the same period, Nasdaq Stockholm rose by 7 per cent. The highest closing price for the Class B share in 2015 was SEK 133.50 and the lowest was SEK 99.41. The highest closing price for the Class A share was SEK 139.00 and the lowest was SEK 96.40.
A total of 17,684,063 Sweco shares were traded on Nasdaq Stockholm during the year. The average trading volume per business day was 69,859 Class B shares and 596 Class A shares.
The annual total yield of the Sweco B share, defined as the sum of share price performance and reinvested dividends, has averaged at 22 per cent over the past five years. The corresponding figure for Nasdaq Stockholm was a total of 11 per cent.
| Number | Holding, % | |||||
|---|---|---|---|---|---|---|
| Shares | Votes | Shares | Votes | |||
| A | 10,539,184 | 10,539,184.0 | 8.7 | 48.8 | ||
| B | 109,655,646 | 10,965,564.6 | 90.6 | 50.8 | ||
| C | 900,000 | 90,000.0 | 0.7 | 0.4 | ||
| TOTAL | 121,094,830 | 21,594,748.6 | 100.0 | 100.0 |
1) As at 30 December 2105, including a total of 1,557,320 treasury shares (657,320 Class B shares and 900,000 Class C shares) and a total of 155,732.0 votes pertaining to treasury shares.
2) Based on data from Euroclear Sweden AB.
| Shareholder | Number of A shares Number of B shares Number of C shares | Total | Votes, %3 | Holding, %3 | ||
|---|---|---|---|---|---|---|
| Nordström family | 5,948,808 | 10,255,240 | 0 | 16,204,048 | 32.3 | 13.4 |
| Investmentaktiebolaget Latour | 1,375,605 | 31,246,875 | 0 | 32,622,480 | 20.8 | 26.9 |
| J. Gust. Richerts Memorial Foundation | 1,991,260 | 118,982 | 0 | 2,110,242 | 9.3 | 1.7 |
| NN Group | 0 | 6,227,071 | 0 | 6,227,071 | 5.1 | 2.9 |
| Lannebo fonder | 0 | 4,337,700 | 0 | 4,337,700 | 2.0 | 3.6 |
| JPM Chase NA | 0 | 4,244,780 | 0 | 4,244,780 | 2.0 | 3.5 |
| Swedbank Robur Fonder | 0 | 3,842,301 | 0 | 3,842,301 | 1.8 | 3.2 |
| KAS Bank Client Acc | 0 | 3,354,582 | 0 | 3,354,582 | 1.6 | 2.8 |
| Nordea Investment Funds | 0 | 3,279,390 | 0 | 3,279,390 | 1.5 | 2.7 |
| SEB Investment Management | 0 | 2,725,714 | 0 | 2,725,714 | 1.3 | 2.2 |
| Total, ten largest shareholders | 9,315,673 | 69,632,635 | 0 | 78,948,308 | 77.7 | 62.9 |
| Other | 1,223,511 | 40,023,011 | 900,000 | 42,146,522 | 22.3 | 37.1 |
| TOTAL | 10,539,184 | 109,655,646 | 900,000 | 121,094,830 | 100.0 | 100.0 |
1) Including a total of 1,557,320 treasury shares (657,320 Class B shares and 900,000 Class C shares) and a total of 155,732.0 votes pertaining to treasury shares.
2) Based on data from Euroclear Sweden AB.
3) Unlike the percentages indicated for each individual shareholder, figures for "Total, ten largest shareholders" are not based on rounded-off shares.
At 31 December 2015 Sweco held a total of 1,557,320 treasury shares (including 657,320 Class B shares with an average purchase price of SEK 84.16, corresponding to SEK 55 million). The market value of the Class B treasury shares at the end of the year was SEK 82 million. The treasury shares correspond to 1.3 per cent of the total number of shares and 0.7 per cent of the votes.
During the year Sweco conducted an issue in kind of 14,949,247 Class B shares (share consideration in the Grontmij acquisition) and a preferential rights issue of 1,171,020 Class A shares and 12,123,925 Class B shares. This brought the total number of votes to 21,594,748.6: 10,539,184 corresponding to Class A shares, 10,965,564.6 to Class B shares and 90,000 to Class C shares.
| Number of shares | Number of shareholders |
Number of A shares |
Number of B shares |
Number of C shares |
Holding, % | Votes, % |
|---|---|---|---|---|---|---|
| 1–500 | 7,513 | 80,983 | 1,082,946 | 0 | 1.0 | 0.8 |
| 501–1,000 | 1,341 | 36,256 | 946,927 | 0 | 0.8 | 0.6 |
| 1,001–10,000 | 2,226 | 373,438 | 5,754,533 | 0 | 4.9 | 3.8 |
| 10,001–50,000 | 274 | 357,899 | 5,223,845 | 0 | 4.4 | 3.5 |
| 50,001–100,000 | 52 | 174,935 | 3,087,577 | 0 | 2.9 | 2.7 |
| 100,001– | 70 | 9,515,673 | 93,559,818 | 900 000 | 86.0 | 88.6 |
| TOTAL | 11,476 | 10,539,184 | 109,655,646 | 900,000 | 100.0 | 100.0 |
1) Including a total of 1,557,320 treasury shares (657,320 Class B shares and 900,000 Class C shares) and a total of 155,732.0 votes pertaining to treasury shares.
2) Based on data from Euroclear Sweden AB.
The 2015 Annual General Meeting (like the AGMs in 2011–14) resolved to implement a long-term share savings scheme for senior executives in the Sweco Group: the 2015 Share Savings Scheme. Under the scheme, participants use their own funds to acquire Class B shares in Sweco ("Saving Shares") on Nasdaq Stockholm for an amount equivalent to 5 to 10 per cent of the respective participant's basic annual salary for 2015. If the Saving Shares are held until the announcement of the year-end report for the 2018 financial year ("the Retention Period") and the participant remains employed in his/her position or an equivalent position in the Sweco Group throughout the Retention Period, each Savings Share shall thereafter grant entitlement to one Class B share in Sweco
without consideration ("Matching Share") and – provided that the performance criteria have been met – to an additional number of not more than one to four Class B shares in Sweco ("Performance Shares"). The granting of Performance Shares is conditional on a positive total yield for the Sweco share, and is also dependent on the Sweco share's total yield in relation to a group of benchmark companies.
The Board has decided to propose that the 2016 AGM approve the implementation of a long-term share savings scheme for up to 100 senior executives and key staff in the Sweco Group.
The participants and number of shares covered by each of the earlier share savings schemes are shown below.
| Share savings scheme | |||||
|---|---|---|---|---|---|
| 20122 | 2013 | 2014 | 2015 | Total | |
| Number of participating executives/key staff | 25 | 32 | 49 | 59 | – |
| Number of Savings Shares acquired by participants with own funds at market price | 29,931 | 27,214 | 33,126 | 36,393 | 126,664 |
| Maximum number of Matching and Performance Shares that can be delivered to participants1 | 109,013 | 95,031 | 107,733 | 118,920 | 430,697 |
| Retention Period runs until publication of year-end report for financial year | 2015 | 2016 | 2017 | 2018 | – |
1) If Savings Shares are held until the end of the respective Retention Period and the participant remains employed in his/her position, each Savings Share grants entitlement to one Matching Share and
– provided that performance criteria for total yield for the Sweco share are met – to an additional number of not more than one to four Performance Shares. 2) The scheme expired in conjunction with the publication of the 2015 year-end report. The Board subsequently decided to allocate a total of 85,446 Class B shares to the remaining participants.
In accordance with the Board's proposal, Sweco's 2015 Annual General Meeting (held on 16 April 2015) resolved to introduce a Share Bonus Scheme for the greater part of Group employees in Sweden. The resolution included decisions to implement a 2015 Share Bonus Scheme; to conduct a directed share issue of Class C shares; to authorise the Board of Directors to repurchase newly-issued Class C shares; and to transfer treasury shares in order to secure obligations under the 2015 Share Bonus Scheme. The estimated maximum number of shares to be issued in May 2016 under the 2015 Share Bonus Scheme is 1,200,000.
Sweco's dividend policy is to distribute at least half of profit after tax to the shareholders while maintaining a capital structure that permits development of and investments in the company's core business.
The Board of Directors proposes a dividend for the 2015 financial year of SEK 3.50 per share (3.37), amounting to a maximum capital distribution of SEK 421 million (318).
Sweco B
OMX PI Stockholm 30 December 2010 = share price for Sweco B
| Change in number of shares | Total number of shares | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | A shares | B shares | C shares | A shares | B shares | C shares | Quota value, SEK |
Share capital, SEK M |
| 2011, Aug: Conversion | -3,399 | 3,399 | – | 9,385,676 | 82,131,171 | – | 1 | 91.5 |
| 2012, May: Conversion | -4,012 | 4,012 | – | 9,381,664 | 82,135,183 | – | 1 | 91.5 |
| 2013, Mar: Conversion | -3,300 | 3,300 | – | 9,378,364 | 82,138,483 | – | 1 | 91.5 |
| 2013, Dec: Conversion | -6,000 | 6,000 | – | 9,372,364 | 82,144,483 | – | 1 | 91.5 |
| 2014, Feb: Conversion | -4,200 | 4,200 | – | 9,368,164 | 82148,683 | – | 1 | 91.5 |
| 2014, May: New share issue | – | – | 900,000 | 9,368,164 | 82148,683 | 900,000 | 1 | 92.4 |
| 2015, May: New share issue | – | – | 900,000 | 9,368,164 | 82148,683 | 1,800,000 | 1 | 93.3 |
| 2015, May: Conversion and redemption | – | 433,741 | -900,000 | 9,368,164 | 82,582,474 | 900,000 | 1 | 92.9 |
| 2015, Sep: Issue in kind | – | 13,116,828 | – | 9,368,164 | 95,699,302 | 900,000 | 1 | 106.0 |
| 2015, Oct: Issue in kind | – | 1,832,419 | – | 9,368,164 | 97,531,721 | 900,000 | 1 | 107.8 |
| 2015, Dec: New share issue | 1,171,020 | 12,123,925 | – | 10,539,184 | 109,655,646 | 900,000 | 1 | 121.2 |
1) As at 30 December 2015, including a total of 1,557,320treasury shares (657,320 Class B shares and 900,000 Class C shares) and a total of 155,732.0 votes pertaining to treasury shares.
Holding as % of shares Holding as % of votes
Swedish shareholders, 72.0% Foreign shareholders, 28.0%
Swedish shareholders, 84.2% Foreign shareholders, 15.8%
| 2015 | 2014 | 20131 | 20121 | 2011 | |
|---|---|---|---|---|---|
| Income statement, SEK M | |||||
| Net sales | 11,389 | 9,214 | 8,165 | 7,480 | 5,988 |
| EBITA excl. extraordinary items | 991 | 826 | 706 | 744 | 554 |
| EBITA | 740 | 814 | 652 | 744 | 554 |
| Operating profit (EBIT) | 681 | 762 | 558 | 681 | 531 |
| Net financial items | -41 | -43 | -32 | -27 | -5 |
| Profit before tax | 640 | 718 | 526 | 654 | 527 |
| Profit for the year | 439 | 545 | 380 | 476 | 375 |
| Balance sheet, SEK M | |||||
| Balance sheet total | 12,575 | 5,917 | 6,003 | 4,647 | 3,257 |
| Equity | 4,907 | 1,888 | 1,633 | 1,674 | 1,504 |
| Cash and cash equivalents and current interest-bearing receivables | 544 | 174 | 319 | 367 | 220 |
| Interest-bearing liabilities | 2,232 | 1,436 | 1,642 | 776 | 79 |
| Net interest-bearing receivable/liability | -1,688 | -1,262 | -1,324 | -409 | 141 |
| Cash flow, SEK M | |||||
| Cash flow from operating activities | 1,140 | 595 | 496 | 415 | 513 |
| Cash flow from investing activities | -1,440 | -177 | -998 | -656 | -313 |
| Cash flow from financing activities | 707 | -582 | 472 | 393 | -356 |
| Cash flow for the year | 407 | -164 | -30 | 153 | -156 |
| Key ratios | |||||
| Operating profit per employee, SEK 000s | 67 | 89 | 71 | 93 | 92 |
| Value added per employee, SEK 000s | 835 | 794 | 757 | 753 | 758 |
| Billing ratio, %2 | 74.2 | 75.6 | 74.2 | 74.2 | 73.9 |
| EBITA margin excl. extraordinary items, % | 8.7 | 9.0 | 8.6 | 9.9 | 9.3 |
| EBITA margin, % | 6.5 | 8.8 | 8.0 | 9.9 | 9.3 |
| Operating margin, % | 6.0 | 8.3 | 6.8 | 9.1 | 8.9 |
| Profit margin, % | 5.6 | 7.8 | 6.4 | 8.7 | 8.8 |
| Equity/assets ratio, % | 39.0 | 31.9 | 27.2 | 36.0 | 46.2 |
| Net debt/EBITDA, times | 1.8 | 1.3 | 1.7 | 0.5 | -0.2 |
| Net debt/equity, % | 34.4 | 66.9 | 81.1 | 24.4 | -9.4 |
| Debt/equity ratio, times | 0.5 | 0.8 | 1.0 | 0.5 | 0.1 |
| Interest coverage ratio, times | 15 | 19 | 15 | 21 | 48 |
| Return on equity, % | 12.9 | 31.0 | 22.9 | 29.9 | 25.6 |
| Return on capital employed, % | 13.2 | 23.2 | 19.7 | 34.0 | 34.2 |
| Return on total assets, % | 7.4 | 14.5 | 10.6 | 17.4 | 17.2 |
| Number of full-time employees | 10,188 | 8,535 | 7,917 | 7,336 | 5,772 |
| Share data | |||||
| Earnings per share, SEK3 | 4.36 | 5.74 | 3.96 | 4.96 | 3.96 |
| Diluted earnings per share, SEK3 | 4.30 | 5.67 | 3.95 | 4.96 | 3.96 |
| Dividend return, %3 | 2.8 | 3.3 | 3.1 | 4.5 | 5.2 |
| Equity per share, SEK3 | 40.98 | 19.89 | 17.10 | 17.44 | 15.86 |
| Diluted equity per share, SEK3 | 40.49 | 19.55 | 17.05 | 17.44 | 15.86 |
| Cash flow per share, SEK3 | 4.05 | -1.73 | -0.32 | 1.61 | -1.65 |
| Diluted cash flow per share, SEK3 | 3.99 | -1.71 | -0.32 | 1.61 | -1.65 |
| Closing price SWECO B at 31 December, SEK3 | 124.25 | 101.81 | 101.81 | 70.11 | 55.23 |
| Market capitalisation, SEK M | 15,038 | 9,768 | 9,663 | 6,653 | 5,258 |
| Ordinary dividend per share, SEK (2015 – proposed)3 | 3.50 | 3.37 | 3.13 | 3.13 | 2.89 |
| Number of shares at 31 December | 119,537,510 | 90,763,410 | 91,112,882 | 91,233,682 | 90,719,827 |
| Number of shares after dilution at 31 December | 120,972,890 | 92,299,382 | 91,399,382 | 91,233,682 | 90,719,827 |
| Number of shares after full dilution at 31 December | 120,972,890 | 92,299,382 | 91,399,382 | 91,233,682 | 90,719,827 |
| Number of Class B and C treasury shares | 1,557,320 | 1,653,437 | 403,965 | 283,165 | 797,020 |
1) Figures for 2012 and 2013 have been restated due to changed accounting policies. 2) Billing ratio for 2015 is pro forma and includes the Grontmij Group as of 1 January 2015.
3) Historical share data has been restated in accordance with IAS 33 due to the preferential rights issue conducted during Q4 2015.
2011 started with healthy demand in all of Sweco's markets. In particular, the Swedish market and the construction and infrastructure sectors showed solid growth during the year. Another stand-out was the Finnish market, which stabilised and noted rising demand for Sweco's industry-related consulting services. The generally high level of demand also continued through the second half of the year, in spite of the European debt crisis and economic contraction. Sweco Group's net sales were up 14 per cent to SEK 5,988 million. Operating profit rose 23 per cent to SEK 531 million and the operating margin was 8.9 per cent. The financial position remained strong. The ratio of net debt to equity was -9 per cent and the equity/assets ratio was 46 per cent. The number of employees rose by around 900, of which more than 300 were added through organic growth. During the year Sweco made 16 acquisitions with a total of around 600 employees. An agreement was signed in late 2011 to acquire Finland's FMC Group, with annual sales of approximately EUR 80 million and around 1,100 employees. The acquisition of FMC, completed in February 2012, gave Sweco annual sales of approximately SEK 6.7 billion and 7,400 employees. The bid price for the Sweco B share at 31 December 2011 was SEK 57.50, a decrease of 1 per cent.
The strong market conditions that prevailed in 2011 continued throughout most of 2012, notwithstanding the European debt crisis and general contraction of the economic climate. Development was particularly strong in the Nordic countries. A downturn was noted at the end of the year, primarily for building-related services with a focus on housing and for services in certain industrial segments. Sweco Group's net sales were up 25 per cent to SEK 7,480 million. Organic growth was 8 per cent and acquisition-driven growth was 17 per cent. Operating profit improved 24 per cent to SEK 681 million and the operating margin was 9.1 per cent. The increase in profit of SEK 150 million was mainly attributable to the acquisition of FMC Group, which was consolidated on 1 February 2012, and improved earnings in Sweco Norway. Profit for the year included a positive non-recurring effect of SEK 21 million arising from changes in Norwegian pension plans. Profit was charged with costs of SEK 15 million for restructuring in the Russian operations and a goodwill impairment loss of SEK 12 million in Sweco Industry. The financial position was good. The ratio of net debt to equity was 24 per cent and the equity/assets ratio was 36 per cent. The number of employees rose by 1,200 through acquisitions and 300 through organic growth. The bid price for the Sweco B share at 31 December 2012 was SEK 73.00, an increase of 27 per cent.
Sweco signed an agreement in June to acquire Vectura Consulting AB from the Swedish Government. Through the acquisition, Sweco became the largest engineering consultancy in the Nordic market with an unrivalled offering in the infrastructure segment. On 1 July the Sweco Industry business area was divided between the Finland, Sweden and Norway business areas. On 1 December the Russia and Central & Eastern Europe business areas were merged to create the new Central Europe business area. The downturn in the Nordic market that started at the end of 2012 continued into the first quarter of 2013. Development was weakest in the Finnish industrial sector and remained so throughout the year. The other markets in Norway, Sweden and Finland strengthened gradually during the year. Net sales were up 9 per cent, substantially through acquisitions, and totalled SEK 8,165 million. Operating profit was SEK 558 million. Total amortisation and impairment of acquisition-related
intangible assets totalled SEK 94 million, of which SEK 49 million was attributable to impairment of acquisition-related intangible assets in Russia and Eastern Europe. Integration costs for Vectura were charged to profit in an amount of SEK 53 million. Net debt in relation to equity was 81 per cent. Net debt in relation to EBITDA was 1.7. The number of employees rose during the year by 1,263, of which 1,355 through acquisitions. The bid price for the Sweco B share at year end was SEK 106.00, an increase of 45 per cent.
The market improved overall during 2014. The market improved slowly but steadily in Sweden. There was some weakening of the Norwegian economy, but the market was aided by government investments. The market in Finland remained challenging, while Central Europe showed some improvement late in the year. Sweco strengthened its market-leading position within infrastructure during the second half of the year. Sweco was entrusted with contributing its expertise to some of the Nordic region's largest infrastructure initiatives in modern times. Among other things, Sweco will design two of the first three stretches of Sweden's first high-speed railway, modernise the Östfoldbanan in Norway, serve as site supervisor for the extension of Helsinki's underground metro, and design Stockholm's new underground metro line to Nacka. Vectura was fully integrated in Sweco Sweden as of 1 January. Net sales increased 13 per cent, substantially through acquisitions, to SEK 9,214 million. Organic growth was 3 per cent and operating profit totalled SEK 762 million. The profit improvement was mainly attributable to Vectura's contribution in Sweden, reduced integration costs, and improved profit in Finland and Central Europe. Profit was charged with integration costs for Vectura totalling SEK 11 million. The Board adopted a new financial target of net debt not to exceed 2.0 times EBITDA. Net debt in relation to EBITDA was 1.3. The number of employees at year end was 8,943. The bid price for the Sweco B share was SEK 106.00 at year end, the same price as at year-end 2013.
Overall, the market for Sweco's services is good and development is stable. The Swedish market was strong. The Norwegian market was good, but had weakened. Markets in Denmark, Western Europe and Central Europe were good and developed positively. The markets in Finland and the Netherlands remained challenging. Grontmij, with approximately 6,000 employees in 9 countries, was acquired on 1 October. Sweco is now Europe's leading engineering and architecture consultancy. In 2014 Grontmij had annual sales of approximately SEK 6.0 billion and EBITA (as per Sweco's definition) of approximately SEK 203 million, excluding extraordinary expenses and the divested business in France. Sales for the combined company total approximately SEK 16 billion. Following the acquisition, Sweco has around 14,500 employees (pro forma 2015). Integration is underway and proceeding according to plan. As of 1 October Sweco is organised into 7 geographic business areas. Sweco's Board of Directors decided to introduce EBITA as the primary earnings measure, to replace EBIT (operating profit). Accordingly, EBITA has been the primary earnings measure used for internal and external results monitoring since Q4 2015. Net sales increased 24 per cent to SEK 11,389 million. Adjusted for extraordinary expenses of SEK 250 million related to the Grontmij acquisition, EBITA totalled SEK 991 million. EBITA totalled SEK 740 million. Net debt in relation to EBITDA was 1.8 times. The number of employees at year end was 15,151. The closing price for the Sweco B share was SEK 124.25, an increase of 21 per cent.
Sweco plans and designs tomorrow's communities and cities. Our work produces sustainable buildings, efficient infrastructure and access to electricity and clean water. With 14,500 employees in Europe, we offer our customers the right expertise for every project. We deliver qualified consulting services in the fields of engineering and architecture to thousands of customer in tens of thousands of projects every year. Approximately 40 per cent of our turnover is from the public sector and 60 per cent from the private sector. Our ten largest customers account for around 20 per cent of net sales. These factors give Sweco a good risk diversification. In spite of this, the Group is exposed to a number of risks through its business activities. Consequently, one important aspect of management and control of the Group's operations is to maintain effective risk management in which risks are identified, evaluated and handled. The aim of Sweco's risk management is to secure the Group's long-term earnings growth and ensure that the various business units achieve their objectives.
Sweco's goals, which are expressed in the company's business plan and strategy, provide a foundation for the company's risk management. The Group's risk management is based on a company-wide risk analysis. This inventory of risks is aimed at identifying the most significant risks that the company is exposed to, the probability that they will occur and their potential impact on the company's goals. Concurrently, the effectiveness of the existing controls and risk mitigation measures is assessed. The results of the overall risk analysis have been gathered in a risk map that reflects the company's risk exposure in each business area and in total for the Group. The risk maps are updated regularly and are used in quarterly risk monitoring work. At the board meetings of each business area, risk management is a standing item on the agenda.
Sweco's risk management covers all business areas, companies/ divisions and processes in the Group. Each manager is responsible for risk management activities in his/her respective area. The Group's Board of Directors and top management have ultimate responsibility for risk management.
The Executive Team develops and follows up on risk management at Group level. The General Counsel initiates reporting of risks on the corporate level, which is done regularly to the Audit Committee. An annual comprehensive report on Group risk and internal control is addressed by the Board, the Audit Committee and the Executive Team. A report on the Group's material disputes is presented at each meeting of the Board and the Audit Committee. Below is a schematic illustration of the company's risk management process.
In light of the takeover of Grontmij N.V. the risk management processes of Sweco will be rolled out to the new entities.
Sweco's operations are exposed to a number of strategic, operational and financial risks. The risks that Sweco has identified as the most significant in its business operations, and the ways in which these are managed, are described here.
During the year the company maintained its focus on business ethics and a business ethics compliance programme, based on Sweco's CSR policy, was implemented throughout the Group. Work included a revision of the CSR policy, new routines and training measures. There are a number of procedures including those that apply to business partners incorporated into the management system sweco@work. For managers there is a full-day training course and for all employees, an e-learning course that also includes a "team-learning" section where groups meet and discuss business ethical dilemmas. Dilemma discussions have also been held by Sweco's Executive Team. The training programme and dilemma discussions will continue through 2016. A whistle-blower function (Sweco Ethics Line) has been in place since 2013 and enables the anonymous reporting of suspected improprieties. The purpose of the compliance programme is to increase awareness, ensure that adequate risk management procedures are in place, and monitor compliance within the Group. The full-day training for managers and key employees will continue in 2016 and will also include regional managers. The newly acquired entities will also be enrolled in the business ethics compliance programme. The full-day training will be provided to all management and key employees, with local roll-out in all countries.
Changed market conditions caused by factors such as economic decline, lower propensity among the customers to invest, changes in political priorities, changes in purchasing behaviour, new legislation and customer consolidation may result in lower income and margins for Sweco. Sweco's decentralised organisation and closeness to the customers enable early observation of changes in the market. The effects of these risks are reduced through a wide geographic presence in areas with often differing market cycles, a comprehensive range of services and a large customer base that is spread across different industries and sectors.
Project risks consist of the risks connected to an individual assignment, such as miscalculation of the amount of time needed or costs involved. Assignments may also lead to disputes regarding Sweco's right to payment and the customer's claim to compensation for any damages caused by Sweco. In the assignments, contracts are entered into on suitable terms to minimise risks and avoid disputes with customers. Among other things, the agreements ensure that the scope of the assignment is defined, that Sweco has the right to payment on performance according to the terms of the contract and that the terms of liability correspond to the insurer's requirements. Sweco has an insurance programme that includes professional indemnity insurance to protect against liability for damages related to performance of the assignments. Quality assurance of the assignments is supported by management systems (including sweco@work, which is certified according to ISO 9001, ISO 14001 and OHSAS 18001 standards).
Sweco's success is dependent on its ability to attract, develop and retain the top talent. Sweco has a strong brand and is repeatedly given high rankings as an attractive workplace among students and young engineers. Sweco uses a number of processes and tools to develop employees and strengthen its leadership, such as the Sweco Talk performance review, the Sweco Employee Survey, skills training through Sweco Academy and the leadership aspects defined in the Sweco Leadership
Compass, as well as management training and succession planning through the Next Generation Programme.
Skills development and knowledge sharing are also vital for Sweco's success. The employees' expertise and ability to translate their knowledge into optimal solutions for the customers is the core of the Group's business and distinguishes Sweco from its competitors. Shortcomings in knowledge sharing may result in risks such as low quality in customer deliveries. Knowledge and processes for knowledge sharing and cooperation are therefore a strategic priority for Sweco. The exchange of experiences and learning takes place primarily through work in the assignments. All employee development is focused on performance, knowledge and knowledge sharing. Sweco has a large number of processes and tools for knowledge sharing.
Sweco's growth is partly due to acquisitions, which may involve risks. Examples include a transaction being based on incomplete or incorrect data, key persons leaving the company, the integration being unsuccessful or anticipated results failing to materialise. Acquisitions in new markets involve risks associated with factors such as an understanding of the local market conditions, price scenario and competitive situation. These risks are minimised through a well-developed acquisition and integration process where decisions about new acquisitions are made by the Board or the Executive Team according to a process with fixed decision-making points. Sweco's Board of Directors conducts an ongoing evaluation of previous acquisitions. The continued integration of Grontmij and the realisation of synergies are priorities in 2016.
Sweco's consultants are dependent on access to advanced IT tools and a secure IT environment. The availability and reliability of the company's IT environment is therefore critical for uninterrupted business operations. Effective firewalls and virus protection, regular software upgrades and redundant data centres minimise disruptions arising from technical problems. The company has information security guidelines focused on how the employees and subconsultants should act in order to always uphold the highest possible level of security toward all stakeholders.
Sweco's success is associated with the ability to communicate effectively with both internal and external stakeholders. Through clear communication and a strong brand we inspire confidence and build relationships. A deeply rooted culture in which employees are well aware of the company's values and policies strengthens the Group's identity and creates security for customers. Sweco's communication guidelines include instructions for price-sensitive information, mass media contacts and use of the social media. There are also guidelines for crisis management that include procedures for dealing with communication in a crisis situation.
Sweco's growth involves an expanding international presence. This may give rise to risks tied to business and political climates and increased exposure to CSR-related risks. With more than 100 years of experience in project exports, Sweco has developed and established routines and tools for initiating and implementing assignments around the world. Sweco's policies, guidelines and processes are subject to continuous review; during the year the company further developed these with a special focus on business ethics violations such as fraud, bribery, competition-restraining practices and conflicts of interest.
Sweco has a zero tolerance policy with regard to non-compliance with business ethics. All Sweco employees are required to undergo business
ethics training. A full-time, dedicated Compliance Officer was appointed in 2015. An Ethics Line allows internal and external stakeholders to report potential ethics issues. All notifications of potential misconduct are investigated in a standard manner.
Through its operations, Sweco is exposed to different types of financial risks. Sweco's finance policy states how these risks are to be managed in the Group. The Board of Directors is responsible for the finance policy, which contains guidelines, targets and a division of responsibilities for the Treasury Department together with rules for financial risk management. For more information, see Note 33 on pages 80–81.
Changes in interest rates, exchange rates and the market prices of financial instruments may affect Sweco's cash flow, profit and balance sheet. Sweco has a strong balance sheet, which means that direct interest rate risk is limited. With regard to currency risk, the Group normally has natural risk coverage since both sales and expenses are denominated in local currency. In cases where contracts are entered into in a non-local currency, the contracted and anticipated payment flows are hedged through forward contracts. Liquidity risk is the risk of being unable to meet financial obligations when they fall due. Thanks to its strong financial position and available overdraft facilities, Sweco's liquidity risk is low.
Credit risk is defined as the risk related to customers' ability to pay. Sweco has a balanced base of around 23,000 customers. Sweco is not dependent on any individual customer, since the largest customers account for only a small share of total sales. The assignment volume is evenly distributed between the public and private sectors. Historically, credit losses have been minor.
Non-compliance with tax regulations may result in fines or other expenses for the company. There is also a risk that anticipated benefits resulting from the existence of compensable tax losses may not be realised.
In the Group's financial reporting, there is a risk that errors may arise and that the financial reporting is not prepared in accordance with legal requirements, rules for listed companies or applicable accounting standards. Through an effective control environment, clear instructions and internal normative documents for financial reporting, Sweco works continuously with control of its accounting and reporting. In addition, extensive monitoring and analysis take place through the use of reporting systems, budgets, forecasts, etc. The Executive Team carries out monthly reviews with the management of each business area. For more information about internal control, see pages 41–42.
Born in 1966. Board Chairman. Member of the Board since 2012. Directorships include: Skirner AB, Hemfrid i Sverige AB and Sparbössan Fastigheter AB. Education: Architect, Royal Institute of Technology in Stockholm (KTH). Experience: CEO of Skirner AB. Holdings in Sweco: 281,250 directly held shares and 14,380,168 shares held through Skirner Förvaltning AB, which is owned by the Nordström family.
Born in 1943. Member of the Board since 2009. Chairman of: Gränges AB and Herenco AB. Directorships include: AxFast AB, Investment AB Latour, Recipharm AB and Beijer-Alma AB. Education: M.Sc.Econ., Lund University. Experience: former President and CEO of Axel Johnson International, former Vice President of SSAB and former President and CEO of Nobel Industrier AB. Holdings in Sweco: 13,500 shares (with related parties).
Born in 1955. Member of the Board since 2008. Chairman of: Team Olivia AB, Global Scanning A/S and the Ruter Dam Foundation. Directorships include: HiQ International AB, PostNord AB and Dustin Group AB. Education: Systems Scientist, Umeå University. Experience: former President of EDS Norra Europa. Holdings in Sweco: 1,125 shares.
Born in 1965. President and CEO since 2012. Year of employment: 2012. Education: M.Sc.Eng., Chalmers University of Technology; Executive MBA, London Business School and Columbia Business School (New York). Experience: former President of NCC Construction Sweden. Holdings in Sweco: 84,791 shares (with related parties).
Born in 1962. Member of the Board since 2009. Education: studies at the Stockholm School of Economics and Stockholm University. Experience: economist, journalist, financial analyst, active in own business Ity AB. Holdings in Sweco: 3,384 shares.
Born in 1952. Finnish citizen. Member of the Board since 2011. Directorships include: Stockmann Oyj, Universitetsapoteket, the Arcada Foundation and the Nottbeck Foundation. Education: Ph.D., Åbo Akademi University. Experience: former Corporate Communications Director and Corporate Vice President responsible for Sustainability at Fortum Abp. Holdings in Sweco: 5,000 shares.
Born in 1958. Member of the Board since 2013. Directorships include: ASSA ABLOY AB, Tieto Oy, Bodycote plc and Micronic AB. Education: M.Sc.Eng., Linköping University and MBA, University of Melbourne, Australia. Experience: former President of TeliaSonera International Carrier. Holdings in Sweco: 1,125 shares.
Born in 1968. Member of the Board since 2015. Directorships include: AB Fagerhult and Nord-Lock International AB. Education: MBA, Lund Univeresity. Experience: CEO of Fagerhult, former CEO of Lammhults Design Group, senior executive positions with Electrolux Group within product development and marketing. Holdings in Sweco: 30,000 shares.
Born in 1971. Employee representative since 2005. Education/experience: Architect SAR/MSA, Faculty of Engineering, Lund University. Employed by Sweco since: 1997. Holdings in Sweco: 471 shares.
Born in 1953. Employee representative since 2007. Education/experience: M.Sc.Eng., Licentiate in Engineering. Employed by Sweco since: 1988. Holdings in Sweco: 1,233 shares.
Born in 1953. Employee representative since 2008. Education/experience: Engineer. Employed by Sweco since: 2001. Holdings in Sweco: 1,181 shares.
PricewaterhouseCoopers AB Auditor in charge: Michael Bengtsson, Authorised Public Accountant. Other assignments: Indutrade, Bure, Nobina and Carnegie.
Görgen Edenhagen Born in 1964. Employed by Sweco. Employee representative since 2011. Holdings in Sweco: none.
Born in 1963. Employed by Sweco. Employee representative since 2011. Holdings in Sweco: 2 shares.
Born in 1974. Employed by Sweco. Employee representative since 2015. Holdings in Sweco: 1,116 shares.
TOMAS CARLSSON Born in 1965. President & CEO since 2012. Year of employment: 2012. Holdings in Sweco: 84,791 shares (with related parties).
ÅSA BARSNESS Born in 1973. Communications Director at Sweco AB since 2013. Year of employment: 2014. Holdings in Sweco: 1,902 shares.
LISA LAGERWALL Born in 1972. General Counsel at Sweco AB since 2011. Year of employment: 2006. Holdings in Sweco: 5,866 shares.
ÅSA BERGMAN Born in 1967. President of Sweco Sweden since 2012. Year of employment: 1991. Holdings in Sweco: 18,874 shares.
JONAS DAHLBERG Born in 1973. Chief Financial Officer since 2012. Year of employment: 2008. Holdings in Sweco: 29,115 shares.
JESSICA PETRINI Born in 1971. HR Director at Sweco AB since 2006. Year of employment: 1998. Holdings in Sweco: 2,490 shares.
BO CARLSSON Born in 1956. President of Sweco Western Europe since 2015. Year of employment: 1990. Holdings in Sweco: 16,279 shares.
MARKKU VARIS Born in 1958.
GRETE ASPELUND Born in 1971. President of Sweco Norway since 2016. Year of employment: 2016.
Holdings in Sweco: 1,275 shares.
President of Sweco Finland since 2013. Year of employment: 1993. Holdings in Sweco: 4,116 shares.
INA BRANDES
Born in 1977. President of Sweco Central Europe since 2015. Year of employment: 2015 (previously employed by Grontmij). Holdings in Sweco: 5,629 shares.
JOHN CHUBB Born in 1965. President of Sweco Denmark since 2015. Year of employment: 2015 (previously employed by Grontmij). Holdings in Sweco: 1,711 shares.
TON DE JONG Born in 1966. President of Sweco Netherlands since 2015. Year of employment: 2015 (previously employed by Grontmij). Holdings in Sweco: 1,526 shares.
The Annual General Meeting of SWECO AB (publ) will be held at 3:00 p.m. on Thursday, 14 April 2016 at Näringslivets Hus, Storgatan 19, Stockholm, Sweden. Registration for the AGM will begin at 2:00 p.m. Light refreshments will be served after the meeting.
Shareholders who wish to participate in the AGM must be entered in their own name in the register of shareholders maintained by Euroclear Sweden AB, and must have notified the company of their intention to participate no later than Friday, 8 April 2016 via Sweco's website, by letter or by calling the number provided below. The notification should include name, address, telephone number, personal identity number, registered holding and special mention if the shareholder wishes to be accompanied by an assistant. Registered participants will be mailed an admission card which is to be presented at the entrance to the AGM premises.
Shareholders whose shares are registered in the name of a nominee must temporarily re-register the shares in their own names in order to exercise their voting rights at the AGM. Such re-registration should be requested in good time prior to Friday, 8 April 2016 from the bank or securities broker that manages the shares.
Shareholders who are represented by a proxy must submit an original form of proxy and a certificate of registration, where appropriate, to be sent to the company no later than Friday, 8 April 2016. Proxies representing a legal entity must attach a verified certificate of registration or corresponding proof of authorisation to sign for the shareholder.
The items of business required by law and the Articles of Association will be dealt with at the Annual General Meeting.
The Board of Directors proposes that the shareholders receive a dividend of SEK 3.50 per share. The proposed record date is Monday, 18 April 2016. If the AGM decides in favour of the proposal, dividends are expected to be disbursed by Euroclear Sweden AB on Thursday, 21 April 2016.
Annual growth in net sales in local currencies, based on acquired businesses.
Amortisation and impairment of goodwill and acquisition-related intangible assets, revaluation of additional purchase price, and profit and loss on the divestment of companies and operations.
Billable hours in relation to total hours of attendance.
Total assets less interest-free current and non-current liabilities and deferred tax liabilities.
The year's cash flow divided by the average number of shares outstanding (excluding treasury shares).
Interest-bearing liabilities in relation to shareholders' equity.
The year's transfer to shareholders (proposed for 2015) in relation to the closing price for the Sweco Class B share.
Profit for the year attributable to owners of the Parent Company divided by the average number of shares outstanding (excluding treasury shares).
Operating profit before acquisition-related items.
EBITA margin EBITA in relation to net sales.
Operating profit before amortisation/depreciation and impairments of intangible assets; property, plant and equipment; and acquisitionrelated items.
EBITDA margin EBITDA in relation to net sales.
The number of employees who left the Group during the year in relation to the average number of employees.
Equity/assets ratio Shareholders' equity in relation to total assets.
Equity attributable to owners of the Parent Company divided by the number of shares outstanding (excluding treasury shares) at the end of the period.
Refers primarily to transaction expenses and costs for restructuring and/or integrating acquired companies.
Effect of exchange rate fluctuations on net sales growth.
International Accounting Standards.
International Financial Reporting Standards.
Profit after net financial items plus financial expenses in relation to financial expenses.
The year's closing price for the Sweco Class A, Class B and Class C share multiplied by the number of shares outstanding in each class.
Interest-bearing liabilities less cash and cash equivalents divided by shareholders' equity.
Interest-bearing liabilities less cash and cash equivalents.
The potential number of hours, according to the calendar, that an employee could work if he/she is not absent and does not work overtime.
Number of individuals employed at the end of the period.
Hours of attendance plus hours of absence (excluding long-term absence) divided by normal working hours.
Operating profit (EBIT) Profit before net financial items and tax.
Annual growth in net sales in local currencies, excluding acquisitions.
Profit before tax in relation to net sales.
Profit after net financial items plus financial expenses in relation to average capital employed.
Profit for the year attributable to owners of the Parent Company in relation to average equity attributable to owners of the Parent Company.
Profit after net financial items plus financial expenses in relation to average total assets.
Share price performance including reinvested dividends.
Operating profit plus personnel costs divided by full-time equivalents.
Production: Sweco, Elli Production, Volt and Proidea. Translation: JKL. Printing: Ineko. Cover illustration: Tobias Green. Board member photos: Stefan Berg. Executive Team photos: Casper Hedberg. Other photos and illustrations: ALA Architects & Esa Piironen Architects, BAM NV, Fraport AG, Tobias Green, Casper Hedberg, Kontrastfoto, Lentokuva Vallas Oy, LINK Arkitektur, Mecanoo, Linda Nordahl Jakobsen, Oscar Properities, Jan Polansky, Rijkswaterstaat, Shutterstock, SRV/Helin & Co/VoimaGraphics, Thinkstock, Total/Philippe Kirchherr, Thomas Wiklund, Wingårdh and WTP Pilsner/Jan Zeman.
SWECO AB (PUBL). CORP. ID NO 556542-9841 GJÖRWELLSGATAN 22, BOX 34044, SE-100 26 STOCKHOLM TEL: +46 8-695 60 00. FAX: +46 8-695 60 10 EMAIL: [email protected]. WWW.SWECOGROUP.COM
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