NCC-Group Interim report January-September 2001

NCC-GROUP Interim report January-September 2001 July- Jan- 12- Sept Sept month 2001 2000 2001 2000 Oct 00 Jan- (Pro (Pro -Sept Dec forma) forma) 01 2000 1) 1) (Pro (Pro forma) forma) 1) Orders received, SEK M 11 623 9 841 36 32 567 50 615 46 316 866 Net sales, SEK M 12 239 10 303 32 29 012 44 513 40 808 717 Operating profit, SEK 530 621 896 1 721 1 596 2 421 M 530 527 896 809 1 596 1 509 excl. items affecting comparability Profit after financial 323 529 451 1 472 1 042 2 063 items, SEK M 323 435 451 560 1 042 1 151 excl. items affecting comparability Earnings per share, SEK 1.70 2.70 2.50 3.45 6.50 7.45 excl. items affecting comparability Return on equity, % excl. items affecting 7.4 8.4 comparability 1) For information about pro forma figures, see page 2. · Third-quarter operating profit amounted to SEK 530 M (527) was charged with a total of SEK 120 M for write-downs of fixed assets and restructuring costs. · Most of the operations conducted by NCC Contracting and NCC Housing in the Nordic region are developing favorably. · A comprehensive action program will result in considerable write-downs, provisions and restructuring costs in the fourth quarter. As a result, a full-year loss after financial items is expected. · A new Group structure is to be implemented at the beginning of 2002. Comments by Chief Executive Officer Alf Göransson: "The NCC Group's profitability has been unsatisfactory for a long time and has not reached up to the Company's own targets for the past six years. Our overheads are too high, our tied-up capital is excessive and we have a number of loss-making operations that are experiencing financial and structural problems. This situation must be rectified. Since major changes are required in order to resolve the problems, a comprehensive action program is currently being formulated in stages. One aspect of this process is the implementation of a comprehensive risk analysis. Most of the costs for the measures concerned will be charged against fourth-quarter earnings, and considerable write-downs, provisions and restructuring costs are expected. As a result, it is anticipated that the Group will report a full-year loss for 2001, after financial items. As of January 1, 2002, the NCC Group will operate in accordance with a new structure. The new organization will enable us to improve our focus on customers by increasing the degree of geographic responsibility and emphasizing the importance of our customers' value chain. In addition, the structure will be simplified by reducing the number of decision- making levels, thus accelerating the decision process and cutting overhead costs." NCC has a strong market position and key parts of its core operations in the Nordic region are showing a favorable business trend. By focusing on its core operations, and after a targeted action program has been defined and implemented, NCC has excellent potential to achieve profitability that is better and more stable than the level shown to date. GROUP Pro forma The acquisition of Rieber Roads, which became effective on November 1, 2000, is included pro forma for full-year 2000. This mainly affects NCC Industry. In order to facilitate comparisons with previous years, comparative figures (pro forma) are presented for the Group and each business area as if the changes had been implemented on January 1, 2000. Orders received and order backlog Orders received by the NCC Group during July - September 2001 amounted to SEK 11,623 M (9,841), up 18 percent compared with the corresponding period of 2000. Adjusted for currency effects, the increase was 11 percent. Proprietary property-development projects accounted for SEK 692 M (0) of total orders received. Proprietary housing-development projects accounted for SEK 170 M (209). Order received during January - September amounted to SEK 36,866 M, up 13 percent compared with the corresponding period of 2000. Adjusted for currency effects, the increase was 5 percent. Proprietary property- development projects accounted for SEK 2,083 M (1,114) of orders received during January - September and proprietary housing-development projects for SEK 1,883 M (2,218). The order backlog on September 30 was approximately SEK 31 billion, a rise of 19 percent compared with approximately SEK 26 billion at year-end 2000. Currency effects accounted for about SEK 1.7 billion of the increase in the order backlog. Net sales and earning Consolidated net sales during July - September 2001 amounted to SEK 12,239 M (10,303), up 19 percent compared with the year-earlier period. Sales during January - September 2001 totaled SEK 32,717 M, 13 percent higher than in the year-earlier period. The Group's operating profit (EBIT) for July - September 2001 amounted to SEK 530 M, compared with SEK 527 M in the year-earlier period, excluding items affecting comparability (pension refunds from Alecta). Earnings were charged with SEK 120 M resulting from write-downs of asset values in tunneling operations and from costs for downsizing the Corporate Office. The increase in earnings that resulted from the higher sales was mainly offset by losses incurred by civil engineering operations in Norway, Denmark and Poland, plus higher selling and administrative costs. The Group's operating profit (EBIT) for the first nine months of 2001 amounted to SEK 896 M, compared with SEK 809 M in the year-earlier period, excluding items affecting comparability. Profit after financial items for July - September 2001 totaled SEK 323 M compared with SEK 435 M in the year-earlier period, excluding items affecting comparability. Net financial items amounted to an expense of SEK 207 M (expense: 92). The deterioration in net financial items was due to an increase in tied-up capital. Net financial items include exchange-rate effects corresponding to an expense of SEK 18 M. The term exchange-rate effects refers to the impact that changes in various cur rencies have on ongoing financial reporting within the NCC Group as a result of conversion into Swedish krona. In total, exchange-rate effects had a negative impact of SEK 26 M on third-quarter profit after financial items. Profit after financial items during the first nine months of the year amounted to SEK 451 M (1,472). Investments and financing Cash flow, before investments, during July - September was positive in an amount of SEK 53 M. Cash flow during the year-earlier period amounted to SEK 1,726 M. Accumulated cash flow before investments for the January - September period was negative in an amount of SEK 1,692 M, while cash flow in the corresponding period of the preceding year was positive in an amount of SEK 1,411 M. The Group's gross investments in real estate during July - September amounted to SEK 924 M (1,006), of which property development projects accounted for SEK 640 M (569) and housing projects for SEK 276 M (305). The Group's gross investments in other fixed assets amounted to SEK 289 M (237). The Group's gross investments in real estate during January - September amounted to SEK 3,119 M (3,617), of which property-development projects accounted for SEK 2,268 M (1,996) and land intended for housing projects for SEK 748 M (1,099). The Group's gross investments in other fixed assets during the same period amounted to SEK 1,360 M (1,166). Cash flow after investments during July - September was negative in an amount of SEK 277 M. Cash flow during the corresponding period of the preceding year, which was not based on pro forma accounts, was positive in an amount of SEK 1,833 M. On September 30, 2001, NCC's net indebtedness (interest-bearing liabilities less liquid assets less interest-bearing receivables) amounted to SEK 10,535 M (8,098). The change was due mainly to an in crease in capital tied up in housing and property-development projects. At year-end 2000, net indebtedness totaled SEK 8,118 M. On September 30, 2001, the equity/assets ratio was 24 percent (28), compared with 27 percent at year-end 2000. Approximately 1 percentage point of the change derived from application of the RR10 accounting principle (see page 8). CASH FLOW ANALYSIS * July- July- Jan- Jan- Oct Jan- Sept Sept Sept Sept 00- Dec SEK M 2001 2000 2001 2000 Sept 2000 -01 Funds provided from -146 688 -886 989 -1 784 operations 091 Change in working 199 1 038 -806 422 -1 -505 capital 733 Operating capital 53 1 726 -1 1 411 -2 279 692 824 Investments -330 107 -584 -1 -2 -2 194 025 635 Cashflow before -277 1 833 -2 217 -4 -2 financing 276 849 356 Funds generated 848 -1 2 532 -142 4 835 2 161 externally 025 Net change in liquid 571 808 256 75 -14 -195 assets Liquid assets 1 947 1 638 2 207 2 371 2 446 2 371 opening balance Exchange-rate 39 94 125 31 difference in liquid assets Liquid assets at the 2 557 2 446 2557 2 446 2 557 2 207 end of the period * Cash flow during 2000 has not been computed on a pro forma basis. BUSINESS AREAS As of January 1, 2001, NCC is divided into six business areas: NCC Contracting, NCC Housing, NCC Property Development, NCC Industry, NCC Telecom and NCC Service. As a result of this change, a larger proportion of what were previously Group-wide costs are now allocated to the various business areas. NCC Contracting The market for construction investments in the Nordic and Baltic Sea region has shown stable, albeit modest, growth during recent years, although the trends within different countries have varied sharply. Generally speaking, demand is favorable in growth regions, such as the Nordic capitals, but much weaker in other areas. NCC estimates that construction investments in the Nordic region will remain essentially unchanged in 2001, compared with the preceding year, and will weaken in 2002. However, uncertainty regarding the future trend has increased. Orders received by NCC Contracting during July-September 2001 totaled SEK 7,668 M (6,294), up 22 percent compared with the year-earlier period. The main increases in orders received were noted in Norway and Sweden. Orders received during the first nine months of the year rose 13 percent to SEK 25,900 M. The order backlog on September 30, 2001 was SEK 24 billion, 19 percent higher than the year-end figure of SEK 20 billion. Net sales during July-September 2001 rose by 24 percent to SEK 8,628 M (6,966). The increase, which derived mainly from the favorable order situation during the past 12 months, was attributable to all parts of the Nordic market. Operating profit (EBIT) for July-September amounted to SEK 16 M (91). The earnings decline compared with the year-earlier period was due to a write-down of assets in tunneling operations and losses incurred by civil engineering operations in Denmark, Norway and Poland. NCC's participation in the associated company A-Train amounted to a loss of SEK 7 M (loss: 11). When the previous expectation that A-Train's passenger volume would increase during the autumn failed to materialize, due to a downturn in air traffic, expectations were revised, whereby it is now estimated that it will take several years before A-Train makes a positive contribution to profit. NCC Contracting Quartal values Jan-Sept 12-months SEK M Q3: Q3: Q4: Q1: Q2: 2001 200 Oct Jan- 01 00 00 01 01 0 00- Dec Sept 2000 01 Orders received, 7 6 10 8 9 25 23 36 33 SEK M 668 294 992 856 376 900 007 892 999 Order backlog, 24 17 20 22 24 24 17 24 20 remainig to be 021 879 195 733 677 021 879 021 195 earned, SEK M Net sales, SEK M 8 6 9 6 8 23 19 32 28 628 966 147 508 242 378 775 524 921 Operating profit 16 91 - - 20 -74 -9 - - 68 (EBIT), SEK M 59 110 133 Operating margin 0.2 1.3 - - 0.2 -0.3 0.0 -0.4 -0.2 (EBIT) (%) 0.6 1.7 Net margin (%) 0.3 1.6 - - 0.6 -0.1 0.3 -0.2 0.1 0.3 1.5 Operating profit 28 109 -30 -96 26 -41 69 -72 39 (EBIT), excl. BOT, SEK M Operating margin 0.3 1.6 - - 0.3 -0.2 0.3 -0.2 0.1 (EBIT), excl. 0.3 1.5 BOT, (%) Net margin, 0.5 1.9 0.0 - 0.7 0.1 0.7 0.0 0.4 excl. BOT, (%) 1.3 Return on 4.1 4.8 capital employed (%) NCC Housing The Nordic market for residential construction has been favorable during 2001, particularly in metropolitan areas. In Stockholm, the supply side has increased slightly, but demand has remained strong, resulting in relatively stable price levels. Market conditions in Oslo and Copenhagen have also been favorable, despite a sharp drop in residential construction in Denmark as a whole during 2001. In Helsinki the weakening noted earlier this year was accentuated during the third quarter. As a result of softer market conditions in Germany (Berlin/Brandenburg), as noted in the first half of the year, supply was reduced and prices appear to have stabilized. The market trend also remained weak in Poland (Warsaw). Orders received during July-September 2001 rose by 53 percent to SEK 1,358 M (885). Increases were mainly noted in markets outside Sweden, particularly in Denmark. The order backlog on September 30, 2001 was approximately SEK 5.7 billion, compared with SEK 5.0 billion at year- end. During the third quarter, the number of total-package housing starts was 521. At September 30, 2001, NCC Housing owned development rights corresponding to approximately 20,800 housing units, an increase of about 4,100 compared with year-end 2000. Two thirds, or 13,900, of these development rights were in Sweden, with the Stockholm region accounting for slightly more than half, or 7,700. Net sales during July-September amounted to SEK 1,384 M (1,030). This 34- percent sales increase was mainly attributable to Denmark. Adjusted for currency effects, the increase was 23 percent. Operating profit (EBIT) during July-September amounted to SEK 66 M (13). The increased earnings derived mainly from improved results in Denmark, Norway and Finland. NCC Housing Quartal values Jan-Sept 12-months SEK M Q3: Q3: Q4: Q1:0 Q2: 2001 2000 Oct Jan- 01 00 00 1 01 00- Dec Sept 2000 01 Orders received, 1 1 2 1 4 4 6 6 SEK M 358 885 884 160 216 734 171 618 055 Order backlog, 5 4 5 5 5 5 4 5 5 remainig to be 672 837 023 802 463 672 837 672 023 earned, SEK M Net sales, SEK M 1 1 1 1 1 4 3 6 5 384 030 785 401 562 347 581 132 366 Operating profit 66 13 78 53 61 180 129 258 207 (EBIT), SEK M Operating margin 4.8 1.2 4.4 3.8 3.9 4.1 3.6 4.2 3.9 (EBIT) (%) Net margin (%) - 0.6 3.9 2.0 2.7 1.2 2.4 2.5 2.9 1.1 Return on 9.5 10.9 capital employed (%) NCC Property Development Uncertainty regarding the general economic trend has affected developments in the European real estate market. Generally speaking, the rental market has declined at a greater rate than the investor market. The sluggish state of market conditions in Nordic capitals that was noted during the second quarter was accentuated during the third quarter, particularly in Stockholm and to some extent in Helsinki. The weaker market conditions have resulted in a more cautious approach to the start-up new projects. In several markets, however, the downturn is from a relatively high level. Sales within NCC Property Development during July-September 2001 totaled SEK 173 M (203) and mainly derived from rental revenue from managed properties. Operating profit (EBIT) amounted to SEK 158 M (122). NCC Property Quartal values Jan-Sept 12-months Development SEK M Q3:0 Q3:0 Q4:0 Q1:01 Q2:0 2001 2000 Oct Jan- 1 0 0 1 00- Dec Sept 2000 01 Property development - Sales revenues 538 1 1 366 430 1 334 1 577 2 3 028 021 451 785 - Book value -372 -1 -1 -226 -287 -885 -1 -2 -2 004 253 349 138 602 - Sales expenses -16 34 -4 8 -3 -11 -20 -15 -24 - Other -47 -3 -27 -20 -22 -89 -35 -116 -62 operating expenses - Associated and 2 4 33 1 8 11 6 44 39 other companies Profit, property 105 52 200 129 126 360 179 560 379 development Sales of managed properties - Sales value 11 235 1 38 522 571 994 1 2 173 179 750 - Book value -7 -230 -863 -29 -384 -420 -997 -1 -1 283 860 - Sales expenses -7 -7 -35 -5 -4 -16 -31 -51 -66 - Associated and 45 9 3 12 113 57 158 other companies Profit, managed -3 -2 326 13 137 147 79 473 405 properties sales Managed properties -Operating net 77 100 80 79 74 230 302 310 382 - Administrtive -21 -28 -97 -29 -30 -80 -94 -177 -190 costs - Associated and -4 4 -4 other companies Profit, managed 56 72 -21 50 44 150 212 129 192 properties Operating profit 158 122 505 192 307 657 470 1 976 NCC Property 163 Development Net financial -23 -67 -58 -46 -12 -81 -138 -140 -204 items Profit after net 135 55 447 146 295 576 332 1 772 financial items 022 NCC Property Development Return on 12.1 10.7 capital employed (%) Property development The sales volume within property development operations during July- September amounted to SEK 538 M (1,021), resulting in operating profit of SEK 105 M (52), after administrative costs and other items. The largest transaction during the period was the sale of the Lysaker Torg property in Oslo, which comprised a sales volume of SEK 496 M and yielded a gain of SEK 81 M. In addition to this transaction, a few minor sales were implemented. Construction-initiated and construction-approved projects amounted to SEK 7.7 billion on September 30 in terms of total project costs. Costs incurred to date in all initiated and approved projects amount to SEK 4.3 billion, corresponding to 56 percent of the total project costs. The leasing rate was 46 percent, the same level as at midyear. Compared with the preceding quarter, the portfolio was mainly affected by the sale of Lysaker Torg, which was fully leased but not fully completed. Total project costs for construction-initiated projects that will be completed within 18 months amounted to SEK 5.7 billion on September 30, 2001. The completion rate for these projects is 66 percent and the leasing rate 54 percent. The total portfolio of construction-initiated and planned projects on September 30 amounted to SEK 17.2 billion, compared with SEK 16.4 billion on June 30. Sales of managed properties During July-September, managed properties with a total sales value of SEK 11 M (235) were sold, resulting in a loss of SEK 3 M (loss: 2). On September 30, the book value of managed properties was SEK 4.2 billion (5.1). Property management Rental revenues during July-September totaled SEK 136 M (155). The decline in rental revenues was a direct effect of the reduced volume of managed properties. The operating net was SEK 77 M (100) and the visible yield 7.1 percent (7.4). On September 30, the vacancy rate in terms of floor space in the portfolio of wholly owned properties was 6 percent (6), unchanged compared with the end of the second quarter. NCC Industry NCC Industry is the largest player in the Nordic market for asphalt and aggregates. The asphalt market in Denmark and Norway stabilized during January-September and prices improved, which is in line with the expectations NCC noted in connection with the acquisition of Rieber Roads. However, price hikes during 2001, due to increased oil prices, have led to a reduction in volumes in the Danish asphalt market. NCC Industry's net sales during July-September rose 15 percent to SEK 2,592 M (2,263). Approximately half of the increase was attributable to exchange-rate effects. The remainder derived mainly from newly started operations in Finland, Norway and New Markets (Baltic countries, Poland and St. Petersburg). Operating profit (EBIT) during July-September amounted to SEK 418 M (326). The improvement was mainly attributable to a continued strong business trend for machinery operations, improved conditions in the asphalt market and synergies resulting from the acquisition of Riebers Roads, which were in line with expectations. Exchange-rate effects of SEK 25 M had a favorable impact on earnings. NCC Industry Quartal values Jan-Sept 12-months SEK M Q3: Q3: Q4: Q1:0 Q2: 2001 2000 Oct Jan- 01 00 00 1 01 00- Dec Sept 2000 01 Orders received, 2 2 1 1 2 5 5 7 6 SEK M 533 260 853 022 292 847 137 700 990 Order backlog, 179 68 114 230 179 68 179 108 remainig to be 108 earned, SEK M Net sales, SEK M 2 2 1 940 2 5 5 7 6 592 263 809 178 710 100 519 909 Operating profit 418 - 261 391 293 598 500 (EBIT), SEK M 326 207 288 Operating margin 16. 14. 11. - 12. 6.9 5.7 8.0 7.2 (EBIT) (%) 1 4 4 30.7 0 Net margin (%) 13. 12. 8.1 - 9.1 3.6 2.8 3.9 4.2 5 2 36.3 Return on 9.9 10.0 capital employed (%) NCC Telecom NCC Telecom conducts operations in two business units: Mobile Networks (build-out of GSM and UMTS networks) and Broadband Networks (build-out of fixed broadband networks). In Sweden, work on the build-out of third-generation mobile networks (UMTS or 3G) has begun. During 2001, NCC has concluded two agreements covering 3G build-out in Sweden, one with Tele2 in May and the other with 3G Infrastructure Services (3GIS) after the end of the report period. The build-out process in the Nordic region is taking longer than expected, due to a generally cautious approach in the telecom sector, whereby the volumes offered for tender are smaller than expected. NCC's Broadband Networks unit is in the build-up phase. As a consequence of these factors, NCC has revised its assessment of market growth and volumes in the telecom sector. Accordingly, volumes in the years immediately ahead are now expected to be lower than previously estimated. Orders received by NCC Telecom during July-September totaled SEK 23 M (43). Net sales during July-September amounted to SEK 53 M (38), which derived mainly from the continued build-out of existing GSM networks Sweden and Denmark. NCC Telecom reported an operating loss (EBIT) of SEK 27 M (profit: 3) for July-September. The loss was due to tendering expenses and delays in production starts. NCC Telecom Quartal values Jan-Sept 12-months SEK M Q3: Q3:0 Q4: Q1: Q2: 2001 2000 Oct Jan- 01 0 00 01 01 00- Dec Sept 2000 01 Orders received, 23 43 48 37 233 160 281 208 SEK M 173 Order backlog, 117 14 135 117 135 14 remaining to be 135 158 157 earned, SEK M Net sales, SEK M 53 38 90 58 38 149 113 239 203 Operating profit - 3 - - - -78 2 - 91 - 11 (EBIT), SEK M 27 13 18 33 Operating margin - 7.2 - - - - 1.4 - -5.9 (EBIT) (%) 49. 14. 31. 87. 52.1 38.1 3 7 0 7 Net margin (%) - 7.6 - - - - 1.8 - -4.9 55. 13. 31. 88. 54.9 27.6 9 3 5 7 NCC Service NCC Service has two units: Building Services and Facility Management. Operations are conducted in Sweden. Orders received by NCC Service during July-September amounted to SEK 253 M (296). NCC Service reported an operating loss (EBIT) of SEK 28 M (loss: 4) for July-September. The earnings deterioration derived mainly from restructuring costs connected to the closure of a number of Building Services units in northern Sweden, due to a weak profit trend. NCC Service Quartal values Jan-Sept 12-months SEK M Q3: Q3:0 Q4: Q1: Q2: 200 2000 Oct Jan- 01 0 00 01 01 1 00- Dec Sept 2000 01 Orders received, 296 1 911 1 1 SEK M 253 331 397 400 050 381 242 Order backlog, 169 237 169 237 154 remainig to be 237 154 207 264 earned, SEK M Net sales, SEK M 305 983 811 1 1 279 346 355 349 329 157 Operating profit - - 4 10 1 - 6 -33 -10 - 23 (EBIT), SEK M 28 Operating margin - -1.5 2.9 0.3 - - -1.2 -1.7 (EBIT) (%) 10. 1.6 3.4 2 Net margin (%) - -2.1 2.7 0.0 - - -1.8 -0.1 -0.4 10. 1.3 3.4 4 OTHER NVS NVS, Nordisk Värme Sana, is a wholly owned subsidiary active in the market for heating and plumbing installations. Orders received during the third quarter rose to SEK 472 M (415) and operating profit (EBIT) of SEK 14 M (15) was reported. Parent Company The Parent Company reported invoiced sales of SEK 4,978 M (5,864) during the third quarter and of SEK 15,393 M (17,812) for the January-September period. After net financial items, a loss of SEK 45 M (profit: 333) was reported for the third quarter and a loss of SEK 172 M (profit: 1,581) for the January-September period. The average number of employees was 11,058 (11,686). NCC AB's repurchase of own shares The Annual General Meeting on April 3, 2001 provided the Board with renewed authorization to repurchase a maximum of 10 percent of the total number of NCC shares. The main objective of repurchases is to cover commitments under the option program that has been established for approximately 200 senior executives. Since the original repurchase authorization was granted at the 2000 Annual General Meeting, NCC has repurchased 3,474,589 Series B shares at an average price of SEK 73.64, corresponding to 3.2 percent of the total number of shares. No shares were repurchased during the third quarter. Accounting principles The financial statements comply with the Financial Accounting Standards Council's recommendations. The balance sheet at December 31, 2000 has been adapted to the Financial Accounting Standards Council's Recommendation RR 9, Income Taxes. Application of the recommendation resulted in an adjustment of shareholders' equity at December 31, 2000, as shown in the item describing changes in shareholders' equity (see page 14). NCC applies the Financial Accounting Standards Council's RR10 recommendation, which was introduced in 2001 for the reporting of contracting assignments. As a result of the recommendation, such balance- sheet items as "worked up/non-invoiced" and "invoiced/not worked up" are booked in gross amounts on a project-by-project basis. Projects for which worked-up revenues exceed invoiced revenues are reported as current assets, while projects for which invoiced revenues exceed worked- up revenues are reported as a current interest-free liability. This increases seasonal fluctuations in the NCC Group's total assets. For a more detailed account of the accounting principles and definitions applied in this interim report, reference is made to NCC's Annual Report for 2000. New President and Chief Executive Officer Alf Göransson became President and Chief Executive Officer of NCC on September 17. Downsizing of Corporate Office As an initial step in the review of the Group's strategy and organization, staffing of NCC's Corporate Office in Solna has been reduced from slightly more than 80 employees to 30 employees. The Finance, Financial & Business Control and IT corporate staffs now report to the Chief Financial Officer (CFO) and the Purchasing and Environment/Quality corporate staffs have been phased out completely at Group level. Negotiations in accordance with the Swedish Codetermination in Industry Act were concluded at the end of October. SIGNIFICANT EVENTS AFTER PERIOD END Negotiations regarding sale of NVS Negotiations are under way regarding the sale of NVS. Investigation by Competition Authority On Wednesday, October 24, the Swedish Competition Authority initiated an investigation of the asphalt operations conducted by NCC and a number of other Swedish building contractors. According to the Competition Authority, there is reason to suspect that the companies have violated Subsection 6 of the Swedish Competition Act by, among other activities, by engaging in cooperation regarding tenders and the dividing-up of markets. The investigation coincided with a decision by the Public Prosecution Office in Linköping to prosecute seven former NCC employees due to charges of serious fraud against NCC. NCC had filed the charges against the employees in March 2001. In August, the Norwegian Competition Authority initiated an investigation of several major companies in the Norwegian contracting sector, including NCC Norway. No results of the investigations have been published to date. New Group structure and business orientation as of January 1, 2002 NCC's profitability is lower than that of its major Nordic competitors and it has not reached up to the Group's own target for the past six years. One of the reasons is that, in relation to sales revenues, the Group's selling and administrative costs are higher than those of its competitors. Another reason is that a number of operations are generating losses. Capital tied up in operations is too high and the pro portion of managed properties is relatively large. In addition, excessive importance has been attached to achieving growth, based on NCC's vision of being the sector leader in the Nordic and Baltic Sea re gion. This approach is currently being revised, in order to increase the focus on profitability. In the future, operations will focus increasingly on adding value, expanding NCC's undertaking and covering a larger portion of our customers' value chain, primarily in the Nordic market. In the long term, this approach is expected to increase the Group's profitability and reduce the level of risk, compared with a strategy aimed at continued geographic expansion. In a more short-term perspective, pro fitability and a positive cash flow will be assigned priority, in precedence to volume growth. Future growth will be restricted to those operations that are based on a profitable and competitive core business. A new Group structure will be implemented on January 1, 2002 (also see separate press release), with the aim of significantly reducing selling and administrative costs. The first measure has already been implemented in the form of the downsizing of the Corporate Office from 84 to 30 positions. In addition, the new organization will improve the focus on customers, through an increased allocation of geographic responsibility and a greater focus on our customers' value chain. The structure will be simplified by reducing the number of decision-making levels and thus accelerating the decision-making process. The present Contracting, Housing, Telecom and Service business areas will be merged in a single organization, in which geographic domicile will be the determining organizational factor. This will result in the formation of NCC Contracting & Housing units in Sweden, Norway, Denmark, Finland, Germany and Poland. The Property Development business area will retain its current structure. A new business area - NCC Roads - will be formed and will include the present operations in the areas of aggregates, asphalt, paving, parts of road maintenance, road markings and ready-mix concrete - in other words, most of the former NCC Industry. Major Nordic and international civil engineering projects will be organized in NCC International Projects. NCC's machinery operations will be concentrated in a separate company marketed under its own name, with the aim of further developing machinery rental activities focused on customers other than NCC. As of the New Year, NCC's Corporate Management will consist of the CEO, country presidents, the presidents of NCC Roads, NCC Property Development and NCC International Projects and the CFO. NCC has a strong market position and key parts of its core operations in the Nordic region are showing a favorable business trend. By focusing on its core operations, and after a targeted action program has been defined and implemented, NCC has excellent potential to achieve profitability that is better and more stable than the level shown to date. The NCC Group will continue to report financial results in accordance with the current structure until the end of 2001. The new structure will become effective as of the first quarter of 2002. Solna, November 8, 2001 Alf Göransson President and Chief Executive Officer NCC´s year-end report on operations in 2001 will be published on February 12, 2002. AUDITORS' EXAMINATION REPORT We have reviewed this interim report and in this connection have followed the recommendation issued by FAR. A review is substantially more limited than an audit. Nothing has come to light that indicates that the interim report does not fulfill the requirements of the Stock Exchange Act and the Annual Accounts Act. Solna, November 8, 2001 Thomas Jansson Bo Ribers Authorized Public Accountant Authorized Public Accountant If you have any questions, please contact: Björn Andersson, Chief Financial Officer (Tel: +46-8-585 520 40, or +46- 70-627 65 92); Hans-Olof Karlsson, Senior Vice President Corporate Communications (Tel: +46-8-585 522 79, or +46-70-547 12 50); or Annica Gerentz, Investor Relations Manager (Tel: +46-8-585 522 04, or +46-70-398 42 09, annica.gerentz@ncc.se). An English-language telephone press conference will be held between 2.00 and 2.30 p.m. In order to participate in this conference, call +44 (20) 8781 0576 and state "NCC" five to ten minutes before the start of the conference. Information material regarding the telephone press conference will be downloadable from the ncc.se website as of approximately 1.30 p.m. It will also be possible to listen to the conference in real time at www.ir.ncc.se. For those who intend to read the report in an electronic format, click the following link: http://acc.activate.net/teleconferenceregister/genesysuk/default.asp?nam e=340583&date=11/8/01 An information meeting will be held at 7.45 a.m. on November 9, at Operaterassen, Stockholm. Notification of attendance should be sent by e- mail to traffar@fti.se or marjo.hultgren@ncc.se. The presentation will be made in Swedish and a recorded version will be provided on www.ncc.se. Swedish and English versions of the presentation material will be downloadable from www.ir.ncc.se as of approximately 9.00 a.m. . ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/11/08/20011108BIT00820/bit0002.doc The full report http://www.waymaker.net/bitonline/2001/11/08/20011108BIT00820/bit0001.pdf The full report

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About NCC Our vision is to renew our industry and provide superior sustainable solutions. NCC is one of the leading companies in the Nordics within construction, infrastructure and property development, with sales of SEK 55 billion and 17,800 employees in 2017. The NCC share is listed on NASDAQ Stockholm.

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