ANNUAL REPORT 2009

SEK 52 billion
NCC is one of the leading construction and property development companies in the Nordic region, with sales of

and 18,000 employees. With the Nordic region as its home market, NCC is active throughout the value chain
– developing and building residential and commercial properties, and constructing industrial facilities and public buildings, roads, civil engineering structures

and other types of infrastructure. NCC also offers input materials used in construction and accounts for paving and road services. NCC creates future environments

responsible construction operations that result in sustainable inter­

for working, living and communication based on

action between people and the environment.

Review by the President 2 REVIEW BY THE PRESIDENT
Strategic focus 6
Overview of operations 10 CONSIDERABLE WORK REMAINS
Market and competitors 12 NCC’s employees delivered strong results in the face of severe economic
operations conditions, trimmed the balance sheet and prepared NCC for the future,

2
– Construction and civil engineering 14 in which 2010 will be a difficult year. The foundation
– Aggregates, asphalt, has been laid for ensuring a strong position
paving and road services 20 for NCC when the market recovers.
– Housing development 22
– Development of commercial property 26
Financial objectives and dividend policy 28
Sustainable development 30
NCC’s stakeholders 36

FINANCIAL REPORT
Report of the Board of Directors,
including risk analysis 38
Consolidated income statement 46
Consolidated balance sheet 48
Parent Company income statement 50
Parent Company balance sheet 51
Changes in shareholders’ equity 52
Cash flow statements 54
Notes 56
Proposed distribution of
unappropriated earnings 90
Auditors’ Report 91
Ten-year review 92
Quarterly data 95

SHAREHOLDER INFORMATION
Corporate Governance Report 96 STRATEGIC FOCUS
Internal Control Report 100
Board of Directors and Auditors 102 CUSTOMERS,
Group Management
The NCC share
104
106
COSTS AND
Financial information/Contacts 108 competence
Definitions/Glossary 109 NCC’s long-term strategy is designed
to achieve the industry’s highest pro-
duction efficiency and the best employ-
ees and thereby to develop the most
Cover photo: Terminal for liquid natural attractive customer offerings.
gas in Nynäshamn, Sweden.
Photo: Bruno Ehrs.

6
 HOUSING DEVELOPMENT

22
CUSTOMERS’ FIRST CHOICE
The core of professional housing development involves the ability to
purchase developable land and development rights and subsequently
convert them into attractive home environments. It is a capital-inten-
sive undertaking whereby NCC analyzes which land areas in the
­various markets will yield the highest returns over time.

CONSTRUCTION AND CIVIL ENGINEERING THE SHARE

62 PERCENT OF NCC’s SALES INCREASED

NCC’s construction and civil engineering operations construct everything from housing to infra- MARKET
structure. Considerable focus is placed on the continued streamlining of the construction process
capitalization

14
using such tools as platforms and virtual construction. NCC is a leading player in virtual construction.
The weak stock-market trend in 2008
was followed by an exceptionally
strong trend in 2009. The NCC share
outperformed the OMX industry index
and recovered much of the ground
lost during the slump in 2008.

106
30
DEVELOPMENT OF SUSTAINABLE DEVELOPMENT

26
COMMERCIAL PROPERTIES
RESPONSIBILITY –
VARIETY OF
ONE OF NCC’S
DEMANDS AND
CORE VALUES
REQUIREMENTS NCC is a community builder in the true sense
Understanding the requirements of of the word. This is an immense responsibility
tenants is of key importance to offering that provides NCC with an opportunity to
the right products and locations. Cus- contribute to sustainable social development.
tomer interviews are held and studies NCC works to bring about sustainable devel-
performed regularly to develop work opment in all respects: economically, environ-
and retail environments that meet the mentally and socially.
requirements of tomorrow.

20
AGGREGATES, ASPHALT, PAVING AND ROAD SERVICES

TOTAL-PACKAGE UNDER­TAKINGS
AND GREEN PRODUCTS
An increasing number of public-sector customers are demanding total-­
package undertakings, such as function contracts, with NCC assuming
responsi­bility for production, servicing and maintenance of road networks
over a number of years. The customers’ environmental awareness is also
increasing and NCC is investing proactively in energy efficiency and recycling.
A number of green products and production methods have been developed.
 Taking the right actions
at the right time will give
NCC a favorable position
when the market turns

REVIEW BY THE PRESIDENT

A STRONG YEAR IN THE FACE OF SEVERE ECONOMIC CONDITIONS

January 2009 was a time of considerable uncertainty for us and 30 years in the industry, I have never experienced a similar sce­
our customers. The course of the financial crisis could not really nario, and a number of actions were taken during autumn 2008.
be anticipated. The banks had cut back on lending, and many The actions we took were based on our established strategy,
companies had already announced major layoffs. Demand with customers, costs and competence as focus areas. Initiatives
dropped in the export industry, and NCC’s orders received had to increase sales, trim the balance sheet, improve cash flow and
fallen 40 percent in the fourth quarter of 2008. We had more maintain margins laid the foundation for greater freedom of
than 4,000 residential units under construction, and a high per- action as the recession progressed.
centage of them, 52 percent, were unsold. The goals for our operations were and remain unchanged.
We shall be the best construction and property development com­
The first area to feel the effects of the recession was the produc­ pany in the market, with the most attractive customer offering
tion of buildings and housing, which was affected when home and the most efficient production while being the most attrac­
buyers, industry and the retail sector stepped on the brakes. The tive employer. It all boils down to our ambition of creating a
property market was characterized by weak interest among ­sustainable society – economically, socially and environmentally.
investors, lower rent levels and rising vacancy rates.
Since a large portion of NCC’s other operations are late cycli­ CRITICAL DECISIONS
cal, the impact of the financial crisis and the subsequent reces­ A number of critical decisions and measures proved to have a
sion affected the company’s production relatively late, com­ great effect on the favorable earnings that NCC delivered for the
pared with other industries. full-year 2009.
We were prepared for a decline, but it turned out to be unex­ We reduced the organization in all markets at an early stage.
pectedly fast, powerful and difficult to assess. During more than From September 2008 through December 31, 2009, we slimmed

2 NCC 2009
our workforce by nearly 15 percent, or slightly more than 4,000
jobs. It was a difficult time for those who had to leave us, as well
as those who were forced to implement the necessary decisions.
From an early stage, we also concentrated on reducing tied-up
capital and prioritized cash flow and profitability over volume.
A strategic step was to strengthen the Group’s housing devel­
opment by creating the NCC Housing business area. This
enables land assets, development rights and allocation of capital
to be assessed from a greater perspective and increases the busi­
ness area’s strengths in marketing and sales. During 2009, the
focus was on selling housing. Among other initiatives, a very
effective sales campaign was implemented in spring 2009 under
the banner “a room on the house”.The campaign, which was
launched in Sweden, Finland and Denmark, received extra sup­
PRIDE AND RESPONSIBILITY
port from interest-rate cuts and an upturn in the housing market.
To further enhance the efficiency of housing sales, the next ARE THE WORDS THAT BEST
step will be to identify synergies generated from joint housing
platforms and coordination of IT, finance and administration. DESCRIBE NCC IN 2009.
During the year, the business area drove a number of project
sales, including housing development and construction con­
tracts, to private and public customers. Key data

SEK M 2009 2008

Orders received 45,957 51,864
Order backlog 34,084 40,426
Alsion Söderborg, Denmark. Net sales 51,817 57,465
Operating profit 2,150 2,219
Profit after financial items 1,694 2,385
Profit for the year 1,262 1,820
Earnings per share after dilution, SEK 11.63 16.69
Dividend per share, SEK 6.001) 4.00
Cash flow before financing 2,837 –178
Cash flow per share after dilution, SEK 26.18 –1.64
Return on shareholders’ equity, % 18 27
Equity/assets ratio, % 26 19
Net indebtedness 754 3,207
Average number of employees during the year 17,745 19,942
1) Proposed dividend.

NCC 2009 3
 Housing sales increased during spring 2009 and remained gates and the manufacture of asphalt. The new Green Asphalt,
­positive during the second half of the year. As a result, we once for example, is manufactured at a lower temperature, which
again started proprietary housing projects, although from a low saves considerable energy. Recycling of asphalt also increased.
level. In the future, we will concentrate housing development to NCC is also a leader in passive buildings, with six residential
areas in the Nordic region, Germany, the Baltic countries and buildings and two schools under construction or already com­
St. Petersburg, where there is long-term demand for housing. pleted. Passive buildings are extremely energy-efficient and do
At the beginning of 2009, NCC had a large order backlog that not need conventional heating systems. NCC has also developed
we managed well as a result of focused work to reduce costs. and built 14 properties classed as Green Buildings in which
The tools were efficient purchasing work, increased use of energy consumption is 25 percent lower than the prevailing
­platforms, virtual construction and the partnering cooperative national norm.
format. Despite a decline in orders received during most of During 2009, NCC joined the world-leading environmental
2009, we consistently prioritized profitability over volume. classification system BREEAM. All office, retail and logistics
All business areas also focused on cash flow at all levels, from properties are environmentally classified and can thus be judged
formulation of our contracts prior to starting projects to remind­ from a sustainability perspective. During 2009, NCC pre-quali­
ers for late payments. fied six buildings according to BREEAM.
We have also decided to implement Carbon Footprint. This
SUSTAINABILITY IN ALL RESPECTS means that we will be able to measure the organization’s emissions
NCC defines sustainability on the basis of economic, social and of greenhouse gases and thus also set clear environmental targets.
environmental criteria. To be a responsible community builder,
we must have long-term financial viability, take social responsi­ SATISFIED CUSTOMERS – PROUD EMPLOYEES
bility and reduce our environmental impact. This attitude char­ Our future will be determined by our ability to meet customer
acterizes everything we do and every decision we make. expectations and requirements. We are evaluated on the basis
Awareness of energy and environmental issues has increased, of such factors as quality, cost efficiency, attractive offerings
not only at NCC but also in the industry and among consumers. and sound partnership formats. Unfortunately, we sometimes
This benefits NCC, since our main focus is to reduce energy con­ fall short, but the positive features far outweigh our weaknesses.
sumption in our own processes and in the products that we We have reduced costs through international purchases, a plat­
deliver to our customers. During 2009, NCC took new steps in form approach and virtual construction, and we see that cus­
the development of energy-efficient products and processes. tomers prefer our NCC Partnering format for cooperation.
The NCC Roads business area, which has a fundamentally Without committed employees, not even the most ingenious
energy-intensive manufacturing process with many transports, strategies will work. Although we reduced our workforce and
worked hard to reduce energy usage in the production of aggre­ were forced to take a number of difficult actions, pride in work­

“WE PRIORITIZE PROFIT­ “LOWER SALES –

ABILITY OVER VOLUME.” FOCUS ON COSTS.”
Orders received and order backlog Net sales and profit
SEK billion SEK billion %
70 70 3,500
60 60 3,000
50 50 2,500
40 40 2,000
30 30 1,500
20 20 1,000
10 10 500
0 0 0
05 06 07 08 09 05 06 07 08 09

Orders received Net sales

Order backlog remaining to be worked up Profit after financial items

Orders received declined 11 percent, and the order backlog was SEK 34.1 Following two years of weaker growth in construction, net sales declined, pri-
­billion on December 31, 2009. The recession in 2009 resulted in a decline in marily in construction contract operations. Market-adjusted prices resulted in
orders received, primarily in Swedish contracting operations, with a significant increased sales of housing, although with losses after net financial items. Margins
drop for civil engineering and commercial building projects. The housing market on construction contract operations remained at a historically high level,
recovered toward the end of the year. Ongoing projects were produced at a although the volume decline resulted in lower profits.
fast pace, resulting in a declining order backlog.

4 NCC 2009
ing at NCC increased. This is a testament to NCC’s manage­
ment and the tremendous will in the organization to help NCC
THE YEAR IN BRIEF
emerge from the crisis as a stronger company. We apply the • The year 2009 was characterized by recession and lower
Human Capital Index (HCI) to measure satisfaction among the demand in the Nordic construction market. NCC’s orders
company’s employees. The results are also compared with other received declined 11 percent compared with 2008.
companies, and I am pleased to note that NCC earned high HCI
scores. NCC is and will remain an attractive employer and a • Profit after financial items amounted to SEK 1,694 M
company in which work is enjoyable. (2,385). Although lower than the preceding year, this
NCC also had fewer workplace accidents and lower sickness was still a strong result in the face of difficult economic
absence than the other companies. With our focus still firmly con­ditions and represents a high level in a historical
placed on our “zero vision”, the important efforts to achieve ­perspective.
safer and more secure workplaces continued in 2009.
Pride and responsibility. Those are the words that best • The return on shareholders’ equity after tax was 18
describe how I feel in summarizing 2009. NCC’s employees ­percent (27), which was below NCC’s objective of at
delivered strong results in the face of severe economic condi­ least 20 percent. Other financial objectives were
tions, trimmed the balance sheet and prepared NCC for the achieved.
future, in which 2010 will be a tough year. Together, we have
created a foundation that will enable us to invest and position • During 2009, NCC generated strong cash flow, result­
ourselves when the market recovers. ing in low indebtedness of SEK 754 M (3,207) on
December 31, 2009.
Solna, February 2010
• The Board of Directors proposes a dividend for 2009
of SEK 6.00 (4.00) per share.

Olle Ehrlén
President and CEO

“LOWER RETURN BUT STILL

AT A HIGH LEVEL.”
Return
%
35
30
25
20
15
10
5
0
05 06 07 08 09

Return on shareholders’ equity

Return on capital employed

The return increased up until 2007 and then declined in 2008 from a historically
high level, due to lower profitability, primarily in NCC Housing. In 2009, the
return on shareholders’ equity in 2009 was 18 percent.

NCC 2009 5
 STRATEGIC FOCUS
ON CUSTOMERS, COSTS
AND COMPETENCE
STRATEGIC THREE STRATEGIC
BASIS FOCUS AREA

VISION
NCC’s vision is to be the leading company in the NCC’s strategic orientation is to focus on products and services
development of future environments for working, that give the Group a competitive edge over its competitors.
living and communication. NCC’s geographical focus is on the Nordic region, Germany,
the Baltic countries and St. Petersburg. The three focus areas
of the strategy are customers, costs and competence.
OBJECTIVE
NCC’s overriding objective is to have the industry’s
highest production efficiency and the best employ- CUSTOMERS
ees and thereby be able to develop the most attrac-
tive customer offerings. The most attractive • NCC Partnering
• Function contracts
customer offering • The entire value chain
BUSINESS CONCEPT • Sustainable develop-
ment with a focus on
– RESPONSIBLE ENTERPRISE energy
NCC develops and builds future environments for • Healthy developed
working, living and communication. Supported by its ­environments
values – focus, simplicity and responsibility – NCC
and its customers jointly identify needs-based, cost-
effective and high-quality solutions that generate
added value for all of NCC’s stakeholders and
­contribute to sustainable social development.
COSTS
The highest • Purchasing
• Platforms
production efficiency • Project control
• Virtual construction

COMPETENCE
The best company • Attractive employer
• Leadership
to work for • Values – taking
responsibility

6 NCC 2009
NCC’s competitive edge derives from its production and after- in a project – the customer, developer, consultants and contrac­
market expertise, its size combined with a strong local presence tor – at an early stage of the process based on shared goals, joint
and its financial strength. By thinking globally and acting locally, activities and joint financial targets in order to optimize the proj­
NCC strengthens its offering, thus creating the conditions for ect. Quite simply, the focus is on the project. Partnering results
continued profitable growth. in more satisfied customers than traditional construction con­
tracts and stable profitability for NCC.
CUSTOMERS In NCC’s aggregates, asphalt, paving and road services opera­
NCC’s objective is to have the most attractive customer offer­ tions, customer cooperation primarily occurs through function
ings in the market. A prerequisite for achieving this is having an contracts, which include long-term maintenance contracts for
understanding of customer needs prior to, during and after the national and municipal road networks.
production phase. Healthy and attractive environments, as well When it comes to NCC’s housing and commercial property
as cost-effectiveness, quality and competence, are natural cus­ development operations, business opportunities are already
tomer requirements. Demand for energy-efficient solutions has ­created before the land is acquired. NCC plays an active role
also increased in recent years. NCC’s overriding environmental from the idea stage of land development right through to
objective is to contribute to reducing the impact on the environ­ ­production, sales and the aftermarket. The Group’s customers
ment. One step toward achieving this goal is being a leader in include private individuals and property owners, and under­
the area of energy-efficient construction. standing and adapting the offering to customer requirements
NCC’s customers include investors in new residential areas, and requests is a key factor. Another important factor is the
buildings, property development projects, shopping centers and ­ability to offer energy-efficient and healthy developed environ­
various types of infrastructure. The customers of NCC’s custom­ ments. NCC holds a leading position in the development of
ers also impact the business – for example, tenants in a commer­ energy-efficient residential and commercial properties. The
cial property development project or users of society’s infrastruc­ Group aims to be the first choice among residential customers.
ture. To meet the various customer needs, NCC is organized into
different operating sectors with a strong local presence. COSTS
In the area of construction and civil engineering, NCC and an NCC’s goal is to have the highest production efficiency in the
increasing number of customers are prioritizing the cooperative industry. The key factors for increasing productivity are having
format known as NCC Partnering. Partnering involves establish­ an adapted organization, conducting efficient purchasing, utiliz­
ing open and trusting cooperation between all parties included ing the opportunities presented by industrial construction and

NCC conducts operations from development to production and aftermarket.

DEVELOPMENT > PRODUCTION > AFTERMARKET NCC’s various operating sectors encompass the entire chain, but focus on dif-
ferent phases. The development stages are mainly represented by NCC Hous-
ing and NCC Property Development, which develop housing properties and
Housing commercial premises, respectively. These operations are characterized by early
capital investments – for example, in land – that are tied up for many years. The
Aggregates, asphalt, paving and road services period between a land investment and the sale of a finished project can last for
several years. NCC’s production areas primarily encompass construction and
civil engineering activities. These operations require little tied-up capital and
Construction and civil engineering generate favorable cash flows. In the aftermarket area, NCC mainly conducts
repair and maintenance activities for road networks.
Commercial properties

NCC 2009 7
 maintaining effective project control. By achieving high produc­ PROJECT CONTROL
tion efficiency in the Group’s construction and civil engineering NCC’s greatest opportunities and risks lie in its project control.
operations, cost benefits are generated, which strengthen the The success of both major and minor projects largely derives
competitiveness of NCC’s development operations. from planning, management, control and follow-up. One crucial
factor for the success of a project is human expertise, more
PURCHASING ­specifically leadership. Experience indicates that project losses
The construction process involves an extensive flow of materials, are often caused by insufficient project control. NCC has devel­
and approximately 65 percent of the NCC Group’s costs are oped its own model for the control and follow-up of major
related to purchasing. NCC’s goal is to have the industry’s low­ ­projects. Since efficient purchasing, platforms and competence
est purchasing costs. This is to be achieved by continuing to centers strengthen project control by enabling greater control
work on coordinating purchasing volumes, increasing the pro­ of all elements in the construction process, continuous improve­
portion of international purchasing and developing the purchas­ ment work is a prioritized issue.
ing operations together with selected suppliers. High quality,
environmental commitment and social responsibility are self- COMPETENCE
evident parameters that impact material and supplier selections. To achieve the highest production efficiency in the industry
and the most attractive customer offerings, NCC must have
INDUSTRIAL CONSTRUCTION the best employees and the right employees in the right place.
For a number of years, NCC has operated with an increasingly Accordingly, NCC aims to be the best company to work for and,
industrialized construction process. The industrial process in recessionary conditions, NCC also aims to act responsibly in
begins as early as in the project engineering phase through relation to the employees who must leave the company. Accord­
design, planning and logistics – also referred to as a platform ing to the Group’s employee survey, which from 2009 also
approach. Joint design generates economies of scale, as well as offers a comparison with competing companies, NCC is an
volumes that favor the purchasing process. Planning is a prereq­ attractive employer in several respects. Despite extensive work­
uisite for an industrialized process and in, for example, major force cutbacks in 2009, NCC continued to achieve excellent
projects, logistical solutions are critical for the project to be results in the internal Human Capital Index (HCI) employee
implemented. A platform approach is used in various parts of survey. To strengthen NCC’s competitiveness as an employer,
the Group for apartment blocks, single-family homes, offices the efforts of the Human Resources department focus on con­
and logistics buildings. Specialized platforms are also used in the tinued work on the Group’s values, strengthening and develop­
production of bridges, indoor sports arenas, bathrooms and engi­ ing management, career planning and remuneration issues, and
neered services cores. Three-dimensional, virtual construction long-term work to attract and recruit employees. The overriding
models are increasingly used and are linked to the platforms. goals are to minimize the number of occupational accidents,
NCC has assumed a leading position in virtual construction, an maintain a low employee turnover rate and to continue focusing
area that is the focus of continued research, development and use. on competency development.

Tuborg Harbor in Hellerup, Denmark.

8 NCC 2009
NCC’S GEOGRAPHICAL MARKETS

NCC IN SWEDEN NCC IN NORWAY NCC IN FINLAND

Sweden is NCC’s largest market by far and In Norway, NCC has a large civil engineering operation that con- NCC in Finland focuses on residential and
NCC is a market leader in most sectors, structs roads, tunnels, bridges and other types of infrastructure. building construction. NCC is a leading deve-
including civil engineering, building con- NCC also develops and constructs housing and offices, and has loper of business parks, with several projects
struction, housing development, property a substantial aggregates, asphalt, paving and road service operation. under way in the Helsinki region. In recent
development and aggregates, asphalt, Notable customer categories include the Norwegian years, NCC has expanded its presence in
paving and road services. Large customer central government, municipalities, property aggregates, asphalt, paving and road services.
groups are the central government, muni­ companies and other major companies.
cipalities and large corporations in areas
Net sales: SEK 7,521 M
including the mining industry, as well as Net sales: SEK 5,914 M
­private customers who buy housing. Number of employees: 2,475
Number of employees: 1,790 Capital employed: SEK 2,387 M
Capital employed: SEK 2,415 M
Net sales: SEK 28,793 M
Number of employees: 10,043
Capital employed: SEK 4,686 M

NCC IN DENMARK

In Denmark, NCC is a major player

in building construction, as well as
aggregates, asphalt, paving and road
services. NCC has also developed
several property projects. Major
customers include the central
government, municipalities, various
investors and private customers.

Net sales: SEK 6,159 M

Number of employees: 2,295
NCC IN GERMANY NCC IN THE BALTIC COUNTRIES
Capital employed: SEK 4,564 M

In Germany, NCC builds housing. NCC In the Baltic countries, NCC constructs
is active in a number of selected metro­ ­housing and buildings, and is established in
politan regions in Germany. ­property development. Construction has been
concentrated to the capital cities of Tallinn
Net sales: SEK 2,560 M (Estonia), Riga (Latvia) and Vilnius (Lithuania).
Number of employees: 692
Capital employed: SEK 1,223 M NCC IN ST. PETERSBURG

NCC has invested in sites for future develop-

ment of housing in St. Petersburg. NCC also
has asphalt and paving operations.

OPERATIONS/LEGEND Net sales: SEK 778 M

Housing Buildings Civil engineering Property development Aggregates, asphalt, paving Number of employees: 415
and road services Capital employed: SEK 1,147 M

NCC 2009 9
 OVERVIEW OF OPERATIONS
NCC’S FOUR
OPERATING SECTORS SHARE OF NCC TOTAL

CONSTRUCTION AND 62% Net sales

CIVIL ENGINEERING
This operating sector is responsible for all of NCC’s construction opera- 65% Operating profit
tions and is divided into four business areas (NCC Construction Sweden,
NCC Construction Denmark, NCC Construction Finland and NCC
­Construction Norway). The Construction units are based on assignments 18% Capital employed
pertaining to housing, offices, other buildings, industrial premises, roads,
civil engineering and other types of infrastructure. The main operations
are conducted in the Nordic region and the Baltic countries. 70% Average number of employees

AGGREGATES, ASPHALT, PAVING 18% Net sales

AND ROAD SERVICES

These operations are conducted in the business area NCC Roads, 18% Operating profit
and the core business is the production of aggregates and asphalt, as
well as asphalt paving and road services. The various areas contrib-
ute to a natural processing chain that is well integrated with NCC’s
17% Capital employed

construction and civil engineering operations. NCC is the leading

player in the Nordic market. 23% Average number of employees

HOUSING DEVELOPMENT 16% Net sales

These operations are conducted in the business area NCC Housing,
which develops and sells permanent housing in selected markets in the neg. Operating profit
Nordic region, Germany, the Baltic countries and St. Petersburg. NCC is
active throughout the value chain, from concept and land acquisition to
sales and aftermarket. NCC is a leader in several ­Nordic markets. 46% Capital employed

6% Average number of employees

DEVELOPMENT OF 4% Net sales

COMMERCIAL PROPERTIES
These operations are conducted in the business area NCC ­Property 17% Operating profit
Development, which develops and sells commercial properties in
defined growth markets in the Nordic region and the Baltic coun-
tries. NCC controls the entire value chain, from concept and
18% Capital employed

­business development to leasing and sales. Office properties are

the main product in this operating sector, while retail and logistics 1% Average number of employees
properties are an important complement.

10 NCC 2009
 Cultural center and hotel in Lofoten, Norway.

GEOGRAPHICAL MARKETS

Net sales, distribution

Sweden, 63 (57)%
Denmark, 9 (10)%
Finland, incl.
Baltic countries, 16 (17)%
Norway, 12 (16)%

Billund Airport in Denmark.

Net sales, distribution

Sweden, 48 (49)%
Denmark, 21 (22)%
Finland, 12 (11)%
Norway, 17 (15)%
St. Petersburg, 2 (3)%

Ursvik residential area in Sundbyberg, Sweden.

Housing units under construction

Sweden, 34 (43)%
Denmark, 0 (1)%
Finland, 10 (19)%
Norway, 7 (0)%
Germany, 49 (34)%
Baltic countries and
St. Petersburg, 0 (3)%

Conference Center, European Chemicals Authority, ECHA, in Helsinki, Finland.

Investment value and land holdings

Sweden, 17 (36)%
Denmark, 47 (25)%
Finland, 21 (28)%
Norway, 8 (10)%
Baltic countries, 7 (1)%

NCC 2009 11
 MARKET AND COMPETITORS
– RECESSION AND
DIMINISHING INVESTMENTS
IN ­CONSTRUCTION
In 2009, the Nordic construction and property market was As a rule, the construction market tracks the general economic
­characterized by financial turmoil and recession. These trends trend but with a time lag of at least one year. The housing mar­
primarily impacted the construction market, which experienced ket reacts the fastest to economic cycles, since sales are made
weak demand for housing, offices and other buildings. directly to consumers. The housing market is also particularly
sensitive to changes in interest rates and employment. Interest
The housing market strengthened somewhat during the second in leasing commercial premises is also determined by economic
half of the year. The civil engineering market benefitted from a trends and employment. Demand for investments in property
strong trend in infrastructure construction, while demand for projects is largely controlled by the leasing rate, market trans­
development work declined. Demand for commercial property parency and access to funds in the financial system.
projects was weak in 2009. Other building construction (offices, industrial and public
The market outlook for 2010 remains bleak – the Nordic premises) and the civil engineering market are subject to a
­construction and property market is not expected to expand. greater time lag, since such projects depend on the investment
However, a certain amount of growth is forecast in the civil plans of other industries. This also results in construction proj­
­engineering market, as a result of government infrastructure ects frequently being procured during one economic cycle and
investments. The conditions in the property market are also produced during another. As a rule, larger projects also extend
expected to remain challenging. over a longer period of time.

FACTS | MARKET and competitors

Major competitors in the Nordic region 2009

MT Høj- Lemmin- AF
Key figures and products NCC Skanska1) Peab gaard2) Veidekke YIT ­käinen Gruppen JM Colas2) CRH3)
Sales (SEK billion) 52 137 35 13 19 37 21 7 9 126 191
Number of employees (thousands) 18 53 13 5 5 23 9 2 2 74 94
Housing
Building
Civil engineering
Asphalt, aggregates, concrete
Property development
Machinery operations
Market share, Nordic region, total (%) 6 6 4 2 2 4 2 1 1 –4) –4)
1) NCC estimates that approximately SEK 50 billion of Skanska’s sales derives from Nordic construction operations.
2) Pertains to the period October 2008–September 2009.
3) Pertains to the period July 2008–June 2009.
4) No information available.

12 NCC 2009
MARKET DEVELOPMENT
In 2009, overall construction investments in the Nordic region
declined approximately 8 percent. NCC’s assessment is that the
market will remain weak in 2010.

COMPETITORS
The Nordic construction market is national, highly fragmented
and characterized by intense local competition. In local markets,
NCC competes with thousands of small building contractors.
Large-scale civil engineering projects in the Nordic region are
often procured in the face of international competition from
Europe’s major construction companies, with the largest proj­
ects frequently conducted in consortia.
At the Nordic level, NCC’s main competitors are Skanska
and Peab of Sweden, MT Højgaard of Denmark, Veidekke of
Norway and YIT and Lemminkäinen of Finland. In Sweden,
JM is a major competitor in residential development. In civil
engineering projects and road construction, as well as asphalt
and paving in the Nordic region, central government and munic­
ipal production units, such as Svevia in Sweden, Mesta in
­Norway and Destia in Finland, are other significant competitors.
In Denmark and Finland, Colas and CRH are competitors in
asphalt and aggregates.
The Nordic property development market comprises a
few major players from a Nordic perspective, with NCC as
one of the larger ones. Others include Skanska of Sweden and
Själsøgruppen of Denmark. In local markets, other players
may also be significant competitors, such as YIT of Finland
and ROM Utveckling of Norway.

Saltsjöqvarn residential area in Stockholm, Sweden.

Lersögraven in Copenhagen, Denmark.

Market shares in 2009, percent

NCC, 6%
Skanska, 6%
YIT, 4%
Peab, 4%
Veidekke, 2%
Lemminkäinen, 2%
MT Højgaard, 2%
JM, 1%
AF Gruppen, 1%
Others, 72%

The Nordic construction market is highly fragmented. NCC is one

of the two largest companies in the Nordic region, with a market
share of 6 percent.The construction market in the Nordic region
generated sales of approximately SEK 883 billion (excluding resi-
dential renovation) in 2009.
(Source: Euroconstruct)

NCC 2009 13
 CONSTRUCTION AND CIVIL
ENGINEERING – ALL OF NCC’S
CONSTRUCTION FROM HOUS­
ING TO INFRASTRUCTURE
Today, NCC is one of the leading construction companies in
Akerselva Atrium Oslo, Norway.
Northern Europe with extensive production of housing units,
buildings, roads and civil engineering structures.

NCC’s construction activities are conducted under the name

NCC Construction and meet customers from the private and
public sectors on a daily basis. Customers range from munici­
palities, county councils, government bodies and public-utility
housing companies in the public sector to retail, industrial and
service companies in the private sector.
Internal partnership projects are also performed every day,
with NCC Property Development developing commercial
properties and NCC Housing developing housing. The NCC
Roads business area, which produces aggregates, asphalt and
asphalt paving, is another key internal partner, for example, in
landscaping contracts and infrastructure projects.

CONSTRUCTION AND CIVIL ENGINEERING

around the baltic sea
NCC’s construction and civil engineering operations are rep­
resented in Denmark, Finland, Norway, Sweden, St. Peters­
burg and the Baltic countries. NCC’s presence and offering
FACTS | CONSTRUCTION
vary somewhat according to market. and civil engineering
In Sweden, orders received are generally evenly divided
between the construction of housing, buildings and civil engi­
neering structures. The percentage of civil engineering projects
rose in 2009 due to the decline in housing, offices and other
building projects. NCC is one of the very largest players in Geographic markets, distribution of net sales
the market, with a broad geographic spread and a strong local
foundation.
Housing production is dominant in Finland, followed by Sweden, 63 (57)%

office construction. The percentage of renovation projects Denmark, 9 (10)%

increased in 2009 and accounted for 20 percent of sales. NCC Finland incl. Baltic
countries, 16 (17)%
also conducts business operations in the Baltic countries and in
Norway, 12 (16)%
St. Petersburg, primarily involving housing and office con­
struction. NCC has no civil engineering operations in Finland.
NCC has a long tradition of engaging in civil engineering in
Norway, where roads, tunnels and infrastructure form a strong
foundation. However, NCC also has construction operations
in such areas as housing, commercial premises and public
buildings, for example, schools and hospitals.
The housing market in Denmark has weakened substan­ Sweden is the largest market for NCC’s construction and civil engineering
operations, accounting for 63 percent (57) of the sales.The increase compared
tially since 2006, which has resulted in NCC’s operations with 2008 was due to a high order backlog at the beginning of 2009, which
shrinking over several years. The civil engineering operations enabled a high work-up rate. In Norway, however, sales declined sharply during
the first half of 2009.
are stable. NCC accounts for a small share of the construction
and civil engineering market in Denmark.

14 NCC 2009
 Bridge over the River Hud, Bohuslän county, Sweden.

Finnfast Tunnel, Norway. Helsinki University Central Hospital, Finland.

NET SALES SEK 35,328 M | NUMBER OF EMPLOYEES 12,423

Product mix Customer mix

Infrastructure, 17 (15)% Central government, 16 (13)%

Landscaping, 13 (12)% Public-utility housing
companies, 8 (8)%
Housing, 18 (20)%
Municipalities/county
Industrial and councils, 20 (16)%
processing plants,10 (10)%
Private customers, 44 (49)%
Offices, 15 (13)%
Internal within NCC, 12 (16)%
Shopping centers, etc., 10 (10)%
Other, 17 (19)%

NCC has a broad product mix. In 2009, the percentage of Demand from the public sector was not affected to the same extent by
housing declined, while infrastructure increased. the recession as the private sector, and the percentage of public-sector
­customers increased. Lower proprietary housing production led to a
decline in its share internally within NCC.

NCC 2009 15
 LOGIC OF THE CONSTRUCTION PROCESS STRATEGY IS THE FOUNDATION
A common feature of all construction projects, irrespective of NCC’s strategy for achieving long-term profitability and com­
whether they involve the building of single-family homes, the petitiveness focuses on customers, costs and competence.
paving of roads or the construction of sports halls, is that they NCC Construction’s focus areas of partnering, virtual con­
are clearly defined with start and completion deadlines, tie up a struction, platforms and purchasing deal with cost issues and
relatively small amount of capital and generate a continuous customer value. To be able to offer customers more efficient con­
cash flow from operations. struction processes, NCC provides extensive skills development
Cash flows from construction operations boost NCC’s scope in critical areas, such as in project development, platforms and
for developing offices and housing, which are more capital virtual construction. NCC has also built up knowledge in the
intensive. partnering cooperation format and is now a leader in this field.
The core skill for NCC Construction is its ability to manage
the complexity of organizing a variety of projects, involving any­ PARTNERING IS INCREASING
thing from replacing pipe systems in apartment blocks to large- The focus on the partnering cooperation format, whereby the
scale national infrastructure projects. customer, NCC and other project participants jointly formulate
The requirements are essentially the same – the projects must project targets and perform the work under joint responsibility
be delivered on time, at the right level of quality and at the has been highly successful.
agreed price. This form of cooperation is now in demand among many cus­
NCC’s construction and civil engineering operations conduct tomers, both private and public, and the number of partnering
about 4,000 projects every year in the Nordic region. The size of projects rose during the year. Partnering sales in 2009 remained at
these projects varies from a few hundred thousand Swedish kro­ SEK 10 billion (10), despite the overall decrease in the Group’s
nor in sales and an implementation period of just a few days to total sales.
multi-year projects that generate billions of kronor. Partnering projects are delivered on time, at the right costs
The common denominator for these projects, regardless of and without any subsequent disputes, saving both NCC and the
size and markets, is that in many instances they are unique and customer time and money.
will not have any repetitive effects. For this reason, NCC’s
expertise in planning, logistics, allocation of resources, technical RISK MANAGEMENT AND PROFITABILITY
know-how, flexibility and risk management is a vital competitive For NCC’s construction operations, it is also necessary to man­
tool in the increasingly internationalized Nordic construction age risk. An increase in the margin by one percentage point has a
market. much greater impact on earnings than an increase in volume by
5–10 percent. Risk management is based on well-functioning
shared business systems and well-developed procedures for
­tendering new projects.

BUSINESS ENVIRONMENT AND MARKET

The Nordic construction market was weak in 2009, with lower year-end, albeit up from a low level. The drivers were low
demand for housing, offices and other building construction, ­interest rates and less turmoil in the housing market.
mainly among private customers. Public-sector investors were In autumn 2008, NCC established a specialist unit for infra­
less affected by the recession. structure projects in Sweden. The percentage of civil engineer­
ing projects in the order backlog increased in 2009. A distinct
The downturn abated toward the end of the year and some signs trend in Sweden was intensifying international competition for
of recovery could be discerned in the housing and civil engineer­ large civil engineering and infrastructure projects.
ing sectors. Low interest rates and expansive fiscal policies
boosted the housing market and NCC started more housing weak danish economy
projects following a period of favorable housing sales. Danish construction and civil engineering investments fell 11
The outlook for the civil engineering market is more positive percent in 2009. The most severe downturn was noted in housing
with some growth anticipated in 2010, although it is not and office construction, while the renovation and civil engineer­
expected to offset the weak market for buildings and commer­ ing market suffered only a slight setback. The slowdown also
cial properties. impacted sales and earnings for NCC Construction Denmark.
The Danish economy is expected to recover in 2010, when
LOWER DEMAND IN SWEDEN modest economic growth is forecast, and the construction sector
The Swedish construction and civil engineering market was has received some support in the form of government incentive
characterized by significantly lower demand in 2009. Demand packages. Despite this, the decline in the housing and office mar­
for buildings and housing fell considerably at the beginning of kets is expected to continue.
the year. However, demand levels for new homes rose toward

16 NCC 2009
PROJECT ENGINEERING AND PLATFORMS
NCC’s size as a construction company combined with its
desire to create efficient construction processes form a solid
base for developing project engineering and planning tools and
platforms. Economies of scale can also be found in negotiating
volume discounts when purchasing goods and services.
Shared platforms for housing, buildings and civil engineer­
ing are highly significant in quality-assurance activities and in
the potential for reducing costs. This is NCC’s way of industri­
alizing the construction process, in which the shared building
blocks are based on well-tested technical solutions. Using the
same solutions to a great extent also generates larger purchas­
ing volumes for individual goods, thus contributing to cost
reductions.
NCC develops platforms in all of its operating sectors and
offers a wide variety of products from sports halls, nursing
homes, offices, logistics facilities, roads and bridges to housing,
all based on the platform work method.

MORE EFFICIENT CONSTRUCTION USING 3D

Virtual construction is now a natural feature of many con­
struction projects and, when used correctly, it can change the
entire construction process. 3D models are becoming increas­
ingly commonplace at NCC, where they are used as support
for communication between the various processes in a con­
struction project. Such models allow all project participants
to have the same impression of the construction process and
the completed building. Quality is improved and costs
reduced as a result of more efficient project engineering and
implementation.

Hamnhuset, a passive building in Gothenburg, Sweden.

WEAK RECOVERY IN FINLAND EXPECTED STABLE CIVIL ENGINEERING MARKET IN NORWAY

The Finnish construction industry weakened in 2009, primarily The Norwegian market was marked by declining investments in
as a result of lower construction of commercial premises and housing construction and office premises, while the civil engi­
offices. Government incentive packages had a positive effect on neering market remained relatively stable. For NCC, this led to
housing production and renovation activities. The worst of the lower sales of housing and office projects and stable sales of civil
downturn is over, but recovery will be weak with rising unem­ engineering structures, as well as a rise in public-sector projects.
ployment, according to forecasts from the Finnish Ministry of For example, NCC secured several construction assignments for
Finance. Demand for new housing is expected to increase in schools and teaching premises at year-end 2009.
2010, driven by low interest rates. Positive signals in the Norwegian housing market in late 2009
NCC is expected to initiate several housing projects in 2010, indicated an improvement. NCC’s Norwegian construction and
although a decline in the volume of office projects is anticipated. civil engineering operations were gradually adapted to the new
Accelerating demand for renovation activities has presented conditions.
new opportunities to the Finnish operations.
The construction activities in the Baltic countries were Nordic construction market 2010
severely impacted by the economic slowdown and the situation Segment Sweden Denmark Finland Norway
risks remaining difficult given the presumed decline in GDP
Housing
again in 2010. Weak demand and an uncertain outlook for the Buildings
housing market reduced investments, but demand for housing Civil engineering –1)
may stabilize somewhat in 2010 as a result of lower interest rates. Total
1)NCC is not active in this market.
(Source: NCC.)

NCC 2009 17
 Tulli Business Park Tampere, Finland.

Put simply, the project is built on a scale of 1:1 in a three-­ PURCHASING OF MATERIALS AND SERVICES
dimensional computer model before it is physically constructed. Since purchasing of materials and services accounts for appr­oxi­
The model results in a more rational construction process with mately 65 percent of the NCC Group’s costs, major focus
more efficient planning, improved logistics and less waste. ­continues to be directed to generating potential cost savings.
Virtual construction can be used in all construction projects The construction industry has traditionally often purchased
from housing and building production to civil engineering and materials and services from local building material suppliers and
infrastructure projects. NCC has already started developing subsuppliers, resulting in very weak competition. This is one of
4D and 5D, where the model includes time and cost elements. the reasons why construction costs have exceeded the consumer
NCC is a leading player in the use of virtual construction, not price index for a long time.
only in the Nordic region but also globally.

NCC has a plant for reinforcing

rods in Norrköping in Sweden
that provided the Swedish con-
struction industry with 24,000
tons of reinforcing products in
2009. All reinforcing products
are purchased from non-Nordic
suppliers and subsequently
refined in Norrköping, which
also serves as a logistics hub.

18 NCC 2009
 Sollentuna Centrum, Sweden.

NCC’s purchasing activities are guided by two main principles. HEALTH, ENVIRONMENT AND SAFETY
The first is to coordinate purchasing in the Nordic region in a bid Efficient and successful construction projects are almost always
to achieve volume advantages. Another positive effect of coordi­ characterized by low sickness absence and few occupational
nated purchasing is that it reduces the number of suppliers and injuries. The planning and control of activities include a high
different items, which also has cost-savings effects. level of control and monitoring of environmental, health and
The second main principle is to purchase goods and services safety issues. NCC devotes considerable resources to training,
internationally. NCC’s purchasing offices, with some 30 employ­ supporting and monitoring work-environment activities in all
ees, are situated in Russia, the Baltic countries, Poland, the countries in which the company operates. All employees in
Czech Republic, Germany, Turkey and China. Despite lower ­Sweden who work with planning, cost accounting and project
sales, a weak SEK and financial uncertainty, international pur­ engineering will have completed work-environment courses
chasing remained in line with 2008 levels and a further increase during 2009 and 2010 with the aim of preventing, as early as
in costs savings was noted in 2009. The average cost of goods the planning stage, instances and situations that could give rise
purchased internationally was slightly more than 20 percent to repetitive strain injuries or accidents.
lower than the corresponding cost of goods purchased in the These efforts have no deadline, and in 2009 NCC established
Nordic region. An additional positive effect of international an international health and safety group to address the principal
­purchases is the indirect impact on local pricing. problem areas, such as falling accidents and lifting heavy con­
Purchasing of international subcontracts is an area that grew crete units.
in 2009. Procurement processes whereby NCC purchases total-
package solutions that include materials, transportation and EVERYTHING FROM GREENBUILDINGS TO PASSIVE BUILDINGS
assembly services, and in certain cases project engineering, are NCC has developed methods for constructing low-energy and
becoming more commonplace. passive buildings to meet customer demands for more energy-
The most frequent international purchases are frameworks, efficient buildings. NCC is one of the Nordic construction
glass and aluminum facades, and steel and concrete products. ­companies that has built the most passive buildings, in the form
Coordinated purchases in the Nordic region and international of both row houses and apartment blocks.
purchasing have improved the competitive situation in the NCC has also built several buildings classified in accordance
­Nordic construction markets and become a key part of NCC’s with the EU initiative GreenBuilding. In 2009, the company
continuous efforts to reduce costs. built hospitals, offices, retail and warehouse premises that meet
the GreenBuilding energy consumption criteria, meaning that
the buildings use 25 percent less energy than the norm prevail­
ing in the particular country.

NCC 2009 19
 PRODUCTION OF
AGGREGATES AND
ASPHALT, PAVING
AND ROAD SERVICES
NCC Roads’ operations comprise the foundation for all con- ­ perations. Stone materials are used, for example, in foundations
o
struction activities. The base is the production of aggregates and for housing units, in offices and in industry, as well as in the con-
asphalt, as well as asphalt paving and road services. These various crete industry.
components are interrelated and form a natural processing chain
that is highly integrated with NCC’s construction and civil engi- INCREASED PERCENTAGE OF PUBLIC-SECTOR CUSTOMERS
neering operations. Municipal and public-sector administrations and customers in
the private sector comprise the customer base for aggregates,
Stone materials, which are primarily extracted in proprietary asphalt manufacturing, paving and road services. Due to the eco-
quarries, are utilized as both an ingredient in asphalt and as an nomic downturn in 2009, the customer base shifted away from
input material in construction and civil engineering projects. the private sector and moved toward the public sector, particu-
Asphalt is manufactured in proprietary asphalt plants and then larly toward central government. However, the private market
used in road paving. The road network requires continuous for asphalt and deliveries of gravel products and aggregates still
maintenance, and multi-year road-service contracts are fre- represents the largest section of the customer base.
quently concluded. NCC is increasingly offering public-sector customers total-
By applying high-tech manufacturing processes, input materi- package undertakings, known as function contracts, which
als and asphalt are supplied to everything from garage driveways include long-term planning of resources for the production,
and smaller roads to complex infrastructure projects. Deliveries ­servicing and maintenance of road networks over a number
are also made to other construction and civil engineering of years.

FACTS | AGGREGATES, ASPHALT, PAVING AND ROAD SERVICES

Geographic markets, distribution of net sales Product mix

Sweden, 48 (49)% Aggregates, 20 (22)%

Denmark, 21 (22)% Asphalt and paving, 62 (64)%
Finland, 12 (11)% Road services, 18 (14)%
Norway, 17 (15)%
St. Petersburg, 2 (3)%

The distribution between the markets was relatively constant and NCC Roads’ predominant product is asphalt and paving. Road
tracked the trend in the construction market. Sweden is the largest ­service is a product that continued to increase during 2009 and
market, accounting for nearly half of sales. will soon be as large as aggregates operations.

20 NCC 2009
LOCAL MARKET LEADERS NCC Green Concept, which is a registered Group trademark.
NCC’s market presence is concentrated to the Nordic countries, The most well-known brand is NCC Green Asphalt, a produc-
where the company is the leading player in the industry. Sweden tion method in which energy consumption and carbon emissions
represents the single largest market, accounting for about 50 are significantly lower than in the manufacture of traditional
percent of sales. Asphalt and paving operations are also con- hot asphalt.
ducted in St. Petersburg. It is more energy efficient to recycle asphalt and other materi-
In 2009, NCC Roads continued its strategic work aimed at als than to produce new materials. Accordingly, a growing number
being a market leader locally, securing the supply of stone mate- of NCC plants have improved their recycling capacity, leading
rials from proprietary quarries located close to urban areas and to a more eco-cycle-oriented operation. Some 11 percent (8)
enhancing coordination within the business area. of the total amount of hot asphalt produced in 2009 comprised
The trend in the construction market in the Nordic countries recycled asphalt granules.
was weak during the year, which led to a general slowdown and NCC’s recycling center, Miljöfabriken, is an example whereby
reduced volumes of aggregates, asphalt and paving contracts. such materials as aggregates, gravel, sand and soil products are
NCC Roads’ operations are relatively dependent on the eco- delivered to a separate plant, refined and resold as new products.
nomic climate, although government incentives aimed at stimu- The recycling of collected street sand, which is cleaned and
lating the construction sector with infrastructure investments reused for anti-slide purposes and in asphalt production as an
offset the decline in 2009. alternative to newly produced aggregates, is another method
Demand for aggregates for the concrete industry also declined that helps reduce the impact on the environment.
as a result of lower residential and building construction. Efficient transportation planning reduces the company’s
However, the road services market remained stable in 2009 energy consumption. Logistics centers, GPS technology and
and is not particularly sensitive to economic fluctuations. Pro- mobile offices improve the planning of business activities and
viding road services is a key development area with excellent thus reduce lead times, the number of transportations and deliv-
growth potential, and a number of strategic contracts were ery costs for aggregates and asphalt.
signed during the year.

GREEN PRODUCTS, RECYCLING AND EFFICIENT

TRANSPORTATION
The environmental awareness of customers is increasing
and NCC Roads is investing proactively in energy efficiency
and recycling.
A variety of green products and production methods have
been developed. Investments have been made in asphalt plants
to expand capacity and meet heightened demand for environ-
ment-friendly products.
Products and methods to reduce the negative impact on the
environment have been grouped together under the name

NET SALES SEK 10,338 M | NUMBER OF EMPLOYEES 4,040

Customer mix

Central government, 25 (21)%

Municipalities/county
councils, 19 (18)%
Private customers, 49 (55)%
Internal within NCC, 7 (6)%

Private customers were the dominant customer group. The share of

central government customers rose in 2009 as a result of such factors
as a higher proportion of road services.

NCC 2009 21
 HOUSING – PROPRIETARY
DEVELOPMENT AND SALES

NCC develops and sells permanent housing, ranging from been concentrated in the NCC Housing business area, which
detached houses and row houses to apartments in apartment was created on January 1, 2009 to facilitate learning and build-
blocks. Customer groups include private individuals wishing to ing up development project know-how across national borders.
purchase their own home, municipal housing companies, private The core of professional housing development involves the
property owners and financial investors who recognize a value in ability to purchase developable land and development rights and
investing in housing projects. subsequently convert them into attractive home environments.
It is a capital-intensive undertaking, requiring that NCC analyzes
Developing a residential area is a customer-controlled process, the land areas in the various markets that will yield the highest
based on thorough analyses of future housing requirements. returns over time.
NCC conducts operations in all parts of the value chain, from The new business area is contributing to intensifying customer
project concept and analysis to land acquisitions, concept devel- focus and expanding knowledge of customer requirements,
opment, production, marketing and sales up to the final stages and making it possible to capitalize on a range of synergies in
of aftermarket and customer care. all areas from marketing, sales and capital allocation to product
The entire development process takes place in close coopera- development. The organization’s long-term endeavor is to uti-
tion with municipalities, land owners, architects and other stake- lize the same administrative support systems and sales channels,
holders. The housing units are produced by NCC’s construction the Internet being the most important tool, in all ­markets in
and civil engineering operations. which NCC conducts business.
NCC conducts business activities in the Nordic region,
­Germany, the Baltic countries and St. Petersburg. The operations VIRTUAL SHOWROOMS
are concentrated in growing metropolitan regions with a stable The Internet is becoming an increasingly important sales chan-
local labor market that generates demand for new housing. nel. New visualization tools allow customers to take a virtual
All of the company’s expertise in housing development has walk around the housing units that they are interested in. Online

FACTS | HOUSING DEVELOPMENT

22 NCC 2009
sales tools increase customer willingness to purchase housing the eyes of professional players. In 2009, several “package sales”
units at an early stage – far earlier than the showroom apart- were implemented, mainly in Sweden and Finland, whereby
ments are ready for visitors. Increasing numbers of customers development assignments containing both land and construction
are finding new homes via NCC’s website. contracts were sold to investors. A number of package sales were
Resources for further honing the efficiency of the marketing also implemented in Germany during the year.
and sales process are concentrated to the new business area.
The coordination of marketing and sales began in 2009.

CONCEPT DEVELOPMENT
Land areas are converted into specific projects at the concept
development phase. Municipalities are consulted on detailed
development plans, and occasionally cooperation may also take
place with investors interested in acquiring the entire project.

PLATFORMS GENERATE ECONOMIES OF SCALE

The development of platforms for housing units is a central task.
The aim is to create a shared platform that will generate econo-
mies of scale at lower costs, higher purchasing volumes and
improved quality, while ensuring that energy-efficient solutions
have a broad impact. Housing customers will benefit from lower
energy consumption when these characteristics are included in
the project as early as at the drawing board. Using its shared
platforms, NCC will be able to design attractive housing and
keep product costs low, while maintaining flexibility.

PACKAGE SALES MORE COMMON

Private customers represent 80 percent of all housing purchases.
Housing in the mid-price segment is produced in the Nordic
countries, while the lower-price segment is the base of the oper-
ations in Germany.
Investors in the form of housing and property companies
account for 20 percent of sales.
NCC is an experienced housing developer that holds a port-
folio of many attractive land areas. It works continuously to
enhance its expertise, thus enabling the company to grow in

NET SALES SEK 8,996 M | NUMBER OF EMPLOYEES 965

Portfolio of development rights, ongoing and completed housing Geographic markets, housing units under construction

Number

42% Sweden, 34 (43)%

15,000
Denmark, 0 (1)%
12,000
29% Finland, 10 (19)%
9,000 Norway, 7 (0)%

6,000 Germany, 49 (34)%

12%
10% Baltic countries and
3,000 6% St. Petersburg, 0 (3)%
1%
0
Not General Detailed Building Ongoing Comp-
planned plan plan permit produc- leted,
tion unsold
Of the total portfolio of 31,872 development rights, about 14,000 are well In 2009, NCC initiated construction on housing units in Germany, Sweden,
advanced in the development process, with an approved building permit or a Finland and Norway. At year-end, Germany and Sweden accounted for a large
detailed development plan, which provides good potential for the years ahead. proportion of the housing for which production was ongoing.There were no
Of the remaining number of development rights, a general plan has been approved housing starts in Denmark, the Baltic countries and St. Petersburg during 2009.
for the predominant portion. Being able to successfully pursue the work on the
detailed development plan and to jointly with municipality create attractive resi-
dential environments accounts for a major share of value generation in housing
development. The percentage figure denotes the share of NCC’s total develop-
ment rights.
NCC 2009 23
 FOCUS ON THE ENVIRONMENT AND SAFETY
Low-energy housing is increasingly in demand among housing
customers. NCC’s expressed aim is to reduce energy consump-
tion in buildings in a bid to reduce the impact they have on the
environment over their lifetimes. The aim is that all of NCC’s
proprietary housing units, in all markets, will have energy con-
sumption levels that are below the norm for their respective
markets. For example, energy consumption in proprietarily
built housing in Sweden should be 20 percent below the equiva-
lent norm.
NCC is a leader in passive buildings in the Nordic region and
has completed many row houses and apartment blocks accord-
ing to this method. In the Swedish market, NCC commenced
the construction of its first proprietary apartment block of a
­passive-building standard in 2009.
Climate-declared housing units make it easier for customers
to make an environmentally sound housing choice. Today, NCC
prepares climate declarations for all newly produced housing
units in Sweden and Denmark. The next step will be to prepare
climate declarations for all proprietary housing.
The need for security was more important than ever in the
housing market in 2009 and NCC offers a variety of security
packages, such as providing customers with cover for double
housing costs, unemployment and illness.
Condominiums (owner-occupied apartments) are common-
place in most European countries, and were introduced in
­Sweden in 2009. There are many advantages with this new form,
with the clearest positive effect being greater flexibility in the
housing market. NCC currently develops and sells condomini-
ums in all other markets and possesses extensive know-how and
experience of this form of ownership.

BUSINESS ENVIRONMENT AND MARKET

The housing market was highly cautious at the beginning of 2009. falling interest rates contributed to an upward trend in the
The trend in demand moved in a positive direction during the ­market which, despite many unsold housing units, noted price
second half of the year as a result of tax reductions, low interest increases in the metropolitan areas of Bergen, Oslo and
rates and greater confidence in the future. The exceptions to ­Trondheim.
this trend were Denmark and the Baltic countries, where the The Danish market has been virtually stagnant since 2006. In
housing market remained weak. 2009, NCC sold many housing units that were completed some
time ago but did not initiate any new projects. A gradual adjust-
In 2009, sales of NCC housing units exceeded the number of ment of prices occurred in 2009.
new housing starts. Encouraged by the combination of rising Rising unemployment in Finland had a negative impact on
demand and expectations of continued low interest rates in demand, while falling interest rates had a positive effect. NCC’s
2010, NCC decided to launch the sale of additional projects sales figures for Finland were healthy, with few housing units in
towards the end of 2009. stock, and a slight price increase could be discerned toward the
In Sweden, NCC had many housing units in production at the end of the year. As in Sweden, “package solutions” attracted
beginning of the year, but reduced the number of unsold units widespread interest and NCC sold a number of completed
with its “a room on the house” campaign. At year-end 2009, development projects, including land and construction con-
NCC had only a small number of unsold apartments. tracts, to housing companies.
The Norwegian market was uneven. A solid labor market and Falling prices and low demand were characteristic of develop-

24 NCC 2009
 Row houses in Beckomberga, Sweden.

ments in the Baltic countries, due to the financial crisis. NCC

Housing’s sales picked up in the autumn after price adjustments Housing construction in the Nordic region,
had been made. In certain parts of the Baltic region, prices number of housing starts, apartments and single-family homes
declined 50 percent.
000s
The German market was stable during the year. NCC oper- 35
ates in the lower-price segment of the market, which is less sen- 30
sitive to economic fluctuations. The restructuring of the German 25
operations, which was initiated in 2008, continued throughout 20
2009. The changes included maintaining a market presence in
15
fewer locations than previously.
10
5
0
Sweden Denmark Finland Norway
The Nordic housing market experienced lower demand in 2009. The turmoil in
financial markets led to a cautious approach among the public to purchasing 2007 Source: Euroconstruct
homes and among developers in initiating new projects. The downturn was most 2008
profound in Denmark, although declines were noted in all of the Nordic coun­ 2009
tries. The economy improved in the autumn and demand increased. Eurocon­
struct predicts a higher number of housing starts in the next few years.

NCC 2009 25
 COMMERCIAL PROPERTIES
– PROPRIETARY DEVELOP­
MENT AND SALES

It all begins with an idea. An idea that is analyzed, crystallized VARIETY OF DEMANDS AND REQUIREMENTS
and developed to be subsequently realized as new offices, a new Understanding the requirements of tenants is of key importance
retail center or a new logistics facility. NCC Property Develop- to offering the right products and locations. Customer inter-
ment’s operations involve the development of properties and views are held and surveys/studies performed regularly to
their sale to investors. develop work and retail environments to meet the requirements
of tomorrow. The requirements for offices differ from those for
NCC develops properties in all of the Nordic countries and in retail centers and logistics facilities.
the Baltic region and controls the entire value chain from initial Attractive offices that offer employees a pleasant and effec-
concept and business development to leasing the completed and tive work environment feature high on the tenants’ wish lists.
sold property. The heart of the operation is the business devel- Other key aspects are having offices that reflect and strengthen
opment phase, which is where value growth for NCC and the the tenants’ brands, while the work environment is becoming an
client is achieved. In the subsequent stages of project engineer- increasingly important competitive factor in the recruitment of
ing and production, greater focus is directed to cost and quality new employees.
control. The value chain ends with the sale of the project, which Requirements for retail properties differ from those for offices.
makes funds available for new development projects. Office The premises and surrounding infrastructure must be optimal
development dominates, followed by retail and logistics. for selling the tenants’ products and services. All elements of the

FACTS | development of COMMERCIAL PROPERTIES

26 NCC 2009
experience, such as location, traffic flows, parking options and EARLY ADAPTATION OF THE PROJECT PORTFOLIO
the handling of heavy transportation, must be taken into account. Having sold many projects with rental guarantees at an early
The location and ability to design efficient flows of goods in stage, NCC optimized its earnings when the downturn hit the
warehouse premises are the two most essential components in leasing market later than the property market. NCC also applied
developing logistics facilities. NCC possesses specialist expertise a restrictive approach to launching new projects, which led to a
in this field which, combined with standardized construction low-risk project portfolio. At year-end 2009, NCC had 14 ongo-
solutions for warehouse buildings, provides favorable potential ing projects with an investment value of SEK 0.9 billion. The
for reducing customer costs. portfolio of development rights totaled approximately 1.3 mil-
lion square meters at year-end plus an additional 0.8 million
YIELD – ALL THAT COUNTS FOR INVESTORS square meters of land options and preliminary land allocations.
Potential investors are interested in purchasing developed prop- The continuous work on 40–50 development projects across the
erties that generate a high yield. They are often large national or Nordic region is proceeding as planned.
international organizations such as pension managers, property
funds or property or insurance companies. NCC’s offering of GREEN PROPERTY DEVELOPMENT
developed properties frequently competes with other invest- Environmental activities were intensified and NCC had devel-
ment options, such as equities and bonds. oped 14 GreenBuilding-certified projects at year-end 2009. All
The investors are essentially the same as those that choose to new projects are developed with GreenBuilding certification,
invest capital in office, retail or logistics properties and, in many meaning that their energy consumption is at least 25 percent
cases, they are seeking to diversify their property portfolio to lower than the norm for equivalent buildings.
spread some of their risk. NCC has decided to use the globally leading BRE Environ-
mental Assessment Method (BREEAM) for all development
LOW ACTIVITY IN THE PROPERTY MARKET IN 2009 projects in the Nordic region, and is also one of the initiators of
Major international investors make the Nordic property market the formation of Green Building Councils in all Nordic countries.
an integral component in the global financial industry. In recent
years, this has meant that the property development market has
expanded. However, the effects of the financial crisis and the Kungsbron Stockholm, Sweden.
ensuing recession have been profound. The 2009 fiscal year was
characterized by low activity in the property market. Uncer-
tainty arose regarding the price levels of properties due to the
low number of transactions completed, while the investors’
yield requirement increased. The banks remained restrained in
their financing and higher credit costs put the brakes on new
transactions. At the same time, the rental market noted higher
vacancy rates and lower rent levels.

NET SALES SEK 2,014 M | NUMBER OF EMPLOYEES 103

Gothenburg’s new court, Sweden.

NCC 2009 27
 FINANCIAL OBJECTIVES
AND DIVIDEND POLICY
The aim of the NCC Group’s strategy is to generate a healthy To ensure that the return target is not reached by taking financial
return to shareholders under financial stability. This is reflected risks, net indebtedness – defined as interest-bearing liabilities
in the financial objectives, which for 2009 were a return on less cash and cash equivalents and interest-bearing receivables –
equity of 20 percent after tax, a positive cash flow before invest- must be less than shareholders’ equity. As a complement to the
ments in properties classed as current assets and other invest- return requirement, cash flow before investments in properties
ment activities and net indebtedness that is less than sharehold- classed as current assets and other investment activities must
ers’ equity. For 2010, the financial objectives have been aligned be positive, to ensure that there is an underlying real earnings
to the new accounting policies that will start being applied then. capacity in the Group, so that the return is not based upon what,
from a valuation viewpoint, are profit or capital adjustments in
BASIS FOR THE FINANCIAL OBJECTIVES the accounts.
The level for the profitability objective is based on the margins Proprietary housing and property-development projects, as
that the various parts of the Group may be expected to generate well as investment-heavy NCC Roads, account for most of the
on a sustainable basis, and on capital requirements in relation to capital requirement and thus also the financing requirement.
the prevailing business focus. The contracting operations have limited capital requirements

RETURN ON SHAREHOLDERS’ EQUITY DEBT/EQUITY RATIO

Objective 2009 Objective 2009
Return on shareholders’ equity after tax shall amount to 20 Net indebtedness, defined as interest-bearing liabilities less
percent. cash and cash equivalents and interest-bearing receivables,
shall be less than shareholders’ equity. This target applies to
Fulfillment of objective the end of every quarter.
Return on shareholders’ equity after tax amounted to 18
­percent (27), which is below the target of 20 percent. The Fulfillment of objective
objective was not attained, primarily due to the lower earnings The debt/equity ratio did not exceed the limit stated in NCC’s
resulting from declining volumes in the construction market, financial objective for any of the 2009 quarterly accounts, and
and the housing operations’ negative impact on earnings. In totaled 0.1 (0.5) at year-end. The debt/equity ratio is affected
2008, the return figure was positively affected by SEK 493 M by seasonal variations. During the second and third quarters,
as a result of the sale of NCC’s share in the Polish concession more capital is tied up due to a high pace of activity in asphalt
company AWSA, while there was no such corresponding and civil engineering activities.
effect in 2009.

Return on shareholders’ equity Debt/equity ratio

% Times
35 1.2
30 1.0
25
0.8
20
0.6
15
0.4
10
5 0.2
0 0.0
05 06 07 08 09 Quarter 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2005 2006 2007 2008 2009
Objective: 20 percent (from 2007)
Target: <1

28 NCC 2009
but are subject to major seasonal and, to some extent, cyclical Within the various business areas, business operations are fol-
changes in working capital. In order to take these fluctuations lowed up on a local basis with the aim of steering them towards
within large parts of the Group operations into account, the the Group’s financial objectives. Thus, from an operational view-
return requirement has to be reached on a calendar-year basis. point, the main financial key figures are the operating margin,
The goal that net indebtedness should not exceed shareholders’ return on capital employed and cash flow. In addition, other
equity also applies to the close of each quarterly period. important operation-related objectives are set to support NCC’s
The internally focused analysis that forms the foundation for strategy, in such areas as the work environment, customer satis-
the above financial objectives is checked regularly against other faction, product quality, environmental impact and purchasing.
companies active in NCC’s markets and against the return
requirement that the capital market places on NCC. This com-
parison ensures that the objectives are reasonable when viewed
from a shareholder perspective.

Financial objectives and dividend

Result Average
Target 2005 2006 2007 2008 2009 5 year
Return on shareholders’ equity, %1) 20% 18 27 34 27 18 25
Debt/equity ratio, times <1 0.1 0.1 0.1 0.5 0.1 0.2 1) New objective, as of 2007: 20 percent; previous objective:
Cash flow before investments in 15 percent.
properties classed as current assets 2) New objective, as of 2007: cash flow shall be positive before

and other investment activities, SEK M2) Positive 1,613 5,005 8,198 7,787 5,732 5,667 gross investments in properties classed as current assets and
Ordinary dividend, % >50% 51 51 53 24 52 46 other investment activities. In previous reports, amounts for
2007 and 2008 had been reported before net investments.
Ordinary dividend, SEK 5.50 8.00 11.00 4.00 6.003) 6.90
Objective prior to 2007: positive before financing.
Extraordinary dividend, SEK 10.00 10.00 10.00 – – 6.00 3) Proposed dividend.

DIVIDEND FINANCIAL OBJECTIVES FOR 2010

Dividend policy
– Return on shareholders’ equity after tax must amount
NCC’s policy is to distribute at least half of profit after taxes
to 20 percent.
to the shareholders. The reason for establishing this level is
– Net indebtedness must never exceed 1.5 times
to generate a healthy return for NCC’s shareholders and to
­shareholders’ equity.
provide NCC with the potential to invest in core business and
thus to ensure that future growth can be created while main-
For 2010, the financial objectives have been aligned to the new
taining financial stability. For 2009, the Board of Directors
accounting policies that will start being applied then. As of
proposes a dividend of SEK 6.00 per share (4.00). The pro-
January 1, 2010, NCC will apply IFRIC 15, Agreements for
posed dividend corresponds to 52 percent of profit after taxes,
the Construction of Real Estate. The new accounting policies
which is in line with the dividend policy.
will mainly affect housing operations, since as of 2010 sales
of housing projects will generally not be recognized as profit
until the projects have been transferred to the end customer,
in contrast to 2009 and prior years, when profit was recog-
nized in pace with completion and sale.
NCC’s assets and liabilities will also be affected by the
introduction of IFRIC 15. Interest-bearing liabilities will be
higher than previously because ongoing construction of hous-
Dividend
ing in Swedish tenant owner associations and Finnish housing
SEK companies will have to be recognized in NCC’s balance sheet.
25 Accordingly, reported net indebtedness will increase. How-
20 ever, the changes will have no impact on NCC’s financial posi-
tion and risk. NCC’s financial objective for the debt/equity
15
ratio is being adapted and increased from 1.0 to 1.5, which
10 means that net indebtedness must never exceed 1.5 times
shareholders’ equity at the end of any quarter.
5
The objective for the return on shareholders’ equity remains
0
05 06 07 08 09 unchanged at 20 percent after tax. The current objective for
cash flow has been discontinued, due to the limitations on the
Extraordinary dividend Objective: >50%
of profit for the year debt/equity ratio.
Ordinary dividend

NCC 2009 29
 SUSTAINABLE
DEVELOPMENT AND
RESPONSIBLE ENTERPRISE
NCC develops and builds future environments for working,
­living and communication, meaning that NCC is a community
builder in the true sense of the word. This is an immense respon-
sibility that provides an opportunity for NCC to contribute to
sustainable social development.

Responsibility is one of NCC’s core values and is the foundation

of the company’s strategic approach toward bringing about sus-
tainable development in all aspects: economically, environmen-
tally and socially. Given NCC’s operations and decentralized
organization, responsibility comprises a natural part of the
employees’ daily working lives. Social responsibility, in particu-
lar, in terms of the work environment is something that is clearly
evident to both employees and the company.
A number of stages of and tasks in the construction process
involve risk or heavy loads and are difficult to perform, making
proactive measures to prevent workplace injuries and accidents
The Norrortsleden Link, Stockholm, Sweden
essential. Such measures are closely associated with NCC’s
­values of honesty, respect and trust, as well as focus, simplicity
and responsibility in daily work activities.
NCC’s operations are continuously present in society and
leave a long-term mark in the form of the buildings and civil Compliance with the Code of Conduct is monitored as an
engineering structures that are constructed. Accordingly, it is ­integral part of the ongoing operations, meaning that monitoring
natural for NCC to focus its sustainability work on healthy is included in procedures and checks, as are other governance
developed environments, energy-efficient buildings and efficient issues. A whistleblower procedure for reporting irregularities is
production processes. NCC is contributing to improvements in in place to enable employees to anonymously bring non-com­
society and many of its projects involve a number of small com- pliance with the Code to the attention of senior management.
panies as suppliers and subcontractors, and for this reason NCC NCC has provided a comprehensive training program in business
has immense responsibility to many stakeholders in society, ethics and competition law for managers since 2002 and approx-
­particularly the customer and customer’s customer who will imately 3,000 managers have now completed the program. See
actually use the final product, whether it be a road user, tenant also the Corporate Governance Report on p. 99.
or resident. As of 2010, NCC has started to adjust the reporting of its
As a community builder, NCC engages in a continuous dialog ­sustainability work according to the Sustainability Reporting
with stakeholders, which largely occurs in connection with on- Guidelines of the Global Reporting Initiatives (GRI). Sustain-
going contact during the progress of projects. At the same time, ability reporting and management issues are handled by repre-
the Group’s website is the hub for broader communications. sentatives from the Corporate Communications, Legal Affairs,
A more detailed stakeholder model is presented on pp. 36–37. Environment, HR and Purchasing staff units.
NCC’s Code of Conduct describes the requirements that
NCC – the Board of Directors, management and all employees – NCC’S ENVIRONMENTAL RESPONSIBILITY
has to meet in terms of behavior and conduct and that NCC in NCC’s environmental work has been shaped by the following
turn expects its business partners to respect. The Code of Con- four overriding environmental objectives for several years:
duct is also the framework of NCC’s approach to its environ- • Create healthy developed environments
mental and social responsibility in terms of sustainable develop- • Reduce climate impact
ment and is based on such internationally recognized guidelines • Reduce the use of harmful substances
as the UN’s Universal Declaration of Human Rights, ILO con- • Contribute to recycling
ventions, OECD guidelines and the UN Global Compact. NCC
joined the World Economic Forum Partnering Against Corrup- NCC’s operations leave a long-term mark on society in terms of
tion Initiative (PACI) in 2005 and signed the UN Global Com- environmental impact and energy consumption.
pact with effect from 2010.

30 NCC 2009
 CODE OF CONDUCT
NCC’s Code of Conduct, describes the requirements that
NCC – the Board of Directors, management and all employ-
ees – has to meet in terms of behavior and conduct and that
NCC in turn expects its business partners to respect.
The basis of the Code of Conduct is NCC’s values – the
company’s value foundation. Honesty, Respect and Trust
are required of all NCC employees and are expected of all
parties with whom NCC has relationships.
The Code of Conduct is an overriding policy document
that covers the following areas:

• Business principles that summarize laws, agreements,

competition issues and conflicts of interest
• Human rights and working principles
• Environmental responsibility
• Compliance and follow-ups

As a result, environmental activities permeate all of NCC’s for casting or securing rock and land masses. Fuel for contractor
operations and are often the reason that NCC is a viewed as a machinery and transportation is a key input material, primarily
viable option for many assignments. Environmental responsibil- for infrastructure and civil engineering projects.
ity rests with the line organization and the supporting staff units One way of reducing the use of materials is to app ly an effi-
are largely decentralized. Leading-edge expertise in the shape of cient construction process, with industrial construction and vir-
internal engineering consultancies also exists. tual construction methods (such as 3D and 4D designs) as key
components. In doing so, the possibilities for future re-use of
USE OF MATERIALS construction materials increase, once the building/facility has
Construction uses natural resources but also creates new and served its use or requires renovation. Recycling is a major factor
healthy environments for people to live in. In its construction and an average of almost 90 percent of construction waste is
operations, NCC uses stone that is mined from bedrock and, recycled. The recycling of previously paved asphalt is an impor-
after their useful lives, depleted quarries and industrial areas are tant input material for asphalt production, as is collected road
post-treated and converted into residential areas, for example. sand to some extent. Lower temperatures and alternative fuels,
When conducting construction contracts, NCC always shows such as fish oil and natural gas, are used in asphalt manufacturing
great consideration for nature and the environment and protect- to reduce energy consumption in production. Fuel consumption
ing biodiversity is frequently part of a project; for instance, can be lowered by enhancing the efficiency of transportation in
­animal crossways during road works. The careful restoration of the construction process.
historical surroundings and buildings is a common task for NCC. The construction process involves chemical substances and
The construction process encompasses a large amount of NCC’s aim is to reduce the use of dangerous substances. In Swe-
input materials, which vary greatly from project to project. den, the industry works together under the BASTA product
Building construction (for example, residential properties, com- choice system, which has a greater reach than the EU’s REACH
mercial premises and public buildings) requires such materials chemical legislation in terms of dangerous substances. The
as stone, concrete, wood, steal, copper, iron, plastic, glass and national chemical database is used in Denmark, while Norway
china. For infrastructure projects, stone materials crushed into and Finland have phase-out lists.
different sizes comprise a key input material, as does bitumen,
an oil product used in asphalt manufacturing. Explosive are
commonly used in underground work, as are various materials

NCC 2009 31
 FOCUS ON REDUCING ENVIRONMENTAL IMPACT ENERGY-EFFICIENT BUILDINGS
NCC’s aim is to reduce its impact on the environment, with a NCC has extensive experience of constructing energy-efficient
focus on energy consumption and reducing carbon emissions. buildings and civil engineering structures and the energy con-
A survey was initiated in 2009 to study the direct impact of sumption of the new housing units it builds in Sweden is at least
NCC’s operations on carbon emission levels in accordance with 20 percent lower than the norm for equivalent buildings. The
the Greenhouse Gas Protocol (Carbon Footprint). A high per- energy efficiency of residential properties, for example, is
centage of the direct impact from NCC derives from heating enhanced through efficient heat recycling and energy-efficient
premises and fuel for various types of vehicles. NCC in Sweden windows and white goods. All of NCC’s office projects are
purchases only “green electricity” (“Good Environmental Choice designed according to the EU GreenBuilding Program, which
according to the Swedish Society for Nature Conservation”) entails that the projects consume at least 25 percent less energy
and fuel-efficient vehicles are prioritized in NCC’s fleet. than the norm for equivalent buildings. To date, NCC has devel-
Indirectly, NCC also has great potential to influence energy oped 14 buildings under the GreenBuilding Program, making it
consumption in society by offering energy-efficient buildings. the first construction company in Sweden to be classified as a
Buildings represent nearly 40 percent of total energy consump- GreenBuilding Corporate Partner and one of the first in Europe.
tion (according to the Swedish Energy Agency, for example) To become a partner, 75 percent of new buildings produced by
and most energy is used in the operations phase. The impact on a company must meet the Program’s demands.
carbon emissions varies depending on the source of energy used NCC is one of the construction companies that has built the
for heating and cooling the building. In Sweden, Norway and most “passive buildings.” These are buildings characterized by a
Finland, energy is largely generated from hydroelectric power well-insulated design and that lack traditional heating systems.
and nuclear power, which has a low impact on carbon levels, They are heated mainly by the heat emitted by residents, solar
while the energy generated from coal in Denmark, the Baltic heat and household appliances, which reduces energy consump-
countries and Germany has a greater impact on carbon levels. tion by 50 to 60 percent. To date, NCC has constructed six
NCC has the greatest potential to influence the total energy ­residential properties as passive buildings in such towns as
burden of its products by becoming involved at an early stage ­Gothenburg, Värnamo, Växjö and Sundbyberg, and two passive
of the construction process. The platform work method enables school buildings.
the systematic inclusion of positive environmental characteris- In a bid to highlight and document its energy-efficient build-
tics in construction projects, while simultaneously promoting ings, NCC produces climate declarations for its residential prop-
high quality at a low cost. NCC’s platforms are based on stan- erties and classifies commercial premises in accordance with the
dardized and stringently tested solutions that have fewer faults BRE Environmental Assessment Method (BREEAM), the lead-
and sustainably maintain quality, which is an environmental ing European method, with more than 130,000 buildings having
advantage in itself. received BREEAM certification. Unlike other environmental
assessment systems, BREEAM also takes into account a whole
range of environmentally impacting factors in a property, such as
transportation, control and the choice of location for a building.

NCC’s environmental work in practice, examples

HOUSING OFFICES, PREMISES, BUILDINGS MATERIALS AND SERVICES

• E nergy-efficient housing – energy con­ • E nergy-efficient buildings – energy consump­ • A lternative fuels in asphalt production
sumption that is at least 20 percent tion that is at least 25 percent lower than the (such as fish oil and natural gas)
lower than the norm for equivalent norm for equivalent buildings • NCC Green Concept® – umbrella
buildings (Sweden) • Green Building Partner term for environment-friendly initiatives
• Only renewable energy to be purchased • Green Working – training tenants in reducing involving aggregates and asphalt
for proprietary projects their energy consumption • NCC Green Asphalt® – produced with
• Climate declarations for residential • Concept House – a house powered by solar, at least a 20-percent reduction in energy
properties (Sweden and Denmark) wind and water consumption and an up to 30-percent
• Passive buildings reduction in carbon emissions
• Own generation of renewable energy in
• Energy clock – a way of visualizing ­proprietary projects: local wind farms, • Recycling of asphalt
energy use in the home solar panels • Miljöfabriken – concept for recycling
• Green Living – training homeowners in • Use of BRE Environmental Assessment waste
reducing their energy consumption Method (BREEAM) to measure environ­ • Increase in the efficiency of transportation
(Sweden and Finland) mental impact of buildings

32 NCC 2009
FOCUS ON WORK ENVIRONMENT, HEALTH AND SAFETY comparisons with previous years more difficult, although it facil-
NCC is a large employer with about 18,000 employees, itates comparability of the construction market as a whole in
involved mainly in production and also mainly in Sweden. The those countries where NCC is active. The results of the 2009
most highly prioritized area of social responsibility by far is survey showed that job satisfaction at NCC is at a high level and
ensuring a secure and safe work environment at construction is also higher than the overall construction industry.
sites, for both the company’s own employees and for subcon-
tractors. The company’s vision is to have zero accidents and WORKPLACE RELATIONSHIPS
work is continuously undertaken to minimize accidents and NCC encourages its employees to join a trade union and collec-
increase safety at NCC construction sites. Preventive measures, tive negotiations are respected. Most employees are members of
information, safety equipment, project control and, in particular, trade unions, primarily the Swedish Building Workers’ Union. In
a management approach that prioritizes work-environment 2009, NCC was forced to make layoffs due to shortage of work,
efforts are all factors that contribute to reducing the number of with a total of 2,900 people leaving the company. Major efforts
accidents and minimizing injuries. In 2009, the number of work- were made to ensure that those employees who had to leave the
place accidents, measured per million work hours, was 12. company were treated respectfully throughout the entire pro-
cess, and while maintaining a positive relationship with the com-
THE INDUSTRY’S MOST ATTRACTIVE EMPLOYER pany. The outcome of the 2009 survey indicated that employees
Despite construction sites being hazardous places for employ- had widespread understanding for these personnel reductions.
ees, sickness absence is low and job satisfaction high at NCC.
Sickness absence amounted to 3.4 percent in 2009. The annual CONTINUOUS SKILLS DEVELOPMENT
employee survey, the Human Capital Index (HCI), revealed that Committed, loyal and skilled employees in the correct position
job satisfaction remained high at the company. The methodology in the organization are essential to NCC’s ability to compete.
used for the HCI was improved during the year, which made Consequently, maintaining and recruiting the right employees is

NCC’s values – HCI 2009

NCC Construction NCC NCC

Sweden Denmark Finland Norway Roads Housing
For many years, NCC has devoted systematic work to the corporate culture,
Honesty
meaning the company’s and the employees’ values. Honesty, Respect and Trust
are the basic requirements placed on all NCC employees and on those who have
Respect working relationships with NCC. NCC’s business operations must also be char­
Trust acterized by focus, simplicity and responsibility. NCC’s values are well grounded
and are appreciated among the employees, and the results in this area have been
Focus
high and the trend favorable for a number of years. The downturn in the results
Simplicity for NCC Construction Norway in 2009 should be viewed in the light of the
Responsibility sharp decline in its volumes. No trend concerning the trend prevailing at NCC
Property Development and NCC Housing can be presented, since there are no
Proud of working at NCC comparable figures for 2008.

High employee satisfaction at NCC

Index
80
70
60
50
40
30
20
10
0
NCC NCC Construction NCC Construction NCC Construction NCC Construction NCC NCC Property
Total Sweden Norway Denmark Finland Housing Development

NCC 2009
EEI Benchmark (EEI = European Employee Index). Comparison with the construction industry in Sweden,
Norway and Denmark, and with the entire labor market in Finland and Germany.

Employee satisfaction is measured on the basis of the European Employee Index model, which enables NCC’s results to be compared with
those of similar companies.The model provides an overall assessment of the employees’ job satisfaction and loyalty and includes questions
­concerning comfort, values, the immediate superior, motivation and commitment. NCC outperformed or was in line with the industry index
in each market. NCC Roads was not covered by the survey in 2009 due to the change in the measurements made.

NCC 2009 33
 strategically important, as is continuous skills development. DIVERSITY AND EQUALITY
A number of training programs are arranged every year in differ- NCC is a male-dominated company, with men accounting
ent fields. The activities conducted in 2009 included a major for 89 percent of the workforce. The distribution between the
focus on the work environment and on values in Sweden. genders is slightly more even at the senior manager level, at 73
NCC is a learning organization and new projects continuously percent. NCC strives to ensure increased equality and greater
involve new challenges. Recycling experiences is a key task, at diversity in terms of gender, age, religion, sexual orientation
the same time as new research is required. Every year, NCC has and ethnicity. Punishment, discrimination and harassment are
a number of industry-based PhD students, and in 2009 seven of not accepted. In Sweden, there is a network called Stella for
these were active in, for example, the development of energy- ­supporting female academics in their professions.
efficient buildings and construction in polluted areas.
Many of the projects that NCC works on are complex and are HUMAN RIGHTS
based on close cooperation between all participants. Accord- NCC supports and respects international conventions on human
ingly, joint skills development focused on optimizing the project rights. The risk of deviations from such conventions is mainly
is essential. One example is the cooperation framework known deemed to exist in the area of international purchases, in
as NCC Partnering. ­markets in Eastern Europe and Asia. To ensure, to the extent

Sickness absence Gender distribution

Total sickness absence as a percentage of regular working hours, percent 2009 Share, percent 2009 2008
NCC Construction 3.7 Group
NCC Roads 2.5 Board of Directors, women 22.9 16.6
NCC Housing 4.8 Other senior executives, women 18.1 16.4
NCC Property Development 0.8 Total percentage of women 10.8 11.3
NCC Group total 3.4

Occupational accidents per one million worked hours 2009

NCC Construction 13.0
NCC Roads 9.0
NCC Housing 15.1
NCC Property Development 0
NCC Group total 12.0

Workers on the roof of a silo in Narvik, Norway.

34 NCC 2009
possible, that suppliers are adhering to NCC’s Code of
­Conduct, the Business Social Compliance Initiative (BSCI)
is used, which conducts assessment of suppliers.

BUSINESS ETHICS AND CORRUPTION

NCC respects and abides by laws and agreements, and sup-
ports correct and balanced competition in connection with
procurement processes, tendering, product procurement and
purchasing. NCC’s Code of Conduct expressly states that
employees may not become involved in activities that could
lead to conflicts of interest and may not give or receive gifts or
business entertainment above certain determined levels, or
request or give such promises.
Unfortunately, NCC has been party to unpermitted busi-
ness transactions that have resulted in the company conduct-
ing internal investigations, employees leaving the company,
the need for more training activities in business ethics and
competition law, long processes and heavy fines. The final
­verdicts in the Swedish and Finnish cartel cases, which per-
tained to transgressions of competition legislation, were
announced in 2009. In Sweden, NCC was ordered to pay
SEK 200 M in competition damages and in Finland a total
of approximately SEK 70 M.
NCC works continuously to train its personnel and has
provided training in competition law to about 3,000 managers
to date. The training program is part of employment contracts,
meaning that an employee will be dismissed if violations occur.

LIABILITY FOR PRODUCTS AND SERVICES

NCC has a broad spectrum of products and services that
are often covered by guarantees and liability for products.
A construction project is inspected at various stages and
guarantees are provided according to applicable norms as
a minimum.
In recent years in Sweden, NCC has extended its
­guarantee commitments from two to ten years for clients
pur­chasing single-family homes whose façades were
­finished according to what is known as the single-stage
method. A program has been prepared for investigating
and restoring the homes that have experienced problems
caused by damp in their façade.

NCC 2009 35
 NCC’s STAKEHOLDERS
NCC faces expectations and demands from many different stakehold-
ers. How NCC lives up to these expectations is a decisive factor for the
Group’s success in its business operations. The matrix below summarizes
NCC’s key issues, and provides examples of measures designed for each
stakeholder category.

CUSTOMERS

KEY ISSUES FOCUS IN 2009

• The most attractive customer offerings. Platforms.
• Strong, longstanding customer relations. Energy-efficient products and services.
• High level of competence. Climate declaration of homes.
• Contribute to sustainable social development. GreenBuilding and BREEAM.
• Highest production efficiency in the industry. Extended guarantee periods.
• NCC Partnering.
• Function contracts. PRIORITY ISSUES FOR 2010
• Lifecycle approach. • NCC Partnering.
• Committed employees. • Function contracts.
• Energy-efficient products and services. • More in-depth customer surveys.
• Reduction in carbon-dioxide emissions. • Broadened lifecycle approach.
• Carbon Footprint.
• Energy-efficient products and services.
• Long-term initiatives involving research
and development.

USERS

KEY ISSUES FOCUS IN 2009

• Create healthy built environments. Energy-efficient products and services.
• Reduced impact on climate during useful life of Climate declaration of homes.
buildings. GreenBuilding and BREEAM.
• Satisfied users.
• Effective and appropriate housing, commercial PRIORITY ISSUES FOR 2010
premises and plants, with low lifecycle costs. • Offer environmentally labeled single-family
• Well-conceived design. homes.
• Energy-efficient products and services. • Continued future-oriented studies.
• Climate declaration of all types of buildings
and civil engineering structures.

SHAREHOLDERS EMPLOYEES

KEY ISSUES FOCUS IN 2009 KEY ISSUES

• Increased value growth. Organization adapted to lower demand. • Most attractive employer.
• 20 percent return on shareholders’ Financial stability. • Low level of sickness absence and zero
equity after tax. work-related accidents.
Positive cash flow.
• Financial stability. • Committed employees.
Profitability ahead of volume.
• At least half of after-tax profit distributed • Modern personnel relations.
Limited risk exposure.
to shareholders. • Clear, value-guided and supportive leadership.
• Highest production efficiency in the industry. • Good development opportunities.
PRIORITY ISSUES FOR 2010
• Growth efforts. • Influence over own work.
• Sustainable profitability.
• Committed employees. • Recruit and retain the best employees.
• Competitiveness.

36 NCC 2009
 %
35
Financial statements pp. 38–95
30
25
20
15
10
5 SUPPLIERS

0
05 06 07 08
KEY ISSUES 09 FOCUS IN 2009
• Lowest purchasing costs in the industry. Increase in purchasing coordination.

Avkastning på eget kapital •

•
Reduction in total purchasing costs every year.
International purchasing.
Development of international purchasing offices.
Optimized and focused purchasing resources for

Avkastning på sysselsatt kapital •

•
Coordination.
Developed logistics.
international purchasing.
Increase in purchasing specialization and knowledge
• Cooperation with the most cost-effective of value chains.
suppliers. Strategic partnerships with the globally most ­
• Industrial construction. cost-effective suppliers.
• Improved project control.
• Rate of change. PRIORITY ISSUES FOR 2010
• Develop efficient trading and logistics.
• Continued strategic development.
• Implementation of product-approval process.
• Leadership to drive change.

authorities

KEY ISSUES FOCUS IN 2009

• P
 rovide best possible documentation prior to Dialog with municipal administrations,
political decisions. government authorities and departments
• Participate in public debates on matters affecting and other decision-makers.
the construction sector. Discussions regarding new forms of
• Long-term collaboration partner. procurement and construction costs.
• Understanding for the role of the authorities.
• Continuous dialog. PRIORITY ISSUES FOR 2010
• In-depth expertise. • High product efficiency.
• Energy-efficient products and services. • Reduce construction costs.
• Carbon Footprint.
• Broaden scope for NCC Partnering and
function contracts.
• Dialog about decrease in CO2 emissions
in the industry.

INDIRECT STAKEHOLDERS

FOCUS IN 2009 KEY ISSUES FOCUS IN 2009

Management training. • Increase awareness and knowledge of NCC. Debate articles concerning important and
Further develop Human Capital Index (HCI). • Be perceived as a responsible company. strategic matters.
Reduced sickness absence. • Benchmark company in the industry. Involvement in member and industry
Value dialog. • Participation in public debates. organizations.
Work-environment training. • Dialog with nearby residents. Visible social responsibility, through, for
example, prevention of occupational injuries
• Dialog with media.
PRIORITY ISSUES FOR 2010 and accidents.
• Energy-efficient products and services.
• Competency development.
PRIORITY ISSUES FOR 2010
• Increased diversity.
• Strengthen leadership. • Long-term and systematic brand building.
• Carbon Footprint.
• Intensified dialog with various stakeholder
categories.

NCC 2009 37
 REPORT OF THE BOARD OF DIRECTORS
Financial report

The Board of Directors and the President of NCC AB (publ), positive trend continued in the second half of the year and
corporate registration number 556034-5174 and headquartered certain markets, such as Norway and metropolitan areas in
in Solna, hereby submit the annual report and the consolidated Sweden, demonstrated price increases. The market trend for
financial statements for the 2009 fiscal year. commercial properties was negative during 2009. The rental
market reported rising vacancies and falling rents. During the
GROUP RELATIONSHIP second half of the year, the number of property transactions
Since January 2003, NCC AB has been a subsidiary of Nord- increased, albeit from a low level. Yield requirements
stjernan AB, corporate registration number 556000-1421. stabilized during the second half of the year.
The return on shareholders’ equity after tax was 18 per-
OPERATIONS cent (27). Cash flow before investments in properties classed
NCC is one of the leading construction and property develop- as current assets and other investment activities gross was a
ment companies in the Nordic region. The Group develops and positive SEK 5.7 billion (7.8). Net indebtedness at year-end
constructs residential and commercial properties, industrial was SEK 0.7 (3.2) and the debt/equity ratio was 0.1 (0.5).
facilities and public buildings, roads, civil engineering structures During the year, the shareholders of NCC were paid divi-
and other types of infrastructure. NCC also offers input materi- dends totaling SEK 0.4 billion, as resolved by the 2009
als used in construction, such as aggregates and asphalt, and pro- Annual General Meeting.
vides paving and road services. The Group’s primary geographi-
cal focus is on the Nordic region. In the Baltic countries, NCC Orders received
mainly constructs housing and buildings and in Germany it Orders received totaled SEK 45,957 M (51,864). The decline
mainly builds housing. was largely due to NCC Construction Sweden, which received
fewer major orders (meaning orders exceeding SEK 100 M) for
OPERATIONS DURING THE YEAR housing and civil engineering projects compared with the pre-
The Nordic construction market was weak during 2009, ceding year. Orders received by NCC Construction Norway,
with lower demand for housing, offices and other buildings, which secured several major orders in the fourth quarter,
primarily from private customers. Demand from the public increased by 32 percent in 2009. NCC Construction Finland
sector was not impacted by the economic downturn to the and NCC Housing also reported increases in orders received.
same extent. Interest in constructing rental apartments Exchange-rate changes resulted in an increase of SEK 1,670 M
increased. During 2009, demand for aggregates and asphalt in orders received, ­compared with the preceding year. Orders
was lower than in the preceding year. Following a period of received for proprietary housing projects totaled SEK 3,027 M
sharp decline in late 2008 and early 2009, the housing (3,347). During the year, 1,138 (1,568) proprietary housing
market stabilized during the second quarter of 2009. This starts were carried out and 3,275 (2,416) units were sold.

Orders received and order backlog Profit/loss after financial items, per quarter

SEK billion SEK M

70 1,500
60 1,250
50 1,000
750
40
500
30
250
20 0
10 –250
0 –500
05 06 07 08 09 Q1 Q2 Q3 Q4

Orders received 2005 2007 2009

Order backlog remaining to be worked up 2006 2008

Orders received declined 11 percent and the year-end order backlog totaled Earnings for 2009 were favorable, despite the adverse impact on earnings
SEK 34.1 billion. The recession of 2009 led to decreases in orders received, resulting from sluggishness in the housing market and the poor conditions for
­primarily in Swedish construction operations, with a downturn for both civil property sales, combined with NCC Roads’ weak start to the year. Although
engineering and commercial projects. The housing market recovered during volume in the construction contract operations declined, earnings remained
the second half of 2009. The ongoing projects continued to be produced at favorable, as a result of historically high margins.
a fast pace, which resulted in a decrease in the order backlog.

38 NCC 2009
 Financial report
In addition, construction started on of 1,574 (284) housing units sales of housing units and properties, which enabled reversals
in projects sold to investors. Orders received for proprietary of sales-rate eliminations and inter-company profit amounting to
property development projects amounted to SEK 422 M profit of SEK 133 M (loss: 91). The item also includes SEK 50 M
(1,779). in expenses for the increased competition-impeding fee and a
gain of SEK 70 M from a settlement concerning a project in the
Net sales discontinued business area NCC International Projects.
Net sales declined 10 percent to SEK 51,817 (57,465). Com-
pared with the preceding year, net sales were lower in all quarters. Profit after financial items
The lower sales were due primarily to the recession and to Profit after financial items amounted to SEK 1,694 M (2,386).
reduced demand in the Nordic construction market. The decline Profit in the preceding year included SEK 493 M from the sale
was somewhat greater during the second half of the year. of NCC’s share in the Polish concession company AWSA.
Exchange-rate changes increased sales by SEK 1,837 M, Excluding the gain from AWSA, net financial income deterior­
­compared with the preceding year. ated compared with the preceding year, due to the high net
indebtedness that NCC had in the first six months and higher
Operating profit interest-bearing liabilities and high interest rates in the Baltic
Operating profit amounted to SEK 2,150 M (2,219). Earnings region and Russia during the first three quarters of the year.
in the preceding year were affected by impairment losses on
land and completed unsold housing units, as well as restructur- Profit after tax
ing costs. Together, these items totaled SEK 741 M, of which The profit after tax for the period amounted to SEK 1,262 M
impairment losses on land and completed unsold housing units (1,820). NCC’s tax rate for the year was 25 percent (24).
accounted for SEK 537 M. In 2009, impairment losses on
­completed unsold housing units amounted to SEK 192 M. FINANCIAL POSITION
Exchange-rate changes had a marginal impact on operating Profitability
profit, compared with the preceding year. The return of 18 percent (27) on shareholders’ equity after
The decline in operating profit, compared with 2009, was pri- tax was affected by the lower earnings compared with 2008.
marily due to the first quarter, when earnings were affected by
weaker conditions in the housing market, lower profit from Cash flow
property sales and a weak start for NCC Roads. Cash flow before financing amounted to SEK 2,837 M (neg:
Although NCC Construction Sweden’s earnings declined 178). Higher sales of primarily housing projects resulted in a
due to lower sales, the operating margin was in line with 2009. positive cash flow from changes in working capital. Lower inter-
NCC Construction Denmark reported lower operating profit est-free financing within NCC Housing had an adverse impact
during the year due to reduced sales. NCC Construction on cash flow.
­Finland’s earnings deteriorated because of lower sales and a Fewer housing projects were started than in the preceding
weak market in the Baltic region. NCC Construction Norway’s year, while the number of completed unsold housing units
operating profit declined due to lower sales, although its operat- declined. Paid accounts receivable and an increase in accounts
ing margin increased. payable contributed to a healthy cash flow compared with the
NCC Roads’ earnings declined due to lower volumes, com- preceding year. In 2008, the sale of NCC’s shareholding in the
pared with 2009, and to a competition-impeding fee in Finland Polish concession company AWSA had a favorable impact of
of SEK 45 M. SEK 493 M on cash flow. Also refer to the cash flow statements
Despite favorable housing sales, NCC Housing reported on p. 54.
an operating loss for 2009. Earnings were affected by price
reductions for housing, which were implemented to stimulate Equity/assets and debt/equity ratio
sales of housing units in the submarkets with the greatest On December 31, 2009, the equity/assets ratio was 26 percent
­exposure to competition. (19). The debt/equity ratio amounted to a multiple of 0.1 (0.5).
NCC Property Development’s earnings were lower than
in 2009, because of fewer property sales and that earnings Seasonal effects
from supplementary purchase considerations declined, as The operations of NCC Roads and certain activities within
did reversals of rental guarantees. NCC’s Construction units are affected by seasonal variations
Other items and eliminations totaled SEK 116 M (loss: 53). caused by cold weather conditions. The first and final quarters
The increase in this item was primarily attributable to higher are normally weaker than the rest of the year.

NCC 2009 39
 BUSINESS AREAS NCC Roads
Financial report

NCC Construction Sweden NCC Roads reported net sales of SEK 10,338 M (11,317). The
Orders received by NCC Construction Sweden declined 25 weak conditions in the construction market resulted in reduced
­percent to SEK 18,842 M (25,056), a decline that was most volumes of aggregates, asphalt and paving. Margins were in line
­tangible during the early parts of the year, while a slight recovery with the preceding year. Asphalt and paving managed to uphold
occurred towards the end of 2009. The recession had a severe their healthy margins as a result of lower prices for input materi-
impact on larger commercial building and civil engineering als. Aggregates were affected more significantly by the downturn
­projects due to financings problems affecting the customers, in residential and building construction, and in demand from the
combined with the uncertain future outlook. NCC Construc- concrete industry. Road service was the area that was impacted
tion Sweden started the year with a healthy order backlog that least by the recession. Operating profit for 2009 totaled SEK
enabled a high rate of production, although it was still 10 387 M (446). Competition-impeding fees of SEK 45 M that
­percent lower than in the preceding year. Despite the reduced were paid in Finland were charged against earnings.
volume, operating profit amounted to SEK 1,031 M (1,154).
The favorable profit for the year resulted from efficient risk NCC Housing
management, with few loss-making projects, and an alignment As of 2009, housing development is organized in a separate
of the organization and costs as volumes declined. ­business area. The year started with falling demand, resulting in
price reductions. During the year, the number of housing units
NCC Construction Denmark sold significantly exceeded housing starts. The organization,
Orders received by NCC Construction Denmark amounted to operations and costs were adapted to the market conditions.
SEK 3,194 M (3,253) and operating profit to SEK 72 M (119). Sales totaled 3,275 (2,416) proprietary housing units and 1,574
The deterioration in earnings was due to reduced volume and (284) housing units were sold to investors. At the beginning of
restructuring costs for adapting the organization. the year, start-ups of new proprietary projects were unusually
low. However, demand increased during the final quarter, which
NCC Construction Finland enabled the initiation of new projects. The number of housing
Within NCC Construction Finland, orders received increased starts was 1,138 (1,568), primarily in Germany and Sweden but
to SEK 5,662 M (5,411). The main increases were noted for also in Finland and Norway. The markets in Denmark, the Baltic
­renovation projects and government-subsidized public-utility countries and St. Petersburg remained weak, which did not
housing. Operating profit declined to SEK 172 M (254). The ­permit the initiation of any projects during the year.
operations in Finland noted higher profitability in their projects. As a result of the high sales, the number of completed unsold
The deterioration in earnings was due mainly to impairment housing units declined to 391 (831) at year-end. Ongoing hous-
losses and restructuring costs in the Baltic countries. ing units in production totaled 1,938 (4,065), equal to a work-
up rate of 69 percent (71) and a sales rate of 77 percent (48).
NCC Construction Norway The number of development rights was 31,872 (31,182),
Orders received by NCC Construction Norway amounted including 15,200 (14,200) in Sweden.
to SEK 4,681 (3,546). The increase was attributable to higher Capital tied up in housing projects declined to 8,363
demand, enabling the start-up of projects. Customers with (11,377), primarily as a result of sales of both unsold completed
secured financing and an increased belief in the future resulted and ongoing housing units.
in orders for commercial building projects. Government initia-
tives contributed to civil engineering activities accounting for NCC Property Development
most of the orders received in the fourth quarter. A weak order NCC Property Development’s sales amounted to SEK 2,014 M
backlog at the start of the year resulted in declining production (2,133). Property sales for full-year 2009 amounted to SEK
volumes, which had an adverse impact on operating profit. 1,966 M (2,052). Capital gains totaled SEK 556 M (986).
Operating profit amounted to SEK 140 M (224). The rent levels for commercial properties were low and the

Orders received, net sales and earnings per business area

Orders received Net sales Operating profit/loss

SEK M 2009 2008 2009 2008 2009 2008
NCC Construction Sweden 18,842 25,056 22,225 24,612 1,031 1,154
NCC Construction Denmark 3,194 3,253 3,321 4,079 72 119
NCC Construction Finland 5,662 5,411 5,718 7,087 172 254
NCC Construction Norway 4,681 3,546 4,065 6,936 140 224
NCC Roads 11,001 11,989 10,338 11,317 387 446
NCC Housing 5,128 4,827 8,996 8,773 –126 –660
NCC Property Development 2,014 2,133 359 735
Total 48,508 54,081 56,676 64,937 2,035 2,272
Other and eliminations –2,551 –2,217 –4,859 –7,474 116 –53
Group 45,957 51,864 51,817 57,463 2,150 2,219

40 NCC 2009
completion of property transactions was characterized by business area. In addition, a centralized insurance function is

Financial report
­sluggishness. Operating profit declined to SEK 359 M (735). responsible for Group-wide non-life and liability insurance,
Completed or construction-initiated property projects at year- ­primarily property and contractor’s insurance. The function
end amounted to SEK 1.2 billion (2.3) in total project costs. also performs preventive risk-management work together with
Costs incurred in all project starts totaled SEK 0.9 billion (1.5), the business areas. All of this results in cost-effectiveness and
corresponding to 74 (67) percent of total project costs. The coordination of insurable risks.
­year-end leasing rate was 65 percent (56).
MARKET RISKS
BRANCHES OUTSIDE SWEDEN Price risk
The NCC Construction Sweden business area conducts For several years, the prices of building products had increased
­operations via a branch in Norway. NCC also has a branch in at a rate that far exceeds general inflation, although previously
Denmark, as well as branches connected to individual projects the current economic conditions have led to a slowdown. Dur-
that are being completed in Singapore and Zambia. ing a shift in economic conditions, there is a risk that prices for
input materials and services could increase, whereby it is not
ENVIRONMENTAL IMPACT possible to offset this factor with higher prices for NCC’s prod-
The Group conducts operations subject to permit and reporting ucts and services.
obligations in accordance with the Environmental Code. These Purchases of materials and services account for 65 percent of
opertations involve the Swedish Parent Company and Swedish NCC’s costs. For a number of years, NCC’s Construction units
subsidiaries. Of the Group operations subject to permit and have worked to increase the efficiency of the construction pro-
reporting obligations, it is mainly the asphalt and gravel pit cess, in part by using platforms that create greater purchasing
­operations conducted within NCC Roads that affect the exter- volumes for individual products and in part by coordinating
nal environment. The external environmental impact of these ­purchases of materials and services in the Nordic region and
operations mainly comprises emissions to air and noise. through international purchases. In these efforts, the purchasing
function, in part through non-Nordic procurements, is an
SIGNIFICANT RISKS AND UNCERTAINTIES important feature and, financially, is the key to gaining control
The global turmoil in financial markets that first arose in 2009 over the price trend. The use of joint platforms is an important
diminished during the year and there were signs in early 2010 condition for NCC Housing and NCC Property Development’s
of a recovery in the global economy. ability to gain control over production costs.
Raw-material costs account for about one third of the price
Risk management NCC Roads pays for paved asphalt. The main raw materials
Through its business operations, NCC is exposed to various risks, are the oil product bitumen followed by aggregates. NCC Roads
which could be financial or operational. The operational risks purchases bitumen from several international suppliers. Pur-
relate to the Group’s day-to-day operations, and could be purely chasing and logistics involving bitumen are coordinated between
operative or apply to tenders or project development, seasonal Sweden, Denmark and Norway. Longer-term agreements with
exposure or assessments of the earnings capacity of a project. customers normally include price clauses that reduce NCC
Operational risks are managed within the framework of the Roads’ exposure to risks. In several markets, NCC Roads is self-
internal business area control established by NCC. The business sufficient in terms of aggregates, in part through the acquisition
areas assess and manage their risks using operational systems and of strategically located pits.
developed procedures.
The management of the Group’s financial risks such as inter- Seasonal risks
est-rate, refinancing, currency, liquidity and credit risks is cen- The NCC Roads business area and civil engineering operations
tralized, in order to minimize and control the Group’s risk expo- within NCC’s Construction units are subject to considerable
sure. Customer-credit risks are handled within each particular seasonal variations. Within asphalt operations, most procure-

Earnings trend per business area

Profit after financial items, SEK M 2009 2008 2007 2006 2005
NCC Construction Sweden 1,031 1,154 936 1,235 779
NCC Construction Denmark 72 119 –25 –35 209
NCC Construction Finland 172 254 265 390 320
NCC Construction Norway 140 224 5 179 202
NCC Construction Germany 85 0
NCC Roads 387 446 679 415 313
NCC Housing –126 –660 946
NCC Property Development 359 735 780 472 200

In the comparative figures for 2005 and 2006, earnings attributable to NCC Housing are included in the various Construction units. The comparative figures for
2007 and 2008 are pro forma, due to the new organizational structure in which NCC Construction Germany is included in its entirety in NCC Housing as of 2007.

NCC 2009 41
 ment is conducted during the spring, while asphalt production particularly important in a declining market, when a company
Financial report

and paving activities are conducted during the summer half year. may be tempted to accept low-margin or high-risk projects in
Warm autumn weather could have a favorable effect on produc- order to maintain employment. In a growing market, however,
tion, while long, cold winters have negative effects on earnings. it is important to be selective because an extensive tendering
To manage these risks, NCC Roads offers road-related products volume could result in a shortage of internal and external
and services that encompass the entire value chain. Repair and resources for handling all projects, which could lead to both
maintenance activities, for example, complement paving opera- weaker internal control and increased costs. When selecting suit-
tions over the year. able contracts, NCC assigns priority to projects whose risks are
identified, and are thus manageable and calculable.
Development risks Most risks, such as contract risks and technological and
In addition to the contract risk, which is managed by NCC’s ­production-related risks, are best managed and minimized in
Construction units, proprietary project development in both cooperation with the customer and other players during early
residential and commercial properties includes a contract risk stages of the project. Various types of cooperative formats, such
and a development and sales risk. Every project concept must as NCC Partnering, can be used to help manage risk. Project
be adapted to local market preferences and the planning control is of decisive importance to minimizing problems and
requirements imposed by public authorities. State-of-the-art thus costs. Many Group units are quality and environmentally
skills are required to optimize the timing of projects that have to certified.
be processed by, for example, local municipalities and possibly
have to pass an appeals process. Housing-development compe- FINANCIAL RISK-TAKING AND RISKS
tencies have been concentrated in NCC Housing, which was Through its business operations, the Group is exposed to finan-
formed on January 1, 2009. cial risks. The financial risk should be viewed against the back-
NCC has successively limited the markets in which the ground of the capital requirements of NCC’s various operations.
Group is active and expanding. Proprietary housing and prop- Contracting operations normally generate a positive cash flow at
erty projects are developed primarily in large growth communi- the beginning of projects but a neutral or negative cash flow
ties in the Nordic countries, as well as in Germany, the Baltic towards the end. During a business cycle, the cash generated in
countries and St. Petersburg. In addition, NCC has consciously this manner could be needed when there is a decrease in orders
decided to refrain from excessively niche-oriented projects received during an economic recession and, accordingly, the
intended for narrow target groups, since earnings from such financial assets of contracting operations should exceed their
operations have historically not corresponded with their higher ­liabilities, which means they should have no net debt.
inherent risks. Risk limitation is achieved through demands for NCC Roads mainly has capital employed in fixed assets (quar-
high leasing rates for commercial properties and a high rate of ries, crushing plants, asphalt plants, paving machinery, road service,
presales for housing before a project is started. Tied-up capital is etc). To the extent possible, investments that achieve the maximum
reduced through early payment. capacity utilization are prioritized. To a large extent, investments
in these fixed assets can be financed with loans, but are subject
OPERATIONAL RISKS to limitations in terms of, for example, cyclical and seasonal risks.
For a building contractor, the principal risk-limitation phase is This is controlled by, among other factors, financial targets.
during the contract-tendering process. NCC’s overall strategy Proprietary housing and property development ties up capital
is normally to adopt a selective approach to tendering. This is throughout the course of the projects; firstly, through investment

Sensitivity analysis

Effect on profit Effect on return Effect on return

after financial on equity, on capital employed,
Change items, SEK M percentage points percentage points
NCC’s Construction units
Volume +/– 5% 165 1.7 1.3
Operating margin +/– 1 percentage point 353 3.6 2.8
NCC Roads
Volume +/– 5% 43 0.4 0.3
Operating margin +/– 1 percentage point 103 1.1 0.8
Capital rationalization +/– 10% 13 0.1 0.4
NCC Housing
Volume +/– 10% 36 0.4 0.3
Operating margin +/– 1 percentage point 90 0.9 0.7
NCC Property Development
Sales volume, projects +/– 10% 56 0.6 0.4
Sales margin, projects +/– 1 percentage point 20 0.2 0.2
Group
Interest rate, borrowing +/– 1 percentage point 8 0.1
Decrease in net debt SEK 500 M 23 0.2 0.7
Change in equity/assets ratio – 5 percentage points –67 4.0

42 NCC 2009
in land, then during the development phase and finally during the Other risk assessments

Financial report
sale of the project. The financing of these projects varies with time. Since the recognition of certain items is based on estimates and
Initially, uncertainty is considerable and borrowing should be low, assessments, they are subject to uncertainty. The current assess-
while a finished property can be leveraged to a much greater extent. ment is that market conditions, which were very uncertain at the
Financial risks refer to interest-rate, currency, refinancing, start of 2009, improved somewhat during the year but are still
liquidity and credit risks. NCC’s finance policy for managing impacting values, particularly those for land held for future devel-
financial risks was decided by the Board of Directors and forms opment and ongoing property development and housing projects.
a framework of guidelines and rules in the shape of risk mandates These items are recognized on the basis of what, when this report
and limits for finance activities. In the NCC Group’s organiza- was issued, were current, difficult-to-assess assumptions concern-
tion, finance activities are centralized in the NCC Corporate ing sales prices, production costs, land prices, rent levels, yield
Finance unit in order to monitor the Group’s overall financial requirements and the timing of production starts and/or sales.
risk positions, to achieve cost-effectiveness and economies of NCC continuously monitors developments in the market and
scale and to accumulate expertise, while protecting Group-wide tests the assumptions made on an ongoing basis.
interests. The Group’s financial risks are managed by NCC’s
internal bank. Credit risks related to customers are handled SENSITIVITY AND RISK ANALYSES
within each particular business area. For a more comprehensive For NCC’s Construction operations, a one-percentage-point
description of financial instruments and financial risk manage- increase in the margin has a much larger impact on earnings
ment, reference is made to Note 39, Financial instruments and than a 5–10 percent increase in volume. This reflects the impor-
financial risk management. tance of pursuing a selective tendering policy and focusing on
risk management in early project stages.
RISK FOR ERRORS IN FINANCIAL REPORTING NCC Roads’ operations are affected by such factors as price
Risk for errors in profit recognition levels and the volume of produced and paved asphalt. An
NCC applies the percentage-of-completion method for recog- extended season due to favorable weather conditions increases
nizing profit from contracting operations, whereby profit is rec-
ognized in parallel with completion, which means before the
final result is established. The risk that actual profit will deviate
from percentage-of-completion profit recognition is minimized Major ongoing projects
through NCC’s project-management model, which ensures the
necessary follow-up and control of all construction projects on Completion
NCC’s rate Estimated
which profit recognition is based. If the final result of a project is share of Dec 31, year of
expected to be negative, the entire loss from the project is Project, > SEK 300 M order value 2009, % completion
immediately charged against earnings, regardless of the project’s Norrström tunnel, Stockholm SE 1,598 8 2015
completion rate. Profit recognition from NCC’s proprietary Underground and construction works,
Kiruna/Malmberget SE 1,459 56 2012
housing projects is recognized as the worked-up rate (costs
Raise boring, Kiruna SE 1,371 32 2012
incurred in relation to the final status forecast) times the sales
Shopping center, Sollentuna SE 1,338 90 2010
rate (number of sold apartments), which entails more cautious
Shopping center, Norrköping SE 843 74 2010
profit recognition.
E6, Highway, Trondheim NO 674 0 2013
Highway 45 – E12, E13,
Western Sweden SE 670 71 2012
Highway E18, Bjørvika, Oslo NO 556 79 2011
Clarion Hotel, Arlanda SE 545 0 2012
Tramway Fantoft-Nesttun, Bergen NO 535 91 2010
Light rail link, Phase 3, Stockholm SE 525 0 2013
Congress hotel, Bella center, Amager DK 503 49 2011
Highway, E4 Enånger-Hudiksvall,
Hudiksvall SE 502 64 2011
Orders received by project size, 2009,
Railway tunnel, Fossveien, Oslo NO 500 81 2010
volume NCC’s Construction units and NCC Housing
Shopping center, Örebro SE 495 99 2010
Hospital, Kolmiosairaala,
Förklaring, XX% Helsinki FI 495 61 2010
Tunnel, E400, Malmö SE 478 79 2010
< SEK 5 M, 9 (8)% Förklaring, XX%
Offices, Hellerup DK 454 82 2010
SEK 5–10 M, 7 (6)% Förklaring, XX%
Local road, Ulven-Sinsen, Oslo NO 450 79 2010
SEK 10–25 M, 13 (14)% Förklaring,
Arena Skövde, SkövdeXX% SE 449 97 2010
SEK 25–50 M, 19 (17)% Förklaring,
Maintenance XX%
gas store,
Hammerfest LNG, Melkøya NO 426 50 2012
SEK 50–100 M, 21 (14)% Förklaring, XX%
Housing, Sjaelland DK 419 87 2010
> SEK 100 M, 31 (41)% Förklaring, XX%
Healthcare and pool center, Västerås SE 413 48 2010
Förklaring,
Lindholmspiren XX%
3, Gothenburg SE 387 59 2010
Förklaring, XX%
Arena, Halmstad SE 386 94 2010
Light rail link, Phase 2,XX%
Förklaring, Stockholm SE 379 4 2012
Major projects with a value exceeding SEK 100 M accounted for a reduced Road E6 Solhem – Pålen,
­proportion of orders received. The initiation of proprietary projects declined Western Sweden SE 353 75 2011
sharply in 2009, compared with 2008. Yet again, the importance of the many District court, Ullevi Park, Gothenburg SE 304 97 2010
small and midsize projects increased in relative terms, following several years of
domination by the major projects. Travel center, Uppsala SE 301 69 2011

NCC 2009 43
 volumes and, because the proportion of fixed costs is high, the ments in the form of either lay-offs or new recruitment. NCC’s
Financial report

affect on the margin is considerable. long-term efforts involving the work environment and health
For proprietary housing projects within NCC Housing, the matters continued during the year.
major challenge is to have the right products in the market and
to guide them through the planning process so they arrive in the NCC SHARE
market at the right time. At December 31, 2009, NCC’s registered share capital consisted
NCC Property Development’s earnings are predominantly of 42,396,448 Series A shares and 66,039,374 Series B shares.
determined by sales. Opportunities to sell development projects The shares have a quotient value of SEK 8.00 each. The com-
are affected by the leases signed with tenants, whereby an pany holds 21,138 Series B treasury shares. NCC purchased
increased leasing rate facilitates higher sales. The value of a prop- these shares at an average price of SEK 73.35 per share. These
erty is also determined by the difference between operating shares account for 0.02 of total capital. Series A shares carry ten
expenses and rent levels, which means that a change in the rent votes and Series B shares one vote each. All shares provide the
levels or operating economy of projects in progress could change same entitlement to participation in the ­company’s assets and
the value of such projects. profit and to an equally large dividend.
The NCC Group had a favorable financial position with sub- At the request of the holder, Series A shares can be converted
stantially reduced indebtedness in 2009. Interest-rate changes, into Series B shares. Such a request must be made in writing to
amortization of remaining debt using available cash assets or the Board of Directors, which takes decisions on such matters on
increased financing of construction projects would not have a a continuous basis. After a conversion decision is made, this is
major impact on earnings. A continued reduction in net indebted- reported to Euroclear Sweden AB for registration. Conversion
ness would have a continued favorable impact on profitability, occurs when such registration has taken place.
while an increase in borrowing and in the dividends paid/spin-offs The number of NCC shareholders at year-end was 32,317
to shareholders, and thus a lower equity/assets ratio, would have (32,730), with Nordstjernan AB as the largest individual holder
an adverse impact on earnings, but boost the return on equity. accounting for 23 percent (27) of the share capital and 51 per-
cent (55) of the voting rights. The second largest shareholder
CARTEL PROCESSES was L E Lundbergföretagen AB, with 10 percent (10) of the
On May 28, 2009, the Swedish Market Court ordered NCC to share capital and 22 percent (21) of the voting rights. Com-
pay competition-impeding damages of SEK 200 M. NCC had bined, the ten largest owners accounted for 53 percent (54) of
posted a provision of SEK 150 M in the accounts for 2007 to the share capital and 83 percent (85) of the voting rights.
cover the fee. Since the fee was raised, SEK 50 M was charged The Annual General Meeting on April 7, 2009 renewed the
against earnings for the second quarter of 2009. The verdict of Board’s authorization to repurchase a maximum of 10 percent
the Swedish Market Court cannot be appealed. of the total number of NCC shares. No shares were repurchased
The Supreme Administrative Court of Finland ordered NCC in 2009. The Board will propose to the 2010 Annual General
Roads Oy and the half-owned NCC company VLT Trading Oy, Meeting that it be authorized to repurchase Series A or B NCC
formerly Valtatie Oy, to pay an administrative fee of approxi- shares up to the next Annual General Meeting in such a number
mately SEK 70 M for violations of the Finnish Competition Act. that the Company’s holding of its own shares does not exceed
An amount of SEK 25 M had already been charged against 10 percent of the total number of NCC shares at any point in
NCC’s earnings in the fourth quarter of 2007 to cover the fees time. Share purchases must be effected via the OMX Nasdaq
to be paid by NCC and VLT. The remaining fee of approxi- Exchange in Stockholm at a price per share that is within the
mately SEK 45 million was charged against earnings in the third band of share prices registered at each particular time. The rea-
quarter of 2009. The verdict of the Supreme Administrative son for repurchasing shares is to adjust NCC’s capital structure.
Court cannot be appealed. In the event that any major changes occur in NCC AB’s own-
NCC and other construction companies have received claims ership structure, meaning if a shareholder other than L E Lund-
for damages from a number of municipalities in Sweden and bergföretagen AB or Nordstjernan AB acquires more than 30
Finland, as well as the Finnish Road Administration. These percent of voting rights in NCC AB, the syndicated credit facil-
claims will be heard in general courts of law. ity may be terminated by the lenders.

PERSONNEL NOMINATION COMMITTEE

Number of employees At the Annual General Meeting on April 7, 2009, Viveca Ax:son
In 2009, the average number of employees in the NCC Group Johnson (Chairman of the Board of Directors, Nordstjernan), Ulf
was 17,745 (19,942). NCC is continuously adapting the organi- Lundahl (Executive Vice President, L E Lundbergföretagen) and
zation to the prevailing market conditions and slightly more Mats Lagerqvist (formerly President, Swedbank Robur AB) were
than 2,900 (1,200) surplus employees were laid off during elected as mem­bers of the Company’s Nomination Committee,
2009. In February 2010, the assessment was that it will not be with Viveca Ax:son Johnson as Committee Chairman. Tomas
necessary to implement any major further cutbacks. Locally, Billing, Chairman of the NCC Board of Directors, is a co-opted
however, it could still be necessary to continue to make adjust- member of the Nomination Committee but has no voting right.

44 NCC 2009
 GUIDELINES FOR REMUNERATION OF SENIOR EXECUTIVES PARENT COMPANY

Financial report
The Board of Director’s motion concerning guidelines apply to Commission agreement
the company’s President and members of Group Management, a Since January 1, 2002 and January 1, 2009, respectively, NCC
total of 11 (10) people. The objective of the guidelines for salary Construction Sverige AB and NCC Boende AB have been con-
and remuneration to Group Management is that NCC will be ducting operations on a commission basis on behalf of NCC AB.
able to offer competitive market remuneration that enables the
NCC Group to both recruit and retain people with the highest Net sales and earnings
possible expertise. The remuneration payable to Group Manage- The Parent Company’s net sales totaled SEK 21,784 M
ment comprises a fixed salary, variable remuneration, pension (21,239). Profit after financial items amounted to SEK 3,202 M
and other benefits. (1,305). In the Parent Company, profit is recognized when proj-
Fixed salary. When determining the fixed salary, the individ- ects are subject to final profit recognition. The increase in profit
ual executive’s sphere of responsibility, experience and achieved was attributable to dividends from subsidiaries. The average
results shall be taken into account. The fixed salary is to be number of employees was 7,259 (7,821).
revised either annually or every second year.
Variable remuneration. The variable remuneration must be OUTLOOK
maximized and be related to the fixed salary, as well as being No growth in terms of construction investments in housing,
based on the outcome in relation to established targets, with offices and other buildings is expected in 2010. However, the
financial targets accounting for by far the greatest proportion. prospects in the civil engineering market appear brighter, partly
For the President, variable remuneration is maximized to 50 thanks to government infrastructure programs.
percent of fixed salary and for other members of Group Man- The anticipated decline in activity in the construction market
agement to 40–50 percent of fixed salary. The variable remuner- in 2010 will also impact demand for aggregates and asphalt,
ation is to be revised annually. It is estimated that the company’s although such demand will benefit from a growing civil engi-
undertakings in relation to the executives concerned will cost neering market.
the company a maximum of SEK 22.5 M (20.9). NCC expects stable or slightly rising demand for housing in
Pensions. NCC is endeavoring to move gradually towards all of its submarkets in 2010, with the exception of the Baltic
defined contribution solutions, which entail that NCC pays con- region.
tributions that represent a specific percentage of the employee’s NCC’s assessment is that the market conditions for commer-
salary. In addition to basic pension, which is normally an ITP cial properties will be challenging in 2010.
pension, members of Group Management who are active in
Sweden are entitled to a defined contribution supplementary PROPOSED DIVIDEND
pension for salary increments exceeding 30 income base The Board of Directors proposes a dividend of SEK 6.00 (4.00)
amounts. The income base amount for 2010 is SEK 51,100. per share. The proposed record date for dividends is April 19,
Members of Group Management who are active in another 2010. The dividend proposal is in line with NCC’s dividend
country are covered by pension solutions in accordance with ­policy, which states that at least 50 percent of profit shall be
local practices. ­distributed to the shareholders. If the Annual General Meeting
NCC is endeavoring to achieve a harmonization of the retire- approves the Board of Directors motion, it is estimated that
ment age of Members of Group Management at 65 years. ­dividend payments, via Euroclear Sweden AB, will commence
Other benefits. NCC provides other benefits to members of on April 22, 2010.
Group Management in accordance with local practices. The The Board of Directors statement regarding the proposed
combined value of such benefits in relation to total remunera- dividend and the acquisition of NCC’s own shares will be avail-
tion should account for only a limited portion and correspond able on NCC’s website and be distributed to shareholders at the
essentially to the costs normally arising in the market. Annual General Meeting.
Period of notice and severance pay. Members of Group Man-
agement who terminate their employment at NCC’s initiative AMOUNTS AND DATES
are normally entitled to a 12-month period of notice, plus sever- Unless otherwise indicated, amounts are stated in SEK millions
ance pay corresponding to 12 months of fixed salary. Any sever- (SEK M). The period referred to is January 1 – December 31 for
ance pay will be deducted from remuneration paid by a new income-statement items and December 31 for balance-sheet
employer during the said 12 months. The normal period of items. Rounding-off differences may arise.
notice when employment is terminated at the employee’s own
initiative is six months.
These guidelines may be disapplied by the Board of Directors
if there is special reason to do so in an individual case.
In all significant respects, the above proposed guidelines
­comply with those applying in 2009.

NCC 2009 45
 CONSOLIDATED INCOME STATEMENT
Financial report

WITH COMMENTS

SEK M Note 2009 2008
1, 8, 26
Net sales 2, 3 51,817 57,465
Production costs 4, 5, 6, 10 –46,544 –52,005
Gross profit 5,273 5,460

Selling and administrative expenses 4, 5, 6, 7 –3,035 –3,197
Result from sales of properties 9 10 15
Impairment losses on fixed assets 10 –7 –76
Result from sales of Group companies 11 5 8
Competition impeding damages –95
Result from participations in associated companies 12 –1 9
Operating profit 3, 13 2,150 2,220

Financial income 70 6151)
Financial expense 10 –526 –449
Net financial items 17 –456 166

Profit after financial items 1,694 2,386

Tax on net profit for the year 31 –432 –565
NET PROFIT FOR THE YEAR 18, 44 1,262 1,820

Attributable to:
NCC’s shareholders 1,261 1,809
Minority interests 1 11
Net profit for the year 1,262 1,820

Earnings per share 19
Before dilution
Profit after tax, SEK 11,63 16,69

After full dilution
Profit after tax, SEK 11,63 16,69
1) Including profits of SEK 493 M from the sale of NCC’s share in AWSA.

CONSOLIDATED STATEMENT OF other

COMPREHENSIVE INCOME
SEK M Note 2009 2008
1
Net profit for the year 1,262 1,820

Other comprehensive income
Translation differences during the year in translation of foreign operations –64 481
Gain/loss on hedging of exchange-rate risk in foreign operations 118 –521
Tax attributable to hedging of exchange-rate risk in foreign operations –31 146
Translation differences transferred to net profit for the year –3 3
Fair-value changes for the year on available-for-sale financial assets 1
Fair-value changes for the year in cash flow hedges –34 –57
Fair-value changes in cash flow hedges transferred to net profit for the year 4 28
Tax attributable to cash flow hedges 8 7
Revaluations of tangible assets for the year in conjunction with gradual acquisitions 14
Other comprehensive income/loss for the year –1 102

Total comprehensive income 1,262 1,922

Attributable to:
NCC’s shareholders 1,261 1,910
Minority interests 1 12
TOTAL COMPREHENSIVE INCOME 1,262 1,922

46 NCC 2009
 Financial report
Net sales Operating profit
Net sales decreased 10 percent to SEK 51,817 M (57,465). The The decline compared with the preceding year was largely due
lower sales were primarily due to the recession and reduced to a weak first quarter featuring a sluggish housing market, a
demand in the Nordic construction market, which impacted the reduced number of property sales and a slack start for NCC
contracting operations of the Nordic Construction units as well Roads. The decrease in volumes had an adverse impact on earn-
as NCC Roads in the form of lower volumes. However, housing ings, although the operating margin for NCC’s Construction units
sales were favorable but at lower prices. remained at a favorable level. Full-year housing sales were healthy,
but sales were conducted at lower prices leading to a loss.
Gross profit Profit for 2009 includes the above-mentioned impairment
Impairment losses losses on land and completed unsold housing, and for 2008
Gross profit includes impairment losses on land and completed restructuring expenses. These items correspond to a total of SEK
unsold housing totaling SEK 192 M (537), of which impairment 192 M (741). Competition-infringement fees had a negative
losses on land accounted for SEK 60 M (285) and completed impact of SEK 95 M on 2009 earnings. Project settlements in
unsold housing for SEK 132 M (252). Also refer to Note 10, the former business area NCC International resulted in earnings
Impairment losses and reversal of impairment losses. of SEK 70 M.

Specification of total impairment losses and reversals of impairment losses

Selling and administrative expenses
SEK M 2009 2008 Expenses declined since adjustments were made to the organi-
Housing projects –192 –537 zation and to costs.
Managed properties –8
Owner-occupied properties –6 –33
Financial income
Machinery and equipment –1 –31)
Financial fixed assets –2 –1 Financial income for the preceding year included the divestment
Goodwill within NCC Roads2) –32 of NCC’s holding in the Polish concession company AWSA for a
Total impairment losses –200 –614 final gain of SEK 493 M.
1) The impairment losses correspond to the net of impairment losses and reversed impairment losses.
2) Impairment losses on goodwill pertain to subsidiaries whose recoverable amount proved to be

lower than the carrying amount. The residual value of goodwill is tested annually and when indica-
Taxation
tions of a change in value arise. The reasons for recognizing impairment losses could be changed NCC’s tax rate was 25 percent (24) during the year. Also refer to
market conditions or return requirements that result in a lower recoverable amount.
Note 31, Tax on net profit for the year, deferred tax assets and
deferred tax liabilities.
Competition-infringement fees
In 2009, NCC paid competition-impeding fees of SEK 50 M in Other comprehensive income
Sweden and SEK 45 M in Finland, or SEK 95 M in total. In May, The change in comprehensive income primarily comprises net
the Swedish Market Court ordered NCC to pay SEK 200 M, profit for the year, translation differences and the effects of IAS
of which SEK 150 M had been charged to earnings for 2007. In 39. Any tax effects of these transactions are recognized sepa-
September, the Finnish Supreme Administrative Court ordered rately; refer also to Note 31, Tax on net profit for the year,
NCC Roads Oy and NCC’s half-owned company VLT Trading deferred tax assets and deferred tax liabilities.
Oy, formerly Valtatie Oy, to pay fines totaling SEK 70 M, of
which SEK 25 M had been charged to earnings for 2007.

Net sales and profit

SEK billion %
70 3,500
60 3,000
50 2,500
40 2,000
30 1,500
20 1,000
10 500
0 0
05 06 07 08 09

Net sales
Profit after financial items

Following two years of weaker growth in construction, net sales declined,

­primarily in construction contract operations. Market-adjusted prices resulted
in increased sales of housing, although with losses after net financial items.
­Margins on construction contract operations remained at a historically high
level, although the volume decline resulted in lower profits.

NCC 2009 47
 CONSOLIDATED balance sheet
Financial report

WITH COMMENTS

SEK M Note 2009 2008

1,8,26
ASSETS
Fixed assets
Goodwill 21 1,750 1,772
Other intangible assets 21 120 122
Managed properties 23 12
Owner-occupied properties 22 647 682
Machinery and equipment 22 1,910 1,975
Participations in associated companies 25 9 10
Other long-term holdings of securities 28 203 227
Long-term receivables 30 1,261 1,135
Deferred tax assets 31 117 203
Total fixed assets 39 6,016 6,139

Current assets
Property projects 32 2,835 3,439
Housing projects 32 8,363 11,377
Materials and inventories 33 514 624
Tax receivables 31 200 164
Accounts receivable 6,355 7,820
Worked-up, non-invoiced revenues 34 1,459 1,854
Prepaid expenses and accrued income 844 1,169
Other receivables 30 1,272 1,613
Short-term investments 28 286 215
Cash and cash equivalents 46 1,831 1,832
Total current assets 39 23,959 30,108
TOTAL ASSETS 44 29,976 36,247

EQUITY
Share capital 35 867 867
Other capital contributions 1,844 1,844
Reserves 170 173
Earnings brought forward including profit for the year 4,786 3,955
Shareholders’ equity 7,667 6,840
Minority interests 18 25
Total shareholders’ equity 7,685 6,865

LIABILITIES
Long-term liabilities
Long-term interest-bearing liabilities 36 2,941 2,620
Other long-term liabilities 40 558 837
Deferred tax liabilities 31, 37 710 492
Provisions for pensions and similar obligations 37, 38 18 42
Other provisions 37 3,023 3,190
Total long-term liabilities 39, 43 7,250 7,180

Current liabilities
Current liabilities, interest-bearing 36 391 2,929
Accounts payable 3,545 4,356
Tax liabilities 38 140
Invoiced revenues, not worked up 34 4,516 5,300
Accrued expenses and deferred income 42 3,539 4,249
Provisions 37 59 122
Other current liabilities 40 2,954 5,106
Total current liabilities 39 15,041 22,202
Total liabilities 22,291 29,382
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 44 29,976 36,247

Assets pledged 45
Contingent liabilities 45

48 NCC 2009
 Financial report
Fixed assets Long-term liabilities
Goodwill Long-term interest-bearing liabilities
NCC impairment tests the carrying amount annually and more The portion of long-term liabilities rose slightly in 2009 in NCC,
often when there are indications of value changes. This balance- as a result of the longer interest-rate maturities that were sought.
sheet item declined in 2009 primarily due to exchange-rate Refer also to Note 36, Interest-bearing liabilities.
­fluctuations. Refer also to Note 21, Intangible assets.
Current liabilities
Current assets Current interest-bearing liabilities
Property projects The healthy cash flow was used to repay some interest-bearing
Lower investments, few initiations of new projects and continued liabilities.
divestments of previously started projects led to a decrease in
the value of property projects compared with 2008. Refer also Invoiced revenues, not worked up
to Note 32, Properties classed as current assets. The decrease in operations, primarily in NCC’s construction
contract projects, reduced advanced invoicing of projects.
Housing projects
Fewer investments in properties held for future development Accrued expenses and deferred income
and a high level of sales reduced the value. The number of The decrease in operations resulted in a reduction in accrued
unsold completed housing units also fell since sales exceeded expenses and deferred income primarily pertaining to NCC’s
production for the year. Refer also to Note 32, Properties classed construction contract projects. Refer also to Note 42, Accrued
as current assets. expenses and deferred income.

Accounts receivables Other current liabilities

Lower sales and proactive efforts to secure payment for Other current liabilities declined, primarily due to the reduction
accounts receivables resulted in lower accounts receivables in housing operations and in production-related liabilities. The
­compared with 2008. decrease in operations in NCC’s Construction units also contrib-
uted to the decline. Refer also to Note 40, Other liabilities
Worked-up, non-invoiced revenues
The decrease in operations, primarily in NCC’s construction
contract projects, reduced the work-up rate for projects.

Other receivables
The decrease in other receivables was due to the settlement of
receivables pertaining to property projects during the year.

Capital employed, share per business area Return

Förklaring,
% XX%
NCC Construction Sweden, 9 (12)% 35
Förklaring, XX%
NCC Construction Denmark, 4 (3)% 30
Förklaring, XX%
NCC Construction Finland, 1 (1)%
25
Förklaring, XX%
20
NCC Construction Norway, 5 (4)% Förklaring, XX%
15
NCC Roads, 17 (15)% Förklaring, XX%
10
NCC Housing, 46 (47)% Förklaring, XX%
5
NCC Property Development, 18 (18)% Förklaring, XX%
0
05 06 07 08 09
Förklaring, XX%
Return on
Förklaring, XX% shareholders’ equity
Return on capital employed

The NCC Group’s business areas that mainly tie up capital are NCC Housing, NCC The return rose up until 2007 only to fall in 2008 from a historically high level,
Property Development and NCC Roads. NCC Housing and NCC Property Devel- due to lower profitability, primarily in NCC Housing. The return on share­
opment tie up capital in land and unsold houses and buildings. The operations of holders’ equity totaled 18 percent in 2009.
NCC Roads require capital for maintaining quarries, asphalt plants and machinery.

NCC 2009 49
 PARENT COMPANY INCOME STATEMENT
Financial report

WITH COMMENTS

SEK M Note 2009 2008

1
Net sales 2,41 21,784 21,239
Production costs 4,5,6,10 –20,053 –19,612
Gross profit 1,732 1,627

Selling and administrative expenses 4,5,6,7 –1,283 –1,321
Result from sales of properties 9 3 6
Operating profit 452 312

Result from financial investments
Result from participations in Group companies 10,11 2,851 1,356
Result from participations in associated companies 10,12 24 –5
Result from other financial fixed assets 14 1
Result from financial current assets 15 223 48
Interest expense and similar items 16 –348 –405
Profit after financial items 3,202 1,305

Appropriations 20 50 –73
Tax on net profit for the year 31 –106 45
NET PROFIT FOR THE YEAR 3,147 1,278

The Parent Company income statement differs from the consol- Invoicing for the Parent Company amounted to SEK 21,784 M
idated income statement in such ways as its presentation and (21,239). Profit after financial items was SEK 3,202 M (1,305).
designations of certain items, because the Parent Company’s In the Parent Company, profit is not recognized until final
income statement is compiled in accordance with the Annual ­recognition of projects. The change in profit was due partly to
Accounts Act while the Group complies with IFRS. healthy margins from the contracting operations but was mainly
The Parent Company comprises the operations in NCC AB, an effect of higher dividends from subsidiaries compared with
as well as NCC Construction Sverige AB and NCC Boende AB, the preceding year.
which conduct their own operations on a commission basis on The average number of employees was 7,259 (7,821).
NCC AB’s behalf.

50 NCC 2009
PARENT COMPANY BALANCE SHEET

Financial report
WITH COMMENTS

SEK M Note 2009 2008 SEK M Note 2009 2008

1 1
ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES
Fixed assets Shareholders’ equity
Tangible fixed assets Restricted shareholders’ equity
Owner-occupied properties, Share capital 35 867 867
construction in progress 112 113 Statutory reserves 174 174
Machinery and equipment 171 175 Total restricted shareholders’ equity 1,041 1,041
Total tangible fixed assets 22 283 288
Unrestricted shareholders’ equity
Financial fixed assets Earnings brought forward 1,338 332
Participations in Group companies 24 5,421 5,559 Net profit for the year 3,147 1,278
Receivables from Group companies 145 157 Total unrestricted shareholders’ equity 4,485 1,610
Participations in associated companies 27 139 139
Total shareholders’ equity 5,526 2,651
Receivables from associated companies 130 46
Other long-term holdings of securities 6 7 Untaxed reserves 20 513 563
Deferred tax assets 31 240 301
Other long-term receivables 64 76 Provisions
Total financial fixed assets 29,39 6,144 6,284 Provisions for pensions and similar obligations 38 3 9
Total fixed assets 6,426 6,572 Other provisions 1,299 1,103
Total provisions 37 1,301 1,112
Current assets
Properties classed as current assets Long-term liabilities
Housing projects 358 549 Liabilities to credit institutions 1,200 1,200
Total current assets 32 358 549 Liabilities to Group companies 1,987 1,547
Other liabilities 291 382
Inventories, etc. Total long-term liabilities 36,39 3,478 3,130
Materials and inventories 33 13 17
Total inventories, etc. 13 17 Current liabilities
Advances from customers 367 137
Current receivables Work in progress on another party’s account 41 3,331 3,379
Accounts receivable 3,179 3,077 Accounts payable 1,808 1,657
Receivables from Group companies 1,965 1,825 Liabilities to Group companies 2,066 1,715
Receivables from associated companies 34 45 Liabilities to associated companies 6 5
Other current receivables 3,079 1,606 Other liabilities 460 814
Tax receivable 31 28 129 Accrued expenses and deferred income 42 1,521 1,433
Prepaid expenses and accrued income 422 308 Total current liabilities 36,39 9,559 9,139
Total current receivables 8,705 6,991
TOTAL SHAREHOLDERS’ EQUITY
Short-term investments 46 3,526 500 AND LIABILITIES 44 20,377 16,595

Cash and bank balances 46 1,348 1,966
Assets pledged 45 13 14
Total current assets 39 13,951 10,023
Contingent liabilities 45 16,217 18,769
TOTAL ASSETS 44 20,377 16,595

The Parent Company balance sheet differs from the consolidated balance sheet in terms of presentation
and certain designations of items, because the Parent Company’s balance sheet is prepared in accordance
with the Annual Accounts Act while the Group complies with IFRS.

NCC 2009 51
 CHANGES IN SHAREHOLDERS’ EQUITY
Financial report

WITH COMMENTS

GROUP Shareholders’ equity attributable to Parent Company’s shareholders

Share Other capital Earnings brought Minority Total
SEK M capital contributions Reserves forward Total interests equity
Opening balance, January 1, 2008 867 1,844 73 4,423 7,207 30 7,237

Total comprehensive income for the year 101 1,809 1,910 12 1,922
Transactions with minority interests –15 –15
Dividend –2,277 –2,277 –2 –2,279
Shareholders’ equity on December 31, 2008 867 1,844 174 3,955 6,840 25 6,865

Total comprehensive income for the year –1 1,262 1,261 1 1,262
Reversal of depreciation on previously revalued assets –3 3
Transactions with minority interests –2 –2
Dividend –434 –434 –7 –440
Shareholders’ equity on December 31, 2009 867 1,844 170 4,786 7,667 18 7,685

Accounting of shareholders’ equity in accordance other than that in which the consolidated financial statements
with IFRS and Swedish Companies Act are presented, in NCC’s case, SEK. Furthermore, the translation
Shareholders’ equity is divided into equity attributable to the reserve includes exchange-rate differences that arise from the
Parent Company’s shareholders and minority interests. Transfer revaluation of liabilities and currency forward contracts entered
of value in the form of dividends from the Parent Company and into as instruments intended to hedge net investments in foreign
the Group shall be based on a statement prepared by the Board operations.
of Directors concerning the proposed dividend. This statement
must take into account the prudence regulation contained in the Fair value reserve
Act, in order to avoid dividends being paid in an amount that The fair value reserve includes the accumulated net change in
exceeds what there is coverage for. the fair value of available-for-sale financial assets up to the time
that the asset is derecognized from the balance sheet.
Change in shareholders’ equity
The change in shareholders’ equity derives primarily from total Hedging reserve
comprehensive income for the year, transactions with minority The hedging reserve includes the effective portion of the accu-
interests and dividends to shareholders. mulated net change in the fair value of cash-flow hedging instru-
ments attributable to hedging transactions that have not yet
Share capital occurred.
On December 31, 2009, the registered share capital amounted
to 42,396,448 Series A shares and 66,039,374 Series B shares. Revaluation reserve
The shares have a quotient value of SEK 8.00 each. Series A The revaluation reserve arises from gradual acquisitions, mean-
shares carry ten votes each and Series B shares one vote each. ing acquisitions that comprise several stages, and increases in the
fair value of already owned portions of net assets resulting from
Other capital contributions gradual acquisitions.
Pertains to shareholders’ equity contributed by the owners.
A reduction in share capital in 2004 is included in this item. Earnings brought forward including net profit for the year
This item includes funds earned by the Parent Company and its
Reserves subsidiaries, associated companies and joint ventures.
Translation reserve
The translation reserve includes all exchange-rate differences
that arise from the translation of the financial statements of for-
eign operations that have compiled their reports in a currency

52 NCC 2009
 Financial report
PARENT COMPANY Restricted Unrestricted
shareholders’ equity shareholders’ equity
Share Statutory Earnings brought Net profit Total
SEK M capital reserves forward for the year equity
Opening balance, January 1, 2008 867 174 288 2,395 3,724
Appropriations of profits 2,395 –2,395
Group contributions provided1) –74 –74
Total change in net asset value recognized directly against equity,
excluding transactions involving Company shareholders 867 174 2,609 3,650

Net profit for the year 1,278 1,278
Total change in net asset value, excluding transactions
involving Company shareholders 867 174 2,609 1,278 4,928

Dividends –2,277 –2,277
Shareholders’ equity on December 31, 2008 867 174 332 1,278 2,651

Appropriations of profits 1,278 –1,278
Group contributions1) 162 162
Total change in net asset value recognized directly against equity,
excluding transactions involving Company shareholders 867 174 1,772 2,813

Net profit for the year 3,147 3,147
Total change in net asset value, excluding transactions
involving Company shareholders 867 174 1,772 3,147 5,960

Dividends –434 –434
Shareholders’ equity on December 31, 2009 867 174 1,338 3,147 5,526
1) In accordance with a statement from the Swedish Financial reporting Board, UFR 2. See the Reporting of Group and Shareholder Contributions section of the accounting policies, p. 62.

Specification of the item Reserves in shareholders’ equity: Capital management

Translation reserve 2009 2008 The aim of the NCC Group’s strategy is to generate favorable
Translation reserve, January 1 158 50 returns to shareholders under financial stability. The strategy is
Translation differences during the year in reflected in the financial objectives, which in 2009 were:
translation of foreign operations –64 483
− A return on shareholders’ equity after tax of 20 percent.
Gain/loss on hedging of exchange-rate risk
in foreign operations 118 –521 In 2009, the return on shareholders’ equity was 18 percent.
Tax attributable to hedging of exchange-rate − A positive cash flow before gross investments in properties
risk in foreign operations –31 146 classed as current assets and other investment activities gross,
Translation differences transferred to net profit for the year –3
which was achieved in 2009.
Translation reserve, December 31 178 158
− Net indebtedness that is less than shareholders’ equity. On
Fair value reserve 2009 2008 December 31, 2009, net indebtedness was about 10 percent
Fair value reserve, January 1 4 3 of shareholders’ equity.
Fair value changes for the year on
available-for-sale financial assets 1 NCC’s subsidiaries, NCC Försäkrings AB and NCC Re AG, as
Fair value reserve, December 31 4 4
insurance companies, must have investment assets that cover
Hedging reserve 2009 2008 technical reserves for own account. During 2008 and 2009, both
companies fulfilled these requirements. Otherwise, there were no
Hedging reserve, January 1 –2 20
Fair value changes for the year in cash flow hedges –34 –57 other Group companies subject to external capital requirements.
Fair-value changes in cash flow hedges For further information on NCC Group’s financial objectives
transferred to net profit for the year 4 28 and dividend policy, refer to page 28.
Tax attributable to cash flow hedges 8 7
Hedging reserve, December 31 –24 –2

Revaluation reserve 2009 2008
Revaluation reserve, January 1 14
Valuation due to acquisition achieved in stages 19
Transfer to earnings brought forward –3 –5
Revaluation reserve, December 31 11 14

Total reserves 2009 2008
Reserves, January 1 174 73
Change in reserves during the year
– Translation reserve 20 108
– Fair value reserve 1
– Hedging reserve –22 –22
– Revaluation reserve –3 14
Reserves, December 31 170 174

NCC 2009 53
 CASH FLOW STATEMENTs
Financial report

WITH COMMENTS

Group Parent Company

SEK M Note 2009 2008 2009 2008
OPERATING ACTIVITIES
Profit after financial items 1,694 2,385 3,202 1,305
Adjustments for items not included in cash flow:
– Depreciation 506 497 75 65
– Impairment losses and reversed impairment losses 200 614 67 359
– Exchange-rate differences 408 –771
– Result from sales of fixed assets –23 –541 –9 –13
– Result from sales of subsidiaries –49 –16 1 –24
– Result from associated companies 12
– Changes in provisions –72 –129 230 167
– Restructuring costs 256 50
– Anticipated dividend –2,381 –1,492
– Other 52 21
Total items not included in cash flow 1,023 –57 –2,017 –887
Taxes paid –218 –472 57 –42
Cash flow from operating activities before changes in working capital 2,499 1,856 1,243 377

Cash flow from changes in working capital
Increase(–)/Decrease(+)in inventories 88 –81 –5 –16
Increase(–)/Decrease(+)in receivables 2,110 1,339 –1,351 –126
Increase(+)/Decrease(–)in liabilities –4,801 –995 –246 –455
Increase(+)/Decrease(–)in net work in progress –48 1,012
Increase(–)/Decrease(+)in properties recognized as current assets, net 3,422 –1,990 150 –381
Cash flow from changes in working capital 819 –1,728 –1,500 35
CASH FLOW FROM OPERATING ACTIVITIES 3,318 128 –257 412

INVESTING ACTIVITIES
Acquisition of subsidiaries 46 –149 –190 –15
Sale of subsidiaries 46 –9 86 143 119
Acquisition of buildings and land 46 –41 –117 –5
Sale of buildings and land 37 65 4 6
Acquisition of other financial fixed assets –92 –220 12 –31
Sale of other financial fixed assets 25 532 1
Acquisition of other fixed assets 46 –446 –592 –67 –66
Sale of other fixed assets 45 90 7 21
Cash flow from investing activities –481 –306 –95 34
CASH FLOW BEFORE FINANCING 2,837 –178 –352 446

FINANCING ACTIVITIES
Dividend paid –434 –2,277 –434 –2,277
Group contributions 162 –74
Loans raised 1,657 3,906 3,519 2,243
Amortization of loans –3,820 –1,822 –116 34
Increase(–)/Decrease(+) in long-term interest-bearing receivables –29 174 63 38
Increase(–)/Decrease(+) in current interest-bearing receivables –193 319 –434 –363
Increase(+)/Decrease(–) in minority interests, etc. –8 –2
Cash flow from financing activities –2,827 298 2,759 –399
CASH FLOW DURING THE YEAR 11 121 2,408 47

Cash and cash equivalents on January 1 46 1,832 1,685 2,466 2,419
Exchange-rate difference in cash and cash equivalents –12 27
Cash and cash equivalents on December 31 46 1,831 1,832 4,874 2,466

54 NCC 2009
 Financial report
Cash flow from changes in working capital Net indebtedness trend
Cash flow from changes in working capital amounted to SEK 2009 2008
Group Jan–Dec Jan–Dec
819 M (negative: 1,728). Lower investments primarily in hous-
ing projects led to a positive cash flow from changes in working Net indebtedness, January 1 –3,207 –744
Cash flow before financing 2,837 –178
capital. A decrease in interest-free financing at NCC Housing
Dividend –434 –2,277
had an adverse impact on cash flow. Other changes in net indebtedness 49 –8
Net indebtedness, December 31 –754 –3,207
Cash flow from investing activities
Cash flow from investing activities was a negative SEK 481 M Financial objective, cash flow
(negative: 306). Cash flow for the preceding year was positively Group 2009 2008
affected by the sale of NCC’s portion of the Polish concession Cash flow before financing 2,837 –178
company, AWSA. Reversal of gross investments in properties classed
as current assets and other gross investments 2,895 7,965
Cash flow from financing activities Cash flow before investments in properties
classed as current assets 5,732 7,787
Cash flow from financing activities was a negative SEK 2,827 M
(positive: 298). The positive cash flow from operations was used Change in properties classed as current assets
to repay interest-bearing liabilities. Group Parent Company
2009 2008 2009 2008
Total cash and cash equivalents including short-term invest-
Investments in property projects –1,054 –2,210
ments with a maturity exceeding three months amounted to Sales of property projects 1,992 2,332
SEK 2,117 M (2,047). Investments in housing projects –1,262 –5,010 –236 –405
Sales of housing projects 3,747 2,898 386 24
Cash and cash equivalents and short-term investments Increase(–)/Decrease(+)
Group 2009 2008 in properties classed as
current assets, net 3,422 –1,990 150 –381
Short-term investments 286 215
Cash and bank balances 1,093 1,085
Investments with a maturity of less than three months 738 747 Parent Company
Cash and cash equivalents 1,831 1,832 The Parent Company’s cash flow was higher than in the preced-
Amount at year-end 2,117 2,047 ing year. Cash flow before changes in working capital rose due to
The Group’s unutilized committed lines of credit amounted to SEK 4 billion (5) at year-end. improved profits, mainly attributable to higher dividends from
subsidiaries, which were received in part in 2009. Anticipated
Information about transactions that did not give rise to cash flow dividends will be paid in 2010. This resulted in an increase in
Cash flow was affected by exchange-rate differences in cash and tied-up working capital. Some portions of the dividends were
cash equivalents estimated at: not paid and increased working capital instead.

Group 2009 2008

Exchange-rate differences in cash and cash equivalents –12 27
Trend of net indebtedness, per quarter
Of which, exchange-rate differences in cash
and cash equivalents attributable to cash SEK M
and cash equivalents at the beginning of the year –1 11 6,000
Exchange-rate differences in cash flow for the year –11 16
5,000
Refer also to Note 46, Cash flow statement.
4,000
Net indebtedness 3,000
Net indebtedness (interest-bearing liabilities – cash and cash 2,000
equivalents – interest-bearing receivables) amounted to SEK
1,000
754 M (3,207) on December 31. Cash flow from operating
0
activities was positive and lower capital tied-up in property and 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
housing projects contributed positively to reducing net indebt- 2006 2007 2008 2009
edness. The maturity period for interest-bearing liabilities was
47 months (24) at the end of the year. NCC’s unutilized com- Net indebtedness is affected by seasonal variations. Dividends are paid to
NCC’s shareholders during the second quarter, and more capital is normally
mitted lines of credit at year-end amounted to SEK 4,307 M tied up during the second and third quarters due to a high degree of activity in
(4,884) with a remaining average duration of 26 months (32). NCC Roads’ asphalt and aggregate operations, as well as in parts of NCC’s
Construction units. The 2008 fiscal year was impacted by higher capital tied-
up for primarily NCC Housing and partly due to interest-bearing liabilities.
A reduction in tied-up capital was noted in 2009 mainly in the housing opera-
tions but also in the property operations.

NCC 2009 55
 CONTENTS NoteS Page
Notes
FINANCIAL REPORT

Note 1 Accounting policies 56

Note 2 Distribution of net sales 64 Note 1 | ACCOUNTING POLICIES
Note 3 Operating segments 64
The NCC Group applies the International Financial Reporting Standards
Note 4 Average number of employees 65
(IFRS) adopted by the EU and the interpretive statements issued by the Inter-
Note 5 Personnel expenses 65 national Financial Reporting Interpretations Committee (IFRIC). The Group
Note 6 Depreciation/Amortization 67 also applies recommendation RFR 1.2 and statements issued by the Swedish
Note 7 Fees and remuneration to auditors and audit firms 67 Financial Reporting Board. The Annual Report and the consolidated financial
Note 8 Result from property management 67 statements were approved for issue by the Board of Directors on February 9,
2010. The consolidated income statement and balance sheet and the Parent
Note 9 Result from sales of properties 67
Company’s income statement and balance sheet will be subject to adoption by
Note 10 Impairment losses and reversal of impairment losses 67 the Annual General Meeting on April 14, 2010.
Note 11 Result from participations in Group companies 67
Note 12 Result from participations in associated companies 67 NEW IFRS, AMENDMENTS TO IFRS AND
Note 13 Operating expenses 68 INTERPRETATIVE STATEMENTS APPLIED AS OF 2009
IFRS 8 Operating Segments states that segments are to be presented from the
Note 14 Result from other financial fixed assets 68
perspective of the “chief operating decision maker,” who in NCC’s case is the
Note 15 Result from financial current assets 68 President and CEO. As far as NCC is concerned, the division of segments
Note 16 Interest expense and similar income statement items 68 under IFRS 8 is the same as the segments presented under the former standard
Note 17 Net financial items 68 IAS 14, with the addition of the recently formed business area, NCC Housing,
Note 18 Effects on income statement comprising a separate segment. IFRS 8 stipulates the disclosure requirements
of exchange-rate changes 68 for each segment and, in accordance with the transition rules, information for
the comparative year has been adjusted to the new requirements.
Note 19 Earnings per share 69
Amendments to IAS 1 Presentation of Financial Statements (2007) states
Note 20 Appropriations and untaxed reserves 69 that the statement of changes in shareholders’ equity shall only contain
Note 21 Intangible assets 69 changes attributable to transactions with owners. Other income and expenses
Note 22 Tangible fixed assets 71 that were previously recognized in the statement of changes in shareholders’
Note 23 Managed properties 72 equity are now included in other comprehensive income instead. NCC pres-
ents this item in a separate statement entitled “Statement of other comprehen-
Note 24 Participations in Group companies 73
sive income” directly after the income statement. The amendment to IAS 1
Note 25 Participations in associated companies also permits changes to the designations and terminology used in the financial
consolidated in accordance with the equity method 74 statements. NCC has decided not to change these designations and terminol-
Note 26 Participations in joint ventures consolidated in ogy. Comparison periods have been adjusted throughout the financial state-
accordance with the proportional method 74 ments to comply with the new presentation format.
Note 27 Participations in associated companies 74 Amendments to IFRS 7 Financial Instruments: Disclosures affects NCC’s
financial statements as of the 2009 Annual Report. The amendment primarily
Note 28 Financial investments 74
involves the division of financial instruments measured at fair value into three
Note 29 Financial fixed assets 75 tiers depending on the quality of the input data in the measurement. In addi-
Note 30 Long-term receivables and other receivables 75 tion, existing disclosure requirements regarding liquidity risk have been clari-
Note 31 Tax on net profit for the year, fied and expanded. These disclosure requirements affected Note 39 below.
deferred tax assets and deferred tax liabilities 75 In accordance with the transition rules, comparative information need not be
Note 32 Properties classed as current assets 77 provided for the first year of application.
Amendments to IAS 23 Borrowing Costs require the mandatory capitaliza-
Note 33 Materials and inventories 78
tion of borrowing costs in the acquisition value of qualifying assets started
Note 34 Construction contracts 78 after January 1, 2009. For a more detailed description of the accounting policy,
Note 35 Share capital 78 refer to the “Borrowing costs” section below. For 2009, the amendment led to a
Note 36 Interest-bearing liabilities 79 SEK 7 M reduction in interest expense.
Note 37 Provisions 79 The following amendments to existing standards also became effective
­during the year:
Note 38 Pensions 80
• Addition to IFRS 1 and IAS 27 Cost of an Investment in a Subsidiary, Jointly
Note 39 Financial instruments and financial risk management 81 Controlled Entity or Associate
Note 40 Other liabilities 87 • Addition to IAS 32 and IAS 1 Puttable Financial Instruments and Obliga-
Note 41 Work in progress on another party’s tions Arising on Liquidation.
account and net sales 87 • Addition to IFRS 2 Vesting Conditions and Cancellations
None of these additions had any impact on NCC’s financial statements.
Note 42 Accrued expenses and prepaid income 87
The interpretive statement IFRIC 13 Customer Loyalty Programs came into
Note 43 Leasing 87
effect in 2009, and did not have any impact on NCC’s financial statements.
Note 44 Transactions with related companies 88
Note 45 Pledged assets, guarantees and guarantee obligations 88 NEW IFRS’, AMENDMENTS TO IFRS AND INTERPRETIVE
Note 46 Cash-flow statement 89 STATEMENTS THAT HAVE YET TO BE APPLIED
The following EU-approved IFRS, amendments to IFRS and interpretive state-
Note 47 Information about the Parent Company 89
ments issued by IFRIC become effective as of the 2010 fiscal year and have
not yet been applied in the compilation of the current financial statement.
IFRS 3 (revised) Business Combinations and IAS 27 (amended) Consoli-
dated and Separate Financial Statements include regulations entailing the
­following: changes to the definition of business combinations, that transaction
expenses attributable to business combinations be expensed, that conditional
purchase considerations be determined at fair value on the acquisition date
and that effects of revaluations of liabilities related to purchase considerations
be recognized in profit or loss. Another new feature is that there are two alter-
natives for recognizing non-controlling interests (formerly called minority
interest) and goodwill in conjunction with business combinations. Non-con-

56 NCC 2009
trolling interests can be measured at either fair value or the proportionate CONSOLIDATED FINANCIAL STATEMENTS

FINANCIAL REPORT
share of net assets of the acquiree. The choice of method can be made on a The consolidated financial statements include the Parent Company and the
transaction-by-transaction basis. Furthermore, the amendments to IAS 27 companies and operations in which the Parent Company, directly or indirectly,
Consolidated and Separate Financial Statements require that the effects of has a controlling interest, as well as joint ventures and associated companies.
transactions involving non-controlling interests be recognized in shareholders’
equity if they do not entail any change in the controlling interest and these Purchase method
transactions do not give rise to goodwill or gains and losses. When a Parent The acquisition of business operations is handled in accordance with the pur-
Company loses its controlling influence, any remaining share shall be remea- chase method, which is characterized by acquired assets, liabilities and contin-
sured at fair value and the loss/gain recognized in profit or loss. The amend- gent liabilities being entered at market value, after due consideration for
ments to IFRS 3 and IAS 27 will have only prospective effects for NCC. deferred tax on the acquisition date. If the acquisition value of a subsidiary
IFRIC 12 Service Concession Arrangements addresses the reporting of exceeds the market value of the subsidiary’s net assets, taking contingent
­facilities by private players and the rights and obligations undertaken in ­liabilities into account, the difference is entered as Group goodwill. When the
­agreements with national governments, county councils or municipalities difference is negative, it is recognized directly in profit or loss.
­concerning, for example, financing, operation and development of facilities. Goodwill arising in this connection is not amortized but is subject to contin-
This interpretive statement will affect NCC’s reporting of projects involving uous impairment testing when necessary, at least once a year. Other acquired
the construction and subsequent maintenance of facilities. The interpretive intangible assets are amortized over their estimated useful life. Acquired and
statement is to be applied retroactively. divested companies are included in the consolidated income statement, bal-
ance sheet and cash flow statement for the holding period.
IFRIC 15 Agreements for the Construction of Real Estate When an acquisition is conducted in several stages, known as gradual acqui-
NCC will apply IFRIC 15 Agreements for the Construction of Real Estate sitions, a revaluation of NCC’s earlier holdings is performed when control is
as of January 1, 2010. This means that the sale of housing projects from 2010 obtained. This revaluation is recognized as a revaluation reserve under equity
will be primarily recognized in profit or loss on the date of transfer of the and is reversed as the recognized surplus value is used.
property to the end customer, in contrast to current practice, whereby projects
are recognized in pace with completion and sale. This change will mean that Subsidiaries
revenues and gains on sales of housing projects will be postponed normally by Companies in which the Parent Company, directly or indirectly, holds shares
about one to two years compared with current principles. carrying more than 50 percent of the voting rights, or otherwise has a control-
Similarly, NCC’s assets and liabilities will be affected by the introduction of ling influence, are consolidated in their entirety. Shares in subsidiaries are rec-
IFRIC 15. The most important change is that, unlike current practice, unsold ognized in the Parent Company in accordance with the acquisition value (cost)
housing in Swedish tenant-owners’ associations and Finnish housing compa- method. Impairment losses on shares in subsidiaries are recognized upon a
nies will be recognized in NCC’s balance sheet, which will mainly affect inter- permanent decline in value. Dividends received are recognized as revenue.
est-bearing liabilities. It also means that NCC’s key figures will change, pri- For information on NCC’s subsidiaries, refer to Note 24, Participations in
marily capital employed, equity/assets ratio and indebtedness. Accordingly, Group companies.
NCC’s financial objectives will be reviewed.
NCC Housing is the segment of NCC’s reporting that will mainly be Minority interest
impacted by this change, although minor changes will also be made in NCC In companies that are not wholly owned subsidiaries, minority interest is rec-
Property Development and the Construction units. ognized as the share of the subsidiaries’ equity held by external shareholders.
The effects of IFRIC 15 will be announced prior to the publication of the This item is recognized as part of the Group’s shareholders’ equity. The
2010 first-quarter interim report. Comparative figures for 2009 will be minority share is recognized in profit or loss. Information about the minority
restated in accordance with IFRIC 15 (pro forma). share of profit is disclosed in conjunction with the income statement.

The following additions to IFRS and interpretative statements from the IFRIC Associated companies
do not currently have any effect on NCC’s financial statements: Associated companies are defined as companies in which the Group controls
• Addition to IFRS 2 Group Cash-settled Share-based Payments Transactions 20–50 percent of the voting rights. Companies in which the Group owns less
• Addition to IAS 39, Eligible Hedge Items than 20 percent of voting rights but exercises a significant influence are also
• Addition to IAS 32, Classification of Rights Issues classified as associated companies. Refer to Note 25 for information about the
• Addition to IFRIC 9 and IAS 39, Imbedded Derivatives Group’s participations in associated companies, and Note 27 for the Parent
• IFRIC 16 Hedges of a Net Investment in a Foreign Operation Company’s participations in associated companies.
• IFRIC 17 Distributions of Non-cash Assets to Owners Participations in associated companies are consolidated in accordance with
• IFRIC 18 Transfers of Assets from Customers the equity method.
In the equity method, the carrying amount of shares in associated compa-
PARENT COMPANY ACCOUNTS COMPARED WITH CONSOLIDATED nies is adjusted by the Group’s shares in the profit of associated companies
FINANCIAL STATEMENTS less dividends received. As in the case of full consolidation of subsidiaries, an
The Parent Company prepared its annual report in accordance with the acquisition analysis is made when the shares are acquired. Fixed assets are rec-
Annual Accounts Act (1995:1554) and recommendation RFR 2.2 Accounting ognized at fair value and any surplus value is amortized during its estimated
for Legal Entities issued by the Swedish Financial Reporting Board. The state- useful life. This depreciation affects that the carrying amount of associated
ments issued by the Swedish Financial Reporting Board in respect of listed companies. Any goodwill that arises is not amortized but is subject to con­
companies are also applied. In RFR 2.1, the Swedish Financial Reporting tinuous impairment testing performed at least once a year. NCC’s share in
Board, for tax reasons, has granted exemption from the requirement that listed associated companies relates to their operations and its share in the results of
parent companies must report certain financial instruments at fair value. NCC associated companies is recognized in profit or loss as “Result from participa-
applies the exemption rules and has thus refrained from reporting certain tion in associated companies,” which is part of operating profit. Amounts are
financial instruments at fair value. recognized net after taxes.
The accounting policies presented below differ from those used in the con- In the Parent Company, associated companies are recognized at acquisition
solidated financial statements: value less any impairment losses. Dividends received are recognized as reve-
• Subsidiaries nue. Refer to Note 12, Result from participations in associated companies, for
• Associated companies information about results from participations in associated companies. For
• Income taxes additional information about associated companies, refer to Note 25, Partici-
• Financial instruments pations in associated companies consolidated in accordance with the equity
• Leasing method, and Note 27, Participations in associated companies.
• Construction contracts and similar assignments
• Pensions Joint ventures
• Borrowing costs Joint ventures are defined as projects conducted in forms similar to those of a
consortium, meaning subject to joint control. This could take the form of, for
The differences are presented under the respective headings below. example, jointly owned companies that are governed jointly. NCC consoli-
dates joint ventures in accordance with the proportional method. Accordingly,

NCC 2009 57
 NCC’s share of the joint venture’s income statements and balance sheets is the construction of a building. The project is estimated to take two years to
FINANCIAL REPORT

added to the corresponding line in NCC’s accounts in the same manner as the complete. The contract price is 100 and the anticipated profit from the project
recognition of subsidiaries. For further information, refer to Note 26, Participa- is 5. On December 31 of year 1, NCC’s costs for the project amount to 47.5,
tions in joint ventures consolidated in accordance with the proportional method. which is in line with expectations. Since NCC has completed half of the work
and the project is proceeding as planned, NCC recognizes half of the antici-
Elimination of intra-Group transactions pated profit of 5, that is 2.5, in the accounts for Year 1. Income recognition on
Receivables, liabilities, revenues and costs, as well as unrealized gains and completion means that profit is not recognized until the end of Year 2, or the
losses, that arise when a Group company sells goods or services to another beginning of Year 3, depending on when the final financial settlement with the
Group company are eliminated in their entirety. Unrealized losses are elimi- customer was agreed.
nated in the same way as unrealized gains, but only insofar as there are no
impairment requirements. This also applies to joint ventures and associated Earnings Year 1 Year 2
companies, in an amount corresponding to the Group’s holding. Refer to
Income recognition on completion 0 5
Note 44, Transactions with related companies.
According to percentage-of-completion 2.5 2.5
Internal pricing
Market prices are applied for transactions between Group entities. Proprietary housing projects
When determining income from proprietary housing projects, income from
Foreign subsidiaries and joint ventures the project is calculated by multiplying the completion rate with the sales rate.
Foreign subsidiaries are recognized using the functional currency and are The sales rate refers to the sold portion of the project.
translated to the reporting currency. For NCC, the functional currency is
defined as the local currency used in the reporting entity’s accounts. The Par- Example: Sales rate of 50 percent
ent Company’s functional currency is SEK. The reporting currency is defined Completion rate of 50 percent
as the currency in which the Group’s overall accounting is conducted, in
NCC’s case SEK. All assets and liabilities in the subsidiaries’ balance sheets, In the above example, earnings based on the percentage-of-completion
including goodwill, are translated at exchange rates prevailing on the balance- method during Year 1 would be 1.25, rather than the 2.5 based on the com-
sheet date, and all income statement items are translated at the calculated pletion rate.
average exchange rates in effect at the time of each transaction. The trans­
lation difference arising in this connection is transferred directly to other Work in progress in the Parent Company
­comprehensive income. For divested subsidiaries, the accumulated translation NCC does not apply percentage-of-completion profit recognition in the Par-
difference is recognized under consolidated profit or loss. ent Company. Projects that are not completed on the balance-sheet date are
recognized in the Parent Company accounts as work in progress. The invoicing
REVENUES amount is equivalent to the amount billed to the customer, including amounts
With the exception of contracting assignments, the Group recognizes reve- withheld by the customer in accordance with contract terms. Advances not
nues in profit or loss when, among other factors, the material risks and rewards matched by work performed reduce the invoiced amount. Costs incurred by a
associated with ownership have been transferred to the purchaser. particular construction worksite include:
• Cost of installation materials, consumption materials and construction tools.
Construction contracts and similar assignments • Wages, salaries and remuneration, including social security fees, for hourly
Income recognition of construction projects based rated employees, supervisors and other staff on site.
on percentage-of-completion method • Cost of subcontracts and other external and internal services.
Application of the percentage-of-completion method entails income recogni- • External and internal machine rentals and transport costs.
tion in pace with the degree of completion of the project. To determine the
amount of income worked up at a specific point in time, the following compo- Work in progress on another party’s account comprises the difference
nents are required: between invoicing and costs incurred. Income is recognized when the project
• Project revenue – Revenues related to the construction contract. The reve- is completed. As a result of this accounting method, this entry may include
nues must be of such a character that the recipient can credit them to profits not entered as income. When a project is expected to incur a loss, a pro-
income in the form of actual payment received or another form of payment. vision is posted for such a loss. For details, refer to Note 41, Work in progress
• Project cost – Costs attributable to the construction assignment, which on another party’s account and net sales.
­correspond to project revenues.
• Completion rate (worked-up rate) – Recognized costs in relation to Result from sales of development properties
­estimated total assignment costs. NCC’s sales include revenues from sales of properties classed as current assets.
Sales also include rental revenues from properties classed as current assets.
The fundamental condition for income recognition based on percentage of Property sales are recognized at the time when material risks and rewards
completion is that project revenues and costs can be quantified reliably. are transferred to the purchaser, which normally coincides with the transfer of
As a consequence of income recognition based on the percentage-of-com- ownership rights.
pletion method, the trend of earnings is reflected immediately in the financial Property projects sold before construction is completed are recognized as
statements. However, percentage of completion gives rise to one disadvantage. profit in two separate transactions when the property (land or land with ongo-
Due to unforeseen events, the final profit may occasionally be higher or lower ing construction) is sold and, at the same time, a separate agreement is signed
than expected. It is particularly difficult to anticipate profit at the beginning of with the purchaser concerning the construction of a building or completion of
the project period and for technically complex projects or projects that extend the ongoing construction. The first transaction – sale of a property project –
over a long period. comprises the realization of a property value that has been accumulated at
For projects that are difficult to forecast, revenue is recognized in an amount several levels, such as site acquisition, formulation of a detailed development
corresponding to the worked-up cost, meaning that zero earnings are entered plan, design of a property project, receipt of a building permit and leasing to
until the profit can be reliably estimated. As soon as this is possible, the project tenants. This value accumulation is finally confirmed by means of the sale. The
switches to the percentage-of-completion method. second transaction is the contracting assignment, meaning implementation of
Provisions posted for potential losses are charged against income for the rel- construction work on the sold property. The first transaction is recognized as
evant year. Provisions for losses are posted as soon as they become known. profit, provided that the material risks and rewards are deemed to have been
Balance-sheet items such as “worked up, non-invoiced revenues” and transferred, in the manner stated above and the second transaction is recog-
“invoiced revenues, not worked up” are recognized in gross amounts on a proj- nized as profit in pace with the degree of completion of the project.
ect-by-project basis. Projects for which worked-up revenues exceed invoiced It could also be the case that property projects are sold with guarantees of
revenues are recognized as current assets, while projects for which invoiced certain leasing to tenants or with a stipulation that a supplementary purchase
revenues exceed worked-up revenues are recognized as a current interest-free consideration be paid when a certain leasing rate has been achieved. In con-
liability. Refer to Note 34 Construction contracts. nection with the date of sale, a provision for rental guarantees is posted. The
The following example illustrates how the percentage-of-completion supplementary purchase consideration is recognized as revenue when the
method is applied. On January 1 of Year 1, NCC receives a contract regarding agreed leasing rate has been achieved.

58 NCC 2009
Result from property management LEASING

FINANCIAL REPORT
Results from property management operations consist of the operating net In the consolidated financial statements, leasing is classified as either financial
of managed properties and revaluations to fair value (impairment losses and or operational. Financial leasing exists if the financial risks and benefits associ-
reversal of previous impairment losses). Rental revenues are distributed ated with ownership are essentially transferred to the lessee. All other cases are
evenly over the leasing period. Also refer to Note 8, Result from property regarded as operational leasing. Assets leased in accordance with financial leas-
management. ing agreements are capitalized in the consolidated balance sheet. Correspond-
ing obligations are entered as long-term and current liabilities. Leased assets
Result from sales of managed and owner-occupied properties are depreciated, while leasing payments are recognized as interest payments
These items include the realized result of sales of managed and owner-occu- and debt amortization. The assets are recognized in the balance sheet under
pied properties. Selling and administrative expenses include costs for the com- appropriate asset items. As a lessor, the asset is recognized in accordance with
pany’s own sales work. Earnings are charged with overhead costs for both a financial leasing agreement as a receivable in the balance sheet. Operational
completed and non-implemented transactions. See income statement and leasing is recognized in profit or loss. Leasing fees are distributed on the basis
Note 9, Result from property sales. of use, which could differ from the leasing fee paid during the year under
review. For further information on leasing, refer to Note 44. In the Parent
DEPRECIATION Company, all leasing agreements are recognized in accordance with the regu-
Straight-line depreciation according to plan is applied in accordance with the lations for operational leasing.
estimated useful life, with due consideration for any residual values at the
close of the period, or after confirmed depletion of net asset value in those TAXES
cases when the asset does not have an indefinite life. Goodwill and other assets Income taxes comprise current tax and deferred tax. Taxes are recognized in
that have an indefinite life are not amortized but subject to systematic impair- profit or loss, with the exception of cases in which underlying transactions are
ment testing. NCC applies so-called component depreciation, whereby each recognized in other comprehensive income or directly under shareholders’
asset with a considerable value is divided into a number of components that equity, with the relating tax effect recognized in other comprehensive income
are depreciated on the basis of their particular useful life. Depreciation/amor- or in equity. Current tax is tax attributable to the current fiscal year, which
tization rates vary in accordance with the table below: also includes adjusted tax attributable to previous periods.
Deferred tax is recognized on the basis of temporary differences between
recognized and taxable values of assets and liabilities, and has to be paid in the
Usufructs In line with confirmed depletion of net asset value future. Deferred tax assets represent a reduction of future tax attributable to
Software 20–33 percent temporary tax-deductible differences, tax loss carryforwards and other unuti-
Other intangible assets 10–33 percent lized tax deductibles. Temporary differences are not taken into consideration
Owner-occupied properties 1.4–10 percent for differences arising in the recognition of goodwill or upon initial recognition
Land improvements 3.7–5 percent of assets and liabilities not classified as acquisitions of business operations that,
Pits and quarries In line with confirmed depletion of net asset value at the time of the transaction, did not affect either net profit or taxable profit.
Fittings in leased premises 14–20 percent
Nor are temporary differences attributable to shares in subsidiaries that are
Machinery and equipment 5–33 percent
not expected to be reversed in the foreseeable future taken into ­consideration.
Deferred tax liabilities and assets are calculated on the basis of the tax rate
The distribution of the depreciation/amortization posted in profit or loss and determined for the following year in each particular country. When changes
balance sheet is presented in Comments to the income statement, Note 6, occur in tax rates, the change is recognized in the consolidated income state-
Depreciation, Note 21, Intangible assets and Note 22, Tangible fixed assets. ment. Tax-deductible temporary differences and tax loss carryforwards are
recognized to the extent that it is considered likely they will result in lower
IMPAIRMENT LOSSES tax payments in the future. For information on tax on current-year profit and
This section does not apply to impairment of inventories, assets that arise dur- deferred tax assets and liabilities, refer to Note 31.
ing the course of a construction assignment, deferred tax assets, financial In the Parent Company, untaxed reserves are recognized that consist of the
instruments, assets connected to pensions or assets classified as investments taxable temporary difference arising because of the relationship between
available for sale, since the existing standards for these types of assets contain reporting and taxation in the legal entity. Untaxed reserves are recognized
specific requirements regarding recognition and valuation. gross in the balance sheet and the change is recognized gross in profit or loss, as
An impairment requirement arises when the recoverable amount is less an appropriation.
than the carrying amount. The distribution of impairment losses in the income
statement and balance sheet is described in comments to the income state- REPORTING BY OPERATING SEGMENT
ment, Note 10, Impairment losses and reversed impairment losses, Note 21, An operating segment is part of the Group that conducts business operations
Intangible assets, and Note 22, Tangible fixed assets. from which it generates revenues and incurs costs and for which independent
When necessary, although at least once a year, NCC conducts impairment financial information is available. Furthermore, the earnings of an operating
tests of recognized asset values, for indications of whether values have segments are monitored by the chief operating decision maker, who in NCC’s
declined. In the event that the recoverable amount is lower than the carrying case is the President and CEO, for evaluation of results and for allocating
amount, an impairment loss is posted. If the basis for impairment has been resources to the operating segment. The reporting of operating segments con-
removed, impairment losses posted earlier are reversed. Impairment losses are curs with the reports presented to the President and CEO. For further infor-
recognized in profit or loss. The residual carrying amount of goodwill is subject mation, refer to Note 3 Operating segments.
to impairment testing once per year or if there is an indication of a change in
value. In those cases where the recoverable amount of goodwill is less than the EARNINGS PER SHARE
carrying amount, an impairment loss is posted. Previously impaired goodwill is The calculation of earnings per share is based on the Group’s net profit for the
not reversed. year attributable to Parent Company shareholders and on the weighted aver-
The term impairment is also used in connection with revaluations of prop- age number of shares outstanding during the year. The calculation of earnings
erties classed as current assets. Valuations of these properties, however, are per share is not affected by preferred shares or convertible debentures, since
based on the lowest value principle and comply with IAS 2 Inventories. the Group has no such items. NCC has a small number of Series B treasury
shares; see page 62 under Repurchase of shares.
GOVERNMENT ASSISTANCE
Government assistance is an action by the government designed to provide a INTANGIBLE ASSETS
financial advantage that is limited to a single company or a category of companies Intangible assets are recognized at acquisition value less accumulated impair-
that fulfills certain criteria. Government grants are support from governmental ment losses and amortization.
authorities in the form of transfers of resources to a company in exchange for the Goodwill arises from acquisitions of companies and operations. Goodwill is
company’s fulfillment or future fulfillment of certain conditions regarding its not amortized according to plan. Goodwill in foreign operations is valued in
operations. Government is defined as states, federal governments, public the particular functional currency and is converted from this functional cur-
authorities or similar organizational bodies, regardless of whether they are local, rency to the Group’s reporting currency at the exchange rates prevailing on
national or international. Grants related to assets are recognized as a reduction the balance-sheet date.
of the carrying amount for the asset. Grants related to profit are recognized as Usufructs consist primarily of the right to utilize rock pits and gravel quar-
a reduction in the expenses for which the subsidy is intended to cover. ries, which are depreciated in parallel with confirmed depletion of net asset

NCC 2009 59
 value based on volumes of extracted stone and gravel. For the distribution of Ongoing property projects
FINANCIAL REPORT

value, refer to Note 21 Intangible assets. Properties held for future development are reclassified as ongoing property
projects when a definitive decision is taken about a building start and when
TANGIBLE FIXED ASSETS the activities required in order to complete the property project have been ini-
NCC’s property holdings are divided into: tiated. An actual building start is not necessary.
• Owner-occupied properties Ongoing property projects include properties under construction, extension
• Managed properties or refurbishment.
• Properties classed as current assets Ongoing property projects are reclassified as completed property projects
when the property is ready for occupancy, excluding adjustments to tenant
Properties classed as current assets are held for development and sale as part of requirements in those properties whose premises are not fully leased. The
operations. The principles applied for the categorization, valuation and profit reclassification is effective not later than the date of approved final inspection. If
recognition of properties classed as current assets are presented under the a project is divided into phases, each phase must be reclassified separately. In this
Current assets section below. context, a phase always comprises an entire building that can be sold separately.

Owner-occupied properties Completed property projects

Owner-occupied properties are held for use in the Company’s own operations Completed property projects can only be derecognized from the balance
for the purpose of production, the provision of services or administration. sheet as a result of a sale or, if they remain unsold, by being reclassified as man-
Owner-occupied properties are recognized at acquisition value less accu- aged properties. This occurs only to a small extent in NCC.
mulated depreciation and any accumulated impairment. Also refer to Note
22, Tangible fixed assets. Valuation of commercial property projects
The acquisition value of commercial property projects includes expenditure
Managed properties for the acquisition of land and for building design/property development, as
Managed properties are held to generate rental income or value growth, or a well as expenditure for construction, extension or refurbishment. Expenditure
combination of both. These properties are valued in accordance with the fair for borrowing costs is included when capitalized interest during the term of
value method in IAS 40 Investment Property. The fair value of a managed the project totals a significant amount. Other borrowing costs are expensed on
property is the price at which the property could be sold in a transaction a current account basis. Property development means that the input of the
between knowledgeable parties who are independent of each other and have developer – NCC Property Development – is concentrated to the activities
an interest in the completion of the transaction. NCC divested its last remain- that do not pertain to actual construction. These activities are evaluation of
ing managed property in 2009. project concepts, acquisition of land, work on the detailed development plan,
project development, leasing and sale. These activities are conducted by the
Machinery and equipment company’s own employees and by external architects and other technical con-
Machinery and equipment is recognized at acquisition value less accumulated sultants. Expenditure for the Company’s own employees within the project
depreciation and any impairment losses. In addition to the purchase price, the development organization and for consultants is capitalized after the project
acquisition value includes costs attributable to transporting the machinery and has been classified in the balance sheet as an ongoing project. Prior to this, the
equipment to the correct site and preparations of the asset in order to be used costs are expensed on a current account basis.
in the manner intended by the acquisition. Commercial property projects are recognized continuously in the balance
sheet at the lower of acquisition value and net realizable value, which is the
FINANCIAL FIXED ASSETS selling value (market value) less estimated costs for completion and direct
Financial fixed assets are recognized at fair value or accrued acquisition value. ­selling costs.
Impairment losses are posted if the fair value is less than the acquisition cost. The market value of completed property projects is calculated in accor-
Also see the Financial instruments section on page 61. For information on the dance with the yield method, which means that the continuous yield (operat-
value and type of assets, refer to Note 29 Financial fixed assets. For valuations of ing net) on the property at full leasing is divided by the project’s estimated
participations in associated companies, joint ventures and financial instruments, yield requirement. Unleased space in excess of normal vacancy is taken into
see the respective headings. The Parent Company recognizes shares in Group account in the form of a deduction from the value based on the assumed
companies at acquisition value less, where applicable, impairment losses. ­leasing rate.
The market value of ongoing property projects is calculated as the value in
CURRENT ASSETS completed condition, as described above, less the estimated remaining cost of
Properties classed as current assets completing the project.
Group property holdings recognized as property and housing projects are val- Properties held for future development that are included in the project
ued as inventories when the intention is to sell the properties on completion. portfolio, meaning ones that are held for development and sale, are normally
Property projects are valued at the lower of acquisition value and net realiz- valued in the same manner as ongoing projects, as described above. Other
able value. Property projects are defined as properties held for development properties held for future development are valued on the basis of a value per
and sale within NCC Property Development. Housing projects pertain to square meter of development right or a value per square meter of land.
unsold residential properties, unsold portion of proprietary residential proper-
ties with ownership rights, undeveloped land and properties held for future Housing projects
development in NCC Housing. Housing projects within NCC Housing are divided between:
• Properties held for future development, housing
Property projects • Unsold portion of ongoing proprietary housing projects
Property projects within NCC Property Development are divided as follows: • Unsold, completed residential properties
• Properties held for future development
• Ongoing property projects For a distribution of values, refer to Note 32, Properties classed as current
• Completed property projects assets. Ongoing housing projects are recognized as construction contracts.
The reclassification from properties held for future development to ongoing
For a distribution of values, refer to Note 32, Properties classed as current projects occurs when a decision to initiate construction has been taken.
assets.
Properties held for future development, housing
Properties held for future development, property development Properties held for future development are NCC’s holdings of land and devel-
Properties held for future development consist of NCC’s holding of land opment rights for future housing development. Properties with leased build-
and development rights intended for future property development and sale. ings are classified as properties held for future development if the intention is
Properties comprising leased buildings are classified as properties held for to demolish or refurbish the property.
future development in cases where the intention is to demolish or refurbish Properties held for future development are valued taking into consideration
the buildings. whether the properties will be developed or sold on. The valuation of land and

60 NCC 2009
development rights for future development is based on a capital investment Held-to-maturity investments

FINANCIAL REPORT
appraisal. This appraisal is updated with regard to the established sales price Investments intended to be held to maturity comprise interest- bearing securi-
and cost trend when the market and other circumstances so require. In those ties with fixed or calculable payments and a determined maturity that were
cases when a positive contribution margin from the development cannot be acquired with the intention and possibility of being held to maturity. Invest-
obtained taking into consideration normal contract profit, an impairment loss ments intended to be held to maturity are measured at amortized cost. Assets
is recognized. In the case when properties are to be sold on, the holdings are with a remaining maturity exceeding 12 months after the balance-sheet date
valued at the established market value. are recognized as fixed assets. Other assets are recognized as current assets.

Unsold portion of ongoing proprietary housing projects Loans and accounts receivable
The unsold portion of housing projects for which the purchasers, following Loans and accounts receivable are measured at amortized cost, meaning the
acquisition, will directly own their portion of the project, meaning they will amount expected to be received less an amount for doubtful receivables,
have ownership rights, is recognized as a housing project. which is assessed on an individual basis. Since the expected maturity of an
account receivable is short, a nominal value without discounting is recognized.
Unsold, completed residential properties Accounts receivable are measured on an ongoing basis. As soon as it is
Project costs for completed unsold residential properties are reclassified from doubtful that an invoice will be paid, a provision is made for the amount.
ongoing housing projects to unsold residential properties at the date of final Although each invoice is measured individually, provisions are noted for
inspection. invoices that are more than 60 days overdue unless special circumstances
Properties classed as current assets and completed unsold housing projects apply. Provisions are made for all invoices that are more than 150 days over-
are valued at the lower of acquisition value and net realizable value. due if payment is not secured.

Properties classed as current assets transferred from subsidiaries Available-for-sale financial assets
Due to the commission relationship between NCC AB and NCC Construc- This category includes financial assets that do not fall into any of the other
tion Sweden AB, certain properties that are included in housing projects are ­categories, or those assets that the company has elected to classify into this
recognized in NCC AB’s accounts, even if the ownership right remains with category. Holdings of shares and participations that are not recognized as
NCC Construction Sweden AB until the properties are sold to customers. ­subsidiaries, associated companies or joint ventures are recognized here.
These assets are valued at accrued acquisition value (amortized cost). Impair-
INVENTORIES ment losses are posted when there are objective reasons for assuming that
Inventories are valued at the lower of acquisition value and net realizable impairment is required.
value. For a distribution of inventory values, refer to Note 33 Materials and
inventories. Financial liabilities at fair value through profit or loss
This category includes the Group’s derivative instruments with a negative fair
FINANCIAL INSTRUMENTS value, with the exception of derivative instruments that function as identified
Acquisition and divestments of financial instruments are recognized on the and effective hedging instruments. Changes in fair value are recognized among
date of transaction, meaning the date on which the company undertakes to net financial items.
acquire or divest the asset.
Financial instruments recognized on the asset side of the balance sheet Other financial liabilities
include cash and cash equivalents, loan receivables, accounts receivable, finan- Loans and other financial liabilities, such as accounts payable, are included in
cial investments and derivatives. Accounts payable, loan payables and deriva- this category. Liabilities are recognized at amortized cost.
tives are recognized under liabilities. Financial guarantees such as sureties are
also included in financial instruments. Hedge accounting
A financial asset or financial liability is recognized in the balance sheet when NCC applies hedge accounting in the following categories: Hedging of
the company becomes a party to the instrument’s contractual terms and con- exchange-rate risk in transaction flows, Hedging of net investments and Hedg-
ditions. Accounts receivable are recognized in the balance sheet when invoices ing of the Group’s interest maturities.
have been sent. Accounts payable are recognized when invoices have been
received. Hedging of exchange-rate risk in transaction flows
A financial asset is derecognized from the balance sheet when the contrac- Currency exposure associated with future flows is hedged by using currency
tual rights have been realized or extinguished. The same applies to portions forward contracts. The currency forward contract that hedges this cash flow is
of financial assets. A financial liability is derecognized from the balance sheet recognized at fair value in the balance sheet. When hedge accounting is
when the contractual obligation has been fulfilled or otherwise terminated. applied, the change in fair value attributable to changes in the exchange rate
This also applies to part of the financial liability. for the currency forward contract is recognized in other comprehensive
Financial instruments are classified in the following categories for measure- income, after taking tax effects into account. Any ineffectiveness is recognized
ment: Financial assets at fair value through profit or loss, Investments held to in profit or loss. When the hedged flow is recognized in profit or loss, the value
maturity, Loan receivables and accounts receivable and Available-for-sale change of the currency forward contract is moved from other comprehensive
financial assets, Financial liabilities at fair value through profit or loss and income to profit or loss, where it offsets the exchange-rate effect of the hedged
Other financial liabilities. When entered for the first time, a financial instru- flow. The hedged flows can be both contracted and forecast transactions.
ment is classified on the basis of the purpose for which the instrument was
acquired. This classification determines how the financial instrument is Hedging of net investments
­measured following the first reporting occasion, as described below. Group companies have currency hedged their net investments in certain for-
Cash and cash equivalents comprise cash funds and immediately available eign subsidiaries, associated companies and joint ventures. In the consolidated
balances at banks and equivalent institutions, as well as short-term invest- financial statements, the exchange-rate differences on these hedging positions,
ments with a maturity of less than three months at the date of acquisition after taking tax effects into account, are moved directly to other comprehen-
and that are exposed to only a minor risk of value fluctuation. sive income, insofar as they are matched by the year’s translation differences
within other comprehensive income. Any surplus amount, so-called ineffec-
Financial assets at fair value through profit or loss tiveness, is recognized among net financial items. NCC uses currency loans
This category includes the Group’s derivative instruments with a positive fair and currency forward contracts to hedge net investments.
value and short-term investments. Changes in fair value are recognized among
net financial items in profit or loss. All instruments included in this category Hedging of the Group’s interest maturities
are held for trading. Derivative instruments that function as identified and Interest-rate derivatives are used to manage the interest-rate risk. Hedge
effective hedging instruments are not included in this category. For an account accounting occurs in cases where an effective hedging relationship can be
of hedging instruments, see Hedge accounting below. proved. The value change is recognized in other comprehensive income after
taking tax effects into account. Any ineffectiveness is recognized among net
financial items. What NCC achieves by hedging interest rates is that the vari-
able interest on parts of the Group’s financing becomes fixed interest.

NCC 2009 61
 Embedded derivatives between how pension costs are established in the legal entity and the Group,
FINANCIAL REPORT

An embedded derivative is a part of either a financial agreement or a commercial a provision or receivable is recognized, which is not present valued, pertaining
put or call contract that is equivalent to a financial derivative instrument. An to the payroll tax based on this difference. Accordingly, the value of the
embedded derivative must be recognized separately only if: defined benefit liability is the present value of anticipated future disburse-
• the economic characteristics and risks of the embedded derivative are not ments using a discount rate that corresponds to the interest rate stated in
closely related to the characteristics and risks of the host contract’s cash Note 38 Pensions. The outstanding term of interest corresponds to the pension
flow, and obligations.
• a separate “stand alone” derivative with the same terms as the embedded For funded plans, the fair value of plan assets reduces the computed obliga-
derivative would meet the definition of a derivative, and tion. Funded plans with assets that exceed the obligations are recognized as
• the hybrid (combined) instrument is not measured at fair value in the bal- financial fixed assets. Estimated actuarial gains and losses within the 10-per-
ance sheet, while changes in its fair value are recognized in profit or loss. cent corridor are not recognized. It is not until the actuarial gains or losses fall
outside the corridor that revenues and expenses are recognized. The results
If the contractual terms and conditions meet the criteria for an embedded are distributed over the anticipated average remaining term of employment.
derivative, this, in common with other financial derivatives, is measured at fair This reporting method is applied for all identified defined benefit pension
value, with changes in value recognized in profit or loss. plans in the Group. The Group’s disbursements related to defined benefit pen-
sion plans are recognized as an expense during the period in which the
Receivables and liabilities in foreign currency employees perform the services covered by the fee.
Receivables and liabilities in foreign currency are restated at the exchange The Parent Company is covered by the ITP plan, which does not require
rates prevailing on the balance-sheet date. any payments by the employees. The difference, compared with the principles
Exchange differences arising from the translation of operational receivables applied by the Group, pertains mainly to how the discounting rate is deter-
and liabilities are recognized in operating profit, while exchange differences mined, the fact that the calculation of defined benefit obligations is based on
arising from the translation of financial assets and liabilities are recognized in the current salary level without assuming future pay rises and the fact that all
net financial items. actuarial gains and losses are recognized in profit or loss when they arise.

Financial instruments in the Parent Company Severance payments

Financial instruments in the Parent Company are recognized at acquisition In conjunction with notice of employment termination, a provision is posted
value less any impairment losses and taking into account earnings effects only if the company is contractually obliged to terminate an employment
accrued up to fiscal year-end. In respect of the qualitative and quantitative risk position before the normal time, or when payments are made as an offering to
information, reference is made to the disclosures made for the Group above, encourage voluntary termination. For cases in which the company implements
since Group-wide risk management is applied for the Group. personnel cutbacks, a detailed plan is prepared that covers at least the work-
place concerned, positions, and the approximate number of affected employ-
CASH AND CASH EQUIVALENTS ees and disbursements for every personnel category or position, as is a time
Cash and cash equivalents consist of cash, bank balances and short-term invest­ schedule for the plan’s implementation. If severance payment requirements
ments with a maturity of less than three months at the date of acquisition. arising from personnel cutbacks extend beyond 12 months after fiscal year-
end, such payments are discounted.
SHAREHOLDERS’ EQUITY
Recognition of Group and shareholder contributions PROVISIONS
Group contributions and shareholder contributions in the Parent Company are Provisions differ from other liabilities in that there is a degree of uncertainty
recognized in accordance with their financial impact, which in the case of NCC concerning when payment will occur or concerning the size of the amount
is directly against shareholders’ equity, following due consideration for tax. required to settle the provision. Provisions are recognized in the balance sheet
when there exists a legal or informal commitment as a result of an event that
Repurchase of shares has occurred, it is probable that an outflow of resources will be required to set-
The repurchase of shares (treasury shares) has been charged directly against tle the commitment and provided that the amount can be estimated reliably.
retained earnings. Similarly, the sale of such shares results in an increase in Provisions are made in an amount that corresponds to the most reliable esti-
retained earnings. Refer to Note 35 Share capital, for more information on mate of the amount required to settle the existing commitment on the bal-
treasury shares. ance-sheet date. In the event that the effect of the date of payment is signifi-
cant, provisions are calculated through a discounting of the anticipated future
EMPLOYEE BENEFITS cash flow.
NCC differentiates between defined contribution pension plans and defined
benefit pension plans. Defined contribution plans are pension plans for which Guarantee commitments
the company pays fixed fees to a separate legal entity and does not assume any Provisions for future costs arising due to guarantee commitments are recog-
obligations for payments of additional fees, even if the legal entity lacks suffi- nized at the estimated amounts required to settle the commitment on the bal-
cient assets to pay benefits accrued for employment up to and including the ance-sheet date. The computation is based on calculations, executive manage-
balance-sheet date. Other pension plans are defined benefit plans. ment’s appraisal and experience from similar transactions.

Defined benefit Defined contribution Other provisions

Country of operation pension obligations pension obligations Provisions for restoration costs are posted when such obligations arise. Provi-
Sweden X X sions are posted for that portion of restoration that arises for start-up of a
Denmark X quarry and construction of plants at pits and quarries, and on current account
Finland X when activities are related to additional extractions at pits and quarries. A pro-
Norway X X vision for restructuring is recognized when a detailed or formal restructuring
Germany X plan has been established and the restructuring has either started or been
Other countries X announced publically. No provisions are posted for future operating expenses.

There are several defined contribution and defined benefit pension plans in BORROWING COSTS
the Group, some of which are secured through assets in dedicated foundations Borrowing costs attributable to qualifying assets are capitalized as a portion of
or similar funds. The pension plans are financed through payments made by the capitalized asset’s acquisition value when the total borrowing costs total a
the various Group companies. Calculations of defined benefit pension plans significant amount. A qualifying asset is an asset that takes a substantial period
are based on the Projected Unit Credit Method, whereby each term of of time to get ready for its intended use or sale, which in NCC’s case is more
employment is considered to create a future unit of the total final obligation. than a year. For NCC, the capitalization of borrowing costs is most relevant in
All units are computed separately and, combined, represent the total obliga- the construction of property and housing projects. Other borrowing costs are
tion on the balance-sheet date. The principle is intended to provide linear expensed on current account in the period in which they are incurred.
expensing of pension payments during the term of employment. The calcula- In the Parent Company, borrowing costs are expensed in their entirety in
tion is made annually by independent actuaries. When there is a difference the period in which they are incurred.

62 NCC 2009
PLEDGED ASSETS Profit recognition of property development projects

FINANCIAL REPORT
NCC recognizes collateral pledged for company or Group liabilities and/or Property sales are recognized as of the time when significant risks and rewards
obligations as pledged assets. These liabilities and/or obligations may or may are transferred to the purchaser. The actual timing of profit recognition
not be included in the balance sheet. The collateral may be related to assets depends on the agreement with the purchaser and could occur when signing
entered in the balance sheet or mortgages. Assets are recognized at the carry- the agreement, at a certain leasing rate, on completion or when the right of
ing amount and mortgages at nominal value. Shares in Group companies are ownership is transferred, and it could also depend on a combination of these
recognized at their value in the Group. variables. This is determined from agreement to agreement and is subject to
For information on types of collateral, refer to Note 45 Pledged assets, guar- elements of estimations and assessments, and also applies to both direct sales
antees and guarantee obligations. of a property and indirect sales via the sale of companies.

GUARANTEES AND GUARANTEE OBLIGATIONS Valuation of properties classed as current assets

An obligation is recognized when there is a possible commitment originating NCC’s properties classed as current assets are recognized at the lower of
from occurred events whose existence will be confirmed by one or more acquisition value and net realizable value. In 2009, impairment losses on prop-
uncertain future events, or when there is a commitment that is not recognized erties classed as current assets amounted to SEK 0.2 billion (0.5), which can
as a liability or provision because it is not probable that an outflow of be compared with their year-end carrying amount of SEK 11.2 billion (14.8).
resources will be required. For information on the distribution and size of con- The assessment of net realizable value is based on a series of assumptions
tingent liabilities, refer to Note 45 Pledged assets, guarantees and guarantee that, in the prevailing market conditions, are very difficult to gauge, such as
obligations. sales prices, production costs, the price of land, rent levels and yield require-
ments plus the possible timing of production start and/or sale. NCC continu-
CASH FLOW STATEMENT ously monitors developments in the market and tests the assumptions made
The cash flow statement is prepared using the indirect method, in accordance on an ongoing basis.
with IAS 7, Statement of Cash Flows. The recognized cash flow includes only In some cases, the difference between the carrying amount and the esti-
transactions that involve cash payments and disbursements. For information mated net realizable value is very slight. A change in the assumptions made
on the effects on cash flow of acquired and divested subsidiaries, refer to Note could give rise to an additional impairment requirement.
46 Cash flow statement.
Valuation of goodwill
NON-CURRENT ASSETS HELD FOR SALE AND Goodwill is measured at the lower of acquisition value and recoverable
DISCONTINUED OPERATIONS amount. Goodwill in the Group is valued at SEK 1.8 billion (1.8).
To be recognized as fixed (non-current) assets held for sale, the assets must be Several assumptions and estimations are made concerning future condi-
available for immediate sale and it must be highly probable that the sale will tions, which are taken into account when calculating the discounted cash flow
be effected within a year from the reclassification. Operations that are being upon which the estimated recoverable amount has been based. Important
discontinued are defined as any part of a company that is being discontinued assumptions include expected growth, margins and the weighted average cost
in accordance with a cohesive plan and which can comprise an independent of capital. If these assumptions change, the value of the remaining goodwill
organizational unit or a major line of business or geographical area. For the could be affected; refer to Note 21 Intangible assets, for information on the
2009 and 2008 fiscal years, no fixed assets or operations covered by the above assumptions and estimations made.
standard were identified.
Valuation of receivables
EVENTS AFTER THE BALANCE-SHEET DATE NCC’s accounts receivable, including receivables for sold property projects,
NCC considers events that confirm a condition that was relevant on the bal- amount to SEK 6.8 billion (8.7); refer to Note 39 Financial instruments and
ance-sheet date. financial risk management.
If events occur after the balance-sheet date that are not of such nature that Receivables are measured at fair value, which is affected by several assess-
they should be considered when the income statement and balance sheet are ments, of which the one that is most important to NCC is credit risk and thus
finalized, but are so significant that a lack of information about them would any need to post provisions for doubtful receivables. Although each receivable
affect opportunities for readers to make correct assessments and well-founded must be valued individually, for receivables that are more than 60 days past
decisions, NCC will provide information about every such event in a note and due special circumstances are generally required for a provision not to be
in the Report of the Board of Directors. posted in full or in part.

CRITICAL ESTIMATES AND ASSESSMENTS Guarantee commitments

Estimates and assessments that affect the Group’s accounting records have At year-end, the guarantee provision amounted to SEK 2.1 billion (1.9); refer
been made on the basis of what is known when the Annual Report was issued. to Note 37 Provisions. Provisions for future costs due to guarantee commit-
The estimates and assessments may, at a later date, be changed because of, for ments are recognized at the amount expected to be required to settle the
example, changes in factors in the business environment. Particular attention commitment on the balance-sheet date. This estimate is based on calculations,
must be paid to this considering the prevailing economic climate, which is assessments by company management and experiences of similar transactions.
characterized by major uncertainty in terms of the construction market and
the global financial market. The assessments that are most critical to NCC are Pension obligations
reported below. NCC’s net pension obligation amounts to SEK 0.5 billion (0.6) which, taking
into account an actuarial loss, resulted in a net asset of SEK 1.0 billion (0.8);
Percentage-of-completion profit recognition refer to Note 38 Pensions.
A fundamental condition for being able to estimate percentage-of-completion Recognized amounts are affected by changes in the actuarial assumptions
profit recognition is that project revenues and project costs can be established that form the foundation for calculations of plan assets and pension obliga-
reliably. This reliability is based on such factors as compliance with NCC’s sys- tions. These actuarial assumptions are described in Note 38 Pensions.
tems for project control and that project management has the necessary skills.
The assessment of project revenues and project costs is based on a number Guarantee obligations, legal disputes, etc.
of estimates and assessments that depend on the experience and knowledge of Within the framework of its regular business operations, NCC occasionally
project management in respect of project control, training and the prior man- becomes a party to legal disputes. In such cases, an assessment is made of
agement of projects. There is a risk that the final result will differ from the NCC’s obligations and the probability of a negative outcome for NCC. NCC’s
profit accrued based on percentage-of-completion. At year-end, recognized assessment is made on the basis of the information and knowledge currently
revenues amounted to SEK 38.5 billion (46.8); refer to Note 34 Construction possessed by the company. In several cases, these are difficult assessments and
contracts. the final outcome could differ from the conclusion currently made.

NCC 2009 63
 Note 2 | DISTRIBUTION OF NET SALES NCC’s business operations are divided into seven operating segments based
FINANCIAL REPORT

on the parts of the organization monitored by the President and CEO, who is
the chief operating decision maker. Each operating segment has a president
Group Parent Company
who is responsible for the daily operations and regularly reports on the results
2009 2008 2009 2008
of the segment’s performance to Group Management. The following segments
Construction contracts 31,056 35,979 16,974 18,206 were identified based on this reporting procedure:
Housing projects 8,996 8,773 4,782 2,998 NCC Construction Sweden, Denmark, Finland (not civil engineering opera-
Aggregates, asphalt, paving and tions) and Norway, which construct housing, offices, other buildings, industrial
road-service operations 9,600 10,529 facilities, roads, and other types of infrastructure.
Property projects 1,966 2,054 NCC Housing develops and sells housing in selected markets in the Nordic
Rental revenue 48 76 region, Germany, the Baltic countries and St. Petersburg.
Other sales 151 54 29 35 NCC Property Development develops and sells commercial properties in
Total 51,817 57,465 21,784 21,239 defined growth markets in the Nordic and Baltic region.

Sales distributed by business segment1) NCC Roads’ core business is the production of aggregates and asphalt, com-
NCC Construction Sweden 17,002 18,241 bined with paving operations and road services.
NCC Housing 4,782 2,998 All transactions between the different segments were conducted on a purely
commercial basis. With the exception of Swedish pension costs, segment
Total 21,784 21,239
reporting is prepared by applying the same accounting policies as those used
1) For the distribution of consolidated sales, refer to Note 3.
in the consolidated financial statements.

Note 3 | OPERATING SEGMENTS

NCC Construction NCC NCC Property Total Other and

GROUP, 2009 Sweden Denmark Finland Norway Roads Housing Development Segment eliminations1) Group
External net sales 20,387 3,121 3,745 3,906 9,600 8,995 2,013 51,768 49 51,817
Internal net sales 1,837 199 1,972 159 738 1 2 4,908 –4,908
Total net sales 22,225 3,321 5,718 4,065 10,338 8,996 2,014 56,676 –4,859 51,817
Depreciation –160 –27 –22 –25 –308 –10 –3 –554 –19 –573
Impairment losses –2 –14 –1 –184 –200 –200
Share in associated company profits –3 1 –2 1 –1
Operating profit/loss 1,031 72 172 140 387 –126 359 2,035 116 2,150
Financial items –456
Profit after financial items 1,694
Cash flow before financing 1,494 –405 337 –6 263 940 374 2,997 –160 2,837
Assets 8,777 2,101 1,104 2,702 5,213 11,254 3,495 34,646 –4,670 29,976
Capital employed 1,434 617 103 859 2,788 7,653 2,965 16,420 –5,386 11,034

NCC Construction NCC NCC Property Total Other and

GROUP, 2008 Sweden Denmark Finland Norway Roads Housing Development Segment eliminations1) Group
External net sales 21,446 3,335 4,378 6,435 10,529 8,773 2,130 57,026 439 57,465
Internal net sales 3,166 744 2,709 501 789 1 2 7,911 –7,911
Total net sales 24,612 4,079 7,087 6,936 11,317 8,773 2,133 64,937 –7,472 57,465
Depreciation –151 –34 –21 –28 –299 –9 –3 –544 –25 –568
Impairment losses –1 –26 –520 –546 –68 –614
Share in associated company profits 5 4 9 9
Operating profit/loss 1,154 119 254 224 446 –660 735 2,272 –53 2,220
Financial items 166
Profit after financial items 2,386
Cash flow before financing 1,477 300 67 34 –289 –1,512 –295 –218 40 –178
Assets 9,845 2,262 1,632 3,120 5,430 14,175 4,625 41,090 –4,843 36,247
Capital employed 2,101 583 141 778 2,695 8,698 3,200 18,197 –5,741 12,456
1) This heading includes:
2009 2008
External Operating External Operating
net sales profit/loss net sales profit/loss
NCC’s Head office, results from minor subsidiaries and associated companies,
the remaining portions of NCC International 49 –1342) 439 –158
Eliminations of inter-company gains and sales-rate eliminations 133 –91
Other Group adjustments (essentially comprising the differences in accounting policies
pertaining to Swedish pensions between the segments and the Group) 117 196
49 116 439 –53
2) This amount includes competition-impeding damages of SEK 50 M and a gain of SEK 70 M from the settlement of a project from the divested business areas NCC International Projects.

Geographical areas Investments and sales

External Operating 2009 2008
net sales profit1)
NCC Housing
2009 2008 2009 2008
Investments in fixed assets 17 7
Sweden 28,793 29,844 1,802 1,799 Investments in housing projects 1,262 5,010
Finland 7,521 8,317 289 316 Housing projects 8,363 11,377
Norway 5,914 8,378 761 677
NCC Property Development
Denmark 6,159 6,808 1,452 1,613
Property investments 1,054 2,210
Other countries 3,430 4,118 122 159
Property sales 1,992 2,332
Total 51,817 57,465 4,426 4,564
1) Pertainsto fixed assets that are not financial instruments, deferred tax assets, assets pertaining to
64 post employment benefits and rights arising in accordance with insurance agreements.
NCC 2009
Note 4 | AVERAGE NUMBER OF EMPLOYEES

FINANCIAL REPORT
2009 2008 Percentage of women, % 2009 2008
No. of of whom, No. of of whom, Distribution of company management by gender
employees men employees men
Group total, including subsidiaries
Parent Company – Boards of Directors 22.9 16.6
Sweden 7,259 6,690 7,821 7,166 – Other senior executives 18.1 16.4

Subsidiaries Parent Company
Sweden 2,784 2,596 2,930 2,601 – Board of Directors 22.2 22.2
Denmark 2,295 1,951 2,878 2,491 – Other senior executives 16.7 23.1
Estonia 46 39 58 49
Finland 2,475 2,025 2,849 2,414
Latvia 87 75 160 138
Lithuania 84 67 133 107
Norway 1,790 1,645 2,032 1,849
Poland 2 1 46 40
Russia 198 143 190 133
Germany 692 566 774 630
Other countries 33 29 71 61
Total in subsidiaries 10,486 9,137 12,121 10,513
Group total 17,745 15,827 19,942 17,679

Note 5 | PERSONNEL EXPENSES

Wages, salaries and other remuneration distributed by members of the Board and senior executives and other employees
2009 2008
Board of Directors and Board of Directors and
other senior executives Other other senior executives Other
(of which, bonus) employees Total (of which, bonus) employees Total
Parent Company
Sweden 30 3,012 3,042 20 3,153 3,173
Total in Parent Company 30 3,012 3,042 20 3,153 3,173
(8.0) (0.5)
Social security expenses 1,468 1,501
– of which, pension costs 12 336 348 9 349 358
Pension commitments 51 50

Group total 223 8,316 8,539 226 8,818 9,044
(33.2) (34.5)
Social security expenses 2,631 2,574
– of which, pension costs 833 804
Pension commitments 81 74
The Board of Directors and senior executives category comprises 13 people (13) in the Parent Company and 171 (168) in the Group.

Sickness absence Senior executives’ employment conditions and remuneration

The below figures concerning sickness absence pertain to the NCC Group’s The Chairman of the Board and other Board members elected by the Annual
Swedish operations. General Meeting receive director fees in an amount resolved by the Annual
General Meeting. No pensions are paid to Board members. No special fee is
Group Parent Company paid to the Nomination Committee.
% 2009 2008 2009 2008 Remuneration for the CEO is proposed by the Chairman of the Board and
decided by the Board. Remuneration for other senior executives in Group
Total sickness absence as a percentage Management is proposed by the CEO and approved by the Chairman of the
or ordinary working time 3.4 3.6 3.7 3.8
Board.
Percentage of total sickness absence
Remuneration for the CEO and other senior executives consists of a basic
accounted for by uninterrupted sickness
absence of 60 days or more 44.7 45.5 44.1 44.4 salary, variable remuneration, other benefits and pensions. The term “other
senior executives” pertains to the senior executives who, together with the
Sickness absence by gender: CEO, constitute Group Management, as well as those senior executives who
Men 3.6 3.8 3.8 3.9 are not members of Group Management but who report directly to the CEO.
Women 2.3 2.3 2.3 2.2 At the start of 2009, there were 12 such executives and at year end there

Sickness absence by age category: were 11, of whom six were employed by the Parent Company and five by
29 years or younger 3.5 3.3 3.6 3.3 ­subsidiaries.
Between 30 and 49 years 2.5 2.6 2.6 2.7
50 years or older 4.5 4.9 4.7 5.0 Variable remuneration
The maximum variable remuneration payable to CEO Olle Ehrlén in 2009
amounted to 50 percent of his basic salary. The variable remuneration was

based on financial targets established by the Board. The amounts expensed for
2009 corresponded to 50 percent of his fixed annual salary, meaning SEK
3,090,000 (0). Variable remuneration for other senior executives in 2009
­corresponded to 35 to 50 percent of basic salary based on financial targets. The
provision posted for variable remuneration payments to other senior execu-
tives during 2009 corresponded to 26 to 50 percent (0–45) of basic salary.

NCC 2009 65
 Note 5 | cont. PERSONNEL EXPENSES
FINANCIAL REPORT

Remuneration and other benefits in 2009

Total salary, remuneration of which, of which, variable Pension Pension
SEK 000s and benefits benefits remuneration cost commitment
Chairman of the Board Tomas Billing 575
Deputy Chairman of the Board Fredrik Lundberg 460
Member of the Board Ulf Holmlund 375
Member of the Board Antonia Ax:son Johnson 375
Member of the Board Ulla Litzén 375
Member of the Board Marcus Storch 375
President and CEO Olle Ehrlén 9,417 65 3,090 7,980 23,053
Other senior executives employed by NCC AB (7 people)1) 18,356 166 4,940 4,448 7,771
Total Parent Company 30,308 231 8,030 12,428 30,824

Other senior executives employed by subsidiaries (5 people) 21,619 596 5,364 3,809 6,058
Total senior executives 51,927 827 13,394 16,237 36,882

Remuneration and other benefits in 2008
Total salary, remuneration of which, of which, variable Pension Pension
SEK 000s and benefits3) benefits remuneration cost commitment
Chairman of the Board Tomas Billing 555
Deputy Chairman of the Board Fredrik Lundberg 444
Member of the Board Ulf Holmlund 362
Member of the Board Antonia Ax:son Johnson 362
Member of the Board Ulla Litzén2) 275
Member of the Board Anders Rydin2) 87
Member of the Board Marcus Storch 362
President and CEO Olle Ehrlén 6,743 66 4,356 15,891
Other senior executives employed by NCC AB (6 people) 11,244 131 516 4,991 11,248
Total Parent Company 20,434 197 516 9,347 27,139

Other senior executives employed by subsidiaries (6 people) 20,348 399 2,818 4,400 2,488
Total senior executives 40,782 596 3,334 13,747 29,627
1) The number of senior executives in the Parent Company in 2009 was seven until September, and subsequently six.
2) Ulla Litzén was elected and Anders Rydin declined re-election at the Annual General Meeting on April 8, 2008.
3) The director fees were raised in accordance with a resolution of the 2008 Annual General Meeting. Amounts in the table have been subject to accrual accounting.

Remuneration and benefits pertain to vacation compensation, reduced working hours and company cars.
Variable remuneration pertains to the amounts expensed during the particular fiscal year.

Pension conditions for the President Pension conditions for other senior executives
NCC’s CEO Olle Ehrlén is covered by a defined benefit ITP plan with a con- Other senior executives employed in Sweden are covered by a defined-benefit
tracted retirement age of 65. In additon, Olle Ehrlén is also covered by a ITP plan with a retirement age of 65. In addition, five senior executives are
defined benefit pension agreement originating from the period prior to him encompassed by a supplementary pension plan with retirement ages of 60 or
becoming CEO. In connection with Ehrlén taking office as CEO, a supplemen- 62. The supplementary pension plan is paid until the age of 65, and has a tar-
tary agreement was reached under which remaining costs for these previous get pension of 70 percent of pensionable salary. Pensionable salary is defined as
agreements would be limited to a certain amount. the senior executive’s average fixed salary over a vesting period of at least ten
This entails that Olle Ehrlén will receive an old-age pension between the years. The earned benefit is vested and secured in a pension foundation. The
ages of 60 and 65 corresponding to aproximately 50 percent of fixed salary in company has undertaken to pay the ITP plan in full on the condition that the
2009 and – excluding ITP – from the age of 65 corresponding to aproximately senior executive remains in service until the agreed age of retirement. Two
10 percent of this salary. In 2009, the final provision for these commitments senior executives, who are not part of the aforementioned supplementary
was posted, which resulted in an elevated pension cost for 2009 compared pension plan, are encompassed by a defined contribution pension commit-
with 2008. The commitments are secured with NCC’s pension foundation. ment totaling 30 percent of fixed salary, less pension costs for the defined
From age 60, meaning November 2009, the company pays a defined contri- ­benefit ITP plan. For other senior executives employed outside Sweden, the
bution pension premium corresponding to 30 percent of fixed salary. To this various pension conditions in those countries of employment will apply.
must be added ITP fees, which in connection with retirement prior to 65 years
will be paid definitely on a single occasion, as well as indexing of the afore- Severance pay
mentioned defined benefit commitments to safeguard value, etc. NCC and Olle Ehrlén are subject to a mutual period of notice of employment
termination of six months. Olle Ehrlén will not receive any severance pay.
Other senior executives are normally subject to 12 months’ notice from NCC,
or six months’ notice if the senior executive resigns of his/her own accord.
Other senior executives are normally entitled to 12 months of severance pay,
in one case 18 months, if their employment is terminated by NCC. Remunera-
tion will be reduced by an amount corresponding to any remuneration
received from a new employer or own business. During the period of notice,
senior executives may not take up a new position with another employer or
conduct their own business activities without NCC’s written consent.

66 NCC 2009
Note 6 | DEPRECIATION/AMORTIZATION Note 10 | IMPAIRMENT LOSSES AND REVERSAL

FINANCIAL REPORT
OF IMPAIRMENT LOSSES
Group Parent Company
2009 2008 2009 2008 Group Parent Company
2009 2008 2009 2008
Other intangible assets –21 –25 –1
Owner-occupied properties –34 –43 –7 –7 Production costs
Machinery and equipment1) –519 –500 –69 –58 Housing projects –192 –537 –18 –98

Total depreciation/amortization –573 –568 –75 –65 Result from participations in
1) Of which, depreciation for leased equipment in the Group amounts to 67 (71). associated companies
Associated companies –1

Financial expenses
Note 7 | FEES AND REMUNERATION TO AUDITORS
AND AUDIT FIRMS
Other securities

Result from participations
–2 –1

in subsidiaries
Group Parent Company Shares in subsidiaries –49 –260
2009 2008 2009 2008
Impairment loss and reversal of
Audit firms impairment losses, fixed assets
PricewaterhouseCoopers Managed properties –8
Auditing assignments 15 13 5 3 Owner-occupied properties –6 –33
Other assignments 3 2 1 1 Machinery and equipment –1 –31)

Goodwill within NCC Housing2) –32
Other auditors
Auditing assignments 1 1 Total –200 –614 –67 –359
Other assignments 3
Total fees and remuneration to Impairment losses have been reported under the following headings
auditors and audit firms 20 19 6 4 in the income statement
Group Parent Company
Auditing assignments are defined as examinations of the Annual Report and 2009 2008 2009 2008
financial statements, as well as of the administration of the Board of Directors Production costs –192 –537 –18 –98
and President, other duties that the Company’s auditors are obliged to con- Impairment loss, fixed assets –7 –76
duct and advice or other assistance required due to observations made during Result from participations in
such examinations or during the performance of such other duties. All other associated companies –1
work is defined as other assignments. Financial expenses –2 –1
Result from participations
in Group companies –49 –260
Note 8 | RESULT FROM PROPERTY MANAGEMENT Total –200 –614 –67 –359
1) Impairment losses are defined as the recognized net amount of impairment losses and reversed
impairment losses.
Group 2009 2008 2) Goodwill impairment; refer also to Note 21.

Rental revenues 1 1
Operation and maintenance costs – –1
Operating net

1 0 Note 11 |  ESULT FROM PARTICIPATIONS
R
IN GROUP COMPANIES

Note 9 | RESULT FROM SALES OF PROPERTIES Group Parent Company

2009 2008 2009 2008
Owner-occupied Dividend 2,901 1,593
properties Capital gain/loss on sale 5 8 –1 23
Group 2009 2008 Impairment losses –49 –266
Reversal of impairment losses 6
Sales value 17 56
Carrying amount –7 –41 Total 5 8 2,851 1,356
Total 10 15

Owner-occupied
properties
Note 12 |  ESULT FROM PARTICIPATIONS
R
IN ASSOCIATED COMPANIES
Parent Company 2009 2008
2009 2008
Sales value 3 17
Property
Carrying amount –11 GROUP Other operations Other Total
Total 3 6
Participation in results of associated
companies after taxes 4 3 3 6
Capital gains/losses on sales –5 1 2 3
Total –1 4 5 9

parent company 2009 2008
Dividends from associated companies and
earnings in partnerships and limited partnerships 24 –4
Impairment losses –1
Total 24 –5

NCC 2009 67
 Note 13 | OPERATING EXPENSES Note 17 | NET FINANCIAL ITEMS
FINANCIAL REPORT

GROUP 2009 2008 GROUP 2009 2008

Change in inventories 110 –150 Interest income on financial assets held for resale 34 55
Personnel expenses 11,183 11,619 Interest income on non-impaired investments held to maturity 11 12
Depreciation/amortization 573 568 Interest income on non-impaired loans and accounts receivable 11 17
Impairment losses 200 614 Interest income on bank balances 6 17
Reversal of impairment losses –1 Net profit on available-for-sale financial assets1) 2 493
Total 12,066 12,652 Net profit on financial assets/liabilities held for resale 8
Net exchange-rate changes 5
Other financial income 7 8
Purchases of production-related goods and services, as well as raw materials
and supplies, are recognized as production costs. Financial income 70 615

Interest expense on financial liabilities recognized
at accrued acquisition value –468 –420
Note 14 | RESULT FROM OTHER FINANCIAL FIXED ASSETS Interest expense on financial liabilities held for resale –5
Net loss on financial assets/liabilities held for resale –7 –2
Impairment loss on financial investments –2 –1
Parent Company 2009 2008
Net exchange-rate changes –5
Capital gains on sales 1 Other financial expenses –39 –26
Total 1 0 Financial expense –526 –449
Net financial items –456 166
Of which, changes in value calculated using valuation techniques –7 11
Note 15 | RESULT FROM FINANCIAL CURRENT ASSETS 1) Gain on the sale of NCC’s share in AWSA in 2008.

Parent Company 2009 2008 Interest expense was capitalized in the amount of SEK 7 M, for which an
interest rate of 2.6 percent was used to determine the amount.
Interest income, Group companies 57 103
Interest income, others 11 10

|
Premium income 140
Exchange-rate differences 15 –65 Note 18 E FFECTS ON income statement OF
EXCHANGE-RATE CHANGES
Total 223 48
2009 2009 Exchange-
GROUP Exchange rates 20081) rate effect
Note 16 | INTEREST EXPENSE AND SIMILAR
INCOME STATEMENT ITEMS
Net sales
Operating profit
49,980
2,117
51,817
2,150
1,837
33
Profit after financial items 1,693 1,694 1
Parent Company 2009 2008 Net profit for the year 1,270 1,262 –8
Interest expense, Group companies –92 –72 1) Figures for 2009 converted at 2008 exchange rates.
Interest expense, others –276 –135
Exchange-rate differences 17 –201 Average exchange rate Year-end rate
Other financial items 3 3 Jan–Dec Dec 31
Total –348 –405 Country SEK Currency 2009 2008 2009 2008
Denmark 100 DKK 142.65 128.95 138.72 146.73
EU 1 EUR 10.62 9.61 10.32 10.93
Norway 100 NOK 121.61 117.04 123.88 110.56
Poland 1 PLN 2.46 2.74 2.50 2.64
US 1 USD 7.65 6.59 7.19 7.70

68 NCC 2009
Note 19 | EARNINGS PER SHARE Note 20 | APPROPRIATIONS AND UNTAXED RESERVES

FINANCIAL REPORT
2009 2008 Appropriations Untaxed reserves
Before After Before After parent company 2009 2008 2009 2008
GROUP, SEK M dilution dilution dilution dilution
Accumulated depreciation
Earnings per share 11.63 11.63 16.69 16.69 in excess of plan
– machinery and equipment 4 –6 32 36
The numerator and denominators used in the accompanying calculation of Reserve in work in progress 46 –67 481 527
earnings per share were calculated in the manner shown below. Total 50 –73 513

2009 2008
Before After Before After
SEK M dilution dilution dilution dilution
Net profit for the year
attributable to Parent
Company shareholders 1,261 1,261 1,809 1,809

Weighted average number
of shares outstanding
Thousands of shares
Total number of shares,
January 1 108,415 108,436 108,415 108,436
Total number of shares,
December 31 108,415 108,436 108,415 108,436
Weighted average number
of shares for the year 108,415 108,436 108,415 108,436

Note 21 | INTANGIBLE ASSETS

Group Parent Company

Acquired intangible assets Internally developed Total
2009 Goodwill Usufructs Other intangible assets other Other
Recognized acquisition value on January 1 2,134 170 92 23 284 4
Investments 5 16 21
Divestment and scrappage –1 –30 –32
Reclassifications –1
Translation difference during the year –28 –2 –5 –7
Recognized acquisition value on December 31 2,105 171 73 23 267 4

Accumulated amortization on January 1 0 –68 –60 –21 –150 –4
Divestment and scrappage 1 23 24
Reclassifications –5 –5
Translation difference during the year 1 3 5
Amortization according to plan during the year –12 –7 –2 –21
Accumulated amortization on December 31 0 –77 –46 –23 –145 –4

Accumulated impairment losses on January 1 –361 –2 –12 –13
Divestment and scrappage 8 8
Reclassifications 5 5
Translation differences during the year 5
Accumulated impairment losses on December 31 –355 –2 –1

Residual value on January 1 1,772 100 20 2 122 0
Residual value on December 31 1,750 92 28 0 120 0

NCC 2009 69
 Note 21 | cont. INTANGIBLE ASSETS
FINANCIAL REPORT

Group Parent Company

Acquired intangible assets Internally developed Total
2008 Goodwill Usufructs Other intangible assets other Other
Recognized acquisition value on January 1 1,954 130 69 28 227 4
Investments 40 37 9 47
Divestment and scrappage –6 3 –5 –8
Translation difference during the year 140 9 11 20
Recognized acquisition value on December 31 2,134 170 92 23 284 4

Accumulated depreciation on January 1 0 –52 –40 –15 –107 –3
Divestment and scrappage 2 2
Through sold companies 2 2
Reclassifications 1 –10 –9
Translation difference during the year –5 –8 –13
Depreciation according to plan during the year –14 –5 –6 –25 –1
Accumulated depreciation on December 31 0 –68 –60 –21 –150 –4

Accumulated impairment losses on January 1 –303 –2 –22 –24
Reclassifications 10 10
Translation differences during the year –25
Impairment losses during the year –32
Accumulated impairment losses on December 31 –361 –2 –12 –13

Residual value on January 1 1,651 76 7 13 96 1
Residual value on December 31 1,772 100 20 2 122 0

Impairment testing of goodwill in cash-generating units Important variables:

Goodwill totaling SEK 1,750 M is included in NCC’s balance sheet. Sales: The general socioeconomic trend, the investment plans of other indus-
The item is distributed as follows among NCC’s business areas: tries, public finances and investment plans, monetary policy and the interest
rate trend, local market conditions and the price trend.
Unit 2009 2008
Operating expenses: Anticipated wage trends, the cost trend for building mate-
NCC Construction 610 619 rials and at the subcontractor level (mainly applies to NCC’s construction
NCC Roads 1,118 1,132 units), bitumen and energy prices (mainly applies to NCC Roads) and ongoing
NCC Housing 22 22 internal action programs to boost operational efficiency.
NCC Group 1,750 1,772
Capital requirements: NCC’s construction units often apply pre-invoicing,
which means that increased sales do not result in an increased need for work-
Impairment testing has been conducted by discounting future cash flow after ing capital. However, NCC Housing, which develops housing, has a need for
tax and thus calculating their value in use. The future cash flow has been working capital that is determined by the forthcoming production and sales
­calculated using the following method: rate for new projects. A constant production rate and reduced sales increase
Unless another course of action arises from discussions with the manage- capital requirements. NCC Roads’ operations mainly tie up capital in gravel
ment of the various cash-generating units, a five-year forecast has been pre- and rock pits, asphalt plants and machinery. The need to reinvest in order to
pared. This forecast is based on the assumption that sales will grow at a sus- maintain capacity is largely determined by the future capacity utilization rate.
tainable rate of 1.5 percent (1.5) based on the figures for 2009, that tied-up
working capital will be the same as in 2009 and that the future margins will be The cash flow that is forecast after five years is based on a sustainable growth
the average of those for the most recent three years. rate in terms of both revenues and costs, and a constant capital turnover.
However, in certain cases, future market prospects are not the same as the Subsequently, the cash flow is discounted using a weighted capital cost, for
historical ones. In these cases, sales, margin and capital requirements have been which the required return on shareholders’ equity is calculated in accordance
adjusted based on a five-year business plan produced by the local management with the Capital Asset Pricing Model and the interest on net indebtedness is
of the cash-generating unit. calculated in accordance with the market cost of NCC’s borrowing.

70 NCC 2009
Note 21 | cont. INTANGIBLE ASSETS

FINANCIAL REPORT
Assumptions regarding required return: The other intangible assets consist mainly of software and licenses. The peri-
Risk-free interest rate: Ten-year treasury bond, or similar financial investment ods of use range from three to five years and amortization is posted on a
offering the lowest possible risk. straight-line basis.

The market’s risk premium: 4.5 percent (4.5).

Beta: Since the trend in the construction industry largely tracks the general Depreciation is included in the following lines in the income statement
socioeconomic trend, the beta has been set at one (1). Group Parent Company
Interest expense: In accordance with NCC’s cost for borrowing with a five-year 2009 2008 2009 2008
duration. Production costs –14 –17
Tax rate: Based on the tax rate prevailing in the various countries. Selling and administrative costs –7 –8 –1
Total –21 –25 0 –1
Debt/equity ratio: Company management’s estimate of reasonable indebted-

ness based on a balance sheet with no goodwill. This is in accordance with
Impairment losses are included in the following lines in the income statement
NCC’s internal governance concerning the indebtedness of units.
Group Parent Company
Based on the above assumptions, the required return after tax varies between
2009 2008 2009 2008
the cash-generating units, depending on the level of indebtedness and the total
value in use, although the return requirement for the NCC Group corre- Total on line Impairment of fixed assets –7 –76
sponds to 7.8 percent. of which, impairment of goodwill,
based on the above –32
Other intangible assets
Usufructs include the right to use gravel and rock pits for a determinate
period. The periods vary but the rights normally pertain to long periods.
Amortization occurs in pace with confirmed depletion of net asset value,
based on the volume of extracted rock and gravel.

Note 22 | TANGIBLE FIXED ASSETS

Group Parent Company

Owner-occupied Construction Machinery and Owner-occupied Machinery and
2009 properties in progress equipment Total properties equipment Total
Recognized acquisition value on January 1 1,384 6 6,185 7,575 178 478 656
Investments 35 4 517 556 5 82 87
Increase through acquisitions 2 2
Transfer within NCC Group –22 –22
Divestment and scrappage –36 –421 –457 –33 –33
Decrease through sales of companies –6 –6
Reclassifications 7 –7 31 32
Translation difference during the year –21 –16 –37
Recognized acquisition value on December 31 1,370 3 6,291 7,664 183 504 687

Accumulated impairment losses and depreciation on January 1 –708 –4,210 –4,919 –65 –303 –368
Transfer within NCC Group 7 7
Divestment and scrappage 10 351 360 31 31
Decrease through sales of companies 2 2
Reclassifications –1 –22 –23
Translation difference during the year 13 18 31
Impairment losses during the year1) –6 –1 –7
Depreciation during the year –34 –519 –553 –7 –69 –75
Accumulated impairment losses and depreciation on December 312) –726 –4,381 –5,108 –71 –333 –404

Residual value on January 1 676 6 1,975 2,657 113 175 288
Residual value on December 31 644 3 1,910 2,556 112 171 283
Carrying amount of financial lease 209 209

Tax assessment value of fixed assets in Sweden
– Buildings 198 198 41 41
– Land 187 187 16 16
Carrying amount of fixed assets in Sweden
assigned tax assessment value 241 241 112 112
1) Impairment losses on owner-occupied properties are included
on the line “Impairment losses” in the income statement.
Impairment losses on machinery and equipment are included
on the line “Production costs.”
2) Accumulated impairment losses at year-end –121 –100 –221

NCC 2009 71
 Note 22 | cont. TANGIBLE FIXED ASSETS
FINANCIAL REPORT

Group Parent Company

Owner-occupied Construction Machinery and Owner-occupied Machinery and
2008 properties in progress equipment Total properties equipment Total
Recognized acquisition value on January 1 1,226 1 5,970 7,198 177 469 646
Investments 99 2 766 867 96 96
Increase through acquisitions 5 13 18
Transfer within NCC Group –65 –65
Divestment and scrappage –32 –599 –631 –22 –22
Decrease through sales of companies –10 –10
Reclassifications 11 3 –197 –183
Translation difference during the year 86 231 317
Recognized acquisition value on December 31 1,385 6 6,185 7,576 178 478 656

Accumulated impairment losses and depreciation on January 1 –587 –4,196 –4,783 –58 –288 –346
Transfer within NCC Group 35 35
Divestment and scrappage 2 481 483 8 8
Decrease through sales of companies –2 –2
Reclassifications –4 178 174
Translation difference during the year –43 –168 –211
Reversed impairment 1 1
Impairment losses during the year1) –34 –3 –37
Depreciation during the year –43 –500 –543 –7 –58 –65
Accumulated impairment losses and depreciation on December 312) –708 –4,210 –4,919 –65 –303 –368

Residual value on January 1 640 1 1,774 2,415 119 181 300
Residual value on December 31 676 6 1,975 2,657 113 175 288
Carrying amount of financial lease 232 232

Tax assessment value of fixed assets in Sweden
– Buildings 168 168 14 14
– Land 180 180 12 12
Carrying amount of fixed assets in Sweden assigned tax assessment value 239 239 113 113
1) Impairment losses on owner-occupied properties are included
on the line “Impairment losses” in the income statement.
Impairment losses on machinery and equipment are included
on the line “Production costs.”
2) Accumulated impairment losses at year-end –125 –112 –238

Depreciation is included on the following lines in the income statement:

Parent Company 2009 2008
Production costs 53 42
Selling and administrative costs 23 23
Total depreciation in the income statement 75 65

Note 23 | MANAGED PROPERTIES

GROUP 2009 2008

Fair value on January 1 12 21
Investment in properties 11
Reclassifications –1
Revaluation effect during the year –8
Capital gains/losses on sales –12 6
Sales revenue, divested properties –17
Fair value on December 31 0 12

Tax assessment value of managed properties in Sweden
– Buildings 6
– Land 1

Managed properties are recognized in accordance with the fair value method.
No managed properties existed at year-end 2009. For information about the
effect of managed properties on net profit for the period, refer to Notes 8 and 9.

72 NCC 2009
Note 24 | PARTICIPATIONS IN GROUP COMPANIES

FINANCIAL REPORT
PARENT COMPANY PARENT COMPANY
Name of company, Corp. Reg. Ownership, No. of part- Carrying amount Name of company, Corp. Reg. Ownership, No. of part- Carrying amount
No., Registered office share, %1) icipations2) 2009 2008 No., Registered office share, %1) icipations2) 2009 2008
Real estate companies: NCC International AB,
NCC Property Development BV, 556033-5100, Solna 100 1 000 258 258
33.213.877, the Netherlands 93 4 4 NCC International Danmark A/S,
NCC Property Development Nordic AB, 26 70 86 21, Denmark 100 300
556743-6232, Solna 100 1 960 960 NCC Knallen Stockholm AB,
Total participations in real estate companies 964 964 556716-8637, Stockholm 100 1
NCC Komponent AB,
Other companies: 556627-4360, Solna 100 1 4 4
Allmänna El Motala AB, NCC Leasing Alfa AB,
556145-1856, Solna 100 1 556522-7724, Solna 100 1
Alsike Utvecklings AB, NCC Nordic Construction Company AB,
556245-9452, Uppsala 100 16 2 2 556065-8949, Solna 100 3,809 1,018 1,018
Anjo Bygg AB, NCC Polska Sp. Z.o.o.,
556317-8515, Halmstad 100 9 43 33 KRS20513, Poland 100 665
Bergnäsets Ställningsmontage i Luleå AB, NCC Purchasing Group AB,
556393-2838, Luleå 100 1 2 2 556104-9932, Stockholm 100 2 1 1
Boendeutveckling i Ursvik AB, NCC Rakennus Oy,
556718-5961, Solna 135 1765514-2, Finland 100 4 391 391
Däldehög AB, NCC Reinsurance AG,
556268-5700, Gothenburg 100 9 41 41 CH-0203003243-9, Switzerland 100 3 35 78
Eeg-Henriksen AB, NCC Roads Holding AB,
556399-2642, Stockholm 100 5 1 1 556144-6732, Solna 100 275 1,633 1,633
Ekängens Handelsträdgård AB, NCC Seminariet i Uppsala AB,
556188-6903, Linköping 100 1 4 4 556698-6823, Solna 4
Elpolerna i Malmö AB, NCC Södra Ekkällan AB,
556720-5934, Malmö 80 1 556679-8780, Solna 100 1 1 1
Frösunda Exploaterings AB, NCC Treasury AB,
556430-1876, Solna 100 1 556030-7091, Solna 100 120 16 17
Frösunda Exploaterings KB, NCC Zinkensdamm AB,
916636-6451, Stockholm 983) 1 1 556716-8652, Stockholm 100 1
Fågelbro Mark AB, Nils P Lundh, AB,
556234-0868, Stockholm 100 200 30 34 556062-7795, Solna 100 1
Förseglet Fastighets AB, Norrströmstunneln AB,
556681-8935, Stockholm 2 556733-7034, Solna 100 1
Hercules Grundläggning AB, Nybergs Entreprenad AB,
556129-9800, Stockholm 100 196 59 59 556222-1845, Gotland 100 10 11 11
JCC Johnson Construction Company AB, Portalgatan Förvaltnings AB,
556113-5251, Solna 100 1 556385-9296, Uppsala 100 3 3
Kungsplattan AB, Siab Investment AB,
556713-0850, Solna 100 1 1 2 556495-9079, Stockholm 100 1
Kvarntorget Bostad AB, Sintrabergen Holding AB,
556729-8541, Uppsala 100 1 556498-1248, Stockholm 100 3
Lava Leasing AB, Ställningsmontage och Industritjänst i
556308-2139, Solna 2 Södra Norrland AB, 556195-2226, Solna 100 2 1 1
Luzern, AB, Svelali AB,
556336-4727, Lund 100 1 3 3 556622-7517, Halmstad 100 1
Marielund 1:7 AB, Svenska Industribyggen AB,
556522-7369, Stockholm 100 1 6 6 556087-2508, Stockholm 100 1
Mälarstadens Exploaterings AB, Söderby Park Fastigheter HB,
556336-2135, Södertälje 100 1 916630-4817, Stockholm 100 10 10
NCC Bau & Holding GmbH, Södertäljebyggare Exploaterings KB,
FB-nr 201178a, Austria 100 916635-5900, Södertälje 100 1 1 1
NCC Beckomberga nr 1 AB, Tipton Ylva AB,
556617-6243, Stockholm 100 1 1 1 556617-6326, Stockholm 100 1 1 1
NCC Boende AB, Ursvik Sopsug AB,
556726-4121, Solna 100 556764-2334, Sundbyberg 57 1
NCC Boende Holding 1 AB, Total participations in other companies 4,458 4,595
556761-3459, Solna 100 1
Total participations in Group companies 5,421 5,559
NCC Boende Holding 2 AB,
556795-2089, Solna 100 1 1) The ownership share corresponds to the shareholding.
2) Number of shares in thousands.
NCC Bolig AS, 3) Remaining 2 percent is owned by Frösunda Exploaterings AB.
980 390 020, Norway 100 45
NCC Construction Danmark A/S,
69 89 40 11, Denmark 100 400 115 115 Companies for which ownership shares and number of shares have not been
NCC Construction Norway AS, specified were divested, merged or liquidated during the year.
911 274 426, Norway 100 17,500 160 160 Only directly owned subsidiaries are specified. The number of indirectly
NCC Construction Sverige AB, owned subsidiaries is 150 (153). A complete specification is available on
556613-4929, Solna 100 500 50 50 NCC’s website www.ncc.info or may be ordered from NCC AB.
NCC Deutschland GmbH,
HRB 8906 FF, Germany 100 410 410
NCC Försäkrings AB,
516401-8151, Solna 100 500 78 78
NCC Industries AB,
556001-8276, Stockholm 100 15 22 22

NCC 2009 73
 Note 25 | PARTICIPATIONS IN ASSOCIATED COMPANIES CONSOLIDATED IN ACCORDANCE WITH THE EQUITY METHOD
Financial report

Group 2009 2008 GROUP

Name of company, Corp. Reg. Ownership, No. of part- Carrying amount
Carrying amount on January 1 10 25
No., Registered office share, %1) icipations2) 2009 2008
Acquisition of associated companies 1
Divestment of associated companies –1 –5 Aggder Bygg-Gjennvinning AS,
Share in associated company profits1) –11 880 704 532, Norway 50 1
Reclassifications –1 Asfalt & Maskin, 960 585 593, Norway 50 2 2
Translation difference 1 Glysisvallen AB, 556315-5125, Hudiksvall 50 1 1 1
Carrying amount on December 31 9 10 Återvinnarna i Sverige AB,
556560-7883, Stockholm 50 10 2 2
1) Share in the associated companies’ profit after taxes and minority interests in
Östhammarkrossen KB,
the associated company.
916673-1365, Uppsala 50 2 2
Other NCC-owned
associated companies 18 (20) 1 3
Total 9 10
1) The ownership share corresponds to the proportion of votes for the total number of shares.
2) Number of shares in thousands.

Note 26 | PARTICIPATIONS IN JOINT VENTURES CONSOLIDATED IN ACCORDANCE WITH THE PROPORTIONAL METHOD

The consolidated financial statements include the items below that constitute cont. Specification of joint ventures
interests in the joint ventures’ revenues, costs, assets and liabilities. GROUP Shareholding, %

GROUP 2009 2008 Fastighets AB Strömstaden 32

Granitsoppen AB 50
Revenues 151 544 Granitsoppen, KB 50
Costs –139 –467 Hercules-Trevi Foundations AB 50
Profit 12 77 Isle of Grain, AF 50
Korsnäs, konsortie 50
Fixed assets 26 17
Koy Polaris Parkki 30
Current assets 653 940 Koy Polaristontti 2 50
Total assets 679 957 Koy Polaristontti 3 50

Koy Polaristontti 7 50
Long-term liabilities 187 213
Langebrokonsortiet - 2 I/S 50
Current liabilities 347 562
NVB Beckomberga KB 25
Total liabilities 534 775 NCC Boende Elinegård AB 50
Net assets 145 182 NCC-MJEkonsortie I/S 50
Oraser AB 50
The joint venture category also includes partly owned contracts, for which Polaris Business Park Oy 50
NCC has a contractual joint influence together with the other partners. PULS Planerad Underhållsservice AB 50
Specification of joint ventures Scania II, konsortie 50
Scanpile AB 50
GROUP Shareholding, %
Skattkärrs Byggnads AB 50
A2 Bau Development Gmbh 50 Stora Ursvik KB 50
Arandur OY 33 SWTP Construction OY 33
Bergbyggarna HB i Norr 50 Tipton Brown AB 33
Björnö Mark, KB 50 Ullevi Park 4 i Gbg AB 50
Bolig Interessentskabet Tuborg Nord 50 Ullevi Park Holding 4 i Göteborg AB 50
C825 Circle Line Project 35 Valtatie OY 50
Entreprise 23 konsortiet 50 Vänerbyggen Skattkärrs Byggnads AB & Co KB 50
Eurogate, HB 50 Öhusen, KB 50
cont.

Note 27 | PARTICIPATIONS IN ASSOCIATED COMPANIES Note 28 | FINANCIAL INVESTMENTS

Participations in associated companies included in financial fixed assets

GROUP 2009 2008
PARENT COMPANY
Carrying amount Financial investments classified as fixed assets
Name of company, Corp. Reg. Ownership, No. of part-
Available-for-sale financial assets
No., Registered office share, %1) icipations2) 2009 2008
Shares and participations 29 28
Björnö Mark, KB, 916638-1419, Norrtälje 50 2 2 Investments held to maturity
Fastighets AB Strömstaden, Interest-bearing securities 174 199
556051-7202, Norrköping 32 2 2 2
Total 203 227
PULS Planerad Underhålls Service AB,
556379-1259, Malmö 50 15 8 8 Short-term investments classified as current assets
Stora Ursvik KB, 969679-3172, Stockholm 50 110 110 Financial assets that have been fair valued
Tipton Brown AB, 556615-8159, Stockholm 33 125 15 15 through income statement
Återvinnarna i Sverige AB, Interest-bearing securities 227 122
556560-7883, Stockholm 50 10 2 2 Investments held to maturity
Other 16 (16) Interest-bearing securities 58 93
Total 139 139 Total 286 215
1) The ownership share corresponds to the proportion of votes for the total number of shares.
2) Number of shares in thousands. Carrying amount
Other long-term holdings of securities include:
Unlisted securities
Other, unlisted 29 28
Total 29 28

Investments held to maturity had an established interest rate ranging from

1.0 to 5.8 percent, and had due dates ranging from 0.5 to 4.3 years.
74
Note 29 | FINANCIAL FIXED ASSETS

Financial report
Participations Receivables,
Participations Receivables, in associated associated Other Other
in Group Group companies and companies and long-term long-term
PARENT COMPANY, 2009 companies companies joint ventures joint ventures securities receivables Total
Recognized acquisition value on January 1 14,235 157 436 47 14 380 15,269
Assets added 135 99 3 237
Transferred within NCC Group 56 56
Assets removed –403 –147 –16 –1 –76 –643
Translation difference during the year 17 17
Recognized acquisition value on December 31 13,904 145 436 130 14 307 14,935

Accumulated write-ups on January 1 268 268
Accumulated write-ups on December 31 268 268

Accumulated impairment losses on January 1 –8,945 –297 –1 –7 –2 –9,252
Transferred within NCC Group –16 –16
Assets removed 259 259
Reclassifications –1 –1
Impairment losses during the year –49 –49
Accumulated impairment losses on December 31 –8,752 –297 –1 –7 –2 –9,059
Residual value on December 31 5,421 145 139 130 6 304 6,144

Participations Receivables,
Participations Receivables, in associated associated Other Other
in Group Group companies and companies and long-term long-term
PARENT COMPANY, 2008 companies companies joint ventures joint ventures securities receivables Total
Recognized acquisition value on January 1 14,380 193 443 44 6 281 15,347
Assets added 197 147 3 2 101 450
Transferred within NCC Group –243 –243
Reclassifications –183 –7 7 –183
Assets removed –98 –2 –100
Recognized acquisition value on December 31 14,235 157 436 47 14 380 15,269

Accumulated write-ups on January 1 268 268
Accumulated write-ups on December 31 268 268

Accumulated impairment losses on January 1 –8,749 –303 –1 –2 –9,056
Transferred within NCC Group 61 61
Assets removed 3 3
Reversal of impairment losses 6 6
Reclassifications 7 –7
Impairment losses during the year –266 –1 –267
Accumulated impairment losses on December 31 –8,945 –297 –1 –7 –2 –9,252
Residual value on December 31 5,559 157 139 46 7 377 6,284

Note 30 | L ONG-TERM RECEIVABLES AND

OTHER RECEIVABLES
Note 31 |  AX ON NET PROFIT FOR THE YEAR, DEFERRED
T
TAX ASSETS AND DEFERRED TAX LIABILITIES

GROUP 2009 2008 Group Parent Company

Long-term receivables classified as fixed assets 2009 2008 2009 2008
Receivables from associated companies and joint ventures 67 31 Tax on net profit for the year
Pension receivable, net1) 965 870 Current tax cost –112 –442 –44 –29
Derivatives held for hedging purposes 1 1 Deferred tax cost/revenue –320 –123 –62 74
Other long-term receivables 229 233 Total recognized tax on
Long-term receivables classified as fixed assets 1,261 1,135 net profit for the year –432 –565 –106 45

Other receivables classified as current assets
Receivables from associated companies and joint ventures 22 33
Receivables from sales of property and housing projects 428 849
Advance payments to suppliers 16 13
Derivatives held for hedging purposes 75 85
Other current receivables 731 634
Other receivables classified as current assets 1,272 1,613
1) Also refer to Note 38 Pensions.

NCC 2009 75
 Note 31 | cont. TAX ON NET PROFIT FOR THE YEAR, DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES
Financial report

Group Parent Company

2009 2008 2009 2008
Effective tax Tax, % Profit/Loss Tax, % Profit/Loss Tax, % Profit/Loss Tax, % Profit/Loss
Pretax profit 1,694 2,385 3,253 1,232
Tax according to Company’s current tax rate –26 –446 –28 –671 –26 –855 –28 –345
Effect of other tax rates for non-Swedish companies –4 –61 1 14
Other non-tax-deductible costs –3 –52 –6 –146 –1 –40 –5 –62
Non-taxable revenues 12 206 10 240 25 806 39 477
Tax effect resulting from utilization of non-capitalized tax loss carryforwards –4 –76 –1 –28 –2
Tax attributable to prior years 1 –10 –5 –2 –20
Changed tax rate 2 42 –4
Other –4 –5 –11
Recognized tax –25 –432 –24 –565 –3 –106 4 45

Current tax has been calculated on the basis of the nominal tax prevailing in the country concerned. In so far as the tax rate for future years has been amended,
that rate is used for calculating deferred tax. In Sweden, the tax rate has been changed from 28.0 percent in 2008 to 26.3 percent in 2009.

Tax items recognized directly in other comprehensive income or against

shareholders’ equity Change in deferred tax in temporary differences and tax loss carryforwards
Group Parent Company Group Parent Company
2009 2008 2009 2008 2009 2008 2009 2008
Current tax Group contributions Opening value –289 –155 301 227
received/granted –59 9 Acquisition of subsidiaries 4 –23
Current tax in hedging instruments –31 117 Total recognized tax on
Other 8 36 net profit for the year –320 –123 –62 74
Total –23 153 –59 9 Tax items reported directly
against other comprehensive income 3 36

Translation differences 5 1
Other 4 –24
Closing acquisition value –592 –289 240 301

Assets Liabilities Net

Group 2009 2008 2009 2008 2009 2008
Tangible fixed assets 54 62 54 62
Financial fixed assets –1 –1 –1 –1
Non-completed projects –742 –845 –742 –845
Properties held for future development –111 –135 –111 –135
Accounts receivable
Provisions 571 634 571 634
Personnel benefits/pension provisions 10 15 –253 –229 –244 –214
Tax loss carryforwards 54 275 54 275
Other 99 148 –272 –213 –173 –65
Deferred tax asset/tax liability 788 1,134 –1,379 –1,423 –592 –289

Offsetting –671 –931 671 931
Net deferred tax asset/tax liability 117 203 –710 –492 –592 –289

Assets Liabilities Net

PARENT COMPANY 2009 2008 2009 2008 2009 2008
Provisions 238 230 238 230
Personnel benefits/pension provisions 5 7 5 7
Other 50 –4 –4 50
Deferred tax liability 14 14
Deferred tax asset/tax liability 244 301 –4 240 301

Offsetting –4 4
Net deferred tax asset/tax liability 240 301 0 0 240 301

Temporary differences between the carrying amount and the taxable value of directly owned participations do not normally arise for participations held as
­business assets in Swedish companies. Nor is this the case for the participations owned by NCC companies in other countries.
Within the Group, there are also non-capitalized tax loss carryforwards corresponding to SEK 0.5 billion (0.4). These mainly derive from operations
­conducted outside Sweden, primarily in Germany.

76 NCC 2009
Note 32 | PROPERTIES CLASSED AS CURRENT ASSETS

Financial report
Total Properties Unsold
Properties held Ongoing Completed property held for future ongoing Unsold Total
for future property property development development, proprietary completed housing
GROUP, 2009 development projects projects projects2) housing housing housing projects3) Total
Recognized acquisition value on January 1 1,981 1,296 234 3,511 7,626 1,891 2,474 11,991 15,502
Investments 176 785 17 978 887 358 126 1,371 2,349
Divestment and scrappage –27 –1,157 –210 –1,394 –1,407 –1,299 –1,119 –3,825 –5,219
Decrease through company divestments –149 –149 –149
Reclassifications –35 –482 420 –97 465 –291 –165 9 –88
Translation difference during the year –52 –36 –19 –107 –201 –50 –81 –332 –439
Recognized acquisition value on December 31 2,043 406 442 2,891 7,221 609 1,235 9,065 11,956

Accumulated impairment losses and
depreciation on January 1 –72 –72 –342 –273 –615 –687
Divestment and scrappage –1 –1 4 99 103 102
Reclassifications 15 15 –18 –13 3
Translation difference during the year 2 2 10 11 21 23
Impairment losses during the year4) –60 –132 –192 –192
Accumulated impairment losses and
depreciation on December 311) –56 –56 –388 –313 –701 –757

Residual value on January 1 1,909 1,296 234 3,439 7,284 1,891 2,201 11,377 14,816
Residual value on December 31 1,987 406 442 2,835 6,833 609 922 8,363 11,198
1) Accumulated impairment losses at year-end. –13 –13 –320 –242 –562 –575
2) Pertains to properties classed as current assets recognized in NCC Property Development.
3) Pertains to properties classed as current assets recognized in NCC Housing.
4) Impairment losses are included in “Production costs” in the income statement.

Total Properties Unsold

Properties held Ongoing Completed property held for future ongoing Unsold Total
for future property property development development, proprietary completed housing
GROUP, 2008 development projects projects projects2) housing housing housing projects3) Total
Recognized acquisition value on January 1 1,434 766 10 2,210 6,152 1,891 731 8,774 10,984
Investments 454 1,404 286 2,144 2,919 1,582 107 4,608 6,752
Increase through company acquisitions 51 51 51
Divestment and scrappage –59 –891 –280 –1,230 –1,578 –835 –106 –2,519 –3,749
Decrease through company divestments –67 –67 –67
Reclassifications –23 –115 190 52 –361 –919 1,490 210 262
Translation difference during the year 175 132 28 335 510 172 252 934 1,269
Recognized acquisition value on December 31 1,981 1,296 234 3,511 7,626 1,891 2,474 11,991 15,502

Accumulated impairment losses and
depreciation on January 1 –65 –65 –32 –1 –32 –98
Reclassifications –7 –7 –7
Translation difference during the year –7 –7 –18 –21 –39 –46
Impairment losses during the year4) –285 –252 –537 –537
Accumulated impairment losses and
depreciation on December 311) –72 –72 –342 –273 –615 –687

Residual value on January 1 1,369 766 10 2,145 6,120 1,891 730 8,742 10,887
Residual value on December 31 1,909 1,296 234 3,439 7,284 1,891 2,201 11,377 14,815
1) Accumulated impairment losses at year-end. –28 –28 –342 –273 –615 –642
2) Pertains to properties classed as current assets recognized in NCC Property Development.
3) Pertains to properties classed as current assets recognized in NCC Housing.
4) Impairment losses are included in “Production costs” in the income statement.

NCC 2009 77
 Note 32 | cont. PROPERTIES CLASSED AS CURRENT ASSETS
Financial report

2009 2008
Properties held Unsold Total Properties held Unsold Total
for future completed housing for future completed housing
PARENT COMPANY development housing projects development housing projects
Recognized acquisition value on January 1 243 398 639 259 20 279
Investments 42 68 110 19 106 125
Transferred within NCC Group 1 1
Divestment and scrappage –61 –352 –413 –11 –11 –22
Reclassifications 8 72 80 –25 283 258
Recognized acquisition value on December 31 232 186 418 243 398 639

Accumulated impairment losses on January 1 –41 –48 –89 –13 –1 –13
Divestment and scrappage 5 57 62
Reclassifications –13 –13
Impairment losses during the year –18 –18 –28 –48 –76
Accumulated impairment losses on December 31 –37 –22 –59 –41 –48 –89

Residual value on January 1 201 350 549 246 19 264
Residual value on December 31 195 163 358 201 350 549

Note 33 | MATERIALS AND INVENTORIES Note 35 | SHARE CAPITAL

Group Parent Company Changes in share capital Number of shares Share capital, SEK M
2009 2008 2009 2008 1988 Start of year 6,720,000 672
Aggregates 351 394 Split, 1:4 20,160,000
Building materials 81 103 13 17 Directed placement in connection
Other 82 127 with the acquisitions of ABV 16,259,454 407
1991 Conversions of debentures 1,449,111 36
Total 514 624 13 17
1993 Conversions of debentures 468,928 11

Directed placements in connection with
purchase of minority-held NK shares 1,838,437 46
Note 34 | CONSTRUCTION CONTRACTS 1994 New issue 19,841,991 496
Conversions of debentures 13,394,804 335
Worked-up, non-invoiced revenues 1997 Directed placements, in connection
GROUP 2009 2008 with the acquisition of Siab 28,303,097 708
2004 Reduction of share capital1) –1,844
Worked-up revenues from non-completed contracts 4,597 10,663
2009 End of year 108,435,822 867
Invoicing for non-completed contracts –3,137 –8,809
1) The quotient value was changed from SEK 25.00 to SEK 8.00.
Total 1,459 1,854

Holding of Series B shares Number of shares

Invoiced revenues, not worked-up
2000 Repurchases 2,775,289
GROUP 2009 2008
2001 Repurchases 699,300
Invoicing for non-completed contracts 38,403 41,482 2002 Repurchases 2,560,800
Worked up revenues for non-completed contracts –33,887 –36,182 2003 Repurchases 3
Total 4,516 5,300 2005 Sale –4,840,998
2006 Sale –843,005
Worked-up revenues from non-completed contracts including recognized 2007 Sale –330,251
gains less recognized loss reserves amounted to SEK 38,484 M (46,845). 2009 End of year 21,138
Advanced payments received amounted to SEK 401 M (265). Amounts
­withheld by the customer amounted to SEK 564 M (597). The share capital is divided into 108,435,822 shares with a quotient value of
SEK 8.00 each. During 2009, 4,000,000 (518,400) Series A shares were con-
verted into Series B shares.

The shares are distributed as follows by class:

Series A Series B Total
Number of shares 42,396,448 66,039,374 108,435,822
Series A shares carry ten voting rights each and Series B shares carry one voting right.

A specification of changes in shareholders’ equity is presented on page 52.

The Board of Directors proposes an ordinary dividend of SEK 6.00 per share,
making a total of SEK 650,488,104.

78 NCC 2009
Note 35 | cont. SHARE CAPITAL Note 37 | PROVISIONS

Financial report
Series A and B shares
GROUP, 2009 Pensions Taxes Guarantees Other Total
Series Series Total A and
A shares B shares B shares On January 1 42 492 1,925 1,387 3,846
Provisions during the year 7 257 739 254 1,257
No. of shares on Dec. 31, 1999 63,111,682 45,324,140 108,435,822
Amount utilized during the year –28 –42 –503 –567 –1,140
Conversion of Series A to Series B
Reversed, unutilized provisions –6 –2 –56 –49 –113
shares during 2000–2008 –16,715,234 16,715,234
Via sold companies –9 –20 –29
Shares repurchased
during 2000–2003 –6,035,392 –6,035,392 Reclassifications 4 52 –114 –58
Sale of treasury shares Translation differences 3 11 –19 52 47
during 2005–2007 6,014,254 6,014,254 On December 31 18 710 2,138 944 3,810
No. of shares on Dec. 31, 20081) 46,396,448 62,018,236 108,414,684
Conversion of Series A to Series B GROUP, 2008 Pensions Taxes Guarantees Other Total
shares during 2009 –4,000,000 4,000,000
No. of shares at Dec. 31, 2009 42,396,448 66,018,236 108,414,684 On January 1 112 431 1,860 1,223 3,627
Number of voting rights 423,964,480 66,018,236 489,982,716 Provisions during the year 263 431 308 1,002
Percentage of voting rights 87 13 100 Amount utilized during the year –68 –170 –309 –310 –857
Percentage of share capital 39 61 100 Reversed, unutilized provisions –7 –117 –28 –152
Closing price on Dec. 31, 2009 118.00 118.25 Via sold companies 2 2
Market capitalization, SEK M 5,003 7,807 12,809 Reclassifications –31 –2 194 161
1) The 1999–2001 options program expired on February 28, 2007.
Translation differences –3 6 62 –3 62
On December 31 42 492 1,925 1,387 3,846

Note 36 | INTEREST-BEARING LIABILITIES PARENT COMPANY, 2009 Pensions Guarantees Other Total
On January 1 9 1,003 100 1,112
GROUP 2009 2008 Provisions during the year 473 8 482
Long-term liabilities Amount utilized during the year –241 –44 –286
Liabilities to credit institutions 2,187 1,978 Reversed, unutilized provisions –6 –6
Financial lease liabilities 209 232 On December 31 3 1,235 64 1,301
Other long-term loans 544 409
Total 2,941 2,620 PARENT COMPANY, 2008 Pensions Guarantees Other Total

Current liabilities On January 1 12 840 43 895
Current portion of liabilities to credit institutions 106 2,715 Provisions during the year 314 9 323
Other current liabilities 285 214 Amount utilized during the year –3 –151 –2 –156
Total 391 2,929 Reclassifications 50 50
Total interest-bearing liabilities 3,331 5,548 On December 31 9 1,003 100 1,112

For repayment schedules and terms and conditions, refer to Note 39 Specification of other provisions and guarantees
Financial instruments and financial risk management.
Group Parent Company
For information on payment schedules for financial leasing liabilities, also see 2009 2008 2009 2008
Note 43 Leasing. Provision for proprietary
housing projects, recognized profit 10 375
PARENT COMPANY 2009 2008 Restoration reserve 158 151
Other 777 861 64 100
Long-term liabilities
Other provisions 944 1,387 64 100
Liabilities to credit institutions 1,200 1,200
Guarantee commitments 2,047 1,764 1,235 1,003
Group companies 869 457
Rental guarantees 91 161
Total 2,069 1,657
Total 3,082 3,312 1,299 1,103
Current liabilities
Associated companies 2 2
Guarantee commitments
Group companies 1,946 1,252
Guarantee provisions pertain to anticipated future costs. To estimate a future
Other current liabilities 8 29
guarantee cost, individual assessments are made from project to project. Stan-
Total 1,956 1,283 dard percentage rates are used for the calculation of the size of the future cost,
Total interest-bearing liabilities 4,025 2,940 whereby the standard percentage is varied depending on the nature of the
project. In order to eliminate various risks, a provision for guarantee claims is
For repayment schedules and terms and conditions, refer to Note 39 posted at the rate at which the risks are expected to arise after having been
Financial instruments and financial risk management. identified. Initially, the guarantee cost is posted for each project. This means
that the cost can be recognized and booked gradually for each project. The
longest maturity for a guarantee provision is ten years, while most of them
have maturities of approximately two to three years. Guarantee commitments
also include rental guarantees issued as part of property transactions imple-
mented by NCC Property Development.
A provision has been posted for the estimated consequences of deficiencies
in the performance of housing construction whereby façades were sealed in
accordance with the single-stage method. NCC had previously issued a ten-
year guarantee covering damp-related damage to the particular façade design.
In addition, on the basis of in-house studies and conclusions from studies
implemented by the Development Fund of the Swedish Construction Indus-
try and SP Technical Research Institute of Sweden, NCC has developed and
tested a program for investigating and rectifying deficiencies in façades sealed
in accordance with the single-stage method. The program has been offered to

NCC 2009 79
 Note 37 | cont. PROVISIONS Net amount is recognized in the following balance-sheet items:
Financial report

GROUP 2009 2008

property owners in a limited number of residential areas where NCC, follow- Financial fixed assets –965 –870
ing a dialog with property owners, has reason to fear that deficiencies may Provisions for pensions and similar obligations 3 42
exist. Investigations, plus actions in accordance with the program, were imple- Net amount in balance sheet (obligation +, asset –) –962 –829
mented during 2009 and will continue in 2010. A number of property owners,
who were offered but rejected participation in the program, have decided to Net amount is distributed among plans in the following countries:
sue NCC and, among other claims, have demanded that the existing façades Sweden –948 –855
be demolished and replaced using a different façade design. NCC does not Norway –13 27
agree with the opinion forwarded by these property owners. Net amount in balance sheet (obligation +, asset –) –962 –829
Provision for proprietary housing projects, recognized profit
For proprietary housing projects built by NCC Construction for NCC Hous- Change in obligation for defined benefit plans
ing, provisions are posted for the difference between the completed contract GROUP 2009 2008
method and the percentage-of-completion method. Only profit correspond-
Obligation for defined benefit plans on January 1 3,946 3,632
ing to the completion rate multiplied by the sales rate is recognized.
Benefits paid –78 –53
Restoration reserve Current service cost plus interest expense 251 243
The restoration reserve is attributable to NCC Roads. The provisions are Decrease through company divestment 8
intended to cover future costs for restoring pits used to mine gravel and aggregates. Reductions 1 36
The provisions are posted continuously, once the future costs have been identi- Actuarial gains and losses 261 147
fied. Accordingly, the reserves are utilized at the same rate as restoration occurs. Exchange-rate differences 103 –59
Other Obligation for defined benefit plans on December 31 4,493 3,946
The provisions comprise additional costs and apply to uncertainty in projects,
such as outstanding disputes and legal matters. Part of the provisions is Change in plan assets
intended to cover losses that arise in operations and is utilized gradually as GROUP 2009 2008
the project is worked up. “Other” also includes future restructuring costs.
Fair value of plan assets on January 1 3,392 3,349
Contribution by employer 276 352
Benefits paid –23 –22
Note 38 | pensions Compensation –25
Pension costs Reductions –1
Expected return 200 194
GROUP 2009 2008
Actuarial gains and losses 77 –404
Defined benefit plans: Exchange-rate differences 91 –51
Current service cost 163 153 Fair value of plan assets on December 31 4,013 3,392
Past service cost 15 13
Interest expense 134 130 The plan assets comprise:
Expected return on plan assets –200 –194 Shares 1,224 824
Actuarial gains (–) and losses (+) reported during the year 84 32 Funds 283 279
Losses (+) or gains (–) on reductions and payments 11 Properties 152 129
Total cost of defined benefit plans 207 134 Interest-bearing securities 2,323 2,134
Total cost of defined contribution plans 626 562 Others 31 27
Payroll taxes and return tax 93 96 Fair value of plan assets on December 31 4,013 3,392
Total cost of remuneration after terminated employment 926 792
Return on plan assets
The entire cost during the year of remuneration after terminated employment GROUP 2009 2008
is included in operating profit. Return on fair value of plan assets 277 –210
NCC secures commitments for disability pensions and family pensions for Expected return on plan assets 200 194
white-collar employees in Sweden through insurance in Alecta. According to
Unrecognized actuarial result for plan
a statement from the Swedish Financial Reporting Board, UFR 3, this consti- assets during the year (gain +) 77 –404
tutes a defined benefit plan that covers several employers. For the 2009 fiscal

year, NCC did not have access to the type of information required for report-
Historical values
ing these plans as defined benefit plans. Accordingly, the ITP (individual sup-
plementary pension) plan that are secured through insurance in Alecta are GROUP 2009 2008 2007 2006 2005
reported as a defined contribution plan. In 2009, the contributions for pension Present value of defined benefit obligations 4,493 3,946 3,632 3,070 2,920
insurance arranged by Alecta amounted to SEK 64 M (45). Fair value of plan assets 4,013 3,392 3,349 3,059 2,631
Alecta’s surplus may be distributed to the policyholders and/or the insured. Surplus (–)/deficit (+) in the plan 480 554 283 11 289
At the end of 2008, Alecta’s surplus in the form of its collective solvency rate
Experience-based adjustment of plan assets 111 –403 –86 15 –49
amounted to 141 percent (112). The collective solvency rate consists of the
Experience-based adjustment
market value of Alecta’s assets as a percentage of its insurance obligations, cal- of benefit obligation 260 45 96 45 51
culated in accordance with Alecta’s actuarial accounting assumptions, which

do not comply with IAS 19.
Actuarial assumptions, weighted average value, %
Defined benefit obligations and the value of plan assets GROUP 2009 2008
GROUP 2009 2008 Discount interest rate 4.1 4.1
Expected return on plan assets 5.5 5.6
Obligations secured in full or in part in funds:
Future salary increases 3.2 3.3
Present value of defined benefit obligations 4,493 3,946
Future pension increases 2.0 2.0
Fair value of plan assets 4,013 3,392
Anticipated inflation 2.0 2.0
Net value of obligations funded in full or in part 480 554

Adjustments:
Accumulated unrecognized actuarial gains (+) and losses (–) –1,391 –1,336
Net obligation –912 –782
Special payroll tax/employer contributions –50 –46
Net amount in balance sheet (obligation +, asset –) –962 –829

80 NCC 2009
Note 38 | cont. pensions Note 39 | F INANCIAL INSTRUMENTS AND

Financial report
FINANCIAL RISK MANAGEMENT
Pension liability according to the balance sheet
Group Parent Company
Finance policy
2009 2008 2009 2008 Through its business operations, the Group is exposed to financial risks. These
Provision for pensions, other 18 42 3 9 financial risks are defined as refinancing, liquidity, interest-rate, exchange-rate,
credit and counterparty risks. NCC’s finance policy for managing financial
Cost of pension payments risks has been decided by NCC’s Board of Directors and constitutes a frame-
work of guidelines and rules in the form of risk mandates and limits for finance
PARENT COMPANY 2009 2008
activities.
Proprietary pension payments Within the NCC Group’s decentralized organization, finance activities are
Proprietary costs, excluding interest expense 184 222 centralized to NCC Corporate Finance in order to monitor the Group’s over-
Interest expense 7 9 all financial risk positions, to achieve cost-effectiveness and economies of scale
Cost of proprietary pension payments 191 231 and to accumulate expertise, while protecting Group-wide interests. Within
Pension payments through insurance NCC, risks associated with the Group’s interest and exchange rates, credit,
Insurance premiums 133 114 refinancing, counterparty and liquidity are managed by NCC’s internal bank,
Subtotal 324 345 NCC Treasury AB. Customer-credit risks are managed by the business area
Special payroll tax on pension costs 81 87 concerned.
Pension costs during the year 405 432
Contractual conditions
NCC has a covenant in the form of the debt/equity ratio that is linked to a
Capital value of pension obligations
credit facility of EUR 275 M that was concluded with a bank syndicate and
PARENT COMPANY 2009 2008 had a remaining term to maturity of about four years, with an option to extend
Capital value of pension obligations pertaining the facility for another one year. NCC satisfies the financial covenants.
to proprietary pension payments on January 1 2,149 1,933
Cost, excluding interest expense, charged against profit 184 222 Refinancing risk
Interest expense 7 9 The refinancing risk is defined as the risk that NCC will not be able to obtain
Pension payments –33 –15 financing at a given time or that creditors will have difficulty in fulfilling their
Capital value of pension obligations pertaining commitments. NCC strives to spread its risk among various sources of financ-
to proprietary pension on December 31 2,307 2,149 ing (market-financing programs, bank loans and other loan structures) in order
to secure the Group’s long-term access to borrowed capital.
Fair value of especially detached assets NCC’s policy for its refinancing risk is to ensure that the borrowing portfo-
lio has a maturity structure that minimizes the Group’s exposure from the
PARENT COMPANY 2009 2008
perspective of the refinancing risk. The maturity periods must be well-diversi-
Fair value of especially detached assets on January 1 2,345 2,386 fied over time. The norm concerning distribution is that the weighted average
Return on especially detached assets 308 –229 remaining maturity must be at least 18 months. At December 31, the maturity
Payment to pension foundations 126 188 of loans was 47 months (24).
Fair value of especially detached assets on December 31 2,779 2,345
Maturity structure, capital December 31, 2008
Fair value of especially detached assets is divided among: Interest-bearing liabilities
Shares 994 624 Matures Amount Proportion, %
Funds 258 257
2010 391 12
Interest-bearing receivables 1,527 1,464
2011 96 3
Fair value of especially detached assets on December 31 2,779 2,345
2012 852 25
2013 69 2
The pension foundations have an interest-bearing receivable of SEK 1,200 M 20141) 1,696 51
(1,200) from NCC AB. Otherwise, the pension foundations have no financial 2015– 245 7
instruments issued by the Company or assets used by the Company. Total 3,349 100
Net pension obligation
1) Of which, reloaning from the NCC Group’s pension foundation accounted for SEK 1,200 M.

PARENT COMPANY 2009 2008

NCC has established the following investor-related market-financing
Capital value of pension obligations pertaining to ­programs:
proprietary pension payments on December 31 2,307 2,149
Fair value of especially detached assets on December 31 2,779 2,345 Market-financing programs
Surplus on especially detached assets 475 205 Utilized
Net reported pension obligation 3 9 Limit SEK M
Commercial paper (CP) program in Finland EUR 300 M
Assumptions underlying defined benefit obligations Commercial paper (CP) program in Sweden SEK 4,000 M 17
Parent Company 2009 2008 Medium Term Note (MTN) in Sweden SEK 3,000 M 619
Discount interest rate on December 31 3.84 3.84 Total 636

The pension calculations are based on the salary and pension level on the Of NCC’s total interest-bearing liability, investor-related loans accounted for
­balance-sheet date. 19 percent (43).

NCC 2009 81
 Note 39 | cont. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Financial report

Liquidity risks
To achieve adequate flexibility and cost-effectiveness, while ensuring that of 2.1 years (2.7). Available cash and cash equivalents are invested in banks or
future financing requirements are satisfied, the Group’s access to funds con- in interest-bearing instruments with good credit ratings and liquid secondary
sists essentially of committed lines of credit. NCC’s credit policy states that markets. At year-end, the Group’s cash and cash equivalents, including short-
the Group’s access to funds must correspond to at least 7 percent of annual term investments, amounted to SEK 2.1 billion (2.0). Access to funds on
consolidated sales, with at least 5 percent of this in the form of unutilized December 31, 2008 corresponded to 12 percent (9) of sales.
committed lines of credit. Access to funds is defined as the Group’s cash and The table below shows the Group’s financial liabilities (including interest pay-
cash equivalents, short-term investments and unutilized committed lines of ments) and derivative instruments classed as financial liabilities. Financial instru-
credit, less market-financing programs with a remaining maturity of less than ments subject to variable interest rates have been calculated using the interest
three months. On December 31, the volume of unutilized committed lines of rate prevailing on the balance-sheet date. Amounts in foreign currency have
credit amounted to SEK 4.3 billion (4.9), with a remaining average maturity been translated to SEK at exchange rates prevailing on the balance-sheet date.

Analysis of maturities (amounts including interest)

2009 2008
<3 3 months 1–3 3–5 >5 <3 3 months 1–3 3–5 >5
Total months –1 year years years years Total months –1 year years years years
Reloaning from the pension foundation 1,530 66 132 1,332 1,515 63 126 1,326
Interest-bearing liabilities 1,420 111 287 174 587 261 1,789 425 154 862 114 234
MTN loans 679 6 18 655 102 1 101
Commercial paper 17 17 2,355 1,753 602
Financial leasing liabilities 211 7 204 256 256
Pension liabilities 22 1 2 19 51 2 4 45
Interest-rate swaps 135 10 23 44 26 32 45 4 4 16 5 16
Currency forward contracts 21 21 523 523
Financial guarantee contracts* 1,365 518 847
Accounts payable 3,545 3,545 4,356 4,356
Total 8,945 4,190 1,287 1,211 1,964 293 10,992 7,062 926 1,264 1,490 250
* As of 2009, the analysis of maturities includes financial guarantee contracts, although corresponding comparative figures are not shown for 2008.

Interest-rate risks Exchange-rate risks

The interest-rate risk is the risk that changes in interest rates will adversely The exchange-rate risk is the risk that changes in exchange rates will adversely
affect NCC’s cash flow or the fair value of financial assets and liabilities. affect the consolidated income statement, balance sheet or cash flow state-
NCC’s main financing sources are shareholders’ equity, cash flow from operat- ment. In accordance with the finance policy, transaction exposure must be
ing activities and borrowing. Interest-bearing borrowing exposes the Group to eliminated as soon as it becomes known. Contracted and probable forecast
an interest-rate risk. NCC’s finance policy for the interest-rate risk is that the flows are hedged, mainly by using currency forward contracts. Contracted net
weighted average remaining maturity of net borrowing should normally be 12 exposure in each currency is hedged at a rate of 100 percent. Forecast net
months, subject to a mandate to deviate from this figure by +/– 6 months, and exposure is hedged successively over time, which entails that the quarters that
that the interest-rate maturity structure of the borrowing portfolio should be are closest in time are hedged to a greater extent than the following quarters.
adequately spread over time. If the interest-rate terms of available borrowing Accordingly, each quarter is hedged on several occasions and is covered by sev-
vehicles are not compatible with the desired structure for the loan portfolio, eral hedged contracts that have been entered into at different times. The target
interest swaps are the main instruments used to adapt the structure. In the is to hedge 90 percent of the forecast for the current quarter and 70 percent of
financial statements, hedge accounting is applied when there is an effective the forecast for the following quarter, followed by 50, 30 and 10 percent,
connection between the hedged loan and interest-rate swaps. respectively, in the following quarters. In the financial statements, hedge
At the end of 2009, NCC’s interest-bearing gross debt amounted to SEK accounting is applied when the requirements for hedge accounting are fulfilled.
3,349 M (5,591) and the average interest-rate maturity was 22 months (12), Exposure to financial flows, such as loans and investments, is mainly hedged
including interest-rate swaps linked to the borrowing portfolio. Short-term using currency swaps. Following the revision of NCC’s finance policy on April
investments and cash and cash equivalents amounted to SEK 2,117 M (2,048) 7, 2009, the main rule is that the Group’s translation exposure should not be
and the average interest-rate maturity for these assets was 2 months (2). The hedged.
average interest rate maturity reduced by interest-rate exposure associated Development operations, such as NCC Property Development and NCC
with cash and cash equivalents was 21 months (11). Housing, are exempt from this rule and for these operations currency hedging
On December 31, 2009, NCC had interest-rate swaps linked to the borrow- is permissible. In those cases where hedging occurs, not more than 90 percent
ing portfolio with a nominal value of SEK 1,811 M (415). Other interest-rate of foreign net assets may be hedged, without taking the tax effect into
swaps, intended for the hedging of the interest-rate risk associated with lease account. The CEO may decide on the hedging of foreign net assets in selected
contracts had a nominal value of SEK 516 M (547). At the same date, the companies in excess of the above limits.
interest-rate swaps linked to the borrowing portfolio had a negative fair value Borrowing in the NCC Group occurs primarily through the central treasury
of SEK 10 M (2) net, comprising assets of SEK 1 M (3) and liabilities of SEK unit and is then transferred to the business areas and subsidiaries in the form
11 M (5). The other interest-rate swaps had a negative fair value of SEK 32 M of internal loans. Lending is denominated in local currency, while financing
(24) net, comprising liabilities of SEK 32 M (24). The interest-rate swaps largely occurs in SEK and EUR. The exchange-rate risk that thus arises is man-
linked to the borrowing portfolio have expiration dates ranging from 0.4 (0.2) aged by means of currency swaps. The following tables illustrate NCC’s
to 3.2 (2.5) years. The other interest-rate swaps have expiration dates ranging financing and the currency swap agreements for financing. The stated values
from 1.5 (2.5) to 7.6 (8.6) years. include underlying capital amounts.

Interest-rate maturity structure at Dec 31, 2009 Interest-bearing liabilities at Dec 31, 2009
Interest-bearing liabilities, Counter-value in SEK M Amount Proportion, %
incl. interest-rate swaps
DKK 90 3
Maturity Amount Proportion, %
EUR 1,661 49
2010 1,611 48 SEK 1,598 48
2011 483 15 Total 3,349 100
2012 566 17
2013 179 5
2014 173 5
2015– 337 10
Total 3,349 100
82 NCC 2009
Note 39 | cont. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Financial report
Financing via currency swap agreements at Dec 31, 2009
Counter-value in SEK M
Buy CHF 28
Sell DKK –1,738
Sell EEK –125
Buy EUR 429
Sell LTL –1
Sell LVL –347
Buy NOK 175
Sell RUB –505
Buy SGD 56
Net –2,028

Transaction exposure
The table below shows the Group’s net outflows of various currencies, and the
hedged portion, during the year.

Counter-value in SEK M
2009 2008
Net Of which, Hedged Net Of which, Hedged
Currency outflow hedged portion, % outflow hedged portion, %
DKK 43 15 35 94 91 97
EUR 425 444 104 927 557 60
NOK 31 1 3 12
PLN 25 23 92 51 34 67
USD 18 10 56 52 46 88
Other 10 14 13 93
Total 552 493 89 1,150 741 64

During 2009, no cash flow hedges were closed, because it was no longer probable that the expected cash flow would be achieved. Transaction exposure was
hedged through currency forward contracts. The forward contracts used to hedge contracted and forecast transactions are classified as cash flow hedges.
The net fair value of currency forward contracts used for hedging transaction exposure amounted to an expense of SEK 1 M (revenue: 32). Of this amount,
assets of SEK 4 M (33) and liabilities of SEK 5 M (1) have been recognized in the balance sheet. The hedge position for the first quarter also includes remaining
bank balances for past-due currency forward contracts intended for the hedging of forecast flows.

The table below shows forecast currency flows during 2010-2011, the outstanding hedge position and the hedged portion.

Counter-value in SEK M

1–3 months 3–6 months 6–9 months 9–12 months >12 months Total
Net- Of Hedged Net- Of Hedged Net- Of Hedged Net- Of Hedged Net- Of Hedged Net- Of Hedged
out- which, portion out- which, portion out- which, portion out- which, portion out- which, portion out- which, portion
Currency flow hedged % flow hedged % flow hedged % flow hedged % flow hedged % flow hedged %

EUR 99 123 124 100 45 45 116 27 23 96 11 11 86 2 2 497 208 42

Target value, % 90 70 50 30 10 50

The outstanding hedge position at year-end pertaining to contracted currency flows amounted to SEK 35 M, of which SEK 19 M matures within three months.

Translation exposure
The table below shows the Group’s hedged net investments and hedging positions per currency, plus the hedged portion both with and without taking tax effects
into account. The tables at December 31, 2009 show net investments that will continue to be hedged (NCC Property Development and NCC Housing), as well
as other companies, for which the hedges are being discontinued, while the table at December 31, 2008 shows the total hedges, meaning NCC Property Develop-
ment, NCC Housing and other companies.

Counter-value in SEK M
NCC Property Development,
NCC Property Development and NCC Housing NCC Housing and other companies
Dec 31, 2009 Dec 31, 2008
Hedge Hedge Hedge Hedge Hedge Hedge Hedge Hedge
Net position portion position portion Net position portion position portion
Currency investment before tax before tax % after tax after tax % investment before tax before tax % after tax after tax %
DKK 490 458 93 338 69 2,008 1,912 95 1,377 69
EUR 1,821 1,401 77 1,033 57 2,685 2,379 89 1,713 64
NOK 394 319 81 236 60 1,189 966 81 696 59
RUB –64 –62 97 –46 72
LTL –9 –19 211 –14 156
LVL –61 –50 82 –37 61
EEK –78 –63 81 –46 59
Total 2,493 1,984 80 1,464 59 5,882 5,257 89 3,786 64

NCC 2009 83
 Note 39 | cont. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Financial report

Other companies
NCC Property Development and NCC Housing Age analysis of accounts receivable including
receivables for divested property projects
Hedge Hedge Hedge Hedge
Net position portion position portion 2009 2008
Valuta investment before tax before tax % after tax after tax % Provision for Provision for
DKK 1,748 757 43 559 32 doubtful doubtful
Gross receivables Gross receivables
EUR 1,244 62 5 46 4
NOK 1,007 404 40 298 30 Not due accounts receivable 5,893 5 7,035
Total 3,999 1,223 31 903 23 Past-due accounts receivable
1–30 days 256 4 839 4
Past-due accounts receivable
Net assets are hedged through the raising of loans and through currency for- 31–60 days 75 4 158 3
ward contracts. The carrying amount of currency forward contracts (including Past-due accounts receivable
underlying capital amounts) used as hedging instruments at December 31, 61–180 days 110 7 186 15
2009 was SEK 3,207 M (5,257). Hedge accounting is applied when the crite- Past-due accounts receivable
ria for hedge accounting are met. A positive exchange-rate difference of SEK > 180 days 861 393 764 291
118 M (negative: 521) was recognized in other comprehensive income in con- Total 7,195 413 8,981 313
nection with the recalculation of loans and currency forward contracts into
SEK. For more information on hedge accounting, refer to Note 1 Accounting Collateral for accounts receivable was received in an amount of SEK 187 M (832).
policies, Hedging of net investments.
The hedges fulfill effectiveness requirements (except for the hedging in Provision for doubtful receivables
LTL) meaning that all changes resulting from changed exchange rates are
2009 2008
reported in the translation reserve in other comprehensive income.
Opening balance 313 264
Credit risks Provision for the year 318 179
Credit risks in financial operations Reversal of previously posted impairment losses –221 –140
NCC’s investment regulations for financial credit risks are revised continu- Translation differences 2 10
ously and characterized by caution. Transactions are only entered into with Closing balance 413 313
creditworthy counterparties with credit ratings of at least A (Standard &
Poor’s) or the equivalent international rating. ISDA’s (International Swaps and Carrying amount and fair value of financial instruments
Derivatives Association) framework agreement on netting is used with all The carrying amount and the fair value of financial instruments are presented
counterparties with respect to derivative trading. The investment regulations in the following table. For financial assets, the fair value has been established
specify maximum credit exposures and maturities for various counterparties. through a discounting of future payment flows to the market interest rate
Total counterparty exposure with respect to derivative trading, calculated as ­prevailing on the balance-sheet date. It is considered that the carrying amount
the net receivable per counterparty, amounted to SEK 144 M (131) at the end for accounts receivable and accounts payable matches the fair value.
of 2009. The net receivable per counterparty is calculated in accordance with The fair value of currency derivatives is calculated by means of a discount-
the market valuation method (FFFF 2007:1). Calculated gross exposure to ing of the difference between the agreed forward rate and the forward rate
counterparty risks pertaining to cash and cash equivalents and short-term that can be attained on the balance-sheet date for the remaining contractual
investments amounted to SEK 2,117 M (2,048). period. The fair value of interest-rate swaps is calculated by means of a dis-
counting of future cash flows. The interest rate used for discounting is the
Credit risks in accounts receivable market-based interest rate for similar instruments on the balance-sheet date.
The risk that the Group’s customers will not fulfill their obligations, meaning
that payment is not received from the customers, is a credit risk. The credit
rating of the Group’s customers is checked, whereby information on the cus-
tomers’ financial position is obtained from various credit information compa-
nies. For major accounts receivable, the risk of credit losses is limited through
various types of collateral, such as bank guarantees, blocks on building loans,
Parent Company guarantees and other payment guarantees.
NCC’s exposure to credit risks associated with accounts receivable is moni-
tored continuously within the Group. On the balance-sheet date, there was no
significant concentration of credit-risk exposure. The maximum exposure to
credit risk is apparent from the carrying amount in the balance sheet.

84 NCC 2009
Note 39 | cont. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Financial report
CLASSIFICATION OF FINANCIAL INSTRUMENTS, fair value and carrying amount
Financial
Financial liabilities
assets measured Derivatives Available- measured
at fair value used in Accounts Investments for-sale at fair value Total Total
through profit hedge and loan held to financial through profit Other carrying fair
GROUP, 2009 and loss* accounting receivables maturity assets and loss* liabilities amount value
Other long-term holdings of securities 174 29 203 213
Long-term receivables 1 111 112 112
Accounts receivable 6,355 6,355 6,355
Prepaid expenses and accrued income 4 4 4
Other receivables 30 45 664 739 739
Short-term investments 227 58 285 286
Total assets 258 45 7,134 232 29 7,698 7,709

Long-term interest-bearing liabilities1) 2,941 2,941 2,941

Other long-term liabilities 31 6 520 557 557
Provisions for pensions, and similar obligations 18 18 18
Current interest-bearing liabilities 391 391 391
Accounts payable 3,545 3,545 3,545
Accrued expenses and deferred income 3 1 4 4
Other current liabilities 15 36 1 52 52
Total liabilities 46 45 7,417 7,508 7,508

GROUP, 2008
Other long-term holdings of securities 199 28 227 237
Long-term receivables 1 71 72 72
Accounts receivable 7,820 7,820 7,820
Prepaid expenses and accrued income 1 11 12 12
Other receivables 19 66 955 1,040 1,040
Short-term investments 122 93 215 216
Total assets 143 66 8,857 292 28 9,386 9,397

Long-term interest-bearing liabilities1) 2,620 2,620 2,620
Other long-term liabilities 29 3 806 837 837
Provisions for pensions, and similar obligations 42 42 42
Current interest-bearing liabilities 2,929 2,929 2,929
Accounts payable 4,356 4,356 4,356
Accrued expenses and deferred income 2 25 27 27
Other current liabilities 407 169 3 578 578
Total liabilities 436 174 10,781 11,390 11,390
1) Reloaning of SEK 1,200 M (1,200) from NCC’s Pension Foundation is included. *) Held for resale

NCC 2009 85
 Note 39 | cont. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Financial report

CLASSIFICATION OF FINANCIAL INSTRUMENTS, Fair value and carrying amount

Derivatives Available-
used in Accounts for-sale Total
hedge and loan financial Other carrying Total
PARENT COMPANY, 2009 accounting receivables assets liabilities amount fair value
Receivables from associated companies 130 130 130
Other long-term holdings of securities 6 6 6
Other long-term receivables 37 37 37
Accounts receivable 3,179 3,179 3,179
Current receivables from Group companies 23 1,942 1,965 1,965
Current receivables from associated companies 34 34 34
Other current receivables 2,591 2,591 2,591
Short-term investments 3,526 3,526 3,526
Total assets 23 11,439 6 11,468 11,468

Long-term liabilities to credit institutions1) 1,491 1,491 1,491
Long-term liabilities to Group companies 1,987 1,987 1,987
Accounts payable 1,808 1,808 1,808
Current liabilities to Group companies 7 2,059 2,066 2,066
Current liabilities to associated companies 6 6 6
Other current liabilities 8 8 8
Total liabilities 7 7,359 7,366 7,366

PARENT COMPANY 2008
Receivables from Group companies 147 147 147
Receivables from associated companies 46 46 46
Other long-term holdings of securities 7 7 7
Other long-term receivables 39 39 39
Accounts receivable 3,077 3,077 3 077
Current receivables from Group companies 28 3,289 3,317 3 339
Current receivables from associated companies 45 45 45
Other current receivables 48 48 48
Short-term investments 500 500 500
Total assets 28 7,191 7 7,226 7 248

Long-term liabilities to credit institutions
1) 1,582 1,582 1 582
Long-term liabilities to Group companies 1,547 1,547 1 547
Accounts payable 1,657 1,657 1 657
Current liabilities to Group companies 221 1,494 1,715 1 715
Current liabilities to associated companies 5 5 5
Other current liabilities 29 29 29
Total liabilities 221 6,314 6,535 6 535
1) Reloaning of SEK 1,200 (1,200) from NCC’s Pension Foundation is included.

The classification categories Financial assets measured at fair value through profit and loss, Investments held to maturity and Financial liabilities measured at fair
value through profit and loss are not applicable for the Parent Company. No reclassification of financial assets and liabilities among the above categories was
effected during the year.

In the tables below, disclosures are made concerning how fair value was determined for the financial instruments measured at fair value in the balance sheet.
When determining fair value, assets were divided into the following three tiers:
Tier 1: in accordance with prices quoted on an active market for the same instruments.
Tier 2: on the basis of directly or indirectly observable market data that is not included in Tier 1.
Tier 3: on the basis of input data that is not observable in the market (which is not applicable for NCC).

GROUP, 2009 Tier 1 Tier 2 Total

Financial assets measured at fair value through profit and loss
– Available-for-sale derivative instruments 31 31
– Available-for-sale securities 227 227
Derivative instruments used for hedging purposes 45 45
Total assets 227 76 303
Financial liabilities measured at fair value through profit and loss
– Available-for-sale derivative instruments 45 45
Derivative instruments used for hedging purposes 46 46
Total liabilities 91 91

PARENT COMPANY, 2009 Tier 1 Tier 2 Total
Derivative instruments used for hedging purposes 23 23
Total assets 23 23
Derivative instruments used for hedging purposes 7 7
Total liabilities 7 7

86 NCC 2009
Note 40 | OTHER LIABILITIES Note 43 | LEASING

Financial report
In Finland, Norway and Denmark, framework agreements have been con-
GROUP 2009 2008
cluded for the operational leasing of cars and light goods vehicles, including
Other long-term liabilities relating administrative services. The agreements are based on variable interest
Liabilities to associated companies 21 21 rates. A separate agreement is required for the acquisition of leased objects and
Derivative instruments held for hedging 38 32 the extension of leasing agreements. In Sweden, framework agreements have
Other long-term liabilities 499 784 been concluded for the financial leasing of cars and light goods vehicles. The
Total 558 837 agreements are based on variable interest rates. NCC recommends purchasers
and leasing agreements for individual vehicles can be extended. Within NCC
Other current liabilities Roads, framework agreements have been concluded for the operational leasing
Advance payments from customers 401 266 of production equipment for road maintenance operations. The agreements
Liabilities to associated companies 1 3 are based on variable interest rates and pertain to Sweden, Norway, Denmark
Derivative instruments held for hedging 51 576 and Finland. During 2005, NCC took over an operational leasing agreement
Other current liabilities 2,501 4,261 on a property in Norway that runs until December 31, 2011. The property is
Total 2,954 5,106 leased to a number of other tenants on operational leasing contracts.
In 2006, a sale-leaseback agreement was concluded with the German
finance group HSH Nordbank and its associated company AGV pertaining to
properties in the Sonnengarten area of Berlin. At the same time, an 18-year
Note 41 |  ORK IN PROGRESS ON ANOTHER
W
PARTY’S ACCOUNT AND NET SALES
lease was signed, which is recognized as an operational lease.

GROUP 2009 2008

PARENT COMPANY 2009 2008
Financial lessor
Invoicing excluding withheld amount 22,649 22,248
Leasing contracts that expire:
Withheld amount 312 301
Within one year 7
Total invoicing 22,961 22,549 Later than one year but earlier than five years 14

Costs incurred excluding reserve for losses –19,690 –19,307
Reserve for losses 61 137 Financial lessee
Leasing contracts that expire:
Total costs incurred –19,629 –19,170
Within one year 38 46
Total work in progress on another party’s account 3,331 3,379
Later than one year but earlier than five years 175 194

Profit-recognized invoicing Future minimum leasing fees
Invoicing during the year 22,196 24,608 Within one year 66 77
Invoiced but not recognized as profit on January 1 22,549 19,180 Later than one year but earlier than five years 126 166
Less: Invoiced but not recognized as profit on December 31 –22,961 –22,549 Present value of future leasing fees
Total revenues 21,784 21,239 Within one year 64 64
Later than one year but earlier than five years 124 154
Reconciliation of future leasing fees and their present value
Note 42 | ACCRUED EXPENSES AND deferred INCOME Future minimum leasing fees 192 243
Less interest charge –4 –25
Group Parent Company Present value of future minimum leasing fees 188 218
2009 2008 2009 2008
Variable fees included in net profit for the year:
Payroll-related costs 1,950 1,919 937 954
Interest
Financial expense 5 27
Leased machinery and equipment 4 2
Prepaid rental revenues 5 4 1 1
Leased buildings 1
Project-related costs 1,117 1,892 538 439
Total 4 3
Administrative costs 32 51 2
Guarantee costs 1 56
Operating and sales costs 118 167 Operational leasing
Other expenses 312 133 44 39 Group Parent Company
Total 3,539 4,249 1,521 1,433 2009 2008 2009 2008
Operational lessor
Future minimum leasing fees–
lessor (leased premises)
Distributed by maturity period:
Within one year 8 2
Later than one year but earlier
than five years 16 26 13 25

Operational lessee
Future minimum leasing fees – lessee
Leasing contracts that expire:
Within one year 465 572
Later than one year but earlier
than five years 630 848 20 19
Later than five years 474 602
The year’s cost for operational
leasing amounts to 546 729 8 9

NCC 2009 87
 Note 44 | TRANSACTIONS WITH RELATED COMPANIES Note 45 |  LEDGED ASSETS, guarantees and
P
Financial report

guarantee obligations

The main companies that are closely related to NCC are the Nordstjernan Group Parent Company
Group, companies in the Axel Johnson Group and the Lundberg Group,
2009 2008 2009 2008
­associated companies and joint ventures. The Parent Company has a close
­relationship with its subsidiaries; refer to Note 24, Participations in Group Pledged assets
companies. For information on NCC’s senior executives, refer to Note 5, For own liabilities:
­Personnel expenses. Transactions involving NCC’s associated companies and Property mortgages 26 27
joint ventures were of a production nature. The transactions were conducted Chattel mortgages 6 8
on a purely commercial basis. Assets subject to liens, etc. 209 232
Restricted bank deposits 57 60 13 14
GROUP 2009 2008 Total 298 327 13 14

Transactions with associated companies and joint ventures

Other pledged assets:
Sales to associated companies and joint ventures 143 128
Pledging to Nasdaq OMX Stockholm AB 20
Purchases from associated companies and joint ventures 51 63
Dividend from associated companies 3 3 Total 20
Long-term receivables from associated companies and joint ventures 67 31 Total assets pledged 319 327 13 14
Current receivables from associated companies and joint ventures 36 50
Interest-bearing liabilities to associated companies and joint ventures 72 30 Guarantees and guarantee obligations
Current liabilities to associated companies and joint ventures 26 28 Own contingent liabilities:
Contingent liabilities to associated companies and joint ventures 29 105 Guarantees on behalf of
Group companies 11,817 12,961
Transactions with the Nordstjernan Group Deposits and concession fees 2,958 3,049 2,958 3,049
Sales to the Nordstjernan Group 18 10 Construction loans 1,365 2,575 1,365 2,575
Purchases from the Nordstjernan Group 790 1,011 Other guarantees and
Current receivables from the Nordstjernan Group 6 3 contingent liabilities 72 175 72 174
Current liabilities to the Nordstjernan Group 50 90
Held jointly with other companies:
Transactions with the Axel Johnson Group Liabilities in consortiums, partnerships
Sales to the Axel Johnson Group 72 52 and limited partnerships 205 194 5 10
Purchases from the Axel Johnson Group 12 7 Total guarantees and guarantee
Current receivables from the Axel Johnson Group 1 26 obligations 4,600 5,993 16,217 18,769

Transactions with the Lundberg Group
Sales to the Lundberg Group 184 51 Assets subject to liens
Purchases from the Lundberg Group 2 3 Pertains to leased equipment in the form of vehicles.
Current receivables from the Lundberg Group 24 10
Sureties on behalf of Group companies
PARENT COMPANY 2009 2008 Sureties on behalf of subsidiaries have mainly been issued as collateral for uti-
lized guarantee limits with banks and insurance companies, NCC Treasury
Transactions with Group companies AB’s borrowing and fulfillment of construction-contract agreements.
Sales to Group companies 242 322
Purchases from Group companies 1,004 1,189 Deposits and concession fees
Interest income from Group companies 57 103 Deposit guarantees constitute collateral for investments and concession fees
Interest expense to Group companies 92 72 paid to tenant-owner associations formed by NCC. Such guarantees shall be
Dividend from Group companies 2,901 1,593 relinquished as soon as one year has passed after the final acquisition cost for
Long-term receivables from Group companies 145 157 the tenant-owner association’s building has been established.
Current receivables from Group companies 6,806 4,251
Interest-bearing liabilities to Group companies 2,815 1,708 Building loans
Current liabilities to Group companies 1,238 1,553 Security provided as collateral for a building loan raised from a tenant-owner
Contingent liabilities to Group companies 11,817 12,961 association applies until loans are transferred to the agreed long-term financing.

Transactions with associated companies and joint ventures
Sales to associated companies and joint ventures 93 73
Purchases from associated companies and joint ventures 42 43
Dividend from associated companies and joint ventures 1
Long-term receivables from associated companies and joint ventures 130 46
Current receivables from associated companies and joint ventures 34 45
Interest-bearing liabilities to associated companies and joint ventures 2 2
Current liabilities to associated companies and joint ventures 4 3
Contingent liabilities to associated companies and joint ventures 29 105

Transactions with the Nordstjernan Group
Sales to the Nordstjernan Group 9 6
Purchases from the Nordstjernan Group 510 650
Current receivables from the Nordstjernan Group 6 2
Current liabilities to the Nordstjernan Group 42 70

Transactions with the Axel Johnson Group
Sales to the Axel Johnson Group 72 52
Purchases from the Axel Johnson Group 9 5
Current receivables from the Axel Johnson Group 1 26

Transactions with the Lundberg Group
Sales to the Lundberg Group 149 50
Purchases from the Lundberg Group 1 1
Current receivables from the Lundberg Group 15 10

88 NCC 2009
Note 46 | CASH FLOW STATEMENT Acquisition of tangible fixed assets
Group

Financial report
Cash and cash equivalents Acquisitions of tangible fixed assets during the year amounted to SEK 466 M
GROUP 2009 2008 (677), of which SEK 0 M (0) was financed through loans.
Acquisitions of subsidiaries amounted to SEK 0 M (153), of which SEK 0 M
Cash and bank balances 1,093 1,085
(4) had no effect on cash flow. Sales of subsidiaries amounted to a negative
Short-term investments 738 747
SEK 4 M (positive: 157), of which SEK 5 M (71) had no effect on cash flow.
Total according to balance sheet and cash flow statement 1,831 1,832
Parent Company
PARENT COMPANY 2009 2008 Acquisitions of tangible fixed assets during the year amounted to SEK 72 M
(66), of which SEK 0 M (0) was financed through loans.
Cash and bank balances 1,348 1,966
Since the Parent Company has only insignificant amounts of cash and cash
Short-term investments 3,526 500
equivalents in foreign currency, no exchange-rate differences in cash and cash
Total according to cash flow statement 4,874 2,466 equivalents arose during the year.

The short-term investments have been classified as cash and cash equivalents Information about interest received/paid
based on the following considerations: Group
– They are subject to an insignificant risk of value fluctuation. Interest received during the year amounted to SEK 57 M (89). Interest paid
– They can easily be converted into cash funds. during the year amounted to SEK 429 M (351).
– They have a maturity of not more than three months from the
date of acquisition. Parent Company
Interest received during the year amounted to SEK 68 M (113). Interest paid
GROUP 2009 2008 during the year amounted to SEK 208 M (164).

Intangible fixed assets –54 Cash flow attributable to joint ventures consolidated in accordance with the
Buildings and land –14 proportional method
Tangible fixed assets –109
GROUP 2009 2008
Properties classed as current assets
Inventories –42 Operating activities 102 10
Accounts receivable and other current receivables –25 Change in working capital –56 197
Cash and cash equivalents –4 Investing activities –8 14
Long-term liabilities 5 Financing activities –436
Accounts payable and other current liabilities 52 Total cash flow 38 –215
Current interest-bearing liabilities 26
Minority interests Cash and cash equivalents unavailable for use
Deferred tax liability 12
GROUP 2009 2008
Purchase considerations paid –153
Acquired cash and cash equivalents 4 Restricted bank deposits 57 60
Cash and cash equivalents in joint ventures 60 86
Impact on the Group’s cash and cash equivalents –149
Total cash and cash equivalents unavailable for use 117 146
No subsidiaries were acquired in 2009.

Sales of subsidiaries Transactions that do not give rise to receipts/disbursements

GROUP 2009 2008 GROUP 2009 2008

Intangible fixed assets Sales of assets through receipt of promissory note 1 12

Buildings and land 12 Acquisition of an asset through financial leasing 86 119
Tangible assets 5 40
Financial fixed assets 15
Properties classed as current assets
Inventories
13
15
Note 47 | INFORMATION ABOUT THE PARENT COMPANY

Accounts receivable and other current assets 38 211

Cash and cash equivalents 5 71 NCC AB, Corp. Reg. No: 556034-5174, is a limited liability company regis-
Long-term liabilities –27 tered in Sweden, with its Head Office in Solna. NCC’s shares are listed on the
Accounts payable and other current liabilities –45 –185 Nasdaq OMX Exchange on the Stockholm/Large Cap List.
Current interest-bearing liabilities –1 –13
Minority interests –3 The address to the Head Office is:
Deferred tax liability –4 –5 NCC AB, Vallgatan 3,
Capital gains –2 13 SE-170 80 Solna, Sweden
Purchase considerations –4 157
Sold cash and cash equivalents –5 –71 The consolidated financial statements for 2009 relate to the Parent Company
Impact on the Group’s cash and cash equivalents –9 86 and its subsidiaries, jointly designated the Group. The Group also includes
shareholdings in associated companies and joint ventures.

NCC AB is consolidated as a subsidiary in Nordstjernan AB’s consolidated

financial statements. Nordstjernan AB accounts for 23.1 percent of the share
capital and 51.0 percent of the voting rights in NCC AB. Nordstjernan AB,
Corp. Reg. No: 556000-1421, has its registered Head Office in Stockholm.

NCC 2009 89
 PROPOSED DISTRIBUTION OF UNAPPROPRIATED EARNINGS
Financial report

The Board of Directors proposes that

the funds available for distribution by the Annual General Meeting 4,484,906,073
be appropriated as follows:
Ordinary dividend to shareholders of SEK 6.00 per share 650,488,104
To be carried forward 3,834,417,969
Total, SEK 4,484,906,073

The Board of Directors and President hereby give their assurance that the Annual Report and the consolidated financial statements
have been compiled in compliance with the European Parliament’s and Council of Europe’s Regulation (EC) No. 1606/2002 dated
July 19, 2002 regarding the application of international accounting standards and with generally acceptable accounting practices for
listed companies and thus provide a fair and accurate impression of the financial position and earnings of the Group and the Parent
Company. The Reports of the Board of Directors for both the Group and the Parent Company accurately review the Group’s and the
Parent Company’s operations, financial positions and earnings and describe the significant risks and uncertainties facing the Parent
Company and the companies included in the Group.

The Annual Report and the consolidated financial statements were approved for issue by the Board of Directors on February 9, 2010.
The consolidated income statement and balance sheet and the Parent Company’s income statement and balance sheet will be
­presented to the Annual General Meeting on April 14, 2010 for adoption.

Solna, February 9, 2010

Tomas Billing Antonia Ax:son Johnson Ulf Holmlund

Chairman of the Board Member of the Board Member of the Board

Ulla Litzén Fredrik Lundberg Marcus Storch

Member of the Board Member of the Board Member of the Board

Lars Bergqvist Sven Frisk Karl-Gunnar Sivertsson

Member of the Board Member of the Board Member of the Board
representing employees representing employees representing employees

Olle Ehrlén
President and CEO

Our Audit Report was submitted on February 19, 2010

PricewaterhouseCoopers AB

Håkan Malmström Ulf Westerberg

Authorized Public Accountant Authorized Public Accountant
Auditor-in-charge

90 NCC 2009
AUDITORS’ REPORT

Financial report
We have audited the Annual Report, the consolidated financial tion in the Annual Report and consolidated financial statements.
statements, the accounts and the administration of the Board of We examined significant decisions, actions taken and circum-
Directors and the President of NCC AB for the 2009 fiscal year. stances of the Company in order to be able to determine the
The Company’s Annual Report is included in the printed ver- possible liability to the Company of any Board member or the
sion of this document on pages 38–90. The Board of Directors President or whether they have in some other way acted in con-
and the President are responsible for these accounts and the travention of the Companies Act, the Annual Accounts Act or
administration of the Company, and for ensuring that the Annual the Articles of Association. We believe that our audit provides a
Accounts Act is applied when the Annual Report is compiled, reasonable basis for our opinion set out below.
and that the International Financial Reporting Standards The Annual Report has been prepared in accordance with the
(IFRS) as adopted by the EU and the Annual Accounts Act are Annual Accounts Act and provides a true and fair picture of the
applied for compiling the consolidated financial statements. Company’s and the Group’s earnings and financial position in
Our responsibility is to express an opinion on the Annual Report, accordance with Generally Accepted Accounting Standards in
consolidated financial statements and the administration based Sweden. The consolidated financial statements have been com-
on our audit. piled in compliance with the International Financial Reporting
We conducted our audit in accordance with Generally Standards (IFRS) as adopted by the EU and the Annual Accounts
Accepted Auditing Standards in Sweden. Those standards require Act and provide an accurate impression of the Group’s earnings
that we plan and perform the audit to obtain reasonable, but not and financial position. The Report of the Board of Directors is
absolute assurance that the Annual Report and the financial compatible with the other parts of the Annual Report and
statements are free of material misstatement. An audit includes ­consolidated financial statements.
examining, on a test basis, evidence supporting the amounts and We recommend that the Annual General Meeting adopt the
disclosures in the financial statements. An audit also includes income statements and balance sheets of the Parent Company
assessing the accounting policies used and their application by and the Group, that the profit in the Parent Company be dealt
the Board of Directors and the President, evaluating the material with in accordance with the proposal in the Report of the
estimations made by the Board of Directors and President when Board of Directors, and that the members of the Board and
compiling the Annual Report and the consolidated financial the President be discharged from liability for the fiscal year.
statements, and evaluating the overall presentation of informa-

Stockholm, February 19, 2010

PricewaterhouseCoopers AB

Håkan Malmström Ulf Westerberg

Authorized Public Accountant Authorized Public Accountant
Auditor-in-charge

NCC 2009 91
 TEN-YEAR REVIEW
Financial report

IFRS
INCOME STATEMENT, SEK M 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009
Net sales 38,728 47,521 45,165 45,252 45,437 46,534 49,506 55,876 58,397 57,465 51,817
Production costs –34,641 –45,232 –40,950 –41,739 –41,809 –42,749 –45,158 –50,729 –52,572 –52,005 –46,544
Gross profit 4,087 2,289 4,215 3,513 3,628 3,785 4,347 5,147 5,825 5,460 5,273

Selling and administrative expenses –2,545 –4,004 –3,157 –2,717 –2,523 –2,577 –2,677 –2,795 –3,059 –3,197 –3,035
Result from property management 254 103 50 29 45 17 –5
Result from sales of managed properties 640 229 322 –26 51 –60 92 9
Result from sales of owner-occupied properties 16 6 6 19 22 19 15 10
Impairment losses on fixed assets –16 –282 –6 –64 –138 –149 –94 –22 –245 –76 –7
Impairment losses/reversal of impairment losses
on properties, NCC Property Development 1) –44 –77 –4 –782 –69
Result from sale of Group companies –1 8 303 4 73 64 –5 7 415 8 5
Competition-infringement fee –175 –95
Result from participations in associated companies 294 47 44 11 60 33 49 29 11 9 –1
Operating profit/loss 2,415 –1,536 1,820 5 1,117 1,147 1,748 2,392 2,790 2,219 2,150

Financial income 503 529 327 219 148 209 116 116 131 615 70
Financial expense –765 –1,123 –841 –547 –310 –412 –284 –245 –313 –449 –526
Net financial items –262 –595 –514 –328 –162 –203 –168 –129 –182 166 –456

Profit/loss after net financial items 2,153 –2,130 1,306 –323 955 945 1,580 2,263 2,608 2,385 1,694

Tax on profit for the year –655 –121 –461 –77 –96 –68 –393 –555 –357 –565 –432
Net profit/loss for the year 1,498 –2,251 844 –400 859 876 1,187 1,708 2,252 1,820 1,262

Attributable to:
NCC’s shareholders 1,494 –2,269 821 –421 856 873 1,178 1,706 2,247 1,809 1,261
Minority interests 4 18 24 21 3 3 9 1 4 11 1
Net profit/loss for the year 1,498 –2,251 844 –400 859 876 1,187 1,708 2,252 1,820 1,262
1) As of 2004, Impairment losses/reversal of impairment losses on properties, NCC Property Development are reported as production costs.

2000: Earnings for 2000 included surplus pension 2004: Properties were sold for nearly SEK 5 billion 2007: The economic boom in combination with
funds from Alecta amounting to SEK 912 M. and net indebtedness was reduced by SEK 3.7 strong earnings from property development oper-
The main reason for the improved earnings was a ­billion to SEK 1.1 billion. ations contributed to the highest earnings in
high rate of activity within real estate operations. NCC’s history and all of the financial objectives
2005: Earnings increased, primarily as a result of
Rieber & Søn’s asphalt and aggregate operations were achieved. Costs of SEK 645 M for the NCC
a strong housing market in the Nordic region and
were also acquired. Complete development project were charged
also because of improved profitability in the
against earnings, as was a competition-impeding
2001: Earnings for 2001 were charged SEK 1,740 ­Nordic contracting operations. Impairment losses
damage of SEK 175 M. Operating profit included
M for write-downs and provisions. A comprehen- of approximately SEK 220 M were incurred for
SEK 383 M from the sale of the Polish asphalt and
sive restructuring and action program was intro- such assets as goodwill, property projects and
aggregates operations.
duced to improve profitability. As of 2001, sales of ­associated companies. All financial objectives
NCC Property Development’s property projects were achieved and net indebtedness was reduced 2008: NCC reported its second highest earnings
were reported as part of net sales. The effect for to SEK 0.5 billion. ever and all of the financial objectives were
2001 was an approximately SEK 1.5 billion achieved. This was also the year that the housing
2006: A boom in the Nordic region gave rise to
increase in sales. market came to an abrupt halt and a recession
considerable activity, resulting in rising sales and
started, which was compounded by a global finan-
2002: Operations were affected by the action pro- earnings. Sales of housing, above all else, contrib-
cial crisis. Earnings were charged with impairment
gram initiated in 2001. Restructuring measures uted to the healthy earnings, as did contracting
losses and restructuring costs totaling SEK 741 M.
were implemented in the Nordic countries. The operations, which showed increased profitability.
The divestment of NCC’s share in the Polish con-
phase-out of non-core operations was initiated. Costs of SEK 186 M for the NCC Complete
cession company AWSA contributed SEK 493 M
The sale of the subsidiary NVS generated a capital development project were charged against
to earnings.
gain of SEK 301 M. ­earnings. All of the financial objectives were
achieved and net indebtedness was reduced to 2009: The year was characterized by recession and
2003: Earnings for 2003 were charged SEK 782 M
SEK 0.4 ­billion. reduced demand in the Nordic construction mar-
for impairment losses within NCC Property
ket. While volumes declined, margins remained
Development and SEK 195 M for impairment
healthy. Although sales of housing units were favor­
losses within NCC Roads, including restructuring
able, they generated a loss due to price discounts.
measures. The subsidiary Altima was spun off.
Earnings were charged with SEK 192 M for impair­
Altima’s earnings for full-year 2003 are included.
ment losses on land and unsold housing units.

92 NCC 2009
 Financial report
IFRS
BALANCE SHEET, SEK M 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009
ASSETS
Fixed assets
Goodwill 3,210 2,787 2,538 2,045 1,597 1,790 1,772 1,700 1,651 1,772 1,750
Other intangible assets 87 146 130 82 31 31 61 113 96 122 120
Managed properties 4,570 3,895 1,306 897 41 449 71 65 21 12
Owner-occupied properties and
construction in progress 1,057 1,072 1,190 868 821 830 865 796 640 682 647
Machinery and equipment 3,218 3,242 3,055 1,926 1,803 1,848 1,937 1,940 1,774 1,975 1,910
Participations in associated companies 833 872 805 694 609 200 44 47 25 10 9
Other long-term holdings of securities 384 236 201 167 311 311 265 242 250 227 203
Long-term receivables 1,203 670 1,253 1,217 1,392 1,363 1,246 2,739 1,968 1,338 1,378
Total fixed assets 14,562 12,920 10,478 7,896 6,605 6,822 6,263 7,642 6,424 6,139 6,016

Current assets
Property projects 4,036 5,477 4,215 3,755 2,002 2,105 2,005 1,955 2,145 3,439 2,835
Housing projects 3,152 3,335 3,358 3,510 3,495 4,345 4,395 5,979 8,553 11,377 8,363
Materials and inventories 721 669 727 575 604 609 502 443 474 624 514
Participations in associated companies 120 132 116 53
Accounts receivable 7,140 6,880 6,401 6,167 6,185 6,476 7,137 7,934 8,323 7,820 6,355
Worked-up, non-invoiced revenues 1,135 3,507 2,683 2,420 2,696 2,998 2,737 2,840 2,956 1,854 1,459
Prepaid expenses and accrued income 909 689 884 692 582 587 638 852 1,048 1,169 844
Other receivables 2,831 2,551 2,620 2,399 1,912 1,819 1,361 1,532 1,979 1,778 1,472
Short-term investments 1 2 32 113 153 173 483 215 286
Cash and cash equivalents 2,206 3,164 3,717 2,463 2,574 2,514 1,919 1,253 1,685 1,832 1,831
Total current assets 22,131 26,392 24,737 22,101 20,133 21,567 20,848 22,961 27,645 30,108 23,959
TOTAL ASSETS 36,693 39,312 35,215 29,997 26,738 28,389 27,110 30,603 34,069 36,247 29,976

SHAREHOLDERS’ EQUITY
Shareholders’ equity 9,971 7,322 7,597 6,188 6,728 6,715 6,785 6,796 7,207 6,840 7,667
Minority interests 20 94 83 78 84 84 94 75 30 25 18
Total shareholders’ equity 9,991 7,416 7,680 6,266 6,812 6,799 6,879 6,870 7,237 6,865 7,685

LIABILITIES
Long-term liabilities
Long-term interest-bearing liabilities 4,757 4,826 4,924 4,267 3,148 3,485 2,004 2,023 1,590 2,620 2,941
Other long-term liabilities 2,212 24 20 38 34 343 392 561 816 837 558
Deferred tax liabilities 858 504 687 659 502 481 199 461 431 492 710
Provisions for pensions and similar obligations 884 1,022 1,168 20 180 180 143 119 112 42 18
Other provisions 714 1,370 1,475 1,472 1,641 1,683 1,611 2,157 2,729 3,190 3,023
Total long-term liabilities 9,425 7,746 8,274 6,456 5,506 6,172 4,348 5,321 5,678 7,180 7,250

Current liabilities
Current liabilities, interest-bearing 6,073 8,904 4,987 4,125 1,107 1,187 1,052 552 1,701 2,929 391
Accounts payable 4,463 4,890 4,460 3,855 3,891 3,908 4,520 4,874 4,974 4,356 3,545
Tax liabilities 333 398 292 118 261 260 137 170 101 140 38
Invoiced revenues, not worked-up 2,632 3,468 3,486 3,521 3,563 4,375 4,367 4,823 4,971 5,300 4,516
Accrued expenses and deferred income 2,472 3,548 3,003 3,161 3,231 3,305 3,271 4,592 5,177 4,371 3,598
Other current liabilities 1,304 2,942 3,033 2,497 2,368 2,383 2,535 3,400 4,231 5,106 2,954
Total current liabilities 17,277 24,150 19,261 17,276 14,421 15,418 15,883 18,411 21,154 22,202 15,041
Total liabilities 26,702 31,896 27,535 23,732 19,926 21,590 20,231 23,732 26,832 29,382 22,291
TOTAL SHAREHOLDERS’ EQUITY
AND LIABILITIES 36,693 39,312 35,215 29,997 26,738 28,389 27,110 30,603 34,069 36,247 29,976

2004: Total assets declined primarily as a result of considerable sales of invest- 2007: Increase in capital tied up in property projects within NCC Property
ment properties within NCC Property Development and the divestment of a Development, and in housing projects within NCC’s Construction units in
number of subsidiaries. Property development projects were also reduced Sweden, Denmark and Finland.
through divestment.
2008: Continued increase in tied-up capital, primarily in housing operations.
2005: NCC Property Development continued to divest managed properties
2009: Total assets declined as a result of an intensified focus on cash flow and
and received payment for properties sold in the preceding years, which led to
tied-up capital, resulting in, for example, lower investments in property and
a reduction in total assets.
housing projects. An increase in sales of housing units also contributed to a
2006: As a result of additional sales of property projects within NCC Property decline in tied-up capital.
Development, long-term receivables from sales of property projects increased.
Investments in land for housing projects increased.

NCC 2009 93
 TEN-YEAR REVIEW, cont.
Financial report

IFRS
KEY FIGURES 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009
SEK M
Net sales 38,728 47,521 45,165 45,252 45,437 46,534 49,506 55,876 58,397 57,465 51,817
Operating profit/loss 2,415 –1,536 1,820 5 1,117 1,147 1,748 2,392 2,790 2,219 2,150
Profit/loss after net financial items 2,153 –2,130 1,306 –323 955 945 1,580 2,263 2,608 2,385 1,694
Profit/loss for the year 1,498 –2,251 844 –400 859 876 1,187 1,708 2,252 1,820 1,262
Investments in fixed assets 4,298 2,269 1,662 1,102 850 866 901 798 780 983 584
Investments in property projects 2,738 2,819 1,439 1,334 413 438 626 1,049 1,493 2,210 1,054
Investments in housing projects 1) 2,276 860 1,525 1,667 1,921 1,920 2,140 3,908 5,392 5,010 1,262

Cash flow, SEK M
Cash flow from operating activities 279 916 2,747 959 3,399 4,161 2,046 2,171 1,031 128 3,318
Cash flow from investing activities –2,635 –1,662 2,308 –196 1,097 1,083 69 –514 134 –306 –481
Cash flow before financing –2,356 –746 5,055 762 4,517 5,244 2,115 1,657 1,165 –178 2,837
Cash flow from financing activities 2,161 1,617 –4,452 –1,962 –4,380 –5,264 –2,745 –2,307 –763 298 –2,827
Change in cash and cash equivalents –195 871 603 –1,199 115 –20 –596 –666 432 147 –1

Profitability ratios
Return on shareholders’ equity, % 15 neg 11 neg 14 14 18 27 34 27 18
Return on capital employed, % 13 neg 10 1 10 9 17 24 28 23 17

Financial ratios at year-end, SEK M
Interest-coverage ratio, % 4.8 –1.1 2.4 0.5 3.6 3.6 6.9 11.5 10.2 7.0 4.5
Equity/assets ratio, % 27 19 22 21 25 24 25 22 21 19 26
Interest-bearing liabilities/total assets, % 32 37 31 28 16 17 12 9 10 15 11
Net indebtedness 8,118 10,306 5,816 4,891 679 1,149 496 430 744 3,207 754
Debt/equity ratio, times 0.8 1.4 0.8 0.8 0.1 0.2 0.1 0.1 0.1 0.5 0.1
Capital employed at year-end 21,705 22,153 18,759 14,678 11,098 11,503 10,032 9,565 10,639 12,456 11,034
Capital employed, average 19,797 22,999 20,770 17,770 13,152 14,054 10,930 10,198 10,521 11,990 12,659
Capital turnover rate, times 1.8 2.1 2.2 2.5 3.5 3.3 4.5 5.5 5.6 4.8 4.1
Share of risk-bearing capital, % 30 20 24 23 27 26 26 24 23 20 28
Average interest rate, % 5.5 5.6 5.3 4.6 4.8 4.8 4.8 4.8 5.2 5.9 4.5
Average period of fixed interest, years 1.6 1.2 1.3 0.9 1.3 1.3 1.1 2.6 1.8 1.6 1.8

Order status, SEK M
Orders received 46,316 50,647 43,098 40,941 45,362 45,624 52,413 57,213 63,344 51,864 45,957
Order backlog 25,835 30,750 23,788 23,752 27,077 27,429 32,607 36,292 44,740 40,426 34,084

Per share data, SEK
Profit/loss after taxes, before dilution 14.00 –21.60 7.95 –4.10 8.36 8.53 11.07 15.80 20.75 16.69 11.63
Profit/loss after taxes, after dilution 13.80 –21.60 7.55 –4.10 7.89 8.05 10.86 15.74 20.73 16.69 11.63
Cash flow from operating activities, after dilution 2.57 8.45 25.34 8.84 31.35 38.39 18.88 20.03 9.51 1.18 30.60
Cash flow before financing, after dilution –21.73 –6.88 46.63 7.03 41.67 48.38 19.52 15.29 10.75 –1.64 26.17
P/E ratio, before dilution 5 neg 7 neg 10 10 13 12 7 3 10
Dividend 4.50 2.25 2.75 2.75 4.50 4.50 5.50 8.00 11.00 4.00 6.00 2)
Extraordinary dividend 6.703) 10.00 10.00 10.00 10.00 10.00
Dividend yield, % 6.5 3.2 5.2 17.0 16.5 16.5 10.9 9.6 15.1 8.1 5.1
Dividend yield excl. extraordinary dividend, % 6.5 3.2 5.2 5.0 5.1 5.1 3.9 4.3 7.9 8.1 5.1
Shareholders’ equity before dilution 93.90 69.75 74.20 60.45 65.70 65.58 63.30 62.86 66.48 63.10 70.72
Shareholders’ equity after dilution 91.98 67.55 70.08 57.08 62.07 61.95 62.60 62.69 66.48 63.10 70.70
Share price/shareholders’ equity, % 73 100 71 92 134 134 225 298 209 78 167
Share price at year-end, NCC B, SEK 69.00 70.00 53.00 55.50 88.00 88.00 142.50 187.50 139.00 49.50 118.25

Number of shares, millions
Total number of issued shares 4) 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4
Treasury shares at year-end 2.7 3.4 6.0 6.0 6.0 6.0 1.2 0.3
Total number of shares outstanding at
year-end before dilution 105.7 105.0 102.4 102.4 102.4 102.4 107.2 108.1 108.4 108.4 108.4
Average number of shares outstanding
before dilution during the year 107.0 105.0 103.6 102.4 102.4 102.4 106.4 108.0 108.3 108.4 108.4
Market capitalization before dilution, SEK M 7,353 7,347 5,366 5,625 8,984 8,984 15,282 20,242 14,999 5,209 12,809

Personnel
Average number of employees 25,192 28,170 25,554 24,076 22,214 22,375 21,001 21,784 21,047 19,942 17,745

1) As of 2007, includes investments in the unsold share of ongoing proprietary housing projects. As of Figures for 2000 to 2004 are not IFRS adjusted.
2008, includes costs incurred prior to project start. Figures for 2004 are not adjusted for IAS 39, Financial Instruments.
2) Board of Directors’ motion to the Annual General Meeting. For definitions of key figures, see p. 109.
3) Extraordinary dividend in 2003 pertains to all shares in Altima.
4) All shares issued by NCC are common shares.

94 NCC 2009
QUARTERLY DATA

Financial report
Quarterly amounts, 2009 Full year Quarterly amounts, 2008 Full year
SEK M Q1 Q2 Q3 Q4 2009 Q1 Q2 Q3 Q4 2008
NCC Group
Orders received 8,166 11,931 11,644 14,216 45,957 11,993 17,408 12,794 9,670 51,864
Order backlog 38,318 35,096 33,721 34,084 34,084 45,123 46,165 45,288 40,426 40,426
Net sales 11,065 13,992 12,211 14,549 51,817 11,412 15,623 13,945 16,485 57,465
Operating profit/loss –234 858 792 735 2,150 169 968 787 294 2,219
Operating margin, % –2.1 6.1 6.5 5.1 4.1 1.5 6.2 5.6 1.8 3.9
Profit/loss after financial items –352 729 676 642 1,694 117 883 702 684 2,385
Net profit/loss attributable to NCC’s shareholders –257 551 505 463 1,261 93 670 514 532 1,809
Cash flow before financing –1,356 746 1,552 1,896 2,837 –1,122 –1,888 1,333 1,500 –178
Net indebtedness –4,608 –4,256 –2,654 –754 –754 –1,830 –5,975 –4,688 –3,207 –3,207
Earnings per share after dilution, SEK –2.37 5.08 4.66 4.27 11.63 0.86 6.18 4.74 4.91 16.69
Average number of shares outstanding after dilution
during the year, millions 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4 108.4

NCC Construction Sweden
Orders received 3,767 5,107 4,143 5,826 18,842 6,599 7,337 5,888 5,232 25,056
Order backlog 18,320 17,533 16,799 16,247 16,247 20,541 21,553 21,771 19,638 19,638
Net sales 5,082 5,806 4,967 6,369 22,225 5,228 6,330 5,700 7,354 24,612
Operating profit 221 212 267 330 1,031 198 279 291 385 1,154
Operating margin, % 4.4 3.7 5.4 5.2 4.6 3.8 4.4 5.1 5.2 4.7

NCC Construction Denmark
Orders received 554 800 720 1,119 3,194 1,113 765 768 606 3,253
Order backlog 2,224 2,165 2,011 2,263 2,263 3,218 2,933 2,882 2,525 2,525
Net sales 866 828 748 878 3,321 869 1,068 917 1,225 4,079
Operating profit 9 24 17 23 72 27 26 34 32 119
Operating margin, % 1.0 2.8 2.3 2.6 2.2 3.1 2.4 3.7 2.6 2.9

NCC Construction Finland
Orders received 799 1,344 1,840 1,679 5,662 1,035 2,175 1,220 981 5,411
Order backlog 4,109 3,880 4,205 4,498 4,498 4,960 5,301 5,135 4,686 4,686
Net sales 1,546 1,541 1,125 1,506 5,718 1,730 1,864 1,538 1,955 7,087
Operating profit 73 34 23 42 172 78 88 60 28 254
Operating margin, % 4.7 2.2 2.1 2.8 3.0 4.5 4.7 3.9 1.4 3.6

NCC Construction Norway
Orders received 646 1,077 833 2,125 4,681 635 1,600 822 489 3,546
Order backlog 2,911 2,932 3,000 4,124 4,124 5,674 5,438 4,701 3,120 3,120
Net sales 1,199 985 776 1,104 4,065 1,604 1,937 1,554 1,841 6,936
Operating profit 45 27 29 39 140 14 53 40 117 224
Operating margin, % 3.8 2.7 3.7 3.5 3.4 0.9 2.7 2.6 6.4 3.2

NCC Roads
Orders received 1,901 3,404 3,035 2,661 11,001 1,824 4,003 3,306 2,855 11,989
Order backlog 4,304 4,721 4,216 4,159 4,159 3,280 4,025 3,602 3,460 3,460
Net sales 1,147 2,939 3,484 2,768 10,338 1,243 3,270 3,762 3,042 11,317
Operating profit/loss –412 367 413 19 387 –289 305 389 41 446
Operating margin, % –35.9 12.5 11.9 0.7 3.7 –23.2 9.3 10.4 1.3 3.9

NCC Housing
Orders received 717 519 2,207 1,685 5,128 1,571 2,082 1,610 –436 4,827
Order backlog 6,711 4,878 4,732 4,147 4,147 11,206 10,683 10,670 8,559 8,559
Net sales 1,851 2,530 2,034 2,581 8,996 1,961 2,763 1,899 2,149 8,773
Operating profit/loss –175 3 –33 79 –126 39 109 –176 –633 –660
Operating margin, % –9.5 0.1 –1.6 3.1 –1.4 2.0 4.0 –9.3 –29.4 –7.5

NCC Property Development
Net sales 530 898 96 489 2,014 441 331 292 1,071 2,133
Operating profit 34 134 7 184 359 181 122 92 340 735

The operations of NCC Roads and certain activities within NCC’s Construction units are affected by seasonal variations in their production caused by cold
weather conditions. The first and final quarters are normally weaker than the rest of the year.

NCC 2009 95
 CORPORATE GOVERNANCE REPORT
SHAREHOLDER INFORMATION

NCC AB is a Swedish public limited liability company whose The 2009 Annual General Meeting was held on April 7 and was
shares are listed on Nasdaq OMX Stockholm. NCC AB is gov- attended by 283 shareholders representing 52 percent of the
erned in accordance with Swedish company law. NCC also com- share capital and 86 percent of the total number of voting rights.
plies with other applicable Swedish and international laws and
regulations. In addition, NCC has undertaken to comply with OWNERSHIP STRUCTURE AND VOTING RIGHTS
Nasdaq OMX Stockholm’s regulations, which include the NCC shares are issued in two series, designated Series A and
Swedish Code of Corporate Governance. NCC has applied the Series B shares. Each Series A share carries ten votes and each
Code since it was introduced in 2005. This report is not part of Series B share one vote. All of the shares carry identical rights to
the formal annual report documentation and has not been participation in the Company’s assets and profits and identical
examined by the Company’s auditors. entitlement to dividends. The distribution of shares and voting
rights is shown on pp. 106–107, as is the ownership structure.
GENERAL SHAREHOLDER MEETINGS On request, Series A shares may be converted into Series B
The procedures for notifying shareholders of General Meetings shares. A written conversion request must be submitted to the
are stipulated in the Articles of Association. Notice of meetings Company’s Board, which makes continuous decisions on such
shall be made in the form of an announcement in Post- och matters. Following a conversion decision, the matter is reported
Inrikes Tidningar and Dagens Nyheter. Notice of the Annual to Euroclear Sweden AB for registration. Conversions become
General Meeting shall be issued not earlier than six weeks and effective when the shares are registered.
not later than four weeks prior to the Meeting. Notice of Extra­
ordinary General Meetings convened to address amendments to COMPOSITION OF THE BOARD
the Articles of Association shall be issued not earlier than six The Board shall consist of not fewer than five and not more than
weeks and not later than two weeks prior to the Meeting. Gen- ten members elected by the Annual General Meeting. The
eral Meetings may be held in the municipalities of Stockholm, employees are represented on the Board. The Board Members
Solna or Sigtuna. At General Meetings, shareholders may be are elected for a period of one year. During 2009, there were six
accompanied by not more than two advisors, on condition that elected Board Members. The Board also included three repre-
the shareholder has given the Company prior notice of this. sentatives and two deputies for the employees. Three of the

NCC’S CONTROL STRUCTURE 2009

NCC:s STYRNINGSSTRUKTUR 2008

ANNUAL GENERAL MEETING NOMINATION COMMITTEE

Nomination and remuneration
(32,317 shareholders)
of Board Members and auditors
EXTERNAL AUDIT
(Auditing firm)
BOARD OF DIRECTORS
6 elected members
3 employee representatives

PRESIDENT AND CEO INTERNAL CONTROL

Group Management ENVIRONMENT
(11 members)
STAFF UNITS

EXTERNAL RULES AND INTERNAL RULES AND

REGULATIONS BUSINESS AREAS REGULATIONS
• Swedish Companies Act • Articles of Association
(Boards of Directors, presidents)
• Listing agreement of • Operating procedures
NASDAQ OMX Stockholm for Board work
• Swedish Code of Corporate • Division of work between
Governance the Board/CEO
• Decision-making procedures
for Group and business areas
• NCC’s Code of Conduct
• Policies, regulations, guidelines
and instructions

96 NCC 2009
 SHAREHOLDER INFORMATION
Board members (Antonia Ax:son Johnson, Tomas Billing and BOARD DUTIES
Marcus Storch) were dependent on the principal owner Nord- In 2009, NCC’s Board held six scheduled meetings, one
stjernan and one member (Fredrik Lundberg) was dependent unscheduled meeting and the statutory meeting held directly
on the second largest shareholder L E Lundbergföretagen. Ulf after the Annual General Meeting, making a total of eight meet-
Holmlund and Ulla Litzén are independent in relation to NCC’s ings. The Board’s work focuses primarily on strategic issues, busi-
major shareholders. All Board Members are independent in ness plans, the financial accounts and major investments and
­relation to the company and company management. Informa- divestments, plus other decisions that, in accordance with
tion on individual Board Members is presented on pp. 102–103. NCC’s decision-making procedures, have to be addressed by the
Board. Reporting on the progress of the Company’s operations
NOMINATION ACTIVITIES and financial position was a standing item on the agenda. The
The Annual General Meeting elects a Nomination Committee, Board has established operating procedures for its work and
which nominates candidates to the Annual General Meeting for instructions for the division of duties between the Board and the
election as Board members, proposes the fees to be paid to CEO, as well as for financial reporting to the Board. The Board
Board members and nominates auditors and the fees to be paid made several worksite visits in connection with Board meetings.
to them. The Annual General Meeting held on April 7, 2009 re- Other senior executives within NCC participated in Board
elected Viveca Ax:son Johnson (Chairman of Nordstjernan AB), meetings in order to present matters. NCC’s senior legal counsel
Ulf Lundahl (Deputy CEO of L E Lundbergföretagen AB) and was secretary of the Board.
Mats Lagerqvist (former President of Swedbank Robur AB) to On several occasions, the Board has evaluated the matter of
the Nomination Committee, with Viveca Ax:son Johnson as establishing committees to deal with remuneration and audit-
chairman. Tomas Billing, Chairman of the NCC Board, was a related issues. The Board has decided not to establish such com-
­co-opted member of the Committee, but had no voting right. mittees and instead to address remuneration and audit-related
No remuneration was paid to members of the Nomination issues within the framework of ordinary Board work (also see
Committee. the section entitled “Work involving audit, financial reporting
The NCC Nomination Committee proposes that the 2010 and internal control” below.
Annual General Meeting reelect the current members of the
Board Tomas Billing, who is also proposed for reelection as CHAIRMAN OF THE BOARD
Chairman of the Board, Antonia Ax:son Johnson, Ulf Holmlund, The Chairman of the Board directs the work conducted by the
Ulla Litzén and Marcus Storch. Fredrik Lundberg, Deputy Board and maintains regular contact with the CEO, in order to
Chairman, has declined reelection. continuously monitor the Group’s operations and development.
The Nomination Committee also proposes that the Annual The Chairman represents the Company in ownership matters.
General Meeting elect Christoph Vitzthum as new member
of the Board. Christoph Vitzthum was born in 1969 and has a WORK INVOLVING AUDIT, FINANCIAL REPORTING
­Masters of Economics degree. He is a member of the executive AND INTERNAL CONTROL
management team of the Finnish industrial group Wärtsilä According to the Swedish Code of Corporate Governance,
Oyj Abp and is president of the business area Wärtsilä Services. the Board must document and disclose information about the
Christoph Vitzthum has held various positions in the Wärtsilä manner in which the Board assures the quality of financial
group since 1995. reporting and communicates with the Company’s auditors.
A report on the Nomination Committee’s work and motions This information is contained in the section entitled “Board
ahead of the 2010 Annual General Meeting is presented on NCC’s report on internal controls pertaining to financial reporting for
website www.ncc.se under the “Corporate Governance” tab. the 2009 fiscal year” on pp. 100–101.

Composition and attendance of Board meetings 2009

Feb. 11 April 7 April 73) May 12 June 244) Aug. 19 Nov. 3 Dec. 2
Board Members elected by the Annual General Meeting
Tomas Billing
Antonia Ax:son Johnson
Ulla Litzén
Ulf Holmlund
Fredrik Lundberg
Marcus Storch

Regular employee representatives
Lars Bergqvist
Sven Frisk
Karl G Sievertsson1)
Ruben Åkerman2)
1) Elected as of the Annual General Meeting on April 7, 2009.
2) Elected up to the Annual General Meeting on April 7, 2009.
3) Statutory Board meeting.
4) Unscheduled Board meeting.

NCC 2009 97
SHAREHOLDER INFORMATION

The CEO is responsible for ensuring that the Board receives tives are resolved by the Annual General Meeting. Remunera-
continuous reports and information of such a quality that the tion paid to the CEO is proposed by the Chairman and estab-
Board is able to make well-founded assessments. Business and lished by the Board. The CEO does not participate in this deci-
financial reports are presented at each scheduled Board Meeting. sion. Remuneration to other senior executives is proposed by
Quarterly and year-end reports constitute the Company’s fun- the CEO and approved by the Chairman of the Board. Remu-
damental financial reporting, which is supplemented by business neration to the CEO and other senior executives consists of a
unit information from NCC’s internal reporting system. Each fixed salary, variable remuneration, pension and other benefits.
scheduled Board Meeting also addresses matters of material sig- Framework conditions for variable remuneration are decided by
nificance in terms of principle or major financial importance. the Board. The term “other senior executives” pertains to the
According to the Swedish Companies Act, the Board must executives who, in addition to the CEO, comprise Group Man-
establish an audit committee. If, as in the case at NCC, the Board agement. A specification of salaries and other remuneration paid
considers it more appropriate, the entire Board of Directors may to Board members, the CEO and senior executives is presented
fulfill the duties of an audit committee in cases when an inde- in Note 5, Personnel expenses.
pendent member possesses auditing expertise. The fact that the
Board is relatively small facilitates its work. The Board meets the PRESIDENT AND CHIEF EXECUTIVE OFFICER
auditors twice a year, including one occasion without the pres- The Board of Directors has established instructions for the divi-
ence of executive management. In addition, the Chairman of the sion of duties between the Board and the CEO, and for financial
Board has direct contact with the auditors on a number of occa- reporting to the Board (also refer to p. 97, “Work involving audit,
sions during the year. financial reporting and internal control”).
The Board of Directors is evaluated within the framework of
the Nomination Committee’s work. In addition, the Board per- DEPUTY CHIEF EXECUTIVE OFFICERS
forms an annual evaluation of its work and the format for per- NCC has not appointed any Deputy Chief Executive Officers.
forming Board work, which also constitutes part of the Nomina-
tion Committee’s evaluation. For the purpose of examining the GROUP MANAGEMENT
Company’s Annual Report, consolidated financial statements, In 2009, NCC’s Group Management consisted of the CEO, the
accounting records and the Company’s management by the Presidents of NCC Construction Sweden, NCC Construction
Board of Directors and President, the Annual General Meeting Denmark, NCC Construction Finland, NCC Construction Nor-
appoints a maximum of three Authorized Public Accountants, way, NCC Property Development, NCC Housing and NCC
with a maximum of three deputies. A registered firm of accoun- Roads, plus the Chief Financial Officer and the Senior Vice Pres-
tants may also be appointed auditor of the Company. The Nom- idents for Corporate Communications and Corporate Legal
ination Committee evaluates the audit work and nominates Affairs. Further information on members of Group Management
auditors. Auditors are appointed for a period of four years. Since is presented on pp. 104–105.
April 8, 2008 and until the close of the Annual General Meeting Group Management mainly focuses on strategic matters and
in 2012, the registered firm of accountants Pricewater- generally meets once per month.
houseCoopers AB will serve as NCC’s auditors. Authorized Pub-
lic Accountant Håkan Malmström has been elected Pricewater- INTERNAL GOVERNANCE
houseCoopers AB’s auditor-in-charge. For more information NCC’s operations require a considerable amount of delegated
about auditors, see p. 103. responsibility. Procedures have been formulated within the
Group in order to clarify exactly who is to do what at each stage
REMUNERATION OF THE BOARD OF DIRECTORS of the decision-making process. In addition to strategic and orga-
The Nomination Committee proposes the fees to be paid to the nizational matters, the areas regulated include investments and
Board of Directors. The Annual General Meeting on April 7, divestments, rental and leasing agreements, financing, sureties,
2009 resolved that the director fees for Board work in 2009 guarantees, the assessment of tenders and business agreements.
would total SEK 2,535,000 to be distributed among the Board The number of projects in production varies from year to year
Members elected by the Annual General Meeting. The Chair- but totals several thousands. The organization of each project
man received SEK 575,000, the Deputy Chairman SEK varies according to the specific project’s size and complexity.
460,000 and the four other Board Members received SEK Each project is led by a project manager who is responsible for
375,000 each. The employee representatives do not receive product format, purchases, financial aspects, production, quality,
director fees. completion and handover to the customer. Major projects are
monitored on a monthly basis by the CEO and Chief Financial
REMUNERATION OF EXECUTIVE MANAGEMENT Officer. Tenders for projects exceeding SEK 300 M are subject
According to the Swedish Code of Corporate Governance, the to special assessment and must be approved by the CEO. Ten-
Board must establish a remuneration committee to prepare mat- ders for projects exceeding SEK 500 M must be confirmed by
ters relating to remuneration and other terms of employment NCC AB’s Board. Proprietary housing and property projects
for executive management. If, as in the case at NCC, the Board representing an investment exceeding SEK 20 M must be
considers it more appropriate, the entire Board of Directors may approved by the CEO and such projects exceeding SEK 100 M
fulfill the duties of a remuneration committee. Guidelines for must be authorized by NCC AB’s Board.
salary and other remuneration for the Company’s senior execu-

98 NCC 2009
 SHAREHOLDER INFORMATION
GOVERNANCE OF BUSINESS AREAS Every manager has an obligation, within his or her area of
The Group comprises business areas that constitute separate responsibility, to ensure that employees and business partners
subsidiaries. These subsidiaries are managed by the respective are informed about the contents of the Code of Conduct and
business area presidents, who are similarly appointed president the requirement that they be observed. NCC managers must
of the particular subsidiary. Each business area has a Board of always set a good example. Adherence to the Code of Conduct
Directors, of which, among others, NCC AB’s CEO, Chief is followed up continuously as a natural part of ongoing opera-
Financial Officer and Senior Legal Counsel are members. For tions. NCC has a whistleblower procedure in the form of dis-
certain decisions, the approval of the CEO or NCC AB’s Board tinct reporting routes pertaining to any violations of the Code of
Chairman or Board of Directors is required. The decision-mak- Conduct.
ing procedure consists of proposals, endorsement, decisions and Repeated and serious violation of the Code of Conduct
confirmation. A matter requiring a decision is normally pro- results in corrective action. If any of NCC’s business partners
cessed by the entity that initiated the matter or which is respon- repeatedly and seriously violates NCC’s Code of Conduct,
sible for it in terms of function. Many types of decisions are pre- cooperation is discontinued.
ceded by consultation. Country managers (the heads of NCC’s The Compliance Program, consisting of a comprehensive
Construction units in each country) are responsible for initiating training program in business ethics and competition law, was
coordination in matters involving several NCC units in the par- introduced in 2002. The program is now an integral part of
ticular country. Such matters include the Group’s brands and NCC’s ordinary training of newly appointed managers and has
image, utilizing synergism, maintaining uniform systems for sala- been received by approximately 3,000 managers within the
ries, accounting and IT, and coordinating salary-setting and per- Group since 2002. The program is a part of the employment
sonnel policies. relationship.
Further information on control and corporate governance
CODE OF CONDUCT within NCC is presented on the Group’s website – www.ncc.se
A comprehensive program to formulate and implement the val- – where the Articles of Association and the Code of Conduct are
ues that are to hallmark NCC’s operations has been under way also available.
in recent years. These values have been translated into norms
and rules governing how NCC employees are to behave in vari-
ous situations. These regulations are summarized in a Code of
Conduct. The Code of Conduct describes the requirements that
NCC – the Board of Directors, management and all employees –
have to meet in terms of behavior and conduct and that NCC in
turn expects its business partners to respect.

NCC’S organization 2009

NCC AB

NCC NCC NCC NCC NCC

NCC NCC
Construction Construction Construction Construction Property
Roads Housing
Sweden Denmark Finland Norway Development

Baltic countries Sweden Sweden Sweden

St. Petersburg Denmark Denmark Denmark
Finland Finland Finland
Norway Norway Norway
St. Petersburg Germany Baltic countries
Baltic countries
St. Petersburg

NCC 2009 99
 INTERNAL CONTROL REPORT
SHAREHOLDER INFORMATION

THE BOARD OF DIRECTORS’ REPORT ON INTERNAL The control environment, organization, decision-making paths,
CONTROL PERTAINING TO FINANCIAL REPORTING FOR THE authorities and responsibilities that are documented and com-
2009 FISCAL YEAR municated in control documents, as well as internal policies,
guidelines and manuals, form the basis for the internal control
In accordance with the Swedish Companies Act and the Swedish pertaining to financial reporting.
Code of Corporate Governance, the Board of Directors is respons­ Information and communication regarding the internal poli-
ible for internal control. This report has been prepared pursuant cies, guidelines, manuals and codes to which the financial report-
to Rule 10.5 of the Swedish Code of Corporate Governance and ing is subject is available on NCC Starnet Ekonomi (NCC’s
is thus limited to the internal control of financial reporting. Intranet). Starnet Ekonomi is a living regulatory system that is
This report does not represent part of the formal annual updated regularly through the addition of, for example, new reg-
report documentation. ulations concerning IFRS and Nasdaq OMX Stockholm. NCC’s
The NCC Group is a decentralized international organization Chief Financial Officer has principal responsibility for Starnet
with business areas structured in a corporate format based on Ekonomi which includes the following:
rules concerning the companies’ governance in accordance with • Policies and regulations for the valuation and classification of
company law. Each year, the Board of Directors establishes rules assets, liabilities, revenues and costs.
of procedure for the work of the Board of Directors and an • Definitions of the terms used within NCC.
instruction concerning the division of work between the Board • Accounting and reporting instructions.
and the Chief Executive Officer. Operational management of • Framework for self-evaluation of internal controls.
the Group is based on decision-making regulations within the • The organization of the financial control function.
NCC Group that are adopted annually by the Board. The deci- • Time schedules for audit and reporting occasions, among others.
sion-making regulations stipulate the matters that require the • Decision-making regulations.
Board’s approval or confirmation. In turn, this is reflected in the • Attestation instructions.
decision-making regulations and attestation regulations applying All financial reporting must comply with the rules and regula-
for the subsidiaries. At Board meetings, the CEO and, where tions found on Starnet Ekonomi.
applicable, subsidiary presidents present the matters that require Financial reporting occurs in part in the form of figures in the
treatment by the Board. Group-wide reporting system and in part in the form of written
The CEO must ensure that the Board receives factual, comments in accordance with a specially formulated template.
exhaustive and relevant information to enable the Board to Instructions and regulations concerning both written and figure-
make well-founded decisions, and to keep it continuously based reporting are available on Starnet Ekonomi. The rules and
informed of the development of the Company’s operations and regulations are updated under the auspices of the Chief Finan-
its financial position. cial Officer. In addition, regular training programs and confer-
In addition, NCC’s auditor, PricewaterhouseCoopers AB, ences are arranged for management and financial control person-
must report the results of its examination and proposed mea- nel pertaining to joint principles concerning the requirements to
sures to the NCC Board on two occasions per year, including which the internal control is subject. This is within the Chief
one occasion without the attendance of Company management. Financial Officer’s sphere of responsibility.
Prior to these meetings, views from the audit of the business NCC applies a risk-assessment and risk-management method
areas and subsidiaries have been presented to the Board meet- to ensure that the risks to which the Company is exposed are
ings held in the particular business area/subsidiary or to the managed within the established framework. The material risks
respective business area management. Actions must be taken that have to be taken into account are operating risks, develop-
concerning the views that arise and these actions must be fol- ment risks, seasonal risks, the risk of errors in profit recognition,
lowed up systematically within the particular unit. financial risks and insurance risks.

100 NCC 2009

 SHAREHOLDER INFORMATION
Within NCC, this is done in several different ways: NCC also attaches considerable weight to the follow-up of projects.
• Monthly meetings with the president and financial manager Follow-ups to safeguard the quality of the internal controls are
of each particular business area. These meetings are always conducted in various ways within NCC. Since the introduction
attended by the CEO and the Chief Financial Officer. The of the Swedish Code of Corporate Governance, NCC has devel-
monthly meetings address such matters as orders received, oped a system (framework) for documented self-evaluation of
earnings, major ongoing and problematical projects, cash flow internal controls. Such self-evaluation is performed regularly for
and outstanding accounts receivable. The meetings also NCC’s business areas and Group office, and constitutes part of
address tenders and major investments, in accordance with the basis for the Board’s assessment of the internal controls.
the decision-making regulations. Controls to ensure that projects are running smoothly are
• Board meetings in the various business areas, which are held evaluated through operational audits, which lead to continuous
at least five times per year. Minutes are taken of these meet- evaluations and follow-ups to check that any shortcomings are
ings. The members of each particular board include NCC being rectified. The internal controls are also followed up via
AB’s CEO and the Chief Financial Officer, as well as the Board work within the various business areas and, in cases where
Senior Legal Counsel. These meetings address the complete it is considered that targeted action is required, the financial
income statement, balance sheet and cash flow statement in control and controller organization is utilized.
terms of both outcome and forecast, alternatively budget. The NCC’s auditor, PricewaterhouseCoopers AB, also examines a
meetings also address tenders and investments, in accordance selection of NCC’s controls as part of its audit process. In view
with the decision-making regulations. Investments and divest- of the follow-ups conducted via the operational audits and
ments of real estate exceeding SEK 100 M must be approved through the financial control and controller organization, the
by NCC AB’s Board. All investments exceeding SEK 20 M Board is of the opinion that there is no need for a special internal
must be approved by NCC AB’s CEO. examination function. In the light of the above, the Board of
• Major tenders to be submitted by the business area (exceed- Directors considers that NCC has a well-balanced control
ing SEK 300 M) must be approved by NCC AB’s CEO. Ten- ­structure. This report has not been examined by the company’s
ders exceeding SEK 500 M must be endorsed by NCC AB’s auditors.
Board.
• NCC AB’s Board receives monthly financial reports and the
current financial status is presented at each Board meeting.
Financial risk positions, such as interest rate, credit, liquidity,
exchange rate and refinancing risks, are managed by the special-
ist function, NCC Corporate Finance. NCC’s finance policy
stipulates that NCC Corporate Finance must always be con-
sulted and, in cases where Corporate Finance sees fit, must man-
age financial matters.
At NCC, financial reporting and the management of risks are
based on a number of control activities that are conducted at
various levels of the companies and business areas. This occurs in
part via the IT systems that support the various operational pro-
cesses and in part through appropriately designed manual con-
trols intended to prevent, discover and correct faults and non-
conformities. Great importance is attached to ensuring that the
transactions included in the financial reporting are correct.

NCC 2009 101

 BOARD OF DIRECTORS AND AUDITORS
SHAREHOLDER INFORMATION

APPOINTED BY ANNUAL GENERAL MEETING

TOMAS BILLING
Chairman. Born 1963.
Board member since 1999 and Chairman since 2001. President of Nordstjernan AB.
Chairman of Nordstjernan Industriutveckling AB and Välinge Flooring Technology AB.
Board member of Konecranes Oy. Previous experience: President of Hufvudstaden AB
and Monark Bodyguard AB, among other positions.
Shareholding in NCC AB: 20,600 Series A shares and 55,400 Series B shares.

Fredrik Lundberg
Deputy Chairman. Born 1951.
Board member and Deputy Chairman since 1997. President and Chief Executive Officer
of L E Lundbergföretagen AB. Chairman of Cardo AB, Holmen AB and Hufvudstaden AB.
Deputy Chairman of Svenska Handelsbanken AB. Board member of L E Lundbergföre­
tagen AB, Sandvik AB and Industrivärden AB.
Shareholding in NCC AB: 0.

Antonia Ax:son Johnson

Born 1943.
Board member since 1999. Chairman of Axel Johnson AB, Axel Johnson Inc. and Axel
and the Margaret Ax:son Johnson Foundation. Deputy Chairman of Nordstjernan AB.
Board member of Axfast AB, Axfood AB, Mekonomen AB and the Axel and Margaret
Ax:son Johnson Foundation for Public Benefit, as well as the World Childhood Foundation.
Shareholding in NCC AB: 167,400 Series A shares and 72,400 Series B shares via
­private companies.

Ulf Holmlund
Born 1947.
Board member since 2004. Board member of Atrium Ljungberg AB, Anticimex
­Holding AB and Nordstjernans Industriutveckling AB. Previous experience: President
of  ­LjungbergGruppen AB (1983–2003) and President of Fastighets AB Celtica
(1993–2003), among other positions.
Shareholding in NCC AB: 10,000 Series B shares.

Ulla Litzén
Born 1956.
Board member since April 8, 2008. Board member of Alfa Laval AB, Atlas Copco AB,
Boliden AB, Rezidor Hotel Group AB and AB SKF. Previous experience includes: Presi­
dent of W Capital Management AB (2001–2005) and Vice President of Investor AB
(1996–2001).
Shareholding in NCC AB: 3,400 Series B shares.

Marcus Storch
Born 1942.
Board member since 1998. Chairman of the Nobel Foundation. Deputy Chairman
Axel Johnson AB, Axfood AB and Mekonomen AB. Board member of AB Hannells
Industrier and ­Nordstjernan AB. Member of the Royal Swedish Academy of Sciences
and the Royal Swedish Academy of Engineering Sciences.
Previous experience: President of AGA AB (1981–1997), among other positions.
Shareholding in NCC AB: 20,000 Series B shares via private companies.

The details regarding shareholdings in NCC pertain to shares that were directly owned or owned via companies at December 31, 2009. For updated information about shareholdings,
see the Group’s www.ncc.se website, under investor relations/The NCC share, which includes information from the Swedish Financial Supervisory Authority’s insider register.

102 NCC 2009

 AUDITORS Håkan Malmström Ulf Westerberg
Auditor-in-charge. Born 1965. Other significant Born 1959. Other significant assignments:
PRICEWATERHOUSECOOPERS AB
assignments: Auditor of Gambro AB, Karo Bio AB, Auditor of Brio AB, Home Properties AB,
­Nordstjernan AB and TeliaSonera AB. ­Malmbergs Elektriska AB and SBAB.

SHAREHOLDER INFORMATION
EMPLOYEE REPRESENTATIVES

Lars Bergqvist
Born 1951. Construction engineer.
Board member since 1991. Employed since 1975. Shop steward at NCC. Employee
­representative of Ledarna (Swedish Association of Supervisors). Other assignments:
Chairman of Byggcheferna (union of construction managers).
Shareholding in NCC AB: 200 Series B shares.

sven frisk
Born 1946. Carpenter.
Board member since 1999. Employed since 1978. Construction carpenter and shop
­steward at NCC. Employee representative of Svenska Byggnadsarbetareförbundet
(Swedish Building Workers’ Union). Other assignments: Chairman of Svenska
­Byggnadsarbetareförbundet’s local union branch in Gothenburg.
Shareholding in NCC AB: 0.

karl g sivertsson
Born 1961. Carpenter.
Board member since 2009. Employed since 1986. Shop steward at NCC. Employee
­representative of Svenska Byggnadsarbetareförbundet. Other assignments: Section
Chairman of the Swedish Building Workers’ Union in Jämtland-Härjedalen.
Shareholding in NCC AB: 0.

Karl-Johan Andersson
Born 1964. Paver.
Substitute Board member since 2007. Employed since 1984. Paver and shop steward
at NCC. Employee representative of SEKO (Union for Employees in the Service and
­Communication Sectors). Other assignments: Substitute member of SEKO’s Executive
­Committee. Member of SEKO’s Road and Rail Department in Skåne. Chairman of the
­paving section in Skåne.
Shareholding in NCC AB: 0.

lis karlehem
Born 1963. Systems manager.
Deputy Board member since 2009. Employed since 1999. Employee representative of
Unionen (formerly SF, Swedish Industrial Salaried Employees’ Association). Systems
­manager at IT Sverige.
Shareholding in NCC AB: 0.

SECRETARY
håkan broman
Born 1962. General Counsel at NCC AB. NCC AB’s Board Secretary since 2009.
Shareholding in NCC AB: 500 Series B shares.

NCC 2009 103

 GROUP MANAGEMENT
SHAREHOLDER INFORMATION

Olle Ehrlén
Born 1949. President and CEO of NCC since 2007. Formerly Deputy Chief Executive
Officer and President of NCC Construction Sweden since 2001. Employed by NCC since
1973. Previous experience: Regional Manager at NCC Building Stockholm, construction
Staff Manager in civil engineering operations, Business & Technological Development
Manager in construction operations and Department Manager in rebuilding operations,
among other positions.
Shareholding in NCC AB: 10,900 Series B shares.

ToMAS CARLSSON
Born 1965. President of NCC Construction Sweden since 2007. Employed by NCC since
1991. Previous experience: Regional Manager at NCC Construction Sweden Western
Region (2005–2006), Head of NCC Roads’ New Markets (Poland, Baltic countries and
St. Petersburg) 2000–2005, Production Manager at Skanska 1999–2000 (Southern Link),
Supervisor at NCC Industry (Ballast) 1997–1999, various positions in NCC’s civil engi­
neering operations (1991–1996), among other positions.
Shareholding in NCC AB: 4,000 Series B shares.

Torben Biilmann
Born 1956. President of NCC Construction Denmark since 2006. Employed by NCC
since 1984 (what was then Rasmussen & Schiötz, which was acquired by NCC in 1996).
Previous experience: Deputy President of NCC Construction Denmark, with responsi­
bility for such items as strategy, operational development and housing investments
(2005–2006), various management positions in NCC Construction Denmark since 1990,
among other positions.
Shareholding in NCC AB: 0.

Timo U. Korhonen
Born 1952. President of NCC Construction Finland since 2001. Employed by NCC
­during 1988–1993 and since 1998. Previous experience: Regional Manager at Puolimatka,
Business Area President at Lemminkäinen Construction and President of NCC Inter­
national, among other positions. Other assignments: Chairman of Finnish Federation
of Building Industries and Mutual Pension Insurance Company Etera.
Shareholding in NCC AB: 0.

Peter gjörup
Born 1959. President of NCC Construction Norway since 2007. Employed by NCC
since 1984. Previous experience: Manager of Norrland Region in NCC ­Construction
Sweden among other positions in both civil engineering and building.
Shareholding in NCC AB: 53 Series A shares.

Joachim Hallengren
Born 1964. President of NCC Property Development since 2009. Employed by NCC
since 1995. Previous experience: Head of NCC Property Development’s Swedish oper­
ations (2007–2009), Regional Manager NCC Property Development Western Sweden
(2004–2007), Regional Manager NCC Property Development ­Southern ­Sweden (2003–
2004), various positions within NCC’s Property Development ­operations (1995–2003),
among other positions.
Shareholding in NCC AB: 2,000 Series B shares.

104 NCC 2009

 SHAREHOLDER INFORMATION
Peter Wågström
Born 1964. President of NCC Housing as of January 1, 2009 and President of NCC
­Property Development up to March 31, 2009. Employed by NCC since 2004. Previous
experience: Head of NCC Property Development’s Swedish operations (2004–2006),
various management positions in Drott (currently Fabege) (1998–2004) and member of
Drott’s Group Management (2000–2004) and various positions in Skanska’s real estate
operations (1991–1998), among other positions. Other assignments: Chairman of ASPECT.
Shareholding in NCC AB: 2,000 Series B shares.

Göran Landgren
Born 1956. President of NCC Roads since 2006. Employed by NCC since 1981. Previous
experience: Deputy President of NCC Construction Sweden with responsibility for
­marketing, business development and subsidiaries (2004–2006) and ­various positions in
building and civil engineering operations at NCC (1981–2001). Employed by Peab as
Head of the Civil Engineering Division (2001–2003).
Shareholding in NCC AB: 0.

Håkan Broman
Born 1962. General Counsel in NCC AB since 2009. Employed by NCC since 2000. Previ­
ous experience: corporate lawyer at NCC International Projects and NCC Property Devel­
opment (2000–2008), corporate lawyer at ABB/Daimler Chrysler ­Transportation (1996–
2000), lawyer at Ekelunds advokatbyrå (1993–1996) and positions in Swedish court system
(1991–1993), among other positions; active in the European ­International Contractors
(EIC) since 2001.
Shareholding in NCC AB: 500 Series B shares.

Ann-Sofie Danielsson
Born 1959. Chief Financial Officer since 2007 and Financial Director since 2003. Employed
by NCC since 1996. Previous experience: Finance Director and Group controller at NCC
AB (1999–2003), Group Accounts Manager at NCC AB (1996–1999) and Group Accounts
Manager at Nynäs AB (1993–1995), among other positions. Authorized Public Accountant
at Tönnerviksgruppen and KPMG (1984–1992). Other assignments: Board member of
Svenska Kraftnät.
Shareholding in NCC AB: 1,000 B shares.

Annica gerentz
Born 1960. Senior Vice President Corporate Communications at NCC since 2004.
Employed by NCC since 2000. Previous experience: Investor Relations Manager at
NCC AB since 2000, president and journalist of Börsveckan (1998–2000), editor
of Risk & Försäkring newsletter (1996–1998), journalist at Nyhetsbyrån Direkt
(1989–1996), among others editorial manager, and journalist at Dagens Industri
(1987–1989) and journalist at Expressen (1983–1987), among other positions.
Other assignments: Board member of the Swedish Public Relations Association.
Shareholding in NCC AB: 0.

OTHER SENIOR EXECUTIVES*

Mats Pettersson
Born 1961. Vice President Human Resources since 2007, Personnel Manager in NCC Construc­
tion Sweden since 2005. Employed by NCC since 2005. Previous experience: personnel manager
at Manpower (1999–2005), personnel manager at SSP Restaurants and at Eurest (1993–1999),
head of cabin department and training, salesman and steward at Scanair (1985–1993), and travel
guide, site manager and seller Fritidsresor (1981–1985), among other positions.
Shareholding in NCC AB: 0.
* Reports directly to the Chief Executive Officer.

NCC 2009 105

 THE NCC SHARE
SHAREHOLDER INFORMATION

The weak trend on stock markets in 2008 was followed by an SHARE REPURCHASES AND CONVERSIONS
equally strong 2009. The Nasdaq OMX Stockholm Exchange The number of treasury shares at year-end was 21,138, which
recovered all of the downturn from the preceding year, with the derived from a rolling options program that was concluded in
NCC share rising 139 percent. The total return (share perfor- 2007.
mance plus the dividend) was approximately 147 percent for In 1996, holders of Series A shares were provided with the
Series B shares. The year-end price of the NCC share corre- opportunity to convert their Series A shares to B shares. During
sponded to market capitalization of SEK 12.8 billion. 2009, four million shares (518,400) were converted and a total
of 21.4 million shares have been converted since 1996. An addi-
NCC’s shares were initially listed on the Stockholm Stock tional 10.8 million shares were converted in February 2010.
Exchange in 1988, under the Nordstjernan name. The shares are Written requests regarding conversion must be submitted to the
traded on Nasdaq OMX Stockholm/Large Cap. Board of Directors.

SHARE PERFORMANCE AND TRADING DIVIDEND AND DIVIDEND POLICY

Following the global financial crisis, stock markets worldwide NCC’s dividend policy is to distribute at least half of profit after
moved sharply upwards during 2009. However, this should be taxes as dividends. The Board of Directors proposes a dividend
viewed in the light of the considerable downturn that occurred of SEK 6.00 (4.00) per share for 2009. The proposed ordinary
in 2008. The Stockholm exchange rose 47 percent. The price of dividend amounts to SEK 650 M (434), corresponding to 52
Series B NCC shares rose 139 percent, which may be compared percent of profit after taxes for the year.
with the OMX sector index, which increased 73 percent. The total return (based on the share performance and divi-
A total of 141 million NCC shares were traded in 2009, of dend paid in relation to the price of NCC’s share at the begin-
which Nasdaq OMX Stockholm accounted for 87 percent and ning of the year) in 2009 was approximately 147 percent (minus
other marketplaces1) for 13 percent. The turnover rate for Series 49) for Series B shares. The Nasdaq OMX Stockholm average,
A NCC shares was 2 percent (4) and the rate for Series B shares according to Six Return Index, was 53 percent (minus 39).
was 185 percent (204). The turnover rate for the Large Cap list
was 126 percent and that for Nasdaq OMX Stockholm as a
The NCC share on Nasdaq OMX Stockholm 2009
whole 119 percent.
Series A shares Series B shares
OWNERSHIP STRUCTURE Total number of shares1) 42,396,448 66,018,236
Nordstjernan AB is the largest NCC shareholder. Swedbank Voting rights 10 votes 1 vote
Robur funds and SEB funds increased their holdings of NCC Total share turnover, including late entries 1,025,388 122,074,668
Number of shares traded per day 4,085 486,353
shares, while AMF Pension and Alecta reduced their holdings.
Turnover rate, % 2 185
The proportion of foreign shareholders rose to 21 percent of the Share price at start of year, SEK 46.10 49.50
share capital, with the US and UK accounting for the largest Share price at year-end, SEK 118.00 118.25
holdings. The Norwegian Government is a new member of the Highest price paid, SEK 121.50 121.25
ten largest shareholders. L E Lundbergföretagen AB, which was Lowest price paid, SEK 43.90 43.50
Beta value2) 1.23 1.54
the second largest owner at year-end, sold its entire holding at
Paid-out dividend, SEK 4.00 4.00
the beginning of 2010. The current list of shareholders is avail- Total return, % 165 147
able on www.ncc.se. 1) Excluding treasury shares.
2) Measured based on 250 days as per December 31.
1) Asa result of the introduction of the EU’s MiFID directive, the structure for equity trading in
Europe has changed. It is now possible to trade in shares in marketplaces other than the exchange
on which a share is listed, which has resulted in trade becoming more fragmented.

Shareholder categories, percentage of share capital Share-price trend 2009

SEK Number of shares

120 000s
Closely held companies
(including Nordstjernan), 26 (30)% Förklaring, XX%
100
Swedish mutual funds, 18 (12)% Förklaring, XX%
Exchange-listed companies Förklaring, XX%
(L E Lundbergföretagen), 10 (10)% 80
Förklaring, XX%
Other Swedish 25,000
institutions, 10 (16)% Förklaring, XX%
60 20,000
Swedish private individuals, 9 (11)% Förklaring, XX% 15,000
Foreign shareholders, 21 (14)% Förklaring, XX% 10,000
Foundations, 3 (3)% Förklaring, XX% 5,000
Other, 3 (4)% 40 Förklaring, XX%
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Förklaring, XX%
The share of foreign ownership increased from 14 to 21 percent
during 2009. Swedish mutual funds also increased their holdings, NCC Series B shares Number of shares traded
while other Swedish institutions reduced their share. OMX Stockholm in thousands (incl. late entries)
SX201030 Construction and
Civil Engineering Index
106 NCC 2009
 SHAREHOLDER INFORMATION
NCC share trend in past five years Distribution of shares by holding, December 31 20091)

2005 2006 2007 2008 2009 Percentage Percentage

No. of of total no. of No. of of share
Market price at year-end, Holding shares held shareholders shares capital
NCC B share, SEK 142.50 187.50 139.00 49.50 118.25
Market capitalization, SEK M 15,282 20,242 14,999 5,209 12,809 1–500 23,817 73.7 4,297,422 3.9
Earnings per share, SEK1) 10.86 15.74 20.73 16.69 11.63 501–1,000 4,649 14.4 3,937,840 3.6
Ordinary dividend, SEK 5.50 8.00 11.00 4.00 6.002) 1,001–10,000 3,405 10.5 9,602,835 8.8
Extraordinary dividend, SEK 10.00 10.00 10.00 – – 10,001–100,000 327 1.0 9,860,802 9.1
Dividend yield, % 10.9 9.6 15.1 8.1 5.1 100,001–1,000,000 108 0.3 33,498,837 31.0
Total return, %3) 78 42 –16 –49 147 1,000,001– 10 0.1 47,216,948 43.6
Number of shares at Total 32,317 100.0 108,414,684 100.0
year-end (millions) 107.2 108.1 108.4 108.4 108.4 1) Calculated after a deduction for repurchased shares.
Key figures per share are presented in the Ten-year review on p. 94. (Source: Euroclear Sweden AB)
1) After tax and full dilution.
2) Proposed dividend.
3) Share performance and dividend paid in relation to the price of NCC’s share at the beginning of

the year.

Series A and B shares Ownership structure at December 31, 2009

No. of No. of Percentage of1)

Series Series Total A Series Series Share Voting
A shares B shares and B shares Shareholder A shares B shares capital rights
No. of shares on Dec. 31, 1999 63,111,682 45,324,140 108,435,822 Nordstjernan AB 25,000,000 23.1 51.0
Conversion of Series A to L E Lundbergföretagen AB2) 10,850,000 10.0 22.1
Series B shares during 2000-2008 –16,715,234 16,715,234 Swedbank Robur funds 2,219,417 6,378,471 7.9 5.8
Shares repurchased during 2000-2003 –6,035,392 –6,035,392 SEB funds 3,096,611 2.9 0.6
Sale of repurchased Nordea funds 2,620,062 2.4 0.5
shares during 2005-2007 6,014,254 6,014,254 Skandia Liv 988,175 743,072 1.6 2.2
No. of shares on Dec. 31, 2008 46,396,448 62,018,236 108,414,684 Unionen 1,472,028 1.4 0.3
Conversion of Series A DFA funds (USA) 27,992 1,395,949 1.3 0.3
to Series B shares during 2009 –4,000,000 4,000,000 Catella funds 1,217,654 1.1 0.2
Number of shares Norwegian Government 1,190,918 1.1 0.2
at December 31, 20091) 42,396,448 66,018,236 108,414,684 Total ten largest shareholders 39,085,584 18,114,765 52.8 83.2
Number of voting rights 423,964,480 66,018,236 489,982,716 Other shareholders in Sweden 3,146,266 28,463,857 29.1 12.4
Percentage of voting rights 87 13 100 Shareholders outside Sweden 164,598 19,439,614 18.1 4.4
Percentage of share capital 39 61 100 Total 42,396,448 66,018,236 100.0 100.0
Closing price Dec. 31, 2009, SEK 118,00 118,25 Repurchased 21,138
Market capitalization, SEK M 5,003 7,807 12,809 Total number of shares 42,396,448 66,039,374
1) Duringthe period January 1 to February 28, 2010, 10,850,000 Series A shares were converted to 1) After repurchased shares have been deducted.
Series B shares. 2) L E Lundbergföretagen AB sold its entire holding in February 2010. In connection

with the divestment, the Series A shares were converted into Series B shares.
(Source: SIS Ägarservice and Euroclear Sweden AB)

Share-price trend and turnover, 2005–2009 Total return 2005–2009

SEK Number of shares, SEK

thousands
250 300
200 250

150 200

150
100

25,000 100
20,000
50 15,000
10,000
5,000
30 50
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
© NASDAQ OMX AB

NCC Series B shares Number of shares traded NCC Series B shares

OMX Stockholm in thousands (incl. late entries) SIX Return Index
SX201030 Construction and
Civil Engineering Index

NCC 2009 107

 FINANCIAL INFORMATION
SHAREHOLDER INFORMATION

NCC will publish financial information regarding the 2010 fiscal e-mailing [email protected], writing to NCC AB, SE-170 80 Solna,
year on the following dates: ­Sweden, calling NCC AB at +46 8 585 510 00 or faxing
NCC AB at +46 8 85 77 75.
April 14 Annual General Meeting The person within the NCC Group responsible for share-
May 10 Interim report, January–March holder-related issues and financial information is Johan Bergman,
August 19 Interim report, January–June IR Manager (Tel: +46 8 585 523 53; e-mail: [email protected]).
November 9 Interim report, January–September
February 2011 Year-end report 2010 ANNUAL GENERAL MEETING
The Annual General Meeting will be held at 4:30 p.m. on
April 14, 2010.
NCC’s interim reports are downloadable from the NCC Venue: Grand Hôtel, Vinterträdgården, Royals entré,
Group’s website, www.ncc.se, where all information regarding Stall­gatan 6, Stockholm, Sweden.
the NCC Group is organized in English and Swedish versions. Notification can be made by post to the following address:
There are also links to brief descriptions in other languages, such NCC AB, Lisbeth Karlsson, SE-170 80, Solna, Sweden; or by the
as French, Chinese and Russian. The website also includes an NCC Group’s Internet website www.ncc.se; or by telephone to
archive of interim reports dating back to 1997 and an archive of +46 8 585 522 61; fax to +46 8 585 517 56; or e-mail to
annual reports dating back to 1996. Since 2003, NCC has not [email protected]. Notifications should include name,
printed or distributed its interim reports. personal identification number (corporate registration number),
The price performance of NCC’s Series A and B shares, address, telephone number and registered shareholding.
updated every 15th minute of each day of trading, is presented Registration at the Meeting will begin at 3:30 p.m. The offi-
under the “Investor Relations” tab, as are relevant financial fig- cial notification of the Annual General Meeting is available on
ures. Press releases issued by the Group, NCC AB, and local the NCC Group’s website, www.ncc.se, and was published in
press releases from the various countries are available on the Swedish daily newspapers in mid-March.
website. These releases are sorted by year, and a search function
is also available. NCC AB (publ) Corp. Reg. No: 556034-5174. Registered Head
NCC’s financial information can be ordered either by using Office: Solna. Addresses of the companies included in the NCC
the order form available on the www.ncc.se website or by Group are available on the Internet at www.ncc.se.

SHAREHOLDER INFORMATION ON NCC.SE

All financial information concerning the NCC Group and everything that concerns you
as a NCC shareholder is available on NCC’s website under the Investor Relations tab.

SHARE-PRICE INFORMATION.
Share-price information with a
15-minute delay is available and it
will also be possible to see the
total return (including reinvested
dividends) and compare the per- MORE INFORMATION/
formance of the NCC share with CONTACT PERSON.
that of Nordic competitors. Johan Bergman
IR Manager
Tel: +46 8 585 523 53
e-mail: [email protected]
LIST OF ANALYSTS. Here, you
will find a list of the analysts who
monitor NCC regularly.

SHAREHOLDER SERVICE.
From our Shareholder Service, you
can subscribe for the information
you would like to receive – and
also decide the format in which
you will receive it, on paper or by
e-mail.

108 NCC 2009

DEFINITIONS/GLOSSARY

FINANCIAL DEFINITIONS Return on total capital: Profit after financial items including result from
­participations in associated companies plus financial expense as a percentage
Average interest rate: Nominal interest weighted by interest-bearing liabili-
of average total assets.
ties outstanding on the balance-sheet date.
Share of risk-bearing capital: The total of shareholders’ equity and deferred
Average period of fixed interest: The remaining period of fixed interest
tax liabilities as a percentage of total assets.
weighted by interest-bearing liabilities outstanding.
Total return: Share-price performance during the year plus dividend paid
Average shareholders’ equity: Average of the balances at January 1, March
divided by share price at the beginning of the year.
31, June 30, September 30 and December 31.
Capital employed: Total assets less interest-free liabilities including deferred
tax liabilities. Average capital employed is calculated as the average of the bal-
SECTOR-RELATED DEFINITIONS
ances at January 1, March 31, June 30, September 30 and December 31. Aggregates: Rock materials resulting from the disintegration of rock through
crushing; also called macadam.
Capital turnover rate: Net sales divided by average capital employed.
Ballast: Normal term for gravel, disintegrated materials, mainly rock materials,
Debt/equity ratio: Net indebtedness divided by shareholders’ equity.
used for construction and civil engineering purposes.
Dividend yield: The dividend as a percentage of the market price at year-end.
Buildings/other buildings: In descriptions of operations, this term pertains to
Earnings per share, after taxes: Net profit for the year attributable to NCC commercial buildings, mainly offices, retail outlets, shopping malls and garages.
shareholders divided by the weighted number of shares during the year in
Construction costs: The cost of constructing a building, including building
question.
accessories, utility-connection fees, other contractor-related costs and VAT.
Equity/assets ratio: Shareholders’ equity as a percentage of total assets. Construction costs do not include the cost of land.
Exchange-rate difference: Exchange-rate changes attributable to move- Development right: Estimated possibility to develop a site. With respect to
ments in various exchange rates when receivables and liabilities in foreign cur- housing, a development right corresponds to an apartment or ­semi-detached
rencies are translated into SEK. or detached house. Either ownership of a site or an option on ownership of the
Exchange-rate effect: The impact of changes in various exchange rates on site concerned is a prerequisite for being granted access to a ­development right.
current reporting in NCC’s consolidated accounts on translation into SEK. For commercial properties, development rights are ­measured in square meters.

Interest-coverage ratio: Profit after financial items plus financial expense Contract forms:
divided by financial expense. General contract/implementation contract: When NCC conducts construction
work on behalf of a client who has conducted the building design. NCC
Net indebtedness: Interest-bearing liabilities and provisions less financial
appoints and is responsible for the subcontractors.
assets including cash and cash equivalents.
Negotiated contract/mutual-trust contract: When NCC cooperates on an
Net investments: Closing balance less opening balance plus depreciation and ­exclusive basis with the customer throughout the construction process –
impairment losses less write-ups pertaining to fixed assets and properties from planning to final inspection.
classed as current assets. Turnkey contract/design and build contract: When NCC has turnkey responsi-
Net margin: Profit after net financial items as a percentage of net sales. bility for a project, from the concept and building design stage right through
to completion.
Net sales: The net sales of construction operations are reported in accordance
with the percentage-of-completion principle. These revenues are reported in Function contract: Usually a multi-year contract in which the customer
pace with the gradual completion of construction projects within the Group. imposes functional requirements rather than detailed requirements concern-
In the Parent Company, net sales correspond to income-recognized sales from ing materials and design.
completed projects. Within other operations, net sales correspond to invoicing Leasing rate: The percentage of anticipated rental revenues that corresponds
for the year. to signed leases (also called leasing rate based on revenues).
Operating margin: Operating profit as a percentage of net sales. Macadam: Rock materials resulting from the disintegration of rock through
Operating net: Result from property management before depreciation. crushing; also called aggregates.

Order backlog: Value at the end of the year of the remaining non-worked-up NCC Partnering: A cooperation format applied in the construction and civil
project revenues for projects received, including proprietary projects for sale engineering industry, whereby the client, consultants and contractor establish
that have not been completed. open and trusting cooperation at an early stage of the process based on shared
goals, joint activities and joint financial targets in order to optimize the project.
Orders received: Value of received projects and changes in existing projects
during the period concerned. Proprietary projects for sale, if a decision to initi- Platforms: Group-wide standardized technical solutions. Have been devel-
ate the assignment has been taken, are also included among assignments oped for everything from sports arenas, offices, logistics facilities and bridges
received, as are finished properties included in inventory. to single-family and multi-family housing.

P/E ratio: Market price of the shares at year-end, divided by earnings per share Properties: In descriptions of operations, “properties” refers to buildings,
after taxes. housing or land.

Profit margin: Profit after financial items as a percentage of net sales. Proprietary project: When NCC, for its own development purposes,
acquires land, designs a project, conducts construction work and then sells the
Repurchase of Company shares (treasury shares) in share data: Treasury
project. Pertains to both housing projects and commercial property projects.
shares have been excluded from calculations of key figures based on the num-
ber of shares outstanding. Required yield: The property yield required by NCC Property Develop-
ment’s and NCC Housing’s investors for their investment, which is to be
Return on capital employed: Profit after financial items including results
achieved through rental guarantees. Operating revenues less operating
from participations in associated companies following the reversal of interest
expenses divided by the investment value.
expense in relation to average capital employed.
Return on equity: Net profit for the year according to the income statement
excluding minority share as a percentage of average shareholders’ equity.

Production: NCC and Hallvarsson & Halvarsson. Translation:The Bugli Company.

Photographers: Søren Witt Andersen p. 13. Kenneth Bengtsson p. 31. Bruno Ehrs cover, p. 17, p. 19, p. 30, p. 36.Thomas Fahlander inside cover, p. 6, p. 21, p. 31.
Jenny Gaulitz p. 1, p. 35. Getty Images p. 37. Carl Magnus Hegde Naess p. 14. Sten Jansin inside cover, p. 1, p. 3, p. 5, p. 13, p. 18, p. 25, p. 27, p. 36. Anne-Beth Jensen/Byggeindustrien p. 11.
Tom Jersø p. 8. Knut Koivisto p. 102–105. Mikael Lindén p. 11. Niklas Lundberg p. 21. Anna Emilia Lundgren p. 23. Cato A. Mørk p. 1, p. 15, p. 34, p. 37. Henrik Ottosson p. 37.
Paatela-Paatela & Co Oy p. 15. Per Petersson (www.perpixel.se) p. 15. Mikael Röhr p. 1, p. 11. Jørgen Strohbach p. 11. Kimmo Torkkeli p. 18. Jørgen True p. 2. Anders Wejrot p. 27.
Printing: Elanders in Falköping, 2010.
NCC 2009 109
 NCC is one of the leading construction and
property development companies in the
Nordic region, with sales of SEK 52 billion
and 18,000 employees. With the Nordic
region as its home market, NCC is active
throughout the value chain – developing
and building residential and com­mercial
properties, and constructing industrial
facilities and public buildings, roads, civil
engineering structures and other types of
infrastructure. NCC also offers input mate-
rials used in construction and accounts for
paving and road services. NCC creates
future environments for working, living
and communication based on responsible
construction operations that result in
­sustainable inter­action between people
and the environment.

NCC AB, SE-170 80 Solna, Sweden • Tel +46 8 585 510 00 • Fax +46 8 85 77 75
www.ncc.se