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Investments in 2009 amounted to MNOK 468 (MNOK 774). Investments have primarily been in heavy construction equipment and asphalt. Capital tied up in property operations remained relatively stable during the year and accounted for MNOK 2 219 (MNOK 2 635).
Sales of fixed assets amounted MNOK 40 (MNOK 122). Net cash flow from operations was MNOK 1 198 (MNOK 1 211), which primarily relates to good project liquidity. The Group has a strong financial position with a net interest-bearing position of 101 MNOK (MNOK -260). The Group's total assets were MNOK 7 779 (MNOK 8 966). Total shareholder’s equity was MNOK 2 054 (2 114), giving an equity ratio of 26.4 percent (23.6 percent).
Financial risk
Veidekke aims to have a strong financial position. In order to achieve this, it is important to have good operational management, low risk exposure, and sound management of the parameters influencing financial risk. Financial development is an integral part of the Group’s strategy process, and the Group’s financial policy governs the management of financial risk.
Veidekke is primarily exposed to risk through financial instruments such as accounts receivable, liquidity and interest-bearing liabilities. The risk is related to credit, market and liquidity matters.
Credit risk The Group’s credit risk is mainly associated with settlement of the Group’s accounts receivable. The Group has a considerable share of public customers (37 percent) for whom credit risk is considered very low. For our private customers (63 percent), we seek to minimise credit risk within the Group’s divisions through methods adapted to the different business areas.
For construction projects, thorough assessments in tender processes, settlement of work according to progress, contractual guarantees and active follow-up of outstanding claims are essential.
For the Industry Division, which has a considerably larger number of customers, credit rating procedures, timely invoicing, guarantees and active follow-up of outstanding claims are important.
Within Property, we seek to minimise risk through advance payments and mortgages in completed dwellings up to the time of delivery.
Veidekke has historically had low losses on receivables.
Interest rate risk
Due to its low net interest-bearing position, the interest risk for the Group as a whole is low. However, the various divisions are exposed to interest risk based on their different financial positions. Interest derivatives are used to hedge against long-term interest risk in some partly-owned companies.
When it comes to other financial assets, shareholdings in the unlisted Norwegian property company, Hansa Property Group ASA, is the most significant. At 31 December 2009, this shareholding had a book value of MNOK 33. The shareholding is recorded at fair value, and its value therefore depends on share price development of Hansa and comparable companies.
Fluctuations in currency rates have little direct influence on Veidekke, as its operations are largely national in character and project cash flows are normally in the same currency. Any substantial currency risks that arise are hedged. Equity investments in foreign subsidiaries are, however, not hedged.
Liquidity Risk
Veidekke has secured long-term financing through borrowing facilities which expire in 2012. At the end of 2009, unused committed borrowing facilities amounted to MNOK 1 895 (MNOK 1 273). The level is well adjusted to the Group’s strategy and planned operations for the years ahead.
The Group also has substantial borrowing facilities available to meet its current construction project performance guarantees.