WET News

12 Leaders 2014 the LeADeRS 2014 Skanska targets larger share of water market A strong financial performance for the fih consecutive year sees Skanksa UK top our Return on Capital Top 10 table. S kanska UK has had a fih con- secutive year of strong finan- cial performance. In 2013, the operating profit for its con- struction business was £41.9M on a revenue of £1.2B. This equates to an operating margin of 3.4%, which is in the upper quartile for the industry. The results are broadly similar to 2012, where revenue is up from £1.16B, operating margins are down 0.2% and operating income is slightly reduced from £42.6M. The latest set of results mean that Skanska UK has secured operating mar- gins of at least 3% for the last four years. Terry Muckian, utilities director of Water and Operational Delivery at Skanska, says Skanska is "looking opti- mistically to the future". He says: "We have been actively engaged in the AMP6 Return on Capital Skanska 8903.6 Galliford Try 1,086 AECOM Design Build 357 Kirk Environmental 268 Dawnus 76.4 Carillion Utility Services 63.5 Laing O'Rourke 57.7 McNicholas 52.8 Kier 50.8 Dyer & Butler 49.9 "As part of this growth we are committed to developing and retaining the best peo- ple within our water sector" Terry Muckian ECI (early contractor involvement) for Thames Water on the eight2O Alliance, as well as delivering the year four pro- gramme of AMP5 as part of the @One Alliance for Anglian Water." Skanska, along with MWH Global and Balfour Beatty, is part of the joint venture SMB, which has been selected to provide design-and-build solutions for the development and delivery of Thames Water's £2B-3B AMP6 as part of eight2O. The 23-month early contractor involvement phase is underway, in preparation for the start of AMP6 deliv- ery, running from April 2015 to March 2020. Muckian says Skanska is committed to alliance models and sees this as the best opportunity for Tier 1 contractors like itself to add value. "Through a col- laborative approach we can help to drive innovation, leading to more sus- tainable, cost effective and less disrup- tive solutions for customers." The company expects to maintain constant activity levels for the remain- der of AMP5, where the alliance model anticipates and accommodates a closer move to totex. According to Muckian, in the future there will be a reduction in high-value capex infrastructure pro- jects – moving to a larger volume of smaller value projects and a strategy more focused around programme man- agement to deliver a lower unit cost. He says: "Key to our business strat- egy is to take a larger share of the water sector, where we expect to see contin- ued growth and greater integration with our clients and partners. We are currently working hard to secure one additional AMP6 alliance. "As a business Skanska is planning to create around 1,500 jobs in the UK during the next two to three years. These will be required to complete major rail, water, building and roads contracts won by the company. As part of this growth we are committed to developing and retaining the best peo- ple within our water sector." Skanska UK announced more than £1B of new work last year, and UK presi- dent and CEO Mike Putnam is positive about the market outlook: "The market is improving and we have secured or been named preferred bidder on a sig- nificant amount of work. When we take this into account, we are in a strong position going forward." The company has made significant progress in a number of strategic growth areas. It began construction on its first commercial development projects in the UK: 66 Queen Square in Bristol, The Skanska Utilities Maple Cross House, Denham Way, Rickmansworth, Herts. www.skanska.co.uk % leaders 2104 13 The Numbers 10 11 12 %chaNge Sales £M 143.1 119.7 120.8 1 Gross profit £M 5.5 5.7 8.9 57 Operating profit £M -3.0 -0.8 4.9 757 Pre-tax profit £M -3.0 -0.7 5 857 Staff 989 551 554 1 Net assets £M -2.5 -5.1 0.1 -101 The raTIOs 10 11 12 % chaNge Return on capital % 119.5 12.9 8,903.6 68,764 Gross margin % 3.9 4.8 7.4 55 Operating margin % -2.1 -0.6 4.1 751 Net margin % -2.1 -0.6 4.1 850 Sales/employee £K 144.7 217.2 218.1 0 Monument Building in central London, and Bentley Works in South Yorkshire In green retrofit, Skanska won a number of projects, including an energy performance contract with Barts Health NHS Trust. In energy, Skanska and GE launched Smart Grid Enterprises to help deliver the UK's smart metering programme. Skanska also made strong progress in the water sector last year. Putnam adds: "We have weathered the economic recession well, securing strong results throughout the last five years. We are now looking forward to a period of planned growth and expan- sion thanks to the strategic choices made as part of our business plan and growth in our chosen sectors. There are major opportunities on the horizon and I am very optimistic about the future." A collaborative approach can help to drive innovation, leading to more sustainable, cost effective and less disruptive solutions for customers Terry Muckian

• Cover