SNC-Lavalin 2010 Annual Report

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SNC-Lavalin 2010 Annual Report

Transcript of SNC-Lavalin 2010 Annual Report

  • KNOW-HOW

    2010 ANNUAL REPORT

    KNOW-HOW

  • WE KNOW WHAT WORKS WHATS SUSTAINABLE AND HOW TO GET IT DONE ANYWHERE IN THE WORLD

  • SNC-Lavalin brings unique know-how to developing sustainable solutions that support the widest range of stakeholders. An international leader in engineering and construction, and a major player in operations, maintenance and infrastructure concession investments, our success is founded on our experience and proven technical skills, our global diversity and attentiveness to our clients and the communities we serve.

    2 Financial Highlights

    4 At a Glance

    6 Presidents Message

    8 Chairmans Commentary

    9 Members of the Of ce of thePresident

    10 Report on Operations

    33 WE CARE

    34 Management Team

    37 Main Of ces

    40 Managements Responsibility forFinancial Reporting

    40 Independent Auditors Report on Summary Consolidated FinancialStatements

    41 Summary ConsolidatedFinancial Statements

    45 Board of Directors

    46 Ten-Year Statistical Summary

    48 Information for Shareholders

    49 Glossary

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    100 years of excellence

    Diversity by industry segment

    Diversity by geographic area

    24,000 employees

    Ongoing projects in

    100 countries

    FINANCIAL HIGHLIGHTS

    INFRASTRUCTURE AND

    ENVIRONMENT

    29%OTHER INDUSTRIES

    5%

    CANADA

    54% AFRICA20%

    OTHER REGIONS

    1%

    6%LATIN AMERICA

    AND CARIBBEAN

    3%UNITED STATES

    3%ASIA8%

    INFRASTRUCTURE CONCESSION

    INVESTMENTS

    21%OPERATIONS

    AND MAINTENANCE

    11%MINING

    AND METALLURGY

    12%POWER

    6%MIDDLE EAST

    7%EUROPE

    CHEMICALS AND

    PETROLEUM

    14%

    2010 REVENUES 2010 REVENUES

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    24%5-year dividend CAGR(1)

    $13 billionbacklog at December 31, 2010

    24%5-year average ROASE(2)

    29%5-year net income CAGR(1)

    06 07 08 09 10

    157.8 151.4

    312.5359.4

    437.0

    19.016.4

    29.127.3 27.4

    0.300.39

    0.51

    0.62

    0.72

    10.4 10.69.6

    10.8

    13.0

    (1) Compound Annual Growth Rate(2) Return on average shareholders equity

    NET INCOME (in millions CA$)

    ROASE(2)(in %)

    DIVIDENDS (in CA$)

    BACKLOG (in billions CA$)

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    INFRASTRUCTUREWe design and build various types of infrastructure including airports, bridges, buildings, healthcare facilities, seaports, marine and ferry terminals, flood control systems, mass transit systems, railways, roads and water treatment/distribution infrastruc-ture and facilities for the public and privatesectors.

    ENVIRONMENTOur expertise includes social and envi-ronmental impact assessments and studies; site assessment, remediation and reclamation; ecological and human health risk assessment; waste manage-ment, water and wastewater; marine and coastal management; air quality and acoustics; environmental man-agement; climate change; institutional strengthening and ruraldevelopment.

    CHEMICALS & PETROLEUMIn this sector, we offer front end engi-neering, detailed design, procurement, construction, commissioning and ongo-ing sustaining capital services in the areas of gas processing; heavy and conventional oil production; onshore and offshore oil and gas; LNG re- gasi cation terminals; coal to liquid gas; carbon capture, transportation and sequestration; pipelines, terminals and pump stations; re ning and upgrading; bitumen production; biofuels; petro-chemicals andchemicals.

    POWEROur areas of activity include hydro, thermal and nuclear power generation, energy from waste, green energy solu-tions, and transmission and distribution projects. We offer end-to-end project services including front end engineering for project feasibility, detailed design, construction, commissioning and the operation of power facilities. We also offer unique expertise in the application of information technologies and in tele-communications and networkdesign.

    MINING & METALLURGYWe provide project management, process and detailed engineering, pro-curement and construction services for all mineral and metal recovery processes to our global and regional clients, including mine development, mineral processing, smelting, re ning, mine closure and reclamation, and fer-tilizer plants. We also have specialized expertise in training simulation soft-ware andequipment.

    AT A GLANCE

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    OPERATIONS & MAINTENANCEWe provide operations, maintenance and logistics solutions for buildings, power plants, water supply and treat-ment systems, desalination plants, postal services, broadcasting facili-ties, highways, bridges, light rail transit systems, airports, ships, and camps for construction sites and themilitary.

    INFRASTRUCTURE CONCESSIONINVESTMENTSSNC-Lavalin Capital invests in ICIs in various industry sectors and can take full or partial ownership of infrastruc-ture which SNC-Lavalin often also designs, builds, operates and main-tains. SNC-Lavalin Capital also has the breadth of expertise to arrange short-term or long-term nancing, participate in economic aspects of feasibility studies, negotiate legal agreements, prepare nancial models, perform due diligence and manageICIs.

    AGRIFOODWe provide solutions covering the full life cycle, from food processing, pack-aging and handling, to distribution and storage, for companies of all sizes in their domestic markets and interna-tionally. We have expertise in designing and building agrifood facilities, quality systems and compliance, plant modi- cations and retro t andautomation.

    INDUSTRIALOur areas of activity include glass, lubricants, sugar, cement, automo-bile and aircraft assembly, cosmetics, lling and packaging lines, sulphuric and phosphoric acid, fertilizers, green chemistry and many others. Our exper-tise includes process development and design, instrumentation and automation, e-learning and simulation, construction, project management, plant commis-sioning and start up, and a full range of technical and advisoryservices.

    PHARMACEUTICALS &BIOTECHNOLOGYWe provide full service solutions for the pharmaceutical, biotechnology and life sciences sectors including engineering, construction, automation, commis-sioning and validation. We also have international expertise in biotechnology and pharmaceutical process engineer-ing and regulatorycompliance.

    SNC-Lavalin operates across a broad range of industry sectors and brings expertise in multiple engineering and business disciplines toeveryproject.

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    INTERVIEW WITH PIERRE DUHAIME

    HOW DID THE COMPANY PERFORM FINANCIALLY IN2010?

    Our nancial results for2010 were excellent. Our backlog stood at $13billion and we increased our net income to $437million, 22% higher than in 2009. About 19% of our net income came from our infrastructure concession investments (ICI), which marks a de nite shift in our business. ICI is now a substantial contributor to our netincome.

    Our return on equity was 27%, our revenues remained strong at $6.3billion, and our balance sheet was solid with cash and cash equivalents of $1.3billion. Of that amount, $900million is freehold cash we can use for strategic acquisitions andinvestments.

    WHAT WERE SOME KEY MARKET DEVELOPMENTS IN2010?

    We saw signi cant growth in our public-private partnership (PPP) business. With the addition of the McGill University Hospital Centre and the Chinook Roads Partnership, we now have six PPPs in Canada, and we invested in our rst PPP in India with a toll road concession in AndhraPradesh.

    Looking at the larger picture, developing countries are taking the lead in the global economy. They will soon account for more than half the worlds economic output. This marks a fundamental, long-term structural change in the world marketplace that should open up many opportunities for us. Accelerated growth in countries like China and India is driving the demand for commodities and boosting the economies in resource-rich regions, many of which are strong markets for us. In Latin America, in particular in 2010, we nearly doubled our local presence. Wenow have over 4,000employees in theregion.

    WHAT ARE YOUR MAINPRIORITIES?

    Safety is our top priority. Were happy to report that our health and safety (H&S) performance in2010 was very positive for all our indicators and signi cantly improved. Well continue to build on our H&S procedures and best practices. Equally important, we actively encourage and empower every employee to take the lead in spotting and correcting unsafe situations on theground.

    Risk management is another key area well be focussing on. Here too, we saw excellent results in2010 with a 19% gross margin on our Packages projects. This re ects not only sound risk manage-ment practices, but also superb project delivery on the part of our employees. We are doing well, but managing risk is an ever-evolving process. Every new project brings its own challenges that help us re ne our bestpractices.

    Acquisitions are an important part of our long-term growth plan. Were selective about our choices in terms of price and expertise, but were always looking for opportunities. In 2010, we acquired nine com