Annual Report 2011 - Skanska

of transfers of resources to a company in return for past or future compliance withcertain conditions relating to its operations.Government grants are recognized in the statement of financial position as prepaidincome or reduction in the investment when there is reasonable assurance thatthe grants will be received and that the Group will meet the conditions associatedwith the grant.The Swedish Financial Reporting Board’s recommendation RFR 1,“Supplementary Accounting Regulations for Groups”The recommendation specifies what further disclosures must be provided in order forthe annual accounts to conform with Sweden’s Annual Accounts Act. The additionalinformation mainly concerns personnel-related disclosures.Disclosure on the number of employees, allocated between women and men aswell as among countries, is provided in Note 36. The number of employees duringthe year was calculated as an average of the average number of employees duringthe quarters included in the year. In this calculation, part-time employment is equivalentto 60 percent of full-time employment. Operations divested during the year arenot included.Disclosure on the allocation between women and men for senior executivesspecifies the situation on the closing day. “Senior executives” in the various Groupcompanies refers to the members of the management team of the respective businessunits. The information is provided in Notes 36 and 37.In addition to Board members and the President and CEO, all other persons in theGroup’s Senior Executive Team must be included in the group for which a separateaccount shall be provided of the total amounts of salaries and other remuneration aswell as expenses and obligations related to pensions and similar obligations. Furthermore,the same disclosures must be provided at an individual level for each of theBoard members and for the President as well as previous holders of these positions.Employee representatives are exempted.Note 36 provides information about loans, assets pledged and contingent liabilitieson behalf of members of the Boards of Directors and Presidents in the SkanskaGroup.Information must also be provided on remuneration to auditors and the publicaccounting firms where the auditors work. See Note 38.Order bookings and order backlogIn Construction assignments, an order booking refers to a written order confirmationor signed contract, provided that financing has been arranged and construction isexpected to start within twelve months. If an order received earlier is canceled duringa later quarter, the cancellation is recognized as a negative item when reporting theorder bookings for the quarter when the cancellation occurs. Reported order bookingsalso include orders from Residential Development and Commercial PropertyDevelopment. For services related to fixed-price work, the order booking is recordedwhen the contract is signed, and for services related to cost-plus work, the orderbooking coincides with revenue. For service contracts, a maximum of 24 months offuture revenue is included.In Residential Development and Commercial Property Development, no orderbookings are reported.Order backlog refers to the difference between order bookings for a period andaccrued revenue (accrued project expenses plus accrued project income adjusted forloss provisions) plus order backlog at the beginning of the period.The order backlog in the accounts of acquired Group companies on the date ofacquisition is not reported as order bookings, but is included in order backlog amounts.Market appraisalCommercial Property DevelopmentNote 22 states estimated market values for Skanska’s current-asset properties.For completed properties that include commercial space and for developmentproperties, market values have been partly calculated in cooperation with externalappraisers.Infrastructure DevelopmentSkanska obtains an estimated value for infrastructure projects by discountingestimated future cash flows in the form of dividends and repayments of loans andequity by a discount rate based on country, risk model and project phase for thevarious projects. The discount rate chosen is applied to all future cash flows startingon the appraisal date. The most recently updated financial model is used as a base.This financial model describes all cash flows in the project and serves as the ultimatebasis for financing, which is carried out with full project risk and without guaranteesfrom Skanska. Skanska has not been able to apply the above-described model for theSjisjka Vind project, a wind farm in Sweden that is not a public-private partnershipproject and that is under construction. Instead its value has been deemed to amountto recognized cost.An estimated value is stated only for that have reached financial close. All flowsare appraised − investments in the project (equity and subordinated debentureloans), interest on repayments of subordinated loans as well as dividends to andfrom the project company. Today all investments except New Karolinska Solna andSjisjka Vind are denominated in currencies other than Swedish kronor. This meansthere is also an exchange rate risk.Estimated values have partly been calculated in cooperation with externalappraisers and are stated in Note 20.Note01Parent Company accounting andvaluation principlesThe Parent Company has prepared its annual accounts in compliance with theAnnual Accounts Act and the Swedish Financial Reporting Board’s RecommendationRFR 2, “Accounting for Legal Entities.” RFR 2 implies that in the annual accountsof the legal entity, the Parent Company must apply the International FinancialReporting Standards (IFRSs) and International Accounting Standards (IASs), issuedby the International Accounting Standards Board (IASB), to the extent these havebeen approved by the EU, as well as the interpretations by the IFRS InterpretationsCommittee and its predecessor the Standing Interpretations Committee (SIC), as faras this is possible within the framework of the Annual Accounts Act and with respectto the connection between accounting and taxation. A presentation of the variousaccounting standards can be found in the Group’s Note 1. The statements of theSwedish Financial Reporting Board must also be applied.Important differences compared to consolidated accounting principlesThe income statement and balance sheet comply with the presentation formats inthe Annual Accounts Act.Defined-benefit pension plans are reported according to the regulations in thePension Obligations Vesting Act. Pension obligations secured by assets in pensionfunds are not recognized in the balance sheet.Holdings in associated companies and joint ventures, like holdings in Group companies,are carried at cost before any impairment losses.The Parent Company applies IAS 37 for financial guarantee agreements on behalfof Group companies, associated companies and joint ventures.The SEOP 1 and SEOP 2 employee ownership programs are recognized as sharebasedpayments that are settled with equity instruments, in compliance with IFRS 2.The portion of the Group’s expense for SEOP 2 that is related to employees ofGroup companies is recognized in the Parent Company as an increase in the carryingamount of holdings in Group companies and an increase in equity. Compensationfrom Group companies for shares that have been allocated to participants in theemployee ownership program is recognized directly in equity.Residential DevelopmentIn appraising properties in Residential Development, estimates of market value havetaken into account the value that can be obtained within the customary economic cycle.116 Notes, including accounting and valuation principles Skanska Annual Report 2011