Annual Report 2011 - Skanska

Other European marketsIn the Czech Republic, Skanska received the construction assignmentrelated to the extension of a subway line in Prague. The projectincludes the technical part of the construction of four new stations,with a contract value of about SEK 1.3 billion. In the U.K., Skanskareceived an assignment to be responsible for construction of theCrossrail Paddington Station, part of a project which will connect eastand west London. The contract is worth about SEK 770 M. Skanskaalso received an assignment to upgrade street lighting in the Londonboroughs of Croydon and Lewisham. The construction contracttotals about SEK 760 M and the project is being carried out as a publicprivatepartnership (PPP). In the U.K., Skanska was also awarded adesign-build contract for the new HMP Grampian prison in Aberdeen,worth about SEK 590 M, and the assignment to build a green commercialproperty in Bevis Marks, London, valued at about SEK 517 M.The AmericasDuring 2011 Skanska was awarded a number of major projects.Skanska USA Civil received a contract to extend the light rail systemin Los Angeles County, California, worth about SEK 2.4 billion. Innorthern California, Skanska USA Civil also secured a design-buildcontract for a 16 kilometer (10 mi.) extension of the Bay Area RapidTransit (BART) system, valued at SEK 2.2 billion. Skanska USA Civilalso received a contract to fabricate and erect the steel structure for the“Oculus” building at the new World Trade Center Transportation Hubin New York City, valued at about SEK 1.3 billion. Skanska USA Civilreceived two further major assignments in New York City. One was tofurnish and install finishes in the No. 7 Line subway extension, a projectworth about SEK 2.4 billion. The other assignment was to performpreparatory work for the 86th Street subway station, a contract worthSEK 1.3 billion. During 2011 Skanska USA Building secured contractsfor a number of hospital projects. In Wilmington, Delaware, SkanskaUSA Building received an assignment to expand a children’s hospital,worth about SEK 1.3 billion. In New Orleans, Louisiana, Skanska USABuilding was awarded the first phase of the construction of a stateof-the-artmedical center, worth about SEK 3 billion. Skanska USABuilding was contracted to construct a new hospital campus in NorthCarolina, an order worth about SEK 890 M. Skanska USA Buildingalso received an assignment to complete the final phase of a campusexpansion at the City University of New York. The contract amountwas about SEK 2.4 billion. In Latin America, Skanska Latin Americareceived an assignment to construct a natural gas power plant in Rio deJaneiro, Brazil, worth about SEK 3.2 billion. Skanska was also awardeda contract to modernize and expand an existing lubricant plant andconstruct a new one, also in Rio de Janeiro, Brazil, for about SEK 590 M.Order bookings and backlogBusiness unit Order bookings Order backlogSEK M 2011 2010 2011 2010Sweden 24,493 39,459 1 29,468 31,935 1Norway 17,786 12,893 2 15,414 10,132 2Finland 8,427 8,685 6,614 5,903Poland 9,135 6,854 6,913 8,962Czech Republic 5,988 6,786 7,497 8,399United Kingdom 9,138 14,950 20,141 23,512USA Building 25,928 25,576 35,936 30,649USA Civil 13,142 7,129 24,807 20,812Latin America 9,550 7,961 8,908 5,633Total 123,587 130,293 155,698 145,9371 Adjustment of SEK –1,073 M in 20102 Adjustment of SEK –67 M in 2010Order backlogOrder backlog increased by 7 percent and totaled SEK 155.7 (145.9) billionat the end of 2011. Adjusted for currency rate effects, order backlogalso increased by 7 percent, of which 1 percentage point was acquiredorder backlog. Order backlog was equivalent to about 16 (16) monthsof construction.Skanska’s North American and Latin American, Nordic and otherEuropean operations accounted for 45, 33 and 22 percent of orderbacklog, respectively.The portion of order backlog that is planned for execution during2012 was equivalent to SEK 83.1 billion at closing day exchange rates.Segment and IFRS reportingThe Group reports its Residential Development and CommercialProperty Development segments according to a method in whichsales revenue and gains on the divestment of properties, residential aswell as commercial, are recognized when binding sales contracts aresigned. When reporting in compliance with IFRSs, revenue and gainson divestment of properties are recognized when the purchaser takespossession of the property or home.The differences between the two methods, with regard to revenueand operating income, are summarized in the tables below.Effective from 2011, holdings in joint ventures and associated companiesin the Residential Development income statement are dividedinto revenue and expenses in segment reporting. Historical comparativefigures have not been changed.RevenueSEK M 2011 2010Revenue by business stream according to segmentreportingConstruction 114,972 113,213Residential Development 8,550 7,581Commercial Property Development 5,633 4,648Infrastructure Development 286 319Central and eliminations –6,907 –4,098Total revenue according to segment reporting 122,534 121,663Reconcilation according to IFRSs –3,800 561Total revenue according to IFRSs 118,734 122,224Revenue according to segment reporting rose by 1 percent to SEK 122.5(121.7) billion. In local currencies, the revenue increase was 7 percent.In the Construction business stream, revenue rose in SEK by 2 percentand in local currencies by 8 percent. SEK 14.7 (10.1) billion of revenuein Construction, equivalent to 13 (9) percent, was generated by theGroup’s project development operations. To reconcile with IFRSs, addthe revenue from the homes and properties that were sold during priorperiod but were handed over during the year. Then subtract the homesand properties that were sold during the year but where the purchaserhad not yet taken possession. Of the SEK 8,550 M in Residential Developmentrevenue, SEK 947 consisted of revenue from joint venturesincluded according to the proportional method of accounting.Skanska Annual Report 2011 Report of the Directors 83