Review of 2012 – EUR - Skanska

well 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 Skanska Group.Information must also be provided on remuneration to auditors and the publicaccounting firms where the auditors work. Refer to 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 is expectedto commence within twelve months. If a previously received order is canceledin a subsequent quarter, the cancellation is recognized as a negative item when reportingorder bookings for the quarter when the cancellation occurs. Reported orderbookings also include orders from Residential Development and Commercial Development,which assumes that a building permit has been obtained and constructionis expected to begin within three months. For services related to fixed-price work,the order booking is recorded when the contract is signed, and for services related tocost-plus work, the order booking coincides with revenue. For service agreements, amaximum of 24 months of future revenue is included.No order bookings are reported in Residential Development and CommercialProperty Development.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.Residential DevelopmentIn appraising properties in Residential Development, estimates of market value havetaken into account the value that can be obtained within the customary economiccycle.Infrastructure DevelopmentInfrastructure Development Skanska obtains an estimated value for infrastructureprojects by discounting estimated future cash flows in the form of dividends andrepayments of loans and equity by a discount rate based on country, risk modeland project phase for the various projects. The discount rate chosen is applied to allfuture cash flows starting on the appraisal date. The most recently updated financialmodel is used as a base. This financial model describes all cash flows in the projectand serves as the ultimate basis for financing, which is carried out with full projectrisk and without guarantees from Skanska. For wind-farm projects, the values havebeen deemed to amount to recognized cost.An estimated value is stated solely for projects that have reached contractual andfinancial close. All flows are appraised − investments in the project (equity and subordinateddebenture loans), interest on repayments of subordinated loans, as wellas dividends to and from the project company. Today all investments except NewKarolinska Solna, Sjisjka Vind and Mullbergs Vindpark are denominated in currenciesother than Swedish kronor. This means there is also an exchange-rate risk.Estimated values have partly been calculated in cooperation with external appraisersand are stated in Note 20.Skanska Review of 2012 – EUR version Notes, including accounting and valuation principles 113