New segment reporting and new accounting principles for the Skanska Group

Starting in 2010, changes in the accounting rules in the International Financial Reporting Standards (IFRSs) affect segments, Residential Development (IFRIC 15), Commercial Development (IFRIC 15) and Infrastructure Development (IFRIC 12).

Under the new rules, capital gains in Residential and Commercial Development are recognized only when the purchaser takes possession of the property, which is generally much later than the date when a binding contract is signed. In the accounting method applied to date, capital gains have been recognized successively after the signing of the sales contract and according to the percentage of completion. Since the new accounting method (IFRIC 15) does not reflect the way that the Senior Executive Team and the Board of Directors monitor operations, a new segment reporting method will be presented, in which recognition of capital gains is based on the date when a binding sales contract is signed. The previous percentage of completion method for these two segments will thus disappear entirely in the future. As a result of the new accounting rules, cooperative housing associations are also included in their entirety in Skanska’s accounts, implying an increase in current-asset properties and financial current liabilities compared to earlier. To further increase the transparency of its accounting, Skanska will transfer residential development and commercial development operations that have been carried out as part of Construction in the Nordic countries to the Residential and Commercial Development segments. These two segments will include all of the Group’s operations in these segments. As for Infrastructure Development, the new IFRIC 12-compliant accounting method means that income from joint ventures and associated companies is reported earlier than previously, with the added result that the carrying amount of these investments increases. In the future, the difference compared to market value will thus decrease. Since the new IFRIC 12-compliant accounting method reflects the way that the Senior Executive Team and the Board of Directors monitor operations, the previous accounting method will disappear entirely. Market value figures will also continue to be presented. The new accounting rules do not change the way that Skanska has previously reported its Construction operations. The effects of the new rules on cash flow and financial position are marginal, which means that these reports will follow the new rules in the future. To summarize, in coming financial reports Skanska will present two income statements: one in which capital gains are recognized according to the segment reporting method in Residential and Commercial Development, and one in compliance with the new IFRS rules. The income statement based on segment reporting will primarily be used by the Board of Directors and the Senior Executive Team to monitor operations. The Group’s incentive programs are primarily based on segment reporting, which will also provide guidance for the Board’s dividend decisions. The Group’s financial reports for 2009 have been restated. The effects on the Group’s financial statements for the full year 2009, the opening balance for 2009 and segment reporting for 2009 are presented in the following document. Segment reporting - New segment reporting principle for the Residential Development, Commercial Development and Infrastructure Development segments - Reporting of Construction according to segment reporting conforms to previous reporting of these operations - Effective in 2010, residential and commercial development previously carried out as part of Construction operations in the Nordic countries is being reported in the Residential Development and Commercial Development segments - Interest-bearing assets and liabilities are not affected by segment reporting, which means that net financial items are the same according to segment reporting and IFRS-compliant reporting - In the Group’s future quarterly reports and other financial presentations, segment reporting will serve as the basis for analysis - Profit for the year 2009 is SEK 626 M lower than profit according to the new IFRS-compliant accounting IFRIC 15 − Agreements for the Construction of Real Estate - Affects the reporting of project operations both in Commercial Development and Residential Development - Revenue recognition of property divestments and residential sales will not occur until the purchaser gains legal ownership of the property/residential unit, which normally coincides with taking possession of the property - Interest-bearing liabilities increase, since liabilities that were previously charged only to the cooperative housing association (Sweden) and the housing corporation (Finland) are now recognized as financial liabilities to the Group - The purchase price receivable on divestment of commercial properties, which was previously recognized as a receivable, remains as a current-asset property until the purchaser takes possession of the property - Profit for the year 2009 increases by SEK 318 M - Equity on December 31, 2009 decreases by SEK 577 M, of which SEK -917 M is due to restatement of prior years and thus affects equity on January 1, 2009 - Interest-bearing net receivables on December 31 decrease by SEK 4,433 M, of which SEK 2,553 M is related to Residential Development and SEK 1,880 M is related to Commercial Development IFRIC 12 − Service Concession Arrangements - Affects Skanska Infrastructure Development - For joint ventures and associated companies, this means earlier and more uniformly recognized income - Profit for the year 2009 increases by SEK 275 M - Equity on December 31, 2009 increases by SEK 287 M For further information, please contact: Hans Biörck, Executive Vice President and CFO, Skanska AB, tel +46 10 448 8832 Pontus Winqvist, Senior Vice President, Investor Relations, Skanska AB, tel +46 10 448 8851 Peter Gimbe, Press Officer, Skanska AB, tel +46 10 448 8838, cell phone +46 70 543 88 38