Skanska — Annual Report 2021

Feb 5, 2021

Q4 2020 Press release, February 5, 2021, 7:30 a.m. CET

We build for a better society. 2+U, Seattle, USA

~~2 Pressrelease, February 5, 2021, 7:30 a.m. CET~~

Year-end report, January–December 2020

Highlights according to segment reporting

• Revenue decreased 10 percent and amounted to SEK 158.6 billion (176.8); adjusted for currency effects revenue decreased 8 percent.

• Operating income, which includes the divestment of the ownership stake in the Elizabeth River Crossings, increased 52 percent and amounted to SEK 11.9 billion (7.8).

• Earnings per share increased 45 percent and amounted to SEK 22.46 (15.46).

• The Board of Directors propose a dividend of SEK 9.50 (3.25) per share, of which SEK 6.50 (3.25) per share as ordinary dividend and SEK 3.00 (0.00) per share as extra dividend.

• Operating cash flow from operations amounted to SEK 14.5 billion (3.8), according to IFRS.

• Adjusted interest-bearing net receivables(+)/net debt(–) totaled SEK 16.0 billion (September 30, 2020: 8.0), according to IFRS.

• Order bookings in Construction amounted to SEK 149.8 billion (145.8); adjusted for currency effects order bookings increased 6 percent. The order backlog amounted to SEK 178.9 billion (September 30, 2020: 182.9).

• Operating income in Construction amounted to SEK 3.5 billion (3.8), representing an operating margin of 2.5 percent (2.4).

Operating income in Project Development amounted to SEK 5.4 billion (4.5).

• Return on capital employed in Project Development was 12.2 percent (10.3).

• Return on equity was 26.0 percent (21.4).

Performance Analysis

Tables referring to segment reporting are in shaded background. For more information see page 14. For definitions of non-IFRS financial measures see pages 15-17.

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SEK M Jan-Dec 2020 Jan-Dec 2019 Change, % Oct-Dec 2020 Oct-Dec 2019 Change, %
Revenue
Construction 140,483 159,579 -12 34,188 42,411 -19
Residential Development 13,070 12,483 5 3,506 5,292 -34
Commercial Property Development 14,983 17,850 -16 8,746 7,063 24
Central and Eliminations -9,930 -13,130 -24 -2,440 -3,369 -28
Total 158,606 176,782 -10 44,000 51,397 -14
Operating income
Construction 3,528 3,772 -6 1,112 1,092 2
Residential Development 1,543 1,195 29 475 377 26
Commercial Property Development 3,897 3,287 19 1,693 1,267 34
Central 2,830 -388 - 3,170 -247 -
Eliminations 62 -38 - 138 -36 -
Operating income 11,860 7,828 52 6,588 2,453 169
Net financial items -236 -103 129 -59 -34 74
Income after financial items 11,624 7,725 50 6,529 2,419 170
Taxes -2,350 -1,353 74 -1,429 -477 200
Profit for the period 9,274 6,372 46 5,100 1,942 163
Earnings for the period per share, SEK 22.46 15.46 45 12.37 4.71 163
Revenue for the period according to IFRSs 160,344 172,846 -7 42,625 50,691 -16
Operating income for the period according
to IFRSs 12,633 7,428 70 6,403 2,767 131
Earnings for the period per share according to
IFRSs, SEK 23.97 14.68 63 11.97 5.34 124
Operating cash flow from operations 14,450 3,835 277 9,544 8,339 14
Interest-bearing net receivables(+)/net debt(-) 7,280 -4,917 - 7,280 -4,917 -
Return on capital employed in Project
Development, % 12.2 10.3
Adjusted interest-bearing net receivables(+)/
net debt(-) 15,961 3,241 392
Return on equity, % 26.0 21.4
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Revenue

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SEK bn
200
150
100
50
0
2016 2017 2018 2019 2020
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Operating income

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SEK bn
14
12
10
8
6
4
2
0
2016 2017 2018 2019 2020
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Operating income per segment, Dec 31, 2020

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Construction, 40%
Residential Development, 17%
Commercial Property Development, 43%
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Operating cash flow from operations

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SEK bn
16
14
12
10
8
6
4
2
0
-2
-4
2016 2017 2018 2019 2020
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~~Skanska Year-end report, January–December 2020 3~~

Skanska delivers record profit

Looking back on 2020, the spread of Covid-19 that negatively impacted societies, economies and financial markets globally defined this year. At Skanska, we acted quickly and decisively to protect our people,the company, and the balance sheet. We navigated these difficult times well, and despite a second wave of the pandemic, the Constrution and Residential Development streams remained solid. We also delivered strong divestment gains in Commercial Property Develop-

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ment. On top of that we have been able to divest our ownership in a toll-road project at attractive levels. Altogether, this has contributed to record profit, strong cash generation and a solid balance sheet, enabling us to exceed our group financial target for 2020. Given this performance and considering the market environment and future investment opportunities the Board of Directors propose a dividend of SEK 9.50 per share, of which SEK 6.50 per share as ordinary dividend and SEK 3.00 per share as extra dividend.

The health and safety of our people is of the outmost importance to Skanska. Our ambition is to eliminate all accidents. In 2020 we put additional focus on activities having a higher accident frequency, such as lifting, loading and lowering.

During 2020, we continued to make progress on our journey to net-zero carbon emissions by 2045, including the value chain. The total reduction in our own operations since the base year in 2015 has been more than 30 percent.

In Residential Development both the number of sold and started homes increased during the year and profitability remained at a good level. The rental homes segment represented the largest increase in volume. By the end of the year we started our first BoKlok project in the UK, with the ambition to ramp up over the coming years. We have a strong land bank in our markets and will be able to meet demand. Currently demand is solid, especially in the Nordic countries, but there are uncertainties ahead. The long-term effects of the pandemic, particularly on unemployment and consumer confidence, are still too early to tell.

In Commercial Property Development we delivered yet another record year when it comes to divestment gains. Our developments are in demand and attractive to property investors. The pandemic has had a negative impact on leasing activity in general as many tenants are postponing decisions on what their office needs and criteria will be going forward. We are in close dialogue with potential tenants in all our markets, and we announced some larger leases in Central Europe and USA in the beginning of 2021. Our deep knowledge and strong relations in the tenant market, coupled with our ability to adapt to tenant needs, is a clear strength as we start new developments in a changing office market.

In 2021 the fight against the pandemic remains. We will safeguard our operations, finances, people and support our communities in the challenges we all are facing. There are, however, some factors reducing market uncertainty globally, such as the Covid-19 vaccine, a UK-EU free trade deal in place and a newly inaugurated US president. Reduced uncertainty will likely support the economic recovery, but the pace remains to be seen. Skanska is in a strong position. Our ambition is to generate an industry leading total shareholder return and make use of our strong market position, balance sheet and organizational strength to deliver continued profitability improvement in Construction and increased activity in Project Development.

In Construction the performance was solid. That said, the Construction stream can further improve profitability and the strategy to do so remains. In the UK, we are focusing our operations. In Central Europe we are adapting to lower volumes. In Sweden we have taken additional measures to address areas where we have struggled with the profitability during the year, and in the US we aim for additional profitability improvements. Being selective in our bidding and focusing on commercial management remain in focus. This is increasingly important in a market such as the US where we see increased competition in the civil infrastructure market and public clients face funding uncertainties.

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2+U, Seattle, USA

2+U is comprised of a 65,000-square meter office tower in Seattle’s Central Business District and a 2,200 square-meter open-air community hub on the ground floor, known as the Urban Village, with local retail and cultural space. Office tenants include Qualtrics, Indeed.com, Dropbox Inc. and Spaces. 2+U is targeting LEED Platinum, the highest level of certification, demonstrating comprehensive attention to energy and water efficiency, healthy material selection, and waste reduction across the entire building design. The building has been specifically designed to care for the health & well-being of building occupants. Construction of 2+U began in the second quarter of 2017, both exterior and interior elements were completed in the third quarter of 2019. Skanska divested a 95 percent interest in the 2+U office property in Seattle, Washington, USA, for approximately USD 669 M, about SEK 5.5 billion, to South Korean financial group Hana Alternative Asset Management, alongside Hana Financial Group in the fourth quarter of 2020.

~~4 Skanska Year-end report, January–December 2020~~

Market outlook, next 12 months

Weaker outlook compared to previous quarter. Unchanged outlook compared to previous quarter. Improved outlook compared to previous quarter. Very strong market coming 12m Strong market coming 12m Stable market coming 12m Weak market coming 12m Very weak market coming 12m

Construction

The pandemic has had a negative impact on demand in the construction market, mainly from the private clients and in commercial and residential building construction. Public spending into social infrastructure and infrastructure is keeping up relatively well, even though some decisions are being postponed. Funding could be a challenge as public budgets are decreasing due to lower tax revenue and being consumed to fight the pandemic and to stimulate the economies. This can be seen in the US civil infrastructure market where the competition also is increasing. The inauguration of the US president will likely reduce the market uncertainty and federal infrastructure investments could potentially increase, but lead-times are expected to be long. In the UK, the civil infrastructure market is improving as the free trade deal with the EU is reducing the uncertainty in the public decision making.

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Building, Building,
non-residential residential Civil
[Nordics]
Sweden
Norway
Finland
[Europe]
Poland
Czech Republic [1]
United Kingdom –
USA
USA –
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1 Including Slovakia.

Residential Development

Low interest rate policies to support a recovery in the economies are improving affordability which strengthens the consumer confidence. The housing market is experiencing a shortage as new developments have slowed significantly. The risk of increasing unemployment levels, as a consequence of an economic slowdown due to the pandemic, could potentially impact demand negatively. To some extent, a structural shortage of housing in many of our markets could mitigate that situation.

[Nordics] Sweden Norway Finland

[Europe]

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Norra Vitsippan, Salem, Sweden

Commercial Property Development

The number of transactions and new developments have decreased due to the market uncertainty. The credit market has however recovered and remains stable. Investor appetite for high quality developments is expected to be solid at about current yield levels. Leasing has slowed significantly, mainly due to tenant uncertainty. The activity is expected to recover but there will likely be a change in demand and behaviors in the office market.

[Nordics] Sweden Norway Finland Denmark

[Europe] Poland Czech Republic Hungary Romania USA

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Spark, Warsaw, Poland

~~Skanska Year-end report, January–December 2020 5~~

Performance analysis

Group

Revenue and operating income, rolling	Revenue and operating income, rolling	Revenue and operating income, rolling	Revenue and operating income, rolling	Revenue and operating income, rolling	12 months	12 months	12 months	12 months							Revenue per segment, January-December 2020
8 10 12 14 SEK bn, operating income											160 200 240 SEK bn, revenue
6													120
4													80
0 2													0 40
2016 2017 2018 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Operating income Revenue											Q2 Q3 Q4				Construction, 83% Residential Development, 8% Commercial Property Development, 9%
Revenue and earnings															Operating income per segment, January-December 2020
		Jan-Dec		Jan-Dec		Change,		Oct-Dec		Oct-Dec		Change,
SEK M			2020	2019			%	2020			2019		%
Revenue		158,606		176,782			-10	44,000		51,397			-14
Operating income1, 2		11,860		7,828			52	6,588			2,453		169
Net fnancial items		-236		-103			129	-59			-34		74
Income after fnancial items Taxes		11,624 -2,350		7,725 -1,353			50 74	6,529 -1,429			2,419 -477		170 200
Proft for the period Earnings for the period per share, SEK3		9,274 22.46		6,372 15.46			46 45	5,100 12.37			1,942 4.71		163 163		Construction, 40% Residential Development, 17% Commercial Property Development, 43%
Earnings for the
period per share
according to IFRSs,
SEK3		23.97		14.68			63	11.97			5.34		124
1 Central, SEK 2,830 M (-388). 2 Eliminations, SEK 62 M (-38). 3 Earnings for the period attributable				to equity holders divided by the average number of shares											Revenue decreased 10 percent and amounted to SEK 158.6 billion (176.8); adjusted for currency effects revenue decreased 8 percent. Operating inc
3outstanding.															increased 52 percent and amounted to SEK 11,860 M (7,828); adjusted for
															currency effects operating income increased 54 percent.
															Central stream totaled SEK 2,830 M (–388). SEK 3,734 M (24) relate to t
															PPP-portfolio, where the divestment of the 50 percent ownership stake in
															the Elizabeth River Crossings in Virginia, USA, had a positive effect in th
Changes and currency rate effects															fourth quarter. In the fourth quarter, Central stream was negatively impa by SEK –700 M, mainly consisting of provisions related to remaining risk
						Jan-Dec 2020 / Jan-Dec 2019									closing down legacy items and the PPP-portfolio. In the comparable perio
Revenue Operating income				Change in SEK -10% 52%			Change in local currency -8% 54%				Currency effect -2% -2%				Central stream was positively affected by a release of a provision totaling SEK 212 M related to the legal case concerning the R4 project in Czech Republic. The elimination of gains in Intra-Group projects amounted to
															SEK 62 M (–38).
															Net financial items amounted to SEK –236 M (–103).
															Taxes for the period amounted to SEK –2,350 M (–1,353), corres	pondin
															an effective tax rate of 20 percent (18).

Revenue decreased 10 percent and amounted to SEK 158.6 billion (176.8); adjusted for currency effects revenue decreased 8 percent. Operating income increased 52 percent and amounted to SEK 11,860 M (7,828); adjusted for currency effects operating income increased 54 percent.

Central stream totaled SEK 2,830 M (–388). SEK 3,734 M (24) relate to the PPP-portfolio, where the divestment of the 50 percent ownership stake in the Elizabeth River Crossings in Virginia, USA, had a positive effect in the fourth quarter. In the fourth quarter, Central stream was negatively impacted by SEK –700 M, mainly consisting of provisions related to remaining risks in closing down legacy items and the PPP-portfolio. In the comparable period, Central stream was positively affected by a release of a provision totaling SEK 212 M related to the legal case concerning the R4 project in Czech Republic.

Taxes for the period amounted to SEK –2,350 M (–1,353), corresponding to an effective tax rate of 20 percent (18).

~~6 Skanska Year-end report, January–December 2020~~

Cash flow

Group

Operating cash flow from operations

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SEK bn
16
14
12
10
8
6
4
2
0
-2
-4
-6
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating cash flow from operations, quarterly
Rolling 12 months
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Operating cash flow

Operating cash fow
SEK M	Jan-Dec 2020	Jan-Dec 2019	Change, %	Oct-Dec 2020	Oct-Dec 2019	Change, %
Cash fow from business operations	4,104	4,704	-13	520	1,142	-54
Change in working capital	608	-651	-	1,098	3,237	-66
Net divestments(+)/ investments(-)	12,508	1,632	666	8,499	4,213	102
Cash fow adjustment	-355	209	-	-61	-37	65
Cash fow from business operations before taxes paid Taxes paid in business operations	16,865 -1,481	5,894 -1,371	186 8	10,056 -391	8,555 -107	18 265
Cash fow from fnancing operations	-934	-688	36	-121	-109	11
Operating cash fow from operations Net strategic divestments(+)/ investments(-)	14,450 0	3,835 -6	277 -	9,544 0	8,339 0	14 -
Dividend etc	-1,443	-2,488	-42	-1,374	-15	9,060
Cash fow before change in interest-bearing receivables and liabilities Change in interest- bearing receivables and liabilities excluding lease liabilities	13,007 -1,336	1,341 -3,415	870 -61	8,170 -2,783	8,324 -2,716	-2 2
Cash fow for the period	11,671	-2,074	-	5,387	5,608	-4

Operating cash flow from operations amounted to SEK 14,450 M (3,835), where an increase in net divestments in Commercial Property Development is the main reason for the change in cash flow.

Taxes paid in business operations amounted to SEK –1,481 M (–1,371). Commercial Property Development assets sold but not transferred will have a positive effect on cash flow of SEK 5.7 billion, of which SEK 4.1 billion will be received during 2021. The remainder will affect cash flow during 2022.

Free working capital in Construction

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SEK bn %
30 21
25 18
15
20
12
15
9
10
6
5 3
0 0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Free working capital, SEK bn Free working capital, end of Q4, SEK bn
Average free working capital/ Construction revenue, R-12, %
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Free working capital in Construction amounted to SEK 25.7 billion (26.4). The average free working capital in relation to Construction revenue in the past 12 months was 18.4 percent, partly driven by lower volumes. Free working capital in Construction remained at a good level due to favorable cash flow profiles in several projects and continued focus on cash generation in the Construction stream. Cash flow due to changes in working capital in Construction amounted to SEK 1,382 M (–262).

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Nordøyvegen, Møre – Romsdal, Norway

~~Skanska Year-end report, January–December 2020 7~~

Financial position

Adjusted interest-bearing net receivables(+)/net debt(-)

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SEK bn
20
15
10
5
0
-5
-10
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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Balance sheet - Summary

Balance sheet - Summary
SEK bn	Dec 31, 2020	Dec 31, 2019
Total assets	125.6	126.0
Total equity	38.7	33.0
Interest-bearing net receivables (+)/net debt (-)	7.3	-4.9
Adjusted interest-bearing net receivables(+)/net debt(-)	16.0	3.2
Capital employed, closing balance	61.1	55.9
Equity/assets ratio, %	30.8	26.2

Change in net interest-bearing receivables and liabilities

SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Opening balance interest-bearing net receivables(+)/net debt(-)	-4,917	3,231	-1,329	-14,446
Change in accounting principle1	-	-7,469	-	-
Adjusted opening balance Cash fow for the period	-4,917 11,671	-4,238 -2,074	-1,329 5,387	-14,446 5,608
Less change in interest-bearing receivables and liabilities	1,336	3,415	2,783	2,716
tabell - funkar int Cash fow before change in interest- bearing receivables and liabilities Translation differences, net receivables/ net debt	e att m 13,007 -1,067	ontera 1,341 129	in! 8,170 -526	8,324 32
Remeasurements of pension liabilities	-860	-751	482	1,089
Interest-bearing liabilites acquired/ divested	0	-505	0	10
Other changes, interest-bearing net receivables/net debt	1,117	-893	483	74
Change in interest-bearing net receivables/net debt	12,197	-679	8,609	9,529
Closing balance interest-bearing net receivables(+)/net debt(-) Restricted cash	7,280 -4,814	-4,917 -6,084	7,280 -4,814	-4,917 -6,084
Pension liability, net	6,262	5,321	6,262	5,321
Lease liabilities	7,233	8,921	7,233	8,921
Closing balance adjusted interest- bearing net receivables(+)/net debt(-)	15,961	3,241	15,961	3,241

1 Change in accounting principle is attributable to the implementation 2019 of IFRS 16. 1 For further information see the Annual and Sustainability Report 2019, Note 1.

Adjusted interest-bearing net receivables (+)/net debt (–) amounted to SEK 16.0 billion (September 30, 2020: 8.0). Interest-bearing net receivables amounted to SEK 7.3 billion (September 30, 2020: –1.3) and include SEK 7.2 billion in interest-bearing lease liabilities according to IFRS 16.

At the end of the quarter, cash, cash equivalents and committed unutilized credit facilities amounted to SEK 27.0 billion (September 30, 2020: 22.7), of which SEK 22.8 billion (September 30, 2020: 16.6) is available within one week. The Group central loan portfolio amounted to SEK 3.7 billion (September 30, 2020: 4.4) consisting of SEK 0.5 billion in Medium-Term Notes (MTN) with an average maturity of 2.4 years and SEK 3.2 billion in bilateral loans with an average maturity of 3.4 years. At December 31, the Group’s unutilized credit facilities totaled SEK 7.5 billion. The central loan portfolio, including committed unutilized credit facilities, had an average maturity of 3.1 years (September 30, 2020: 3.2).

At the end of the quarter, capital employed amounted to SEK 61.1 billion (September 30, 2020: 59.6).

Equity

Changes in equity

SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Opening balance	33,021	29,347	35,685	30,311
Change in accounting principle1	-	-67	-	-
Adjusted opening balance Dividend to shareholders	33,021 -1,340	29,280 -2,462	35,685 -1,340	30,311 0
Other changes in equity not included in total comprehensive income for the year	197	219	58	55
Proft for the period Other comprehensive income Translation differences	9,897 -2,146	6,054 679	4,935 -1,076	2,202 -784
Effects of remeasurements of pensions	-792	-729	429	1,055
Effects of cash fow hedges	-120	-20	26	182
Closing balance	38,717	33,021	38,717	33,021

1 Change in accounting principle is attributable to the implementation 2019 of IFRS 16. 1 For further information see the Annual and Sustainability Report 2019, Note 1.

Adjusted equity, less standard tax of 10 percent

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SEK bn
60
50
40
30 Effect in unrealized equity in PPP-portfolio
20 Unrealized Commercial Property
Development gains
10 Unrealized surplus value in Residential
Development
0 Equity attributable to equity holders
Dec 31, 2019 Sep 30, 2020 Dec 31, 2020
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The Group’s equity amounted to SEK 38.7 billion (33.0), resulting in an equity/assets ratio of 30.8 percent (26.2) and a net debt/equity ratio of –0.2 (0.1).

Translation differences amounted to SEK –2,146 M (679) as a result of a stronger Swedish krona.

The effects of remeasurements of pensions amounted to SEK –792 M (–729). This can be explained by lower discount rates in Sweden, Norway and the UK.

Unrealized surplus values in Project Development including the PPP-portfolio amounted to SEK 10.7 billion of which SEK 0.8 billion was realized according to segment reporting. Corresponding amounts less standard tax were SEK 9.7 billion and SEK 0.7 billion.

~~8 Skanska Year-end report, January–December 2020~~

Investments and divestments

Investments and divestments

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SEK bn
20
15
10
5
0
-5
-10
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Investments, quarterly Divestments, quarterly
Net investments, rolling 12 months
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The Group’s investments amounted to SEK –21,685 M (–24,969), while divestments amounted to SEK 34,193 M (26,595), resulting in net divestments of SEK 12,508 M (1,626).

In Construction, investments totaled SEK – 1,503 M (–2,542). These investments mainly relate to property, plant and equipment for the Group’s own operations. Net investments in Construction amounted to SEK – 1,188 M (–1,503). Depreciation of property, plant and equipment and depreciation of property, plant and equipment right-of-use assets amounted to SEK – 2,597 M (–2,682).

In Residential Development, investments totaled SEK – 10,419 M (–9,437), of which SEK – 2,499 M (–1,744) relates to land acquisitions, corresponding to 4,328 building rights. Divestments amounted to SEK 11,710 M (11,793). Net divestments in Residential Development amounted to SEK 1,291 M (2,356).

In Commercial Property Development, investments totaled SEK – 9,777 M (–12,946), of which SEK – 2,752 M (–2,498) relates to investments in new land, while divestments amounted to SEK 16,988 M (13,713). Net divestments in Commercial Property Development amounted to SEK 7,211 M (767).

Divestments in Other relate to the divestment of the ownership stake in the Elizabeth River Crossings.

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Investment, Office development, Los Angeles, USA

Investments, divestments and net divestments(+)/investments(-)

SEK M	Jan-Dec 2020	Jan-Dec 2019	Change, %	Oct-Dec 2020	Oct-Dec 2019	Change, %
Investments Construction	-1,503	-2,542	-41	-504	-875	-42
Residential Development	-10,419	-9,437	10	-3,332	-2,590	29
Commercial Property Development	-9,777	-12,946	-24	-3,464	-4,219	-18
Other	14	-44	-	10	17	-41
Total Divestments Construction	-21,685 315	-24,969 1,039	-13 -70	-7,290 130	-7,667 397	-5 -67
Residential Development	11,710	11,793	-1	3,518	3,482	1
Commercial Property Development	16,988	13,713	24	6,881	7,963	-14
Other	5,180	50	-	5,260	38	-
Total Net divestments(+)/ investments(-) Construction	34,193 -1,188	26,595 -1,503	29 -21	15,789 -374	11,880 -478	33 -22
Residential Development	1,291	2,356	-45	186	892	-79
Commercial Property Development	7,211	767	840	3,417	3,744	-9
Other	5,194	6	-	5,270	55	-
Total	12,508	1,626	669	8,499	4,213	102
Of which strategic	0	-6	-	0	0	-

Capital employed in Project Development

SEK M	Dec 31, 2020	Sep 30, 2020	Dec 31, 2019
Residential Development	13,608	12,810	12,954
Commercial Property Development	30,906	33,951	34,495
Total in Project Development	44,514	46,761	47,449

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Divestment, Elizabeth River Crossings, Virginia, USA

~~Skanska Year-end report, January–December 2020 9~~

Performance analysis, business streams

Construction – Order situation

Order backlog, revenue and order bookings

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SEK bn
250
200
150
100
50
0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Order backlog Order bookings, rolling 12 months
Revenue, rolling 12 months Order bookings per quarter
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At the end of the quarter, the order backlog amounted to SEK 178.9 billion compared to SEK 182.9 billion at the end of the previous quarter. The order backlog corresponds to 16 months of production (September 30, 2020: 15).

Changes and currency rate effects

	Change in SEK	Change in local currency	Currency effect
	Jan-Dec 2020 / Jan-Dec 2019
Order bookings	3%	6%	-3%
	Dec 31, 2020 / Sep 30, 2020
Order backlog	-2%	3%	-5%

Order bookings and order backlog in Construction

SEK bn	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Order bookings	149.8	145.8	39.8	49.0
Order backlog1	178.9	185.4	-	-

1 Refers to the end of each period.

Order bookings amounted to SEK 149.8 billion (145.8); adjusted for currency effects order bookings increased 6 percent. On a rolling 12-month basis the book-to-build ratio was 107 percent (September 30, 2020: 107). Compared to last year, order bookings are higher in Europe, which includes the SEK 13.9 billion order booking of the high speed rail in the UK, but lower in Sweden and in USA. For more information, see page 26.

Major orders in the quarter

Geography	Contract	Amount SEK M	Client
USA	Rail road concourse renovation	3,200	Penn District Station Developer LLC
Nordic	Highway	2,900	Norwegian Public Roads Administration
USA	Infrastructure	2,900	Los Angeles World Airports (LAWA)
Europe	Offce building	2,000	British Land PLC
USA	Offce improvements	1,700	Existing client

==> picture [518 x 306] intentionally omitted <==

Apartment buildings, Helsinki, Finland

~~10 Skanska Year-end report, January–December 2020~~

Construction

Revenue and operating margin, rolling 12 months

==> picture [243 x 135] intentionally omitted <==

----- Start of picture text -----

% SEK bn
6 180
5 150
4 120
3 90
2 60
1 30
0 0
-1 -30
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating margin
Revenue
----- End of picture text -----

Revenue and earnings

==> picture [251 x 178] intentionally omitted <==

----- Start of picture text -----

Jan-Dec Jan-Dec Change, Oct-Dec Oct-Dec Change,
SEK M 2020 2019 % 2020 2019 %
Revenue 140,483 159,579 -12 34,188 42,411 -19
Gross income 9,343 10,437 -10 2,552 3,175 -20
Selling and
administrative
expenses -5,852 -6,702 -13 -1,452 -2,094 -31
Income from joint
ventures and
associated companies 37 37 0 12 11 9
Operating income 3,528 3,772 -6 1,112 1,092 2
Gross margin, % 6.7 6.5 7.5 7.5
Selling and
administrative
expenses, % -4.2 -4.2 -4.2 -4.9
Operating margin, % 2.5 2.4 3.3 2.6
Employees 30,944 33,225
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Changes and currency rate effects

	Jan-Dec 2020 / Jan-Dec 2019	Jan-Dec 2020 / Jan-Dec 2019	Jan-Dec 2020 / Jan-Dec 2019
	Change in SEK	Change in local currency	Currency effect
Revenue	-12%	-10%	-2%
Operating income	-6%	-4%	-2%

Revenue in the Construction business stream decreased 12 percent and amounted to SEK 140.5 billion (159.6); adjusted for currency effects revenue decreased by 10 percent. This is to some extent related to Covid19 disruptions, mainly in Europe and USA, and decisions by clients to postpone ramp-up of new projects. But it is also a result of the strategic actions to focus the operations and be more selective in bidding in order to improve profitability. The operating margin was 2.5 percent (2.4). Operating income decreased 6 percent and amounted to SEK 3,528 M (3,772); adjusted for currency effects operating income decreased by 4 percent. The operating income in Sweden was negatively impacted by weak performance and restructuring costs in the residential construction operations and low volumes in the industry operations. In USA, profitability continued to improve. The operating income in the comparable period was positively impacted by SEK 196 M in the second quarter related to awarded damages in a legal case in Norway and negatively impacted by SEK –367 M goodwill impairment charge in the UK in the fourth quarter.

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Digital tools on site, Slussen, Stockholm, Sweden

~~Skanska Year-end report, January–December 2020 11~~

Residential Development

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----- Start of picture text -----

Revenue and operating margin, rolling 12 months
% SEK bn
20 20
15 15
10 10
5 5
0 0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating margin
Revenue
----- End of picture text -----

Revenue and earnings

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----- Start of picture text -----

Jan-Dec Jan-Dec Change, Oct-Dec Oct-Dec Change,
SEK M 2020 2019 % 2020 2019 %
Revenue 13,070 12,483 5 3,506 5,292 -34
Gross income 2,178 1,986 10 648 668 -3
Selling and
administrative
expenses -635 -791 -20 -173 -291 -41
Operating income 1,543 1,195 29 475 377 26
Gross margin, % 16.7 15.9 18.5 12.6
Selling and
administrative
expenses, % -4.9 -6.3 -4.9 -5.5
Operating margin, % 11.8 9.6 13.5 7.1
Return on capital
employed, % [1] 12.8 9.8 - -
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Homes sold and started

Homes sold and started
	Jan-Dec 2020	Jan-Dec 2019
Homes sold	3,991	3,853
Homes started	3,807	3,407

Homes under construction and unsold

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Homes
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Sold under construction Unsold under construction Unsold completed
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Homes under construction and unsold

Homes under construction and unsold
	Dec 31, 2020	Dec 31, 2019
Homes under construction	6,948	7,130
of which sold, %	72	70
Completed unsold, number of homes	154	134

1 For definition see page 16.

Revenue in the Residential Development business stream amounted to SEK 13,070 M (12,483). The number of homes sold totaled 3,991 (3,853) and construction started on 3,807 homes (3,407). Operating income amounted to SEK 1,543 M (1,195). The operating margin was 11.8 percent (9.6). In the third quarter the divestment of a multifamily housing portfolio of about 600 homes in Sweden for SEK 1.5 billion was included. Return on capital employed was 12.8 percent (9.8).

At the end of the quarter, 6,948 homes (September 30, 2020: 6,637) were under construction. Of these, 72 percent (September 30, 2020: 74) were sold. The number of completed unsold homes amounted to 154 (September 30, 2020: 173). The number of completed homes amounted to 3,794 (3,816).

Breakdown of carrying amounts

Homes sold and started, rolling 12 months

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----- Start of picture text -----

Homes
6,000
5,000
4,000
3,000
2,000
1,000
0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Started
Sold
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Breakdown of carrying amounts
SEK M	Dec 31, 2020	Sep 30, 2020	Dec 31, 2019
Completed projects	648	687	567
Ongoing projects	7,843	8,299	7,902
Undeveloped land and development properties	8,550	7,767	8,196
Total	17,041	16,753	16,665

A breakdown of the carrying amounts for Residential Development is presented in the table above. Ongoing projects amounted to SEK 7.8 billion (September 30, 2020: 8.3) and undeveloped land and development properties amounted to SEK 8.6 billion (September 30, 2020: 7.8). The estimated unrealized surplus value in unsold homes in construction and undeveloped land and development properties amounted to SEK 2.8 billion. The undeveloped land and development properties correspond to Skanska-owned building rights for 26,300 homes and 1,000 building rights held by joint ventures. In addition, subject to certain conditions, the business stream has the right to purchase 12,200 building rights.

~~12 Skanska Year-end report, January–December 2020~~

Commercial Property Development

Revenue and operating income from property divestments

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----- Start of picture text -----

SEK bn
22
20
18
16
14
12
10
8
6
4
2
0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
----- End of picture text -----

Revenue from divestments, rolling 12 months Operating income from divestments, rolling 12 months

Revenue and earnings

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----- Start of picture text -----

Jan-Dec Jan-Dec Change, Oct-Dec Oct-Dec Change,
SEK M 2020 2019 % 2020 2019 %
Revenue 14,983 17,850 -16 8,746 7,063 24
of which from
divestment of properties 13,827 17,133 -19 8,301 6,799 22
Gross income 4,701 4,101 15 1,890 1,551 22
Selling and administrative
expenses -796 -960 -17 -198 -287 -31
Income from joint ventures
and associated companies -8 146 - 1 3 -67
Operating income 3,897 3,287 19 1,693 1,267 34
of which from
divestment of properties 4,750 4,275 11 2,094 1,610 30
Return on capital
employed, % [1] 11.9 10.5
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Unrealized and realized gains, segment reporting

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----- Start of picture text -----

SEK bn
10
8
6
4
2
0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Unrealized gains in:
Land Ongoing projects
Completed projects Realized gains, rolling 12 months
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Leasing and degree of completion

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----- Start of picture text -----

000 sq m %
550 100
500 90
450 80
400 70
350 60
300
50
250
200 40
150 30
100 20
50 10
0 0
2016 2017 2018 2019 2020
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Leasing, rolling 12 months Occupancy rate, ongoing projects
Degree of completion, ongoing projects
----- End of picture text -----

1 For definition see page 16.

In the Commercial Property Development business stream, divestments worth SEK 13,827 M (17,133) were made in 2020. Operating income amounted to SEK 3,897 M (3,287) and included gains from property divestments totaling SEK 4,750 M (4,275). Return on capital employed was 11.9 percent (10.5).

Breakdown of investment value and market values

SEK M	Investment value, end of period	Investment value upon completion	Market value1, 2	Occupancy rate, %	Degree of completion, %
Ongoing projects3	9,739	17,420	21,759	55	57
Completed projects4, 5	7,683	7,683	9,802	62	100
Undeveloped land and development properties	11,592	11,592	12,283
Total	29,014	36,695	43,844
of which carrying amount6	28,667	36,348	0
of which completed projects sold according to segment reporting	444	444	650
of which ongoing projects sold according to segment reporting	3,401	4,398	5,016

At the end of the quarter, Commercial Property Development had 31 ongoing projects. During the quarter, one new project was started, and nine were completed. The 31 ongoing projects represent leasable space of about 595,000 sq m with an occupancy rate of 55 percent, measured in rent. The projects’ degree of completion was 57 percent. Their investment value upon completion is expected to total SEK 17.4 billion, with an estimated market value of SEK 21.8 billion.

Of the ongoing projects, 13 have been divested according to segment reporting. These projects represent an investment value upon completion of SEK 4.4 billion, with a sales value of SEK 5.0 billion. By the end of the year the total number of completed projects amounted to 18. The market value of these projects, excluding property divested according to segment reporting, was SEK 9.2 billion. The occupancy rate, measured in rent, totaled 62 percent (September 30, 2020: 68).

At the end of the quarter, unrealized gains, excluding properties divested according to segment reporting totaled SEK 6.3 billion. These gains related to SEK 3.7 billion in ongoing projects, SEK 1.9 billion in completed projects and SEK 0.7 billion in undeveloped land and development properties.

Accumulated eliminations of intra-Group project gains amounted to SEK 401 M. These eliminations are released at the Group level as each project is divested. During the year new leases were signed for 233,000 sq m (421,000).

1 Market value according to appraisal on December 31, 2020.

2 Ongoing projects - estimated market value at completion fully leased.

3 Including tenant improvement and leasing commissions in CDUS amounted to SEK 0 M.

4 Including tenant improvement and leasing commissions in CDUS amounted to SEK 655 M.

5 Skanska's share of total production cost in JVs is SEK 453 M end of period and upon completion.

6 Includes Skanska's total equity investment in JV of SEK 106 M.

~~Skanska Year-end report, January–December 2020 13~~

Personnel

During 2020, the average number of employees in the Group was 32,463 (34,756). At the end of the quarter, the number of employees totaled 31,517 people (September 30, 2020: 33,282).

Transactions with related parties

For the nature and extent of transactions with related parties, see the Annual and Sustainability Report 2019, Note 39. There were no new significant transactions during the quarter.

Material risks and uncertainties

For information about risks and a description of key estimates and judgments, see the Annual and Sustainability Report 2019, pages 50-54, Note 2 and 6, as well as the section above on market outlook. Aside from the uncertainty from Covid-19, no significant changes occurred that affected these reported risks. Covid-19 and its effects on real economies will create uncertainty and risks for some time.

Other matters

Annual General Meeting

Skanska’s Annual General Meeting 2021 (“AGM”) will take place on Tuesday March 30, 2021. The notice to attend the AGM will be published no later than four weeks prior to the AGM.

Dividend

The Board of Directors propose a dividend of SEK 9.50 (3.25) per share, of which SEK 6.50 (3.25) per share as ordinary dividend and SEK 3.00 (0.00) per share as extra dividend. The proposal is equivalent to a regular dividend payout totaling SEK 3,917 M (1,340). The Board of Directors proposes Thursday April 1, 2021, as the record date for the dividend. The total dividend amount may change up to the record date, depending on share repurchases and transfers.

Events after the end of the report period

There were no events after the end of the report period.

Financial reports for 2021

Skanska’s interim reports and year-end report are available for download on Skanska’s website, www.skanska.com/investors. The 2020 Annual and Sustainability Report will be available on Skanska’s website in the week commencing March 8, 2021.

The Group’s interim reports for 2021 will be published on the following dates:

April 29, 2021 Three Month Report July 23, 2021 Six Month Report October 29, 2021 Nine Month Report February 3, 2022 Year-end Report

Stockholm February 5, 2021

Anders Danielsson

President and Chief Executive Officer

This Year-end report has not been subject to a review by the company’s auditors.

~~14 Skanska Year-end report, January–December 2020~~

Accounting Principles

For the Group, this Year-end report has been prepared in compliance with IAS 34 Interim Financial Reporting, the Annual Accounts Act and the Securities Market Act. For the Parent Company, the Year-end report has been prepared in compliance with the Annual Accounts Act, the Securities Market Act, and Swedish Financial Reporting Board’s Recommendation RFR 2.

As of January 1, 2020, the Group applies the amendments to IFRS 9 and IFRS 7 attributable to the Interest Rate Benchmark Reform. In connection with the reform, the amendment provides temporary relief regarding specific requirements when hedge accounting is applied. The relief aims to ensure that hedge accounting does not end in connection with the reform. The change has not had any significant impact on the Group’s financial reports.

Joint ventures are reported under the proportional method in the segment reporting of Residential Development, whereas all other streams/operating segments apply the equity method.

Intra-Group pricing between operating segments occurs on market terms.

The Parent Company in a Swedish Group prepares its accounts in compliance with the Swedish Financial Reporting Board’s

Recommendation RFR 2 Accounting for Legal Entities (“RFR 2”). According to RFR 2, the annual accounts of the legal entity must apply IFRS as far as this is possible within the framework of the Annual Accounts Act and considering the connection between accounting and taxation.

Relation between consolidated operating cash flow statement and consolidated cash flow statement

The difference between the operating cash flow statement and the summary cash flow statement in compliance with IAS 7 Cash flow Statements, is presented in the Annual and Sustainability Report 2019, Note 35.

Segment and IFRS reporting

Skanska’s business streams Construction, Residential Development and Commercial Property Development represent the group’s operating segments. Tables in this report that refer to segment reporting are shown with a shaded background. In certain cases, the segment reporting differs from the consolidated results presented in accordance with International Financial Reporting Standards, IFRS.

Construction includes both building construction and civil construction. Revenues and earnings are reported over time for both segment and IFRS reporting.

Residential Development develops residential projects for immediate sale. Homes are adapted to selected customer categories. The units are responsible for planning and selling the projects. The related construction assignments are performed by Skanska’s construction units in the Construction segment in each market. In the segment reporting Residential Development recognizes revenue and earnings when contracts are signed for the sale of homes. In the IFRS reporting revenues are instead recognized when the buyer takes possession of the homes.

Commercial Property Development initiates, develops, leases and divests commercial property projects. In most markets the construction assignments are performed by Skanska’s Construction segment. In the segment reporting Commercial Property Development recognizes revenue and earnings when contracts are signed for the sale of the properties. In the IFRS reporting revenues are instead recognized when the buyer takes possession of the property.

~~Skanska Year-end report, January–December 2020 15~~

Definitions

For further definitions, see the Annual and Sustainability Report 2019, Note 43.

Non-IFRS financial measures Definition Reason for use	Non-IFRS financial measures Definition Reason for use	Non-IFRS financial measures Definition Reason for use	Non-IFRS financial measures Definition Reason for use
The following measures are used as they are viewed as the best and most accurate ways to measure Skanska’s operations; reflecting its business model and strategy. Thus assisting investors and management in analyzing trends and performance in Skanska.
Revenue Segment	Revenue segment is the same as revenue IFRS in all streams except for the Residential Development stream and the Commercial Property Development stream, where revenue is recognised for when signing binding agreement for sale of homes and properties. As segment reporting of joint ventures in Residential Development applies the proportional method, revenue segment is affected by this.		Measure revenue generated in current market environment.
Gross income	Revenue minus cost of sales.		Measure profit generated from projects.
Gross margin	Gross income as a percentage of revenue.		Measure profitability in projects.
Selling and admin expenses %	Selling and administrative expenses as a percentage of revenue.		Measure cost efficiency in selling and administrative expenses.
Operating income	Revenue minus cost of sales, selling and administrative expenses and income from joint ventures and associated companies.		Measure profit generated from operations.
Operating income segment	Revenue minus cost of sales, selling and administrative expenses and income from joint ventures and associated companies, according to segment reporting, and where Residential Development applies the proportional method for reporting of joint ventures.		Measure profit generated from operations in current market environment.
Operating income rolling 12 months	Revenue minus cost of sales, selling and administrative expenses and income from joint ventures and associated companies, rolling 12 months.		Measure profit generated from operations.
Operating margin	Operating income as a percentage of revenue.		Measure profitability in operations.
Net financial items	The net of interest income, financial net pension cost, interest expense, capitalized expense, change in fair value and other net financial items.		Measure total net for financial activities.
Income after financial items	Operating income minus net financial items.		Measure profit generated before taxes.
Earnings per share, segment	Profit for the period, segment, attributable to equity holders divided by the average number of shares outstanding.		Measure earnings per share, segment.
Book-to-build, rolling 12 months	Order bookings divided by construction revenue, rolling 12 months.		Measures to which extent new orders are replacing work put in place.
Unrealized gains, Commercial Property Development (CD)	Market value minus investment value upon completion for ongoing projects, completed projects and land. Excluding projects sold according to segment reporting.		Measure potential realization of future gains in Commercial Property Development.
Capital employed, Group	Total assets minus non-interest-bearing liabilities.		Measure capital usage and efficiency.
Capital employed, Stream	Total assets less tax assets, deposits in Skanska’s treasury unit and pension receivable minus non-interest-bearing liabilities excluding tax liabilities. Capitalized interest expense is removed from total assets for the Residential Development and Commercial Property Development segments.		Measure capital usage and efficiency in a Stream.
Capital employed Residential Development (RD) SEK M	Total assets - tax assets - deposits in internal bank - pension receivable - non-interest-bearing liabilities (excluding tax liabilities) - capitalized interest expense	20,058 -260 -102 -33 -5,986 -69 13,608	Measure capital usage and efficiency in Residential Development.
Capital employed Commercial Property Development (CD) SEK M	Total assets - tax assets - deposits in internal bank - pension receivable - non-interest-bearing liabilities (excluding tax liabilities) - capitalized interest expense	34,631 -414 -157 0 -2,914 -240 30,906	Measure capital usage and efficiency in Commercial Property Development.

~~16 Skanska Year-end report, January–December 2020~~

Non-IFRS financial measures Definition	Non-IFRS financial measures Definition	Reason for use	Reason for use
Capital employed average	Calculated on the basis of five measuring points; see below.
ROCE in RD segment, rolling 12 months SEK M	Operating income + capitalized interest expense +/– financial income and other financial items — interest income from internal bank Adjusted profit Capital employed average ROCE RD Capital employed average Q4 2020 13,608 0.5 6,804 Q3 2020 12,810 12,810 Q2 2020 12,478 12,478 Q1 2020 13,301 13,301 Q4 2019 12,954 0.5 6,477 51,870 / 4	1,543 109 2 0 1,654 12,968 12.8% 12,968	Measure the performance (profitability and capital efficiency) in RD.
ROCE in CD segment, rolling 12 months SEK M	Operating income + capitalized interest expense +/– financial income and other financial items – interest income from internal bank Adjusted profit Capital employed average ROCE CD Capital employed average Q4 2020 30,906 0.5 15,453 Q3 2020 33,951 33,951 Q2 2020 33,885 33,885 Q1 2020 34,905 34,905 Q4 2019 34,495 0.5 17,247 135,441 / 4	3,897 135 10 0 4,042 33,860 11.9% 33,860	Measure the performance (profitability and capital efficiency) in CD.
ROCE in Project Development, segment, rolling 12 months SEK M	Is calculated as the summarized adjusted profit for RD and CD divided by the summarized capital employed average for RD and CD. The total ROCE from RD and CD. Adjusted proft CE avg ROCE RD 1,654 12,968 12.8% CD 4,042 33,860 11.9% 5,696 46,828 12.2%		Measure the performance (profitability and capital efficiency) in Project Development.

~~Skanska Year-end report, January–December 2020 17~~

Non-IFRS financial

Non-IFRS financial	Non-IFRS financial
measures Definition		Reason for use
Return on equity segment, rolling 12 months SEK M	Profit attributable to equity holders as a percentage of average equity attributable to equity holders. 9,252 / 35,522 =	26.0%	Measure profitability on invested equity.
Equity average attributable to equity holders SEK M	Calculated on the basis of five measuring points. Q4 2020 38,620 0.5 19,310 Q3 2020 35,589 35,589 Q2 2020 36,035 36,035 Q1 2020 34,692 34,692 Q4 2019 32,924 0.5 16,462 142,088 / 4	35,522
Operating cash flow from operations	Cash flow from business operations including taxes paid and cash flow from financing operations.		Measure total cash flow generated from operations.
Net divestments/investment	Total investments minus total divestments.		Measure the balance between investments and divestments.
Free working capital	Non-interest-bearing receivables less non-interest-bearing liabilities excluding taxes.		Measure the funding stemming from the negative working capital.
Average free working capital in Construction SEK M	Calculated on the basis of five measuring points. Q4 2020 -25,748 0.5 -12,874 Q3 2020 -25,401 -25,401 Q2 2020 -25,245 -25,245 Q1 2020 -26,740 -26,740 Q4 2019 -26,401 0.5 -13,201 -103,461 / 4	-25,865	Measure the funding stemming from the negative working capital generated in Construction.
Interest-bearing net receivables/ net debt	Interest-bearing assets minus interest-bearing liabilities.		Measure financial position.
Adjusted interest-bearing net receivables/net debt	Interest-bearing net receivables/net debt excluding restricted cash, lease liabilities and interest-bearing net pension liabilities.		Measure financial position and investment capacity. The latter is derived by comparing adjusted interest-bearing net receivables/net debt to limits set by the Board of Directors.
Equity/assets ratio	Equity including non-controlling interest as a percentage of total assets.		Measure financial position.
Net debt/equity ratio	Interest-bearing net debt divided by equity including non-controlling interest.		Measure leverage of financial position.
Adjusted equity attributable to equity holders SEK bn	Equity attributable to equity holders Unrealized surplus value in RD Unrealized CD gains Effect in unrealized equity in PPP-portfolio Less standard corporate tax, 10% Adjusted equity	38.6 2.8 7.1 0.8 -1.0 48.3	Measure financial position adjusted for surplus values in Project Development net of taxes. The standard corporate tax represents an approximation of the average corporate income tax within the Group.

~~18 Skanska Year-end report, January–December 2020~~

Reconciliation between segment reporting and IFRSs

	External revenue	External revenue	Intra-Group revenue	Intra-Group revenue	Total revenue	Total revenue	Operating income	Operating income
SEK M	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019
Construction	130,3011	146,0001	10,182	13,579	140,483	159,579	3,528	3,772
Residential Development	13,057	12,431	13	52	13,070	12,483	1,543	1,195
Commercial Property Development	14,900	17,773	83	77	14,983	17,850	3,897	3,287
Total operating segments	158,258	176,204	10,278	13,708	168,536	189,912	8,968	8,254
Central	348	578	22	362	370	940	2,830	-388
Eliminations	0	0	-10,300	-14,070	-10,300	-14,070	62	-38
Total Group	158,606	176,782	0	0	158,606	176,782	11,860	7,828
Reconciliation to IFRSs2 Total IFRSs	1,738 160,344	-3,936 172,846	0 0	0 0	1,738 160,344	-3,936 172,846	773 12,633	-400 7,428
1 Of which external revenue from joint ventures in PPP-portfolio, SEK 4,643 M (7,223). 2 Of which effect from joint ventures in Residential Development proportionally -594 -532 -233 -144 Of which effect of different revenue recognitions 2,332 -3,404 1,006 -256

Revenue by geographical area (IFRS)

	Construction	Construction	Residential Development	Residential Development	Commercial Property Development	Commercial Property Development	Central and Eliminations	Central and Eliminations	Total	Total
SEK M	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2020	Jan-Dec 2019
Nordics	56,515	60,113	9,883	10,897	7,069	5,691	-6,890	-7,456	66,577	69,245
of which Sweden	32,816	34,535	5,977	5,777	5,255	3,225	-4,604	-5,172	39,444	38,365
Europe	23,769	30,861	1,778	972	2,838	3,330	-2,585	-4,084	25,800	31,079
USA	60,199	68,605	0	0	8,231	5,245	-463	-1,328	67,967	72,522
Total operating segments	140,483	159,579	11,661	11,869	18,138	14,266	-9,938	-12,868	160,344	172,846

==> picture [519 x 316] intentionally omitted <==

----- Start of picture text -----

Segment IFRS Segment IFRS Segment IFRS Segment IFRS
SEK M Jan-Dec 2020 Jan-Dec 2020 Jan-Dec 2019 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2020 Oct-Dec 2019 Oct-Dec 2019
Revenue
Construction 140,483 140,483 159,579 159,579 34,188 34,188 42,411 42,411
Residential Development 13,070 11,661 12,483 11,869 3,506 3,555 5,292 3,489
Commercial Property Development 14,983 18,138 17,850 14,266 8,746 7,320 7,063 8,069
Central and Eliminations -9,930 -9,938 -13,130 -12,868 -2,440 -2,438 -3,369 -3,278
Skanska Group 158,606 160,344 176,782 172,846 44,000 42,625 51,397 50,691
Operating income
Construction 3,528 3,528 3,772 3,772 1,112 1,112 1,092 1,092
Residential Development 1,543 1,514 1,195 1,435 475 486 377 192
Commercial Property Development [1] 3,897 4,678 3,287 2,677 1,693 1,534 1,267 1,712
Central 2,830 2,830 -388 -388 3,170 3,170 -247 -247
of which PPP-portfolio 3,734 3,734 24 24 3,741 3,741 -29 -29
Eliminations [1] 62 83 -38 -68 138 101 -36 18
Operating income 11,860 12,633 7,828 7,428 6,588 6,403 2,453 2,767
Net financial items -236 -229 -103 -88 -59 -55 -34 -40
Income after financial items 11,624 12,404 7,725 7,340 6,529 6,348 2,419 2,727
Taxes -2,350 -2,507 -1,353 -1,286 -1,429 -1,413 -477 -525
Profit for the period 9,274 9,897 6,372 6,054 5,100 4,935 1,942 2,202
Earnings for the period per share, SEK [2] 22.46 15.46 12.37 4.71
Earnings for the period per share according to IFRSs, SEK [2] 23.97 14.68 11.97 5.34
1 Of which gains from divestments of commercial properties
reported in:
Commercial Property Development 4,750 5,583 4,275 3,634 2,094 1,987 1,610 2,024
Eliminations 359 394 240 204 166 127 132 127
----- End of picture text -----

2 Earnings for the period attributable to equity holders divided by the average number of shares outstanding.

~~Skanska Year-end report, January–December 2020 19~~

The Skanska Group

Summary income statement (IFRS)

Summary income statement (IFRS)
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Revenue	160,344	172,846	42,625	50,691
Cost of sales	-143,457	-156,540	-37,659	-44,780
Gross income Selling and administrative expenses	16,887 -8,269	16,306 -9,469	4,966 -2,414	5,911 -3,206
Income from joint ventures and associated companies	4,015	591	3,851	62
Operating income Financial income	12,633 120	7,428 188	6,403 13	2,767 30
Financial expenses	-349	-276	-68	-70
Net fnancial items1 Income after fnancial items Taxes	-229 12,404 -2,507	-88 7,340 -1,286	-55 6,348 -1,413	-40 2,727 -525
Proft for the period 1 Of which Interest income	9,897 118	6,054 152	4,935 11	2,202 32
Financial net pension costs	-61	-84	-17	-25
Interest expenses	-194	-209	-42	-39
Interest expenses from lease liabilities	-244	-272	-58	-73
Capitalized interest expenses	195	307	47	60
Net interest items	-186	-106	-59	-45
Change in fair value	-3	4	1	6
Other net fnancial items	-40	14	3	-1
Net fnancial items Proft attributable to: Equity holders	-229 9,875	-88 6,031	-55 4,932	-40 2,195
Non-controlling interests	22	23	3	7
Earnings per share, SEK2	23.97	14.68	11.97	5.34
Earnings per share after dilution, SEK3	23.84	14.62	11.90	5.32

2 Earnings for the period attributable to equity holders divided by the average number of shares outstanding.

3 Earnings for the period attributable to equity holders divided by the average number of shares outstanding after dilution.

Statement of proft or loss and other comprehensive income (IFRS)	Statement of proft or loss and other comprehensive income (IFRS)	Statement of proft or loss and other comprehensive income (IFRS)	Statement of proft or loss and other comprehensive income (IFRS)	Statement of proft or loss and other comprehensive income (IFRS)
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Proft for the period	9,897	6,054	4,935	2,202
Other comprehensive income Items that will not be reclassifed to proft and loss Remeasurements of defned beneft plans	-1,003	-895	549	1,360
Tax related to items that will not be reclassifed to proft and loss	211	166	-120	-305
Items that have been or will be reclassifed to proft and loss Translation differences attributable to equity holders	-792 -2,120	-729 672	429 -1,036	1,055 -739
Translation differences attributable to non-controlling interests	-7	3	-2	-2
Hedging of exchange rate risk in foreign operations	-19	4	-38	-43
Effects of cash fow hedges1	35	31	164	79
Share of other comprehensive income of joint ventures and associated companies2	-176	-41	-136	116
Tax related to items that have been or will be reclassifed to proft and loss	21	-10	-2	-13
Other comprehensive income after tax	-2,266 -3,058	659 -70	-1,050 -621	-602 453
Total comprehensive income	6,839	5,984	4,314	2,655
Total comprehensive income attributable to Equity holders	6,824	5,958	4,313	2,650
Non-controlling interests	15	26	1	5
1 Of which transferred to income statement	-2	2	1	6
2 Of which transferred to income statement	157	148	38	225

~~20 Skanska Year-end report, January–December 2020~~

Summary statement of fnancial position (IFRS)	Summary statement of fnancial position (IFRS)	Summary statement of fnancial position (IFRS)
SEK M	Dec 31, 2020	Dec 31, 2019
ASSETS Non-current assets Property, plant and equipment	6,816	7,742
Property, plant and equipment right-of-use assets	3,930	4,616
Goodwill	3,713	4,057
Intangible assets	771	865
Investments in joint ventures and associated companies	1,689	3,442
Financial non-current assets1, 3	1,931	2,528
Deferred tax assets	1,803	1,862
Total non-current assets Current assets Current-asset properties2	20,653 44,947	25,112 46,373
Current-asset properties right-of-use land	2,980	3,980
Inventories	1,100	1,128
Financial current assets3	8,492	6,899
Tax assets	950	670
Contract assets	4,599	5,898
Trade and other receivables	22,402	27,213
Cash	19,508	8,745
Total current assets TOTAL ASSETS of which interest-bearing fnancial non-current assets	104,978 125,631 1,884	100,906 126,018 2,483
of which interest-bearing current assets	27,808	15,517
Total interest-bearing assets EQUITY Equity attributable to equity holders	29,692 38,620	18,000 32,924
Non-controlling interests	97	97
Total equity LIABILITIES Non-current liabilities Financial non-current liabilities3	38,717 3,247	33,021 2,565
Lease liabilities	6,217	7,843
Pensions	7,360	6,866
Deferred tax liabilities	928	1,045
Total non-current liabilities Current liabilities Financial current liabilities3	17,752 4,663	18,319 4,617
Lease liabilities	1,016	1,078
Tax liabilities	1,883	564
Current provisions	10,326	10,021
Contract liabilities	19,462	20,419
Trade and other payables	31,812	37,979
Total current liabilities TOTAL EQUITY AND LIABILITIES of which interest-bearing fnancial liabilities	69,162 125,631 15,052	74,678 126,018 16,051
of which interest-bearing pensions and provisions	7,360	6,866
Total interest-bearing liabilities 1 Of which shares and participations	22,412 43	22,917 44
2 Current-asset properties Commercial Property Development	27,906	29,708
Residential Development	17,041	16,665
3 Items regarding non-interest-bearing unrealized changes in derivatives/fnancial instruments are included in the following amounts: Financial non-current assets	4	1
Financial current assets	192	127
Financial non-current liabilities	6	2
Financial current liabilities	85	50

Note: Contingent liabilities amounted to SEK 57.9 bn on December 31, 2020 (Dec 31, 2019: 38.8) and relates to joint operations in Construction and joint ventures in Project Development. For more information see 2019 Annual and Sustainability Report, Note 20B, 20C and 33. During the period, contingent liabilities increased by SEK 19.1 bn.

~~Skanska Year-end report, January–December 2020 21~~

Summary statement of changes in equity (IFRS)	Summary statement of changes in equity (IFRS)	Summary statement of changes in equity (IFRS)	Summary statement of changes in equity (IFRS)	Summary statement of changes in equity (IFRS)
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Opening balance	33,021	29,347	35,685	30,311
of which non-controlling interests	97	97	96	107
Change in accounting principle1	-	-67	-	-
Adjusted opening balance	33,021	29,280	35,685	30,311
of which non-controlling interests	97	97	96	107
Dividend to shareholders	-1,340	-2,462	-1,340	0
Dividend to non-controlling interests	-15	-26	0	-15
Effects of equity-settled share-based payments	300	245	92	70
Repurchase of shares	-88	0	-34	0
Total comprehensive income attributable to Equity holders	6,824	5,958	4,313	2,650
Non-controlling interests	15	26	1	5
Closing balance	38,717	33,021	38,717	33,021
of which non-controlling interests	97	97	97	97

1 Change in accounting principle is attributable to the implementation 2019 of IFRS 16. For further information see the Annual and Sustainability Report 2019, Note 1.

Summary consolidated cash fow statement (IAS 7) (IFRS)	Summary consolidated cash fow statement (IAS 7) (IFRS)	Summary consolidated cash fow statement (IAS 7) (IFRS)	Summary consolidated cash fow statement (IAS 7) (IFRS)	Summary consolidated cash fow statement (IAS 7) (IFRS)
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Cash fow from operating activities before change in working capital, according to IAS 7	2,652	3,395	143	1,044
Cash fow from change in working capital, according to IAS 7	8,632	2,643	4,643	7,685
Net investments in property, plant and equipment and intangible assets	4,129	-1,453	4,893	-272
Tax payments on sold property, plant and equipment and intangible assets	-29	-62	-14	-9
Cash fow from business operations including taxes paid according to operating cash fow	15,384	4,523	9,665	8,448
Less net investments in property, plant and equipment and intangible assets	-4,129	1,453	-4,893	272
Less tax payments on sold property, plant and equipment and intangible assets	29	62	14	9
Cash fow from operating activities, according to IAS 7 Cash fow from net strategic divestments(+)/ investments(-) according to operating cash fow	11,284 0	6,038 -6	4,786 0	8,729 0
Net investments in property, plant and equipment and intangible assets	4,129	-1,453	4,893	-272
Increase and decrease in interest-bearing receivables	-2,529	307	-3,083	-821
Taxes paid on sold property, plant and equipment and intangible assets	-29	-62	-14	-9
Cash fow from investing activities, according to IAS 7 Cash fow from fnancing operations according to operating cash-fow statement	1,571 -934	-1,214 -688	1,796 -121	-1,102 -109
Change in interest-bearing receivables and liabilities excluding lease liabilities	-1,336	-3,415	-2,783	-2,716
Increase and decrease in interest-bearing receivables	2,529	-307	3,083	821
Dividend etc1	-1,443	-2,488	-1,374	-15
Cash fow from fnancing activities, according to IAS 7	-1,184	-6,898	-1,195	-2,019
Cash fow for the period	11,671	-2,074	5,387	5,608

1 Of which repurchases of shares SEK -88 M.

~~22 Skanska Year-end report, January–December 2020~~

Operating cash fow (IFRS), supplementary information	Operating cash fow (IFRS), supplementary information	Operating cash fow (IFRS), supplementary information	Operating cash fow (IFRS), supplementary information	Operating cash fow (IFRS), supplementary information
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Construction Cash fow from business operations	6,257	6,614	1,813	2,236
Change in working capital	1,382	-262	1,703	2,955
Net divestments(+)/investments(-)	-1,188	-1,503	-374	-478
Total Construction Residential Development Cash fow from business operations	6,451 -434	4,849 -707	3,142 -221	4,713 -265
Change in working capital	-693	1,055	-386	95
Net divestments(+)/investments(-)	1,291	2,354	186	892
Total Residential Development Commercial Property Development Cash fow from business operations	164 -1,088	2,702 -917	-421 -472	722 -612
Change in working capital	-487	-1,130	-273	70
Net divestments(+)/investments(-)	7,211	775	3,417	3,744
Cash fow adjustment	-355	209	-61	-38
Total Commercial Property Development Central and eliminations Cash fow from business operations	5,281 -631	-1,063 -286	2,611 -600	3,164 -217
Change in working capital	406	-314	54	117
Net divestments(+)/investments(-)	5,194	6	5,270	55
of which PPP-portfolio	5,296	124	5,272	87
Cash fow adjustment	0	0	0	1
Total central and eliminations Total cash fow from business operations	4,969 4,104	-594 4,704	4,724 520	-44 1,142
Total change in working capital	608	-651	1,098	3,237
Total net divestments(+)/investments(-)	12,508	1,632	8,499	4,213
Total cash fow adjustment	-355	209	-61	-37
Cash fow from business operations before taxes paid Taxes paid in business operations	16,865 -1,481	5,894 -1,371	10,056 -391	8,555 -107
Cash fow from business operations including taxes paid Net interest items, other net fnancial items and amortization of lease liabilities	15,384 -1,334	4,523 -983	9,665 -172	8,448 -156
Taxes paid in fnancing operations	400	295	51	47
Cash fow from fnancing operations	-934	-688	-121	-109
Operating cash fow from operations Net strategic divestments(+)/investments(-)	14,450 0	3,835 -6	9,544 0	8,339 0
Dividend etc.1	-1,443	-2,488	-1,374	-15
Cash fow before change in intererst-bearing receivables and liabilities Change in interest-bearing receivables and liabilities excluding lease liabilities	13,007 -1,336	1,341 -3,415	8,170 -2,783	8,324 -2,716
Cash fow for the period Cash and cash equivalents at the beginning of the period	11,671 8,745	-2,074 10,722	5,387 14,922	5,608 3,245
Exchange rate differences in cash and cash equivalents	-908	97	-801	-108
Cash and cash equivalents at the end of the period	19,508	8,745	19,508	8,745

1 Of which repurchases of shares SEK -88 M.

~~Skanska Year-end report, January–December 2020 23~~

Group net divestments(+)/investments(-) (IFRS)

Group net divestments(+)/investments(-) (IFRS)
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
OPERATIONS - INVESTMENTS Intangible assets	-132	-116	-76	-8
Property, plant and equipment	-1,487	-2,566	-436	-915
Shares and participations	-19	-108	-6	0
Current-asset properties	-20,047	-22,173	-6,772	-6,744
of which Residential Development	-10,299	-9,308	-3,315	-2,553
of which Commercial Property Development	-9,748	-12,865	-3,457	-4,191
Investments in operations STRATEGIC INVESTMENTS Businesses	-21,685 0	-24,963 -6	-7,290 0	-7,667 0
Strategic investments Total Investments OPERATIONS - DIVESTMENTS Intangible assets	0 -21,685 8	-6 -24,969 25	0 -7,290 8	0 -7,667 20
Property, plant and equipment	289	1,028	116	386
Shares and participations	5,470	284	5,287	245
Current-asset properties	28,426	25,258	10,378	11,229
of which Residential Development	11,548	11,740	3,503	3,455
of which Commercial Property Development	16,878	13,518	6,875	7,774
Divestments in operation Total divestments TOTAL NET DIVESTMENTS(+)/INVESTMENTS(-)	34,193 34,193 12,508	26,595 26,595 1,626	15,789 15,789 8,499	11,880 11,880 4,213
Depreciation, non-current assets	-2,945	-3,043	-702	-776

Capital employed in Project Development (IFRS)
SEK M	Dec 31, 2020	Sep 30, 2020	Dec 31, 2019
Residential Development	13,608	12,810	12,954
Commercial Property Development	30,906	33,951	34,495
Total in Project Development	44,514	46,761	47,449

~~24 Skanska Year-end report, January–December 2020~~

Parent Company[1]

The parent company’s revenue consists mainly of amounts billed to Group companies. The balance sheet consists of financial instruments almost exclusively in the form of intra-Group receivables and liabilities. The parent company does not report any significant events during the period.

Summary income statement (IFRS)

Summary income statement (IFRS)
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Revenue	675	729	188	257
Selling and administrative expenses	-523	-533	-121	-167
Operating income Net fnancial items	152 2,829	196 2,863	67 -150	90 -111
Income after fnancial items Taxes	2,981 -5	3,059 -21	-83 10	-21 -3
Proft for the period	2,976	3,038	-73	-24
Total comprehensive income	2,976	3,038	-73	-24

Summary balance sheet (IFRS)

Summary balance sheet (IFRS)
SEK M	Dec 31, 2020	Dec 31, 2019
ASSETS Intangible non-current assets	8	11
Property, plant and equipment	0	0
Financial non-current assets2	12,031	11,810
Total non-current assets Current receivables	12,039 164	11,821 157
Total current assets TOTAL ASSETS EQUITY AND LIABILITIES Equity	164 12,203 10,652	157 11,978 8,788
Provisions	240	254
Non-current interest-bearing liabilities2	1,211	2,816
Current liabilities	100	120
TOTAL EQUITY AND LIABILITIES	12,203	11,978

1 As a parent company in an IFRS-group, Skanska AB applies RFR2 in its accounting.

2 Of these amounts, SEK 384 M (Dec 31, 2019: 318) were intra-Group receivables and SEK 1,211 M (Dec 31, 2019: 2,816) intra-Group liabilities.

Note: The Parent Company’s contingent liabilities totaled SEK 160.6 bn on December 31, 2020 (Dec 31, 2019: 173.5), of which SEK 118.1 bn (Dec 31, 2019: 155.0) were related to obligations on behalf of Group Companies. Other obligations, SEK 42.5 bn on December 31, 2020 (Dec 31, 2019: 18.5), were related to commitments to outside parties.

~~Skanska Year-end report, January–December 2020 25~~

Share data

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Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Earnings per share according to segment reporting, SEK [1] 22.46 15.46 12.37 4.71
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Share data
	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Earnings per share according to segment reporting, SEK1	22.46	15.46	12.37	4.71
Earnings per share, SEK1	23.97	14.68	11.97	5.34
Earnings per share after dilution, SEK2	23.84	14.62	11.90	5.32
Equity per share, SEK3	93.67	80.01
Adjusted equity per share, SEK4	117.22	112.04
Average number of shares outstanding	411,993,869	410,720,937
Average number of shares outstanding after dilution	414,304,017	412,585,074
Average dilution, %	0.56	0.45
Number of shares, at balance sheet date	419,903,072	419,903,072
Average price, repurchased shares, SEK	138.45	137.54
Number of Series B shares repurchased	27,348,228	26,888,228
of which repurchased during the year	460,000	0	164,000	0
Number of shares in Skanska’s own custody	7,616,674	8,394,479
Number of shares outstanding	412,286,398	411,508,593

1 Earnings for the period attributable to equity holders divided by the average number of shares outstanding.

2 Earnings for the period attributable to equity holders divided by the average number of shares outstanding after dilution.

3 Equity attributable to equity holders divided by the number of shares outstanding.

4 Adjusted equity diveded by the number of shares outstanding.

Five-year Group financial summary

Five-year Group fnancial summary
SEK M	Jan-Dec 2020	Jan-Dec 2019	Jan-Dec 2018	Jan-Dec 2017	Jan-Dec 2016
Revenue	158,606	176,782	170,494	160,823	151,307
Operating income	11,860	7,828	4,827	5,504	8,199
Proft for the period	9,274	6,372	3,929	4,934	6,526
Earnings per share, SEK	22.46	15.46	9.55	12.01	15.89
Return on capital employed, %	20.2	15.1	11.2	13.3	21.8
Return on equity, %	26.0	21.4	14.1	18.6	28.3
Operating margin, %	7.5	4.4	2.8	3.4	5.4
Return on capital employed accoding to IFRSs, %	21.5	14.3	13.0	11.1	19.2
Cash fow per share according to IFRSs, SEK1	31.57	3.26	9.51	-2.44	-10.16

1 Cash flow before change in interest-bearing receivables and liabilities divided by the average number of shares outstanding.

Exchange rates for the most important currencies

Exchange rates for the most important currencies
	Average exchange rates			Exhange rates on the closing day
SEK	Jan-Dec 2020	Jan-Dec 2019		Dec 31, 2020	Dec 31, 2019
US dollar	9.21	9.46		8.19	9.33
British pound	11.81	12.07		11.15	12.24
Norwegian krone	0.98	1.07		0.96	1.06
Euro	10.49	10.58		10.05	10.45
Czech koruna	0.40	0.41		0.38	0.41
Polish zloty	2.36	2.46		2.22	2.45

~~26 Skanska Year-end report, January–December 2020~~

Construction

Revenue and earnings

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SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Revenue 140,483 159,579 34,188 42,411
Gross income 9,343 10,437 2,552 3,175
Selling and administrative expenses -5,852 -6,702 -1,452 -2,094
Income from joint ventures and associated companies 37 37 12 11
Operating income 3,528 3,772 1,112 1,092
Investments -1,503 -2,542 -504 -875
Divestments 315 1,039 130 397
Net divestments(+)/investments(-) -1,188 -1,503 -374 -478
Gross margin, % 6.7 6.5 7.5 7.5
Selling and administrative expenses, % -4.2 -4.2 -4.2 -4.9
Operating margin % 2.5 2.4 3.3 2.6
Order bookings, SEK bn 149.8 145.8 39.8 49.0
Order backlog, SEK bn 178.9 185.4 - -
Employees 30,944 33,225 - -
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Revenue

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SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Nordics 56,131 59,600 14,469 16,736
of which Sweden 33,690 35,233 8,978 10,078
Europe 24,153 31,366 5,877 8,151
USA 60,199 68,613 13,842 17,524
Total 140,483 159,579 34,188 42,411
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SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Operating income	SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Operating income	SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Operating income	SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Operating income	SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Operating income	SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Operating income	Operating margin, %	Operating margin, %	Operating margin, %	Operating margin, %
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019		Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Nordics	1,995	2,299	587	723		3.6	3.9	4.1	4.3
of which Sweden	1,072	1,330	294	484		3.2	3.8	3.3	4.8
Europe	314	473	149	18		1.3	1.5	2.5	0.2
USA	1,219	1,000	376	351		2.0	1.5	2.7	2.0
Total	3,528	3,772	1,112	1,092		2.5	2.4	3.3	2.6

SEK M Dec 31, 2020 Dec 31, 2019 Order backlog	SEK M Dec 31, 2020 Dec 31, 2019 Order backlog	SEK M Dec 31, 2020 Dec 31, 2019 Order backlog	SEK M Dec 31, 2020 Dec 31, 2019 Order backlog	Order bookings Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019	Order bookings Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019	Order bookings Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019	Order bookings Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019	Order bookings Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019	Book-to build, R-12m	Book-to build, R-12m
SEK M	Dec 31, 2020	Dec 31, 2019		Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019		Dec 31, 2020	Dec 31, 2019
Nordics	63,514	62,244		59,253	59,437	16,516	15,797		106	100
of which Sweden	34,558	37,771		30,502	37,596	6,464	8,153		91	107
Europe	37,681	24,699		40,147	18,953	6,184	6,293		166	60
USA	77,729	98,427		50,402	67,428	17,140	26,938		84	98
Total	178,924	185,370		149,802	145,818	39,840	49,028		107	91

~~Skanska Year-end report, January–December 2020 27~~

Residential Development

Revenue and earnings

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SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Revenue 13,070 12,483 3,506 5,292
Gross income 2,178 1,986 648 668
Selling and administrative expenses -635 -791 -173 -291
Operating income 1,543 1,195 475 377
Operating margin, % 11.8 9.6 13.5 7.1
Investments -10,419 -9,437 -3,332 -2,590
Divestments 11,710 11,793 3,518 3,482
Net divestments(+)/investments(-) 1,291 2,356 186 892
Capital employed, SEK bn 13.6 13.0 - -
Return on capital employed, % 12.8 9.8 - -
Employees 571 551 - -
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Revenue	Revenue	Revenue	Revenue	Revenue
SEK M	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Nordics	11,598	11,296	2,912	4,874
of which Sweden	7,042	6,569	1,726	3,052
Europe	1,472	1,187	594	418
Total	13,070	12,483	3,506	5,292

Operating income[1] Operating margin, %[1 ]

	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019		Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
Nordics	1,345	1,034	414	350		11.6	9.2	14.2	7.2
of which Sweden	797	675	235	322		11.3	10.3	13.6	10.6
Europe	198	161	61	27		13.5	13.6	10.3	6.5
Total	1,543	1,195	475	377		11.8	9.6	13.5	7.1

1 Development gain only. Construction margin reported under Construction.

Homes started Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Nordics 2,937 2,847 851 1,328 of which Sweden 2,124 2,003 816 790 Europe 870 560 461 350 Total 3,807 3,407 1,312 1,678	Homes sold	Homes sold	Homes sold	Homes sold
	Jan-Dec 2020	Jan-Dec 2019	Oct-Dec 2020	Oct-Dec 2019
	3,352	3,203	777	1,350
	2,341	2,057	538	941
	639	650	335	175
	3,991	3,853	1,112	1,525

Homes under construction Dec 31, 2020 Dec 31, 2019 Nordics 5,518 5,672	Homes under construction Dec 31, 2020 Dec 31, 2019 Nordics 5,518 5,672	Homes under construction Dec 31, 2020 Dec 31, 2019 Nordics 5,518 5,672	Homes under construction Dec 31, 2020 Dec 31, 2019 Nordics 5,518 5,672	Completed unsold, number of homes Dec 31, 2020 Dec 31, 2019 141 121	Completed unsold, number of homes Dec 31, 2020 Dec 31, 2019 141 121	Completed unsold, number of homes Dec 31, 2020 Dec 31, 2019 141 121	Homes under construction of which sold, %	Homes under construction of which sold, %
	Dec 31, 2020	Dec 31, 2019		Dec 31, 2020	Dec 31, 2019		Dec 31, 2020	Dec 31, 2019
Nordics	5,518	5,672		141	121		77	69
of which Sweden	3,901	3,789		68	56		77	70
Europe	1,430	1,458		13	13		55	72
Total	6,948	7,130		154	134		72	70

~~28 Skanska Year-end report, January–December 2020~~

Commercial Property Development

Revenue and earnings

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SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Revenue 14,983 17,850 8,746 7,063
of which from divestment of properties 13,827 17,133 8,301 6,799
Gross income 4,701 4,101 1,890 1,551
Selling and administrative expenses -796 -960 -198 -287
Income from joint ventures and associated companies -8 146 1 3
Operating income 3,897 3,287 1,693 1,267
of which gain from divestments of properties [1] 4,750 4,275 2,094 1,610
of which writedowns/reversal of writedowns -282 -89 -250 -19
1 Additional gains included in eliminations 359 240 166 132
Investments -9,777 -12,946 -3,464 -4,219
Divestments 16,988 13,713 6,881 7,963
Net divestments(+)/investments(-) 7,211 767 3,417 3,744
Capital employed, SEK bn 30.9 34.5 - -
Return on capital employed, % 11.9 10.5 - -
Employees 445 427 - -
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Revenue of which from divestments
SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Nordics 5,420 6,665 659 1,011 5,003 6,435 400 945
Europe 2,835 4,398 1,787 825 2,664 4,283 1,740 771
USA 6,728 6,787 6,300 5,227 6,160 6,415 6,161 5,083
Total 14,983 17,850 8,746 7,063 13,827 17,133 8,301 6,799
Operating income of which from divestments
SEK M Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019 Jan-Dec 2020 Jan-Dec 2019 Oct-Dec 2020 Oct-Dec 2019
Nordics 1,870 1,323 -8 269 2,189 1,702 35 365
Europe 661 695 307 -83 865 1,155 377 91
USA 1,366 1,269 1,394 1,081 1,696 1,418 1,682 1,154
Total 3,897 3,287 1,693 1,267 4,750 4,275 2,094 1,610
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Capital employed	Capital employed	Capital employed
SEK M	Dec 31, 2020	Dec 31, 2019
Nordics	11,618	11,595
Europe	9,744	9,803
USA	9,544	13,097
Total	30,906	34,495

PPP-portfolio value

PPP-portfolio value	PPP-portfolio value	PPP-portfolio value	PPP-portfolio value
Unrealized development gain in PPP-portfolio
SEK bn	Dec 31, 2020	Sep 30, 2020	Dec 31, 2019
Present value of cash fow from projects	2.2	4.4	4.9
Present value of remaining investments	-1.0	-0.9	-1.1
Net present value of projects Carrying amount before Cash fow hedge / Carrying amount	1.2 -0.7	3.5 -2.1	3.8 -2.5
Unrealized development gain Cash fow hedge	0.5 0.3	1.4 0.3	1.3 0.3
Effect in unrealized equity1	0.8	1.7	1.6

1 Tax effects not included.

~~Skanska Year-end report, January–December 2020 29~~

About Skanska

Skanska is one of the world’s leading construction and project development companies, focused on selected home markets in the Nordics, Europe and USA. Supported by global trends in urbanization and demographics, and by being at the forefront in sustainability, Skanska offers competitive solutions for both simple and the most complex assignments, helping to build a sustainable future for customers and communities.

Skanska’s business model

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Financial targets
2020
Free working capital
Investment
Revenue from opportunities
external customers Construction P roject development External financing
Revenue with associated Internal contracts Development gains are generated ◀
contract profits ◀ and are realized upon divestment
Operating margin ≥ 3.5% Return on capital employed ≥ 10%
Operating margin 2.5% Return on capital employed 12.2%
Return on equity ≥ 18%
Return on equity 26.0%
Dividend 40-70% of profit
Dividend 42% of profit
Internal contracts and cooperation
Operational and financial synergies are, amongst other things, achieved through investments in Project
Development, generating internal contracts for Skanska’s Construction stream, as well as through the
collaboration between Business Units from different markets. Currently, SEK 15.7 billion of Skanska’s total
order backlog are contracts involving more than one Business Unit, with revenue from internal contracts
amounting to SEK 14.5 billion.
Construction revenue from internal Value of orders in backlog generated
Project Development contracts amounted to: through cooperation between Business Units:
SEK 14.5 billion SEK 15.7 billion
Office building, Los Angeles, USA ESS, Lund, Sweden
Skanska has invested in its first Los Angeles office In Lund, Sweden, Skanska is building what will be a
development project located in Beverly Hills, USA. world-leading, multi-disciplinary research facility,based
Located at 9000 Wilshire Boulevard in Beverly Hills, on the world’s most powerful neutron source, and with
California, Skanska plans to develop and build a four- ground-breaking circular thinking. Skanska is responsible for
story, 4,270 square meter office building with roof top constructing the facility’s 23 buildings and infrastructure. The
terrace and four below grade parking levels. The project work is being carried out under a collaboration agreement,
will target LEED Platinum certification. The project is whereby Skanska and ESS work together on the project
scheduled to be completed in 2022. applying an open and integrated approach.
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Skanska AB

www.skanska.com/investors

Skanska’s home markets

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Sweden
Finland
United States of America Norway
Denmark
United Kingdom Poland
Czech Republic
Slovakia
Hungary
Romania
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For further information, please contact:

Magnus Persson, Executive Vice President and CFO, Skanska AB, tel +46 10 448 8900 André Löfgren, Senior Vice President, Investor Relations, Skanska AB, tel +46 10 448 1363 Karolina Cederhage, Senior Vice President, Communications, Skanska AB, tel +46 10 448 0880 Jacob Birkeland, Head of Media Relations, Skanska AB, tel +46 10 449 1957

This report will also be presented via a telephone conference and a webcast at 10:00 a.m. (CET) on February 5, 2021.

The telephone conference will be webcasted live at www.skanska.com/investors, where a recording of the conference will also be available later. To participate in the telephone conference, please dial +46 8 566 426 51, or +44 333 300 0804, or +1 631 913 1422. PIN code 25299857#. This and previous releases can also be found at www.skanska.com/investors.

This is information is such that Skanska AB is obliged to make public in accordance with the EU Market Abuse Regulation.

The information was submitted for publication, through the agency of the contact persons set out above, at 07.30 a.m. (CET) on February 5, 2021.