Skanska UK’s performance produces consistent and steady results

Press release 15/02/2007 00:00 CET

Skanska UK Plc today announces its results for the year ending December 31st 2006.

Year End 2006 Year End 2005
£M £M

Revenue 907.2 793
Operating Income 30.4 25.5
Order Backlog 2360 1274
Order Intake 1746 1018

Revenue for the year at £907.2 million shows an increase of 14.4 per cent on the same period in 2005. Operating Income at £30.4 million also shows an increase on that in the previous year of 19.2 per cent producing a steady margin of 3.3 per cent.

Order Intake at £1.8 billion is up and includes a number of PFI schemes that reached financial close during 2006 - Barts & The London New Hospitals Redevelopment, Midlothian Schools and Bristol Schools, the first contract under the UK’s Building Schools for the Future Programme. Backlog also includes three ECI road schemes, M1 Junctions 6a-10, A2 - Phase 2, Pepperhill to Cobham and Temple Sowerby as well as two commercial construction schemes in London, One Kingdom Street at PaddingtonCentral for Development Securities and 311-318 High Holborn for Ebble Developments.

David Fison, Chief Executive, Skanska UK Plc said, “The results speak for themselves. I am delighted that year on year our ability to integrate the construction process on Skanska projects develops - a huge testament to the capability of our people at Skanska UK.”

Good news continued after the period with the announcement that a Skanska partnership with GrantRail had been awarded a £40 million project by Transport for London to carry out major civil engineering works for the new Docklands Light Railway (DLR) extension to Stratford International Station – expected to play a key role in transport plans for the 2012 Games. This was then followed by the award of a £64 million project from Greycoat Crown Place Partnership for the construction of a high quality commercial office development at 30 Crown Place, London.

Operational highlights for Skanska UK Plc during 2006:

 Skanska continues to drive its No Harm philosophy to achieve its goal of zero accidents. The emphasis remains on prevention of accidents, with much effort put into its partnership with Mencap and Enable, Safety@Skanska, to improve the reporting of all unsafe conditions and actions across its sites and offices.

The success of the partnership and the behaviour of those that work with Skanska saw the Accident Incident Rate decrease by 37 per cent in 2006 and to date around £50,000 has been raised for Mencap and Enable.

 2006 also saw an industry first with the launch of the Skanska Carbon Neutral Air Programme. This is a commitment the company has made to help give something back to the environment by offsetting carbon emissions from air travel, and has formed a partnership with Cowdray Park in Midhurst in West Sussex.

Through the partnership, Skanska has supported the planting of over 10,000 trees on land specifically earmarked for this purpose. It is expected that during their lifecycle, Skanska’s trees will absorb at least the amount of carbon produced by the company’s air travel.

Civil Engineering & Specialist Business
 In Scotland, Skanska’s team successfully replaced the 3500 tonne Harthope Viaduct on the West Coast Mainline. Completed during the Easter weekend blockade, the team demolished the previous bridge and slid the new one into place, handing back to Network Rail one hour ahead of schedule.

 In Hertfordshire, work began on the M1 junctions 6a-10 widening programme, being carried out in joint venture with Balfour Beatty. The scheme will see the M1 widened to four lanes in each direction, helping ease congestion and improve safety between the M25 and Luton.

 In the North of England and Scotland, following its previous successful performance, Skanska undertook 19 schemes awarded by Network Rail under its new FTN contract.

 In Cumbria, work began on the A66 Temple Sowerby bypass project. This £23 million project will improve safety for the residents of Temple Sowerby and ease traffic flow through the village.

 Skanska in partnership with Areva and Mott Macdonald was named by National Grid as one of its preferred partners to manage, plan and carry out the updating of the electricity network and distribution substations across England and Wales. The Skanska, Areva and Mott Macdonald Alliance are responsible for the South East of England.

 Skanska’s specialist businesses continue to perform well, with consistent streams of new work coming through.

 Skanska, as part of the North London Gas Alliance, entered its second year of working with National Grid on the £400 million contract to replace 3200km of gas mains in North London. The team also received industry praise for its work, winning the Innovation in Management Processes category at the 2006 Quality in Construction Awards.

 In December, Skanska UK completed its acquisition of McNicholas Plc (“BrownMacs”). The combination of skills and expertise of McNicholas Plc and Skanska’s existing Utilities operation produce revenue of around £300 million per annum making Skanska one of the largest utilities and infrastructure services providers in the UK.

 Skanska was awarded a £75 million contract to design and construct a new office building at One Kingdom Street, part of the PaddingtonCentral development in West London. Skanska combined its skills in design, building, building services, piling, steel decking, ceilings and decorative plasterwork to offer a ‘Skanska’ solution for client Development Securities.

 Skanska’s team at the refurbishment of 50 Queen Anne’s Gate for Land Securities received an “Excellent” rating in its BREEAM assessment along with an Environmental Performance Index of 10.

 Skanska received an order from The Heron Tower Property Unit Trust for the first phase of a contract to construct Heron Tower. When complete, Heron Tower will be the tallest building in the City of London. Work is expected to begin on site in 2007.

 In London, Skanska, in consortium with its partners Innisfree and John Laing, achieved Financial Close on the Barts and The London New Hospitals programme. At £1 billion, it is the largest PFI healthcare scheme ever to close in the UK and will see the redevelopment of St Bartholomew’s in the City and the Royal London in Whitechapel.

 In Nottinghamshire, Skanska, in consortium with Innisfree began work at its Central Nottinghamshire Hospitals PFI Scheme. The £300 million project will provide new acute services at Kings Mill Hospital, Mansfield Community Hospital and backlog maintenance works at Newark General Hospital.

 In Derby, Skanska Innisfree handed over the first completed phase of the £333 million Derby PFI Hospital scheme, for Derby Hospitals NHS Foundation Trust. The Kings Treatment Centre, the new Education Building and approximately half of the 95,000m2 Acute Hospital building was handed over to the client on schedule.

 In Coventry, the 15th phase of the New Hospitals PFI Scheme was handed over on schedule in May, just one week after the handover at Derby. That meant that within two weeks, Skanska handed over 6,000 new rooms to the NHS. The Coventry scheme also won a National Gold Award from the Considerate Constructors’ Scheme for the second consecutive year.

 In Suffolk, Skanska completed work on a new £82 million barracks and training complex for Defence Estates. Rock Barracks in Woodbridge, has now become home to 23 Engineer Regiment, part of 16 Air Assault Brigade. The project included the provision of accommodation for its 636 personnel, training, storage and leisure facilities on a 69ha site within an Area of Outstanding Natural Beauty and surrounded by Sites of Special Scientific Interest.

 Skanska and its partner Innisfree was also named preferred bidder on a 33-year PFI scheme to design, build, finance, and operate a major healthcare development in Walsall. This project includes a construction project worth around £170 million along with facilities management of the estate buildings for the life of the project.

A copy of Skanska AB’s results, also released today, can be found at www.skanska.com.