Skanska UK's focus on home markets wins through

During the year, Skanska sold its overseas operating units, which had previously reported through Skanska UK. These were:-

- Gammon Skanska of Hong Kong
- Skanska Cementation, the specialist mining business
- Skanska Cementation India
- Skanska Whessoe, the specialist liquid natural gas business

These divestments mean that the business going forward is entirely focussed on the UK market. Sales and profits of these overseas businesses were previously reported in the UK and therefore the results for 2004 reflect this.

Net sales for the ongoing UK operations for the year at £820 million are slightly down on 2003 at £910 million however profits are up from £12.1 million in 2003 to £22.1 million producing a 2.8% margin. Order backlog at around £1 billion does not include those schemes at preferred bidder stage, which amount to approximately £1.3 billion.

David Fison, Chief Executive, Skanska UK Plc said, “During 2004 we have sorted out our past. Now its about delivering the future. Our core UK business is getting better and better in delivering integrated projects across the infrastructure sector. Our underlying results prove this is the right strategy for us and 2005 will prove it further both in performance and profits.”

Since the start of 2005, Skanska UK has announced new contract awards of £200 million. The company is preferred bidder on both The Barts and The London (£1 billion) and Central Nottinghamshire (£265m) PFI healthcare schemes. David Fison continues, “These awards confirm our strategy of focusing on the UK and in our chosen main contracting growth areas of PFI, Civil Engineering and Utilities. Our specialist businesses continue to lead the industry in the markets in which they operate and underpin the success of Skanska UK’s ability in both PFI and Civil Engineering to offer total solutions.



Operational highlights for Skanska UK Plc during 2004:

PFI/PPP

In London, King’s College PFI Hospital was completed ten weeks ahead of schedule, which enabled the Trust to transfer services early.

In Kent, Skanska in consortium with Mill Group achieved financial close on a £36 million PFI schools project for the London Borough of Bexley. The scheme includes the design, build, finance, and operation of two secondary schools, Bexleyheath and Welling.

In Nottinghamshire, Skanska in consortium with Innisfree was named preferred bidder for the £265 million 30-year PFI scheme to design, build, finance and operate a major hospital development for Sherwood Forest Hospitals NHS Trust and Mansfield District Primary Care Trust.

In Woodbridge, Suffolk, work officially began on an £80 million contract to design and build a new barracks complex under the Defence Estates’ Prime Contracting Initiative and is due for completion in 2006. The financial close of Woodbridge was achieved as Skanska successfully completed the £352 million PFI redevelopment and modernisation scheme of the Ministry of Defence’s Headquarters in Whitehall, London.

Skanska continues its success in PFI achieving first place for the second year running in an industry PFI league table and winning the prestigious “PFI Contractor of the Year” Award.

Civil Engineering & Specialist Businesses

Civil Engineering - In October Skanska was awarded a £150 million Alliance contract by Anglian Water as part of its capital programme. Skanska, in joint venture is one of six partners who will deliver projects collectively worth £750 million for the first phase of Anglian Water’s capital programme planned over the next five years.

Specialist Businesses – Skanska UK’s specialist business continue to lead the industry in the markets in which they operate and underpin the success of Skanska UK’s ability in both PFI and Civil Engineering to offer total solutions.

Utilities

2005 began on a high-note with the award of an alliance contract to replace some 3,200 kilometres of gas distribution mains in the North London area. Skanska will carry out the work, which is valued at around £400 million in joint venture under an eight-year Alliance for Transco Plc, a subsidiary of National Grid Transco (NGT).

Skanska’s utility portfolio continues to grow with the successful renewal of BT’s framework agreement covering its Yorkshire & Humber and Thames Valley regions. The framework is for a period of four years and is valued at £200 million.

In December 2004, Skanska’s telecommunications portfolio increased further with the award of two telecommunications orders totalling £165 million – The first, awarded in joint venture is for the delivery of BT’s Holistic Contract Option part of BT’s network upgrade. The second is the renewal of a four-year tier-two contract serving BT in Scotland.

Construction

During the fourth quarter of 2004, Skanska successfully completed Moor House, the City’s latest landmark office development, a 19-storey office building and Skanska’s second high-profile London landmark following the successful completion of 30 St Mary Axe.


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

ENDS