Skanska Annual Report Analysis

This assignment critically evaluates Skanska's annual report. It examines the company's segment performance reporting, assessing its accessibility, comprehensiveness, and overall quality. The analysis highlights the strengths of the report, such as detailed financial data and clear presentation. It also suggests improvements in areas like branding and intellectual asset disclosures for better reader understanding.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student
Name of the University
Authors Note
Course ID

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Executive summary:
The value framework of the PWC offers the internal and the external decision making that
often demands a complete and related set of information to derive sustainable value creation
and enable decision making concerning the present performance of the organization and its
future prospects. The current study offers assessment of the nature and quality of the Skanska
performance in the areas of the organizational health and organizational performance as
defined under value framework of the PWC. In order to analyse the performance of the
Skanska the annual report of 2016 is considered to determine each elements of the framework
to measure the qualitative and quantitative performance. The report will also measure the
comprehensiveness along with the accessibility of the disclosure that is made in the report.
The outcome of the study provides in depth and breadth disclosure in consistent with the
framework of the PWC. Performance has been discussed in the areas of;
Strategic Elements
a. Strategy
b. Business models
c. Governance
d. Risk
Performance Elements
a. Economic
b. Segmental
Alignment to the PWC integrated reporting framework
The study also aligns with the PWC integration-reporting framework from the annual report
of 2016, which is incompliance with the organizational health and performance elements.

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Table of Contents
Introduction:...............................................................................................................................4
Value Framework Elements: Strategy and Objectives:.............................................................4
Strategy Business Model:...........................................................................................................6
Strategic Governance:................................................................................................................7
Strategy: Risk management:......................................................................................................8
Strategy Remuneration:............................................................................................................10
Resources and relationships: Financial Assets:........................................................................11
Resource and Relationships: Value framework elements: Customers:...................................13
Resource and relationship: People and Culture:......................................................................14
Resources and relationships: Innovation..................................................................................15
Resources and Relationships: Brands and intellectual assets..................................................17
Resources and Relationships: Internal Process and Supply Chain:.........................................17
Performance: Economic Performance:....................................................................................18
Performance: Operating Performance:.....................................................................................20
Performance: Social performance:...........................................................................................21
Performance: Environmental Performance..............................................................................22
Performance: Performance of Segment:..................................................................................23
Conclusion:..............................................................................................................................25
Reference List:.........................................................................................................................26

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Introduction:
The current report is based on the assessment of the PWC value framework of
Skanska. The report will examine the annual report of the company based on the areas of
external drivers, strategy, resources and relationships and performance. The report will also
provide the in depth of the organizational health along with the current performance of the
organization. The report will highlight that performance information forms the vital factors
and elements to support the decision making structure of the organization with appropriate
accountability.
Value Framework Elements: Strategy and Objectives:
Report Extract: Page 3
Reporting critique:
Reporting characteristics that helps in driving strategic and objective framework
elements:
a. Clear incorporation of the strategic goals and objectives
b. Short term, medium term and long term targets
Extensiveness and accessibility:

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Skanska strategy is on track of delivering higher performance each year with the
objective of business plan by positioning its business for success in the upcoming years. The
objective of Skanska can be accessed systematically and it is has been communicated in
terms of both qualitative and quantitative approach in the financial statements of 2016
(Skanska.com, 2017).
Furthermore, the chief executive officer of Skanska has provided a detailed analysis
of the strategy in page number 3 under the section of CEO strategic review and the strategy
of the firm is linked with the strong values and committed people for rendering excellence in
the business operations.
Comprehensiveness:
The CEO strategic review is associated with the growth strategy, shareholders growth and
financial model by reporting in the areas of
a. Macro-economic market overview
b. Customer value creation
c. Continued focus on the working capital
d. Operational efficiency
Apart from emphasising on the preceding year performance, the CEO also provides
qualitative outlook of the controlled business growth. The CEO also provides systematic
environmental management regarding the certifications of the operations to the international
management standard.
Overall conclusion:
The annual report of Skanska for the year 2016 evidently provides the descriptions of
the organizations strategic goals and objectives through appropriately formatted and

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straightforwardly understandable reporting. It can be stated that the qualitative and
quantitative information provides a correlation with the business objectives and the overall
presentation of the information is considered to be good.
Strategy Business Model:
Report extract: Page 7
Report Critique:
The business of the company reflects the method through which it creates value and
factors that are interrelated with the construction of revenue and project development (Smith,
2015).
Accessibility:
The Skanska business model relating to the performance information is found in one
page under the heads of Business Model at the beginning of the 2016 annual report
(Skanska.com, 2017). Therefore, the information to the business model can be accessed with
the help of the contents under the heads of “Business Model”. The model is clearly formatted

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with appropriate explanations to the revenue constructions, project development, return on
equity, shareholders dividend etc.
Comprehensiveness:
The figure above illustrates the performance with circular flow of investment
opportunities and internal contracts. This additionally helps in explaining the long term value
creation of Skanska business model by linking the strategy with its business objectives.
Overall conclusion:
The business model is briefly defined in one page that makes is easy and
comprehensive to understand. The elements are also explained and the overall quality is
good.
Strategic Governance:
Report extract: Page 59
Report Critique:
The governance structure of Skanska reflects the organizations commitment towards
transparency in reporting (Marr, 2012). The governance structure identifies rules regulating
the governing of documents, annual general meeting, nominations of the committee and
board of director’s policies.

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Comprehensiveness:
The structure of corporate governance for Skanska is clearly explained by
commencing the structure of nomination committee, compensation committee, audit
committee and comprehensively defines the governance structure of the company with
corresponding roles.
Skanska applies the below stated governing code of principles;
a. The board of directors communicates with the external auditors to participate in the
audit committee
b. The president and the CEO provides the operational management and internal control
responsibilities of day to day management of company’s state of affairs
c. The board of directors monitors and evaluate the information provided to the senior
executive teams
The governance structure of Skanska provides audit committee report and the nomination
committee report that comprises of the qualitative information regarding the composition and
activities of each of the committee (Skanska.com, 2017).
Overall conclusion:
The structure corporate governance of Skanska provides detailed descriptions of the
numerous governance reports and evidently demonstrates the commitment of the board of
directors towards the transparent flow of information through higher commitment and
regulatory policies. Thus, the overall quality of presentations is good.

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Strategy: Risk management:
Report Extract: page 16
:
Report Critique:
The elements of the risk management comprises of identification of the risk and
opportunity along with the process used in the administration of the organizations risk
(Weygandt et al., 2015).
Accessibility:
Skanska has a three-page section called Risk and opportunity management that lay
down the performance information concerning the organizations approach towards risk
management (Skanska.com, 2017). The section can be located easily with the help of
contents and can be easily identified under the heads of “Skanska’s Main Risk”.
Comprehensiveness:
The organization provides a detailed descriptions of the main risk by conductive
survey with over 200 top level managers so that the group can understand the main risk
surrounding its business. Skanska for each of the main risk identifies adopts comprehensive
management and mitigation measures to mitigate its risk. The annual report contains a two

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page detailed report describing the potential risk faced by the business and the process
adopted to monitor.
Overall conclusion:
Skanska group dedicates a detailed discussion and explanation of the their strategies
to manage risk. The section of the risk report is clearly formatted with the help of headings
and graphs that makes it easy to understand and allows the readers to understand the
transparency of the report. The quality is overall very good.
Strategy Remuneration:
Report Extract: Page 133
Report critique:
The remuneration report of Skanska provides the method of rewarding and
remunerating the employees and the senior executives of the organization (Warren et al.,
2013).
Accessibility:
The remuneration plans and objectives are communicated to the remuneration
committee with reference to the remuneration committee report that can easily accessed
through the contents of the annual report (Skanska.com, 2017).

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Comprehensiveness:
The remuneration report of Skanks is in compliance with the value of the PWC
remuneration criteria. The remuneration report comprise of the following;
a. Description of salary and the yearly process of review
b. Benefits provided in the form of insurance, such as social insurance contributions
c. Pension plans
d. Plans relating to share
The annual report of Skanska contains a well titled page named as remuneration report at
page number 133 that clearly explains with the help of tables the remuneration structure of
Skanska (Skanska.com, 2017). On evaluating the remuneration report of the Skanska it can
be stated that the remuneration plans are communicated precisely in the remuneration
committee. The report also provides the remunerations provided to the employee in terms of
the performance.
Conclusion:
The remuneration structure of the report provides complete transparency concerning
the method adopted in rewarding their employee, senior management etc. The report provides
the figures that has been published exactly and this makes it to be a good element.
Resources and relationships: Financial Assets:
Report Extract: page 116

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Report critique:
The elements of the financial assets comprises of the followings;
a. Disclosure of the assets book values
b. Past and present asset values
c. Asset efficiency and effectiveness
Accessibility:

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The evaluation of the company performance relating to the relevant asset is easy to
discover and it provides a one page tabular depictions of figure under the notes section.
Comprehensiveness:
The tabular depiction of figures provides a brief explanation of the present and past
values of the assets that are recognized in accordance with the company’s policies. These
comprises of the followings;
a. Financial investments
b. Financial receivables and interest bearings
c. Total carrying amount of the financial assets.
In addition to this, the section provides the figures of hedge accounts derivatives and the
carrying value to the balance sheet.
Conclusion:
There is a good measurement of the Skanska current asset as well as the non-current
assets with figures from previous and current year reported in the tabular form, which forms
an element of good decision-making. Therefore, the overall quality of the report is good.
Resource and Relationships: Value framework elements: Customers:
Report Extract: Page 41

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Report Critique:
The resource and relationship performance of Skanska aims to create a health number
of efficient customers for the revenue they bring to the company (Needles et al., 2013).
Accessibility:
Skanska annual report of 2016 comprises of the strategy to develop a customer centric
property so that the company can create a long lasting relationship with the customers
(Skanska.com, 2017). There is a clear description of the customer’s values creation and
performance targets can be noticed in the heads of commercial property development.
Comprehensiveness:
Skanska has listed the strategies that are in line with understanding the preference of
the customers with the objective of improving the relations with customers. There is a
quantitative data provides the percentage of revenue derived from the segments of the market.
From the above stated extracts, it is noticed that the company has provided qualitative data
about improving the customer’s relationship (Skanska.com, 2017). On page 47, a graphical
representation of customer value creation is provided that represent the performance of the
organization.
Overall conclusion:
The annual report of Skanska provides the percentage of revenue derived from the
customers and the overall quality of the report is good.
Resource and relationship: People and Culture:
Report Extract: Page 6

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Report critique:
An organization aims to have highly motivated and competent workforce to engage in
their jobs by retaining highest quality people to preserve the culture of the company (Braun et
al., 2013).
Accessibility:
Skanska annual report provides one full page regarding the significance of strong
company culture and values by driving employees towards organization success. The
information is easily located and the page is formatted with photos to focus on the concept.
Comprehensiveness:
Skanska is able to retain the employees with best employment policy (Skanska.com,
2017). The annual report provides a quantitative statistics of number of male and female
employed by the organization.
Conclusion:
Skanska group provides a vivid and clear explanation of the organization cultural
policy and the overall reporting quality is good.
Resources and relationships: Innovation
Report Extract: Page 64

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Report critique:
Innovations forms an important element in creating value through new and improved
quality products (Butler & Ghosh, 2015).
Accessibility:
The annual report of Skanska contains a section that provides the overview regarding
the innovation and research that are directed towards new ideas of business. Readers can
easily locate it as it is titled under the heads of Research and development.
Comprehensiveness:
In the annual report of 2016 on page number 64 Skanska defines the innovative
functions of the company, which is directed towards the use of new technology
(Skanska.com, 2017). Qualitative information provides that the company has focussed on
new business plans by the year 2020.
Overall conclusion:
The annual report provides a detailed focus on the research and development adopted
by the company and the quality of the reporting is good.

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Resources and Relationships: Brands and intellectual assets
Report Critique:
The brands and intellectual assets emphasis on the reputations of the organization.
Accessibility:
There is no information regarding the brands of the company in annual report.
Comprehensiveness:
An organization good reputation will enable better recognition among the customers.
As this ensure that shareholders invest in the company having better reputations.
Overall conclusion:
There is neither qualitative nor quantitative information about the brand therefore; the
quality of the reporting is ugly.
Resources and Relationships: Internal Process and Supply Chain:
Report Extract: Page 67
Report critique:
Supply chain helps in identifying the performance trends as well as the internal
process of the organization (Marshall, 2016).

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Accessibility:
The annual report provides insufficient information regarding the supply chain and
internal procedure on page 67. Only qualitative information is provided relating to the
strategic goals with no tabular presentation of information.
Comprehensiveness:
The report does not provides any aforementioned charter illustrating the positive
impact of sustainability (Skanska.com, 2017). The report only provides brief explanation of
collaboration with customers and suppliers towards long-term sustainability such as carbon,
energy and materials.
Overall conclusion:
The company does not provides any specific internal process or improvements
therefore the quality of the reporting is bad.
Performance: Economic Performance:
Report Extract: Page 26

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Report Critique:
The economic performance provides explanation to the profit and cash flows
contributing to the success of the company (Needles & Crosson, 2013).
Accessibility:
The economic performance of the company can be easily located under the heads of
the market overview, which provides graphical representations of the GDP growth and GDP
percentage growth to measure the financial performance of the organization.
Comprehensiveness:
On page 26 under the market Overview there is graphical elements that provides
statistical view of the performance to analyse the transparency of the economic performance
(Skanska.com, 2017). The information clearly helps in understanding the construction
investment in terms of the GDP growth.
Conclusion:

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The inclusion of graphical information provides clear transparency of reporting.
Hence the quality of the information is good.
Performance: Operating Performance:
Report Extract: Page 24
Report critique:
The operational performance comprises of the quality of the goods and service along
with the information on cost and customer satisfaction (Crosson & Needles, 2013).
Accessibility:
Skanska possess the portfolio of commercial properties of high quality and the
company is not manufacturing goods in terms of the product or unit cost (Skanska.com,
2017). The annual report provides the information on the customer satisfaction and trends
that impact the market performance.

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Comprehensiveness:
Skanska makes the use of quantitative data with the help of graph to represents
improved customers satisfaction. The company makes the use of bar graph to represents
dividends distribution to ensure that provide best returns.
Overall conclusion:
In spite of not providing information on unit cost the company has provided the
graphical representations of the information. The overall quality of reporting is good.
Performance: Social performance:
Report extract: Page 21
Report Critique
The social framework provides the company’s contribution to the society (Reider,
2016).
Accessibility:

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In the page 21 of the annual report of Skanska, it describes the overall engagement
with the community. The above stated extracts provides a clear and well formatted
descriptions of the images.
Comprehensiveness:
The method of community programmes, contributions to the society and future targets
are effectively incorporated in the annual report of Skanska.
Overall conclusion:
The community section provides a description of the company commitment towards
improving the social performance of the organization. Therefore, the quality of the
information is good.
Performance: Environmental Performance
Report extract: Page 68
Report Critique:
The environmental performance helps in providing explanation to the value creation
through environmental performance (Datar & Rajan, 2014).
Accessibility:

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The objective of the company is to create long-term creation of value through
systematic environmental management. The annual report of the company provides a section
where a detailed discussion of the environmental performance is listed.
Comprehensiveness:
The annual report of the Skanska comprises of the detailed metrics relating to the
following areas;
a. Positive energy building
b. Reduced carbon emission
c. Extensive use of construction materials
d. Climatic leadership identification
Overall conclusion:
The annual report of Skanska provided an in depth value framework of environmental
performance with clearly explained metrics and parameters. The quality of the reporting is
good.
Performance: Performance of Segment:
Report Extract: pg 143

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Report Critique:
An organization segregate their performance in numerous segments in order to obtain
better view of the business units (Wild & Shaw, 2013).
Accessibility:
On page number 143 of Skanska, annual report provides the information relating to
the segments of the organization that can be easily located in the notes section of the
accounts. The segments provides the in depth details of the company performance.
Comprehensiveness:
Skanska list down the necessary data in terms of the revenue generated, operating
income, income after financial items and profit after tax (Skanska.com, 2017). The
information is stated in tables with each segment performance is incorporated.
Overall conclusion:

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The segment performance of the Skanska is very detail and provides clear
understanding of last five years performance. Therefore, the overall quality of reporting is
good.
Conclusion:
The report can be concluded by stating that the analysis has been performed in the
areas of external drivers, strategy, resources and relationships and performance. There have
been majorly good quality of reporting by Skanska as the annual report presented is
comprehensive and easily accessible to the users. The information can be gained by gauging
at the relevant heads and through the contents table. However, there are few areas such as
branding and intellectual assets that falls under the heads of ugly presentations. It is
recommended that Skanska should improve such areas for better understanding of the
readers.

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Reference List:
Braun, K. W., Tietz, W. M., Harrison, W. T., Bamber, L. S., & Horngren, C. T.
(2014). Managerial accounting. Pearson.
Butler, S. A., & Ghosh, D. (2015). Individual differences in managerial accounting
judgments and decision making. The British Accounting Review, 47(1), 33-45.
Crosson, S. V., & Needles, B. E. (2013). Managerial accounting. Cengage Learning.
Datar, S. M., & Rajan, M. V. (2014). Managerial Accounting: Making decisions and
motivating performance. Pearson Education.
Langfield-Smith, K. (2015), Management Accounting. McGraw Hill
Marr, B. (2012). Key Performance Indicators, Prentice Hall, London
Marshall, D. (2016). Accounting: What the numbers mean. McGraw-Hill Higher Education.
Needles, B. E., & Crosson, S. V. (2013). Managerial accounting. Nelson Education.
Needles, B., Powers, M., & Crosson, S. (2013). Financial and managerial accounting.
Nelson Education.
Reider, B. P. (2016). ACTG 202.02: Principles of Managerial Accounting.
Skanska.com. (2017). Skanska Corporate Portal. Retrieved 28 September 2017, from
http://www.skanska.com/
Warren, C. S., Reeve, J. M., & Duchac, J. (2013). Financial & managerial accounting.
Cengage Learning.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & Managerial Accounting.
John Wiley & Sons.

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Wild, J., & Shaw, K. (2013). Managerial accounting. McGraw-Hill Higher Education.

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