Note 5 Business combinations

2017

During 2017 Peab acquired 60 percent of the shares in AB Smidmek Eslöv. The company was consolidated 100 percent through the anticipated acquisition method, since Peab has a put/call option for the acquisition of the rest of the shares. The company complements business area Industry’s existing offer regarding the manufacture of steel and concrete framework. During the year Tranab Markbyggnad AB, which has civil engineering operations in Mälardalen and Närke, also has been acquired. Peab has also acquired rock and concrete sealing operations in Gothenburg as well as the rest of the 66.6 percent of the shares in Telemark Vestfold Utvikling AS.

The above acquisitions in 2017 individually do not have any material acquisition effect from a Group perspective and the information on acquisition effects is therefore given collectively.

In the period after acquisition the above subsidiaries contributed SEK 275 million to Group income and SEK 14 million to profit in 2017. If the acquisitions had taken place on 1 January 2017, the combined effect of these acquisitions on Group income would have been SEK 648 million and on profit for the year by SEK 27 million.

Effects of acquisitions in 2017

The acquisitions’ preliminary effects on Group assets and liabilities are shown below. The acquisition analyses may be adjusted during a twelve month period.

Goodwill primarily consists of human resources and future synergy effects regarding common systems and shared resources which do not meet the criteria for recognition as intangible assets at the time of acquisition.

Total transferred compensation amounted to SEK 261 million.

In connection with the acquisition of the rest of the 66.6 percent of the shares in Telemark Vestfold Utvikling AS the existing holding was revalued to fair value. The effect of the revaluing amounted to SEK 26 million and was recognized as other operating income.

During the year, the acquisition of assets also occurred through the acquisition of shares (asset acquisitions which are not business combinations) which resulted in a cash flow of SEK -121 million and primarily refer to project and development properties with development rights in Kungsängen, Oslo and Västerås.

Acquisitions after the balance sheet date

No substantial acquisitions have been made during 2018 as of the presentation of these financial reports.

2016

During 2016 Peab acquired 90.3 percent of the shares in Solberg Maskin AS. The company was consolidated 100 percent through the anticipated acquisition method. In addition, the gravel and rock operations in Kållered and Torup as well as concrete production in the form of a concrete factory in Borås have been acquired. The acquisition effects of these acquisitions were immaterial from a Group perspective. The total transferred compensation was SEK 228 million.

In the period after acquisition the above subsidiaries contributed SEK 110 million to Group income and SEK 0 million to profit in 2016. If the acquisitions had taken place on 1 January 2016, the combined effect of these acquisitions on Group income would have been SEK 216 million and on profit for the year by SEK 3 million.

In 2016 the acquisition of assets through acquiring shares (substance acquisitions that do not comprise any business) led to a cash flow of SEK -277 million and primarily refer to project and development property with development rights in Gothenburg, Jönköping and Oslo.

In 2016 the remaining 9.9 percent of shares in K. Nordang AS were acquired. The company had already been 100 percent consolidated through the application of the Anticipated acquisition method since there was a put/call option for the acquisition of the rest of the shares.

The acquired companies’ net assets at the time of acquisition:

MSEK 2017 2016
Intangible fixed assets 60 25
Tangible fixed assets 27 262
Financial assets 40
Deferred tax recoverables 2 4
Project and development properties and inventories 211 14
Accounts receivable and other receivables 84 53
Liquid funds 53 14
Interest-bearing liabilities -25 -82
Deferred tax liabilities -42 -14
Provisions -3 -30
Accounts payable and other current liabilities -152 -34
Net identifiable assets and liabilities 255 212
Non-controlling interest -1
Previous value of share in joint venture -60 -7
Group goodwill 67 23
Consideration transferred 261 228

Consideration transferred

MSEK 2017 2016
Liquid funds 213 151
Contingent consideration 11 24
Promissory note 53
Option liabilities 37
Total consideration transferred 261 228