Other information and appropriation of profit

Operations with permit and notification obligations

Operations required to have permits or to notify the authorities according to the Environmental Code are found in the Swedish sub-groups Swerock, Skandinaviska Byggelement, Peab Asfalt, Peab Anläggning and Peab Bostad.

Operations with permits in Sweden are land remediation, intermediate storage and recycling of excavated soil, work in/next to protected areas/objects, water operations/management, extraction of mineral aggregates, transportation of waste and hazardous waste as well as production of polymer modified bitumen (PMB). These operations primarily affect the environment through the extraction of finite resources, future land use, impact on ecosystems, emissions and noise.

Operations required to notify authorities are concrete manufacturing, production of prefabricated concrete elements, permanent and mobile asphalt plants, mobile C&DW crushing plants, actions taken in contaminated areas, intermediate storage of excavated soil and waste, recycling of excavated soil, water operations/management and transportation of waste and hazardous waste.

There are also operations in the other Nordic countries with an environmental impact that must be approved by authorities. They are production of asphalt in Finland, Norway and Denmark as well as extraction of mineral aggregates and concrete manufacturing in Finland and Norway.

Renewal and supplementation of permits as well as submitting notifications is ongoing.

Important events during the year

Corona pandemic

In the be­gin­ning of 2020 the coro­n­avirus spread out over the world and the pandemic has raged ever since, although a stage was reached in the beginning of 2022 where countries and companies more or less opened up. During the pandemic gov­ern­ments and cen­tral banks in­tro­duc­ed dif­fer­ent forms of cri­sis pack­ages to re­duce its fi­nan­cial ef­fects.

The ef­fects of the coro­n­a pandemic on Peab’s op­er­a­tions have been lim­it­ed but nat­u­ral­ly we close­ly fol­low de­vel­op­ments to con­tin­u­al­ly as­sess any further pos­si­ble ef­fects. We also continue to follow The Pub­lic Health Agency of Swe­den’s guide­lines and in­struc­tions as well as cor­re­sponding guidelines in the other coun­tries we work in.

Meanwhile the pandemic has demonstrated what a strength it is for Peab to be the local com­pa­ny with the big group re­sources. Peab has four busi­ness areas – Con­struc­tion, Civil En­gi­neer­ing, In­dus­try and Project De­vel­op­ment – that col­lab­o­rate lo­cal­ly and a large part of input goods and per­son­nel are our own. This gives us good con­trol over the con­struc­tion process and makes us there­fore less vul­ner­a­ble to pro­duc­tion dis­rup­tions.

The AGM’s election of Board members

In ac­cor­dance with the pro­pos­al of the Nom­i­na­tion Com­mit­tee the AGM de­cid­ed the Board would con­tract from nine to eight or­di­nary mem­bers elect­ed by the AGM. The AGM re­elect­ed Karl-​Axel Granlund, Liselott Ki­laas, Ker­stin Lin­dell, Fredrik Pauls­son, Malin Pers­son, Lars Sköld and An­ders Runevad and elect­ed Mag­dale­na Gerg­er as a new Board mem­ber. An­ders Runevad was elect­ed the new Chair­man of the Board. The pre­vi­ous Chair­man of the Board Göran Grosskopf and Board mem­ber Mats Pauls­son de­clined re­elec­tion and there­fore left the Board.

Nomination Committee

Ac­cord­ing to the AGM’s de­ci­sion in 2021 Peab’s Nom­i­na­tion Com­mit­tee con­sists of a rep­re­sen­ta­tive for each of the three share­hold­ers hold­ing the largest num­ber of votes ac­cord­ing to the share reg­is­ter per Sep­tem­ber 30 as well as the Chair­man of the Board. The three share­hold­ers hold­ing the largest num­ber of votes ac­cord­ing to the share reg­is­ter per Sep­tem­ber 30 were: Ekha­ga Utveck­ling which has ap­point­ed An­ders Sund­ström, AB Axel Granlund which has ap­point­ed Ulf Lil­jedahl and Mats Pauls­son with fam­i­ly which has also ap­point­ed An­ders Sund­ström. An­ders Runevad is a mem­ber of Peab’s Nom­i­na­tion Com­mit­tee in his role as Chair­man of the Board of Peab. The Nom­i­na­tion Com­mit­tee has ap­point­ed Ulf Lil­jedahl as Chair­man of the Nom­i­na­tion Com­mit­tee.

Peab has issued green bonds for SEK 1,500 million

On Au­gust 30, 2021 Peab is­sued bonds for a total value of SEK 1,500 mil­lion. The issue is al­lo­cat­ed as fol­lows: SEK 1,000 mil­lion with a ma­tu­ri­ty of 3 years with a vari­able in­ter­est rate of 3 months Sti­bor (the Stock­holm In­ter­bank Of­fered Rate) plus 1.05 per­cent­age points and SEK 500 mil­lion with a ma­tu­ri­ty of 5 years with a vari­able in­ter­est rate of 3 months Sti­bor plus 1.30 per­cent­age points.

Funds from the issue will be used to fi­nance in­vest­ments in green and en­er­gy ef­fi­cient build­ings, ECO prod­ucts and a more en­vi­ron­men­tal­ly-adapt­ed pro­duc­tion, green trans­porta­tion and water and waste man­age­ment. The green bonds were is­sued with­in the frame­work of Peab’s Swedish MTN pro­gram and the newly in­sti­tut­ed frame­work for green fi­nanc­ing. The frame­work has been au­dit­ed by the in­de­pen­dent com­pa­ny CI­CERO Shades of Green which has clas­si­fied it at level “medi­um green”.

Payment regarding Group sickness insurance (AGS)

Afa In­sur­ance de­cid­ed to pay out con­sol­i­da­tion funds in AGS in­sur­ance in 2021. The pay­ments are based on pre­vi­ous re­pay­ment of AGS ​pre­mi­ums for the years 2004-​2008. The pay­ments were made dur­ing October-​November and en­tailed a pos­i­tive ef­fect on Peab’s op­er­at­ing prof­it in the fourth quar­ter 2021 of SEK 179 mil­lion. This amount was rec­og­nized in the Group under Group func­tions.

Important events after the end of the year

War in Ukraine

The recent dramatic developments in Ukraine have a key impact on the world around us. In addition to the tragedy for the people the war touches, the situation risks hampering macroeconomic growth in the world. In Sweden this can affect the construction industry through greater uncertainty and cautiousness concerning investments, continued high material and energy prices and material shortages and delivery problems. We follow developments carefully to continually assess any effects on Peab.

The Peab share

At the end of 2021 Peab’s share capital amounted to SEK 1,583,866,056 divided among a total of 296,049,730 shares, resulting in a nominal value of SEK 5.35 per share. Of the shares, 34,319,957 are A shares with ten votes per share, and 261,729,773 are B shares with one vote per share. All shares carry equal rights to participation in the company’s assets, profits and dividends. There are no restrictions in the articles of association concerning transferring shares or the disposal of votes at the AGM. On December 31, 2021 there were approximately 57,000 shareholders in Peab. As part of the generation shift, in the spring of 2017 the Paulsson families merged the majority of their indirect holdings into a holding company, Ekhaga Utveckling AB, which is controlled by Mats Paulsson’s son Fredrik Paulsson. Ekhaga Utveckling AB has 48.3 percent of the votes. At the end of 2021 the collective ownership connected to the Paulsson families amounted to a total of 26.1 percent of the capital and 59.3 percent of the votes. The company has no knowledge of any agreements between shareholders that can result in restriction of the right to transfer shares.

Peab’s AGM decided on May 6, 2021 to authorize the Board to decide, during the period up to the next AGM, on new issues of B shares with rights for current shareholders to participate in the issue or without preferential rights for current shareholders to participate in the issue in connection with acquisitions. The authorization may be used on one or more occasions and correspond to, at the most, a total of 10 percent of the registered share capital at the time of the authorization. During the year the Board has not decided to issue any new shares.

In 2007 Peab established a profit-sharing foundation. According to the foundation’s placement policy its capital should be placed primarily in Peab shares. On December 31, 2021 the foundation owned 12,458,000 B shares in Peab, corresponding to 4.2 percent of the total number of shares.

Holdings of own shares

At the beginning of 2021 Peab’s own B shareholding was 1,086,984 which corresponds to 0.4 percent of the total number of shares. On May 6, 2021 Peab’s AGM resolved to authorize the Board to, during the period until the next AGM, acquire shares so that the company would have at most 10 percent of the total shares in Peab. No own shares were purchased nor divested during 2021 which means that Peab’s own shareholding was 1,086,984 B shares at the end of 2021. For more information see note 28.

Corporate governance

For a detailed description of the work of the Board of Directors, corporate governance and systems for internal control see the Corporate governance report.

Remuneration policy for executive management

For information on the latest adopted Remuneration Policy containing guidelines for determining salaries and other compensation to senior officers see note 9.

Expectations concerning future development

The financial situation in Sweden continued to develop positively during the end of 2021, although material shortages, the continued spread of COVID-​19 and rising inflation held back development and contributed to uncertainty. This upturn is expected to be followed by weaker growth in 2022 since both housing investments and other building construction are expected to remain on the same level as in 2021. The ongoing uncertainty concerning the supply of cement can create a bumpy market. Civil engineering investments are expected to suffer a slight downturn in 2022 after having grown at a good rate in 2021. There is, however, a risk that rising energy prices and supply disturbances, resulting from the war in Ukraine, can have a negative impact on both households and industry.

The Norwegian economy continued to recover in the latter part of 2021. The forecast for its GNP was adjusted in a positive direction and the strong financial growth will probably continue in 2022, since the unemployment rate is expected to decrease. It appears the total volume of building construction will decline in 2022 after a broad upturn in 2021. The exception is new construction of apartment buildings where development was negative last year. All in all housing investments are expected to rise in 2022 while other building construction is expected to decline. The need for civil engineering investments continues to be strong and in 2022 civil engineering investments are expected to show significant growth. However, total investments may be stymied by weak oil industry investments, a labor shortage in industry and rising interest rates and energy prices as well as supply disturbances resulting from the war in Ukraine.

A quick recovery in employment, which stimulates household consumption, together with the upturn in investments was behind growth in the Finnish economy in 2021, and this is also expected to drive growth in 2022. The GNP forecast was adjusted in a positive direction and now indicates an increase by about 3.5 percent for last year and 3.0 percent for 2022. The increase in total building construction in 2021 was considerable due to industrial investments and growing housing construction. However, a downturn in 2022 may be on the horizon since both housing investments and other building construction is expected to contract. As in 2021 the forecast for 2022 indicates horizontal development in civil engineering construction. The uncertain situation in the world, resulting from the war in Ukraine, can have a negative impact on investments in 2022.

Parent company

The parent company’s business consists of executive management and Group functions. Net sales in 2021 were SEK 293 million (346) and consisted primarily of internal Group services. Operating profit for the year was SEK -131 million (-199). Profit after net financial items amounted to SEK -116 million (243). In the comparable year net financial items included dividends from subsidiaries of SEK 500 million. Of the appropriations, Group contributions were SEK 2,104 million (1,587). Profit for the year amounted to SEK 1,243 million (1,304).