Note 29 Provisions
Accounting principle
Provisions are recognized on the balance sheet when the Group has a legal or informal obligation due to events that have occurred and it is likely that financial resources will be required to meet the obligation, and a reliable estimate of the amount can be made.
Not worked-up feared loss
Feared losses in construction contracts are expensed as soon as they become known. The not worked-up part of a feared loss is recognized as a provision. Provisions for not worked-up feared losses have been made in every business area although most of them are related to business area Construction.
Guarantee costs
Refers to calculated cost for fixing errors and defects in completed projects that arise during a project’s guarantee period as well as rental guarantees. The outflow of resources takes place during a project’s guarantee period which is normally two to five years. Since the effect of when in time payment is made is not important expected future payments are not present value computed. Provisions have been made in every business area.
Restoration costs
Refers to calculated restoration costs in Industry operations for gravel and rock quarries after excavation has ended. The provisions increase based on the excavated amount and are reversed after restoration. The reserved amount is expected to be used successively after excavation has ended. Restoration can be expected to take 1 to 15 years. Calculation of the reserved amount is based on estimated future payments for restoration and mirror Peab’s best assessment taking into consideration the cash flow risk.
Special payroll tax on pension costs and social security costs
There are pension plans where the Group has acquired endowment insurance which is hedged in favor of employees through pledges. Provisions for special payroll tax are reserved calculated on the fair value of the endowment insurance, except in cases where the contract stipulates that the endowment insurance covers special payroll tax.
Provisions for social security for the Performance Share Program are reserved based on the shares’ fair value at the time of reporting.
Disputes
Refers to existing disputes in all business areas.
Obligations in joint ventures
Refers to participations in joint ventures with a negative consolidated value.
Other
Refers to other minor provisions.
Important estimates and assessments
The most important sources of uncertainty in estimates
Disputes
Peab’s business is largely project- related. There are a number of different contract forms where risk levels vary depending on the type of contract. However, with any type of contract ambiguities can arise concerning the terms, which can lead to delimitation issues that create a dispute with the customer. The actual outcome of a disputed amount can deviate from, according to the best assessment, the reported amount.
Provisions which are long-term liabilities
| MSEK | 2024 | 2023 | |
| Mkr | 2024 | 2023 | |
| Feared losses not worked-up | Ej upparbetad befarad förlust | 507 | 644 |
| Guarantee risk reserve | Garantikostnader | 547 | 523 |
| Restoration costs | Återställningskostnader | 246 | 251 |
| Special payroll tax on pensions and social security costs | Löneskatt på pensionskostnader och sociala avgifter | 147 | 135 |
| Disputes | Tvister | 1 | 37 |
| Obligations in joint ventures | Åtagande i joint ventures | 1 | 127 |
| Other | Övrigt | 44 | 31 |
| Total | Summa | 1,493 | 1,748 |
Provisions which are current liabilities
| MSEK | 2024 | 2023 | |
| Mkr | 2024 | 2023 | |
| Feared losses not worked-up | Ej upparbetad befarad förlust | 110 | 64 |
| Guarantee risk reserve | Garantikostnader | 84 | 59 |
| Restoration costs | Återställningskostnader | 93 | – |
| Disputes | Tvister | 40 | 7 |
| Other | Övrigt | 58 | 93 |
| Total | Summa | 385 | 223 |
| 2024‚ MSEK | Feared losses not worked-up | Guarantee risk reserve | Restoration costs | Special payroll tax on pensions and social security costs | Disputes | Obligations in joint ventures | Other | Total | |
| 2024. Mkr | Ej upparbetad befarad förlust | Garanti- kostnader | Återställ- ningskost- nader | Löneskatt på pensions- kostnader och sociala avgifter | Tvister | Åtagande i joint ventures | Övrigt | Totalt | |
| Opening recognized value | Redovisat värde vid årets ingång | 708 | 582 | 251 | 135 | 44 | 127 | 124 | 1,971 |
| Provisions set aside during the year | Avsättningar som gjorts under året | 29 | 431 | 103 | 32 | 3 | 57 | 655 | |
| Amounts requisitioned during the year | Belopp som tagits i anspråk under året | -120 | -355 | -17 | -20 | -6 | -78 | -596 | |
| Reversed unutilized provisions during the year | Outnyttjade belopp som har återförts under året | -32 | -1 | -33 | |||||
| Increase in discounted amounts during the year | Ökning under året av diskonterade belopp | 1 | 1 | ||||||
| Reclassification | Omklassificering | -126 | -126 | ||||||
| Exchange rate differences | Valutakursdifferens | 0 | 5 | 1 | 0 | 0 | 0 | 6 | |
| Closing recognized value | Redovisat värde vid årets utgång | 617 | 631 | 339 | 147 | 41 | 1 | 102 | 1,878 |
| Of which are long-term provisions | Varav långfristig del av avsättningarna | 507 | 547 | 246 | 147 | 1 | 1 | 44 | 1,493 |
| Of which are current provisions | Varav kortfristig del av avsättningarna | 110 | 84 | 93 | 40 | 58 | 385 |
| 2023‚ MSEK | Feared losses not worked-up | Guarantee risk reserve | Restoration costs | Special payroll tax on pensions and social security costs | Disputes | Obligations in joint ventures | Other | Total | |
| 2023. Mkr | Ej upparbetad befarad förlust | Garanti- kostnader | Återställ- ningskost- nader | Löneskatt på pensions- kostnader och sociala avgifter | Tvister | Åtagande i joint ventures | Övrigt | Totalt | |
| Opening recognized value | Redovisat värde vid årets ingång | 80 | 672 | 306 | 138 | 42 | 100 | 94 | 1,432 |
| Provisions set aside during the year | Avsättningar som gjorts under året | 495 | 438 | 13 | 10 | 39 | 27 | 86 | 1,108 |
| Amounts requisitioned during the year | Belopp som tagits i anspråk under året | -67 | -397 | -66 | -13 | -30 | -50 | -623 | |
| Reversed unutilized provisions during the year | Outnyttjade belopp som har återförts under året | 7 | -124 | 0 | 0 | -5 | -5 | -127 | |
| Increase in discounted amounts during the year | Ökning under året av diskonterade belopp | 0 | 0 | ||||||
| Reclassification | Omklassificering | 194 | 194 | ||||||
| Exchange rate differences | Valutakursdifferens | -1 | -7 | -2 | -2 | 0 | -1 | -13 | |
| Closing recognized value | Redovisat värde vid årets utgång | 708 | 582 | 251 | 135 | 44 | 127 | 124 | 1,971 |
| Of which are long-term provisions | Varav långfristig del av avsättningarna | 644 | 523 | 251 | 135 | 37 | 127 | 31 | 1,748 |
| Of which are current provisions | Varav kortfristig del av avsättningarna | 64 | 59 | 7 | 93 | 223 |