Accounting principle

Information about contigent liabilities is provided when there is a possible obligation stemming from events that have occured and the obligations are only confirmed by one or more uncertain future events that are out of the Group’s control or when there is an obligation that is not reported as a liability or provision because it is not likely that an outflow of resources will be required or the amount cannot be calculated with sufficient reliability.

As a consequence of Peab consolidating Swedish tenant- owner associations according to IFRS, surety for tenant- owner associations under production is not reported. When homebuyers take possession of their apartments and the tenant- owner association is no longer consolidated in Peab’s accounts, Peab then reports the part of surety for unsold homes. Peab has a guarantee obligation to acquire unsold homes six months after completion.

In most of the tenant- owner associations Peab develops, Peab AB signs guarantees as surety for paid advances and down payments. These guarantees ensure the tenant- owner’s right to repayment of a down payment if the tenant- owner makes a cancellation because of a substantial rise in fees during the first year after the annual meeting where the final cost of the project is presented. After that the guarantee is null and void. Guarantees or equivalent insurance from an external insurer have never been used and Peab considers it highly unlikely that this will occur in the future. The guarantees are therefore not reported as contingent liabilities.