Other information

Sustainability

Our workplaces should be secure and safe for everyone at them despite the fact that there are risk-filled aspects of our operations. Peab has a high portion of own skilled workers compared to our colleagues in the construction and civil engineering industry. With the acquisition of the Nordic paving and aggregate materials operations the number of Peab employees increased by around 2,000. The number of employees at the end of the second quarter was therefore 16,654, of which 9,300 were skilled workers. Because of the high number of own employees combined with many subcontractors at our workplaces the matter of safe workplaces is particularly important to us.

Serious accidents

To prevent accidents and incidents at our workplaces we continually develop quality assured work methods and educate our employees. Focus is on pla­nning and risk ­assessment in connection with running projects going forward as well as learning from reported risk observations, incidents and accidents.

The number of serious accidents* during the first half-year amounted to 25 regarding our own employees and 21 regarding subcontractors at our workplaces. The industry initiative Maintain Zero, which Peab helped found and that strives for zero accidents in the construction industry, is currently working on developing an industry standard for measuring and monitoring workplace accidents. Peab will begin reporting according to it as soon as the standard is produced and adopted.

Risk observations

Every remedied risk is one less potential accident, which is why we work intensively to raise the number of reported and remedied risk observations*. The goal for 2020 is 45,000 reported and remedied risk observations. The number during the first half-year 2020 was 27,185.

* For definition see section Alternative performance measures and definitions.

Other

• Peab initiated an in-depth collaboration with E.ON to establish the energy system Ectogrid in construction. E.ON’s concept Ectogrid balances heating and cooling in buildings, which reduces the need for external energy.
• Peab’s subsidiary Swerock started up its second production plant for recycling rubble, a so-called wash plant. The establishment in Sundsvall is a further step in offering the market recycled gravel and rock, which saves valuable natural resources. With this new technology the amount of rubble, which otherwise would have gone to landfill, can be reduced by around 80 percent.
• Peab Asfalt received the full climate bonus for the stretch of highway E6 Stora Höga – Ödsmål by meeting the Swedish Transport Administration’s high demands on reducing climate impact in paving operations.
• In the middle of the corona pandemic Peab handed over finished wards with 14 hospital beds and a reception area for patients with infectious diseases at Södra Älvsborg Hospital in Borås. Peab also completed a new ward at Norrland University Hospital ahead of time. The ward holds 22 hospital beds for newly operated patients, which means the existing post-op ward at the hospital can be offered to COVID-19 patients.

Risks and uncertainty factors

Peab’s business is exposed both to operational and financial risks. How much risks affect Peab’s profits and position depends on how well the company handles daily operations. In addition, as a construction and civil engineering company, Peab is vulnerable to external risks such as developments in the economy, climate effects and changes in circumstances due to amendments in laws and regulations, and other political decisions.

In the beginning of 2020 the coronavirus spread over a large part of the world. Governments and central banks are introducing different forms of crisis packages to reduce the financial effects. The entire global economy is affected but it is difficult to say how deeply and for how long. Peab is a major employer with many employees and many people at our workplaces. The short-term effects of the coronavirus on Peab’s operations are limited but at the time of publishing this report it is too early to say how Peab will be affected in the long run and what the financial consequences of the coronavirus pandemic will be. For more information see the section Coronavirus under Important events during the period.

Managing operative risks is a continuous process considering the large number of projects the Group is always starting up, carrying out and completing. Operative risks are managed in the line organization in the business areas through established procedures, processes and control systems. 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.

On December 13, 2019 Peab’s supplier Nynas AB applied for a company reorganization and on March 12, 2020 Nynas AB applied for a further extension of three months which was granted. Thereafter further extension was applied for, which was granted until September 15, 2020. Nynas AB is an essential supplier of bitumen which is used as a binder in the manufacture of asphalt. If Nynas AB cannot fulfill its obligations it will cause considerable disturbances in the Nordic paving market and affect all the companies involved in asphalt paving, including Peab which is a major actor. Peab has chosen to complement with other suppliers to ensure deliveries of bitumen.

Financial risks are primarily associated with the company’s need for capital, tied up capital and access to financing. Financial risks are managed on Group level. For further information about risks and uncertainty factors, see the Annual and Sustainability Report 2019.

Important events during the period

Dividend and distribution proposals and withdrawal of proposals

In conjuncture with the year-end report 2019 Peab’s Board decided to propose to the AGM an unchanged ordinary dividend of SEK 4.20 per share and an extra distribution of the shares in a newly founded real estate company (Annehem Fastigheter).

When the decision was made the global spread of the coronavirus had not yet begun. It has thereafter developed into a pandemic, which in turn has created enormous uncertainty concerning global financial developments.

On March 24, 2020 the Board reviewed the decision of an extra distribution of the shares in Annehem Fastigheter. The strategy to create the company, distribute and list it has not changed. However, the decision to actually distribute and list the company has been put off until there is less uncertainty and circumstances have improved. For more information see the section Annehem Fastigheter.

On April 7, 2020 Peab’s Board also decided to withdraw in its entirety the proposal to the AGM for an ordinary dividend of SEK 4.20 per share. The Board and executive management have reviewed the situation focusing on identifying measures needed to be taken for different scenarios on the Nordic construction market. Their main purpose is to be able to create the prerequisite conditions to handle overhead in a contracting business and at the same time safeguard long-term production capacity. Examples of measures are furloughs and training.

The Board’s ambition is to regularly evaluate the dividend capacity and depending on developments make a decision on both an ordinary dividend and when distribution of all the shares in Annehem Fastigheter can take place.