Financial position and cash flow

Financial position

The equity/assets ratio on 30 September 2018 was 29.4 percent compared to 32.2 percent at year-end. Interest-bearing net debt amounted to SEK 4,441 million compared to SEK 1,216 million at the end of 2017. Net debt increased due to investments in business area Project Development and Industry and more working capital. The average interest rate in the loan portfolio, including derivatives, was 1.7 percent (2.3) on 30 September 2018.

Group liquid funds, including unutilized credit facilities, were SEK 4,473 million at the end of the period compared to SEK 5,145 million on 31 December 2017.

At the end of the period Group contingent liabilities, excluding joint and several liabilities in trading and limited partnerships, amounted to SEK 11,054 million compared to SEK 10,468 million on 31 December 2017. SEK 8,729 million (6,764) of contingent liabilities was surety given for credit lines for tenant-owned apartments under production.

Project and development properties

In connection with implementation of IFRS 15 the previous balance item Work-in-progress has been included in the balance item Project and development properties. Recalculation of the financial reports for 2017 is presented on Peab’s website www.peab.com/ifrs. As of 1 January 2017 the recalculated reported amount was SEK 1,203 million.

Investments and divestments

During the third quarter SEK 362 million (397) was net invested in tangible and intangible fixed assets and investment property. During the period January-September 2018 SEK 1,300 million (1,221) was net invested in tangible and intangible fixed assets and investment property and has primarily consisted of investments in machinery and operations and investment properties in Project Development.

Net investments in project and development properties, which are recognized as inventory items, totaled SEK 371 million (417) during the third quarter. Net investments in project and development properties totaled SEK 1,373 million (790) during the period January-September 2018 and stems from an increase in construction of housing projects in Finland and Norway as well as the acquisition of in development rights in, among other places, Finland. The corresponding period last year contained the divestiture of a number of properties in Ulriksdal in Solna as well as the acquisition of SEK 658 million in development rights on Kvarnholmen in Nacka.

Cash flow

July – September 2018

Cash flow from current operations was SEK -477 million (654), of which cash flow from changes in working capital was SEK -1,234 million (-127). The change in working capital included an increase in accounts receivables as well as construction of our own housing projects in Finland and Norway in Project Development.

Cash flow from investment activities was SEK -399 million (-550) and consisted of investments in machines and in operations and investment properties.

Cash flow before financing was SEK -876 million (104).

January – September 2018

Cash flow from current operations was SEK -914 million (1,637) of which cash flow from changes in working capital was SEK -2,470 million (-134). The change in working capital included an increase in accounts receivables, the acquisition of in development rights in, among other places, Finland as well as construction of our own housing projects in Finland and Norway. In addition, a slowdown in the housing market has entailed longer sales processes which has increased working capital. The corresponding period last year contained the acquisition of SEK 658 million in development rights on Kvarnholmen in Nacka as well as the divestiture of properties in Arenastaden, Solna to Fabege.

Cash flow from investment activities was SEK -1,056 million (-850) and was largely due to investments in machinery and in operations property and investment property. The comparable period included the divestiture of financial assets to Fabege.

Cash flow before financing amounted to SEK -1,970 million compared to SEK 787 million for the same period last year. During the first quarter 2017 the transactions carried out regarding Arenastaden, Solna had a positive effect of SEK 835 million.

Cash flow from financing operations amounted to SEK 1,791 million (-1,573) of which SEK -1,180 million (-1,062) was disbursed dividends and changes in interest-bearing loans was SEK 2,971 million (-511).

Net debt and debt/equity ratio

Cash flow before financing