Financial position and cash flow

IFRS 16 Leases

IFRS 16, Leases replaced IAS 17, Leases as of January 1, 2019. When changing over Peab chose the changeover method in which comparable periods are not recalculated. Additional leases primarily comprise office and premise rents, leaseholds, land rentals and vehicles. Total assets and net debt were affected at changeover on January 1, 2019 by SEK 850 million. IFRS 16, Leases is applied in segment reporting. For further information see note 1.

Financial position

The equity/assets ratio on September 30, 2019 was 29.6 percent compared to 30.4 percent at year-end. Excluding additional IFRS 16, Leases the equity/asset ratio on September 30, 2019 was 30.1 percent. Interest-bearing net debt amounted to SEK 7,942 million compared to SEK 3,551 million at the end of 2018. Excluding additional IFRS 16, Leases net debt on September 30, 2019 was SEK 7,169 million. The increase in net debt is explained by more construction on property on our own balance sheet and joint ventures, our own developed housing projects in Norway and Finland, investments in Industry and payment of SEK 1,239 million in dividends in the second quarter. The average interest rate in the loan portfolio, including derivatives but excluding additional IFRS 16, Leases was 1.4 percent (1.7) on September 30, 2019.

Group liquid funds, including unutilized credit facilities, were SEK 4,320 million at the end of the period compared to SEK 5,846 million on December 31, 2018.

At the end of the period Group contingent liabilities, excluding joint and several liabilities in trading and limited partnerships, amounted to SEK 9,859 million compared to SEK 10,302 million on December 31, 2018. Of contingent liabilities surety given for credit lines for tenant-owned apartments under production was SEK 6,997 million compared to SEK 7,580 million on December 31, 2018.

Investments and divestments

During the quarter SEK 233 million (362) was net invested in tangible and intangible fixed assets and investment property. During the period January-September SEK 1,319 million (1,300) was net invested in tangible and intangible fixed assets and investment property and consisted primarily of office building construction and investments in machinery.

Net investments in project and development properties, which are recognized as inventory items, totaled SEK 177 million (371) during the quarter. Net investments in project and investment properties totaled SEK 1,229 million (1,373) during the period January-September 2019. Most of the investments refer to ongoing housing projects in Finland and Norway and our own developed rental projects in Project Development in Sweden.

Cash flow

July – September 2019

Cash flow from current operations was SEK -335 million (-477), of which cash flow from changes in working capital was SEK -1,038 million (-1,234). The change in working capital included increased accounts receivables and reduced accounts payable as well as the negative effect of construction of own housing projects in Finland and Norway.

Cash flow from investment activities was SEK -6 million (-399).

Cash flow before financing was SEK -341 million (-876).

January – September 2019

Cash flow from current operations was SEK -669 million (-914), of which cash flow from changes in working capital was SEK -2,620 million (-2,470). The change in working capital included, among other things, construction of own housing projects in Finland and Norway and our own developed rental projects in Project Development in Sweden.

Cash flow from investment activities was SEK -434 million (-1,056).

Cash flow before financing amounted to SEK -1,103 million (-1,970).

Cash flow from financing operations amounted to SEK -21 million (1,791) of which SEK -1,239 million (-1,180) consisted of paid dividends and changes in loans was SEK 1,218 million (2,971).