Note 1 – Accounting principles
The quarterly report has been prepared according to the IFRS standards that have been adopted by EU as well as the interpretations of the valid standards adopted by EU, IFRICs. This report for the Group has been prepared according to IAS 34, Interim financial reporting as well as applicable regulations in the Annual Accounts Act. The parent company quarterly report has been prepared according to chapter 9 in the Annual Accounts Act, Quarterly reports and RFR 2, Accounting rules for legal entities. The quarterly report has been prepared for the Group and parent company according to the same accounting principles and conditions applied in the latest Annual Report, except for the amended accounting principles described below.
In addition to the financial reports and their accompanying notes further information according to IAS 34.16A can be found in other sections of the quarterly report.
Changed accounting principles for Swedish tenant-owned housing associations
As of fiscal year 2020 Peab consolidates projects with Swedish tenant-owned housing associations at the time the final homebuyers take possession of their apartments. This means that Peab recognizes the projects on the balance sheet as work-in-progress under the asset item project development properties, and as interest-bearing liabilities. Revenue and costs for the projects will be recognized as homebuyers take possession of their apartments. Costs for loans are included in the acquisition value of the properties. In conjuncture with this change Peab now recognizes all our own developed housing projects in Sweden, Norway and Finland according to the completion method. According to previous principles Peab did not consolidate projects with Swedish tenant-owned housing associations from the time land transfer and turnkey contracts were signed, and revenue and expenses were recognized over time as the projects were successively completed.
All comparative figures for 2019 are translated if not otherwise specified.
| Jan-Sep 2019 MSEK | Reported income statement | Changed accounting principles | Group IFRS | |
| Jan-sep 2019 Mkr | Rapporterad resultaträkning | Ändrad redovisningsprincip | Koncernen IFRS | |
| Net sales | Nettoomsättning | 38,696 | 2,152 | 40,848 |
| Production costs | Kostnader för produktion | -34,930 | -1,513 | -36,443 |
| Gross profit | Bruttoresultat | 3,766 | 639 | 4,405 |
| Sales and administrative expenses | Försäljnings- och administrationskostnader | -2,128 | -2,128 | |
| Other operating income | Övriga rörelseintäkter | 187 | 187 | |
| Other operating costs | Övriga rörelsekostnader | -12 | -12 | |
| Operating profit | Rörelseresultat | 1,813 | 639 | 2,452 |
| Financial income | Finansiella intäkter | 99 | 99 | |
| Financial expenses | Finansiella kostnader | -126 | -126 | |
| Net finance | Finansnetto | -27 | – | -27 |
| Pre-tax profit | Resultat före skatt | 1,786 | 639 | 2,425 |
| Tax | Skatt | -285 | -137 | -422 |
| Profit for the period | Periodens resultat | 1,501 | 502 | 2,003 |
| Profit for the period, attributable to: | Periodens resultat hänförligt till: | |||
| Shareholders in parent company | Moderbolagets ägare | 1,501 | 502 | 2,003 |
| Non-controlling interests | Innehav utan bestämmande inflytande | 0 | – | 0 |
| Profit for the period | Periodens resultat | 1,501 | 502 | 2,003 |
| Sep 30‚ 2019 MSEK | Reported balance sheet | Changed accounting principles | Group IFRS | |
| 30 sep 2019 Mkr | Rapporterad balansräkning | Ändrad redovisningsprincip | Koncernen IFRS | |
| Assets | Tillgångar | |||
| Intangible assets | Immateriella anläggningstillgångar | 2,324 | 2,324 | |
| Tangible assets | Materiella anläggningstillgångar | 6,644 | 6,644 | |
| Investment property | Förvaltningsfastigheter | 704 | 704 | |
| Interest-bearing long-term receivables | Räntebärande långfristiga fordringar | 1,077 | 1,077 | |
| Other financial fixed assets | Övriga finansiella tillgångar | 1,994 | 5 | 1,999 |
| Deferred tax recoverables | Uppskjuten skattefordran | – | 209 | 209 |
| Total fixed assets | Summa anläggningstillgångar | 12,743 | 214 | 12,957 |
| Project and development properties | Projekt- och exploateringsfastigheter | 11,094 | 5,728 | 16,822 |
| Inventories | Varulager | 500 | 500 | |
| Interest-bearing current receivables | Räntebärande kortfristiga fordringar | 195 | -77 | 118 |
| Other current receivables | Övriga kortfristiga fordringar | 14,910 | -1,280 | 13,630 |
| Liquid funds | Likvida medel | 261 | 261 | |
| Total current assets | Summa omsättningstillgångar | 26,960 | 4,371 | 31,331 |
| Total assets | Summa tillgångar | 39,703 | 4,585 | 44,288 |
| Equity and liabilities | Eget kapital och skulder | |||
| Equity | Eget kapital | 11,735 | -769 | 10,966 |
| Liabilities | Skulder | |||
| Interest-bearing long-term liabilities | Räntebärande långfristiga skulder | 5,942 | -1,670 | 4,272 |
| Interest-bearing long-term liabilities, project financing | Räntebärande långfristiga skulder, projektfinansiering | – | 448 | 448 |
| Deferred tax liabilities | Uppskjuten skatteskuld | 138 | 138 | |
| Other long-term liabilities | Övriga långfristiga skulder | 959 | -109 | 850 |
| Total long-term liabilities | Summa långfristiga skulder | 7,039 | -1,331 | 5,708 |
| Interest-bearing current liabilities | Räntebärande kortfristiga skulder | 3,533 | -233 | 3,300 |
| Interest-bearing current liabilities, project financing | Räntebärande kortfristiga skulder, projektfinansiering | – | 7,385 | 7,385 |
| Other current liabilities | Övriga kortfristiga skulder | 17,396 | -467 | 16,929 |
| Total current liabilities | Summa kortfristiga skulder | 20,929 | 6,685 | 27,614 |
| Total liabilities | Summa skulder | 27,968 | 5,354 | 33,322 |
| Total equity and liabilities | Summa eget kapital och skulder | 39,703 | 4,585 | 44,288 |
Annehem Fastigheter
In February 2020 Peab’s Board proposed to the AGM, in addition to the ordinary dividend, an extra distribution of all the shares in a newly founded company, Annehem Fastigheter, containing Peab’s wholly owned, fully developed commercial properties. As a result of the spread of the coronavirus, its effects on external circumstances and on financial markets, Peab’s Board decided to withdraw the proposal to the AGM. Based on market assessments and the development presented in the second quarter report Peab’s Board decided in August 2020 to propose a new date for the distribution of Annehem Fastigheter. On October 19, 2020 the Board summoned an Extra General Meeting on November 12, 2020. For more information see Important events after the period.
As of the Board’s decision in February 2020 Annehem Fastigheter’s assets and liabilities are classified as assets held for value transfer to owners. These assets and liabilities are recognized as a separate item as current assets respectively current liabilities on the balance sheet. The comparative year’s corresponding assets and liabilities have not been reclassified.
Annehem Fastigheter is not recognized as a separate item as discontinued operations in the Group income statement since it previously only made up a small part of operations in business area Project Development.
Annehem Fastigheter is reported as a separate unit outside of segment reporting from January 1, 2020.
Differences in segment reporting and reporting according to IFRS
The Group is reported in the four business areas Construction, Civil Engineering, Industry and Project Development. The business areas are also operating segments. Segment reporting is the model Peab believes best describes Peab’s business regarding both internal steering and risk profile, and it is also how the Board and executive management follow operations.
For Peab’s construction contract businesses, Construction and Civil Engineering, revenue and profit are recognized over time in both segment reporting and reporting according to IFRS. For business area Industry revenue and profit are recognized both over time and at a certain point in time, and reporting is the same in both segment reporting och reporting according to IFRS. For business area Project Development in segment reporting within the unit Housing Development revenue and expenses are recognized over time as the projects are successively completed. This applies to Swedish tenant-owned housing associations and own single homes, Norwegian condominiums and share housing and Finnish residential limited companies. In reporting according to IFRS, housing projects are recognized when the final homebuyers take possession of their apartments. In business area Project Development and the unit Property Development revenue and profit are recognized at a certain point in time in both segment reporting and reporting according to IFRS.
Group functions are reported in addition to the business areas and consist of central companies, certain subsidiaries and other holdings. Central companies consist primarily of the parent company Peab AB, Peab Finans AB and Peab Support (Shared Service Center). There is no difference in segment reporting and reporting according to IFRS regarding Group functions.
Reporting on internal projects between business areas Construction and Project Development
Business area Construction recognizes revenue and profit referring to the construction contract part of our own housing developments, rental project developments and other property development projects for business area Project Development. Recognition takes place over time as the projects are completed. Business area Project Development recognizes revenue for both contract construction and the developer part of our own housing projects but the recognized profit consists of the profit in the developer part. Both revenue and profit are recognized in segment reporting in business area Project Development operations over time while in reporting according to IFRS they are recognized at a certain point in time, in other words when the homebuyers take possession of their homes.
Reporting on property projects on our own balance sheet
The underlying sales value of property projects on our own balance sheet, recognized as project and development property, that are sold in the form of a company via shares, is recognized as revenue and the book value on the balance sheet is recognized as an expense. When property projects recognized as operations property or investment property are divested the net effect on profit is recognized as other operating income or other operating cost. Recognition of property projects is the same in both segment reporting and reporting according to IFRS.
IFRS 16, additional leases
In segment reporting for all business areas leasing fees are recognized in operating profit as a cost linearly over the leasing period for IFRS 16, additional leases (previously operational leasing). Application of IFRS 16 for additional leases in reporting according to IFRS is only given as a total for the Group.
Financial key ratios in segment reporting
Financial key ratios such as capital employed, the equity/assets ratio, net debt, debt/equity ratio and earnings per share are presented in segment reporting with consideration taken to the above prerequisites. Net debt in segment reporting includes the unsold portion of housing projects.