Financial position and cash flow

Financial position

The equity/assets ratio on 31 December 2018 was 30.4 percent compared to 32.2 percent at previous year-end. Interest-bearing net debt amounted to SEK 3,551 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. During the fourth quarter the property Ångkraftverket 2 in Västerås, containing a hotel and Kokpunkten Actionbad was divested, which entailed a reduction in net debt by SEK 765 million.

The average interest rate in the loan portfolio, including derivatives, was 1.4 percent (2.6) on 31 December 2018.

Group liquid funds, including unutilized credit facilities, were SEK 5,846 million at the end of the year compared to SEK 5,145 million on 31 December 2017.

At the end of the year Group contingent liabilities, excluding joint and several liabilities in trading and limited partnerships, amounted to SEK 10,378 million compared to SEK 10,468 million on 31 December 2017. SEK 7,580 million (7,750) 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 fourth quarter SEK 279 million was net divested (net invested with SEK 691 million) in tangible and intangible fixed assets and investment property. During the fourth quarter the property Ångkraftverket 2 in Västerås, containing a hotel and Kokpunkten Actionbad, was divested for around SEK 800 million.

During the year 2018 SEK 1,021 million (1,912) 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 730 million (107) during the fourth quarter. Net investments in project and development properties totaled SEK 2,103 million (847) during the year 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. Included in 2017 was the acquisition of development rights on Kvarnholmen in Nacka for SEK 658 million as well as the sales of a number of properties in Arenastaden, Solna to Fabege.

Cash flow

October – December 2018

Cash flow from current operations was SEK 664 million (1,202), of which cash flow from changes in working capital was SEK -474 million (177). The change in working capital included an increase in investments in project and development property as well as construction of our own housing projects in Finland and Norway in Project Development.

Cash flow from investment activities was SEK 285 million (306) which included the divestiture of the property Ångkraftverket 2 in Västerås, containing a hotel and Kokpunkten Actionbad, for around SEK 800 million. The comparable period included the divestiture of shares in Lemminkäinen Oyj for about SEK 575 million.

Cash flow before financing was SEK 949 million (1,508).

January – December 2018

Cash flow from current operations was SEK -250 million (2,839) of which cash flow from changes in working capital was SEK -2,944 million (43). The change in working capital included the effects of higher investments in project and development property and construction of our own housing projects in Finland and Norway. Included in 2017 was the acquisition of development rights on Kvarnholmen in Nacka for SEK 658 million as well as the sales of a number of properties in Arenastaden, Solna to Fabege.

Cash flow from investment activities was SEK -771 million (-544) and was largely due to investments in machinery and in operations property and investment property. The amount also included the divestiture of the property Ångkraftverket 2 in Västerås, containing a hotel and Kokpunkten Actionbad, for around SEK 800 million. The comparable period included the divestiture of shares in Lemminkäinen Oyj for about SEK 575 million as well as the divestiture of financial assets to Fabege.

Cash flow before financing amounted to SEK -1,021 million compared to SEK 2,295 million for the 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 1,770 million (-2,750) of which SEK -1,180 million (-1,062) was disbursed dividends and changes in interest-bearing loans was SEK 2,950 million (-1,688).