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 also applied in segment reporting. For further information see note 1.

Financial position

The equity/assets ratio on December 31, 2019 was 31.7 percent compared to 30.4 percent at previous year-end. Excluding additional IFRS 16, Leases the equity/asset ratio on December 31, 2019 was 32.3 percent. Interest-bearing net debt amounted to SEK 7,507 million compared to SEK 3,551 million at the end of 2018. Excluding additional IFRS 16, Leases net debt on December 31, 2019 was SEK 6,743 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 and investments in Industry. The average interest rate in the loan portfolio, including derivatives but excluding additional IFRS 16, Leases was 1.5 percent (1.4) on December 31, 2019.

Group liquid funds, including unutilized credit facilities, were SEK 5,013 million at the end of the year 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 9,121 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 6,207 million compared to SEK 7,580 million on December 31, 2018.

Investments and divestments

During the fourth quarter SEK 357 million (net divested with SEK 279 million) was net invested in tangible and intangible fixed assets and investment property. During the fourth quarter 2018 the property Ångkraftverket 2 in Västerås, containing a hotel and Kokpunkten Actionbad, was divested for around SEK 800 million. During 2019 SEK 1,676 million (1,021) 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 320 million (730) during the fourth quarter. Net investments in project and investment properties totaled SEK 1,549 million (2,103) during 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

October – December 2019

Cash flow from current operations was SEK 721 million (664), of which cash flow from changes in working capital was SEK -480 million (-474). The change in working capital refers to investments in project and development property as well as construction of our own housing projects in Finland and Norway.

Cash flow from investment activities was SEK -169 million (285). During the fourth quarter 2018 the property Ångkraftverket 2 in Västerås, containing a hotel and Kokpunkten Actionbad, was divested which had a positive effect on cash flow by around SEK 800 million.

Cash flow before financing was SEK 552 million (949).

January – December 2019

Cash flow from current operations was SEK 52 million (-250), of which cash flow from changes in working capital was SEK -3,100 million (-2,944). The change in working capital included, among other things, construction of own housing projects in Finland and Norway and our own rental projects in Sweden as well as lower operating debt.

Cash flow from investment activities was SEK -603 million (-771).

Cash flow before financing amounted to SEK -551 million (-1,021).

Cash flow from financing operations amounted to SEK -462 million (1,770), of which SEK -1,239 million (-1,180) consisted of paid dividends and changes in loans was SEK 776 million (2,950).