Year-end report JANUARY – DECEMBER 2020

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GÅRDA VESTA
Gothen burg
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Strong financial position and new financial targets

In this re port amounts and com ments are based on seg ment re por ting if not ot her wi se spe ci fi ed. As of Ja nu a ry 1, 2020 Peab has chang ed ac counting prin ciples for Swe - dish tenant- owned housing pro jects in re por ting ac cor ding to IFRS. Re por ting of housing pro jects in Nor way and Fin land in seg ment re por ting chang ed. The Group has di� e rent ac counting prin ciples in seg ment re por ting com pa red to re por ting ac cor ding to IFRS. For more in for ma tion on the new ac counting prin ciples and the di� e - rences between seg ment re por ting and re por ting ac cor ding to IFRS, see note 1 and 4.

Sum ma ry ac cor ding to seg ment re por ting

October – December 2020

Net sales SEK 15,424 million (15,858), of which acquired operations were SEK 1,412 million
Operating profit SEK 1,825 million (797), of which acquired operations were net SEK 42 million and the e�ect of distributing Annehem Fastigheter was SEK 952 million
Operating margin 11.8 percent (5.0), 5.7 percent excluding the e�ect of distributing Annehem Fastgheter
Pre-tax profit SEK 1,807 million (772)
Earnings per share SEK 5.62 (2.10)
Orders received SEK 12,189 million (12,096), of which acquired operations contributed by SEK 1,113 million
Cash flow before financing SEK 1,763 million (1,095)
Distribution and listing of Annehem Fastigheter carried out

January – December 2020

Net sales SEK 57,417 million (55,349), of which acquired operations SEK 5,891 million
Operating profit SEK 3,541 million (2,610), of which acquired operations net SEK 250 million and the e�ect of distributing Annehem Fastigheter was SEK 952 million
Operating margin 6.2 percent (4.7), 4.5 percent excluding the e�ect of distributing Annehem Fastigheter
Pre-tax profit SEK 3,433 million (2,579)
Earnings per share SEK 10.00 (7.25)
Orders received SEK 49,735 million (44,130), of which acquired operations contributed SEK 4,357 million. Order backlog SEK 42,709 million (42,494)
Cash flow before financing SEK 2,779 million (1,025), of which acquisition payment was SEK -3,184 million
Net debt SEK 3,873 million (7,535)
Equity/assets ratio 36.2 percent (32.5)
Acquisition of paving and mineral aggregates operations from YIT finalized on April 1, 2020
The Board proposes a dividend of SEK 4.50 (–) per share
New financial and non-financial targets established

Group

Group
		Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
MSEK		2020	2019	2020	2019
Segment reporting
Net sales		15,424	15,858	57,417	55,349
Operating profit		1,825	797	3,541	2,610
Operating margin, %		11.8	5.0	6.2	4.7
Pre-tax profit		1,807	772	3,433	2,579
Profit for the period		1,655	620	2,948	2,138
Earnings per share, SEK		5.62	2.10	10.00	7.25
Return on equity, % 1)		23.1	17.9	23.1	17.9
Return on capital employed, %	1)	17.6	12.8	17.6	12.8
Net debt		3,873	7,535	3,873	7,535
Equity/assets ratio, %		36.2	32.5	36.2	32.5
Cash flow before financing		1,763	1,095	2,779	1,025
Number of employees at the end of the period		15,252	14,258	15,252	14,258
Reporting according to IFRS
Net sales, IFRS		15,989	15,455	59,852	56,303
Operating profit, IFRS		1,942	833	3,922	3,285
Pre-tax profit, IFRS		1,910	802	3,745	3,227
Profit for the period, IFRS		1,729	653	3,181	2,656
Earnings per share, IFRS, SEK		5.87	2.21	10.79	9.00
Cash flow before financing, IFRS		1,958	815	3,753	3,226

1) Calculated on rolling 12 months

Orders received

Operating profit

Net sales

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MSEK MSEK MSEK
18,000 2,000 14,000
1,800
15,000 12,000
1,600
1,400 10,000
12,000
1,200 8,000
9,000 1,000
800 6,000
6,000 600 4,000
400
3,000 2,000
200
0 0 0
Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q4-18Q1-19Q2-19Q3-19Q4-19Q1-20Q2-20Q3-20Q4-20
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MSEK
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ÄLVDAL SCHOOL
Älv da len
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Comments from the CEO

Even though 2020 was a dra ma tic year glo bal ly Peab’s de ve lop ment was ro - bust. The level of or ders re cei ved con ti nu ed to be stab le and a strong cash flow im pro ved our fi nan ci al po si tion. Both the ac qui si tion of the pa ving and mi ne ral ag gre ga tes ope ra tions and the dis tri bu tion of An ne hem Fas tig he ter con tri bu ted to very good pro fits and cla ri fy ing our core bu si ness.

GROUP DEVELOPMENT

Net sales in 2020 incre a sed by four per cent and amounted to SEK 57,417 mil li on (55,349), of which the ac qui red ope ra tions con tri bu ted by SEK 5,891 mil li on. Ope - ra ting pro fit was SEK 3,541 mil li on (2,610), of which the e� ect of the ac qui red ope ra tions was SEK 250 mil li on and the e� ect of the dis tri bu tion of An ne hem Fas - tig he ter was SEK 952 mil li on. The ope ra ting mar gin was 6.2 per cent (4.7) and not in clu ding the e� ect of the dis tri bu tion of An ne hem Fas tig he ter, the ope ra ting mar gin was 4.5 per cent. Last year in clu ded an in come con tri bu tion of SEK 170 mil li on from di ve sti tu res of pro per ti es in the par ti al ly owned com pa ny Ac tu rum. Cash flow con ti nu ed to de ve lop well du ring the year, which con tri bu ted to re du - cing net debt.

BUSINESS AREA DEVELOPMENT

Net sales in bu si ness area Con struc tion contrac ted by eight per cent in 2020 and were SEK 26,989 mil li on. Net sales were lower in Swe den but hig her in Nor way and Fin land. Housing con struc tion con ti nues to decli ne while other pub lic buil - ding con struc tion is on the rise. The ope ra ting pro fit was 2.5 per cent (2.4). Net sales in bu si ness area Civil Engi ne e ring contrac ted by four per cent in 2020 with decli nes in Local mar ket and Ope ra tions and Main te nan ce. Ho wever, the ope ra - ting mar gin im pro ved. Net sales and ope ra ting pro fit incre a sed in bu si ness area In du stry where as of April 2020 the Nor dic pa ving and mi ne ral ag gre ga tes ope ra - tions ac qui red from YIT are in clu ded. Bu si ness area Pro ject De ve lop ment re por - ted lower net sales pri ma rily due to the drop in sales in Housing De ve lop ment in Swe den. Ope ra ting pro fit in clu ded SEK 896 mil li on from the e� ect of dis tri bu ting An ne hem Fas tig he ter. Last year in clu ded an in come con tri bu tion of SEK 170 mil li - on from the di ve sti tu re of pro per ti es in the par ti al ly owned com pa ny Ac tu rum. Pro duc tion starts of our own de ve lo ped housing and sales have been stab le with a good geo grap hic spre ad in Swe den, Nor way and Fin land. Du ring the fourth quar ter Housing De ve lop ment sig ned contracts for the sales of se ve ral te nan cy pro jects which will be on our own ba lan ce sheet under con struc tion and re cog ni - zed in pro fit/loss when tur ned over in the coming years. The re la ti vely li mi ted ef - fect of the co ro na pan de mic on Peab has main ly a� ec ted Pro per ty De ve lop ment in ope ra tions con nec ted to tra vel and tou rism.

ORDER SITUATION

De spi te the cur rent un cer tain ty on the mar ket the level of or ders re cei ved con ti - nues to be stab le. For the full year 2020 it amounted to SEK 49,735 mil li on (44,130), of which the ac qui red ope ra tions con tri bu ted by SEK 4,357 mil li on. We are also happy to note that the or ders con ti nue to be well spre ad in both place and pro duct. Order back log was SEK 42,709 mil li on (42,494), of which 32 per cent will be pro du ced a�er 2021.

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READY FOR THE NEXT PHASE

The year 2020 will go down as an ex cep tio nal year cha rac te ri zed by the pan de mic and its con se quences. Nonet he less, for Peab the year was both suc cess ful and es - sen ti al to our con ti nu ed de ve lop ment. On April 1st we fi na li zed the stra te gic ac - qui si tion in pa ving and mi ne ral ag gre ga tes ope ra tions and on De cem ber 11th we dis tri bu ted and lis ted the pre viously whol ly owned sub si di a ry An ne hem Fas tig he - ter. These two events have clear ly de fi ned our core bu si ness as a focu sed and pro fes sio nal buil der and de ve lo per in the Nor dic re gi on with a high level of our own re sour ces. Now we are ready to enter the next phase of Peab’s de ve lop ment.

Owing to the fact that now we are fully a Nor dic com mu ni ty buil der with ex ten si - ve local pre sence and four col la bo ra ting bu si ness areas, execu ti ve ma na ge ment and the Board has made a com pre hen si ve re vi ew of Peab’s tar gets; eve ryt hing from our mis sion, bu si ness con cept and stra te gic tar gets to more concre te fi nan - ci al and non- financial tar gets. These tar gets were ad op ted and com mu ni ca ted yes ter day and based on this we will pre sent our way for ward in gre a ter de tail on our Ca pi tal Mar ket Day next Wed nes day, Feb ru a ry 10th.

We are con fi dent about our fu tu re. The long- term ex ter nal for ces point in our favor. We have a strong bu si ness model and the re fo re eve ryt hing we need to ac - hi e ve our stra te gic tar gets to have the most sa tis fi ed custo mers, be the best work pla ce and the most pro fi tab le com pa ny in the in du stry – and now to lead in so ci al re spon si bi li ty.

I want to thank all our fan tastic employe es at Peab who have kept our bu si ness going du ring this spe ci al year and furt her strengthened Peab.

DIVIDEND PROPOSAL

Based on the Group’s stab le pro fi ta bi li ty and fi nan ci al si tu a tion as well as the com pa ny’s order si tu a tion and in vest ment needs the Board pro po ses a di vi dend of SEK 4.50 (-) per share for the fi nan ci al year 2020.

MARKET AND OUTLOOK FOR THE FUTURE

A�er ne ga ti ve growth du ring 2020 due to the co ro na pan de mic the Nor dic countri es are ex pec ted grow again in 2021. In ge ne ral, we ex pect a sta bel de ve - lop ment in the mar kets we are ac ti ve in. Housing con struc tion will pro bably move ho ri zon tal ly in all three countri es du ring the pe ri od 2021- 2022. Other buil - ding con struc tion du ring 2021 is ex pec ted to incre a se in Swe den, decli ne in Nor - way and re main the same in Fin land. The com mon de nomi na tor is con ti nu ed strong pub lic sector con struc tion. Civil engi ne e ring in vest ments are ex pec ted to grow in Swe den and Nor way while they are ex pec ted to decli ne so mewhat in Fin - land.

Jesper Gö rans son CEO and Pre si dent

Net sales and profit

TRANSLATED COMPARATIVE FIGURES AFTER CHANGED

ACCOUNTING PRINCIPLES

As of fiscal year 2020 Peab con so li da tes pro jects with Swe dish tenant- owned housing as so ci a tions at the time the final ho me buy ers take pos ses sion of their apart ments. This means that Peab re cog ni zes the pro jects on the ba lan ce sheet as work- in-progress under the asset item pro ject de ve lop ment pro per ti es, and as interest- be a ring li a bi li ti es. Re venue and costs for the pro jects will be re cog ni zed as ho me buy ers take pos ses sion of their apart ments. In con jun ctu re with this change Peab now re cog ni zes all our own de ve lo ped housing pro jects in Swe den, Nor way and Fin land ac cor ding to the com ple tion met hod. Ac cor ding to pre vious prin ciples Peab did not con so li da te pro jects with Swe dish tenant- owned housing as so ci a tions from the time land trans fer and turn key contracts were sig ned, and re venue and ex pen ses were re cog ni zed over time as the pro jects were suc ces si - vely com ple ted.

To cre a te cla ri ty and enab le the mar ket to follow Peab’s de ve lop ment re gar ding our own housing de ve lop ments, in seg ment re por ting re venue and ex pen ses will con ti nue to be re cog ni zed over time as the pro jects are suc ces si vely com ple ted. This ap pli es to the bu si ness area Pro ject De ve lop ment and the unit Housing De - ve lop ment and re fers to Swe dish tenant- owned housing as so ci a tions and own sing le homes, Nor wegi an con do mi ni ums and share housing and Fin nish re si den - ti al li mi ted com pa ni es. Re venue and ex pen ses for our own housing de ve lop - ments in Nor way and Fin land along with our own sing le homes in Swe den were pre viously re cog ni zed at one point in time in seg ment re por ting as well. Fi nan ci al key ra tios such as ca pi tal employed, the equi ty/as sets ratio, net debt and the debt/equi ty ratio as well as ear nings per share are pre sen ted in seg ment re por - ting with con si de ra tion taken to the above pre requi si tes. Net debt in seg ment re - por ting in clu des the un sold por tion of housing pro jects du ring ongo ing pro duc - tion. Seg ment re por ting is also the model Peab uses for its in ter nal ste e ring.

In con jun ctu re with chan ging seg ment re por ting for housing pro jects Peab has also chang ed the seg ment re por ting of ad di tio nal le a ses ac cor ding to IFRS 16 (pre viously ope ra tio nal le a ses). The change means that le a sing fees are re cog - ni zed in ope ra ting pro fit as a cost li near ly over the le a sing pe ri od in seg ment re - por ting for all bu si ness areas and ap pli ca tion of IFRS 16 for ad di tio nal le a ses is only given as a total for the Group.

In the following re port amounts and com ments are based on seg ment re por ting if not ot her wi se spe ci fi ed. All com pa ra ti ve fi gu res for 2019 are trans la ted if not ot - her wi se spe ci fi ed. For more in for ma tion con cer ning trans la ted com pa ra ti ve fi gu - res see note 1 as well as www.peab.com/ifrs.

NET SALES AND PROFIT

October – December 2020

Group net sales for the fourth quar ter 2020 was SEK 15,424 mil li on (15,858), of which SEK 1,412 mil li on are re la ted to the ac qui si tion of pa ving and mi ne ral ag - gre ga tes ope ra tions. Not in clu ding the ac qui red ope ra tions net sales contrac ted by twel ve per cent. Net sales in bu si ness area Con struc tion decre a sed by ele ven per cent and the re duc tion pri ma rily re fers to Swe dish ope ra tions. Net sales in bu - si ness area Civil Engi ne e ring decre a sed by five per cent. Bu si ness area In du stry pre sen ted an incre a se in net sales of 37 per cent. Not in clu ding the ac qui red ope - ra tions net sales contrac ted in bu si ness area In du stry by three per cent. Net sales in bu si ness area Pro ject De ve lop ment decre a sed by 33 per cent com pa red to the fourth quar ter last year. The re duc tion is pri ma rily re la ted to Housing De ve lop - ment. Of the quar ter’s net sales SEK 5,106 mil li on (3,439) were at tri bu tab le to sales and pro duc tion out si de Swe den. The incre a se is pri ma rily due to ope ra tions ac qui red wit hin bu si ness area In du stry.

Ope ra ting pro fit for the fourth quar ter 2020 amounted to SEK 1,825 mil li on (797), of which the ac qui red ope ra tions wit hin bu si ness area In du stry made up net SEK 42 mil li on and the e� ect of the dis tri bu tion of An ne hem Fas tig he ter was SEK 952 mil li on. The ope ra ting mar gin was 11.8 per cent (5.0). Wit hout the e� ect of the dis tri bu tion of An ne hem Fas tig he ter the ope ra ting mar gin was 5.7 per cent.

The ac qui si tion of the pa ving and mi ne ral ag gre ga tes ope ra tions was fi na li zed on April 1, 2020, which meant the ac qui si tion oc cur red when the se a son star ted. The un der ly ing ope ra tions in the ac qui red com pa ni es con tri bu ted by SEK 72 mil li on in the fourth quar ter. De pre ci a tion on sur plus va lues for, among other things, custo mer contracts in the order back log taken over and fixed as sets amounted to SEK -30 mil li on. De pre ci a tion on sur plus va lues for custo mer contracts in the order back log taken over have been high throug hout 2020 and will also a� ect part of 2021. All in all ope ra ting pro fit for the fourth quar ter was po si ti vely a� ec - ted by SEK 42 mil li on re la ted to the ac qui red ope ra tions.

In bu si ness area Con struc tion ope ra ting mar gin was 2.6 per cent (2.5) and in bu si - ness area Civil Engi ne e ring the ope ra ting mar gin was 3.6 per cent (3.5). Bu si ness area In du stry sho wed a mar gin of 8.1 per cent (10.1), not in clu ding the ac qui red ope ra tions the ope ra ting mar gin was 10.2 per cent. Ope ra ting pro fit in Pro ject De - ve lop ment incre a sed in the fourth quar ter and amounted to SEK 1,195 mil li on (278), of which the e� ect of the dis tri bu tion of An ne hem Fas tig he ter was SEK 896 mil li on. Even wit hout the e� ect of the dis tri bu tion of Ann hem Fas tig he ter, ope ra - ting pro fit im pro ved in Pro per ty De ve lop ment. Housing De ve lop ment had a slight ly lower ope ra ting pro fit du ring the quar ter but the ope ra ting mar gin im - pro ved to 13.5 per cent (10.0).

ANNEHEM FASTIGHETER

In Feb ru a ry 2020 Peab’s Board pro po sed, in ad di tion to the or di na ry di vi dend, an extra dis tri bu tion of all the sha res in a newly foun ded com pa ny, An ne hem Fas tig - he ter, con tai ning all Peab’s whol ly owned, fully de ve lo ped com mer ci al pro per ti - es. As a re sult of the spre ad of the co ro na vi rus, its e� ects on ex ter nal cir cumstan - ces and on fi nan ci al mar kets, Peab’s Board de ci ded to withdraw the pro po sal to the AGM. Based on mar ket as sess ments as well as the de ve lop ment pre sen ted in the se cond quar ter re port Peab’s Board de ci ded in Au gust 2020 to pro po se a new date for the dis tri bu tion of An ne hem Fas tig he ter. An Extra Ge ne ral Me e ting was held on No vem ber 12, 2020 where Peab’s sha re hol ders ad op ted the pro po sal from the Board and the sha res were dis tri bu ted in De cem ber. De cem ber 11, 2020 was the first day of tra ding in An ne hem Fas tig he ter’s B sha res on Nas daq Stock - holm.

An ne hem Fas tig he ter is re por ted as a se pa ra te unit out si de of seg ment re por ting. Pre viously An ne hem Fas tig he ter was in clu ded in bu si ness area Pro ject De ve lop - ment and the unit Pro per ty De ve lop ment. The change ap pli es per Ja nu a ry 1, 2020 and no com pa ra ti ve fi gu res have been trans la ted. For more in for ma tion, see the sec tion An ne hem Fas tig he ter.

ACQUISITION OF NORDIC PAVING AND MINERAL AGGREGATES OPERATIONS

On July 4, 2019 Peab sig ned a contract to ac qui re YIT’s pa ving and mi ne ral ag gre - ga tes ope ra tions in the Nor dic re gi on. The trans ac tion was con di tio nal on ap pro - val from com pe ti tion aut ho ri ti es as well as the ful fill ment of cer tain contractu al con di tions. At the end of March 2020 the trans ac tion was ap pro ved by the com - pe ti tion aut ho ri ti es and the ac qui si tion was fi na li zed on April 1, 2020. Through the ac qui si tion Peab ex pands its pre sence in Swe den, Nor way and Fin land and be come established in the pa ving bu si ness in Den mark. The ope ra tions are con - so li da ted into the bu si ness area In du stry as of April 1, 2020.

The trans ac tion is a com bi na tion of an asset deal and a share pur cha se. The pur - cha se price amounted to SEK 3,184 mil li on for a debt- free bu si ness and is fully fi - nan ced. The ac qui red bu si ness had net sales of SEK 5,878 mil li on with an ad - justed EBIT DA of SEK 282 mil li on in 2019.

Eli mi na tion and re ver sal of in ter nal pro fit amounted to SEK 37 mil li on (-53) of which the re ver sal of con struc tion pro fit in con nec tion with the dis tri bu tion of An ne hem Fas tig he ter was SEK 56 mil li on. De pre ci a tion and write- downs for the fourth quar ter were SEK -348 mil li on (-292), of which SEK -70 mil li on is re la ted to ac qui red bu si ness.

Net fi nan ci al items amounted to SEK -18 mil li on (-25) of which net in te rest was SEK -13 mil li on (-24). Pre- tax pro fit was SEK 1,807 mil li on (772). Pro fit for the fourth quar ter amounted to SEK 1,655 mil li on (620).

Operating profit and operating margin, per quarter

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MSEK %
2,000 15.0
1,800
1,600
1,400
10.0
1,200
1,000
800
5.0
600
400
200
0 0.0
Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20
Operating profit Operating margin
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For more in for ma tion see the sec tions Bu si ness area In du stry, Other in for ma tion and note 2.

January – December 2020

Group net sales for 2020 incre a sed by four per cent to SEK 57,417 mil li on (55,349), of which ac qui red ope ra tions were SEK 5,891 mil li on. A�er ad just ments for ac qui - red and di ve sted units net sales decre a sed by seven per cent.

Net sales in bu si ness area Con struc tion contrac ted by eight per cent and the decre a se was re la ted to our Swe dish ope ra tions while net sales incre a sed in our Nor wegi an and Fin nish ope ra tions. In bu si ness area Civil Engi ne e ring net sales sh runk by four per cent com pa red to last year. Net sales in bu si ness area In du stry grew by 40 per cent. Not in clu ding the ac qui red ope ra tions net sales in bu si ness area In du stry contrac ted by four per cent. The re duc tion stems from Trans por ta - tion and Machi nes, Ren tals and Con struc tion Sy stem. In bu si ness area Pro ject De - ve lop ment net sales sh runk in both Pro per ty De ve lop ment and Housing De ve lop - ment. The re duc tion in Housing De ve lop ment stems from Swe dish and Fin nish ope ra tions.

Of the pe ri od’s net sales SEK 17,005 mil li on (11,260) were at tri bu tab le to sales and pro duc tion out si de Swe den. Most of the incre a se is re la ted to the ac qui red pa ving and mi ne ral ag gre ga tes ope ra tions in bu si ness area In du stry.

Ope ra ting pro fit for 2020 amounted to SEK 3,541 mil li on (2,610), of which the ac - qui red ope ra tions were SEK 250 mil li on and the e� ect of the dis tri bu tion of An ne - hem Fas tig he ter was SEK 952 mil li on. Last year in clu ded an in come con tri bu tion of SEK 170 mil li on from the di ve sti tu re of pro per ty in the par ti al ly owned com pa - ny Ac tu rum. The ope ra ting mar gin was 6.2 per cent (4.7). Wit hout the e� ect of the dis tri bu tion of An ne hem Fas tig he ter the ope ra ting mar gin was 4.5 per cent.

The ac qui si tion of the pa ving and mi ne ral ag gre ga tes ope ra tions was fi na li zed on April 1, 2020, which meant the ac qui si tion oc cur red when the se a son star ted. The un der ly ing ope ra tions in the ac qui red com pa ni es con tri bu ted du ring the pe ri od April- December to the ope ra ting pro fit by SEK 494 mil li on. De pre ci a tion on sur - plus va lues for, among other things, custo mer contracts in the order back log taken over and fixed as sets amounted du ring the same pe ri od to SEK -189 mil li - on. De pre ci a tion on sur plus va lues for custo mer contracts in the order back log taken over hace been high throug hout 2020 and will also a� ect part of 2021. In ad di tion, ac qui si tion costs and trans fer tax in Fin land have char ged pro fits in total by SEK -55 mil li on. All in all ope ra ting pro fit for the year was po si ti vely a� ec - ted by SEK 250 mil li on re la ted to the ac qui red ope ra tions. Becau se the ac qui red ope ra tions have a very clear se a so nal pat tern the first quar ter is cha rac te ri zed by con si de rab le de fi cits since the se a son starts in the se cond quar ter. If the ac qui si - tion had taken place on Ja nu a ry 1, 2020 pro fit in the first quar ter would have been a� ec ted by SEK -297 mil li on and the un der ly ing ope ra tions would have had an ac cu mu la ted ope ra ting pro fit for January- December 2020 of SEK 197 mil li on.

The ope ra ting mar gin in bu si ness area Con struc tion was 2.5 per cent (2.4) in 2020. In bu si ness area Civil Engi ne e ring the ope ra ting mar gin im pro ved to 3.0 per cent (2.8). The ope ra ting mar gin in bu si ness area In du stry was 5.9 per cent (7.0). Not in clu ding the ac qui red ope ra tions the ope ra ting mar gin was 6.7 per cent. The lower ope ra ting mar gin in In du stry is due to a lower mar gin in Ren tals and Con - struc tion Sy stem. Ope ra ting pro fit in Pro ject De ve lop ment incre a sed to SEK 1,669 mil li on (1,015), ho wever, wit hout the e� ect of the dis tri bu tion of An ne hem Fas tig - he ter of SEK 896 mil li on ope ra ting pro fit contrac ted. Last year an in come con tri - bu tion of SEK 170 mil li on from Ac tu rum was in clu ded in Pro per ty De ve lop ment. Du ring the year some ope ra tions in Pro per ty De ve lop ment were a� ec ted ne ga ti - vely by SEK -64 mil li on due to the co ro na pan de mic, where SEK -44 mil li on was re la ted to Äng el holm Helsing borg Air port, of which SEK -20 mil li on re fers to wri - ting down good will. The ope ra ting pro fit in Housing De ve lop ment decre a sed slight ly du ring the year but the ope ra ting mar gin im pro ved to 9.6 per cent (8.6).

Eli mi na tions and re ver sal of in ter nal pro fit in our own pro jects have a� ec ted ope - ra ting pro fit net by SEK 23 mil li on (-142), of which the re ver sal of con struc tion pro fits in con nec tion with the dis tri bu tion of An ne hem Fas tig he ter was SEK 56 mil li on. Last year se ve ral of our own major o� ice pro jects were under con struc - tion. Eli mi na tion is re ver sed in con nec tion with the ex ter nal di vest ment of a pro - ject.

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ALTA ASSISTED LIVING
Alta, Nor way
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Net fi nan ci al items amounted to SEK -108 mil li on (-31), of which net in te rest amounted to SEK -56 mil li on (-72). Net fi nan ci al items from ac qui red ope ra tions amounted to SEK -27 mil li on du ring the year. Net fi nan ci al items in clu ded cur ren - cy ex change rate di� e rences of SEK -88 mil li on (-2). Cur ren cy ex change rate di� e - rences have for the most part oc cur red on re cei va bles in sub si di a ri es in Nor way and Fin land, and have no e� ect on cash flow.

Pre- tax pro fit was SEK 3,433 mil li on (2,579). Tax for the year was SEK -485 mil li on (-441) cor re spon ding to a tax rate of 14 per cent (17). The lower tax rate is due to non- taxable in come from, among ot hers, the pro fit/loss e� ect of the dis tri bu tion of An ne hem Fas tig he ter.

Pro fit for the year was SEK 2,948 mil li on (2,138).

SEASONAL VARIATIONS

Group ope ra tions, par ticu lar ly in In du stry and Civil Engi ne e ring, are a� ec ted by fluctu a tions that come with the cold weat her du ring the win ter half of the year. Nor mal ly the first quar ter is wea ker than the rest of the year. The se a so nal pat - tern will be even strong er with the ac qui si tion of the pa ving and mi ne ral ag gre ga - tes ope ra tions.

Operating profit and operating margin, rolling 12 months

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MSEK %
4,000 8.0
3,000 6.0
2,000 4.0
1,000 2.0
0 0.0
Operating profit Operating margin
Q1-19 * Q2-19 * Q3-19 * Q4-19 Q1-20 Q2-20 Q3-20 Q4-20
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*Q1-Q3 2019 not translated according to the changed accounting principles for our own developed housing projects.

De pre ci a tion and write- downs for the year were SEK -1,412 mil li on (-1,094), of which SEK -310 mil li on is re la ted to ac qui red ope ra tions in bu si ness area In du - stry.

Financial position and cash flow

FINANCIAL POSITION

Total as sets per De cem ber 31, 2020 were SEK 36,604 mil li on (38,362), of which ap - prox i ma tely SEK 4,000 mil li on is re la ted to the ac qui red pa ving and mi ne ral ag - gre ga tes ope ra tions. An ne hem Fas tig he ter were in clu ded by SEK 2,077 mil li on at the same point in time last year. Equi ty amounted to SEK 13,251 mil li on (12,479) which means the equi ty/as sets ratio was 36.2 per cent com pa red to 32.5 per cent at the end of last year. Interest- bearing net debt decre a sed du ring the year and amounted to SEK 3,873 mil li on com pa red to SEK 7,535 mil li on at the same time last year. Net debt in clu des the un sold part of our own de ve lo ped housing pro - jects as long as they are in pro duc tion. The un sold part at the end of the year was SEK 1,055 mil li on (3,088). In ad di tion, the po si ti ve e� ects of the dis tri bu tion of An ne hem Fas tig he ter have re du ced net debt. The pur cha se price of the pa ving and mi ne ral ag gre ga tes ope ra tions incre a sed net debt by SEK 3,184 mil li on on April 1, 2020. Since the ac qui si tion took place at the start of the se a son po si ti ve cash flow e� ects have the re a� er con tri bu ted to lo wering net debt. The ave rage in te rest rate in the loan port fo lio, in clu ding de ri va ti ves, was 1.4 per cent (1.5) on De cem ber 31, 2020.

Group liquid funds ac cor ding to IFRS, in clu ding unu ti li zed cre dit fa ci li ti es, were SEK 8,822 mil li on at the end of the year com pa red to SEK 5,013 mil li on on De cem - ber 31, 2019.

As a con se quence of Peab con so li da ting Swe dish tenant- owned housing as so ci a - tions per Ja nu a ry 1, 2020 ac cor ding to IFRS, sure ty for tenant- owned housing as - so ci a tions under pro duc tion is not re por ted. When ho me buy ers take pos ses sion of their apart ments and the tenant- owned housing as so ci a tion is no long er con - so li da ted in Peab’s ac counts, Peab then re ports the part of sure ty for un sold homes. This is becau se Peab has a gua ran tee ob li ga tion to ac qui re un sold homes six mont hs a�er com ple tion. Com pa ra ti ve fi gu res for 2019 have been trans la ted. Group con tin gent li a bi li ti es, ex clu ding joint and se ve ral li a bi li ti es in tra ding and li mi ted part ners hips, amounted to SEK 3,481 mil li on at the end of the year com - pa red to SEK 3,347 mil li on on De cem ber 31, 2019. Sure ty for cre dit lines in tenant- owned housing as so ci a tions re gar ding the un sold part a�er de con so li da - tion made up SEK 238 mil li on of con tin gent li a bi li ti es com pa red to SEK 433 mil li - on on De cem ber 31, 2019.

INVESTMENTS AND DIVESTMENTS

Net debt

	Dec 31	Dec 31
MSEK Bank loans	2020 2,135	2019 1,864
Commercial papers	110	1,359
Bonds	2,249	2,248
Financial leasing liabilities Project financing, unsold part of housing projects	634 1,055	579 3,088
Interest-bearing receivables	-1,342	-1,230
Liquid funds Net debt, segment reporting	-968 3,873	-373 7,535
Additional leasing liabilities according to IFRS 16	1,808	764
Project financing, sold part of housing projects	4,001	4,875
Net debt, IFRS	9,682	13,174

Net debt and debt/equity ratio

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MSEK Multiple
9,000 1.0
8,000
7,000
6,000
5,000
0.5
4,000
3,000
2,000
1,000
0 0.0
Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20
Net debt Debt/equity ratio
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Du ring the quar ter tan gib le and in tan gib le fixed as sets and in vest ment pro per ty were net in ve sted for SEK 124 mil li on (317). The in vest ments refer pri ma rily to in - vest ments in machi nes. Du ring the year tan gib le and in tan gib le fixed as sets and in vest ment pro per ty were net in ve sted for SEK 732 mil li on (1,554). In the com pa - rab le pe ri od a large part of the in vest ments re fer red to buil ding up pro per ti es on our own ba lan ce sheet and these have been trans fer red to An ne hem Fas tig he ter du ring 2020.

Net di ve sti tu res in pro ject and de ve lop ment pro per ti es, which are re cog ni zed as in ven to ry items, to ta led SEK 343 mil li on (net di ve sti tu res SEK 117 mil li on) du ring the fourth quar ter. Net di ve sti tu res in pro ject and in vest ment pro per ti es to ta led SEK 1,917 mil li on (net di ve sti tu res SEK 434 mil li on) du ring the year 2020. Pro ject and de ve lop ment pro per ti es in clu de the un sold part of ongo ing own de ve lo ped housing pro jects. Du ring the year this por tion has contrac ted due to more homes sold than has been star ted up.

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HIGHWAY E20
Alingsås
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CASH FLOW

October – December 2020

Du ring the quar ter cash flow from cur rent ope ra tions im pro ved to SEK 2,010 mil - li on (1,264), of which cash flow from changes in wor king ca pi tal was SEK 865 mil - li on (60). Bu si ness areas In du stry and Pro ject De ve lop ment re por ted im pro ved cash flows from changes in wor king ca pi tal com pa red to the cor re spon ding quar - ter last year.

Cash flow from in vest ment ac ti vi ti es was SEK -247 mil li on (-169) and con si sted most ly of machi ne in vest ments.

Cash flow be fo re fi nan ci ng im pro ved to SEK 1,763 mil li on (1,095).

January – December 2020

Cash flow from cur rent ope ra tions was strong du ring the year and amounted to SEK 6,749 mil li on (1,628), of which cash flow from changes in wor king ca pi tal was SEK 2,886 mil li on (-1,427). All bu si ness areas re por ted im pro ved cash flows from changes in wor king ca pi tal ex cept Con struc tion where cash flow was slight ly lower com pa red to 2019. A large part of the po si ti ve cash flows from changes in wor king ca pi tal comes from ha ving sold more of our de ve lo ped homes than pro - duc tion star ted du ring the year.

Cash flow before financing

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MSEK
2,000
1,500
1,000
500
0
-500
-1,000
-1,500
-2,000
-2,500
Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20
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Cash flow from in vest ment ac ti vi ti es was SEK -3,970 mil li on (-603) where the ac - qui si tion price of the pa ving and mi ne ral ag gre ga tes ope ra tions was in clu ded by SEK -3,184 mil li on. Most of the other in vest ments du ring the year con si sted of machi ne in vest ments.

Cash flow be fo re fi nan ci ng im pro ved and amounted to SEK 2,779 mil li on (1,025).

Financial goals

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Equity/assets ratio Return on equity Dividends
% % %
40 30 200
180
35
25 160
30
140
20
25 120
20 15 100
80
15
10 60
10 40
5 5 20
0
0 0
In 2019 no dividend was distributed. The value of the
Goal > 25% Goal > 20% distribution of Annehem Fastigheter at the time of the
distribution in December 2020 was 97 percent of the profit for the
year 2019. ** In 2020, the Board’s proposal to the AGM. The
proportion is calculated without the e�ect of MSEK 952 on profit
due to the distribution of Annehem Fastigheter.
Goal > 50% of the pro fit for the year
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011201220132014201520162017201820192020
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Years 2011- 2018 are not trans la ted ac cor ding to the chang ed ac counting prin ciples. For more in for ma tion, see the sec tion Net sales and pro fit, as well as note 1.
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Order situation

October – December 2020

Or ders re cei ved in the fourth quar ter 2020 amounted to SEK 12,189 mil li on com - pa red to SEK 12,096 mil li on for the same quar ter last year. The ac qui red pa ving and mi ne ral ag gre ga tes ope ra tions con tri bu ted by SEK 1,113 mil li on in or ders re - cei ved.

The level of or ders re cei ved in bu si ness areas In du stry and Pro ject De ve lop ment have incre a sed while they have decli ned in Con struc tion and Civil Engi ne e ring com pa red to the same quar ter last year. Ho wever, ex clu ding or ders re cei ved from the ac qui red ope ra tions, the level of or ders re cei ved in bu si ness area In du stry decli ned as well.

The ac qui red pa ving and mi ne ral ag gre ga tes ope ra tions con tri bu ted by SEK 4,357 mil li on in or ders re cei ved. Or ders re cei ved incre a sed in Con struc tion, In du stry and Pro ject De ve lop ment. Wit hout the ac qui red ope ra tions or ders re cei ved contrac ted in bu si ness area In du stry. Group or ders re cei ved are well spre ad geo - grap hi cal ly and there is good pro duct di ver si ty.

Order back log yet to be pro du ced at the end of the year was SEK 42,709 mil li on com pa red to SEK 42,494 mil li on at the end of last year. The order back log in clu - des order back log of SEK 1,531 mil li on from the ac qui red pa ving and mi ne ral ag - gre ga tes ope ra tions. Of the total order back log, 32 per cent (31) is ex pec ted to be pro du ced a�er 2021 (2020). Swe dish ope ra tions ac counted for 78 per cent (80) of the order back log.

January – December 2020

Or ders re cei ved in 2020 incre a sed by 13 per cent and amounted to SEK 49,735 mil li on com pa red to SEK 44,130 mil li on last year.

Orders received

Order backlog

Orders received	Order backlog
MSEK Oct-Dec 2020 Oct-Dec 2019 Jan-Dec 2020 Jan-Dec 2019 Construction 6,620 7,789 26,597 26,155 Civil Engineering 2,724 3,679 12,752 13,108 Industry 2,816 1,803 9,893 6,174 Project Development 2,211 1,480 6,940 6,164 Eliminations -2,182 -2,655 -6,447 -7,471 Group 12,189 12,096 49,735 44,130	MSEK Dec 31 2020 Dec 31 2019
	Construction 26,558 26,928 Civil Engineering 13,075 13,446 Industry 3,921 2,548 Project Development 5,151 5,027 Eliminations -5,996 -5,455
	Group 42,709 42,494

We received several major projects and contracts in the fourth quarter, including:

Renovation of the dock at Haakonsvern Naval Base in Bergen for Forsvarsbygg. The contract is worth NOK 120 million. Rebuilding of apartments for rent in Helsingborg for AB Helsingborgshem. The contract is worth SEK 101 million. Renovation of apartments for rent for Helsingin kaupungin asunnot Oy (HEKA) in Pihlajisto. The contract is worth EUR 17 million. Construction of new swimming pool facility in Kävlinge for KKB Fastigheter AB. The contract is worth SEK 292 million.
Refurbishing of Köping Port for Köping Municipality. The contract is worth SEK 170 million.
Construction of the Stridsberg Bridge in Trollhättan for Trollhättan City. The contract is worth SEK 329 million.
Decontamination of soil in Norra Djurgård City in Stockholm for Stockholm City. The contract is worth SEK 140 million. Rebuilding of Highway 23 between Älmhult and Växjö for the Swedish Transport Administration. The contract is worth SEK 159 million.
Construction of new detention cells at the Salberga Institution in Sala for Skandrenting AB. The contract is worth SEK 300 million. Commission to deliver the frame of a new building for Danderyd Hospital in Stockholm for Region Stockholm through Locum AB. The contract is worth SEK 169 million.

Rebuilding a property in Mölndal for Castellum. The contract is worth SEK 181 million.

Construction of a school in Älta south of Stockholm for Hemsö. The contract is worth SEK 306 million.

Construction of a school in Åmål for Åmål’s municipal properties. The contract is worth SEK 210 million.
Construction of apartments in Steninge Slottsby, Sigtuna for Borohus and Innovation Properties. The contract is worth SEK 139 million.
Construction of a bridge over Tärendö River in Norrbotten for the Swedish Transport Administration. The contract is worth SEK 111 million.
Construction of apartments for rent in Eskilstuna for Heimstaden. The contract is worth SEK 251 million.
Construction of high-rise in Dickursby in Vanda City for A-Kruunu Oy. The contract is worth EUR 17 million.
Construction of apartments and stores in Visby on Gotland for BRF Ordboken. The contract is worth SEK 106 million.
Construction of apartments for rent in Linnéstaden in Kalmar for PPE Fastigheter i Kalmar AB. The contract is worth SEK 187 million.

Project allocation of order backlog, December 31, 2020

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MSEK
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----- Start of picture text -----

24,000
20,000
16,000
12,000
8,000
4,000
0
< 200 MSEK, 51% (48) 201 – 500 MSEK, 34% (27)
501 – 1,000 MSEK, 6% (15) >1,000 MSEK, 9% (10)
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Order backlog allocated over time

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MSEK
32,000
28,000
24,000
20,000
16,000
12,000
8,000
4,000
0
Coming financial year Next financial year Thereafter
December 31, 2019 December 31, 2020
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Overview business areas

The Peab Group is pre sen ted in four di� e rent bu si ness areas: Con struc tion, Civil Engi ne e ring, In du stry and Pro ject De ve lop ment. The bu si ness areas are also ope - ra ting seg ments.

For more in for ma tion re gar ding the di� e rences between seg ment re por ting and re por ting ac cor ding to IFRS, see note 1 and note 4.

In ad di tion to the bu si ness areas cen tral com pa ni es, cer tain sub si di a ri es and other hol dings are pre sen ted as Group fun c tions. The cen tral com pa ni es pri ma - rily con si st of the pa rent com pa ny Peab AB, Peab Fi nans AB and Peab Sup port (Sha red Ser vice Cen ter).

An ne hem Fas tig he ter, which was dis tri bu ted to Peab’s sha re hol ders in De cem ber 2020, has as of Ja nu a ry 1, 2020 been re por ted as a se pa ra te unit out si de of seg - ment re por ting. Pre viously An ne hem Fas tig he ter was in clu ded in bu si ness area Pro ject De ve lop ment and the unit Pro per ty De ve lop ment. No com pa ra ti ve fi gu - res have been trans la ted.

Net sales and operating profit per business area

		Net	sales			Operating profit	Operating profit
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
MSEK	2020	2019	2020	2019	2020	2019	2020	2019
Construction	7,448	8,371	26,989	29,416	197	207	663	711
Civil Engineering	3,600	3,792	12,843	13,339	131	132	391	367
Industry	4,929	3,592	18,720	13,339	397	363	1,105	937
Project Development	1,804	2,684	7,500	9,125	1,195	278	1,669	1,015
– of which Property Development	71	179	375	786	961	28	982	300
– of which Housing Development	1,733	2,505	7,125	8,339	234	250	687	715
Group functions	317	325	1,206	1,176	-132	-130	-310	-278
Eliminations	-2,674	-2,906	-9,841	-11,046	37	-53	23	-142
Group, segment reporting	15,424	15,858	57,417	55,349	1,825	797	3,541	2,610
Adjustment housing to IFRS	560	-403	2,491	954	95	30	331	652
IFRS 16‚ additional leases	–	–	–	–	12	6	34	23
Annehem Fastigheter	36 1)	–	171 2)	–	13 1)	–	30 2)	–
Eliminations	-31	–	-227	–	-3	–	-14	–
Group, IFRS	15,989	15,455	59,852	56,303	1,942	833	3,922	3,285
						Operating margin
					Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
Percent					2020	2019	2020	2019
Construction					2.6	2.5	2.5	2.4
Civil Engineering					3.6	3.5	3.0	2.8
Industry					8.1	10.1	5.9	7.0
Project Development					66.2	10.4	22.3	11.1
– of which Property Development					1,353.5	15.6	261.9	38.2
– of which Housing Development					13.5	10.0	9.6	8.6
Group functions
Eliminations
Group, segment reporting					11.8	5.0	6.2	4.7
Adjustment housing to IFRS
IFRS 16‚ additional leases
Annehem Fastigheter					36.1 1)	–	17.5 2)	–
Eliminations
Group, IFRS					12.1	5.4	6.6	5.8

1) Refers to October-November 2020 Refers to January-November 2020 2)

Business area Construction

With local roots close to custo mers bu si ness area Con struc tion per forms con - struc tion work for both ex ter nal and in ter nal custo mers. Con struc tion pro - jects in clu de eve ryt hing from new pro duc tion of housing, pub lic and com - mer ci al pre mi ses to re no va tions and ex ten sions as well as con struc tion main te nan ce.

Ope ra tions in bu si ness area Con struc tion are run via some 150 local o� i ces around the Nor dic area, or ga ni zed in thir teen re gi ons in Swe den, three in Nor way and two in Fin land. There are spe ci a li zed housing pro duc tion units in Stock holm, Gothen burg and the Öresund re gi on. Con struc tion main te nan ce ope ra tions are run in a na tionwi de re gi on in Swe den pri ma rily focu sed on the big city areas. Other re gi ons are re spon sib le for all types of con struc tion pro jects in their geo - grap hic area.

NET SALES AND PROFIT

October – December 2020

Net sales

per product area, rolling 12 months

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Other building
construction, Housing, 36% (38)
public, 32% (30)
Other building construction,
private, 32% (32)
----- End of picture text -----

Net sales for the fourth quar ter 2020 decre a sed by ele ven per cent and amounted to SEK 7,448 mil li on (8,371). The decre a se is at tri bu tab le to Swe den.

per geographic market, rolling 12 months

Ope ra ting pro fit for the fourth quar ter amounted to SEK 197 mil li on (207) and the ope ra ting mar gin was 2.6 per cent (2.5).

January – December 2020

Net sales for 2020 decre a sed by eight per cent and amounted to SEK 26,989 mil li - on (29,416). The decre a se is at tri bu tab le to Swe den while net sales in ope ra tions in Nor way and Fin land incre a sed. The pro por tion of housing con ti nues to contract while other buil ding con struc tion for the pub lic sector has grown.

Ope ra ting pro fit for the year amounted to SEK 663 mil li on (711) and the ope ra ting mar gin amounted to 2.5 per cent (2.4).

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Finland, 14% (12)
Norway, 14% (12)
Sweden, 72% (76)
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ORDERS RECEIVED AND ORDER BACKLOG

October – December 2020

Or ders re cei ved du ring the fourth quar ter amounted to SEK 6,620 mil li on (7,789).

January – December 2020

Or ders re cei ved du ring 2020 incre a sed slight ly to SEK 26,597 mil li on (26,155). The or ders re cei ved are re la ti vely well spre ad re gar ding pro ducts and loca tion.

Order back log on De cem ber 31, 2020 was SEK 26,558 mil li on com pa red to SEK 26,928 mil li on at the end of De cem ber 2019.

Project allocation of order backlog, December 31, 2020

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MSEK
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
< 200 MSEK, 53% (43) 201 – 500 MSEK, 36% (33)
501 – 1,000 MSEK, 4% (18) >1,000 MSEK, 7% (6)
----- End of picture text -----

Key ratios

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
	2020	2019	2020	2019
Net sales, MSEK	7,448	8,371	26,989	29,416
Operating profit, MSEK	197	207	663	711
Operating margin, %	2.6	2.5	2.5	2.4
Orders received, MSEK	6,620	7,789	26,597	26,155
Order backlog, MSEK	26,558	26,928	26,558	26,928
Number of employees at the end of the period	5,878	6,299	5,878	6,299

Business area Civil Engineering

Bu si ness area Civil Engi ne e ring is a le a ding play er in Swe den and with ope ra - tions in Nor way and Fin land as well. The bu si ness area works with lands ca - ping and pi pe li nes, builds and main tains roads, rail ro ads, bridges and other in frastructu re as well as founda tion work. Ope ra tions are or ga ni zed in geo - grap hic re gi ons and the spe ci a li zed pro duct areas Local mar ket, In frastructu - re and heavy con struc tion and Ope ra tion and main te nan ce.

On the Local mar ket the bu si ness area is wor king with lands ca ping and pi pe li nes, founda tion work and builds di� e rent kinds of fa ci li ti es.

In the area of In frastructu re and heavy con struc tion it builds roads, rail ro ads, bridges, tun nels and ports.

Ope ra tion and main te nan ce pro vi des just that for na tio nal and mu ni ci pal hig h - ways and stre et networks as well as cares for parks and out do or pro per ty. It also ope ra tes water and se wage sup p ly networks.

Net sales

per product area, rolling 12 months

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Infrastructure and heavy
construction, 32% (27)
Local market, 52% (56)
Operations and
maintenance, 16% (17)
----- End of picture text -----

NET SALES AND PROFIT

October – December 2020

Net sales for the fourth quar ter 2020 decre a sed by five per cent and amounted to SEK 3,600 mil li on (3,792). Net sales incre a sed in In frastructu re while net sales in Local mar ket was lower.

Ope ra ting pro fit for the fourth quar ter 2020 was SEK 131 mil li on (132) and the ope ra ting mar gin im pro ved to 3.6 per cent (3.5).

January- December 2020

Net sales du ring the year 2020 decre a sed by four per cent and amounted to SEK 12,843 mil li on (13,339). Even a�er ad just ments for ac qui red units net sales decre - a sed by four per cent. Net sales incre a sed in In frastructu re du ring the year while net sales in Local mar ket as well as Ope ra tions and main te nan ce were lower.

Ope ra ting pro fit for the year amounted to SEK 391 mil li on (367) and the ope ra ting mar gin im pro ved to 3.0 per cent (2.8). Local mar ket and In frastructu re have im - pro ved ear nings du ring the year while Ope ra tion and Main te nan ce have con ti nu - ed on a lower level.

ORDERS RECEIVED AND ORDER BACKLOG

October – December 2020

Or ders re cei ved du ring the fourth quar ter 2020 amounted to SEK 2,724 mil li on (3,679).

January- December 2020

Or ders re cei ved du ring the year decre a sed to SEK 12,752 mil li on (13,108).

Order back log on De cem ber 31, 2020 amounted to SEK 13,075 mil li on (13,446).

per geographic market, rolling 12 months

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Finland, 1% (1)
Norway, 8% (7)
Sweden, 91% (92)
----- End of picture text -----

Project allocation of order backlog, December 31, 2020

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MSEK
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
< 200 MSEK, 47% (54) 201 – 500 MSEK, 28% (23)
501 – 1,000 MSEK, 11% (3) >1,000 MSEK, 14% (20)
----- End of picture text -----

Key ratios

Key ratios
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
	2020	2019	2020	2019
Net sales, MSEK	3,600	3,792	12,843	13,339
Operating profit, MSEK	131	132	391	367
Operating margin, %	3.6	3.5	3.0	2.8
Orders received, MSEK	2,724	3,679	12,752	13,108
Order backlog, MSEK	13,075	13,446	13,075	13,446
Number of employees at the end of the period	3,523	3,511	3,523	3,511

Business area Industry

Bu si ness area In du stry is a com ple te sup pli er of the pro ducts and ser vices nee ded to carry out a sustai nab le and cost- e� i ci ent con struc tion and civil engi ne e ring pro ject on the Nor dic mar ket. In du stry o� ers eve ryt hing from mi ne ral ag gre ga tes, concre te, pa ving and tem po ra ry electri ci ty to pre fab ri - ca ted concre te ele ments. Bu si ness area In du stry also as sists with crane and machi ne ren tal, dis tri bu tion of bin der to the concre te in du stry, trans por ta - tion as well as re cycles pro duc tion waste and rubb le.

Bu si ness area In du stry is run in six pro duct areas: Mi ne ral ag gre ga tes, Pa ving, Concre te, Trans por ta tion and Machi nes, Ren tals and Con struc tion Sy stem. All the pro duct areas ope ra te on the Nor dic con struc tion and civil engi ne e ring mar ket.

ACQUISITION OF NORDIC PAVING AND MINERAL AGGREGATES OPERATIONS

Through the ac qui si tion Peab ex pands its pre sence in Swe den, Nor way and Fin - land and be come established in the pa ving bu si ness in Den mark. This gives Peab a uni que and mar ket le a ding po si tion in this bu si ness in the Nor dic re gi on. The ac qui si tion en tails taking over some 2,000 employe es, around 200 stra te gi cal ly loca ted quar ri es along with 63 pro duc tion asphalt plants in the Nor dic re gi on. The ope ra tions are pri ma rily in teg ra ted into the com pa ni es Peab As falt and Swerock and for Peab As falt it means establishing ope ra tions in Fin land and Den - mark. The ac qui si tion also pro vi des con di tions for furt her ex pan sion and de ve - lop ment in other ope ra tions such as Re cycling and Concre te.

The trans ac tion is a com bi na tion of an asset deal and share pur cha se. The pur - cha se price amounted to SEK 3,184 mil li on for a debt- free bu si ness and is fully fi - nan ced.

The ac qui red ope ra tions had net sales of SEK 5,878 mil li on with an ad justed EBIT - DA of SEK 282 mil li on in 2019.

NET SALES AND PROFIT

October – December 2020

Net sales for the fourth quar ter 2020 incre a sed by 37 per cent and amounted to SEK 4,929 mil li on (3,592), of which the ac qui red ope ra tions con tri bu ted by SEK 1,438 mil li on. Not in clu ding the ac qui red ope ra tions net sales contrac ted by three per cent and amounted to SEK 3,491 mil li on. The re duc tion stems pri ma rily from Trans por ta tion and Machi nes as well as Ren tals.

The ac qui si tion of the pa ving and mi ne ral ag gre ga tes ope ra tions was fi na li zed on April 1, 2020, which means the ac qui si tion oc cur red when the se a son star ted. The un der ly ing ope ra tions in the ac qui red com pa ni es con tri bu ted to ope ra ting pro fit by SEK 72 mil li on in the fourth quar ter. De pre ci a tion on sur plus va lues for, among other things, custo mer contracts in the order back log taken over and fixed as sets amounted to SEK -30 mil li on. De pre ci a tion on sur plus va lues for custo mer contracts in the order back log taken over have been high throug hout 2020 and will also a� ect part of 2021. All in all ope ra ting pro fit for the fourth quar ter was af - fec ted by SEK 42 mil li on re la ted to the ac qui red ope ra tions.

January – December 2020

Net sales for 2020 incre a sed by 40 per cent and amounted to SEK 18,720 mil li on (13,339), of which the ac qui red ope ra tions con tri bu ted by SEK 5,944 mil li on. Ad - justed for the ac qui red ope ra tions, net sales contrac ted by four per cent to SEK 12,776 mil li on. Net sales incre a sed in Mi ne ral Ag gre ga tes and Concre te while they decre a sed in Trans por ta tion and Machi nes, Ren tals and Con struc tion Sy stem.

Ope ra ting pro fit for the year incre a sed to SEK 1,105 mil li on (937) with an ope ra - ting mar gin amounting to 5.9 per cent (7.0). Not in clu ding the ac qui red ope ra - tions, ope ra ting pro fit was SEK 855 mil li on and the ope ra ting mar gin was 6.7 per - cent. The lower ope ra ting mar gin is due to a lower pro fit in Ren tals and Con struc - tion Sy stem.

The un der ly ing ope ra tions in the ac qui red com pa ni es con tri bu ted to ope ra ting pro fit by SEK 494 mil li on. De pre ci a tion on sur plus va lues for, among other things, custo mer contracts in the order back log taken over and fixed as sets amounted to SEK -189 mil li on. De pre ci a tion on sur plus va lues for custo mer contracts in the order back log taken over have been high throug hout 2020 and will also a� ect part of 2021. In ad di tion, ac qui si tion costs and trans fer tax in Fin land have char - ged pro fits in total by SEK -55 mil li on. All in all ope ra ting pro fit for the pe ri od was a� ec ted by SEK 250 mil li on re la ted to the ac qui red ope ra tions. Becau se the ac - qui red ope ra tions have a very clear se a so nal pat tern the first quar ter is cha rac te - ri zed by con si de rab le de fi cits since the se a son starts in the se cond quar ter. If the ac qui si tion had taken place on Ja nu a ry 1, 2020 pro fit in the first quar ter would have been a� ec ted by SEK -297 mil li on and the un der ly ing ope ra tions would have had an ac cu mu la ted ope ra ting pro fit per De cem ber 31, 2020 of SEK 197 mil - li on.

Ca pi tal employed in In du stry was at the end of the year SEK 8,822 mil li on com pa - red to SEK 6,799 mil li on at the end of last year. The incre a se is due to the ac qui - red ope ra tions.

Ope ra ting pro fit for the fourth quar ter 2020 amounted to SEK 397 mil li on (363) and the ope ra ting mar gin was 8,1 per cent (10.1). Not in clu ding the ac qui red ope - ra tions, ope ra ting pro fit was SEK 355 mil li on and the ope ra ting mar gin was 10.2 per cent. The lower ope ra ting pro fit stems pri ma rily from Ren tals.

Net sales

per product area, rolling 12 months

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Construction System, 5% (7)
Rentals, 12% (19)
Transportation and
Paving, 48% (30)
Machines, 11% (17)
Mineral
Aggregates, 13% (12)
Concrete, 11% (15)
----- End of picture text -----

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per geographic market, rolling 12 months
Denmark, 3% (–)
Finland, 23% (5)
Norway, 10% (7) Sweden, 64% (88)
----- End of picture text -----

ORDERS RECEIVED AND ORDER BACKLOG

October – December 2020

Or ders re cei ved du ring the fourth quar ter 2020 amounted to SEK 2,816 mil li on (1,803), of which or ders re cei ved from the ac qui red ope ra tions amounted to SEK 1,113 mil li on.

January- December 2020

Or ders re cei ved du ring 2020 incre a sed to SEK 9,893 mil li on (6,174), of which or - ders re cei ved from the ac qui red ope ra tions amounted to SEK 4,357 mil li on.

Order back log on De cem ber 31, 2020 amounted to SEK 3,921 mil li on (2,548), of which order back log re la ted to ac qui red ope ra tions was SEK 1,531 mil li on.

Key ratios

Key ratios
			Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
			2020	2019	2020	2019
Net sales, MSEK			4,929	3,592	18,720	13,339
Operating profit, MSEK			397	363	1,105	937
Operating margin, %			8.1	10.1	5.9	7.0
Orders received, MSEK			2,816	1,803	9,893	6,174
Order backlog, MSEK			3,921	2,548	3,921	2,548
Capital employed at the end of the period, MSEK			8,822	6,799	8,822	6,799
Number of employees at the end of the period			4,967	3,482	4,967	3,482
Concrete, thousands of m 3 1)			352	365	1,372	1,344
Paving, thousands of tons	1)		2,498	904	8,396	2,718
Mineral Aggregates, thousands of tons		1)	9,490	4,815	32,229	15,755

1) Refers to sold volume

Business area Project Development

Bu si ness area Pro ject De ve lop ment, which com pri ses Housing De ve lop ment and Pro per ty De ve lop ment, cre a tes sustai nab le and vi brant urban en vi ron - ments with both re si den ti al and com mer ci al pro per ty. The bu si ness area is re spon sib le for the Group’s pro per ty ac qui si tions and di ve sti tu res as well as pro ject de ve lop ment which ge ne ra tes contract work for the other bu si ness areas. Pro ject De ve lop ment works through whol ly owned pro jects or in col - la bo ra tion with other part ners in joint ven tu res.

Housing De ve lop ment de ve lops all kinds of housing such as apart ment buil dings in te nan cy ow ners hip, ow ners hip and ren tal form as well as sing le homes. Ope ra - tions in Pro per ty De ve lop ment re vol ve around the ac qui si tion, de ve lop ment, main te nan ce and ma na ge ment as well as the di ve sti tu re of com mer ci al pro per ty.

Peab’s pri ma ry am bi tion is to work with de ve lop ment pro jects on our own ba lan - ce sheet. Col la bo ra tion with other part ners via joint ven tu res may take place from time to time du ring a pro ject. The goal is to cre a te ca pi tal e� i ci ent de ve lop - ments with part ners that bols ter bu si ness and pro fit ge ne ra tion.

NET SALES AND PROFIT

October – December 2020

Net sales for the fourth quar ter 2020 in bu si ness area Pro ject De ve lop ment decre a sed to SEK 1,804 mil li on (2,684). The decre a se is pri ma rily due to lower net sales in Housing De ve lop ment. Ope ra ting pro fit was SEK 1,195 mil li on (278), of which the e� ect of dis tri bu ting An ne hem Fas tig he ter was SEK 896 mil li on.

January – December 2020

Net sales for the year 2020 in bu si ness area Pro ject De ve lop ment decre a sed to SEK 7,500 mil li on (9,125). The decre a se is pri ma rily due to lower net sales in Housing De ve lop ment. Ope ra ting pro fit was SEK 1,669 mil li on (1,015), of which the e� ect of dis tri bu ting An ne hem Fas tig he ter was SEK 896 mil li on. Last year in clu ded an in come con tri bu tion of SEK 170 mil li on from the di ve - sti tu re of pro per ty in the par ti al ly owned com pa ny Ac tu rum.

Ca pi tal employed in Pro ject De ve lop ment has decre a sed and amounted to SEK 12,189 mil li on (16,679) at the end of the year. Ca pi tal employed contrac - ted in Housing De ve lop ment as a con se quence of more homes being sold than pro duc tion star ted. An ne hem Fas tig he ter was in clu ded by SEK 1,927 mil li on in Pro per ty De ve lop ment at the end of last year.

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BRF BRYGGHUSEN
Hud dinge
----- End of picture text -----

Capital employed

	Dec 31	Dec 31
MSEK	2020	2019
Operations property	161	1,226
Investment property	112	500
Project and development property	9,060	11,850
of which housing development rights	4,819	5,674
of which commercial development rights	585	556
of which unsold part of ongoing housing projects of which ongoing rental projects in Sweden	1,730 1,100	3,520 846
of which ongoing commercial projects	226	445
of which completed property	311	391
of which other	289	418
Participation in joint ventures	1,873	2,019
Loans to joint ventures	1,213	1,106
Working capital and other	-230	-22
Total	12,189	16,679

Key ratios

Key ratios
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
	2020	2019	2020	2019
Net sales, MSEK	1,804	2,684	7,500	9,125
of which Property Development	71	179	375	786
of which Housing Development	1,733	2,505	7,125	8,339
Operating profit, MSEK	1,195	278	1,669	1,015
of which Property Development	961	28	982	300
of which Housing Development	234	250	687	715
Operating margin, %	66.2	10.4	22.3	11.1
of which Property Development	1,353.5	15.6	261.9	38.2
of which Housing Development	13.5	10.0	9.6	8.6
Capital employed at the end of the period, MSEK	12,189	16,679	12,189	16,679
Orders received, MSEK	2,211	1,480	6,940	6,164
Order backlog, MSEK	5,151	5,027	5,151	5,027
Number of employees at the end of the period	248	343	248	343

HOUSING DEVELOPMENT

October – December 2020

Net sales decre a sed by 31 per cent and amounted to SEK 1,733 mil li on (2,505). The re duc tion is due to lower net sales in Swe den becau se of fewer ongo ing housing pro jects com pa red to last year. Ope ra ting pro fit decre a sed to SEK 234 mil li on (250) but the ope ra ting mar gin was 13.5 per cent (10.0). Ope ra ting pro fit in clu ded po si ti ve e� ects from the sales of te nan cy pro jects.

The num ber of start- ups of our own de ve lo ped homes during the fourth quar ter amounted to 679 units (538) with a good geo grap hic spre ad. The num ber of sold homes was 664 (755). Du ring the quar ter sales were good in all three countri es.

January – December 2020

Net sales decre a sed to SEK 7,125 mil li on (8,339) and the re duc tion is main ly re la - ted to Swe den. Ope ra ting pro fit amounted to SEK 687 mil li on (715) and the ope - ra ting mar gin im pro ved to 9.6 per cent (8.6).

The num ber of start- ups of our own de ve lo ped homes amounted to 2,291 units (2,067), most of which were in Swe den. The start- ups have been spre ad geo grap - hi cal ly in Swe den, Nor way and Fin land. The num ber of sold homes was 2,682 (2,709). Sales of homes were high du ring the be gin ning of the year but slo - wed down when the co ro na pan de mic broke out in the spring. Du ring the sum - mer and in the be gin ning of autumn de mand for our housing has grown and all to get her sales have been good du ring the year in all three countri es. The num ber of own de ve lo ped homes in pro duc tion at the end of the year was 4,014 (4,616). The level of sold homes in pro duc tion was 73 per cent (69). The num ber of re pur - cha sed homes per De cem ber 31, 2020 was 222 (253) of which two thirds were in Swe den, a few were in Nor way and the rest in Fin land. Peab de ve lops and builds housing all over Swe den and in large parts of Nor way and Fin land. Our housing is pri ma rily in the me dium price seg ment and we see that there con ti nues to be a con si de rab le need for new pro duc tion of housing in this range.

Ca pi tal employed has decre a sed at the end of the year com pa red to the cor re - spon ding point in time in 2019. The re duc tion is lar gely due to less ca pi tal tied up in un sold homes. In re cent years we have com ple ted more homes than pro duc - tion star ted which is why the amount has contrac ted. At the same time we have had a good rate of sales, which has re du ced the amount of ca pi tal tied up in un - sold homes. Ca pi tal employed also in clu des apart ments for rent pro jects in Swe - den that can be con ver ted to tenant- owned homes or be sold on the in vest ment mar ket.

In Octo ber 2020 Peab sig ned contracts for the sales of three te nan cy pro jects and an as sisted living fa ci li ty, all in all 280 apart ments, which will be on Peab’s ba lan - ce sheet under con struc tion and tur ned over du ring 2022- 2024. The sales value is SEK 775 mil li on. One apart ment buil ding pro ject in Malmö and one in Par til le are sold to An ne hem Fas tig he ter, one apart ment buil ding pro ject in Öre bro is sold to a local actor and an as sisted living fa ci li ty is sold to SPP Fas tig he ter (publ). The pro jects will be re cog ni zed in pro fit/loss when they are tur ned over.

Development rights for housing

Number, approx.	Dec 31 2020	Dec 31 2019
Development rights on our own balance sheet	18,900	20,300
Development rights via joint ventures	4,400	4,600
Development rights via options etc.	9,700	9,500
Total	33,000	34,400

Time of completion of our own developed ongoing housing 1)

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Number
800
600
400
200
0
Sweden Norway Finland
Q1 – 21 Q2 – 21 Q3 – 21 Q4 – 21 Q1 – 22 Q2 – 22 Q3 – 22 Q4 – 22 Q2 – 23 Q4 – 23
----- End of picture text -----

1) Refers to Swedish tenant-owner associations and own developed homes, Norwegian condominiums and share housing and Finnish residential limited companies.

Net sales

per geographic market, rolling 12 months

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----- Start of picture text -----

Finland, 27% (25)
Sweden, 59% (65)
Norway, 14% (10)
----- End of picture text -----

In De cem ber 2020 Peab sig ned contracts to sell four te nan cy pro jects with a total of 312 apart ments for a total value of SEK 824 mil li on. The four pro jects con si st of 84 apart ments in Bot kyr ka, 79 apart ments in Väs terås, 108 apart ments in Eskilstu na and 41 apart ments in Troll hät tan. The pro ject Flot til jen in Bot kyr ka is sold to Niam, the pro ject Po sei don in Väs terås and Frista den in Eskilstu na are sold to Po di um Fas tig he ter AB and the pro ject Tra ver sen in Troll hät tan is sold to For ti no va Fas tig he ter AB. All the te nan cy pro jects will be on Peab’s own ba lan ce sheet under con struc tion and will be re cog ni zed in pro fit/loss when tur ned over in 2023.

Own housing development construction

Own housing development construction
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
	2020	2019	2020	2019
Number of housing starts during the period	679	538	2,291	2,067
Number of sold homes during the period	664	755	2,682	2,709
Total number of homes under construction, at the end of the period	4,014	4,616	4,014	4,616
Share of sold homes under construction, at the end of the period	73%	69%	73%	69%
Number of repurchased homes in the balance sheet, at the end of the period	222	253	222	253

PROPERTY DEVELOPMENT

Net sales and ope ra ting pro fit from ope ra tions are de ri ved from ac qui si tions, de - ve lop ment, main tai ning and ma na ging whol ly owned pro per ty, sha res in the re - sult from part ly owned com pa ni es as well as ca pi tal gains/los ses from the di ve sti - tu re of com ple ted pro per ty and sha res in part ly owned com pa ni es.

October – December 2020

Du ring the fourth quar ter 2020 net sales were SEK 71 mil li on (179) and ope ra ting pro fit was SEK 961 mil li on (28), of which the e� ect of dis tri bu ting An ne hem Fas - tig he ter was SEK 896 mil li on.

January – December 2020

Du ring the year 2020 net sales in Pro per ty De ve lop ment were SEK 375 mil li on (786) and ope ra ting pro fit was SEK 982 mil li on (300), of which the e� ect of dis tri - bu ting An ne hem Fas tig he ter was SEK 896 mil li on. Some ope ra tions con nec ted to air tra vel and tou rism have been ne ga ti vely a� ec ted by the co ro na pan de mic which has lo wered ope ra ting pro fit by SEK -64 mil li on, of which SEK -44 mil li on is re la ted to Äng el holm Air port. The amount in clu des a SEK -20 mil li on write- down of good will. Äng el holm Air port was di ve sted du ring the year. Du ring the year Pro - per ty De ve lop ment di ve sted its 50 per cent ow ners hip in Nya Bara Ut veck lings AB to Bri no va with a po si ti ve e� ect on pro fit of SEK 30 mil li on. Last year in clu ded an in come con tri bu tion of SEK 170 mil li on from the sales of pro per ty in the par ti al ly owned com pa ny Ac tu rum.

At the end of the year ca pi tal employed in Pro per ty De ve lop ment had contrac ted com pa red to the same pe ri od 2019 due to the trans fer of fully de ve lo ped pro per - ti es to An ne hem Fas tig he ter. At the same time last year An ne hem Fas tig he ter was in clu ded by SEK 1,927 mil li on.

Ca pi tal employed in Pro per ty De ve lop ment in clu des as of 2020 pri ma rily com - mer ci al de ve lop ment rights, ongo ing pro per ty pro jects, sha res in par ti al ly owned com pa ni es as well as loans to par ti al ly owned com pa ni es.

Du ring the se cond quar ter 2020 pro per ty con tai ning o� i ces and par king space in Solna was di ve sted to An ne hem Fas tig he ter and in the fourth quar ter anot her pro per ty was di ve sted in Oslo. Peab has sig ned a contract with An ne hem Fas tig - he ter to di vest two more pro per ty pro jects loca ted in Solna and Helsing borg re - specti vely du ring 2021. The table below pre sents the lar ger ongo ing pro per ty pro jects per De cem ber 31, 2020.

ONGOING PROPERTY PROJECTS

					Total
					investment at
			Degree rented,	Recognized	completion,	Timepoint of	Level of
Type of project	Location	Area in m 2	%	value, MSEK	MSEK	completion	completion, %
O�ice building	Helsingborg	2,900	88	92	106	Q2-2021	87
O�ice building	Solna	4,300	89	111	194	Q3-2021	57
Tennis hall	Sundsvall	14,700	100	78	212	Q2-2022	37
Total				281
of which operations property				92
of which project and development property				189

Significant joint ventures

Peab’s sig ni fi cant joint ven tu re com pa ni es Fas tig hets AB Cen tur, Tor net Bo stads pro duk tion AB, Fas tig hets AB ML4 and Point Hyl lie Hol ding AB are de ve lo ping well and via them Peab has built up con si de rab le in direct hol dings in in vest ment pro per ty and de ve lop ment pro per ty for both com mer ci al and re si den ti al pur po ses. Ongo ing re turns are in the form of sha res in the pro fit from joint ven tu res re cog ni zed in ope ra ting pro fit and in te rest in come on len ding. Changes in mar ket va lues that e� ect booked va lues in joint ven tu re com pa ni es are not in clu ded in Peab’s ac counts.

TORNET BOSTADS PRODUKTION AB

Own and ma nage at tracti ve and en vi ron men tal ly fri end ly ren tals in lar - ger ci ti es in Swe den.

FASTIGHETS AB CENTUR

Own, ma nage and de ve lop com mer ci al pro per ty and housing.

Peab’s share: 50 per cent

Peab’s share: 33 per cent

Part ner: Folk sam and Bal der

Loca tion: Stock holm, the Mä lar da len re gi on, Gothen burg and the Öresund re gi on

Re cog ni zed value on pro per ti es De cem ber 31, 2020 :1) SEK 5,019 mil - li on (4,300)

Peab’s por tion of un re cog ni zed fair value ex clu si ve tax :1) SEK 357 mil li on (260)

Major ongo ing pro jects: LP Par ken, Gothen burg Ren tab le area 15,000 m2, Tall bo hov, Jär fäl la Ren tab le area 10,500 m2 and two other apart - ment buil ding pro jects in Helsing borg

Part ner: Bal der

Loca tion: Stock holm, the Mä lar da len re gi on, Gothen burg and the Öresund re gi on

Re cog ni zed value on pro per ti es De cem ber 31, 2020 : 1) SEK 7,103 mil - li on (6,621)

Peab’s por tion of un re cog ni zed fair value ex clu si ve tax :1) SEK 427 mil li on (421)

Major ongo ing pro jects: Gju te ri et Varvs sta den, Malmö, re no va tion of around 4,600 m2 (te nant Oat ley)

FASTIGHETS AB ML4

Own and ma nage the re se arch fa ci li ty Max IV. The fa ci li ty is ren ted to Lund Uni ver si ty.

Peab’s share: 50 per cent Part ner: Wihl borgs Loca tion: Lund

Re cog ni zed value on pro per ti es De cem ber 31, 2020: SEK 1,956 mil li - on (1,870) Major ongo ing pro jects: Re se arch buil ding 6,400 m[2]

POINT HYLLIE HOLDING AB

De ve lop, own and ma nage the o� ice pro per ty The Point as well as own and ma nage the hotel pro per ty Värds hu set 5 (Ope ra tor Qua li ty Hotel View).

Peab’s share: 50 per cent

Part ner: Vo li to

Loca tion: Hyl lie, Malmö

Re cog ni zed value of pro per ti es De cem ber 31, 2020: SEK 1,356 mil li on (1,279)

Major ongo ing pro jects: No major ongo ing pro jects

1) Va lu ed at mar ket price in joint ven tu re com pa ni es. The mar ket pri ces on pro per ti es that a� ect the re cog ni zed va lues in joint ven tu re com pa ni es are not in clu ded in Peab’s ac counts.

Annehem Fastigheter

BACKGROUND

In Feb ru a ry 2020 Peab’s Board pro po sed to the AGM an extra dis tri bu tion of all the sha res in a newly for med com pa ny hol ding Peab’s whol ly owned, fully de ve - lo ped com mer ci al pro per ti es, ear li er in clu ded in bu si ness area Pro ject De ve lop - ment and the en ti ty Pro per ty De ve lop ment. As a re sult of the spre ad of the co ro - na vi rus and its e� ects on ex ter nal cir cumstan ces and fi nan ci al mar kets Peab’s Board de ci ded to withdraw the pro po sal to the An nu al Ge ne ral Me e ting. With the un cer tain si tu a tion in the world it was not the right time to list the com pa ny. Based on mar ket as sess ments as well as the de ve lop ment pre sen ted in the se - cond quar ter re port Peab’s Board de ci ded in Au gust 2020 to pro po se a new date for the dis tri bu tion of An ne hem Fas tig he ter. The Board sum mo ned an Extra Ge ne - ral Me e ting (EGM) No vem ber 12, 2020 and Peab’s sha re hol ders ad op ted its pro po - sal to dis tri bu te An ne hem Fas tig he ter.

DISTRIBUTION

The dis tri bu tion ratio was 1:5 which meant that one share in Peab en tit led to one share right of the same sort in An ne hem Fas tig he ter, and five share rights en tit led to one share of the same sort in An ne hem Fas tig he ter. Dis tri bu tion was car ri ed out in De cem ber 2020 and the first day of tra ding in An ne hem Fas tig he ters’ B sha - res on Nas daq Stock holm was De cem ber 11, 2020. The first tra ding price was SEK 35 per share.

The dis tri bu tion cor re sponds to equi ty of around SEK 2 bil li on. The level of equi ty and bor rowing in An ne hem Fas tig he ter has been de ter mi ned based on the cur - rent pro per ty port fo lio and taking into con si de ra tion fu tu re growth.

DISTRIBUTION EFFECTS IN THE PEAB GROUP

At the dis tri bu tion of An ne hem Fas tig he ter the di� e rence between fair value and book va lues was re cog ni zed in the Group in Pro per ty De ve lop ment at SEK 896 mil li on. In ad di tion, pre viously eli mi na ted con struc tion contract pro fit of SEK 56 mil li on was re ver sed under Eli mi na tions. All in all, ope ra ting pro fit in the Peab Group has been a� ec ted po si ti vely by SEK 952 mil li on.

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January – November, 2020

Net sales for January- November 2020 amounted to SEK 171 mil li on. Ope ra ting pro fit amounted to SEK 30 mil li on and ope ra ting mar gin was 17.5 per cent. Lis ting and se pa ra tion costs of SEK 14 mil li on were in clu ded in ope ra ting pro fit. De pre ci - a tion and write- downs for the pe ri od were SEK -46 mil li on.

PROPERTY PORTFOLIO

At the time of the dis tri bu tion the ba lan ce sheet total in An ne hem Fas tig he ter in the Peab Group amounted to SEK 2,334 mil li on. Ad di tio nal IFRS 16, Le a ses for of - fice rent incre a sed by SEK 564 mil li on and the re fo re the net e� ect on Peab’s ba - lan ce sheet total amounted to SEK -1,770 mil li on at the time of the dis tri bu tion, of which the e� ect on equi ty was SEK -1,054 mil li on. In ad di tion, dis tri bu tion costs of SEK -22 mil li on a�er tax have char ged equi ty. For more in for ma tion see note 6. For in for ma tion on the e� ects in Peab AB see Pa rent com pa ny in sum ma - ry.

BUSINESS CONCEPT, BOARD AND MANAGEMENT

An ne hem Fas tig he ter will own and ma nage high qua li ty com mer ci al, com mu ni ty and re si den ti al pro per ty with a clear en vi ron men tal pro fi le and good con nec tions to the Nor dic growth areas Stock holm, Skåne, Gothen burg as well as Helsin ki and Oslo. An ne hem Fas tig he ter builds lasting re la tions hips and value through ma na - ge ment close to custo mers.

The board of An ne hem Fas tig he ter con si sts of Göran Grosskopf, Pia An ders son, Jesper Gö rans son, An ders Hylén, Lars Ljungälv and Karin Eb bing haus. Göran Grosskopf has been ap poin ted chair man. In ad di tion, Jör gen Lund gren has been ap poin ted CEO, Jan Ege näs as CFO and Adela Co la ko vic as Group Ac counting Ma - na ger for An ne hem Fas tig he ter. Jör gen Lund gren le a ves his po si tion as CEO of Sol na berg Pro per ty AB (publ). Jör gen Lund gren has pre viously held po si tions such as Pre si dent and CEO of Fas tig hets ak tie bo la get Norr por ten and is, among other things, cur rent ly a board mem ber of Aros Bo stä der and vice chair man of Mäk lar hu set.

NET SALES AND PROFIT

The pro per ty port fo lio in An ne hem Fas tig he ter is being built up. Re venue and pro fit will suc ces si vely incre a se in the coming years as more pro per ty is taken over.

October – November, 2020

Net sales for October- November, 2020 was SEK 36 mil li on. Ope ra ting pro fit amounted to SEK 13 mil li on and ope ra ting mar gin was 36.1 per cent. Lis ting and se pa ra tion costs of SEK 2 mil li on were in clu ded in ope ra ting pro fit. De pre ci a tion and write- downs du ring the quar ter were SEK -10 mil li on.

An ne hem Fas tig he ter owns as sets in the form of fully de ve lo ped pro per ti es and on Sep tem ber 30, 2020 the mar ket value of the pro per ti es was ap prox i ma tely SEK 3,300 mil li on. Du ring the se cond quar ter it was de ci ded not to in clu de Peab’s par - ti al ly owned com pa ny Nya Bara Ut veck lings AB in An ne hem Fas tig he ter. Du ring the third quar ter it was de ci ded that Peab’s 50 per cent ow ners hip in the joint ven - tu re com pa ny, Point Hyl lie Hol ding AB will not be owned by An ne hem Fas tig he ter but re main in Peab.

Du ring the se cond quar ter An ne hem Fas tig he ter ac qui red a pro per ty con tai ning o� i ces and par king space in Solna for a mar ket value of SEK 290 mil li on from Peab and du ring the fourth quar ter a pro per ty in Oslo with a sales value of SEK 278 mil li on. An ne hem Fas tig he ter has also sig ned a contract in Octo ber 2020 with Peab to ac qui re furt her pro per ti es a�er they are com ple ted. Two pro per ti es loca - ted in Solna and Helsing borg will be trans fer red in 2021 for a total sales value of SEK 406 mil li on and two housing pro per ti es with a total sales value of SEK 385 mil li on will be tur ned over in 2022 and 2024 re specti vely.

			Degree
Wholly owned		Area in	rented,
property	Location	m 2	%
Business park Business park	Ängelholm Ljungbyhed	51,500 77,200	93 77
O�ice building	Solna	12,400	100
O�ice building and parking	Solna	13,500	100
O�ice building	Helsinki	9,300	100
O�ice building	Helsinki	7,600	100
Retail and o�ices	Gothenburg	6,400	99
O�ice building	Malmö	4,900	100
O�ice building	Malmö	1,000	100
Retail	Oslo	3,600	100

Construction market

SWEDEN

The re co ve ry in Swe den’s eco nomy has been sur pri sing and many forecasts have been ad justed upward. Unemployment is ex pec ted to con ti nue to rise in 2021, pressu re from in fla tion will pro bably be weak for se ve ral years and the re fo re the repo rate is ex pec ted to re main around zero over the next two to three years. Housing con struc tion is ex pec ted to de ve lop ho ri zon tal ly du ring the pe ri od 20212022. A�er the dra ma tic drop in 2020 pri va te pre mi ses are ex pec ted to turn du - ring 2021. Pub lic buil ding con struc tion is ex pec ted to incre a se in 2021. The forecast for civil engi ne e ring in di ca tes gre a ter in vest ments in 2021 with a par ticu - lar focus on pub lic spen ding.

Housing

		2020	2021	2022
	Sweden
	Norway
	Finland

Forecast for started- up housing in vest ments, new pro duc tion and re no va tions Sour ce: Navet Ana ly tics

NORWAY

The Nor wegi an eco nomy has made a good re co ve ry a�er fal ling in the spring and growth forecasts have been ad justed upwards. Re co ve ry has been dri ven by do - me stic de mand where pri va te con sump tion has been a par ticu lar ly strong force. De ve lop ment on the con struc tion mar ket is so mewhat fractu red. Housing con - struc tion is ex pec ted to de ve lop ho ri zon tal ly du ring the pe ri od 2021- 2022. Other buil ding con struc tion is ex pec ted to decli ne in 2021. In vest ments in in dust ri al and com mer ci al pre mi ses are ex pec ted to contract while pub lic sector con struc - tion is ex pec ted to grow. The go vern ment’s eco no mic po li cy is ex pec ted to con ti - nue to be ex pan si ve next year and there is room for in vest ments in civil engi ne e - ring con struc tion, which is ex pec ted to con ti nue to grow in 2021.

Other building construction

		2020	2021	2022
	Sweden
	Norway
	Finland

Forecast for started- up other buil ding con struc tion in vest ments, new pro duc tion and re no va tions (In du stry, o� ice/re tail etc. and pub lic pre mi ses)

Sour ce: Navet Ana ly tics

FINLAND

Fin land’s eco nomy has so far shown strong re sistan ce to the glo bal eco no mic down turn cre a ted by the pan de mic. Housing con struc tion is ex pec ted to de ve lop ho ri zon tal ly du ring the pe ri od 2021- 2022. Other buil ding con struc tion is ex pec ted to re main un chang ed where in vest ments in in du stry are ex pec ted to drop while pub lic sector con struc tion is ex pec ted to grow. Civil engi ne e ring con struc tion is ex pec ted to have had a po si ti ve de ve lop ment in 2020 but decli ne in 2021.

Civil engineering

		2020	2021	2022
	Sweden			–
	Norway			–
	Finland			–

Forecast for civil engi ne e ring in vest ments

Sour ce: Navet Ana ly tics

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Worse forecast compared to the previous quarterly report Better forecast compared to the previous quarterly report Same forecast compared to the previous quarterly report

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Other information

SUSTAINABILITY

A safe work en vi ron ment is the founda tion of our bu si ness. The con di tions of our work pla ces should be secu re and safe for eve ry o ne at them, de spi te the fact that there are risk- fil led aspects of our ope ra tions.

Serious accidents

To pre vent ac ci dents and in ci dents at our work pla ces we con ti nu al ly de ve lop qua li ty as su red work met hods and educa te our employe es. Focus is on plan ning and risk as sess ment in con nec tion with run ning pro jects going for ward as well as le ar ning from re por ted risk ob ser va tions, in ci dents and ac ci dents.

The num ber of se ri ous ac ci dents* 2020 amounted to 51 re gar ding our own employe es and 43 re gar ding subcontractors at our work pla ces. Peab has a high num ber of own skil led wor kers com pa red to other ac tors in the con struc tion and civil engi ne e ring in du stry as well as many subcontractors. At the end of 2020 Peab had 15,252 employe es, of which 8,224 were skil led wor kers. As of 2021 Peab will up da te the de fi ni tion of se ri ous ac ci dents and the re by the me a su ring and mo ni to ring of work pla ce ac ci dents.

Risk observations

Every re me di ed risk is one less po ten ti al ac ci dent, which is why we work in ten si - vely to raise the num ber of re por ted and re me di ed risk ob ser va tions*. The goal for 2020 was 45,000 re por ted and re me di ed risk ob ser va tions. The num ber du ring the year 2020 was 61,200.

For de fi ni tion see sec tion Al ter na ti ve per for man ce me a su res and de fi ni tions.

Other

A healthy construction industry and fair competition are essential to the future of the industry. Peab works systematically with this issue and during the quarter implemented third party controls of suppliers at our construction sites according to a new method.
In collaboration with Volvo Lastvagnar Peab company Swerock started test driving completely electric transportation solutions for the construction industry. Swerock will run a concrete mixer truck and a hook li� truck in daily operations during two years. This is a major step in more climate smart transportation.
Another subsidiary, Skandinaviska Byggelement, has begun to carry concrete elements by train from Katrineholm. The first wagons carrying concrete elements went from Katrineholm to Gothenburg. In addition to Katrineholm, the company uses the railroad for transportation from Ucklum.
Subsidiary Swecem is building a terminal in Skelle�eå to store Merit, which is a by-product from the steel industry and replaces cement in the production of ECO-Betong, thereby considerably reducing CO2 emissions. The Swedish Environmental Protection Agency gave Swecem an investment grant via
”Klimatklivet” for 40 percent of the total investment of SEK 30 million. The new terminal contains a 5,000 m3 silo and a loading hall for trucks. It will be completed in the summer of 2021.
Peab’s ECO concept that includes ECO-Betong and ECO-Asfalt is expanding with two other brands. Peab Construction System is launching ECO-Prefab and ECO-Stomme in climate-improved concrete. A higher level of slag as binder (Merit) reduces CO2 emissions by 35 percent. The products will be launched on full scale in the beginning of 2021.
Peab and Tibnor have taken a comprehensive approach to the environmental impact of steel in construction through Environmental Product Declarations or EPDs. This means Peab can track the environmental impact of the steel from the steelworks, carriage and processing all the way to delivery at the construction site. This facilitates aware purchasing choices.

RISKS AND UNCERTAINTY FACTORS

Peab’s bu si ness is ex po sed both to ope ra tio nal and fi nan ci al risks. How much risks a� ect Peab’s pro fits and po si tion de pends on how well the com pa ny hand - les daily ope ra tions. In ad di tion, as a con struc tion and civil engi ne e ring com pa ny, Peab is vul ne rab le to ex ter nal risks such as de ve lop ments in the eco nomy, cli ma - te e� ects and changes in cir cumstan ces due to amend ments in laws and re gu la - tions, and other po li ti cal de ci sions.

In the be gin ning of 2020 the co ro na vi rus spre ad over a large part of the world. Go vern ments and cen tral banks are im ple men ting di� e rent forms of cri sis pac ka - ges to re du ce the ne ga ti ve fi nan ci al e� ects. The en ti re glo bal eco nomy is a� ec ted but it is di� icult to say how deeply and for how long. So far the e� ects of the co ro -

na vi rus on Peab’s ope ra tions have been li mi ted. We clo se ly follow de ve lop ments in order to as sess the e� ects in the long run. For more in for ma tion see the sec tion Co ro na vi rus under Im por tant events du ring the pe ri od.

Ma na ging ope ra ti ve risks is a con ti nu ous pro cess con si de ring the large num ber of pro jects the Group is al ways star ting up, car ry ing out and com ple ting. Ope ra ti ve risks are ma na ged in the line or ga ni za tion in the bu si ness areas through established pro ce du res, pro ces ses and con trol systems. Peab’s bu si ness is lar gely project- re la ted. There are a num ber of di� e rent contract forms where risk le vels vary de pen ding on the type of contract. Ho wever, with any type of contract am bi - gui ti es can arise con cer ning the terms, which can lead to de li mi ta tion is sues that cre a te a dis pu te with the custo mer.

On De cem ber 13, 2019 Peab’s sup pli er Nynas AB ap pli ed for a com pa ny re or ga ni - za tion and on March 12, 2020 Nynas AB ap pli ed for a furt her ex ten sion of three mont hs which was gran ted. The re a� er furt her ex ten sions were ap pli ed for be fo re Nynas AB re cei ved ap pro val by their cre di tors of their com po si tion pro po sal in No vem ber 2020. The de ci sion to de ter mi ne Nynas’ com po si tion beca me legal in Sö der törn Court in Ja nu a ry 2021. This meant that Nynas’ com pa ny re or ga ni za - tion could be for mal ly ended and that Nynas’ cre di tors will be paid ac cor ding to the com po si tion agre e ment. Nynas AB is an es sen ti al sup pli er of bi tu men which is used as a bin der in the ma nu factu re of asphalt. If Nynas AB had not been able to reach an agre e ment and could not ful fill its ob li ga tions it would have cau sed con si de rab le distur ban ces in the Nor dic pa ving mar ket and a� ec ted all the com - pa ni es in vol ved in asphalt pa ving, in clu ding Peab which is a major actor. Peab has cho sen to com ple ment with other sup pli ers to en su re de li ve ri es of bi tu men.

Fi nan ci al risks are pri ma rily as so ci a ted with the com pa ny’s need for ca pi tal, tied up ca pi tal and ac cess to fi nan ci ng. Fi nan ci al risks are ma na ged on Group level. For furt her in for ma tion about risks and un cer tain ty factors, see the An nu al and Sustai na bi li ty Re port 2019.

IMPORTANT EVENTS DURING THE PERIOD

Dividend proposals and carried out distribution of Annehem Fastigheter

In con jun ctu re with the year- end re port 2019 Peab’s Board de ci ded to pro po se to the AGM an un chang ed or di na ry di vi dend of SEK 4.20 per share and an extra dis - tri bu tion of the sha res in a newly foun ded real esta te com pa ny (An ne hem Fas tig - he ter).

When the de ci sion was made the glo bal spre ad of the co ro na vi rus had not yet begun. It has the re a� er de ve lo ped into a pan de mic, which in turn has cre a ted enor mous un cer tain ty con cer ning glo bal fi nan ci al de ve lop ments.

On March 24, 2020 the Board re vi ewed the de ci sion of an extra dis tri bu tion of all the sha res in An ne hem Fas tig he ter. The Board put o� the de ci sion to ac tu al ly dis - tri bu te and list the com pa ny until there was less un cer tain ty and cir cumstan ces im pro ved. The stra te gy to cre a te the com pa ny, dis tri bu te and list it did not chang ed.

On April 7, 2020 Peab’s Board also de ci ded to withdraw in its en tire ty the pro po - sal to the AGM for an or di na ry di vi dend of SEK 4.20 per share. The Board and execu ti ve ma na ge ment have re vi ewed the si tu a tion focu sing on iden ti fy ing me a - su res nee ded to be taken for di� e rent sce na ri os on the Nor dic con struc tion mar - ket. Their main pur po se is to be able to cre a te the pre requi si te con di tions to hand le over he ad in a contracting bu si ness and at the same time sa fe gu ard longterm pro duc tion ca pa ci ty. Ex amples of me a su res are fur loug hs and trai ning.

The Board’s am bi tion have been to re gu lar ly eva lu a te the di vi dend ca pa ci ty and de pen ding on de ve lop ments make a de ci sion on both an or di na ry di vi dend and when dis tri bu tion of all the sha res in An ne hem Fas tig he ter can take place. Based on mar ket as sess ments and the de ve lop ment pre sen ted in the se cond quar ter re - port Peab’s Board de ci ded in Au gust 2020 to pro po se a new date for the dis tri bu - tion of An ne hem Fas tig he ter. Peab’s Board furt her de ci ded not to put forth a new di vi dend pro po sal but let the AGM’s de ci sion of no cash di vi dend for 2019 re main un chang ed.

On Octo ber 19, 2020 the Board sum mo ned an Extra Ge ne ral Me e ting on No vem - ber 12, 2020 and Peab’s sha re hol ders ad op ted its pro po sal to dis tri bu te An ne hem Fas tig he ter. Dis tri bu tion was car ri ed out in De cem ber 2020. The dis tri bu tion ratio was 1:5 which means that one share in Peab en tit led to one share right of the same sort in An ne hem Fas tig he ter, and five share rights en tit led to one share of the same sort in An ne hem Fas tig he ter. The first day of tra ding was De cem ber 11, 2020 and the first tra ding price was SEK 35 per share. For more in for ma tion see the sec tion An ne hem Fas tig he ter and note 6.

Coronavirus

In the be gin ning of the year the co ro na vi rus spre ad to a large part of the world. Countri es are still put ting di� e rent me a su res to limit the spre ad of the in fec tion, for ex amp le entry and qua ran ti ne re gu la tions. Go vern ments and cen tral banks are in tro du cing di� e rent forms of cri sis pac ka ges to re du ce the fi nan ci al e� ects. This will a� ect the glo bal eco nomy but to what ex tent is still di� icult to say.

Peab is a major employer with many employe es and many pe op le at our work - pla ces. As employer we care about our employe es but na tu ral ly we also care about our custo mers, subcontractors, sup pli ers and other part ners. For Peab it is im por tant from a so ci e tal per specti ve that we do eve ryt hing we can to th wart the spre ad of in fec tion and keep our ope ra tions going.

Peab’s me a su res to limit the spre ad of the in fec tion are foun ded on The Pub lic He alth Agen cy of Swe den’s gui de li nes and in struc tions as well as those that cor - re spond in the other countri es we work in. Since the si tu a tion and in struc tions from the aut ho ri ti es are con stant ly chan ging, we clo se ly follow de ve lop ments and adopt to them. Above all they a� ect the directi ves we give our employe es.

The short- term e� ects of the co ro na vi rus on Peab’s ope ra tions are li mi ted at the mo ment but na tu ral ly we clo se ly follow de ve lop ments so that we can con ti nu al ly as sess pos sib le a� ects in a long er per specti ve. Under the cur rent cir cumstan ces we see what a strength it is for us to be the local com pa ny with the big group re - sour ces. Peab has four bu si ness areas – Con struc tion, Civil Engi ne e ring, In du stry and Pro ject De ve lop ment that col la bo ra te local ly and a large part of input goods and per son nel are our own. This gives us good con trol over the con struc tion pro - cess and makes us the re fo re less vul ne rab le to pro duc tion dis rup tions.

Roger Lin nér and Niclas Winkvist. Karl- Gunnar Karls son will leave his role as Bu si - ness Area In du stry Ma na ger and the re fo re execu ti ve ma na ge ment. Karl- Gun nar has been ap poin ted MD for Swerock.

Chief Stra te gic O� i cer ap poin ted

In order to en su re scale ad van ta ges, e� ecti ve ness and sustai nab le pro ducts, at the same time we de ve lop our local bu si ness, we have to stream li ne the way we lead and steer. Di gi ta li za tion will con ti nue to enab le this work going for ward. In order to sup port execu ti ve ma na ge ment’s work with these mat ters Johan Da ger - tun has been ap poin ted CSO.

Johan Da ger tun was most re cent ly MD for Con struc tion Sy stem in bu si ness area In du stry and has pre viously been a bu si ness con trol ler in Fi nan ce and Tre a su ry at Peab.

A�er these changes have been made Peab’s execu ti ve ma na ge ment will con si st of the following mem bers:

Jesper Göransson, President and CEO
Niclas Winkvist, CFO, part of business area Industry
Roger Linnér, COO, part of business area Industry
Stefan Danielsson, Business Area Construction Manager
Lotta Brändström, Business Area Civil Engineering Manager
Göran Linder, Business Area Project Development Manager
Camila Buzaglo, CCO
Johan Dagertun, CSO

Acquisition of Nordic paving and mineral aggregates operations

On July 4, 2019 Peab sig ned a contract to ac qui re YIT’s pa ving and mi ne ral ag gre - ga tes ope ra tions in the Nor dic re gi on. The trans ac tion was con di tio nal on ap pro - val from com pe ti tion aut ho ri ti es as well as the ful fill ment of cer tain contractu al con di tions. At the end of March 2020 the trans ac tion was ap pro ved by the com - pe ti tion aut ho ri ti es and the ac qui si tion was fi na li zed on April 1, 2020. The ope ra - tions are con so li da ted into the Peab Group as of that date.

Through the ac qui si tion Peab ex pands its pre sence in Swe den, Nor way and Fin - land and be come established in the pa ving bu si ness in Den mark and this gives Peab a uni que and mar ket le a ding po si tion in this bu si ness in the Nor dic re gi on. The ac qui si tion en tails taking over some 2,000 employe es, around 200 stra te gi - cal ly loca ted quar ri es along with 63 pro duc tion asphalt plants in the Nor dic re gi - on. The deal also incre a se the im por tan ce of in dust ri al ope ra tions for the Group.

Gre a ter geo grap hic pro li fe ra tion in areas that are nor mal ly less sen si ti ve to the bu si ness cycle incre a ses sta bi li ty in the Group. It also pro vi des a plat form for furt - her ex pan sion and de ve lop ment in other ope ra tions such as Re cycling and Concre te.

The trans ac tion is a com bi na tion of an asset deal and a share pur cha se. The pur - cha se price amounted to SEK 3,184 mil li on for a debt- free bu si ness and is fully fi - nan ced. In 2019 the ac qui red ope ra tions had net sales of SEK 5,878 mil li on with an ad justed EBIT DA of SEK 282 mil li on.

For more in for ma tion, see sec tion Bu si ness area In du stry and note 2.

Changes in Peab’s executive management

In the spring of 2020 Peab’s ac qui si tion of YIT’s pa ving and mi ne ral ag gre ga tes ope ra tions in the Nor dic re gi on was fi na li zed. As a re sult of the ac qui si tion the im por tan ce of ope ra tions in In du stry in the Group have grown at the same time Peab has incre a sed its pre sence in Swe den, Nor way and Fin land and established it self in pa ving in Den mark. Peab has the re by tran si tio ned from being a Swe dish com pa ny with ope ra tions in Nor way and Fin land to be coming a Nor dic com pa ny based in Swe den.

The No mi na tion Com mit tee pro po ses new au di tors

Peab AB’s No mi na tion Com mit tee pro po ses that the ac counting firm EY be elec - ted new au di tor with Aut ho ri zed Pub lic Ac countant Jonas Svens son as lead au di - tor. The pro po sal is made in com pli an ce with the ob li ga to ry au di tor ro ta tion. KPMG has been Peab’s au di tor until and in clu ding the fi nan ci al year 2020.

IMPORTANT EVENTS AFTER THE PERIOD

New financial and non-financial targets

Through the stra te gic trans ac tions in re cent years Peab has more clear ly be come a com mu ni ty buil der that, through four col la bo ra ting bu si ness areas and local pre sence, is ac ti ve throug hout the Nor dic re gi on. Our bu si ness model pro vi des us with uni que op por tu ni ti es to, with our own re sour ces and con trol over the en ti re value chain, meet our custo mers’ needs and the ex pecta tions of the world around us. In order to furt her pro mo te value cre a tion we have re vi sed eve ryt hing from our mis sion, bu si ness con cept and stra te gic tar get areas to in ter nal and ex - ter nal fi nan ci al and non- financial tar gets.

Both the in ter nal and ex ter nal fi nan ci al and non- financial tar gets are ca te go ri zed under the pre vious stra te gic tar gets; Most sa tis fi ed custo mers in the in du stry, Best work pla ce in the in du stry and Most pro fi tab le com pa ny in the in du stry as well as the new, fourth stra te gic tar get, Le a der in so ci al re spon si bi li ty in the in du - stry. We con si der the ex ter nal tar gets par ticu lar ly im por tant and they are a sub set of our in ter nal tar gets and ac tion plans. As of 2021 Peab will ex ter nal ly re port the per for man ce of the bu si ness by mo ni to ring nine tar gets, of which three are fi nan - ci al.

Re vi sed mis sion: We im pro ve eve ryday life where it’s lived.

Re vi sed bu si ness con cept: Peab is the Nor dic Com mu ni ty Buil der with a local pre - sence. Focu sing on our own re sour ces and local part ners we de ve lop, do the ground work and build eve ryday life where it’s lived.

Peab’s external targets as of 2021:

Today Peab has 15,000 employe es. We now have a gre a ter geo grap hic spre ad and our local pre sence is strong er, which makes it pos sib le for us to de ve lop wit hin the fram ework of what we call local ly pro du ced com mu ni ty buil ding. Through Peab’s four col la bo ra ting bu si ness areas we can, as far as pos sib le, en su re that we use local re sour ces in the form of our own employe es, our own input goods and subcontractors.

Bu si ness area In du stry changes

Bu si ness area In du stry con si sts of a num ber of com pa ni es that de li ver input goods and ser vices to the con struc tion in du stry. Due to the ac qui si tion from YIT our ope ra tions have grown ex ten si vely and the re fo re need to be ste e red and led at com pa ny level rat her than bu si ness area level. The in dust ri al com pa ni es will con ti nue to re port ex ter nal ly as one bu si ness area. Ope ra ti vely they will be led by MDs that re port to two mem bers of execu ti ve ma na ge ment re spon sib le for them,

Most satisfied customers in the industry; SCI > 75
Best workplace in the industry; eNPS >Benchmark, Serious accidents: Zero vision for serious accidents through a continuously contracting trend
Most profitable company in the industry; Operating margin > 6 %, Net debt/equity ratio 0.3 – 0.7 Dividend > 50 % of profit for the year
Leader in social responsibility in the industry; Carbon dioxide intensity, own production: 60 % reduction by 2030, Carbon dioxide intensity, input goods and purchased services: 50 % reduction by 2030, Equal opportunity recruitment: Number of women recruited should always exceed the education market

The No mi na tion Com mit tee’s pro po sed Board mem bers

The No mi na tion Com mit tee of Peab AB pro po ses re e lec tion of Board mem bers Fred rik Pa uls son, Malin Pers son, Karl- Axel Granlund, Li se lott Ki laas, Lars Sköld, Kerstin Lin dell and An ders Ru ne vad as well as elec tion of Mag da le na Ger ger. Mats Pa uls son and Göran Grosskopf have both decli ned re e lec tion for age re a sons. An - ders Ru ne vad is pro po sed to be elec ted Chair man of the Board.

HOLDINGS OF OWN SHARES

At the be gin ning of 2020 Peab’s own B sha re hol ding was 1,086,984 which cor re - sponds to 0.4 per cent of the total num ber of sha res. No changes have taken place du ring the year 2020.

THE PEAB SHARE

Peab’s B share is lis ted on the Nas daq Stock holm, Large Cap list. As of De cem ber 31, 2020, the price of the Peab share was SEK 89.65, a decre a se of four per cent du ring 2020. Du ring the same pe ri od, the Swe dish stock mar ket incre a sed by 13 per cent ac cor ding to the ge ne ral index in the bu si ness ma ga zi ne “A� ärs värl den”. Du ring 2020 the Peab share has been quo ted at a max i mum of SEK 110.70 and a mi ni mum of SEK 59.30.

PROPOSED DIVIDEND

A di vi dend of SEK 4.50 (-) per share is pro po sed for 2020. Ex clu ding the 1,086,984 sha res owned by Peab AB per Feb ru a ry 3, 2021, which are not en tit led to di vi - dends, the pro po sed di vi dend is equi va lent to a total di vi dend dis tri bu tion of SEK 1,327 mil li on (-). Cal cu la ted as a share of the Group’s re por ted pro fit for the year (ex clu ding the e� ect of the dis tri bu tion of An ne hem Fas tig he ter of SEK 952 mil li - on), the pro po sed di vi dend amounts to 66 per cent (-). The pro po sed di vi dend is equi va lent to a direct re turn of 4.6 per cent based on the clo sing price on Feb ru a ry 3, 2021.

ANNUAL GENERAL MEETING

The An nu al Ge ne ral Me e ting of Peab will be held on May 6, 2021 at Gre vie par ken in Gre vie.

NOMINATION COMMITEE

At the An nu al Ge ne ral Me e ting held on May 6, 2020, Göran Grosskopf, Malte Åker - ström, Mats Rasmus sen and Ulf Lil je dahl were ap poin ted to the Peab No mi na tion Com mit tee and Ulf Lil je dahl was named its Chair man.

Report on the Group income statement, IFRS

Group net sales ac cor ding to IFRS incre a sed by six per cent du ring January- December 2020 and amounted to SEK 59,852 mil li on (56,303). The ac qui red ope ra tions in bu - si ness area In du stry con tri bu ted by SEK 5,891 mil li on du ring the year in net sales. More com ple ted than pro duc tion star ted own de ve lo ped homes a� ec ted net sales by SEK 2,491 mil li on (954) du ring January- December 2020.

Ope ra ting pro fit ac cor ding to IFRS for 2020 amounted to SEK 3,922 mil li on (3,285) and the ope ra ting mar gin was 6.6 per cent (5.8) du ring the year. The ac qui red ope ra - tions con tri bu ted du ring the year net by SEK 250 mil li on to ope ra ting pro fit. The e� ect of the dis tri bu tion of An ne hem Fas tig he ter was SEK 952 mil li on. The ad just ment of own housing de ve lop ment pro jects to the com ple tion met hod a� ec ted ope ra ting pro fit by SEK 331 mil li on (652).

	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
MSEK	2020	2019	2020	2019
Net sales	15,989	15,455	59,852	56,303
Production costs	-14,159	-13,869	-53,711	-50,312
Gross profit	1,830	1,586	6,141	5,991
Sales and administrative expenses	-914	-751	-3,359	-2,879
Distribution of Annehem Fastigheter	952	–	952	–
Other operating income	84	93	229	280
Other operating costs	-10	-95	-41	-107
Operating profit	1,942	833	3,922	3,285
Financial income	23	31	96	130
Financial expenses	-55	-62	-273	-188
Net finance	-32	-31	-177	-58
Pre-tax profit	1,910	802	3,745	3,227
Tax	-181	-149	-564	-571
Profit for the period	1,729	653	3,181	2,656
Profit for the period, attributable to:
Shareholders in parent company	1,730	653	3,182	2,656
Non-controlling interests	-1	0	-1	0
Profit for the period	1,729	653	3,181	2,656
Key ratios, IFRS
Earnings per share before and a�er dilution, SEK	5.87	2.21	10.79	9.00
Average number of outstanding shares, million	295.0	295.0	295.0	295.0
Return on capital employed, %			15.0	13.2
Return on equity, %			26.0	24.3

Report on the Group income statement and other comprehensive income in summary, IFRS

in summary, IFRS
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
MSEK	2020	2019	2020	2019
Profit for the period	1,729	653	3,181	2,656
Other comprehensive income
Items that can be reclassified or have been reclassified to profit for the period
Translation di�erences for the period from translation of foreign operations	-71	-60	-194	49
Changes in fair value of cash flow hedges for the period	2	5	5	9
Shares in joint ventures’ other comprehensive income	0	0	0	0
Tax referring to items that can be reclassified or have been reclassified to profit for the period	-4	-6	-21	6
Other comprehensive income for the period	-73	-61	-210	64
Total comprehensive income for the period	1,656	592	2,971	2,720
Total comprehensive income for the period, attributable to:
Shareholders in parent company	1,657	593	2,972	2,720
Non-controlling interests	-1	-1	-1	0
Total comprehensive income for the period	1,656	592	2,971	2,720

Report on financial position for the Group in summary, IFRS

Total as sets on De cem ber 31, 2020 was SEK 42,164 mil li on (43,688) of which around SEK 4,000 mil li on is re la ted to the ac qui red pa ving and mi ne ral ag gre ga tes ope ra - tions. Du ring the year we sold and com ple ted more own de ve lo ped homes than were pro duc tion star ted which is why pro ject and de ve lop ment pro per ti es have contrac ted com pa red to the end of 2019. An ne hem Fas tig he ter, which was dis tri bu ted to sha re hol ders in De cem ber 2020, was in clu ded at the end of last year by SEK 2,077 mil li on. Equi ty amounted to SEK 12,443 mil li on (11,559), which ge ne ra ted a equi ty/as sets ratio of 29.5 per cent (26.5). Dis tri bu tion of An ne hem Fas tig he ter has af - fec ted equi ty by SEK -2,087 mil li on in clu ding trans ac tion costs. In clu ded in the amount is a po si ti ve e� ect on pro fit of SEK 952 mil li on re fer ring to the di� e rence between fair va lues and booked va lues as well as the re ver sal of pre viously eli mi na ted con struc tion contract pro fit. For more in for ma tion con cer ning the e� ects of the dis tri bu tion see the sec tion An ne hem Fas tig he ter and note 6.

	Dec 31	Dec 31	Jan 1
MSEK	2020	2019	2019
Assets
Intangible assets	3,679	2,334	2,250
Tangible assets	7,571	6,811	5,741
Investment property	130	558	589
Interest-bearing long-term receivables	1,257	1,086	1,445
Other financial fixed assets	2,016	2,097	1,297
Deferred tax recoverables	164	201	346
Total fixed assets	14,817	13,087	11,668
Project and development properties	14,074	16,948	17,219
Inventories	1,269	533	441
Interest-bearing current receivables	85	144	456
Other current receivables	10,951	12,603	13,030
Liquid funds	968	373	1,376
Total current assets	27,347	30,601	32,522
Total assets	42,164	43,688	44,190
Equity and liabilities
Equity	12,443	11,559	10,077
Liabilities
Interest-bearing long-term liabilities	4,289	3,803	3,970
Interest-bearing long-term liabilities, project financing	75	326	213
Deferred tax liabilities	183	148	123
Other long-term liabilities	1,569	938	868
Total long-term liabilities	6,116	5,215	5,174
Interest-bearing current liabilities	2,647	3,011	1,310
Interest-bearing current liabilities, project financing	4,981	7,637	10,963
Other current liabilities	15,977	16,266	16,666
Total current liabilities	23,605	26,914	28,939
Total liabilities	29,721	32,129	34,113
Total equity and liabilities	42,164	43,688	44,190
Key ratios, IFRS
Capital employed	24,435	26,336	26,533
Equity/assets ratio, %	29.5	26.5	22.8
Net debt	9,682	13,174	13,179
Equity per share, SEK	42.18	39.18	34.16
Number of outstanding shares at the end of the period, million	295.0	295.0	295.0

Report on changes in Group equity in summary, IFRS

Report on changes in Group equity in summary, IFRS
	Dec 31	Dec 31
MSEK	2020	2019
Equity attributable to shareholders in parent company
Opening equity on January 1	11,557	11,347
Adjustment consolidation tenant-owner housing associations (see note 1)	–	-1,271
Adjusted equity on January 1	11,557	10,076
Profit for the period	3,182	2,656
Other comprehensive income for the period	-210	64
Total comprehensive income for the period	2,972	2,720
Cash dividend	–	-1,239
Dividends of Annehem Fastigheter	-2,065	–
Dividend expenses	-22	–
Closing equity	12,442	11,557
Non-controlling interests
Opening equity on January 1	2	1
Comprehensive income for the period	-1	0
Shareholder contribution	–	1
Closing equity	1	2
Total closing equity	12,443	11,559

Report on Group cash flow in summary, IFRS

Report on Group cash flow in summary, IFRS
	Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
MSEK	2020	2019	2020	2019
Cash flow from current operations before changes in working capital	1,406	1,279	4,587	3,869
Increase (-) / Decrease (+) of project and development properties	722	-391	2,243	337
Increase (-) / Decrease (+) of inventories	6	-41	-108	-89
Increase (-) / Decrease (+) of current receivables / current liabilities	-13	214	971	-104
Cash flow from changes in working capital	715	-218	3,106	144
Cash flow from current operations	2,121	1,061	7,693	4,013
Acquisition of subsidiaries / businesses, net e�ect on liquid funds	–	–	-2,384	-22
Redemption of loan to seller upon acquisition of business	–	–	-746	–
Sale of subsidiaries / businesses, net e�ect on liquid funds	–	75	20	163
Acquisition of fixed assets	-325	-574	-1,299	-1,925
Sale of fixed assets	162	253	469	997
Cash flow from investment operations	-163	-246	-3,940	-787
Cash flow before financing	1,958	815	3,753	3,226
Shareholder contribution holding with non-controlling interest	–	1	–	1
Increase (+) / Decrease (-) of interest-bearing liabilities	-1,690	-890	-249	243
Increase (+) / Decrease (-) of interest-bearing liabilities, project financing	-615	185	-2,775	-3,244
Dividend Annehem Fastigheter 1)	-55	–	-55	–
Dividend expenses	-28	–	-28	–
Dividend distributed to shareholders in parent company	–	–	–	-1,239
Cash flow from financing operations	-2,388	-704	-3,107	-4,239

Cash flow for the period	-430	111	646	-1,013
Cash at the beginning of the period	1,408	261	373	1,376
Exchange rate di�erences in cash	-10	1	-51	10
Cash at the end of the period	968	373	968	373

1) Refers to liquid funds in distributed operations

Parent company

The pa rent com pa ny Peab AB’s net sales for the year 2020 amounted to SEK 346 mil li on (348) and main ly con si sted of in ter nal Group ser vices. Pro fit for the year amounted to SEK 1,304 mil li on (1,263). Pro fit for the year in clu ded di vi dends of SEK 500 mil li on (200) from sub si di a ri es.

The pa rent com pa ny’s as sets main ly con si st of par ti ci pa tions in Group com pa ni es amounting to SEK 12,109 mil li on (12,050). The as sets have been fi nan ced from equi ty of SEK 8,338 mil li on (9,057) and long- term li a bi li ti es to Group com pa ni es amounting to SEK 2,697 mil li on (2,791). Dis tri bu tion of Ann hem Fas tig he ter a� ec ted equi ty by SEK -2,023 mil li on, of which SEK -22 mil li on is trans ac tion costs net a�er tax.

The pa rent com pa ny is in direct ly a� ec ted by the risks descri bed in the sec tion Risks and Un cer tain ty Factors.

Report on the parent company income statement in summary

		Oct-Dec	Oct-Dec	Jan-Dec	Jan-Dec
MSEK		2020	2019	2020	2019
Net sales		89	114	346	348
Administrative expenses		-155	-156	-545	-513
Other operating income		0	–	0	5
Operating profit		-66	-42	-199	-160
Result from financial investments
Profit from participation in Group companies		-1	0	499	130
Other financial items		-15	-16	-57	-68
Result a�er financial items		-82	-58	243	-98
Appropriations		1,266	1,656	1,266	1,656
Pre-tax profit		1,184	1,598	1,509	1,558
Tax		-242	-332	-205	-295
Profit for the period	1)	942	1,266	1,304	1,263

1) Profit/loss for the period corresponds to comprehensive profit/loss for the period and therefore only one income statement is presented without a separate one for comprehensive profit/loss.

Report on financial position for the parent company in summary

	Dec 31	Dec 31
MSEK	2020	2019
Assets
Fixed assets
Intangible assets	43	51
Tangible assets	1	1
Financial assets
Participation in Group companies	12,109	12,050
Deferred tax recoverables	125	119
Total financial assets	12,234	12,169
Total fixed assets	12,278	12,221
Current assets
Current receivables
Accounts receivable	0	1
Receivables from Group companies	1,655	2,479
Current tax assets	86	60
Other receivables	30	44
Prepaid expenses and accrued income	10	10
Total current receivables	1,781	2,594
Cash and bank	0	0
Total current assets	1,781	2,594
Total assets	14,059	14,815
Equity and liabilities
Equity
Restricted equity	1,898	1,901
Non-restricted equity	6,440	7,156
Total equity	8,338	9,057
Untaxed reserves	2,724	2,403
Provisions
Other provisions	43	41
Total provisions	43	41
Long-term liabilities
Liabilities to Group companies	2,697	2,791
Total long-term liabilities	2,697	2,791
Current liabilities
Accounts payable	36	32
Liabilities to Group companies	129	404
Other liabilities	8	12
Accrued expenses and deferred income	84	75
Total current liabilities	257	523
Total liabilities	2,954	3,314
Total equity and liabilities	14,059	14,815

Note 1 – Accounting principles

The quar ter ly re port has been pre pa red ac cor ding to the IFRS stan dards that have been ad op ted by EU as well as the in ter pre ta tions of the valid stan dards ad op ted by EU, IFRICs. This re port for the Group has been pre pa red ac cor ding to IAS 34, In te rim fi nan ci al re por ting as well as ap pli cab le re gu la tions in the An nu al Ac counts Act. The pa rent com pa ny quar ter ly re port has been pre pa red ac cor ding to chap ter 9 in the An nu al Ac counts Act, Quar ter ly re ports and RFR 2, Ac counting rules for legal en ti ti es. The quar ter ly re port has been pre pa red for the Group and pa rent com pa ny ac cor ding to the same ac counting prin ciples and con di tions ap pli ed in the la test An nu al Re - port, ex cept for the amen ded ac counting prin ciples descri bed below.

In ad di tion to the fi nan ci al re ports and their ac com pa ny ing notes furt her in for ma tion ac cor ding to IAS 34.16A can be found in other sec tions of the quar ter ly re port.

CHANGED ACCOUNTING PRINCIPLES FOR SWEDISH TENANT-OWNED HOUSING ASSOCIATIONS

As of fiscal year 2020 Peab con so li da tes pro jects with Swe dish tenant- owned housing as so ci a tions at the time the final ho me buy ers take pos ses sion of their apart - ments. This means that Peab re cog ni zes the pro jects on the ba lan ce sheet as work- in- progress under the asset item pro ject de ve lop ment pro per ti es, and as interest- be - a ring li a bi li ti es. Re venue and costs for the pro jects will be re cog ni zed as ho me buy ers take pos ses sion of their apart ments. Costs for loans are in clu ded in the ac qui si tion value of the pro per ti es. In con jun ctu re with this change Peab now re cog ni zes all our own de ve lo ped housing pro jects in Swe den, Nor way and Fin land ac cor ding to the com ple tion met hod. Ac cor ding to pre vious prin ciples Peab did not con so li da te pro jects with Swe dish tenant- owned housing as so ci a tions from the time land trans fer and turn key contracts were sig ned, and re venue and ex pen ses were re cog ni zed over time as the pro jects were suc ces si vely com ple ted.

All com pa ra ti ve fi gu res for 2019 are trans la ted if not ot her wi se spe ci fi ed.

Jan-Dec 2019	Reported	Changed accounting
MSEK	income statement	principles	Group IFRS
Net sales	54,008	2,295	56,303
Production costs	-48,734	-1,578	-50,312
Gross profit	5,274	717	5,991
Sales and administrative expenses	-2,879		-2,879
Other operating income	280		280
Other operating costs	-107		-107
Operating profit	2,568	717	3,285
Financial income	130		130
Financial expenses	-188		-188
Net finance	-58	–	-58
Pre-tax profit	2,510	717	3,227
Tax	-418	-153	-571
Profit for the period	2,092	564	2,656
Profit for the period, attributable to:
Shareholders in parent company	2,092	564	2,656
Non-controlling interests	0	–	0
Profit for the period	2,092	564	2,656

Dec 31‚ 2019	Reported	Changed accounting
MSEK	balance sheet	principles	Group IFRS
Assets
Intangible assets	2,334		2,334
Tangible assets	6,811		6,811
Investment property	558		558
Interest-bearing long-term receivables	1,086		1,086
Other financial fixed assets	2,092	5	2,097
Deferred tax recoverables	8	193	201
Total fixed assets	12,889	198	13,087
Project and development properties	11,407	5,541	16,948
Inventories	533		533
Interest-bearing current receivables	144		144
Other current receivables	13,383	-780	12,603
Liquid funds	373		373
Total current assets	25,840	4,761	30,601
Total assets	38,729	4,959	43,688
Equity and liabilities
Equity	12,266	-707	11,559
Liabilities
Interest-bearing long-term liabilities	5,617	-1,814	3,803
Interest-bearing long-term liabilities, project financing	–	326	326
Deferred tax liabilities	148	–	148
Other long-term liabilities	1,014	-76	938
Total long-term liabilities	6,779	-1,564	5,215
Interest-bearing current liabilities	3,493	-482	3,011
Interest-bearing current liabilities, project financing	–	7,637	7,637
Other current liabilities	16,191	75	16,266
Total current liabilities	19,684	7,230	26,914
Total liabilities	26,463	5,666	32,129
Total equity and liabilities	38,729	4,959	43,688

ANNEHEM FASTIGHETER

In Feb ru a ry 2020 Peab’s Board pro po sed to the AGM, in ad di tion to the or di na ry di vi dend, an extra dis tri bu tion of all the sha res in a newly foun ded com pa ny, An ne hem Fas tig he ter, con tai ning Peab’s whol ly owned, fully de ve lo ped com mer ci al pro per ti es. As a re sult of the spre ad of the co ro na vi rus, its e� ects on ex ter nal cir cumstan ces and on fi nan ci al mar kets, Peab’s Board de ci ded to withdraw the pro po sal to the AGM. Based on mar ket as sess ments and the de ve lop ment pre sen ted in the se cond quar ter re port Peab’s Board de ci ded in Au gust 2020 to pro po se a new date for the dis tri bu tion of An ne hem Fas tig he ter. The Board sum mo ned an Extra Ge ne ral Me e ting on No vem ber 12, 2020 where Peab’s sha re hol ders ad op ted the pro po sal from the Board on the dis tri bu tion of An ne hem Fas tig he ter and the sha res were dis tri bu ted in De cem ber 2020. De cem ber 11, 2020 was the first day of tra ding in An ne hem Fas tig he ter’s B sha res on Nas daq Stock holm. For more in for ma tion see An ne hem Fas tig he - ter and Im por tant events du ring the re port pe ri od.

As of the Board’s de ci sion in Feb ru a ry 2020 An ne hem Fas tig he ter’s as sets and li a bi li ti es were clas si fi ed as as sets held for value trans fer to ow ners. These as sets and li a - bi li ti es were re cog ni zed as a se pa ra te item as cur rent as sets re specti vely cur rent li a bi li ti es on the ba lan ce sheet. The com pa ra ti ve year’s cor re spon ding as sets and li a bi - li ti es have not been reclas si fi ed.

An ne hem Fas tig he ter has not been re cog ni zed as a se pa ra te item as di scon ti nu ed ope ra tions in the Group in come sta te ment since it pre viously only made up a small part of ope ra tions in bu si ness area Pro ject De ve lop ment.

At the dis tri bu tion of An ne hem Fas tig he ter the di� e rence between fair va lues and book va lues were re cog ni zed in the Group in Pro per ty De ve lop ment. In ad di tion, pre - viously eli mi na ted con struc tion contract pro fit was re ver sed under Eli mi na tions. In the con so li da ted in come sta te ment these items have been re cog ni zed on a se pa ra te line in the in come sta te ment cal led Dis tri bu tion of An ne hem Fas tig he ter. For more in for ma tion on An ne hem Fas tig he ter see note 6.

An ne hem Fas tig he ter was re por ted as a se pa ra te unit out si de of seg ment re por ting from Ja nu a ry 1, 2020 until the dis tri bu tion in De cem ber 2020.

DIFFERENCES IN SEGMENT REPORTING AND REPORTING ACCORDING TO IFRS

The Group is re por ted in the four bu si ness areas Con struc tion, Civil Engi ne e ring, In du stry and Pro ject De ve lop ment. The bu si ness areas are also ope ra ting seg ments. Seg ment re por ting is the model Peab be li e ves best descri bes Peab’s bu si ness re gar ding both in ter nal ste e ring and risk pro fi le, and it is also how the Board and execu ti - ve ma na ge ment follow ope ra tions.

For Peab’s con struc tion contract bu si nes ses, Con struc tion and Civil Engi ne e ring, re venue and pro fit are re cog ni zed over time in both seg ment re por ting and re por ting ac cor ding to IFRS. For bu si ness area In du stry re venue and pro fit are re cog ni zed both over time and at a cer tain point in time, and re por ting is the same in both seg ment re por ting and re por ting ac cor ding to IFRS. For bu si ness area Pro ject De ve lop ment in seg ment re por ting wit hin the unit Housing De ve lop ment re venue and ex pen ses are re cog ni zed over time as the pro jects are suc ces si vely com ple ted. This ap pli es to Swe dish tenant- owned housing as so ci a tions and own sing le homes, Nor wegi an con do -

mi ni ums and share housing and Fin nish re si den ti al li mi ted com pa ni es. In re por ting ac cor ding to IFRS, housing pro jects are re cog ni zed when the final ho me buy ers take pos ses sion of their apart ments. In bu si ness area Pro ject De ve lop ment and the unit Pro per ty De ve lop ment re venue and pro fit are re cog ni zed at a cer tain point in time in both seg ment re por ting and re por ting ac cor ding to IFRS.

Group fun c tions are re por ted in ad di tion to the bu si ness areas and con si st of cen tral com pa ni es, cer tain sub si di a ri es and other hol dings. Cen tral com pa ni es con si st pri - ma rily of the pa rent com pa ny Peab AB, Peab Fi nans AB and Peab Sup port (Sha red Ser vice Cen ter). There is no di� e rence in seg ment re por ting and re por ting ac cor ding to IFRS re gar ding Group fun c tions.

Reporting on internal projects between business areas Construction and Project Development

Bu si ness area Con struc tion re cog ni zes re venue and pro fit re fer ring to the con struc tion contract part of our own housing de ve lop ments, ren tal pro ject de ve lop ments and other pro per ty de ve lop ment pro jects for bu si ness area Pro ject De ve lop ment. Re cog ni tion takes place over time as the pro jects are com ple ted. Bu si ness area Pro - ject De ve lop ment re cog ni zes re venue for both contract con struc tion and the de ve lo per part of our own housing pro jects but the re cog ni zed pro fit con si sts of the pro fit in the de ve lo per part. Both re venue and pro fit are re cog ni zed in seg ment re por ting in bu si ness area Pro ject De ve lop ment ope ra tions over time while in re por ting ac cor - ding to IFRS they are re cog ni zed at a cer tain point in time, in other words when the ho me buy ers take pos ses sion of their homes.

Reporting on property projects on our own balance sheet

The un der ly ing sales value of pro per ty pro jects on our own ba lan ce sheet, re cog ni zed as pro ject and de ve lop ment pro per ty, that are sold in the form of a com pa ny via sha res, is re cog ni zed as re venue and the book value on the ba lan ce sheet is re cog ni zed as an ex pen se. When pro per ty pro jects re cog ni zed as ope ra tions pro per ty or in - vest ment pro per ty are di ve sted the net e� ect on pro fit is re cog ni zed as other ope ra ting in come or other ope ra ting cost. Re cog ni tion of pro per ty pro jects is the same in both seg ment re por ting and re por ting ac cor ding to IFRS.

IFRS 16, additional leases

In seg ment re por ting for all bu si ness areas le a sing fees are re cog ni zed in ope ra ting pro fit as a cost li near ly over the le a sing pe ri od for IFRS 16, ad di tio nal le a ses (pre - viously ope ra tio nal le a sing). Ap pli ca tion of IFRS 16 for ad di tio nal le a ses in re por ting ac cor ding to IFRS is only given as a total for the Group.

Financial key ratios in segment reporting

Fi nan ci al key ra tios such as ca pi tal employed, the equi ty/as sets ratio, net debt, debt/equi ty ratio and ear nings per share are pre sen ted in seg ment re por ting with con si - de ra tion taken to the above pre requi si tes. Net debt in seg ment re por ting in clu des the un sold por tion of ongo ing own de ve lo ped housing pro jects.

Note 2 – Business combinations

ACQUISITION OF NORDIC PAVING AND MINERAL AGGREGATES OPERATIONS

On July 4, 2019 Peab sig ned a contract to ac qui re YIT’s pa ving and mi ne ral ag gre ga tes ope ra tions in the Nor dic re gi on. The trans ac tion was con di tio nal on ap pro val from com pe ti tion aut ho ri ti es as well as the ful fill ment of cer tain contractu al con di tions. At the end of March 2020 the trans ac tion was ap pro ved by the com pe ti tion aut - ho ri ti es. The take over took place on April 1, 2020. Through the ac qui si tion Peab ex pands its pre sence in Swe den, Nor way and Fin land and be come established in the pa ving bu si ness in Den mark and this gives Peab a uni que and mar ket le a ding po si tion in this bu si ness in the Nor dic re gi on. The ac qui si tion also en tails taking over some 2,000 employe es, some 200 stra te gi cal ly loca ted quar ri es along with 63 pro duc tion asphalt plants in the Nor dic re gi on. The ope ra tions are pri ma rily in teg ra ted into the com pa ni es Peab As falt and Swerock. For the pa ving bu si ness this en tails establishing ope ra tions in Fin land and Den mark. It also pro vi des con di tions for furt her ex pan sion and de ve lop ment in other ope ra tions such as Re cycling and Concre te.

The trans ac tion is a com bi na tion of an asset deal and a share pur cha se. The total trans fer red re mu ne ra tion from Peab was SEK 3,184 mil li on, di vi ded into SEK 2,438 mil - li on in trans fer red re mu ne ra tion for sha res and as sets as well as SEK 746 mil li on in re demp tion of sha re hol der loans to the sel ler.

Du ring the nine mont hs the ac qui si tion has been part of the Group it has con tri bu ted by SEK 5,891 mil li on to Group in come and SEK 222 mil li on to pro fit for the pe ri od (in clu ding fi nan ci ng costs and de pre ci a tion of sur plus va lues but not in clu ding ac qui si tion costs and trans fer tax in Fin land). If the ac qui si tion had taken place on Ja nu a - ry 1, 2020 it would have con tri bu ted by SEK 6,197 mil li on to Group in come and SEK -26 mil li on to pro fit for the pe ri od (in clu ding fi nan ci ng costs and de pre ci a tion of sur - plus va lues but not in clu ding ac qui si tion costs and trans fer tax in Fin land). Ac qui si tion costs and trans fer tax in Fin land were SEK 95 mil li on, of which SEK 40 mil li on were re por ted in 2019. The costs are re cog ni zed as sales and ad mi nist ra tion costs and in the cash flow ana ly sis in cur rent ope ra tions.

The ac qui si tion ana ly sis was ap pro ved du ring the fourth quar ter 2020. The di� e rence between the pre li mi na ry ac qui si tion ana ly sis and the ap pro ved ana ly sis is that in - tan gib le as sets have been re du ced by SEK 68 mil li on and tan gib le as sets have incre a sed cor re spon dingly. Other di� e rences are not con se quen ti al.

E�ects of the acquisition in 2020

The ac qui red com pa ni es' net as sets at the time of ac qui si tion:

Group‚ MSEK
Intangible assets			211
Tangible assets			1,631
Other financial assets			71
Deferred tax recoverables			158
Inventories			695
Accounts receivable and other receivables			359
Liquid funds			59
Interest-bearing liabilities (leases)			-361
Shareholder loan to selling company (acquired receivables)		1)	-746
Deferred tax liabilities			-57
Provisions			-371
Accounts payable and other	current liabilities		-608
Net identifiable assets and liabilities			1,041
Group goodwill			1,397
Consideration transferred	2)		2,438
Acquired receivables are recognized at the seller’s nominal value and is settled in Peab against acquired liabilities for the corresponding amount 1)
Cash 2)			2,438
Additional shareholder loans to the	selling company		746

Goodwill

The good will re cog ni zed for the ac qui si tion re pre sents a strong mar ket po si tion, establish ment on new mar kets, sy ner gi es with ex is ting ope ra tions, furt her ex pan sion and de ve lop ment of other ope ra tions such as Re cycling and Concre te as well as a well fun c tio ning or ga ni za tion. SEK 80 mil li on of ac qui red good will is tax de duc tib le.

Intangible assets

In tan gib le as sets were SEK 211 mil li on and con si st pri ma rily of SEK 140 mil li on in ac qui red custo mer contracts with an use ful life of 1-2 years as well as SEK 68 mil li on in ac qui red rights of use for gra vel and rock quar ri es with an ex pec ted use ful life of 10 years.

Acquired receivables

The fair value of ac counts re cei vab le amounts to SEK 172 mil li on. The gross amount of the re cei va bles amounts to SEK 178 mil li on, of which SEK -6 mil li on is not ex pec - ted to be sett led.

Provisions

Pro vi sions amounted to SEK 371 mil li on and refer main ly to resto ring gra vel and rock quar ri es, gua ran tee costs and re me di a tion.

OTHER ACQUISITIONS

Du ring the pe ri od other minor ac qui si tions have been made by the Peab Group but since these are not ma te ri al no in for ma tion about them is pro vi ded.

GOODWILL

Group‚ MSEK
Opening acquisition value	1,875
Purchases through acquired companies	1,397
Sales through acquired companies	-20
Disposals	-15
Exchange rate di�erences	-145
Closing accumulated acquisition value	3,092
Opening write-downs	-39
Sales through acquired companies	20
Disposals	15
Write-downs for the year	-20
Closing accumulated write-downs	-24
Closing recognized value	3,068

Note 3 – Revenue allocation

								Di�erences in
								accounting
Group Jan-Dec 2020		Civil		Project	Group		Group	principles
MSEK	Construction	Engineering	Industry	Development	functions	Eliminations	Segment	and other 1)	Group IFRS
Allocation per
external/internal
External sales	22,898	11,742	15,151	7,436	51		57,278	2,574	59,852
Internal sales	4,091	1,101	3,569	64	1,155	-9,841	139	-139	–
Total	26,989	12,843	18,720	7,500	1,206	-9,841	57,417	2,435	59,852
Allocation per country
Sweden	19,417	11,637	11,484	4,543	997	-7,666	40,412	2,408	42,820
Norway	3,766	1,101	1,868	1,031	131	-893	7,004	-288	6,716
Finland	3,806	105	4,630	1,926	78	-1,277	9,268	315	9,583
Denmark			720			-5	715		715
Other			18				18		18
Total	26,989	12,843	18,720	7,500	1,206	-9,841	57,417	2,435	59,852
Allocation per type of
customer
Public sector	10,619	8,991	5,214	26	43		24,893	12	24,905
Private customers	12,279	2,751	9,937	7,410	8		32,385	2,562	34,947
Internal customers	4,091	1,101	3,569	64	1,155	-9,841	139	-139	–
Total	26,989	12,843	18,720	7,500	1,206	-9,841	57,417	2,435	59,852
Allocation per point in
time
At one point in time	32	20	5,983	625	56	-1,315	5,401	6,885	12,286
Over time	26,934	12,814	10,913	6,767	966	-7,135	51,259	-4,539	46,720
Rent revenue 2)	23	9	1,824	108	184	-1,391	757	89	846
Total	26,989	12,843	18,720	7,500	1,206	-9,841	57,417	2,435	59,852
Allocation per type of
revenue
Construction contracts	26,934	12,814	10,913	6,766	41	-6,218	51,250	-4,532	46,718
Sales of goods			4,203			-640	3,563		3,563
Sales of property projects				494		-1	493	6,871	7,364
Transportation services			1,573			-537	1,036		1,036
Administrative services				1	925	-917	9	-7	2
Rent revenue 2)	23	9	1,824	108	184	-1,391	757	89	846
Other	32	20	207	131	56	-137	309	14	323
Total	26,989	12,843	18,720	7,500	1,206	-9,841	57,417	2,435	59,852

1) Refers to di�erences in accounting principles regarding our own developed housing projects. In segment reporting revenue is recognized over time while in reporting according to IFRS it is at the time of possession. The item also includes revenue of SEK 171 million during January-November 2020 attributable to Annehem Fastigheter including internal revenue from other Peab Group companies. Rent revenue is recognized according to2) IFRS 16.

								Di�erences in
Group Jan-Dec 2019		Civil		Project	Group		Group	accounting
MSEK	Construction	Engineering	Industry	Development	functions	Eliminations	Segment	principles 1)	Group IFRS
Allocation per
external/internal
External sales	24,265	12,141	9,784	9,067	92		55,349	954	56,303
Internal sales	5,151	1,198	3,555	58	1,084	-11,046	–		–
Total	29,416	13,339	13,339	9,125	1,176	-11,046	55,349	954	56,303
Allocation per country
Sweden	22,349	12,063	11,712	5,980	993	-9,008	44,089	2,326	46,415
Norway	3,604	1,144	1,003	900	116	-784	5,983	-471	5,512
Finland	3,463	132	608	2,245	67	-1,254	5,261	-901	4,360
Other			16				16		16
Total	29,416	13,339	13,339	9,125	1,176	-11,046	55,349	954	56,303
Allocation per type of
customer
Public sector	8,457	6,782	3,085	98			18,422		18,422
Private customers	15,808	5,359	6,699	8,969	92		36,927	954	37,881
Internal customers	5,151	1,198	3,555	58	1,084	-11,046	–		–
Total	29,416	13,339	13,339	9,125	1,176	-11,046	55,349	954	56,303
Allocation per point in
time
At one point in time	62	37	5,746	725	66	-1,517	5,119	6,125	11,244
Over time	29,350	13,259	5,651	8,206	965	-8,082	49,349	-5,171	44,178
Rent revenue 2)	4	43	1,942	194	145	-1,447	881		881
Total	29,416	13,339	13,339	9,125	1,176	-11,046	55,349	954	56,303
Allocation per type of
revenue
Construction contracts	29,350	13,259	5,651	8,198	39	-7,202	49,295	-5,171	44,124
Sales of goods	3		3,665			-749	2,919		2,919
Sales of property projects				558			558	6,125	6,683
Transportation services			1,893			-659	1,234		1,234
Administrative services				8	926	-880	54		54
Rent revenue 2)	4	43	1,942	194	145	-1,447	881		881
Other	59	37	188	167	66	-109	408		408
Total	29,416	13,339	13,339	9,125	1,176	-11,046	55,349	954	56,303

Note 4 – Operating segment and reconcilation between segment reporting and reporting according to IFRS

								Di�erences in
								accounting
Group Jan-Dec 2020		Civil		Project	Group		Group	principles	Group
MSEK	Construction	Engineering	Industry	Development	functions	Eliminations	Segment	and other 1)	IFRS
External sales	22,898	11,742	15,151	7,436	51		57,278	2,574	59,852
Internal sales	4,091	1,101	3,569	64	1,155	-9,841	139	-139	–
Total revenue	26,989	12,843	18,720	7,500	1,206	-9,841	57,417	2,435	59,852
Operating profit	663	391	1,105	1,669	-310	23	3,541	381	3,922
Operating margin, %	2.5	3.0	5.9	22.3			6.2		6.6
Financial income							96	0	96
Financial expenses							-204	-69 2)	-273
Net finance							-108	-69	-177
Pre-tax profit							3,433	312	3,745
Tax							-485	-79	-564
Profit for the year							2,948	233	3,181
Capital employed (closing balance)	-767	-408	8,822	12,189		-402	19,434	5,001	24,435
Total assets							36,604	5,560 3)	42,164
Equity/assets ratio, %							36.2		29.5
Cashflow before financing							2,779	974	3,753

1) For more information about the allocation of revenue and profit items see note 3 and the section Overview business areas. Divided during January-November 2020 between Annehem Fastigheter SEK -35 million and IFRS2) 16, additional leases SEK -34 million. Divided between IFRS 16, additional leases SEK 1,805 million and housing projects SEK 3,755 million.3)

								Di�erences in
Group Jan-Dec 2019		Civil		Project	Group		Group	accounting	Group
MSEK	Construction	Engineering	Industry	Development	functions	Eliminations	Segment	principles 1)	IFRS
External sales	24,265	12,141	9,784	9,067	92		55,349	954	56,303
Internal sales	5,151	1,198	3,555	58	1,084	-11,046	–		–
Total revenue	29,416	13,339	13,339	9,125	1,176	-11,046	55,349	954	56,303
Operating profit	711	367	937	1,015	-278	-142	2,610	675	3,285
Operating margin, %	2.4	2.8	7.0	11.1			4.7		5.8
Financial income							130	–	130
Financial expenses							-161	-27 2)	-188
Net finance							-31	-27 2)	-58
Pre-tax profit							2,579	648	3,227
Tax							-441	-130	-571
Profit for the year							2,138	518	2,656
Capital employed (closing balance)	-1,013	267	6,799	16,679		-1,115	21,617	4,719	26,336
Total assets							38,362	5,326 3)	43,688
Equity/assets ratio, %							32.5		26.5
Cashflow before financing							1,025	2,201	3,226

1) For more information about the allocation of revenue and profit items see note 3 and the section Overview business areas. Refers to IFRS 16, additional leases SEK -27 million. Divided between IFRS 16, additional leases2) 3) SEK 761 million and housing projects SEK 4,565 million.

Note 5 – Financial assets and liabilities valued at fair value

The table below shows the al loca ted level for fi nan ci al as sets and fi nan ci al li a bi li ti es re cog ni zed at fair value in the Group’s ba lan ce sheet. Me a su re ment of fair value is based on a three level hi e rar chy;

Level 1: pri ces that re flect quo ted pri ces on an ac ti ve mar ket for iden ti cal as sets.

Level 2: based on direct or in direct in puts ob ser vab le to the mar ket not in clu ded in level 1. Level 3: based on in puts unob ser vab le to the mar ket.

For a descrip tion of how fair value has been cal cu la ted see the An nu al Re port 2019, note 34. The fair value of fi nan ci al as sets and li a bi li ti es re cog ni zed as their amor ti zed cost is esti ma ted to be, in prin cip le, the same as their re cog ni zed va lues.

Group		Dec 31 2020			Dec 31 2019
MSEK	Level 2	Level 3	Total	Level 2	Level 3	Total
Financial assets
Other securities held as fixed assets		60	60		82	82
Of which investments in unlisted funds		37	37		58	58
Of which shareholding in unlisted company		23	23		24	24
Other current receivables	5		5			–
Of which commodity hedging with futures	5		5			–
Total financial assets	5	60	65	–	82	82
Financial liabilities
Other long-term liabilities	8		8	13		13
Of which interest rate swaps	8		8	13		13
Other current liabilities	4		4	3	1	4
Of which currency swaps	2		2	2		2
Of which commodity hedging with futures	2		2	1		1
Of which contingent consideration			–		1	1
Total financial liabilities	12	–	12	16	1	17

The ta bles below are a re con ci li a tion between the ope ning and clo sing ba lan ce for as sets and li a bi li ti es in clu ded in level 3.

Group			Other securities	Other securities	held as fixed asset
		Unlisted funds			Unlisted	shares
MSEK		Dec 31 2020	Dec 31 2019		Dec 31 2020	Dec 31	2019
Opening balance		58		89	24		25
Investments		4		9
Sales					-1		-1
Dividends received		-21		-55
Reported in profit/loss for the period
Net finance		-4		15
Reported in other comprehensive income					0		0
Closing balance		37		58	23		24
Group					Contingent consideration
MSEK					Dec 31 2020	Dec 31	2019
Opening balance					1		34
Payments during the period					-1		-31
Reported in profit/loss for the period
Other operating costs (+) / other operating income (-)							-3
Interest expense (discount)	1)						1
Reported in other comprehensive income							0
Closing balance					–		1

1) Recognized in net financial items

Note 6 – Distribution of Annehem Fastigheter AB

Peab dis tri bu ted the sha res in An ne hem Fas tig he ter AB to Peab’s sha re hol ders in De cem ber 2020. The first day of tra ding was De cem ber 11, 2020 and the first tra ding price was SEK 35 per B share, which makes a mar ket value of around SEK 2,065 mil li on. Pro fit from the dis tri bu tion of An ne hem Fas tig he ter was SEK 952 mil li on. Pro fit is char ged with pro vi sions of SEK -59 mil li on for rent gua ran ti es and other gua ran ti es.

INCOME STATEMENT

	Jan 1 – Nov 30
MSEK	2020
Net sales	171
Productions costs	-110
Sales and administrative expenses	-26
Other operating costs	-5
Operating profit	30
Net finance	-35
Pre-tax profit	-5
Tax	-1
Profit for the period	-6

BALANCE SHEET

	Nov 30
MSEK	2020
Assets
Intangible assets	1
Tangible assets	1,164
Investment property	418
Deferred tax recoverables	52
Total fixed assets	1,635
Project and development properties	612
Other current receivables	32
Liquid funds	55
Total current assets	699
Total assets	2,334
Equity and liabilities
Equity	1,054
Liabilities
Deferred tax liabilities	4
Interest-bearing long-term liabilities	710
Total long-term liabilities	714
Interest-bearing current liabilities	463
Other current liabilities	103
Total current liabilities	566
Total liabilities	1,280
Total equity and liabilities	2,334

Future financial information

Capital Market Day
Annual and Sustainability Report 2020
Quarterly Report January-March 2021 and Annual General Meeting
Quarterly Report January-June 2021
Quarterly Report January-September 2021
Year-end report January-December 2021

February 10, 2021 April 2021 May 6, 2021 July 16, 2021 October 27, 2021 February 4, 2022

Förs löv, Feb ru a ry 4, 2021

Jesper Gö rans son CEO and Pre si dent

The in for ma tion in this in te rim re port has not been re vi ewed se pa ra tely by the com pa ny’s au di tors.

PRESENTATION OF THE QUARTERLY REPORT

This quar ter ly re port will be pre sen ted di gi tal ly and on a phone con fe rence Thurs day, Feb ru a ry 4, 2021 at 9.00 a.m. by the Pre si dent and CEO Jesper Gö rans son and CFO Niclas Winkvist. The pre sen ta tion will be held in Swe dish and is avai lab le via https://www.peab.com/financial- info/.

Call one of the following te lep ho ne num bers to par ti ci pa te:

From Sweden: +46 856642692
From Great Britain: +44 3333009030

This in for ma tion is in for ma tion that Peab AB is ob li ged to make pub lic pur su ant to the EU Mar ket Abuse Re gu la - tion. The in for ma tion was sub mitted for pub li ca tion, through the agen cy of the con tact per son set out above, at Feb ru a ry 4, 2021, 8:00 a.m. CET.

Quarterly data

Group, IFRS

Group, IFRS
	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar
MSEK	2020	2020	2020	2020	2019	2019	2019	2019
Net sales	15,989	16,204	15,789	11,870	15,455	12,869	15,140	12,839
Production costs	-14,159	-14,463	-14,127	-10,962	-13,869	-11,717	-13,405	-11,321
Gross profit	1,830	1,741	1,662	908	1,586	1,152	1,735	1,518
Sales and administrative expenses	-914	-717	-962	-766	-751	-604	-773	-751
Distribution of Annehem Fastigheter	952	–	–	–	–	–	–	–
Other operating income	84	72	36	37	93	122	38	27
Other operating costs	-10	-9	-13	-9	-95	-6	-3	-3
Operating profit	1,942	1,087	723	170	833	664	997	791
Financial income	23	18	15	40	31	14	31	54
Financial expenses	-55	-55	-34	-129	-62	-35	-41	-50
Net finance	-32	-37	-19	-89	-31	-21	-10	4
Pre-tax profit	1,910	1,050	704	81	802	643	987	795
Tax	-181	-210	-160	-13	-149	-104	-161	-157
Profit for the period	1,729	840	544	68	653	539	826	638
Profit for the period, attributable to:
Shareholders in parent company	1,730	840	543	69	653	539	826	638
Non-controlling interests	-1	0	1	-1	0	0	0	0
Profit for the period	1,729	840	544	68	653	539	826	638
Key ratios, IFRS
Earnings per share, SEK	5.87	2.85	1.84	0.23	2.21	1.83	2.80	2.16
Average number of outstanding shares, million	295.0	295.0	295.0	295.0	295.0	295.0	295.0	295.0
Capital employed (closing balance)	24,435	27,729	28,829	25,830	26,336	26,371	26,025	24,888
Equity (closing balance)	12,443	12,874	12,043	11,560	11,559	10,966	10,425	10,808

Bu si ness areas

Bu si ness areas
	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar	Oct-Dec	Jul-Sep	Apr-Jun	Jan-Mar
MSEK	2020	2020	2020	2020	2019	2019	2019	2019
Net sales
Construction	7,448	5,798	7,123	6,620	8,371	6,520	7,782	6,743
Civil Engineering	3,600	3,041	3,432	2,770	3,792	3,257	3,374	2,916
Industry	4,929	6,233	5,343	2,215	3,592	3,820	3,697	2,230
Project Development	1,804	1,750	1,977	1,969	2,684	2,015	2,259	2,167
– of which Property Development	71	71	111	122	179	180	254	173
– of which Housing Development	1,733	1,679	1,866	1,847	2,505	1,835	2,005	1,994
Group functions	317	298	308	283	325	289	287	275
Eliminations	-2,674	-2,283	-2,665	-2,219	-2,906	-2,600	-2,872	-2,668
Group, segment reporting	15,424	14,837	15,518	11,638	15,858	13,301	14,527	11,663
Adjustment of housing to IFRS	560	1,384	295	252	-403	-432	613	1,176
IFRS 16. additional leases
Annehem Fastigheter	36 1)	47	48	40
Eliminations	-31	-64	-72	-60
Group, IFRS	15,989	16,204	15,789	11,870	15,455	12,869	15,140	12,839
Operating profit
Construction	197	137	183	146	207	150	199	155
Civil Engineering	131	92	127	41	132	76	123	36
Industry	397	471	303	-66	363	360	258	-44
Project Development	1,195	162	138	174	278	221	336	180
– of which Property Development	961	13	-17	25	28	34	192	46
– of which Housing Development	234	149	155	149	250	187	144	134
Group functions	-132	-14	-81	-83	-130	-10	-90	-48
Eliminations	37	-4	-9	-1	-53	-34	-42	-13
Group, segment reporting	1,825	844	661	211	797	763	784	266
Adjustment of housing to IFRS	95	226	57	-47	30	-105	207	520
IFRS 16. additional leases	12	12	6	4	6	6	6	5
Annehem Fastigheter	13 1)	5	6	6
Eliminations	-3	0	-7	-4
Group, IFRS	1,942	1,087	723	170	833	664	997	791
Operating margin, %
Construction	2.6	2.4	2.6	2.2	2.5	2.3	2.6	2.3
Civil Engineering	3.6	3.0	3.7	1.5	3.5	2.3	3.6	1.2
Industry	8.1	7.6	5.7	-3.0	10.1	9.4	7.0	-2.0
Project Development	66.2	9.3	7.0	8.8	10.4	11.0	14.9	8.3
– of which Property Development	1,353.5	18.3	-15.3	20.5	15.6	18.9	75.6	26.6
– of which Housing Development	13.5	8.9	8.3	8.1	10.0	10.2	7.2	6.7
Group functions
Eliminations
Group, segment reporting	11.8	5.7	4.3	1.8	5.0	5.7	5.4	2.3
Adjustment of housing to IFRS
IFRS 16. additional leases
Annehem Fastigheter	36.1 1)	10.6	12.5	15.0
Eliminations
Group, IFRS	12.1	6.7	4.6	1.4	5.4	5.2	6.6	6.2
Key ratios, segment reporting, MSEK
Earnings per share, SEK	5.62	2.25	1.72	0.41	2.10	2.14	2.24	0.77
Capital employed (closing balance)	19,434	21,086	22,390	19,927	21,617	21,999	21,961	20,106
Equity (closing balance)	13,251	12,637	12,852	12,349	12,479	11,992	11,386	11,920
Orders received	12,189	11,718	13,220	12,608	12,096	9,349	10,817	11,868
Order backlog at the end of the period	42,709	44,722	46,123	44,151	42,494	43,821	45,873	47,532

1) Refers to October-November 2020

Alternative performance measures and definitions

Al ter na ti ve per for man ce me a su res are used to descri be the de ve lop ment of ope ra tions and to en han ce com pa ra bi li ty between pe ri ods. These are not de fi ned under IFRS but cor re spond to the met hods ap pli ed by execu ti ve ma na ge ment and Board of Directors to me a su re the com pa ny’s fi nan ci al per for man ce. Al ter na ti ve per for man - ce me a su res should not be vi ewed as a sub sti tu te for fi nan ci al in for ma tion pre sen ted in ac cor dan ce with IFRS but rat her as a com ple ment.

The di� e rence between seg ment re por ting and re por ting ac cor ding to IFRS is descri bed in gre a ter de tail in note 1. The di� e rence con si sts pri ma rily of di� e rences in ac - counting prin ciples for our own de ve lo ped housing pro jects where re venue and pro fit are re cog ni zed over time in seg ment re por ting and at a cer tain point in time, when ho me buy ers take pos ses sion of their homes, in re por ting ac cor ding to IFRS. For the key ra tios below, ho wever, the met hod of cal cu la tion is the same in both seg - ment re por ting and re por ting ac cor ding to IFRS. For more in for ma tion and cal cu la tions, see note 1 and www.peab.com/alternative- performance-measures.

FINANCIAL DEFINITIONS

Available liquidity

Liquid funds and short- term in vest ments along with unu ti li zed cre dit fa ci li - ti es, not in clu ding unu ti li zed pro ject fi nan ci ng. Shows the Group´s avai lab - le liqui di ty.

Capital employed for the business areas

Total as sets in the bu si ness areas at the end of the pe ri od re du ced by de fer - red tax re co ve ra bles and in ter nal re cei va bles from the in ter nal bank Peab Fi nans with de duc tions for non- interest-bearing li a bi li ti es and de fer red tax li a bi li ti es. The me a su re ment is used to me a su re ca pi tal uti li za tion and its e� ecti ve ness for the bu si ness areas, and is only pre sen ted as a net amount per bu si ness area.

Capital employed for the Group

Total as sets at the end of the pe ri od less non- interest-bearing ope ra ting li a - bi li ti es and pro vi sions. The me a su re ment is used to me a su re ca pi tal uti li za - tion and its e� ecti ve ness.

Earnings per share

Pro fit for the pe ri od at tri bu tab le to sha re hol ders in pa rent com pa ny di vi ded by the ave rage num ber of out stan ding sha res du ring the pe ri od.

Equity/assets ratio

Equi ty as a per cen tage of total as sets at the end of the pe ri od. Shows fi nan - ci al po si tion.

Equity per share

Equi ty at tri bu tab le to sha re hol ders in pa rent com pa ny di vi ded by the num - ber of out stan ding sha res at the end of the pe ri od.

Net debt

Interest- bearing li a bi li ti es in clu ding pro vi sions for pen sions less liquid funds and interest- bearing as sets.

Net debt/equity ratio

Interest- bearing net debt in re la tion to equi ty. Shows fi nan ci al po si tion.

Net investments

The change in the pe ri od of the re cog ni zed value of cur rent as sets (CB-OB) plus de pre ci a tion and write- downs.

Operating margin

Ope ra ting pro fit as a per cen tage of net sales.

Order backlog

The value at the end of the pe ri od of the re mai ning in come in ongo ing pro - duc tion plus or ders re cei ved yet to be pro du ced. Order back log is based on seg ment re por ting.

Orders received

The sum of or ders re cei ved du ring the pe ri od. Me a su res how new or ders re - pla ce pro du ced work. In our own de ve lo ped housing pro jects tenant- owned housing as so ci a tions and re si den ti al li mi ted com pa ni es are con si de red ex - ter nal custo mers.

Return on capital employed

The pre- tax pro fit of the rolling 12 mont hs pe ri od with the ad di tion of fi nan - ci al ex pen ses in per cent of the ave rage (last four quar ters) ca pi tal employed. The me a su re ment is used to me a su re ca pi tal e� i ci en cy and to al loca te ca pi tal for new in vest ments and show the Group’s ear ning ca pa ci ty in de pen dent of fi nan ci ng.

Return on equity

The pro fit of the rolling 12 mont hs pe ri od at tri bu tab le to sha re hol ders in pa rent com pa ny di vi ded by the ave rage (last four quar ters) equi ty at tri bu - tab le to sha re hol ders of sha res in the pa rent com pa ny. The me a su re ment is used to cre a te e� i ci ent bu si ness and a ra tio nal ca pi tal structu re and to show the yield on the sha re hol ders’ equi ty.

OTHER NON-FINANCIAL DEFINITIONS

Serious accidents

Peab uses the Swe dish Work En vi ron ment Aut ho ri ty’s de fi ni tion of a se ri ous ac ci dent as an ac ci dent where one or more per sons are in ju red at a work - pla ce or a place they have vi si ted for work. Se ri ous ac ci dents can be in ju ri es such as bone fractu res, e� u si ve blee ding or nerve, musc le or ten don da - mage, in ju ri es to inner or gans or se cond or third de gree burns. Se ri ous ac ci - dents that occur in our other Nor dic countri es are ca te go ri zed by the same de fi ni tion.

Risk observations

A risk ob ser va tion means no ti cing, at a work pla ce, be ha vi or, risks or shortcomings that can lead to an in ci dent or ac ci dent.

The Nordic

Peab a� ects so ci e ty and the en vi ron ment for the pe op le who now and in the fu tu re will live with what we de - ve lop, build and con struct. Peab is also a big employer with local roots and with this comes big re spon si bi li ty.

Peab is en ga ged in de ve lo ping a more sustai nab le so ci e ty. Our goal is to meet the de mands and ex pecta tions from ot hers and at the same time cre a te new bu si ness op por tu ni ti es.

Peab’s bu si ness con tri bu tes to so ci e ty by de ve lo ping and buil ding new homes and o� i ces, pub lic fun c tions and in frastructu re. This is how we are use ful and make a di� e rence in daily life in big and small pla ces in Swe - den, Nor way, Fin land and Den mark.

Long- term re la tions hips with custo mers and sup pli ers re sult in bet ter so ci al, en vi ron men tal and eco no mic con di tions. Stab le pro fi ta bi li ty ge ne ra tes the funds ne ces sa ry to de ve lop our bu si ness and pro vi de re turns for our sha re hol ders.

Net sales, appr.

SEK 57 billion

Employees, appr.

15,000

BUSINESS MODEL

Four collaborating business areas create added value

Peab is cha rac te ri zed by a de cent ra li zed and cost- e�icient or ga ni za tion with four com ple - men ta ry bu si ness areas whose ope ra tions are based on local ent re pre neurs hip close to custo mers. Our bu si ness model with four col la bo ra ting bu si ness areas cre a tes op por tu ni ti - es throug hout the value chain in our con struc tion pro jects.

Our three stra te gic goals Most sa tis fi ed custo mers, Best work pla ce and Most pro fi tab le com pa ny frame our pri o ri ti zed in vest ments in the bu si ness plan pe ri od 2018- 2020.

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Bu si ness area Con struc tion works with eve ryt hing from new con - struc tion of homes, pub lic and com mer ci al pre mi ses to re no va - tions and ex ten sions as well as of - fe ring con struc tion ser vices.

Bu si ness area Civil Engi ne e ring is ac ti ve on the local civil engi ne e ring mar ket as well as in lar ger Nor dic in frastructu re pro jects like hig h - ways, rail ro ads and bridges. It also ope ra tes and main tains stre ets and roads.

Bu si ness area In du stry de li vers, among other things, mi ne ral ag gre - ga tes, concre te, pa ving, tem po ra ry electri ci ty and pre fab ri ca ted concre te ele ments to ex ter nal custo mers and the other bu si ness areas in Peab. It also pro vi des cra - nes, machi nes and trans por ta tion as well as re cycles con struc tion waste, de mo li tion waste and rubb - le.

Bu si ness area Pro ject De ve lop - ment hand les Group ac qui si tions as well as de ve lop ment, ma na ge - ment and di vest ment of re si den ti al and com mer ci al pro per ty. Housing De ve lop ment is main ly gea red to - wards pri va te con su mers while Pro per ty De ve lop ment is aimed at real esta te in ve stors.

Pho to grap hers: Carl Ljung berg, Kasper Dud zik, Klas An ders son, Mar kus Es sel mark, Ørjan Mara katt Ber tel sen, Per Er iks son and Peter Steen.

Peab takes work en vi ron ment mat ters very se ri ously and works sys te ma ti cal ly to cre a te safe work pla ces. The kind of sa fe ty equip ment used va ri es de pen ding on na tio nal re gu la tions and the type of ope ra - tions. A risk ana ly sis is al ways per for med for each work pla ce be fo re any ex cep tion is made. The pe op le pictu red in this pub li ca tion are wea ring per so nal sa fe ty equip ment requi red by re gu la tions valid for the ope ra tions and country they are in.

AI assistant

Peab — Annual Report 2020

2954_10-k_2021-02-04_e3e1d9e0-7891-4b57-83f5-36692667a9b2.pdf

Year-end report JANUARY – DECEMBER 2020

Strong financial position and new financial targets

Sum ma ry ac cor ding to seg ment re por ting

October – December 2020

January – December 2020

Group

Operating profit

Net sales

Comments from the CEO

GROUP DEVELOPMENT

BUSINESS AREA DEVELOPMENT

ORDER SITUATION

READY FOR THE NEXT PHASE

DIVIDEND PROPOSAL

MARKET AND OUTLOOK FOR THE FUTURE

Net sales and profit

TRANSLATED COMPARATIVE FIGURES AFTER CHANGED

ACCOUNTING PRINCIPLES

NET SALES AND PROFIT

October – December 2020

ANNEHEM FASTIGHETER

ACQUISITION OF NORDIC PAVING AND MINERAL AGGREGATES OPERATIONS

Operating profit and operating margin, per quarter

January – December 2020

SEASONAL VARIATIONS

Operating profit and operating margin, rolling 12 months

Financial position and cash flow

FINANCIAL POSITION

INVESTMENTS AND DIVESTMENTS

Net debt

Net debt and debt/equity ratio

CASH FLOW

October – December 2020

January – December 2020

Cash flow before financing

Financial goals

Order situation

October – December 2020

January – December 2020

Orders received

Order backlog

We received several major projects and contracts in the fourth quarter, including:

Project allocation of order backlog, December 31, 2020

Order backlog allocated over time

Overview business areas

Net sales and operating profit per business area

Business area Construction

NET SALES AND PROFIT

October – December 2020

Net sales

January – December 2020

ORDERS RECEIVED AND ORDER BACKLOG

October – December 2020

January – December 2020

Project allocation of order backlog, December 31, 2020

Key ratios

Business area Civil Engineering

Net sales

per product area, rolling 12 months

NET SALES AND PROFIT

October – December 2020

January- December 2020

ORDERS RECEIVED AND ORDER BACKLOG

October – December 2020

January- December 2020

Project allocation of order backlog, December 31, 2020

Key ratios

Business area Industry

ACQUISITION OF NORDIC PAVING AND MINERAL AGGREGATES OPERATIONS

NET SALES AND PROFIT

October – December 2020

January – December 2020

Net sales

ORDERS RECEIVED AND ORDER BACKLOG

October – December 2020

January- December 2020

Key ratios

Peab Annual Report 2020