Annual and Sustainability Report 2019
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Peab Annual and Sustainability Report 2019 Report Annual and Sustainability Peab Annual and Sustainability Report 2019 LOCALLY ENGAGED COMMUNITY BUILDER The Nordic Community Builder Peab is one of the leading construction and civil engineering companies in the Nordic area with operations in Sweden, Norway and Finland. Peab affects society and the environment for the Peab’s business contributes to society by developing people who now and in the future will live with and building new homes and offices, public functions what we develop, build and construct. Peab is and infrastructure. This is how we are useful and make also a big employer with local roots and with a difference in daily life in big and small places in this comes big responsibility. Sweden, Norway and Finland. Peab is engaged in developing a more sustainable Long- term relationships with customers and suppliers society. Our goal is to meet the demands and result in better social, environmental and economic expectations from others and at the same time conditions. Stable profitability generates the funds create new business opportunities. necessary to develop our business and provide returns for our shareholders. Construction Business model Four collaborating business Most satisfied customer Project areas create added value Development Best workplace Civil Most profitable company Engineering Peab is characterized by a decentralized and cost- efficient organization with four complementary business areas whose operations are based on local entrepreneurship close to customers. Our business model with four collaborating business areas creates opportunities throughout the value chain in our projects. Industry Our three strategic goals Most satisfied customers, Best workplace and Most profitable company frame our prioritized investments in the business plan period 2018- 2020. Net sales Per business area, 2019 Construction 45% (45) Civil Engineering 23% (22) Industry 18% (21) SEK 54 billion Project Development 14% (12) Per geographic area, 2019 Per customer type, 2019 Operating profit per business area, 2019 Construction 24% (23) Sweden 82% (80) Private 66% (60) Civil Engineering 12% (15) Norway 10% (11) Public 34% (40) Industry 32% (34) Finland 8% (9) Project Development 32% (28) Orders received and order backlog Net sales Operating profit and operating margin MSEK MSEK MSEK % 60,000 60,000 3,000 6 50,000 50,000 2,500 5 40,000 40,000 2,000 4 30,000 30,000 1,500 3 20,000 20,000 1,000 2 10,000 10,000 500 1 0 0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Order backlog per 31 Dec Orders received Operating profit Operating margin Share per country Employees Gender distribution Peab is a lasting and secure employer that priori- tizes health and a safe work environment. We offer Sverige 83% (85) personal development opportunities in a company Män 87% (87) Norge 11% (10) culture based on respect for equal rights and Kvinnor 13% (13) Finland 6% (5) characterized by our core values Down- to-earth, Developing, Personal and Reliable. Content 2019 in summary 1 Six initiatives that reflect Comments from the CEO 2–3 how we work sustainably Extra distribution 6–7 through the areas Social, Environment and Economic. 60 years of community building 8–9 Overview Peab’s business areas 10–11 External circumstances and the market 12–13 The Norwegian Goals and strategies 14–17 Parliament is inspired Our take on sustainable business 18–35 by the Peab School Social 23–27 Read more on page 24 Environment 28–32 Economic 33–35 New safety park strengthens work on Board of Directors’ report 36–127 the work environment The Group 36–40 Read more on page 26 Business area Construction 42–43 Business area Civil Engineering 44–45 Peab Life and Business area Industry 46–47 Räddningsmissionen Business area Project Development 48–53 Read more on page 27 Risks and risk management 54–57 Other information and appropriation of profit 58–62 Financial reports and notes 64–127 Climate-improved ECO-Betong™ Auditor’s report 128–131 Read more on page 29 Corporate governance 132–136 Board of Directors 138 Innovative concrete Executive management 139 pile generates The Peab share 140–141 environ mental gains Five-year overview 142 Read more on page 30 Alternative performance measures and definitions 143 Annual General Meeting 144 “Air out the fear of Shareholder information 144 tough issues” Read more on page 35 GRI appendix incl. sustainability data: peab.inpublix.com/2019 Formal annual and Group financial reports which have been audited by company accountants, pages 36–127. Peab AB is a public company, Company ID 556061-4330. Domicile Båstad, Sweden. All values are expressed in Swedish krona. Krona is abbreviated to SEK, thousands of kronor to TSEK and millions of kronor to MSEK. Numbers presented in parentheses refer to 2018 unless otherwise specified. Data regarding markets and the competition are Peab’s own assessments, unless another source is specified. These assessments are based on the best and latest available facts from, among others, previously published material. Cover picture: Tromsøbadet, Tromsø. Photographers other pictures: Gatun Arkitekter / Sebastien Berthier (Actic), Klas Andersson, Peter Steen, Mette Ottosson, Bård Gudim, Magnus Torle, Per Eriksson, Nicholas Tourrenc, Jyri Laitinen, Lucas Lindgren – Peab takes work environment matters very seriously and works systematically to create safe workplaces. The kind of safety equipment used varies depending on national regulations and the type of operations. A risk analysis is always performed for each workplace before any exception is made. – The people pictured in this publication are wearing personal safety equipment required by regulations valid for the operations and country they are in. 1 2019 in summary 2019 in summary Net sales increased by three percent and amounted to SEK 54,008 million (52,233). Operating profit amounted to SEK 2,568 million (2,573) and operating margin amounted to 4.8 percent (4.9). The business areas developed stably during the year. Business area Industry has been charged with acquisition costs of total SEK 87 million. The property divestiture in the partly owned company Acturum had a positive effect of SEK 170 million in profit contribution in business area Project Development. Orders received amounted to SEK 44,130 million (51,087). The comparison year included two larger projects of total SEK 5,000 million. Orders received during the year have been more along the lines of mid-sized or smaller projects. Order backlog per 31 December 2019 was SEK 42,494 million (45,819) with a broad range of products and well spread geographically. Cash flow before financing amounted to SEK -551 million (-1,021). Net debt amounted to SEK 7,507 million (3,551). Excluding additional IFRS 16, Leases net debt was SEK 6,743 million. Cash flow and net debt have been affected by more construction on property in our own balance sheet and by more ongoing housing projects in Norway and Finland in business area Project Development. In addition, we have continued to invest in machines and equipment in business area Industry. Equity/assets ratio amounted to 31.7 percent (30.4). Excluding additional IFRS 16, Leases equity/assets ratio was 32.3 percent. Return on equity amounted to 17.9 percent (19.6). The Board proposed in February 2020 unchanged dividend of SEK 4.20 per share and extra distribution of a real estate company according to Lex Asea. Due to the coronavirus and the uncertain market situation, the Board chose to withdraw the proposals. On July 4, 2019 Peab signed an agreement to acquire YIT’s Nordic paving and mineral aggregates business. After approval from the competition authorities the acquisition was finalized on April 1, 2020. Financial summary Financial 2019 2018 2017 goals Net sales, MSEK 54,008 52,233 49,981 Operating profit, MSEK 2,568 2,573 2,418 Operating margin, % 4.8 4.9 4.8 Pre-tax profit, MSEK 2,510 2,518 2,458 Profit for the year, MSEK 2,092 2,100 2,067 Profit per share, SEK 7.09 7.12 7.01 Dividend per share, SEK 1) – 4.20 4.00 > 50% Return on equity, % 17.9 19.6 21.3 > 20% Equity/assets ratio, % 2) 31.7 30.4 32.2 > 25% Cash flow before financing, MSEK -551 -1,021 2,295 Net debt, MSEK 3) 7,507 3,551 1,216 Orders received, MSEK 44,130 51,087 48,999 Order backlog on 31 December, MSEK 42,494 45,819 40,205 Number of employees on 31 December 14,258 14,614 14,344 1) The Board of Directors’ proposes to the AGM that no dividend be distributed for 2019. 2) Excluding additional IFRS 16, Leases the equity/assets ratio was 32.3 percent. 3) Excluding additional IFRS 16, Leases net debt was SEK 6,743 million. Financial goals Return on equity Equity/assets ratio Dividends % % % 40.0 40.0 100 80 30.0 30.0 60 20.0 20.0 40 10.0 10.0 20 0.0 0.0 0 2015* 2016 2017 2018 2019 2015* 2016 2017 2018 2019 2015* 2016 2017 2018 2019** oal 20 oal 2 oal 0 of te rofit for te year * Not recalculated taking IFRS 15 into account, ** The Board of Directors’ proposes to the AGM that no dividend be distributed for 2019. PEAB ANNUAL AND SUSTAINABILITY REPORT 2019 2 Comments from the CEO Four collaborating business areas provide long-term growth After a year characterized by stable development we started 2020 with a well- filled order backlog amounting to SEK 42.5 SEK billion (45.8) and a strong financial position. With the dramatic start of 2020 due to the spread of the coronavirus in mind it is 54 billion important to underline that our lasting stability is built on a Net sales increased by three percent to business model where our four business areas complement SEK 54 billion (52.2).