PEAB ANNUAL REPORT 2005 Shareholders Is Published Quarterly and Is Availible in Swedish, Norwegian and Finnish

PEAB ANNUAL REPORT 2005 Shareholders Is Published Quarterly and Is Availible in Swedish, Norwegian and Finnish

PEAB A NNU A L R EP Financial information ORT 2005 Peab will issue the following financial information concerning the 2006 financial year: Interim Report, January-March May 17 Interim Report, January-June August 25 Interim Report, January-September November 24 Year-end Report, 2006 February 16, 2007 Annual Report, 2006 April 2007 PeabJournalen Peab’s magazine for employees, clients and PEAB ANNUAL REPORT 2005 shareholders is published quarterly and is availible in Swedish, Norwegian and Finnish. Internet Current information about Peab is available on our website at www.peab.com Ordering information Financial information and PeabJournalen may be ordered from Peab AB, Information, SE-260 92 Förslöv, tel +46 431 890 00, fax +46 431 45 19 75, [email protected] RHR Corporate Communication, Sweden Peab AB (publ), SE-260 92 Förslöv. ID. No. 556061-4330. Tel +46 431 890 00. Fax +46 431 45 19 75 www.peab.com CONTENTS ADDRESSES ADRESSER .................... Head office Peab AB The year in brief 3 SE-260 92 Förslöv Sweden The Managing Director’s comments 4 (Margretetorpsvägen 84) Tel +46 431 890 00 The Peab share 6 Fax +46 431 45 17 00 Business concept 8 Peab’s business 9 Peab Sverige AB Peab Sverige AB SE-260 92 Förslöv Civil Engineering Division Financial objectives 13 Sweden SE-401 80 Gothenburg (Margretetorpsvägen 84) Sweden Market and competitors 14 Tel +46 431 890 00 (Anders Personsgatan 2) Fax +46 431 45 15 08 Tel +46 31 700 84 00 Peab’s employees 17 Fax +46 31 700 84 20 Peab Sverige AB The Directors’ report 21 Southern Division Peab AS SE-260 92 Förslöv Postboks 2909 Financial reports 30 Sweden Solli (Margretetorpsvägen 84) NO-0230 Oslo Notes to financial reports 38 Tel +46 431 890 00 Norway (Drammensveien 40) Audit report 72 Fax +46 431 45 15 08 Tel +47 23 30 30 00 Corporate governance report 2005 73 Peab Sverige AB Fax +47 23 30 30 01 Western Division Board of Directors and Auditors 76 SE-401 80 Gothenburg Peab Seicon Oy Sweden Kornetintie 3 Management group 77 (Anders Personsgatan 2) FIN-00380 Helsinki Tel +46 31 700 84 00 Finland Shareholders’ information 79 Fax +46 31 700 84 20 Tel +358 207 606 200 Fax +358 207 606 206 Five-year review 80 Peab Sverige AB Housing Division Swerock AB Definitions 81 Box 808 Box 22284 SE-169 28 Solna SE-250 24 Helsingborg Addresses 83 Sweden Sweden .................... (Gårdsvägen 6) (Garnisonsgatan 25 A) Tel +46 8 623 68 00 Tel +46 42 25 68 00 Fax +46 8 623 20 60 Fax +46 42 25 68 01 Peab Sverige AB Skandinaviska Byggelement AB Stockholm Commercial Division Box 22045 Box 808 SE-250 22 Helsingborg SE-169 28 Solna Sweden Sweden (Garnisonsgatan 25 A) (Gårdsvägen 6) Tel +46 42 25 68 00 Tel +46 8 623 68 00 Fax +46 42 25 68 01 Fax +46 8 623 68 60 Peab Asfalt AB Peab Sverige AB SE-260 92 Förslöv North Eastern Division Sweden Box 808 (Margretetorpsvägen 84) SE-169 28 Solna Tel +46 431 890 00 Sweden Fax +46 431 45 16 40 (Gårdsvägen 6) Tel +46 8 623 68 00 Lambertsson Sverige AB Fax +46 8 623 20 60 SE-260 92 Förslöv Sweden Peab Sverige AB (Margretetorpsvägen 84) Project Development Division Tel +46 431 893 00 Box 808 Fax +46 431 892 58 SE-169 28 Solna Sweden (Gårdsvägen 6) Tel +46 8 623 68 00 Fax +46 8 35 15 01 THE YEAR IN BRIEF • Net sales increased by 16 per cent to SEK 25 501 million (22 039) • Operating profit amounted to SEK 747 million (577) • Profit for the year amounted to SEK 855 million (389) • Profit per share amounted to SEK 10.06 (4.56) • Orders received increased by 12 per cent to SEK 24 227 million (21 559) • Order backlog increased by 11 per cent to SEK 17 722 million (15 899) • The Board proposes an increased dividend per share to SEK 3.00 (2.50) Financial summary 2005 2004 Net sales, MSEK 25 501 22 039 Profit after net financial items, MSEK 824 521 Return on capital employed, % 17.1 13.4 Return on equity, % 28.7 15.4 Earnings per share, SEK 10.06 4.56 Dividend per share, SEK 1) 3.00 2.50 Equity/assets ratio, % 24.4 23.1 Net debt, MSEK 1 893 1 666 1) For 2005, proposed by the Board to the AGM Welcome to Peab’s Annual General Meeting Time and place The Annual General Meeting (AGM) of Peab AB will be held at 3 pm on Wednesday, 17 May 2006 at Grevieparken, Grevie. Notification Notification of participation in the meeting must be submitted at the latest by 2 pm on Friday, 12 May 2006. Notification may be submitted by telephone on +46 431 890 00, by post to Peab AB, Information, SE-260 92 Förslöv, or via the company’s website at www.peab.com/agm. To participate in the AGM shareholders must be registered in the share register kept at the Swedish Securities Register Centre, VPC AB, by Thursday, 11 May 2006 at the latest. Shareholders who have registered their shares in trust must have registered such shares in their own names at the latest by this date. Shareholders should request trustees to undertake such registering a few days in advance. Dividend The Board of Directors proposes to the AGM a dividend of SEK 3.00 per share for 2005. The proposed record day is Monday, 22 May 2006. If the AGM approves the proposals submitted, it is proposed to distribute dividends from the VPC on Friday, 26 May 2006. 3 »In general, costs can be reduced by up to 10 -15 per cent if we can exploit all the benefits of trust-based contracts« Mats Paulsson MD, Peab 4 We have more to give 2005 will be remembered as one favourable year to the Nordic building and construction market. Judging from the demand and order situation, 2006 may also develop in a positive direction, providing conditions in the environment are equivalent. During the year orders received by Peab increased by right decision back then and the contacts our employ- 12 per cent compared with the previous year and the ees enjoy with local networks are creating a firm foun- order backlog at the end of the year amounted to SEK dation for an even larger share of trust-based con- 17.7 billion. For the first time in Peab’s history sales tracts. exceeded SEK 25 billion during a single financial year, We are also intensifying our efforts to minimise the which together with the widening operating margins number of errors out on our building sites. Studies show resulted in increased operating profit amounting to SEK that an unnecessarily large amount of time is spent 747 million (577). correcting faults, so there is major potential for savings Our order books look good and we are well posi- here which we need to exploit. We also have an ambi- tioned within the segment where we expect continued tion to achieve a zero tolerance of accidents or near strong demand, i.e. in housing construction and civil accidents on our building sites, and therefore we are engineering works. Our ambition is to further develop continually providing information and training tailored and enhance the efficiency of actual production while according to our employees areas of work. Such initia- keeping costs under control. tives are primarily aimed at preventive work environment The questions we at Peab sought to answer dur- work. ing the year were urgent in nature, such as how we During the past year we have also observed new could enlist the right skills for our projects, whether or phenomena in the building and construction market. not the profiles of our managers and leaders were right, Not only are foreign labour and foreign building materi- whether we had adequate resources to provide what als slowly altering the picture, but we have seen foreign our customers could rightfully demand of us or whether players taking an increasing share of the Nordic tender we choose those assignments which are best suited cake, and they have also displayed an innovative and for Peab. interesting approach to development and construction Yet another constantly recurring subject was technology. Naturally, we must learn from these good whether it is possible to further reduce the final price examples. customers have to pay. I am convinced that we can if In my opinion, Peab must make demand on together with our customers, focus even more in- domestic suppliers first before we start seeking human tensely on good long-term and more efficient planning resources and construction materials outside our bor- of projects. In general, costs can be reduced by up to ders. Consequently, it is extremely important for us to 10 -15 per cent if we can exploit all the benefits of be an attractive enough company to recruit the best trust-based contracts. In other words, by getting in- possible personnel. And recruitment will be one of the volved in projects at the earliest possible stage, using key issues in forthcoming years, as competition for ready-made systems and series building, further de- manpower is going to be razor sharp. veloping logistics and learning the lessons of previous In the future we must use our resources more comparable projects. Working together in this way efficiently. For example, during the summer half we provides clear incentives both for customers and the could work shifts on road projects. This will provide contractor. Where trust-based contracts are con- major benefits for all concerned in the form of reduced cerned, we have for many years provided a 5-year costs, improved quality and less disruption to road guarantee, which today is the norm throughout the traffic.

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