Annual report 2012 - Peab

Note 37 Financial risks and financial policy
Finance and treasury
The Group is exposed to various types of financial risks through its
operations. The term financial risk refers to fluctuations in the company’s
profits and cash flow resulting from changes in exchange rates,
interest rates, refinancing and credit risks. Group finance and treasury
is governed by the financial policy established by Peab’s Board of
Directors. The policy is a framework of guidelines and regulations in
the form of a risk mandate and limitations in finance and treasury. The
Board has appointed a finance and treasury committee which is
chaired by the Chairman of the Board. It is authorised to take decisions
that follow the financial policy in between meetings of the
Board. The finance and treasury committee must report any such
decisions at the next meeting of the Board. The Group staff Finance
and treasury and the Group’s internal bank Peab Finans AB manage
coordination of Group finance and treasury. The overall responsibility
of the finance and treasury function is to provide cost-effective funding
and to minimise the negative effects on Group profit due to the
price of financial risks.
The liquidity risk refers to the risk of Peab having difficulties in meeting
its payment obligations as a result of a lack of liquidity or problems
in converting or recieving new loans. The Group has a rolling
one month liquidity plan for all the units in the Group. Plans are updated
each week. Group forecasts also comprise liquidity planning in the
medium term. Liquidity planning is used to handle the liquidity risk
and the cost of Group financing. The objective is for the Group to be
able to meet its financial obligations in favourable and unfavourable
market conditions without running into significant unforeseen costs.
Liquidity risks are managed centrally for the entire Group by the
central Finance and treasury function and at year-end liquid funds
were available as shown below.
The financial policy dictates that Group net debt should mainly be
covered by loan commitments that mature between 1 and 7 years. At
Available liquid funds
Group
MSEK 2012-12-31 2011-12-31
Liquid funds and bank holdings 439 1,1221) Unutilized overdraft facilities 1,369 1,189
Other unused credit lines 3,853 2,633
Total 5,661 4,944
1) Of which SEK 200 million are reported as interest-bearing current receivables.
Age analysis of financial liabilities, undiscounted cash flow including interest
Group 2012
MSEK Currency
Average interest
rate on balance
sheet date, %
the end of the year, the average loan period for utilised credits was 31
months (30), for unutilised credits 21 months (23), and for all granted
credits 25 months (28). Peab’s base financing was renegotiated and
extended in 2007. The bilateral loan agreements from 2007 amounted
at the end of the year to SEK 2,950 million (2,950) split between 5
banks (5). The loan agreements, which are not subject to amortization,
run until September 2014. There are also additional credit facilities
of SEK 1,200 million (200). The base financing in Peab Industri,
which was acquired in December 2008 after the company was distributed
to Peab’s shareholders in 2007, is made up of bilateral loan
agreements totaling SEK 2,300 million divided among four banks.
The loan agreements, which are not subject to amortization, run until
June 2014. The bilateral loan agreements all have the same basic
documentation and contain financial covenants in the form of interest
coverage ratios and equity/assets ratios that the Group must meet,
which is standard for this kind of loan. Peab had exceeded these key
ratios by a broad margin at the end of the year.
Peab set up a lending program for commercial papers in 2004.
Under the program, Peab can issue commercial papers for a maximum
of SEK 3,5 billion. The borrower is Peab Finans AB and the
guarantor is Peab AB. At the end of the year, Peab had outstanding
commercial papers worth SEK 343 million (818).
Peab issued convertible bonds to all employees in December 2007.
Settlement was in January 2008. A total of 8.8 million convertibles
were issued for a total nominal sum of SEK 598 million. The convertibles
of 2007/2012 matured on 30 november 2012. None were converted
to shares and the loans have been paid in full.
In 2011 Peab issued unsecured bonds for a nominal value of SEK
1,000 million that run for three, four and five years. In February 2012
Peab received FSA approval and registration for the issuance of
Medium Term Notes (MTN) with a loan limit of SEK 3 billion. During
2012 bonds for SEK 1,000 million have been issued under the MTN
program. At the end of the year Peab had outstanding bonds totaling
SEK 2,000 million (1,000).
Total credit commitments, excluding unutilized leasing lines, excluding
that part of the certificate program which has not been utilized
and excluding the unutilized part of the MTN program amounted to
SEK 13,855 million (12,969) per 31 December 2012. SEK 8,633 million
(9,147) was utilized of the total credit commitments.
Nominal value,
original
currency
Amount
SEK
Maturing
in 2013
Maturing
in 2014
Maturing
in 2015
Maturing
in 2016
Maturing
in 2017
Maturing
2018–
Bank loans SEK 2.3 5,065 5,065 1,077 3,081 170 94 124 519
Bank loans NOK 4.0 359 419 231 23 142 1 1 21
Bank loans EUR 1.4 55 476 44 34 8 4 4 382
Commercial paper SEK 2.8 346 346 346 – – – – –
Bonds SEK 3.5 2,229 2,229 70 570 555 1,032 2 –
Financial leasing liabilities SEK 2.8 492 492 184 157 71 20 43 17
Financial leasing liabilities NOK 4.0 144 168 39 32 25 21 19 32
Total interest-bearing financial liabilities 9,195 1,991 3,897 971 1,172 193 971
Accounts payable SEK – 3,985 3,985 3,985
Accounts payable NOK – 357 416 416
Accounts payable EUR – 15 133 133
Other liabilities SEK – 298 298 264 17 4 0 4 9
Interest rate swaps – 116 116 31 25 20 17 10 13
Total non-interest-bearing financial liabilities 4,948 4,829 42 24 17 14 22
Total financial liabilities 14,143 6,820 3,939 995 1,189 207 993
PEAB ANNUAL REPORT 2012
73
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