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2014-07-10

Peab: Peab further develops Project Development's operations

· Advanced business model for Project Development
· Disposal of Varvsstaden
· Presentation of development rights portfolio
· Financial effect, operation profit + SEK 100 million, employed
capital under SEK 500 million during the third quarter

Advanced business model for Project Development
One of the measures in Peab's action plan, carried out in the autumn
of 2013, was to hasten the turnover rate in order to achieve a better
balance between tied up capital and profit generation. The first step
in this work was to transfer housing development from Business Area
Construction to Business Area Project Development in order to improve
focus from an organizational perspective.

We have continued to work to develop Project Development's business
model and this has entailed, among other things, a more clearly
defined strategy and a review of the project development portfolio.

In regards to our strategy Peab's primary ambition is to work with
development projects based on development rights we have on our own
balance sheet. Collaboration with other partners via joint ventures
may take place from time to time during a project. This might occur
already when land is purchased, or when we begin to develop a
property or later on the development process. The decision regarding
when to start up a collaboration and with whom is governed by how
much capital a project needs, the opportunities for work for Peab's
construction operations and what expertise is required to realize the
project. The goal is to create capital efficient developments with
partners that bolster business and profit generation.

Disposal of Varvstaden
As part of this strategy a partnership has been formed with Balder to
further develop Varvsstaden in Malmö. This collaboration will be
created by selling Varvsstaden in its entirety to development company
Centur which is jointly owned by Peab and Balder. Varvsstaden
contains future development rights for 350,000 square meters of
housing and commercial space. The project is aimed at developing a
new city block in Malmö where Kockum's once had its shipyard.

Presentation of the project development portfolio
After the disposal of Varvsstaden housing in the development rights
portfolio are allocated per den 30 June 2014 as shown in the table
below:

+-------------------------------------------+--------------+
|Homes (number) | |
+-------------------------------------------+--------------+
|Development rights on our own balance sheet|approx. 15,500|
+-------------------------------------------+--------------+
|Development rights via joint ventures |approx. 6,900 |
+-------------------------------------------+--------------+
|Development rights via options etc. |approx. 6,100 |
+-------------------------------------------+--------------+
|Total |Approx. 28,500|
+-------------------------------------------+--------------+

Peab's project development portfolio consists of directly owned or
indirectly owned property and projects. The total amount of capital
employed in the Business Area Project Development on 31 March 2014
was SEK 11,365 million and allocated as shown in the table below
(including Varvsstaden):

+----------------------------------------------+------+
|Employed capital BA Project Development (MSEK)| |
+----------------------------------------------+------+
|Project and exploitation property |7 068 |
+----------------------------------------------+------+
|Shares in joint ventures | 772|
+----------------------------------------------+------+
|Financial statements and other |3 525 |
+----------------------------------------------+------+

On 31 March 2014 booked values for project and exploitation property
of MSEK 7,068 were allocated as shown in the table below (including
Varvsstaden):

+------------------------------------------------------------+-----+
|Housing development |4,036|
+------------------------------------------------------------+-----+
|- of which development rights |3,645|
+------------------------------------------------------------+-----+
|- of which shares in tenant owner associations or the like|391 |
+------------------------------------------------------------+-----+
|Property development |3,032|
+------------------------------------------------------------+-----+
|- of which investment properties |1,387|
+------------------------------------------------------------+-----+
|- of which projects under construction |888 |
+------------------------------------------------------------+-----+
|- of which commercial development rights |757 |
+------------------------------------------------------------+-----+
|Total Project and exploitation property |7,068|
+------------------------------------------------------------+-----+

Financial effect
There are major variations in timetables for planned developments in
the portfolio and in connection with the review certain values have
been corrected to better reflect the time aspect and the market
conditions in different geographic markets for these projects.

The affect on operating profit of these changes and transactions
including the disposal of Varvsstaden is SEK 100 million and entails
a reduction of consolidated capital employed of around SEK 500
million. The affects will be presented in the third quarter 2014.

Peab AB discloses the information provided herein pursuant to the
Securities Markets Act and/or the Financial Instruments Trading Act.
The information was submitted for publication on 11 July 2014 at 8.30
a.m.

For further information, please contact:
Jesper Göransson, CEO and President Peab, +46 431 89 338
Niclas Brantingson, CIO Peab, +46 733 37 20 06
Peab is the Nordic Community Builder with some 13,000 employees and
net sales exceeding SEK 40 billion. The Group's subsidiaries have
strategically located offices in Sweden, Norway and Finland. The
share is listed on NASDAQ OMX Stockholm. The registered office of the
Group is at Förslöv, Skåne in south of Sweden.

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http://news.cision.com/peab/r/peab-further-develops-project-development-...
http://mb.cision.com/Main/424/9615462/266018.pdf

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