Peab’s management steers the business based on the Board’s guidelines that are founded on three financial goals – Return on equity, the Equity/assets ratio and Dividends.
The goals are concrete, clear and sim-plify communication with financial markets. We use our goals to measure how well we can meet the market long-term, regardless of business and development cycles. Due to changes in the financial situation our goal achievement may vary.
Return on equity will be a minimum of 20 percent
The goal is set in order to create efficient operations and a rational capital structure adapted to Peab’s operations.
The return on equity improved to 20.1 percent (9.9) in 2016 and the goal level was achieved after several years of lower returns. The result improved in business areas Industry and Project Development while business areas Construction and Civil Engineering showed stable levels. The last few years were characterized by lower profitability and write-downs in the business, which had a negative effect on return on equity.
Equity/assets ratio will be a minimum of 25 percent
The equity/assets ratio regulates the relationship between equity and debts. The goal, aimed at balancing the owners’ demand on return and the need for securing the business for times also when market conditions are worse, means the Group assets should be financed through equity by at least 25 percent.
In recent years the equity/assets ratio has been better than the goal and in 2016 it improved to 29.7 percent (28.8). The improvement is primarily due to higher earnings.
Dividends will be a minimum of 50 percent of profit after tax
The goal is set in order to ensure owners’ return on capital as well as meet the company’s need for funds to develop operations.
A dividend of SEK 3.60 (2.60) per share are proposed for 2016. Calculated as a share of the Group’s recorded profit for the year the proposed dividend is 61 percent (96). The proposed dividend is equivalent to a direct return of 5.0 percent (4.0) calculated on the closing price on 31 December 2016.