AF Gruppen

Earnings Release • May 12, 2023

AF Gruppen ASA Q1 2023

12 May 2023

Overview

Challenging 1st quarter 2023 for AF Gruppen

• Revenue: NOK 7,393 (6,809) million in Q1
• Earnings before tax: NOK 13 (209) million in Q1
• Profit margin: 0.2% (3.1%) in Q1
• Cash flow from operations: NOK -24 (607) million in Q1
• Order backlog: NOK 41,668 (42,697) million as of 31 March 2023
• Net interest-bearing debt of NOK 570 (-371) million as of 31 March 2023
• The board of directors suggests a dividend of NOK 6.50 (6.50) per share to be paid in the first half of 2023

Health and safety

Number of lost-time injuries and severe personnel injuries not resulting in lost-time, including subcontractor employees, per million hours worked

Number of lost-time injuries, injuries involving substitute work and medical treatment injuries, including subcontractor employees, per million hours worked

Revenues and earnings

Return on invested capital

* Last four quarters rolling

Interest expences added

* Rolling average last four quarters

Return on invested capital

The Group's required return on invested capital is 20 %

Cash flow statement

NOK million	Q1 2023	Q1 2022	2022
EBIT	15	215	1,409
Depreciation, amortisation and impairment	131	130	528
Change in net working capital	-63	421	-43
Taxes paid	-81	-115	-299
Other	-27	-44	-135
Cash flow from operations	-24	607	1,460
Net investments	-77	-34	67
Dividend	-53	-56	-1,365
Other capital transactions	-30	-68	-59
Interest paid and change in interest bearing debt	50	-139	-12
Net change in cash and cash equivalents	-134	310	90
Net cash and cash equivalents at beginning of period	765	680	680
Change in cash and cash equivalents without cash effect	45	-17	-4
Net cash and cash equivalents end of period	677	974	765

Net interest-bearing debt and liquidity

Components net interest-bearing receivables (debt)

Available liquidity: NOK 3,084 million (including financial facilities of NOK 3,000 million)

Balance sheet

NOK million	31.03.23	31.03.22	31.12.22
Non-current assets	7 859	7 608	7 630
Current assets, ex. cash	6 643	4 993	6 062
Cash and cash equivalents	677	974	765
Total assets	15 180	13 574	14 457
Equity	3 458	3 639	3 494
Long term debt	1 323	1 381	1 250
Short term debt	10 399	8 554	9 713
Sum egenkapital og gjeld	15 180	13 574	14 457

All the company's covenants exclude the effect of IFRS 16

Environment

¹ Regulatory requirement of 60%

YTD 2022 YTD 2023

Recycling environmental sites Recycling rate 78% (78%) YTD in 2023

YTD 2022 YTD 2023

Business Areas

1 st quarter 2023

Good Result and Record High Order Backlog

NOK million	Q1 23	Q1 22	2022
Revenues	1,451	1,242	5,919
EBIT	77	84	445
EBT	78	83	440
EBIT %	5.3%	6.7%	7,5%
EBT %	5.4%	6.7%	7,4%

• Civil Engineering has revenue growth compared to 1st quarter last year, and reports a good result
• AF Anlegg has a good result with high activity and good operations in the major projects E6 Rentvannstunnel in Oslo and Bergtunnlar Lovö in Stockholm. The new water treatment plant on Huseby and cable tunnel Sogn-Ulven are in the starting phase
• Very good result from Målselv Maskin & Transport. Stenseth & RS reports a good result, while Eiqon and Consolvo have weak results
• During the quarter, AF Anlegg entered into an agreement to build 9.6 km of new E6 from Storhove near Lillehammer to Øyer, including 2.7 km of tunnel. The contract has a value of NOK 1,800 million excl. VAT
• Order backlog: NOK 17,517 (12,425) million

Construction

Low Profitability and Varied Performance

NOK million	Q1 23	Q1 22	2022
Revenues	2,591	2,481	11,090
EBIT	51	18	322
EBT	46	17	318
EBIT %	2.0%	0.7%	2,9%
EBT %	1.8%	0.7%	2,9%

• Construction reports overall low profitability. The market is challenging and there is great variation in the results and performances at project and unit level
• AF Bygg Østfold and Strøm Gundersen report good results in the quarter. Other units report below expectations. Haga & Berg reports weak results in the quarter
• Five contracts were announced in the quarter. The largest contract was entered by Helgensens Tekniske Bygg to build the new commercial building Kokstad Mobilitetspark in Bergen. The contract has a value of NOK 287 million excl. VAT
• Order backlog: NOK 9,342 (13,211) million
• After the end of the quarter, AF Bygg Østfold entered into a contract for the construction of the new wastewater treatment plant for FREVAR KF with a contract value of NOK 1,081 million excl. VAT

Betonmast

Improved Results, but Below Expectation

NOK million	Q1 23	Q1 22	2022
Revenues	1,206	1,243	5,145
EBIT	34	23	166
EBT	40	20	174
EBIT %	2.8%	1.8%	3,2%
EBT %	3.3%	1.6%	3,4%

• Varying results in the units lead to a weak result for Betonmast
• Betonmast Romerike, Trøndelag, Røsand and Asker og Bærum report good results in the quarter
• Betonmast Budskerud-Vestfold and Betonmast Boligbygg report weak results in the quarter
• In the quarter, Betonmast entered into an agreement with Horten Industripark to build a combined industrial and office building in Horten, with a total value of NOK 840 million excl. VAT. In addition, further two contracts with a combined value of NOK 629 million excl. VAT has been announced
• Order backlog: NOK 5,115 (6,258) million

Construction City. Photo: Catchlight

Property

Low Sales in the Quarter

NOK million	Q1 23	Q1 22	2022
Revenues	10	6	30
EBIT	-1	2	75
EBT	1	3	82
Invested capital	678	678	654

• Low residential sales in the quarter. Sales contracts signed for a total of 20 (57) residential units in the quarter, whereof AF's share was 9 (26) units
• Seven projects with a total of 940 residential units are in production (AF's share is 438). The sales ratio in commenced projects is 78%
• Residential portfolio under development: 1,580 (1,658) units. AF's share: 788 (802)
• Commercial portfolio under development: 58,899 (61,856) GFA sqm. AF's share: 29,270 (30,749)

Sweden

Challenging Quarter with a Negative Result

NOK million	Q1 23	Q1 22	2022
Revenues	1,927	1,585	7,445
EBIT	-162	46	130
EBT	-163	44	127
EBIT %	-8.4%	2.9%	1,7%
EBT %	-8.5%	2.8%	1,7%

• Sweden has a negative result due to further negative adjustments of the project estimates in the former Betonmast Sweden units of NOK 230 million excl. VAT. The remaining production value in loss-making projects in this portfolio is NOK 940 million excl. VAT
• Very good results from AF Prefab Mälardalen and AF Härnösand Byggreturer. Kanonaden, AF Bygg Syd and HMB have positive profit contributions, but deliver somewhat below expectation
• Kanonaden will carry out the earthworks for Metsä Tissue's expansion of the paper mill in Mariestad, total contract value is SEK 300 million excl. VAT. HMB entered into a contract to build a retirement home complex in Flen, total contract value is SEK 150 million excl. VAT
• Order backlog: NOK 7,645 (8,531) million

Good Growth, but Result Below Expectation

NOK million	Q1 23	Q1 22	2022
Revenues	287	237	1 062
EBIT	11	12	84
EBT	13	11	82
EBIT %	3.7%	4.9%	7,9%
EBT %	4.4%	4.5%	7,7%

• Energy and environment reports an overall result below expectation
• AF Energi has increased revenues and reports a good result in the quarter. AF Decom has low activity, and reports a weak result
• AF Decom has sorted metal for recycling and recycled materials at the environmental centers corresponding to 46,565 (51,514) CO2-equivalents
• Order backlog: NOK 694 (763) million
• After the end of the quarter, AF Energi entered into a contract with Statsbygg to provide piping and plumbing works for the Life Sciences building. Total contract value based on target price is NOK 680 million excl. VAT

Offshore

Revenue Growth and Very Good Profitability

NOK million	Q1 23	Q1 22	2022
Revenues	244	185	1 238
EBIT	18	17	164
EBT	16	16	160
EBIT %	7.2%	9.4%	13,2%
EBT %	6.4%	8.6%	12,9%

• Offshore reports revenue growth and a very good result in the quarter
• AF Offshore Decom reports good profitability in the quarter, mainly related to AF Miljøbase Vats
• As of the first quarter, metal sorted for recycling corresponds to savings of 11,651 (16,557) CO2-equivalents at AF Miljøbase Vats
• Aeron reports good profitability in the quarter
• Order backlog: NOK 1,625 (1,583) million

Solid Order Backlog

Summary

NOK million	Q1 23	Q1 22	2022
Revenues	7,393	6,809	31,205
EBIT	15	215	1,409
EBT	13	209	1,400
EBIT %	0.2%	3.2%	4,5%
EBT %	0.2%	3.1%	4,5%

• Well positioned in a challenging market
• Solid revenue growth, but weak profitability
• Strong financial position
• Solid order backlog: NOK 41,668 (42,697) million
• The board of directors suggest a dividend of NOK 6.50 (6.50) per share to be paid in the first half of 2023

Thank you for your attention

Q2 | 25 August 2023