Quarterly Report • May 12, 2023
Quarterly Report
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12 May 2023
1
Q1
We delivered weak results in the first quarter as a result of challenges in some of our Swedish units, as well as weak profitability in the construction business area. The industry is experiencing a demanding construction and property market, however the results are primarily due to our own performance. This has resulted in downward adjustments in our Swedish portfolio for the quarter. We will ensure the best possible execution of these projects.
There were many strong performances in the quarter, especially within the Offshore and Civil Engineering business areas. We have a solid order backlog with large, complex projects of high social benefit. Our base principles for the business remain unchanged, as good safety work is a prerequisite for profitable growth. It is pleasing to see that there was a positive development in sick leave during the quarter.
AF has always been proud of its strength and ability to perform complex tasks. The group's entrepreneurial spirit has been characterised by the ability and willingness to think differently and to find better, more futureoriented ways to generate value.
| Key figures (NOK million) | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 7,393 | 6,809 | 31,205 |
| EBITDA | 146 | 345 | 1,937 |
| Earnings before financial items and tax (EBIT) | 15 | 215 | 1,409 |
| Earnings before tax (EBT) | 13 | 209 | 1,400 |
| Result per share (NOK) | -0.03 | 1.40 | 8.96 |
| Diluted result per share (NOK) | -0.03 | 1.39 | 8.96 |
| EBITDA margin | 2.0 % | 5.1 % | 6.2 % |
| Operating profit margin | 0.2 % | 3.2 % | 4.5 % |
| Profit margin | 0.2 % | 3.1 % | 4.5 % |
| Return on capital employed (ROaCE)1) | 26.8 % | 35.4 % | 31.6 % |
| Cash flow from operating activities | -24 | 607 | 1,460 |
| Net interest-bearing debt (receivables) | 570 | -371 | 329 |
| Shareholders' equity | 3,458 | 3,639 | 3,494 |
| Total equity and liabilities | 15,180 | 13,574 | 14,457 |
| Equity ratio | 22.8 % | 26.8 % | 24.2 % |
| Order backlog | 41,668 | 42,697 | 39,765 |
| LTI-1 rate | 1.4 | 0.9 | 1.1 |
| Absence due to illness | 4.4 % | 5.5 % | 4.6 % |
1) Rolling average last four quarters
1ST QUARTER 2023
5
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 1,451 | 1,242 | 5,919 |
| Earnings before financial items and tax (EBIT) | 77 | 84 | 445 |
| Earnings before tax (EBT) | 78 | 83 | 440 |
| Operating profit margin | 5.3 % | 6.7 % | 7.5 % |
| Profit margin | 5.4 % | 6.7 % | 7.4 % |
AF is one of Norway's largest companies in the civil engineering market, and the customers include both public and private actors. Its project portfolio includes roads, railways, bridges, port facilities, airports, tunnels, foundation work, renovation and construction of concrete structures, power and energy plants, as well as onshore facilities for oil and gas.
Civil Engineering increased the level of activity in during the first quarter and delivered good results. The Civil Engineering business area reported revenues of NOK 1,451 million (1,242 million) for the 1st quarter. Earnings before tax were NOK 78 million (83 million).
AF Anlegg had two major projects in production at the end of the quarter: E6 Rentvannstunnel in Oslo and Bergtunnlar Lovö in Stockholm. Both of these projects have a high level of activity and good operations. Several other projects also contributed good results for the quarter. AF Anlegg has two major projects that are in the early start-up phase: The E1 Vannbehandlingsanlegg at Huseby in Oslo and the Cable Tunnel between Sogn and Ulven in Oslo. AF Anlegg delivered good results for the first quarter.
Målselv Maskin & Transport had strong revenue growth and a very good result in the first quarter. Stenseth &RS reported good results, while Eiqon and Consolvo reported weak results for the quarter.
One contract was reported to the stock exchange in the first quarter. AF Anlegg will construct 9.6 km of the new E6 motorway from Storhove near Lillehammer to Øyer, including the 2.7 km Fåberg Tunnel. The agreement is valued at approximately NOK 1,800 million, excl. VAT. Construction is expected to commence during the third quarter of 2023 and will be handed over in the fourth quarter of 2026.
The order backlog for Civil Engineering was NOK 17,517 million (12,425 million) as at 31 March 2023.
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 2,591 | 2,481 | 11,090 |
| Earnings before financial items and tax (EBIT) | 51 | 18 | 322 |
| Earnings before tax (EBT) | 46 | 17 | 318 |
| Operating profit margin | 2.0 % | 0.7 % | 2.9 % |
| Profit margin | 1.8 % | 0.7 % | 2.9 % |
AF provides contracting services for residential, public and commercial buildings. Our services range from planning to construction and renovation. AF cooperates closely with customers to find efficient and innovative solutions adapted to their needs. The business area encompasses the Norwegian entities except for Betonmast and is mainly located in Eastern Norway and the Bergen Region.
Construction reported revenues of NOK 2,591 million (2,481 million) for the 1st quarter. The market is demanding and there are significant variations in terms of results and performance at project and unit level. On the whole, the business area reported a weak result for the quarter. Earnings before tax were NOK 46 million (17 million).
Strøm Gundersen and AF Bygg Østfold had good results for the first quarter. AF Bygg Oslo, Strøm Gundersen Vestfold, AF Håndverk, LAB Entreprenør, HTB, Åsane Byggmesterforretning and FAS delivered results for the quarter that were somewhat below expectations. AF Byggfornyelse and Haga & Berg delivered weak results for the quarter.
Five contracts were reported to the stock exchange in the quarter. HTB will construct the new commercial building Kokstad Mobilitetspark in Bergen. The turnkey contract has a value of NOK 287 million, excl. VAT. AF Byggfornyelse has agreed to further renovation work at Dronning Mauds gate 15 in Oslo at a value of NOK 130 million, excl. VAT. LAB Entreprenør has signed a contract for the remodelling and rehabilitation of the county administration building in Leikanger valued at NOK 115 million, excl. VAT, and for a combined residential and commercial building for Frekhaug Torg AS valued at NOK 103 million, excl. VAT. AF Byggfornyelse has started a collaborative phase for the renovation of Akersgata 13-15 / Tollbugata 32 in Oslo, the expected construction cost of approximately NOK 480 million will be included in the order backlog when the final implementation contract is signed.
Construction's order backlog was NOK 9,342 million (13,211 million) as at 31 March 2023.
Since the end of the quarter, AF Bygg Østfold has signed a contract for the construction of a new treatment plant for FREVAR KF in Fredrikstad, which has a contract value of NOK 1,081 million, excl. VAT. Construction is scheduled to commence in June 2023.
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 1,206 | 1,243 | 5,145 |
| Earnings before financial items and tax (EBIT) | 34 | 23 | 166 |
| Earnings before tax (EBT) | 40 | 20 | 174 |
| Operating profit margin | 2.8 % | 1.8 % | 3.2 % |
| Profit margin | 3.3 % | 1.6 % | 3.4 % |
NUMBER OF EMPLOYEES
• Betonmast Boligbygg
Betonmast is a construction contractor with operations in the largest markets in Norway. The project portfolio comprises everything from major residential projects to commercial and public buildings. Betonmast is a major player in construction for the public sector and has specialist expertise in project development and collaborative contracts. Betonmast also has a property portfolio in Norway.
Overall, Betonmast reported revenue that was at the same level as the previous year. Although the result for the quarter was weak, it was an improvement when compared with the first quarter of last year. Betonmast reported revenues of NOK 1,206 million (1,243 million) and earnings before tax of NOK 40 million (20 million) in the 1st quarter.
The Betonmast Romerike, Trøndelag, Røsand and Asker and Bærum units delivered good results in the quarter. Betonmast Oslo og Østfold delivered results that were below expectations. Betonmast Boligbygg, Innlandet and Buskerud-Vestfold had weak results during the quarter.
Betonmast has a separate property portfolio with one property project with a total of 256 units under production. Betonmast Eiendom delivered a weak result in the quarter. For further information regarding these projects, see Note 7.
Three new contracts were reported to the stock exchange in the first quarter. Betonmast Buskerud-Vestfold has signed a contract with Horten Industrial Park for the construction of a combined industrial and office building in Horten. The contract is a turnkey contract valued at approximately NOK 840 million, excl. VAT. Betonmast Buskerud-Vestfold has also entered into an agreement with Fritzøe Eiendom to develop and build a commercial building in the centre of Larvik. The contract is a collaborative contract valued at approximately NOK 239 million, excl. VAT. In addition, during the quarter, Betonmast Østfold signed a contract with Nordre Follo municipality for phase 2 of the project to build Sofiemyr School in Nordre Follo. The collaborative contract was reported to the stock exchange in the fourth quarter of 2021. The contract has a value of NOK 390 million, excl. VAT.
As at 31 March 2023, Betonmast's order backlog was NOK 5,115 million (6,258 million).
ENTERED INTO SALES
CONTRACTS (NUMBER)
TURNOVER UNITS IN PRODUCTION (NOK million)
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 10 | 6 | 30 |
| Earnings before financial items and tax (EBIT) | -1 | 2 | 75 |
| Earnings before tax (EBT) | 1 | 3 | 82 |
| Capital employed | 678 | 678 | 654 |
AF develops, designs and carries out residential and commercial projects in Norway, and activities take place in geographical areas where AF has its own production capacity. AF works closely with other players in the industry, and the development projects are mainly organised as associated companies and joint ventures.
Property delivered earnings before tax of NOK 1 million (3 million) in the 1st quarter. Property consists of two operating units, AF Eiendom and LAB Eiendom, with local presence in Greater Oslo and the Bergen region respectively.
Rising interest rates and economic instability have resulted in a challenging property market, and contributed to low sales during the quarter. Sales contracts for 20 (57) homes were signed in the quarter, of which AF's share is 9 (26).
There were seven residential property projects in the production stage at the end of the quarter. A total of 940 units are in production, of which AF's share is 438:
• Fyrstikkbakken in Oslo (159 units in production, of which 139 sales contracts have been signed).
Skårersletta MIDT in Lørenskog (295 units in production, of which 179 sales contracts have been signed).
• Bekkestua Have in Bærum (232 units in production, of which 227 sales contracts have been signed).
• Rolvsrud Arena in Lørenskog (194 units in production, of which 130 sales contracts have been signed).
Kråkehaugen in Bergen (55 units in production, of which 53 sales contracts have been signed).
• Skiparviklia 3D in Bergen (4 units in production, of which 4 sales contracts have been signed).
• Baneveien 16 in Bergen (1 unit in production, 1 sales contract has been signed).
This gives a sales ratio of 78 per cent for commenced projects. Property also has 28 units for sale in projects in the sales phase at Rolvsrud Arena at AF Eiendom. There was a total of 5 (4) completed unsold units at the end of the quarter, of which AF's share was 2 (2). For more information on projects for own account, see Note 7.
AF also has a significant development portfolio in Norway which is estimated at 1,580 (1,658) residential units. AF's share of this was 788 (802) residential units.
AF has a commercial building in the production stage at Baneveien 16 in Bergen, which also includes one residential unit. AF has ownership stakes in commercial property under construction with a total RFA of 58,899 (61,856) square metres, of which AF's share is an RFA of 29,270 (30,749) square metres.
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 287 | 237 | 1,062 |
| Earnings before financial items and tax (EBIT) | 11 | 12 | 84 |
| Earnings before tax (EBT) | 13 | 11 | 82 |
| Operating profit margin | 3.7 % | 4.9 % | 7.9 % |
| Profit margin | 4.4 % | 4.5 % | 7.7 % |
AF offers energy-efficient solutions for buildings and industry and is a leading player in environmental clean-up, demolition and recycling. Contaminated materials are sorted, decontaminated and recycled at AF's environmental centres Rimol, Jølsen and Nes and over 80 per cent of material is reused.
Energy and Environment had a higher level of activity in the first quarter when compared to the same quarter last year, however the overall results reported were below expectations. Revenues for the 1st quarter were NOK 287 million (237 million). Earnings before tax were NOK 13 million (11 million).
AF Decom reported a low level of activity for the quarter and delivered a weak result. AF's demolition operations demolish and sort different materials for recycling. AF Decom demolished and facilitated the recycling of approximately 4,542 (11,229) tonnes of metal in the first quarter. The steel industry accounts for about 7 per cent of the world's total CO2 emissions. Reusing steel results in 70 per cent lower CO2 emissions than ore-based production. This corresponds to a reduction in emissions of 1 kg CO2 for each kilo of steel recycled. This means that AF Decom's demolition operations have helped to reduce alternative CO2 emissions by 4,542 tonnes thus far in 2023.
The foundation for our environmental activities is that waste can to a large extent be reused, and thus be a valuable resource in a growing circular economy. AF's environmental centres receive contaminated material and are working to reuse as much as possible instead of it going to landfill. The profitability of the environmental centres was weak during the quarter as a result of a planned, temporary shutdown of one of the plants, as well as seasonal effects. AF's environmental centres recycled 46,565 (51,514) tonnes of material in the first quarter. The recycling rate realised for contaminated material in the first quarter was 78 per cent.
AF Energi reported significant revenue growth for the quarter. A high level of activity and good operational performance in the projects contributed to a very good result for the first quarter. Mepex reported very good profitability during its first quarter as part of AF Gruppen.
The order backlog for Energy and Environment stood at NOK 694 million (763 million) as at 31 March 2023. Since the end of the quarter, AF has signed a contract with Statsbygg to provide piping and plumbing works for the Life Sciences building, total value based on a target price is NOK 680 million, excl. VAT.
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 1,927 | 1,585 | 7,445 |
| Earnings before financial items and tax (EBIT) | -162 | 46 | 130 |
| Earnings before tax (EBT) | -163 | 44 | 127 |
| Operating profit margin | -8.4 % | 2.9 % | 1.7 % |
| Profit margin | -8.5 % | 2.8 % | 1.7 % |
• AF Bygg Väst, prev. Betonmast Göteborg
• AF Bygg Stockholm, prev. Betonmast Stockholm
• AF Anläggning Väst, prev. Betonmast Anläggning
The Sweden business area comprises AF's Swedish operations in civil engineering, construction, property and demolition. The geographic area of operation encompasses Gothenburg and Southern Sweden, as well as Stockholm and Mälardalen.
Sweden reported a negative result as a consequence of further downward adjustments of the project estimates in the Group's Swedish business. The project estimates have been adjusted downwards by approximately NOK 230 million, excl. VAT, and relate to the companies in the former Betonmast Sweden. Several organizational and operational measures have been implemented the last quarters. The loss making projects have a remaining production value of NOK 940 million, excl. VAT.
Of the business area's total order backlog of NOK 7,645 million (8,531 million) as of 31 March 2023, the order backlog for the former Betonmast Sweden was NOK 2,097 million.
Sweden reported revenues of NOK 1,927 million (1,585 million) for the 1st quarter. Earnings before tax were NOK -163 million (44 million).
AF Prefab in Mälardalen and AF Härnösand Byggreturer delivered both revenue growth and very good results in the quarter. Kanonaden, AF Bygg Syd and HMB made positive profit contributions, however delivered results somewhat below expectations in the first quarter.
AF Projektutveckling, AF's property business in Sweden, has one residential project with a total of 83 units under production. For further information on the residential projects, see Note 7. The unit has a building site inventory (residential units under development) that is estimated at 1,080 residential units. AF's share of this is 540 residential units.
Two new contracts were reported to the stock exchange in the first quarter. Kanonaden Entreprenad will carry out the earthworks for Metsä Tissue's expansion of the paper mill in Mariestad. The value of the contract is approximately SEK 300 million, excl. VAT. The contract will be carried out as a construction contract for the client Skeppsviken Bygg in Skövde. In addition, HMB Construction was awarded a contract to build the residential care complex Gårdsjö Strand in Flen for Flen Kommunfastigheter. The contract amount is approximately SEK 150 million, excl. VAT, and will be carried out as a turnkey contract.
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 244 | 185 | 1,238 |
| Earnings before financial items and tax (EBIT) | 18 | 17 | 164 |
| Earnings before tax (EBT) | 16 | 16 | 160 |
| Operating profit margin | 7.2 % | 9.4 % | 13.2 % |
| Profit margin | 6.4 % | 8.6 % | 12.9 % |
• AF Offshore Decom
• Aeron
AF has varied activities aimed at the maritime business and the oil and gas sector. Our services range from new construction and modification of climate control systems (HVAC) for the offshore and marine markets, to the removal and recycling of offshore installations. AF has a state-of-the art facility for environmental clean-up at Vats.
There was a significant increase of 32% in offshore revenue compared to the first quarter last year, and the business area delivered good results that were on par with the previous year. Revenues in the 1st quarter were NOK 244 million (185 million). Earnings before tax were NOK 16 million (16 million).
AF Offshore Decom had a high level of activity compared to the same quarter last year and reported good profitability. A high level of activity at the Environmental Base at Vats also contributed to the good result for this quarter.
AF Offshore Decom demolishes and facilitates the recycling of offshore installations. AF Offshore Decom sorted 95 per cent of the structures for recycling in the first quarter, where metal is the main component. AF Offshore Decom demolished and facilitated the recycling of 11,651 (16,577) tonnes of steel in the first quarter, which corresponds to a reduction of alternative CO2 emissions of 11,651 tonnes compared to ore-based production.
Aeron had a high level of activity and good profitability during the quarter.
The order backlog for Offshore was NOK 1,625 million (1,583 million) as at 31 March 2023.
AF Gruppen shall have robust financing with respect to operational and market-related fluctuations. The Group's required return on invested capital is 20%, and its financial position shall underpin the growth strategy and provide an adequate dividend capacity.
In the 1st quarter, net operating cash flow was NOK -24 million (607 million) and net cash flow from investments was NOK -77 million (-34 million). Cash flow before capital transactions and financing was NOK -101 million (573 million) for the 1st quarter.
At the end of the 1st quarter, AF Gruppen had cash and cash equivalents of NOK 677 million (974 million). Net interestbearing debt (receivables) as at 31 March 2023 was NOK 570 million (-371 million).
AF Gruppen's total financing facilities are NOK 3,000 million. The financing include a multi-currency overdraft facility (revolving 1-year term) of NOK 2,000 million with DNB and a revolving long-term credit facility of NOK 1,000 million with Handelsbanken, available until 2024. Available liquidity at 31 March 2023, including overdraft facilities with Handelsbanken and DNB, is NOK 3,084 million.
Total assets were NOK 15,180 million (13,574 million) as at 31 March 2023. The Group's equity totalled NOK 3,458 million (3,639 million) as at 31 March 2023. This corresponds to an equity ratio of 22.8% (26.8%).
AF Gruppen's shares are listed on the Oslo Børs OB Match List and trade under the ticker AFG. The share is included in the Oslo Børs All Share Index (OSEAX), Benchmark Index (OSEBX) and Mutual Fund Index (OSEFX) and the Industrials Index (OINP).
As of 31 March 2023, the AF share had a closing price of NOK 149.00. This corresponds to a return of 3.6% in the first quarter. The Oslo Børs Benchmark Index showed a return of 0.4% for the same period.
As a result of the Group's strong financial position, it has been decided to propose to the General Meeting on
| LIST OF SHAREHOLDERS AS AT 31 MARCH 2023 | |
|---|---|
| ------------------------------------------ | -- |
| Name | No. Shares | % share | |
|---|---|---|---|
| ØMF Holding AS | 17,922,233 | 16.6 | |
| OBOS BBL | 17,459,483 | 16.2 | |
| Constructio AS | 15,288,012 | 14.2 | |
| Folketrygdfondet | 8,404,284 | 7.8 | |
| LJM AS | 2,515,217 | 2.3 | |
| Artel Kapital AS | 2,508,267 | 2.3 | |
| VITO Kongsvinger AS | 1,911,676 | 1.8 | |
| Arne Skogheim AS | 1,753,870 | 1.6 | |
| Janiko AS | 1,350,186 | 1.3 | |
| Moger Invest AS | 1,242,609 | 1.2 | |
| Ten largest shareholders | 70,355,837 | 65.3 | |
| Total other shareholders | 37,299,163 | 34.6 | |
| Own shares | 47,000 | 0.04 | |
| Total number of shares | 107,702,000 | 100.0 |
12 May 2023 that a dividend of NOK 6.50 (6.50) per share be distributed for the first half of the year. This distribution is consistent with the company's dividend policy, namely a semi-annual distribution and the intention to distribute a minimum of 50 per cent of the profit for the year as a dividend.
The number of shares in AF Gruppen is 107,702,000, which corresponds to share capital of NOK 5,385,100.
Health, safety and environment (HSE) has high priority in AF Gruppen and is an integral part of the management at all levels. AF has a structured and uniform HSE system that encompasses all projects. The working environment should be safe for everyone, including those who are employed by our subcontractors. AF´s subcontractors are therefore included in the injury statistics.
The LTI (lost-time injury) rate is an important measurement parameter for safety work at AF. The LTI-1 rate is defined as the number of serious personal injuries and absence injuries per million man-hours. A total of 8 (5) injuries resulting in absence were registered in the 1st quarter. This gives an LTI-1 rate of 1.4 (0.9) for the 1st quarter.
Systematic and long-term work is being carried out to reduce the LTI-1 rate. Significant resources are being invested to further improve our HSE efforts in order to be able to achieve our goal of an LTI-1 rate of zero. Key to this work is AF's fundamental understanding and acceptance that all injuries have a cause and can therefore be avoided. Identifying risk and risk analysis are key parts of our preventive activities. Based on a given risk scenario, physical and organisational barriers are established to reduce the risk of personal injury.
Learning from own mistakes is of critical importance. AF has systematised this through reporting and follow up of undesired incidents, as well as investigating the most serious incidents. The number of reports has increased steadily in recent years, and we see a clear correlation between the increased reporting of undesired incidents and decrease in injuries.
The registration of sick leave forms the basis for the measurement of health work at AF. In the 1st quarter, sick leave rate was 4.4% (5.5%). Our target is a healthy sick leave level, without absence due to occupational illnesses or injuries. Systematic efforts are being made, which consist of ongoing risk analysis of exposure that is harmful to health, the establishment of physical and organisational barriers, and close follow-up of employees on sick leave.
AF strives to avoid environmental damage and minimise undesirable effects on the environment. Environmental work is an integral part of HSE work, and the main tools used are therefore the same that are used otherwise in connection with HSE work.
As part of the strategy for 2021-2024, AF has set a goal of halving relative greenhouse gas emissions and waste volumes that cannot be reused or recycled by 2030. The most important factor in reducing our own climate footprint is logistics planning to, among other things, reduce the transport of masses. In addition, the use of electric machinery, a modern machinery and car fleet and sorting of waste will help to further reduce our own greenhouse gas emissions.
The source separation rate indicates how much of the waste from AF's operations is separated for the purpose of facilitating recycling. The government requirement for source separation is 70%. In the 1st quarter, the source separation rate for construction was 86% (89%), for renovation it was 89% (88%) and for demolition it was 97% (95%). These results are considered to be very good. A total of 125,160 tonnes (82,661 tonnes) of waste were separated at source in the 1st quarter.
1ST QUARTER 2023
AF wants to use the expertise we have to create further indirect savings on greenhouse gas emissions. AF's environmental centres are examples of services where materials that previously would have ended up in landfill sites now can be recovered and have their useful life extended. The environmental centres have recycled a total of 46,565 tonnes (51,514 tonnes) of materials for the 1st quarter.
The Offshore and Energy and Environment business areas are based on services that solve environmental challenges in the area of demolition and recycling. All our demolition activities, both onshore and offshore, are based on a circular economy, where over 95% of all material from demolition is sorted for recycling. Metals, especially steel, are one of the main components of that which is recycled. The steel industry accounts for about 7% of the world's total CO2 emissions. Reusing steel results in 70% lower CO2 emissions than ore-based production. This corresponds to a reduction in emissions of 1 kg CO2 for each kilo of steel recycled. AF Offshore Decom and AF Decom demolished and facilitated the recycling of 16,193 tonnes (27,806 tonnes) of metal in the 1st quarter. This represents a reduction of alternative CO2 emissions by around 16,193 tonnes (27,806 tonnes) for the 1st quarter.
Each year, AF reports climate accounts based on the Greenhouse Gas Protocol (GHG), where our own direct and indirect emissions (scope 1 and 2), as well as other selected indirect emissions (scope 3) are measured in tonnes of CO2 equivalents. The other selected indirect emissions included in the climate accounts are emissions from waste generated, business travel and commuting. Waste from demolition operations is not included in the emission figures in scope 3. As at 31 March 2023, the carbon footprint was 1.6 (1.4). AF has set a target of halving greenhouse gas emissions for each service type relative to revenue by 2030. The basis year of the reduction target of scope 1 and 2-emissions is 2020, and the carbon footprint for that year was 1,6. In AF's climate accounts, the use of diesel in construction equipment is the largest direct source of emissions.
| Climate accounts (tonnes CO2e1 ) |
Per 1. kv. 23 |
Per 1. kv. 22 |
|---|---|---|
| Direct emissions | 8,513 | 7,493 |
| Indirect emissions, energy consumption | 514 | 430 |
| Other indirect emissions | 2,549 | 1,420 |
| Greenhouse gas emissions (tonnes CO2e) | 11,576 | 9,343 |
| Revenue (NOK million) | 7,393 | 6,809 |
| Carbon footprint2 | 1.6 | 1.4 |
1) Greenhouse gas emissions with global warming potential
equivalent 2) Tonnes CO2e emissions per NOK million in revenue
AF Gruppen is working continuously to build a uniform corporate culture. Motivated employees and a solid organisation are an important foundation for creating value. It is prioritized in AF to develop organisations with a good composition of technical expertise and management at all levels. The resources are organised close to production, with project teams where the managers have a high degree of influence.
AF aims to be a company to which talented individuals apply, whether they are women or men. A long-term goal is to increase the total proportion of women to 20% and the proportion amongst officials to 40%. This is an ambitious goal. In the 1st quarter the share of women is 9.4 % (9.3 %) in total and 19.3 % (18.6 %) amongst officials.
In AF, everyone is of equal value, and the company shall have an inclusive and safe working environment with zero tolerance for discrimination and a culture where violations have consequences. AF has been working on the diversity project "The best people" since 2018, and as part of the project, the campaign "Of equal value" has been launched. The campaign has been very well received in all projects in both our Swedish and Norwegian business units. AF's work on diversity, including through the Diversitas network and
AF maintains a high focus on innovation and digitalisation within all our business areas. We are working in a structured manner on how new technology can contribute to increased productivity and minimise risk in our projects, a safer working environment for our employees, and not to mention create greater value for our customers. In addition, we are continuously seeking new business models on the border of or outside of our current core areas. AF Gruppen has its own corporate function for innovation and digitalisation, in addition to a joint venture fund with OBOS for venture capital investments in the building and construction industry (Construct Venture).
AF invests a lot of time and resources in development of employees through the AF Academy. More than 80% of the current managers have been recruited internally. Our employees are good ambassadors in the recruitment of new colleagues.
At the end of the 1st quarter AF Gruppen had a total of 6,012 (5,639) employees. Of these employees 4,846 (4,590) were employed in Norway, 1,122 (1,025) in Sweden, 21 (11) in Lithuania, 20 (13) in Germany and 3 (0) in Great Britain.
AF Gruppen is exposed to risk of both non-financial and financial nature. Risk reflects uncertainty or variations in the result. Non-financial risk encompasses business risk, reputational risk, and operational risk. Business risk arises as a result of external circumstances. These circumstances may, for example, be related to how competitors act, climate changes, regulatory changes or other political risk. The importance of business risk has been highlighted by the effect of Covid-19 pandemic and Russia´s invasion of Ukranie. Reputational risk is the risk of loss of reputation. AF's credibility is based on trust and we have an uncompromising attitude towards ethics and a strong corporate culture with zero tolerance for, among other things, corruption and bribery. Our employees represent AF Gruppen in all business context, and it is essential that they identify with and follow AF's Code of Conduct. Suppliers and subcontractors are also obliged to follow the Code of Conduct through AF's supplier declaration. Operational risk is the risk of losses due to deficiencies or errors in processes and systems, human errors or external events. AF Gruppen wants to undertake operational risk that the business units can influence and control. AF has developed risk management processes that are well adapted to our operations. Standardised, actionoriented risk management processes ensure comprehensive and coherent risk management in all parts of the organisation. AF seeks to limit exposure to risk that cannot be influenced. A risk review is conducted for all projects before a tender is even submitted. Analysis of risk during the tendering phase enables the correct pricing and management of risk in the project. The same project organisations conduct detailed risk reviews every quarter. The Corporate Management Team participates in risk reviews of all projects with a contract value in excess of NOK 100 million. In addition, 38 quarterly reviews in the business units were completed during the 1st quarter, where the Corporate Management Team also participated.
Financial risk encompasses market risk, credit risk and liquidity risk. Market risk includes commodity price risk, foreign exchange risk and interest rate risk. AF is exposed to foreign exchange risk, including indirectly via suppliers who purchase from abroad, as well as the purchase and leasing of machinery manufactured abroad. As a major demolition and recycling operator, AF Gruppen is also exposed to fluctuations in steel prices. AF aims to have low exposure to risks that cannot be influenced, and use hedging instruments to mitigate the risk associated with foreign exchange rates and steel prices. AF has credit risk in relation to customers, suppliers and partners. In addition to the parent company and bank guarantees, the use of credit rating tools contributes to reducing risk. The liquidity risk is considered low. AF Gruppen's available liquidity, including credit facilities of NOK 3,000 million, stood at NOK 3,084 million as at 31 March 2023.
High inflation, the energy crisis and disruptions to supply chains have resulted in a shift in the Norwegian and international economies. Significant increases in interest rates have been introduced over a short period of time and forecasts from Norges Bank, the central bank of Sweden (Riksbanken) and several other central banks indicate that interest rates will continue to rise. The Norwegian krone has weakened considerably as of late, and there is major uncertainty associated with the future market outlook.
The civil engineering market in Norway is less sensitive to cyclical fluctuations, as public sector demand is the greatest driver behind civil engineering investments. The Norwegian Government has set aside NOK 82.8 billion for transport in the 2023 national budget. Prognosesenteret updated its forecast in March with downward adjustments to growth expectations since September 2022. Prognosesenteret expects the total civil engineering market to grow by 1.7 per cent in 2023, 1.9 per cent in 2024 and 4.8 per cent in 2025. While growth will mainly come from operations and maintenance in 2023, investments are expected to drive growth in 2024 and 2025. Investments in the road development segment are expected to grow for the duration of the forecast period. The forecasts for the civil engineering market indicate a good basis for further growth for AF's civil engineering activities.
Figures from Property Norway (Eiendom Norge) show growth in residential property prices during the first quarter after a negative price development during the second half of 2022. On a national basis, residential property prices have risen by 6.8 per cent in the year to April 2023. At the interest rate meeting in April 2023, Norges Bank decided to raise the key rate by 0.25 percentage points to 3.25 per cent and maintain the inflation target of 2.0 per cent. Norges Bank indicated that there would be a further interest rate increase in June.
Prognosesenteret expects marginal changes in production value nationwide for 2023 and 2024 in the construction market. An increase in production values of 5.4 per cent is expected in 2025. There is expected to be a nationwide reduction in new builds in 2023, while the market for rehabilitation, renovation and extensions (ROT) is expected to grow. The growth is particularly evident in the regions of Oslo and the former counties of Akershus, Hordaland and Rogaland. Start permits for approximately 29,820 new residential units were registered in 2022. Prognosesenteret estimates that the number of start permits will decrease in 2023, however will pick up again in 2024 and 2025.
The general increase in prices for materials, energy and other goods is a significant element of uncertainty for our activities going forward. According to Statistics Norway's construction cost index for "Housing in total", prices increased by 6.0 per cent in March compared to the same period last year, of which labour costs increased by 4.5 per cent and materials by 7.6 per cent. The price of concrete has increased by 10.9 per cent since the previous quarter, while concrete elements have increased by 3.2 per cent during the same period. The price level for reinforcing steel and wood products fell by 10.8 per cent and 7.9 per cent respectively from the previous quarter, however remains significantly higher than prior to the Covid-19 pandemic. Projects with ongoing wage and price increase mechanisms partly compensate for the increased cost levels.
The Norwegian Government's national budget for 2023 contains several aspects that could impact our activities in Norway, both in terms of activity level and our direct costs. Lower predictability linked to public sector investments and indications of reduced public sector development and budget allocations for road and railway development are all creating added uncertainty in a challenging market. The Government's tightening of the contracting rules effective from 1 April 2023 also constitutes a challenge for AF Gruppen's Norwegian business, both directly and indirectly through our subcontractors.
The Norwegian authorities have set ambitious targets for reducing energy use up to 2030, and high electricity prices make investments in energy-efficient measures very attractive. According to the Norwegian Building Industry Association, the potential for energy efficiency is 10TWh throughout Norway, which will provide good market opportunities for AF's energy business.
The Energy and Environment business area encompasses AF's energy services related to land-based operations, as well as services related to demolition and recycling onshore in Norway. The activities of the business area are closely related to the construction market, where the level of new building starts will affect the market for demolition and recycling services. Demand for energy and other environmental-related services is growing. Cleaned material from AF's environmental centres is finding an increasing number of areas of application, such as an additive to spray concrete and as gritting sand during the winter season.
AF's offshore climate control business (HVAC) as well as maintenance and modifications, also has a better market outlook. Electrification of the marine sector and installations on the Norwegian shelf provides new market opportunities. The carbon tax is NOK 952 per tonne in 2023, and the "Climate Plan for 2021-2030" white paper has signaled that it will be increased to NOK 2,000/tonne in 2030. This can help accelerate the rate of electrification.
Offshore services for the removal and recycling of decommissioned oil platforms solve a significant societal challenge. The aim is to recycle as much of the materials from the decommissioned offshore platforms as possible. The recycling of steel from decommissioned oil platforms
is a significant contribution to reducing greenhouse gas emissions compared with ordinary steel production.
The run-down of petroleum activities on a global basis, with approximately 10,000 platforms in operation, provides great potential for AF Gruppen's decommissioning operations. During the 2022-2031 period, the British trade association Offshore Energies UK (OEUK) anticipates that two million tonnes of oil and gas installations will be removed from the North Sea. The market for removing offshore installations has long been characterised by postponements. At the same time, it is now expected that several large portfolios of oil platforms will be demolished over the next decade.
The growth in offshore wind expansion will create pressure on available vessels and port facilities. This may lead to higher prices for offshore decommissioning. Increased investment in offshore wind can also provide new market opportunities for AF's business.
Byggföretagen reports that building investments in Sweden (excluding civil engineering investments) amounted to SEK 491.5 billion in 2022, and expects this to decrease to SEK 409.5 billion (-16.7 per cent) in 2023, primarily in connection with the residential segment.
The Swedish residential property market had a moderate price development during the first quarter. At the end of March, Svensk Mäklarstatistik reported a 11.0 per cent price decrease for apartments and a 13.1 per cent decrease for detached houses since the previous year. As a result of high inflation, the central bank of Sweden decided in April to increase the key rate by 0.50 percentage points, from to 3.0 per cent to 3.5 per cent.
Board of Directors of AF Gruppen ASA
For more detailed information, please contact: Amund Tøftum, CEO [email protected] | +47 920 26 712 Anny Øen, CFO [email protected] | +47 982 23 116 Internet: www.afgruppen.no
271ST QUARTER 2023 Construction City. Photo: Catchlight
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Operating and other revenue | 7,393 | 6,809 | 31,205 |
| Subcontractors | -3,879 | -3,498 | -16,554 |
| Cost of materials | -1,263 | -1,255 | -5,346 |
| Payroll costs | -1,485 | -1,342 | -5,487 |
| Operating expenses ex. depreciation and impairment | -655 | -420 | -2,072 |
| Net gains (losses) and profit (loss) from associates | 35 | 52 | 190 |
| EBITDA | 146 | 345 | 1,937 |
| Depreciation and impairment of tangible fixed assets | -52 | -49 | -209 |
| Depreciation and impairment of right of use assets | -79 | -81 | -317 |
| Depreciation and impairment of intangible assets | - | - | -2 |
| Earnings before financial items and tax (EBIT) | 15 | 215 | 1,409 |
| Net financial items | -2 | -6 | -10 |
| Earnings before tax (EBT) | 13 | 209 | 1,400 |
| Income tax expense | -3 | -30 | -248 |
| Net income for the period | 10 | 179 | 1,151 |
| Attributable to: | |||
| Shareholders in the Parent Company | -3 | 149 | 958 |
| Non-controlling interests | 13 | 29 | 193 |
| Net income for the period | 10 | 179 | 1,151 |
| Earnings per share (NOK) | -0.03 | 1.40 | 8.96 |
| Diluted earnings per share (NOK) | -0.03 | 1.39 | 8.96 |
| Key figures | 1Q 23 | 1Q 22 | 2022 |
| EBITDA margin | 2.0 % | 5.1 % | 6.2 % |
| Operating profit margin | 0.2 % | 3.2 % | 4.5 % |
| Profit margin | 0.2 % | 3.1 % | 4.5 % |
| Return on capital employed (ROaCE)1) | 26.8 % | 35.4 % | 31.6 % |
| Return on equity | 29.4 % | 35.4 % | 34.0 % |
| Equity ratio | 22.8 % | 26.8 % | 24.2 % |
| Net interest-bearing debt (receivables) 2) | 570 | -371 | 329 |
| Capital employed 3) | 5,071 | 4,593 | 4,900 |
| Order backlog | 41,668 | 42,697 | 39,765 |
1) Return on capital employed (ROaCE) = (Earnings before tax + interest expense) / average capital employed
2) Net interest-bearing debt (receivables) = Cash and cash equivalents + interest-bearing receivables - interest-bearing debt
3) Capital employed = Equity + interest-bearing debt
| NOK million Net income for the period Net actuarial gains and losses Currency translation differences non-controlling int. Items that will not be reclassified to income statement in subsequent periods Net cash flow hedges Currency translation differences shareholders of the parent Items that may be reclassified to income statement in subsequent periods Other comprehensive income for the period |
1Q 23 | 1Q 22 | 2022 | |
|---|---|---|---|---|
| 10 | 179 | 1,151 | ||
| - | - | 2 | ||
| 6 | -7 | -6 | ||
| 6 | -7 | -5 | ||
| -29 | 1 | 4 | ||
| 71 | -40 | -35 | ||
| 42 | -40 | -31 | ||
| 48 | -48 | -36 | ||
| Total comprehensive income for the period | 58 | 133 | 1,116 | |
| Attributable to: | ||||
| - Shareholders of the parent | 39 | 111 | 929 | |
| - Non-controlling interests | 19 | 22 | 187 | |
| Total comprehensive income for the period | 58 | 133 | 1,116 |
| NOK million | Paid-in capital |
Translation differences |
Actuarial pension gain/ (loss) |
Cash flow hedge |
Retained earnings |
Attributable to share holders |
Non controlling interests |
Total equity |
|---|---|---|---|---|---|---|---|---|
| As at 31 December 2021 | 506 | 16 | -20 | -22 | 2,174 | 2,654 | 918 | 3,572 |
| Comprehensive income | - | -40 | - | 1 | 149 | 110 | 22 | 133 |
| Capital increase | 40 | - | - | - | - | 40 | - | 40 |
| Purchase of treasury shares | - | - | - | - | -40 | -40 | - | -40 |
| Sale of treasury shares | - | - | - | - | 10 | 10 | - | 10 |
| Dividend paid | - | - | - | - | -56 | -56 | ||
| Share-based remuneration | 7 | - | - | - | - | 7 | 1 | 8 |
| Put options for non-controlling interests | - | - | - | - | 4 | 4 | - | 4 |
| Addition from acquisition of subsidiaries | - | - | - | - | - | - | 14 | 14 |
| Transactions with non-controlling interests | - | - | - | - | -83 | -83 | 37 | -46 |
| As at 31 March 2022 | 553 | -24 | -20 | -21 | 2,215 | 2,703 | 936 | 3,639 |
| As at 31 December 2022 | 682 | -19 | -19 | -18 | 1,950 | 2,575 | 918 | 3,494 |
| Comprehensive income | - | 71 | - | -29 | -3 | 39 | 19 | 58 |
| Capital increase | - | - | - | - | - | - | - | - |
| Purchase of treasury shares | - | - | - | - | -18 | -18 | - | -18 |
| Sale of treasury shares | - | - | - | - | 11 | 11 | - | 11 |
| Dividend paid | - | - | - | - | - | - | -63 | -63 |
| Share-based remuneration | 7 | - | - | - | - | 7 | 1 | 8 |
| Put options for non-controlling interests | - | - | - | - | -10 | -10 | - | -10 |
| Addition from acquisition of subsidiaries | - | - | - | - | - | - | 3 | 3 |
| Transactions with non-controlling interests | - | - | - | - | 4 | 4 | -29 | -25 |
| As at 31 March 2023 | 689 | 52 | -19 | -47 | 1,933 | 2,608 | 850 | 3,458 |
| NOK million | 31/03/23 | 31/03/22 | 31/12/22 | |
|---|---|---|---|---|
| Tangible fixed assets | 1,469 | 1,429 | 1,462 | |
| Right of use assets | 895 | 787 | 859 | |
| Intangible assets Investment in associates and joint ventures |
4,533 507 |
4,456 632 |
4,461 490 |
|
| Deferred tax asset | 131 | 8 | 76 | |
| Interest-bearing receivables | 315 | 284 | 268 | |
| Pension plan and other financial assets | 9 | 13 | 13 | |
| Total non-current assets | 7,859 | 7,608 | 7,630 | |
| Inventories | 304 | 222 | 301 | |
| Projects for own account | 159 | 47 | 158 | |
| Trade receivables and contract assets | 6,125 | 4,657 | 5,557 | |
| Interest-bearing receivables | 51 | 67 | 44 | |
| Derivatives | 4 | - | - | |
| Cash and cash equivalents | 677 | 974 | 765 | |
| Total current assets | 7,320 | 5,967 | 6,827 | |
| Total assets | 15,180 | 13,574 | 14,457 | |
| Equity attributable to shareholders of the parent | 2,608 | 2,703 | 2,575 | |
| Non-controlling interests | 850 | 936 | 918 | |
| Total equity | 3,458 | 3,639 | 3,494 | |
| Interest-bearing debt | 77 | 90 | 75 | |
| Interest-bearing debt - lease liability | 649 | 587 | 607 | |
| Retirement benefit obligations | 3 | 6 | 3 | |
| Provisions | 135 | 113 | 117 | |
| Deferred tax | 430 | 580 | 445 | |
| Derivatives | 28 | 4 | 2 | |
| Total non-current liabilities | 1,323 | 1,381 | 1,250 | |
| Interest-bearing debt | 603 | 9 | 433 | |
| Interest-bearing debt - lease liability | 284 | 267 | 290 | |
| Trade payables and other short-term debt | 8,361 | 7,467 | 7,969 | |
| Derivatives | 36 | 35 | 20 | |
| Provisions | 705 | 604 | 585 | |
| Tax payable | 409 | 172 | 416 | |
| Total current liabilities | 10,399 | 8,554 | 9,713 | |
| Total liabilities | 11,721 | 9,935 | 10,963 | |
| Total equity and liabilities | 15,180 | 13,574 | 14,457 | |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| Earnings before financial items and tax (EBIT) | 15 | 215 | 1,409 |
| Depreciation, amortisation and impairment | 131 | 130 | 528 |
| Change in net working capital | -63 | 421 | -43 |
| Income taxes paid | -81 | -115 | -299 |
| Net gains (losses) and profit (loss) from associates | -35 | -52 | -190 |
| Other adjustments | 8 | 8 | 55 |
| Cash flow from operating activities | -24 | 607 | 1,460 |
| Net investments | -77 | -34 | 67 |
| Cash flow before financing activities | -101 | 573 | 1,527 |
| Share issue | - | - | 85 |
| Dividends paid to shareholders in the Parent Company | - | - | -1,125 |
| Dividends paid to non-controlling interests | -53 | -56 | -240 |
| Transactions with non-controlling interests | -23 | -38 | -135 |
| Sale (purchase) of treasury shares | -7 | -30 | -9 |
| Borrowings (repayment) of debt | 69 | -127 | 29 |
| Interest and other financial expenses paid | -19 | -12 | -41 |
| Cash flow from financing activities | -33 | -263 | -1,437 |
| Change in cash and cash equivalents with cash effect | -134 | 310 | 90 |
| Net cash and cash equivalents at the beginning of | 765 | 680 | 680 |
| period Change in cash and cash equivalents without cash |
45 | -17 | -4 |
| effect Net cash and cash equivalents at the end of period |
677 | 974 | 765 |
AF Gruppen's division into operating segments is consistent with the division of the business areas: Civil Engineering, Construction, Betonmast, Property, Energy and Environment, Sweden and Offshore.
Segment information is presented in accordance with the AF Gruppen's accounting policies in accordance with IFRS with the exception of the principles for revenue recognition for residential property development in accordance with IFRS 15. This policy exception applies to the segments Construction, Property and Sweden. Revenue from projects for own account in these segments is not recognised upon handover as regulated in IFRS 15, but in accordance with the degree of completion method. This means that the recognition of revenue in these projects is the product of the degree of completion, sales ratio and expected contribution margin.
Segment information is presented in accordance with reporting to the Corporate Management Team and is consistent with the financial information utilised by the Company's senior decision-makers when evaluating developments and allocating resources. The effect of the deviant application of principles on the consolidated accounts is illustrated in a separate table in the segment information. Additional information on projects for own account is provided in Note 7.
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 1,356 | 1,141 | 5,370 |
| Internal operating and other revenue | 95 | 100 | 549 |
| Total operating and other revenue | 1,451 | 1,242 | 5,919 |
| EBITDA | 122 | 129 | 636 |
| Earnings before financial items and tax (EBIT) | 77 | 84 | 445 |
| Earnings before tax (EBT) | 78 | 83 | 440 |
| EBITDA-margin | 8.4 % | 10.4 % | 10.7 % |
| Operating margin | 5.3 % | 6.7 % | 7.5 % |
| Profit margin | 5.4 % | 6.7 % | 7.4 % |
| Assets | 3,572 | 2,614 | 3,546 |
| Order backlog | 17,517 | 12,425 | 15,368 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 2,558 | 2,466 | 10,992 |
| Internal operating and other revenue | 33 | 15 | 98 |
| Total operating and other revenue | 2,591 | 2,481 | 11,090 |
| EBITDA | 73 | 39 | 410 |
| Earnings before financial items and tax (EBIT) | 51 | 18 | 322 |
| Earnings before tax (EBT) | 46 | 17 | 318 |
| EBITDA-margin | 2.8 % | 1.6 % | 3.7 % |
| Operating margin | 2.0 % | 0.7 % | 2.9 % |
| Profit margin | 1.8 % | 0.7 % | 2.9 % |
| Assets | 4,859 | 4,631 | 4,887 |
| Order backlog | 9,342 | 13,211 | 10,045 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 1,206 | 1,243 | 5,142 |
| Internal operating and other revenue | - | - | 2 |
| Total operating and other revenue | 1,206 | 1,243 | 5,145 |
| EBITDA | 39 | 29 | 190 |
| Earnings before financial items and tax (EBIT) | 34 | 23 | 166 |
| Earnings before tax (EBT) | 40 | 20 | 174 |
| EBITDA-margin | 3.3 % | 2.4 % | 3.7 % |
| Operating margin | 2.8 % | 1.8 % | 3.2 % |
| Profit margin | 3.3 % | 1.6 % | 3.4 % |
| Assets Order backlog |
3,209 5,115 |
3,400 6,258 |
3,257 4,415 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 10 | 6 | 30 |
| Internal operating and other revenue | - | - | - |
| Total operating and other revenue | 10 | 6 | 30 |
| EBITDA | -1 | 2 | 75 |
| Earnings before financial items and tax (EBIT) | -1 | 2 | 75 |
| Earnings before tax (EBT) | 1 | 3 | 82 |
| EBITDA-margin | - | - | - |
| Operating margin | - | - | - |
| Profit margin | - | - | - |
| Assets | 701 | 688 | 660 |
| Order backlog | - | - | - |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 276 | 222 | 988 |
| Internal operating and other revenue | 11 | 15 | 74 |
| Total operating and other revenue | 287 | 237 | 1,062 |
| EBITDA | 27 | 28 | 150 |
| Earnings before financial items and tax (EBIT) | 11 | 12 | 84 |
| Earnings before tax (EBT) | 13 | 11 | 82 |
| EBITDA-margin | 9.4 % | 11.7 % | 14.2 % |
| Operating margin | 3.7 % | 4.9 % | 7.9 % |
| Profit margin | 4.4 % | 4.5 % | 7.7 % |
| Assets | 708 | 612 | 733 |
| Order backlog | 694 | 763 | 640 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 1,921 | 1,585 | 7,438 |
| Internal operating and other revenue | 7 | 1 | 7 |
| Total operating and other revenue | 1,927 | 1,585 | 7,445 |
| EBITDA | -145 | 61 | 193 |
| Earnings before financial items and tax (EBIT) | -162 | 46 | 130 |
| Earnings before tax (EBT) | -163 | 44 | 127 |
| EBITDA-margin | -7.5 % | 3.9 % | 2.6 % |
| Operating margin | -8.4 % | 2.9 % | 1.7 % |
| Profit margin | -8.5 % | 2.8 % | 1.7 % |
| Assets | 3,113 | 2,760 | 2,712 |
| Order backlog | 7,645 | 8,531 | 7,638 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 244 | 184 | 1,236 |
| Internal operating and other revenue | - | - | 1 |
| Total operating and other revenue | 244 | 185 | 1,238 |
| EBITDA | 25 | 26 | 194 |
| Earnings before financial items and tax (EBIT) | 18 | 17 | 164 |
| Earnings before tax (EBT) | 16 | 16 | 160 |
| EBITDA-margin | 10.3 % | 13.9 % | 15.7 % |
| Operating margin | 7.2 % | 9.4 % | 13.2 % |
| Profit margin | 6.4 % | 8.6 % | 12.9 % |
| Assets | 1,022 | 923 | 1,003 |
| Order backlog | 1,625 | 1,583 | 1,694 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 17 | 14 | 59 |
| Internal operating and other revenue | 12 | 12 | 48 |
| Total operating and other revenue | 29 | 26 | 107 |
| EBITDA | 19 | 11 | 40 |
| Earnings before financial items and tax (EBIT) | 1 | -5 | -24 |
| Earnings before tax (EBT) | -6 | -4 | -31 |
| Assets | 1,965 | 1,650 | 2,175 |
| Order backlog | - | - | - |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | -81 | -2 | 152 |
| Internal operating and other revenue | -158 | -143 | -779 |
| Total operating and other revenue | -240 | -145 | -627 |
| EBITDA | -2 | -2 | 33 |
| Earnings before financial items and tax (EBIT) | -2 | -2 | 33 |
| Earnings before tax (EBT) | -1 | -2 | 33 |
| Assets | -3,894 | -3,640 | -4,448 |
| Order backlog | -461 | -297 | -410 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | -112 | -50 | -203 |
| Internal operating and other revenue | - | - | - |
| Total operating and other revenue | -112 | -50 | -203 |
| EBITDA | -10 | 21 | 15 |
| Earnings before financial items and tax (EBIT) | -10 | 21 | 15 |
| Earnings before tax (EBT) | -10 | 21 | 15 |
| Assets | -76 | -64 | -67 |
| Order backlog | 193 | 222 | 375 |
| NOK million | 1Q 23 | 1Q 22 | 2022 |
|---|---|---|---|
| External operating and other revenue | 7,393 | 6,809 | 31,205 |
| Internal operating and other revenue | - | - | - |
| Total operating and other revenue | 7,393 | 6,809 | 31,205 |
| EBITDA | 146 | 345 | 1,937 |
| Earnings before financial items and tax (EBIT) | 15 | 215 | 1,409 |
| Earnings before tax (EBT) | 13 | 209 | 1,400 |
| EBITDA-margin | 2.0 % | 5.1 % | 6.2 % |
| Operating margin | 0.2 % | 3.2 % | 4.5 % |
| Profit margin | 0.2 % | 3.1 % | 4.5 % |
| Assets | 15,180 | 13,574 | 14,457 |
| Order backlog | 41,668 | 42,697 | 39,765 |
AF Gruppen is one of Norway's leading contracting and industrial groups. AF Gruppen is divided into seven business areas: Civil Engineering, Construction, Betonmast, Property, Energy and Environment, Sweden and Offshore.
AF Gruppen ASA is a public limited company registered and domiciled in Norway. The head office is located at Innspurten 15, 0663 Oslo. AF is listed on Oslo Børs under the ticker symbol AFG.
This summary of financial information for the 1st quarter 2023 has not been audited.
The consolidated accounts for AF Gruppen encompass AF Gruppen ASA and its subsidiaries, joint ventures and associated companies. The consolidated financial statements for the 1st quarter 2023 have been prepared in accordance with IAS 34 Interim Accounts. The summary of the financial information presented in the quarterly accounts is intended to be read in conjunction with the annual report for 2021, which has been prepared in accordance with the International Financial Reporting Standards (IFRS).
As a result of rounding off, the numbers and percentages will not always add up to the total.
There were no material changes to the Group's structure during the year.
AF Gruppen presents figures for the Group as lessee to comply with the accounting principles for IFRS 16. The present value of future rental payments for lease liabilities is recognised in the balance sheet as an interest-bearing loan, and right of use is recognised as a non-current asset, except for short-term or terminable leases. The right of use asset recognised on the balance sheet will be amortised over the agreed term of the lease including any reasonably certain option periods, and interest on the lease liability will be recognised as an interest expense. Both instalments and interest on lease liabilities recognised on the balance sheet are classified as cash flow from financing activities in the cash flow statement.
Recognised lease liabilities in the Group affect key figures, including equity ratio and net interest-bearing liabilities, as shown in tables below.
| 1Q 23 less IFRS |
Effect of | 1Q 22 less IFRS |
Effect of | 2022 less IFRS |
Effect of | ||||
|---|---|---|---|---|---|---|---|---|---|
| NOK million | 16 | IFRS 16 | 1Q 23 | 16 | IFRS 16 | 1Q 22 | 16 | IFRS 16 | 2022 |
| Operating expenses excl. depr. and impairment |
-725 | 70 | -655 | -496 | 75 | -420 | -2,368 | 296 | -2,072 |
| EBITDA | 76 | 70 | 146 | 270 | 75 | 345 | 1,640 | 296 | 1,937 |
| Depr. and impairment of right of use assets |
-14 | -65 | -79 | -10 | -71 | -81 | -40 | -276 | -317 |
| Earnings before financial items and tax (EBIT) |
9 | 6 | 15 | 210 | 5 | 215 | 1,389 | 20 | 1,409 |
| Net financial items | 3 | -5 | -2 | -2 | -4 | -6 | 8 | -18 | -10 |
| Earnings before tax (EBT) | 12 | - | 13 | 208 | 1 | 209 | 1,397 | 2 | 1,400 |
| Income tax expense | -3 | - | -3 | -30 | - | -30 | -248 | -1 | -248 |
| Net income for the period | 10 | - | 10 | 178 | 1 | 179 | 1,150 | 2 | 1,151 |
| NOK million | 31.03.23 less IFRS 16 |
Effect of IFRS 16 |
31.03.23 | 31.03.22 less IFRS 16 |
Effect of IFRS 16 |
31.03.22 | 31.12.22 less IFRS 16 |
Effect of IFRS 16 |
2022 |
|---|---|---|---|---|---|---|---|---|---|
| Right of use assets | 240 | 655 | 895 | 231 | 556 | 787 | 233 | 627 | 859 |
| Total assets | 14,525 | 655 | 15,180 | 13,018 | 556 | 13,574 | 13,830 | 627 | 14,457 |
| Total equity | 3,479 | -21 | 3,458 | 3,661 | -22 | 3,639 | 3,514 | -20 | 3,494 |
| Interest-bearing debt - lease liability (non-current) |
168 | 480 | 649 | 172 | 415 | 587 | 140 | 467 | 607 |
| Deferred tax | 435 | -5 | 430 | 586 | -5 | 580 | 450 | -5 | 445 |
| Interest-bearing debt - lease liability (current) |
44 | 241 | 284 | 38 | 230 | 267 | 64 | 226 | 290 |
| Total equity and liabilities | 14,525 | 655 | 15,180 | 13,018 | 556 | 13,574 | 13,830 | 627 | 14,457 |
| Equity ratio | 24.0 % | - | 22.8 % | 28.1 % | - | 26.8 % | 25.4 % | - | 24.2 % |
| Gross interest-bearing debt | 892 | 721 | 1,613 | 309 | 645 | 954 | 713 | 693 | 1,406 |
| Net interest-bearing debt (receivables) |
-151 | 721 | 570 | -1,015 | 645 | -371 | -364 | 693 | 329 |
The preparation of the interim accounts requires the use of assessments, estimates and assumptions that have an effect on the application of accounting principles and recognised figures related to assets and liabilities, revenues and costs. The estimates are based on the management's best judgement and experience, and there is some uncertainty related to the concurrence of these estimates with the actual result. Estimates and their underlying assumptions are assessed on a continuous basis. Changes in accounting estimates are recognised for the period in which the estimate is changed and for future periods if these are affected by the change in estimate.
The Group's related parties consist of associates, joint ventures, the Company's shareholders, members of the Board of Directors and Corporate Management Team. All business transactions with related parties are carried out in accordance with the arm's length principle.
The segment information is presented in accordance with the Group's accounting policies in accordance with IFRS except for the principles for revenue recognition for residential property development in accordance with IFRS 15. This policy exception applies to the Construction, Property and Sweden segments. Revenue from projects for own account in these segments is not recognised upon handover as regulated in IFRS 15, but in accordance with the percentage of completion method. This means that revenue and cost for these projects is recognized in proportion with the stage of completion and the sales ratio for the project. The effect of this on the consolidated accounts is illustrated in a separate table in the segment information. The Betonmast segment is reported in accordance with IFRS. To ensure completeness Betonmast's property projects are included in the table below.
The effect of the deviant application of principles in the segment accounts with respect to earnings before tax is NOK -10 million (21 million) for the 1st quarter 2023. The effect on equity was NOK -83 million (-66 million), and the accumulated reversed revenues were NOK 193 million (222 million) as at 31 March 2023.
The table on the next page shows residential housing projects for our own account that are in the production phase. Contractor values have been included in those cases where group companies are the contractor.
| Number of housing units | Construction period | ||||||
|---|---|---|---|---|---|---|---|
| Property projects for own account | AF's construction value1) |
Total number |
Hereof transferred in 2022 |
Hereof completed not transf. |
Start up | Completion | Ownership share AF |
| Lilleby Triangel B4, Trondheim | 51 | 54 | 1 | - | Q3 2019 | Q2 2021 | 33% |
| Brøter Terrasse, Lillestrøm | - | 78 | 1 | 5 | Q3 2020 | Q4 2022 | 35% |
| Total completed in 2021 - Property2) | 51 | 132 | 2 | 5 | |||
| Kosterbaden Fritid, Koster | - | 20 | - | 13 | - | - | 100% |
| Snipetorp, Skien | - | 16 | - | 4 | Q3 2018 | Q2 2020 | 50% |
| Lietorvet II, Skien | - | 26 | - | 1 | Q3 2019 | Q4 2021 | 25% |
| 2317 Sentrumskvartalet A-B, Hamar | 172 | 73 | 1 | 2 | Q2 2020 | Q1 2022 | 50% |
| 2317 Sentrumskvartalet C, Hamar | 54 | 23 | - | 4 | Q2 2021 | Q3 2022 | 50% |
| Klosterøya Vest 4, Skien | - | 44 | 14 | - | Q1 2021 | Q3 2022 | 24% |
| Total completed earlier years - Betonmast2) | 226 | 202 | 15 | 24 | |||
| Stadsgården 2, Halmstad | 69 | 42 | 1 | - | Q4 2021 | Q3 2022 | 50% |
| Total completed earlier years - Sweden2) | 69 | 42 | 1 | - | |||
| 2317 Sentrumskvartalet D, Hamar | 59 | 25 | 19 | 6 | Q3 2021 | Q1 2023 | 50% |
| Klosterøya Vest 4, Skien | - | 25 | 11 | 14 | Q2 2021 | Q1 2023 | 24% |
| Total completed in 2022 - Betonmast segment | 59 | 50 | 30 | 20 | |||
| Kråkehaugen, Bergen (LAB Eiendom) | 185 | 55 | - | - | Q2 2021 | Q2 2023 | 50% |
| Fyrstikkbakken, Oslo | 370 | 159 | - | - | Q2 2021 | Q4 2023 | 50% |
| Skårersletta Midt 1 og 2, Lørenskog | 409 | 169 | - | - | Q3 2021 | Q1 2024 | 50% |
| Bekkestua Have, Bærum | - | 232 | - | - | Q4 2021 | Q2 2024 | 50% |
| Rolvsrud Arena trinn 1, Lørenskog | 266 | 95 | - | - | Q2 2022 | Q2 2024 | 33% |
| Skiparviklia 3D, Bergen (LAB Eiendom) | 23 | 4 | - | - | Q2 2022 | Q4 2023 | 50% |
| Baneveien, Bergen (LAB Eiendom) | 17 | 1 | - | - | Q2 2022 | Q1 2024 | 50% |
| Skårersletta Midt 3 og 4, Lørenskog | 305 | 126 | - | - | Q4 2022 | Q3 2024 | 50% |
| Rolvsrud Arena trinn 2, Lørenskog | 277 | 99 | - | - | Q4 2022 | Q1 2025 | 33% |
| Total in production - Property segment | 1,853 | 940 | - | - | |||
| SPG Bostader Linden, Strömstad3) | 148 | 162 | - | - | Q4 2021 | Q3 2023 | 45% |
| SPG Bostader Häggen, Strömstad3) | 86 | 94 | - | - | Q2 2022 | Q4 2023 | 45% |
| Total in production - Betonmast segment | 234 | 256 | - | - | |||
| BRF Prefekten, Mölndal | 125 | 83 | - | - | Q4 2021 | Q1 2024 | 50% |
| Total in production - Sweden segment | 125 | 83 | - | - |
1) NOK million excl. VAT
2) Only projects with not sold or not transferred units as at year end 2022 are included.
3) Built for rental and will be sold collectively ("hyresrett")
There have been no events since the end of the quarter that would have had a material effect on the quarterly financial statements.
AF Gruppen presents alternative performance targets as a supplement to performance targets that are regulated by IFRS. The alternative performance targets are presented to provide better insight into and understanding of the operations, financial standing and foundation for development going forward. AF Gruppen uses alternative performance targets that are commonly used in the industry and among analysts and investors.
This performance target provides useful information to both AF's management and Board of Directors, as well as to investors concerning the results that have been achieved during the period under analysis. AF uses the performance target to measure the return on capital employed, regardless of whether the financing is through equity capital or debt. Use of the performance target should not be considered an alternative to performance targets calculated in accordance with IFRS, but as a supplement.
The alternative performance targets are defined as follows:
EBITDA: Earnings before i) taxes, ii) net financial items, iii) depreciation and amortisation.
Operating profit (EBIT): Earnings before i) taxes, ii) net financial items.
EBITDA margin: EBITDA divided by operating revenue and other revenues.
Operating margin: Operating profit (EBIT) divided by operating revenue and other revenues.
Profit margin: Earnings before tax divided by operating revenue and other revenues.
Gross interest-bearing debt: Sum total of long-term interest-bearing loans and credits and short-term interest-bearing loans and credits.
Net interest-bearing debt (receivables): Gross interest-bearing debt less i) long-term interest-bearing receivables, ii) short-term interest-bearing receivables and iii) cash and cash equivalents.
Capital employed: Sum total of shareholders' equity and gross interest-bearing debt.
Average capital employed: Average capital employed in the last four quarters.
Return on capital employed (ROaCE): Earnings before taxes and interest divided by the average capital employed.
Equity ratio: Shareholders' equity divided by total equity and liabilities.
Average shareholders' equity: Average shareholders' equity in the last four quarters.
Return on equity: Net income divided by average shareholders' equity.
Order backlog: Remaining estimated value of contracts, contract changes and orders that have been agreed upon, but have not been earned by the reporting date.
The table below shows the reconciliation of alternative performance targets with line items in the reported financial figures in accordance with IFRS.
| NOK million | 31/03/23 | 31/03/22 | 31/12/22 |
|---|---|---|---|
| GROSS INTEREST-BEARING DEBT / NET INTEREST-BEARING DEBT | |||
| Non-current interest-bearing debt | 77 | 90 | 75 |
| Non-current interest-bearing debt - lease liability | 649 | 587 | 607 |
| Current interest-bearing debt | 603 | 9 | 433 |
| Current interest-bearing debt - lease liability | 284 | 267 | 290 |
| Gross interest-bearing debt | 1,613 | 954 | 1,406 |
| Less: Non-current interest-bearing receivables |
-315 | -284 | -268 |
| Current interest-bearing receivables | -51 | -67 | -44 |
| Cash and cash equivalents | -677 | -974 | -765 |
| Net interest-bearing debt (receivables) | 570 | -371 | 329 |
| NOK million | 31/03/23 | 31/03/22 | 31/12/22 |
|---|---|---|---|
| CAPITAL EMPLOYED | |||
| Shareholders' equity | 3,458 | 3,639 | 3,494 |
| Gross interest-bearing debt | 1,613 | 954 | 1,406 |
| Capital employed | 5,071 | 4,593 | 4,900 |
| AVERAGE CAPITAL EMPLOYED | |||
| Capital employed as at 2nd quarter 2021 | - | 4,231 | - |
| Capital employed as at 3rd quarter 2021 | - | 4,489 | - |
| Capital employed as at 4th quarter 2021 | - | 4,571 | - |
| Capital employed as at 1st quarter 2022 | - | 4,593 | 4,593 |
| Capital employed as at 2nd quarter 2022 | 4,366 | - | 4,366 |
| Capital employed as at 3rd quarter 2022 | 4,385 | - | 4,385 |
| Capital employed as at 4th quarter 2022 | 4,900 | - | 4,900 |
| Capital employed as at 1st quarter 2023 | 5,071 | - | - |
| Average capital employed | 4,680 | 4,471 | 4,561 |
| RETURN ON CAPITAL EMPLOYED | |||
| Earnings before tax 2nd quarter 2021 | - | 356 | - |
| Earnings before tax 3rd quarter 2021 | - | 344 | - |
| Earnings before tax 4th quarter 2021 | - | 635 | - |
| Earnings before tax 1st quarter 2022 | - | 209 | 209 |
| Earnings before tax 2nd quarter 2022 | 426 | - | 426 |
| Earnings before tax 3rd quarter 2022 | 263 | - | 263 |
| Earnings before tax 4th quarter 2022 | 502 | - | 502 |
| Earnings before tax 1st quarter 2023 | 13 | - | - |
| Earnings before tax last four quarters | 1,204 | 1,543 | 1,400 |
| Interest expense 2nd quarter 2021 | - | 10 | - |
| Interest expense 3rd quarter 2021 | - | 19 | - |
| Interest expense 4th quarter 2021 | - | -2 | - |
| Interest expense 1st quarter 2022 | - | 10 | 10 |
| Interest expense 2nd quarter 2022 | 8 | - | 8 |
| Interest expense 3rd quarter 2022 | 10 | - | 10 |
| Interest expense 4th quarter 2022 | 15 | - | 15 |
| Interest expense 1st quarter 2023 | 20 | - | - |
| Interest expense last four quarters | 53 | 37 | 43 |
| Earnings before tax and interest expense last four quarters | 1,256 | 1,581 | 1,442 |
| Divided by: | |||
| Average capital employed | 4,680 | 4,471 | 4,561 |
| Return on capital employed | 26.8 % | 35.4 % | 31.6 % |
| NOK million | 31/03/23 | 31/03/22 | 31/12/22 |
|---|---|---|---|
| EQUITY RATIO | |||
| Shareholders' equity | 3,458 | 3,639 | 3,494 |
| Divided by: | |||
| Total equity and liabilities | 15,180 | 13,574 | 14,457 |
| Equity ratio | 22.8 % | 26.8 % | 24.2 % |
| AVERGE SHAREHOLDERS' EQUITY | |||
| Shareholder's equity as at 2nd quarter 2021 | - | 3,117 | - |
| Shareholder's equity as at 3rd quarter 2021 | - | 3,378 | - |
| Shareholder's equity as at 4th quarter 2021 | - | 3,572 | - |
| Shareholder's equity as at 1st quarter 2022 | - | 3,639 | 3,639 |
| Shareholder's equity as at 2nd quarter 2022 | 3,126 | - | 3,126 |
| Shareholder's equity as at 3rd quarter 2022 | 3,286 | - | 3,286 |
| Shareholder's equity as at 4th quarter 2022 | 3,494 | - | 3,494 |
| Shareholder's equity as at 1st quarter 2023 | 3,458 | - | - |
| Average shareholders' equity | 3,341 | 3,427 | 3,386 |
| RETURN ON EQUITY | |||
| Net income 2nd quarter 2021 | - | 279 | - |
| Net income 3rd quarter 2021 | - | 270 | - |
| Net income 4th quarter 2021 | - | 486 | - |
| Net income 1st quarter 2022 | - | 179 | 179 |
| Net income 2nd quarter 2022 | 337 | - | 337 |
| Net income 3rd quarter 2022 | 207 | - | 207 |
| Net income 4th quarter 2022 | 428 | - | 428 |
| Net income 1st quarter 2023 | 10 | - | - |
| Net income for the last four quarters | 983 | 1,214 | 1,151 |
| Divided by: | |||
| Average equity | 3,341 | 3,427 | 3,386 |
| Return on equity | 29.4 % | 35.4 % | 34.0 % |
Innspurten 15 0603 Oslo T +47 22 89 11 00 F +47 22 89 11 01
Postboks 6272 Etterstad 0603 Oslo Norway
Pål Egil Rønn, Board Chairman Hege Bømark Kristian Holth Saloume Djoudat Erik Veiby Hilde Kristin Herud Arne Baumann Arne Sveen Hilde W. Flaen Espen Jahr
Amund Tøftum, CEO Anny Øen, CFO Geir Flåta, EVP Civil Engineering and Property Bård Frydenlund, EVP Sweden and Betonmast Eirik Wraal, EVP Construction, Energy and environment, Corporate social responsibilty Tormod Solberg, EVP Construction Lars Myhre Hjelmeseth, EVP Offshore
Presentation of interim accounts:
12/05/2023 Interim report 1st quarter 2023 25/08/2023 Interim report 2nd quarter 2023 10/11/2023 Interim report 3rd quarter 2023
The presentation of interim accounts takes place at Hotel Continental, Stortingsgata 24-26, at 8:30 a.m.
For more information on the company, visit our web site at afgruppen.com
Cover: Statpipe New Landfall Photo: Hans Fredrik Asbjørnsen
Oslo Brannsikring
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