AF Gruppen

Investor Presentation • Aug 21, 2020

Highlights

Solid revenue growth and record-high order backlog

• Revenue: NOK 6,568 million (5,863) in Q2 and NOK 13,175 million (11,077) year-to-date
• Earnings before tax: NOK 258 million (363) in Q2 and NOK 465 million (590) year-to-date
• Profit margin: 3.9 % (6.2 %) in Q2 and NOK 701 million (542) year-to-date
• Cash flow from operations: NOK 202 million (284) in Q2 and NOK 701 million (542) year-to-date
• Record high order backlog: NOK 34,155 million (23,085) as of 30 June 2020
• Net interest-bearing debt of NOK 49 million (753) as of 30 June 2020

Safety

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

Total recordable injury frequency (TRIF)

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

Reported unwanted incident frequency (RUIF)

Revenues and earnings – quarterly

Revenues

Earnings before tax

Profit margin

Return on capital employed

Rolling average last four quarters

Cash flow statement

N O K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
E B I T	2 6 3	3 6 9	4 6 7	6 0 1
D i t i t i t i d i i t e p r e c a o n s, a m o r z a o n a n m p a r m e n	1 3 7	1 1 7	2 7 0	2 2 7
C h i k i i l t t a n g e n n e o r n g c a p a w	1 1 2 -	8 0 -	9 9	1 1 6 -
O t h d j t t / t i d e r a u s m e n s a x e s p a	8 7 -	1 2 2 -	1 4 4 -	1 7 0 -
C h f l f i t a s o w r o m o p e r a o n s	2 0 2	2 8 4	7 0 1	5 4 2
N t i t t e n v e s m e n s	3 5	1 0 2 -	6 2 -	4 9 0 -
C h f l f i l i i i t t t a s o w r o m c a p a a c v e s	3 6 0 -	6 5 5 -	5 1 2 -	7 4 3 -
I t t i d d h i i t t b i d b t n e r e s p a a n c a n g e n n e r e s e a r n g e	7 5 -	3 4 7	1 4 4 -	0 3 4
N t h i h d h i l t e c a n g e n c a s a n c a s e q u v a e n s	1 9 9 -	3 6 -	1 7 -	2 8 8 -
f N t h d h i l t t b i i i d e c a s a n c a s e q u v a e n s a e g n n n g o p e r o	7 6 4	4 0 5	5 6 3	6 5 6
C f f h i h d h i l t i t h t h t a n g e n c a s a n c a s e q u v a e n s w o u c a s e e c	4 -	1	1 6	3
N h d h i l d f i d t t e c a s a n c a s e q u v a e n s e n o p e r o	5 6 1	3 7 0	5 6 1	3 7 0

Net interest-bearing receivables

All the company's covenants exclude the effect of IFRS 16 The implementation of IFRS 16 from January 1st 2019 led to an increase of interest-bearing debt. As of 30 June 2020, the effect was NOK 908 million

Equity ratio

Equity

2 919

Equity ratio excluding the effect of IFRS 16 would be 25,0 % at 30 June 2020 All the company's covenants exclude the effect of IFRS 16

Health and environment

6%

Covid-19

related absence estimated to 1,1%

Sick-leave increased due to Covid-19

Sick leave Source separation rate

A total of 159,530 (146,480) tonnes of waste have been sorted YTD 2020

A total of 248,730 (233,555) tonnes of contaminated materials have been recycled YTD 2020

Recycling rate

Civil Engineering

Solid margins

O N K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	2 0 2 0 Y T D	2 0 1 9 Y T D
R e v e n u e s	9 0 2	1, 7 0 6	1, 8 1 0	3, 3 6 3
E B I T	5 4	9 0	1 1 8	1 6 1
E B T	2 5	8 9	1 2 0	1 6 3
E B I T %	6. 0 %	3 % 5.	6. % 5	4. 8 %
E B T %	8 % 5.	2 % 5.	6. 6 %	4. 8 %

• Revenues in AF Anlegg declined by almost half compared to the same quarter last year, when the major E18 Tvedestrand-Arendal project represented a significant portion of the revenues
• Planning of the project Bergtunnlar Lovö in Stockholm valued at SEK 3,400 million has started, and start up of production is expected in Q3
• There are several projects in the final phase that contributed to good margins for AF Anlegg
• Målselv Maskin & Transport with a good level of activity. The unit has never before reported better earnings in a 2nd quarter
• Order backlog: NOK 8,026 million (5,740)

Building

Good activity level, but Eiqon with negative results

N O K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	2, 3 4 7	2, 3 6 7	4, 8 4 5	2 4 4 5,
E B I T	9 1	1 6 4	2 0 6	2 9 2
E B T	9 2	1 6 9	2 0 9	3 0 1
E B I T %	3. 9 %	6. 0 %	4. 2 %	5. 6 %
E B T %	3. 9 %	6. 2 %	4. 3 %	5. 7 %

• AF Bygg Oslo, Haga & Berg and AF Håndverk delivered very good results
• Eiqon delivered a very poor result during the quarter due to losses and provisions for risk on several projects in its portfolio
• Due to the uncertainty surrounding the impact of COVID-19, fewer residential property projects have started and the competition for public construction projects is increasing
• Order backlog: NOK 10,622 million (11,792)

Betonmast

Variation in results

N O K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	1 9 9 7	-	3 8 2 0	-
E B I T	6 0	-	1 0 4	-
E B T	5 5	-	1 0 1	-
E B I T %	3, 0 %	-	2, 7 %	-
E B T %	2, 8 %	-	2, 6 %	-

• Variation in the results of the various units
• Betonmast Romerike with strong results
• Betonmast Boligbygg, Betonmast Telemark and Betonmast Ringerike reported weak results
• Betonmast Bergen was sold to Backe Gruppen during the quarter
• Order backlog: NOK 8,876 million

Property

O N K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	6	4	1 2	7
E B I T	1 0	2 3	1 4	6 0
E B T	9	2 3	1 2	5 8
C i l l d t a p a e m p o y e	9 0 3	9 2 2	9 0 3	9 2 2

Residential unit sales slowed down toward the end of 1st quarter as a result of the spread of COVID-19, but have improved significantly during Q2. 70 (80) apartments sold in 2nd quarter, of which AF's share is 25 (37)

• Five residential property projects under production with a total of 663 apartments (AF's share is 237). The sales ratio for commenced projects is 78 per cent at the end of the 2nd quarter. Number of unsold completed apartments was 13 (1), of which AF's share was 4 (0,3)
• A significant development portfolio estimated at 2,413 (2,154) units, AF's share of this was 1,173 (996) residential units
• After the end of the quarter a bid was accepted for sale of the ATEA building. The bid is subject to financing and due diligence. Transaction expected to be completed in Q4

Energy and Environment

Good margins

O N K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	2 1 9	2 8 8	4 4 3	5 0 5
E B I T	1 5	1 6	1 7	2 4
E B T	1 1	1 5	1 8	2 2
% E B I T	6, 9 %	% 5, 5	3, 8 %	8 % 4,
% E B T	2 % 5,	1 % 5,	0 % 4,	3 % 4,

AF Energi & Miljøteknikk reported results below expectation for the quarter. Variable profitability in the project portfolios

AF Decom reported good results in the quarter. The unit had somewhat lower activity compared to the same quarter last year, but the margins improved. Strong performances in both demolition and recycling at AF's environmental centres

Order backlog: NOK 607 million (628)

Sweden

Revenue growth and improved margins

O N K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	1, 0 6 4	9 2 5	2, 0 9 9	1, 7 6 3
E B I T	4 1	2 8	8 3	6 1
E B T	3 9	2 7	8 0	5 9
% E B I T	3. 8 %	3. 0 %	3. 9 %	3. % 4
% E B T	3. % 7	2. 9 %	3. 8 %	3. 3 %

Revenue growth of 15 percent compared to the same quarter last year, which is primarily attributed to revenue growth in Kanonaden and HMB

• AF Bygg Syd reported good profitability for the quarter, while HMB and AF Bygg Göteborg reported profitability somewhat below expectations. AF Härnösand Byggreturer maintained good earnings
• Kanonaden reported strong revenue growth and delivered good results. The discontinuation of the foundation business in Pålplintar is expected to be completed in Q3 2020. AF Projektutveckling, AF's property business in Sweden, has a residential and school project under production
• Order backlog: NOK 3,597 million (2,939)

Offshore

Low activity level and weak results

N O K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	1 4 7	1 9 1	3 0 2	3 1 4
E B I T	2	5	1 5 -	3 -
E B T	4 -	1	6 0 -	1 1 -
E B I T %	1. 0 %	2. 6 %	1 6. 8 % -	1. 1 % -
E B T %	2. 5 % -	0. 6 %	1 9. 8 % -	3. 4 % -

The outbreak of COVID-19 and the fall in oil prices has resulted in very challenging market conditions for the company's offshore businesses

• AF Offshore Decom reported a low level of activity and delivered weak results for the quarter. The level of activity at Vats was limited at the beginning of the quarter, but the base was fully operational in June. Successful offshore and subsea campaigns have been carried out
• AF Gruppen has been awarded a contract by Shell UK Ltd for the dismantling and recycling of the FPSO unit Curlew. This represents a new market segment with opportunities going forward
• AF AeronMollier delivered positive results in the quarter
• Order backlog: NOK 1,693 million (1,474)

Order backlog

A record high order backlog

Order backlog

Order backlog per business area

Second Quarter 2020

New CEO of AF Gruppen from 24 August

Amund Tøftum Success factor: Safe and profitable operations

To recruit, grow and retain the best people

We will maintain AF's historically good results and profitability performance.

Success factor: Safe and profitable operations

Operational excellence is the foundation

It is at the project sites where salaried employees and skilled workers perform together that our profitability and values for society are created.

Safety is our number one priority – and applies to everyone

factor: Health, Safety

and Environment

Success

Regardless of strategy, everyday life in AF will still be characterized by further strengthening our safety work.

Success factor: Develop and improve

Curiosity

We will continue to renew ourselves and acquire expertise that makes us relevant to the customer and society in the future.

Success factor: Sustainable entrepreneurship

Profitable social responsibility

We will continue to cultivate the culture of curiosity in AF and strive to find the best solutions to the environmental challenges our society is facing.

Summary

N O K i l l i m o n	Q 2 2 0 2 0	Q 2 2 0 1 9	Y T D 2 0 2 0	Y T D 2 0 1 9
R e v e n u e s	6, 5 6 8	5, 8 6 3	1 3, 1 7 5	1 1, 0 7 7
E B I T	2 6 3	3 6 9	4 7 6	6 0 1
E B T	2 5 8	3 6 3	4 6 5	5 9 0
E B I T %	4. 0 %	6. 3 %	3. 6 %	5. 4 %
E B T %	% 3. 9	% 6. 2	% 3. 5	% 5. 3

Revenue growth continues

• Results lower than in 2nd quarter last year
• Strong financial position
• Record high order backlog: NOK 34,155 million (23,085)