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AF Gruppen

Investor Presentation • Feb 15, 2019

3522_rns_2019-02-15_f6112675-bc97-4ca1-901d-08d1eea09f3e.pdf

Investor Presentation

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Q4 2018 AF Gruppen ASA

Highlights

Solid growth and good results

  • Revenues: NOK 5,656 million (4,296) in Q4 vs. NOK 18,767 million (13,704) in 2018.
  • EBT: NOK 373 million (310) in Q4 vs. NOK 1,136 million (935) in 2018.
  • EBT margin: 6.6 % (7.2 %) in Q4 vs. 6.1 % (6.8 %) in 2018.
  • Strong order backlog: NOK 21,541 million (19,773)
  • Solid financial position: Net interest bearing receivables of NOK 894 million (1,210)
  • Dividend proposal for 1st half-year of NOK 5.00 (5.00) per share.

Safety

Lost-time injury frequency (LTIF)

Number lost-time injuries 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)

Number of reported unwanted incidents per man-year.

Measuring of LTIF and TRIF also includes injuries by subcontractor employees.

Revenues and earnings - quarterly

NOK million3103730501001502002503003504004. kv.20171. kv.20182. kv.20183. kv.20184. kv.2018Revenues Earnings before tax Profit margin

Revenues and earnings - yearly

NOK million9351 13602004006008001 0001 2002014 2015 2016 2017 2018

Revenues Earnings before tax Profit margin

*AF's target is to achieve a return on capital employed above 20 %.

Cash flow statement

O
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Net interest bearing receivables

Net interest bearing receivables as of 31 December is NOK 894 million (1,210).

Equity ratio

Health and environment

Sick leave Source separation rate

A total of 512,401 (324,370) tonnes of waste has been sorted in 2018

Civil Engineering

Strong growth and good operational performance

N
O
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
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T		 6.
9
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%		 5.
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5
%
  • AF Anlegg had a high activity level and delivered good results in Q4. The unit grows more than 60 % in 2018.
  • Målselv Maskin & Transport delivers very good results both in Q4 and for the full year.
  • AF Anlegg entered into a final agreement with Nye Veier in Q4 for the E39 Kristiansand vest - Mandal øst contract. Total contract value is NOK 4,700 million excl. VAT.
  • Order backlog: NOK 7,664 million (6,082)

Environment

Higher activity level and good profitability

N
O
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
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3		 9 4
3		 2
7
E
B
I
T
%		 9.
2
%		 9.
3
%		 3
%
7.		 9
%
5.
E
B
T
%		 9.
0
%		 9.
1
%		 1
%
7.		 8
%
5.
  • High activity level and good operational performance for AF Decom in Q4. The market for environmental services is good.
  • The environmental facilities have had high activity levels in Q4 and the full year. The facilities deliver good results.
  • The market for receiving and recycling masses is good and AF is considering the possibility of establishing more facilities.
  • Order backlog: NOK 258 million (274)

Building

Solid results

N
O
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
2
0
1
7		 2
0
1
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1
7
R
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9		 2,
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7,
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4
4		 6
1
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6
7
E
B
T		 2
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%
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T		 8.
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%		 6.
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%		 6.
8
%		 6.
3
%
%
E
B
T		 8.
5
%		 6.
2
%		 7.
1
%		 6.
4
%

AF Bygg Oslo and MTH both deliver very good Q4 results.

  • AF Byggfornyelse, AF Bygg Østfold, LAB, EIQON and Strøm Gundersen all have a high activity levels in Q4 and deliver good results.
  • LAB AS signed a final agreement in Q4 to buy 70 % of the shares in Helgesen Tekniske Bygg AS (HTB).
  • LAB Entreprenør entered into an agreement in Q4 with Skjoldnes Utvikling AS to build 65 flats at Skjoldnes in Bergen. Contract value is approximately MNOK 140 excl. VAT.
  • Order backlog: NOK 9,871 (9,837)

Property

Solid year for Property

N
O
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
2
0
1
7		 2
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E
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T		 2
3		 2
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7		 6
4
%
E
B
I
T		 %
2
4
6.
5		 %
4
0
8.
9		 %
2
2
6.
7		 %
3
6
6.
5
E
B
T
%		 %
2
4
0.
8		 %
3
5
3.
0		 %
2
1
3.
9		 %
3
0
1.
7
  • 2018 earnings were positively effected by the sale of commercial properties at Hasle in Oslo.
  • 47 (86) apartments were sold in Q4. AF's share is 17 (36).
  • Six residential projects with 921 apartments in the production phase (AF's share 338). 74 % of the apartments in production are sold as per December 31st.
  • Land and development rights in progress: 1,831 (2,063) residential units. AF's share is 871 (831)
  • AF has 53,683 (92,084) m2 gross area of urban premises under development. AF's share is 26,264 (45,273).

Energy

Increasing activity level, weak results

N
O
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
2
0
1
7		 2
0
1
8		 2
0
1
7
R
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v
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s		 8
4		 7
3		 2
7
7		 2
4
4
E
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E
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T		 3 7 2
-		 2
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%
E
B
I
T		 %
2.
3		 %
7.
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0.
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8.
2
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%		 %
4.
1		 %
1
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0		 %
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-		 %
9.
1
  • Increasing activity level for AF Energi & Miljøteknikk in Q4, but the unit delivers Q4 results below expectations and weak fullyear results.
  • After quarter-end, the unit entered into an agreement with Statsbygg for plumbing work in the new Life Science Building at the University of Oslo. The contract has an estimated value of around NOK 300 million. (not included in order backlog 31.12)
  • Order backlog: NOK 275 million (345)

Sweden

Strong growth and good results

O
M
N
K		 Q
4
2
0
1
8		 Q
4
2
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1
7		 2
0
1
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%
E
B
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T		 0
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4.		 0
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5.		 0
%
5.		 2
%
5.
%
E
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T		 0
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4.		 %
4.
7		 0
%
5.		 1
%
5.
  • Kanonaden Entreprenad delivers good Q4 results. Pålplintar delivers weak results for the quarter as well as the full-year.
  • High activity level and very good profitability at AF Härnösand Byggreturer. The unit delivers solid results throughout 2018.
  • AF Bygg Syd delivers good results both for the quarter and 2018, while AF Bygg Göteborg delivers weak results.
  • Entered into final agreement after quarter-end to buy 70% of HMB Holding AB.
  • Order backlog: NOK 1,578 million (1,760).

Offshore

Low activity level, weak results

O
N
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
2
0
1
7		 2
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R
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9
E
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E
B
I
T
%		 %
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1
-		 %
1
2.
5		 %
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2
-		 %
8.
8
E
B
T
%		 %
2
2.
5
-		 %
1
1.
0		 %
4.
1
-		 %
7.
4
  • As expected, AF Offshore Decom has a low activity level, and the unit delivers weak results. The unit has won several projects, but these will not generate offshore activity until 2020 and later.
  • No activity at Environmental Base Vats.
  • Demanding market conditions for AF AeronMollier. The unit has decided to shut down its Shanghai department, and costs related to this affect the units Q4 results.
  • Order backlog: NOK 1,456 million (916)

Order backlog

All-time high order backlog

Order backlog

Order backlog per business area

AF Gruppen's operations in Sweden

AF Gruppen's Swedish operations comprise seven companies and are represented in five geographical areas and five segments

HMB was acquired in January 2019

  • Traditional building companies
  • VD: Krister Karlsson
  • 260 employees
  • Decentralised departmental structure
  • 70 % owned by AF, the rest owned by the employees
  • Turnover of SEK 1,300 million
  • Order reserves: SEK 1,669 million

Decentralised and autonomous departmental structure

Organisation

We use the same recipe as Sweden and Norway

AF Gruppen Sweden

Decentralised organisation with a substantial mandate

The Swedish building and construction market

A split Swedish building and construction market

Investments in building and construction in Sweden per segment 2015-2019P 1094242015 2016 112017 2018P13122019P459497 506 489Construction - public Industrial building - private Construction - private Industrial building - public Holiday homes Residential units(renovation) Residential units - new 3.9% 4.4% 5.4% 0.2% 5.2% 2.5% 10.3% 7.5% 5.0% 2.8% 0.5% -0.3% 6.7% 3.9% -2.4% 3.3% 2.6% 1.4% 2.1% -10.8% -16.2% 3.6% 0.8 -3.3% 2015-19P 2017-19P 2018-19P Average annual growth SEK per month (fixed 2017 prices) >2% 0-2% <0%Total

The new housing segment is still at a higher level than what was achieved as recently as 2015

The housing segment is declining

• Industrial building and construction increasing

•

•

• The ROT segment is continuing to grow, but at a slower rate

SOURCE: THE SWEDISH CONSTRUCTION FEDERATION 24 OCTOBER 2018. NOTE: : * CLASSIFIED AS PRIVATE CONSTRUCTION INVESTMENTS BY THE SWEDISH CONSTRUCTION FEDERATION, BUT IN PRACTICE THEY ARE PUBLIC (IT IS MAINLY MUNICIPAL COMPANIES WHICH MAKE THESE INVESTMENTS)

Development in AF Gruppen's geographical areas and segments in the Swedish building and construction market

Market with large geographical differences

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We are experiencing

  • • Significant decline in condominiums in Stockholm-Mälardalen.
  • •Demand for tenancies has increased slightly
  • • Saturated premium market, better for reasonable-priced housing
  • •Good access to projects for public customers
  • • High demand for offices, logistics and industrial buildings and the groundwork associated with these segments
  • • Stable demand for wind power, water and wastewater treatment plants* in southern, south-west and south-east Sweden
  • •High degree of joint contracts with returning customers

SOURCE: THE SWEDISH CONSTRUCTION FEDERATION 24 OCTOBER 2018. NOTE: : * CLASSIFIED AS PRIVATE CONSTRUCTION INVESTMENTS BY THE SWEDISH CONSTRUCTION FEDERATION, BUT IN PRACTICE THEY ARE PUBLIC (IT IS MAINLY MUNICIPAL COMPANIES WHICH MAKE THESE INVESTMENTS)

VO Sweden

44

0

500

1 000

1 500

2 000

2 500

3 000

3 500

NOK million

107

351

Syd

Order backlog

AF Gruppen Sweden

Future plans

  • Consolidate and develop existing activities
  • HSE
  • Develop the organisation
  • Always be curious about more talented people and companies

Summary

N
O
K
i
l
l
i
m
o
n		 Q
4
2
0
1
8		 Q
4
2
0
1
7		 2
0
1
8		 2
0
1
7
R
e
e
n
e
s
v
u		 5,
6
5
6		 4,
2
9
6		 1
8,
7
6
7		 1
3,
7
0
4
E
B
I
T		 3
6
3		 2
9
7		 1
1
1
9		 9
2
4
E
B
T		 3
7
3		 3
1
0		 1
1
3
6		 9
3
5
%
E
B
I
T		 %
6.
4		 %
6.
9		 %
6.
0		 %
6.
7
%
E
B
T		 %
6.
6		 %
7.
2		 %
6.
1		 %
6.
8
  • Good results
  • Revenue growth of 37 % in 2018
  • All time high order backlog: NOK 21,541 million (19,773)
  • Strong financial position
  • Dividend proposal of NOK 5.00 (5.00) per share for 1st half-year 2019

Thank you for your attention!

Q1 2019: May 15th 2019

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