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AF Gruppen

Investor Presentation • Aug 24, 2018

3522_rns_2018-08-24_cf63439f-8a79-471c-85db-a4519e35e9bf.pdf

Investor Presentation

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Highlights

Good result and 40 % growth

  • Revenues: NOK 4,692 million (3,347) in Q2 vs. NOK 8,575 million (6,009) year-to-date.
  • EBT: NOK 256 million (250) in Q2 vs. NOK 450 million (393) year-to-date.
  • EBT margin: 5.5 % (7.5 %) in Q2 vs. 5.3 % (6.5 %) year-to-date.
  • Strong order backlog: NOK 19,866 million (18,928)
  • Solid financial position: Net interest bearing receivables of NOK 609 million (698)

Safety

Lost-time injury frequency (LTIF)

Number lost-time injuries per million hours worked. Measuring of LTIF also includes injuries by subcontractor employees.

Total recordable injury frequency (TRIF)

Number of lost-time injuries, injuries involving substitute work and medical treatment injuries per million hours worked. Measuring of TRIF also includes injuries by subcontractor employees.

Reported unwanted incident frequency (RUIF)

Number of reported unwanted incidents per man-year.

Revenues

Q2 revenues by business area:

Earnings before tax

  • A good 2nd quarter
  • EBT Q2: NOK 256 million (250)
  • EBT YTD: NOK 450 million (393)
  • EBT % Q2: 5.5 % (7.5 %)
  • EBT % YTD: 5.3 % (6.5 %)

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

Cash flow statement

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Net interest bearing receivables

Net interest bearing receivables as of 30 June is NOK 609 million (698).

Health and environment

Sick leave Source separation rate

A total of 126,966 (161,887) tonnes of waste has been sorted in 2018

Civil Engineering

Very high activity level

O
N
K
i
l
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i
m
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n		 Q
2
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8		 Q
2
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B
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%		 %
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3		 %
6.
3		 %
3.
9		 %
6.
8
E
B
T
%		 3.
6
%		 6.
6
%		 4.
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%		 0
%
7.
  • AF Anlegg has an organic growth in Q2 of 79 %. Many new projects and few project completions leads to lower results and reduced margin.
  • Målselv Maskin & Transport delivers good Q2 results.
  • AF Anlegg entered into agreements with Statkraft Energi, Statkraft and Sporveien in Q2. Total contract value is estimated at NOK 480 million excl. VAT.
  • Order backlog: NOK 5,206 million (5,230)

Environment

High activity level and good profitability

N
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%
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T		 6.
8
%		 7.
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%		 6.
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%		 5.
3
%
%
E
B
T		 6.
7
%		 7.
4
%		 6.
2
%		 5.
2
%
  • High activity level for AF Decom in Q2. The unit has good operational performance and delivers good Q2 results.
  • High activity level at Rimol Miljøpark and Jølsen Miljøpark in Q2. Both facilities deliver good results.
  • The new environmental facility at Nes near Oslo is completed. The facility has received its first masses for cleaning.
  • Order backlog: NOK 209 million (350)

High activity level and good results

O
N
K
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l
l
i
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o
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2
2
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1
8		 Q
2
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%		 6.
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%		 6
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5.		 8
%
5.
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T
%		 6.
4
%		 6.
3
%		 9
%
5.		 6.
0
%

AF Bygg Oslo, MTH and EIQON all deliver good Q2 results.

  • AF Bygg Østfold, AF Byggfornyelse, LAB and Strøm Gundersen all have a higher activity level in Q2 and deliver satisfactory results.
  • AF Nybygg has an increasing activity level and the unit delivered positive Q2 results.
  • Building has entered into 11 sizable agreements in Q2 at a total contract value of NOK 2,312 million.
  • Order backlog: NOK 11,070 (10,271)

Property

N
O
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i
l
l
i
m
o
n		 Q
2
2
0
1
8		 Q
2
2
0
1
7		 Y
T
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2
0
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B
I
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%		 8
9.
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%		 2
3.
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7		 1
1
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%
5.		 3
4.
1
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5
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B
T
%		 8
3.
1
%		 2
2
8.
4
%		 1
0
3.
9
%		 2
9
7.
6
%

117 (55) apartments were sold in Q2. AF's share is 38 (21).

  • Six residential projects with 973 apartments in the production phase (AF's share 377). 72 % of the apartments in production are sold as per June 30th.
  • Land and development rights in progress: 1,972 (2,580) residential units. AF's share is 816 (1,096)
  • AF has 73,751 (92,084) m2 gross area of urban premises under development. AF's share is 36,198 (45,273).

Energy

Good activity level, weak results

N
O
K
i
l
l
i
m
o
n		 Q
2
2
0
1
8		 Q
2
2
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7		 Y
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2
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B
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T		 2
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E
B
T		 3
-		 6 4
-		 1
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E
B
I
T
%		 %
2.
8
-		 %
1
0.
3		 %
1.
5
-		 %
9.
3
%
E
B
T		 %
4.
3
-		 %
1
0.
4		 %
3.
6
-		 %
9.
3
  • High activity level for AF Energi & Miljøteknikk in Q2, but the unit delivers weak results.
  • The results are affected by challenging completions of some EPC-contracts and the shutdown of the unit's Bergen office.
  • Order backlog: NOK 275 million (345)

Sweden

Profitable growth

M
N
O
K		 Q
2
2
0
1
8		 Q
2
2
0
1
7		 Y
T
D
2
0
1
8		 Y
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2
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1
7
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r		 6
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5		 2
4		 6
7		 4
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4		 6
6		 4
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E
B
I
T
%		 7.
2
%		 5.
7
%		 5.
9
%		 5.
5
%
E
B
T
%		 7.
1
%		 5.
7
%		 5.
8
%		 5.
5
%
  • Kanonaden Entreprenad delivers satisfactory results also in Q2. Pålplintar has a low activity level.
  • High activity level and very good profitability at AF Härnösand Byggreturer. The unit delivers very good Q2 results.
  • AF Projektutveckling and AF Bygg Syd delivers good quarterly results, while AF Bygg Göteborg delivers results somewhat below expectations.
  • Order backlog: NOK 1,513 million (1,155).

Offshore

Challenging market conditions

N
O
K
i
l
l
i
m
o
n		 Q
2
2
0
1
8		 Q
2
2
0
1
7		 Y
T
D
2
0
1
8		 Y
T
D
2
0
1
7
R
e
e
n
e
s
v
u		 1
8
4		 2
0
0		 3
6
6		 3
5
5
E
B
I
T		 6 1
7		 9 2
7
E
B
T		 4 1
4		 8 2
2
%
E
B
I
T		 3.
1
%		 8.
5
%		 2.
5
%		 7.
6
%
%
E
B
T		 2.
1
%		 7.
2
%		 2.
1
%		 6.
2
%
  • As expected, AF Offshore Decom has a lower activity level, but the unit still delivers positive Q2 results. New projects won in 2017 will mainly generate activity in 2019 and later.
  • No activity at Environmental Base Vats.
  • Demanding market conditions for AF AeronMollier. The unit has a stable activity level and delivers positive Q2 results.
  • Order backlog: NOK 924 million (1,004)

Order backlog

Q1 Q2 Q3 Q4

Order backlog

Order backlog per business area

Strong organic growth and record-high order backlog

Turnover and profitability in Building Order backlog in Building

Number of employees in Building

Safety

The refurbishment segment has grown by 18% annually since 2015

Turnover within new building and refurbishment in Building

New building

Broad portfolio within construction/refurbishment...

Kulturstedet

…and within façade and concrete refurbishment

Changes in the market

The market has changed, the customers are placing different demands on the contractors

  • Attentiveness to workplace crime and social dumping
  • Requirements for skilled workers and apprentices
  • A greater level of collaborative contracts
  • Higher expectation of quality

Competitive power through expertise

  • Focus on niches where we provide a wide range of services through several specialised suppliers
  • We have responded to the changes in the market by building up a significant level of in-house production
  • Part-ownership by senior executives, small organisations where the management is close to operations

Summary

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

Good results

  • Strong revenue growth (+40 % Q/Q)
  • High order backlog: NOK 19,866 million (18,928)
  • Strong financial position supports ambitions of structural growth

Thank you for your attention!

Q3 2018: November 9th 2018

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