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AF Gruppen — Earnings Release 2014
May 15, 2014
3522_rns_2014-05-15_f81fdaa3-eb7a-4ada-a5d9-3e51d1f2133a.pdf
Earnings Release
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4th quarter 2014
Q1
From the CEO
Our performance in Q1 shows that we have strengthened profitability and reduced the number of injuries.
AF's policy is that all planning and execution must be based on a fundamental understanding and acceptance that all injuries have a cause and that undesired incidents thus can be avoided. This understanding forms the basis for our mindset regarding safety. Our safety performance shows that we are on the right track, although it must be emphasised that we have not yet reached our goal.
Some of our production is carried out by our partners. It is essential that we make it very clear what they can expect from us, as well as what we expect from them in terms of safety, quality and conduct.
Dedicated and motivated employees are our most important asset. It is satisfying to see that our focus on values and organizational culture also results in very high job satisfaction. The basis for profitable growth is considered to be good through both organic growth and via acquisitions.
AF has always been proud of its strenght and ability to perform complex tasks. The group's entreprenurial spirit has been characterised by the ability and will to think differently and to find better, more future-oriented ways to generate value.
Highlights
- • Revenues were NOK 2,295 million (2,376 million) in the 1st quarter.
- • Earnings before tax were NOK 92 million (91 million) in the 1st quarter.
- • Earnings pershare were NOK 0.80 (0.90) in the 1st quarter.
- • Net operating cash flow was NOK -130 million (-121 million) in the 1st quarter.
- • Total order backlog wasNOK 10,521 million (9,257 million) as at 31 March 2014.
- • Net interest-bearing receivables was NOK 902 million (42 million) as at 31 March 2014.
Earnings before tax per quarter (NOK million)
Summary of 1st quarter 2014
| Key figures (NOK million) | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and other income | 2,295 | 2,376 | 10,127 |
| EBITDA | 110 | 117 | 679 |
| Earnings before finacial items and tax (EBIT) | 84 | 88 | 568 |
| Earnings before tax (EBT) | 92 | 91 | 580 |
| Result pershare (NOK) | 0.80 | 0.90 | 5.26 |
| Diluted result pershare (NOK) | 0.80 | 0.89 | 5.11 |
| EBITDA margin | 4.8 % | 4.9 % | 6.7 % |
| Operating profit margin (EBIT %) | 3.7 % | 3.7 % | 5.6 % |
| Pre-tax margin (EBT %) | 4.0 % | 3.8 % | 5.7 % |
| Return on capital employed (ROaCE) 1) | 42.4 % | 26.7 % | 45.7 % |
| Cash flow from operating activities | -130 | -121 | 1,015 |
| Net interest-bearing receivables(debt) | 902 | 42 | 751 |
| Capital employed | 30.2 % | 24.7 % | 25.5 % |
| Order backlog | 10,521 | 9,257 | 10,976 |
1) 12-month rolling average
Frya-Vinstra
Business areas
Civil Engineering
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and income | 707 | 597 | 2,950 |
| EBIT | 57 | 26 | 253 |
| EBT | 60 | 29 | 265 |
| EBIT % | 8.0 % | 4.4 % | 8.6 % |
| EBT % | 8.5 % | 4.9 % | 9.0 % |
The Civil Engineering business area encompasses AF's civil engineering activitiesin Norway and Sweden.
Civil Engineering consists of two business units:
- AF Anlegg
- Pålplintar
Civil Engineering reported revenues of NOK 707 million (597 million) and earnings before tax of NOK 60 million (29 million) in the 1st quarter.
AF Anlegg continues the trend of a high level of activity and good operations in the 1st quarter. The major civil engineering projects, such as E6 Frya-Vinstra, E03 Solbakk Tunnel and the North Pier at Gardermoen have a high level of activity.
Pålplintar's level of activity is increasing and the company's results improved in the 1st quarter.
AF Anlegg was appointed as the contractor for the development of E39 at Gaular by the Western Region of the Norwegian Public Roads Administration in March. This contract concerns 9 km of new E39, incl. 760 m of tunnel and some small concrete structures. The contract was signed in April and is valued at approximately NOK 330 million, excluding VAT.
After the end of the quarter, AF Anlegg was selected as the contractor for the Preparatory Åsland work contract by the Norwegian National Rail Administration. This contract concerns driving two access tunnels, each with a length of approximately 1 km, down towards the main track of the Follo Line. In addition, miscellaneous ground work is to be performed at Åsland. The contract is valued at approximately NOK 250 million, excluding VAT. The work started at the turn of April/May, and the construction period will last for approximately 1 year.
The order backlog for Civil Engineering was NOK 4,088 million (2,756 million) as at 31 March 2014.
Environment
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and income | 154 | 110 | 684 |
| EBIT | 4 | -2 | 40 |
| EBT | 3 | -3 | 38 |
| EBIT % | 2.4 % | -2.2 % | 5.8 % |
| EBT % | 1.6 % | -2.4 % | 5.5 % |
The Environment business area encompasses AF's services related to demolition and recycling services onshore.
The business area consists ofthe following business units:
- AF Decom
- AF Decom AB
- Härnösand Byggreturer AB
Environment reported revenues of NOK 154 million (110 million) and earnings before tax of NOK 3 million (-3 million) in the 1st quarter.
The business area has an increasing level of activity. The increase inrevenues overthe 1stquarter of 2013 is also attributed to the acquisition of Härnösand Byggreturer AB.
Härnösand Byggreturer saw a good level of activity and delivered good results in the 1st quarter.
AF Decom AB saw a cautiousstart to the year.
Rimol Miljøpark in Trondheim is performing well. Jølsen Miljøpark in Skedsmo is in the start-up phase.
The total order backlog for the Environment business area was NOK 224 million (283 million) as at 31 March 2014.
Stranden 1
Building
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and income | 1,144 | 1,164 | 4,793 |
| EBIT | 31 | 26 | 169 |
| EBT | 29 | 23 | 160 |
| EBIT % | 2.7 % | 2.3 % | 3.5 % |
| EBT % | 2.5 % | 2.0 % | 3.3 % |
The Building business area encompasses activities related to new building and renovation in Norway and Sweden.
The Building business area is divided into seven business units:
- AF Bygg Oslo
- AF Byggfornyelse
- AF Bygg Østfold
- AF Bygg Sør
- AF Bygg Göteborg
- AF Bygg Rogaland
- Strøm Gundersen
Building reported revenues of NOK 1,144 million (1,164 million) and earnings before tax of NOK 29 million (23 million) in the 1st quarter.
The building units in Oslo, AF Bygg Oslo and AF Byggfornyelse, both showed a positive trend in the 1st quarter. The positive result development in these units is expected to continue. AF Bygg Østfold has seen a high level of activity and performed well to date this year, and it delivered good results for the quarter. AF Bygg Sør experienced a low level of activity and delivered weak results. AF Bygg Rogaland showed a positive development during the quarter. The level of activity at AF Bygg Göteborg is increasing, and the unit is delivering satisfactory results. Strøm Gundersen and itssubsidiaries performed well, but saw a seasonally lower level of activity in the 1st quarter.
AF Bygg Oslo wasselected asthe contractor for the Krydderagen residential housing project at Hasle in Oslo by Haslemann AS in March.The work has commenced, and this phase of construction will be completed in the first quarter of 2016. The contract isfor the construction of 94 apartments, divided into three buildings with a large underground garage over two levels. The contract is a turnkey contract valued at NOK 245 million, excluding VAT.
After the end of the quarter, Strøm Gundersen was selected as the contractor for the construction of an office building at Union Brygge in Drammen by Union Eiendomsutvikling. The office building of approximately 10,600 m2 , will include both offices and parking when it is completed in December 2016. The contract is an integrated project contract valued at NOK 188 million, excluding VAT.
After the end of the quarter, Strøm Gundersen entered into a contract with Øvre Eiker Municipality for the construction of a nursing home at Hokksund in Buskerud.The new building will consist of three floors with a basement and have a total gross area of 6,550 m2. It will house a new casualty clinic for the municipality, rehabilitation places, dementia places and a palliative care ward for the nursing home. The contract is a turnkey contract valued at NOK 119 million, excluding VAT. Construction will start in May 2014 and is scheduled for completion in January 2016.
The total order backlog for the Building business area was NOK 4,495 million (4,344 million) as at 31 March 2014.
Krydderhagen
Property
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and income | 9 | 18 | 60 |
| EBIT | 5 | 4 | 32 |
| EBT | 3 | 2 | 30 |
| EBIT % | - | - | - |
| EBT % | - | - | - |
The Property business area encompasses the development of residential housing units and commercial buildings for our own account in geographic areas where AF has access to its own contracting services. These development projects are organised as associated companies in the AF Group and are not included in the order backlog. The Swedish property development activities in Gothenburg have been part of the Property business area since 1 January 2014.
Property reported earnings before tax of NOK 3 million (2 million) in the 1st quarter.
The arrows for the residential housing market are pointing upwards again, and the sales rate for new projects is showing improvement. A decision was made to initiate the Krydderhagen project at Hasle in Oslo in the 1st quarter.
A total of 23 apartments were sold in the 1st quarter. AF'sshare of the apartments sold was 11.
Of the apartments sold in the 1st quarter of 2014, 0 (6) were completed apartments. There were 3 (9) unsold completed apartments at the end of the quarter. AF owns land and development rights in progress, which are estimated to amount to 1,019 (938) residential units. The numbers refer to AF's share of the projects.
Property and Building revenues that relate to the company's own projects are eliminated at the corporate level during the execution phase in proportion to the ownership interest, and they are recognised in their entirety on handover.
Energy
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and income | 28 | 35 | 173 |
| EBIT | -2 | 2 | 11 |
| EBT | -2 | 2 | 12 |
| EBIT % | -8.0 % | 5.1 % | 6.5 % |
| EBT % | -8.2 % | 5.3 % | 6.8 % |
The Energy business area encompasses AF's energy servicesfor onshore activities.
The business area consists of a single business unit: AF Energi & Miljøteknikk AS
Energy also has activities in Boligenergi AS, which is owned jointly withOBOS.
Revenues in the 1st quarter were NOK 28 million (35 million) and earnings before tax were NOK -2 million (2 million).
AF Energi& Miljøteknikk reports a lowlevel of activity andweak earnings for the 1st quarter. Losses on a contract in the final phase has a negative impact on the results. Most of the unit's
project portfolio is in the engineering/analysis phase. It is expected that these projects will generate projects in the execution phase in 2014.
No Energy Savings Contracts(EPC) were signed in the 1st quarter. AF Energi & Miljøteknikk has nine EPC contracts in the analysis phase, and it is expected that they will be converted to implementation projects. The energy savings contracts have had a very modest effect on the order backlog, since they do not include a contractual volume. It is expected that these contracts may possibly generate activity of approximatelyNOK 150 million in addition to the existing order backlog.
The total order backlog for the Energy business area was NOK 56 million (100 million) as at 31 March 2014.
Deepsea Atlantic, Vats
Offshore
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Revenues and income | 273 | 383 | 1 480 |
| EBIT | -2 | 24 | 70 |
| EBT | -1 | 24 | 71 |
| EBIT % | -0.6 % | 6.2 % | 4.7 % |
| EBT % | -0.4 % | 6.4 % | 4.8 % |
The Offshore business area encompasses AF's services related to the removal, demolition and recycling of offshore installations. Offshore also includes new building, modification and maintenance work related to HVAC, cranes, modules and rig services. In addition, Offshore also has services related to the maintenance and modification of onshore facilities for the oil and gas industry.
The business area consists of three business units:
- AF Decom Offshore
- Aeron
- Mollier
Offshore also has activities in the subsidiaries AF Offshore Systems (5D) and AF Offshore Mandal, projects related to the maintenance and modification of onshore facilities(V & M Landanlegg), as well asin the associated company MiljøbaseVats.
Revenues in the 1st quarter were NOK 273 million (383 million) and earnings before tax were NOK -1 million (24 million). As communicated earlier, AF Decom Offshore has a low order backlog for 2014, and it delivered weak results for the 1st quarter. The order backlog for AF Desom Offshore will mainly be carried out in 2015 and 2016. The capacity available at Vats is utilised by AF Rig Services, which completed a very successful classification and modification job for Odfjell Drilling in March/April.
Aeron's level of activity is increasing, and the results show improvement. The marine market for HVAC servicesisshowing a positive development.
Mollier and AF Offshore Mandal delivered good results in the 1st quarter. The 1st quarter has been weak for theAF Offshore Systems(5D).
V & M Landanlegg performed well for the first quarter.
The order backlog for Offshore stood at NOK 1,562 million (1,751 million) at 31 March 2014.
AFG - Share price last 12 months
Financial information
Net operating cash flow was NOK -130 million (-121 million) in the 1st quarter of 2014.The AFGroup had a cash flow from net investments of NOK 37 million (-38 million) in the 1st quarter. Cash flow before capital transactions and financing was NOK -93 million (-159 million) in the 1st quarter. SharesforNOK 242 million were issued in the 1st quarter of 2014 in connection with the Group's option programme.
The AFGroup had netinterest-bearing receivables ofNOK 902 million (42 million) at the end of the 1st quarter.
The AFGroup has a three-year financing agreement withDanske Bank and Handelsbanken that expires in 2015. The company also has a small credit facility with DnB. The total financing limit is NOK 1,280 million. This gives available liquidity of NOK 2,182 million as at 31 March 2014.
Total assets were NOK 5,402 million (5,133 million) as at 31 March 2014. The Group's equity totalled NOK 1,632 million (1,270 million). This corresponds to an equity ratio of 30.2 per cent (24.7 per cent).
Share performance
The AF Group's shares are listed on the Oslo Stock Exchange's OB-match list and trade under the ticker symbol AFG. The shares are included in the Oslo Stock Exchange's benchmark index (OSEBX) and fund index (OSEFX). The AF Group has entered into a market-making agreement to promote the liquidity of the Company'sshares.
The closing price for the AF share was NOK 78.50 on 31 March 2014. This correspondsto a dividend-adjusted return of 15.87 per cent to date in 2014. The Oslo Stock Exchange's benchmark index showed a return of 2.38 per cent during the same period.
For 2013, a preliminary dividend of NOK 6.00 has been proposed, of which the ordinary dividend amounts to NOK 2.60 (2.40) and the extraordinary divided amounts to NOK 3.40 (2.10). The dividend will be paid to shareholders who are registered as at 15 May 2014. The expected payment date is 27 May 2014.
The option programme for employees of the AF Group was
| Name | No. shares | % share |
|---|---|---|
| OBOS INVEST AS | 22 239 041 | 25,2 |
| CONSTRUCTIO AS | 11 589 066 | 13,2 |
| ØMF INVEST AS | 10 605 978 | 12,0 |
| ASPELIN-RAMM GRUPPEN AS | 4 993 269 | 5,7 |
| ØMF HOLDING AS | 2 524 652 | 2,9 |
| LJM A/S | 2 513 900 | 2,9 |
| VITO KONGSVINGER AS | 2 461 676 | 2,8 |
| SKOGHEIM, ARNE | 1 723 870 | 2,0 |
| STAAVI, BJØRN | 1 492 232 | 1,7 |
| MOGER INVEST AS | 1 240 541 | 1,4 |
| Ten largest shareholders | 61 384 225 | 69,7 |
| Total other shareholders | 26 704 434 | 30,3 |
| Own shares | 0 | 0,0 |
| Total number of shares | 88 088 659 | 100,0 |
List of shareholders as at 30 April 2013:
LTI rate development
settled in March 2014. A total of 5,755,679 options were exercised by 1,240 employees, and a corresponding number of shares were issued. The volume-weighted average redemption price for the options was NOK 41.97. The new issue was adopted by the Board of Directors in accordance with the authorisation granted by the Extraordinary General Meeting of 14 February 2014. After completion of the new issue, the total number of shares is 88,088,659, which corresponds to share capital of NOK 4,404,433. The number of outstanding unexercised optionsin AF Gruppen ASA was 0 after this.
Health, safety and the environment (HSE)
HSE is an important part of our culture and an integral part of our management at all levels. The working environment shall be equally safe for all employees in our projects. The figures from AF's subcontractors are therefore included in the injury statistics.
The LTI rate forms the basis for the measurement of safety work at AF. The LTI rate is defined as the number of injuries resulting in absence per million man-hours. A total of two injuries resulting in absence were registered in the 1st quarter, all of them in Norway. This gives an LTI rate (lost-time injury rate) of 0.9 (2.1) for the 1st quarter.
The LTI rate has been reduced through systematic and longterm efforts. Significant resources are being invested to further improve our HSE effortsin order to be able to achieve our goal of an LTI 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 a key part of our preventive activities. Based on an assessment of the risks, physical and organisational barriers are established to reduce the risk of personal injury to a low and acceptable level.
In addition to risk assessments, being able to learn from our mistakes is also vital. AF has systematised this through reporting and responding to undesired incidents or hazardous conditions, as well as investigating the most serious incidents or conditions. The number of reports has increased steadily during the last 10 years, andwe see a clear correlation between the increased reporting of undesired incidents and the decrease in injuries.
The registration of sickness absence forms the basis for the measurement of health work at AF. Sickness absence was 3.8 per cent (4.6 per cent) in the 1st quarter. Sickness absence at AF is low compared to that of comparable businesses, but AF is working to lower sickness absence even more. Our target is total sickness absence of less than 3.0 per cent, a level we believe represents a healthy situation without absence due to occupational illnesses/injuries. AF believes that it can achieve this target through systematic health work, which consists, for example, 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.
Environmental work has high priority throughout the entire Group. AF would like to avoid environmental damage and minimise undesirable effects on the environment. Environmental work is an integral part of HSE work, and the tools used are therefore the same that are used otherwise in connection with HSE work.
Follow-up of the source separation rate parameter acts as an extra driving force for AF's environmental work. This parameter places the focus on an important environmental factor that AF has an opportunity to influence. The source separation rate indicates how much of the waste from AF's operations is separated for the purpose of facilitating recycling. For the 1st quarter, the result for building was 79 per cent (79 per cent), the result for renovation was 90 per cent (86 per cent) and the resultfor demolitionwas 95 per cent(97 per cent).These results are considered good, and they are well above the government requirement of a minimum of 60 per cent.
Organisation
Motivated employees and a solid organisation are an important foundation for creating value. At AF we focus on building organisations with a robust composition of technical expertise
Sick leave development
and management at all levels. The resources are organised close to the production with project teams where the managers have an influential force. Managers at AF should achieve results by setting a good example and building a culture in which orderly conduct is recognised, valued and lived up to by our employees.
The last employee satisfaction survey that was conducted in November 2013 shows that our employees are very happy, have a high degree of job satisfaction and are proud to work for AF. Our employees are good ambassadors for the recruitment of new personnel. We are experiencing an increasing and satisfactory influx of qualified employees.
The AF Group had a total of 2,767 (2,621) employees at the end of the 1st quarter. Of these employees, 2,498 (2,396) were employed in Norway, 218 (165) in Sweden, 43 (50) in Lithuania, 0 (1) in Poland, 2 (3) in the UK, 4 (3) in China and 2 (2) in Germany.
Risk and risk management
The AF Group is exposed to risk of both an operational and financial nature. The AF Group wants to assume operational risk that the business units can influence and control. AF has developed risk management processes that are well adapted to our operations. Standardised, action-oriented risk management processes ensure comprehensive and coherent risk management in all parts of the organisation. The analysis of risk in the tender phase of projects enables the correct pricing and management of the risk that the AF Group assumes. AF limits exposure to risk that cannot be influenced.
Financial risk encompasses market risk, credit risk and liquidity risk. Market risk includes commodity price risk, foreign exchange risk and interest rate risk. The AF Group has limited exposure to foreign exchange risk, but as a major demolition and recycling operator, the group is exposed to fluctuations in steel prices. The AF Group aims to have low exposure to risks that cannot be influenced, and it uses hedging instruments to mitigate the risk associated with foreign exchange rates and steel prices.
Liquidity risk is considered low. In 2012, the AF Group signed a three-year financing agreement with a credit limit of NOK 1,200 million. As at 31 March 2014, this credit facility had not been used.
Market outlook
The outlook for our Norwegian markets is good, and improvement is expected for the Swedish market in 2014. The civil engineering market is driven primarily by major public infrastructure projects, and political priorities have thus a strong influence on the development of the market. In the national budget for 2014, the Government has proposed appropriation of NOK 22.7 billion for roads. This is an increase of approximately NOK 1.7 billion or 8.1 per cent over the budget for 2013. The national budget for 2014 also aims to establish an independent road development company that is to boost several road projects and make the development more efficient. In addition, an NOK 100 billion infrastructure fund will be established to ensure predictable and lasting financing of infrastructure investments. The analysis company Prognosesenteret isforecasting growth of 5 per cent in building and construction in 2014 and an additional 12 per cent in 2015. It is expected that the growth will primarily be in power/energy plants and roads, as well as railways. The positive market outlook provides a good foundation for the civil engineering activities at AF.
AF's activities in the Building, Property and Environment business areas are closely linked to the demand for new housing and non-residential buildings. This demand normally fluctuates according to the economic cycles and is influenced by the development of the Norwegian and global economy, including the labour market, income growth and interest rate levels. The residential housing market weakened in the autumn of 2013, and, after a cautiousstart to the year, there are positive signals from the residential housing market now. The real estate brokerage industry's residential property price statistics showed a price increase of 1.3 per cent (0.6 per cent adjusted for seasonal fluctuations) from
March to April of 2014 . To date in 2014, residential property pricesincreased 0.3 per cent in relation to 2013, and they are currently at the highest level ever measured.
Prognosesenteret expects that the market for the renovation, remodelling and extension of non-residential buildings will grow by 3 per cent in 2014 compared with 2013. The market is driven by the same drivers as mentioned above, in addition to the maintenance lag for municipal buildings and a great renovation potential as a result of ambitious government energy targets. The latter, as well as the mandatory energy labelling of buildings that was introduced from 1 July 2010, provides a good basis in the long term for further growth of AF's energy conservation services.
Through the activities of Civil Engineering and Offshore, AF has positioned itself with respect to activities on the Norwegian continental shelf. Statistics Norway estimates that investments in oil and gas activities will increase by 7 per cent from NOK 209 billion in 2013 to NOK 224 billion in 2014. The estimate for 2014 is the highest ever given since Statistics Norway started the investment survey in 1985. High oil prices and new technology has increased the lifetime of many of the oil and gas fields, and this has postponed the expected time for demolition of many oil and gas installations. This entails at the same time an increased need for maintenance services and the renovation of smaller installations. The high level of activity on the Norwegian continental shelf will give AF additional opportunities for growth through both existing and new operations.
The performance of the eurozone is impacting growth in the Swedish economy. After a weak development in 2013, the Swedish central bank Riksbanken is expecting the gross national product to grow by 2.7 per cent in 2014 and 3.2 per cent in 2015 in Sweden. The weak development of the economy in 2013 has impacted the Swedish building and construction industry, while the Swedish Construction Federation expects growth of 5 per cent for building and construction in 2014. The positive market outlook provides a good foundation for AF's Swedish operations in 2014.
Oslo, 14 May 2014 Board of Directors of AF Gruppen ASA
For more detailed information, please contact: CEO Pål Egil Rønn [email protected] +47 909 57 713
CFO Sverre Hærem [email protected] +47 952 45 167
www.afgruppen.no
Condensed consolidated statement of comprehensive income
| Revenues and incom 2,295 2,376 10,127 Subcontractors -965 -1,069 -4,637 Cost of materials -356 -377 -1,366 Payroll cost -577 -527 -2,132 Operating expenses ex. depreciation, amortis. and impairment -302 -324 -1,400 Net gains(losses) and profit (loss) from associates 15 38 87 EBITDA 110 117 679 Depreciation and impairment of tangible fixed assets -25 -26 -106 Amotisation and impairment of intagible assets -1 -2 -4 Earnings before financial items and tax (EBIT) 84 88 568 Net financial items 7 2 12 Earnings before tax (EBT) 92 91 580 |
|---|
| Income tax expense -24 -19 -128 |
| Net income for the period 68 71 453 |
| Attributable to: |
| Shareholders of the parent 66 73 429 |
| Non-controlling interests 2 -2 24 |
| Net income for the period 68 71 453 |
| Earnings pershare 0.80 0.90 5.26 |
| Diluted earnings per share 0.80 0.89 5.11 |
| Key figures 1Q 14 1Q 13 2013 |
| EBITDA margin 4.8 % 4.9 % 6.7 % |
| Operating profit margin (EBIT %) 3.7 % 3.7 % 5.6 % |
| Pre-tax margin (EBT %) 4.0 % 3.8 % 5.7 % Return on capital employed (ROCE) 1) 42.4 % 26.7 % 45.7 % |
| Return on equity 34.4 % 21.0 % 38.4 % Equity ratio 30.2 % 24.7 % 25.5 % |
| Net interest-bearing receivables 2) 902 42 751 |
| Capital employed 3) 1,805 1,397 1,414 |
| Order backlog 10,521 9,257 10,976 |
1) Return on capital employed (ROCE) = Earnings before tax + interest expense / average capital employed
2) Net interest-bearing receivables = Interest-bearing receivables + cash and cash equivalents - interest-bearing debt
3) Capital employed = Equity + interest-bearing debt
Statement of comprehensive income
| NOK million | 1Q 14 | 1Q 13 | 2013 |
|---|---|---|---|
| Net income for the period | 68 | 71 | 453 |
| Net actuarial gains and losses (will not be classified through profit or loss) | 0 | 0 | 3 |
| Currency translation differences(may be reclassified through profit or loss) | -6 | 8 | 19 |
| Other comprehensive income | -6 | 8 | 22 |
| Total comprehensive income | 62 | 80 | 475 |
| Attributable to: | |||
| - Shareholders of the parent | 61 | 82 | 451 |
| - Non-controlling interests | 1 | -2 | 24 |
| Comprehensive income for the period | 62 | 80 | 475 |
Equity
| NOK million | Paid-in capital |
Other reserves |
Retained earnings |
Attributable to shareholders |
Non controlling interests |
Total equity |
|---|---|---|---|---|---|---|
| Pr. 31.12.12 | 244 | -21 | 880 | 1 102 | 100 | 1 202 |
| Comprehensive income | - | 21 | 429 | 451 | 24 | 475 |
| Capital increase | 53 | - | - | 53 | - | 53 |
| Purchase of treasury shares | - | - | -10 | -10 | - | -10 |
| Sale of treasury shares | - | - | 7 | 7 | - | 7 |
| Dividend paid | -35 | - | -331 | -366 | -17 | -384 |
| Share-based remuneration | 12 | - | - | 12 | - | 12 |
| Trans. with. non-controlling inter. | - | - | -19 | -19 | -2 | -20 |
| Pr. 31.12.13 | 273 | - | 956 | 1 229 | 106 | 1 334 |
| Comprehensive income | - | -5 | 66 | 61 | 1 | 62 |
| Capital increase | 242 | - | - | 242 | - | 242 |
| Purchase of treasury shares | - | - | -3 | -3 | - | -3 |
| Sale of treasury shares | - | - | 9 | 9 | - | 9 |
| Dividend paid | - | - | - | - | -17 | -17 |
| Share-based remuneration | 5 | - | - | 5 | - | 5 |
| Trans. with. non-controlling inter. | - | - | - | - | 1 | - |
| Pr. 31.03.14 | 520 | -5 | 1 027 | 1 541 | 91 | 1 632 |
Consolidated balance sheet
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| Tangible fixed assets | 361 | 389 | 397 |
| Intagible assets | 1,344 | 1,312 | 1,347 |
| Investment in associates | 280 | 230 | 272 |
| Deferred tax asset | 43 | 28 | 45 |
| Interest-bearing receivables | 57 | 35 | 59 |
| Pension plan and other financial assets | 12 | 8 | 12 |
| Total non-current assets | 2,097 | 2,003 | 2,131 |
| Inventories | 154 | 138 | 132 |
| Projects for own account | 95 | 145 | 97 |
| Trade and other receivables | 2,036 | 2,701 | 2,093 |
| Interest-bearing receivables | 49 | 1 | 77 |
| Financial derivatives | 2 | 12 | 11 |
| Cash and cash equivalents | 968 | 133 | 695 |
| Total current assets | 3,304 | 3,130 | 3,105 |
| Total assets | 5,402 | 5,133 | 5,237 |
| Equity attributable to sharholders of the parent | 1,541 | 1,187 | 1,229 |
| Minority interests | 91 | 84 | 106 |
| Total equity | 1,632 | 1,270 | 1,334 |
| Long-term interest-bearing debt | 29 | 67 | 29 |
| Retirement benefit obligations | 2 | 5 | 2 |
| Provisions | 29 | 50 | 29 |
| Deferred tax | 435 | 491 | 422 |
| Total non-current liabilities | 495 | 613 | 483 |
| Short-term interest-bearing debt | 144 | 60 | 50 |
| Trade and other payables | 2,785 | 3,040 | 3,018 |
| Financial derivatives | 2 | - | 2 |
| Provisions | 154 | 125 | 149 |
| Tax payable | 190 | 24 | 200 |
| Total current liabilities | 3,275 | 3,250 | 3,419 |
| Total liabilities | 3,769 | 3,863 | 3,902 |
| Total equity and liabilities | 5,402 | 5,133 | 5,237 |
Consolidated cash flow statement
| Beløp i MNOK | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| Driftsresultat | 84 | 88 | 568 |
| Av- og nedskrivninger | 26 | 28 | 110 |
| Endring netto driftskapital | -206 | -194 | 452 |
| Betalte skatter | -20 | -12 | -40 |
| Andre justeringer | -13 | -32 | -75 |
| Kontantstrøm fra driften | -130 | -121 | 1 015 |
| Netto investeringer | 37 | -38 | -107 |
| Kontantstrøm før kapitaltransaksjoner og finansiering | -93 | -159 | 908 |
| Aksjeemisjon | 242 | - | 53 |
| Transaksjoner med minoritet | - | - | -31 |
| Salg av egne aksjer | 9 | 4 | 7 |
| Kjøp av egne aksjer | -3 | -2 | -10 |
| Betalt utbytte | - | -6 | -384 |
| Kontantstrøm fra kapitaltransaksjoner | 247 | -4 | -365 |
| Kontantstrøm før finansiering | 154 | -164 | 543 |
| Kontanteffekt av finanskostnader | -3 | 3 | -9 |
| Kontantstrøm før endring netto rentebærende gjeld | 151 | -161 | 534 |
| Netto rentebærende gjeld ved begynnelsen av perioden | -751 | -204 | -204 |
| Endring netto rentebærende gjeld uten kontanteffekt | - | 1 | -14 |
| Endring netto rentebærende gjeld med kontanteffekt | -151 | 161 | -534 |
| Netto renteb. gjeld (fordring) ved slutten av perioden | -902 | -42 | -751 |
Business areas
The AF Group's division into operating segments is consistent with the division of the business areas Civil Engineering, Environment, Building, Property, Energy and Offshore.
Segment information is presented in accordance with the Group's accounting policies in accordance with IFRS with the exception of IFRIC 15 (Agreements for the Construction of Real Estate). This policy exception applies to the Building and Property segments in Norway. Income from projects for own account in these segments is recognised in accordance with IAS 11. This means that the recognition of income in these projects is the product of the physical degree of completion, the percentage sold and the 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 IFRIC 15 on the consolidated accounts is illustrated in a separate table in the segment information and a separate note.
Civil engineering
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 706 | 596 | 2,928 |
| Internal revenue and income | 1 | 2 | 22 |
| Total revenue and income | 707 | 597 | 2,950 |
| EBITDA | 70 | 40 | 309 |
| Earnings before financial items and tax (EBIT) | 57 | 26 | 253 |
| Earnings before tax (EBT) | 60 | 29 | 265 |
| EBITDA % | 10.0 % | 6.7 % | 10.5 % |
| EBIT % | 8.0 % | 4.4 % | 8.6 % |
| EBT % | 8.5 % | 4.9 % | 9.0 % |
| Assets | 1,407 | 1,115 | 1,664 |
| Order backlog | 4,088 | 2,756 | 4,604 |
Environment
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 152 | 102 | 662 |
| Internal revenue and income | 2 | 7 | 22 |
| Total revenue and income | 154 | 110 | 684 |
| EBITDA | 6 | - | 49 |
| Earnings before financial items and tax (EBIT) | 4 | -2 | 40 |
| Earnings before tax (EBT) | 3 | -3 | 38 |
| EBITDA % | 4.0 % | -0.2 % | 7.1 % |
| EBIT % | 2.4 % | -2.2 % | 5.8 % |
| EBT % | 1.6 % | -2.4 % | 5.5 % |
| Assets | 325 | 279 | 366 |
| Order backlog | 224 | 283 | 215 |
Building
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 1,144 | 1,163 | 4,792 |
| Internal revenue and income | - | 1 | 2 |
| Total revenue and income | 1,144 | 1,164 | 4,793 |
| EBITDA | 34 | 30 | 183 |
| Earnings before financial items and tax (EBIT) | 31 | 26 | 169 |
| Earnings before tax (EBT) | 29 | 23 | 160 |
| EBITDA % | 3.0 % | 2.6 % | 3.8 % |
| EBIT % | 2.7 % | 2.3 % | 3.5 % |
| EBT % | 2.5 % | 2.0 % | 3.3 % |
| Assets | 2,159 | 1,886 | 2,327 |
| Order backlog | 4,495 | 4,344 | 4,760 |
Property
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 9 | 18 | 60 |
| Internal revenue and income | - | - | - |
| Total revenue and income | 9 | 18 | 60 |
| EBITDA | 5 | 4 | 32 |
| Earnings before financial items and tax (EBIT) | 5 | 4 | 32 |
| Earnings before tax (EBT) | 3 | 2 | 30 |
| EBITDA % | - | - | - |
| EBIT % | - | - | - |
| EBT % | - | - | - |
| Assets | 481 | 121 | 351 |
| Order backlog | - | - | - |
Energy
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 28 | 35 | 172 |
| Internal revenue and income | - | - | 1 |
| Total revenue and income | 28 | 35 | 173 |
| EBITDA | -2 | 2 | 12 |
| Earnings before financial items and tax (EBIT) | -2 | 2 | 11 |
| Earnings before tax (EBT) | -2 | 2 | 12 |
| EBITDA % | -7.5 % | 5.4 % | 6.8 % |
| EBIT % | -8.0 % | 5.1 % | 6.5 % |
| EBT % | -8.2 % | 5.3 % | 6.8 % |
| Assets | 127 | 116 | 138 |
| Order backlog | 56 | 100 | 59 |
Offshore
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 271 | 370 | 1,448 |
| Internal revenue and income | 2 | 13 | 32 |
| Total revenue and income | 273 | 383 | 1,480 |
| EBITDA | 1 | 27 | 81 |
| Earnings before financial items and tax (EBIT) | -2 | 24 | 70 |
| Earnings before tax (EBT) | -1 | 24 | 71 |
| EBITDA % | 0.3 % | 7.1 % | 5.5 % |
| EBIT % | -0.6 % | 6.2 % | 4.7 % |
| EBT % | -0.4 % | 6.4 % | 4.8 % |
| Assets | 828 | 998 | 949 |
| Order backlog | 1,562 | 1,751 | 1,265 |
Other segments (Group)
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 9 | 7 | 30 |
| Internal revenue and income | 9 | 17 | 37 |
| Total revenue and income | 18 | 25 | 66 |
| EBITDA | - | 4 | 12 |
| Earnings before financial items and tax (EBIT) | -4 | -1 | -6 |
| Earnings before tax (EBT) | 4 | 2 | 7 |
| Assets | 1,114 | 1,734 | 1,194 |
| Order backlog | - | - |
Eliminations
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | -17 | - | -54 |
| Internal revenue and income | -14 | -40 | -115 |
| Total revenue and income | -31 | -40 | -168 |
| EBITDA | - | -2 | -14 |
| Earnings before financial items and tax (EBIT) | - | -2 | -14 |
| Earnings before tax (EBT) | - | -2 | -14 |
| Assets | -1,032 | -1,111 | -1,748 |
| Order backlog | 69 | - | 54 |
IFRIC 15
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | -7 | 85 | 89 |
| Internal revenue and income | - | - | - |
| Total revenue and income | -7 | 85 | 89 |
| EBITDA | -4 | 13 | 14 |
| Earnings before financial items and tax (EBIT) | -4 | 13 | 14 |
| Earnings before tax (EBT) | -4 | 13 | 14 |
| Assets | -8 | -5 | -4 |
| Order backlog | 27 | 23 | 19 |
Segment total
| NOK million | 31.03.14 | 31.03.13 | 31.12.13 |
|---|---|---|---|
| External revenue and income | 2,295 | 2,376 | 10,127 |
| Internal revenue and income | - | - | - |
| Total revenue and income | 2,295 | 2,376 | 10,127 |
| EBITDA | 110 | 117 | 679 |
| Earnings before financial items and tax (EBIT) | 84 | 88 | 568 |
| Earnings before tax (EBT) | 92 | 91 | 580 |
| EBITDA % | 4.8 % | 4.9 % | 6.7 % |
| EBIT % | 3.7 % | 3.7 % | 5.6 % |
| EBT % | 4.0 % | 3.8 % | 5.7 % |
| Assets | 5,402 | 5,133 | 5,237 |
| Order backlog | 10,521 | 9,257 | 10,976 |
Notes
1. General information
The AF Group is one of Norway'sleading contracting and industrial groups. The AF Group is divided into six business areas: Civil Engineering, Environment, Building, Property, Energy and Offshore.
AF Gruppen ASA is a public limited company registered and domiciled in Norway. The head office islocated at Innspurten 15, 0663 Oslo. AF is listed on the Oslo Stock Exchange's OB Match list under the tickersymbol AFG.
This summary of financial information for the 1st quarter has not been audited.
2. Basis of preparation
The consolidated financialstatementsfor the AF Group encompass AF Gruppen ASA and itssubsidiaries, joint ventures and associated companies. The consolidated financialstatementsfor the 1st quarter have been prepared in accordance with IAS 34 Interim Accounts. The summary of the financial information presented in the quarterly accountsisintended to be read in conjunction with the annual report for 2013, which has been prepared in accordance with the International Financial Reporting Standards(IFRS).
As a result of rounding off, the numbers or percentages will not always add up to the total.
3. Accounting policies
The accounting policies applied to the accounts are consistent with those described in the annual report for 2013.
New and amended standards implemented by the Group
The AF Group has not implemented any new or amended standardsin the 1st quarter of 2014. IFRS 10, 11 and 13 were implemented early from the 1st quarter of 2013.
4. Estimates
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 commitments, revenues and costs. The estimates are based on the management's best judgement and experience, but 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. Changesin 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.
5. Transactions with related parties
The Group'srelated parties consist of associates, joint ventures, the Company'sshareholders and members of the Board of Directors and Corporate Management Team. All businesstransactions with related parties are carried out at arm'slength.
On 14 February 2014, the Board of Directors approved the redemption of all the outstanding options by means of a capital increase. This wasin accordance with the authorisation from the General Meeting. A total of 5,755,679 options were exercised by 1,240 employees of the AF Group The volume-weighted average redemption price for the options was NOK 41.97. Primary insidersin the AF Group purchased 447,701 sharesin the AF Gruppen ASA in this connection.
6. IFRIC 15
IFRS with the exception of IFRIC 15 (Agreements for the Construction of Real Estate). The effect of IFRIC 15 on the consolidated accounts is illustrated in a separate table in the segment information. According to IFRIC 15, income from the sale of apartments and the associated proportion of contracting services shall not be entered until handover. The table below 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.
Projects for own account - Property
| AFs construction value | Housing | Construction period | Ownership | ||
|---|---|---|---|---|---|
| Project | ex. VAT (NOK million) | units | Start up | Completion | share AF |
| Lillohagen F/G | 111 | 58 | Q4 2012 | Q3 2014 | 33 % |
| Kilen Panorama | 51 | 20 | Q1 2014 | Q4 2014 | 40 % |
| Hasle Linje A1/A2/A3 | 245 | 51 | Q2 2014 | Q1 2016 | 50 % |
Company information
AF Gruppen ASA
Head office: Innspurten 15 0603 Oslo T +47 22 89 11 00 F +47 22 89 11 01
Postal address: P.O. Box 6272 Etterstad 0603 Oslo
Company's Board of Directors
Tore Thorstensen, Chairman of the Board Mari Broman Hege Bømark Carl Henrik Eriksen Peter Groth Kenneth Svendsen, elected by the employees Pål Jacob Gjerp, elected by the employees Arne Sveen, elected by the employees
Corporate Management
Pål Egil Rønn, CEO Sverre Hærem, CFO Arild Moe, EVP Civil Engineering and Environment Morten Grongstad, EVP Building AndreasJul Røsjø, EVP Property and Energy Robert Haugen, EVP Offshore
Financial calendar
Presentation of interim accounts:
| 15.05.2014 | Interim report 1st quarter 2014 |
|---|---|
| 22.08.2014 | Interim report 2nd quarter 2014 |
| 14.11.2014 | Interim report 3rd quarter 2014 |
The presentation of interim accounts for the 1th quarter will take place at Felix Konferansesendter, Bryggetorget 3, at 8:30 a.m.
For more information on the company, visit our web site at www.afgruppen.no