AF Gruppen — Earnings Release 2017

Nov 10, 2017

November 10th 2017

Q3 2017 AF Gruppen ASA

Campus Ås

Highlights

Good quarter and solid order backlog

• Revenues: NOK 3,399 million (3,108) in Q3 and NOK 9,408 million (8,984) year-to-date.
• EBT: NOK 232 million (265) in Q3 and NOK 625 million (700) year-to-date.
• EBT margin: 6.8 % (8.5 %) in Q3 and 6.6 % (7.8 %) year-to-date.
• Strong order backlog: NOK 20,183 million (11,200)
• Solid financial position: Net interest bearing receivables of NOK 1,068 million (473)
• Dividend for 2nd half-year of NOK 3.50 (3.00) per share approved.

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

Q3 revenues by business area:

Revenues year-to-date: NOK 9,408 million (8,984)

Earnings before tax

• Good margins in all six business areas in Q3
• EBT Q3: NOK 232 million (265)
• EBT % Q3: 6.8 % (8.5 %)
• EBT 2017 YTD: NOK 625 million (700)
• EBT % 2017 YTD: 6.6 % (7.8 %)

Return on capital employed

12 month rolling average

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

Cash flow statement

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

Net interest bearing receivables

Net interest bearing receivables as of 30 September is NOK 1,068 million (473).

Balance sheet

N O K i l l i m o n	3 0. 0 9. 1 7	3 0. 0 9. 1 6	3 1. 1 2 1 6
N t t o n- c u r r e n a s s e s	4, 1 3 8	3, 8 0 9	3, 7 8 9
C C h t t r r e n a s s e s, e a s u x.	2, 4 3 7	2, 4 0 9	2, 2 9 1
C h d h i l t a s a n c a s e q u v a e n s	8 8 3	3 5 9	4 6 9
T l t t o a a s s e s	6 7, 7 5	6, 5 7 7	6, 4 9 5
E i t q u y	2, 0 4 6	1, 8 2 4	1, 9 5 0
L t d b t o n g e r m e	5 9 9	7 1 7	5 5 3
S h t t d b t o r e r m e	5, 1 1 9	4, 0 3 7	4, 0 4 6
T t l i t d d b t o a e q u y a n e	7, 7 6 5	6, 5 7 7	6, 5 4 9

Equity ratio

Health and environment

Sick leave in Q3: 2.6 %

Sick leave Source separation rate

A total of 76,578 (191,608) tonnes of waste has been sorted in the 3rd quarter.

Civil Engineering

High activity level and solid order backlog

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

• Full production for AF Anlegg on the E18 Tvedestrand Arendal project. The unit has a high activity level.
• Målselv Maskin & Transport and Kanonaden Entreprenad both have good operational performance and deliver good Q3 results.
• Pålplintar has somewhat lower activity in the 3rd quarter.
• AF Anlegg awarded three large contracts in Q3 with a total contract value of NOK 2.2 billion.
• Order backlog: NOK 7,410 million (2,697)

Solid order situation

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

• AF Decom experiences a slightly lower activity level and varying profitability in the regional departments.
• AF Härnösand Byggreturer has good profitability in their projects.
• Somewhat lower activity level at Rimol Miljøpark in Q3, but positive results.
• The construction work on the new environmental facility at Nes in Akershus has started. Facility to be operative in Q2 2018.
• Order backlog: NOK 379 million (202)

Building

High activity level and good operational performance

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

• AF Bygg Oslo, LAB and the companies in Strøm Gundersen and MTH all deliver good Q3 results.
• AF Bygg Østfold and AF Bygg Sverige has increasing activity in Q3. Both units deliver satisfactory quarterly results.
• Market conditions in south-western Norway are demanding and AF Bygg Prosjektpartner delivers weak results.
• Bygg has announced 3 new contracts in Q3, with a total contract value of NOK 750 million excl. VAT.
• Order backlog: NOK 10,600 (7,274)

Property

Wait-and-see market

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

• 17 (291) apartments were sold in Q3. AF's share is 7 (117). 18 (221) apartments were announced for sale in Q3.
• Seven housing projects with 980 apartments in the production phase (AF's share 466). 88 % of the apartments in production are sold as per September 30th.
• Land and development rights in progress: 2,572 (2,244) residential units. AF's share is 1,095 (956)
• AF has 92,084 (107,310) m2 gross area of urban premises under development. AF's share is 45,273 (51,213).

Building

Building's revenue distribution YTD 2017

Total revenues for Building year-to-date: NOK 5 489 million

• 32 % of Building's revenues comes from residential new building
• Building has an order backlog of NOK 10,600 million, of which residential new building with sales reservation is NOK 860 million (8,1 %)
• For AF Gruppen, revenues from residential new building is 19 % of total revenues
• AF Gruppen has an order backlog of NOK 20,183 million, of which residential new building with sales reservation is 4,3 %

Energy

Stable activity level

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

• AF Energi & Miljøteknikk had a stable activity level in Q3. Good operational performance for AF Energi & Miljøteknikk in ongoing projects and the unit delivers good Q3 results.
• Stable demand for energy services. The unit has a high volume of tender calculations and a rising order backlog.
• New business opportunities for AF Energi & Miljøteknikk through partnering contracts.
• Order backlog: NOK 301 million (115)

Offshore

High activity at Vats

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

• Good operational performance and good results for AF Offshore Decom. High activity level at Environmental Base Vats in Q3.
• Low activity level for AF Offshore AeronMollier in Q3 and the unit delivers weak quarterly results.
• AF Offshore Decom UK has entered into an agreement with the intent to establish a new joint venture, AF Dundee, which will lay the foundations of creating a UK North Sea oil and gas decommissioning hub in the city of Dundee.
• AF Offshore Decom has received notice that ConocoPhillips (UK) Limited intend to enter into a frame agreement for the future removal and disposal of up to 7 platforms in the Southern North Sea. (not included in order backlog)
• Order backlog: NOK 883 million (626)

Order situation

Solid order backlog

Q1 Q2 Q3 Q4

Order situation

Order backlog per business area

Our expertise covers a wide range of services

Healthy order situation

Turnover and profit margin Order backlog

*as of Q3. 2017

Added value with focus on safety and the environment

*Reported unwanted incidents as of Q3. 2017 – Norwegian operations

Source separation and recycling

Key figures source separation

Key figures recycling

Environmental Centre

The circular city

Environmental Centre

Sustainable interaction provides further growth

EnvironmentAn operation that is broader and less dependent on economic cycles

resources and technology necessary for creating the society and jobs of the future

"

…which is why we want to offer solutions that meet the environmental challenges of the future

Corporate social responsibility

Summary

M N O K	Q 3 2 0 1 7	Q 3 2 0 1 6	Y T D 2 0 1 7	Y T D 2 0 1 6
I k t t n n e e r	3, 3 9 9	3, 1 0 8	9, 4 0 8	8, 9 8 4
E B I T	2 3 0	2 0 7	6 2 6	0 6 7
E B T	2 3 2	2 6 5	6 2 5	7 0 0
E B I T %	6 8 %	8 7 %	6 7 %	7 9 %
E B T %	6 8 %	8 5 %	6 6 %	7. 8 %

A good quarter

• All time high order backlog: NOK 20,183 million (11,200)
• Positive development in LTI-rate
• Record-low absence due to illness
• Strong financial position and order intake supports our growth strategy

Thank you for your attention!

Q4 2017: February 16th 2018