AF Gruppen ASA Q2 2022

26 August 2022

Highlights

AF Gruppen with significant turnover growth and good profitability

Revenue: NOK 8,292 (7,189) million in Q2 and NOK 15,101 (13,398) million year-to-date
Earnings before tax: NOK 426 (356) million in Q2 and NOK 635 (602) million year-to-date
Profit margin: 5.1% (5.0%) in Q2 and 4.2% (4.5%) year-to-date
Cash flow from operations: NOK 619 (529) million in Q2 and NOK 1 226 (734) million year-to-date
Order backlog: NOK 42,003 (37,837) million as of 30 June 2022
Net interest-bearing receivables of NOK 145 (-333) million as of 30 June 2022

Health and Safety

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

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

Revenues and Earnings – Quarterly

Return on Capital Employed

* Last four quarters rolling

Interest expences added

* Rolling average last four quarters

YTD 2022

2 nd quarter 2022

Cash Flow Statement

NOK million	Q2 2022	Q2 2021	YTD 2022	YTD 2021
EBIT	421	363	636	626
Depreciations, amortisation and impairment	136	140	266	276
Change in net working capital	189	159	610	44
Other adjustments / taxes paid	-127	-133	-286	-213
Cash flow from operations	619	529	1,226	734
Net investments	203	-98	169	-136
Cash flow from capital activities	-910	-767	-1,034	-860
Interest paid and change in interest bearing debt	177	-101	39	-204
Net change in cash and cash equivalents	90	-436	400	-466
Net cash and cash equivalents at beginning of period	974	630	680	708
Change in cash and cash equivalents without cash effect	22	12	5	-37
Net cash and cash equivalents end of period	1,086	205	1,086	205

Net Interest-bearing Receivables and Liquidity

Components net interest-bearing receivables

Available liquidity: NOK 3,804 million (including financial facilities of NOK 3,000 million)

Balance Sheet

NOK million	30.06.22	30.06.21	31.12.21
Non-current assets	7,494	7,786	7,490
Current assets, ex. cash	5,505	4,556	4,937
Cash and cash equivalents	1,086	205	680
Total assets	14,085	12,547	13,108
Equity	3,126	3,117	3,572
Long term debt	1,438	1,378	1,343
Short term debt			8,193
Sum egenkapital og gjeld	14,085	12,547	13,108

All the company's covenants exclude the effect of IFRS 16

Environment

¹ Regulatory requirement of 60%

YTD 2022

Recycling environmental parks Recycling rate 81% (78%) YTD in 2022

YTD 2022

Business Areas

2 nd quarter 2022

Solid Order Backlog and Strong Results

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	1,537	1,568	2,778	3 077
EBIT	99	100	183	197
EBT	96	99	179	193
EBIT %	6.5%	6.4%	6,6%	6,4%
EBT %	6.3%	6.3%	6,4%	6,3%

Very good results from AF Anlegg, Målselv Maskin & Transport and Consolvo. Eiqon and Stenseth & RS had low profitability in the quarter
Målselv Maskin & Transport and Stenseth & RS signed contracts at record high levels this quarter, with a total value of MNOK 325 excl. VAT
AF Anlegg was appointed contractor for a new modification and maintenance contract for civil works for Equinor on behalf of Hammerfest LNG, approximate value of NOK 250 million excl. VAT
After the quarter, AF has been nominated by Avinor for a turnkey contract with interaction at the new airport in Mo I Rana
Order backlog: NOK 12,193 (7,224) million

Construction

High Activity, but Lower Profitability

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	2,916	2,165	5,397	4 019
EBIT	82	132	100	214
EBT	83	134	100	216
EBIT %	2.8%	6.1%	1,8%	5,3%
EBT %	2.9%	6.2%	1,9%	5,4%

Price developments for raw materials and wood products still affects the construction unit's profitability negatively. Cost increases and delays in the portfolio of AF Nybygg has entailed further loss provisions in the quarter. In addition AF Byggfornyelse, Strøm Gundersen and Fundamentering reports weak results in the quarter
AF Håndverk, Haga & Berg, AF Bygg Oslo, AF Bygg Østfold, Strøm Gundersen Vestfold and Åsane Byggmesterforretning report good results in the quarter
AF Bygg Oslo signed a contract to build 300 apartments in the housing project Rolvsrud Arena in Lørenskog. The contract has a value of NOK 810 million excl. VAT. In addition to this, further four contracts with a total value of approx. NOK 580 million excl. VAT has been reported to the stock exchange
Order backlog: NOK 13,172 (13,054) million

Betonmast

Several Business Units with Good Results

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	1,273	1,266	2,517	2,488
EBIT	29	16	52	41
EBT	30	14	50	30
EBIT %	2.3%	1.2%	2,0%	1.6%
EBT %	2.3%	1.1%	2,0%	1.2%

Betonmast Romerike, Røsand, Trøndelag and Østfold reported good results
Betonmast Boligbygg improved profits compared to last year with zero profits in the quarter. Betonmast Innlandet has made write-downs in its project portfolio
Betonmast Røsand signed a contract to build Campus Kristiansund for Devoldholmen Utvikling AS, the contract has a value of NOK 582 million excl. VAT. In addition, two contracts were reported to the stock exchange with total value of NOK 330 million excl. VAT
Order backlog: NOK 6,245 (6,956) million

Property

Completed Sale of Commercial Building in Hasle

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	5	8	11	15
EBIT	57	9	59	16
EBT	59	9	62	16
Capital employed	532	922	532	922

Property reports a good results in the quarter, affected by completion of the sale of office building Karvesvingen 7 in Hasle, Oslo (21,056 GFA sqm.)
Sales contracts signed for a total of 64 (148) residential units in the quarter, whereof AF's share was 29 (70) units
Eight projects with a total of 917 residential units are in production (AF's share is 410). Sales ratio on commenced projects are 83%
Residential portfolio under development: 1,576 (2,112) units. AF's share: 761 (1,064)
Commercial portfolio under development: 62,256 (143,380) GFA sqm. AF's share: 30,949 (41,196)
LAB Eiendom initiated the rehabilitation of Baneveien 16 in Bergen

Sweden

Revenue Growth and Improved Profitability

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	1,958	1,630	3,544	3 024
EBIT	75	53	121	104
EBT	74	51	118	101
EBIT %	3.8%	3.2%	3,4%	3,4%
EBT %	3.8%	3.1%	3,3%	3,3%

Sweden reports revenue growth and somewhat improved profitability in the quarter
Kanonaden with strong turnover growth compared to the same period last year and reports good results. Härnösand Byggreturer continues to report very good results
The other business units reports collectively higher revenue compared to the same quarter last year, but the result is still below expectation
Betonmast Stockholm signed a contract with Skandia Fastigheter to construct a new office block in Solna outside Stockholm, with total value of SEK 345 million excl. VAT.
HMB signed a contract with Tornet Bostadproduktion to build 182 apartments and a nursery school in Örebro, with total value of SEK 280 million excl. VAT.
Order backlog: NOK 8,479 (7,962) million

Solid Results Despite Lower Activity

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	255	323	492	573
EBIT	18	22	30	33
EBT	19	21	29	31
EBIT %	7.2%	6.8%	6,1%	5,8%
EBT %	7.4%	6.6%	6,0%	5,3%

Energy and Environment reports solid results
AF Decom with lower activity compared to the same period last year, but reports very good results
AF Energi with increased profitability compared to the same period last year and reports good results
AF Decom has so far this year sorted metal for recycling and recycled materials at the environmental centers corresponding to 24,265 (16,934) CO² -equivalents
Order backlog: NOK 686 (715) million

Offshore

High Turnover and Excellent Profitability

NOK million	Q2 22	Q2 21	1H 22	1H 21
Revenues	305	257	489	416
EBIT	36	17	53	25
EBT	40	16	55	22
EBIT %	11.9%	6.7%	10,9%	6,0%
EBT %	13.0%	6.3%	11,3%	5,3%

Offshore reported a high level of activity and excellent profitability
AF Offshore Decom had a high level of activity during the quarter with excellent profitability. The good result in the quarter reflects high production and good operations at AF Environmental Base Vats
AF Offshore Decom has so far this year sorted metal for recycling corresponding to 28,314 (17,069) CO² -equivalents
AF AeronMollier reports increased revenues compared to last year, profits are still below expectations
Order backlog: NOK 1,435 (1,651) million