AF Gruppen — Interim / Quarterly Report 2016

May 12, 2016

Highlights

A good first quarter

• Good operational performance in all business areas
• High activity level and solid margins
• Revenues: NOK 2,707 million (2,534)
• Earnings before tax: NOK 186 million (134), result margin 6.9 %
• Solid financial position:
• Net interest bearing receivables: NOK 705 million (375)
• Available liquidity: NOK 2,185 million (1,855)
• A dividend of NOK 5.00 per share will be proposed to the Annual General Meeting today

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

161

Earnings before tax

• EBT increased by 40 % compared to Q1 2015
• Profit margin of 6.9 % (5.3 %)
• Building and Civil engineering are the main contributors to the Q1 earnings
• Compensation regarding the Slomarka Fulu project is included in the results

Return on capital employed

12 month rolling average

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

Cash flow statement

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

Net interest bearing receivables

Net interest bearing receivables as of 31 March is NOK 705 million (375).

Balance sheet

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

Equity ratio

Health and environment

Sick leave Source separation rate

Civil Engineering

Good performance and good results

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

• Good performance and very good results for AF Anlegg and Målselv Maskin & Transport in the 1st quarter.
• Pålplintar has seasonally lower activity in the quarter.
• High activity within tender calculation and many tenders out.
• Q1 results are effected positively by dispute where AF was awarded compensation of NOK 41 million + interest and legal costs.
• Order backlog: NOK 3,047 million (3,103)

Environment

Seasonally lower activity

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

• AF Decom has somewhat lower activity because of seasonal variations. Strong order intake.
• Härnösand Byggreturer has high activity and delivers good Q1 results.
• Both environmental parks have seasonally lower activity in Q1.
• The remaining 50 % of BA Gjenvinning AS was sold in March.
• Order backlog: NOK 286 million (216)

Building

High activity and good operational performance

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

• LAB delivers very good results in Q1. AF Bygg Oslo and AF Bygg Østfold are both off to a good start in 2016.
• Other units experience regional differences in activity level and results.
• Strong incoming orders and a solid order backlog.
• Order backlog: NOK 5,716 (5,971)

Property

High activity and good housing sales

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

• 108 (82) apartments were sold in Q1. AF's share is 47 (37).
• Eight housing projects with 743 apartments in the production phase (AF's share 303).
• Apartments for more than 1 billion NOK sold at Hasle (Oslo).
• Land and development rights in progress: 2,292 (2,431) residential units. AF's share is 962 (860).
• AF has 109,082 (122,717) m2 gross area of urban premises under development. AF's share is 52,454 (71,275).

Energy

Somewhat lower activity

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

• Somewhat lower activity level for AF Energi & Miljøteknikk compared to Q1 2015. Good operational performance and Q1 results are satisfactory.
• Stable demand for energy services.
• The unit has a large part of its project portfolio in the analysis and engineering phase.
• Order backlog: NOK 80 million (107)

Offshore

High tender activity for the decommissionsing unit

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

• High tender activity and many tenders out for AF Offshore Decom.
• The offshore M & M businesses has a low activity level.
• Environmental Base Vats was awarded the contract for thedemolition and recycling of the Huldra-platform.
• Order backlog: NOK 1,093 million (1,608)

Order backlog

Order backlog development

Order backlog

Order backlog per business area

Risk management in AF

• Large variations in project results
• Low margins compared to the company's risk profile
• Substantial annual growth and continued growth ambitions

Decision in 2006

• Systematic risk analysis of all tenders, projects and portfolios
• Method is based on Steen Lichtenberg successive principle

Margin improvement

Order backlog in a longer perspective

The hit rate is stable over time

Tenders1 delivered and won AF Gruppen (2011-2015)

Note: 1.Applies to tenders where group staff has facilitated the risk analysis.

5 subjects are critical for good project execution

"Give me six hours to chop down a tree and I will spend the first four sharpening the axe" Abraham Lincoln

Barriers for good project execution

Summary

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

• Off to a good start. Good performance and good margins
• Internal focus on HSE. Not satisfactory LTI-rate for Q1
• Strong financial position. Good dividend capacity and financial leeway
• Signs of positive development in order intake last few months
• Faithful to own approach to risk management and tender work

Thank you for your attention!

Q2 2016: August 26th 2016