AF Gruppen — Interim / Quarterly Report 2017

May 12, 2017

Highlights

Good start to 2017

• Revenues: NOK 2,662 million (2,707)
• EBT: NOK 142 million (186)
• EBT margin: 5.4 % (6.9 %)
• Strong order backlog: NOK 15,984 million (10,623)
• Solid financial position: Net interest bearing receivables of NOK 1,063 million (705)
• Dividend proposal for 1st half-year 2017 of NOK 5.00 (5.00).

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

Q1 revenues by business area:

Earnings before tax

• Seasonally good result
• EBT Q1: NOK 142 million (186)
• EBT % Q1: 5.4 % (6.9 %)

*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 1 2 0 1 7	Q 1 2 0 1 6	2 0 1 6
E B I T	1 4 5	1 8 8	1, 0 3 4
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 9	3 2	1 7 7
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	2 8 7	1 8	2 1 6 -
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	5 6 -	8 7 -	1 7 3 -
C h f l f i t a s o r o m o p e r a o n s w	4 1 5	1 2 5	8 2 2
N t i t t e n v e s m e n s	1 4 2 -	2 3 -	1 3 -
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	1 8 0	6 0 -	7 5 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	1 5 -	1 1	2 5 -
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	4 3 9	7 9	3
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	4 6 9	4 5 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	2 -	7
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	9 0 7	3 6 5	4 6 9

Net interest bearing receivables

Net interest bearing receivables as of 31 March is NOK 1,063 million (705).

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

Equity ratio

Health and environment

Sick leave Source separation rate

A total of 85,675 (91,812) tonnes of waste has been sorted in the 1st quarter.

Civil Engineering

Good operational performance

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

• AF Anlegg delivers good results and started up the E18 Tvedestrand-Arendal project.
• Målselv Maskin & Transport delivers good Q1 results.
• Pålplintar delivers seasonally weak results in Q1.
• Acquisition of Kanonaden Entrepenad AB closed Q1 2017, and the company delivers good results as expected.
• Order backlog: NOK 5,679 million (3,047)

Environment

Lower activity level

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

• Due to many small projects in their portfolio, AF Decom experienced a lower activity level in Q1.
• AF Härnösand Byggreturer shows good profitability and delivers good Q1 results.
• Seasonally lower activity level at Rimol Miljøpark in Q1.
• Entered agreement to establish new environmental facility
• Order backlog: NOK 243 million (286)

Building

Good performance and high activity level

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

• AF Bygg Oslo, LAB and the companies in Strøm Gundersen and MTH all deliver good Q1 results.
• AF Bygg Østfold and AF Bygg Sverige has a lower activity level in Q1, but both units have many new orders in Q2.
• Bygg has announced three new contracts in Q1, with a total contract value of NOK 599 million excl. VAT.
• Order backlog: NOK 8,759 (5,716)

Property

Good home sales

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

127 (108) apartments were sold in Q1. AF's share is 47 (47).

• Ten housing projects with 1,134 apartments in the production phase (AF's share 488). 91 % of the apartments in production are sold as per March 31st.
• Land and development rights in progress: 2,295 (2,292) residential units. AF's share is 977 (962)
• AF has 93,642 (109,082) m2 gross area of urban premises under development. AF's share is 46,429 (52,454).

Energy

Good operational performance and good results

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

• Good operational performance for AF Energi & Miljøteknikk in ongoing projects. The unit delivers good Q1 results.
• Stable demand for energy services. The unit has a high volume of tender calculations and a rising order backlog
• Order backlog: NOK 164 million (80)

Offshore

High activity level in Vats

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

• High activity level at Environmental Base Vats for AF Offshore Decom. The unit delivers good Q1 results.
• Demanding market conditions for AF Offshore AeronMollier. The unit has significantly lower activity in Q1 and delivers weak results for Q1.
• AF Offshore Decom has after quarter-end been notified by ConocoPhillips Skandinavia that they intend to enter a contract for removal and disposal of 4 platforms connected to the Ekofisk field. The project will run from 2017 to 2022.
• Order backlog: NOK 605 million (1,093)

Order backlog

Q1 Q2 Q3 Q4

Order backlog

Order backlog per business area

AF Offshore

Safety always comes first

Key safety figures

LTI: Number lost-time injuries per million hours worked. Measuring of LTI also includes injuries by subcontractor employees. RUIF: Number of reported unwanted incidents per man-year.

AF Offshore

Solid first quarter; high activity level at Vats and within tendering

AF Offshore Decom:

• -Very high activity level at Vats in Q1
• Increased order backlog in Q1

• -High tendering activity

• Weak start to the year due to low activity and a demanding marked

• Shift towards segments that are less dependent on the offshore market
• Slowly improving market for offshore maintenance and modification

Strategy 2016 - 2020

Organic and structural growth

AF will secure a stronger position in the offshore market through organic and structural growth.

Expand services portfolio and geographic presence to become a complete supplier.

Increase project focus and range of services within HVAC

Establish project based services in border area of existing core business in markets with different cycles than offshore decommissioning

AF Offshore Aeron Mollier

Total technical contractor and service partner

Increasing decommissioning activity on British and Norwegian continental shelf over the next 10 years

180 DECOM PROJECTS TO BE CARRIED OUT

1 832 WELLS TO BE PLUGGED

PARTIALLY REMOVED

7 500 KILOMETRES OF PIPING TO BE REMOVED

Estimated approx. 33 decom projects on Norwegian continental shelf over the next 10 years, and 153 on british continental shelf

1 470 wells to be plugged on british side, while estimates shows 362 equivalent operations on Norwegian side

There are approx. 120 platforms on Norwegian side alone, and almost 350 subsea installations

Approx. 7 500 kilometres of piping systems to be removed on the seabed of the North Sea

Offshore Decom

Innovative solutions since the beginning..

Ambition to expand services from disposal to shutdown

CAT3

Main contractor:HMC

Scope: 36 000 tonnes excl. option

Platforms:

• - EKOA
• - EKOF
• - EKOH + bridges
• - EKOQ + bridges
• - Tor (option)

Contract period: Q2 2017 – 2022

Summary

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

Seasonally good quarter

• All time high order backlog: NOK 15 984 million (10 623)
• Decline in LTI and absence due to illness
• Strong financial position supports our growth strategy