AF Gruppen — Investor Presentation 2016

Aug 26, 2016

August 26th 2016

Q2 2016 AF Gruppen ASA

Highlights

Solid margins

• Very good operational performance in all business areas
• Incoming orders strong in Q2: 4.2 billion NOK
• Building business area with all-time-high order backlog
• High activity level and good margins
• Revenues: NOK 3,170 million (3 490) in Q2 vs. NOK 5,877 million (6 024) year-to-date.
• EBT: NOK 249 million (262) in Q2 vs. NOK 435 million (397) year-to-date.
• EBT margin: 7.8 % (7.5 %) in Q2 vs. 7.4 % (6.6 %) year-to-date.
• Solid financial position: Net interest bearing receivables of NOK 300 million (94)

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

Q2 revenues by business area:

Revenues 1st half-year: NOK 5,877 million (6,024)

Earnings before tax

• Very good margins in all six business areas in Q2, from 7.4 % and up
• EBT Q2: NOK 249 million (262)
• EBT % Q2: 7.8 % (7.5 %)
• EBT 2016 YTD: NOK 435 million (397)
• EBT % YTD: 7.4 % (6.6 %)

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

Net interest bearing receivables

Net interest bearing receivables as of 30 June is NOK 300 million (94). NOK 463 million was paid to shareholders as dividend in Q2 16

Balance sheet

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

Equity ratio

Health and environment

Sick leave Source separation rate

A total of 191,959 (96,220) tonnes of waste has been sorted in the 2nd quarter, and a total of 283,771 (180,628) tonnes has been sorted in the first half of the year.

Civil Engineering

Good performance and solid results

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

• Good performance and very good results for AF Anlegg and Målselv Maskin & Transport in the 2nd quarter.
• Pålplintar delivers weak results in the 2nd quarter.
• The civil engineering market in Norway is doing well. There is a large supply of new projects in the market, and there is a very high volume of tender calculations.
• Order backlog: NOK 2,934 million (3,480)

Environment

Increasing activity

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

• AF Decom has a high activity level and good operational performance in Q2.
• Also high activity level at Härnösand Byggreturer which delivers good Q2 results.
• Both environmental parks have seasonally high activity in Q2.
• Order backlog: NOK 264 million (231)

Building

Good performance and strong order intake

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

• AF Bygg Oslo reports high revenues and delivers good results for the quarter. LAB and the companies in Strøm Gundersen have seen a somewhat lower level of activity, but delivers good Q2 results. The largest units have had a strong order intake in the 2nd quarter.
• Other units experience regional differences in activity level and results.
• Order intake of NOK 3.1 billion for Building in Q2
• Order backlog: NOK 7,105 (6,087)

Property

Good market and good sales

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

115 (178) apartments were sold in Q2. AF's share is 47 (67).

• Seven housing projects with 639 apartments in the production phase (AF's share 258).
• Property has 157 apartments in the sales phase (AF's share 71).
• Land and development rights in progress: 2,281 (2,258) residential units. AF's share is 975 (1,213)
• AF has 109,082 (122,717) m2 gross area of urban premises under development. AF's share is 52,454 (59,272).

Energy

Good operational performance

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

• Somewhat lower activity level for AF Energi & Miljøteknikk compared to Q2 2015. Good operational performance in ongoing projects and Q1 results are good.
• Stable demand for energy services. The unit has a high volume of tender calculations.
• The unit has a large part of its project portfolio in the analysis and engineering phase.
• Order backlog: NOK 94 million (177)

Offshore

Lower activity, good results

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

• High tender activity and many tenders out for AF Offshore Decom. The Murchison offshore campaign started in June.
• Challenging market conditions for AF Offshore AeronMollier, but the unit still delivers positive results for Q2 and the first half-year of 2016.
• Order backlog: NOK 963 million (1,200)

Order backlog

Strong order intake

Order backlog

Order backlog per business area

Profitable growth in Building past 5 years

*Per June 30th

Increased safety focus has led to profitable growth

Safety - key figures

H1 rate: Number lost-time injuries per million hours worked. RUIF: Number of reported unwanted incidents per man-year.

We must choose collaborating partners who share our values

• Prequalification of suppliers through Startbank
• Maximum 2 levels in contractual pyramid
• Control of pay and work conditions
• In-house «Labor Inspection Authority» with continuing control on site

Source: Byggenæringens landsforbund, Regjeringen.no, Oslo.kommune.no

Building is well-positioned in markets with good growth opportunities

We will continue to focus on the value creating factors of our business

Summary

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

• A good quarter. Good performance and good margins
• Strong order intake and high tender activity
• The progress in the Building business area supports our ability to grow profitably
• Strong financial position and order intake supports continued growth for AF

Thank you for your attention!

Q3 2016: November 15th 2016