Investor Presentation • Apr 26, 2019
Investor Presentation
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AFK General Assembly – 25 April 2019
Jarle Roth (CEO) Lars Peder Fensli (CFO)
Lars Peder Fensli CFO
Morten Henriksen Senior Vice President
Torkil Mogstad Senior Vice president
Stig Svensson
Ingunn Ettestøl Espen Schie Tom K. Pedersen Gunnar Line Preben T. Nilsen Hege Eikin
AFK shall pay a dividend that reflects the company's long term strategy, financial position and investment capacity. The dividend shall be stable, and over time ensure competitive direct returns to its shareholders.
Dividend will likely be in the area of 40-60% of yearly net income.
In the period 2014 – 2018, large extraordinary dividends of 1540 NOK/ share has been distributed, equivalent to 3.4 bn NOK.
AFK considers it important to inform its shareholders and investors about the group's development and financial position. A new format for annual and quarterly reports was established in 2017.
Source: Oslo Børs
1) Dividends assumed reinvested (compounded)
2) Dividends assumed not reinvested (simple)
In Q2 2018, Arendals Fossekompani ASA distributed its shareholding in Kongsberg Gruppen ASA as dividends in kind with a total value of MNOK 1904.
4.36 KOG shares per AFK share allocated to shareholders in AFK at 27 April, corresponding to a value of 870 NOK per AFK-share.
AFK with substantial financial profits from the KOG shareholding. The total returns in the period 2003-2018 was MNOK 2007, including direct returns (received dividends).
On December 21, AFK accepted an offer from Euronext N.V. for its 4.46% shareholding in Oslo Børs VPS at 145 NOK/share. On February 11, the bid was raised to 158 NOK/share.
AFK acquired its shareholding in Oslo Børs VPS Holding in 2003 at cost price MNOK 31
AFK with substantial financial profits from the Oslo Børs VPS shareholding. The total returns in the period 2003-2019 is MNOK 496, including direct returns (received dividends).
| Financial Figures, MNOK | Q4-18 | Q4-17 | YTD 2018 |
YTD 2017 |
|---|---|---|---|---|
| Operating Revenues | 1 352 | 1 234 | 4 906 | 4 427 |
| EBITDA | 132 | 120 | 501 | 488 |
| EBITDA margin | 10 % | 10 % | 10 % | 11 % |
| Earnings before tax (EBT) | 3 0 |
-18 | 276 | 186 |
| Operating Cashflow | 3 7 |
183 | 250 | 402 |
| NIBD | 103 | 121 | 101 | 105 |
| Equity | 3 174 | 4 386 | 3 172 | 4 386 |
| Equity Ratio | 54 % | 57 % | 54 % | 51 % |
• Overall for the Group, revenues and earnings for 2019 are expected to be in line with 2018
| Financial Figures, MNOK | Q4-18 | Q4-17 | YTD 2018 |
YTD 2017 |
|---|---|---|---|---|
| Operating Revenues | 1 352 | 1 234 | 4 906 | 4 427 |
| EBITDA | 132 | 120 | 501 | 488 |
| EBITDA margin | 10 % | 10 % | 10 % | 11 % |
| Earnings before tax (EBT) | 3 0 |
-18 | 276 | 186 |
| Operating Cashflow | 3 7 |
183 | 250 | 402 |
| NIBD | 103 | 121 | 101 | 105 |
| Equity | 3 174 | 4 386 | 3 172 | 4 386 |
| Equity Ratio | 54 % | 57 % | 54 % | 51 % |
(Consolidated balance sheet as per 31.12.2018)
| Amounts in MNOK | AFK Group |
|---|---|
| Property, plant and equipment | 1 006 |
| Intangible assets | 758 |
| Other investments and assest | 404 |
| Total non-current assets | 2 169 |
| Inventories | 360 |
| Cash and cash equivalents | 1 892 |
| Trade and other receivables | 1 471 |
| Total current assets | 3 723 |
| Total assets | 5 892 |
| Equity | 3 005 |
| Non-controlling interests | 167 |
| Total equity | 3 172 |
| Interest-bearing loans and borrowings | 777 |
| Other non-current liabilities | 202 |
| Total non-current liabilities | 979 |
| Interest-bearing loans and borrowings (current) | 296 |
| Trade and other payables | 738 |
| Other current liabilities | 707 |
| Total current liabilities | 1 741 |
| Total equity and liabilities | 5 892 |
| Key Financials | |
|---|---|
| • NIBD : MNOK 101 |
Equity: MNOK 3 172 |
| • NIBD / EBITDA (LTM): 0,2 |
Equity Ratio: 54% |
Maturity profile long-term debt facilities*
*Options to extend not included
(figures in parentheses refer to the same period the previous year)
EFD delivers advanced heating systems based on induction technology for the engineering industry throughout the world. The main customers are within the automotive industry, pipe production, the electronics industry, cable industry and mechanical industry.
Q4 2018: MNOK 363 (330) 2018: MNOK 1 250 (1 158)
Q4 2018: MNOK 51 (39) 2018: MNOK 134 (113)
Employees: 1 107 Headquarters: Skien, Norway
AFK shareholding: 98 %
Improving competitive position through product development and optimizing value chain. Evaluating addon acquisitions and growth initiatives in selected niches.
EFD Induction expects revenues and earnings to be weaker in 2019 than in 2018
Cogen operates its own and third-party combined heat and power plants in Spain. Surplus heat from gas-based electricity generation produces heat, steam or cooling for industrial partners. The electricity produced is sold at the physical electricity market.
Q4 2018: MNOK 309 (281) 2018: MNOK 1 182 (938)
Q4 2018: MNOK 2 (16) 2018: MNOK 40 (74)
Employees: 62 Headquarters: Madrid, Spania
AFK shareholding: 100 %
Keep improving general operations of plants, renew existing customer contracts. Actively evaluate new growth opportunities.
Cogen expects revenues to be on par with 2018. Earnings are expected to be somewhat weaker.
NSSL is an independent provider of satellite communications and IT support that delivers high-quality voice and data services to customers everywhere in the world, regardless of location and terrain.
Q4 2018: MNOK 184 (192) 2018: MNOK 758 (774)
Q4 2018: MNOK 39 (42) 2018: MNOK 167 (154)
Employees: 182 Headquarters: Redhill, England
AFK shareholding: 80 %
Renew key customer contracts where needed, develop next generation products and services based on technology available from recent acquisitions. Consider new acquisitions.
NSSL expects somewhat increased revenues in 2019, whilst earnings are expected to be somewhat weaker.
(figures in parentheses refer to the same period the previous year)
Powel develops and delivers business-critical IT solutions and services to the energy sector in the Nordic region and Europe, to municipalities in Norway, as well as the contractor sector in Norway and Sweden.
Q4 2018: MNOK 152 (159) 2018: MNOK 585 (591)
Q4 2018: MNOK -5 (13) 2018: MNOK 16 (49)
Employees: 433 Headquarters: Trondheim, Norway
AFK shareholding: 97 %
First phase of transformation completed and new organisation implemented. Loss making subsidiary divested in Q4. Improve profitability through increased sales and investments in key segments.
Powel expects revenues to be somewhat weaker in 2019, whilst earnings are expected to be better.
Scanmatic delivers technical infrastructure as well as instrumentation and control systems for industrial and professional customers within Defence, Transportation, Renewable energy and Offshore.
Q4 2018: MNOK 204 (182) 2018: MNOK 649 (574)
Q4 2018: MNOK 12 (17) 2018: MNOK 44 (41)
Employees: 166 Headquarters: Arendal, Norway
AFK shareholding: 69 %
Deliver projects on time and according to commitments. Build a stronger orderbook for 2H 2019 and 2020. Evaluate/review strategic initatives in new segments and markets.
Scanmatic expects revenues to be somewhat weaker in 2019, whilst earnings are expected to be on par with 2018.
Tekna manufactures systems and equipment for production of spherical micro and nanoparticles of various metals based on the use of plasma generated by electrical induction. Tekna also has a subsidiary that uses such systems to produce various metal powders.
Q4 2018: MNOK 35 (31) 2018: MNOK 144 (124)
Q4 2018: MNOK -10 (8) 2018: MNOK -22 (-18)
Employees: 184 Headquarters: Sherbrook, Canada
AFK shareholding: 100 %
Optimize sales of powder and efficiency improvements in all parts of the operation. Introduce new materials to the market. Evaluate strategic partnerships.
Tekna expects revenues and earnings to be better in 2019 than in 2018.
(figures in parentheses refer to the same period the previous year)
Wattsight is a leading provider of data and consulting services to the European energy market, providing forecasting of fundamentals and prices for the short, medium and long-term horizon.
Q4 2018: MNOK 17 2018: MNOK 66
Q4 2018: MNOK 3 2018: MNOK 11
Employees: 34 Headquarters: Arendal, Norway
AFK shareholding: 91%
Wattsight will through 2019 accelerate the technology shift and offer more advanced products based on AI and Machine learning. This will strengthen the offering in markets that become automated and real time.
Wattsight expects increased revenues in 2019, whilst earnings are expected to be somewhat weaker.
Markedskraft provides services for efficient handling of production, distribution and consumption in the short- and long term wholesale power market.
Q4 2018: MNOK 21 2018: MNOK 70
Q4 2018: MNOK 3 2018: MNOK -2
Employees: 50 Headquarters: Arendal, Norway
AFK shareholding: 93%
Markedskraft is embarking on a transition towards more automated services and stronger focus on technology. The shift will enable new and more advanced products for existing and new customers.
Markedskraft expects revenues in 2019 to be in line with 2018, whilst earnings are expected to improve
(figures in parentheses refer to the same period the previous year)
Arendals Fossekompani generates power at two locations in the Arendal watercourse. The Bøylefoss and Flatenfoss power stations produce in excess of 500 GWh annually.
Q4 2018: MNOK 66 (49) 2018: MNOK 195 (141)
Q4 2018: MNOK 42 (28) 2018: MNOK 123 (71)
Employees: 22 Headquarters: Arendal, Norway
AFK is planning investments/upgrades to both plants in the coming years in order to satisfy more stringent statutory requirements for power stations with associated dams.
Revenues and earnings from power generation are expected to be somewhat weaker in 2019 than in 2018.
Real Estate includes AFK's real estate investments in the Arendal area. Vindholmen Eiendom (Bryggebyen) represents the largest development project. Arendal Lufthavn Gullknapp is in the Municipality of Froland.
Vindholmen Eiendom is on schedule with development of the waterside residential project Bryggebyen Vindholmen.
Calculation of the turnkey project cost for the first construction phase of Bryggebyen were completed in Q4. Assuming signature of satisfactory contract with contractor, sales start-up is planned in spring 2019.
The company OSM Aviation Academy started up an aviation school at Gullknapp in 2018. Work is also under way on positioning ALG as a test centre and centre of excellence for drone operations.
Arendals Fossekompani manages an investment portfolio of financial securities – mainly a limited number of liquid listed shares, but also some selected less liquid holdings of financial nature.
As at 31 December the total value of the share portfolio was MNOK 1021, consisting of investments in Victoria Eiendom, Eiendomsspar and Oslo Børs VPS.
The return on financial investments for the year was 21% as at 31 December, or MNOK 209.
The shares in Kongsberg Gruppen, with a total value of MNOK 1,904, were distributed to the company's shareholders as a dividend in kind on 9 May 2018.
On December 21, AFK accepted an offer from Euronext N.V. for its shareholding in Oslo Børs VPS at NOK 145/share. The transaction is conditional upon, among other things, approval from relevant authorities.
At present date there are two bidders for the shares in Oslo Børs VPS. The outcome of this process is not yet clear.
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