AF Gruppen ASA

Hello, and a warm welcome to the presentation of the second quarter for the AF Group 2023. Today's theme will be innovation and how we adapt to a more digital everyday life and artificial intelligence. After the presentation, there will be questions and answers for the upcoming meetings. First main points in this quarter. We have had a turnover of 7.8 billion. A result before the tax of 292 million, which gave a result margin of 3.7%. The sales volume was 227 million, and we had an order entry of over 10.8 billion, and we have a record order reserve per 36 at 44.7 billion. The net interest rate is per 36 at an undercut of 1.6 billion. Our main priority is the safety and health of those who work with us and for us, and our people. And in this quarter we have had four incidents that have led to injury or serious personal injury without injury. And when we divide that by the number of million hours we have performed, it becomes a H1 value of 0.7. Our goal is to have a safe HNC day and zero, but it is still a positive development. For the H2 value, we add the number of injuries caused by medical treatment and the number of injuries caused by alternative work. Our H2 value in this quarter is 6.9. Furthermore, we are concerned about a health hazard that gives a healthy picture of the company. We think it is around 3%. It is therefore pleasant to see that in this quarter we are below 4% and are at 3.9%, which is in the right direction. In terms of sales and revenues, it has a 5% decline of 7.8 billion kroner. Last year, we had a result before tax of 426 million kroner. Well done for sales of a business building in that quarter. This year, we have a profit margin of 292 million kroner, which gives us a profit margin of 3.7%. This is a margin that is under our expectations. In the last 12 months, we have had a result before the tax, and when we put the interest rates back, at an overhead of 1.1 billion. And then we have increased the average invested capital with a little over 400 million to 4.9 billion, and that gives us a return on invested capital of 23.3 percent. It is well below what we are used to seeing in the AF group, but it is still above our target of 20 percent. If we take a look at the cash flow, the cash flow for fuel has been 227 million. We have expensives right below 800 million. And we have liquid fuels coming out at 494 million. The liquid funds are found to the right of this figure. In addition, we have housing leasing obligations, we have slightly increased leasing obligations on machines, and we have increased interest rates, among other things, as a result of investment in machines and property. This gives us a net interest rate of 1.6 billion. Then we have a draw facility of 3 billion, and that gives us an available liquidity of about 2 billion, and we mean that we are in a solid financial position. The balance has increased to 14.9 billion, and we have received a capital of 2.9 billion, which gives us a capital share of 19.5 billion. XIFRS 6 is at 20.2%. We have all the responsibility for the footprint that we put on the climate and the environment, as well as for the Aaf Group's business. We measure this, among other things, on these three KPIs. And we have, so far this year, source sorted more than 172,000 tons of waste, with a source sorting rate of approximately 86, 88 and 96 percent for demolition, rehabilitation and construction. Further, we have ripped and sorted metal for recycling, over 25,000 tons, and our environmental parks have recycled more than 124,000 tons so far this year. And together, these two have saved about 35,000 tons of CO2 equivalents. We will continue to look at the business areas, and before we start with the facilities, we can see this picture from AF Anlegg, which works with dam rehabilitation in Nersjøvann up in Trøndelag. And I think this is a good transition for WHO facilities, which have delivered well in this quarter. Income of about 1.5 billion has increased the operating result to 104 million, which gives a operating margin of a strong 6.9%. Målsælve Maskin & Transport delivers both turnover growth and very good results. Stenset and RS have good results, while Konsolvo and Eikon deliver relatively below expectations and weakly. AF Anlegg is the locomotive in this business area, and they have had a good second quarter, with good contributions from several projects. Among other things, we have high activity and good operation in several of our major projects, including the Rentevannstunnel in Oslo, as you can see this TBM machine is about to start working there. And we also have high activity and good operation on mountain tunnels Lovø outside Stockholm. We have a number of large construction projects now in the start-up phase in this quarter. We can mention the cable tunnel Sogn-Ulven, Storoved-Øyer and the Mo-Irana airport, to name a few. We have had an order entry of about 4 billion, and the order reserve is about 20 billion. If we look at the Norwegian construction industry, we have had a weak turnover of 2.6 billion. The operating result is 112 million, which gives a operating margin of 4.2%, which is up 1.4% from last year. Bygg Østfold, Strøm Gunnarsen, Strøm Gunnarsen Vestfold and Haga Berg have very good results this quarter. AF Håndverk and Åsane Bygg Mesterforetning deliver good results, while Bygg Oslo and Lab deliver below expectations, and Bygg Fornyelse, Fas and HDP deliver poorly. At this time, I am very pleased that we have a new contract, and I am happy that there have been five in this business area this quarter. Among other things, Bygg Østfold, which is going to build a cleaning facility for a little over a billion in Fredrikstad. And Bygg Fornyelse, which after three years of collaboration will finally start building at the Viking Times Museum. The order volume collected for construction is 3.8 billion, while the order reserve is 10.5 billion. Betongmast had revenues of 1.1 billion, with a operating profit of 33 million, which gives a operating margin of 3%, which is up 0.7% from last year. Trøndelag, Romerike, Røsand, Asker og Bærum have built the fine Villa P and Meglegården buildings, as you can see in this picture, which deliver good results in this quarter. We have Østfold, which delivers below expectations, and Boligbygg, Oslo, Innlandet, Buskerød and Vestfold have poor results in this quarter. We have signed two contracts here, Trondheim Cathedral School and the construction of student residences in Trondheim for a little over 1.5 billion. The reserve in Betongmast is now at about 4.9 billion. The low housing sales continue in this quarter, and this is a sign of the results. We have sold a total of 16 homes, where our share is 7, and we have 6 housing projects with 885 units under production, where the sales rate is at 75%. In our development portfolio now, there are over 1,600 units in housing and over 73,000 square meters in business. If we look at Sweden, the turnover growth continues at an overhead of 2.1 billion. The operating result ended at 27 million, which gives a operating margin of 1.3%. It is important to point out that there are still big gaps in performance in Sweden. On the one hand, we have the cannonade, prefab Melardalen and Hørnesand building tours, which deliver both good turnover growth and very good results. Bygg Syd and HNB deliver good results, but the margin is low in this quarter. The rest of the entrepreneurial business, which we have covered in some quarters, still has negative results in the second quarter. We have continued to build wind farms and have received a new contract at Brusa Holm in Eksjø municipality. We have collected orders for this business area in excess of 700 million, and we now have an order reserve in Sweden in excess of 6.2 billion. Energy and the environment have had a turnover growth of over 25% and now have a turnover of 326 million. They have a operating result of 19, which gives a operating margin of 5.9%. AF Energi has increased the turnover significantly and has delivered a good result in this quarter. We are very happy that they have received a contract after many years of collaboration on the life science building. As far as ØSPE is concerned, there is no other pipe contract in Norway that is 680 million more than this. DECOM has increased the activity level, despite the market, but delivers a result under expectation. The total order reserve is 1.4 billion. If we look at offshore, they have over 14% growth. ending at 342 million in turnover, with a turnover of 17 million, which gives a turnover margin on our demand. Offshore Dekom has high activity on a number of offshore campaigns out in the North Sea, as well as on the VATS environment base, and delivers well. And it is very happy that Aeron has a high level of activity and delivers very good profitability in this quarter. The order reserve for offshore is 1.4 billion. If we look at the total annual reserve, it is at the bottom at 44.7 billion, and it is divided by facilities at 20 billion, buildings at the bottom at 10.5 billion, Sweden at 6.2 billion and Betongmast at about 4.9 billion, which are the largest contributors to it. I think we have a solid annual reserve. Today's theme is innovation and our approach to a digital everyday life and the use of AI in AF. Already in 2016, we defined innovation and innovation as one of the four strategic initiatives. Innovation is still a strategic pillar for us in AF. But now innovation is well anchored in AF long before that, and we believe it is a part of our culture and the entrepreneurial spirit that has influenced us since the start of the company. At AF, we welcome changes. We are constantly looking for new technology and improvements that increase profitability and security, and that are less burdensome on both health, climate and environment. In innovation, we put much more than the digital, but in this presentation, it is our approach to a more digital everyday life and the use of artificial intelligence, or AI, that will be the theme. And to be very clear on the main message from the start, we are very positive about the possibilities that more digitalization and AI will bring to the construction industry. We think it will bring us even more resource efficient and that we can carry out our important social tasks in an even better way. As mentioned, we are known for our curiosity and that we are a driver for a more sustainable and future-oriented industry. We believe that everything can be improved. Our approach to innovation and digital investment in AF can simply be divided into two. It is about improving and transforming existing businesses, as well as being a leader in creating new businesses. All under the precondition of profitability. When we started the digital investment for over six years ago, it was as usual. It started with the idea that we wanted to have our own knowledge, so we looked at management with expertise or domain knowledge, as it is often referred to here. Over the years, they have managed to build up an environment at ØS that today consists of both their own developers, their own programmers, their own business developers and investment teams. And the latter mentioned, they work with slightly different mandates than the rest of the M&A business at ØS. A part of innovation work is of course to raise the bar and try to look far ahead. But another part, and equally important, is to take concrete initiatives or opportunities that are in our daily operations to solve our tasks more effectively. A company like AF, we generate and are in possession of enormous amounts of data and information in our business, both analog and digital. We are now increasingly seeking to collect more and more information electronically, in a way that allows us to make use of this data. We have a number of programmers in the organization who are involved in smoothing the process at different levels in the company. Not only develop our own software or systems, but perhaps just as important, adapt the existing storage to the equipment or the data we have. And at least help in creating simple user interface, or dashboards, as we say in Gudbrandstaden. to create simpler, more accessible and timely decision-making support around the organisation. All from our operators up to the head of the company, for example. Roughly speaking, we have six main areas that we operate with innovation through digitalisation in AF. They are summarized here, and I will go through Hård Eintorrum with some practical examples. The first is generative design, which includes optimization and simulation. For us, this can typically be within route selection in road construction, material use, e.g. use of steel in large, heavy constructions, or plan solutions for housing construction, or the mix of apartments in our properties. This picture illustrates the flood problem, which has been a well-known phenomenon for most, including Hans, in recent times, and where Seven Analytics, a company we are investors in, has gained a lot of attention by being able to model flood water and detect potential floodwaters in densely built streams. And this is technology that we will probably use in our projects in the ESEC region. This scary figure is just an illustration that we have generated with the help of AI. It is actually a strong contrast to RPA-robotization, which is code that is used in everyday life. We have now used robotic process automation in several processes. We have a number of processes that we have digitized in AF and in the company over the past years, and we have very good experience with that. LRPA carries out repetitive processes with high demands for accuracy and precision, and we see that more control is applied between subjects, and at least much easier administrative work. If we look at the digitalization of FDV documentation, we believe that the industry has both potential and potential. The amount and scope of documentation in our industry, which is constantly increasing, we are all familiar with. And here we mean that carrying categorization, digitization, accessibility, and that it is traceable, and that we manage to make both analog information and digital information more accessible, has a great potential. And therefore, among other things, we have invested in the company Findable, and we use those products now in several of our projects. Scanning is used strictly within all our business areas, both facilities, offshore and construction. This picture was taken from one of our construction projects. But we see that scanning and various scanning methods give us a faster feedback on whether we are building what we are going to do. This helps to increase quality as well as track and resource use. Image recognition is an area that has been used more and more extensively in recent years. Among other things, we now use drones even more extensively, and we use them, among other things, to cover deviations and see risks. The method can be used to typically cover energy deposits, weaknesses in constructions, calculate masses and perform more effective ground work. Our Swedish unit Kanonaden, as you can see in this picture, is one of the companies that have come a long way in this work, and they are now using drones to monitor wind power projects. Kyrkestuen, which works with facade rehabilitation in Oslo, is another of our companies that is far ahead of this. It is worth mentioning that we are both engaged and receive support from the EU in a BIMProve project, which is an important European initiative related to this. Sensorics is the sixth and final area. A significant potential is to make use of even more sensors in production. It is to carry both the aircraft with us, as well as to predict measures in our production chain. It is actually only the imagination that sets the limit for how we can use it in construction and facilities or offshore. Everything from heating to concrete, moisture and so on. And we have used it for many years, both in the construction business and on projects such as the Østensjøbanen and Lovø, and on a number of construction projects. We believe that investment in innovation is attractive, both for new graduates and experienced people. We are now recruiting people with new and valuable skills in different parts of the value chain. We find it incredibly inspiring that several of our summer students come not only from traditional building subjects, but also from fields such as deep mathematics, AI, programming and cybernetics, to name a few. I would like to mention two projects that they have contributed to in recent years. The first illustration is a picture taken of last year's project in Åtøs, where summer students together with our people used AI for mass migration. It gives optimized production and positive effects on the environment when we are more efficient. After this year's projects, we used AI to develop solutions for predicting energy consumption in buildings and power plants, which contributed to significant cost savings on energy costs. And I think people are fascinating to see when you manage to connect people with this background and competence, together with experienced engineers and skilled workers, and with easy-to-understand commercial thinking, what is possible to achieve. I hope that both young and experienced people with this type of skills will want to enter our industry. We really need them, and they will be able to contribute to creating great social benefits. I mentioned at the beginning that we also have our own investment arm in AF. Most of you know that we were previously in Spacemaker, but today we are in eight companies via Construct Venture, among others. We develop our own software and our own solutions, or rather we invest in solutions, when we see that the solutions can be part of the potential to drive our industry forward. We seek to work with or invest in companies that see they have technology or develop new technology and that need an industrial partner to be able to take this a few steps further. And finally, I would like to mention Our own software, Klara, combines safety and risk management with production planning, which is able to give us even greater decision support in production. We compete in terms of safety, so other actors who also run project operations are welcome to use Klara. To sum up, how do we think we will succeed in innovation in the future? We will continue to improve and transform existing businesses. We will create new and profitable businesses, and we will at least continue to attract new competencies that will increase the value of our services. We will continue to focus on the investments we make in early stage companies. Finally, I would like to say that at AF we are future optimists, and we believe that digitalization and AI is about making our process and production more efficient. As a speaker pistol, the hammer has been replaced to a large extent, but it has replaced the need for good people, and this is actually not much more mystical than this is. We will in the future have even more technology to help us, and we will be curious. But to be crystal clear on that, good management and deep expertise in what we do will never go to waste. And that is what is and still will be our most competitive strength. Now we'll go over the summary of this quarter. We have had a high activity level of just over 7.8 billion in turnover. We had a result before tax of 292 million, which gave a result margin of 3.7 percent, which is below what we expected from our business. We are in a strong financial position, and we have had a good order entry, which means that we have a record high order reserve, just below 44.7 billion. And with that, this presentation is over. I hope that those who are here, and those who have been born digitally, will return on November 10th to follow up on the third quarter's presentation. And until then, we will do what we can to continue to choose the right projects. We will be organized robustly. We will conduct good risk management. There are rules in place. and at least take care of our money and our people. And with that, I wish you a good day and, after all, a good weekend. And then I say thank you for the meeting to those who follow us digitally.