AF Gruppen ASA

and a warm welcome to the presentation of the fourth quarter for the AF Group 2023. The theme today is the business area construction, and will be presented to the board of directors Tormod Solberg. After the presentation, there will be questions and answers for those who have met. The main points in this quarter, the turnover was 8.3 billion, and we had a result before tax of 292 million, which gives a result margin of 3.5%. The cash flow from the drift was 855 million in the quarter, and over 1.5 billion last year. The annual income in the fourth quarter was 8.5 billion, and we have an annual reserve at the beginning of the year at just below 42 billion. Net profit per 31.12 was 641 million, and we had a result per share in 2023 of 3.73 kroner per share. The board proposes an exchange rate of 3.50 kroner per share for payment in the first half of the year. That everyone who works for us comes safely home from work in good health on the first day is our main goal. In this quarter we had five incidents that led to injury or serious personal injury without injury. This gives a H1 value of 0.9 in the quarter, and if we look at the year under right, we are down to 0.8. The goal is zero, but it is especially exciting to see that development over time is in a positive direction. This is also for the H2 value, perhaps a bit surprising. In this quarter, we had 6.8 in H2 value and 7.9 last year. Another important parameter for us is health care. This quarter we had 4.2% in health care, and last year we were down 0.5% from last year, and it ended at 4.1%. If we go back to the talks, we see that the turnover is slightly down and ended at 8.3 billion. The result before the tax was 292 million in the quarter, which gives a result margin of 3.5%. This is a level we are not satisfied with, and it is below what we expected from the AF Group. This parameter follows what was on the previous page, so when we have had results before tax in the last four quarters, and we put back interest rates, it comes to about 800 million, and we have had an average invested capital of about 5 billion, so they give it a return on invested capital of 15.9%. Our target in the AF is 20%. If we look at the cash flow, we have had a cash flow from drift in this quarter of 855 million, over 1.5 billion for 2023. In this quarter, we have used it to mainly pay off interest, and we have liquid funds emerging at 347 million. The 347 million is in the upper right corner of this picture. We also have interest-bearing conditions, as well as leasing obligations on our machines and house leasing obligations. We have interest-bearing debt, and the sum is net interest-bearing debt of 641 million. We have a withdrawal facility of 3.5 billion, and this gives us an available liquidity of 3.4 billion. If we look at the balance, there are no major changes here. We have an equity capital of 3.2 billion, with a total balance of 14.6 billion, which gives an equity capital share of 21.9%, and the ex-IFRS 6 is at 23.2%. The board has proposed an exchange rate of 3.5 kroner for the first half of the year. We believe we are in a solid financial position. EILE is responsible for the climate and environmental footprint it affects the environment with. We measure this with these parameters. We have sorted over 287,000 tonnes this year, with a source sorting rate of 84, 780 and 96 percent, which is well above both the authority requirements and our target. In addition, we have sorted over 37,000 tons of metals for recycling, and our environmental parks have treated over 280,000 tons of mass this year, which gives a savings of about 60,000 tons of CO2 equivalents this year. There has been a great deal of tension in the results between our business areas this quarter. We will take a closer look at how things have gone with the different ones. We start with a plant that has had a turnover growth of over 28% and received a turnover of 2.1 billion, with a operating result of 240 million, giving it a operating margin of a strong 11.2%. Last year, they delivered 550 million in operating results and 8.1%. AF Anlegg is the large locomotive in this business area, which has both revenue growth and very good results in the quarter, with solid results from several projects. We see examples from one project here to the right, where before Christmas we were ready to mount the TBM in connection with Vav and the production of new fresh water to the municipality of Oslo. There are several large projects in production, and there is always high activity and good operation in the AF projects. Bolsheviks Machine and Transport is used to delivering very good results, not less impressive for that reason, but it is also happy that Stenseth and RS deliver very good results in this quarter. And Consolvo delivers a good result in the quarter, while Eikon has low activity and a weak result in the quarter. The order reserve in the facility is up by about 20 percent to 18.1 billion at the beginning of the year. If we look at construction, they have had a turnover of 2.6 billion, and a turnover of 141 million, which gives a turnover margin in the quarter of 5.3%, up 1.3% from last year. It is exciting to see that Bygg Oslo, Strøm Gunnarsen, OBF and HTB deliver very good results this quarter. Bygg Østfold and Strøm Gunnarsen Vestfold also deliver good results. In LAB and FAS, we have expected results, while Byggfornyelse, Haga Berg and Fontverk have weak results in the quarter. We have also reported that we have set up construction for Bjørvika School, which is a contract value of 1.2 billion, and LAB has also received a contract. The reserve for This business area is at 9.4 billion. Tormod will take us further through this business area in his presentation later. If we look at concrete masonry, we have a quarter with a negative result of 53 million. This is mainly due to declines in the project portfolio for concrete masonry housing. On the other end of the scales, we see that Betongmast Røsand and Østfold deliver very good results this quarter. Here we see a picture from Hovsetter School, which is a great project built by Asker and Bærum. We look forward to seeing that both Inlander and Asker and Bærum deliver good results this quarter. Bromerike, Buskerud and Vestfold are below expectations, while Oslo and Trøndelag have weak results. The oil reserves in concrete mass are up from 4.4 to 6.2 billion. For property, The agreement on Kjøpt and Ullevålsveien 114, which is the main document in this quarter, gives a positive signal that we have faith in the market in the future, even if sales at the moment are weak, with an uncertain market segment and still high interest rates affecting. We have five housing projects with 800 units in production, where our share is 360, and the sales rate in these projects is 75%. Moving on, we have a quarter with a negative result of 16 million, with 1.8 billion in turnover. It is important to note that there is a very high level of tension in the unit's performance. These are the three units, Bygg Vest, AF Bygg Øst and Anleggning Vest, where the downloads are linked to. These are the remaining companies from Betongma Sverige. On the other end, Kanonaden, AF Prefab Mellardalen, Bygg Syd and Hørnesand Byggreturer are delivering very good results in the fourth quarter. OMB is also delivering good results. There have been five contracts signed in this quarter, and our construction company, Kanonaden, has tripped and tripped at about 600 million. The order entry is at 1.8 billion, and the order reserve in Sweden is at 5.1 billion. Energy and the environment. We have had a strong turnover growth of 37% compared to last year, and we have a operating profit of 39 million, which gives a operating margin of 9.2%. AF Energi's activity level has increased significantly compared to last year, and there is both high activity and good performance in the projects, and they deliver very well in the fourth quarter. Dekom has also had a growth in revenue, and they deliver very well in this quarter. The annual reserve has nearly doubled, and is at 1.2 billion. Moving on to offshore, it is a quarter where the decline in one offshore project to offshore DECOM marks the quarter. We have operating revenues of minus 40 million. Let's look at Aeron, which is up to date with a high activity level, and they deliver very good profitability in this quarter, and during the year before last, Aeron has a good result. The order reserve for this year is 1.4 billion. If we look at the order reserve in Overøyna, we have a stable order reserve at the bottom at 42 billion. The distribution is on facilities at just over 18 billion, buildings at Underkant at 9.5 and Betongmast at 6.2, and Sverige at 5.1, which are the four largest contribution areas to this order reserve. Considering the times we are in, we are pleased to have a stable order reserve. Then we have come over to the theme presentation for today. It is about the business area ByggNorge, and it is the board of directors Tormod Solberg who will present it.

My name is Tormod Solberg, and I am the CEO of the business area Bygg. And as Amund mentioned, I will take you through this business area. We have had a good development throughout the year, both in terms of results and with security work, with a turnover of 10 billion, a operating margin of 3.9% and with 5.3% now in the last quarter, and a H1 value of 0.7%. Simply put, we have a strong position within two areas and two geographies. First, we are a total entrepreneur for large new buildings and rehabilitation projects within housing, business and public buildings. They are represented by several strong brands around and in Norway's two largest cities. Secondly, in addition to being a total entrepreneur, we are also a significant niche actor who provides a number of specialist services in rehabilitation and reconstruction. And the fact that we can both take small and large projects, new buildings and rehab, makes us even more able to take out the potential in the markets we operate in. We have a broad project portfolio for a wide spectrum of buildings, and that is exactly what we experience as an advantage in today's market. On this page, it shows a little snippet of the project where we are a total entrepreneur. These are a few examples of the breadth of the project we have and the customers we work for. Construction City is just such a project. It is our largest construction project ever. It will be our new headquarters and it will be an innovation hub for the construction, construction and property sector. The project is developed together with OBOS and some of our most important sub-entrepreneurs. In this project, we will test out new digital solutions, new environmental solutions on a large scale. We carry out both small projects, and projects such as Construction City show that we can take on the largest construction projects in Norway. We have continued to have a strong position within housing production. In January, we signed a contract of over 900 million NOK for the construction of Nora on Bislett. But what I have recognized in the last year for us at AF, is our ability to turn around these other market opportunities when they have slowed down in some areas. Here we see some examples of public projects illustrated by the Viking Museum, Tøyenbadet and Kommunegården. Or social-critical infrastructure projects such as Fredrikstad waste-cleaning plant. Or the rehab project Dankert Kron in Bergen. Let's take a look at Bergen. What's new in 2024 is that the climate and the environment, as the main rule, should be valued at least 30% in all public procurement. And it doesn't stop there. In municipalities like Bergen, they set goals for both circularity and area neutrality. Areal neutrality means, among other things, that the demolition of nature will be compensated by the corresponding restoration of other places in the city. This means that fewer new buildings are being built, and that it is important to be able to take care of existing buildings and rehabilitate worn out buildings, just as the railway is important both for us, for the municipalities, and for our property companies and our building companies. Another example is the old TV2 building, which was originally to be demolished to make room for new homes. Now, together with Byggherren, we have set ourselves the goal to dismantle the building and reuse 70% of the building in new buildings and new functions. Many of the rehabilitation projects we have in Bergen are co-operative contracts, and it is precisely with co-operative contracts, and where we come in early, that we can get such good environmental solutions. As Armin showed in the first part of the presentation, the AF has a strong order reserve. Our ability to go after new opportunities when parts of the market slow down, means that the order reserve and within the building, Norway has stabilized and the activity level is acceptable. In addition to the projects we have in the order reserve, we have several interaction agreements on the project that are ready and that we expect will come when the market dissolves. The market is what creates a lot of uncertainty for us and our industry. It affects both the order reserve, our level of activity and our profitability. Especially the interest rate level has a big effect on us. There is still a lot of uncertainty linked to the interest rate. With the ongoing high price growth, the strong labour market and the weak crown, it is uncertain when this will go down. The interest rate level also affects to a large extent by the introduction of both commercial buildings, but especially the severe break we have had in terms of housing and housing production, despite the fact that housing needs are constantly increasing, especially in the big cities. Already in 2025, it is predicted that housing production will rise significantly. We have also experienced inflation and inflation development, which fortunately has been a takeaway in recent months. But if we look at the inflation target for Norway's banks, it is still high and far above that, and we think it will take time before we get there. The inflation and price growth together with the strong labor market and wage growth there are two of the important factors for us to see continued growth in building costs. We have seen growth through 2023, but more on a normal level, and we expect it to continue into 2024. But we don't think it will come back to the explosive growth in 2021 and 2022. And around all this, there is a macro environment and a macro uncertainty that affects all these factors. And the geopolitical risk and conflict level in several places in the world can change and turn a little on this picture that we see right now. At AF, we have to work with what we can influence. We have a diversified project portfolio, and in recent years we have shown a good ability to adjust direction and enter new market opportunities. To ensure good profitability, we see that the basic knowledge we have for good project implementation, we have to take care of and strengthen across all our companies. These are things like production control, economic control, contract management and risk control. The competence that we have built up through our projects in the last years for climate and environmental innovative solutions, and which has given us a competitive power, must be further developed so that it becomes a valuable asset in the future. And not least, we have very high satisfaction in AF. We have recently measured it, and the fact that employees like it is a fantastic foundation for building robust organizations, carrying out good projects and further developing the company. So to sum up, the competition I think will grow even more in the short term, but we absolutely experience that there are attractive projects in the market. But in an uncertain world, we have to be even more selective about which customers we work for, which sub-entrepreneurs we have with us, and we have to choose, and we have to dare to choose away. We will continue to develop good project organizations and deliver good projects, so that we are well equipped when the market comes back. Because that is exactly what we look forward to. Thank you.

Then we will summarize the quarter. We had revenues of 8.3 billion. We had a sales result of 302, and a result before tax of 292 million, which gives a sales margin of 3.6%. It is a weak result for the AF Group, but we have a strong financial position. We have an order entry of 8.5 billion. We have an order reserve of just under 42 billion. As mentioned, the board has proposed an exchange rate of 3.5 kroner per share for payment for the first half year. 2023 has been a year for the AF Group that has been divided. On one side we have, for example, our security performance, which has been in a solid, correct direction. And on the other side we have profitability, which has not been where we want it to be. But even there, there has been a divided picture, where we have several business areas that have delivered very well. In the future, we will continue to work with what we can influence and what we see work. We will choose the right projects. We will organize ourselves robustly. We will conduct good risk management. Be good at operations. Pay attention to the money. And last but not least, we will take care of our people. With that, I wish you all a good day, and we look forward to 2024. I would like to thank those of you who have met digitally, and we will continue with questions and answers. Have a nice day.