AF Gruppen ASA

Hello, and a warm welcome to the presentation of the third quarter of 2024 for the AF Group. Today's theme is concrete, and will be presented to the board of directors at Geir Flotta. And for those who have met physically, there will be a reason to ask questions after the presentation, so we will answer as well as we can. The main points in this quarter are a turnover of a little over SEK 7.2 billion, a result before the tax on SEK 289 million, which gives a result margin of 4%. The cash flow from the quarter was at SEK 348 million, while a little over SEK 1.1 billion so far this year. And we had an order entry of 5.4 billion, and an order reserve of 36.4. And then we had a net revenue gain per 39, at 780 million. That everyone who works for us comes home safe and sound, as fresh as when they arrived, on their first day, is our main goal. In this quarter, we have had two incidents that have led to serious personal injuries without emergency services. We also include our subcontractors in those talks. And when we divide that by the number of million worked hours, we get a HN value of 0.5 in the quarter. And we also have a 0.5 hidden theory in the HN value. If we continue to look at the number of injuries caused by medical treatment and the number of injuries that have led to alternative work, we get the H2 value, and it is at 8.9 in this quarter, so we will continue to look at that. But summed up for this year, the trend is still in a positive direction, that is to say that it is down to 7.2. The health care shortage is also in the right direction. We have a health care shortage that is below 4% and is at 3.8% per quarter, and accumulated last year at 4%. This is also a trend that we are pleased with and is going in the right direction. We expect a health care shortage of about 3%. If we go back and look at the numbers, we can see that the stakes are also in a positive direction. We have had a turnover growth of a little over 4%, at 7.2 billion. And the result before the tax is up to 289 million. And that gives an improvement in the result margin with 2.5 percentage points. And we are at 4% in the quarter. We are pleased with the development in the direction, but the requirement in the AF is 5%, and we have not reached that in this quarter. When we continue to look at the drop in investment capital, we have had an undercut of 900 million in results before the tax, in the last four quarters. And we have an average investment capital of about 4.7 billion, which gives a drop in investment capital of 18.8%. This is an increase from last year, but it is still below our target of 20%. If we look at the cash flow, we had a cash flow of 348 million in the quarter, and over 1.1 billion this year, which is a strong strength from last year, which we are pleased with. And we have liquid funds emerging at 522 million. The liquid funds can be found on the right side of this slide. We have interest rates, house leasing obligations, leasing obligations on our machines and interest rates. Netto interest rates are 780 million, which is close to half of last year. We have a draw facility of 3.5 billion, and we have available liquidity in the company at the right bottom, at 3.4 billion. We mean that we are in a solid financial position. If we look at the balance, there are few essential changes there, and it has increased to 15.7 billion. We have an equity share of 19.4%, and the ex-IFRS 6 is at 20.5%. Eile has a responsibility for the footprint that we affect climate and the environment with. We measured these three parameters. Out of the 150,000 tons we have sorted so far this year, we have had a source sorting rate higher than the authority's requirement of 70%, respectively 88, 86 and 94%. We have also ripped and sorted metal for recycling and recycled a lot in our environmental parks, which so far this year have saved the climate for over 44,000 tons of CO2 equivalents. Before we move on and look at the business areas, we can take a look at the roof construction at the Viking Tikt Museum, which is a building renovation building on Bygdøy. There is high activity on both concrete and concrete production every day. High activity is also in the business sector, which has had 40% growth in the quarter, and has a turnover of a little over 2.3 billion, with a operating result of 150 million, which gives a operating margin of 6.4%. It is AF Anlegg with many large projects with good production, such as Forbifarten Lovø, as you can see in the picture here, which stands for a strong turnover growth and a good result in the quarter. Målsæl, Maskin & Transport, VSP and Stensett & RS also deliver very good results in this quarter. And then AF Anlegg, where it has been as a total entrepreneur for the development of the waste cleaning facility in Romerike. This is a joint venture center price with an expected contract value of about 1 billion, but it will not be included in the annual reserve before we possibly enter a phase 2 of the contract. So, the order volume in this quarter was 1.6 billion, and the order reserve is 14.3 billion. And we must also highlight that after the end of the quarter, we have signed a phase 2 agreement with the Oslo Municipality for a new water treatment facility in Huseby. And that is in AF context a record high contract of 7.6 billion. If we look at the construction business, we have had a turnover of about 2 billion, and a operating profit of 60 million. This gives a operating margin of 3%. Here we have AF Bygg Østfold, Strøm Gunnarsen, Haga Berg and ÅBF, who deliver very good results in the quarter, while Bygg Fornyelse deliver good results. We build Oslo, Strøm-Gunnersen-Vestfold, Lab, HTB, which have results below expectations, while our foundation business in Trondheim has a result below expectations. In this quarter, our craftsmanship business, AF Handverk, has delivered a weak result, which affects the results in all business areas. We have in this quarter sold four contracts at a little over 1.5 billion, and the order volume has increased to a little over 1.3 billion, and the order reserve has strengthened to 9.4 billion. When we continue to look at Betongmast, there is still a stable activity level of about 1 billion. The operating results have doubled to 38 million, which gives a operating margin of 3.6%. Here is Asker and Bærum, which deliver extremely good results in the quarter, while Trøndelag, Røsand, Inlandet, Buskerud Vestfold and Østfold deliver good results. Romerike has a result far below expectations, while Boligbygget Oslo has weak results in this quarter. We have in Betongmast Børsmelt three new contracts at a little over 1.5 billion kroner in the quarter, and the order reserve has strengthened to 5 billion kroner. If we look at our property business, we have entered several sales contracts in 2020-2020, which is up from five last year, in this quarter. We have many great projects, such as Bekkesstua Havet, which has sold well in this picture. But there is still a lot of sales for this business area, and that is what characterizes our sales in this quarter. We have three housing projects with all 368 units under production and the sales rate is 63 percent. And then we have a development portfolio on housing and business with a turnover of a little over 1,400 units and 73,000 BTA. If we look at the Swedish business, the turnover continues down there. We now have a turnover of 1.1 billion and close to zero results in this quarter. The summer trend continues with a two-part where AF Prefab delivers very good results, Kanonaden and HNB deliver good results. Byggskydd og Hørnesand byggreturer har resultat nogg og under forventning, mens øvrig entreprenørvirksomhet har også svake resultater i dette kvartalet. Now, the collection of orders has ended at a little over 1.2 billion, and we have an order reserve of 4.5 billion by the end of the quarter. Meanwhile, after the end of the quarter, Kanonaden, together with Hightechi, has been awarded a contract for the Swedish Kraftnet, which is at 900 million, and in addition 400 million in options. If we look at the business area, energy and environment, it continued with a stable turnover and good results. Income was at 380 million, and operating results at 24 million, in a operating margin of 6.3%. And here is AF Energy, which, among other things, delivers new energy centers and power systems at Drammen Hospital, as you can see in the picture here, which continues with very good growth and very good results in the quarter. And then we have our Rive business, AF Dekom, which delivers good results in this quarter as well. The order volume is 361 million, and the order reserve is a little over 1.1 billion. If we look at our offshore business, it has higher activity than last year, and has increased to 242 million. The operating result ended at 14 million, which gives a operating margin of 6%. Here is Aeron, which has a strong turnover growth compared to previous ones, and delivers good profitability in this quarter. Then we have the rival company Offshore Decom, which is up to activity level, but delivers a weak result. The order reserve in Offshore is about 1.7 billion. If we then look at the order entry, And the order reserve per quarter end, we see that the order reserve is at 36.4 billion. And the distribution of the facilities is approximately 14.4 billion. Buildings at 9.4 billion, concrete masts at 5 billion and Sweden at 4.5 billion as the largest contribution sites. And even though the order has gone down, we have, as mentioned, signed a number of orders after the end of the quarter. And we believe that this is a good position we are in. Now we will ask VG Sover to present one of our most important materials in our production, and that is concrete. And it will be presented to the CEO, Geir Flota. Here you go.

Thank you, Amund. My name is Geir Flotta. I am the managing director for construction and ownership in the AF Group. At AF, we prioritize professional competence, and we carry out our projects with our own professional leadership and a high degree of self-production with our own professionals. At AF, we will be best at the subjects we offer in self-production, and then we have to train, and we have to train a lot. Today I'm going to talk about one of our most important subjects and factors in our projects, namely concrete. Here in the picture you can see the Viking Times Museum in Bygdøy, where AF Byggfornyelse is a total entrepreneur. The concrete works are carried out by our own company, Stensett RS. I strongly recommend visiting the Viking Museum when it opens, not only to see the Viking ships, but also to see the extreme quality of the concrete that is made here. Globally, concrete is one of the most used building materials that is used. Concrete has its traces several thousand years back. You can just look at the Colosseum in Rome, which is an example, which stands today after 2000 years. But concrete as we know it today, i.e. reinforced concrete, has its origin from the 1800s. Concrete has a big challenge in today's ambitions to achieve climate and environmental goals. It releases a lot of CO2 by the development and production of lime in concrete, what we call cement. Almost all projects we report to the market contain some form of concrete. In the following years, significant efforts have been made to develop environmentally friendly concrete. The cement, which is called the Sunderland, accounts for 90-95% of the emissions from the production of concrete. There is now a solution to create zero emissions concrete. It is an exciting project called the Langskip-project. It is Europe's first value chain in terms of capture, transport and storage of CO2. Breivik, which produces cement, captures CO2. It is transported by ship to the outskirts of Bergen. This is pumped out to the red lines on Sokkeren and down to the reservoirs. to take care of CO2. This is what we call a zero-release cement. At AF, we work broadly within the concrete industry, and we provide our own production both for construction and for our application. We build new constructions, such as raw buildings, bridges, dams, and tournaments. Everything you can think of can be built in concrete. In addition, we take care of the constructions that have already been built. We extend the lifetime of concrete. Our concrete capacity is divided into 15 companies, as you can see the logos here, and we are currently around 800 employees who are specialized in concrete. Concrete is the largest single subject in AF. We are constantly experiencing increased demand for our concrete services, and we are continuously working to develop our competence. We have established our own concrete forum, where we want to share best practices and be an important arena for innovation. Betong i AF is a broad spectrum of projects. Here you can see some examples that I will go through. Up to the left you can see a bridge project in connection with the construction of E39 west of Kristiansand. Eikon and Steensat RS are specialists in all types of construction projects and a number of other projects. In Konsolvo we do most of the rehabilitation and extension of life. And Konsolvo has operations in Norway and Germany. Kanonaden is our Swedish construction company that carries out a number of concrete projects. Here we show the construction of foundations for windmills. Labentreprenør, which is located in Bergen, carries out all of its projects with own energy concrete. And here it is shown with the county house in Bergen. Fjærby is engaged in mountain protection, and there they use a lot of spray concrete to protect the mountain. And down to the right, We are offshore, in the North Sea, with a company called RAKOM, which prolongs the lifetime of the old concrete platforms. Norway is a pioneer country in concrete and the development of robust concrete solutions. The development of high-end concrete has its origin from the 80s and 90s in the North Sea, when these concrete platforms were launched, to withstand extreme environmental conditions. Here, concrete has been developed that is three times higher than what is commonly used in the country. But at AF, we have also been a pioneer in thinking new, including developing our own concrete recipes and challenging the laboratory. For example, we have taken some examples from Melkeøya, where we have developed self-compriming low-end concrete that no one had done before us. In 2008, we developed our own air-washed cement, which gives low heat development to achieve risk-free walls, and which saves a lot of CO2. We called it the AF concrete, and the concrete we developed in 2008 is in line with the market today, something we call low carbon A concrete, which is an environmentally friendly concrete. We have also been involved in developing concrete with a recirculated addition. This is a bit technical. What is concrete, and what is a concrete construction? Concrete consists of water, the cement, and other additives that make it easy to dump out, and deposits, which are sand and stone. Cement is developed from lime, and several of these additives are scarce resources. In a finished concrete construction, we have to use damage, we have to use armor, and the concrete itself. Concrete can withstand a lot of pressure, but it can't withstand a stretch. Therefore, we add armor, which is steel, which then takes up the stretch in a concrete construction. The impact factors in a finished concrete construction vary a little in relation to what we build, whether it is a roof, a roof, a foundation. But in general, we can say that more than 50% does work. When we include the three processes, damage, armor, and concrete. In terms of materials, it is concrete and arming that drives the costs, and especially the cement in the concrete. And we can see that in this picture. From 2015 to 2020, the development was more or less equivalent to the general price development we saw in the market. But from 2020 to 2024, there has been a strong increase, and far beyond the strong general price development. So 50% of the 60% in total from the last 10 years will come in the last 3 years. And it's the environment that's the driver. CO2 emissions that affect both cement production and transport. And some examples of that, if we're going to have a concrete car on fire, it costs 2-3 times more than a regular concrete car that goes on diesel. And the CCS cement, the zero-release cement that I talked about earlier, will have a price of six times today's cement price. And that will increase the price of concrete by three more times. So the challenges we see in the future are not solved today, but we have a good route, and the development has been strong in recent years. Concrete will remain part of the solution. for what needs to be built. But we need to build smarter. It is difficult for many of the factors involved in the production of concrete, but new environmental-friendly concrete-recepts give the challenge of foreclosure and frost resistance, especially when it snows in the winter half of the year in Norway. And concrete will still be a significant source of climate gas emissions, and it is uncertain how high the cost-effectiveness will be in the market for the most environmental-extreme concrete variants that give zero emissions. But the possibilities will be there. And we are looking for better solutions in our projects, and we will continue to hunt for specially adapted concrete recipes. We will automate and robotize where we can achieve a productivity gain. The use of sensors for monitoring when we step and the speed of the concrete gives us a good insight into how we should plan and implement our work. Today we scan many of our finished constructions and verify them against the digital building model. Here we look at solutions to scan more running while we build, so that we ensure that we build right the first time. Our environmental stations contribute by recirculating and washing concrete deposits, and we are involved in solving an environmental problem. We actively use the digital building model for early involvement, where we design smarter solutions. And here you can see a bridge on a project called E6 Router i Storovet by Lillehammer, where you can see the big bridge, what they were going to build, and we have been involved and early involved, and plan to build the small bridge. And then the bridge has been shortened down from 960 to 540 meters, and they have saved climate gas emissions by 67%. That contributes a lot. In the future, we also have to look at reconstruction more than we have done historically. So what we are building today must be built so robust that it can be rebuilt several times in the future. We experience high demand and we have good value creation in the field of concrete in the AF Group. In construction, we have seen an increase in the last few years in line with the market, but our expectation is increased demand in the future. There is a big demand for raw materials, and we believe this demand will continue to grow. We will combine this in a good way, even though there is some reduced access to raw materials. As we all know, challenges drive innovation further. To sum up, we at AF will strengthen our expertise further, and we will continue to challenge the established with new solutions. We must continue to approach the concrete industry with good planning and good implementation. We are part of this solution, and we must dare to take advantage of new solutions that will help us achieve our climate and environmental goals in combination with reduced costs and deliver robust concrete solutions. We will be our customers' leading partners, and we will maintain our leading position within Beton. Thank you.

Tusen hjertelig takk, Geir. Da skal vi oppsummere kvartalet. Vi har hatt høg aktivitet og forbedret lønnsomheten i kvartalet. Vi har en sterk finansiell posisjon og en ordreserve på 36 milliarder etter en orderingang på 5,3 milliarder. Vi har også som kjent varslet om en betydelig orderingang etter kvartalets slutt. And at AF we will continue with what we have been working on in each quarter, and we will do so in the future. The aim is to choose the right project. It is to organize robustly. We will be good at risk management, smart at operations. We will take care of the money. And last but not least, we will take care of our people, so that they enjoy themselves and come home happy and healthy. Og med det så vil jeg takke dem som har født oss på stream, og ønske etter hvert god helg. Og så går vi over til spørsmål og svar for dere som har møtt frem her.