AF Gruppen ASA

Hello, and a warm welcome to the presentation of the second quarter of 2025 for the AF Group. Today's theme is concrete mast, and will be presented to the board of directors for concrete mast and Sweden, Bård Frydenlund. After the presentation, there will be a chance to ask questions. Main points in this quarter. We had a turnover of just over 7.8 billion. We had a result before tax of 388 million, which gives a result margin of 5%. The cash flow from the drift was 580 million, and we had an order entry in the quarter of about 8 billion. The oil reserve per 36 was just under 44.5 billion, and we have a net revenue of 263 million. We'll start with safety first. In this quarter, we had one incident that led to serious personal injury without injury. We include sub-entrepreneurs in our numbers. When we divided that into millions of hours, we got a H1 value of 0.2. It is a very strong result in the industry context, but for the AF group, the goal is zero. One event is one too much. For us, everyone should be safe at home on the first day. The H2 value is relatively stable at 7.3, and the health care is weak at 4.2%. This is a trend we are not so happy with. We want health care at 3.0, because we think it says a lot about management, nutrition, work environment and productivity. If we look at the numbers for the quarter, we had a careful growth of about 2%, so the turnover ended at 7.8 billion. We have a strong improvement in the result to 388 million, and we have a result margin of 5%. We are very pleased with that. It is on demand, and thus what we are pleased with in the second quarter. Thank you very much. Thank you. I'm sorry for the technical interruption. Let's go back to the investment capital. In the last four quarters, we had a result before the tax. If we put the interest rates back, it's just over 1.5 billion. The average investment capital is just over 4.8 billion. That gives an investment capital of over 32%. It is high above our target of 20%, and back to levels we like to be at. If we look at the cash flow, we can first look at the figure to the right. In 2024, we had a cash flow of over 2.2 billion. This year, we have 910 million. If we go back to the table, you can see that for this quarter, the cash flow was a strong 580 million. We have liquid funds, starting at 931 million. Find a cut to the right in this picture. Here we have the interest rates. On the bottom, we have leasing obligations on machines, interest rates, and housing leasing obligations, which in this quarter have been significantly increased, as a result of the construction city leasing obligations. It gives a net profit margin of 263 million. And as you can see on the left figure, it was on the corresponding 10 last year, almost 1 billion. So it is a strong improvement that we are pleased with. And available liquidity in the company is now at 4.2 billion. And we mean that we thus have a solid financial position. If we look at the balance, the equity is strengthened from the last 10 years. We are at 3.3 billion in equity, and we have a total capital of about 15.6 billion. That gives an equity share of 21.3%. The exclusive effect of IFRS 6 is at 23%. Everyone has a responsibility for the footprint. They affect the climate and the environment. We have a goal of halving ours. We measure, among other things, on these parameters, and if we start with climate gas emissions first, we have by the end of the year released a little over 18,000 tons of CO2, against a little over 24,000 tons last year, so a decline of a little over 20%. And if we go further, we have had a source sorting rate of 93, 97 and 96 percent, which is higher than the authority's requirement for TEK 17. And we have source sorted a little over 147,000 tons of waste this year. We have recovered a little over 68,000 tons of pre-washed mass and metal from our mining business, and that has contributed to tracking a little over 66,000 tons of CO2 equivalents this year. Let's continue and take a look at our business areas. We start with a plant that has had a growth of about 19% and ended up at just below 2.9 billion in turnover in the quarter, with a corresponding operating result of 179 million, which gives a operating margin of 6.2%. It is in particular a VSP with, among other things, Consolvo and Jernbannebruet in Drammen, which you can see a nice picture of here, which we rehabilitate, which has been able to stand out and stand out from that, together with Målsjøl, Maskin og Transport, which has delivered very good profitability in the second quarter. And AF Anlegg, which had a... The demanding first quarter, which must impress the AF group, is happy to see that they are back with a high level of activity in the quarter and good profitability. At the same time, they have a solid portfolio of projects, with several large projects in production, and here it is evenly over high activity and good operation. Stenset RS has delivered well, and Eikon has had a poor result in this quarter. The order volume is just below 1.3 billion, and the order reserve is up by about 4 billion, and at 19 billion. If we look at construction, our construction company has had a stable activity level at just below 2.4 billion, with a operating result of 86 million. with a operating margin of 3.6%. Haga Berg and Åsane Byggmesterforretning- deliver very good results this quarter. Bygg Fornyelse, who rehabilitates projects in Kvadraturen,- as you can see in this picture,- together with Bygg Oslo, Bygg Østfold- and Strøm Gunnarsen Vestfold, deliver good results. Strøm Gunnarsen had a result somewhat below expectations, while Lab and Fas had a result below expectations. And Håndverk and HTB have delivered weakly in this quarter. It is glad that Bygg Østfold has been able to enter a contract on Råbygg at the new Rikshospitalet for 960 million, and furthermore we have bidded five contracts in the quarter, but collected value of just over 1 billion. The order entry was at just over 3.3 billion for the company, and the order reserve is relatively stable at just below 11 billion. If we look at the concrete mass, which is today's theme, then the revenues have been at just over 900 million, with a operating result of 38 million, which gives a operating margin of 4.1%, which is 3.1% up from the corresponding 10 in last year. Buskerud Vestfold, Boligbygg and Trøndelag, who are building student housing in Trondheim on the Nardoveg. The project you see here, together with Røsand, Inlandet, Asker og Bærum and Østfold, who deliver good results in the second quarter. Oslo is under expectation, and Romerike has a weak result in the quarter. Børsmelt has a new contract with Buskerud Vestfold, which in Drammen, together with SPG, will build 150 apartments. The total order volume is 1 billion, with a relatively stable order reserve of about 5 billion. If we move on to ownership, it's a pleasure that Fagerblom, which you can see in the picture here, and which is a housing project we have at Fagerborg in Oslo, has had a very good sales start. It has been collected, where this is an essential part, a total of 61 residents in the quarter. We have one housing project with 95 units under production up at Rolfsru Arena in Lørenskog. And for this portfolio, we have a development portfolio on housing right at the top and 1,000 units, while our development portfolio on business is right at the bottom of 40,000 square meters. Thanks for the ride to Sweden, it has been nice in this quarter. We have an activity level of about 1.2 billion, with a relevant operating result of 78 million, which gives a operating margin of 6.3%. And here is the cannonade in Særdeleset, with a project that is a nice picture to have here, where we are building foundations for wind parks in Sweden, as you can see to the right here, which has contributed to this, together with Prefab in Melardalen, Hørnesand Byggreturer, which delivers very good results in the quarter. HMB delivers a good result, while Bygg Syd delivers something under expectation. In Bygg Øst and Bygg Vest, there are weak results, and in this quarter. We have four new contracts, Meldt at a little over 1.1 billion, while Samla Ordereingang is at an overhead of 2.2 billion, and we have an order reserve that is up by about 2 billion, at a right undercut of 6.4 billion. If we look at our business within energy and environment, we have a turnover of 339 million and a operating profit of 18 million, which gives a operating margin of 5.2%. Here, AF Energy has delivered a good result, and Dekom has delivered a result more than expected in the quarter. The environmental parks, which we see filter cakes in the picture, have contributed positively in this quarter. It is also worth mentioning that in this quarter we have entered a purchase agreement for 80% of the shares in Eveny Solutions, which is an engineering and entrepreneurial company within electrical infrastructure, and which will take AF into a new market segment. The transaction is expected to be completed at the end of the third quarter. The order volume is 227 million, and the order reserve is 1.1 billion. Offshore, we have a relatively stable activity level and a operating result that is close to zero. Here is a close-up picture. We have Aeron, which increased activity in this quarter and at the same time delivered a very good result in the second quarter. Offshore Decom has a decline in revenues and is weakly delivering in this quarter. HMC has signed a contract for the reception and dismantling of oil platforms in VATS in this quarter, at a right upper limit of 100 million, and the order reserve is at a right lower limit of 1.7 billion. If we look at the total year's reserve, the largest contribution sites are Anlegg on about 19, Bygg on the lower right and Ørløv, Sverige on about 6.4 and Betongmast with 5, which make up the largest contribution sites in a total year's reserve on the lower right and 44.5 billion. It is a solid and good year's reserve to have with you in the future. Then we have come to the theme part of today's presentation, and I would like to invite Bård Fryndlin up on stage.

Thank you, Amund, and good day everyone. We will now give you a picture of how we see the status of Betongmast. First, a little look back at 2024. Then Betongmast made an undercut of 4.4 billion, with a operating result of 120 million. That gave a operating margin of 2.8%. The result before the tax ended at 163 million, with the result margin of 3.7%. The difference before and after financing is also a picture of how good Betongmast is at liquidity control and has a solid labor capital. The H1 rating ended in 2024 at 0.4. The number of employees per 36 was 482, out of 293 employees and 106 skilled workers. The employees had a female share of 22%. Unfortunately, no female skilled workers in Betongen. Betonbast has its operations in various operating companies, mainly concentrated in the eastern region and in central Norway. If we look at safety performance over time, you can see that the frequency of accidents has been higher before. We are very happy that we are now in 2025 at a H1 value of 0. This means that there have been no serious accidents or damage to the property in Betongvast since Q1 2024. Five quarters in a row. This is a result of hard and structured work over time. In the weeks we are in now, they have what they call a focus week, where they put extra focus on working with safety. Here they have picked out five themes based on the analysis of the observations that have been made in the project over the years. We have documented safety training, ensuring that everyone who is involved in the project has the training they need. We have established a user course, and we have control over the resources we have. There is knowledge about which chemicals we deal with, and the consequences of those. is that we work with provisional construction power. We work closely with power and how to handle it. And we have what we call a security condition, where we analyze what is the condition of the project. For example, we make sure that the savings are secured, that we lock off areas that are to be locked off, or that we have clean and clean roads for the workers. so that they work safely. And when they work safely, they work more efficiently. And that is also positive in terms of creating profitability. And if we look at the historical development in revenue and profitability, if we look at the revenue first, you can see that the revenue was a bit higher in 2021. The decline in relation to that today is first and foremost that some companies have been sold, and not least that the concrete market has moved over to the off-group market. I will come back to that later. Looking at the results, we had weaker results from concrete than we could have hoped for. However, we see a positive development of 4.1% both in the quarter and so far this year. We have seen this through the last four quarters, starting from Q3 2024. And if you look at the last four quarters in a row, from Q3 2024 to QT 2025, Betongmast has delivered a operating margin of 4.9%. And after finance, it has delivered a result margin of 6%. Which I think is pretty good in today's construction market. So there shouldn't be any doubt that many powerful and structural organisational approaches have been made in Betongmast. We have sold the company, we have sold Betongmast Bergen, we have sold Betongmast Telemark. It was a company that we were unable to create sustainable profitability in. The same goes for the case of Betongvast Ringerike. We haven't sold it, but we've restructured it. We've changed the entire management, just the organisation number again. We've changed the name to Asker & Bærum. We've also changed the focus from Ringerike to Asker & Bærum. As I mentioned, we have moved Betongvast Verget to Afgruppen Verget, because Betongvast will be able to have full focus and concentrate on the business in Norway. So we have merged Betongvast Boligbygg with Betongvast Oslo. Housing is probably the company in Betongen that has burdened the company's results in the most negative way possible. They have also added leadership capacity in recent years and have had many talented leaders who have done a very good job in terms of cleaning up that portfolio. At the same time, we have a very solid platform in Oslo, which has created solid results over many years. We believe that this is a very good combination. Then we have introduced a supply chain to control both safety and risk. And also when we moved in here to Construction City, both Betongvast and Avgruppen, we have also coordinated concern functions, where Betongvast previously had its own concern functions. So many of those who are now provided services are directly from Avgruppen. In summary, we experience many powerful measures that we believe will have a positive effect on profitability in the future. If we move on to climate and environment, it is an area that Betongvast has invested a lot in and has a lot of competence in. They provide innovative solutions to create added value for customers, while also giving competitive power to Betongvast. In this picture, we can see the project Saga in Larvik. It was a project that was developed because Spor X had been built in Drammen, which allowed for a collaboration to build Saga in Larvik. where concrete is used as a hybrid between wood, steel and concrete. This gives a much lower climate impact and a much better cost-effectiveness. This creates value for both parties. The fact that Betongmast is so advanced and so good at providing innovative solutions to develop projects together with their customers, makes me dare to say that they are one of Norway's best cooperating actors. And there are many good examples of cooperating projects in Betongmast. I have brought six here. The first, Construction City, is a building that Betongmast Oslo has built together with AF Bygg Oslo in collaboration with the customer Oboz. We have Vision in Horten, a collaboration contract for Horten Industry Park, which will house both offices and production premises for the Kongsberg Group. Vi har Nardoveien oppe i Trondheim som gjøres for studentsamskimdaden i Trondheim som skal bygge sårt trengte hybler for studenter. Vi har Campus Kristiansund som Betongmast Røsand har bygd i samspill for studenter. Bane Nord Eiendom and Relog. And then we have Slippen i Drammen, which Buskerud and Vestfold have in collaboration with Scandinavian Property Group. And then I have with me here Edvard Munk, Videregående Skole, a school project here in the city that is done in collaboration with Oslo Bygg. One of several examples of many schools that Thomas has built in recent years. As Arvind mentioned, the oil reserve is around 5 billion. It has been stable for the last few years. We have seen a certain amount of public projects, such as school projects, in the city. We also see a lot of commercial buildings in the market. The high building costs and interest rates have affected the building segment, especially when it comes to the new building of housing. Men vi håper på en gradvis forbedring fra 2026. In the future, there will be a focus on controlled and profitable growth, with both risk and money management, to attract and maintain the best people to be able to provide leadership and skills, so that we can provide customers with innovative and good solutions that give value to them, while also creating competitive power for Betongmast. And I dare to say that Betongvast has never been stronger than they are today. They have never had more competence than they have today. And the talented people in Betongvast have the very best conditions now to create good performance in the future. And we are going to work hard every single day for everyone to get home safe. Thank you.

Thank you, Bård. We will summarize the quarter. We had a quarter with H1 value of 0.2. At the same time, we have a stable activity level with a turnover of 7.8 billion. We have had a strong profitability improvement and a good result. The reserve is high at 44.5 billion, and we are in a solid financial position. So I want to thank you for the effort in this quarter, and at the same time be clear that in AF we will continue to lift the view up and forward. Shoulder by shoulder, step by step, we will continue with what we know will lead us forward. And that is to choose the right project, robust organization, hard work, pay attention to the money, and last but not least, pay attention to the people, so they can perform well and come home safe and sound. That was what we were going to present. Now we have the opportunity for questions. I would like to invite Anni Øen, financial director at AF Opp and Bård.

Since some of the questions are in the room, we ask that you use the microphone and introduce yourselves.

Thank you for that, Simon Mortensen, DNB Carnegie. A couple of questions from my side. It concerns especially Beton Mast and Sweden, which has an exceptionally good margin improvement year-over-year. Are there any effects in terms of project conclusions in relation to other one-off elements that have lifted the margins so much in relation to both year-over-year and quarter-over-quarter?

Yes, I can perhaps take Sweden first. It is the untapped fresh money that comes from running operations. And of course, some projects have been in the final phase, which contributes more to the results than others, as it has actually been consistent.

Vi har tenkt på et tudelt bilde i Sverige over tid, og det er nå aktivitet fra den delen som har levert hjemt over mange år.

Yes, because the comments are a bit like this, some deliver very well, some deliver medium divisions, and some deliver below, a little evenly over the entire portfolio, including facilities, including buildings, so it's the picture you print, it's varying in all divisions, and then it's a crazy result. Can you say, what do you see as possible? Is this a correct level?

Every quarter, we have to reach 5%, which is the requirement at AF. We try to reach it as far as we can.

The goal at AF is 7%. Anne, have you adjusted the leasing in relation to NetApp?

How is it reported? Sorry. Netto rentebærende gjeld er rapportert konsistent med tidligere år og kvartal, så det inkluderer også alle leieforpliktelser.

Maybe a more general question, but a specific one for Bård. The decision to merge housing into Oslo. I'm surprised that the housing has been so bad, and Oslo has been so good for a long time. So a bigger justification for the background.

Yes, it depends on what I said before. First of all, Oslo has been with Betongmast from the start. It has a basic culture, a management and performance level that has been very solid for a long time. At the same time, the housing segment in Oslo is expected to be a significant segment in the future. We think that the management that is now in the housing sector, together with Betongmast Oslo, is a good combination to take hold of the market when it comes back.

Thank you. Thank you. Maybe a little more for all three of you. If you could explain the simple differences between Beton Mast and AF Bygg, whether it's a culture-production mix, are there any special things that you think separate the two companies from each other?

I don't think we'll go into that detail here. Sure.

More questions from the audience? No? We have one question from the internet at the moment. That was a nice question in and of itself, which is difficult to answer. And that is from investor Per Halmelast. Is the result margin at 5% sustainable in the future? Yes or no question. It's worth answering.

I don't think it's a yes or no question. What is profitable is only powerful. So there is no doubt about that. If the AF group reaches 5% in the future, if that is part of the question, then we do what we can every quarter to get over the margin requirement of 5%. The goal of the AF is 7%, and perhaps more than that. So we do what we can for every quarter.

There are no more questions.

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