ABILITY TO SUCCEED
ANNUAL REPORT 2020 AF Gruppen is a leading contracting and industrial group that was formed by an entrepreneurial spirit and the ability to succeed. We provide services in the areas of Civil Engineering, Construction, Energy, Environment, Property and Offshore, primarily in Norway and Sweden. AF creates value for its employees, customers and owners, and we contribute at the same time to solving important social challenges. In brief, we clear the past and build for the future.
2020 marked the end of a strategy period with major growth ambitions. The revenue target of NOK 20,000 million within 2020 was already achieved in 2019, and the collection of companies in the AF Group has become ever larger.
AF Gruppen aims to the Nordic region's most profitable contractor by preserving and strengthening the foundation of AF Gruppen: a value-based corporate culture and an uncompromising attitude to health, safety and ethics. New ambitious goals have been set for the next strategy period up to 2024. Our objective to reach a revenue of NOK 40,000 million and achieve an operating margin of 7 per cent. To get there, we will continue to attract and develop the best people, maintain pressure on innovation and digitalisation, and develop new services.
REVENUES EBIT OPERATING MARGIN NOK MILLION NOK MILLION 5.5% 27,025 1,480
EQUITY RATIO LTI-1 RATE 27.2% 1.8
FRONT PAGE: FROM THE RESIDENTIAL PROJECT, VANNKUNSTEN, IN BISPEKVIKA. PHOTO: HANS FREDRIK ASBJØRNSEN KEY FIGURES REVENUES (NOK MILLION) EARNINGS BEFORE INTEREST AND TAXES (NOK MILLION)
30,000 1,600 1,400 25,000
1,200 1,480 20,000 27,025 1,000 15,000 800 600 10,000 400 5,000 200 0 0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
OPERATING MARGIN RETURN ON AVERAGE CAPITAL EMPLOYED (ROACE)
9% 60% 8% 50% 7% 6% 40% 5% 30%
4% 5.5%
3% 20% 34.8% 2% 10% 1% 0% 0% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
EQUITY RATIO DIVIDEND PER SHARE (NOK)
35% 10.00 9.00 30% 8.00 25% 7.00 6.00 * 20% 27.2% 5.00 6.50 15% 4.00 10% 3.00 2.00 5% 1.00 0% 0.00 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 * Dividend to be distributed in the first half of 2021 is proposed, not approved
LTI-1 RATE ABSENCE DUE TO ILLNESS
2.0 5%
1.8 4%
1.5 4.6%
3% 1.0 2%
0.5 1%
0.0 0% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 FINANCIAL RATIOS
YEAR 2020 2019 2018 2017 2016
REVENUES (NOK MILLION) Operating and other revenue 27,025 22,612 18,767 13,704 11,876 Order backlog 30,617 28,200 21,541 19,773 15,332
EARNINGS (NOK MILLION) Earnings before interest, tax, depreciation and amortisation (EBITDA) 2,053 1,882 1,303 1,092 1,212 Depreciation and write-downs -573 -547 -184 -169 -177 Earnings before interest and tax (EBIT) 1,480 1,335 1,119 924 1,034 Earnings before tax (EBT) 1,447 1,317 1,136 935 1,040 Earnings after tax 1,158 1,027 921 754 787
PROFITABILITY EBITDA-margin 7.6% 8.3% 6.9% 8.0% 10.2% Operating margin 5.5% 5.9% 6.0% 6.7% 8.7% Profit margin 5.4% 5.8% 6.1% 6.8% 8.8% Return on equity 36.6% 43.7% 45.4% 35.8% 43.3% Return on invested capital (ROIC) 34.8% 38.2% 53.9% 42.7% 54.2% Economic Value Added (NOK Million) 788 735 725 552 624 Cash flow from operations (NOK million) 1,189 1,508 841 1,354 822
BALANCE SHEET (NOK MILLION) Total assets 12,862 12,854 8,486 7,724 6,549 Shareholders' equity 3,494 2,999 2,124 2,078 1,950 Invested capital 4,621 4,183 2,223 2,198 2,063 Average invested capital 4,313 3,603 2,133 2,230 1,954 Equity ratio 27.2% 23.3% 25.0% 26.9% 29.8% Gross interest-bearing liabilities 1,127 1,184 99 120 113 Net interest-bearing debt (receivables) 90 -163 894 1,210 606
THE SHARE Market value at 31/12 (NOK) 175.60 176.00 132.00 133.50 154.50 No. of shares 105,998,497 103,065,277 99,009,179 97,961,000 93,610,000 Market value (NOK million) 18,613 18,139 13,069 13,078 14,463 Earnings per share (NOK) 9.29 8.51 7.88 6.43 7.44 Diluted earnings per share (NOK) 9.27 8.46 7.88 6.43 7.29 Dividend per share first half of the year (NOK)1) 6.50 6.00 5.00 5.00 5.00 Dividend per share second half of the year (NOK) - 3.50 3.50 3.50 3.50
1) Dividend to be distributed in the first half of 2021 is proposed, not approved.
PERSONNEL Number of salaried employees 2,602 2,638 1,797 1,564 1,322 Number of skilled employees 2,908 2,898 2,423 2,204 1,727 Total number of employees 5,510 5,536 4,220 3,768 3,049 LTI-1 rate 1.8 1.2 0.8 1.1 1.3 Absence due to illness 4.6% 3.8% 3.3% 3.0% 3.7%
EXTERNAL ENVIRONMENT Carbon footprint 1.8 2.3 4.5 4.5 3.1 Source separation rate – building 91% 87% 89% 83% 85% Source separation rate – renovation 89% 93% 87% 85% 79% Source separation rate – demolition 96% 95% 97% 95% 97% Total amount source separation in tonnes 402,535 360,368 512,401 324,370 507,198
For definitions of key figures, see the description of alternative performance measures on page 204 and the definitions on page 206. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 5 3 ABOUT AF GRUPPEN AF ABOUT OM AF GRUPPEN
CONTENT
INNOVATIVE ENERGY 02 ABOUT AF GRUPPEN SOLUTIONS AND RECYCLING 04 The CEO Vannkunsten and Dronninglunden 06 Our business in Bispevika were built with 16 Highlights minimal residual waste and are 18 Goals and results heated by a seawater-based heat pump. Page 8 20 Strategy 26 Risk management
30 CORPORATE SOCIAL RESPONSIBILITY QUALITY STUDENT 32 Social responsibility in AF ACCOMMODATION 34 Climate and environment The new student accommodation 39 Climate accounts at Campus Bø in Vestfold and 40 Social conditions Telemark creates a good framework 46 Governance for an important phase of life, with a healthy indoor climate and energy- 52 BUSINESS AREAS efficient solutions. Page 28 54 Civil Engineering 58 Construction PROTECTING DRINKING WATER 62 Betonmast WITH A SLIDING BRIDGE 66 Property The incremental launch 70 Energy and Environment method is both an efficient and 74 Sweden environmentally friendly way to 78 Offshore build a bridge, and protects the drinking water of 50,000 people in 84 SHAREHOLDER INFORMATION Kristiansand. Page 50 86 Corporate management team 88 Board of Directors REUSING GRITTING SAND 90 Corporate Governance Slippery winter pavements and 92 The share roads in Bærum are being strewn with recycled gritting sand from 98 BOARD OF DIRECTOR'S REPORT Nes environmental park for the first 100 Board of Director's report time. Page 82 116 FINANCIAL STATEMENT 118 Annual accounts Group 119 Income statement 120 Statement of financial position THE KINDER EGG 122 Statement of changes in equity OF SAVING ENERGY 123 Cash flow statement Energy-saving measures improve 124 Notes the municipal economy, are good for the environment and provide 186 Annual accounts residents with services that create 187 Income statement well-being. Page 96 188 Statement of financial position 189 Cash flow statement 190 Notes DOUBLING TREATMENT 197 Responsibility statement CAPACITY 198 Auditor's report The capacity of the Bekkelaget 204 Alternative performance measures treatment plant has been doubled. This means both that Oslo can 206 Definitions continue to grow and that the 207 Addresses environment in the Oslo Fjord can be improved. Page 114 4 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
THE NORDIC REGION'S MOST PROFITABLE CONTRACTOR
AF delivers excellent results in an unprecedented 2020. CEO Amund Tøftum highlights good project performance, adaptability and impressive effort as drivers. AF has a solid bedrock and the best conditions for reaching new ambitious goals.
We cannot sum up the past year without With the new strategy, climate and the environ- mentioning the external conditions that have ment is one of four corporate initiatives. We want impacted us. The Covid-19 pandemic and to reduce the relative carbon footprint from AF associated infection control measures increased Gruppen's operations. The goal, relative to our the need for flexibility and practical solutions. revenue, is to halve greenhouse gas emissions and We are lucky to have skilled people and project the amount of waste that cannot be recycled for organisations that have been able to adapt and each business area by 2030. This is a natural part mobilize for the extra effort required. The year of our corporate social responsibility. Sustainabil- has also demonstrated the willingness and ity is also profitable and offers new and exciting execution capability inherent in the AF culture. business opportunities. We will continue to seek A number of good performances in our projects out these opportunities. I believe that we are ensured a strong end to the year and a very equipped and well positioned for the change of good result for 2020. pace to come, because we are curious by nature At AF, we do not just measure financial per- and have a culture that is founded on entrepre- formance. We also value the safety of everyone neurial spirit and willingness to innovate. who works at, and for, AF. Safety is essential In the coming years, we will also maintain when working in our projects, and continuous pressure on innovation and digitalisation, as safety work is the basis for everything we do. well as continue the prioritisation of cooper- Nevertheless, we see sometimes there are flaws, ation with customers and suppliers. Last but and that the consequences of mistakes are seri- not least, we will continue to invest in and ous. Regrettably there were two cases in 2020 develop our people. These initiatives, together with fatal outcomes. These incidents affect and with the ability to safeguard both diversity and stay with us, and are a strong reminder of the a common culture are important drivers for energies we surround ourselves with. We must maintaining our competitiveness. learn from our mistakes and implement meas- The past year had many highlights. We deliv- ures that can prevent similar accidents from ered historically strong results for 2020 and we happening again. With an increase in serious have completed and added many good projects. injuries and fatal incidents, as well as histori- Our own digitalisation and innovation projects cally high sickness absence for AF, it is vital that have helped us make a further leap in streamlin- the entire organisation works to improve the ing the business. Our work on diversity, including situation. through the Diversitas network and #HunSpan- The year 2020 marked the end of a highly derer, has contributed to a sharper focus and ambitious strategy period that began in 2016. The change of attitudes related to unconscious dis- verdict is ready, and we can celebrate new mem- crimination. We have shown that we care about bers of the AF family and growth that exceeded each other and kept up progress despite days and our goal. When we now set out a new path for the months that have been far from normal. We will next four years, we are just as ambitious. We will continue to take good care of each other, both be the Nordic region's most profitable contractor, those who work at and for AF. This is part of our and the goal is to have a revenue of 40 billion corporate social responsibility. and a 7% operating margin by 2024. The goal of Being able to lead AF is a privilege I have zero serious injuries and work-related absence is embarked upon with great humility and grati- a prerequisite for profitable growth in AF. These tude. I am inspired and impressed by the drive ambitions will be fulfilled through thoroughness and will to perform inherent in the organisation and hard work, as well as heightened efforts and on a daily basis. It gives me faith that we will stricter compliance in safety work. reach our ambitious goals by 2024. ABOUT AF GRUPPEN 55 RISK MANAGEMENT RISK STRATEGY HIGHLIGHTS OUR BUSINESS OUR THE CEO THE ABOUT AF GRUPPEN AF ABOUT 6 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
BUSINESS STRUCTURE
AF is a project-based contracting and industrial group with seven opera- tional business areas: Civil Engi- neering, Construc- tion, Betonmast, Property, Energy CIVIL ENGINEERING CONSTRUCTION BETONMAST AF is one of Norway’s AF provides contracting Betonmast is one of and Environment, largest actors in the civil services for residential, Norway’s largest building Sweden and Off- engineering market, and public and commercial contractors and has opera- the customers include both buildings. Our services tions in the largest markets shore. public and private actors. Its range from planning to in Norway and Sweden. The project portfolio includes building and renovation. project portfolio comprises roads, railways, port AF cooperates closely with everything from major resi- facilities, airports, tunnels, customers to find efficient dential projects to commer- foundation work, power and and innovative solutions cial and public buildings. energy, as well as onshore adapted to their needs. Betonmast is a major player facilities for oil and gas. Construction encompasses in building for the public the Norwegian business sector and possesses spe- and is mainly located in cialist expertise in project Eastern Norway and the development and collabora- Bergen region. tive contracts. Betonmast also has a property portfolio in Norway.
Revenues NOK million 4,157 9,459 7,862
Earnings before tax NOK million 331 486 261 Employees 1,479 1,497 983 ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 7 ABOUT AF GRUPPEN AF ABOUT
PROPERTY ENERGY AND SWEDEN OFFSHORE AF develops, designs and ENVIRONMENT AF’s Swedish operations in AF has varied activities carries out residential and AF offers energy-efficient civil engineering, aimed at maritime sector commercial projects in solutions for buildings and construction, property and the oil and gas industry. Norway, and activities takes industry and is a leading development and Our services range from new place in geographical areas player in environmental demolition are combined in construction and where AF has its own clean-up, demolition and the Sweden business area. modification of climate production capacity. AF recycling. Contaminated The geographic area of control systems (HVAC) for works closely with other materials are sorted, operation encompasses the offshore and marine players in the industry, and decontaminated and recycled Gothenburg and Southern markets, to the removal and the development projects at AF’s environmental centres Sweden, as well as recycling of offshore are mainly organised as Rimol, Jølsen and Nes. Over Stockholm and Mälardalen. installations. AF has a associated companies and 80% of the materials are state-of-the art facility for joint ventures. recycled. environmental clean-up at Vats, where up to 98% of the materials from demolished platforms and installations are delivered for recycling.
33 962 4,138 672 135 54 219 -25 26 283 843 220 AF GRUPPENAF ANNUAL REPORT 2020
ABOUT AF GRUPPEN ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 9 ABOUT AF GRUPPEN AF ABOUT
NO RESIDUAL WASTE In Bispevika, AF has collaborated with Norsk Gjenvinning to carry out two large housing projects without any residual waste. Practical systems for sorting waste have been established, and both employees and subcontractors have been trained to raise competence and awareness related to waste sorting. The high level of ambition has resulted in 97.3 per cent of the construction waste in the project being sorted for recycling – well above the government requirement of 60 per cent. The buildings are also architectural gems, incorporating slate facades from AF's own quarry in Oppdal. 10 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
OUR VALUES ARE THE BEDROCK
The two AF founders Moger and Aftreth have described the start-up as “madness”. With thoroughness, hard work and a persistence in achieving profitable growth, they laid the foundation for unparalleled successful growth on Oslo Børs. Now, 35 years later, the same values still constitute the bedrock of the company.
1980’S 1990’S
ENTREPRENEURIAL SPIRIT PROFITABILITY AND GROWTH The year is 1985. Per Aftreth and Leif Jør- Our core values quickly contributed to gen Moger founded Arbeidsfellesskapet, results and larger contracts and gave AF the subsequently AF, with a group of former col- muscle to look towards the construction leagues, supported by an overdraft facility of and property market. In 1997, AF merged NOK 20 million. A high level of integrity, thor- with the contractor Ragnar Evensen AS and oughness, hard work and an entrepreneurial laid the foundation for the Property busi- spirit resulted in a positive bottom line for ness area through acquisitions. AF was listed the company in its first year of operation on the stock exchange that same autumn.
2000’S 2010’S
NEW MARKETS LEADING CONTRACTOR New acquisitions gave AF access to the AF grows through acquisitions in and groundwork and demolition industry, an outside of Norway. There is also significant initial foothold in Sweden and control of organic growth in the Civil Engineering and a larger portion of the value chain in the Construction business areas. Major acqui- construction and civil engineering industry. sitions in the Swedish construction market Our entry into the demolition market lay the foundation for the Sweden business marked the start of new successful growth area. The decade is rounded off with the for AF through the three business areas, acquisition of Betonmast. Energy and environment and Offshore. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 11 ABOUT AF GRUPPEN AF ABOUT
VISION AND VALUES
OUR CORE VALUES
RELIABILITY FREEDOM TO EXERCISE ENTREPRENEURSHIP AND DISCIPLINE IN ACCORDANCE WITH GOALS AND REQUIREMENTS Our employees, and particularly our managers, represent the organisation’s morals and conscience. The operative activities shall be decentralised and have All employees have a duty and right to contribute a good balance between freedom and discipline. We to discussions on important processes or decisions. shall give employees who see and seize opportunities When decisions are made, they shall be space. We must at the same time exercise discipline so implemented quickly, loyally and efficiently. that the creation of value is not at the expense of safety, ethics or other goals and requirements.
OUR VISION
Clearing up the PERSISTENCE IN ACHIEVING past, building for THOROUGHNESS AND PROFITABLE GROWTH the future. HARD WORK AF shall create value through We shall have perseverance profitable revenue growth. to ensure thorough The ability and capacity to preparations, clear operate a growing organisa- decisions, complete tion must be constantly execution and reliable developed. We shall invest in documentation. Risk new business areas where willingness is dependent we can achieve competitive on flexible employees who advantages and keep a can make an extra effort commercial mindset in all when the situation requires our business. an effort be made. MANAGEMENT THROUGH PRESENCE AND INVOLVEMENT Managers at AF shall set the norms by being present and setting an example. We shall have the ability to prioritise and focus our resources on defined tasks. Whoever is managed is entitled to guidance in their work. 12 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
BUSINESS MODEL
Employee ownership
Value-based OUR MISSION spirit Entrepreneurial corporate AF Gruppen shall create culture value and opportunities through project activities with an uncompromising attitude towards safety and ethics. Execution capability Active risk management
Decentralised decision-making authority
Creates value for:
EMPLOYEES CUSTOMERS OWNERS SOCIETY The employees are AF's AF shall have a good AF's owners shall receive a AF shall run a socially re- most important resource. dialogue with the customer competitive return on their sponsible business. This We will provide a safe and when carrying out projects investment in the AF share means managing the secure workplace and a to ensure they are satisfied through dividends and price projects with a sustainable good working environment. with the results. The services appreciation. business model and adding AF shall also facilitate the and solutions offered by value to society by offering development of AF Gruppen shall be in services that contribute to competence. In addition, accordance with what the solving society's challenges. employees are given an customer needs, and they AF contributes to improving opportunity to participate in shall be delivered at com- the environment by reduc- the creation of financial petitive prices. ing waste, promoting recy- value through employee cling and reuse, and mini- ownership. mising the consumption of non-renewable resources. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 13 ABOUT AF GRUPPEN AF ABOUT
CRITERIA FOR SUCCESS
AF’s business model is based on certain key principles that we consider to be our criteria for success. Our common denominator for success is our dedicated and capable employees.
Value-based Employee 1 corporate culture 2 ownership
PEOPLE CREATE VALUE EMPLOYEES PARTICIPATE IN JOINT VALUE CREATION Our corporate culture is the foundation of AF’s success. AF’s Employee ownership is part of the AF culture, and in connection corporate culture has been built up over time by motivated with acquisition processes we search actively for businesses were and capable employees. We are proud of our culture, and we the employees would like to participate on the ownership side. believe that it is distinguished by ethical conduct, cooperation When AF Gruppen was established in 1985, one of the aims was and dedication. A key ingredient in AF’s success is building our for the employees to be given an opportunity to become corporate culture on core values so that a uniform perception co-owners. The idea was that as many employees as possible is established for how AF shall emerge both internally and should be able to take part in the increase in value resulting from externally. Corporate culture arises and is developed the joint creation of value and the development of the company. throughout the entire organisation at any given time, from The same philosophy still applies. The offer of employee the CEO to the project organisations. Closeness and inte- ownership through share and option programmes contributes raction between the various business units are essential to the to making AF an attractive place to work. The purpose of the creation of a common understanding of who we are. We are programmes is to motivate employees to have a greater, aware of the importance of a corporate culture when long-term commitment to the business. Employees own shares acquiring new companies, and it is of decisive importance to in AF Gruppen ASA valued at more than NOK 2 billion. In investment decisions that the corporate culture of the addition to this, there is the value of the non-controlling shares companies we acquire is consistent with our own. in subsidiaries that are owned by employees. Read more about the share and option programme for employees on p. 134.
Decentralised Active risk 3 decision-making authority 4 management
MOTIVATED AND QUALIFIED EMPLOYEES ARE GIVEN MANAGERIAL WE SHALL ACTIVELY ASSUME RISK THAT WE CAN INFLUENCE RESPONSIBILITY AND DECISION-MAKING AUTHORITY AF Gruppen is exposed to risk of both an operational and AF has a decentralised operating model, and the authority and financial nature. AF Gruppen wants to assume operational risk responsibility lies where value is created. AF’s many capable that the business units can influence and control. AF has employees are given an opportunity to assume managerial developed risk management processes that are well adapted to positions at an early stage. We have a goal to develop our our operations. Standardised, action-oriented risk management managers internally, and over 80% of our managers have risen processes ensure comprehensive and coherent risk manage- up the ranks internally. With motivated and qualified employ- ment in all parts of the organisation. AF seeks to limit exposure ees, it is natural to delegate decision-making authority to those to risk that cannot be influenced. A risk review is conducted for who are closest to the problems. Relying on our employees all projects before a tender is submitted. Analysis of risk during and trusting their qualifications make us dynamic and the tendering phase enables the correct pricing and manage- adaptable, since our employees are allowed to suggest new ment of risk in the project. The same project organisations and better solutions to existing problems. Decision-making conduct detailed risk reviews every quarter. Read more about authority and autonomy are important in order to be able to how we work systematically with risk management in all our challenge the status quo. projects and business units on p. 26 AF GRUPPENAF The apartmentsThe AF has built in ANNUAL REPORT 2020 Bispevika are supplied with heat via an ENOVA-supported Bispevika via an ENOVA-supported supplied with heat are a through down and cooled is heated water The solution. is greatest, consumption When pump. heat seawater-based district is supplied from extra heating. energy SEAWATER AND ENERGY. SEAWATER
ABOUT AF GRUPPEN ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 15 ABOUT AF GRUPPEN AF ABOUT 16 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
HIGHLIGHTS FROM 2020
With solid core values, adaptability and a strong team spirit, we have resolved the challenges that confronted AF in 2020. Driven by strong performances in many projects, revenues reached a record high and profitability was good. We have also used the year to set new ambitious goals for the future. Here are some of the strong performances and events that characterised the year.
ONE OF EUROPE’S SMARTEST BUILDINGS At Hasle in Oslo, AF Gruppen has been both developer and contractor for what is described as one of Europe's smartest office buildings. The Atea building, which houses some of the country's leading IT companies, was completed in February 2020. It maintains a high environmental standard and aims to be certified BREAAM-NOR Excellent in addition to its class A (passive house) energy rating. The building ensures that technology and modern solutions supports the environ- ment, operating costs and user friendliness. From their own smartphone, the users of the building can, among other things, control the selection of office desk, access, lift calling, lighting and the reservation of meeting rooms. At the same time, the building analyses and uses collected data to adapt and adjust light, climate and energy use. The solutions and computer architecture in the building are so unique that there are barely any similar projects in Europe. AF, together with development partner Höegh Eiendom, sold the Atea building to Clarkson Platou Real Estate in the autumn of 2020. NEW GROUP STRATEGY TOWARDS 2024 In 2020, AF has both completed the previous strategy period and prepared the plan for the next four years. AF will maintain and strengthen its position as the Nordic region's most profitable contractor. The financial targets for 2024 are revenues of NOK 40 billion and an operating margin of 7 per cent. The goal of zero serious injuries and work-related absence remains unchanged, and the strategy also includes goals for climate and the environment: AF aims to halve relative greenhouse gas emissions and halve waste volumes that cannot be reused or recycled by 2030. Four initiatives will be prioritised to achieve these goals: disciplines and management, customers and suppliers, climate and the environment as well as innovation. Today, AF Gruppen consists of more than a hundred companies, and in order to succeed in solving tomorrow's challenges, we will utilise and strengthen the combined power of diversity and unique skills. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 17 ABOUT AF GRUPPEN AF ABOUT
GOOD INFECTION CONTROL KEPT THE WHEELS RUNNING When Covid-19 broke out in March 2020, an AF corona council was immediately established which worked closely with the management. The council provided guidelines for systematic infection control management and uniform and clear communication between management, business units and projects. The projects contributed with adaptability and action where the practical measures were imple- mented, so that the infection control was adapted to project-specific needs and local conditions. An example is the project E39 Kristiansand vest – Mandal east, where more than 600 people work, most of them in shifts. As in other projects, the employ- ees showed a high degree of flexibility and made great efforts to carry out operations as best they could. The overall team effort at AF Gruppen contributed to as many peo- ple as possible staying healthy and enabled us to continue our societal duty without significant delays.
TREATMENT FACILITY FOR THE FUTURE Oslo is the third fastest growing city in Europe and the strain on the infrastructure for wastewater treatment has steadily increased. If the capacity of the treatment plants is insufficient, untreated wastewater could end up in the Oslo Fjord in the event of extreme precipitation and lack of surface water management. Bekkelaget treatment plant handles wastewater from around 40 per cent of Oslo's population. After three years of plant operation, AF completed the work of expanding the facility in 2020, as well as adapting it to new environmental requirements. Wastewater capacity was increased from 270,000 to 500,000 people, which corresponds to the estimated number of users in 2040. Oslo Municipality conducts continuous water tests of inlets and outlets, and the water quality in the Bunnefjord has improved significantly after the new treat- ment plant was put into use. 18 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
GOALS AND RESULTS
PROFITABILITY FINANCIAL STRENGTH
GOALS GOALS AF’s goal is to have a better operating margin AF’s goal for financial strength is to achieve an and a better return on invested capital than equity ratio of a minimum of 20%, and to have comparable companies. AF has a goal of a return sufficient liquidity to cover the Group’s current on invested capital greater than 20% and an needs at any given time. operating margin greater than 5%.
RESULT 2020 RESULT 2020 AF achieved better earnings than comparable AF’s equity ratio was 27.2% at the end of 2020. companies, with an operating margin of 5.5% in The Group had net interest-bearing receivables of 2020. The return on invested capital was 34.8%. NOK 90 million. Unused credit and loan facilities The results were on par with the best companies in at year-end totalled NOK 3,000 million. the reference group defined as Skanska, Veidekke, NCC and PEAB.
OPERATING MARGIN EQUITY RATIO
27.2% 5.5%
NET INTEREST-BEARING RECEIVABLES (DEBT) RETURN ON AVERAGE CAPITAL EMPLOYED (NOK MILLION)
34.8% 90 ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 19 ABOUT AF GRUPPEN AF ABOUT
DIVIDEND HEALTH AND SAFETY
GOALS GOALS AF’s dividend policy is to provide shareholders AF’s goal is to perform all our operations without with a competitive dividend yield. Dividends will injuries, with an LTI rate of zero and zero absence be paid semi-annually. The dividend shall be stable due to work-related illness. AF’s partners are sub- and ideally rise in line with earnings performance. ject to the same requirements as AF itself, and AF AF Gruppen's intention over time is to distribute a includes them in its reported target for lost-time minimum of 50% of the profit for the year per injuries. share as a dividend per share.
RESULT 2020 RESULT 2020 In 2020, AF paid a total dividend of NOK 9.50 per AF achieved an LTI rate of 1.8 and absence due to share for the 2019 financial year. Earnings per share illness of 4.7%. This is on par with the best safety was NOK 8.51 in 2019. Earnings per share was NOK results in the contractor industry. 9.29 in 2020. For the 2020 financial year, payment of a dividend of NOK 6.50 per share is proposed for the 1st half of 2021. The dividend for payment in the 2nd half of 2021 will be announced when the results for the 3rd quarter of 2021 are presented.
DIVIDEND PER SHARE (NOK) LTI-1 RATE
1.8 *
6.50 * Dividend to be distributed in the first half of 2021 is proposed, not approved.
EARNINGS PER SHARE (NOK) ABSENCE DUE TO ILLNESS
9.29 4.6% 20 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
SMASHED THE GROWTH TARGET FROM THE PREVIOUS STRATEGY PERIOD
AF Gruppen's four-year group strategy for the period 2017–2020 was ambitious and growth-oriented. The target of NOK 20 billion in revenues was already reached in 2019 and was thoroughly exceeded when we passed NOK 27 billion in revenues for 2020. The operating margin in 2020 was 5.5 per cent.
The goal was clear when AF began a new to NOK 27 billion in 2020, and the number strategy period in 2017. Revenues were to reach of employees in AF has increased by almost NOK 20 billion within 2020, with a requirement 2,500. This strong growth is explained by both for an operating margin of at least 5.0 per cent. acquisitions and significant organic growth in The AF family was to be expanded with up to both Norway and Sweden. 2,000 new employees, and we were to increase For the past four years, we at AF have our market share in the growing cities in Norway worked actively on innovation and challenged and Sweden. During the strategy period, we have the way we work on a daily basis. More and worked on initiatives that support organisa- more of our work processes have been auto- tional and structural growth, good customer and mated or complemented by new technology, supplier relations, innovation as well as increased and new business areas have emerged. We management capacity and competence. have also focused on further developing our The results show that since 2016, revenues employees and raising awareness of the value have grown from just under NOK 12 billion of diversity at AF.
Revenues 2016 Organic growth 17–20 NOK MILLION 40.6% 12
Revenues 2020 Structural growth 17–20 NOK MILLION 59.4% 27 ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 21 ABOUT AF GRUPPEN AF ABOUT
ORGANIC GROWTH STRUCTURAL GROWTH
AF Anlegg has increased revenues by around 2017 – The acquisition of Kanonaden NOK 1 billion from 2016 and revenues in 2020 was Entreprenad gave AF a position in the growing just over NOK 4 billion. When Nye Veier took over Swedish construction market. Kanonaden responsibility for specific highways in 2016, the reported revenues of around SEK 700 million in civil engineering market changed significantly 2016 and has since grown significantly. with larger contracts, turnkey contracts and closer cooperation with the customer. AF Anlegg 2018 – The acquisition of Helgesen Tekniske has entered into two major road contracts with Bygg (HTB) added up to NOK 400 million in Nye Veier and is in the cooperation phase of the revenues and supplemented the range of Roterud-Storhove project. construction services in Western Norway.
Construction has had organic growth of almost 2019 – The acquisition of HMB expanded the NOK 3 billion since 2016. In percentage terms, scope for the Swedish construction business and growth is evenly distributed between the Bergen gave AF a solid position in the Stockholm region. region, led by LAB Entreprenør, and Greater Oslo. HMB added revenues of around SEK 1,200 million.
Betonmast has had organic growth of just over 2019 – The acquisition of Betonmast, with NOK 1 billion after the acquisition in 2019. revenues of around NOK 6,700 million, gave AF a significant boost in revenues and strengthened In Sweden, AF has achieved around both the Norwegian and Swedish construction SEK 1.5 billion in organic growth since 2016, of business areas. which SEK 0.5 billion is related to the construction business and NOK 1 billion is growth in the civil engineering business in Kanonaden.
Following the establishment of Nes Miljøpark, revenues for the environmental centres, which recycle contaminated material, have increased from around NOK 50 million in 2016 to NOK 110 million in 2020. This corresponds to an increase from 317,730 tonnes to 528,758 tonnes. 22 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
Strategy towards 2024 SAFE AND PROFITABLE GROWTH
AF Gruppen now consists of more than a hundred companies. It is the strength of diversity and breadth of competence that allows AF to undertake the most demanding missions. A shared set of values and an uncompromising attitude to safety and ethics give us a unique competitive advantage.
AF Gruppen has enjoyed solid growth for many region’s most profitable contractor. At AF, we years. When AF sets the course for further are constantly looking for new technology and profitable growth in the coming strategy period, improvements that will increase productivity and we will continue to be curious and challenge have less of an impact on health and the envi- the status quo. The journey towards 2024 shall ronment. We succeed best when the projects are be safe, environmentally friendly, innovative profitable for all parties: for our customers, the and not least profitable. AF shall be the Nordic climate, society, owners and for the employees.
STRATEGIC GOALS
Work-related absence and NOK 40 0 serious injuries Revenue target 7% 20% Operating Return on margin invested capital
... halve relative greenhouse gas emissions and waste volumes that cannot be reused or recycled by 2030. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 23 ABOUT AF GRUPPEN AF ABOUT
MARKET TRENDS
In the 2024 strategy, we have assessed external drivers and trends in the market that we believe are important to address in the way we think and work going forward.
URBANISATION TECHNOLOGICAL ADVANCES Population growth is highest in the most New technology is becoming increasingly central parts of Norway and Sweden. accessible. Growth in the Norwegian and Swedish Digitalisation and industrialisation in the construction and civil engineering markets markets in which we operate provides new is concentrated in the areas with the highest business opportunities. population density. Competence requirements are constantly changing.
GREEN TRANSITION MARKET FLUCTUATIONS Society's climate and environmental focus There will be greater fluctuations in political provides new business opportunities. priorities in the future. Emission requirements are becoming Uncertainty and delays will affect the markets. increasingly stringent. We expect increased investment in public Government and customer requirements can buildings, especially in health and social care. radically change framework conditions and create Increased infrastructure investment is new business opportunities. expected.
COMPLEXITY OF PROJECTS AND BATTLE FOR QUALIFIED CUSTOMER REQUIREMENTS RESOURCES The proportion of large and complex projects The construction industry needs to develop its will increase and this tightens requirements for competitiveness in order to attract resources. the right organisation, management and technical There will be a fierce battle for the best people expertise. in the markets we operate in. Customer requirements will be further tightened, particularly regarding seriousness and environmental focus. 24 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
Strategy towards 2024 STRATEGIC INITIATIVES
AF Gruppen will increase competitiveness and promote profitable growth through four strategic initiatives that will be operationalised in each individual business unit.
Disciplines Climate and and management environment
We aim to be the industry's most attractive AF aims to reduce its footprint and we have set a employer for both women and men, where every- goal of halving relative greenhouse gas emissions one shall have equal opportunities and thrive at and halve waste volumes that cannot be reused work. AF wants to be the place where the best or recycled by 2030. We will continue to clear people have room to fulfil their dreams. We will the past and build for the future, and it will be continue to attract and develop the most talented more important than ever to do so in an environ- people and ensure that everyone has the same mentally friendly manner. Our industry impacts opportunities. We think that greater diversity is the environment, and it is our responsibility to good for both well-being and the working envi- ensure that this impact is as small as possible. AF ronment, but above all it is profitable. Because has extensive experience from projects that set when we are able to harness the power of diver- comprehensive environmental requirements and sity, we gain more perspectives and make wiser has an in-depth understanding of how processes, decisions. material choices and operating solutions impact AF offers countless career paths. Career devel- the environment. We will use our expertise to opment is built up through on-the-job training reduce waste and greenhouse gas emissions in and developing skills in the AF Academy. We aim projects and encourage clients to choose good to have the market's best leadership development environmental solutions. for leaders at all levels. In order to maintain man- We will also be an advocate for the fact that agement capacity, AF also works systematically climate and environmental savings can be profit- with succession planning and evaluation of our able. Innovation and a focus on the environment managers and management groups. go hand in hand. We have no choice but to be Our partnership with educational institutions innovative and find better solutions. AF’s eco- aimed at attracting skilled engineers and workers parks are examples of solutions where materials will continue. The same applies to our work to that previously would have ended up in landfill ensure that AF and our industry is an attractive sites can now be recovered and live on. We will career choice for both women and men with an continue to acquire and attract relevant climate inclusive, safe and good working environment and environmental expertise and develop new, with zero tolerance for discrimination. in-demand climate and environmental services. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 25 ABOUT AF GRUPPEN AF ABOUT
Customers and suppliers Innovation
We can always be better. We will refine our We will be the Nordic region’s most inquisitive cooperation and communication skills and use contractor. AF is known for its inquisitiveness and learning points from clients and suppliers to for being a driving force behind a better, more improve. We want to be the preferred partner future-oriented industry. We respond to good and build long-term partnerships based on ideas from all parts of the business. Everything trust, performance and loyalty. can be improved. We will continue to work on The best partners, those who do not com- digitalisation and better utilisation of data, and promise when safety and ethics are put to the we are constantly on the lookout for new business test, are the ones with which AF wants to work. opportunities. We make demands of those we work with, and Part of the work on innovation involves look- we will ensure that both grow in the process. We ing far ahead, analysing and categorising future succeed best when the projects are profitable perspectives, exploring possibilities and initiating for all of the parties involved. pilot projects to find the future way of working. We will seek early involvement so we can We shall identify productivity improvements, find the best solutions and identify future client development good solutions in-house, and con- needs. AF will have the best understanding of tinue to invest in environments, expertise or tech- the market and clients, be solution-oriented nology that can provide major benefits for AF’s and be the best in the market at solving clients’ project industry. AF’s position and reputation as a acute problems. We will be predictable and challenger and innovator shall be strengthened. practice transparent communication with those with whom we work. 26 ANNUAL REPORT 2020 AF GRUPPEN ABOUT AF GRUPPEN AF ABOUT
RISK MANAGEMENT – WE SHALL ACTIVELY ASSUME RISK THAT WE CAN INFLUENCE
Risk management is an important tool that enables AF Gruppen to deliver good results over time. AF has a systematic approach to risk management in the projects and the units, during both the tender and the execution phases. The aim is not to eliminate risk, but to identify, manage and price risk correctly.
Risk is an uncertain event or action that can have our experience with the customer, contrac- a positive or negative effect on project targets, tual terms and conditions and the extent to such as time, cost, scope or quality. AF Gruppen which the project is in accordance with our works systematically with risk management in all strategy and expertise. For tenders in excess of projects and business units. We desire to actively NOK 100 million, the Executive Vice President assume risk that we can influence, and to ensure for the business area will participate in the risk against or avoid risk that we cannot influence. review, and the Corporate Management Team This approach to risk also contributes to our must approve the tender before it is submit- ability to submit competitive tenders. In addition, ted. Tenders with a contract value in excess we want to have a better decision-making basis of NOK 600 million are also reviewed by the and insight before operative decisions are taken Board of Directors prior to submission. in matters with a high level of risk and a broad During the execution phase, risk reviews range of potential outcomes. Risk management are carried out for large projects every quar- has contributed to fewer loss-making projects ter, with broad participation from the project and increased profitability in general. organisation. The project management is responsible for defining specific and meas- AF’S RISK MANAGEMENT PROCESSES urable measures for handling threats and Risk management and a scenario mentality have exploiting opportunities in the project. become integral parts of all commercial activities The business unit’s management group of AF Gruppen, involving managers at all levels. aggregates the project analyses. A risk analysis A special function for risk management facilitates of the project portfolio is conducted quarterly, the necessary processes related to risk. with a quantitative assessment of the range of AF Gruppen works continuously to improve outcomes for each project, and representatives its risk management tools and processes. Our for the Corporate Management Team partici- development work is now taking shape in the pate in this analysis. This analysis establishes Risk Management 2.0 project, which aims to the basis for the unit’s priorities in the follow- make risk information more readily accessible, ing quarter and illustrates the risk situation in provide enhanced decision support through dig- the unit to the Corporate Management Team. ital platforms and better adapt risk management All the risk reviews at the business unit level to the different business units. The project will are aggregated by the Corporate Management be implemented step by step in several of AF’s Team, and the main points are presented to the business units in 2019 and 2020. Board of Directors every quarter. Risk management at the project level is the foundation of AF’s risk work, and it starts SCOPE OF RISK MANAGEMENT IN 2020 already before a project tender is submitted. The scope of the risk reviews has been stable Various opportunities and threats associ- over recent years, and in 2020, around 180 ated with the project are discussed in the risk risk reviews were conducted prior to submit- review, and various scenarios are considered ting important tenders and 84 quarterly risk for 5–10 predefined risk groups. This may, for reviews of the project portfolios in the business example, include risk related to our capacity, units were conducted. ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 27 ABOUT AF GRUPPEN AF ABOUT
Risk hierarchy The focus on risk management is firmly anchored in all commercial activities, from the individual project to the Corporate Management Team. OVERALL RISK MANAGEMENT
RISK MANAGEMENT OF PROJECT PORTFOLIO
RISK MANAGEMENT IN PROJECTS
1 2 3 4 Tender selection Risk review Management's Risk review in of tenders risk review ongoing project of start-up
TENDER SELECTION TENDER CALCULATION PROJECT START-UP PROJECT EXECUTION Q1
Quarterly Continuous work with risk management in the projects Q4 Review Risk management is performed in all processes ranging from tender management, project execution and the ongoing Q2 management of the projects. Q3 AF GRUPPENAF ANNUAL REPORT 2020
ABOUT AF GRUPPEN ABOUT AF GRUPPEN THE CEO OUR BUSINESS HIGHLIGHTS STRATEGY RISK MANAGEMENT 29 ABOUT AF GRUPPEN AF ABOUT
ENVIRONMENTALLY FRIENDLY STUDENT ACCOMMODATION At the start of the academic year in August 2020, the Student Welfare Organisation of Southeast Norway was able to offer its students 282 new housing units. The new housing units on Campus Bø were built by Betonmast Telemark in solid wood with the passive house standard. A focus on climate and the environment has been central to the project from the cooperation phase until the building was ready for use. This has manifested itself in environmental measures such as geothermal wells for the supply of energy, the reuse of material from the neighbouring site and minimisation of waste from the construction process. 30 ANNUAL REPORT 2020 AF GRUPPEN
QUALITY STUDENT ACCOMMODATION. At Campus Bø in Vestfold and Telemark, students can enjoy wood that breathes, a stable indoor climate and a good study environment. CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 31 CORP. SOCIAL RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
32 SOCIAL RESPONSIBILITY IN AF 34 CLIMATE AND ENVIRONMENT 39 CLIMATE ACCOUNTS 40 SOCIAL CONDITIONS 46 GOVERNANCE - - - - - Suppliers our projects and subcontractors in Code of Conduct Purpose – Goals – Values Group policy and authority matrix must also commit to following our values and requirements for conduct by accepting AF's supplier declaration (see: afgruppen.com/ supply-to-af). Reference is made to "Purpose and the – Goals – Values" "Code as Conduct", of well as the in the principles UN Global Com Group policy and authority matrix roles and principles, AF's Group policy defines in purposes and requirements responsibilities, customers and suppli HSE, the following areas: quality and improvement, risk management,ers, personnel and organisation, communication, procurement,finance, management and financial Code of Conduct and Purpose – Goals – Values The Code of Conduct applies to all employees All and other persons representing AF Gruppen. employees in AF are presented with the Code of Conduct at a course and for new recruits, receive appendixthis as an to their employ ment agreement. Compliance with the Code of Conduct is expected. Several of AF's subsidiar ies have prepared their own codes of conduct that reflect the principles in the Group's Code of Conduct. An important part of our procurement pact. work is ensuring that our suppliers impose the safety quality, ethics, toward requirements same and the environment as we external do. ciples constitute the framework for business activities within all areas and at all levels of the The principles are operating organisation. set out in the where following documents, the first two are available at https://afgruppen.com/ about-af/vision-and-values/: • • • a business model and general principles for corporate governance. The business model is described on page of the 12 annual report. Together with the the business model, prin - -
- - AF GRUPPENAF AF shall be a responsible player that amplifies positive impact positive player that amplifies AF shall be a responsible
ANNUAL REPORT 2020 AF’S OPERATING PRINCIPLES PRINCIPLES OPERATING AF’S WHAT IS AF’S SOCIAL RESPONSIBILITY? RESPONSIBILITY? SOCIAL AF’S IS WHAT in its project operations and minimises negative effects on the and minimises negative in its project operations that provide services We will also and society. people environment, and other scarce resources, consumption of energy contribute to reduced and society. are otherwise useful to the customer and services that nities where we can use our expertise to solve challenges faced by the customer and society. With the support of the AF Gruppen'sBoard, corporate team has establishedmanagement mental activities, we will continue to clear themental activities, past and clean contaminated materials that can gravel andthen re-enter the cycle as clean sand, we are also As a challenger and innovator, stone. constantly looking for new business opportu efficient solutions, and contribute to buildings and other infrastructure being constructed and modernised to use less energy and withstand In AF Gruppen's energy busi climate change. efficient energy use, local alternative energyness, production and monitoring of energy solutions are the actual business concept. In our environ Further development of the servicespectrum and offer servicesAF will continue to develop We will carrythat customers and society require. out civil engineering and construction projects with environmental certifications and energy- tion and regulations, and we shall minimise the and we shall minimise tion and regulations, negative impact on climate and the environment by reducing consumption of non-renewable beresources and minimising waste that cannot recycled. Our employees shall have a safe and where diversity isgood working environment is This valued and harassment is not tolerated. the foundation of all our activities. Be a responsible player First and foremost, we shall manage our own All our businessprojects in a sustainable way. legisla operations shall follow ethical guidelines, AF has a special responsibility where society's Thechallenges can be related to our business. UN's Sustainable Development Goals describe Our socialthe world's challenges and needs. and is linked to theresponsibility is twofold, UN's Sustainable Development Goals as follows:
SOCIAL RESPONSIBILITY IN AF 32
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IT and internal cooperation. The authority Interdisciplinary forum for cooperation matrix is a key document in AF Gruppen's inter- AF has an interdisciplinary forum for topics on nal control and covers responsibilities in the climate and environment that meets 1–3 times Group. The Group policy applies to all business a year and discusses the direction of AF's
units and wholly owned companies in AF Grup- environmental efforts. Plans are underway to CORP. SOCIAL RESPONSIBILITY pen and serves as a benchmark for part-owned increase the meeting frequency of the environ- subsidiaries. The authority matrix applies to all mental forum and to arrange several climate units in AF Gruppen. and environment-related seminars in 2021. There is also an HSE forum consisting of HSE Roles and responsibility managers from each business unit in AF. The CEO Amund Tøftum has operational respon- forums help to maintain policy tools, provide sibility for corporate social responsibility and a common understanding of key issues within this follows his line management, whereby HSE, create a good informal cooperation and each executive vice president is responsible contribute to our development. for his/her respective business area. It is a requirement that business units and projects Internal and external reporting of health, are organised with sufficient competence safety and the environment within health, safety and environment (HSE). Internally, figures related to safety (LTI- Mapping and analysis of risk in connection 1) are reported on an ongoing basis, while with HSE shall be carried out and documented figures on the environment and health (source in all projects – both at the start and during separation and absence due to illness) are implementation. reported monthly. Climate accounts for the Executive Vice President Eirik Wraal has whole AF Gruppen are compiled and reported specialist responsibility for corporate social annually in accordance with the Greenhouse responsibility. Olav Aune is director of HSE, Gas Protocol standard. In addition, a project and is responsible for supporting line manage- has been started to develop a digital platform ment in HSE work, as well as being responsible that can contribute to dynamic follow-up at for HSE and the HSE system in the Group. the unit and project level. AF has also started As of 1 February 2021, Anastasia Wraa was mapping what constitutes green revenue employed as Group Manager Environment, according to the EU's taxonomy for sustaina- and will further develop AF's commitment to ble finance, to enable future reporting. climate and environment.
RESPONSIBILITY AND REPORTING OF CORPORATE SOCIAL RESPONSIBILITY IN AF
Group policy and authority matrix
THE BOARD Purpose – Goals – Values External reporting Overall responsibility
Code of Conduct AMUND TØFTUM CEO
EIRIK WRAAL EXECUTIVE VICE PRESIDENTS OLAV AUNE Specialist corporate social BUSINESS AREAS Director HSE responsibility Operational corporate social responsibility
ANASTASIA WRAA Group manager environment Responsibility Reporting ------At the same time, climate change reg and ment in its tenders. We ment in its tenders. also see that private customers have become more ambitious in their climate requirements. Owners: The is part of the EU's taxonomy EU's action plan for sustainable finance. It is a clas system that will help determinesification how ulatory changes will lead to increased demand for AF Gruppen's services, such as infrastruc ture energy projects, environmental centers, energy-efficient buildings and theplants, recy cling of offshore installations. However, we see that a negative reputationto AF in poses a risk the As climate short term. and the environment become important to our stake increasingly holders, at AF we must be equally clear about the responsibility we want to take. There expectais an increasing Employees: tion among our employees that AF will take a clearer position in the green In addition, shift. it is an important prerequisite for AF to suc ceed in attracting and retaining the best people, both now and in the future. Public and private customers Customers: demand environmentally friendly solutions and adequate reporting. Those who perform well in environmental terms can gain a competitive advantage, as the public sector places ever stricter requirements on climate and environ risks and similar opportunities related to climate change. The analysis and associated preparatory work have also helped to raise awareness of how we with climate work and environment across the Group. The conclusion is that the overall climate risk for AF Gruppen is considered There low. is a risk that higher temperatures and more extreme weather will lead to greater unpredictability and an increased especially risk of accidents, within the civil engineering business. - - - - . In . - 2 AF GRUPPENAF emissions. In emissions. 2 Climate change is one of the greatest societal challenges of is one of the greatest societal Climate change
ANNUAL REPORT 2020 AF's vision is clearing up the and build past CLIMATE AND ENVIRONMENT AS A BUSINESS BUSINESS A AS ENVIRONMENT AND CLIMATE OPPORTUNITY Sweden, it is estimated that the construction engineering industry accounts for and civil around 20 per cent of total CO our time. AF aims to reduce the footprint of its own operations and be to reduce the footprint of its our time. AF aims reduce the use of and delivering services that a leader in developing for our customers and society.energy and other scarce resources addition, the sector contributes to construction addition, indirect emissions through building materials, transport and land use, which are emissions that are mainly attributed to other sectors in the climate We accounts. can also influence the use of materials and the choice of solutions so that renewable energy solutions are used and lifetime emissions are reduced. The industry can therefore greatly influence and contribute to solutions to limit negative climate change. Risks and opportunities associated with the green shift AF Gruppen In 2020, carried out a climate risk regula The physical, analysis. analysis covers markettory, technological, and reputational tunity for AF: good environmental solutions will attract employees, owners and new con tracts, while of willingness to innovate a lack will impair our ability succeed in the market. Climate have and environment thus become a central part of AF's strategic towards work 2024 as one of four Group initiatives. The green shift poses both a risk and an oppor ing for the we future. This means that must remove, clean or eliminate land materials, and energy solutions that are harmful to the and that we environment, must offer services that society needs to meet current and future energy and environmental challenges. direct greenhouse gas emissions from construc direct greenhouse tion in Norway total 2 million tonnes of CO The construction sector accounts for around and 40 per cent of global energy consumption about 30 per cent of global greenhouse gas Statistics Norway estimatesemissions. that
CLIMATE AND ENVIRONMENT AND CLIMATE 34
CORP. SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 35 CORP. SOCIAL RESPONSIBILITY
climate and environmentally friendly an invest- Engineering business area and high growth ment is based on specific screening criteria. A in other activities that have lower greenhouse growing number of investors want to invest in gas emissions. Lower civil engineering activity companies that contribute to the green shift, than the year before, with the resulting lower and AF must clearly communicate how we can consumption of diesel and fewer flights, is also contribute to the transition in order to remain the main reason why absolute consumption an attractive investment object. decreased. The climate accounts also include a separate section with the savings AF Gruppen's Society: Society needs new solutions to cli- demolition and recycling activities represent mate and environmental challenges to prevent for society's greenhouse gas emissions. Reusing
the average temperature from rising more than steel results in 70 per cent lower CO2 emissions the Paris Agreement's target of a maximum than ore-based production. This corresponds
increase of 2° C. The most important chal- to a reduction in emissions of 1 kg CO2 for each lenges have been clarified by the UN through kilo of steel recycled. AF Decom demolished the sustainable development goals. By offering and facilitated the recycling of approximately existing and new services that customers and 19,380 (9,982) tonnes of metal in 2020. society need to achieve their goals, AF has an AF Offshore Decom demolished and facilitated excellent opportunity to gain market share in the recycling of approximately 19,153 (14,782) both new and existing markets. tonnes of steel in 2020. In total, this represents
a reduction of alternative CO2 emissions of HOW AF WORKS WITH CLIMATE around 38,533 tonnes. AF’s environmental cen- AND THE ENVIRONMENT tres have recycled a total of 528,758 (317,730) The business units in AF Gruppen have tonnes of material in 2020. This corresponds
been working on climate and environmental to a reduction of alternative CO2 emissions improvements for many years, but from 2021 of 32,266 (13,195) tonnes. (See the climate AF Gruppen will focus on more coordinated accounts on page 39). and targeted climate and environmental work by including a number of qualitative and Reduction of greenhouse gas emissions quantitative goals in the new Group strategy In the Group strategy, AF has set a goal of halv- towards 2024. The areas where AF Gruppen ing relative greenhouse gas emissions by 2030. has set specific quantitative targets are green- The goal will be quantified per business area so house gas emissions and resource efficiency. that we implement actual changes in operations and achieve real environmental savings instead GREENHOUSE GAS EMISSIONS AND of achieving the goal by changing the service mix ENERGY CONSUMPTION from, for example, civil engineering to construc- AF’s impact on the climate is measured contin- tion. Goals shall also be set and followed up per uously in terms of the amount of greenhouse unit for anchoring close to the daily operations
gas emissions, i.e. tonnes of CO2 equivalents. where the environmental impact takes place. We submit annual climate accounts (see page 39), which summarise direct emissions from our projects within civil engineering, construc- tion and demolition on land and offshore. In 2020, AF had a carbon footprint of 1.8 (2.3)
and total emissions of 48,528 tonnes of CO2 equivalents, which represented a reduction of
2,810 tonnes of CO2 equivalents compared with 2019. In AF's climate accounts, the use of diesel FROM AF’S GROUP POLICY in civil engineering equipment is the largest All impact on the external direct source of CO2 emissions. The decline environment shall be kept to in the carbon footprint, which is defined as a minimum. tonnes of CO2 equivalents per NOK million in revenues, is related to a decline in the Civil - The European Commission has launched In AF the projects are planned so that as CLIMATE AND ENVIRONMENTALLY FRIENDLY FRIENDLY ENVIRONMENTALLY AND CLIMATE SERVICES AND PRODUCTS AF has started mapping what constitutes green revenue according to the EU's taxonomy Reduction of waste volumes that cannot be reused recycled or In AF's strategy, we have decided to halve the amount of waste that cannot be recycled. We have worked on and measured source separa tion in the and now over several years, projects we are raising the To achieve bar even higher. we our goal, will reduce the amount of waste produced at the construction site (at the top of the pyramid), and prioritise the fractions that are for incineration or to landfill. typically sent Each unit shall prepare specific action plans to reduce non-recyclable waste. or recycled, and the industry can contribute to and the industry or recycled, forthe storage of carbon in building materials, example by using more timber. In other words, input factors in our projects could be a positive contribution to battle climate changes. an action plan for the circular economy based on the reuse so that and recycling of materials, as few resources as possible are lost. Central to the action plan is a framework directive that measures to reduceranks waste volumes. The waste hierarchy illustrates the desire to treat waste as close to the top of the hierarchy as unnecessarypossible, and to avoid disposal of waste in landfills. little waste as possible is created, and so that the waste can be sorted to the for recycling greatest possible To facilitate extent. recycling, the source separation rate at all our business units is measured, and this rate represents how much of the waste from the activities is sorted The for recycling. goal at AF is to sort 80 per cent of waste, well above the current government requirement of 60 per cent. AF's environmental centres recycled a total of tonnes of material in 2020. (317,730) 528,758 This corresponds to a recycling rate of 86 per cent, well above the target of 80 per cent.
- Regulatory requirements Regulatory
96% AF GRUPPENAF
D 89%
R 91% ANNUAL REPORT 2020 C engineering projects) Comprehensive planning of road paths to reduce mass excavation and associated transportation Use of autonomous machines that prevent idling and optimise work performance Other sources of fuel, such as hydrogen and biodiesel Electric machinery at construction sites (climate-neutral construction and civil SOURCE SEPARATION RATE SEPARATION SOURCE RESOURCE EFFICIENCY AND CIRCULARITY AND EFFICIENCY RESOURCE tion and civil engineering industry, and basedtion and civil engineering industry, construction and demolition projectson volume, are the largest source of waste in the EU. The EU's goal is for a minimum of 70 per cent of construction and demolition waste to be reused Building materials account for over 80 per centBuilding materials account for over 80 per of greenhouse gas emissions from the construc Part of the work to be done in the future is toPart of the work to be further develop reporting and follow-up of greenhouse gas emissions at project and unit level so that we can prioritise the right measures as possible.to reduce emissions as quickly Potential measures we are looking at to reduce our direct greenhouse gas emissions: • • • • CLIMATE AND ENVIRONMENT CONT. ENVIRONMENT AND CLIMATE 36
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The waste hierarchy The waste hierarchy illustrates the desire to treat waste as close to the top of the hierarchy as possible, and to avoid unnecessary disposal of waste in landfills.
WASTE REDUCTION REDUCE WASTE VOLUMES
REUSE SEE OPPORTUNITIES IN REUSE
MATERIAL RECYCLING ASPIRE TO SEPARATE WASTE AT SOURCE
ENERGY UTILISATION MINIMISE INCINERATION
AF aims to halve DISPOSAL IN LANDFILLS the volumes of AVOID DISPOSAL IN LANDFILLS waste that cannot be recycled by 2030 ------The management system for environ Several business units are also certified AF is affiliated with the extended producer COMPETENCE AND CERTIFICATION AND COMPETENCE wegian Green Building Council, a non-profit member association for increased sustainabil ity in the industry. mental work at AF follows the principles of the AF 14001. environmental standard ISO in different geo activities conducts various takes placegraphical areas and certification at a decentralisedlevel. The following companies are certified: AF Decom, AF Byggfornyelse, AF Offshore AF Anlegg, Kanonaden Decom, BetonmastEntreprenad AB, AF Bygg Göteborg, AS, Consolvo AS and Strøm Gundersen AS. under the Lighthouse scheme. Environmental This applies AF Bygg Oslo, to AF Nybygg, Entreprenør AS, Åsane LAB AF Eiendom, Byggmesterforretning AS and Haga & Berg Entreprenør AS. responsibility company NORSIRK AS and thus its producer responsibility for packaging. fulfils This is an international scheme that is to help ensure the of returnfinancing schemes for used AF is also a member of the packaging. Nor fication and improving energy efficiency in and improving energy efficiency fication the the marine sector. In 2020, unit supplied systems and equipment for the electrification of 33 ferries, which corresponds to around half of the Norwegian market. both in con Several of AF’s business units, have struction and civil engineering, employed and further trained resources with environ mental expertise to work on optimising the environmental impact of projects. The goal is for the footprint of project activities to be as small as possible. Knowledge of the climate and environmental impact of each individual business unit shall be decentralised. With effectfrom 2021, the Group has a climate and environment function which will facilitate good reporting, as well as increase knowledge about climate and environment in AF. AF AeronMollier contributes to reducingAF AeronMollier contributes greenhouse gas emissions through electri ------AF GRUPPENAF ANNUAL REPORT 2020 AF Environmental Base is pur Vats AF Environmental AF’s environmental centres (Rimol, Jølsen AF’s environmental centres (Rimol, BREEAM is an environmental certification BREEAM is an environmental certification delivers ener AF Energi og Miljøteknikk Civil Engineering delivers projects relatedCivil pose-built for handling offshore installations and other marine structures. At Miljøbase ships and offshore are installations Vats, demolished separated and at source for recy The cling. port is approved in accordance with ISPS regulations. ting sand on slippery winter roads is a good example of the use of these materials and new business opportunities in the circular econ AF envisages establishing Going forward, omy. more centres in both Norway environmental and Sweden. ures must be profitable for the customer in terms, but also for the financial environment. The utilise solutions will such as local energy, which would otherwise surplus heat, be lost. and Nes)materials for reuse, clean which Recycledwould otherwise grit go to landfill. gy-efficient solutions, energy plants, local energy production and follow-up of energy solutions through monitoring, operational optimisation and service The contracts. meas ture hydropower for water treatment plants, Several of the and wind power. projects, for example in foundation work and landslide contribute protection, to society's climate adaptation to deal with the increasing degree of extreme weather. how climatefor buildings that classifies and environment friendly a building is in both an construction and use. AF is experiencing increased demand for BREEAM certified buildings and we are constantly working to ensure sufficient and good competence in BREEAM. tribute positively to the green shift and thus can be reported as green revenues. to railways and tramways and infrastruc for sustainable Thefinal definition finance. of what is considered green revenues will be available in the second quarter of 2021 and will set the basis for future reporting. An early survey based on the EU's preparatory work that con shows that AF has several services CLIMATE AND ENVIRONMENT CONT. ENVIRONMENT AND CLIMATE 38
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CLIMATE ACCOUNTS
CORP. SOCIAL RESPONSIBILITY A AfA Gruppen’s climate accounts consist of two main components: the first is energy A consumption and associated emissions, and the second is recycled materials and metals, and emission savings compared to corresponding conventional production.
ENERGY CONS PTION AND E ISSIONS ENERGY CONS PTION AND E ISSIONS ENERGY CONS PTION AND E ISSIONS Category C E . E CO E CO Category C E . E CO E CO Category C E . E CO E CO P I P I P D I I D I B D I B B P P P CO CO COA A A O O O B B B C C C T T T
D D D D D P P P T T T
A A A C C B C B B L L L T T T
CO CO CO CO COC CO CO NO C CO NO C CO NO 1) Energy equivalents are calculated for the core operations (direct and indirect emissions) to illustrate the annual energy intensity of AF Gruppen's activities. 1) 2) Energy equivalents are calculated for the core operations (direct and indirect emissions) to illustrate the annual energy intensity of AF Gruppen's activities. 1) GreenhouseEnergy equivalents gas emissions are calculated with warming for the corepotential operations equivalent (direct to andCO2 indirect emissions) to illustrate the annual energy intensity of AF Gruppen's activities. 2) 2) Greenhouse gas emissions with warming potential equivalent to CO2 Greenhouse gas emissions with warming potential equivalent to CO2
CO SAVINGS BY SORTING AND RECYCLING CO SAVINGS BY SORTING AND RECYCLING CO SAVINGS BY SORTING AND RECYCLING
R A E R A E E R CO A E CO E CO CO E CO CO D A D A O D
D A D A O D D E CO A D A O D CO E CO CO E CO CO E CO
E CO 3)E CO The recycling of contaminated mass and materials produces less CO2 emissions compared to conventional extraction and production of aggregate. 3) 3)4) The recycling of contaminated mass and materials produces less CO2 emissions compared to conventional extraction and production of aggregate. TheRecycled recycling steel of has contaminated 70 per cent less mass CO and2 emissions materials than produces ore-based less production, CO2 emissions which compared implies toa reductionconventional of 1 extractionkg of CO2 for and each production kilo of steel of aggregate. recycled. 4) 4) Recycled steel has 70 per cent less CO2 emissions than ore-based production, which implies a reduction of 1 kg of CO2 for each kilo of steel recycled. Recycled steel has 70 per cent less CO2 emissions than ore-based production, which implies a reduction of 1 kg of CO2 for each kilo of steel recycled.
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of suppliers who are of suppliers who are with comply willing to our ethical guidelines. AF shall only make use FROM AF’S GROUP POLICY • REPORTING that they can therefore be Potential avoided. undesired incidents are identified risk through and preventive analysis, barriers are estab lished so that the risk is eliminated or reduced to an acceptable level. The most important measurable parameter for safety work at AF is the LTI-1 rate. The LTI-1 rate is defined as the number of lost time inju the ries, number of serious personal injuries and the number of serious personal injuries with permanent disabilities per million man- and this includes our own employees, hours, subcontractors and suppliers are who injured The in our projects. injury rate has shown a positive trend throughout the years, from an rate LTI-1 of around 20 for the Norwegian rate operations in the to an LTI-1 early 1990s, in 2020. This rate of 1.8 (1.2) represents 39 Two of the (22) H1 injuries in 2020. accidents in 2020 had a fatal outcome. In February, a tinsmith died after a fall at a construction He site in Nordhordaland. was in Alversund - - - - AF GRUPPENAF Everyone who works on AF projects shall have a safe andEveryone who works on AF projects
ANNUAL REPORT 2020 ble and desirable. The a general challenge industry has with work-related crime – for example through undeclared employee work and when basic rights are lacking. crimination. Strong competition creates pressure on margins, and can lead to pressure on employees to work beyond what is justifia The safetybasic idea behind work at AF is There is a lot of energy in play. The sources of danger and the risk associated with these must be identified and adequate preventive barriers must be established to ensure the safety and health of both our own employees and those of subcontractors. It is a male-dominated industry with a risk of conscious and unconscious gender dis A A WORKPLACE SAFE • AF has provisions to ensure employees' physical health and safety, as well as rights in the employment relationship. The regulations apply to our own employees, subcontractors and suppliers in all our projects. • secure workplace. We shall have a good and equal working environment, and equal a good shall have We workplace. secure of our employees in accordance withand we shall safeguard the rights human rights.applicable legislation and international AF has an uncompromising attitude towards health and safety. The avoid inju goal is to illness and ailments due ries, to the working and in particular to avoid work environment, accidents that result in serious injuries and sickness absence. AF imposes the same strict safety on its subcontractors as on requirements its own organisation. that all undesired incidents have a cause, and The construction and civil engineering industry has some inherent risks associated with work ing conditions that we must take into account: • •
SOCIAL CONDITIONS 40
CORP. SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 41 CORP. SOCIAL RESPONSIBILITY
employed by a subcontractor to Helgesen LTI-1 RATE Tekniske Bygg (HTB). In July, an employee of a subcontractor to Pålplintar died in a crush- ing accident when moving a concrete element
1.8 in Nykvarn in Sweden. The accidents have
been investigated and measures and barriers have been implemented to prevent similar accidents from happening again. The increase in the LTI-1 rate in 2020 is mainly driven by incidents in Betonmast and Sweden.
Management system and tools for learning and improvement AF has a structured and uniform system for health and safety work. All undesired inci- dents and circumstances are registered and dealt with in the non-conformance system Synergi Life or similar systems in order to LTI -2 RATE find the underlying causes and measures for improvement. There is a strong willingness 10.0 for continuous improvement, and in 2020 almost 43,136 (36,762) incidents and circum- stances (RUH) were reported.
Emergency preparedness and investigation AF is always prepared for serious accidents, and has an emergency preparedness system in place in each project and overall at group level. * This shall ensure good handling and follow-up, as well as reduction of the adverse effects. The * 2019 numbers is excl. Betonmast most serious incidents are followed up by sub- sequent investigations in which the Corporate Management Team participates. Investiga- tion is a high priority at AF. The purpose of the investigation is to identify improvement ABSENCE DUE TO ILLNESS opportunities and measures that will prevent similar conditions from reoccurring. Strategic work and digitalisation The Group strategy towards 2024 continues 4.6% with the goal for AF Gruppen to have LTI-1 = 0 and 0 work-related absence. Despite a low LT1 value in relation to comparable companies, AF Gruppen still experiences too many personal injuries. Work to prevent injuries is ongoing, and among the latest measures and tools we have introduced, we can highlight: ------When subcontractors are approved and The of goods and services procurement WORKING ENVIRONMENT, EMPLOYEE EMPLOYEE ENVIRONMENT, WORKING RIGHTS EMPLOYEES' AND DEVELOPMENT languages. In addition, AF has developed AF languages. In addition, and uses the Health Risk programme, which ena given access to a project, they access to a project, are given followed up reactively through spot checks and controls to verify that the activities are carried out in accordance the with regulations and the applicable The guidelines. most important weverifications carry out are: ification moduleification to assess possible suppliers. Human rights and measures against work- against measures and rights Human related crime The construction industry has some general challenges related especially to human rights, related to working conditions. It is important that major players such as AF take responsi bility for ensuring that the entire value chain follow ethical guidelines and basic human AF is committedrights. to complying with the human rights principles of the UN Global Compact, and has strong systems in place to prevent our projects from committing work-re lated crime and violations of workers' rights. accounts for around 65 per cent of our reve nues. AF is responsible for the entire contract pyramid for our projects, and suppliers must commit to following our ethical AF guidelines. Gruppen's Supplier Statement is a mandatory contract appendix to procurement agreements. AF Gruppen has zero tolerance for behaviour that violates the provisions of the supplier's statement. We both proactivelywork and reac tively to ensure compliance with this policy, and allow only two levels of subcontractors to ensure acceptable transparency. Proactively, AF uses and a proprietary StartBANK, prequal bles us to better identify and influence health risks. AF's policy regarding human rights, working conditions and employee is setdevelopment out in the Code of Conduct and Purpose – Goals – Values. - - - CONT. - - AF GRUPPENAF ANNUAL REPORT 2020 tive health impact. ment that will ensure that important and critical risk issues reach the sharp end of our projects – the skilled worker. Testing of body equipment that measures and warn when hazardous levels of e.g. noise, air values/gas and vibrations are The present. purpose is to enable our skilled workers to reduce and avoid unwanted exposure to situations that can have nega AF has an internal corporate health service To ensure that there is knowledge of what Mandatory use of gloves and safety goggles for everyone working in the project. Safetalks and personal safety involvement (PSI) in advance of work situations to strengthen the risk and safety awareness of skilled workers. AF Message Portal – communication tool that allows employees send safety-related to messages to predefined and where groups, any message is automatically translated into the recipient's specified native language. – web-basedCLARA tool for risk manage HEALTH • ing, and what measures can prevent health ing, injuries, AF has health cards for the 15 most relevant types of exposure available in several tor of health work, and our rate was 4.6 (3.8) and our rate tor of health work, was 4.6 (3.8) absence per cent in 2020. AF’s due to illness is considered in the low construction and civil Some engineering industry. of the absence is work-related, the and systematic long-term work to achieve the goal of a “healthy situa The tion” has top priority. goal is to have zero work-related absence. that assists with preventive health work. They monitor employee health through regular health check-ups, and assist the sickness absence committees in the business units to ensure with sickness absence that everyone is followed up well. employees can be exposed to while work AF works continuously to ensure that all employees experience job satisfaction and Absence well-being. due is an indica to illness • • • • SOCIAL CONDITIONS SOCIAL CONDITIONS 42
CORP. SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 43 CORP. SOCIAL RESPONSIBILITY
• Control of pay and working conditions Employment conditions among suppliers, subcontractors and AF has an employee representative and safety employment agencies, both by the projects organisation that ensures that the employ- themselves and with the assistance ees have an opportunity to influence their of AF Gruppen’s WR Crime Consultant. working conditions. There is a special Works • Access control for the projects. Council and Working Environment Commit- • Internal audits are conducted at all levels tee with representatives from the Corporate of the organisation. Management Team, the employees and senior • Safety rounds are conducted weekly for employee representatives. New guidelines that all projects to ensure compliance with the entered into force in 2018 ensure that salaried regulations for the working environment. workers, skilled workers and both genders rep- • Audits are conducted of subcontractors resent the employees on the Board of Directors. and suppliers to ensure that they have good In line with the UN's Global Compact, AF systems with respect to working conditions facilitates the conditions for craftsmen and and ethics. production workers to join a union, and over 90 per cent are therefore unionised. If work-related crime is detected among our Laws, regulations and collective agreements subcontractors, this will be classified as a red are framework conditions that AF Gruppen matter and the matter will be investigated. adheres to, and this applies to both salaries and an action plan based on the survey. and this is reflectedAF is an attractive employer, inby the Universum Student Survey 2020, which AF Gruppen was ranked as the 13th most attractive employer among engineering In the Universum Professional Surveystudents. up from AF came 11th, for working people, 2020 AF wants to attract the best15th place in 2019. talent both among experienced workers and new and has a strategic goal towards 2024graduates, in Universum's awards.to be among the top five The best people – recruitment, development employees of training and AF will increase strategic cooperation with educational to strengthen access to institutions skilled One measure resources. that has been implemented in the last two years is the "AF collective" competition where the winners are AF GRUPPENAF ANNUAL REPORT 2020 The Employee Satisfaction Survey (ESS) that was last conducted shows that in 2019 our employees are very satisfied with their AF own work and with AF as their employer. achieved a scale 5.2 on where from 1–6, 6 is the and has as a strategicbest, goal towards 2024 to be above The ESS > 5. survey shows that the on-the-job development opportunities are the of satisfaction on the most important driver job for both skilledand salaried employees. The ESS consists of a number of questions within the collaboration and areas of satisfaction, and each business unit draws up management, working time for our employees.provisions Negotiations on salaries are carried out with the trade and are unions, laid down in AF's Code of Conduct. Satisfaction and attractiveness 44
CORP. SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 45 CORP. SOCIAL RESPONSIBILITY
Percentage of women at AF 9.8%
offered a year in shared housing free of charge. orientation, age or disability. This is of mutual benefit where the students get The recruitment share by gender shall reflect the opportunity to learn from and be inspired the recruitment basis, and the relative share by the industry's foremost professionals, and of promotions shall be equal for women and where AF can be challenged by curious stu- men. AF has a long-term goal of increasing the dents who will help shape the future. proportion of women among salaried employ- Developing the knowledge and competence ees to 40 per cent, and the total proportion of of our employees is the most profitable invest- women to 20 per cent. ment we make. The most important tool for AF’s work on diversity, including through the promotion of professional development is the Diversitas network and #HunSpanderer, practical training in the line hierarchy. AF also has contributed to a sharper focus and change offers formal training through the AF Acad- of attitudes related to unconscious discrimi- emy and external continuing education. The nation. Among other things, gatherings have breadth of AF’s centres of expertise provides been arranged for many senior employees a good foundation for professional develop- where unconscious discrimination and any ment and career opportunities throughout the personal experiences have been discussed. Group. AF has a decentralised decision-making In 2020, the proportion of women in AF was structure in which capable employees are given 9.8 (9.4) per cent, with 18.9 (19.4) per cent of an opportunity to take responsibility early on. salaried staff and 1.6 (1.4) per cent of skilled AF’s goal is to develop managers through inter- workers. At the end of 2020, AF has one woman nal training, and around 80 per cent of today’s and six men in the Corporate Management managers have been recruited internally. Team. The Board of Directors comprises four Over the past year, AF has intensified its focus women and six men. AF's long-term strategic on apprentices by motivating more people to goal is to increase the proportion of women choose vocational subjects through the infor- among salaried employees to 40 per cent and mation campaign "Dreams can become reality" the total proportion of women to 20 per cent. which has been shown across social media. We have worked more closely with schools and counsellors in rural and urban areas (Digitalt Rådgivertreff in autumn 2020) to remove preju- dices among parents related to the construction industry. AF has a strategic goal towards 2024 of FROM AF'S GROUP POLICY a proportion of apprentices > 7 per cent and that • AF shall facilitate more than 60 per cent of our skilled employees employee and career holding a certificate of completed apprenticeship. development and internal mobility as well Equality as emphasise gender It is a central principle at AF and part of the balance when recruiting. Code of Conduct that recruitment, employ- Employees shall be able ment, training, pay, promotion, punishment to thrive and perform and other working conditions shall be handled throughout life’s phases. without regard to friendship, ethnicity, skin colour, religion, nationality, gender, sexual - - - - - HSE Forum for questions relatedHSE Forum for questions to HSE legislation Personnel Forum for safeguarding employee rights WR Crime Forum for work to counteract work-related crime Purchasing Forum for questions related to business ethics Intercompany network organisations have Intercompany network organisations have INTERNAL CONTROL AND RISK RISK AND CONTROL INTERNAL MANAGEMENT porate Team beforeManagement the binding offer is submitted. If thevalue tender exceeds the NOK 100 million, offer must be approved by the Corporate Management Team, and if it exceeds the offer NOK 600 million, must be approved by the Board of Directors. tified. The management system contains The management system contains tified. risk assessments and procedures the plans, to ensure uniform man that are required agement of the various projects, and that the activities are carried out in accordance with the Group’s business model and ethical Internal audits of all framework conditions. business units are carried out to ensure ade quate compliance. AF has comprehensive systems in place for internal control and risk management. The systems are reviewed annually by both the auditor and the Board's Audit Committee. a risk reviewFor all major tenders, must be carried a representative out with from the Cor tion and the transfer of experience across the various units and to ensure compliance with the requirements throughout all of AF: • • • • management All of AF’s business units have systems, and many of them are ISO-cer manager. They meet regularly through AF’s network organisation for work-related crime, WR Crime. been established to create arenas for coopera - - - - AF GRUPPENAF
AF's credibility and competitiveness are based on trust, and trust, on based are competitiveness and credibility AF's
ANNUAL REPORT 2020
we must therefore have an uncompromising attitude to ethics and have an uncompromising attitude we must therefore we work with.make clear demands on everyone AF has an operations supervisor course COMPLIANCE THROUGH THE THE THROUGH USE COMPLIANCE SYSTEMS MANAGEMENT OF TRAINING AF has introduced organisational and structural measures to ensure that AF only Among other cooperates with serious actors. things, there a position in the is Group that has work-related crime as its speciality, and each business unit has its own seriousness ductory course. The course ensures that all the employees are aware of what requirements and expectations apply, and it is an important instrument for building a corporate culture with high ethical standards. that covers subjects such as purchasing, HSE and personnel management. The management courses at AF include “dilemma training” and other attitude-forming tasks to ensure that AF's guidelines are practised AF uniformly. also arranges a self-developed course in the prevention of work-related crime at least twice Furthermore, all subcontractors must a year. complete a mandatory HSE course before starting an AF project. dates for acquisition, decisive decisive datesimportance for acquisition, is placed on whether the corporate company’s culture and core values are in accordance with those of AF. Employees at AF are introduced to our Code of Conduct and core values at a mandatory intro agement Team to our projects and employees. Our employees represent AF Gruppen in all and it is essentialbusiness contexts, that they identify with AF’s Code Suppliof Conduct. ers and subcontractors are also required to observe the Code through AF’s of Conduct Supplier Statement. When assessing candi Internal control and compliance with Group policy are anchored in the Board of Directors, and is exercised through the Corporate Man GOVERNANCE 46
CORP. SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 47 CORP. SOCIAL RESPONSIBILITY
In the execution phase of the projects, the and external parties are entitled notify, and units themselves are responsible for ongoing the whistleblower shall be protected from follow-up of risk, and for larger projects, quar- retaliation. The notification can be open or terly risk reviews shall be carried out together anonymous, and both the notification and with representatives from the Corporate Man- identity of the whistleblower will be handled agement Team. confidentially. Notification can be made to an immediate superior in the line organisation, BRIBERY AND CORRUPTION to a manager at a higher level, by e-mail to AF has zero tolerance for price collusion, the Whistleblowing Committee, or by sending corruption and bribery. This means that an electronic form from www.afgruppen.no/ employees shall not give or receive gifts and varsling. In the last-mentioned case, the noti- other benefits that might be designed to create fication is sent to an external company before doubt about the integrity of AF Gruppen and the Whistleblowing Committee receives it and compliance with current regulations. Our follows up in accordance with AF’s routines. Code of Conduct also forbids the Company's An anonymous whistleblowing option is also employees to discuss, propose or enter into provided. agreements with competitors that may affect The principles for handling whistleblow- the competitive situation. ing cases in AF are that all inquiries must be In accordance with AF's corporate policy taken seriously and dealt with immediately. and authority matrix, all contracts shall be Anonymous whistleblowing must be taken in writing and signed by at least two repre- just as seriously and must be dealt with. All sentatives of AF. This reduces the risk that whistleblowing cases are confidential, and individuals will be offered, or choose to accept the whistleblowing system must be able to be bribes. used without fear of consequences, reprisals or retaliation for whistleblowing. The whis- ECONOMIC CRIME tleblower must also receive feedback within a AF Gruppen has zero tolerance for economic reasonable time about the situation that has or financial crime, and strict requirements been notified (unless the notice was submitted have been introduced for invoice processing anonymously). as a barrier to embezzlement and financial irregularities. Incoming invoices are processed electronically, and they must be approved and authorised in accordance with the authority matrix. Payments must also be approved by two persons. Furthermore, AF shall handle tax and duties in a responsible manner in accord- AF’S WHISTLEBLOWING COMMITTEE ance with applicable laws and regulations. COMPRISES Olav Aune, Director of HSE and AF Gruppen has a special policy related • Quality (Committee Chairman) to price-sensitive information and maintains ongoing control of transactions with shares in • Hilde Slørdahl Conradi, AF carried out by the Company’s employees company doctor and their related parties. Abuse of price-sen- • Arne Sveen, chief employee sitive information will result in police charges representative/chief safety and a dismissal. representative • Sigrunn Wangen, Human NOTIFICATION OF CENSURABLE CONDITIONS Resources Manager AF has procedures and routines related to the • Christoffer Fjellheim, Director of notification of censurable conditions, including Procurement and Legal the violation of laws and ethical guidelines. Both our own employees, contracted personnel - See also Principle 4See also Principle centage of women at AF, from 10 per cent as of year end as of year 10 per cent from AF, at of women centage Team Management Corporate The 20 per cent. 2020 to working make are actively to organisation and the entire on p. Read more everyone. for employer AF an attractive 40 (Social. conditions) - prequali and suppliers must undergo subcontractors All and up suppliers on an ongoing basis, follows AF fication. suspect actors practice unethical who we may excludes conduct. of the skilled than 90 per cent in units whollyMore workers AF participates unionised. in collective AF are by owned this where all levels and at all employees for bargaining AF also has a well-functioning employee is relevant. 40 (Social on p. Read more organisation. representative . conditions) and working the pay verifying for AF has a procedure agencies. and employment subcontractors at conditions Inspecific actors 2020, AF blocked comply who did not working- to conditi ethical guidelines related with AF’s the suppliers before identified were conditions The ons. 40 on p. Read more AF. by contracted in question were (Social. conditions) of all the em- contracts the employment AF examines agencies as a and employment of subcontractors ployees No actual of the Seriousness of instances result Initiative. suspected or identified been uncovered, child labour have of our suppliers. any of our projects or at in any 40 (Social conditions). on p. Read more of Conduct they when the Code must sign employees All and participate in an introductory recruited, course are strategy The Conduct of is reviewed. which the Code at the per to increase 2024 includes specific goals towards AF has laid down its attitudes and principles concerning its attitudes AF has laid down of the Code documents: human rights in fundamental policy corporate Conduct, and Purpose-Goals-Values. Action AF GRUPPENAF The United Nations Global Compact is based on ten principles in the areas of human of human areas principles in the is based on ten Nations Global Compact United The the to and anti-corruption. the environment Adherence conditions, working rights, their businesses operate do their utmost to entails that companies UN Global Compact principles: the ten with in accordance Relevance AF to AF shall have a working environment a working environment AF shall have is no prejudice, there where abuse or verbal discrimination, to principles related persecution. AF’s in the Code laid down are discrimination of Conduct. AF does not make use of child labour in must not make use and we its projects, (particularlyof companies transnational product and service have that companies) exploitation chains in which the economic occur. may of children AF does not deal with companies that that AF does not deal with companies human rights to way in any contribute violations. of the organisation AF facilitates collective the right to and employees, and respected. is recognised bargaining in conditions pay have employees AF’s - legislati with the national accordance unions. with trade on and agreements undertakeAF uses only suppliers that with our ethical guidelines, comply to collective statutorysatisfy requirements, and internal requirements agreement AF. at requirements AF Gruppen complies with all the current with all the current AF Gruppen complies - recogni and respects internationally laws we of where regardless sed human rights, operate. ANNUAL REPORT 2020 the elimination of the elimination in respect of discrimination and occupation employment the effective abolition of the effective and child labour, the elimination of all forms of all forms the elimination and compulsory of forced labour, Businesses should uphold of association the freedom recognition and the effective collective to of the right bargaining, make sure that they are not they are that sure make in human rights complicit abuses Businesses should support and respect the protection recognised of internationally and human rights, UN GLOBAL COMPACT GLOBAL UN WORKING CONDITIONS WORKING PRINCIPLES HUMAN RIGHTS HUMAN 6 5 4 3 2 1 48
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PRINCIPLES Relevance to AF Action
ENVIRONMENT
Businesses should support AF works continuously to reduce its impact on AF requires that a risk analysis shall be conducted 7 a precautionary approach to our environment. Every one of AF Gruppen’s prior to the start-up of any project. Environmental environmental challenges, companies and business units has its own risk is an element of this analysis. Risk analyses goals for the external environment. AF shall have been conducted in accordance with the also comply with the main principles of the ISO corporate policy in 2020. 14001 environmental standard. Read more on p. 26 (risk management).
undertake initiatives By focusing on the environment, energy and AF is continuously developing its range of 8 to promote greater recycling, we will safely remove and eliminate services. The source separation rate and carbon environmental materials, earth and energy solutions that footprint are parameters that are measured in responsibility, and are harmful to the environment. Our services AF’s projects, and focusing on these parameters and solutions should make it possible for our promotes greater environmental responsibility customers to take greater responsibility for the in the organisation as a whole. In addition, AF environment. has prepared several business areas that can contribute to a circular economy. Read more on p. 34 (Environment and climate).
encourage the development One of AF’s core values is entrepreneurial AF has developed unique technology that 9 and diffusion of spirit. We will offer services and solutions that enables the decontamination and reuse of conta- environmentally friendly meet the environmental challenges of today minated materials at our environmental centres. technologies and tomorrow through our environmental Energy conservation services and environmen- competence. tally friendly buildings are a range of services that are under constant development at AF. For offshore activities, the Environmental Base at Vats has been established as an approved and certified reception facility for recyclable materials. Read more on p. 34 (Environment and climate).
ANTI-CORRUPTION
Businesses should work AF aims to be trustworthy. The Company has an It is expected that all employees comply with 10 against corruption in all its uncompromising attitude towards safety and principles that are embedded in our Code of Con- forms, including extortion ethics. AF’s Code of Conduct describes our duct, which includes anti-corruption principles. and bribery attitude towards corruption, price collusion and No instances of corruption, including blackmail bribery. and bribery, have been identified in 2020.
An approval requirement for the engagement of subcontractors and suppliers is compliance with the current laws and regulations related to corruption in the past, including compliance with the tax laws.
Read more on p. 46 (Governance). 50 ANNUAL REPORT 2020 AF GRUPPEN CORP. SOCIAL RESPONSIBILITY
SLIDING BRIDGE PROTECTS DRINKING WATER Along the new E39 from Kristiansand to Mandal, AF and Kruse Smith are building the new Rossevann bridge without any concrete work being carried out over water. Using the incremental launch method, the bridge is built from one side and pushed outwards. An assembly line consisting of both a bridge and reinforcement plant is both an efficient and environmentally friendly way of constructing a bridge. The method, which so far is little used in Norway, protects the drinking water of 50,000 people in Kristiansand. CORPORATE SOCIAL RESPONSIBILITY SOCIAL RESPONSIBILITY IN AF CLIMATE AND ENVIRONMENT SOCIAL CONDITIONS GOVERNANCE 51 CORP. SOCIAL RESPONSIBILITY 52 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS
AS CLEAN AS EVER. Chemical substances and alkaline concrete do not reach the Rossevann drinking water outside Kristiansand. BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 53 BUSINESS AREAS
BUSINESS AREAS
54 CIVIL ENGINEERING 58 CONSTRUCTION 62 BETONMAST 66 PROPERTY 70 ENERGY AND ENVIRONMENT 74 SWEDEN 78 OFFSHORE AF Anlegg JR Anlegg Transport Målselv Maskin & Norway CIVIL ENGINEERING CONSIST OF CONSIST ENGINEERING CIVIL GEOGRAPHIC PRESENCE GEOGRAPHIC
275 293
4.7% 6,709 5.0% 2018 5,861 7,664 331 2020 2020 20 20 NOK MILL. NOK 20 20 373 376 6.5% 6.5% 2019 5,787 5,424 20 20 20 20 0 AF GRUPPEN GRUPPENAF AF 0 000 000 000 000 000 000 2 000 000 00 00 00 200 00 OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING ORDER BACKLOG ORDER 315 331
7.6%
2020 8.0% 4,157 6,709 4,157 2020 ANNUALANNUAL REPORTREPORT 2020 2020 20 20 1,479 20 AF Gruppen 5,510 20 0 CIVIL ENGINEERING KEY FIGURES KEY EMPLOYEES REVENUES REVENUES NOK MILL. 000 000 000 000 2 000 000 NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before Operating margin Operating Profit margin Profit Order backlogOrder 54
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 55
STRONG The Civil Engineering business RESULTS area maintained a good level of activity and several projects in the closing phase contributed to a strong result in 2020.
AF is one of Norway’s largest compa- AF Anlegg signed one major contract also contributes to a shift towards nies in the civil engineering market, during the year, the E4 Bergtunnlar machines that pollute less because the and the customers are both public Lovö project for Trafikverket. Produc- machinery with the highest emissions and private actors. The project portfo- tion started at the end of Q3 2020. is replaced. lio includes roads, railways, port The contract has an estimated value
facilities, airports, tunnels, founda- of NOK 3,400 million excl. VAT. The MARKET OUTLOOK BUSINESS AREAS tion work, power and energy, as well interaction phase of the E6 Roterud– The civil engineering market in as onshore facilities for oil and gas. Storhove project has begun, and there Norway is good and less sensitive The Civil Engineering business is a good relationship with the client. to cyclical fluctuations since public area in Norway consists of two busi- A contract for this project will have a sector demand is the greatest driver ness units: AF Anlegg and Målselv value of NOK 3,750 million excluding behind investments. In the 2021 Maskin & Transport. AF Anlegg VAT. This project is not included in the State Budget, NOK 80 billion has carries out civil engineering pro- order backlog as of 31 December 2020. been allocated to transport, which is jects throughout Norway. Målselv Målselv Maskin & Transport had a an increase of 7.9 per cent over the Maskin & Transport is the largest good year in 2020, with a high level of final budget for 2020. machinery contractor in Troms and activity and very good results for 2020. Prognosesenteret reports that the carries out projects in the areas of At year end, the Civil Engineering level of activity in civil engineering in technical municipal facilities, road business area had an order backlog of 2020 seems to have only been affected construction, earthmoving, and NOK 6,709 million (5,424 million). by Covid-19 and the infection control site preparation and concrete work, measures to a small extent, and among others. SUSTAINABILITY expects this also to be the case in 2021. Civil Engineering builds socially Their forecasts assume that the direct YEAR 2020 IN BRIEF useful infrastructure such as road impact on the level of activity in the The Civil Engineering business area systems and hydropower plants. To construction market will remain low. reported revenues of NOK 4,157 mil- carry out these projects, the business However, the development in 2020 lion (5,787 million) in 2020. Earnings is dependent on large construction was weaker than estimated with total before tax were NOK 315 million machinery. This means that Civil investment of NOK 86 billion, which (376 million). The profit margin Engineering has a highly negative indicates a decline of 1.3 per cent ended at 7.6 per cent, compared with climate footprint. Specific measures from 2019, primarily due to a decline 6.5 per cent in 2019. are continuously being developed in road investment. For the forecast
AF Anlegg had a good level of to reduce CO2 emissions. The main period from 2021 to 2023, total growth activity in 2020, but lower than in driver of emissions is the transport of of 40 per cent is expected in civil 2019. The year was marked by high excavated mass. The projects therefore engineering investments. Growth is production on the major project E39 strive to reuse as much of the masses primarily expected to come from road Kristiansand vest – Mandal øst for as possible within the project in order projects, but also railway and tramline Nye Veier. This is a large and challeng- to reduce the need for transport over systems. In 2021, Prognosesenteret ing project with a high level of activity, longer distances. Electrical alternatives expects NOK 104 billion of civil and the project will be completed for machinery and equipment are engineering investments, of which 39 on schedule. The unit delivered very used where appropriate, and several per cent will come from road construc- good results for the year, with several projects use biodiesel as a fuel source. tion, while 15 per cent will come from projects in the final phase that con- Civil Engineering has a very modern railway and tramline systems. tributed overall to the strong results. stock of machinery, and all machines Overall, the forecasts for the civil The Covid-19 outbreak with associated are equipped with a digital chip to engineering market provide a good restrictions has created challenges and measure diesel consumption, efficiency foundation for further growth of AF’s affected all projects. However, most and idling. This contributes to more civil engineering activities, even with projects have managed to maintain energy-efficient and cost-effective the uncertainty related to conse- good progress. machinery usage. The information quences of Covid-19 in the short term. 56 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 57
SELECTED PROJECTS
E39 KRISTIANSAND ØST – MANDAL VEST One of Nye Veier's highest priority road sections is a motorway with a 110 km/h speed limit, and includes as many as 45 structures, including Southern Norway’s longest tunnel of 4 km and the 537 m long Trysfjord bridge. The development will improve traffic safety, increase capacity, take traffic away from landslide- prone areas and connect the region more strongly. So far the project has tested the use of autonomous machines to reduce greenhouse gas emissions, time and costs, and has won an award for digital innovation in collaboration with Norconsult.
BUSINESS UNIT: AF ANLEGG CLIENT: NYE VEIER COMPLETION: NOVEMBER 2022 CONTRACT VALUE: NOK 4,700 MILLION EXCL. VAT. BUSINESS AREAS
VESLE KJELA POWER PLANT E6 SOKNEDAL STORMOEN LANDFILL
Vesle Kjela hydropower plant is built into AF has built a new two/three-lane road Målselv Maskin & Transport has the mountains just south of Kjelavatnet on the 6.7 km long stretch between excavated a new disposal site at on Haukelifjell, and has an installed Vindåsliene and Korporalsbrua. The Perpetuum's landfill at Stormoen in power output of 8.5 MW. AF has been work has included a new bridge over Troms and Finnmark county. A total responsible for all civil engineering Sokna and a new 3.6 km long tunnel. of 412,000 cubic meters of excavated and construction work on the project, The new E6 is approximately 1 km mass has been moved and the including the blasting of a 2.2 km long shorter compared to the previous landfill is covered with several layers tunnel, the power station, concrete route and is located outside Soknedal of membrane and canvas, and with works and a 1.5 km long access road centre. Soknedal has its own exit from excavated mass between some of from the E 134. Existing infrastructure the E6 at a two-level intersection, and the layers to protect surrounding soil. has largely been used, which resulted a pedestrian and bicycle path has Drainage pipes have been established in modest encroachments on the been built on the former E6. This has at the bottom which are connected terrain and environment. The project resulted in better accessibility, traffic to a pumping system and a dam that demonstrates how the amount of safety and environmental conditions in handles the run-off from the material renewable energy can be increased by Soknedal. and shields the local environment. better utilising the water in areas that have already been developed. BUSINESS UNIT: AF ANLEGG BUSINESS UNIT: MÅLSELV MASKIN & TRANSPORT CLIENT: NORWEGIAN PUBLIC ROADS CLIENT: PERPETUUM CIRCULI AS BUSINESS UNIT: AF ANLEGG ADMINISTRATION COMPLETION: OCTOBER 2020 CLIENT: STATKRAFT ENERGI AS COMPLETION: DECEMBER 2020 CONTRACT VALUE: NOK 23 MILLION EXCL. VAT. COMPLETION: DECEMBER 2020 CONTRACT VALUE: NOK 993 MILLION EXCL. VAT. CONTRACT VALUE: NOK 145 MILLION EXCL. VAT.
(FAS) Helgesen Tekniske AF Håndverk LAB Entreprenør Byggmester Åsane forretning Fundamentering (HTB) Bygg EIQON
AF Bygg Oslo AF Bygg Østfold AF Bygg AF Byggfornyelse AF Nybygg Gundersen Strøm Gundersen Strøm Vestfold Haga & Berg Consolvo Norway CONSTRUCTION CONSIST OF CONSIST CONSTRUCTION GEOGRAPHIC PRESENCE GEOGRAPHIC
619 645
6.8% 7.1% 10,025 2018
9,055 9,871 486 NOK MILL. NOK 656 667 6.2% 6.3% 2019 10,581 10,045 AF GRUPPEN GRUPPENAF AF OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING ORDER BACKLOG ORDER 491 486 5.1% 2020 5.2% 9,459
10,025 9,459 ANNUALANNUAL REPORTREPORT 2020 2020 1,497 AF Gruppen 5,510 EMPLOYEES REVENUES REVENUES NOK MILL. NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before Operating margin Operating Profit margin Profit backlogOrder KEY FIGURES KEY CONSTRUCTION 58
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 59
GOOD RESULTS Construction delivered a good AND SOLID ORDER result in 2020 despite lower revenue than BACKLOG in 2019. The Construction units are attractive partners and won many new projects throughout the year.
AF provides contracting services units. AF Bygg Oslo, Haga & Berg and MARKET OUTLOOK for residential, public and commer- Åsane Byggmesterforretning excelled The Construction market in Nor- cial buildings. Our services range with excellent profitability. AF Bygg way remained at a high level in from planning to construction and Østfold delivered a good result in 2020 with a total production value renovation. AF cooperates closely 2020 after a weak 2019. Eiqon and of NOK 349 billion, a decrease of
with customers to find efficient and Strøm Gundersen Vestfold delivered 0.4 per cent from the previous year. BUSINESS AREAS innovative solutions adapted to weak results in 2020, and measures The largest decline was in new their needs. Constructionen com- have been implemented in both units residential buildings. Prognosesen- passes the Norwegian construction to improve the situation. teret expects a 1.7 per cent increase business except for Betonmast, and The total order book for Construc- in production value in 2021, before a is mainly located in Eastern Norway tion stood at NOK 10,025 million decline in the market of 1.0 per cent and the Bergen region. Betonmast (10,045 million) at the end of in 2022 and a further 1.2 per cent reports as its own business area. the 2020. in 2023. New residential buildings Construction consists of 14 units and the ROT market are expected and their associated subsidiaries: SUSTAINABILITY to drive growth in 2021. During AF Bygg Oslo, AF Byggfornyelse, AF Gruppen's construction units the forecast period up to 2023, the AF Nybygg, AF Bygg Østfold, Strøm have expertise and broad experience largest growth is estimated for the Gundersen, Strøm Gundersen in constructing buildings in solid construction market in Oslo. Vestfold, Haga & Berg, Consolvo, wood and buildings classified to Start permits for 30,038 new AF Håndverk, Eiqon, LAB Entre- BREEAM certification. BREEAM- residential units were registered in prenør, Fundamentering, Åsane NOR is Norway’s only method for 2020. This represents a decline of Byggmesterforretning and HTB. environmental classification of 4.9 per cent from the previous year. All the contractor units have strong buildings. In order to achieve classi- For 2021, 2022 and 2023, Prognose- local roots and a broad range of fication, sustainable thinking must senteret estimates that start permits services. be incorporated in all stages of the will be for 31,000, 27,000 and construction process, which requires 26,000 residential units respectively. YEAR 2020 IN BRIEF close collaboration with the client. For Oslo, housing starts in 2021 are Construction reported revenues of In order to carry out projects with expected to amount to 3,400 resi- NOK 9,459 million (10,581 million) strict environmental requirements dential units, an increase of some and earnings before tax of NOK 491 in a cost-effective manner, expertise 21.9 per cent from 2020. Prognose- million (667 million) in 2020. This must be constantly refined. AF Bygg senteret also expects growth in the gives a profit margin of 5.2 per cent, Oslo has, among other things, set a number of commenced residential compared with 6.3 per cent in 2019. goal for all project managers to be units in Viken and Vestland in 2021. Turnover for Construction fell trained to qualify for BREEAM AP Even though a high level of activity compared with 2019. Covid-19 has (Accredited Professional) dur- is expected for AF’s building oper- led to increased competition for pub- ing 2021. ations in Norway in the future, the lic construction projects and project In the Furuset Hageby and Fyrs- consequences of Covid-19 will con- postponements, especially in housing tikkbakken 14 projects, AF Bygg Oslo tribute to increased uncertainty for construction. The virus outbreak and AF Nybygg are contractors in the building market in the short term. and the infection control measures their respective FutureBuilt projects. that were introduced have created FutureBuilt's goal is to produce challenges in several projects. Nev- reference projects that reduce green- ertheless, the units have maintained house gas emissions by 50 per cent good performance in most projects. in the areas of transport, energy use Overall, Construction delivered good and material use. Fyrstikkbakken profitability in 2020, but perfor- 14 is FutureBuilt's first commercial mance varied within the portfolio of housing project in solid wood. 60 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 61
SELECTED PROJECTS
DEICHMAN BJØRVIKA Deichman Bjørvika is a unique library spread over six floors, including a basement, and has the ambition of being the most environmentally friendly cultural building in Norway. The library has a passive house standard and houses 19,600 square meters of literature, reading and study spaces, stages, a cinema and workshops for young and old. AF has been responsible for interior design and interior work. Strict requirements for fire safety and acoustics have been resolved in close cooperation with the customer and architect, including a specially developed ceiling module that characterises the interior design.
BUSINESS UNIT: AF BYGGFORNYELSE CLIENT: KULTUR OG IDRETTSBYGG OSLO KF COMPLETION: JUNE 2020 CONTRACT VALUE: NOK 172 MILLION EXCL. VAT. BUSINESS AREAS
RØAKOLLEN SCANDIC HELSFYR HOTELL BRØGGER’S HUS BY THE BOTANICAL GARDEN AF has built 213 apartments in two Scandic Helsfyr Hotell is the chain's Brøgger's house from 1917 has Norway's construction stages at Røakollen, largest hotel in Norway, and AF Bygg most extensive geological natural his- which has the protected Mærradalen Oslo has, in collaboration with other tory collections. Haga & Berg has carried as its closest neighbour. With effective business units in AF, worked on the out a complete rehabilitation of the cooperation from the Agency for Urban significant renovation and expansion building according to the methodology Environment in Oslo municipality, AF of the property. The hotel has 197 new from BREEAM In-Use. An important suc- has ensured the least possible impact rooms and 252 rooms have been ren- cess factor has been to integrate mod- on nature by, among other things, ovated. A new entrance, a new interme- ern building functions and technical taking into account the root zones of diate building and an underground car systems in the building with protected trees near the project. Outdoors, AF park have been constructed. Facilities building components and fixtures. The Decom has contributed to the removal such as the restaurant area and con- work has included replacement of ven- of an old commercial building, and JR ference area have also been expanded tilation and pipes, upgrading of surfaces Anlegg has carried out mass relocation and modernised. The new wing is set to and levelling of floors to increase acces- and expansion of the local pedestrian achieve the BREEAM Very Good classi- sibility. The university is now working on and bicycle paths. AF has an option fication and the rehabilitated premises the exhibition program and Brøgger's to build a further 168 apartments in BREAAM In-Use. hus is expected to reopen to the public construction phase 3. in the spring of 2022. BUSINESS UNIT: AF BYGG OSLO BUSINESS UNIT: AF BYGG OSLO CLIENT: EIENDOMSSPAR/STOREBRAND EIEN- BUSINESS UNIT: HAGA & BERG ENTREPRENØR CLIENT: OBOS NYE HJEM DOMSFOND CLIENT: UNIVERSITY OF OSLO COMPLETION: JUNE 2020 COMPLETION: NOVEMBER 2020 COMPLETION: DECEMBER 2020 CONTRACT VALUE: NOK 508 MILLION EXCL. VAT. CONTRACT VALUE: NOK 234 MILLION EXCL. VAT. CONTRACT VALUE: NOK 111 MILLION EXCL. VAT. Betonmast Buskerud-Vestfold Göteborg Betonmast Mälardalen Betonmast MalmöBetonmast StockholmBetonmast Anläggning Betonmast Eiendom Betonmast Norway Sweden Betonmast Boligbygg Betonmast Oslo Betonmast Trøndelag Betonmast RomerikeBetonmast RøsandBetonmast Telemark Betonmast ØstfoldBetonmast InnlandetBetonmast RingerikeBetonmast BETONMAST CONSIST OF CONSIST BETONMAST GEOGRAPHIC PRESENCE GEOGRAPHIC ------
2018 7,274 261 NOK MILL. NOK 49 46 4.0% 3.8% 1,226 7,293 2019* AF GRUPPEN GRUPPENAF AF OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING ORDER BACKLOG ORDER 261 252
2020 3.3% 3.2% 7,274 7,862 7,274 ANNUALANNUAL REPORTREPORT 2020 2020 983 AF Gruppen 5,510 BETONMAST EMPLOYEES KEY FIGURES KEY REVENUES REVENUES NOK MILL. * The figures reflect the period after 31 October 2019, when Betonmast became a part of AF Gruppen Betonmast when 2019, October after 31 period the reflect * The figures NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before margin Operating margin Profit Order backlogOrder 62
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 63
RESULT Betonmast delivered a result AS EXPECTED for the year which, as expected, was weaker than the profitability of other businesses in AF Gruppen.
Betonmast is one of Norway’s largest Organisational changes have been resources will be reduced, and in construction contractors and has made in several units, and Beton- addition to AF Gruppen's goal of operations in the largest markets in mast Bergen was sold to Backe a source separation rate of 80 per Norway and Sweden. The project Bergen in the summer of 2020. cent, a target for waste volume in portfolio comprises everything There was a high activity level in kg/m2 BTA has been set for various
from major residential projects to the Swedish business units. Beton- types of buildings. Furthermore, BUSINESS AREAS commercial and public buildings. mast Malmö delivered good results, the use of hazardous substances is Betonmast is a key contributor in while other units delivered stable to be eliminated and local ecology construction for the public sector, profitability. After the end of the promoted. By 2030, Betonmast will and has specialist expertise in project year, it was decided that Betonmast only have projects with a clear envi- development and collaborative Göteborg will buy AF Bygg Göte- ronmental ambition. Betonmast has contracts. borg. The purpose is to strengthen introduced the "green line" model Betonmast consists of 16 busi- the presence in the region through a which describes how Betonmast as ness units in Norway and Sweden: larger company. The transaction will a developer and contractor will take Betonmast Oslo, Betonmast Romer- be completed in April 2021. care of the environment from early ike, Betonmast Buskerud-Vestfold, At the beginning of 2021, Beton- project development to operation Betonmast Boligbygg, Betonmast mast Eiendom has two housing after delivery. Ringerike, Betonmast Røsand, projects in production. Betonmast Telemark, Betonmast Betonmast signed a number of Østfold, Betonmast Innlandet, contracts during the year, a total of Betonmast Trøndelag, Betonmast 27 new contracts were announced Göteborg, Betonmast Mälardalen, to the stock exchange. The contracts Betonmast Malmö, Betonmast Stock- are distributed among the units holm, Betonmast Anläggning and both in Norway and in Sweden. Betonmast Eiendom. Betonmast Romerike has entered into the largest contract this year YEAR 2020 IN BRIEF for the construction of Fjellhamar Betonmast reported revenues of school in Lørenskog. The construc- NOK 7,862 million (1,226 mil- tion project includes the building of lion) and earnings before tax of a new primary school, in addition to NOK 252 million (46 million) for the construction of a sports building 2020. The profit margin ended at with multi-purpose halls and a swim- 3.2 per cent. Betonmast became part ming pool. The project is a turnkey of AF Gruppen on 31 October 2019 contract in partnership and is valued and the comparative figures only at approximately NOK 1,200 million include the period after the acquisi- excluding VAT. tion date. As of 31 December 2020, The result is in line with our Betonmast’s order backlog was expectations with a margin lower NOK 7,274 million (7,293 million). than the requirement in AF Gruppen. There is great variation in perfor- SUSTAINABILITY mance between the Norwegian units. Betonmast has set ambitious goals Betonmast Oslo and Betonmast to contribute to the development Romerike distinguished themselves of a sustainable society. The goal with strong results, while Betonmast is to cut greenhouse gas emissions Boligbygg, Telemark, Ringerike and from its own construction activities Innlandet reported weak earnings. by 65 per cent by 2030. The use of 64 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 65
SELECTED PROJECTS
VOLDA CAMPUS ARENA Volda's new sports arena has become a landmark building of 11,200 square meters. The building is energy class A and uses, among other things, geothermal heat from 15 wells drilled at a depth of 260 metres in combination with water-borne heat. In addition, sedum roofs have been used which insulate against both heat and cold, and contribute to efficient surface water management. The sports arena is equipped with international dimensions for handball and volleyball, grandstand facilities, a climbing hall and parking facili- ties, as well as a side building with changing rooms, fitness rooms and office and meeting room facilities.
BUSINESS UNIT: BETONMAST RØSAND AS CLIENT: VOLDA CAMPUS ARENA AS COMPLETION: DECEMBER 2020 CONTRACT VALUE: NOK 229 MILLION EXCL. VAT BUSINESS AREAS
NEW HOLMLIA CENTRE STUVERIET GOTHENBURG CAMPUS BØ
Construction of the new Holmlia The development of the Stuveriet pro- Campus Bø is the village's largest hous- Centre began in May 2019, and will be ject began in the spring of 2020, and ing project and consists of 282 new a combination of a shopping centre will be a new office and meeting place student accommodation over a total and office building with a gross area in the centre of Gothenburg. The prop- of approx. 10,000 square meters. The of 23,000 square meters. Parts of the erty will be certified in accordance with building has a strong environmental current centre will be retained while LEED Platinum, which is the system's profile with, among other things, a new squares, meeting places and a highest sustainability certification. The solid wood construction and heating bicycle path will be built. The project building will consist of 16 floors with a from two geowells. This helps to meet will be carried out with a fossil-free facade of recycled aluminium, and with the criteria for the passive house construction site and aims to be certi- solar panels and sedum plants on the standard. The project also achieved a fied according to BREEAM Very Good roof. Two more floors will be built on recycling rate of 86 per cent and waste with ambitious environmental goals top of Stena Fastigheter's existing office volume of 21.8 kg/sqm. such as 90 per cent recycling, and only building in the neighbouring building, 25 kg/sqm of waste in total. The project and the total area will be around 10,000 BUSINESS UNIT: BETONMAST TELEMARK AS process has been characterised by early square meters. CLIENT: STUDENTSAMSKIPNADEN involvement and good interaction with I SØRØST-NORGE the client. BUSINESS UNIT: BETONMAST GOTHENBURG COMPLETION: AUGUST 2020 CLIENT: STENA FASTIGHETER CONTRACT VALUE: NOK 187 MILLION EXCL. VAT BUSINESS UNIT: BETONMAST OSLO COMPLETION: SPRING 2022 CLIENT: OBOS EIENDOM CONTRACT VALUE: SEK 190 MILLION EXCL. VAT COMPLETION: AUTUMN 2021 CONTRACT VALUE: NOK 366 MILLION EXCL. VAT Norway AF Eiendom LAB Eiendom GEOGRAPHIC PRESENCE GEOGRAPHIC PROPERTY CONSIST OF PROPERTY CONSIST - - - 73 166 157
2018 135 - - - 26 18 107 100 2019 AF Gruppen 5,510 AF GRUPPEN GRUPPENAF AF EMPLOYEES - - - OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING 33 132 135
2020 33 ANNUALANNUAL REPORTREPORT 2020 2020 REVENUES REVENUES NOK MILL. KEY FIGURES KEY NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before Operating margin Operating Profit margin Profit Order backlogOrder PROPERTY 66
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 67
GOOD SALES AND Eiendomsvirksomheten GOOD RESULTS hadde i 2020 et høyt aktivitetsnivå og gode resultater
Property buys, develops and sells At the end of 2020, Property had 2030, and for all new projects to be residential and commercial projects ownership interests in residential environmentally certified according in Norway. The activities take place property projects with a total of 145 to the BREEAM-NOR Very Good in geographic areas where AF has its (235) apartments available for sale. standard or better. In this way, own production capacity. Property AF’s share was 58 (88) apartments. they will contribute to a sustainable cooperates closely with other solid 134 apartments are related to projects living environment. As an example,
players in the property industry, and in production and 10 in the Fyrstikk AF Eiendom, together with Birk & BUSINESS AREAS the development projects are mainly bakken project, which is in the sales Co, is developing Fyrstikkbakken 14, organised in part-owned companies. phase. There is also a total of 1 (32) which is FutureBuilt's first commer- The earnings that are recognised in completed unsold apartment, of which cial housing project. FutureBuilt's Property correspond to the earnings AF's share was 1 (11) apartment. goal is to produce reference projects after tax multiplied by the ownership At the start of 2021, AF’s property that reduce greenhouse gas emissions interest (equity method of accounting). business had five residential property by 50 per cent in the areas of trans- projects with a total of 701 apart- port, energy use and material use. YEAR 2020 IN BRIEF ments in the production phase, and The project will be built in Norwegian Property reported earnings before AF’s share was 265 apartments. The solid wood and built according to the tax of NOK 132 million (100 million) share of apartments sold in these BREEAM-NOR Very Good standard. in 2020. The sale of the ATEA build- projects was 81 per cent. To reduce the carbon footprint of ing, which is a commercial property • Bo på Billingstad in Asker property development, they have also at Hasle in Oslo, contributed greatly (186 units under production) invested in renovation projects. Fred to the result for the year. Of the • Lilleby Triangel in Trondheim Olsens gate 3B, which was purchased housing projects, the most significant (253 units under production) and will be developed together with profit contributions came from Lillo • Skiparviken in Bergen (129 units Møller Eiendom and Odin Utvikling Gård in Oslo and Bo på Billingstad under production) in 2020, is an example of this. in Asker. • Brøter Terrasse at Lillestrøm Residential sales in 2020 were (78 units in production) MARKET OUTLOOK very good with 433 (363) apartments • Kråkehaugen in Bergen (55 units Figures from Property Norway for sold, and AF’s share was 160 (130) in production) the 4th quarter of 2020 show growth apartments. The residential prop- in housing prices in Norway. At the erty market in Greater Oslo, where At the end of the year, AF had a end of the 4th quarter, residential Property has most of its activities, has development portfolio in Norway property prices were 8.7 per cent seen strong demand and price growth that was estimated to yield 2,133 higher nationally than one year ago. in 2020. The Covid-19 outbreak (1,865) residential units. AF’s share Oslo had the strongest price perfor- with associated restrictions caused of this was 1,048 (916) residential mance in 2020, with an increase of a dramatic slowdown in the housing units. The majority of the portfolio is 12.0 per cent, but Bergen also had market in March and April 2020 located in Greater Oslo and Bergen. high growth of 8.5 per cent. Eiendom before sales picked up sharply. Lilleby Property is a partner in the Hasle Norge points out that it is important Triangel, Bo på Billingstad and Brøter Linje Næring project in Oslo (AF’s that higher house prices are followed Terrasse were the projects with the stake is 49.5 per cent). The pro- by more residential construction in most units sold in 2020. ject has a total commercial area of areas where there is a supply-side A total of 465 (477) apartments 74,484 square meters GFA, of which deficit. At the interest rate meeting were handed over in 2020, and AF’s K4 hotel and offices of 21,056 square in March 2021, Norges Bank decided share was 168 (159) apartments. Of meters GFA were under construction to keep the key rate unchanged at the total of 465 apartments handed at the end of 2020. 0 per cent. According to Norges over during the year, 159 apartments Bank’s assessment of the outlook and were handed over at Lillo Gård, 146 SUSTAINABILITY the risk situation, the key policy rate at Lilleby Triangel, 134 at Kilen Bry- Property's goal is for greenhouse will most likely be raised during the gge and 26 at Krydderhagen. gas emissions to be halved by second half of 2021. 68 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 69
SELECTED PROJECTS
KRÅKEHAUGEN The Kråkehaugen project is located in Bergen in a well-established residential area between the Paradis and Fantoft neighbourhoods, walking distance from the tram stop, shops and services. When completed, it will consist of 55 apartments split across four buildings. The facades will be built in Superwood, which is a durable and sustainable wood cladding. Together with elements of plate cladding and natural stone, the facades will provide the buildings with a warm and exclusive feel.
BUSINESS UNIT: LAB EIENDOM CONTRACTOR: LAB ENTREPRENØR COMPLETION: 2023 OWNERSHIP STAKE: 50% BUSINESS AREAS
LILLO GÅRD LILLEBY TRIANGEL FYRSTIKKBAKKEN 14
At Storo in Oslo, AF has been At Lade in Trondheim, a total of Fyrstikkbakken 14 at Bryn in Oslo is the involved in developing a completely 400 apartments will be built in the first commercial FutureBuilt housing new micro-district consisting of triangle between Jarleveien and Lade- project in solid wood. The goal is to 415 apartments, a kindergarten and a veien. Residents will begin to move in halve greenhouse gas emissions from local shopping center. In the project, to the 275 apartments from the first the construction process and achieve emphasis has been placed on good construction phase as early as the an energy consumption that is close to floor plans, high material quality and first quarter of 2021, and the project zero when the residents move into the an inviting outdoor area. All roofs are has been well received by customers. apartments. A total of 163 apartments covered with sedum which prevents Among the feedback, customers will be built across four buildings, in surface water during heavy rainfall and highlight a user-friendly solution for addition to a number of communal provides a good habitat for insects and additional interior choices, proximity facilities. The project has a fully digital birds. In addition to the new homes, a to the city centre, services and public showroom centre and allows the cus- square has been built around the old transport, and attractive facades. tomer to adapt the floor plan to their Lillo farm, which has been preserved. needs through a digital floor planning The square creates a natural gathering BUSINESS UNIT: AF EIENDOM tool in the purchase process. point for both the project's residents CONTRACTOR: BETONMAST TRØNDELAG and the rest of the neighbourhood. COMPLETION: 2022 BUSINESS UNIT: AF EIENDOM OWNERSHIP STAKE: 33% CONTRACTOR: AF NYBYGG BUSINESS UNIT: AF EIENDOM COMPLETION: 2023 CONTRACTOR: AF BYGG OSLO OWNERSHIP STAKE: 50% COMPLETION: NOVEMBER 2020 OWNERSHIP STAKE: 25% AF Energi & MiljøteknikkAF Energi Enaktiva Boligenergi Baltic AF Energija AF Decom Rimol Miljøpark Jølsen Miljøpark Nes Miljøpark Norway Lithuania ENERGY AND ENVIRONMENT ENVIRONMENT AND ENERGY OF CONSIST GEOGRAPHIC PRESENCE GEOGRAPHIC 44 41 875 501
5.0% 4.7% 2018
703 54 NOK MILL. NOK 78 75 371 7.3% 7.0% 2019 1,072 AF GRUPPEN GRUPPENAF AF ORDER BACKLOG ORDER OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING 52 54 703 962
2020 5.6% 5.5% 962 ANNUALANNUAL REPORTREPORT 2020 2020 283 AF Gruppen 5,510 EMPLOYEES NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before Operating margin Operating margin Profit Order backlogOrder REVENUES REVENUES NOK MILL. KEY FIGURES KEY ENERGY AND ENVIRONMENT ENVIRONMENT ENERGY AND 70
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 71
GOOD RESULTS Energy and Environment had a slightly AND SOLID lower level of activity in 2020 compared to ORDER BACKLOG 2019, but maintained good profitability. AF sees more opportunities for growth going forward, and the order backlog is at a record high.
The Energy and Environment area consumption by offering alternative of steel that is recycled, which means consists of two business units, and renewable solutions for both that AF Decom's operations have AF Energi & Miljøteknikk and new and existing buildings and contributed to reducing alternative
AF Decom. AF Energi & Miljøteknikk industry. Increased energy efficiency CO2 emissions by 19,380 tonnes. provides smart, energy-efficient can provide an energy saving of Contaminated materials that are
solutions for buildings and industry. 20–50 per cent with an investment traditionally disposed of are sorted, BUSINESS AREAS The unit also designs and supplies pay-back time of 4–7 years for the decontaminated and recycled at AF’s energy plants that are favourable in customer. AF's deliveries guarantee environmental centres. The environ- a long-term ownership perspective. lower energy consumption for the mental centres have a goal that 80 per AF Decom is a leading player in customer and reduce climate emis- cent of the materials will be reused environmental clean-up, demolition sions for society. For example, AF in local markets after they have been and recycling. In addition, AF Decom Energi & Miljøteknikk contributed to recycled. AF’s environmental centres has developed several environmental Senter Syd at Mortensrud reducing recovered a total of 528,758 (317,730) parks, which sort, decontaminate and energy consumption by 37.5 per cent tonnes of materials in 2020, and the recycle materials that would have oth- in just one year. In Asker, AF Energi recycling rate realised for contami- erwise ended up at a disposal site. & Miljøteknikk, together with Slem- nated materials was 86 per cent. mestad Brygge and Vea, will build YEAR 2020 IN BRIEF and operate the new energy supply MARKET OUTLOOK The Energy and Environment busi- for the coastal town of Slemmestad. AF Gruppen’s level of activity is ness area reported revenues of The energy project has developed a closely connected to the general level NOK 962 million (1,072 million) new circular solution which, through of activity in the construction market. in 2020. Earnings before tax were heat exchange using treated wastewa- Lower housing starts will affect the NOK 52 million (75 million). This gives ter, will supply heating and cooling to market for demolition and recycling a profit margin of 5.5 (7.0) per cent. all buildings, as well as street heating services. Covid-19 contributes to AF Decom continues to deliver for snowmelt. increased uncertainty for the demand solid results in both demolition and AF Gruppen's environmental for such services in the short term. recycling despite a lower level of business aims to be a leading player However, the authorities in Norway activity than in 2019. The level of in environmental clean-up, demoli- have defined ambitious energy goals activity in the environmental centres tion and recycling. The foundation related to a reduction in the con- has been high in 2020, and profitabil- for the environmental business is sumption of energy towards the year ity has further improved from 2019. that waste can be reused, and thus 2030. Enova has found that there AF Energi & Miljøteknikk increased be a valuable resource in a growing is a major maintenance backlog for revenues in 2020 compared to 2019, circular economy. AF Decom has set public buildings and major conser- but delivered results below expecta- a goal of separating 95 per cent of vation opportunities in connection tions. Despite varying profitability the amount of waste from demolition with the rehabilitation of buildings. in the project portfolios, AF Energi operations at source and achieved a The demand for heating and cool- & Miljøteknikk has handed over a source separation rate of 96 per cent ing for commercial buildings is number of good, high-quality projects in 2020. In the same year, AF Decom closely related to the number of new to satisfied customers. has refined and facilitated the recy- commercial building starts. Progno- At the end of the year, the Energy cling of approximately 19,380 tonnes sesenteret expects the total floor area and Environment business area had of metal. The steel industry accounts of commercial building starts in 2021 an order backlog of NOK 703 million for approx. 7 per cent of the world's to be on par with 2020. The largest
(371 million). total CO2 emissions, and reused steel growth of commercial building starts
has approx. 70 per cent less CO2 during the forecast period is expected SUSTAINABILITY emissions than ore-based production. for Oslo. Overall, we expect a healthy The purpose of AF's energy opera- This corresponds to a reduction in market for AF’s activities in Energy tions is to reduce customers' energy emissions of 1 kg CO2 for every kilo and Environment. 72 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 73
SELECTED PROJECTS
BERGEN COUNTY ADMINISTRATION BUILDING Vestland fylkeskommune is to renovate its premises and AF Decom was commissioned to demolish the existing 11-storey building from 1972. The first step in the process has been to remove all technical instal- lations, insulation and other fixtures. With only concrete and reinforcement steel left, demolition robots tore down the upper floors before more conventional demolition machines dismantled the remaining floors. A total of 20,000 tonnes of concrete has been demolished and processed. The concrete will be reused as filler on LAB's projects at Skiparviken and Haukeland.
BUSINESS UNIT: AF DECOM CLIENT: LAB ENTREPRENØR / VESTLANDET FYLKESKOMMUNE COMPLETION: DECEMBER 2020 CONTRACT VALUE: NOK 38 MILLION EXCL. VAT. BUSINESS AREAS
STATNETT, LYSE – TONSTAD KONGENS GATE 12 UNSØ
AF Decom will remove 209 old In the Canica Eiendom building in The project involves internal technical high-voltage masts distributed over Kongens gate 12, AF Energi & Miljø work on the extension of Non-Schengen a length of nearly 80 km between teknikk has carried out a number East (UNSØ), which will be an extension Lysebotn and Tonstad, and then of upgrades to the building's HVAC of the original international terminal at between Tonstad and Solholm in Agder. installations. Among other things, a Oslo Airport Gardermoen. The project Demolition started in November 2020 new ventilation unit has been supplied, started in March 2020 and is a main and will last for one year. In total, up to a new ice water circuit with a cooling contract that includes electrical, pipe 1,880 tonnes of steel masts, 835 tonnes machine has been established, a new and ventilation disciplines. The work of concrete foundations and 770 tonnes technical shaft has been established includes the construction of air treat- of pipeline will be removed, recycled from the roof to the basement for air ment units with associated ventilation and stored in a depot. supply and removal, and a complete systems, heating and cooling systems, SD system has been installed in the sprinkler control centre, sanitary facili- BUSINESS UNIT: AF DECOM building to control the technical instal- ties and electrotechnical facilities. CLIENT: STATNETT lations. Trial operation of the systems COMPLETION: NOVEMBER 2021 will take place until June 2021. BUSINESS UNIT: AF ENERGI & MILJØTEKNIKK CONTRACT VALUE: NOK 80 MILLION EXCL. VAT. CLIENT: AVINOR BUSINESS UNIT: AF ENERGI & MILJØTEKNIKK COMPLETION: 2022 CLIENT: CANICA EIENDOM CONTRACT VALUE: NOK 200 MILLION EXCL. VAT. COMPLETION: JUNE 2020 CONTRACT VALUE: NOK 6,3 MILLION EXCL. VAT. CONSIST OF CONSIST Sweden Kanonaden Pålplintar Göteborg AF Bygg Syd AF Bygg AF Projektutveckling AF Härnösand Byggreturer HMB SWEDEN SWEDEN GEOGRAPHIC PRESENCE GEOGRAPHIC 114 113
5.0% 5.0% 2018
2,270 4,120 1,578 219 NOK MILL. NOK 149 146 4.0% 4.0% 2019 3,683 2,946 AF GRUPPEN GRUPPENAF AF ORDER BACKLOG ORDER OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING 212 219
5.1% 2020 5.3% 4,120 4,138 4,138 ANNUALANNUAL REPORTREPORT 2020 2020 843 AF Gruppen 5,510 REVENUES REVENUES NOK MILL. EMPLOYEES NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before Operating margin Operating Profit margin Profit Order backlogOrder SWEDEN KEY FIGURES KEY 74
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 75
HIGHER LEVEL Sweden reported significantly OF ACTIVITY higher revenues in 2020 as a result of strong AND GOOD growth in Kanonaden. Sweden delivered good RESULTS results overall, even though the level of profitability varies between the business units.
Sweden includes AF Gruppen's decided that AF Bygg Göteborg will decided to maintain a zero interest Swedish operations in civil engi- be bought by Betonmast Göteborg to rate, and Byggföretagen expects the neering, construction, property create a larger and stronger player in interest rate to remain at this level and demolition, excluding Beton- the region. for the rest of 2021. mast Sverige which reports under AF Projektutveckling, AF’s Despite the Covid-19 pandemic,
the Betonmast business area. The property business in Sweden, had 2020 was marked by price increases BUSINESS AREAS geographic area of operation encom- two residential property projects and and increased sales volumes. Svensk passes Gothenburg and Southern one school project in the production Mäklarstatistik reports 7 per cent Sweden, as well as Stockholm and phase, as well as several in the devel- growth for apartments and 13 per Mälardalen. opment phase in 2020. The unit has cent for detached houses from 2019 The business area consists of a building site inventory (apartments to 2020. In metropolitan areas, the business units Kanonaden, under development) that is esti- prices of apartments increased Pålplintar, AF Bygg Göteborg, mated at 363 (368) apartments. AF’s between 3 per cent and 9 per cent, AF Bygg Syd, AF Projektutveck- share of this was 169 (233) apart- and the Malmö region showed the ling, AF Härnösand Byggreturer ments. strongest price growth. and HMB. At the end of 2019, the Sweden In October, Byggföretagen business area had an order backlog expected a 1 per cent decline in YEAR 2020 IN BRIEF of NOK 4,120 million (2,946 mil- construction and civil engineering Sweden reported revenues of lion). investments in Sweden in 2020 and NOK 4,138 million (3,683 mil- an unchanged investment volume in lion) and earnings before tax of SUSTAINABILITY 2021. This follows several years of NOK 212 million (146 million) in AF aims to halve greenhouse gas high growth. For 2021, a 4 per cent 2020. This gives a profit margin of emissions and halve waste volumes fall in residential building produc- 5.1 per cent, compared with 4.0 per that cannot be reused or recycled by tion is expected, while growth in cent in 2019. 2030. Sweden wants to minimise building renovation is expected to In the Swedish construction mar- waste produced on construction sites be 2 per cent. Construction invest- ket, Kanonaden saw strong revenue and has a goal of separating at least ments are expected to grow by growth and the unit delivered a very 80 per cent at source. In 2020, the 5 per cent in 2021, with increased good result. Pålplintar delivered Sweden business area achieved a public investment in infrastructure a slightly positive result for the source separation rate of 96 per cent. making a positive contribution. This year. The level of activity has been AF Gruppen Sverige intends to indicates that we will also have good reduced as a result of the closure of join the "Roadmap 2045", which opportunities for AF's operations in the foundation business. is the construction sector's contri- Sweden in the future, even though The Swedish demolition busi- bution to Sweden's goal of fossil competition is tough. However, ness, AF Härnösand Byggreturer, freedom by 2045. This entails a the consequences of Covid-19 will continues to deliver strong margins commitment to map the company's continue to contribute to a greater even though the level of activity has climate impact during 2021–2022 degree of uncertainty in Sweden in been reduced. There is variation in and produce well-developed goals the near future. performance among the Swedish and action plans. construction units. HMB delivered increased revenues, but somewhat MARKET OUTLOOK weaker profitability than last year. The spread of Covid-19 has affected AF Bygg Syd achieved strong prof- the Swedish economy, and there is itability despite a somewhat lower still uncertainty as to how hard the level of activity. AF Bygg Göteborg construction and civil engineering had a reduced level of activity, markets in Sweden will be affected. and after the end of the year it was In February 2021, Riksbanken 76 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 77
SELECTED PROJECTS
GLASBRUKET In August 2020, construction began on the Glasbruket housing cooperative flats in the Majorna district of Gothenburg. A total of 136 apartments ranging from 35–173 square meter will be built in an industrial style with large windows in a classic brick facade. This is a turnkey contract for AF, and the project will be certified in accordance with Silver 3.0 standard under the Swedish environmental building certification system Miljöbyggnad.
BUSINESS UNIT: AF BYGG GOTHENBURG CLIENT: FASTIGHETS AB BALDER COMPLETION: 2023 CONTRACT VALUE: SEK 200 MILLION EXCL. VAT. BUSINESS AREAS
VINDPARK ÅBY-ALEBO TALLBOHOV ELECTRIC VILLAGE SJÖLUNDA SEWAGE TREATMENT PLANT Vindpark Åby-Alebo in Mönsterås HMB Construction will build four high- Over the past four years, AF Bygg Syd municipality will be the largest wind rise buildings with 180 apartments has built a new sewage plant, and farm in southern Sweden. It will consist in the first of two phases in Tallbohov designed and installed a new mechan- of a total of 36 wind turbines expected Electric Village. The housing project ical purification and sand treatment to generate approximately 500 GWh of is included in a research project to plant The plant is one of the largest renewable electricity annually. This is the develop sustainable and innovative treatment facilities in Sweden and equivalent of enough electricity to run residential buildings with government cleans wastewater from approximately 100,000 houses. Kanonaden is tasked support. The apartments will be 300,000 inhabitants. The new treatment with designing and building roads, virtually energy self-sufficient and will plant creates a better water environ- casting foundations and establishing use artificial intelligence to choose ment and ensures wastewater treat- the power grid for the wind farm. the energy source that has the lowest ment that copes better with climate carbon emissions at the time – solar change, stricter environmental require- BUSINESS UNIT: KANONADEN ENTREPRENAD energy, geothermal energy, district ments and a growing population. CLIENT: STENA RENEWABLE heating or electricity from the grid. COMPLETION: 2022 BUSINESS UNIT: AF BYGG SYD CONTRACT VALUE: SEK 213 MILLION EXCL. VAT. BUSINESS UNIT: HMB CONSTRUCTION CLIENT: VA SYD CLIENT: TORNET BOSTADSPRODUKTION COMPLETION: MAY 2020 COMPLETION: 2023 CONTRACT VALUE: SEK 200 MILLION EXCL. VAT. CONTRACT VALUE: SEK 237 MILLION EXCL. VAT. CONSIST OF CONSIST Norwegian and British shelf continetal Norway UK AF Offshore AF Offshore Decom AF Offshore UK Ltd. Decom AF Miljøbase Vats AF AeronMollier OFFSHORE OFFSHORE GEOGRAPHIC PRESENCE GEOGRAPHIC -21 -27 655
2018
1,456 1,365 -3.2% -4.1% -25 NOK MILL. NOK -83 -94 679 2019 1,351 -12.2% -13.9% AF GRUPPEN GRUPPENAF AF ORDER BACKLOG ORDER OPERATING PROFIT NOK MILL. NOK PROFIT OPERATING -25 -40 672
2020
1,365 -3.7% -5.9% 672 ANNUALANNUAL REPORTREPORT 2020 2020 220 AF Gruppen 5,510 REVENUES REVENUES NOK MILL. EMPLOYEES NOK million Revenue Operating profit (EBIT) profit Operating Earnings before tax (EBT)Earnings before margin Operating Profit margin Profit backlogOrder OFFSHORE KEY FIGURES KEY 78
BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 79
STABLE LEVEL Challenging market conditions, OF ACTIVITY the impact of Covid-19, as well as a AND WEAK standstill in production at Vats for much PROFITABILITY of the first half of the year, affected profitability for Offshore in 2020.
AF has varied activities aimed at the conditions with vulnerable projects MARKET OUTLOOK maritime business and the oil and and a reduced level of activity for The market for the removal of off- gas sector. Our services range from offshore technicians as a result of shore installations has been marked new construction and modification of Covid-19 and associated infection by delays and strong competition. climate control systems (HVAC) for control measures. However, latest estimates from
the offshore and marine markets, to At year end, the Offshore busi- the British industry organisation BUSINESS AREAS the removal and recycling of offshore ness area had an order backlog of Oil & Gas UK show expectations of installations. AF has a state-of- NOK 1,365 million (1,351 million). a high volume for the demolition the art facility for environmental and removal of decommissioned clean-up at Vats. SUSTAINABILITY oil installations going forward. It is Offshore consists of the business AF Offshore Decom's business con- expected that more than 900,000 units AF AeronMollier and AF Off- cept is based on solving a significant tonnes of top deck must be removed shore Decom with subsidiaries. societal challenge by removing in the North Sea during the period and recycling decommissioned oil from 2020 to 2029. This applies to YEAR 2020 IN BRIEF platforms. The unit aims to recycle the British, Norwegian, Danish and The Offshore business area reported as much of the materials from the Dutch sectors. The recycling of steel revenues of NOK 672 million decommissioned offshore platforms from decommissioned oil platforms (679 million) for 2020. Earnings as possible. In recent years, the unit represents a significant contribu- before tax were NOK -40 million has achieved a source separation rate tion to reducing greenhouse gas (-94 million). This gives a profit mar- of 94 per cent for the structures for emissions compared with ordinary gin of -5.9 per cent, compared with recycling, where the main compo- steel production. This could make a -13.9 per cent in 2019. nent is metal. Reusing steel results in positive contribution to the demand
AF Offshore Decom increased its 70 per cent less CO2 emissions than for this type of service. revenues in 2020 from the previous ore-based production, which corre- For AF’s offshore climate control year, but delivered a negative result. sponds to an emission reduction of 1 business (HVAC), as well as main-
The unit’s revenues and profitability kg CO2 per kilo of recycled steel. AF tenance and modifications, market largely depend on the timing of off- Offshore Decom demolished and facil- conditions remain challenging. How- shore campaigns, as well as the level itated the recycling of approximately ever, electrification of the marine of activity at the Miljøbase Vats. The 22,000 tonnes of steel in 2020, corre- sector and installations on the Nor- unit had only minor offshore cam- sponding to a reduction of alternative wegian shelf provides new market
paigns in 2020 and mainly prepared CO2 emissions of 22,000 tonnes. opportunities. The Government's
for upcoming offshore campaigns AF AeronMollier's business climate plan proposes that the CO2 in 2021 and 2022. A standstill in contributes to reducing greenhouse tax be adjusted upwards from NOK production at Vats in the first quarter gas emissions through electrification 590/tonnes today to NOK 2,000/ and limited activity at the base in the and improving energy efficiency in tonnes in 2030, which can help second quarter impacted profitability the marine sector. In 2020, the unit accelerate the pace of electrification. in the first half of the year. There was supplied systems and equipment for The oil price fluctuated significantly a high level of activity at Vats and electrification of 33 ferries, which in 2020, and despite the oil price good profitability for our demolition corresponds to around half of the now being back at its opening level business in the second half of the Norwegian market. Electrification in 2020, Covid-19 is still contribut- year. A high level of demolition activ- of ferries means that the ferries ing to uncertainty in the oil industry, ity is expected at Vats in 2021. are mainly charged with electricity which in turn may affect AF's opera- AF AeronMollier had lower from the grid through ordinary tions in the future. revenues in 2020 than in 2019, but grid production, thus resulting in a delivered positive results for 2020. significant reduction in greenhouse The fall in revenues reflects, among gas emissions compared to the use other things, challenging market of fossil fuels. 80 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 81
SELECTED PROJECTS
CURLEW FPSO AF Environmental Base Vats will dismantle and recycle the production vessel Curlew FPSO (Floating Production, Storage and Offloading). The contract awarded in the international competition includes engineering, preparations, dismantling and recycling. Curlew is a 235 meter long vessel manufactured in 1983, and has been in operation in the British sector of the North Sea. A total of 25,000 tonnes of steel will be cut up, cleaned and separated at source. The project is due for completion in 2024.
BUSINESS UNIT: AF OFFSHORE DECOM CLIENT: SHELL UK LTD COMPLETION: 2024 BUSINESS AREAS
BRENT A JOTUN B ULSTEIN
The 44-year-old Brent A platform is The Jotun B platform has been extract- The ships National Geographic one of four platforms that operated on ing oil on the Norwegian shelf in the Endurance and National Geographic the Brent field northeast of Scotland in central North Sea since 1999, and was Resolution are built by Ulstein Verft the British sector of the North Sea. At removed from the Balder field by Heer- according to X-Bow design for the cus- over 10,000 tonnes, the Brent A jacket ema in 2020. AF Environmental Base tomer Lindblad Expeditions, and will be is one of the largest of its kind, and the Vats received the 8,200-tonne jacket in able to operate in a polar environment largest structure that has been lifted the summer of 2020, which was then all year round. AF AeronMollier is onto the quay of AF Environmental the largest of its kind received at the responsible for the engineering and Base Vats in one horizontal lift. At the base. The structure has been divided delivery of complete ventilation and base, the jacket must be cleaned of into several stages for source separa- air conditioning systems (HVAC), and marine fouling and loose parts must tion and recycling. Recycled steel is provisions for the ships. The delivery be removed before the construction is used for rebar, among other things, includes, among other things, Aeron further divided into smaller parts. The and the work of recycling the structure Connect which makes it possible to work of source separation and prepar- will continue in 2021. monitor and remotely control the HVAC ing Brent A for recycling will continue system from shore. Endurance was into 2021. BUSINESS UNIT: AF OFFSHORE DECOM delivered in the spring of 2020, while CLIENT: HEEREMA MARINE CONTRACTORS Resolution is expected to be completed BUSINESS UNIT: AF OFFSHORE DECOM COMPLETION: 2021 in the autumn of 2021. CLIENT: SHELL UK LTD. COMPLETION: 2021 BUSINESS UNIT: AF AERONMOLLIER CLIENT: ULSTEIN VERFT COMPLETION: 2021 82 ANNUAL REPORT 2020 AF GRUPPEN BUSINESS AREAS BUSINESS AREAS CIVIL ENGINEERING CONSTRUCTION BETONMAST PROPERTY ENERGY AND ENVIRONMENT SWEDEN OFFSHORE 83
REUSING GRITTING SAND Gritting sand is a challenge for Norwegian municipalities. The material that remains when ice and snow are gone contains environmentally hazardous substances, and most goes to landfill. AF's environmental park at Nes has found the solution to the problem. With the latest in cleaning technology, brake dust from cars, leaves, plastic and other rubbish is removed, so that up to 80 per cent of the material can be reused. The treatment technology at the environmental park has made a name for itself both in Norway and internationally. BUSINESS AREAS 84 ANNUAL REPORT 2020 AF GRUPPEN SHAREHOLDER INFORMATION
ENVIRONMENTAL BENEFIT FOR RESIDENTS. Slippery winter pavements and roads in Bærum were strewn with recycled gritting sand for the first time. SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 85 SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
86 CORPORATE MANAGEMENT TEAM 88 BOARD OF DIRECTORS 90 CORPORATE GOVERNANCE 92 THE SHARE 86 ANNUAL REPORT 2020 AF GRUPPEN
CORPORATE MANAGEMENT TEAM
SVERRE HÆREM (1965) CFO
Sverre Hærem has been the CFO of AF since 2007. During the period from 2012 to 2013, he was also the Executive Vice President for the Energy business area. He has previously been the CFO of Fjord Seafood ASA and CFO of Dyno. Sverre Hærem has an advanced economics degree (siviløkonom) from BI Norwegian Business School. He owns 142,464 shares and 23,110 options in AF Gruppen ASA as at 31 December 2020. AMUND TØFTUM (1978) CEO
Amund Tøftum joined AF in 2005 and was executive vice president for Construction, Betonmast and Offshore SHAREHOLDER INFORMATION before becoming CEO of AF Gruppen from 24 August 2020. He has also been pro- ject director at AF Offshore Decom and has experience from business development and various operational roles at AF. Tøftum has an advanced engineering degree (sivilingeniør) from the Nor- wegian University of Science IDA AALL GRAM EIRIK WRAAL and Technology (NTNU). He (1977) (1979) owns 109,925 shares and Executive Vice President Executive Vice President 20,833 options in AF Gruppen ASA as at 31 December 2020. Ida Aall Gram is responsible Eirik Wraal is responsible for the for the Property business Energy & Environment business area, as well as HR and area, parts of the Construction Communication. She came business area and corporate to AF as a portfolio director social responsibility at AF Grup- for AF Eiendom in 2017. She pen. He was previously head of has previous experience AF Decom and has been with from Gyldendal, Orkla AF since 2004. Wraal has also Eiendom and McKinsey and held various operational roles has an advanced degree in in AF’s environmental business economics (siviløkonom) and has an advanced engineer- from BI Norwegian ing degree (sivilingeniør) from Business School. She owns the Norwegian University of Sci- 14,022 shares and 20,488 ence and Technology (NTNU). options in AF Gruppen ASA He owns 31,943 shares and as at 31 December 2020. 20,660 options in AF Gruppen ASA as at 31 December 2020. SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 87
TORMOD SOLBERG (1971) Executive Vice President
Tormod Solberg joined the Corporate Management Team on 1 October 2020, and is responsible for the Construction business area. He has held various leadership roles at AF Gruppen since 2006, and came from the position of CFO of AF Bygg Oslo. As Director of Quality and Risk, he was instrumental in establishing AF Gruppen's risk management model. Solberg has a background as project manager in ABB and as a consultant at PwC. He owns 41,554 shares and 8,913 options in AF Gruppen ASA as at 31 December 2020. SHAREHOLDER INFORMATION
BÅRD FRYDENLUND GEIR FLÅTA (1968) (1978) Executive Vice President Executive Vice President
Bård Frydenlund is Geir Flåta is responsible for responsible for the Sweden the Civil Engineering and and Betonmast business Offshore business areas. He areas. He was previously was previously Director for director of Personnel and AF Nybygg and has broad Organisation and has held project and managerial expe- various roles in human rience from construction and resources and finance since civil engineering activities at 2000. Bård Frydenlund AF. Flåta has an MBA from the has a degree in economics Norwegian School of Econom- (diplomøkonom) and ics (NHH) and an advanced Master of Management engineering degree from the from BI Norwegian Business Norwegian University of Sci- School. He owns 162,703 ence and Technology (NTNU). shares and 20,833 options He owns 1,092 shares and in AF Gruppen ASA as at 20,488 options in AF Gruppen 31 December 2020. ASA as at 31 December 2020. 88 ANNUAL REPORT 2020 AF GRUPPEN
BOARD OF DIRECTORS
PÅL EGIL RØNN (1968) Board Chairman
Pål Egil Rønn was the CEO of AF Gruppen from 2007 to 2015. Since starting at AF in 1999, he held various leadership positions. His other board positions include Bouvet AS, Eidsiva Energi AS, Sparebank 1 Gudbrandsdalen and Øster Hus Gruppen AS. He has an advanced engineering degree (sivilingeniør) and doctorate from the Norwegian University of Science and Technology (NTNU). SHAREHOLDER INFORMATION
HEGE BØMARK KRISTINA ALVENDAL KENNETH SVENDSEN KRISTIAN HOLTH (1963) (1972) (1973) (1984) Board Member Board Member Board Member Board Member
Hege Bømark has a Kristina Alvendal is the CEO Kenneth Svendsen is an Kristian Holth has a background as a financial and owner of a property employee representative on background as the CFO analyst at Fearnley Finans development company, the Board of Directors. He of KB Gruppen AS and (Fonds) AS and Orkla and the former CEO of has been with AF Gruppen Contiga AS. He also has Finans (Fondsmegling) AS. Airport City Stockholm since 1998 and has had experience from McKinsey Past board positions have AB. Alvendal has had a various roles within the & Company. Other board included Norwegian Property long political career in company, including positions include Gunnar ASA, Fornebu Utvikling Stockholm, including as surveying supervisor, Holth Grusforretning AS, ASA and BWG Homes ASA, Deputy Mayor of Stockholm operations manager and BRG Entrepenør AS and and she is currently a board with responsibility for urban project manager. He is Grunn-Service AS. He has member of Europris ASA, and property development. currently a Division Director an advanced engineering and OBOS-banken AS. She She also sits on a number of at AF Anlegg. He has a degree (sivilingeniør) in has an advanced economics boards. She is a lawyer with degree in construction industrial economics from degree (siviløkonom) from specialisation in English law. and civil engineering from the Norwegian University the Norwegian School of Narvik University College. of Science and Technology Economics (NHH). (NTNU). SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 89
HILDE WIKESLAND FLAEN ARNE SVEEN BORGHILD LUNDE ARNE BAUMANN (1983) (1970) (1965) (1962) Board Member Board Member Board Member Board Member
Hilde Wikesland Flaen is an Arne Sveen is an employee Borghild Lunde is Executive Arne Baumann is an employee representative representative on the Vice President of Aibel with Executive Vice President on the Board of Directors. Board of Directors. He has responsibility for Business of OBOS Boligutvikling She has been employed by worked for AF since 1999, Development and Purchas- in Norway and Sweden. AF Gruppen since 2008 and as the chief employee rep- ing Management. She has He has worked for OBOS SHAREHOLDER INFORMATION has varied experience as a resentative and chief safety previously held a number of since 2002 and has project engineer, operation representative for the past leadership positions at ABB, broad experience from supervisor, site manager fourteen years, with respon- including as Director of Oil, residential development and contract manager sibility for the Collective Gas and Chemicals. Lunde and the development at AF Anlegg. She has an Agreement for Construction is also Board Chairman at and management of advanced engineering Trades. Previously, he Tonito. She holds advanced commercial buildings. He degree (sivilingeniør) in worked as a crane operator/ engineering degree (siv- has an advanced degree in structural engineering and site preparation worker for ilingeniør) in Engineering economics (siviløkonom) architecture from UMB. AF Bygg Oslo. Cybernetics from the Nor- from the BI Norwegian wegian University of Science Business School and holds and Technology (NTH). an MBA from the University of Wisconsin-Madison.
KJETEL DIGRE (1969) Board Member
Kjetel Digre is CEO of Aker Solutions. He was previously Senior Vice President Operations at Aker BP, where he worked on digitalisation of the Norwegian continental shelf. He has had a long senior management career in which he has led major offshore projects for Equinor, such as the Johan Sverdrup and Gjøa prospects. He has a MSc in Subsea Engineering from Heriot-Watt University. 90 ANNUAL REPORT 2020 AF GRUPPEN
CORPORATE AF Gruppen is a value-based company GOVERNANCE with a strong culture. AF Gruppen’s values together with the principles for risk management and internal control make up the cornerstones of corporate governance.
KEY EVENTS IN 2020 BOARD OF DIRECTORS In 2020, work on a new strategy that will apply until 2024 was an important item for the Board of Directors. Members Number of Attendance The strategy continues the ambition of profitability and shares 1) record growth and the goal for 2024 is a revenue of 40 billion and an operating margin of 7 per cent. Four initiatives Pål Egil Rønn (Chairman) 207,225 16 will be prioritised to achieve these goals: disciplines and Arne Baumann 17,183,709 16/16 management, customers and suppliers, climate and Kristian Holth 15,616,856 16/16 environment as well as innovation. Hege Bømark - 16/16 The Covid-19 pandemic with associated infection Borghild Lunde 26,048 15/16 control measures also impacted the work of the Board Kjetel Digre - 16/16 of Directors. The Board of Directors followed develop- Kristina Alvendal - 16/16 SHAREHOLDER INFORMATION ments closely and assessed emergency preparedness Kenneth Svendsen 102,514 16/16 in AF Gruppen and the need for measures on an ongo- Hilde W. Flaen 27,337 16/16 ing basis. Different scenarios for the effects on the Arne Sveen - 14/16 business were analysed, such as the extent of shutting 1) Number of shares owned as at 31 December 2020 includes shares that down society and restrictions on employee mobility. belong to the immediate family and companies in which the individual has a controlling influence.
WORK OF THE BOARD OF DIRECTORS Good corporate governance is the responsibility of the BOARD’S AUDIT COMMITTEE Board of Directors. The Board of Directors annually Hege Bømark (Chairman) reviews AF Gruppen’s principles and code of practice Borghild Lunde for corporate management and prepares a statement Kjetel Digre in accordance with the Norwegian Code of Practice of 17 October 2018, cf. www.nues.no. BOARD’S COMPENSATION COMMITTEE The Board has an established annual plan for its Pål Egil Rønn (Chairman) Kristian Holth work. The annual plan includes a review of risk areas Arne Baumann and internal control, as well as the approval of the Kristina Alvendal strategy, interim financial statements, annual financial statements and budget. In addition, our core values, NOMINATION COMMITTEE guidelines for ethics and social responsibility and Roar Engeland (Chairman) organisational structure will be reviewed. Marianne E. Johnsen Roy G. Holth In addition to the regular items, the Board of Peter Groth Directors considers all potential acquisitions, site investments and contract tenders with a contract sum EXTERNAL AUDITOR in excess of NOK 600 million. The tenders are consid- PricewaterhouseCoopers AS ered, for example, on the basis of strategic, financial and organisational criteria, and important risk factors are highlighted in particular. Contracts with a lower contract sum are also considered by the Board of The complete statement of Directors if the risk situation or other factors indicate corporate governance is so. In 2020, the Board of Directors considered 12 ten- available at afgruppen.com ders before the tenders were submitted. SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 91
AF’S COMPLIANCE WITH THE NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE
Section of the Norwegian Code of Practice for Corporate Governance Deviation from the Code of Practice
1 Statement of corporate governance No deviation 2 Activities No deviation 3 Share capital and dividends No deviation 4 Equal treatment of shareholders and transactions with related parties No deviation 5 Negotiability No deviation 6 General Meeting Two deviations, see the text below 7 Nomination Committee One deviation, see the text below SHAREHOLDER INFORMATION 8 Corporate Assembly and Board of Directors – composition and independence No deviation 9 Work of the Board of Directors No deviation 10 Risk management and internal control No deviation 11 Directors’ fees No deviation 12 Remuneration of executive personnel One deviation, see the text below 13 Information and communication No deviation 14 Company takeover No deviation 15 Auditor No deviation
DEVIATIONS FROM THE NORWEGIAN CODE OF PRACTICE FOR CORPORATE GOVERNANCE
In the opinion of the Board of Directors, AF Gruppen has deviations Section 7. Nomination Committee from three of the sections in the Code of Practice: AF Gruppen has one deviation from the Code of Practice for this section. The majority of the Nomination Committee is not independent of the Section 6. General Meeting Board of Directors. AF Gruppen has two deviations from the Code of Practice for this section. The General Meeting is not chaired by an independent Section 12. Remuneration of executive personnel chairperson, but by the Board Chairman. The fact that the General AF Gruppen has one deviation from the Code of Practice for this Meeting shall be chaired by the Board Chairman in stipulated in the section. There is no ceiling for performance-related remuneration for Articles of Association. The need for an independent chairperson has employees. This has been adopted by the Board of Directors with the not been considered necessary either based on the items that are aim that employees, in the same manner as the owners, shall have an reviewed at the General Meeting and a limited degree of disagreement opportunity to share in the creation of value without limitation. among the shareholders.
The second deviation from this section is the fact that not all the board members attend the General Meeting. The Board of Directors considers it adequate that the Board Chairman, Chairmen of the Audit Committee and Chairman of the Compensation Committee are present. Other board members will attend as required. 92 ANNUAL REPORT 2020 AF GRUPPEN
After a year of major stock market fluctuations, THE SHARE the AF share ended at the same price level as at the end of 2019. Including the dividend of NOK 9.50, this yielded a total return of 5.6 per cent in 2020.
The AF share price was NOK 175.60 at the end of the DIVIDEND last trading day of 2020. In 2019, the share price was A total of NOK 9.50 per share was paid in 2020 for the NOK 176.00 at year end. Adjusted for a dividend of 2019 financial year. The company paid a dividend for NOK 9.50 per share, this gives a total return of 5.6 per cent the first half of the year of NOK 6.00 per share in May for 2020. The Oslo Børs Benchmark Index (OSEBX) 2020, and a dividend for the second half of the year of showed a return of -4.6 per cent for the same period. NOK 3.50 per share was distributed in November 2020. For the 2020 financial year, the Board proposes HISTORY payment of a dividend of NOK 6.5 per share for the first AF Gruppen was established in 1985 and was listed on half of 2021 to the General Meeting. The dividend will 8 September 1997. The shares in AF Gruppen are listed be distributed on 25 May to the shareholders of record on the Oslo Børs OB Match List and trade under the as at 11 May 2021. ticker symbol AFG. There is only one class of shares, and Dividends are paid out up to twice a year if the all the shares carry voting rights. The shares are included company’s earnings are able to justify such. Distribu- in the total index, benchmark index, fund index and tion will preferably take place after the Annual General industrials index. Meeting in May and after presentation of the quarterly AF Gruppen has provided good returns over time to results for the 3rd quarter. its shareholders. Over the last five years, the AF share has Over time, AF Gruppen should provide its share- yielded a return of 68.3 per cent, including dividends. holders with a competitive return. Provided that the SHAREHOLDER INFORMATION This corresponds to an average annual return of 11.0 per underlying performance is satisfactory, AF Gruppen cent. In comparison, the Oslo Børs Benchmark Index assumes that dividends will be stable and, preferably, rose 59.6 per cent over the last five years, which corre- rise in the future. The Board evaluates the company’s sponds to an average annual return of 9.8 per cent. liquidity and possible strategic transactions before AF Gruppen’s goal is to create value for shareholders proposing a dividend to the General Meeting. The through a competitive return relative to comparable intention over time is to distribute a minimum of investment alternatives. This return will be a combina- 50 per cent of the profit per share for the year as a tion of dividends and share price appreciation. dividend per share.
EARNINGS PER SHARE (NOK) DIVIDEND PER SHARE (NOK)
9.21
*
6.50 * Proposed, not approved dividend for first half of 2021. SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 93
KEY FIGURES FOR THE SHARE
2020 2019 2018 2017 2016 2015 2014 2013 2012 2011
Key figures for the share 18,613 18,139 13,069 13,078 14,463 12,929 7,009 5,578 4,578 3,556 Number of shares traded (1,000) 8,292 6,537 4,360 8,137 6,690 10,370 7,102 2,559 2,568 2,095 Total number of shares as at 31/12 (Mill.) 106.00 103.07 99.01 97.96 93.61 92.68 88.72 82.33 81.38 80.81 Number of shareholders as at 31/12 4,520 3,582 3,303 3,158 2,737 2,575 1,815 1,494 1,407 1,254
Share prices as at 31/12 175.60 176.00 132.00 133.50 154.50 139.50 79.00 67.75 56.25 44.00 – High 183.00 185.00 142.00 162.00 164.50 139.50 82.00 72.00 59.25 53.00 – Low 128.50 135.50 118.50 122.00 120.00 77.25 66.50 54.75 41.50 38.60
Earnings per share (NOK) 9.29 8.51 7.88 6.43 7.44 7.64 5.11 5.26 2.40 3.83 Diluted earnings per share (NOK) 9.27 8.46 7.88 6.43 7.29 7.50 5.09 5.11 2.37 3.83 Dividends per share (NOK) 6.501) 9.50 8.50 8.50 8.50 8.00 8.00 6.00 4.50 4.50
Distribution ratio2) 70.0% 111.6% 107.9% 132.2% 114.2% 104.7% 156.6% 114.1% 187.5% 117.5% Direct return 5.4% 6.4% 6.4% 5.5% 5.7% 10.1% 8.9% 8.0% 10.2% 11.3%
Share's total return 5.6% 40.3% 5.6% -8.3% 15.0% 89.2% 25.5% 28.4% 38.1% 21.3% SHAREHOLDER INFORMATION
Return on equity (ROE) 36.6% 43.7% 45.4% 35.8% 43.3% 43.8% 34.3% 38.4% 19.0% 28.5% Share price /earnings per share (P/E) 18.9 20.7 16.8 20.8 20.8 18.3 15.5 12.9 23.4 11.5 Share price / equity per share (P/B) 5.3 6.1 6.2 6.3 7.4 7.1 4.7 4.2 3.8 2.7 Return on average capital employed (ROaCE) 0.3 0.4 0.5 0.4 0.5 0.5 0.4 0.5 0.2 0.4 Enterprice value / EBIT (EV/EBIT) 12.5 13.7 10.9 12.8 13.4 12.2 11.2 8.5 13.5 8.0 Enterprice value /Invested capital (EV/CE) 4.0 4.4 5.5 5.4 6.7 6.4 3.9 3.4 3.3 2.1
1) Proposed, not approved dividend for first half of 2021. 2) For 2020, the distribution ratio only include dividends for distribution in the first half of 2021.
ANNUAL TOTAL RETURN AS AT 31 DECEMBER 2020
L L L L L L
AF G N OSEB
* Unweighted average of competing nordic contractors (local currency). 94 ANNUAL REPORT 2020 AF GRUPPEN
GRAPH FOR THE AF SHARE FOR 2020
F M A M A S O N D
T T AF
Number of shares % of total SHARE CAPITAL AND SHAREHOLDER COMPOSITION Shareholders 31/12/2020 31/12/2020
At the end of 2020, the share capital totalled NOK OBOS BBL 17,183,709 16.2% 5,299,924.85, divided into 105,998,497 shares, each with a ØMF HOLDING AS 16,527,342 15.6% nominal value of NOK 0.05. The share capital increased by CONSTRUCTIO AS 14,595,347 13.8% NOK 146,661 and 2,933,220 shares in 2020 in connection FOLKETRYGDFONDET 9,879,650 9.3% with two employee share issues. The issues were made in LJM AS 2,515,217 2.4% SHAREHOLDER INFORMATION connection with the redemption of the option programme ARTEL KAPITAL AS 2,508,267 2.4% from 2017–19 of 2,217,994 shares and for the share pro- VITO KONGSVINGER AS 1,911,676 1.8% gramme for employees in November of 715,226 shares. ARNE SKOGHEIM AS 1,753,870 1.7% During 2020, AF Gruppen gained over 900 new Staavi, Bjørn 1,627,000 1.5% shareholders, and at the end of the year the company had Skandinaviska Enskilda Banken AB 1,329,107 1.3% a total of 4,529 (3,582) owners. Around 1,400 of these are JANIKO AS 1,290,186 1.2% employees of AF, and together they own approximately MOGER INVEST AS 1,242,609 1.2% 12.2 (12.1) per cent of the shares. The ten largest share- FLYGIND AS 1,021,509 1.0% holders own 65.9 per cent of the shares, and OBOS is the VERDIPAPIRFONDET KLP AKSJENORGE IN 747,682 0.7% largest shareholder. OBOS has a total ownership interest STENSHAGEN INVEST AS 609,977 0.6% Eriksson, Erik Håkon 560,000 0.5% of 16.2 (16.5) per cent. 94.9 (93.5) per cent of the shares Landkreditt Utbytte 550,000 0.5% are owned by Norwegian shareholders. State Street Bank and Trust Comp 495,687 0.5% There have been no significant changes in ownership Nordea Bank Abp 457,578 0.4% among the ten largest shareholders during the year. The REGOM INVEST AS 451,394 0.4% largest increase was ØMF Holding, whose ownership Total 20 largest 77,257,807 72.9% stake increased 0.5 percentage points from 15.1 per cent Total other 28,605,690 27.0% to 15.6 per cent. VITO Kongsvinger reduced its ownership Own shares 135,000 0.1% stake by 0.5 percentage points from 2.3 per cent to 1.8 per Total other shares 105,998,497 100.0% cent in 2020. AF Gruppen has been authorised by the General Meet- ing to buy up to 10 per cent of the shares outstanding. Number of shares Number of owners Per cent The buyback of shares will be considered on an ongoing basis in light of the company’s alternative investment 1–100 1,420 0.05% options, financial situation and need for treasury shares 101–500 874 0.22% in connection with the sale of shares to employees, option 501–1,000 419 0.31% programme, bonus programme and acquisitions. At the 1,001–5,000 967 2.18% end of the year, AF Gruppen owns 135,000 shares. 5,001–10,000 356 2.43% 10,001–100,000 405 10.78% LIQUIDITY 100,001–1,000,000 66 14.80% The share’s liquidity is low, but has improved somewhat > 1,000,000 13 69.23% in recent years. Over the last five years, the turnover rate 4,520 100.00% SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 95
GRAPH FOR THE PRICE PERFORMANCE FOR THE LAST 10 YEARS COMPARED WITH COMPETING CONTRACTORS AND THE OSLO STOCK EXCHANGE
AF G V S NCC PEAB O B OSEB
Oslo Stock Exchange and competing contractors rebased, 31 December 2010 =20.36. Local currency, total return.
has ranged from 5 to 8 per cent. In 2020, the rate was Analyst coverage table Telephone 7.9 per cent. In 2020, a total of 8,292,083 (6,536,917) shares were traded on the stock exchange. The AF share ABG Sundal Collier +47 22 01 60 98 was traded on 252 out of 252 possible trading days, and Carnegie +47 22 00 93 54 the average turnover for each trading day was 32,905 DNB Markets +47 24 16 92 09 (26,253) shares. Of the 8.29 million shares that were KeplerCheuvreux +46 8 723 51 75 Pareto +47 24 13 21 39 traded on the stock exchange in 2020, AF Gruppen SHAREHOLDER INFORMATION itself accounted for 468,712 (37,936) shares, corre- sponding to 5.7 (0.6) per cent of the total turnover. These are shares the company bought on the stock exchange for use in the share and bonus programmes exercise the options, it is a condition that must one be for employees. employed by the Group on 1 March 2023. AF Gruppen issued 3,850,000 options to 1,584 employees in 2020. SHARE AND OPTION PROGRAMME The total number of outstanding options, adjusted for Employees of AF Gruppen have the opportunity to employees who have left the company during the year, buy shares through the annual share programme at a was 3,806,660 as at 31 December 2020. discount of 20 per cent on the current market price. In addition, the company has an option programme that is INVESTOR RELATIONS offered to all employees. Our goal is that all investors and other stakeholders shall Through the share programme in 2020, 950 employ- have access to the same financial information on the ees subscribed for a total of 1,000,000 shares at a price company at all times. We assign high priority to contact of NOK 137.80 per share (after the 20 per cent dis- with the stock market and desire an open dialogue with count). In connection with the sale, the Board used its the market players. authority and issued 715,226 new shares. The remain- The information provided by AF Gruppen shall ensure ing 284,774 shares were transferred from the holding of a valuation of the share that is as correct as possible. treasury shares. Information that may affect the price of the shares will be Since 2008, AF Gruppen has also had an option disclosed through stock exchange announcements to Oslo programme for all employees in the Group, and in Børs and on the company’s website. February 2020 2,217,994 options were redeemed by We hold public presentations of our quarterly and 913 employees. The General Meeting adopted a new annual results, and the presentations are transmitted option programme for the next three years in May directly by webcast. Webcasts are available on the web- 2020. The maximum number of options that may be sites of both Oslo Børs and AF (afgruppen.no/investor). allocated is 4,000,000 with an option premium of In addition, the company maintains ongoing contact with NOK 1 per option, and the programme entails annual investors and analysts. The company’s website provides a allotments in 2020–22 and an exercise date in March list of the analysts that follow the AF share. 2023. The purchase price for the shares will be based The company follows Oslo Børs’ recommendation for on the average market price during the week before reporting IR information. Sverre Hærem, Executive Vice the three respective subscription periods. In order to President/CFO, is responsible for investor relations. 96 ANNUAL REPORT 2020 AF GRUPPEN SHAREHOLDER INFORMATION SHAREHOLDER INFORMATION CORPORATE MANAGEMENT TEAM BOARD OF DIRECTORS CORPORATE GOVERNANCE THE SHARE 97
THE KINDER EGG OF SAVING ENERGY Sports facilities require a lot of energy and can be a burden on the municipal economy. Among 140 energy efficiency measures in 21 buildings in Modum municipality, AF Energi & Miljøteknikk has upgraded Furumoen swimming pool with the latest in ventilation systems. A separate pool unit, incorporating dehumidification, recovers the heat from the humid pool air and uses it to heat fresh air that is to enter the hall. This provides energy savings that are good for the economy, residents and the climate. SHAREHOLDER INFORMATION 98 ANNUAL REPORT 2020 AF GRUPPEN BOARD OF DIRECTORS' REPORT
THE JOY OF TRAINING IN THE SWIMMING POOL Energy saving measures improve municipal finances and enable the swimming pool to be kept open every day – to the great joy of young, eager swimmers. BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 99 BOARD OF DIRECTORS' REPORT
BOARD OF DIRECTORS' REPORT
100 BOARD OF DIRECTORS' REPORT 113 CONTRACTS ANNOUNCED ON OSLO BØRS 100 ANNUAL REPORT 2020 AF GRUPPEN
BOARD OF DIRECTORS’ REPORT 2020
AF Gruppen delivered solid results for 2020. AF Gruppen delivered solid results for 2020. Revenues Revenues increased to NOK 27,025 million, and the profit increased tomargin NOK 27,025 for the million, year was and 5.4 the per profit cent . Themargin breadth for the and year overall was 5.4 per cent.power The breadth of the organisationand overall power has never of the been organisation greater, and has thenever been greater,Board and the of DirectorsBoard of Directorsis of the opinion is of the that opinion AF is that well AF positioned is well positioned toto achieve achieve the the goals goals set set for for the the upcoming upcoming strategy strategy period. period.
OPERATIONS T O B A G E PROFIT FOR THE YEAR A A G T NO E A NO NO A G C E REVEN ESREVENUES NO (NOK ILLION MILLION) C B P E E 0 000 S O T O
2 000
27,025 C 20 000
MISSION 000 A G 0 000
000
0 BOARD OF DIRECTORS' REPORT 20 20 2 20 20 20 20 20 20 20 2020 EXPLANATION OF THE FINANCIAL STATEMENTS
T A G EARNINGS NO BEFORE ILLION TAX (NOK MILLION)
I R 00 S I RS T A G ASA 00
I RS T B D 200 1,447
000 00 D I N 00 B D 00 200 0 20 20 2 20 20 20 20 20 20 20 2020 E NO T
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 101
T CAS CASH LO FLOW RO FROM OPERATIONS OPERATIONS NO (NOK ILLION MILLION) T C A A T 1,189 E N V C E C A B A G N P ATEA THE SHARE O E NO D E E NO T B NO T O T NO T B BALANCE SHEET AND LIQUIDITY G T T B O I T A NO RETURNRET RN ON ON CAPITAL CAPITAL E PLOYED EMPLOYED T
NO T NO T DISTRIBUTION OF COMPREHENSIVE INCOME FOR THE YEAR
34.8% C A G ASA NO BOARD OF DIRECTORS' REPORT
T NO P NO T NO T NO D A G NO BUSINESS AREAS 2020 NO CIVIL ENGINEERING T C E N N NO A A T C A A NO A N NO A G ASA
T T
102 ANNUAL REPORT 2020 AF GRUPPEN
G NOK million 2020 2019 2018 I P NO R O EBIT E EBT O P T O
I C E C NO E NO T CONSTRUCTION A A C A G T E N V I T C C N E ROT C N B T C E N B T C T A B O A B A N A B S G S G V A C B N EI ON LAB E B A A E AS T B TB A L T P T NO VAT T E R S NOK million 2020 2019 2018 A R NO VAT T O EBIT E EBT D O I C E P BOARD OF DIRECTORS' REPORT NO NO O
C NO NO T N T C C N I S B NO T P N C O C T A B O B B A B NO E S G V
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 103
N C N T C BETONMAST A B O B NOR E S V T N S T S T NO B VAT B C E C S E N R A B N D A B S B O B R B B V B B B R B R B T T NO B B I B VAT A T A S T B G B G T B B S B E A B E NO VAT NOK million 2020 2019 2018 S R LAB E O EBIT B E EBT L B O P O B T T NO B NO VAT NO I C NO T B A G O NO T T N A G T BOARD OF DIRECTORS' REPORT NO N T B O B R P B B T R I O N B B B B ROT D T S B O A B G S A B G T T I A P A B E O N P B V V
104 ANNUAL REPORT 2020 AF GRUPPEN
T T ATEA N O S B R O P L G O L T B B A A T NO VAT B B L G L T B S B A L A A P C T NO VAT I S S L B T NO VAT A B T NO NO B B A L T T S B B T L B A A N S S C S P L N PROPERTY T L N T P G A N T A A A T T A P N
BOARD OF DIRECTORS' REPORT N A O NOK million 2020 2019 2018 R B P O EBIT N E EBT R I N B NUMBER OF UNITS 1) A N B C I
LAND AND DEVELOPMENT RIGHTS 1) E ENER Y AN EN IRON ENT I 1) AF´s share of housing units and area m2 T E E A E A D P NO A E T
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 105
A D I A D L C N NOK million 2020 2019 2018 E R O EBIT E EBT O P T O P T E E T NO E NO T O O A D T SWEDEN A E S A G S D B S B A E T G S S S T E P A B G A N B S A P A B B NO NOK million 2020 2019 2018 A O A R A E O EBIT A T E EBT E N S E NS O T P BOARD OF DIRECTORS' REPORT O NO VAT A D S I S NO E N R A N E NO R T N T C P B I S T P T T T S NO A B VAT I E E NO T S B NO A B S A B G A
106 ANNUAL REPORT 2020 AF GRUPPEN
B G B G C S OFFSHORE T A O I S NO VAC A NO V O A A N A O D O A S R AB V V A NOK million 2020 2019 2018
S T SE R VAT O EBIT E E EBT T A B AB T O SE VAT P O D S A B T O NO G B E NO R I T G B T SE A O D VAT B R V T SE VAT E B V T A T C S V S I T V R A
BOARD OF DIRECTORS' REPORT B V A A D C T S I C I O S C N A G S L T S C T PSO N S T T A O D C S E PSO V I O NO T A S NO
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 107
A T G T A G ASA B O G I G C I N S T B N D D T DIVERSITY AND INCLUSION O T T T A A N T G CO NO A I NO T C T T A C A I A D A ORGANISATION, HEALTH, SAFETY AND THE ENVIRONMENT O A A A PERSONNEL AND ORGANISATION D R A G A A A A D T N T A
BOARD OF DIRECTORS' REPORT S A G T A G T T A T S A A A I I A A A G A G A T A G
108 ANNUAL REPORT 2020 AF GRUPPEN
C C T C C D A A A T S L T T A A G I R I T A LTI A A LTI WHISTLEBLOWING P I A G T A G T LTI LTI
LTI1-RATE EMPLOYEE OWNERSHIP LTI RATE A G
T A 1.8 I
T NO A
A G T G A BOARD OF DIRECTORS' REPORT T G T LTI A G T T I A N T A T B G TB I P A D N S T HEALTH AND SAFETY T A G LTI B S D LTI B T LTI I
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 109
A G S A A S P S I PSI T A A T T B D A A G T A A S A A A ISO A G G D ABSENCE DUE TO ILLNESS ABSENCE D E TO ILLNESS I A
4.6% Source separation and recycling I N T I A T A BOARD OF DIRECTORS' REPORT T T Greenhouse gas emissions T
CO
A A CO I A R A T T CLIMATE AND ENVIRONMENT A A A S T T C
110 ANNUAL REPORT 2020 AF GRUPPEN
E T COVID A T T A G A Services that solve climate and environmental challenges A T I C A C BREEA NOR T O E A E A A A T I T C
CO R T
CO T
CO A O D FINANCIAL RISK A D I
CO T A E B V T
A Foreign exchange risk T G C E C B BOARD OF DIRECTORS' REPORT P E E S P O A E R SD T I E R SD A A G NO RISK, MARKET OUTLOOK AND STRATEGY A G RISK MANAGEMENT AND FINANCIAL RISK T G A G R N O T G C NO T
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 111
NO D I NO I SE T NO T MARKET OUTLOOK AND STRATEGY NO Commodity price risk G NO T O B N S A T C A N T A G NO A C A V Interest rate risk T G T G A A G P G T G C T Credit risk NO A T G G
G BOARD OF DIRECTORS' REPORT V S B I P NO A T Liquidity risk L C P I A G DNB NO N T ROT DNB NO D NO T O S A T NO D T P NO D
112 ANNUAL REPORT 2020 AF GRUPPEN
O O O S A S A P S S T A P S T P O V V B O S T V V B O V V N B S S O I A A N S I A P N LABN S S T I A N LAB C N V V N B LAB O T B TB C N T B TB C N N S E T A B I TB A Y Y Y E A T N LAB S E A T S T C S I N S T B TB S ORDRERESERVEORDRERESERVEORDRERESERVEI NO NO NO C Y Y Y Y Y I S R I E A S S S C I B R I C T I R S R R R B I S B ORDRERESERVE ORDRERESERVE ORDRERESERVE I I ORDRERESERVE ORDRERESERVE NO NO NO NO NO B D T R R R B D T D S S C S C S S I R B D T D C R R D R R R C S B I 28 200 28 200 28 200 28 200 S T R R R R R S B D T D D D D C I O S T
T 28 200 28 200 28 200 28 200 28 200 I O S D D D C S I O S T C T C D D D D D S A T T S S S S A I O S D T D S D D D A S S S B B B T C T T S S S S S S S S S A D D D S S S T S S S S S B B B B B C S S S S S A G C A G D D C D D D S S S S S A G T C T A A A G G G T C T C T E E E C A T S A G B A A A A S B A S D A A G A G A G A G G T B D T C B D D D D T B D C T D T B E E E D E E C A A A A A A G G G A A A A A C S A S A G B S A G I A S D D T D D D D A G T B D I A T I A C A G A A A T A A A A A G A G A G A G G A G A A A A NO A G S A A G NO A A A G G G I A NO O B T T O B D D D T G S T A G O B A A A A A A T A G O O S O B B B T G G G S S S A A A A G NO A S G T A A G A G A G A G G A D D D A G A G I O B D D D D D T B B B ABAB AB B B B I S S S G O O S O B O B O B B G B T G G I G G S S S S S T B A A A A A A A A A T B D D D D D T A B G AB B T B T S S S B AB B B B B B B B B B AB T AB B AB B AB B AB B B B I AB B S S S S S BOARD OF DIRECTORS' REPORT A A A A A T B T S S S S S B AB B B B B B B
OSLO ARC OSLO OSLO OSLO OSLO . .APRIL APRIL . ARC APRIL OSLO ARC
OSLO ARC OSLO OSLO OSLO OSLO . OSLO APRIL . APRIL. APRIL . .APRIL APRIL
P P E P E E R R R B B B B B B L L L A A A B B B
StyretsStyretsStyrets leder leder leder P E R B B L A B
BoardP ChairmanP E P E R P E P R E R E R R B B B B B B B B B L B L L L L A A B A B A A B B B P E R B B L A B Board Chairman StyretsStyretsStyrets leder StyretslederStyrets leder leder leder Board Chairman P E R B B L A B A Board T Chairman S S S S A A A A S S S S A A A A KonsernsjefKonsernsjefA KonsernsjefCEO T S A S A A T S A S A CEO CEO S S S S S A A S A S A A S S S A A A A A KonsernsjefKonsernsjefA KonsernsjefKonsernsjefKonsernsjef T S A S A CEO The document is signed electronically and therefore has no hand-written signatures.
BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED 113
CONTRACTS ANNOUNCED ON OSLO BØRS IN 2020 1)
Business Area Customer Project Contract amount excl. VAT Currency
Civil Engineering The Swedish Transport Administration Road and tunnel construction on E4 Forbifart (Stockholm) 3,400 SEK Civil Engineering Helse Sør-Øst Basement construction at the new Drammen hospital 300 NOK Civil Engineering Entreprenørservice AS Wind park construction in Odalen 100 NOK Civil Engineering Helse Sør-Øst Access road to the new Drammen hospital 120 NOK Construction Bærum kommunale pensjonskasse Reconstruction of the Municipality building in Sandvika 800 NOK Construction Omsorgsbygg Oslo KF Construction of the Furuset Hageby nursing home (Oslo) 484 NOK Construction Clemenskvartalet Holding AS Construction of the Clemens quarter in Bispevika South (Oslo) 420 NOK Construction Bergen municipality Rehabilitation of Bergen Inclusion Center 415 NOK Construction Helse Sør-Øst Structural construction and piling, new Drammen hospital 347 NOK Construction Storøykilen Utvikling Construction of apartments in Storøykilen at Fornebu (Bærum) 337 NOK Construction Thune Eureka (Fram Eiendom) Construction of office building at Skøyen (Oslo) 285 NOK Construction Hotell Østre AS (Avinor) Extension of the Gardermoen Park Inn Hotel 250 NOK Construction Entra Construction of office building in Bergen 233 NOK Construction Bane NOR Eiendom Construction of train workshop at Støren (Trøndelag) 217 NOK Construction Kråkehaugen Construction of 55 apartments in Bergen 185 NOK Construction Tandberg Eiendom Residential and commercial building construction in Asker 170 NOK Construction Værste AS Commercial and office building construction in Fredrikstad 163 NOK Construction Lier Eiendomsselskap KF Construction of a new extension for a nursing home in Lier 135 NOK Construction Haraldsplass Diakonal Stiftelse Interior work on a new hospital building (Bergen) 129 NOK Construction Studentsamskipnaden i Østfold Construction of 213 new student apartments in Halden 126 NOK Construction Storgata 3–5 AS Construction of the new Dokkenkvartalet in Sandefjord 119 NOK Betonmast Lørenskog municipality Construction of a new Fjellhamar school at Lørenskog 1,200 NOK Betonmast Fredensborg Bolig Construction of 423 apartments at Lørenskog 900 NOK Betonmast Selvaag Bolig Construction of 187 apartments in Asker 630 NOK Betonmast Selvaag Bolig Construction of 241 apartments in Lørenskog 515 NOK Betonmast Avantor Construction of office building in Nydalen (Oslo) 400 NOK Betonmast Ailon Partners AB Construction of 355 student apartments in Kista (Stockholm) 300 SEK Betonmast Volvo Real Estate Construction of workshop, office and parking in Gothenburg 250 SEK Betonmast Scandinavian Property Group (SPG) Construction of 256 apartments in Strømstad 239 SEK Betonmast Conceptor Bolig Construction of 87 apartments in Hamar 228 NOK Betonmast Porsgrunn Bolig Construction of apartments at Frednes Brygge in Porsgrunn 210 NOK Betonmast Vestaksen Eiendom Office building construction in Drammen 200 NOK Betonmast Malmö kommunala bostadsbolag Construction of 142 apartments in Malmö 198 SEK Betonmast Stena Fastigheter Office building construction in Gothenburg 190 SEK Betonmast Klosterøya Vest Construction of 69 apartments on Klosterøya (Skien) 190 NOK Betonmast Midtbyen Pale Residential and commercial building construction in Brumunddal 176 NOK Betonmast Västerstaden AB Construction of 97 apartments Gothenburg 174 SEK BOARD OF DIRECTORS' REPORT Betonmast Realinvest Office building construction in Tronheim 150 NOK Betonmast Boligbygg Oslo KF Internal building rehabilitation at Ryen (Oslo) 147 NOK Betonmast Brabo Construction of 109 apartments in Upplands Väsby 145 SEK Betonmast Per Kroghs vei 1 KS Rehabilitation of logistics and office building in Oslo 143 NOK Energy and Environment Avinor Internal technical work, extension of Non-Schengen East (UNSØ) 200 NOK Energy and Environment Helse Sør-Øst Rig and operating contractor at Radiumhospitalet (Oslo) 117 NOK Sweden Familjebostäder Construction of 112 apartments in Drevvikshöjden (Farsta) 275 SEk Sweden Fastighets AB Tornet Construction of 180 apartments in Tallbohov (Järfälla) 237 SEK Sweden AB Familjebostäder Construction of 87 apartments in Drevvikshöjden (Farsta) 218 SEK Sweden Stena Renewable AB Road construction, foundations and power grid, Åby-Alebo wind farm 213 SEK Sweden Fastighets AB Balder Construction of 139 apartments at Glasbruket (Gothenburg) 200 SEK Sweden Riksbyggen Construction of 142 apartments in Backa (Gothenburg) 200 SEK Sweden AF Projektutveckling Construction of 63 apartments in Stadsgården (Halmstad) 170 SEk Sweden ÖBO, ÖrebroBostäder Construction of 75 apartments in Örebro 168 SEK Sweden Tornet Bostadsproduktion Construction of 132 apartments in Tallbohov (Stockholm) 164 SEK Sweden Tommy Allström Byggproduktion Construction of a logistics center in Eskilstuna 142 SEK Sweden Riksbyggen Construction of 120 apartments west of Stockholm 124 SEK Offshore Shell UK Ltd. Dismantling and recycling of Curlew FPSO production vessel 315 NOK
1) Betonmast has announced an additional seven contracts in 2020. Included in the list are the most valuable contracts in terms of contract amount. ANNUAL REPORT 2020 AF GRUPPEN BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT BOARD OF DIRECTORS' REPORT CONTRACTS ANNOUNCED BOARD OF DIRECTORS' REPORT
DOUBLING TREATMENT CAPACITY Bekkelaget treatment plant receives 40 per cent of Oslo municipality's wastewater, but has only been scaled for 270 000 people. In order to meet stricter environmental requirements and an ever-increasing number of inhabitants, capacity had to be doubled. With AF Anlegg's expertise in rock and underground projects, blasting, concrete and steel work has been carried out to expand existing facilities. The treatment plant has been expanded by 200–300 metres southwards along the E18, and was put into operation in 2020. 116 ANNUAL REPORT 2020 AF GRUPPEN
WATER QUALITY IN THE FJORD. Oslo is one of Europe's fastest FINANCIAL STATEMENT growing cities. The expansion of Bekkelaget treatment plant has been important to ensure good water quality in the Oslo Fjord, which benefits both the inhabitants above and below the water surface. FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 117
FINANCIAL STATEMENT
118 GROUP ACCOUNTS 186 COMPANY ACCOUNTS 197 RESPONSIBILITY STATEMENT 198 AUDITOR'S REPORT FINANCIAL STATEMENT 118 ANNUAL REPORT 2020 AF GRUPPEN
RO P ACCO NTS A R PPEN ASA
I S S C
NOTES
N G N B N N N S N A N O N P N O N N N T N I N P N I N P N L N P N T N R N N N N N E N N D N C N I N D N A N N S N S N S N R B D N R N P N C N E N S N S FINANCIAL STATEMENT
186 ANNUAL ACOUNTS AF GRUPPEN ASA
R CEO
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 119
INCOME STATEMENT
Amounts in NOK million N
O O T
S C P D A A O T
N P E EBIT
N E EBT
I P
Attributable to: S P C N P
E NO D NO D NO
1) Dividend for 2020 has been proposed for payment first half of 2021.
COMPREHENSIVE INCOME Amounts in NOK million N
P
C C T O
C C T O
T OCI
T
Attributable to: FINANCIAL STATEMENT S P C N T
120 ANNUAL REPORT 2020 AF GRUPPEN
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
Amounts in NOK million N
ASSETS
NON-CURRENT ASSETS P R I A D I P T
CURRENT ASSETS I P T I D C T
T
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 121
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER STATEMENTSTATEMENT OF FINANCIAL OF FINANCIAL POSITION POSITION AS AT AS 31 AT DECEMBER 31 DECEMBER Y Y Y
Amounts STATEMENTin NOK million OF FINANCIAL POSITION AS AT 31 DECEMBER N Amounts in NOK million ORDRERESERVEORDRERESERVEORDRERESERVE NO NO NO N Amounts in NOKY Y million Y Y Y N EQUITYS S S AND LIABILITIES EQUITY AND LIABILITIES R R R EQUITY AND LIABILITIES ORDRERESERVEORDRERESERVEORDRERESERVEORDRERESERVEORDRERESERVE NO NO NO NO NO S ARE OL ER S Amounts in E ITE NOK million N R R R S S ARE OL ER SS S S S E ITE E S ARE OL ER S E ITE P C R E R R EQUITYE R R AND LIABILITIES P P C C 28 200 28 200 28 200 28 200 N N R R R R R T N S ARE OL ER S D D D E ITE T T E P C D D D D 28 200 28 200 28 200 28 200 28 200 LON TER LIABILITIES N D D D D D I LON LON TER TER LIABILITIES LIABILITIES T S S S D D D D D I I I S L S S B B B I L P I LON TER LIABILITIES L S S S P S S S S S D D P D P I S S S P S S S S S B B B B B D P I L S S S S S D D D D D D P D D S S S S S D D T P A A A G G G T T D E E E
C RRENTA A A D LIABILITIES C RRENT LIABILITIES A A G A G A G A G G I C RRENT T LIABILITIES D D D I E E E E E I I A A A A A L A A A A A A G G G I L T I C RRENT LIABILITIES L D D D D D T D T I A A A A A D A A G A G A G A G G P D I L A A A P C P T A A A G G G C T C D A A A D D A A D T T P O O O O B B B B G G G G A A G A G S A G S S A S G G A A A
D D T D C D D D D D T B B B T T AB AB AB B B B O O O B O B O B B G B G G G G S S S S S S S S A A A A A
T D D D D D A A A T S S S B B B BT B BT B B AB AB B AB B AB B AB B B S S S S S
A A A A A T S S S S S B B B B B
OSLO ARC OSLO ARC OSLO OSLO OSLO OSLO . ..APRIL APRIL . APRIL ARC
OSLO OSLO OSLO OSLO OSLO . OSLO APRIL . APRIL ARC . APRIL . .APRIL APRIL
P P E P E E R R R B B B B B B L L L A A A B B B
StyretsStyretsStyretsStyrets leder lederleder leder P E R B B L A B
BoardP ChairmanP E P P E R E P E P R E R R E R R B B B B B B B B B B B L L B L L L L A A B A A B A A B B B B
BoardStyretsStyretsBoard ChairmanStyrets leder StyretsChairmanlederStyrets leder leder leder
P E R B B L A B A T S S S S A A A A S S S S A A A A BoardA Chairman T S A S A KonsernsjefKonsernsjef A Konsernsjef CEO T S A S A CEO CEO S S S S S A A S A S A A S S S A A A A A KonsernsjefA KonsernsjefKonsernsjefKonsernsjefKonsernsjef T S A S A CEO FINANCIAL STATEMENT
The document is signed electronically and therefore has no hand-written signatures.
122 ANNUAL REPORT 2020 AF GRUPPEN
STATEMENT OF CHANGES IN EQUITY
N . Amount in NOK million E P C T A O S T C R N T
2018 E P O T
S P S D S N A T E
2019 E I RS L E . P O T
S P S D S A A T E
2020 P O T
S P S D S N A A T
FINANCIAL STATEMENT E
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 123
CASH FLOW STATEMENT
Amounts in NOK million N
CASH FLOW FROM OPERATING ACTIVITIES P D C A N N P
C C C C
I N
CASH FLOW FROM INVESTMENT ACTIVITIES A I P P P P P D P P I N
N
CASH FLOW FROM FINANCING ACTIVITIES I D P C D T P R N I N
N
C D FINANCIAL STATEMENT C
124 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 1 GENERAL INFORMATION
A G ASA N A G N C E C P I O N E E O N S T N S T B D A
NOTE 2 BASIS OF PREPARATION FOR ANNUAL FINANCIAL STATEMENTS
T A G T I R S I RS E N N A A T G N OCI S T N T I RS
T A N S
NOTE 3 NEW AND AMENDED ACCOUNTING STANDARDS
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS THAT Amendments to IAS 1 and IAS 8 Definition of material HAVE BEEN IMPLEMENTED BY THE GROUP I A G I RS G T I C IASB T Conceptual framework for financial reporting T T Exemption in IFRS 16 Leases - Covid-19 I IASB I RS L T I RS Amendments to IFRS 3: Definition of a business T I RS T IASB T COVID I RS O Amendments to IFRS 7, IFRS 9 and IAS 39 Interest Rate Benchmark C A G Reform T I RS IAS I R NEW FUTURE STANDARDS, AMENDMENTS AND INTERPRETATIONS T T IASB A N A G FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 125
NOTE 4 SEGMENT INFORMATION
T C E P A B G A B S A P T A B B T T G S C T EBIT EBT A G O A O VAC T A A A O D O A BUSINESS AREAS V A G T C T A C E C B P O P C E E S O E E O T T G B O T C E
A CONTRACT TYPES N T A A T T A G T C A N T I P C P E N B T A B O A B A N A B S G S G V B C A E LAB ACCOUNTING POLICIES E B AS T G T B TB I RS T C P S R B B T N S T B B B O B T B P R B R B T B I RS B I B B V B G R C C I I RS B B B S B A B E T P N T A A IMPORTANT CUSTOMERS T N N P R A T P E B P O I NO E E I N C N V AS N V A G N O E NO N V FINANCIAL STATEMENT A E
T IMPAIRMENT LOSSES A D R N I NO
C I NO T S O NO S N S T
126 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 4 SEGMENT INFORMATION CONT.
E C AAP E C B E Amounts in NOK million P S O O E . T
2020 INCOME STATEMENT E I T
E EBITDA E EBIT E EBT
KEY FIGURES AND FINANCIAL STATEMENT EBITDA O P
A D C D N D
REMAINING PERFORMANCE OBLIGATIONS (ORDER BACKLOG) O O T
DISTRIBUTION OF REVENUE BY REVENUE STREAMS R R R R T
DISTRIBUTION OF REVENUE BY GEOGRAPHY R N R S R T
CASH FLOW N N N
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 127
NOTE 4 SEGMENT INFORMATION CONT.
E C AAP E C B E Amounts in NOK million P S O O E . T
2019 INCOME STATEMENT E I T
E EBITDA E EBIT E EBT
KEY FIGURES AND FINANCIAL STATEMENT EBITDA O P
A D C D N D
REMAINING PERFORMANCE OBLIGATIONS (ORDER BACKLOG) O O T
DISTRIBUTION OF REVENUE BY REVENUE STREAMS R R R R T
DISTRIBUTION OF REVENUE BY GEOGRAPHY R N R S R T
CASH FLOW N N N
FINANCIAL STATEMENT
128 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 4 SEGMENT INFORMATION CONT.
E C AAP E C B E Amounts in NOK million P S O O E . T
2018 INCOME STATEMENT E I T
E EBITDA E EBIT E EBT
KEY FIGURES AND FINANCIAL STATEMENT EBITDA O P
A D C D N D
REMAINING PERFORMANCE OBLIGATIONS (ORDER BACKLOG) O O T
DISTRIBUTION OF REVENUE BY REVENUE STREAMS R R R R T
DISTRIBUTION OF REVENUE BY GEOGRAPHY R N R S R T
CASH FLOW N N N
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 129
NOTE 5 ACQUISITION AND SALE OF BUSINESSES
AC ISITION AN SALE O B SINESSES
S B B AS I B B AS B G T NO B B NO A G
Amounts in NOK million B B
G C N
A AS
I O A G G AS C
Amounts in NOK million AS
G C N
RECONCILIATION OF ADDITIONS AND DISPOSALS FROM ACQUISITION AND SALE OF BUSINESSES 2020
Amounts in NOK million N B B
L L R
Amounts in NOK million N
G
I
FINANCIAL STATEMENT
130 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 5 ACQUISITION AND SALE OF BUSINESSES CONT.
AC ISITION O B SINESSES
A B AS O O A G B B AS T NO NO T B AS O A O S E A A G G OBOS BBL AS B C AS T B T B B G NO B B N T B O T A N S B B D B G NO T B G NO T NO
Amounts in NOK million B
C C N B AS B AS
P R G I O C C C I C N D C N C P T B AS O B T B AS O
C B AS B AS C B AS A B AS C B AS O N
FINANCIAL STATEMENT T N T A B NO T B NO
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 131
NOTE 5 ACQUISITION AND SALE OF BUSINESSES CONT.
A B AB B A G S AB A G O B SE B AB SE T S A A T B AB G ASA NO SE B SE I A B B SE T AB
B I A G S AB D S B B C AB B AB T B B S D C AB B C AB V G A B A G S AB A B A A I RS T B T B NO
Amounts in SEK million B
C S P C B AB
N B AB B AB
C B C AB O B C AB
P R N C C C D N C N
C B AB C B C AB C B N
T SE NO FINANCIAL STATEMENT T A SE NO G A
132 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 5 ACQUISITION AND SALE OF BUSINESSES CONT.
RECONCILIATION OF NET CASH CONSIDERATION IN THE CASH FLOW
Amounts in NOK million B B T
G C N
RECONCILIATION OF ADDITIONS FROM THE ACQUISITION OF BUSINESSES 2019
Amounts in NOK million N B B T
N
G I
B P
L L R
C N I FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 133
NOTE 6 OPERATING AND OTHER REVENUE
Amounts in NOK million N
R R R R T
R O T
T
O
DISTRIBUTION OF OPERATING REVENUE IN ACCORDANCE WITH THE REVENUE RECOGNITION PRINCIPLE
Amounts in NOK million
S S T
DISTRIBUTION OF OPERATING REVENUE BY CUSTOMER TYPE S S T
D N S I N S
I N I N
RECOGNISED AS REVENUE UNDER PROJECTS IN PROGRESS
Amounts in NOK million
A A FINANCIAL STATEMENT
134 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 7 PAYROLL COSTS
Amounts in NOK million N
P R S O T
RECONCILIATION OF SHARE VALUE-BASED REMUNERATION S D S
AVERAGE NUMBER OF FULL-TIME EQUIVALENTS N S G L C T
SALE OF SHARES TO EMPLOYEES I A G T T
NUMBER OF SHARES / PRICE
N N NO S NO
Accounting impact of sale of shares to employees: P
OPTION PROGRAMME 2017-2020 T G A G T T T T NO O A G T D A N
OPTION PROGRAMME 2020-2023 T G A G T T T T NO O A G A G T D R NO
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 135
NOTE 7 PAYROLL COSTS CONT.
E D N OPTIONS E NO
N C N O O O C N
A G B S T
E R E S NO
1) nd this level will reduce the strike price. FINANCIAL STATEMENT
136 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 8 OTHER OPERATING EXPENSES
Amounts in NOK million N
OTHER OPERATING EXPENSES R O I C A O B D IT S T
Amounts in NOK 1000
REMUNERATION OF THE GROUP'S ELECTED AUDITOR S O T O T
REMUNERATION OF OTHER AUDITORS S O T
T
R
NOTE 9 NET GAINS (LOSSES)
Amounts in NOK million
G G N N T
1) Gains (losses) on sale of business in 2020 is related to the sale of Betonmast Bergen.
2) Gains (losses) on the sale of shares in property companies include both the sale of shares in associated companies and joint ventures, and the sale of shares in subsidiaries that engage in property activities. In an early development phase, the ownership interest in the property companies is often
FINANCIAL STATEMENT greater than when the construction starts. In the production phase, most of the projects are organised as associated companies, cf. Note 27 Investments in associated companies and Note 28 Investments in joint ventures.
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 137
NOTE 10 TRADE AND NON-INTEREST-BEARING RECEIVABLES
Amounts in NOK million N
I P C
E C C
T V P O O
T
1) d completion, up to 10 per cent of the contract sum is retaine settlement is paid, the credit balance is released.
MAXIMUM EXPOSURE TO CREDIT RISK
A N S
I
A N S
I
A T T T E I R E S C R E
O R T FINANCIAL STATEMENT
138 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 11 INVENTORIES
Amounts in NOK million
S R T
I I
NO N P
NOTE 12 PROJECTS FOR OWN ACCOUNT
D A G N A N
Amounts in NOK million
C L T
LAND FOR DEVELOPMENT L C A
COMPLETED RESIDENTIAL UNITS FOR SALE
N FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 139
NOTE 13 INTANGIBLE ASSETS
O Anmounts in NOK million N T
ACQUISITION COST O A D T
O A D T
DEPRECIATION AND WRITE-DOWNS D D
D D
CARRYING AMOUNT A D
A D
O
E D S
FINANCIAL STATEMENT
140 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 13 INTANGIBLE ASSETS CONT.
ALLOCATION OF GOODWILL TO CASH-GENERATING UNITS G T Anmounts in NOK million
T A A T C E
S G B C A E LAB E B T B TB AS A B T C
B O B R B B B V B B B T B R B C S T B
A A T O
A E A D T E E
B E A B G A B T S
B
IMPAIRMENT TESTS FOR GOODWILL T G I T T ACC D N S A O
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 141
NOTE 13 INTANGIBLE ASSETS CONT.
T
NORWAY
G ACC ACC
SWEDEN
G ACC 1) The growth rate is nominal and assumed to be perpetual.
IMPAIRMENT TEST OF GOODWILL IN 2020 A A) SENSITIVITY ANALYSIS OF DISCOUNT RATE (WACC) I T A G T B T A G T I ACC A T T I NO E ACC E LAB E SENSITIVITY ANALYSIS FOR KEY ASSUMPTIONS S I ACC T A A B ACC A G A A
2020
R B R ACC UNIT
S G B R LAB E B B O A A
FINANCIAL STATEMENT
142 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 13 INTANGIBLE ASSETS CONT.
2019
R B R ACC UNIT
S G B C LAB E E A A
B) SENSITIVITY ANALYSIS OF CASH FLOWS T E LAB E A A I T I T A A 2020 C
E B C UNIT
S G B R LAB E B B O A A
2019 C
E B C UNIT
S G B C LAB E E A A FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 143
NOTE 14 PROPERTY PLANT AND EQUIPMENT
B Amounts in NOK million N T
ACQUISITION COST O A R D T
O D T
DEPRECIATION AND WRITE-DOWNS D R A T
D A T
CARRYING AMOUNT A D
A D
DEPRECIATION RATES N P
B
PLEDGED ASSETS I N P FINANCIAL STATEMENT
144 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 15 LEASES
GROUP AS LESSEE A G T A G I RS T A G S T
RIGHT-OF-USE ASSETS L L Amounts in NOK million N T
ACQUISITION COST I I RS O A D
O D D T
DEPRECIATION AND WRITE-DOWNS D A T
D A A T
CARRYING AMOUNT A D
A D
T C G T A G T I FINANCIAL STATEMENT
A G T L
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 145
NOTE 15 LEASES CONT.
LEASE LIABILITIES
LEASED BUILDINGS AND PRODUCTION PLANTS Amounts in NOK million N
R R R O N
LEASED MACHINERY AND VEHICLES
Amounts in NOK million N
R R R O N
TOTAL LEASE LIABILIITIES Amounts in NOK million N T O T
A G
SUMMARY OF OTHER LEASE INCOME AND COSTS IN THE INCOME STATEMENT
Amounts in NOK million N
T O T
GROUP AS LESSOR I NO A
AF Gruppen as lessee
Amounts in NOK million
S S S T
PLEDGED ASSETS FINANCIAL STATEMENT I N P
146 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 16 PROVISIONS FOR LIABILITIES
N C O T Amounts in NOK million
R P T
T T
A A T
R P T
T T
A D T
1) best estimate of the warranty liability for ordinary construction and civil engineering projects and warranty liability under the Housing Construction Act. The warranty period is normally 3 5 years.
2) Provisions for contingent consideration of NOK 15 Million is linked to the acquisition of Helgesen Tekniske Bygg AS in 2018. During 2020 provisions for contingent consideration of NOK 42 Million related to the acquisition of HMB in 2019 were reversed.
3) As at 31 December 2020, AF Gruppen has an estimated obligation related to agreements that entitle non-controlling owners to sell shares in subsidiaries to AF Gruppen at given times (put options) of NOK 182 million. The value is not predetermined but is calculated on the redemption date as the enterprise value adjusted for liabilities. The enterprise value is calculated as the average operating profit for the previous three years multiplied by an agreed multiple. The calculated equity value has been discounted by a risk-free interest rate. Valuations are ba -bearing liabilities, as well as the time of the redemption. The value that is calculated is considered equivalent to the fair value and is at level 2 in the valuation hierarchy in accordance with IFRS 13. The contra entry for the liability is the equity of the majority interests, cf. Statement of Changes in Equity. In 2020, NOK 163 million of the estimated liability is classified as a short-term provision since the put options can be exercised from 2021.
CLASSIFICATION ON THE BALANCE SHEET
N C T FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 147
NOTE 17 TRADE PAYABLES AND NON-INTEREST-BEARING LIABILITIES
Amounts in NOK million
T P P A O T
NOTE 18 RETIREMENT BENEFITS
T N G A O DEFINED BENEFIT PENSION PLAN T G N DEFINED CONTRIBUTION PENSION PLAN T A T G T N A T G G P G G S N N I S G G G G T G N I E A T C CONTRACTUAL EARLY RETIREMENT (AFP) A S T G T A P S A I T T T A P N I G T G T
RETIREMENT BENEFIT COSTS
Amounts in NOK million
D N C O R P R
RETIREMENT BENEFIT LIABILITIES AND PLAN ASSETS T G NO T FINANCIAL STATEMENT T G NO D O NO NO NO D R G NO NO A NO NO T NO NO
148 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 19 NET FINANCIAL ITEMS
Amounts in NOK million N
FINANCIAL INCOME I I O O T
FINANCIAL EXPENSES I I O O T
FINANCIAL GAINS (LOSSES) ON CHANGES IN VALUE N T
N FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 149
NOTE 20 NET INTEREST-BEARING RECEIVABLES (DEBT)
Amounts in NOK million N
NET INTEREST-BEARING RECEIVABLES (DEBT) I I C I L I L N
Amounts in NOK million N
CASH AND CASH EQUIVALENTS B C
O R
DRAWING RIGHTS A G DNB NO T D B DNB NO A G NO I G NO T T G NO D
I Amounts in NOK million N L
CHANGE IN LIABILITIES FROM FINANCING ACTIVITIES:
C C C C
O S S A D I O
FINANCIAL STATEMENT
150 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 20 NET INTEREST-BEARING RECEIVABLES (DEBT) CONT.
I Amounts in NOK million N L
CHANGE IN LIABILITIES FROM FINANCING ACTIVITIES:
I RS
C C C C
O S A A I O
E Amounts in NOK million N
INTEREST-BEARING LOANS AND CREDIT FACILITIES O L O T
CLASSIFICATION ON THE BALANCE SHEET C L T
MATURITY STRUCTURE: L L L T O T
I N FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 151
NOTE 21 EARNINGS AND DIVIDEND PER SHARE
CAPITAL MANAGEMENT T G G A G T I G I A G B D I RS L EBITDA T
EARNINGS PER SHARE
Beløp i MNOK
ANTALL AKSJER PER 31. DESEMBER T T
R NO . . .
NO . . .
1) Time-weighted average number of shares issued minus treasury shares. 2) AF Gruppen's share value-based remuneration scheme (options), cf. Note 7 Payroll costs, entails that externally owned shares may be diluted as a result of the redemption of options. To take into account the future increase in the number of externally owned shares, the diluted earnings per share is calculated in addition to the earnings per share. The dilutive effect is calculated by dividing the value of the options as at the date of the balance sheet by the market price of the AF share at the same point in time. The value of the options is calculated by multiplying the number of options by the difference between the market price of the AF share on the date of the balance sheet and the average redemption price. As at 31 December 2018, the market price was lower than the exercise price. Thus there was no dilutive effect for 2018.
DIVIDEND PER SHARE A NO N A G ASA NO N A NO T NO T B D B D G NO I N T G
Amounts in NOK T D S E E P T FINANCIAL STATEMENT
152 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 22 FINANCIAL RISK MANAGEMENT
T G N T
T G A A G T T I
T B T I G C R T G CASH AND CASH EQUIVALENTS C T A) CREDIT RISK S P T C A T DERIVATIVES T
TRADE AND OTHER RECEIVABLES CREDIT EXPOSURE TO FINANCIAL ASSETS O
T B) MARKET RISK P I I) INTEREST RATE RISK A G G T G S N A N V AS N A N B T I N T G T S N P
T G Sensitivity to interest rate changes T G T T T
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 153
NOTE 22 FINANCIAL RISK MANAGEMENT CONT.
Amounts in NOK million
N
EFFECT ON PROFIT AFTER TAX E E
II) CURRENCY RISK A G P O SE E R E R SD T SD T G NO A D SE SD E R N D N A NO T A G NO T T G NO N T G T G C NO E C B P E E S NO
SENSITIVITY CURRENCY DERIVATIVES
Amounts in NOK million
EFFECT ON PROFIT AFTER TAX E NO E NO
EFFECT ON OTHER COMPREHENSIVE INCOME (OCI) E NO OCI E NO OCI
EFFECT ON EQUITY E NO E NO
SENSITIVITY ASSOCIATED WITH THE TRANSLATION OF RECEIVABLES AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES TO NOK A G E R GBP SD SE N T T
Amounts in NOK million
EFFECT ON EARNINGS AFTER TAX AND EQUITY E NO E NO
SENSITIVITY ASSOCIATED WITH TRANSLATION OF INCOME STATEMENT AND BALANCE SHEET IN FOREIGN CURRENCIES TO NOK T NO FINANCIAL STATEMENT T T
154 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 22 FINANCIAL RISK MANAGEMENT CONT.
Amounts in NOK million
EFFECT ON PROFIT AFTER TAX E NO E NO
EFFECT ON EQUITY E NO E NO
III) OTHER PRICE RISKS T O A G N S A S A D D A G C T S N D A A C C) LIQUIDITY RISK S L A G C T B D S N N
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 155
NOTE 23 DERIVATIVES
Amounts in NOK million A L A L
I T
I C C T
T
INTEREST RATE SWAPS CURRENCY EXCHANGE CONTRACTS A G A G A E B V A D COMMODITY DERIVATIVES SD T E R T A I S N G A D A G A E T G B V N N
THE TABLE BELOW SHOWS HOW CASH FLOW HEDGING IS RECLASSIFIED FROM OTHER COMPREHENSIVE INCOME TO THE INCOME STATEMENT
Amounts in NOK million
C C R OCI
C C C
C C T
FINANCIAL STATEMENT
156 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 23 DERIVATIVES CONT.
FINANCIAL ASSETS AND LIABILITIES ARE MEASURED AT FAIR VALUE IN ACCORDANCE WITH THE VALUATION HIERARCHY
A G A D A G T C I RS T L L V L V
FINANCIAL ASSETS AND LIABILITIES ARE MEASURED AT FAIR VALUE IN ACCORDANCE WITH THE VALUATION HIERARCHY
Amounts in NOK million L L L T
A D L D T
Amounts in NOK million L L L T
A D L D T
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 157
NOTE 24 FINANCIAL INSTRUMENTS: CATEGORY TABLE
T A G S N I RS I A N
FINANCIAL ASSETS BY CATEGORY
Amounts in NOK million N T 31/12/20 N OCI T
N N C C C C T
Amounts in NOK million N T 31/12/19 N OCI T
N N C C C C T
1) Trade receivables and contract assets classified as loans and receivables do not include contract assets and prepaid expenses.
FINANCIAL STATEMENT
158 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 24 FINANCIAL INSTRUMENTS: CATEGORY TABLE CONT.
FINANCIAL LIABILITIES BY CATEGORY L N T 31/12/20 N OCI T
N L L C S L C N C T
L N T 31/12/19 N OCI T
N L L C S L C N C T
2) Trade payables and non-interest-bearing liabilities classified as financial liabilities at amortised cost consist of ordinary trade payables and other current liabilities. Financial liabilities do not include prepayments from customers and statutory obligations such as unpaid value-added tax, retirement benefits and other personnel-related costs. FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 159
NOTE 25 INCOME TAX EXPENSE
Amounts in NOK million
C A T
CHANGE IN DEFERRED TAX RELATED TO: C C C A T
T
RECONCILIATION OF TAX PAYABLE IN THE INCOME STATEMENT AGAINST TAX PAYABLE ON THE BALANCE SHEET C T I T I C T
RECONCILIATION OF INCOME TAX EXPENSE CALCULATED AT THE NORWEGIAN TAX RATE AND THE INCOME TAX EXPENSE AS PRESENTED IN THE INCOME STATEMENT P E N T D N P N C C E T
E FINANCIAL STATEMENT
160 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 26 DEFERRED TAX / DEFERRED TAX ASSETS
CHANGE IN RECOGNISED NET DEFERRED TAX
Amounts in NOK million
B R R OCI I I E I RS C B
CLASSIFICATION ON THE BALANCE SHEET
D D N
CHANGE IN DEFERRED TAX ASSETS AND DEFERRED TAX (WITHOUT NETTING WITHIN THE SAME TAX REGIME)
A C 2020 R R DEFERRED TAX OCI
P I P O R A T
O
A C R R DEFERRED TAX ASSETS OCI
P O P R T
O O
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 161
NOTE 26 DEFERRED TAX / DEFERRED TAX ASSETS CONT.
A 2019 R R C DEFERRED TAX OCI
P I P O R A T
O
A R R C DEFERRED TAX ASSETS OCI
P O P R T
O O
1) Projects in progress have a major impact on the calculation of deferred tax and the current tax payable. Projects in progress are valued at the direct production cost, and revenue is not recognised for tax purposes until delivery.
2) The deferred tax assets related to tax loss carryforwards are recognised on the balance sheet when it is probable that the Group can apply this against future taxable income. The tax loss carryforward recognised on the balance sheet is not time limited and totals NOK 161 million (NOK 218 million). FINANCIAL STATEMENT
162 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 27 ASSOCIATED COMPANIES
INVESTMENTS IN ASSOCIATED COMPANIES
Amounts in NOK million
B A A D S T E C T
A G T A G I G G
T I
A A I A
T
I S
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 163
NOTE 27 ASSOCIATED COMPANIES CONT.
2020 SPECIFICATION OF THE AMOUNTS IN THE ACCOUNTS: E O Amounts in NOK million T
A A
T G
SUMMARY OF FINANCIAL INFORMATION ESSENTIAL ASSOCIATED COMPANIES
L AS L L B
Amounts in NOK million S AS N A AS IS T
L B P L G L T N B P O T O A R O O O O C N T C N T S T
O E
RECONCILIATION OF BOOK VALUE
T O B
RECONCILIATION OF SHARE OF COMPREHENSIVE INCOME FROM ESSENTIAL COMPANIES
T O R
COMPREHENSIVE INCOME, ALL ASSOCIATED T T T COMPANIES
E
FINANCIAL STATEMENT T D NO
164 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 27 ASSOCIATED COMPANIES CONT.
2019 SPECIFICATION OF THE AMOUNTS IN THE ACCOUNTS: E O Amounts in NOK million T
A A
B T G
SUMMARY OF FINANCIAL INFORMATION ESSENTIAL ASSOCIATED COMPANIES
L AS N . AS L L B Amounts in NOK million S S AS N A AS IS T
T L B P L G L T N B P O L T O A R O O O O O C N T C N T S T
O E
RECONCILIATION OF BOOK VALUE
B
RECONCILIATION OF SHARE OF COMPREHENSIVE INCOME FROM ESSENTIAL COMPANIES
T R R
COMPREHENSIVE INCOME, ALL ASSOCIATED T T T COMPANIES
E
T S B AS S NO FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 165
NOTE 28 JOINT VENTURES
INVESTMENTS IN JOINT VENTURES AMOUNTS IN NOK MILLION
Amounts in NOK million
B A A D S T E T
A G T A G I G G
T I
A A I A
T
I G T S
FINANCIAL STATEMENT
166 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 28 JOINT VENTURES CONT.
2020
SPECIFICATION OF THE AMOUNTS IN THE ACCOUNTS: E O Amounts in NOK million T
A A
T G
SUMMARY OF FINANCIAL INFORMATION ESSENTIAL JOINT VENTURES
AS Amounts in NOK million S AS T
S P B P P B S R A O O C N T C N T S T
O E
RECONCILIATION OF BOOK VALUE
B
RECONCILIATION OF SHARE OF COMPREHENSIVE INCOME FROM ESSENTIAL JOINT VENTURES
R
E O COMPREHENSIVE INCOME OF ALL JOINT VENTURES T
E
D T
N NO
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 167
NOTE 28 JOINT VENTURES CONT.
2019
SPECIFICATION OF THE AMOUNTS IN THE ACCOUNTS: E O Amounts in NOK million T
A A
T G
SUMMARY OF FINANCIAL INFORMATION ESSENTIAL JOINT VENTURES
AS Amounts in NOK million S AS AS IS T
S P B P P B S O R A O O O C N T C N T S T
O E
RECONCILIATION OF BOOK VALUE
R G B
RECONCILIATION OF SHARE OF COMPREHENSIVE INCOME FROM ESSENTIAL JOINT VENTURES
I R G R
E O COMPREHENSIVE INCOME OF ALL JOINT VENTURES T
E
FINANCIAL STATEMENT A T NO T NO
168 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 29 SUBSIDIARIES
T T I A G P T
A O B N P C A G N AS O N R A AS N C E P G S AS O N C E T AS N C E A A AB S S C E T B AS TB O N C LAB E AS B N C AS T N C B AS B N C T AS B N C N AS B N C E AS B N C S G AS N C S G V AS N C C AS N C O B AS O N C B E AS O N C B S AS O N C R AS S N C C S AS T N C C AS T N C C S AS T N C C E AS T N C V AS T N C E A AS A N C E B AB V L C E AS A N C P AS T N C P CPE AB G S C P S G R G C P S G R G C AS N C O S AS O N C O P AS O N C O T S AS O N C L AS G N C G AS G N C S B AS O N C O P AS O N C VD V D AS S N C T AS O N C AS O N C AS O N C T D AS O N C T C P AS O N C AS O N C B AS O N B FINANCIAL STATEMENT I AS A N B B B AS O N B B B AS O N B
1) AF Gruppen Norge AS encompasses the Civil Engineering, Construction and Property business areas
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 169
NOTE 29 SUBSIDIARIES CONT.
A O B N P C
B AS G N B B T T N B B B V AS O N B B R AS A N B B I AS G N B B R AS N B B O AS O N B B R AS L N B B T AS S N B B S AB G S B B G AB G S B B AB S S B B S AB S S B B AB S B B A AB G S B B E AS O N B O AS O N B B R T AS O N B R E AS A N B R I AS A N B AB G S B B AS S N P S P AS B N P G AS O N P G AS O N P S AS O N P A D AS O N E E AS S N E E R AS T N E E N AS N N E E E AS O N E E E AS O N E E A E AS A N E E A E B AB V L E E P S AB S S S A B AB S S S A B S AB S S A B G AB G S S A P AB G S S E AB N S S B G AB N S S AB S S S T AB N S S S AB N S S B C AB S S B C AB S S S E AB S S A V AS O N O A O D AS O N O A O D L L E O A A AS N O FINANCIAL STATEMENT
170 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 30 SIGNIFICANT NON-CONTROLLING INTERESTS
T A G
B Amounts in NOK million LAB O T
N
S S S A N T N
S S S A N T N
S S S A N T N
T
B LAB Amounts in NOK million
P T
N C T
E N L C T
N I
FINANCIAL STATEMENT B O
T
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 171
NOTE 31 SHARE CAPITAL AND SHAREHOLDER INFORMATION
THE SHARE CAPITAL CONSISTS OF
Amounts in NOK million N N B
A
SHAREHOLDER S N .
OBOS BBL AS C AS L AS A AS V AS A S AS S B S E B AB T . T T .
T E
A D
MOVEMENT IN NUMBER OF SHARES DURING THE YEAR
T N N T
SHARES AND OPTIONS OWNED BY THE BOARD OF DIRECTORS AND SENIOR EXECUTIVES AS AT 31 DECEMBER 2020 S
B O T
P E R B C A B B B L R D A S A S S
1) Represents OBOS BBL, which owns 17,183,709 shares. 2) Represents Constructio AS and Flygind AS, which own 14,595,347 and 1,021,509 shares, respectively. 3) Close associate of Tonito AS, which owns 26,048 shares. FINANCIAL STATEMENT
172 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 31 SHARE CAPITAL AND SHAREHOLDER INFORMATION CONT.
C T O S
A T CEO S E V P C O B E V P E E V P I A G E V P G E V P T S E V P T
1) Amund Tøftum was Executive Vice President up until 21 August 2020. He has been CEO since 24 August 2020. 2) Tormod Solberg has been Executive Vice President since 21 September 2020.
T B T A G A A G ASA A G A D
TREASURY SHARES T S S
N A NO T NO
N A NO T NO
N D N NO FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 173
NOTE 32 REMUNERATION OF THE BOARD OF DIRECTORS AND SENIOR EXECUTIVES
REMUNERATION OF SENIOR EXECUTIVES T T C EVA E V A A G EVA I EVA CEO T C G EVA T C B T A S C T A G N A G ASA T R N T B D C T
2020 R S Corporate Management Team (NOK 1000) B O T
G CEO A T CEO A T E V P S E V P C O B E V P E E V P I A G E V P G E V P T S E V P A E V P T C T
1) Morten Grongstad was CEO up until 21 August 2020. 2) Amund Tøftum was Executive Vice President up until 21 August 2020. He has been CEO since 24 August 2020. 3) Tormod Solberg has been Executive Vice President since 21 September 2020. 4) Arild Moe was Executive Vice President up until 18 September 2020.
C T NO B
2019 R S Corporate Management Team (NOK 1000) B O T
G CEO S E V P C O B E V P E E V P A T E V P A E V P I A G E V P G E V P A R E V P O E V P T C T
1) Ida Aall Gram and Geir Flåta have been Executive Vice Presidents since 1 March 2019. 2) Andreas Jul Rødsjø was Executive Vice President up until 28 February 2019. Remuneration for 2019 included remaining holiday pay. 3) Henning Olsen was Executive Vice President up until 28 February 2019. Remuneration for 2019 included remaining holiday pay.
FINANCIAL STATEMENT
174 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 32 REMUNERATION OF THE BOARD OF DIRECTORS AND SENIOR EXECUTIVES CONT.
BONUS FOR THE PURCHASE OF SHARES Number of shares/price
N N NO S NO
A NO I
S N S
DIRECTORS' FEES Director's fee (in NOK 1000)
P E R B C B L B A B D A A S S G B T
D
I B C NO NO A G D C E E NTN A G NTN T NO NO T A C NO NO D A G B
GUIDELINES FOR 2020 T B G S N P L C A T B D S S N A A
G T G T B D A G T B T B NO T S NO A T T D
B EVA E V T B A EVA G T
FINANCIAL STATEMENT G B
I G O T G
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 175
NOTE 33 RELATED PARTIES
T N A N I T N A N I
TRANSACTIONS WITH RELATED PARTIES
Amounts in NOK million
CONTRACT TOTAL A T
TRADING VOLUME A T
PURCHASE OF GOODS AND SERVICES A T
NON-INTEREST-BEARING RECEIVABLES AS AT 31 DECEMBER A T
INTEREST-BEARING RECEIVABLES AS AT 31 DECEMBER A T
B D G A G ASA B D N R B D T B D
G N FINANCIAL STATEMENT
176 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 34 PLEDGED ASSETS AND GUARANTEES
PLEDGED ASSETS
Amounts in NOK million N
B .
BOOK VALUE OF SECURED ASSETS B T O L T
A G
T G
GUARANTEES
Amounts in NOK million
G G S
1) In connection with construction contracts entered into, the subsidiaries in AF Gruppen are subject to the usual contracting obligations and the associated guarantees. In this connection, AF Gruppen ASA has furnished guarantees to subsidiaries in the form of absolute guarantees to financial institutions. In addition, AF Gruppen ASA and AF Gruppen Norge AS have issued parent company guarantees, which primarily concern guarantees of this type. The guarantees issued to clients are related to contractual obligations and are primarily issued as tender guarantees, delivery guarantees and payment guarantees.
2) AF Gruppen Norge AS has in some cases issued guarantees as security for loans etc. in favour of development companies. This can typically be in connection with the fact that the development company has received financing from a bank and the owners have chosen to provide a guarantee for parts of such financing, based on a specific assessment. This concerns partial guarantees, in which AF Gruppen only guarantees for a portion of the amount corresponding to its ownership interest in the project in question. The guarantee cannot be enforced unless the development company is not able to fulfil its obligations.
I A G A D NO FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 177
NOTE 35 CONTINGENCIES
T A A N P R A A G R R E T D A THE FOLLOWING CASES MENTIONED IN 2019 HAVE BEEN CONCLUDED IN 2020: I A A G O
NOTE 36 EVENTS AFTER THE BALANCE SHEET DATE
N
FINANCIAL STATEMENT
178 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 37 SIGNIFICANT ACCOUNTING ASSESSMENTS, ESTIMATES AND ASSUMPTIONS
I A T T T
L C I N R NO
PRODUCTION CONTRACTS RECOGNISED OVER TIME
R R N S C C C T C T P R GOODWILL T T N A G C N I T L T N R NO T
T I
V
T
D
T G C T FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 179
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION POLICIES Change in ownership interests with loss of control S G T A G ASA I S G A G A N G G T S
Minority interest and change in ownership interests without a change in control Business combinations B N T T A C T E G T I I A I I O G G T A G
A G I N
P I T Business combinations by step-by-step acquisitions A G A T T G FINANCIAL STATEMENT
180 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES CONT.
E I T S A I T N R Functional currency and presentation currencies T N G T Group companies T T T V B I T I V T I I I G S R REVENUE RECOGNITION PRINCIPLES R S Production contracts
T T I P IAS C P T A G T I T A C T A FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 181
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES CONT.
P Order backlog T I T I OTHER ACCOUNTING POLICIES C C
Projects for own account A P C A A E
A T A T P Demolition work D D T A P T T A T D A T A Sale of plant and equipment and other goods G P R O T Financial income I P G T FINANCIAL STATEMENT
182 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES CONT.
T E P L L T I C I T I I Goodwill G G I A G G D O Patents and licences T A T D Software E D S E I G Contractual customer relationships C T C P C P A T I Quarrying rights P T A S Impairment in the value of non-financial assets T I P C
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 183
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES CONT.
T
T T C N Right-of-use assets T R
A L A A G I RS T A N A
T I T
T G IAS I E Financial assets OCI Lease liabilities T L T T G T Financial assets that are debt instruments D V C A G E G OCI P V OCI G O V I Derivatives T A T
T FINANCIAL STATEMENT
184 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES CONT.
I RS OCI T Dividend I D G T E Investments in equity instruments Defined-benefit plans I T G N C G T T OCI O T A A Financial liabilities A A P I Receivables T S N D
S E S T T N C T G T C T T Defined-contribution pension plans T G Inventories N T I T G I C I O Share-based compensation A G T P I P D T Treasury shares A G T O T Translation differences T T T NO T FINANCIAL STATEMENT A
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 185
NOTE 38 SIGNIFICANT ACCOUNTING POLICIES CONT.
S P C
E B T C L A G P A G R I C C G B
R G C T T T P P C C S P C G
I E T E T
FINANCIAL STATEMENT
186 ANNUAL REPORT 2020 AF GRUPPEN
ANN AL ACCO NTS A R PPEN ASA
I S D C
NOTES
N 1 A N R CEO N O N N N I N I N I N L N S N E N G
R CEO A
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 187
INCOME STATEMENT
Amounts in NOK million N
I T
O E EBIT
N E EBT
I P
TOTAL COMPREHENSIVE INCOME Amounts in NOK million
P O T FINANCIAL STATEMENT
188 ANNUAL REPORT 2020 AF GRUPPEN
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER
AmountsAmounts in NOK millionin NOK million N N Amounts in NOK million N
ASSETSAmountsASSETS in NOK million N
ASSETS NON C RRENTNON C RRENT ASSETS ASSETS ASSETS Y Y Y D Y D NON C RRENT ASSETS NON C RRENT ASSETS I D I D Y Y Y Y Y ORDRERESERVE ORDRERESERVE ORDRERESERVE ORDRERESERVE NO NO NO NO T I T S S S S I T R R R R T ORDRERESERVEORDRERESERVEORDRERESERVEORDRERESERVEORDRERESERVE NO NO NO NO NO C RRENT C RRENT ASSETS ASSETS R R R R S O S S S S O C RRENT ASSETS
28 200 28 200 28 200 28 200 R O R C RRENTO R R R ASSETS O O T R R R R R T O D D D D O T D D D D 28 200 28 200 28 200 28 200 28 200 T T T D D D D D T S S S S T D D D D D EQUITY AND LIABILITIES EQUITY AND LIABILITIES S S S S B B B B S S S S EQUITY AND LIABILITIES S S S S S S ARE OL ERS S ARE OL ERS E ITY E ITY D D D D EQUITY AND LIABILITIES S S S S S S S S S S B B B B B S S ARE OL ERS E ITY S ARE OL ERS E ITY S S S S S T S T D D S P D D D S S S S S P T A A A G G A G G T O O P E E E E P T A A A T A O O A A G A G A G A G G T D D D D T E E E E E O O A A A A A A A G G A G G A T A A A A T O O D D D D D T A A A A A T T A A G A G A G A G G T A A A A T A A A G G A G G T C RRENT LIABILITIES C RRENT LIABILITIES D D D D A A A A A C RRENTO LIABILITIES O O O O O B B B B G G G G A A G S A S G S A G A S G G A A A A O C RRENTI LIABILITIES D D D D I D D D D D O T B B B B T I AB AB AB B B AB B B O O O B O B O B B G B G G G G S S S S S S S S S A A A A A I T T D T D D D D A A A A T O O B T B B B B S S S AB S AB B AB B AB B AB B B B B B B S S S S S T P P O A A A A A O O O P S S S S S B B B B B P T O T O T T T T OSLO OSLO OSLO OSLO . .APRIL .APRIL APRIL . APRIL T T
OSLO OSLO OSLO OSLO OSLO AR OSLO . OSLO APRIL C . APRIL AR . APRIL . C .APRIL APRIL
OSLO ARC OSLO ARC P P P E E E P R R E R R B B B B B B B B L L L L A A A A B B B B
StyretsStyretsStyretsStyrets leder leder leder leder P E R B B L A B P E R B B L A B Board Chairman BoardP ChairmanP E P E R R P E P R E R E R R B B B B B B B B B L B L L L L A A B A B A A B B B Board StyretsStyrets P ChairmanStyrets leder E StyretslederStyrets R leder leder leder B B L A B FINANCIAL STATEMENT Board Chairman A A T T S S S S S S A A A A S S A S S S A S A A A A A A CEO KonsernsjefKonsernsjefKonsernsjef KonsernsjefA CEO T S A S A A CEO T S A S A S S S S S A A S A S A A S S S A A A A A CEO KonsernsjefKonsernsjefKonsernsjefKonsernsjefKonsernsjef The document is signed electronically and therefore has no hand-written signatures.
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 189
CASH FLOW STATEMENT
Amounts in NOK million N
CASH FLOW FROM OPERATING ACTIVITIES P G R C C C N
CASH FLOW FROM INVESTMENT ACTIVITIES P D P P P N
CASH FLOW FROM FINANCING ACTIVITIES P I P P P N
N C C 1) The payment of option premiums for the option programme was presented as debt in the 2019 financial statements, see mention in principle note. The cashflow effect was NOK 334 thousand in 2019. FINANCIAL STATEMENT
190 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 1 ACCOUNTING POLICIES
GENERAL T G A G ASA N T P C R O N N A G ASA A P C T I R S I RS E I RS SHARES IN SUBSIDIARIES S S N A A R I C S I T I R S I RS T A G ASA A O DIVIDENDS AND GROUP CONTRIBUTIONS E S N A A N A A A G ASA T P C A G ASA T B D T
NOTE 2 REMUNERATION OF THE CEO AND BOARD OF DIRECTORS
Amounts in NOK thousand
REMUNERATION OF THE CEO Amund Tøftum R O Morten Grongstad B R O T
A T CEO A E V P
D
A G ASA T CEO A G N AS
C CEO B D N N FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 191
NOTE 3 OTHER OPERATING EXPENSES
Amounts in NOK million
A O O T
Amounts in NOK thousand
REMUNERATION TO THE AUDITOR S O T O T R
A B T NO NO
NOTE 4 NET FINANCIAL ITEMS
Amounts in NOK million
FINANCIAL INCOME I O T
FINANCIAL EXPENSES O T
FINANCIAL STATEMENT
192 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 5 INCOME TAX EXPENSE AND DEFERRED TAX/TAX ASSET
Amounts in NOK million
INCOME TAX EXPENSE IN THE INCOME STATEMENT C T
C C T
T
RECONCILIATION OF THE INCOME TAX EXPENSE FOR THE YEAR P E
T C R T
TAX PAYABLE ON THE BALANCE SHEET IS CALCULATED AS FOLLOWS: T T
TEMPORARY DIFFERENCES INCLUDED IN THE DEFERRED TAX ASSETS/LIABILITIES T B
D
NOTE 6 INVESTMENTS IN SUBSIDIARIES
O N B
A G N AS O A G AS O A O AS O A E AS O B AS O
1) AF Energi AS was merged with AF Miljø AS in 2019. 2) The company is a holding company for the ownership in Betonmast purchased in October 2019. See note 5 in the Group accounts. AF Offshore Energy AS was discontinued in 2020. This resulted in a gain of NOK 9,8 million. FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 193
NOTE 7 INTERCOMPANY BALANCES WITH GROUP COMPANIES
Amounts in NOK million
RECEIVABLES FROM GROUP COMPANIES G VAT O T
Amounts in NOK million
DEBT TO GROUP COMPANIES G C VAT T
T A G N AS T D T
NOTE 8 LONG-TERM LIABILITY
Amounts in NOK million
OTHER NON-INTEREST BEARING LIABILITY O T
T A G N E N P FINANCIAL STATEMENT
194 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 9 SHARE CAPITAL AND SHAREHOLDER INFORMATION
T N N B
A
O N
SHAREHOLDERS OBOS BBL AS C AS L AS A AS VITO AS A S AS S B S E B AB T .
T T .
T E A D
N . N .
BOARD OF DIRECTORS P E R E C B A B E E A E B E B L E D E S E E A S E S
1) Represents OBOS BBL, which owns 17,053,686 shares. 2) Represents Constructio AS and Flygind AS, which own 14,470,022 and 1,021,509 shares, respectively. 3) Close associate of Tonito AS, which owns 26,048 shares.
FINANCIAL STATEMENT
FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 195
NOTE 9 SHARE CAPITAL AND SHAREHOLDER INFORMATION CONT.
N . N .
A T CEO S E V P C O T S E V P B E V P I A G E V P E E V P G E V P S
T B T A G
OPTION PROGRAMME 2017-2020 T G A G T T D A N
OPTION PROGRAMME 2020-2023 T G A G T A G T D FINANCIAL STATEMENT
196 ANNUAL REPORT 2020 AF GRUPPEN
NOTE 10 EQUITY
O Amounts in NOK million S T P O T
E D C P S I T O P E
C P S T N T O P E
A D C NO T
NOTE 11 GUARANTEES
I I A G ASA A G ASA
Amounts in NOK million L L
G G L B T FINANCIAL STATEMENT
Y Y Y Y Y Y Y Y ORDRERESERVE ORDRERESERVE ORDRERESERVE NO NO NO S S S R R R ORDRERESERVEORDRERESERVEORDRERESERVEORDRERESERVEORDRERESERVE NO NO NO NO NO S R R S R S S S
R R R R R 28 200 28 200 28 200 28 200 R R R R R D D D 28 200 28 200 28 200 28 200 28 200 D D D D D D D D D S S S D D D D D FINANCIAL STATEMENT S S S B B B GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 197 S S S S S S S S D D D S S S S S B B B B S B S S S S S S S D D D D D S S S S S A A A G G G E E E A A RESPONSIBILITY A STATEMENT FROM MEMBERS OF THE BOARD A AND A G A G CEO A G A G G RESPONSIBILITY STATEMENT FROM MEMBERS D D D OF THE BOARD AND CEO E E E E E A A RESPONSIBILITY A A A STATEMENT FROM A MEMBERSA A OF THE BOARD A ANDA A G G CEO G A G ASD A D D D D RESPONSIBILITY STATEMENT FROM MEMBERS OF THE BOARD AND CEO A G AS A A A A A A A A G A G A G A G G T I RS E A G ASA A A A N A A T A A A G G G I RS E T P C A G A G ASA AS A I RS I RS T N A A I RS E D D N D A A T N P A C A A G ASA A A A A A I RS I RS T O O O O B B B B G G G G S S S S I RS E T P A A G C A G A G A G G A G ASA N A I RS A A A A I RS N A A D D D N A A T T P C A G ASA D D D D D I RS C I RS G B B B ABAB AB B B B O O O B O B O B B G B G G G G S S S S S A G S S S N A A A A A A A T C G D D D D D A A A T A G C G S S S B B B B B B B B AB AB B AB B AB B AB B B A S G S S S S T C G A A A A A A G S S S S S B B B B B
OSLO ARC OSLO OSLO OSLO OSLO . ..APRIL APRIL . APRIL AR C
OSLO ARC OSLO OSLO OSLO OSLO OSLO . OSLO APRIL . APRIL AR. APRIL . .APRIL C APRIL
P P E P E E R R R B B B B B B L L L A A A B B B
StyretsStyretsStyretsStyrets leder lederleder leder P E R B B L A B
BoardP ChairmanP E P E R P E P R E R E R R B B B B B B B B B B L B L L L L A A A B A B A A B B B
BoardStyretsStyrets ChairmanP Styrets leder E StyretslederStyrets R leder leder leder B B L A B
BoardP E Chairman R B B L A B A T S S S S A A A A S S S S A A A A Board Chairman KonsernsjefKonsernsjef A Konsernsjef CEO T S A S A CEO A T S S S S S S A A A S A S A A S S S S A A A A A A KonsernsjefKonsernsjefA KonsernsjefCEOKonsernsjefKonsernsjef T S A S A CEO
FINANCIAL STATEMENT
The document is signed electronically and therefore has no hand-written signatures.
198 ANNUAL REPORT 2020 AF GRUPPEN
AUDITORS REPORT FINANCIAL STATEMENT FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 199 FINANCIAL STATEMENT 200 ANNUAL REPORT 2020 AF GRUPPEN FINANCIAL STATEMENT FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 201 FINANCIAL STATEMENT 202 ANNUAL REPORT 2020 AF GRUPPEN FINANCIAL STATEMENT FINANCIAL STATEMENT GROUP ACCOUNTS COMPANY ACCOUNTS RESP. STATEMENT AUDITOR'S REPORT APM 203 FINANCIAL STATEMENT
The document is signed electronically and therefore has no hand-written signature. 204 ANNUAL REPORT 2020 AF GRUPPEN
A G Pro t margin I RS T A G GrossPro t interestmargin -bearin g debt I RS T A G Gross interest -bearing debt Net interest -bearing debt (receivables) A G Net interest -bearing debt (receivables) RETURN ON CAPITAL EMPLOYED (ROACE): Capital employed T A RETURN ON CAPITAL B EMPLOYED D (ROACE): AverageCapital employed capital employed T A A B D ReturnAverage on capital capital employed employed (RO aCE) A EconomicReturn on Valuecapital Added employed (EVA) (RO aCE) I RS Economic Value Added (EVA)
Equity ratio T I RS
AverageEquity ratio shareholders' equity EBITDA T ReturnAverage on shareholders' equity equity Operating pro t (EBIT) EBITDA Order intake E Return on equity EBITDA margin EBITDA Operating pro t (EBIT) Order backlogintake E R Operating margin EBIT EBITDA margin EBITDA Order backlog R Operating margin EBIT T I RS
T Amounts in NOK million I RS
GROSS INTEREST-BEARING DEBT/NET INTEREST BEARING DEBT Amounts in NOK million I I GROSS INTEREST -BEARING DEBT/NET INTEREST BEARING DEBT I I I I L I I L C I N I C CAPITALN EMPLOYED S G CAPITAL EMPLOYED C S G AVERAGEC CAPITAL EMPLOYED C C AVERAGE CAPITAL EMPLOYED C FINANCIAL STATEMENT C A C C A
FINANCIAL STATEMENT 205
APM . . . . .
AUDITOR'S REPORT AUDITOR'S . . . . .
RESP. STATEMENT RESP. COMPANY ACCOUNTS COMPANY GROUP ACCOUNTS GROUP
RETURN ONRETURN EQUITY I D A R AVERAGE SHAREHOLDERS' EQUITY S S S S A EQUITY RATIO S D T E E A E A E A R L C E E D A R ECONOMIC (EVA) VALUE ADDED Beløp i MNOK Beløp i ONRETURN CAPITAL EMPLOYED P I
FINANCIAL STATEMENT FINANCIAL 206 ANNUAL REPORT 2020 AF GRUPPEN
DEFINITIONS
DEFINITIONS FINANCIAL RATIOS OTHER DEFINITIONS
Earnings per share BRA Earnings after tax / average number of shares outstanding Abbreviations for available area. Available area is the gross area minus the area occupied by external walls. Indicated in P/E m2 or sqm. Share price / earnings per share BREEAM P/B BRE Environmantal Assessment Method. Developed in the UK Share price / book value per share by BRE (Building Research Establishment). Europe’s leading environmental classification tool. EV / EBIT (Market value less net interest bearing receivable) / earnings Own Accountt before interest and tax When AF buys land, develops projects and then sells units for its own account.
EPC For other definitions of financial ratios, see alternative Energy performance contract. performance targets on page 168. EPCIC Engineering, Procurement, Construction, Installation & Commissioning.
LTI-1 rate Numer of lost time injuries per million man-hours. AF Gruppen includes all subcontractors when calculating the LTI-1 value.
LTI-2 rate Number of lost time injuries + number of injuries requiring medical treatment + number of injuries resulting in alternative BOARD OF DIRECTORS' REPORT work per million man-hours. AF Gruppen includes all subcontractors when calculating the LTI-2 value.
HVAC Heating, Ventilation, Air conditioning and Cooling systems.
Source separation rate Separate rate for demolition waste that can be recycled.
Carbon footprint
Emissions of greenhouse gases in tons of CO2 equivalents
(CO2e) per NOK million in turnover. ADDRESSES
NORWAY Åsane Byggmesterforretning AF Gruppen ASA AF AeronMollier AS Jølsen Miljøpark AS AS AF Gruppen Norge AS Nulandsvika 8 Jølsenveien 26 Hesthaugvegen 18 AF Anlegg 4400 Flekkefjord 2000 Lillestrøm 5119 Ulset AF Byggfornyelse Tel +47 38 32 78 00 Tel +47 22 89 11 00 Tel +47 55 39 39 00 AF Bygg Oslo AF Nybygg AF Bygg Østfold LAB Entreprenør AS SWEDEN AF Eiendom Sarpsborgveien 25 LAB Eiendom AF Bygg Syd AB AF Decom AS 1640 Råde Kanalveien 105 B Tullkammarhuset AF Offshore Decom AS Tel +47 69 28 35 00 5068 Bergen Strandgatan 3 AF Energi & Miljøteknikk AS Tel +47 55 20 62 00 S - 302 50 Halmstad JR Anlegg AS AF Miljøbase Vats AS Tel +46 35 710 20 00 Raunesveien 597 Målselv Maskin & Transport AS 5578 Nedre Vats Rossvoll AF Bygg Göteborg AB Besøksadresse Tel +47 22 89 14 40 9322 Karlstad AF Projektutveckling AB Innspurten 15 Tel +47 77 83 28 80 Theres Svenssons gata 9 0663 Oslo Betonmast AS S - 417 55 Göteborg Betonmast Eiendom AS Nes Miljøpark AS Tel +46 31 762 40 00 Postadresse Schweigaards gate 34E Miljøparkveien 112 Postboks 6272 Etterstad 0191 Oslo 2160 Vormsund AF Härnösand Byggreturer AB 0603 Oslo +47 22 17 54 80 Tel +47 63 91 24 70 Torsgatan 8 Tel +47 22 89 11 00 S-871 42 Härnösand Faks +47 22 89 11 01 Consolvo AS Palmer Gotheim Skiferbrudd AS Tel +46 61 155 05 90 Ringveien 6 Vollalia www.afgruppen.no 3409 Tranby 7340 Oppdal Betonmast Sverige AB Tel +47 40 07 34 22 +47 72 40 01 30 Mölndalsvägen 42 S - 412 63 Göteborg Eiqon AS Rimol Miljøpark AS Tel +47 22 17 54 80 St. Hallvardsvei 3 Tiller-ringen 166 3414 Lierstranda 7092 Tiller HMB Construction AB Tel +47 40 00 00 74 Tel +47 22 89 11 00 Kolonnvägen 7 S - 791 31 Falun Fundamentering AS Strøm Gundersen AS Tel +46 023-79 20 30 Løvåsmyra 4 Papyrusveien 33 7093 Tiller 3050 Mjøndalen Kanonaden Entreprenad AB Tel +47 73 82 26 30 Tel +47 32 27 43 50 Bockängsgatan 2 S – 571 38 Nässjö Haga & Berg Entreprenør AS Strøm Gundersen Vestfold AS Tel +46 38 055 52 50 Ryensvingen 1 Halfdan Wilhelmsens alle 37 0680 Oslo 3117 Tønsberg Pålplintar AB Tel +47 22 71 77 61 Tel +47 99 69 18 46 Borrvägen 4 155 93 Nykvarn Helgesen Tekniske Bygg AS AF Håndverk AS Tel +46 85 506 50 50 Valestrand Kirkestuen AS 5281 Valestrand Thorendahl AS Tel +47 56 19 34 00 Nils Hansens vei 2c 0666 Oslo Tel +47 23 25 34 00
Design: Fete typer | Main photo: Hans Fredrik Asbjørnsen, photo p. 5: Max Emanuelson and other photos AF Gruppen | Print: RK Grafisk | April 2021 AF GRUPPEN Annual report 2020 AF GRUPPEN ASA Innspurten 15 Etterstad box 6272 P.O. 0603 Oslo 00 Phone 22 11 89 +47 www.afgruppen.com