Highlights 2010 annual reportAF Group 2010 Record profit The AF Group ended its 2010 anniversary year with the highest annual net profit in the history of the AF Group annual reportAF Group 2010 company. Profit before tax for 2010 was NOK 372 million, corresponding to a profit margin of 6.4 per cent. While the outlook for the five business areas varies, overall the AF Group is well positioned for the future from both an organisational and financial standpoint. Financially sound position At the end of 2010 AF had NOK 580 million in net interest-bearing receivables and an equity ratio of 32.1 per cent. Thanks to the sale of parts of the Environ- mental Base at Vats and profits from operations AF is financially strong and well equipped to meet opportunities and challenges in the time to come. High activity and good performance in Civil Engineering AF’s Civil Engineering business area reported its highest level of activity and earnings ever in 2010. Revenues in 2010 amounted to NOK 2,158 million and profit before tax was NOK 198 million, equivalent to a profit margin of 9.2 per cent. All the Civil Engineering units performed very well during the year. Historically low level of injuries HSE has high priority at AF and is an integral part of management at all levels. In 2010, AF had a historically low level of injuries, with an LTI rate of 1.7 for the Norwegian part of the business. The LTI rate is defined as the number of lost time injuries per million man- hours, and AF includes all sub-contractors in the Annual report 2010 calculation. AF shareholders acquire Environmental Base at Vats In the autumn of 2010 AF sold parts of its Environ- mental Base at Vats, Europe’s most modern reception facility for decommissioned offshore installations. The buyers were the largest shareholders in the AF Group AF Gruppen ASA along with several smaller ones, including employees Innspurten 15 AF Group of AF. AF retains a 40 per cent ownership interest in P.O. Box 6272 Etterstad the environmental base. 0603 Oslo Telephone +47 22 89 11 00 Fax +47 22 89 11 01 www.afgruppen.no Operational structure Addresses Contents This is the AF Group 04 AF’s goals for profitable growth 08 History of the AF Group 10 From the CEO 12 Risk management 14 AF Gruppen ASA Aeron AS BA Gjenvinning AS Health, safety and the environment (HSE) 16 AF Gruppen Norge AS Nulandsvika 8 P.O. box 6271 Etterstad Environmental and social responsibility 18 AF Anlegg 4400 Flekkefjord 0603 Oslo AF Offshore & Civil Construction Tel. +47 38 32 78 00 Tel. +47 22 89 12 24 People in the AF Group 22 AF Byggfornyelse Fax +47 38 32 78 01 Fax +47 22 89 11 01 AF Bygg Oslo AF Anlegg AF Bygg Oslo AF Eiendom AF Decom AF Energi & AF Eiendom AF Bygg Göteborg AB Johan Rognerud AS Business areas Miljøteknikk AF Decom AS Theres Svenssons gata 9 Industriveien 28 Civil Engineering 26 AF Decom Offshore AS S - 417 55 Gothenburg 2050 Jessheim Building 32 AF Offshore & AF Bygg- AF Decom Mollier AF Entech AS Tel. +46 31 762 40 00 Tel. +47 63 92 79 00 Property 38 Civil Construction fornyelse Offshore Environment 42 AF Energi & Miljøteknikk AS Fax +46 31 762 40 01 Fax +47 63 92 79 09 Energy 48 AF Miljø AS Pålplintar AF Bygg Østfold Aeron Miljøbase Vats AS AF Bygg Syd AB Mollier AS i Sverige Shareholder Information 54 Stationgatan 37 Forusbeen 210 Corporate governance 55 Visiting address S - 302 45 Halmstad 4313 Sandnes The share 61 AF Bygg Sør Innspurten 15 Tel. +46 35 71 02 000 Tel. +47 51 96 26 00 Board of Directors’ report 64 0663 Oslo Fax +46 35 21 74 40 Fax +47 51 96 26 01 Postal address AF Bygg Sør Pålplintar AB Annual accounts AF Group 74 AF Bygg Statement of comprehensive income 75 Göteborg P.O. Box 6272 Etterstad Sjølystveien 15 Borrvägen 3 Balance sheet 76 0603 Oslo 4610 Kristiansand S S - 155 93 Nykvarn Statement of changes in equity 78 Tel. +47 22 89 11 00 Tel. +47 22 89 11 00 Tel. +46 85 50 65 050 Cash flow statement 79 Fax +47 22 89 11 01 Fax +47 22 89 11 01 Fax +46 85 50 67 210 Notes 80 http://www.afgruppen.no AF Bygg Østfold AF Group Polska Sp.z o. o. Annual accounts AF Gruppen ASA 127 Sarpsborgveien 11 D Ul. Mokotowska 55/7 Statement of comprehensive income 128 Civil Eng. Building Property 1640 Råde 00-542 Warsaw Balance sheet 129 Tel. +47 69 28 35 00 Poland Cash flow statement 130 Fax +47 69 28 35 01 Tel. +48 608 022 88 Notes 131 Civil Engineering carries out large complex construction Building performs traditional building operations Property comprises the development of residential Auditor’s Report 139 projects and niche projects in the following areas: with a solid local base. The business area enjoys a housing units and commercial buildings for own Glossary 141 ports, oil and energy and foundations. Customers strong market position in the central Eastern Norway account in Eastern Norway, where the company has AF Decom AB Definitions 142 include both public sector and municipal agencies region and in southern Sweden. AF is also one of access to its own contracting services. AF will gain August Barks gata 30 A Addresses 143 and large industrial companies. Norway’s largest building renovation contractors. better control over the value chain by collaboration S - 421 32 Västra Frölunda between property and contracting operations. Tel. +46 31 76 25 100 Design Cox design/cox.no Photo Werner Anderson, Jan Lillehamre (Cox) Translation Amesto Translations AS Print TS-trykk™ ER JØM KE IL T M 2 4 6 1 1 7 T RYKKSAK Key figures YEAR 2010 2009 2008 2007 2006 Definitions and glossary TURNOVER (NOK MILLION) Financial ratios Operating and other revenue 5,828 5,401 5,916 5,538 5,358 1) EBITDA % Order backlog 6,193 6,033 4,912 5,862 5,177 (Operating profit+depreciation, EARNINGS (NOK MILLION) amortisation and impairment)/operating Earnings before interest taxes, depreciation and revenue amortisation (EBITDA) 463 417 417 311 266 2) EBIT % Depreciation, amortisation and impairment losses -97 -83 -88 -82 -74 Operating profit/operating revenue Earnings before interest and taxes (EBIT) 366 335 328 229 192 Earnings before taxes (EBT) 372 366 308 232 185 3) EBT % Net profit 277 270 219 175 134 Earnings before taxes/operating revenue PROFITABILITY (NOK MILLION) 1) 4) Return on equity EBITDA % 7.9 % 7.7 % 7.0 % 5.6 % 5.0 % Net profit/average shareholders’ equity EBIT % 2) 6.3 % 6.2 % 5.6 % 4.1 % 3.6 % EBT % 3) 6.4 % 6.8 % 5.2 % 4.2 % 3.5 % 5) Return On Average Capital Employed Return on equity 4) 37.6 % 33.1 % 33.5 % 31.6 % 27.8 % (ROaCE) Return on average capital employed (ROaCE) 5) 36.0 % 35.7 % 33.0 % 29.3 % 25.4 % (Earnings before taxes+interest expenses)/average capital employed Economic Value Added (EVA) 6) 181 183 154 107 79 BALANCE SHEET (NOK MILLION) 6) Economic Value Added (EVA) Total assets 3,013 3 059 3,194 2 553 2,155 (Return on capital employed*0.72- Equity 968 915 741 570 534 average capital costs after tax)*average Capital employed 7) 1,040 1,009 1,202 859 834 capital employed Average capital employed 1,047 1,075 1,024 843 922 7) Capital employed 8) Equity ratio 32.1 % 29.9 % 23.2 % 22.3 % 24.8 % Shareholders’ equity+interest-bearing Net interest-bearing receivables (debt) 9) 580 185 -297 -124 -206 liabilities Debt-to-equity ratio 10) -1.50 -0.25 0.29 0.18 0.28 THE SHARE (NOK) 8) Equity ratio Equity/total capital Share capital as at 31 December 3,555,897 3,524,797 3,467,472 3,442,472 3,442,472 Number of shares as at 31 December 71,117,940 70,495,940 69,349,440 68,849,440 68,849,440 9) Net interest-bearing receivables (debt) Earnings per share 11) 3.92 3.85 3.16 2.55 1.95 Interest-bearing receivables+liquid Diluted earnings per share 3.82 3.85 3.16 2.55 1.95 assets- interest-bearing liabilities Cash flow per share 12) 6.14 4.02 5.83 4.26 3.65 10) Debt-to-equity ratio Dividend per share 4.50 3.60* 1.40 1.20 1.00 Net interest-bearing liabilities/(share- PERSONNEL holders’ equity+net interest-bearing Number of salaried employees as at 31 December 972 977 963 857 736 liabilities) Number of employees paid by the hour as at 31 December 961 997 1,084 1,033 1,057 Total number of employees 1,933 1,974 2,047 1,890 1,793 11) Earnings per share Net profit/average number of shares * Includes extraordinary dividend of NOK 2.00 per share. outstanding 12) Cash flow per share (Earnings before taxes+depreciation- taxes paid)/average number of shares Environment Energy outstanding Through state-of-the-art expertise Environment offers The world needs more energy. This will create more solutions that meet the environmental challenges business opportunities. Energy will drive the develop- faced by the Group's customers. The business area ment of smarter, more energy-efficient technical includes AF’s environmental services within onshore solutions for the building, industry, marine and and offshore demolition and recycling. Onshore demoli- offshore sectors.