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The Board of Directors report

During the first quarter of 2014, Infratek Group AS acquired the remaining shares in Infratek ASA and delisted the company’s shares from the Oslo Stock Exchange. The delisting was followed by a changed of company type from public limited liability (ASA) to limited liability (AS).

Efforts to further develop Infratek Group have continued during 2014. The main focus has been streamlining of the business and improvement initiatives to achieve operational excellence. The prior business segment Infrastructure has been organized in eight business areas based on geographic markets and delivery of services. The group divested its business within Security-Technical Solutions in June 2014. The reorganization of the business areas will further contribute to the development of a strong independent service provider in the market of building, operating and maintaining critical infrastructure in the Nordic countries.

During May 2014, the group successfully issued a bond of NOK 650 million. The bond was listed on Oslo Stock Exchange in December 2014.

Result for the year and financial matters consolidated financial statements

The consolidated financial statements for Infratek Group AS are presented for 1 January to 31 December 2014 with comparative figures from 25 June to 31 December 2013.

The Group’s operating revenues came in at NOK 2 773 million for 2014 (NOK 1 520 million in 2013). The Group posted an operating profit of NOK 151 million (NOK 10 million) and a profit after tax and discontinued operations of NOK 91 million (NOK -29 million).

The operating margin for the year came in at 5.4 per cent in 2014 (0.1 per cent). The operations in the geographical segments Norway, Sweden and Finland returned respectively an operating margin of 14.1 per cent (7.5 per cent), 1.2 per cent (-0.9 per cent) and 10.7 per cent (0.9 per cent) in 2014. Other returned a negative operating profit of NOK 43.6 million (NOK 120.7 million).

Profits in 2014 were still influence by restructuring expenses, as well as material impact from change in pension plans. Adjusted for non-recurring items totaling a positive effect of NOK 27 million, underlying operations showed a profit of NOK 124 million and an adjusted profit margin of 4.5 per cent.

Operating profit in 2013 was strongly affected by restructuring expenses as well as transactions costs. Adjusted for non-recurring items of NOK 76 million, underlying operations showed profit of NOK 86 million in 2013.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by EU. There were no material changes in accounting policies during the year affecting the Group’s consolidated financial statements.

Equity base and long-term debt

The Group has a capital structure with an NOK 295 million (NOK 366 million) in Equity and NOK 1.331 million (NOK 1.379 million) in debt at year end. In May 2014, the group successfully issued a bond of NOK 650 million with the duration of 5 years. The bond was listed on the Oslo Stock exchange on 17 December 2014. See note 15 in the consolidated financial statements for further information related to the bond.

Cash flow

Net cash holdings and cash equivalents as of 31 December 2014 amounted to NOK 175 million (NOK 170 million). The Group also has a NOK 100 million credit facility with Swedbank consisting of a 20 million overdraft facility and 80 million revolving credit facility.

The net cash flow from operations amounted to NOK 81 million (NOK 94 million). The difference between operating profit and cash flow from operations is mainly due to differences between cost of pensions and cash flow related to pension payments as well as taxes paid in Norway during 2014.

Net cash flow from investing activities amounted to NOK -275 million (NOK -659 million) in 2014. NOK 234 million (NOK 642 million) was invested in acquisition of subsidiaries, while NOK 29 million (NOK 19 million) was invested in new operating assets during the year, primarily relating to the purchase of machinery and special vehicles. Standard vehicle are leased.

The cash flow from financing activities was primarily attributable issue of a bond net of repayment of other long- and short-term debt. Interest payments were net NOK 66 million (NOK 1 million). Net cash flow from financing activities was NOK 170 million (NOK 715 million).

Result for the year and financial matters statutory accounts Infratek Group AS

Infratek Group AS is a holding company with no employees and was established 28 May 2013. The assets mainly consists of shares in subsidiaries, deferred tax asset and receivable group contribution, while financing is through equity, bond and other long-term loans, as well as short term liabilities. Equity was NOK 253 million (NOK 185 million) relative to NOK 696 million (NOK 527 million) in long-term debt and NOK 29 million (NOK 74 million) in short-term debt at year end.

The loss for 2014 was NOK 38.4 million compared to NOK 22.5 million in 2013. The company has no revenue and costs mainly consist of interest expenses and financial income from group contribution.

The accounts have been prepare in accordance with the Norwegian accounting law and generally accepted accounting principles in Norway (NGAAP).

Going concern

The consolidated financial statements for Infratek Group, as well as the statutory accounts for Infratek Group AS have been prepared in accordance with the going concern principle. The board of directors confirms that the basis for the going concern assumption is present.

Infratek’s business concept and vision to be continued

Infratek builds, operates and maintains critical infrastructure in line with the vision: “Together we shall deliver and become a leading Nordic player”. This strategy will be continued in 2015. Through the Group’s core values of presence, job satisfaction and movement, Infratek shall create a business culture that contributes to the achievement of the Group’s targets and ambitions.

The business areas

In 2014, the group changed its corporate structure to consist of three business segments; Norway, Sweden and Finland. The segments in 2013 were Local Infrastructure, Central Infrastructure and Security (comprising Technical Solution and Electrical Safety). The Group employs 603 (577) in Norway, 618 (711) in Sweden and 113 (129) employees in Finland. In Norway, 29 (26) staff are employed with Infratek AS and constitute support functions part of the other/group segment. The Group is headquartered in Oslo. Comparative numbers for 2013 are shown on full year basis.


Operations in Norway are organized within the areas Electrical Grids, Electrical Safety, Projects and Infra Solutions. Electrical Grids is aimed at the product area distribution grids, transmission grids, transformer stations and power cables. Electrical Safety provides inspection and monitoring services on behalf of grid companies. Projects operates as an end-to-end supplier of projects within the high voltage electrical infrastructure, while Infra Solutions offer services within street lighting, metering and fibre/telecom.

The Norway business area achieved the following results in 2014:
- Operating revenues: NOK 1 066 million (NOK 1 166 million)
- Operating profit: NOK 150 million (NOK 88 million)
- Operating margin: 14.1 per cent (7.5 per cent)
- Adjusted operating margin: 9.5 per cent (8,4 per cent)

The operating profit and operating margin in Norway for 2014 is regarded as satisfactory.


Operations in Sweden are organized within the areas Electrical Grids, Projects, Infra Solutions and Railway. Electrical Grids is aimed at the product areas distribution grids, transmission grids, transformer stations and power cables. Projects operates as an end-to-end supplier of projects within the high voltage electrical infrastructure, while Infra Solutions offer services within street lighting, metering and fibre/telecom. Railway delivers services to constructors and owners of infrastructure for railway.

The Sweden business area achieved the following results in 2014:
- Operating revenues: NOK 1 479 million (NOK 1 398 million)
- Operating profit: NOK 18 million (NOK -12 million)
- Operating margin: 1.2 per cent (-0.9 per cent)
- Adjusted operating margin: 1.2 per cent (0,9 per cent)

The result for 2014 for the whole segment was unsatisfactory. The main cause for the poor results was losses on fibre projects. A number of measures to increase profitability in general have been implemented, while the fibre business will be closed down during first half of 2015.


Operations in Finland comprise of services and products aimed at the central transmission grid, especially related to transformer stations.

The Finland business area achieved the following results in 2014:
- Operating revenues: NOK 238 million (NOK 192 million)
- Operating profit: NOK 25 million (NOK 2 million)
- Operating margin: 10.7 per cent (0.9 per cent)
- Adjusted operating margin: 10.7 per cent (2,3 per cent)

The operating profit and operating margin in Finland for 2014 is regarded as satisfactory.

Discontinued operations

2014 has been a year of material changes in the previous business area Security. While on 30 June 2014, the business area Security – Technical Solutions was disposed of, the business area Electrical Safety continues to deliver strong results through the company Infratek Elsikkerhet AS. Infratek Elsikkerhet AS is now part of the geographical segment Norway.

The profit for the year and the net gain from the sale of the business area are included in the item “Profit (loss) for the period from discontinued operations” in the consolidated income statement with NOK 35 million. Security – Technical Solutions had revenues of NOK 122 million with profits of NOK 1 million between 1 January and 30 June 2014. In 2013 revenues amounted to NOK 131 million with a loss of NOK 3 million.

With effect from 30 September 2013, Eiendomssikring AS was sold to the Safeguard Group. The profit year to date and the net gain from the sale of shares are included under the item “Profit from discontinued operations” in the consolidated income statement. In 2013 the company had revenues of NOK 21 million and operating profit of NOK 2.3 million.


The "Other” business area comprises Group administration and expenses relating to group-level functions. Operating loss for the period was NOK 44 million compared to loss of NOK 121 million in 2013.
Both 2014 and 2013 are impacted by non-recurring items, respectively NOK 22 million in 2014 and NOK -90 million in 2013.

Personnel, working environment and equality

Infratek attaches high importance to promoting its employees’ professional and personal development. The Group will continue to retain, develop and attract the market’s leading specialists. Continued availability of critical expertise within technical areas when seen in light of future retirements is a challenge. The ability to attract new employees and retain existing core expertise will be essential for Infratek’s development over the next five years. These issues have been placed at the top of the Group’s personnel policy agenda.

At the end of 2014 the Group employed 1 334 staff, compared to 1 488 employees at the end of the previous year, a year-on-year decrease of 148.

The Group’s business has a technical bias and is male-dominated. Infratek aims to achieve a more equal gender balance and seeks to employ staff of varied experience, age and interests. At the end of 2014, 8.2 per cent of the company’s employees were women compared to 7.5 per cent at the end of 2013. The Board of directors of Infratek Group AS consists of three members. Operational matters within the group are processed by the board of Infratek AS which consists of eight members.

The Group is working actively with targeted and systematic efforts to prevent discrimination based on ethnicity, national origin, ancestry, skin colour, language, religion and beliefs. These activities include recruitment, wages and working conditions, promotion, development opportunities and protection against harassment.

The Group strives to be a workplace where there is no discrimination on grounds of disability. The Group is working actively and making targeted efforts to design and facilitate physical conditions such that the company’s various functions can be used by as many people as possible. For employees or applicants with disabilities, the workplace and job responsibilities are adapted to suit the individual on a case-by-case basis.

For the board’s statement on salaries and other remuneration paid to senior executives, see Note 21, which is deemed an integral part of the Report from the Board of Directors.

External environment

Sound environmental management is an important part of Infratek’s social responsibility initiatives. At the heart of the Group’s environment policy is the idea that principles of sustainability shall underpin the further development of its business, products and services. Infratek is certified to the ISO 14001 environmental standard.

Infratek’s impact on the external environment primarily relates to management of waste and use of transport means. The Group has waste management agreements which ensure that waste from our activities is collected and treated in the best possible way for the environment. The Group is continuing work to make its vehicle fleet more efficient and renew it with more environmentally friendly vehicles. Infratek shall therefore use modern vehicles with low CO2 emissions, and the Group’s target is not to employ service vehicles older than five years.

To boost each individual employee’s competence and awareness of environmental issues, Infratek implemented a mandatory environmental e-learning program for all Group employees. All new Infratek employees will also undergo the same training.

Health, safety and the environment

Employee health, welfare and safety always comes first. Infratek has signed up to the government’s inclusive working life (IA) scheme in spring 2005, and continuously strives to offer training and to raise the awareness of managers with respect to HSE, and to develop the Group’s health and safety organisation. In 2014, Infratek had an H-value of 7.9, at the end of 2013 the H-value was 9.1. During 2013, plans and measures were revised to prevent accidents in the workplace. To develop this further, the Group has developed overarching targets for all managers in the Group geared toward preventive measures to avoid accidents.

The sickness absence rate was stable in 2014 with 3.9 per cent compared to 3.8 per cent in 2013. The absence rate in the individual businesses, companies and countries varied from 1.6 per cent to 5.4 per cent. The various companies work with both public and private health companies to identify and implement measures to reduce sickness absence.

Risk and internal controls

The Group is exposed to risk along the entire value chain. The board is keen to secure systematic and concerted management of risk in the business, and regards this as critical for long-term value creation. Risk management is an integral part of business processes and is monitored within the respective business areas through procedures for assessing and monitoring risk. The board reviews Infratek’s risk exposure based on an annual survey of the risks attaching to the Group’s activities.

Infratek has implemented a common management system which defines the Group’s shared processes and guidelines intended to secure an effective control environment that meets management’s objectives and intentions. The company is endeavouring to reinforce and systemise internal controls on financial reporting in the Group. The system shall secure reliable accounting information in monthly, quarterly and annual reports.

Infratek is primarily exposed to risk factors connected to financial and market conditions, operating activities, project implementation and consequences of changes in political and financial framework conditions.

Market and financial risk

Infratek is exposed to significant competition in all its business areas, and all contracts are obtained through tendering. The Group’s ability to compete is therefore important for future development and earnings. Infratek’s business is labour-intensive. Consequently, developments in areas such as access to human resources, future salary changes and loss of key staff could affect the Group’s results.

Major seasonal fluctuations result in poor capacity utilisation and low operating margins in periods of low activity. A major loss of customers, reduced ability to pay or lower investment levels among Infratek’s customers, project delays, operation stoppages or reduced access to goods or services could all result in reduced profitability and affect the Group’s reputation.

Credit, liquidity and foreign currency risk

Infratek’s activities primarily target the business market and the number of customers is controllable. Historically Infratek’s bad debt exposure has been insignificant. The group has some dependencies on a few large customers.

Interest rate risk primarily relates to the Group’s interest expenses on the Group’s Bond and other interest-bearing debt net of interest income on cash holdings. The Group enjoys sound access to liquidity, and has positive cash holdings and an unused credit facility of NOK 100 million. Loan covenants attach to the Group’s credit facility and bank guarantees, which are to be measured on Infratek AS consolidated accounts. Infratek operates in Norway, Sweden and Finland, but the Group’s reporting currency is NOK. The company is therefore exposed to currency fluctuations from SEK and EUR to NOK. The Group purchases goods in foreign currency to a limited extent. The Group’s liquidity, credit and foreign currency risk is considered to be limited.

Operational risk

The processes in the value chain are exposed to operational risk. This is most notably the case with regard to operating activities and project implementation. This may result in:

- Injuries to employees
- Damage to the environment
- Damage to company or third-party assets

The Group has taken out insurance to cover all material types of damage and injuries. Operational risk is managed through detailed procedures for activities in all operational units and various types of contingency plans. We have an extensive system for recording and reporting hazardous conditions, undesired events and injuries/damage. These are analysed on an ongoing basis in order to prevent and restrict any consequences, and to ensure that we can follow up causal relationships and take appropriate measures.

Regulatory risk

The Group’s activities are subject to legislation and statutory regulations governing areas such as health, safety and the environment. Some areas of the Group’s activities also require a government license. Changes in regulatory conditions affecting opportunities or requirements to purchase services from third parties could also affect activities. Construction of new infrastructure and maintenance of existing infrastructure is to some extent regulated by public authorities. Changes in prevailing legislation and regulations could impact demand for and profitability of Infratek’s services.

Corporate Governance

The Group has a separate document describing the guidelines for Corporate Governance. See for more information. Separate guidelines have also been prepared describing the Group’s work on anti-corruption and anti-trust.

Ownership structure and shareholder issues

Per 31. December 2014 the Infratek Group AS’s share capital totaled NOK 34 100 allocated to 31 shares. All shares are owned by Heraldic Midco s.a.r.l.

Dividend and allocation of profit for the year in the parent company

The board proposes no dividend for 2014. Loss for the period of NOK 38.4 million is proposed allocated to uncovered deficit.

Outlook for 2015

The overriding aim is to strengthen Infratek's position in the market for critical infrastructure - through profitability and growth. The board of directors believes that Infratek is well equipped to develop the Group further in this direction.

An increased efficiency in operations has boosted Infratek's competitiveness, while the award of several strategically important and long-term contracts has reinforced the Group's market position.

The total order book for 2015 is satisfactory, but seasonal fluctuations during the year give significant variations in workload from quarter to quarter.

Infratek's Nordic market position and strong financial position, makes Infratek well positioned to meet the challenges facing the Group in the future.

The Board of Directors of Infratek Group AS

Oslo, 21 April 2015


Carl Johan Falkenberg
Board chairman


Petter Darin
Board member


Carl Johan Renvall
Board member