The Board of Directors report

During 2013 Infratek has been through several major changes. Hafslund and Fortum sold their stakes in Infratek, respectively 43.3 percent and 33.0 percent. This completes the process that was initiated when Infratek was established to create a strong independent service provider in the market of building, operating and securing critical infrastructure in the Nordic countries.

During the year an internal reorganisation of the Group has been carried out. Going into 2014 the Group is organised in two business areas, Infrastructure and Security. The merger of the business areas Central Infrastructure and Local Infrastructure will contribute to further refinement of services, improve internal competence sharing, increase cost effectiveness and the flexibility in deliveries. The board has appointed Lars Bangen as the new CEO after Bjørn Frogner.

The investment firm Triton, who are owners of Infratek through the company Infratek Group AS, has during the 1st quarter of 2014 achieved a 100 percent ownership in Infratek. As a consequence Infratek has been delisted from the Oslo Stock Exchange and has changed the legal form of organisation from a public to a limited company.

Result for the year and financial matters
Operating conditions were good throughout most of 2013. Severe cold at the start of the year presented a number of operational challenges, but the organisation was suitably prepared and dealt with the situation satisfactorily.

The Group’s operating revenues increased slightly from NOK 2,779 million in 2012 to NOK 2,955 million in 2013, primarily due to rise in activity within central grid projects and  within the railway segment. The Group posted a negative operating profit of NOK 53 million (NOK 103 million) and a negative profit after tax of NOK 52 million (NOK 71 million).

The operating margin for the year came in at minus 1.8 per cent in 2013 (3.7 per cent). The Local Infrastructure business area returned an operating margin of 3.4 per cent (5.5 per cent) and Central Infrastructure achieved an operating margin of 0.6 per cent (0.4 per cent) in 2013. The Security business area returned an operating margin of minus 12.6 per cent (7.3 per cent) in 2013.

Operating profit is strongly affected by implemented accounting assessments of assets and liabilities, and restructuring expenses totaling NOK 134 million. Adjusted for special factors underlying operating showed profit of NOK 81 million, a decrease of NOK 22 million compared to 2012.

Reference is made to the individual note for a description of the accounting assessments and operational adjustments.

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). There were no material changes in accounting policies during the year.

Solid equity base
The Group has a strong capital structure with a 43.5 percent (47.1 percent) equity-to assetration at year end. Net cash holdings and cash equivalents as of 31 December 2013 amounted to NOK 167 million (NOK 244 million). The Group also has a NOK 100 million overdraft facility with DNB.

Satisfactory Cash flow
The net cash flow from operations amounted to NOK 40 million (NOK 94 million). The reduction is mainly due to increase in net working capital.

NOK 35 million (NOK 39 million) was invested in new operating assets during the year, primarily relating to the purchase of machinery and special vehicles. Standard vehicle are leased. A further NOK 12.6 million was invested in the purchase of 51 per cent of the shares in Plahn Systems A/S in Denmark.

The cash flow from financing activities was primarily attributable to the dividend paid in spring 2012 of NOK 96 million, which equates to 135 per cent of the previous year’s post-tax profit.

Infratek’s business concept and vision to be continued
Infratek builds, operates and secures critical infrastructure in line with the vision: “Together we shall deliver and become a leading Nordic player”. This strategy will be continued in 2014. Through the Group’s core values of presence, job satisfaction and adaptability, Infratek shall create a business culture that contributes to the achievement of the Group’s targets and ambitions.

The annual financial statements have been prepared in accordance with the going concern principle. For details of events after the end of the reporting period, please refer to Note 29.

The business areas
Infratek is organised in three business areas: Local Infrastructure, Central Infrastructure and Security based on products and services offered. From January 2014 the business areas Local Infrastructure and Central Infrastrucuture merged into one common business area covering the Group’s infrastructure activity. The Group operates in Norway, Sweden, Finland and Denmark where it employs 676 (717), 765 (826), 136 (129) and 20 (0) employees respectively. The Group is headquartered in Oslo.

Local Infrastructure
The Local Infrastructure business area comprises the Group’s infrastructure operations in Norway and Sweden which are aimed at the product areas distribution grids, street lighting, fibre-optics/telecoms, district heating and railways.

Local Infrastructure accounted for 66 per cent (67 per cent) of total Group revenues in 2013, and had 1,018 employees (1,054 employees) at the end of the reporting period.

The Local Infrastructure business area achieved the following results in 2013:
- Operating revenues: NOK 1,965 million (NOK 1,894 million)
- Operating profit: NOK 66.3 million (NOK 103.3 million)
- Operating margin: 3.4 per cent (5.5 per cent)

Adjusted for operational adjustments and imparment of fixed assets and goodwill the operating result ended at NOK 99.5 million and an operating margin of 5.3 per cent.The operating profit and operating margin for the year is regarded as satisfactory.

In recent years, Local Infrastructure has focused on establishing strong local representation in order to cater for the needs of the market, and this will remain an extremely important undertaking in the future. In parallel, work has been done on numerous improvement measures aimed at increasing productivity and reducing operating costs, which has started to provide results. The focus for 2014 will be to further refine existing business activities through information exchange and effective systems for implementing best practices throughout the business area.

The main elements of this strategy will include a continued focus on the major Nordic distribution grid companies, heavier investment in the rail market and increased investment in the cities of Stockholm, Oslo, Gothenburg and Öresund to Malmö.

Central Infrastructure
The Central Infrastructure business area comprises the Group’s infrastructure operations in Norway, Sweden and Finland, which are aimed at the central transmission system for the transmission of power in the Nordic countries; products and services within the areas of transformer stations, power cables and power lines for higher voltage ranges.

Central Infrastructure accounted for 23 per cent (21 per cent) of total Group revenues in 2013, and had 348 employees (391 employees) at the end of the reporting period.

The Central Infrastructure business area achieved the following results in 2013:
- Operating revenues: NOK 671 million (NOK 591 million)
- Operating profit: NOK 3.9 million (NOK 2.5 million)
- Operating margin: 0.6 per cent (0.4 per cent)

Adjusted for operational adjustements and Adjusted for operational adjustments and imparment of fixed assets and goodwill the operating result ended at NOK 7.8 million and an operating margin of 1.2 per cent. The result for 2013 for the whole business area was unsatisfactory. The main causes for the poor results were losses on projects, primarily on medium-sized projects in the regional grid segment. A number of measures to raise expertise levels within project management have been implemented.

The Security business area comprises the Group’s operations within high-security and services aimed at electrical safety. The business area offers its technical services in Norway, Sweden, Finland, and Denmark.

With effect from 10 July 2013, Infratek Sikkerhet AS acquired the remaining shares in Infratek Säkerhet Sverige AB. Infratek Sikkerhet already owned 51 per cent of the shares. Infratek Sikkerhet exercised its purchase option, and in this regard paid NOK 6.4 million for the remaining 49 per cent of the shares.

Infratek entered into an agreement on 10 January 2013 concerning the acquisition of 51 per cent of the shares in the Danish security company, Plahn Systems A/S, whose total revenue for 2012 ended at DKK 29 million. The acquisition agreement includes both a sales option and a purchase option with respect to the remaining 49 per cent of the shares in the company, which fall due in 2018.

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.

Security accounted for 11 per cent (10 per cent) of total Group revenues in 2013, and had 205 employees (206 employees) at the end of the reporting period.

The Security business area achieved the following results in 2013:
- Operating revenues: NOK 321 million (NOK 289.5 million)
- Operating profit: NOK -40 million (NOK 21 million)
- Operating margin: -12.6 per cent (7.3 per cent)

Adjusted for impairment of fixed assets and goodwill the operating result ended at NOK 8 million and an operating margin of 2.6 per cent.

The high security segment posted satisfactory results on ongoing operating contracts, but the new project activities are still too low and the competition strong. The Electrical Safety product area achieved satisfactory profitability levels throughout the year. In light of the difficult high security market, the result for the business area as a whole was satisfactory.

The strategy moving forward will be to consolidate Infratek’s position as a high security company, and to leverage group-wide economies of scale. Within electrical security Infratek will continue to play an active role in the market for statutory control services.

The Other business area comprises Group administration and expenses relating to group-level functions. This business area employs 26 staff, including 10 employees in the accounting service, which delivers services to the Group’s Norwegian companies.

Other posted a negative operating profit of NOK -83.2 million (minus 24.3 million). Adjusted for  accruals for losses on rental agreement and impairment of ICT-investments the operating result ended at minus NOK 33.2 million (minus 24.3).The cost increase from 2012 to 2013 is related to strengthen of staff and support functions at the corporate level.

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 2013 the Group employed 1,597 staff, compared with 1,672 employees at the end of the previous year, a year-on-year decrease of 75. Staffing adjustments were made to address the changed market situation in some areas in Norway and the loss of the contingency contract in Sweden. Staff numbers have also been reduced through natural wastage of none critical competence, thus enabling the company to reduce the risk attaching to the industry’s natural seasonal fluctuations throughout the year, by using subcontractors in peak periods. The decline in the number of employees will be partially offset by new and intensified activity in urban areas.

The Group’s business has a technical bias and has historically been 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 2012, 8.5 per cent (8.2 per cent) of the company’s employees were women. Until conversion of the company from public limited company to limited company in March i mars 2014 two of the five shareholder-elected board members were women.

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 executive 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.

Corporate Social Responsibility
Infratek is responsible for any social consequences caused by the Group’s operations in terms of impact on the external environment, human rights, working conditions and other social issues. Infratek’s work within social responsibility includes our attitude to the environment around us, ethical trading and code of conduct for our employees.

The board has adopted principles for corporate governance in line with the Norwegian Code of Practice for Corporate Governance as of 23 October 2012. The report does not cover the requirements of the Norwegian Accounting Act § 3-3 c. These guidelines are deemed to be part of the Report of the Board of Directors.

Infratek’s has a policy of giving customers the opportunity to choose more environmentally friendly solutions, where sound alternatives exist. In addition, employees and the company are encouraged to strive to develop and adopt environmentally friendly practices and solutions. The idea is that the principles of sustainability shall underpin the further development of the Group's business, products and services.

In relation to procurement, Infratek sets ethical standards for its suppliers, who undertake to practise their business in a manner that does not contravene any internationally recognised principles or guidelines relating to human and labour rights, the environment and corruption. Ensuring that their own manufacturers and sub-contractors do not violate the aforementioned principles is also one of the suppliers’ obligations. Infratek has established procedures for following up sub-contractors in this area. These procedures aim to ensure that suppliers comply with the obligations that Infratek has towards its customers and partners. Infratek also demands that investment purchases are of a high quality with regard to the environment.

Ethical practices are about having a commitment to a solid foundation of values that each individual has towards themselves, their employer, their colleagues and society as a whole. Infratek puts ethics on the agenda through guidelines for ethical trade and a code of conduct for all employees. The Infratek Code of Conduct is applicable to all employees, employee representatives and directors. The guidelines govern the conduct and actions in connection with business operations and in interactions with customers, partners and employees. The guidelines are considered to be a minimum requirement. All employees must comply with external laws and regulations, industry guidelines on ethics and internal regulations that are applicable to Infratek. The contents of the Group's ethical guidelines should be made known to the staff, and continuous efforts are to make sure all employees act in compliance with the guidelines.

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. Within waste management the company has agreements with Norsk Gjenvinning AS in Norway and Stena Recycling in Sweden, 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 employ modern vehicles with low CO2 emissions, and the Group’s target is not to use service vehicles older than five years. At the end of 2013 Infratek had 1,279 vehicles.

To boost each individual employee’s competence and awareness of environmental issues, Infratek implemented a mandatory environmental e-learning programme 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 come first. Infratek 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 2013, Infratek had an H-value of 9.1, at the end of 2012, the H-value was 10.4. Although there was a positive trend with regard to injuries in 2013, the injury rate is still too high. 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 improved in 2013 and was reduced from 4.6 per cent in 2012 to 3.8 per cent in 2013. This reduction was mainly due to fewer employees on long-term sick leave than before. The absence rate in the individual businesses, companies and countries varied from 1.2 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.

An employee survey was carried out for all staff in the fourth quarter, the results of which revealed high general levels of satisfaction with day-to-day working life and the working environment in all countries where the Group operates. Regular meetings are held with the employee representatives. Close cooperation with employee organisations plays an important role in the further development of the Group’s activities.

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.

Infratek’s interest-bearing debt is very limited. Interest rate risk primarily relates to interest income from the Group’s cash holdings and customers’ willingness to invest. The Group enjoys sound access to liquid capital, and has positive cash holdings and an unused bank overdraft facility of NOK 100 million. Loan covenants attach to the Group’s drawdown facility and bank guarantees. The agreement requires a minimum equity of 25 per cent and a target of a maximum 2.0 for (net debt / EBITDA) for Infratek. Infratek operates in Norway, Sweden and Finland, but the Group’s reporting currency is NOK. The company is therefore exposed to currency fluctuations. 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
All 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 can result in:
- Injuries to employees
- Damage to the environment
- Damage to company or third-party assets

The company has taken out insurance to cover all material types of damage and injuries. The company manages operational risk 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 licence. 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.

Ownership structure and shareholder issues
At the end of 2013 the Group’s share capital totalled NOK 319 million allocated to 63,863,224 shares. At the reporting date Infratek Group AS owned hundred per cent of the shares in Infratek AS. The board is authorised to issue up to 6,386,322 new shares until the date of the annual general meeting in spring 2014.

The work of the board of directors
The board has adopted guidelines governing its own work and evaluates its work on an annual basis. A total of fourteen board meetings were held along with three mail-based board meetings in 2013. The Audit Committee held six meetings during the year.

The board has adopted principles for corporate governance in line with the Norwegian Code of Practice for Corporate Governance as of 23 October 2012. The report does not cover the requirements of the Norwegian Accounting Act § 3-3 b. These guidelines are deemed to be part of the Report of the Board of Directors.

The board has adopted social responsibility and code of conduct and notification procedures pursuant to the Norwegian Act on the Working Environment. It has been agreed not to establish a corporate assembly. The board therefore reports directly to the general meeting.

The board complies with the requirements outlined in the Norwegian Public Limited Liability Companies Act with regard to gender balance until the company was convered from Public Limited Company to Limited Company. As the percentage of female employees in the Group is less than 20 per cent, an exemption relating to gender balance among employee representatives has been sought.

Dividend and allocation of profit for the year in the parent company
Infratek aims to maintain a dividend level of at least 50 per cent of the profit after tax adjusted for non-cash items. Due to the negative profit for the year and the liquidty situation during the year, the board proposes that no dividend is paid for the year 2013.

The board proposes the following appropriation of Infratek ASA’s profit for the year:


NOK million



 Transferred from other equity



 Proposed dividend



 Total allocated



Outlook for 2014
Society is making ever-more stringent demands for stabile and robust solutions for critical infrastructure, which in turn is raising the quality requirements for existing grid and network. In addition, rising consumption requires reinforcement of existing installations and construction of new grid and network. In a parallel development, climate challenges are driving the construction of renewable energy systems including wind farms and district heating plants and associated infrastructure. Public transport in the Nordic region is facing the same challenges with regard to stability, capacity and the climate. Railways and trams will therefore represent important focus areas for the government and municipalities going forward. Behovet for sikring og overvåkning av kristisk infrastruktur øker både som følge av økt terrorfrykt og krav til stablie løsninger.

Taken together these factors will present a number of promising marketing opportunities for Infratek. This view is corroborated by clear indications of higher investment levels among the Group's customers.

Expected market growth will result in a need for increased skills and capacity. In addition an imminent generational shift in many technical environments will present challenges for all companies, in particular in closed markets. Capacity challenges may stimulate use of the open market and lead to the spin-off of executing activities from the grid companies. This will give rise to new opportunities for Infratek through business transfers or acquisitions. These types of processes are often politically governed and require a good understanding of local conditions and patience to get the desired positions.

The total order book for 2014 is satisfactory, but seasonal fluctuations during the year give significant variations in workload from quarter to quarter.

Effective management of project risks is crucial for Infratek’s results. This year has been characterised by relatively large losses in some projects. Measures are implemented to ensure better analysis of project risks from tender stage to implementation are expected to give financial results in the future.

The board of directors has an active role in the development of the Group’s business strategy.

The Board of Directors of Infratek AS

Oslo, 8 April 2014


Lars Ove Håkansson
Board chairman


Carl Johan Falkenberg
Board member


Mats Jönsson
Board member






Petter Darin
Board member


Roger André Hansen
Board member


Rune Tobiassen
Board member






Olle Strömberg
Board member


Lars Bangen