Boards report

Nature of the enterprise

4Service Holding AS is the parent company within the 4Service Holding Group. Its business includes the Facility Services, staff canteens, restaurants, coworking, catering, cleaning, as well as delivery of catering services, kitchen operations and related activities at construction camps, on board ships and at offshore installations.

Food & Facilities are delivered by the following brands: De 3 Stuer, Eir Mat og Drikke, Søtt+Salt, and Gastro. Additionally, customized brands have been established in cooperation with those customers who have signed full-service contracts, which include the delivery of services such as restaurants and co-working spaces under the brand name INC.

Cleaning & Maintenance are operated through the brand Eir Renhold, that provide cleaning and maintenance services.

Accommodation includes catering services. The onshore element of Accommodation is comprised of Camp, that supplies construction hotels under the brands 4Service and Eir Camp. The offshore business includes contracts where the company supplies catering to various offshore rigs on the Norwegian continental shelf under the 4Service brand.

The Group has acquired five businesses in 2022. The acquisitions are mainly within the Cleaning and Maintenance area. All of the acquired businesses – Apex Renhold AS, Viken Sanering AS, Skien Renhold AS, Royal Pluss AS, and Servicepartner 1 AS – have been merged into the subsidiary 4Service Eir Renhold AS.

True overview of development and profit/loss

It is hereby confirmed that the financial statements provide a true and fair overview of the company’s development, profit/loss, and financial position. No events have occurred between 31/12/2022 and the present that are of any significance to the company that change the assessment above. The Board of Directors and the management continuously assess the company’s mode of operation, duties and personnel.

The 4Service Holding Group had a total operating income in 2022 of NOK 3,313.6 million, an increase of 40% compared to 2021 (NOK 2,374.1 million). EBITDA for 2022 was NOK 300.4 million compared to NOK 249.3 million in 2021. Consequently, we observe an increase in profitability from 2021.The pre-tax profit/loss for the year was NOK 105.0 million, of which NOK -0.1 million is the share of non-controlling interests. The profit after tax amounted to NOK 64.2 million compared to a profit of NOK 56.9 million in 2021.

Total ordinary investments in tangible fixed assets in 2022 amounted to NOK 48.5 million (2021: 33.5 million) for the Group. Total assets at year-end amount to NOK 2,517.0 million. The total available working capital stands at NOK -205.4 million. The company has an unused drawdown reserve amounting to NOK 105 million and the company’s situation in terms of liquidity is deemed good.

Total equity including non-controlling stakes amounted to NOK 388.6 million at year-end, which corresponds to an equity ratio of 15% as compared to 13% the year before. At the end of 2022, minority interests amounted to NOK -2.3 million. The Group’s financial position is deemed to be good.

Cash flow for the year is characterized by good operations with a focus on the balance sheet. The Group’s net cash flow from operating activities amounted to NOK 251.0 million (NOK 380.8 million). Net cash flow from investing activities amounted to NOK -213.8 million (NOK -79.2 million). Net cash flow from financing activities amounted to NOK 1.1 million (NOK -165.9 million). Holding of cash and cash equivalents at the end of 2022 amounted to NOK 266.8 million. The corresponding figure for 2021 was NOK 228.5 million.

4Service Holding AS recorded a profit in 2022 of NOK 0.0 million. The parent company has an equity ratio of 38.5% and the company’s financial position is deemed to be good.

Statement on the company’s outlook

In both 2021 and the start of 2022, the market for especially canteen and catering has been affected by a reduction in revenues. This was due to COVID-19, which has led to a temporary fall in demand for the Group’s food services in relation to commercial buildings. Although observed normalization around medio 2022, financial turmoil led to a reduction in the demand of the same services towards the end of 2022. Along with an increase in food prices, this has led to short-term challenge for profitability.

The Group’s market share in 2022 rose, and it will continue to rise in 2023 because of new sales in 2021 and 2022 that will materialize in 2023. The general market outlook is good. The Board of Directors continuously assesses a variety of partnerships and acquisitions that may enable the Group to develop further.

Throughout 2022, the Group showed excellent resourcefulness, reduced its costs, and demonstrated that its underlying operations are both scalable and robust. The Group has recorded significant growth across all areas during 2022 in terms of new sales that are expected to materialize in 2023. Our focus on sales, including amid a demanding period in 2021 and 2022, is paying dividends as new contracts materialize across all business areas. Our existing portfolio and new contracts mean that we anticipate a return to our long-term plan in 2023.

Going concern

Based on the above statement of the Group’s profit/loss and financial position, the Board of Directors hereby confirms that the financial statements for 2022 have been prepared on the going concern basis and that they provide a true picture of the Group’s assets and liabilities, financial position, and profit/loss.

The Group is still in a growth phase, and its goal is to consolidate and exploit synergies in 2023 while organic growth continues.

Working environment

The Board of Directors considers the company to have a good working environment. No special measures have been implemented in this regard. Thirteen meetings of the Working Environment Committee were held across four committees in Renhold, Facility, Camp, and Offshore.

During 2022, 93 workplace injuries to employees were reported. 26 of these injuries caused employee absences. These injuries were primarily burns, cuts and injuries incurred in falls.

The Group has a focus on EHS and EHS training to reduce registered employee absences.

In 2022, the Group provided 50,397 instances of digital training activities.

Short-term absences in the Group amounted to 4.8% and long-term absences amounted to 3.6%. The 4Service Holding Group emphasizes the creation of a safe working environment in all our workplaces.

Equal opportunities

At year-end, the Group had 5,117 employees, of which 59,5% were women and 40,5% were men. Working hours and salaries are fairly distributed between the sexes.

There are 6 members of the Board of Directors, including a deputy member, of which one person is a woman. The Group’s stated HR policy is to be gender neutral in all areas of the business.

The Group aims to be a workplace where there is no discrimination and therefore consciously seeks to ensure equality between male and female applicants during recruitment processes. Throughout all processes, it is the principle of competence that guides all decisions made. The 4Service Holding Group seeks to be an attractive employer to people from a range of backgrounds, regardless of their ethnicity, gender, religion, and age.

In 2022, the Group has conducted an analysis of salaries and compensations as part of the Group’s overall measures towards being proactive in its work with equal rights and opportunities, as well as preventing discrimination in line with the Norwegian Equality and Anti-Discrimination Act. The findings from our analysis are available on our website.

The Transpary Act

In line with the Transpary Act of July 1st 2022, the Group’s account of the due diligence assessments will be published on the Group’s website within June 30th 2023.

External environment and sustainability

The Group does not engage in any activities that contaminate the external environment. In 2022, the Group undertook several initiatives to take a conscious position on sustainability. At present, the Group is a large workplace that leaves behind a large, overall footprint every single day. During 2022, we secured certification for the Group in accordance with ISO 14001:2015, while also putting the spotlight on following up on goals and outcomes that relate to the environment. In 2022, a sustainability report was prepared by an external, independent party. We measure food waste in most of our canteens and have invested in electric vehicles. Our dedicated resources on social sustainability has created opportunities for people in social exclusion by working explicitly with inclusion of people through training, workplace education and personnel development.

For further information, we refer to the ESG report on our website.

Research and development

4Service has implemented several steps to our digital strategy to develop seamless services and build a foundation that will help us become a data driven group. The digital customer journey provides us with the possibilities of an innovative expansion of our services, as well as new business opportunities integrated with the future back-office function.

Through analysis and predictions, a data driven development is created by using data to develop useful information that yields added value through sustainable and smart operational choices. All information required to control operational choices on the lowest level is made available through Qlik Sense.

A perfect interaction between people and technology will contribute to a magical customer experience.

Financial risk

Financial market risk

The Group is exposed to financial market risk through interest-bearing debts to credit institutions. These amounted to NOK 841 million at year-end. The floating interest rate on the loan is partially converted to a fixed rate through the purchase of interest derivatives (interest swap). As at 31/12/22, a total of 11% had been converted to fixed rates. The Group has insignificant exposure to exchange rate fluctuations.

Credit risk

The risk of losses on receivables is higher due to the uncertainty in the Norwegian economy. The Group has not experienced significant losses on its receivables to date, but it has increased the number of resources dedicated to follow-up the Group’s outstanding trade receivables. Gross credit exposure as at the balance sheet date amounted to a total of NOK 417.1 million. The Group has not entered into any set-off agreements or other derivative agreements to reduce its credit risks.

Liquidity risk

The Board of Directors considers the Group’s liquidity to be good, with a cash balance of NOK 266.8 million as at 31/12/2022, in addition to drawing facilities available via the Group’s bank. The Group’s loan facilities mature at 31/12/2023. We have good and constructive discussions regard refinancing.

Allocation of this year’s profit/loss

As per the income statement.

Other matters

The Board of Directors is not aware of any matters of material significance to the assessment of the company’s position and profit/loss that are not set out in the profit and loss account and balance sheet with accompanying notes. Furthermore, no matters have arisen following the end of the financial year that are, in the view of the Board of Directors, of any significance in the assessment of the financial statements.

It is the view of the Board of Directors that given the company’s current state of development, conditions for further operations and development are good.

The Group has taken out liability insurance for the Board and the CEO