Boards report
Nature of the entity
4Service Holding AS is the parent company in the 4Service Holding Group. The business includes Facility services, staff restaurants, restaurants, coworking spaces, catering, cleaning, as well as the provision of catering services, kitchen operations, and related activities at construction camps, vessels, and offshore installations. The group's headquarters are located in Oslo, but it operates in large parts of Norway and also beyond the borders of Norway.
Food and Facilities operates under the brand names De 3 Stuer, Ekre, Søtt+Salt, and Gastro. In addition, custom branding has been established in collaboration with clients on full-service contracts, offering services such as restaurants, events, and coworking spaces under the brand name INC. The Food and Facilities market is in Norway, and the business operates throughout the country with multiple departments.
Cleaning and Maintenance operates under the brand name Eir Renhold, providing cleaning and maintenance services in Norway.
Accommodation includes catering services, where the land-based part consists of Camp, providing facility hotels under the brand name 4Service. Offshore operations, which include contracts where the company provides catering on various rigs on the Norwegian and foreign continental shelf, are delivered under the brand name 4Service.
In 2023, the group did not do any acquisitions. 4Service Eir Camp AS has been merged into 4Service Landanlegg AS to streamline the camp area within the Accommodation segment.
Fair overview of the group’s development and results
It is confirmed that the financial statements provide a true and fair view of the development, results, and financial position of the company. No significant events have occurred between December 31, 2023, and the current date that would change the above assessment. The board of directors and management continuously assess the company's operations, tasks, and personnel.
The group 4Service Holding AS reported operating revenues of 4,101.9 million NOK, representing a 24% increase from 2022 (3,313.6 million NOK). EBITDA for 2023 amounted to 432.3 million NOK, compared to 300.4 million NOK in 2022, indicating increased profitability from the previous year. The profit before tax for the year was 199.8 million NOK, of which -0.1 million NOK represents the non-controlling interest's share. The net profit for the year amounted to 153.7 million NOK, compared to a profit of 64.2 million NOK in 2022.
The group’s total ordinary investments in fixed assets in 2023 amounted to 43.5 million NOK (2022: 48.5 million NOK). Total assets at the end of the year amounted to 2,785.9 million NOK. The working capital is at -136.6 million NOK. The group has an unused available credit facility of 105 million NOK, and the group's liquidity situation is considered good.
At the end of the year, the total equity including non-controlling interests was 540.3 million NOK, corresponding to an equity ratio of 19%, compared to 15% last year. At the end of 2023, minority interests amount to -2.4 million NOK. The group's financial position is considered good.
The cash flow for the year reflects good operational management with a focus on the balance sheet. The group's net cash flow from operating activities amounted to 303.9 million NOK (251.0 million NOK). Net cash flow from investing activities was -62.1 million NOK (-213.8 million NOK). Net cash flow from financing activities was -226.8 million NOK (1.1 million NOK). The cash and cash equivalents amounted to 281.8 million NOK at the end of 2023. The corresponding figure for 2022 was 266.8 million NOK.
4Service Holding AS result for 2023 is 0.0 million NOK. The parent company has an equity ratio of 38.5%, and the company's financial position is considered good.
Statement of the Group’s outlook
Both in 2022 and the beginning of 2023, the catering and canteen market, in particular, has been affected by significant increases in food prices, which the group couldn't pass on to customers until Q2-23. Simultaneously, the financial instability in late 2022 and in 2023 has affected commercial sales, including restaurant turnover.
The increased prices challenged the Group’s profitability in Q1-23, but both profitability and growth improved over the year due to strong organic growth in all business areas, where the company expanded and developed its range of services while also gaining market share.
The general market outlook is positive. The board continuously evaluates opportunities for various forms of collaboration or acquisitions that can further develop the group.
Throughout 2023, the group has demonstrated significant initiative, adjusted its cost base, and shown that the underlying operations are both scalable and robust. Additionally, the group has experienced growth in all areas in 2023, including new sales that are expected to materialize in 2024. The group's position and reputation, concepts, and an efficient sales force are yielding results with continuously new contracts across all areas. This has resulted in a significant number of new contracts launched in the beginning of 2024. With the existing portfolio and newly signed contracts, the company expects to continue experiencing strong organic growth in 2024.
As of Q1 2024, the group has completed one acquisition. The acquired company operates within the Cleaning and Maintenance segment and is headquartered in Tromsø. This acquisition enhances the group's presence in the region.
The board clarifies that there is normally considerable uncertainty connected to the assessment of future conditions.
Going concern
Based on the above statement regarding the group's results and financial position, the board confirms that the annual accounts for 2023 have been prepared on the assumption of going concern, and that it provides a true and fair view of the group's assets and liabilities, financial position, and results.
The group is still in a developmental phase. After a year focused on consolidation, extracting synergies, and experiencing strong organic growth, the group is well-positioned for further profitable growth in 2024.
Working environment
The board considers the working environment within the group to be good. No specific measures have been implemented in this regard. There have been 16 meetings in the workplace environment committee, distributed among 8 committees in the Accommodation segment, 4 committees in Food and Facilities, and 4 committees in Cleaning and Maintenance.
During 2023, there have been 67 reported injuries to employees in connection with the performance of their work. 22 of these injuries resulted in absence from work. These injuries mainly consist of burns, falls, and cuts.
The group focuses on health, safety, and environmental measures and training to reduce reported absentee injuries.
In 2023, 29,627 digital training activities were conducted.
The short-term absence rate in the group was 2.2%, and the long-term absence rate was 3.4%. 4Service Holding focuses on creating a safe working environment at all the Group’s workplaces.
Equal opportunities
At the end of the year, the group had 5,401 employees, of which 59.8% were women and 40.2% were men. Working hours and wages are fairly distributed between genders.
The board consists of 6 members, including one alternate, of which one person is a woman. The group's personnel policy is considered gender-neutral in all areas.
The group aims to be a workplace free from discrimination and is therefore consciously striving for gender equality in recruitment processes. Competence is the guiding principle in all decision-making processes. 4Service Holding aims to be an attractive employer for individuals with diverse backgrounds, regardless of ethnicity, gender, religion, or age.
In 2023, the group conducted a wage survey as part of the company's general efforts to be proactive in ensuring equal rights and opportunities and preventing discrimination under Norwegian equality and anti-discrimination laws. The findings of the wage survey are presented on our website
The Transparency Act
In accordance with the Transparency Act of July 1, 2022, the Group's statement on due diligence will be published on the company's website by June 30, 2024.
External environment and sustainability
In 2023, it became clear that the EU's Corporate Sustainability Reporting Directive (CSRD) will apply to the company starting from financial year 2025. CSRD involves a significant expansion of the reporting obligation, as well as the preparation of a double materiality analysis. The process for implementing CSRD at 4Service will commence in 2024, but all ESG initiatives and activities were already assessed against their impact/value with respect to CSRD in 2023.
The company conducted a new climate and environmental analysis in 2023, which aimed to 1) identify areas of operations affecting the external environment and to what extent, and 2) develop measures and metrics to prevent or reduce negative environmental impacts. The company is certified according to ISO 14001 Environmental Management.
In 2023, a comprehensive carbon footprint for the group was prepared according to the GHG Protocol, including a detailed reporting of scope 3 emissions for the first time. This will serve as a baseline for further measurements and development of carbon emissions, as well as the basis for the company's carbon reduction plan.
90% of the company's carbon emissions are in scope 3 (indirect emissions), with food and meat purchases being the largest factor by far. Measures to reduce this have been implemented for several years, and meat consumption has steadily decreased since measurements began three years ago. These measures require high competence from the company's chefs, as well as close collaboration with customers to ensure that their dining experience is not reduced or compromised.
In 2023, the company experienced increased demand from customers for our climate and environmentally focused work. This demand primarily comes in the form of:
- Requirements for description and documentation of ESG work in sales/tenders
- Desire for presentation of our ESG initiatives for existing customers
- Digital evaluation forms sent from customers via third parties
- From January 1, 2024, climate and environment will be weighted at least 30% in public procurement.
An annual ESG report is prepared according to GRI and GHG Protocol, which can be read in its entirety on 4Service's website.
Research and development
4Service has implemented several steps in its digital strategy to develop seamless services and lay the foundation for becoming a data-driven group. The digital customer journey provides the company with opportunities for innovative expansion of its service offerings as well as new business opportunities integrated with the future back office.
Throughout 2023, the group has invested significant resources in the development of digital solutions, predictive tools, and the use of artificial intelligence. This will be an ongoing effort to ensure that 4Service remains at the forefront in the future as well. The goal is constantly to provide added value to our customers through smoother and better solutions, with a customer-centric approach.
All information necessary to make operational decisions at the lowest level is made available through Qlik Sense.
A perfect synergy between people and technology aims to create magical customer experiences. The group continuously explores opportunities for using technology to support, simplify, and add value to the customer experience alongside efficient internal processes.
Financial risk
Financial market risk
The group faces financial market risk through interest-bearing debt with credit institutions, which amounted to 751 million NOK at year-end. The loan has a floating interest rate. The group also has some currency exposure through its offshore operations, but this exposure is considered insignificant. The group continuously monitors the risk landscape and implements measures as needed to control financial risk.
Credit risk
There is a greater risk associated with losses on receivables due to uncertainty in the Norwegian economy. The group has experienced an increase in the number of bankruptcies among smaller customers, and it has become somewhat more challenging to recover receivables. However, the group has not experienced significant losses on receivables so far. The group has allocated additional resources to follow up on outstanding customer receivables. The gross credit exposure at the balance sheet date totals 616.6 million NOK. The group has not entered into any offsetting agreements or other derivative contracts to reduce credit risk.
Liquidity risk
The board assesses the liquidity of the group as good, with a cash balance available as of December 31, 2023, amounting to 281.8 million NOK, along with the credit facilities available in the bank. The company's loan facilities mature on December 31, 2024. The group is engaged in positive and constructive discussions regarding refinancing.
Allocation of this year’s profit/loss
The group had a total profit of 153.7 million NOK in 2023, compared to 64.2 million NOK in 2022. The board proposes the following allocation of this year's profit:"
Transferred to retained earnings: 153.7 million NOK. The board proposes that no dividend be distributed for 2023.
Other matters
The board is not aware of any significant matters that would affect the assessment of the company's position and results beyond what is disclosed in the income statement and balance sheet with notes. Additionally, no events of significance have occurred after the end of the financial year, in the board's opinion, that would affect the assessment of the accounts.
Given the current developments within the group, the conditions are, in the board's opinion, conducive to continued operations and growth.
The group has taken out insurance for the board members and managing director to cover their potential liability to third parties or relevant entities within the group. The insurance coverage, effective from January 1, 2022, is limited to 200 million NOK.