The board's annual report

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

Facility Services are provided under the following brands: De Tre Stuer, Eir Mat og Drikke, Søtt+Salt, Gastro, and Eir Renhold. Additionally, customised 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 Tribe og Events.

The onshore element of the catering business comprises Camp which supplies construction hotels under the brands 4Service and Eir Camp. The offshore business includes contracts where the company supplies catering to various rigs on the Norwegian continental shelf under the 4Service brand.

It is hereby confirmed that the financial statements presented provide a true and fair overview of the company’s development, profit/loss and financial position. No events have occurred between 31/12/2021 and the present that are of any significance to the company that change the assessment above. The Board of Directors and management team continuously assess the company’s mode of operation, duties and personnel.

The 4Service Holding Group had a total operating income in 2021 of NOK 2,374.1 million, an increase of 12 % compared to 2020 (NOK 2,103.9 million). EBITDA for 2021 was NOK 249.3 million compared to NOK 200.4 million in 2020. Consequently, an increase in profitability from 2020. The pre-tax profit/loss for the year was NOK 78.8 million, of which NOK -3.6 million is the share of non-controlling interests. The profit after tax amounted to NOK 56.9 million compared to a profit of NOK 37.9 million in 2020.

Total ordinary investments in tangible fixed assets in 2021 amounted to NOK 42.1 million (2020: 47.7 million) for the Group. Total assets at year-end amount to NOK 1,959.7 million. The total available working capital stands at NOK -198.6 million. The company has an unused drawdown reserve amounting to NOK 120 million and the company’s situation in terms of liquidity is deemed good.

Total equity including non-controlling stakes amounted to NOK 262.4 million at year-end, which corresponds to an equity ratio of 13 % as compared to 13 % the year before. At the end of 2021, minority interests amounted to NOK 2.2 million. The Group’s financial position is deemed to be good.

Cash flow for the year is characterised by good operations with a focus on the balance sheet. The Group’s net cash flow from operating activities amounted to NOK 380.8 million (NOK 217.8 million). Net cash flow from investing activities amounted to NOK -79.2 million (NOK -46.1 million). Net cash flow from financing activities amounted to NOK -165.9 million (NOK -168.2 million). Holding of cash and cash equivalents at the end of 2021 amounted to NOK 228.4 million. The corresponding figure for 2020 was NOK 92.8 million.

4Service Holding AS recorded a profit in 2021 of NOK 0.0 million. The parent company has an equity ratio of 23 % and the company’s financial position is deemed to be good.

In both 2020 and 2021, the market for especially canteen and catering has been affected by a reduction in the revenue. 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. Our estimates show a reduction of approx. 25 % compared to a normal situation (pre-covid) in total across the Group. The Group’s market share in 2021 rose and it aims to continue in a similar vein in 2022. 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 2021, the Group showed excellent resourcefulness, reduced its costs and demonstrated that its underlying operations are both scalable and robust. At the same time, the Group has recorded significant growth across all areas during 2021 in terms of new sales that are expected to materialise during the course of 2022. COVID-19 was challenging to areas of our business, but at the same time it has represented an opportunity for the Group to restructure, revitalise and innovate in a way that means the Group is now better equipped for opportunities moving forward. Development has continued during the beginning of 2022 following the same trends noted in 2021, and we continue to see consistently positive signals from across all business areas during 2022. Our investment in sales, including in the midst of a demanding period in 2021, is paying dividends through a constant stream of new contracts across all business areas. Our existing portfolio and new contracts mean that we anticipate a return to our long-term plan by the end of 2022.

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 2021 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 developmental phase, and it is its goal to consolidate and exploit synergies in 2022 while organic growth continues.

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

During 2021, 41 workplace injuries to employees were reported. 17 of these injuries caused employee absences. These injuries were primarily burns, cuts and injuries incurred in falls.

A focus on EHS and EHS training has contributed to a reduction in registered employee absences compared to 2020.

In 2021, the Group provided 41,000 instances of digital training activities.

Short-term absences in the Group amounted to 4.4 % (2.5 %) and long-term absences amounted to 3.2 %. The 4Service Holding Group emphasises the creation of a safe working environment in all of our workplaces.

At year-end, the Group had 3,712 employees, of which 60 % were women and 40 % 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 member 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 2021, 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 Group does not engage in any activities that contaminate the external environment. In 2021, the Group undertook several initiatives seeking to develop a conscious position on sustainability. At present, the Group is a large workplace that leaves behind a large, overall footprint every single day. During 2021, 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 2021, a sustainability report was prepared by an external, independent party. We measure food waste in the majority of our canteens and have invested in electric vehicles. In 2021, we won the prestigious Matprisen culinary award for large-scale kitchen of the year thanks to our work on sustainable seafood. Our dedicated resource on social sustainability has created opportunities for people in social exclusion by working in a targeted fashion on the inclusion of people through training, workplace education and personnel development.

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

In 2021, Izy was separated from the Group to contribute towards continued transformation and facilitate new sustainable business models for owners of commercial buildings and other service suppliers.

4Service has implemented several steps of 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 the facilitation of 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 experiences.

Financial market risk

The Group is exposed to financial market risk through interest-bearing debts to credit institutions. These amounted to NOK 682 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 31/12/21, a total of 16 % had been converted to fixed rates. The Group has insignificant exposure to exchange rate fluctuations.

Credit risk

The risk of losses on receivables is considered to be low. The Group has not to date had significant losses on its receivables. Gross credit exposure as at the balance sheet date amounted to a total of NOK 255.5 million. The Group has not entered into any set-off agreements or other derivative agreements in order 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 228.4 million as at 31/12/2021, in addition to drawing facilities available via the Group’s bank.

As per the income statement.

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