Multiconsult

Earnings Release • Nov 8, 2018

MULTICONSULT BRIDGING THE PAST TO THE FUTURE

Third quarter 2018 presentation and Capital market update 8 November 2018

TIME	AGENDA
09:00	Third quarter 2018
	Break
	Capital market update
	Closing comments and Q&A
10:45	End

PRESENTERS

CEO, Christian Nørgaard Madsen

CFO, Anne Harris

DISCLAIMER

This presentation includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this presentation, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as "believe," "expect," "anticipate," "may," "assume," "plan," "intend," "will," "should," "estimate," "risk" and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forwardlooking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this presentation.

INTRODUCTION AND HIGHLIGHTS THIRD QUARTER 2018

Christian Nørgaard Madsen, CEO

Highlights

• Weaker earnings than expected reflecting results in LINK arkitektur and International segments
• As stated in profit warning of 22 October 2018
• 2018 EBIT margin target of 6% will not be reached, estimated at 2017 level
• Net operating revenue growth of 10.9% in the quarter, 12.8% year to date
• Higher net write-downs than previous year, but still at a normal level
• Improvement in the billing ratio in Norway
• Order backlog increased to NOK 2.4 billion
• Intensified measures are being implemented to strengthen profitability

Financial summary 3Q and YTD 2018

multiconsult.no

• 3Q 2018

• Net operating revenues up 10.9 % y-o-y to NOK 675.5 million
• EBIT of NOK 4.5 million, 0.7 % margin

• YTD 2018

• Net operating revenues up 12.8 % y-o-y to NOK 2 422.1 million
• Organic growth 3.2 % adjusted for calendar effect
• Calendar effect of one less working day
• EBIT of NOK 89.5 million, 3.7 % margin

Order intake 3Q 2018

Highlights

• Order intake NOK 879.6 million, up 10.6 % y-o-y
• Majority of order intake was extensions of existing contracts
• Continued strong tender pipeline

Key order intake

• E6 Ranheim Værnes
• Nye Hammerfest hospital
• Tonstad wind park
• Devoll Hydropower
• Jurong Rock Caverns

Order backlog development and backlog per business area

Organisation

• 2 875 employees at 30 September 2018
• Group turnover at 9.5 %
• Universum ranking best in industry for seasoned professionals
• Extract of awards to Multiconsult and employees in 3Q
• Stanislas Merlet awarded the title "European Young Professional" of the Year 2018 by EFCA
• Digital role model Cathrine Mørch nominated as "Professional Expert" in the nomination of RIFs "Young consultant of the year"
• Tønsberg hospital project awarded "Gullhammeren" for best practice 2018 by Bygg21
• Knut Aaneland, Senior HSE advisor, awarded "Enthusiast of the year 2018" by RIF
• Multiconsult and Betonmast Hæhre awarded "Best practice" for Smisto powerplant in Nordland

FINANCIAL REVIEW

Anne Harris, CFO

Financial highlights 3Q 2018

EBIT Bridge Y-O-Y

Segments YTD 2018

Greater Oslo Area	YTD 2018	YTD 2017	Change
EBIT MNOK	52.4	64.5	-18.7 %
EBIT margin %	4.7 %	7.1 %	-2.4 pp
Billing ratio	69.8 %	67.2 %	2.6 pp
Number of employees	1 154	1187	-2.8 %

Regions Norway	YTD 2018	YTD 2017	Change
EBIT MNOK	50.5	30.3	66.6 %
EBIT margin %	6.3 %	4.0 %	2.4 pp
Billing ratio	70.6 %	67.3 %	3.3 pp
Number of employees	833	842	-1.1 %

International	YTD 2018	YTD 2017	Change
EBIT MNOK	5.7	17.1	-66.8 %
EBIT margin %	4.0 %	13.1 %	-9.1 pp
Billing ratio	71.6 %	72.1 %	-0.5 pp
Number of employees	269	205	31.2 %

LINK arkitektur	YTD 2018	YTD 2017	Change
EBIT MNOK	7.1	11.6	-38.7 %
EBIT margin %	1.9 %	3.4 %	-1.5 pp
Billing ratio	72.9 %	71.4 %	1.5 pp
Number of employees	487	476	2.3 %

From 2018, Multiconsult changed its principles for group overhead allocation following the new legal structure. Not allocated costs YTD 2018 were NOK 26.2 million (NOK 2.8 million YTD 2017).

Operating revenues by business area YTD 2018

Cash flows YTD 2018

• Net cash flow from operating activities
• Impacted by lower net profit
• Change in working capital
• Increased work in progress driven by seasonal fluctuation
• Investments include
• Ordinary asset replacement
• Financing activities
• Reflecting increased interest bearing debt less dividend payment

Working Capital YTD 2018

TIME	AGENDA
09:00	Third quarter 2018
	Break
	Capital market update
	Closing comments and Q&A
10:45	End

PRESENTERS

CEO, Christian Nørgaard Madsen

CFO, Anne Harris

MULTICONSULT BRIDGING THE PAST TO THE FUTURE

Capital market update 8 November 2018

Given the current profitability situation and the timing in the strategic period towards 2020, it is time to revise our strategy

Agenda

• Flashback to CMU 2016

• Recent developments
• Improvement efforts
• Our context today
• Revised strategy
• People & projects

Steady long-term financial performance

Flashback to our context at CMD 2016

Note: Multiconsult not a part of Peer Group. The group consists of Sweco, Pöyry, ÅF, Rejlers and Projektengagement

Agenda

• Flashback to CMU 2016

• Recent developments
• Improvement efforts
• Our context today
• Revised strategy
• People & project

Industry profitability challenge intensified

112 100 0 113 114 101 108 102 103 104 107 105 106 110 109 111 Wage 2015 104 2013 2014 2016 2017 113 2018 Billing rate 7.7% 8.8% 4.3% 9.2% 1.4%

INDEXED DEVELOPMENT WAGE AND BILLING RATE

• The last 5 years the wage increase has been considerably higher than the increase in billing rates.
• Since 2016 the billing rates have moved upwards, although not enough to reduce the gap.
• The cumulative effect since 2013 is a marginalisation of 9.2%.

Source: RIF; Multiconsult; Arkitektbedriftene

Note: Billing rate is price per hour divided by chargeable hours (for Multiconsult Norway). Wage assumes a mix of 25% architects and 75% engineers (RIF), where 60% of the engineers are civil eng. For 2018 a wage increase of 2,8% percent is assumed. Hourly rate is YTD 2018.

Coupled with Multiconsult effects

Note: Consolidated accounts. EBIT is adjusted for extraordinary events when the companies have reported adjusted EBIT in their annual reports. The group consists of Sweco, Pöyry, ÅF, Rejlers and Projektengagement. Source: RIF, Odin/BvD; Annual Reports

3-2-1 GO strategic objectives from CMU 2016

	OBJECTIVES	COMMENTS
1	Develop multidisciplinary business in Sweden	• Acquired Iterio primo 2017 • Further activities stopped due to reduced profitability
2	Stepwise international build-up in renewable energy	Established international sales offices • • Identified and dialoged with potential strategic partners
3	Establish a leading position within health buildings in Scandinavia	• Successful wins on Tønsberg, Drammen, Helsingborg and Hammerfest hospitals • Acquired important expertise through aarhus arkitekterne (LINK Denmark)
4	Capture a leading position within urbanism in Scandinavia	• Successful wins on prestigious projects, market less mature than anticipated • Established a strong urbanism center of expertise
5	Scandinavian market leader in digitalisation	• Defined a digital road map and established a digital platform • Won projects and several awards based on digitalisation
6	One Group – Stronger organisation built by a shared culture	• Successfully implemented corporate values MOVE across the group

Agenda

• Flashback to CMU 2016
• Recent developments
• Improvement efforts
• Our context today
• Revised strategy
• People & projects

"Intensified focus on improving profitability"

Multiconsult, Outlook 3Q 2017 presentation

"Profitability improvement program launched "

Multiconsult, 4Q 2017 presentation

Fighting off the profitability challenge in Norway

Improving profitability for Greater Oslo & Regions Norway from 3Q 2017

• Further develop strategic sales team
• Key account management program
• Prioritised tendering

• Stricter pricing criteria

• Increased sale

• Aligned procedures
• Reduce internal activity
• No integration of new acquisitions in Norway

Sales Billing ratio Project execution Efficiency gains

• Continue already established programs
• Improve client communication

• Benefit from improved transportation market

• Release synergies from new ERP system

• Fully integrate existing acquisitions
• Further focus on cost reduction
• Manning control

Effects of improvement programme - Norway

Improving profitability for Greater Oslo & Regions Norway

Agenda

• Flashback to CMU 2016
• Recent developments
• Improvement efforts
• Our context today
• Revised strategy
• People & projects

Outlook - Norway

MACRO ECONOMIC OUTLOOK

YEARLY INVESTMENT NATIONAL TRANSPORT PLAN

Source: SSB, NTP 2018 Note: Oil price is Brent Blent, USD/Barrel. GDP Growth is mainland Norway

Outlook – Multiconsult markets

Agenda

• Flashback to CMU 2016
• Recent developments
• Improvement efforts
• Our context today
• Revised strategy
• People & projects

The need for profitability improvement triggers the need for a revised strategy

Long-term strategic direction remains

• Execution horizon adjusted for expansion into Sweden and international Renewable Energy until normal profitability levels are regained

Revised ambitions towards 2020

Profitability above peer-group average

Strengthened operations and value creation

Gain | Profitability above peer-group * average

• Increase share of new projects with higher profitability potential
• Ensure well-managed project execution and optimise project staff-mix
• Realise benefits of scale through standardisation and efficient use of technology
• Continued strong cost control
• Organic growth in line with market development to maintain overall relative market share
• Resume selective expansion to Sweden and international energy markets when profitability goals are achieved

* Listed Nordic engineering consultants with more than NOK 1 billion in revenues. Consists currently of Sweco, Pöyry, ÅF, Rejlers and Projektengagement

Operations | Strengthened operations and value creation

• Further develop a culture with commercial mindset to drive value creation and profitability
• Strengthen project management expertise and capacity
• Continue to professionalise sales activities
• Develop employees and expertise through prestigious and exciting projects
• Utilise the leading position as an employer to become the most attractive advisor to the customers in the industry

Revised strategic objectives

1	Regain a normalised profitability level as a basis for further development
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• Take a position as #1 in large profitable EPC/IPD projects in Norway
• Take a leading position and improved profitability within Transportation
• Realise profitability and selective growth within Energy in Norway and internationally
• Further develop our leading position within healthcare buildings in Scandinavia
• Enable digital innovation and develop new business models
• Develop flexible manning solutions that ensure profitability

How to succeed

1 Profitability

2 Large projects Norway

3 Transportation

4 Energy

• Prioritise profitability before growth
• Apply improvement programme across the group
• Monitor developments continuously and implement new measures as required
• Increase exposure to contracts with higher profitability potential through strict risk management
• Collaborate with selected contractors
• Further develop project management expertise for EPC contracts
• Selective tendering to prioritise profitable projects
• Become the preferred partner for contractors towards Nye Veier
• Establish leading expertise within rail and construction
• Enter into strategic partnerships
• Exploit attractive sales opportunities through our international sales offices • Utilise existing Oil & Gas expertise to grasp international opportunities

How to succeed

• 5 Health buildings
• 6 Digital innovation

7 Manning solutions

• Focus on winning prestigious projects to further develop market position
• Use Architecture as a spearhead for further growth
• Continue to deliver integrated architectural and engineering services towards clients
• Develop customer-driven digital skills, tools and expertise within selected projects
• Collaborate with key players across own and other industries
• Develop new business models and products
• Develop flexible manning solutions for peak production
• Further develop design centre in Poland
• Establish strategic manning alliances outside Norway to support existing Scandinavian activities

Intensified Profitability Improvement - Group-wide measures

Sales

• Further develop sales processes across the group
• Prioritise tendering with increased profitability requirements

Billing ratio

• Continue improvements in Norway
• Optimise hours spent on architecture competitions

Project profitability

• Standardise project portfolio follow-up
• Increase use of low cost resources
• Optimise project resources and staffing

Efficiency gains

• Realise group synergies from new systems
• Continue tight manning and cost control
• Explore flexible manning models

Portfolio review

• Address challenges in international units
• Optimise business development in international energy

Our plattform

• Strong historical financial performance with a long-term perspective
• Fighting industry challenges with continuous improvements
• Market outlook is positive and our backlog is increasing
• We are the most attractive employer in our industry
• Proven track record of developing and growing the business

Revised Strategy

Improve profitability to regain normal levels in order to further develop the Multiconsult group

• Profitability, consolidation and operations prioritised
• Course unchanged, speed reduced
• Growth in line with market development
• Long-term goal of selective expansion in Sweden and Energy international remains. Execution horizon postponed until profitability is regained.

Financial overview

Agenda

• Flashback to CMU 2016
• Recent developments
• Improvement efforts
• Our context today
• Revised strategy
• People & projects

Our employees

The best young professional in Europe

Stanislas Merlet (32), a solar energy consultant at Multiconsult, was selected as Europe's Young Professional of the Year 2018.

This is the first time a candidate from a Norwegian company is awarded the prize.

The Enthusiast of the year

Knut Aaneland was named the Enthusiast of the year 2018 ("Årets ildsjel" 2018) by RIF.

He is particularly acknowledged for his long-standing commitment to safety in the industry.

Most attractive in the industry

Multiconsult is ranked as #1 attractive employer in the industry for both students and professionals.

Project awards

Best practise

Multiconsult and BetonmastHæhre received Bygg 21's prize for "Best Practice".

The background is the design and construction of Smisto power, done entirely without the use of 2D drawings.

World Champion in OpenBim

The Tønsberg project was awarded the buildingSMART International Award for Design 2017.

The project was awarded "Gullhammeren" for Best practice 2018 by Bygg21

Several awards to E6 project

E6 Frya - Sjoa was awarded "Vakre vegers pris" 2018. The prestigious award is awarded by the Norwegian Public Roads.

Last year the road project was also awarded Årets anlegg 2017

#1 Hospital

New Hammerfest hospital

With Consto, Link Arkitektur and Multiconsult won major contracts for the pre-design of the new hospital in Hammerfest.

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New Drammen Hospital

LINK arkitektur Norway secured their largest contracts of all time, and Multiconsult won three contracts with Helse Sør-Øst

International architecture Award for LINK arkitektur

LINK arkitektur was the winner of the WAN Future Projects Healthcare Award for the project Danish Center for Particle Therapy in Aarhus.

Recently awarded projects

Water supply to Oslo

Multiconsult will provide all engineering works for new water supply for Oslo.

The project is estimated to generate in excess of MNOK 200 to Multiconsult.

New Prestigious contract awarded to Multiconsult Poland

Multiconsult will deliver construction consultancy services for the General Directorate of National Roads and Motorways in Poland.

Multiconsult is set to deliver all engineering services

Nye Veier has chosen Acciona Construccion S.A, MUltconsult, Leonard Nilsen & Sønner and Acciona Mantenimiento de infrastructuras S.A. for the EPC contract of approximately NOK 4 billion

Q&A

THIRD QUARTER RESULTS 2018 CAPITAL MARKET UPDATE 2018

Christian Nørgaard Madsen, CEO Anne Harris, CFO

FINANCIAL CALENDAR

Extraordinary general meeting	26 Nov 2018
4Q 2018 results	26 Feb 2019
General Meeting	25 Apr 2019
1Q 2019 results	23 May 2019
2Q 2019 results	29 Aug 2019
3Q 2019 results	7 Nov 2019

THANK YOU FOR YOUR ATTENTION

Investor relations in Multiconsult ASA E-mail: IR@multiconsult.no Web: Multiconsult-ir.com