Multiconsult — Investor Presentation 2018

Aug 23, 2018

FIRST QUARTER 2018 RESULTS

Christian Nørgaard Madsen, CEO | Anne Harris, CFO

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

Christian Nørgaard Madsen, CEO

Highlights

• Significant calendar effect in Norway reduced revenues and EBIT by approximately NOK 70 million
• Profitability improvement program on track with tangible improvement already in Regions Norway
• LINK arkitektur continues to generate improved profitability
• Group-wide billing ratio at a satisfactory level
• Significant contract awards in the quarter
• Stable order backlog at NOK 2.2 billion

Financial summary 1Q 2018

• Net operating revenues up 7.4 % y-o-y to NOK 859.1 million

multiconsult.no

• Higher production due to acquisition of the Hjellnes group and Iterio AB
• Billing ratio increased to 70.6% (68.4%)
• Significant calendar effect of approximately NOK 70 million
• Organic growth in net operating revenues down 3.8%
• ‒ adjusted for calendar effect up 4.8 %
• EBIT of NOK 36.1 million, 4.2 % margin
• ‒ Adjusted for the calendar effect, EBIT margin is 11.3 % in the quarter.

Status profitability improvement program

• Manning control

Area of improvement	Ambitions	Status	Comments on achievements since baseline 1 January 2018
Sales	- Further develop strategic sales team - Key account management (KAM) program - Prioritised tendering - Stricter pricing criteria		- Order intake Regions Norway and increased group order backlog - KAM program in progress - Significant frame agreement awards - Moderate increase in billing rates, still price pressure
Billing ratio	- Increased sales - Aligned procedures - Reduce internal activity - No integration of new acquisitions in Norway		- Improved billing ratio in all segments - Aligned procedures implemented - Low internal activity, but reorganisation in Greater Oslo Area - No new acquisitions
Project execution	- Continue already established programs - Improve client communication - Benefit from improved transportation market		- Net write-downs reflect a normal level of 1-2% of revenues - Fifth project management training programme completed - Best value procurement- and EPC project execution models
Efficiency gains	- Release synergies from new ERP system - Fully integrate existing acquisitions - Further focus on cost reduction		- ERP system gradually improved - Integration of the Hjellnes group according to plan - Operating expenses reduced in Greater Oslo Area and Regions Norway

• Manning control resulting in stable headcount in Greater Oslo and Regions Norway

Key ongoing projects 1Q 2018

multiconsult.no

• Campus Ås

• Neelum Jhelum
• Tønsberg Hospital

• Fornebubanen

• InterCity Fredrikstad - Sarpsborg

Order intake 1Q 2018

Order backlog development and overview per business area

Organisation

• 2 861 employees at 31 March
• Group employee turnover at 5.9 %
• A new organisational structure of The Greater Oslo Area in effect from 1 March 2018.
• Comprehensive reorganisation and integration process
• More than 1 000 employees involved

• Universum annual rankings

• More attractive employer than ever with top 3 ranking for both engineering students and engineering professionals in Norway
• Industry leader for sixth consecutive year

Universum student ranking – Engineering/Natural Sciences 2018 - Norway

Employer	Per cent	Rank
Statoil	24,98%	1	-
Kongsberg Gruppen	16,80%	2	-
Multiconsult	16,76%	3	-
Aker Solutions	13,85%	4
Norconsult	13,35%	5
Sintef	11,19%	6
Sweco	10,88%	7
Rolls-Royce	10,73%	8
Hydro	10,03%	9	-
Forsvaret	9,50%	10

FINANCIAL REVIEW

Anne Harris, CFO

Financial highlights 1Q 2018

EBIT Bridge Y-O-Y

Segments 1Q 2018

Greater Oslo Area	1Q 2018	1Q 2017	Change	Calendar adjusted
EBIT MNOK	11.6	52.1	77.7 %	47.2
EBIT margin %	2.9 %	14.9 %	11.9 pp	11.0 %
Billing ratio	69.6 %	67.8 %	1.8 pp
Number of employees	1 172	898	30.5 %

Regions Norway	1Q 2018	1Q 2017	Change	Calendar adjusted
EBIT MNOK	13.8	22.4	38.4 %	42.5
EBIT margin %	4.9 %	8.0 %	3.1 pp	13.8 %
Billing ratio	69.9 %	66.7 %	3.2 pp
Number of employees	842	807	4.3 %

International	1Q 2018	1Q 2017	Change
EBIT MNOK	5.4	13.1	58.8 %
EBIT margin %	10.5 %	28.2 %	17.7 pp
Billing ratio	75.7 %	73.3 %	2.4 pp
Number of employees	241	208	15.9 %

LINK arkitektur	1Q 2018	1Q 2017	Change
EBIT MNOK	12.8	8.3	54.2 %
EBIT margin %	9.0 %	6.8 %	2.2 pp
Billing ratio	76.1 %	71.7 %	4.4 pp
Number of employees	477	431	10.7 %

Operating revenues by business area 1Q 2018

Cash flows 1Q 2018

• Cash flow from operations impacted by
• Calendar effect
• Change in working capital driven by
• Increased receivables due to increased production
• Investments include
• Ordinary asset replacement
• Financing
• Higher level of interest bearing debt

Outlook

• The overall market outlook shows signs of positive development across all business areas
• Supported by industry consensus from RIF economic survey
• Continued strong competition and price pressure on large projects
• Market rates have increased in Norway, regional variation
• Stronger combination of professional capability and stable order backlog
• Active and systematic implementation of the 3-2-1 GO strategy with clear emphasis on profitability
• Profitability program systematically implemented in daily operations
• Close management follow-up on all levels

*RIF: Economic survey 2018

FINANCIAL CALENDAR

Dividend payment	25 May 2018
2Q 2018 results	23 Aug 2018
3Q 2018 results	8 Nov 2018

Q&A

FOURTH QUARTER 2017 RESULTS | Christian Nørgaard Madsen, CEO Anne Harris, CFO