NCC Group

Earnings Release • Jul 17, 2020

Profitability continues to improve

"NCC is stable and has a strong order backlog and healthy cash flow. We are in a good position for the years ahead," says Tomas Carlsson, President and CEO of NCC.

• · Improved operating profit for the quarter and first half-year
• · Orders received at normal levels comparison with 2019 is affected by several major orders worth in total SEK 3.4 billion in Denmark in the second quarter of 2019
• · Year-on-year improvement in quarter and half-year in cash flow from operating activities
• No significant effects on ongoing projects from the Corona virus, more cautious letting market but with a slight recovery toward the end of the period

Second quarter 2020

• · Orders received amounted to SEK 12,730 M (16,070)
• Net sales totaled SEK 14,431 M (14,610)
• · Operating profit improved to SEK 483 M (411)
• · Profit after financial items improved to SEK 463 M (380)
• · Profit after tax improved to SEK 435 M (322)
• Earnings per share after dilution were SEK 4.03 (2.85)

First half of 2020

• · Orders received amounted to SEK 28,188 M (31,572)
• · Net sales totaled SEK 26, 197 M (26,044)
• Operating profit improved to SEK 414 M (59)
• Profit after financial items improved to SEK 373 M (9)
• · Profit after tax improved to SEK 351 M (8)
• Earnings per share after dilution were SEK 3.25 (-0.03)

	02		Jan-Jun		R 12 Jul-Jun	l an-Dec
Group, SEK M	2020	2019	2020	2019	2019/2020	2019
Orders received	12,730	16,070	28,188	31,572	54,665	58,048
Order backlog	59,486	63,027	59,486	63,027	59,486	57,800
Net sales	14,431	14,610	26,197	26,044	58,387	58,234
Operating profit los s	483	411	414	રેતે	1,652	1,296
Operating margin, %	3.3	2.8	1.6	0.2	2.8	2.2
Protit/loss after financial items	463	380	373	9	1,547	1,184
Net profit loss for the period	435	322	351	8	1,218	875
Profit foss per share after dilution, SEK	4.03	2.85	3.25	-0.03	11.38	8.09
Cashflow from operating activities	- 489	-889	514	-834	3,562	2,214
Cashflow before financing	-605	- 1,109	413	- 1,249	3,174	1,512
Net cash +/het debt -	- 5,201	-6,352	- 5,201	-6,352	-5,201	- 4,489

For definitions of key figures, see https://www.ncc.com/investor-relations/nccshare/financial-definitions/

CEO Tomas Carlsson comments

NCC's operating profit is improving and net sales are at the same levels as before. Activity levels during the second quarter remained high despite the Corona crisis. Orders received are at a normal level given that the comparative figure from last year includes a number of major orders in Denmark totaling SEK 3.4 billion. Orders received have a natural variation between quarters. During the first half-year, orders received are substantially higher than net sales and NCC has a strong order backlog.

Cash flow remains strong and is a substantial improvement on the preceding year, which is important in our operations and particularly in times of uncertainty.

The Corona crisis has still not had any significant impact in ongoing projects. Work has largely continued as normal, albeit adapted to the current situation. The impact in the longer term is still unclear.

The Infrastructure business area is steadily improving its operating profit in pace with the renewal of its project portfolio. After the end of the quarter, we announced that the Road Services division in Sweden and Finland will be sold to the German company Mutares and that Road Services in Denmark will be sold to Arkil A/S. The operations within Road Services differ commercially from other parts of NCC and have few synergies with the rest of the company. The limited operations that remain in Norway will be continued as part of the Infrastructure business area while various sales opportunities are considered.

Orders received were healthy in the Building Sweden business area this quarter, and included a number of housing projects, particularly rental units. The business area has a strong order backlog. Earnings are steadily improving due to slightly higher project margins.

The Building Nordics business area also reported better profitability year-on-year. Despite lower orders received than the exceptional second quarter of 2019, the business area has a strong order backlog. Net sales are increasing as activity is getting under way in the many projects secured last year.

Year-on-year, the Industry business area reported lower operating profit. Asphalt operations reported normal volumes

but lower net sales and higher costs, both of which were related to the price of the input material bitumen due to falling oil prices. Early in the period, we secured larger than normal bitumen volumes to a higher price due to uncertainty about a supplier.

The Property Development business area recognized two projects in profit during the quarter, both in Finland. Uncertainty caused by the Corona crisis was noticeable in lower activity levels on the letting market at the start of the quarter. Activity increased toward the end of the quarter and letting resumed again, though the long-term effects are still unclear.

Today, NCC is a stable company with the right conditions in place to develop well and to contribute to strengthening society through a continuous high level of activity even in difficult and uncertain times. We maintain close dialogue with various members in society about how we can best contribute and what is needed to create a favorable environment to allow our economies to recover

Tomas Carlsson, President and CEO Solna, July 16, 2020

Group performance

Second quarter and first half of 2020

Market

It remains difficult to say how, and for how long, the effect of the Corona virus will affect the long-term market conditions in the global economy. NCC is affected by a general decline in the economy.

The long-term market conditions for construction in the Nordic region nonetheless remained generally favorable, although a more cautious attitude in some submarkets was already noted prior to the Corona virus, with somewhat protracted decision-making processes. There is continued demand for public buildings, such as schools, hospitals and retirement homes, driven by growing cities and the demographic trend. Demand for housing has stabilized. In general, demand for renovation and refurbishment is healthy.

Public-sector infrastructure initiatives are fueling the Nordic infrastructure market, resulting in a continued strong market in Norway and Sweden. Competition from both domestic and international players is intense, meaning that NCC only bids on the projects that meet the risk profitability requirements NCC has set. Demand for asphalt and stone materials in Norway and Sweden is stable, driven by a strong civil engineering market.

The Corona virus makes it difficult to assess market conditions in the Nordic property market in the short and medium term, even if there is support for healthy demand in the stable Nordic economies. During the spring, we noted a slight increase in activity at the end of the second quarter compared with the beginning of the quarter.

Net sales and earnings

Net sales amounted to SEK 14,431 M (14,610) in the second quarter and to SEK 26,197 M (26,044) in the first half-year. Net sales in the quarter were higher in Infrastructure, Building Nordics and Property Development but lower in Building Sweden and Industry's asphalt operations. Changes in exchange rates had an impact of SEK -138 M (241) on net sales.

The operating profit amounted to SEK 483 M (411) in the second quarter and SEK 414 M (59) for the first half-year. Operating profit improved in all business areas apart from Industry during the second quarter.

During the first half-year, operating profit was positively impacted by Property Development's recognition of the K12 office project in Sweden, but also from underlying improvements in other operations. Because NCC is the principal tenant of the K12 property, approximately 40 percent of the result from the sale was eliminated at Group level to be allocated over a ten year period, in compliance with IFRS 16.

Net financial items was SEK -41 M (-50) in the first half-year. The improvement is attributable to lower costs for the company's other net debt.

Orders received, Jan-Jun SEK M

28,188

Net sales, Jan-Jun SEK M

26,197

Operating profit, SEK M

Cash flow

Cash flow for the quarter before financing was SEK -605 M (-1,109). The improvement was largely due to sales of property projects. The cash flow for the January-June period before financing was SEK 413 M (-1,249). The improvement was attributable to higher cash flow from the sale of K12 in the first quarter. Total cash and cash equivalents at the end of the period amounted to SEK 2,405 M (726).

The Group's net debt at June 30 amounted to SEK -5,201 M (-6,352). This decrease is due in all significant respects to a substantially improved cash flow from operating activities. The positive effects were offset by a higher pension debt. Excluding lease liability and pension debt, the company's net cash at the end of the quarter was SEK 73 M (-2,089).

The Group's total assets at June 30 amounted to SEK 29,570 M (30,579). The decrease in total assets of SEK 1 billion, despite an increase in cash and cash equivalents of SEK 1.3 billion, was largely attributable to a decrease in accounts receivable and lower liabilities such as invoiced not worked-up revenues as well as lower interestbearing liabilities.

At the end of the quarter, the average maturity period for the interest-bearing liabilities, excluding pension debt according to IAS 19 and lease liabilities according to IFRS 16 Leases, was 34 months (21). At June 30, 2020, NCC's unutilized committed lines of credit totaled SEK 3.7 billion (3.7), with an average remaining maturity of 16 months (27).

Capital employed

At June 30, 2020, capital employed amounted to SEK 11,040 M (10,091). The increase was mainly attributable to a reduction in interest-free liabilities, particularly invoiced not worked-up revenues in the Building Sweden and Infrastructure business areas. Return on capital employed was 15 percent (-9).

Financial targets and dividend policy

NCC has established three financial targets at Group level: operating margin ≥4%, return on equity ≥20% and net debt <2.5 times EBITDA.

On a rolling twelve-month basis, NCC has an operating margin of 2.8 percent. The return on equity is 44 percent, and the company has net cash1, no net debt. Accordingly, the recognized net debt/EBITDA amounted to -0.03 times.

NCC's dividend policy is to distribute at least 40 percent of after-tax profit for the year. At the Annual General Meeting on April 1, 2020, the Meeting resolved, due to the prevailing uncertainty in society due to the Corona virus, not to pay any dividend for 2019. NCC's Board of Directors expressed its intention to convene an Extraordinary General Meeting later this year to decide on a dividend if the situation permits.

Net debt excludes pension debt and lease liability in accordance with IFRS 16 Leases. EBITDA refers to operating profit according to the income statement, with reversal of depreciation and impairment losses.

¹ This refers to the company's net cash excluding pension debt and lease liability

Safety

Safety is a high priority area at NCC, and we have a vision of zero accidents. The accident frequency rate during the second quarter of 2020 was at a slightly lower level than the second quarter of 2019 but higher than 2019 as a whole. In June, a tragic fatal accident took place at one of NCC's facilities in Sweden when a subcontractor died.

The importance of our work with health and safety and the goal of reaching zero accidents cannot be overestimated. We are continuing to develop our work method with support and initiatives for managers at all levels, development of methods and more focused resources and activities on units with high accident rates.

11Accident frequency rate: Worksite accidents resulting in one or several dates of absence from work per million worked hours.

Horisonten - a new landmark in Danish Aalborg

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ﺟﻴﺮﺍ : 新闻

The three apartment blocks in the Horisonten project are, with a maximum of 66 meters, the highest buildings in northern Jutland and contain 166 energyefficient apartments. The buildings, designed by Arkitema, form a new landmark in the city. They were delivered to the customer, Aberdeen Standard Investments, one month ahead of schedule, in May 2020.

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NCC Infrastructure

Second quarter and first half of 2020

Orders received and order backlog

Orders received by NCC Infrastructure totaled SEK 3,015 M (3,428). For the first half-year, orders received amounted to SEK 7,431 M (8,267). Orders received were lower in Norway and Sweden within normal variation and in line with a selective approach to submitting tenders with a focus on profitability.

The order backlog decreased year-on-year due primarily to lower orders received in Norwegian operations and totaled SEK 19,219 M (21,770).

Net sales and earnings

Net sales increased to SEK 4,512 M (4,192) in the second quarter, and to SEK 8,302 M (7,841) for the first half-year. The higher net sales during the first halfyear are from all parts of the operations.

Operating profit was SEK 92 M (81) in the second quarter and SEK 131 M (89) for the first half-year. The improved operating profit is attributable to higher volumes and a better project portfolio with higher margins.

Operating profit for the second quarter and for the first half of 2019 included a positive earnings impact of SEK 45 M from settled disputes, primarily in Norway.

	లో		Jan-Jun		R 12 Jul-Jun Jan-Dec
NCC Intrastructure, SEK M	2020	2019	2020	2019	2019/2020	2019
Orders received	3,015	3,428	7,431	8,267	15,764	16,601
Order backlog	19,219	21,770	19,219	21,770	19,219	20,389
Net sales	4,512	4,192	8,302	7,841	17,886	17,425
Operating profit los s	92	81	131	89	254	212
Financial target: 17
Operating margin, %	2.0	1.9	1.6		1.4	1.2

1) Target: operating marqin ≥ 3.5%

NCC has decided to divest the Road Services division is therefore presented separately as of the fourth quarter of 2018. After the end of the quarter, it was announced that Road Services' operations in Sweden, Finland and Denmark will be sold and the transactions are expected to be completed in the third quarter. Thereafter, the limited operations that remain will be reported as part of the Infrastructure business area.

	ರ		lan-Jun		R 12 Jul-J un Jan-Dec
NCC Road Services , SEK M	2020	2019			2020 2019 2019/2020 2019
Orders received	619	268	1,117	1,117	1,618	1,617
Order backlog	2,884	3,679	2,884	3,679	2,884	2,816
Net sales	531	ર્ભ	958	1,297	2,285	2,624
Operating profit los s	য	6	- 10	-	の	20

NCC Building Sweden

Second quarter and first half of 2020

Orders received and order backlog

Orders received increased considerably to SEK 3,729 M (2,368) in the second quarter and to SEK 8,187 M (4,947) in the first half-year. Public buildings accounted for the largest proportion of orders received for the first half-year and included an order from Region Sörmland for SEK 2.4 billion in the first quarter. Almost three-quarters of orders received for housing consisted of rental units. The share of orders received for refurbishment/conversion declined during the first halfyear but orders received in value were at roughly on a par with the year-earlier period.

The order backlog increased to SEK 17,898 M (16,261) at the end of the quarter.

Net sales and earnings

Net sales amounted to SEK 3,464 M (3,726) in the second quarter and to SEK 6,849 M (7,394) in the first half-year. Public buildings accounted for almost a third of the total net sales, followed by residential, which corresponded to slightly more than a quarter of net sales.

Operating profit amounted to SEK 90 M (76) in the second quarter and SEK 177 M (185) for the first half-year. Year-on-year, the earnings were positively impacted by an improved project portfolio, but negatively impacted by lower volumes. In the preceding year, operating profit was negatively impacted by a provision for fines and legal costs related to a district court decision regarding the Rågården project.

		02 Jan-Jun		R 12 Jul-Jun Jan .- Dec.
NCC Building Sweden, SEK M	2020	2019	2020	2019	2019/2020	2019
Orders received	3,729	2,368	8,187	4,947	15,981	12,741
Order backlog	17,898	16,261	17,898	16,261	17,898	16,561
Net sales	3,464	3,726	6,849	7,394	14,306	14,851
Operating profit /los s	90	76	177	185	356	364
- Financial target:
Operating margin, %	2,6	2,0	2,6	2,5	2,5	2,5

1) Target: operating margin ≥ 3.5%

NCC Building Nordics

Second quarter and first half of 2020

Orders received and order backlog

Orders received decreased to SEK 2,179 M (6,210) in the second quarter and to SEK 5,426 M (10,396) in the first half-year. A comparison with the preceding year is affected by three major housing projects, valued at a total of SEK 3.4 billion, which were registered among orders in Danish operations in the second quarter last year. Public buildings accounted for approximately a third of the total orders received, followed by residential and refurbishment/conversion, which together corresponded just under half of orders received.

The order backlog declined to SEK 15,178 M (16,738) at the end of the quarter but remains at a high level.

Net sales and earnings

Net sales increased to SEK 3, 142 M (2,803) in the second quarter and to SEK 5,997 M (5,370) in the first half-year. Net sales increased in both the Danish and Finnish operations.

Building Nordics' net sales during the first half-year largely comprised refurbishment and residential production.

Operating profit increased to SEK 62 M (46) in the second quarter and to SEK 112 M (80) for the first half-year. The improvement in the quarter is the result of higher net sales, primarily in the Danish operations.

	లో		Jan-Jun		R 12 Jul-Jun Jan .- Dec.
NCC Building Nordics , SEK M	2020	2019	2020	2019	2019/2020	2019
Orders received	2,179	6,210	5,426	10,396	11,110	16,080
Order backlog	15, 178	16,738	15,178	16,738	15,178	15,807
Net sales	3,142	2,803	5,997	5,370	12,396	11,769
Operating profit fos s	62	વર્ષ્ડ	112	80	263	231
- Financial target:
Operating margin, %	2,0	1,6	1,9	1,5	2,1	2,0

1) Target: operating margin ≥ 3.5%

NCC Industry

Second quarter and first half of 2020

Orders received and order backlog

Orders received amounted to SEK 3,677 M (3,991) in the second quarter, and to SEK 7,089 M (7,362) for the first half-year. Orders received were lower in asphalt operations, mainly in Denmark, which registered a large government contract among orders during the second quarter last year. Orders received for Hercules were lower in the second quarter while orders received for stone materials operations rose slightly.

Net sales and earnings

Net sales amounted to SEK 3,554 M (3,721) in the second quarter, and to SEK 4,868 M (4,985) for the first half-year.

Volumes in asphalt operations were at the same level as the year-earlier period, but net sales were adversely impacted by the low price of bitumen. Net sales in Hercules and stone materials operations were slightly higher in the second quarter compared with prior year.

The operating profit was lower year-on-year and amounted to SEK 258 M (322) for the quarter and SEK -105 M (-63) for the first half-year. The operating profit for asphalt operations was negatively impacted by the low price of bitumen. Early in the period, NCC secured larger than normal bitumen volumes at a higher price due to uncertainty about the supplier Nynas. The operating profit for Hercules was higher during the quarter due to increased activity in Sweden and Denmark.

Capital employed

Capital employed increased seasonally at the end of the second quarter compared with the end of 2019 but was lower year-on-year due to lower capital tied up in machinery and equipment as well as lower working capital.

	02		Jan-Jun		R 12 Jul-Jun Jan-Dec
NCC Industry, SEK M	2020	2019	2020	2019	2019/2020	2019
Orders received	3,677	3,991	7,089	7,362	12,579	12,852
Order backlog	5,119	5,487	5,119	5,487	5,119	2,967
Net sales	3,554	3,721	4,868	4,985	12,854	12,971
Operating protit los s	258	322	- 105	-63	470	રી ।
Capital employed	5,910	6,397	5,910	6,397	5,910	5,507
Stone materials tons , s old v olume	7,908	7,999	13,986	13,215	29,110	28,339
As phalt tons , sold volume	1,935	1,904	2,111	2,070	6,141	6,100
Financial targets : "
Operating margin, %	7.2	8.6	-2.2	- 1.3	3.7	3.9
Return on capital emploved. %					10.3	9.0

1) Targets: operating marqin ≥ 4%, return on capital emplo yed

NCC Property Development

Second quarter and first half of 2020

Net sales and earnings

Net sales increased to SEK 679 M (321) in the second quarter and to SEK 2,255 M (732) for the first half-year.

Operating profit also increased to SEK 68 M (40) in the second quarter and to SEK 391 M (21) for the first half-year. During the second quarter, two office projects were recognized in profit, the Fredriksberg B and Fredriksberg C projects in Finland. During the second quarter, the sale of land as well as earnings from earlier sales also contributed positively to earnings. During the first half-year, operating profit was positively impacted by the recognition of the K12 office project in Sweden.

In the preceding year, the second quarter included earnings from one project recognized in profit and two sales of land.

Property projects

Two projects, the Fredriksberg B and Fredriksberg C projects in Finland, were recognized in profit during the second quarter. A total of three projects were recognized in profit during the first half-year compared with four projects in the year-earlier period.

In the second quarter, the construction of one project commenced, Bettorp in Sweden. It is a fully let community service property. This project was also divested during the quarter and is expected to be completed and recognized in profit during the fourth quarter of 2021.

In total, construction of two projects commenced during the first half-year, one in Finland and one in Sweden.

Letting amounted to 25,600 square meters (59,400) for the first half-year, including 12,100 square meters (28,400) in the second quarter.

At the end of the second quarter, 14 projects (17) were either ongoing or completed but not yet recognized in profit. The costs incurred in all projects amounted to SEK 4.4 billion (4.6), corresponding to a total completion rate of 46 percent (47). The letting rate was 55 percent (57). Operating net amounted to SEK 2 M (9) for the second quarter, and to SEK 9 M (16) in the first half-year.

Capital employed

The capital employed amounted to SEK 5,337 M (5,534) at the end of the quarter.

		02 Jan-Jun		R 12 Jul-Jun Jan-Dec
NCC Property Development, SEK M	2020	2019	2020	2019	2019/2020	2019
Net sales	679	321	2,255	732	4,580	3,056
Operating profit los s	68	40	391	21	683	313
Capital employed	5,337	5,534	5,337	5,534	5,337	4,935
Financial targets :
Operating margin, % Return on capital employed. %	10.1	12.5	17.3	2.9	14.9 129	10.2 6.2

1) Targets: operating margin ≥ 10%, return on capital employeι

Share of net sales Jan-Jun

NCC Property Development

Ongoing Property development projects '

			Sold, es timated	Completion	Lettable area	L etting ratio,
Project	Type	Location	recognition in profit	ratio, %	(s qm)	%
Frederiks Plads 2	Office	Árhus		48	17,000	70
Omega CH	Office	Århus		27	8,800	ಲ್ಲಿ ನಿ
Total Denmark				42	25,800	રેજ
Hats ina Office 1	Office	Es poo	Q3 2021	27	18,500	રેરે
Next	Office	Es poo		27	10,000	100
Total Finland				27	28,500	70
Valle View	Office	Os lo	Q1 2021	ਟੈੱਪ	23,600	રેજે
Total Norway				રત	23,600	ર્સ્ડ
Kineum Gårda2	Office	Gothenburg		50	21,900	80
K113	Office	Solna		୧୯	13,100	31
Björkö Skola	Other	Gothenburg	Q4 2020	67	3,500	100
Bromma Blocks	Office	Stockholm		57	51,500	48
Arendal 4	L ogis tics	Gothenburg	Q4 2020	83	17,400	100
V åghus et	Office	Gothenburg		27	1 1,000	0
Brick Studios	Office	Gothenburg		27	16,100	19
Bettorp	Other	Örebro	Q4 2021	18	6,900	100
Total Sweden				50	141,400	ಗರ
Total				પર્	219,300	રેર

Com pleted Property development projects

Project	ı ype	Location	Sold, es timated recognition in profit	L ettable area (s qm)	L etting ratio, %
Viborg Retail II+III	Retail	V iborg		900	O
Total Denmark				900	0

1) The tables refers to ongoing or completed property projects that have not yet been recognized as revenue. In addition to these projects , NCC als o focuses on rental (rental gurchase) in thirteen previously s old and revenue recognized property projects , a maximum of approximately SEK 129 M

2) The project comprises rentable area of an existing building of approximately 16,000 square meters and an additional building right about 30,000 square meters of office space. The project is carried out together with Plated real estate company, in a half-owned company. The information about lettable area in the table refers to NCC's share of the project.

3) Since quarter 1 2020, a detached garage which is under constuction is included.

Other

Significant risks and uncertainties

The risks to which NCC may be exposed is presented in the 2019 Annual Report (pages 20-22). This assessment still applies.

The effects and uncertainty in society due to the Corona virus could also affect NCC. NCC could be impacted by the availability of labor due to restrictions on travel and freedom of movement, as well as access to and delays to materials deliveries as a result of disruptions to production or supplies. The credit risk could also be impacted. In the longer term, a declining economy and falling GDP also represent a risk for NCC.

The company Nynas, which is one of the primary suppliers of bitumen for asphalt manufacturing in the Nordic region, announced during the fourth quarter of 2019 that it is in the process of reorganization. This still applies. If Nynas were to cease deliveries, it would have a negative impact in the short to medium term on the entire asphalt market in the Nordic region, including NCC's asphalt operations. This risk remains, even if measures to reduce the risk have been taken.

Related-party transactions

Related parties are NCC's subsidiaries, associated companies and joint arrangements. Related-company sales during the second quarter amounted to SEK 10 M (16) and purchases to SEK O M (11). In the first half-year, sales amounted to SEK 14 M (26) and purchases to SEK 0 M (16).

Seasonal effects

NCC Industry's operations and certain operations in NCC Building Sweden, NCC Building Nordics and NCC Infrastructure are impacted by seasonal variations due to weather conditions. Earnings in the first quarter are normally weaker than the rest of the year.

Repurchase of shares

NCC AB holds 764,267 Series B shares in treasury to meet its obligations pursuant to long-term incentive programs.

Dividend

NCC's Annual General Meeting on April 1, 2020, resolved not to pay any dividend for 2019 due to the prevailing uncertainty in society due to the Corona virus. NCC's Board of Directors expressed its intention to convene an Extraordinary General Meeting later this year to decide on a dividend if the situation permits.

Events after the close of the quarter

Impact of the Corona crisis

Up until the report date, there has been no significant impact from the Corona virus.

Divestment of Road Services

On July 3, it was announced that the operations in Road Services in Denmark are being sold to Arkil A/S. The transaction is expected to close during the third quarter and then have a marginal positive impact on earnings.

On July 15, it was announced that the operations within Road Services Sweden and Finland will be sold to the company Mutares. This transaction is also expected to close during the third quarter with a marginally negative impact on earnings. Together, both transactions have a marginally positive effect on cash flow.

For the limited operations that remain in Norway, opportunities for divestment are still being considered. Following the completion of the above transactions, Road Services Norway will be operated and reported as part of the Infrastructure business area.

The Board of Directors and the CEO provide their assurance that the interim report gives a true and fair view of the Parent Company's and the Group's operations, position and describes the significant risks and uncertainties facing the Parent Company and the companies included in the Group.

Solna, July 16, 2020

Alf Göransson Chairman of the Board Geir Magne Aarstad Board member

Simon de Château Board member

Viveca Ax:son Johnson Board member

Mats Jönsson Board member Angela Langemar Olsson Board member

Birgit Nørgaard Board member

Karl-Johan Andersson Board member Employee representative Karl G Sivertsson Board member Employee representative Harald Stjernström Board member Employee representative

Tomas Carlsson President and CEO

This report is unaudited.

CONDENSED CONSOLIDATED INCOME STATEMENT

		Q2		Jan-Jun		Jan-Dec
SEK M Note 1	2020	2019	2020	2019	2019/2020	2019
Net sales	14,431	14,610	26,197	26,044	58,387	58,234
Production costs Note 2, 3	- 13,204	- 13,473	- 24,319	- 24,560	-53,892	- 54, 134
Gross profit	1,227	1,137	1,878	1,484	4,495	4,101
Note 2, 3 Selling and administrative expens es	- 740	-730	- 1,466	- 1,423	- 2,853	-2,811
Other operating income/expenses Note 3	-3	4	2	- 2	10	ර
Operating profit los s	483	411	414	રતે	1,652	1,296
Financial income	7	5	22	23	33	34
Financial expense 11	-27	-37	-64	-72	- 138	- 146
Net financial item s	- 20	-32	- 41	- 50	- 104	- 112
Profit los s after financial item s	463	380	373	9	1,547	1,184
Tax	- 28	- 58	-22	- 1	-329	-309
Net profit/los s	435	322	351	8	1,218	875
Attributable to:
NCC's shareholders	435	308	351	- Д	1,228	873
Non-controlling interes ts		14		11	- 10	2
Net profit loss for the period	435	322	351	8	1,218	875
Earnings per share
Before and after dilution
Net profit loss for the period, SEK	4.03	2.85	3.25	-0.03	11.38	8.09
Num ber of shares , m illions
Total number of is sued shares	108.4	108.4	108.4	108.4	108.4	108.4
Average number of shares outstanding before and after dilution during the period	107.8	108.0	107.8	108.8	107.9	108.0
Number of shares outstanding at the end of the period	107.7	108.0	107.7	108.0	107.7	107.9

1) Whereof interest expenses for the period Jul 19 - Jun 20 SEK, 114 M and Jan-Dec 19 SEK 126 M .

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Q2		Jan-Jun		R 12 Jul-Jun	Jan-Dec
SEK M Note	2020	2019	2020	2019	2019/2020	2019
Net profit loss for the period	435	322	351	8	1,218	875
ltem s that have been recycled or should be recycled to net profit loss for the period
Exchange differences on trans lating foreign operations	- 108	31	- 26	75	- 59	43
Cash flow hedges	12	- 13	-9	12	- 12	8
Income tax relating to items that have been or should be recycled to net profit/os s
for the period	-3	3	2	-2	2	-2
	- 100	20	-33	85	-68	19
ltem s that cannot be recycled to net profiit fos s for the period
Revaluation of defined benefit pension plans	179	- 38	- 145	-38	- 550	- 443
Income tax relating to items that can not be recycled to net profit,/os s for the period	- 38	8	31	8	118	ઠર
	141	-30	- 114	-30	-433	-348
Other com prehensive income	41	-9	- 147	રેર	- 501	- 299
Total com prehens ive income	476	312	204	રેરિકેટરી	77	576
Attributable to:
NCC's shareholders	476	298	204	ನಾ	727	574
Non-controlling interes ts		14		11	- 10
Total com prehens ive income	476	312	204	રેરિકેટરી	717	576

CONDENSED CONSOLIDATED CHANGES IN SHAREHOLDERS' EQUITY

	Jun 30, 2020			Jun 30, 2019
			lotal			l otal
	Shareholders´Non-controlling shareholders´				Shareholders´ Non-controlling shareholders´
SEK M	equity	interests	equity	equity	interes ts	equity
Opening balance, January 13'	3,044		3,044	2,931	17	2,948
Total comprehensive income	204		204	52	11	ર્સ્ડ
Dividend				- 432	- 18	- 450
Sale/Acqusition of treas ury shares	- 34		-34	- 19		- 19
Performance based incentive program				O		2
Clos ing balance	3,221	O	3,221	2,533	10	2,543

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

	Q2		Jan-Jun		R 12 Jul-Jun	l an-Dec
SEK M	2020	2019	2020	2019	2019/2020	2019
OPERATING ACTIVITIES
Profit /loss after financial items	463	380	373	9	1,547	1,184
Adjustments for items not included in cash flow	382	280	677	532	1,845	1,700
Taxes paid	-92	- 65	- 263	- 162	-211	- 1 10
Cash flow from operating activities before changes in working capital	753	રેતરે	787	379	3,181	2,774
Divestment of property projects	456	114	1,727	ર્સર્ડ	3,299	2,116
Gross investments in property projects	-716	-705	- 1,690	- 1,343	-3,628	-3,281
Cash flow from property projects	- 259	-591	37	-800	-329	- 1,165
Other changes in working capital	-982	-892	-309	-414	710	રે રેણર
Cash flow from operating activities	-489	-889	514	-834	3,562	2,214
INVESTING ACTIVITIES
Acquisition/Sale of subsidiaries and other holdings	8	1	9	2		-7
Acquisition/Sale of tangible fixed as sets	- 121	- 209	- 104	-397	-379	-671
Acquisition/Sale of other fixed as sets	-3	- 13	-6	- 20	-9	- 23
Cash flow from investing activities	- 116	-221	- 101	-415	-388	-701
Cash flow before financing	-605	- 1,109	413	- 1,249	3,174	1,512
FINANCING ACTIVITIES
Cash flow from financing activities	-246	937	-563	741	- 1,612	-308
Cash flow during the period	-850	- 172	- 150	- 208	1,563	1,204
Cash and cash equivalents at beginning of period	3,068	883	2,416	1,197	716	1,197
Effects of exchange rate changes on cash and cash equivalents	14	6	-34	28	- 47	15
Cash and cash equivalents at end of period "	2,231	716	2,231	716	2,231	2,416
Short-term investments due later than three months	174	10	174	10	174	63
Total liquid as s ets at end of period	2,405	726	2,405	726	2,405	2,478

™ Road Services cash is includet with SEK 193 M

CONDENSED CONSOLIDATED NET DEBT

	Jan-Jun
Net debt, SEK M	2020	2019	2019/2020	2019
Net debt, opening balance	- 4,489	-3,045	-6,352	-3,045
- Cash flowfrom operating activities	514	-834	3,562	2,214
- Cash flow from investing activities	- 101	-415	-388	-701
Cash flow before financing	413	- 1,249	3,174	1,512
Leasing - IFRS 16-effect	-849	- 1,743	- 1,048	- 1,942
Acquisition/Sale of treas ury shares	-34	- 19	-34	- 19
Change of provisions for pensions	- 208	-90	-679	- 261
Currency exchange differences in cash and cash equivalents	-34	28	- 47	ાર
Paid dividend		- 234	-216	- 4.50
Net cash + /het debt - closing balance	-5,201	-6,352	-5,201	-4,489
- Whereof provisions for pensions	-3,048	-2,369	-3,048	-2,840
- Whereof leasing debt according to IFRS 16.	-2,226	- 1,894	-2,226	- 1,732
- Whereof other net cash het debt	73	- 2,089	73	83

PARENT COMPANY CONDENSED INCOME STATEMENT

		02		Jan-Jun		R 12 Jul-Jun	lan-Dec
SEK M	Note	2020	2019	2020	2019	2019/2020	2019
Net sales		13	38	30	71	205	246
Selling and adminis trative expens es		-73	-94	- 133	- 174	-303	-344
Operating profit		-60	- 56	- 102	- 103	-97	-98
Result from participations in Group companies		1,054	332	1,054	332	1,204	482
Result from other financial fixed as sets		10		10	13	10	13
Result from financial current as sets				3	2	4	3
Interest expense and similar items		- 10	-9	- 19	- 19	- 42	- 42
Result after financial item s		994	268	945	226	1,079	358
Appropriations						577	577
Tax		15	21	25	33	- 109	- 102
Net profit loss for the period		1,009	289	971	259	1,546	833

The Parent Company consists primarily of head office functions plus a branch in Norway. Net sales pertain to charges to Group companies. The average number of employees was 53 (62).

PARENT COMPANY CONDENSED BALANCE SHEET

SEK M	Note 1	lun 30 2020	Jun 30 2019	Dec 31 2019
ASSETS
Intangible fixed as sets			3
Tangible fixed as sets			53	3
Financial fixed as sets		4,567	5,587	4,562
Total fixed as sets		4,567	5,642	4,565
Current receivables		248	292	1,123
Treasury balances in NCC Treasury AB		505	174	164
Total current as sets		753	467	1,287
Total as sets		5,321	6,109	5,852
SHAREHOLDERS' EQUITY AND LIABIL IT IES
Shareholders' equity		4,227	2,699	3,281
Provisions		6	8
Long term liabilities		605	2,046	803
Current liabilities		482	1,356	1,761
Total shareholders equity and liabilities		5,321	6,109	5,852

The total resolved dividend to shareholders amounted to SEK 0 M (432) due to the uncertainty prevailing in society due to the Corona virus.

NOTE 1. ACCOUNTING POLICIES

This interim report has been compiled pursuant to IAS 34 Interim Financial Reporting. The interim report has been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of prevailing accounting standards issued by the International Financial Reporting Interpretations Committee (IFRIC), as approved by the EU.

The interim report has been prepared pursuant to the same accounting policies and methods of calculation as the 2019 Annual Report (Note 1 , pages 32-38). Any new supplementary standards or interpretations did not affect this financial report to any discernible extent.

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

The assets and liabilities attributable to the sale of the operations in Road Services, are recognized on separate lines on the asset and liability sides, respectively.

Parent Company

The Parent Company has prepared its interim report pursuant to the Swedish Annual Accounts Act (1995:1554) and the Swedish Financial Reporting Board's recommendation RFR 2 Accounting for Legal Entities.

The interim report for the Parent Company has been prepared in accordance with the same accounting policy and methods of calculation as the Annual Report for 2019 (Note 1, pages 32-38) except that the Parent Company applies the exemption in RFR 2 and recognizes all lease commitments as operating leases.

1 ) Of which depreciation of right-of-use assets SEK 148 M (126)
2) Of which depreciation of right-of-use assets SEK 214 M (219)

	02		Jan-Jun		R 12 J ul J un - J an - Dec
SEK M		2020	2020 -		2019	2019
Ow ner-occupied properties	-9	-12	-9 -	- 13	ဝ	-13
Machinery and equipment		-		-8		-8
Other intangible as sets					- 1	- 1
Total im pairm ent los s es	-9	-13 -	-9	-21	-9	-22

SEK M
Koncernen	Jun 30 2020	Jun 30 2019	Dec 31 2019
Ow ner-occupied properties	1,112	756	717
Machinery and equipment	856	1,000	862
Land leases	50	51	51
Total right-of-us e as sets	2.018	1,813	1.630

		NCCC	NCCC
	NCC	Building	Building		NCC NCC Property	Total	Other and
April - June 2020	Infrastructure	Sweden	Nordics	Indus try	Development	s egments	eliminations 11	Group
Net sales , external	4,900	3,054	2,758	3,043	676	14,431		14,431
Net sales , internal	142	411	383	512	3	1,451	- 1,451
Net sales , total	5,042	3,464	3,142	3,554	679	15,882	- 1,451	14,431
Operating profit	ઠર્ભ	90	62	258	୧୫	574	-91	483
Net financial items								- 20
Profit Yos s after financial items								463
		NCC	NCC
	NCC	Building	Building		NCC NCC Property	Tota	Other and
April - June 2020	Infrastructure	Sweden	Nordics	Indus try	Development	s egments	eliminations 11	Group
Net sales , external	4,951	3,514	2,598	3,236	309	14,607	3	14,610
Net sales , internal	- 124	212	205	484	11	789	-789
Net sales , total	4,827	3,726	2,803	3,721	321	15,396	-786	14,610
Operating profit	87	76	46	322	40	571	- 160	411
Net financial items								-32
Profit loss after financial items								380
		NCC	NCC
	NCC	Building	Building	NCC	NCC Property	Total	Other and
January - June 2020	Infrastructure	Sweden	Nordics	Indus try	Development	s egments	eliminations 21	Group
Net sales , external	9,015	6,110	5,344	3,991	2,250	26,710	- 213	26,197
Net sales , internal	246	739	୧୧3	877	6	2,521	- 2,521
Net sales , total	9,261	6,849	5,997	4,868	2,255	29,231	-3,034	26,197
Operating profit	121	177	112	- 105	391	રેત્વર	- 282	414
Net financial items								- 41
Profit loss after financial items								373
		NCCC	NCC
	NCC	Building	Building		NCC NCC Property	Tota	Other and
January - June 2019	Infrastructure	Sweden	Nordics	Indus try	Development	s egments	eliminations 21	Group
Net sales , external	9,184	6,939	5,005	4,204	709	26,041	3	26,044
Net sales , internal	- 46	પર્સ્ટર	365	782	23	1,579	- 1,579
Net sales , total	9,138	7,394	5,370	4,985	732	27,620	- 1,576	26,044

1 ) The figures for the quarter include among others NCC's head office and results from small subsidiaries and associated companies, totalling SEK -47 M (-94). Further, the figures for the quarter includes eliminations of internal profits of SEK -18 M (-44) and other Group adjustments, mainly consisting of differences of accounting policy between the segments and the Group, totaling SEK -26 M (-22). These items primarly correspond to pensions and in 2020 also leasing, when the rules on sale and leaseback are applied. 2 ) The figures for the period include among others NCC's head office and results from small subsidiaries and associated companies, totalling SEK -92 M (-140).

Further, the figures includes eliminations of internal profits amounting of SEK -17 M (-55) and other Group adjustments, mainly consisting of differences of accounting policy between the segments and the Group, totaling SEK -173 M (-59). These items primarly correspond to pensions and in 2020 also leasing, when the rules on sale and leaseback are applied.

	Net sales			Orders received
	lan-Jun
SEK M	2020	2019	2020	2019
Sweden	15,669	16,010	18,398	15,627
Denmark	3,492	3,190	4,170	8,329
Norway	3,131	3,613	2,685	3,756
Finland	3,906	3,232	2,936	3,860
Total	26.197	26.044	28.188	31.572

NOTE 6. FAIR VALUE OF FINANCIAL INSTRUMENTS

In the tables below, disclosures are made concerning how fair value has been determined for the financial instruments that are continuously measured at fair value in NCC's balance sheet. When determining fair value, assets have been divided into three levels. No transfers were made between the levels during the period.

In level 1 , measurement complies with the prices quoted on an active market for the same instruments. Derivatives in level 2 comprise currency forward contracts, interest rate swaps, oil forward contracts

and electricity forward contracts used for hedging purposes. The measurement to fair value of currency forward contracts, oil forward contracts and electricity forward contracts is based on accepted models with observable input data such as interest rates, exchange rates and commodity prices. The measurement of interest rate swaps is based on forward interest rates based on observable yield curves. In level 3, measurement is based on input data that is not observable in the market

SEK M		Jun 30, 2020				Jun 30, 2019	Dec. 31, 2019
		Nvå				Nvå				Nvå
		2	3	Tot	-	2	ന	Tot		2	3	Tot
Financial as sets meas ured at fair value through protit and los s
Short-term investments	72			72	10			10	10			10
Derivative instruments		୧୫		୧୫		21		21		રેર		રુ
Derivative instruments used in hedge accounting		18		18		31		31		12		12
Financial as sets meas ured at fair value through other com prehensive incom e Equity instruments			68	68			74	74			74	74
Total as sets	72	86	રેજ	226	10	52	74	136	10	୧୫	74	152
Financial liabilities meas ured at fair value through profit and los s
Derivative instruments		2		2		10		10		୧୦		રે જ
Derivative instruments used in hedge accounting		38		38		34		34		14		14
Total liabilities	0	40	0	40	O	प्रति	O	प्रत	0	74	0	74

In the table below, disclosures are made concerning fair value for the financial instruments that are not recognized at fair value in NCC's balance sheet.

SEK M	Jun 30, 2020		Jun 30, 2019		Dec. 31, 2019
	Carrying amount	Fair value	Carrying amount	Fair value	Carrying amount	Fair value
Long-term interest- bearing receivables - amortized cost	92	93	199	201	144	1 44
Short-term investments - amortized cost	102	102			52	52
Long-term interes t- bearing liabilities	3,834	3,793	2,191	2,192	3,568	3,569
Current interest-bearing liabilities	818	818	2,846	2,846	796	797
Interest-bearing liabilities attributable to as sets held for sale	119	119	142	142	133	133

For other financial instruments recognized cost - accounts receivable, current interestbearing receivables, cash and cash equivalents, accounts payable and other interestries include does not materially deviate from the carrying anount.

NOTE 7. PLEDGED ASSETS, CONTINGENT LIABILITIES AND GUARANTEE OBLIGATIONS

SEK M

Group	Jun 30 2020	Jun 30 2019	Dec 31 2019
Assets pledged	532	527	487
Contingent liabilities and guarantee obligations	249	576	રતેત્વ
Parent com pany
Contingent liabilities and guarantee obligations	21,505	21,574	21,456

" A mong these, NCC AB has sureties which are indemnified by Bonava AB based on the Master Separation Agreement. Bonava is working on formally replacing these sureties with other forms of collateral in a gradual process, which means that this item will decline further over time. In addition, NCC AB has received guarantees from credit insurance companing outstanding commitments on behalf of now wholly owned Bonava companies.

1) Calculations are based on the rolling 12 month period.
2) All shares issued by NCC are common shares.
3) The amounts are adjusted for change in accounting policy regarding IFRS 15.
4) M arket value December 2016 excludes NCC´s residential business, Bonava. Including Bonava the maket value amounts to SEK 39,563 M 5) The profit arising from the dividend of Bonava was SEK -31 M and SEK 6,724 M in the full year 2017 and 2016.

5) The profit arising from the dividend of Bonava was SEK -31 M and SEK 6,724 M in the full year 2017 and 2016.

6) Refers to interest-bearing liabilities excluding pension liabilities according to IAS 19 and leasing according to IFRS 16.

For definitions of key figures, see https://www.ncc.com/investor-relations/ncc-share/financial-definitions/.

This is the type of information that NCC AB is obligated to disclose pursuant to the information was issued for publication through the agency of the contact persons set out below on July 17, 2020, at 7:10 a.m. CEST.

Invitation to presentation of the Interim Report for the period January-June 2020

NCC's President and CEO Tomas Carlsson and Chief Financial Officer Susanne Lithander will present the interim report by audiocast with integrated teleconference on July 17 at 9:00 a.m. (CEST). The presentation will be held in English.

Presentation material for the conference will be available at www.ncc.com/ir at around 8:00 a.m. (CEST).

Link to webcast:

https://ncc-live-external.creo.se/200717

To participate by phone:

To participate by phone, please call one of the following numbers five minutes prior to the start of the conference.

Sweden: +46 8 566 427 07 UK: +44 333 300 9272 US: +1 833 526 8383

Financial calendar 2020

Interim report Q3, January-September 2020

Year-end report Q4, January—December 2020 January 28, 2021

November 6, 2020

601

For further information, please contact:

Chief Financial Officer (CFO) Susanne Lithander Tel. +46 (0)73-037 08 74

Head of Corporate Relations Maria Grimberg Tel. +46 (0)70-896 12 88

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