NRC Group — Interim / Quarterly Report 2014

Aug 21, 2014

Improved results

The company's focus and resources during the quarter have been aimed at maintaining and developing the company's profitable operations further. In addition, the company has focused on the development of a sustainable business model by exploiting its existing expertise in new business areas.

Blom entered into an agreement to build a new European map data set during the quarter. The agreement has an initial value of up to NOK 30 million, but it is expected to increase significantly if the project is carried out as planned. This agreement confirms the company's position as a strong expertise and resource centre for large complex jobs. The agreement will give us rights linked to the database, which may offer future earning opportunities.

The company reported revenues of NOK 71 million in the 2nd quarter, compared with NOK 69 million for the same quarter in 2013. EBITDA for the quarter was NOK 5 million, compared with NOK 3 million for the corresponding quarter in 2013. This corresponds to an EBITDA margin of 6.7 per cent, compared with 4.5 per cent in the 2nd quarter of 2013. The pre-tax profit was NOK 2 million, compared with a pre-tax loss of NOK -7 million for the corresponding quarter in 2013.

Revenues for the 1st half year totalled NOK 113 million, compared with NOK 105 million for the same period in 2013. EBITDA for the 1st half year was NOK -1 million, compared with NOK -4 million for the corresponding period in 2013. This corresponds to an EBITDA margin of -0.8 per cent, compared with -3.3 per cent for the 1st half of 2013. The operating loss for the 1st half year was NOK -5 million, compared with NOK -19 million for the same period in 2013.

The company's principal operations are focused now on the Nordic region, where the company has had a strong market position over time. A stronger concentration of the resources combined with a more concentrated focus on special products and customer segments is expected to give more predictable earnings and better margins over time.

The challenging macroeconomic conditions in Iberia continue. In 2014, the company has scaled down its operations further through the sale and liquidation of its subsidiaries. The operations linked to the company's database technology will still be managed by a Spanish subsidiary.

In the future, the company will focus on increasing sales and measures to develop business opportunities in markets where the company's competence can be exposed to a better risk and earnings profile. The company will also assess new development and business opportunities in which we can exploit the company's expertise to improve the results through various forms of partnership. The company will also continue its work to adapt its structure, cost base and product portfolio.

The company has a satisfactory balance sheet. The company's equity ratio is 41 per cent, and the current ratio has improved.

Results

	nd qtr. 2		st half year 1
IFRS	2014	2013	2014	2013
(Amounts in NOK 1000)
Operating revenues	71,262	68,921	113,127	105,376
EBITDA	4,789	3,105	-915	-3,509
EBIT	2,390	-5,787	-4,942	-19,299
EBT	1,768	-7,363	-6,880	-23,551

This report has been prepared in accordance with IAS 34 on interim accounts. The interim accounts do not contain all the information that is required in complete annual accounts, and they should be read in conjunction with the consolidated accounts for 2013. The interim accounts have been prepared in accordance with the same principles that are used in the annual accounts for 2013. The result from discontinued businesses is presented on a separate line in other comprehensive income. The report has not been audited.

Operations

Operational development

The company has chosen to focus more on market niches in which the company has a competitive advantage, or where new business models can be developed based on services of a more repetitive nature over time, so that the company's earnings and margins can become more predictable.

In the Nordic segment, the Swedish operations have demonstrated a good ability to develop new business areas. The increased focus on specific customer segments and a changed product mix has resulted in revenue growth and an improvement in earnings.

Certain important customer segments in Norway have seen a decline in volume and lower prices in recent years. The company has implemented a number of cost-saving measures to maintain its position. The order intake has been good, and the company has increased its market share, compared with 2013, but this has unfortunately been at the expense of lower margins.

Mid-Europe has increased its revenues somewhat compared with 2013, and the efficiency improvement measures implemented are contributing to an improved margin. The order intake has been relatively good, and there is reason to expect improved earnings in the region for the year as a whole.

In spite of the fact that the underlying operations for the company as a whole show a slight earnings improvement this year, there is still significant room for improvement in the future results. The company is therefore focusing on the development of products and services to increase the creation of value for the company's customers. We believe that his will contribute to stronger margins over time.

The company signed a two-year contract with Viking Supply Ships AS (VSS) on 5 February 2014 for the delivery of airborne remote sensor services in 2014 and 2015. These services are linked to VSS operations in Northern waters and will be part of a larger ice monitoring programme. The contract will generate estimated annual revenues of NOK 35 to 50 million, with satisfactory margins. For Blom, the contract is important confirmation that the company is able to adapt and make use of its competence in new markets. VSS has an option for two additional years under certain conditions. Thus far, the contract has followed the plan in every way, and the customer is satisfied with the service.

The company has entered into an agreement with a leading global supplier of geospatial information. The agreement is part of a global programme, in which the company will build a new orthophoto library covering most of the European continent. The entire programme should be completed by the end of 2017. Blom will retain certain rights to the library, which will provide potential future earnings.

Finance and accounts

2 nd QUARTER 2014

Operating revenues from the segments in the 2nd quarter:

Operating revenues (NOK 1000)	nd qtr. 2014 2	nd qtr. 2013 2
Nordic	44,944	52,541
Mid-Europe	23,873	14,297
Eastern Europe	2,445	2,083
Total	71,262	68,921

1 st HALF OF 2014

Operating revenues from the segments in the 1st half were:

Operating revenues (NOK 1000)	1. half of	1. half of
	2014	2013
Nordic	69,411	72,303
Mid-Europe	39,208	27,679
Eastern Europe	4,508	5,394
Total	113,127	105,376

The company's operations are exposed to substantial seasonal fluctuations. The company's trade receivables increased by NOK 5 million during the period to NOK 28 million, while work in progress increased by NOK 22 million, to NOK 42 million. This resulted in a negative cash flow from operating activities of NOK 12 million in the 2nd quarter.

In the 2nd quarter, the company made operational investments of NOK 2 million. Net financial expenses totalled NOK 0.6 million in the 2nd quarter, and they were lower than the same period last year.

The equity ratio was 41 per cent, compared with 29 per cent as at 31 December 2013, and cash and cash equivalents were NOK 33 million at the end of the quarter.

Risk

The financial risks are discussed in more detail in the annual report for 2013. Our credit risk consists primarily of government and municipal customers, and purely private companies to a lesser extent. The company has not experienced any significant losses on trade receivables. Certain government and municipal customers are, however, relatively late with the payment of their trade payables.

The amount of capital committed in work in progress and trade receivables has declined significantly in 2014 as a result of the company's reduced exposure to Southern European markets, compared with the same period last year. Work in progress and trade receivables are set out contractually, and this means that the amount of capital committed is determined by the credit terms of the contracts. Blom continues to focus a great deal on reducing the amount of capital committed. The group's liquidity reserves will be at their lowest in the spring and summer due to the seasonally relatively high amount of working capital committed. During this period, the company has a low level of liquidity reserves for unforeseen events. Blom is also exposed in general to fluctuations in exchange rates, while fluctuations in interest rates are of less importance.

Estimates and discretionary assessments are assessed continuously and are based on historical experience and other factors, including expectations of future events that are regarded as probable under the current circumstances. The group prepares estimates and makes assumptions concerning the future. The accounting estimates that are made as a result of this will rarely coincide in full with the final outcome. The most important valuation items for Blom are the recognition of income from projects and provisions for potential losses on trade receivables. The estimates and discretionary assessments are discussed in more detail in the annual report for 2013.

Organisation and personnel

The company has a staff of employees with a high level of competence. This represents the foundation for the company's growth. As at 30 June 2014, there was a total of 162 employees in the operative companies, down from 207 at the end of 2013. There are 265 employees at Blom's production facilities in Indonesia and Eastern Europe. The group has a total of 427 employees, which is a reduction of 6 since 31 December 2013.

Shareholder matters

As at 30/06/2014, the company's share capital totalled NOK 10,070,649.00, divided into 10,070,649 shares, each with a par value of NOK 1.00. Number of shareholders as at 30 June 2014 was 2,201, and foreign shareholders accounted for 0.57 per cent of the share capital. Blom owns a total of 395,336 of the company's own shares, which represents 3.93 per cent of the total number of outstanding shares.

Outlook

In the opinion of the Board of Directors, the company should have profitable operations in 2014 based on the current strategy. The Board of Directors is satisfied with the company's ability to carry out demanding restructuring, at the same time that the company is establishing itself in new business areas with better visibility and margins.

Statement of the Board and CEO

We confirm that the half-year financial statements for the period from 1 January to 30 June 2014 have been prepared in accordance with IAS 34 Interim Reporting, and that the information presented in the financial statements provides a fair representation of the group's assets, debt, financial situation and overall results, in addition to providing a fair overview of important events during the accounting period and their influence on the half-year financial statements, and the most important risk factors and factors of uncertainty that the business faces.

Oslo, 20 August 2014

Trygve Bruland	Siv Staubo	Birgitte Ellingsen
Board Chairman	Board Member	Board Member
Kristian Lundkvist		Dirk Blaauw
Board Member		CEO

Consolidated Statement of Income – Blom Group

nd qtr. 14 2	nd qtr. 13 2		30/06/2014	30/06/2013	31/12/2013
71,262	68,921	Operating revenues	113,127	105,376	230,321
31,479	24,419	Cost of materials	45,733	37,289	70,082
27,869	32,957	Salaries and personnel costs	54,258	58,353	114,219
2,400	8,893	Depreciation and write-downs	4,028	15,790	86,794
7,125	8,440	Other operating and administrative costs	14,051	13,243	26,247
0	0	Other gains and losses	0	0	-24,207
68,873	74,708	Operating expenses	118,070	124,675	273,135
2,390	-5,787	Operating profit/loss	-4,942	-19,299	-42,814
-622	-1,576	Net financial items	-1,938	-4,252	-13,636
1,768	-7,363	Pre-tax profit/loss	-6,880	-23,551	-56,450
-85	-41	Taxes	-205	-213	3,018
1,683	-7,404	Profit/loss from continuing business	-7,085	-23,764	-53,432
-881	-2,375	Profit/loss from discontinued busi ness	2,837	-9,417	-6,007
802	-9,780	Profit/loss for the year	-4,248	-33,181	-59,439
		Profit/loss attributable to:
802	-9,774	Shareholders	-4,248	-33,181	-59,439
802	-9,780	Profit/loss after tax	-4,248	-33,181	-59,439
		Comprehensive profit/loss:
-420	42	Recalculation of pension obligations	-840	84	168
68	2,911	Currency translation differences	-59	2,614	6,041
-450	-6,827	Comprehensive profit/loss	-5,147	-30,483	-53,230
		Comprehensive income attributable to:
-450	-6,827	Shareholders	-5,147	-30,483	-53,230
-450	-6,827	Comprehensive profit/loss	-5,147	-30,483	-53,230
Earnings per share:
From continuing business			-0.73	-70.55	-39.28
	From discontinued business		0.29	-27.95	-4.42
	From profit/loss for the year		-0.44	-98.50	-43.70

Balance Sheet – Blom Group

ASSETS			(Amounts in NOK 1000)
	30/06/2014	30/06/2013	31/12/2013
Intangible assets	414	1,201	684
Property, plant and equipment	19,393	88,115	20,636
Fixed asset investments	117	703	1,151
Total non-current assets	19,924	90,019	22,471
Work in progress	41,510	56,260	30,965
Trade receivables	27,784	46,665	36,117
Other current receivables	20,749	26,424	15,054
Total receivables	48,533	73,089	51,171
Cash and cash equivalents	33,026	39,372	42,725
Assets classified as held for sale	0	0	48,072
Total current assets	123,069	168,721	172,933
TOTAL ASSETS	142,993	258,740	195,404

Balance Sheet – Blom Group

EQUITY AND LIABILITIES (Amounts in NOK 1000)

	30/06/2014	30/06/2013	31/12/2013
Called-up and fully paid share capital:
Share capital	10,071	16,849	10,071
Treasury shares	-1,977	-110	-1,977
Share premium account	97,720	20,458	97,720
Other reserves:
Currency translation differences	-27,743	-38,775	-35,348
Retained earnings	-19,172	11,965	-14,210
Total equity	58,900	10,387	56,256
Pension obligations	4,779	5,678	3,233
Non-current liabilities	454	72,090	10,506
Total non-current liabilities	5,233	77,768	13,739
Credit facilities	0	3,504	0
Other interest-bearing current liabilities Total interest-bearing current liabili	2,780	50,207	3,864
ties	2,780	53,711	3,864
Trade payables	25,454	49,884	25,955
Unpaid government taxes	6,151	20,798	18,931
Other current liabilities	44,475	46,192	43,449
Total other current liabilities	76,080	116,874	88,335
Liabilities classified as held-for-sale	0	0	33,209
Total current liabilities	78,860	170,585	125,408
Total liabilities	84,093	245,397	139,147
TOTAL EQUITY AND LIABILITIES	142,993	258,740	195,403

Change in equity from 1 January to 30 June

2013
40,870
-33,181
84
2,617
10,387

Cash Flow Statement – Blom Group

Indirect model (Amounts in NOK 1000)

2	nd quarter		As at 30 June
2014	2013			2014	2013
			CASH FLOW FROM OPERATING ACTIVITIES
1,768	-7,363		Pre-tax profit/loss	-6,880	- 23,551
2,400	8,892	+	Depreciation and amortisation of property, plant and equipment	4,028	15,790 -
-5,315	-6,165	+/-	Change in trade receivables	-3,390	17,716
-22,547	-14,252	+/-	Change in inventories and work in progress	-17,695	-9,901
12,118	10,921	+/-	Change in trade receivables	9,999	3,448
-836	4,614	+/-	Change in other accruals and unrealised foreign exchange Net cash flow from operating activities	-12,020	17,356 -
-12,413	-3,354	A =	– continuing business	-25,959	14,574
-815	-1,060		Net cash flow from operating activities – discontinued business	-3,901	-653
-13,228	-4,413	A =	Net cash flow from operational activities – total	-29,866	- 15,227
			CASH FLOW FROM INVESTMENT ACTIVITIES
-2,085	-2,751	–	Purchases of property, plant and equipment	-2,237	-6,004
-340	0	+	Receipts from sale of shares and other investments	23,968	7,487
-2,425	-2,751		Net cash flow from investment activities – continuing business	21,731	1,483
0	-38		Net cash flow from investment activities – discontinued business	0	-76
-2,425	-2,789	B =	Net cash flow from investment activities – total	21,731	1,407
			CASH FLOW FROM FINANCING ACTIVITIES
-460	-1,698	+/-	Net change in current and non-current liabilities Net cash flow from financing activities	-862	-3,206
-460	-1,698		– continuing business	-862	-3,206
0	-5,707		Net cash flow from financing activities – discontinued business	0	-8,211
-460	-7,396	C =	Net cash flow from financing activities – total	-862	- 11,417
					-
-16,113	-14,598		A+B+C Net change in cash and cash equivalents	-8,991	25,237
49,847	53,970	+	Cash and cash equivalents at the start of the period	42,725	64,609
33,734	39,372	=	Cash and cash equivalents as at 30 June	33,734	39,372
33,026	30,201		Cash and cash equivalents – continuing business	33,026	30,201
708	9,171		Cash and cash equivalents – discontinued business	708	9,171

(Amounts in NOK 1000)

Segments – Blom Group

Operating revenues Q2 2014 Q2 2013 As at 30/06/2014 As at 30/06/2013 Nordic 44,944 52,541 69,411 72,303 Mid-Europe 23,873 14,297 39,208 27,679 Eastern Europe 2,445 2,083 4,508 5,394 Total 71,262 68,921 113,127 105,376 EBITDA Q2 2014 Q2 2013 As at 30/06/2014 As at 30/06/2013 Nordic 5,344 13,040 2,367 13,485 Mid-Europe 2,599 1,188 3,723 252 Eastern Europe 607 287 1,425 1,381 Other segments / unallocated -3,761 -11,410 -8,430 -18,627 Total 4,789 3,105 -915 -3,509 EBIT Q2 2014 Q2 2013 As at 30/06/2014 As at 30/06/2013 Nordic 3,373 5,943 -800 821 Mid-Europe 2,252 -317 3,023 -2,567 Eastern Europe 526 254 1,265 1,335 Other segments / unallocated -3,762 -11,667 -8,431 -18,888 Total 2,390 -5,787 -4,942 -19,299 Assets 1) Q2 2014 Q2 2013 As at 30/06/2014 As at 30/06/2013 Nordic 63,851 121,811 63,851 121,811 Mid-Europe 22,036 22,568 22,036 22,568 Eastern Europe 3,218 3,835 3,218 3,835 Other segments / unallocated 53,888 110,527 53,888 110,527 Total 142,993 258,740 142,993 258,740 Investments Q2 2014 Q2 2013 As at 30/06/2014 As at 30/06/2013 Nordic 2,150 2,211 2,304 5,863 Mid-Europe 83 724 83 746 Eastern Europe 88 99 88 144 Other segments / unallocated 0 321 0 372 Total 2,321 3,355 2,475 7,125

1) Allocated assets include external trade receivables, work in progress, non-current assets and intangible assets with the exception of deferred tax assets. Other / unallocated assets include assets classified as held for sale.

BLOM MAIN OFFICES

P.O. Box 34 Skøyen Cheddar Business Park N-0212 Oslo Wedmore Road, BS27 3EB Norway UK Tel.: +47 23 25 45 00 Tel.: +44 1934 311000 E-mail: blom.no@blomasa.com E-mail: info.uk@blomasa.com

Pasilanraitio 5 Oskar–Frech–Strasse 15 FI-00240 Helsinki 73614 Schorndorf Finland Germany Tel.: +358 10 322 8940 Tel.: +49 7181 98021 0

Blom Geomatics AS Blom Sweden AB

P.O. Box 34 Skøyen Hammarbacken 6 B N-0212 Oslo SE-191 49 Sollentuna Norway Sweden Tel.: +47 23 25 45 00 Tel.: +46 8 578 247 00

Blom ASA Blom Aerofilms Ltd.

Blom Kartta OY Blom Deutschland GmbH

E-mail: info.fi@blomasa.com E-mail: info.de@blomasa.com

E-mail: info.no@blomasa.com E-mail: info.se@blomasa.com