NRC Group — Interim / Quarterly Report 2014

May 15, 2014

Blom looks to the future

Extensive restructuring has marked the company's reports in recent years. In the first quarter of 2014, the sale of the consulting engineering company in Romania was finalized. The company will also complete the restructuring of the company's operations in Iberia in the 2nd quarter of 2014. The company's focus and resources will in the future be directed towards new revenue-generating measures that will establish the foundation for a healthier business model in markets where the willingness and capacity to pay for the company's expertise is better. The first quarter is seasonally weak for the company.

The company reported revenues of NOK 49 million for the 1st quarter of 2014, compared with NOK 42 million for the same quarter in 2013. EBITDA for the quarter was NOK -6 million, compared with NOK -10 million for the corresponding quarter in 2013. This corresponds to an EBITDA margin of -11.4 per cent, compared with -22.9 per cent in the 1st quarter of 2013. The operating loss for the quarter was NOK 7 million, compared with an operating loss of NOK 17 million for the same period in 2013. The pre-tax loss was NOK 9 million, compared with a pre-tax loss of NOK 20 million for the corresponding quarter in 2013.

The company's principal operations are focused out of the Nordic region, where the company holds a strong historic market position. After three years when a significant portion of the operations in Sweden were linked to a major contract, the Swedish operations have now demonstrated an excellent ability to develop new business areas aimed at new customer groups based on products with satisfactory margins, in a market marked by overcapacity, the company has increased its market share in certain customer segments to over 50 per cent. The company believes that these development trends, combined with a focus on a broader range of services developed on the basis of the company's core competence, may form a solid foundation for growth in the time to come.

The challenging macroeconomic conditions in Iberia continue, and the order intake to date in 2014 has been weak and significantly lower than expected. Therefore, the company will scale down its operations further through the sale and liquidation of its subsidiaries. Operations linked to specific customer segments in the region, as well as the operation and development of the company's database technology, will still be carried out by the 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 established a satisfactory balance sheet through the measures that have been implemented. The company's equity ratio is 35 per cent, and the current ratio has improved.

A new Board of Directors and a new shareholder structure with express confidence in the company's competence and opportunities is a strong motivation for the company's employees.

Results

IFRS	st Qtr. 1 2014	st Qtr. 1 2013	31/12/2013
(Amounts in NOK 1000)
Operating revenues	49,008	42,342	264,575
EBITDA	-5,611	-9,713	32,442
EBIT	-7,344	-16,750	-54,906
EBT	-8,830	-19,598	-64,195

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 businesses sold is presented on a separate line in other comprehensive income. The report has not been audited.

Operations

Operational development

To improve profitability under the prevailing market conditions that have marked parts of Europe in recent years, 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. In addition, the company will maintain reduced geographic exposure.

The Nordic region has increased its revenues, compared with the first quarter of 2013. In Sweden, the company's 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 in these segments has been good in the first quarter of 2014. 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 compared with the first quarter of 2013, and the efficiency improvement measures implemented contribute to an improved margin. The order intake in the first quarter was good.

The challenging macroeconomic conditions in Iberia continue. The further reduction of geographic exposure, combined with a more focused range of products, will provide the basis for the company's reduced activity in this region in 2014.

In spite of the improved underlying operations profitability for the company this year, the company's results are not satisfactory. The company is therefore focusing on the development of products and services to increase the creation of value for the company's customers.

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.

Finance and accounts

1 st QUARTER 2014

Operating revenues from the segments in the 1st quarter:

Operating revenues (NOK 1000)	st Qtr. 2014 1	st Qtr. 2013 1
Nordic	24,467	19,762
Mid-Europe	15,335	13,382
Eastern Europe	2,063	3,312
Iberia & Latin America	7,143	5,886
Total	49,008	42,342

The company's negative cash flow from operating activities in the 1st quarter has been influenced by seasonal fluctuations and the restructuring measures implemented. Trade receivables declined by NOK 6 million during the period to NOK 31 million, while work in progress declined by NOK 6 million to NOK 25 million.

The company's operations are marked by seasonal fluctuations, with most of the value creation taking place in the spring, summer and autumn months. The first quarter does therefore not reflect the expected average quarter for the year.

No operational investments of significance were made in the 1st quarter. The corresponding figure for 2013 was NOK 4 million. Net financial expenses totalled NOK 1.5 million for the quarter, and they were lower than the same period last year as a result of lower interest-bearing debt. The equity ratio is 35.1 per cent, compared with 28.8 per cent as at 31 December 2013. Cash and cash equivalents increased by NOK 7 million to NOK 50 million during the quarter.

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 31 March 2014, there were a total of 189 employees in the operative companies, down from 207 at the end of 2013. There are 244 employees at Blom's production facilities in Indonesia and Eastern Europe. The group has a total of 433 employees, which is a reduction of 32 since 31 December 2013.

Shareholder matters

As at 31 March 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. The total number of shareholders as at 31 March 2014 was 2,269, and foreign shareholders accounted for 0.68 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 spite of the fact that the company has implemented substantial restructuring measures over the last two years, the company will continue to focus on efficiency improvement measures, and streamlining and developing the operations, as well as increasing sales, so that the company can obtain optimal cost structures.

In the opinion of the Board of Directors, all of the measures that have been implemented and the measures that have been planned will enable the company to have profitable operations in 2014 and the years to come. The Board of Directors is satisfied with the company's ability to complete a demanding restructuring process at the same time as the company has established itself in new business areas with better visibility and margins.

Oslo, 14 May 2014

Siv Staubo	Tore Hopen	Birgitte Ellingsen
Board Chairman	Board Member	Board Member
Kristian Lundkvist		Dirk Blaauw
Board Member		CEO

Consolidated Statement of Income – Blom Group

	31/03/2014	31/03/2013	31/12/2013
Operating revenues	49,008	42,342	264,575
Cost of materials	15,589	12,674	79,213
Salaries and personnel costs	30,482	32,555	140,809
Depreciation and write-downs	1,733	7,037	87,348
Other operating and administrative costs	8,548	6,826	36,318
Other gains and losses	0	0	-24,207
Operating expenses	56,352	59,092	319,481
Operating profit/loss	-7,344	-16,750	-54,906
Net financial items	-1,486	-2,848	-9,289
Pre-tax profit/loss	-8,830	-19,598	-64,195
Taxes	-126	-179	2,965
Profit/loss from continuing business	-8,956	-19,777	-61,230
Profit/loss from business sold	3,530	-3,624	1,791
Profit/loss for the year	-5,426	-23,401	-59,439
Profit/loss attributable to:
Shareholders	-5,426	-23,401	-59,439
Profit/loss after tax	-5,426	-23,401	-59,439
Comprehensive profit/loss:
Recalculation of pension obligations	-420	42	168
Currency translation differences	-127	-297	6,041
Comprehensive profit/loss	-5,973	-23,656	-53,230
Comprehensive income attributable to:
Shareholders	-5,973	-23,656	-53,230
Comprehensive profit/loss	-5,973	-23,656	-53,230
Earnings per share:
From continuing business	-0.93	-14.51	-45.01
From business sold	0.36	-0.93	1.32
From profit/loss for the year	-0.56	-15.44	-43.70

Balance Sheet – Blom Group

ASSETS			(Amounts in NOK 1000)
	31/03/2014	31/03/2013	31/12/2013
Intangible assets	621	1,124	684
Property, plant and equipment	18,621	92,939	20,636
Fixed asset investments	1,268	361	1,151
Total non-current assets	20,510	94,424	22,471
Work in progress	24,955	39,130	30,965
Trade receivables Other current receivables Total receivables	30,626 17,340 47,966	41,893 28,560 70,453	36,117 15,054 51,171
Cash and cash equivalents	49,847	53,970	42,725
Assets classified as held for sale	0	0	48,072
Total current assets	122,768	163,553	172,933
TOTAL ASSETS	143,278	257,977	195,404

Balance Sheet – Blom Group

EQUITY AND LIABILITIES (Amounts in NOK 1000)

	31/03/14	31/03/13	31/12/13
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	-35,475	-41,686	-35,348
Retained earnings	-20,057	21,705	-14,210
Total equity	50,283	17,216	56,256
Pension obligations	4,141	6,189	3,233
Non-current liabilities	10,256	74,169	10,506
Total non-current liabilities	14,397	80,358	13,739
Credit facilities	0	3,367	0
Other interest-bearing current liabilities	3,360	51,268	3,864
Total interest-bearing current liabilities	3,360	54,635	3,864
Trade payables	19,277	38,748	25,955
Unpaid government taxes	13,767	15,857	18,931
Other current liabilities	42,193	51,163	43,449
Total other current liabilities	75,237	105,768	88,335
Liabilities classified as held-for-sale	0	0	33,209
Total current liabilities	78,598	160,403	125,408
Total liabilities	92,995	240,761	139,147
TOTAL EQUITY AND LIABILITIES	143,278	257,977	195,403

Change in equity from 1 January to 31 March

	2014	2013
Equity as at 31 December	56,256	40,870
Profit/loss for the period	-5,426	-23,400
Pension obligations	-420	42
Currency translation differences	-127	-296
Equity as at 31 December	50,283	17,216

Cash Flow Statement – Blom Group

Indirect model (Amounts in NOK 1000)

		As at 31 March
		2014	2013
	CASH FLOW FROM OPERATING ACTIVITIES
	Pre-tax profit/loss	-8,830	-19,598
+	Depreciation and amortisation of property, plant and equipment	1,733	7,037
+/-	Change in trade receivables	5,491	-3,910
+/-	Change in inventories and work in progress	6,010	5,035
+/-	Change in trade receivables	-6,678	-11,942
+/-	Change in other accruals and unrealised foreign exchange	-14,358	11,862
	Net cash flow from operating activities – continuing
A =	business	-16,632	-11,516
	Net cash flow from operating activities – discontinued business	0	702
A =	Net cash flow from operating activities – total	-16,632	-10,814
	CASH FLOW FROM INVESTMENT ACTIVITIES
–	Purchases of property, plant and equipment	-152	-3,253
+	Receipts from sale of shares and other investments	24,308	7,487
	Net cash flow from investment activities – continuing
	business	24,156	4,234
	Net cash flow from investment activities – discontinued busi
	ness	0	-38
B =	Net cash flow from investment activities – total	24,156	4,196
	CASH FLOW FROM FINANCING ACTIVITIES
+/-	Net change in current and non-current liabilities	-402	-1,599
	Net cash flow from financing activities – continuing busi
	ness	-402	-1,599
	Net cash flow from financing activities – discontinued business	0	-2,422
C =	Net cash flow from financing activities – total	-402	-4,021
	A+B+C Net change in cash and cash equivalents	7,122	-10,639
+	Cash and cash equivalents at the start of the period	42,725	64,609
=	Cash and cash equivalents as at 31 March	49,847	53,970
	Cash and cash equivalents – continuing business	49,847	45,565
	Cash and cash equivalents – discontinued business	0	8,405

Segments – Blom Group

(Amounts in NOK 1000)

Operating revenues	As at 31/03/2014	As at 31/03/2013
Nordic	24,467	19,762
Mid-Europe	15,335	13,382
Eastern Europe	2,063	3,312
Iberia & Latin America	7,143	5,886
Total	49,008	42,342
EBITDA	As at 31/03/2014	As at 31/03/2013
Nordic	-2,977	445
Mid-Europe	1,124	-936
Eastern Europe	818	1,094
Iberia & Latin America	93	-3,099
Other segments / unallocated	-4,669	-7,217
Total	-5,611	-9,713
EBIT	As at 31/03/2014	As at 31/03/2013
Nordic	-4,173	-5,122
Mid-Europe	771	-1,397
Eastern Europe	739	228
Iberia & Latin America	-12	-3,238
Other segments / unallocated	-4,669	-7,221
Total	-7,344	-16,750
Assets 1)	As at 31/03/2014	As at 31/03/2013
Nordic	39,017	106,593
Mid-Europe	15,212	20,894
Eastern Europe	3,935	2,374
Iberia & Latin America	13,435	17,083
Other segments / unallocated	71,679	111,032
Total	143,278	257,977
Investments	As at 31/03/2014	As at 31/03/2013
Nordic	121	3,652
Mid-Europe	0	22
Eastern Europe	0	45
Iberia & Latin America	33	51
Total	154	3,770

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 as at 31 December 2013.

BLOM MAIN OFFICES

P.O. Box 34 Skøyen Cheddar Business Park N-0212 Oslo Wedmore Road, BS27 3EB Norway UK Tel.: +47 22 13 19 20 Tel.: +44 1934 311000 Fax: +47 22 13 19 21 Fax: +44 1334 745825 E-mail: blom.no@blomasa.com E-mail: info.uk@blomasa.com

Blom Sistemas Geoespaciales S.L. Blom Deutschland GmbH

C/ Zurbano 46 Oskar–Frech–Strasse 15 28010 Madrid 73614 Schorndorf Spain Germany Tel.: +34 914 150 350 Tel.: +49 7181 98021 0 Fax: +34 9 310 49 14 Fax: +49 7181 98021 29 E-mail: info.spain@blomasa.com E-mail: info.de@blomasa.com

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 Fax: +47 23 25 45 01 Fax: +46 8,578,247 01

Blom Kartta OY

Pasilanraitio 5 FI-00240 Helsinki Finland Tel.: +358 10 322 8940 Fax: +358 10 322 8941 E-mail: info.fi@blomasa.com

Blom ASA Blom Aerofilms Ltd.

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