NRC Group — Investor Presentation 2016

Nov 8, 2016

Q3 2016 Presentation

Oslo 8 November 2016

Disclaimer

Forward Looking Statements

This presentation contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking. You should not place undue reliance on these forward-looking statements for many reasons.

These forward-looking statements reflect current views with respect to future events and are by their nature subject to significant risk and uncertainties because they relate to events and depend on circumstances that will occur in future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that our future results, level of activity or performance will meet these expectations. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Unless we are required by law to update these statements, we will not necessarily update any of these statements after the date of this presentation, either to conform them to actual results or to changes in our expectations.

Highlights

All-time high revenue and profit for the quarter High activity, particularly in Sweden Strong order backlog of NOK 1,444 million in Q3 2016

Revenues of NOK 645.1 million in Q3 2016 vs NOK 417.8 million in Q3 2015 EBITDA of NOK 88.9 million in Q3 2016 vs NOK 51.7 million in Q3 2015 EBITDA margin of 13.8% in Q3 2016 vs. 12.4% in Q3 2015

Key events post Q3

SEK 180 million extension makes Ludvika-Frövi project the largest contract awarded to date, bringing the total contract value to SEK 295 million

Sale of Blom UK

Acquisition of Gravco to strengthen position in tram and metro market

Dividend policy decided by the Board of Directors

Financials 2

Market 3

Q3 2016 pro forma key figures – profit and loss

• Revenue of NOK 645.1 million (NOK 417.8 million)
• Strong growth in Sweden
• EBITDA NOK 88.9 million (NOK 51.7 million)
• EBITDA margin of 13.8 per cent (12.4 per cent)
• EBIT NOK 75.0 million (NOK 43.5 million)

(Amounts in NOK 1 000)	Q3 2016	Q3 2015	YTD 2016	YTD 2015
Revenue	645 065	417 835	1 559 976	866 011
Operating expenses	556 176	366 119	1 423 329	802 697
EBITDA	88 890	51 716	136 647	63 314
EBITA	78 442	47 116	114 560	50 448
EBIT	74 968	43 553	104 015	39 760
EBT	72 818	41 342	96 684	32 484
EBITDA (%)	13,8 %	12,4 %	8,8 %	7,3 %

Includes pro forma figures for 2016 and 2015, adjusted for transaction costs of NOK 2.0 million and one-offs of NOK 10.8 million, and transaction costs of NOK 22 million and oneoffs of NOK 12 million, in 2016 and 2015 respectively.

Order book development

Order book development Q2 16 – Q3 16 In NOK million

Order book Q3 2014- Q3 2016 In NOK million

Seasonal fluctuations in earnings

Revenues Q3 2014- Q3 2016 In NOK million

EBITDA Q3 2014- Q3 2016

In NOK million

Q3 2016 key figures – balance sheet

• Intangible assets of NOK 600.4 million vs. NOK 614.7 million as per 31 December 2015
• Net debt is NOK 49.9 million vs. net cash of NOK 8.3 million as per 31 December 2015
• Equity ratio is 51.9 per cent per 30 September 2016 vs 53.6 per cent per 31 December 2015

(Amounts in NOK 1 000)
ASSETS	30.09.2016	30.09.2015	31.12.2015
Intangible non-current assets	600 380	351 442	614 675
Other non-current assets	134 039	129 790	128 986
Other current assets	505 457	294 045	359 362
Cash and cash equivalents	187 754	127 538	258 229
Total assets	1 427 630	902 814	1 361 251

(Amounts in NOK 1 000)
EQUITY AND LIABILITIES	30.09.2016	30.09.2015	31.12.2015
Total equity	741 113	347 641	729 004
Non-current interest-bearing liabilities	115 563	175 070	162 088
Other non-current liabilities	41 587	31 855	33 006
Total interest-bearing current liabilities	122 119	96 613	87 841
Total other current liabilities	407 248	251 635	349 312
Total equity and liabilities	1 427 630	902 814	1 361 251

Q3 2016 key figures – cash flow

				Q3 2015 (Re		YTD 2015 (Re
•	Cash balance at NOK 187.7 million per 30	(Amounts in NOK 1 000)	Q3 2016	presented)	YTD 2016	presented)
	September 2016 vs. NOK 258.2 million per 31
	December 2015	Profit/loss before tax	72 881	22 326	83 773	2 770
		Net cash flow from operating activities	80 812	1 784	54 475	-14 641
•	Cash flow from operating activities in Q3 is NOK	Net cash flow from investing activities	-23 073	-19 943	-71 795	-163 370
	80.8 million
		Net cash flow from financing activities	-28 461	83 987	-37 689	247 505
		A+B+C Net change in cash and cash equivalents	29 278	65 828	-55 009	69 494
•	Net cash flow from investing activities in Q3 is
	NOK -23.1 million	Cash and cash equivalents at the start of the period	167 446	56 475	258 228	52 390
	– Prepayment tamping machine ~ NOK 19
	million	Translation differences	-8 969	5 235	-15 465	5 654
		Cash and cash equivalents at the end of the period	187 754	127 538	187 754	127 538

• Net cash flow from financing activities in Q3 is NOK -28.5 million

Summary & outlook

Macro trends driving rail, tram and metro investments

Infrastructure investment drivers

• Population growth
• Bigger and older population
• Urbanization
• Strong global trend
• Sustainability
• Need for environmentally friendly solutions
• Large maintenance backlog
• Severe underinvestment in public transport systems over the last 30-40 years in Norway and Sweden

Source: Statistics Norway, Statistics Sweden

Source: EY / World Economic Forum "Global Competitiveness Index 2015/2016. European assessment of the quality of rail infrastructure grades ranging from 7 (efficient and universally well developed) to 1 (underdeveloped)

Political commitment to long-term railway spending

3.3 3.4 3.7 4.7 5.4 5.7 5.6 5.5 6.7 6.5 8.2 7.8 10.0 10.0 10.0 1.4 2.3 2.4 3.1 3.8 4.4 5.1 6.5 9.1 11.2 9.9 10.2 8.6 8.6 8.6 8.2 8.2 8.2 0.0 5.0 10.0 15.0 20.0 25.0 30.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Operations and maintenance (non-adressable) Investments NTP High vs. baseline scenario in proposed NTP 2018-2029

*)Sources:

NOK billion

2006-2017: The Norwegian national budget and the National railroad authority

From 2018: Baseline scenario vs. high scenario from the proposal to Norwegian National Transport Plan 2018-2029

A new National Transport Plan (NTP) for 2018-29 is due in 2017

The proposed Medium case indicates an overall increase in annual spending of ~40% from the previous NTP

Spending over the national budget has averaged 7% above the current NTP for 2014-2017

The primary market for NRC Group is considered to be approximately NOK 4 billion per year

Maintenance is carried out by a government owned entity. Primary market is expected to increase to more than NOK 6 billion when maintenance is privatized

Sweden is already accelerating rail investments

Source: The Swedish national budget proposal for 2017, Proposal for new NTP 2018-2029

The addressable Swedish railway market is approximately 4x the size of the Norwegian market and tenders are typically larger

A SEK 623 billion NTP for the period 2018 – 2029 was proposed by the government in October 2016

Representing an increase of 20% from the previous plan period (2014-25)

Including a 47% increase to SEK 125 billion in operations and maintenance spending

The NTP proposal included extra railway maintenance allocations impacting from 2016

Sweden is the biggest market for NRC Group

NRC Group addressable market

Sources: NRC Group, The Norwegian and Swedish NTP's and 2017 budget proposals

Source: Jernbaneverket, Railroad statistics 2015, Trafikvärket

Tram and metro investments to grow significantly

Public transport spending Oslopakke 3

• Large projects are underway and under planning in both Norway and Sweden
• Solves challenges posed by urbanisation and population growth
• An exceptional market opportunity
• NRC Group has the in-house capabilities to execute large tram and metro projects
• Position is further strengthened by Gravco acquisition

Source: Vegvesenet. Oslopakke 3 Handlingsprogram 2017-20.

Planned spending on investments in and operations of public transport in Oslo and Akershus.

*) The full Fornebubanen investment included with construction assumed executed in the period 2020-2025. Majorstuen-Bryn tunnel not included

Tramway tenders and awards due in 2017

Overview of key Oslo-package 3 projects

• A number of tramway projects approved for 2017 start-up
• First tenders expected by end of H1 2017 with completion by end 2020
• A total of 27 projects planned executed ahead of delivery of 87 new tram wagons being tendered
• The largest projects may range from NOK 200 million to NOK 400 million each
• Selected projects with expected completion by 2019
• Majorstuen (2017 -2018)
• Storgata (2017 -2019)
• Storokrysset (2018 2019)
• Thorvald Meyersgate (2018 -2019)
• Ekebergbanen (2018 2019)
• All of these projects feature a combination of groundworks, rail and water/wastewater

The Gravco acquisition strengthens NRC Group's position in Norway

• Gravco AS is a leading water and wastewater entrepreneur in the Oslo area
• Established in 1977 with 42 employees
• The acquisition enables NRC Group to bid for and execute upcoming turnkey tramline upgrade contracts including water line related work
• The Oslo tram system will undergo a major upgrade triggering a number of contracts with start-up from 2017 in order to prepare for the delivery of new tram wagons in 2021
• The city of Oslo will in parallel with the tramline upgrades, renew water and wastewater lines
• The enterprise value is NOK 75 million and is based on a guaranteed 2016 and 2017 EBITDA of NOK 15 million

Company overview and deal rationale Strengthening position within groundwork

Summary & outlook

• All-time high revenue and profit
• High tendering activity with awards expected through first half 2017
• Reaffirmed Norwegian and Swedish political commitment to increase railway spending
• Increased focus on tram and metro entered water/wastewater market by acquisition of Gravco
• Dividend policy in place

20 largest shareholders

Per 7 November 2016

INVESTOR	NO OF SHARES	% OF TOTAL	ACC TYPE	COUNTRY
DATUM	5 100 000	14,44 %		NOR
SWEDBANK	3 903 917	11,06 %	NOM	SWE
URBEX INVEST	3 807 033	10,78 %		NOR
DANSKE BANK	2 864 108	8,11 %	NOM	SWE
DNB NOR MARKETS	2 032 809	5,76 %		NOR
NORDEA BANK	1 988 061	5,63 %	NOM	SWE
CHARLOTTE HOLDING	1 928 008	5,46 %		NOR
ARCTIC FUNDS	1 564 884	4,43 %		IRL
SOGN INVEST	1 281 046	3,63 %		NOR
ALFRED BERG GAMBAK	1 126 210	3,19 %		NOR
GRANSHAGEN INVEST	601 007	1,70 %		NOR
MIDDELBORG INVEST	600 000	1,70 %		NOR
VERDIPAPIRFONDET DNB	570 517	1,62 %		NOR
STATOIL PENSJON	548 141	1,55 %		NOR
ALFRED BERG NORGE	534 040	1,51 %		NOR
HOLMEN SPESIALFOND	450 000	1,27 %		NOR
ENSKILDA SEB	432 064	1,22 %	NOM	LUX
KRAG INVEST AS	400 000	1,13 %		NOR
SORA	390 000	1,10 %		NOR
MP PENSJON	316 008	0,89 %		NOR
TOTAL NUMBER OWNED BY TOP 20	30 437 853	86,18 %
TOTAL NUMBER OF SHARES	35 311 362