NRC Group — Investor Presentation 2016

Mar 17, 2016

The fast growing infrastructure specialist

DnB Markets SME Conference Thursday 17 March 2016

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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.

NRC Group is a fast growing company within the Nordic infrastructure market

Notes: 1) Based on combined financials (revenues) for 2015, and adjusted for divestment of Blom Nordic

Q4 2015 Acquisitions

1 Litz Entreprenad AB	 Closing of acquisition of Swedish Litz Entreprenad AB  Rail certified specialist in all railway-related electric services such as signal and contact line - catenary  Strong market position in Eastern part of Sweden  Complements the services of SJT, NRC Group's Swedish subsidiary
2 Elektrobyggnad AB	 Closing of acquisition of Swedish Elektrobyggnad AB  One of Sweden's largest specialised business within rail contact line  Strong market position in Western part of Sweden  Complements SJT who specializes in track and project management, now able to deliver full-scale projects based on in-house capabilities
3 Segermo Entreprenad AB	 Acquisition and closing of the Swedish rail groundwork contractor Segermo Entreprenad AB  Carries out contract works in rail, road and engineering space  Within rail, the company performs projects within tracks, channeling and platforms, covering the entire specter of ground works  The company's clients are Trafikverket, municipalities and larger entrepreneurs
Established NRC Group as significant player in the Nordic rail industry	 Latest acquisitions in Sweden was made to strengthen the company position in the Swedish rail industry  Additional capacities and competencies secured within NRC Group's new core business area – Rail  NRC Group is now a fully integrated rail infrastructure contractor in the Norwegian and Swedish markets  The acquisitions has already resulted in several large contract wins and a strong order book

A full service rail specialist with significant growth and synergy potential

The Vislanda contract is an excellent example of the effects of consolidation

Comments

• As of 4 January 2016 Trafikverket has appointed NRC as the contractor for track renewal of 70 kilometers on the connection between Vislanda and Mosselund in Sweden
• The contract is valued at approximately SEK 159 million. The project is scheduled for completion in December 2017
• This project is an excellent example on why it has been important to consolidate the companies aquired during 2015. The contract is awarded to NRC - SJT, but all Swedish rail entities will perform work under this contract:
• SJT will perform work related to project management, safety, track work, telecom and signal
• Litz will perform work related to signal and electro
• Elektrobyggnad will perform work related to electro
• Segermo will perform groundwork
• With all key elements inhouse NRC Group has an competitive advantage when competing for and executing contracts

Project elements

Strong underlying growth in Nordic infrastructure markets - especially within rail

• In June 2013, the Norwegian Parliament approved a NOK 173 billion NTP for railway 2014-2023, 49 per cent increase from 2013 levels
• The NTP increased spending on railway significantly in 2014, with further step up in spending from 2018

• Historically, the allocated budgets have typically been above the levels outlined in the NTP

• The Swedish railway market is about 3x the size of the Norwegian market and tenders are typically larger

• In 2014, Trafikverket acquired services for SEK 17.8 billion
• A SEK 522 billion transportation plan for the period 2014 2025 was adopted by the government in April 2014
• Includes SEK 86 billion for maintenance and reinvestment and SEK 95 billion for large new railway infrastructure projects

Source; NTP, Government budgets, Trafikverket

Large maintenance backlog and need for renewal 2014-2027

Several very large projects… …with all capabilities needed.

Source; Jernbaneverket

Infrastructure continuously high on the agenda with several large projects in the pipeline

RTMS
		ilik fungerer systemet som skal fjerne 99 av
	00 signalfeil
	ble med på testtur i Sverige

Comments

ERTMS project with a total investment need of approximately NOK 12bn towards 2027

Norway

Electrification of the Trønder- og Meråkerbanen of approximately NOK 2.8bn towards 2023

Comments

• Connection between Flackarp and Arlöv Trafikverket will expand the railway to four tracks. Investments of approximately SEK 4 bn towards 2022
• Connection between Eriksberg and Pölsebo Trafikverket will build a double track in the tunnel. Investments of more than SEK 1 bn towards 2022

Source; NTP, Government budgets, Trafikverket

Rail infrastructure high on the political agenda in Norway

Q4 Pro forma key figures – business segments

• Rail division (includes NRC Rail Norge, SJT, Litz, Elektrobyggnad and Segermo):
• Revenue NOK 415 million (NOK 296 million)
• EBITDA NOK 38 million (NOK 37 million)
• Geo division:
• Revenue NOK 57million (NOK 53 million)
• EBITDA NOK 3 million (NOK 4 million)

(Amounts in NOK 1 000)

Revenue	Q4 2015	Q4 2014	YTD 2015	YTD 2014
Rail	415 297	296 359	1 198 961	1 007 045
Geo	57 458	53 490	232 997	245 966
Business Segments	472 755	349 849	1 431 958	1 253 011
EBITDA	Q4 2015	Q4 2014	YTD 2015	YTD 2014
Rail	38 269	36 484	100 090	125 412
Geo	2 518	4 479	5 983	28 252
Other	-3 936	-2 629	-12 892	-14 543
Business Segments	36 850	38 334	93 181	139 121

Key figures – Q4 balance sheet

• The increase in assets is mainly related to the acquisitions of NRC Rail Norge, SJT, Litz, Elektrobyggnad and Segermo
• The increase in equity is related to the transactions being partly settled in shares, and the equity issues completed during 2015. Equity ratio is 54 per cent.
• The increase in debt is mainly related to financing the acquisition of SJT combined with existing debt in SJT and NRC Rail Norge.
• Net interest bearing debt is NOK 8 million.

(Amounts in NOK 1 000)

ASSETS	31.12.2015	31.12.2014
Intangible non-current assets	614 675	482
Tangible non-current assets	120 593	19 949
Total inventories	114 302	24 983
Total receivables	245 060	42 371
Assets classified as held for sale	0	4 199
Other current assets	359 361	71 553
Cash and cash equivalents	258 229	51 400
Total assets	1 361 251	147 922
EQUITY AND LIABILITIES	31.12.2015	31.12.2014
Total equity	729 003	74 656
Non-current interest-bearing liabilities	162 088	977
Pension obligations	5 306	4 348
Deferred taxes	27 600	26
Other non-current liabilities	32 906	4 374
Total interest-bearing current liabilities	87 841	648
Total other current liabilities	349 312	63 547
Total equity and liabilities	1 361 251	147 922

Business segments - earnings & order book

296 ⁴¹⁵ Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Combined revenues (net of internal revenue) in NOK million 264

Combined revenue Q1 2014- Q4 20152)

Order book Q1 2014- Q4 20152)

Order book in NOK million for NRC Rail and NRC Geo

Combined EBITDA Q1 2014- Q4 20151)

Notes: 1) Other costs (ASA costs) adjusted for in aggregate EBITDA figures. Adjusted for divestment of Blom Nordic

2) Adjusted for divestment of Blom Nordic

Summary & outlook

NRC Group is uniquely positioned to capture the strong growth in the infrastructure markets

1	Nordic infrastructure and geospatial services markets in strong growth	 Significant investments in railway required to meet national transportation plans approved by the respective governments in Norway and Sweden  Strong political consensus from an environmental perspective to further increase investments in railway infrastructure  Development is underpinned by increasing number of tenders for new projects – also larger projects being tendered – in both Norway and Sweden
2	Strong backlog and specialist capabilities in place to realize strong growth	 Specialist railway infrastructure contractor with leading position in the Norwegian and Swedish markets  Track-record and capabilities to secure all types of projects in the market  Market with high barriers to entry due to special permits and competences required  Latest acquisitions has established NRC Group as significant player in the Nordic rail industry
3	Asset light and flexible business model with attractive margins	 In-house specialist competence complemented by partnerships with subcontractors ensures flexibility and capacity for superior project execution  Asset light organization with limited machinery  Required machinery sourced through partners secures competitive pricing and limits fixed costs  Highly attractive margins compared to both railway infrastructure specialists and construction companies
4	Active role in market consolidations	 Consolidation of the market will be driven by increased complexity and size of the projects  Transactions done by NRC Group have been accretive, while securing continued commitment from the sellers through combination of cash and share transactions  Synergies through increased utilization of employees, machinery and equipment  NRC Group has an ambition to take an active role in the further consolidation of the market

The fast growing infrastructure specialist