NRC Group — Investor Presentation 2017

Nov 7, 2017

Q3 2017 Result presentation

Oslo, 7 November 2017

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.

Q3 highlights

	All-time high quarterly revenue and EBITDA
Key events	Record EBITDA margin driven by strong project execution
	Closed acquisitions of ALTi and SBB
	Subsequent acquisition of Fibertech
Key figures Q3	Revenues of NOK 777 million in 2017 vs NOK 600 million in 2016 EBITDA of NOK 111 million in 2017 vs NOK 81 million in 2016 EBITDA margin of NOK 14.2% in 2017 vs NOK 13.5% in 2016
Order intake	Order backlog of NOK 2,417 million, an increase of 73% Order intake of NOK 642 million Six announced contracts during the quarter

Financials

Q3 2017 key figures – profit and loss

• Revenue in Q3 2017 of NOK 777 million (NOK 600 million)
• EBITDA in Q3 2017 of NOK 111 million (NOK 81 million)
• Strong production in Sweden
• Includes M&A cost of NOK 2.3 million
• EBITA in Q3 2017 of NOK 98 million (NOK 72 million)

		Restated		Restated
(Amounts in NOK million)	Q3 2017	Q3 2016	YTD 2017	YTD 2016
Revenue	776,5	599,9	1 699,0	1 423,3
Operating expenses	665,9	518,7	1 539,5	1 318,3
EBITDA	110,5	81,2	159,5	105,0
EBITA	98,0	71,8	129,0	86,5
EBIT	88,7	64,7	103,0	65,1
EBT	88,1	62,8	98,1	58,3
EBITDA (%)	14,2 %	13,5 %	9,4 %	7,4 %

*Reported numbers for the first three quarters of 2016 reflects the corrections of the purchase price allocations for the 2015 business combinations and the divestment of the Geo business

• EBIT in Q3 2017 of NOK 89 million (NOK 65 million)
• Amortisation of intangible assets (excl. Fibertech) in 2017 is estimated to NOK 34 million and NOK 14 million in 2018

Order book development

*Reported figures

Order book development Q2 17 – Q3 17

In NOK million

Q3 2017 key figures – balance sheet

•	Intangible assets of NOK 955 million	(Amounts in NOK million)		Restated
		ASSETS	30.09.2017	30.09.2016	31.12.2016
		Intangible assets	955,2	590,5	631,8
•	Cash is NOK 308 million	Other non-current assets	265,8	134,0	150,8
		Other current assets	620,9	505,5	422,5
•	Net debt is NOK 125 million	Cash and cash equivalents	308,2	187,8	418,4
	– Acquisition financing of SBB and ALTi of NOK 171 million	Total assets	2 150,1	1 417,8	1 623,4
		EQUITY AND LIABILITIES
•	Equity ratio is 57%	Total equity	1 232,4	731,0	1 014,2
		Non-current interest-bearing liabilities	318,5	115,6	110,8
		Other non-current liabilities	19,5	41,9	16,0
		Interest-bearing current liabilities	114,5	122,1	82,1
		Other current liabilities	465,1	407,2	400,3

Total equity and liabilities 2 150,1 1 417,8 1 623,4

Q3 2017 key figures – cash flow

• Cash balance at NOK 308 million
• Cash flow from operating activities of NOK 33 million
• Net cash flow from investing activities is NOK -138 million – SBB and ALTi net of NOK -137 million
• Net cash flow from financing activities is NOK +151 million
• Acquisition financing SBB and ALTi: NOK +171 million
• Repayment loans: NOK –20 million

		Restated		Restated
(Amounts in NOK million)	Q3 2017	Q3 2016	YTD 2017	YTD 2016
Profit/loss before tax	88,1	62,8	98,1	58,3
Net cash flow from operating activities	32,6	106,1	-27,6	79,8
Net cash flow from investing activities – conti. oper.	-137,7	-22,4	-218,4	-70,1
Net cash flow from financing activities	151,3	-28,5	127,6	-37,7
Net change in cash and cash equivalents	46,1	54,6	-114,3	-29,7
Cash and cash equivalents at the start of the period	263,9	167,4	418,4	258,2
Translation differences	-1,9	-9,0	4,1	-15,5
Cash and cash equivalents at the end of the period	308,2	213,1	308,2	213,1

Long-term growth for railway activity in Sweden

Annual average spending in new proposed NTP* Long-term railway spending development**

• 2018 budget proposal confirms increased level of new investments
• The Government's estimates for 2019-20 railway spending indicate growth in both new investments and maintenance activity

Sources: *) Preliminary 2018-29 NTP proposal **) 2006-2020: Swedish national budget: Tables for Investment plan for Trafikvärket and Maintenance of the State transport infrastructure

Sweden set to start ERTMS roll-out

• Covers 12 000 km of railway
• Requires 2 000 GSM masts to secure full redundancy
• Installation of 30 000 signal units
• Establishes one EU-compliant signalling system
• Will remove the main hurdle for cross-border railway traffic
• Currently 20 different signal systems in Sweden, some of which from the 1940/50'ies

ERTMS roll-out schedule per category

Source: Trafikvärket, ERTMS roll-out presentation

Multi-year upgrade program planned for Inlandsbanan

• Funded by local municipalities and government
• Significant upgrade pending for Inlandsbanan to facilitate increased cargo shipments and growing public transport
• Preliminary estimates indicate investments of SEK 3-5 billion
• Detailed plan expected in H1 2018
• Planned for contract award and construction start in 2018
• Dependent on approval of NTP (April)
• Contract awards scheduled for mid-May
• July construction start

Source: Trafikvärket, Inlandsbanan

Key metro projects - Sweden

Metro Stockholm development Project scheduling

Long-term growth for railway activity in Norway

2018 proposed railway spending Long-term railway spending development

NOK billion per year NOK billion per year

• Increased railway spending in 2018 budget vs. 2017 revised budget
• Budget proposal opens up for privatization of maintenance

35,0

*)Sources: 2006-2017: The Norwegian national budget and national accounts and the NTP proposal

Selected investment projects - Norway

Investment projects and current NTP schedule

Source: Bane NOR, Contractor-day presentation 23 October 2017

ERTMS roll-out in Norway

• Total project estimated to approximately NOK 26 billion
• ERTMS contract award planned H1 2018
• Additional work prior to main ERTMS contract

Source: Bane NOR

Several tramline contracts coming up for award in Oslo

Key tramway development projects

16

Planned project schedule

A selection of upcoming tram projects – tender process Q4/17 - Q2/18

Source: Oslo Sporveier

Delivering on market consolidation strategy in 2017

Summary

• Continued focus on project execution
• Strong market outlook
• Overall improved project pipeline visibility
• Continue to build orderbook
• Continued focus on integration of acquired companies
• Continued focus on consolidation and M&As

Appendix

20 largest shareholders

Per 6 November 2017

INVESTOR	NO OF SHARES	% OF TOTAL	ACC. TYPE	COUNTRY
DATUM AS	5 100 000	12,20		NOR
SWEDBANK AB	3 669 468	8,78	NOM	SWE
URBEX INVEST AS	3 632 033	8,69		NOR
ARCTIC FUNDS PLC	2 098 884	5,02		IRL
DANSKE BANK A/S	1 771 139	4,24	NOM	SWE
DnB NOR MARKETS	1 731 609	4,14		NOR
NORDEA BANK AB	1 370 788	3,28	NOM	SWE
CHARLOTTE HOLDING AS	1 328 008	3,18		NOR
SEB AB	1 140 869	2,73	NOM	LUX
LGA HOLDING AS	1 133 193	2,71		NOR
SOGN INVEST AS	1 110 846	2,66		NOR
NORRON SICAV-TARGET	1 010 000	2,42		LUX
ALFRED BERG GAMBAK	975 810	2,33		NOR
MIDDELBORG INVEST AS	775 000	1,85		NOR
E.K HOLDING AS	640 000	1,53		NOR
SEB AB	630 142	1,51	NOM	SWE
JPMORGAN CHASE BANK	551 384	1,32	NOM	SWE
ALFRED BERG NORGE	521 787	1,25		NOR
HSBC TRINKAUS & BURKHARDT AG	516 242	1,23	NOM	DEU
SVENSKA HANDELSBANKEN AB	500 000	1,20		SWE
TOTAL NUMBER OWNED BY TOP 20	30 207 202	71,36%
TOTAL NUMBER OF SHARES	42 327 848

Seasonal fluctuations – reported figures

Revenues Q3 2015 – Q3 2017 In NOK million

In NOK million

Segments – key figures quarterly development

(In NOK million)	Restated	Restated	Restated	Restated	Restated	Reported	Reported	Reported
Norway operations	FY 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017
Revenue	348,6	113,2	162,2	161,0	168,1	108,2	188,8	254,8
Operating profit/loss before depr. and amort. (EBITDA)	26,9	-5,4	6,2	13,9	-1,5	-5,5	9,5	18,6
Operating profit/loss before amort. (EBITA)	21,3	-7,8	3,4	10,6	-3,7	-9,9	5,1	13,0
Operating profit/loss (EBIT)	18,7	-9,0	2,3	9,4	-5,1	-12,1	1,8	8,4
Sweden operations	FY 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017
Revenue	329,7	206,6	341,4	438,9	383,6	232,7	395,8	524,5
Operating profit/loss before depr. and amort. (EBITDA)	44,3	10,8	34,0	72,6	56,1	19,3	42,0	95,5
Operating profit/loss before amort. (EBITA)	42,1	9,2	31,7	66,6	52,2	15,0	37,2	88,6
Operating profit/loss (EBIT)	35,3	3,1	25,8	60,6	46,5	9,1	32,0	83,8
Parent, holding companies and eliminations	FY 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017
Revenue	0,0	0,0	0,0	0,0	0,0	0,0	-3,0	-2,8
Operating profit/loss before depr. and amort. (EBITDA)	-39,3	-4,5	-17,3	-5,3	-7,3	-7,8	-8,6	-3,6
Operating profit/loss before amort. (EBITA)	-39,5	-4,5	-17,3	-5,3	-7,3	-7,8	-8,6	-3,6
Operating profit/loss (EBIT)	-39,5	-4,5	-17,4	-5,3	-7,2	-7,8	-8,6	-3,6