NRC Group — Investor Presentation 2017

Sep 6, 2017

Carnegie small & mid cap seminar

Company presentation - Stockholm, 6 September 2017

CEO – Øivind Horpestad

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.

A fast-growing Nordic rail and ground entrepreneur

Revenue development*

*) Revenue for 2011-2014 is reported numbers for Team Bane AS. From 2015 the reported revenue for the rail activities of NRC Group ASA.

Five main elements of railroad construction

SUBSTRUCTURE

Substructure ensures stable tracks and railroads. The substructure is the foundation of the railway track. It consists of the mass that the railway track is placed on top, in addition to different constructions such as tunnels, bridges and culverts

• Groundwork, tunnels, bridges, culverts etc.

SUPERSTRUCTURE

Superstructure ensures the interaction between the train and the track, and makes sure trains move safely, comfortably and fast at the same time. The superstructure consists of ballast, sleepers, rails and switches

• Track, sleepers, ballast, switches, cable channel

SIGNALLING SYSTEM:

Ensures safety, speed and time management for trains on the move

• Signal

TELE

Provides required telecommunication

• Cables (fiber, tele)

POWER SUPPLY SYSTEM

Secures continuous power transfer to the trains

• Electro, catenary

Source: Bane NOR

A full-service rail, tram and metro specialist

Comprehensive offering

• Turnkey entrepreneur
• In-house capability to deliver complex infrastructure projects
• Service offerings include specialized track work, power supply, signalling and groundwork
• Project oriented and agile organization
• Flexible asset strategy
• Modern custom-fit machine park

Well established in markets with high barriers to entry

• A regulated market requiring local approvals
• Turnkey contractors must handle complexity and several different disciplines
• A few large players dominate the market
• Certification of competencies required
• Key customers mainly state- and municipality owned companies

Industry service offering

				Main competitors service offering - rail specialists Nordic
	Norway	Sweden	Track	Signal& telecom	Electro	Security & safety	Groundwork
NRC Group
INFRANCRD
Strukton
baneservice
NORSK JERNBANEDRIFT

Key market features NRC Group delivery models

• Positioned to execute large turnkey contracts
• Focus on providing critical personnel such as project managers and certified personnel
• Clear ambition of being the lead contractor when engaged in projects

NRC Group	Lead contractor	Consortium partner	Subcontractor
Third party	Subcontractor	Consortium partner Subcontractor	Lead contractor
	NRC Group preference

Macro trends driving rail, tram and metro investments

Infrastructure investment drivers

• Population growth
• Bigger and older population
• Urbanization
• Strong global trend
• Sustainability

7

• Need for environmentally friendly solutions
• Large maintenance backlog
• Severe underinvestment in public transport systems over the last 30- 40 years in Norway and Sweden

Population development

Quality of European railway infrastructure

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)

Sweden vs Norway rail market

Source: Jernbaneverket, Railroad statistics 2015, Trafikvärket

Political commitment to increase railway spending in Sweden

• Significant spending increase proposed in new NTP
• SEK 125 billion for railway maintenance and upgrade confirmed
• Up 47% from previous NTP
• Planned railway investments of SEK 146 billion
• County plans due end of 2017, and final approval by first half 2018
• Railway priorities detailed in Aug 31 NTP proposal
• Improving traffic flow and speeds
• Digitizing the railway and new signaling system
• Roadmap to highspeed railway development
• Investments outside NTP
• Ongoing SEK 25 billion Stockholm metro development

SEK billion

8,3 1,3 10,4 8,7 1,3 Add 8,7 Planned

Annual average spending in new proposed NTP

Maintenance 2017E Proposed NTP 2018-29

Investments 2017E Proposed NTP 2018-29

12,2

Long-term railway spending development

25,0 SEK billion

*)Sources: 2006-2017: Swedish national budget, from 2018: Preliminary proposals Swedish NTP

Key national projects - Sweden

Swedish railway network

Metro Stockholm development

Growing Norwegian market opportunity

• Increased addressable market in Norway
• Extended NRC Group operations and capacities
• Increased overall railway investments approved in new NTP for 2018-2029
• Privatisation of maintenance?
• Railway investments of NOK 319 billion in new NTP
• Equals average annual spending of NOK 27 billion, up from NOK 17 billion in previous NTP
• Overall improved project pipeline visibility
• Expected trend shift towards larger turnkey awards confirmed
• Tram- and metro line developments funded at city and county level
• Fornebubanen NOK ~12bn
• Oslopakke 3, renewal of Oslo tram lines ~NOK 3bn
• Development of Bergen tram-line system

Railway average spending new NTP*

*) Includes funding for operations of Bane NOR and planning

Long-term railway spending development

*)Sources: 2006-2017: The Norwegian national budget, National railroad authority, from 2018: NTP proposal

Key national projects - Norway

Source: Bane NOR Source: Sporveien annual report 2016

Strategic positioning for larger and more complex projects

M&As Revenue development*

NOK million

*) Revenue for 2011-2014 is reported numbers for Team Bane AS. From 2015 the reported revenue for the rail activities of NRC Group ASA. Acquisitions after 2016 are not included.

Delivering on market consolidation strategy in 2017

Investment summary

• High barriers to entry
• Strong macro drivers urbanisation, population growth and environmental focus
• Governmental commitment for substantial increase in investments
• Proven track record as industry consolidator

• 1 private Nordic railway specialist and turnkey operator

Appendix

Q2 highlights

	Key events

Record-high order intake of NOK 1,231 million Adding groundwork and project management expertise by acquiring ALTi Bygg og Anlegg AS Initiated and executed new share buyback programme

Key figures Q2*

Revenues of NOK 582 million in 2017 vs NOK 504 million in 2016 EBITDA of NOK 43 million in 2017 vs NOK 23 million in 2016 Order backlog of NOK 2,451 million - increase of 52% vs 2016

Contract wins

Historically largest contract win of SEK 700 million confirms strategy to position for larger contracts has been successful Appointed to SEK 155 million groundwork contract for new road between Dala-Järna and Vansbro Appointed to SEK 172 million contract for track renewal at Alingsås in Sweden Appointed to SEK 47 million contract for ground and catenary foundation work at Gällivare- Kiruna

* Reported figures (ex SBB and ALTi)

Q2 and first half 2017 key figures – profit and loss

• Revenue in Q2 2017 of NOK 582 million (NOK 504 million)
• EBITDA in Q2 2017 of NOK 43 million (NOK 23 million) – Including M&A costs of NOK 1.7 million
• EBITA in Q2 2017 of NOK 34 million (NOK 18 million)
• EBIT in Q2 2017 of NOK 25 million (NOK 11 million)
• Amortisation of intangible assets (ex SBB and ALTi) in 2017 is estimated to NOK 28 million
• Amortisation of intangible assets from acquisition of HAG over two years with 1.5 million per quarter
• SBB and ALTi will be included as from Q3 2017

(Amounts in NOK million)	Q2 2017	Q2 2016*	YTD 2017	YTD 2016*
Revenue	581,6	503,6	922,5	823,4
Operating expenses	538,6	480,8	873,5	799,6
EBITDA	43,0	22,9	49,0	23,8
EBITA	33,8	17,8	31,0	14,7
EBIT	25,2	10,7	14,3	0,4
EBT	22,9	8,3	10,1	-4,5
EBITDA (%)	7,4 %	4,5 %	5,3 %	2,9 %

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

Q2 2017 key figures – balance sheet

(Amounts in NOK million)
ASSETS	30.06.2017	30.06.2016	31.12.2016
Intangible assets	738,4	617,8	631,8
Other non-current assets	224,6	117,1	150,8
Other current assets	555,8	490,7	422,5
Cash and cash equivalents	263,9	167,4	418,4
Total assets	1 782,7	1 393,1	1 623,4
EQUITY AND LIABILITIES Total equity	1 042,7	694,7	1 014,2
Non-current interest-bearing liabilities	174,9	105,4	110,8
Other non-current liabilities	11,7	57,8	16,0
Interest-bearing current liabilities	69,5	129,6	82,1
Other current liabilities	483,7	405,5	400,3
Total equity and liabilities	1 782,7	1 393,1	1 623,4

• Intangible assets of NOK 738 million
• Cash is NOK 264 million
• Net cash is NOK 19 million
• Equity ratio is 58%

Order book development

Order book* Q2 2015 – Q2 2017

In NOK million

Order book development Q1 17 – Q2 17

In NOK million

^*Reported figures

Seasonal fluctuations – reported figures

Revenues Q2 2015 – Q2 2017 In NOK million

EBITDA Q2 2015 – Q2 2017

In NOK million

Highly experienced and capable management team

Øivind Horpestad, CEO NRC Group ASA

Horpestad has more than 8 years of experience in management, leadership and business development from the railway industry. He was one of the founders of Team Bane, and has previously held positions within VRS Installasjon AS, VRS Rail AS, AMT UK Ltd and Coast Capital.

Dag Fladby, CFO NRC Group ASA

Fladby has a broad managerial background from different industries. Including CEO and CFO with Scandinavian Beverage Group, as investment director with Norwegian Property ASA, CFO at Holta Invest and Finance Director with the Norwegian Armed Forces Logistical Organisation (FLO.).

Daniel Pettersson, Managing Director NRC Sverige

Pettersson has more than 15 years' experience from infrastructure projects and is one of the founders of Segermo Entreprenad. Prior Segermo he held a position at Peab as regional manager for mid-Sweden and was also a member of Nordic executive committee at Peab.

Geir Nilsen, Managing Director NRC Norge

Nilsen has more than 20 years' experience from the construction industry and is one of the founders of HAG Anlegg AS. Nilsen holds a Civil Engineering Degree and his previous positions include project manager in NCC, project and managing director in Betonmast Anlegg AS and CEO of Implenia Norge AS. He was previously to NRC Group the CEO of HAG Anlegg AS.

20 largest shareholders

Per 30 August 2017

INVESTOR DATUM AS	NO OF SHARES 5 100 000	% OF TOTAL ACC TYPE 12,20	COUNTRY NOR
SWEDBANK	4 074 770	9,74 NOM	SWE
URBEX INVEST	3 632 033	8,69	NOR
CHARLOTTE HOLDING	1 928 008	4,61	NOR
NORDEA BANK	1 804 957	4,32 NOM	SWE
ARCTIC FUNDS	1 786 884	4,27	IRL
DANSKE BANK .	1 771 139	4,24 NOM	SWE
DnB NOR MARKETS	1 661 667	3,97	NOR
SOGN INVEST	1 156 046	2,76	NOR
SKANDINAVISKA ENSKILDA	1 140 869	2,73 NOM	LUX
ALFRED BERG	975 810	2,33	NOR
NORRON SICAV-TARGE	962 235	2,30	LUX
MIDDELBORG INVEST	775 000	1,85	NOR
E.K HOLDING	633 193	1,51	NOR
LGA HOLDING	633 193	1,51	NOR
SEB AB	630 142	1,51 NOM	SWE
STATOIL PENSJON C/O JP MORGAN CHASE	609 641	1,46	NOR
VERDIPAPIRFONDET ALFREED BERG	521 787	1,25	NOR
SVENSKA HANDELSBANKEN	500 000	1,20	SWE
GRANSHAGEN INVEST	481 007	1,15	NOR
TOTAL NUMBER OWNED BY TOP 20	30 778 381	73,60 %
TOTAL NUMBER OF SHARES	41 814 953