NRC Group — Investor Presentation 2018

Feb 13, 2018

Q4 2017 Result presentation

Oslo, 13 February 2018

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

Key events	Continued strong project execution Increase in tender activity in Norway Strong order backlog of NOK 2,408 million, an increase of 72% Proposed dividend of NOK 1.75 per share
Key figures Q4	Revenues of NOK 674 million in 2017 vs NOK 552 million in 2016 EBITDA of NOK 70 million in 2017 vs NOK 47 million in 2016 EBITDA margin of 10.4% in 2017 vs 8.6% in 2016

Key figures 2017

EBITDA margin improved to 9.7% for 2017 from 7.7% in 2016

Full year revenue growth of 20%

Q4 2017 key figures – profit and loss

• Revenue in Q4 2017 of NOK 674 million (NOK 552 million)
• EBITDA in Q4 2017 of NOK 70 million (NOK 47 million) – Includes M&A cost of NOK 2.4 million
• EBITA in Q4 2017 of NOK 55 million (NOK 41 million)
• EBIT in Q4 2017 of NOK 46 million (NOK 34 million)
• Amortisation of intangible assets is estimated to NOK 17 million in 2018 (NOK 34 million in 2017)

		Restated
(Amounts in NOK million)	Q4 2017	Q4 2016	2017	2016
Revenue	673,8	551,7	2 372,8	1 975,0
Operating expenses	604,1	504,3	2 143,6	1 822,6
EBITDA	69,7	47,4	229,2	152,4
EBITA	54,7	41,2	183,7	127,7
EBIT	46,4	34,2	149,5	99,3
EBT	45,6	31,1	143,8	89,4
EBITDA (%)	10,4 %	8,6 %	9,7 %	7,7 %

*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

Order book development

Order book* Q4 2015 – Q4 2017

In NOK million

^*Reported figures

Order book development Q3 17 – Q4 17

In NOK million

^**including Fibertech

Q4 2017 key figures – balance sheet

• Intangible assets of NOK 1,048 million
• Cash is NOK 409 million
• Net debt is NOK 30 million
• Equity ratio is 55%

(Amounts in NOK million)

ASSETS	31.12.2017	31.12.2016
Intangible assets	1 047,9	631,8
Other non-current assets	287,2	150,8
Other current assets	740,6	422,5
Cash and cash equivalents	408,5	418,4
Total assets	2 484,2	1 623,4
EQUITY AND LIABILITIES
Total equity	1 357,3	1 014,2
Non-current interest-bearing liabilities	317,3	110,8
Other non-current liabilities	26,7	16,0
Interest-bearing current liabilities	121,1	82,1
Other current liabilities	661,8	400,3
Total equity and liabilities	2 484,2	1 623,4

Q4 2017 key figures – cash flow

				Restated
		(Amounts in NOK million)	Q4 2017	Q4 2016	2017	2016
•	Cash flow from operating activities of NOK 160 million	Profit/loss before tax	45,6	31,1	143,8	89,4
•	Net cash flow from investing activities is NOK -29 million	Net cash flow from operating activities	160,1	67,1	132,6	146,9
	– Fibertech net of NOK -24 million	Net cash flow from investing activities – conti. oper.	-28,5	-18,8	-246,9	-88,9
	– Capex NOK -6 million	Net cash flow from financing activities	-35,4	130,8	92,2	93,1
		Net change in cash and cash equivalents	96,2	201,8	-18,1	172,1
•	Net cash flow from financing activities is NOK -35 million	Cash and cash equivalents at the start of the period	308,2	213,1	418,4	258,2
	– Repayment of debt: NOK -26 million	Translation differences	4,1	3,5	8,2	-12,0
		Cash and cash equivalents at the end of the period	408,5	418,4	408,5	418,4
	– Share buyback: NOK -12 million

Long-term growth for railway activity in Sweden

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

SEK billion SEK billion

• Continued high activity levels expected in Sweden for 2018
• The new NTP is scheduled for approval in April and is a likely trigger for further growth in demand for infrastructure services
• The Government's estimates for railway spending indicate another step-up in activity in 2019 and 2020

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

Continued market growth in Sweden

Long-term growth and improved visibility in Norway

2018 proposed railway spending Long-term railway spending development

• NOK 430 million additional funding to railway operations and maintenance in final 2018 budget vs. proposed budget
• Norwegian Government supportive of increased investments in environmentally friendly transport systems
• Improved visibility on future spending as Bane Nor signed first four-year funding agreement with the Government

*)Sources: The Norwegian national budget, national accounts and the most recent NTP

Increased tender activity - Norway

Selected investment projects included in first six years of NTP schedule

• ERTMS contract award planned H1 2018

Several tramline contracts coming up for award in Oslo

Key tramway development projects

Source: Oslo Sporveier

A selection of upcoming tram tender processes

Delivering on market consolidation strategy in 2017

Building turnkey capacity in Norway		ALTi
ALTi Bygg og Anlegg AS
Infrastructure construction company
- Extensive project management and construction - Strong commercial track record - 2016 EBITDA	Adding core competencies in Norway
- Specialising in concrete constructions, and port developments	HAG Anlegg acquisition		HAG ANLEGG
	· Transport infrastructure construction comp
Strengthens ability to undertake larger and more comp - Expands turnkey capacity	- Specialising in surface and concret - Extensive project management and	Expanding the Swedish footprint
- ALTi managers to take leading positions in NRC Purchase price NOK 200 million - EV NOK 165 million	Enables group to undertake larger, more of - Strengthened position towards tran	SBB* acquisition Railway infrastructure company established in 200 - Construction, project- and site managemen		Adding special competencies in Norway
- Assuming cash position of minimum NOK 35 mi	HAG CEO Geir Nilsen new MD for NRC N	- Operates within railway infrastructure, signa	Fibertech AS		FIBERTECH
- Paid 50% in cash, rest in new NRC Group shan	· Purchase price NOK 107.5 million - Paid 58% in cash, rest in new NRC	Strengthens competitiveness of Swedish operation - Group positioned for work on SEK 25 billior	• Leading niche provider of fibre optic installation services - Provides turnkey developments of fibre optic networks
	- Guaranteed minimum 2017 EBIT o	· SBB CEO Pär Opard to join Swedish group manag	- Railway focused with Bane NOR as biggest customer
		• Purchase price SEK 115 million	· Strengthens NRC Group's set of specialist competencies
		- 65% in cash, rest in new NRC Group share	- Additional specialist capacity to support turnkey projects requiring fibre optics competencies
		- Guaranteed minimum 2017 EBITDA of SEK	- Positions NRC Group for upcoming EMTRS development
				- Fibre optics an integrated part of all major railway developments
		*) Signal & Banbyggarna i Dalarna Aktiebolag		- Additional growth potential within road and tunnel developments
			· Enterprise value of NOK 61.5 million
			- 55% in cash, rest in new NRC Group shares
				- Guaranteed minimum EBIT in 2017 and 2018 of NOK 12 million

Record contract for Oslo tram confirms strategic positioning

Major award for rebuilding Holtet base

• NOK 402 million turnkey contract including a full scope of specialist rail services including track, electro and groundwork
• Structure for reception and operation of new Oslo trams
• Base for 43 of 87 trams to be delivered by 2021
• The biggest-ever award for NRC Group in Norway
• Tender with significant emphasis on execution capacity, environment and quality in addition to price
• The first major turnkey contract awarded by Sporveien
• Confirming shift towards bigger contracts involving several specialist disciplines
• In line with NRC Group's strategic positioning

Source: Sporveien

Summary & outlook

• Solid results in 2017
• Strong balance sheet and proposed dividend of NOK 1.75 per share
• Strong market outlook
• Overall improved project pipeline visibility
• Continue to build orderbook
• Continued focus on project execution
• Continued focus on consolidation and M&As

Appendix

17

20 largest shareholders

Per 12 February 2018

INVESTOR	NO OF SHARES	% OF SHARES	ACC TYPE	COUNTRY
DATUM	5 100 000	12,05		NOR
KGL PROSJEKT 2	3 632 033	8,58		NOR
ARCTIC FUNDS	2 855 384	6,75		IRL
DNB NOR MARKETS	1 720 405	4,06		NOR
SWEDBANK	1 647 549	3,89	NOM	SWE
DANSKE BANK	1 643 339	3,88	NOM	SWE
CHARLOTTE HOLDING	1 328 008	3,14		NOR
NORRON SICAV TARGE	1 210 100	2,86		LUX
NORDEA BANK	1 164 761	2,75	NOM	SWE
LGA HOLDING	1 133 193	2,68		NOR
SOGN INVEST	1 110 846	2,62		NOR
VERDIPAPIRFONDET ALFRED BERG	975 810	2,31		NOR
FIRST GENERATOR	807 000	1,91		NOR
MIDDELBORG INVEST	775 000	1,83		NOR
JPMORGAN CHASE	704 476	1,66	NOM	SWE
E.K HOLDING	680 000	1,61		NOR
SEB	630 142	1,49	NOM	SWE
SEB	540 869	1,28	NOM	LUX
HSBC TRINKAUS & BURK	522 127	1,23	NOM	DEU
VERDIPAPIRFONDET ALFRED BERG	521 787	1,23		NOR
TOTAL NUMBER OWNED BY TOP 20	28 702 829	67,81
TOTAL NUMBER OF SHARES	42 327 848

Seasonal fluctuations – reported figures

Revenues Q4 2015 – Q4 2017 In NOK million

EBITDA Q4 2015 – Q4 2017

In NOK million

Segments – key figures quarterly development

	Restated	Restated	Restated	Restated	Restated	Reported	Reported	Reported	Reported
Norway operations (NOK million)	Full year 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017	Q4 2017
Revenue	348,6	113,2	162,2	161,0	168,1	108,2	188,8	254,8	218,8
Operating profit/loss before depr. and amort. (EBITDA)	26,9	-5,4	6,2	13,9	-1,5	-5,5	9,5	18,6	17,8
Operating profit/loss before amort. (EBITA)	21,3	-7,8	3,4	10,6	-3,7	-9,9	5,1	13,0	9,7
Operating profit/loss (EBIT)	18,7	-9,0	2,3	9,4	-5,1	-12,1	1,8	8,4	4,1
Sweden operations (NOK million)	Full year 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017	Q4 2017
Revenue	329,7	206,6	341,4	438,9	383,6	232,7	395,8	524,5	460,3
Operating profit/loss before depr. and amort. (EBITDA)	44,3	10,8	34,0	72,6	56,1	19,3	42,0	95,5	62,0
Operating profit/loss before amort. (EBITA)	42,1	9,2	31,7	66,6	52,2	15,0	37,2	88,6	55,0
Operating profit/loss (EBIT)	35,3	3,1	25,8	60,6	46,5	9,1	32,0	83,8	52,3
Parent, holding companies and eliminations (NOK
million)	Full year 2015	Q1 2016	Q2 2016	Q3 2016	Q4 2016	Q1 2017	Q2 2017	Q3 2017	Q4 2017
Revenue	0,0	0,0	0,0	0,0	0,0	0,0	-3,0	-2,8	-5,3
Operating profit/loss before depr. and amort. (EBITDA)	-39,3	-4,5	-17,3	-5,3	-7,3	-7,8	-8,6	-3,6	-10,0
Operating profit/loss before amort. (EBITA)	-39,5	-4,5	-17,3	-5,3	-7,3	-7,8	-8,6	-3,6	-10,0
Operating profit/loss (EBIT)	-39,5	-4,5	-17,4	-5,3	-7,2	-7,8	-8,6	-3,6	-10,0