NRC Group — Investor Presentation 2020

Feb 12, 2020

NRC Group

Q4 2019 result presentation

Oslo, 13 February 2020

Disclaimer

• This draft presentation (hereinafter referred to as the "Presentation") has been prepared exclusively for information purposes, and does not constitute an offer to sell or the solicitation of an offer to buy any financial instruments.
• This Presentation includes and is based on, among other things, forward-looking information and statements. Such forward-looking information and statements are based on current expectations, estimates and projections. Such forward-looking information and statements reflect current views with respect to future events and are subject to risks, uncertainties and assumptions. We cannot give any assurance as to the correctness of such information and statements.
• Several factors could cause the actual results, performance or achievements of the companies mentioned herein to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this Presentation, including, among others, risks or uncertainties associated with the company's business, segment, development, growth management, financing, market acceptance and relations with customers, and, more generally, general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of these risks or uncertainties materialise, or should underlying assumption prove incorrect, actual results may vary materially from those described in this document. We do not intend, and do not assume any obligation, to update or correct the information included in this Presentation.
• There may have been changes in matters which affect the companies herein subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the company/companies have not since changed, and we do not intend, and do not assume any obligation, to update or correct any information included in this Presentation.
• This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo City Court AS exclusive venue.

Highlights Q4

Quarterly revenue and EBITA* per country

• Solid margins in Civil and Environment
• Net adjustments of project margins in Rail of NOK -50 million
• Several measures taken to improve profitability in Rail division in Norway
• Strong organic growth in 2019 with +16%
• Net adjustments of project margins in Rail- and Civil construction projects of NOK -80 million
• Several measures taken to restore profitability
• Increased activity but high price competition in the tender market in Q4, strong tender pipeline in 2020
• Continued solid growth in Rail construction
• Reduced margins due to project write downs in bridge construction and maintenance area 1
• Additional depreciations of approximately NOK 10 million (one-off)
• Strong organic growth with +13% in 2019

Q4 key figures – profit & loss

• Revenue in Q4 2019 of NOK 1,663 million
• EBITA ex M&A in Q4 2019 of NOK -32 million
• M&A cost NOK -32 million;
  • Subsequent adjustment of contingent consideration of NSS
• Depreciations of NOK -60 million during Q4 2019
  • Additional depreciations of approximately NOK 10 million in Finland (one-off)

(Amounts in NOK million)	Q4 2019	Q4 2018	FY 2019	FY 2018
Revenue	1 663	971	6 193	3 176
Operating expenses	1 635	977	5 912	3 044
EBITDA before other income and expenses	28	-7	281	132
Other income and expenses	-32	-14	-91	-28
EBITDA	-4	-21	191	104
Depreciation	60	29	212	75
Operating profit/loss before amortisation (EBITA)	-64	-50	-21	29
Amortisation	17	9	70	28
Operating profit/loss (EBIT)	-80	-59	-91	1
Net financial items	-20	-5	-73	-11
Profit/loss before tax (EBT)	-100	-64	-163	-10
Taxes	26	12	23	10
Net profit/loss from continuing operations	-74	-52	-140	0
Net profit from discontinued operations	65	0	80	0
Net profit/loss	-9	-52	-61	0

Q4 2019 key figures – balance sheet

• Sale of Design completed in Q4
• Goodwill and other intangible assets: NOK 2 796 million
• Cash of NOK 154 million
• Interest bearing debt excluding leasing is NOK 1 262 million
  • Bond: NOK 600 million
  • Bank debt: NOK 662 million
• Leasing liability of NOK 525 million
  • Including operational lease of NOK 188 million
• Net Debt incl. total leasing: NOK 1 633 million
• Equity: 38%

Intangible assets 2 796 1 275 Right-of-use assets 522 0 Total other non-current assets 301 428 Cash and cash equivalents 154 396 Other current assets 1 648 841 Assets classified as held for sale 0 0 Total assets 5 420 2 940 EQUITY AND LIABILITIES Total equity 2 044 1 442 Long-term financial lease liabilities 214 152 Long-term operating lease liabilities 125 0 Other non-current interest-bearing liabilities 1 161 287 Other non-current liabilities 34 46 Short-term financial lease liabilities 123 89 Short-term operating lease liabilities 63 0 Other interest-bearing current liabilities 101 86 Other current liabilities 1 555 838 Liabilities classified as held for sale 0 0

Total equity and liabilities 5 420 2 940

ASSETS 31.12.2019 31.12.2018

(Amounts in NOK million)

Q4 2019 key figures – cash flow

•	Cash flow from operating activities of NOK 122 million	(Amounts in NOK million)		Q4 2018	FY 2019	FY 2018
		Profit/loss before tax	-100	-64	-163	-10
•	Net cash from investments of NOK 427 million • Capex net : NOK -4 million	Net cash flow from operating activities - continuing operations	68	242	-32	206
•	Gross proceeds sale of Design: NOK 431 million	Net cash flow from operating activities - discontinued operations	54	0	109	0
		Net cash flow from operating activities	122	242	77	206
•	Net cash flow from financing activities of NOK -481 million • Net repayment of borrowings NOK -394 million • Payment of leasing NOK -55 million • Interest NOK -25 million	Net cash flow from investing activities	427	0	-937	-140
		Net cash flow from financing activities	-481	-46	628	-76
		Net change in cash and cash equivalents	69	197	-232	-10
		Cash and cash equivalents at the end of the period	154	396	154	396

Strong order intake in Q4

Segments – key figures quarterly development

				Reported	Reported	Reported	Reported	Reported	Reported	Reported	Reported
Norway operations (NOK million)	FY 2016	FY 2017	FY 2018	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	FY 2019
Total revenue	604	771	1 598	212	335	421	630	470	545	683	583	2 281
EBITDA*	13	43	136	-1	26	46	65	14	65	75	47	200
EBITA*	2	21	96	-7	19	36	48	-5	43	52	23	112
EBIT*	-2	5	75	-13	16	33	39	-13	35	45	17	84
Sweden operations (NOK million)	FY 2016	FY 2017	FY 2018	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	FY 2019
Total revenue	1 371	1 613	1 591	316	498	433	344	299	411	460	370	1 539
EBITDA*	173	221	27	9	46	32	-60	-7	-13	14	-71	-77
EBITA*	160	198	-8	2	38	23	-71	-20	-24	2	-83	-125
EBIT*	136	179	-16	1	37	17	-71	-20	-24	2	-83	-125
Finland operations (NOK million)	FY 2016	FY 2017	FY 2018	Q1 2018	Q2 2018	Q3 2018	Q4 2018	Q1 2019	Q2 2019	Q3 2019	Q4 2019	FY 2019
Total revenue								361	601	712	713	2 388
EBITDA*								4	64	70	53	191
EBITA*								-13	45	55	29	116
EBIT*								-24	35	45	19	75

*excluding M&A costs