NRC Group — Investor Presentation 2021

Aug 19, 2021

Q2 & 1st half 2021 result presentation

Henning Olsen and Dag Fladby 19 August 2021

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 Q2

Revenue

• NOK 1.5 billion (NOK 1.7 billion Q2 2020)

EBITA*

• NOK 47 million (NOK 27 million Q2 2020)

Order backlog

• NOK 6.7 billion (NOK 7.5 billion Q2 2020)

Order intake

• NOK 2.2 billion (NOK 1.3 billion Q2 2020)

Highlights Q2 – Major wins

SWE: Sundsvall-Birsta-Timrå and Tunadal

NOK 213 million

* Not included in the order book

Operations and business during Covid-19

Main priorities

• Keep employees safe and minimize impact on operations
• Compliant with public restrictions and recommendations

• Monitor potential effects on the industry and NRC Group's business

• Limited impact on project execution to date

• Maintenance and upgrade activities considered critical infrastructure
• Increasing uncertainty due to further increase of infection
• Restrictions related to workforce mobility, will lead to higher production cost
• Eased entry restrictions for fully vaccinated and workers who have recovered from Covid-19

Risk management

Operations

• Maintaining robust financial position
• National public transport agencies represent ~95% of backlog
• Outbreaks may impact productivity, project execution and value chain
• Dependent on customers announcing and awarding tenders as scheduled

Health & safety first

*LTI-1: Injuries resulting in absence at least one full day per million man-hours (incl. subcontractors).

**LTI-2: lost time injuries in total per million man-hours, also including injuries that require medical treatment and alternative work (incl subcontractors).

Figures per 30 June 2021 compared with 30 June 2020.

Sustainability at the core of our strategy

Q2 key figures – Profit & loss

• Revenues down 8% from Q220
• Adjusted for currency ~ -3%
• EBITA* improvement of NOK 20 million from Q220

(Amounts in NOK million)	Q2 2021	Q2 2020	YTD 2021	YTD 2020	FY 2020
Revenue	1 529	1 661	2 658	2 915	6 449
Operating expenses	1 430	1 580	2 569	2 835	6 185
EBITDA*	99	81	89	80	264
Other income and expenses (M&A expenses)	-5	2	-11	-6	-1
EBITDA	93	83	77	75	263
Depreciation	52	54	101	108	214
EBITA*	47	27	-12	-27	50
EBITA	41	28	-23	-33	49
Amortisation	21	16	33	31	59
Operating profit/loss (EBIT)	20	12	-57	-64	-10
Net financial items	-15	-18	-33	-41	-84
Profit/loss before tax (EBT)	5	-6	-90	-105	-94

Q2 key figures – Balance sheet

• Cash: NOK 441 million
• Interest-bearing debt reduced by NOK 37 million to NOK 1,620 million
• Operating lease of NOK 149 million
• Net interest-bearing debt increased by NOK 72 million, to NOK 1,179 million
• Equity ratio: 47%

(Amounts in NOK million)	30.06.2021	30.06.2020	31.12.2020
ASSETS
Intangible assets	2 917	2 989	3 010
Right-of-use assets	527	578	588
Total other non-current assets	216	319	255
Cash and cash equivalents	441	691	610
Other current assets	1 508	1 566	1 404
Total assets	5 610	6 143	5 867
EQUITY AND LIABILITIES
Total equity	2 611	2 732	2 731
Long-term financial lease liabilities	248	273	290
Long-term operating lease liabilities	93	105	106
Other non-current interest-bearing liabilities	957	1 138	1 042
Other non-current liabilities	34	63	52
Short-term financial lease liabilities	119	130	120
Short-term operating lease liabilities	56	53	57
Other interest-bearing current liabilities	148	159	153
Other current liabilities	1 344	1 488	1 316
Total equity and liabilities	5 610	6 143	5 867

Q2 key figures - Cash flow

Cashflow from operation* per quarter (NOK million)

(NOK million)	Q2 2021	Q2 2020	YTD 2021	YTD 2020	FY 2020
Profit/loss before tax	5	-6	-90	-105	-94
Net cash flow from operating activities	-45	31	-29	87	316
Net cash flow from investing activities	33	-30	46	-38	-150
Net cash flow from financing activities	-94	-108	-190	502	304
Net change in cash and cash equivalents	-106	-108	-172	551	470
Cash and cash equivalents at the end of the period	441	691	441	691	610

• Normal seasonal development

• Q2 last year was positively affected by improved payment terms to Trafikverket in Sweden, due to Covid-19 support measures

Strong order intake Q2 2021

Order book* (NOK million)

Order intake (NOK million)

Unannounced order intake Announced order intake Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 1 319 1 200 1 393 860

2 166

• Order book NOK 6,693 million
• Framework agreement with FTIA in Finland of NOK 2,000 million not included in the orderbook
• Order intake of NOK 2,166 million
• Announced orders NOK 1,244 million
• Unannounced orders NOK 921 million includes

* "Zero margin" projects, related to the project adjustments in Q4 2019 is ~ NOK 103 million on 30 June 2021, and is scheduled for execution in 2021.

Financial position as per 30 June

• Cash position of NOK 441 million
• Undrawn Revolver Credit Facility of NOK 200 million
• Net interest bearing debt of NOK 1,179 million

EU Taxonomy – Eligible and aligned activities

• Infrastructure for rail transport
• Infrastructure enabling low-carbon road transport and public transport
• Infrastructure for personal mobility
• Electricity generation from wind power • Collection and transport of non-
• hazardous waste in source segregated fractions
• Freight transport services by road

NRC Group activities not eligible:

• Parts of the environmental business

• Civil construction related to noneligible activity

• Rail infrastructure must be electrified or planned to be electrified within 10 years

• Freight transport services by road must comply with emission requirements

• One important condition for our business is recycling rate > 70%

and EU regulations

Estimated results

Requirements going forward

• 85-95% of economic activities are eligible* (based on share of expected revenue for 2021)
• Estimate that 65-75% of revenue will be aligned**

Requirements going forward

• From 1 January 2022 (Sustainability Report 2021)
• Disclose the share of Taxonomy-eligible and Taxonomy non-eligible economic activities
• From 1 January 2023 (Sustainability Report 2022)
• Full reporting

Operational review

NRC Group Finland – Strong profitability

(NOK million)	Q2 2021	Q2 2020
Revenue	695	700
EBITA*	65	19
EBITA* margin	9.4%	2.7%
Order intake	1,287	557

• Organic growth** +8%
• Solid performance in Rail Construction
• Improved results in Maintenance
• Positive results from sale of machinery
• Solid order intake

NRC Group Finland – Solid tender pipeline

NRC Group Sweden – Low revenue impacting profitability

(NOK million)	Q2 2021	Q2 2020
Revenue	400	487
EBITA*	-12	-13
EBITA* margin	-3.1%	-2.7%
Order intake	288	305

• Organic growth** -15%
• Low hit rate the last 12 months
• Still fierce competition
• Low profitability
• Prioritising winning robust projects vs growth

NRC Group Sweden – Continued high tender activity expected

NOK 9.0 billion tender pipeline¹ NOK million value, # of tenders, next 9 months

19

NRC Group Norway – Continued focus on restoring margins

(NOK million)	Q2 2021	Q2 2020
Revenue	433	476
EBITA*	2	27
EBITA* margin	0.5%	5.7%
Order intake	591	457

• Continued improvement in Rail Construction
• Weak profitability NSS** good progress on improvement measures
• Low profitability in Civil due to low revenue
• Solid order intake in Civil construction during the quarter

NRC Group Norway - Solid tender pipeline

NOK 8.3 billion tender pipeline¹ NOK million value, # of tenders, next 9 months

• Decrease of NOK 1.0 Bn in tender pipeline vs Q121 and an increase of NOK 0.7 Bn vs last year
• Maintenance contract included in Rail construction pipeline
• Proposal for 2022-2033 of NOK 400 Bn presented in March up NOK 72 billion from existing NTP
• Approved by the parliament in June 2021

Strong pipeline

NTP² update

1.) NRC Group estimates 2.) National Transportation Plan

Summary

• Financials Improved results
• Strong order intake

Operations • Focus on core processes in tendering and project execution continues in order to restore profitability

• Outlook 2021 EBITA*margin expected to be 1.75-2.5%
• Continued strong outlook for investments in sustainable infrastructure confirmed

Appendix

Order book and book to bill

Order book execution by country NOK million

Book-to-bill ratio Period order intake/revenue

24

Segments – key figures quarterly development

					Reported**	Reported**		Reported Reported***	Reported	Reported	Reported	Reported	Reported	Reported
Norway operations (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021
Total revenue	771	1 598	2 281	1 866	470	545	683	583	407	476	541	442	423	433
EBITDA*	43	136	186	82	14	65	75	32	7	50	41	-17	6	29
EBITA*	21	96	97	-14	-5	43	52	8	-14	27	16	-43	-17	2
EBIT*	5	75	70	-23	-13	35	45	2	-18	23	16	-44	-18	-7
Sweden operations (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2020	Q2 2021
Total revenue	1 613	1 591	1 539	1 777	299	411	460	370	311	487	583	396	259	400
EBITDA*	221	27	-77	-21	-7	-13	14	-71	-15	0	4	-10	-22	0
EBITA*	198	-8	-125	-69	-20	-24	2	-83	-27	-13	-7	-22	-35	-12
EBIT*	179	-16	-125	-71	-20	-24	2	-83	-28	-14	-8	-23	-36	-13
Finland operations (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2020	Q2 2021
Total revenue			2 388	2 811	361	601	712	713	540	700	831	740	446	695
EBITDA*			191	231	4	64	70	53	16	37	100	78	15	78
EBITA*			116	161	-13	45	55	29	-3	19	84	62	2	65
EBIT*			75	116	-24	35	45	19	-14	7	72	50	-9	55
Consolidated (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2020	Q2 2021
Total revenue	2 373	3 176	6 193	6 449	1 130	1 551	1 850	1 663	1 254	1 661	1 956	1 578	1 129	1 529
EBITDA*	236	132	267	264	-3	103	153	13	-1	81	140	44	-10	99
EBITA*	190	57	55	50	-54	51	105	-47	-54	27	88	-10	-59	47
EBIT*	156	29	-15	-8	-72	34	87	-63	-69	11	75	-25	-71	26

*Before other income and expenses (M&A expenses).

**Design operations restated as discontinued operations.

***Restated due to deviation from Q4 to full-year 2019 report related to the final settlement of a dispute from 2015 decided by an arbitration court.

Finland – Confirmed continued high level of investment in 2021

Rail investments and maintenance spending¹ EUR million, 2019-24

Sweden – High investment level in line with expectations

Rail investments and maintenance spending¹ SEK billion, 2019-24

Norway - Investment growth in 2021 mainly related to on-going projects

Rail investments and maintenance spending¹ NOK billion, 2019-24

1) Norway: Proposed National budget 2021, National Railway Directorate NTP filings. Maintenance figures include Bane NOR operations and renewal, partly addressable. Excluding tram and metro. NTP: National Transportation Plan 2018-2029