NRC Group — Investor Presentation 2021

Feb 17, 2021

Q4 2020 Result presentation NRC Group

CEO – Henning Olsen and CFO – Dag Fladby

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 2020

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
Operations	• Limited impact on project execution to date • Maintenance and upgrade activities considered critical infrastructure • Increasing uncertainty due further increase of infection • Restrictions related to workforce mobility, will lead to higher production cost • The Norwegian Government imposed stricter rules 27 January on foreign nationals seeking entry to Norway that will affect production over time
Risk management	• 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	4

Health and 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 31 December 2020 compared with 31 December 2019

Sustainability

• 2020 Materiality analysis • Climate risk analysis

• Define baseline, set goals and ambitions

• Launch Sustainability report with GRI indicators

6

• Preparing for reporting on EU-Taxonomy
• Seeking opportunities to invest more in a greener machine fleet

Q4 key figures – profit & loss

• Revenue in Q4 20 of NOK 1,578 million
• EBITA* in Q4 20 of NOK -10 million
• Strong results in Finland
• Lower than expected results in demolition- and recycling business in Norway
• Low revenue in Sweden and in Civil operation in Norway
• EBITA* % 2020 is 0.8%
• Other income and expenses (M&A) include a NOK 12 million compensation related to earn-out for NSS
• Amortisations: Expected level for 2021 is approximately NOK 50 million

(Amounts in NOK million)	Q4 2020	Q4 2019	FY 2020	FY 2019
Revenue	1 578	1 663	6 449	6 193
Operating expenses	1 534	1 650	6 185	5 927
EBITDA*	44	13	264	267
Other income and expenses (M&A expenses)	9	-32	-1	-91
EBITDA	53	-19	263	176
Depreciation	54	60	214	212
EBITA*	-10	-47	50	55
EBITA	-1	-78	49	-36
Amortisation	14	17	59	70
Operating profit/loss (EBIT)	-16	-95	-10	-105
Net financial items	-20	-20	-84	-73
Profit/loss before tax (EBT)	-36	-115	-94	-178

Q4 2020 key figures – balance sheet

• Goodwill and other intangible assets: NOK 3,010 million
• Cash: NOK 610 million
• Interest-bearing debt including leasing: NOK 1,768 million
• Operating lease: NOK 163 million
• Net interest-bearing debt incl. leasing: NOK 1,158 million
• Equity ratio: 47%

(Amounts in NOK million)
--------------------------	--	--	--

ASSETS	31.12.2020	31.12.2019
Intangible assets	3 010	2 799
Right-of-use assets	588	522
Total other non-current assets	255	301
Cash and cash equivalents	610	154
Other current assets	1 404	1 648
Total assets	5 867	5 423
EQUITY AND LIABILITIES
Total equity	2 731	2 033
Long-term financial lease liabilities	290	214
Long-term operating lease liabilities	106	125
Other non-current interest-bearing liabilities	1 042	1 161
Other non-current liabilities	52	34
Short-term financial lease liabilities	120	123
Short-term operating lease liabilities	57	63
Other interest-bearing current liabilities	153	101
Other current liabilities	1 316	1 569
Total equity and liabilities	5 867	5 423

Q4 2020 key figures – strong cash flow from operations

•	(Amounts in NOK million) Solid cash flow from continuing operating activities of NOK 110		Q4 2020	Q4 2019	FY 2020	FY 2019
	million in the quarter and NOK 312 million in 2020	Profit/loss before tax	-36	-115	-94	-178
•	Net cash from investments of NOK -2 million	Net cash flow from operating activities - continuing Net cash flow from operating activities - discontinued	110 -10	63 54	312 4	-37 109
		Net cash flow from operating activities		117	316	71
•	Net cash flow from financing activities of NOK -98 million	Net cash flow from investing activities	-2	433	-150	-931
		Net cash flow from financing activities	-98	-481	304	628
		Net change in cash and cash equivalents	-1	69	470	-232
		Cash and cash equivalents at the end of the period	610	154	610	154

Robust financial position as per 31 December

• Cash position of NOK 610 million
• NIBD of NOK 1,158 million
• Undrawn Revolver Credit Facility of NOK 200 million

Operational review

Key measures implemented in 2020

Overhead cost reductions in Sweden and Rail Norway. Measures to increase flexibility in cost base in Finland implemented, with effect from Q2 2021.

Continued focus in 2021 on core processes to improve profitability

Win the right projects at the right price

A fact-based analytical approach throughout the tender process by:

• Selecting projects based on competitive edge and commercial potential
• Continues improvement of calculation process
• Analytical pricing approach based on systematic use of market intelligence

Operational excellence – do the projects right

Strengthen execution model and portfolio governance by:

• Robust project organisations
• Strengthen production planning, purchasing, contract- and risk management
• Improved financial control by follow up of production cost vs. completion rate

Strong cost awareness

Increase flexibility of cost base

• Reduction of overhead costs
• Improved machine utilization
• Better utilization of capacity and competence across business units

NRC Group Finland – Strong results

-3% Organic growth**	• •	Strong growth in Light rail Lower activity in Maintenance and Materials		Revenue NOK million		EBITA* NOK million		Order backlog NOK million
EBITA*	•	Strong results in light rail projects	820 720	713	740			2 905	2 568
Order intake of NOK 484 million	• •	Light rail extension contract of EUR 16 million Book to Bill LTM: 0.8	620 520 420 320			100 90 80 70 60 50 29 40 30	62	1 674 1 231	1 202 1 365	Coming years Next year
Additional measures	• •	Measures to reduce costs and increase flexibility in the cost base are being implemented Expected to have full effect from second quarter 2021	220	Q4 2019	Q4 2020	20 10 0 Q4 2019	Q4 2020	Q4 2019	Q4 2020

NRC Group Finland – Solid increase in tender pipeline

NRC Group Sweden – weak results

NRC Group Sweden – Focus areas 2021

• Organic profitable growth
• Expand customer portfolio and geographical expansion

• Target for a more balanced portfolio with small and medium sized projects

• Improvement processes within project execution and follow up continues

• Increase hit rate in tenders by improving tender processes

• Steady performance last three years

• Seven contracts to be tendered in the market the next nine months, where three out of seven contracts operated by NRC Group Sweden

NRC Group Sweden – Strong tender pipeline

NRC Group Norway – Low activity and weak results

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

NRC Group Norway – continued focus on core processes to improve profitability

• Continue working on tender processes and project execution processes
• Further improvement is expected in 2021

processes

• Implement improvement initiatives to restore profitability in Norsk Saneringsservice

NRC Norway - Strong tender pipeline

21 2. NRC Group estimates

Summary

Financials • EBITA margin in 2020 at 0.8%

• Solid cashflow from operations in 2020

Operations

• Focus on core processes in tendering and project execution continues in order to restore profitability in Norway and Sweden
• Strong project execution in Finland, measures to increase flexibility in cost base with effect from Q2 2021

22

• Continued strong outlook for investments in sustainable infrastructure confirmed by approved national budgets in Norway, Sweden and Finland

Outlook

• Increasing tender pipeline
• 2021 EBITA margin expected to be 1.75-2.5%
• Long-term ambitions for 2024 maintained

Appendix

Segments – key figures quarterly development

					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
Total revenue	771	1 598	2 281	1 866	470	545	683	583	407	476	541	442
EBITDA*	43	136	186	82	14	65	75	32	7	50	41	-17
EBITA*	21	96	97	-14	-5	43	52	8	-14	27	16	-43
EBIT*	5	75	70	-23	-13	35	45	2	-18	23	16	-44
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
Total revenue	1 613	1 591	1 539	1 777	299	411	460	370	311	487	583	396
EBITDA*	221	27	-77	-21	-7	-13	14	-71	-15	0	4	-10
EBITA*	198	-8	-125	-69	-20	-24	2	-83	-27	-13	-7	-22
EBIT*	179	-16	-125	-71	-20	-24	2	-83	-28	-14	-8	-23
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
Total revenue			2 388	2 811	361	601	712	713	540	700	831	740
EBITDA*			191	231	4	64	70	53	16	37	100	78
EBITA*			116	161	-13	45	55	29	-3	19	84	62
EBIT*			75	116	-24	35	45	19	-14	7	72	50
Total group segment accounts	FY 2017	FY 2018	FY 2019	FY 2020	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020
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
EBITDA*	236	132	267	264	-3	103	153	13	-1	81	140	44
EBITA*	190	57	55	50	-54	51	105	-47	-54	27	88	-10
EBIT*	156	29	-15	-8	-72	34	87	-63	-69	11	75	-25

*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.

Orderbook and order intake Q4 2020

• Order book NOK 6,475 million
• Order intake of NOK 1,392 million

341

Q3 20

Q2 20

859

754

Q4 20

• Announced orders NOK 754 million
• Unannounced orders NOK 639 million

Orderbook indicates moderate growth in 2021

Order book execution by country NOK million

Book-to-bill ratio

Period order intake/revenue

NRC Finland – Confirmed continued high level of investment in 2021

Light rail and other private Investments & renevals

Maintenance

Rail investments and maintenance spending1

EUR million, 2019-24

• Budget confirmed Confirmed investments and spending at EURO 0.92 Bn
• Investments and renewals at high levels

Light rail projects

• Continued high investment level expected
• NRC Finland is market leader
• Crown Bridge project is expected to be decided second half 2021

NRC Sweden – High investment level in line with expectations

Rail investments and maintenance spending1

Budget confirmed • SEK 30.4 Bn for 2021, +7% higher than estimated in the NTP • The high investment level is expected to continue also in 2022 Rail investments • SEK +2.9 Bn mainly targeted to existing larger projects Maintenance • Additional allocation of SEK 700 mill in 2020 and SEK 500 mill each year in 2021-2023 Renewal • SEK 3.7 bn in 2021 vs SEK 4.3 bn in 2020 Maintenance backlog • SEK ~18 Bn in 2020 and expected to be stable going forward

1) Sweden: National budget 2021 with estimated for 2022-23, Swedish Transport Administration estimates for 2024 excluding estimated railroad tax; Maintenance is including renewal/reinvestments. Excluding tram and metro

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

Rail investments and maintenance spending¹ NOK billion, 2019-24

12,7 13,2 17,3 17,0 18,5 18,9 8,5 8,7 9,2 9,6 9,9 10,6 A2019 E2020 NTP2024 26,5 21,9 B2021 NTP2022 NTP2023 21,1 26,6 28,4 29,5 Operations, maintenance and renewal Investment and investment planning

Budget confirmed • NOK 26.5 bn for 2021, +20% from 2020 and approximately NOK +1.7 Bn vs NTP level for 2021 Rail investments • Increase of NOK +4.5 bn mainly targeted to already awarded Inter City investment (IC) projects in Vestfoldbanen, Meråkerbanen and other IC projects Budget for operations, maintenance and renewal • NOK 9.2 bn - up NOK 0.5 bn mainly related to implementation of ERTMS • Renewal and upgrade NOK 2.3 bn in 2021 (NOK 2.2 bn in 2020) Maintenance backlog • NOK 21 bn in 2020 and expected to increase to NOK 23 bn during 2021