NRC Group — Investor Presentation 2022

Feb 16, 2022

4th quarter 2021 result presentation

CEO Henning Olsen 16 February 2022

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. Neitherthe 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

Revenue NOK 1.6 billion (NOK 1.6 billion Q4 2020)

EBITA* NOK 50 million

(NOK -10 million Q4 2020)

EBITA* margin 3.1% (-0.7% Q4 2020)

Order intake NOK 1.9 billion (NOK 1.4 billion Q4 2020)

Operating cash flow NOK 149 million

(NOK 110 million Q4 2020)

Summary 2021 and outlook

Key figures 2021

• Moderate decrease in revenue
• Strong increase in EBITA* margin
• Lower net interest bearing debt
• Order book increased 20%

Outlook 2022

• Continued positive operational and financial development
• Moderate to strong revenue growth
• Moderate increase in EBITA* margin compared to 2021

2019 2020 2021

Order book (NOK million)

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

Health & safety

Q4 2020: 0

Covid-19

• Keep employees safe and minimize impact on operations

Q4 2020: 4.8%

• New variant emerged, infection rate expected to be high
• Expect impact on sickness absence

*LTI: Injuries resulting in absence at least one full day per million man-hours (incl. subcontractors). Previously reported as LTI-1. **TRI: Frequency of injuries with and without absence for personnel (employees, rented workers and subcontractors) per million hours worked. Previously reported as LTI-2. Figures per 31 December 2021 compared with 31 December2020.

KEY SUSTAINABILITY COMMITMENTS

Building sustainable infrastructure

The EU Taxonomy results for 2021

• Revenue (economic activities)
• 87% is eligible
• 62% (72%*) is aligned
• OpEx (operational expenditures)
• 87% is eligible
• 63% (72%*) is aligned
• CapEx (additions to owned/ ROU assets)
• 77% is eligible
• 64% (69%*) is aligned

Profit & loss

• Revenues up +1% from Q420
• Adjusted for currency effects ~ +7%
• EBITA* improvement of NOK 60 million from Q420
• EBITA* margin of 3.1% vs -0.7% last year
• EBT improvement of NOK 30 million from Q420
• Full year amortisations include write-downs of NOK 16 million. Expected level for 2022 is NOK 40 million

(Amounts in NOK million)	Q4 2021	Q4 2020	FY 2021	FY 2020
Revenue	1 601	1 578	5 957	6 449
Operating expenses	1 504	1 534	5 621	6 185
EBITDA*	97	44	336	264
Other income and expenses (M&A expenses)	-22	9	-34	-1
EBITDA	75	53	302	263
Depreciation	47	54	196	214
EBITA*	50	-10	139	50
EBITA	29	-1	105	49
Amortisation	19	14	64	59
Operating profit/loss (EBIT)	10	-16	42	-10
Net financial items	-16	-20	-66	-84
Profit/loss before tax (EBT)	-6	-36	-24	-94

Balance sheet

• Cash: NOK 626 million
• Interest-bearing debt reduced by NOK 31 million in Q4 to NOK 1,518 million
• Net interest-bearing debt decreased by NOK 93 million in Q4 to NOK 891 million
• NOK 399 million excluding leasing
• Equity ratio: 47%

(Amounts in NOK million)	31.12.2021	31.12.2020
ASSETS
Intangible assets	2 838	3 010
Right-of-use assets	514	588
Total other non-current assets	193	255
Cash and cash equivalents	626	610
Other current assets	1 387	1 404
Total assets	5 587	5 867
EQUITY AND LIABILITIES
Total equity	2 622	2 731
Long-term financial lease liabilities	224	290
Long-term operating lease liabilities	95	106
Other non-current interest-bearing liabilities	880	1 042
Other non-current liabilities	26	52
Short-term financial lease liabilities	118	120
Short-term operating lease liabilities	55	57
Other interest-bearing current liabilities	146	153
Other current liabilities	1 422	1 316
Total equity and liabilities	5 587	5 867

Continued solid cash flow in Q4

Cash flow from continuing operations per quarter (NOK million)	(Amounts in NOK million)	Q4 2021	Q4 2020	FY 2021	FY 2020
238	Profit/loss before tax	-6	-36	-24	-94
149	Net cash flow from operating activities - continuing Net cash flow from operating activities	149 149	110 100	358 358	312 316
129 110	Net cash flow from investing activities	5	-2	34	-150
63	Net cash flow from financing activities	-91	-98	-377	304
43 31 17	Net change in cash and cash equivalents Cash and cash equivalents at the end of the period	63 626	-1 610	14 626	470 610

Solid financial position as per 31 December

• Cash position of NOK 626 million
• Undrawn Revolver Credit Facility of NOK 200 million
• Net interest-bearing debt of NOK 891 million - NOK 399 million excluding leasing
• Leasing liability due in 2022 of NOK 173 million

Solid order intake Q4 2021

• Order book NOK 7,801 million
• Order intake of NOK 1,872 million
• 2021 order intake NOK 7,581 million (NOK 5,339 million in 2020)

Improved order book and book-to-bill

Order book execution by country NOK million

Book-to-bill ratio Period order intake/revenue

Operational review

NRC Group Finland – Strong profitability

(NOK million)	Q4 2021	Q4 2020
Revenue	706	740
EBITA*	59	62
EBITA* margin	8.3%	8.4%
Order intake	968	484

• Organic growth** +3%
• Strong profitability driven by Rail construction
• Change in revenue mix in 2022
• Machine sales contributing positively to the EBITA

NRC Group Finland – Decline in tender pipeline, but record high investment budget in Rail Construction

NRC Group Norway – Improved profitability and strong growth

(NOK million)	Q4 2021	Q4 2020
Revenue	508	442
EBITA*	21	-43
EBITA* margin	4.2%	-9.7%
Order intake	495	534

• Improved profitability driven by Environment improvement measures yielding results
• Solid order book going into 2022

NRC Group Norway - Solid tender pipeline

NOK 8.9 billion tender pipeline¹ NOK million value, # of tenders, next 9 months

• Strong pipeline Increase of NOK 1.4 bn in tender pipeline vs Q321 and an increase of NOK 2.7 bn vs last year
• Mainly increase in rail construction

Budget 2022² • NOK 26.7 bn for 2022, at same level as 2021 and National Transport Plan for 2022

1) NRC Group estimates 2) National budget 2022, prop 1S

NRC Group Sweden – weak results – better outlook for 2022

(NOK million)	Q4 2021	Q4 2020
Revenue	398	396
EBITA*	-21	-22
EBITA* margin	-5.2%	-5.5%
Order intake	409	375

• Organic growth** +7%

• EBITA affected by low revenues, and legacy projects coming to an end in Q4
• Improved order intake and solid order book entering 2022
• Still fierce competition

NRC Group Sweden – Continued high tender activity expected

Tender pipeline

Budget 2022²

NOK 8.6 billion tender pipeline¹ NOK million value, # of tenders, next 9 months

• At same level as Q321 pipeline
• Decrease of NOK -1.4 Bn compared last year at same time, mainly explained reduced level in maintenance due to awarded tenders in 2021
• Delayed decisions on maintenance tenders

• SEK 30.7 bn for 2022, +2% higher than estimated in the NTP

Summary Q4

• Organic revenue growth 7%
• Improved profitability
• Strong order intake
• Solid cash flow

Financials

Operations • Continued focus on core processes in tendering and project execution • Focus on profitable growth

Outlook 2022 • Continued positive operational and financial development

• Moderate to strong revenue growth
• Moderate increase in EBITA* margin compared to 2021.

Appendix

Segments – Key figures quarterly development

						Reported**	Reported**	ReportedReported***		Reported	Reported	Reported	Reported	Reported	Reported	Reported	Reported
Norway operations (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021	Q3 2021	Q4 2021
Total revenue	771	1 598	2 281	1 866	1 859	470	545	683	583	407	476	541	442	423	433	495	508
EBITDA*	43	136	186	82	120	14	65	75	32	7	50	41	-17	6	29	42	43
EBITA*	21	96	97	-14	27	-5	43	52	8	-14	27	16	-43	-17	2	20	21
EBIT*	5	75	70	-23	16	-13	35	45	2	-18	23	16	-44	-18	-7	20	21
Sweden operations (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2020	Q2 2021	Q3 2021	Q4 2021
Total revenue	1 613	1 591	1 539	1 777	1 468	299	411	460	370	311	487	583	396	259	400	411	398
EBITDA*	221	27	-77	-21	-17	-7	-13	14	-71	-15	0	4	-10	-22	0	13	-9
EBITA*	198	-8	-125	-69	-67	-20	-24	2	-83	-27	-13	-7	-22	-35	-12	0	-21
EBIT*	179	-16	-125	-71	-71	-20	-24	2	-83	-28	-14	-8	-23	-36	-13	-1	-21
Finland operations (NOK million)	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2020	Q2 2021	Q3 2021	Q4 2021
Total revenue			2 388	2 811	2 640	361	601	712	713	540	700	831	740	446	695	793	706
EBITDA*			191	231	265	4	64	70	53	16	37	100	78	15	78	100	72
EBITA*			116	161	213	-13	45	55	29	-3	19	84	62	2	65	87	59
EBIT*			75	116	164	-24	35	45	19	-14	7	72	50	-9	55	76	41
Total group segment accounts	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	Q1 2019	Q2 2019	Q3 2019	Q4 2019	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2020	Q2 2021	Q3 2021	Q4 2021
Total revenue	2 373	3 176	6 193	6 449	5 957	1 130	1 551	1 850	1 663	1 254	1 661	1 956	1 578	1 129	1 529	1 698	1 601
EBITDA*	236	132	267	264	336	-3	103	153	13	-1	81	140	44	-10	99	150	97
EBITA*	190	57	55	50	139	-54	51	105	-47	-54	27	88	-10	-59	47	102	50
EBIT*	156	29	-15	-8	75	-72	34	87	-63	-69	11	75	-25	-71	26	90	31

*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 – Proposed higher level of investment in 2022

Rail investments and maintenance spending¹ EUR million, 2019-24

Sweden – Budget 2022 in line with expectations

Rail investments and maintenance spending¹ SEK billion, 2019-24

• Budget SEK 30.7 Bn for 2021, +2% higher than estimated in the NTP
• Rail investments SEK 16.7 Bn mainly targeted to existing larger projects, slightly higher than NTP
• Maintenance 2022 In line with NTP. Expected additional increases in 2023/24
• Renewal SEK 4.7 Bn in 2022 vs SEK 4.3 bn in P 2021
• Maintenance backlog SEK ~18 Bn in 2020 and expected to be stable going forward

Norway - Budget 2022 for operation and investments is in line with 2021 and NTP

Rail investments and maintenance spending¹ NOK billion, 2019-24

Investment and investment planning

• Budget NOK 26.7 Bn for 2022, at same level as 2021 and NTP for 2022
• Increase of NOK +3.0 Bn from 2021 mainly due increased investment and technical changes is the budget (ERMTS is moved to investments)
• Investments mainly targeted to already awarded Inter City investment (IC) projects
• NOK 7.6 Bn down NOK 1.6 Bn mainly due to technical changes in the budget (ERMTS moved to investments)
  • Renewal and upgrade NOK 3.2 Bn in 2021 (NOK 2.3 Bn in 2021)
• Maintenance backlog NOK 23 Bn in 2021 and expected to increase to NOK 24.4 Bn during 2022

1) Norway: National budget 2022, National Railway Directorate NTP filings. Maintenance figures include Bane NOR operations and renewal, partly addressable. Excluding tram and metro. S2021: Revised budget 2021. NTP: National Transportation Plan 2022-2033