Q-Free ASA — Earnings Release 2020

Oct 28, 2020

Highlights

Q3 2020

• 210 MNOK in revenues, down 13% YoY amid reduced product sales and delayed project deliveries caused by COVID-19
• 32 MNOK in EBITDA (15% margin), up from 31 MNOK (22 MNOK excl. one-time pension adjustment) in Q3-19, driven by strong margins and low OPEX
• 24 MNOK in positive cash flow from operations
• 354 MNOK in order intake and >300 MNOK in awarded but not yet signed contracts
• 1 169 MNOK in order backlog, up 7% YoY and 12% QoQ

ORDER INTAKE LAST 5 QUARTERS MNOK

EBITDA LAST 5 QUARTERS MNOK 31 11 -8 26 32 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020

ORDER BACKLOG LAST 5 QUARTERS MNOK

Financial review

KEY FIGURES
NOK 1.000	Q3 2020	Q3 2019	Y/Y-%	9M 2020	9M 2019	Y/Y-%	FY 2019
Revenues	210 377	242 630	-13,3%	634 616	716 594	-11,4%	962 317
Gross contribution	135 052	141 592	-4,6%	398 930	405 128	-1,5%	539 389
Gross margin - %	64,2%	58,4%		62,9%	56,5%		56,1%
Operating expenses	102 868	110 698	-7,1%	348 496	343 005	1,6%	468 371
EBITDA excl non-recurring items	32 184	21 769	47,8%	50 434	52 998	-4,8%	71 018
EBITDA margin excl non-recurring items	15,3 %	9,0 %		7,9 %			7,4 %
Non-recurring items*	0	9 125		0	9 125		1 625
EBITDA	32 184	30 894	4,2 %	50 434	62 123	-18,8%	72 643
EBITDA margin	15,3%	12,7%		7,9%	8,7%		7,6%
Depreciation and amortisation	14 436	17 725	-18,6%	46 333	54 618	-15,2%	68 692
Impairment	0	0		0	0		58 332
Operating profit - EBIT	17 748	13 169		4 101	7 505		-54 381
EBIT margin	8,4%	5,4%		0,6%	1,0%		-5,7%
Profit before tax	2 064	28 431		-9 117	10 260		-50 050
Profit margin	1,0%	11,7%		-1,4%	1,4%		-5,2%
Profit after tax	3 047	25 376		-15 452	2 705		-49 981
Profit for the period	3 047	25 376		-15 452	2 705		-49 981
EPS	0,03	0,28		-0,17	0,03		-0,56
Number of employees	381	390		381	390		396

*Cost of goods sold in FY 2019 negatively impacted by 3 MNOK in write down of parking inventory. Operating expenses in FY 2019 negatively impacted by 4.5 MNOK in fees related to structural processes. FY 2019 positively impacted by 9 MNOK from reduced pension obligations in N orway.

Profit and loss third quarter 2020

Q-Free generated total revenues of 210 MNOK in the third quarter of 2020, down 13 percent from Q3-19. Tolling revenues ended at 142 MNOK versus 165 MNOK in Q3-19 and Traffic Management revenues at 46 MNOK compared to 50 MNOK in Q3-19. The Covid-19 pandemic had a negative impact on product sales in both segments in the quarter.

The gross contribution of 135 MNOK was down 5 percent from Q3-19. Gross margin was positively impacted by the revenue mix in Tolling with a high share of SW and system revenues.

Operating expenses in Q3-20 amounted to 103 MNOK compared to 111 MNOK in Q3-19 (120 MNOK adjusted for one-time pension scheme effect). The YoY-decrease is mainly explained by swift implementation of the cost reduction measures announced in April, which have reduced personnel, consultant, and travel expenses significantly.

QUARTERLY REVENUES AND EBITDA MARGIN MNOK & %

Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020

-10,0 % -5,0 % 0,0 % 5,0 % 10,0 % 15,0 % 20,0 %

EBITDA in the quarter ended at 32 MNOK (15.3 percent margin), slightly up from 31 MNOK in Q3-19. However, adjusting for the 9 MNOK positive impact from the one-time pension scheme change in Q3-19, profitability improved considerably.

Depreciation and amortization in Q3-20 ended at 14 MNOK compared to 18 MNOK in Q3-19.

Operating profit (EBIT) in the third quarter ended at 18 MNOK compared to 13 MNOK in Q3-19.

Net financial items in the quarter were negative by 16 MNOK, a decrease of 31 MNOK from 15 MNOK in Q3-19. The change is mainly explained by negative currency effects in the quarter and interest expenses.

Reported pre-tax profit ended at 2 MNOK, down from 28 MNOK in Q3-19.

Earnings per share was 0.03 NOK in the third quarter of 2020 versus 0.28 NOK in Q3-19.

Profit and loss first nine months 2020

Accumulated revenues for the first nine months of 2020 amounted to 635 MNOK, down 11 percent from 717 MNOK in the corresponding period in 2019. Tolling had a negative growth of 10 percent in the period, whereas Traffic Management delivered a YoY negative growth of 14 percent. Revenues in both segments have been negatively impacted by the Covid 19-pandemic with lower product sales and postponed project deliveries.

Gross contribution for the first nine months ended at 399 MNOK, slightly down YoY. The 6.4 percentage point increase in gross margin year to date is explained by a favourable revenue mix with high margin software and system sales.

Year to date operating expenses were 348 MNOK, up 5 MNOK compared to the first nine months of 2019. Operating expenses were negatively influenced by currency in the period amid a weak NOK against USD, EUR and AUD.

EBITDA in the first nine months of 2020 amounted to 50 MNOK compared to 62 MNOK in 2019. The EBITDA margin per Q3-20 was 8 percent versus 9 percent per Q3-19. Operating profit (EBIT) ended at 4 MNOK versus 8 MNOK. Adjusting for the 9 MNOK in positive impact from a pension scheme change in Q3-19, year to date EBITDA and EBIT was stable compared to 2019.

Net financial items were -13 MNOK during the first nine months of 2020 compared to 3 MNOK in the corresponding period of 2019. Pre-tax profit was -9 MNOK compared to 10 MNOK per Q3-19.

Balance sheet

Total assets as of 30 September 2020 were 915 MNOK, down from 918 MNOK at the end of Q2-20 and down from 994 MNOK as of Q3-19. Total assets were negatively influenced by currency in the quarter.

Total equity ended at 388 MNOK, up from 387 MNOK at the end of Q2-20 down from 410 MNOK at the end of Q1-20 and down from 409 MNOK at the end of Q3-19. The equity ratio was 42 percent, on the same level as per the end of Q2-20 and up from 41 percent at the end of Q3-19. The equity proportion of the issued convertible bond was MNOK 11, while the increase in equity in the third quarter is explained by currency effects.

Non-current liabilities ended at 286 MNOK, down 14 MNOK from Q2-20 and up 58 MNOK from Q3-19. The increase compared to Q3-19 is mainly explained by increased bank borrowings and a convertible bond issue.

Current borrowings to financial institutions were 54 MNOK at the end of the third quarter 2020, up from 46 MNOK at the end of Q2-20 and down from 73 MNOK at the end of Q3-19. Granted, but unused, credit facilities were 100 MNOK at the end of Q3-20 compared to 100 MNOK at the end of Q2-20.

Net interest-bearing debt ended at 233 MNOK, down from 244 MNOK in the previous quarter. The reduction is explained by positive cash flows from operations, which has enabled repayment of borrowings in addition to increased cash at hand.

QUARTERLY NIBD

Current liabilities were 241 MNOK at the end of the quarter compared to 231 MNOK at the end of Q2-20. The increase from Q2-20 is mainly explained by an increase in liabilities held for sale, partly offset by a reduction in other certain current liability items.

Net working capital (defined as current assets excluding cash less current liabilities excluding current borrowings) amounted to 195 MNOK at the end of Q3-20, down from 197 MNOK at the end of Q2-20. Compared to Q3-19, net working capital was negatively impacted by a reclassification of certain noncurrent assets and non-current liabilities to assets and liabilities held for sale. Net working capital at the end of Q3- 19 was 172 MNOK. The working capital ratio based on 12 month trailing revenues ended at 22 percent at end of Q2-20,

on the same level as at the end of Q2-20 and up from 18 percent at the end of Q3-19.

Cash flow

Net cash flow from operating activities was 24 MNOK in Q3- 20 compared to 41 MNOK in Q3-19. The decrease is explained by working capital effects.

Net cash flow from investing activities was -7 MNOK in Q3-20 compared to -49 MNOK in Q3-19.

Net cash flow from financing activities was -16 MNOK in Q3- 20 versus -28 MNOK in Q3-19. The difference is mainly explained by proceeds from borrowings and repayment of borrowings.

QUARTERLY AVAILABLE CREDIT AND CASH AT HAND MNOK

The net change in available cash in the period was 5 MNOK explained by increased cash at hand. Q-Free had 181 MNOK in available funds at the end of Q3-20.

Order intake and backlog

Total reported order intake in the third quarter of 2020 was 354 MNOK compared to 206 MNOK in Q3-19. Book-to-bill in the quarter ended at 1.68. The significant YoY and QoQ increase in order intake reflects the large announced contracts in Portugal (130 MNOK), USA (55 MNOK) and Norway (30 MNOK) in addition to several small and mediumsized contracts. Contracts with a value in excess of 300 MNOK have been awarded to Q-Free, but are not yet signed and booked as order intake. Q-Free expects these contracts to be signed in Q4-20.

The order backlog at the end of Q3-20 was 1 169 MNOK, up from 1 091 MNOK at the end Q3-19 and 1 040 MNOK at the end of the previous quarter. 245 MNOK of the backlog is scheduled for delivery in Q4-20, 405 MNOK in 2021, and 518 MNOK for the period 2022 and beyond.

In terms of revenue mix, the order backlog is composed of 12 percent product deliveries, 39 percent service and maintenance contracts, and 49 percent system projects.

ORDER BACKLOG AND ORDER INTAKE MNOK

ORDER BACKLOG COMPOSITION Q3-20 MNOK

Covid-19 impact

Q-Free has adapted advice from local authorities, implemented travel-restrictions, working from home policies and other measures to limit risk of Covid-19 exposure. As commented above, the outbreak has had a negative impact on revenue and order intake, but the effects are expected to be temporary. Q-Free has implemented cost-cutting measures including travel bans, salary cuts, furloughs, and termination of certain positions. The cost-cutting measures are continuously reconsidered depending on activities in the market. Q-Free does not expect a long-term adverse financial effect from the outbreak.

Segment overview

Thailand

Q-Free's segment structure per Q3 2020:

-

-

REVENUES AND MARGINS

Quarterly Tolling revenues amounted to 142 MNOK, down from 165 MNOK in Q3-19. The decline was caused by lower product sales and delayed project revenues.

Q-Free generated 40 MNOK in service and maintenance revenues, 73 MNOK in system project and software revenues, and 29 MNOK in product revenues in the quarter.

Tolling achieved an EBITDA of 38 MNOK in the third quarter of 2020, in line with Q3-19. Lower revenues were offset by a higher gross margin and lower operating expenses compared to the corresponding period in 2019.

The figures are impacted by the new segment reporting from January 1, 2020. Certain group expenses have been allocated to the Tolling segment, hence figures on segment level have been restated for comparison. Reference is made to note 3 in the Q3-20 report.

ORDER INTAKE AND BACKLOG

Q-Free booked Tolling contracts worth 236 MNOK in the quarter. In addition to a 130 MNOK multi-lane free-flow contract in Portugal and a 30 MNOK SW contract in Norway, the order intake consisted of various small and medium-sized orders.

The order backlog ended at 971 MNOK, up from 892 MNOK in Q3-19. Product deliveries account for 7 percent of the backlog value and are typically sold with short lead-times, while the remaining 93 percent consists of system projects and long-term service & maintenance contracts.

TOLLING ORDER BACKLOG DISTRIBUTION MNOK

TOLLING REVENUES AND EBITDA

MNOK
	Q3-20	Q3-19	9M-20	9M-19
REVENUES	142	165	415	460
EBITDA	38	38	73	78

LAST 5 QUARTERS TOLLING REVENUES MNOK

TOLLING ORDER BACKLOG & ORDER INTAKE MNOK

Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Order backlog Order Intake

-

-

REVENUES AND MARGINS

Traffic Management revenues ended at 46 MNOK in Q3-20, down from 50 MNOK in Q3-19. The Covid-19 pandemic has caused temporary delays in deliveries which impacted revenues negatively in the quarter.

EBITDA ended at -2 MNOK in the quarter compared to 2 MNOK in Q3-19. The decrease is mainly due to lower revenues.

The figures are impacted by the new segment reporting from January 1, 2020. Figures on segment level have been restated for comparison. Reference is made to note 3 in the Q3-20 report.

ORDER INTAKE AND BACKLOG

Q-Free booked Traffic Management contracts in the quarter worth 91 MNOK compared to 37 MNOK in Q3-19. In addition to a renewal of a statewide ATMS contract worth 55 MNOK, the order intake comprised several small and medium-sized orders in the US.

The order backlog ended at 164 MNOK. Most of the backlog is due for delivery in the coming 2 to 6 months.

TRAFFIC MANAGEMENT ORDER BACKLOG DISTRIBUTION MNOK

TRAFFIC MANAGEMENT REVENUES AND EBITDA MNOK

	Q3-20	Q3-19	9M-20	9M-19
REVENUES	46	50	151	176
EBITDA	-2	2	-3	7

LAST 5 QUARTERS TRAFFIC MANAGEMENT REVENUES MNOK

TRAFFIC MANAGEMENT ORDER BACKLOG & ORDER INTAKE MNOK

ASSETS HELD FOR SALE

REVENUES AND MARGINS

Q3-20 revenues came in at 23 MNOK, down from 28 MNOK in Q3-19. The decline is mainly explained by lower revenues in the previous Parking business.

EBITDA was 3 MNOK in Q3-20, up from -1 MNOK last year.

The figures are impacted by the new segment reporting from January 1, 2020. Figures on segment level have been restated for comparison. Reference is made to note 3 in the Q3-20 report.

ORDER SITUATION

Q-Free booked 27 MNOK in new orders in Q3-20. The order intake was primarily from Europe.

The business normally consists of small and medium sized orders with a typical delivery time of 4-8 weeks. 24 MNOK of the order backlog is scheduled to be delivered during Q4 2020, 9 MNOK is scheduled for delivery in Q1 2021.

DIVESTMENT PROCESS

Several potential buyers have made contact concerning our assets held for sale, and some discussions have been initiated. However, the Covid-19 pandemic creates general market uncertainty and makes cross border negotiation and transaction processes challenging. Q-Free will continue to explore potential divestment opportunities in the coming months.

ASSETS HELD FOR SALE ORDER BACKLOG DISTRIBUTION MNOK

ASSETS HELD FOR SALE REVENUES AND EBITDA MNOK

	Q3-20	Q3-19	9M-20	9M-19
REVENUES	23	28	69	80
EBITDA	3	-1	4	1

LAST 5 QUARTERS ASSETS HELD FOR SALE REVENUES MNOK

ASSETS HELD FOR SALE ORDER BACKLOG & ORDER INTAKE MNOK

Outlook

The third quarter of 2020 was a very strong quarter for Q-Free with high profitability, solid cash flow from operations, and a high order intake.

EBITDA increased to 32 MNOK with a healthy 15% margin despite low product sales and delayed project revenues caused by Covid-19. In the second and the third quarter of 2020 Q-Free has reaped the rewards for proactively and forcefully adjusting its cost base in anticipation of lower revenues. Consequently, profitability has been solid in the recent two quarters even if revenues have declined. Profitability is expected to remain solid in the coming quarters based on a healthy order backlog, an attractive revenue mix, and continued cost control.

Good cash management and improved profitability enabled Q-Free to reduce its net interest-bearing debt in the quarter while simultaneously increasing its liquidity reserves. New contracts, in particular in the Tolling business, have improved payment terms and lower working capital needs than in previous years. The company now has sufficient capital to fund ongoing development initiatives/delivery projects and planned investments.

Q-Free managed to significantly increase its order intake in the quarter even though the traffic technology industry has been hit hard by the Covid-19 pandemic. On the back of big contract wins in Portugal, the USA, and Norway plus several medium-sized and small contracts, Q-Free increased its year-to-date book-to-bill ratio to 1.2 and its order backlog to a healthy 1 169 MNOK. In addition, Q-Free has been awarded contracts with an accumulated value of more than 300 MNOK. These contracts are expected to be signed in Q4-20.

In addition to boosting order intake and backlog, the contract wins are a testament to Q-Free's increasing competitiveness in the market. The company has invested, and continues to invest, significantly in products and services that will drive profitable growth going forward. The outlook for the fourth quarter and 2021 is positive.

As a consequence of dialogues related to divestment of "assets held for sale", Q-Free has also experienced interest in other parts of the company from potential buyers and structural partners. Inbound inquiries are assessed by the Board if deemed sufficiently attractive and feasible. Q-Free will update the market according to applicable law and the Continuing Obligation of companies listed on the Oslo Børs.

Consolidated financial statements

STATEMENT OF PROFIT OR LOSS STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF FINANCIAL POSITION STATEMENT OF CASH FLOWS STATEMENT OF CHANGES IN EQUITY

INDEX OF NOTES

• 1 General information & Accounting policies
• 2 Operating Segments
• 3 Revenue
• 4 Borrowings
• 5 Net financial items
• 6 Assets held for sale
• 7 Subsequent events

ALTERNATIVE PERFORMANCE MEASURES

Interim condensed consolidated statement of profit or loss

30 SEPTEMBER 2020

Amounts in TNOK	Note	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Revenue from customers	3	210 377	242 630	634 616	716 594	962 317
Total operating revenue		210 377	242 630	634 616	716 594	962 317
Cost of goods sold		56 165	72 868	170 916	234 745	304 556
Project contractor expenses		19 160	28 170	64 770	76 721	118 372
Employee benefit expenses		75 229	80 385	248 646	243 409	328 788
Other operating expenses		27 639	30 313	99 850	99 596	137 958
Total operating expenses		178 193	211 736	584 182	654 471	889 674
Earnings before interest, taxes, depreciation and amortisation (EBITDA)		32 184	30 894	50 434	62 123	72 643
Depreciation of property, plant and equipment Amortisation of intangible assets		6 848 7 588	7 271 10 454	21 714 24 619	21 515 33 103	29 128 39 564
Impairment of intangible assets and PP&E		-	-	-	-	58 332
Total depreciation, amortization and impairment		14 436	17 725	46 333	54 618	127 024
Earnings before interest and taxes (EBIT)		17 748	13 169	4 101	7 505	-54 381
Financial income Financial expenses	5 5	3 861 -19 545	19 062 -3 800	52 972 -66 190	25 942 -23 187	89 777 -85 446
Net financial items	5	-15 684	15 262	-13 218	2 755	4 331
Profit before tax		2 064	28 431	-9 117	10 260	-50 050
Tax expense		983	-3 055	-6 335	-7 555	69
Profit / (-) loss for the period		3 047	25 376	-15 452	2 705	-49 981
Earnings per share Diluted earnings per share		0,03 0,03	0,28 0,28	-0,17 -0,16	0,03 0,03	-0,56 -0,56

The interim financial information has not been subject to audit or review.

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Interim condensed consolidated statement of comprehensive income

30 SEPTEMBER 2020

Amounts in TNOK	Note	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Profit / (-) loss for the period Other comprehensive income		3 047	25 376	-15 452	2 705	-49 981
Other comprehensive income to be reclassified to profit or loss in
subsequent periods: Currency translation differences, net of tax		-2 337	14 472	35 403	3 512	4 852
Net other comprehensive income to be reclassified to profit or		-2 337	14 472	35 403	3 512	4 852
loss in subsequent periods
Other comprehensive income for the period, net of tax		-2 337	14 472	35 403	3 512	4 852
Total comprehensive income for the period, net of tax		710	39 848	19 951	6 217	-45 129

The interim financial information has not been subject to audit or review.

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Interim condensed consolidated statement of financial position

30 SEPTEMBER 2020

Amounts in TNOK	Note	Q3 2020	Q3 2019	2019
ASSETS
Deferred tax assets		5 465	12 412	15 564
Intangible assets		91 511	129 635	114 245
Goodw ill		291 744	326 595	285 270
Property, plant and equipment	1	63 408	75 619	78 785
Non-current receivables		-	2 916	382
TOTAL NON-CURRENT ASSETS		452 128	547 177	494 246
Inventories		33 953	73 431	76 143
Contract assets		101 551	128 724	103 957
Accounts receivable		107 576	169 933	140 265
Other current assets		34 765	42 643	37 506
Cash and cash equivalents		81 280	31 873	31 051
Assets held for sale	6	103 643	-	-
TOTAL CURRENT ASSETS		462 767	446 604	388 922
TOTAL ASSETS		914 895	993 781	883 168

Interim condensed consolidated statement of financial position

30 SEPTEMBER 2020

Note	Q3 2020	Q3 2019	2019
	33 905	33 905	33 905
	578 307	578 307	578 307
	21 199	21 142	21 183
	-245 274	-224 548	-275 893
	388 137	408 806	357 502
4	191 700	185 000	160 000
	67 931	-	-
1	26 067	33 343	37 197
	-	-	-
	-	9 348	-
	285 698	227 691	197 197
4	54 300	72 806	72 022
	9 894	38 560	4 253
	44 774	101 374	117 609
	926	2 152	3 531
	11 119	21 284	20 167
1	21 527	61 332	54 414
	69 378	59 776	56 473
6	29 142	-	-
	241 060	357 284	328 469
			525 666
		526 758	584 975

The interim financial information has not been subject to audit or review.

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

Interim condensed consolidated statement of cash flows

30 SEPTEMBER 2020

Amounts in TNOK	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Cash flow from operations
Profit before tax	2 064	28 431	-9 117	10 260	-50 050
Paid taxes	-509	-2 025	-3 785	-5 756	-8 034
Depreciation and impairment of property, plant and equipment	6 848	7 271	21 714	21 515	29 128
Amortisation and impairment of intangible assets	7 588	10 454	24 619	33 103	97 896
Accrued interest expense	549	121	1 217	-224	-173
Share-based payment expense	-84	81	-233	267	348
Working capital adjustments:	- -	- -	- -	- -
Changes in inventory	5 555	-6 865	15 341	-1 435	-4 147
Changes in contract assets	-2 190	-16 927	1 460	-46 404	-26 738
Changes in accounts receivable	-2 204	804	12 090	-9 114	20 554
Changes in advance payments from customers	-2 706	11 818	8 446	24 221	-10 086
Changes in accounts payable	3 168	24 497	-61 007	5 382	21 617
Changes in other items	6 167	-16 952	24 987	-43 781	-32 630
Net cash flow from operations	24 246	40 708	35 732	-11 966	37 685
Cash flow from investing activities
Investments in PP&E and intangible assets	-5 638	-7 669	-16 605	-20 657	-35 454
Cash flow from investing activities	-5 638	-7 669	-16 605	-20 657	-35 454
Cash flow from financing activities
	-	4 000	182 114	73 033	73 033
Cash proceeds from borrow ings Repayment of borrow ings	-8 500	-23 248	-103 085	-30 748	-56 533
Equity share of convertible bond	-	-	10 727	-	-
Payments of lease liabilities	-4 849	-5 011	-15 860	-14 770	-19 801
Net interest paid	-3 094	-4 215	-9 908	-9 123	-13 023
Cash flow from financing activities	-16 443	-28 474	63 988	18 392	-16 324
Effect on cash and cash equivalents of changes in foreign exchange rates	2 968	2 456	-395	1 169	209
Net change in cash and cash equivalents for the period	5 133	7 021	82 720	-13 062	-13 884
Cash and cash equivalents beginning of period	76 147	24 852	31 051	89 700	89 700
Transferred to Assets held for sale		-	-	-	-
Cash and cash equivalents end of period	81 280	31 873	113 771	76 638	75 816

The interim financial information has not been subject to audit or review.

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

See note 7 regarding changes in accounting principles.

Interim condensed consolidated statement of changes in equity

30 SEPTEMBER 2020

Amounts in TNOK

	Subscribed share capital	Share premium	Other paid-in capital	Retained earnings	Available-for sale reserve FVOCI (IFRS 9)	Currency translation differences, net of tax	Total
Total equity 31.12.2019	33 905	578 307	21 183	-360 965	-	85 071	357 502
Profit / (-) loss for the period	-	-	-	-15 452	-	-	-15 452
Other comprehensive income Total comprehensive income for the period	- 33 905	- 578 307	- 21 183	- -376 417	- -	35 403 120 474	35 403 377 453
Reclassification of non-controlling interests							-
Share issue arising from acquisitions							-
Share issue							-
Sale of Non-Controlling Interests							-
Share-based payment expense	-	-	-43	-	-	-	-43
Convertible bond issue	-	-		10 727	-	-	10 727
Total equity 30.09.2020	33 905	578 307	21 140	-365 690	-	120 474	388 137
Total equity 31.12.2018	33 905	578 307	20 950	-310 984	-	80 219	402 397
Profit / (-) loss for the period	-	-	-	2 705	-	-	2 705
Other comprehensive income	-	-	-	-	-	3 512	3 512
Total comprehensive income for the period	33 905	578 307	20 950	-308 279	-	83 731	408 614
Share-based payment expense	-	-	192	-	-	-	192
Total equity 30.09.2019	33 905	578 307	21 142	-308 279	-	83 731	408 806

The interim financial information has not been subject to audit or review.

On May 19, The Company issued Convertible Bonds at a par value of tNOK 80 000. In accordance with IAS 32, the proceeds have been split between a debt element valued at fair market value, while the residual (option element for conversion right) should be considered equity.Net after deduction for transaction cost , the debt is valued at tNOK 65 050 at time of issue, while the equity is valued at net tNOK 10 727. Accrued interest have been added to the debt.

The Bonds will bear interest at 6 months NIBOR + 4.00% per annum with deferral optionality, have a tenor of three years and an initial conversion price of NOK 4.3669 equal to a premium of 25% over the volume weighted average price of the Shares on the Oslo Stock Exchange the 22 April 2020 of NOK 3.4935. The Bonds will not be listed.

Notes to the condensed interim financial statements Q3 2020

NOTE 1 – GENERAL INFORMATION & ACCOUNTING POLICIES

The Q-Free Group provides leading technology solutions to the global ITS market. Q-Free has 381 employees, is headquartered in Trondheim Norway, and has local offices in 16 countries around the world. Q-Free ASA is a Norwegian public limited liability company, and has been listed on the Oslo Stock Exchange under the ticker QFR since 2002.

Basis of preparation

These consolidated interim financial statements for 2020, combined with other relevant financial information in this report, have been prepared in accordance with the regulations of the Oslo Stock Exchange and the requirements in IAS 34. These condensed consolidated interim financial statements for the quarter have not been audited or been subject to review by the Group's auditor. The financial statements do not include all of the information required for the full annual financial statements of the Group and should be read in conjunction with the consolidated financial statements for 2019. The consolidated financial statements for 2019 are available upon request from the company's registered office in Trondheim or at our website, www.qfree.com. The consolidated condensed interim financial statements were approved by the Board of Directors at its meeting on 28 May 2020.

The preparation of the Q-Free Group's consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates can result in outcomes that require a material adjustment to the carrying amount of the assets or liability affected in future periods.

No significant events, which are not mentioned in this report, have occurred since the balance sheet date.

As a result of rounding differences, numbers or percentages may not add up to the total.

Accounting policies

The interim condensed consolidated financial statements of the Q-Free Group for Q3 2020 were prepared in accordance with International Financial Reporting Standards (IFRS) in accordance with IAS 34 Interim Financial Reporting. The Group has used the same accounting policies and standards as in the consolidated financial statements as of 31 December 2019.

NOTE 2 OPERATING SEGMENTS

The Group discloses operating segment information under IFRS 8 Operating Segments, which requires the entity to identify segments according to the organisation and reporting structure used by management. Operating segments are components of a business that are evaluated regularly by the chief operating decision maker for the purpose of assessing performance and allocating resources. The Group's chief operating decision maker is the members of the corporate management team.

The operating segments are determined based on how resources and investments are allocated within the Group, as well as on differences in the nature of the operations, solutions, products and services. As of January 1 2020, the Group changed the segment reporting from the previously five segments Tolling, Parking, Urban, Inter-Urban and Infomobility to the two segments Tolling and Traffic Management. Parking and Infomobility is classified as held for sale. As a consequence, the Group manages its operations in two segments:

Segment	Products offered within the segment
Tolling	DSRC tags and readers, ALPR and image based solutions, Electronic toll collection
	systems (multilane free-flow, truck tolling and congestion charging)
Traffic Management	Regional Freeway Management and Advanced Management Traffic Systems (ATMS),
	Corridor Management, Traffic Signal Operation & Traffic Management, Wrong-Way
	Applications, Connected Intersections, Lane Closure Management

Global Functions do not represent a separate segment but are expenses that are not relevant to allocate to specific segments. Global functions include corporate services, such as management and Group finance services at the Q-Free headquarters. These expenses are reported in a separate column as shown in the table below.

NOTE 2 OPERATING SEGMENTS

SEGMENTS T O L L I N G			Traffic Management		Assets held for sale		Global functions		T O T A L
Amounts in TNOK	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019
Revenue from customers	142 066	165 058	45 517	49 780	22 794	27 792		0 - 0	210 377	242 630
Cost of goods sold	34 831	50 443	15 104	12 574	6 231	9 852	0	0	56 166	72 868
Project contractor expenses	14 301	21 079	1 471	1 354	3 388	5 737	0	0	19 160	28 170
Gross Contribution	92 934	93 537	28 943	35 853	13 176	12 202		0 - 0	135 052	141 591
Gross margin - %	65,4 %	56,7 %	63,6 %	72,0 %	57,8 %	43,9 %			64,2 %	58,4 %
Total OPEX	55 285	56 021	30 768	33 732	10 245	12 934	6 570	8 013	102 868	110 700
EBITDA	37 649	37 515	-1 825	2 121	2 931	-732	-6 570	-8 013	32 184	30 891
EBITDA margin	26,5 %	22,7 %	-4,0 %	4,3 %	12,9 %	-2,6 %			15,3 %	12,7 %
Depreciation and amortisation	7 121	9 087	4 590	5 282	2 725	3 357	0	0	14 436	17 725
EBIT	30 528	28 428	-6 415	-3 161	206	-4 088	-6 570	-8 013	17 748	13 166
EBIT margin	21,5 %	17,2 %	-14,1 %	-6,3 %	0,9 %	-14,7 %			8,4 %	5,4 %

SEGMENTS	T O L L I N G		Traffic Management		Assets held for sale		Global functions		T O T A L
Amounts in TNOK	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019
Revenue from customers	414 509	460 285	151 449	176 330	68 659	79 979	- 0	0	634 617	716 594
Cost of goods sold	102 301	146 197	44 952	57 090	23 663	31 459	0	0	170 916	234 745
Project contractor expenses	54 362	56 075	2 517	10 040	7 890	10 607	0	0	64 769	76 721
Gross Contribution	257 846	258 013	103 980	109 201	37 106	37 914	- 0	0	398 931	405 127
Gross margin - %	62,2 %	56,1 %	68,7 %	61,9 %	54,0 %	47,4 %			62,9 %	56,5 %
Total OPEX*	185 269	179 982	106 723	101 986	32 777	36 528	23 726	24 512	348 495	343 007
EBITDA	72 577	78 031	-2 743	7 215	4 328	1 386	-23 726	-24 512	50 436	62 121
EBITDA margin	17,5 %	17,0 %	-1,8 %	4,1 %	6,3 %	1,7 %			7,9 %	8,7 %
Depreciation and amortisation	21 592	27 467	15 739	16 489	9 002	10 663	0	0	46 333	54 619
EBIT	50 985	50 564	-18 482	-9 274	-4 674	-9 276	-23 726	-24 512	4 103	7 502
EBIT margin	12,3 %	11,0 %	-12,2 %	-5,3 %	-6,8 %	-11,6 %			0,6 %	1,0 %

The revenues and expenses as reported in the previous segment reporting structure and the new segment reporting structure are shown in the tables below.

SEGMENTS	TOLLING		TRAFFIC MANAGEMENT	URBAN	INTER-URBAN	HELD FOR SALE	PARKING	INFOMOBILITY		GLOBAL FUNCTIONS		TOTAL
Amounts in TNOK	Q3 2019 New segment	Q3 2019	Q3 2019 New segment	Q3 2019	Q3 2019	Q3 2019	Q3 2019	Q3 2019	Q3 2019	Q3 2019	Q3 2019	Q3 2019
EUROPE		107 428		141	11 413		4 591	14 030			-	137 603
APMEA		25 867		-	-		63	186			-	26 116
AMERICAS		13 777		22 673	27 079		13 011	2 370			-	78 911
Revenue from customers	165 058	147 073	49 780	22 815	38 492	27 792	17 665	16 585	-	-	242 630	242 630
Cost of goods sold	50 443	44 782	12 574	12 574	4 292	9 852	6 420	4 801	-		72 868	72 868
Project contractor expenses	21 079	19 864	1 354	-	2 049	5 737	5 918	338	-		28 170	28 170
Gross Contribution	93 537	82 434	35 853	10 241	32 152	12 202	5 326	11 446	-	-	141 591	141 592
Gross margin - %	56,7 %	56,0 %	72,0 %	44,9 %	83,5 %	43,9 %	30,2 %	69,0 %			58,4 %	58,4 %
Total OPEX	56 021	42 600	33 732	17 394	20 091	12 934	10 204	10 571	8 013	9 837	110 698	110 698
EBITDA before non recurring items	37 516	39 827	2 121	- 7 153	12 061	- 731	- 4 878	875	- 8 013	- 9 837	30 893	30 894
EBITDA margin	22,7 %	27,1 %	4,3 %	-31,4 %	31,3 %	-2,6 %	-27,6 %	5,3 %			12,7 %	12,7 %
Depreciation and amortization	9 087	5 255	5 282	4 171	3 572	3 357	2 048	2 680			17 725	17 725
EBIT before non recurring items	28 428	34 573	- 3 161	- 11 324	8 489	- 4 088	- 6 927	- 1 805	- 8 013	- 9 837	13 169	13 169
EBIT margin	17,2 %	23,5 %	-6,3 %	-49,6 %	22,1 %	-14,7 %	-39,2 %	-10,9 %			5,4 %	5,4 %

SEGMENTS	TOLLING		TRAFFIC MANAGEMENT	URBAN	INTER-URBAN	HELD FOR SALE	PARKING	INFOMOBILITY		GLOBAL FUNCTIONS		TOTAL
Amounts in TNOK	9M 2019 New segment	9M 2019	9M 2019 New segment	9M 2019	9M 2019	9M 2019	9M 2019	9M 2019	9M 2019	9M 2019	9M 2019	9M 2019
EUROPE		307 060		396	21 573		15 313	50 041			-	394 382
APMEA		56 586		-	-		2 049	901			-	59 536
AMERICAS		47 420		110 275	67 990		30 568	6 423			-	262 676
Revenue from customers	460 285	411 066	176 330	110 671	89 563	79 979	47 930	57 364	-	-	716 594	716 594
Cost of goods sold	146 197	131 394	57 090	57 096	9 515	31 459	18 653	18 081			234 745	234 745
Project contractor expenses	56 075	54 116	10 040	3 246	7 684	10 607	10 684	992			76 721	76 721
Gross Contribution	258 013	225 557	109 201	50 329	72 364	37 914	18 593	38 292	-	-	405 127	405 128
Gross margin - %	56,1 %	54,9 %	61,9 %	45,5 %	80,8 %	47,4 %	38,8 %	66,8 %			56,5 %	56,5 %
Total OPEX	179 982	146 907	101 986	47 085	57 159	36 528	28 918	33 737	24 512	29 206	343 005	343 005
EBITDA before non recurring items	78 031	78 649	7 215	3 244	15 205	1 386	- 10 325	4 554	- 24 512	- 29 206	62 122	62 122
EBITDA margin	17,0 %	19,1 %	4,1 %	2,9 %	17,0 %	1,7 %	-21,5 %	7,9 %			8,7 %	8,7 %
Depreciation and amortization	27 467	15 625	16 489	12 721	11 506	10 663	6 235	8 532			54 618	54 618
EBIT before non recurring items	50 564	63 024	- 9 274	- 9 477	3 699	- 9 276	- 16 560	- 3 978	- 24 512	- 29 206	7 505	7 505
EBIT margin	11,0 %	15,3 %	-5,3 %	-8,6 %	4,1 %	-11,6 %	-34,6 %	-6,9 %			1,0 %	1,0 %

NOTE 3 REVENUES

Revenue from customers is disaggregated in the table below by type of product or project category, by the timing of the reception of revenue, and by segment.

Disaggregation of revenue from customers

Amounts in TNOK	T O L L I N G		TRAFFIC MANAGEMENT		ASSETS HELD FOR SALE		TOTAL
	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019	Q3 2020	Q3 2019
Revenue from customers	142 066	165 058	45 517	49 780	22 794	27 792	210 377	242 630
At a point in time revenue recognition
Product deliveries (not related to projects)	28 806	64 159	23 533	18 701	5 957	6 282	58 295	89 141
Total at a point in time revenue recognition	28 806	64 159	23 533	18 701	5 957	6 282	58 295	89 141
Over time revenue recognition
Service & Maintenance	40 319	33 886	5 504	3 802	778	1 136	46 601	38 824
System Projects (includes over-time product deliveries related
to projects)	72 941	67 014	16 481	27 277	16 060	20 374	105 481	114 665
Total over time revenue recognition	113 260	100 900	21 985	31 079	16 837	21 510	152 082	153 489

Amounts in TNOK	T O L L I N G		TRAFFIC MANAGEMENT		ASSETS HELD FOR SALE		TOTAL
	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019	9M 2020	9M 2019
Revenue from customers	414 509	460 285	151 449	176 329	68 659	79 979	634 617	716 593
At a point in time revenue recognition
Product deliveries (not related to projects)	91 041	183 579	64 483	72 152	20 571	21 306	176 094	277 037
Total at a point in time revenue recognition	91 041	183 579	64 483	72 152	20 571	21 306	176 094	277 037
Over time revenue recognition
Service & Maintenance	117 725	105 172	23 791	34 172	2 200	2 471	143 715	141 816
System Projects (includes over-time product deliveries related to projects)	205 743	171 534	63 176	70 005	45 889	56 202	314 807	297 741
Total over time revenue recognition	323 468	276 706	86 967	104 177	48 088	58 673	458 522	439 556

NOTE 4 BORROWINGS

	Effective
Type	interest rate***	Maturity	30.09.2020	30.09.2019	31.12.2019
Non-current
Nordea - Term loan	3,2 %	01.06.2022	37 500	85 000	70 000
Nordea - Term loan	3,2 %	01.06.2022	29 230	-	34 730
Nordea - Term loan*	3,16 %	28.05.2022	69 700	-	-
Nordea - Revolving Credit Facility (RCF)	3,2 %	01.06.2022	55 270	100 000	55 269
Total non-current borrowings			191 700	185 000	160 000
Convertible bond
Convertible bond (NIBOR + 4.00%)	12,53 %	19.05.2023	67 931	-	-
Current
Nordea - Term loan	3,2 %	01.06.2022	25 000	7 500	15 000
Nordea - Term loan	3,2 %	01.06.2022	17 000	-	10 000
Nordea - Term loan*	3,16 %	28.05.2022	12 300	-	-
Nordea - Credit line **	-	01.06.2022	-	65 306	47 021
Total current borrowings			54 300	72 806	72 022
Total			313 931	257 806	232 022

* The facility is partly guaranteed by GIEK as part of the Norwegian government's Covid-19 support packages.

** Credit line is renewed annually. Cost of facility is partially interest on actual overdraft with an additional overdraft facility fee. The available credit of tNOK 100 000 is currently not utilized.

*** Effective October 20 onwards

Convertible Bond

On May 19, 2020 the Company issued Convertible Bonds at a par value of tNOK 80 000. In accordance with IAS 32, the proceeds have been split between a debt element valued at fair market value, while the residual (option element for conversion right) should be considered equity. Net after deduction for transaction cost, the debt is valued at tNOK 65 050 at time of issue, while the equity is valued at net tNOK 10 727. Accrued interest have been added to the debt.

The Bonds will bear interest at 6 months NIBOR + 4.00% per annum with deferral optionality, have a tenor of three years and an initial conversion price of NOK 4.3669 equal to a premium of 25% over the volume weighted average price of the Shares on the Oslo Stock Exchange the 22 April 2020 of NOK 3.4935. The Bonds will not be listed.

Under IAS 32, all interest on nominal amount is charged to the debt proportion of the convertible bond. For accounting purposes, the effective interest is therefore significantly higher than the nominal interest.

Debt covenants

Following a revision of the financial contract with its main bank in April 20, the following loan covenants apply:

There is a minimum equity ratio covenant of 35%, where equity ratio is defined as equity plus subordinated convertible bond divided on total assets.

The earnings covenant has a holiday until Q4-2020. At the end of Q4-2020 the covenant structure requires 12M reported EBITDA to exceed MNOK 30 and pr. end of Q1-2021 12M rolling EBITDA should exceed MNOK 45. Starting Q2-2021, covenant is based on measurement of leverage ratio (NIBD (excluding convertible bond)/EBITDA) that should not be higher than 3.50 in Q2 2021 before being reduced to 3.25 in Q3 2021, 2.75 in Q4 2021 and 2.5 in Q1 2022 onwards.

The effective interest rate of selected facilities/borrowings are dependent if Q-Free's leverage ratio is above or below 2,75. The interest is currently (Effective October 20) on the lowest level but will increase if leverage ratio increases above 2,75.

NOTE 5 NET FINANCIAL ITEMS

Amounts in TNOK

Financial items	Q3 2020	Q3 2019	9M 2020	9M 2019	FY 2019
Interest income	759	132	963	233	134
Realised exchange rate differences	3 101	2 455	13 940	9 230	9 462
Unrealised exchange rate differences Fair value change in contingent consideration and other	-	6 874	31 717	6 878	8 723
liabilities*	-	9 601	-	9 601	17 596
Financial income	3 861	19 062	46 620	25 942	35 915
Interest expense	-619	-2 045	-1 858	-4 068	-5 394
Interest on borrow ings	-3 797	-2 302	-10 635	-5 288	-7 763
Realised exchange rate differences	-3 342	-1 606	-11 722	-8 194	-10 186
Unrealised exchange rate differences	-12 705	3 187	-30 632	-2 062	-3 786
Fair value change in contingent consideration and other
liabilities*	-	-94	-	-283	644
Other financial expense	919	-940	-4 992	-3 292	-5 098
Financial expense	-19 545	-3 800	-59 838	-23 187	-31 583
NET FINANCIAL ITEMS	-15 684	15 262	-13 219	2 755	4 332

* Change in contingent consideration and other liabilities is explained by currency effects on the liability for the purchase of the remaining shares of Intelight Inc. The remaining shares in Intelight Inc. was purchased during Q2-20. The currency effect on settlement is classified as realized exchange rate differences.

NOTE 6 ASSETS HELD FOR SALE

Amounts in TNOK	30.09.2020	30.09. 2019	2019
ASSETS
Deferred tax assets	8 894	-	-
Development, goodwill	37 096	-	-
Property, plant and equipment	7 842	-	-
Inventories	26 849	-	-
Contract assets	946	-	-
Accounts receivable	20 599	-	-
Other current assets	1 416	-	-
ASSETS HELD FOR SALE	103 643	-	-

Amounts in TNOK	30.09.2020	30.06. 2019	2019
LIABILITIES
Accounts payable	11 828	-	-
Public duties payable	5 199	-	-
Other current liabilities	12 115	-	-
LIABILITIES HELD FOR SALE	29 142	-	-

NOTE 7 CHANGES IN ACCOUNTING PRINCIPLES

In the interim condensed consolidated statement of cash flows as reported in the interim condensed financial statements for Q3 2020, Net interest paid is classified as an element in cash flow from financing activities. This has previously been classified as a part of cash flow from operations.

Under IFRS, the reclassification is considered a change in accounting principles. The corresponding figures for previous accounting periods have been restated, and the impacts on the relevant items are stated in the table below.

For the purpose of the statement of cash flows to give a relevant and reliable view of the nature of the business and the origin of the cash flows in the Group, management has deemed the reclassification necessary.

For the sake of good order, there is no change in total cash flows or in cash and cash equivalents in any of t he accounting periods.

Q1 2019	Q2 2019	Q3 2019	9M 2019	Q1 2020	Q2 2020	Q3 2020	9M 2020
-12 672	-44 910	36 493	-21 089	-15 920	20 592	21 152	25 824
2 414	2 494	4 215	9 123	3 224	3 590	3 094	9 908
-10 258	-42 416	40 708	-11 966	-12 696	24 182	24 246	35 732
35 086	16 688	-24 259	27 515	29 936	57 309	-13 349	73 896
-2 414	-2 494	-4 215	-9 123	-3 224	-3 590	-3 094	-9 908
32 672	14 194	-28 474	18 392	26 712	53 719	-16 443	63 988

ALTERNATIVE PERFORMANCE MEASURES

The Group presents some financial performance measures in its annual report which are not defined according to IFRS. The Group is of the opinion that these measures provide valuable complementar y information to investors and the Group's management since they facilitate the evaluation of the Group's performance. As every Group does not calculate financial performance measures in the same manner, these are not always comparable with measures used by other companies. These financial performance measures should therefore not be regarded as a replacement for measures as defined according to IFRS.

Gross contribution:

Defined as Revenue from customers reduced with Cost of goods sold and Project contractor expenses. Project contractor expenses are included in Gross Contribution since they are heavily correlated with project and service revenues.

Project contractor expenses:

Project contractor expenses include costs for external consultants and / or services that are consumed under project executions and service and maintenance work.

Gross margin:

Defined as Revenue from customers reduced with Cost of goods sold and Project contractor expenses in percentage of revenues.

Amounts in TNOK
Gross contribution and gross margin	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Revenue from customers	210 377	242 630	634 616	716 594	962 317
Cost of goods sold	-56 165	-72 868	-170 916	-234 745	-304 556
Project contractor expenses	-19 160	-28 170	-64 770	-76 721	-118 372
Gross contribution	135 052	141 592	398 930	405 128	539 389
Gross margin	64,2 %	58,4 %	62,9 %	56,5 %	56,1 %

EBITDA / EBIT:

The Group considers EBITDA / EBIT to be normal accounting terms, but they are not included in the IFRS accounting standards. EBITDA is an abbreviation for Earnings Before Interest, Taxes, Depreciation and Amortisation. The Group uses EBITDA in the income statement as a summation line for other accounting lines. These accounting lines are defined in our accounting principles, which are part of the financial statements for 2019. The same applies for EBIT.

EBITDA margin:

Defined as Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) in percentage of revenues.

Amounts in TNOK
EBITDA margin	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Revenue from customers	210 377	242 630	634 616	716 594	962 317
EBITDA	32 184	30 894	50 434	62 123	72 643
EBITDA margin	15,3 %	12,7 %	7,9 %	8,7 %	7,5 %

EBIT margin:

Defined as Earnings Before Interest and Taxes (EBIT) in percentage of revenues.

Amounts in TNOK
EBIT margin	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Revenue from customers	210 377	242 630	634 616	716 594	962 317
EBIT	17 748	13 169	4 101	7 505	-54 381
EBIT margin	8,4 %	5,4 %	0,6 %	1,0 %	-5,7 %

ALTERNATIVE PERFORMANCE MEASURES

Non-recurring items:

The Group defines non-recurring items as one-time costs, not related to the actual reporting period. Restructuring costs and settlement of disputes are classified as non-recurring items.

Amounts in TNOK
Non-recurring items	Q3 2020	Q3 2019	9M 2020	9M 2019	2019
Termination of w age compensation for lost pension benefits	-	-9 125	-	-9 125	-9 125
Restructuring costs	-	-	-	-	7 500
Non-recurring items in EBITDA	-	-9 125	-	-9 125	-1 625
Impairment	-	-		-	58 332
Non-recurring items in EBIT	-	-9 125	-	-9 125	56 707

Net Interest Bearing Debt (NIBD):

Long term borrowings plus short term borrowings less cash and cash equivalents.

Amounts in TNOK
Net Interest Bearing Debt	Q3 2020	Q3 2019	2019
Non-current borrow ings from financial institutions	191 700	185 000	160 000
Convertible bond	67 931	-	-
Current borrow ings from financial institutions	54 300	72 806	72 022
Gross Interest Bearing Debt	313 931	257 806	232 022
Cash and cash equivalents	81 280	31 873	31 051
Net Interest Bearing Debt	232 651	225 933	200 971

Net working capital:

Defined as Current assets excluding Cash less Current liabilities, and excluding Current borrowings and the Intelight share purchase liability classified as Current financial liabilities.

Amounts in TNOK
Net Working Capital	Q3 2020	Q3 2019	2019
Inventories	33 953	73 431	76 143
Contract assets	101 551	128 724	103 957
Accounts receivable	107 576	169 933	140 265
Other current assets	138 408	42 643	37 506
Current Assets (excl Cash and cash equivalents)	381 487	414 731	357 871
Advance payments from customers	9 894	38 560	4 253
Accounts payable	44 774	101 374	117 609
Taxes payable	926	2 152	3 531
Public duties payable	11 119	21 284	20 167
Current financial liabilities	21 527	61 332	54 414
Other current liabilities	98 520	59 776	56 473
Intelight share purchase liability	-	-48 280	-32 651
Current liabilities (excl Currrent borrowings from financial institutions)	186 760	236 198	223 796
Net Working Capital	194 727	178 533	134 075

ALTERNATIVE PERFORMANCE MEASURES

Working capital ratio:

Defined as Current assets excluding Cash less Current liabilities, and excluding Current borrowings and the Intelight share purchase liability classified as Current financial liabilities in percentages of last 12 months Rev enue from customers.

Amounts in TNOK
Working Capital ratio	Q3 2020	Q3 2019	2019
12 months Revenue from customers	880 339	958 037	962 317
Net Working Capital	194 727	178 533	134 075
Working Capital ratio	22,1 %	18,6 %	13,9 %

Equity ratio:

Equity ratio is defined as equity proportion of total assets and shows financial leverage.

Amounts in TNOK
Equity ratio	Q3 2020	Q3 2019	2019
Total equity	388 137	408 806	357 502
Total assets	914 895	993 781	883 168
Equity ratio	42,4 %	41,1 %	40,5 %

For the purpose of covenant calculation on the loans from financial institutions, the debt element of the convertible bond is considered equity. Hence, an equity ratio for covenant calculation purposes is provided below.

Amounts in TNOK
Equity ratio for covenant calculation purposes	Q3 2020	Q3 2019	2019
Total equity. Debt element of convertible bond considered equity	456 068	408 806	357 502
Total assets	914 895	993 781	883 168
Equity ratio for covenant calculation purposes	49,8 %	41,1 %	40,5 %

Order intake:

Order intake is defined as total amount of all signed new contracts received in a defined period.

Order backlog:

Order backlog is defined as total amount of signed contracts to be delivered in future periods.

The order backlog is calculated as shown below:

Prior period's backlog

• • Received new orders
• ÷ This periods revenues
• • / ÷ Currency adjustments
• = End backlog reporting period

THIRD QUARTER RESULTS 2020 32