Q-Free ASA — Investor Presentation 2021

Feb 12, 2021

Håkon Volldal, President & CEO Trond Christensen, Interim CFO

COPYRIGHT © 2020 Q-FREE

Q-FREE IS A PRIME MOVER IN TRAFFIC TECHNOLOGY…

FOUNDED IN 1984

HEADQUARTERED IN NORWAY

OFFICES IN 16 COUNTRIES

35 NATIONALITIES

50+ REFERENCE MARKETS

COMPANY & PEOPLE BUSINESS AREAS & SOLUTIONS

>40 million tags sold

~2 000 tolling lanes in operation

>50 000 active ALPR SW licenses

Tolling: Traffic Management:

> 35 000 traffic controllers installed

>500 000 highway lane miles monitored and managed

Road information services for more than 25 million people

3

…HAS A STRONG AND COMPELLING PURPOSE…

KEY MOBILITY CHALLENGES Q-FREE'S SOLUTIONS

CONGESTION	Q-FLOW Optimize how people and goods move	• Electronic Toll Collection and Congestion Charging • Regional Freeway Management • Traffic Signal Operations and Management • Way-finding
ACCIDENTS	Q-SAFE Make roads and travel safe	• Connected Intersections • Incident Management • Lane Closure Management • ALPR Enforcement • Smart Digital Tachographs
POLLUTION	Q-CLEAN Stimulate sustainable transportation	• Congestion Charging & low-emission zones • Urban Geofencing • Traffic Signal Operations and Management • Pay by Weight and Plate

…AND A REAL, POSITIVE IMPACT ON THE WORLD

ETC Fast Lanes, Thailand

• 420 000 hrs of congestion time saved p.a.
• PM2.5 significantly reduced

Congestion Charging, Sweden

• 20% reduction in traffic
• 13% reduction in air-borne pollutants and 9% reduction in NOX emissions

Event Management, GA, USA

Truck Tolling, Slovenia

• 30 million kg of CO2 and 84 000 kg of NOX abated p.a.
• 1700 kg of PM2.5 abated p.a.

Ramp Metering, NC Carolina, USA

• 7.3% decrease in drive time per day for a commuter

• From 2 hours to 45 minutes to clear 70 000 fans from the Super Bowl LIII stadium in Atlanta

Lane Closure, VA, USA

• 42 693 valid lane closures managed in 2019, saving lives and preventing injuries

A SOLID QUARTER

Growth	• 4% YoY growth
Profitability	• 25 MNOK and 10% EBITDA margin despite 4 MNOK in extraordinary expenses
Cash flow and liquidity	• 31 MNOK in cash flow from operations • 175 MNOK in available liquidity entering 2021
Order intake & pipeline	• 205 MNOK in order intake + 30 MNOK frame agreement • >400 MNOK in awarded contracts pending signing EOQ

HIGHLIGHTS

FOURTH QUARTER 2020 FULL YEAR 2020

• 255 MNOK in revenues, up 4% YoY
• 25 MNOK in EBITDA (10% margin), up from 11 MNOK (4% margin) in Q4-19
• 31 MNOK in cash flow from operations and 175 MNOK in available credit and cash at hand
• 205 MNOK in order intake + new 30 MNOK frame agreement

• 400 MNOK in awarded but not yet signed contracts (of which 240 MNOK have been signed YTD 2021)

• 889 MNOK in revenues, down 8% from 2019 amid low product sales caused by Covid-19

• 76 MNOK in EBITDA (8.5% margin), up from 73 MNOK (7.5% margin) in 2019
• 67 MNOK in cash flow from operations
• 949 MNOK in order intake, book-to-bill-ratio of 1.07
• 1 083 MNOK in order backlog (not incl. frame agreements) versus 1 080 MNOK end of Q4-19

FINANCIAL SUMMARY

MNOK	Q4 2020	Q4 2019	YoY Change
Revenues	255	246	+3.7%
Gross contribution	146	134	+8.9%
Gross margin	57.4%	54.6%	+2.8 pp
OPEX	121	124	-2.3%
EBITDA	25	11	+141%
EBITDA margin	10.0%	4.3%	+5.7 pp
EBIT*	-13	-62

FY 2020	FY 2019	YoY Change
889	962	-7.6%
545	539	+1.1%
61.3%	56.1%	+5.2 pp
469	467	+0.6%
76	73	+4.3%
8.5%	7.6%	+0.9 pp
-9	-54

* Q4-20/FY 2020 EBIT includes 21 MNOK and Q4-19/FY 2019 EBIT 58 MNOK in impairment of intangible assets and PP&E

FIRST QUARTER 2019

REVENUE DEVELOPMENT

QUARTERLY REVENUES NOK million

Q4-20 REVENUES PER BUSINESS AREA Percent

SEGMENT REVENUE DETAILS

NOK million

SEGMENT	Q4-20	Q4-19	YoY Change	FY 2020	FY 20219	YoY
Tolling	158	155	+2%	572	616	-7%
Traffic Management	55	55	-	206	231	-11%
Assets held for sale	42	36	+18%	111	116	-4%
REVENUES	255	246	+4%	889	962	-8%

		Change	FY 2020	FY 20219	YoY Change
55	55	-	206	231	-11%
42	36	+18%	111	116	-4%

NOTE: Figures are rounded

~40% OF Q-FREE'S REVENUES ARE NOW «RECURRING»

DECOMPOSITION OF 2020 REVENUES Percent, 100% = 889 MNOK

• Tolling S&M contracts
• Tolling back-office SW contracts
• Tolling Ferry services
• Tolling ALPR solutions
• Tolling multi-year tag contracts
• ATMS O&M contracts
• ATMS multi-year controller contracts

EBITDA DEVELOPMENT

EBITDA EXCL. NON-RECURRING ITEMS NOK million

• Q4-20 negatively impacted by 4 MNOK in extraordinary expenses related to structural processes

EBITDA MARGIN EXCL. NON-RECURRING ITEMS Percent

SEGMENT EBITDA DETAILS

EBITDA NOK million

SEGMENT	Q4-20	Q4-19	Margin change	FY 2020	FY 2019	Margin change
Tolling	31	11	+12.5 pp	104	89	+3.6 pp
Traffic Management	1	0	+1.1 pp	-2	7	-4.2 pp
Assets held for sale	-1	2	-10.2 pp	3	4	-0.6 pp
Group Functions	-5	-3		-29	-28
EBITDA	25	11	+5.7 pp	76	73	+1.0 pp

		change	FY 2020	FY 2019
1	0	+1.1 pp	-2	7
-1	2	-10.2 pp	3	4

NOTE: Figures are rounded

ORDER INTAKE DEVELOPMENT

ORDER INTAKE & BOOK-TO-BILL PER QUARTER NOK million / ratio

• Order intake does not include frame agreements, i.e. the 30 MNOK Tolling contract in Norway announced in Q4-20

• 400 MNOK in awarded contracts pending final signatures not included in order intake/backlog (of which 240 MNOK have been signed YTD 2021)

Q4-20 ORDER INTAKE PER BUSINESS AREA NOK million

KEY CONTRACT WINS IN Q4-20

NORWAY – 30 MNOK

• Tolling roadside equipment to Vegfinans + long-term recurring S&M
• 4-year frame agreement, first delivery expected in 2021
• New mini-tenders possible

MISC WIM – 30 MNOK

• Weigh-in-motion solutions to Ukraine and Saudi Arabia
• Deliveries started in Q4- 20, will continue in 2021
• Additional sales possible (some new systems already won)

NORWAY – 30 MNOK

• Extension of current back-office SW contract
• Secures transaction services until January 2022

USA – 15 MNOK

• ALPR and manual image review SW
• 21-month initial contract, extension possible

KEY CONTRACTS SIGNED AFTER CLOSING OF Q4-20

SWEDEN - 130 MNOK

• Upgrade of congestion tax system in Stockholm (originally delivered by Q-Free in 2005)
• Roadside equipment deliveries in 2021 and 2022
• 10 years of recurring S&M
• Potential extensions on top

USA - 90 MNOK

• New statewide ATMS System
• Initial deployment in 2021 (~20% of contract value)
• 10 years of recurring O&M (~80% of contract value)
• Potential new task orders on top

ORDER BACKLOG DEVELOPMENT

ORDER BACKLOG NOK million

• Frame contracts with no committed minimum volumes and awarded but not yet signed contracts are NOT included in the backlog

EXPECTED DELIVERY SCHEDULE NOK million

• Healthy backlog for 2021 (+ new contract wins in Q1-21)
• Some changes to planned delivery schedules might occur as a result of the Covid-19 pandemic

AVAILABLE FUNDS

AVAILABLE CREDIT AND CASH AT HAND NOK million

RECONCILIATION OF Q4-20 AND Q3-20 AVAILABLE FUNDS

BALANCE SHEET AND NIBD

BALANCE SHEET ITEMS NOK million

Current liabilities Non-current liabilities

Equity

• Other current assets
• Assets held for sale
• Cash
• Other non-current assets
• GW & other intangible assets
• 21 FOURTH QUARTER 2020

NET INTEREST BEARING DEBT NOK million

• NIBD/EBITDA ratio well inside loan covenant for Q4-20 and Q1-21

FIRST QUARTER 2019

OUR 2020-2023 PLAN

A MORE FOCUSED SETUP WAS IMPLEMENTED IN 2020

FROM 5 BUSINESS UNITS... …TO 2 BUSINESS UNITS

MARKET EFFORTS HAVE BEEN CONCENTRATED AND REFOCUSED OVER THE PAST YEARS

Q-Free office closed

• Brazil (2016)
• South Africa (2017)
• Malta (2018)
• Serbia (2018)
• Indonesia (2018)
• Malaysia (2019)

PROFITABILITY AND LIQUIDITY WERE RESTORED AFTER A CHALLENGING Q1-20

EBITDA EXCL. NON-RECURRING ITEMS NOK million

AVAILABLE CREDIT AND CASH AT HAND NOK million

Available credit Cash at hand

OUR 2020-2023 PLAN

IN TOLLING CORE MARKETS ARE «SECURED» AND CONTINUE TO OFFER EXCITING OPPORTUNITIES

Norway

• ~25 MNOK in annual toll service revenues
• ~20 MNOK in annual ferry tolling revenues
• ~70 MNOK in annual transaction-based SW revenues
• ~30 MNOK Vegfinans contract won in Q4-20

Portugal

• ~40 MNOK in annual toll service revenues
• ~130 MNOK Ascendi MLFF contract won
• ~20 MNOK A28 upgrade contract won

• ~15 MNOK in annual truck tolling service revenues

• ~130 MNOK Stockholm upgrade project won

• ~35 MNOK in annual service revenues

• ~20 MNOK in annual revenues from ATMS systems

Australia

Chile

• ~15 MNOK in annual service revenues
• ~20 MNOK Cross-City Tunnel contract won & delivered
• ~55 MNOK Queensland contract won

• ~6-8 MNOK in annual toll service revenues • ~20 MNOK Ruta 68 contract won & delivered

• ~20 MNOK multi-year tag contract won

Thailand

• ~25 MNOK in annual tag sales
• ~70 MNOK DMT contract won

USA

• ~25 MNOK in annual ALPR SW revenues • ~15 MNOK ALPR contract won in Q4-20

• 20 FOURTH QUARTER 2020

28

Slovenia

Sweden

IN TRAFFIC MANAGEMENT LONG-TERM CONTRACTS WITH KEY DOTs NOW DRIVE INCREASING ARR

BUILD 2

THE OPPORTUNITY PIPELINE LOOKS PROMISING

ADDRESSABLE OPPORTUNITIES WITH VALUE >1 MEUR EXPECTED TO BE TENDERED/AWARDED IN 2021 MNOK

Q-FREE

THE PRIME MOVER IN INTELLIGENT TRAFFIC SOLUTIONS

Q-FREE CONTINUES TO INNOVATE AND IMPROVE ITS OFFERING TO DRIVE PROFITABLE GROWTH!

Scalable Tolling backoffice SW platform

Pioneering future RUC technology

Industry-leading ATMS SW platforms Advanced transportation controllers & cabinets

BUILD 2

TOLLING ADVANCEMENTS: A NEW CAMERA GENERATION & ROAD USER CHARGING TECHNOLOGY

NEW IMAGING SYSTEM NEW ROAD USER CHARGING TECHNOLOGY

• Vehicle tracking for single-gantry operation
• Improved dirt/dust/snow resilience
• Covers multiple lanes
• Reduced weight & size

• Flexible and easy installation

• Highly flexible

• Secure and enforceable
• Allows interaction with user
• Protects privacy
• Applicable to all eligible vehicles
• EETS compatible

TRAFFIC MANAGEMENT ADVANCEMENT: THE KINETICS SW PLATFORM

• Single, off-the-shelf ATMS solution
• Unifies freeway and signal management
• Fosters a truly open traffic ecosystem
• Improves mobility across local, intercity, and regional traffic operations.

BUILD 2

OUR 2020-2023 PLAN

THE SCALABILITY OF OUR OFFERING IS INCREASING SIGNIFICANTLY

SCALE 3

OUR SCALABLE SOLUTIONS WILL BE SOLD IN SELECTED NEW MARKETS

SCALE 3

OUR 2021 OUTLOOK

• 10% organic revenue growth (@ 2020 FX rates)

• Book-to-bill > 1.1

• 10% EBITDA margin

GOALS ENABLERS

• Increasing ARR, solid backlog & several recent contract wins

• Attractive contract pipeline and competitive offering

• Solid gross margin structure and reduced OPEX base

OUR 2025 AMBITIONS

• 1.3-1.5 bn NOK in revenues + potential M&A growth
• 15-20% EBITDA margin & 10-15% EBIT margin
• Technology leadership The Prime Mover

GOALS ENABLERS

• Attractive mega trends, increasing ARR & bolt-on acquisitions
• Increasing SW share and high scalability of solutions
• Continous innovation & clear roadmaps

CHANGING THE MOVEMENTS of LIFE

Q-Free info@q-free.com www.q-free.com @qfreeasa

QFreeITS #LiveQFree

41 Copyright © 2020 Q-Free. May not be distributed or reproduced without written consent. Updated 17 Nov 2020