CEO’s letter

Building a sustainable company The Covid-19 pandemic affected our way of living and the way we work in 2020, and I want to thank our employees who rapidly adapted to a challenging situation. Health, safety and environment will always be our number one priority, and our collective effort as a team enabled us to continue safe operations during the year.

We made good progress on our organisational development, internal processes, and cost reduction to build a more flexible cost base. Even though we achieved many operational goals, we did not reach our profitability target for 2020. This was mainly due to weak margins in the demolition- and recycling business, low activity in Civil Norway, and too few projects won in a very competitive market in Sweden. Overcapacity during first half of the year in Finland led to higher production overhead costs. Summing up, these factors generated unsatisfactory results for 2020 and lowered our 2021 expectations.

BUILDING A STRONGER PLATFORM FOR FUTURE GROWTH Our improvement programs are taking effect across the organisation and we see the results in more robust processes and in financial performance at project level. We are winning the right projects at the right price, supported by a structured and disciplined tendering process, and the quality of our orderbook is improving.

I would like to highlight the strategic importance of the maintenance contract we won in Finland during the year, which confirmed our competitiveness and strong position in this important market. In late 2020, we also won a sizeable contract for rehabilitation of Nittedal railway station in Norway. This is a project that fully leverages our combined capabilities in civil works and rail services. We also won contracts for demolition, remediation and mass removal on the new Fornebubanen metro line in Oslo, which is one of the largest sustainable infrastructure projects in Norway in the coming years. In Sweden, The Swedish Transport Administration, appointed us a contract of SEK 149 million for catenary work on the railway connections Österås-Bispgården, RamsjöLjusdal and Storvik-Gävle.

BUILDING OPPORTUNITIES FOR THE FUTURE As a Nordic leader in sustainable infrastructure, we take great pride in building environmentally friendly solutions to connect people and cities. The light rail projects in Finland and Fornebubanen in Norway are great examples of how NRC Group’s services contribute to efficient transports, reduced emissions and a more sustainable society.

We are always mindful of how we conduct our operations. NRC Group has experience from executing low emission projects and have established a leading market position within environmental services for the construction industry in Norway. In order for us to deliver the solutions for tomorrow, we also recognise that we need to be transparent on how we conduct our operations and minimise our own footprint when building zero-emission infrastructure such as railroads, tramlines or electric ferry ports.

During the year we decided to better identify how we can help address the climate challenge, and the commercial opportunities this creates for NRC Group. We identified material topics and completed a climate risk analysis, to strengthen our ability to build environmentally friendly solutions connecting people and cities. For us to deliver sustainable solutions for tomorrow, we recognise our responsibility to minimise NRC Group’s impact on the external environment. We will present our material topics and how we work with them, climate accounting and GRI standard reporting in a separate sustainability report.

Our ambition is to make a positive impact for all our stakeholders, and we believe an integrated framework for handling environmental, social and governance factors will support our external brand recognition, tendering processes, project execution and talent recruitment for long-term value creation.

LONG-TERM AMBITION STANDS FIRM A year ago, we presented our ‘Tomorrow in the making’ - strategy, positioning us for strong growth in the infrastructure markets across Norway, Sweden and Finland. We also presented long-term ambitions of NOK 10 billion in revenue and 7% EBITA margin in 2024.

These ambitions remain intact. Lower results than expected in 2020, give us less time, still I’m confident that we are building an even stronger foundation for the company. Our improvement programs show good progress and significant results. We firmly believe that our ambitions are at the right level.

The long-term outlook for sustainable infrastructure investments remains strong across the Nordics, which is confirmed in the public budgets in Norway, Sweden and Finland. We are fully committed to establishing the position as the most profitable sustainable infrastructure provider in these markets and continue to see growth opportunities in all our segments.

Lysaker, 15 March 2021

CHIEF EXECUTIVE OFFICER Henning Olsen comes from the position as executive vice president in AF Gruppen, where he has been responsible for the Building business area in Norway since 2016. His previous roles in AF Gruppen include head of AF Eiendom, financial director within AF Bygg Oslo and group controller. Before joining AF Gruppen in 2010, he has been employed at Statkraft and Boston Consulting Group. Henning holds a Master of Science degree in Business from BI Norwegian Business School (2003).

Henning Olsen CEO