Norva24 Group AB: Interim report (Q1 and Q3)

Good organic growth, solid margins and excellent operating cash flow during the third quarter

July-September 2022

• Total operating revenue amounted to NOK 612.0 million (541.0), an increase of 13.1%. Currency-adjusted organic growth was 6.7%.
• Revenue from customer contracts amounted to NOK 610.6 million (532.3), an increase of 14.7%.
• EBIT amounted to NOK 76.6 million (54.6).
• The quarter was charged with non-recurring items amounting to NOK 1.1 million (10.7).
• Adjusted EBITA amounted to NOK 86.7 million (72.5).
• Profit for the period was NOK 49.8 million (19.8).
• Cash flows from operating activities totaled NOK 133.3 million (107.6).
• Basic/Diluted earnings per share amounted to NOK 0.27 (0.25).

January-September 2022

• Total operating revenue amounted to NOK 1,746.9 million (1,436.4), an increase of 21.6%. Currency-adjusted organic growth was 10.7%.
• Revenue from customer contracts amounted to NOK 1,732.7 million (1,422.7) an increase of 21.8%.
• EBIT amounted to NOK 176.4 million (117.9).
• The period was charged with non-recurring items amounting to NOK 6.7 million (37.0).
• Adjusted EBITA amounted to NOK 207.5 million (175.6).
• Profit for the period was NOK 126.2 million (35.3).
• Cash flows from operating activities totaled NOK 199.9 million (197.2).
• Basic/Diluted earnings per share amounted to NOK 0.69 (0.16).

Significant events during the January-September 2022 period

• Norva24 acquired the German company Zimmerbeutel, a leading provider of underground infrastructure maintenance (UIM) services in the Rhein/Ruhr area.
• Norva24 Group acquired the Swedish company IRG Rörinspektion. The acquisition is strategically important for Norva24's efforts to develop new technological solutions within sensor technology and digital monitoring in addition to regular UIM services.
• To strengthen Norva24's Group Management Team and prepare for further expansion, current Group CFO Stein Yndestad will become Group Chief Business Development Officer reporting to the Group CEO and remains part of the Group Management Team. Stein Yndestad will remain in his current role as Group CFO until new Group CFO Dean Zuzic assumes his position in February 2023.
• Norva24 strengthened its market position in Jutland Denmark through the acquisition of Thornvig Jensen - a company that has been operating for 100 years.
• Norva24 strengthened its position within pipe relining in the Swedish market through the acquisition of Stockholm Relining
• Norva24 signed an agreement to acquire Jutzy Haustechnik und Service. The acquisition strengthens Norva24's market leading position in UIM in Germany and makes Norva24 the clear UIM leader in the greater Berlin area.

Significant events after the reporting period

• Norva24 acquired CKS Express Baumanagement GmbH and CKS Rohr Express e.K. (CKS), further strengthening Norva24's market leading position in UIM in the Greater Berlin area.

Improved margins and good growth both organic and acquired combined with excellent cash flow

I'm pleased with our development in the third quarter confirming again that we are on the right track to achieve our financial targets in 2025. In Q3 2022, Norva24 achieved a strong total revenue growth of 13%, supported by solid currency-adjusted organic growth of 7%. Several acquisitions were signed during the quarter and with a continued extensive pipeline, we expect our acquisition activities even in 2023 to be well in line with our mid term plan. Adjusted EBITA in the quarter was NOK 87 million, an improvement of 20% year-on-year. Adjusted EBITA-margin was up by 0.8 percentage-points to 14% in Q3 2022.

Norva24's organic growth and the solid EBITA margin development in Q3 proves that our business model is resilient in this weaker economic environment as well as inflation resistant. Each of the three Scandinavian countries delivered continued strong currency adjusted organic growth with Norway at 9%, Denmark at 13% and Sweden at 10%. The solid organic growth was driven by increased customer activity and general price increases. As mentioned in our Q2 report, Norway was expected to see a lower growth in Q3 than in the first half of the year as the assignments postponed due to Covid-19 in 2020 and 2021 were completed in the first half of 2022. Regarding Germany's weaker organic development, it must be noted that the organic growth was very strong at 21% in Q3 2021 which provides for tough comparable figures for 2022.

Norway continued to deliver satisfying currency adjusted organic growth of 9% in Q3 2022. The organic growth was driven by a general increase in the level of activity and price adjustments. The backlog of assignments after Covid-19 contributed to a very high organic growth of more than 20% in the first half-year and was largely completed in Q2.

Norway also showed a strong adjusted EBITA margin of 18% in Q3 2022, a significant improvement compared with 14% in 2021.

As in the first half of the year, Sweden showed a strong organic growth in Q3 2022. Total revenue growth in Sweden was also very strong with 46% year to date.

We are pleased to see that the improvements in the Danish operations seen in previous quarters continued in the third quarter with 13% currency adjusted organic growth and positive EBITA of NOK 5 million. Adjusted EBITA margin improved by 8 percentage points year to date, confirming again that Denmark is on the right track.

Even if growth was lower due to a very strong currency adjusted organic growth of 21% in Q3 2021, Germany posted a healthy Q3 adjusted EBITA margin of 16% down from 19% in Q3 last year, with a dilutive effect from acquisitions made in 2022.

With regards to acquisitions, we have so far this year closed six acquisitions, confirming that 2022 as a whole will be a strong acquisition year. In Q3, three acquisitions were closed.

The first acquisition closed in Q3 was Thornvig Jensen in Denmark, a company with over 100 years of operations. With this acquisition we have strengthened our position and improved Norva24s density in the Danish market.

The second was Stockholm Relining. This acquisition complements Norva24's range of services and makes the company a full-service provider within UIM in the Stockholm area.

The third acquisition closed in Q3 was Jutzy in the Berlin/Brandenburg area, followed by the acquisition of CKS in the same area early in Q4. Adding these two companies to the rest of Norva24's activities in the area fortifies Norva24's position as the clear market leader in the strategic Berlin metropolitan area where we now have more than NOK 300 million in annual revenue.

It is also encouraging to see that the cash flow from operations cover the acquisitions both in Q3 and LTM. We are therefore comfortable with our healthy financial position, excellent cash flow and the leverage as calculated towards the covenants in the financing facility, ie proforma, is still at a level below 2.0x adjusted EBITDA after these recent acquisitions.

We have acquired a total of six companies in 2022 so far, adding annual revenue of NOK 350 million. We will continue to act in a prudent and orderly way in accordance with our acquisition strategy, with diligent assessment and integration of candidates, to ensure continued strong organic development. Our vision is clear: We want to be the market leader in underground infrastructure maintenance in Europe. We will continue to strengthen our position through both acquisitions and organic growth to fully live up to our promise to our customers: "We always help!"

The market we operate in is non-cyclical, and our business is resilient since our services are mission-critical with market growth driven by factors such as an ageing underground infrastructure, increased regulation, and a higher frequency of extreme weather events due to climate change. Our services are critical to the functioning of society and there is a need for them regardless of any economic cycles and inflationary environments.

We have an ambitious digitalization agenda and we continuously work to increase the operational efficiency through digitalization. The vast majority of our Scandinavian branches are operating on the same IT platform including same ERP system, Business Intelligence Solution and order handling module etc. As part of this digitalization strategy, the group has now around 500 vehicles on the same fleet management system including GPS tracking of the vehicles making optimization of route and density synergies possible.

We have a clear, proven, and consistent acquisition strategy, with 39 acquisitions completed since Norva24 was established. We operate in the European UIM market, with a total addressable market of NOK 140 billion, and have a clear number one position in Northern Europe, a market worth NOK 36 billion, we are well on track to achieve our financial target of NOK 4.5 billion in revenue by 2025.

Maintenance of underground infrastructure is a key factor for a sustainable future, as presented in our sustainability report 2021. We remain focused on our core business and work continually to further develop Norva24's sustainability initiatives to safeguard the UN Global Sustainable Development Goals for clean water, sanitation, and clean energy to further consolidate our position as the leading player in the industry.
Henrik Damgaard Chief Executive Officer

"Norva24 achieved a strong total growth of 13% as well as an increased adjusted EBITA of 20%. We are pleased with the six acquisitions so far this year and our pipeline remains strong."

Shareholders, Investors, analysts and journalists are welcome to attend the company's presentation in Stockholm or webcast with teleconference at 09.30 (CST) .

Henrik Damgaard, CEO, Stein Yndestad, CFO, and Sture Stölen, Head of IR, will present the report. The presentation will be held in English.

Date: November 23, 2022
Time: Report published at 08.00 (CET)
Webcast with teleconference at 09.30 (CET) To participate in the conference, please go to link
or dial in on the telephone numbers below If you want to be present physically please be present at Helio GT30 Grev Turegatan 30 Stockholm latest by 09.15 (CET).
Webcast: https://financialhearings.com/event/44437

Teleconference:
Dial-in number
DK: [phone]
SE: [phone]
UK: [phone] (UK Pin: 33807300#)
US: [phone]

For further information contact:
Sture Stölen, Head of IR
Tel: [phone]
E-mail: [e-mail]

This information is information that Norva24 Group AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2022-11-23 08:00 CET.