Norconsult : 2024 - First Quarter Norconsult report

The market for private Buildings & Architecture is still a bit on the weak side, however, there are some bright spots. In the first quarter Norconsult together with our architects in Nordic Office of Architecture (Nordic) was part of the winning team that will design and build the refurbishment and addition to the hospital in Nykøbing Falster in Denmark. During the quarter our win together with partners of the design-build competition for the expansion of Geneva Airport in Switzerland was also confirmed. In addition, there was a large number of smaller wins.

As in recent quarters we see strong activity and healthy demand from the Energy & Industry segment, with a balanced mix of projects. In the Infrastructure segment there has been fewer large projects, but in total the demand remains stable. The water infrastructure market had a stable quarter, driven by increased requirements for water and wastewater treatment facilities.

In the first quarter Norconsult acquired Concreto AS, an Oslo-based planning and analysis company. Concreto operates mainly within buildings, infrastructure and urban planning, and their services primarily focus on economic analysis as a basis for decision-making

by project owners in the early phases of projects. Norconsult also bought a majority share in the property developer company SQM AS which was completed 31 January.

Each year we engage in thousands of projects that require expertise in sustainability, digitalisation and collaboration. In all our projects, we take pride in delivering the little big differences - those that increase value for our clients and contribute to sustainable development. To highlight some of the projects our skilled employees participate in, and to highlight much of the fantastic work that is being done, we have during the first quarter honoured outstanding project and team performance within five categories during our Norconsult Awards. The Norconsult Awards categories are Sustainability, Digitalisation, Project Management,

Egil Hogna, CEO Norconsult (Herman Dreyer)

• In all our projects, we take pride in delivering the little big differences
• • those that increase value for our clients and contribute to sustainable development.

Collaboration and the Open Category. Examples of award-winning projects are the New Sotra Bridge, the world's largest all-digital bridge, and the Pre-feasibility study for Green Ammonia for Fortescue at Holmaneset, Norway.

I would like to thank our customers and our employees who work hard every day to improve everyday life with their dedicated work on thousands of projects. Their efforts resulted in Norconsult achieving another quarter of growth and underlying stable performance. We continue our efforts to attract, develop and retain the best employees in Norconsult as they are the foundation of our success.

Highlights Q1 2024

• Income after external project costs was NOK 2 360 million (2 359)

Significant calendar effects in the quarter due to Easter holiday in March, resulting in five less working days compared with Q1 2023, amounting to NOK -178 million in reduced income after external project costs and adj. EBITA

• Organic growth of 6 percent adjusted for calendar effects
• Adj. EBITA was NOK 227 million (381) with an adj. EBITA margin of 9.6 percent (16.2)
• Adj. EBITA margin adjusted for calendar effects was 15.9 percent (16.2)
• Costs for employee share program 2023 (gift shares) of NOK 77 million (0) is excluded from adj. EBITA
• Net profit of NOK 103 million (283)
• Ordinary earnings per share NOK 0.36 (1.02)

Key figures for Q1 2024

Consolidated key figures

Refer to page 34 for reconciliations and definitions of Alternative Performance Measures.

Group performance

Growth and underlying

stable profitability

The first quarter was significantly affected by an Easter holiday

calendar effect of five less working days compared to the first quarter of 2023, which negatively impacted income after external project costs and adjusted EBITA of NOK 178 million. Adjusted for calendar effect, income after external project costs increased with 8 percent, where the organic growth adjusted for calendar effects was 6 percent. Adjusted EBITA margin was 15.9 percent for the quarter

adjusted for calendar effects (16.2).

Q1 2024

Operating revenue and other income for the quarter ended at NOK 2 633 million, an increase of 1 percent compared with the same quarter last year.

Income after external project costs for the quarter ended at NOK 2 360 million, an increase of NOK 1 million compared with the same quarter last year. The negative impact due to calendar effects amounted to NOK 178 million. Income after external project costs adjusted for calendar effects increased with 8 percent compared to the same quarter last year.

Organic growth adjusted for calendar effects amounted to 6 percent. Acquired growth was 1 percent. Currency effects were 1 percent for the quarter.

The organic growth is mainly driven by higher number of employees and increased average billing rate.

Adjusted EBITA for the quarter ended at NOK 227 million, compared with NOK 381 million for the same period last year. Adjusted EBITA margin was 15.9 percent adjusted for calendar effects compared to 16.2 percent in the same period last year.

Solid improvement compared to last year in Norway Head Office and Renewable Energy contributed positively, mainly due to increased average billing rates and stable billing ratio. The improvement was partly mitigated by lower profitability in Norway Regions and Sweden mainly due to lower billing ratio. Expenses for the employee share program for 2023 (gift shares) of NOK 77 million are not included in adjusted EBITA.

EBIT for the quarter ended at NOK 145 million compared with NOK 376 million in the same period last year, mainly explained by the negative calendar effect of NOK 178 million. In addition, expenses for employee share programs for 2023 (gift shares) and 2024 were NOK 87 million (0) in the quarter.

Net profit for the period ended at NOK 103 million compared with NOK 283 million in the same period last year, mainly due to less working days and expenses for employee share programs for 2023 and 2024.

Ordinary earnings per share decreased from NOK 1.02 in the first quarter of 2023 to NOK 0.36 in the same period this year mainly as a result of the calendar effects for the current quarter and costs for employee share programs.

The order backlog at the end of the quarter increased to NOK 6.6 billion up from NOK 6.2 billion at the end of 2023.

Calendar effects in the first quarter of 2024 were significant due to five less working days compared to the first quarter 2023. There will be four more working days in the second quarter 2024 compared with same quarter 2023 with an estimated positive effect on income after external projects and adjusted EBITA for the Group of NOK 140 million.

Note that the calendar effect has not been adjusted in the graphs below.

Income after external project costs

Adj. EBITA

Financial position, cash flow and liquidity

People and organisation

Markets and projects

Total assets amounted to NOK 6 688 million, an increase of 5 percent compared with total assets at the year-end 2023. The change is mainly due to prepaid expenses, an increase in non-current assets as a result of acquisitions and additions of right-of-use assets. The Company's equity totaled NOK 2 257 million at 31 March 2024 compared to NOK 2 065 million at year-end 2023. The change in equity is mainly a result of net profit for the period.

Net interest-bearing debt (NIBD) amounted to NOK 656 million, up from NOK 633 million at year-end 2023. NIBD excluding IFRS leasing liabilities amounted to NOK -991 million, improved from NOK -947 million

at 31 December 2023.

Net cash flow from operating activities was NOK 184 million, down NOK 75 million compared with same quarter last year mainly due to calendar effects. A new agreement for engineering software applications for the Group was entered into with yearly payments, whereas the previous agreements were invoiced quarterly. This had a negative effect on cash flow from operating activities in this quarter of approximately NOK 40 million. Fluctuations in working capital items are in general in line with seasonal variations and change in operating revenue.

Net cash flow used in investing activities was

NOK -46 million in Q1 2024 compared with NOK -65 million the same period last year, mainly due to lower payments related to acquisitions.

Net cash flow from financing activities was

NOK -105 million, compared with NOK -99 million in the same period last year.

Cash and cash equivalents at quarter end were NOK 592 million. Including placements in bond funds, with a fair value of NOK 398 million, total liquidity was NOK 991 million, up from NOK 947 million at the end of 2023.

At the end of Q1 2024 the number of employees was 6 300 up from 5 870 employees by end of Q1 2023. The number of FTEs was 6 148 compared to 5 697 FTEs in the same period in 2023.

Our commitment to promoting diversity, equality, and inclusion (DEI) was highlighted on International Women's Day where our managers and employees were invited to discuss in panel debates and local sessions what we would need to do to abolish Women's Day. Further we have participated with a use case in the Executive Master Program Multicultural Leadership at the Norwegian Business School BI. We have refined and upgraded the Group's recruitment procedures to better assist our leaders in recruiting the best talent.

To highlight some of the projects our employees work in, and to highlight much of the work that is being done, we have during the first quarter honoured outstanding project and team performance within five categories in our own Norconsult Awards. The Norconsult Awards categories are Sustainability, Digitalisation, Project Management, Collaboration and Open Category.

The annual executive meeting EXECOM gathered around 90 leaders across the Group to discuss The road to Nordic Top 3 - Making a decent profit decently with focus on environmental, social, and economic sustainability.

Our employees have during the first quarter of 2024 conducted their yearly performance review and set goals for the upcoming period.

The market for Norconsult's services in the first quarter of 2024 was, at large, in line with previous years. We observe a slightly more optimistic market sentiment, driven by macroeconomic forecasts. The market for Buildings & Architecture is still a bit on the weak side. We continue to see high activity and healthy demand from the Energy & Industry segments. Demand in the Infrastructure market remains stable, as expected. While the activity level overall remains stable, we do notice some delay with regards to construction of new capital-intensive projects, especially in Norway.

Norconsult reports on markets and projects through the following three main business markets:

• Buildings & Architecture
• Infrastructure
• Energy & Industry

Buildings & Architecture

Norconsult, as the rest of our industry, continues to navigate a weaker and uncertain buildings market, moved by macroeconomic investment sentiments. Given the external circumstances, we are relatively pleased with the order intake from Buildings & Architecture in this quarter. Our focus on the public buildings market mitigates some of the volatility we observe in the private segment. We continue to expect a fair level of activity in the public building segment across the Nordics, while we expect the private building market to be influenced by macroeconomic sentiments going forward.

Among noticeable projects included in the order intake during the quarter were:

• Økern school - technical disciplines, Oslo, Norway
• New Sealand University Hospital, Nykøbing Falster, Denmark
• Stavanger emergency room, Stavanger, Norway

Infrastructure

The activity level in public and private infrastructure spending, observed by Norconsult, continues in line with previous periods. This observation is supported by the newly published proposal for a new Norwegian national transport plan 2025-2036 (NTP). As expected, the NTP emphasizes steady public transportation infrastructure investments levels in the next decade, but with increased focus on modification and maintenance of existing infrastructure. We understand that the proposed NTP, if passed by parliament, will reallocate some resources from a few very large newbuild projects, to give economic room for an increased number of smaller projects distributed across a larger geography. The NTP is scheduled for parliamentary vote before summer. The water infrastructure sub-segment continues its stable development, driven by long term increased focus

and requirements for water and wastewater treatment facilities.

Among noticeable projects included in the order intake during the quarter were:

• Highway 4, Almenningsdelet - Lygnebakken, Innlandet, Norway
• Frame agreement, Traffic investigation and traffic analysis, Umeå, Sweden
• Pilestredet, upgrade for light rail and water infrastructure, Oslo, Norway

Energy & Industry

The strong activity in the Energy & Industry market continues. We still observe a healthy demand in both new industry as well as energy projects across geographies. There continues to be a balanced mix between different sub-segments in Energy & Industry, such as new industrial buildings and infrastructure, pharmaceuticals, hydropower production as well as power transmission systems.

Among noticeable projects included in the order intake during the quarter were:

• Fortescue Future Industries - Holmaneset and Sundsmarka, Norway
• New Vinje hydropower dam, Telemark, Norway
• Bulk Infrastructure Norway Data Center Campus - N01, Agder, Norway

Business area overview

For management purposes, the Group is organised into business areas based on a combination of geography and services and has five reportable segments. Digital and Technogarden are segments not separately reportable under IFRS. Each business segment has an Executive Vice President responsible for day-to-day operations and financial performance. The segments are:

Norway Head Office

This segment includes operations in the greater Oslo area and supports the entire Group with expertise and experience from large complex projects in the market areas of transport, buildings, industry, water, environment, architecture as well as society and urban development.

Norconsult is a leading interdisciplinary consultancy firm solving the most complex engineering problems with the best talents.

The Group operates under a Pan-Nordic delivery model balancing unmatched local presence with knowledge hubs in approximately 140 locations.

Income after external project costs increased by

10 percent after adjustment for calendar effects, of which organic growth was 9 percent. The increase was mainly driven by higher number of FTEs and higher average billing rates, in addition to a slightly higher billing ratio compared with the same period last year. Calendar effects had a negative impact of approximately NOK 73 million on income after external project costs and adjusted EBITA.

Adjusted EBITA for the quarter was NOK 84 million compared with NOK 133 million in the same period last year, and the corresponding margin was 11.8 percent (18.4) The margin was negatively impacted by calendar effects and adjusted for these effects the adjusted EBITA margin was 19.9 percent in the quarter. The improved profitability was mainly due to increased number of FTEs, higher average billing rates and slightly improved billing ratio.

FTE increased from 1 475 in the first quarter of 2023 to 1 567 FTE in the first quarter of 2024 (+6.2 percent).

Norway Regions

This segment includes operations in Norway outside the greater Oslo area. Industry, and in particular renewable and green industry, is an important focus area for Norway Regions, while buildings as well as transport constitute the two largest market subareas in the business area. The segment has a larger exposure towards the Buildings & Architecture market compared with the other segments in Norconsult.

Sweden

This segment consists of operations in Sweden within Infrastructure, Buildings & Architecture and Energy & Industry.

Income after external project costs increased by

3 percent after adjustment for calendar effects as a result of organic growth. The increase was mainly driven by the higher number of FTEs and increased billing rates, however mitigated by lower billing ratio mainly explained by the Buildings & Architecture market, which has been weak for the last 12-18 months. Calendar effects had a negative impact of approximately NOK

70 million on income after external project costs and adjusted EBITA.

Adjusted EBITA for the quarter was NOK 56 million compared with NOK 140 million in the same period last year, and the corresponding margin was 8.1 percent (19.0). The margin was negatively impacted by calendar effects and adjusted for these effects the adjusted EBITA margin was 16.6 percent in the quarter. The decrease was mainly explained by a lower billing ratio due to a continued weak market within Buildings & Architecture.

FTE increased from 1 585 in the first quarter of 2023 to 1 675 FTE in the first quarter of 2024 (+5.7 percent).

Income after external project costs increased by

14 percent after adjustment for calendar effects, of which organic growth was 11 percent. The increase was mainly driven by higher number of FTEs in addition to increased billing rate partly mitigated by lower billing ratio. Sweden recruited approximately 100 senior resources during second half of 2023. The senior resources are according to plan gradually staffed on new projects, hence it will take some time to achieve a normal billing ratio. Calendar effects had a negative impact of approximately NOK 11 million on income after external project costs and adjusted EBITA.

Adjusted EBITA for the quarter was NOK 37 million compared with NOK 61 million in the same period last year, and the corresponding margin was 9.3 percent (17.1). The margin was negatively impacted by calendar effects and adjusted for these effects the adjusted EBITA margin was 11.7 percent in the quarter. The decline was a result of lower billing ratio mainly due to the recruitment of the senior resources, with an estimated effect of NOK -7 million in the first quarter. The billing ratio in Buildings & Architecture was slightly down from a strong first quarter last year, in addition to lower activity in geotechnical services.

FTE increased from 1 116 in the first quarter of 2023 to 1 312 FTE in the first quarter of 2024 (+17.6 percent).

Denmark

This segment consists of operations in Denmark with projects mainly within Buildings & Architecture, soil analysis, in addition to industry and life science.

Renewable Energy

Renewable Energy supplies services to the entire renewable industry and is transferring many decades of experience from hydropower to solar power, wind power and energy storage. The segment includes services for the renewable sector with locations in Norway, Poland, Iceland, Finland in addition to smaller project offices in Africa and Asia.

Income after external project costs increased by

10 percent after adjustment for calendar effects, mainly driven by acquisitions. Organic growth adjusted for calendar effects was -3% compared with the same quarter last year, mainly due to a continued weak market within Buildings & Architecture. Calendar effects had a negative impact of approximately NOK 8 million on income after external project costs and adjusted

EBITA.

Adjusted EBITA for the quarter was NOK 13 million compared with NOK 20 million in the same period last year, and the corresponding margin was 7.4 percent (12.0). The margin was negatively impacted by calendar effects and adjusted for these effects the adjusted EBITA margin was 11.3 percent in the quarter. The adj. EBITA was reduced by NOK 4 million related to leaver penalty and earn-out agreements in acquisitions.

FTE increased from 452 in the first quarter of 2023 to 467 FTE in the first quarter of 2024 (+3.3 percent).

Income after external project costs increased by

18 percent after adjustment for calendar effects, of which organic growth was 17 percent. The growth was mainly driven by higher number of FTEs, increased average billing rates and higher billing ratio. Calendar effects had a negative impact of approximately NOK

16 million on income after external project costs and adjusted EBITA.

Adjusted EBITA for the quarter was NOK 36 million compared with NOK 35 million in the same period last year, and the corresponding margin was 18.1 percent (19.2). The margin was negatively impacted by calendar effects and adjusted for these effects the adjusted EBITA margin was 24.4 percent in the quarter. The main contributor to the development in profitability was continued strong performance in Hydropower & Transmission with stable development in Wind- and Solar power.

FTE increased from 386 in the first quarter of 2023 to 452 FTE in the first quarter of 2024 (+17.1%).

Total revenue for the quarter ended at NOK 317 million up from NOK 298 million in 2023. The increase was mainly due to increased volume and improved hourly rates in Technogarden.

Income after external project costs for the quarter was NOK 202 million compared with NOK 210 million in the same period last year. The decrease was mainly due to higher use of subconsultants and fewer FTEs in Technogarden. Digital is in line with the same quarter last year, with increased sales of licenses partly offset by lower utilisation of consultants.

548 FTE in the first quarter of 2024 (-4.5%).

Risk and uncertainties

Outlook

Norconsult has a large number of private and public customers in several industries and is exposed to the economic development in a large number of industries in the Nordics. The Group is vulnerable for and exposed to risks related to economic downturns, public sector austerity programs, reductions in private sector spending and reduced activity in relevant markets and the ability to continue to attract, retain and motivate qualified personnel. Further, any adverse changes in the

economic, political and market conditions (primarily in the Nordic region) and the current geopolitical instability could have a material adverse effect on the Group's business, revenue, profit and financial condition.

The Group is also exposed to certain types of financial risks, such as credit risk, liquidity risk, currency risk and interest rate risk. For additional information see Note 4 Financial risk management in the IFRS Financial statement for 2023.

The overall market is still affected by uncertainty influenced by macroeconomics.

There are signs of improvement in the market for Buildings & Architecture, while we expect high activity and healthy demand from the Energy & Industry markets. The demand in the Infrastructure market is expected to be quite stable going forward, but we do notice some delay with regards to construction of new large capital-intensive projects.

Norconsult has considerable flexibility, a diversified mix of services and end-market exposures in the Nordics. Most of the demand for our services comes from the public sector. This makes Norconsult less exposed towards short-term cyclicality in the general economy. We continue to expect a relatively stable market outlook going forward, despite the macroeconomic uncertainties we are experiencing.

Our orderbook has increased during the quarter, with a good mix of new projects and growth in existing contracts. We continue to take proactive measures to improve our underlying profitability and maintain our

Acquisitions and disposals

efficiency.

Norconsult Norge AS, a subsidiary of Norconsult ASA, acquired 51% of the shares in Oslo-based project management and consultancy company SQM AS. The company counts seven FTEs and is consolidated into the Norway Head Office business segment from 31 January 2024.

Further, Norconsult Norge AS also acquired the Oslo- based planning and analysis company Concreto AS. The company counts 13 FTEs and is included in the Norway Head Office business segment from 29 February 2024.

Norconsult has divested its business in the Philippines and sold all of the shares in the fully owned subsidiary Norconsult Management Systems Ph.Inc. (NMS) to the local managing director as of 5 March 2024.

Sandvika, 13 May 2024

The Board of Directors and CEO of Norconsult ASA

The Annual General Meeting was held on 13 May 2024. The Annual General Meeting approved all the proposed items on the agenda, including the proposed new composition of the Board of Directors in accordance with proposal of the nomination committee.

The Annual General Meeting resolved in accordance with the proposal of the Board of Directors to distribute a dividend of NOK 1.20 (0.96) pr share to the shareholders.

In connection with the offering and the listing of the Norconsult share 10 November 2023, the selling shareholders, members of the Board of Directors and the Executive Management undertook that they will not during a period ending 12 months after the listing, sell, pledge, or otherwise dispose of their shares. It was agreed that 50 percent of the shares will be released from lock-up 6 months after the listing, except for any shares held by members of the Board of Directors or the Executive Management. The lock up period for 50 percent of the shares expired on 10 May 2024.

At 25 April 2024, Norconsult Norge, together with the contractor Hent, has secured a contract with Avinor to design and build the buildings at the new airport in Bodø, Norway. Norconsult will act as a subcontractor to Hent, in collaboration with Archus and LPO architects. The new airport is tentatively scheduled for completion in 2029/2030. Norconsult`s revenue from the contract is estimated to be approximately NOK 100 million.

In order for Norconsult Digital to get closer to Norconsult's core business, Bård Hernes will succeed Kathrine Duun Moen as EVP Norconsult Digital as from 14 May 2024. Hernes continues as EVP Norway Head Office. Duun Moen continues as EVP Technogarden.