4 PRESENTATION OF FOURTH QUARTER AND PRELIMINARY FULL YEAR 2018 - PowerPoint PPT Presentation

4 PRESENTATION OF FOURTH QUARTER AND PRELIMINARY FULL YEAR 2018 RESULTS President & CEO Håkon Volldal / CFO Tor Eirik Knutsen

SUMMARY

HIGHLIGHTS FOURTH QUARTER 2018 FULL YEAR 2018 • 241 MNOK in revenues, down 9% YoY due to high • 889 MNOK in revenues, down 9% from 2017. 10% project revenues in Slovenia in Q4-17. 32% YoY growth growth in non-tolling businesses despite divestments in non-tolling businesses! • 89 MNOK in EBITDA before non-recurring items (10% • 22 MNOK in EBITDA before non-recurring items (9% margin), down from 110 MNOK in 2017. margin) compared to 40 MNOK (15% margin) in Q4-17 71 MNOK in reported EBITDA due to 18 MNOK in one- off expenses related to close down of Serbia, Malta and • 262 MNOK in order intake, up 97% YoY Jakarta • 971 MNOK in order intake, up 58% from 2017 (not • 22 MNOK in operating cash flow incl. net investments including frame agreements worth >100 MNOK signed • Jakarta business closed down in 2018) • 1 128 MNOK in order backlog (not including >200 MNOK in expected value of frame agreements), up from 1 049 MNOK at the end of Q4-17 • 117 MNOK in operating cash flow incl. net investments 3 FOURTH QUARTER 2018

Q4-18 AND FULL YEAR 2018 FINANCIALS MNOK Q4 2018 Q4 2017 YoY FY 2018 FY 2017 YoY Change Change Revenues 241 265 -8.7% 889 973 -8.7% 569 591 -3.7% Gross contribution 151 169 -10.7% Gross margin 62.6% 64.0% -1.6 pp 64.1% 60.7% +3.4 pp OPEX 129* 130 -0.4% 480** 481 -0.1% EBITDA before non- 22 40 -44.2% 89 110 -18.9% recurring items Margin 9.2% 15.0% -5.8 pp 10.0% 11.3% -1.3 pp EBITDA 9* 40 -78.2% 71** 83*** -13.9% Margin 3.6% 15.0% -11.4 pp 8.0% 8.5% -0.5 pp EBIT -3 4 24 4 EBIT margin -1.4% 1.5% -2.9 pp 2.7% 0.4% +2.3 pp * 13 MNOK in close-down costs for Jakarta in Q4-18 ** 18 MNOK in close-down costs in FY 2018 for Jakarta, Serbia and Malta *** 28 MNOK in settlement costs in FY2017 4 FOURTH QUARTER 2018

Q-FREE HAS HISTORICALLY STRUGGLED WITH THE TRANSITION FROM LARGE PROJECT DELIVERIES, BUT NOT IN 2018 ANNUAL REVENUES AND ADJUSTED EBITDA MARGIN MNOK / Percent, Year End December 31st 973 1000 20% 889 877 15,2 % 900 789 15% 767 800 11,3 % 705 10,7 % 10,0 % 700 10% 606 598 568 600 500 5% 400 0% 300 -0,5 % -1,0 % -1,4 % 200 -5% 100 -5,2 % -5,2 % 0 -10% 2010 2011 2012 2013 2014 2015 2016 2017 2018 Portugal Brazil Slovenia Slovakia Thailand 5 FOURTH QUARTER 2018

THE REVENUE COMPOSITION HAS CHANGED SIGNIFICANTLY OVER THE PAST FEW YEARS… ANNUAL REVENUES PER BUSINESS AREA NOK million 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 46 20 % 39 38 34 21 10 % 11 0 % 2010 2011 2012 2013 2014 2015 2016 2017 2018 Other segments Tolling 6 FOURTH QUARTER 2018

…HENCE, OUR BUSINESS MODEL IS NOW MORE ROBUST 100 % Non-recurring 90 % (~15%, -9 pp vs. 2017) 80 % 70 % 60 % Resilient (~52%, +6 pp vs. 2017) 50 % 40 % 30 % 20 % Recurring (~33%, +3 pp vs 2017 ) 10 % 0 % 2010 2017 2018 Tolling S&M Inter-Urban S&M CS Norway/ALPR Tolling Products Parking/info/Urban Products Tolling Projects Inter-Urban Projects 7 THIRD QUARTER 2018

BUSINESS UPDATE

TOLLING HIGHLIGHTS Q4-18 REVENUES AND EBITDA NOK million • Revenues and EBITDA down YoY Q4-18 Q4-17 FY 18 FY 17 − Low project revenues as Slovenia entered service EUROPE 99 136 376 446 and maintenance phase in Q2-18 APMEA 7 19 54 69 − New contracts in Chile and Thailand will improve AMERICAS 14 16 51 86 revenue situation in APMEA and AMERICAS REVENUES 121 172 481 601 • Significant increase in order intake EBITDA 18 48 84 133 − Ferry contract in Norway (55 MNOK) − Chile tolling contract (30 MNOK) REVENUE AND ORDER INTAKE DEVELOPMENT − Australia tolling contracts (25 MNOK) NOK million 172 155 • Q-Free withdrew from the Jakarta ERP process and 144 141 126 121 121 117 117 closed down the office in Q4-18 56 − 13 MNOK in restructuring charges in Q4-18 − >15 MNOK in expected OPEX savings in 2019 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Revenues Order intake 9 FOURTH QUARTER 2018

PARKING HIGHLIGHTS Q4-18 REVENUES AND EBITDA NOK million • Revenues up 11% YoY driven by increased parking Q4-18 Q4-17 FY 18 FY 17 guidance sales in France EUROPE 8 5 26 27 APMEA 1 2 5 7 • Improved EBITDA AMERICAS 4 4 20 22 REVENUES 13 11 52 56 − Malta costs removed from Q3-18 − R&D and industrialization costs related to launch EBITDA 0 -3 -13 -8 of new outdoor parking sensor impact negatively (lower cost base from Q1-19) − Continued positive development expected REVENUE AND ORDER INTAKE DEVELOPMENT NOK million • Good order intake 22 − Increased sales in the US 19 16 14 − First contracts for new outdoor sensor won! 13 13 13 11 10 − Several significant tenders for outdoor sensor in 5 the pipeline Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Revenues Order intake 10 FOURTH QUARTER 2018

INFOMOBILITY HIGHLIGHTS Q4-18 REVENUES AND EBITDA NOK million • Revenues up 64% YoY driven by strong performance in Q4-18 Q4-17 FY 18 FY 17 EUROPE EUROPE 22 11 69 46 APMEA 1 3 4 11 • Good EBITDA contribution in the quarter due to high AMERICAS 2 2 5 7 revenues and good ALPR volumes REVENUES 25 16 78 64 • Continued growth in order intake after a soft 1H-18 EBITDA 4 0 10 5 − First large order from the US (6 MNOK) − Misc. orders in Europe REVENUE AND ORDER INTAKE DEVELOPMENT NOK million 30 26 24 23 20 17 16 16 16 10 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Revenues Order intake 11 FOURTH QUARTER 2018

URBAN HIGHLIGHTS Q4-18 REVENUES AND EBITDA NOK million • Revenues up 13% YoY despite divestiture of Serbia Q4-18 Q4-17 FY 18 FY 17 − Strong HW volumes EUROPE 0 5 1 14 − Delivery of PennDOT SW contract APMEA 0 0 0 0 AMERICAS 49 28 156 126 • Strong EBITDA contribution REVENUES 49 33 157 139 − Higher share of high-margin SW revenues EBITDA 11 -4 30 2 − No negative contribution from Serbia • Order intake driven by several medum-sized contracts, REVENUE AND ORDER INTAKE DEVELOPMENT strong pipeline for 2019 NOK million 74 59 49 46 41 42 33 31 20 17 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Revenues Order intake 12 FOURTH QUARTER 2018

INTER-URBAN HIGHLIGHTS Q4-18 REVENUES AND EBITDA NOK million • Revenues flat versus Q4-17 Q4-18 Q4-17 FY 18 FY 17 − Steady business in Slovenia EUROPE 5 4 21 19 APMEA 0 0 0 0 − Steady US business with VDOT, PennDOT and AMERICAS 28 28 99 94 WVDOT REVENUES 33 32 121 113 • EBITDA contribution stabilized after a weak H1-18 EBITDA 2 8 16 16 • Good order intake compard to previous quarters, however REVENUE AND ORDER INTAKE DEVELOPMENT book-to-bill is negative given ongoing VDOT project NOK million deliveries 32 32 31 29 − Ljubljana Ring Bypass project (10 MNOK) 28 25 23 − Misc. US orders 16 14 9 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Revenues Order intake 13 FOURTH QUARTER 2018

4 OUT OF 5 SEGMENTS CONTRIBUTE POSITIVELY, PARKING WE EXPECT TO BE “FIXED” IN 2019 Tolling EBITDA Inter-Urban EBITDA 60 40 40 20 20 0 0 -20 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Infomobility EBITDA Urban EBITDA 40 40 20 20 0 0 -20 -20 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Parking EBITDA • Urban: Profitability negatively impacted by Serbia up 40 until end of Q1-18 20 • Parking: Profitability in the period negatively impacted by 0 Malta, which was discontinued end of Q2-18, and R&D -20 expenses related to new parking sensor Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 14 FOURTH QUARTER 2018

FINANCIAL UPDATE

REVENUE DEVELOPMENT QUARTERLY REVENUES REVENUE BREAKDOWN ON REGION/SERVICE LINE NOK million Percent 265 241 INTER-URBAN 226 217 14 % 204 APMEA 4 % AMERICAS 40 % URBAN TOLLING 20 % EUROPE 50 % 56 % Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 INFOMOBILITY PARKING 11 % 5 % • EUROPE is still the largest region with 56% of Revenues down 9% from Q4 2017 revenues, down from 61% in Q4-17 • Tolling revenues down 51 MNOK due to lower project • Non-tolling businesses accounted for 50% of revenues revenues in Slovenia and Chile in the quarter, up from 35% in Q4-17 • Non-tolling revenues up 27 MNOK despite exit from Serbia and Malta 16 FOURTH QUARTER 2018

EBITDA DEVELOPMENT EBITDA EXCL. NON-RECURRING ITEMS EBITDA MARGIN EXCL. NON-RECURRING ITEMS NOK million Percent 16% 15,0 % 14,7 % 14% 12% 9,2 % 8,8 % 10% 40 7,3 % 8% 33 6% 22 4% 18 16 2% 0% Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 • YoY EBITDA reduction due to lower project revenues in • Full-year 2018 adjusted EBITDA margin of 10%, down from tolling 11.3% in 2017 • Reported EBITDA in Q4-18 negatively impacted by 13 • Reported Q4-18 and FY 2018 EBITDA margin negatively MNOK in close-down costs in Jakarta impacted by close down-costs of 13 and 18 MNOK respectively 17 FOURTH QUARTER 2018