Norske tog AS Bond Investor Presentation November 2019 Important - - PowerPoint PPT Presentation

Norske tog AS

Bond Investor Presentation November 2019

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Important Information (1/2)

This presentation and its appendices (collectively the "Presentation") has been produced by Norske Tog AS (the "Company") with assistance from Nordea Bank Abp, filial i Norge, and SEB (together the "Managers") in connection with the

• ffering of bonds by the Company (the "Offering").

This Presentation is strictly confidential and may not be reproduced or redistributed, in whole or in part, to any other person. This Presentation has not been reviewed by or registered with any public authority or stock exchange and does not constitute a prospectus. To the best of the knowledge of the Company and its board of directors, the information contained in this Presentation is in all material respects in accordance with the facts as of the date hereof, and contains no omissions likely to affect its import. This Presentation contains information obtained from third parties. As far as the Company is aware and able to ascertain from the information published by that third party, such information has been accurately reproduced and no facts have been omitted that would render the reproduced information to be inaccurate or misleading. Only the Company and the Managers are entitled to provide information in respect of matters described in this Presentation. Information obtained from other sources is not relevant to the content of this Presentation and should not be relied upon. This Presentation does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in such jurisdiction. Persons in possession of this Presentation are required to inform themselves about and to observe any such restrictions. This Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company, the Managers or any of their parent or subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence

• f the forecasted developments. The Company or the Managers assume no obligation, except as required by law, to update this Presentation, including any forward-looking statements or to conform any forward-looking statements to our

actual results. In making an investment decision, potential investors must rely on their own examination, and analysis of, and enquire into the Company and the terms, including the merits and risks involved. AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY'S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION. THE COMPANY OR THE MANAGERS DO NOT INTEND TO OR ASSUME ANY OBLIGATION TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION. Norske Tog Investor Presentation 2

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The Managers have not engaged any external advisors to carry out any due diligence investigations and have not taken any steps to verify any of the information contained herein other than a due diligence call with representatives of the

• Company. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is

accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company or the Managers or any of their parent or subsidiary undertakings or any such person's officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the Company, the market and the market position of the Company, the Company’s funding position, and that you will conduct your own investigations and analysis and be solely responsible for forming your own view of the future performance of the Company’s business and its current and future financial situation. Within the European Economic Area, this Presentation is being made and communicated pursuant to an exemption from the requirement to produce a prospectus under the EU Prospectus Directive and amendments thereto. This Presentation is confidential and is being communicated in the United Kingdom to persons who have professional experience, knowledge and expertise in matters relating to investments and are "investment professionals" for the purposes of article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and only in circumstances where, in accordance with section 86(1) of the Financial and Services Markets Act 2000 ("FSMA") the requirement to provide an approved prospectus in accordance with the requirement under section 85 FSMA does not apply. Consequently, the Investor understands that the Offering may be offered only to "qualified investors" for the purposes of sections 86(1) and 86(7) FSMA, or to limited numbers of UK investors, or only where minima are placed on the consideration or denomination of securities that can be made available (all such persons being referred to as "relevant persons"). This presentation is only directed at qualified investors and investment professionals and other persons should not rely on or act upon this presentation or any of its contents. Any investment or investment activity to which this communication relates is only available to and will only be engaged in with investment professionals. This Presentation (or any part of it) is not to be reproduced, distributed, passed on, or the contents otherwise divulged, directly

• r indirectly, to any other person (excluding an investment professional's advisers) without the prior written consent of the Company or the Managers.

IN RELATION TO THE UNITED STATES AND U.S. PERSONS, THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING FURNISHED SOLELY IN RELIANCE ON APPLICABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED. THE BONDS HAVE NOT AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IS AVAILABLE. ACCORDINGLY, ANY OFFER OR SALE OF BONDS WILL ONLY BE OFFERED OR SOLD (I) WITHIN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS, ONLY TO QUALIFIED INSTITUTIONAL BUYERS ("QIBs") IN OFFERING TRANSACTIONS NOT INVOLVING A PUBLIC OFFERING AND (II) OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN ACCORDANCE WITH REGULATION S. ANY PURCHASER OF BONDS IN THE UNITED STATES, OR TO OR FOR THE ACCOUNT OF U.S. PERSONS, WILL BE DEEMED TO HAVE MADE CERTAIN REPRESENTATIONS AND ACKNOWLEDGEMENTS, INCLUDING WITHOUT LIMITATION THAT THE PURCHASER IS A QIB. NORDEA BANK ABP, FILIAL I NORGE IS NOT REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AS A U.S. REGISTERED BROKER-DEALER AND WILL NOT OFFER OR SELL THE BONDS WITHIN THE UNITED STATES. This Presentation speaks as of 25 November 2019. There may have been changes in matters which affect the Company subsequent to the date of this Presentation. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo District Court (Nw: Oslo tingrett) as exclusive venue. Norske Tog Investor Presentation 3

Important Information (2/2)

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Speakers

Øystein Risan - CEO Linda Venbakken - CFO

Norske Tog Investor Presentation 4

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Norske Tog Investor Presentation 5

▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix

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Norske tog in numbers

Employees Experienced employees with solid sector competence Return on equity Norske tog delivered a return on equity of 8.5% per H1 2019 LTM (against the required 5%)

33 16yrs

Average fleet age Norske tog strives to acquire at least one vehicle per month, phase out less modern ones and optimize transport capacity

89%

Electric train sets The majority of Norske tog’s 255 train sets are powered by electricity

255

Train sets1 Owns and manages all Norwegian passenger trains, with a few exceptions

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Types of vehicles1 Norske tog strives to effectively facilitate sufficient access to reliable and contemporary vehicles, in line with the society’s need

24% A+

rating Currently rated A+ (Stable) by S&P Equity ratio The company had an equity ratio of 24% per H1 2019

Norske Tog Investor Presentation

8.5%

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Note: Figures based on Norske tog H1 financial report 1) Train sets and vehicle types as of 31 October 2019

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Credit Highlights

Norske tog owns ~90% of the rolling stock in Norway Favourable passenger railway fundamentals Visible and stable cash flows Supportive regulatory environment

• Long-term leasing contracts and limited cashflow cyclicality
• Cashflows underpinned by high quality lessee
• Framework that provides stability to Norske tog’s operations
• Supportive mechanism underscore Norske tog’s strategic importance

Highly committed and long-term owner

• Norwegian state (rated AAA/Aaa) is committed to the solid long-term credit quality of Norske tog
• Railway identified as the clean energy mass transportation solution for the future

Residual value guarantee Green and sustainable business model

• Norske tog has a key role to play in achieving a more efficient and climate-friendly transport system
• Investments in the transport sector will play a vital role in meeting the government’s targets for reduced emissions
• Proceeds will be used for electric train investments
• The Norwegian state guarantees 75% of the book value of all vehicles
• High barriers of entry – currently the single provider of passenger rolling stock to the Norwegian railway system1
• Rolling stock portfolio designed for Norwegian rail specifications
• Authorities negotiate lease agreements prior to competitive tenders
• Growing population and increased urbanization expected to drive train usage
• Robust increase in passenger growth and the National Transport Plan forecast significant investments

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1) Excluding Oslo Airport Express, trains coming in from Sweden and a few vehicles retained by NSB (Flåmsbanen)

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Norske Tog Investor Presentation 8

▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix

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Norske Tog Investor Presentation

MINISTRY OF TRANSPORT AND COMMUNICATIONS

• As part of the railway reform, Norske tog AS was put under direct
• wnership of the Transport and Communications Ministry in 2017, tasked

with ensuring equal access to rolling stock for the operators, as well as acquisitions and management of the stock

• 100% owned by the Norwegian Ministry of Transport and Communications
• Classified as a category 3 company1 by the Norwegian Government

together with Statnett and Avinor among others

• The company own, acquire and manages train stock for leasing to railway
• perators in Norway
• Dedicated towards contributing to the “green shift”
• The company also act as an advisor to the Norwegian Railway Directorate
• Following the implementation of the railway reform, rolling stock owned by

NSB AS (now Vy) was spun off and transferred to Norske tog

• Norske tog’s most important social function is laying the foundations for

more people choosing to use public transport for their daily travel, by ensuring a sufficient supply of – good-quality – rolling stock

Brief company description

100% Train sets

255

The Norwegian rolling stock owner

135

Wagons

22

Locomotives

9 1) A category 3 company fulfils national sectorial political objectives and is primarily not exposed to competition

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Norske Tog Investor Presentation

MINISTRY OF TRANSPORT AND COMMUNICATIONS

Strategic governance and regulation of the sector, and ownership of several entities Coordination, operational governance and continuous development of the sector Governance and regulation State owned companies Private sector

Railway- , maintenance- and construction companies and suppliers competing for tenders

• Following the new structural

changes, responsibilities and accountabilities for the various state-owned entities are more efficiently divided

• The Ministry sets the overall

long-term strategic goals, while the Railway Directorate is responsible for tendering railroad operations and acquisition of infrastructure services

• By introducing competition in

the railroad industry, entities such as Vy compete for tenders alongside private railway

• perators
• Norske tog is not exposed to

competition Railway infrastructure Rolling stock

• wnership

Sales ticketing Rolling stock maintenance Passenger

• perations

Industry structure

As owner of rolling stock, Norske tog is not exposed to competition

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Norske Tog Investor Presentation Source: Norske tog annual report (2018)

Recent development and current vehicle deployment

Overview of railway lines Selected Norske tog milestones

• Jan. 2018:

Preparation of new local train acquisition started

• Mar. 2018:

Tender for traffic package North announced

• May. 2018: Start of the ERTMS project with Alstorm as supplier for onboard

equipment for new the signal system for the railway

• May. 2018: Tender for traffic package North announced
• Aug. 2018: FLIRT train #100 delivered from Stadler
• Oct. 2018:

Traffic package South awarded to British Go-Ahead

• Des. 2018: Option 5 in the FLIRT contract with Stadler exercised and the

last 25 vehicles are ordered. Total orders now at 150 vehicles

• Des. 2018: Tender for new mobile amplifier (repeater) and replacement of

diesel locomotives opened

• Des. 2018: Competition for traffic package West tendered
• Jun. 2019:

SJ Norge awarded traffic package Nord

• Aug. 2019: Contract for new 4G mobile amplifiers signed
• Sep. 2019: Norske tog announces new local trains to be used between Ski-

Oslo-Stabekk (planned to be procured in 2020)

• Dec. 2019: Traffic package West to be announced with start-up in Dec. 2020
• Dec. 2019: Traffic package South scheduled for start-up

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Not served by Norske tog’s stock Type 69 Type 70 Type 72 Type 73 Type 74 Type 75 Type 92 Type 93 Type 5/WLAB2 Type 7/WLAB2

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The Norwegian Railway Directorate determines the future railway

• fferings in Norway,

and sets the premise for Norske Tog The Norwegian Government guarantees 75% of residual book value of the rolling stock Norske tog finances their acquisitions through debt financing Norske tog acquires,

• wns and manages

rolling stock for passenger transportation in Norway The Norwegian Railway Directorate has imposed train operators to use Norske tog’s stock for the tenders that have been made until now, or announced Norske tog generates revenues through leasing their train stock to railway operators

Norske tog’s operations

1 2 3 4 5 6

Year 4 Year 3 Year 2 Year 1 Preparation stage

• The Directorate sets a rolling stock strategy and

send orders

• Norske tog provides advice to the Directorate,

which sends an application to the Ministry for residual value guarantees

• Norske tog prepares the competition stage for

delivery

• Announcement of

competition after allocation

• f residual value guarantee
• Evaluation and contract

signing at the end of year 1

• Design, testing and production
• Norske tog creates training documentation for

conductors and maintenance personnel

• Delivery of trains

typically after four years

• The first train needs to

be type approved (the process usually takes between 6-12 months) Procurement stage

Illustrative rolling stock acquisition timeline

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Business model

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Tender 2 North case study – Norske tog will supply reliable and up to date rolling stock to SJ Norge

Norske Tog Investor Presentation

Tender 2 North Tender 2 North (diesel)

Tender overview Background

• SJ Norge submitted the bid which gave the best balance between quality

and costs to the government for the second traffic package (North)

• In June 2019, the 10 year contract was signed between the Norwegian

Railroad Directorate and SJ Norge

• The tender includes rail passenger services on Dovrebanen, Rørosbanen,

Raumabanen, Nordlandsbanen, Trønderbanen and Meråkerbanen

• The average compensation that SJ Norge requires from the government

amounts to a fifth of the current costs

SJ Norge

• SJ Norge is a Norwegian subsidiary of Sweden’s largest rail passenger
• perator, SJ AB. SJ is owned 100 % by the Swedish government
• The group is already operating in Norway, and runs the services between

Stockholm and Narvik and between Stockholm and Oslo

Norske tog’s role

• Norske tog's responsibility is to procure and lease out a sufficient number
• f safe, reliable and up to date vehicles to SJ Norge
• SJ Norge will be responsible for operation and maintenance of vehicles

leased from Norske tog

• Together, SJ Norge and Norske tog will contribute to make passenger

train transport attractive in Norway and to "the green shift"

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Stable cash flows

Norske tog is the passenger rolling stock supplier in Norway

Area 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Direct acquisition agreements Gjøviksbanen Tender 1 – South Tender 2 – North Tender 3 – West Tender 4 - Oslo Tender 5 – East Tender 6 – Oslo corridor Tender 7 – OSL

Cash flow underpinned by high quality lessees Cash flow underpinned by high quality lessees

Vy as main

• perator

Other operators Predictable revenues Contract structure eliminates exposure to key costs ▪ Vy is operator of last resort for available stock ▪ Strong credit profile (A- by S&P), providing counterparty security throughout the contract term ▪ Leases are negotiated with the Norwegian Railway Directorate ▪ Pre-qualified criteria for tender requires solid financial and economic position, as well as relevant competence ▪ No exposure to key operating costs such as maintenance insurance or fuel prices, all met by the lessees ▪ Fixed monthly payment contracts provide predictable stream of revenue

Norske Tog Investor Presentation Source: Company data

Contracted Option Future tenders

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Norske tog is committed to a sustainable business model

Norske tog’s sustainability focus areas Selected guidelines

Innovation and reduced emissions

• Emissions reduced through new transport methods
• New technical solutions with reduced energy

consumption on both existing and new trains

• Trains should facilitate easy upgrades of boarding

systems and interior solutions for increased capacity and thereby resource utilization

Sustainable public transport

• In order to increase demand for public transport, Norske

tog aim to provide the best rolling stock possible at appropriate costs

Responsible procurement and acquisition

• Norske tog has ethical requirements towards suppliers
• Suppliers need to commit to international conventions

and facilitate for inspections from Norske tog or the government

Labour and human rights

• Strong focus on diversity within the organization
• Work towards zero injuries – no reported incidents in

2018

• Norske tog has several focus areas with respect to contributing to the

sustainability targets set by the UN

• The focus areas and guidelines are integral parts of Norske togs
• perations

Norske Tog Investor Presentation 15

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Norske Tog Investor Presentation 16

▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix

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Continued increase in the governments budgeted railway investments

Norske Tog Investor Presentation Source: The Norwegian Government Fiscal Policy 2020

2,000 1,900 1,900 528 3,400 624 233 103 Østfoldbanen Vestfoldbanen Dovrebanen Follobanen Ringeriksbanen Trønderbanen Vossebanen Oslo tunnel (planning) 25.7 26.8 0.9 11.6 8.7 4.0 1.6 Maintenance Other 2019 2020 Investments Acquisition of transport services Investment planning +4%

Budgeted allocation to the railway sector in 2020 (NOKbn) Budgeted investments in 2020 per railway section (NOKbn)

Intercity Other projects

The Norwegian government aim to modernize the railway sector in order to facilitate effective and sustainable public transport

▪ Significant investments are scheduled going forward, where roughly 50% will be dedicated to InterCity in 2020 ▪ In addition to modernizing the infrastructure and phasing in new trains, the government wish to increase the attractiveness of railway transport ▪ NOK 26.8 billion is proposed for rail purposes in the Norwegian Government Fiscal Policy 2020, an increase of 1.1 billion or 4.5% from 2019

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Favourable passenger railway fundamentals

Norske Tog Investor Presentation 50 10 60 20 30 40 70 80 73.6 2013 74.3 2018 Millions 2012 70.3 2014 2015 2016 2017 62.7 67.3 73.8 77.7 +4% 3 1 2 4 Billions 2013 2018 2012 2014 2015 3.3 2016 2017 3.1 3.4 3.6 3.7 3.6 3.7 +3%

▪ The Norwegian government is currently undertaking the largest expansion

• f the railroad system in history

▪ Of the total investments laid out in The National Transport Plan 2018-2029, 45% is to be used on the railroad sector (NOK 319bn) ▪ Attractiveness of train travel is set to improve dramatically following renewal and expansion of the existing infrastructure

5.6 5.4 5.8 5.0 5.2 4.8 4.4 4.6 6.0 6.2 6.1 Estimated population (billions) 2020 2030 2040 5.3 6.0 5.4 5.7 5.4 5.5 5.6 5.7 5.8 5.9 5.9

Substantial railroad investments going forward Growing population expected to drive train usage Steady growth in passenger kilometres

Source: Statistics Norway

Increased number of boardings

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Norske Tog Investor Presentation 19

▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix

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Green bond framework

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Norske tog will further promote investments in rolling stock and improve existing trains

• By the end of 2018 Norske tog has taken delivery
• f 105 FLIRTS, with remaining 45 scheduled for

delivery over the next four years

• All FLIRTS are electric except for 14 new Class 76

bimodal trains, i.e. trains that can run on both electricity and diesel

• In addition to acquire new trainsets, modifications

and mid-life upgrades are important investments in order to ensure sufficient capacity

• Norske tog wants to contribute to making the

railway even more climate friendly

• In 2018, Norske tog joined forces with Feral on a

pilot project developing new, retrofittable engine technology for diesel trains, which could potentially help reduce greenhouse gas emissions and consumption of fossil fuels for Norske tog’s diesel trains by up to 20%

• The National Transport Plan outlines a

historically large investment budget in the Norwegian railway sector

• The Norwegian population is expected to

increase from current 5.3 million to 6 million people within the next 20 years1

• Urbanization is a global trend increasing the

demand for efficient and environmentally friendly transport in urban areas

• Rail transport plays a crucial role in achieving

society’s environmental and climate goals

• Compared to other modes of transport, trains are

more energy efficient and makes only a marginal contribution to local air pollution

• Norske tog must follow up the significant

investments made in expanding and upgrading the rail network in Norway

• Norske tog has a key role to play in achieving a

more efficient and climate-friendly transport system

• The company shall help to make passenger train

transport attractive in Norway and contribute to “The Green Shift

• The green bond framework is based on the 2018

version of Green Bond Principles (ICMA)

• Through the eligible projects, the framework targets

the following UN Sustainable Development Goals: Overview Climate considerations Norske tog and Green Bonds

Norske Tog Investor Presentation 20 1) Statistics Norway

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Use of proceeds

• The net proceeds raised

from the issuance of Norske tog green bonds will be used to finance or re-finance a selected pool

• f assets that promote the

transition to low-carbon and climate resilient growth

• Refinancing of eligible

projects will have a look- back period of no longer than 3 years from the time

• f issuance

Category Eligible Projects UN SDG Mapping Environmental Objective Clean Transportation Investments into new or renewed electric train sets and renovation or improvements of the existing electric rolling stock Provide access to safe, affordable, accessible and sustainable transport systems for all Climate change mitigation Pollution prevention and control

Electric train investments, renovations or improvements

Norske Tog Investor Presentation 21

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Management of proceeds and reporting

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✓

Norske tog will establish a green bond register in relation to green bonds issued for the purpose of monitoring the eligible projects and the allocation

• f the net proceeds

✓

Norske tog will strive to report on the actual environmental impact of the investments financed by their green bonds

✓

Norske tog will annually publish a report on the allocation and impact of green bonds issued under this framework Clean transportation Energy savings (GWh saved / reduced) Increase in the use of renewable energy Annual GHG emissions reduced / avoided

Impact metrics selected may include:

Norske Tog Investor Presentation 22

Norske tog has implemented a process to ensure that only projects aligned with the criteria will be selected as eligible projects

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Second opinion from CICERO

Norske Tog Investor Presentation 23

• Dark Green is allocated to the projects and solutions that correspond to the

long-term vision of a low carbon and climate resilient future

• Selected highlights from the second opinion:

✓ The framework is well aligned with the Green Bond Principles ✓ The eligible category (clean transportation) is well defined and aligned with a low carbon future ✓ Norske tog has close dialog with other stakeholders in the railway industry to influence and put green considerations on the agenda for future decisions ✓ Norske tog emphasizes responsible purchasing and procurement of new trains ✓ No significant weaknesses associated with this green bond issuance framework

Norske tog has received the highest possible shading, “Dark Green”, from CICERO

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Norske Tog Investor Presentation 24

▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix

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Norske Tog Investor Presentation

Income statement Operating revenue (NOKt)

Financial statements

NOKt H1 2019 FY 2018 FY 2017 Operating income 628,275 1,217,061 996,681 Salary and other personnel expenses

• 20,747
• 43,028
• 34,732

Other operating expenses

• 55,104
• 56,045
• 51,817

EBITDA 552,424 1,117,988 910,132 Depreciations and write-downs

• 352,936
• 692,055
• 642,522

Operating profit 199,488 425,933 267,610 Financial income 78,370 169,200 120,607 Financial costs

• 147,834
• 291,645
• 233,863

Net financial pension costs

• 311
• 334

Unrealised value changes 6,740 20,371

• 1,896

Sum financial items

• 62,724
• 102,385
• 115,486

EBIT 136,764 323,548 152,124 Taxes

• 30,088
• 44,243
• 9,613

Net income 106,676 279,305 142,511 Estimate deviations pension

• 13,423
• 2,773

Tax related to posts not subject to reclassifications 2883 595 Net profit for the year 106,676 268,765 140,333 628,275 607,772 H1 2018 H1 2019

EBITDA (NOKt)

552,424 569,578 H1 2019 H1 2018

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Norske Tog Investor Presentation

Balance sheet Equity ratio

Financial statements

NOKt H1 2019 FY 2018 FY 2017 Tangible assets 10,334,487 9,883,793 9,733,784 Total fixed assets 10,334,487 9,883,793 9,733,784 Trade receivables and other receivables 1,442 698 21,247 Derivatives 1,156,946 1,203,006 1,091,712 Cash 602,939 2,372,091 360,499 Total current assets 1,761,327 3,575,795 1,473,458 Total assets 12,095,814 13,459,588 11,207,242 Share capital 2,400,000 2,400,000 2,400,000 Retained earnings 541,275 434,598 165,834 Total equity 2,941,275 2,834,598 2,565,834 Debt 6,715,394 8,311,286 7,309,273 Derivatives Deferred tax liability 690,225 660,137 618,777 Pension liabilities 31,455 32,296 18,271 Other accruals 8,869 Total long-term liabilities 7,445,943 9,003,719 7,946,321 Trade payables and other short term debt 72,811 138,676 19,509 Deferred tax liability Debt 1,591,197 1,463,863 647,635 Derivatives 44,589 18,732 27,943 Total short-term liabilities 1,708,596 1,621,271 695,087 Total liabilities 9,154,539 10,624,990 8,641,408 Total equity and liabilities 12,095,814 13,459,588 11,207,242 24.3% 23.5% H1 2018 H1 2019 10,334,487 9,864,241 H1 2018 H1 2019

Total fixed assets (NOKt)

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Norske Tog Investor Presentation

Cash flow

Financial statements

NOKt H1 2019 FY 2018 FY 2017 Ordinary result before taxes 136,764 323,548 152,124 Depreciations and write-downs 352,936 692,055 642,522 Pension differences

• 841

602

• 1,164

Interest items

• 106,082
• 52,161

76,739 Changes in working capital

• 59,135

139,717

• 524,107

Net cash flow from operating activities 323,642 1,103,761 346,114 Acquisition of fixed assets

• 792,805
• 842,064 -1,133,603

Net cash flow from investment activities

• 792,805
• 842,064 -1,133,603

Debt drawings

• 2,850,000

1,049,941 Debt repayments

• 1,300,000 -1,099,995
• 549,946

Net group contribution 644,428 Net cash flow from financing activities

• 1,300,000 1,750,005

1,144,423 Change in cash position for the period

• 1,769,163 2,011,702

356,934 Liquidity reserve at the beginning of the period 2,372,091 360,499 1,245 Currency gains/ loss on cash 11

• 110

2,320 Liquidity reserve at the end of the period 602,939 2,372,091 360,499

Operating cash flow (NOKt)

323,642 552,258 H1 2019 H1 2018

Acquisition of fixed assets (NOKt)

792,805 470,560 H1 2018 H1 2019

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Norske Tog Investor Presentation

Low refinancing risk

28

1.0 2.2 2.4 0.0 0.4 0.2 0.6 1.4 0.8 1.2 1.6 1.8 2.0 2027 2020 NOKbn 2019 0.30 0.30 2021 2.00 0.35 0.75 2022 0.60 2023 2024 2025 2026 2028 1.52 2.35 0.77 0.55 0.65 0.50 1.15

Maturity profile for Norske tog’s long term liabilities

Undrawn credit facilities NOK bonds CHF bonds1

1) NOK equivalent as per Norske tog’s Q2 2019 report

Confidential

Norske Tog Investor Presentation

Book values of rolling stock (per September 2019)

29

The Norwegian state guarantees 75% of the book value of all vehicles

153 9,853 453 484 734 2,079 5,332 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Type 73B Type 70 Total NOKm Type 5 Type 93 246 135 Type 72 Type 74 Type 69 Type 75 Type Wlab2 7,389 (75%) 5 1 Type 92 12 TYPE Di4 55 Type 73A 53 Type EL18 Type 7 111 Train sets Wagons Locomotives

Confidential

Norske Tog Investor Presentation 30

▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix

Confidential

Value chain and Norske tog’s positioning

Norske Tog Investor Presentation

Maintenance providers Passenger train

• perators

Rolling stock

• wner

Train manufacturers

Overview Responsibility

• Norske tog has an ongoing

procurement contract with Stadler AG

• Manufacturing lead time of

typically 2-5 years

• Currently no competition in Norway
• High entry barriers due to

customized trains for Norwegian climate and rail tenders, and a supportive owner

• Operator agreements of 8-10 years

with extension options

• Offering maintenance services to

passenger train operators for which they are responsible

• Mantena wholly owned by the

Ministry of Transport and communications

• Manufactures Norske tog’s train
• rders
• Railway Directorate responsible

for instructing Norske tog on new investments

• Manages overall rolling stock fleet

for Norwegian passenger services

• No regular maintenance

responsibility

• Procures mid-life upgrade services

from manufacturers

• Lease and runs rolling stock
• Procures maintenance services to

maintain the fleet

• Provides maintenance services

Norske tog operations protected due to no existing competition, customized train requirements in Norway, manufacturing lead-times of 2-5 years as well as significant initial investment requirements

31

Confidential

Commercial

• bjectives

Commercial and

• ther defined objectives

Regulator and political objectives

Baneservice Vy Norske Tog Entra Posten Norge Avinor Flytoget Statkraft Bane NOR Mesta Eksportfinans Nye Veier GIEK Kredittforsikring Kommunalbanken Statnett

Importance of “government related entity”

*A category 3 company fulfils national sectorial political objectives, and is primarily not exposed to competition. The Norwegian government sets guidelines for a number of conditions, including airport structure, emergency preparedness, aviation fees and duties imposed by society Source: Norwegian Government

Norske Tog Investor Presentation

Strategic importance to Norwegian infrastructure

32

Norske tog is defined as a category 3 company*

1 2 3

Confidential

Norske Tog Investor Presentation 33

Management team

CEO

Øystein Risan Øystein joined Norske tog in 2016 from NSB, where he worked as director Traffic for Passenger Trains. Øystein has over 24 years industry experience from the railway sector, and holds a Civil Engineering degree from the University of Glasgow.

Technical

Luca Cuppari Prior to joining Norske tog as Technical Director, Luca held various technical positions at NSB. Before joining NSB he has experience from The National Railway Authority, Mantena and AnsaldoBreda. Luca holds a Master degree in Electrical Engineering

Legal

Iren Marugg Iren has broad experience within the railway sector. She is specialized within procurement- and contract law, and has been working with both national and international suppliers. Iren holds a M.Sc. Of Law from the University of Oslo.

Asset Management

Kjell-Arthur Abrahamsen Kjell-Arthur joined Norske tog from NSB Materiell where he held the position Head of Projects. He is long- tenured within acquisition, modification and management of rolling stock. Kjell-Arthur has 19 years of sector expertise and holds a B.Sc. In Mechanical Engineering.

Finance

Linda Venbakken Linda served as group treasurer at NSB from 2006 prior to joining Norske tog as CFO in 2016. She also held various controller and accounting positions at The Royal Bank of Scotland, Kohn, Pedersen and King

• Sturge. Linda holds a Master of

Management from BI.