Norske tog AS Bond Investor Presentation November 2019 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 offering 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.
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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 of 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 Confidential Important Information (2/2)
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 or 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 Confidential Speakers
Øystein Risan - CEO Linda Venbakken - CFO
Norske Tog Investor Presentation 4 Confidential ▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix
Norske Tog Investor Presentation 5 Confidential Norske tog in numbers
33 255 8.5% 16yrs Employees Train sets1 Return on equity Average fleet age Experienced employees Owns and manages all Norske tog delivered a Norske tog strives to acquire with solid sector Norwegian passenger return on equity of 8.5% per at least one vehicle per month, competence trains, with a few H1 2019 LTM (against the phase out less modern ones exceptions required 5%) and optimize transport capacity
89% 17 24% A+ Electric train sets Types of vehicles1 Equity ratio rating The majority of Norske Norske tog strives to effectively The company had an Currently rated A+ (Stable) tog’s 255 train sets are facilitate sufficient access to equity ratio of 24% per by S&P powered by electricity reliable and contemporary H1 2019 vehicles, in line with the society’s need
Note: Figures based on Norske tog H1 financial report 1) Train sets and vehicle types as of 31 October 2019 Norske Tog Investor Presentation 6 Confidential Credit Highlights
• High barriers of entry – currently the single provider of passenger rolling stock to the Norwegian railway system1 Norske tog owns ~90% of • Rolling stock portfolio designed for Norwegian rail specifications the rolling stock in Norway • Authorities negotiate lease agreements prior to competitive tenders
Favourable passenger • Growing population and increased urbanization expected to drive train usage railway fundamentals • Robust increase in passenger growth and the National Transport Plan forecast significant investments
Visible and stable • Long-term leasing contracts and limited cashflow cyclicality cash flows • Cashflows underpinned by high quality lessee
Supportive regulatory • Framework that provides stability to Norske tog’s operations environment • Supportive mechanism underscore Norske tog’s strategic importance
Highly committed and • Norwegian state (rated AAA/Aaa) is committed to the solid long-term credit quality of Norske tog long-term owner • Railway identified as the clean energy mass transportation solution for the future
• Norske tog has a key role to play in achieving a more efficient and climate-friendly transport system Green and sustainable • Investments in the transport sector will play a vital role in meeting the government’s targets for reduced emissions business model • Proceeds will be used for electric train investments
Residual value guarantee • The Norwegian state guarantees 75% of the book value of all vehicles
1) Excluding Oslo Airport Express, trains coming in from Sweden and a few vehicles retained by NSB (Flåmsbanen) 7 Confidential ▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix
Norske Tog Investor Presentation 8 Confidential Brief company description The Norwegian rolling stock owner
• As part of the railway reform, Norske tog AS was put under direct ownership 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 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 operators in Norway 100% • 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 255 135 22 Train sets Wagons Locomotives
1) A category 3 company fulfils national sectorial political objectives and is primarily not exposed to competition Norske Tog Investor Presentation 9 Confidential Industry structure As owner of rolling stock, Norske tog is not exposed to competition
• Following the new structural Governance and regulation changes, responsibilities and accountabilities for the various state-owned entities are more MINISTRY OF TRANSPORT AND COMMUNICATIONS efficiently divided Strategic governance and regulation of the sector, and ownership of several entities • The Ministry sets the overall long-term strategic goals, while the Railway Directorate is responsible for tendering Coordination, operational governance and railroad operations and continuous development of the sector acquisition of infrastructure services State owned companies • By introducing competition in the railroad industry, entities such as Vy compete for tenders Rolling stock Railway Sales ticketing Passenger Rolling stock alongside private railway ownership infrastructure operations maintenance operators
• Norske tog is not exposed to competition Private sector
Railway- , maintenance- and construction companies and suppliers competing for tenders
Norske Tog Investor Presentation 10 Confidential Recent development and current vehicle deployment Selected Norske tog milestones Overview of railway lines
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 Type 69 Type 70 Jun. 2019: SJ Norge awarded traffic package Nord Type 72 Type 73
Aug. 2019: Contract for new 4G mobile amplifiers signed Type 74 Sep. 2019: Norske tog announces new local trains to be used between Ski- Type 75 Oslo-Stabekk (planned to be procured in 2020) Type 92 Type 93 Dec. 2019: Traffic package West to be announced with start-up in Dec. 2020 Type 5/WLAB2 Type 7/WLAB2 Dec. 2019: Traffic package South scheduled for start-up Not served by Norske tog’s stock
Source: Norske tog annual report (2018) Norske Tog Investor Presentation 11 Confidential Norske tog’s operations Business model
1 2 3 4 5 6
The Norwegian Railway The Norwegian Norske tog finances Norske tog acquires, The Norwegian Railway Norske tog generates Directorate determines Government their acquisitions owns and manages Directorate has imposed revenues through the future railway guarantees 75% of through debt financing rolling stock for train operators to use leasing their train stock offerings in Norway, residual book value of passenger transportation Norske tog’s stock for the to railway operators and sets the premise the rolling stock in Norway tenders that have been for Norske Tog made until now, or announced
Illustrative rolling stock acquisition timeline Procurement stage
Preparation stage Year 1 Year 2 Year 3 Year 4
• The Directorate sets a rolling stock strategy and • Announcement of • Design, testing and production • Delivery of trains send orders competition after allocation • Norske tog creates training documentation for typically after four years • Norske tog provides advice to the Directorate, of residual value guarantee conductors and maintenance personnel • The first train needs to which sends an application to the Ministry for • Evaluation and contract be type approved (the residual value guarantees signing at the end of year 1 process usually takes • Norske tog prepares the competition stage for between 6-12 months) delivery
12 Confidential Tender 2 North case study – Norske tog will supply reliable and up to date rolling stock to SJ Norge Background Tender overview
• SJ Norge submitted the bid which gave the best balance between quality Tender 2 North Tender 2 North (diesel) 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 operator, 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 of 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"
Norske Tog Investor Presentation 13 Confidential 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
Contracted Option Future tenders Cash flow underpinned by high quality lessees Cash flow underpinned by high quality lessees
▪ Vy is operator of last resort for available stock ▪ Fixed monthly payment contracts provide predictable Vy as main Predictable stream of revenue operator ▪ Strong credit profile (A- by S&P), providing counterparty revenues security throughout the contract term ▪ Leases are negotiated with the Norwegian Railway Directorate Contract structure ▪ No exposure to key operating costs such as maintenance eliminates Other operators insurance or fuel prices, all met by the lessees ▪ Pre-qualified criteria for tender requires solid financial and exposure to key economic position, as well as relevant competence costs
Source: Company data Norske Tog Investor Presentation 14 Confidential Norske tog is committed to a sustainable business model Norske tog’s sustainability focus areas Selected guidelines
• Norske tog has several focus areas with respect to contributing to the • Emissions reduced through new transport methods sustainability targets set by the UN • New technical solutions with reduced energy • The focus areas and guidelines are integral parts of Norske togs Innovation and consumption on both existing and new trains operations reduced emissions • Trains should facilitate easy upgrades of boarding systems and interior solutions for increased capacity and thereby resource utilization
Sustainable • In order to increase demand for public transport, Norske public tog aim to provide the best rolling stock possible at transport appropriate costs
• Norske tog has ethical requirements towards suppliers Responsible procurement • Suppliers need to commit to international conventions and acquisition and facilitate for inspections from Norske tog or the government
• Strong focus on diversity within the organization Labour and human rights • Work towards zero injuries – no reported incidents in 2018
Norske Tog Investor Presentation 15 Confidential ▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix
Norske Tog Investor Presentation 16 Confidential Continued increase in the governments budgeted railway investments 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
Budgeted allocation to the railway sector in 2020 (NOKbn) Budgeted investments in 2020 per railway section (NOKbn)
Intercity Other projects +4% 26.8 3,400 25.7
11.6
2,000 1,900 1,900
8.7
4.0 624 528 1.6 0.9 233 2019 2020 Investments Maintenance Acquisition of Investment Other 103 transport services planning Østfoldbanen Vestfoldbanen Dovrebanen Ringeriksbanen Follobanen Vossebanen Trønderbanen Oslo tunnel (planning) Source: The Norwegian Government Fiscal Policy 2020 Norske Tog Investor Presentation 17 Confidential Favourable passenger railway fundamentals Substantial railroad investments going forward Increased number of boardings
Millions +4% ▪ The Norwegian government is currently undertaking the largest expansion 77.7 80 73.8 74.3 73.6 of the railroad system in history 70.3 70 67.3 ▪ Of the total investments laid out in The National Transport Plan 2018-2029, 62.7 60 45% is to be used on the railroad sector (NOK 319bn) 50 ▪ Attractiveness of train travel is set to improve dramatically following renewal 40 and expansion of the existing infrastructure 30 20 10 0 2012 2013 2014 2015 2016 2017 2018
Growing population expected to drive train usage Steady growth in passenger kilometres Estimated population (billions) Billions +3% 6.2 4 6.1 3.7 3.7 6.0 3.6 3.6 5.9 3.4 6.0 5.9 3.3 5.8 3.1 5.8 5.7 5.7 3 5.6 5.6 5.5 5.4 5.4 5.4 5.3 2 5.2
5.0
4.8 1
4.6
4.4 0 2020 2030 2040 2012 2013 2014 2015 2016 2017 2018
Source: Statistics Norway Norske Tog Investor Presentation 18 Confidential ▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix
Norske Tog Investor Presentation 19 Confidential Green bond framework Norske tog will further promote investments in rolling stock and improve existing trains
Overview Climate considerations Norske tog and Green Bonds
• By the end of 2018 Norske tog has taken delivery • The National Transport Plan outlines a • Norske tog must follow up the significant of 105 FLIRTS, with remaining 45 scheduled for historically large investment budget in the investments made in expanding and upgrading the delivery over the next four years Norwegian railway sector rail network in Norway
• All FLIRTS are electric except for 14 new Class 76 • The Norwegian population is expected to • Norske tog has a key role to play in achieving a bimodal trains, i.e. trains that can run on both increase from current 5.3 million to 6 million more efficient and climate-friendly transport system electricity and diesel people within the next 20 years1 • The company shall help to make passenger train • In addition to acquire new trainsets, modifications • Urbanization is a global trend increasing the transport attractive in Norway and contribute to “The and mid-life upgrades are important investments demand for efficient and environmentally friendly Green Shift in order to ensure sufficient capacity transport in urban areas • The green bond framework is based on the 2018 • Norske tog wants to contribute to making the • Rail transport plays a crucial role in achieving version of Green Bond Principles (ICMA) railway even more climate friendly society’s environmental and climate goals • Through the eligible projects, the framework targets • In 2018, Norske tog joined forces with Feral on a • Compared to other modes of transport, trains are the following UN Sustainable Development Goals: pilot project developing new, retrofittable engine more energy efficient and makes only a marginal technology for diesel trains, which could contribution to local air pollution potentially help reduce greenhouse gas emissions and consumption of fossil fuels for Norske tog’s diesel trains by up to 20%
1) Statistics Norway Norske Tog Investor Presentation 20 Confidential Use of proceeds Electric train investments, renovations or improvements
• The net proceeds raised Category Eligible Projects UN SDG Mapping Environmental Objective from the issuance of Norske tog green bonds will be used to finance or re-finance a selected pool of assets that promote the transition to low-carbon Climate change and climate resilient growth mitigation
• Refinancing of eligible projects will have a look- back period of no longer Investments into new or renewed Provide access to safe, affordable, than 3 years from the time Clean electric train sets and renovation or accessible and sustainable transport of issuance Transportation improvements of the existing electric systems for all rolling stock
Pollution prevention and control
Norske Tog Investor Presentation 21 Confidential Management of proceeds and reporting Norske tog has implemented a process to ensure that only projects aligned with the criteria will be selected as eligible projects
✓ 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 of 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
Impact metrics selected may include:
Annual GHG emissions Clean transportation reduced / avoided
Energy savings Increase in the use of (GWh saved / reduced) renewable energy
Norske Tog Investor Presentation 22 Confidential Second opinion from CICERO Norske tog has received the highest possible shading, “Dark Green”, from CICERO
• 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 Investor Presentation 23 Confidential ▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix
Norske Tog Investor Presentation 24 Confidential Financial statements Income statement Operating revenue (NOKt)
NOKt H1 2019 FY 2018 FY 2017 628,275 607,772 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 H1 2019 H1 2018 Financial costs -147,834 -291,645 -233,863 Net financial pension costs - -311 -334 EBITDA (NOKt) Unrealised value changes 6,740 20,371 -1,896 569,578 Sum financial items -62,724 -102,385 -115,486 552,424 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 0 -13,423 -2,773 Tax related to posts not subject to 0 2883 595 reclassifications Net profit for the year 106,676 268,765 140,333 H1 2019 H1 2018
Norske Tog Investor Presentation 25 Confidential Financial statements Balance sheet Equity ratio
NOKt H1 2019 FY 2018 FY 2017 24.3% 23.5% 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 H1 2019 H1 2018 Debt 6,715,394 8,311,286 7,309,273 Derivatives Total fixed assets (NOKt) Deferred tax liability 690,225 660,137 618,777 10,334,487 Pension liabilities 31,455 32,296 18,271 9,864,241 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 H1 2019 H1 2018
Norske Tog Investor Presentation 26 Confidential Financial statements Cash flow Operating cash flow (NOKt)
NOKt H1 2019 FY 2018 FY 2017 552,258 Ordinary result before taxes 136,764 323,548 152,124 Depreciations and write-downs 352,936 692,055 642,522 323,642 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 H1 2019 H1 2018 Net cash flow from investment activities -792,805 -842,064 -1,133,603 Acquisition of fixed assets (NOKt) Debt drawings - 2,850,000 1,049,941 792,805 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 1,144,423 470,560 Change in cash position for the period -1,769,163 2,011,702 356,934 Liquidity reserve at the beginning of the 2,372,091 360,499 1,245 period Currency gains/ loss on cash 11 -110 2,320 Liquidity reserve at the end of the period 602,939 2,372,091 360,499 H1 2019 H1 2018
Norske Tog Investor Presentation 27 Confidential Low refinancing risk Maturity profile for Norske tog’s long term liabilities
NOKbn
2.4 2.35 Undrawn credit facilities 2.2 NOK bonds CHF bonds1 2.0
1.8
1.6 1.52
1.4 2.00
1.2 1.15
1.0
0.8 0.77 0.75 0.65 0.60 0.6 0.55 0.50 0.30 0.4
0.2 0.30 0.35
0.0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
1) NOK equivalent as per Norske tog’s Q2 2019 report Norske Tog Investor Presentation 28 Confidential Book values of rolling stock (per September 2019) The Norwegian state guarantees 75% of the book value of all vehicles
NOKm Train sets 10,000 9,853 Wagons Locomotives 9,000
8,000 7,389 7,000 5,332 (75%)
6,000
5,000
4,000 2,079 3,000
2,000 734 484 1,000 453 246 153 135 53 55 111 0 1 5 12 Type 69 Type 92 Type Wlab2 TYPE Di4 Type EL18 Type 7 Type 70 Type 93 Type 73B Type 5 Type 73A Type 72 Type 74 Type 75 Total
Norske Tog Investor Presentation 29 Confidential ▪ Introduction ▪ Company overview ▪ Market overview ▪ Green bond framework ▪ Financials ▪ Appendix
Norske Tog Investor Presentation 30 Confidential Value chain and Norske tog’s positioning 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
Train Rolling stock Passenger train Maintenance manufacturers owner operators providers
• Norske tog has an ongoing • Currently no competition in Norway • Operator agreements of 8-10 years • Offering maintenance services to procurement contract with • High entry barriers due to with extension options passenger train operators for which Stadler AG customized trains for Norwegian they are responsible • Manufacturing lead time of climate and rail tenders, and a • Mantena wholly owned by the
Overview typically 2-5 years supportive owner Ministry of Transport and communications
• Manufactures Norske tog’s train • Manages overall rolling stock fleet • Lease and runs rolling stock • Provides maintenance services orders for Norwegian passenger services • Procures maintenance services to • Railway Directorate responsible • No regular maintenance maintain the fleet for instructing Norske tog on responsibility new investments • Procures mid-life upgrade services
Responsibility from manufacturers
Norske Tog Investor Presentation 31 Confidential Strategic importance to Norwegian infrastructure Norske tog is defined as a category 3 company*
1 2 3 Commercial Commercial and Regulator and objectives other defined objectives 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 32 Confidential 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.
Finance Asset Management Legal Technical Linda Venbakken Kjell-Arthur Abrahamsen Iren Marugg Luca Cuppari
Linda served as group treasurer at Kjell-Arthur joined Norske tog from Iren has broad experience within the Prior to joining Norske tog as NSB from 2006 prior to joining Norske NSB Materiell where he held the railway sector. She is specialized Technical Director, Luca held various tog as CFO in 2016. She also held position Head of Projects. He is within procurement- and contract law, technical positions at NSB. Before various controller and accounting long- tenured within acquisition, and has been working with both joining NSB he has experience from positions at The Royal Bank of modification and management of national and international suppliers. The National Railway Authority, Scotland, Kohn, Pedersen and King rolling stock. Kjell-Arthur has 19 Iren holds a M.Sc. Of Law from the Mantena and AnsaldoBreda. Luca Sturge. Linda holds a Master of years of sector expertise and holds a University of Oslo. holds a Master degree in Electrical Management from BI. B.Sc. In Mechanical Engineering. Engineering
Norske Tog Investor Presentation 33 Confidential