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▪NOBINA AB, OCTOBER 9, 2018
CAPITAL MARKETS DAY
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WELCOME TO NOBINACAPITAL MARKETS DAY 2018
Agenda
Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
The purpose of todayis for us to provide you with:
a marketoutlook
a strategyupdate
new financialtargets
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12 115tonnes of CO2 reduction from fuelefficiency initiative DGR in 2017
3 600buses
319million passengersper year
>100contracts
4countries
NOBINA THE LEADING PUBLIC TRANSPORT COMPANY IN THE NORDICS – WITH A MARKET SHARE OF 16%
Net Sales
9,1Billion Sek
EBT Margin
4,5%LTM
Dividend yield
6,1%
11 000employees
EBT
388Million Sek
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EBT Margin
4,5%
Growth of sales
6,4%
Leverage
2,9-3,8
Dividend
76-77%
SOLID GROWTH AND MARGIN IMPROVEMENTS –WE ARE FULFILLING OUR FINANCIAL TARGETS COMMITTED IN 2015
Targeton 4,5%
Financial targets from 20159117 m SEK
4,5%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
12/13 13/14 14/15 15/16 16/17 17/18 Q3 17/18-Q2 18/19
0
2000
4000
6000
8000
10000
EBT Margin (%) Net Sales (mSEK)
Historical development
Net Sales (mSEK) EBT Margin
Faster thanmarket (~3%)
Target interval3-4x ND/EBITDA
Dividend at least75% of EBT
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WE SEE ATTRACTIVE GROWTH OPPORTUNITIESIN ALL OUR COUNTRIES GOING FORWARD
Norway
• Challenger position with 7% market share
• Total market value of 9 Billion SEK
• Rapid development in electrification and high focus on sustainability
Denmark
• Challenger position with 5% market share
• Total market value of 9 Billion SEK.
• Fragmented market with many small to medium operators
Sweden
• Market leader with 27% market share
• Total market value of 22 Billion SEK
• Rapid progress towards increased level of quality evaluation and incentives in contracts
Finland
• Market leader in the Helsinki region and 20% total market share
• Total market value of 7 Billion SEK
• Growth opportunities outside of Helsinki
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BUSINESS MODEL FOR A SUSTAINABLE SOCIETY
• CO2 emissions
• Urbanization
• Congestions
• Utilizations of public space
Pushing migration from fossil fuels
Minimizing the use of energythrough several initiatives
Working with our customers to create efficient public transport solutions
Creating jobs driving integration in the society
Aligning our strategic planning with selected UN Development Goals
Nobina is: Challenges for society
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MOVING FORWARDWE HAVE A CLEAR STRATEGY BUILDING ON FOUR FOCUS THEMES
Bus SolutionsContract
ManagementResourceEfficiency
Employees in Development
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Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
AGENDA
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MARKET OUTLOOKAND DEVELOPMENTJONAS KEMPE, MARKETING DIRECTOR
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Nobina is positioned to meet some ofthe biggest global trends and challenges of today
Growth opportunities in the Nordics both inthe core business but also in new segments
The operator has a great potential to take the leadin a complex society in order to make things happen
KEY TAKE AWAYS FROM OUR VIEW ON THE MARKET
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GLOBAL CHALLENGES
PUBLICTRANSPORT IS PART
OF THE SOLUTION
• Urbanisation and lack of public space in cities
• Local air quality and urban livability
• Reduction of CO2 footprint
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MARKET TRENDS IN THE NORDICS
GROWING URBAN AREAS DRIVE MORE TRAFFIC
VOLUME
ELECTROMOBILITY IS GOING FROM PILOTS TO FULL SCALE
SOLUTIONS
GOVERNMENTAL SUPPORT FOR INVESTMENTS IN PUBLIC
TRANSPORT INFRASTRUCTURE
INTERACTIONWITH OTHER SECTORS
CUSTOMER DRIVEN BUSINESS MODELS
OPPORTUNITIES TO CAPTURE AND CAPITALIZE
ON TECH SHIFTS
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MARKET DEVELOPMENT
1990
• One business model
• Low degrees of freedom
• Operations and cost focus
• Limited customer orientation
• ”Drive the bus” approach by operator
• Resource efficiency
• Customer driven business models
• Operator responsible for trafficplanning and local marketing
• Market for bus solutions
• Competitiveness a combination ofmarket- and resource efficiency
2018
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Total market volume approximately 47 BSEKcorresponding to 20 000 buses
Regional and local bus market in the Nordics Tendered volume vs Total volume
THE NORDIC BUS MARKET
SWEDENSEK ~22 bn
NORWAYSEK ~9 bn
DENMARKSEK ~9 bn
FINLANDSEK ~7 bn
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0
500
1000
1500
2000
2500
3000
3500
FY 17/18 FY 18/19 FY 19/20 FY 20/21
Sweden
Norway
Finland
Denmark
GROWTH POSSIBILITIES GOING FORWARD
*Based on 10 year contract and current rolling fleet
*Average market renewal level
Estimated available tender volumesBuses
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Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
AGENDA
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STRATEGIC FOCUSMAGNUS ROSÉN, CEO
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OUR STRATEGY IS BUILT ON FOUR FOCUS THEMES
“we attract and develop people to ensure
efficient delivery and development of our
business”
Employees in Development
ResourceEfficiency
“we focus on ensuring resource efficiency and operational excellence to be competitive and
to contribute to a sustainable society”
ContractManagement
“we are a proactive partner to our
customers and strive to develop contracts and conditions through the
whole lifecycle”
“we develop bus solutions for growth, competitiveness and
our long term relevance”
Bus Solutions
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BUS SOLUTIONS
Maintain our focus on the Nordic countries and on organic growth but with an actively opportunistic approach to acquisition opportunities
Develop complementing business opportunities where we can leverage on our capabilities and strengths in our core business - Contracted Bus Traffic
Leverage on our strong position in conceptualizing “CompleteBus Solutions” and new technology
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CONTRACT MANAGEMENT
Proactively influence PTAs to develop attractive and fair contract models
Solid delivery according to contract terms
Suggest and negotiate traffic improvements in contractsto create benefits for all parties
Allocate resources and support to succeed in the coming years intensive contract migrations (close down and start ups)
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RESOURCE EFFICIENCY
Additional focus to ensure profitability by cost efficiency in delivery; implementation of methods and tools to improve speed in execution
Continue high focus on execution of energy saving and sustainability initiatives to improve competitiveness and contribute to a sustainable society
Development and execution on a technology roadmap to proactively manage impact from technology shifts on our full operation
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EMPLOYEES IN DEVELOPMENT
Focus on securing long term supply of drivers and mechanics in all countries while maintaining high competence requirements
Drive equality, diversity and inclusion to be a relevant employer
Prepare for the technology shift from a competence perspective
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Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
AGENDA
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Niels Peter NielsenMD Denmark
Jan Volsdal MD Norway
Henrik DagnäsMD Sweden
Tom Ward MD Finland
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Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
AGENDA
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Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
AGENDA
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DANIEL MOHLIN – BUSINESS MANAGER COMPLETE SOLUTIONS
CASE BARKARBYSTADEN
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BARKARBYSTADEN IS GROWING
• Largest city development project in northern Europe
• New travel node in western Stockholm
• Extended metro line and two new stations
• Low car dependency
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THE MISSION
Design a traffic solution with innovation that meetsthe increasing travel demand in Barkarbystaden
Before opening of Metro
After opening of Metro
1
2
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Year Apartments Population
2017 2 400 4 800 – 5 520
2022 4 540 9 080 – 10 442
2026 7 900 15 800 – 18 170
2030 11 090 22 180 – 25 507
2040 17 500 35 000 – 40 250
POPULATION AND RIDERSHIP FORECAST
Number of trips by public transportfrom Barkarby per winter day
2000
3000
4000
5000
6000
7000
2013 2018 2022 2025
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Nobina Analytics (NOA) show a change in travelpatterns, but strongly dependent on route planning
4
11
6
18
Maximum PT travel time within Barkarbystaden
TRAVEL PATTERNS ARE CHANGING
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Planned City Development Area
2018
2019
2020
2025
2021
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Planned City Development Area
2018
2019
2020
2025
2021
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Planned City Development Area
Akalla
2018
2019
2020
2025
2021
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Planned City Development Area
Akalla
Future metro station
Test with autonomousOn-Demand Solution
2018
2019
2020
2025
2021
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Planned
City Development Area
Regional BRT AutonomousOn-Demand
Solution
Akalla
2018
2019
2020
2025
2021
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A COMPLETE BUS SOLUTION BY NOBINA
• Nobina Analytics• Analysis and understanding of needs
• Forecasts
• Solution design
• Funding
• Implementation
• Operations
Made possible by and designedwith Nobina Analytics
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COMPLETE BUS SOLUTIONS
• Increasing complexity for municipalitiesand PTA with fast urbanization and technology shifts
• Operator in unique role to integrate and design solutions
• Nobina is equipped with the right competence and tools
Increased complexity driveshigher volumes and profitability
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Introduction Magnus Rosén, CEO
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO
Q&A, Summary Magnus Rosén, CEO Per Skärgård, CFO
AGENDA
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NEW FINANCIAL TARGETSPER SKÄRGÅRD, CFO
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NOBINA’S FINANCIAL EQUATION
A well-managed PTA contract business is an attractive yield case investment on the following assumptions:
• Non-volatile Revenue stream
• Debt financed fixed assets
• Limited Equity base
• High quality contract portfolio delivering solid EBITDAR
• Negative working capital
• Cash flow is available for dividends
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PERFORMANCE DEVELOPMENT
-200
0
200
400
600
800
1000
-2000
0
2000
4000
6000
8000
10000
EBTNet Sales EBT Net Sales
12/13 13/14 14/15 15/16 16/17 17/18 Q3 17/18 –Q2 18/19
Growth 2,3% 0,8% 3,9% 10,2% 6,5% 2,7% 2,1%
EBT margin -0,1% 1,2% 1,9% 3,6% 4,0% 4,3% 4,5%
Leverage 5,5 4,3 4,2 3,7 3,2 3,1 3,0
Dividend pay-out ratio – – – 77% 77% 76% –
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NOBINA’S TARGET ACHIEVEMENTFINANCIAL TARGETS LAUNCHED AT THE IPO IN 2015
Growth: 6,4% three year average 15/16-17/18 vs market growth of ~3%
EBT-margin: 4,5% achieved for rolling full year Q2 FY 17/18 – Q1 FY 18/19
Leverage: Net debt/EBITDA: The highest leverage has been 3,8 and the lowest 2,9
Dividend policy: Dividend has been 77%, 77% and 76% for the three years following the IPO
Nobina’s target is to grow net salesat a rate faster than the market
Nobina’s target on an annual basis is to achievean EBT margin in excess of 4.5% in the medium term
Under normal circumstances, Nobina aims to maintaina net leverage ratio of 3.0x to 4.0x EBITDA
Under normal circumstances, Nobina expects todistribute annually more than 75% of adjusted EBT.
EBT Margin
4,5%
Growth of sales
6,4%
Leverage
2,9-3,8
Dividend
76-77%
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DEVELOPMENT OF FINANCIAL STRUCTURE
23,6% 22,6% 21,9% 20,5% 18,5% 18,2% 18,5%
50,0% 50,8% 51,4% 52,8% 52,6% 53,9% 54,6%
13,5% 13,2% 13,2% 13,0% 15,3% 14,5% 13,4%
11,3% 10,6% 10,1% 9,7% 9,1% 8,6% 8,3%
EBT 1,2% EBT 1,9% EBT 3,6% EBT 4,0% EBT 4,3% EBT 4,5%
-20%
0%
20%
40%
60%
80%
100%
12/13 13/14 14/15 15/16 16/17 17/18 Q3 17/18-Q218/19
EBT
Financial net excl Bus fin
Other depreciations
Capital cost Buses
Other external expenses
Personnel costs
Fuel Tires & Consumables
• Solid EBT growth by lower relative costs for consumables, capital and external resources
• Higher relative personnel cost due to contract migration towards more city traffic
,
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NEW FINANCIAL TARGETS
Growth:
Profit margin:
Net debt/EBITDA:
Dividend policy:
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Growth is important for securing the capability to increase dividend pay-out over time
• EBT-margin improvement more limited going forward
• Organic growth is first priority
• Actively opportunistic approach on growth through acquisitions
Growth:
Average growth
5%
Nobina’s target is 5% accumulated annualaverage net sales growth with 18/19 as base year
NEW FINANCIAL TARGETS
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EBT profit margin is relevant for Nobina as it reflects the quality of the contract portfolio and includes operational financing cost for buses
• Contract migration will always create short term earnings volatility
• Fluctuations in contract portfolio average age is pushing down/upthe profit margin in relative terms
• Strategic debt financing cost is likely to be part of financial netbut should not hamper target achievement
EBT Profit margin
NEW FINANCIAL TARGETS
EBT-margin
5%
Nobina’s target is to achieve an EBT-margin of 5%at average contract age being 50% of average contract length
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Net debt / EBITDA
Net debt/EBITDA leverage is very relevant for a capital intensive company like Nobina
• The Net debt/EBITDA leverage will from now on also include potential strategic debt financing
• Solidity is not as relevant as it does not reflect the capability of amortising debt
NEW FINANCIAL TARGETS
Leverage
3-4x
Under normal circumstances, Nobina aims to maintaina net leverage ratio of 3,0x to 4,0x EBITDA including strategic debt financing
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Dividend policy
Attractive dividend policy to reiterate Nobina’sposition as a yield case
• Nobina’s current Dividend Policy stating a pay out of at least 75% of Earnings Before Tax
• When current deductibles from historical losses cease to exist, dividend based on Earnings After Tax is more relevant
• For time being Earnings before tax and Earnings after tax paid gives the same level of dividend
• Earnings After Tax will be defined as Earnings After Tax Paid
NEW FINANCIAL TARGETS
Dividend
≥75%
Nobina expects to, under normal circumstances,pay a Dividend of at least 75% of Earnings after tax paid
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STATUS TAX ASSETS
SEK million
Deductible amounts Tax rate Tax effect
Sweden 1 035 22% 227
Norway 389 24% 93
Finland 0 20% -
Denmark 234 22% 51
Total 1 658 371
Net operating losses have been built up historically
Outstanding balance of 1 658 MSEK in net losses carried forward can be set-off against taxable trading income
SEK 242m of the deferred tax asset recognised on the balance sheet is attributable to Sweden, the remaining SEK 11m to Denmark
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Growth:
Profit margin:Nobina’s target is to achieve an EBT-margin of 5%at average contract age being 50% of average contract length
Net debt/EBITDA:Under normal circumstances, Nobina aims to maintaina net leverage ratio of 3.0x to 4.0x EBITDA including strategic debt financing
Dividend policy: Nobina expects to, under normal circumstances,pay a Dividend of at least 75% of Earnings after tax paid
Nobina’s target is 5% accumulated annualaverage net sales growth with 18/19 as base year
NEW FINANCIAL TARGETS
≥75%
3-4x
5%
5%
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Introduction Magnus Rosén, CEO and President
Market Outlook Jonas Kempe, Marketing Director
Strategic Focus Magnus Rosén , CEO and President
Moderated Interviews Country MD’s
Break 20 min
Case Barkarbystaden Daniel Mohlin, Business Manager
Financial Targets Per Skärgård, CFO and Vice President
Q&A, Summary Magnus Rosén, CEO andPer Skärgård, CFO
AGENDA
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