Aug 30, 2018

NRC Group ASA acquires Gunnar Knutsen AS

NRC Group ASA ("NRC Group" or the "Company") has on 30 August 2018 entered into a definitive agreement for the acquisition of Gunnar Knutsen AS ("GK") for an enterprise value of NOK 199 million on a cash and debt free basis.

Construction and infrastructure development is associated with major climate and environmental responsibility. There is a clear trend of increased regulations and expectations from the authorities related to sustainability and environmental impact. The same trend is reflected among customers and other stakeholders, which has led to a higher weighting of environmental and safety considerations in tendering processes. The acquisition of GK further strengthens NRC Group’s Norwegian operations and broadens the company’s overall capabilities as a turnkey contractor.

“Infrastructure development projects are increasingly subject to environmental regulations, requirements and expectations. We are committed to operate in the most sustainable manner with the competence and capacity needed to provide a full range of services, from planning and project management to the actual physical work of decommissioning, remediation and waste logistics,” says Øivind Horpestad, CEO of NRC Group ASA.

“Environmental services are a growth opportunity for us. The acquisitions of GK and previously announced Norsk Saneringsservice AS and Miljøvakta AS, strengthen our competitive position, both on our own projects and as a third-party supplier,” adds Horpestad.

GK is one of Norway's leading companies within transportation of loose materials for the building and construction industry in Norway. GK currently employs approximately 55 people. The company owns a fleet of 44 modern trucks and vehicles, operated from a newly built headquarter and operation central, located in Bærum, Akershus. The company had a revenue of NOK 234 million in 2017 with an EBITDA of NOK 33 million. The company has a large and loyal base of customers of public and private construction companies within the larger capital area.

NRC Group will acquire 100% of the shares in GK. The enterprise value is NOK 199 million on a cash and debt free basis and assuming a normalized level of working capital. The seller has guaranteed an aggregate EBIT for the second half of 2018 and FY19 of at least NOK 45 million.

Assuming no adjustments in the enterprise value, 60% of the purchase price will be settled by payment of NOK 119.4 million in cash and the remaining 40% of the purchase price of NOK 79.6 million will be settled by way of 1,154,962 shares in the Company at a price of NOK 68.92 per share, of which 405,000 shares will be existing shares held in treasury and 749,962 shares will be newly issued shares (the "Consideration Shares"). The Consideration Shares are subject to lock-up periods, whereby 1/2 of the Consideration shares are subject to a lock-up undertaking of 24 months and the remaining 1/2 for 36 months after the closing date. The seller will pledge a number of Consideration Shares that represents in aggregate a value of NOK 30 million as security for claims the Company may have against the seller. The transaction is expected to be completed during September 2018.

The following table provides key financial information (based on local statutory accounts) for GK:

(NOK million) FY 2017 FY 2016 (Pro forma*)
Revenue 233.8 274.0
EBITDA 33.2 44.1
EBIT 23.8 35.6
EBIT margin (%) 10.2 13.0
Cash and cash equivalents 28.1 62.3
Total assets 133.4 144.9

* Include Bardalen, Steen & Lund AS that was acquired in 2016 and merged with GK as of 1 January 2017.

GK will be organized as a separate subsidiary under NRC Norge AS, a wholly owned subsidiary of NRC Group ASA.

There are no special agreements or arrangements that have been or will be entered into with the directors or executive management of GK or the Company in connection with the transaction.

***

For further information, please contact CEO Øivind Horpestad, telephone: +47 91 00 06 26


About NRC Group ASA:

NRC Group is a leading contractor within railway infrastructure in Norway and Sweden. The company is a supplier of all track-related infrastructure services, including groundworks, specialized track work, safety, electro, telecom- and signaling systems. The company works within rail, metro, tram segments and close related infrastructure. NRC Group has experienced significant growth since its inception in 2011 and has a vision of becoming the leading Nordic entrepreneur within railway infrastructure.

For more information: www.nrcgroup.no/.


About GK

GK is one of Norway's leading companies within transportation of loose materials for the building and construction industry in Norway. The company is headquartered in Skui and had a revenue of approximately NOK 234 million in 2017. For more information: www.gunnarknutsen.no

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Contact us

Henning Olsen

Henning Olsen

CEO

+47 91 74 15 92

henning.olsen[at]nrcgroup.com

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