RENONORDEN ASA. (A public limited company incorporated under the laws of Norway)

Size: px
Start display at page:

Download "RENONORDEN ASA. (A public limited company incorporated under the laws of Norway)"

Transcription

1 RENONORDEN ASA (A public limited company incorporated under the laws of Norway) Initial public offering of Shares with an indicative price range of NOK 39 to NOK 53 per Share Listing of the Company s Shares on Oslo Børs, or alternatively on Oslo Axess This prospectus (the Prospectus ) has been prepared in connection with the initial public offering (the Offering ) of shares of RenoNorden ASA (the Company, and together with its consolidated subsidiaries, RenoNorden or the Group ), a public limited company incorporated under the laws of Norway, and the related listing (the Listing ) of the Company s shares (the Shares ) on Oslo Børs, or alternatively on Oslo Axess, both of which are regulated markets operated by Oslo Børs ASA (the Oslo Stock Exchange ). The Offering comprises new shares to be issued by the Company to raise gross proceeds in the amount of approximately NOK 309 million (the New Shares ) and existing shares (the Sale Shares ) offered by Asta Netherlands B.V. ( CapVest ), a company controlled by CapVest Equity Partners II LP, and Accentfourteen Holding Limited ( Accent Equity, and together with CapVest, the Principal Shareholders ), as well as certain other shareholders listed in Section 14 The Selling Shareholders (collectively, the Selling Shareholders ). The Sale Shares, together with the New Shares and, unless the context indicates otherwise, the Additional Shares (as defined below), are referred to herein as the Offer Shares. The Offering consists of: (i) a private placement to (a) investors in Norway, (b) investors outside Norway and the United States of America (the U.S. or the United States ), subject to applicable exemptions from the prospectus requirements, and (c) qualified institutional buyers ( QIBs ) in the United States as defined in Rule 144A ( Rule 144A ) under the U.S. Securities Act of 1933, as amended (the U.S. Securities Act ) (the Institutional Offering ) and (ii) a retail offering to the public in Norway (the Retail Offering ). All offers and sales outside the United States will be made in compliance with Regulation S under the U.S. Securities Act ( Regulation S ). In addition, the Principal Shareholders have granted Danske Bank, on behalf of the Managers (as defined below), an option to purchase additional Shares (the Additional Shares ), equalling up to approximately 15% of the aggregate number of New Shares and Sale Shares to be sold in the Offering, exercisable, in whole or in part, within a 30- day period commencing at the time at which trading in the Shares commences on Oslo Børs, or alternatively on Oslo Axess, expected to be on or about 16 December 2014, to cover any over-allotments made in connection with the Offering on the terms and subject to the conditions described in this Prospectus (the Over-Allotment Option ). The Company will not receive any of the proceeds from the sale of the Sale Shares and the Additional Shares, if any. The price (the Offer Price ) at which the Offer Shares are expected to be sold will be between NOK 39 and NOK 53 per Offer Share (the Indicative Price Range ). The Offer Price may be set within, below or above the Indicative Price Range. The Offer Price will be determined through a bookbuilding process and will be set by the Company and Principal Shareholders in consultation with the Joint Bookrunners (as defined below). See Section 19 Terms of the Offering for further information on how the Offer Price is set. Investors in the Retail Offering will receive a discount of NOK 1,000 on their aggregate subscription amount for the Offer Shares allocated to such investors. The Offer Price and the number of Offer Shares sold in the Offering, is expected to be announced through a stock exchange notice on or about 12 December 2014 at 07:30 hours (Central European Time, CET ). The offer period for the Institutional Offering (the Bookbuilding Period ) will commence at 09:00 hours (CET) on 1 December 2014 and close at 15:00 hours (CET) on 11 December The application period for the Retail Offering (the Application Period ) will commence at 09:00 hours (CET) on 1 December 2014 and close at 12:00 hours (CET) on 11 December The Bookbuilding Period and the Application Period may be shortened or extended beyond the set times by the Company and the Principal Shareholders, in consultation with the Joint Bookrunners, but will in no event be shortened to expire prior to 09:00 hours (CET) on 8 December 2014 or extended beyond 15:00 hours (CET) on 27 February The Shares are, and the New Shares will be, registered in the Norwegian Central Securities Depository (the VPS ) in book-entry form. All Shares will rank in parity with one another and carry one vote per Share. Except where the context otherwise requires, references in this Prospectus to the Shares will be deemed to include the Offer Shares. Investing in the Offer Shares involves a high degree of risk. Prospective investors should read the entire document and, in particular, consider Section 2 Risk Factors beginning on page 15 when considering an investment in the Company. The Shares have not been, and will not be, registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States, and are being offered and sold: (i) in the United States only to persons who are QIBs in reliance on an exemption from the registration requirements under the U.S. Securities Act; and (ii) outside the United States in compliance with Regulation S. The distribution of this Prospectus and the offer and sale of the Offer Shares in certain jurisdictions may be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. See Section 20 Selling and Transfer Restrictions. Prior to the Offering, the Shares have not been publicly traded. The Company will on or about 1 December 2014 apply for the Shares to be admitted for trading and listing on Oslo Børs, or alternatively on Oslo Axess, and completion of the Offering is subject to the approval of the listing application by the board of directors of the Oslo Stock Exchange. The due date for the payment of the Offer Shares is expected to be on or about 15 December 2014 in the Retail Offering and on or about 16 December 2014 in the Institutional Offering. Delivery of the Offer Shares is expected to take place on or about 16 December 2014, through the facilities of the VPS. Trading in the Shares on Oslo Børs, or alternatively on Oslo Axess, is expected to commence on or about 16 December 2014, under the ticker code RENO. If closing of the Offering does not take place on such dates, or at all, the Offering may be withdrawn, resulting in all applications for Offer Shares being disregarded, any allocations made being deemed not to have been made and any payments made will be returned without any interest or other compensation. All dealings in the Shares prior to settlement and delivery are at the sole risk of the parties concerned. Sole Global Coordinator Danske Bank Joint Bookrunners Carnegie Danske Bank DNB Markets The date of this Prospectus is 28 November 2014

2 IMPORTANT INFORMATION This Prospectus has been prepared in connection with the Offering of the Offer Shares and the Listing of the Shares on Oslo Børs, or alternatively on Oslo Axess. This Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the Norwegian Securities Trading Act ) and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in prospectuses, as amended, and as implemented in Norway (the EU Prospectus Directive ). This Prospectus has been prepared solely in the English language. The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet) (the Norwegian FSA ) has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information included in this Prospectus. The approval by the Norwegian FSA only relates to the information included in accordance with pre-defined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or referred to in this Prospectus. For definitions of certain other terms used throughout this Prospectus, see Section 22 Definitions and Glossary. The Company and the Selling Shareholders have engaged Danske Bank A/S ( Danske Bank ) as Sole Global Coordinator and Carnegie AS ( Carnegie ), Danske Bank and DNB Markets, a part of DNB Bank ASA ( DNB Markets ) as Joint Bookrunners. The Sole Global Coordinator and Joint Bookrunners are together referred to herein as the Joint Bookrunners or the Managers. The information contained herein is current as at the date hereof and subject to change, completion and amendment without notice. In accordance with Section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment by investors of the Offer Shares between the time of approval of this Prospectus by the Norwegian FSA and the Listing of the Shares on Oslo Børs, or alternatively on Oslo Axess, will be included in a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus, nor the sale of any Offer Share, shall under any circumstances imply that there has been no change in the Group s affairs or that the information herein is correct as at any date subsequent to the date of this Prospectus. No person is authorised to give information or to make any representation concerning the Group or in connection with the Offering or the sale of the Offer Shares other than as contained in this Prospectus. If any such information is given or made, it must not be relied upon as having been authorised by the Company or the Managers or by any of the affiliates, representatives, advisors or selling agents of any of the foregoing. The distribution of this Prospectus and the offer and sale of the Offer Shares in certain jurisdictions may be restricted by law. This Prospectus does not constitute an offer of, or an invitation to purchase, any of the Offer Shares in any jurisdiction in which such offer or sale would be unlawful. Neither this Prospectus nor any advertisement or any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with applicable laws and regulations. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. In addition, the Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. See Section 20 Selling and Transfer Restrictions. This Prospectus and the terms and conditions of the Offering as set out herein and any sale and purchase of Offer Shares hereunder shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Offering or this Prospectus. In making an investment decision, prospective investors must rely on their own examination, and analysis of, and enquiry into the Group and the terms of the Offering, including the merits and risks involved. None of the Company, the Selling Shareholders or the Managers, or any of their respective representatives or advisers, is making any representation to any offeree or purchaser of the Offer Shares regarding the legality of an investment in the Offer Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Offer Shares. All Sections of the Prospectus should be read in context with the information included in Section 4 General Information. NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. NOTICE TO INVESTORS IN THE UNITED STATES Because of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the Shares. The Offer Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States and may not be offered, resold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable state securities laws. Accordingly, the Offer Shares will not be offered or sold within the United States, except in reliance on the exemption from the registration requirements of the U.S. Securities Act under Rule 144A or another exemption from the registration requirements of the U.S. Securities Act. The Offer Shares will be offered outside the United States in compliance with Regulation S. Prospective purchasers are hereby notified that sellers of Offer Shares may be relying on an exemption from the provisions of Section 5 of the U.S. Securities Act. See Section United States. Any Shares offered or sold in the United States will be subject to certain transfer restrictions as set forth under Section United States. The securities offered hereby have not been recommended by any United States federal or state securities commission or regulatory authority. Further, the foregoing authorities have not passed upon the merits of the Offering or confirmed the accuracy or determined the adequacy of this Prospectus. Any representation to the contrary is a criminal offense under the laws of the United States. II

3 In the United States, this Prospectus is being furnished on a confidential basis solely for the purposes of enabling a prospective investor to consider purchasing the particular securities described herein. The information contained in this Prospectus has been provided by the Company and other sources identified herein. Distribution of this Prospectus to any person other than the offeree specified by the Managers or their representatives, and those persons, if any, retained to advise such offeree with respect thereto, is unauthorised and any disclosure of its contents, without prior written consent of the Company, is prohibited. This Prospectus is personal to each offeree and does not constitute an offer to any other person or to the public generally to purchase Offer Shares or subscribe for or otherwise acquire any Shares. NOTICE TO INVESTORS IN THE UNITED KINGDOM This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom (the UK ) or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as Relevant Persons ). The Offer Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. NOTICE TO INVESTORS IN THE EEA In any member state of the European Economic Area (the EEA ) that has implemented the EU Prospectus Directive, other than Norway (each, a Relevant Member State ), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the EU Prospectus Directive. The Prospectus has been prepared on the basis that all offers of Offer Shares outside Norway will be made pursuant to an exemption under the EU Prospectus Directive from the requirement to produce a prospectus for offer of shares. Accordingly, any person making or intending to make any offer within the EEA of Offer Shares which is the subject of the Offering contemplated in this Prospectus within any EEA member state (other than Norway) should only do so in circumstances in which no obligation arises for the Company or any of the Managers to publish a prospectus or a supplement to a prospectus under the EU Prospectus Directive for such offer. Neither the Company nor the Managers have authorised, nor do they authorise, the making of any offer of Shares through any financial intermediary, other than offers which constitute the final placement of Offer Shares contemplated in this Prospectus. Each person in a Relevant Member State other than, in the case of paragraph (a), persons receiving offers contemplated in this Prospectus in Norway, who receives any communication in respect of, or who acquires any Offer Shares under, the offers contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with the Managers and the Company that: a) it is a qualified investor as defined in the EU Prospectus Directive; and b) in the case of any Offer Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) such Offer Shares acquired by it in the Offering have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the EU Prospectus Directive, or in circumstances in which the prior consent of the Managers has been given to the offer or resale; or (ii) where such Offer Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Offer Shares to it is not treated under the EU Prospectus Directive as having been made to such persons. For the purposes of this provision, the expression an offer to the public in relation to any of the Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Shares to be offered so as to enable an investor to decide to purchase any of the Offer Shares, as the same may be varied in that Relevant Member State by any measure implementing the EU Prospectus Directive in that Relevant Member State, and the expression EU Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU. See Section 20 Selling and Transfer Restrictions for certain other notices to investors. STABILISATION In connection with the Offering, Danske Bank (the Stabilisation Manager ), or its agents, on behalf of the Managers, may, upon exercise of the Lending Option (as defined below), engage in transactions that stabilise, maintain or otherwise affect the price of the Shares for up to 30 days from the first day of the Listing. Specifically, the Stabilisation Manager may effect transactions with a view to supporting the market price of the Shares at a level higher than might otherwise prevail, through buying Shares in the open market at prices equal to or lower than the Offer Price. There is no obligation on the Stabilisation Manager and its agents to conduct stabilisation activities and there is no assurance that stabilisation activities will be undertaken. Such stabilisation activities, if commenced, may be discontinued at any time, and will be brought to an end at the latest 30 calendar days after the first day of the Listing. Save as required by law or regulation, the Stabilisation Manager does not intend to disclose the extent of any stabilisation transactions under the Offering. ENFORCEMENT OF CIVIL LIABILITIES The Company is a public limited company incorporated under the laws of Norway. As a result, the rights of holders of the Company s Shares will be governed by Norwegian law and the Company s articles of association (the Articles of Association ). The rights of shareholders under Norwegian law may differ from the rights of shareholders of companies incorporated in other jurisdictions. The members of the Company s board of directors (the Board Members and the Board of Directors, respectively) and the members of the Group s management (the Management ) are not residents of the United States, and a substantial portion of the Company s assets are located outside the United States. As a result, it may be difficult for investors in the United States to effect service of process on the Company or its Board Members and members of Management in the United States or to enforce in the United States judgments obtained in U.S. courts against the Company or those persons, including judgments based on the civil liability provisions of the securities laws of the United States or any state or territory within the United States. Uncertainty exists as to whether courts in Norway will enforce judgments obtained in other jurisdictions, including the United States, against the Company or its Board Members or members of Management under the securities laws of those jurisdictions or entertain actions in Norway against the Company or its Board Members or members of Management under the securities laws of other jurisdictions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may not be enforceable in Norway. The United States and Norway do not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral awards) in civil and commercial matters. AVAILABLE INFORMATION The Company has agreed that, for so long as any of the Offer Shares are restricted securities within the meaning of Rule 144(a)(3) under the U.S. Securities Act, it will during any period in which it is neither subject to Sections 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the U.S. Exchange Act ), nor exempt from reporting pursuant to Rule 12g3-2(b) under the U.S. Exchange Act, provide to any holder or beneficial III

4 owners of Shares, or to any prospective purchaser designated by any such registered holder, upon the request of such holder, beneficial owner or prospective owner, the information required to be delivered pursuant to Rule 144A(d)(4) of the U.S. Securities Act. IV

5 TABLE OF CONTENTS 1 SUMMARY RISK FACTORS RESPONSIBILITY FOR THE PROSPECTUS GENERAL INFORMATION REASONS FOR THE OFFERING AND THE LISTING DIVIDENDS AND DIVIDEND POLICY INDUSTRY AND MARKET OVERVIEW BUSINESS OF THE GROUP CAPITALISATION AND INDEBTEDNESS SELECTED FINANCIAL AND OTHER INFORMATION OPERATING AND FINANCIAL REVIEW UNAUDITED PRO FORMA FINANCIAL INFORMATION BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE THE SELLING SHAREHOLDERS RELATED PARTY TRANSACTIONS CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL SECURITIES TRADING IN NORWAY TAXATION THE TERMS OF THE OFFERING SELLING AND TRANSFER RESTRICTIONS ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY APPENDICES APPENDIX A ARTICLES OF ASSOCIATION OF RENONORDEN ASA... A1 APPENDIX B FINANCIAL STATEMENTS FOR RENONORDEN ASA FOR THE YEARS ENDED 31 DECEMBER 2013, 2012 AND B1 APPENDIX C FINANCIAL STATEMENTS FOR RENONORDEN HOLDING AS FOR THE YEAR ENDED 31 DECEMBER C1 APPENDIX D INTERIM FINANCIAL STATEMENTS FOR RENONORDEN ASA FOR THE THREE AND NINE MONTH PERIODS ENDED 30 SEPTEMBER 2014 (WITH COMPARABLE FIGURES FOR 2013). D1 APPENDIX E FINANCIAL STATEMENTS FOR HFT ENVIRONMENT OY FOR THE YEAR ENDED 31 DECEMBER E1 APPENDIX F INDEPENDENT PRACTITIONER S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION... F1 APPENDIX G APPLICATION FORM FOR THE RETAIL OFFERING... G1 1

6 1 SUMMARY Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A E (A.1 E.7) below. This summary contains all the Elements required to be included in a summary for these types of securities and the Company. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case, a short description of the Element is included in the summary with the mention of not applicable. Section A Introduction and Warnings A.1 Warning This summary should be read as an introduction to the Prospectus. Any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Consent for intermediaries Not applicable; no consent is granted by the Company for the use of the Prospectus for subsequent resale or final placement of the Shares. Section B Issuer B.1 Legal and commercial name B.2 Domicile and legal form, legislation and country of incorporation B.3 Current operations, principal activities and markets RenoNorden ASA. The Company is a public limited company organised and existing under the laws of Norway, pursuant to the Norwegian Public Limited Companies Act. The Company was incorporated in Norway on 17 March 2011, and the Company s registration number in the Norwegian Register of Business Enterprises is RenoNorden is a leading waste collection services provider operating across the Nordic region 1. Since establishment, the Group has experienced strong growth, both organically and through acquisitions. RenoNorden is a leading waste collection services provider operating in the Nordic region 2. Since establishment, the Group has experienced strong growth, both organically and through acquisitions. In the period, the Group achieved revenue growth of 26% per annum 3. In 2013, the Group generated revenues of NOK 1,466 million and adjusted EBITDA of NOK 249 million on a pro forma basis, corresponding to an adjusted EBITDA margin of 16.9% 4. Excluding the acquisition of HFT Environment, revenues for the year were 1 See Section 7 Industry and Market Overview for market share data. 2 See Section 7 Industry and Market Overview for market share data. 3 Not including the acquisition of HFT Environment in Finland in December As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. EBITDA for Finland calculated as Operating profit plus Depreciation. 2

7 NOK 1,268 million and adjusted EBITDA of NOK 227 million, implying adjusted EBITDA margin of 17.9% 5. As at the date of this Prospectus, the Group services over 230 municipalities and over five million inhabitants across Norway, Sweden, Denmark and Finland. RenoNorden operates primarily in the household waste collection segment (94% of pro forma revenue in ) within the wider waste management industry. The Group is the only operator in this subsegment that is present in four Nordic countries. In general, the Group tenders for household waste collection contracts awarded by municipalities, that typically have contract durations of five years with extension options for the municipalities for a two further years. In Finland, the business also operates in the commercial waste collection segment, where it provides waste collection services for selected clients on a contracted or ad-hoc basis. The Group has recently begun exploring opportunities in Norway, Sweden and Denmark to deploy its existing fleet to meet the waste collection requirements of suitable commercial clients also in these countries. B.4a Significant recent trends Since 30 September 2014 and until the date of the Prospectus, the Group has continued to trade well, and in line with the Management s expectations, which indicates 2014 full year revenues in the range of NOK 1,550 1,575 million. Given the performance throughout this period, and assuming no significant changes in the general trading environment, the Management remains confident in the Group s prospects for the remainder of the 2014 financial year. There have been no significant change in the financial or trading position of the Group since the date of the Interim Financial Statements as of, and for the three and nine months ended, 30 September 2014, which has been included in this Prospectus as Appendix D. B.5 Description of the Group The Company, which is the parent company of the Group, is a holding company and the operations of the Group are carried out through the operating subsidiaries of the Company. The Company owns 100% of the shares in RenoNorden Investments AS (Norway), which in turn owns 100% of the shares in the subsidiaries (i) RenoNorden AB (Sweden), (ii) RenoNorden AS (Norway), (iii) RenoNorden A/S (Denmark) and (iv) RenoNorden Finland Holding OY (Finland). RenoNorden Finland Holding OY (Finland) owns 100% of the shares in HFT Environment OY (Finland), which in turn owns 100% of the shares in HFT Network OY (Finland). B.6 Interests in the Company and voting rights Shareholders owning 5% or more of the Shares have an interest in the Company s share capital, which is notifiable pursuant to the Norwegian Securities Trading Act. As of the date of this Prospectus, the Company has 24 shareholders. CapVest and Accent Equity will following the combination of the classes and the issuance of the New Shares in the Offering, but prior to allocation of the Sale Shares, hold 12,005,296 and 7,596,987 Shares in the Company, respectively, corresponding to 45% and 29%, respectively, of the issued and outstanding Shares, assuming a price 5 EBITDA is excluding the HFT Acquisition. See Section Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA for adjustments of non-ifrs financial measures for the nine months ended 30 September 2014 (with comparable figures for 2013). Adjustments relates to Monitoring Fees to the current Principal Shareholders (to be discontinued post Listing, but the Group is obliged to pay Monitoring Fees for the full year of 2014). 6 See Section 12 Unaudited Pro Forma Financial Information. 3

8 equal to the high-point of the Indicative Price Range. At Listing, there will be no differences in voting or other rights between the Shares. The Company is not aware of any arrangements the operation of which may, at a subsequent date, result in a change of control of the Company. B.7 Selected historical key financial information The following selected financial information has been extracted from the Group s unaudited interim condensed consolidated financial statements as of, and for the three and nine months ended, 30 September 2014 (with comparable figures for 2013) (the Interim Financial Statements), the Group s audited consolidated financial statements as of, and for the years ended, 31 December 2013 and 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011 (the Financial Statements) and RenoNorden Holding AS (RenoNorden Holding) audited consolidated financial statements as of, and for the year ended, 31 December 2011 (the RenoNorden Holding Financial Statements). As the Group, with the Company as the ultimate parent company, did not trade prior to 30 September 2011, which was the date the Company, through its wholly-owned subsidiary RenoNorden Investments AS, acquired RenoNorden Holding, the RenoNorden Holding Financial Statements have been included in this Prospectus in order to show the performance of the Group s underlying business for the full year Prior to the acquisition, RenoNorden Holding was the ultimate holding company in the group owning the RenoNorden business. The Financial Statements as of, and for the year ended, 31 December 2013 (with comparable figures for 2012), included in Appendix B to this Prospectus, have been prepared in accordance with IFRS. The Financial Statements as of, and for the year ended, 31 December 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011, included in Appendix B to this Prospectus, have been prepared in accordance with NGAAP. The RenoNorden Holding Financial Statements, included in Appendix C to this Prospectus, have been prepared in accordance with NGAAP. The Interim Financial Statements, included in Appendix D to this Prospectus, have been prepared in accordance with IAS 34. The selected consolidated financial information included herein should be read in connection with, and is qualified in its entirety by reference to, the Financial Statements, the RenoNorden Holding Financial Statements and the Interim Financial Statements included in Appendix B, Appendix C and Appendix D, respectively, of this Prospectus. 4

9 Selected consolidated financial information for the Group: From 17 March 2011 to Three months ended 30 September Nine months ended 30 September Year ended 31 December 31 December 2011 In NOK thousands 2014 (IFRS) 2013 (IFRS) 2014 (IFRS) 2013 (IFRS) 2013 (IFRS) 2012 (IFRS) 2012 (NGAAP) (NGAAP) Income statement data Total operating revenue , ,831 1,172, ,865 1,268,323 1,177,323 1,177, ,105 Operating profit... 60,097 46, , , , ,313 92,618 (2,440) Profit/loss for period... 42,744 25,412 80,184 50,581 49,499 65,523 (4,540) (24,267) Balance sheet Total non-current assets ,693,218-1,699,818 1,483,383 1,435,240 1,374,641 Total current assets , , , , ,988 Total assets ,220,110-2,236,699 1,863,456 1,814,931 1,630,629 Total equity (335,908) - (408,961) (457,391) 251, ,447 Total non-current liabilities , , , ,891 94,280 Total long-term liabilities , , ,301 1,052, ,699 Total current liabilities ,449,976-1,494,885 1,347, , ,203 Total liabilities ,556,017-2,645,660 2,320,847 1,563,928 1,376,182 Total equity and liabilities ,220,109-2,236,699 1,863,456 1,814,931 1,630,629 Cash flow Net cash flows from operating activities ,755 93, , , ,509 (27,165) Net cash flows from investing activities (12,940) (14,777) (66,110) (51,461) (48,455) (875,875) Net cash flows from financing activities (125,005) (53,334) 4,346 7,369 5, ,691 Net change in cash and cash equivalents (38,190) 25, , , ,011 46,651 Cash and cash equivalents at end of period , , , , ,662 46,651 7 The Group s Financial Statements for 2011 represents the operation of the underlying business of RenoNorden only for a period of three months. 5

10 Selected financial information for RenoNorden Holding: Year ended 31 December In NOK thousands 2011 (NGAAP) Income statement Revenue... 1,024,398 Operating profit... 70,827 Profit/loss for period... 28,874 Balance sheet Total non-current assets ,670 Total current assets ,718 Total assets ,388 Total equity ,421 Total long-term liabilities ,967 Total current liabilities ,348 Total liabilities ,967 Total equity and liabilities ,388 Cash flow Net cash flows from operating activities... 80,489 Net cash flows from investing activities... (167,000) Net cash flows from financing activities... 83,553 Net change in cash and cash equivalents... (2,959) Cash and cash equivalents at period end... 41,442 B.8 Selected key pro forma financial information The following table sets out certain selected key unaudited pro forma income statement information for the Group for the year ended 31 December On 19 December 2013, the Group acquired all the shares in the Finnish company HFT Environment OY (HFT Environment). As a result thereof, and effective from that date, HFT Environment became an indirect wholly-owned subsidiary of the Company. The unaudited pro forma financial information has been prepared to show how the acquisition of HFT Environment might have affected the Group s income statement for the year ended 31 December 2013 as if the Group had acquired HFT Environment on 1 January Unadjusted information of the Group Unadjusted information of HFT Environment (audited, Unadjusted information of HFT Environment (unaudited, IFRS adjustments of HFT Environment Pro forma adjustment for the HFT Acquisition Pro forma financial information (audited, IFRS) FGAAP) FGAAP) (unaudited) (unaudited) (unaudited) NOK thousands EUR thousands NOK thousands NOK thousands NOK thousands NOK thousands Total operating revenue... 1,268,323 25, , ,466,366 Costs of sales... (77,705) (12,447) (97,196) 0 (174,901) Employee benefit expenses... (679,336) (7,805) (60,945) 0 (740,281) Depreciation and amortisation... (85,571) (735) (5,741) (7,608) (1,274) (100,193) Other operating expenses... (288,296) (3,745) (29,246) 10,821 0 (306,721) Total operating expenses... (1,130,908) (24,732) (193,128) 3,213 (1,274) (1,322,097) Operating profit , ,915 3,213 (1,274) 144,269 Net financial items... (75,732) (144) (1,126) (751) (1,727) (79,335) Profit before tax... 61, ,789 2,462 (3,001) 64,934 6

11 Income tax expenses... (12,183) (192) (1,497) (131) 780 (13,031) Profit for the year... 49, ,292 2,332 (2,221) 51,902 B.9 Profit forecast or estimate Not applicable. No profit forecasts or estimates are made. B.10 Audit report qualifications Not applicable. There are no qualifications in the audit reports. B.11 Insufficient working capital Not applicable. The Company is of the opinion that the working capital available to the Group is sufficient for the Group s present requirements, for the period covering at least 12 months from the date of this Prospectus. Section C Securities C.1 Type and class of securities admitted to trading and identification number At Listing, the Company will have one class of Shares in issue and all Shares will have equal rights in the Company. Each of the Shares will carry one vote. The Shares have been created under the Norwegian Public Limited Companies Act and will upon Listing be registered in book-entry form with the VPS under ISIN NO C.2 Currency of issue The Shares are issued in, and the Offer Price is in, NOK. C.3 Number of shares in issue and par value C.4 Rights attaching to the securities As of the date of this Prospectus, the Company s share capital is NOK 2,836, divided into 283,691,971 Shares, each having a par value of NOK 0.01, of which 278,121,091 Shares are class A- shares and 5,570,880 Shares are class B-shares. On 27 November 2014, the Company s General Meeting resolved to combine the two share classes into one class of ordinary shares in which all the shares carry one voting right and otherwise rank pari passu in all respects with effect from the registration of the share capital increase relating to the issuance of the New Shares in the Offering with the Norwegian Register of Business Enterprises (i.e. on or about 12 December 2014). Further, the General Meeting resolved to issue New Shares in the Offering. The net proceeds from the issuance of the New Shares will be used to repay the amount outstanding under the Shareholder Loan (expected to be NOK million as of 17 December 2014) and the outstanding amount of the loans from former employees of the Group (the Leaver Loans) (in total NOK 11 million as of 30 September 2014). Following combination of the share classes and issuance of the New Shares in the Offering, there will be 26,491,520 Shares, 27,378,292 Shares and 28,583,392 Shares outstanding based on the final Offer Price being set at the high, mid and low-point of the Indicative Price Range, respectively. The Company will at Listing have one class of Shares in issue, and in accordance with the Norwegian Public Limited Companies Act, all Shares in that class will have equal rights in the Company. Each of the Shares will at Listing carry one vote. C.5 Restrictions on transfer All Selling Shareholders are subject to a 180-day lock-up period (except for the Management which are subject to a 365-day lock-up). Furthermore, the Company is subject to a 365day lock-up. The Articles of Association do not provide for any restrictions or right of first refusal on the transfer of Shares. Share transfers will not be subject to approval by the Board of Directors. 7

12 C.6 Admission to trading The Company will on or about 1 December 2014 apply for Listing of its Shares on Oslo Børs, or alternatively on Oslo Axess (to the extent the Company should not fulfil, as at the time of the Listing, the listing requirements for a listing on Oslo Børs). It is expected that the board of directors of the Oslo Stock Exchange will approve the listing application of the Company on 5 December 2014, subject to certain conditions being met. The Company currently expects commencement of trading in the Shares on Oslo Børs, or alternatively on Oslo Axess, on or around 16 December The Company has not applied for admission to trading of the Shares on any other stock exchange or regulated market. C.7 Dividend policy The Company targets to pay dividends annually and expects to pay its first dividend of NOK 50 million, for the year ending 31 December 2014, in the first half of Thereafter, the Company will target a dividend pay-out ratio of at least 60% of the Group s net profit. The pay-out ratio shall consider the financial position of the Group and its future growth opportunities. Section D Risks D.1 Key risks specific to the Company or its industry Risks related to the business of the Group and the industry in which the Group operates The Group operates in a highly competitive industry and there is no guarantee that it can renew and win contracts General economic and other factors can affect the Group s revenues and profitability The Group may be adversely affected by exposure under longterm contracts with fixed unit prices Tender processes for municipal waste collection contracts are highly regulated, rigid and transparent The Group may lose contracts by early termination or lack of contract extensions by its customers in their sole discretion The Group can provide no assurance that the Group s order reserve will be ultimately realised The Group is dependent on its key customers The Group has a relatively concentrated supplier base The Group relies on access to road networks Weather disruption may affect the Group s operations The Group is subject to strict environmental and occupational health and safety laws and regulations New environmental standards may require the Group to replace its vehicles earlier than at the end of a contract cycle As the Group s fleet of vehicles age, vehicle values will decrease, and the Group will be exposed to various other risks relating to an aging fleet Failure of the Group s logistics and route planning and other IT systems could adversely affect the Group s revenues and profitability The Group may not be successful in implementing its strategies in the future The Group can provide no assurance that it will be able to 8

13 achieve and manage growth The Group s business is subject to health and safety risks, including the risk of personal injury to employees and others The Group may from time to time be involved in litigation matters and disputes The Group is exposed to risks and liabilities that may not be adequately covered by insurance The Group s risk management procedures may fail to identify or anticipate future risks The Group is dependent upon its key personnel and its local managers Substantially all of the Group s employees are parties to collective bargaining agreements and trade unions Increases in the cost of labour may reduce the Group s profitability Changes in the prices of diesel fuel and liquefied natural gas (LNG) may affect the Group s profitability The presence of a Nordic black market for the waste collection industry may have a material adverse effect on the Group s revenues and profitability Exchange rate fluctuations may affect the Group s results of operations, financial position and future prospects Changes in rules related to accounting for income taxes, changes in tax laws in any of the jurisdictions in which the Group operates or adverse outcomes from audits by taxation authorities could result in an unfavourable change in its effective tax rate A loss of a tax dispute or a successful tax challenge to the Group s operating structure or to the Group s tax payments, among other things could result in a higher tax rate on the Group s earnings, which could result in a significant negative impact on its earnings and cash flows from operations Certain of the Group s agreements and instruments are subject to change of control or similar provisions Risks related to financing The Group operates in a capital intensive industry The Group may not obtain the financing it requires in the future The Company operates as a holding company and depends on its subsidiaries for cash to satisfy its obligations and to pay dividends The Group s current and future debt levels could have important consequences to the Group Interest rate fluctuations could affect the Group s cash flow and financial condition in addition to the price of the Shares D.3 Key risks specific to the securities Risks related to the Listing and the Shares The Group will incur increased costs as a result of the Listing and being a publicly traded company The price of the Shares could fluctuate significantly There is no existing market for the Shares, and an active trading market may not develop Future sales, or the possibility for future sales, including by the Selling Shareholders, Management and Board Members, of 9

14 substantial numbers of Shares could affect the Shares market price Each of the Principal Shareholders will after the Offering have significant voting power and the ability to influence matters requiring shareholder approval Future issuances of Shares or other securities could dilute the holdings of shareholders and could materially affect the price of the Shares Pre-emptive rights to secure and pay for Shares in additional issuance could be unavailable to U.S. or other shareholders Investors could be unable to exercise their voting rights for Shares registered in a nominee account The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Company s ability to pay dividends is dependent on the availability of distributable reserves and the Company may be unable or unwilling to pay any dividends in the future Investors could be unable to recover losses in civil proceedings in jurisdictions other than Norway Norwegian law could limit shareholders ability to bring an action against the Company Exchange rate fluctuations could adversely affect the value of the Shares and any dividends paid on the Shares for an investor whose principal currency is not NOK Market interest rates could influence the price of the Shares The limited free float of the Shares may have a negative impact on the liquidity of and market price for the Shares Section E Offer E.1 Net proceeds and estimated expenses Assuming that the Offer Price is set at the high-point of the Indicative Price Range (NOK 53) and that all the New Shares and Sale Shares are sold in the Offering (i.e. excluding any over-allotments), the aggregate gross amount of the Offering will be approximately NOK 918 million. The Company will receive the proceeds from the New Shares while the Selling Shareholders will receive the net proceeds from the sale of Sale Shares and the Principal Shareholders will receive the net proceeds from the sale of Additional Shares, if any. The Company will not receive any proceeds from the sale of Sale Shares or Additional Shares. The gross proceeds to the Company will be approximately NOK 309 million and the Company s total costs and expenses of, and incidental to, the Listing and the Offering are estimated to amount to approximately NOK 30 million (excluding VAT). E.2 Reasons for the Offering and use of proceeds The Company will apply for the Listing of all of its Shares on Oslo Børs, or alternatively on Oslo Axess. The Company believes that the Offering will: increase the shareholder base and enhance RenoNorden s access to the capital markets for further growth; further improve the ability of RenoNorden to attract key management and qualified employees; heighten RenoNorden s profile with investors, local communities, business partners and customers; and 10

15 facilitate a partial monetisation of the Principal Shareholders holdings in line with their business model and provide a liquid market for their retained Shares going forward. The Company will repay the Shareholder Loan (expected to be NOK million as of 17 December 2014) and the Leaver Loan using the proceeds from issuance of the New Shares in the Offering. The Company will not receive any proceeds from the sale of Sale Shares or Additional Shares. E.3 Terms and conditions of the Offering The Offering consists of (i) an offer of New Shares issued by the Company to raise gross proceeds in the amount of approximately NOK 309 million and (ii) an offer of Sale Shares, all of which are existing, validly issued and fully paid-up registered Shares with a par value of NOK 1, offered by the Selling Shareholders. The Joint Bookrunners may elect to over-allot Additional Shares equalling up to approximately 15% of the number of New Shares and Sale Shares allocated in the Offering. The Principal Shareholders have granted Danske Bank, on behalf of the Managers, an Over-Allotment Option to purchase a corresponding number of Additional Shares to cover any such over-allotments. The Offering consists of: An Institutional Offering, in which Offer Shares are being offered to (a) investors in Norway, (b) investors outside Norway and the United States, subject to applicable exemptions from the prospectus requirements, and (c) in the United States to QIBs in reliance on an exemption from the registration requirements under the U.S. Securities Act. The Institutional Offering is subject to a lower limit per application of NOK 1,000,000. A Retail Offering, in which Offer Shares are being offered to the public in Norway subject to a lower limit per application of an amount of NOK 10,500 and an upper limit per application of NOK 999,999 for each investor. Investors who intend to place an order in excess of NOK 999,999 must do so in the Institutional Offering. Multiple applications by one applicant in the Retail Offering will be treated as one application with respect to the maximum application limit. All offers and sales outside the United States will be made in compliance with Regulation S. This Prospectus does not constitute an offer of, or an invitation to purchase, the Offer Shares in any jurisdiction in which such offer or sale would be unlawful. The Principal Shareholders, the Company and the Joint Bookrunners may decide to limit the total number of applicants to whom Offer Shares are allocated in the Retail Offering. The applicants to whom Offer Shares are allocated will then (i) be determined on a random basis by using the VPS automated simulation procedures and/or other random allocation mechanism, and/or (ii) by setting a threshold, between NOK 10,500 and NOK 999,999, for the aggregate value of Offer Shares to be allocated to a portion (or all) of the applicants, and by not allocating Offer Shares to a portion (or any) of the applicants that have applied for Offer Shares for an aggregate value below this threshold (if applicable to a portion and not all of the applicants, such applicants to be determined by drawing of lots). The Bookbuilding Period for the Institutional Offering is expected to take place from 1 December 2014 at 09:00 hours (CET) to 11 December 2014 at 15:00 hours (CET). The Application Period for 11

16 the Retail Offering will take place from 1 December 2014 at 09:00 hours (CET) to 11 December 2014 at 12:00 hours (CET). The Company and the Principal Shareholders, in consultation with the Joint Bookrunners, reserve the right to shorten or extend the Bookbuilding Period and Application Period at any time. The Managers expect to issue notifications of allocation of Offer Shares in the Institutional Offering on or about 12 December 2014, by issuing contract notes to the applicants by mail or otherwise. Payment by applicants in the Institutional Offering will take place against delivery of Offer Shares. Delivery and payment for Offer Shares is expected to take place on or about 16 December The due date of payment in the Retail Offering is on or about 15 December Subject to timely payment by the applicant, delivery of the Offer Shares allocated in the Retail Offering is expected to take place on or about 16 December The Company and the Principal Shareholders have, together with the Joint Bookrunners, set an Indicative Price Range for the Offering from NOK 39 to NOK 53 per Offer Share. Completion of the Offering is conditional upon, among other conditions, the Company satisfying the listing conditions and being approved for listing on Oslo Børs, or alternatively on Oslo Axess. E.4 Material and conflicting interests The Managers or their affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions, and may come to have interests that may not be aligned or could potentially conflict with the interests of the Company and investors in the Company. The Managers do not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so. Danske Bank and DNB Bank ASA are lenders under the Group s Senior Facility and are also counter-parties to the Group under certain of the Group s vehicle leasing arrangements. The Managers will receive commissions and fees in connection with the Offering and, as such, have an interest in the Offering. The Selling Shareholders will also receive repayment by the Company of the Shareholder Loan, which will be financed by the issuance of the New Shares. The Selling Shareholders will receive the net proceeds from the sale of the Sale Shares and the Principal Shareholders will receive the net proceeds from the sale of Additional Shares, if any. Beyond the above-mentioned, the Company is not aware of any interest, including conflicting ones, of any natural or legal persons involved in the Offering. E.5 Selling shareholders and lock-up agreements The Selling Shareholders are (i) Asta Netherlands BV (CapVest), (ii) Accentfourteen Holding Limited (Accent Equity), (iii) as well as such other shareholders listed in Section 14 The Selling Shareholders (jointly referred to as the Selling Shareholders). CapVest and Accent Equity will following the combination of the share classes and the issuance of the New Shares in the Offering, but prior to allocation of the Sale Shares, hold 12,005,296 and 7,596,987 Shares in the Company, respectively, corresponding to 45% and 29% of the issued and outstanding Shares, assuming a price equal to the high-point of the Indicative Price Range. 12

17 CapVest and Accent Equity will sell Sale Shares in the Offering pro rata to their respective shareholding in the Company (i.e. CapVest and Accent Equity will sell 61% and 39%, respectively, of the Sale Shares sold by the Principal Shareholders). The number of Sale Shares to be sold by the Principal Shareholders will be subject to the final Offer Price, provided, however that CapVest and Accent Equity will retain a shareholding in the Company of at least 12.7% and 8.0%, respectively, following the Offering (including the issuance of the New Shares), assuming that the Over-Allotment Option is exercised in full. Further, if the final Offer Price is set at the low-end of the Indicative Price Range, CapVest and Accent Equity will sell at least 5,546,934 and 3,510,107 Sale Shares, respectively, and thus retain a shareholding in the Company of not more than 22.6% and 14.3% (6,458,362 and 4,086,880 Shares), respectively, following the Offering (including the issuance of the New Shares), assuming that the Over-Allotment Option is exercised in full. The Principal Shareholders have agreed with the Managers that, for a period of 180 days following the first day of Listing (except for Management and other Selling Shareholders, and their close associates, who are subject to a 365 days lock-up), shall issue a lockup undertaking to the Manager, pursuant to which they will undertake not to, without the prior reasonable consent of the Managers, (a) issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares, other equity interest in the capital of the Company or any securities or convertible into or exercisable for such Shares or other equity interests, or (b) enter into any swap or other agreement that transfers to another, in whole or in part, any of the economic consequences of ownership of the shares or other equity interests, whether any such transaction described in (a) or (b) above is to be settled by delivery of the shares or other securities or interests, in cash or otherwise, or (c) publicly announce an intention to effect any transaction specified in (a) or (b) above, for a period commencing on the date hereof and expiring 180 calendar days (and 365 calendar days for the Management and other Selling Shareholders) following the first day of Listing. The above lock-up undertakings are subject to certain exceptions. Furthermore, the Company has agreed with the Managers that, for a period of 365 days following the first day of Listing, the Company or its subsidiaries shall not, without the prior consent of the Managers, (a) directly or indirectly, issue, offer, sell, or contract to issue or sell any Share; (b) directly or indirectly, issue, offer, pledge, sell or contract to issue or sell any securities convertible into or exercisable or exchangeable for shares in the Company or (c) enter into any swap or any other agreement or any transaction that has an equivalent effect to such transaction described in (b) above, whether any such swap or transaction described in paragraph (b) or (c) above is to be settled by delivery of such securities, in cash or otherwise, or (d) publicly announce an intention to effect any transaction specified in (a), (b) or (c) above. The above lock-up undertakings are subject to certain exceptions. E.6 Dilution resulting from the Offering Following the issuance of the New Shares, the immediate dilution for the Selling Shareholders is estimated to be in the region of 22-28%. Following completion of the Offering, the immediate dilution for the Selling Shareholders is estimated to be in the region of 52% 13

18 (assuming the minimum sale/issuance of Sale Shares and New Shares and no exercise of the Over-Allotment Option) to 75% (assuming the maximum sale/issuance of Sale Shares and New Shares and full exercise of the Over-Allotment Option). E.7 Estimated expenses charged to investor Not applicable. The gross proceeds to the Company will be approximately NOK 309 million and the Company s total costs and expenses of, and incidental to, the Listing and the Offering are estimated to amount to approximately NOK 30 million (excluding VAT). The Managers fees and commissions will be settled out of the Selling Shareholders proceeds from the sale of Sale Shares. No expenses or taxes will be charged by the Company or the Managers to the applicants in the Offering. 14

19 2 RISK FACTORS An investment in the Offer Shares involves inherent risk. Before making an investment decision with respect to the Offer Shares, investors should carefully consider the risk factors and all information contained in this Prospectus, including the financial statements and related notes. The risks and uncertainties described in this Section 2 are the principal known risks and uncertainties faced by the Group as of the date hereof that the Company believes are the material risks relevant to an investment in the Offer Shares. An investment in the Offer Shares is suitable only for investors who understand the risks associated with this type of investment and who can afford to lose all or part of their investment. The absence of negative past experience associated with a given risk factor does not mean that the risks and uncertainties described herein should not be considered prior to making an investment decision in respect of the Offer Shares. If any of the following risks were to materialise, individually or together with other circumstances, they could have a material and adverse effect on the Group and/or its business, financial condition, results of operations, cash flows and/or prospects, which could cause a decline in the value and trading price of the Offer Shares, resulting in the loss of all or part of an investment in the same. The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude of their potential impact on the Group s business, financial condition, results of operations, cash flows and/or prospects. The risks mentioned herein could materialise individually or cumulatively. The information in this Section 2 is as of the date of this Prospectus. 2.1 Risks related to the business of the Group and the industry in which the Group operates The Group operates in a highly competitive industry and there is no guarantee that it can renew and win contracts. The domestic and commercial waste collection industry is highly competitive. Substantially all waste collection contracts with municipalities, inter-municipal companies and other associations and companies are subject to competitive tender processes. As these contracts generally are fixed term contracts, the law requires that they are re-tendered at the end of their terms, including extension options. Because the contract terms are between five and seven years, it is expected that between 14-20% of all contracts come up for re-tender each year, although this can be higher and lower depending on when the original contracts were awarded. While barriers to entry for new competitors exist, including municipalities requisition for previous experience, ISO certifications and bank guarantees to support service provision, price competition is fierce, and price is an important component in determining who will ultimately win and be awarded the contract. While the Group does not expect to renew and win all contracts, the prospects of the Group are dependent on its ability to continue to retain and win its fair share of contract tenders. The Group competes with large vertically integrated waste management companies in each of its geographies and also with inter-municipal companies or municipalities that may have competitive advantages not available to private companies or niche providers. Some of these competitors may have greater financial and/or operational resources, such as processing capacity or larger fleets of vehicles, which may put them at a competitive advantage relative to the Group. The industry also includes numerous regional and local companies, of varying sizes and financial resources. Some of these competitors may have lower financial return expectations, allowing them to reduce their prices to win contracts at levels that are not profitable for the Group. Competition levels may also increase further in the future due to various reasons. For example Norwegian, Swedish and Danish municipalities processing capacity may in the future be privatised thereby allowing vertical integration throughout the waste management supply chain. This could favour vertically integrated operators, which would negatively impact the position and prospects of the Group. Also a change in legislation could result in the removal of the monopoly position the municipalities currently hold on the domestic waste collection routes, thereby turning the markets into unregulated or free markets, such as is the case in parts of Finland. While this could not impact existing contracts, this could affect the profitability and prospects of the Group as existing contracts end. If the Group is unable to successfully compete against its competitors, the Group s ability to retain existing customers and obtain future business could be adversely affected. The Group s failure to renew and win 15

20 contracts, or the Group renewing and winning contracts at levels below what it expects or has been able to do historically, would adversely impact the Group s business, results of operations, financial position and prospects. Importantly, the Group may have to substantially lower prices in order to be the successful bidder, thereby negatively affecting its profitability. General economic and other factors can affect the Group s revenues and profitability. The Group s business is affected by changes in national, regional and general economic factors that are outside of the Group s control. Although waste needs to be collected regardless of economic conditions, a weak economy generally results in decreased levels of consumer spending which may reduce the volumes of waste generated. Where the Group is paid on the basis of kilogram/tonnes collected, this could directly negatively impact the Group s revenues and profit. In situations where the volume of waste to be collected falls dramatically, it could also cause a reduction in the number of bins to be collected, thereby adversely impacting the Group s revenues and profit. Other factors that affect the number of bins or volume of waste collected include urbanisation, given the fact that waste is usually collected in larger bins in urbanised areas, and the level of immigration into and the extent of emigration out of a region. Declines in population in the areas the Group operate could negatively impact the level of revenues and profitability on the Group s contracts. In addition, the Group s costs (largely people, fuel and maintenance on the vehicles) may be difficult to quickly adjust to match shifting volume levels given the respective routes still need to be driven. Most of the Group s contracts have price adjustment provisions that are tied to an index 8, and the Group s costs may increase in excess of the increase, if any, in such indices. The Group may be adversely affected by exposure under inflexible, long-term contracts with fixed unit prices. The Group typically collects waste in a particular geographical area under a long-term contract. The terms and conditions of many of the Group s contracts are fixed as part of a tender process; i.e. not open to negotiation. In fact, the contract forms the basis of the underlying tender on which bids are invited. Any material changes to the terms and conditions subsequent to the tender being awarded would require that the contract is formally re-tendered. The unit price, i.e. the fee charged per bin or per kilogram/tonne collected, is decided upfront having been calculated by the bidders on the basis of the contract terms and other information and assumptions provided by the customer. With the exception of adjustment provisions that allow for annual inflation adjustment of the fixed unit prices in line with a prescribed index 9, unit prices may only be adjusted in very limited circumstances for example when the value of the amendments to the contracts exceed more than 25% of the initial contract value. In the majority of the municipality contracts in Finland, the index change will only occur if the change is at least two to three percent (subject to the specific regulation in the particular contract). Commercial contracts generally have a back-to-back clause with waste its processors for the gate fees 10 and in some contracts an index change will occur if there is a change regardless of the materiality of change. The length of municipality contracts in Finland generally varies from five to up to seven years and for commercial contracts between two and five years which may be extended annually. The length of the Group s municipal contracts in Sweden, Norway and Denmark generally varies from five to up to seven years. Entering into inflexible long-term contracts exposes the Group to the risks of: Being legally bound to perform an unprofitable contract as a result of inaccurate pricing by the Group based on erroneous assumptions, for example number and cost of vehicles, number of employees etc., without a mechanism to restore or improve profitability. 8 Normally, indices published by Statistics Denmark, Statistics Finland, Statistics Norway and Statistics Sweden, respectively. 9 Normally, indices published by Statistics Denmark, Statistics Finland, Statistics Norway and Statistics Sweden, respectively. 10 A gate fee is a charge levied upon a given quantity of waste received at a waste processing plant. 16

21 Being required to compensate the customer in the case where the Group walks away from the contract. Such compensation could be material and would generally represent the difference between the cost of a replacement service provider and the level of the Group s winning bid for the remaining term of the contract. Becoming subject to margin pressure from increases in operating costs, including fuel prices and wages, and various other costs. The Group could also suffer from cost inflation rates fluctuating during the year compared to the point at which the index is applied. Any of the above could materially impact the Group s business, results of operations, profitability, financial position and prospects. Tender processes for municipal waste collection contracts are highly regulated, rigid and transparent. Most of the Group s tenders are subject to highly regulated, transparent and rigid public tender procedures. The Group cannot have bilateral discussions with its potential customers. Rather, the Group is entitled to ask questions related to upcoming tender situations, but these questions have to be made in writing and formally lodged. These questions and the written answers provided are a matter of public record, although anonymous. Once the final, signed tender documentation is submitted, it is not capable of being amended, corrected or updated. If accepted by the customer, the Group is legally bound to deliver what it has undertaken to do in the tender submission. It is important that all the documentation is correct, complete and submitted in time to avoid technical disqualification, or missing the opportunity to compete. This process exposes the Group to the risk of being disqualified without redress as a result of human error. This process also exposes the Group to perform the contract as tendered, even if unprofitable, without a mechanism to adjust, except in very limited circumstances. All tenders submitted, and the respective unit prices, are made public to all other bidders once the contract is awarded. This gives all bidders full transparency of competitor bids, so tactics in each contract tender process are important. Competitors are entitled to ask for and receive all of the Group s tender documentation once the tender is awarded. This exposes the Group to successful challenge from competitors, which could result in a contract award being over-turned if errors are found to exist in the documentation after the event. This also gives competitors a current view of the Group s current operating models, which reduces its competitive advantage. The Group may lose contracts by early termination or lack of contract extensions by its customers in their sole discretion. The Group s customers may terminate contracts with the Group before the end of the contract term. Many of the Group s contracts may be terminated by the customer in the customer s sole discretion, following a certain notice period that is generally not shorter than six months. Compensation may be payable to the Group in some contracts following customer termination. While six months should give the Group sufficient time to manage down the work-force and related costs in an efficient and cost effective way, early termination of contracts would adversely impact the Group s business, results of operations, financial position and prospects. The Group s contracts may in most cases be terminated by the customer upon material breach of the contract by the Group. This is also true in some cases, upon repeated failure by the Group to meet certain specified performance criteria in the contract, such as required level of delivery reliability measured over a certain period, or an unacceptable level of end-user complaints over a certain period. In such situations, in addition to termination, the Group may be exposed to related penalties and fines, which can be material. If the Group is not able to replace revenues from any terminated contracts within a reasonable time period, the Group s revenues and operating income would decline. To the extent the Group would not be able to redeploy the related vehicles, they would need to be sold. To the extent there was a lack of a liquid market into which to sell the vehicles, this could result in a realised loss on sale. In addition to the financial impact, there is also the risk that the reputation of the Group will suffer and so too its ability to secure future business. 17

22 In addition to the initial fixed term, which is generally around five years, the Group s contracts typically also include a possible extension period of up to three one-year extension options where the customer has the option to extend the contract on its current terms in its sole discretion. Because of the pay-back period on the vehicles, the exercise of the extension options could be very valuable to the Group. To the extent that customers choose not to exercise the extension options, this could negatively impact the Group s financial position and prospects. The Group can provide no assurance that the Group s order reserve will be ultimately realised. As at 13 November 2014, the Group had an order reserve of approximately NOK 3.4 billion, excluding customer extension options, and NOK 5.4 billion including extension options; see Section 8.6 Order reserves for further information. The Group calculates order reserve by adding annual revenue from ongoing or newly awarded contracts and assumes it remains the same for the duration of the initial fixed term. For the avoidance of doubt, the revenues are not adjusted for price or volume changes, including indexation. Option values are calculated in the same manner, running from expiry of the fixed term to the final date, assuming all the extension options are exercised. The order reserve assumes local currencies, converted to NOK at fixed exchange rates throughout the period of NOK:SEK= 0.91, NOK:DKK=1.06 and NOK:EUR=8.40. It is important to highlight that the order reserve is indicative, and that in practice, there is a risk that the actual amounts of revenue earned may differ from the amounts indicated here and in the tables provided in Section 8.6 Order reserves because, among other things: Unit prices are negotiated at the start of the contract. These unit prices will be index-adjusted on the basis of the official public inflation indices applicable on the anniversary of the respective contracts, determined by the actual inflation development in the underlying cost base during the preceding 12 months. The customer may, under any contract with the Group, require the Group to collect a higher or lower volume of waste than that initially set out in the contract, or to increase or decrease the collection frequency, on the basis of these unit prices. The Group may sell additional services to its customers, for which additional revenue can be earned, for example leafleting to residents, cleaning or replacement of bins, or tagging of bins. Any customer may, under any contract with the Group, deduct from revenue any daily penalties imposed by the customer for non-performance by the Group. Any of the Group s contracts may be early terminated by the customer, or any customer may elect not or fail to exercise an extension option, although compensation may be payable to the Group in some contracts. Exchange rates fluctuations. Non-realisation of the Group s order reserve could adversely affect the Group s business, results of operations, profitability, financial position and prospects The Group is dependent on its key customers. The Group has a relatively diversified customer base where the largest customer represented approximately 5% of the Group s revenue for 2013 on a pro forma basis 11. The majority of the Group s waste collection contracts are with municipalities and inter-municipal companies, which represented 94% of the Group s revenue for on a pro forma basis. It is generally accepted that Nordic municipal and inter-municipal counter-parties represent low credit risk. In Finland, the Group has some corporate customers such as hotels, owners of office 11 As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. On an actual basis, as per the Group s Financial Statements, total operating revenue was NOK 1,268 million and EBITDA was NOK 223 million in As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. On an actual basis, as per the Group s Financial Statements, total operating revenue was NOK 1,268 million and EBITDA was NOK 223 million in

23 blocks and shopping centres. While these represent a higher degree of counter-party risk, they in total accounted for 6% of the Group s revenue on a pro forma basis for In the event that customers were to fail, refuse to pay or delay payment, or if a customer becomes insolvent or goes bankrupt, or if the Group s customers change payment terms, or terminate their contracts with the Group, there is a risk that the Group s business, results of operations and financial position and future prospects could be negatively affected. Similarly, if the Group is unable to renew contracts when they come up to tender, and if the Group is not able to replace revenues within a reasonable time period, the Group s revenues and operating income would decline. To the extent the Group would not be able to redeploy the related vehicles, they would need to be sold. To the extent there was a lack of a liquid market into which to sell the vehicles, this could result in a realised loss on sale. The Group has a relatively concentrated supplier base. Other than its workforce, the Group s key suppliers are in relation to fuel, vehicles and maintenance. While the Group works to ensure that it adequately safeguards supply with alternative suppliers, it does have a relatively concentrated supplier base: Fuel. The Group has several fuel suppliers in total, but generally one or two within each country. On some routes, however, there is a lack of local competition and in these situations, the Group relies on a single provider. Daily operations highly depend on the vehicle being able to efficiently access fuel. The route plan is typically set up in a way to take on fuel in an optimised way and the contract is priced as such. To the extent there is a dispute with a supplier or a lack of, or no available fuel, the efficiency and profitability of the route will be negatively impacted as drivers are forced to travel to find less convenient alternative fuel sources, and in extreme circumstances, collection may be compromised until fuel supply resumes. Vehicles. The Group will typically order vehicles, to the extent necessary, upon being awarded a contract, from suppliers including Scania, Mercedes and Volvo. In most cases, contracts are awarded with sufficient notice to cope with the respective vehicle manufacturers normal lead times. In situations where this is not the case, there is an increased risk of not having all or some of the vehicles in situ in time to operate the contracts. Often delays of new vehicles occur for reasons outside of the Group s control, namely quality, classification or engineering problems; changes in governmental regulations; work stoppages or other labour disturbances at the vehicle factory or dealer, or bankruptcy or other financial crisis of the vehicle factory or dealer. While the Group actively manages the supply chain to avoid such delays and has a large fleet with capacity to cover some level of vehicle delays, there is the risk of severe disruption if a vehicle order cannot be fulfilled or is materially delayed. Maintenance. Keeping the vehicles running is a key element to having efficient operations and maintaining profitability. Vehicle breakdowns are an everyday feature of the business, which needs active management. Preventative maintenance and real-time support to fix vehicles efficiently are core competencies and an operational focus for the Group. As a precautionary measure, the Group maintains appropriate levels of reserve vehicles to substitute into the operations in normal level of breakdown, as required under the contracts with customers. The Group also has in place maintenance contracts with vehicle suppliers to provide quick turnaround support cost effectively. Without adequate systems and controls over this area, and in situations of abnormal level of vehicles breakdown, there is a risk of disruption to service provision. Any disruption in the supply of fuel, vehicles or maintenance services or other material supply items could materially negatively impact the ability of the Group to operate its business and expose it to penalties, fines and potential contract termination; any of which could adversely affect the Group s business, results of operations, profitability, financial position and prospects. The Group relies on access to road networks. The Group operates a large fleet of vehicles that visit a great number of individual premises every day in the geographies in which the Group operates. The efficiency of the service the Group provides is largely dependent on its large vehicles getting access to road networks in these areas. The Group has a contractual obligation to its customers to collect and unload waste with such agreed frequency and within prescribed times, regardless of 19

24 any disruptions to road transport systems, because of, for example, traffic congestion, road works or closures and inclement weather. Disruption to road transport systems may require the Group to use alternative, longer and less cost efficient routes, which may reduce contract profitability. In addition, delays in collection as a result of any such event may also, according to the Group s contracts, result in imposition of daily penalties by the customer, and may, in certain circumstances, also entitle to customer to terminate the contract. In addition, the local authorities may, in some instances, deny waste collecting operators the possibility to collect waste on certain roads and in particular areas due to health risks to personnel or extremely difficult driving conditions. Such situations may have an effect on the Group s business, results of operations and financial position and reduce its opportunity to serve areas in which it is currently operating and to obtain new tender contracts. Weather disruption may affect the Group s operations. The Group s core business is operated outside. As such, weather is a factor that could add complexity and cost to daily operations, especially in the harsh winters. Given the geographic reach of the Group, harsh winters are a common occurrence. Snow is an occupational hazard increasing the level of accidents and vehicle damage, as well as slowing and hindering the speed of collection. Sickness rates also increase. In very cold conditions, vehicles are difficult to start and break-down levels escalate. Therefore, there is a risk that bad or abnormal weather conditions may negatively impact service levels, increase rates of damage and thereby negatively affect the Group s business, results of operations, financial position and prospects. The Group is subject to strict environmental and occupational health and safety laws and regulations. The Group s is subject to strict laws and regulations relating to waste management and collection, vehicle requirements and working conditions of the employees of the Group, including specific precautionary and preventative measures. Please see Section 8.12 Regulations for more information on regulations and the Group s licenses, permits and certifications. These laws and regulations include rules governing the number of hours that drivers can work on consecutive days. In periods of high collection activity, high levels of sick leave among, or absence of, employees, or inclement weather conditions, these regulations may restrict the Group from deploying drivers that otherwise would have been available, and require the Group to increase its workforce and hence cost base, or hiring more expensive temporary employees, in order to satisfy its contractual obligations, which could reduce the Group s operating profitability. Regulations also govern the weight limits of the loads each of the Group s vehicles can take. For instance, the Group s waste collection vehicles are generally limited to a loaded weight of 25 tonnes (large vehicle), 20 tonnes (medium sized vehicle) and 7 tonnes (small vehicle). Where a customer requires the Group to collect a number of units or weight in excess of the number of units or weight initially contemplated to be collected under a contract, which the Group s customer generally may do without adjustments to the unit prices under the contract, the Group may be required to re-allocate the vehicles in its fleet, or to acquire additional vehicles, or additional stops to unload waste from that in the original tender which could negatively impact the Group s financial position and profitability. The Group s compliance with existing regulatory requirements is costly, and changes in such laws and regulations could increase the Group s compliance costs and reduce the Group s profitability. New environmental standards may require the Group to replace its vehicles earlier than at the end of a contract cycle. The Company intends to use its vehicles over the lifetime of up to two standard customer contracts. At the end of their useful life, the vehicles have generally been sold to third-parties or returned to the supplier at, or around, net book value at the date of the sale or return. Increasing political pressure and societal emphasis on environmental issues has amplified the focus by municipalities and corporates on the vehicle types used in outsourced contracts. Customers are not legally able to change the specifications of vehicles deployed on contracts already in force, however, the Group has noticed that in some new tenders, especially for larger cities, specifications included are for the latest environmental and technical standards, such as with respect to fuel efficiency, levels of emissions and fuel type, for example 20

25 gas, diesel versus petrol. While this is relevant to a different extent in each of the Group s core geographies, the trend is becoming more established. The impact of this trend for the Group is that it may be required to replace its vehicles earlier, i.e. at the end of a contract cycle rather than at the end of their useful life. While the Group can manage this by re-using vehicles in less onerous contract renewals in less exacting geographies, such as in Denmark, which currently has lower environmental standards, this could have the effect of increasing the capital intensity of the Group s business model. The Group may also be required to incur various other expenditures for alterations or additions to vehicles to bring them in line with the latest environmental or safety standards, which could negatively impact the Group s results of operations and financial position, and reduce the profitability of the business. To the extent there is not a liquid market into which to sell vehicles no longer able to be deployed, the Group may need to recognise impairment charges that will reduce the earnings and net assets of the Group. As the Group s fleet of vehicles age, vehicle values will decrease, and the Group will be exposed to various other risks relating to an aging fleet. As the Group s fleet of vehicles age, vehicle values, which are determined by the state of the second hand market and outside of the control of the Group, will decrease and the Group may need to recognise impairment charges that will reduce the earnings and net assets of the Group. The cost of maintaining vehicles in good operating condition also increases with the age of the vehicle, and older vehicles are typically less fuel efficient due to gradual improvements in the engine technology and other design features. Current and potential customers may, when awarding contracts, in tender specifications apply new vehicle criteria, particularly relating to environmental and technical standards, such as with respect to fuel efficiency and type of fuel used, that may require the Group to replace its vehicles earlier than at the end of their useful life or to incur various other expenditures for alterations or additions. Government regulations and safety or other equipment standards may also require the Group to incur expenditures relating to its vehicles in order to satisfy new standards. Any of these outcomes could adversely affect the Group s business, results of operations, profitability, financial position and prospects. Failure of the Group s logistics and route planning and other IT systems could adversely affect the Group s revenues and profitability. The Group is dependent upon its IT systems for the efficient functioning of its operations, including logistics and route planning, invoicing and administration. An important part of the Group s policy is to achieve cost efficiencies, generally and compared to its competitors, while timely delivering a high quality service. The ability to do this requires efficient functioning, and continuous improvement, of IT systems. Some customer contracts also specify that each waste collection unit (bin lifted/kilogram collected) must be registered in the Group s IT systems, and if the IT system is not functioning properly the Group risks not receiving payment for the waste collection service completed. The Group s IT systems may become subject to disruption caused by circumstances beyond the Group s control, such as power outages, computer systems and network failures, computer viruses, cyber attacks, or malicious software programmes. In addition, the deployment of new IT systems can adversely affect, or even disrupt, the Group s operations until resolved. Although the Group does have business continuity plans in place to mitigate against the effect of such events, should the Group s IT systems fail, this could adversely affect the Group s revenues and profitability. The Group may not be successful in implementing its strategies in the future. The Group may not be successful in implementing its strategies for the Group in the future. Further, the adopted strategies may not be right for the Group or may not result in fulfilment of the financial goals or other objectives. The Group s future development and success will depend on these strategies being accurate for the Group, that the measures are being efficiently and correctly implemented and that they provide the expected result. In the event that such strategies are not accurate for the Group or are not accurately implemented or implemented within the expected time frames, earnings may not be maintained or grown and savings may not be realised. This may negatively affect the Group s business, results of operations, financial position, profitability and future prospects. 21

26 The Group can provide no assurance that it will be able to achieve and manage growth. The Group has been created in part through mergers and acquisitions, most recently in 2013 with the acquisition of HFT Environment in Finland. The Group may engage in mergers, acquisitions and joint venture schemes in the future. Mergers, acquisitions and joint ventures are associated with several risks, such as strategic risks, risks relating to financing and valuation, risks relating to sustainability of profit and cashgeneration ability and retention of key customers, suppliers and personnel of the target company, as well as risks relating to the combination and integration of the business operation. In international transactions these risks are enhanced because of, among other things, different corporate cultures, official procedures, local laws and regulations, politics, local foreign exchange, as well as the interpretation of local circumstances. The Group s evaluation of potential acquisitions will typically be based on imprecise and incomplete information and assumptions that may prove to be incorrect. In addition, competition legislation may also affect or even prevent the Group from making acquisitions. The Group may not be successful in implementing plans regarding existing or new projects, and mergers or acquisitions, their implementation or any expectations concerning integration and synergies may not be achieved according to plan. The Group may not find suitable targets for mergers or acquisitions in the future, at an acceptable price, and the Group may not be allowed to make such acquisitions due to competition legislation. In addition, executing the Group s growth strategy will require significant time from the Group s senior management potentially at the expense of attention to existing operations or other priorities. The Group s business is subject to health and safety risks, including the risk of personal injury to employees and others. Providing waste collection services involves risks of fatal and serious accidents, including, but not limited to fatal accidents or personal injury to employees and the general public, and damage to third party property. While the Group seeks to minimise its exposure to such risks through training and compliance programs, as well as vehicle and equipment maintenance programs, if the Group were to incur substantial liabilities not covered by insurance, its business, results of operations and financial condition could be adversely affected. Any such incidents could also affect the Groups reputation with local communities, customers and employees. The Group may from time to time be involved in litigation matters and disputes. The Group may from time to time be involved in litigation matters and disputes within the framework of its normal business activities and, like other operators in the Group s industry, be subject to disputes over tender awards and claims concerning agreements, product liability, personal injury, alleged faults in supplies of services, environmental issues, employment matters and government claims for taxes or duties and intellectual property rights. It is common in the industry to be involved in legal disputes in terms of public procurement processes that are challenged either by the Group or its competitors. Disputes and claims of this kind can be time consuming, disrupt normal operations, involve large amounts and result in considerable costs. Moreover, it can be difficult to predict the outcome of complex disputes, claims or other litigation matters. Such costs associated with prosecuting or defending such lawsuits, including the diversion of management s attention to these matters may negatively affect the Group s business, results of operations, financial position and future prospects. The Group is exposed to risks and liabilities that may not be adequately covered by insurance. The Group s is exposed to a variety of risks that could, among other things, result in damage to property and environment, personal injury, monetary losses and liability. Although the Group seeks to maintain insurance for such risks and in such amounts as it considers reasonably prudent, the Group s insurance policies are subject to exclusions and limitations of liability both in amount and with respect to insured loss events. Certain risks are also not possible to insure against. For example, even though certain costs in connection with service provision stoppages are covered by the Group s insurance, the long-term effects of such service provision stoppages, such as loss of confidence with the customers, are generally not possible to insure. Consequently its insurance may not adequately protect it against losses sustained. In addition, the Group s current insurance coverage may be cancelled or become unavailable on reasonable economic terms in the future. Any damage caused by the Group which is not materially covered by insurance could have a material adverse effect on the Group s business, results of operations, financial condition and future prospects. Any claims made 22

27 under the Group s insurance policies may also cause insurance premiums to increase. The Group s risk management procedures may fail to identify or anticipate future risks. Although the Board of Directors believe that the Group has adequate risk management procedures in place, the methods used to manage risk may not identify or anticipate current or future risks or the extent of future exposures, which could be significantly greater than historical measures indicate. Risk management methods depend on the evaluation of information regarding markets, customers or other matters that is publicly available or otherwise accessible to the Group. Failure (or the perception that the Group has failed) to develop, implement and monitor the Group s risk management policies and procedures and, when necessary, preemptively upgrade them could give rise to reputational issues which could have a material adverse effect on the Group s business, prospects, results of operations and financial conditions. The Group is dependent upon its key personnel and its local managers. The Group s continued success depends in large part on the sustained contribution of the Group s key personnel. The Group relies on its senior managers to execute its operational strategies and to identify and pursue new business opportunities. In addition, the Group depends on its local managers for its day-to-day operations. The Group manages its operations on a decentralised basis, and also delegates financial and commercial responsibility to its local managers. Key personnel are of great importance to the Group s future, especially in implementing the strategic objectives and directing, managing and controlling business operations effectively in a competitive marketplace. If key personnel resign, start working for competitors or retire from the Group and are not suitably and efficiently replaced or if the Group cannot recruit or retain qualified personnel in the future, or if the cost to replace key personnel is materially higher than the Group currently pays, this may negatively affect the Group s business, results of operations, financial position and future prospects. Substantially all of the Group s employees are parties to collective bargaining agreements and trade unions. Substantially all of the Group s employees are party to collective bargaining agreements and trade unions. The Group s relationship with works councils and trade unions is therefore important. The presence of works councils and trade unions may limit the Group s flexibility in dealing with its workforce and ultimately lead to increased operating costs. A lengthy strike or other work stoppage by the Group s employees could have a material adverse effect on the Group s ability to conduct its operations and complete its contractual obligations, which again could affect revenues and profits earned under contracts, result in delays that could entitle the customer to impose of daily penalties on the Group, and in certain circumstances also entitle to customer to terminate the contract. Any such delays, stoppages or interruptions could have a material adverse effect on the Group s results of operations and financial position. Increases in the cost of labour may reduce the Group s profitability. Labour costs represent major operating expenses for the Group. Labour costs are dependent upon, among other things, unemployment levels, demand and supply imbalances in various geographic regions, prevailing wage rates, collective bargaining arrangements, insurance costs, changes in employment and labour legislation and employee turnover rate in the waste collection industry. The Group competes with other businesses in its markets for qualified employees. The labour market is currently tight in some of the areas in which the Group operate, for example in Norway and parts of Finland. Historically, the Group has been able to find the right personnel as needed, but in the future, a shortage of qualified employees may require the Group to enhance its wage and benefits packages to compete more effectively for employees. An increase in wage rates or the need to take on temporary employees to meet shortfalls would reduce the Group s profitability. Changes in the prices of diesel fuel and liquefied natural gas ( LNG ) may affect the Group s profitability. The Group needs diesel fuel and LNG to run its large fleet of collection vehicles and other vehicles, and the expenses relating especially to diesel fuel represent major operating expenses for the Group. The prices of diesel fuel and LNG fluctuate based on events outside of the Group s control, including, but not limited to, local taxes and oil price. The Group tries to minimise the risk of increased costs of diesel through indexation of the unit price, where fuel is included as one of the component costs, in the customer contracts. However, this may not be sufficient and a time lag between the increase in fuel price and index adjustment may be apparent. The 23

28 Group has a policy to enter into OTC commodity hedging agreements in order to lower the risk of increased fuel costs. However, the Group does not have in place diesel cap agreements after 31 December A sustained increase in the costs of diesel fuel and LNG, or reductions in the supply, would increase the Group s operating costs and reduce the Group s profitability or could interrupt or curtail the Group s operations. The presence of a Nordic black market for the waste collection industry may have a material adverse effect on the Group s revenues. A black market in the waste collection industry may occur in order for black market participants to avoid government regulation and taxes. While consumers and customers usually shun the black market because they consider it wrong and illegal, there may be some customers who purchase such services regardless. Europe has seen examples of such black markets in Italy and Spain. Fortunately, the governments in the Nordic countries have so far been able to regulate waste collection services in such a way that black-markets have not made their strong-hold. However, if such were to occur, the Group may experience a lack in tendering contracts and thereby a reduction in the Group s revenues. Exchange rate fluctuations may affect the Group s results of operations, financial position and future prospects. The Group is exposed to currency risk since exchange rates affect the Group s income statement, balance sheet and cash flow statement. Currency exposure is the result of purchases and sales of goods and services in other currencies besides the respective subsidiary s local currency (transaction exposure) and of the conversion of the balance sheets and income statements in foreign currencies into NOK (translation exposure). This translation exposure does not give rise to an immediate cash effect, but might impact the Group s financial covenants. Changes in exchange rates can also affect the Group s suppliers and thus indirectly affect the Group s profits. Furthermore, the Group is exposed to foreign currency transactions. The Group s business model is to provide services from the local subsidiary to municipalities in their local currency. Bank loans are denominated in the four currencies of Norway, Sweden, Finland and Denmark largely in proportion to the underlying earnings, such that the financing does not give rise to significant exposures for the Group. As a result of the international structure of the Group, the Group is exposed to some foreign currency exchange risks relating to various transactions in currencies other than the functional currency. The Group is principally exposed to changes in EUR, DKK and SEK compared to NOK. Exchange rate fluctuations may negatively affect the Group s business, results of operations, financial position and future prospects. Changes in rules related to accounting for income taxes, changes in tax laws in any of the jurisdictions in which the Group operates or adverse outcomes from audits by taxation authorities could result in an unfavourable change in its effective tax rate. The Group has grown by way of mergers and acquisitions in the Scandinavian and Finnish markets. Mergers and acquisitions typically entail exposure on existing and future tax positions. Although the Group has obtained qualified advice by local counsel in its mergers and acquisitions, tax exposure may exist on the transactions that have created the Group. The Group operates its business in different tax jurisdictions; Denmark, Finland, Norway and Sweden. As a result, its effective tax rate is derived from a combination of the applicable tax rates in these jurisdictions. The Group s effective tax rate may be lower or higher than its tax rates have been in the past due to numerous factors, including the sources of its income and the tax filing positions it takes. The Group s estimates its effective tax rate at any given point in time based on a calculated mix of the tax rates applicable to the Group and on estimates of the amount of business likely to be done in any given jurisdiction. Changes in rules related to accounting for income taxes, changes in tax laws in any of the jurisdictions in which the Group s operates, expiration of tax credits formerly available, or adverse outcomes from tax audits that the Group may be subject to in any of the jurisdictions in which it operates could result in an unfavourable change in its effective tax rate. An example in this instance is new Norwegian tax legislation which has been adopted with effect from 1 January 2014 which limits the deductibility of interest expense on related party debt. The new tax legislation may entail that interest expenses related to the Shareholder Loan will not be fully tax deductible for the Company (increasing the taxable income of the Company in Norway). 24

29 A loss of a tax dispute or a successful tax challenge to the Group s operating structure or to the Group s tax payments, among other things could result in a higher tax rate on the Group s earnings, which could result in a significant negative impact on its earnings and cash flows from operations. From time to time, the Group s tax payments may be subject to review or investigations by tax authorities of the jurisdictions in which the Group operates. If any tax authority successfully challenges the Group s operational structure, intercompany pricing policies, the taxable presence of its subsidiaries in certain countries, or if the Group loses a material tax dispute in any country, or any tax challenge of the Group s tax payments is successful, its effective tax rate on its earnings could increase substantially and the Group s earnings and cash flows from operations could be materially adversely affected. There could also be a risk that any adjustment is retrospective. There are, for instance, limited transactions taking place between the companies in the Group and related companies, which must be carried out in accordance with arm s length principles in order to avoid adverse tax consequences. There can be no assurance that the tax authorities will conclude that the Group s transfer pricing policy calculates correct arm s length prices for intercompany transactions, which could lead to an adjustment of the agreed price, which would in turn lead to increased tax cost for the Group. Some of the Group s employees have acquired shares in the Company at a time when there was no public market for its shares. In the event the tax authorities would deem the purchase price as lower than the fair market value for such investments there is a risk that the Group becomes liable for paying payroll tax based on the difference between the tax authorities view of the fair market value and the purchase price at the time of investment. Certain of the Group s agreements and instruments are subject to change of control or similar provisions. Certain of the Group s agreements and instruments are subject to change of control provisions that may be triggered by the completion of the Offering or changes of control in the Company after the Offering. For example, the Group s Senior Facility contains a change of control provision which may be triggered if any person or group of persons acting in concert (other than CapVest) acquire or gains direct or indirect control of more than 50% of the issued Shares and/or the voting shares in the Company. Further, the standard terms and conditions of many of the Group s counter-parties under its vehicle lease agreements contain change of control provisions, as is customary for these types of agreements, and some of the Group s customer contracts with municipalities or inter-municipal companies contain change of control provisions. Where considered needed and appropriate, the Company aim to obtain consents or waivers or other comfort to the change of control provisions in these agreements. Failure to receive necessary consents or waivers for any reason could result in the loss of contractual rights and benefits, or the termination of agreements, which could also result in crossdefault provisions in other financing agreements and instruments being triggered, any of which could have a material and adverse effect on the Group s business, results of operations and financial condition. 2.2 Risks relating to financing The Group operates in a capital intensive industry. The Group operates in a capital intensive industry that requires a substantial amount of capital expenditure and other long-term committed expenditures, including, but not limited to, those relating to the leasing of vehicles. As of 1 November 2014, the Group had a vehicle fleet of 889 heavy asset vehicles, 13 of which approximately 46% were leased on long-term leasing contracts, and approximately 54% were owned by the Group directly. The Group has funded and expects to fund future investments and other capital and operating expenses from a combination of cash on hand, cash generated from operations and bank and leasing facilities. One risk in this regard is that the relevant financial institutions providing the credit facilities or loans may cease providing such arrangements, outside of the control of the Group. Another risk is that the relevant financial institutions providing the credit facilities or loans may require guarantors to guarantee the due performance of the Group s obligations under those loan arrangements. The Group may not be able to obtain or provide such guarantees at all, or obtain such guarantees on commercially reasonable terms. Lease agreements typically have a term of between seven and ten years. There is a risk that if vehicles are not utilisable for the full duration of the leasing contract, the vehicles may need to be disposed of at the end of a contract period (say 5 or 7 years), leaving the remaining loan to be settled from the disposal proceeds. In a situation where the vehicle is not sold at or 13 Figure includes asset heavy and operation critical vehicles only. The figure does not include smaller units, such as trailers, company cars, forklifts, tractors and vans. See Section Vehicles, fleet management and maintenance for further details on the fleet of vehicles. 25

30 around the value or the outstanding loan, the Group will be required to repay the remaining lease balances out of operating cash flow or cash balances, with the commensurate negative impact on the Group s financial position. The Group expects to have sufficient cash and/or committed financing to meet its obligations as they fall due. However, no assurances can be given that it will be able to generate sufficient cash from operations or obtain the necessary financing or the required guarantee can be provided for the relevant financing arrangement or that such financing will be at interest rates and on the terms that are favourable to it or consistent with its expectations. If the Group is unable to secure necessary financing required to complete the purchase of these vehicles, the Group may not be able to fulfil its obligations under the vehicle purchase contracts or to meet other funding requirements and may incur penalties under those contracts, the payment of which may adversely affect its business, financial condition and results of operations. The Group may not obtain the financing it requires in the future. The Group is financed by equity and debt, and is therefore exposed to the risks associated with debt financing, inter alia, covenants which upon breach may result in the loan being considered due and payable. Interest payments could adversely affect the Group, e.g. by reducing or postponing investments or by requiring the Group to sell assets, issue equity or restructure the debt at unattractive terms. The Group may require additional capital in the future due to unforeseen liabilities, to fund acquisitions or in order to take advantage of other business opportunities, or to be able to respond to competitive pressures. The Group may not be able to obtain necessary financing in a timely manner on acceptable terms, or at all, in the future. The Group s ability to obtain such additional capital or financing will depend in part upon prevailing market conditions as well as conditions of its business and its operating results, and those factors may affect its efforts to arrange additional financing on satisfactory terms. If the Group raises additional funds by issuing additional shares or other equity or equity-linked securities, it may result in a dilution of the holdings of existing shareholders. If funding is insufficient at any time in the future, this could adversely impact the Group s business, results of operations, cash flow, financial position and prospects. To the extent the Group is unable to meet capital expenditure requirements on new or renewed contracts out of operating cash flow in situations where lease or bank financing cannot be obtained, the Group will not be able to tender for contracts, thereby negatively impacting the financial condition, performance and prospects of the Group. The Company operates as a holding company and depend on its subsidiaries for cash to satisfy its obligations and to pay dividends. The Company operates as a holding company and its principal assets consist of direct and indirect shareholdings in subsidiaries. The Company s ability to make required payments of interest and principal on the Company s indebtedness and funding of the Group s operations, as well as to pay dividends, is affected by the ability of the subsidiaries to transfer available cash resources to the Company. Transfer of funds to Company from its subsidiaries, by way of dividends, inter-company loans or otherwise may be restricted or prohibited by legal and contractual requirements applicable to the respective subsidiaries. Limitations or restrictions of the transfer of funds between companies within the Group may become more restrictive in the event that the Group experiences difficulties with respect to liquidity and financial position. This may also negatively affect the Group s business, results of operations, financial position and prospects. The Group s current and future debt levels could have important consequences to the Group. The Group is more leveraged than many other public companies. The Company is of the opinion that the Group s capital structure generally is beneficial for the Group as a substantial portion of the Group s debt is incurred under vehicle leasing arrangements, which provides a cheaper and more efficient way of financing a high amount of fixed assets than alternative financing sources, and because such financing is backed by vehicles which have relatively liquid values, and are mainly supported by long-term contracts with municipality customers. The Group s level of debt, and any additional debt incurred in the future could however have important consequences to the Group, including: affecting the Group s ability to obtain additional financing on favourable terms, or at all, for working capital, capital expenditures, acquisitions or other purposes; affecting the Group s costs of borrowing, which could increase with high leverage levels; 26

31 requiring the Group to use a substantial portion of its cash from operations to make principal and interest payments on its debt, reducing the funds that would otherwise be available for operations, future business opportunities and dividends to its shareholders; making the Group more vulnerable than its competitors with less debt to competitive pressures, a downturn in its business or the economy generally; and limiting the Group s flexibility in responding to changing business and economic conditions. The Group s ability to service its current and future debt will depend upon, among other things, its future financial and operating performance, which will be affected by prevailing economic conditions as well as financial, business, regulatory and other factors, some of which are beyond its control. If the Group s operating income is not sufficient to service its current or future debt, the Group will be forced to take action such as reducing or delaying its business activities including contract tenders, acquisitions, investments or capital expenditures, selling assets, restructuring or refinancing its debt or seeking additional equity capital. The Group may not be able to affect any of these remedies on satisfactory terms, or at all. Interest rate fluctuations could affect the Group s cash flow and financial condition in addition to the price of the Shares. The Group faces interest rate risk from borrowings and deposits with a floating rate. The Group may enter into and maintain certain hedging arrangements designed to fix or limit risk on a portion of these rates, but in the future such arrangements may not be available on commercially reasonable terms. The Group has sought to reduce such interest rate risk by entering into an OTC interest rate cap agreement with a bank, which in effect caps the interest rate until December 2016 for the majority of the Company s bank debt. If interest rates were to rise significantly the Group s interest expense would correspondingly increase, thus reducing free cash flow. Accordingly, fluctuations in interest rates could negatively affect the Group s business, results of operations, financial position and future prospects. 2.3 Risks related to the Listing and the Shares The Group will incur increased costs as a result of the Listing and being a publicly traded company. As a publicly traded company with its Shares listed on Oslo Børs or Oslo Axess (as the case may be), the Group will be required to comply with the Oslo Stock Exchange s reporting and disclosure requirements and with corporate governance requirements. As a consequence, the Group will incur additional legal, accounting and other expenses to comply with these and other applicable rules and regulations. The Group anticipates that its incremental general and administrative expenses as a publicly traded company will include, among other things, costs associated with annual and quarterly reports to shareholders, shareholders meetings, investor relations, incremental director and officer liability insurance costs and officer and director compensation. In addition, the board of directors and management may be required to devote significant time and effort to ensure compliance with such rules and regulations, which may entail that less time and effort can be devoted to other aspects of the business. Any such increased costs, individually or in the aggregate, could have an adverse effect on the Group s business, financial condition, results of operations and cash flows. The price of the Shares could fluctuate significantly. The market for securities is very volatile. As an equity investment can both rise and fall in value, it is not certain that an investor will get back the capital invested. An investment in the Company s shares should therefore be preceded by a careful analysis of the Group, its competitors and the business environment, general information about the industry and other relevant information. The value of the Company s Shares may fluctuate significantly in the future, even as a result of events that are not directly linked to the Group or to the operations of the Company. Therefore there is no guarantee regarding the future development of the price of the Company s shares. The share price can be negatively affected as a result of capital market volatility, general macroeconomic conditions, the possibility of a large number of shares being sold on the market, or as a result of an expectation that such divestment will occur. Sales of shares by major shareholders or executive officers may also make it difficult for the Group to obtain capital through new issues of shares or other securities in the future. 27

32 In addition, the liquidity and market price of the Shares after Listing may be affected by major fluctuations, including fluctuations in actual or projected results of operations or those of its competitors, changes in earnings projections or failure to meet investors and analysts earnings expectations, investors evaluations of the success and effects of the policy described in this Prospectus, as well as the evaluation of the related risks, changes in general economic conditions, seasonal fluctuations that cause the Group s results of operations to vary among quarters, changes in shareholders, changes in the regulatory environment and other factors. Those changes may occur without regard to the operating performance of these companies. The price of the Shares may therefore fluctuate based upon factors that have little or nothing to do with the Group, and these fluctuations may materially affect the price of the Shares. Furthermore, limited liquidity of the Company s shares may increase the fluctuations of the share price. Limited liquidity may also make it difficult for individual shareholders to sell their shares. It is possible that shareholders in the Company will not be able to sell their share at a price acceptable to the shareholder at every given time. In addition, the trading market for the Company s shares will be influenced by the research reports that research analysts publish about the Company or its business. If one or more of these analysts cease coverage of the Company s business or fail to publish reports on the Company regularly, the Company could lose visibility in the financial markets, which in turn could cause the Company s share price or trading volume to decline. Moreover, if one or more of the analysts who cover the Company s business adversely changes their recommendations regarding the Company s shares or if the Company s operating results do not meet their expectations, the Company s share price could decline. There is no existing market for the Shares, and an active trading market may not develop. Prior to the Listing, there was no public market for the Shares, and there is no assurance that an active trading market for the Shares will develop, or be sustained or that the Shares could be resold at or above the Offer Price. The market value of the Shares could be substantially affected by the extent to which a secondary market develops for the Shares following the completion of this Offering. Future sales, or the possibility for future sales, including by the Selling Shareholders, Management and members of the Board of Directors, of substantial numbers of Shares could affect the Shares market price. The Company cannot predict what effect, if any, future sales of the Shares, or the availability of Shares for future sales, will have on the market price of the Shares. Sales of substantial amounts of the Shares in the public market following the Offering, including by the Selling Shareholders, Management and members of the Board of Directors (which, following the Offering, will hold approximately 25% to 48% of the Shares), or the perception that such sales could occur, could adversely affect the market price of the Shares, making it more difficult for holders to sell their Shares or the Company to sell equity securities in the future at a time and price that they deem appropriate. Although the Selling Shareholders, as of the date of this Prospectus, are subject to agreements with the Joint Bookrunners that, subject to certain conditions and exceptions, restrict their ability to sell or transfer their Shares for a period of 365 days after the Listing, the representatives of the Joint Bookrunners may, in their sole discretion and at any time, waive the restrictions on sales or transfer during this period. Additionally, following this period, all Shares owned by the Selling Shareholders will be eligible for sale or other transfer in the public market, subject to applicable securities laws restrictions. Each of the Principal Shareholders will after the Offering have significant voting power and the ability to influence matters requiring shareholder approval. After the Offering, CapVest will own between approximately 13% - 27%, and Accent Equity will own between approximately 8% - 17%, of the Shares in Company, depending on the final Offering size and whether the Over-Allotment Options is exercised. This means that each of the Principal Shareholders will continue to have significant voting power and the ability to influence matters requiring shareholder approval. The interests of each of the Principal Shareholders could differ from or be in conflict with the Group s interests or the interest of the Company s other shareholders. For example, there may be a conflict between the interests of each of the Principal Shareholders on the one hand, and the Company s or its other shareholders interests on the other, as regards payment of dividends and the size and regularity of any such dividend payments. 28

33 Future issuances of Shares or other securities could dilute the holdings of shareholders and could materially affect the price of the Shares. The Company may in the future decide to offer additional Shares or other securities in order to finance new capital-intensive projects, in connection with unanticipated liabilities or expenses or for any other purposes. There is no assurance the Company will not decide to conduct further offerings of securities in the future. Depending on the structure of any future offering, certain existing shareholders may not have the ability to purchase additional equity securities. If the Company raises additional funds by issuing additional equity securities, holdings and voting interests of existing shareholders could be diluted. Pre-emptive rights to secure and pay for Shares in additional issuance could be unavailable to U.S. or other shareholders. Under Norwegian law, unless otherwise resolved at the Company s general meeting of shareholders (the General Meeting ), existing shareholders have pre-emptive rights to participate on the basis of their existing ownership of Shares in the issuance of any new Shares for cash consideration. Shareholders in the United States, however, could be unable to exercise any such rights to subscribe for new Shares unless a registration statement under the U.S. Securities Act is in effect in respect of such rights and Shares or an exemption from the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions outside Norway could be similarly affected if the rights and the new Shares being offered have not been registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws of any other jurisdiction outside Norway in respect of any such rights and Shares, and doing so in the future could be impractical and costly. To the extent that the Company s shareholders are not able to exercise their rights to subscribe for new Shares, their proportional interests in the Company will be diluted. Investors could be unable to exercise their voting rights for Shares registered in a nominee account. Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other third parties) could be unable to vote such Shares unless their ownership is re-registered in their names with the VPS prior to any General Meeting. There is no assurance that beneficial owners of the Shares will receive the notice of any General Meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote their Shares in the manner desired by such beneficial owners. The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions. The Shares have not been registered under the U.S. Securities Act or any U.S. state securities laws or any other jurisdiction outside Norway and are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable securities laws. See Section 20 Selling and Transfer Restrictions. In addition, there is no assurance that shareholders residing or domiciled in the United States will be able to participate in future capital increases or rights offerings. The Company s ability to pay dividends is dependent on the availability of distributable reserves and the Company may be unable or unwilling to pay any dividends in the future. The size of any future dividend from the Company is dependent on a number of factors, such as the Company s business development, results, financial position, cash flow and need for working capital. There are many risks that may affect the Company s earnings and there is no guarantee that the Company will be able to present results that enable distribution of dividend to shareholders in the future. If no dividend is distributed, returns on the investment in the Company will solely be generated by the potential development of the share price. Norwegian law provides that any declaration of dividends must be adopted by the shareholders at the General Meeting. Dividends may only be declared to the extent that the Company has distributable funds and the Company s Board of Directors finds such a declaration to be prudent in consideration of the size, nature, scope and risks associated with the Company s operations and the need to strengthen its liquidity and financial position. As the Company s ability to pay dividends is dependent on the availability of distributable reserves, it is, among other things, dependent upon receipt of dividends and other distributions of value from its subsidiaries and companies in which the Company may invest. As a general rule, the General Meeting may not declare higher dividends than the Board of Directors has proposed or approved. If, for any reason, the General Meeting does not declare dividends in accordance with the above, a shareholder will, as a general rule, have no 29

34 claim in respect of such non-payment, and the Company will, as a general rule, have no obligation to pay any dividend in respect of the relevant period. One of the factors that could influence the price of the Shares is its annual dividend yield as compared to yields on other financial instruments. Thus, an increase in market interest rates will result in higher yields on other financial instruments, which could adversely affect the price of the Shares. Investors could be unable to recover losses in civil proceedings in jurisdictions other than Norway. The Company is a public limited company organised under the laws of Norway. As a result, it may not be possible for investors to effect service of process in other jurisdictions upon the Company, to enforce against the Company judgments obtained in non-norwegian courts, or to enforce judgments on the Company in other jurisdictions. Norwegian law could limit shareholders ability to bring an action against the Company. The rights of holders of the Shares are governed by Norwegian law and by the Articles of Association. These rights may differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law limits the circumstances under which shareholders of Norwegian companies may bring derivative actions. For instance, under Norwegian law, any action brought by the Company in respect of wrongful acts committed against the Company will be prioritised over actions brought by shareholders claiming compensation in respect of such acts. In addition, it could be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated upon, securities laws in other jurisdictions. Exchange rate fluctuations could adversely affect the value of the Shares and any dividends paid on the Shares for an investor whose principal currency is not NOK. The Shares will be priced and traded in NOK on Oslo Børs, or alternatively on Oslo Axess, and any future payments of dividends on the Shares will be denominated in NOK. Investors registered in the VPS whose address is outside Norway and who have not supplied the VPS with details of any NOK account, will, however, receive dividends by cheque in their local currency, as exchanged from the NOK amount distributed through the VPS. If it is not practical in the sole opinion of DNB Bank ASA ( DNB ), being the Company s VPS registrar, to issue a cheque in a local currency, a cheque will be issued in USD. The issuing and mailing of cheques will be executed in accordance with the standard procedures of DNB. The exchange rate(s) that is applied will be DNB s rate on the date of issuance. Exchange rate movements of NOK will therefore affect the value of these dividends and distributions for investors whose principal currency is not NOK. Further, the market value of the Shares as expressed in foreign currencies will fluctuate in part as a result of foreign exchange fluctuations. This could affect the value of the Shares and of any dividends paid on the Shares for an investor whose principal currency is not NOK. Market interest rates could influence the price of the Shares. One of the factors that could influence the price of the Shares is its annual dividend yield as compared to yields on other financial instruments. Thus, an increase in market interest rates will result in higher yields on other financial instruments, which could adversely affect the price of the Shares. The limited free float of the Shares may have a negative impact on the liquidity of and market price for the Shares. After completion of the Offering, approximately 52% - 65% of the Company s share capital (approximately 60% - 75% of the share capital if the Over-Allotment Option is exercised in full, and the maximum number of Additional Shares which may be sold pursuant to the Over-Allotment Option is sold) will be publicly held if all the Offer Shares are sold. The remaining approximately 35% - 48% (approximately 25% - 40% if the Over- Allotment Option is exercised in full, and the maximum number of Additional Shares which may be sold pursuant to the Over-Allotment Option is sold) of the share capital is expected to be held by the Selling Shareholders. The limited free float may have a negative impact on the liquidity of the Shares and result in a low trading volume of the Shares, which could have an adverse effect on the then prevailing market price for the Shares and could result in increased volatility of the market price for the Shares. 30

35 3 RESPONSIBILITY FOR THE PROSPECTUS This Prospectus has been prepared in connection with the Offering described herein and the Listing of the Shares on Oslo Børs, or alternatively on Oslo Axess. The Board of Directors of RenoNorden ASA accepts responsibility for the information contained in this Prospectus. The members of the Board of Directors confirm that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import. 28 November 2014 The Board of Directors of RenoNorden ASA Penelope Kate Briant Chairman Alexander Noel Walsh Board member Niklas Nikita Sloutski Board member 31

36 4 GENERAL INFORMATION 4.1 Other important investor information The Company has furnished the information in this Prospectus. The Managers and the Selling Shareholders disclaim, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this Prospectus or any such statement. Neither the Selling Shareholders, nor the Company or the Managers, or any of their respective affiliates, representatives, advisers or selling agents, is making any representation to any offeree or purchaser of the Offer Shares regarding the legality of an investment in the Offer Shares. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a purchase of the Offer Shares. Investing in the Offer Shares involves a high degree of risk. See Section 2 Risk Factors beginning on page 15. In connection with the Offering, each of the Managers and any of their respective affiliates, acting as an investor for its own account, may take up Offer Shares in the Offering and in that capacity may retain, purchase or sell for its own account such securities and any Offer Shares or related investments and may offer or sell such Offer Shares or other investments otherwise than in connection with the Offering. Accordingly, references in the Prospectus to Offer Shares being offered or placed should be read as including any offering or placement of Offer Shares to any of the Managers or any of their respective affiliates acting in such capacity. None of the Managers intends to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligation to do so. In addition, certain of the Managers or their affiliates may enter into financing arrangements (including swaps) with investors in connection with which such Managers (or their affiliates) may from time to time acquire, hold or dispose of Shares. 4.2 Presentation of financial and other information Financial information The Group s audited consolidated financial statements as of, and for the year ended, 31 December 2013 (with comparable figures for 2012) have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ( IFRS ), and the Group s audited consolidated financial statements as of, and for the year ended, 31 December 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011, have been prepared in accordance with Norwegian Generally Accepted Accounting Principles ( NGAAP ). The Group s audited consolidated financial statements as of, and for the years ended, 31 December 2013 and 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011 are together referred to as the Financial Statements and are included in Appendix B to this Prospectus. As the Group, with the Company as the ultimate parent company, did not exist prior to 30 September , which was the date the Company through its wholly-owned subsidiary RenoNorden Investments AS ( RenoNorden Investments ) 15 acquired RenoNorden Holding AS 16 ( RenoNorden Holding ), RenoNorden Holding s audited consolidated financial statements as of, and for the year ended, 31 December 2011 (the RenoNorden Holding Financial Statements ) have been included in this Prospectus in order to show the performance of the Group s underlying business for the full year The RenoNorden Holding Financial Statements have been prepared in accordance with NGAAP, and are included in Appendix C. The Group s unaudited interim condensed consolidated financial statements as of, and for the three and nine month periods ended, 30 September 2014 (with comparable figures for 2013) (the Interim Financial Statements ), included in Appendix D to this Prospectus, have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting as adopted by the EU ( IAS 34 ). The Financial Statements as of, and for the year ended, 31 December 2013 and 2012 and as of, and for the period 14 The Company was incorporated on 17 March RenoNorden Investments AS was previously named Asta Investments AS. 16 Prior to the acquisition, RenoNorden Holding was the ultimate parent company of the group owning the RenoNorden business. As a result of the acquisition, RenoNorden Holding became a wholly-owned subsidiary of RenoNorden Investments, which in turn is a wholly-owned subsidiary of the Company. In 2014, RenoNorden Holding was merged into RenoNorden Investments and dissolved in a statutory Norwegian merger. 17 The Group s Financial Statements for 2011 includes the operations of the underlying business (i.e. the RenoNorden business) for a period of three months only. 32

37 from the date of inception (17 March 2011) to, 31 December 2011 have been audited by KPMG AS, as set forth in their reports thereon included herein. The RenoNorden Holding Financial Statements as of, and for the year ended, 31 December 2011 have been audited by Revisjonsfirmaet Åsvang & Co AS, as set forth in their report thereon included herein. KPMG AS has issued a report on their view of the Interim Financial Statements, as set forth in their report included herein. The Financial Statements, the RenoNorden Holding Financial Statements and the Interim Financial Statements are together referred to as the Financial Information. In addition to the Financial Information, the Group has included unaudited pro forma financial information (the Pro Forma Financial Information ) in this Prospectus to show how the acquisition of HFT Environment OY ( HFT Environment ) by the Group on 19 December 2013 (the HFT Acquisition ) could have affected the Group s income statement for the year ended 31 December 2013 as if the transaction had taken place at 1 January HFT Environment s audited consolidated financial statements as of, and for the year ended, 31 December 2013 (the HFT Environment Financial Statements ) have been prepared in accordance with Finnish Generally Accepted Accounting Principles ( FGAAP ), and are include in Appendix E. The unaudited Pro Forma Financial Information is presented for illustrative purposes only and does not purport to represent what the Group s actual income statement would have been had the events which were the subject of the adjustments occurred on the relevant dates. The Pro Forma Financial Information does not include all of the information required for financial statements under IFRS and should be read in conjunction with the Financial Statements and related notes included in Appendix B and the HFT Environment Financial Statements. See Section 12 Unaudited Pro Forma Financial Information for further information about the basis of preparation of the Pro Forma Financial Information. The Group has adopted IFRS with 1 January 2012 as the date of transition. For a discussion of the material differences between IFRS and NGAAP, please see Section 10.5 Analysis of material differences between IFRS and NGAAP. Please refer to note 27 of the Financial Statements for the year ended 31 December 2013 for a reconciliation of IFRS to NGAAP. Potential investors should consult their own professional advisers for an understanding of the differences between IFRS and NGAAP, and how these differences might affect the Financial Information contained herein. The Company presents the Financial Information in NOK (presentation currency) Non-IFRS financial measures In this Prospectus, the Company presents certain non-ifrs financial measures and ratios. The Group defines EBITDA as operating profit before depreciation, amortisation and impairment. EBITDAR is defined as operating profit before depreciation, amortisation and impairment and before vehicles operating lease expenses. EBITA is defined as operating profit before amortisation. adjusted EBITDA, adjusted EBITDAR and adjusted EBITA are defined as EBITDA, EBITDAR and EBITA as adjusted for non-recurring Monitoring Fee payable to the Principal Shareholders. The non-ifrs financial measures presented herein are not measurements of performance under IFRS or other generally accepted accounting principles and investors should not consider any such measures to be an alternative to: (a) operating revenues or operating profit (as determined in accordance with IFRS or other generally accepted accounting principles), as a measure of the Group s operating performance; or (b) any other measures of performance under generally accepted accounting principles. The non-ifrs financial measures presented herein may not be indicative of the Group s historical operating results, nor are such measures meant to be predictive of the Group s future results. The Company believes that the non-ifrs measures presented herein are commonly reported by companies in the markets in which it competes and are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation, amortisation and impairment, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred), business practice or based on non-operating factors. Accordingly, the Group discloses the non-ifrs financial measures presented herein to permit a more complete and comprehensive analysis of its operating performance relative to other companies and across periods, and of the Group s ability to service its debt. Because companies calculate the non-ifrs financial measures presented herein differently, the Group s presentation of these non-ifrs financial measures may not be comparable to similarly titled measures used by other companies. 33

38 4.2.3 Industry and market data In this Prospectus, the Company has used industry and market data obtained from independent industry publications, market research and other publicly available information, and specific market data the Company has commissioned from PricewaterhouseCoopers AS ( PwC ). The market data from PwC is not publicly available information. While the Company has compiled, extracted and reproduced industry and market data from external sources, and included the specific market data commissioned from PwC herein, the Company has not independently verified the correctness of such data. The Company cautions prospective investors not to place undue reliance on the above mentioned data. Unless otherwise indicated in the Prospectus, the basis for any statements regarding the Group s competitive position is based on the Company s own assessment and knowledge of the market in which it operates. The Company confirms that where information has been sourced from a third party, such information has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. Where information sourced from third parties has been presented, the source of such information has been identified. Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The Company has not independently verified and cannot give any assurances as to the accuracy of market data contained in this Prospectus that was extracted from these industry publications or reports and reproduced herein. Market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products, services and transactions should be included in the relevant market. As a result, prospective investors should be aware that statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data in this Prospectus (and projections, assumptions and estimates based on such information) may not be reliable indicators of the Group s future performance and the future performance of the industry in which it operates. Such indicators are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of other factors, including those described in Section 2 Risk Factors and elsewhere in this Prospectus Calculation of number of outstanding Shares following the Offering In this Prospectus, all calculations of the number of outstanding Shares following the Offering and any calculations based on such number, do not reflect the discount given by the Company in the Retail Offering Other information In this Prospectus, all references to NOK are to the lawful currency of Norway, all references to DKK are to the lawful currency of Denmark, all references to SEK are to the lawful currency of Sweden, all references to USD are to the lawful currency of the United States and all references to EUR are to the lawful common currency of the EU member states who have adopted the Euro as their sole national currency. The Financial Information is published in NOK. The Nordic countries in the Prospectus refers to Denmark, Finland, Norway and Sweden, and not including Iceland throughout Rounding Certain figures included in this Prospectus have been subject to rounding adjustments (by rounding to the nearest whole number or decimal or fraction, as the case may be). Accordingly, figures shown for the same category presented in different tables may vary slightly. As a result of rounding adjustments, the figures presented may not add up to the total amount presented. 4.3 Cautionary note regarding forward-looking statements This Prospectus includes forward-looking statements that reflect the Company s current views with respect to future events and financial and operational performance. These forward-looking statements may be identified 34

39 by the use of forward-looking terminology, such as the terms anticipates, assumes, believes, can, could, estimates, expects, forecasts, intends, may, might, plans, projects, should, will, would or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements are not historic facts. They appear in the following Sections in this Prospectus, Section 2 Risk Factors, Section 7 Industry and Market Overview, Section 8 Business of the Group and Section 11 Operating and Financial Review, and include statements regarding the Company s intentions, beliefs or current expectations concerning, among other things, potential risk factors, financial strength and position of the Group, operating results, liquidity, prospects, growth, the implementation of strategic initiatives, as well as other statements relating to the Group s future business development and financial performance, and the industry in which the Group operates. Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Group s actual financial position, operating results and liquidity, and the development of the industry in which the Group operates, may differ materially from those made in, or suggested by, the forward-looking statements contained in this Prospectus. The Company cannot guarantee that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur. By their nature, forward-looking statements involve, and are subject to, known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set out in the forward-looking statements. Important factors that could cause those differences include, but are not limited to: implementation of the Group s strategy and its ability to further expand its business and growth; the competitive nature of the industry the Group operates in and the competitive pressure and changes to the competitive environment in general; earnings, cash flow, dividends and other expected financial results and conditions; fluctuations of exchange and interest rates, and diesel fuel and LNG; changes in general economic and industry conditions, including changes to tax rates and regimes and other increases in costs, including wage inflation; changes in the legal and regulatory environment; the state of the Group s relationships with major customers, suppliers and the renewal, extension or termination of any contract with any major customer or supplier; inadequacy of the Group s insurance to cover the Group s losses; political, governmental, social, legal, environmental and regulatory changes; failure to retain and attract a sufficient number of skilled personnel; changes in and compliance with laws and regulations; access to funding; and legal proceedings. Additional factors that could cause the Group s actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Section 2 Risk Factors and Section 11 Operating and Financial Review. The information contained in this Prospectus, including the information set out under Section 2 Risk Factors, identifies additional factors that could affect the Group s business, financial condition, results of operations, 35

40 cash flows, liquidity, performance and prospects. Prospective investors in the Shares are urged to read all Sections of this Prospectus and, in particular, Section 2 Risk Factors for a more complete discussion of the factors that could affect the Group s future performance and the industry in which the Group operates when considering an investment in the Company. These forward-looking statements speak only as at the date on which they are made. The Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Company or to persons acting on the Company s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus. 4.4 Exchange rates The following table sets forth, for the periods indicated, information regarding the average NOK exchange rate against SEK, DKK, EUR and USD, in each case rounded to the nearest two decimal places, based on the daily exchange rate announced by Norges Bank (the Norwegian Central Bank). Nine months ended 30 September Year ended 31 December 1-27 November 2014 October NOK SEK DKK EUR USD Source: Average figures Norgesbank.no. 36

41 5 REASONS FOR THE OFFERING AND THE LISTING Under the ownership of the Principal Shareholders, RenoNorden has developed solidly over recent years. The Group has maintained its market leadership positions in Norway and Denmark, grown to become the market leader in Sweden from a foothold position and has successfully entered the Finnish market to become a Nordic leader in the domestic waste collection services segment. Management capability in the business has been upgraded under the leadership of Staffan Ebenfelt, as CEO, who brings a strong and successful background in business services across the region. Staffan Ebenfelt is implementing a well-defined three-year policy to continue to develop the Group and to drive growth and improved profitability over the coming years. The Principal Shareholders, the Board of Directors and the Management are of the opinion that the time is now appropriate for a listing of RenoNorden. The Company will apply for the Listing of all of its Shares on Oslo Børs, or alternatively on Oslo Axess. The Company believes that the Offering will: increase the shareholder base and enhance RenoNorden s access to the capital markets for further growth; further improve the ability of RenoNorden to attract and retain key management and qualified employees; heighten RenoNorden s profile with investors, local communities, business partners and customers; and facilitate a partial monetisation of the Principal Shareholders holdings in line with their business model and provide a liquid market for their retained Shares going forward. The Principal Shareholders will continue to be material minority shareholders in the Company following the Offering, and will thereby continue to contribute to, and benefit from, the Company s further development. The Company will receive the proceeds from the issuance of the New Shares and will use such proceeds to repay the Shareholder Loan to the shareholders of the Company and to repay the Leaver Loans. The Selling Shareholders will receive proceeds from the sale of Sale Shares and the Principal Shareholders will receive proceeds from the sale of Additional Shares, if any (after deduction of fees and provisions). The Company will not receive any proceeds from the sale of Sale Shares or Additional Shares. 37

42 6 DIVIDENDS AND DIVIDEND POLICY 6.1 Dividend policy In deciding whether to propose a dividend and in determining the dividend amount, the Board of Directors will take into account legal restrictions, as set out in the Norwegian Public Limited Companies Act of 13 June 1997 no. 45 (the Norwegian Public Limited Companies Act ) (see Section 6.2 Legal constraints on the distribution of dividends ), the Group s capital requirements, including capital expenditure requirements, its financial position and condition, future growth opportunities, general business conditions and any restrictions that its contractual arrangements in place at the time of the potential dividend may place on its ability to pay dividends and the maintaining of appropriate financial flexibility. Except in certain specific and limited circumstances set out in the Norwegian Public Limited Companies Act, the amount of dividends paid may not exceed the amount recommended by the Board of Directors. The Company targets to pay dividends annually and expects to pay its first dividend of NOK 50 million, for the year ending 31 December 2014, in the first half of Thereafter, the Company will target a dividend payout ratio of at least 60% of the Group s net profit. The pay-out ratio shall consider the financial position of the Group and its future growth opportunities. There can be no assurance that a dividend will be proposed or declared in any given year. If a dividend is proposed or declared, there can be no assurance that the dividend amount will be as contemplated above. Dividends distributed to the shareholders of the Company for the years 2013, 2012 and 2011, since acquisition by the Principal Shareholders, were nil in each year. 6.2 Legal constraints on the distribution of dividends Dividends may be paid in cash or in some instances in kind. The Norwegian Public Limited Companies Act provides the following constraints on the distribution of dividends applicable to the Company: Section 8-1 of the Norwegian Public Limited Companies Act provides that the Company may distribute dividends to the extent that the Company s net assets, following the distribution covers (i) the share capital, (ii) the reserve for valuation variances and (iii) the reserve for unrealised gains. The amount of any receivable held by the Company which is secured by a pledge over Shares in the Company, as well as the aggregate amount of credit and security which, pursuant to Section 8 7 to 8-10 of the Norwegian Public Limited Companies Act fall within the limits of distributable equity, shall be deducted from the distributable amount. The calculation of the distributable equity shall be made on the basis of the balance sheet included in the approved annual accounts for the last financial year, provided, however, that the registered share capital as of the date of the resolution to distribute dividends shall be applied. Following the approval of the annual accounts for the last financial year, the General Meeting may also authorise the Board of Directors to declare dividends on the basis of the Company s audited annual accounts. Dividends may also be resolved by the General Meeting based on an interim balance sheet which has been prepared and audited in accordance with the provisions applying to the annual accounts and with a balance sheet date not further into the past than six months before the date of the General Meeting s resolution. Dividends can only be distributed to the extent that the Company s equity and liquidity following the distribution is considered sound by the Board of Directors, acting prudently. The Norwegian Public Limited Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non- Norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-norwegian residents, see Section 18 Taxation. 38

43 6.3 Manner of dividend payments Any future payments of dividends on the Shares will be denominated in NOK, and will be paid to the shareholders through the VPS. Investors registered in the VPS whose address is outside Norway and who have not supplied the VPS with details of any NOK account, will, however, receive dividends by cheque in their local currency, as exchanged from the NOK amount distributed through the VPS. If it is not practical, in the sole opinion of DNB, being the Company s VPS registrar, to issue a cheque in a local currency, a cheque will be issued in USD. The issuing and mailing of cheques will be executed in accordance with the standard procedures of DNB. The exchange rate(s) that is applied will be DNB s rate on the date of issuance. Dividends will be credited automatically to the VPS registered shareholders NOK accounts, or in lieu of such registered NOK account, by cheque, without the need for shareholders to present documentation proving their ownership of the Shares. 39

44 7 INDUSTRY AND MARKET OVERVIEW The information contained and data included in this Section 7 Industry and Market Overview has been prepared by PwC at the request of the Company for the purpose of inclusion in this Prospectus. PwC has based the information contained in this Section on data and research from recognised research companies, as well as official financial statistics and other publicly available information. The industry and market overview does not purport to contain all of the information the recipient may desire or require to make a decision to proceed with further investigations. Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. Neither PwC nor the Company has independently verified and cannot give any assurances as to the accuracy of market data contained in this Section that was extracted from these industry publications or reports and reproduced herein. Market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgements by both the researchers and the respondents, including judgements about what types of products and transactions should be included in the relevant market. Interested parties should conduct their own investigations and analyses of the industry and the Company. Certain statements, estimates and projections with respect to future industry development are included herein. Such statements, estimates and projections reflect various assumptions and anticipated results, which may or may not be correct. As a result, prospective investors should be aware that statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data in this Section (and projections, assumptions and estimates based on such information) may not be reliable indicators of the Group s future performance and the future performance of the industry in which it operates. Such indicators are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of other factors, including those described in Section 2 Risk Factors and elsewhere in this Prospectus. Although the information set out herein is believed to be correct, no representation or warranty, express or implied, is given by PwC, the Company or the Selling Shareholders, as to the accuracy or completeness of the contents of this industry and market overview or to the accuracy or completeness of the projections included herein or of any other document or information supplied at any time in connection with the Offering and Listing. 7.1 Waste management value chain The waste management industry comprises collection, transportation, sorting, recycling and treatment of household and commercial waste. Historically, RenoNorden has specialised in collection and transportation of household waste in Scandinavia, but has with its recent expansion to Finland, also moved into commercial waste collection and now operates across the entire Nordic region, except Iceland. 40

45 Waste management value chain Municipal waste Collection Direct transportation for post processing Biological treatment Incineration plant Sorting/ Pre-treatment Transportation Commercial waste Collection Direct transportation for post processing Waste disposal Recycling RenoNorden s position in Norway, Sweden and Denmark and Finland RenoNorden s position in Finland Source: RenoNorden The definition of municipal waste differs somewhat across the Nordics. In Norway and Denmark, the term includes only waste from households, public places and recycling stations. In Sweden and Finland, municipal waste also includes comparable waste generated outside of the home, i.e. waste collected from public places, hospitals, schools, stores, restaurants, offices etc. Commercial waste comprises waste from commercial businesses, construction and industry. In general, municipalities have ownership of household waste throughout the value chain, and it is their responsibility to ensure proper waste collection from their inhabitants and treatment in accordance with government regulations. Collectors of household waste do not take ownership of the waste as opposed to collectors involved in commercial waste where the collectors may own the waste and receive revenue or generate cost from selling or disposing of recycled waste fractions (e.g. gate fees). Hence, collectors of household waste are not exposed to fluctuating material prices or associated environmental risks and are less exposed to changes in waste volumes. 7.2 The Nordic household waste collection market Market structure Responsibility for municipal waste collection and treatment is largely the same in the Scandinavian countries based on the development in the EU, where all responsibility and cost resides with the municipalities, with somewhat different regulations in Finland. Some municipalities in Finland have transferred the cost of waste collection to the inhabitants who are required to buy transport services directly from waste collection providers such as, RenoNorden. Traditionally, household waste collection has been a relatively unsophisticated service in which a single waste bin has been emptied at a given frequency using standard waste vehicles. As environmental concerns have increased, requirements for increased recycling and separation of waste fractions have emerged. In parallel, focus has been given to the cost aspects of municipal services leading to more outsourcing to external collection providers resulting in an increasing private market for collection services. Thus, collection has become more specialised, requiring improved route planning and setting higher requirements to the waste collection vehicles and the external providers. Household waste collection services is usually either managed as an internal (in-house) operation (financed directly from the operational budget) and either operated by a municipal or an inter-municipal company, or outsourced to a third-party provider, such as RenoNorden. When services are outsourced, the contract is awarded through a public tender process. 41

46 The cost for household waste collection in Scandinavia is in principle fully recovered by the municipality through a waste management fee charged to the households. The fee is meant to cover the entire cost for the municipalities including collection and transportation, sorting, treatment and disposal. The low-cyclical nature of the market is explained by collectors not having ownership for the waste reducing the impact from material prices and variation in volume. Furthermore, temporary fluctuations in household waste volume can be accommodated without modifying bin-size or collection frequency and most contracts are relatively long-term without price fluctuations for the services. Population density in the Nordic region is low compared to other European countries. This has impacted the industry, benefiting larger operators that are able to plan and operate larger geographic areas more efficiently Regulatory development The waste volume is generally expected to increase with economic growth. This has forced governments to prioritise and stress initiatives on how to reduce the amount of waste produced, but also to make best use of the waste. In the end of 2013, European Member States governments developed a resource/waste policy in accordance with the EU Waste Directive 2008/98/EC (Article 29 of the Directive). The focus of the Directive is grounded in the upper part of the waste hierarchy, waste reduction, but also includes focus areas within waste reuse, recycling, other recovery and disposal. The directive entailed that European Member States were required to prioritise actions for reduction of waste in their legislation. In this context, actions were to be identified, goals to be set and indicators to be developed for waste reduction and reuse in accordance with the requirements of the EU Waste Directive. Source: Ministry of the Danish Environment (MST) report «Danmark uden affald»2013 The extent and impact of regulatory reform differs between the Nordic countries. Nevertheless, the trends and initiatives in the respective countries are fairly similar. In 2013, the Norwegian Government issued a whitepaper on waste and recycling stating an overall goal of 50% material recycling of paper, metals, plastics and glass waste in Norway by In practice, the municipalities are responsible for household waste and increased recycling can be achieved through either increased sorting in the home or through centralised sorting facilities. The share of household waste that is recycled has remained stable at c. 39% over the last five years. Energy recovery through incineration has however become increasingly important and in 2013 the total share of energy recovery of household waste recycled was equal to 88%. In Denmark the EU Waste Directive has led to a resource and waste policy for 2018 including several initiatives on conservation of resources in the waste hierarchy for both the industry and households (2022 goal). It includes the ambition of more than doubling the amount of recycled household waste, from 22% in 2013 to 42

47 50% in As in Denmark, the EU Waste Directive has led to a number of initiatives in Sweden. The Swedish Environmental Protection Agency (Sw.: Naturvårdsverket 18 ) has determined that the waste recycling level in Sweden should reach 50% by the year 2020, through decreasing the amount of waste and increasing the recycled part of total waste. A goal is that at least 50% of the food waste should be biologically treated before Finland has set a goal to reach a 50% recycling rate by 2016, a goal that is considered difficult to attain. The recycling rate in Finland was at c. 37% in These regulations are changing the way municipalities collect household waste, as it requires even more segmented disposal and sorting system varying from individual household to central sorting. The requirements are likely to be beneficial to operators in the waste collection market as the requirements, among other things, will lead to an increase of the number of fractions to be collected. Country Household recycling rate (2013) Household recycling rate goal Norway 39% 50% by 2020 Denmark 22% 50% by 2022 Sweden 49% 50% by 2020 Finland 37% 50% by 2016 Source: The Ministry of Environment in the respective countries Tender process According to the EU Public Procurement Directive, all central, municipal and county-authorities in the Nordic countries are required to arrange purchases over EUR 200,000 as open and transparent tender processes. Tenders for household waste collection contracts awarded by municipalities typically have durations of five years with options for two further years (one plus one), exercisable at the discretion of the municipalities. Each tender process starts with a pre-qualification process. The criteria and documentation required to be presented in such a process varies between the Nordic countries, but will often cover financial stability, track record in previous contracts operated and qualitative assessments of the assets and resources available. More specific requirements on vehicle equipment and other quality requirements such as environmental standards (e.g. Euro 5 or Euro 6 19 ) are also present. Tender processes in Sweden and Finland generally include more detailed requirements in the pre-qualification process; however price is the only criteria assessed in the final tender award in these countries. In Norway and Denmark, price is the main criteria in contract awards, but most issuers also include additional quality criteria. One or more of the following criteria will typically be included in addition to price: Quality, i.e. capacity, stability, competence, previous experience. Environment, i.e. environmental concerns and energy utilisation. Understanding of assignment, i.e. accordance with tender, number of modifications. 18 Naturvårdsverket, 2014, 20 October The Euro 5 and 6 standards are type of approval standards of motor vehicles in regards to emissions from light passenger and light commercial vehicles and on access to vehicle repair and maintenance information. 43

48 # of participants % of tender criteria % of tender criteria Development in average tender criteria; Norway 100% 80% 60% % 27% 8% 13% Number of tenders Development in average tender criteria; Denmark 100% 80% 60% % 16% 16% 18% 40% 20% 74% 73% 92% 87% 40% 20% 65% 84% 84% 82% 0% % Price Quality criteria Price Quality criteria Source: Camelot Consulting, Doffin 20, PwC Over the last three years, price has been increasingly used as main criteria, shifting from a period ( ) where issuers put more emphasis on quality criteria. The use of soft criteria has turned out to be somewhat problematic due to challenges in measuring and evaluating quality criteria accurately. Several tender outcomes in Norway have been appealed to the Norwegian Complaints Board (KOFA) by participants, claiming that selection mechanisms have not fulfilled the transparency requirement. In addition, as more requirements on e.g. equipment and environmental standards have been included in the pre-qualification process, emphasis on quality criteria has been reduced. Development in number of participants in tender processes The average number of participants in tender processes has in general declined in the last decade, indicating more complex tender processes with more services to be performed and illustrating the consolidation trend seen in some of the markets. During the last four years, this effect has levelled out and the number of participants has remained relatively stable in Norway and Sweden. Increased competition in the Danish market has led to an increase in the average number of participants per tender in the recent years. In addition, the municipal reform in Denmark in 2007 reduced the number of municipalities leading to larger contracts, thus changing the contract structure and competitive landscape. In Finland, a number of small operators have entered different local markets, resulting in an increase in the number of participants per tender. Development in average number of participants in tenders Norway Sweden Denmark Finland Source: Camelot Consulting, Doffin 21, Opic 22, Credita 23, TED 24, PwC 20 The Norwegian national notification database for public procurement, The Norwegian national notification database for public procurement, Visma Opic payable database for public procurement, Credita payable database for public procurement, Tenders Electronic Daily, European database for public procurement,

49 NOK in millions Million tonnes Market size In 2013, the total household waste volume handled in the Nordic market was 12.7 million tons. Waste volumes were somewhat impacted by the financial crisis in 2009 and 2010, but volumes have increased steadily since Estimate for the period 2013 to 2017 indicates a stable positive annual growth rate of 3.0%. Volume growth is expected in all the Nordic countries, with the strongest growth expected in the Swedish market. Municipal waste volume in the Nordic market, Forecast 3.0% -2.1% 1.7% CAGR Finland Denmark Sweden Norway CAGR % 2.2% 4.1% 3.1% Source: See sources in the sections of each respective country, including Section 7.3 The Norwegian market, Section 7.4 The Swedish market, Section 7.5 The Danish market, Section 7.6 The Finnish market. The Nordic market for collection and transportation of municipal household waste is estimated at NOK 6,833 million in 2013 (i.e. the total market including in-house part), and is forecasted to grow by 3.4% p.a. reaching NOK 7,768 million in The estimated market value including the Finnish commercial waste market is estimated to NOK 7,226 million in Household waste transportation services value in the Nordic market, ,000 10,000 8, % 5,781 5,977 6,000 5, , , ,575 1,648 1,720 Forecast 3.4% 4.2% ,355 6,709 7,008 7,226 7,489 7,740 8,008 8,255 1,186 1,222 1,260 1, ,015 1,079 1,139 1,144 1,792 1,800 1,808 1,815 1,867 1,894 1,924 1,961 1,093 1,188 1,286 1,373 1,501 1,641 1,784 1,870 1,956 2,024 2,082 2,000 1,493 1,585 1,683 1,861 1,971 2,039 2,089 2,146 2,223 2,333 2, CAGR Finland (commercial) Finland (household) Denmark Norway Sweden CAGR % 3.2% 1.9% 3.9% 3.9% Source:See sources in the sections of each respective country, including Section 7.3 The Norwegian market, Section 7.4 The Swedish market, Section 7.5 The Danish market, Section 7.6 The Finnish market. The main growth drivers for municipal waste collection have historically been the cost price index, population growth, increasing number of fractions collected and additional services required. These drivers will continue to impact the market size in the years to come, hence with a slightly lower growth effect from cost price index development. This growth has been tempered by the retendering process which will continue to be an offsetting factor going forward Market drivers and trends Household waste collection revenue is a function of the unit price charged for each unit of waste collected. At the time of contract signing a unit price is determined. A unit refers to a bin/ container, or a similar receptacle, and constitutes one single collection point. Waste type (e.g. unsorted waste, paper, metal) size of bin/container and collection complexity (i.e. does the container requires a special vehicle to collect) may affect the unit price. The total amount of waste produced in each country will, to some extent, impact the market value as the 45

50 amount of waste influences the size of bin/containers used at each collection point. However, it is the number and type of units, the collection frequency as well as the distance between households, rather than the volume of waste collected and transported, that determines the value of a contract. Normal contract length for municipal buyers is four to six years with an option to extend the contract, typically with two years. It is the industry norm to link the unit price to relevant industry indices during the contract length. Population growth and increased recycling are further drivers of volume growth in the waste collection market. As some parts of the market are operated by in-house resources, the total market value addressable for private companies is also impacted by the level of outsourcing. The main industry drivers are discussed in more detail below. Household waste collection industry drivers Industry drivers Cost price index Contract complexity Technology Public tender process Price drivers Volume growth Population Waste per capita Additional home ownership Frequency of waste collection Level of outsourcing (only affecting addressable market) Unit prices have increased at a steady pace over recent years Existing contracts typically include provisions for adjusting the unit prices on a yearly basis according to defined national indices for road transport / waste collection. The indices are based on key cost factors for the transportation industry, including but not limited to fuel prices, investment costs, repair prices and labour costs. The following indices are most commonly used in each country: Norway. Cost index for road transport (with separate indices for different vehicle types), published by Statistics Norway (SSB). Sweden. Waste collection index R77:4, published by Statistics Sweden (SCB) on behalf of Sveriges Åkeriföretag, up to A12:1 household waste collection index, published by Statistics Sweden (SCB) on behalf of Avfall Sverige, from 2012 and onwards. Denmark. Cost index for household waste collection, published by Statistics Denmark (DST). Finland. Cost index for road transport of goods, published by Statistics Finland (Tilastokeskus). The national indices have shown year-on-year growth in recent years despite a noticeable drop in Finland and Sweden in The Finnish index has shown the strongest growth numbers with a CAGR of 3.5% in while the Danish index has grown by a CAGR of 2.5%. 46

51 Index (2007 = 100) Index (Jan 2000 = 100) Cost price index development since CAGR 3.51% 3.20% 2.98% 2.46% Norway Sweden Denmark Finland Source: Please see description of the databases being used above in Section Unit prices have increased at a steady pace over recent years When a contract expires it is normally renewed through a public tender process. Price is given relatively large weight when municipalities evaluate public tenders. This puts pressure on the unit price, effectively lowering the price increase driven by the national price indices to some extent. For example, the Helsinki region environmental services authority reported a unit price decrease of 10-15% for renewed contracts in their area in 2013 (only affecting the share of the market being renewed). However, the true effect on the aggregate market is still positive. Other evaluation criteria used in public tenders in Denmark and Norway include environmental friendliness and quality of performance Increasing waste volumes due to growing population and wealth in the Nordics The volume of waste produced on a market is heavily impacted by the demographics of the region in question. The Nordic population as a whole has seen an annual increase of 0.75% during 2007 to The population growth is forecasted slightly higher, at 0.78% from 2013 to 2017, with Norway and Sweden being the fastest growing regions. This is expected to positively impact the need for waste transport services in the coming years. Population growth - Rebased ( F) 114 Population (millions) Country Est. CAGR E 2015F 2016F 2017F Norway Sweden Denmark Finland Norway % Sweden % Denmark % Finland % Source: Eurostat 25 Despite the regulatory initiatives to maximise conservation of resources through reducing the amount of waste generated, waste volumes in the Nordic countries historically have, in general, increased. The amount of waste generated per capita is a key market driver and often follows the GPD development. In line with GDP per capita, the generated waste volume declined in 2008, but has shown signs of recovery across all Nordic markets since 2009 and is anticipated to keep growing in alongside GDP and the population. In 25 Eurostat database, 25 October

52 Multi-fractions (%) addition, additional homes in the Nordics have historically been a driver of volume. This trend has slowed down in the Nordics in recent years but carries regional differences Increasing waste collection complexity drives both the unit price and volume Increased environmental awareness and political attention on all Nordic markets have led to new policies and schemes being implemented on waste management related services. Increased recycling is a clear outcome of this trend as the EU has communicated a goal to reach 70% recycling of household waste by This has often resulted in more complex waste collection procedures. The ability to reach national and European recycling goals depends on the growing consumer trend to sort waste into different fractions. The most common fractions collected today are organic waste, paper & cardboard, glass, metal and plastic. However, residual waste is still the single largest fraction in terms of volume with between c. 50% (Sweden) to 60% (Finland) share of all waste produced. The number of different fractions collected at each household has seen a steady increase during recent years and the development is expected to continue up to The share of population with four or more fractions collected is the highest in Norway and Finland while Sweden is lagging behind the other Nordic countries. The share of population with four or more fractions collected grew on all markets from 2010 to The growth was slowest in Denmark with only 1% change while the share doubled in Sweden, from 5% to 10%. Households with four or more fractions collected 2010 and % 25% 20% 15% 10% 5% 23% 27% 21% 24% 13% 14% 5% 10% 0% Norway Finland Denmark Sweden Source: JLY 26, PwC In the Nordics in general, a larger responsibility is put on the households to pre-sort their waste into different fractions using multi-fraction solutions. With multi-fraction solutions, several different systems are being attended for, e.g. the four-bin system and the domestic sorting system. The four-bin system demands better technology vehicles and an expertise from the collection services firm which drives the price per collection. According to industry experts and interviewed municipalities, a shift from a two-bin system to a four-bin system would increase the contract price by approximately 30%. In Sweden, this price increase has not yet come to affect the outsourced market largely since the four-bin system is relatively new to the market, so the majority of the municipalities using this solution have waste collection services in-house. In connection with renewing outsourced contract, a larger demand for multi-fraction solutions is expected. The domestic sorting solution is especially common in apartment blocks and allows each household to sort their waste in several different compartments situated nearby their home. Each waste type has one large compartment, which is collected with different vehicles. It does not necessarily drive the price as much as the four-bin system since it is not as advanced however it drives the number of collections which increases the contract values. Another possible sorting solution that is frequently discussed is the opti-bag system. The opti-bag system allows the household to sort each waste type in differently coloured plastic bags and throw into the same compartment. All the waste gets picked up by one vehicle and transported to a refuse disposal plant. In order for the opti-bag solution to work, the refuse disposal plant has to be equipped with a reader to map the correct colour of the bag and sort it into its category. This system does not drive complexity for the waste collection 26 Information on municipal waste treatment 2010 & 2013, 24 October

53 part (easy to pick up, no advanced vehicles needed). However, since compactors cannot be used it drives volume. The opti-bag solution is expensive for the municipalities and it requires a large amount of administrative work to distribute the correct amount of differently coloured plastic bags to each household. Hence, the risk of the opti-bag solution becoming a standard system is considered moderate Stable outsourcing trend estimated Critical services, like hospital services, childcare services etc., sometimes encounter resistance from the public with regards to outsourcing. Outsourcing of waste collection service is, however, generally accepted even though it is seen as a critical service for the society. The main reasons for municipalities operating waste collection in-house are insufficient technical resources (e.g. not yet four-bin capacity vehicles) among service providers, and a general resistance towards dismissing internal employees for the benefit of external service providers. Consequently, the level of outsourcing waste collection services in the Nordic countries is high at c. 83% in 2014 and the outsourcing share increased rapidly from c. 78% in 2007 to c. 83% in 2012, mainly driven by increased outsourcing in Sweden and Denmark. Sweden and Norway are the countries with the least developed outsourcing markets, with outsourcing levels of c. 72% and 71% respectively. The level of outsourcing is not estimated to increase further up to 2017 as most municipalities considering outsourcing waste collection services already have gone through the outsourcing process. However, if private operators increase investments in new technology and new vehicles (e.g. vehicles adjusted to four-bin system) opportunities could arise. Level of outsourcing in Nordic countries % 95% 90% 85% 80% 75% 70% 65% 60% Norway Sweden Denmark Finland Source: Camelot Consulting, PwC The Nordic countries have high degrees of outsourcing also in comparison to other countries. This is particularly true for Finland and Denmark, which are the two countries with the highest shares of outsourcing in Europe. Going forward, the outsourcing rates are expected to be stable in all Nordic Countries, keeping the current levels. 49

54 Number of contracts NOK in millions Outsourcing 2013 (%) Outsourced services as a proportion of total household waste collection per country 100% 100% 94% 90% Indicative numbers only 80% 70% 60% 50% 72% 71% 68% 68% 65% 62% 61% 52% 50% 50% 40% 30% 20% 10% 0% Finland Denmark Sweden Norway Italy Switzerland Ireland France Austria Germany UK Belgium Source: Camelot Consulting, PwC Contract opportunities Number of contracts to be tendered in the Nordics, Contract value to be tendered in the Nordics, , ,250 1, , Renewal dates are estimated by assuming contract option times will be fully exercised. Source: See sources in the sections of each respective country, including Section 7.3 The Norwegian market, Section 7.4 The Swedish market, Section 7.5 The Danish market, Section 7.6 The Finnish market. The average contract length in the Nordic household waste market is approximately five years plus usually an option to extend the contract with one plus one year (the option is usually exercised). Assuming an average contracts length of seven years the number of contracts available in each year typically exceeds 100 contracts, with 2017 being a peak year both in terms of number of contracts expected to come to the market and in terms of available market value. In general, the majority of the contract value up for tender is expected in the latter part of the period, Timing of contracts being retendered will depend on whether municipalities choose to exercise the option or not. A limited number of new contracts through increased outsourcing are expected to be up for tender in the 2015 to 2019 period The competitive landscape The household waste market in the Nordics has a clear leader in Renonorden, with an estimated market share 50

55 of 28% of the outsourced part of the population in the Nordic countries (including HFT Environment in Finland) an increase of 7ppt. since The growth has been achieved through organic growth by winning several new contracts in Denmark and Sweden (in the latter at the expense of all of the key competitors) and through acquisitions in Denmark, Sweden and Finland. The three largest operators in the market comprise c. 50% of the Nordic market. The Group is the only operator that is present across all of the Nordic countries, except for Iceland. In-house collection of waste comprise c.18% of the total market. There are several operators with a market share 5% and 2%. In Norway, there are two dominating operators, namely RenoNorden and Norsk Gjenvinning, whereof RenoNorden is the largest having a market share of 46% of the outsourced market (serving 33% of the Norwegian population in 2014) 27. Together, the two largest operators hold c. 65% of the outsourced market. The Swedish market is fragmented with three large nationwide operators, namely RenoNorden, Ragn-Sells and SITA. They are the only operators with market shares above 10% individually, and have an aggregated 58% share. In the Danish market, RenoNorden holds a market share of 32%. In addition, there are a number of regional medium sized operators with high single-digit or low double digit market shares. The Finnish market is dominated by three nationwide operators, HFT Network (acquired by RenoNorden in December 2013), SITA Finland and Lassila & Tikanoja with a combined market share of c. 70% of the municipal contracts. Estimated Nordic market shares Estimated Nordic market shares a Other 25% RenoNorden 21% Marius Pedersen 2% Other 22% RenoNorden 28% Marius Pedersen 2% HCS 3% Miljøteam 3% Liselotte Lööf M 2% Larsen 3% Meldgaard 4% Renova 4% Norsk Gjenvinning 4% Ragn Sells 7% Lassila & Tikanoja 10% SITA 12% HCS 2% Miljøteam 3% Liselotte Lööf 2% Renova 3% Meldgaard 4% M Larsen 3% Norsk Gjenvinning 3% Ragn-Sells 7% SITA 11% Lassila & Tikanoja 10% Source: Annual reports, Doffin 28, SSB 29, Camelot Consulting, PwC 7.3 The Norwegian market Key characteristics Household waste, defined as waste from private households in Norway, constitutes c. 20% of the total waste volume in Norway. Public and private waste collectors in Norway handled approximately 2.3 million tonnes household waste in 2013 with the average Norwegian produced ~440 kilo household waste. Waste generation is considered to be correlated to overall consumption (measured by GDP development), and SSB estimates that for each NOK 1,000 spent, ~2 kilo waste is produced. In the years leading up to 2012, there was a decrease in waste generation per person, which again shifted upwards to 442 kilo in Household waste collection services is usually either managed in-house as an internal operation (financed directly from the operational budget) and either operated by a municipal or an inter-municipal company, or it is outsourced to a third-party provider such as RenoNorden. When services are outsourced, the contract is awarded through a public tendering process. A household waste collection contract typically lasts for five years, with a two year optional extension which is normally exercised by the municipality. The degree of outsourcing 27 Annual reports, Camelot Consulting, PwC. 28 The Norwegian national notification database for public procurement, Statistics Norway, Population, 1 January 2014, 22 October

56 Million tonnes has remained relatively stable at c. 71% over the last five years, and is expected to remain at similar levels going forward. Responsibility of the municipalities for household waste Municipalities in Norway are decreed by law to collect, sort and treat household waste. Requirements related to handling and treatment of different types of waste is regulated by law, but most of these regulations are based on EU regulations with some national adaptations. The municipalities have ownership of the waste throughout the entire value chain, ensuring proper waste collection and treatment according to government regulations, while collection of commercial waste is privately procured. The household waste collection is financed through a waste collection fee charged to the households through municipal tax, where the municipalities charge the actual costs to their inhabitants without a mark-up. As such, collection companies do not take credit risk on end customers. Several municipalities, such as Oslo and Tromsø have invested in new sorting facilities making use of optic sorting of the waste using different coloured waste bags. Although this solution calls for fewer waste bins and less separation of fractions as all fractions (except for paper) are collected in the same bin, the quality of the bag results in lower fill grade in the waste vehicles as the bags will break and fractions get mixed if compressed Market size In 2013, the Norwegian municipalities handled 2.3 million tonnes of household waste, which is about 84,000 tonnes more than in Waste levels declined somewhat in 2009 due to the financial crisis, but picked up in 2010 and Going forward the household waste volume is expected to grow annually by 3.1%, driven by increasing population and GDP growth. Municipal waste volume in Norway, CAGR % Forecast 3.1% Source: SSB 30, SSB 31, IMF 32, PwC The Norwegian market for household waste transportation and collection services is estimated at NOK 1,784 million in Current outsourcing level is c. 70%, making the addressable market for private operators c. 1.3 billion. The market value in 2013 follows an average annual growth of 8.5% from 2007 to The annual growth is forecasted to 3.9% from 2013 to 2017, with an estimated market value of NOK 2,082 million in Statistics Norway, Waste from households, 2013, 22 October Statistics Norway, Population, 1 January 2014, 22 October International Monetary Fund, World Economic Outlook Database, GDP growth, 20 October

57 NOK in millions Household waste transportation services value in Norway, ,500 Forecast 2,000 1,784 1, % 1,641 1,501 1,500 1,373 1,286 1,188 1,093 1, % 1,956 CAGR 2,024 2, Source: Camelot Consulting, Doffin 33,SSB 34, SSB 35, PwC The growth in market value going forward is expected to slow down compared to previous years, but is expected to remain at growth levels exceeding the cost price index. The expected slowdown in growth is due to potential reduction in price levels in connection with contract renewals as well as somewhat lower levels in growth of the population and cost price index than the previous years. The level of outsourcing of waste collection services impacts the addressable market for private waste management companies. In Norway, approximately 71% of the population is served by outsourced waste collection services, representing a market value of c. NOK 1.3 billion in The outsourcing share has remained stable in the period , and no material change is expected over the next three years. Several of the larger municipalities in Norway have not outsourced household waste collection, e.g. Bergen, Trondheim, Stavanger, Fredrikstad and Tromsø. Waste collection is here performed by a companies that are, wholly owned by the municipality or through inter-municipal organisations. Bergen is a part of the intermunicipal unit BIR, which is responsible for the municipalities around Bergen which are already outsourced. Bergen municipality has currently a contract with BIR which expires in The process of outsourcing in Trondheim was initiated, but subsequently reversed following the municipal elections in 2007 and the current contract with the municipally owned Trondheim Renholdsverk runs until In parts of Stavanger waste collection is currently outsourced and the municipality is currently not looking to outsource the waste collection in the remaining part of Stavanger. Neither Fredrikstad nor Tromsø are likely to outsource their waste collection activities in the near future. Driver Impact on market value growth (CAGR) Impact on market value growth (CAGR) Comments Cost price index Strong market impact 3.1% Most Norwegian waste collection contracts have a price adjustment mechanism based on the cost price index for waste collection vehicles Tender process A negative effect observed from municipalities adding additional services to contracts at renewal, maintaining prices at current levels with increased service coverage -0.9% Constant tendering will decrease prices, particularly impacting market size in 2016 and 2017 when a large number of contracts is put up for tender It is expected that the growth in Population A growing population has a strong impact on total waste 1.1% densely populated areas will continue, and foreign immigration will also contribute to the growth 33 The Norwegian national notification database for public procurement, Statistics Norway, Population, 1 January 2014, 22 October Statistics Norway, Cost index for road goods transport, October 2014, 22 October

58 Number of contracts NOK in millions Driver Impact on market value growth (CAGR) Impact on market value growth (CAGR) Comments Waste complexity Moderate impact 0.7% Opposing trends within waste complexity indicating a stable and moderate positive impact. Some increase in optic sorting reduces complexity, whereas municipalities to a small extent increasing number of fractions draws in the opposite direction Contract opportunities The majority of household waste collection contracts in Norway are five year contracts with options to extend the contract for two more years (one plus one), with some exceptions of contract durations ranging between four to six years with one to four years option periods. In most instances the option is executed by the principal, which impacts when contracts are expected to be tendered. The number of contracts to be expected tendered will peak in 2017 and with a continued high level in 2018, whereas the largest contract values are expected in 2016 and The relatively large contract value in 2016 seen against number of contracts is mainly attributable to large contracts tendered in the Oslo; the Oslo B, Oslo C and Oslo D areas 36. Number of potential new contracts tendered in the period is limited compared to renewed contracts, depending on political priorities. Number of contracts to be tendered in Norway, Contract value to be tendered in Norway, Note: Renewal dates are estimated using the average length of contracts (including option) in the country Source: Camelot Consulting, Doffin 37, SSB 38, SSB 39, PwC The competitive landscape The market for waste collection is a highly competitive market in Norway with price being the main differentiator when awarding contracts. The competitive landscape in Norway is largely dominated by three operators, namely RenoNorden, Norsk Gjenvinning and Ragn Sells, whereof RenoNorden is by the largest, serving 33% of the Norwegian population in 2014 (46% of the outsourced market). Together, the three operators hold c. 70% of the outsourced market. 36 The Oslo municipality is divided into four contracts based on geographic area (Oslo A, Oslo B, Oslo C and Oslo D). Three of these four contracts are up for tender in The Norwegian national notification database for public procurement, Statistics Norway, Population, 1 January 2014, 22 October Statistics Norway, Cost index for road goods transport, October 2014, 22 October

59 Outsourced Norway waste collection market based on inhabitants served (2010) Outsourced Norway waste collection market based on inhabitants served (2013a) Nortransport 3% Other 22% Other 24% Retura 1% Ragn Sells 5% Norsk Gjenvinning 22% RenoNorden 47% Nortransport 3% Retura 3% Ragn Sells 5% Norsk Gjenvinning 19% RenoNorden 46% Source: Camelot Consulting, Doffin 40, SSB 41, PwC All of the three key operators operate mainly in Southern-Norway. RenoNorden is the only specialised household waste collector, retaining the role as market leader since Norsk Gjenvinning, the second largest waste collector holds a market share of c. 19% down from 22% in 2010 and has a broad offering including collection, transportation and sorting, treatment, recycling and deposit of household, industrial and hazardous waste. During the last four years, the Group has gone through restructuring and has acquired several companies, including Wilhemsen & Søner, Tomwil Miljø and Humlekjær & Ødegaard (end of 2012). Ragn-Sells serve c. 5% of the outsourced part of the Norwegian population and are a total waste provider with services that cover collection, transportation, treatment, recycling, deposit and destruction of waste. Ragn-Sells signed a partnership agreement with Retur AS in June 2013, which is responsible for the Ragn-Sells Group s household waste collection. The outsourced waste collection market is operated by c. 50 private companies holding contracts with the municipalities. In addition, a large part of waste collection is performed by inter-municipal companies or by the municipalities themselves. Company Geographic footprint The Nordics Region South Norway Region South Scandinavia Norway: Akershus Revenue 2013 (2012) NOK 548m (NOK 531m) NOK 4,118m NOK 974m (NOK 926m) Est. share of revenue in waste transport 100% (Household waste) 306m (Household waste) Not quantified (Household waste) Market share 2013 (2010) based on population served, only municipal contracts 46% (47%) 22% (19%) 5% (5%) Source: Company Websites, Doffin 42, Camelot Consulting, PwC 7.4 The Swedish market Key characteristics The outsourced part of the Swedish market for waste collection and transportation services is procured by 40 The Norwegian national notification database for public procurement, Statistics Norway, Population, 1 January 2014, 22 October The Norwegian national notification database for public procurement,

60 Million tonnes municipalities through public tenders. It is a competitive market where the most significant contract selection criteria is price. In comparison to the rest of the Nordics, the outsourced market in Sweden is (together with Norway) the least developed with an outsourcing percentage of c. 72% of total market based on population served, and it is expected to remain around 72% in the foreseeable future. Since the recent government election, the waste collection and transportation legislation has been up for debate in Sweden. The discussion concerns an amendment to the law which would expand the municipalities waste collection and transportation responsibility by including paper, plastic, glass and packaging. Due to the uncertainty, some municipalities are hesitating to renew their outsourcing contracts, since they do not want to be party to long-term contracts that do not include all waste types. The discussion might be a reason for the decrease in outsourcing growth rate, however, if the current debated legislation is implemented it would mean larger outsourcing contracts which would drive the market value. The largest region is Stockholm, which alone constitutes c. 14% of the addressable market in terms of people served. Stockholm together with the second and third largest regions, Gothenburg and Malmö respectively, makes up 27% of the outsourced market. All of the three regions are currently fully outsourced Market size The total volume of municipal waste in Sweden in 2013 was 4.4 million tonnes. The waste volume decreased during the financial crisis and returned to positive growth levels in The positive trend is expected to continue, with a forecasted CAGR of 4.1% in , driven by increasing population and an estimated increasing GDP per capita. The population in Sweden is anticipated to grow from 9.7 million in 2014 to 10.2 million in 2017, and the GDP per capita is expected to grow 3% p.a CAGR Municipal waste volume in Sweden, Forecast 4.1% % Source: EEA 43, SCB 44, World Bank 45, Avfall Sverige 46, Government Offices of Sweden 47, PwC 43 European Environment Agency, Municipal waste generation per capita in Europe, Statistics Sweden (SCB) population statistics. 45 World Bank database, GDP growth. 46 Avfall Sverige, Svensk Avfallshantering 2014, Government Offices of Sweden, Sweden s Convergence Programme 2014,

61 NOK in millions CAGR Municipal waste transportation services value, Forecast 3.9% % Source: Camelot Consulting, SCB 48, Avfall Sverige 49, SCB 50, SCB 51, PwC The Swedish market for collection and transportation of municipal waste is estimated to c. NOK 2.1 billion in 2013, and is expected to grow with 3.9% p.a. reaching c. NOK 2.4 billion in Given the outsourcing level at c. 72%, the addressable market for private operators 2013 is approximately NOK 1.5 billion. The market has experienced moderate growth in compared to previous years with the underlying reason being the relatively steady diesel fuel price thereby keeping the cost price index stable. The anticipation that the future market will be more efficient and exposed to competition reduces the price level in connection to contract renewals and slows down the growth projection per annum. However, the growth from the waste contract complexity, population- and cost price index is estimated to surpass the negative effect. Hence, the market shows healthy growth projections from Driver Impact on market value growth (CAGR) Impact on market value growth (CAGR) Comments Population 0.8% 1.0% Tender process -1.4% -1.4% Estimated moderate increase in population growth Slight price decrease in connection to contract renewals Cost price index 2.7% 2.5% Slightly decreasing impact Waste complexity 2.4% 1.6% High complexity impact with four-bin system 48 Statistics Sweden (SCB), population statistics. 49 Avfall Sverige, "Svensk Avfallshantering 2014", Statistics Sweden (SCB), A12:1 household waste collection index, Statistics Sweden (SCB), R77:4 sanitation index,

62 Number of contracts NOK in million Contract opportunities Number of contracts to be tendered in Sweden, Contract value to be tendered in Sweden, Note: Renewal dates are estimated using the average length of contracts (including option) in the country Source: Camelot Consulting, SCB 52, SCB 53, PwC The average length of a contract without options is 4.8 years, while it is 6.9 years if the extension option is used. A critical year in terms of tendering is 2015 whereby contracts for c. 1.6 million people are to be renewed in public tenders. Among others, Uppsala and a number of municipalities in Southern Sweden will be up for tendering. According to several municipalities and industry organisations, the outsourcing level is stable and there is no reason to expect a drastic change in the short-term. The outsourced versus in-house waste collection topic is claimed to be highly relevant due to the recent elections in Sweden, however the interviewed municipalities states that they are satisfied with their current waste collection solution. None of the interviewed municipalities are considering going from outsourced to in-house, or vice versa The competitive landscape Outsourced Swedish household waste collection market based on inhabitants served (2010) Outsourced Swedish household waste collection market based on inhabitants served (2013a) Others 21% SITA 22% Others 23% RenoNorden 22% Ohlssons 4% Liselotte Lööf 6% Renova 12% Ragn-Sells 20% RenoNorden 15% Ohlssons 3% Liselotte Lööf 7% Renova 9% Ragn-Sells 17% SITA 19% Source: PwC, Camelot Consulting The Swedish market is fragmented with three large nationwide operators, namely RenoNorden, Ragn-Sells and SITA. These are the only operators reaching a market share above 10% individually, and have an aggregated 38.3% share. RenoNorden has since 2010 gained market share at the expense of its main competitors. All individually examined competitors have seen a decline in their market shares since SCB, A12:1 household waste collection index, SCB database, population statistics. 58

63 In 2013, SITA acquired Röngårds Åkeri AB, which operates in Älvdalen in the western parts of Sweden and the subsidiary Byggåtervinnarna in Stockholm merged with SITA Sweden. Ragn-Sells were also quite active in the mergers and acquisitions arena and became the sole shareholder of Ragn-Sells Granulate by acquiring 20% of the shares of this company. The Renova group has gone through a restructuring recently and has been divided into a parent company, Renova AB, and a subsidiary, Renova Miljö AB. The reason for the restructuring was to enable long-term, healthy, regional relations to the different municipalities in which Renova are active. Company Geographic footprint Scandinavia with focus on Stockholm and southern/central parts of Sweden Nationwide in Sweden. Active in Norway, Denmark, Estonia, Latvia and Poland SITA Sweden is part of the global player Suez Environment. Sita works nationwide with 60 local offices Municipality-owned player active in the Western parts of Sweden Revenue 2013 (2012) NOK 314m (NOK 274m) SEK 2,800m (SEK 2,855m) SEK 2,226m (SEK 2,226m) SEK 1,199m (SEK 1,273m) Est. share of revenue in waste transport 100% (household waste collection) 9% (household waste collection) 13% (household waste collection) 12% (household waste collection) Market share 2013 (2010) based on population served 15% (10%) 11% (14%) 13% (15%) 6% (8%) Source: PwC, Company Websites, Camelot Consulting 7.5 The Danish market Key characteristics The Danish waste collection market is anticipated to change somewhat over the next couple of years, due to a new governmental waste policy for 2022, created on the basis of the recent EU directive imposing Member States prioritise waste recycling and disposal. The government s goal is to increase the number of clear waste streams directly from the households, as this will reduce the need for central waste plant sorting and in the end reduce costs and increase waste reutilisation. Most of the initiatives are expected to have an impact by The 50% waste recycling target in the household segment is not anticipated to be outsourced before In comparison with the rest of the Nordics, the Danish market has the second highest outsourcing rate at 94%. The rate has grown slightly over the past years and is expected to remain fairly stable in the foreseeable future although with a small increase over the next five years, as some municipalities are expected to revaluate their waste collection and transportation setup once their fixed assets (in some cases recently acquired) have been fully depreciated. Additionally, the Danish government s ambition of increasing waste recycling would require waste collection providers to handle more differentiated waste, which is something that could challenge some of the smaller in-house municipalities with limited operations. The single largest region is Copenhagen, which alone constitutes c. 10% of the addressable market in terms of inhabitants served. The second and third largest regions are Aarhus and Aalborg, respectively, which, together with Copenhagen, make up 19% of the total market, based on inhabitants served Market size The total volume of municipal waste in Denmark in 2013 was 3.2 million tonnes. During the financial crisis and up until 2013 the waste volume trend was decreasing. The trend is however changing and a CAGR of 2% is expected going forward driven by slightly increasing population and growing GDP per capita. The current population in Denmark is expected to increase from 5.6 billion in the 2014 to 5.7 billion in 2017 and the GDP 59

64 NOK in millions Million tonnes per capita growth is anticipated to grow c. 2% p.a. from CAGR Municipal waste volume in Denmark, Forecast % 2.2% Source: Camelot Consulting, DST 54, DST 55 MST 56, MST 57, PwC The total Danish market for household waste collection is estimated to c. NOK 1,815 million in 2013 and is expected to increase to c. NOK 1,961 million in 2017, implying a CAGR of 1.9% over the four year period. In contrast to other European markets, nearly the entire Danish market is outsourced (approximately 94% in 2013) leaving only a few municipalities with in-house household waste collection services. Excluding the nonoutsourced part the Danish market is valued at c. NOK 1.8 billion. CAGR Household waste transportation services value in Denmark, Forecast 2, % 2, % 1,575 1,648 1,720 1,792 1,800 1,808 1,815 1,867 1,894 1,924 1,961 2,000 1,750 1,500 1,250 1, Source: Camelot Consulting, DST 58, PwC The market growth has been relatively stable between 2007 and 2013 and the positive trend is expected to continue, although with a slightly lower growth rate, due to increased competition, price pressure and more effective waste handling. This is expected to reduce the price level in connection with contract renewals and to slow down the annual growth projection. Still, the waste contract complexity, population- and cost price index growth is anticipated to surpass the negative effect of increased price competition. 54 Danish Statistics database, municipal waste volume. 55 Danish Statistics database, population data. 56 MST, Danmark uden affald, MST, Indikatorer til måling af affaldsforebyggelse, Danish Statistical database, Cost index for household waste collection,

65 Driver Impact on market value Impact on market value Comments growth (CAGR) growth (CAGR) Population 0.4% 0.4% Tender process -1.7% -1.9% Cost price index 1.8% 2.0% Waste complexity 0.8% 1.6% Low impact on the Danish market - An estimated stable population increase and mainly in densely populated areas Constant tendering will decrease prices, which particularly will have an impact in the periods where a large number of contracts are retendered Moderate to high impact on the market. Most Danish waste collection contracts have a price adjustment mechanism based on the standard Moderate to high complexity impact with 2018 governmental waste plan goals (increase recycling to 50%) as main driver. Increased optic sorting reduces complexity, whereas municipalities increasing number of fractions have the opposite effect Source: Camelot Consulting, DST 59, DST 60, PwC Contract opportunities Most of the retendered contracts from will come to market within the first part of the period from There will be a slight drop in retendered contracts from , but the decreasing part of the retendered value is due to the fact that many contracts are expected to expire in 2020 and The large number of contract opportunities in 2015 and 2016 results in an opportunity to capture market share. Among others, Aarhus and a number of larger municipalities and districts in Zealand will be re-tendered. The average length of a contract without options is 4.4 years and 5.8 years including options. The tender selection criteria have predominantly favoured the most economically viable offer, but soft factors such as the environment, service quality and the waste collection providers organisations also influence the tender selection. According to a number of municipalities and industry organisations, the outsourcing level is generally expected to remain stable and there are little expectations of significant changes in the near future. However, even though the interviewed municipalities that operate in-house waste collection services claim to be satisfied with their correct waste collection solution, a few are considering outsourcing as an option within a three to four year time horizon. 59 Danish Statistics database, population data. 60 Danish Statistics database, Cost index for household waste collection,

66 Number of contracts NOK in millions Number of contracts to be tendered in Denmark, Contract value to be tendered in Denmark, Note: Renewal dates are estimated using the average length of contracts (including option) in the country Source: Camelot Consulting, PwC The competitive landscape The Danish market is characterised by a number of regional medium-sized operators with high single-digit or low double digit market share. Since 2010 the competitive landscape has changed, due to RenoNorden s consolidation in the market, which have made them market leader with a market share of around 30%. Meldgaard and M-Larsen s market shares have remained fairly stable, and they are still regarded the largest competitors to RenoNorden. Others, HCS and Marius Pedersen have all lost market share and they play today a smaller role in the Danish competitive landscape. Outsourced Danish household waste collection market based on inhabitants served (2010) Outsourced Danish household waste collection market based on inhabitants served (2013a) Marius Pedersen 9,5% HCS 12,2% RenoNorden 19,7% Marius Pedersen 6,2% HCS 7,5% RenoNorden 31,8% Miljøteam 12,2% Others 19,3% Miljøteam 11,4% M Larsen 13,7% Others 15,6% M Larsen 12,8% Meldgaard 14,3% Meldgaard 13,9% Source: Camelot Consulting, PwC The transaction activity has been moderate over the past of years in the Danish market. Marius Pedersen A/S, which was previously owned (65%) by French Veolia Environment, was bought back by the Marius Pedersen Foundation (2014). This transaction has not changed the competitive landscape. The most recent transactions are RenoNorden s acquisitions of Nord-Ren (2011) and the acquisition of the tender division in Renoflex (2010). In the Danish market there are still a large number of small local operators suggesting likelihood for further consolidation in the future. 62

67 Company Geographic footprint Scandinavia, Denmark Copenhagen area and Zealand Denmark (mainly Jutland) Denmark (Copenhagen and surrounding areas) Denmark (mainly Jutland) Revenue 2013 (2012) NOK 404m (NOK 371m) DKK 353m (DKK 283m) DKK 456m (DKK 401m) DKK 201m (DKK 213m) Est. share of revenue in waste transport Market share 2013 (2010)* 100% % 40-60% % 32% (20%) 14% (14%) 14% (13%) 11% (12%) Source: Camelot Consulting, PwC, annual reports from the companies depicted in the table 7.6 The Finnish market Key characteristics Waste management in Finland is divided into political and operational units. Political decisions, i.e. collection network for different fractions, waste collection pricing etc., are made by the local municipal environmental services committees while the operational waste management, including collection and handling of waste, is handled by 35 waste management companies that are jointly owned by the local municipalities. The population served by each waste management company range from c. 50,000 in northern Finland to over 1 million in the capital region. There are also a small percentage of municipalities that have chosen not to participate in any joint waste management company that handle all operational tasks on municipal level. The Finnish waste collection is currently undergoing several large structural changes: Shift from privately procured to municipal publicly tendered waste collection services. Shift from deposition of waste to waste incineration. Increased producer responsibility for collection of waste materials from packages (metal, glass, fibre packages and plastic). Consolidation of waste collection service providers. These trends will be further elaborated in the sub-sections below Market size The total volume of municipal waste produced in Finland was estimated at c. 2.8 million tonnes in The term municipal waste in Finland includes household waste and all comparable waste. Comparable waste constitutes waste collected from service companies, hospitals, schools, offices etc. The municipal waste is divided into three sub-groups based on waste management responsibility. c. 45% is under municipal responsibility, c. 20% under producer responsibility (industry or importers) and the rest, c. 35%, is under the waste producing companies (stores, restaurants etc.) responsibility. The total volume of municipal waste produced in Finland declined somewhat during the financial crisis in 2009 and The decline was mainly attributable to commercial waste, as household waste is less impacted by general economic condition. Despite the drop, the total volume of municipal waste grew by an annual rate of c. 1% from 2007 to The annual growth rate is estimated to increase to c. 2% up to 2017 as the general economic conditions in Finland improves. 63

68 Million tonnes Municipal waste volume in Finland, CAGR % Forecast % Source: Tilastokeskus 61, JLY 62, World Bank 63, PwC The Finnish market for household waste transportation and collection services has seen stable annual growth of 3.7% from 2007 to The annual growth is forecasted to slow down to 3.2% from 2014 to The total market, including both outsourced and in-house waste collection, for 2013 is estimated at c. NOK 1.1 billion. Contrary to other European markets, the Finnish market is almost fully outsourced with only one municipality complementing their outsourced waste collection with some of in-house waste collection vehicles. The addressable market in Finland is therefore estimated at c. NOK 1.1 billion in The Finnish market is, however, divided into a municipal and a private market. The municipalities can decide to provide centrally managed and procured waste collection services to the whole population or impose the task on the inhabitants. In 2014 c. 62% of the population was served by publicly tendered waste collection services while the remaining 38% of the population was living in areas without publicly tendered waste collection. In areas without publicly tendered waste collection the inhabitants are free to enter into service agreements with any service provider they please, causing a very fragmented market with multiple service providers potentially operating on the same streets. The cost of waste collection is generally 15-30% higher for privately procured waste collection when compare to waste collection under contracts that have been subject to municipal public tenders. A recently passed waste law (646/2011) in Finland states that all municipalities should provide centrally managed waste collection. Municipalities can still choose to keep the privately procured model if they can show that all inhabitants receive waste collection services at fair, non-discriminating conditions. Generally, the jointly owned waste companies are positive towards a municipal publicly tendered model and it is likely that more municipalities will shift to this model in the coming years. For waste collection companies this trend results in both reduced credit risk and administrative burden from invoicing individual households. It is estimated that in 2017 c. 67% of the Finnish population will live in a municipality that tenders for waste collection services centrally. 61 Tilastokeskus, Municipal solid waste in Finland , 19 October JLY, Municipal waste treatment in Finland 2014, 19 October World Bank database, GDP growth. 64

69 NOK in millions Household waste transportation services value in Finland, CAGR Forecast 3.2% % Municipal public tender Privately procured Source: Camelot Consulting, JLY 64, Tilastokeskus 65, Eurostat 66, PwC The shift towards publicly tendered waste collection services is estimated to cause the private market to decrease with an annual rate of 0.3% from 2014 to 2017 while the publicly tendered market is estimated to grow with an annual rate of 5.2% from 2014 to The market size is mainly driven by population growth, national cost indices, waste complexity and the tender process efficiency. Population growth drives volume in waste collection while cost indices drive unit value. The most commonly used index for municipal contract in Finland is the cost index for road transport of goods which is estimated to show an annual growth of 3.5% from 2014 to Waste complexity impacts both the volume of bin collections and the cost per each bin collection. The effect on the market is expected to be moderate compared to other Nordic countries. A new producer responsibility for collecting package materials (paper, fibre packages, glass, metal etc.) will be in place from the beginning of 2016 and it is still unclear how this will impact the market. An increase in fractions collected will have a positive impact on the market value while a smaller collection network (the law only requires producers to maintain 2,000 collection points) and nationally procured waste collection services will have negative impact on the total market value. The lowest tender is, by default, awarded with a contract in public tenders in Finland. This leads to price pressure when retendering existing municipal contracts. The average impact on the market value is estimated at -1.3% during 2014 to The outsourcing level in Finland is close to 100% (99.7%) and it is expected to remain stable up to However, the increasing municipal tendering will benefit larger operators and increase contract values. Driver Impact on market value growth (CAGR) Impact on market growth (CAGR) Comments Population 0.5% 0.5% Tender process -0.9% -1.0% Cost price index 4.2% 3.5% Waste complexity 0.5% 0.5% Slight increase in population growth Stable price decrease at new tenders Lower impact of cost index in future Moderate complexity impact compared to other Nordic countries Source: Camelot Consulting, JLY 67, Tilastokeskus 68, Eurostat 69, PwC 64 Information on municipal waste treatment 2010 & 2013, 24 October Tilastokeskus, Cost index for road transport of goods, Eurostat database, Main scenario - Population on 1st January (proj_13npms), 19 October Information on municipal waste treatment 2010 & 2013, 24 October Tilastokeskus, Cost index for road transport of goods, Eurostat database, Main scenario - Population on 1st January (proj_13npms), 19 October

70 Number of contracts NOK in million Contract opportunities The outlook is a stable supply of new contracts available on the market up until 2019 as municipalities shift from private procurement to municipal public tenders. In Finland, with new contracts means contracts that are moving away from private tendering towards municipal (i.e. they have already outsourced but the contract will be larger and more addressable to a player like RenoNorden). The average length of a contract in Finland is four to five years with options to prolong the contract with one plus two years. The municipal contract renewal cycle is estimated to cause the number of contracts tendered to peak in 2017, with a value peak in 2019 mainly attributable to large contracts tendered in Kuopio, Tampere and Espoo. The outlook is that there will be a stable supply of new contracts available on the market up to 2019 as municipalities shift from private procurement to municipal public tenders. Two relatively large new contracts are estimated to be tendered in the cities of Lohja and Hämeenlinna, effectively driving the market value in The competition for new municipal contracts in Finland is expected to be tough as several service providers already operate in the local private markets. Number of contracts to be tendered in Finland, Contract value to be tendered in Finland, Note: Renewal dates are estimated using the average length of contracts (including option) in the country Source: Camelot Consulting, Tilastokeskus 70, Eurostat 71, PwC Commercial waste in Finland Commercial entities are required to ensure a well-functioning waste collection service for each place of business and this is normally done through direct contracts with waste collection service providers. This results in a privately procured commercial waste collection market in Finland, in which RenoNorden is also active. The commercial waste market only includes waste from service companies and offices and the fractions collected are similar to those for household waste. Furthermore, the commercial market described in the Prospectus only includes the market for waste transportation services. All pass through fees, like cost of waste handling which may be charged by the waste collection company, are excluded from the market size. In 2011 c. 35% of the municipal waste volume was produced by and collected from commercial entities. The market value is estimated to be lower (relatively) than household collection as commercial waste containers often are larger in size. 70 Tilastokeskus, Cost index for road transport of goods, Eurostat database, Main scenario - Population on 1st January (proj_13npms), accessed October

71 NOKm Commercial waste transportation services value in Finland, Forecast CAGR % % Source: Camelot Consulting, JLY 72, PwC The total market for commercial waste in Finland was estimated to grow with an annual rate of c. 4% from 2007 to 2013 and estimated to c. NOK 0.4 billion in Commercial waste was, to a larger extent than household waste, impacted by the economic downturn in 2009 and The annual growth rate in market value is therefore expected to increase to c. 5% from 2014 to It is commonly the same suppliers that compete for commercial contracts and household waste contracts. Operators in both commercial and household market can achieve better efficiency as the type of waste often is similar The competitive landscape Outsourced Finnish household and commercial waste collection market (2010)* Outsourced Finnish household and commercial waste collection market (2013a)* Tampereen autokuljetus 4% Other 22% Lassila & Tikanoja 38% Tampereen autokuljetus 4% Other 21% Lassila & Tikanoja 36% Sihvari 5% Sihvari 5% HFT Network (RenoNorden) 11% SITA 20% HFT Network (RenoNorden) 15% SITA 19% Source: Camelot Consulting, PwC The market shares are based on municipal publicly tendered (i.e. not the private waste collecting market segment which is not tendered publically). Hence, the calculations are based on the assumption that market shares for the private segment are similar to the public segment. HFT Network (RenoNorden) has increased its market share substantially in the period JLY, Municipal waste treatment in Finland 2014, Information on municipal waste treatment 2013, non-public presentation, 19 October

72 Company Geographic footprint Scandinavia. Focus on southern, eastern and central regions in Finland Nationwide in Finland, operations in Sweden, Latvia and Russia Global. Focus on southern regions in Finland Regional. Focus on southern regions in Finland Revenue 2013 (2012) EUR 25m EUR 668m EUR 70m EUR 12m (EUR24m) 73 (EUR 674m) (EUR 71m) (EUR 10m) Est. share of revenue in waste transport 55% (Municipal contracts) 3% (Municipal contracts) 19% (Municipal contracts) 37% (Municipal contracts) Market share 2013 (2010)* 15% (11%) 36% (38%) 19% (20%) 5% (5%) * Market share in Finland constitute both household and commercial market. Household market share is based on actual contracts, while commercial market share is based on interviews. Numbers should be treated as indicative Source: Camelot Consulting, Annual reports, PwC The Finnish market is dominated by three nationwide operators, Lassila & Tikanoja, HFT Network (acquired by RenoNorden) and SITA Finland with a combined market share of c. 67% of the municipal contracts. Of these three operators, HFT Network is the only one that has been able to increase market share compared to Other large regional operators in Finland include Tamperen Autokuljetus and Sihvari who both have a market share of c. 5%. A large number of smaller competitors are also present on a local level. The market has seen some consolidation in recent years. Recent merger and acquisition activity include RenoNorden s acquisition of HFT Network in December 2013 as well as Lassila & Tikanoja s acquisitions of Joutsan Kuljetus OY and Paperitiikerit OY in However, there have been indications of increased competition for waste collection services in some areas. For example, HSY, the capital region waste management company, has gone from three service suppliers in 2008 to 12 suppliers in The large companies are expected to perform better in the future as they are better equipped to handle large contracts for the municipal waste management companies. The shift towards producer responsibility for package materials (metal, glass, fibre packages and plastic) is also expected to favour large operators. PYR, the environmental register of packaging, are estimated to divide Finland into 20 collection zones. Larger operators who will be able to manage a whole zone are expected to be chosen before smaller operators that are forced to use sub-contractors. 73 HFT Environment was acquired by the Group on 19 December 2011, thus the financial figures are obtained from the audited consolidated financial statements as of, and for the year ended, 31 December 2013 for HFT Environment, prepared in accordance with FGAAP. 68

73 8 BUSINESS OF THE GROUP 8.1 Overview Introduction RenoNorden is a leading waste collection services provider operating across the Nordic region 74. Since establishment, the Group has experienced strong growth, both organically and through acquisitions. In the period, the Group achieved revenue growth of 26% per annum 75. In 2013, the Group generated revenues of NOK 1,466 million and adjusted EBITDA of NOK 249 million on a pro forma basis, corresponding to an adjusted EBITDA margin of 16.9% 76. Excluding the acquisition of HFT Environment, revenues for the year were NOK 1,268 million and adjusted EBITDA of NOK 227 million, implying adjusted EBITDA margin of 17.9% 77. As at the date of this Prospectus, the Group services over 230 municipalities and over five million inhabitants in Norway, Sweden, Denmark and Finland ,024 16,3% Group key financials 1,177 1, ,268 18,4% 17,9% 40,0 % 30,0 Revenue % (NOKm) PF Finland 20,0 (NOKm) % Adj. EBITDA margin 10,0 % ,0 % The chart above shows the recent key financials for the Group. Please note that 2011 are NGAAP figures, 78 while 2013 figures include pro forma revenues 79. See Section Non-IFRS financial measures for a definition of EBITDA. In 2011, the Group had sales of NOK 1,024 million and an EBITDA margin of 16.3%, based on NGAAP figures. In 2012, the Group increased both sales and margins significantly, with annual revenues of NOK 1,177 million. In 2013, the Group increased revenues to NOK 1,268 million and NOK 1,466 million on a pro forma basis 80. However, margins on a pro forma basis were slightly decreasing because of lower margins in Finland thereby affecting Group margins. The Group continuously seeks to optimise efficiency and minimise costs and the Group aims to return to margins above the 2012 level in the medium-term. RenoNorden operates primarily in the household waste collection segment (94% of revenue in ) within the wider waste management industry. The Group is the only operator in this segment that is present in four Nordic countries. In general, the Group tenders for household waste collection contracts awarded by municipalities that typically have durations of five years with extension options for the municipalities for two further years (one plus one). 74 See Section 7 Industry and Market Overview for market share data. 75 Not including the acquisition of HFT Environment in Finland in December As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. EBITDA for Finland calculated as Operating profit plus Depreciation. 77 EBITDA is excluding the HFT Acquisition. See Section Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA for adjustments of non-ifrs financial measures for the nine months ended 30 September 2014 (with comparable figures for 2013). Adjustments relates to Monitoring Fees to the current Principal Shareholders (to be discontinued post the Listing, but the Group is obliged to ay Monitoring Fees for the full year of 2014). 78 Extracted from the RenoNorden Holding Financial Statements for As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. EBITDA for Finland calculated as Operating profit plus Depreciation. 80 See previous footnote. 81 Source: Management as per 14 October As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. On an actual basis, as per the Group s Financial Statements, total operating revenue was NOK 1,268 million and EBITDA was NOK 223 million in

74 The Group also sells additional services to its customers for which additional revenue can be earned, for example leafleting to residents, cleaning or replacement of bins, or tagging of bins. In Finland, the business also operates in the commercial waste collection segment (6% of revenue in ) for selected clients on a contracted basis. The Group has recently begun exploring opportunities in Norway, Sweden and Denmark to deploy its existing fleet to meet the collection requirements of commercial clients also in these countries. As at the date of this Prospectus, the Group employs over 1,440 people in the Nordic region, providing collection services to over five million inhabitants. Country Market position 83 Employees Vehicles 84 Branches 85 Norway No Sweden No Denmark No Finland No Total 1, The charts below show the revenue of the Group in on a pro forma basis split by geography and service. Revenue by geography, 2013 PF Revenue by service, 2013 PF 14% Norway 6% Household waste 28% 37% Sweden Denmark 94% Commercial waste 21% Finland History RenoNorge (the former name of RenoNorden) was established in 2000 in Norway. At that time, the Norwegian waste market was dominated by two vertically integrated waste management companies. The core premise of the Company s tailored business model, which remains today, was to be a focused, specialist waste collection service provider to municipalities and to create a niche operator in this segment. RenoNorden was awarded its first contract in 2001 by the Kongsberg municipality in Norway, and continued thereafter to grow organically in Norway by successfully winning public waste collection tenders. The Group is today the largest household waste collection service provider in Norway, in terms of number of households serviced 88. In 2013, the Group serviced 117 municipalities and one in every three Norwegians. In 2007, RenoNorden was awarded its first contract in Sweden by AOS Skaraborg and continued thereafter to grow organically in Sweden by successfully winning public waste collection tenders. In 2010, RenoNorden acquired a Swedish competitor s assets out of bankruptcy, including its contracts in Stockholm and Malmö. The 82 See previous footnote. 83 See Section 7 Industry and Market Overview for market share data. Finnish market shares include commercial waste. 84 Table includes asset heavy and operation critical vehicles only. The table does not include smaller units, such as trailers, company cars, forklifts, tractors and vans. See Section Vehicles, fleet management and maintenance for further details on the fleet of vehicles. 85 Branches defined as physical locations with ongoing operations. Source: Management. 86 See Section 7 Industry and Market Overview for market share data. Finnish market shares include commercial waste. 87 As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. EBITDA for Finland calculated as Operating profit plus Depreciation. 88 See Section 7 Industry and Market Overview for market share data. 70

75 1 500, , ,00 900,00 700,00 500,00 300,00 100,00-100,00 Group is today the largest household waste collection service provider in the Swedish market 89, in terms of number of households serviced. In 2010, RenoNorden completed the acquisition of the tender division of the household waste collection service provider Renoflex-Gruppen A/S. Renoflex-Gruppen A/S was at the time a regional operator in the Danish market, based in Zealand, but provided the Group a strong platform for further expansion into the Danish market. In 2011, the Group further strengthened its position in the Danish market through the acquisition of Nord-Ren A/S in Jutland. Through the acquisition of Nord-Ren A/S, the Group became a true national operator in Denmark and is today the largest household waste collection service provider in the Danish market 90, in terms of number of households serviced. RenoNorden entered the Finnish market in December 2013 through the acquisition of HFT Environment. HFT Environment is the third largest operator in waste collection market in Finland (including commercial waste) 91, in terms of population serviced, including both household and commercial waste. The acquisition underpins the Group s position as a leading provider of waste collection services in the Nordics 92. Further, the acquisition also marked RenoNorden s first move into commercial waste collection. The table below shows the revenue development from organic and first-year acquisition revenue of the Group 93, extracted from the Group s financial statements and the historical financial statements and records of the Group s predecessor companies 94. The Group has had an organic growth of 20% per annum between 2004 and Group annual revenue (NOKm) Organic Non-organic Organisational structure The Company is a holding company, and operates through its operating subsidiaries in Norway, Sweden, Denmark and Finland. The Group Management is set up to reflect the Nordic focus of the Group. The CEO and the central development department is based in Sweden, finance function including the CFO are physically located at the Norwegian head office and sourcing and fleet Management is concentrated in Denmark. This is in line with the Group s ambition to establish centres of excellence in countries based on their unique expertise 89 See Section 7 Industry and Market Overview for market share data. 90 See Section 7 Industry and Market Overview for market share data. 91 See Section 7 Industry and Market Overview for market share data. 92 See Section 7 Industry and Market Overview for market share data. 93 Organic growth defined as Group revenue deducted for the accumulated first-year revenues from acquisitions. 94 The table is based on the following financial statements (all NGAAP statements): Annual financial statements as of, and for the period ended, 31 December 2000 and 2001 for RenoNorge AS; Annual financial statements as of, and for the period ended, 31 December 2002 to 2004 for RenoNorge AS; Annual financial statement as of, and for the period ended, 31 December 2005 to 2007 for RenoNorden AS (predecessor group); Annual financial statements as of, and for the period ended, 31 December from 2008 to 2010 for RenoNorden Holding AS (predecessor group); Annual financial statements as of, and for the period ended, 31 December 2011 for RenoNorden Holding AS (predecessor group); and Annual financial statements as of, and for the period ended, 31 December 2013 and 2012 for Asta Group AS. 95 Organic growth defined as Group revenue deducted for the accumulated first-year revenues from acquisitions. 71

76 (e.g. IT-based registration in Sweden and commercial collection in Finland). The majority of the Group s central management works out of the Group s headquarters in Frogner, Norway. In addition, the Swedish, Danish and Finnish operating subsidiaries have central country management teams. The main premise of the business model is that each country shall have core resources in place to be able to drive its day-to-day operations independently, but such that these resources shall be complemented by certain key functions which are more efficiently managed centrally for the benefit and support of the whole Group, such as Group strategy and business development. The central Group function continuously work on locating and realising operational synergies within areas such as sourcing, route planning and vehicle utlilisation. This include development and implementation of business development programs focused on improving the overall business, driving the sharing of best practice between countries and driving operational execellence reviews to boost individual department profitability. Aligned KPI reporting across the Group enables the Group headquarters to monitor operational performance across geographies. The Group headquarter is also the Group s spearhead in merger and acquisition initiatives, exploring both opportunities with good economical rationale in current markets and geographical expansion. In addition, tendering and fleet management are coordinated at the Group level. An important benefit of scale for the Group is the ability to source vehicles and other equipment cost efficiently. This is ensured by coordinated sourcing and by maintaining strong relationships with key suppliers at the Group level. Within each country, the Group operates a lean and efficient central country management team with main focus on adapting the business to national conditions, and to monitor and ensure adherence to the national regulatory environment. The central country management is also responsible for monitoring and following the local market through continuous market surveillance. Monthly profit and loss performance is monitored and consolidated at country level before submitted to the central Group management for review. Another key responsibility for the central country management is to assist and aid branches in the start-up phase of any new contract. The chart below provides an overview of the central Group management and the central country management. For further information on the Group s Management, see Section 13.3 Management. 72

77 CEO Staffan Ebenfelt Group finance Jon Kristian Flesvik Business development Andreas Westin MD Norway Fredrik Eldorhagen MD Sweden Peter Ekholm MD Denmark Torben Lindholm MD Finland Jukka Koivisto Operation Tendering Operation Tendering Group Fleet manager Per Henrik Brask Operation Tendering Route planning Route planning Operation Route planning Finance, HR, IT Finance, HR, IT Tendering Route planning Finance, HR, IT Finance, HR, IT Commercial Sales Within each country, the Group operates a network of local branches that manage the day-to-day operations of Group s respective customer contracts. Each branch typically has an operational manager (branch manager) with responsibility to deliver on contracted services on a daily basis, focus on profitability improvements, expand local business and ancilliary services through close and pro-active customer interaction, to ensure appropriate fleet maintenance and that the necessary resources are available within the branch or are called upon from central functions. It is also the operational manager s responsibility to report monthly profit and loss performance to the central country management. The branch managers are part of a yearly incentive programme designed to align their incentives with continuously improving the overall performance of the operations. The overall size of the bonus available depends on the size of the branch and the contract managed. 50% of the total attainable bonus is awarded on the basis of annual financial performance criteria and 50% on the basis of other measurable factors or key performance indicators, for example vehicle maintenance, sick leave, damages and injuries, contract turnover and deviations from the customer contract criteria. The weighting given to each of these factors can vary on an annual basis, and between branches, dependent on where Management believes most focus should be placed. The Group has recently hired Per Henrik Brask as new Group fleet manager. He will commence in the position from 1 January 2015 and will be located in Copenhagen. The Group fleet manager will have the main responsibility to ensure an optimal use of the Group s vehicle fleet. In addition to a branch manager, a branch typically consists of waste collection operators and ancillary support staff. In some of the larger branches, there are two branch managers, where the roles and responsibilities are shared between the two managers, based on their complementary competencies. Where there is only one branch manager, there is often also an employee in a foreman role. This employee carries out standard waste collection operations, similar to the other collection operators, but takes on more of an administrative and coordinating role. The number of collection operators and support staff per branch depends on the size of the contract, but ranges from 10 to 35. All personnel in the Group are employed on local, standard contract terms, appropriate to the position and country in which they are working. The Group employs the majority of its workforce, which is collection operators, in direct response to the award of a new contract. In Norway, the availability of skilled personnel within the automotive and transport sector has been limited in recent years. As a result, the Group has required a number of operators from other European countries. All international staff receive the same compensation as locally-recruited staff. In addition, the Group supports international staff as they relocate, providing, if appropriate, help with accommodation. RenoNorden requires that all international workers take local language courses when they begin work. Importantly, much of the training material and handbooks provided by the Group are available in a range of languages to ensure all 73

78 employees have a good understanding of important Group procedures, particularly in relation to health and safety. In the future, availability of local personnel is expected to improve and the Company anticipates that it will be able to recruit a greater proportion of new employees domestically also. In Sweden, Denmark and Finland, the availability of suitable personnel has been less of an issue and the majority of employees are local. The predominant salary system for waste collectors is based on a simple model, under which they are paid a base salary, equivalent to a 37.5 hour working week. In addition, all operators have the ability to supplement this salary by demonstrating a superior efficiency or competency in their work. This is regulated by the branch manager. There are examples of variations to the salary system, for example in Denmark and in a few branches in Sweden. In those branches the waste collectors are paid a performance based salary that is based on the number of waste collection lifts performed. There is a guaranteed minimum salary for the collectors, however, the employees are generally paid more than the minimum salary. The actual number of hours a waste collection operator works varies during the course in the year, depending on factors such as waste volumes to be collected, road maintenance and winter weather conditions which affect time used on the routes. The daily working schedule, with an early start and early finish, is somewhat unorthodox to a typical nine to five job. However, RenoNorden ensures that suitable focus and consideration is placed on the welfare and satisfaction of its employees. The employee turnover rate in the business, over the past three years, has been approximately 15%. Over the same period, the average long-term sickness rate was approximately 3.3%. Management believe these are lower than market comparable benchmarks Customers and markets The Group s principal customers are municipalities, which represented 94% of the Group s revenue in Norway, Sweden, Denmark and Finland in 2013 on a pro forma basis 96. Municipalities in the Nordics generally have very strong credit ratings, which limits the counter-party credit risk exposure of the Group. In 2013, 6% of the Group s revenue, on a pro forma basis came from select commercial contracts, 100% of which from the Group's operations in Finland 97. A typical municipality contract has a duration for five years with extension options for the customer for two further years (one plus one), while the Group also operates shorter contracts for commercial waste in Finland where the typical contract duration is two to three years. In accordance with national legislation, in Norway, Sweden, Denmark and parts of Finland, municipalities are required to facilitate collection of household waste from their inhabitants. Most municipalities fulfil this duty by outsourcing the service to third-party operators such as the Group. These countries have all implemented the EU Public Procurement Directive and appurtenant regulations in their national legislation, which ensures that awards of household waste collection contracts by municipalities are made on the basis of transparent public tender processes. The Group s core business activity is the collection and transportation of household waste from households to designated waste separation and treatment facilities. In Norway, Sweden and Denmark, these facilities are often owned by the municipalities. With the exception of contracts for commercial waste collection in Finland, the Group does not assume ownership of the waste during collection and transport and is not pursuant to laws or regulations imposed such ownership. The Group's operations do not include taking any risk on the secondary value of the waste it collects as it only collects and transports it for its customers. Furthermore, the Group does not process the waste and is therefore not exposed to environmental liabilities in the same manner as vertically integrated waste management companies are. Household waste collection is a vital service required by municipalities. The demands of inhabitants to receive the most seamless and least intrusive service, coupled with growing regulatory, environmental and technological requirements, places increasing obligations on waste collection operators. RenoNorden believes that the Group, with its scale, decentralised organisation and innovative approach to business development, is at the forefront of meeting the evolving requirements of its customers and is able to quickly adapt to efficiently 96 Source: Management as of 14 October 2014 on a pro forma basis, as if the HFT Acquisition had been completed as at 1 January As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. On an actual basis, as per the Group s Financial Statements, total operating revenue was NOK 1,268 million and EBITDA was NOK 223 million in

79 offer customised solutions. In Finland, the household waste market is split between areas where the municipalities facilitate collection of household waste, like in Norway, Sweden and Denmark and areas where the households contract with collection providers directly. The Group primarily operates within the former section of this market. In Finland, the Group also has certain commercial contracts with customers under which it provides collection services similar to the services it provides to municipalities, but for light commercial waste. 8.2 Geographic presence RenoNorden is present in Norway, Sweden, Denmark and Finland and is headquartered in Frogner, Sørum approximately 30 km north of Oslo. Norway is currently the Group s largest market and in 2013 the Norwegian operations accounted for approximately 37% of the Group s total revenues on a pro forma basis 98. The Group has increased its presence in both Sweden and Denmark, both by way of organic growth, through succeeding in contract tenders, and as a result of acquisitions. The Group entered the Finnish market in December 2013 by acquiring the third largest operator in the Finnish waste collection market (in terms of number of households serviced), HFT Environment. The Swedish, Danish and Finnish operations accounted for approximately 21%, 28% and 14% of the Group s pro forma total revenues in 2013, respectively 99. The Group is now the largest household waste collection operator in the Nordic region, and a market leader in Norway, Sweden and Denmark, in terms of households served 100. The chart below depicts the Group s geographic presence Norway The Group has a total of 25 branch offices in Norway. Norway is the Group s domestic market and RenoNorden is of the opinion that it has built up a strong reputation and track record in the 12 years that it has been in operation in this country. From the award of its first contract in 2001, the Group has grown significantly and currently, at the date of this Prospectus, operates 30 contracts in Norway. 98 As if the HFT Acquisition had been completed as at 1 January 2013; see Section 12 Unaudited Pro Forma Financial Information. 99 See footnote See Section 7 Industry and Market Overview for market share data. 75

80 8.2.2 Sweden The Group has a total of 12 branch offices in Sweden. The Group won its first contract in Sweden from AOS Skaraborg in 2007 and began operations in Sweden in The Group has since grown steadily in Sweden. RenoNorden has taken a well-defined approach to its expansion into Sweden, focusing on specific regions, where the opportunities and future potential are perceived to be the greatest. The Group has been involved in a number of tender processes in this market, however, in many cases, participation has been on an opportunistic basis and contracts with low profitability have not been prioritised. In September 2010, the Group strengthened its operations in Sweden by taking over the contracts and operations of Resta AB. After a period of financial difficulty and operational underperformance, Resta filed for bankruptcy in September 2010, following the revocation of contracts by municipalities in the Stockholm region. RenoNorden had been monitoring Resta and the developments of Resta s situation over a long period of time, including through discussions with Resta management. Based on this good existing knowledge of Resta, RenoNorden was in a position to move quickly to start discussions with the relevant municipalities and Resta s creditors. RenoNorden took over the assets and personnel necessary to continue Resta s operations and managed to negotiate the transfer of contracts on attractive terms. These contracts were successfully renewed in Sweden is the Group s largest market, and the Group s third largest segment, in terms of revenue. The Group is of the opinion that it has built up a strong reputation and track record in the six years that it has been in operation in this country. From the award of its first contract in Sweden in 2007, the Group has grown significantly and currently operates 31 contracts in Sweden Denmark The Group has a total of 20 branch offices in Denmark. The Group entered the Danish market in January 2010 through the acquisition of the household waste collection division of Reno-Flex-Gruppen A/S. In March 2011, RenoNorden completed its second acquisition in Denmark, acquiring the shares of Nord-Ren A/S. Nord-Ren operated contracts in the North Western region of Denmark and therefore presented a good complementary fit with the Group s other operations. Through these acquisitions and further tender awards, the Group has become the largest operator in Denmark, in terms of number of households serviced, and is currently operating a total of 42 contracts in 34 municipalities Finland The Group has 14 branch offices in Finland. The Group recently entered the Finnish market by acquiring the third largest waste collection operator, HFT Environment. The Finnish household waste collection market is operated in a different setting than the other Nordic countries in several ways. In Finland, the household waste market is split between areas where the municipalities facilitate collection of household waste, similar to Scandinavia, and areas with free markets. In free market areas, households normally can select service operator among two till three operators with license to operate in a specific region. Households enter into contracts with the service operator directly. The Group primarily operates within the former section of this market. In some contracts the Group must pay gate fees to the waste facility. 8.3 Operating model RenoNorden s operating model RenoNorden provides waste collection services primarily to municipalities and inter-municipal companies in the Nordic region, based on contracts that are secured through highly regulated and transparent tender processes. The Group has a niche focus and operates the majority of its contracts itself with leased or owned vehicles and with its own employed staff. In some contracts, the Group does collect some waste from businesses or more industrial-type operations, such as hospitals, care homes or schools as well as from recycling and collection stations. However, this is mainly waste that is similar to household waste rather than hazardous or speciallytreatable items. In Finland where the Group operates a commercial waste collection in parallel with municipal 76

81 waste contracts, waste collection from business and industrial-type fractions represent a meaningful share of revenues. The operating model is primarily based on having a diversified contract portfolio with a limited overall risk profile, comprising of: many relatively small contracts, where a single contract represent a limited part of total revenues; contracts with different expiry dates spanning a number of years, to further distribute risk; contracts with municipalities, which have limited credit risk and which retains ownership to the waste lifted and bears the responsibility for the disposal; and contracts with select counter-parties that are not municipalities. The largest customer in the Group s current contract portfolio represented approximately 5% of total revenues on a pro forma basis for As at 30 September 2014, the Group operated in total 173 waste collection contracts, of varying expiration dates in the period; see Section 8.6 Order reserves. In 2013, household waste collection contracts with municipalities represented 94% of the Group s revenue on a pro forma basis 102. Overall, this underpin a limited contract portfolio risk exposure. The Group operates in a niche segment of the Nordic waste management value chain, as depicted in the chart below. Value chain positioning This niche segment is characterised by an established and stable regulatory environment, including with respect to: Municipal responsibility for collection. The household waste collection markets in the Nordics are not deregulated markets. Municipalities in the Nordics are legally responsible to collect domestic waste (however with some exceptions in the Finnish markets where selected areas are operated by multiple collectors and where consumers are responsible for the collection and to choose their preferred operator). Household waste collection is however a basic service provided by the public sector which is believed to be a non-vital service and therefore largely outsourced. 101 As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. On an actual basis, as per the Group s Financial Statements, total operating revenue was NOK 1,268 million and EBITDA was NOK 223 million in Source: Management as of 14 October 2014 on a pro forma basis, as if the HFT Acquisition had been completed as at 1 January

82 Public and transparent tender processes. The EU Public Procurement Directive, and national legislation implementing the Directive, requires public authorities to tender services which have a value in excess of EUR 200,000 in public and transparent processes. This ensures a level playing field between niche service providers and vertically integrated waste management companies. For example vehicles need to be exclusive to the contract. An awarded contract also secures for the service provider a monopoly on the route. A pre-existing route density is therefore not a differentiator. Contract awards are also generally upheld in local courts. Consumer relationships being managed by the municipalities. It is the municipalities which manage consumer relationships, i.e. the relationship with the households, such as with respect to complaints. Hence no consumer service capability is required by the waste collector. Municipal waste ownership and processing. In general, and except from Finland, it is the municipalities that own the waste collected, and it is also the municipalities that represent most of the processing capacity. Therefore it is limited, or no, economic incentive to collect waste volume other than for the logistic service revenues, and collectors do not take on volume risk or substantial environmental liabilities. Contract structures that encourage competition. The municipal household waste collection contracts are index adjusted long-term contracts. The majority of the Group s contracts have 100%, while some have 80-90% index adjustment (annual). These features of the contracts, combined with the low credit risk of the municipal counterparties, makes contracts economically viable and financeable for the niche operators. The Company is of the opinion that these market segment characteristics benefit niche operators and are less beneficial for vertically integrated waste management companies. Under the Group s operating model, the Group benefits from drawing on a highly competent and experienced central management team, with specialist knowledge on efficiently structuring and pricing contracts laid out for tender. At the same time, the transfer of day-to-day operational management of the contracts to the branch level results in a less bureaucratic and leaner operating structure than more centralised operational management models, facilitating quicker decision making processes and lower overhead costs. The local management has the responsibility for the operation of the customer contract, including the financial control. The purpose of this is to optimise the commercial opportunities and cost control in each contract based on the different contract s individual prerequisites. To this effect, the Group has introduced a local ownership program, which is a governance model based on locally owned budgets with concrete targets that are transformed into local action plans, closely followed up in monthly financial reviews and supported by an incentive program. Customers benefit from this business approach by having a dedicated team sitting close to the operations, with the flexibility and ability to react to potential issues and concerns that may be raised quickly and efficiently. To leverage on the Group s competitive advantage of being highly specialised operator with Nordic coverage and size, RenoNorden has established a central operational excellence team. This team consists of experienced former management consultants. Their main functions are to drive overall Group innovation and business development, to spread best practices and to support the local management in driving efficiencies in operational reviews. The operational reviews are driven by a team of specialised professionals in route planning, controlling and fleet management, and reviewing local contracts for profit improving initiatives. To further leverage on the geographical reach and size of the Group s operations, certain key competences are centrally coordinated: Fleet management. A centrally coordinated fleet management optimises the Group s vehicle fleet across geographies and contracts. An overall fleet strategy is developed that covers fleet optimization, maintenance solutions, reuse/reconstruction of compactors and vehicles and efficient trading of old vehicles. 78

83 Route planning. A centrally coordinated route planning ensures capacity to efficiently plan and constantly re-route contracts to optimize productivity. Further gains are reached through the implementation of a route planning software throughout the Group. Sourcing. A centrally coordinated sourcing function enables scale in sourcing. The Group is focused on maintaining strong relations with key suppliers and leverage its purchasing power Description of the operational processes for commercial collection The process of winning and operating a commercial contract follows a similar structure as a municipal contract. Initially, contact is established with a potential customer for which the Group performs a situation review of their current waste management set-up including, but not limited to, location of facilities, number of fractions, potential volumes, waste bin set-up, and suitable collection frequency. The Group then details a proposal for a service delivery, detailing material flows, collection schemes and total cost level, before negotiating the contract with the prospective customer. After a contract is signed, the Group initiates the preparation phase and verifies that the internal organisation has the delivery capacity needed, or engages with required sub-contractors. In parallel, internal accounting and statistical systems are prepared to track the performance of the upcoming service delivery. After the service have been delivered for 1-2 months, the Group and the client meets in a start-up evaluation meeting to verify to what extent the Group has delivered services to expected levels. This type of service review meeting typically occur throughout the length of the contract with frequencies adapted to the contract size, to ensure tight collaboration with larger customers. These review meetings also offer the opportunity for additional add-on sales, for example adding additional waste fractions or volumes, statistical performance reports, or consultative services. Well in advance of a contract reaching its expiry date, the Group engages with the customer to promote extension of the agreement such that it is not made subject to competitive tenders Vehicles, fleet management and maintenance Vehicles overview As of October 2014, the Group had a total vehicle fleet of 1,017 vehicles, including reserves. Of these, 889 vehicles were classified by the Group as asset heavy and operation critical. The remaining 128 vehicles were smaller and less operational critical vehicles, including company cars, vans, forklifts, etc. All vehicles used for standard household waste collection services have vehicle bodies with modules customised for waste collection. The vehicle body has a waste container that is usually equipped with a compactor. The waste container may contain up to three chambers, depending on the number of waste fractions that are transported, including paper and plastics in separate chambers. Some vehicles are equipped with cranes for lifting waste containers, and some with suction equipment designed for sub-terrain containers. The Group continues to work with its main suppliers continuously to further develop and optimise the technology in the vehicles. Often, changes and modifications are made to support increased efficiency and to prevent personnel injuries or damage to the equipment. For example, most of the Group s vehicles are equipped with air conditioning and specially designed footboards for easier and safer entry/exit of the vehicle. The Group also has a track record of developing special vehicles tailor-made to operate in especially demanding environments. Examples include the recently won contract in Holbæk in Denmark where contract restrictions required the usage of a small light-weight two-chamber compacting vehicle. As there were no current vehicle alternatives on the market, the Group commissioned the development of a specially designed vehicle with a new prototype two-chamber compacting body in aluminium which fulfilled requirements. The successful execution of such complex contracts is a solid indication of the Group s high flexibility, vehicle competency, and ability to meet customer demands. The Group sources the majority of its waste collection vehicles from Scania, Mercedes and Volvo. Compactors are delivered by separate suppliers, with Norwegian based NTM Trailer & Tipp currently the largest supplier. 79

84 The majority of the Group s vehicles are diesel-fuelled. However, tender specifications, and increased environmental focus has led to the inclusion of a number of LNG-fuelled vehicles, delivered by Mercedes and Scania, in the fleet. As of October 2014, 149 of the vehicles were LNG-fuelled. The split of vehicles by country is consistent with the relative size of the Group s current operations in the different countries, with the Norwegian fleet being the largest. The chart below shows the Group s fleet of vehicles, split by country and type as of October The charts include the entire fleet of 1,017 vehicles. Breakdown of vehicles by type Breakdown of vehicles by country The charts below provides certain selected data on vehicles in the Group s fleet: Type Picture Main specifications Brands Comprimator 772 vehicles 2-4 axels Normally tons Main brands: Scania, Mercedes and Volvo Main vehicle for waste collection Primarily rear-end loading Side feed comprimator 22 vehicles 2-4 axels Main brands: Scania and Volvo Used for collection of waste bins lifted and emptied on the side of the vehicle Used mainly in Sweden Flatbed truck 27 vehicles 2 axels Up to 8 tons Main brand: Mercedes Used for collection of various types of containers Mainly used in Norway and Denmark Other heavy units 68 vehicles 2-4 axels Main brands: Scania and Volvo Different types of vehicles used for collecting and moving different types of material Other smaller units 128 vehicles/units Company cars Trailers Lift trucks Pick-up vehicles Tractors Vans Fork lifts Other vehicles Different types of vehicles used for collecting and moving different types of material 80

85 Fleet management Group fleet management, which is part of the central Group management, is responsible for setting the overall strategic direction with respect to the the fleet. This include coordinating the Group s fleet across geographies, matching vehicle demand in new contracts with supply from closing contracts, as well as to reuse and rebuilding vehicles to reduce capital expenditure based on business case and risk assessments. A high priority is to seek a high degree of standardisation across the fleet and geographies. As an efficient group-wide fleet is a competitive advantage, the Group has recently hired Per Henrik Brask as new Group fleet managers, who will join the Group with effect from 1 January The Group fleet manager will have the main responsibility to ensure an optimal use of the Group s vehicle fleet and will interacts with the local management in order to find the optimal solution from a Group perspective. RenoNorden has focused on developing a strong relationship with a limited number of vehicle suppliers. The Company believes that this contributes to the Group s ability to buy vehicles with shorter delivery schedules than otherwise would have been the case, thus supporting flexibility with regard to planning and contract startup. In some cases, where there is a short lead-time between contract award and start-up, beneficial delivery schedules for new vehicles can be a competitive advantage. In addition, the high degree of standardisation in the vehicle fleet allows for cost effective fleet management, as a result of accumulation of knowledge and experience in respect of the vehicles used, cheaper spare parts and maintenance agreements, as well as flexibility with regard to allocation and utilisation of personnel and vehicles. In general, the environmental requirements for contracts are highest in Norway and Sweden, often requiring the purchase of new vehicles. Danish and Finnish contracts, in particular the Group s commercial contracts in Finland, generally require lower environmental standards which contributes to a natural lifecycle for the Group s vehicles as they transfer across the region. Given the nature of the contracts that the Group is awarded, the Group generally does not need to acquire vehicles until it has won the contract. As a result, the Group has historically been able to purchase its vehicles entirely through debt financing. This provides the Group with good flexibility to grow the business, without requiring significant equity resources. The average price per vehicle vary with specification of each contract, but on average the price historically for a fully equipped vehicle is between approximately NOK million. The fleet is primarily financed through bank debt and financial leases. Historically, start-up investment has been in the area of % of the first-year contract revenues in Norway and Sweden, with somewhat less investment in Denmark (in the area of 60-70% of first-year contract revenues) and Finland (approximately 80% of the first-year contract revenues). Leases are typically at a 2-3% margin with ten year duration. RenoNorden s current financing strategy for its vehicles is to primarily use financial leasing. Historically, this has not always been the preferred option and currently close to 54% of the heavy asset fleet are owned by the Group and some 46% of the fleet of vehicles are currently financed through leases. As the Group intends to use financial leasing as the primary source of financing going forward, and consequently the share of leased vehicles and vehicles is expected to increase Maintenance The high standard of the Group s vehicles and high level of maintenance and care that are given to the Group s vehicle fleet contributes to the Group s reputation, in the opinion of the Company. Waste collection operators must leave their vehicles in a good and clean state at the end of each shift. Light maintenance, such as washing, greasing and oiling is carried out on-site, on a weekly basis. The Group always secures ample space and facilities for vehicle maintenance and parking at its premises. The Group has service agreements for the majority of its vehicle fleets in all countries it operates. RenoNorden is focused on negotiating attractive contract terms and these contracts ensure that the Group has good visibility of the vehicle maintenance costs over the length of a municipality contract. The operational excellence team is reviewing all vehicle maintenance contracts in all geographies to find further improvements from both a cost and quality perspective. Opportunities are ranging from renegotiating current agreements, to moving to new suppliers leveraging the Group s consolidated purchase power towards the vehicle supplier market. 81

86 For all other types of heavier maintenance work, which are not covered by the supplier service contracts, each local branch is responsible for establishing a good relationship with local workshops, to ensure fast, efficient and reliable service. All maintenance costs are accounted for in the profit and loss statement. Operating cost relate to replacement of spare parts of tyres, maintenance service and repairs, etc. As a result of the Group s maintenance practice, the Group intends to use a vehicle over the lifetime of two standard contracts. However, changes in the contract criteria requested from the municipalities, particularly in relation to environmental or technical changes, can mean that the Group chooses, or is required to, to replace vehicles earlier. At the end of their useful life for the Group, the vehicles are sold on to third parties or returned to the supplier. The average age of the current vehicle fleet, which is used in connection with the operation of contracts (889 heavy asset vehicles), was 4.8 years as of October Overview of a typical official tender process in the Nordics for household waste collection contracts Tender submission process The following chart depicts a typical tender process in the Nordics for household waste collection contracts. Overview of the tender process Tender award process Submission process Tender invitation Tender meeting Tender collection Award letter distribution Complaint period Contract signing Pursuant to the EU Public Procurement Directive, and national legislation implementing the Directive, all public authorities are required to hold tender processes, when acquiring services from a third party with a total value above EUR 200,000. Generally, the Group s customer contracts are of a value above this threshold. Municipalities increasingly make use of specialised procurement consultants to assist them in tender processes. This means that the Group is often facing a specialised procurement consultant rather than the municipality that is submitting the tender. Dealing with a counterparty that is specialised in the tender process contributes to a smoother process, and the risk of potential open issues in the final contract is reduced. All tender invitations are made public at the start of a process. In Denmark, Norway, Sweden and Finland, tender invitations (regarding procurements with a value above EUR 200,000) are published on Tenders Electronic Daily, an electronic journal containing tender invitations from the EU and the EEA. All tender invitations in these countries are also published on mercell.com or Doffin. A tender process may include a pre-qualification phase. In such tender processes, the tender invitation will specify the relevant pre-qualification criteria a potential bidder will need to satisfy before being allowed to submit a bid for the contract. It has become more common for municipalities to include a pre-qualification phase. The reason for this is that in certain cases the party chosen to operate a contract have been unable to deliver the quality of service desired by the municipality within the price that has been presented. The exact criteria and documentation required to be presented in a pre-qualification process will vary, but will often cover financial stability, track record in previous contracts operated and qualitative assessments of the assets and resources available. This pre-qualification process allows municipalities to continue to assess tenders on the merits of the actual bid that they submit, but provides them with more safety and certainty that the services delivered will be of an appropriate standard. Pre-qualification is seen as a positive development in the market for professional operators, such as the Group, as the Group has always pre-qualified. 103 Includes asset heavy and operation critical vehicles only, and not include smaller units, such as trailers, company cars, forklifts, tractors and vans. 82

87 The tender documents, provided in connection with the tender invitation, give an overview of existing waste collection operations and any modifications or extensions to the operations that are anticipated in the new contract. Information provided in the documents typically covers a description of demography, road network, expected volumes, and offer instructions. In some instances, electronic maps are also supplied. In addition, the main terms of the contract are given and the service level requirements are specified. These include tolerance levels for deviations, vehicle equipment, IT demands etc. Bidders will typically be asked to provide a bid based on a unit price per waste container per collection. The tender documents will also specify the criteria upon which the tender offers shall be evaluated. Once a tender process is made public, the municipality will typically offer the opportunity for participants to raise questions in relation to the tender within a given time frame. In Norway and Denmark, this is more commonly done through a public tender meeting. During a public tender meeting, the municipality presents the basis for the tender contract, and the interested parties are able to participate in a Q&A session. The minutes from such meetings will become part of the final contract. In Sweden, it is more common to submit written questions, which are then answered by the municipality within a given deadline. The answers to these written questions will, in the same way as minutes from public tender meetings, become part of the final contract. The tender process for commercial business in Finland follows a less rigid structure and allows for more dialogue around potential solutions. The first step is a site visit to the potential customer where the Group s service offering is presented and suitable approaches to meeting the client s need is discussed. Thereafter, a detailed mapping of the customer s units and locations are performed to verify the scope and limitations of the assignment. The Group then submits a proposal to the prospective customer detailing service level and price position, where after a discussion with the customer follows where improvements are made to the proposal. In instances where the Group competes for the business against competitors, the client s decision process is typically longer than in non-competitive situations. The full tender process typically takes approximately 2-4 months in Denmark, Sweden and household contracts in Finland, 3-10 months in Norway and 1-3 months for commercial contracts in Finland. The process of submitting tenders is subject to strict regulation and tender documents are usually required to be delivered in hard copy, within a specified date and time Tender award process Price remains the main purchase criteria in the majority of contracts. However, other factors have become more relevant in the evaluation of bids, particularly where no pre-qualification round has been undertaken. These can include specific requirements for new types of technology, more environmentally-friendly equipment, but often also include more qualitative factors, concerning track record, reputation and ability to deliver on target. Once the award letter is sent out, there is typically a short stand-still period (usually 10 days), during which the competing bidders may request information or appeal the decision. The contract is then signed after the standstill or potential appeal process. If the decision is appealed, the contracting municipality processes the appeal first, and if the municipality s conclusion is also appealed, then this is sent further to the relevant complaints authority. In Norway, complaints are handled by the Norwegian Complaints Board ( KOFA ) and such complaints processes can often take between 2-3 months to resolve. In Sweden, complaints are filed to The Administrative Court (Swedish: Förvaltningsrätten ) and in Denmark complaints are filed to The Danish Business Authority (Danish: Klagenævnet for udbud ). In Finland, complaints are filed to the Market Court (Finnish: Markkinaoikeus, Marknadsdomstolen ). Unless the complaint is successful, the complaint process will typically not affect the start-up of a contract, as the read-time from the award of the contract to actual start-up is normally more than three months. In 2014, while the Group has been awarded several new contracts, the Group also failed to win a retendered contract in Norway, which represented approximately 4.7% of the Group s revenues on a pro forma basis for the year ended 31 December See Section 8.9 Legal proceedings and Section Operating revenue. 104 As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. 83

88 8.4.3 Contract signing Once final approval of the service provider has been given, a contract meeting is typically held, where supplementary information relevant to the award may be provided. Small changes to the contract may be made. However, once a bidder has been selected, the terms of the contract are not negotiable, as this would change the basis for the tender contest. Approximately 83% of the Group s contracts are entered into for a period of five years or longer, and most contracts have a total duration of seven years. Approximately, 12% of the Group s contracts have a duration of longer than seven years. This, most usually, includes an option for extending the contract with two years (one plus one) at the discretion of the municipality. It is very seldom in the experience of the Company for the options on its contracts not to be exercised. The Group s extension track record is very high. This is often due to the reluctance of municipalities to enter into the long and onerous tendering process more frequently than necessary. The contracts usually specify an initial annual contract price, which is commonly calculated on the basis of an agreed price per unit and an estimate of the number of units that are to be served. The initial contract price is commonly subject to two adjustment mechanisms. Firstly, the estimated unit numbers are usually adjusted periodically often on a monthly (for example in Norway and Finland) or quarterly (for example in Sweden) basis to adjust for changes in the workload of the contract, e.g. due to changes in the number of households. Secondly, the unit price on which the contract is based is usually adjusted on an annual basis in accordance with monthly, or in Denmark, and in some contracts in Sweden, quarterly, index changes, typically changes in specific cost indices for waste transportation provided by the National statistics agencies. Most contracts in Norway, Denmark and Finland are indexed at full value, while a portion of the contracts in Sweden offer a 80-90% indexation and some contracts in Sweden, standard indexation. Contracts will also typically include a penalty regime, which commonly allows for a reduction in the service providers remuneration if certain predefined quality standards are not met or if collection is delayed. This is in use in all the Nordic markets, and favours operators, such as the Group, who have a strong focus and track record of quality in delivery. Penalty levels at the Group are considered very low. The Group typically invoices customers with a 30 day notice period. The Group is of the opinion that its working capital requirements are low. Historically, working capital has been fluctuating between 0 and 5% of last 12 months revenues, with an average in the area of 2.5%. 8.5 Description of the Group s operational processes In the process of tendering for and operating a contract that has been won, there are five key stages. The Group s success in securing and effectively operating a contract is dependent on thorough understanding, planning and execution in each of these stages Market surveillance The Group continuously monitors the Nordic waste collection market by keeping track of public tenders that are announced, and continuously updates its own overview of tender processes that are expected to come up over the next 12 months. This enables management to have an updated view, at all times, of potential time and resource allocation required in the Group Tender process The process, starting from when the tender documents for a new contract are received and ending when the contract is awarded, can be categorised in four steps: i. Receipt of tender documents. The tender documents, describing the current waste collection system and any potential changes, are reviewed by RenoNorden before a public hearing regarding the tender is held. ii. Initial contract analysis. After the hearing, RenoNorden starts analysing the tender contract. When considering tendering for a prospective contract, RenoNorden makes an assessment of its strategy in the area in question and sets an internal priority for winning the contract. The geographic area for the new contract is inspected. During the inspection period, several factors are 84

89 evaluated, such as geography, collection distance, location of any containers, population density, terrain and manning requirements. Any deviances from the normal conditions, such as population density, location of dumpsites and recycling stations are noted and evaluated. Other factors, such as proximity to suitable garage/mechanic facilities and fuel stations, are also considered. iii. Creative design. Further to the initial contract analysis, a simulation of the potential operation is performed, based on a wide array of input factors such as number of waste bins and waste type per area, kilos per bin, and number and type of vehicles. A production plan is created based on the capacity analysis, with a separate route plan for each vehicle, taking into consideration tonnage and number of bins. The ability to navigate different kinds of terrain is also considered in the route planning process and the suitability of selected vehicle types is assessed. Optimising the production plan is essential to winning contracts, in order to make sure that RenoNorden is able to price its offer as competitively as possible. In order to develop a competitive edge in the tender process, significant efforts are invested in developing creative solutions which go beyond what is typically done in the market and what competitors are expected to do. The ultimate target with the creative solution element in this design phase is to reduce the resources need to operate the contract and thereby increasing the competitiveness of the bid. An additional important element in the design phase is to utilize and evolve best-practice tools and techniques across the Group, including but not limited to work schedule setups, special vehicle configurations, evaluation of new suppliers to use, route optimization approaches, and mid-point collection schemes. iv. Game theory simulations. To further improve the Group s competitiveness, an important step in the tender process is to perform game theory-simulations in which potential approaches by competitors are estimated. Different competitors have different competitive advantages, and by estimating the impact these may have in individual tenders improves the accurateness of the Group s bids. To over time build a more solid understanding of how the approaches and actual advantages of competitors, the Company also performs detailed post-award analyses of competitors bid. As information submitted to public tenders are public domain, the Group has the right to obtain certain insights into competitor bid levels. To challenge the creativity of bids and stress-test game theory assumptions and shadow bid levels, the Company may also assign an additional tender team based in another country to develop a competing bid based on a clean slate approach. This facilitates an open discussion on contract limitations and counteracts relying on only tried-and-tested approaches. The decision on how to structure the final bid is taken jointly by the tender manager, line management, and senior management using all available input from different production scenarios, shadow bids, and game theory implications. Other factors are also evaluated. These include the potential to make amendments to the contract specifications; the perceived competition in the tender process, future expected trends which could enable tactical pricing considerations, and the overall attractiveness and importance for the Group of winning the particular contact. These evaluations are combined with the results of the profitability analysis in order to reach a final price. The cost modelling will evaluate the likely capital expenditure related to the new contract. This will include an assessment of whether existing resources can be transferred or what new financing is required. All necessary documentation is carefully reviewed before being physically delivered to the municipality within the timeframe allowed Contract start-up preparations RenoNorden has developed strong experience in how to prepare for the start-up of new waste collection contracts most efficiently. This includes routines and documents for hiring the desired workforce, route planning, as well as pre-job and on-the job training. After the Group has won a tender, the process starts for hiring a branch manager. The manager is usually local and therefore familiar with the contract area. Branch managers typically have a background from the wider transportation industry or from other industries with an emphasis on similar practical business fundamentals. 85

90 The branch manager has a key role in setting up the new branch, to ensure that the branch can be run as autonomously as possible once the operation of the contract is up and running. Together with the Group s central management, the branch manager is responsible for finding suitable premises, hiring a local team of collectors and participating in internal training according to the Group s standards. Obtaining and allocating the correct vehicle fleet for the contract remains a responsibility for the central office. However, the branch manager is responsible for liaising with the central office during the lifetime of the contract and for ensuring that the maintenance and standard of the vehicles is upheld. In areas where the Group takes over a contract from a competitor, an information meeting is held and all competent and willing workers are invited to apply for a job with the Group. The Group is not obliged to employ the workers and the proportion of workers transferred varies from contract to contract. Workers transferred typically have in-depth, existing knowledge of the area concerned and the job requirements and this therefore makes the application and training process for such employees quicker. The pre-training period normally starts 2-4 weeks before the commencement of a contract and covers all aspects of the job. All collectors drive through their route to become familiar with the area. RenoNorden s aim is for all employees of the Group to be suitably qualified to be able to drive and operate the vehicles. This enables flexibility during holiday seasons and periods of sick leave. The Group has three employees who have a dedicated role to continuously optimise and improve the route scheduling. Route scheduling remains a central function, but once the contract has begun, branch managers will often also provide input to this optimisation process as well as to re-optimisations throughout the contract lifetime, as required. The premises of the local branches generally consist of office space for the branch manager, a dining room and lounge for the collectors, toilets/showers, washing and maintenance halls, as well as outdoor parking facilities for the vehicles. RenoNorden s strategy is to lease rather than to own such local premises. RenoNorden places great emphasis on creating and maintaining a pleasant environment for the collectors, including through suitable branch premises Operation of contract Focus and attention on the operation of the contract is important to the Group s business model, in terms of improving profitability over the term of the contract, enhancing the chances of renewing the contract at the end of its life and in terms of general ongoing reputation, which may impact the Group s chances of winning new contracts in other areas. RenoNorden believes that its customers recognise the quality of its services, and great emphasis is placed on ensuring that this level of quality is maintained throughout its contract portfolio. RenoNorden has defined its own targets for regularity of service and customer satisfaction. All instances of deviations from the desired quality are logged and reported, in order to measure whether the targets are reached. Deviations (both frequency and type) are key factor in a municipality s overall assessment of the performance of the Group. One of RenoNorden s main quality targets relates to the number of missed or unsatisfactory collections. It is the responsibility of the branch managers to rectify any deviations from quality targets for a contract as quickly as possible. Internal training programmes, well-developed systems in for quality assurance, internal manuals and thorough job descriptions are methods used to contribute to quality. Waste collection operators are continuously evaluated on their performance, with a greater regularity of follow up during the first few weeks of employment to ensure that routes are followed correctly and that all collections are made. Routines with regards to internal controls, vehicle maintenance and all health, safety and environment issues are included in the quality assurance system. See Section 8.12 Regulations for more information on the certifications in Norway, Denmark, and Sweden Continuous improvements of contracts An important lever for continued operating margin growth is to continue to strive to reduce the cost position of local contracts and uncover all opportunities for further revenue and profit generation. This is partly secured by the local ownership program whereby the local branch manager is responsible for optimising department profitability and is incentivised by the level of profit generation. In addition, the operational excellence team 86

91 performs operational reviews and coordinates the efforts of several functions who critically reviews the current delivery setup and suggests improvements to boost profitability. The constant focus on cost improvements delivers both operating margin, but also improves the chances that the Group will re-win the individual contract at its expiration. 8.6 Order reserves As at 13 November 2014, the Group had an order reserve of approximately NOK 3.4 billion, excluding customer extension options, and NOK 5.4 billion including extension options. It is very seldom for the options on a contract not to be exercised. The charts below depict the Group s total order reserve, split by year and country. Total order reserve as at 13 November 2014, split by year Order reserve (NOKm) Contracts Options Total order reserve as at 13 November 2014, split by country Order reserve by country (incl. options) Finland 7 % Denmark 30 % Norway 34 % Sweden 29 % The Group calculates order reserve by adding annual revenue from ongoing or newly awarded contracts and assumes it remains the same for the duration of the initial fixed term. For the avoidance of doubt, the revenues are not adjusted for price or volume changes, including indexation. Option values are calculated in the same manner, running from expiry fixed term to final date, assuming all the extension options are exercised. The order backlog assumes local currencies, converted to NOK at fixed exchange rates throughout the period of NOK:SEK= 0.91, NOK:DKK=1.06 and NOK:EUR=8.40. Typical contract duration vary across regions. Average contract length in Norway, Sweden and Denmark of 6.7 years (including extension options) and 5.4 years for municipality contracts in Finland (including extension options). The actual amounts of revenues earned and the actual periods during which revenues are earned may differ from the amounts and periods shown above due to various factors. Revenues earned under the Group s customer contracts are generally based on unit prices agreed at the time of execution of the contract. The customer may under a contract with the Group require the Group to collect a higher of lower volume than 87

92 initially set out in the contract, or to increase or decrease the collection frequency, on the basis of these unit prices. The revenues the Group earn under a contract is accordingly affected by, among other things, the amount of waste the customer require the Group to collect and transport in the geographical area covered by a contract, which again is affected by the amount of waste generated in that area. Other factors that may cause order reserve not to be realised include unit price adjustments, deduction to revenue of daily penalties imposed by the customer, termination of any contract or lack of use of any extension option by any customer, counterparty credit and other risk and exchange rate fluctuations. Hence, the Company can provide no assurance that the Group s current order reserve will be ultimately realised. See Section 2 Risk Factors for more information. 8.7 Key strengths RenoNorden believes that the Group s future prospects for success are enhanced by the following aspects of its business: Niche focus and industry fundamentals support steady and sustainable market growth. Waste collection is an essential service that is largely governed by entrenched EU and local legislation. The established and stable regulatory environment in the Nordics does not, in the opinion of the Company and as further discussed in Section RenoNorden s operating model, benefit vertically integrated waste management companies. The Group operates in strong growing economies with increasing waste volumes and increaseing waste fractions, as further discussed in Section 7 Industry and Market Overview. A long-term trend is that municipalities outsource more waste collection services, where Sweden and Norway represent the biggest oppurtunities for growth in addressable market. The Group s growth is driven by the increasing GDP and populations within all four countries it operates, as well as increased contract complexity driving contract values. Attractive business model with long-term contracts, strong counter-parties, order reserve and cash conversion. As at 13 November 2014, the Group had an order reserve of approximately NOK 3.4 billion, excluding customer extension options, and NOK 5.4 billion including extension options; see Section 8.6 Order reserves. It is very seldom for the options on a contract not to be exercised and the Group s extension track record is good. The Group s long-term municipal contracts, which typically have durations of five years with extension options for two further years (one plus one), provide good revenue visibility. Indexation of the agreed unit prices under the contracts provides margin protection against cost inflation; and payments under the contracts are generally made per bin collected, implying resilent volume underpinning; see Section Contract signing. In addition, the business has a strong track record of improving margins within the life of each contract by providing additional value-added services to its municipality clients and through continuous operational improvements. The Group s principal customers are municipalities, which represented 94% of the Group s revenue in Norway, Sweden, Denmark and Finland in 2013 on a pro forma basis 105. Municipalities in the Nordics generally have very strong credit ratings, which limits the counter-party credit risk exposure of the Group. In 2013, 6% of the Group s revenue on a pro forma basis came from select commercial contracts, 100% of which from the Group s operations in Finland 106. The Group has a strong conversion from EBITDA to free cash flow. Apart from historical acquisitions, close to all of the Group s capital expenditure is related to purchase of vehicles in connection with initiation of new and renewal of contracts, which is typically lease financed. Capital expenditure in connection with a contract is principally incurred when a contract is secured, which enables attrative financing through leases and debt, and maintenance capital expenditure is limited. In Norway and Sweden, start-up capital expenditure has historically been in the area of % of first-year contract revenues; and in Denmark start-up capital expenditure has historically been in the area of 105 Source: Management as of 14 October 2014, as if the HFT Acquisition had been completed as at 1 January As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. On an actual basis, as per the Group s Financial Statements, total operating revenue was NOK 1,268 million and EBITDA was NOK 223 million in

93 60-70% of first-year contract revenues and in Finland, start-up capital expenditure has historically been approximately 80% of first-year contract revenues; see Section Vehicles, fleet management and maintenance. Given the financing level of new capital expenditure related to operating a contract, most new contract has a positive net cash flow from the first year of operation. Efficient operational set-up with local focus on contract management, operations and profit optimisation. RenoNorden s niche focus enables a lean and focused organisation. RenoNorden places a large part of it success on the ability to engage and create strong local departments. The local departments are the main point-of-contact with the customers and the users of the Group s services. RenoNorden differentiate itself by delegating a large portion of the responsibility for the individual contracts to the branch managers. This includes the responsibility for financial and commercial interests. Group profitability is generated in each local contract with its specific preconditions and dedicated local management is critical. Local management is expected to understand changes in runrate levels and implement changes to counter for unwanted developments. To do this the Group has invested in operational systems allowing quick and flexible reporting monitoring monthly profit and loss development as well as main key performance indicators. including fuel, maintenance, sick leave, etc. The focus is on development of key cost drivers and outliers versus budget targets. A stringent governance model ensures that local changes are quickly reported to central Group management level, so that additional Group resources can be allocated if appropriate. The branch managers report monthly to regional managers, who report to central country managers who in turn reports to the Group CEO. Branch managers are incentivised with bonuses tied to target realisation of both financial and action plan targets. Operational excellence team to ensure innovation, development and best practive. With much of the competencies on individual contracts located at local management levels it is important for RenoNorden to be able to lift this competence to Group level so that the whole Group may benefit from this knowledge. In this respect the Group employs an operational excellence team, currently consisting of three business development professionals with background from various consultancy environments. The main purpose of this team is to drive operational reviews of key contracts to boost local department profitability and institutionalise best-practices across the Group. The operational excellence team is also responsible for managing long-term policy and transformation programs, drive internal innovation and monitor technological advances to stay ahead of competition, as well as to provide ad-hoc problem solving capacity at both local and group level. A market leading Nordic operator with specialisation and scale leveraged by centralised competencies. In terms of households serviced, the Group is the largest household waste collection operator in Norway, Sweden and Denmark, and the third largest operator in Finland for household and commercial waste collection (not including the private waste collection market in Finland) 107. With its Nordic presence, the Group is positioned to explore several benefits from economies of scale. With its large fleet of vehicles, the Group has the possibility to coordinate the Group fleet across geographies matching vehicle demand in new contracts with supply from closing contracts. To the extent possible, RenoNorden also targets reuse and/or rebuild of vehicles to avoid extra capital expenditure, based on business case, risk assessments and high degree of standardisation in the fleet. The Group fleet manager manages the fleet over the countries in close cooperation with the local managers based on a database with detailed information on all vehicles. A fleet policy is under development and will seek to optimise every step in the fleet lifespan from purchase, operation (maintenance costs), reallocation/reconstruction to the final sale or disposal of old vehicles. Feeding into this is the scale synergy of cost efficient sourcing. The Group consolidate sourcing over all geographies on several large cost categories, such as fuels, tires, maintenance, compactors, etc. This may lead to lower unit prices, often limiting number of suppliers and agents and/or middle-men. Consolidated purchases also improve payment terms and reduce spending through demand management. Route planning is also a critical skill and by coordinating processes and resources over the Group more contracts may be won and the present contracts may show higher profits. A software solution currently used in Finland is to be implemented in the rest of the Group s operations. This software speeds up the route planning process allowing a higher frequency in rerouting and 107 See Section 7 Industry and Market Overview for market share data. 89

94 optimising existing contracts. Finally coordinated and developed tendering has proven successful. By involving local managers, specialists and the operational excellence team in important tenders, best practice and innovative design is built into the bids. In some cases an opposing bid is also produced to challenge the applied solutions. This in turn may contribute to a higher winrate and improved margins. According to the Group s internal records, it had a 63% win rate on contract renewals between 2008 and November 2014 (50% in Norway, 68% in Sweden and 75% in Denmark). Further, it had a 40% win rate on new contracts in the same time period (35% in Norway, 58% in Sweden and 37% in Denmark). Strong financial performance. The Group has a strong track record of profitable growth. In the period, the Group had a total revenue growth of 26% per annum 108. In the same period, the Group had a revenue growth from organic growth of 20% per annum 109 ; see Section Introduction and Section History. 8.8 Strategy RenoNorden is currently implementing on a cost efficiency review of the entire business to further drive up its profitability by relooking at its procurement efficiencies, as well as deployment of vehicles and route optimisation for all contracts. To this effect, the Group s management has developed and is implementing a strategy program with concrete improvement areas and estimated financial impacts over a three-year period. The program affects both revenue and margin levels and has been approved by RenoNorden s Board of Directors, and its initiatives are distributed into the country management teams. The strategy program centres around: Operational excellence improvement (short-term focus). Operational improvements in local contracts, review of cost structure and organisational structure is a focus for the Group in the shortterm, with the aim of increasing margins. This includes actions to strengthen and develop Management and key specialists in key competency areas. Detailed actions and economic effects are outlined for each year under the strategy program. Expanding present business (medium-term focus). The strategy programme contains initiatives to strengthen tendering capacity by coordinating resources, integrating operational improvements and new solutions into bids to improve hit-rate and allow for good operating margins. Bolt-on acquisitions in present geographies and service scope are also included in the plan as a focus for the Group in the medium-term. Expanding services and geographies (medium-term focus). Selective entrance into commercial waste collection thereby implementing the Finnish operating model in other countries is a focus for the Group in the medium-term. Such service expansion is primarily intended to optimise utilisation of existing production resources and build margins, however also to contribute to top line growth. Entering into new markets with lower environmental standards can both provide growth and better utilisation of the Group s vehicles fleet. Transformational actions (long-term focus). Transformational actions like service expansion and larger acquisitions are a focus for the Group in the long-term. 8.9 Legal proceedings From time to time, the Company and other companies in the Group are involved in litigation, disputes and other legal proceedings arising in the normal course of its business. It is common in the industry to be involved in legal disputes in terms of public procurement processes that are challenged either by the Group or its competitors. This should be seen as part of the day to day business and the Group is well experienced in these processes. In 2014, while the Group has been awarded several new contracts, the Group also failed to win a 108 Not including the acquisition of HFT Environment in Finland in December Organic growth defined as Group revenue deducted for the accumulated first-year revenues from acquisitions. 90

95 retendered contract in Norway, which represented approximately 4.7% of the Group s revenues on a pro forma basis for the year ended 31 December The retendering process for this contract is being challenged by the Group in court and it is expected that a verdict will be rendered on or about 10 December Such court challenges are a regular feature of the Group s business model and the Nordic waste collection market in general. The revenue guidance and liquidity assessment included in this Prospectus has been prepared using numbers presuming this contract is not retendered. Except for the above, neither the Company nor any other company in the Group is, nor has been, during the course of the preceding 12 months involved in any legal, governmental or arbitration proceedings which may have, or have had in the recent past, significant effects on the Company s and/or the Group s financial position or profitability, and the Company is not aware of any such proceedings which are pending or threatened Contracts outside the ordinary course of business Neither the Group nor any member of the Group has entered into any material contracts outside the ordinary course of business for the two years prior to the date of this Prospectus. Further, the Group has not entered into any other contract outside the ordinary course of business which contains any provision under which any member of the Group has any obligation or entitlement Property and plants The Group does not own any real property or plants Regulations Overview The Group s operations are subject to numerous regulations including, but not limited, to regulations concerning labour and employment, transportation, traffic, pollution of air and water, health, safety and environment. Non-compliance by Management or the Group s employees may result in fines, penalties or a decrease in reputational standing, which could reduce the demand for the Group s services and hurt its business and results of operations. The nature of the Group s business related to public tender processes requires the Group to follow and comply with strict public procurement rules, see Section 8.4 Overview Overview of a typical official tender process in the Nordics for household waste collection contracts. In addition, the Group must hold licenses and permits for transportation for goods on public roads. Since the Group primarily deliver a collection and transportation service there are few specific waste environmental regulations it needs to comply with other then those related to transportation Transportation and other licenses and permits In Norway, RenoNorden AS holds a permit allowing it to transport waste in Norway. Such permits are granted by the transport authority of Akershus Fylkeskommune to a specific person employed in the company. The permits are not granted directly to the company, as the permit holder must meet certain criteria in terms of good and proper conduct and professional qualifications in order to be eligible for the permit. Due to the change of CEO in the Norwegian company in January 2014, the necessary steps have been taken to secure the fulfilment of the criteria regarding licence for transport of goods. The new CEO will meet the requirements to hold the licenses within the time limit set by the license authority, including any extended time period granted by the license authority. In Denmark, RenoNorden A/S holds a permit allowing it to transport goods in Denmark. Such permits are granted by the Danish Transport Authority. In Sweden, RenoNorden AB holds (i) a permit allowing it to transport goods in Sweden, (ii) a permit allowing it to transport waste and dangerous goods in Sweden, and (iii) a permit allowing it to operate its washing facility. 110 As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. 91

96 In Finland, the license requirements for the Group s business differ from the requirements in Norway, Sweden and Denmark. According to Finland s environmental protection legislation, permits are needed for all activities involving the risk of pollution of air and water, or soil contamination. The Group is of the opinion that it holds all permits in Finland relevant for the Group s operations, which is (i) a permit for transportation of goods in Finland, (ii) entries into the waste management registers of the Finnish Environmental Protection Authority in the municipality within which collection occurs, and (iii) certain other environmental permits for temporary storage of separately collected bio waste and bio waste transfer depots Environmental, health and safety matters The Company is of the opinion that it operates materially in accordance with current legislation on environmental, health and safety matters applicable to the Group, and the Group continuously works to proactively anticipate changes in such legislation. The Group allocates significant resources to secure that it operates in accordance with both laws that are generally applicable to it, but also industry-specific regulations. The Company is of the opinion that the Group operates in compliance with the national regulations and legislation related to the working environment in each country. This applies to the physical as well as the psychological working environment. The Group strive to promote the employees health for the benefit of themselves and the Group. The Group is working hard to make improvements to the environment, employees and ensure high quality for customers. The Group s policy on climate and the environment is to (i) minimise the impacts on the environment from vehicles and other activities, (ii) inspect equipment systematically to ensure unintended consequences on the environment, and (iii) continuous improvement of environmental performance Quality control and certifications The Group holds several quality control and certification in relation with its operations. Several of these are required by municipalities for the Group to be able to participate in public tenders and some are related to RenoNorden s ambition to be in the forefront of environmental and safety responsible companies. In Norway, the Group holds the following independent third party certifications: NS-EN ISO 9001 (Quality Management), NS-EN ISO (Environmental Management System) and SN-BS OHSAS (Working Environment Management System). The Group has a dedicated quality department responsible for the quality management and assurance system. In Sweden, the Group holds the following independent third party certifications: ISO 9001 (Quality Management) and ISO (Environmental Management System). In Denmark, the Group hold the following independent third party certifications: ISO 9001 (Quality Management) and ISO (Environmental Management System) OHSAS 18001:2008, and RenoNorden A/S also joined the European Road Safety Charter and made an EMAS registration. RenoNorden A/S publishes each year an annual environmental report, in which RenoNorden A/S efforts to minimise and reduce environmental impacts can be documented and supported. RenoNorden A/S has an occupational environmental committee, which works across all departments with job satisfaction and safety and is composed of employee representatives and designated safety officers. RenoNorden A/S was in 2013 certified with an OHSAS certification for occupational environment and has been awarded the crown smiley from the Danish Labour Inspection. In Finland, the Group is committed to complying with quality, environmental and safety management systems. This commitment is demonstrated by following an operational policy, setting development targets, ensuring sufficient resources and securing favourable conditions for continuous improvement. The Group s business management system in Finland is a system that comprises the quality, environmental and safety management systems ISO 9001, ISO and OHSAS The system is not yet certified Insurance The Group has various operating insurance policies covering employees accidents and travel, damage to property, general liability, legal expenses (including tax litigation), loss and damage from natural disasters, business disruption, transport and cars. 92

97 In addition, directors and officers (D&O) liability insurance is in force for the members of the Board of Directors and the Management. The Company considers the Group to be adequately covered with regard to the nature of the business activities of the Group and the related risks in the context of available insurance offerings and premiums. The Management regularly reviews the adequacy of the insurance coverage. However, no assurance can be given that the Group will not incur any damages that are not covered by its insurance policies or that exceed the coverage limits of such insurance policies Research and development, dependency on contracts, patents and licenses The Group has no research and development, patents or licenses that are material to its business or profitability. It is the Company s opinion that the Group s existing business or profitability is not dependent upon any contracts. It is further the opinion of the Company that the Group s existing business or profitability is not dependent on any patents or licences. 93

98 9 CAPITALISATION AND INDEBTEDNESS The information presented below should be read in conjunction with the other parts of this Prospectus, in particular Section 10 Selected Financial and Other Information and Section 11 Operating and Financial Review, and the Financial Statements and Interim Financial Statements and the notes related thereto, included in Appendix B and Appendix D, respectively, of this Prospectus. This Section provides information about the Group s unaudited consolidated capitalisation and net financial indebtedness on an actual basis as at 30 September 2014 and, in the As adjusted 30 September 2014 columns, the Group s unaudited consolidated capitalisation and net financial indebtedness as at 30 September 2014, on an adjusted basis to give effect to the following transactions as if these transactions had happened on 30 September 2014: (i) The refinancing of the Group s bank debt on 10 November 2014, comprising a NOK 620 million Senior Facility which has been used to refinance the Group s Prior Senior Facility, and approximately NOK 7 million in transaction costs, see Section Material indebtedness. (ii) That subject to completion of the Offering and Listing, 263,045,471 class A-shares will be cancelled, the remaining 20,664,163 class A-shares and class B-shares will be combined into one class of ordinary Shares and 544,679 treasury shares held by the Company will be cancelled, see Section 16.3 Share capital and share capital history. (iii) That subject to completion of the Offering and Listing, the Company will raise NOK 309 million in new equity through the issuance of the New Shares, and approximately NOK 23 million in transaction costs. (iv) That subject to completion of the Offering and Listing, the Company will receive net proceeds from the issuance of the New Shares in the amount of NOK 309 million, which will be used to repay the amounts outstanding under the Shareholder Loan and Leaver Loans, see Section 16.3 Share capital and share capital history. As a result of the transactions in (ii), (iii) and (iv), and based on a final Offer Price per Offer Share of NOK 53, which is the high-point in the Indicative Price Range, the Company s share capital will be NOK 26,491,520 consisting of 26,491,520 Shares, each with a par value of NOK 1. Other than as set forth as above, there has been no material change to the Group s unaudited consolidated capitalisation and net financial indebtedness since 30 September Capitalisation In NOK millions Indebtedness Total current debt: As of 30 September 2014 As adjusted 30 September Guaranteed and secured Guaranteed but unsecured Secured but unguaranteed Unguaranteed and unsecured 2,4... 1, Total non-current debt: Guaranteed and secured Guaranteed but unsecured Secured but unguaranteed , Unguaranteed and unsecured Total indebtedness... 2,259 1,221 Shareholders equity 94

99 In NOK millions Indebtedness As of 30 September 2014 As adjusted 30 September Share capital Additional paid-in capital Currency translation reserve... (8) (8) Retained earnings... (332) (332) Treasury shares Other equity Total shareholders equity... (336) 673 Total capitalisation... 1,924 1,893 1 Bank borrowing of NOK 102 million is secured by land, buildings, machinery and office equipment as well as accounts receivable and inventory held by the Group, and current leasing obligation secured on the vehicles totalling NOK 50 million. 2 The Shareholder Loan and class A-Shares totalling NOK 1,021 million, are unguaranteed and unsecured. The Leaver Loan of NOK 11 million, classified as other current liabilities, is unguaranteed and unsecured. 3 Long-term borrowings of NOK 779 million are secured by land, buildings, machinery and office equipment as well as accounts receivable and inventory held by the Group. Non-current leasing obligation secured on the vehicles totalling NOK 296 million. 4 Adjustments have been made for: (i) refinancing of the Prior Senior Facility, where the Senior Facility is unsecured and unguaranteed for current and non-current debt, (ii) issuance of the New Shares for gross proceeds in the amount of NOK 309 million, out of which NOK 6 million is share capital and NOK 304 million is share premium (based on an Offer Price of NOK 53 which is the high-point in the Indicative Price Range), (iii) repayment of the Shareholder Loan including accrued interest totalling NOK 298 million as of 17 December 2014 and Leaver Loan of NOK 11 million, (iv) the net effect of reduction and conversion of class A-shares principal, the conversion of class A-share premium and the Make Whole Amount net of accrued interest on the Shareholder Loan into ordinary Shares, which in addition to the existing ordinary Shares and share premium, the Share capital increase by transfer from the Share premium and the estimated transaction costs related to the Listing of approximately NOK 23 million, gives rise to Share capital totalling NOK 26 million, Additional paid-in capital totalling NOK 983 million and Other equity totalling NOK 3 million. See Section 16.3 Share capital and share capital history. 9.2 Net financial indebtedness In NOK millions As of 30 September 2014 As adjusted 30 September (A) Cash (B) Cash and cash equivalents (C) Trading securities... (D) Liquidity (A)+(B)+(C)... (E) Current financial receivables (F) Current bank debt (G) Current portion of non-current debt (H) Other current financial debt... (I) Current financial debt (F)+(G)+(H)... (J) Net current financial indebtedness (I)-(E)-(D)... 1,032-1, (65) (K) Non-current bank loans (L) Bonds issued (M) Other non-current loans... (N) Non-current financial indebtedness (K)+(L)+(M)... (O) Net financial indebtedness (J)+(N) ,075 1,069 2,012 1,004 1 Adjustments have been made for: (i) refinancing of the Prior Senior Facility, where the Senior Facility is unsecured and unguaranteed for current and non-current debt, (ii) issuance of the New Shares for gross proceeds in the amount of NOK 95

100 309 million, out of which NOK 6 million is share capital and NOK 304 million is share premium (based on an Offer Price of NOK 53 which is the high-point in the Indicative Price Range), (iii) repayment of the Shareholder Loan including accrued interest totalling NOK 298 million as of 17 December 2014 and Leaver Loan of NOK 11 million, (iv) the net effect of reduction and conversion of class A-shares principal, the conversion of class A-share premium and the Make Whole Amount net of accrued interest on the Shareholder Loan into ordinary Shares, which in addition to the existing ordinary Shares and share premium, the Share capital increase by transfer from the Share premium and the estimated transaction costs related to the Listing of approximately NOK 23 million, gives rise to Share capital totalling NOK 26 million, Additional paid-in capital totalling NOK 983 million and Other equity totalling NOK 3 million. See Section 16.3 Share capital and share capital history. 9.3 Working capital statement The Company is of the opinion that the working capital available to the Group is sufficient for the Group s present requirements, for the period covering at least 12 months from the date of this Prospectus. 9.4 Contingent and indirect indebtedness As at 30 September 2014 and as at the date of the Prospectus, the Group did not have any contingent or indirect indebtedness, except for the off-balance sheet arrangements described in Section Off-balance sheet arrangements. 96

101 10 SELECTED FINANCIAL AND OTHER INFORMATION 10.1 Introduction and basis for preparation The following selected financial information has been extracted from the Group s unaudited interim condensed consolidated financial statements as of, and for the three and nine months ended, 30 September 2014 (with comparable figures for 2013) (the Interim Financial Statements), the Group s audited consolidated financial statements as of, and for the years ended, 31 December 2013 and 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011 (the Financial Statements) and RenoNorden Holding s audited consolidated financial statements as of, and for the year ended, 31 December 2011 (the RenoNorden Holding Financial Statements). The Financial Statements as of, and for the year ended, 31 December 2013 (with comparable figures for 2012), included in Appendix B to this Prospectus, have been prepared in accordance with IFRS. The Financial Statements as of, and for the year ended, 31 December 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011, included in Appendix B to this Prospectus, have been prepared in accordance with NGAAP. The RenoNorden Holding Financial Statements as of, and for the year ended, 31 December 2011 have been prepared in accordance with NGAAP, and are included in Appendix C. The Interim Financial Statements, included in Appendix D to this Prospectus, have been prepared in accordance with IAS 34. See Section 10.5 Analysis of material differences between IFRS and NGAAP for a discussion of the material differences between IFRS and NGAAP. The selected consolidated financial information included herein should be read in connection with, and is qualified in its entirety by reference to, the Financial Statements, the RenoNorden Holding Financial Statements and the Interim Financial Statements included in Appendix B, Appendix C and Appendix D, respectively, of this Prospectus and should be read together with Section 11 Operating and Financial Review Summary of accounting policies and principles For information regarding the Group s accounting policies under IFRS and the use of estimates and judgements, please refer to note 2 of the Financial Statements as of, and for the year ended, 31 December 2013 (with comparable figures for 2012), included in this Prospectus as Appendix B. For information regarding the Group s accounting policies under NGAAP, please refer to note 1 of the Financial Statements as of, and for the year ended, 31 December 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011, included in this Prospectus as Appendix B. For information regarding RenoNorden Holding s accounting policies under NGAAP, please refer to note 1 of the RenoNorden Holding Financial Statements as of, and for the year ended, 31 December 2011, included in this Prospectus as Appendix C Selected financial information for the Group Selected data from the statements of consolidated income The table below sets out selected data from the Group s condensed consolidated interim statement of income for the three and nine month periods ended 30 September 2014 (with comparable figures for 2013) and its consolidated statement of income for the years ended 31 December 2013 and 2012 and for the period from the date of inception (17 March 2011) to 31 December

102 From 17 March 2011 to 31 Three months ended 30 September Nine months ended 30 September Year ended 31 December December 2011 In NOK thousands 2014 (IFRS) 2013 (IFRS) 2014 (IFRS) 2013 (IFRS) 2013 (IFRS) 2012 (IFRS) 2012 (NGAAP) (NGAAP) Revenue ,266,491 1,176,017 1,176, ,105 Other operating revenue ,832 1,305 1,305 0 Total operating revenue , ,831 1,172, ,865 1,268,323 1,177,323 1,177, ,105 Cost of sales... 40,840 17, ,321 57,144 77,705 83, ,412 12,740 Employee benefit expense , , , , , , , ,937 Depreciation and amortisation... 21,369 20,763 71,277 60,183 85,571 68, ,834 32,894 Other operating expenses... 88,163 70, , , , , ,795 74,974 Total operating expenses , ,183 1,031, ,435 1,130,908 1,033,009 1,084, ,545 Operating profit (loss)... 60,097 46, , , , ,313 92,618 (2,440) Financial income and expenses Interest income ,988 2,709 2, Finance income ,807 14,265 14,265 3,177 Interest expense ,343 54,637 72,565 18,847 Finance expense ,184 23,668 23,668 10,866 Net financial items.. (6,875) (15,061) (50,820) (54,319) (75,732) (61,311) (79,259) (26,257) Profit / (loss) before tax... 53,222 31,587 90,072 64,111 61,683 82,983 13,360 (28,697) Income tax expense (income)... 10,478 6,174 9,888 13,530 12,183 17,460 17,900 (4,430) Profit / (loss) for the period... 42,744 25,412 80,184 50,581 49,499 65,523 (4,540) (24,267) Other comprehensive income Currency translation differences... (4,883) 1,429 (7,279) 1,672 (1,001) Total comprehensive income for the period... 37,861 26,841 72,905 52,253 48,498 65, Earnings per share Basic earnings per share from profit for the period , Diluted earnings per share from profit for the period , The Group s Financial Statements for 2011 represents the operation of the underlying business (i.e. the RenoNorden business) only for a period of three months. The Company was incorporated on 17 March

103 Selected data from the balance sheet The table below sets out selected data from the Group s condensed consolidated interim balance sheet as at 30 September 2014 and its consolidated balance sheet as at 31 December 2013, 2012 and As of 30 September As of 31 December In NOK thousands 2014 (IFRS) 2013 (IFRS) 2012 (IFRS) 2012 (NGAAP 2011 (NGAAP) Assets Non-current assets Property, plant and equipment , , , , ,011 Goodwill... 1,009,774 1,011, , , ,524 Other intangibles... 11,515 12, Investments in shares Financial instruments ,313 7,969 Total non-current assets... 1,693,218 1,699,818 1,483,383 1,435,240 1,374,641 Current assets Inventory... 6,754 5,651 4,541 4,541 1,585 Derivative financial instruments Accounts receivables , , , , ,229 Other receivables... 34,939 39,210 18,231 18,231 41,523 Cash and cash equivalents , , , ,662 46,651 Total current assets , , , , ,988 Total assets... 2,220,110 2,236,699 1,863,456 1,814,931 1,630,629 Equity and liabilities Equity Share capital ,814 2,806 Share premium... 4,020 3,873 3, , ,789 Treasury shares... (2) (1) - Retained earning... (331,822) (412,006) (461,507) 6,502 0 Other reserves... (8,159) (880) (148) Total equity... (335,908) (408,961) (457,391) 251, ,447 Total non-current liabilities... Deferred tax... 30,647 49,626 40,312 41,545 29,982 Non-current financial lease obligations , , , ,346 64,298 Total non-current liabilities , , , ,891 94,280 Long-term financial liabilities Bank loans , , , , ,698 Other long-term debt , ,001 Total long-term financial liabilities... Current liabilities 779, , ,301 1,052,387 1,080,699 Shareholder loan... 1,020,674 1,007,482 1,010, Share preference shares Bank loans , , , ,381 18,687 Accounts payable... 62,269 77,851 60,387 60,387 56,753 Taxes payable... 26,135 7,077 4,576 4,576 1,890 Accrued public taxes... 49,394 45,962 40,815 40,815 29,169 Other current liabilities , ,858 97,899 97,494 94,704 Current financial obligations... 50,242 61,948 26, Total current liabilities... 1,449,976 1,494,885 1,347, , ,203 Total liabilities... 2,556,017 2,645,660 2,320,847 1,563,928 1,376,182 Total equity and liabilities... 2,220,109 2,236,699 1,863,456 1,814,931 1,630,629 99

104 Selected data from the statements of cash flows The table below sets out selected data from the Group s consolidated interim condensed statement of cash flows for the nine month period ended 30 September 2014 (with comparable figures for 2013) and its consolidated statement of cash flows for the years ended 31 December 2013 and 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December Nine months ended 30 September Year ended 31 December From 17 March 2011 to 31 December 2011 In NOK thousands 2014 (IFRS) 2013 (IFRS) 2013 (IFRS) 2012 (IFRS) 2012 (NGAAP) 2011 (NGAAP) Cash flows from operating activities Profit (loss) before income taxes... 90,072 64,111 61,683 82,983 13,360 (28,697) Taxes paid in the period... (7,077) (4,576) (4,576) (1,890) 0 0 Gain/loss from sale of property, plant and equipment... (369) (54) (337) (97) 0 0 Depreciation... 71,277 60,183 85,571 68, ,834 32,894 Change in inventory... (1,103) 108 (1,110) (2,956) (2,956) (1,585) Change in accounts receivable... (31,767) (13,532) (6,749) (33,029) (33,029) (166,229) Change in accounts payable... (15,582) (11,724) 17,464 3,634 3,634 56,753 Change in fair value of derivative financial instruments... (1,612) (2,914) (2,688) 1, Change in other receivables and other current liabilities, and non-cash items... (4,084) 2,205 40,445 36,319 50,666 79,699 Net cash flows from operating activities... 99,755 93, , , ,509 (27,165) Cash flows from investment activities Proceeds from sale of property, plant and equipment... 1,700-9,794 3,674 6,679 - Purchases of property, plant and equipment... (14,640) (14,777) (24,004) (55,135) (55,087) - Acquisition of subsidiaries, net of cash acquired (51,900) Purchase of shares ,370 Change in other investments (495) Net cash investment activities... (12,940) (14,777) (66,110) (51,461) (48,455) (875,875) Cash flows from financing activities Proceeds from bank loans related to Finnish acquisition , Proceeds from other long-term bank borrowings ,358 8,114 25,186 17, ,032 Proceeds from other short-term bank borrowings ,000 - Repayment of other long-term bank borrowings... (60,261) (10,600) (90,239) (68,169) (94,797) (46,512) Net changes in short-term bank borrowings... (19,095) (21,266) 41,265 76,150 74,784 (15,575) Proceeds from new shareholder loans... 3, Payment of shareholder loans... (5,426) Repayment of finance lease obligation.. (44,043) (29,826) (41,123) (26,625) - - Proceeds from issuance of equity ,596 Proceeds from sale of treasury shares

105 Nine months ended 30 September Year ended 31 December From 17 March 2011 to 31 December 2011 In NOK thousands 2014 (IFRS) 2013 (IFRS) 2013 (IFRS) 2012 (IFRS) 2012 (NGAAP) 2011 (NGAAP) Purchases of treasury shares... (142) Net cash from financing activities... (125,005) (53,334) 4,346 7,369 5, ,691 Exchange gains/(losses) on cash and cash equivalents Net change in cash and cash equivalents... (38,190) 25, , , ,011 46,651 Cash and cash equivalents at the beginning of the period... Cash and cash equivalents at the end of the period , , ,662 46,651 46, , , , , ,662 46, Selected data from the statements of changes in equity The table below sets out selected data from the Group s consolidated statement of changes in equity for the years ended 31 December 2011, 2012 and 2013 and its consolidated interim condensed statement of changes in equity for the nine month period ended 30 September Ordinary In NOK thousands and preference Currency Total share Share Retained Treasury translation shareholder s capital premium earnings shares differences equity NGAAP shareholder s equity , , (148) 254,446 Equity effect of conversion to IFRS... (2,753) (247,884) (527,031) - - (777,668) IFRS shareholder s equity ,905 (527,031) - (148) (523,221) Profit for the year , ,523 Capital increase Repurchase of own shares Other comprehensive income of the year Shareholder s equity ,942 (461,507) (457,390) Profit for the year , ,499 Capital increase Other comprehensive income for the year (1,001) (1,001) Repurchase of own shares... - (67) - (1) - (68) Transferred to equity upon acquisition Shareholder s equity ,873 (412,006) (1) (880) (408,961) Shareholder s equity ,873 (412,006) (1) (880) (408,961) Profit for the year , ,184 Capital increase Other comprehensive income for the year (7,279) (7,729) Repurchase of own shares... - (143) - (1) - (144) Sale of treasury shares Shareholder s equity at ,020 (331,822) (2) (8,159) (335,908) 101

106 Segment information The table below sets out the Group s sales revenues by segment (geography) for the three and nine month periods ended 30 September 2014 (with comparable figures for 2013) and the years ended 31 December 2013 and 2012, as extracted from the Financial Statements. In NOK thousands Three months ended 30 September Nine months ended 30 September Year ended 31 December Revenue specified by geographic area: 2014 (IFRS) 2013 (IFRS) 2014 (IFRS) 2013 (IFRS) 2013 (IFRS) 2012 (IFRS) Norway , , , , , ,838 Sweden... 87,510 78, , , , ,394 Denmark , , , , , ,785 Finland... 63, , Total , ,831 1,172, ,865 1,266,491 1,176, Selected financial information for RenoNorden Holding Selected data from the statements of consolidated income The table below sets out selected data from RenoNorden Holding s consolidated statement of income for the year ended Year ended 31 December In NOK thousands 2011 (NGAAP) Revenue... 1,013,134 Other operating revenue... 11,264 Total operating revenue... 1,024,398 Cost of sales... 70,525 Employee benefit expense ,886 Depreciation... 96,330 Other operating expenses ,830 Total operating expenses ,571 Operating profit... 70,827 Financial income and expenses Interest income Finance income Intra group interest expenses... 7,527 Interest expense... 26,657 Finance expense... 3,953 Net financial items... (37,338) Profit before tax... 33,489 Income tax expense... 4,614 Profit of the year... 28,

107 Selected data from the balance sheet The table below sets out selected data from RenoNorden Holding s consolidated balance sheet as at 31 December Year ended 31 December In NOK thousands 2011 (NGAAP) Assets Non-current assets Property, plant and equipment ,012 Goodwill and other intangible assets ,632 Investments in shares Total non-current assets ,670 Current assets Inventories... 1,585 Accounts receivables Other receivables... 41,462 Cash and cash equivalents... 41,442 Total current assets ,718 Total assets ,388 Equity and liabilities Equity Share capital... 25,483 Retained earning ,938 Total equity ,421 Total non-current liabilities Deferred tax... 23,353 Financial lease obligation... 64,298 Total non-current liabilities... 87,651 Long-term financial liabilities Bank loans ,967 Total long-term financial liabilities ,967 Current liabilities Intercompany payables... 37,840 Bank loans... 1,989 Accounts payable... 54,922 Taxes payable... 1,890 Accrued public taxes... 29,169 Other current liabilities... 94,538 Intra group current liabilities... 37,840 Total current liabilities ,348 Total liabilities ,967 Total equity and liabilities ,

108 Selected data from the statements of cash flows The table below sets out selected data from RenoNorden Holding s consolidated statement of cash flows for the year ended 31 December Year ended 31 December In NOK thousands 2011 (NGAAP) Cash flows from operating activities Profit before income taxes... 28,874 Change in deferred taxes... 5,427 Gain/loss from sale of property, plant and equipment... (298) Depreciation... 96,330 Change in accounts receivable, inventory and current liabilities... (18,599) Change in other short- term receivables and liabilities... (31,245) Net cash flows from operating activities... 80,489 Cash flows from investments Proceeds from sale of property, plant and equipment... 2,461 Purchases of property, plant and equipment... (142,454) Invested in goodwill... (27,471) Changes in other investments Net cash used in investments... (167,000) Cash flows from financing Proceeds from bank loans ,598 Repayment of bank loan... (628,104) Group contribution... (37,840) Foreign exchange equity in foreign subsidiaries... (101) Proceeds from issuance of equity... - Net cash from financing activities... 83,553 Exchange gains/(losses) on cash and cash equivalents Net change in cash and cash equivalents... (2,959) Cash and cash equivalents at the beginning of the period... 44,401 Cash and cash equivalents at the end of the period... 41, Selected data from the statements of changes in equity The table below sets out selected data from RenoNorden Holding s note 2 to the RenoNorden Holding Financial Statements for the year ended 31 December 2011 on a consolidated basis. In NOK thousands 2011 (NGAAP) Equity ,488 Profit for the year... 28,874 Group contribution... (37,840) Translation adjustment... (101) Repurchase of own shares... 0 Equity , Analysis of material differences between IFRS and NGAAP The following is an explanation of the significant differences between NGAAP and IFRS upon conversion of the Group s consolidated financial statements as of, and for the years ended, 31 December 2013 and 2012 from NGAAP to IFRS. 104

109 Goodwill The major differences in accounting policies for goodwill are included in two standards, IAS 36 and IFRS 3. In September 2011, the Group acquired RenoNorden Holding AS, including the operational Norwegian, Swedish and Danish subsidiaries. Goodwill related to the acquisition in the amount of NOK 970 million was recognised under NGAAP and amortised in the amount of NOK 14 million in As per 1 January 2012, NGAAP goodwill was NOK 957 million. In accordance with IFRS 1 the Group has elected to use the business combination exemption, with the effect that IFRS 3 Business Combinations is not applied to business combinations prior to the transition date. The amortisation of goodwill recognised during 2011 in the amount of NOK 14 million is not reversed upon conversion to IFRS. In accordance with IFRS 3, goodwill and other intangible assets with indefinite lives should not be amortised. Instead these assets should be tested annually for impairment according to IAS 36. In the NGAAP consolidated financial statements, goodwill was amortised on a straight-line basis over 20 years. Reversal of goodwill amortisation improves the 2013 ending retained earnings by NOK 107 million as compared to the NGAAP figure. In accordance with IAS 36, the existence of impairment indicators are assessed. At the date of transition as of 1 January 2012, impairment tests of goodwill were performed. There was no impairment of goodwill at the date of transition to IFRS, or at 31 December 2012 and See note 21 Business combinations and note 27 IFRS 1 first time adoption in the 2013 IFRS consolidated financial statements for additional information. Derivative Financial Instruments The major differences in accounting policies for derivative financial instruments are included in two standards, IAS 32 and IAS 39. The Group hedges some of its economic exposure to increase in variable interest rates and increases in diesel fuel through the use of interest rate caps and diesel caps. In the NGAAP consolidated financial statements, the financial derivative contracts were initially recognised in the consolidated balance sheet at the amount of the cash paid upon entering into the financial derivative contracts. This amount was then amortised on a straightline basis over the life of the contract. IAS 32 defines these contracts as derivatives, and IAS 39 requires initial recognition to be at fair value. Subsequent measurement each reporting period is the change in fair value recognised over the profit or loss statement. Upon transition to IFRS, the derivative financial instrument contracts outstanding as of 1 January 2012 were recognised in the IFRS opening balance sheet at a total fair value of NOK 5 million and reduced the opening balance equity of NOK 3 million. See note 13 Derivative financial instruments and note 27 IFRS 1 first time adoption in the 2013 IFRS consolidated financial statements for additional information related to these instruments. Preference Shares The major differences in accounting policies for the preference shares are included in two standards, IAS 32 and IAS 39. Investors and certain managerial employees of the Company hold class B-shares (ordinary shares), class A- shares (preference shares) and a subordinated loan referred to as 8 per cent. Fixed Unsecured PIK Notes 2021 (the Shareholder Loan or PIK Notes ), governed by an Investment Agreement dated 30 September In accordance with NGAAP, the ordinary shares and the preference shares were classified as equity and the Shareholder Loan as debt. The accounting classification as debt or equity for the ordinary shares and Shareholder Loan is the same under both NGAAP and IFRS. The preference shares, however, are classified as debt under IFRS. IAS 32 governs the classification of in-scope financial instruments as debt or equity. The Company s Management has concluded, after an evaluation of the IAS 32 principles in combination with the terms and conditions of the Investment Agreement, that the class A-shares (preference shares) shall be classified as debt for IFRS reporting purposes. The relevant focus in this evaluation is the following facts: (1) the investment was made at a fixed amount; (2) the Investment Agreement guarantees a fixed cumulative return (the class A- 105

110 shares (preference share) return of 21 percent annually) or a guaranteed minimum return of 100 percent of the original investment in class A-shares (preference Shares) and Shareholder Loan in aggregate (the Make Whole Amount ); (3) the repayment of the invested capital and the guaranteed minimum return (or fixed cumulative return if higher) is to be at a date in the future that is determined solely by the lead investor (not by the Company). The Company is not able to control the amount of the guaranteed return or the date of payment. However, the Group has received a waiver release from the Principal Shareholders stating that they will not request redemption of the preference shares, repayment of the Shareholder Loan or payment of the Make Whole Amount within the next 12 month period following the signing of the Financial Statements for the period ended 31 December 2013, other than in the event of an exit (the Listing or sale of the Group). See note 2.1 in the Financial Statement for the year ended 31 December 2013 as included in Appendix B to the Prospectus. Upon transition to IFRS, the preference shares were reclassified from class B-shares (ordinary shares) and share premium in the amount of NOK 3 million and NOK 248 million, respectively, to short-term debt. The Make Whole Amount was recognised in its entirety, less an adjustment of NOK 5 million of previously accrued Shareholder Loan interest, as an opening IFRS adjustment to equity with a corresponding increase in shortterm debt. The Shareholder Loans original investment amount of NOK 229 million was reclassified from long-term to short-term debt in the opening 1 January 2012 IFRS balance sheet. This reclassification did not have any effect on cash flows. Both the class A-shares debt and Shareholder Loan are classified as short-term debt due to the fact that the terms of the Investment Agreement allow the Lead Investor to determine the timing of the repayment. In the schedule of IFRS transition balance sheet adjustments, the IFRS Shareholder Loan short-term liability amount of NOK 1,009 million consists of the reclassification of the class A-shares (preference shares) from equity (NOK 275 million) and Shareholder Loans original investment (NOK 229 million) plus the 100 percent guaranteed minimum return (the Make Whole Amount of NOK 505 million). See note 24 Shareholder loans and note 27 IFRS 1 first time adoption in the 2013 IFRS consolidated financial statements for additional information Auditor The Company s auditor is KPMG AS. KPMG AS is a member of Den Norske Revisorforeningen (The Norwegian Institute of Public Accountants). KPMG AS has been the Company s auditor since 11 August KPMG AS was elected as the Company s auditor at the Annual General Meeting held on 8 July KPMG AS reports on the consolidated financial statements prepared under IFRS as of, and for the years ended, 31 December 2013 and 2012, for the consolidated Financial Statements prepared under NGAAP as of, and for the year ended, 31 December 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011 are included with these consolidated financial statements in Appendix B. KPMG AS has performed a review of the Company s consolidated condensed financial statements as of 30 September 2014 and for the three and nine month periods then ended in accordance with the International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity, and the report on the review of the Interim Financial Statements is included together with the Interim Financial Statements in Appendix D. With respect to the unaudited pro forma financial information included in the prospectus, KPMG AS has applied assurance procedures in accordance with the International Standard on Assurance Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus in order to express an opinion as to whether the unaudited pro forma financial information has been properly compiled on the basis stated, and that such basis is consistent with the accounting policies of the Company. KPMG AS report on the unaudited pro forma financial information is included in Appendix F. KPMG Oy Ab has audited the HFT Environment Financial Statements as of, and for the year ended, 31 December 2013, attached hereto as Appendix E. 106

111 KPMG AS has not audited, reviewed or produced any report on any other information provided in this Prospectus. Åsvang & Co has audited the RenoNorden Holding Financial Statements for the year ended 31 December 2011, attached hereto as Appendix C. 107

112 11 OPERATING AND FINANCIAL REVIEW This operating and financial review should be read together with Section 10 Selected Financial and Other Information and the Financial Statements, the RenoNorden Holding Financial Statements and the Interim Financial Statements and related notes included in Appendix B, Appendix C and Appendix D, respectively, of this Prospectus. The following discussion contains forward-looking statements. These forward-looking statements are not historical facts, but are rather based on the Group s current expectations, estimates, assumptions and projections about the Group s industry, business and future financial results. Actual results could differ materially from the results contemplated by these forward-looking statements because of a number of factors, including those discussed in Section 2 Risk Factors of this Prospectus and Section 4.3 Cautionary note regarding forward-looking statements as well as other Sections of this Prospectus Overview Introduction to RenoNorden RenoNorden is a leading waste collection services provider operating in the Nordic region 112. Since establishment, the Group has experienced strong growth, both organically and through acquisitions. In the period, the Group achieved revenue growth of 26% per annum 113. In 2013, the Group generated revenues of NOK 1,466 million and adjusted EBITDA of NOK 249 million on a pro forma basis, corresponding to an adjusted EBITDA margin of 16.9% 114. Excluding the acquisition of HFT Environment, revenues for the year were NOK 1,268 million and adjusted EBITDA of NOK 227 million, implying adjusted EBITDA margin of 17.9% 115. See Section Introduction for more information regarding the business of the Group Presentation of financial information The Group s audited consolidated financial statements as of, and for the year ended, 31 December 2013 (with comparable figures for 2012) have been prepared in accordance with IFRS, and the Group s audited consolidated financial statements as of, and for the year ended, 31 December 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011, have been prepared in accordance with NGAAP. The Financial Statements as of, and for the years ended, 31 December 2013 and 2012 and as of, and for the period from the date of inception (17 March 2011) to, 31 December 2011 have been audited by KPMG AS, as set forth in their reports thereon included herein. As the Group technically did not exist prior to 30 September , which was the date the Company through RenoNorden Investments acquired RenoNorden Holding, RenoNorden Holding s audited consolidated financial statements as of, and for the year ended, 31 December 2011 have been included in this Prospectus in order to show the performance for the full year The RenoNorden Holding Financial Statements have been prepared in accordance with NGAAP. The RenoNorden Holding Financial Statements as of, and for the year ended, 31 December 2011 have been audited by Revisjonsfirmaet Åsvang & Co AS, as set forth in their report thereon included herein. The Group s unaudited interim condensed consolidated financial statements as of, and for the three and nine month periods ended, 30 September 2014 (with comparable figures for 2013) have been prepared in accordance with IAS 34. KPMG AS has issued a report on their review of the Interim Financial Statements, as set forth in their report included herein. See Section 10.6 Auditor for more information about KPMG AS reports. 112 See Section 7 Industry and Market Overview for market share data. 113 Not including the acquisition of HFT Environment in Finland in December As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. EBITDA for Finland calculated as operating profit plus depreciation. 115 EBITDA is excluding the HFT Acquisition. See Section Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA for adjustments of non-ifrs financial measures for the nine months ended 30 September 2014 (with comparable figures for 2013). Adjustments relates to Monitoring Fees to the current Principal Shareholders (to be discontinued post the Listing, but the Group is obliged to ay Monitoring Fees for the full year of 2014). 116 Note that for 2011, KPMG s audit only covers the Financial statements from the date of inception (17 March 2011) to 31 December The Group s Financial Statements for 2011 represents the operation of the underlying business (i.e. the RenoNorden business) only for a period of three months. 108

113 11.2 Significant factors affecting the Group s results of operations and financial performance The Group s results of operations have been, and will continue to be, affected by a range of factors, many of which are beyond the Group s control. The factors that Management believe have had a material effect on the Group s results of operations during the periods under review, as well as those considered likely to have a material effect on its results of operations in the future, are described below Operating revenue The Group has contracts with municipalities and inter-municipal companies in the Nordic countries, and with clients on a contracted basis. In the commercial waste collection segment in Finland, some customers are invoiced on an ad-hoc basis. The municipal contracts have a typical length of five years with extension options for the municipalities for two further years and the Group enjoys a solid and diversified customer base. The level of the Group s operating revenues is principally driven by its ability to secure new contracts and retain existing contracts, mainly through tenders. The level of the Group s operating revenues in Norway has been relatively stable in recent years, which is mainly a result of the number the contracts coming up for tender being lower than previous years. The Group expects new contracts to enter into the market in the coming periods which, if won by the Group, would enable further growth in Norway. Notwithstanding, several of the contracts currently held by the Group are up for retender in 2016 and In 2014, while the Group has been awarded several new contracts, the Group also failed to win a retendered contract in Norway, which represented approximately 4.7% of the Group s revenues on a pro forma basis for the year ended 31 December The retendering process for this contract is being challenged by the Group in court and it is expected that a verdict will be rendered on or about 10 December Such court challenges are a regular feature of the Group s business model and the Nordic waste collection market in general. The revenue guidance and liquidity assessment included in this Prospectus has been prepared using numbers presuming this contract is not retendered. See Section Tender award process and Section 8.9 Legal proceedings. The operating revenue in Sweden has grown significantly since 2011 driven mainly by integration and a successful turn-around of the acquired Resta business 119. The Group acquired the contract portfolio of Resta which were primarily of shorter duration, e.g. 18 months, than the typical contract length of the Group s contracts of five years. Except for one smaller contract, all acquired contracts were renewed during 2011, which enabled further growth in 2012 and In addition, the Swedish operations won several new contracts in 2011 in close vicinity to the re-granted contracts, e.g. in Kungsholmen, Bromma, Järfälla, Sollentuna and Österåker. These contracts commenced Over the period , the Group grew revenue by leveraging its scale to win additional adjacent contracts, e.g. Eslöv, Sigtuna, and Sundbyberg. Following this period of revenue growth, the Swedish operation had executed numerous operational improvements in 2013 and 2014, including an organisational restructuring. The reorganisation of the Swedish division has enabled the business to drive more commercial initiatives and operational efficiency projects to reduce the overall cost base in several contracts. In Denmark, the business has grown since 2011 primarily as a consequence of the Nord-Ren acquisition in 2011, but also following a successful tendering period in when several new contracts were won and only a few which were not renewed. Most importantly, the Group has managed to establish a significant footprint in the large Jutland area, as well as further strengthening presence in larger cities as Copenhagen and Aarhus. Several ongoing operational improvements were implemented through granting increased responsibility to local department managers to identify and deliver cost saving opportunities and capture additional revenue streams (e.g. by adding additional services) in their respective contracts. The Company entered the Finnish market in December 2013 through the acquisition of HFT Environment. The acquisition marked the Group s entry into Finland, its fourth Nordic market. The acquisition also represents the Group s entry to the commercial waste market. During the period of 2011 to 2014, HFT Environment had a successful track record of organic growth within both household and commercial waste transport with steady 118 As if the HFT Acquisition had been completed as at 1 January See Section 12 Unaudited Pro Forma Financial Information. 119 See Section History for more information regarding the Group s history. 109

114 growing revenues from EUR 24 million in 2012 to EUR 25.3 million in Within household waste collection, HFT s success has been driven by lean central administration enabling relatively low overhead costs, and solid route planning capacity. Within commercial transport, growth was driven by the entry into strategic partnerships with two larger nation-wide customers within facility and environmental management. The growth in these two segments (household transport and commercial transport) has a complementary effect as vehicle assets required for service delivery are the same, but the customer base and service requirement needs are different. There is therefore an opportunity to share trucks between the divisions. It is the opinion of the Management that HFT Environment s operational flexibility and ability for service customisation has been the key driver for new customer wins, additional ancillary services for clients resulting in the organic revenue growth since The Group has a demonstrated ability to retain contracts. However adverse factors affecting service levels could affect the Group s ability to retain existing contracts. The majority of contracts include mechanisms to adjust unit prices on a yearly basis according to defined national indices for road transport / waste collection. These indices reflect the actual development on certain key cost items specific to the transportation industry, including but not limited to, fuel prices, investment costs, repair prices and labour costs. The indices most commonly used in the countries the Group operates are: Norway. Cost index for road transport (with separate indices for different vehicle types) published by Statistic Norway (SSB). Sweden. Waste collection index R77:4, published by Sveriges Åkeriföretag, up to A12:1 household waste collection index, published by Statistics Sweden (SCB), from 2012 and onwards. Denmark. Cost index for household waste collection, published by Statistics Denmark (DST). Finland. Cost index for road transport of goods, published by Statistics Finland (Tilastokeskus). Inflation in the unit prices will increase revenues, however, this is to compensate for the historic inflation the Group would have seen in its operating costs. The Group s ability to provide additional services under existing collection arrangements can also contribute to additional revenue. These services could take the form of additional collections, rubbish bin washing, replacement or tagging of rubbish bins, leafleting and other ad-hoc services. Urbanisation and immigration will increase the number of people living in a region, which could increase the number of pick-ups, and therefore the revenue under a contract. The same is true in reverse. Finally, increasing complexity, i.e. increased fractions and/or the number of pick-ups will increase revenues on a contract, but this happens on the renewal of a contract, rather than during a contract Total operating expenses The Group s total operating expenses are mostly affected by cost inflation, age of the vehicle fleet and the level of its business activity. Key expense categories include personnel costs, fuel, maintenance and repairs and overheads. Personnel costs, which represented approximately 60% of the Group s total operating expenses in 2013, are impacted by a number of factors, including the number of employees deployed on the individual routes, efficiency on the route, the level of sickness and absenteeism, the level of overtime, and staff turnover and movements in the market cost of labour. In Norway and Sweden, collection teams consist of one to two persons per vehicle, with fixed salary, except for the Stockholm area where salary is based on the number of bins collected. In Denmark, vehicle personnel consist of two to three persons per vehicle. Their salary is based on the number of bins collected by the vehicle, subsequently allocated respectively to each collector/driver. The Danish operations negotiate employee compensation conditions with local union representatives to ensure that personnel costs are optimised in relation to collection efficiency. For example, by equipping vehicles with faster compactors with automatic bin lifters the average time to empty a bin may be reduced from seconds down to 7-9 seconds. Under these conditions, it is possible to further increase resource efficiency of the fleet, thus keeping personnel cost down. 120 See the HFT Environment Financial Statements included as Appendix E. 110

115 The Group has a fleet of approximately 889 heavy asset vehicles and therefore vehicle related costs represent an important percentage of the Group s total operating expenses. Given that the Group s vehicles are used every day in tough mechanical work, they are exposed to a high level of wear and tear. Maintenance costs reflected approximately 10% of the Group s total operating expenses in Maintenance cost levels are impacted by the level of preventative maintenance undertaken, the care with which the vehicle is driven and will generally rise as the vehicle ages. Fuel, either petrol, diesel or natural gas (LNG), is also a material cost item, which represented approximately 9% of total operating expenses in The level of fuel costs can be impacted by speed of driving, the efficiency of the route and fluctuations in the underlying commodity prices. Management actively monitors the performance of the individual route vehicle fleet through a fleet management system in order to minimise related costs. Significant increases in insurance, fuel and maintenance costs, or the level of damage could have an adverse impact on the Group s business. As discussed in Section Diesel fuel and LNG costs risk, currently the Group does not have in place diesel cap agreements after 31 December 2014, however, it is the Group s policy to enter into certain diesel caps agreements, with duration from 1 January to expiration at year end, in order to mitigate its exposure related to large fluctuations in diesel prices. Overhead costs represented approximately 5.5% of total operating revenues in These costs are the indirect costs associated with maintaining the regional and central infrastructure of the Group, including indirect personnel (human resources, accounting and finance, tendering and route planning and management), rent, legal and compliance costs etc. These would typically increase on the basis of inflation, given they are not directly linked to activity. Keeping these tightly controlled and maintaining a lean organisation is an essential ingredient to maintaining profitability. The Group is subject to a wide range of regulations. However, it is primarily environmental and health and safety related regulations which have the greatest impact. Changes in these regulations can affect the Group s costs of doing business. For example, pressure from municipalities to use cleaner fuel technologies and more advanced vehicles, which are more expensive, would lead to increase in depreciation. This would be effected on contract renewal and would be included in the tender specifications, which would be reflected in the tender price. However, more efficient and newer technology may reduce fuel consumption costs. Furthermore, as a business reliant on a significant workforce, any changes to employee law or related taxation could have an impact on the Group s costs of doing business. In the future, as a listed company, the Group also expects to incur additional costs related to compliance with the additional requirements of being a listed company Interest rate fluctuations The Group is leveraged and has on its balance sheet material levels of interest bearing bank borrowings, denominated in NOK, SEK, DKK and EUR, where the interest rate is based on the respective IBOR rates and a margin. Any fluctuation in the underlying IBOR rates would have an immediate and direct impact on the level of the Group s interest expense, which in turn could affect positively or negatively future results. As discussed in Section Cash flow interest rate risk, the Group has entered into certain interest rate cap agreements out to December 2016 in order to mitigate its interest rate exposure Foreign currency fluctuations The Group s results of operations are subject to both translation risk and transaction risks as a result of fluctuation in exchange rates. The Group s reporting currency is NOK, and therefore the Group s Financial Information is presented in NOK. The Group s subsidiaries earn operating revenues and incur costs in the local currency in the country in which they operate and their respective financial statements record such activities in that local currency. This translation exposure does not give rise to an immediate cash effect, but might impact the Group s financial covenants and is therefore closely monitored. Furthermore, the Group is exposed to foreign currency transactions. The Group s business model is to provide services from the local subsidiary to municipalities in their local currency. Bank loans are denominated in the four currencies of Norway, Sweden, Finland and Denmark, such that the financing does not give rise to significant exposures for the Group. As a result of the international structure of the Group, the Group is exposed to some foreign currency exchange risks relating to various transactions in currencies other than the functional currency Seasonality 111

116 The Group s business is seasonal. The Group has historically realised a higher portion of its operating revenue and EBITDA in the second and third quarter of each year. This seasonality is a characteristic of the business in which it operates, in that during the warmer summer months, the Group increases the frequency of collection for biodegradable waste matter. Furthermore, the Group also collects waste from areas where holiday properties require additional collections in the holiday season, while being relatively vacated in the winter. Volume of collections also increases during the summer months when outdoor activity increases the volume of waste generated from garden activities and other household projects. Both revenues and margins typically decrease in the first and fourth quarter. This trend is expected to continue in line with historical levels Vehicle value The Group orders new vehicles, to the extent necessary, upon award of new contracts. However, the Group may lose contracts by early termination or lack of contract extensions by its customers. If the Group is not able to re-use vehicles on other contracts within a reasonable time period, there is an impairment risk related to the vehicles that are no longer in use. However, an eventual impairment of vehicles will not result in an immediate cash effect for the Group. Furthermore, the Group finances most of its vehicles needs through finance lease agreements, which allows the Group flexibility on the quantity of vehicles by returning finance leased vehicles that are no longer in used back to the lessor. The Group has also historically often been able to sell vehicles that are no longer in used to third parties at or around booked value. See Section 2.1 Risks related to the business of the Group and the industry in which the Group operates for more information Capital expenditure The Group defines capital expenditures as acquisition of fixed and intangible assets, as well as acquisition of companies offering regional or competitive advantages or synergies within the Group s strategy. Generally, the Group will only make an acquisition in vehicles following the award of a binding new waste contract. As such, the Group s acquisition in new vehicles can fluctuate, depending on the level of additional contracts awarded. In addition to capital expenditures as defined above, the Group also finances its vehicles through finance lease agreements, as explained above in Section Vehicle value Working capital The Group s working capital comprises inventory, accounts receivables and accounts payables, as well as other current liabilities and receivables primarily related to accruals for personnel related expenses, prepaid expenses and prepaid revenues, where accounts receivables have historically been the largest item. As such, the Group s cash availability is mainly affected by the risk related to customers not being able to pay invoices related to services provided by the Group. In the event that customers were to refuse to pay or delay payment, the Group s results of operations and cash flows would be negatively affected. However, the Group believes that its credit risk is minimal since the Group s customers are for the most part municipalities. The Group has also historically not experienced the need for write downs of customers receivables due to customers not being able to pay their due Recent developments and trends The Group is exposed to macroeconomic trends in Norway, Sweden, Denmark and Finland. Basic data on the macroeconomic situation in the Nordic countries is presented in Section 7 Industry and Market Overview. In general terms, the level of waste generation is connected with rates of economic growth and the macroeconomic situation. Moreover, macroeconomic conditions have significant influence on the levels of disposable income of population and consumption. Level of consumption affects total volume of waste generated in the Nordics, and therefore affects the Group s business. However, it should be noted that these changes are slow and affect the Group s operations in the long-term. In general, the Group operates in strong growing economies which underpin a steady development in waste volumes. Waste collection in the Nordic countries is an essential service largely governed by entrenched EU and local legislation. The Nordic market structure does not benefit vertical integration the municipalities own the waste and most of the processing capacity. There is a long-term trend of municipalities outsourcing more waste collection services to the private sector, and where Sweden and Norway seem to represent the biggest opportunity. The Group s development is dependent on the level of domestic waste collection contract renewals/tenders in the market each year. While this defines the amount of the addressable market that the Group can target in 112

117 order to grow its market share each year, it also highlights the level of market share the Group needs to defend, i.e. own contracts to renew/re-win. The level of contracts coming to the market in each country each year fluctuates, depending on the renewal dates on the individual contracts and this tender rate is further influenced whether the underlying contracts are extended or not. The mix of new and renewing contracts and the Group s success rates in each will have an impact on the Group s operations, financial performance and financial position. Since 1 January 2014 and until the date of the Prospectus, the Group has continued to trade well, delivering results in line with the Group s expectations. Except from the above, there have been no significant changes in the financial or trading position of the Group since the date of the Interim Financial Statements, which have been included in this Prospectus as Appendix D Explanation of income statement line items Total operating revenue Total operating revenue consists primarily of revenues earned from the provision of waste collection services to municipalities or corporate customers, rental revenues from rental of bins or containers, sales of bins or bags and other ancillary services provided to municipalities and businesses Cost of sales Cost of sales consists primarily of subcontractor costs, such as hiring of waste collection services from third parties for areas not easily accessible by the Group, as well as purchases of bins and bags Employee benefit expenses This consists of salaries, overtime, wage subsidies, personal insurance, employers contribution and other personnel costs Depreciation and amortisation Depreciation charges relate to both the Group s own vehicles, containers/bins and vehicles held under finance leases. Amortisation charges relate to intangible assets that are subject to amortisation. Note that in the NGAAP financial statements, goodwill is amortised, however, it is not amortised under IFRS, see Section 10.5 Analysis of material differences between IFRS and NGAAP for further information regarding significant differences between NGAAP and IFRS Other operating expenses Other operating expenses consist of vehicle related costs, such as fuel, tyres, maintenance and servicing costs, as well as rent of buildings, consultant fees, audit fees, operating lease costs related to vehicles along with other indirect administration costs and other overhead costs Operating profit Operating profit is the sum of total operating revenue and total operating expenses Net financial items Net financial items consist mainly of interest income on cash balances, interest expenses related to bank loans and shareholders loans, and finance expenses related to finance leases of as well as currency gains and losses. Interest expenses of 100% on the preference shares and Shareholder Loan (PIK Notes) were recognised to equity at 1 January 2012 upon conversion of the Group s consolidated financial statements for 2013 and 2012 from NGAAP to IFRS. Consequently, no net interest expenses have been recognised in profit and loss on the outstanding Shareholder Loan (PIK Notes) and Preference Shares in the IFRS Financial Statements subsequent to 1 January 2012, except for effects of some issue and repurchase of new Preference Shares. See also Section 10.5 Analysis of material differences between IFRS and NGAAP for further information regarding significant differences between NGAAP and IFRS Profit for the period Profit for the period is the sum of operating profit and the finance income or (expense), less any tax expense in the period. 113

118 Non-IFRS measures See Section Non-IFRS financial measures for further information on non-ifrs financial measures Results of operations Nine months ended 30 September 2014 compared to nine months ended 30 September 2013 The table below is extracted from the Group s Interim Financial Statements for the nine months ended 30 September 2014 (with comparable figures for 2013). The Group In NOK thousands Nine months ended 30 September Total operating revenue... 1,172, ,865 Cost of sales ,321 57,144 Employee benefit expense , ,927 Depreciation and amortisation... 71,277 60,183 Other operating expenses , ,181 Total operating expenses... 1,031, ,435 Operating profit (loss) , ,430 Net financial items... (50,820) (54,319) Profit before tax... 90,072 64,111 Income tax expense (income)... 9,888 13,530 Profit for the period... 80,184 50, Total operating revenue For the Group, total operating revenues increased by NOK 223 million or 23%, from NOK 950 million for the nine month period ended 30 September 2013 to NOK 1,173 million for the nine month period ended 30 September This increase was primarily attributable to the effect of the Group s operations in Finland during 2014, acquired in December 2013, which contributed to an increase in total operating revenues of NOK 171 million. The remaining increase of NOK 52 million was attributable to an increase in total operating revenues in Norway, Sweden and Denmark, mainly due to higher activity as a result of more contracts won and favourable SEK/NOK and DKK/NOK currency exchange rates. Norway contributed positively to the revenue development due to increases in contract value as a consequence of several new contract start-ups and few contracts discontinuations. Furthermore, the Group s management in Norway has initiated several attempts to maximise the value of existing contracts, to maintain existing revenue streams and explore opportunities for new revenue streams within existing contracts. In addition to driving revenue generation, these activities also enhances the Group s competitiveness when contracts are retendered as competitors may not be aware of implicit revenue opportunities. In Sweden, several commercial initiatives such as re-tagging and re-placement of waste bins, have been initiated which contributed to the revenue improvement. In addition, the Group continuously works to improve the rate of successful registration of emptied bins to secure that correct level of revenues are obtained from municipality customers. In Denmark, several new contracts had been started across the country during the period, along with a positive full-year effect from contracts initiated in In addition, the business has also successfully driven a number of initiatives to capture additional revenues, e.g. replacement, tagging and washing of bins in Copenhagen Cost of sales For the Group, cost of sales increased by NOK 59 million or 104%, from NOK 57 million for the nine month period ended 30 September 2013 to NOK 116 million for the nine month period ended 30 September This increase was mainly attributable to the full effect of the Group s operations in Finland in Overall level of cost of sales for the Finnish operations was relatively higher than in the other countries due to higher dependency on sub-contractors Employee expenses For the Group, employee benefit expenses increased by NOK 82 million or 16%, from NOK 510 million for the nine month period ended 30 September 2013 to NOK 592 million for the nine month period ended 114

119 30 September This increase was primarily attributable to the full effect of the Group s operations in Finland in 2014 with NOK 54 million. The remaining increase of NOK 28 million was primarily attributable to an increase in employee costs in Norway of approximately NOK 15 million due to increase in employees salaries and the Group s activity as explained above, leading to increased number of hours worked. Employee expenses as a percentage of total operating revenue during the period remained relatively constant at 50% for the nine month period ending 30 September 2014 (54% for the similar period in 2013), indicating that the Group is able to absorb increased activity without incurring significant incremental overhead costs. For the Swedish operations, adverse effects of increased salary costs due to smaller new contracts and more central overhead resources have been proactively offset by driving a set of operational efficiency improvements focused on reducing staffing on larger existing contracts. In Denmark, management has successfully conducted negotiations with union representatives to further improve the competitiveness of the Group s personnel cost agreements in Denmark Depreciation and amortisation For the Group, depreciation and amortisation increased by NOK 11 million or 18%, from NOK 60 million for the nine month period ended 30 September 2013 to NOK 71 million for the nine month period ended 30 September This increase was primarily attributable to the effect of the Group s operations in Finland, as well as an increase in vehicle fleet as a result of new contracts won. In 2013, pro forma depreciation was approximately NOK 100 million, and the Group expects this figure to be representative for the current fiscal year Other operating expenses For the Group, other operating expenses increased by NOK 48 million or 24%, from NOK 204 million for the nine month period ended 30 September 2013 to NOK 252 million for the nine month period ended 30 September This increase was primarily attributable to the effect of the Group s operations in Finland in 2014 with NOK 36 million. The remaining increase of NOK 12 million was mainly related to increase in activity as explained above, leading to higher level of fuel consumption as well as vehicles maintenance and services. Other operating expenses as a percentage of total operating revenue during the period remained relatively constant at 22% (21% for the similar period in 2013). In Denmark, the fuel consumption reduction program, called Falck Sirius, decreased the cost of fuel as share of revenues in branches where the program has been implemented Total operating expenses For the Group, total operating expenses increased by NOK 201 million or 24%, from NOK 831 million for the nine month period ended 30 September 2013 to NOK 1,032 million for the nine month period ended 30 September This increase was primarily attributable to the effect of the Group s operations in Finland in 2014 with approximately NOK 161 million, while the remaining NOK 39 million were related to its operation in Norway, Sweden and Denmark, as explained above Operating profit For the Group, operating profit increased by NOK 22 million or 19%, from NOK 118 million for the nine month period ended 30 September 2013 to NOK 141 million for the nine month period ended 30 September 2014, where the Group s business in Finland contributed positively with approximately NOK 10 million in 2014, as explained above. Norway was re-granted two contacts at lower revenue levels than previous years resulting in negative impact in this period. In Sweden, the operating profit improved significantly for the nine month period, primarily due to operational efficiency improvements reducing the total cost base both through lower staffing and fewer sub-contractors. In Denmark, the effect from new personnel cost agreements with local union representatives had a positive impact on operating profit Net financial items For the Group, net financial items, which was an expense in both the nine month periods ended 30 September 2013 and 2014, decreased by NOK 3 million or 6%, from an expense of NOK 54 million for the nine month period ended 30 September 2013 to an expense of NOK 51 million for the nine month period ended 30 September Net financial items for the nine month period ending 30 September 2014 include interest on bank loans of NOK 34 million, finance lease interest of NOK 13 million and a net increase in the Make Whole Amount related to the preference shares and Shareholder Loan (PIK Notes) of NOK 8 million (due to the 115

120 issuance of additional preference shares and Shareholder Loan (PIK Notes) in the first quarter of 2014) 121. The remaining amount of net financial items was currency effects and other items. Figures for the nine month period ending 30 September 2013 are comparable with the exception that there was no additional charge for the Make Whole Amount during Profit before tax For the Group, profit before tax increased by NOK 26 million or 40%, from NOK 64 million for the nine month period ended 30 September 2013 to NOK 90 million for the nine month period ended 30 September This increase was primarily attributable to an increase in operating profit of NOK 22 million where Finland contributed positively with approximately NOK 10 million and a decrease in net financial items of NOK 3 million, as explained above Income tax expense For the Group, income tax expenses decreased by NOK 4 million or 27%, from NOK 14 million for the nine month period ended 30 September 2013 to NOK 10 million for the nine month period ended 30 September 2014 and the effective tax rate for the Group was 21% for the nine month period ended 30 September 2013 and 11% for the nine month period ended 30 September Income tax expense is assessed based on annual results and, accordingly, determining the tax charge for the interim period involves making an estimate of the likely effective tax rate for the year for each material tax jurisdiction. The tax effect of one-off items are not included in the estimated effective annual tax rate, but are recognised in the same period as the relevant one-off item. The effective tax rate for the nine month period ended 30 September 2014 was reduced by a NOK 10 million reversal in the first quarter of previously over recognised deferred tax liabilities in Sweden. The effective tax rate for both years is also reduced due to permanent tax differences related to the Shareholder Loan (PIK Note) interest. There is no effect on reported profit while the interest is deductible in taxable income. In 2014, the Shareholder Loan (PIK Note) interest effect is partially offset by the permanent difference on the net expense of the net issue/repurchase of preference shares and Shareholder Loan (PIK Note). The permanent difference of the Shareholder Loan (PIK Note) interest and preference shares was NOK 8 million and NOK 10 million for the nine and three month periods ended 30 September 2014, respectively. The permanent difference of the Shareholder Loan (PIK Note) interest and preference shares was NOK 15 million and NOK 5 million for the nine and three month periods ended 30 September 2013, respectively Profit for the period For the reasons described above, profit for the nine month period ended 30 September 2014 was NOK 80 million compared to NOK 51 million for the nine month period ended 30 September 2013, an increase of NOK 29 million Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA The table below reconciles EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA against operating profit for the period presented for the Group: As adjusted In NOK thousands Nine months ended 30 September Nine months ended 30 September Operating profit , , , ,530 Amortisation... 1, , EBITA , , , ,571 Depreciation... 69,806 60,142 69,806 60,143 EBITDA , , , ,713 Operating lease expenses for vehicles... 8,900 10,095 8,900 10,095 EBITDAR , , , ,808 1 As adjusted for Monitoring Fee of NOK 3.1 million in the nine months ended 30 September 2013 and NOK 3.4 million in the nine months ended 30 September See note 1 in the Interim Financial Statement, included hereto as Appendix D. 116

121 The Group s operating profit increased by NOK 22 million or 17%, from NOK 118 million for the nine month period ended 30 September 2013 to NOK 141 million for the nine month period ended 30 September This increase resulted from higher activity in the nine month period ended 2014 compared to the same period in 2013 was primarily driven by effect of the operation in Finland during 2014, acquired in December 2013, and general operational improvements, as explained above. Compared to the Group s operating profit, the Group s EBITA showed relatively the same amount in the nine month periods ended 30 September 2013 and 2014, respectively, which was due to the fact that the Group s amortisation was as low as NOK 41 thousand in the nine month period ended 30 September 2013, and NOK 1.5 million in the nine month period ended 30 September The increase in amortisation in the nine month period ended 30 September 2014 compared to the same period in 2013 was due to amortisation of intangible assets arising from the acquisition of HFT Environment at the end of The Group s EBITDA increased by NOK 34 million or 19%, from NOK 179 million for the nine month period ended 30 September 2013 to NOK 212 million for the nine month period ended 30 September 2014, increase in total operating revenues of NOK 223 million, offset by increase in cost of sales, employee benefit expenses and other operating expenses totalling NOK 189 million as explained in Sections Total operating revenue to Operating profit above. The Group s EBITDAR, which is EBITDA stated after the elimination of vehicles operating lease expenses, increased by NOK 32 million, from NOK 189 million for the nine month period ended 30 September 2013 to NOK 221 million for the nine month period ended 30 September The increase in the Group s EBITDAR is approximately the same level as the increase of the Group s EBITDA, which is mainly due to operating lease expenses in the nine month periods ended 30 September 2014 and 2013 being consistent. The Group s adjusted EBITDA, adjusted EBITA and adjusted EBITDAR reflects the elimination of Monitoring Fee expenses of NOK 3.1 million in the nine month period ended 30 September 2013 and NOK 3.4 million in the nine month period ended 30 September Three months ended 30 September 2014 compared to three months ended 30 September 2013 The table below is extracted from the Group s Interim Financial Statements for the three months ended 30 September 2014 (with comparable figures for 2013). The Group In NOK thousands Three months ended 30 September Total operating revenue , ,831 Cost of sales... 40,840 17,789 Employee benefit expense , ,610 Depreciation and amortisation... 21,369 20,763 Other operating expenses... 88,163 70,021 Total operating expenses , ,183 Operating profit (loss)... 60,097 46,648 Net financial items... (6,875) (15,061) Profit before tax... 53,222 31,587 Income tax expense (income)... 10,478 6,174 Profit for the period... 42,744 25, Total operating revenue For the Group, total operating revenues increased by NOK 88 million or 27%, from NOK 326 million for the three month period ended 30 September 2013 to NOK 414 million for the three month period ended 30 September Compared to the 23% increase in total operating revenues in the nine month periods ended 30 September 2013 and 2014, the percentage increase in total operating revenues in the three month periods ended 30 September 2013 and 2014 was 4% higher. For the Swedish operations, operating revenues have grown primarily due to three new contracts in the Stockholm region, smaller commercial projects connected to optical sorting in Stockholm and bin replacement projects, and higher rate of successful 117

122 registration of tagged bins. In Denmark, the initiation of new contracts in 2014 and positive full-year effects from contracts started in late 2013 contributed to the growth in operation revenues Cost of sales For the Group, cost of sales increased by NOK 23 million or 130%, from NOK 18 million for the three month period ended 30 September 2013 to NOK 41 million for the three month period ended 30 September This increase is mainly attributable due to the acquisition of the Finnish operations in December 2013, as the other countries were approximately in line with the cost level of the three month period ended 30 September Overall level of cost of sales for the Finnish operations was relatively higher than in the other countries due to higher dependency on sub-contractors Employee benefit expenses For the Group, employee benefit expenses increased by NOK 33 million or 19%, from NOK 171 million for the three month period ended 30 September 2013 to NOK 204 million for the three month period ended 30 September This increase was primarily due to the acquisition of the Finnish operations in December 2013, as well as newly initiated contracts and full-year effects of previously initiated contracts in both Sweden and Denmark. Employee benefit expenses as a percentage of total operating revenue during the period remained relatively constant at 49% for the three month period ending 30 September 2014 (52% for the similar period in 2013) Depreciation and amortisation For the Group, depreciation and amortisation increased by NOK 0.6 million or 3%, from NOK 20.8 million for the three month period ended 30 September 2013 to NOK 21.4 million for the three month period ended 30 September The main reason for this increase was related to higher asset base subject to amortisation and depreciation for the three month period ended 30 September 2014 compared to the same period in the previous year Other operating expenses For the Group, other operating expenses increased by NOK 18 million or 26%, from NOK 70 million for the three month period ended 30 September 2013 to NOK 88 million for the three month period ended 30 September This increase was primarily due to the acquisition of the Finnish operations in December 2013, as well as newly initiated contracts and full-year effects of previously initiated contracts in both Sweden and Denmark. Other operating expenses as a percentage of total operating revenue during the period remained relatively constant at 21% for the three month period ending 30 September 2014 (21% for the similar period in 2013) Total operating expenses For the Group, total operating expenses increased by NOK 75 million or 27%, from NOK 279 million for the three month period ended 30 September 2013 to NOK 354 million for the three month period ended 30 September This increase was primarily attributable to increase in cost of sales, employee benefit expenses and other operating expenses as explained above Operating profit For the Group, operating profit increased by NOK 13 million or 29%, from NOK 47 million for the three month period ended 30 September 2013 to NOK 60 million for the three month period ended 30 September This increase was primarily attributable to an increase in total operating revenue of NOK 88 million, offset by an increase in total operating expenses of NOK 75 million, as explained above Net financial items For the Group, net financial items was an expense in the three month periods ended 30 September 2013 and 2014, and decreased by NOK 8 million or 54% from NOK 15 million for the three month period ended 30 September 2013 to NOK 7 million for the three month period ended 30 September This reduction in net financial expenses in the three month period ended September 2014 compared to the same period in the previous year was mainly attributable to net foreign exchange gains on loans denominated in other currencies than NOK, held by RenoNorden Investments as well as a decrease in expenses of approximately NOK 5 million in connection with a buy-back of class A-shares (preference shares) and Shareholder Loans (PIK Notes) from 118

123 former employees by the Group Profit before tax For the Group, profit before tax increased by NOK 22 million or 68%, from NOK 32 million for the three month period ended 30 September 2013 to NOK 53 million for the three month period ended 30 September This increase was primarily attributable to an increase in operating profit of NOK 13 million and a decrease in net financial expenses of NOK 8 million, as explained above Income tax expenses For the Group, income tax expenses increased by NOK 4 million or 70%, from NOK 6 million for the three month period ended 30 September 2013 to NOK 10 million for the three month period ended 30 September 2014 and the effective tax rate for the Group was 20% in both three month periods ended 30 September 2013 and 2014, respectively. The effective tax rate for both years is reduced due to permanent tax differences related to the Shareholder Loan (PIK Note) interest. There is no effect on reported profit while the interest is deductible in taxable income. In 2014 the Shareholder Loan (PIK Note) interest effect is partially offset by the permanent difference on the net expense of the net issue/repurchase of preference shares and Shareholder Loan (PIK Notes). The permanent difference of the Shareholder Loan (PIK Note) interest and preference shares was NOK 10 million for the three month period ended 30 September 2014 and NOK 5 million for the three month period ended 30 September Profit for the period For the reasons described above, profit of the period for the three month ended 30 September 2014 was NOK 43 million compared to NOK 25 million for the three month ended 30 September 2013, an increase of NOK 17 million Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA The table below reconciles EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA against operating profit for the period presented for the Group: As adjusted In NOK thousands Three months ended 30 September Three months ended 30 September Operating profit... 60,097 46,648 61,397 47,547 Amortisation EBITA... 60,587 46,661 61,887 47,560 Depreciation... 20,879 20,750 20,879 20,750 EBITDA... 81,466 67,411 82,766 68,310 Operating lease expenses for vehicles... 3,215 3,001 3,215 3,001 EBITDAR... 85,981 70,412 84,981 71,311 1 As adjusted for Monitoring Fee of NOK 0.9 million in the three months ended 30 September 2013 and NOK 1.3 million in the three months ended 30 September The Group s operating profit increased by NOK 13 million or 29%, from NOK 47 million for the three month period ended 30 September 2013 to NOK 60 million for the three month period ended 30 September This increase was primarily driven by the full effect of the acquisition of HFT Environment in the end of 2013, as well as higher activity in the other countries where the Group operated. Compared to the Group s operating profit, the Group s EBITA showed relatively the same amount in the three month periods ended 30 September 2013 and 2014, respectively, which was due to the fact that the Group s amortisation was as low as NOK 14 thousand in the three month period ended 30 September 2013, and NOK 490 thousands in the three month period ended 30 September The increase in amortisation in the three month period ended 30 September 2014 compared to the same period in 2013 was due to amortisation of intangible assets arising from the acquisition of HFT Environment at the end of

124 The Group s EBITDA increased by NOK 14 million or 21%, from NOK 67 million for the three month period ended 30 September 2013 to NOK 81 million for the three month period ended 30 September The Group s EBITDA was positively affected by increase in total operating revenues of NOK 88 million offset by an increase in cost of sales, employee benefit expenses and other operating expenses totalling NOK 74 million as explained in Sections Total operating revenue to Operating profit above. The Group s EBITDAR, which is EBITDA stated after the elimination of vehicles operating lease expenses, increased by NOK 14 million, from NOK 70 million for the three month period ended 30 September 2013 to NOK 85 million for the three month period ended 30 September Compared to the Group s EBITDA, the Group s EBITDAR was positively affected by vehicles related operating lease expenses of NOK 3.4 million in the three month period ended 30 September 2013 and NOK 3.0 million in the three month period ended 30 September The increase in the Group s EBITDAR is on the same level as the increase of the Group s EBITDA, which is mainly due to the fact that operating lease expenses in the three month periods ended 30 September 2014 and 2013 are consistent. The Group s adjusted EBITA, adjusted EBITDA and adjusted EBITDAR are stated after the elimination of Monitoring Fee expenses of NOK 0.9 million in the three month period ended 30 September 2013 and NOK 1.3 million in the three month period ended 30 September Financial year ended 31 December 2013 compared to financial year ended 31 December 2012 The table below is extracted from the Group s Financial Statements for the years ended 31 December 2013 (with comparable figures for 2012) (IFRS). The Group In NOK thousands Year ended 31 December IFRS Revenue... 1,266,491 1,176,017 Other operating revenue... 1,832 1,305 Total operating revenue... 1,268,323 1,177,323 Cost of sales... 77,705 83,209 Employee benefit expense , ,663 Depreciation and amortisation... 85,571 68,378 Other operating expenses , ,939 Total operating expenses... 1,130,908 1,033,009 Operating profit (loss) , ,313 Financial income and expenses Interest income... 2,988 2,709 Finance income... 2,807 14,265 Interest expense... (51,343) (54,637) Finance expense... (30,184) (23,668) Net financial items... (75,732) (61,331) Profit (loss) before tax... 61,683 82,983 Income tax expense (income)... 12,183 17,460 Profit for the year... 49,499 65, Total operating revenue For the Group, total operating revenues increased by NOK 91 million or 8%, from NOK 1,177 million for the year ended 31 December 2012 to NOK 1,268 million for the year ended 31 December This increase was primarily attributable to increase in total operating revenues in Sweden by approximately 14% (where the Group s share of total operating revenues for 2013 in Sweden was approximately 25%), Denmark by approximately 9% (where the Group s share of total operating revenues for 2013 in Denmark was approximately 32%) and Norway by approximately 3% (where the Group s share of total operating revenues for 2013 in Norway was approximately 43%) compared to the prior year. The increase in total operating revenues in Sweden and Denmark, which was also positively affected by a favourable SEK/NOK and DKK/NOK currency exchange rate, was mainly due to the fact that both countries were relatively new markets for the 120

125 Group, where net new sales contracts won were higher off a lower base than Norway which is a more mature market. Norway had limited new tender opportunities coming to market during his period resulting is only small changes in operating revenue. For the Swedish business, 2013 was a strong year with several new contracts initiated, e.g. in Southern Sweden, and an upswing in commercial project activities, e.g. bin projects. In addition, there was a positive full-year effect from contracts started during The Danish operations faced significant competitive pressure during 2013 from larger competitors, who have needed to capture volume at the expense of lower prices. Even if the Danish business lost a number of contracts during the period, the net effect with won contracts was a revenue increase by approximately 9% Cost of sales The Group s cost of sales decreased by NOK 5 million or 6%, from NOK 83 million for the year ended 31 December 2012 to NOK 78 million for the year ended 31 December The main reason for this decrease was lower use of subcontractors services in 2013 compared to As discussed in Section Cost of sales, this financial line item consists mainly on subcontractor costs, such as hiring of waste collection services from third parties for areas not easily accessible by the Group, as well as purchases of bins. Since the Group strongly prefers to run its own contracts, no new subcontractor arrangements were taken on during the period, explaining the relatively stable performance versus the same period the prior year Employees benefit expenses For the Group, employees benefit expenses increased by NOK 62 million or 10%, from NOK 618 million for the year ended 31 December 2012 to NOK 679 million for the year ended 31 December This increase was mainly related to an increase in numbers of employees driven by higher activity through net new contracts won. Employee benefit expenses as a percentage of total operating revenue for the year ended 31 December 2013 remained relatively constant at 54% (52% in the previous year). For Norway, the salary regulation was normal and in line with previous years which in combination with the stable revenue level due to the low number of new tenders resulted in an increased employee expense ratio. In Sweden, employee expenses increased in line with operating revenues as a consequence of newly initiated contracts Depreciation and amortisation For the Group, depreciation and amortisation increased by NOK 17 million or 25%, from NOK 68 million for the year ended 31 December 2012 to NOK 86 million for the year ended 31 December This increase was mainly related to expansion of the Group s vehicle fleet as a result of net new contracts won Other operating expenses For the Group, other operating expenses increased by NOK 24 million or 9%, from NOK 264 million for the year ended 31 December 2012 to NOK 288 million for the year ended 31 December This increase was mainly related to increase in activity and expansion of the Group s vehicle fleet, leading to higher level of fuel consumption, as well as vehicles maintenance and services. Other operating expenses as a percentage of total operating revenue for the year ended 31 December 2013 remained relatively constant at 23% (22% in the previous year) Total operating expenses For the Group, total operating expenses increased by NOK 98 million or 9% from NOK 1,033 million for the year ended 31 December 2012 to NOK 1,131 million for the year ended 31 December This increase was primarily attributable to increase in employee benefit expenses, depreciation and other operating expenses, as explained above Operating profit For the Group, operating profit decreased by NOK 7 million or 5%, from NOK 144 million for the year ended 31 December 2012 to NOK 137 million for the year ended 31 December This decrease was attributable to total operating expenses increasing more than total operating revenues, as explained above. In Sweden, the operating profit decreased versus the same period in 2012 due to the positive one-off effect from selling vehicles in Net financial items For the Group, net financial items, which was an expense in both years ended 31 December 2012 and 2013, 121

126 increased by NOK 14 million or 24%, from an expense of NOK 61 million for the year ended 31 December 2012 to an expense of NOK 76 million for the year ended 31 December This increase in finance expenses was primarily due to an expansion of the Group s vehicle fleet financed through leasing driven mainly by net new sales contracts won, and a decrease in finance income of NOK 11 million. Finance income in the year ended 31 December 2012 showed an amount of NOK 14 million, mainly related to foreign exchange gain on loans denominated in other currencies than NOK, held by RenoNorden Investments which were not passed through to other subsidiaries in the Group, while the corresponding amount in 2013 was NOK 3 million Profit before tax For the Group, profit before tax decreased by NOK 21 million or 26%, from NOK 83 million for the year ended 31 December 2012 to NOK 62 million for the year ended 31 December This decrease was primarily attributable to a decrease in operating profit of NOK 7 million and an increase in net financial items of NOK 14 million, as explained above Income tax expenses For the Group, income tax expenses decrease by NOK 5 million or 30% from NOK 17 million for the year ended 31 December 2012 to NOK 12 million for the year ended 31 December 2013 and the effective tax rate for the Group was 21% in 2012 and 20% in This decrease in income tax expenses of NOK 5 million was mainly attributable to a decrease in taxable income reflecting lower profitability compared to the prior year Profit for the year For the reasons described above, net profit for the year ended 31 December 2012 was NOK 66 million compared to NOK 49 million for the year ended 31 December 2013, a decrease of NOK 17 million Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA The table below reconciles EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA against operating profit for the period presented: As adjusted In NOK thousands Year ended 31 December Year ended 31 December Operating profit , , , ,640 Amortisation EBITA , , , ,697 Depreciation... 85,517 68,322 85,517 68,322 EBITDA , , , ,019 Operating lease expenses for vehicles... 13,683 19,732 13,683 19,732 EBITDAR , , , ,751 1 As adjusted for Monitoring Fee expense of NOK 4 million in 2013 and NOK 4.3 million in The Group s operating profit decreased by NOK 7 million or 5%, from NOK 144 million for the year ended 31 December 2012 to NOK 137 million for the year ended 31 December This decrease was attributable to total operating expenses increasing more than total operating revenues, as explained above. Compared to the Group s operating profit, the Group s EBITA showed relatively the same amount in 2012 and in 2013, which is due to the fact that the Group's amortisations are approximately on the same level in the two years (NOK 57 thousands in 2012 and NOK 54 thousands in 2013). The Group s EBITDA increased by NOK 10 million or 5%, from NOK 213 million for the year ended 31 December 2012 to NOK 223 million for the year ended 31 December The Group s EBITDA was positively affected by an increase in total operating revenue of NOK 91 million and decrease in cost of sales of NOK 5 million offset by an increase in employee benefit expenses and other operating expenses totalling NOK 86 million, as explained in Sections Total operating revenue to Operating profit above. 122

127 The Group s EBITDAR increased by NOK 4 million, from NOK 232 million for the year ended 31 December 2012 to NOK 237 million for the year ended 31 December The increase in the Group s EBITDAR is lower than the increase in the Group s EBITDA with NOK 6 million due to decrease in vehicles operating lease expenses in 2013 compared to The decrease of vehicle related operating lease expenses in 2013 compared to 2012 mainly resulted from the Group s entering into financial lease agreements instead of operating lease agreements. The Group s adjusted EBITDA, adjusted EBITA and adjusted EBITDAR are stated after the elimination of Monitoring Fee expenses of NOK 4.3 million in 2012 and NOK 4 million in Financial year ended 31 December 2012 compared to the period from the date of inception (17 March) to 31 December 2011 The table below is extracted from the Group s Financial Statements for the year ended 31 December 2012 and for the period from the date of inception (17 March 2011) to 31 December 2011 and the RenoNorden Holding Financial Statements for the year ended The Group In NOK thousands The Group Year ended 31 December From 17 March 2011 to 31 December 2011 RenoNorden Holding Year ended 31 December NGAAP NGAAP NGAAP Revenue 1,176, ,105 1,013,134 Other operating revenue... 1, ,264 Total operating revenue... 1,177, ,105 1,024,398 Cost of sales ,412 12,740 70,525 Employee benefit expense , , ,886 Depreciation and amortisation ,834 32,894 96,330 Other operating expenses ,795 74, ,830 Total operating expenses... 1,084, , ,571 Operating profit (loss)... 92,618 (2,440) 70,827 Financial income and expenses Interest income... 2, Finance income... 14,265 3, Interest expense... 72,565 18,847 34,184 Finance expense... 23,668 10,866 3,953 Net financial items... (79,259) (26,257) (37,339) Profit (loss) before tax... 13,360 (28,697) 33,489 Income tax expense (income)... 17,900 (4,430) 4,614 Profit for the year... (4,540) (24,267) 28, Total operating revenue Total operating revenues increased by NOK 153 million or 15%, from NOK 1,024 million for RenoNorden Holding for the year ended 31 December 2011 to NOK 1,177 million for the Group for the year ended 31 December This increase was primarily attributable to increase in total operating revenues in Sweden by approximately 37% (where the Group s share of total operating revenues in 2012 in Sweden was approximately 23%), Denmark by approximately 11% (where the Group s share of total operating revenues in 2012 in Denmark was approximately 32%) and Norway by approximately 8% (where the Group s share of total 122 As the Group, with the Company as the ultimate parent company, did not exist prior to 30 September 2011, which was the date the Company through RenoNorden Investments acquired RenoNorden Holding, income statement data from the RenoNorden Holding Financial Statements as of, and for the year ended, 31 December 2011 have been included in order to show the performance of the Group s underlying business for the full year The consolidated income statement data for RenoNorden Holding does not include expenses in the Group besides those in RenoNorden Holding, nor the effects of acquisition, especially amortisation of goodwill and financing costs which are included in the income statement data for the Group for The Group s Financial Statements for 2011 represents the operation of the underlying business (i.e. the RenoNorden business) only for a period of three months. 123

128 operating revenues in 2012 in Norway was approximately 45%) compared to the prior year. The increase was attributable to net new sales contracts in Sweden. In Norway, the Company lost one and won two contracts yielding a stable revenue development. In Sweden, the business grew rapidly during the period due to the start-up of six new contracts in the Stockholm region, and two in mid-sweden. Two larger bin re-tagging and replacement projects in southern Sweden also contributed to the higher revenue. In addition, there was a positive extra-ordinary effect from selling used vehicles as a consequence of the Resta acquisition Cost of sales and other operating expenses The Group used in 2012 a different classification compared to RenoNorden Holding regarding cost of sales and other operating expenses. This effect is illustrated in the table above for the year ended 2012 compared to the year ended Therefore, these two financial line items are discussed together to give a comparable basis for discussion. The total of cost of sales and other operating expenses increased by NOK 25 million or 8%, from NOK 320 million for RenoNorden Holding for the year ended 31 December 2011 to NOK 345 million for the Group for the year ended 31 December The increase was mainly attributable to an increase in vehicle related costs reflecting higher level of activity in 2012 compared to The total of cost of sales and other operating expenses as a percentage of total operating revenue in the year ended 31 December 2012 remained relatively constant at 29% (31% in the previous year) Employee benefit expenses Employee benefit expenses increased by NOK 81 million or 15%, from NOK 537 million for RenoNorden Holding for the year ended 31 December 2011 to NOK 618 million for the Group for the year ended 31 December This increase was mainly related to an increase in numbers of employees mainly driven by higher activity through net new sales contracts won, as well as an unfavourable SEK/NOK and DKK/NOK currency exchange rate. Employee benefit expenses as a percentage of total operating revenue in the year ended 31 December 2012 remained relatively constant at 52% (52% in the previous year) Depreciation and amortisation Depreciation and amortisation increased by NOK 26 million or 26%, from NOK 96 million for RenoNorden Holding for the year ended 31 December 2011 to NOK 122 million for the Group for the year ended 31 December This increase was mainly related to increase in vehicle fleet as a result of net new sales contracts won and an increase in goodwill (and related amortisation under NGAAP) due to acquisition of RenoNorden Group in the last quarter of Total operating expenses Total operating expenses increased by NOK 131 million or 14%, from NOK 954 million for RenoNorden Holding for the year ended 31 December 2011 to NOK 1,084 million for the Group for the year ended 31 December This increase was primarily attributable to the changes in cost of sales, employee benefit expenses, depreciation and other operating expenses between 2011 and 2012, as explained above Operating profit For the Group, operating profit increased by NOK 22 million or 31%, from NOK 71 million for RenoNorden Holding for the year ended 31 December 2012 to NOK 93 million for the Group for the year ended 31 December This increase was mainly attributable to the growing Swedish business and the positive one-off effect of selling used vehicles, as explained above Net financial items For the Group, net financial items increased by NOK 42 million or 112%, from an expense of NOK 37 million for RenoNorden Holding for the year ended 31 December 2011 to an expense of NOK 79 million for the Group for the year ended 31 December This increase was primarily attributable to an increase in interest expenses following the acquisition of RenoNorden Group in the last quarter of 2011, where the Group was refinanced by way of new and higher levels of external loans and shareholders loans, and to a lesser extent an increase in finance expenses due to an increase in financed leased vehicle fleet following new sales contracts won Profit before tax For the reasons described above, profit before tax for RenoNorden Holding for the year ended 31 December 2011 was NOK 33 million compared to NOK 13 million for the Group for the year ended 31 December 2012, a 124

129 decrease of NOK 20 million Income tax expenses Compared to RenoNorden Holding AS, income tax expenses for the Group increased by NOK 13 million from NOK 5 million for RenoNorden Holding AS to NOK 18 million for the Group. The corresponding effective tax rate for the Group in 2012 was 134%, which was mainly due to non-tax deductible items related to the transaction costs and goodwill amortisation associated with the acquisition of RenoNorden Holding Profit/loss for the year For the reasons described above, net profit for RenoNorden Holding for the year ended 31 December 2011 was NOK 29 million compared to a loss of NOK 5 million for the Group for the year ended 31 December 2012, a decrease of NOK 33 million Balance sheet The following table sets forth the total assets and total liabilities of the Group as of 30 September 2014 and 31 December 2013, 2012 and 2011: As of 30 September As of 31 December In NOK thousands 2014 (IFRS) 2013 (IFRS) 2012 (IFRS) 2012 (NGAAP 2011 (NGAAP) Property, plant and equipment , , , , ,011 Goodwill and other intangible assets... 1,009,774 1,011, , , ,524 Total non-current assets... 1,693,218 1,699,818 1,483,383 1,435,240 1,374,641 Total current assets , , , , ,988 Total assets... 2,220,110 2,236,699 1,863,456 1,814,931 1,630,629 Total equity... (335,908) (408,961) (457,391) 251, ,447 Total current liabilities... 1,449,976 1,494,885 1,347, , ,203 Total liabilities... 2,556,017 2,645,660 2,320,847 1,563,928 1,376,182 Total equity and liabilities... 2,220,109 2,236,699 1,863,456 1,814,931 1,630,629 The Group s total assets decreased by NOK 17 million, or 1%, from NOK 2,237 million as of 31 December 2013 to NOK 2,220 million as of 30 September 2014, primarily as a result of decrease in total current assets with NOK 10 million, and decrease in total non-current assets with NOK 7 million. The decrease in total non-current assets mainly related to depreciation and amortisation of NOK 71 million in the nine month period ended 30 September 2014, offset by the purchase of property, plant and equipments and acquisition of vehicles and vehicles funded through finance lease in the nine month period ended 30 September The decrease in total current assets is mainly related to a decrease in cash and cash equivalents of NOK 38 million as explained in Section Cash flows below, offset by an increase in accounts receivables of NOK 32 million in the nine month period ended 30 September Increase in accounts receivables was mainly driven by increase in operating profit. The Group s total liabilities decreased by NOK 89 million, or 3%, from NOK 2,645 million as of 31 December 2013 to NOK 2,556 million as of 30 June 2014, primarily as a result of decrease in total bank borrowings following repayment of loans, offset by increase in total finance lease obligation due to increase in the Group s vehicle fleet funded through finance lease agreements. The Group s total assets increased by NOK 373 million, or 20%, from NOK 1,863 million as of 31 December 2012 to NOK 2,237 million as of 31 December 2013, primarily as a result of increase in total non-current assets with NOK 216 million and increase in total current assets with NOK 157 million. The increase in total noncurrent assets mainly related to the acquisition of HFT Environment in December 2013 which contributed to an increase in intangibles assets of NOK 68 million, whereas goodwill with NOK 55 million, and an increase in property, plant and equipments of NOK 60 million, while the remaining increase in total non-current assets related to the Group s purchase of property, plants and equipments and acquisition of vehicles funded through finance lease, offset by depreciation in the 12 month period ended 31 December The increase in total current assets was mainly attributable to increase in cash and cash equivalents as discussed in Section Cash flows below. The Group s total liabilities increased by NOK 325 million, or 14%, from NOK 2,321 million as of 31 December 2012 to NOK 2,646 million as of 31 December 2013, primarily as a result of increase in total 125

130 bank borrowings with NOK 75 million mainly related to the acquisition of HFT Environment and increase in total finance lease obligation with NOK 159 million due to increase in the Group s vehicle fleet funded through finance lease agreements, while the remaining increase of NOK 91 million mainly related to increase in deferred tax with NOK 9 million as well as increase in accounts payable and other current liabilities totalling NOK 77 million where approximately NOK 54 million were accounts payable and other current liabilities held in HFT Environment. The Group s total assets increased by NOK 184 million, or 11%, from NOK 1,631 million as of 31 December 2011 to NOK 1,815 million as of 31 December 2012, primarily as a result of the net increase in property, plant and equipment of NOK 117 million offset by the amortisation of goodwill of NOK 54 million (with booked value of NOK 957 million in the year ended 31 December 2011 and NOK 903 million in the year ended 31 December 2012 which arose from the acquisition of RenoNorden in the last quarter of 2011), and increase in total current assets with NOK 124 million. The increase in total current assets was mainly attributable to increase in cash and cash equivalent of NOK 111 million which was due to the fact that 2012 was the Group s first full year of activity following the acquisition of RenoNorden Holding in the last quarter of The Group s total liabilities increased by NOK 188 million, or 14%, from NOK 1,376 million as of 31 December 2011 to NOK 1,564 million as of 31 December 2012, primarily as a result of increase in total financial lease obligation with NOK 95 million due to increase in the Group s vehicle fleet funded through financial lease, as well as increase in bank borrowings with NOK 41 million in order for the Group to have sufficient liquidity to further expand its operations following the acquisition of RenoNorden in the last quarter of 2011, while the remaining increase of NOK 51 million mainly related to increase in deferred tax with NOK 12 million, increase in other long-term debt with NOK 19 million mainly related to increased interests on the PIK Notes (see also Section 10.5 Analysis of material differences between IFRS and NGAAP ), as well as increase in accrued public taxes with NOK 12 million due to increase in numbers of employees Liquidity and capital resources Sources and uses of cash The Group s liquidity requirements arise primarily from the requirement to fund operating expenses, working capital, capital expenditures, mainly in connection with purchasing of new vehicles, and to service debt. As of 30 September 2014, the Group s principal sources of liquidity consisted of cash at hand, cash generated from operating activities, and undrawn facilities with Nordea Bank Norge ASA and DNB Bank ASA (the Prior Senior Facility ) (see Section Material indebtedness ), totalling NOK 175 million, where NOK 40 million was available in the revolving credit facility. Approximately NOK 135 million of the Prior Senior Facility is to be used on guarantees of which NOK 18.9 million was undrawn as of 30 September As of 30 September 2014, the Group maintained cash in banks denominated in NOK amounting to NOK 207 million, SEK amounting to SEK 15 million, DKK amounting to DKK 23 million and EUR amounting to EUR 1 million. On 10 November 2014, the Group refinanced the Prior Senior Facility (where unamortised upfront fees amounted to NOK 26 million as at 30 September 2014) and entered into a new senior facility agreement (the Senior Facility ) for a NOK 620,000,000 multicurrency term loan facility and a NOK 350,000,000 multicurrency revolving credit facility (see Section Material indebtedness ). The Group s expected liquidity needs for the 12 month period following the date of this Prospectus primarily relate to interest expenses, repayments of loans and new investments in vehicles to support contracts renewed and won. The Group s ability to generate cash from operations depends on its future operating performance, which is, in turn, dependent, to some extent, on general economic, financial, competitive, market regulatory and other facts, many of which are beyond the Group s control, as well as other facts described in Section 2 Risk Factors. The Group will use free cash to repay debt to re-grow the business whilst maintaining maximum cash available. The Group has the flexibility to make early repayments on the Senior Facility, with no prepayment penalties. Further, the Senior Facility should provide the Group with ample liquidity to finance working capital fluctuations and other short-term capital requirements, such as capital expenditure (see Section Material 126

131 indebtedness ). The Group believes that its operating cash flows and borrowing capacity will be sufficient to meet its requirements and commitments for the foreseeable future. The Group s actual financing requirements depend on a number of factors, many of which are beyond its control. Risk management is carried out by the Company under policies approved by the Board of Directors. The Management identifies, evaluates and hedges financial risks in close co-operation with the Board of Directors. See Section Cash flow interest rate risk and Section Diesel fuel and LNG costs risk for further information. The Board of Directors provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, and investment of excess liquidity. There have been no significant changes in cash flows from 30 September to the date of the Prospectus Cash received from subsidiaries The Company does not believe that there are significant obstacles or barriers to transfer funds to it from its subsidiaries that may affect its ability to meet or fulfil its financial or other obligations Cash flows The table below summarises the Group s historical cash flows, and is extracted from the IFRS Financial Statements, for each of the financial periods presented. In NOK thousands Nine months ended 30 September Year ended 31 December Year ended 31 December Net cash from (used in) operating activities... 99,755 93, , ,103 Net cash from (used in) investing activities... (12,940) (14,777) (66,110) (51,461) Net cash from financing activities... (125,005) (53,334) 4,346 7,369 Cash and cash equivalents at beginning of period , , ,662 46,651 Cash and cash equivalents at end of period , , , , Cash flows from (used in) operating activities The nine month period ended 30 September 2014 compared to the nine month period ended 30 September 2013 Net cash inflow from operating activities for the nine month period ended 30 September 2014 was NOK 99.8 million compared to a cash inflow of NOK 93.8 million for the nine month period ended 30 September 2013, an increase of NOK 6 million. The main factors driving this change were related to increase in EBITDA and increase in accounts receivables, and were mainly driven by increase in operating profit. There were no significant overdue on accounts receivables at 30 September Financial year ended 31 December 2013 compared to financial year ended 31 December 2012 Net cash inflow from operating activities for the financial year ended 31 December 2013 was NOK million compared to NOK million for the financial year ended 31 December 2012, an increase of NOK 34.6 million. The main factors driving this change year-on-year are movements in working capital, where accounts receivables increased by NOK 7 million in the financial year ended 31 December 2013 (NOK 33 million in the previous year) and accounts payables increased by NOK 17 million in the financial year ended 31 December 2013 (NOK 4 million in the previous year). The increase in accounts receivables and payables were driven by the Group s higher activity levels in 2013 compared to Cash flows from (used in) investing activities The nine month period ended 30 September 2014 compared to the nine month period ended 30 September 2013 Net cash outflow from investing activities for the nine month period ended 30 September 2013 was NOK 14.8 million compared to a cash outflow of NOK 12.9 million for the nine month period ended 30 September 2014, a decrease in cash outflow from investing activities of NOK 1.9 million. Net cash outflow from investing activities in the nine month period ended 30 September 2013 which was NOK 14.8 million, was related to the purchase of vehicles, while net cash outflow from investing activities in the same period in

132 which was NOK 12.9 million, was related to purchase of vehicles of NOK 14.6 million, and proceeds from sale of property, plant and equipment which contributed to a cash inflow of NOK 1.7 million. Financial year ended 31 December 2013 compared to financial year ended 31 December 2012 Net cash outflow from investing activities for the financial year ended 31 December 2013 was NOK 66.1 million compared to NOK 51.5 million for the financial year ended 31 December 2012, an increase in outflow of NOK 14.6 million. The increase was primarily attributable to the acquisition of HFT Environment in 2013 of NOK 52 million, offset by a decrease in purchase of vehicles in 2013 by NOK 31 million, from NOK 55 million in 2012 to NOK 24 million in Net cash flow from investing activities was positively affected by the proceeds from sales of property, plant and equipment of NOK 10 million in 2013, and NOK 4 million in Cash flows from (used in) financing activities The nine month period ended 30 September 2014 compared to the nine month period ended 30 September 2013 Net cash outflow from financing activities for the nine month period ended 30 September 2014 was NOK 125 million compared to a cash outflow of NOK 53.3 million for the nine month period ended 30 September 2013, an increase in cash outflows used in financing activities of NOK 71.7 million. This increase in cash outflow was impacted by repayment of bank borrowings of NOK 60 million which was mainly related to the acquisition of HFT Environment, as well as an increase in repayment of finance lease obligation of NOK 14 million compared to the same period in the previous year, due to increase in the Group s vehicle fleet funded through financial lease agreements. Financial year ended 31 December 2013 compared to financial year ended 31 December 2012 Net cash inflow from financing activities for the financial year ended 31 December 2013 was NOK 4.3 million compared to NOK 7.4 million for the financial year ended 31 December 2012, an decrease of NOK 3.1 million. Cash flow from financing activities in 2013 was positively impacted by proceeds from bank loans of NOK 86 million in connection with the acquisition of HFT Environment and proceeds from other long-term borrowings of NOK 8 million, offset by the repayment of other long-term bank borrowings of NOK 90 million. Cash flow from financing activities in 2012 was NOK 7 million, and was mostly related to the net effect of refinancing of bank loans and repayments of financial lease obligation Impairment testing The Group tests for goodwill impairment as necessary, or at a minimum annually. Assessment of impairment is performed at the cash generating unit (CGU) level. Goodwill is tested for impairment at the segment level which is defined geographically, i.e. Norway, Sweden, Denmark and Finland. In order to test for impairment, the Management compare the recoverable amount (through value in use) for each CGU to their respective carrying amount Investments Historical capital expenditures and investments The table below shows the historical capital expenditure (expenditures relating to acquiring and replacing the Group s fixed and intangible assets, excluding financial lease) of the Group for the nine month period ended 30 September 2014, the years ended 31 December 2013 and 2012 and for the period from the date of inception (17 March 2011) to 31 December 2011, as well as for RenoNorden Holding for the year ended 31 December The Group Nine months ended 30 September The Group Year ended 31 December The Group From 17 March to 31 December RenoNorden Holding Year ended 31 December In NOK millions Acquisition of vehicles Acquisition of Nord-Ren A/S Acquisition of RenoNorden Holding Acquisition of HFT Environment

133 The Group Nine months ended 30 September The Group Year ended 31 December The Group From 17 March to 31 December RenoNorden Holding Year ended 31 December In NOK millions Total The acquisition of Nord-Ren A/S resulted in recognised goodwill of NOK 27 million on the balance sheet of RenoNorden Holding as of 31 December Please refer to note 1 Accounting principles to the 2011 condensed Financial Statements of RenoNorden Holding as included in Appendix C to the Prospectus. 2 The acquisition of RenoNorden Holding resulted in recognised goodwill of NOK 970 million on the balance sheet of the Group as of 31 December The reason why goodwill was higher than acquisition cost was due to the negative booked equity value in RenoNorden Holding group at the time. Please refer to note 6 in the NGAAP Financial Statements of Asta Group AS for the year ended 31 December 2011 as included in Appendix B to the Prospectus. 3 The total consideration for the acquisition of HFT Environment was NOK 70 million, and resulted in recognised goodwill of NOK 55 million on the Group s balance sheet. Please refer to note 21 Business Combination to the IFRS 2013 Financial Statements of the Group as included in Appendix B to the Prospectus. The Group s capital expenditure is primarily in Norway, Sweden, Denmark and Finland, where the Group s operations are located. For the years ended 31 December 2013 and 2012 and for the period from the date of inception (17 March 2011) to 31 December 2011, the Group s capital expenditures of NOK 24 million and NOK 55 million and nil, respectively, were related to vehicle acquisitions in connection with project start-ups or renewals. For the nine month period ended 30 September 2014, total capital expenditures amounted to NOK 15 million, mainly relating to the acquisition of vehicles in connection with project start-ups or renewals. For the year ended 31 December 2013, the Group s total capital expenditure for the acquisition of HFT Environment was NOK 70 million. As of, and for the period from the date of inception (17 March 2011) to, 31 December 2011, the Group s total capital expenditure for the acquisition of RenoNorden Holding AS was NOK 881 million. For the year ended 31 December 2011 for RenoNorden Holding AS, the total capital expenditure of NOK 100 million was related to vehicle acquisitions in connection with project start-ups and renewals. In the same period, the acquisition of Nord-Ren A/S in Denmark resulted in a capital expenditure of NOK 29 million. See Section Contractual cash obligations and other commitments for information on operating lease payments and finance lease payments. Between the date of the Interim Financial Statements and in the period ending 31 December 2014, the Group is expected to make an investment of approximately NOK 40 million through financial leasing for vehicles for the use in awarded contracts. Except from this, there have been no principal capital expenditures or investments since the date of the Interim Financial Statements as of, and for the nine months ended, 30 September 2014 and until the date of this Prospectus Capital investment in progress and planned capital investments The Group s investments are primarily related to investments in new vehicles and relevant add-on acquisitions. Generally the Group will only make an investment in vehicles following the award of a binding new waste collection contracts 124. As such, investments in new vehicles can fluctuate, depending on the level of additional contracts awarded in the next years. Furthermore, the Management opportunistically explores new opportunities to accelerate growth through small acquisitions of companies offering regional or competitive advantages or synergies, in line with the Group s policy. The Group intends to finance all future capital expenditures from a combination of cash on hand, cash generated from operations, bank facilities and lease arrangements. 124 See Section Fleet management. 129

134 As mentioned, the Group has a policy of investing in new vehicles based on signed sales contracts. As such, investments in new vehicles can fluctuate, depending on the level of additional contracts awarded in the next years. These investments are expected to be funded through financial lease agreements. Except from the commitments mentioned above in Section 11.9 Investments and in Section Contractual cash obligations and other commitments, the Group has no significant committed future investments as of the date of this Prospectus Material indebtedness As of 30 September 2014, the Group had finance lease obligation with a booked value of NOK 346 million 125 and a total net interest bearing debt of NOK 2,012 million, primarily in form of class A-shares (with a booked value of NOK 726 million) and the Shareholder Loan (with a booked value of NOK 295 million), the Prior Senior Facility with booked value of NOK 881 million. Furthermore, the principal amount of loans from former employees of the Group (Leaver Loans) had a booked value of NOK 11 million as of 30 September The class A-shares are booked as debt under IFRS. On 10 November 2014, the Group refinanced its Prior Senior Facility and entered into new bank facilities agreements with DNB Bank ASA and Danske Bank A/S as lenders (the Senior Facility) for a NOK 620,000,000 multicurrency term loan facility and a NOK 350,000,000 multicurrency revolving credit facility. Subject to completion of the Offering and the Listing, the net proceeds from the issuance of the New Shares will be used to repay the amount outstanding under the Shareholder Loan, including interest accrued (is expected to be in total NOK million as of 17 December 2014) and the outstanding amount of the loans from former employees of the Group (the Leaver Loans ) (in total NOK 11 million as of 30 September, thus reducing the Group s net interest bearing debt by the amount outstanding under the Shareholder Loan and Leaver Loans. The Company s repayment obligation under the Leaver Loans is subject to the valuation of the Company in the Offering (i.e. that the Offer Price is above a certain level). The Company believes that the valuation target will be reached in the Offering and that the Leaver Loans therefore shall be repaid in full. With effect from the same point in time, the class A-shares preference shares) and class B-shares (ordinary shares) will be combined into one class of ordinary Shares (the Combination), as described in Section 16.3 Share capital and share capital history. As a result thereof, all the Shares in the Company will be booked as equity under IFRS upon the Listing and debt will be reduced. Class A-shares As of the date of the Prospectus, the Company has 278,121,091 class A-shares with a par value of NOK 0.01 each in issue. The rights conferred by the class A-shares upon the existing shareholders, including the preferential rights to dividends and other distributions and the calculation of the preference return, are set forth in the Company s Articles of Association and an investment agreement dated 30 September 2011 entered into by, among others, the Company and the Selling Shareholders (the Investment Agreement ). The class A- shares are booked as debt under IFRS and as at 30 September 2014, the class A-shares was booked as debt of NOK 726 million. The class A-shares carrying amount outstanding as at 30 September 2014 consists of the invested amount of NOK 280 million, plus a Make-Whole Amount of NOK 446 million. This Make-Whole Amount is a 100 percent return on the class A-shares investment as well as a 100 percent guaranteed return on the amount invested in the Shareholder Loan. The entire Make-Whole Amount is recognised under IFRS as interest expense related to the class A-shares. As a result of the Combination, the class A-shares and class B-shares will be combined into one class of ordinary Shares. The Shareholder Loan On 30 September 2011, the Company entered into the agreement for the Shareholder Loan with the shareholders of the Company that provided for a subordinated Shareholder Loan (PIK Notes) of NOK 233 million, with final maturity date on the date of exit, i.e. the Listing. The Shareholder Loan was used in the financing of the acquisition of all the shares in RenoNorden Holding in The Shareholder Loan carries a cumulative interest at a rate of 8% per annum. The accrued interest on the Shareholder Loan has been added to the principal amount of the loan annually. As at 30 September 2014, the outstanding amount of the Shareholder Loan was NOK 295 million. The Company will repay the Shareholder Loan using the proceeds from 125 See Interim Financial Statements as attached in Appendix D. 130

135 the issuance of the New Shares in the Offering. New Norwegian tax legislation has been adopted with effect from 1 January 2014 which limits the deductibility of interest expense on related party debt. The new tax legislation may entail that interest expenses related to the Shareholder Loan will not be fully tax deductible for the Company (increasing the taxable income of the Company in Norway). The principal amount of the Shareholder Loan together with the interest accrued thereon will be converted to ordinary Shares at the Offer Price in connection with the Offering and Listing, see Section 16.3 Share capital and share capital history. Senior Facility The Senior Facility was entered into on 10 November 2014 by the Company as parent, certain of the Company s subsidiaries as original borrowers and/or guarantors, and DNB Bank ASA and Danske Bank A/S, Norwegian branch, as original lenders. The Senior Facility comprises a NOK 620,000,000 multicurrency term loan facility and a NOK 350,000,000 multicurrency revolving loan facility, of which NOK 150,000,000 is reserved for one or more ancillary guarantee facilities. The term loan facility and the revolving credit facility have a term of five years from the signing date. The Senior Facilities will be used to refinance the existing bank facilities at the time of the Listing. The Senior Facilities provide that the Group s leverage ratio, i.e. the consolidated total net debt to consolidated EBITDA shall not be higher than 5.00x, and that the Group s interest coverage ratio, i.e. consolidated EBITDA to net finance charges, shall be no less than 4.0x. The interest on each loan for each interest period is the percentage rate per annum which is the aggregate of (i) the applicable margin (being 2.00% with respect to the term loan facility and 1.75% with respect to the revolving loan facility) and (ii) the relevant interbank offered rate. There is no mandatory repayment on the Senior Facility until the termination date on 10 November 2019, but the borrowers may repay the Senior Facility more rapidly than set forth in the Senior Facility without any premium or penalty, except for break costs in the event of prepayment in the middle of an interest period. The Group wishes to continue its deleveraging and aims for a leverage ratio (net interest bearing debt/ebitda) below 4. If a change of control (triggered by either (i) the acquisition or gain of control of more than 50.00% of the issued shares and/or voting shares of the Company by any person or group of persons acting in concert, or (ii) a delisting of the shares of the Company), or (iii) a sale of all or substantially all of the assets of the Group, occurs, the lenders have the right to cancel the commitments with 30 days notice and declare the outstanding loans (together with accrued interest) immediately due and payable The following maturity profile and estimated interest costs for the Senior Facility are based on a 1.7% NIBOR on average for the term of the loan: In NOK millions Repayment (revolving loan facility)... - (65.3) Repayment (term loan facility) (620.0) Total repayments... - (65.3) (620.0) Estimated interest (revolving loan facility) Estimated interest (term loan facility) Total interest Assumptions: The Offering and Listing is completed and the Shareholder Loan has been settled in full. The term loan facility is fully utilised. The revolving loan facility is expected to be partially drawn (by approximately NOK 65.3 million subject to the IPO Offer Price), at Listing, and the Group plans to repay the loan facility in The NIBOR base rate is 1.7% on average for the term of the term loan and revolving loan facility. A commitment fee of 40% of the applicable margin applies to the revolving credit facility. 131

136 11.11 Contractual cash obligations and other commitments Operating lease payments The Group has branch offices under operating leases in Norway, Sweden, Denmark and Finland, and leases vehicles under operating leases. The following tables set out the Group s future commitments of lease payments, for years and branch offices, respectively, under operating leases based on a standard rental period, with payments (i.e. fixed rental costs) under 1 year, 1-5 years, after 5 years, as of 31 December 2013, 2012 and The table below includes an overview of the Group s commitments in connection with operating leases for the Group s vehicles: As of 31 December In NOK millions Within 1 year years After 5 years Total commitments relating to operating leases As of 30 September 2014, the remaining commitments under the Group s operating leases of vehicles and similar were approximately NOK 15 million. See Section Off-balance sheet arrangements. The table below includes an overview of the Group s commitments in connection with the operating leases for the Group s offices: As of 31 December In NOK millions Within 1 year years After 5 years Total commitments relating to operating leases The size of the Group s offices is approximately 21,490 square meters 126. As of 30 September 2014, the remaining commitments under the Group s operating lease contracts related to branch offices were approximately NOK 40 million. See Section Off-balance sheet arrangements Finance lease payments The Group also has finance leases relating to vehicles. The following table sets out the Group s net future lease payment obligations under such finance leases, with payments within 1 year, 1-5 years, after 5 years, as of 31 December 2013, 2012 and As of 31 December In NOK millions 2013 (IFRS) 2012 (IFRS) 2011 (NGAAP) Within 1 year years After 5 years Total of future lease payments ,6 174, Future finance charges on finance lease liabilities... (18,7) (15,07) Office space includes 5,490 square meters in Sweden, 2,200 square meters in Finland, 4,800 square meters in Denmark and 9,000 square meters in Norway. 132

137 As of 31 December In NOK millions 2013 (IFRS) 2012 (IFRS) 2011 (NGAAP) Present value of future minimum lease payments ,9 159,3 64, Off-balance sheet arrangements RenoNorden s off-balance sheet arrangements as of 30 September 2014 were as follows: The remaining commitments under the Group s operating lease contracts related to branch offices are approximately NOK 40 million. The remaining commitment under the Group s operating leases of vehicles and similar are approximately NOK 15 million. Commitments of approximately NOK 40 million related to financial lease of vehicles. Commitments related to contracts with subcontractors which vary in length from one to eight years, and relate to operational services. Bank guarantees of approximately NOK million, issued as collateral for the fulfilment of the Group s obligations under their contracts with municipalities Qualitative disclosure about financial risk The Group s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and other price risk), credit risk and liquidity risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. The Group uses derivative financial instruments to economically hedge certain risk exposures, such as diesel prices and interest rates. The Group does not use hedge accounting Market risk Market risk can be defined as the risk that the Group s income and expenses, future cash flows or fair value of financial instruments will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk, such as diesel price risk. Market risk is monitored and actively managed by the Group through a combination of natural hedging techniques and financial derivatives Currency risk For risk management purposes, two types of currency exposure have been identified: Translation into the presentation currency Being a multinational group, the Group faces currency risk arising from the translation of entities whose functional currency differs from the presentation currency of the Group. This translation exposure does not give rise to an immediate cash effect; however it may impact the Group s financial covenant and is therefore monitored. See Section Foreign currency fluctuations. Foreign currency transaction The Group s business model is to provide services from the local subsidiary almost exclusively to municipalities in their local currency, and most costs are also incurred in local currency. Bank loans are denominated in the four currencies of Norway, Sweden, Finland and Denmark, to minimise currency exposures for the Group. As a result of the international structure of the Group, the Group is exposed to some foreign currency exchange rate risks relating to various transactions in currencies other than the functional currency. See Section Foreign currency fluctuations. 133

138 Cash flow interest rate risk The Group is exposed to interest rate risk fluctuations mainly due to the multi-currency bank loans from DNB Bank ASA and Nordea Bank Norge ASA (to be replaced by the new bank loan facilities), which bear variable interest rates that are based on the respective IBOR-plus a margin. In order to mitigate the risk of fluctuations in the variable interest rates, Management has entered into certain interest rate caps and which are OTC European and Asian call contracts. This sets a ceiling on the variable portion of the interest expense to 2.8% and therefore limits the potential cash outflows and minimises liquidity fluctuations until December See also Section Interest rate fluctuations and note 13 Derivative financial instruments in the financial statements of the Group as included in Appendix B in this Prospectus for further information Diesel fuel and LNG costs risk The Group is exposed to diesel fuel price risk fluctuations in each of their countries of operations. Since diesel and LNG fuel constitutes one of the large operating costs of the Group, increasing prices can have a material impact on the Group s results. This risk is managed through the purchase of diesel caps derivative financial instruments. These derivative instruments cap the diesel prices the Group will pay, in the event of large increases in diesel prices, and therefore limits the potential cash outflows and minimises liquidity fluctuations. The Group s hedging policy is to enter 12 month diesel cap contracts with duration from 1 January to expiration at year end in order to manage the risk of material fluctuations between fuel price moves and the annual indexation under the contracts. See also Section 2 Risks related to the industry in which the Group operates and note 13 Derivative financial instruments in the financial statements of RenoNorden as included in Appendix B in this Prospectus for further information Credit risk management The Group believes that the credit risk is minimal since the Group s customers are mostly municipal governments. For smaller corporate customers in Finland this is monitored closely Liquidity risk Liquidity risk arises from the Group s potential to meet its financial obligations towards suppliers and debt capital provides. In addition to the management of interest rate and diesel fuel price risk, liquidity management represents a key focus for the Group s financial management. The goal of liquidity management is to ensure the ability to service the Group s commitments and to make payments when they come due. The Group s liquidity situation is closely monitored and rolling 12-month forecasts of cash flows and cash holdings are prepared monthly Critical accounting policies and estimates Overview Note 2 to the Financial Statements (IFRS) for the year ended 31 December 2013 included in this Prospectus as Appendix B includes a summary of the significant accounting policies and methods used in the preparation of such financial statements. When preparing the consolidated financial statements, Management undertakes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The assumptions, estimates and judgements are based on historical experience, current trends and other factors that management believes to be relevant at the time the Financial Statements are prepared. Critical accounting estimates and judgements are those that have the most significant effect on the amounts recognised or have a significant risk of causing material adjustments. The estimates and judgements have been consistently applied to all the years presented in the Financial Statements. The judgements, apart from those involving estimations, that management has made in the process of applying the Group s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements are discussed below Class A-shares (preference shares) In the accounting for class A-shares (preference shares), the Group has interpreted the Investment Agreement such that the Group does not have an unconditional right to avoid delivering cash or another financial asset. Consequently, the class A-shares (preference shares) are classified as liabilities. IAS 39 Financial Instruments: Recognition and Measurement combined with IFRS 13 Fair Value Measurements are interpreted to require 134

139 recognition of the minimum preference share return on initial recognition of the liability. Due to a demand feature the fair value is estimated at the total amount that can be required to be paid (guaranteed minimum return). Discounting is evaluated not to be relevant. The preference share return is recognised in profit or loss as interest expense and in the balance sheet as a current financial liability. As the Investment Agreement was signed 30 September 2011, the preference share return, for IFRS reporting purposes was an interest expense in 2011, so is therefore shown as an equity adjustment in the 1 January 2012 opening IFRS balance sheet. Subsequent measurement of any changes in the preference share return will affect profit or loss, and for the total of Shareholder Loans and class A-shares (preference shares) no net interest expense is recognised until the aggregate accumulated return based on the stated annual returns exceed the minimum preference share return. See notes 24 Shareholder loans and 27 IFRS conversion in the 2013 IFRS consolidated financial statements included in Appendix B in this Prospectus for additional information. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below Impairment of non-current assets IAS 36 requires that the Group assess conditions that could cause an asset to become impaired and to test recoverability of potentially impaired assets. These conditions include internal and external factors such as the Group s market capitalisation, significant changes in the planned use of the assets or a significant adverse change in the expected prices, sales volumes or raw material cost. Each cash generating unit (CGU) or individual asset is reviewed for impairment indicators. Most of the Group s assets are assigned to CGUs. The identification of CGUs involves judgment, including assessment of where active markets exist, and the level of interdependency of cash inflows. For the Group, the CGU is the group of assets employed within one country, as all of these assets serve a common market. If a loss in value is indicated, the recoverable amount is estimated as the higher of the CGUs fair value less cost to sell, or its value in use. Calculation of value in use is a discounted cash flow calculation based on continued use of the assets in its present condition, excluding potential exploitation of improvement or expansion potential. Determination of the recoverable amount involves management estimates on highly uncertain matters, such as commodity prices (diesel fuel) and their impact on markets, development in demand, inflation, operating expenses and tax and legal systems. Management uses internal business plans, quoted market prices and our best estimate of commodity prices, currency rates, discount rates and other relevant information. A detailed forecast is developed for a period of three to five years with projections thereafter. Estimated cash flows are discounted with a nominal risk adjusted discount rate Business combinations and goodwill In a business combination consideration, assets and liabilities are recognised at estimated fair value, and any excess purchase price included in goodwill. Valuation models are used to estimate the fair value of acquired intangible assets. Such valuations are subject to numerous assumptions including the useful lives of assets and the timing and amounts of certain future cash flows, which may be dependent on discount rates and other factors. In accordance with IAS 36, goodwill and certain intangible assets are reviewed at least annually for impairment. The IFRS opening balance goodwill impairment test, using a value-in-use model for Sweden was sensitive for changes in EBITDA margin assumptions, discount rate and growth assumptions. If the expected EBITDA margin was two percentage points lower than management estimates of EBITDA margin, the Group would have recognised an impairment of goodwill in the amount of NOK 68 million. If the estimated discount rate used in determining the value-in-use had been one percent higher the Group would have recognised an impairment of goodwill in the amount of NOK 91 million. If the estimated growth rate used in determining the value-in-use had been one percent lower the Group would have recognised an impairment in the amount of NOK 98 million. As part of the transition to IFRS, the Group allocated goodwill to Norway, Sweden and Denmark based on average key figures in 2011 (revenues, EBITA and total capital employed) in the respective countries. If the allocation of goodwill had been based on other key figures this would have resulted in a different allocation of goodwill. If more weight was put on EBITA, this would have resulted in a lower amount of goodwill allocated to 135

140 Sweden, and reduced the Swedish CGUs sensitivity for impairment. As part of the 2013 acquisition in Finland, the Group performed a purchase price allocation. The total excess value was allocated to customer contracts, technology and goodwill. This allocation required the use of estimates and management judgment. The fair value of customer contracts has been estimated based on contract length and expected net cash flow after an asset charge of 3.9% of the carrying value of machinery and equipment. If the expected net cash flow had been lower, and/or the asset charge higher, the Group would have recognised a lower amount on customer contracts and a higher amount on goodwill related to the acquisition. The fair value of technology assets was estimated based on expected replacement cost. If the expected replacement cost had been lower, the Group would have recognised a lower amount on Technology and a higher amount on goodwill related to the acquisition. See note 21 Business combinations in the 2013 IFRS consolidated financial statements included in Appendix B in this Prospectus for additional information Recent development and change Since 30 September 2014 and until the date of the Prospectus, the Group has continued to trade well, delivering year on year growth in total operating revenue in line with the Management s expectations, which indicates 2014 full year revenues in the range of NOK 1,550 1,575 million. Given the performance throughout this period, and assuming no significant changes in the general trading environment, the Management remains confident in the Group s prospects for the remainder of the financial year. See Section Operating revenue for information in connection with a retendered contract in Norway which was not awarded the Group. There have been no significant change in the financial or trading position of the Group since the date of the Interim Financial Statements as of, and for the three and nine months ended, 30 September 2014, which has been included in this Prospectus as Appendix D. 136

141 12 UNAUDITED PRO FORMA FINANCIAL INFORMATION 12.1 Introduction As discussed elsewhere in this Prospectus, on 19 December 2013, RenoNorden Finland Holding OY ( RenoNorden Finland ), a wholly-owned indirect subsidiary of the Company, completed the acquisition of all the shares in HFT Environment for the consideration agreed pursuant to a share sale and purchase agreement (the SPA ) dated the same date (the HFT Acquisition). As a result thereof, HFT Environment became a whollyowned subsidiary of RenoNorden Finland, which in turn is a wholly-owned subsidiary of RenoNorden Investments AS, a wholly-owned subsidiary of the Company. The total consideration amounted to EUR 8.4 million, where EUR 7.3 million was settled in cash and EUR 1.1 million was new shares issued by the Company except expensing of acquisition costs. Upon the acquisition of HFT Environment, RenoNorden Finland was a shelf company with no activity, established by RenoNorden Investments with the primary purpose of acting as the acquisition vehicle in connection therewith. Also, and as mentioned in note 21 (Business Combinations) in the Financial Statements as of, and for the year ended, 31 December 2013 included in Appendix B to this Prospectus, the HFT Acquisition was completed close to year end As such, no profit and loss effects have been recorded in the Financial Statements as of, and for the year ended, 31 December 2013 in connection with the HFT Acquisition. On this basis, the Management has concluded that, on the ground of immateriality, the unaudited pro forma financial information will be prepared under the assumption that RenoNorden Investments acquired HFT Environment directly, without using RenoNorden Finland as acquisition vehicle. Reference is also made to the financial statements of the target company HFT Environment as of, and for the year ended, 31 December 2013 (the HFT Environmental Financial Statements), included as Appendix E to this Prospectus. Furthermore, since no profit and loss effects have been recorded in the Financial Statements of the Group as of, and for the year ended, 31 December 2013 for the last 12 days of 2013 during which HFT Environment was a wholly-owned subsidiary of the Company, the unaudited pro forma financial information will show the full year income statement effect of HFT Environment for 2013, as if RenoNorden Investments had acquired HFT Environment on 1 January A pro forma balance sheet is not included as the HFT Acquisition is reflected in the Group s balance sheet as of 31 December General information and purpose of the unaudited pro forma financial information The unaudited pro forma financial information set out below has been prepared by the Company to show how the HFT Acquisition might have affected the Group s income statement information for the year ended 31 December 2013 as if the Group had acquired HFT Environment on 1 January The unaudited pro forma financial information is based on certain management assumptions and adjustments. These assumptions might not necessarily have applied had HFT Environment been consolidated into the Group for the purposes of financial reporting in such periods. Because of its nature, the unaudited pro forma financial information included herein addresses a hypothetical situation and, therefore, does not represent the actual financial results for the Group for the periods presented. The pro forma financial information is prepared for illustrative purposes only and describes a hypothetical situation. It does not purport to present what the Group s results of operations would actually have been had the acquisition of HFT Environment been completed on 1 January Investors are cautioned against placing undue confidence on this unaudited pro forma income statement information. It should be noted that the unaudited pro forma financial information is not prepared in connection with an offering registered with the U.S. Securities and Exchange Commission ( SEC ) under the U.S. Securities Act and consequently is not compliant with the SEC s rules on presentation of pro forma financial information. As such, a U.S. investor should not place reliance on the unaudited pro forma financial information included in this Prospectus. The assumptions underlying the pro forma adjustments and IFRS adjustments, for purpose of deriving the unaudited pro forma financial information, are described in the notes to the unaudited pro forma financial information. Neither these adjustments nor the resulting unaudited pro forma financial information have been audited in accordance with Norwegian or United States generally accepted auditing standards, and the unaudited pro forma financial information have not been prepared in accordance with the requirements of 137

142 Regulation S-X of the SEC or generally accepted practice in the United States. In evaluating the unaudited pro forma financial information, each reader should carefully consider the audited historical financial statements and the notes thereto and the notes to the unaudited pro forma financial information. The unaudited pro forma income statement information does not include all of the information required for financial statements under IFRS and should be read in conjunction with the Financial Statements of the Group as of, and for the year ended 31 December 2013, included in Appendix B to this Prospectus Basis of preparation General The Group s Financial Statements as of, and for the year ended, 31 December 2013 (with comparable figures for 2012) have been prepared in accordance with IFRS. The HFT Environment Financial Statements as of, and for the year ended, 31 December 2013 have been prepared in accordance with FGAAP. With respect to the unaudited pro forma financial information included in this prospectus, KPMG AS has applied assurance procedures in accordance with International Standards on Assurance Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, in order to express an opinion as to whether the unaudited pro forma financial information has been properly compiled on the basis stated, and that such basis is consistent with the accounting policies of the Group. KPMG AS report is included in Appendix F to this Prospectus Basis and source for the unaudited pro forma financial information The unaudited pro forma financial information giving effect to HFT Acquisition has been prepared on the basis of the IFRS accounting principles applied by the Group. Differences between the accounting principles adopted by the Group and those adopted by HFT Environment have been analysed. Please refer to Section Description of the IFRS adjustments of HFT Environment for the year ended 31 December 2013 for further information. The unaudited pro forma financial information is based on and derived from: The Group s Financial Statements as of, and for the year ended, 31 December 2013 (prepared in accordance with IFRS), included as Appendix B to the Prospectus; and The HFT Environment Financial Statements as of, and for the year ended, 31 December 2013 (prepared in accordance with FGAAP), included as Appendix E to this Prospectus Unaudited pro forma financial information Unaudited pro forma income statement information for the year ended 31 December 2013 The table below sets out the unaudited pro forma income statement information for the Group for the year ended 31 December 2013, as if the HFT Acquisition had taken place on 1 January For purpose of the pro forma financial information, it is assumed that RenoNorden Investments acquired HFT Environment directly, without the use of the shelf company RenoNorden Finland. Reference is made to Section 12.1 Introduction above. Unadjusted information of the Group (audited, IFRS) NOK 1 thousands Unadjusted information of HFT Environment (audited, FGAAP 1 ) EUR thousands Unadjusted information of HFT Environment (unaudited, FGAAP) NOK thousands 1 IFRS adjustments of HFT Environment (unaudited) NOK thousands 2 Pro forma adjustment for the HFT Acquisition (unaudited) NOK thousands 3 Pro forma financial information (unaudited) NOK thousands Total operating revenue... 1,268,323 25, , ,466,366 Costs of sales... (77,705) (12,447) (97,196) 0 (174,901) Employee benefit expenses... (679,336) (7,805) (60,945) 0 (740,281) 138

143 Unadjusted information of the Group (audited, IFRS) NOK 1 thousands Unadjusted information of HFT Environment (audited, FGAAP 1 ) EUR thousands Unadjusted information of HFT Environment (unaudited, FGAAP) NOK thousands 1 IFRS adjustments of HFT Environment (unaudited) NOK thousands 2 Pro forma adjustment for the HFT Acquisition (unaudited) NOK thousands 3 Pro forma financial information (unaudited) NOK thousands Depreciation and amortisation... (85,571) (735) (5,741) (7,608) (1,274) (100,193) Other operating expenses... (288,296) (3,745) (29,246) 10,821 0 (306,721) Total operating expenses... (1,130,908) (24,732) (193,128) 3,213 (1,274) (1,322,097) Operating profit , ,915 3,213 (1,274) 144,269 Net financial items... (75,732) (144) (1,126) (751) (1,727) (79,335) Profit before tax... 61, ,789 2,462 (3,001) 64,934 Income tax expenses... (12,183) (192) (1,497) (131) 780 (13,031) Profit for the year... 49, ,292 2,332 (2,221) 51,902 1 The Group s Financial Statements as of, and for the year ended, 31 December 2013 are presented in NOK. In order to be consistent with the presentation of currency of the consolidated financial statements of the Group and for pro forma purposes, an average NOK/EUR exchange rate of which has been extracted from Norges Bank s website has been applied on the HFT Environment Financial Statements for the period from 1 January 2013 to 31 December Please refer to Section Description of the IFRS adjustments of HFT Environment for the year ended 31 December 2013 for a description of the adjustments. 3 Please refer to Section Description of pro forma adjustments for a description of the adjustments Description of the IFRS adjustments of HFT Environment for the year ended 31 December 2013 IFRS adjustments HFT Environment Since the HFT Environment Financial Statements as of, and for the year ended, 31 December 2013 have been prepared in accordance with FGAAP, the Management has assessed that certain adjustments were necessary in order to reflect the accounts in accordance with IFRS for use in Section Unaudited pro forma income statement information for the year ended 31 December 2013 above. The following table summarises these IFRS adjustments: IFRS adjustments (unaudited) Total IFRS adjustment (unaudited) Finance lease expenses EUR thousands 1 Goodwill amortisation EUR thousands 2 EUR thousands NOK thousands 3 Other operating expenses , ,386 10,821 Depreciation and amortisation 4... (1,221) 247 (974) (7,608) Total operating expenses ,213 Operating profit ,213 Net financial items... (96) 0 (96) (751) Profit before tax ,462 Income tax expenses... (17) 0 (17) (131) Profit for the year ,332 1 Please refer to (a) below for a specification of the corresponding IFRS adjustments. 2 Please refer to (b) below for a specification of the corresponding IFRS adjustments. 3 This column represents the NOK amount of the total IFRS adjustments in EUR, based on an average NOK/EUR exchange rate of Please also refer to footnote 1 in Section Unaudited pro forma income statement information for the year ended 31 December 2013 above for further information. 4 The amounts for Total operating expenses and Operating profit are the total of the amounts related to Other operating expenses and Depreciation and amortisation as shown is this table. 5 The amount for Profit before tax is the total of the amounts of Operating profit and Net financial items as shown in this table. 6 The amount for Profit for the year is the total of the amounts for Profit before tax and Income tax expenses as 139

144 IFRS adjustments (unaudited) Total IFRS adjustment (unaudited) Finance lease expenses EUR thousands 1 Goodwill amortisation EUR thousands 2 EUR thousands NOK thousands 3 shown is this table. The IFRS adjustments are specified as follow: (a) Finance lease expenses In accordance with FGAAP, lease is accounted for as operating lease without distinction between operating and finance lease, which is not permitted by IFRS. As such, and in order for finance lease to be accounted for in accordance with IFRS, the following adjustments, which are also illustrated in the table above, have been made: elimination of historical expenses related to finance lease with EUR 1,386 thousands, accounted for as operating lease and presented as other operating expenses in accordance with FGAAP; and pro forma adjustment of EUR 1,221 thousands corresponding to the depreciation of recognised finance lease assets, as if financial lease was accounted for in accordance with IFRS. This adjustment is based on principles as stated in note 27 (IFRS 1 First time adoption of IFRS) and note 17 (Leases) in the Group s Financial Statements as of, and for the year ended, 31 December 2013, included in Appendix B to this Prospectus; and pro forma adjustment of EUR 96 thousands corresponding to financial expenses of recognised finance lease liabilities, as if finance lease was accounted for in accordance with IFRS. This adjustment is based on principles consistent with those as stated in note 27 (IFRS 1 First time adoption) and note 17 (Leases) in the Group s Financial Statements as of, and for the year ended, 31 December 2013, included in Appendix B to this Prospectus; and pro forma adjustment of EUR 17 thousands corresponding to tax effect of the above mentioned adjustments totalling EUR 68 thousands, where the tax effect of the EUR 17 thousands corresponds to the corporate tax rate in Finland of 24.5% in (b) Goodwill amortisation The HFT Environment Financial Statements as of, and for the year ended, 31 December 2013 included goodwill relating to previous acquisitions. Under IFRS, this goodwill is not an identifiable asset and accordingly not included in the acquisition balance sheet. Consequently, no impairment test according to IAS 36 is required for this goodwill. In the HFT Environment Financial Statements as of, and for the year ended, 31 December 2013, which have been prepared in accordance with FGAAP, this goodwill has been amortised. As such, and in order for goodwill to be accounted for in accordance with IFRS, and in order for goodwill to be accounted for with principles consistent as those stated in note 27 (IFRS 1 First time adoption) and note 11 (Intangible assets) in the Group s Financial Statements as of, and for the year ended, 31 December 2013, included in Appendix B to this Prospectus, the following adjustment, which is illustrated in the table above, have been made: historical amortisation of goodwill of EUR 247 thousands as accounted for in accordance with FGAAP (no tax effect on the goodwill depreciation as not tax deductible) has been eliminated. The Management has not identified any other adjustments that were necessary in order for the income statement information of HFT Environment to be stated in accordance with IFRS for pro forma purposes for use in Section Unaudited pro forma income statement information for the year ended 31 December 2013 above. 140

145 Description of pro forma adjustments Overview of the pro forma adjustments The following table summarises the pro forma adjustments related to the purchase price allocation and the pro forma adjustments related to the HFT Acquisition. Pro forma adjustments (unaudited) Total pro forma adjustment (unaudited) Purchase price allocation 1 Interest expenses 2 Depreciation and amortisation... (1,274) 0 (1,274) Total operating expenses 3... (1,274) 0 (1,274) Operating profit 3... (1,274) 0 (1,274) Net financial items... 0 (1,727) (1,727) Profit before tax 4... (1,274) (1,727) (3,001) Income tax expenses Profit for the year 5... (917) (1,304) (2,221) 1 Please refer to Section Purchase price allocation of the HFT Acquisition for a specification of the corresponding pro forma adjustments. 2 Please refer to Section Pro forma adjustments related to the HFT Acquisition for a specification of the corresponding pro forma adjustments. 3 The amounts for Total operating expenses and Operating profit are equal to the amounts related to Depreciation and amortisation as shown is this table. 4 The amount for Profit before tax is the total of the amounts of Operating profit and Net financial items as shown in this table. 5 The amount for Profit for the year is the total of the amounts for Profit before tax and Income tax expenses as shown is this table. For a description of those pro forma adjustments, see Section Purchase price allocation of the HFT Acquisition and Section Pro forma adjustments related to the HFT Acquisition Purchase price allocation of the HFT Acquisition The HFT Acquisition, which gives rise to a change of control for IFRS accounting purposes, has been accounted for using the acquisition method in accordance with IFRS 3 (Business Combinations). Under IFRS 3, the cost of an acquisition is measured as the fair value of the assets transferred, liabilities incurred and the equity interests issued by the acquirer, including the fair value of any asset or liability resulting from a contingent consideration arrangement, if any. Acquisition related costs of NOK 3.5 million have been charged to administrative expenses in the Group s income statement for the year ended 31 December Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the completion date. The excess of the consideration transferred over the fair value of the acquirer s share of the identifiable net assets acquired is recorded as goodwill. In connection with this process, the Management has identified that a pro forma adjustment of NOK 1,274 thousands for amortisation, attributable to identified value in excess related to intangible assets subject to amortisation, should be performed in order to illustrate how the financial results of the Group might have been had it acquired HFT Environment on 1 January The tax effect of the NOK 1,274 thousands above is NOK 357 thousands, assuming a corporate tax rate of 28% corresponding to the corporate tax rate in Norway for Reference is also made to note 27 (IFRS 1 First time adoption) and note 21 (Business Combination) of the Group s Financial Statements as of, and for the year ended, 31 December 2013, included in Appendix B to this Prospectus, where HFT Environment was consolidated in as at 31 December This pro forma adjustment is considered as recurring. 127 See note 21 to the Financial Information ended 31 December 2013, Appendix B to the Prospectus. 141

146 Pro forma adjustments related to the HFT Acquisition This pro forma adjustment illustrates the elimination of historical interest expenses in HFT Environment on loans for the year ended 31 December 2013, as if these loans were re-financed by way of a draw-down of the existing senior facility at 1 January 2013, and the pro forma interest expenses related to the financing of the HFT Acquisition by RenoNorden Investments for the year ended 31 December 2013 as if this financing has been in place since 1 January 2013, as follows: In NOK thousands Net financial items... (1,727) Income tax expenses This pro forma adjustment is specified as follows: (a) Pro forma elimination of historical interest expenses in HFT Environment Pursuant to the share purchase agreement for the HFT acquisition, the buyer was committed to repay on behalf of HFT Environment certain debt totalling approximately EUR 2 million at the date of the completion of the HFT Acquisition. The following pro forma adjustment shows therefore the effect of the elimination of historical interest expenses related to HFT Environment for this debt. The Management has assumed that, for pro forma purposes, the related tax effect corresponds to the corporate tax rate in Finland of 24.5% for 2013, and applied a NOK/EUR exchange rate of : In thousands 1 EUR NOK Net financial items ,124 Income tax expenses... (35) (275) 1 See footnote 1 in Section Unaudited pro forma income statement information for the year ended 31 December 2013 above for more information. This pro forma adjustment is considered as recurring. (b) Pro forma interest expenses in connection with the financing of the HFT Acquisition In connection with the financing of the acquisition of HFT Environment, RenoNorden Investments made a drawdown of EUR 10.3 million on the already existing facility agreement arranged by DNB Bank ASA and Nordea Bank Norge ASA. Pursuant to this agreement, the interest rate was based on a margin and a floating interest rate, where the margin, which was based on certain ratios, for pro forma purposes has been assumed to be 3%, and where the floating interest rate which was based on EURIBOR for 12 months, for pro forma purposes has been assumed to be 0.54%. Assuming an exchange rate of NOK/EUR of , and assuming that no repayment of the loan is performed during 2013, and that the loan of EUR 10.3 million was recognised in RenoNorden Finland, the following pro forma adjustment shows therefore the effect of interest expenses and corresponding tax effect, under the assumption that the related tax effect corresponds to the corporate tax rate in Finland of 24.5% in 2013: In NOK thousands Net financial items... (2,851) Income tax expenses This pro forma adjustment is considered as recurring. 142

147 13 BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE 13.1 Introduction The General Meeting is the highest authority of the Company. All shareholders in the Company are entitled to attend and vote at General Meetings of the Company and to table draft resolutions for items to be included on the agenda for a General Meeting. The overall management of the Group is vested in the Company s Board of Directors and the Group s Management. In accordance with Norwegian law, the Board of Directors is responsible for, among other things, supervising the general and day-to-day management of the Group s business ensuring proper organisation, preparing plans and budgets for its activities monitoring that the Group s activities, accounts and assets management are subject to adequate levels of control and undertaking investigations necessary to perform its duties. The Board of Directors has two sub-committees: an audit committee and a remuneration committee. In addition, the Company s Articles of Association provides for a nomination committee. The Management is responsible for the day-to-day management of the Group s operations in accordance with Norwegian law and instructions set out by the Board of Directors. Among other responsibilities, the Group s chief executive officer, or CEO, is responsible for keeping the Group s accounts in accordance with prevailing Norwegian legislation and regulations and for managing the Group s assets in a responsible manner and ensuring adequate internal control frameworks are implemented. In addition, the CEO must according to Norwegian law brief the Board of Directors about the Group s activities, financial position and operating results at a minimum of one time per month Board of Directors Overview of the Board of Directors The Company s Articles of Association provide that the Board of Directors shall consist of a minimum of three and a maximum of seven Board Members. As of the date of the Prospectus, the current Board of Directors consists of three Board Members. Subject to, and with effect from, the Listing, the current Board of Directors will be expanded with two additional Board Members. See Section The Board of Directors below. The composition of the Board of Directors as of the first day of the Listing will be in compliance with the independence requirements of the Corporate Governance Code (as defined below), meaning that (i) the majority of the shareholder-elected members of the Board of Directors is independent of the Company s Management and material business contacts, (ii) at least two of the shareholder-elected Board Members are independent of the Company s main shareholders (shareholders holding more than 10% of the Shares in the Company), and (iii) no members of the Company s Management serves on the Board of Directors. The Company s registered business address, Lindebergvegen 3, N-2016 Frogner, Norway, serves as the c/o address for the Board Members in relation to their directorship of the Company. As at the date of this Prospectus, none of the Board Members holds any Shares, options or other rights to acquire Shares The Board of Directors The names and positions and current term of office of the Board Members as at the date of this Prospectus are set out in the table below. Name Position Served since Term expires Penelope Kate Briant... Chairman Alexander Noel Walsh... Board member Niklas Nikita Sloutski... Board member

148 The table below sets out the names and terms of office for the persons who have been appointed as additional Board Members subject to, and with effect from, the Listing. Name Position Serves from Term expires Erik Thorsen... Chairman Date of Listing 2016 Charlotte Gaarn Hansson... Board member Date of Listing 2016 The General Meeting held on 24 November 2014 resolved to appoint Erik Thorsen and Charlotte Hansson as Chairman and Board Member, respectively, with effect from the first day of Listing. Penelope Kate Briant shall remain as Chairman until the effective time of the appointment of Erik Thorsen. Penelope Kate Briant is appointed Board Member in the same General Meeting with effect from Listing Brief biographies of the Board Members Set out below are brief biographies of the current Board Members and the additional Board Members, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside the Company and names of companies and partnerships of which a Board Member is or has been a member of the administrative, management or supervisory bodies or partner in the previous five years (not including directorships and executive management positions in subsidiaries of the Company). Penelope Kate Briant, Chairman Kate Briant is chairman of the boards of directors of RenoNorden AS, RenoNorden Investments AS and the Company as well as member of the boards of directors of Mater Private Healthcare, Scandi Standard AB (publ) and Valeo Foods. Kate Briant is a partner of CapVest Associates LLP and a partner of CapVest Partners LLP, as well as limited partner of BreadVest LP, CapVest Partners LP, CapVest Partners II L.P., CapVest Special Partners I, LP, CapVest Special Partners II, LP, CV Partners LP and CV Partners II LP. In addition, Kate Briant holds partnership interests in CapVest Equity Partners II LP and CapVest Equity Partners III LP. Kate Briant holds a Bachelor of Commerce and an Accounting Honours from University of Cape Town, South Africa. Kate Briant is a Chartered Accountant (CA(SA)), registered with the South African Institute of Chartered Accountants and she is registered with the Financial Conduct Authority United Kingdom. Kate Briant is a British citizen, and resides in the UK. Current directorships and senior management positions... Mater Private Healthcare (board member), Mater Private Executive Trust Ltd (board member), Mater Private Hospital Foundation II Ltd (board member), MP Healthcare (board member), MP Healthcare Holdings (board member), Eccles Fund Co Ltd (board member), Building Blocks Foundation Limited (board member), Valeo Foods Group Limited (board member) and various other subsidiaries of Valeo Foods, Kronfagel Holding AB (board member), Scandi Standard AB (publ) (board member), Scandinavian Standard AB (board member), Scandinavian Standard Norway AS (board member), IP Powerhouse (board member), CapVest Associates LLP (partner), CapVest Partners II LP (partner) and limited partner of various other subsidiaries of CapVest. Previous directorships and senior management positions last five years... Vaasan & Vaasan Oy (board member) and Scandi Standard AB (chairman). Alexander Noel Walsh, Board member Alexander Walsh is chairman of the boards of directors of Provender AS, Provender Holding AS, Provender Holding II AS, Scandza Holding III AS, Scandza Holding IV AS and Scandza Holding V AS, as well as member of the boards of directors of Asta Group AS (to be renamed RenoNorden ASA), Bisca A/S, Scandi Standard AB (publ) and Synnøve Finden AS. Alexander Walsh is also co-founder and member of the board of directors of House of Botany Limited, partner of CapVest Associates LLP and CapVest Partners LLP, as well as limited partner of CapVest Partners II LP, CapVest Special Partners LP, CV Partners II LP and CV Co-Invest II LP. Alexander Walsh holds an MSc in Economics and history from University of St. Andrews. Mr. Walsh is a British citizen, and resides in the UK. 144

149 Current directorships and senior management positions... Chairman of Provender Holding AS and various subsidiaries of Provender Holding AS, Scandza Holding VI AS (chairman), Scandza Holding III AS (chairman), Scandza Holding IV AS (chairman), Scandi Standard AB (publ) (board member), Scandza Holding V AS (chairman), Bisca A/S (board member), Synnøve Finden AS (board member), House of Botany Limited (co-founder and board member), CapVest Associates LLP (partner), CapVest Partners II LP (partner), CapVest Equity Partners II LP (partner), CapVest Equity Partners III LP (partner) and limited partner of various other subsidiaries of CapVest. Previous directorships and senior management positions last five years... Cafe 2008 Holdings B.V. (board member). Niklas Nikita Sloutski, Board member Mr. Sloutski is chairman of the board of directors of HoistLocatel Group AB, as well as member of the boards of directors of Accent Equity Partners AB, Aviator Airport Alliance Europe AB, Candyking Holding AB, Eurowrap A/S, and Scandic Hotels AB. Mr. Sloutski is also CEO and Partner of Accent Equity Partners AB, the investment advisor of the general partners of Accent Equity Funds. Mr. Sloutski holds an MSc in Business and Economics from the Stockholm School of Economics, a Certificate in Business Administration from the Edinburgh Business School and course diplomas in finance from Harvard University and law from Stockholm University. Mr. Sloutski is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions... HoistLocatel Group AB (chairman), Accent Equity Partners AB (board member), Aviator Airport Alliance Europe AB (board member), Candyking Holding AB (board member), Eurowrap A/S (board member), Scandic Hotels Holding AB (board member), Southpaw CEP AB (chairman), Northpaw Capital AB (chairman) and Accent Equity Partners AB (CEO, board member and partner). Previous directorships and senior management positions last five years... Bergteamet Group AB (board member), NSS Group AS (board member), Scanbook Holding AB (publ) (board member), Crem International Holding AB (board member), INR Holding AB (chairman), Mont Blanc Group AB (board member), Troax Group AB (chairman), Autotube Group AB (chairman) and Hööks Group AB, and in some cases subsidiaries of the above mentioned companies. Erik Thorsen, Board member Erik Thorsen is chairman of the board of directors of Metallkraft AS, Eltek ASA, Biotec Pharmacon ASA and Zeropex AS. Mr. Thorsen has over 25 years of experience in Norwegian and international trade and industry. Previously, Mr. Thorsen held the position as managing director of REC ASA for four years, after nine years as managing director of Tomra Systems ASA. Mr. Thorsen holds an MBA from University of Karlstad, along with studies in mathematics and naval engineering from University of Oslo and Royal Norwegian Naval Academy. Mr. Thorsen is a Norwegian citizen, and resides in Norway. Current directorships and senior management positions... Metallkraft AS (chairman), Metallkraft International II AS (board member), Eltek ASA (chairman), Eltek AS (chairman), Biotec Pharmacon ASA (chairman), Zeropex AS (chairman), Envipco AS (managing director) and Toleko AS (founder, CEO and chairman). Previous directorships and senior management positions last five years... Energreen AS (chairman), Energreen Heat Recovery AS (board member), Green Renewable Energy Holding Ltd (board member), Nuclear Protection Products AS (board member), REC ASA (managing director) and Nera Telecommunications Ltd (board member). Charlotte G. Hansson, Board member Charlotte Hansson is managing director at MTD KB (MorgonTidigDistribution) and member of the board of directors of Orio AB, DistIT AB (listed), B&B Tools AB (listed), BE Group AB (listed) and Formpipe Software AB (listed), as well as the founder of Scandinavian Insight Consulting AB. Hansson has more than 15 years of industrial experience from the transportation and logistics industry and ten years experience from bio tech and life sciences. In addition to holding a MSc in Market Economics from IHM in Stockholm, Charlotte Hansson holds 145

150 a Cand. Scient. in Biochemistry from University of Copenhagen. Charlotte Hansson also participated in the leadership-program Ruter Dam. Mrs. Hansson is a Danish citizen, and resides in Sweden. Current directorships and senior management positions... Orio AB (board member), B&B Tools AB (listed) (board member), BE Group AB (board member), DistIT AB (listed) (board member), Formpipe Software AB (board member), MTD AB (managing director) and Scandinavian Insight Consulting AB (founder and owner). Previous directorships and senior management positions last five years... Oxeon AB (board member), Co-Pilot Bygg & Projektledning (chairman), Jetpak Finland & Denmark (managing director) and Jetpak AB and associated companies (managing director) Management Overview The Group s management team consists of seven individuals. The names of the members of the Management as at the date of this Prospectus, and their respective positions, are presented in the table below: Name Current position within the Group Employed with the Group since Staffan Ebenfelt... Chief Executive Officer January 2014 Jon Kristian Flesvik... Chief Financial Officer April 2009 Fredrik Eldorhagen... Country Manager Norway July 2014 Peter Ekholm... Country Manager Sweden January 2011 Torben Lindholm... Country Manager Denmark January 2010 Jukka Koivisto... Country Manager Finland December 2013 Andreas Westin... Head of Development March 2014 In addition, Per Henrik Brask, will join the Group as of 1 January 2015 as Group fleet manager. The Company s registered business address, Lindebergvegen 3, N-2016 Frogner, Norway, serves as the business address for the members of the Management in relation to their employment with the Group Brief biographies of the members of the Management Set out below are brief biographies of the members of the Management, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside the Company and names of companies and partnerships of which a member of the Management is or has been a member of the administrative, management or supervisory bodies or partner the previous five years (not including directorships and executive management positions in subsidiaries of the Company). Staffan Ebenfelt, Chief Executive Officer Staffan Ebenfelt has been the Chief Executive Officer of Asta Group AS (to be renamed RenoNorden ASA) since January Prior to his appointment as CEO, Mr. Ebenfelt held several senior management positions within the hospitality and service management industry, including Coor Service Management group and Ericsson Real Estate and Services. At Coor Service Management Group, Mr. Ebenfelt was responsible for the operation in Sweden and in the geographies outside of the Nordics. Mr. Ebenfelt was the founder and owner of European Service Advisors AB. Mr. Ebenfelt holds a diploma in Hospitality Management from the Hotel Institute Montreux in Switzerland and AH&MA. Mr. Ebenfelt is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions... Åkersberga Judoklubb (chairman). Previous directorships and senior management positions last five years... Coor Service Management Group (executive vice president) and Coor Service Management Sweden (CEO). Jon Kristian Flesvik, Chief Financial Officer Jon Kristian Flesvik has been the Chief Financial Officer of Asta Group AS (to be renamed RenoNorden ASA) since Prior to his appointment as CFO, he worked as CFO for Nordisk Mobiltelefon Norge AS (ICE) and various financial positions for Statoil ASA. Mr. Flesvik holds an MSc in Business Administration from the 146

151 Norwegian Business School in Oslo. Mr. Flesvik is a Norwegian citizen, and resides in Norway. Current directorships and senior management positions... Tvice AS (owner, chairman and managing director). Previous directorships and senior management positions last five years... None. Fredrik Eldorhagen, Country Manager Norway Fredrik Eldorhagen has been the country manager of RenNorden AS in Norway since Prior to his appointment as country manager, Mr. Eldorhagen worked as managing director of EFG HOV+DOKKA AS. Mr. Eldorhagen has held numerous positions within operations, strategy and sales and marketing, including ISS Facility Services AS, Gjensidige Bank and Insurance AS, Excellent AS and Talk2me AS (now Bring Dialogue). Mr. Eldorhagen holds an MSc in Marketing from the Norwegian Business School. Mr. Eldorhagen is a Norwegian citizen, and resides in Norway. Current directorships and senior management positions... Eldorhagen Industrier (owner). Previous directorships and senior management positions last five years... EFG HOV+DOKKA AS (managing director), Office Interiør AS (managing director), Karstem M. AS (managing director), Eldorhagen Industrier (owner), ISS Facility Services AS (sales and marketing director) and ISS Facility Services AS (divisional director route based services). Peter Ekholm, Country Manager Sweden Peter Ekholm has been the country manager of RenNorden AB in Sweden since Prior to his appointment, Mr. Ekholm held various managing positions within the Schenker logistics group, including regional manager. Mr. Ekholm is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions... None. Previous directorships and senior management positions last five years... Schenker Logistics AB (regional manager). Torben Lindholm, Country Manager Denmark Torben Lindholm has been country manager of RenoNorden A/S in Denmark since 2010, but had worked in the Renoflex group since 1998 which was acquired by the Group in Mr. Lindholm has worked more than 23 years within the household-waste management industry, including holding positions with Renholdningsselskabet af 1898 andrenoflex. Mr. Lindholm holds an MSc in business from Copenhagen Business School and an MSc in Product Engineering from the Technical University of Denmark. Mr. Lindholm is a Danish citizen, and resides in Denmark. Current directorships and senior management positions... None. Previous directorships and senior management positions last five years... Renoflex A/S (managing director and board member) and NordRen A/S (board member). Jukka Koivisto, Country Manager Finland Jukka Koivisto has been country manager of RenoNorden Finland Holding OY in Finland since 2014, but had worked in HFT Environment OY since 2002 which was acquired by the Group in Mr. Koivisto has more than 25 years of experience within the environmental business industry and has helped start up and develop numerous waste handling companies, such as HFT Network OY and CCR Nordic OY. Mr. Koivisto holds a BSc in Engineering from Arcada-Nylands Svenska yrkeshökskolan. Mr. Koivisto is a Finish citizen, and resides in Finland. Current directorships and senior management positions... Scandinavian Waste Management OY (board member), HFT Environment OY (board member), HFT Network OY (board member) and Lindbohm & Partners OY (board member). Previous directorships and senior management positions last five years... Environment OY (board member). 147

152 Andreas Westin, Head of Development Andreas Westin has been Head of Development of the Company since Prior to joining the Company, Mr. Westin worked as a management consultant with A. T. Kearney and Capgemini Consulting, focusing on supply chain efficiencies, market strategy and operational excellence. Mr. Westin holds an MSc in Business Administration from Stockholm University and an MSc in Industrial Engineering from Linköping University. Mr. Westin is a Swedish citizen, and resides in Sweden. Current directorships and senior management positions... Westindustries AB (owner). Previous directorships and senior management positions last five years... None Shares held by members of Management As of 27 November 2014, the members of the Company s Management have the following shareholdings in the Company: Name Position No. of A- shares No. of B- shares No. ordinary Shares after the Combination Staffan Ebenfelt 1... CEO 1,069, , ,322 Jon Kristian Flesvik 2... CFO 1,158,060 89, ,989 Fredrik Eldorhagen... Country manager Norway 509,766 47,500 75,218 Peter Ekholm 3... Country manager Sweden 259,186 19,447 33,540 Torben Lindholm... Country manager Denmark 787,239 48,659 91,465 Jukka Koivisto... Country manager Finland 2,126,942 44, ,420 Andreas Westin 4... Head of Development 262,633 22,000 36,280 1 Staffan Ebenfelt holds shares in the Company through Staffan Ebenfelt Investments AS. 2 Jon Kristian Flesvik holds shares in the Company through Tvice AS. 3 Peter Ekholm holds shares in the Company through Ekholm Invest AS. 4 Andreas Westin holds shares in the Company through WestInvest AS. See Section 16.5 Ownership structure for more information regarding the Combination. As of the date of this Prospectus, none of the members of the Management holds any options for Shares in the Company Remuneration and benefits Remuneration of the Board of Directors The Board Members did not receive any remuneration in Remuneration of the Management The Board of Directors has established guidelines for the remuneration to the members of the Management. It is a policy of the Company to offer the Management competitive remuneration based on current market standards, company and individual performance. The remuneration consists of a basic salary element combined with a performance based bonus program as set forth below. The Management participates in the Company s insurances and medical coverage, and is entitled to certain fringe benefits, such as one newspaper, use of mobile and home telephone, computer (included broadband) and company car including related expenses. The Group does not disclose remuneration on an individual basis as it is not required to do so in the various operating jurisdictions Benefits upon termination No employee, including any member of the Management, has entered into employment agreements which provide for any special benefits upon termination, except for Fredrik Eldorhagen, Jon Kristian Flesvik and Staffan Ebenfelt who are, under certain circumstances, entitled to six months severance pay and Peter Ekholm who is, under certain circumstances, entitled to three months severance pay. Furthermore, Jukka Koivisto is, pursuant to a service contract, under certain conditions, entitled to 18 months of 33% of salary if non-compete clause to which he is subject is complied with. None of the Board Members or members of the nomination committee have service contracts and none will be entitled to any benefits upon termination of office. 148

153 13.6 Pensions and retirement benefits The Group has a defined contribution plan which covers all of the Group s employees. The Company has no pension or retirement benefits for its Board Members. For more information regarding pension and retirement benefits, see note 6 to the Financial Statements for the year ended 31 December 2013, included as Appendix B Loans and guarantees The Company has not granted any loans, guarantees or other commitments to any of its Board Members or to any member of the Management Employees As of the date of this Prospectus, the Group has approximately 1,444 full-time employees. The table below shows the development in the numbers of full-time employees for the nine months ended 30 September 2014 and the years ended 2013, 2012 and As at 30 September As at 31 December Employees in Norway Employees in Sweden Employees in Denmark Employees in Finland Total employees Group... 1,444 1,445 1,175 1,085 1 HFT Environment was acquired 19 December The table below shows the numbers of employees by main category of activity for the nine months ended 30 September 2014 and the years ended 2013, 2012 and As at 30 September As at 31 December Administration Transportation... 1,293 1,298 1, Total employees Group... 1,444 1,445 1,175 1,085 1 HFT Environment was acquired 19 December Long-term incentive program In order to strengthen the common interests between the Management and other key employees and the shareholders after the Listing, the Board of Directors has resolved, subject to completion of the Offering and Listing and approval by the General Meeting, to implement a long-term incentive program for its Management and other key employees (as defined by the CEO and approved by the Board of Directors) by granting shares to such persons. 149

154 The shares will be granted annually, and the Board of Directors will determine the maximum number of shares to be granted each year. The participants in the program will at each grant receive shares worth from one to six months base salary, calculated on the basis of the market value of the shares at the time of grant and a purchase price equal to the nominal value of the shares (NOK 1). The Board of Directors will annually decide to whom shares shall be granted and the number of shares to be granted to each individual employee. The first time of grant will be in the first half of The shares will vest three years after grant, subject to key performance criteria being met, and subject to the holder being an employee of the Group at the vesting date. Employees whose employment terminates prior to the vesting date due to death, disability or termination by the Group without cause, shall be entitled to a pro rata portion of the shares (subject to the key performance criteria being met). Vested shares will be delivered in the period starting on the day following the date of the Company s release of its annual results and for 15 business days thereafter. The Company may honour vested shares in the form of shares or by an equivalent amount in cash Nomination committee The Company s Articles of Association provide for a nomination committee composed of two members who are shareholders or representatives of shareholders. The current members of the nomination committee are Seamus Philip Fitzpatrick (chairman) and Ian Lambert. The nomination committee will be responsible for nominating the shareholder-elected Board Members and members of the nomination committee and make recommendations for remuneration for the Board Members and members of the nomination committee Audit committee The Board of Directors has established an audit committee composed of Board Members. The current members of the audit committee are Penelope Kate Briant (chairman) and Niklas Nikita Sloutski. Charlotte G. Hansson has been appointed as additional member of the audit committee subject to, and with effect from, the Listing. The primary purposes of the audit committee are to: assist the Board of Directors in discharging its duties relating to the safeguarding of assets; the operation of adequate system and internal controls; control processes and the preparation of accurate financial reporting and statements in compliance with applicable legal requirements, corporate governance and accounting standards; and provide support to the Board of Directors on the risk profile and risk management of the Company. The audit committee reports and makes recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations Remuneration committee The Board of Directors has established a remuneration committee amongst the Board Members. The remuneration committee comprises Alexander Walsh (chairman) and Niklas Nikita Sloutski. Erik Thorsen has been appointed as additional member of the remuneration committee subject to, and with effect from, the Listing. The primary purpose of the remuneration committee is to assist the Board of Directors in discharging its duty relating to determining Management s compensation. The remuneration committee shall report and make recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations Corporate governance The Company has adopted and implemented a corporate governance regime which complies with the Norwegian Code of Practice for Corporate Governance, dated 30 October 2014 (the Corporate Governance Code ) Conflicts of interests etc. During the last five years preceding the date of this Prospectus, none of the Board Members and members of 150

155 the Management has, or had, as applicable: any convictions in relation to indictable offences or convictions in relation to fraudulent offences; received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or was disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company; or been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his or her capacity as a founder, member of the administrative body or supervisory body, director or senior manager of a company. To the Company s knowledge, there are currently no other actual or potential conflicts of interest between the Company and the private interests or other duties of any of the Board Members and members of the Management, including any family relationships between such persons. 151

156 14 THE SELLING SHAREHOLDERS 14.1 CapVest and Accent Equity CapVest (with registered address Atrium, Stawinkylaan ZX AMSTERDAM, the Netherlands and register number ) will following the Combination of the class A-shares and class B-shares and the issuance of the New Shares in the Offering (and assuming a price equal to the high-point of the Indicative Price Range), hold 12,005,296 Shares in the Company, corresponding to 45% of the issued and outstanding Shares prior to the allocation of Sale Shares. Accent Equity (with registered address 3 The Forum, Greenville Street, St Helier, JE2 4UF, Jersey, Channel Island) will following the Combination of the class A-shares and class B-shares and the issuance of the New Shares in the Offering (and assuming a price equal to the high-point of the Indicative Price Range), hold 7,596,987 Shares in the Company, corresponding to 29% of the issued and outstanding Shares prior to the allocation of Sale Shares. CapVest and Accent Equity will sell Sale Shares in the Offering pro rata to their respective shareholding in the Company (i.e. CapVest and Accent Equity will sell 61% and 39%, respectively, of the Sale Shares sold by the Principal Shareholders). The number of Sale Shares to be sold by the Principal Shareholders will be subject to the final Offer Price, provided, however that CapVest and Accent Equity will retain a shareholding in the Company of at least 12.7% and 8.0%, respectively, following the Offering (including the issuance of the New Shares), assuming that the Over-Allotment Option is exercised in full. Further, if the final Offer Price is set at the low-end of the Indicative Price Range, CapVest and Accent Equity will sell at least 5,546,934 and 3,510,107 Sale Shares, respectively, and thus retain a shareholding in the Company of not more than 22.6% and 14.3% (6,458,362 and 4,086,880 Shares), respectively, following the Offering (including the issuance of the New Shares), assuming that the Over-Allotment Option is exercised in full. Pursuant to a lock-up agreement, the Principal Shareholders will give an undertaking that will, among other things, restrict their ability to offer, sell or transfer Shares, as applicable, for a period ending 180 days after completion of the Offering. See Section Lock-up Management and other employees The table below shows the members of the Management and other employees offering of Sale Shares in the Offering, including such persons registered address, number of Shares held following the Combination of the class A-shares and class B-shares and the issuance of the New Shares in the Offering (and assuming a price equal to the high-point of the Indicative Price Range), but prior to allocation of the Sale Shares. The number of Sale Shares offered by Management and other employees is based on the assumption that the Offer Price is set at the high-point of the Indicative Price Range. The number of Sale Shares offered will increase if the final Offer Price is higher and decrease if the final Offer Price is lower as the Management and other employee shareholders have agreed that the total amount received by each of them through the repayment of the Shareholder Loan and the sale of Sale Shares in the Offering shall be limited to 25% of their investment in the Company (i.e. the sum of their portion of the Shareholder Loan and their Shares in the Company at the Offer Price). 152

157 Name Staffan Ebenfelt 1 Jon Kristian Flesvik 1 Registered address Sätterfjärdsvägen 9, SE Åkersberga, Sweden Smibakken 6A N-2337 Tangen, Norway Andreas Westin 1 Frejgatan 37, 5tr, SE Stockholm, Sweden Peter Ekholm 1 Gustavsgatan 58, SE Örebro, Sweden Torben Lindholm 1 Fredrik Eldorhagen 1 Flintsvej 17, DK-4600 Køge, Denmark Minåsveien 5, N-0891 Oslo, Norway Anders Rees Mikrofonvägen 13, SE Kirsten Bie Fjeldstad Hägersten, Sweden Gamle Strømsvei 29A, N-1056 Oslo, Norway Jacob Malmborg Wittstocksgatan 3c, SE Yngve Haugvik Stockholm, Sweden Helgerudveien 4, N-3400 Lier, Norway Siri Andresen Furuvegen 17, N-2016 Frogner, Norway Anniqa Wallonius Renlavsgången 17, SE Maria-Louise H. Eskildsen Nils Barfod Karsten Linderskov Andreas Andresen Finn Lodsby Jukka Koivisto 1 Hanna-Liisa Järvinen Tyresö, Sweden Søndervangen 5, DK-4600 Køge, Denmark Århusgade th. DK-2100 København Ø., Denmark Møllevænget 41, DK-2970 Hørsholm, Denmark Furuvegen 17, N-2016 Frogner, Norway Møllevegen 3, N-2740 Roa, Norway Kuusitie 13, Vantaa, Finland Iltapäiväntie 2D 23, Espoo, Finland Kalle Hakala Hiidenkatu 1 C 3, Kuopio, Finland Hanna Rissanen Viitostie 3667, Svein Tore Aurland Paukarlahti, Finland Gauteidvegen 227, N-2016 Frogner, Norway Number of Shares held Number of Sale Shares offered 2 Number of Shares held following the Offering 2 Percentage of issued share capital following the Offering 2 277,322 8, , % 150,989 7, , % 36,280 n.a. 3 44, % 33,540 1,645 31, % 91,465 4,540 86, % 75,218 n.a. 3 92, % 14, , % 4,921 n.a. 3 6, % 7,382 n.a. 3 9, % 11,798 n.a. 3 14, % 11,798 n.a. 3 14, % 5, , % 10, , % 5, , % 5, , % 21,126 n.a. 3 25, % 10,974 n.a. 3 13, % 160,420 n.a , % 90,469 n.a. 4 90, % 11,259 n.a. 4 11, % 4,503 n.a. 4 4, % 20,220 1,179 19, % 1 Primary insiders of the Company. 2 Assuming an Offer Price equal to the high-point in the Indicative Price Range. 3 These members of Management roll their interest (less their proportion of fees) forward in the Offering, hence the Shareholders increase their number of shares in the Company following repayment of the Shareholder Loan. 4 These members of management roll approximately 75% of their interest (less their proportion of fees) forward in the Offering, hence they increase their number of shares in the Company following repayment of the Shareholder Loan. 5 Svein Tore Aurland is no longer employed by the Company. Pursuant to lock-up agreements, the members of the Management will give undertakings that will restrict their ability to offer, sell or transfer Shares, as applicable, for a period ending 360 days after completion of the Offering. See Section Lock-up. 153

158 15 RELATED PARTY TRANSACTIONS 15.1 Introduction Below is a summary of the Group s related party transactions for the periods covered by the historical financial information included in this Prospectus as Appendix B and Appendix D and up to the date of this Prospectus. For further information on related party transactions of the Group, please refer to note 23 and note 3 of the Financial Statements and the Interim Financial Statements, respectively, included in Appendix B and Appendix D to this Prospectus Transactions carried out with related parties in the years ended 31 December 2013, 2012 and 2011 The shareholders of the Company have provided an interest-bearing loan to the Company carrying a fixed cumulative interest of 8% per annum (the Shareholder Loan). As at 30 September 2014, the outstanding amount under the Shareholder Loan was NOK 295 million. Subject to completion of the Offering and Listing, the Shareholder Loan will be repaid in full by the proceeds from issuance of the New Shares in the Offering, see Section 19.1 Overview of the Offering. As of 17 December 2014, the outstanding amount under the Shareholder Loan is expected to be NOK million. The Principal Shareholders and certain managerial employees of the Company hold class A-shares (preference shares) governed by the Investment Agreement dated 30 September The class A-shares give its holder the right to a fixed cumulative compounded preferential return at an annual rate of 21%. See Section 10.5 Analysis of material differences between IFRS and NGAAP and note 24 for the Group s Financial Statement for the year ended 31 December 2013 for more information on the preference shares. Pursuant to the Combination, the Company s General Meeting resolved to combine the two share classes into one class of ordinary shares. See Section 16.3 Share capital and share capital history for more information regarding the Combination. Pursuant to an agreement between the Company, Accent Equity and CapVest dated 30 September 2011, Accent Equity and CapVest Limited or CapVest Partners LLP, or any respective successor entity thereto ( CapVest Adviser ), shall provide the Group with services relating to strategy, marketing and general corporate advice or monitoring. The annual compensation payable by the Company for such services (the Monitoring Fee ) is a total amount equal to 1.5% of the Group s EBITDAR (plus any VAT or similar taxes) as determined based on the audited accounts of the Group for the relevant financial year. The agreement will terminate as of the date of the Listing, but the Company is obliged to pay Monitoring Fee for the full year The Monitoring Fee for 2013 and 2012 was invoiced and paid in the fourth quarter of The Monitoring Fee for 2014 will be invoiced and paid in 2015 based on the EBITDAR in the audited financial statement for See Section Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA for more information regarding the provisional Monitoring Fee. In connection with the Company s acquisition of the RenoNorden Holding in 2011, CapVest Adviser and Accent Equity received a one-off transaction fee (the Inception Fee ) of NOK 3,895,000 to Accent Equity and NOK 8,998,000 to CapVest Adviser. The below table gives an overview of the related party transactions in the years ended 31 December 2013, 2012 and In NOK thousands Year ended 31 December Counterparty Shareholder loan... The shareholders of the Company 229, , ,376 Whereas: Accrued interest expense 6... The shareholders of the Company 43,519 23,304 4,587 Accent Equity and CapVest Monitoring Fee... Adviser 3, , ,6 4 Accent Equity and CapVest Inception Fee... Adviser ,

159 In NOK thousands Year ended 31 December Counterparty Stated as of 1 January See note 24 to the Financial Statement for the year ended 31 December Whereas CapVest Adviser received NOK 2,224, and Accent Equity received NOK 1,407, Whereas CapVest Adviser received NOK 2,192, and Accent Equity received NOK 1,387, Whereas CapVest Adviser received NOK 447,128.6 and Accent Equity received NOK 282, Whereas CapVest Adviser received NOK 8,998,000 and Accent Equity received NOK 3,895, Please note that the interest is accrued full interest and not only the interest for the financial year included Transactions carried out with related parties in the nine months ended 30 September 2014 The below table gives an overview of the related party transactions carried out with related parties in the nine months ended 30 September In NOK thousands Nine months ended 30 September Counterparty 2014 Shareholder loan... The shareholders of the Company 295,000 Whereas: Accrued interest expense... The shareholders of the Company 60,300 Monitoring Fee... Accent Equity and CapVest Adviser 3, Monitoring Fee is provisional. See Section Overview of EBITDA, EBITDAR, EBITA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITA Transactions carried out with related parties in the period following 30 September 2014 In the period following 30 September 2014, the Group has not entered into any new related party agreements. The related party agreements the Group was a party to during the nine months ended 30 September 2014 have continued to be in effect in the period following 30 September As a result, related party transactions have been carried out under these related party agreements in the same manner as in the nine months ended 30 September They will cease at the Listing, except for the Monitoring Fee which will terminate as of the date of the Listing, but the Company is obliged to pay Monitoring Fee for the full year

160 16 CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL The following is a summary of certain corporate information and material information relating to the Shares and share capital of the Company and certain other shareholder matters, including summaries of certain provisions of the Company s Articles of Association and applicable Norwegian law in effect as of the date of this Prospectus. The summary does not purport to be complete and is qualified in its entirety by the Company s Articles of Association, included in Appendix A to this Prospectus, and applicable law Company corporate information The Company s registered name is RenoNorden ASA. The Company is a public limited company organised and existing under the laws of Norway pursuant to the Norwegian Public Limited Companies Act. The Company s registered office is in the municipality of Sørum, Norway. The Company was incorporated in Norway on 17 March 2011 as a private limited company. The Company was converted into a public limited company on 25 November 2014 and at the same time the Company s name was changed from Asta Group AS to RenoNorden ASA. The Company s registration number in the Norwegian Register of Business Enterprises is , and the Shares will upon Listing be registered in book-entry form with the VPS under ISIN NO The Company s register of shareholders in the VPS is administrated by DNB. The Company s registered office is located at Lindebergveien 3, N-2016 Frogner, Norway and the Company s main telephone number at that address is and its telefax number is The Company s website can be found at The content of is not incorporated by reference into or otherwise forms part of this Prospectus Legal structure The Company, which is the parent company of the Group, is a holding company and the operations of the Group are carried out through the operating subsidiaries of the Company. The following table sets out information about the Company s subsidiaries: Country of Company incorporation Field of activity Holding (%) RenoNorden Investments AS Norway Holding company 100% RenoNorden AS Norway Waste collection services 100% RenoNorden AB Sweden Waste collection services 100% RenoNorden A/S Denmark Waste collection services 100% RenoNorden Finland Holding Oy Finland Holding company 100% HFT Environment Oy Finland Waste collection services 100% HFT Network Oy Finland Waste collection services 100% As at the date of this Prospectus, the Group is of the opinion that its holdings in the entities specified above are likely to have a significant effect on the assessment of its own assets and liabilities, financial condition or profits and losses. The following chart sets out the Group s legal group structure at the date of this Prospectus: 156

161 RenoNorden ASA (Norway) RenoNorden Investments AS (Norway) RenoNordenAB (Sweden) RenoNorden AS (Norway) RenoNorden A/S (Denmark) RenoNorden Finland Holding Oy (Finland) HFT Environment Oy (Finland) HFT Network Oy (Finland) The Finnish subsidiaries HFT Environment and HFT Network OY are anticipated to merge on or around 31 December Share capital and share capital history As of the date of this Prospectus, the Company s share capital is NOK 2,836, divided into 283,691,971 Shares, each having a par value of NOK 0.01, of which 278,121,091 Shares are class A-shares and 5,570,880 Shares are class B-shares. All the Shares have been created under the Norwegian Public Limited Companies Act, and are validly issued and fully paid. As of the date of the Prospectus, the class A-shares have a preference right to dividend paid by the Company and no voting rights in the General Meeting. The class B-shares have voting rights in the General Meeting of the Company. Combination of share classes On 27 November 2014, the Company s General Meeting resolved to combine the two share classes into one class of ordinary shares (the Combination ) in which all the shares carries one voting right and otherwise rank pari passu in all respects with effect from registration of the share capital increase relating to the issuance of the New Shares in the Offering (i.e. on or about 12 December 2014). In the Combination, 263,045,471 class A-shares will be cancelled without compensation, while the rights attaching to the remaining 15,093,283 class A-shares will be amended in order for such shares to carry the same rights as the class B-shares. In addition, 544,679 treasury shares held by the Company will be cancelled. As a result of the Combination and before the issuance of the New Shares there will be 20,664,163 Shares outstanding, each having a par value of NOK 1, and each Share will carry one vote and all Shares will rank pari passu in all respects. See Section Determination of the number of Offer Shares and the Offer Price. The General Meeting held on 27 November 2014 resolved to increase the share capital by minimum NOK 3,500,000 and maximum NOK 10,000,000 by the issuance of minimum 3,500,000 and maximum 10,000,000 New Shares in the Offering in order to raise an amount of approximately NOK 310 million. The General Meeting further resolved that the issue price shall be set by the Board of Directors within a range from NOK 20 to NOK 80 per Share. The net proceeds from the issuance of the New Shares will be used to repay the amount outstanding under the Shareholder Loan, including interest accrued (is expected to be in total NOK as of 17 December 2014) and the outstanding amount of the loans from former employees of the Group (the Leaver Loans) (in total NOK 11 million). The final number of Shares outstanding following the issuance of the New Shares in the Offering will be determined by the final Offer Price. For illustration purposes, the number of outstanding Shares before and following the Offering at alternative Offer Prices within the Indicative Price Range is set out below. 157

162 Price per Offer Share Shares outstanding following Combination... 20,664,163 20,664,163 20,664,163 20,664,163 20,664,163 Pre-money market value ,013 1,095 Number of Shares outstanding following the Offering... 28,583,392 28,017,732 27,378,292 26,967,223 26,491,520 Post money market value... 1,115 1,177 1,259 1,321 1,404 The Company will upon Listing have one class of Shares. Neither the Company nor any of its subsidiaries will upon Listing directly or indirectly own Shares in the Company. The table below shows the development in the Company s share capital for the period from its incorporation to the date hereof. Change in Date of resolution Type of change share capital (NOK) Par value (NOK) New number of Shares New share capital (NOK) Incorporation , Share capital decrease 2 99, , Share capital increase 2 2,708, ,957,133 2,710, Share capital increase 3 65, ,589,101 2,776, Share capital increase 4 29, ,949,920 2,805, Share capital increase 5 8, ,532 2,814, Share capital increase 6 22, ,251,295 2,836, Share capital increase 7 169, ,990 2,836, Share capital reduction 8 2,630, ,646, , Share capital increase 9 20,440, ,664, , The shares were subscribed at a price of NOK 1 each. 2 A share capital decrease and a share capital increase were resolved in the same general meeting. The shares were subscribed in the share capital increase at a price of NOK 1 each. The Company issued 1,935,197 new class B-shares (ordinary shares) and 269,021,936 new class A-shares (preference shares), each with a par value of NOK The shares were subscribed at a price of NOK 1 by way of conversion of shareholders loans. The Company issued 360,024 new class B-shares (ordinary shares) and 6,229,077 new class A-shares (preference shares), each with a par value of NOK The shares were subscribed at a price of NOK 1. The Company issued 2,949,920 new class B-shares (ordinary shares), each with a par value of NOK The shares were subscribed at a price of NOK 1 by way of conversion of shareholders loans. The Company issued 38,585 new class B-shares (ordinary shares) and 788,947 new class A-shares (preference shares), each with a par value of NOK The shares were subscribed at a price of NOK 1 by way of conversion of shareholders loans and cash contribution. The Company issued 170,164 new class B-shares (ordinary shares) and 2,081,131 new class A-shares (preference shares), each with a par value of NOK The capital increase was part of the settlement of the HFT Acquisition in December The shares were subscribed at a price of NOK 1. The Company issued 16,990 new class B-shares (ordinary shares), each with a par value of NOK Cancellation of shares in connection with the Combination of the class A-shares and class B-shares into one share class. 9 Bonus issue by the increase of the nominal value of the shares from NOK 0.01 to NOK 1. In the period from incorporation of the Company to the date of this Prospectus, other than set out in the notes to the table above, none of the share capital has been paid with assets other than cash Admission to trading The Company will on or about 1 December 2014 apply for admission to trading of its Shares on Oslo Børs, or alternatively on Oslo Axess. It is expected that the board of directors of the Oslo Stock Exchange approves the listing application of the Company on or about 5 December 2014, subject to certain conditions being met. See Section Conditions for completion of the Offering Listing and trading of the Offer Shares. The Company currently expects commencement of trading in the Shares on Oslo Børs, or alternatively on Oslo Axess, on or around 16 December

163 The Company has not applied for admission to trading of the Shares on any other stock exchange or regulated market Ownership structure As of the date of this Prospectus, the Company has 24 shareholders. The table below shows the 20 largest shareholders in the Company as of the date of this Prospectus. # Shareholder Name No. of class B-shares (ordinary shares) No. of class A-shares (preference shares) 1 CapVest 3,049, ,695,680 2 Accent Equity 1,930, ,220,000 3 Staffan Ebenfelt Investments AS (Staffan Ebenfelt) 219,179 1,069,298 4 Tvice AS (Jon Kristian Flesvik) 89,175 1,136,810 5 Torben Lindholm 48, ,239 6 Fredrik Eldorhagen 47, ,766 7 Jukka Koivisto 44,768 2,126,942 8 Hanna-Liisa Järvinen 25,247 1,199,486 9 WestInvest AS (Andreas Westin) 22, , Probatix Holding AS (Svein Tore Aurland) 20, Ekholm AS (Peter Ekholm) 19, , Andreas Andresen 10, , Anders Rees 6, , Yngve Haygvik 5, , Siri Holand Andresen 5, , Maria-Louise H. Eskildsen 5, , Finn Lodsby 5, , Kalle Hakala 3, , Jacob Malmborg 3,000 80, Anniqa Wallonius 2,598 53,128 Total 5,562, ,356,718 See Section 14 Selling Shareholders for details on shareholders offering Sale Shares in the Offering. Following the Combination of the share classes before Listing, there will only be one class of Shares and accordingly no differences in voting rights among Shares. As a result of the Combination, the shareholding of the existing shareholders will be significantly changed and the 20 largest shareholders will then be. # Shareholder Name No. of ordinary shares 1 CapVest 12,005,296 2 Accent Equity Staffan Ebenfelt Investments AS (Staffan Ebenfelt) Jukka Koivisto 160,420 5 Tvice AS (Jon Kristian Flesvik) Torben Lindholm 91,465 7 Hanna-Liisa Järvinen 90,469 8 Fredrik Eldorhagen 75,217 9 WestInvest AS (Andreas Westin) 36, Ekholm AS (Peter Ekholm) 33, Andreas Andresen 21, Probatix Holding AS (Svein Tore Aurland) 20, Anders Rees 14, Yngve Haygvik 11, Siri Holand Andresen 11, Kalle Hakala 11, Finn Lodsby 10, Maria-Louise H. Eskildsen 10, Jacob Malmborg 7, Anniqa Wallonius 5,486 Total 20,643,

164 The above shareholding will be adjusted on the basis of the final Offer Price in order to reflect the principles of the Investment Agreement. Shareholders owning 5% or more of the Shares have an interest in the Company s share capital which is notifiable pursuant to the Norwegian Securities Trading Act. See Section 17.8 Disclosure obligations for a description of the disclosure obligations under the Norwegian Securities Trading Act. Following the completion of the Offering, the Company is not aware of any persons or entities who, directly or indirectly, jointly or severally, will exercise or could exercise control over the Company. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company. The Shares have not been subject to any public takeover bids Authorisation to increase the share capital and to issue Shares In the General Meeting held on 27 November 2014, the Board of Directors was granted an authorisation to increase the share capital of the Company by up to NOK 2,000,000, corresponding to less than 10% of the Company s share capital prior to the issuance of the New Shares. The authorisation can be used at the discretion of the Board of Directors, including without limitations in connection with acquisitions and share based incentive programs for the employees. The authorisation is valid until the Company s annual general meeting in 2015, but no longer than to 30 June The preferential rights of the existing shareholders to subscribe to the new shares pursuant to Section 10-4 of the Norwegian Public Limited Companies Act may be deviated from. The authorisation does comprise potential share capital increases against contribution in kind, but it does not comprise share capital increases in connection with mergers Authorisation to acquire treasury shares In the General Meeting held on 27 November 2014, the Board of Directors was granted an authorisation to repurchase the Company s own shares within a total par value of NOK 2,000,000, corresponding to less than 10% of the Company s share capital prior to the issuance of the New Shares. The Board of Directors is authorised to acquire and sell shares at its discretion, but not at prices higher than NOK 80 or lower than NOK 20. The authorisation is valid until the Company s annual general meeting in 2015, but no longer than to 30 June Other financial instruments Other than the long-term incentive program described in Section 13.9 Long-term incentive program, neither the Company nor any of its subsidiaries has issued any options, warrants, convertible loans or other instruments that would entitle a holder of any such instrument to subscribe for any shares in the Company or its subsidiaries. Further, neither the Company nor any of its subsidiaries has issued subordinated debt or transferable securities other than the Shares and the shares in its subsidiaries which will be held, directly or indirectly, by the Company Shareholder rights The Company will, upon completion of the Offering, have one class of Shares in issue, and in accordance with the Norwegian Public Limited Companies Act, all Shares in that class will provide equal rights in the Company. Each of the Company s Shares will carry one vote. The rights attaching to the Shares are described in Section The Articles of Association and certain aspects of Norwegian law The Articles of Association and certain aspects of Norwegian law The Articles of Association The Company s Articles of Association as these will be upon completion of the Offering are set out in Appendix A to this Prospectus. Below is a summary of certain provisions of the Articles of Association Objective of the Company The objective of the Company is to operate transport services, waste management and all matters related 160

165 thereto, as well as owning companies operating such activities Registered office The Company s registered office is in the municipality of Sørum, Norway. The Company may also hold its General Meetings in Oslo Share capital and par value The Company s share capital as of this Prospectus is NOK 2,836, divided into 283,691,971 Shares, each having a par value of NOK 0.01, of which 278,121,091 Shares are class A-shares and 5,570,880 Shares are class B-shares. The Shares are registered with the Norwegian Central Securities Depository (VPS) Board of Directors The Company s Board of Directors shall consist of a minimum of three and a maximum of seven members Restrictions on transfer of Shares The Articles of Association do not provide for any restrictions on the transfer of Shares, or a right of first refusal for the Company. Share transfers are not subject to approval by the Board of Directors General Meetings Documents relating to matters to be dealt with by the Company s General Meeting, including documents which by law shall be included in or attached to the notice of the General Meeting, do not need to be sent to the shareholders if such documents have been made available on the Company s website. A shareholder may nevertheless request that documents which relate to matters to be dealt with at the General Meeting are sent to him/her. The shareholders may cast their votes in writing, including by electronic means, in a period prior to the general meeting. The Board of Directors may provide guidelines for such voting. The notice of the General Meeting shall include the guidelines adopted by the Board of Directors Nomination committee The Company shall have a nomination committee. See Section 13 Board of Directors, Management, Employees and Corporate Governance Certain aspects of Norwegian corporate law General meetings Through the general meeting, shareholders exercise supreme authority in a Norwegian company. In accordance with Norwegian law, the annual general meeting of shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of annual general meetings setting forth the time of, the venue for and the agenda of the meeting be sent to all shareholders with a known address no later than 21 days before the annual general meeting of a Norwegian public limited company listed on a stock exchange or a regulated market shall be held, unless the articles of association stipulate a longer deadline, which is not currently the case for the Company. A shareholder may vote at the general meeting either in person or by proxy appointed at their own discretion. Although Norwegian law does not require the Company to send proxy forms to its shareholders for General Meetings, the Company plans to include a proxy form with notices of General Meetings. All of the Company s shareholders who are registered in the register of shareholders maintained with the VPS as of the date of the General Meeting, or who have otherwise reported and documented ownership to Shares, are entitled to participate at General Meetings, without any requirement of pre-registration. Apart from the annual general meeting, extraordinary general meetings of shareholders may be held if the Board of Directors considers it necessary. An extraordinary general meeting of shareholders must also be convened if, in order to discuss a specified matter, the auditor or shareholders representing at least 5% of the share capital demands this in writing. The requirements for notice and admission to the annual general meeting also apply to extraordinary general meetings. However, the annual general meeting of a Norwegian public limited company may with a majority of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a general meeting resolve that extraordinary general 161

166 meetings may be convened with a 14 days notice period until the next annual general meeting provided the company has procedures in place allowing shareholders to vote electronically Voting rights amendments to the Articles of Association With the effect from completion of the Combination, each of the Company s Shares will carry one vote. In general, decisions that shareholders are entitled to make under Norwegian law or the Company s Articles of Association may be made by a simple majority of the votes cast. In the case of elections or appointments, the person(s) who receive(s) the greatest number of votes cast are elected. However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights to subscribe in connection with any share issue in the Company, to approve a merger or demerger of the Company, to amend the Articles of Association, to authorise an increase or reduction in the share capital, to authorise an issuance of convertible loans or warrants by the Company or to authorise the Board of Directors to purchase Shares and hold them as treasury shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a general meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval by the holders of such shares or class of shares as well as the majority required for amending the Articles of Association. Decisions that (i) would reduce the rights of some or all of the Company s shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of the Shares, require that at least 90% of the share capital represented at the general meeting in question vote in favour of the resolution, as well as the majority required for amending the Articles of Association. In general, only a shareholder registered in the VPS is entitled to vote for such Shares. Beneficial owners of the Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor is any person who is designated in the VPS register as the holder of such Shares as nominees. Investors should note that there are varying opinions as to the interpretation of the right to vote on nominee registered shares. In the Company s view, a nominee may not meet or vote for Shares registered on a nominee account ( NOM-account ). A shareholder must, in order to be eligible to register, meet and vote for such Shares at the General Meeting, transfer the Shares from such NOM-account to an account in the shareholder s name. There are no quorum requirements that apply to the general meetings Additional issuances and preferential rights If the Company issues any new Shares, including bonus share issues, the Company s Articles of Association must be amended, which requires the same vote as other amendments to the Articles of Association. In addition, under Norwegian law, the Company s shareholders have a preferential right to subscribe for new Shares issued by the Company. Preferential rights may be derogated from by resolution in a General Meeting passed by the same vote required to amend the Articles of Association. A derogation of the shareholders preferential rights in respect of bonus issues requires the approval of all outstanding Shares. The General Meeting may, by the same vote as is required for amending the Articles of Association, authorise the Board of Directors to issue new Shares, and to derogate from the preferential rights of shareholders in connection with such issuances. Such authorisation may be effective for a maximum of two years, and the par value of the Shares to be issued may not exceed 50% of the registered par share capital when the authorisation is registered with the Norwegian Register of Business Enterprises. Under Norwegian law, the Company may increase its share capital by a bonus share issue, subject to approval by the Company s shareholders, by transfer from the Company s distributable equity or from the Company s share premium reserve and thus the share capital increase does not require any payment of a subscription price by the shareholders. Any bonus issues may be affected either by issuing new shares to the Company s existing shareholders or by increasing the par value of the Company s outstanding Shares. Issuance of new Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights may require the Company to file a registration statement in the United States under United States securities laws. Should the Company in such a situation decide not to file a registration statement, the Company s U.S. shareholders may not be able to exercise their preferential rights. If a U.S. shareholder is 162

167 ineligible to participate in a rights offering, such shareholder would not receive the rights at all and the rights would be sold on the shareholder s behalf by the Company Minority rights Norwegian law sets forth a number of protections for minority shareholders of the Company, including, but not limited to, those described in this paragraph and the description of General Meetings as set out above. Any of the Company s shareholders may petition Norwegian courts to have a decision of the Board of Directors or the Company s shareholders made at the General Meeting declared invalid on the grounds that it unreasonably favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. The Company s shareholders may also petition the courts to dissolve the Company as a result of such decisions to the extent particularly strong reasons are considered by the court to make necessary dissolution of the Company. Minority shareholders holding 5% or more of the Company s share capital have a right to demand in writing that the Company s Board of Directors convene an extraordinary general meeting to discuss or resolve specific matters. In addition, any of the Company s shareholders may in writing demand that the Company place an item on the agenda for any General Meeting as long as the Company is notified in time for such item to be included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if the deadline for issuing notice of the General Meeting has not expired Rights of redemption and repurchase of Shares The share capital of the Company may be reduced by reducing the par value of the Shares or by cancelling Shares. Such a decision requires the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at a General Meeting. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed. The Company may purchase its own Shares provided that the Board of Directors has been granted an authorisation to do so by a General Meeting with the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at the meeting. The aggregate par value of treasury shares so acquired, and held by the Company must not exceed 10% of the Company s share capital, and treasury shares may only be acquired if the Company s distributable equity, according to the latest adopted balance sheet, exceeds the consideration to be paid for the shares. The authorisation by the General Meeting of the Company s shareholders cannot be granted for a period exceeding 18 months Shareholder vote on certain reorganisations A decision of the Company s shareholders to merge with another company or to demerge requires a resolution by the General Meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the General Meeting. A merger plan, or demerger plan signed by the Board of Directors along with certain other required documentation, would have to be sent to all the Company s shareholders, or if the Articles of Association stipulate that, made available to the shareholders on the Company s website, at least one month prior to the General Meeting to pass upon the matter Liability of Board Members Board Members owe a fiduciary duty to the Company and its shareholders. Such fiduciary duty requires that the Board Members act in the best interests of the Company when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company. Board Members may each be held liable for any damage they negligently or wilfully cause the Company. Norwegian law permits the General Meeting to discharge any such person from liability, but such discharge is not binding on the Company if substantially correct and complete information was not provided at the General Meeting passing upon the matter. If a resolution to discharge the Company s Board Members from liability or not to pursue claims against such a person has been passed by a General Meeting with a smaller majority than that required to amend the Articles of Association, shareholders representing more than 10% of the share capital or, if there are more than 100 shareholders, more than 10% of the shareholders may pursue the claim on the Company s behalf and in its name. The cost of any such action is not the Company s responsibility but 163

168 can be recovered from any proceeds the Company receives as a result of the action. If the decision to discharge any of the Company s Board Members from liability or not to pursue claims against the Company s Board Members is made by such a majority as is necessary to amend the Articles of Association, the minority shareholders of the Company cannot pursue such claim in the Company s name Indemnification of Board Members Neither Norwegian law nor the Articles of Association contains any provision concerning indemnification by the Company of the Board of Directors. The Company is permitted to purchase insurance for the Board Members against certain liabilities that they may incur in their capacity as such Distribution of assets on liquidation Under Norwegian law, the Company may be wound-up by a resolution of the Company s shareholders at the General Meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the meeting. In the event of liquidation, the Shares rank equally in the event of a return on capital Shareholders agreement The shareholders in the Company and the Company are currently parties to the Investment Agreement, which, amongst other, governs the rights and obligations of the shareholders in respect of their shares in the Company. It is expected that the Principal Shareholders will enter into a sell-down agreement in connection with the Offering in order to coordinate further sale of Shares by them, if any, during the period from completion of the Offering until the earlier of (i) either party holding less than 5% of the Shares in the Company and (ii) 18 months from the first day of Listing. The Investment Agreement will terminate with effect from, and conditioned upon, the Listing. Other than this, there are to the knowledge of the Board of Directors no shareholders agreements relating to the Shares. 164

169 17 SECURITIES TRADING IN NORWAY 17.1 Introduction The Company will apply for Listing of its Shares on Oslo Børs, or alternatively on Oslo Axess (to the extent the Company should not fulfil, as at the time of the Listing, the listing requirements of Oslo Børs). Oslo Børs and Oslo Axess are both regulated markets operated by the Oslo Stock Exchange. The matters described in this Section applies both to shares listed on Oslo Børs and Oslo Axess The Oslo Stock Exchange The Oslo Stock Exchange was established in 1819 and is the principal market in which shares, bonds and other financial instruments are traded in Norway. As at 31 December 2013, the total capitalisation of companies listed on the Oslo Stock Exchange amounted to approximately NOK 1,927 billion. Shareholdings of non-norwegian investors as a percentage of total market capitalisation as at 31 December 2013 amounted to approximately 37.3%. The Oslo Stock Exchange has entered into a strategic cooperation with the London Stock Exchange group with regards to, inter alia, trading systems for equities, fixed income and derivatives Trading and settlement Trading of equities on the Oslo Stock Exchange is carried out in the electronic trading system TradElect. This trading system was developed by the London Stock Exchange and is in use by all markets operated by the London Stock Exchange as well as by the Borsa Italiana and the Johannesburg Stock Exchange. Official trading on the Oslo Stock Exchange takes place between 09:00 hours (CET) and hours (CET) each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET), closing auction from 16:20 hours (CET) to 16:25 hours (CET) and a post trade period from 16:25 hours (CET) to 17:30 hours (CET). Reporting of after exchange trades can be done until 17:30 hours (CET). The settlement period for trading on the Oslo Stock Exchange is two trading days (T+2). This means that securities will be settled on the investor s account in the VPS two days after the transaction, and that the seller will receive payment after two days. Oslo Clearing ASA, a wholly-owned subsidiary of SIX x-clear AG, a company in the SIX group, has a license from the Norwegian FSA to act as a central clearing service, and has from 18 June 2010 offered clearing and counterparty services for equity trading on the Oslo Stock Exchange. Investment services in Norway may only be provided by Norwegian investment firms holding a license under the Norwegian Securities Trading Act, branches of investment firms from an EEA member state or investment firms from outside the EEA that have been licensed to operate in Norway. Investment firms in an EEA member state may also provide cross-border investment services into Norway. It is possible for investment firms to undertake market-making activities in shares listed in Norway if they have a license to this effect under the Norwegian Securities Trading Act, or in the case of investment firms in an EEA member state, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Norwegian Securities Trading Act relating to brokers trading for their own account. However, such market-making activities do not as such require notification to the Norwegian FSA or the Oslo Stock Exchange except for the general obligation of investment firms that are members of the Oslo Stock Exchange to report all trades in stock exchange listed securities Information, control and surveillance Under Norwegian law, the Oslo Stock Exchange is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of the Oslo Stock Exchange monitors all market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments. The Norwegian FSA controls the issuance of securities in both the equity and bond markets in Norway and evaluates whether the issuance documentation contains the required information and whether it would 165

170 otherwise be unlawful to carry out the issuance. Under Norwegian law, a company that is listed on a Norwegian regulated market, or has applied for listing on such market, must promptly release any inside information directly concerning the company. Inside information means precise information about financial instruments, the issuer thereof or other matters which are likely to have a significant effect on the price of the relevant financial instruments or related financial instruments, and which are not publicly available or commonly known in the market. A company may, however, delay the release of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the confidentiality of the information and that the delayed release would not be likely to mislead the public. The Oslo Stock Exchange may levy fines on companies violating these requirements The VPS and transfer of Shares The Company s principal share register is operated through the VPS. The VPS is the Norwegian paperless centralised securities register. It is a computerised book-keeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. The VPS and the Oslo Stock Exchange are both wholly-owned by Oslo Børs VPS Holding ASA. All transactions relating to securities registered with the VPS are made through computerised book entries. No physical share certificates are, or may be, issued. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To give effect to such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norwegian banks, Norges Bank (being, Norway s central bank), authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents. As a matter of Norwegian law, the entry of a transaction in the VPS is prima facie evidence in determining the legal rights of parties as against the issuing company or any third party claiming an interest in the given security. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition is not prevented by law, the relevant company s articles of association or otherwise. The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of, rights in respect of registered securities unless the error is caused by matters outside the VPS control which the VPS could not reasonably be expected to avoid or overcome the consequences of. Damages payable by the VPS may, however, be reduced in the event of contributory negligence by the aggrieved party. The VPS must provide information to the Norwegian FSA on an ongoing basis, as well as any information that the Norwegian FSA requests. Further, Norwegian tax authorities may require certain information from the VPS regarding any individual s holdings of securities, including information about dividends and interest payments Shareholder register Norwegian law Under Norwegian law, shares are registered in the name of the beneficial owner of the shares. As a general rule, there are no arrangements for nominee registration and Norwegian shareholders are not allowed to register their shares in the VPS through a nominee. However, foreign shareholders may register their shares in the VPS in the name of a nominee (bank or other nominee) approved by the Norwegian FSA. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the company and to the Norwegian authorities. In case of registration by nominees, the registration in the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions, but cannot vote in general meetings on behalf of the beneficial owners Foreign investment in shares listed in Norway Foreign investors may trade shares listed on the Oslo Stock Exchange through any broker that is a member of the Oslo Stock Exchange, whether Norwegian or foreign Disclosure obligations If a person s, entity s or consolidated group s proportion of the total issued shares and/or rights to shares in a 166

171 company listed on a regulated market in Norway (with Norway as its home state, which will be the case for the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of that company, the person, entity or group in question has an obligation under the Norwegian Securities Trading Act to notify the Oslo Stock Exchange and the issuer immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the company s share capital Insider trading According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such dispositions, must not be undertaken by anyone who has inside information, as defined in Section 3-2 of the Norwegian Securities Trading Act. The same applies to the entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions Mandatory offer requirement The Norwegian Securities Trading Act requires any person, entity or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a company listed on a Norwegian regulated market (with the exception of certain foreign companies not including the Company) to, within four weeks, make an unconditional general offer for the purchase of the remaining shares in that company. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of shares that, together with the party s own shareholding, represent more than one-third of the voting rights in the company and the Oslo Stock Exchange decides that this is regarded as an effective acquisition of the shares in question. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately notify the Oslo Stock Exchange and the company in question accordingly. The notification is required to state whether an offer will be made to acquire the remaining shares in the company or whether a sale will take place. As a rule, a notification to the effect that an offer will be made cannot be retracted. The offer and the offer document required are subject to approval by the Oslo Stock Exchange before the offer is submitted to the shareholders or made public. The offer price per share must be at least as high as the highest price paid or agreed by the offeror for the shares in the six-month period prior to the date the threshold was exceeded. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered. In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, the Oslo Stock Exchange may force the acquirer to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the company, such as voting in a general meeting, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise his/her/its rights to dividends and pre-emption rights in the event of a share capital increase. If the shareholder neglects his/her/its duty to make a mandatory offer, the Oslo Stock Exchange may impose a cumulative daily fine that runs until the circumstance has been rectified. Any person, entity or consolidated group that owns shares representing more than one-third of the votes in a company listed on a Norwegian regulated market (with the exception of certain foreign companies not including the Company) is obliged to make an offer to purchase the remaining shares of the company (repeated offer obligation) if the person, entity or consolidated group through acquisition becomes the owner of shares representing 40%, or more of the votes in the company. The same applies correspondingly if the person, entity or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes 167

172 in the company. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares which exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered. Any person, entity or consolidated group that has passed any of the above mentioned thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules is, as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of shares in the company Compulsory acquisition Pursuant to the Norwegian Public Limited Companies Act and the Norwegian Securities Trading Act, a shareholder who, directly or through subsidiaries, acquires shares representing 90% or more of the total number of issued shares in a Norwegian public limited liability company, as well as 90% or more of the total voting rights, has a right, and each remaining minority shareholder of the company has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the remaining shares with immediate effect. If a shareholder acquires shares representing more than 90% of the total number of issued shares, as well as more than 90% of the total voting rights, through a voluntary offer in accordance with the Securities Trading Act, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution authorised to provide such guarantees in Norway. A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the determination of which is at the discretion of the majority shareholder. However, where the offeror, after making a mandatory or voluntary offer, has acquired more than 90% of the voting shares of a company and a corresponding proportion of the votes that can be cast at the general meeting, and the offeror pursuant to Section 4-25 of the Norwegian Public Limited Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of the offer price for the mandatory/voluntary offer unless specific reasons indicate another price. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition. Absent a request for a Norwegian court to set the price or any other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline Foreign exchange controls There are currently no foreign exchange control restrictions in Norway that would potentially restrict the payment of dividends to a shareholder outside Norway, and there are currently no restrictions that would affect the right of shareholders of a company that has its shares registered with the VPS who are not residents in Norway to dispose of their shares and receive the proceeds from a disposal outside Norway. There is no maximum transferable amount either to or from Norway, although transferring banks are required to submit reports on foreign currency exchange transactions into and out of Norway into a central data register maintained by the Norwegian customs and excise authorities. The Norwegian police, tax authorities, customs and excise authorities, the National Insurance Administration and the Norwegian FSA have electronic access to the data in this register. 168

173 18 TAXATION Set out below is a summary of certain Norwegian tax matters related to an investment in the Company. The summary regarding Norwegian taxation is based on the laws in force in Norway as at the date of this Prospectus, which may be subject to any changes in law occurring after such date. Such changes could possibly be made on a retrospective basis. The following summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase, own or dispose of the shares in the Company. Shareholders who wish to clarify their own tax situation should consult with and rely upon their own tax advisors. Shareholders resident in jurisdictions other than Norway and shareholders who cease to be resident in Norway for tax purposes (due to domestic tax law or tax treaty) should specifically consult with and rely upon their own tax advisors with respect to the tax position in their country of residence and the tax consequences related to ceasing to be resident in Norway for tax purposes. Please note that for the purpose of the summary below, a reference to a Norwegian or non-norwegian shareholder refers to the tax residency rather than the nationality of the shareholder Norwegian taxation Taxation of dividends Norwegian Personal Shareholders Dividends received by shareholders who are individuals resident in Norway for tax purposes ( Norwegian Personal Shareholders ) are taxable as ordinary income in Norway for such shareholders at a flat rate of 27% to the extent the dividend exceeds a tax-free allowance. The allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by a risk free interest rate based on the effective rate after tax of interest on treasury bills (Nw.: statskasseveksler) with three months maturity. The allowance is calculated for each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares at the expiration of the relevant calendar year. Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend distributed on the share ( excess allowance ) may be carried forward and set off against future dividends received on, or gains upon realisation, of the same share. Norwegian Corporate Shareholders Dividends distributed from the Company to shareholders who are limited liability companies (and certain similar entities) resident in Norway for tax purposes ( Norwegian Corporate Shareholders ), are effectively taxed at rate of 0.81% (3% of dividend income from such shares is included in the calculation of ordinary income for Norwegian Corporate Shareholders and ordinary income is subject to tax at a flat rate of 27%). Non-Norwegian Personal Shareholders Dividends distributed to shareholders who are individuals not resident in Norway for tax purposes ( Non- Norwegian Personal Shareholders ), are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. The withholding obligation lies with the company distributing the dividends and the Company assumes this obligation. Non-Norwegian Personal Shareholders resident within the EEA for tax purposes may apply individually to Norwegian tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share (please see Taxation of dividends Norwegian Personal Shareholders above). However, the deduction for the tax-free allowance does not apply in the event that the withholding tax rate, pursuant to an applicable tax treaty, leads to a lower taxation on the dividends than the withholding tax rate of 25% less the tax-free allowance. 169

174 If a Non-Norwegian Personal Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a Norwegian Personal Shareholder, as described above. Non-Norwegian Personal Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted. Non-Norwegian Corporate Shareholders Dividends distributed to shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes ( Non-Norwegian Corporate Shareholders ), are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. Dividends distributed to Non-Norwegian Corporate Shareholders resident within the EEA for tax purposes are exempt from Norwegian withholding tax provided that the shareholder is the beneficial owner of the shares and that the shareholder is genuinely established and performs genuine economic business activities within the relevant EEA jurisdiction. If a Non-Norwegian Corporate Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a Norwegian Corporate Shareholder, as described above. Non-Norwegian Corporate Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted. Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee has obtained approval from the Norwegian Tax Directorate for the dividend to be subject to a lower withholding tax rate. To obtain such approval the nominee is required to file a summary to the tax authorities including all beneficial owners that are subject to withholding tax at a reduced rate. The withholding obligation in respect of dividends distributed to Non-Norwegian Corporate Shareholders and on nominee registered shares lies with the company distributing the dividends and the Company assumes this obligation Taxation of capital gains on realization of shares Norwegian Personal Shareholders Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes. A capital gain or loss generated by a Norwegian Personal Shareholder through a disposal of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the Norwegian Personal Shareholder s ordinary income in the year of disposal. Ordinary income is taxable at a rate of 27%. The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number of shares disposed of. The taxable gain/deductible loss is calculated per share as the difference between the consideration for the share and the Norwegian Personal Shareholder s cost price of the share, including costs incurred in relation to the acquisition or realisation of the share. From this capital gain, Norwegian Personal Shareholders are entitled to deduct a calculated allowance provided that such allowance has not already been used to reduce taxable dividend income. Please refer to Section Taxation of dividends Norwegian Personal Shareholders above for a description of the calculation of the allowance. The allowance may only be deducted in order to reduce a taxable gain, and cannot increase or produce a deductible loss, i.e. any unused allowance exceeding the capital gain upon the realisation of a share will be annulled. If the Norwegian Personal Shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis. 170

175 Norwegian Corporate Shareholders Norwegian Corporate Shareholders are exempt from tax on capital gains derived from the realisation of shares qualifying for participation exemption, including shares in the Company. Losses upon the realisation and costs incurred in connection with the purchase and realisation of such shares are not deductible for tax purposes. Non-Norwegian Personal Shareholders Gains from the sale or other disposal of shares by a Non-Norwegian Personal Shareholder will not be subject to taxation in Norway unless the Non-Norwegian Personal Shareholder holds the shares in connection with business activities carried out or managed from Norway. Non-Norwegian Corporate Shareholders Capital gains derived by the sale or other realisation of shares by Non-Norwegian Corporate Shareholders are not subject to taxation in Norway Net wealth tax The value of shares is included in the basis for the computation of net wealth tax imposed on Norwegian Personal Shareholders. Currently, the marginal net wealth tax rate is 1.0% of the value assessed. The value for assessment purposes for listed shares is equal to the listed value as of 1 January in the year of assessment (i.e. the year following the relevant fiscal year). Please note that the Norwegian government has recently proposed to reduce the marginal net wealth tax rate to 0.75%. If the proposal is adopted by the Norwegian parliament, the amendment will be effective as of 1 January Norwegian Corporate Shareholders are not subject to net wealth tax. Shareholders not resident in Norway for tax purposes are not subject to Norwegian net wealth tax. Non- Norwegian Personal Shareholders can, however, be taxable if the shareholding is effectively connected to the conduct of trade or business in Norway VAT and transfer taxes No VAT, stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares Inheritance tax A transfer of shares through inheritance or as a gift does not give rise to inheritance or gift tax in Norway. 171

176 19 THE TERMS OF THE OFFERING 19.1 Overview of the Offering The Offering consists of (i) an offer of New Shares to raise an amount of approximately NOK 309 million and (ii) an offer of Sale Shares, all of which are existing, validly issued and fully paid-up registered Shares with a par value of NOK 1, offered by the Selling Shareholders, as further specified in Section 14 The Selling Shareholders. In addition, the Joint Bookrunners may elect to over-allot a number of Additional Shares, equalling up to approximately 15% of the number of New Shares and Sale Shares. The Principal Shareholders have granted Danske Bank, on behalf of the Managers, an Over-Allotment Option to purchase a corresponding number of Additional Shares to cover any such over-allotments. The Offering consists of: An Institutional Offering, in which Offer Shares are being offered to (a) investors in Norway, (b) investors outside Norway and the United States, subject to applicable exemptions from the prospectus requirements, and (c) in the United States to QIBs in reliance on an exemption from the registration requirements under the U.S. Securities Act. The Institutional Offering is subject to a lower limit per application of NOK 1,000,000. A Retail Offering, in which Offer Shares are being offered to the public in Norway subject to a lower limit per application of an amount of NOK 10,500 and an upper limit per application of NOK 999,999 for each investor. Investors in the Retail Offering will receive a discount of NOK 1,000 on their aggregate amount payable for the Offer Shares allocated to such investors. Investors who intend to place an order in excess of NOK 999,999 must do so in the Institutional Offering. Multiple applications by one applicant in the Retail Offering will be treated as one application with respect to the maximum application limit. The Principal Shareholders, the Company and the Joint Bookrunners may decide to limit the total number of applicants to whom Offer Shares are allocated in the Retail Offering. The applicants to whom Offer Shares are allocated will then (i) be determined on a random basis by using the VPS automated simulation procedures and/or other random allocation mechanism, and/or (ii) by setting a threshold, between NOK 10,500 and NOK 999,999, for the aggregate value of Offer Shares to be allocated to a portion (or all) of the applicants, and by not allocating Offer Shares to a portion (or any) of the applicants that have applied for Offer Shares for an aggregate value below this threshold (if applicable to a portion and not all of the applicants, such applicants to be determined by drawing of lots). All offers and sales outside the United States will be made in compliance with Regulation S. This Prospectus does not constitute an offer of, or an invitation to purchase, the Offer Shares in any jurisdiction in which such offer or sale would be unlawful. For further details, see Important Notice and Section 20 Selling and Transfer Restrictions. The Bookbuilding Period for the Institutional Offering is expected to take place from 1 December 2014 at 09:00 hours (CET) to 11 December 2014 at 15:00 hours (CET). The Application Period for the Retail Offering will take place from 1 December 2014 at 09:00 hours (CET) to 11 December 2014 at 12:00 hours (CET). The Company and the Principal Shareholders, in consultation with the Joint Bookrunners, reserve the right to shorten or extend the Bookbuilding Period and Application Period at any time. Any shortening of the Bookbuilding Period and/or the Application Period will be announced through the Oslo Stock Exchange s information system on or before 09:00 hours (CET) on the new expiration date of the Bookbuilding Period, provided, however, that in no event will the Bookbuilding Period and/or Application Period be shortened to expire prior to 09:00 hours (CET) on 8 December Any extension of the Bookbuilding Period and/or the Application Period will be announced through the Oslo Stock Exchange s information system on or before 09:00 hours (CET) on the first business day following the until then prevailing expiration date of the Bookbuilding Period. An extension of the Bookbuilding Period and/or the Application Period can be made one or several times provided, however, that in no event will the Bookbuilding Period and/or Application Period be extended beyond 15:00 hours (CET) on 27 February In the event of a shortening or an extension of the Bookbuilding Period and/or the Application Period, the allocation date, the payment due dates and the dates of delivery of Offer Shares will be changed accordingly, but the date of the Listing and commencement of trading on Oslo Børs, or alternatively on Oslo Axess, may not necessarily be changed. 172

177 The Company and the Principal Shareholders have, together with the Joint Bookrunners, set an Indicative Price Range for the Offering from NOK 39 to NOK 53 per Offer Share. Assuming that the Offer Price is set at the high-point of this range and all the New Shares and Sale Shares are issued/sold in the Offering (i.e. excluding any over-allotments), the aggregate gross amount of the Offering will be approximately NOK 918 million. The Company and the Principal Shareholders will, in consultation with the Joint Bookrunners, determine the number of Offer Shares and the Offer Price on the basis of the bookbuilding process in the Institutional Offering and the number of applications received in the Retail Offering. The bookbuilding process, which will form the basis for the final determination of the number of Offer Shares and the Offer Price, will be conducted only in connection with the Institutional Offering. The Indicative Price Range may be amended during the Bookbuilding Period. Any such amendments to the Indicative Price Range will be announced through the Oslo Stock Exchange s information system. In addition, the Principal Shareholders have granted the Stabilisation Manager (Danske Bank), on behalf of the Managers, the Over-Allotment Option to purchase a number of Additional Shares, equalling up to approximately 15% of the aggregate number of New Shares and Sale Shares at the Offer Price, exercisable, in whole or in part, within a 30-day period commencing at the time at which trading in the Shares commences on the Oslo Børs, or alternatively on Oslo Axess, expected to be on 16 December The Over-Allotment Option is granted to cover over-allotments, if any, made in connection with the Offering on the terms and subject to the conditions described in this Prospectus. In order to permit delivery in respect of over-allotments made, if any, the Principal Shareholders will grant to the Stabilisation Manager an option (the Lending Option ) to require the Principal Shareholders to lend to the Stabilisation Manager, on behalf of the Managers, up to a number of Shares equal to the number of Additional Shares. See Section 19.9 Over-allotment and stabilisation activities for further details. The Offer Shares allocated in the Offering are expected to be traded on Oslo Børs, or alternatively on Oslo Axess, from and including 16 December Completion of the Offering is conditional upon, among other conditions, the Company satisfying the listing conditions and approved for being listed on Oslo Børs, or alternatively on Oslo Axess (to the extent the Company should not fulfil, as at the time of the Listing, the listing requirements of Oslo Børs), see Section Conditions for completion of the Offering listing and trading of the Offer Shares. The Company has made certain representations and warranties in favour of, and agreed to certain undertakings with the Joint Bookrunners in the mandate agreement and ancillary agreements and documents entered into in connection with the Offering and the Listing. The Company and its non-norwegian subsidiaries have undertaken, subject to certain conditions and limitations, to indemnify the Joint Bookrunners against certain liabilities in connection with the Offering and the Listing. See Section Expenses of the Offering and the Listing for information regarding fees expected to be paid to the Managers and costs expected to be paid by the Company in connection with the Offering Timetable The timetable set out below provides certain indicative key dates for the Offering (subject to shortening or extensions): Bookbuilding Period commences... 1 December 2014 at 09:00 hours (CET) Bookbuilding Period ends December 2014 at 15:00 hours (CET) Application Period commences... 1 December 2014 at 09:00 hours (CET) Application Period ends December 2014 at 12:00 hours (CET) Allocation of the Offer Shares... On or about 12 December 2014 Publication of the results of the Offering... On or about 12 December 2014 Issuance of allocation notes... On or about 12 December 2014 Accounts from which payment will be debited in the Retail Offering to be sufficiently funded... On or about 12 December 2014 Payment date in the Retail Offering... On or about 15 December 2014 Delivery of the Offer Shares in the Retail Offering... On or about 16 December 2014 Payment date in the Institutional Offering... On or about 16 December 2014 Delivery of the Offer Shares in the Institutional Offering... On or about 16 December 2014 Listing and commencement of trading in the Shares... On or about 16 December

178 Please note that the Company and the Principal Shareholders, together with the Joint Bookrunners, reserve the right to shorten or extend the Bookbuilding Period and the Application Period. In the event of a shortening or an extension of the Bookbuilding Period and/or the Application Period, the allocation date, the payment due dates and the dates of delivery of Offer Shares will be changed accordingly, but the date of the Listing and commencement of trading on Oslo Børs, or alternatively on Oslo Axess, may not necessarily be changed Resolution relating to the Offering In the General Meeting held on 27 November 2014 it was resolved to increase the share capital of the Company by up to minimum NOK 3,500,000 and maximum NOK 10,000,000 in connection with the Offering of the New Shares as follows (translated from Norwegian): (i) The share capital shall be increased by minimum NOK 3,500,000 and maximum NOK 10,000,000, by issuance of minimum 3,500,000 new shares and maximum 10,000,000 new shares, in order to raise an amount of around NOK 310 million, as resolved by the board. The subscription price to be paid per share shall be resolved by the board, but shall not be higher than NOK 80 or lower that NOK 20. (ii) The new shares shall be subscribed to by those being allocated shares in the offering that is conducted in connection with the listing of the shares in the Company on Oslo Børs/Oslo Axess (the Offering ), or by the Managers of the Offering for onwards sale to such investors. The shareholders of the Company shall accordingly not have any pre-emptive rights to the new shares (ref Section 10-4 of the Norwegian Public Limited Companies Act). (iii) The shares shall be subscribed to no later than on 11 December 2014, or such earlier or later date which is last day of the application period for the Offering (and in no event later than three months from the date of the general meeting). (iv) Payment shall be made to the Company s account on the first business day following date of the subscription deadline. (v) The new shares carry rights to dividends and other rights in the Company from the registration of the share capital increase in the Norwegian Register of Business Enterprises. (vi) The Company s expenses in relation to the capital increase are estimated to NOK 100,000. In addition, further expenses have accrued during the listing process. (vii) Section 4 of the articles of association shall be amended to state the total share capital and number of shares following the share capital increase. (viii) The share capital increase and the other parts of this resolution is conditional upon and shall be registered at the same time as the share capital reduction in section 4.1 above and the share capital increase in section above. The completion of the share capital increase is also conditional upon the board of directors resolving to proceed with the listing of the shares in the Company on Oslo Børs/Oslo Axess, and that the Managers of the Offering do not prior to the registration terminate their commitment to pay the subscription amount. Following the end of the Bookbuilding Period and the Application Period, both the Board of Directors and the Principal Shareholders will consider and, if thought fit, approve the completion of the Offering and determine the final Offer Price, the number of and allocation of the Offer Shares. 128 Items 4.1 and 4.2 in the resolution refer to the resolutions resolved in connection with the Combination. See Section 16.3 Share capital and share capital history. 174

179 19.4 The Institutional Offering Determination of the number of Offer Shares and the Offer Price The Company and the Principal Shareholders have, together with the Joint Bookrunners, set an Indicative Price Range for the Offering from NOK 39 to NOK 53 per Offer Share. The Company and the Principal Shareholders will, in consultation with the Joint Bookrunners, determine the number of New Shares and Sale Shares to be sold/issued and the final Offer Price on the basis of the applications received and not withdrawn in the Institutional Offering during the Bookbuilding Period and the number of applications received in the Retail Offering. The Offer Price will be determined on or about 11 December The Offer Price may be set within, below or above the Indicative Price Range. Investors applications for Offer Shares in the Institutional Offering will, after the end of the Bookbuilding Period, be irrevocable and binding regardless of whether the Offer Price is set within, above or below the Indicative Price Range. The final Offer Price is expected to be announced by the Company through the Oslo Stock Exchange s information system on or about 12 December 2014 under the ticker code RENO Bookbuilding Period The Bookbuilding Period for the Institutional Offering will last from 1 December 2014 at 09:00 hours (CET) to 11 December 2014 at 15:00 hours (CET), unless shortened or extended. The Company and the Principal Shareholders, in consultation with the Joint Bookrunners, may shorten or extend the Bookbuilding Period at any time, and extension may be made on one or several occasions. The Bookbuilding Period may in no event be shortened to expire prior to 09:00 hours (CET) on 8 December 2014 or extended beyond 15:00 hours (CET) on 27 February In the event of a shortening or an extension of the Bookbuilding Period, the allocation date, the payment due date and the date of delivery of Offer Shares will be changed accordingly, but the date of the Listing and commencement of trading on Oslo Børs, or alternatively on Oslo Axess, may not necessarily be changed Minimum application The Institutional Offering is subject to a minimum application of NOK 1,000,000 per application. Investors in Norway who intend to place an application for less than NOK 1,000,000 must do so in the Retail Offering Application procedure Applications for Offer Shares in the Institutional Offering must be made during the Bookbuilding Period by informing one of the Managers shown below of the number of Offer Shares that the investor wishes to order, and the price per share that the investor is offering to pay for such Offer Shares. Carnegie AS Danske Bank DNB Markets Grundingen 2, Aker Brygge Bryggetorget 4 Dronning Eufemias gate 30 P.O. Box 684 Sentrum P.O. Box 1170 Sentrum P.O. Box 1600 Sentrum N-0106 Oslo N-0250 Oslo N-0021 Oslo Norway Norway Norway All applications in the Institutional Offering will be treated in the same manner regardless of which Manager the applicant chooses to place the application with. Any orally placed application in the Institutional Offering will be binding upon the investor and subject to the same terms and conditions as a written application. The Managers may, at any time and in their sole discretion, require the investor to confirm any orally placed application in writing. Applications made may be withdrawn or amended by the investor at any time up to the end of the Bookbuilding Period. At the close of the Bookbuilding Period, all applications in the Institutional Offering that have not been withdrawn or amended are irrevocable and binding upon the investor Allocation, payment for and delivery of Offer Shares The Managers expect to issue notifications of allocation of Offer Shares in the Institutional Offering on or about 12 December 2014, by issuing contract notes to the applicants by mail or otherwise. Payment by applicants in the Institutional Offering will take place against delivery of Offer Shares. Delivery and payment for Offer Shares is expected to take place on or about 16 December 2014 (the Institutional Closing Date ). For late payment, interest will accrue on the amount due at a rate equal to the prevailing interest rate under 175

180 the Norwegian Act on Overdue Payment of 17 December 1976 no. 100 (the Norwegian Act on Overdue Payment ), which, at the date of this Prospectus, is 9.50% per annum. Should payment not be made when due, the Offer Shares allocated will not be delivered to the applicants, and the Managers reserve the right, at the risk and cost of the applicant, to cancel the application and to re-allot or otherwise dispose of the allocated Offer Shares on such terms and in such manner as the Managers may decide (and the applicant will not be entitled to any profit there from). The original applicant remains liable for payment for the Offer Shares allocated to the applicant, together with any interest, cost, charges and expenses accrued, or the Managers may enforce payment of any such amount outstanding. In order to provide for prompt registration of the New Shares with the Norwegian Register of Business Enterprises, the Managers are expected to, on behalf of the applicants, subscribe for and pre-fund payment for the New Shares allotted in the Offering at a total subscription price equal to the Offer Price multiplied by the number of New Shares, less the total amount of discount in the Retail Offering; and by placing an application, the applicant irrevocably authorise and instructs the Managers, or someone appointed by any of them, to do so on its behalf. Irrespectively of any such pre-funding of payment for New Shares, the original applicant will remain liable for payment of the Offer Price for the Offer Shares allocated to the applicant, together with any interest, costs, charges and expenses accrued, and the Company, the Selling Shareholders and/or the Managers may enforce payment of any such amount outstanding. The subscription and pre-funding by the Managers of New Shares as described above constitute an integrated sales process where the investors purchase New Shares from the Company based on this Prospectus, which has been prepared by the Company. The investors will not have any rights or claims against the Managers The Retail Offering Offer Price The price for the Offer Shares offered in the Retail Offering will be the same as in the Institutional Offering, see Section Determination of the number of Offer Shares and the Offer Price. However, investors in the Retail Offering will receive a discount of NOK 1,000 on their aggregate amount payable for the Offer Shares allocated to such investors. The discount will be granted by the Company on New Shares. Multiple applications by one applicant in the Retail Offering will be treated as one application with respect to the discount. Each applicant in the Retail Offering will be permitted, but not required, to indicate when ordering through the VPS online application system or on the application form to be used to apply for Offer Shares in the Retail Offering, attached to this Prospectus as Appendix G (the Retail Application Form ), that the applicant does not wish to be allocated Offer Shares should the Offer Price be set higher than the highest price in the Indicative Price Range. If the applicant does so, the applicant will not be allocated any Offer Shares in the event that the Offer Price is set higher than the highest price in the Indicative Price Range. If the applicant does not expressly stipulate such reservation when ordering through the VPS online application system or on the Retail Application Form, the application will be binding regardless of whether the Offer Price is set within or above (or below) the Indicative Price Range, as long as the Offer Price has been determined on the basis of orders placed during the bookbuilding process described above Application Period The Application Period during which applications for Offer Shares in the Retail Offering will be accepted will last from 1 December 2014 at 09:00 hours (CET) to 11 December 2014 at 12:00 hours (CET), unless shortened or extended. The Company and the Principal Shareholders, in consultation with the Joint Bookrunners, may shorten or extend the Application Period at any time, and extension may be made on one or several occasions. The Application Period may in no event be shortened to expire prior to 09:00 hours (CET) on 8 December 2014 or extended beyond 15:00 hours (CET) on 27 February In the event of a shortening or an extension of the Application Period, the allocation date, the payment due date and the date of delivery of Offer Shares will be changed accordingly, but the date of the Listing and commencement of trading on Oslo Børs, or alternatively on Oslo Axess, may not necessarily be changed Minimum and maximum application The Retail Offering is subject to a minimum application amount of NOK 10,500 and a maximum application amount of NOK 999,999 for each applicant. 176

181 Multiple applications are allowed. One or multiple applications from the same applicant in the Retail Offering with a total application amount in excess of NOK 999,999 will be adjusted downwards to an application amount of NOK 999,999. If two or more identical application forms are received from the same investor in the same offering, the application form will only be counted once unless otherwise explicitly stated on one of the application forms. In the case of multiple applications through the online application system or applications made both on a physical application form and through the online application system, all applications will be counted. Investors who intend to place an order in excess of NOK 999,999 must do so in the Institutional Offering Application procedures and application offices Norwegian applicants in the Retail Offering who are residents of Norway with a Norwegian personal identification number are recommended to apply for Offer Shares through the VPS online application system by following the link to such online application system on the following websites: and Applicants in the Retail Offering not having access to the VPS online application system must apply using the Retail Application Form attached to this Prospectus as Appendix G Application Form for the Retail Offering. Retail Application Forms, together with this Prospectus, can be obtained from the Company, the Company s website the Managers websites listed above or the application offices set out below. Applications made through the VPS online application system must be duly registered during the Application Period. The application offices for physical applications in the Retail Offering are: Carnegie AS Danske Bank DNB Markets Registrars Department Grundingen 2, Aker Brygge Bryggetorget 4 Dronning Eufemias gate 30 P.O. Box 684 Sentrum P.O. Box 1170 Sentrum P.O. Box 1600 Sentrum N-0106 Oslo N-0250 Oslo N-0021 Oslo Norway Norway Norway Tel: Tel: Tel: Fax: Fax: subscriptions@carnegie.no emisjoner@danskebank.com retail@dnb.no All applications in the Retail Offering will be treated in the same manner regardless of which of the above Managers the applications are placed with. Further, all applications in the Retail Offering will be treated in the same manner regardless of whether they are submitted by delivery of a Retail Application Form or through the VPS online application system. Retail Application Forms that are incomplete or incorrectly completed, electronically or physically, or that are received after the expiry of the Application Period, may be disregarded without further notice to the applicant. Properly completed Retail Application Forms must be received by one of the application offices listed above or registered electronically through the VPS application system by 12:00 hours (CET) on 11 December 2014, unless the Application Period is being shortened or extended. None of the Company, the Principal Shareholders or any of the Managers may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by any application office. Subject to Section Offer Price above, all applications made in the Retail Offering will be irrevocable and binding upon receipt of a duly completed Retail Application Form, or in the case of applications through the VPS online application system, upon registration of the application, irrespective of any extension of the Application Period, and cannot be withdrawn, cancelled or modified by the applicant after having been received by the application office, or in the case of applications through the VPS online application system, upon registration of the application Allocation, payment and delivery of Offer Shares Danske Bank, acting as settlement agent for the Retail Offering, expects to issue notifications of allocation of Offer Shares in the Retail Offering on or about 12 December 2014, by issuing allocation notes to the applicants by mail or otherwise. Any applicant wishing to know the precise number of Offer Shares allocated to it, may contact one of the application offices listed above on or about 12 December 2014 during business hours. 177

182 Applicants who have access to investor services through an institution that operates the applicant s account with the VPS for the registration of holdings of securities ( VPS account ) should be able to see how many Offer Shares they have been allocated from on or about 12 December In registering an application through the VPS online application system or completing a Retail Application Form, each applicant in the Retail Offering will authorise Danske Bank (on behalf of the Managers) to debit the applicant s Norwegian bank account for the total amount due for the Offer Shares allocated to the applicant. The applicant s bank account number must be stipulated on the VPS online application or on the Retail Application Form. Accounts will be debited on or about 15 December 2014 (the Payment Date ), and there must be sufficient funds in the stated bank account from and including 15 December Applicants who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the Payment Date (15 December 2014). Further details and instructions will be set out in the allocation notes to the applicant to be issued on or about 12 December 2014, or can be obtained by contacting Danske Bank at Should any applicant have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, interest will accrue on the amount due at a rate equal to the prevailing interest rate under the Norwegian Act on Interest on Overdue Payments, which at the date of this Prospectus is 9.50% per annum. Danske Bank (on behalf of the Managers) reserves the right (but has no obligation) to make up to three debit attempts through 22 December 2014 if there are insufficient funds on the account on the Payment Date. Should payment not be made when due, the Offer Shares allocated will not be delivered to the applicant, and the Managers reserve the right, at the risk and cost of the applicant, to cancel at any time thereafter the application and to re-allot or otherwise dispose of the allocated Offer Shares, on such terms and in such manner as the Managers may decide (and that the applicant will not be entitled to any profit there from). The original applicant will remain liable for payment of the Offer Price for the Offer Shares allocated to the applicant, together with any interest, costs, charges and expenses accrued, and the Company, the Selling Shareholders and/or the Managers may enforce payment of any such amount outstanding. In order to provide for prompt registration of the New Shares with the Norwegian Register of Business Enterprises, the Managers are expected to, on behalf of the applicants, subscribe for and pre-fund payment for the New Shares allotted in the Offering at a total subscription price equal to the Offer Price multiplied by the number of New Shares, less the total amount of discount in the Retail Offering; and by placing an application, the applicant irrevocably authorise and instructs the Managers, or someone appointed by any of them, to do so on its behalf. Irrespectively of any such pre-funding of payment for New Shares, the original applicant will remain liable for payment of the Offer Price for the Offer Shares allocated to the applicant, together with any interest, costs, charges and expenses accrued, and the Company, the Selling Shareholders and/or the Managers may enforce payment of any such amount outstanding. The subscription and pre-funding by the Managers of New Shares as described above constitute an integrated sales process where the investors purchase New Shares from the Company based on this Prospectus, which has been prepared by the Company. The investors will not have any rights or claims against the Managers Mechanism of allocation It has been provisionally assumed that approximately 90% or more of the Offering will be allocated in the Institutional Offering and that approximately up to 10% of the Offering will be allocated in the Retail Offering. The final determination of the number of Offer Shares allocated to the Institutional Offering and the Retail Offering will only be decided, however, by the Principal Shareholders and the Company, in consultation with the Joint Bookrunners, following the completion of the bookbuilding process for the Institutional Offering, based on the level of orders or applications received from each of the categories of investors relative to the level of applications or orders received in the Retail Offering. The Principal Shareholders, the Company and the Joint Bookrunners reserve the right to deviate from the provisionally assumed allocation between tranches without further notice and at their sole discretion. No Offer Shares have been reserved for any specific national market. In the Institutional Offering, the Company and the Principal Shareholders, together with the Joint Bookrunners, will determine the allocation of Offer Shares. An important aspect of the allocation principles is the desire to 178

183 create an appropriate long-term shareholder structure for the Company. The allocation principles will, in accordance with normal practice for institutional placements, include factors such as premarketing and management road-show participation and feedback, timeliness of the order, price level, relative order size, sector knowledge, investment history, perceived investor quality and investment horizon. The Company, the Principal Shareholders and the Joint Bookrunners further reserve the right, at their sole discretion, to take into account the creditworthiness of any applicant. The Company, the Principal Shareholders and the Joint Bookrunners may also set a maximum allocation, or decide to make no allocation to any applicant. The basis for allocations in the Retail Offering, is that no allocations will be made for a number of Offer Shares representing an aggregate value of less than NOK 10,500 per applicant, however, all allocations will be rounded down to the nearest number of whole Offer Shares and the payable amount will hence be adjusted accordingly. One or multiple orders from the same applicant in the Retail Offering with a total application amount in excess of NOK 999,999 will be adjusted downwards to an application amount of NOK 999,999. In the Retail Offering, allocation will at the outset be made solely on a pro rata basis using the VPS automated simulation procedures. However, depending on the level of demand in the Offering and the Retail Offering, respectively and as a whole, the Principal Shareholders, the Company and the Joint Bookrunners reserve the right to limit the total number of applicants to whom Offer Shares are allocated if the Principal Shareholders, the Company and the Joint Bookrunners deem this to be necessary in order to keep the number of shareholders in the Company at an appropriate level and such limitation does not have the effect that any conditions for the Listing regarding the number of shareholders will not be satisfied. If the Principal Shareholders, the Company and the Joint Bookrunners so should decide to limit the total number of applicants to whom Offer Shares are allocated, the applicants to whom Offer Shares are allocated will (i) be determined on a random basis by using the VPS automated simulation procedures and/or other random allocation mechanism, and/or (ii) by setting a threshold, between NOK 10,500 and NOK 999,999, for the aggregate value of Offer Shares to be allocated to a portion (or all) of the applicants, and by not allocating Offer Shares to a portion (or any) of the applicants that have applied for Offer Shares for an aggregate value below this threshold (to the extent this allocation mechanism is used for a portion and not all of the applicants, the portion of applicants that are not allocated Offer Shares will be determined by drawing of lots) VPS account To participate in the Offering, each applicant must have a VPS account. The VPS account number must be stated when registering an application through the VPS online application system or on the Retail Application Form for the Retail Offering. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised investment firms in Norway and Norwegian branches of credit institutions established within the EEA. However, non-norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorised by the Norwegian Ministry of Finance. Establishment of VPS accounts requires verification of identification by the relevant VPS registrar in accordance with Norwegian anti-money laundering legislation (see Section 19.8 Mandatory anti-money laundering procedures ) Mandatory anti-money laundering procedures The Offering is subject to applicable anti-money laundering legislation, including the Norwegian Money Laundering Act of 6 March 2009 no. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 no. 302 (collectively, the Anti-Money Laundering Legislation ). Applicants who are not registered as existing customers of any of the Managers must verify their identity to the Manager in which the order is placed in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Applicants who have designated an existing Norwegian bank account and an existing VPS account on the Retail Application Form are exempted, unless verification of identity is requested by any of the Managers. Applicants who have not completed the required verification of identity prior to the expiry of the Application Period may not be allocated Offer Shares Over-Allotment and stabilisation activities Over-allotment of Additional Shares In connection with the Offering, the Joint Bookrunners may elect to over-allot a number of Additional Shares, equalling up to approximately 15% of the aggregate number of allotted New Shares and Sale Shares and, in 179

184 order to permit the delivery in respect of over-allotments made, the Stabilisation Manager may, pursuant to the Lending Option, require the Principal Shareholders to lend to the Stabilisation Manager, on behalf of the Managers, up to a number of Shares equal to the number of Additional Shares. Further, pursuant to the Over- Allotment Option, the Principal Shareholders have granted the Stabilisation Manager, on behalf of the Managers, an option to purchase a number of Additional Shares, exercisable within 30 days after the commencement of trading in the Shares, equalling up to approximately 15% of the aggregate number of New Shares and Sale Shares at a price equal to the final Offer Price in the Offering, as may be necessary to cover over-allotments and short positions, if any, made in connection with the Offering. To the extent that the Managers have over-allotted Shares in the Offering, the Managers have created a short position in the Shares. The Stabilisation Manager may close out this short position by buying Shares in the open market through stabilisation activities and/or by exercising the Over-Allotment Option. A stock exchange notice will be made on 16 January 2014 announcing whether the Managers have over-allotted Shares in connection with the Offering. Any exercise of the Over-Allotment Option will be promptly announced by the Stabilisation Manager through the Oslo Stock Exchange s information system Price stabilisation The Stabilisation Manager (Danske Bank), or its agents, on behalf of the Managers, may, upon exercise of the Lending Option, from the first day of the Listing effect transactions with a view to supporting the market price of the Shares at a level higher than what might otherwise prevail, through buying Shares in the open market at prices equal to or lower than the Offer Price. There is no obligation on the Stabilisation Manager and its agents to conduct stabilisation activities and there is no assurance that stabilisation activities will be undertaken. Such stabilising activities, if commenced, may be discontinued at any time, and will be brought to an end at the latest 30 calendar days after the first day of the Listing. It should be noted that stabilisation activities might result in market prices that are higher than would otherwise prevail. Any stabilisation activities will be conducted in accordance with Section 3-12 of the Norwegian Securities Trading Act and the EC Commission Regulation 2273/2003 regarding buy-back programmes and stabilisation of financial instruments. The Principal Shareholders and the Joint Bookrunners have agreed that any profit or loss resulting from stabilisation activities conducted by the Stabilisation Manager, on behalf of the Managers, will be for the account of the Joint Bookrunners. Within one week after the expiry of the 30 calendar day period of price stabilisation, the Stabilisation Manager will publish information as to whether or not price stabilisation activities were undertaken. If stabilisation activities were undertaken, the statement will also include information about: (i) the total amount of Shares sold and purchased; (ii) the dates on which the stabilisation period began and ended; (iii) the price range between which stabilisation was carried out, as well as the highest and the lowest price paid during the stabilisation period; and (iv) the date at which stabilisation activities last occurred. It should be noted that stabilisation activities might result in market prices that are higher than would otherwise prevail. Stabilisation may be undertaken, but there is no assurance that it will be undertaken and it may be stopped at any time Publication of information in respect of the Offering In addition to press releases which will be posted on the Company s website, the Company will use the Oslo Stock Exchange s information system to publish information relating to the Offering, such as amendments to the Bookbuilding Period and Application Period (if any), the final Offer Price, the number of Offer Shares and the total amount of the Offering, allotment percentages, and first day of trading. The final determination of the Offer Price, the number of Offer Shares and the total amount of the Offering is expected to be published on or about 12 December The rights conferred by the Offer Shares The Sale Shares will in all respects carry full shareholders rights in the Company on an equal basis as any other Shares in the Company, including the right to any dividends, from the date of registration of the share capital 180

185 increase pertaining to the Consolidation in the Norwegian Register of Business Enterprises. The New Shares will in all respects carry full shareholders rights in the Company on an equal basis as any other Shares in the Company, including the right to any dividends, from the date of registration of the share capital increase pertaining to the issuance of the New Shares in the Norwegian Register of Business Enterprises. For a description of rights attached to the Shares, see Section 16 Corporate Information and Description of the Share Capital VPS registration The Sale Shares and any Additional Shares have been, and the New Shares will be, created under the Norwegian Public Limited Companies Act. The Sale Shares and any Additional Shares, and the New Shares will be, registered in book-entry form with the VPS and have ISIN NO The Company s register of shareholders with the VPS is administrated by DNB Bank ASA, Registrars Department, P.O. Box 1600 Sentrum, N-0021 Oslo, Norway Conditions for completion of the Offering Listing and trading of the Offer Shares The Company will on or about 1 December 2014 apply for Listing of its Shares on Oslo Børs, or alternatively on Oslo Axess (to the extent the Company should not fulfil, as at the time of the Listing, the listing requirements of Oslo Børs). It is expected that the board of directors of the Oslo Stock Exchange will approve the listing application of the Company on 5 December 2014, conditional upon the Company obtaining a minimum of 500 shareholders, or in respect of Oslo Axess, a minimum of 100 shareholders, each holding Shares with a value of more than NOK 10,000 and there being a minimum free float of the Shares of 25%. The Company expects that these conditions will be fulfilled through the Offering. Completion of the Offering on the terms set forth in this Prospectus is expressly conditioned upon the board of directors of the Oslo Stock Exchange approving the application for Listing of the Shares in its meeting to be held on or about 5 December 2014, on conditions acceptable to the Company and that any such conditions are satisfied by the Company. The Offering will be cancelled in the event that the conditions are not satisfied. There can be no assurance that the board of directors of the Oslo Stock Exchange will give such approval or that the Company will satisfy these conditions. Completion of the Offering on the terms set forth in this Prospectus is otherwise only conditional on (i) the Company and the Principal Shareholders, in consultation with the Joint Bookrunners, having approved the Offer Price and the allocation of the Offer Shares to eligible investors following the bookbuilding process, (ii) the Board of Directors resolving to issue the New Shares and the (iii) the Joint Bookrunners not prior to the registration of the share capital increase relating to the issuance of the New Shares having terminated their commitment to pay the subscription amount for the New Shares. The Joint Bookrunners will inter alia have the right to terminate their commitment in the event of non-fulfilment of certain other conditions for the Offering and Listing, breach of agreement by the Selling Shareholders or the Company, and upon the occurrence of certain force majeure events. There can be no assurance that these conditions for completion of the Offering will be satisfied. If the conditions are not satisfied, the Offering may be revoked or suspended. Assuming that the conditions are satisfied, the first day of trading of the Shares, including the Offer Shares, on Oslo Børs, or alternatively on Oslo Axess, is expected to be on or about 16 December The Shares are expected to trade under the ticker code RENO. Applicants in the Retail Offering selling Offer Shares prior to delivery must ensure that payment for such Offer Shares is made on or prior to the Payment Date, by ensuring that the stated bank account is sufficiently funded from 12 December 2014 and onwards. Applicants in the Institutional Offering selling Offer Shares prior to delivery must ensure that payment for such Offer Shares is made on or prior to Institutional Closing Date. Accordingly, an applicant who wishes to sell his/her Offer Shares, following confirmed allocation of Offer Shares, but before delivery must ensure that payment is made in order for such Offer Shares to be delivered in time to the applicant. Prior to the Listing and the Offering, the Shares are not listed on any stock exchange or authorised market 181

186 place, and no application has been filed for listing on any other stock exchanges or regulated market places other than Oslo Børs, or alternatively on Oslo Axess Dilution Following the issuance of the New Shares, the immediate dilution for the Selling Shareholders is estimated to be in the region of 22-28%. Following completion of the Offering, the immediate dilution for the Selling Shareholders is estimated to be in the region of 52% (assuming the minimum sale/issuance of Sale Shares and New Shares and no exercise of the Over-Allotment Option) to 75% (assuming the maximum sale/issuance of Sale Shares and New Shares and full exercise of the Over-Allotment Option) Expenses of the Offering and the Listing The gross proceeds to the Company will be approximately NOK 309 million and the Company s total costs and expenses of, and incidental to, the Listing and the Offering are estimated to amount to approximately NOK 30 million (excluding VAT). Under the mandate agreement entered into among the Company, the Principal Shareholders and the other Selling Shareholders in connection with the Offering, the Selling Shareholders will pay to the Managers a commission calculated on the basis of the gross proceeds of the Offering (including the gross proceeds from the sale of the Sale Shares, the New Shares and, if applicable, any gross proceeds relating to the Additional Shares sold). This does not include any incentive fees, which may be paid at the discretion of the Principal Shareholders. No expenses or taxes will be charged by the Company, the Selling Shareholders or the Managers to the applicants in the Offering Lock-up The Principal Shareholders have agreed with the Managers that, for a period of 180 days following the first day of Listing (except for Management and the other Selling Shareholders, and their close associates, which are subject to a 365 days lock-up) (the Restricted Period ), shall issue a lock-up undertaking to the Manager, pursuant to which they will undertake not to, without the prior consent of the Managers, (a) issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares, other equity interest in the capital of the Company or any securities or convertible into or exercisable for such Shares or other equity interests, or (b) enter into any swap or other agreement that transfers to another, in whole or in part, any of the economic consequences of ownership of the shares or other equity interests, whether any such transaction described in (a) or (b) above is to be settled by delivery of the shares or other securities or interests, in cash or otherwise, or (c) publicly announce an intention to effect any transaction specified in (a) or (b) above, for a period commencing on the date hereof and expiring 180 calendar days (365 calendar days for Management and the other Selling Shareholders) following the first day of Listing. The Lock-up for the Principal Shareholders does not apply to the sale of the Sale Shares in the Offering and share transfers as part of the Offering, under the Over-allotment Option or as part of an post IPO-pricing adjustment of the shareholding in the Company in order to obtain an ownership allocation reflecting the provisions of the investment agreement among the Company and its shareholders dated 30 September

187 The Lock-up for Management and the Selling Shareholders (other than the Principal Shareholders) does not apply to (i) the sale of the Sale Shares in the Offering and share transfers as part of the Offering, under the Over-allotment Option and as part of an post IPO-pricing adjustment of the shareholding in the Company in order to obtain an ownership allocation reflecting the provisions of the investment agreement among the Company and its shareholders dated 30 September 2011; (ii) provided that the transferee or acquirer prior to any such transfer issues a lock-up undertaking to the Managers on terms equal to those set out in this section of the Lock-Up Undertaking: (a) any disposal by way of gift by any Selling Shareholder that is an individual or member of Senior Management to its spouse, cohabitee or child (including such child by adoption or step child) ( Family Members ) or (b) transfers to controlled companies; or (iii) the sale of Shares by a Selling Shareholder to finance tax payment obligations triggered by the acquisition, holding or divestment of Shares in the Company, in the case of (iii), to the extent the Selling Shareholder prior to any such sale of Shares has (a) provided documentation or other information to the Managers showing that a tax payment obligation was triggered by the acquisition, holding or divestment of Shares in the Company, and (b) confirmed in writing to the Managers that sufficient funds to finance any such tax payment obligation are not otherwise available to the Selling Shareholder (timely and reasonably, without having to incur indebtedness or realise other assets). Furthermore, the Company has agreed with the Managers that it will not, without the prior consent of the Managers, directly or indirectly, issue, offer, sell, or contract to issue or sell any shares in the Company, for a period commencing on the date hereof and expiring 365 calendar days following the first day of Listing. On the same basis and for the same period, the Company will undertake not to, and will procure that none of its respective subsidiaries nor any other party acting on its behalf (other than the Managers) will, without the prior written consent of the Managers (a) directly or indirectly, issue, offer, sell, or contract to issue or sell any Share; (b) directly or indirectly, issue, offer, pledge, sell or contract to issue or sell any securities convertible into or exercisable or exchangeable for shares in the Company or (c) enter into any swap or any other agreement or any transaction that has an equivalent effect to such transaction described in (b) above, whether any such swap or transaction described in paragraph (b) or (c) above is to be settled by delivery of such securities, in cash or otherwise, or (d) publicly announce an intention to effect any transaction specified in (a), (b) or (c) above. This Lock-Up Undertaking does not apply to (i) the issuance of New Shares in the Offering; or (ii) the granting, selling or issuing of shares or rights to shares under long term incentive programs for employees of the Company and its subsidiaries Interest of natural and legal persons involved in the Offering The Managers or their affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions and may come to have interests that may not be aligned or could potentially conflict with the interests of the Company and investors in the Company. The Managers do not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so. Danske Bank and DNB Bank ASA are lenders under the Group s Senior Facility, see Section Material indebtedness, and are also counterparties to the Group under certain of the Group s vehicle leasing arrangements. The Managers will receive a management fee in connection with the Offering and, as such, have an interest in the Offering. In addition, the Selling Shareholders may, at the sole and absolute discretion of the Principal Shareholders pay to the Joint Bookrunners an additional discretionary fee in connection with the Offering. See Section Expenses of the Offering and the Listing for information on fees to the Managers in connection with the Offering. The Selling Shareholders will receive the proceeds from the sale of the Sale Shares and the Principal Shareholders will receive proceeds from the sale of any Additional Shares. The Selling Shareholders will also receive repayment by the Company of the Shareholder Loan, which will be financed by the issuance of the New Shares. Beyond the above-mentioned, the Company is not aware of any interest, including conflicting ones, of any natural or legal persons involved in the Offering Participation of major existing shareholders and members of the Management, supervisory and administrative bodies in the Offering 183

188 The following members of the Management have indicated an intention to apply for Offer Shares: Fredrik Eldorhagen (country manager in Norway) has indicated that he will apply for Offer Shares in an amount corresponding to his current holding of PIK Notes, i.e. NOK 442,734 plus accrued interests of NOK 122,917 according to the Investment Agreement, less a proportionate amount of accrued fees for the Offering ; and Andreas Westin (Head of Development) has indicated that he will apply for Offer Shares in an amount corresponding to his current holding of PIK Notes, i.e. NOK 215,367 plus accrued interests of NOK 59,793 according to the Investment Agreement, less a proportionate amount of accrued fees for the Offering. Except as set out above, the Company is not aware of whether any major shareholders of the Company or members of the Management, supervisory or administrative bodies intend to apply for Offer Shares in the Offering, or whether any person intends to apply for more than 5% of the Offer Shares Governing law and jurisdiction This Prospectus, the Retail Application Form and the terms and conditions of the Offering shall be governed by and construed in accordance with Norwegian law. Any dispute arising out of, or in connection with, this Prospectus, the Retail Application Form or the Offering shall be subject to the exclusive jurisdiction of the courts of Norway, with the Oslo District Court as the legal venue. 184

189 20 SELLING AND TRANSFER RESTRICTIONS 20.1 General As a consequence of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of the Shares offered hereby. Other than in Norway, the Company is not taking any action to permit a public offering of the Shares in any jurisdiction. Receipt of this Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only and should not be copied or redistributed. Except as otherwise disclosed in this Prospectus, if an investor receives a copy of this Prospectus in any jurisdiction other than Norway, the investor may not treat this Prospectus as constituting an invitation or offer to it, nor should the investor in any event deal in the Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that investor, or the Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an investor receives a copy of this Prospectus, the investor should not distribute or send the same, or transfer Shares, to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations Selling restrictions United States The Offer Shares have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold except: (i) within the United States to QIBs in reliance on an exemption from the registration requirements under the U.S. Securities Act; or (ii) to certain persons in offshore transactions in compliance with Regulation S, and in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. Transfer of the Offer Shares will be restricted and each purchaser of the Offer Shares in the United States will be required to make certain acknowledgements, representations and agreements, as described under Section United States. Any offer or sale in the United States will be made through affiliates of the Managers who are broker-dealers registered under the U.S. Exchange Act. In addition, until 40 days after the commencement of the Offering, an offer or sale of Offer Shares within the United States by a dealer, whether or not participating in the Offering, may violate the registration requirements of the U.S. Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A or pursuant to another exemption from the registration requirements of the U.S. Securities Act, and in each case any applicable state securities laws. The Managers and/or their affiliates who are broker-dealers registered under the U.S. Exchange Act may in accordance with their own policies, in connection with any offer or sale in the United States require the investor to make certain acknowledgements, representations and agreements United Kingdom Each United Kingdom applicant confirms that it understands that the Institutional Offering in the United Kingdom has only been communicated or caused to be communicated and will only be communicated or caused to be communicated ) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as Relevant Persons). The Offer Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents European Economic Area In relation to each Relevant Member State, with effect from and including the date on which the EU Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date ), an offer to the public of any Offer Shares which are the subject of the offering contemplated by this Prospectus may not be made in that Relevant Member State, other than the offering in Norway as described in this Prospectus, once the Prospectus has been approved by the competent authority in Norway and published in accordance with the EU Prospectus Directive (as implemented in Norway), except that an offer to the public in that Relevant Member State of any Offer Shares may be made at any time with effect from and including the Relevant 185

190 Implementation Date under the following exemptions under the EU Prospectus Directive, if they have been implemented in that Relevant Member State: to legal entities which are qualified investors as defined in the EU Prospectus Directive; a) to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive), as permitted under the EU Prospectus Directive, subject to obtaining the prior consent of the Joint Bookrunners for any such offer, or b) in any other circumstances falling within Article 3(2) of the EU Prospectus Directive; provided that no such offer of Offer Shares shall require the Company, the Selling Shareholders or any Manager to publish a prospectus pursuant to Article 3 of the EU Prospectus Directive or supplement a prospectus pursuant to Article 16 of the EU Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Securities to be offered so as to enable an investor to decide to purchase any Offer Shares, as the same may be varied in that Member State by any measure implementing the EU Prospectus Directive in that Member State the expression EU Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU. This EEA selling restriction is in addition to any other selling restrictions set out in this Prospectus Additional jurisdictions Switzerland The Offer Shares may not be publicly offered in Switzerland and will not be listed on the Swiss Exchange ( SIX ) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under article 652a or article 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under article 27 ff of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the Offer Shares or the Offering may be publicly distributed or otherwise made publicly available in Switzerland. Neither this document nor any other offering or marketing material relating to the Offering, the Company or the Shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the Offering will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the Offering has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ( CISA ). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares Canada This Prospectus is not, and under no circumstance is to be construed as, a prospectus, an advertisement or a public offering of the Offer Shares in Canada or any province or territory thereof. Any offer or sale of the Offer Shares in Canada will be made only pursuant to an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable provincial securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made Hong Kong The Offer Shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, or (ii) to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made there under, or (iii) in other circumstances which do 186

191 not result in the document being a prospectus within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the Offer Shares may be issued or may be in the possession of any person for the purposes of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Offer Shares which are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made there under Singapore This Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Offer Shares may not be circulated or distributed, nor may they be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA ), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA Other jurisdictions The Offer Shares may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into, Japan, Australia or any other jurisdiction in which it would not be permissible to offer the Offer Shares. In jurisdictions outside the United States and the EEA where the Offering would be permissible, the Offer Shares will only be offered pursuant to applicable exceptions from prospectus requirements in such jurisdictions Transfer restrictions United States The Offer Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Terms defined in Rule 144A or Regulation S shall have the same meaning when used in this section. Each purchaser of the Offer Shares outside the United States pursuant to Regulation S will be deemed to have acknowledged, represented and agreed that it has received a copy of this Prospectus and such other information as it deems necessary to make an informed decision and that: The purchaser is authorised to consummate the purchase of the Offer Shares in compliance with all applicable laws and regulations. The purchaser acknowledges that the Offer Shares have not been and will not be registered under the U.S. Securities Act, or with any securities regulatory authority or any state of the United States, and are subject to significant restrictions on transfer. The purchaser is, and the person, if any, for whose account or benefit the purchaser is acquiring the Offer Shares was, located outside the United States at the time the buy order for the Offer Shares was originated and continues to be located outside the United States and has not purchased the Offer Shares for the benefit of any person in the United States or entered into any arrangement for the transfer of the Offer Shares to any person in the United States. The purchaser is not an affiliate of the Company or a person acting on behalf of such affiliate, and is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Offer Shares from the Company or an affiliate thereof in the initial distribution of such Shares. 187

192 The purchaser is aware of the restrictions on the offer and sale of the Offer Shares pursuant to Regulation S described in this Prospectus. The Offer Shares have not been offered to it by means of any directed selling efforts as defined in Regulation S. The Company shall not recognise any offer, sale, pledge or other transfer of the Offer Shares made other than in compliance with the above restrictions. The purchaser acknowledges that the Company, the Selling Shareholders, the Managers and their respective advisers will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements. Each purchaser of the Offer Shares within the United States pursuant to Rule 144A will be deemed to have acknowledged, represented and agreed that it has received a copy of this Prospectus and such other information as it deems necessary to make an informed investment decision and that: The purchaser is authorised to consummate the purchase of the Offer Shares in compliance with all applicable laws and regulations. The purchaser acknowledges that the Offer Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state of the United States and are subject to significant restrictions to transfer. The purchaser (i) is a QIB (as defined in Rule 144A), (ii) is aware that the sale to it is being made in reliance on Rule 144A or another exemption from the registration requirements under the U.S. Securities Act and (iii) is acquiring such Offer Shares for its own account or for the account of a QIB, in each case for investment and not with a view to any resale or distribution to the Offer Shares, as the case may be. The purchaser is aware that the Offer Shares are being offered in the United States in a transaction not involving any public offering in the United States within the meaning of the U.S. Securities Act. If, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such Offer Shares, as the case may be, such Shares may be offered, resold, pledged or otherwise transferred only (i) to a person whom the beneficial owner and/or any person acting on its behalf reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii) in accordance with Regulation S, (iii) in accordance with Rule 144 (if available), (iv) pursuant to any other exemption from the registration requirements of the U.S. Securities Act, subject to the receipt by the Company of an opinion of counsel or such other evidence that the Company may reasonably require that such sale or transfer is in compliance with the U.S. Securities Act or (v) pursuant to an effective registration statement under the U.S. Securities Act, in each case in accordance with any applicable securities laws of any state or territory of the United States or any other jurisdiction. The purchaser is not an affiliate of the Company or a person acting on behalf of such affiliate, and is not in the business of buying and selling securities or, if it is in such business, it did not acquire the Offer Shares from the Company or an affiliate thereof in the initial distribution of such Shares. The Offer Shares are restricted securities within the meaning of Rule 144(a)(3) and no representation is made as to the availability of the exemption provided by Rule 144 for resales of any Offer Shares, as the case may be. The Company shall not recognise any offer, sale pledge or other transfer of the Offer Shares made other than in compliance with the above-stated restrictions. 188

193 The purchaser acknowledges that the Company, the Selling Shareholders, the Managers and their respective advisers will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements European Economic Area Each person in a Relevant Member State (other than, in the case of paragraph (a), persons receiving offers contemplated in this Prospectus in Norway) who receives any communication in respect of, or who acquires any Offer Shares under, the offers contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with each Manager and the Company that: a) It is a qualified investor as defined in the EU Prospectus Directive; and b) in the case of any Offer Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the EU Prospectus Directive, (i) the Offer Shares acquired by it in the offer have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior consent of the Managers has been given to the offer or resale; or (ii) where Offer Shares have been acquired by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those Shares to it is not treated under the EU Prospectus Directive as having been made to such persons. For the purposes of this representation, the expression an offer in relation to any Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any Offer Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Offer Shares, as the same may be varied in that Relevant Member State by any measure implementing the EU Prospectus Directive in that Relevant Member State and the expression EU Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU. 189

194 21 ADDITIONAL INFORMATION 21.1 Auditor and advisors The Company s independent auditor is KPMG AS with registration number , and business address at Sørkedalsveien 6, N-0369 Oslo, Norway. KPMG AS is a member of Den Norske Revisorforeningen (The Norwegian Institute of Public Accountants). The reports KPMG AS has issued which are included in this Prospectus are described in Section 10.6 Auditor. Danske Bank (Bryggetorget 4, N-0107 Oslo, Norway) is acting as Sole Global Coordinator for the Offering. Carnegie AS (Grundingen 2, Aker Brygge, N-0250 Oslo, Norway), Danske Bank and DNB Markets (Dronning Eufemias gate 30, N-0021, Norway) are acting as Joint Bookrunners for the Offering. Advokatfirmaet Thommessen AS (Haakon VIIs gate 10, N-0116 Oslo, Norway) is acting as Norwegian legal counsel to the Company in connection with the Offering and the Listing. Advokatfirmaet Grette DA (Fillipstad Brygge 2, N-0114 Oslo, Norway) is acting as Norwegian legal counsel to the Joint Bookrunners Documents on display Copies of the following documents will be available for inspection at the Company s offices at Lindebergvegen 3, N-2016 Frogner, Norway, during normal business hours from Monday to Friday each week (except public holidays) for a period of 12 months from the date of this Prospectus: The Company s certificate of incorporation and Articles of Association; All reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the Company s request any part of which is included or referred to in this Prospectus; The historical financial information of the Company and its subsidiary undertakings for each of the two financial years preceding the publication of this Prospectus; and This Prospectus. 190

195 22 DEFINITIONS AND GLOSSARY In the Prospectus, the following defined terms have the following meanings: 2010 PD Amending Directive... Directive 2010/73/EU amending the EU Prospectus Directive. Accent Equity... Accentfourteen Holding Limited. Additional Shares... Additional Shares sold pursuant to the over-allotment by the Stabilisation Manager, equalling up to approximately 15% of the aggregate number of New Shares and Sale Shares to be issued/sold in the Offering. adjusted EBITA... EBITA as adjusted for non-recurring Monitoring Fee payable to the Principal Shareholders. adjusted EBITDA... EBITDA as adjusted for non-recurring Monitoring Fee payable to the Principal Shareholders. adjusted EBITDAR... EBITDAR as adjusted for non-recurring Monitoring Fee payable to the Principal Shareholders. Anti-Money Laundering Legislation... The Norwegian Money Laundering Act of 6 March 2009 no. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 no. 302, collectively. Application Period... The application period for the Retail Offering which will take place from 09:00 hours (CET) on 1 December 2014 to 12:00 hours (CET) on 11 December 2014, unless shortened or extended. Articles of Association... The Company s articles of association. Board of Directors... The board of directors of the Company. Board Members... The members of the Board of Directors. Bookbuilding Period... The bookbuilding period for the Institutional Offering which will take place from 09:00 hours (CET) on 1 December 2014 to 15:00 hours (CET) on 11 December 2014, unless shortened or extended. c.... Abbreviation for approximately. CAGR... Compound annual growth rate. CGU... Under IFRS, a cash-generating unit is the smallest group of assets that independently generated cash flow and whose cash flow is largely independent of the cash flows generated by other assets. CapVest... Asta Netherlands B.V. (a company controlled by CapVest Equity Partners II LP) with registered address Atrium, Stawinkylaan ZX AMSTERDAM, the Netherlands and register number CapVest Adviser... Pursuant to an agreement between the Company, Accent Equity and CapVest dated 30 September 2011, CapVest Adviser shall provide the Group with services relating to strategy, marketing and general corporate advice or monitoring. Carnegie... Carnegie AS. CET... Central European Time. CISA... The Swiss Federal Act on Collective Investment Schemes. Combination... The combination of the Company s class A-shares and class B-shares into one class of ordinary Shares. Company... RenoNorden ASA. Corporate Governance Code... The Norwegian Code of Practice for Corporate Governance, dated 30 October Danske Bank... Danske Bank A/S. DKK... Danish Kroner, the lawful currency of Denmark. DNB... DNB Bank ASA. DNB Markets... DNB Markets, a part of DNB Bank ASA. EBITA... Operating profit before amortisation. EBITDA... Operating profit before depreciation, amortisation and impairment. EBITDAR... Operating profit before depreciation, amortisation and impairment and before vehicles operating lease expenses. EEA... The European Economic Area. EU... The European Union. EUR... The lawful common currency of the EU member states who have adopted the Euro as their sole national currency. 191

196 EU Prospectus Directive... Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003, and amendments thereto, including the 2010 PD Amending Directive to the extent implemented in the Relevant Member State. Family Member... Spouse, cohabitee or child (including such child by adoption or step child) of a Selling Shareholder or member of Senior Management. FGAAP... Finnish Generally Accepted Accounting Principles. Financial Information... The Financial Statements, the RenoNorden Holding Financial Statements and the Interim Financial Statements. Financial Statements... The Group s audited consolidated financial statements as of, and for the years ended, 31 December 2013 and 2012 and as of, and for the period from inception (17 March 2011) to, 31 December General Meeting... The Company s general meeting of shareholders. Group... The Company and its consolidated subsidiaries. HFT Acquisition... The Group s acquisition of HFT Environment, completed on 19 December HFT Environment... HFT Environment OY. HFT Environment Financial Statements... HFT Environment s audited consolidated financial statements as of, and for the year ended, 31 December IAS International Accounting Standard 34 Interim Financial Reporting as adopted by the EU. IFRS... International Financial Reporting Standards as adopted by the EU. Inception Fee... In connection with the Company s acquisition of the RenoNorden Holding in 2011, CapVest Adviser and Accent Equity received a one-off transaction fee of NOK 3,895,000 to Accent Equity and NOK 8,998,000 to CapVest Adviser. Indicative Price Range... The indicative price range in the Offering of NOK 39 to NOK 53 per Offer Share. Institutional Closing Date... Delivery and payment for the Offer Shares by the applicants in the Institutional Offering is expected to take place on or about 16 December Institutional Offering... An institutional offering, in which Offer Shares are being offered to (a) investors in Norway, (b) investors outside Norway and the United States, subject to applicable exemptions from the prospectus requirements, and (c) in the United States to QIBs in reliance on an exemption from the registration requirements under the U.S. Securities Act, subject to a lower limit per application of NOK 1,000,000. All offers and sales outside the United Stated will be made in compliance with Regulation S. Interim Financial Statements... The Group s unaudited interim condensed consolidated financial statements as of, and for the three and nine month periods ended, 30 September 2014 (with comparable figures for 2013). Investment Agreement... The Investment Agreement dated 30 September 2011 entered into by, among others, the Company and the Selling Shareholders in connection with the Principal Shareholders investment acquisition of RenoNorden Holding AS. Joint Bookrunners... Carnegie, Danske Bank and DNB Markets, collectively. Leaver Loans... Loans from former employees of the Group used as consideration for purchase of their shares in connection with end of employment. Lending Option... A lending option granted to the Stabilisation Manager by the Principal Shareholders, pursuant to which the Stabilisation Manager may require the Principal Shareholders to lend to the Stabilisation Manager, on behalf of the Managers, up to a number of Shares equal to the number of Additional Shares. Listing... The listing of the Shares on Oslo Børs, or alternatively on Oslo Axess. LNG... Liquefied natural gas. Make Whole Amount... The Investment Agreement guarantees a fixed cumulative return (the class A-shares (preference share) return of 21 percent annually) or a guaranteed minimum return of 100 percent of the original investment in class A-shares (preference Shares) and Shareholder Loan in aggregate. Management... The senior management team of the Group. Managers... The Sole Global Coordinator and the Joint Bookrunners, collectively. Monitoring Fee... An annual fee equal to 1.5% of the Company s EBITDAR (plus any VAT or similar taxes) payable by the Company under an agreement between the Company, Accent Equity and CapVest Limited dated 30 September 2011 regarding services relating to strategy, marketing and general corporate advice or monitoring to be provided to 192

197 the Group. New Shares... New shares to be issued by the Company in the Offering to raise gross proceeds in the amount of approximately NOK 309 million. NGAAP... Norwegian Generally Accepted Accounting Principles. NOK... Norwegian Kroner, the lawful currency of Norway. NOM-account... Nominee account. Non-Norwegian Corporate Shareholders... Shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes. Non-Norwegian Personal Shareholders... Shareholders who are individuals not resident in Norway for tax purposes. Norwegian Accounting Act... The Norwegian Accounting Act of 17 July 1998 no. 56 (Nw.: regnskapsloven). Norwegian Act on Overdue Payment... The Norwegian Act on Overdue Payment of 17 December 1976 no Norwegian Corporate Shareholders... Shareholders who are limited liability companies (and certain similar entities) resident in Norway for tax purposes. Norwegian FSA... The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet). Norwegian Personal Shareholders... Shareholders who are individuals resident in Norway for tax purposes. Norwegian Public Limited Companies Act... The Norwegian Public Limited Companies Act of 13 June 1997 no. 45 (Nw.: allmennaksjeloven). Norwegian Securities Trading Act... The Norwegian Securities Trading Act of 29 June 2007 no. 75 (Nw.: verdipapirhandelloven). Offering... The global offering including the Institutional Offering and the Retail Offering taken together. Offer Price... The final offering price for the Offer Shares in the Offering. The Offer Price may be set within, below or above the Indicative Price Range. Offer Shares... The New Shares together with the Sale Shares and any Additional Shares the Shares offered pursuant to the Offering. Order... The UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended. Oslo Axess... A Norwegian regulated market operated by the Oslo Stock Exchange. Oslo Børs... A Norwegian regulated market operated by the Oslo Stock Exchange. Oslo Stock Exchange... Oslo Børs ASA. Over-Allotment Option... Option granted by the Principal Shareholders to the Stabilisation Manager, on behalf of the Managers, to purchase Additional Shares, equalling up to approximately 15% of the number of New Shares and Sale Shares issued/sold in the Offering, exercisable, in whole or in part, within a 30-day period commencing at the time at which trading in the Shares commences on Oslo Børs, or alternatively on Oslo Axess, expected to be on or about 16 December 2014, to cover any over-allotments made in connection with the Offering. Payment Date... The payment date for the Offer Shares under the Retail Offering, expected to be on 15 December PIK Notes... The subordinated loan referred to as 8 per cent. Fixed Unsecured PIK Notes 2021 (the Shareholder Loan or PIK Notes), governed by an Investment Agreement dated 30 September Preference shares... Agreement between the Company and the Selling Shareholders dated 30 September 2011 that provides for a shareholder loan referred to as preference shares with an annual return of 21 percent and minimum 100 percent for the total subscribed amount of PIK Notes and Preference Shares (with booked value of NOK 726 million). Principal Shareholders... CapVest and Accent Equity, collectively. Prior Senior Facility... The former senior facility with DNB Bank ASA and Nordea Bank Norge ASA. Pro Forma Financial Information... Unaudited pro forma financial information showing how the HFT Acquisition could have affected the Group s income statement for the year ended 31 December 2013 as if the transaction had taken place at 1 January Prospectus... This Prospectus, dated 28 November PwC... PricewaterhouseCoopers AS. QIBs... Qualified institutional buyers in the United States as defined in Rule 144A. 193

198 Regulation S... Regulation S under the U.S. Securities Act. Relevant Implementation Date... In relation to each Relevant Member State, with effect from and including the date on which the EU Prospectus Directive is implemented in that Relevant Member State. Relevant Member State... Each member state of the EEA which has implemented the EU Prospectus Directive. Relevant Persons... Persons in the UK that are (i) investment professionals falling within Article 19(5) of the Order or (ii) high net worth entities, and other persons to whom the Prospectus may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order. RenoNorden... The Company and its consolidated subsidiaries. RenoNorden Finland... RenoNorden Finland Holding OY. RenoNorden Holding... RenoNorden Holding AS. RenoNorden Holding Financial Statements... RenoNorden Holding s audited consolidated financial statements as of, and for the year ended, 31 December RenoNorden Investments... RenoNorden Investments AS. Restricted Period... The lock-up period under the Lock-Up Undertaking commencing the first day of trading of the Shares on the Oslo Stock Exchange and ending 180 days after such date for the Principal Shareholders, and 365 days for the Management, Selling Shareholders (except the Principal Shareholders) and the Company. Retail Application Form... Application form to be used to apply for Offer Shares in the Retail Offering, attached to this Prospectus as Appendix G. Retail Offering... A retail offering, in which Offer Shares are being offered to the public in Norway, subject to a lower limit per application of an amount of NOK 10,500 and an upper limit per application of NOK 999,999 for each investor. Rule 144A... Rule 144A under the U.S. Securities Act. Sale Shares... Existing shares of the Company offered pursuant to the Offering. SEC... U.S. Securities and Exchange Commission. SEK... Swedish Kroner, the lawful currency of Sweden. Selling Shareholders... CapVest and Accent Equity, as well as certain other shareholders of the Company listed in Section 14 The Selling Shareholders, collectively. Senior Facility... Agreement between the Company as borrower and DNB Bank ASA and Danske Bank A/S as lenders, dated 10 November 2014, that provides for a senior facility comprising a NOK 620,000,000 multicurrency term loan facility and a NOK 350,000,000 multicurrency revolving credit facility. SFA... Securities and Futures Act of Singapore. Share(s)... Shares in the share capital of the Company, each with a par value of NOK 0.01, or any one of them. Shareholder Loan... Agreement between the Company and the Selling Shareholders dated 30 September 2011 that provides for a subordinated loan referred to as 8 per cent. Fixed Unsecured PIK Notes 2021 (booked value of NOK 295 million as at 30 September 2014). SIX... The Swiss Exchange. Sole Global Coordinator... Danske Bank. SPA... RenoNorden Finland completed on 19 December 2013 the acquisition of all the shares in HFT Environment for the consideration agreed pursuant to a share sale and purchase agreement dated the same date. Stabilisation Manager... Danske Bank. UK... The United Kingdom. U.S. or United States... The United States of America. U.S. Exchange Act... The U.S. Securities Exchange Act of 1934, as amended. U.S. Securities Act... The U.S. Securities Act of 1933, as amended. USD... United States Dollars, the lawful currency in the United States. VPS... The Norwegian Central Securities Depository (Nw.: Verdipapirsentralen). VPS account... An account with the VPS for the registration of holdings of securities. 194

199 APPENDIX A: ARTICLES OF ASSOCIATION OF RENONORDEN ASA A 1

200 ARTICLES OF ASSOCIATION FOR RENONORDEN ASA (reg no ) UPDATED AS OF 27 NOVEMBER Name The company s name is RenoNorden ASA. The company is a public limited company. 2 Registered business address The company s registered business address is in the municipality of Sørum. 3 Object The object of the company is to operate transport services, waste management and all matters related thereto, as well as owning companies operating such activities. General Meetings may also be held in Oslo municipality. 4 Share capital 147 The share capital of the company is NOK [] divided into [] shares, each with a nominal value of NOK 1. The shares shall be registered with a securities register. 5 Board The company s Board of Directors shall consist of three to seven members, according to the decision of the general meeting. 6 Nomination committee The company shall have a nomination committee. The nomination committee shall consist of two or three members, according to the decision of the general meeting. The members of the committee, including the chairman, shall be elected by the general meeting. Unless otherwise resolved by the general meeting, the elections shall be held every two years. The nomination committee shall make recommendations to the general meeting for the election of shareholder elected board members and members of the nomination committee, and the remuneration to the members of the board of directors and the nomination committee. The remuneration to the members of the nomination committee shall be resolved by the general meeting. The general meeting may establish guidelines for the nomination committee. 7 General meeting Documents related to matters to be considered at the general meeting, including documents which shall, according to law, be included in or attached to the notice of the general meeting, do not need to be sent to the shareholders if the documents are made available on the company s website. A shareholder may, nevertheless, demand to receive the documents concerning matters which are to be discussed at the general meeting. The shareholders shall be able to cast their votes in writing, including by electronic means, in a period prior to the general meeting. The board of directors may provide guidelines for such voting. The notice of the general meeting shall include the guidelines adopted by the board of directors. The annual general meeting shall deal with and decide the following matters: 1. Approval of the annual accounts and the annual report, including distribution of dividend. 2. Any other business which according to law pertains to the annual general meeting. 146 Articles of Association following completion of the Offering. 147 To be updated to reflect the number of New Shares issued in the Offering. See Section 16.3 Share capital and share capital history. A 2

201 APPENDIX B: FINANCIAL STATEMENTS FOR RENONORDEN ASA FOR THE YEARS ENDED 31 DECEMBER 2013, 2012 AND 2011 B 1

202 B 2

203 B 3

204 B 4

205 Notes to the consolidated financial statements 1 - General information Asta Group AS ( the Company ) and its subsidiaries (together, the Group ), also known collectively as the RenoNorden Group, develop and operate waste disposal services for municipalities and inter-municipal waste companies in the Nordic region. The Group specialises in the collection of household waste and operates across Sweden, Denmark, Finland and Norway. In 2011 the RenoNorden group was acquired by CapVest Associates LLP, a private equity investment company. CapVest is the ultimate parent of the RenoNorden group. CapVest Associates LLP is located at 100 Pall Mall, London, Great Britain, SW1Y 5NQ. The Company is a public limited liability company and has applied for listing on the Oslo Stock Exchange in Q The Company is incorporated and domiciled in Norway. The address of its registered office is Lindebergvegen 3, 2016 Frogner, Norway. 2 - Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The consolidated financial statements of Asta Group AS have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS) as required for financial years beginning 1 January The consolidated financial statements have been prepared under the historical cost convention, as modified by any derivative instruments at fair value through profit or loss. The Consolidated Financial Statements are prepared using uniform accounting policies for similar transactions and events under similar conditions for all reporting periods presented. Management believes that the Group's cash flow from operations and its current and future credit facilities will continue to provide the cash necessary to satisfy the Group's working capital requirements and capital expenditures, as well as to make all scheduled long-term debt payments, requests for redemption payments on the preference shares, repayment of shareholder loans, and to satisfy the Group's other financial commitments. The Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4. This is the first set of consolidated financial statements for Asta Group AS prepared in accordance with IFRS and therefore IFRS 1 First-time Adoption of International Financial Reporting Standards has been applied. The date of transition was 1 January In accordance with IFRS 1, Asta Group AS has also prepared an opening IFRS consolidated balance sheet as of 1 January 2012, as well as comparative figures for 31 December 2012 and 31 December 2013, respectively. Comparative figures for the consolidated statement of comprehensive income, consolidated statement cash flow and consolidated statement of changes in equity have also been prepared for the years ended 31 December 2012 and 31 December 2013, respectively. The effects from the conversion from Norwegian GAAP to IFRS are explained in note Basis of consolidation (a) Subsidiaries Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expensed as incurred. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement (note 2.6). 2.3 Segment reporting B 5

206 Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions Foreign currency translation a) Functional and presentation currency Items included in the financial statements of each of the Group s entities are measured using the currency of the primary economic environment in which the entity operates ( the functional currency ). The consolidated financial statements are presented in Norwegian Kroner (NOK), which is the Group s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. (c) Group companies The results and balances of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows: (i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (ii) income and expenses for each income statement are translated at average exchange rates and (iii) all resulting exchange differences are recognised in other comprehensive income. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. However, the Company has adopted the exemption not apply IAS 21 The Effects of Changes in Foreign Exchange Rates retrospectively to goodwill arising in business combinations that occurred before the date of transition to IFRS. This goodwill is consequently reflected as assets and liabilities in NOK. Exchange differences arising are recognised in other comprehensive income Property, plant and equipment Property, plant and equipment consist mainly of waste disposal trucks/units held under finance leases. In addition, property plant and equipment consists of containers and other transportation equipment plus furniture and fittings and IT equipment for office premises. Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditures that are directly attributable to the acquisition of the items. Subsequent costs are included in the asset s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Land is not depreciated. Depreciation on other property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: Buildings and other properties years Plant and machinery 3-15 years Waste disposal trucks 10 years Fixtures and fittings 3-15 years The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each annual reporting period. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount (note 2.7). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within Other operating expenses in the consolidated statement of comprehensive income. 2.6 Intangible assets (a) Goodwill For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (CGUs), or groups of CGUs, that are expected to benefit from the synergies of the combination. Each unit to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually at year-end or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the relevant unit including goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment of goodwill is recognised immediately as an expense and is not subsequently reversed. Goodwill that was recognized prior to the IFRS conversion date of 1 January 2011 was allocated to the respective CGU's using the presentation currency (NOK). This goodwill is subsequently measured and tested for impairment based on this currency. (b) Other intangible assets Patents, technology and customer contracts are shown at historical cost. Patents, technology and customer contracts acquired in a business combination are recognised at fair B 6

207 value at the acquisition date. Patents, technology and customer contracts have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost patents, technology and customer contracts over their estimated useful lives of 3 years, 10 years, and the time period of the individual customer contracts, respectively. 2.7 Impairment of non-financial assets Intangible assets that have an indefinite useful life or intangible assets not ready for use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date. 2.8 Inventory Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses Accounts receivable Accounts receivable are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. Accounts receivable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment Cash and cash equivalents In the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. In the consolidated balance sheet, bank overdrafts are included within current liabilities Financial assets Classification The Group classifies its financial assets in the following categories: at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. (a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. The Group currently does not have any derivatives designated as hedges for hedge accounting purposes. Currently the Group has only derivatives in this category. Financial assets in this category are classified as current assets. (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. The Group s loans and receivables comprise Accounts receivable, Other receivables and Cash and cash equivalents Recognition and measurement Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the consolidated statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method. Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Derivatives financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivative instruments are recognised in Other operating expenses Impairment of financial assets (a) Assets carried at amortised cost The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or Group of financial assets is impaired. A financial asset or a Group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or Group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated B 7

208 future cash flows, such as changes in arrears or economic conditions that correlate with defaults. For loans and receivables category, the amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of income and other comprehensive income Shareholder's equity Ordinary shares are classified as equity. Preference shares for which the Company does not have an unconditional right to avoid delivering cash or another financial asset, are classified as liabilities (note 2.15). Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the company s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company s equity holders. Foreign currency translation reserve The translation reserve is comprised of foreign currency rate changes arising from the translation of financial statements of the Group s foreign entities into NOK. On disposal of a foreign operation, the related cumulative translation differences recognised in equity are reclassified to profit or loss and are recognized as part of the gain or loss on disposal Accounts payable Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method Bank borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates Preference shares Preference shares for which the Company does not have an unconditional right to avoid delivering cash or another financial asset, are classified as liabilities. The existing preference shares have a demand feature and are classified as current liabilities and recognized at the amount payable on demand. Discounting is evaluated not to be relevant. The Preference Share Return is recognised in the consolidated statement of comprehensive income as interest expense Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated statement of comprehensive income. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. B 8

209 Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for services provided or products delivered, stated net of discounts, returns and value added taxes. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for the Group s activities, as described below. Revenues are primarily earned from the provision of waste collection services to municipalities, rental revenues from the leasing of bins or containers, and sale of bins or bags and other services provided to municipalities and businesses. The Group recognises revenue as the services are provided or the products are delivered Interest income Interest income is recognised using the effective interest method Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straightline basis over the period of the lease. The Group leases certain property, plant and equipment, specifically waste disposal vehicles. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease s commencement at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Finance lease payments are allocated between liability and finance charges. The corresponding rental obligations, net of finance charges, are included in current and noncurrent liabilities. The property, plant and equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset and the lease term Pension For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The Group also has a contractually regulated pension plan in Norway ("avtalefestet førtidspensjon" or AFP) that is a multi-employer agreement where the Company has agreed on the level and duration of the pension benefits. As it is currently not possible to reliably measure the individual pension components in this pension agreement, it is recognized in the financial statements similarly to the defined contribution plan, discussed above New standards not yet adopted Standards, amendments and interpretations that were adopted early in connection with the conversion to IFRS IFRS 10, 11 and 12 were early adopted in connection with the conversion to IFRS. Standards, amendments and interpretations to existing standards that were not effective at December 31, 2013 and have not been adopted early by the Group. IFRS 9 Financial Instruments addresses the classification, measurement, and recognition of financial assets, financial liabilities and hedge accounting. The final IFRS 9 standard was issued in July The Group is yet to assess IFRS 9's full impact. IFRS 9 is effective on 1 January 2018 with early application permitted. IFRS 15 Revenue from Contracts with Customers establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. The Group is yet to assess the impact of adopting IFRS 15. IFRS 15 is effective for annual periods beginning on or after 1 January IFRIC 21, Levies sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to pay a levy and when should a liability be recognized. The Group does not expect the implementation of IFRIC 21 to have a material impact on their consolidated financial statements. IFRIC 21 is effective for annual periods beginning on or after 1 January B 9

210 There are no other standards or interpretations that are not yet effective that are expected to have a significant impact on the consolidated financial statements. 3. Financial risk management The Group s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group s financial performance. The Group uses derivative financial instruments to economically hedge certain risk exposures, such as diesel prices and interest rates. The Group does not use hedge accounting. Risk management is carried out by the CFO and his staff under policies approved by the board of directors. The CFO identifies, evaluates and hedges financial risks in close cooperation with the Group s operating units. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. Risk management policies and procedures are reviewed regularly to reflect changes in market condition and the Group's activities. 3.1 Financial risk factors a) Market risk Market risk can be defined as the risk that the Group's income and expenses, future cash flows or fair value of financial instruments will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk, such as diesel fuel price risk. Market risk is monitored and actively managed by the Group through a combination of natural hedging techniques and financial derivatives. i) Currency risk For risk management purposes, two types of currency exposure have been identified: Translation into the presentation currency Being a multinational Group, the Group faces currency risk arising from the translation of entities whose functional currency differs from the presentation currency of the Group. This exposure does not give rise to an immediate cash effect; however it may impact the Group's financial covenants and is therefore monitored. Exposure related to equity in foreign currency is generally not hedged. Foreign currency transactions The Group's business model is to provide services from the local subsidiary to municipalities in their local currency, and most costs are also incurred in local currency. Bank loans are denominated in the four currencies of Norway, Sweden, Finland and Denmark, such that the financing does not give rise to significant currency exposures for the Group. As a result of the international structure of the Group, the Group is exposed to some foreign currency exchange rate risks relating to various transactions in currencies other than the functional currency. ii) Cash flow interest rate risk The Group is exposed to interest rate risk fluctuations mainly due to the DnB and Nordea bank loans, with variable interest rates that are based on NIBOR (or comparable for the local country) plus a margin. In order to mitigate the risk of fluctuations in the variable interest rates, management has entered into certain interest rate caps derivative financial instruments. This sets a ceiling on the variable portion of the interest expense to 2.8 percent and therefore limits the potential cash outflows and reduces liquidity fluctuations. iii) Diesel fuel price risk The Group is exposed to diesel fuel price risk fluctuations in each of their countries of operations. This risk is managed through the purchase of diesel caps derivative financial instruments. These derivative instruments cap the diesel prices the Group will pay, in the event of increases in diesel prices for the period the contracts are entered into, and therefore limits the potential cash outflows and reduce liquidity fluctuations. b) Credit risk The Group believes that the credit risk is minimal since the Group's customers are the majority municipal governments, and all cash balances are on deposit with Nordea. c) Liquidity risk Liquidity risk arises from the Group's potential to meet its financial obligations towards suppliers and debt capital providers. In addition to the management of interest rate and diesel fuel price risks, liquidity management represents a key element of our financial management. The goal of liquidity management is to ensure the ability to service the Group's commitments and to make payments when they come due. The Group's liquidity situation is closely monitored and rolling forecasts of cash flows and cash holdings are prepared monthly. The schedule of payments related to the specific financial liabilities bank loans and financial leases is disclosed in the relevant note. The Shareholder loans (PIK notes) and class A shares (preference shares) are payable on demand, see notes 2.15 and 24 Shareholder loans. Current financial liabilities are scheduled to be paid within the next 12 months. B 10

211 3.2 Capital management The Group s objectives when managing capital are to grow the business while safeguarding the Group s ability to continue as a going concern. The Group has an objective to maintain a capital structure that gives the Group the lowest possible cost of capital given current market conditions. The Group has a policy to use finance leases for the purchase of operational assets. Financing of the subsidiary acquisitions was achieved through shareholder loans and the issuance of preference shares. Other financing needs are met through the use of bank borrowings. Bank borrowings are denominated at the local currency of the subsidiary, such that loan repayments and interest payments are matched with the local currency cash inflows from sales. Cash outflows related to interest payments are capped with the purchase of interest rate cap contracts. There are no binding debt covenants in any of the bank loan agreements, except in the Danish subsidiary, which has a debt covenant requirement to maintain a greater than 10 percent equity, measured using the local GAAP statutory financial statements. Cash is managed by use of a Group cash pool to manage the cash needs for all of the subsidiaries. All group bank accounts and the cash pool treasury management is with Nordea. The Group has short-term bank borrowing facilities for short-term cash needs. In accordance with the Group policy to have maximum cash available to grow the business, no dividends have been paid out in 2011, 2012 or Critical accounting estimates and judgements When preparing the consolidated financial statements, management undertakes a number of judgments, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The judgements, apart from those involving estimations, that management has made in the process of applying the entity s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements are discussed below. Preference shares In the accounting for preference shares, the Company has interpreted the Investment Agreement such that the Company does not have an unconditional right to avoid delivering cash or another financial asset. Consequently, the Preference Shares are classified as liabilities. IAS 39 Financial Instruments: Recognition and Measurement combined with IFRS 13 Fair Value Measurements are interpreted to require recognition of the minimum Preference Share Return on initial recognition of the liability. Due to a demand feature the fair value is estimated at the total amount that can be required to be paid (guaranteed minimum return). Discounting is evaluated not to be relevant. The Preference Share Return is recognized in profit or loss as interest expense and in the balance sheet as a current financial liability. As the Investment Agreement was signed in September 2011, the Preference Share Return, for IFRS reporting purposes was an interest expense in 2011, so is therefore shown as an equity adjustment in the 1 January 2012 opening IFRS balance sheet. Subsequent measurement of any changes in the Preference Share Return will affect profit or loss, and for the total of Shareholder Loans and Preference Shares no net interest expense is recognized until the aggregate accumulated return based on the stated annual returns exceed the minimum Preference Share Return. See notes 24 Shareholder loans and 27 IFRS conversion for additional information. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below. Impairment of non-current assets IAS 36 requires that the Group assess conditions that could cause an asset to become impaired and to test recoverability of potentially impaired assets. These conditions include internal and external factors such as the Group's market capitalization, significant changes in the planned use of the assets or a significant adverse change in the expected prices, sales volumes or raw material cost. Each Cash Generating Unit (CGU) or individual asset is reviewed for impairment indicators. Most of the Group's assets are assigned to CGUs. The identification of CGUs involves judgment, including assessment of where active markets exist, and the level of interdependency of cash inflows. For the Group, the CGU is the group of assets employed within one country, as all of these assets serve a common market. If a loss in value is indicated, the recoverable amount is estimated as the higher of the CGU's fair value less cost of disposal, or its value in use. Calculation of value in use is a discounted cash flow calculation based on continued use of the assets in its present condition, excluding potential exploitation of improvement or expansion potential. Determination of the recoverable amount involves management estimates on highly uncertain matters, such as commodity prices (diesel fuel) and their impact on markets, development in demand, inflation, operating expenses and tax and legal systems. Management uses internal business plans, quoted market prices and our best estimate of commodity prices, currency rates, discount rates and other relevant information. A detailed forecast is developed for a period of three to five years with projections thereafter. Business combinations and goodwill In a business combination consideration, assets and liabilities are recognized at estimated fair value, and any excess purchase price is included in goodwill. Valuation models are used to estimate the fair value of acquired intangible assets. Such valuations are subject to numerous assumptions including the useful lives of assets and the timing and amounts of certain future cash flows, which may be dependent on discount rates and other factors. In accordance with IAS 36, goodwill and certain intangible assets are reviewed at least annually for impairment. The IFRS opening balance goodwill impairment test, using a value-in-use model for Sweden was sensitive for changes in EBITDA margin assumptions, discount rate and growth assumptions. If the expected EBITDA margin was two percentage points lower than management estimates of EBITDA margin, the Group would have recognized an impairment of goodwill in the amount of NOK 68 million. If the estimated discount rate used in B 11

212 determining the value-in-use had been one percent higher the Group would have recognized an impairment of goodwill in the amount of NOK 91 million. If the estimated growth rate used in determining the value-in-use had been one percent lower the Group would have recognized an impairment in the amount of NOK 98 million. As part of the transition to IFRS, the Group allocated goodwill to Norway, Sweden and Denmark based on average key figures in 2011 (revenues, EBITA and total capital employed) in the respective countries. If the allocation of goodwill had been based on other key figures this would have resulted in a different allocation of goodwill. If more weight was put on EBITA, this would have resulted in a lower amount of goodwill allocated to Sweden, and reduced the Swedish CGU's sensitivity for impairment. As part of the 2013 acquisition in Finland, the Group performed a purchase price allocation. The total excess value was allocated to customer contracts, technology and goodwill. This allocation required the use of estimates and management judgment. The fair value of customer contracts has been estimated based on contract length and expected net cash flow after an asset charge of 3.9 percent of the carrying value of machinery and equipment. If the expected net cash flow had been lower, and/or the asset charge higher, the Group would have recognized a lower amount on customer contracts and a higher amount on goodwill related to the acquisition. The fair value of technology assets was estimated based on expected replacement cost. If the expected replacement cost had been lower, the Group would have recognized a lower amount on Technology and a higher amount on goodwill related to the acquisition. See note 21Business combinations for additional information. B 12

213 B 13

214 B 14

215 B 15

216 B 16

217 B 17

218 B 18

219 B 19

220 B 20

221 B 21

222 B 22

223 B 23

224 B 24

225 B 25

226 B 26

227 B 27

228 B 28

229 B 29

230 B 30

231 B 31

232 B 32

233 B 33

234 B 34

235 B 35

236 B 36

237 B 37

238 B 38

239 B 39

240 B 40

241 B 41

242 B 42

243 B 43

244 APPENDIX C: FINANCIAL STATEMENTS FOR RENONORDEN HOLDING AS FOR THE YEAR ENDED 31 DECEMBER 2011 C 1

245 C 2

246 C 3

247 C 4

248 C 5

249 C 6

250 C 7

251 C 8

252 APPENDIX D: INTERIM FINANCIAL STATEMENTS FOR RENONORDEN ASA FOR THE THREE AND NINE MONTH PERIODS ENDED 30 SEPTEMBER 2014 (WITH COMPARABLE FIGURES FOR 2013) D 1

253 D 2

254 D 3

255 D 4

256 D 5

257 D 6

258 D 7

259 APPENDIX E: FINANCIAL STATEMENTS FOR HFT ENVIRONMENT OY FOR THE YEAR ENDED 31 DECEMBER 2013 E 1

260 E 2

261 E 3

262 E 4

263 E 5

264 E 6

265 E 7

266 E 8

267 E 9

268 E 10

269 E 11

270 E 12

271 E 13

272 E 14

273 E 15

274 E 16

275 E 17

276 APPENDIX F: INDEPENDENT PRACTITIONER S ASSURANCE REPORT ON THE COMPILATION OF THE UNAUDITED PRO FORMA FINANCIAL INFORMATION 200 F 1

277 F 2

278 F 3

279 APPENDIX G: APPLICATION FORM FOR THE RETAIL OFFERING G 1

280 APPLICATION FORM FOR THE RETAIL OFFERING General information: The terms and conditions for the Retail Offering are set out in the prospectus dated 28 November 2014 (the Prospectus ), which has been issued by RenoNorden ASA (the Company ) in connection with the sale of newly issued shares by the Company and the secondary sale of existing shares in the Company by Asta Netherlands B.V. ( CapVest ), a company controlled by CapVest Equity Partners II LP, and Accent Fourteen Holding Limited ( Accent Equity, and together with CapVest, the Principal Shareholders ), as well as certain other shareholders listed in Section 14 The Selling Shareholders of the Prospectus (collectively, the Selling Shareholders ), and the listing of the Company s Shares on Oslo Børs, or alternatively on Oslo Axess. All capitalised terms not defined herein shall have the meaning as assigned to them in the Prospectus. Application procedure: Norwegian applicants in the Retail Offering who are residents of Norway with a Norwegian personal identification number may apply for Offer Shares by using the following websites: and Applications in the Retail Offering can also be made by using this Retail Application Form (see definition in Section Offer Price of the Prospectus), attached as Appendix G to the Prospectus. Retail Application Forms must be correctly completed and submitted by the applicable deadline to one of the following application offices: Carnegie AS Danske Bank DNB Markets Registrars Department Grundingen 2, Aker Brygge Bryggetorget 4 Dronning Eufemias gate 30 P.O. Box 684 Sentrum P.O. Box 1170 Sentrum P.O. Box 1600 Sentrum N-0106 Oslo N-0250 Oslo N-0021 Oslo Norway Norway Norway Tel: Tel: Tel: Fax: Fax: subscriptions@ Carnegie.no emisjoner@danskebank.com retail@dnb.no The applicant is responsible for the correctness of the information filled in on this Retail Application Form. Retail Application Forms that are incomplete or incorrectly completed, electronically or physically, or that are received after expiry of the Application Period, and any application that may be unlawful, may be disregarded without further notice to the applicant. Subject to any shortening or extension of the Application Period, applications made through the VPS online application system must be duly registered by 12:00 hours (CET) on 11 December 2014, while applications made on Retail Application Forms must be received by one of the application offices by the same time. None of the Company, the Selling Shareholders or any of the Managers may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by any of the application offices. All applications made in the Retail Offering will be irrevocable and binding upon receipt of a duly completed Retail Application Form, or in the case of applications through the VPS online application system, upon registration of the application, irrespective of any shortening or extension of the Application Period, and cannot be withdrawn, cancelled or modified by the applicant after having been received by the application office, or in the case of applications through the VPS online application system, upon registration of the application. Price of Offer Shares: The indicative price range (the Indicative Price Range ) for the Offering is from NOK 39 to NOK 53 per Offer Share. The Company and the Principal Shareholders will, in consultation with the Joint Bookrunners, determine the final Offer Price on the basis of applications received and not withdrawn in the Institutional Offering during the Bookbuilding Period and the number of applications received in the Retail Offering. The Offer Price will be determined on or about 11 December The Offer Price may be set within, below or above the Indicative Price Range. Each applicant in the Retail Offering will be permitted, but not required, to indicate when ordering through the VPS online application system or on the Retail Application Form that the applicant does not wish to be allocated Offer Shares should the Offer Price be set higher than the highest price in the Indicative Price Range. If the applicant does so, the applicant will not be allocated any Offer Shares in the event that the Offer Price is set higher than the highest price in the Indicative Price Range. If the applicant does not expressly stipulate such reservation when ordering through the VPS online application system or on the Retail Application Form, the application will be binding regardless of whether the Offer Price is set within or above (or below) the Indicative Price Range. Allocation, payment and delivery of Offer Shares: Danske Bank, acting as settlement agent for the Retail Offering, expects to issue notifications of allocation of Offer Shares in the Retail Offering on or about 12 December 2014, by issuing allocation notes to the applicants by mail or otherwise. Any applicant wishing to know the precise number of Offer Shares allocated to it may contact one of the application offices on or about 12 December 2014 during business hours. Applicants who have access to investor services through an institution that operates the applicant s VPS account should be able to see the number of Offer Shares they have been allocated from on or about 12 December In registering an application through the VPS online application system or by completing and submitting a Retail Application Form, each applicant in the Retail Offering will authorise Danske Bank (on behalf of the Managers), or someone appointed by it to debit the applicant s Norwegian bank account for the total amount due for the Offer Shares allocated to the applicant. Accounts will be debited on or about 15 December 2014 (the Payment Date ), and there must be sufficient funds in the stated bank account from and including 15 December Applicants who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the Payment Date. Further details and instructions will be set out in the allocation notes to the applicant to be issued on or about 12 December 2014, or can be obtained by contacting Danske Bank at Danske Bank (on behalf of the Managers) is only authorised to debit each account once, but reserves the right (but has no obligation) to make up to three debit attempts through 22 December 2014 if there are insufficient funds on the account on the Payment Date. Should any applicant have insufficient funds on his or her account, or should payment be delayed for any reason, or if it is not possible to debit the account, overdue interest will accrue and other terms will apply as set out under the heading Overdue and missing payment below. Subject to timely payment by the applicant, delivery of the Offer Shares allocated in the Retail Offering is expected to take place on or about 16 December 2014 (or such later date upon the successful debit of the relevant account). Trading in the Shares on Oslo Børs, or alternatively on Oslo Axess, is expected to commence on or about 16 December Guidelines for the applicant: Please refer to the second page of this Retail Application Form for further application guidelines. Applicant s VPS-account (12 digits): I/we apply for Offer Shares for a total of NOK (minimum NOK 10,500 and maximum NOK 999,999) Applicant s bank account to be debited (11 digits): OFFER PRICE: My/our application is conditional upon the final Offer Price not being set above the upper end of the Indicative Price Range (insert cross) (must only be completed if the application is conditional upon the final Offer Price not being set above the upper end of the Indicative Price Range): I/we hereby irrevocably (i) apply for the number of Offer Shares allocated to me/us, at the Offer Price, up to the aggregate application amount as specified above subject to the terms and conditions set out in this Retail Application Form and in the Prospectus, (ii) authorise and instruct each of the Managers (or someone appointed by any of them) acting jointly or severally to take all actions required to purchase and/or subscribe the Offer Shares allocated to me/us on my/our behalf, to take all other actions deemed required by them to give effect to the transactions contemplated by this Retail Application Form, and to ensure delivery of such Offer Shares to me/us in the VPS, on my/our behalf, (iii) authorise Danske Bank, or someone appointed by it, to debit my/our bank account as set out in this Retail Application Form for the amount payable for the Offer Shares allotted to me/us, and (iv) confirm and warrant to have read the Prospectus and that I/we are eligible to apply for and purchase Offer Shares under the terms set forth therein. Date and place*: Binding signature**: * Must be dated during the Application Period. ** The applicant must be of legal age. If the Retail Application Form is signed by a proxy, documentary evidence of authority to sign must be attached in the form of a Power of Attorney or Company Registration Certificate. DETAILS OF THE APPLICANT ALL FIELDS MUST BE COMPLETED First name Surname/Family name/company name Home address (for companies: registered business address) Zip code and town Identity number (11 digits) / business registration number (9 digits) Nationality Telephone number (daytime) address G 2

281 GUIDELINES FOR THE APPLICANT THIS RETAIL APPLICATION FORM IS NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE. PLEASE SEE SELLING RESTRICTIONS BELOW. Regulatory issues: Legislation passed throughout the European Economic Area (the EEA ) pursuant to the Markets and Financial Instruments Directive ( MiFID ) implemented in the Norwegian Securities Trading Act, imposes requirements in relation to business investment. In this respect the Managers must categorise all new clients in one of three categories: Eligible counterparties, Professional and Non-professional clients. All applicants applying for Offer Shares in the Offering who/which are not existing clients of one of the Managers will be categorised as Non-professional clients. The applicant can by written request to the Managers ask to be categorised as a Professional client if the applicant fulfils the provisions of the Norwegian Securities Trading Act. For further information about the categorisation the applicant may contact the Managers. The applicant represents that it has sufficient knowledge, sophistication and experience in financial and business matters to be capable of evaluating the merits and risks of an investment decision to invest in the Company by applying for Offer Shares, and the applicant is able to bear the economic risk, and to withstand a complete loss of an investment in the Company. Execution only: As the Managers are not in the position to determine whether the application for Offer Shares is suitable for the applicant, the Managers will treat the application as an execution only instruction from the applicant to apply for Offer Shares in the Offering. Hence, the applicant will not benefit from the corresponding protection of the relevant conduct of business rules in accordance with the Norwegian Securities Trading Act. Information barriers: The Managers are securities firms, offering a broad range of investment services. In order to ensure that assignments undertaken in the Managers corporate finance departments are kept confidential, the Managers other activities, including analysis and stock broking, are separated from their corporate finance departments by information barriers known as Chinese walls. The applicant acknowledges that the Managers analysis and stock broking activity may act in conflict with the applicant s interests with regard to transactions in the Offer Shares as a consequence of such Chinese walls. VPS account and anti-money laundering procedures: The Retail Offering is subject to applicable anti-money laundering legislation, including the Norwegian Money Laundering Act of 6 March 2009 no. 11 and the Norwegian Money Laundering Regulation of 13 March 2009 no. 302 (collectively, the Anti-Money Laundering Legislation ). Applicants who are not registered as existing customers of one of the Managers must verify their identity to one of the Managers in accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Applicants who have designated an existing Norwegian bank account and an existing VPS account on the Retail Application Form are exempted, unless verification of identity is requested by a Manager. Applicants who have not completed the required verification of identity prior to the expiry of the Application Period will not be allocated Offer Shares. Participation in the Retail Offering is conditional upon the applicant holding a VPS account. The VPS account number must be stated in the Retail Application Form. VPS accounts can be established with authorised VPS registrars, who can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity to the VPS registrar in accordance with the Anti-Money Laundering Legislation. However, non-norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorised by the Norwegian FSA. Selling restrictions: The Offering is subject to specific legal or regulatory restrictions in certain jurisdictions, see Section 20 Selling and Transfer Restrictions in the Prospectus. Neither the Company nor the Selling Shareholders assumes any responsibility in the event there is a violation by any person of such restrictions. The Offer Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act ) or under any securities laws of any state or other jurisdiction of the United States and may not be taken up, offered, sold, resold, transferred, delivered or distributed, directly or indirectly, within, into or from the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with the securities laws of any state or other jurisdiction of the United States. There will be no public offer in the United States. The Offer Shares will, and may, not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, within, into or from any jurisdiction where the offer or sale of the Offer Shares is not permitted, or to, or for the account or benefit of, any person with a registered address in, or who is resident or ordinarily resident in, or a citizen of, any jurisdiction where the offer or sale is not permitted, except pursuant to an applicable exemption. In the Retail Offering, the Offer Shares are being offered and sold to certain persons outside the United States in offshore transactions within the meaning of and in compliance with Rule 903 of Regulation S under the U.S. Securities Act. The Company has not authorised any offer to the public of its securities in any Member State of the EEA other than Norway. With respect to each Member State of the EEA other than Norway and which has implemented the EU Prospectus Directive (each, a Relevant Member State ), no action has been undertaken or will be undertaken to make an offer to the public of the Offer Shares requiring a publication of a prospectus in any Relevant Member State. Any offers outside Norway will only be made in circumstances where there is no obligation to produce a prospectus. Stabilisation: In connection with the Offering, Danske Bank (as the Stabilisation Manager ), or its agents, on behalf of the Managers, may, upon exercise of the Lending Option, engage in transactions that stabilise, maintain or otherwise affect the price of the Shares for up to 30 days from the first day of the Listing. Specifically, the Stabilisation Manager may effect transactions with a view to supporting the market price of the Shares at a level higher than might otherwise prevail, through buying Shares in the open market at prices equal to or lower than the Offer Price. There is no obligation on the Stabilisation Manager or its agents to conduct stabilisation activities and there is no assurance that stabilisation activities will be undertaken. Such stabilising activities, if commenced, may be discontinued at any time, and will be brought to an end not more than 30 calendar days after the first day of the Listing. Investment decisions based on full Prospectus: Investors must neither accept any offer for, nor acquire any Offer Shares, on any other basis than on the complete Prospectus. Terms and conditions for payment by direct debiting - securities trading: Payment by direct debiting is a service provided by cooperating banks in Norway. In the relationship between the payer and the payer s bank the following standard terms and conditions apply. 1. The service Payment by direct debiting securities trading is supplemented by the account agreement between the payer and the payer s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions. 2. Costs related to the use of Payment by direct debiting securities trading appear from the bank s prevailing price list, account information and/or information is given by other appropriate manner. The bank will charge the indicated account for incurred costs. 3. The authorisation for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge the payer s bank account. 4. In case of withdrawal of the authorisation for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Financial Contracts Act, the payer s bank shall assist if payer withdraws a payment instruction which has not been completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary. 5. The payer cannot authorise for payment a higher amount than the funds available at the payer s account at the time of payment. The payer s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the funds available, the difference shall be covered by the payer immediately. 6. The payer s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorisation for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorisation has expired as indicated above. Payment will normally be credited the beneficiary s account between one and three working days after the indicated date of payment/delivery. 7. If the payer s account is wrongfully charged after direct debiting, the payer s right to repayment of the charged amount will be governed by the account agreement and the Financial Contracts Act. Overdue and missing payments: Overdue payments will be charged with interest at the applicable rate under the Norwegian Act on Interest on Overdue Payments of 17 December 1976 no. 100, which at the date of the Prospectus is 9.50% per annum. Should payment not be made when due, the Offer Shares allocated will not be delivered to the applicant, and the Managers reserve the right, at the risk and cost of the applicant, to cancel at any time thereafter the application and to re-allot or otherwise dispose of the allocated Offer Shares, on such terms and in such manner as the Managers may decide (and that the applicant will not be entitled to any profit therefrom). The original applicant will remain liable for payment of the Offer Price for the Offer Shares allocated to the applicant, together with any interest, costs, charges and expenses accrued, and the Company, the Selling Shareholders and/or the Managers may enforce payment of any such amount outstanding. In order to provide for prompt registration of the New Shares with the Norwegian Register of Business Enterprises, the Managers are expected to, on behalf of the applicants, subscribe for and pre-fund payment for the New Shares allotted in the Offering at a total subscription price equal to the Offer Price multiplied by the number of New Shares, less the total amount of discount in the Retail Offering; and by placing an application, the applicant irrevocably authorise and instructs the Managers, or someone appointed by any of them, to do so on its behalf. Irrespectively of any such pre-funding of payment for New Shares, the original applicant will remain liable for payment of the Offer Price for the Offer Shares allocated to the applicant, together with any interest, costs, charges and expenses accrued, and the Company, the Selling Shareholders and/or the Managers may enforce payment of any such amount outstanding. The subscription and pre-funding by the Managers of New Shares as described above constitute an integrated sales process where the investors purchase New Shares from the Company based on this Prospectus, which has been prepared by the Company. The investors will not have any rights or claims against the Managers. G 3

282 RenoNorden ASA Lindebergveien 3 N-2016 Frogner Norway Sole Global Coordinator Danske Bank Bryggetorget 4 N-0250 Oslo Norway Carnegie AS Grundingen 2, Aker Brygge N-0250 Oslo Norway Joint Bookrunners Danske Bank Bryggetorget 4 N-0250 Oslo Norway DNB Markets Dronning Eufemias gate 30 N-0191 Oslo Norway Legal Adviser to the Company (as to Norwegian law) Advokatfirmaet Thommessen AS Haakon VIIs gate 10 N-0116 Oslo Norway Legal Adviser to the Sole Global Coordinator and Joint Bookrunners (as to Norwegian law) Advokatfirmaet Grette DA Filipstad Brygge 2 N-0114 Oslo Norway

IMPORTANT INFORMATION

IMPORTANT INFORMATION INFRONT ASA Initial public offering of New Shares with gross proceeds of approximately MNOK 100 and up to 9,099,868 Secondary Shares Indicative Price Range of NOK 20 to NOK 23 per Share Listing of the

More information

PROSPECTUS RENONORDEN ASA. (A public limited liability company incorporated under the laws of Norway)

PROSPECTUS RENONORDEN ASA. (A public limited liability company incorporated under the laws of Norway) PROSPECTUS RENONORDEN ASA (A public limited liability company incorporated under the laws of Norway) Rights issue of 350,000,000 Offer Shares at a subscription price of NOK 1.00 per Offer Share with Subscription

More information

Saferoad Holding ASA

Saferoad Holding ASA SUPPLEMENTAL PROSPECTUS Saferoad Holding ASA (A public limited company incorporated under the laws of ) Supplementing information contained in the Prospectus dated 10 May 2017 concerning the initial public

More information

SUPPLEMENTAL PROSPECTUS NORDIC NANOVECTOR ASA

SUPPLEMENTAL PROSPECTUS NORDIC NANOVECTOR ASA SUPPLEMENTAL PROSPECTUS NORDIC NANOVECTOR ASA (A public limited company incorporated under the laws of ) Supplementing information contained in the Prospectus dated 10 March 2015 concerning the initial

More information

Saferoad Holding ASA

Saferoad Holding ASA PROSPECTUS Saferoad Holding ASA (A public limited company incorporated under the laws of Norway) Initial public offering of shares with an indicative price range of NOK 45 to NOK 60 per share Listing of

More information

PROSPECTUS SELF STORAGE GROUP ASA

PROSPECTUS SELF STORAGE GROUP ASA PROSPECTUS SELF STORAGE GROUP ASA (A public limited liability company incorporated under the laws of Norway) Initial public offering of up to 17,855,000 Offer Shares at an Offer Price of NOK 14 per Offer

More information

IMPORTANT NOTICE IMPORTANT:

IMPORTANT NOTICE IMPORTANT: IMPORTANT NOTICE IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the Prospectus attached to this electronic transmission and you are therefore advised

More information

NEXT BIOMETRICS GROUP ASA

NEXT BIOMETRICS GROUP ASA NEXT BIOMETRICS GROUP ASA (A public limited liability company incorporated under the laws of Norway) Initial public offering of 1,600,000 New Shares and up to 130,000 Sale Shares Listing of the Company

More information

IMPORTANT NOTICE IMPORTANT:

IMPORTANT NOTICE IMPORTANT: IMPORTANT NOTICE IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the Prospectus attached to this electronic transmission and you are therefore advised

More information

PROSPECTUS. Havila Shipping ASA. (i) Listing of 615,663,840 new shares to be issued in connection with the Cash Private Placement

PROSPECTUS. Havila Shipping ASA. (i) Listing of 615,663,840 new shares to be issued in connection with the Cash Private Placement PROSPECTUS Havila Shipping ASA (i) Listing of 615,663,840 new shares to be issued in connection with the Cash Private Placement (ii) Listing of 561,340,560 new shares to be issued in connection with the

More information

Unified Messaging Systems ASA

Unified Messaging Systems ASA Unified Messaging Systems ASA (A public limited company incorporated under the laws of Norway) Initial public offering of shares at a price of NOK 1,25 per share Listing of the Company`s shares on Oslo

More information

NOT FOR GENERAL DISTRIBUTION IN THE UNITED STATES. Prospectus. Hofseth BioCare ASA

NOT FOR GENERAL DISTRIBUTION IN THE UNITED STATES. Prospectus. Hofseth BioCare ASA NOT FOR GENERAL DISTRIBUTION IN THE UNITED STATES Prospectus *** Hofseth BioCare ASA (A public limited liability company organised under the Norwegian Public Limited Liability Companies Act with business

More information

GLX Holding AS Summary. GLX Holding AS FRN Senior Secured NOK 2,000,000,000 Callable Open Bonds 2017/2023 NO

GLX Holding AS Summary. GLX Holding AS FRN Senior Secured NOK 2,000,000,000 Callable Open Bonds 2017/2023 NO GLX Holding AS FRN Senior Secured NOK 2,000,000,000 Callable Open Bonds 2017/2023 NO0010812092 Joint Lead Managers: 25.05.2018 Prepared according to Commission Regulation (EC) No 486/2012 article 1 (10)

More information

Pareto Bank ASA (A public limited liability company organised under the laws of Norway) Org.no

Pareto Bank ASA (A public limited liability company organised under the laws of Norway) Org.no Pareto Bank ASA (A public limited liability company organised under the laws of Norway) Org.no. 990 906 475 Rights Issue of 6,666,666 New Shares Subscription Price: NOK 30 per New Share Subscription Period:

More information

Fjord 1 AS. Application Agreement Private Placement April 2017

Fjord 1 AS. Application Agreement Private Placement April 2017 Fjord 1 AS Application Agreement Private Placement April 2017 Joint Lead Managers and Bookrunners: Fearnley Securities AS, e-mail: subscriptions@fearnleys.no SpareBank 1 Markets AS, e-mail: corporate@sb1markets.no

More information

INTERMEDIATE CAPITAL GROUP PLC. 500,000,000 Euro Medium Term Note Programme

INTERMEDIATE CAPITAL GROUP PLC. 500,000,000 Euro Medium Term Note Programme BASE PROSPECTUS DATED 18 FEBRUARY 2015 INTERMEDIATE CAPITAL GROUP PLC 500,000,000 Euro Medium Term Note Programme Arranger and Dealer Deutsche Bank AN INVESTMENT IN NOTES ISSUED UNDER THE PROGRAMME INVOLVES

More information

Prospectus. NRC Group ASA

Prospectus. NRC Group ASA Prospectus NRC Group ASA (a public limited liability company organized under the laws of the Kingdom of Norway) Business registration number: 910 686 909 Subsequent Offering of up to 370,370 Offer Shares

More information

ASTUTE CAPITAL PLC. (Incorporated in England) 500,000,000 Secured limited recourse bond programme

ASTUTE CAPITAL PLC. (Incorporated in England) 500,000,000 Secured limited recourse bond programme ASTUTE CAPITAL PLC (Incorporated in England) 500,000,000 Secured limited recourse bond programme Under the 500,000,000 secured limited recourse bond programme (the Programme ) described in this Programme

More information

Prospectus. Aqualis ASA

Prospectus. Aqualis ASA Prospectus Aqualis ASA (A public limited liability company organised under the laws of Norway) Org.no. 983 733 506 Listing of 43 750 000 New Shares, issued to the Aqualis Offshore Ltd shareholders as consideration

More information

TARGOVAX ASA. (A public limited company incorporated under the laws of Norway) Listing of the Company s Shares on Oslo Axess

TARGOVAX ASA. (A public limited company incorporated under the laws of Norway) Listing of the Company s Shares on Oslo Axess TARGOVAX ASA (A public limited company incorporated under the laws of Norway) Listing of the Company s Shares on Oslo Axess Offering and listing of up to 2,666,667 Offer Shares with Subscription Rights

More information

VESPUCCI STRUCTURED FINANCIAL PRODUCTS

VESPUCCI STRUCTURED FINANCIAL PRODUCTS Base Prospectus VESPUCCI STRUCTURED FINANCIAL PRODUCTS p.l.c. (incorporated as a public limited company in Ireland with registered number 426220) 40,000,000,000 Programme for the issue of Notes It is intended

More information

SILVERSTONE MASTER ISSUER PLC

SILVERSTONE MASTER ISSUER PLC Base prospectus SILVERSTONE MASTER ISSUER PLC (incorporated in England and Wales with limited liability, registered number 6612744) 20,000,000,000 Residential Mortgage Backed Note Programme Under the residential

More information

Invitation to acquire shares in Bygghemma Group First AB (publ)

Invitation to acquire shares in Bygghemma Group First AB (publ) Invitation to acquire shares in Bygghemma Group First AB (publ) Sole Global Coordinator and Joint Bookrunner Joint Bookrunners Invitation to acquire shares in Bygghemma Group First AB (publ) IMPORTANT

More information

Stranger Holdings plc (Incorporated in England and Wales with Registered No )

Stranger Holdings plc (Incorporated in England and Wales with Registered No ) THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document you should consult a person authorised under the Financial Services and Markets

More information

Holmetjern Invest AS Summary. FRN Senior Secured NOK 500,000,000 Bonds 2018/2022 NO Manager:

Holmetjern Invest AS Summary. FRN Senior Secured NOK 500,000,000 Bonds 2018/2022 NO Manager: FRN Senior Secured NOK 500,000,000 Bonds 2018/2022 NO0010815632 Manager: 18.12.2018 Prepared according to Commission Regulation (EC) No 486/2012 article 1 (10) - Annex XXII Summaries are made up of disclosure

More information

PCI Biotech Holding ASA (a public limited liability company incorporated under Norwegian law) TRANSFER FROM OSLO AXESS TO OSLO BØRS SUMMARY

PCI Biotech Holding ASA (a public limited liability company incorporated under Norwegian law) TRANSFER FROM OSLO AXESS TO OSLO BØRS SUMMARY PCI Biotech Holding ASA (a public limited liability company incorporated under Norwegian law) TRANSFER FROM OSLO AXESS TO OSLO BØRS SUMMARY This summary is produced pursuant to section 7-2 of the Norwegian

More information

Webstep ASA - Announcement of terms of the initial public offering

Webstep ASA - Announcement of terms of the initial public offering NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE PEOPLE S REPUBLIC OF CHINA, SOUTH AFRICA OR

More information

IMPORTANT INFORMATION

IMPORTANT INFORMATION IMPORTANT INFORMATION THIS SUMMARY NOTE CONSTITUTES PART OF A PROSPECTUS AND CONTAINS INFORMATION ON SANTUMAS SHAREHOLDINGS P.L.C. AND BUSINESS OF THE GROUP, AND INCLUDES INFORMATION GIVEN IN COMPLIANCE

More information

Summary ISIN NO Summary. FRN Color Group AS Senior Unsecured Guaranteed Bond Issue 2016/2020 NO Joint Lead Managers

Summary ISIN NO Summary. FRN Color Group AS Senior Unsecured Guaranteed Bond Issue 2016/2020 NO Joint Lead Managers Summary FRN Color Group AS Senior Unsecured Guaranteed Bond Issue 2016/2020 NO 001 076763.5 Joint Lead Managers 17.8.2016 Prepared according to Commission Regulation (EC) No 486/2012 article 1 (10) - Annex

More information

Aqualis Offshore Holding ASA

Aqualis Offshore Holding ASA Aqualis Offshore Holding ASA (A public limited liability company organised under the laws of Norway) Org.no. 913 757 424 Listing of 43,190,544 shares in Aqualis Offshore Holding ASA (the Shares ) on the

More information

STATOIL ASA TERMS AND CONDITIONS OF THE DIVIDEND ISSUE UNDER THE TWO YEAR SCRIP DIVIDEND PROGRAMME

STATOIL ASA TERMS AND CONDITIONS OF THE DIVIDEND ISSUE UNDER THE TWO YEAR SCRIP DIVIDEND PROGRAMME ISIN: NO 0010096985 Trading Symbol: STL 20 November 2017 STATOIL ASA TERMS AND CONDITIONS OF THE DIVIDEND ISSUE UNDER THE TWO YEAR SCRIP DIVIDEND PROGRAMME SECOND QUARTER 2017 This document sets forth

More information

UNCONDITIONAL OFFER TO ACQUIRE ALL OUTSTANDING SHARES IN AURORA LPG HOLDING ASA. made by BW LPG LIMITED

UNCONDITIONAL OFFER TO ACQUIRE ALL OUTSTANDING SHARES IN AURORA LPG HOLDING ASA. made by BW LPG LIMITED UNCONDITIONAL OFFER TO ACQUIRE ALL OUTSTANDING SHARES IN AURORA LPG HOLDING ASA made by BW LPG LIMITED Consideration: Either (i) 0.3175 shares in BW LPG Limited and NOK 7.40 in cash, or (ii) NOK 16.00

More information

BANCA IMI S.p.A. WARRANTS AND CERTIFICATES PROGRAMME

BANCA IMI S.p.A. WARRANTS AND CERTIFICATES PROGRAMME BASE PROSPECTUS BANCA IMI S.p.A. (incorporated with limited liability in the Republic of Italy) WARRANTS AND CERTIFICATES PROGRAMME Under the terms of its Warrants and Certificates Programme (the "Programme"),

More information

Securities, LLC. Deutsche Bank Securities

Securities, LLC. Deutsche Bank Securities OFFERING CIRCULAR ALESCO Preferred Funding XVII, Ltd. ALESCO Preferred Funding XVII, LLC U.S.$236,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2038 U.S.$16,000,000 Class A-2

More information

PROSPECTUS BW OFFSHORE LIMITED. (An exempted company limited by shares incorporated under the laws of Bermuda)

PROSPECTUS BW OFFSHORE LIMITED. (An exempted company limited by shares incorporated under the laws of Bermuda) PROSPECTUS BW OFFSHORE LIMITED (An exempted company limited by shares incorporated under the laws of Bermuda) Rights Issue of 8,559,810,000 Offer Shares at a Subscription Price of NOK 0.10 per Offer Share

More information

Metalcorp Group B.V. 1 June Summary. Metalcorp Group B.V 7.0 per cent. senior unsecured EUR 70,000,000 bonds 2017/2022 ISIN NO

Metalcorp Group B.V. 1 June Summary. Metalcorp Group B.V 7.0 per cent. senior unsecured EUR 70,000,000 bonds 2017/2022 ISIN NO ISIN NO0010795701 Metalcorp Group B.V 7.0 per cent. senior unsecured EUR 70,000,000 bonds 2017/2022 ISIN NO0010795701 Manager: 1 June 2018 Prepared according to Commission Regulation (EC) No 486/2012 article

More information

CROWN GLOBAL SECONDARIES IV PLC

CROWN GLOBAL SECONDARIES IV PLC This document is important. If you are in any doubt about the contents of this Prospectus, you should consult your stockbroker, bank manager, accountant, lawyer or other financial adviser. Certain capitalized

More information

F. van Lanschot Bankiers N.V. (incorporated in the Netherlands with its statutory seat in 's-hertogenbosch)

F. van Lanschot Bankiers N.V. (incorporated in the Netherlands with its statutory seat in 's-hertogenbosch) 3 November 2017 FIFTH SUPPLEMENT TO THE BASE PROSPECTUS IN RESPECT OF THE EUR 2,000,000,000 STRUCTURED NOTE PROGRAMME FOR THE ISSUANCE OF INDEX AND/OR EQUITY LINKED NOTES F. van Lanschot Bankiers N.V.

More information

$529,761,000 Extendible PIK Step-Up Notes

$529,761,000 Extendible PIK Step-Up Notes $529,761,000 Extendible PIK Step-Up Notes Carrington Holding Company, LLC, a limited liability company organized and existing under the laws of the state of Delaware, the United States of America with

More information

Summary. ice group Scandinavia Holdings AS FRN Unsecured Bonds 2017/2021 ISIN: NO Listing on Oslo Børs. Arrangers: 3 November 2017

Summary. ice group Scandinavia Holdings AS FRN Unsecured Bonds 2017/2021 ISIN: NO Listing on Oslo Børs. Arrangers: 3 November 2017 ice group Scandinavia Holdings AS FRN Unsecured Bonds 2017/2021 ISIN: NO 0010807092 Listing on Oslo Børs 3 November 2017 Arrangers: DNB Markets As Joint Lead Manager Pareto Securities AS As Joint Lead

More information

AK BARS LUXEMBOURG S.A.

AK BARS LUXEMBOURG S.A. Level: 3 From: 3 Monday, November 16, 2009 15:11 Mac 4 4179 Intro U.S.$1,500,000,000 Programme for the Issuance of Loan Participation Notes to be issued by, but with limited recourse to, AK BARS LUXEMBOURG

More information

22, 2038 U.S.$42,200,000

22, 2038 U.S.$42,200,000 OFFERING CIRCULAR U.S.$332,300,000 Floating Rate Class A-1 Senior Notes Due March 22, 2038 U.S.$84,600,000 Floating Rate Class A-2 Senior Notes Due March 22, 2038 U.S.$75,500,000 Floating Rate Class B

More information

BANCA IMI S.p.A. (incorporated with limited liability in the Republic of Italy) STRUCTURED NOTE PROGRAMME

BANCA IMI S.p.A. (incorporated with limited liability in the Republic of Italy) STRUCTURED NOTE PROGRAMME BASE PROSPECTUS BANCA IMI S.p.A. (incorporated with limited liability in the Republic of Italy) STRUCTURED NOTE PROGRAMME Under this Structured Note Programme (the Programme) Banca IMI S.p.A. (the Issuer)

More information

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN 6.50 per cent Seadrill Limited Unsecured Bond Issue 2010/2015 ISIN NO 001 058949.2 Securities Note

More information

BASE PROSPECTUS LANARK MASTER ISSUER PLC. (incorporated in England and Wales with limited liability under registered number )

BASE PROSPECTUS LANARK MASTER ISSUER PLC. (incorporated in England and Wales with limited liability under registered number ) BASE PROSPECTUS LANARK MASTER ISSUER PLC (incorporated in England and Wales with limited liability under registered number 6302751) 20 billion Residential Mortgage Backed Note Programme (ultimately backed

More information

ETFS Equity Securities Limited. ETFS Short Equity Securities. ETFS Leveraged Equity Securities

ETFS Equity Securities Limited. ETFS Short Equity Securities. ETFS Leveraged Equity Securities Base prospectus dated 1 September 2017 ETFS Equity Securities Limited (Incorporated and registered in Jersey under the Companies (Jersey) Law 1991 (as amended) with registered number 112019) AVII.4.2 AVII.4.3

More information

Summary per cent Yara International ASA Senior Unsecured Open Bond Issue 2014/2021 NO Joint Lead Managers 19.

Summary per cent Yara International ASA Senior Unsecured Open Bond Issue 2014/2021 NO Joint Lead Managers 19. 2.55 per cent Yara International ASA Senior Unsecured Open Bond Issue 2014/2021 NO0010727985 Joint Lead Managers 19.01 2015 Prepared according to Commission Regulation (EC) No 486/2012 article 1 (10) -

More information

FINAL TERM SHEET. Scatec Solar ASA Senior Unsecured Bond Issue 2017/2021 (the Bonds or the Bond Issue )

FINAL TERM SHEET. Scatec Solar ASA Senior Unsecured Bond Issue 2017/2021 (the Bonds or the Bond Issue ) FINAL TERM SHEET Scatec Solar ASA Senior Unsecured Bond Issue 2017/2021 (the Bonds or the Bond Issue ) ISIN: NO0010809684 Issuer: Scatec Solar ASA (a company incorporated under the laws of Norway with

More information

REPUBLIC OF FINLAND EUR 20,000,000,000. Euro Medium Term Note Programme

REPUBLIC OF FINLAND EUR 20,000,000,000. Euro Medium Term Note Programme OFFERING CIRCULAR REPUBLIC OF FINLAND EUR 20,000,000,000 Euro Medium Term Note Programme This Offering Circular comprises neither a prospectus for the purposes of Part VI of the United Kingdom Financial

More information

IMPORTANT: You must read the following before continuing. The following applies to the prospectus (the Prospectus ) following this page, and you are

IMPORTANT: You must read the following before continuing. The following applies to the prospectus (the Prospectus ) following this page, and you are IMPORTANT: You must read the following before continuing. The following applies to the prospectus (the Prospectus ) following this page, and you are therefore advised to read this carefully before reading,

More information

IMPORTANT INFORMATION

IMPORTANT INFORMATION IMPORTANT INFORMATION THIS SUMMARY NOTE CONSTITUTES PART OF A PROSPECTUS AND CONTAINS INFORMATION ON SANTUMAS SHAREHOLDINGS P.L.C. AND BUSINESS OF THE GROUP, AND INCLUDES INFORMATION GIVEN IN COMPLIANCE

More information

IXONOS PLC STOCK EXCHANGE RELEASE at 17:15

IXONOS PLC STOCK EXCHANGE RELEASE at 17:15 IXONOS PLC STOCK EXCHANGE RELEASE 2.12.2015 at 17:15 Not to be published or distributed in or into the United States, Canada, Australia, Hong Kong, South Africa or Japan. IXONOS PLC S BOARD OF DIRECTORS

More information

Salar BidCo AS, Summary ISIN NO Summary. FRN Pharmaq Senior Secured Callable Bond Issue 2014/2019 NO

Salar BidCo AS, Summary ISIN NO Summary. FRN Pharmaq Senior Secured Callable Bond Issue 2014/2019 NO Salar BidCo AS, 17.12 2014 Summary ISIN NO 001 070816.7 Summary FRN Pharmaq Senior Secured Callable Bond Issue 2014/2019 NO 001 070816.7 Managers: 17.12 2014 2/13 Summaries are made up of disclosure requirements

More information

Issue of further new Ordinary Shares

Issue of further new Ordinary Shares This document comprises a prospectus relating to Capital Gearing Trust P.l.c. (the "Company") prepared in accordance with the Prospectus Rules and Listing Rules of the UK Listing Authority made under section

More information

Summary for Scatec Solar ASA listing prospectus 18 December 2015 ANNEX XXII. Disclosure requirements in summaries

Summary for Scatec Solar ASA listing prospectus 18 December 2015 ANNEX XXII. Disclosure requirements in summaries Summary for Scatec Solar ASA listing prospectus 18 December 2015 ANNEX XXII Disclosure requirements in summaries Summaries are made up of disclosure requirements known as Elements. These elements are numbered

More information

Abbey National Treasury Services plc (incorporated under the laws of England and Wales)

Abbey National Treasury Services plc (incorporated under the laws of England and Wales) PROSPECTUS DATED 14 APRIL 2010 Abbey National Treasury Services plc (incorporated under the laws of England and Wales) 2,000,000,000 Structured Note Programme Unconditionally and irrevocably guaranteed

More information

OFFERING MEMORANDUM $1,091,000,000 Airspeed Limited

OFFERING MEMORANDUM $1,091,000,000 Airspeed Limited OFFERING MEMORANDUM $1,091,000,000 Airspeed Limited $626,400,000 Class G-1 Floating Rate Asset Backed Notes Series 2007-1 $417,600,000 Class G-2 Floating Rate Asset Backed Notes Series 2007-1 $ 47,000,000

More information

BBVA Global Markets B.V. Banco Bilbao Vizcaya Argentaria, S.A.

BBVA Global Markets B.V. Banco Bilbao Vizcaya Argentaria, S.A. BASE PROSPECTUS BBVA Global Markets B.V. (a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under Dutch law with its seat in Amsterdam, the Netherlands

More information

Securities Note. DFDS A/S FRN senior unsecured NOK 1,875,000,000 bonds 2017/2022 NO DFDS A/S, Joint Lead Managers:

Securities Note. DFDS A/S FRN senior unsecured NOK 1,875,000,000 bonds 2017/2022 NO DFDS A/S, Joint Lead Managers: DFDS A/S, 11.12.2017 Securities Note ISIN NO0010806912 Securities Note DFDS A/S FRN senior unsecured NOK 1,875,000,000 bonds 2017/2022 NO0010806912 Joint Lead Managers: 11.12.2017 Prepared according to

More information

PROSPECTUS QUESTERRE ENERGY CORPORATION

PROSPECTUS QUESTERRE ENERGY CORPORATION PROSPECTUS QUESTERRE ENERGY CORPORATION A public corporation amalgamated under the Business Corporations Act pursuant to the laws of the Province of Alberta, Canada Listing of 15,200,000 Private Placement

More information

VALMET CORPORATION DEMERGER PROSPECTUS

VALMET CORPORATION DEMERGER PROSPECTUS DEMERGER PROSPECTUS VALMET CORPORATION The Board of Directors of Metso Corporation (the Demerging Company or Metso ) has on May 31, 2013 unanimously approved a demerger plan (the Demerger Plan ) pursuant

More information

Securities Note. for

Securities Note. for Securities Note for FRN Gjensidige Forsikring ASA Subordinated Callable Bond Issue 2014/2044 Oslo, 4 December 2014 Joint Lead Managers: Securities Note FRN Gjensidige Forsikring ASA Subordinated Callable

More information

BACCHUS plc (a public company with limited liability incorporated under the laws of Ireland, with a registered number of )

BACCHUS plc (a public company with limited liability incorporated under the laws of Ireland, with a registered number of ) BACCHUS 2008-2 plc (a public company with limited liability incorporated under the laws of Ireland, with a registered number of 461074) 404,000,000 Class A Senior Secured Floating Rate Notes due 2038 49,500,000

More information

ANNEXES. Annex 1: Schedules and building blocks. Annex 2: Table of combinations of schedules and building blocks

ANNEXES. Annex 1: Schedules and building blocks. Annex 2: Table of combinations of schedules and building blocks ANNEXES Annex 1: Schedules and building blocks Annex 2: Table of combinations of schedules and building blocks ANNEX 1, appendix A: Minimum Disclosure Requirements for the Share Registration Document (schedule)

More information

S.A. 32,000,000,000 PROGRAMME FOR THE ISSUANCE OF DEBT INSTRUMENTS

S.A. 32,000,000,000 PROGRAMME FOR THE ISSUANCE OF DEBT INSTRUMENTS BASE PROSPECTUS Santander International Debt, S.A. Unipersonal (incorporated with limited liability in Spain) and Santander Issuances, S.A. Unipersonal (incorporated with limited liability in Spain) guaranteed

More information

OCTAGON INVESTMENT PARTNERS VIII, LTD. OCTAGON INVESTMENT PARTNERS VIII, LLC

OCTAGON INVESTMENT PARTNERS VIII, LTD. OCTAGON INVESTMENT PARTNERS VIII, LLC PROSPECTUS OCTAGON INVESTMENT PARTNERS VIII, LTD. OCTAGON INVESTMENT PARTNERS VIII, LLC U.S. $318,000,000 CLASS A-1 SENIOR SECURED FLOATING RATE NOTES DUE 2017 U.S. $25,000,000 CLASS A-2 REVOLVING SENIOR

More information

SUPPLEMENTARY PROSPECTUS DATED 3 DECEMBER 2018 TO THE PROSPECTUS DATED 14 SEPTEMBER 2018

SUPPLEMENTARY PROSPECTUS DATED 3 DECEMBER 2018 TO THE PROSPECTUS DATED 14 SEPTEMBER 2018 SUPPLEMENTARY PROSPECTUS DATED 3 DECEMBER 2018 TO THE PROSPECTUS DATED 14 SEPTEMBER 2018 TOYOTA MOTOR FINANCE (NETHERLANDS) B.V. (a private company incorporated with limited liability under the laws of

More information

Nestlé Holdings, Inc. Nestlé Finance International Ltd. Nestlé S.A.

Nestlé Holdings, Inc. Nestlé Finance International Ltd. Nestlé S.A. PROSPECTUS 21 May 2014 Nestlé Holdings, Inc. (incorporated in the State of Delaware with limited liability) and Nestlé Finance International Ltd. (incorporated in Luxembourg with limited liability) Debt

More information

BASE PROSPECTUS EFG-HERMES MENA SECURITIES LIMITED. US$ 5,000,000,000 Securitised Holding Abwab Market Access Listed (SHAMAL) Notes Programme

BASE PROSPECTUS EFG-HERMES MENA SECURITIES LIMITED. US$ 5,000,000,000 Securitised Holding Abwab Market Access Listed (SHAMAL) Notes Programme Programme BASE PROSPECTUS EFG-HERMES MENA SECURITIES LIMITED (registered as a limited liability company in the British Virgin Islands under No. 1424759) US$ 5,000,000,000 Securitised Holding Abwab Market

More information

Tryg A/S announces a private placement of shares in relation to the financing of the acquisition of Alka Forsikring

Tryg A/S announces a private placement of shares in relation to the financing of the acquisition of Alka Forsikring To NASDAQ Copenhagen Announcement no. 20 2017 5 December 2017 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES

More information

50,000,000,000. Euro Medium Term Note Programme

50,000,000,000. Euro Medium Term Note Programme SUPPLEMENTARY PROSPECTUS DATED 7 DECEMBER 2012 TO THE PROSPECTUS DATED 14 SEPTEMBER 2012 TOYOTA MOTOR FINANCE (NETHERLANDS) B.V. (a private company incorporated with limited liability under the laws of

More information

BURFORD CAPITAL FINANCE LLC GUARANTEED BY BURFORD CAPITAL LIMITED AND BURFORD CAPITAL PLC

BURFORD CAPITAL FINANCE LLC GUARANTEED BY BURFORD CAPITAL LIMITED AND BURFORD CAPITAL PLC PROSPECTUS DATED 23 JANUARY 2018 BURFORD CAPITAL FINANCE LLC GUARANTEED BY BURFORD CAPITAL LIMITED AND BURFORD CAPITAL PLC FIXED INTEREST RATE OF 6.125 PER CENT. PER ANNUM MATURITY DATE OF 2025 MANAGER

More information

Securities Note ISIN NO Securities Note. 5.90% Schibsted ASA Senior Unsecured Open Bond Issue 2012/2019 NO

Securities Note ISIN NO Securities Note. 5.90% Schibsted ASA Senior Unsecured Open Bond Issue 2012/2019 NO Schibsted ASA, 12.03 2012 Securities Note ISIN NO001 063727.5 Securities Note 5.90% Schibsted ASA Senior Unsecured Open Bond Issue 2012/2019 NO 001 063727.5 Arangers: 12 March 2012 Prepared according to

More information

LBG Capital No.1 plc. LBG Capital No.2 plc

LBG Capital No.1 plc. LBG Capital No.2 plc PROSPECTUS LBG Capital No.1 plc as Issuer and LBG Capital No.2 plc as Issuer 5,000,000,000 Enhanced Capital Note Programme unconditionally and irrevocably guaranteed by Lloyds Banking Group plc and/or

More information

NOTICE. You must read the following disclaimer before continuing

NOTICE. You must read the following disclaimer before continuing NOTICE You must read the following disclaimer before continuing THIS DOCUMENT MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER, AND IN PARTICULAR,

More information

See the section entitled Risk Factors herein for a discussion of certain factors to be considered in connection with an investment in the Notes.

See the section entitled Risk Factors herein for a discussion of certain factors to be considered in connection with an investment in the Notes. BLACK DIAMOND CLO 2015-1 DESIGNATED ACTIVITY COMPANY (a private company with limited liability incorporated under the laws of Ireland, under company number 549425) 176,300,000 Class A-1 Senior Secured

More information

ICD FUNDING LIMITED (incorporated with limited liability in the Cayman Islands)

ICD FUNDING LIMITED (incorporated with limited liability in the Cayman Islands) BASE PROSPECTUS ICD FUNDING LIMITED (incorporated with limited liability in the Cayman Islands) U.S.$2,500,000,000 Euro Medium Term Note Programme unconditionally and irrevocably guaranteed by INVESTMENT

More information

Fjordkraft Holding - Announcement of terms of the Initial Public Offering

Fjordkraft Holding - Announcement of terms of the Initial Public Offering NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE

More information

General Electric Capital Corporation (Incorporated under the laws of the State of Delaware, United States of America)

General Electric Capital Corporation (Incorporated under the laws of the State of Delaware, United States of America) General Electric Capital Corporation (Incorporated under the laws of the State of Delaware, United States of America) GE Capital Australia Funding Pty Ltd (A.B.N. 67085675467) (Incorporated with limited

More information

QUALIFIED INSTITUTIONAL BUYERS

QUALIFIED INSTITUTIONAL BUYERS IMPORTANT NOTICE THIS OFFERING IS AVAILABLE ONLY TO INVESTORS ( ELIGIBLE INVESTORS ) THAT ARE EITHER (1)(I)(A) QUALIFIED INSTITUTIONAL BUYERS ( QUALIFIED INSTITUTIONAL BUYERS ) (AS DEFINED IN RULE 144A

More information

AFME Standard Form. Plan of Distribution

AFME Standard Form. Plan of Distribution For the avoidance of doubt, this standard form is in a non-binding, recommended form. Individual parties are free to depart from the terms of this form and should always satisfy themselves of the taxation,

More information

Nestlé Holdings, Inc. Nestlé Finance International Ltd. Nestlé S.A.

Nestlé Holdings, Inc. Nestlé Finance International Ltd. Nestlé S.A. PROSPECTUS 29 May 2015 Nestlé Holdings, Inc. (incorporated in the State of Delaware with limited liability) and Nestlé Finance International Ltd. (incorporated in Luxembourg with limited liability) Debt

More information

Securities Note. for

Securities Note. for Securities Note for 0.125 per cent Norsk Hydro ASA Senior Unsecured Bond Issue 2017/2019 Joint Lead Managers: Oslo, 7 December 2017 Securities Note 0.125 per cent Norsk Hydro ASA Senior Unsecured Bond

More information

BASE PROSPECTUS DATED 8 AUGUST Santander UK plc. (incorporated under the laws of England and Wales) Structured Note and Certificate Programme

BASE PROSPECTUS DATED 8 AUGUST Santander UK plc. (incorporated under the laws of England and Wales) Structured Note and Certificate Programme BASE PROSPECTUS DATED 8 AUGUST 2017 Santander UK plc (incorporated under the laws of England and Wales) Structured Note and Certificate Programme Santander UK plc (the "Issuer") may from time to time issue

More information

Nestlé Holdings, Inc. Nestlé Finance International Ltd. Nestlé S.A.

Nestlé Holdings, Inc. Nestlé Finance International Ltd. Nestlé S.A. PROSPECTUS 23 May 2013 Nestlé Holdings, Inc. (incorporated in the State of Delaware with limited liability) and Nestlé Finance International Ltd. (incorporated in Luxembourg with limited liability) Debt

More information

WARRANT AND CERTIFICATE PROGRAMME

WARRANT AND CERTIFICATE PROGRAMME BASE PROSPECTUS DATED 19 JUNE 2017 WARRANT AND CERTIFICATE PROGRAMME This Base Prospectus has been approved by the Central Bank of Ireland (the Central Bank ) as competent authority under the Prospectus

More information

IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S.

IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S. IMPORTANT NOTICE NOT FOR DISTRIBUTION TO ANY U.S. PERSON OR TO ANY PERSON OR ADDRESS IN THE U.S. IMPORTANT: You must read the following before continuing. The following applies to the Offering Circular

More information

SeaBird Exploration Plc

SeaBird Exploration Plc SUPPLEMENTAL PROSPECTUS SeaBird Exploration Plc (a company incorporated under the laws of the Republic of Cyprus) Supplementing information contained in the Prospectus dated 5 July 2018 concerning the

More information

GROUP FIVE LIMITED (Incorporated in the Republic of South Africa with limited liability under Registration Number 1969/000032/06)

GROUP FIVE LIMITED (Incorporated in the Republic of South Africa with limited liability under Registration Number 1969/000032/06) GROUP FIVE LIMITED (Incorporated in the Republic of South Africa with limited liability under Registration Number 1969/000032/06) unconditionally and irrevocably guaranteed by GROUP FIVE CONSTRUCTION LIMITED

More information

See "Risk Factors" beginning on page 42 for a discussion of certain factors to be considered in connection with an investment in the Notes.

See Risk Factors beginning on page 42 for a discussion of certain factors to be considered in connection with an investment in the Notes. ADAGIO III CLO P.L.C. (a public company with limited liability incorporated under the laws of Ireland) 153,000,000 Class A1A Senior Floating Rate Notes due 2022 38,300,000 Class A1B Senior Floating Rate

More information

PizzaExpress Financing 2 plc

PizzaExpress Financing 2 plc Listing Particulars Not for general distribution in the United States PizzaExpress Financing 2 plc 55,000,000 6.625% Senior Secured Notes due 2021 PizzaExpress Financing 2 plc (formerly Twinkle Pizza plc),

More information

Atlas Mara Co-Nvest Limited. Citigroup

Atlas Mara Co-Nvest Limited. Citigroup THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this Document or the action you should take, you are recommended to seek your own financial

More information

Base Prospectus Dated 10 June 2014

Base Prospectus Dated 10 June 2014 Base Prospectus Dated 10 June 2014 CAISSE D AMORTISSEMENT DE LA DETTE SOCIALE an administrative public agency (établissement public national à caractère administratif) established in France EURO 65,000,000,000

More information

ZAR2,000,000,000 Note Programme

ZAR2,000,000,000 Note Programme TRANSCAPITAL INVESTMENTS LIMITED (Incorporated in the Republic of South Africa with limited liability under registration number 2016/130129/06) unconditionally and irrevocably guaranteed by TRANSACTION

More information

MORGAN STANLEY B.V. as issuer (incorporated with limited liability in The Netherlands)

MORGAN STANLEY B.V. as issuer (incorporated with limited liability in The Netherlands) MORGAN STANLEY B.V. as issuer (incorporated with limited liability in The Netherlands) as guarantor (incorporated under the laws of the State of Delaware in the United States of America) Issue by Morgan

More information

The Royal Bank of Scotland plc

The Royal Bank of Scotland plc PROSPECTUS The Royal Bank of Scotland plc (Incorporated in Scotland with limited liability under the Companies Acts 1948 to 1980, registered number SC090312) (the Issuer ) Call and Put Warrants Base Prospectus

More information

Citycon Treasury B.V.

Citycon Treasury B.V. OFFERING CIRCULAR Citycon Treasury B.V. (incorporated with limited liability in the Netherlands) 1,500,000,000 Euro Medium Term Note Programme unconditionally and irrevocably guaranteed by Citycon Oyj

More information

Europris ASA - Announcement of terms of the Initial Public Offering

Europris ASA - Announcement of terms of the Initial Public Offering NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA, OR ANY OTHER JURISDICTION

More information

BlackRock European CLO III Designated Activity Company

BlackRock European CLO III Designated Activity Company BlackRock European CLO III Designated Activity Company (a designated activity company limited by shares incorporated under the laws of Ireland with registered number 592507 and having its registered office

More information

Aircraft Lease Securitisation II Limited

Aircraft Lease Securitisation II Limited LISTING PARTICULARS Aircraft Lease Securitisation II Limited Investing in the Initial Class A Notes involves risks. See "Risk Factors" beginning on page 33. Aircraft Lease Securitisation II Limited ("ALS"),

More information