In Intro roduc ducti tion n to Q Q-Free ree September 2016 2 - PowerPoint PPT Presentation

In Intro roduc ducti tion n to Q Q-Free ree September 2016

2 Introduction Håkon Volldal Roar Østbø President & CEO CFO

3 This is Q-Free TOLLING URBAN TRAFFIC MGMT. PARKING INFOMOBILITY INTER-URBAN TRAFFIC MGMT. HOMELAND SECURITY • Leading supplier of Intelligent Transportation Systems (ITS) technologies and solutions • 30+ years of experience in electronic toll collection and advanced traffic management services • Global player with ~470 employees, references from 50+ markets and presence on all continents 1 276 Revenue development (NOKm) Backlog development (NOKm) 899 804 789 748 606 593 481 437 379 2012 2013 2014 2015 LTM 2012 2013 2014 2015 Q2 2016

4 The historical context Strong tolling market – large contracts Commercial breakthrough Investments in adjacent technologies 1984 1998 2002 2008 2012 2014 2016 • Established as • Company • IPO on • Expanded range of • • Acquisitions of • Awarded NOK Awarded Micro Design rebranded as Q- Oslo Stock solutions through Gothenburg TDC, Traffic ~470m tolling AS Free ASA Exchange acquisition of congestion Design and contract in • International Dacolian BV charging project Open Roads Slovenia • • Sells 53% of expansion with Broadening of new offices in business scope electronics Malaysia, Brazil with acquisition manufacturer and China of TCS (parking) Noca 1988 2004 2009 2013 2015 • First ‘Q - Free’ • Awarded • NOK 1.2bn in • Acquisition of • Acquisitions of electronic tolling Stockholm order intake after Elcom Traffiko and system installed congestion winning large Intelight in Trondheim charging contract tolling contracts in from IBM Slovakia, Portugal, Thailand and Norway 1984 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016e Revenues (NOKm)

The ITS market is growing rapidly, 5 supported by several mega-trends USD ~22bn market with annual growth of ~12% Urbanisation Climate and pollution Connectivity and internet of things People in urban areas The computing power of a 1.5m People added to the urban >80% 20x exposed to pollution levels modern car versus a population every week exceeding WHO guidelines modern PC • • • The urban population has grown by 1.6 6 billion litres of fuel wasted from >150 million vehicles will be connected billion people to 3.9 billion from 1990 to vehicles idling in traffic in advanced to the internet by 2020 2014 economies every year • From means of transportation to digital • • ecosystem – heavy investments in next >40 megacities with 10 million people or 53 000 deaths in the US alone caused more in 2025 by vehicle emissions annually generation vehicles Need for increased urban infrastructure Need to reduce traffic/congestion, Need for more intelligent road investments and actions to reduce impose costs on high-emitters and infrastructure as well as increased congestions and optimize traffic loads measure the impact of policies traffic monitoring Source: United Nations Population Division, PWC, McKinsey Quarterly, IHS Automotive, MiT, MarketsandMarkets

ITS comprises multiple segments 6 categorised by application areas Electronic tolling Parking Infomobility Traffic management Segments • • • • Electronic plaza tolling On-street parking Traffic analytics and data Urban traffic management segments Key sub- • • • All Electronic tolling Off-street parking (garages, distribution Inter-urban traffic • • Multi-Lane Free Flow tolling airports, surface lots etc.) Vehicle-2-Vehicle, Vehicle- management • Open road tolling 2-Infrastructure, Vehicle-2- Everything (X) • • • • Operational and Central Parking Back-office systems Traffic Management Typical solutions/ offerings commercial back-office Management Systems Systems for highways, • Journey time analyses systems tunnels, bridges etc. – Access control • Weigh-in-motion systems • • Access-based tolling Signal/Traffic controllers – Payment • Pedestrian and cycle systems • Misc. hardware (signs, – Customer Management counting • Distance-based tolling lighting etc.) – • Business intelligence Vehicle classification systems – • Claims enforcement Air quality monitoring • Time-based tolling systems • Parking Guidance Systems • Congestion charging • systems Misc. hardware (signs, kiosks, CCTV etc.) • Managed lanes (express lanes, high occupancy tolling)

Strong market growth is expected in each 7 segment, with slightly different drivers Electronic tolling equipment and solutions Traffic management equipment and solutions Est. market size Est. market size 2014 2020 2014 2020 ~13% ~10% USD ~4bn USD ~8.5bn USD ~9bn CAGR USD ~16bn CAGR Key drivers Key drivers  Funding of new or maintenance of old road infrastructure  Economic cost of congestion and accidents drives need for  Political commitment to reduce congestion and pollution remote monitoring and management  Political push to utilize infrastructure capacity in a smarter way  Demand for differentiated service levels on highways  New sensors and data sources enable new services Infomobility equipment and solutions Parking management equipment and solutions Est. market size Est. market size 2014 2020 2014 2020 ~11% ~14% USD ~2.5bn USD ~4.5bn USD ~1bn USD ~2bn CAGR CAGR  Political interest in measuring impact of infrastructure projects  Rapid growth in number of vehicles drives need for more parking Key drivers Key drivers  Demand from public to receive travel and traffic information space  Parking increasingly seen as a source of revenue  New sensors and data sources enable new services  Automation as enabler for more cost efficient operations Source: MarketsandMarkets, Ptolemeus Consulting Group

Q-Free has evolved from a tolling company 8 into an ITS player Leveraging key technologies to develop new ITS offerings Complementary technologies obtained through a series of Rationale for pursuing new offerings acquisitions  Position Q-Free for future growth  Secure multiple revenue streams from a broader range of Parking Guidance Variable Traffic Controllers System Message Signs projects with different business models and risk profiles  Leverage key Q-Free technologies in new areas Infomobility Tolling, parking, Traffic Central Parking Development in revenues from new segments (NOKm) solutions traffic management management Management System 1,000 899 New offerings developed and monetized 804 789 800 • Q-Free is in the process of developing new ITS offerings based on 606 593 acquired technology and extension of core tolling technologies 600 • For example, our parking offering comprises a central SW system from Traffiko, parking guidance solutions from TCS/Elkom, and 400 automatic license plate recognition technology and tags from tolling 200 41% • 39% The move into adjacent business areas has been successful: 21% Q-Free now has a ~NOK 100m run rate in quarterly revenues 11% from new segments 0 2012 2013 2014 2015 LTM • Going forward, Q-Free will focus on developing competitive and ATMS Tolling complete offerings in prioritized market niches

Fundamentally different business models – 9 revenues less volatile with new offering Business model varies from segment to segment Cash flow profiles (illustrative yearly profile) Tolling & Traffic Management • Government tenders • Large initial projects with long tail of service/maintenance work and opportunities for additional product sales • Supplier financed – working capital intensive, paid at delivery • Large projects often involve consortiums of suppliers 1 2 3 4 5 6 7 8 9 Project Product sales & maintenance Parking & Infomobility • Orders from government bodies and private parking operators • Several smaller contracts (NOK 0.5-2m) involving a combination of product and software sales o Subsequent annual license fees and service and maintenance contracts 1 2 3 4 5 6 7 8 9 o Opportunity to enter into frame agreements with large parking operators Multiple product deliveries to same client – growing as relationship develops • Delivery times typically 3-4 months – not very capital intensive, 2 instalments (signing and delivery)

Despite a crowded landscape, Q-Free aims 10 for a leading role in certain niches Select ITS players  Vast, fragmented market with hundreds of players = Large addressable market with structural opening for Q-Free  Wide range of products and services offered = Several different offerings and niches that can be targeted  No dominant global player = Opportunity to build global leadership within niches  Very few players able to provide end-to-end solutions = Q-Free has technology, position and references to create in multiple segments market leading offerings within selected segments Q-Free is one of the global leaders in electronic tolling and is well positioned to become a leader in adjacent niches based on recent acquisitions and application of core tolling technology in new areas