Welcome to the quarterly presentation of NRC Group. Welcome to all of you present here today in House of Oslo, and also welcome to all of you present through our live stream. The key figures for third quarter confirms the positive trend for NRC Group. We deliver improved results, and we deliver an EBITDA margin of 6% versus 4.5% last year. The good trend in order intake continues with our order intake of NOK 2.7 billion in the quarter, and we deliver a very strong cash flow from operations of NOK 238 million. With a continued good order intake throughout the year, we see that our order book for next year is significantly stronger than same period last year. This indicates that the trend of declining revenues we have seen for the past couple of quarters should turn entering 2022.
We have had some significant wins also this quarter. After spending two years in the development phase, we can finally start construction in the Crown Bridges Alliance contract in Helsinki. This, of course, is an important milestone for our Finnish organization and also for NRC Group. We have also won the electrification of Trønder- and Meråkerbanen in a joint venture between our Swedish and Norwegian organization. This shows how we can utilize synergies across NRC Group to be more competitive, as this project could neither have been won or executed by one of the country organizations alone. These bigger projects are important for NRC Group in order to create a good foundation for profitable growth, and it's also an important tool for us in order to grow and develop our organization. When it comes to our HSE KPIs, we see mixed results this quarter and so far this year.
We have a too high injury frequency rate represented by the LTI figures. However, it's positive to see that we have zero serious accidents this quarter and also this year. However, looking at the accidents causing medical treatment, the frequency rate is still too high, and we need to improve within this area in order to get everyone home safe every day. On the positive side, we can also see that the sickness absence trend, absence rate continues to trend downwards, and we also have had less impact from COVID-19 in our operations this quarter. However, we need to be ready for setbacks during winter. Dag, now you will take us through the financials.
Thank you, Henning. Our revenues in quarter three was NOK 1.7 billion, which is 13% lower than last year. Adjusted for currency effects, the decline is around 11%, coming mainly from Sweden, where our hit rate the last 18 months has been low. In addition, also the tenders we have had recently in Norway have not had revenue effect yet. The order intake we have seen lately, the last quarters, improves the order book in these countries. Hence, the growth looks comfortable going into 2022. In Finland, the revenue in quarter three was more or less flat compared with same quarter last year. Our EBITA, excluding M&A, was NOK 102 million, with an EBITA margin of 6%, up from 4.5 last same quarter last year.
All countries are showing improved profitability, and the main driver for the results in the quarter is Finland, with continued strong profitability. In Norway, the profitability has increased, and we see positive development in several parts of the organization going forward. In Sweden, the profitability has also increased. However, it's partly mitigated by low revenue, which cause negative scale effects. Depreciation, amortization, and net finance is more or less the same on normal levels. Pre-tax profit ended at NOK 71 million, which is 51% increase from the same quarter last year. Moving to our balance sheet, our total balance at the end of the quarter is NOK 5.6 billion, with an equity ratio of 48%. Our cash position at the end of the quarter was NOK 565 million, up from NOK 441 million in quarter two.
The improvement is explained by increased results but also improvement in net working capital. The improvement in net working capital is due to strong continued focus on improving working capital as well as seasonal variations. Interest-bearing debt is reduced by NOK 71 million and is NOK 1.55 billion at the end of the quarter. Reduction is mainly due to repayment of bank debt and also reduced leasing debt. With a cash position of NOK 565 million, our net interest-bearing debt is decreasing by NOK 194 million, and is now at the end of the quarter, NOK 985 million. Deducted for leasing debt, our net debt is approximately NOK 500 million end of quarter.
Our cash flow from operations in the third quarter was solid with NOK 238 million, an improvement of NOK 109 million from the same quarter last year. The improvement is due to a continued sharp focus on improving working capital and also beneficial project mix in the quarter. Net cash flow from investing activities was NOK 17 million, and net cash flow from financial activities NOK -97 million. All in all, a cash position of NOK 565 million end of quarter. Our order intake continued strong in the quarter with NOK 2.7 billion of orders. Our book-to-bill was 1.6 in the quarter, continuing the good development we had in quarter two. Order book at the end of the quarter, 7.6 billion, up from 6.7 billion last quarter.
I will also like to mention that our order intake year to date, end of Q3, is NOK 5.7 billion, which is actually a 45% increase compared with the same period last year. This is a good indication of a more comfortable growth for next year. Our financial position is robust at the end of the quarter. We have a cash position of NOK 565 million and an unused credit facility of NOK 200 million. The remaining repayment schedule for the bank debt is NOK 37 million in 2021, and then approximately NOK 150 million each year the next three years. Our bond has maturity in September 2024. Now Henning will take us through operational review in more details.
Good thanks, Dag. We deliver another strong quarter in our Finnish business with an EBITDA margin of 10.9% this quarter. The profitability is driven by very strong performance both in our rail construction and light rail business. We have had a high order intake also in Finland this quarter with NOK 1.4 billion, of course, mainly due to the win of the Crown Bridges Alliance contract. However, we have seen a weak hit rate in our maintenance business, losing two of our existing contracts, in total yielding approximately NOK 100 million in annual revenue. This indicates a risk for somewhat lower revenues and somewhat weaker profitability in the maintenance business in Finland next year.
When it comes to the tender pipeline, we have two new maintenance contracts coming up for the next nine months, and of course, with the losses we experienced this quarter, this will be of high importance for us next year. We still see that the record high investments we have seen in rail construction this year will continue next year in the Finnish market, which will be very positive for us. We also see a pipeline of light rail projects coming up in Finland. However, none of them will be tendered during 2022. The activity level in Norway is impacted by the low hit rate we saw in 2020. Looking at the order backlog, we should have a much stronger position moving forward in the Norwegian market. We see improved results in all divisions in Norway.
We deliver very strong results in our civil construction business, and the excellent project execution we have seen for the past years continues. The results in rail construction are impacted by low volumes. However, we see that the project portfolio is much more healthy and has a much higher margin than what we saw one year ago and two years ago. What we need in order to get the full benefits of the improvements in rail construction is more volume. With the win of Trønder- and Meråkerbanen, we should be in a very good position for 2022. Within the environmental division, we have seen a high activity level through the quarter, and we also deliver healthy results from that operation. To sum up the headline in Norway, we are on track to deliver improved profitability.
The tender pipeline remains strong in Norway across all our business areas. The biggest change this quarter has been the clear signal from the Norwegian government that they want to end the ongoing privatization process of rail maintenance. This is a lost opportunity for NRC Group with the annual market of around NOK 2 billion, and it's very sad to see that the Norwegian government says, "No, thanks," to significantly reduced expenses maintaining their rail infrastructure. Our benchmarks are very clear. In Sweden and Finland, there is a significant savings potential for the Norwegian state in this area. The activity level in Sweden is low. We have stayed loyal to our strategy, not dumping prices to get volume, and this is the only way forward for long-term success in Sweden. Although the volumes are significantly down, we are able to improve the results somewhat compared to last year.
That is mainly due to good performance in projects won from 2020 and onwards. We are, of course, very happy to see an increased order intake in the Swedish market as well, with the most significant win being the Trønder- and Meråkerbanen for our Swedish organization as well. As you have seen, we have won several small and medium-sized contracts in Sweden, both in quarter three and quarter four. Our order book for Sweden also looks significantly stronger for next year, and we should be able to return to growth in the Swedish market in 2022. Our hit rate has increased, but we still face a fierce competition in the Swedish market. The tender pipeline remains strong in Sweden, and it will be interesting to see how our competitors price going forward.
When it comes to maintenance, three of our own contracts are out for tender in Sweden during the next nine months. The first one has already been submitted, but will not be awarded before December this year. The second one is expected to be awarded during quarter one, and the third one will most likely slide into quarter two before we get a decision on it. Our focus for the last two years have been to restore our profitability, and on the next couple of slides, we will show you a bit what we have achieved during that process. When we had our capital market update in February 2020, we presented our measures to restore profitability. The big losses leading up to this came from our rail construction unit in Norway and our civil and rail construction unit in Sweden.
Our argument for why we should be able to restore the profitability was based on the fact that we had exact similar business represented by the civil construction unit in Norway and rail construction in Finland, delivering excellent result within the exact same business. Our strategy was to change management of the non-performing units and let the new management implement proven processes from the performing units. One of the most important tasks in order to improve the profitability from the non-performing units is to reduce the tail of loss-making projects you can see on the right-hand side. The most important measure to succeed with this is to build robust tender processes.
Our slogan for the past two years has been to win the right project at the right price, meaning if we see a project with a big negative asymmetric risk in the tender phase, either we need to increase our price and rather risk losing it, or maybe even better, stop calculation at the early phase, focus our resources on projects with a better risk reward and better suited for our competitive edge. We also saw a potential for improving our project execution, and it was mainly related to how we organize project, and also we needed to lift critical capabilities within our project teams. When we compare the performance in the new portfolio where we have projects won after January 1, 2020, with the performance in the project portfolio we presented at the capital markets update, we can clearly see that our measures have been successful.
The average margin of the new portfolio is seven percentage points higher than what we saw in the portfolio presented in February last year. We have not been able to completely eliminate loss-making projects, but they are small in size and have a very limited impact on our profitability. Looking at this portfolio, it's clearly fewer projects, but they are bigger in average size. Of course, they are somewhat shorter in the life cycle, but I'm confident that we have a much healthier portfolio with a much more balanced risk. To sum up, the third quarter has been a good quarter for NRC Group. We have seen clear improvements in many important areas. We deliver better profitability.
We have a continued strong order intake, giving us a head start to 2022 when it comes to order book for the season, and we still see record high investments in our markets. We deliver a very strong cash flow from operations, and our financial position remains strong. As you can see on the last slides, our measures to improve profitability are yielding results, and we will continue the sharp focus on these processes going forward. Our guidance for the year remains unchanged. We expect to deliver an EBITDA margin between 1.75% and 2.5%. Now we can open up for questions. Yep.
Yep. On the previous page, you commented 7% improvement. Is that 7 basis points higher on average margins in the project, or is it 7% compared to last year in terms of expected margins or?
The first one, seven percentage points versus the average margin in the old portfolio.
You gonna want to say anything about the impact of that will have in the guidance for 2022 maybe?
Well, we won't be precise on the guidance for 2022, but it's obvious that these results you see on the last slide support a continuous improvement in our profit going forward.
Thank you.
With respect to the same slide, if you think about volumes, are there apples for apples? On the left side, is that NOK 6 billion in revenue and the right is only a half billion in revenue?
Well, you need to remember that this is only a part of the business. I think the annual revenue from the old project portfolio in 2019 was approximately NOK 1.8 billion, while the annual revenue we see from this portfolio we presented here is NOK 1.2 billion, and that is of course also representing the fact that we have had a lower hit rate in 2020. To get the full benefit of the margin expansion you can see here, we also need more volumes. As you have seen, we also have a good trend in order intake.
Just to add, it's also only projects which are won after 2020. Of course, that is not the full picture.
How much of the backlog is on the right side then?
We have NOK 30 million left of the, you can say the legacy project at the end of the quarter, and that we expect to be finalized during the year.
On guiding, will you continue to guide or is that something that you want to discontinue?
That is something for the board to decide when we are delivering quarter four results.
Okay.
Steel and concrete prices, how will that impact business, next year with steel prices rolling up and concrete situation in Sweden being what it is, and also with the Norcem also increasing prices in Norway? How do you see those impacts?
Well, of course, it will impact some of our projects, but we don't see any major impact on our profitability based on this. Our exposure to steel and concrete prices are not very high. Of course, we have some projects where we build concrete structures, but that is not a significant part of our operation. We have seen the same price increase that you indicate, Simon, and it will impact some of our projects. At new contracts we tender, we will of course take it into account when we deliver our prices as well.
Just getting enough concrete, like in Sweden, how well are your connections to. If rationing starts now in December, how will that. How well are you prepared for if that actually happens, which it looks like it's going to be?
If you look at our civil construction activity, which is the business that, you know, supposedly should use most of the concrete in our business, our projects in Sweden is mostly related to groundwork and not concrete work. We have one big project in Sweden in the joint venture with Webuild and Gülermak in Gothenburg, and there, of course, we are dependent on concrete. We have agreements for that in place.
On recruiting, obviously, project economics is also dependent on very good project leaders and expanding, let's say, your capabilities within the organization. How is that going compared to, let's say, one year ago?
I would say we have a stronger organization when it comes to our project execution capability today compared to what we had two years ago. We also have a much stronger management on the operational businesses that we have, which is also important, especially when it comes to tender and also when it comes to doing follow-up of the existing projects. Of course, recruiting those kind of capabilities are maybe the biggest bottleneck in the market, and that, I would say is also the only real bottleneck for NRC Group in order to reach our long-term target. That has been one of the topics we have worked with systematically throughout the two last years to also build our brand for recruiting new people.
I think the most important measure here is to build competence within our existing employees, recruit less experienced people and train them through the projects. That's why I also said that these bigger projects are important for us because they are a good tool to actually take that journey with less experienced employees. Obviously, in long term, this is our biggest bottleneck, but it's also something we work very systematically on in order to mitigate.
How is, like, also the recruitment of perhaps not as qualified personnel engineers and, like, the boots on the ground, with the COVID-19 restrictions and all of that, in the various markets with borders closed, getting people from Poland becomes harder for the operations. How are you seeing that impacting operations now in Norway, Sweden?
I would say nearly no impact currently. The travel restrictions have been lifted. We have no problems getting people into our countries, and it's mainly related for our part to the civil construction and partly some of the environmental companies in Norway where we use foreign labor. When we talk about rail construction and maintenance, it's mostly local and Nordic employees, as it requires, certificates, et cetera, from the local transport agencies.
Final question from me. On the competitive picture, probably a bit more color on the Norwegian market when we hear Mesta is probably changing a bit and moving into your market. We know that's Swedish stuff. How do you see the Norwegian competitive market within the different segments? Also maybe some comments on the Finnish market, given the loss of the maintenance contracts.
Yeah. I think for the Norwegian market, if you talk rail construction, which I guess is your question, Mesta bought a small rail contractor. I think the main strategy behind it was to be positioned for the maintenance market, which is now most likely closed. We have seen somewhat higher competition when it comes to the smaller projects in rail construction in Norway, and that is also one of the reason behind our lower volume in rail construction this year. With the RIAS, the company Mesta bought being one player, with Spordrift, the monopolist of maintenance being one new player. We will of course push very hard for Spordrift to continue now being a monopolist, but removing their mandate to compete in the private market. It doesn't make any sense for them to operate in the private market while being a monopolist in maintenance.
On the smaller projects in Norway, somewhat increased competition. On the bigger projects, it's been stable. We see three to four players on the bigger contracts, and we don't expect that to change materially. Finland, I would say it's a stable, competitive environment. Same players as we have seen for the past two, three years.
Last time we met was the CMD.
Yes.
It's been a while. You're now repeating the same guidance for 2021. How you think about your ambition, long-term ambition?
Yeah
The ones you presented at the CMD, are those still valid?
We are still keeping our long-term ambition, but as we have been clear for the past two or three quarters, we are clearly delayed at reaching that ambition. I see no significant change, just saying that we should not be able to achieve those ambition in the long term. Obviously, with the numbers you have seen for the past 18 months, we are delayed.
Even though your order backlog has improved as much as we've seen, it will be delayed.
Yes.
Thank you.
Thank you. I think that was everything for today. Thank you for good questions here from the audience in House of Oslo, and also thank you to all of you joining on our stream. Have a nice day.