Techstep ASA — Annual Report 2018

Mar 27, 2019

Annual report 2018

Contents

Techstep in brief	3
Key figures	4
Letter from the CEO	5
Executive Management	6
Board of Directors	8
Board of Directors' Report	10
Corporate governance report	16
Corporate social responsibility report	22
Responsibility statement	24
Consolidated financial statements	25
Notes to the financial statements	31
Techstep ASA financial statements	72
Techstep ASA Notes to the financial statements	77
Alternative performance measures	84
Auditor's report	85

Help your people do a better job

TECHSTEP is positioning itself as a leading Nordic enabler of the DIGITAL WORKPLACE

Techstep combines robust, safe and smart tools to make work mobile. We believe that whatever your business, there`s a better way to do it.

Built on a decade`s foundation of telecom, communications and consultancy experience, our teams are experts in optimisation. We deliver comprehensive, best practice knowledge on business process optimisation. We supply the devices you love and the software you need with the security you expect, whilst giving you full overview, control and support, wherever and whenever you need it.

Private and public enterprises are currently in the middle of digital transformation processes to enable more efficient operations. At the same time, more and more enterprises recognise the challenge and opportunity in making the operational tools and data available to employees on all devices and in all locations.

Over the past years, Techstep has developed, established or acquired all the building blocks necessary to become a one-stop shop with a complete products and service offering for a secure, stable and user-friendly mobile work environment.

Techstep currently has 221 employees in Norway and Sweden, serving some 6,000 customers, with more than 662,000 potential end-users. The company recorded revenues of NOK 1,064 million in 2018 and secured new contracts with a potential revenue of around NOK 1 billion.

Although hardware sales remain the largest revenue contributor, the company is growing its solutions sales and gaining traction with its subscription-based Mobile-as-a-Service (MaaS) offering.

Techstep ASA is backed by strong long-term investors, known for value creation through transformation. The shares are listed on the Oslo Stock Exchange under the ticker "TECH".

Key Figures

(amounts in NOK 1,000)	2018	2017
Revenue	1 064 114	789 473
EBITDA	43 023	(735)
EBITA	41 280	(2 125)
EBIT	22 362	(23 147)
EBITDA margin (%)	4.0%	-0.1%
EBITA margin (%)	3.9%	-0.2%
EBIT margin (%)	2.1%	-2.9%
Hardware, share of revenue	74%	78%
Solutions, share of revenue	26%	22%
Total Assets	787 954	765 477
Cash	53 996	35 278
Equity	513 780	450 110
Employees	221	219

Note: EBITDA was positively affected by a reversal of a contingent liability related to the acquisition of BKE Telecom AB of NOK 20.0 million for FY 2018 (Note 6). 2018 EBITDA also includes a one-off provision of NOK 7.0 million relating to a remaining rent obligation on regional offices as part of co-location of premises in Norway (Note 5).

M&A costs and other one-offs amounted to NOK 26.3 million in 2017.In 2018, a reversal of an earn-out obligation was made and reported as other income of NOK 19.9 million

The hardware and solution shares of revenue were restated in 2018 to include related commissions and bonuses. Previously, all commission and bonus revenues were allocated to hardware

Letter from the CEO

We make work mobile

In 2018, a milestone was reached by Techstep. For the first time, revenue exceeded NOK 1 billion and the company signed new customer contracts with a potential value of around NOK 1 billion. Techstep aspires to become the leading Nordic provider of solutions that Make Work Mobile. We are proud to see an increasing number of companies in both the private and public sectors showing confidence in us as the preferred partner, digitalising core processes by implementing mobile solutions provided by Techstep

We expect the market for B2B mobility services to continue to grow in the years ahead and believe Techstep is well positioned to take a growing share of this market.

The profitability level is not yet where we want it, although reported operating profits turned positive in 2018. The result is still affected by continued growth investments and integration costs related to the acquisitions we have carried out over the past few years. Measures have been taken to increase profitable sales, and we were glad to see this taking effect in both Norway and Sweden towards the end of the year.

Margin expansion has also been held down by a revenue mix where hardware sales still account for over two-thirds of sales in the year. An increasing number of customers are however opting for combined hardware and solutions offerings, creating an upside potential for additional sales. We are also beginning to gain traction with our higher margin "Mobile-asa-Service" -or MaaS- offering. The focus on solutions and MaaS-sales will be a priority going forward.

Successful Integration and consolidation of people and operations into one Techstep has been a key priority throughout 2018, and we were glad to see the completion of the legal and organisational integration of the entities in Norway and Sweden towards the end of the year. The next phase is to streamline operations on a common platform. In Norway we look forward to completing the co-location project launched during the year, and welcome most of our employees into new headquarters in Oslo in 2019.

Overall, we were 221 employees at Techstep at the end of the year, and I would like to take this opportunity to thank them for their efforts during 2018. The joint efforts of the entire organisation are needed to reach our strategic goals and ambitions.

Jens Haviken, CEO Techstep ASA

Executive Management

Jens Haviken - CEO

Mr. Haviken is an experienced executive within consultation and managed services, and software and hardware distribution. He has a proven track record of developing, restructuring and streamlining the operations of companies in the ICT sector. Prior positions held by Haviken include VP Services and Solutions and Country Manager with Dustin Group AB (publ). and various Director roles for Microsoft and Accenture. He has worked in the industry since 1991, and has experience ranging from start-ups to large international corporations, such as Microsoft and Accenture.

Marius Drefvelin – CFO

Mr. Drefvelin was previously the Group CFO of Creuna, a leading Nordic technology and communications consultancy firm with 350 employees. He has been with Creuna since 2012. During 2010-2012, he was a financial advisor with Deloitte, working on mergers, acquisitions and IPOs. Before this, he worked with Jebsen Asset Management from 2007-2009. During 2001-2007, Mr. Drefvelin worked with KPMG, also on transactions.

In addition to his experience with transactions, he has focused on identifying and implementing operational improvements during his time. Mr. Drefvelin has a B.Sc. in Finance and a B.Sc. in Economics from the University of Utah, USA. Moreover, he is a Certified European Financial Analyst from the Norwegian School of Economics.

Inge Paulsen – Chief Operating Officer

Mr. Paulsen is an experienced executive manager with a proven track record from companies such as Clear Channel, Eltel Networks/Sønnico Tele, Infratek/Hafslund, Implement (formerly known as MarkUp Consulting) and Accenture.

Business development and change management, combined with handling daily operations are Mr. Paulsen's core competencies. His broad experience comes from heading strategic business development projects in venture businesses or turnaround cases, as well as holding various executive positions responsible for profits & loss.

Mr. Paulsen holds a MSc in Business Management (Siviløkonom) from the Norwegian School of Economics and Business Administration (NHH). He also graduated from The Royal Norwegian Air Force Academy.

Mads Vårdal – Chief Innovation Officer

Mr.Vårdal is an experienced business developer and executive with a proven track record from previous positions at Nordialog, Smartworks and Teki Solutions.

His long experience from the industry covers sales, strategy, business development, M&A processes, product development and executive manager roles. Mr.Vårdal has since 2007 been operating in several central executive roles within sales, business development and daily management with a build- and turn-around focus.

Erik Haugen – Chief Commercial Officer

Mr Haugen is an international business professional, bringing with him broad commercial experience in finance, telecommunications, consumer electronics, the entertainment licencing industry, and IT.

Following his business administration studies at BI Norwegian Business School, Mr Haugen spent 12 years in London, working with a focus on sales, marketing and business management for companies like Pioneer and Sony Ericsson, before moving into international movie and music licensing, joining The Licensing Agency Ltd. in 2005.

Since returning to Norway in 2009, Mr Haugen first joined Norwegian Air Shuttle ASA to implement their mobile communications initiative. He subsequently moved into finance and professional service sales with Lindorff AS (now Intrum) in 2011, where he has been responsible for strategic sales, key account management and business development for a large portfolio of clients within telecoms, utilities, trade, SME and the public sector.

Board of Directors

Einar J. Greve – Chairman of the board

Mr. Greve has served on the Board of Techstep since November 2016. Mr. Greve works as a strategic advisor at Cipriano AS and has previously worked as a partner of Wikborg Rein & Co and as a partner of Arctic Securities ASA. Mr. Greve has held, and holds, various positions as Chairman or director of several listed and unlisted companies. He holds a degree in law (cand.jur) from the University of Oslo.

Jens Rugseth - Board member

Jens Rugseth has served on the Board of Techstep since February 2019. Mr. Rugseth is a co-founder and Chairman of the Board of Crayon Group ASA and Link Mobility Group ASA. He has been a serial founder of a number of companies within the IT sector over the past 30 years. Mr. Rugseth has also held the position of chief executive officer with some of the largest IT-companies in Norway, including ARK ASA, Cinet AS and Skrivervik Data AS. Mr. Rugseth studied business economics at the Norwegian School of Management. Jens Rugseth is a Norwegian citizen, currently residing in Oslo, Norway.

Ingrid E. Leisner - Board member

Ms. Leisner has served on the Board of Techstep since January 2016. Ms. Leisner's directorships include current Board positions for, Self Storage Group ASA, Spectrum ASA, Maritime and Merchant ASA. Ms. Leisner has a background as a trader of various oil and gas products in her 15 years with Statoil ASA. Her years of experience of, and expertise in, business strategy, M&A, management consultation and change management has been very valuable when serving on the Boards of several companies listed on Oslo Stock Exchange. She holds a Bachelor of Business degree with honours from the University of Texas in Austin.

Stein Erik Moe - Board member

Mr. Moe has served on the Board of Techstep since November 2016. Mr. Moe is the CEO and cofounder of Gture AS, a digital services company. Mr. Moe has over 27 years of experience with Accenture, and was a global leader in the Technology, Media and Communication division. He has led large-scale projects and transformations, cross strategy, technology, organization and business processes. His directorships are including but not limited to Gture AS (Chairman), Gvalueinvest AS (Deputy Chairman), GoDigitalChina AS (Board member) and Digitread AS (Board member). He holds a degree in Computer Science from the University of Strathclyde in Glasgow, and courses from BI Norwegian Business School.

Anders Brandt - Board member

Mr. Brandt has served on the Board of Techstep since April 2018. Mr. Brandt has more than 20 years of experience in international entrepreneurship, technology, venture capital and digital services. He is managing partner in the venture capital fund Idekapital, and has co-founded and exited numerous companies, including DinSide, OMG, Viken Fibernett, Mytos, Meshtech and Bubbly Group. Brandt has 14 years of Board experience for listed companies on Oslo Stock Exchange and Nasdaq Stockholm, including several tech companies.

Toril Nag - Board member

Ms. Nag has served on the Board of Techstep since April 2018. Ms. Nag is Group Executive Vice President, responsible for customer service and the telecommunications business area of the Lyse Group. She has extensive experience in telecom and digital services, as well as banking and finance. She has held a number of Board appointments in technology, energy and R&D-related companies, and her directorships include Dolphin Group ASA, IKT-Norge, Kolumbus AS and Altibox AS. Ms. Nag is a qualified civil engineer in Computer Science from the University of Strathclyde and has further education in management from the Norwegian Business School BI.

Board of Directors' Report

Techstep's growth and acquisitions strategy has enabled the company to acquire the building blocks necessary to become a onestop shop, with a complete products and services offering for the digital mobile workplace. The company has seen a high level of acquisition activity over the past years, and the consolidation of products and services and the integration of these companies into one Techstep were key priorities through 2018.

Business activities and strategy

New technology is transforming the way we live and work. Today, about 60% of all internet traffic is through mobile devices, and people expect easy access to tools and services across devices, both at home and at work. The emerging digital workspace represents a tremendous market opportunity. Techstep was founded to not only be a part of this transformation but to be a consolidator in the B2B market for mobility and digital communications, and to become a leading enabler of the digital workplace in the Nordic Region.

Since late 2016, Techstep has acquired eight companies and is in the process of integrating all of them into one Techstep. In 2018, the company strengthened its security offering through the acquisition of Wizor AS.

Techstep now offers both standalone products and services, bundled hardware and software solutions. Although hardware sales remain the largest revenue contributor, the company is growing its solutions sales and gaining traction with its MaaS offering.

Going into 2019, Techstep is better positioned to serve the expanding market for digital workplace and mobile solutions. The next phase for the company is to streamline operations on a common platform to increase profitability.

Mobile as a Service (MaaS)

Techstep's Mobile-as-a-Service (MaaS) offering is a vital part of the growth strategy. MaaS combines the company's expertise with hardware and connectivity, enterprise mobility management systems, value-adding software solutions, security systems, and advisory services, and enables customers' employees to work across different locations and different mobile devices in a secure and stable operational environment.

MaaS has the potential to become a major value driver for both Techstep and its customers. With Techstep's solution, customers can empower their employees to increase efficiency and ultimately do a better job, by equipping employees with mobile tools which facilitate reporting, interaction, invoicing, calculations and other work-specific tasks while on the move, in the field or in the store, depending on the type of work. In addition, the customer can access Techstep's solutions within mobility management, software, services, advisory and security.

The MaaS solution is typically billed on a monthly basis, offering customers steady and predictable operating expenditure and cash expenses.

Overall, Techstep is gaining traction and pipeline within the MaaS offering, signing MaaS contracts with a total contract value of NOK 141 million in 2018. In the last quarter, Techstep signed its first MaaS agreement in Sweden, with the heating, ventilation and sanitation company Radiator VVS AB.

Overall, the company has built a base of approximately 6,000 customers and 662,000 large-scale end-users across the private and public sectors in the Nordic Region. A number of these companies are major Norwegian and Swedish companies which have started to digitalise their work processes.

Key events in 2018

Employment of new CEO

In April, Jens Haviken became the new CEO for Techstep ASA. He joined Techstep from his position as VP of Services and Solutions with Dustin Group, with extensive experience within the IT sector.

Techstep acquires remaining shares in Swedish IT advisory company

In 2017, Techstep acquired a majority share of Conneqted 365 AB to strengthen its Enterprise Mobility Management (EMM) offering and presence in Sweden. In June 2018, Techstep exercised its right to acquire the remaining shares. The acquisition enabled Techstep to provide a one-stop-shop offering in Sweden, as well as a pan-Nordic delivery model.

Acquisition of Norwegian IT security company

In June 2018, Techstep entered into an agreement to acquire Wizor AS, a Nordic supplier of encrypted and secure solutions for mobile phones, tablets and other mobile devices. The acquisition was in alignment with Techstep's strategy to become a leading enabler of the digital workplace in the Nordic region.

Strengthening the balance sheet with equity growth capital

In connection with the acquisition of Wizor, and to finance future acquisitions and further growth, the company raised approximately NOK 25 million in a fully underwritten, private placement in June 2018.

For further details of the key events, reference is made to the stock exchange releases published in 2018, which are available on www.techstepasa.no and www.newsweb.no.

Operational review

Over the past few years, Techstep has developed, established or acquired all the building blocks necessary to become a onestop shop with a complete products and service offering for a secure, stable and user-friendly mobile work environment.

Although hardware sales remain the largest revenue contributor, the company is growing its solution sales and gaining traction with its subscription-based Mobile-as-a-Service (MaaS) offering.

Increased sales activity

In 2018, Techstep signed contracts with a combined potential value of just under NOK 1 billion. Techstep is enjoying increased sales activity, with a particularly positive development in Sweden towards the end of the year. MaaS sales gained traction throughout the year, with the first sale in Sweden in the fourth quarter.

Techstep signed key contracts with both new and existing customers. A substantial share of the sales wins came in sectors in which Techstep identified the highest potential for efficiency gains from mobile solutions.

Among the key contracts signed were Nordea, NSB, Bane NOR, Difi, Apotek 1, Eika Gruppen, Recover Nordic Group and Sykehusinnkjøp HF. Many of the new contracts represent up-selling on existing agreements.

The contracts vary in scope and size and include pure hardware sales, solution sales and combinations thereof. The MaaS offering, which includes the Mytos' asset management solution, was successfully introduced onto the Norwegian and Swedish markets in the second half of 2018. During 2018, Techstep entered into 18 MaaS contracts worth a total potential value of NOK 141 million. Increasing solution sales and continued sales of MaaS will be key focus areas in 2019.

Concept development

As part of Techstep's efforts to increase its marketing and sales capacity, the company initiated a customer engagement programme, and continued to invest in product development throughout 2018. The company also completed the development of a new corporate profile and implemented Techstep branding in all group units.

Financial review

Profit and loss

Full-year revenue amounted to NOK 1,064.1 for 2018, an increase of 35% from NOK 789.5 million in 2017. This reflects 39% growth in hardware revenue and 25% growth in solutions revenue.

Total operating expenses in 2018 were NOK 1,041.2 million excluding reversal of contingent liability, compared to NOK 790.4 million in 2017. EBITDA for 2018 was hence NOK 43.0 million, compared to a negative NOK 0.7 million in 2017.

The EBITDA includes reversal of contingent liabilities for BKE Telecom of NOK 19.9 million, reported in the line item "Other income and expenses". This was partly offset by a provision of NOK 7.0 million for the remaining rent on premises which will be vacated during 2019, reported in the line item "Other operational expenses". EBITDA also included growth investments and integration costs.

The ordinary operating profit (EBIT) was NOK 22.4 million for 2018, compared to a loss of NOK 23.1 million in 2017.

Net financial expenses amounted to NOK 3.4 million in 2018, compared to NOK 23.0 million in 2017. Net financial expenses in 2017 was impacted by an impairment of financial assets related to Kjedehuset.

The net profit for 2018 was hence NOK 21.3 million, compared to a net loss of NOK 47.7 million in 2017.

Cashflow

The net cashflow generated from operating activities was NOK 23.4 million in 2018, compared with a negative NOK 34.7 million in 2017.

The net cashflow used for investment activities in 2018 was NOK 16.3 million, mainly related to IT investments and acquisition of subsidiaries. The acquisition made in 2018 were partly paid for through the issuance of new shares. Net cashflow used on investment activities in 2017

was NOK 87.1 million, mostly related to the acquisitions made during the year.

The net cashflow from financing activities in 2018 was NOK 11.7 million, with proceeds from a share issue, partly offset by repayment of debt. In 2017, net cashflow from financing activities amounted to NOK 75.0 million, mainly reflecting a larger share issue.

Cash and cash equivalents increased by NOK 18.8 million during 2018, to NOK 54.0 million at the end of the year.

Financial position

In 2018, Techstep issued 4,868,723 new shares in connection with acquisition of wizor and as settlement for minority share in Conneqted 365 AB. In addition, NOK 25 million was injected into the company in June 2018, through a private placement in which 7,936,508 new shares were issued.

As at 31 December 2018, Techstep ASA had total assets of NOK 788.0 million, compared to NOK 765.5 million at year-end 2017. A significant portion of these assets represents goodwill and customer relationships. Impairment testing has been performed and no impairments were identified, see Note 18. Accounts receivable decreased by NOK 10.1 million from year-end 2017 to NOK 146.6 million.

During 2018, total equity increased by NOK 63.7 million to NOK 513.8 million, corresponding to an equity ratio of 65%. One year previously, total equity amounted to NOK 450.1, corresponding to an equity ratio of 59%.

Total liabilities decreased by NOK 41.2 million during the year, to NOK 274.2 million. Total non-current debt comprised NOK 19.0 million and includes non-current interest-bearing debt of NOK 7.3 million relating to a long-term property loan for the premises in Karlstad, Sweden. Other non-current debt of NOK 8.1 million represents an earn-out obligation related to Wizor AS and the long-term portion of restructuring provisions. Current interestbearing liabilities amounted to NOK 66.0 million, including factoring debt of NOK 35.8 million, a drawn credit facility of NOK 14.3 million, and a vendor Note of NOK 15.3 million related to the acquisition of BKE TeleCom AB

Going concern

Based on the aforementioned comments about Techstep ASA's accounts, the Board of Directors confirms that the annual financial statements for 2018 have been prepared on the basis of a going concern assumption, and that this assumption has been made in accordance with Section 3-3a of the Norwegian Accounting Act.

Allocation of the profit/loss for the parent company, Techstep ASA

Profit for the year 2018 attributable to owners of the parent was NOK 20.7 million, compared to a loss of NOK 47.8 million for 2017. The Board has proposed the net income of Techstep ASA be allocated to:

• Retained earnings: NOK 20.7 million
• Net income allocated: NOK 20.7 million

The Board of Directors does not propose to pay any dividends for 2018.

Financial risk and risk management

Techstep is exposed to various types of risks. Market-, operational- and financial-risks are the most relevant and is subject to risk management. The company's risk management aims to support value creation and ensure a continued, solid financial platform through transparent and strategic management of both financial and operational risk factors. The company's risk management is coordinated by the head office in cooperation with the Board of Directors, and is continuously monitored, so that appropriate actions can be taken when required, to eliminate or mitigate any potentially negative impact on operational or financial performance.

In the short and intermediate term, Techstep's focus is on developing its business platform and maintaining ongoing, active operations, which secure the company's cash flow by reducing financial market exposure. Long-term financial investments have been made to generate longterm financial returns.

Techstep's operations, revenues and profits are dependent on the company's ability to generate sales through existing and new customers. The company operates in a highly competitive market segment, and the company's success depends on its ability to meet changing customer preferences, to anticipate and respond to technological changes, and develop effective and competitive relationships with its customers. With the ongoing consolidation of companies acquired, and the transformation of customers to solutions sales and MaaS, Techstep believes it is well positioned to retain and strengthen its market position going forward. The operational risk mainly relates to major projects, which are continuously reviewed by the corporate management.

Techstep's activities involve various types of financial risk: credit risk, liquidity risk and market risk (currency risk and interest rate risk). The primary focus of the company's capital structure is to ensure sufficient free liquidity, to ensure that the company can service its obligations on an ongoing basis, and at the same time be able to make strategic acquisitions. Management is satisfied with the current development regarding liquidity and capital management.

The credit risk is related to customers not being able to settle their obligations as they mature. Techstep has a well-diversified customer portfolio, mainly comprising medium-sized and some larger companies in the private and public sectors. The company has established mitigating procedures including credit rating of major private customers, and the credit risk is considered satisfactory.

Techstep's liquidity risk is related to a mismatch between cash flows from operations and financial commitments. Historically, the company's liquidity has been satisfactory. The consolidated cash flows from operations were positive in 2018 and deemed sufficient to cover financial commitments. The Group's liquidity is satisfactory and management's liquidity budget models show satisfactory liquidity throughout they budget period.

Techstep's market risk is related to fluctuations in currencies and interest rates. As the company's operations are conducted primarily in Norway and Sweden, the company is only to a limited extent affected by currency

fluctuations other than between NOK and SEK. There is limited trade between Norway and Sweden, and the currency risk is generally considered to be low. Group values related to foreign operations are subject to currency fluctuations. As such, there may be variations in the "exchange differences on translating foreign operations" in the consolidated statement of comprehensive income. Interest rate changes have only a marginal direct effect on consolidated operating income and cash flows from operating activities. Techstep's interest rate risk is related to floating interest rates on bank accounts and deposits, in addition to floating rate debt in credit institutions. Techstep does not use any hedging instruments for currency or interest rate fluctuations.

See Note 19 of this report for a more detailed review of financial risk factors.

Transactions with related parties

In 2018, Techstep entered into an agreement with Gture AS, a company controlled by Board member Stein Erik Moe, regarding certain consultancy services provided to Techstep in connection with the development of a new ecommerce solution. The estimated value of the contract is NOK 5 million.

In February 2019, Jens Rugseth was elected member of the Board of Techstep ASA. Mr. Rugseth also holds a position as chairman of the Board in Crayon Group Holding ASA. Trade between Techstep and all Crayon Group companies has been disclosed.

There were no other transactions with related parties during the period. See Note 22 for further details.

Corporate governance

Techstep observes the Norwegian Code of Practice for Corporate Governance (NUES) of 17 October 2018. A statement on Techstep's corporate governance principles and practices is provided in a separate section of this annual report. In the company's own assessment, Techstep did not deviate from any sections of the Code of Practice as at year-end 2018.

Corporate social responsibility

Techstep aims to be a responsible company which respects people, society, and the environment. The company plays a central role in workplace digitalisation, and its primary corporate responsibility is to help ensure that modern enterprises can digitalise their operations in a safe and efficient manner.

Techstep has developed a CSR policy, committing the company to responsible business practices in the areas of human rights, labour, anti-corruption and the environment. A separate section of this annual report contains further details of Techstep's corporate social responsibility activities.

Shareholder information

As at 31 December 2018, Techstep had 159 055 106 shares outstanding, an increase from 146 249 875 shares one year earlier. The company had 2,553 shareholders. The number of treasury shares amounted to 1,914. The shares have par value of NOK 1.0.

The company's largest shareholder, Datum AS, held 20.00% of the shares at year end, with the 20 largest shareholders holding 78.21% of the shares outstanding.

During 2018, Techstep's share price fluctuated between NOK 2.38 and NOK 3.76 per share. The final price at the close of the year was NOK 3.30 per share, slightly down from 3.35 per share in the previous year.

38.2 million shares were traded over the course of the year, corresponding to 24 % of the total number of shares outstanding at end of year.

For detailed shareholder information, see Note 22/24 in the consolidated financial statements for 2018.

Outlook

Techstep is well positioned to benefit from positive market trends, which reflect increasing digitization and higher demand for professional mobile solutions. Techstep expects the market for B2B mobility services in Norway and Sweden to continue to grow in the years ahead.

Techstep aspires to become a leading enabler of the mobile digital workplace in the Nordic

region and is well on its way to executing its strategic ambitions. The company has made several acquisitions over the past years and is nearing the completion of many of the integration processes. These will result in unified and more efficient operations under the Techstep brand. At the same time, the company is rolling out its Mobile as a Service (MaaS) offering, tailored to meet the demands of the modern mobile digital workplace.

The main priorities for 2019 will be to finalise the ongoing integration processes, streamline operations, and continue to grow solution sales to secure profitable growth going forward.

Corporate Governance report

Techstep ASA's principles for good corporate governance establish the foundation for longterm value creation to the benefit of the owners, employees, other stakeholders, and society at large.

The principles should help instil trust and confidence in the company, render decisionmaking more effective, and improve communication between management, the Board of Directors and the company's shareholders.

The principles cannot replace the ongoing work to maintain a healthy corporate culture throughout the company but should be considered in this context. Trust and confidence in Techstep are based on the existence of respect, responsibility and equality, both internally and externally.

Implementation and reporting on corporate governance

Techstep is a Norwegian public limited company listed on the Oslo Stock Exchange and bases its corporate governance structure on Norwegian legislation and recommended guidelines.

The company observes the Norwegian Code of Practice for Corporate Governance, issued by the Norwegian Corporate Governance Board, which was most recently revised on 17 October 2018, and referred to in this document as "the Code of Practice". The Code of Practice is available on the website www.nues.no. The application of the Code of Practice is based on the "comply or explain" principle, which stipulates that any deviations from the code, should be explained.

By the company's own assessment, Techstep did not have any deviations from the Code of Practice in 2018.

The principles and implementation of corporate governance are subject to annual reviews and discussions by the company's Board of Directors. This report discusses Techstep's main corporate governance policies and practices and how Techstep has complied with the Code of Practice in the preceding year.

Business

Techstep is positioning itself to become a leading Nordic provider of solutions making work mobile. The company's operations comply with the business objective set forth in its Articles of Association, section 3:

"The company's purpose is to engage in business operations within information and communication technology, and to develop and provide solutions and software related to the mobility, digitalisation and consultancy business and everything that belongs thereto, including the owning of shares and other securities in other companies."

The Board of Directors has defined clear goals, strategies and risk profiles for the company's business activities, to create value for its shareholders and ensure that its resources are utilised in an efficient and responsible manner to the benefit of all its stakeholders. The Board has further adopted various policies providing business practice guidance, including policies on corporate social responsibility, code of conduct and ethical trade. The policies set the standards for responsible and ethical behaviour expected of employees or persons associated with the company, to build trust and loyalty internally and to prevent violations and negative impact externally. The company's objectives, strategy and risk profile, which are reviewed on an annual basis, are described in the annual report for 2018, together with a report on the company's corporate social responsibility measures.

Equity and dividends

As at 31 December 2018, Techstep's total equity was NOK 513.8 million and total liabilities amounted to NOK 274.2, which corresponds to an equity ratio of 65.2%, and a debt-to-equity ratio of 53.4%. The Board of Directors considers the capital structure to be satisfactory and in accordance with Techstep's risk profile, which enables the company to pursue its goals and strategy.

Techstep has not established a dividend policy beyond a consensus that the company's goals and strategy are to increase shareholder value

and contribute to an attractive market for the company's shares. Techstep has not paid dividends to date and does not expect to pay a dividend in the coming years. Techstep's intention is to retain future earnings, if any, to finance operations and expand the business. Any future decision to pay a dividend will depend on the company's financial position, operating profit and capital requirements.

Board mandates

At the annual general meeting on 4 April 2018, three authorisations were granted to the Board of Directors:

• Authorisation to increase the share capital by up to NOK 35 million, by issuing up to 35 million shares with a par value of NOK 1 per share. The authorisation covers both cash and non-cash considerations, including mergers. The par value and number of shares have been adjusted in connection with acquisitions made during the year. As at 31 December 2018, the remaining number of unused shares was 22.194.769.
• Authorisation to acquire treasury shares is limited to 10% of the share capital as at 31 December 2017. As at 31 December 2018, the authorisation has not been used.
• Authorisation to increase the company's share capital by a maximum of NOK 15.7 million, by issuing a maximum of 15.7 million shares in Techstep, with a par value of NOK 1 per share, in connection with the company's incentive plan for its employees and directors. As at 31 December 2018, a total of 13.2 million share options have been granted to key employees under the existing authorisation.

All three authorisations are valid until Techstep's annual general meeting in 2019, and no later than 30 June 2019. There was a separate vote on each of the three authorisations. For supplementary information on the authorisations, reference is made to the minutes of the annual general meeting held on 4 April 2018. These are available from www.techstepasa.no and www.newsweb.no.

Equal treatment of shareholders and transactions with related parties

Techstep ASA has one class of shares. All shares enjoy equal rights in the company, and the company's Articles of Association contain no restrictions on exercising voting rights. Treasury shares will be traded on the stock exchange or in accordance with the guidelines of the Oslo Stock Exchange.

In the event of a capital increase based on authorisation from the AGM, where the preemptive rights of shareholders are set aside, the company shall provide the reasons for the action in the stock exchange notice in which the capital increase is announced.

In 2018, Techstep completed a private placement to finance the acquisition of Wizor AS and for general corporate purposes, where the pre-emptive rights of the shareholders were set aside. In addition, consideration shares were issued as settlement for the acquisitions of shares in Wizor AS and Conneqted 365 AB. For details, see stock exchange releases from 2018 and Note 21 Changes in Group structure and Business combinations in the annual report for 2018.

For significant transactions with related parties, the company will use valuations and statements from an independent third party, if the transaction is not to be considered by the general meeting. In 2018, Techstep entered into one agreement with a company controlled by one of the company's Board members. The agreement was entered into on market terms. For further information, refer to Note 22 "Related parties' transactions" in the annual report for 2018.

Freely negotiable shares

The company's shares are freely negotiable on the Oslo Stock Exchange. There are no restrictions on owning, trading or voting for shares in the Articles of Association.

General Meetings

The general meeting is the company's highest decision-making body. The general meeting is open to all shareholders, and Techstep encourages shareholders to participate and exercise their rights at the company's general

meetings. In order to vote, the shareholder must be registered with the Norwegian Central Securities Depository (VPS) at the time of the general meeting.

Notices of general meetings shall be sent no later than 21 days prior to the date of the general meeting. According to the company's Articles of Association, there is no requirement to send the documents for consideration by the general meeting directly to shareholders as long as the documents have been made available on the company's website. The same applies to documents that are required by law to be included in or attached to the notice of the general meeting. A shareholder may nonetheless request that relevant documents concerning business to be discussed at the general meeting be sent to him or her. The registration deadline will be set as close to the meeting as possible, and all the necessary registration information will be provided in the notice.

Shareholders who are unable to attend may vote by proxy. Whenever possible, the company will prepare a proxy form that permits separate votes for each item up for consideration by the general meeting.

The Chairman of the Board normally chairs the general meeting. In the event of disagreements about individual items, where the Chairman belongs to one of the factions or is for other reasons not regarded as impartial, another chairperson will be appointed to ensure impartial treatment of the items up for consideration at the meeting.

In 2018, Techstep held its annual general meeting on 26 April.

Nomination committee

Techstep's nomination committee consists of two members, elected pursuant to section 6 of the company's Articles of Association.

The duties of the nomination committee include nominating candidates for the Board of Directors and the nomination committee, as well as proposing the Board's remuneration. Grounds for nominations by the nomination committee shall be provided when nominees are presented to the general meeting. All shareholders are entitled to nominate candidates to the Board, and information about

whom to contact to propose candidates can be found on the company's website, www.techstepasa.no.

The objectives, responsibilities and functions of the committee are further described in the "Instructions for the nomination committee", which was adopted by the general assembly at the annual general meeting in 2018.

The current nomination committee was elected at the annual general meeting on 25 April 2018 and consists of two members, Harald Arnet and Jonathan Raknes, who were both elected for a period of two years. Both members are considered independent of the Board of Directors and the executive management. Remuneration of the members of the nomination committee is determined by the general meeting, based on the Board of Director's proposal.

Board of Directors, composition and independence

In accordance with article 5 of the Articles of Association, the company's Board of Directors shall consist of 3 - 7 members, elected by the general meeting. The Chairman of the Board is elected by the general meeting. At 31 December 2018, the company's Board of Directors consists of six members, two of whom are women: Einar J. Greve (Chairman), Ingrid Leisner, Kristian Lundkvist, Stein Erik Moe, Anders Brandt and Toril Nag. All board members were elected at the annual general meeting on 25 April 2018. In addition, Siri Børsum was elected as director at the annual general meeting in 2018, but she has subsequently resigned from the Board and her position may be replaced at the annual general meeting in 2019. The term of office is two years and the members may be re-elected. At an extraordinary general meeting held 11 February 2019, Jens Rugseth was elected as new board member. He replaced Kristian Lundkvist who resigned from the board.

The composition of the Board of Directors is based on broad representation of the company's shareholders, as well as the company's need for competence, capacity and balanced decisions. A summary of the competence and background of each individual board members is available on the company's website, www.techstepasa.no.

All board members are regarded as independent in relation to the company's dayto-day management, and in relation to important business associates. Five of the board members are regarded as independent of the company's principal shareholders: Einar J. Greve, Stein Erik Moe, Ingrid Leisner, Anders Brandt and Toril Nag. A summary of the shares of stock held in the company by each board member is available in Note 27 to the annual report for 2018.

The work of the Board of Directors

The Board of Directors has the ultimate responsibility for overseeing and supervising the company's management and operations. The work of the Board is based on the rules of procedure for the Board of Directors, adopted on 24 November 2016, which describe the responsibilities, duties and administrative procedures of the Board of Directors, and regulate the distribution of duties between the Chairman and CEO. The rules of procedure also regulate work related to the Board committees, including the audit committee and the compensation committee.

The Board of Directors is responsible for determining the company's overall goals and strategic direction, principles, risk management, and financial reporting. The Board of Directors is also responsible for ensuring that the company has competent management with a clear internal distribution of responsibilities, as well as for continuously evaluating the performance of the CEO. Rules of procedure for the CEO, clarification duties, authorities and responsibilities, have also been prepared.

Techstep treats transactions with shareholders, Board members, employees and other related parties with due care. To ensure that these transactions and situations are handled in the best possible manner, the Board of Directors urges transparency and the application of good judgment in any transaction in which the company and a Board member, or a party related to a Board member, may have interests.

The Board of Directors meets as often as necessary to fulfil its duties, and at least seven times each financial year. The Board of Directors held 12 Board meetings in 2018.

The Board of Directors undertakes an annual evaluation of its work and competence, which is reported to the nomination committee.

Board committees

The Board of Directors has appointed an audit committee, the main duties of which are to assess the company's financial reporting and systems for internal control, monitor and evaluate the auditor, ensure that the auditor is independent, and assist the nomination committee with a proposal for the election and remuneration of the auditor. As at 31 December 2018, the audit committee consisted of two Board members, Ingrid Leisner and Toril Nag, both of whom are regarded as independent of the company.

The Board of Directors has also appointed a compensation committee, which assists the Board of Directors with tasks related to the evaluation and determination of the remuneration of the CEO, as well as the formulation of a policy for the remuneration of executive personnel. As at 31 December 2018, the compensation committee consisted of two Board members, Chairman Einar J. Greve and Kristian Lundkvist. Following Kristian Lundkvist's withdrawal from the Board on 11 February 2019, he has been replaced by Ingrid Leisner.

Risk management and internal control

The Board of Directors of Techstep is responsible for ensuring that the company has good risk management and internal control in accordance with the regulations that apply to its business activities.

The company's systems and procedures related to risk management and internal control shall ensure efficient operations, timely and correct financial reporting, and compliance with the laws and regulations to which the company is subject. Specific goals for the company's internal control are prepared and revised annually by Techstep's corporate management. In addition, the audit committee meets annually with the auditor, during which the company's internal control procedures are reviewed and assessed.

Techstep's accounts are prepared in accordance with the international accounting standard, IFRS, which aims to provide a true and fair overview of the company's assets, financial obligations, financial position and operating profit. The Board of Directors receives monthly reports from management on developments and results related to strategy, finance, KPIs, risk management, projects, challenges and plans for upcoming periods. In addition, quarterly reports are prepared in accordance with the recommendations of the Oslo Stock Exchange, which are reviewed by the audit committee prior to the respective Board meetings and subsequent publication.

The Board has adopted an insider manual with ancillary documents, including policies and procedures on retrieving and disclosing information related to Group operations. The insider manual is intended to ensure that, e.g. trading in the company's shares by Board members, executives and/or employees, including close relations is conducted in accordance with applicable laws and regulations. Furthermore, the company has prepared a code of conduct and policy for corporate social responsibility, which was implemented in the organisation during 2018.

For information related to the company's risk identification and risk management, reference is made to the Board of Directors' Report and Note 19 to the accounts in the annual report for 2018.

Remuneration of the Board of Directors

The remuneration of Board members is stipulated annually by the annual general meeting based on the nomination committee's recommendation. The remuneration reflects the Board of Directors' responsibilities, competence, time involved, and the complexity of the business.

The remuneration of the Board of Directors is not performance based and the company does not grant share options to any Board members. Members of the audit committee are remunerated separately. The company does not provide loans to Board members. Detailed information about the remuneration of the Board of Directors can be found in Note 27 to the accounts in the annual report for 2018.

Remuneration of executive personnel

The main principle of Techstep's executive remuneration policy is that the remuneration should be competitive and provide the motivation to attract and retain individuals with the required competence. The executive remuneration consists of a fixed salary and a variable part linked to the company's and the individual's achievements. Performance-related remuneration is tied to business results and other KPIs, and subject to an absolute limit of 50% of the fixed salary. In 2018, the share option programme for executive management and certain other employees was extended. The programme is linked to value creation to the benefit of shareholders over time.

The executive remuneration guidelines have been presented to, and were adopted by, the general meeting (see Note 27).

Information and communications

Techstep seeks to adhere to the Oslo Stock Exchange's IR recommendation; last revised 1 March 2017. The company prioritises communication with shareholders, investors and analysts to build trust and credibility, and support access to capital and a fair valuation of the company's shares. The Board of Directors seeks to provide accurate, clear, relevant and up-to-date information to the market, while ensuring equal treatment.

The CEO and the Chairman are responsible for investor and shareholder relations. The CEO shall focus on the day-to-day communication with investors and shareholders, while the Chairman shall focus on the shareholders' expectations related to the company's strategic direction and risk preparedness, as well as issues that require resolution by the general meeting. The Board has adopted instructions pertaining to the handling of inside information and disclosure of information, in which the company's disclosure obligations and procedures are explained.

Techstep provides interim reports within 45 days of the end of the quarter, in accordance with the Oslo Stock Exchange's recommendation. The complete annual financial statements, including the Board of Directors' Report, are made available no later than three weeks prior to the annual general

meeting, and no later than the end of April every year.

Techstep provides presentations in connection with the company's interim reports. The presentations are open to the public and provide an overview of the operational and financial developments, market outlook and the company's prospects. The presentations are also made available by webcast on the company's website.

All information is primarily provided in English, and is distributed to the company's shareholders through the Oslo Stock Exchange and www.newsweb.no, and the company's website www.techstepasa.no.

Takeovers

The company's Articles of Association contain no defence mechanisms against take-over bids, nor have other measures been implemented to specifically hinder the acquisition of shares in the company.

In the event of a takeover process, the Board of Directors and the executive management shall ensure that the company's shareholders are treated equally, and that the company's activities are not unnecessarily interrupted. The Board of Directors has a special responsibility to ensure that the shareholders have the sufficient information and time to assess the offer.

In addition to complying with relevant legislation and regulations, the Board of Directors shall seek to comply with the recommendations in the Code of Practice, if the situation so permits. The Board of Directors has established guiding principles for how it shall act in the event of a takeover bid. The main principles include that the Board shall not hinder or obstruct any takeover bid, give shareholders or others unreasonable advantages, or protect their personal interests at the expense of others, and that the Board shall protect the shareholders' values and interests.

If deemed necessary, the Board shall also ensure a valuation by an independent thirdparty. On this basis, the Board of Directors will make a recommendation as to whether the shareholders should accept the bid.

Auditor

The company's auditor, BDO AS, was appointed by the annual general meeting, and is regarded as independent in relation to Techstep ASA. The Board of Directors receives an annual confirmation from the auditor that the requirements regarding independence and objectivity have been satisfied.

The Board of Directors requires the auditor to prepare an annual plan on the implementation of the audit, which is made known to the audit committee and the Board of Directors. The Board of Directors further requires an annual meeting with the auditor in conjunction with the approval of the annual report. This meeting includes an opportunity for a review with the auditor, without the presence of the company's day-to-day management.

The Board of Directors has prepared separate guidelines for using the auditor for services other than auditing. As a guiding principle, the company's auditor cannot be contracted if the service rendered can be considered to compromise the auditor's independence in the eyes of an outside party.

The Board of Directors discloses the amount of remuneration to be paid to the auditor, distributed between auditing and other services, to the annual general meeting, which makes the final decision to approve the auditor's remuneration. The auditor shall attend the annual general meeting.

Corporate social responsibility report

As a Nordic provider of solutions that digitalise the workplace, Techstep has an opportunity but also a responsibility to help modern enterprises to safely and efficiently digitalise their business operations, and contribute towards sustainable economic, social and environmental development.

Principles and guidelines

Techstep has established a corporate social responsibility (CSR) policy, with the intent of raising awareness and committing the company to responsible business practices in the areas of human rights, labour, anti-corruption, and the environment. In addition, a Code of Conduct was developed to specify the main business principles that apply when people work together within the Group or with external parties. The Code of Conduct is intended to guide daily business activities and to be integrated into critical processes, practices, activities, and decision making across the Group. During the first half of 2018. Techstep deployed the CSR policy and Code of Conduct to all employees and persons associated with Techstep.

Employees and working environment

Techstep is committed to be a responsible employer with a view to working conditions, human rights, the environment and anticorruption efforts. Techstep promotes employees' health and work-life balance above and beyond the minimum requirements specified by law. By acting responsibly in all aspects of its business, the company supports internationally recognised human rights and labour standards, as defined by the International Labour Organization's (ILO) fundamental conventions and the UN Declaration of Human Rights.

Techstep promotes a productive and inclusive working environment, free from harassment, discrimination, and disrespectful behaviour. All employees are entitled to equal opportunities, regardless of gender, age, religion, sexual orientation, ethnicity, nationality, or social background. As at 31 December 2018, Techstep had 221 employees (210) in Norway and Sweden, of which 40 (40) were women.

There are no women in the top management. The total workforce increased by 2 employees in 2018.

The company seeks to offer competitive remuneration to all employees, reflecting their education, experience and professional qualifications. Employees are further provided opportunities for professional development and skill building.

Techstep targets an absence due to illness rate of 2% or less. In 2018, absence due to illness was approximately 3% of the total work hours in the Group. Adjusted for 3 employees, who have long term absence due to various reasons, the illness rate is on target. No occupational injuries or fatal incidents were reported during the year which was also the case in 2017. In 2018, Techstep continued to develop its company culture, updating its CSR policy and Code of Conduct. The company will strive to pay more attention to the individual employee's development, including personal development meetings and improved workplace ergonomics. The customer centre, where work is largely sedentary, has installed Active Stand to prevent back problems among employees.

Corporate ethics and anti-corruption

Techstep will conduct its business in an honest and ethical manner, to build trust and confidence with its stakeholders as well as a strong corporate culture. The company takes a zero-tolerance approach to bribery and corruption, and is committed to acting professionally, fairly, and with integrity.

The company's insider manuals and supporting documents are communicated to all employees. In addition, the Code of Conduct specifies the main business principles that apply to people working together in the Group, or with external parties.

The Code of Conduct applies to all employees and persons associated with Techstep and was deployed throughout the organisation during the first half of 2018. The Code of Conduct is intended to guide daily business activities and to be integrated into critical processes, practices, activities and decision making across

the Group. A whistleblowing policy and related procedures, including an anonymous whistleblower channel, were also established during the year.

Techstep further promotes responsible sourcing and expects all suppliers to comply with the company's ethical trade policy, which is built on central UN and ILO principles and conventions. Most of the suppliers are also members of the Responsible Business Alliance (former EICC), which commits them to support the rights and wellbeing of workers and communities worldwide that are affected by the global electronics supply chain.

The environment

Techstep seeks to contribute to safeguarding the environment for future generations. The company works to minimise its impact on the environment by conducting its business operations in a responsible manner.

Through Eco-lighthouse certification, Techstep has made a commitment to the responsible use of resources and to minimising its environmental impact. Key targets for the years to come include a 5% reduction of total energy use, and 100% recycling and waste reduction. Travel and non-environmentally friendly modes of transport shall be based on an assessment of necessity, and the use of alternative forms of meetings, such as video conferences, is prioritised.

Techstep takes recycling seriously, i.e. by recovering or recycling used IT products and by seeking more efficient and environmentallyfriendly alternatives for the sourcing, packaging

and transportation of goods. Activities are carried out in accordance with applicable laws, regulations, standards and other environmental requirements.

In one of Techstep's business areas, the company sells hardware manufactured by international technology companies. The average life span for mobile phones is approximately two years, and approximately three years for tablets and laptops. Techstep is taking action to help increase the life span of mobile units by giving used smartphones, tablets and laptops a second life through resale or recycling. Through close cooperation with certified partners, each unit is securely wiped of personal data and then assessed with regards to how salvageable the device is. If possible, the unit is repaired and sold on a secondary market. The remaining equipment is recycled in a secure and environmentally friendly way. All Techstep partners related to the resale or recycling are certified in accordance with ISO 9001, 14001 and comply with the Waste Electrical and Electronic Equipment (WEEE) Directive.

Techstep is certified as Eco-lighthouse. Ecolighthouse is Norway's most widely used environmental management certification. Through easily-implemented, specific, relevant and profitable measures, enterprises can improve their environmental performance, control their environmental impact, and prove their dedication to corporate responsibility. Ecolighthouse certification ensures that Techstep is in full compliance with the Internal Control Regulations and relevant environmental regulations.

Responsibility statement

Oslo, 27 March 2019

From the Board of Directors and CEO of Techstep ASA

We confirm, to the best of our knowledge, that the financial statements for the period 1 January to 31 December 2018, the comparative figures presented for the period 1 January to 31 December 2017 and the opening balance 1 January 2017 have been prepared in accordance with current applicable accounting standards, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the entity and the group taken as a whole. We also confirm that the Board of Directors' Report includes a true and fair review of the development and performance of the business and the position of the entity and the group, together with a description of the principal risks and uncertainties facing the entity and the group.

Einar J. Greve Chairman

Jens Rugseth Board member

Ingrid Leisner Board member Stein Erik Moe Board member

Anders Brandt Board member

Toril Nag Board member

Jens Haviken CEO

Consolidated income statement

(amounts in NOK 1 000)	Note	2018	2017
Revenue		1 059 596	786 242
Other revenue		4 518	3 231
Total revenue	2, 3	1 064 114	789 473
Cost of goods sold		(769 695)	(559 656)
Salaries and personnel costs	4, 27	(195 376)	(144 943)
Other operational costs	5, 26	(76 101)	(59 451)
Share of profit (loss) in joint ventures		119	223
Depreciation		(1 743)	(1 390)
Amortisation	9	(18 918)	(21 022)
Other income and expenses	6	19 962	(26 381)
Operating profit (loss)		22 362	(23 147)
Remeasurement on equity interests	21	-	(5 356)
Financial income	7	1 108	6 211
Financial expense	7	(4 462)	(29 230)
Profit before taxes		19 009	(51 523)
Income taxes	8	2 320	3 846
Net income		21 329	(47 677)
Net income attributable to
Non-controlling interests	21	644	95
Shareholders of Techstep ASA		20 685	(47 773)
Earnings per share in NOK:
Basic	23	0.13	(0.35)
Diluted	23	0.13	(0.35)

Consolidated statement of comprehensive income

(amounts in NOK 1 000)	2018	2017
Net income	21 329	(47 677)
Items that may be reclassified to profit and loss
Exchange differences on translating foreign operations	414	487
Income tax related to these items	396	-
Comprehensive income	22 138	(47 190)
Comprehensive income attributable to
Non-controlling interests	644	95
Shareholders of Techstep ASA	21 495	(47 285)

ASSETS	Note	31.12.2018	31.12.2017
Non-current assets
Deferred tax asset	8	2 439	-
Goodwill	9, 17, 18, 21	457 388	436 515
Customer relations and technology	9, 17, 18, 21	67 733	77 385
Sum intangible assets		527 560	513 900
Property, plant and equipment		9 377	9 115
Sum tangible assets		9 377	9 115
Joint ventures	22	735	616
Shares and investments	10	8 117	8 877
Other non-current assets		2 568	1 547
Sum financial assets		11 420	11 040
Total non-current assets		548 357	534 056
Inventories	11	16 155	20 715
Trade receivables	12	146 565	156 663
Other receivables	12	22 881	18 766
Total inventories and receivables		185 601	196 143
Cash and cash equivalents	13	53 996	35 278
Total current assets		239 597	231 421
Total assets		787 954	765 477
EQUITY AND LIABILITIES	Note	31.12.2018	31.12.2017
Share capital	24	159 057	146 252
Other equity		354 722	303 488
Total equity attributable to the owners of Techstep ASA		513 780	449 740
Non-controlling interests		-	370
Total equity		513 780	450 110
Deferred tax	8	3 608	10 428
Non-current interest-bearing borrowings	14, 21	7 341	23 551
Other non-current debt	15, 21	8 081	22 277
Total non-current liabilities		19 030	56 256
Current interest-bearing borrowings	14	66 009	67 604
Trade payables	14,16	116 694	116 765
Tax payable	8, 14	3 470	4 586
Public duties	14,16	21 842	19 657
Other current liabilities	14,16	47 131	50 498
Total current liabilities		255 145	259 110
Total liabilities		274 175	315 367
Total equity and liabilities		787 954	765 477

Consolidated statement of financial position

Oslo, 27 March 2019, from the Board of Directors and the CEO of Techstep ASA, signatures on the following page:

Einar J. Greve Chairman

Jens Rugseth Board member

Ingrid Leisner Board member Stein Erik Moe Board member

Anders Brandt Board member

Toril Nag Board member

Jens Haviken CEO

Statement of changes in equity

(amounts in NOK 1 000)	Share capital	Other paid-in capital	Other equity	Sum	Non control ling interest	Total equity
Equity as of 1 January 2017	102 476	283 702	(151 072)	235 107	25 187	260 294
Profit for the period			(47 773)	(47 773)	95	(47 677)
Other comprehensive income			487	487		487
Total comprehensive income for the period	-	-	(47 285)	(47 285)	95	(47 190)
Transactions with owners in their capacity as owners: Contributions of equity net of	17 544	78 656	-	96 200	-	96 200
transaction costs
Share-based payments Issue of ordinary shares as			3 365	3 365		3 365
consideration for a business combination, net of transaction costs and tax	26 232	110 934	25 187	162 354	(25 187)	137 166
Non-controlling interests on acquisition of subsidiary				-	274	274
Equity as of 31 December 2017	146 252	473 292	(169 805)	449 740	369	450 110
Equity as of 1 January 2018	146 252	473 292	(169 805)	449 739	369	450 110
Profit for the period			20 685	20 685	644	21 329
Other comprehensive income			809	809		809
Total comprehensive income for the period	-	-	21 495	21 495	644	22 138
Transactions with owners in their capacity as owners:
Contributions of equity net of transaction costs Issue of ordinary shares as	7 937	16 062		23 999		23 999
consideration for a business combination, net of transaction costs and tax	4 869	7 741		12 610		12 610
Purchase of minority interest in subsidiary			1 013	1 013	(1 013)	-
Share-based payments			4 924	4 924		4 924
Equity as of 31 December 2018	159 057	497 096	(142 374)	513 780	-	513 780

Consolidated statement of cash flows

(amounts in NOK 1 000)	Note	2018	2017
Profit before tax		19 009	(51 523)
Profit from joint venture		(119)	(223)
Depreciation and amortisation	9	20 657	22 413
Share-based payments	24, 27	4 924	3 365
Unrealised changes in fair value of shares and investments	10	-	25 647
Remeasurement of contingent liability	6	(19 962)
Remeasurement on equity interest	21	-	5 356
Net exchange differences		(2 133)
Taxes paid		(1 518)	(5 835)
Changes in net operation working capital		2 556	(33 871)
Net cash flow from operational activities		23 413	(34 671)
Payment for acquisition of subsidiaries net of cash acquired	21	(5 335)	(83 581)
Payment for acquisition of equity in joint ventures		-	(500)
Payment for other financial assets		-	(89)
Payment for property plant and equipment and other intangible assets	9	(11 689)	(2 896)
Proceeds from sale of equity instruments		760
Net cash used on investment activities		(16 264)	(87 066)
Proceeds from issuance of shares	24	23 700	95 000
Repayment of borrowings	14	(12 008)	(20 000)
Net cash flow from financing activities		11 692	75 000
Net change in cash and cash equivalents		18 841	(46 738)
		-
Cash and cash equivalents at 1 January	13	35 524	81 692
Effects of exchange rate changes on cash and cash equivalents		(370)	324
Cash and cash equivalents at 31 December	13	53 996	35 278

Notes to the Group accounts

1. General information and summary of significant accounting policies

How the figures are calculated

• 1. Segments
• 1. Disaggregation of revenues
• 1. Payroll
• 1. Other operational costs
• 1. Other inceom and expenses
• 1. Financial income and expenses
• 1. Tax
• 1. Intangible assets
• 1. Equity instruments
• 1. Inventories
• 1. Trade receivables and other receivables
• 1. Cash and cash equivalents
• 1. Borrowings
• 1. Other non-current debt
• 1. Current liabilities

Risk

• 1. Critical estimates
• 1. Impairment oassessment of group values
• 1. Financial risk management
• 1. Legal disputes and contingencies

Group structure

1. Changes in Group structure and business combinations

Other

• 1. Related parties transacitons
• 1. Earnings per share
• 1. Shares, capital structure and shareholders
• 1. Group structure
• 1. Remuneration to auditor
• 1. Remuneration to the board and executive management
• 1. Events after the reporting period

Notes to the consolidated financial statements

1. General information and summary of significant accounting policies

Techstep ASA (the Company or Company) is a public limited liability company domiciled in Norway. The address of its registered office is Brynsveien 3, NO-0667 Oslo. The shares are listed on the Oslo Stock Exchange under the TECH ticker. The Techstep Group (Group) consists of Techstep ASA and its subsidiaries.

Techstep Group is a Nordic enabler of the mobile workplace, delivering a full range of hardware and services to facilitate mobile workplaces.

The consolidated financial statements for Techstep Group for the year 2018 were approved by the Board of Directors on 27 March 2019 and will be presented for approval by the Annual General Meeting on 25 April 2019.

Rounding differences may occur in summations and between the notes and the financial statements.

Basis for preparation

The consolidated financial statements have been prepared and presented in accordance with the International Financial Reporting Standards (IFRS) as adopted by the EU. The financial statements have been prepared in accordance with the historical cost convention.

Change in accounting principles

IFRS 9 Financial Instruments

The Group has adopted IFRS 9 in its entirety as of 1 January 2018. The new rules have been applied retrospectively from 1 January 2018. Comparatives for 2017 have not be restated. Management has undertaken an IFRS 9 implementation assessment related to the effect of IFRS 9 on the first quarter of 2018's financial position and the other financial statements.

Classification and measurement of financial assets

Financial assets comprise the following current assets: accounts receivable, other receivables and cash and cash equivalents. All these current assets are in the IAS 39 category of loans and receivables and are measured at amortised cost. Upon adoption of IFRS 9, these financial assets have been determined to be within a business model of hold to collect and meet the solely payments of principal and interest (SPPI) criteria. Classification and measurement will continue to be at amortised cost under IFRS 9. There is no implementation impact on the financial statements related to the classification and measurement of the Group's financial assets.

For more details refer to section 1.14 Trade and trade receivables, 1.15 Cash and cash equivalents, 1.16 Financial instruments and 1.17 Trade payables.

Impairment

Upon implementation of IFRS 9 the Group adopted the new impairment requirements for financial assets. For accounts receivables the loss allowance is measured at the lifetime expected credit loss. Management has not recognised any initial adjustment to the opening 1 January 2018 equity as financial assets taken are in stage 1 and have a low estimated probability of default.

Hedge accounting

The Group does not apply hedge accounting and is thus not affected by the changes related to the new rules under IFRS 9.

Overall implementation effect

No implementation effects related to the IFRS 9 classification, impairment and hedge accounting rule changes have affected the 1 January 2018 opening balance.

IFRS 15 Revenue from Contracts with Customers

The Group has adopted IFRS 15 in its entirety as of 1 January 2018. The new rules have been applied retrospectively from 1 January 2018, with the practical expedients permitted under the standard. Comparatives for 2017 have not be restated.

IFRS 15 establishes a new set of principles that shall be applied to reported information related to the nature, amount, timing and uncertainty of revenue arising from contracts with customers. In order to operationalise these principles, the standard introduces a five-step model;

• 1. Identify customer contracts
• 1. Identify performance obligations in the contracts
• 1. Determine the transaction price
• 1. Allocate the transaction price
• 1. Recognise revenue when (or as) a performance obligation is satisfied

Under IFRS 15 an entity recognises revenue when (or as) the "control" of the goods or services underlying the particular performance obligation is transferred to the customer.

Techstep has performed an impact assessment of the aspects of IFRS 15 and has not identified any significant impact on the Group's consolidated financial statements. Techstep has applied the modified retrospective approach, which allows for any adjustments to the opening balance of equity on the date of initial application 1 January 2018. No prior annual comparatives are restated when using the modified retrospective approach.

For areas of specific importance to Techstep when assessing the impact of applying IFRS 15, see 1.6 Revenue recognition.

Overall implementation effect

No implementation effects related to IFRS 15 have been recognised regarding the 1 January 2018 opening balance.

Amendments to IFRS 2 Share-based payment

Share-based payments are part of the remuneration to executive management and other key personnel.

The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted.

The total expense is recognised over the vesting period, which is the period over which the vesting conditions are satisfied. At the end of each period, the estimate of the number of options that are expected to vest based on the

non-market vesting and service conditions is revised. The revision, if any, of the original estimates are recognised in the income statement, with a corresponding adjustment to equity.

Social security tax is provided for at each balance sheet date based on the underlying value of the options.

The amendments refer to the classification and measurement of share-based payment transactions and mainly address the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction, the classification of a share-based payment transaction with net settlement features for withholding tax obligations, and the accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash-settled to equity-settled.

Overall implementation effect

The amendments made to IFRS 2 Share-based payments do not have any effect on the accounting treatment of share-based payments in the Group.

"Other new and amended standards effective from 1 January 2018 are not relevant or have not had any effect on the consolidated financial statements".

1.3 Functional and presentation currency

The Group presents its accounts in Norwegian Kroner (NOK), which is also Techstep ASA's functional currency.

The figures presented in the annual accounts are in NOK thousand unless otherwise stated.

1.4 Consolidation principles and subsidiaries

i) subsidiaries

The consolidated financial statements incorporate the financial statements of Techstep ASA (the Company) and entities controlled by the Company (its subsidiaries). 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

The income and expenses of Group subsidiaries acquired or disposed of during the year, are included in the consolidated income statement from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the transferred asset.

Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, the consolidated statement of comprehensive income, statement of changes in equity, and the consolidated statement of financial position, respectively.

ii) joint arrangements

Under IFRS 11 - Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Techstep has invested in one joint venture, Techstep Finance AS.

Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated balance sheet. Thereafter the balance sheet value is adjusted with the Group's share of the postacquisition profits or losses of the investee in the consolidated income statement, and the Group's share of movements in other comprehensive income of the investee in other comprehensive income.

1.5 Transactions in foreign currencies

i) Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured in the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in NOK, which is Techstep ASA's functional and presentation currency.

ii) Transactions and balances

Foreign currency transactions are converted into the functional currency, using the exchange rates on the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions, and from the converted of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates, are recognised in the consolidated income statement

Foreign exchange gains and losses are presented in the consolidated income statement, as financial expenses.

iii) Group companies

The results and financial position of foreign operations that have a functional currency that is different from the presentation currency, are converted into the presentation currency as follows:

• Assets and liabilities for each balance sheet presented are converted at the closing rate on the date of that balance sheet;
• income and expenses for the consolidated income statement and statement of comprehensive income are converted at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are converted on the dates of the transactions), and;
• all resulting exchange differences are recognised in other comprehensive income.

When consolidated, exchange differences arising from the converted of any net investment in foreign entities, and of borrowings, are recognised in other comprehensive income.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as the assets and liabilities of the foreign operation and converted at the closing rate.

1.6 Revenue recognition

Revenue from contract with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods and services.

Revenue from hardware sales

A major part of the Group's revenue arises from the sale of hardware to its customers. Each sale is defined as a customer contract, where the delivery of the hardware in question is identified as the performance obligation. The customers obtain control of the hardware when the item is shipped to the customers. Revenue is recognised at the time of shipment as the performance obligations is then satisfied.

Revenue from licences sales

The Group provides various software licenses to its customers. Management has assessed the customer contracts related to software licenses and have found the sale of software licenses to be distinct performance obligations as software licenses. Customers can benefit from the license on its own and can be a stand-alone delivery with no other goods or services.

The Group provides both right-to-use licenses and right-to-access licenses.

For right-to-use licenses, the performance obligation is satisfied when the customer gains access to the software license, and revenue from the sale of licenses is thus recognised at the point in time when the software is transferred to the customer.

For right-to-access licences the performance obligation is satisfied over time.

Revenue from the sale of services

Techstep offers support and maintenance services to its customers. These services are organised as subscription programmes where the customers have access to support and maintenance for a monthly fee. The performance obligations related to support and maintenance are satisfied on an ongoing basis, and revenue related to the sales of services are thus recognised on a linear basis over time.

The sale of support and maintenance that exceed the subscription programme is recognised as revenue based on time and material.

Commissions and bonuses

The sale of certain items of hardware and licenses triggers a right to a commission or bonus from partners. The commissions and bonuses accounted for as revenue are driven by volumes sold of the underlying item. Commissions or bonuses are recognised as revenue when the performance obligations for the sale of hardware or license is satisfied.

MaaS

Mobile-as-a-Service contracts are combined contracts which are disaggregated and accounted for in accordance to IFRS 15 when the separate performance obligations in the contract are satisfied.

1.7 Other income and expenses

Other income and expenses of a special nature are presented in the separate line item Other income and expenses within operating profit (loss). Such items will be characterised by being of a non-recurring nature and not being reliable indicators of underlying operations. Other income and expenses will include items such as restructuring costs related to executive management, acquisition-related costs, gains or losses on the sale or material remeasurement of assets or liabilities. Acquisition-related costs may include both costs related to acquisitions closed and transactions that were not completed.

1.8 Business combinations

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date's fair value of the assets transferred by the Group, liabilities incurred by the Group in relation to the former owners of the acquiree, and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are expensed as incurred.

On the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their fair value, except for:

• Deferred tax assets or liabilities are recognised and measured in accordance with IAS 12 Income taxes.
• Liabilities or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 19 - Employee benefits.

The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis, at the non-controlling interest's proportionate share of the acquired entity's net identifiable assets.

Goodwill is measured as the excess of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any), over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in the consolidated income statement as a bargain purchase gain.

Where settlement of any part of a cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity's incremental borrowing rate, i.e. the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Changes in the fair value of the contingent consideration that qualify as measurement period adjustments, are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period (the measurement period cannot exceed one year from the acquisition date), about facts and circumstances that existed on the acquisition date.

Changes in the fair value of contingent consideration not classified as equity that does not qualify as a measurement period adjustment are remeasured at subsequent reporting dates. The corresponding gain or loss is recognised in the consolidated income statement.

When a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured at fair value on the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in the consolidated income statement. Amounts arising from interests in the acquiree prior to the acquisition date that have been previously recognised in other comprehensive income, are reclassified to the consolidated income statement where such treatment would be appropriate.

1.9 Intangible assets

Intangible assets with finite useful lives that are acquired separately, are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each reporting period, with the effect of any changes on estimates being accounted for on a prospective basis.

Intangible assets with indefinite useful lives that are acquired separately, are carried at cost less accumulated impairment losses.

The costs of intangible assets acquired through acquisitions are recorded at fair value as at the date of acquisition.

Software expenses related to the purchase of new computer programmes are accounted for as an intangible asset if these expenses are not part of hardware acquisition costs. Expenses incurred due to updates and general maintenance of the software, are expensed, unless the changes in the software increase the future economic benefits from the software.

1.10 Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses.

The cost of the asset, less its residual value, is depreciated on a straight-line basis over the estimated useful life of the asset. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal, or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss that arises on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

1.11 Impairment of intangible assets and property, plant and equipment

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that the carrying amount might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised as 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 separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets, other than goodwill, that have historically been impaired are reviewed for possible reversal of the impairment at the end of each reporting period.

1.12 Shares and investments

Investments in equity interests with ownership of less than 20% are classified as shares and investments. At initial recognition, the Group measures shares and investments at their fair value. All shares and investments held by the Group are classified as financial assets at fair value through profit and loss. Gains or losses arising from changes in the fair value are recognised either as financial income or financial expense, as appropriate.

1.13 Inventories

Inventories are valued at the lower of cost or net realisable value for products that will be sold as separate items. Inventories that will be sold as part of a transaction with several items, and where the transaction is expected to earn net income, are not considered as an indicator of write-downs for single units of goods, even though the allocated sales price in the transaction is lower than the cost. Cost is determined using the FIFO or weighted average method, depending on the nature of the inventories. The Group companies do not combine or alter inventory to a material extent.

1.14 Trade receivables

Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. For trade receivables the loss allowance is measured at the lifetime expected credit loss.

1.15 Cash and cash equivalents

Cash and cash equivalents in the consolidated statement of financial position, and for the purpose of presentation in the statement of cash flows, comprise cash, bank deposits, and revolving credit facilities. The revolving credit facilities are presented in the consolidated statement of financial position on the financial statement line item, Current interest-bearing liabilities.

1.16 Financial instruments

Financial assets and liabilities include investment in shares, trade receivables, other receivables, borrowings, trade payables and other current and non-current liabilities.

Financial assets and financial liabilities) are recognised initially on the date when the Group becomes a party to the contractual provisions of the instrument.

From 2018 the Group has classified, at initial recognition, its financial instruments in one of the following categories:

• Financial assets or financial liabilities at fair value through profit or loss,
• Financial asset at amortised cost,
• Financial liabilities at amortised cost

The classification depends on the Group's business model for managing them and the contractual cash-flow characteristics of the instrument. Financial assets or financial liabilities at fair value through profit or loss are financial assets held for trading and acquired primarily with a view of selling in the near term. This category is included in the Consolidated statement of financial position line item Shares and investments.

Financial assets at amortised cost are financial asset held to collect the contractual cash-flow and where the cash-flows are solely payment of principal and interest on the outstanding principal. The category is included in the consolidated statement of financial position financial line items Other non-current assets, Trade receivables, Other receivables and Cash and cash equivalents. Financial assets at amortised cost are recognised initially at fair value plus directly attributable transaction costs. Subsequently, if the asset is non-current it is measured at amortised cost using the effective interest method, reduced by any impairment loss. The carrying amounts of line

items classified as current are assumed to be the same as their fair values, due to their short-term nature. Shortterm loans and receivables are for practical reasons not amortised, unless the effect is material.

The category financial liabilities at amortised cost is included in the consolidated statement of financial position line items Non-current interest-bearing borrowings, Other non-current debt, Current interest-bearing borrowings, Trade payables, Tax payables, Public duties and Other current liabilities. Items in the Other financial liabilities category are recognised initially at fair value. Subsequently, if they are non-current, other financial liabilities are measured at amortised cost using the effective interest method. Effective interest is recognised in the income statement as financial expenses. Current items in the category are for practical reasons not amortised, unless the effect is material.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire and the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Any rights and obligations created or retained in such a transfer are recognised separately as assets or liabilities. The Group assesses quarterly whether there is objective evidence that a financial asset or group of financial assets is impaired.

For trade and other receivables, default in payments, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or debt settlement negotiations are considered to be indicators that the Group will not be able to collect all amounts due according to the original terms of the receivables. For trade receivables the loss allowance is measured at the lifetime expected credit loss. The loss is recognised as other operating expenses in the income statement, while impairment of other financial assets is recognised as financial expenses.

The fair value of financial instruments is based on quoted prices as at the balance sheet date in an active market, if such markets exist. If an active market does not exist, fair value is established by using valuation techniques that are expected to provide a reliable estimate of the fair value. The fair value of unlisted securities is based on cash flows discounted using an applicable risk-free market interest rate and a risk premium specific to the unlisted securities.

Financial assets and liabilities measured at fair value are classified according to the valuation method:

Level 1: Valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Valuation based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

Level 3: Valuation based on inputs for the asset or liability that are unobservable market data.

If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. Changes in fair value recognised in other comprehensive income is recognised in the line item Exchange differences on converting foreign operations. Changes in fair value recognised in profit or loss are presented in the line item, Financial expenses and Other income and expenses.

1.17 Accounts payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts comprise both secured factoring debt and unsecured payables and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities, unless payment is not due within 12 months of the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

1.18 Dividend and interest income

Dividend income from investments is recognised when the shareholder's right to receive payment has been established (provided it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably). The parent companies recognise dividends from joint ventures and other equity investments when it is reasonably certain that it will be received.

1.19 Income tax

The income tax expense or credit for the period is the tax payable on the current period's taxable income, based on the applicable income tax rate for each jurisdiction, adjusted for changes in deferred tax assets and liabilities attributable to temporary differences, and for unused tax losses.

i) Tax payable

The current income tax charge is calculated on the basis of the tax laws enacted, or substantively enacted, at the end of the reporting period in Norway and Sweden, where subsidiaries generate taxable income. Management periodically evaluates positions taken in tax returns, with respect to situations in which applicable tax regulation is subject to interpretation. Management establishes provisions where appropriate, on the basis of amounts expected to be paid to the tax authorities.

ii) Deferred tax

Deferred income tax is provided in full, using the liability method, 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 determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period, and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise the temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities, and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income, or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively

1.20 Equity

The nominal value of holdings of the Company's own shares is reported in the balance sheet, as a deduction to other equity.

Transaction costs in relation to equity transactions are charged to equity after deducting tax.

Treasury shares are presented as a reduction of equity.

1.21 Retirement benefit plan

The Group has defined contribution plans. A defined contribution plan is a retirement plan in which the Group pays fixed contributions to a separate legal entity. The Group has no legal or other obligation to pay additional contributions if the entity does not have sufficient assets to pay all employee benefits associated with earnings in present and previous periods. Pre-paid contributions are recorded in the accounts as an asset, to the extent the contribution may be refunded or may reduce future contributions.

1.22 Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.

1.23 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, and considers the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation it carrying amount is the present value of those cash flows (where the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received, and the amount of the receivable can be measured reliably.

1.24 Cash flow statement

The cash flow statement is presented using the indirect method. The Group's activities are divided into operational, investment and financing activities. Investment in new business is classified as payment for the acquisition of subsidiaries, net of cash acquired in the cash flow statement.

1.25 Segment information

The division into operating segments corresponds to the management structure and the internal reporting to the Group's chief operating decision maker (CODM), defined as the CEO. Companies are allocated to a segment based on the geographical location of the company. Previously, the companies were allocated based on the main type of operations in the company. Following the change in the composition of the reportable segments, all corresponding items of segment information for 2017 have been restated.

1.26 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Group does not have any leases classified as financial in 2017 or 2018.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

Refer to section 1.28 regarding new principles on leasing to be implemented on 1 January 2019.

1.27 Use of estimates in the preparation of financial statements

Management has used estimates and assumptions that affect the assets, liabilities, revenues, expenses and information regarding potential liabilities. This particularly applies to share-based compensation, depreciation of property, plant and equipment, intangible assets and allocation of excess value in a business combination. Future events may lead to the estimates changing. Estimates and underlying assumptions are assessed continuously. Changes in accounting estimates are recognised in the period when the change occurs.

1.28 Earnings per share

i) Basic earnings per share

Basic earnings per share are calculated by dividing:

• the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares;
• by the weighted average number of ordinary shares outstanding during the financial year, excluding treasury shares.

ii) diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share, to take account of:

• the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and;
• the weighted average number of additional ordinary shares that would have been outstanding, assuming the conversion of all dilutive potential ordinary shares.

As at year-end 2018 the Group has options outstanding that are out of the money. Basic earnings per share and diluted earnings per share are therefore equal.

1.29 New standards and interpretations not yet adopted

The Group has elected not to early-adopt any standards or interpretations that have an adoption date after the balance sheet date. Below is an overview of the most relevant new standards issued by the IASB:

• IFRS 16 - Leases. Mandatory effect from 1 January 2019

The new IFRS 16 eliminates the division between operational and financial leasing and introduces a single lessee accounting model. When the new model is applied, a lessee is required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value, and to recognise depreciation of lease assets separately from interest on lease liabilities in the income statement. For the Group, this implies that current operating leases that satisfy the criteria will be recognised with assets and liabilities.

The Group has elected to apply the standard to leases of intangible assets.

The Group holds leases related to premises, cars and IT systems. As per year-end 2018, an implementation of the standard would entail presentation of an asset (right of usage) amounting to NOK 22.2 million. The Group has accounted for restructuring costs related to offices in 2018. The Group has utilised the practical expedient set out in IFRS 16 related to onerous leases. The liability related to leases amount to NOK 24 million, of which NOK 10.2 million is current debt and NOK 13.9 million is non-current debt.

The change will have a materially positive impact on the financial statement line item. Other operational costs in the consolidated income statement. The table below sets out the expected effects on 2019 with the Group's current leases.

	IAS 17	IFRS 16
Other operational costs	7 041	-
Depreciation	-	6 760
Finance costs	-	534

The figures presented do not include the Group's new headquarters, as the premises are not ready to be used by the Group.

Changes in other standards are not expected to have a material effect on the Group's financial statements.

Note 2. Business segments

Techstep has two business segments, which are represented by the geographic locations where the Group's entities are incorporated. The entities are controlled and owned by the Techstep Group. Other companies are included in the segment, Headquarters and other.

Operating segments are changed from 1 October 2018 and restated retrospectively to give comparable information.

Eliminations comprise intersegment sales. Transactions between operating segments are conducted on normal commercial terms.

1) Norway

• Techstep Norway AS: The offerings of the company are mobile hardware, service, support and mobility consultancy services. The company is located in Oslo and Sandefjord and comprises the hardware suppliers formerly known as Nordialog Oslo As and Apro Tele og Data AS, as well as the service and solutions company formerly known as Techstep Nordic AS.
• Mytos AS: A Norwegian based software as a service company with mainly recurring revenue. Mytos offers a full range of telecom expense management ("TEM") modules, all with proprietary software and highly user-friendly implementation and operation. The company is located in Oslo.
• Wizor AS: A Norwegian based company specialising in high security mobile communication solutions. The company is located in Oslo.
• Techstep Denmark ApS: Established to invoice Danish customers. The company is fully supported from Norway and does not have any employees.

2) Sweden:

• Techstep Sweden AB: The company offers mobile hardware, industry-leading cloud-based (UCaaS) PBX solutions, Mobility consultancy services and Enterprise Mobility Management (EMM) services, including Mobile Security, system design, implementation, mobile device management. The company is located in Karlstad and Stockholm.
• Mowizor AB: A Swedish based security software company, providing the same products and services as Wizor AS, located in Stockholm.

3) Headquarters and other:

• Techstep ASA, Techstep Nordic AS (formerly Teki Solutions AS), Netconnect AS, Mytos IPR AS and Techstep Holding AB.

			Head quarters
			and	Elim
2018	Norway	Sweden	other	inations	Total
Operating revenues from external customers	805 508	258 606	-	-	1 064 114
Operating revenues from other segments	19 455	432	16 010	(35 898)	-
Operating revenues	824 963	259 038	16 011	(35 898)	1 064 114
Cost of goods sold	(592 098)	(198 991)	(51)	21 445	(769 695)
Salaries and personnel costs	(127 909)	(42 172)	(28 004)	2 710	(195 376)
Other operational costs	(51 106)	(15 640)	(21 098)	11 744	(76 101)
Share of profit (loss) of joint ventures	-	-	119	-	119
Depreciation	(772)	(893)	(78)	-	(1 743)
Amortisation	(10 001)	(6 786)	(2 131)	-	(18 918)
Other income and expenses	-	-	19 962	-	19 962
Operating profit (loss)	43 077	(5 444)	(15 270)	-	22 362
Remeasurement on equity interests	-	-	-	-	-
Financial income	729	191	2 432	(2 244)	1 108
Financial expenses	(3 027)	(895)	(2 196)	1 656	(4 462)
Profit (loss) before tax	40 779	(6 148)	(15 034)	(588)	19 009

			Head quarters
2017	Norway	Sweden	and other	Elim inations	Total
Operating revenues from external customers	683 618	104 535	1 320	-	789 473
Operating revenues from other segments	10 395	-	10 926	(21 321)	-
Operating revenues	694 013	104 535	12 246	(21 321)	789 473
Cost of goods sold	(490 082)	(79 963)	-	10 389	(559 656)
Salaries and personnel costs	(109 952)	(14 368)	(20 623)	-	(144 943)
Other operational costs	(51 325)	(5 219)	(13 833)	10 926	(59 451)
Share of profit (loss) of joint ventures	107	-	116	-	223
Depreciation	(1 052)	(218)	(121)	-	(1 390)
Amortisation	(17 892)	(3 130)	-	-	(21 022)
Other income and expenses	-	-	(26 381)	-	(26 381)
Operating profit (loss)	23 817	1 637	(48 596)	-	(23 147)
Remeasurement on equity interests	(5 356)	-	-	-	(5 356)
Financial income	4 026	429	42 100	(40 343)	6 211
Financial expenses	(31 273)	(689)	(2 665)	5 397	(29 230)
Profit (loss) before tax	(8 787)	1 377	(9 161)	(34 946)	(51 523)

Operating revenues and non-current assets by geographical area

In the presentation of geographical information, the operating revenues are attributed according to the location of Group companies. There are no significant differences between the attribution of operating revenues based on the locations of the Group companies, and an attribution based on the customers' location. Non-current assets are attributed based on the geographical location of the assets.

Non-current assets	2018	2017
Norway	432 272	410 811
Sweden	116 085	123 245
Total	548 357	534 056

Note 3: Disaggregation of revenues

In the following tables, Total revenue is disaggregated by major revenue streams divided into the reportable segments as shown in note 2.

Hardware revenue comprises hardware and related bonuses and commissions.

Solutions comprises licenses, service and related bonuses and commissions.

			Headquarters
2018	Norway	Sweden	and other	Eliminations	Group
Total revenues	824 773	259 038	16 201	(35 898)	1 064 114
Hardware
Hardware revenues	581 825	193 956	-	(19 412)	756 369
Bonus	23 487	307	-	-	23 794
Commission					-
Total	605 312	194 263	-	(19 412)	780 163
Solutions
Solutions revenues	161 651	55 027	-	(475)	216 203
Bonus	21 543	-	-	-	21 543
Commission	32 029	9 639	-	-	41 668
Total	215 223	64 666	-	(475)	279 414
Other revenues
Other	4 237	109	16 201	(16 010)	4 537
Total	4 237	109	16 201	(16 010)	4 537

Contract assets and contract liabilities

The majority of the Group's contracts with customers are annual. The majority of the contracts run in the calendar year. The contract assets and liabilities as at the balance sheet date are therefore immaterial. This also applies to the unfulfilled performance obligations.

"Contract assets and liabilities vary to an extent throughout the reporting period.

Sales of hardware and licences do not lead to material contract assets or liabilities.

Contract assets and liabilities originate from sales of support. Customers are invoiced in advance for monthly or quarterly support subscriptions. The Group also has customers who are invoiced after the services are rendered, monthly or annually.

Contract liabilities are recognised in relation to the sale of the product "fakturakontroll" (Mytos), which is invoiced in advance each quarter.

Other arrangements with customers do exist but are deemed immaterial.

Customers have payment terms varying from 15-45 days.

Of the Group's total customer base as at 31 December 2018, the five largest customers represent approximately 11% (11%) of total revenue in 2018, and the ten largest customers represent approximately 15% (16%) of total revenue.

Management assessments

Recognition of revenue from combined customer contracts.

Consolidated operating revenues include both of sales of hardware and IT-related services, often deriving from the recognition of multiple elements in the same customer contract. Management has determined that revenue is recognised when control over the goods and services has been transferred to the customer.

Determining the transaction price for combined contracts.

The Group is required to determine the transaction price in respect of each performance obligation within its contracts with customers when the stand-alone selling price for each performance obligation is not readily available. In making such judgments, the Group assesses the stand-alone selling prices based on the Group's customer contracts for comparable products and services.

Variable considerations arise from commissions, vendor discounts, rebates and other contractual bonus elements. In determining the impact of variable considerations, the Group uses the most likely amount prescribed in IFRS 15 whereby the transaction price is determined by reference to the single most likely amount in a range of possible consideration amounts.

Note 4. Payroll and management remuneration

	2018	2017
Salaries and holiday pay	152 259	114 282
Social security tax	26 258	18 978
Pension costs including social security tax	8 366	6 159
Other personnel costs	8 493	5 525
Total personnel costs	195 376	144 943
Number of employees at year end	221	219

All companies in the Group have defined contribution pension plans covering all employees. Regarding remuneration to executive management, please refer to Note 27 Remuneration to management.

Note 5. Other operational costs

	2018	2017
Office rental and operations	12 618	10 264
Sales and marketing	10 700	10 265
Computers and software	10 060	7 326
Fees for external services	14 367	12 974
Factoring expenses	1 747	1 597
Communication	3 363	3 384
Travel expenses	5 220	3 296
Leasing	2 272	1 675
Provision for onerous lease contract for offices*	6 962	-
Other costs	8 792	8 669
Total operating costs	76 101	59 451

*Restructuring costs related to co-location of all offices in Oslo.

Operating lease commitments:

		due within
	1 year	1-3 years	3-5 years	over 5 years
Cars	1 164	1 484	-	-
Offices	9 967	17 537	11 475	5 305
Total leasing commitments	11 131	19 021	11 475	5 305

The group has offices in 15 rented premises. The group will co-locate the offices in Oslo in 2019. Due to the colocation, an onerous lease provision of MNOK 7 has been made. The above table shows the expected cash outflow from future payments.

The Group changes principle starting on 1 January 2019 and will comply with IFRS 16. Refer to principles for more information.

All material lease commitments subject to restructuring have been charged to the consolidated income statement in 2018 on the line item, Other operational costs. The operating lease commitments presented above represents the expected cash outflow from future payments.

Note 6. Other income and expenses

	2018	2017
Restructuring costs, executive management	-	(3 900)
Transaction costs	-	(17 274)
Strategic initiatives	-	(1 100)
Other costs	-	(4 107)
Derecognition of contingent consideration	19 962	-
Total	19 962	(26 381)

Derecognition of contingent consideration

In relation to the acquisition of BKE Telecom AB (now Techstep Sweden AB), a contingent consideration was recognised. The payment of the contingent consideration was dependent on the company reaching an accumulated EBITDA target ending in June 2019. Based on current forecasts, it is management's assessment that it is unlikely that the EBITDA target will be reached. The contingent consideration is reversed in full in 2018.

Note 7. Financial income and expenses

	2018	2017
Interest income	513	781
Dividends from equity investments	9	3 767
Other financial income	587	1 663
Total financial income	1 108	6 211
Interest expenses	(3 387)	(2 935)
Unrealised changes in fair value of shares and investments	-	(25 647)
Other financial expenses	(1 074)	(648)
Total financial expenses	(4 462)	(29 230)

Dividends from equity investments in 2017 are from Kjedehuset AS.

Other financial income and expenses mainly comprise agio and disagio, respectively.

Impairment of financial assets in 2017 is related to the Group's investment in Kjedehuset AS. Refer to Note 10, Equity instruments for further details.

Note 8. Tax

Income tax expense	2018	2017
Current tax	(11 137)	(6 849)
Change in deferred tax	13 457	10 695
Tax expense	2 320	3 846
Reconciliation of relationship between accounting profit and tax expense
Profit before tax	19 009	(51 523)
Tax at the Norwegian tax rate of 23% (2017 – 24%)	(4 385)	12 259
Tax effect permanent differences	7 491	(13 421)
Difference in tax rates Tax related to change in tax rates	(141) 142	109 257
Previously unrecognised tax losses no recouped	-	66
Reversal of tax related to Netconnect (refer to Note 19, Legal disputes and
contingencies)	-	3 290
Other	(787)	1 287
Income tax expense	2 320	3 846
Effective tax rate	12%	(7%)
Amounts recognised directly in equity
Deferred tax arising in the reporting period directly debited to equity:
Deferred tax: Share issue cost	(299)	(1 200)
Total	(299)	(1 200)
Tax losses
Unused tax losses for which no deferred tax asset has been recognised	(448 841)	(448 841)
Potential tax asset at 22% tax rate (2016 - 23%), see Note 17	(98 745)	(103 233)
Deferred tax
The balance comprises temporary differences attributable to:
Property, plant and equipment	49 288	81 572
Inventories	(964)	(466)
Trade receivables and other receivables	(5 202)	(5 475)
Other current liabilities	(13 508)	(217)
Tax loss carried forward	(9 533)	(31 013)
Carry forward interest	(4 153)	(3 779)
Total basis for deferred tax	15 928	40 623
Tax rate deferred tax	22%	23%
Net deferred tax with applicable year's tax rate	4 180	11 262
Change in deferred tax due to change in tax rate	14	877
Difference in tax rates	(72)	(162)
Adjustment, prior years	(1 520)	(1 550)
Other	(1 433)	-
Net deferred tax (+)/ deferred tax asset (-)	1 169	10 428
Net deferred tax related to Norway	(2 439)	2 769
Net deferred tax related to Sweden	3 608	7 659
Total deferred tax (+)/ deferred tax asset (-)	1 169	10 428

Note 9. Intangible assets

		Customer	Other intangible
	Goodwill	relationships	assets	Total
Accumulated cost as at 1 January 2018	510 355	290 067	14 180	814 601
Additions	-	-	12 797	12 797
Additions arising from business combinations	22 878	-	-	22 878
Translation differences	(2 006)	(1 083)	(27)	(3 115)
Accumulated cost as at 31 December 2018	531 228	288 984	25 008	845 220
Accumulated cost as at 1 January 2017	320 769	222 137	-	542 906
Additions	-	-	2 752	13 252
Additions arising from business combinations	187 827	67 064	11 405	255 796
Translation differences	1 759	866	23	2 648
Accumulated cost as at 31 December 2017	510 355	290 067	14 180	814 601
Accumulated amortisation and impairment as at 1 January 2018	73 840	226 534	328	300 701
Additions arising from business combinations	-	-	-	-
Current year amortisation	-	16 265	2 653	18 918
Current year impairment	-	-	-	-
Translation differences	-	159	320	479
Accumulated amortisation and impairment as at 31 December 2018	73 840	242 958	3 301	320 098
Accumulated amortisation and impairment as at 1 January 2017	68 484	205 637	-	274 120
Additions arising from business combinations	-	-	139	139
Amortisation	-	20 831	185	21 016
Impairment	5 356	-	-	5 356
Translation differences	-	65	4	70
Accumulated amortisation and impairment as at 31 December 2017	73 840	226 534	328	300 701
Book value as at 31 December 2017	436 516	63 533	13 852	513 901
Book value as at 31 December 2018	457 388	46 027	21 707	525 122
Estimated economic life time in years	Indefinite	5 years	3-5 years
Depreciation method		linear	linear

For a description of movement in the categories, Goodwill and Customer relationships, refer to Note 18. Impairment of intangible assets and Note 21, Changes in Group structure and Business combinations. The material items in the category, Other intangible assets are the source code for the Mytos product and capitalized expenses related to the development of a self-service online shop. Also refer to Note 22, Related party transactions.

Note 10. Equity instruments

Book value of shares and investments	2018	2017
Shares in Kjedehuset AS	8 072	8 072
Other shares and investments	44	805
Total	8 117	8 877

Shares held in Kjedehuset represent 8.25% ownership of the company.

At the end of 2017, Telenor Norge AS cancelled its distributor agreement with Kjedehuset AS. The book value of the Kjedehuset AS shares represent management's best estimate for the fair value of the shares.

As at the balance sheet date, most of Kjedehuset's assets have been converted to cash. There is limited uncertainty related to the value of the shares in Kjedehuset AS.

Note 11. Inventories

Book value of inventories	2018	2017
Inventories	16 585	21 148
Less write-down of inventories	(430)	(433)
Total inventories	16 155	20 715

Note 12. Trade receivables and other receivables

Accounts receivable and other receivables shown at maturity per as at 31 December 2018:

		Days outstanding
	Book value	not over due	0-30 days over due	30-60 days over due	60-90 days over due	> 90 days over due
Trade receivables	147 595	125 823	9 494	3 240	2 347	6 691
Other current receivables	22 881	22 881	-	-	-	-
Less provision for bad debt	(1 030)	-	-	-	-	(1 030)
Total trade receivables and other short-term receivables	169 446	148 704	9 494	3 240	2 347	5 661

Accounts receivable and other receivables shown at maturity as at 31 December 2017:

		Days outstanding
	Book value	not over due	0-30 days over due	30-60 days over due	60-90 days over due	> 90 days over due
Trade receivables	157 750	121 059	20 989	6 542	1 110	8 050
Other current receivables	18 766	18 766	-	-	-	-
Less provision for bad debt	(1 087)	-	-	-	-	(1 087)
Total trade receivables and other short-term receivables	175 429	139 825	20 989	6 542	1 110	6 963

Changes in the provision for bad debt during the year

	2018	2017
Opening balance provision for bad debt as at 1 January	(1 087)	(1 012)
Additions from business combinations	-	(535)
Additions to the provision during the year	-	(250)
Reduction of the provision during the year	57	710
Closing balance provision for bad debt as at 31 December	(1 030)	(1 087)

Other short-term receivables

	2018	2017
Retailer bonus	10 821	8 248
Commissions	5 286	1 217
Prepayments	5 830	4 439
Other receivables	944	4 862
Total	22 881	18 766

Note 13. Cash and cash equivalents

The carrying amounts of the Group's cash and cash equivalents by
currency	2018	2017
NOK	36 700	22 621
SEK	15 527	11 345
Other	1 768	1 312
Total	53 996	35 278

The Group's cash and cash equivalents consist in their entirety of short-term bank deposits.

6 189 Of which is restricted			5 270
---------------------------------	--	--	-------

Note 14. Borrowings

The Group's interest-bearing liabilities consist of:

	2018		2017
		non		non
	current	current	current	current
Seller credits related to business combinations	15 347	-	-	15 195
Bank debt	588	7 341	11 500	8 355
Bank overdraft facilities	50 074	-	56 104	-
Total interest-bearing debt	66 009	7 341	67 604	23 550

The table below sets out expected nominal payments on borrowings:

			Due within
	Total	1 year	1-5 years	over 5 years	Annual interest rate
Seller credits related to business combinations	15 761	15 761			4%
Bank overdraft facilities	51 911	51 911			1-month NIBOR + 2.25%
Bank loan	12 238	355	1 251	10 633	1,99% - 4,48%
Trade payables	116 694	116 694
Tax payables	3 470	3 470
Public duties	21 842	21 842
Other current liabilities	47 131	47 131
Total	269 047	257 163	1 251	10 633

The Group has two overdraft facilities - one in Norway, and one in Sweden.

The Norwegian overdraft facility has a credit limit of NOK 40 million. The terms are NIBOR + 2.25%, plus commission of 0.1% per quarter for the total facility.

The Swedish overdraft facility has a credit limit of SEK 4 million. The annual interest rate is 4.5%. The facility was not utilised as at year end 2018.

The factoring facility has a credit limit of NOK 40 million. The commission charged for the factoring service in 2018 was NOK 1.7 million (NOK 1.6 million). The cost is presented as other operating expenses in the consolidated income statement.

The facilities are classified as current liabilities, as the facilities are subject to annual renewal.

The terms and conditions are unchanged from 2017.

Covenants

Techstep Norway AS has covenants in relation with its bank overdraft facilities in DnB ASA. As per 31.12.2018 NOK 50 million was drawn from the facilities.

The covenants are in relation to the Financial statement of Techstep Norway AS. The company was not in breach with the covenants as at 31 December 2018 and has comfortable headroom.

Pledges in relation to the loans to financial institutions

The Group's bank loans, overdraft facilities and factoring facility are secured borrowings. Book value of assets pledged as collateral are as follows*:

	2018	2017
Trade receivables	101 545	96 879
Inventories	8 831	11 946
Property, plant and equipment	2 261	2 080
Total book value of assets pledged as collateral:	112 637	110 905

*The table excludes assets pledged as collateral for the overdraft facility in Sweden as this facility is not utilised.

Note 15. Other non-current debt

Other non-current debt consists of the following:	2018	2017
Provision for restructuring	3 040	-
Contingent liabilities	4 859	21 206
Deferred revenue	182	1 071
Total non-current debt	8 081	22 277

Non-current contingent liability for 2018 is related to the acquisition of Wizor AS. The comparative number is related to the acquisition of BKE Telecom AB in 2018, refer to Note 21 Changes in Group structure and Business combinations.

Movement in contingent consideration
Opening balance	21 206
Derecognition of contingent consideration, refer to Note 6	(19 962)
Contingent consideration recognised in business combinations	4 859
Translation differences	(1 244)
Closing balance 31 December 2018	4 859

Note 16. Current liabilities

Current liabilities	2018	2017
Trade payables	116 694	116 765
Public taxes	21 842	19 657
Accrued personnel expenses (bonuses, holiday pay etc.)	31 847	28 607
Accrued cost	2 217	2 490
Provision for onerous lease contracts (see Note 5)	3 671	-
Deferred revenue	3 204	5 782
Other current liabilities	6 191	13 619
Total current liabilities	185 666	186 920

Note 17. Critical estimates

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies.

Changes in assumptions may have a significant impact on the consolidated financial statements in the period in which the assumptions are changed. Estimates and judgments are continually evaluated and are based on historical experience as adjusted for current market conditions and other factors. Management believes the underlying assumptions are appropriate.

Management makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates, assumptions and management judgments that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

Detailed information about each of these estimates and judgements is included in other notes together with information about the basis of calculation for each affected line item in the financial statements.

Impairment of intangible assets

Goodwill and customer relationships are recognised based on the acquisition method used to account for business combinations. Customer relationships acquired in previous periods were recognised at fair value as at the acquisition date, have a finite useful life, and are subsequently carried at cost less accumulated amortisation and impairment losses.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.

The recognised values of goodwill and customer relationships are material to the 2018 financial statements as a whole, and it is important that the user of the Group's financial statements understand the existence of an inherent uncertainty pertaining to the recognised values.

Valuation related to goodwill and customer relationships is further described in Note 18.

Goodwill

The Group tests whether goodwill has suffered any impairment on an annual basis. For the 2018 and 2017 reporting periods, the recoverable amount of the cash generating units (CGUs) was determined based on valuein-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated in Note 17. These growth rates are consistent with forecasts included in economic outlook reports specific to the area in which each CGU operates.

Customer relationships

The group estimates the useful life of the customer relationship to be at least 5 years based on the expected future revenue generated from the customer base. However, the actual useful life may be shorter or longer than 5 years, depending on technical innovations, technical obsolescence of existing products and actions of competitors.

Recognition of income tax

The Group is subject to income tax in mainly two jurisdictions, and significant estimates are required to determine the provision for income taxes and related tax balances. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current tax and deferred tax provisions.

The deferred tax assets recognised as at 31 December 2018 have been based on future profitability assumptions, and the deferred tax assets are recognised to the extent that it is probable that the tax assets will be realised.

The Group has, as at the balance sheet date, tax losses carried forward which are not included in the basis for the recognised deferred tax asset, as a significant uncertainty pertaining to the possible utilisation of these losses has been identified.

Note 18. Impairment assessment of group values

No impairment loss has been recognised in 2018.

A summary of the allocation of goodwill and customer relationship as at 31 December 2018 is presented below:

	Goodwill	Customer relationships
	2018	2018
Techstep Norway	264 093	8 412
Techstep Sweden	82 400	25 467
Mytos	93 570	12 147
Wizor	17 325	-
Total	457 388	46 027

The group structure was reorganised in 2018, see Note 2.

As at 31 December 2017, goodwill was allocated as follows:

	Goodwill	Customer relationships
	2017	2017
Hardware
Norway	256 993	13 868
Sweden	64 610	26 869
Software
Norway	100 670	16 087
Sweden	13 073	6 709
Total	436 515	63 533

Goodwill (and Customer relationships) are monitored by management at the level defined in the 2018 table above. These CGU represent the lowest level within the Group at which the goodwill and other intangible assets are monitored for internal management purposes.

Goodwill is initially recognised at the date of an acquisition of a business combination and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value as at the acquisition date of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. Other intangible assets are recognised at the fair value as at the acquisition date.

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Impairment reviews are undertaken by calculating the recoverable amount of the CGU containing goodwill and other intangible assets. The carrying amount of the CGU is then compared to the recoverable amount of the CGU, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

The estimate of the recoverable amount of the CGU is largely based on management's assumption pertaining to the Group's future cash flow projections.

For the 2018 and 2017 reporting period, the recoverable amount of the cash generating units (CGUs) was determined based on value-in-use calculations which require the use of several key assumptions. The calculations use cash flow projections based on financial budgets and prognoses approved by management covering a five-year period. Cash flows beyond the five-year period are calculated using the estimated growth rates stated below.

Please refer to the table "Key assumptions for estimating future performance" for further details.

Key assumptions for estimating future performance

	Techstep Norway	Techstep Sweden	Mytos	Wizor
Factors that affect the cash flow from operations	The cash flow is based upon past performance adjusted for expected future development with the company's budget for 2019 as the baseline. The cash flow from operations is expected to increase in the company due to continuous improvement programmes and focus on solutions sales.	The cash flow is based upon past performance adjusted for expected future development with the company's budget for 2019 as the baseline. The company has been and still is undergoing changes which have positive effects on the cash flow.	The company's main product "fakturakontroll" provides a stable recurring cash flow from operations. The expectation is that the number of users will remain stable or increase.	The company was acquired by Techstep in 2018. The synergies from the acquisition are expected to materialise in the cash flows in 2019 and 2020.
Economic conditions and market outlook	The company operate in a stable economy with a high penetration of use of advanced mobile devices. The market related to other service offerings from the company is expected to grow in the future.	The company operate in a stable economy with a high penetration of use of advanced mobile devices. The market related to other service offerings from the company is expected to grow in the future.	The company operate in a stable economy with a high penetration of use of advanced mobile devices where the service offerings for both private and business purposes increase at a high rate. As users utilise their devices both for private and business purposes, the offering's from Mytos are highly relevant.	The company has license to a high security solution for mobile communication. The market is expected to mature and grow in the following years.
Investments	Capital expenditure is assumed to be equal to depreciation in the terminal year.	Capital expenditure is assumed to be equal to depreciation in the terminal year.	Capital expenditure is assumed to be equal to depreciation in the terminal year.	Capital expenditure is assumed to be equal to depreciation in the terminal year.
Budget assumptions	The budget is based on a stabilisation and slight improvement in operating profit margins less depreciation and amortisation (EBITDA). A decrease in the EBITDA margins of 2% could lead to impairment, all other factors being equal.	Techstep Sweden AB is expected to perform on the same level as Techstep Norway AS. The budget and following forecasts include an improvement of operating profit margins less depreciation and amortisation of 4.5%. An improvement of less than 3% could lead to impairment.	Mytos is expected to grow at a steady pace throughout 2019 and the following years. The headroom related to the CGU is high and impairment charges are unlikely.	The budget is based upon reasonable growth in revenues and gross profit less depreciation and amortisation. Becoming a part of Techstep has opened up a customer base to the company which is under development for future sales.

Budget assumptions

The Group's solutions offering is diversified, with an overall increasing demand for the total service offerings of the Group.

Overall, it is assumed that the margins in Techstep Norway AS and Techstep Sweden AB will increase, with a higher increase in Sweden. The increase is expected through synergies between the merged companies, lower costs and a higher share of solutions sales.

The cash flow estimates are sensitive to the companies' ability to maintain an absolute margin. The initiatives related to solution sales and continuous focus on costs in the organisations is important to reaching the goals.

Discount rates

The pre-tax discount rate applied for the impairment testing is set at 11.9%. This rate of return is calculated based on the weighted average of required rates of return on the Group's equity and debt (WACC) using the capital asset pricing model (CAPM).

The required rate of return on debt is estimated based on a long-term risk-free interest rate, to which a premium is added to reflect the creditors' risk when lending funds to the Group. The discount rate includes a small business premium (operational risk) and the expected future levels of inflation. For impairment reviews performed at yearend 2018, these assumptions have been applied consistently across the Group.

	2018	2017
Equity ratio	65%	59%
Growth in terminal value	0.5%	1.0%
WACC	11.9%	11.7%

Sensitivity

A reasonable change, as described above under budget assumptions, would not lead to any impairment charges, nor would a reasonable possible decline in sustained growth in the terminal period. As regards sensitivity pertaining to future cash flows predictions, please refer to the section above, Budget assumptions.

Note. 19 Financial risk management

The Group's financial risk is related to credit risk, liquidity risk, currency risk and interest rate risk. The Group's risk management aims to support value creation and ensure a solid financial platform, through transparent and strategic management of both financial and operational risk factors. Operational risk relates mainly to major projects, which are continuously reviewed by corporate management.

The Group's capital consists of net interest-bearing debt (NIBD) and equity:	2018	2017
Non-current interest-bearing borrowings	7 341	23 551
Current interest-bearing borrowings	66 009	67 604
Cash and cash equivalents	53 996	35 278
NIBD	19 354	55 877
Group equity	513 780	450 110
Net gearing (NIBD/equity)	4%	12%
Undrawn credit facilities	33 807	27 895

A) Capital management

The Groups capital structure's primary focus is to ensure sufficient free liquidity in the form of cash and cash equivalents along with bank overdraft facilities to ensure that the Group can continually service its obligations and at the same time being able to make strategic acquisitions. Management is satisfied with the current development in regard to liquidity and capital management.

B) Credit risk

Credit risk is the risk that customers are unable to settle their obligations as they mature. Credit risk is considered part of the business risk and is included in ongoing operations. The Group has established procedures for credit rating major private customers, and the risk that customers do not have the financial means to meet their obligations is considered low. Historically, only minor losses have been realised as a result of customers experiencing financial difficulties. The customer base comprises many medium-sized customers, along with a few larger customers. The customer portfolio is considered to be well diversified across industries, as well as private and public customers. The risk level is considered satisfactory. The bulk of the Group's customers are Norwegian and Swedish, which constitutes a geographic concentration of risk.

No single customer represents 10% or more of trade receivables as at 31 December 2018. No single customer represents 10% or more of the Group's revenues in 2018 or 2017.

The maximum credit exposure consists of the carrying value of receivables and cash and cash equivalents. All receivables are due within one year. Normally, payment is 14 days after invoicing.

Long-term receivables consist of smaller holdings, with no fixed maturity.

Provisions for losses on trade receivables are based on individual assessments of Trade receivables above a certain value, with particular focus on those more than 90 days overdue.

Historically, actual losses on trade receivables have been immaterial, as was also the case in 2018. It is management's assessment that the Group's overall credit risk is satisfactory. Please also refer to Note 12, Trade receivables and other receivables.

C) Liquidity risk

Liquidity risk is the risk of not being able to pay the Group's financial obligations upon maturity. Liquidity risk arises from a mismatch between cash flows from operations and financial commitments. Liquidity budgets are prepared based on the Group's financial budgets. The budgets are prepared annually and are updated with new forecasts throughout the year. The Group's liquidity is satisfactory and management's liquidity budget models show satisfactory liquidity throughout the budget period.

The consolidated cash flows from operations in 2018 is positive due to an improvement in working capital. Most payments are related to employees and suppliers.

For details regarding the Group's interest-bearing borrowings refer to Note 14, - Interest-bearing borrowings.

D) Currency risk

The Group's operations are conducted in Norway and Sweden. The Group is thus not materially affected by operational currency fluctuations other than fluctuations between NOK and SEK. The bulk of the Group's goods and services is billed in NOK or SEK as appropriate. To a minor extent, some solutions revenue and expenses are invoiced in EUR and USD. The Group does not hedge cash flows in foreign currencies. The Group has only a small number of bank accounts, trade receivables and trade payables in currencies other than NOK and SEK. Therefore, consequences on the Group's profit and equity from changes in exchange rates between NOK and foreign currencies, and SEK and foreign currencies is limited and deemed acceptable. There is limited trade between Norway and Sweden and currency risk is considered to be low overall. Group values related to foreign operations are subject to currency fluctuations. As such, there may be variations in the "exchange differences on translating foreign operations" in the consolidated statement of comprehensive income.

E) Interest rate risk

Interest rate changes have only a marginal direct effect on consolidated operating income and cash flows from operating activities. The Group's interest rate risk is related to floating interest rates on bank accounts and deposits, in addition to floating rate debt in credit institutions. The Group has no fixed-rate deposits or debt and is therefore not exposed to fair value interest rate risk. The Group assesses its capital structure on an ongoing basis.

F) Categories of financial instruments

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised and measured at fair value in the financial statements. To provide an indication of the reliability of the inputs used to determine fair value, the Group has classified its financial instruments into the

three levels prescribed under the accounting standards. An explanation of each level is included in Note 1, Accounting principles.

To assess the fair value of shares and investments held by the Group, management assesses the underlying values in the companies in which the Group holds shares. The change in fair value is accounted for over profit and loss.

The Group has the following categories of financial instruments as at 31 December 2018:	Financial assets or financial liabilities at fair value through profit or loss	Financial assets at amortised cost	Other financial liabilities	Total	Level in fair value hierarchy
ASSETS
Shares and investments	8 117	-	-	8 117	3
Other non-current assets	-	2 568	-	2 568	3
Trade receivables	-	146 565	-	146 565	3
Other receivables	-	22 881	-	22 881	3
Cash and cash equivalents	-	53 996	-	53 996	1
Total assets	8 117	226 010	-	234 127

	Financial assets or financial liabilities at fair value through profit or loss	Financial liabilities at amortised cost		Other financial liabilities	Total	Level in rating hierarchy
LIABILITIES
Non-current interest-bearing debt	-		-	7 341	7 341		3
Other non-current debt	-		-	8 081	8 081		3
Current interest-bearing debt	-		-	66 009	66 009		3
Trade payables	-		-	116 694	116 694		3
Tax payable	-		-	3 470	3 470		3
Public duties	-		-	21 842	21 842		3
Other current liabilities	-		-	47 131	47 131		3
Total liabilities	-		-	270 566	270 566

The Group has the following categories of financial instruments as at 31 December 2017:	Financial assets or financial liabilities at fair value through profit or loss	Financial assets at amortised cost	Other financial liabilities	Total	Level in fair value hierarchy
ASSETS
Shares and investments	8 877	-	-	8 877	3
Other non-current assets	-	1 547	-	1 547	3
Trade receivables	-	156 663	-	156 663	3
Other receivables	-	18 766	-	18 766	3
Cash and cash equivalents	-	35 278	-	35 278	1
Total assets	8 877	212 254	-	221 130

	Financial assets or financial liabilities at fair value through profit or loss	Financial liabilities at amortised cost	Other financial liabilities	Total	Level in rating hierarchy
LIABILITIES
Non-current interest-bearing debt	-	-	23 551	23 551	3
Other non-current debt	-	-	22 277	22 277	3
Current interest-bearing debt	-	-	67 604	67 604	3
Trade payables	-	-	116 765	116 765	3
Tax payable	-	-	4 586	4 586	3
Public duties	-	-	19 657	19 657	3
Other current liabilities	-	-	50 498	50 498	3
Total liabilities	-	-	304 939	304 939

Note 20. Legal disputes and contingencies

The Group's dispute with the Norwegian tax authorities regarding offsetting loss carried forward against taxable income in other Group companies through Group contributions in 2014 has been decided in 2018. The court ruling was in the tax authorities favour and no further actions will be taken by the company to dispute the court's decision.

The amount payable has been provided for in full in the Consolidated statement of financial position on the financial statement line item tax payable.

Note 21. Changes in Group structure and business combinations

2018:

In 2018, Techstep invested NOK 4.3 million in cash (net of cash acquired NOK 5.3 million) related to acquistions of subsidiaries and businesses (Business combinations).

Furthermore, the Group has issued consideration shares amounting to NOK 12.6 million in 2018 related to business combinations and share purchases. In addition contingent consideration amounting to NOK 4.9 million have been recognised.

The Minority in Conneqted 365 AB was acquired with 2,500,302 consideration shares in Techstep ASA.

Business combinations

Techstep has invested NOK 4.7 million in cash (net of cash acquired NOK 5.3 million) related to acquisitions (Business combinations) in 2018.

Furthermore, the Group issued 2,368,421 shares as payment for business combinations in 2018 related to business combinations. In addition, a contingent consideration amounting to NOK 4.9 million has been recognised.

In June 2018, Techstep entered into a binding agreement to acquire 100% of Wizor AS. With the acquisition of Wizor, Techstep added a Nordic supplier of encrypted and secure solutions for mobile phones, tablets and other mobile devices to its portfolio. The transaction was completed on 3 September 2018.

Other changes in the group structure

In June 2018 the Group entered into a binding agreement to acquire 49% of the shares in Conneqted 365 AB, making Conneqted a wholly owned subsidiary. The transaction was completed on 3 September 2018.

Acquisition related costs amounting to NOK 1.3 million are recognized in the consolidated income statement in the line item, Other income and expenses.

The tables below summarise the consideration transferred, and the amounts recognised for assets acquired and liabilities assumed after the business combinations:

Consideration
Cash	4 643
Consideration shares	6 134
Contingent consideration	4 859
Total	15 636

Net assets
Intangible assets	64
Property plant and equipment	598
Trade and other receivables	630
Cash and cash equivalents	(692)
Other non-current liabilities	(387)
Current liabilities	(1 902)
Net assets	(1 689)
Excess value	17 325

Purchase price allocation
Goodwill	17 325
Total	17 325

The recognised goodwill of NOK 17.3 million is attributable to inseparable noncontractual customer relationships, the assembled workforce of the companies and synergies with other companies in the Group. None of the goodwill recognised is expected to be deductible for income tax purposes. The business combination is undertaken as part of the Group's growth strategy, and the businesses acquired are good strategic fits with existing operations within the Techstep Group, in terms of supplementary product offerings.

The companies acquired through business combinations completed through the purchasing of shares have, since the acquisition dates, contributed NOK 3.7 million to operating revenues and a negative of NOK 1.3 million to consolidated profit. If the acquisition date of all business combinations completed through the purchasing of

shares was as at 1 January 2017, the operating revenues of the Group would have increased by NOK 6 million and the effect on the consolidated profit would have been a negative NOK 1.3 million.

2017:

In 2017, Techstep invested NOK 100 million in cash (net of cash acquired NOK 74 million) related to the acquistion of subsidiaries and businesses (Business combinations).

Furthermore, the Group issued consideration shares amounting to NOK 123 million in 2017. In addition, seller credits amounting to NOK 17,5 million (whereof NOK 2 million have been settled in the reporting period) and contingent consideration amounting to NOK 20 million have been recognised.

With the exception of the purchase of the minority interest in Teki Solutions AS on 8 February 2017, all the investements have been accounted for as business combinations.

The Teki Solutions AS transaction was settled with 6,580,710 consideration shares in Techstep ASA at NOK 4.3 per share, of which 1,786,042 shares were settlement for the minority shares and 4,794,665 were settlement for shareholder loans.

Business combinations

Techstep invested NOK 111 million in cash (net of cash acquired NOK 83 million) related to the acquistion of subsidiaries and businesses (Business combinations) in 2017.

Furthermore, the Group issued consideration shares amounting to NOK 116 million in 2017. In addition, seller credits amounting to NOK 17,5 million (whereof NOK 2 million have been settled in the reporting period) and contingent considerations amounting to NOK 20 million have been recognised.

In February 2017, Techstep entered into a binding agreement to acquire 100% of Mytos AS. With the acquisition of Mytos AS, Techstep added unique solutions within telecom expense management software to its portfolio in addition to a significant customer base.

In February 2017, Techstep entered into a binding agreement to acquire the remaining 50% of the Nordialog Asker shares, thereby gaining control over the company. As a result of the step-by-step acquisition, the company has been reclassified from a joint venture, accounted for using the equity method to be fully consolidated. A remeasurement of previously held equity interest has been charged to the income statement.

In April 2017, Techstep acquired Apro Tele og Data AS. The acquistion supports Techstep's strategy to increase its core-adjacent customer base and leverage this customer base with leading solutions and service offerings.

Also in April 2017, Techstep acquired InfraAdvice Sweden AB (renamed Techstep InfraAdvice AB). By doing so, the Group obtained a plattform for growth in Sweden, with the possibility for existing products to gain easier access to the Swedish market.

In August 2017, Techstep aqcuired BKE Telecom AB. The acquisition provided the Group with a Swedish hardware, logistics and distribution platform which will be an integrated part of Techstep's unique Mobile as a Service (MaaS) concept. Moreover, BKE offers a wide and solid customer base already asking for the enterprise mobility solutions which is the core of Techstep's current offering.

In August 2017, the Group acquired 51% of the shares in Conneqted 365 AB. Conneqted's enterprise mobility management (EMM) offering is mainly based on the MobileIron platform, thereby complementing the Group's existing platform and offering.

Acquistion-related costs amounting to NOK 8,7 million are recognized in the consolidated income statement in the line item, Other income and expenses.

	BKE Telecom
Consideration	Mytos AS	AB	Others	Total
Cash	50 000	37 637	23 594	111 231
Consideration shares	70 000	26 912	18 617	115 529
Seller credits	-	14 679	2 525	17 204
Contingent consideration	-	19 962	2 500	22 462
Consideration transferred	120 000	99 190	60 692	279 882
Fair value of previously held equity interests			(5 356)	(5 356)
Total	120 000	99 190	55 336	274 526

Net assets
Intangible assets	-	904	-	904
Property, plant and equipment	383	10 924	728	12 035
Other non-current assets	-	-	2 981	2 981
Trade and other receivables	4 531	23 925	20 642	49 097
Cash and cash equivalents	3 748	11 029	12 196	26 973
Other non-current liabilities	-	(7 937)	(488)	(8 425)
Current liabilities	(5 957)	(22 130)	(24 944)	(53 031)
Total identifiable net assets	2 705	16 714	11 115	30 534
Non-controlling interest	-	-	331	331
Net assets	2 705	16 714	10 784	30 203
Excess value	117 295	82 476	44 552	244 320

Purchase price allocation
Property, plant and equipment	-	(5 006)	-	(5 006)
Equity investments	-	-	3 569	3 569
Technology	10 500	-	-	10 500
Customer relations	17 400	28 184	21 480	67 063
Deferred tax	(4 176)	(5 099)	(5 002)	(14 277)
Goodwill	93 571	64 397	29 859	187 827
Fair value of previously held equity interests	-	-	(5 356)	(5 356)
Total	117 295	82 476	44 550	244 320

The recognised goodwill of NOK 186.7 million is attributable to inseparable noncontractual customer relationships, the assembled workforce of the companies and synergies with other companies in the Group. None of the recognised goodwill is expected to be deductible for income tax purposes. The business combinations are carried out as part of the Group's growth strategy, and the businesses acquired are good strategic fits with existing operations within the Techstep Group, both in terms of geographic expansion and supplementary product offerings.

Non-controlling interests are measured at the proportionate share of the acquiree's identifiable net assets.

The companies acquired in business combinations completed through the purchasing of shares have, since the acquisition dates, contributed NOK 230 million to operating revenues and NOK 23 million to consolidated profit (loss). If the acquisition date of all business combinations completed through the purchasing of shares was as at 1 January 2017, the operating revenues of the Group would have increased by NOK 147 million and profit would have increased by NOK 8.7 million.

Note 22. Related parties transactions

The following are considered related parties to the Group:

All the members of the Board of Directors and Group management, including close family members, as defined by the Norwegian accounting act and associated regulations

The following companies are considered related parties to the group:

Company	Relationship	Role
Techstep Finance AS	Techstep ASA	Joint venture
Cipriano AS	Einar Greve	Chairman of the Board
Middelborg Invest AS	Kristian Lundkvist	Member of the Board in 2018
Middelborg AS	Kristian Lundkvist	Member of the Board in 2018
Gture AS	Stein Erik Moe	Member of the Board
Crayon Holding ASA and subsidiaries	Jens Rugseth	Member of the Board from 2019

Consolidated income statement	Revenue from		Expenses to
	2018	2017	2018	2017
Techstep Finance	12 842	19 589	0	0
Crayon	295	-	4 350	-
Middelborg	-	188	-	2 124
Cipriano AS	-	10	-	-
Other	-	40	-	-

Balance as at 31 December	Receivables		Payables
	2018	2017	2018	2017
Techstep Finance	2 375	180	-	-

	Capitalised expenses in the year
Consolidated statement of financial position	2018	2017
Gture	2 917	1 926

	Charged to equity
Consolidated statement of financial position	2018	2017
Cipriano AS and Middelborg AS	212	400

In relation to the capital increase in February 2017, Middelborg Invest AS and Cipriano acted as underwriters, among others.

In June 2018, Techstep completed a share issue in which the underwriters received a commision of 2% of the total capital increase, whereof Middelborg AS and Cipriano AS received their respective share. The expenses are presented net of the capital increase and tax in the statement of changes in equity and in the consolidated statement of cash flows.

According to an agreement with Middelborg AS, a company controlled by board member Kristian Lundkvist, Techstep is charged a consultancy fee for services provided by Middelborg. Total cost of NOK 1.4 million in 2017.

Capitalised expenses related to the development of a self-service portal. The portal is developed by Gture AS.

All transactions with related parties are carried out using the at arm's length principle.

Note 23. Earnings per share

	2018	2017
Weighted average number of shares outstanding	153 519 956	137 185 831
Profit attributable to owners of the parent company	20 685	(47 773)
Earnings per share	0.13	(0.35)

The Group has issued stock options to all member of the executive management group. The options are out of the money, and thus basic earnings per share and dilluted earnings per share are equal.

For details regarding the issuance of shares in 2017 and 2018, refer to Note 24, Shares, capital structure and shareholders.

Note 24. Shares, capital structure and shareholders

Share capital

The company's share capital as at 31 December 2018 was NOK 159,057,020 divided into 159,057,020 ordinary shares with a par value of NOK 1.00.

Each share gives the right to one vote at the company's annual general meeting. As at the date of this report, Techstep holds 1,914 treasury shares.

The development in share capital and other paid-in equity is set out in the consolidated statement of changes in equity.

Development in the number of issued and outstanding shares:

	Shares outstanding	Treasury shares*	Issued
Number of shares 1 January 2018	146 249 875	1 914	146 251 789
Capital increase	7 936 508		7 936 508
Consideration shares	4 868 723		4 868 723
Number of shares 31 December 2018	159 055 106	1 914	159 057 020

	Shares outstanding	Treasury shares*	Issued
Number of shares 1 January 2017	102 473 663	1 914	102 475 577
Capital increase	17 543 860		17 543 860
Consideration shares	26 232 352		26 232 352
Number of shares 31 December 2017	146 249 875	1 914	146 251 789

*Treasury shares are included in the column Other equity in the statement of changes in equity

2018:

Techstep has issued considerations shares in relation to the following acquisitions:

• Minority interest in Conneqted 365 AB.
• Shares in Wizor AS

Techstep completed a capital increase of 7,936,508 shares. The capital increase was completed at an offer price of NOK 3.15 per share. Expenses related to the capital increase amount to NOK 1.3 million. The capital increase is presented net of the expenses and tax in the statement of changes in equity and net of expenses in the consolidated statement of cash flows.

2017

Techstep has issued considerations shares in relation to the following acquisitions:

• Minority interest in Teki Solutions AS
• Shares in Nordialog Asker AS
• Shares in Apro Tele & Data AS
• Shares in InfraAdvice Sweden AB
• Shares in BKE Telecom AB
• Shares in Conneqted 365 AB

In total, 26,232,352 shares have been issued as consideration shares.

Techstep completed a capital increase of 17,543,860 shares. The capital increase was completed at an offer price of NOK 5.70 per share. Expenses related to the capital increase amount to NOK 5 million. The expenses are presented net of the capital increase and tax in the statement of changes in equity and in the consolidated statement of cash flows.

Shareholder	Number of shares	Ownership
DATUM AS	31 817 975	20,00%
MIDDELBORG INVEST AS1	30 517 764	19,19%
DnB NOR MARKETS, AKSJEHAND/ANALYSE	14 159 714	8,90%
CIPRIANO AS2	4 968 835	3,12%
Skandinaviska Enskilda Banken AB	4 244 108	2,67%
TIGERSTADEN AS	4 000 000	2,51%
PALOS NORGE AS	3 966 667	2,49%
RUGZ AS	3 299 470	2,07%
Tinde industrier as	3 063 372	1,93%
ZONO HOLDING AS3	3 000 007	1,89%
SÅ&HØSTE AS	2 925 936	1,84%
TVENGE	2 700 000	1,70%
SKARESTRAND INVEST AS	2 563 097	1,61%
J.P. Morgan Bank Luxembourg S.A.	2 301 706	1,45%
NOMO HOLDING AS	1 946 253	1,22%
NORDIALOG ENSJØ AS	1 946 253	1,22%
DOVRAN INVEST AS	1 863 372	1,17%
UNIFIED AS	1 849 457	1,16%
RAKNES HOLDING AS	1 649 348	1,04%
VERDIPAPIRFONDET DNB SMB	1 616 290	1,02%
Total number owned by top 20	124 399 624	78,21%
Total number of shares	159 057 020	100%

At 29 December 2018, Techstep's 20 largest shareholders were as follows:

1) Middelborg Invest AS is controlled by Kristian G. Lundkvist, who was a board member until 11 February 2019

2) Cipriano AS, owned by chairman of the Board of Directors Einar J. Greve

3) Zono Holding AS owned by Middelborg Invest AS 50,44%, Cipriano AS 4,65%, Duo Jag AS 0,93%

Duo Jag AS, which is partly owned by member of the Board of Directors Ingrid Leisner, ownes 554,834 shares in Techstep ASA.

Share option grant

On 26 April 2018 the General assembly approved of the Board of Directors proposal to grant CEO Jens Haviken 5 million share options in three tranches, vesting annually. the strike price is set to NOK 4.50, NOK 5.00 and NOK 5.50 to the respecive tranches. Existing outstanding share options already granted are alligned to the same strike prices. The total cost related to the alligment of strike prices is NOK 2.2 million, where NOK 1.3 million has been accounted for in the 2018 financial statements.

As per 31 December 2018, the total number of outstanding share options was 13.2 million, equivalent to 7.7% of the number of shares fully diluted (including 1,914 treasury shares) in Techstep ASA.

Note 25. Group structure

As per 31 December 2017 the Group consisted of the following companies:

Company	Location	Segment	Ownership
Techstep ASA	Oslo	Headquarters and others	100%
Techstep Nordic AS	Oslo	Headquarters and others	100%
Techstep Norway AS	Oslo	Norway	100%
Mytos AS	Oslo	Norway	100%
Wizor AS	Oslo	Norway	100%
Mytos IPR AS	Oslo	Headquarters and others	100%
Netconnect AS	Oslo	Headquarters and others	100%
Techstep Holding AB	Karlstad	Headquarters and others	100%
Techstep Sweden AB	Karlstad	Sweden	100%
Mowizor AB	Stockholm	Sweden	100%
Techstep ApS	Denmark	Norway	100%

Note 26. Remuneration to auditor

Auditor remuneration

(amounts in NOK 1 000)	2018
	Audit Services	Other attestation services	Tax advisory services	Other non-audit services	Total
BDO	1 489	94	64	189	1 837
Other auditing firms	55	-	-	-	55
Total	1 544	94	64	189	1 891

	Audit Services	Other attestation services	Tax advisory services	Other non-audit services	Total
BDO	1 506	205	179	348	2 238
Other auditing firms	103	-	-	-	103
Total	1 609	205	179	348	2 341

2017

Note 27. Remuneration to the board and executive management

Remuneration to the board and management

Total remuneration to the Board of Directors

			Remuneration	Remuneration
	Position	Period	2018	2017
Einar J. Greve	Chairman	Whole year	500	500
Ingrid Leisner	Member, Chairman of audit committee	Whole year	300	300
Kristian Lundkvist	Member	Whole year	250	250
Stein Erik Moe	Member	Whole year	250	250
Toril Nag	Member, Member of audit committee	From 26 April 2018	202	-
Anders Brandt	Member	From 26 April 2018	167	-
Camilla Magnus	Member, Member of audit committee	Until 26 April 2018	86	285
Kristin Hellebust	Member	Until 27 April 2017	0	83
Svein Ove Brekke	Member	Until 27 April 2017	0	83
Total remuneration			1 755	1 751

Total remuneration to management in 2018

					Pension and
Name	Position	Period	Salary	Bonus	other remuneration	Options programme
Jens Haviken	CEO	From 1 April 2018	1 667	1 000	98	1 025
Gaute Engbakk*	CEO*	until 31 March 2018	625	-	91	196
Marius Drefvelin	CFO	Whole year	1 990	150	153	978
Mads Vårdal	CIO	Whole year	1 358	300	129	978
Inge Paulsen	COO	Whole year	1 200	260	129	669
Erik Haugen	CCO	Whole year	1 100	240	129	669
Bartek Regerqvist	CEO Sweden	From 1 April 2018	753	150	200	248
Total remuneration to management			8 693	2 100	929	4 562

The CEO is entitled to severance payment equivalent to 6 months' salary in addition to pay during the six-month notice period. The same is applicable to the former CEO. Severance payment to Gaute Engbakk amounted to NOK 1.9 million in 2018. The amount was accrued for in 2017.

The Criteria for bonuses to management are based on Group performance and individual performance.

Name	Grant date	Opening balance	Granted during the year	Forfeite d during the year	closing balance	Expiry date	Shares held 31 Dec 2018
Jens Haviken	26 Apr 2018	-	5 000 000		5 000 000	15 Apr 2021	100 000
Gaute Engbakk*	27 Apr 2017	1 000 000			1 000 000	31 Dec 2018	-
Marius Drefvelin	27 Apr 2017	1 500 000			1 500 000	15 Apr 2020	40 000
Mads Vårdal	27 Apr 2017	1 500 000			1 500 000	15 Apr 2020	5 019
Inge Paulsen	16 Aug 2017	1 000 000			1 000 000	15 Apr 2020	100 000
Erik Haugen	16 Aug 2017	1 000 000			1 000 000	15 Apr 2020	-
Bartek Regerqvist	26 Apr 2018	-	200 000		200 000	15 Apr 2021	-
Total options granted to executive management		6 000 000	5 200 000	-	11 200 000		245 019
Average weighted exercise price per option		5,12	5,00		5,06

Shares and Share options

There are 2 million share options granted to key personnel who are not a part of executive management. The Vesting dates and exercise prices are equal to the executive managements' options.

Name	Vesting date first tranche	Vesting date second tranche	Vesting date third tranche	Exercise price first tranche	Exercise price second tranche	Exercise price third tranche
Jens Haviken	01 Mar 2019	01 Mar 2020	01 Mar 2021	4.5	5	5.5
Gaute Engbakk*	01 Mar 2018	-	-	5.7	-	-
Marius Drefvelin	01 Mar 2018	01 Mar 2019	01 Mar 2020	4.5	5	5.5
Mads Vårdal	01 Mar 2018	01 Mar 2019	01 Mar 2020	4.5	5	5.5
Inge Paulsen	01 Mar 2018	01 Mar 2019	01 Mar 2020	4.5	5	5.5
Erik Haugen	01 Mar 2018	01 Mar 2019	01 Mar 2020	4.5	5	5.5
Bartek Regerqvist	01 Mar 2019	01 Mar 2020	01 Mar 2021	4.5	5	5.5

All options are granted for no consideration. The share option amount granted is divided equally over 3 tranches.

Fair value of options granted

The assessed fair value as at the grant date of options granted range from NOK 0.42 to NOK 1.67 per option.

The fair value at grant date is independently determined per tranche using the Black Scholes Model. An estimated 50% of options are assumed to be exercised at vesting date and 50% to be exercised at expiry date.

The expected volatility of the company's share price is 45%. The volatility is based on historical volatility, a peer group review and management judgement. The risk-free interest rate used is a 3-year state obligation interest of 0.78% per year.

Total remuneration to management in 2017

					Pension and other	Options program
Name	Position	Period	Salary	Bonus	remuneration	me
Gaute Engbakk*	CEO	Whole year	2 408	-	124	828
Marius Drefvelin	CFO	Whole year	1 803	888	142	914
Mads Vårdal	CIO	Whole year	1 255	849	112	914
Inge Paulsen	COO	From 22 May 2017	659	200	62	354
Erik Haugen	CCO	From 1 Oct 2017	296	100	31	354
Total remuneration to management			6 421	2 037	472	3 365

*Gaute Engbakk resigned from his position as CEO in Q2 2018.

Note 28. Events after the reporting period

There are no subsequent events to report after the reporting period.

(amounts in NOK 1 000) Note	2018	2017
Other revenue	10 497	5 862
Total revenue	10 497	5 862
Salaries and personnel costs 2	(21 040)	(17 215)
Other operational costs 2, 3	(14 148)	(10 790)
Share of profit (loss) in joint ventures	119	116
Depreciation	(31)	(35)
Impairment 7	(262 860)	-
Other income and expenses 4	-	(24 722)
Operating profit (loss)	(287 464)	(46 784)
Financial income 5	316 937	38 507
Financial expense 5	(3 739)	(925)
Profit before taxes	25 734	(9 202)
Income taxes 6	(6 711)	664
Net income	19 023	(8 538)
Net income	19 023	(8 538)
Other comprehensive income	19 023	(8 538)

Techstep ASA - income statement

ASSETS Note	31.12.2018	31.12.2017
Non-current assets
Deferred tax asset 6	1 302	7 714
Customer relations and technology	-	1 942
Sum intangible assets	1 302	9 656
Property, plant and equipment	77	89
Sum tangible assets	1 379	9 745
Joint ventures	735	616
Shares and investments 7	506 778	485 162
Other non-current assets	103	100
Sum financial assets	507 615	485 878
Total non-current assets	508 994	495 623
Receivables from Group companies 8	132 393	100 473
Trade receivables	6 703	485
Other receivables	-	1 320
Total inventories and receivables	139 095	102 278
Cash and cash equivalents	7 978	1 115
Total current assets	147 073	103 393
Total assets	656 068	599 016
EQUITY AND LIABILITIES Note	31.12.2018	31.12.2017
Share capital	159 057	146 252
Other equity	412 917	365 167
Total equity	571 974	511 418
Other non-current debt	4 859	-
Total non-current liabilities	4 859	-
Trade payables	3 167	3 002
Current liabilites to Group companies 8	67 026	69 982
Public duties	1 291	957
Other current liabilities	7 752	13 657
Total current liabilites	79 236	87 597
Total liabilities	84 094	87 597
Total equity and liabilities	656 068	599 016

Techstep ASA - statement of financial position

Oslo, 27 March 2019, from the Board of Directors and the CEO of Techstep ASA, signatures on the following page:

Einar J. Greve Chairman

Jens Rugseth Board member

Ingrid Leisner Board member Stein Erik Moe Board member

Anders Brandt Board member

Toril Nag Board member

Jens Haviken CEO

Statement of changes in equity

		Other
	Share	paid-in	Other	Total
(amounts in NOK 1 000)	capital	capital	equity	equity
Equity as of 1 January 2017	102 476	302 911	(129 841)	275 546
Profit for the period			(8 538)	(8 538)
Total comprehensive income for the period	-	-	(8 538)	(8 538)
Transactions with owners in their capacity as owners:
Contributions of equity net of transaction costs	17 544	78 656		96 200
Issue of ordinary shares as consideration for a business combination, net of transaction costs and tax	26 232	110 934		137 166
Purchase treasury shares		7 679		7 679
Share-based payments			3 365	3 365
Equity as of 31 December 2017	146 252	500 180	(135 014)	511 418
Equity as of 1 January 2018	146 252	500 180	(135 014)	511 418
Profit for the period			19 023	19 023
Total comprehensive income for the period	-	-	19 023	19 023
Transactions with owners in their capacity as owners:
Contributions of equity net of transaction costs	7 937	16 062		23 999
Issue of ordinary shares as consideration for a business combination, net of transaction costs and tax	4 869	7 741		12 610
Share-based payments			4 924	4 924
Equity as of 31 December 2018	159 057	523 984	(111 067)	571 974

Consolidated statement of cash flows

(amounts in NOK 1 000) Note	2018	2017
Profit before tax	25 734	(9 202)
Share-based payments	4 924	3 365
Profit from joint venture	(119)	(116)
Depreciation and amortisation	31	35
Impairment 6	262 860	-
Dividends from subsidiaries 5	(269 899)	-
Changes in net operation working capital	(65 202)	(18 772)
Net cash flow from operational activities	(41 671)	(24 690)
Payment for acquisition of subsidiaries	(4 707)	(83 581)
Payment for acquisition of equity in joint ventures	-	(500)
Payment for non-current intangible and tangible assets	(3 914)	(2 066)
Proceeds from sale of non-current intangible and tangible assets	5 856	-
Proceeds from sale of subsidiaries	27 600	-
Net cash used on investment activities	24 834	(86 147)
Proceeds from issuance of shares	23 700	95 000
Net cash flow from financing activities	23 700	95 000
Net change in cash and cash equivalents	6 864	(15 837)
Cash and cash equivalents at 1 January	1 115	16 886
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents as of 31 December	7 978	1 115
of which is restricted	627	485

Techstep ASA - Notes to the annual accounts

• 1. General information, basis for preparation
• 1. Salaries and personnel cost
• 1. Other operational costs
• 1. Other expenses
• 1. Finance income and expenses
• 1. Income tax
• 1. Shares in subsidiaries and joint ventures
• 1. Receivables and liabilities to Group companies
• 1. Events after the reporting period

Note 1. General information, basis for preparation

Techstep ASA is a public limited company incorporated and domiciled in Norway. The address of its registered office is Brynsveien 3, 0667 Oslo, Norway. The shares of Techstep ASA are listed on the Oslo Stock Exchange under ticker TECH.

Techstep ASA is the parent company of the Techstep Group, with business in Norway and Sweden. For more information, see the consolidated financial statements. The financial statements were approved by the Board of Directors on 27 March 2019 and will be proposed to the General Meeting 25 April 2019.

The financial statements for the company Techstep ASA have been prepared and presented in accordance with simplified IFRS pursuant to § 3-9 in the Norwegian Accounting Act. For the accounting principles used to prepare and present the financial statements refer to note 1 General information and summary of significant accounting policies in the Group financial statement.

Accounting principles applicable to the company not presented in the group financial statements:

Shares in subsidiaries and joint ventures

Subsidiaries are all entities controlled, either directly or indirectly, by Techstep ASA. Techstep ASA controls an entity when it is exposed to, or has rights to, variable returns from the involvement with the entity and has the ability to affect those returns through power over the entity. Power over an entity exists when Techstep have power to direct the activities in which significantly affect the entity's returns. Generally, there is a presumption that a majority of voting rights result in control. Techstep considers all relevant facts and circumstances in assessing whether control exist, including contractual arrangements and other potential voting rights to the extent that these are substantive.

Shares are classified as investment in subsidiaries from the date Techstep ASA effectively obtains control of the subsidiary (acquisition date).

A joint venture is an entity over which Techstep ASA directly, or indirectly through subsidiaries, has joint control. Joint control is normally presumed to exist when Techstep controls 50% of the voting power of the investee.

Shares are measured at cost, and impairment loss is recognised if the carrying amount exceeds the recoverable amount. The impairment is reversed if the basis for the write-down is no longer present.

Group contributions received are included in financial income provided that it does not represent a repayment of capital invested. Group contributions that represent a repayment of capital are accounted for as a reduction in the cost of investments. Net group contributions payable (gross group contributions less tax effect) are accounted for as cost of investments in subsidiaries.

Dividends from subsidiaries and associates are included in financial income.

Note 2. Salaries and personnel cost

	2018	2017
Salary and holiday pay	18 104	13 255
Social security tax	2 208	1 627
Pension costs including social security tax	640	588
Other personnel costs	87	1 745
Total salaries and personnel cost	21 040	17 215
Number of employees at year end	5	5

The Company's pension plans meet the requirements of the Act on Mandatory occupational pensions (OTP).

Please refer to note 27 Remuneration to management in the consolidated group financial statements for details regarding executive management remuneration and note 24 Share, capital structure and shareholders in the consolidated group financial statements for information about share option grant.

Auditor remuneration

(amounts in NOK 1 000)			2018
	Audit Services	Other attestation services	Tax advisory services	Other non-audit services	Total
BDO	664	-	36	170	870
Total	664	-	36	170	870

	2017
	Audit Services	Other attestation services	Tax advisory services	Other non-audit services	Total
BDO	370	128	121	205	824
Total	370	128	121	205	824

Note 3. Other operational costs

	2018	2017
Office rental and operations	492	481
Sales and marketing	3 395	271
Computers and software	93	463
Fees for external services	5 521	6 440
Communication	480	66
Travel expense	224	236
Other costs	3 943	2 833
Total operating costs	14 148	10 790

Note 4. Other expenses

	2018	2017
Restructuring costs executive management	-	3 200
Transaction costs	-	16 874
Strategic initiatives	-	1 100
Other costs	-	3 548
Total other expenses	-	24 722

Note 5. Finance income and expenses

	2018	2017
Interest income	3 298	3 519
Dividends from equity investments	-	-
Dividend from Group companies	269 899	-
Group contributions received	41 435	34 946
Other financial income	2 305	42
Total financial income	316 937	38 507
Interest expenses	2 854	852
Other financial expenses	885	73
Total financial expenses	3 739	925

Note 6. Income tax

Income tax expense	2018	2017
Change in deferred tax	(6 711)	664
Tax expense	(6 711)	664
Reconciliation of relationship between accounting profit and tax expense
Profit before tax	25 734	(9 202)
Tax at the Norwegian tax rate of 23 % (2017 - 24%)	(5 919)	2 208
Tax effect permanent differences	471	(975)
Tax related to change in tax rates	(46)	(335)
Other	(1 219)	(234)
Income tax expense	(6 711)	664
Amounts recognised directly in equity
Deferred tax arising in the reporting period directly debited to equity:
Deferred tax: Share issue cost	(299)	(1 200)
Total	(299)	(1 200)
Tax losses	22 %	23 %
Unused tax losses for which no deferred tax asset has been recognised	(443 788)	(443 788)
Potential tax asset at 22 % tax rate (2017 - 23 %)	(97 633)	(102 071)
Deferred tax
The balance comprises temporary differences attributable to:
Property, plant and equipment	(1 198)	(1 503)
Trade receivables and other receivables	(4 130)	(4 691)
Tax loss carried forward	-	(27 344)
Total basis for deferred tax	(5 328)	(33 538)
Tax rate deferred tax	22 %	23 %
Net deferred tax with applicable year's tax rate	(1 225)	(8 049)
Change in deferred tax due to change in tax rate	53	335
Adjustment prior years	(130)	-
Net deferred tax (+)/ deferred tax asset (-)	(1 302)	(7 714)

Note 7. Shares in subsidiaries and joint ventures

				Equity 31	Net
		Ownership/voti		December	income
Shares in subsidiaries 2018	Location	ng rights	Book value	2018	2018
Techstep Nordic AS	Oslo	100 %	35 000	40 395	(14 527)
Techstep Holding AB	Karlstad	100 %	49	17 613	16 591
Techstep Norway AS	Oslo	100 %	334 498	73 285	27 903
Mytos AS	Oslo	100 %	111 000	5 002	9 515
Mytos IPR AS	Oslo	100 %	10 530	9 735	(790)
Wizor AS	Oslo	100 %	15 636	(341)	(4 687)
Techstep APS	Denmark	100 %	65	22	(43)
Total			506 778	145 711	33 962

To simplify the Group structure the following changes occured in 2018:

• Nordialog Oslo AS was transferred from Teki Solutions AS to Techstep ASA as settlement for dividend given.
• Nordialog Oslo AS was renamed to Techstep Norway AS
• Apro Tele og Data AS and Techstep Nordic AS was merged into Techstep Norway AS.
• Teki Solutions AS was renamed to Techstep Nordic AS

Techstep InfraAdvice AB and Conneqted 365 AB were sold to Techstep Sweden AB, and subsequently Merged into Techstep Sweden AB.

Impairment

An impairment charge is booked towards the company's shares in Techstep Nordic AS. When Techstep Norway AS was transferred from Techstep Nordic AS (formerly Teki Solutions AS) to Techstep ASA, management assessed that the carrying amount of the shares in Techstep Nordic AS exceeded recoverable amount of the shares. Following this assessment, the shares in Techstep Nordic AS have been impaired with NOK 262.860 million in 2018.

				Equity 31	Net
		Ownership/voti		December	income
Shares in subsidiaries 2018	Location	ng rights	Book value	2018	2018
Techstep Finance AS	Oslo	50 %	735	1 392	237
Total			735	1 392	237

				Equity 31	Net
		Ownership/voti		December	income
Shares in subsidiaries 2017	Location	ng rights	Book value	2017	2017
Teki solutions AS	Oslo	100 %	297 860	374 377	5 902
Techstep Holding AB	Karlstad	100 %	49	682	620
Apro Tele & Data AS	Sandefjord	100 %	18 000	7 677	4 671
Techstep Nordic AS	Oslo	100 %	26 600	5 752	(3 709)
Mytos AS	Oslo	100 %	111 000	3 544	12 685
Techstep InfraAdvice AB	Stockholm	100 %	17 707	3 025	1 370
Conneqted AB	Karlstad	51 %	3 417	660	195
Mytos IPR AS	Oslo	100 %	10 530	50 523	(1)
Total			485 162	446 240	21 733

				Equity 31	Net
		Ownership/voti		December	income
Shares in subsidiaries 2018	Location	ng rights	Book value	2017	2017
Techstep Finance AS	Oslo	50 %	616	1 232	232
Total			616	1 232	232

Note 8. Receivables and liabilities to Group companies

	2018	2017
Group contribution received	21 434	34 946
Other current receivables	110 958	65 527
Total current receivables	132 393	100 473
	2018	2017
Other current liabilities	67 026	69 982
Total current liabilities	67 026	69 982

The Group contribution received from Techstep Norway AS (with tax effect) is partly offset by group contribution given to Techstep Norway AS (without tax effect) amounting to NOK 20 million.

Note 9. Events after the reporting period

Please refer to note 28 Events after the reporting period in the consolidated group financial statements.

Alternative Performance Measures

Techstep Group's financial information is prepared in accordance with international financial reporting standards (IFRS). In addition, it is management's intent to provide alternative performance measures that are regularly reviewed by management to enhance the understanding of Techstep's performance, but not instead of, the financial statements prepared in accordance with IFRS. The alternative performance measures presented may be determined or calculated differently by other companies. The principles for measurement of the alternative performance measures are in accordance with the principles used both for segment reporting in Note 2 and internal reporting to Group Executive Management (chief operating decision makers) and are consistent with financial information used for assessing performance and allocating resources.

Gross Margin

Gross margin is defined as Total revenues subtracted cost of goods sold divided by total revenues.

EBITDA

Earnings before interest, tax, depreciation and amortisation (EBITDA) is a key financial parameter for Techstep. This measure is useful to users of Techstep's financial information in evaluating operating profitability on a more variable cost basis as it excludes depreciation and amortisation expense related primarily to capital expenditures and acquisitions that occurred in the past. The EBITDA margin presented is defined as EBITDA divided by total revenues.

EBIT

Earnings before interest and tax (EBIT) is a useful to users of Techstep's financial information in evaluating operating profitability on the cost basis as well as the historic cost related to past business combinations and capex. The EBIT margin presented is defined as EBIT divided by total revenues.

Hardware revenues

Hardware revenues are defined as revenues from sales of tangible goods and related kick-backs from suppliers and partners.

Hardware share of revenues are the hardware revenues divided by total revenues

Solutions revenues

Solutions revenues are defined as revenues from sale of licenses, support and other non-tangible items to customers. Also included are kick-backs from suppliers and partners.

Solutions share of revenues are the solutions revenues divided by total revenues.

-

-

Description of the key audit matter	How the key audit matter was addressed in the audit
Valuation of intangible assets In accordance with IFRS, the Group is required to test the carrying value of intangible assets for impairment annually. Impairment testing of intangible assets is a key aspect of our audit due to the complexity of the assessments and the significance of assumptions related to future market and/or economic conditions that underlie the assessment. Recognised goodwill and customer relations allocated through previous acquisitions as at 31.12.2018 of NOK 525,1 million are allocated to the group's cash-generating units. Management has concluded that the recoverable amount exceeds the book value and there is no need for impairment. The complexity and the judgments relating to impairment testing have made us identify this a key focus area for our audit.	Our audit procedures have included a detailed review of management's impairment test for each business unit to which intangible assets are allocated. We have also assessed management's assumptions underlying the valuation and taken into account management's historical accuracy in determining the estimates. We have used internal specialists in this process. We have also considered the assumptions described in note 18. We have also assessed the adequacy of the information provided in the notes against the requirements of IAS 36.
Valuation of investments in subsidiaries The company has significant investments in subsidiaries that are valued at cost. The investments amount to NOK 506,8 million. In connection with the assessment of the underlying value of the subsidiaries, an estimate of the recoverable amount in accordance with IAS 36 has been established to determine if there are indications that these assets should be impaired. Losses and low equity in subsidiaries are indicators that there may be impairment losses relating to investments. The significant amounts involved, and the complexity of the valuation of the assets, lead us to classify the valuation of investments in subsidiaries as a key audit matter.	Our audit procedures included a detailed review, testing, and assessment of management's impairment testing, including the calculation of recoverable amounts. We have also assessed management's assumptions underlying the valuation and taken into consideration the historical accuracy in determining the estimates. We have used internal specialists in this process. We have also considered the assumptions described in note 18.

TECHSTEP ASA

Note 4: Changes in Group structure and subsequent events

Brynsveien 3 0667 Oslo, Norway +47 915 233 37

www.techstepasa.no

89

ANNUAL REPORT 2018