Techstep ASA — Interim / Quarterly Report 2019

May 10, 2019

Interim report Q1 2019

Highlights Q1 2019

• ● Q1 2019 revenue was NOK 284.1 million, an increase of 22% from NOK 232.3 million in the same quarter in 2018 and reflecting growth in both Norway and Sweden
• ● Gross profit for the quarter was NOK 74.9 million (NOK 68.2 million)
• ● EBITDA amounted to NOK 9.2 million (NOK 6.2 million) with an EBITDA margin of 3.2%
• ● Cash flow from operations amounted to NOK 4.3 million (NOK 3.0 million)
• ● Techstep was awarded new contracts, with a potential total value of NOK 184 million in the first quarter of 2019

CEO comments

"We continued to show revenue growth in both Norway and Sweden in the first quarter 2019. Although hardware sales still accounts for the bulk of sales, we see an increasing number of customers opting for combined hardware and software solutions.

We expect the enterprise market for mobility services will continue to grow in the years ahead. Techstep's offering of robust, safe and smart tools puts us in a unique position to take a growing share of this market.

Our main priorities for 2019 are to increase profitability through organic growth and acquisitions, streamline operations, and increase revenue on our own software and services", says CEO Jens Haviken.

About Techstep

Techstep is positioning itself as a leading Nordic enabler of the digital workplace. Techstep supplies hardware, software, connectivity and mobile device management bundled as a managed service. This enables enterprises and their employees to do their work across mobile devices and locations, with a high degree of security and operational stability. Techstep has 223 employees based in Norway and Sweden, serving close to 6,000 customers and 677,000 end users across various industries in the private and public sectors. The company is listed on the Oslo Stock Exchange. For more information, see www.techstepasa.no.

Key Figures

(amounts in NOK 1 000)	Q1 2019	Q1 2018	2018
Revenues	284 101	232 278	1 064 114
Gross profit	74 961	68 171	294 419
EBITDA	9 221	6 050	43 023
EBITA	5 543	5 621	41 280
EBIT	20	898	22 362
Net profit (loss) for the period	(1 511)	1 083	21 329
EBITDA margin (%)	3.2%	2.6 %	4.0%
EBITA margin (%)	2.0%	2.4 %	3.9%
EBIT margin (%)	0.0%	0.4 %	2.1%
Net profit (loss) for the period (%)	-0.5%	0.1%	2.0%
Hardware, share of revenue	64%	74.0 %	74%
Solutions, share of revenue	36%	26.0 %	26%
Cash and cash equivalents	48 647	29 477	53 996
Net interest-bearing debt	20 759	64 334	19 444
Capex	5 625	3 014	11 689

The share of revenue from hardware and solutions were restated in Q3 2018 to include related commission and bonuses. Previously, all commission and bonus revenues were allocated to hardware. As such, the share of revenue reported in the Q1 2018 report cannot be reconciled with the table above.

The FY 2018 EBITDA includes two one-off items with a positive net effect of NOK 13 million, comprising a reversal of an earn-out obligation of NOK 20 million for an acquisition in Sweden, offset by the provision of NOK 7 million for remaining rent obligations on vacated premises in Norway

The effect of IFRS 16 Leases is a reduction of operational costs of NOK 2.8m in Q1 2019. See note 5 for further details.

Operational review

Main developments

Techstep is positioned as a leading Nordic enabler of the mobile digital workplace and continued to deliver revenue growth in both Norway and Sweden in the first quarter of 2019. The commercial focus in the quarter was on developing and delivering on existing contracts.

Techstep is acting as a market consolidator in the mobile Nordic workplace. M&A activities play an important role in the growth strategy, and the company has carrried out several acquisitions in Norway and Sweden over the past years. With the combined resources of the company, Techstep is building a platform for growth through organic innovation, acquistions and partnership.

During the first quarter, the company completed the implementation of a new CRM system in Norway, which will be followed by Sweden later in 2019. This will strengthen our collaboration capabilities on both local and cross-border projects.

In the quarter, Techstep completed the largest EMM (Enterprise Mobility Management) licensing delivery recorded in the Nordic region. The deal was booked as a one-off solution sale in the quarter.

Sales activity

The first quarter of 2019 saw a soft market in the first months, although sales activity picked up towards the end of the quarter. The

company was awarded contracts with a potential value of NOK 184 million in the period, and the pipeline remains good with several promising cases. The new contracts comprise a mix of both pure hardware or solutions contracts, as well as combination contracts and MaaS ("Mobile as a Service").

The largest contract awarded in the first quarter of 2019 was on a large Swedish industrial company. Techstep and Telenor will deliver hardware to the company and its 20,000 Swedish employees under a framework agreement including both mobile devices and accessories.

Techstep is gaining traction with its "Mobile as a Service" (MaaS) offering, which enables customers and its 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 Techstep and its customers.

During the first quarter, Techstep signed MaaS agreements with five customers across various industries for a potential total value of NOK 59 million.

End-user base developments

Techstep's consolidated end-user base increased to ~677,000 at the end of the first quarter of 2019, up from ~613,000 at the end the of first quarter of 2018, corresponding to a year-over-year growth of 10%.

Financial review

The interim financial information has not been subject to audit or review.

Techstep has implemented the new IFRS 16 Leases standard with effect from 1 January 2019. The figures from last year have not been adjusted, and are therefore not fully comparable with those presented for 2019. Operating expenses, depreciation and interest expenses are the items affected in the profit and loss statement. See note 5 for further details.

Profit and loss

Techstep generated total revenue of NOK 284.1 million in the first quarter of 2019, up 22% from NOK 232.3 million in the corresponding quarter last year.

Hardware sales increased by 5% year-overyear, primarily increased sales to public sector customers in Norway. Solutions revenue increased by 71% year-over-year, which included a one-off EMM case of NOK 23 million in Sweden. This resulted in a 36% share of total revenue for solutions.

Gross profit increased by 10% year-over-year to NOK 75.0 million, however gross margin decreased from 29% in the first quarter of 2018 to 26% in the first quarter of 2019. This is mainly due to the increased hardware volume in public contracts in Norway.

Salaries and personnel costs increased by 8% to NOK 51.4 million, primarily due to the acquisition of Wizor and recruiting in alignment with Techstep's growth strategy. Options costs for the quarter were NOK 1.4 million.

Other operational costs amounted to NOK 14.7 million, flat year-over-year. Capitalised internal development costs were NOK 1.0 million (compared to to NOK 0.1 million in the first quarter 2018) and relate to the development of own IP.

EBITDA amounted to NOK 9.2 million in the first quarter of 2019, up from NOK 6.1 million in the corresponding quarter of 2018. The EBITDA effect from the implementation of IFRS 16 with effect in the first quarter 2019, is a reduction of other operational costs estimated to about NOK 2.8 million, reflecting the changed accounting of leasing agreements.

Operating profit (EBIT) was NOK 20 thousand in the first quarter of 2019, compared to an operating profit (EBIT) of NOK 1.0 million for first the quarter last year.

Net financial items amounted to NOK 0.7 million in the first quarter of 2019, compared with NOK 1.4 million in the first quarter og last year.

Net loss amounted to NOK 1.5 million in the first quarter of 2019, compared to a loss of NOK 0.2 million in the corresponding quarter of last year.

Cash flow

Net cash flow from operating activities was positive at NOK 4.3 million in the first quarter of 2019, reflecting earnings from the period and changes in working capital.

Net cash flow from investment activities was negative NOK 5.6 million, relating to IT investments.

Net cash flow from financing activities was negative at NOK 3.3 million in the quarter, relating to lease payments (IFRS 16).

Cash and cash equivalents decreased by NOK 5.3 million in the first quarter to NOK 48.6 million.

Financial position

As at 31 March 2019, total assets were NOK 792.9 million, compared with NOK 788.0 million at 31 December 2018. The effect of IFRS 16 is an increase on total assets and liabilities of NOK 21.6 million. See note 5 for further details. NOK 523.5 million were intangible assets..

Total equity in the first quarter was NOK 505.8 million, corresponding to an equity ratio of 65% equal to the end of 2018.

Non-current interest-bearing debt of NOK 7.2 million relates to a long-term property loan for the premises in Karlstad, Sweden. Other noncurrent debt of NOK 17.4 million includes an earn-out obligation related to Wizor AS of NOK 4.9 million, leasing commitments of NOK 9.1 million and the long-term portion of restructuring provisions of NOK 3.0 million.

Current interest-bearing liabilities amounted to NOK 62.2 million and includes factoring debt of NOK 37.0 million, a drawn credit facility of NOK 10.0 million, and a vendor note of NOK 14.8 million related to the acquisition of BKE TeleCom AB, now part of Techstep Sweden AB.

Subsequent events

At the Annual General Meeting on 25 April 2019, Jens Rugseth was elected as the new chairman of the board.

Outlook

Techstep is well positioned to benefit from the market trends of 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 few 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.

Our main priorities for 2019 are to increase profitability through organic growth and acquisitions, streamline operations, and increase revenue on our own software and services", says CEO Jens Haviken.

Consolidated income statement

(amounts in NOK 1 000)	Note	Q1 2019	Q1 2018	2018
Revenue	2, 3	283 455	231 827	1 059 596
Other income		646	451	4 518
Total revenues		284 101	232 278	1 064 114
Cost of goods sold		(209 140)	(164 107)	(769 695)
Salaries and personnel costs		(51 395)	(47 426)	(195 376)
Other operational costs	5	(14 709)	(14 658)	(76 101)
Share of profit (loss) in joint ventures		365	(37)	119
Depreciation	5	(3 679)	(428)	(1 743)
Amortisation		(5 523)	(4 723)	(18 918)
Other income and expenses		-	-	19 962
Operating profit (loss)		20	898	22 362
Financial income		455	163	1 108
Financial expense	5	(1 192)	(1 574)	(4 462)
Profit before taxes		(717)	(513)	19 009
Income taxes		(794)	1 596	2 320
Net profit (loss) for the period		(1 511)	1 083	21 329
Net income attributable to
Non-controlling interests		-	325	644
Shareholders of Techstep ASA		(1 511)	757	20 685
Earnings per share in NOK:
Basic		(0.01)	0.01	0.13
Dilluted		(0.01)	0.01	0.13

Consolidated statement of comprehensive income

(amounts in NOK 1 000)	Note	Q1 2019	Q1 2018	2018
Net profit (loss) for the period		(1 511)	1 083	21 329
Items that may be reclassified to profit and
loss
Exchange differences on converting foreign operations*		(8 608)	(8 377)	414
Income tax related to these items		1 109	-	396
Total comprehensive income		(9 010)	(7 294)	22 138
Total comprehensive income attributable to
Non-controlling interests		-	325	644
Shareholders of Techstep ASA		(9 010)	(7 619)	21 495

The interim financial information has not been subject to audit or review.

*Exchange differences on translating foreign operations relates to revaluation of group values held in foreign currency and the currency effect on net investments in foreign operations.

Consolidated statement of financial position

		period end
ASSETS	Note	March 2019	2018
Non-current assets
Deferred tax asset		-	2 439
Goodwill		454 432	457 388
Customer relations and technology		69 037	67 733
Total intangible assets		523 469	527 560
Property, plant and equipment	5	27 692	9 377
Total tangible assets		27 692	9 377
Joint ventures		1 100	735
Shares and investments		8 117	8 117
Other non-current assets		2 684	2 568
Total financial assets		11 901	11 420
Total non-current assets		563 062	548 357
Inventories		18 897	16 155
Accounts receivable		134 444	146 565
Other receivables		27 814	22 881
Total inventories and receivables		181 155	185 601
Cash and cash equivalents		48 647	53 996
Total current assets		229 802	239 597
Total assets		792 864	787 954

		period end
EQUITY AND LIABILITIES	Note	March 2019	2018
Share capital		159 057	159 057
Other equity		346 710	354 722
Total equity attributable to the owners of Techstep ASA	4	505 767	513 780
Non-controlling interests		-	-
Total equity		505 767	513 780
Deferred tax		7 292	3 608
Non-current interest-bearing debt		7 190	7 341
Other non-current debt	5	17 444	8 081
Total non-current debt		31 925	19 030
Current interest-bearing liabilities		62 216	66 009
Accounts payable		106 619	116 694
Tax payable		3 244	3 470
Public taxes, provisions		26 635	21 842
Other current liabilities	5	56 458	47 131
Total current debt		255 172	255 145
Total liabilities		287 097	274 175
Total equity and liabilities		792 864	787 954

Consolidated statement of changes in equity

		Other				Total
(amounts in NOK 1 000)	Share capital	paid-in capital	Other equity	Sum	Minority interest	equity capital
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	7 937	16 062		23 999		23 999
transaction costs
Issue of ordinary shares as consideration for a business
combination, net of transaction costs	4 869	7 741		12 610		12 610
and tax
Purchase of minority interest in			1 013	1 013	(1 013)	-
subsidiary
Share-based payments	159 057	497 096	4 924 (142 374)	4 924 513 780	-	4 924 513 780
Equity as of 31 December 2018
Equity as of 1 January 2019	159 057	497 096	(142 374)	513 780	-	513 780
Profit for the period			(1 511)	(1 511)		(1 511)
Other comprehensive income			(7 499)	(7 499)		(7 499)
Total comprehensive income for			(9 010)	(9 010)		(9 010)
the period	-	-			-
Share-based payments			997	997		997
Equity as of 31 March 2019	159 057	497 096	(150 387)	505 767	-	505 767

Consolidated statement of cash flow

(amounts in NOK 1 000)	Q1 2019	Q1 2018	FY 2018
Profit before tax	(717)	(513)	19 009
Profit from joint venture	(365)	37	(119)
Depreciation and amortisation	9 202	5151	20 657
Share-based payments	997	945	4 924
Remeasurement of contingent liability	-	-	(19 962)
Net exchange differences		-	(2 133)
Taxes paid	267	(3 499)	(1 518)
Changes in net operating working capital	(5 080)	924	2 556
Net cash flow from operational activities	4 304	3 045	23 413
Payment for acquisition of subsidiaries net of cash acquired	-	-	(5 335)
Payment for property, plant and equipment and intangible assets	(5 625)	(3 014)	(11 689)
Proceeds from sale of equity instruments	-	-	760
Net cash used on investment activities	(5 625)	(3 014)	(16 264)
Proceeds from issuance of shares	-	-	23 700
Repayment of borrowings	(32)	(5 204)	(12 008)
Lease repayments	(3 273)	-
Net cash flow from financing activities	(3 306)	(5 204)	11 692
Net change in cash and cash equivalents	(4 627)	(5 173)	18 841
			-
Cash and cash equivalents at beginning of period	53 994	35 278	35 524
Effects of exchange rate changes on cash and cash equivalents	(721)	(627)	(370)
Cash and cash equivalents at end of period	48 647	29 477	53 996

Notes to the consolidated financial statements

1. Accounting principles

Techstep (the Group) consists of Techstep ASA (the Company) and its subsidiaries. Techstep ASA is a limited liability company, incorporated in Norway. The consolidated interim financial statements consist of the Group and the Group's interests in a joint arrangement. As a result of rounding differences, numbers or percentages may not add up to the total.

1. ACCOUNTING PRINCIPLES

The interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS), for the periods presented. The interim financial report is presented in accordance with IAS 34 Interim Financial Reporting. The interim consolidated financial statements do not include all the information and disclosures required in the Annual Financial Statements and should be read in conjunction with the Group's Annual Financial Statements 2018. The accounting policies adopted in the preparation of the interim consolidated financial statements are consistent with those followed in the preparation of the Group's Annual Financial Statements for the year ended 31 December 2018, with the exceptions stated below. The report has not been audited.

IFRS 16 – Leases

From Q1 of 2019, Techstep has adopted the new accounting standard IFRS 16 Leases.

The Group applies the modified retrospective approach where right-to-use assets are measured at an amount equal to the lease liability at 1 January 2019. The lease liability is calculated as the present value of future lease payments. The future lease payments are discounted by the incremental borrowing rate at the time of transition.

The modified retrospective approach does not have any effect on equity.

Using this approach, the comparable numbers from 2018 are not restated as if IFRS 16 was applied in 2018. The presented amounts are calculated based on the judgements and interpretations at the time of adopting the new standard.

The Group has elected to apply the recognition exemption to leases for which underlying assets are of low value. Leases of intangible assets that are within the scope of the standard are accounted for in accordance with IFRS 16.

The right-to-use assets are depreciated over the lifespan of the lease using a linear approach. The assets are presented on the line item. The corresponding lease liability is reduced when downpayments are made. The interest element of the lease is calculated using the incremental borrowing rate. For the group, the rate varies between 3-5 %, depending on the company holding the lease and the underlying asset. The transition effect of adopting the standard are shown in note 5, Leases.

Note 2. Business segments

Techstep has two business segments, which are represented by the geographic locations where the Group's entitites 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, servicing, support and mobility consultancy services. The company is located in Oslo and Sandefjord and consists of 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 services company with mainly recurring revenue. Mytos offers a full range of telecom expense management (TEM) modules, all with proprietary software and highly userfriendly 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 quarter
			and	Elim
Q1 2019	Norway	Sweden	other	inations	Total
Operating revenues from external customers	193 968	90 133	-	-	284 101
Operating revenues from other segments	1 646	603	4 112	(6 361)	-
Operating revenues	195 613	90 737	4 112	(6 361)	284 101
Cost of goods sold	(138 734)	(72 353)	-	1 947	(209 140)
Salaries and personnel costs	(31 869)	(10 912)	(8 877)	263	(51 395)
Other operational costs	(13 273)	(2 684)	(4 014)	5 262	(14 709)
Share of profit (loss) of joint venture	-	-	365	-	365
Depreciation	(2 132)	(642)	(904)	-	(3 679)
Amortisation	(2 918)	(1 775)	(831)	-	(5 523)
Other income and expenses	-	-	-	-	-
Operating profit (loss)	6 687	2 370	-10 148	1 111	20
Employees, 31 March 2019	143	62	18		223

			Head quarter
			and	Elim
Q1 2018	Norway	Sweden	other	inations	Total
Operating revenues from external
customers	167 914	64 149	215	-	232 278
Operating revenues from other segments	13 498	515	5 448	(19 461)	-
Operating revenues	181 412	64 664	5 663	(19 461)	232 278
Cost of goods sold	(131 792)	(43 303)	-	10 988	(164 107)
Salaries and personnel costs	(32 122)	(9 949)	(5 876)	521	(47 426)
Other operational costs	(13 449)	(4 840)	(3 615)	7 246	(14 658)
Share of profit (loss) of joint venture	-	-	(37)	-	(37)
Depreciation	(185)	(222)	(21)	-	(428)
Amortisation	(2 445)	(1 753)	(525)	-	(4 723)
Other income and expenses	-	-	-	-	-
Operating profit (loss)	1 419	4 597	(4 411)	(706)	898
Employees, 31 March 2018	147	62	8		217

			Head
			quarter 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	16 010	(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 venture	-	-	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
Employees, 31 December 2018	142	61	18		221

Note 3: Disagregation of revenues

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

			Headquarter
Q1 2019	Norway	Sweden	and other	Eliminations	Group
Total revenues	195 613	90 737	4 112	(6 361)	284 101
Hardware
Hardware revenues	138 502	37 941	-	(1 645)	174 797
Bonus	5 804	830	-	(603)	6 031
Commisions	-	-	-	-	-
Total	144 306	38 771	-	(2 249)	180 828
Solutions
Solutions revenues	39 369	48 938	-	-	88 307
Bonus	5 822	-	-	-	5 822
Commisions	5 611	2 887	-	-	8 499
Total	50 802	51 825	-	-	102 627
Other revenues
Other	505	140	4 112	(4 112)	646
Total	505	140	4 112	(4 112)	646

			Headquarter
Q1 2018	Norway	Sweden	and other	Eliminations	Group
Total revenues	187 919	64 849		(26 470)	232 278
Hardware
Hardware revenues	123 752	41 194	-	(7 088)	157 858
Bonus	5 843	-	-	-	5 843
Commisions	7 066	1 759	-	-	8 825
Total	136 660	42 953		(7 088)	172 525
Solutions
Solutions revenues	49 176	21 474	-	(12 126)	58 524
Bonus	-	-	-	-	-
Commisions	384	394	-	-	778
Total	49 560	21 868		(12 126)	59 302
Other revenues
Other	1 699	28	5 980	(7 256)	451
Total	1 699	28	5 980	(7 256)	451

			Headquarter
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
Commisions	-	-	-	-	-
Total	605 312	194 263	-	(19 412)	780 163
Solutions
Solutions revenues	161 651	55 027	-	(475)	216 203
Bonus	21 543	-	-	-	21 543
Commisions	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

Note 4: Share capital and shareholders

The company's share capital as at 31 March 2019 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. At the time of this report, Techstep holds 1,914 treasury shares.

Techstep's 20 largest shareholders as at 31 March 2019 were as follows:
-------------------------------------------------------------------------	--	--	--

Shareholder	# of shares	Ownership %
DATUM AS 1	31 817 975	20.00 %
MIDDELBORG INVEST AS	30 517 764	19.19 %
DNB Markets Aksjehandel/-analyse	9 514 212	5.98 %
RUGZ AS 3	7 954 972	5.00 %
CIPRIANO AS 2	4 968 835	3.12 %
Skandinaviska Enskilda Banken AB	4 028 390	2.53 %
TIGERSTADEN AS	4 000 000	2.51 %
PALOS NORGE AS	3 966 667	2.49 %
Tinde industrier as	3 063 372	1.93 %
ZONO HOLDING AS 4	3 000 007	1.89 %
SÅ&HØSTE AS	2 925 936	1.84 %
TVENGE	2 700 000	1.70 %
SKARESTRAND INVEST AS	2 583 097	1.62 %
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	1 600 255	1.01 %
Total number owned by top 20	124 197 871	78.08%
Total number of shares	159 057 020	100%

1) Datum AS is controlled by deputy board member Jan Haudemann-Andersen

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

3) Rugz AS is owned by chairman of the board Jens Rugseth

4) Zono Holding AS owned by Middelborg Invest AS 50.44%, Cipriano AS 4.65%, Duo Jag AS 0.93%

Idekapital AS, which is controlled by board member Anders Brandt, owns 1,287,245 shares in Techstep ASA.

Duo Jag AS, which is partly owned by board member Ingrid Leisner, owns 554,834 shares in Techstep ASA.

Share option grant

On 26 April 2018, the General assembly approved the Board of Directors' proposal to grant CEO Jens Haviken 5 million share options in three tranches, vesting annually. The strike price is set at NOK 4.50, NOK 5.00 and NOK 5.50 for the respecive tranches. Existing outstanding share options granted previously are aligned to the same strike prices.

As of 31 March 2019, the total number of outstanding share options was 13.2 million, which is equivalent to 7.7 % of the number of shares fully diluted (including 1,914 treasury shares) in Techstep ASA.

Name	Position	Shares	Share options
Jens Haviken	CEO	100,000	5,000,000
Marius Drefvelin	CFO	40,000	1,500,000
Mads Vårdal	CIO	5,019	1,500,000
Inge Paulsen	COO	150,000	1,000,000
Erik Haugen	CCO	-	1,000,000

Overview of shares and share options held by members of the management group as at 31 March 2019:

Note 5: Leases

Effects on the consolidated statement of financial position.

The equity effect of the adoption of IFRS 16 was zero. The table below presents the effects in assets and liabilities presented in the fourth quarter report and financial statements of 2018 before and after the adoption of IFRS 16.

	IFRS 16
	31 December	implementation	1 January
	2018	effect	2019
Total tangible assets	9 377	21 563	30 940
Other non-current debt	(8 081)	(10 315)	(18 396)
Other current liabilites	( 47 131)	(11 248)	(58 378)

Effects on the consolidated income statement

	Excluding IFRS 16	IFRS 16	Total effect
	Q1 2019	effects	Q1 2019
Other operational costs	2 806	-	(2 806)
Depreciation	-	2 705	2 705
Finance expenses	-	131	131
Total	2 806	2 836	30

Note 6: Subsequent events

At the Annual General Meeting on 25 April 2019, Jens Rugseth was elected as the new chairman of the board.

No other material events have occurred from the balance sheet date until the publication of the financial statements that have had material impact on the Group's financial position and that should have been reflected in the published financial statements.

Alternative Performance Measures

"Alternative Performance Measures

Techstep Group's financial information is prepared in accordance with international financial reporting standards (IFRS). In addition, it is management's intention 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 measuring 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 profit

Gross profit is defined as Total revenue less Cost of goods sold.

Gross margin

Gross margin is defined as Total revenue less Cost of goods sold divided by Total revenue.

"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 leases, capital expenditures and acquisitions that occurred in the past. The EBITDA margin presented is defined as EBITDA divided by total revenues."

"EBITA

Earnings before interest, tax and amortisation (EBITA) 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 related primarily to leases and capital expenditures and acquisitions that occurred in the past. The EBITA margin presented is defined as EBITA divided by total revenue."

"EBIT

Earnings before interest and tax (EBIT) is useful to users with regard to 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 revenue."

"Hardware revenue

Hardware revenue is defined as revenue from sales of tangible goods and related discounts from suppliers and partners.

Hardware share of revenue is the hardware revenue divided by total revenues"

"Solutions revenue

Solutions revenue is defined as revenue from sales of licenses, support and other non-tangible items to customers. Also included are discounts from suppliers and partners. Solutions share of revenue is the solutions revenue divided by total revenue."

Net interest-bearing debt (NIBD)

Net interest-bearing debt is non-current interest-bearing debt plus current interest-bearing liabilities less cash and cash equivalents.

Capital Expenditure (Capex)

Capital expenditure is the same as payment for property, plant and equipment and intangible assets.

TECHSTEP ASA

Note 4: Changes in Group structure and subsequent events

Brynsveien 3 0667 Oslo, Norway +47 915 233 37

www.techstepasa.no

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Interim report Q1 2019