Interim report Q1 2020

Highlights Q1 2020

● Stable quarter with limited impact from the COVID-19 pandemic
● Revenue was NOK 293 million, up from NOK 284 million in the first quarter of 2019
● Gross profit was NOK 80 million, up from NOK 75 million in the first quarter of 2019
● EBITDA adjusted was NOK 12 million
● ARR of NOK 37 million from 207,000 end-users at the end of the quarter
● Signed six new Flow contracts with an estimated value of NOK 12 million
● Extraordinary market conditions reducing near-term demand, driven by cautious private sector enterprises
● Digital transformation amplified and accelerated, mobility market fundamentals improving long-term
● Sold Techstep's IT Operations and Support business for NOK 8 million in April
● Focus on software- and IP-lead growth

CEO comment

"We are experiencing extraordinary times for society, people and workplaces, and Techstep like other companies and organizations has taken swift actions to respond and adapt to the situation. We put people, customers and our partners first. The nature of what we do makes us very well equipped to deal with the challenge, and to maintain operations in a good way. At the same time, our team of 200+ employees have shown a tremendous commitment to adapt to the new situation taking care of thousands of customers and hundreds of thousands of end-users.

When it comes to our business, our stable first quarter results reflect our strategic development transforming into a software and IP-driven mobility services provider. We are deliberately sharpening our focus, reducing revenue and margin contribution from some areas, to prioritize our mobility-as-aservice offering "Flow" that we believe will enable value creating growth for our customers and Techstep in the coming years.

When it comes to the market, we are observing a mixed picture. We see higher activities in some areas, while some hard-hit existing and potential customers obviously are curbing demand in other areas. Overall, the initial effect on demand has been soft and Techstep has mitigated the challenges by reducing costs and capex accordingly.

Looking ahead, we see mobility needs and trends being amplified and accelerating, and we are positive that our mobility solutions will be more relevant than ever once the crisis abates. At its core, our business is to enable enterprises and employees to do their work across mobile devices in any location with a high degree of security and operational stability. We will focus on "Flow" and solutions sales, operational efficiency to drive growth and continue to invest in software and IP, as well as pursuing M&A. For Techstep, 2020 will be a very important platform for long-term success. What we do matters to society, people and organizations," says Techstep 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 212 employees based in Norway and Sweden, serving close to 4,000 customers and 207,000 recurring revenue 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 2020	Q1 2019	2019

Total Revenue	292 677	284 101	1 132 059
Annual Recurring Revenue (ARR)	37 127	34 218	36 632

Gross profit	80 454	74 961	279 338

EBITDA adj.	11 879	9 221	29 007
EBITDA rep.	11 629	9 221	27 040
EBITA	(393)	5 543	(58 174)
EBIT	(5 431)	20	(80 192)
Net profit (loss) for the period	(3 391)	(1 511)	(64 329)

EBITDA adj. margin (%)	4.1 %	3.2 %	2.6 %
EBITDA rep. Margin (%)	4.0 %	3.2 %	2.4 %
EBITA margin (%)	(0.1 %)	2.0 %	(5.1 %)
EBIT margin (%)	(1.9 %)	0.0 %	(7.1 %)
Net profit (loss) for the period (%)	(1.2 %)	(0.5 %)	(5.7 %)

Cash	19 996	48 647	44 588
Net interest-bearing debt	27 498	20 759	1 996
Capex	23 334	5 625	33 610

EBITDA adjusted excludes non-recurring items related to M&A activities and restructuring costs of NOK 0.3 million in Q1 2020 and NOK 2 million in 2019.

The Q1 2020 financial statements include the full consolidation effect of the leasing portfolio from Techstep Finance. The effect in Q1 2020 is an increase of NOK 9.6 million on revenue, an increase of NOK 9.2 million on EBITDA profit and an increase of NOK 9.1 million on depreciation.

Operational review

Main developments

The first quarter of 2020 was marked by the abrupt change in the macro environment owing to the outbreak of the COVID-19 virus. In the Nordics, the effects from the pandemic and the measures to limit the spread started mid-March. Techstep proactively took steps to safeguard employees, families, customers and partners while minimising risk of business interruptions. Techstep adheres to local public health advisories across its locations.

Employees' health and well-being are the highest priority

Techstep's main priority is the health of employees and their families. Immediately after the local public health authorities took measures to limit spread, Techstep established business continuity plans and a dedicated task force. Since 12 March, Techstep has run core operations utilising mobile office solutions enabling employees to work remotely. Furthermore, Techstep restricts physical meetings and all travel across borders or within countries unless strictly necessary.

Impact on Techstep's operations in the wake of COVID-19

Techstep's business is to enable enterprises and employees to do their work across mobile devices and locations, with a high degree of security and operational stability. Techstep is fortunate and well equipped to deal with the current situation and ensure business continuity and efficient operations.

Techstep has experienced some reduction in demand for hardware offerings as many private enterprises are affected by the outbreak. The decline has partly been offset by an increased demand from the public sector, primarily in healthcare and education. The establishment of the City of Oslo coronavirus hotline is an example of Techstep's latest deliveries within communication support.

During the quarter, Techstep also purchased additional hardware supplies to mitigate

potential increased supplier risk and ensure its capability to serve its customers.

Operational and financial flexibility

Following the significant macroeconomic uncertainty, some hard-hit sectors curbed customer demand. Techstep reacted promptly to the situation and implemented a temporary adjustment in workforce capacity by approximately 20%, effective from mid-April. The temporary reductions have been implemented in the Norwegian and Swedish sales and support business units, whereas the software development unit continues as normal.

Techstep has operational, cost and capital expenditure flexibility and will continue to adapt as market conditions evolve. The temporary adjustments in the workforce is one such adaption. Techstep will continue its softwarerelated investments as planned, but other capital expenditures may be reduced going forward. Financially, Techstep has a solid balance sheet and limited net interest-bearing debt.

Techstep's strategy of making work mobile more relevant than ever

Techstep's strategy is to help enterprises handle the complexity that comes with providing hundreds or thousands of employees with mobility solutions. In 2019, Techstep continued to transition from a hardware wholesaler and distributor towards becoming an IP- and software-led provider offering mobility solutions capable of handling complexity at scale.

In line with this strategy and its software-as-aservice business model, Techstep continued to develop its "mobile-as-a-service" concept (formerly known as "MaaS") throughout 2019. At the end of the year, an evolved offering named "Flow" was launched to existing and new customers.

Flow allows Techstep to bundle value-adding services together with hardware and software into one complete solution offered to enterprises for a fixed monthly fee per user. The Flow offering consists of a smartphone,

Techstep's software solutions (Origo Business Cloud), device life-cycle management and financing. The financing through Techstep Finance adds the benefit of a residual value at the end of the leasing period, contributing to a lower total cost of ownership for the customer. In addition, the customer can choose among several add-on services tailored to its needs.

As Flow was launched into the wider market, Origo Business Cloud - a key component of the Flow offering, was also introduced independently to selected customers. Being a software solution, Origo will also be sold independently through partners.

M&A activities have played an important role in Techstep's history, and the company has acted as a market consolidator in Norway and Sweden over the past years.

After the first quarter, Techstep Norway AS (a fully owned subsidiary of Techstep ASA) sold its IT Operations and Support business unit to Crayon AS for a total consideration of NOK 8 million. This agreement follows a series of measures to transform Techstep towards a software and IP-driven company.

Sales activity

During the first quarter Techstep signed a total of six Flow agreements with a potential value of NOK 12 million. All six were signed in Norway.

While Flow is Techstep's evolved version of its mobile-as-a-service solution consisting of both hardware, software, device lifecycle management and financing, the other new contracts in the quarter were a mix of both hardware-only and combinations of hardware and solutions.

The largest contracts signed in the quarter were Optimera in Norway, a solutions and hardware

contract with an estimated value of about NOK 10 million. The agreement also includes the potential for Flow at a later stage. In Sweden, LRF Konsult and Volvo Personvagnar were the largest contracts signed in the quarter with a financed hardware deal and pure hardware deal, respectively.

Recurring revenue base

Techstep's annual recurring revenue base (ARR¹ ) was NOK 37 million per first quarter 2020 from a total end-user base of ~207,000. Techstep's recurring revenue relates to the sale of our own software with 100% gross margin; Mobile Expense Management and Origo Business Cloud, sold either as a white-label service through partners or directly by Techstep.

¹ *Refer to alternative performance measures

Financial review

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

In the fourth quarter of 2019, Techstep ASA gained control over Techstep Finance AS. As of the first quarter of 2020, Techstep Finance AS is fully consolidated in the consolidated financial statements.

Profit and loss

Techstep generated total revenue of NOK 292.7 million in the first quarter of 2020, up 3% from NOK 284.1 million in the corresponding quarter last year.

Total Solution revenue, which comprises Own software, Advisory & services and related commissions, amounted to NOK 73.0 million in the quarter (NOK 102.6 million including a oneoff EMM case of NOK 23 million), of which own software accounted for NOK 9.7 million in the quarter (NOK 8.6 million). Leasing of hardware amounted to NOK 9.6 million in the quarter (NOK 0 million). Hardware revenue amounted to NOK 210.2 million in the first quarter (NOK 180.8 million).

Thus, Hardware accounted for 72% of revenue, Leasing for 3%, Own software for 3% and Advisory & services for the remaining 22%.

Gross profit increased by 7% year-over-year to NOK 80.4 million. This includes a positive effect from the consolidation of Techstep Finance AS, offset by a decrease in operator commissions and third-party software. The gross margin for the quarter was 27%, an increase from 26% in the corresponding quarter of 2019.

Hardware accounted for 35% of gross profit, Leasing for 11%, Own software for 12%, and Advisory & Services for the remaining 41%.

Salaries and personnel costs declined by 3% to NOK 49.7 million in the first quarter of 2020, reflecting a lower headcount and efficiency improvement initiatives in Norway, partly offset by new hires within Advisory & Services and own software development.

Option costs for the quarter were NOK 0.4 million, compared to NOK 1.0 million in the corresponding quarter last year.

Other operational costs were NOK 19.0 million in the first quarter 2020, up from NOK 14.7 million in the same quarter of 2019. The increase is primarily related to an increase in IT spending, marketing and personnel training in line with the company's strategy, and full consolidation of Techstep Finance AS.

Capitalised costs relating to the development of own software were NOK 2.3 million (NOK 1.0 million), of which NOK 0.6 million were personnel costs and NOK 1.7 million were external development costs. Other investments related to internal IT were NOK 2.6 million.

EBITDA amounted to NOK 11.6 million in the first quarter of 2020, up from NOK 9.2 million in the corresponding quarter of 2019.

Operating loss (EBIT) came to NOK 5.4 million in the first quarter of 2020, compared to an operating loss (EBIT) of NOK 0 million for the first quarter of 2019.

Net loss in the first quarter of 2020 amounted to NOK 3.4 million, compared to a loss of NOK 1.5 million in the first quarter of 2019.

Financial position

As at 31 March 2020, total assets were NOK 844.0 million, compared with NOK 817.2 million as at 31 December 2019.

Intangible assets account for NOK 498.2 million as at 31 March 2020, up from NOK 480.3 million at the end of the year. The increase is mainly related to currency effects on goodwill.

Total tangible assets were NOK 117.6 million at 31 March 2020, including hardware leased out to customers of NOK 80.0 million and premises and IT licenses of NOK 34.3 million.

Total inventories and receivables were NOK 31.1 million as at 31 March 2020. The increase from NOK 11.8 million relates to increased

inventory of goods in Sweden for delivery in the second quarter.

Assets classified as held for sale were NOK 5.5 million and relate to the premises in Karlstad, Sweden. In December 2019, an agreement was signed to sell the premises for SEK 12.8 million. There is a property loan of NOK 7.8 million classified as current interest-bearing liabilities which will be settled when the building has been handed over to the new buyer, scheduled for summer 2020.

Total equity at the end of the first quarter was NOK 472.9 million, corresponding to an equity ratio of 56% equal to the end of 2019.

Other non-current debt of NOK 50.1 million comprises an earn-out obligation related to Wizor AS of NOK 4.9 million, leasing commitments of NOK 24.8 million and a buyback obligation for leased hardware of NOK 16.4 million.

Current interest-bearing liabilities amounted to NOK 47.3 million and includes factoring debt of NOK 39.5 million, and the property loan for the Swedish office building of NOK 7.8 million.

Other current liabilities of NOK 122.9 million per 31 March 2020 mainly include vacation pay and bonus provisions of NOK 23.1 million, deferred revenue of NOK 71.1 million and leasing commitments of NOK 11.2 million.

Net interest-bearing debt was NOK 27.5 million at the end of the first quarter 2020, compared to NOK 2.0 million per year-end 2019. The increase is largely explained by reduced cash used for early purchase of inventory for delivery in the second quarter.

Cash flow

Net cash outflow from operating activities was NOK 1.3 million in the first quarter of 2020. This includes a negative effect from working capital due to increased inventory in Sweden for delivery in the second quarter.

Net cash outflow to investment activities was NOK 23.3 million, including capital expenditure to software and IT development of NOK 4.9

million and leased out hardware of NOK 18.4 million in gross payments.

Net cash outflow to financing activities was NOK 3.2 million in the quarter, relating to lease repayments (IFRS 16) for premises and licenses.

Cash and cash equivalents decreased by NOK 27.8 million in the first quarter to NOK 20.0 million.

Subsequent events

On 3 April, Techstep entered into an agreement to divest its IT Operations and Support business unit to Crayon AS for a total consideration of NOK 8 million. The transaction was structured as an asset purchase and effective from 1 April 2020. At the same time, Techstep signed a 3-year agreement with Crayon for IT Operations and Support

Outlook

While the transition from a hardware supplier to a software and solutions provider is materialising gradually, Techstep is experiencing lower gross profit contribution from operator commissions and volumes from the Norwegian SME segment that was discontinued in the second quarter 2019. As Techstep's new software and solution offerings are being gradually introduced to customers and the market, it is expected to take some time before they will compensate fully.

Techstep will continue focusing on growing sales of the company's value creating, higher margin software and services solutions to enterprise customers in Norway and Sweden. In addition to investments in the software platform and organisational development and

capabilities, Techstep will continue to pursue M&A opportunities.

Techstep monitors the current uncertain macroeconomic development following the COVID-19 outbreak and has established contingency plans to further adjust the operations and expenditures should the situation require the company to do so.

Looking further ahead, the relevance for mobility solutions within the workplace is perhaps higher than ever. Digital transformation is amplified and accelerated and mobility market fundamentals improving long-term. Techstep is positive that its solutions will be even more relevant once the crisis abates. In addition, the Flow offering enables Techstep to help companies enable mobility solutions through financing options, reducing the shorterterm liquidity need for customers' mobility and communication platforms.

Consolidated income statement

(amounts in NOK 1 000)	Note	Q1 2020	Q1 2019	2019
Revenue	2, 3	292 219	283 455	1 127 763
Other income		458	646	4 296
Total revenues		292 677	284 101	1 132 059

Cost of goods sold		(212 223)	(209 140)	(852 722)
Salaries and personnel costs		(49 781)	(51 395)	(187 994)
Other operational costs		(19 044)	(14 709)	(65 363)
Share of profit (loss) in joint ventures		-	365	1 059
Depreciation	5	(12 021)	(3 679)	(15 214)
Amortisation		(5 039)	(5 523)	(22 018)
Impairment		-		(70 000)
Other income		-	-	-
Operating profit (loss)		(5 431)	20	(80 192)

Remeasurement on equity interests		-		18 206
Financial income		4 648	455	5 546
Financial expense		(5 576)	(1 192)	(5 948)
Profit before taxes		(6 359)	(717)	(62 388)
Income taxes		2 968	(794)	(1 941)
Net profit (loss) for the period		(3 391)	(1 511)	(64 329)

Net income attributable to
Non-controlling interests		95	-	(1)
Shareholders of Techstep ASA		(3 486)	(1 511)	(64 328)

Earnings per share in NOK:
Basic		(0.02)	(0.01)	(0.40)
Diluted		(0.02)	(0.01)	(0.40)

Consolidated statement of comprehensive income

(amounts in NOK 1 000)	Q1 2020	Q1 2019	2019
Net profit (loss) for the period	(3 391)	(1 511)	(64 329)

Items that maybe reclassified to profit and loss
Exchange differences on translating foreign operations*	22 404	(8 608)	(7 613)
Income tax related to these items	(2 648)	1 109	923
Total comprehensive income	16 365	(9 010)	(71 019)

Total comprehensive income attributable to
Non-controlling interests	(6)	-	-
Shareholders of Techstep ASA	16 371	(9 010)	(71 019)

*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

(amounts in NOK 1 000)
ASSETS Note	Q1 2020	FY 2019
Non-current assets
Deferred tax asset	2 163	0
Goodwill	432 315	418 385
Customer relations and technology	63 684	61 901
Total intangible assets	498 163	480 285
Right-of-use assets 5	34 333	36 590
Property, plant and equipment	83 309	75 197
Total tangible assets	117 643	111 787
Joint ventures	-	-
Shares and investments	44	44
Other non-current assets	145	181
Total financial assets	189	225
Total non-current assets	615 995	592 298
Inventories	31 102	11 828
Accounts receivable	155 199	147 411
Other receivables	16 231	16 104
Total inventories and receivables	202 531	175 343
Cash and cash equivalents	19 996	44 588
Assets classified as held for sale	5 490	4 962
Total current assets	228 018	224 893
Total assets	844 013	817 191

EQUITY AND LIABILITIES Note	Q1 2020	FY 2019
Share capital 4	162 795	162 795
Other equity	310 133	293 478
Total equity attributable to the owners of Techstep ASA 4	472 927	456 273
Non-controlling interests	(213)	(304)
Total equity	472 714	455 970
Deferred tax	3 162	4 483
Non-current interest-bearing debt	162	162
Other non-current debt	50 119	47 688
Total non-current debt	53 443	52 333
Current interest-bearing liabilities	47 333	46 423
Accounts payable	122 115	122 328
Tax payable	(309)	936
Public taxes, provisions	25 850	22 381
Other current liabilities 5	122 868	116 820
Total current debt	317 857	308 888
Total liabilities	371 300	361 221
Total equity and liabilities	844 013	817 191

Consolidated statement of changes in equity

(amounts in NOK 1 000)	Share capital	Other paid-in capital	Other equity	Reval. reserve	SUM	Minority interest	Total equity capital

Equity as of 1 January 2019	159 057	497 096	(143 670)	1 296	513 780	-	513 780
Profit for the period	-	-	(64 328)	-	(64 328)	(1)	(64 329)
Other comprehensive income	-	-	-	(6 690)	(6 690)	-	(6 690)
Total comprehensive income for the period	-	-	(64 328)	(6 690)	(71 018)	(1)	(71 019)
Transactions with owners in their capacity as owners: Issue of ordinary shares as consideration for a
business combination, net of transaction costs and tax	3 738	7 178	-	-	10 916	(305)	10 611
Share-based payments	-	-	2 597	-	2 597	-	2 597
Equity as of 31 December 2019	162 795	504 273	(205 402)	(5 394)	456 273	(304)	455 970

Equity as of 1 January 2020	162 795	504 273	(205 402)	(5 394)	456 273	(304)	455 970
Profit for the period Other comprehensive	-	-	(3 486)	-	(3 486)	95	(3 391)
income	-	-	-	19 756	19 756	(6)	19 750
Total comprehensive income for the period	-	-	(3 486)	19 756	16 270	89	16 359
Transactions with owners in their capacity as owners:
Share-based payments Equity as of 31 March 2020	- 162 795	- 504 273	385 (208 502)	- 14 362	385 472 927	- (213)	385 472 714

Consolidated statement of cash flow

(amounts in NOK 1 000)	Note	Q1 2020	Q1 2019	2019

Profit before tax		(6 359)	(717)	(62 388)
Profit from joint venture		-	(365)	(1 059)
Depreciation equipment and other fixed assets	5	9 123	974	4 281
Depreciation right-of-use assets	5	2 898	2 705	10 933
Amortisation		5 039	5 523	22 018
Share-based payments		385	997	2 597
Dividend reclassified to investment activities		-	-	(2 103)
Impairment		-	-	70 000
Remeasurement of equity interest		-	-	(18 206)
Net exchange differences*		11 287	(4 172)	1 451
Taxes paid		(1 037)	267	(2 508)
Changes in net operating working capital core		(23 405)	1 346	2 681
Changes in other net operation working capital		795	1 984	23 382
Net cash flow from operational activities		(1 274)	8 541	51 079

Payment for acquisition of subsidiaries net of cash acquired		-	-	5 184
Payment for equipment and other fixed assets	5	(18 492)	(533)	(16 221)
Payment for intangible assets		(4 842)	(5 092)	(17 389)
Repayment of invested capital		-	-	8 073
Proceeds from dividends received		-	-	2 094
Net cash used on investment activities		(23 334)	(5 625)	(18 259)

Proceeds from issuance of shares		-	-	-
Repayment of borrowings		(61)	(32)	(15 350)
Lease repayments		(3 186)	(3 273)	(12 145)
Net cash flow from financing activities		(3 247)	(3 306)	(27 494)

Net change in cash and cash equivalents		(27 855)	(390)	5 326

Cash and cash equivalents at beginning of period		44 588	39 741	39 716
Effects of exchange rate changes on cash and cash equivalents		3 264	(721)	(453)
Cash and cash equivalents at end of period		19 996	38 629	44 588

*Restated Q1 2019. Refer to note 6

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 under 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 2019. 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 2019. The report has not been audited.

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, servicing, support and mobility consultancy services. The company is located in Oslo and Sandefjord.
Mytos AS: A Norwegian based software as a services company with mainly recurring revenue. Mytos offers a full range of mobile expense management (TEM) modules, all with proprietary software and highly user-friendly implementation and operation. 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.
Techstep Finance AS: Provides financing and remarketing services.

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, Gothenburg and Stockholm.
Mowizor AB: A Swedish based security software company, located in Stockholm.
Techstep Finance AB: Provides financing and remarketing services.

3) Headquarters and other:

• Techstep ASA, Techstep Nordic AS, Netconnect AS and Techstep Holding AB.

			HQ and	Elim
Q1 2020	Norway	Sweden	other	inations	Total
Operating revenues from external
customers	209 921	82 509	246	-	292 677
Operating revenues from other segments	2 671	1 161	8 274	(12 106)	-
Operating revenues	212 593	83 669	8 521	(12 106)	292 677
Cost of goods sold	(154 363)	(60 888)	(283)	3 312	(212 223)
Salaries and personnel costs	(29 923)	(11 580)	(8 528)	250	(49 781)
Other operational costs	(15 505)	(5 112)	(13 605)	15 178	(19 044)
Share of profit (loss) of joint venture	-	-	-	-	-
Depreciation	(8 222)	(1 879)	(1 921)	-	(12 021)
Amortisation	(2 697)	(1 862)	(480)	-	(5 039)
Impairment	-	-	-	-	-
Other income and expenses	-	-	-	-	-
Operating profit (loss)	1 883	2 348	(16 296)	6 634	(5 431)

Employees 31 March 2020	136	60	16		212

			HQ 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)	0
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)
Impairment	-	-	-	-	-
Other expenses	(0)	-	-	-	(0)
Operating profit (loss)	6 687	2 370	(10 148)	1 111	20

Employees 31 March 2019	143	62	18		223

			HQ and	Elim
FY 2019	Norway	Sweden	other	inations	Total
Operating revenues from external customers	824 119	307 940	0	-	1 132 059
Operating revenues from other segments	6 057	3 172	22 567	(31 796)	-
Operating revenues	830 176	311 112	22 567	(31 796)	1 132 059
Cost of goods sold	(622 397)	(238 273)	(35)	7 984	(852 722)
Salaries and personnel costs	(114 929)	(42 444)	(31 587)	965	(187 994)
Other operational costs	(55 118)	(12 888)	(20 544)	23 187	(65 363)
Share of profit (loss) of joint venture	-	-	1 059	-	1 059
Depreciation	(7 094)	(2 600)	(5 519)	-	(15 214)
Amortisation	(13 298)	(7 068)	(1 653)	-	(22 018)
Impairment	(70 000)	-	-	-	(70 000)
Other expenses	-	-	-	-	-
Operating profit (loss)	(52 660)	7 839	(35 712)	340	(80 192)

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:

			Headquarter
Q1 2020	Norway	Sweden	and other	Eliminations	Group
Total revenues	212 593	83 669	8 521	(12 106)	292 677

Hardware
Hardware revenues	160 044	52 837	-	(2 671)	210 210
Bonus	7 449	1 580	-	-	9 029
Total	167 493	54 417	-	(2 671)	219 238

Solutions
Solution revenues	37 772	26 667	-	(1 161)	63 278
Commission	6 973	2 729	-	-	9 702
Total	44 745	29 396	-	(1 161)	72 980

Other revenues
Other	354	(143)	8 521	(8 274)	458
Total	354	(143)	8 521	(8 274)	458

			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
Total	144 306	38 771	-	(2 249)	180 828

Solutions
Solution revenues	39 369	48 938	-	-	88 307
Commission	11 433	2 887	-	-	14 320
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

In Q1 2019 NOK 5,8 million were reported as Solution bonus. The amount has been reclassified to Solutions commission.

			Headquarter
FY 2019	Norway	Sweden	and other	Eliminations	Group
Total revenues	830 176	311 112	22 567	(31 796)	1 132 059

Hardware
Hardware revenues	607 136	203 986	-	(5 266)	805 857
Bonus	28 380	2 807	-	-	31 187
Total	635 517	206 793	-	(5 266)	837 044

Solutions
Solutions revenues	155 751	95 765	-	(3 963)	247 552
Commission	34 388	8 780	-	-	43 167
Total	190 139	104 544	-	(3 963)	290 720

Other revenues
Other	4 521	(225)	22 567	(22 567)	4 296
Total	4 521	(225)	22 567	(22 567)	4 296

Note 4: Share capital and shareholders

The company's share capital as at 31 March 2020 was NOK 162,795,337 consisting of 162,795,337 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 at 31 March 2020 were as follows:
----------------------------------------------------------------------	--	--	--

Shareholder	# of shares	Ownership %
DATUM AS1	31 817 975	19.54 %
MIDDELBORG INVEST AS	30 517 764	18.75 %
KARBON INVEST AS2	17 236 689	10.59 %
CIPRIANO AS3	4 968 835	3.52 %
TIGERSTADEN AS	4 526 153	2.78 %
VERDIPAPIRFONDET DNB SMB	4 179 903	2.57 %
ZONO HOLDING AS4	4 000 007	2.46 %
PALOS NORGE AS	3 966 667	2.44 %
BRIDGE CAPITAL AS	3 813 317	2.34 %
SKANDINAVISKA ENSKILDA BANKEN AB	3 654 465	2.24 %
TINDE INDUSTRIER AS	3 063 372	1.88 %
TVENGE	3 000 000	1.84 %
SÅ&HØSTE AS	2 925 936	1.80 %
ADRIAN AS	2 038 851	1.25 %
NOMO HOLDING AS	1 946 253	1.20 %
NORDIALOG ENSJØ AS	1 946 253	1.20 %
SKARESTRAND INVEST AS	1 922 315	1.18 %
DOVRAN HOLDING AS	1 863 372	1.14 %
UNIFIED AS	1 849 457	1.14 %
MODIOLA AS	1 649 348	1.13 %
Total number owned by top 20	130 886 932	80.99 %
Total number of shares	162 795 337	100%

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

2) Karbon Invest AS is owned by chairman of the board Jens Rugseth

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

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

As of 31 March, the total number of outstanding share options was 11.6 million, which is equivalent to 7% of the number of shares (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
Erik Haugen	CCO	-	1,000,000
Inge Paulsen	Managing Director Norway	150,000	1,000,000
Bartek Regerqvist	Managing Director Sweden	-	200,000

Overview of shares and share options held by members of the management group as at 31 March 2020:

Note 5: Property, plant and equipment

	Land and buildings	Right-of-use assets	Equipment*	Other fixed assets	Total

Accumulated cost as at 1 January 2020	-	47 552	103 200	19 966	170 718
Additions	-	390	18 250	105	18 745
Additions arising from business combinations	-	-	-	-	-
Disposals	-	-	-	-	-
Translation differences	-	495	1 364	2 217	4 076
Reclassified to asset classified as held for sale	-	-	-	-	-
Accumulated cost 31 March 2020	-	48 437	122 814	22 289	193 540

Accumulated cost as at 1 January 2019	8 166	-	-	17 950	26 115
Additions	-	47 686	14 858	2 049	64 593
Additions arising from business combinations	-	-	91 007	-	91 007
Disposals	-	-	-	-	-
Translation differences	(133)	(135)	(21)	(32)	(321)
Reclassified to asset classified as held for sale	(8 032)	-	-	-	(8 032)
Accumulated cost 31 December 2019	-	47 552	105 865	19 966	173 383

Accumulated depreciation as at 1 January 2020	-	(10 962)	(33 791)	(16 763)	(61 516)
Additions arising from business combinations	-	-	-	-	-
Current year depreciation	-	(2 898)	(8 942)	(181)	(12 021)
Reclassified to held for sale	-	-	-	-	-
Disposals	-	-	-	-	-
Translation differences	-	(244)	(214)	(1 903)	(2 361)
Reclassified to asset classified as held for sale	-	-	-	-	-
Accumulated depreciation 31	-	(14 104)	(42 946)	(18 847)	(75 897)
March 2020
Accumulated depreciation as at 1	(3 056)	-	-	(13 682)	(16 739)
January 2019 Additions arising from business	-	-	(32 034)	-	(32 034)
combinations Current year depreciation	(82)	(10 933)	(1 834)	(2 365)	(15 214)
Reclassified to held for sale	-	-	-	-	-
Disposals	-	-	-	-	-
Translation differences	68	(28)	(3)	(110)	(75)
Reclassified to asset classified as
held for sale	3 070	-	-	(605)	2 465
Accumulated depreciation 31 December 2019	-	(10 962)	(33 871)	(16 763)	(61 596)
Book value of assets 31 December	-	36 590	69 409	3 203	111 787
2019 Book value of assets 31 March
2020	-	34 333	79 868	3 441	117 642

Note 6: Reclassification

Reclassification impact in consolidated statement of cash flows

	Changes in net	Cash and cash	Cash and cash
	operating working	equivalents at	equivalents at
	capital	beginning of period	end of period
Q1 2019 Restated	8 541	39 741	38 630
Q1 2019 Reported	3 045	53 994	48 647
Change	5 496	(14 253)	(10 017)

The restated changes in net operating working capital comprise the reclassification of a non-cash currency effect and reclassification of a bank overdraft facility.

Note 7: Subsequent events

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, amortisation and impairment (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.

Adjusted EBITDA

Adjusted Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) is based on EBITDA but adjusted for transactions of a non-recurring nature. Such non-recurring transactions include, but are not limited to: restructuring costs, gains or losses related to sale of subsidiaries, acquisition related costs and other non-recurring income and expenses.

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.

Total net operating expenses

Total net operating expenses includes the line items Cost of goods sold, Salaries and personnel costs, Other operating costs, Share of profit (loss) in joint venture, Depreciation, Amortisation, Impairment and Other income.

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.

Equity ratio

Equity ratio is defined as Total equity divided by total equity and liabilities.

Capital Expenditure (Capex)

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

Annual Recurring Revenue (ARR)

ARR is calculated as the revenue the following 12 months from own software as at the balance sheet date. The ARR is calculated by multiplying the number of users of own software with the price per product and in turn annualized.

APM's in the income statement	Q1 2020	Q1 2019	2019

Total revenue	292 677	284 101	1 132 059
Cost of goods sold	(212 223)	(209 140)	(852 722)
Gross profit	80 454	74 961	279 338
Gross margin	0	0	0
Salaries and personnel costs	(49 781)	(51 395)	(187 994)
Other operational costs	(19 044)	(14 709)	(65 363)
Share of profit (loss) in joint ventures	-	365	1 059
Other income	-	-	-
EBITDA	11 629	9 221	27 040
Depreciation	(12 021)	(3 679)	(15 214)
Impairment	-	-	(70 000)
EBITA	(393)	5 543	(58 174)
Amortisation	(5 039)	(5 523)	(22 018)
EBIT	(5 431)	20	(80 192)

Adjusted EBITDA
EBITDA	11 629	9 221	27 040
Non-recurring costs	250	-	1 967
Adjusted EBITDA	11 879	9 221	29 007

Total net operating expenses
Cost of goods sold	(212 223)	(209 140)	(852 722)

Salaries and personnel costs	(49 781)	(51 395)	(187 994)
Other operational costs	(19 044)	(14 709)	(65 363)
Share of profit (loss) in joint ventures	-	365	1 059
Depreciation	(12 021)	(3 679)	(15 214)
Amortisation	(5 039)	(5 523)	(22 018)
Impairment	-	-	(70 000)
Other income	-	-	-
Total net operating expenses	(298 108)	(284 081)	(1 212 252)

Revenue splits
Revenue	292 677	284 101	1 132 059
Hardware revenue	219 696	181 474	841 340
Solutions revenue	72 980	102 627	290 720
Hardware share of revenue	75 %	64 %	74 %
Solutions share of revenue	25 %	36 %	26 %

NIBD
Cash and cash equivalents	19 996	44 588
Non-current interest-bearing borrowings	162	162
Current interest-bearing borrowings	47 333	46 423
NIBD	(27 498)	(1 996)

Equity ratio
Total equity	472 714	455 970
Total equity and liabilities	844 013	817 191
Equity ratio	56 %	56 %

ARR
Number of users	207	201
Average price own software	180	182
ARR	37 127	36 628

TECHSTEP ASA

Brynsalléen 4 0667 Oslo, Norway +47 915 233 37