Techstep ASA — Investor Presentation 2017

Aug 17, 2017

Q2 2017

T E C H S T E P ¹ Marius Drefvelin, CFO

" We make work life mobile" Gaute Engbakk, CEO

Agenda

Highlights and Summary
M&A
Customer Value Proposition
Financials
Customers and End-User Base

Highlights Q2 2017

Operations	• Growth in end-users of ~6% to 490,000 since Q1 2017 • Secured frame agreements • Successful MaaS pilots and delivery to select customers • Heavy M&A activity and planning of integrations • Strengthened executive management team with COO and CCO
Financials	• Stable pro forma revenues of NOK 182.2 million (NOK 180.3 million) • YoY growth of 28% in solutions and 2.4% in hardware, offset by a reduction in commission and bonuses. Reduction due to the transition to new business model and sales priorities • Pro forma adjusted EBITDA of NOK 1.8 million (NOK 10.7 million) • Combination of stable total revenues and increased costs related to growth investments
Key Events Post Q2-17	• Became Tier one strategic partner with Apple • Acquisitions in Sweden to complement customer offering and pan-Nordic capabilities

Techstep is positioning itself as a leading Nordic enabler of the digital workplace

Simplified company structure

Pending closing

Financial summary Q2 2017

Key figures (pro forma)

(amounts in NOK 1,000)	Q2 2017	Q2 2016	YTD 2017	FY 2016
Revenue	182,219	180,285	362,547	719,391	• 2,4% revenue growth in hardware YoY Q2-16 to
Adjusted EBITDA 1) Adjusted EBITA 1)	1,757 1,545	10,741 10,326	11,618 10,953	29,441 28,196	Q2-17 • 28% increase in Solutions
Adjusted EBITDA margin (%) Adjusted EBITA margin (%)	1.0 % 0.8 %	6.0 % 5.7 %	3.2 % 3.0 %	4.1 % 3.9 %	YoY from Q2-16 to Q2-17 • Underlying revenue
Hardware, provision and bonuses, share of revenue (%) Solutions, share of revenue (%)	79.0 % 21.0 %	83.0 % 17.0 %	78.0 % 22.0 %	84.7 % 15.4 %	increase offset by reduction in commission & bonuses, impacting
Key figures (as reported)					profitability
Revenue	182,219	143,471	327,437	573,498	• Equity ratio of 67%
EBITDA EBITA	(1,829) (2,041)	6,352 6,147	(7,269) (7,923)	(4,433) (5,336)
Total assets Cash Equity	676,478 70,645 459,058	469,980 6,885 34,114	676,478 70,645 459,058	508,409 81,692 260,294

Company progress towards becoming a Nordic enabler of the digital workplace

	2017
Focus: M&A, integration and product development		and sales focus	Focus: Product rollout
Q1	Q2	Q3	Q4
✓  Acquisition of Mytos ✓  Acquisition of Infra Advice ✓  Acquisition of Apro ✓  Equity issue of NOKm 100	✓  Initiate integration of acquired companies ✓  MaaS pilot customers ✓  In process to acquire BKE ✓  Initiated cross sales efforts	 Full MaaS launch Norway  Launch of Mytos' asset management solution  Launch of Mytos in Sweden  In process to acquire Conneqted	 Launch of Techstep Finance in Sweden  Launch of MaaS in Sweden  Launch of new vertical solutions Expected positive effect on

profitability

Techstep has, via Kjedehuset, been certified as «Apple Authorized Enterprise Reseller»

Key Benefits

% Highest discount level on products

Educating Techstep sales personnel within solution selling

Extended marketing funds

Will recommend and actively support Techstep to win tenders and agreements with enterprise customers

Dedicated cooperation within Health, Retail, Education and Bank and Finance

General trend: Partners are moving away from operators, towards value adding providers

The Swedish B2B-phone market is 2-3 times larger than the Norwegian, and users are expected to grow

M&A

BKE Telecom acquisition adds a distribution platform and solid customer base in Sweden, strengthening Techstep's offering in the Nordics

Background info Financial info

• BKE TeleCom AB is one of the leading providers of business telecommunication equipment and services
• Hardware offering: Communication equipment from e.g. Apple, Dell, Jabra, HTC, Huawei, LG, Microsoft, Samsung and Sony
• One of few market players in Sweden offering cloudbased PBXs integrated with all of the largest Swedish operators, i.e. Tele2, Telenor, Telia and 3
• Customer base includes both public sector and private companies
• Founded in 1983, headquartered in Karlstad, Sweden, with 43 FTEs

Key facts and transaction terms

• Revenue of SEKm 189.1 and EBITDA of SEKm 15.5 in 2016/17
• Techstep acquires 100% at enterprise value. SEKm 82.5

Conneqted 365 AB adds complimentary EMM competence

Business introduction

• Complete Enterprise Mobility Management (EMM) provider, including system design, implementation, mobile device management, maintenance and support
• Founded in January 2016, headquartered in Karlstad, Sweden, with 5 FTEs
• Business model based on billing consulting hours and license fees
• Key partnerships include Telenor in Sweden and BKE Telecom
• Conneqted adds complementary competence on the MobileIron platform, completing Techstep's existing platform and EMM offering

Key facts and transaction terms

• Revenue SEKm 8.8 and EBITDA SEKm 0.5 in 2016/17
• Techstep acquires 51% at enterprise value approx. SEKm 7
• Agreement includes an option to acquire remaining 49%

Key Partners

Customer value proposition

© Nordialog 2016

Although majority of workforce is mobile in nature, mobility solutions mostly present in 'stationary' jobs

= high mobility = some mobility = little mobility

Industry sector	Mobility	# people
Agriculture, forestry and fishing		58753
Mining and quarrying	娇娇	59 994
Manufacture	咏	215521
Electricity, water supply, sewerage, waste management	咏	29 639
Construction	盛	207 492
Wholesale and retail trade		349 128
Transportation and storage	咏	138614
Accommodation and food service activities	盛	86 117
Information and communication	ç	88 199
Financial and insurance activities	ç	46839
Real estate, professional, scientific and technical activities	ı۸ı	161247
Administrative and support service activities	모	120 678
Public adm., defense, soc. security	ç	163 153
Education	ı٦ı	209 533
Human health and social work activities	咏	532 683
Other service activities	ıПı	99 002
Unspecified	ın	21112

Consumers accustomed to advanced mobile solutions; businesses to follow suit

Consumer solutions Business solutions

'Work is the place I go to use old technology'

Techstep delivers a complete stack of solutions that provides an improved total-cost-of-ownership (TCO) and lower risk to the customer

MaaS will drive both "one-offs" and recurring revenues for Techstep. The customers buy the service at a fixed monthly cost

Financials

© Nordialog 2016

Revenue development in Hardware and Solution Q1 2016 – Q2 2017

Revenue and EBITDA development Q1 2016 – Q2 2017

Consolidated income statement – as reported

Amounts in NOK 1 000	Q2 2017	Q2 2016	YTD 2017	2016
Revenue	181,183	143,104	326,146	570,526
Other revenue	1,036	367	1,292	2,972
Total revenue	182,219	143,471	327,437	573,498
Cost of materials	130,995	98,881	229,269	405,210
Salaries and personnel costs	33,085	24,701	61,080	104,041
Depreciation	211	205	655	903
Amortisation intangible assets	5,241	6,903	8,963	18,984
Other operational costs	16,383	13,537	30,220	51,169
Other costs	3,586		14,137	17,511
Total operating expenses	189,500	144,227	344,324	597,818
EBIT/ Operating profit	(7,281)	(756)	(16,887)	(24,319)
Financial income	3,853	22	4,539	(5,117)
Financial expense	(849)	(950)	(1,730)
Technical loss				(21,217)
Net financial expense	3,005	(928)	2,809	(26,334)
Profit before taxes	(4,277)	(1,684)	(14,078)	(50,654)
Income taxes	531	1,726	1,060	5,954
Net income	(3,746)	42	(13,018)	(44,700)
Net income attributable to
Non-controlling interests	-	4	-	(4,245)
Shareholders of Techstep ASA	(3,746)	38	(13,018)	(40,455)
Earnings per share in NOK:
Net income after tax	(0.03)	(0.47)	(0.10)	(1.29)
Other comprehensive income	(3,746)	42	(3,746)	(44,700)

• Increase in revenue driven by both acquisitions and organic growth
• Gross profit impacted by the reduction in commission and bonuses. Potentially mitigated by
• Commission & bonuses from new direct partners and suppliers
• Increased support sales (SLA paid for by customer, rather than operator)
• Customer self service
• Profitability going forward driven by
• Solution sales (high gross margin)
• Scalability on current capacity

Balance sheet – as reported

Amounts in NOK 1 000	Q2 2017	Q2 2016	2016
Intangible assets 1)	429,192	278,939	272,350
Tangible assets	3,239	3,240	3,159
Financial assets 2)	31,709	20,138	41,829
Inventories	13,973	25,642	9,526
Accounts receivable	116,509	94,980	83,250
Other receivables	11,211	18,451	16,603
Cash and cash equivalents	70,645	5,506	81,692
Total assets	676,478	446,895	508,409
Total equity	459,058	34,156	260,294
Deferred tax	1,407	6,979
Non-current interest bearing debt	12,656	29,675	12,656
Other non-current debt	2,025	25,044	-
Current interest bearing liabilities	60,365	245,871	113,721
Accounts payable	86,076	18,494	62,050
Other current liabilities 3)	54,890	86,675	59,687
Total equity and liabilities	676,478	446,895	508,409

• Intangible assets include goodwill (NOKm 400)
• Increase in accounts receivable due to higher volume and acquisitions
• Current interest bearing liabilities include factoring NOKm 33 and drawn credit facility of NOKm 26
• Current cash position of NOKm 71

Customers and end-user base

Organic growth of unique end-users of 6%

Total unique end-users base

• Organic end-user growth of 6% (annualized CAGR ~ 30%)
• Primarily driven by organic growth in solution
• Effect of cross-sales still limited
• Including BKE and Conneqted end-user base ~600k users (compared to ~230k end-users in YE 2016)

Solid user growth is a platform for future revenue and profitability growth

Solid cross-sell potential as only 23% of Techstep's unique end-users have a combined hardware and solution today

T E C H S T E P ²⁴ 1) MaaS customers account for 3% of combination end-users, but only 0,5% of the total end-users

Solid customer base spanning across the Nordics includes both public and private sector

Summary

© Nordialog 2016

Summary

• Growth in sales YoY Q2 2016 to 2017 in both hardware and solutions
• Profitability is down due to transition to new business model and sales priorities
• Prioritized long term growth over short term profitability in order to take the market position as the Nordic enabler of making work life mobile
• Acquired two interesting companies, BKE Telecom and Conneqted, in line with our strategy
• Going forward, focus this second half of 2017 will be organic growth and profitability

Appendix

Appendix

Top 20 shareholders August 14th 2017

Name	Shareholding	% Share
DATUM AS	30,079,142	21.29%
MIDDELBORG INVEST AS	28,066,931	19.87%
PALOS AS	11,666,667	8.26%
SKARESTRAND INVEST AS	7,513,372	5.32%
DOVRAN INVEST AS	3,763,372	2.66%
JYST INVEST AS	3,763,372	2.66%
TINDE INDUSTRIER AS	3,763,372	2.66%
CIPRIANO AS	3,651,375	2.58%
ZONO HOLDING AS	3,000,007	2.12%
SÅ&HØSTE AS	2,925,936	2.07%
TIGERSTADEN AS	2,779,182	1.97%
TVENGE TORSTEIN INGVALD	2,664,185	1.89%
NOMO HOLDING AS	1,946,253	1.38%
NORDIALOG ENSJØ AS	1,946,253	1.38%
VERDIPAPIRFONDET DNB SMB	1,872,933	1.33%
ARCTIC FUNDS PLC	1,871,434	1.32%
UNIFIED AS	1,849,457	1.31%
RAKNES HOLDING AS	1,649,348	1.17%
SONGA TRADING INC	1,438,596	1.02%
VINTERSTUA AS	1,200,000	0.85%
Total number owned by top 20	117,411,187	83.11%
Other shareholders	23,866,633	16.89%
Total number of shares	141,277,820	100 %

Appendix

Management team

Gaute Engbakk – CEO

Mr. Engbakk is an experienced change leader from working many years in Accenture with large international companies. He joined Techstep in November 2016. In Accenture, he worked in a variety of markets and industries and built up a division within analytics and information management. Mr. Engbakk led Creuna AS, a significant Nordic player within digital solutions, branding and advertising during 2010-2014, and during 2014-2016 he was the CEO of Gambit Hill & Knowlton Strategies.

Marius Drefvelin – CFO

Mr. Drefvelin joined Techstep in January 2017 and 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 at Deloitte, working with mergers, acquisitions and IPOs. Before this, he worked at Jebsen Asset Management from 2007-2009. During 2001-2007, Mr. Drefvelin worked at KPMG, also working with transactions.

Mads Vårdal – Chief Innovation Officer

Mr. Vårdal has been with companies within the Techstep sphere for more than eleven years. He came from a central position in Teki Solutions AS and has been a leading figure for the development of Smartworks. He has previously had a leading position in Nordialog Skøyen AS and CEO in Buskerud Tele AS

Inge Paulsen – Chief Operations Officer

Mr. Paulsen is an experienced executive manager with a proven track record from companies like Clear Channel, Eltel Networks/Sønnico Tele, Infratek/Hafslund, Implement and Accenture. His broad experience comes from heading strategic business development projects in venture businesses or turn around cases as well as holding various executive positions responsible for profit & loss.

Board of directors

Einar J. Greve – Chairman of the board

Mr. Greve has served on the Board in Techstep since November 2016. Mr. Greve works as a strategic advisor at Cipriano AS, and has previously worked as partner of Wikborg Rein & Co and as Partner of Arctic Securities ASA. Mr. Greve has held and holds various positions in listed and unlisted companies, including but not limited to Weifa ASA (chairman), Solon Eiendom ASA (Vice chairman), Vistin Pharma ASA (board member), Elliptic Labs AS (board member), Future Group (board member) and Hæhre and Isachsen Holding AS (board member). He holds a degree in law (cand.jur) from the University of Oslo

Kristian Lundkvist – Board member

Mr. Lundkvist has served on the Board of Techstep since November 2016. Mr. Lundkvist is the CEO and founder of Middelborg AS, a corporation with roots from the retail business in the telecom industry, which has grown into a diversified holding company including investments in real estate, equities, and shipping. Middelborg AS is a long term industrial owner who actively participates in the value creation of the companies in the portfolio, especially business development, optimization of capital structures and networking. His directorships are including but not limited to NRC Group ASA (board member), Middelborg AS (chairman), Folksom (board member) and Kjedehuset AS (board member)

Ingrid E. Leisner - Board member

Ms. Leisner has served on the Board in Techstep since January 2016. Ms. Leisner's directorships over the last five years include current board positions in Vistin Pharma ASA, Hunter Group AS, Spectrum ASA, Maritime and Merchant ASA. Ms. Leisner has a background as a trader of different oil and gas products in her 15 years in Statoil ASA. Her years of experience and skills within business strategy, M&A, management consulting and change management has been very valuable when serving on the board of several companies listed on Oslo Børs. She holds a Bachelor of Business degree with honors from the University of Texas in Austin.

Camilla Magnus - Board member

Ms. Magnus has served on the Board of Techstep since November 2016. Ms. Magnus is a partner in Advokatfirma Selmer DA and heads the firm's Corporate and Finance Department. Her area of expertise includes M&A, contract law and corporate law. Ms. Magnus graduated with a law degree from University of Oslo in 1998. She regularly holds lectures and seminars on transaction related legal subjects for Norwegian and foreign lawyers, business community and students.

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 lead 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 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.

Disclaimer

This presentation (the "Presentation") has been prepared by Techstep ASA ("Techstep" or the "Company" and together with its subsidiaries the "Techstep Group"). The Presentation has been prepared and is delivered for information purposes only. It has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place.

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