Q2 2019 presentation

Highlights Q2 2019

Revenue increased by 7% reflecting growth in both Norway and Sweden
EBITDA of NOK 6.4 million
Awarded contracts in the quarter with a potential value of NOK 333 million
Terminated 2,000 SMB customer contracts in Norway to focus on enterprise
Entered into an agreement with Mobit to distribute software solutions to SMB customers
Co-location of offices into one new headquarter in Oslo

Work is going mobile

Tasks can be done across mobile devices and locations

Work gets done when needed more easily and efficiently

Mobile first solutions enable new levels of employee productivity

The employee-focused enterprise can personalise mobility solutions

Enterprises can buy the benefits mobile technology offers via the cloud

We offer a secure, simple and cost efficient solution

Our own software and IP is the main value driver

Techstep shall be the leading Nordic enabler of the mobile workplace

Techstep is purpose built to service enterprise and business mobility needs

Work is going mobile…
…creating a need for efficient mobility solutions
This has guided the development of Techstep's capabilities and offering:

Sharp focus on customer value creation, cost efficient delivery and scalability

~14 million employees in the Nordics
Larger enterprises provide larger-scale value creation opportunity
SMBs to be served by a combination of Techstep and partners
Software and services to drive shorter-term growth in Norway and Sweden
Nordic expansion to drive medium-term growth

Software and Intellectual Property (IP) to lead future growth

Our software, mobility expertise and customer needs will be at the core of what we do and drive value creation
All our activities will be aligned to bring our own software and services to the market
Third party software and hardware to support own software and services
Pursuing M&A to strengthen competency and software platform

Value

added

Optimising operations in Norway – focus going forward will be on larger customers

Terminated 2,000 customer contracts, representing 16,000 end-users
Co-located offices into one new headquarter in Oslo
Signed an agreement with Mobit Norge AS to offer Techstep software towards their customers.

Releases 10 positions effective from Q3 2019, creating room to recruit expertise supporting the strategy
The channel strategy provides an efficient route to the SMB market for our own software

Financials

Key figures

NOK 1 000	Q2 2019	Q2 2018	H1 2019	H1 2018	2018

Revenue	270 045	252 888	554 146	485 166	1 064 114

Gross profit	69 347	71 423	144 308	139 594	294 419
EBITDA	6 426	11 740	15 647	17 789	43 023
EBITA	2 709	11 324	8 252	16 945	41 280
EBIT	(2 753)	6 668	(2 733)	7 566	22 362
Net profit (loss) for the period	(1 043)	6 927	(2 554)	6 717	21 329

EBITDA margin (%)	2.4%	4.6 %	2.8%	3.7 %	4.0%
EBITA margin (%)	1.0%	4.5 %	1.5%	3.5 %	3.9%
EBIT margin (%)	-1.0%	2.6 %	-0.5%	1.6 %	2.1%
Net profit (loss) for the period (%)	-0.4%	2.7 %	-0.5%	1.4 %	2.0%

Hardware, share of revenue	76%	73 %	70%	73 %	74%
Solutions, share of revenue	24%	27 %	30%	27 %	26%

Cash	39 174	23 782	39 174	23 782	53 996
Net interest-bearing debt	13 643	59 612	13 643	59 612	19 354
Capex	3 663	2 269	9 288	5 283	11 689

Revenue growth 7 % year-over-year
Reduction in gross profit due to margin pressure on hardware and reduced commissions from operators on solutions revenue
Improvement of NOK 4.7 million in underlying EBITDA vs. Q2 2018 (excluding earn-out reversal of NOK 10 million)
Net interest-bearing debt reduced to NOK 13.6 million

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 Q2 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 2.8million in Q2 2019. See note 5 in the quarterly report for further details.

Revenue

Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019

Hardware Solutions Other

Hardware sales increased by 10% year-over-year, primarily from increased sales to public customers in Norway
Solutions revenue decreased by 5% year-over-year due to a decrease in commissions from operators
Revenue share: Norway was 70% of total, Sweden 30%

Gross profit and EBITDA

11 25 31 43 46 41 4% 9% 11% 15% 15% 14% Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 EBITDA EBITDA/Gross Profit EBITDA adj./Gross Profit* EBITDA and EBITDA/Gross Profit – last twelve months rolling NOK million and percent

10%

20%

30%

40%

50%

60%

Gross Profit – last twelve months rolling

350,0

* EBITDA reported excluding one-off items

Income statement

NOK 1 000	Q2 2019	Q2 2018	H1 2019	H1 2018	2018

Revenue	267 507	250 862	550 962		482 690 1 059 596
Other income	2 538	2 026	3 184	2 477	4 518
Total revenues	270 045	252 888	554 146		485 166 1 064 114

Cost of goods sold	(200 698)	(181 465)	(409 838)	(345 572)	(769 695)
Salaries and personnel costs	(46 364)	(51 621)	(97 759)	(99 047)	(195 376)
Other operational costs	(17 137)	(17 924)	(31 847)	(32 582)	(76 101)
Share of profit (loss) in joint ventures	580	(173)	945	(211)	119
Depreciation	(3 716)	(415)	(7 395)	(844)	(1 743)
Amortisation	(5 462)	(4 656)	(10 985)	(9 379)	(18 918)
Other income and expenses	-	10 035	-	10 035	19 962
Operating profit (loss)	(2 753)	6 668	(2 733)	7 566	22 362

Financial income	2 845	161	3 300	323	1 108
Financial expense	(1 164)	(1 229)	(2 355)	(2 804)	(4 462)
Profit before taxes	(1 072)	5 599	(1 789)	5 086	19 009
Income taxes	29	1 328	(765)	1 631	2 320
Net profit (loss) for the period	(1 043)	6 927	(2 554)	6 717	21 329

Reduction in personnel costs due to lower headcount
Continued growth investments, including increased marketing spend
Amortisation mainly relates to customers relations from acquisitions made in 2017 and 2018, completed by 2022
Financial income includes a dividend of NOK 10 million from Kjedehuset AS, of which NOK 2 million were booked as financial income and NOK 8 million as repayment on investments

Balance sheet

NOK 1 000	Q2 2019	2018

Intangible assets	517 291	527 561
Tangible assets	47 500	9 377
Financial assets	4 572	11 420
Inventories	21 770	16 155
Accounts receivable
Other receivables	147 890	146 565
	23 967	22 881
Cash and cash equivalents	39 174	53 996
Total assets	802 162	787 954

Total equity	501 817	513 780
Deferred tax	5 107	3 608
Non -current interest -bearing debt	7 024	7 341
Other non -current debt	37 406	8 081

Current interest -bearing liabilities	45 793	66 009
Accounts payable	122 577	116 694
Tax payable	2 527	3 470
Public taxes, provisions	19 725	21 842
Other current liabilities	60 187	47 131
Total equity and liabilities	802 162	787 954

Intangible assets include goodwill of NOK 453 million and customer relations and other intangible assets of NOK 64 million
Equity ratio is at 63%
Non-current interest-bearing debt of NOK 7 million relates to a long -term property loan for premises in Karlstad, Sweden
Current interest -bearing liabilities include factoring of NOK 37 million and a bank overdraft of NOK 9 million
Positive cash flow from operations of NOK 3.0 million
Investments (capex) of NOK 3.6 million, mainly IT development

Growing share of solutions end-users

Distribution of total unique end-users % share of total end-users base

Reduction of 16,000 end-users as part of terminating the SMB customers
Share of hardware-only users reduced to 28%
Focus on solutions sales going forward with large upsale possibility for as a service

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Sales

Quarterly and rolling 12 months sales update

652 985 242 226 226 333 Q3 2018 Q4 2018 Q1 2019 Q2 2019 LTM New contracts awarded Potential value in NOK million

Sales in Q2 2019

Potential value of contracts signed in H1 was above half a billion Norwegian kroner
Mostly hardware and MaaS sales in the quarter
Signed four new MaaS agreements with a potential total value of NOK 74 million
- Signed largest MaaS agreement to date with Coor
Largest contract with Oslo Kommune, where Techstep will work with the digital- and green shift where mobile solutions play an important part

Techstep to deliver MaaS to BDO Sweden AB

Techstep has signed a Mobile as a Service (MaaS) agreement with BDO Sweden. BDO delivers assurance, tax, and financial advisory services to clients in the Nordics

Techstep will deliver Mobile as as Service to BDO´s 800 employees in Sweden that includes deliverables of mobile phones, pre-configuration, asset management and lifecycle management. Potential total contract value of SEK 5 million over two years.

Techstep solutions will empower BDO´s employees to increase efficiency and strengthen BDO´s employee branding

Nordic MaaS Agreement with Coor

Signed a Nordic Mobile as a Service (MaaS) agreement with Coor Service Management, a leading provider of facility management services in the Nordics

Techstep will deliver mobile units, device management, service and support, as well as financing to 5,350 of Coor's employees in Norway, Sweden, Denmark and Finland

Potential total contract value of SEK 36 million over three years

Techstep to deliver mobile solutions to Oslo municipality

Techstep will work with Oslo Kommune in the digital- and green shift where mobile solutions play an important part

Hardware and solution products like mobile phones and operational support, as well as aftermarket handling will be delivered to secure consistent mobile work conditions for the municipality's teachers, social workers, technicians and administrative

The framework agreement with Oslo Kommune is estimated at NOK 100 million. In the renewed agreement, neighbouring municipalities and related organisations are included

Summary

Revenue increased by 7%, with growth in Norway and Sweden
Potential value of contracts in the first half of 2019 at 550 million Norwegian kroner
Optimising operations in Norway focus going forward will be on larger customers
Signed agreement with Mobit to offer Techstep software solution, in-line with channel strategy
We are uniquely positioned to become the leading provider of the mobile workspace in the Nordics

Appendix

Top 20 shareholders at 19 August 2019

NAME	SHAREHOLDING	% SHARE
DATUM AS	31,817,975	20.00 %
MIDDELBORG INVEST AS	30,517,764	19.19 %
SEVENCS AS*	8,269,455	5.20 %
KARBON INVEST AS	7,954,972	5.00 %
CIPRIANO AS	4,968,835	3.12 %
VERDIPAPIRFONDET DNB SMB	4,716,485	2.97 %
TIGERSTADEN AS	4,000,000	2.51 %
PALOS NORGE AS	3,966,667	2.49 %
SKANDINAVISKA ENSKILDA BANKEN AB	3,826,152	2.41 %
TINDE INDUSTRIER AS	3,063,372	1.93 %
ZONO HOLDING AS	3,000,007	1.89 %
SÅ&HØSTE AS	2,925,936	1.84 %
TVENGE TORSTEIN INGVALD	2,920,000	1.84 %
UBS SWITZERLAND AG	2,301,906	1.45 %
ADRIAN AS	2,038,851	1.28 %
NOMO HOLDING AS	1,946,253	1.22 %
NORDIALOG ENSJØ AS	1,946,253	1.22 %
SKARESTRAND INVEST AS	1,912,315	1.20 %
DOVRAN INVEST AS	1,863,372	1.17 %
UNIFIED AS	1,849,457	1.16 %
Total number owned by top 20	125 806 027	79.09 %
Other	33 250 993	20.91 %
Total number of shares	159 057 020	100 %

*Sevencs AS transferred 7,945,902 shares (or 5.00%) to Karbon Invest AS on 31 May 2019 as part of the establishment of a joint investment company owned by, inter alia, Rugz AS and Sevencs AS together with Rugz II AS. The actual ownership by Sevencs AS was reduced to 0.20% following this transfer.

Management team

Jens Haviken – CEO

Mr. Haviken is an experienced executive within consulting, managed services, software and hardware distribution. He has a proven track record of developing, rebuilding and streamlining operations of companies in the ICT sector. Prior positions held by Haviken includes VP Services and Solutions and Country Manager at Dustin Group AB (publ). and various Director roles at Microsoft and Accenture.

Erik Haugen – Chief Commercial Officer

Mr Haugen is an international business professional, bringing with him broad commercial experience. He spent spent twelve years in London working with focus on sales, marketing and business management for companies like Pioneer and Sony Ericsson. Subsequently he moved into finance and professional services sales at 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 public sector.

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 11 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 – Managing Director Norway

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.

Bartek Regerqvist – Managing Director Sweden

Mr Regerqvist joined Techstep in 2018 with long experience from the telecom and integrator industry with focus on managed services in a Nordic offering. He has proven track record in performance management and efficient cost management, creating structure and driving a performance culture within the teams he leads. Prior to Techstep, Regerqvist held a position as Regional Manager at Tele2 and several Management roles at TDC since 2006.

Board of Directors

Jens Rugseth – Chairman of the board (since 2019)

Jens 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 a chief executive officer in some of the largest ITcompanies 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.

Einar J. Greve – Vice chairman (board member since 2016)

Mr. Greve was Chairman of the Board of Techstep from 2016 to April 2019. 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 as chairman or director in several listed and unlisted companies. He holds a degree in law (cand.jur) from the University of Oslo.

Anders Brandt - Board member (since 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 cofunded and exited numerous companies including DinSide, OMG, Viken Fibernett, Mytos, Meshtech and Bubbly Group. Brandt has 14 years of board experience of listed companies on Oslo Børs and Nasdaq Stockholm, whereof several tech companies.

Ingrid Leisner - Board member (since 2016)

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 Storage Group ASA, 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.

Toril Nag - Board member (since 2018)

Ms. Nag is Group Executive Vice President, responsible for customer service and the telecommunications business area of the Lyse Group. She holds extensive experience in telecom and digital service, 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 includes Dolphin Group ASA, IKT-Norge, Kolumbus AS and Altibox AS. 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.

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