Q4 2018 presentation

Highlights 2018

Full-year revenue increased by 35%
EBITDA turned positive reaching NOK 43 million
Integrating acquired companies and building "One Techstep" a key priority in 2018
Awarded contracts in 2018 with a

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 employeefocused enterprise can personalise mobility solutions

Enterprises can buy the benefits mobile technology offers via the cloud

Work places are increasingly adapting mobility solutions
Mobility offer tremendous opportunities for enterprises, employees and customers

Techstep's core offering: Mobile-as-a-Service

A "one stop shop" solution for the digital workplace

Large market within sectors with low adaptivity and high potential efficiency gains

1) CAGR 10%

Financials

Key figures

	Restated*
NOK 1 000	Q4 2018	Q4 2017	FY 2018	FY 2017

Revenues	317 351	281 224	1 064 114	789 473

EBITDA	14 288	1 814	43 023	(735)
EBIT	9 213	(5 073)	22 362	(23 147)

EBITDA margin (%)	4.5%	0.6%	4.0%	(0.1%)
EBIT margin (%)	2.9%	(1.8%)	2.1%	(2.9%)

Total Assets	787 954	765 477	787 954	765 477
Cash	53 996	35 278	53 996	35 278

Equity	513 780	450 110	513 780	450 110

Note: EBITDA was positively affected by a reversal of a contingent liability related to the acquisition of BKE Telecom AB of NOK 9.9 million in Q4 2018 and of NOK 20.0 million for FY 2018. Q4 2018 EBITDA also includes a one-off provision of NOK 7.0 million relating to remaining rent obligation on regional offices as part of co-location of premises in Norway. Consequently, the net EBITDA effect of these two one-offs in Q4 2018, is NOK 2.9 million. For details, see the financial report note 7 and 9.

M&A costs and other one-offs amounted to NOK 9 million in Q4 2017 and NOK 26.3 million in 2017. Amortization relates to customer relations from acquisitions and IT investments, amortised by 2022.

* For details, see note 6 in the Financial Report for Q4 2018.

Revenue

Revenue growth driven by growth in Norway and Sweden
Hardware sales increased by 18% year-over-year, primarily in the Norwegian operations with an increase on public customers
Solutions revenue decreased by 1% year-over-year. A large sale was postponed until the first quarter 2019
Solutions share of revenue 25% in Q4 2018 (FY2018: 26%)
Norway revenue 77% of total, Sweden 23%

Hardware Solutions

Profitability

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

The EBITDA is improving, starting to see results of integration of the acquired companies. The EBITDA level still includes integration costs and growth investments
Solid performance in Norway
Sweden is improving
The EBITDA in Q4 2018 includes one-off gains as well as one-off integration costs, with a combined positive effect of NOK 2.9 million

Note: EBITDA was positively affected by a reversal of a contingent liability related to the acquisition of BKE Telecom AB of NOK 9.9 million in Q4 2018 and NOK 10 million in Q2 2018. Q4 2018 EBITDA also includes a one-off provision of NOK 7.0 million relating to remaining rent obligation on regional offices as part of co-location of premises in Norway. Consequently, the net EBITDA effect of these two one-offs in Q4 2018, is NOK 2.9 million. For details, see the financial report note 7 and 9.

M&A costs and other one-offs amounted to NOK 9 million in Q4 2017 and NOK 26.3 million in 2017.

Customer base with profitable growth opportunities

Total end-user growth of 12% but significantly stronger growth in the target customer groups
Share of end-users in solutions and combined steadily increasing
Increased focus on solutions sales going forward with large up-sale possibility for MaaS solutions

MaaS will yield both "one-off" sales and recurring revenues

Customers invoiced on a periodically fixed fee amount

Revenue effect for Techstep

Balance sheet

NOK 1 000	2018	2017

Intangible assets	527 560	513 900
Tangible assets	9 377	9 115
Financial assets	11 420	20 155

Inventories	16 155	20 715
Accounts receivable	146 565	156 663
Other receivables	22 881	18 766

Cash and cash equivalents	53 996	35 278
Total assets	787 954	765 477

Total equity	513 780	450 110
Deferred tax	3 608	10 428
Non -current interest -bearing debt	7 341	23 551
Other non -current debt	8 081	22 277

Current interest -bearing liabilities	66 009	67 604
Accounts payable	116 694	116 765
Tax payable	3 470	4 586
Public taxes, provisions	21 842	19 657
Other current liabilities	47 131	50 498
Total equity and liabilities	787 954	765 477

Intangible assets include goodwill of NOK 457m and customer relations of NOK 68m
Equity ratio at 65%
Non-current interest -bearing debt NOK 7.3 million relates to a long -term property loan for the premises in Karlstad, Sweden
Current interest -bearing liabilities include factoring of NOK 36m, bank overdraft of NOK 14m and vendor note of NOK 15m
Positive cash flow from operations of NOK 21m
Investments (capex) of NOK 11.7 million in FY 2018, mainly IT development

Sales

Quarterly and full year sales update

New contracts awarded 2018 Potential value in NOK million

Sales in Q4

Mix of hardware, solutions and combined contracts
The largest contracts awarded were Sykehusinnkjøp HF and Recover Nordic Group
Signed three new MaaS agreements with a potential total value of NOK 20 million, including the first in Sweden

Framework agreement within healthcare

Sykehusinnkjøp HF is the national procurement agency for the Norwegian specialist healthcare service, representing 120,000 employees
Framework agreement covers deliveries over a two-year period, with options of two-years extension
Potential contract value of NOK 60 million (excl. options) from 2019

MaaS improving customer dialogue

Apotek 1 has implemented a solution where tablets are used to access information while spending time with customers in the store.

With Techstep's solution, Apotek 1 helps their employees to simplify and improve their customer dialogue

Techstep delivers hardware and mobile solutions consisting of mobile phones, telecom expense management and financing

First MaaS contract in Sweden

Techstep will support Radiator VVS' current digitalisation process with flexible mobile solutions. More than 450 employees will be equipped with mobile tools allowing them to do reporting, invoicing, calculations and other tasks while working in the field.

With Techstep's solution, Radiator will empower their employees to increase efficiency and ultimately do a better job.

Techstep will deliver the solution as a service, including hardware, software, security, mobility management and related advisory services (MaaS).

Protection against eavesdropping with SecuSuite

In today's technology-driven society, threat of unwanted eavesdropping and surveillance is rising
To be certain that confidential information can be communicated securely, protective actions are required
Techstep is rolling-out the SecuSuite for Government app to protect against voice and text eavesdropping
SecuSuite for Government will offer NATO-standard security without the need of costly hardware

Priorities and summary

Meeting our 2018 priorities

✓ Integrate acquired companies
✓ Align everyone behind one brand
✓ Build a shared, strong company culture
✓ Increase profitability

Priorities for 2019

Continue to increase profitability
Increase share of wallet with MaaS
Grow solutions sales
Simplify and improve internal processes and tools
Cultivate shared values and culture

Summary

Full-year revenue increased by 35%
EBITDA margin improving, but continues to reflect growth investments and integration costs
Awarded contracts of 991 mill in 2018
Focus on increasing profitability

Appendix

Income statement

		Restated*
NOK 1 000	Q4 2018	Q4 2017	FY 2018	FY 2017
Revenue	317 351	279 508	1 061 637	786 242
Other revenue	-	1 716	2 477	3 231
Total revenue	317 351	281 224	1 064 114	789 473

Cost of goods sold	(234 419)	(206 123)	(769 695)	(559 656)
Salaries and personnel costs	(53 726)	(48 438)	(195 376)	(144 943)
Other operational costs	(24 825)	(15 770)	(76 101)	(59 451)
Share of profit (loss) in joint ventures	(19)	(66)	119	223
Depreciation	(528)	(470)	(1 743)	(1 390)
Amortisation	(4 547)	(6 417)	(18 918)	(21 022)
Other income and expenses	9 928	(9 013)	19 962	(26 381)
Operating profit (loss)	9 213	(5 073)	22 362	(23 147)

Remeasurement on equity interests	-	-	-	(5 356)
Financial income	622	1 610	1 108	6 211
Financial expense	(525)	(26 727)	(4 462)	(29 230)
Profit before taxes	9 311	(30 190)	19 009	(51 523)
Income taxes	1 550	945	2 230	3 846
Net income	10 861	(29 245)	21 329	(47 677)

* For details, see note 6 in the Financial Report for Q4 2018

Top 20 shareholders at 11 February 2019

NAME	SHAREHOLDING	% SHARE
DATUM AS	31,817,975	20.00 %
MIDDELBORG INVEST AS	30,517,764	19.19 %
DNB NOR BANK ASA EGENHANDELSKONTO	9,484,212	5.96 %
RUGZ A/S	7,954,972	5.00 %
CIPRIANO AS	4,968,835	3.12 %
SKANDINAVISKA ENSKILDA BANKEN AB	4,113,390	2.59 %
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	3,000,007	1.89 %
SÅ&HØSTE AS	2,925,936	1.84 %
TVENGE TORSTEIN INGVALD	2,700,000	1.70 %
SKARESTRAND INVEST AS	2,563,097	1.61 %
J.P. MORGAN BANK LUXEMBOURG S.A.	2,301,706	1.45 %
NOMO HOLDING AS	1,946,253	1.22 %
NORDIALOG ENSJØ AS	1,946,253	1.22 %
DOVRAN INVEST AS	1,863,372	1.17 %
UNIFIED AS	1,849,457	1.16 %
RAKNES HOLDING AS	1,649,348	1.04 %
VERDIPAPIRFONDET DNB SMB	1,616,290	1.02 %
Total number owned by top 20	124,248,906	78.12 %
Other	34,808,114	21.88 %
Total number of shares	159,057,020	100 %

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.

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.

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.

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.

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.

Board of Directors

Einar J. Greve – Chairman of the board (since 2016)

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 as chairman or director in several listed and unlisted companies. He holds a degree in law (cand.jur) from the University of Oslo

Jens Rugseth – Board member (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.

Stein Erik Moe - Board member (since 2016)

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 (board member) and Digitread AS (Board member). He holds a degree in Computer Science from the University of Strathclyde in Glasgow, and courses from BI Norwegian Business School.

Anders Brandt - Board member (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 Stockhol, whereof several tech companies.

Ingrid E. 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.

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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