Webstep

Investor Presentation • Nov 7, 2019

Q3 2019 & STRATEGIC UPDATE

Webstep ASA

Oslo 7 November 2019

Arne Norheim (CEO) Liv Annike Kverneland (CFO)

1. Q3 presentation

• § Highlights
• § Financial review
• § Outlook

2. Strategic update

• § Status
• § IT market towards 2022
• § Ambitions and priorities 2020-2022

3. Q&A

Q3 Highlights

• Revenue growth hampered
• Q3 revenues: NOK 137.2 million (-0.6 per cent)
• YTD revenues: NOK 483.7 million (-0.9 per cent)
• EBITDA negatively impacted by increased use of subcontractors and costs of growth initiatives
• Q3 EBITDA: NOK 4.1 million (-53.8 per cent)
• YTD EBITDA: NOK 48.4 million (-21 per cent)
• Capacity growth initiatives starting to yield results
• 407 employees at quarter end, up by 5.3 per cent from end of Q2
• Growth in headcount continues in Q4
• Strategic review process concluded
• Separate update follows as part 2 of this presentation

Key Value Drivers Q3 Highlights

• Reduced capacity
• Increased use of subcontractors
• Higher rates
• One more working day
• Onboarding (costs and utilisation )
• Increase of sales and recruitment capacity
• Capacity growth initiatives starting to yield results

Financial Review | Income Statement

Revenue growth hampered by lower capacity

(Amounts in NOK million)	Q3	Q3	%	YTD	YTD	%
	2019	2018	Change	2019	2018	Change	• Higher hourly rates and increased use of subcontractors
Total revenues	137.2	138.1	-0.6 %	483.7	487.9	-0.9 %	partly offset the negative effect of reduced capacity
Cost of services and goods Salaries and personnel cost Other operating expenses	17.9 106.2 9.1	12.9 107.3 9.0		61.6 344.8 28.9	45.2 351.6 29.8		• Higher costs due to increased use of subcontractors and effects of growth initiatives
EBITDA	4.1	8.9	-53.8 %	48.4	61.3	-21.0 %	•One-off CEO recruitment and
EBITDA margin	3.0 %	6.4 %		10.0 %	12.6 %		transition costs of NOK 2.8m YTD
Depreciation and amortisation	2.6	0.7		7.1	1.9
EBIT	1.5	8.2	-81.8 %	41.3	59.3	-30.4 %	• Implementation of IFRS 16 positive effect on EBITDA. but
EBIT margin	1.1 %	5.9 %		8.5 %	12.2 %		increases depreciation and
Net financial items	-0.7	-0.6		-1.8	-1.8		financial cost (Q3: NOK 1.7m
Profit before tax	0.8	7.6	-89.7 %	39.5	57.6	-31.4 %	YTD: NOK 4.4m)
Income tax expenses	0.2	1.7		8.7	13.2
Profit for the period	0.6	5.9	-89.6 %	30.8	44.4	-30.5 %
Earnings per share (NOK)	0.02	0.22	-89.7 %	1.16	1.68	-30.8 %
Earnings per share. fully diluted (NOK)	0.02	0.22		1.16	1.68

Financial Review | Segments

NORWAY

(Amounts in NOK million)
	Q3 2019	Q3 2018	YTD 2019	YTD 2018	FY 2018
Sales revenues	118.1	120.2	418.1	419.8	570.3
EBITDA	3.8	8.8	45.8	57.9	75.3
EBITDA margin	3.2 %	7.3 %	11.0 %	13.8 %	13.2 %
EBITDA with former principles for leasing (IAS 17)	2.5	8.8	42.6	57.9	75.3
EBITDA margin with former principles for leasing (IAS 17)	2.1 %	7.3 %	10.2 %	13.8 %	13.2 %
Number of employees, average (FTE)	335	346	334	354	348
Number of employees, end of period	345	338	345	338	334
Number of work days, Norway (excl. vacation)	66	65	187	187	249
EBITDA per average employee (NOK thousand)	11.4	25.3	137.1	163.4	216.4
EBITDA per average employee with former principles(NOK thousand)	7.5	25.3	127.6	163.4	216.4

• Negative revenue and EBITDA effect from fewer employees, partly offset by increased revenue from subcontractors and increased hourly rates

• Positive EBITDA effect of IFRS 16 in Q3 was NOK 1.3 million

• Capacity growth initiatives starting to yield results: Number of employees end of period increased by 20 employees since end of Q2

Financial Review | Segments

SWEDEN

(Amounts in NOK million)
	Q3 2019	Q3 2018	YTD 2019	YTD 2018	FY 2018
Sales revenues	19.1	17.8	65.6	68.1	92.8
EBITDA	0.3	0.1	2.6	3.4	3.5
EBITDA margin	1.4 %	0.6 %	4.0 %	5.0 %	3.7 %
EBITDA with former principles for leasing (IAS 17)	-0.1	0.1	1.4	3.4	3.5
EBITDA margin with former principles for leasing (IAS 17)	-0.7 %	0.6 %	2.1 %	5.0 %	3.7 %
Number of employees, average (FTE)	60	58	60	59	59
Number of employees, end of period	62	56	62	56	60
Number of work days, Sweden (excl. vacation)	66	65	189	189	251
EBITDA per average employee (NOK thousand)	4.4	1.7	43.3	58.0	58.9
EBITDA per average employee with former principles (NOK thousand)	-2.3	1.7	23.3	58.0	58.9

• Revenue increase enabled by increased use of subcontractors and increased hourly rates

• Slightly lower utilisation had a negative effect on both revenue and EBITDA

• Positive EBITDA effect of IFRS 16 in Q3 was NOK 0.4 million

Continued strong financial position Financial Review | Statement of Financial Position

(Amounts in NOK million)	30 Sept	31 Dec
	2019	2018	2018
ASSETS
Non-current assets
Intangible assets	383.6	383.4	387.8
Fixed assets	5.4	5.3	5.0
Right-of-use assets	22.7	0.0	0.0
Non-current financial assets	0.0	0.0	0.0
Deferred tax asset	0.4	0.0	0.4
Total non-current assets	412.0	388.9	393.3
Current assets
Trade receivables	106.0	138.3	103.3
Other current receivables	5.6	3.1	5.0
Cash and short-term deposits	8.9	4.2	33.5
Total current assets	120.4	145.7	141.7
Total assets	532.5	534.6	535.0

IFRS 16 Leases: Lease contracts for office premises classified as Right-of-use assets. The related liabilities classified as borrowings and current leasing liabilities.

Receivables: Trade receivables at quarter end NOK 106.0 million, down from NOK 138.3 million Y/Y mainly because due date fell on a Sunday in 2018 (most receivables are due the last day of the month).

Strong equity position (68%) and low non-current liabilities reflect strong performance.

(Amounts in NOK million)		30 Sept
	2019	2018	2018
EQUITY
Share capital	27.0	27.0	27.0
Treasury shares	-0.5	-0.6	-0.5
Share premium	154.8	150.7	154.0
Retained earnings	181.2	180.3	196.1
Total equity	362.4	357.3	376.6
LIABILITIES
Non-current liabilities
Borrowings	15.1	0.0	0.0
Deferred tax	1.6	1.5	1.8
Total non-current liabilities	16.8	1.5	1.8
Debt to credit institutions	0.0	41.5	0.0
Current leasing liabilities	7.5	0.0	0.0
Trade and other payables	18.5	12.0	21.6
Tax payable	16.6	12.9	16.5
Dividends payable	0.0	0.0	0.0
Social taxes and VAT	46.9	47.8	53.7
Other short-term debt	63.7	61.6	64.9
Total current liabilities	153.3	175.8	156.7
Total equity and liabilities	532.5	534.6	535.0

Solid cash flow from operating activities Financial Review | Cash Flow

(Amounts in NOK million)	Q3	Q3	YTD	YTD	Full year
	2019	2018	2019	2018	2018
Operating activities						• Positive change in
						receivables impacted
Profit/(loss) before tax	0.8	7.6	39.5	57.6	73.5	by calendar effect for
Adjustments for:						payments falling due
Depreciation of property, plant and equipment	2.6	0.7	7.1	1.9	2.9	30 Sept 2019
Net change in trade and other receivables	32.5	5.6	-3.3	-12.3	20.9	(Monday) vs 30 Sept
Net change in other liabilities	0.9	-12.8	-11.0	-15.9	2.8	2018 (Sunday)
Net foreign exchange differences	-0.4	0.1	-0.4	0.1	-0.2
Income tax expenses	-0.4	-0.0	-8.6	-7.6	-8.0	• Bank overdraft was
Net cash flow from operating activities	36.0	1.3	23.2	23.8	91.9	reduced due to
						positive cash flow
Investing activities						from operating
Payments for R&D initiative	0.0	-0.6	0.0	-1.9	-2.8	activities
Purchase of property and equipment	-0.6	-0.8	-2.3	-2.0	-2.7
Net cash flow from investing activities	-0.6	-1.3	-2.3	-3.9	-5.5	• Cash balance of NOK
Financing activities						8.9 million 30 Sept
Repayment of lease liabilities	-1.5	0.0	-4.0	0.0	0.0	2019 (NOK 4.2 million)
Change in bank overdraft	-30.9	-2.3	0.0	17.2	-24.3	•
Payment of dividends	0.0	0.0	-42.4	-39.5	-39.5	The RCF of NOK 110
Sale of treasury shares	0.3	0.0	0.8	0.0	4.3	million was renewed
Net cash flows from financing activities	-32.2	-2.3	-45.5	-22.3	-59.6	for 2 years in Q2
Net increase/(decrease) in cash and cash equivalents	3.2	-2.3	-24.6	-2.3	26.9
Cash and cash equivalents beginning of the period	5.7	6.6	33.5	6.6	6.6
Cash and cash equivalents at the end of the period	8.9	4.2	8.9	4.2	33.5

Outlook

• Utilisation expected to remain high, although near-term impact of onboarding
• Employee growth expected in Q4. Higher average number of employees and reduced use of subcontractors compared to Q4 2018
• Costs related to increasing the sales and recruiting capacity and other measures to support future growth may create short-term challenge for the ability to maintain an EBITDA margin above average market level
• Signs of somewhat slower market in Sweden, which may affect utilisation. Focus on sales rather than recruitment in the coming quarter
• Strong order book confirms good momentum in Norway

1. Q3 presentation

• § Highlights
• § Financial review
• § Outlook

2. Strategic update

• § Status
• § IT market towards 2022
• § Ambitions and priorities 2020-2022

3. Q&A

Ambitions for 2017–2019 Where do we stand?

• 1. Grow faster than the market for IT consulting services in the geographies we operate
• 1. Maintain EBITDA margin above market as demonstrated over the last years
• 1. Annual dividends minimum 75 per cent of net profit

Revenues & EBITDA 2014-2018 Dividends 2018-2019 Where do we stand?

*) Total revenues for following peers: Webstep. Bouvet. Sopra Steria Norway. Itera.B3IT. Knowit. HiQ. Bekk. Avega Group. Acando.

Dividend ratio in line with 75% ambition

Payout year	2019	2018
Dividend per share (NOK)	1.60	1.50
Total dividend	NOK 42.4 million	NOK 39.7 million
Net profit previous year	NOK 56.2 million	NOK 33.9 million
Payout ratio	75%	117%

2019: The change of trends require action Where do we stand?

Webstep revenue trend Webstep EBITDA and EBITDA margin trends

LTM = Last Twelve Months 2017 EBITDA is excl IPO and other non-recurring costs

Growth in most locations since IPO Where do we stand?

393 employees as of 30 September 2017 407 employees as of 30 September 2019

Growth in most locations since IPO Where do we stand?

Oslo:

• Extraordinary turnover in 2H 2018 with spill-over effect into 1H 2019
• Expect stepwise build-up of capacity in 2020

Norway Sweden

Sweden:

• Positive development for Malmø and Uppsala
• Stockholm requires a continued focus

IT market towards 2022

Key tech trends supporting market growth

Digitalisation Wave 2

"End to end"; digitalisation of core business processes. New products and services. New business processes and models

Industrialisation of IT

Mass produces and standardised products from a few global players with innovative power and benefits of scale

New Technologies

IoT. Blockchain. AI. ML etc – different maturity in different sectors

Cyber Security

Mid size businesses also start acknowledging the risk

Webstep is well positioned to capture market growth IT market towards 2022

Summing up

Webstep is well positioned to capture market growth

• Megatrends support future market growth
• Expect high demand and willingness to pay for expert services
• Customers also want a wider range of services
• Webstep has a strong position as a preferred employer for IT experts
• Webstep intends to respond to the market changes and develop its offering to meet new demand

Heading towards 2022 The preferred IT experts

Heading towards 2022

Our long-term ambitions remain unchanged

• 1. Grow faster than the market for IT consulting services in the geographies we operate
• 1. EBITDA margin above market average
• 1. Annual dividends of minimum 75 per cent of net profit

Webstep today Enhancing the business model

The technology experts

Webstep towards 2022 Enhancing the business model

A structured approach to meeting new and increased demands

Enhancing the business model

Strategic partnership with Telenor

• § Telenor and Webstep has entered into a strategic partnership to deliver smarter solutions for digitization and Internet of Things
• § Solutions will be developed on Telenor's data platform Managed IoT Cloud (MIC)
• § The strategic agreement is leveraging Webstep's expertise as a system integrator and will strengthen our solution business
• § The partnership is aiming at positioning Webstep as the preferred partner for forward-looking solutions in the IoT market segment
• § Webstep's local presence was an important factor when the partnership was established
• § Customer value provided from solutions developed:
• - Improved resource management
• - Process automation and increased control
• - Lower maintenance costs
• - Increased insight
• - Improved documentation

Key success factors and strategies for future growth Heading towards 2022

Success factors

Strategies

• 1. Expand service offerings, delivery models and partnerships in response to customer demand
• 2. Expand recruitment base; recruiting new types of expertise
• 3. Strengthen local presence in current and new key locations in Scandinavia.
• 4. Organic growth, but with selective use of M&A to access new client relations and/or new expertise
• 5. Further strengthen capacity, expertise and processes within recruitment and sales
• 6. Further improve brand recognition and position as preferred employer and provider of IT expert services

The preferred IT experts

1. Q3 presentation

• § Highlights
• § Financial review
• § Outlook

2. Strategic update

• § Status
• § IT market towards 2022
• § Ambitions and priorities 2020-2022

3. Q&A

APPENDIX

Effects of implementation IFRS 16 Leasing

Amounts in NOK 1000	IFRS 16	IAS 17		IFRS 16		IAS 17
	Q3 2019	Q3 2019	Q3 2018	YTD 2019	YTD 2019	YTD 2018
Operating revenues	137 237	137 237	138 060	483 701	483 701	487 862
Operating expenses (excluding depreciation and amortisation)	133 143	134 845	129 191	435 314	439 688	426 582
EBITDA	4 094	2 392	8 869	48 388	44 033	61 280
Depreciation and impairment	2 602	1 071	661	7 106	3 134	1 936
EBIT	1 492	1 321	8 209	41 282	40 899	59 344
Net financial items	-712	-541	-601	-1 755	-1 372	-1 756
Profit before tax	780	780	7 607	39 527	39 527	57 588

	IFRS 16	IAS 17
	30 Sept 2019	30 Sept 2019	31 Dec 2018
Fixed assets	28 008	5 354	5 011
Borrowings	15 128	-	-
Current leasing liabilities	7 527	-	-
Total assets/Total equity and liabilities	532 486	509 832	535 023
Total equity	362 438	362 438	376 574
Equity ratio	68.1 %	71.1 %	70.4 %

Consolidated statement of changes in equity Equity changes

						Total
				Foreign		attributable
				currency		to equity	Non-
	Issued	Treasury	Share	translation	Retained	owners	controlling	Total
(Amounts in NOK 1000)	capital	shares	premium	reserve	earnings	parents	interest	equity
At 1 January 2018	26 9 67	(610)	149 823	12 3 9 1	169 167	357738		357738
Profit for the period					56 2 20	56 220		56 220
Sales of treasury shares		124	3020			3 1 4 4		3 1 4 4
Other comprehensive income/(loss)		۰		(2109)		(2109)	٠	(2109)
Share incentive prorgram		$\sim$	1 1 1 7		$\sim$	1 1 1 7	۰	1 1 1 7
Other comprehensive income/(loss)		٠
Dividends		$\overline{\phantom{a}}$		$\sim$	(39535)	(39535)	×.	(39 535)
At 31 December 2018	26 967	(486)	153 960	10 2 8 2	185851	376 574	$\sim$	376 574
Profit for the period					30840	30 840		30 840
Sales treasury shares
Other comprehensive income/(loss)		٠		(3444)		(3444)	۰	(3444)
Share incentive program		۰	839			839		839
Dividends		۰		$\sim$	(42369)	(42369)	۰	(42369)
At 30 September 2019	26 9 67	(486)	154799	6838	174 322	362 438	۰	362 438

By shareholder Top 20 shareholders at 5 November 2019

Shareholder name	Shares	%	Type	Country
J.C. Broch AS and related parties	6 444 843	24%	Ordinary	Norway
Virtus KAR International Small-Cap	3 119 279	12%	Ordinary	United States
VERDIPAPIRFONDET ALFRED BERG GAMBA	1 556 645	6%	Ordinary	Norway
HANDELSBANKEN Nordiska Smabolag	1 000 180	4%	Ordinary	Sweden
PARK LANE FAMILY OFFICE AS	840 791	3%	Ordinary	Norway
Goldman Sachs International	783 058	3%	Nominee	United Kingdom
JAKOB HATTELAND HOLDING AS	712 212	3%	Ordinary	Norway
VERDIPAPIRFONDET NORDEA NORGE VERD	685 000	3%	Ordinary	Norway
Danske Invest Norge Vekst	542 000	2%	Ordinary	Norway
Taaleri Nordic Value Equity Fund	470 000	2%	Ordinary	Finland
Citibank, N.A.	438 491	2%	Nominee	Ireland
WEBSTEP ASA	414 016*	2%	Ordinary	Norway
SEB PRIME SOLUTIONS CARN Long Shor	400 000	1%	Ordinary	Luxembourg
NWT MEDIA AS	390 000	1%	Ordinary	Norway
SALT VALUE AS	358 130	1%	Ordinary	Norway
BOREA GLOBAL EQUITIES SPESIALFOND	352 892	1%	Ordinary	Norway
EMPLOYEES RETIR SYSTEM OF TEXAS	349 491	1%	Ordinary	United States
VIRTUS TACTICAL ALLOCATION FUND	282 917	1%	Ordinary	United States
AMG RENAISSANCE INTL EQ FD	281 408	1%	Ordinary	United States
COLINA INVEST AS	231 981	1%	Ordinary	Norway
Total top 20 shareholders	19 653 334	73%
Other	7 313 683	27%
Total share outstanding	26 967 017	100%

* After the balance sheet date, Webstep ASA has transferred 72,411 own shares to 147 eligible employees following the expiry of the vesting period of the employee saving shares program 11 October 2019

Share of total and by geography Top 20 shareholders at 5 November 2019

Top 20 shareholders at 5 November 2019

73% 27%

Total top 20 shareholders Other

Top 20 shareholders by geography at 5 November 2019