Webstep — Investor Presentation 2020

Aug 26, 2020

Q2 and H1 2020

Webstep ASA Oslo | 26 August 2020

Arne Norheim (CEO) Liv Annike Kverneland (CFO)

Agenda

• 1. Q2 and H1 highlights
• 2. Business review
• 3. Financial review
• 4. Outlook
• 5. Q&A

Q2 and H1 highlights

• Revenue growth of 6.4% in Q2 and 2.6% in H1
• Solid EBIT
• Continued strong market for IT expert services
• Reduced recruitment activity in Q2, back to normal in Q3
• Strong growth in project deliveries (Solutions)
• Webstep Sweden with increased profitability
• The Board maintains its intention to distribute dividend in 2020

3

Business review

Steady operations and continued demand

Expert Services

• Continued operations through the lock-down
• Webstep experts critical resources for customers
• Steady demand for IT consultants
• High activity in all regions

Solutions

• New contracts signed in Q2 deliveries start in Q4
• Further development made in municipality offering - set to launch in October
• High recruitment activity to meet demand

5

BUSINESS REVIEW

Webstep as lead IT partner

Enova selected Webstep as lead IT partner for next 4 years.

• Agreement focused on digitizing the company and make Enova a data driven organization
• Webstep will act as a trusted advisor and ensure development of a cloud based platform
• New solution (named plattform 42) will ensure seamless and agile digital processes and automated tools supporting development of new technology

Enova SF contributes to reduced greenhouse gas emissions, development of energy and climate technology and a strengthened security of supply.

BUSINESS REVIEW

Webstep supports the global COVID-19 response

• A new digital app for peer-to-peer training related to COVID-19 protection equipment was delivered in April 2020 by Webstep senior consultants
• Webstep has been a trusted provider of services related to design, development and project management for various digital projects and deliveries

Laerdal Medical is a global provider of products and services to the healthcare industry. The company's vision is Helping save lives.

BUSINESS REVIEW

Organization and operations

• 414 employees at the end of Q2 2020
  • ○ Up 5 from year-end 2019
  • ○ Up 28 last 12 months
• Average number of employees in the quarter up 5.9% from Q2 2019
• COVID-19:
  • ○ Most of the employees worked from home offices in Q2
  • ○ Closed kindergartens and schools in Norway affected work situation for employees with children
  • ○ Recruitment activities slowed down
  • ○ COVID-19 salary programme to provide security for consultants
  • ○ Utilization lower than normal
• Sundsvall served from Stockholm going forward

8

Note: Numbers in parentheses refer to year-over-year growth in number of employees.

Financial review

FINANCIAL REVIEW

Key figures - Group

	Q2	Q2	Y/Y %	H1	H1	Y/Y %
NOK million	2020	2019	growth	2020	2019	growth
Sales revenues	172.4	162.0	6.4%	355.4	346.5	2.6%
EBITDA	26.7	22.0	21.4%	43.2	44.3	(2.4%)
EBITDA margin	15.5%	13.5%	2.0pp	12.2%	12.8%	(0.6pp)
EBIT	23.2	19.6	18.4%	36.3	39.8	(8.7%)
EBIT margin	13.5%	12.1%	1.4pp	10.2%	11.5%	(1.3pp)
Net profit	17.7	14.8	19.3%	27.3	30.2	(9.8%)
Net cash flow	11.6	(19.9)	158.4%	25.3	(27.8)	191.1%
Earnings per share (NOK)	0.66	0.56	18.4%	1.02	1.14	(10.5%)
Earnings per share. fully diluted (NOK)	0.66	0.56	18.8%	1.02	1.14	(10.2%)
Equity ratio	68.7%	64.1%	4.5pp	68.7%	64.1%	4.5pp
Cash and cash equivalents	50.8	5.7		50.8	5.7
Number of employees, average (FTE)	414	391	5.9%	412	395	4.4%
Number of employees, end of period	414	386	7.1%	414	386	7.1%
EBITDA per FTE (NOK thousand)	64.6	56.1	15.1%	105.0	112.1	(6.4%)
EBIT per FTE (NOK thousand)	56.2	50.2	11.9%	88.2	100.8	(12.5%)

Q2 and H1 highlights

• Revenue growth driven by headcount and hourly rates
• Estimated negative effect of COVID-19 on revenues:
  • ○ Ca. NOK 10 million in Q2
  • ○ Ca. NOK 13 million in H1
  • ○ Canceled projects and family care leave
• Solid financial results
  • ○ COVID-19 salary program for consultants funded by cost savings and and reduced social security contribution tax
  • ○ Estimated negative effect on EBIT from COVID-19: NOK 1 million in Q2 and NOK 3 million in H1
• Net cash flow positively affected by extended payment terms for taxes

FINANCIAL REVIEW

Key figures - Norway

	Q2	Q2	Y/Y %	H1	H1	Y/Y %
NOK million	2020	2019	growth	2020	2019	growth
Sales revenues	145.7	138.4	5.3%	301.1	300.0	0.3%
EBIT	20.5	18.6	10.0%	31.1	38.2	(18.5%)
EBIT margin	14.0%	13.4%	0.6pp	10.3%	12.7%	(2.4pp)
Number of employees, average (FTE)	351	329	6.7%	348	334	4.2%
Number of employees, end of period	351	325	8.0%	351	325	8.0%
Number of work days, excl. vacation	59	58		123	121
EBIT per FTE (NOK thousand)	58.3	56.5	3.1%	89.4	114.3	(21.8%)
Revenue breakdown
	Q2	Q2	Y/Y %	H1	H1	Y/Y %
NOK million	2020	2019	growth	2020	2019	growth
Oslo	66.1	71.2	(7.2%)	136.2	161.3	(15.6%)

Regional offices 76.7 67.2 14.1% 161.5 138.7 16.4% Solutions 2.9 0 - 3.4 0 - Total 145.7 138.4 5.3% 301.1 300.0 0.3%

Q2 and H1 highlights

• Revenue growth driven by headcount and hourly rates
• Estimated negative effect of COVID-19 on revenues:
  • ○ Ca. NOK 10 million in Q2
  • ○ Ca. NOK 13 million in H1
  • ○ Canceled projects and family care leave
• Solid financial results
  • ○ COVID-19 salary program for consultants funded by cost savings and reduced social security contribution tax

11

● Government grants of NOK 4.3 million in Q2 and H1

FINANCIAL REVIEW

Key figures - Sweden

	Q2	Q2	Y/Y %	H1	H1	Y/Y %
NOK million	2020	2019	growth	2020	2019	growth
Sales revenues	26.7	23.6	13.1%	54.3	46.4	17.1%
EBIT	2.8	1.0	176.2%	5.2	1.6	223.3%
EBIT margin	10.4%	4.2%	6.2pp	9.6%	3.5%	6.1pp
Number of employees, average (FTE)	63	62	1.6%	63	61	3.8%
Number of employees, end of period	63	61	3.3%	63	61	3.3%
Number of work days, excl. vacation	60	59		123	122
EBIT per FTE (NOK thousand)	43.8	16.1	171.9%	82.9	26.6	211.3%

Q2 and H1 highlights

• Constant currency revenue growth Y/Y:
  • Decrease 0.5% in Q2
  • Increase 6.5% in H1
• Increased revenue from own consultants:
  • ○ + 11.9% (constant currency) in Q2
  • ○ + 15.2% (constant currency) in H1
• Improved EBIT margins from cost savings and increased revenues from consultants

Cash flow and net debt

Q2 highlights

• Operating cash flow increase from negative NOK 6.4 million in Q2 2019 to positive NOK 14.1 million in 2020
  • Temporary positive effect of NOK 8.7 million in payment terms of taxes
• Capex relates to office equipment
• Total lease liabilities of NOK 33.3 million, comprise of office rentals and company cars in Sweden (not included in NIBD)
• Undrawn credit line of NOK 110 million in Norway and SEK 5 million in Sweden per end of quarter

	30 Jun
NOK million	2020
Cash and cash equivalents*	(50.8)
Restricted cash	2.4
Debt to credit institutions	0.0
Net interest bearing debt (NIBD)	(48.4)
NIBD/EBITDA (rolling 12 months)	(0.82)
*Negative indicates positive amount

13

Outlook

Outlook

• Carefully optimistic market outlook
  • ○ Signed order flow from Q2 builds a solid foundation for H2
• Continued focus on retainment and recruitment:
  • ○ Recruitment drive ongoing in all locations
  • ○ Q3 headcount expected to be higher than Q2, but paused recruitment activities in Q2 will have a lagging effect in Q4
  • ○ COVID-19 salary programme for consultants continues through October
  • ○ Continued home office
• Organic growth in existing locations through recruitment and utilization is the main focus in the coming quarters

Appendix

Top 20 shareholders at 8 August 2020

Norway
United States
Norway
Norway
Norway
United Kingdom
Norway
Norway
Norway
Ireland
United States
Norway
Norway
Finland
Norway
Finland
Norway
United States
United States
Norway

A diversified customer base

Top 10 customers represent 32.1% of total revenues – up from 26.2% in Q2 2019

Disclaimer

This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for Webstep ASA and Webstep ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for Webstep ASA. Although Webstep ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. Webstep ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither Webstep ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.