Q2 2018 Jens Haviken, CEO Marius Drefvelin, CFO 21 August 2018 - PowerPoint PPT Presentation

Q2 2018 Jens Haviken, CEO Marius Drefvelin, CFO 21 August 2018

Techstep is purpose built to serve public and private enterprises with mobile solutions Nordic IT company ▪ Providing customers in Norway and Sweden ▪ with mobile solutions Bundle hardware and value-adding software ▪ # End-users # Customers ~635,000 ~6,000 and services into subscription based, financed solutions Market consolidator, building solutions ▪ platform through organic innovation, Employees H1 2018 Revenues acquisitions and partnerships ~220 NOK~485 million Listed on the Oslo Stock Exchange ▪ Note: Figures per 30 June 2018

Q2 2018 highlights Revenue and EBITDA-margin Quarterly revenue growth of 39% year-over-year ▪ NOK million and percent 253 Underlying EBITDA level reflects growth investments and ▪ 182 integration costs Awarded new contracts with a potential total value of ▪ NOK 191m in Q2 and NOK 523m in H1 2018 End-user base increased with 38% year-over-year to ▪ 4.6 % 0.7% ~635,000 at the end of Q2 2018, providing a large -1.4% platform for upselling Acquisition of Wizor AS, a provider of high security ▪ Q2 2017 Q2 2018 solutions for mobile units Revenues (NOK million) NOK 25m equity issue to finance acquisition and growth ▪ EBITDA margin (%) excl. reduction of earn-out liability of NOK 10m EBITDA margin (%)

Financials

Key figures Q2 2018 Restated* Restated* NOK 1 000 Q2 2018 Q2 2017 H1 2018 H1 2017 FY 2017 Revenues 252 888 182 219 485 166 327 437 789 473 EBITDA** 11 740 (2 503) 17 789 (7 836) (735) EBITA ** 11 324 (2 714) 16 946 (8 491) (2 125) EBIT ** 6 668 (7 968) 7 566 (17 454) (23 147) EBITDA margin (%) ** 4.6% (1.4%) 3.7% (2.4%) (0.1%) EBITA margin (%) ** 4.5% (1.5%) 3.5% (2.6%) (0.3%) Total Assets 704 168 676 478 704 168 676 478 765 477 Cash 23 782 70 645 23 782 70 645 35 278 Equity 450 290 459 058 450 290 459 058 450 110 *Restatement of previous equity interests in Nordialog Asker and granted share options to executive management. For details, see note 6 in the Financial Report for Q2/H1 2018 ** In relation with the purchase of BKE Telecom AB, a contingent liability was recognised. The contingent liability was dependent on the company reaching an accumulated EBITDA target ending June 2019. Based on current forecast it is the management's assessment that it is unlikely that the entire EBITDA target will be reached. The contingent liability is reduced by NOK 10 million, which is considered the best estimate currently available. The comparative figures in the same line include transactions cost and other one-offs of NOK 3.6 million in Q2 2017 and NOK 26.3 million in 2017

Revenue and EBITDA development Revenue EBITDA and EBITDA margin NOK million NOK million and percent 39% 281 11.7* 253 232 6.1 4.6%* 5.5 182 181 3.0% 1.8 1.7 -2.4 2.6% 0.7% 0.6% -1.3% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Revenue growth of 39% year-over-year ▪ Low EBITDA level continues to reflect growth investments ▪ and integration costs Seasonality impacting Q4 in particular ▪ ▪ Norway ~73% of revenue, Sweden ~27% * EBITDA includes a reduction of a contingent liability related to the acquisition of BKE Telecom AB of NOK 10 million.

Quarterly revenue development: Hardware and Solutions Hardware revenue* Solutions revenue NOK million NOK million 33% 42% 218.4 62.8 55.4 197.3 184.9 47.5 42.0 38.9 143.4 138.8 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 33% growth year-over-year ▪ 42% growth year-over-year ▪ Growth both in Norway and Sweden ▪ ▪ Growth both in Norway and Sweden * Includes commission and bonus

Consolidated income statement Restated* Restated* NOK 1 000 Q2 2018 Q2 2017 H1 2018 H1 2017 FY 2017 Revenue 250 862 181 183 482 690 326 146 786 242 Other revenue 2 026 1 036 2 477 1 292 3 231 Total revenue 252 888 182 219 485 166 327 437 789 473 Cost of goods sold (181 465) (130 994) (345 572) (229 269) (559 656) Salaries and personnel costs (51 621) (33 759) (99 047) (61 754) (144 943) Other operational costs (17 924) (16 383) (32 582) (30 220) (59 451) Share of profit (loss) in joint ventures (173) - (211) 107 223 Depreciation (415) (211) (844) (655) (1 390) Amortisation (4 656) (5 254) (9 379) (8 963) (21 022) Other income and expenses ** 10 035 (3 586) 10 035 (14 137) (26 381) Operating profit (loss) 6 668 (7 968) 7 566 (17 454) (23 147) Remeasurement on equity interests - - - (5 356) (5 356) Financial income 161 3 854 323 4 432 6 211 Financial expense (1 229) (849) (2 804) (1 730) (29 230) Profit before taxes 5 599 (4 963) 5 086 (20 108) (51 523) Income taxes 1 328 531 1 631 1 060 3 846 Net income 6 927 (4 430) 6 717 (19 048) (47 677) * Restatement of previous equity interests in Nordialog Asker and granted share options to executive management. For details, see note 6 in the Financial Report for Q2/H1 2018 ** In relation to the purchase of BKE Telecom AB, a contingent liability was recognised. The contingent liability was dependent on the company reaching an accumulated EBITDA target by June 2019. Based on the current forecast, it is the management’s assessment that it is unlikely that the entire EBITDA target will be reached. In Q2 2018, the contingent liability is reduced to the best estimate currently available. Comparative figures on the same line are mainly transactions costs.

Balance sheet NOK 1 000 Q2 2018 2017 Intangible assets include goodwill ▪ Intangible assets 498 353 513 900 of NOK 429m and customer Tangible assets 9 077 9 115 relations of NOK 69m Financial assets 10 230 20 155 Equity ratio of 64% ▪ Inventories 14 312 20 715 Non-current debt reduced by ▪ Accounts receivable 127 578 156 663 NOK 17.5 million, mainly related Other receivables 20 835 18 766 to reduction of contingent Cash and cash equivalents 23 782 35 278 liability related to BKE and Total assets 704 168 765 477 repayment of borrowings Current interest bearing liabilities ▪ Total equity 450 290 450 110 include factoring of NOK 36m, bank overdraft of NOK 20m and Deferred tax 8 243 10 428 term loan of NOK 6m Non-current interest-bearing debt 20 842 23 551 Other non-current debt 9 696 22 277 Negative cash flow of NOK 5 ▪ million due to capital expenditure Current interest-bearing liabilities 62 552 67 604 and changes in working capital Accounts payable 95 291 116 765 Tax payable (144) 4 586 Net proceeds from the equity ▪ Public taxes, provisions 19 454 19 657 issue will be included in the cash Other current liabilities 37 943 50 498 balance in Q3 2018 Total equity and liabilities 704 168 765 477

Operations

Work is changing employees want mobile tools + enterprises want simple and secure mobile solutions

Significant market potential driven by digitization Addressable market by 2020 1 : ~2 million employees Addressable market by 2020 1 : ~5 million employees 2016: 2.3 million 2016: 1.3 million B2B phone subscriptions in Sweden B2B phone subscriptions in Norway Note: 1) CAGR 10%

Our ~6,000 customers in private and public sectors in Norway and Sweden represent a large growth platform Note: This overview contains only selected customers, it is not comprehensive

Large end-user base provides solid platform for upselling Total unique end-users base ‘1000 users 635 613 589 574 End-user growth of ~38% year-over-year ▪ 22% 18% 19% 19% Increase in solutions-only users and combined ▪ 460 users, according to the strategy 20% A customer base of more than 6,000 thousand ▪ 47% 47% 45% 47% hardware users that potentially could become solutions users also 50% Just beginning to see effects from cross sales ▪ 34% 36% 35% 31% 31% Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Hardware only Solution only Combined 22% Note: From Q2 2018, the development in end-users is based on reported figures, not pro forma. Consequently, the effect of acquisitions is included in accordance with the completion of the transaction.

High level of sales activities in the quarter Key Q2 contract New contracts awarded H1 2018 Potential value in NOK million and # new contracts NOK 191m NOK 523m #100 #154 #76 NOK 332m • Framework agreement (with Telenor), for delivery of mobile solutions to Agrikjøp’s member #54 organisations #231 43% • 3 years-duration + options of 2 years extension #155 with annual renewal 57% • Estimated value of NOK 75 million for Techstep Q1 2018 Q2 2018 H1 2018 (excl. options) Upsell New sales

Techstep making work mobile with Telenor Techstep has signed an agreement with Telenor to deliver ▪ solutions in three targeted sectors Education ▪ Healthcare ▪ Retail ▪ Make digital solutions and mobile tools available for the ▪ organisations, to improve and enhance efficiency

Mobile unit security rising to the top of the agenda