DNB SME Presentation March 21, Making work mobile. Gaute Engbakk, CEO T E C H S T E P

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1 DNB SME Presentation March 21, 2018 Gaute Engbakk, CEO Making work mobile 1

2 Highlights Highlights Q Operations Organic growth in end-users of 14% in 2017 to ~620,000 Transformation to solution selling, new products and services and improve efficiency in delivery has been focus in 2017 Won double digit material, public tenders with new customers (reported four) Positive cash flow Q NOK 7.9 million Financials Revenue growth of 73% to NOK 281 million (NOK 162 million) EBITDA adjusted NOK 12.8 million (NOK 2.4 million) Revenue and EBITDA growth driven by acquisitions and solutions growth Organic growth in solutions of 54% vs. target of 27% in full year 2017 Relative share of solutions increased from 14% in 2016 to 22% in full year 2017 Outlook New technical solutions for management of devices expected to have an impact on managed services revenue Market forces driving the need for mobility and solutions Expect improved margins as solutions revenues increase further 2

3 Work is changing «Mobile first» - 60% of all internet traffic comes from mobile devices Enterprises want and employees expect a digital workplace Capability of mobile technology now surpass desktop Barriers around security, device management, user experience and regulatory 3

4 Digitization deep dive Digitization is happening everywhere both in public and private sector What we see happening Digitization in the news Strong expectations Employees, owners and consumers expect organizations to adopt digital tools Management focus The consequence of this is that digitization is an important part of the agenda for top management Focus on improving work processes Pressure on IT-department This puts pressure on organizations especially IT-departments to change much faster than before, and since everything is digitizing, the scope of IT s activities is increasing but budgets aren t necessarily doing the same because of focus on costs Lack of competency in the new technologies Rise of new solutions Therefore new IT-systems and IT-operating models are required Enterprises are continuously adapting cloud services; in % of enterprises were using cloud services compared with 29% in New solutions (UEM 2 ) is the new trend to manage several types of devices and operating systems Source: SSB Note 1) Enterprises non-financial and above 10 employees. 2) Unified Endpoint Management 4

5 Mobile workforce Although majority of workforce is mobile in nature, mobility solutions currently mostly present in stationary jobs 80% More than 80% of the Norwegian workforce requires some mobility or higher = high mobility = some mobility = little mobility 1,678, , ,000 Source: Statistics Norway (SSB); Employed persons years by sector and industrial division (2015) 5

6 Market potential Significant market opening up in the Nordics driven by digitization agenda 2016: 2016: Addressable market : ~2m users Addressable market : ~ 5m users In addition: Highly attractive Nordic multinationals (win at home, follow abroad) Note: 1) CAGR 10% 6

7 Techstep positioning Techstep is built to serve the expanding market for digital workplace and mobile solutions in the Nordics A mobile native company launching Mobile-as-a-Service to a large-scale customer base 6,000+ Nordic customers 600,000+ end-users A mobile native solutions provider tailored for expanding Nordic market market for digital workplace and mobile solutions Built Mobile-as-a-Service solution consisting of hardware and value adding software and services for private and public enterprises financing/subscription (OPEX) based Acquired 8 and established 1 company since Q3 16 Built high quality customer and large scale end-user base Listed on Oslo stock exchange 7

8 Customer value proposition one stop shop Mobile as a Service Techstep delivers a complete stack of solutions that provides an improved total-cost-of-ownership (TCO) and lower risk to the customer Traditional Buy hardware, software, connectivity, platform, support separate Illustration Mobile as a Service Techstep provides complete MaaS solutions one stop shop Service & Support Mobility Hardware Connectivity Applications Asset mgmt. Mobility Hardware and connectivity MaaS IT & Security Support Operations Software and applications Video Technological enablers IT and Procurement Higher total cost of ownership Higher operational risk Mainly competing on price IoT Big data Sensors Dere gir oss en problemfri mobil hverdag - Procurement at DNB Lower total cost of ownership for customers Single point of contact, reduces operational risk Inherent focus on quality and functionality rather than price 8

9 Market adoption The proliferation of mobile devices is still relatively immature compared to the PC s - managing mobile devices professionally is still due Enterprise market adoption of devices Embryonic Growth Mature Aging Market adoption within enterprise AR & VR Smartphones & tablets Laptops Desktops Time The usage of smartphones and tablets is still relatively new in organizations <10 years Lack professional platform to manage devices Old school way of managing PC s Shadow IT 9

10 Unified Endpoint Management Techstep will be able to deliver management of all devices including Mac and PC at a lower cost, improved quality and better user experience Market size Unified Endpoint Management Norway & Sweden Market definition NOKm +43% Unified Endpoint Management Unified Endpoint Management is an approach to securing and controlling desktop computers, laptops, smartphones, tablets and IoT in a from a single console. Can be deployed via the cloud, on premise or hybrid. Unified endpoint management typically relies on the mobile device management (MDM) application program interfaces (APIs) in desktop and mobile operating systems Managed from a single console UEM Source: Markets & Markets: Unified Endpoint Management Market by Deployment Mode (Cloud, On-Premise, Hybrid), Vertical, Region - Global Forecast to

11 Summary market trends To conclude; the digitization and mobility trend is well documented, and the companies with mobile DNA are best suited to ride the wave Digitalization Mobility Mobile DNA Combining these trends will accelerate growth in Techstep s core markets Technological and societal thresholds 11

12 Building Techstep 12

13 Techstep organization Techstep has acquired key companies with hardware and solutions business TECHSTEP Hardware and subscriptions Financing Mobile device management & managed services Software 100% 100% 100% 50% 1 100% 100% 51% 2 100% Apro Feb Oslo 2016 June TECHSTEP FINANCE Apr 2016 March Aug. Feb Distributor of hardware and subscriptions Telenor distributor of hardware and subscriptions Swedish distributor of hardware and subscriptions Provider of finance and leasing products Enterprise mobility, IT and communications solutions, service and support Mobility advisory in Sweden Swedish Enterprise Mobility Management (EMM) provider Software as a Service. Telecom expense management ~20 FTEs ~80 FTEs ~40 FTEs ~5 FTEs ~30 FTEs ~10 FTEs ~5 FTEs ~10 FTEs Note: 1) Techstep has an option to acquire the remaining shares in Techstep Finance on certain conditions 2) Techstep has an option to acquire the remaining shares in Conneqted on certain conditions 13

14 Building a foundation for growth and taking a leading market position 2017: Company transformation and integration lead to poor EBITDA performance in 2017, but will have positive effects long term People Processes Products Customers Hiring and training for the transition to solution selling More efficient product delivery - automation Scalable product portfolio and new products Growth in new and existing customers Team and recruitment improvements: Enterprise sales team in Sweden, shared services (hub), technical resources and administration Training of sales force to sell solutions. Building culture Established IT transformation program to lower costs and improve customer quality related to ERP, procurement, order processing, distribution and customer service Developed standardized portfolio and solutions that can roll-out globally Created new products for verticals, managed services and MaaS. Moving towards bundling of hardware and software revenues Developing existing customers; enterprise customers lead on in «mobile first» in B2B, SME will follow Developing new customers; 4 large contracts reported to the stock exchange, double digit number of new customers signed Creating a platform for transitioning to more solution selling, that will drive long-term EBITDA growth 14

15 MaaS Techstep has launched MaaS to customers in both Norway and Sweden 15

16 Cross country cooperation Techstep entities started to deliver and win joint customer bids to cross- Nordic customers Techstep is delivering solutions to global customers originating from the Nordics Mytos launch in Sweden in Q BKE using Nordialog Oslo suppliers BKE delivering to Swedish subsidiaries of Apro customers Shared resource pool from SmartWorks, InfraAdvice and Conneqted Nordialog/SmartWorks/BKE/InfraAdvice/Conneqted - joint bids to cross-nordic customers 16

17 Possible future expansion By establishing standardised processes, Techstep can reach customers and partners more effectively Step 1 Acquire hardware vendor Search Well functioning solutions company Plug & play Step 2 Implement Techstep procedures on sales and delivery and distribute solutions Step 4 The new organisation sells products from Techstep s MaaS portfolio Step 3 Support, train and share knowledge on how to transition from traditional sales of goods to sell solutions 17

18 Financials 18

19 Financials Reported P&L Financial summary Q Key figures (reported) (amounts in NOK 1 000) Q Q FY 2017 FY 2016 Revenue Adjusted EBITDA 1) Adjusted EBITA 1) Adjusted EBIT 1) (1 435) (6 808) EBITDA (1 316) (4 433) EBITA (1 592) (5 336) EBIT (3 196) (5 168) (19 408) (24 319) Adjusted EBITDA margin (%) 4.5 % 1.5 % 3.7 % 2.3 % Adjusted EBITA margin (%) 4.4 % 1.3 % 3.6 % 2.1 % Hardware, commission & bonuses, share of revenue 78% 84% 78% 88% Solutions, share of revenue 22% 16% 22% 12% Revenue growth driven both by acquisitions and organic growth Adjusted EBITDA margin in Q4-17 of 4.5% (1.5%) 2017 pro forma revenues NOK 937m, adjusted EBITDA NOK 42.6m Equity ratio 59% Total Assets Cash Equity Employees ) Adjusted for M&A costs and other one-offs of NOK 9.0 million in Q4 2017, NOK 26.3 million per FY 2017 and NOK 17.5 million per FY

20 Revenue development per product From FY16 - FY17 Solution sales grew 54%, Solutions now constitute 22% of the total revenue Pro forma revenue per product type FY16 to FY17 NOKm -10% 737 Absolute development 9% 14% % of total 8% 22% 100% Target solutions growth was 27%, actual growth has been twice as high at 54% % % % 71% On the top-line we are starting to see the effects of cross selling of solutions to hardware customers Going forward we expect to see this effect increasingly on the bottom-line, because of the higher margins from solutions Total pro forma revenue NOK 937m in FY17 vs NOK 953m in FY16 Hardware Solutions Comm&Bonus FY16 FY17 FY16 FY17 Hardware Solutions Comm&Bonus 20

21 Financials Reported P&L Revenue and EBITDA adjusted development Q Q Total revenues Q Q4 2017, NOKm EBITDA adjusted Q Q4 2017, NOKm NOKm % 40% NOKm 15 % 10.0% % 30% 25% 20% 15% 12 Continued increase in the share of 9 solutions revenue from 10% in Q1-16 to 22% in Q (target 20%) % 5.0% 2.5% Increased profitability driven by acquisitions and organic growth in solutions, slightly offset by a decrease in hardware gross margin 0 Q Q Q Q Q % 0 Q Q Q Q Q % % solutions Hardware Solutions Commission&bonus EBITDA adj margin EBITDA adjusted 21

22 Techstep customers and user base 22

23 Public Private Customer base Solid customer base spanning across the Nordics includes both public and private sector Note: This overview contains only selected customers, it is not comprehensive 23

24 End-users Growth of unique end-users, opportunity in cross selling to the 34% of customers that today have hardware only 1000 users % Total unique end-users base Number of unique end-users in 1000 s % 38% 42% +14% % 43% % 44% % 43% Organic end-user growth of ~14% in 2017 primarily driven by organic growth in solutions A customer base of more than 200 thousand hardware users that potentially could become solutions users also Just beginning to see effects from cross sales that will increase ARPU 45% 39% 36% 34% 34% Solid user growth is a platform for future revenue and profitability growth YE 2016 Q Q Q Q Hardware only Solution only Combined 24

25 Customer case DNB and SAS are two companies leading in digitization 25

26 Customer case Meny Move from the back office to storefront 26

27 Customer case Storebrand Mobile First! 27

28 Vertical offering MaaS in Health industry specific use cases that drive the need for Techstep s products and services Use case and user driven Focus on return on investment for customer Bundled and delivered as a service (MaaS) 28

29 Summary Spent FY17 developing offerings and preparing for growth M&A, integration, transformation product and organisational development taking market position ~6,000 customers today, organic growth in end-users of 14% to ~620,000 54% organic growth in solutions revenue from FY16 to FY17. From NOK 132m (14% of revenues) in FY16 to NOK 203m (22% of revenues) in FY17 Techstep built to serve expanding market for digital workplace and mobile solutions: solid existing customer base, new solutions that we now deliver into the market, experience growing demand for our solutions, sales and delivery capacity in place 29

30 Appendix 30

31 Appendix Top 20 shareholders at 19 March 2018 NAME SHAREHOLDING % SHARE DATUM AS % MIDDELBORG INVEST AS % PALOS NORGE AS % SKANDINAVISKA ENSKILDA BANKEN AB % CIPRIANO AS % SKARESTRAND INVEST AS % DOVRAN INVEST AS % JYST INVEST AS % TINDE INDUSTRIER AS % TIGERSTADEN AS % ZONO HOLDING AS % SÅ&HØSTE AS % TVENGE TORSTEIN INGVALD % NOMO HOLDING AS % NORDIALOG ENSJØ AS % UNIFIED AS % VERDIPAPIRFONDET DNB SMB % RAKNES HOLDING AS % SONGA TRADING INC % KAPPA FINANS AS % Total number owned by top % Other shareholders % Total number of shares % 31

32 Appendix Management team Gaute Engbakk CEO Mr. Engbakk is an experienced change leader from working many years in Accenture with large international companies. He joined Techstep in November In Accenture, he worked in a variety of markets and industries and built up a division within analytics and information management. Mr. Engbakk led Creuna AS, a significant Nordic player within digital solutions, branding and advertising during , and during he was the CEO of Gambit Hill & Knowlton Strategies. 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 During , he was a financial advisor at Deloitte, working with mergers, acquisitions and IPOs. Before this, he worked at Jebsen Asset Management from During , 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 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. 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. 32

33 Appendix New Techstep CEO joining Q Jens Haviken onboarding CEO Mr. Haviken will join Techstep in the second quarter of He comes from a position as VP for Services and Solutions in Dustin Group. Before joining Dustin in 2013 Haviken spent most of his career in the services industry. He has worked in the industry since 1991, and has experience ranging from start-ups to large international corporations such as Microsoft and Accenture. 33

34 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. The contents of the Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. Each recipient should consult with its own professional advisors for any such matter and advice. The Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This Presentation is not and does not purport to be complete in any way. By receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the Company, its financial position and prospects and that you will conduct your own analysis and be solely responsible for forming your own view of any refinancing and the potential future performance of the Company s business. The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Techstep Group and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans, estimates, aims, foresees, anticipates, targets, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely views and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any other company in the Techstep Group, or any of its advisors or any of their parent or subsidiary undertakings or any such person s affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company and its advisors assume no obligation to update any forward-looking statements or to conform these forward-looking statements to the Techstep Group's actual results. Investors are advised, however, to inform themselves about any further public disclosures made by the Company, such as filings made with Oslo Børs or press releases. This Presentation does not constitute any solicitation for any offer to purchase or subscribe any securities and is not an offer or invitation to sell or issue securities for sale in any jurisdiction, including the United States. Distribution of the Presentation in or into any jurisdiction where such distribution may be unlawful, is prohibited. The Company and its advisors require persons in possession of this Presentation to inform themselves about, and to observe, any such restrictions. This Presentation speaks as of the date set out on the front page, and there may have been changes in matters which affect the Techstep Group subsequent to the date of this Presentation. Neither the issue nor delivery of this Presentation shall under any circumstance create any implication that the information contained herein is correct as of any time subsequent to the date hereof or that the affairs of the Techstep Group have not since changed, and the Company does not intend, and does not assume any obligation, to update or correct any information included in this Presentation. This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts with Oslo City Court as exclusive venue. By receiving this Presentation, you accept to be bound by the terms above. 34