We make your work life mobile Company Presentation 18 October 2016 - - PowerPoint PPT Presentation

T E C H S T E P

18/10/2016

“We make your work life mobile” Company Presentation

18 October 2016

T E C H S T E P

18/10/2016

Cautionary note regarding forward-looking statements and other risk factors

This presentation includes “forward-looking” statements, including, without limitation, projections and expectations regarding Techstep’s future financial position, business strategy, plans and objectives. All forward-looking statements are based on information available to the company, and views and assessments of the company, as of the date of this presentation. Techstep expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in the Techstep’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. When used in this document, the words “anticipate”, “believe”, “estimate”, “expect”, “seek to” and similar expressions, as they relate to the Techstep, its subsidiaries or its management, are intended to identify forward-looking statements. Techstep can give no assurance as to the correctness of such forward-looking statements and forward-looking statements are not guarantees of future performance. Such forward- looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance and achievements of Techstep and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance

• r achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous

assumptions regarding Techstep’s present and future business strategies and the environment in which Techstep and its subsidiaries

• perate. Factors that could cause the Techstep’s actual result, performance or achievements to materially differ from those in the forward-

looking statements, include but are not limited to, competition, technology, products, liquidity risks, loss of key employees, intellectual property rights, ability to develop new products and/or raise additional capital. The information on slide 4 – 15 is based on the assumption of completion of the Teki Gruppen Transaction. The acquisition of Teki Gruppen’s shares and shareholder loans in Teki Solutions is subject to acceptance in an extraordinary general meeting and customary closing conditions, and any applicable third party transfer restrictions on the Teki Solution shares related to the transaction.

2

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18/10/2016 3

The Teki Gruppen transaction: Subject to acceptance EGM

• On 1st July 2016 Techstep entered into an Agreement in

Principle conditional on dd with Teki Gruppen AS to acquire an additional ~54% in Teki Solutions AS and shareholder loans from Teki Gruppen AS in exchange for shares to be issued by Techstep

• On 5 October Techstep and Teki Gruppen entered into a firm

share purchase agreement, subject to acceptance at an EGM, scheduled for 4th November, and certain customary closing conditions

• The transaction will increase Techstep’s ownership in Teki

Solutions AS with 53.94% to 78.16%.

• The proposed consideration for the transaction is in full Techstep

shares at a share price of NOK 4,30 as agreed in the Agreement in Principle. If accepted by the EGM, sellers will receive approx. 30.1m shares in Techstep or 29.33%

• The board of Techstep has further expressed the intention to

present an offer to acquire the shares and shareholder loans from the remaining shareholders in Teki Solutions on the same terms and conditions as in the Teki Gruppen transaction. Subject to full acceptance, this would result in further approx. 7.3m shares in Techstep

Background and the transactions

The Zono transaction: Completed

• On 1 July 2016 Techstep agreed to acquire 100% of the shares in

Zono AS in a Share Exchange Agreement, under which the consideration for the shares takes the form of Techstep consideration shares. The transaction was approved at the extraordinary general meeting held 23 August 2016 completed 15 September 2016

• Zono AS is wholly owned by Zono Holding AS, a company

controlled by Middelborg and certain other investors including Datum AS and Cipriano AS. Zono’s assets include 24.22%

• wnership in Teki Solutions AS, 5.12% ownership in Kjedehuset

AS and approximately MNOK 55 in cash and cash equivalents

• The transaction was financed through issuance of approximately

58 million new shares

The Birdstep AB transaction: Completed

• On 7 April 2016, Techstep announced the completion of the sale
• f Birdstep AB to Smith Micro
• In relation to the transaction, Techstep entered into a partnership

agreement with Smith Micro to among other things continue the use of the Birdstep technology in the Nordics

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About Techstep Company structure

• Through the two transactions, Techstep will establish itself

as a leading B2B provider mobility and communications services in Norway

• Nordialog is Telenor’s key distribution channel of devices

and subscriptions to the Norwegian business segment:

• Teki Solutions accounts for ~60% of the total Nordialog distribution

volume in Norway

• Teki Solutions operates through 10 business centres located in eastern

Norway and currently employs ~100

• Smartworks delivers services and solutions within the

“Enterprise Mobility Management”:

• Offers mobility digitalisation solutions through 3rd party software, among
• thers Smith Micro, where Techstep’s previous technology is a key

delivery area

• Located in Oslo and currently employs ~30
• The group has a combined customer base of ~3 600 companies

and ~220 000 end users

• Kjedehuset is Telenor’s franchise organisation of which Teki

Nordialog is a franchisee

Techstep in brief

TECHSTEP

Teki Solutions AS1)

24.22% ownership via Zono AS, 100% owned by Techstep

78.16% 8.25%

Kjedehuset AS

Of which 3.13% is owned through subsidiaries in the Teki Solutions Group

Teki Nordialog

Hardware organisation

SmartWorks

Solutions organisation

Simplified to key operational units subject to completion of the Teki Gruppen transaction

1) Teki Solutions AS including subsidiaries is denoted as “Teki Solutions Group”

T E C H S T E P

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• Telecom’s business model has

shifted from payment per SMS and calls per minute towards a fixed monthly fee

• Limited differentiation between

network quality

• Soon SIM cards will disappear

and reduce switching cost between operators

Infrastructure is becoming commodity

15 16 15

2005

16 15

2011 2007

14 17 16

2013

15

2015

16 13

2009

BNOK revenue source in Norwegian telecom market shifting towards fixed fee

Minute & SMS fee Data Fixed fee Other

Market for hardware sales is stabilising Mobile devices to play key role in digitisation Mobility

• After strong growth in smartphone

and tablet sales in Norway, annual sales market penetration are stabilising

• Revenue potential is shifting from

sales of hardware to servicing installed base

• Upside in Hardware sale from

industrial automation/digitalisation

• Smartphones and tablets are used

to an increasing extent in work and day to day life on the expense

• f computers
• Effective use of hardware and

software is increasingly important for businesses

• The market is undergoing

disruptive shifts where work is increasingly mobile

• Value proposition is changing to a

fragmented ecosystem of digital solutions and service providers

3,4 2,5 2,5 2,7

2012 2014

2,4 2,3 2,4

2010

2,8

2016E

4,1 Smartphones (millions) Other phones Tablets Smartphones

BNOK revenue source in Norwegian telecom market

10 20 30 40 50 60 70

2015 2013 2009 2007 2011

World

Example parameter: Exponential development in mobile data use (GB/capita)

The telecom industry is facing a paradigm shift

65% 45% 40% 55%

Jan-14 Jan-17 Jan-15

50% 60%

Jan-16 PC Mobile devices

Percentage of data connection per unique session in Norway Sources: Norwegian Communications Authority, Elektronikkbransjen, TNS Gallup, Swedish Post and Telecom Authority, Danish Business Authority, Finnish Communications Regulatory Authority, Cisco, OECD, GSMA

Power balance is shifting from infrastructure to providing value added services

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18/10/2016

Segment overview

6

Teki Solutions AS Group unaudited pro-forma IFRS adjusted figures1)

1) Does not correlate directly with legal structure, certain elements

• f historic split are estimated

Solutions (high gross margin)

Offering Offering

Hardware (low gross margin)

Revenue (MNOK) Revenue (MNOK)

Terminal sales Subscriptions

• B2B sales of mobile phones,

tablets and related hardware

• Commission and bonus from
• perator

Design & integration Implementation Operations & support

• Solution design
• Advisory services
• Project management
• Communication
• Training
• Track effectiveness
• Operation
• Device & app mgmt.
• Support
• Customer center

Key components

• Security & mobility applications
• AAA2)
• Call center solutions
• Video communication
• Office 365 & Hosted Lync
• Servers & networks

1H 2016 2015 248 2013 591 2014 532 436 37 20 1H 2016 60 2013 2014 29 2015

2) Authentication, authorisation & accounting Commission & bonus

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Hardware & subscriptions ICT operations & support Mobility solutions Specialised applications

Techstep aims to become a fully integrated digital solutions provider

Close ties to a highly attractive customer base: ~3 600 companies with a total of more than 220 000 users. Top 20 customers per July 2016:

Growth ambition

Hardware and related-services. Kjedehuset is Telenor’s franchise organisation owning distributor Telefast and has after market services in Conmodo. Mobility services and solutions through leading 3rd party technology partners Off the shelf Unique solutions

Business criticality Potential partner and M&A opportunities

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18/10/2016

Initiatives Growth KPIs

End user base Margin ARPU1)

8 Solutions Hardware

• More resources on Mobile as a

service (“MaaS”)

• “Productify” offering to SMB
• Increase scope of offering through
• rganic innovation, acquisitions and

partnerships

• Continue increase of number of

customers through organic growth and acquisitions

• Higher penetration within existing

customer base

• Shift in business mix will drive

gross margins

• Implement identified efficiency

gains in indirect cost base

Solutions ARPU1) Solutions penetration

1 2

End user penetration # of end users

4 3

Solutions % of revenue SG&A2) per end user

6 5

Three key value drivers going forward with multiplicative effect

ARPU # of end users Target Today ARPU # of end users Target Today

Revenue

1) Average revenue per user per month 2) All operational expenses above EBITDA except material expenses

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18/10/2016

Strong historic growth, but pressured margins

9

Teki Solutions Group: Key P&L elements 2013-1H 2016 Comments

• Solutions have experienced high growth in revenues in the period 2013-2015

with a CAGR of more than 70%

• Hardware has also experienced growth, albeit at a lower rate of ~20%
• Along with other franchisers, Teki Solutions has seen commission and bonus

from Telenor and Kjedehuset decrease in recent which has contributed to lower margins and profitability

• Flat overall gross margin in recent years, but two offsetting effects:
• Increasing solutions revenue with significantly higher gross margins
• Decreasing margins within hardware
• Several cost efficiency measures identified to reduce indirect OPEX with

expected recurring effect from 2017

• Normalisation in 2015 due to extraordinary expenses of MNOK 9 mostly from

development costs for Solutions

651

6% 29

2015

CAGR +20%

1H 2016

277

2% 30% 248

456 569

6% 5% 37

2013

4% 591 33% 60 10%

2014

20 29% 10% 30% 6% 532 436 MNOK, unaudited pro-forma IFRS adjusted figures Teki Solutions Group does not include Techstep ASA overhead Hardware revenue EBITDA margin normalised EBITDA margin as reported Solutions revenue Gross margin1)

Growth performance indicators, 1H 2016

1) Average revenue per user

End user penetration

Overall share of employees

# of end users

Hardware and solutions

Solutions % of revenue ~22% ~220 000 ~10,5%

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Key sources of value creation in growth strategy

ARPU per month NOK ~2101) Gross margin # of end users: 220 000

NOK ~650m in 2015 turnover

Solutions ARPU: Low Hardware ARPU: High Gross margin solutions: High Gross margin hardware: Low Increased scope and penetration Stable, but recurring through MaaS bundling Stable solutions margins Slight increase in hardware margin expected from MaaS bundling Organic growth plus M&A

Significant growth potential and margin upside

Redirect towards solutions & more automated servicing of hardware

Today Future potential

SG&A per end user

1) Average in H1 2016

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Techstep’s growth plan

Establishment 1

• Divestment and partnership agreement
• f Birdstep technology
• Establish new growth strategy after

completing acquisition of 78% - 100%

• f Teki Solutions

Capitalise 3

• Leverage solutions portfolio and

increased end user base

Build offering & invest 2

• Build a mobility solutions platform
• Adapt operations and cost base
• Consolidation, strategic acquisitions

and partnerships

• Geographic expansion

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Additional Techstep group management after closing of the transactions

Techstep management

Mads Vårdal, Chief Innovation Officer (currently in Teki Solutions)

• Mr. Vårdal has more than ten years industry experience. 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

Current Techstep mgmt.

• Fredrik Johansson, COO and

acting CFO Rune Midthaug, CEO of Teki Solutions

• Mr. Midthaug has been CEO in Teki Solutions since 2014. He has 20 years experience from the Telecom

industry including various leadership positions in Telenor Mobil and Mobildatakjeden AS and well has CFO in Kjedehuset from 2005 to 2014. Rune has an BBA from The University of Texas in Austin

Tom Edman, CEO of Smartworks

• Mr. Edman leads the services company SmartWorks. Before that, he held a head of product position in
• TDC. He has held the positions of head of sales in Telenor focusing on enterprise customers as well as

growing Telenor’s business in emerging markets

Gaute Engbakk, New CEO

• Mr. Engbakk is an experienced change leader, both from working many years in Accenture with large,

international companies and as CEO of Creuna and CEO of Gambit Hill & Knowlton Strategies. He has in-depth IT and communications experience from various industry verticals. Engbakk owns shares in Zono Holding AS, which represents an indirect ownership equivalent to approx. 583 000 Techstep shares, corresponding to 0.6% after completion of the Teki Gruppen transaction

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Board of directors proposed elected at the upcoming EGM

Techstep Board of Directors

Current Techstep BoD

• Ian Jenks, Chairman of the board
• Ingrid Leisner, board member
• Tore Traseth, board member

Einar J. Greve, Chairman

• Mr. Greve has experience from several years as partner in Wikborg Rein and Arctic Securities and the founder of

Cipriano AS. He holds and has held several board positions in listed and unlisted companies, and currently serves as Chairman in Weifa ASA, Axactor ASA and Bionor Pharma ASA. Greve is a shareholder in Zono Holding AS indirectly owning approx. 2.9m shares Techstep, corresponding to approximately 2.8% after completion of the Teki Gruppen transaction.

Kristian Lundkvist, Board member

• Mr. Lundkvist is the CEO and founder of Middelborg AS. Lundkvist holds various positions as Chairman of the

Board and Board member related to Middelborg’s investments including NRC Group ASA. Current Chairman of Teki Solutions and Board member of Kjedehuset. Lundkvist is the majority shareholder of Zono Holding AS through Middelborg AS, indirectly owning approx. 31.6m Techstep shares, corresponding to approximately 30.8% after completion of the Teki Gruppen transaction.

Ingrid Leisner, Board member

• Ms. Leisner has previously worked as Head of Portfolio Management for Electric Power in Statoil Norge AS.

She also has a background as a trader of different oil and gas products in her 15 years in Statoil ASA. She has served on the board of several companies listed on the Oslo Stock Exchange

Two additional board members to be proposed Svein Ove Brekke, Board member

• Mr. Brekke was one of the co-founders of Nordialog Oslo, part of the Teki Solutions group. He also sits on the

Board of Kjedehuset. Brekke is a minority shareholder in Teki Gruppen AS through Walan Invest AS. His indirect ownership will be equivalent to approx. 7.5m Techstep shares, corresponding to approximately 7.3%, after completion of the Teki Gruppen transaction.

Stein Erik Moe, Board member

• Mr. Moe has 27 years of experience with Accenture, and was a global lead in the Technology, Media and

Communications division. He has led large scale projects and transformations, - cross strategy, technology,

• rganisation and business processes. Currently he is chairman and co-founder of Gture, a digital services

company.

T E C H S T E P

18/10/2016

Pro forma shareholder overview

14

1) Controlled by Middelborg AS

Largest 15 shareholders per 11 October 2016 Current ownership After the Teki Gruppen transaction

Zono Holding AS1) 86.56 % 61.18 % Walan Invest AS

• 7.33 %

Sandvik Invest AS

• 7.33 %

Dovran Holding AS

• 7.33 %

Stenslet Holding AS

• 7.33 %

Intelco Concept AS JPMorgan Chase Bank 1.38 % 0.98 % Vinterstua AS 1.10 % 0.78 % MP Pensjon PK 1.06 % 0.75 % Petroleum Invest 0.67 % 0.47 % Strømland Sivert Nøtsund 0.54 % 0.38 % Fres AS c/o DNB Luxembourg 0.37 % 0.26 % Gleff AS 0.35 % 0.25 % Nordnet Bank AB 0.31 % 0.22 % SO Invest AS 0.23 % 0.16 % Nordnet Livforsikring AS 0.18 % 0.13 % Other shareholders 7.24 % 5.12 % Total outstanding shares 72 420 175 102 473 663 Treasury shares 1 914 1 914 Total shares 72 422 089 102 475 577 Should an offer be made on the remaining shares and shareholder loans in Teki Solutions on the same general terms as the Teki Gruppen transaction, minority shareholders in Teki Solutions will, at full acceptance, receive approx. 7.3m shares in Techstep and dilute existing shareholders accordingly, increasing the free float

T E C H S T E P

18/10/2016

Illustrative balance sheet

15

Techstep group illustrative balance sheet, 1H 2016 Comments

• High cash conversion
• Teki Solutions entered into a financial factoring agreement

in 2015 that reduced working capital level

• Limited CAPEX requirements
• In addition to the cash balance of MNOK 95, Techstep

has an undrawn credit facility of MNOK 15

•  Total cash and cash & liquidity reserves of MNOK

~110 within the Techstep group to support strategic initiatives going forward

• Note: The balance sheet is based on a preliminary

conversion of Teki Solutions Group accounts from NGAAP to IFRS in which changes primarily relate to allocation of goodwill from historic acquisitions in the Teki Solutions Group. A final version of this conversion may affect the level of intangible assets and in turn reduce the level of the book equity

MNOK consolidated on 100% basis Pro-forma adjusted for equity issue in Zono AS of NOK 55m completed after 1H Accounts payable & other ST liab. Interest bearing debt Cash & equivalents Inventories & receivables Other assets Equity 81 55 362 56

593 Equity & Liabilities

95 190 347 Intagible assets

593 Assets

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Q3 Report: 25th November 2016 Q4 Report: 23rd February 2017

Contact: Fredrik Johansson +46 70 352 91 90 fredrik.johansson@birdstepasa.com Gaute Engbakk +47 916 33 281 gaute.engbakk@nordialog.no

This presentation includes “forward-looking” statements, including, without limitation, projections and expectations regarding Techstep’s future financial position, business strategy, plans and objectives. All forward-looking statements are based on information available to the company, and views and assessments of the company, as of the date of this presentation. Techstep expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in the Techstep’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. When used in this document, the words “anticipate”, “believe”, “estimate”, “expect”, “seek to” and similar expressions, as they relate to the Techstep, its subsidiaries or its management, are intended to identify forward-looking statements. Techstep can give no assurance as to the correctness of such forward-looking statements and forward-looking statements are not guarantees of future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance and achievements of Techstep and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Techstep’s present and future business strategies and the environment in which Techstep and its subsidiaries operate. Factors that could cause the Techstep’s actual result, performance or achievements to materially differ from those in the forward-looking statements, include but are not limited to, competition, technology, products, liquidity risks, loss of key employees, intellectual property rights, ability to develop new products and/or raise additional capital. The information on slide 4 – 15 is based on the assumption of completion of the Teki Gruppen Transaction. The acquisition of Teki Gruppen’s shares and shareholder loans in Teki Solutions is subject to acceptance in an extraordinary general meeting and customary closing conditions, and any applicable third party transfer restrictions on the Teki Solution shares related to the transaction.