We make your work life mobile

Transcription

1 We make your work life mobile Company Presentation 18 October /10/2016

2 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 forwardlooking 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 forwardlooking 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. 18/10/2016 2

3 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% ownership 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 of 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 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 18/10/2016 3

4 Techstep in brief About Techstep 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 3 rd party software, among others 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 ~ end users Kjedehuset is Telenor s franchise organisation of which Teki Nordialog is a franchisee 8.25% Kjedehuset AS Of which 3.13% is owned through subsidiaries in the Teki Solutions Group Company structure Simplified to key operational units subject to completion of the Teki Gruppen transaction TECHSTEP Teki Nordialog Hardware organisation 78.16% Teki Solutions AS 1) 24.22% ownership via Zono AS, 100% owned by Techstep SmartWorks Solutions organisation 1) Teki Solutions AS including subsidiaries is denoted as Teki Solutions Group 18/10/2016 4

5 The telecom industry is facing a paradigm shift Infrastructure is becoming commodity Market for hardware sales is stabilising Mobile devices to play key role in digitisation Mobility BNOK revenue source in Norwegian telecom market shifting towards fixed fee BNOK revenue source in Norwegian telecom market Example parameter: Exponential development in mobile data use (GB/capita) Percentage of data connection per unique session in Norway 13 Other Fixed fee Data Minute & SMS fee ,4 2,5 Smartphones Other phones Tablets Smartphones (millions) 2,3 2,7 3,4 2,8 2,5 4,1 2, % 60% 55% 50% Mobile devices 20 45% 10 World 40% PC E Jan-14 Jan-15 Jan-16 Jan-17 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 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 of 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 Power balance is shifting from infrastructure to providing value added services Sources: Norwegian Communications Authority, Elektronikkbransjen, TNS Gallup, Swedish Post and Telecom Authority, Danish Business Authority, 18/10/ Finnish Communications Regulatory Authority, Cisco, OECD, GSMA

6 Segment overview Teki Solutions AS Group unaudited pro-forma IFRS adjusted figures 1) Hardware (low gross margin) Solutions (high gross margin) Revenue (MNOK) Commission & bonus Revenue (MNOK) H H 2016 Offering Offering Terminal sales Subscriptions Design & integration Implementation Operations & support Solution design Advisory services Project management Communication Training Track effectiveness Operation Device & app mgmt. Support Customer center B2B sales of mobile phones, tablets and related hardware Commission and bonus from operator Security & mobility applications AAA 2) Call center solutions Key components Video communication Office 365 & Hosted Lync Servers & networks 1) Does not correlate directly with legal structure, certain elements 2) Authentication, authorisation & accounting 18/10/2016 of historic split are estimated 6

7 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 users. Top 20 customers per July 2016: Hardware & subscriptions ICT operations & support Mobility solutions Specialised applications Off the shelf Business criticality Unique solutions 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 Potential partner and M&A opportunities 18/10/2016 7

8 ARPU ARPU Three key value drivers going forward with multiplicative effect ARPU 1) Revenue End user base Margin Target Target Hardware Today Today Solutions # of end users # of end users Initiatives More resources on Mobile as a service ( MaaS ) Productify offering to SMB Increase scope of offering through organic 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 Growth KPIs 1 2 Solutions ARPU 1) Solutions penetration 3 4 End user penetration # of end users 5 6 Solutions % of revenue SG&A 2) per end user 1) Average revenue per user per month 18/10/2016 2) All operational expenses above EBITDA except material expenses 8

9 Strong historic growth, but pressured margins Teki Solutions Group: Key P&L elements H 2016 MNOK, unaudited pro-forma IFRS adjusted figures Teki Solutions Group does not include Techstep ASA overhead Hardware revenue Solutions revenue Gross margin 1) CAGR +20% EBITDA margin as reported EBITDA margin normalised Comments Solutions have experienced high growth in revenues in the period 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 33% % % % # of end users Hardware and solutions Growth performance indicators, 1H 2016 End user penetration Overall share of employees Solutions % of revenue 10% 10% 6% 5% 6% 4% 248 6% 2% ~ ~22% ~10,5% H ) Average revenue per user 18/10/2016 9

10 Key sources of value creation in growth strategy Today Future potential ARPU per month NOK ~210 1) Solutions ARPU: Low Gross margin Gross margin solutions: High Increased scope and penetration Stable solutions margins Hardware ARPU: High Gross margin hardware: Low Stable, but recurring through MaaS bundling Slight increase in hardware margin expected from MaaS bundling SG&A per end user Redirect towards solutions & more automated servicing of hardware # of end users: Organic growth plus M&A NOK ~650m in 2015 turnover Significant growth potential and margin upside 1) Average in H /10/

11 Techstep s growth plan 3 Capitalise 2 Build offering & invest 1 Establishment Leverage solutions portfolio and increased end user base Divestment and partnership agreement of Birdstep technology Establish new growth strategy after completing acquisition of 78% - 100% of Teki Solutions Build a mobility solutions platform Adapt operations and cost base Consolidation, strategic acquisitions and partnerships Geographic expansion 18/10/

12 Techstep management Current Techstep mgmt. Fredrik Johansson, COO and acting CFO Additional Techstep group management after closing of the transactions 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 Techstep shares, corresponding to 0.6% after completion of the Teki Gruppen transaction 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 Rune Midthaug, CEO of Teki Solutions Mr. Midthaug has been CEO in Teki Solutions since 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 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 18/10/

13 Techstep Board of Directors Current Techstep BoD Ian Jenks, Chairman of the board Ingrid Leisner, board member Tore Traseth, board member Board of directors proposed elected at the upcoming EGM 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 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, organisation and business processes. Currently he is chairman and co-founder of Gture, a digital services company. Two additional board members to be proposed 18/10/

14 Pro forma shareholder overview Largest 15 shareholders per 11 October 2016 Current ownership After the Teki Gruppen transaction Zono Holding AS 1) % % Walan Invest AS % Sandvik Invest AS % Dovran Holding AS % Stenslet Holding AS % 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 Treasury shares Total shares 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 1) Controlled by Middelborg AS 18/10/

15 Illustrative balance sheet Techstep group illustrative balance sheet, 1H 2016 MNOK consolidated on 100% basis Pro-forma adjusted for equity issue in Zono AS of NOK 55m completed after 1H Other assets Inventories & receivables Cash & equivalents Interest bearing debt Accounts payable & other ST liab. 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 Intagible assets Equity 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 Assets Equity & Liabilities 18/10/

16 Fredrik Johansson Contact: Gaute Engbakk Q3 Report: 25 th November 2016 Q4 Report: 23 rd February 2017 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. 18/10/