Pricer AB – Year-End Report 2015

Regulatory News:

Pricer AB (STO:PRICB)

Strong result and cash flow concludes 2015, the Board proposes to resume dividend

Fourth quarter 2015

· Net sales of SEK 178.5 (173.2) M, an increase of 3 percent compared to last year

· Operating profit of SEK 7.4 (7.2[2]) M and profit for the period of SEK 7.9 (-5.1) M

· Cash flow from operating activities increased to SEK 92.7 (56.8) M

· Order intake of SEK 108 (115) M, a decrease of 6 percent compared to last year

· The backlog* is approximately SEK 63 M, whereof the majority is expected to be invoiced in the first quarter of 2016

· Framework agreement signed between Strongpoint and Bunnpris in Norway, estimated future order value is approximately SEK 100 M

Full year 2015

· Net sales of SEK 870.6 (583.0) M, an increase of 49 percent compared to last year

· Operating profit of SEK 47.8 (15.9[2]) M and profit for the period of SEK 37.0 (-55.5) M

· Cash flow from operating activities increased to SEK 101.4 (13.6) M

· Order intake of SEK 792 (541) M, an increase of 46 percent compared to last year

· The Board proposes to the Annual General Meeting to resume dividend for 2015 with 0.25 (0) SEK per share

Subsequent events

· Orders from Carrefour of more than 100 MSEK with deliveries scheduled to begin during first quarter of 2016

· Launch of real time in-store automated product positioning

[1] Excluding non-recurring costs of 0 for Q4 2014 and SEK 37.5 M for the full year 2014.

[2] Excluding non-recurring costs of SEK 12.1 M for Q4 2014 and SEK 69.0 M for the full year 2014.

[3] Depreciations of capitalized development costs were during 2014 reclassified from the research and development cost function to cost of goods sold. The effect of this is SEK 2.8 M for Q4 2014 and SEK 11.2 M for the full year 2014.

Comments from the CEO, Jonas Vestin

Pricer succeeded in turning last year’s losses into profit and a very strong cash flow for 2015. I am delighted to report that net sales rose by 49% to SEK 871 M, making this Pricer’s best year ever. We have prioritized profitable growth, order intake increased by 46% to SEK 792 M and operating profit nearly tripled to SEK 48 M, at the same time that we reduced our tied-up capital. This should also be seen against the background of the extensive restructuring that the organization underwent during the period, parallel to the launch of a new digital strategy.

In the fourth quarter, both net sales and profit were up over the same quarter last year. And if we had included the framework order between our Norwegian reseller and Bunnpris that was announced in the fourth quarter as order intake, we would also have shown growth in order intake and backlog. But since the exact size and timetable had not yet been finalized at year-end we have chosen to wait before including them in our order intake and backlog, in accordance with our principles.

At the same time, the lower order intake in the second half of the year does indicate a certain headwind. The fourth quarter of 2015 saw the completion of two major global auction type ESL procurements, with tightly controlled requirements for participation and price as the decisive factor, in which Pricer chose to prioritize margins over volumes. These procurements referred to business where the label density in the stores is low and price updates are relatively few, resulting in strong price pressure in combination with disproportionate risks involved. Pricer’s competitive advantage is stronger when the number of ESL labels per store are high, preferably also combined with an active pricing strategy, resulting in system stability and functionality in addition to price updates being considered important evaluation criteria.

To ensure our ability to be competitive even in major procurements of this kind, we will intensify the already started rationalization initiatives, particularly with regard to graphic ePaper labels. These projects are underway and succeeded in largely compensating for the high US dollar rate in the past year, but will also successively improve our competitiveness in different segments going forward.

Pricer’s digital solutions are leading the way in the industry, but the competitors have wasted no time in revamping both their position and market messages. For Pricer, this means a continued focus on the differentiation strategy that was launched in 2014 and will begin to make a positive contribution to earnings in 2016 through initial deliveries of digital solutions to our customers’ stores. In time, the digital strategy will improve our gross margin and earnings. However, a more powerful breakthrough is not expected until 2017 which is in line with our earlier projections.

All in all, Pricer is now on stable financial ground and delivered robust growth and a strong cash flow in 2015. We are well poised for the year ahead, but despite continued long-term growth in the market, we are dealing with a relatively tough market scenario and will issue no forecast for 2016.

In its capacity as issuer, Pricer AB publishes the information in this interim report in accordance with the Securities Markets Act (2007:528). The information was issued to the media for publication on Friday, 12 February 2016 at 8:30 am CEST.

* The order backlog consists of binding orders and call-offs under frame agreements. Expected future value of frame agreements is not included. Framework agreement between Strongpoint and Bunnpris not part of backlog.

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