Pricer: Interim Report January – June 2015

Regulatory News:

Pricer (STO:PRICB):

Order intake more than doubled and net sales increased by 60 percent compared to last year

· Profit improved but gross margin still low

Second quarter 2015

· Order intake of SEK 296 (127) M, an increase of 133 percent compared to last year · Net sales of SEK 237 (148) M, an increase of 60 percent compared to last year · Operating profit amounted to SEK 8.2 (2.72) M and the profit for the period SEK 7.1 (2.02) M · The backlog* exceeds SEK 300 M, whereof the majority is expected to be invoiced in 2015 · Order intake in the second quarter includes orders of around SEK 80 M from a large French food retail chain and SEK 56 M from Pricer’s Norwegian partner referring to Coop Norway.

1) Excluding non-recurring costs of SEK 37.5 M for Q2 2014 and SEK 37.5 M for the period ending 30 June 2014.

2) Excluding non-recurring costs of SEK 52.8 M for Q2 2014 and SEK 52.8 M for the period ending 30 June 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 quarter 2 2014 and SEK 5.6 M for the period ending 30 June 2014.

Comments from the CEO, Jonas Vestin

As communicated in the report for the first quarter, certain contracts will still burden the gross margin during the coming quarters. The second quarter’s historically low level of 18 percent continues to be affected by currency-, product-, and contract mix. The net sales in the period have been dominated by final deliveries of large old contracts with lower margins and contracts with only graphic labels, that have lower gross margins than segment based labels.

In tough competition, Pricer has historically taken on a number of large contracts with low margins to secure market share and competitive position. Some of the contracts have been further impacted by currency effects during the year. These deliveries have thus burdened the margin of the second quarter. These are contracts that are expected to be phased out during the coming year.

Pricer’s purchases are mainly conducted in US dollars at the same time that the largest part of sales is in Euro. Negotiations with both customers and suppliers regarding price adjustments have a delayed effect and will be realized in coming deliveries. During the first half year, Pricer has gradually adjusted price levels to compensate for a considerably stronger US dollar compared with last year, which short term has affected sales on certain high margin markets in a negative way. My overall assessment is that the weak gross margin has reached its lowest level during the second quarter and that we can now gradually see a strengthening of the margin due to the operational work taking place related to customers, partners and suppliers.

I am pleased that Pricer is continuing to grow on a rolling twelve months basis, with net sales of SEK 716 (555) M, order intake of SEK 846 (487) M and a gradually improving rolling twelve months’ operating profit as well as a substantially larger order backlog. The growth in net sales further means that the installed base also continues to increase, on which we are building our strategy for digital solutions that will expand our margins. As indicated in the report for the first quarter, the strong increase in order intake and net sales have also increased the working capital requirements, resulting in a negative cash flow for the quarter.

Previously announced orders from PSI Group for Coop Norway and NorgesGruppen, deliveries to the "Do-It-Yourself” chain Leroy-Merlin in France and a significant order from a large food retail chain in France, have been the most important contributors to the record high sales numbers in the second quarter.

Even if we see an overall market growth for digital systems for dynamic retail pricing, it will be crucial for margin expansion that our new digital solutions and the associated sale of software is established in the market. This work is moving according to plan with growing intensity in all parts of Pricer’s organization. As previously communicated, we believe that this will have a gradual positive effect on the result starting from next year.

As in previous reports, we do not provide any forecast for 2015.

* The backlog consists of binding orders and call-offs under frame agreements. Expected future value of frame agreements are not included.

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