PRICER: Interim Report January – September 2015

Regulatory News:

Pricer AB (STO:PRICB)

Net sales and operating profit at record high levels

Third quarter 2015

· Order intake of SEK 119 (166) M, a decrease of 28 percent compared to last year

· Net sales of SEK 308 (158) M, an increase of 95 percent compared to last year

· Operating profit amounted to SEK 31.3 (15.2 [2]) M and the profit for the period SEK 20.7 (10.4 [2]) M

· The backlog* is approximately SEK 130 M, whereof the majority is expected to be invoiced in 2015

[1] Excluding non-recurring costs of 0 for Q3 2014 and SEK 37.5 M for the period ending 30 September 2014.

[2] Excluding non-recurring costs of SEK 4.1 M for Q3 2014 and SEK 56.9 M for the period ending 30 September 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 Q3 2014 and SEK 8.4 M for the period ending 30 September 2014.

Comments from the CEO, Jonas Vestin

The third quarter was Pricer’s best ever, both when it comes to net sales and operating profit. This results from delivering the previous quarters’ strong order intake. With SEK 308 M in net sales during the quarter, we can see that Pricer has already after three quarters surpassed the company’s previous record from 2011 when it comes to net sales for a full fiscal year. The cash flow was also considerably improved compared with the previous quarter and compared with the corresponding quarter last year.

Order intake is weaker compared with last year as well as to this year’s two previous quarters. Pricer’s business continues to be of a project oriented nature where large projects will not be evenly distributed between quarters, which will cause rather significant quarterly variations. Our customer’s procurement and decision periods are prolonged with the complexity of the solutions, by its value and strategic importance. Hence, individual quarters will not always reflect the overall market growth. At the same time the product mix has shifted slightly again with the share of segment labels, sold at lower price but with higher margins, having increased compared with the first half year.

The operating profit of SEK 31.3 M in the quarter gives an accumulated operating profit of SEK 40.4 M, which is a clear improvement compared with 2014. The operating margin rose to 10.1 percent in the third quarter. The high net sales in combination with a gross margin improvement - although moderate - compared with the second quarter, results in more than double earnings to the same period 2014.

The improved gross margin compared with the previous quarter confirms our assessment that the gross margin has reached its bottom for Pricer. Our focus continues to rest on sales and marketing activities and previously communicated efforts to increase the gross margin, where we expect a slight improvement during 2016. This mainly stems from our operational efforts within sales and supply chain but also gradually as a result of our digital strategy with a larger share of software and a differentiation that improves our competitive position.

Going into the fourth quarter, the business situation indicates a somewhat higher net sales than the existing order backlog. Sales with delivery and invoicing within the period is generally strong during the fourth quarter. However net sales will not in any way match the level of the present quarter. As in previous reports, we do not provide any forecast for 2015.

Lastly, a progress report on the work with implementing our digital strategy. A new production version of our key server software has been launched. The software is central to Pricer's new digital solutions. We are now able to offer a store completely new possibilities in a sharp live production environment. Regardless of scale, size or number of stores, Pricer's infrastructure can enable the retailer to display in real time on any mobile device where a product is, where a person is located, and to make the product interact directly with the person at the shelf-edge. We are thus ready for scalable production deployments, where Pricer and our customers create completely new solutions. Pricer has thereby taken another important step into the next generation of retail.

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

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