Pricer

Quarterly Report • Apr 23, 2015

Interim Report January - March 2015

Record high net sales and order intake – The gross margin remains low – New strategy launched

First quarter 2015

Amounts in SEK M unless	$\Omega$ 1	Q 1
otherwise stated	2015	2014
Order intake	269,0	133,0
Net sales	147,5	103,6
Gross margin 1)	24%	21%
Operating profit	O.9	$-9,2$
Cash flow	42,0	29,3
Profit for the period	1,3	$-10,0$
Earnings per share (SEK)	0.01	$-0.09$

Comments from the CEO, Jonas Vestin

I am pleased to report that for the first quarter of 2015, Pricer is able to report the highest ever net sales for a first quarter. Net sales increased by 42 per cent compared to the same period last year. Further the order intake more than doubled - 102 per cent - compared to first quarter 2014. This trend creates stability for Pricer's efforts to broaden its range of products, aiming at more solution-oriented offering.

However, the company's result has been burdened by continued pressure on margins. Even though the company is now reporting a profit, it is insufficient. We are therefore focusing on improving the

gross margin, something that a broader and higher growth creates opportunities for.

The gross margin is negatively affected by the strength of the US dollar, since the dollar is Pricer's main purchasing currency. This negative effect is not fully compensated by invoicing in dollars or by currency clauses. Measures have been implemented to balance this trend. The product mix and effect of some contracts concluded at lower margins are further reducing profit for the quarter.

Through a combination of operational and strategic measures relating to how we position ourselves and price our offer, we aim at gradually improving our operating profit and gross margin. Some contracts will continue to burden the gross margin in the coming quarters. However, with a stronger cash flow, a completely new and vital organization, a high level of confidence from our customers and, not least, our commitment to solutions that respond well to retailers' needs for a digital upgrade, we are now in a good position to achieve increasing profitability. I would like to reiterate that this combined effect is expected to give a certain positive effect on sales and operating profit in 2015 and further improvements in 2016.

During the past six months, the management has focused on liquidity and tied-up capital. Pricer ends the quarter with a positive net cash position of SEK 90 million, meaning a positive cash flow of about SEK 100 million during for the last six months. Following the strong order intake, it is expected that the working capital will increase later in the year.

The result for the quarter was negatively affected by investments in marketing activities, such as participation in more trade fairs than previously and increased customer and partner activities.

Pricer's system for more efficient collection of on-line orders (also called Click & Collect) and optimization of shelf space, have been success factors as Pricer's new solutions reached the market. The first pilot projects to study the effect on consumer behavior started up during the first quarter. Pricer's ambition is to become a partner for digital solutions for the retail industry in price optimization, logistics and marketing at the shelf-edge.

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

Market developments during the year

Generally speaking, there is a growing demand for digital shelf-edge solutions, but the industry is subject to continued strong pressure on margins, regardless of the short term impact of the much higher dollar exchange rate. Sales are mainly driven by the core markets of France, Belgium and Italy. These markets delivered large orders and sales in the first quarter; from the retail chains Intermarché in France and Delhaize in Belgium, the French Do-It-Yourself chain Leroy Merlin and our Italian partner Nicolis, among others.

The largest order in the first quarter came from the Norwegian retailer NorgesGruppen via our partner PSI. Sales to the French retail industry have partly consisted of upgrading previously installed shelf labels. Media Markt's continued roll-out in Eastern Europe also resulted in large orders.

A number of large tender inquiries were initiated in the quarter, which indicates a positive market development in 2015. During the first quarter. Pricer decided to expand production capacity in China to meet the strong intake of orders and minimize lead times, which is a competitive advantage.

The graphic e-paper labels' share of the product mix has continued to increase in the first quarter to become the same size as segment-

based LCD labels. This trend has been going on for several years and is not expected to decline. Large e-paper labels are used in the electronics trade in particular. This is a growing market with a few pilot projects that are assessed in the second quarter. Price pressure from on-line commerce and the demands for web synchronization is driving the market forward.

A number of markets have continued to show low demand, such as the USA, Japan and Spain. The company considers that a broader solution that address more of the customer's most important challenges is the way forward for opening up additional and larger markets.

NET SALES BY GEOGRAPHICAL MARKET

	Q 1	Q 1
Amounts in SEK M	2015	2014
Europe, Middle East and Africa	129,7	88,4
America	11,6	4,1
Asia & the Pacific	6.2	11.1
Total net sales	147,5	103,6

Orders, net sales and results

Order intake was SEK 269 (133) million in the first quarter, an increase of 102 per cent compared to the first quarter of 2014. The agreement with NorgesGruppen via our partner PSI Systems that was reported in the fourth quarter led to orders for over SEK 90 million in the first quarter of 2015. Otherwise, order intake was spread over a large number of customers, mainly in Europe.

Net sales amounted to SEK 147.5 (103.6) million during the quarter. The increase was 42 per cent compared to the first quarter of last year. Adjusted for changes in exchange rates, sales increased by 28 per cent.

The gross profit amounted to SEK 35.3 (21.3) million and the gross margin was 23.9 (20.6) percent for the quarter.

Operating expenses increased to SEK 34.4 (30.5) million for the quarter. Besides a currency effect of SEK 1.7 million in the translation of expenses at the subsidiaries, the increased costs were mainly driven by the launch costs for the new solution-oriented strategy where SmartFlash is the first new functionality to be introduced on the market (for a more detailed description of SmartFlash functionality, see the last page of the report). Compared to last year, costs have increased since a new executive team has been appointed. The average number of employees has also increased by three people between the periods, as part of the investment in the new strategy.

The operating profit amounted to SEK 0.9 (-9.2) million for the quarter, an operating margin of 0.6 (neg.) percent.

The profit for the period amounted to SEK 1.3 (-10.0) million.

Translation differences in other comprehensive income of SEK-5.0 (0.3) million consisted of foreign currency translation of net assets in foreign subsidiaries in euro and dollars, which mainly consisted of goodwill.

$\mathbf{r} = \mathbf{r}$

CURRENCY TRANSLATION DIFFERENCE ORDER INTAKE & SALES

	Q	Q1	Full year
	2015	2014	2014
% change in Order intake	102%	$-7\%$	3%
whereof currency translation difference	35%	3%	5%
% change in Order intake adjusted for currency translation difference	67%	$-10%$	$-2%$
% change in Net sales	42%	11%	11%
whereof currency translation difference	14%	2%	5%
% change in Net sales adjusted for currency translation difference	28%	9%	6%

NET SALES AND OPERATING PROFIT, SEK M
	Q 1	Q 1
	2015	2014
Net sales	147,5	103,6
Cost of goods sold 1)	$-112,2$	$-82,3$
Gross profit 1)	35,3	21,3
Gross margin 1)	23,9%	20,6%
Operating expenses 1)	$-34,4$	$-30,5$
Operating profit	O,9	$-9,2$
Operating margin	0,6%	$-8,9%$

Depreciations of capitalized development costs were during 2014 reclassified from the research and $\left( \frac{1}{2} \right)$ development function to cost of goods sold. The effect of this is SEK 2.8 (2.7) million.

Cash flow and financial position

Cash flow from current activities amounted to SEK 42.0 (29.3) million in the first quarter. A significant improvement has taken place during the quarter as a result of an ongoing project to reduce capital tied up in stocks and accounts receivable.

Cash and cash equivalents at the end of the period amounted to SEK 90.8 (74.1) million. In addition to cash and cash equivalents, Pricer has an unused overdraft facility amounting to SEK 50 million and an additional SEK 50 million in a credit facility.

Equity

Pricer holds 1,078,668 own shares in order to fulfill the promise of matching and performance shares in the two outstanding stock saving programs. The value of the promise is reported in accordance with IFRS 2 and is expensed over the vesting period.

ISSUED AND OUTSTANDING SHARES

Stated in thousands of shares	Series A	Series B	Total
Issued at the beginning of the year, 2015-01-01	-226	110 746	110 972
Issued and converted shares in the year
Issued at the end of the period, 2015-03-31	226	110 746	110 972
Treasury shares		$-1.079$	$-1079$
Outstanding shares at end-of period	226	109 667	109 893
$C_1$ and $A_2$ also as the late $C_1$ is contained and also $D_1$ also in a second inter-

Class A share holds five votes and class B share one vote

Investment

Investments in fixed assets amounted to SEK 6.5 (3.6) million in the first quarter and consisted mainly of investments in increased production capacity and capitalized development costs of SEK 3.2 (1.8) million.

Parent company

The parent company's net sales amounted to SEK 111.5 (89.0) million and the result for the period amounted to SEK -0.2 (-8.0) million. The parent company's cash and cash equivalents amounted to SEK 75.7 (70.1) million at the end of the period.

Personnel

The average number of employees was 79 (76) and the number of employees at the end of the period was 82 (76).

Helena Holmgren joined as CFO in March.

Adjusted operating profit

As previously reported, 2014 was burdened with non-recurring costs of a total of SEK 69.0 million relating mainly to component problems for goods delivered and a large-scale structural change. Of the provisions made with regard to quality problems, SEK 19.7 million remained at 31 March, which is considered sufficient to cover the remaining costs.

ADJUSTED OPERATING PROFIT

	Q 1	Q 2	Q 3	$Q_4$	Q 1
Amounts in SEK M	2014	2014	2014	2014	2015
Operating profit	$-9,2$	$-50.1$	11,1	$-4.9$	O,9
Component problems		37.5		۰
Write-down of development project		15.3		O 2
Structural change			4.1	11,9
Total adjustment		52,8	4,1	12,1
Adjusted operating profit	$-9,2$	2.7	15.2	7,2	0.9

Risks and uncertainty factors

Pricer's results and financial position are affected by various risk factors that must be considered when assessing the group and the parent company and their future potential. These risks are primarily associated with the progress of the market for electronic shelf-edge labels and large currency fluctuations. In view of the client structure and the extensive scale of the agreement, a delay in the installations or large fluctuations in exchange rates can have a significant effect in an individual quarter. For other risks, please see the 2014 Annual Report, pages 10 and 39.

Related parties

No significant transactions took place with related parties that significantly affect the group's or parent company's financial position or results.

Accounting principles

This interim report for the group was prepared in accordance with IAS 34 Interim Financial Reporting and applicable provisions of the Annual Accounts Act. The interim report for the parent company was prepared in accordance with the Annual Accounts Act, Chapter 9, and RFR 2. The same accounting principles and bases for calculation were applied for the group and the parent company as in the latest annual report.

A reclassification of depreciations of capitalized development costs was carried out in 2014 from research and development expenses to cost of goods sold. The amount for the first quarter of 2015 is SEK 2.8 (2.7) million. This is to clarify the link to the sale generated by the developed products after launch, when depreciation normally also begins.

Forecasts

No forecast is issued for 2015.

Next reporting date

The Interim Report for January - June 2015 is published on 19 August 2015.

Stockholm, 23 April 2015

The Board of Directors and the CEO

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 Thursday, 23 April 2015 at 08:45 hours.

For further information, please contact.

Jonas Vestin, CEO, or Helena Holmgren, CFO, Pricer AB: 08-505 582 00

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME IN SUMMARY

	Q 1		Q 1 Full year
Amounts in SEK M	2015	2014	2014
Net sales	147,5	103,6	583,0
Cost of goods sold 1, 5)	$-112,2$	$-82,3$	$-480,7$
Gross profit 1)	35.3	21,3	102,3
Selling and administrative expenses 5)	$-30,1$	$-25,7$	$-118,7$
Research and development costs 2, 5)	$-4,3$	$-4,8$	$-36,7$
Operating profit 4)	0,9	$-9,2$	$-53,1$
Net financial items	2,1	$-0.6$	$-O,1$
Profit before $\text{tax}^{4}$	3,0	$-9,8$	$-53,2$
Income tax	$-1,7$	$-0,2$	$-2,3$
Profit for the period 4)	1, 3	$-10.0$	$-55.5$
Other comprehensive income
Items that have or may be accounted for in the profit for the period
Translation differences	$-5,0$	0,3	23,8
Cash flow hedges, net		$\circ$	O,2
Tax relating to items in other comprehensive income	O, 5	O, O	$-1,2$
Other comprehensive income for the period	$-4,5$	0,3	22,8
Net comprehensive income for the period	$-3,2$	$-9,7$	$-32,7$
Profit for the period attributable to:
Owners of the Parent Company	1, 3	$-10,0$	$-55,5$
Other comprehensive income for the period attributable to:
Owners of the Parent Company	$-3,2$	$-9,7$	$-32.7$

EARNINGS PER SHARE

	Q 1	Q 1	Full year
	2015	2014	2014
Basic earnings per share, SEK	O, O1	$-0.09$	$-0.51$
Diluted earnings per share, SEK	0.01	$-0.09$	$-0.51$
Number of shares, millions	109.9	109.9	109.9
Diluted number of shares, millions	109,9	109.9	109,9

NET SALES BY GEOGRAPHICAL MARKET

	Q 1	Q1	Full year
Amounts in SEK M	2015	2014	2014
Europe, Middle East and Africa	129,7	88.4	493,3
America	11.6	4.1	44.7
Asia & the Pacific	6,2	11,1	45.1
Total net sales	147.5	103.6	583.0

Amounts in SEK M		2015-03-31 2014-03-31	2014-12-31
Intangible fixed assets	257,7	268,0	263,4
Tangible fixed assets	10,6	8,2	8,1
Deferred tax assets	101,7	101,8	101,7
Total fixed assets	370,0	378.0	373,2
Inventories	141,4	157,4	157,7
Current receivables	218,7	186,1	231,3
Cash and cash equivalents	90,8	74.1	53,0
Total current assets	450.9	417.6	442,0
TOTAL ASSETS	820,9	795,6	815,2
Shareholders' equity	656,8	682,3	659,7
Total equity	656,8	682.3	659.7
Long-term liabilities	3,2	2,4	4,9
Short-term liabilities	160,9	110,9	150,6
Total liabilities	164,1	113,3	155,5
TOTAL EQUITY AND LIABILITIES	820,9	795,6	815,2
Pledged assets	60,4	60,4	60,5
Contingent liabilities	O, 8	O, 8	O, 8
Basic shareholders' equity per share, SEK	5,98	6.21	6,00
Diluted charabolders' courty per chara CEIX	$E$ 00	$C_{2}$ 21	$\epsilon$ $\cap$

STATEMENT OF CONSOLIDATED FINANCIAL POSITION IN SUMMARY

STATEMENT OF CHANGES IN CONSOLIDATED EQUITY IN SUMMARY

	3 months	3 months	Full year
Amounts in SEK M	2015	2014	2014
Equity at beginning of period	659,7	691.9	691,9
Result for the period	1, 3	$-10.0$	$-55,5$
Other comprehensive income for the period	$-4,5$	O 2	22,8
Net comprehensive income for the period	$-3.2$	$-9.7$	$-32.7$
Share issue			0,3
Repurchase of own shares			$-0.3$
Dividend			0,0
Share based payments, equity settled	0,3	O,1	0,5
Total transactions with owners of the Group	O,3	0,1	0.5
Equity at end of period	656,8	682.3	659,7
Attributable to:
- Owners of the Parent Company	656,8	682.3	659,7

	Q 1	Q 1	Full year
Amounts in SEK M	2015	2014	2014
Profit before tax	3,0	$-9.8$	$-53,2$
Adjustment for non-cash items	$-2,4$	2,8	54,7
whereof depreciations and amortizations	3,8	3,4	15,5
Paid income tax	$-1.5$	$-1,0$	$-3.9$
Change in working capital	42,9	37,3	16, 0
Cash flow from operating activities	42,0	29,3	13,6
Cash flow from investing activities	$-6,5$	-3,6	$-11,6$
Cash flow from financing activities
Cash flow for the period	35,5	25,7	2,0
Cash and cash equivalents at beginning of period	53,0	48,9	48,9
Exchange-rate difference in cash and cash equivalents	2,3	$-0,5$	2,
Cash and cash equivalents at end of period	90,8	74,1	53,C
Unutilised bank overdraft facilities	50.0	50,0	50,0
Disposable funds at end of period	140,8	124,1	103,0

STATEMENT OF CONSOLIDATED CASH FLOWS IN SUMMARY

KEY RATIOS

	Q 1	$Q_4$	Q 3	Q 2	Q 1
Amounts in SEK M	2015	2014	2014	2014	2014
Order intake	269	115	166	127	133
Order intake - rolling 4 quarters	677	541	540	487	513
Net sales	147,5	173.2	158,3	147.9	103,6
Net sales - rolling 4 quarters	626,9	583,0	561,7	555.0	535.0
Operating profit 1)	O,9	7,2	15,2	2,7	$-9.2$
Operating profit 1) - rolling 4 quarters	26,0	15.9	10.8	2,5	8.9
Profit for the period 1)	1, 3	7,0	14.5	2.0	$-10,0$
Cash flow from operating activities	42,0	56,8	$-34.8$	$-37.7$	29.3
Cash flow from op. activities - rolling 4 quarters	26,3	13,6	9,3	26,7	39,0
Number of employees, end of period	82	83	78	78	76
Equity ratio	80%	81%	80%	81%	86%

STATEMENT OF INCOME AND STATEMENT OF COMPREHENSIVE INCOME OF PARENT COMPANY IN SUMMARY

STATEMENT OF INCOME

		3 months 3 months Full year
Amounts in SEK M	2015	2014	2014
Net sales	111,5	89,0	465,8
Cost of goods sold 1, 5)	$-97,1$	$-82,0$	$-444,9$
Gross profit 1)	14, 4	7,0	20,9
Selling and administrative expenses 3)	$-11,6$	$-9,6$	$-46,7$
Research and development costs 2, 5)	$-4,3$	$-4.8$	$-36,7$
Operating profit 4)	$-1,5$	$-7,4$	$-62,5$
Income and expenses from financial items	2,0	$-0,5$	$-0,4$
Profit before $\text{tax}^{4)}$	0,5	$-7,9$	$-62,9$
Income tax	$-0,7$	$-0,1$	1,2
Profit for the period 4)	$-0,2$	$-8,0$	$-61,7$

STATEMENT OF COMPREHENSIVE INCOME

		3 months 3 months Full year
Amounts in SEK M	2015	2014	2014
Profit for the period	$-0.2$	$-8.0$	$-61.7$
Comprehensive income for the period
Items that have or may be accounted for in the profit for the period
Translation differences	$-2.1$	O.O	5.3
Cash flow hedges, net	O, O	O.O	O.2
Tax relating to items in other comprehensive income	O,4	O.O	$-1,2$
Comprehensive income for the period	$-1,7$	0,0	4,3
Net comprehensive income for the period	$-1.9$	$-8,0$	$-57.4$

PARENT COMPANY BALANCE SHEET IN SUMMARY

Amounts in SEK M	2015-03-31	2014-03-31 2014-12-31
Intangible fixed assets	21,2	39,4	20,8
Tangible fixed assets	9,9	7,2	7,3
Financial fixed assets	372,3	378,3	386,9
Total fixed assets	403,4	424,9	415,0
Inventories	110,5	120,8	125,1
Current receivables	148,0	81,8	97,2
Cash and cash equivalents	75,7	70,1	44,5
Total current assets	334,2	272,7	266,8
TOTAL ASSETS	737,6	697,6	681,8
Shareholders' equity	551,1	601,7	552,7
Total equity	551,1	601,7	552,7
Provisions	29,0	9,3	30,9
Long-term liabilities	0,5	O,1	O,1
Current liabilities	157,0	86,5	98,1
Total liabilities	186,5	95,9	129,1
TOTAL EQUITY AND LIABILITIES	737,6	697,6	681,8
Pledged assets	59,6	59,6	59,6
Contingent liabilities

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY IN SUMMARY

	3 months	3 months	Full year
Amounts in SEK M	2015	2014	2014
Equity at beginning of period	552,7	609,6	609,6
Net comprehensive income for the period	$-1.9$	$-8.0$	$-57.4$
Share issue			O.3
Repurchase of own shares			$-0.3$
Dividend
Share based payments, equity settled	0.3	0.1	O,5
Equity at end of period	551.1	601.7	552.7

SmartFlash - for more efficient stores

In line with Pricer's solution-oriented strategy, the company's platform is upgraded to include new

functions to enable new solutions that make stores more efficient, profitable and attractive to customers.

Pricer launched SmartFlash during Q1. With this function, any label can be made to start flashing brightly within a few seconds, which means it becomes clearly visible to anyone in the near vicinity. Solutions built around SmartFlash can simplify several in-store critical tasks. One example is the Click & Collect solution, which addresses the retail need to keep shelves well stocked at all times and to display targeted marketing at the shelf-edge.

Click & Collect allows items to be ordered over the Internet and picked up at stores ready to go, and it is a quickly growing phenomenon. In 2014, 35% of consumers in the UK used Click & Collect, and the figure is expected to more than double within two years. The same trend is clear in other countries, which is putting a great deal of pressure on retailers.

Picking and packing the customer's items takes a great deal of time and thus greatly reduces margins. Pricer's SmartFlash function is very helpful in this respect in terms of finding the right item and making picking more reliable - and above all quicker. A savings of ten seconds per item can translate into SEK 30-40 of increased margin for a typical bag of groceries.

About Pricer

Pricer AB, founded in Sweden in 1991, is world-leading in digital shelf-edge solutions that both increase stores' productivity and enhance the shopping experience. Pricer's platform is based on infrared technology. It is fast, robust, scalable and can be connected to digital applications.

The list of customers includes many of the world's leading retail chains, both large and small: do-ityourself suppliers, electronics chains and specialty stores. To date, Pricer has sold more than 110 million shelf labels to 13,500 stores in 50 countries.

Pricer's shares are listed on the NASDAQ OMX Stockholm Small Cap list. For more information, please visit www.pricer.com.

Pricer AB Box 215 SE-101 24 Stockholm Website: www.pricer.com Telephone no.: +46 8 505 582 00 Corporate registration number: 556427-7993

Office address: Västra Järnvägsgatan 7 SE-111 64 Stockholm