StrongPoint — Interim / Quarterly Report 2009

Feb 18, 2010

PSI Group ASA

Q4 2009

Financial report and status for the fourth quarter 2009

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PSI Group ASA – Q4 2009
Page 2

HIGHLIGHTS OF THE FOURTH QUARTER 2009

• Operating revenues of NOK 154.1 million, down from NOK 199.1 million in Q408
• EBITDA down to NOK 13.9 million from NOK 46.8 million in Q408
• Solid Cash flow from operations of NOK 38.0 million, up from NOK 31.8 million in Q408
• Net interest-bearing debt NOK 187.6 million, down from NOK 219.4 million in Q408
• Svein Jacobsen elected as new chairman of the board

KEY FIGURES

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Operating revenues	154.1	199.1	565.6	553.3
EBITDA^{1}	13.9	46.8	44.3	76.3
Profit/loss before tax^{2}	-9.3	29.0	-8.7	25.2
Diluted earnings per share	-0.48	0.90	-0.42	0.60
Cash flow from operations	38.0	31.8	42.7	52.3
EBITDA-margin	9.0%	23.6%	7.9%	13.8%

1 Q409 includes a one-off charge of NOK 4 million due to workforce reduction, while Q408 includes a positive gain of NOK 11 million as a consequence of the Friström Innovation AB acquisition.
2 Q409 includes a NOK 13.3 million write down on intangible assets

KEY FIGURES SEGMENTS

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Retail Solutions
Sales revenues	104.9	126.4	393.8	430.1
EBITDA	2.1	10.7	14.9	37.9
Cash Management Retail
Sales revenues	25.1	36.4	107.4	62.8
EBITDA	0.8	6.9	7.6	6.9
Cash Management CIT/ATM
Sales revenues	54.2	72.4	173.7	121.6
EBITDA	11.7	30.9	28.7	37.8
Group/ Eliminations
Sales revenues	-30.4	-36.8	-111.0	-63.6
EBITDA	-0.8	-1.7	-6.9	-6.4

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PSI Group ASA - Q4 2009
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GROUP

Consolidated operating revenues were NOK 154.1 million for the fourth quarter, compared with NOK 199.1 million in the same period of 2008. Corresponding figures for the full year were NOK 565.6 million and NOK 553.3 million.

The decline in operating revenues during the quarter primarily reflected a drop in deliveries of CashGuard systems as a result of a generally lower level of investment by the grocery sector in 2009 and a weaker Swedish kronor. Turnover in Cash Management CIT/ATM also fell.

Operating profit before depreciation (EBITDA) was NOK 13.9 million for the fourth quarter, compared with NOK 46.8 million in the same period of 2008. Operating profit before depreciation and amortisation in the fourth quarter 2008 included a gain of NOK 11.0 million related to the Fristrøm Innovation acquisition.

EBITDA for the full year 2009 were NOK 44.3 million compared to NOK 76.3 million in 2008.

Negative effects on EBITDA included a total of NOK 4 million in special items related to downsizing. PSI Group implemented the previously announced downsizing during the fourth quarter, and the effects of these measures will be felt in the first quarter of 2010.

Payroll costs decreased by 18 per cent from the fourth quarter of 2008. Employment in PSI Group was reduced by 24 work-years from the fourth quarter of 2008 and amounted to 350 work-years at 31 December.

The pre-tax loss was NOK 9.3 million for the fourth quarter, compared with a profit of NOK 29 million in the same period of 2008. For the full year, the pre-tax loss was NOK 8.7 million as against a profit of NOK 25.2 million in 2008.

Impairment charges totalling NOK 13.3 million on intangible assets as a result of phasing out some products in Retail Solutions had a negative effect on the pre-tax result.

Turnover and profit for the group are otherwise characterised by a high level of intra-group transactions, which reduce its consolidated turnover and strengthen profit margins.

BUSINESS AREAS

Reporting covers the following business areas.

Retail Solutions – comprises the sale of solutions and after-market sales directly to retail outlets, industry and the public sector. This means, for instance, that added value related to the sale of CashGuard systems to end users by PSI Group's Norwegian and Swedish businesses appears here.

Cash Management Retail – comprises all development, production and sale of systems to all CashGuard's global retailing partners and distributors, including the group's own subsidiaries dealing with the end-user market.

Cash Management CIT/ATM – comprises development, production and sale of the market's most advanced cash security solutions for ATMs and cash in transit (CIT). SQS is also a sub-contractor of this security technology to CashGuard's products, and thereby to that part of the retail distribution segment which requires the highest level of security on the market.

RETAIL SOLUTIONS

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Sales revenues	104.9	126.4	393.8	430.1
EBITDA	2.1	10.7	14.9	37.9
EBITDA-margin	2.0%	8.5%	3.8%	8.8%

Turnover in this business area declined by NOK 21.5 million to NOK 104.9 million for the fourth quarter. EBITDA came to NOK 2.1 million.

After very high sales of CashGuard systems in the fourth quarter of 2008, these fell to 412 machines in the same period of 2009. That represents a decline of 188 systems, but an increase of 119 from the previous quarter.

EBITDA was negatively affected by a total of NOK 3 million in special items related to downsizing and organisational changes. Employment in Retail Solutions Norway was reduced by 12 work-years during the quarter, which will cut payroll costs by

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PSI Group ASA - Q4 2009
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NOK 7.5 million on an annual basis. The president of Retail Solutions Sweden has also been replaced.

The retail sector in Norway and Sweden continues to offer substantial marketing opportunities for PSI Group. A review shows that CashGuard systems have been installed in about 29 per cent of retail outlets in Norway. Market penetration is lower in Sweden.

Sales of the Pricer electronic shelf labeller developed positively during the fourth quarter. That partly reflects a favourable trend for the US dollar exchange rate, as well as the increased attention being paid to price labelling in grocery stores. The Norwegian consumer ombudsman undertook an audit in October and November to see whether shelf label prices corresponded with those charged at the till. This check found that only three out of 23 stores had complete price labelling on inspected goods and that only one had prices which corresponded.

PSI Antonsen entered into a frame agreement during the quarter with ICA Sweden on the delivery of reverse vending systems, which makes it responsible for sales, installation, service and maintenance. This agreement gives Repant a good opportunity to increase its market share in Sweden.

The group entered into a number of strategically important contracts during 2009. In Norway, agreements for delivery of CashGuard have been entered into with two additional grocery chains. This means that Retail Solutions now has three out of four largest grocery chains on their customer list within cash handling solutions.

In second quarter 2009 the Group reached an important milestone in that more than 5000 CashGuard solutions now has been installed in Norway.

CASH MANAGEMENT RETAIL

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Sales revenues	25.1	36.4	107.4	62.8
EBITDA	0.8	6.9	7.6	6.9
EBITDA-margin	3.3%	18.9%	7.1%	10.9%

Turnover in this business area declined by NOK 11.3 million to NOK 25.1 million for the fourth quarter. The same period of 2008 had set a record for Cash Management Retail through a very large delivery to a major customer in the Swedish market.

EBITDA fell by NOK 6.1 million to NOK 0.8 million. This decline reflects the fall in sales as well as a special item of NOK 1 million related to organisational changes.

Work on enhancing the partnership structure continued in the fourth quarter. As part of its efforts to improve follow-up and dialogue with partners, PSI has replaced the head of its business in France.

The new CashGuard Blue series launched in the fourth quarter has been well received in the market. All the units produced have been sold. This model has now been put into series production and will be introduced to the Swedish market. Based on SQS' unique colouring technology, the model will contribute to significant savings for the customer. It also saves space and is simple to install.

To maintain its strong market position, Cash Management Retail is paying great attention to product development. It will introduce a new system in 2010 which means that all movement of banknotes in a shop occurs within closed systems. This will help to enhance security even further. A new web-based software programme will be launched which makes it possible to monitor the flow of cash between the various till points in a retail chain. That will help to improve the efficiency of customer cash management even further.

As part of the internationalisation of CashGuard the Group has during 2009 entered into several partner agreements in Europe. In Denmark, CashGuard AB concluded a partnership with Scanvægt Nordic AS covering distribution of and service for CashGuard cash management solutions in Denmark. Corresponding agreements were made in Finland and Slovakia during the year. Work is under way on other similar deals in other European countries where the business area currently lacks representation.

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PSI Group ASA - Q4 2009
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CASH MANAGEMENT CIT/ATM

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Sales revenues	54.2	72.4	173.7	121.6
EBITDA	11.7	30.9	28.7	37.8
EBITDA-margin	21.6%	42.6%	16.5%	31.1%

Turnover in this business area declined by NOK 18.2 million to NOK 54.2 million for the fourth quarter. EBITDA came to NOK 11.7 million.

Cash Management Retail worked during the quarter on delivering 500 security pouches to a leading European security and valuables transport company. This contract will be finalised during the first quarter of 2010. Deliveries have also been made to other customers in Scandinavia and the rest of Europe.

The group is working actively on potential new contracts for future deliveries to international security companies. The Russian market is among those offering substantial opportunities to Cash Management CIT/ATM, and the company wishes to establish itself there as rapidly as possible. In addition, new marketing initiatives have been made in Germany and South-Africa during 2009.

Since operations in this business area are order-based, fluctuations in turnover must be expected. However, Cash Management CIT/AIM has a flexible organisation with a substantial share of variable costs. This applies primarily to the use of temporary labour. In order to be prepared for a rapid upturn in the level of activity, however, inventory must be maintained at a relatively high level. That helps to tie up working capital.

A substantial market exists for cash security solutions for ATMs and cash in transit (CIT) on a global basis, with a corresponding potential. As a result of leading-edge expertise among customers in this area and the complexity of the security products, virtually all sales in the segment are made directly to end users.

Considerable resources are continuously being invested in product development both with regard to new products and ongoing improvements on existing products. There is an expanded cooperation between Cash Management CIT/ATM and Cash Management Retail regarding product development,

which ensures an effective utilisation of the resources.

CASH FLOW AND EQUITY OVERVIEW

Cash flow from operations in the quarter amounted to NOK 38 million, compared with NOK 31.8 million in the same period of 2008.

Working capital declined by NOK 19 million from 31 December 2008 to NOK 114.3 million. That reflected reductions in both accounts receivable and inventories. Net interest-bearing debt fell by NOK 31.8 million from the fourth quarter of 2008 to NOK 187.6 million. Disposable liquidity rose by NOK 7.2 million from 31 December 2008 to reach NOK 47.5 million.

The group held 1 197 927 of its own (treasury) shares at 31 December, corresponding to 5.4 per cent of outstanding shares. That figure was unchanged from 30 September.

ORGANISATION

The board of directors of PSI Group elected Svein S Jacobsen as its new chair on 11 November. He was elected as a director in January 2009 with a view to strengthening the board's expertise, particularly in the internationalisation of technology.

With effect from 1 January 2010, Torgeir Abusdal has been appointed president of CashGuard. He was previously sales and marketing vice president in the same organisation.

OUTLOOK

Greater attention has recently been devoted to the security offered by cash management systems. An increase in the number of robberies in both Sweden and Norway have contributed to the involvement of various unions in the safety of employees. That includes demands in Sweden for all shops to have cash management systems.

In addition, competitors have staged various marketing drives in Scandinavia. That may boost competition, but the greater concentration on and

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PSI Group ASA – Q4 2009
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awareness of cash management will also help to expand the overall market.

PSI Group has cash management solutions which are not only well tested but also meet all requirements for operational reliability, capacity and speed. In addition, the group will continue to develop new systems which save costs and use cutting-edge technology.

Cash Management Retail has taken active steps to improve follow-up of and dialogue with its international partner network, and is well positioned to achieve sales and marketing growth outside Scandinavia. While many of the international markets are in a build-up phase, the long-term potential is regarded as substantial.

The activity in Cash Management CIT/ATM is order-based, and fluctuations in the level of activity are accordingly natural. The outlook for this segment in the first quarter is expected to be weaker than the corresponding period in 2008.

A number of important contracts were secured during 2009. At the same time, the group implemented a programme to improve profitability in Retail Solutions Norway. Taken together, this provides a good basis for long-term progress by the group.

STATEMENT FROM THE BOARD

The board and group CEO have today considered and approved PSI Group’s financial statements for the fourth quarter of 2009, including summary comparative consolidated figures for the fourth quarter of 2008. This report has been prepared in accordance with IAS 34 on interim financial reporting as determined by the European Union, and with supplementary requirements pursuant to the Norwegian Securities Trading Act.

The board and CEO hereby declare, to the best of their knowledge, that the financial statements for the fourth quarter of 2009 have been prepared in accordance with prevailing accounting principles and that the information in the financial statements gives a true and fair view of the assets, liabilities, financial position and profit of the group taken as a whole at 31 December 2009 and 31 December 2008. To the best of their knowledge, the report gives a true and fair overview of important events during the accounting period and the impact of these events on the financial statements.

The board of directors of PSI Group ASA
Rælingen, 17 February 2010

Svein S. Jacobsen
Chairman of the board

Erik Pinnås
Director

Bente Holm Mejdell
Director

Guri Kogstad
Director

Jørgen Waaler
CEO

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PSI Group ASA - Q4 2009
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GROUP INCOME STATEMENT

NOK Million	Fourth quarter		Year
	2009	2008	2009	2008
Sales revenues	153.9	198.5	563.8	550.9
Profit from AC – Service companies	0.2	0.7	1.8	2.4
Operating revenues	154.1	199.1	565.6	553.3
Cost of goods sold	63.2	89.5	240.9	274.6
Payroll	48.1	58.6	181.0	152.4
Other operating expenses	28.9	4.2	99.4	50.0
Total operating expenses	140.2	152.3	521.3	477.0
EBITDA	13.9	46.8	44.3	76.3
Depreciation tangible assets	3.9	2.4	11.0	6.6
Depreciation intangible assets	3.7	12.2	16.0	17.3
Write down intangible assets	13.3	0.0	13.3	0.0
EBIT	-7.1	32.2	4.0	52.3
Net financial income/(cost)	-2.2	-3.1	-12.7	-16.4
Profit from AC – CashGuard/SQS	0.0	0.0	0.0	-10.7
Profit/loss before tax	-9.3	29.0	-8.7	25.2
Taxes	0.7	9.1	0.1	12.0
Profit/loss after tax	-10.0	19.9	-8.7	13.2

Earnings per share

Earnings per share	-0.45	0.90	-0.39	0.60
Diluted earnings per share	-0.48	0.91	-0.42	0.75
EBITDA per share	0.63	2.11	2.00	3.44
Diluted EBITDA per share	0.66	2.14	2.11	4.33
Number of shares outstanding	22 188 020	22 188 020	22 188 020	22 188 020
Av. number of shares – own shares	20 990 093	21 863 361	20 990 093	17 616 442

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PSI Group ASA - Q4 2009
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GROUP BALANCE SHEET

Nok million	31.12.2009	31.12.2008	31.12.2007
ASSETS
Intangible assets	144.1	177.4	0.1
Goodwill	313.1	346.6	12.5
Tangible assets	38.2	44.7	25.2
Long term investments	9.7	9.4	163.1
Deferred tax	36.6	38.3	6.8
Non-current assets	541.6	616.3	207.6
Financial investments	0.0	0.7	4.7
Goods	75.1	98.4	44.5
Accounts receivable	90.3	115.9	73.6
Prepaid costs	3.1	6.6	5.7
Other receivables	13.1	9.8	15.5
Bank deposits	9.7	21.0	4.0
Current assets	191.4	252.4	148.0
TOTAL ASSETS	733.0	868.8	355.6
EQUITY AND LIABILITIES
Share Capital	13.8	13.8	7.5
Holding of own shares	-0.7	-0.7	0.0
Other equity	351.1	408.3	113.0
Total equity	364.1	421.3	120.5
Long term interest bearing liabilities	81.8	110.3	100.3
Other long term liabilities	21.8	15.9	0.0
Total long term liabilities	103.6	126.2	100.3
Short term interest bearing liabilities	115.5	130.2	33.3
Accounts payable	51.1	80.9	41.0
Taxes payable	0.1	2.8	0.0
Other short term liabilities	98.6	107.4	60.4
Total liabilities	265.3	321.3	134.8
TOTAL EQUITY AND LIABILITIES	733.0	868.8	355.6

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PSI Group ASA - Q4 2009
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CHANGES IN EQUITY

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Equity OB	366.8	343.0	421.3	120.5
Shares bought by company & employees stock options	-	-10.8	-	-11.2
Comprehensive income (see note 4)	-2.6	48.2	-57.2	39.9
Net effect of merger with CashGuard	-	40.9	-	272.1
Equity CB	364.1	421.3	364.1	421.3

CASH FLOW STATEMENT

NOK million	Fourth quarter		Year
	2009	2008	2009	2008
Net cash flow from operation	38.0	31.8	42.7	52.3
Net cash flow from investments	-9.2	5.0	-16.9	-44.8
Net cash flow from financing	-25.3	-23.6	-35.4	10.5
Net change in cash	3.5	13.2	-9.6	18.0
Deconsolidation PSI Finance	-	-	-	-1.1
Exchangevariance	-0.3	-0.9	-1.7	0.1
Cash and cash equivalents at the beginning of the period	6.4	8.7	21.0	4.0
Cash and cash equivalents at the end of period	9.7	21.0	9.7	21.0

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PSI Group ASA - Q4 2009
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NOTE 1 CONFIRMATION OF FINANCIAL FRAMEWORK

The condensed and consolidated quarterly financial statements are prepared in accordance with IAS 34 Interim Financial Reporting. The quarterly financial statements do not comprise a complete set of the information such as required in the annual financial statements and should be read in connection with the Group financial statements for 2008.

NOTE 2 KEY ACCOUNTING PRINCIPALS

The accounting principles for 2008 are described in the annual financial statements for 2008. The Group financial statements for 2008 were prepared in accordance with the IFRS principals and belonging interpretations as defined by the EU, as well as other disclosure requirements pursuant to the Norwegian Accounting Act and the Oslo Stock Exchange regulations and rules which were to be applied as per 31.12.2008. The quarterly report and the interim financial statements have not been revised by auditor.

NOTE 3 SEGMENT INFORMATION

PRIMARY SEGMENT: BUSINESS AREA

	Fourth quarter				Year
	2009 Sales revenues	EBITDA	2008 Sales revenues	EBITDA	2009 Sales revenues	EBITDA	2008 Sales revenues	EBITDA
Cash Management Retail	25,142	836	36,435	6,895	107,378	7,606	62,783	6,866
Cash Management CIT/ATM	54,230	11,731	72,432	30,855	173,706	28,659	121,635	37,820
Retail Solutions	104,921	2,118	126,442	10,735	393,755	14,906	430,124	37,938
Group/Elimineringer	-30,397	-812	-36,846	-1,695	-111,013	-6,900	-63,637	-6,362
Total	153,897	13,873	198,463	46,790	563,826	44,271	550,904	76,262

SECONDARY SEGMENT: GEOGRAPHY

	Sales revenues
	Fourth quarter		Year
	2009	2008	2009	2008
Norway	55,103	61,335	207,606	224,329
Sweden	62,887	95,749	261,302	275,166
Other markets	35,781	41,379	94,793	51,409
Group/Eliminations	125	-0	125	-0
Total	153,897	198,463	563,826	550,904

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NOTE 4 COMPREHENSIVE INCOME

	Fourth quarter 2009	Year 2009	2008
Profit/loss after tax	-9,990	-8,748	13,203
Translation differences	7,371	-48,417	27,429
Changes due to reclassifications of PSI Finance AS	-	-	-711
Comprehensive income	-2,619	-57,166	39,915

NOTE 5 RELATED PARTIES

There were no special transactions between the Group and related parties as per 31 December 2009.

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1. PSI GROUP ASA (HQ)
   PSI Systems AS
   PSI Media Solutions AS
   PSI Production AS
   Slynga 10, 2005 Rælingen
   Postboks 134, 2011 Strømmen, Norway
   Tel: +47 03254
   E-mail: psi@psi.no
   Web: www.psi.no

2. PSI ANTONSON AB
   Johannefredsgatan 2
   P.O.Box 275, 431 24 Mölndal, Sweden
   Tel: +46(0)31 706 80 00
   E-mail: info@antonson.se
   Web: www.antonson.se

3. CASHGUARD AB
   P.O.Box 2960, Propellervägen 10-12
   SE-187 29 Stockholm, Sweden
   Tel: +46 8 732 222 00
   E-mail: info@cashguard.se
   Web: www.cashguard.se

4. CASHGUARD SAS
   17 Square Edouard VII
   FR-75009 Paris, France
   Tel: +33 1 53 43 92 51

5. CASHGUARD GMBH
   Pankstrasse 8-10
   Aufgang Q
   D-13127 Berlin, Germany
   Tel: +49 30 221 99 450 0

6. SQS SECURITY QUBE SYSTEM AS
   Haslevolveien 3L
   NO-0579 Oslo, Norway
   Tel: +47 22 80 12 00

7. SQS SECURITY QUBE SYSTEM AB
   P.O.Box 715, Maskinvägen 13
   SE-931 Skellefteå, Sweden
   Tel: +46 910 71 41 00

8. SQS INTERNATIONAL
   89, Chaussée de Bruxelles
   BE-1410 Waterloo, Belgium
   Tel: +32 2354 0642

9. SQS GmbH
   RheinStrasse 45-46
   Hof 2-Aufgang 4-5
   121 61 Berlin, Germany

10. SQS Sarl
    Burocampus Bât C
    3, rue de Verdun
    FR-78590 Noisy-le-Roi, France

11. SQS SECURITY QUBE SYSTEM (UK) LTD
    20 Queens Parade
    Friern Barnet Road
    London, N11 3DA, UK
    Tel: +44 (0)20 8361 6633