StrongPoint — Investor Presentation 2020

Feb 12, 2020

Strategy Update Session

CEO Jacob Tveraabak | CFO Hilde Horn Gilen

February 12, 2020

The strong market fundamentals provide a double opportunity

E-commerce

Retailers' needs

1. In-store: Pressure on brick & mortar retailers' margin

Opportunity for StrongPoint

Technology solutions in-store to improve retailers' productivity and hence uphold margins

World-class e-commerce solutions for picking and delivery

Well positioned to provide in-store technology solutions

Operational and backend choices in grocery e-commerce

StrongPoint today

Note: Other choices include passive and active cooling

Agenda

Recent development at StrongPoint StrongPoint today

Strategy update

• Ambition 2025
• What and how
• M&A

The path to 2025

Q&A

Agenda

Recent development at StrongPoint

StrongPoint today

Strategy update

• Ambition 2025
• What and how
• M&A

The path to 2025

Q&A

A solid platform for leveraging on retail opportunities

Agenda

Recent development at StrongPoint

StrongPoint today

Strategy update

• Ambition 2025
• What and how
• M&A

The path to 2025

Q&A

A more detailed presentation of retail segments

Business areas

Solutions

Segments

Retail technology	In-store productivity	Electronic Shelf Labels (ESL), ShopFlow logistics, scales and wrapping systems, workforce & task management
	Cash Management	CashGuard, Compact, Unico
	Check out efficiency	Self checkout, self scanning, Vensafe
	E-commerce	Pick & Collect, Click & Collect lockers, delivery solutions
	Other	POS, ERP and other solutions

Cash security

Mini and Maxi Q-Case, Maxi Q-Collector ATM Security Cash In Transit Cassettes, Racks and SoftCar Products

Labels

Industry spesific labels Other

Profile labels, Transparent labels, Duo labels, Embellishment RFID, Printers, Transport labels

Strong revenue mix…

… creates a solid platform for growth

Retail technology

A solid base of recurring revenues

Strong and diverse position in key growth markets

Revenue 2019

		1100 MNOK (100%)	Largest countries/solutions (not exhaustive)
Cash Security 12%			Russia, Belgium, France, Norway, Sweden
	Labels	15%	Sweden, Norway
Retail technology	Other Spain	3 % 6%	Cash management Cash management, E-commerce solutions, ESL
	Baltics	15%	Self checkout, Vensafe, POS, ERP, E-commerce solutions
	Sweden	22%	ESL, E-commerce solutions, Vensafe, Scales, cash management
	Norway	27%	ESL, cash management, Vensafe, Scales, E-commerce solutions

Attractive cashflow profile with solid base of recurring revenues

Solutions Typical cash flow profile components

In store productivity ESL ShopFlow logistics Scales WFM	HW sale + installation + SW License fee + support fee HW sale + monthly user fee HW sale + service & support fee (+labels) Implementation + share of annual contract value
Cash management	HW sale + installation + SW License fee + service & support fee As-a-service: Rental fee, subscription-based SaaS
Check-out efficiency Self checkout Vensafe	HW sale + installation + service & support fee HW sale + installation + service & support fee
E-commerce Pick & Collect C&C lockers	SW License fee + implementation + per pick fee + HW sale SW License fee + HW sale + installation + service & support fee

Focused organisation in key markets

NORWAY

Rælingen and Tangen Number of employees ~ 80

SWEDEN

Täby, Kista, Mölndal, Malmø, Grums and Skellefteå Number of employees ~ 220

LITHUANIA, LATVIA AND ESTONIA

Vilnius, Riga and Tallinn Number of employees ~ 170

SPAIN

Madrid, Barcelona and Gijón Number of employees ~ 35

Leadership organisation

Retail technology

Agenda

Recent development at StrongPoint StrongPoint today

Strategy update

• Ambition 2025
• What and how
• M&A

The path to 2025

Q&A

Significant growth potential for retail technology

Our strong position in grocery retailing provides significant spillover effects to other retail verticals

Introducing financial ambitions for organic growth

NOK 2.5 bn in 2025

EBITDA 13-15%

Build-up of 2025 revenue ambition

Retail technology

Helping retailers to stand out, sustain growth and spur productivity

• leveraging the arising opportunities within e-commerce and in-store technology

2025 ambitions

¹Organic growth ambition ²Norway, Sweden, the Baltics and Spain ³Cash Management solutions in e.g., Italy and Greece, and E-commerce solutions globally ⁴The Nordics and the Baltics

Helping retailers to stand out, sustain growth and spur productivity

• leveraging the arising opportunities within e-commerce and in-store technology

2025 ambitions

¹Organic growth ambition ²Norway, Sweden, the Baltics and Spain ³Cash Management solutions in e.g., Italy and Greece, and E-commerce solutions globally ⁴The Nordics and the Baltics

I. Strong local expertise and presence in key markets

approximately

employees

countries

I. Labels: Market development and growth opportunities

Security printing

Helping retailers to stand out, sustain growth and spur productivity

• leveraging the arising opportunities within e-commerce and in-store technology

2025 ambitions

¹Organic growth ambition ²Norway, Sweden, the Baltics and Spain ³Cash Management solutions in e.g., Italy and Greece, and E-commerce solutions globally ⁴The Nordics and the Baltics

II. Roll-out of world-class proprietary technology

A. E-commerce offering B. CashGuard system

II. Roll-out of world-class proprietary technology

A. E-commerce offering

II A. What do we mean with grocery e-commerce technology?

VIDEO

II A. Strong position in high growth markets

2018-2022 annual online grocery growth, %

Penetration of online grocery retail 2018, % out of total grocery sales

II A. Market characteristics of grocery e-commerce

Illustration of typical demand for online groceries throughout the week

Number of SKUs picked per day as % of Monday

Customer behavior and capex levels of automated picking solutions are working in favor of manual picking – at least in the start and maturing phase of grocery online

II A. Not one silver bullet defining the solution for grocery E-commerce

1. Applicable for summer/winter destinations

II A. Pick & Collect and Click & Collect lockers

Full mobility at all times with wireless hardware and handsfree picking to increase picking speed

Grocery retail focus; especially developed for increased single item picking efficiency and multi-order picking

Click & Collect lockers

Rolled out more than 200 Click & Collect lockers in 10 countries in Europe

First supplier to offer Click & Collect solution locker on wheels – mobile Click & Collect lockers

2 types of lockers including different temperature zones:

• Grocery: ambient, chilled, frozen
• Non-food: ambient

II A. Significantly stepping up international e-commerce sales

Key countries for StrongPoint Own personnel

Additional E-commerce growth countries Primarily partners

II. Roll-out of world-class proprietary technology

B. CashGuard system

II B. CashGuard secures employees, assets and customers

Speed: StrongPoint offers the fastest system on the market

Availability: StrongPoint offers custom payment methods for all types of customers, including rental and breakdown of total sum

Flexibility: StrongPoint offers systems suitable for all kinds of customers, large and small, both cashier and consumer operated

Control: StrongPoint's cloud-based software provides real-time information regarding cash levels at every cash point, in every store and even throughout the retail chain

Distributor's policy: Unlike many of its competitors, StrongPoint trains its distributors to handle sales, service and repairs

II B. Cash will remain key payment solution for years to come

Payment methods for a selected set of countries, % of cash to business C2B

C2B cash usage, % of total

II B. thorough screening of countries for CashGuard has been conducted

II B. Italy and Greece most attractive countries following Spain

II B. CashGuard is the highest performing cash management solution

II B. Cash security: Growth within existing and potential new markets

StrongPoint share of IBNS market

Number of countries introducing IBNS is steadily increasing

Once a country has made IBNS mandatory the annual replacement is low, since the products last for 5-10 years

In the years to come, Russia will continue to play an important role

Future identified key markets are the Middle East, North Africa and Central America

Helping retailers to stand out, sustain growth and spur productivity

• leveraging the arising opportunities within e-commerce and in-store technology

2025 ambitions

¹Organic growth ambition ²Norway, Sweden, the Baltics and Spain ³Cash Management solutions in e.g., Italy and Greece, and E-commerce solutions globally ⁴The Nordics and the Baltics

III. Market access platform for global technology providers in selected markets

Existing and confirmed partnerships with global technology providers

Helping retailers to stand out, sustain growth and spur productivity

• leveraging the arising opportunities within e-commerce and in-store technology

2025 ambitions

¹Organic growth ambition ²Norway, Sweden, the Baltics and Spain ³Cash Management solutions in e.g., Italy and Greece, and E-commerce solutions globally ⁴The Nordics and the Baltics

IV. Best in class sales, service and support

Helping retailers to stand out, sustain growth and spur productivity

• leveraging the arising opportunities within e-commerce and in-store technology

2025 ambitions

¹Organic growth ambition ²Norway, Sweden, the Baltics and Spain ³Cash Management solutions in e.g., Italy and Greece, and E-commerce solutions globally ⁴The Nordics and the Baltics

Profitable growth Balance sheet

Focus on driving sales, margins, pricing policies and supply chain management

Continuous cost improvements Investments in products, competence and marketing

Cost control ESG

Positive cashflow from operations No major capex investments needed in 2025 scenario

Safety and security is part of our core business ESG reporting on material topics from 2019

Strategy requires minimal increase in CAPEX

Technology development will continue to be expensed.

HW-as-a-service to drive CAPEX based on installed base.

A few fixed assets investments related to Labels and Cash Security.

Cash conversion rate expected to continue as per today

Dividend at StrongPoint

Dividend NOK per share

Ambition from Board of Directors: Continue to increase the dividend forward

Agenda

Recent development at StrongPoint StrongPoint today

Strategy update

• Ambition 2025
• What and how
• M&A

The path to 2025

Q&A

Contributions from M&A comes in addition to NOK 2.5 bn ambition in 2025

Strong local expertise and presence in key markets

Roll-out of proprietary technology in selected markets

Market access platform for global technology providers in key markets

Agenda

Recent development at StrongPoint StrongPoint today

Strategy update

• Ambition 2025
• What and how
• M&A

The path to 2025

Q&A

Summary of strategy update: Creating a NOK 2.5 billion retail technology company

Q&A