YEAR END REPORT FOR TAGMASTER AB(publ.)PERIOD 2012-01-01–2012-12-31

Full focus on customers and on developing the business!

Fourth quarter

  · The good order intake continues
  · Jonas Svensson new CEO from October 1
  · Divesting of loss making TagMaster SB in Malaysia
  · Intensive work for new customer, Alstom in France, started by TagMaster
  · Net sales quarter four: 10,0 MSEK (9,4), a 7 % growth
  · Operating income quarter four (EBITDA): -1,0 MSEK (-2,9) excluding TagMaster
SB effects
  · Result quarter four after debt depreciation related to TagMaster SB: -2,5
MSEK (-5,5)

Full year

  · Increased sales and sales focus
  · Refocusing on core business
  · New board and chairman
  · Relocation to more cost efficient premises
  · Successful participation in InnoTrans exhibition in Berlin
  · Major cost reductions achieved
  · Net sales full year: 39,6 MSEK (34,2), a 16% growth
  · Operating income full year (EBITDA): +0,2 MSEK (-9,5)
  · Operating cash flow full year: -0,4 MSEK (-4,7)
  · Accumulated result after goodwill impairment charge and debt depreciation
related to TagMaster SB: -5.5 MSEK (-13,3)
  · No dividend is proposed

Sales and income
TSEK                       Fourth quarter          Full year
                           2012    2011    Change  2012    2011     Change
Sales                      10 043  9 406   7%      39 616  34 190   16%
Operating income (EBITDA)  -983    -2 936  -67%    154     -9 524   -102%
Operating margin (EBITDA)  -9,8%   -31,2%          0,4%    -27,9%
Income before tax          -2 514  -5 460  -54%    -5 466  -13 265  -59%
Operating cash flow                                -379    -4 677   -90%
Earnings per share         -0,02   -0,06   -59%    -0,05   -0,16    -68%

Fourth quarter

The fourth quarter has been dominated by two major tasks apart from continued
focus on sales. The first is the divesting of the loss making company TagMaster
SB in Malaysia, which was successfully completed by November 30, 2012. The
second is discussions about a new major project within our Transportation
segment including a substantial NRE (Non Recurrent Engineering) part with a new
customer for TagMaster, the well-known French train manufacturer Alstom, which
has just recently presented in a separate press release.

Invoicing and result

Sales in the fourth quarter have remained stable and a temporary lower sale in
the fourth quarter within Transportation has been compensated by a higher sale
in Access/Parking. The fourth quarter sales increased by nearly 7% and totaled
10,0 MSEK (9,4). The net income amounted to -2,5 MSEK

(-5,5) corresponding to SEK (-0,02) per share. These figures include costs
incurred by TagMaster SB on TagMaster AB of about 1,2 MSEK. Since the sales
ended up substantially above what was budgeted for the fourth quarter the gross
profit has increased and the bonus agreements signed with employees in the
beginning of the year have accelerated and costs incurred from this is more than
0,6 MSEK in addition to what has been reserved for. In addition to this there is
some write off of the inventory for slow moving items of around 0,2 MSEK.

The costs during the quarter were 6,2 MSEK (6,6).

Full year 2012

The year 2012 has been a very turbulent year for TagMaster. The first half year
was very much characterized by a new and temporary management and with multiple
consultants trying to find cost savings. This lead unfortunately to less focus
on the business and it was of course very tough for the employees. At the end of
the first half year the economical situation was very challenging.

A new board was elected at the Annual General Meeting in June. This has led to a
changed focus. During the first period the main focus was on cash flow
generation and on how to survive. At the same time, measures were taken to
secure full focus on the business and therefore refocus on our customers. We
needed to set our strategy for going forward and we also needed to start the
process to find a qualified sales and market oriented CEO for TagMaster. And we
had a loss making business in Malaysia (TagMaster SB), with very low sales, to
take care of. This led to the conclusion that we had to divest the Malaysian
company. This was finally agreed in November when we sold the company to a
Malaysian buyer already dealing in RFID business in Malaysia. This resulted in a
goodwill impairment charge and debt depreciation related to TagMaster SB. The
debt was loans from parent company, loans given to cover losses since the
company was acquired in May 2011.

The refocus on our core business and on our customers has led to that we have
managed to grow visibly in sales over 2011 with 16% and that we have a small
positive EBITDA for the year compared to losses of almost 10 MSEK for 2011, net
income amounted to -5,5 MSEK (-13,3) in losses due to the Malaysian goodwill
impairment charge and debt write offs.

Both main business areas in the agreed strategy for going forward have shown
growth and the interest for the TagMaster products has remained and even
increased in both areas. We see a lot of activity in both Access/Parking and in
transportation as we go forward.

TagMaster is going into 2013 with a more cost efficient organization and with
focus set on our business. Cash flow will be prioritized throughout the year.
Our expectations for 2013 are both further increase in sales and a positive
bottom line.

Invoicing and result

For the full year the net sales is totally 39,6 MSEK (34,2). The operating
income (EBITDA) for the full year is +0,2 MSEK (-9,5). The costs for the full
year were 22,6 MSEK (26,6).

Cost savings which have gradually come into effect during the year and will have
full effect 2013:

Personnel costs (fewer
employees)
  -2,2 MSEK

Other
costs
                                              -0,4 MSEK

Rent of
premises
                                     -0,7 MSEK

TOTAL
                                                        -3,3 MSEK

Non-recurring costs during the year

There are a number of costs which are non-recurring during 2012 amounting to
around 7 MSEK. This includes impairment charges of investment in TagMaster SB
including loans and losses, consultant’s costs during the first half year,
additional bonus costs and relocation costs. Around 3,5 MSEK of these costs have
also influenced cash-flow negatively.

Liquidity

Per December 31, 2012 TagMaster had liquid assets of 3,8 MSEK (4,7). The
revolving credit amounts to 4,0 MSEK (4,0) and locked funds is 0,5 MSEK (0,5).

TagMaster’s cash position has improved during the second half of the year from a
very tough and strained position at the end of quarter two. The main reasons for
the improvement are growing sales and lower costs.

Liquidity planning for the company is based on regular follow-up of costs and
sales and also a detailed analysis of the cash flow for the next future.
Liquidity and cash flow have priority in the daily work and the dialogue with
creditors, suppliers and customers is continuous. The board therefore, based on
the reduced cost structure in the company and the positive sales development,
makes the judgment that the company has sufficient liquidity for the coming 12
months.

Accounts receivable were 4,4 MSEK (3,9) and accounts payable were 3,6 MSEK
(5,5). The inventories were 5,8 MSEK (8,3).

Access and Parking (AVI): The efforts to search for, identify and engage
distributors in the most important markets have ended up in the first agreements
in some key markets during the fourth quarter. TagMaster should thereby be able
to reach more integrators and become part of more projects with less own effort.
Access and Parking sales are 64 % of total sales 2012.

Transportation: There are many requests in the business area and TagMaster has
to make sure to make the right priorities to spend resources on what could end
up as real projects in a reasonable time and thereby even decline some requests.
One big project that has come to fruition is the project with Alstom in France,
which has been mentioned above. Transportation sales 2012 are 36 % of total
sales 2012.

Technology and products: The new UHF products have seen an increasing sales
volume and is now accounting for more than 10% of sales, and the established 2,4
GHz products have also grown during the year.

Organization and personnel

TagMaster AB has during the year had in average 12 (16) employees.

TagMaster AB has two daughter companies, TagMaster Finance and TagMaster China
Holding, which are both non active companies.

There are two associated companies through long term cooperation agreements,
TagMaster China and TagMaster North America Inc. They have the sales
responsibility in China and the US respectively. TagMaster AB has presently no
ownership in these companies.

Looking forward

The future outlook is unchanged and the company has very good growth
opportunities within Access/Parking as well as in Transportation. TagMaster’s
market share is still small in a big and growing, in some parts even fast
growing market, which means that future growth is mostly dependent on the
company’s own ability. As of the beginning of February the sales force has been
strengthened by one experienced sales person within the Access/Parking business.

About 2012 reporting

TagMaster AB with daughter company TagMaster SB has been a Group and accounting
has been made and shown accordingly. From the fourth quarter and for the full
year the accounting is for TagMaster AB only since TagMaster SB has been
divested by November 30, 2012.

Coming reports 2013-14

May 3, 2013, quarterly report January – March 2013

August 8, 2013, quarterly report April – June 2013

October 24, 2013, quarterly report July – September 2013

February 13, 2014, quarterly report October – December and year-end report 2013

Annual General meeting 2014 is proposed to take place April 24, 2014

Annual General Meeting (AGM)

April 18, 2013

Invitation to the meeting will be published no less than 4 weeks before the AGM
at the company home page and in “Post & Inrikes Tidningar”.

The annual report 2012 will be available no later than March 15, 2013 on the
company home page www.tagmaster.com

Nominating committee

According to the company rules the nominating committee is composed of the three
biggest shareholders, the chairman and one representative for the smaller
shareholders. The nominating committee for the AGM 2013 includes Jan Westlund,
Tomas Brunberg, Didrik Hamilton, Mikael Aronowitsch (representing the smaller
shareholders) and Rolf Norberg, Jan Westlund is the committee chairman and also
representing Gert Sviberg.

Control balance sheet established

Due to the development of the business in Malaysia and the following sale of the
Malaysian company in November 2012 TagMaster has suffered a major loss in
capital through goodwill impairment charges and debt depreciation related to
TagMaster SB. The total capital has come very close to 50% of the share capital
and according to the Swedish Companies Act, the board of directors should, as
soon as the shareholders’ equity capital is less than half of the registered
share capital, make a balance sheet for liquidation purposes. The board of
directors has done this and it shows that there is still some margin to 50% of
the share capital, but that the margin is thin. To address this issue the board
of directors will propose the AGM to decide on a reduction of the share capital
by setting down the nominal value of the TagMaster share from 0,10 SEK to 0,05
SEK.

Contact persons

Jonas Svensson, CEO, +46 8-6321950, Jonas.Svensson@TagMaster.se