QUARTERLY REPORT FOR TAGMASTER AB (publ.) January-March 2014

Stable sales with continued positive result

First quarter

  ·
Net sales was 14,5 MSEK (14,6)

  ·
Result before depreciation (EBITDA) was 1,6 MSEK (1,9)

  ·
Net result was 1,3 MSEK (1,5)

  ·
Result per share was 0,01 (0,01)

  ·
Cash flow from the business was -1,7 MSEK (-0,5)

  ·
Launch of our new product family in the UHF area

  ·
Serial deliveries of products to the Alstom project

Sales and income
TSEK                       First quarter                Full year
                           2014    2013         Change  2013    2012    Change
Sales                      14 506       14 597  -1%     50 196  39 616  27%
Operating income (EBITDA)  1 556   1 940        -20%    2 776   154     1703%
Operating margin (EBITDA)  10,7%   13,3%                5,5%    0,4%
Income before tax          1 254   1 517        -17%    1 512   -5 466  -128%
Operating cash flow        -1 667  -469         255%    -1 209  -379    219%
Earnings per share         0,01    0,01                 0,01    -0,05   -120%

Comments by the CEO

Our sales have been stable during the period with another positive quarterly
result. We are not satisfied with our growth, which we would like to improve
during the year. Our Rail business has been satisfactory with good intake of
serial deliveries to several customers. New projects are discussed and our focus
is to work more and tighter with our already established big partners, with whom
we want to expand our business and become a more important business partner for
them. We have after analyzing the business made the judgment that our product
offering is most efficient in certain applications and we will therefore “drill
deeper” in these applications and spend less time on the requests regarding our
less efficient offerings. Being a small company it is important that we focus on
the right things and especially in Rail Solutions where the projects are
complex, project specific and always demanding major resources.

Our Traffic business has developed well in the US market, while it has been
somewhat weaker in the Asian market. In the EMEA region the sales has been
according to plan, but we intend to increase our efforts there when we launch
our new UHF products which we judge will have a positive impact during the
second half of the year. In Asia we have since February strengthened our
presence with a new representative office in Malaysia. We can hereby offer a
local presence favoring our established partners and at the same time gives us
the opportunity to approach new partners and strengthen our sales network.

The innovation work will continue and we plan to launch more products on our new
UHF family at the end of the year. In focus for our product innovation we have
the customer’s need for security and safety, reliability, functionality, design,
life cycle cost etc. Our judgment is that further launches will increase our
addressable market and this is a fundamental requisite for increasing our
growth.

The result is 1,6 MSEK (1,9), somewhat lower than last year, but one should then
consider that a big part at that time was project sales to Alstom. I think we
should be glad for the quarterly result even if we are no satisfied and want
more for the future. Our liquidity has been negatively impacted by higher
accounts receivable, stock and the fact that we now pay our supplier debts on
time. We have during the period got increased confidence from our bank in the
form of an increased revolving credit and our key ratios like solidity, and
profits are improving continuously. As we have said before we are still in a
change period and this will impose our stability and our quarterly figures
during the quarters to come.

Our new UHF products will contribute with the major part of our growth the next
few years to come even if we see opportunities to make selective acquisitions as
a way to complement our product portfolio in Traffic Solutions with the purpose
to increase the value and the attraction of our customer offering.

Jonas Svensson

CEO

This report like all previous economic reports can be found at the company home
page www.tagmaster.com

For further information, please contact:

Jonas Svensson, CEO, +46 8-6321950, jonas.svensson@tagmaster.com

About TagMaster

TagMaster is an application driven technology company that designs and markets
advanced radio frequency identification (RFID) systems and information products
for demanding environments. Application areas include vehicle access control,
rail bound transportation and logistics, in order to increase efficiency,
security, convenience and to decrease environmental impact. TagMaster has
dedicated agencies in the US and in China and exports mainly to Europe, Middle
East, Asia and North America via a global network of partners, systems
integrators and distributors. TagMaster was founded in 1994 and has its
headquarters in Stockholm. TagMaster is a public company and its shares are
traded on First North stock exchange in Stockholm, Sweden.

www.tagmaster.com