FINANCIAL REPORT FOR TAGMASTER AB (publ.) January-June 2014

Sales increase continues and with a robust improvement of the result

Second quarter

  ·
Net sales increased by 45% during the second quarter and was 16,4 MSEK (11,3)

  ·
Result before depreciation (EBITDA) was 2,2 MSEK (0,2), corresponding to a
margin of 13,1% (1,6)

  ·
Net result was 1,9 MSEK (-0,2)

  ·
Result per share was 0,02 (0,00)

First half year

  ·
Net sales increased during the period by 16% to 30,7 MSEK (25,7)

  ·
Result before depreciation (EBITDA) increased to 3,7 MSEK (2,1), which
corresponds to a margin of 12,1% (8,3)

  ·
Net result was 3,2 MSEK (1,3)

  ·
Result per share was 0,03 (0,01)

  ·
Cash flow from the business was 1,2 MSEK (-2,6)

Sales and
income
TSEK       Second                  First                 Full
           quarter                 half                  year
                                   year
           2014     2013   Change  2014   2013   Change  2013   2012   Change
Sales      16 381   11     45%     30     25     20%     50     39     27%
                    273            735    704            344    681
Operating  2154     183    1077%   3710   2123   75%     2 776  154    1703%
income
(EBITDA)
Operating  13,1%    1,6%           12,1%  8,3%           5,5%   0,4%
margin
(EBITDA)
Income     1902     -193   -1085%  3156   1324   138%    1 512  -5     -128%
before                                                          466
tax
Operating  1213     -2110  -157%   -454   -2579  -82%    -1     -379   219%
cash flow                                                209
Earnings   0,02     0              0,03   0,01   200%    0,01   -0,05  -120%
per share

Comments by the CEO

Our sales during the second quarter have seen a good growth on the total level
and with one more positive quarterly result we feel the stability of our
business increasing. We are not satisfied with all parts of our growth, which we
would like to improve further during the year. Our Rail business has been good
with an even flow 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 expect some more new projects coming
during the year. 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 good in the US market, while it has been
somewhat weaker in the Asian market, where mainly China has been weak. In the
EMEA region the sales has been according to plan, but we intend to increase our
efforts there supported by our new UHF products recently launched and which we
judge will have a positive impact on sales and result during the second half of
the year. In the Nordic market we increase our presence and we already see that
our new UHF reader find a great interest among established as well as new
partners.

The innovation work will continue and we plan to launch more products in 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
and life cycle cost. Our judgment is that further launches will increase our
addressable market and this is a fundamental requisite for increasing our
growth.

Our result of 2,2 MSEK (0,2), is historically very good and I think we should be
pleased by the quarterly result even if we are not satisfied and would like to
see more ahead. 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
and the third quarter is known to be our seasonally weakest quarter.

Our new UHF products will contribute with the major part of our growth the next
few years to come, but we also see 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. Parallel to development of
new products we study different complementary products within Traffic Solutions
as well as companies which could form a complement to our existing business.

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 frquency 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