Quarterly report for TagMaster AB January-September 2016

Press release, Stockholm, Sweden 27 October, 2016

Strong quarter for TagMaster

Third quarter

  · Net sales increased during the third quarter by 56,8% to 28,6 MSEK (18,2)
  · Result before depreciation (EBITDA) was 1,7 MSEK (-3,6), corresponding to a
margin of 6,0% (-19,6)
  · Net result after tax was -0,1 MSEK (-4,5)
  · Result per share was -0,00 (-0,03)
  · The mother company made its best quarter ever with result before
depreciation (EBITDA) of 3,8 MSEK (1,5)
  · Cash flow from the business for the period was 1,0 MSEK (0,1)
  · The Balogh Group was acquired from August 30, 2016. The acquisition means
that TagMaster is taking over a business of just below 35 MSEK yearly.

January - September

  · Net sales increased during the period by 31,5% to 73,8 Mkr (56,1)
  · Result before depreciation (EBITDA) was -1,2 Mkr (1,5), corresponding to a
margin of -1,6% (2,7)
  · Net result after tax was -4,4 Mkr (-0,6)
  · Result per share was -0,03 (0,00)
  · Cash flow from the business for the period was -1,2 Mkr (7,3)

Comments by the CEO

Our sales during the third quarter has been good for the TagMaster part, but
still weak in the CitySync part. We do, however, see that the restructuring
program, which we informed about in the second quarter has good effect and that
the interest for CitySync’s new products is big. We have during the quarter also
finalized our acquisition of Balogh, which is now included with one month and
wit a small positive contribution in the consolidated result.

As we have described earlier we focus in CitySync on building a scalable
business model supported by several product launches this year and during 2017.
During Q3 we have restructured the business including personnel reductions and
changes in the product management, in development and in sales and
administration, Several functions have been centralized to TagMaster and the
cost reductions are estimated to 3,5 MSEK on a yearly basis.

Our rail business has been good during the quarter and product deliveries have
started for the big rail project we announced at the end of last year.
Deliveries will continue during the rest of 2016 and during part of 2017. We
also work on a new rail tag with 20 year lifetime to be used in the same
project, but also in future projects. We already see indications of that our
acquisition of Balogh will increase our total offering to the rail market and
that our complimentary product assortments are received positively by our common
customers. We now start the work to integrate our sales and development
resources within Rail and we expect that our joint offering should contribute
positively already during 2017.

Our Traffic business has stayed unchanged during the quarter, while margins are
developing positively for important product groups. The US market has developed
according to plan while the markets in the ME region and in the Nordics have
been disappointing. We will continue to increase our market activities among
others through participation in several fairs during 2017. During the fourth
quarter we will start the launch of our UHF products in the French market
through the market channels of Balogh and in the beginning of 2017 we plan to
let our different sales forces sell all our product assortment, i.e. both RFID
and ANPR products. We also continue the work to develop more products during the
first half of 2017.

Our quarterly result of 1,7 MSEK (-3,6) is a clear improvement compared to the
last quarter, but we still have work to do. We will during the coming quarter
initiate cost reductions in Balogh, including personnel reductions as well as
other cost reductions like rental costs.

Jonas Svensson

CEO

For further information, please contact:

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

This information is information that TagMaster AB is obliged to make public
pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The
information was submitted for publication, through the agency of the contact
person set out above, at 8.30 a.m. CET on October 27, 2016.

About TagMaster

TagMaster is an application driven technology company that designs and markets
advanced   identification systems and solutions based on radio & vision
technology (RFID & ANPR) for demanding environments. Business areas include
Traffic Solutions and Rail Solutions sold under the brands TagMaster, CitySync
and Balogh with innovative mobility solutions in order to increase efficiency,
security, convenience and to decrease environmental impact within Smart Cities.
TagMaster has dedicated agencies in the US and in China and exports mainly to
Europe, The 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. TagMasters
certified advisor is Remium AB.

www.tagmaster.com