Interim report January to March 2022

Press release, Sweden, Stockholm, April 28, 2022

Improved market climate but disturbances in the supply chain affecting volume and margin

First quarter 2022

• Net sales increased during the first quarter by 6,9% to 79,5 MSEK (74,4). Currency translations had a positive effect of 5,0 MSEK on net sales.
• Adjusted EBITDA decreased during the first quarter by 109,5% to -0,9 MSEK (9,9), corresponding to an adjusted EBITDA margin by -1,2 % (13,3)
• Operating profit/loss was -7,9 MSEK (4,8) which correspond to operating margin of -9,9% (6,5)
• Profit for the quarter was -8,6 MSEK (4,5)
• Result per share was -0,59 (0,31) SEK¹
• Cash flow from operating activities for the period was -2,6 MSEK (3,4)

¹Adjusted retroactively for the reversed split 1:25

Comments by the CEO

We see a slightly improved market climate in our main markets but the first quarter was characterized by a continued lack of components, as for so many other technology companies. Thanks to great flexibility and committed employees, we were able to handle the imbalances in the supply chain in a good way and we have also been able to compensate for increased costs with raised prices for our products and solutions. During the quarter we were able to continue with investments in mobility solutions for Smart Cities based on advanced sensor technology. Our solutions contribute to the necessary transition to a more sustainable transport system, which gives us a good future position.

During the quarter, we were both affected by actual and announced further cost increases for electronic components and input goods. We have increased our component purchases via the spot market to be able to keep commitments to our customers. With increased prices to customers and internal efficiency, we managed to reach a gross margin that is in line with the first quarter of 2021. Given the challenging purchasing situation, we are satisfied with a continued good gross margin, which shows that our offering can withstand price increases without losing attractiveness.

We expect continued challenges in the coming quarters and overall, price compensation is something we will continue to work. We estimate that the component shortage affected negatively on sales with approximately 6 percent, corresponding to approximately SEK 5 million.

During the period, we continued to invest in technology leadership in all our areas and to develop more complex solutions that give our offering increased competitiveness to bring us up in the value chain. Focus is increasingly on solutions that can contribute to a more sustainable transport system where analysis, AI and Deep Learning play an important role. The acquisition of French Citilog during the second quarter of 2021 has sharpened our offering on the technology side and adds value through synergies on the sales and customer side.

The acquisition of Citilog explains the Group's increased operating costs by 39 percent compared with the same period in 2021, when Citilog was not yet part of the Group. During the quarter, some of Citilog's customer projects and the expected growth were postponed, which had a negative impact on both sales and EBITDA of approximately SEK 5.7 million and SEK 5 million, respectively. During the quarter, we were also affected by delayed projects within Rail Solutions in France, which had a negative effect on sales of approximately SEK 3 million.

Taken together, these increased costs in combination with project delays and thus reduced sales have affected both gross profit and operating profit during the period.

During the period, our work to set up a joint sales force for Citilog and our American subsidiary Sensys Networks continued according to plan in combination with the planned measures to adjust costs within Citilog.

The Group's sales during the first quarter amounted to SEK 79.5 million, which is an increase of 6.9 percent compared to the same period in 2021. Organically, however, we see a decrease in sales of 11.5 percent. Our Traffic Solutions business amounted to SEK 68.2 million, which is an increase of 9.1 percent compared with the corresponding period in 2021. During the quarter, Traffic Solutions accounted for 86 percent of sales, while Rail Solutions accounted for 14 percent.

The quarter shows a gross margin of 66.3 percent with an adjusted EBITDA result of SEK -0.9 million, which corresponds to an adjusted EBITDA margin of -1.2 percent. Cash flow from operating activities amounted to SEK -2.6 million and the Group's solvency ratio was 53 percent at the end of the period. Efforts to reduce working capital have continued to focus and our stock decreased during the quarter compared with the corresponding quarter in 2021. Accounts receivable increased during the quarter due to the consolidation of Citilog and due to high sales during the latter part of the quarter.

TagMaster is well positioned in a market with long-term good conditions for growth and good profitability, and we are determined to continue to make TagMaster a stronger and more resilient company while reaching a higher growth curve. The fact that we work to improve the traffic environment in cities and metropolitan areas around the world gives us a very good position in the face of the massive restart packages that are being launched in Europe and the USA and which are largely focused on green investments.

The strategy and value-creating potential have not changed due to the short-term limitations in the supply chain and our investments in growth through innovation, commercial focus and acquisitions mean that we have a positive view of the company's development for the coming year.

Jonas Svensson
CEO

Auditor’s review

This report has not been reviewed by the company auditor.

Reporting

During the business year 2022 TagMaster will report at the following dates:

July 15, 2022:                                   Interim report second quarter 2022

October 27, 2022:                            Interim report third quarter 2022

February 2, 2023:                             Earnings release 2022

This report and previous reports and press releases are found at the company home page www.tagmaster.com

For further information 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 April 28, 2022.

About TagMaster

TagMaster is an application oriented technical company developing and selling advanced sensor systems and solutions based on radio, radar, magnetic and camera technologies for demanding environments. TagMaster works in two segments - Segment Europe and Segment USA – with the trademarks TagMaster, Citilog and Sensys Networks – with innovative mobility solutions for increased efficiency, security, safety, comfort and to reduce environmental impact in Smart Cities. TagMaster has daughter companies in England, France, US and Sweden and exports mostly to Europe, The Middle East, Asia and North America through a global network of partners and system integrators. TagMaster was founded in 1994 and has its head office in Stockholm. TagMaster is a listed company and the share is traded at Nasdaq First North Premier Growth Market in Stockholm. TagMasters certified adviser (CA) is FNCA, telephone +46852800399, E-mail: info@fnca.se www.tagmaster.com