StrongPoint : "Q3 2021 report

YTD 2021

Financial report and status

Jacob Tveraabak

CEO of StrongPoint

StrongPoint  |  Q3 and YTD 2021

CEO's perspective

The fundamentals and long-term prospects for grocery retail technology and StrongPoint's solutions continue to be positive. However, unprecedented recent global turbulence is impacting us and prolonging sales and delivery cycles. Together these recent trends are negatively impacting our short-term financial results. Whereas we are on a journey to shift more of our business to be recurring, we still are to a large extent a project-driven company. Hence, comparing the financial results this autumn with last year's record high project activity level

does not alone give a correct assessment of our progress, achievements and long-termproduct-market fit. StrongPoint's"double opportunity"- capitalizing on the opportunities arising from the increased demand for e-groceries and in-store efficiency - is still very much alive. Despite a challenging quarter and autumn,

I continue to remain confident in achieving our 2.5 BNOK 2025 ambitions.

StrongPoint  |  Q3 and YTD 2021

Highlights 3rd quarter

Topline decline vs last year

• Revenue at 196.4 MNOK (215.2), down 8.8% due to tight global supply chains, lower than anticipated grocery locker roll-outs and last year's unusually large and quickly deployed ESL project.
• EBITDA at 8.0 MNOK (21.4). The reduction reflects increased investments in e-commerce- related R&D, sales resources, marketing activities and IT security as well as lower sales.
• Cash position increased to 186 MNOK after the divestment of the Labels business area in the quarter.

Continued customer success in priority areas

In our third quarter this year, our revenues were down

9%. This is clearly not a development I am pleased with, however there are multiple explanations and our underlying trends are positive. Firstly, as global supply chains are tight, the situation affects us as well by having to postpone certain customer installations which has significantly impacted the delivery of our CashGuard orders in Norway.

Secondly, we are still awaiting new markets to initiate large-scale rollouts of grocery lockers, which we were expecting to happen earlier. However, Proof of concept (POC) and pilots are, nevertheless, still ongoing at a larger pace than ever before proving that there is unprecedented interest in our solutions. Currently we are running E-commerce POCs and pilots at more than 10 large grocery retailers in Europe and North America, a significant uptick compared to pre-pandemic levels. Thirdly, last year's third quarter was extraordinarily positively affected by the large and quickly deployed Electronic Shelf Labels (ESL) roll-out in Norway in the autumn extending well in to the fourth quarter. Compared with Q3 in 2018 and 2019, where such a large-scale project did not take place, the underlying growth in Q3 2021 is healthy and positive.

Our EBITDA is down from 21 MNOK (9.9% EBITDA margin) in third quarter last year to 8 MNOK (4.1% EBITDA margin) this quarter. The decline is partly related to the revenue decline described above, while at the same time we continue to make significant investments in our e-commerce business through product development, marketing and additional staff.

Our Spanish operations, which are undergoing a major restructuring, are steadily stabilizing. In parallel, our engagement with top grocery companies in Spain is deeper than ever in the wake of the Glovo partnership announcement. In the quarter, we won and initiated the

roll-out of our E-commerce Order Picking solution to a top ten grocery retailer. Furthermore, our first-ever Self- Checkout (SCO) solution was also installed within the GM Food retail chain. We remain very positive on the long- term prospects of the Spanish market.

In September we announced our partnership with AutoStore. The partnership provides us with the rights to sell, install, service and support AutoStore facilities in the Nordics and Baltics. Being selected by such an esteemed technology provider as the world's first grocery distributor of its fulfilment solution is a testament to our world-class solutions, customer depth, expertise and team of which I am extremely proud. We are looking very much forward to be working with AutoStore to provide grocery customers with a full suite of e-commerce solutions offerings suited to their unique needs.

In the quarter we finalized the divestment of our former Labels business unit. The financial gains from the transaction led to a strong cash position, a record Earnings Per Share (EPS) and we are well positioned to grow inorganically where it creates clear customer and shareholder value.

Although an isolated choppy quarter and autumn I am excited and confident on our journey ahead. Our investments in product development, sales resources and marketing will continue and further materialize. The depth and relevance with our grocery customers and customer prospects in target markets is as strong as ever, and we are just starting to get known and be respected amongst some of the largest grocery retailers internationally. With all this, I continue to believe we have all the reasons to be optimistic about achieving our 2025 strategic ambitions.

Stay safe and strong!

• Important win with one of top 10 grocery chain in Spain for StrongPoint's Order Picking solution.
• The first pilots for Self-Checkout solution installed within the GM Food retail chain in Spain.
• Order for 250 CashGuard systems to StrongPoint partner Bullion IT in South Africa, and a long term framework agreement for CashGuard signed with REMA 1000 in Norway.

Further progress on 2025 strategic ambitions

• StrongPoint chosen by AutoStore as distribution partner in the Nordics and the Baltics. A product development project has been initiated.
• Finalised divestment of Labels, net gain of 164 MNOK booked in the quarter.

Key figures (MNOK)

	Q3	Q3	YTD	YTD	Year
	2021	2020	2021	2020	2020
Revenue	196.4	215.2	697.2	652.2	941.7
EBITDA	8.0	21.4	33.6	48.8	68.7
EBITDA margin	4.1%	9.9%	4.8%	7.5%	7.3%
Operating profit (EBIT)	1.4	14.8	14.7	28.7	41.8
Ordinary profit before tax (EBT)	-0.5	16.4	15.0	25.5	36.9
Cash flow from operational activities	180.6	35.4	218.5	19.5	131.8
Disposable funds	286.2	54.0	286.2	54.0	175.0
Earnings per share from continued operations (NOK)	-0.01	0.26	0.29	0.40	0.60
Earnings per share from continued operations, adjusted	0.04	0.31	0.42	0.55	0.80
Earnings per share included discontinued operations (NOK)	3.74	0.34	4.10	0.54	2.21

2

3

StrongPoint  |  Q3 and YTD 2021

StrongPoint  |  Q3 and YTD 2021

StrongPoint Group

StrongPoint is a retail technology company that provides solutions to make shops smarter, shopping experiences better and online grocery shopping more efficient. The two non-core business areas Cash Security and Labels were divested in December 2020 and June 2021 respectively. Historic contribution from the divested units is presented as "discontinued operations".

Revenue	Q3		YTD		Year
MNOK	2021	2020	2021	2020	2020
Retail Technology	196.4	218.1	703.4	665.0	957.2
Elim / ASA	-	-2.9	-6.2	-12.8	-15.4
Total	196.4	215.2	697.2	652.2	941.7

EBITDA	Q3		YTD		Year
MNOK	2021	2020	2021	2020	2020
Retail Technology	13.4	29.2	58.3	71.1	95.5
Elim / ASA	-5.4	-7.8	-24.8	-22.3	-26.9
Total	8.0	21.4	33.6	48.8	68.7
Number of employees	402	381	402	381	385

Financial performance influenced by large project last year

The revenue declined by 8.8% compared to same quarter last year. There are three reasons for this. Firstly, significant revenue from contracted CashGuard installations in Norway, which were expected this quarter, have been postponed due to the global supply chain issues. In the absence of this postponement, StrongPoint's revenue would have been approximately at last year's level. Secondly, the grocery locker roll outs to new markets has been slower than anticipated as we are seeing increased sales cycles and prolonged pilots. Thirdly, it must be noted that Q3 2020 revenue was unusually high due to a large and quickly deployed ESL hardware sale and installation project in Norway. The time between the order and installations was shorter than usual creating a spike in the figures and creating a distorted year-on-year comparison.

The EBITDA was impacted both by increased investments and lower revenue from operational activities. Compared to the same quarter last year, a total of 8.1 MNOK in increased investments were related to software development, sales resources, marketing activities and IT security investments, almost all related to e-commerce. The EBITDA margin ended at 4.1% in the quarter.

Continued customer success in priority areas

The increased marketing activities during the past 6 months, in addition to the announced Glovo contract, have led to increased customer attention especially for StrongPoint's Order Picking solution. The Order Picking contract with one of the top 10 grocery chains in Spain proves that the software is highly competitive and will enable groceries chains to leverage their stores to capture and grow online sales. Despite a lower e-commerce delivery in Q3, the interest of both Order Picking and Click & Collect lockers remains high and more than 10 pilots with large grocery retail chains are ongoing.

The first pilots for StrongPoint's Self-Checkout (SCO) solution were installed during the quarter at multiple stores within the GM Food retail chain in Spain. Some of the pilots included SCO with the ability to receive cash, as well as card, as payment method.

StrongPoint's partner Bullion IT continues their success with the StrongPoint CashGuard solution with their sale to one of the largest banks in South Africa of 250 units to be delivered during first half of 2022. In addition, REMA 1000 in Norway signed a long-term framework agreement ensuring that StrongPoint will be the main supplier of Cash Management solutions going forward.

Further progress on 2025 strategic ambitions

StrongPoint announced on September 1 a partnership agreement with AutoStore to become their Nordic and Baltic regional distributor of with particular focus on grocery retailers. The AutoStore solution will enable

StrongPoint business locations

Core markets

Partners in Europe 1)

1. Outside Europe: USA, Canada, Australia, and South Africa

StrongPoint Group
Operating revenue per quarter (MNOK)
300
250
200
150
100
50
2018	2019	2020	2021

EBITDA per quarter (MNOK)
25
20
15
10
5
2018	2019	2020	2021

StrongPoint to provide a fully end-to-end grocery e-commerce offering to its customers. A product development project has been initiated to develop the optimal fulfilment strategies and create an integration between AutoStore, warehouse management systems, StrongPoint's Order Picking software and various types of last mile solutions. Read more on pages 12-15.

The strategic ambitions for 2025 clearly identified retail technology as the core focus. On June 28, StrongPoint announced the divestment of the Labels business unit to the Swedish company Volati Tryck Holding AB, and the divestment was fully closed during Q3 2021. The transaction led to a positive gain of 164 MNOK booked in the quarter.

StrongPoint continues to invest heavily in technology, sales and marketing resources. Compared with Q3 last year, the organization has increased by 17 employees, shared between software development and sales & marketing, most of this related to e-commerce.

4

5

StrongPoint  |  Q3 and YTD 2021

2025 Strategic ambition

In February 2020 StrongPoint set a strategic ambition to achieve NOK 2.5 billion in revenues and EBITDA margins of 13-15% by 2025.

StrongPoint's world class retail technology solutions for increasing in-store efficiency and e-commerce technology for online order picking and last mile solutions have a double opportunity to meet two key global trends affecting grocery retailers. Firstly, the pressure on brick and mortar retailers' margins means that grocery retailers need to find ways to increase in-store productivity to boost profitability. Secondly, the pressure to develop an online presence, grow their market share and reduce costs means they need highly efficient order fulfilment solutions and provide multiple last-mile delivery and pick-up options. These two key industry trends have only been accelerated by the global demand for online groceries during the global Covid-19 pandemic.

To respond to the changes in the industry following the events of 2020, StrongPoint has updated its strategy to achieve its 2025 ambitions.

T-shaped strategy to create a BNOK 2.5 Retail Technology company

StrongPoint  |  Q3 and YTD 2021

StrongPoint Solutions

In-store

In-store Productivity

Pricer Electronic Shelf Labels

ShopFlow Logistics *

Digi Scales and Wrapping Systems

Reflexis Task and Labour Management

Payment Solutions

CashGuard Cash Management *

Check Out Efficiency

Self-Checkout *

Self-Scanning

Vensafe Tobacco Sales Automation *

World-class solutions to selected markets

• E-CommerceLogistics Suite (Order Picking, Micro-Fulfillment centers and Last Mile Solutions) ​
• Self-Checkout​
• Cash Management

Deep in core markets

• Norway​
• Sweden ​
• Baltics ​
• Spain

Retail Management

POS Systems

Commerce Management System

Online

Grocery Picking

Order Picking solution *

AutoStore Micro-

Fulfillment centers

Last mile

StrongPoint's financial ambitions

BNOK 2.5 in 2025

EBITDA 13-15%

Temperature controlled Click & Collect lockers * Drive-thru * Pick-upin-store * Home delivery with route optimization

* Proprietary technologies

6

7

StrongPoint  |  Q3 and YTD 2021

StrongPoint  |  Q3 and YTD 2021

Results per core geographic market

Please note that StrongPoint reports its financial results broken down in two ways: results per core geographic market and per technology segment. The reason for this is that we have core geographical markets where we have established offices but also sell some selected solutions and services outside those countries, hence the need for the two separate reporting formats.

Norway

	Q3		YTD		Year
MNOK	2021	2020	2021	2020	2020
Product Sales	42.9	52.7	162.8	149.0	248.8
Service	26.6	27.4	81.7	81.3	113.2
Revenue	69.5	80.0	244.4	230.3	362.0

The revenue declined by 10.5 MNOK compared to the same quarter last year.

The installation of CashGuard units to NorgesGruppen announced in Q1 2021 was in the quarter negatively affected by the global shortage and supply of components, delaying revenue from Q3 to Q4. Further delays are expected if the global situation does not improve.

Installation on the new contracts for ESL have started but it is expected that the installation will be distributed over the contract period of 2-3 years. In addition the large order of ESL tags to one retail chain within NorgesGruppen led to very high product sales last year. This created a high Q3 2020 result and thus the comparison with 2021 Q3 figures would give a negative impression. The installations continued in Q4 2020 thus we expect the same issue with comparing Q4 2020 and 2021 figures.

During the period, it was announced that REMA 1000, one of the largest retail chains, chose StrongPoint as their long-term supplier of Cash Management solutions. Year to date, the growth was 6%, mainly driven by delivery and installation of ESL, Vensafe and CashGuard.

Sweden

	Q3		YTD		Year
MNOK	2021	2020	2021	2020	2020
Product Sales	34.9	42.1	148.3	117.5	165.5
Service	34.7	32.5	103.6	95.4	128.6
Revenue	69.6	74.5	252.0	212.9	294.1

The Swedish operation delivered lower revenue in Q3 2021 compared to last year. The main driver for the decline was the lower deliveries of Click & Collect lockers. The software revenue remains stable as the price structure on the current version of the software is not linked to number of online orders but number of stores.

Year to date the business has shown a solid growth of 18%, with deliveries and installations of ESL and Click & Collect lockers as the main drivers.

Baltics

	Q3		YTD		Year
MNOK	2021	2020	2021	2020	2020
Product Sales	22.3	24.5	90.5	77.1	108.8
Service	17.1	14.5	47.7	43.4	61.5
Revenue	39.4	39.0	138.1	120.5	170.3

The business in the Baltics delivered revenue at the same level as last year. The product mix showed a lower. revenue from hardware (mainly Self-Checkout) to software and consulting deliveries. The Heineman software project continues to contribue to the growth in service revenue. Year to date, the business has shown solid growth of almost 15%.

Spain/Partners

	Q3		YTD		Year
MNOK	2021	2020	2021	2020	2020
Product Sales	16.1	23.1	61.9	90.9	114.8
Service	1.7	1.5	6.9	10.3	15.9
Revenue	17.8	24.6	68.8	101.2	130.8

Spain

The Spanish revenue declined by 18% from the same quarter last year. The society and the retailers in Spain experience increased activity post pandemic, and sales per week increased towards the end of the quarter.

The order for StrongPoint's Order Picking solution with one of the top 10 retail chains proves that the Spanish market move rapidly into more online shopping. The retail chain is establishing their e-commerce offering in approx. 25% of their stores during Q4 2021 and expects online orders to increase during the next years.

A total of 10 Self-Checkout (SCO) pilots were installed to the chains To Super and Elemen, both part of the retail chain GM Food. The pilots have both the opportunity to receive cash and credit card payment. The Spanish market for SCO is increasing as also the tier2 retail chains are moving towards more efficient check-out solutions.

Following the writedown of inventory in Q2, the local management has initiated several follow-up actions and no further write-downs have been necessary.

Partners

Bullion IT ordered 250 CashGuard units in September to be delivered during first half of 2022. In addition, partners have ordered CashGuard units that are postponed from Q3 to Q4 due to the ongoing global reduced availability of some production components. The situation is expected to last into 2022, delaying delivery of some units from this year to next year.

8

9