Slide 1: Strategy Update Session
Strong Point www.s trongp Slynga oint.co 10 2005 R m ******** ælinge n, Norw ******** ay ******** ******** ******** ******** ** ******** Strategy Update Session ******** ******** ******** Thank ******** yo ******** u ** with S for shoppin trongP g oint 25 April 2024
Slide 2: Agenda & Speakers
Agenda & Speakers • About StrongPoint Jacob Tveraabak Marius Drefvelin • Update on financial results vs. ambitions Chief Executive Officer Chief Financial Officer • Big wins from big investments • Deep dive on Scandinavia, UK and Spain • Financial update • Concluding comments • Q&A Magnus Rosen Alex
Slide 3: Our purpose
Our purpose: Impact on grocery retailers Impact on end consumers "Retail technology in every shopping experience for a smarter and better life" Driving Improving both efficiency Boosting the in-store and online savings margins experience for shoppers
Slide 4: StrongPoint at a glance
StrongPoint at a glance Countries with offices Years in Revenue from business 39 grocery retailers >80% and full sales, service and support coverage Countries with NOK annual full sales, service and support 9 Kr revenue 1.35Bn Listed on Oslo No. of employees 500+ Stock Exchange since 2003 Countries
Slide 5: Our grocery retail solutions - aisle to aisle & door to door
Our grocery retail solutions - aisle to aisle & door to door In-store E-Commerce 1 9 16 In-store In-store Product Pickup Manual 11 (Vensafe) Picking 2 10 Dark Store Electronic Manual 6 Shelf Labels Picking 2 9 3 11 12 Self-Checkout Automated & AI solutions Fulfilment 10 8 4 12 Cash Grocery Managemen
Slide 6: Solution portfolio well suited for grocery retailers in core markets
Solution portfolio well suited for grocery retailers in core markets Sales Service Installation Support
Slide 7: Update on financial results vs. ambitions
Update on financial results vs. ambitions
Slide 8: 2025 financial ambitions communicated in 2020
What we in 2020 communicated as our 2025 financial ambitions Revenue 2.5Bn NOK EBITDA 13-15%
Slide 9: Where we are today and our 2025 estimates
Where we are today and our 2025 estimates 2023 Results 2025 Estimate Revenue 1.35Bn 1.5-1.8Bn NOK NOK EBITDA 0 % 4-6%
Slide 10: Why did we hold onto ambitions for so long?
Why did we hold onto ambitions for so long? Revenue -18% MNOK -15% 405 381 346 337 331 321 301 293 289 284 249 252 196 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23
Slide 11: Business developed far weaker than anticipated
Business developed far weaker than anticipated Revenue 2023 MNOK EBITDA 2023 MNOK 1 451 -109 1 342 MNOK 66 All markets significantly weaker than -46 anticipated in MNOK Q4 except 20* Baltics 2023 Estimate 2023 Actual 2023 Estimate 2023 Actual as of Q3 as of Q3 * EBITDA shown for 2023 is excluding 21
Slide 12: Three major challenges in 2023 and continuing into 2024
Three major challenges in 2023 and continuing into 2024 Challenge 1: Challenge 2: Challenge 3: Difficult market for Currency depreciation Specific challenges grocery retail and in Norway and Sweden in UK business unit retail technology against EUR and USD
Slide 13: Challenge 1: A difficult time for grocery retail
Challenge 1: A difficult time for grocery retail Top 15 trends mentioned by CEOs for the grocery industry 2024* Top 1 - 3 Top 4 - 7 CEOs about the grocery industry 2024* Cos Cost & t & m argin margin press ure pressure Disposable household income Downtrading of consumers under pressure… Talent hirin
Slide 14: Challenge 2: NOK and SEK depreciating against EUR and USD
Challenge 2: NOK and SEK depreciating against EUR and USD 115 Development of currency exchange rates indexed to average monthly rates December 2021 110 105 100 12-18% depreciation since start of 2022 95 90 NOK/EUR SEK/EUR 85 NOK/USD 80 SEK/USD 75 Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan M
Slide 15: Challenge 3: UK business specific challenges
Challenge 3: UK business specific challenges Overview H2 2023 > Q1 - 2024 M&A is part of long-term strategy • Replacement of UK • As result of changes, executive management are experiencing short- ALS business: great team initiated term negative and outstanding customer repercussions in service repu
Slide 16: Challenges summarized – now, what actions?
Challenges summarized – now, what actions? Challenge 1: Challenge 2: Challenge 3: Difficult market for Currency depreciation Specific challenges grocery retail and in Norway and Sweden in UK business unit retail technology against EUR and USD
Slide 17: Actions taken in Scandinavia and Baltics
Actions taken in Scandinavia and Baltics Transformational actions in our traditional markets: Immediate cost reduction, reorganisation and commercial actions taken following signs of challenges: • 25 MNOK gross cost reduction announced in Q4 2023 with full effect from January 1, 2024 • Additionally,
Slide 18: Actions taken in UK and Spain
Actions taken in UK and Spain Further investments in key markets of UK and Spain to leverage recent large customer successes Recruitments and reorganization: • Alex Eveleigh, former Aldi, Ocado, ASDA and Takeoff Technologies executive, as new MD SVP for UK and Ireland • Strengthening UK and Spain te
Slide 19: Continuing to develop strong base of recurring revenue
Continuing to 2023 Revenue develop strong base of recurring and re-occuring revenue Recurring revenue New sales We are still to a large extent a project driven company. Focus going forward is to grow Re-occurring recurring and re-occuring base of revenue revenue, in particular for new large-scale cu
Slide 20: Big wins from big investments
Big wins from big investments
Slide 21: Our investments are bearing fruit
Our investments are bearing fruit Exporting our world-class Order Picking Developed new cash management solution to the UK driving essential solution with Mercadona to improve efficiency savings efficiency of cash operations
Slide 22: Contextualising the size of these grocery retailers
Contextualising the size of these grocery retailers 2023 Revenue NOK 110Bn NOK 400Bn NOK 410Bn
Slide 23: Value in project opportunities are very large in themselves
Value in project opportunities are very large in themselves NOK 60Bn NOK 140Bn E-commerce revenue Cash transactions value
Slide 24: As an incumbent we are well placed to upsell additional solutions
As an incumbent we are well placed to upsell additional solutions 4.7 average number of solutions used Recent clients Number of solutions being used currently using 1 and by largest 10 grocery customers 7 2 solutions in Norway, Sweden and Baltics respectively 6 6 6 5 5 4 3 3 2 2 1 Coop EE IKI Maxima
Slide 25: Large serviceable customer base of grocery retailers
Large serviceable customer base of grocery retailers UK grocery retailer market Spanish grocery retailer market percentage share, by retailer* percentage share, by retailer* TESCO 26.4 Mercadona 26.2 Sainsbury's 14.3 Carrefour 9.9 ASDA 13.4 Lidl 6.4 Morrisons 9.5 Aldi 9.5 Eroski Group 4.4 Lidl 6.6 D
Slide 26: Large opportunities in key markets
Large opportunities in key markets Market size StrongPoint grocery StrongPoint Examples of Country (BnNOK)* chain coverage solution penetration opportunities 100% Self-checkout, Vensafe, Norway 270 Traditional markets E-Commerce E-Commerce, Electronic Sweden 300 100% Shelf Labels, Self-Checkout Balt
Slide 27: Deep dive on Scandinavia, UK and Spain
Deep dive on Scandinavia, UK and Spain
Slide 28: Deep dive on selected core markets
Deep dive on selected core markets Scandinavia UK Spain
Slide 29: Scandinavia
Scandinavia
Slide 30: Decades of grocery customer trust
Decades of grocery customer trust StrongPoint currently serves all the grocery retailers in Norway and Sweden representing amazing starting point Took us 30+ years to get there, and are now a solid and trusted supplier 4.7 average number of solutions used Position as trusted supplier Scandinavia = l
Slide 31: Transformational actions
Transformational actions Organisational efficiency: Commercial steps: • One SVP for Norway and Sweden • Pricing measures • More synergy effects • Harder sales targets and incentives • More best practice sharing • More targeted marketing and selective campaigns
Slide 32: Commercial overview of Scandinavia
Commercial overview of Scandinavia Highly penetrated Less penetrated Solutions that have yet Experimenting with solutions solutions to be adopted new solutions CashGuard Autonomous stores Self- Vensafe Checkout Electronic Shelf Labels Fraud detection Micro- Grocery Lockers Fulfillment Order Picking
Slide 33: UK
UK
Slide 34: Introduction to StrongPoint ALS UK
Introduction to StrongPoint ALS UK • StrongPoint invested in the UK and Ireland with acquisition of Air link Group Ltd (ALS) in June 2022 • ALS served largest UK and Irish grocery retailers for 25+ years • Building a total retail solution provider on top of existing shopfitting business • ALS pedigr
Slide 35: UK priorities
UK priorities 1 Bolster shopfitting business and expand customer base 2 Penetrate UK market with StrongPoint solutions that have good product market fit
Slide 36: UK trends continue to drive opportunities
UK trends continue to drive opportunities UK facing challenges, some already overcome by Scandinavian retailers: • Labour costs increasing • Labour scarcity • Inflation means frequent price changes/promotions • Rising theft and retail crime Driving opportunities
Slide 37: Market opportunities: UK
Market opportunities: UK Vensafe Micro Grocery Electronic Self- Order Fulfillment Lockers Shelf Labels Checkout Picking Market Entirely untapped Latent demand for Many grocery Many grocery Used by almost all Currently Insights market in the UK. No automation in UK, retailers have retailers testing g
Slide 38: Sainsbury's picked StrongPoint
Sainsbury’s picked StrongPoint Contract signed Q1 2024 Potential additional StrongPoint solutions Vensafe Grocery Lockers Electronic Shelf Labels
Slide 39: Spain
Spain
Slide 40: Increasing focus on grocery retail
Increasing focus on grocery retail Today, majority of business is serving non-grocery retailers Only ~15% of StrongPoint Spain’s revenue comes from grocery retailers Successes: We have been successful in a number of retailers with our 4.7 strategy and are starting with a first solution to more than
Slide 41: About Mercadona
About • 1,600 stores in Spain, 50 in Portugal • Employs over 95,000 people • Dominiates Spanish market with >26% market share • Almost half of all transactions in Mercadona are made using with cash = 10% of all cash transactions in Spain • Mercadona looked for partner to develop solution to drastica
Slide 42: CashGuard Connect
CashGuard Connect Cash automatically sent to back office Notes are counted, checked and World’s first end-to-end cash via legacy pneumatic tube systems flattened. Cash-in-transit partner automation solution alerted when pickup is needed from customer to cash-in-transit pickup with zero staff interve
Slide 43: CashGuard Connect: Purpose built for grocery retail
CashGuard Connect: Purpose built for grocery retail Massively reduces costs of processing cash + Makes cash transactions easier and safer for customers and store staff
Slide 44: Market opportunity for CashGuard Connect
Market opportunity for CashGuard Connect Spain €1/4BN Europe €2BN First installation in-store. Plans for industrialised Many European grocery production underway 5+ grocery retailers have retailers use similar with first output relevant infrastructure: pneumatic tube systems expected H2 2025 pneumat
Slide 45: Market opportunities: Spain
Market opportunities: Spain Cash Self- Electronic Grocery Order Scales Management Checkout Shelf Labels Lockers Picking Market Mostly manual Most of tier 1 Grocery retailers Most grocery Grocery e- With e-commerce Insights cash handling in have deployed testing and retailers have scales commerce gro
Slide 46: Financial update
Financial update 'S) StrongPoint
Slide 47: Where we are today and our 2025 estimates
Where we are today and our 2025 estimates 2023 Results 2025 Estimate Revenue 1.35Bn 1.5-1.8Bn NOK NOK EBITDA 0 % 4-6%
Slide 48: 2025 estimates: Scandinavia
2025 estimates: Scandinavia Revenue and EBITDA margin • Overall challenging market (MNOK) conditions in 2023 and so far CAGR 1-10% in 2024 7-8% • Norway: Increase in in-store EBITDA deliveries, off-set by expected 7% reduction in payment EBITDA solutions • Sweden: Increase in in-store 636 650–750 an
Slide 49: 2025 estimates: International
2025 estimates: International Revenue and EBITDA margin MNOK • Mixed performance in 2023 CAGR 10-20% • Baltics and Finland: Increase in 5-8% Checkout, plus recurring EBITDA revenue from POS/ ERP • Spain: CashGuard Connect -1% rollout anticipated H2 2025 EBITDA • UK: Restore Shopfitting volume, 850–1
Slide 50: 2025 estimates: in-store & e-commerce split
2025 estimates: in-store & e-commerce split Revenue In-store MNOK CAGR 5-15% • Increase in ESL projects, 1 500 – 1 800 Self-checkout and 25-50% 200-300 CashGuard Connect CAGR E-commerce 1 342 127 3-10% CAGR E-commerce • Increase in Order Picking, 1 300–1 500 1 216 In-Store Grocery Lockers and AutoSt
Slide 51: M&A update
M&A update Integration of completed acquisitions M&A activities and looking ahead StrongPoint ALS (UK and Ireland) – June 2022 • Short-term focus on improving • Revenue of MNOK 283 in 2023 current operations • Stand-alone first year (Shopfitting) • Integration completed ~summer 2024 with new • M&A c
Slide 52: Financing update
Financing update Net interest-bearing debt and IFRS 16 lease obligations (MNOK) • Increase of (not interest-bearing) lease obligations in 2023 due to new premises in Norway • Gone from almost zero interest 85 bearing debt to debt situation 87 • Secured new financing better suited to our growth ambit
Slide 53: Strong history of dividend payment
Strong history of dividend payment Dividend NOK per share • Policy continues to be to pay dividend 1.50 and increase Extraordinary dividend • No dividend for 2023 • Focus on managing debt 0.90 1.00 0.80 0.70 0.60 0.55 0.50 0.45 0.35 0.30 0.25 0.50 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 20
Slide 54: Concluding comments
Concluding comments 'S) StrongPoint
Slide 55: StrongPoint 2020 vs. 2024
StrongPoint 2020 vs. 2024 StrongPoint before new strategy released StrongPoint in 2024 3 business areas, 16 offices incl. Russia and Grocery retail tech focused with 9 priority countries Malaysia Solution sales with high potential for additional Mainly selling hardware with some service recurring so
Slide 56: Challenges and opportunities
Challenges and opportunities Facing multiple challenges and working to overcome them: reduced costs, transformation program incl. operations and products Lots of opportunities in traditional and future key markets: and our investments are now starting to bear fruit
Slide 57: Long-term financial aspirations
Long-term financial aspirations Revenue EBITDA Continue to pay growth >10% and increase the dividend forward
Slide 58: Key priorities
Key priorities Transform traditional core markets Build on initial success for of Norway, Sweden and further large-scale operations in grow Baltics and Finland UK and Spain
Slide 59: Thank you
Strong Point www.s trongp Slynga oint.co 10 2005 R m ******** ælinge n, Norw ******** ay ******** ******** ******** ******** ** Thank you ******** ******** ******** ******** Thank ******** yo ******** u ** with S for shoppin trongP g oint