PROGRESS IN FOCUS AREA MOBILE

INTERIM REPORT FOR THE PERIOD JANUARY TO JUNE 2018

SECOND QUARTER 

  • Net sales for the remaining operation totaled SEK 18.7 (20.1) million.
  • The operating profit/loss for the remaining operation for the quarter totaled SEK -3.3 (0.5) million.
  • The profit/loss for the period for the remaining operation totaled SEK -4.1 (0.2) million.
  • Earnings per share for the remaining operation totaled SEK -0.01 (0.00).
  • Earnings per share for the total operation totaled SEK -0.01 (0.00).
  • Cash flow from total operating activities totaled SEK -8.6 (-1.3) million.

INTERIM PERIOD 

  • Net sales for the remaining operation totaled SEK 36.9 (36.8) million.
  • The operating profit/loss for the remaining operation for the interim period totaled SEK -5.3 (-2.2) million.
  • The profit/loss for the period for the remaining operation totaled SEK -6.6 (-3.2) million.
  • Earnings per share for the remaining operation totaled SEK -0.02 (-0.01).
  • Earnings per share for the total operation totaled SEK -0.02 (-0.01).
  • Cash flow from total operating activities totaled SEK -16.8 (15.8) million.
  • Cash and cash equivalents were SEK 93.6 (115.0) million at the end of the period.

SIGNIFICANT EVENTS DURING THE QUARTER 

  • Huawei Honor 10 was launched, in which Precise BioMatch Mobile has been implemented with a Qualcomm ultrasound sensor beneath the glass.
  • Deepened collaboration with NXP and Kona-i, two prominent actors in the field of smart cards who supply payment cards to banks.
  • Introduced Precise BioMatch Card, a powerful algorithm solution for fingerprint recognition in smart cards.

SIGNIFICANT EVENTS SINCE THE END OF THE QUARTER 

  • Stefan K Persson took over as new CEO as of August 1.

FINANCIAL DATA AND KEY INDICATORS 
As a result of the Mobile Smart Card Solutions business area having been disposed of as of January 1, 2018, previously reported figures have been restated in order to improve comparability. The business area has been reported as a business held for sale starting in the interim report for the second quarter of 2017. In order to obtain comparable historical data, previously reported figures have only been adjusted for the expenses relating directly to the discontinued business area, which will no longer affect the company’s remaining operation. The discontinued operation’s impact on the financial position has not been reported separately, as the company does not consider it possible to report the discontinued operation’s impact on cash flow. Cash flow is instead reported for the total operation.

Unless otherwise specified, reported figures in the interim report relate to the remaining operation. 

KEY INDICATORS 

Amounts in SEK thousand unless otherwise stated  2018  2017  2018  2017  2017  Rolling 
   Q2  Q2  Q1-Q2  Q1-Q2  Full year  12 mon.
Net sales  18,728  20,160  36,880  36,777  61,039  61,142 
Net sales growth, %  -7.1%  6.5%  0.3%  -7.0%  -26.7%  -24.1% 
Gross margin, %  82.8%  95.0%  87.4%  94.7%  93.3%  88.9% 
Operating profit/loss  -3,296  482  -5,329  -2,179  -13,936  -17,086 
Operating margin, %  -17.6%  2.4%  -14.5%  -5.9%  -22.8%  -27.9% 
Cash flow from operating activities  -8,609  -1,314  -16,835  15,808  22,788  -9,855 
Cash and cash equivalents, total operation  93,580  115,006  93,580  115,006  116,955  93,580 

PRESENTATION OF THE INTERIM REPORT
In connection with today’s interim report, we issue an invitation to an informational event today at 10:00 AM. Please see the last page of the interim report for further information about participation.

THE CHAIRMAN’S COMMENTS
Fingerprint sensors with optics or ultrasound that are placed beneath the glass are gaining more and more ground in the high-end mobile segment. Interest in these sensors is being driven by new design, in which the screen covers the entire front of the mobile phone. Several mobile phones have been launched this year with optical or ultrasound sensors. One of these phones is the Huawei Honor 10, in which our Precise BioMatch Mobile software is integrated with an ultrasound sensor from Qualcomm. The device has been a sales success and has sold more than three million units in less than three months. To further strengthen our position and win new business, we are continuing our close collaboration with several customers that are focusing on optical and ultrasound sensors. There are long lead times in this segment and it takes time from the start of a project until it generates royalty revenues.

The prices of capacitive fingerprint sensors are continuing to fall, which enables more mobile phones in the low-price segment to get such sensors. Our software is included in a number of phones in this segment that were launched recently, from suppliers including Nokia, TCL and Lenovo. 

New pilot projects with biometric payment cards have been launched, and at the same time the evaluations from the first pilot projects in countries including the USA and Japan have generated overwhelmingly positive responses. The major benefits highlighted in these evaluations are that biometric payment cards provide a smooth user experience and that fingerprints are perceived to be a more secure authentication method than PIN codes.

The major suppliers of payment solutions are working to confirm the specifications for biometric payment cards, which is a precondition for the cards to be able to enter into commercial use. The first specification from MasterCard is expected to come before the end of the year, which means that biometric cards for payments could be used commercially and provide us with royalty revenues in the latter part of 2019.
 

We have deepened our collaboration with NXP and Kona-i, two prominent actors in the field of smart cards. These partnerships strengthen our position as the leading supplier of fingerprint software for smart cards. 

The use of biometrics in new areas of application is on the increase, and the technology is moving into more and more areas. A number of new products with fingerprint technology were launched during the quarter, including USB keys and crypto wallets with fingerprint readers, which increases security for the user. 

On August 1, Stefan K Persson started as CEO of Precise Biometrics. The Board looks forward to working with Stefan in continuing to develop our business in our focus areas and to broaden the use of biometrics in new areas of application. 

Work to generate profitable growth continues, and our financial position provides us with opportunities to continue to invest in the focus areas we have identified. 

This information is information that Precise Biometrics AB is obligated to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 8:00 AM on August 15, 2018.