NEW LICENSE AGREEMENTS CREATE ADDITIONAL GROWTH OPPORTUNITIES

PRECISE BIOMETRICS AB (PUBL), CORPORATE IDENTITY NO. 556545-6596, INTERIM REPORT
FOR THE PERIOD JANUARY-JUNE 2016
SECOND QUARTER

  · Consolidated net sales increased to SEK 21.9 (10.0) million.
  · EBITDA increased to SEK 6.2 (-5.2) million.
  · Profit after tax increased to SEK 4.4 (-7.9) million.
  · Earnings per share for the period increased to SEK 0.01 (-0.02).
  · Cash flow from operations increased to SEK 10.0 (-5.6) million.

FIRST HALF-YEAR

  · Consolidated net sales increased to SEK 46.1 (14.6) million.
  · EBITDA increased to SEK 14.4 (-11.6) million.
  · Profit after tax increased to SEK 10.7 (-16.7) million.
  · Earnings per share for the period increased to SEK 0.03 (-0.05).
  · Cash flow from operations increased to SEK 17.5 (-11.9) million.
  · Cash and cash equivalents were SEK 67.4 (47.0) million at the end of the
interim period.

SIGNIFICANT EVENTS IN THE SECOND QUARTER

  · Precise BioMatch Mobile was included in over 40 different smartphones,
tablets and laptops that was launched during the quarter.
  · Licensing agreements were signed with sensor manufacturers IDEX and EOSMEN
as well as the digital security company, Oberthur Technologies.
  · Precise Biometrics, won a framework agreement for Tactivo from the Defense
Logistics Agency within the US Department of Defense.
  · Precise BioMatch Embedded was integrated in Fingerprint Cards (FPC) embedded
biometric module solution FPC-BM.

SIGNIFICANT EVENTS AFTER THE SECOND QUARTER

  · Precise BioMatch Mobile has so far been included into seven different
smartphones and tablets that was launched after the end of the second quarter.
  · Licensing agreements after the end of the quarter were signed with the
sensor manufacturers Betterlife and Qualcomm Technologies, Inc.

CONFERENCE CALL

On the occasion of today’s interim report, we are pleased to invite investors
and journalists to a conference call today at 10.00. More information can be
found at the last page of the report.

CEO´S COMMENTS

The second quarter was another good quarter for Precise Biometrics. The company
has had a fantastic development during the past year. During the last 12-month
period net sales increased with 176% to SEK 87.9 million (SEK 31.8).
Corresponding EDITDA was SEK 26.5 million (- 27.3), an increase with SEK 53.8
million on an annual basis. I am of course not satisfied with the discontinued
net sales growth compared to the first quarter, but I am convinced that we will
have continued growth ahead.
However, I am pleased that the positive trend of new customer agreements
continued during the second quarter, and that we signed an agreement with
Qualcomm at the beginning of the third quarter. This is a partnership that we
feel holds great potential. Qualcomm is one of the leaders in the mobile
industry and has an exciting sensor technology based on ultrasound. During the
quarter we also signed licensing agreements with the sensor manufacturers IDEX
and EOSMEM, and with the security company Oberthur. We now have a total of 18
licensing agreements, giving us great opportunities to win a significant share
of the market growth. We are continuously assessing new partners to further
enhance our market position and competitive edge, in line with our strategy.
The market for fingerprint technology continues to grow, and more and more
manufacturers are also choosing to integrate the technology in mobile phones in
the low- and medium-price segments, as well as in tablets and laptops. Leading
market analysts project a compound annual growth rate of 35% in the fingerprint
market until 2020. I expect that already next year our addressable market will
reach almost 800 million mobile phones, tablets and laptops with fingerprint
technology. This is an amazing market trend, which provides us with
opportunities for growth in both the short term and the long term.
We have further enhanced our position as the leading supplier of fingerprint
software. Our software is now included in more than 130 mobile devices from over
35 different manufacturers. Precise BioMatch Mobile was included in a total of
40 different mobile phones, tablets and laptops that was launched during the
quarter, 15 more than in the first quarter, five of which were for customers
other than Fingerprint Cards AB. We expect sales and volumes to increase from
several of our other sensor customers, which will drive growth and compensate
for the effects of Fingerprint Cards having implemented their own algorithm
solution with some key customers.
In recent months many of our customers have undergone comprehensive
qualification processes with leading mobile phone manufacturers. The customers
are now involved in final evaluations and integration projects that may generate
volume shipments towards the end of the year. During the quarter sensors from
Synaptics and Elan Microelectronics were delivered with our software in several
mobile devices, an indication of increasing competition in the market. We are
increasingly collaborating with our customer on site at the premises of mobile
phone manufacturers. This way, we can achieve faster, more efficient evaluation
and integration processes and thus create the conditions for earlier and
increased royalty revenues.
We have continued our investments in research and development to secure our
competitiveness by having the market’s best performance in terms of user
experience and security. We are furthermore developing our offer with software
and reference implementations for different platforms as well as integration
services to be able to offer broader solutions that enable quicker integration
of our fingerprint software in mobile devices. In order to get closer to and
better support our customers in critical integration projects in our key
markets, China and Taiwan, we have also established a local organization for
support and integration in Taiwan that also covers the Chinese market.
Sales in the Mobile Smart Card Solutions business area was weaker than expected,
primarily because of lower sales to the US government agency market and the
Defense Logistics Agency.
However, we expect continued growth over time in this business area. Beyond the
US, several interesting projects are showing progress, primarily in Sweden,
Germany and the UK. The City of Gothenburg is planning to introduce a mobile
solution featuring Tactivo to 10,000 employees over the next year. This is a
wide-ranging project that is progressing according to schedule, and we expect
initial orders for Tactivo as early as this fall. Many stakeholders in the
Swedish healthcare sector are monitoring the development of this project, which
may have a positive impact on other organizations’ decisions to introduce mobile
solutions using Tactivo. Pilot projects with German authorities are also
progressing in the right direction, which may generate revenues in 2017.
The first half of 2016 has been eventful, and I am satisfied with our overall
development. We have strengthened our position as the leading supplier of
fingerprint software. As more and more of our customers becomes qualified as
suppliers, we are also reducing our reliance on individual partnerships. Through
our broad customer base of 16 sensor manufacturers and two security companies,
we are well positioned for profitable growth and I am confident that Precise
Biometrics’ positive development will continue.
Håkan Persson, CEO
FOR MORE INFORMATION, PLEASE CONTACT
Håkan Persson, CEO, Precise Biometrics AB
Tel. 46 46 31 11 05 or 46 734 35 11 05
E-mail hakan.persson@precisebiometrics.com
ABOUT PRECISE BIOMETRICS
Precise Biometrics is a market leading supplier of solutions for convenient and
secure authentication of people’s identity. We develop and sell fingerprint
software and mobile smart card readers that provide the market’s best user
experience and security. Our solutions are used hundreds of millions of times
every day by people all over the world and are marketed together with strong
business partners. For more information, please visit www.precisebiometrics.com