OSLO, NORWAY--(Marketwired - Aug 25, 2016) - NEXT Biometrics Group ASA (Oslo Bors: NEXT) today announced interim results for the second quarter ended June 30, 2016 and outlined its expectations for the second half of 2016. NEXT, the leader in high-quality low-cost fingerprint sensors based in Oslo, Norway, summarized highlights:
- Sales in 2nd Quarter of 2016 of 26.6 million Norwegian Krone (NOK), up from MNOK 5.2 in 1st Quarter. (Conversion rate $1 USD equals 8.36 NOK as of June 30).
- Showcased the first flexible Smart Card sensor compliant with ISO-specifications
- Received the market's first volume order for Smart Card sensors (MNOK 12)
- Raised gross proceeds of MNOK 164.9 in new equity
- Launched new low-power, high yield sensor for H2-2016 & 2017 markets
Tore Etholm-Idsoe, CEO of NEXT Biometrics, said, "During the second quarter of 2016, NEXT continued to scale-up its mass production capacity for volume deliveries. After initial increased shipments in first quarter, fingerprint sensor volumes continued to grow in the second quarter. During this high growth phase, a number of production yield optimization projects were initiated. Such cost down improvements have been proven effective late in the second quarter and will have impact from late in the third quarter of 2016. All costs related to Q2-transition to new products and volume ramp-up have been booked in this quarter."
The NEXT CEO also detailed the company's outlook, noting:
- Sales Q3 and Q4 are expected to marginally increase compared with Q2 2016
- Improved production yields and higher production capacity
- Strong focus on mass-production preparations for flexible sensors
- Continued negotiations with major players in the Smart Card industry
- Further investments in 2018 generation Smart Cards
- Generation 2 ASIC, Significant cost down project for 2017
Etholm-Idsoe said, "Due to NEXT´s recent successes in bringing forward the world´s first fully ISO-compliant flexible sensor, the vast opportunity Smart Card segment is now the primary focus for company. To NEXT´s knowledge, no other supplier within the fingerprint industry has been able to design sensors meeting all mandatory ISO standard requirements. Thus, NEXT considers itself to have fundamental competitive advantages within this market. Early Smart Card customer projects involve significant value propositions. Several of these first customer projects are larger and more attractive than initially estimated. The Smart Card order announced in April demonstrates the attractive early stage commercial viability of the NEXT Smart Card activities."
The company said that the NEXT ASIC project, a significant cost-down project, has completed its design phase, first silicon samples have been delivered and the Company still targets first volume shipments during Q2 2017.
Etholm-Idsoe said, "NEXT focuses its resources on quality dependent market segments that require high uncompromised levels of security and convenience coupled with the ability to serve close to 100% of a given population. These markets include Smart Cards, NEXT-Enabled markets, traditional markets, high-end security focused smartphones and notebooks where the NEXT technology is uniquely positioned. During the past 12-to-18 months, NEXT identified significant opportunities within several major Smart Card market segments."
NEXT raised gross proceeds of MNOK 164.9 in the beginning of May in a share issue for the purpose of expanding flexible sensor production capacity and to invest in further Smart Card related R&D as well as operational developments. A subsequent repair issue closed by the end of July brought additional gross proceeds of MNOK 26.6, as the company had announced.
NEXT said, operating revenue in the second quarter of 2016 was MNOK 26.6, compared with MNOK 5.2 in the previous quarter and MNOK 0.3 in the second quarter of 2015, noting that the increased revenue was due to higher volume fingerprint sensor shipments. In the first half of 2016, revenue amounted to MNOK 31.8 compared with MNOK 2.7 in the first half of 2015.
NEXT explained that due to low initial production volumes, the production costs were high for these initial delivered sensors and are currently included in other operating expenses. Several of the initial cost elements related to production and delivery of these units are one-offs or temporary and do not provide a clear and relevant indication of cost of goods sold, it added.
Payroll expenses amounted to MNOK 16.4 in the second quarter of 2016, compared with MNOK 15.8 in the previous quarter and MNOK 10.3 in the like quarter of 2015. The increase from the previous quarter of MNOK 0.6 was mainly related to higher accrued social cost related to share-based remuneration, it said. Payroll expenses in the first half of 2016 amounted to MNOK 32.3 compared to MNOK 18.7 in the first half of 2015. NEXT said the increase was mainly due to increased R&D employees in the US and operations staff in Asia.
Other operating expenses amounted to MNOK 60.7 in the second quarter of 2016, compared with MNOK 37.3 in the previous quarter and MNOK 13.5 in the corresponding quarter of 2015. The increase from the previous quarter of MNOK 23.4 was mainly related to higher costs of goods sold due to increased sales, the company said. The R&D costs included in other operating expenses increased to MNOK 18.7 in the second quarter of 2016, compared with MNOK 17.1 in the previous quarter and MNOK 4.8 in the corresponding quarter of 2015. Other operating expenses amounted to MNOK 98.0 in the first half of 2016 compared to MNOK 29.5 in the first half of 2015. The increase from the previous first half year of MNOK 68.5 was mainly related to increased sales and R&D costs.
NEXT said total R&D expenses, included in both payroll and other operating expenses, amounted to MNOK 53.0 in the first half of 2016, compared with MNOK 23.1 in the first half of 2015. Depreciation and amortization amounted to MNOK 0.8 in the second quarter of 2016 compared to MNOK 1.0 in previous quarter and MNOK 0.3 in the like quarter of 2015. In the first half of 2016 depreciation and amortization amounted to MNOK 1.8 versus MNOK 0.5 in the first half of 2015.
NEXT noted that there were no investments in the second quarter of 2016 compared to MNOK 0.1 in previous quarter and MNOK 15.5 in the corresponding quarter of 2015. In the first half of 2016 investments amounted to MNOK 0.1 compared with MNOK 17.0 in the first half of 2015. The main investment in the first half of 2015 was the MNOK 15.5 investment in coating technology, the company explained.
Net financial items amounted to a net cost of MNOK 0.2 in the second quarter of 2016 compared with a net cost of MNOK 0.4 in the previous quarter and a net cost of MNOK 0.7 in corresponding quarter of 2015. In the first half of 2016 net financial items amounted to a net cost of MNOK 0.6 compared to a net income of MNOK 1.9 in the first half of 2015. NEXT said the decrease was mainly related to foreign exchange gains and losses.
NEXT said the net loss in the second quarter of 2016 was MNOK 51.4 compared with a loss of MNOK 49.5 in the previous quarter and a loss of MNOK 24.5 in the corresponding quarter of 2015. Net loss for the first half of 2016 amounted to MNOK 100.9 compared to a loss of MNOK 44.1 in the first half of 2015. NEXT operated at a loss and did not incur deferred or payable income taxes in the first half of 2016 or in 2015, except for an insignificant amount in the fourth quarter of 2015.
The company said cash and cash equivalents amounted to MNOK 182.5 at the end of the first half of 2016 compared with MNOK 130.2 by the end of 2015. The operations, including investments, consumed cash in an amount of MNOK 54.3 in the second quarter of 2016 compared to MNOK 53.7 in the previous quarter and MNOK 22.8 in the second quarter of 2015. Total amount for the first half of 2016, including investments, amounted to MNOK 108.0 compared to MNOK 53.3 in the first half of 2015.
NEXT said that the net proceeds from the private placement of 1,240,000 new shares in May 2016 was MNOK 160.0. The Company's share capital is NOK 14,751,855, divided into 14,751,855 shares with a par value of NOK 1 per share. Equity amounted to MNOK 235.2 by the end of the first half of 2016 compared to MNOK 172.7 by the end of 2015 and MNOK 118.7 by the end of the first half of 2015. This was mainly due to the net proceeds of MNOK 160.0 described above and the loss of MNOK 100.9 in the first half of 2016.
ABOUT NEXT BIOMETRICS:
Enabled by its patented NEXT Active Thermal principle, NEXT Biometrics (www.NextBiometrics.com) offers high quality area fingerprint sensors at a fraction of the prices of comparable competitors. A wide range of product formats including Smartphones, Tablets, PC's, Doors, Time registration systems, Wearables, Payment terminals, Flashdrives, USB-tokens, Key fobs and many more are targeted.
NEXT BIOMETRICS GROUP ASA is a publicly listed company headquartered in Oslo, Norway and with sales, support and development subsidiaries in Seattle, Silicon Valley, Taipei, Prague and Shanghai. Media and Investor contacts for NEXT Biometrics: Tore Etholm Idsøe, CEO, Tore.Idsoe@NEXTbiometrics.com and Knut Stalen, CFO, Knut.Stalen@NEXTbiometrics.com.
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