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Precise Biometrics Interim / Quarterly Report 2019
3189_10-q_2019-11-15_db706778-070e-442b-9e73-bb7a2ea5c665.pdf
Interim / Quarterly Report
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Execution of the strategy yields growth and results
INTERIM REPORT FOR THE PERIOD JULY – SEPTEMBER 2019
THIRD QUARTER
- Net sales totalled SEK 27.5 (16.8) million.
- Net operating profit/loss totalled SEK 3.3 (-0.4) million.
- The profit/loss totalled SEK 3.2 (-0.7) million.
- Earnings per share totalled SEK 0,01 (0,00).
- Cash flow from operating activities totalled -3.4 (-0.2) million.
INTERIM PERIOD JANUARY - SEPTEMBER
- Net sales totaled SEK 53.1 (53.7) million.
- Net operating profit/loss totaled SEK -11.9 (-5.7) million.
- The profit/loss totaled SEK -12.3 (-7.2) million.
- Earnings per share totaled SEK -0.03 (-0.02).
- Cash flow from operating activities totaled SEK -14.7 (-17.0) million.
SIGNIFICANT EVENTS DURING THE QUARTER
- Further implementation of Precise fingerprint software in collaboration with Egis Technology
- Precise integrated in the first biometric smart card module with Mastercard CAST certificate
- Expanded offering in Digital Identity by launching YOUNiQ access a product developed for physical access to facilities
SIGNIFICANT EVENTS AFTER THE END OF THE QUARTER
• Collaboration agreement with Infinity Optics
FINANCIAL DATA AND KEY INDICATORS
KEY INDICATORS
| 2019 | 2018 | 2019 | 2018 | 2018 | Rullande | |
|---|---|---|---|---|---|---|
| Amounts in SEK thousand unless otherwise stated | Q3 | Q3 | Q1-Q3 | Q1-Q3 | Full year | 12 mån. |
| Net sales | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Net sales growth, % | 63,6% | 66,8% | -1,1% | 14,6% | 10,8% | -1,2% |
| Gross margin, % | 89,2% | 84,3% | 82,5% | 86,4% | 85,2% | 82,1% |
| Operating profit/loss | 3 259 | -367 | -11 883 | -5 696 | -19 958 | -26 145 |
| Operating margin, % | 11,8% | -2,2% | -22,4% | -10,6% | -29,5% | -39,0% |
| Cash flow from the operating activities | -3 439 | -153 | -14 734 | -16 988 | -26 055 | -23 801 |
| Cash and cash equivalents | 60 908 | 91 309 | 60 908 | 91 309 | 79 543 | 60 908 |
Definitions, see financial glossary.
PRESENTATION OF THE INTERIM REPORT
In connection with today's interim report, we include an invitation to a telephone conference/webcast today at 10:00 AM.
The conference call starts at 10:00 AM (CET).
Link to all public information such as link to audiocast and participant number for the telephone conference.
https://financialhearings.com/event/11725
To take part, click on the link above to listen to and follow the presentation online, or call +46850558351 to follow it over the phone.
You will be asked to state your name when you connect to the conference call and there will be an opportunity to ask questions in Swedish. The conference call will be held in English.
Participating on behalf of Precise: Stefan K Persson, CEO Ulrik Nilsson, CFO
CEO COMMENTS
I am proud to report a generally strong result for Q3. Our strategy to work on a more focused basis is having increasing effects, which is reflected in both revenue and results. Revenue totaled around MSEK 28, having increased by 64 percent from the same period of the previous year. Through the agreement with Egis Technology – which generated around MSEK 17 – we have strengthened our position in the Mobile area. In Q4, we expect further integration of our software in collaboration with Egis. In the Digital Identity area, too, in which we develop products in several different application areas, during the quarter we gained the first commercial orders in the access for delivery 2020 application area.
Increasing demand
We can see demand increasing for simpler and safer identification solutions for other application areas besides mobile devices, which are the focus of our Digital Identity area. One example of the application area is access, where we are developing a product for various types of access solutions. The product consists of specially-developed identification software intended for various types of authorization control. Using our identification software – and a camera connected to the system – a user's identity can be verified more smoothly and safely than ever before. The passive identification of the user entails that the user does nor need to use keys or an access card to enter the door.
We have strong faith in our Digital Identity growth area and the products we are developing in this area. We continue to invest in this area, with an initial focus on the Nordic market. Most of the ongoing pilot projects, and also sales, are currently taking place in the Swedish market. The product is still at an early stage of the commercialization process, and revenue is therefore limited. We are working to scale up the product and prepare the company for higher inflows of orders from new customers in 2020.
Within Smart Card, we reached an important milestone during the quarter when our software was used in the first payment card to achieve the Mastercard CAST certificate. The certification is the result of several years' development work and proof of our strength within the commercialization that we previously announced was expected to take place in 2020 at the earliest. We look forward to continuing to develop our product for smart cards before the commercial launch of the first payment card with a fingerprint reader.
In 2019, we implemented a completely new strategy for Precise, which entailed streamlining measures, primarily in the Mobile area, and the development of the Smart Card and Digital Identity areas. We have given a new boost to our development power and will keep up this pace in our creation of new products. We continue to work on developing our identification software and also increasing our product range to suit additional application areas. Precise core is based on innovation, with a focus on meeting the demand for smooth and safe identification and enabling people to be their own keyring. Cooperation with Infinity Optics enables convenient and secure identification of the user without storing the biometric template, which is a good example of our strategic direction.
We continue to work on executing the strategy for sustained growth and performance.
Stefan K Persson, CEO
MARKET AND SALES
Precise develops and sells biometrics solutions for convenient and secure verification of people's digital identity in mobile phones, smart cards and digital platforms. The company offers the following products in each area:
Digital identity
Precise YOUNiQ - Secures digital identity in a simple, secure way
Smart cards
Precise BioMatch Card - Verifies fingerprints in smart cards
Mobile
Precise BioMatch Mobile - Verifies fingerprints in mobile phones and tablets
In addition to the areas listed above, Precise is working on selected projects in cars and door locks.
Marknadsutveckling
Digital Identity
We increasingly use digital services that require identification of the user. Since the registration process is often complicated and users choose passwords that are too simple, there is growing demand for easier and safer ways of verifying our digital identity. Our increasingly more interconnected world also means that we not only use our digital identity in multiple channels, but also on several different devices, which amplifies the need for secure and effective identification.
By combining different biometric technologies to verify our digital identity, we can create the optimum balance between convenience and security. This combined technology can be applied in several different application areas, such as access to facilities, document verification and digital services, within such sectors as finance, games, healthcare and transport. According to an analysis from Goode Intelligence, by the year 2024 we can expect over two billion verifications of digital identity and documents, on an annual basis.
Smart Card
Biometrics for identity verification has become an increasingly important tool in the battle against fraud in virtually all payment channels. Payments have become the primary driver of the development of biometrics in the consumer link, and analysts expect biometric cards to be a rapidly growing area in the coming years. Card manufacturers are focusing increasingly on the certification of contactless biometric payment cards, which is a precondition for card issuers to be able to achieve a broad-based market introduction. Sales of contactless biometric payment cards are expected to commence in 2020.
According to Goode Intelligence, 579 million biometric payment cards are expected to be in use by 2023.
Mobile
Continued demand for user-friendly telephones and tablets with full screens is driving the trend for mobile devices. The next development step is sensors that cover the full screen and can read a fingerprint wherever it is placed on the display. According to an analysis from IHS Market, optical and ultrasonic sensors for telephones in the higher price segment will increase and reach more than 100 million sensors during the year. As the average price of these sensors is much higher than for capacitive sensors, they will account for a significant share of the market value for fingerprint sensors. In overall terms, the value of the market for capacitive sensors is falling, as prices are dropping faster than volumes are rising.
NET SALES AND OPERATING PROFIT/LOSS IN THE THIRD QUARTER
Net sales in the third quarter increased by 63.6% and totalled 27.5 SEK (16.8) million. Net sales split between royalty revenues SEK 8.2 (5.7) million, license fees SEK 15.9 (8.0) million, support & maintenance SEK 2.0 (2.1) million and Other SEK 1.5 (1.0) million.
The gross margin for the quarter totalled 89.2% (84.3). The total amortization of capitalized development expenses was SEK 2.6 (2.1) million. Amortizations of intangible assets totalled SEK 0.2 (0.2) million.
Operating expenses for the quarter increased by SEK 6.8 million and totalled SEK 21.3 (14.5) million. The increased costs in R&D was related to increased investments in Digital Identity and Mobile. The higher turnover has led to increased cost for commission and foreign withholding tax. Lower staff costs are related to the completed reorganization.
The operating profit/loss for the quarter totalled SEK 3.3 (-0.4) million. Improvements of the result is primarily explained by a higher gross profit, SEK 10.4 million, partly offset by increased operating expenses of SEK 6.8 million. The operating profit/loss totalled SEK 3.2 (-0.7) million. Total depreciation/write-downs totalled SEK 3.3 (2.5) million. The profit/loss at EBITDA-level totalled SEK 6.6 (2.1) million. The improvements of the result are primarily attributed to the higher turnover. Earnings per share (average number of shares) for the third quarter totalled SEK 0,01 (0,00).
NET SALES AND OPERATING PROFIT/LOSS FOR THE INTERIM PERIOD
Net sales during the interim period totaled SEK 53.1 (53.7) million, split by royalty revenue SEK 11.2 (15.9) million, license fees SEK 29.8 (28.2) million, support & maintenance SEK 7.0 (7.3) and other SEK 5.1 (2.3) million.
The gross margin during the interim period totaled 82.5% (86.4). The total amortization of capitalized development expenses was SEK 7.4 (5.3) million. Amortization of acquired intangible assets totalled SEK 0.4 (0.4) million.
Operating expenses for the interim period increased by SEK 3.6 million and totalled SEK 55.7 (52.1) million. The increased costs in R&D was related to increased investments in Digital Identity and Mobile. The higher turnover has led to increased cost for commission and foreign withholding tax. Lower staff costs are related to the completed reorganization.
The operating profit/loss for the interim period totaled to SEK -11.9 (-5.7) million, primarily due to a decrease in net profit of SEK -2.6 million together with increased operating expenses of SEK 3.6 million. Earnings for the period totaled SEK -12.3 (-7.2) million. The operating profit/loss at EBITDA level totaled SEK -2.2 (0.6) million. Earnings per share (average number of shares) for the period totaled SEK -0.03 (-0.02).
NET FINANCIAL ITEMS AND TAX
Precise holds no interest-bearing debt besides debt for leasing. Financial net is primarily connected with leasing debt according to IFRS 16. Net financial items for the total operations during the second quarter totaled SEK -0.1 (-0.2) million and the tax expense totaled SEK -0.1 (-0.2) million.
Net financial items for the total operations for the interim period totaled SEK -0.1 (-0.8) million and the tax expense totaled SEK -0.4 (-0.8) million.
CASH FLOW AND INVESTMENTS
Cash flow from the company's total operating activities in the quarter totaled SEK -3.4 (-0.2) million. Costs related to the reorganization that was accounted for in the fourth quarter in 2018 impacted cash flow by SEK 0.1 million. During the interim period the Group has invested SEK 0 (0) million in tangible assets.
Cash flow from the company's total operating activities in the interim period totaled SEK -14.7 (-17.0) million. Adjusted for the costs related to the reorganization that was accounted for in the fourth quarter in 2018, the cash flow amounted to SEK -10.8 million. The costs related to the reorganization has reduced the cash flow by SEK 3.9 million. During the interim period the Group has invested SEK 0.2 (0.3) million in tangible assets.
CAPITALIZATION AND AMORTIZATION OF DEVELOPMENT WORK
During the third quarter, development expenses of SEK 1.0 (2.0) million were capitalized. Depreciation of capitalized development expenses totaled SEK 2.6 (4.4) million.
During the interim period, development expenses of SEK 4.1 (8.3) million were capitalized. Depreciation of capitalized development expenses totalled SEK 7.4 (4.4) million.
FINANCIAL POSITION AND LIQUIDITY
Cash and cash equivalents at the end of the interim period totaled SEK 60.9 (91.3) million.
Total equity at the end of the interim period totaled SEK 113.4 (139.4) million and equity per share was SEK 0.31 (0.39).
THE PARENT COMPANY
The parent company's net sales during the interim period amounted to SEK 52.1 (53.3) million. The operating profit/loss totaled SEK -6.2 (-6.9) million and was affected by amortizations of goodwill totaling SEK 1.8 (1.8) million.
Cash and cash equivalents at the end of the quarter totaled SEK 57.6 million (90.0) and total equity amounted to SEK 107.6 million (135.5).
ORGANIZATION AND STAFF
The organization consists of the head office in Lund, Sweden and offices in Potsdam, USA and Shanghai, China. At the end of the interim period the Group had a workforce of 42 (43) people, including on-site consultants. The number of employees were 22 (33), of which 15 (28) in Sweden. Precise works agile together with several partners, which entail a fast-moving, scalable, organization. The number of employees does not include partners.
REPORTING DATES
Year-end report 2019 February 14, 2020 Q1 Interim report 2020 May 15, 2020 Q2 Interim report 2020 August 18, 2020 Annual general meeting May 15, 2020
RISK FACTORS
The Group's and the parent company's business risks and risk management as well as the management of financial risks are described in detail in the Annual Report for 2018. The risk associated with the sale of the Mobile Smart Card Solutions business area is if expected commission revenues are not received, in which case there may be a write-down requirement. Otherwise there have been no events of significant importance during the year that would affect or change these descriptions of the Group's or the parent company's risks and how they are managed.
OWNERSHIP STRUCTURE
Precise Biometrics AB (publ), corporate ID number 556545-6596, is the parent company in the Precise Biometrics Group. Precise Biometrics AB's shares are listed on the Small Cap list of the Nasdaq OMX Nordic. The number of shareholders at the end of the full-year period was 21 288 (22 894). 131 218 553 shares were traded during the second quarter. The closing price on September 30 was SEK 1.73, and during the second quarter the share price fluctuated between SEK 1.24 and, SEK 1.92.
AUDIT
This interim report has been audited by the company's auditors.
The undersigned certifies that the interim report provides a true and fair view of the parent company's and the Group's operations, financial position and financial results, and describes the significant risks and uncertainty factors faced by the parent company and the companies that belong to the Group.
Lund, November 15 2019
Torgny Hellström,
Chairman of the Board
| Torbjörn Clementz, | Mats Lindoff, | Synnöve Trygg, | Åsa Schwarz, |
|---|---|---|---|
| Board member | Board member | Board member | Board member |
Stefan K Persson
CEO
For more information, please contact:
Stefan K. Persson, CEO Telefon: +46 707 92 08 31 E-mail: [email protected]
This information is information that Precise Biometrics AB is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication on 15 November 2019, 08:00 CET.
AUDITORS REVIEW REPORT
Precise Biometrics AB (publ), org.nr 556545-6596
To the Board of Precise Biometrics AB (publ)
Introduction
We have performed a general review of the summary of the financial interim report (interim report) for Precise Biometrics AB (publ) as of September 30, 2019 and the nine-month period that ended on that date. It is the responsibility of the Board and the CEO to prepare and present this interim report in accordance with IAS and the Swedish Annual Accounts Act. It is our responsibility to express a conclusion on this interim report on the basis of our general review.
The emphasis and scope of the general review
We have conducted our general review in accordance with the International Standard on Review Engagements ISRE 2410 General review of financial interim information conducted by the company's elected auditors. A general review consists of making inquiries, in the first instance of persons who are responsible for financial issues and accounting issues, to conduct an analytical review and to perform other general review measures. A general review has a different focus and is of a significantly smaller scope in comparison with the focus and scope of an audit in accordance with the International Standards on Auditing and otherwise generally accepted auditing standards. The review measures performed during a general review do not allow us to obtain a sufficient degree of certainty so as to be aware of all the important circumstances we would have identified if an audit were conducted. Therefore, the opinion we have expressed on the basis of a general review does not have the same degree of certainty as an opinion based on an audit.
Conclusion
On the basis of our general review we have not found any circumstances that have given us reason to believe that the interim report has not in all material respects been prepared in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the parent company in accordance with the Swedish Annual Accounts Act.
Malmö, November 15, 2019
Ernst & Young AB
Johan Thuresson
Authorized Public Accountant
CONSOLIDATED INCOME STATEMENT
| 2019 | 2018 | 2019 | 2018 | 2018 | Rullande | ||
|---|---|---|---|---|---|---|---|
| Amounts in SEK thousands | Note | Q3 | Q3 | Q1 - Q3 | Q1 - Q3 | Full year | 12 mån. |
| Net sales | 2 | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Cost of goods sold | -2 962 | -2 639 | -9 311 | -7 280 | -10 000 | -12 031 | |
| Gross profit | 24 559 | 14 178 | 43 800 | 46 417 | 57 645 | 55 028 | |
| Sales expenses | -8 068 | -6 005 | -18 944 | -21 121 | -27 664 | -25 487 | |
| Administrative expenses | -3 234 | -2 849 | -11 541 | -11 801 | -15 508 | -15 248 | |
| R&D expenses | -10 539 | -5 683 | -26 016 | -18 739 | -33 519 | -40 796 | |
| Other operating income/expenses | 541 | -8 | 818 | -453 | -911 | 360 | |
| -21 300 | -14 545 | -55 683 | -52 113 | -77 602 | -81 172 | ||
| Operating profit/loss | 3 259 | -367 | -11 883 | -5 696 | -19 958 | -26 145 | |
| Finacial income/expenses | 67 | -73 | -69 | -757 | -608 | 80 | |
| Profit/Loss before tax | 3 326 | -439 | -11 952 | -6 453 | -20 565 | -26 065 | |
| Tax | -127 | -229 | -379 | -767 | -1 622 | -1 234 | |
| Profit/Loss for the period | 3 199 | -668 | -12 331 | -7 220 | -22 187 | -27 298 | |
| Profit/Loss after tax from discontinued operations | -255 | 228 | -255 | 741 | 1 733 | 737 | |
| Profit/loss for the period attributable to parent | |||||||
| company shareholders | 2 944 | -440 | -12 586 | -6 479 | -20 454 | -26 561 | |
| Earnings per share, remaining operations, SEK - before dilution |
0,01 | 0,00 | -0,03 | -0,02 | -0,06 | -0,07 | |
| - after dilution | 0,01 | 0,00 | -0,03 | -0,02 | -0,06 | -0,07 | |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||||
| Profit/Loss for the period | 2 944 | -440 | -12 586 | -6 479 | -20 454 | -26 561 | |
| Other comprehensive income: | |||||||
| Items that may be reclassified to profit or loss | |||||||
| Changes in accumulated exchange rate | |||||||
| differences | 56 | -15 | 57 | 122 | 226 | 161 | |
| Other comprehensive income for the period | 56 | -15 | 57 | 122 | 226 | 161 | |
| Profit/Loss total | 3 000 | -455 | -12 529 | -6 358 | -20 228 | -26 399 |
CONSOLIDATED BALANCE SHEET
Amounts in SEK, thousands
| Assets | Note | 2019-09-30 | 2018-09-30 | 2018-12-31 |
|---|---|---|---|---|
| Assets | ||||
| Fixed assets | 3 | 8 848 | 964 | 918 |
| Immaterial assets | 44 113 | 47 660 | 47 955 | |
| Deferred tax | 4 834 | 5 339 | 5 213 | |
| Total fixed assets | 57 795 | 53 963 | 54 086 | |
| Current assets | ||||
| Accounts receivable | 4 | 26 548 | 14 799 | 19 667 |
| Other current receivables | 4 | 2 938 | 4 887 | 3 931 |
| Accruals and deferred income | 4 | 1 280 | 7 249 | 1 560 |
| Cash and cash equivalents | 4 | 60 908 | 91 309 | 79 543 |
| Total current assets | 91 674 | 118 244 | 104 701 | |
| TOTAL ASSETS | 149 469 | 172 207 | 158 787 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| EQUITY | 113 351 | 139 387 | 125 481 | |
| Total equity attributable to parent company shareholders |
113 351 | 139 387 | 125 481 | |
| Long-term liabilities | ||||
| Long-term liabilitieser | 6 873 | |||
| Total long-term liabilities | 6 873 | 0 | 0 | |
| Current liabilities | ||||
| Current liabilities | 4 | 29 245 | 32 820 | 33 306 |
| Total current liabilities | 29 245 | 32 820 | 33 306 | |
| TOTAL EQUITY AND LIABILITIES | 149 469 | 172 207 | 158 787 |
CONSOLIDATED CASH FLOW
| 2019 | 2018 | 2019 | 2018 | 2018 | Rullande | ||
|---|---|---|---|---|---|---|---|
| Amounts in SEK, thousands | Note | Q3 | Q3 | Q1 - Q3 | Q1 - Q3 | Full year | 12 mån |
| Cash flow from operating activities | 5 979 | 2 277 | -3 808 | 2 092 | -9 339 | -15 239 | |
| Cash flow from changes in working capital | -9 418 | -2 430 | -10 926 | -19 080 | -16 716 | -8 562 | |
| Cash flow from operating activities | -3 439 | -153 | -14 734 | -16 988 | -26 055 | -23 801 | |
| Cash flow from investment activities | -1 121 | -2 103 | -4 399 | -8 693 | -11 386 | -7 092 | |
| Cash flow from financing activities | -6 | 0 | 396 | -60 | -96 | 360 | |
| Cash flow for the period | -4 566 | -2 256 | -18 737 | -25 741 | -37 537 | -30 533 | |
| Cash and cash equivalents at the start of the period | 65 416 | 93 580 | 79 543 | 116 955 | 116 955 | 91 309 | |
| Translation difference in cash and cash equivalents | 58 | -15 | 102 | 95 | 125 | 132 | |
| Cash and cash equivalents at the end of the period * | 60 908 | 91 309 | 60 908 | 91 309 | 79 543 | 60 908 |
* The balance sheet item cash and cash equivalents contain only bank balances at the beginning of the period and at the end of the period.
CHANGES IN EQUITY
| Amounts in SEK, thousands | Note | 2019 | 2018 | 2018 | Rullande |
|---|---|---|---|---|---|
| Q1 - Q3 | Q1 - Q3 | Full year | 12 mån | ||
| Equity at start of period | 125 481 | 145 805 | 145 805 | 139 387 | |
| Profit/Loss | |||||
| Profit/Loss for the period | -12 586 | -6 479 | -20 454 | -26 561 | |
| Other comprehensive income | |||||
| Exchange differences | 60 | 122 | 226 | 165 | |
| Total other comprehensive income | 60 | 122 | 226 | 165 | |
| Total comprehensive income | -12 526 | -6 357 | -20 228 | -26 396 | |
| Transactions with share holders | |||||
| Share issue | 5 | 396 | -60 | -96 | 360 |
| Total transactions with shareholders | 396 | -60 | -96 | 360 | |
| Equity at end of period | 113 351 | 139 387 | 125 481 | 113 351 |
NOTE 1 – ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with IAS 34, Interim Reporting. The parent company's financial statements have been prepared in accordance with the Swedish Annual Accounts Act and the Swedish Annual Reporting Board's recommendation RFR2 Accounting for Legal Entities. The recognition and measurement policies as well as the bases of estimates applied in the Annual Report for 2018 have been used in this interim report. No new or revised IFRS's that has come into force in 2019 has had any effect on the company's financial reports, except IFRS 16.
IFRS 16 Leases
IFRS 16 came into force on January 1, 2019 and replaced IAS 17. The right-of-use assets shall be reported in the balance sheet as assets and the lease payments should be included as interest payments. The costs should be divided in interest expense on the lease liability and depreciation of the right-of-use asset. When accounting for a leasing agreement an average interest rate of 3 % is used based on information from external actor. The largest lease liability is a rental agreement for the business operation in Lund.
The company chose the simplified transition method, which means that the comparative figures (2018) will not be recalculated to correspond.
The Group applies the exceptions which entails that leasing contracts with a leasing period of maximum 12 months and leasing agreement where the value of the asset is low will be excluded from the calculation of the leasing debt. These costs are accounted for as linear in the income statement. Non-lease components have been included in the calculation of the leasing liabilities.
IFRS 16 is only applied at consolidated level.
| 2019 | 2018 | 2019 | 2018 | Full year | Rullande | |
|---|---|---|---|---|---|---|
| Amounts in SEK, thousands | Q3 | Q3 | Q1 - Q3 | Q1 - Q3 | 2018 | 12 mån. |
| Revenue type | ||||||
| Royalty | 8 220 | 5 725 | 11 198 | 15 893 | 18 020 | 13 325 |
| Licenses | 15 896 | 7 999 | 29 826 | 28 208 | 36 952 | 38 570 |
| Support & Maintenance | 1 953 | 2 091 | 7 014 | 7 262 | 9 544 | 9 296 |
| Other | 1 452 | 1 001 | 5 073 | 2 334 | 3 129 | 5 868 |
| Total | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Region/Country | ||||||
| Europé | 2 978 | 3 123 | 8 803 | 9 909 | 11 883 | 10 777 |
| - whereof Sweden | 1 348 | 2 426 | 3 724 | 5 061 | 6 115 | 4 778 |
| Asia | 20 391 | 9 895 | 32 332 | 32 760 | 40 820 | 40 392 |
| - whereof China | 707 | 1 739 | 4 958 | 10 128 | 13 202 | 8 032 |
| - whereof Taiwan | 17 423 | 2 409 | 23 042 | 8 095 | 9 993 | 24 940 |
| USA | 4 152 | 3 798 | 11 976 | 11 028 | 14 942 | 15 890 |
| Total | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Timing of revenue recognition | ||||||
| Services transferred over time | 17 849 | 10 090 | 36 840 | 35 740 | 46 496 | 47 866 |
| Services transferred at a certain time | 9 672 | 6 727 | 16 271 | 18 227 | 21 149 | 19 193 |
| Total | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
NOT 2 – REVENUE ALLOCATION
NOT 3 – Financial effects of the change to IFRS 16
As of January 1, 2019, the new accounting standard IFRS 'Leases' is applied, which means that assets and liabilities from leasing contracts will be accounted for in the balance sheet. Below, the effects from the transition to IFRS 16, the new leases standard in the balance sheet and income statement is presented.
INCOME STATEMENT IN SUMMARY, GROUP
| 2019 | 2019 | 2019 | |
|---|---|---|---|
| Amounts in SEK, thousands | Q1 - Q3 | Q1 - Q3 | Q1 - Q3 |
| Excl IFRS 16 | IFRS 16 | Acc. IFRS | |
| Net sales | 53 111 | 53 111 | |
| Cost of goods sold | -9 311 | -9 311 | |
| Gross profit | 43 800 | 43 800 | |
| Sales expenses | -18 970 | 26 | -18 944 |
| Administartive expenses | -11 549 | 8 | -11 541 |
| R&D expenses | -26 085 | 69 | -26 016 |
| Other operating income/expenses | 818 | 818 | |
| Operating profit/loss | -11 986 | 103 | -11 883 |
| Financial income/expenses | 161 | -230 | -69 |
| Earnings before tax | -11 825 | -127 | -11 952 |
| Tax | -379 | -379 | |
| Profit/Loss for the period | -12 204 | -127 | -12 331 |
| Profit/loss after tax from divested operations | -255 | -255 | |
| Profit/loss for the period, total operations | -12 459 | -127 | -12 586 |
| Profit/loss for the period, attributable to stake holders in the parent company | -12 459 | -127 | -12 586 |
BALANCE SHEET IN SUMMARY, GROUP
| Acc. | ||||||
|---|---|---|---|---|---|---|
| Amounts in SEK, thousands | IFRS | 2019-09-30 | IFRS 16 | 2019-09-30 | ||
| Asstes | CB 1812 | effekt | OB 1901 | Excl. IFRS 16 | effekt | Acc. IFRS |
| Assets | ||||||
| Fixed assets | 918 | 9 180 | 10 098 | 786 | 8 062 | 8 848 |
| Intangible assets | 47 955 | 47 955 | 44 113 | 44 113 | ||
| Deferred tax | 5 213 | 5 213 | 4 834 | 4 834 | ||
| Total fixed assets | 54 086 | 9 180 | 63 266 | 49 733 | 8 062 | 57 795 |
| Current assets | ||||||
| Accounts receivable | 19 667 | 19 667 | 26 548 | 26 548 | ||
| Other current receivable | 3 931 | 3 931 | 2 938 | 2 938 | ||
| Prepaid cost and accrued income | 1 560 | 1 560 | 1 280 | 1 280 | ||
| Cash and cash equivalents | 79 543 | 79 543 | 60 908 | 60 908 | ||
| Total current assets | 104 701 | 0 | 104 701 | 91 674 | 0 | 91 674 |
| TOTAL ASSETS | 158 787 | 9 180 | 167 967 | 141 407 | 8 062 | 149 469 |
| EQUITY AND LIABILITIES | ||||||
| Equity | ||||||
| Equity | 125 481 | 2 | 125 483 | 113 477 | -126 | 113 351 |
| Total equity | 125 481 | 2 | 125 483 | 113 477 | -126 | 113 351 |
| Total equity attributable to parent company shareholders | 125 481 | 0 | 125 481 | 113 477 | -126 | 113 351 |
| Long-term liabilities | ||||||
| Long-term liabilities | 0 | 7 768 | 7 768 | 0 | 6 873 | 6 873 |
| Total long-term liabilities | 0 | 7 768 | 7 768 | 0 | 6 873 | 6 873 |
| Current liabilities | ||||||
| Current liabilities | 33 306 | 1 410 | 34 715 | 27 931 | 1 314 | 29 245 |
| Total current liabilities | 33 306 | 1 410 | 34 715 | 27 931 | 1 314 | 29 245 |
| TOTAL EQUITY AND LIABILITIES | 158 787 | 9 180 | 167 967 | 141 407 | 8 062 | 149 469 |
NOT 4 - FINANCIAL INSTRUMENTS
| 2019-09-30 | 2018-09-30 | |||
|---|---|---|---|---|
| Bokfört värde | Bokfört värde | |||
| Financial assets | ||||
| Financial assets valued at the accrued cost of acquisition |
||||
| Accrued income | 26 548 | 19 897 | ||
| Accounts receivable | 2 937 | 7 037 | ||
| Other receivable | 60 908 | 91 309 | ||
| Cash and cash equivalents | 90 393 | 118 244 | ||
| Financial liabilities | ||||
| Financial liabilities at fair value via the income statement |
||||
| Derivates | 0 | 647 | ||
| Financial liabilities valued at the accrued cost of acquisition |
||||
| Accounts payable | 4 668 | 2 254 | ||
| Other liabilities | 505 | 2 915 | ||
| Other accrued expenses | 6 540 | 5 623 | ||
| Total | 11 713 | 11 439 |
Derivatives consist of forward currency contracts and are used for hedging purposes and are valued according to level 2. The fair value with respect to other financial assets and liabilities corresponds in all material respects with the carrying amount in the balance sheet.
NOT 5 OPTION PROGRAMS
At the annual general meeting in 2017, a decision was made to offer an incentive program for the company's employees to the effect that a maximum of five million (5,000,000) stock options could be issued, with each stock option providing entitlement to subscribe to one (1) share in the company. Subscription to the stock options was to take place no later than December 31, 2017. Subscription through the exercising of stock options may take place during the period June 1, 2020 until June 30, 2020. The subscription price for the options was set at SEK 0.06 and the subscription price for the shares at SEK 5.40. At the end of the first half of 2019, 1,230,000 options had been subscribed, corresponding to 25% of the total stock option; this was after options subscribed by employees, including former CEO, had been bought back. Assuming that all stock options are exercised to subscribe to new shares, the number of shares in the company will increase by 1,330,000 shares.
At the annual general meeting 2019, a decision was made to offer an incentive program for the company's CEO and CFO by way of issuing a maximum of 1,300,000 stock options, with each stock option providing entitlement to subscribe to one (1) share in the company. Subscription to the stock options was to take place no later than June 31, 2019, with the board having the right to extend the subscription period. Subscription through the exercising of the subscription warrants may take place during June 1, 2022 until June 30, 2022. The subscription price for the options is set at SEK 0.32 and the subscription price for the shares at SEK 1.65. At the end of the first half of 2019, 1,300,000 options had been subscribed, corresponding to 100% of the total stock option. Assuming that all stock options are exercised to subscribe to new shares, the number of shares in the company will increase by 1,300,000 shares.
Dilution is considered in cases where earnings per share deteriorate. Dilution has been considered as the average share price during the interim period was above the price of the incentive program decided 2019.
INCOME STATEMENT, PARENT COMPANY
| 2019 | 2018 | 2019 | 2018 | 2018 Full |
Rullande | |
|---|---|---|---|---|---|---|
| Amounts in SEK thousand Not |
Q3 | Q3 | Q1-Q3 | Q1-Q3 | year | 12 mån. |
| Net sales | 27 247 | 16 460 | 52 084 | 53 320 | 66 940 | 65 704 |
| Cost of goods sold | -5 053 | -3 265 | -15 179 | -9 013 | -12 372 | -18 538 |
| Gross profit | 22 194 | 13 194 | 36 905 | 44 307 | 54 568 | 47 166 |
| Marketing and sales expenses | -7 453 | -6 015 | -17 172 | -21 071 | -27 593 | -23 694 |
| Administrative expenses | -3 218 | -2 852 | -11 511 | -11 893 | -15 592 | -15 210 |
| R&D expenses | -9 713 | -5 217 | -23 658 | -18 475 | -32 850 | -38 033 |
| Other operating income/expenses | 247 | -2 331 | 563 | 232 | 659 | 990 |
| -20 137 | -16 415 | -51 778 | -51 207 | -75 376 | -75 947 | |
| Operating profit/loss | 2 057 | -3 220 | -14 873 | -6 899 | -20 808 | -28 782 |
| Financial income/expenses | 148 | 320 | 162 | -364 | -6 | 520 |
| Profit/loss before tax | 2 205 | -2 900 | -14 711 | -7 264 | -20 808 | -28 255 |
| Tax | 0 | -144 | 0 | -420 | -420 | 0 |
| Profit/loss for the period* | 2 205 | -3 044 | -14 711 | -7 684 | -21 228 | -28 255 |
*Result for the period is equivalent of total result for the period
BALANCE SHEET, PAENT COMÅANY
Amounts in SEK thousand
| ASSETS Note |
2019-09-30 | 2018-09-30 | 2018-12-31 |
|---|---|---|---|
| Fixed assets | |||
| Fixed assets | 472 | 675 | 647 |
| Intangible assets | 38 652 | 44 650 | 44 332 |
| Financial assets | 7 958 | 7 538 | 8 949 |
| Total fixed assets | 47 082 | 52 862 | 53 928 |
| Current assets | |||
| Accounts receivable | 26 190 | 14 637 | 19 276 |
| Other current receivables | 2 938 | 5 621 | 3 931 |
| Prepaid costs and accrued income | 1 143 | 6 908 | 1 488 |
| Cash and cash equivalents | 57 572 | 89 994 | 78 016 |
| Total current assets | 87 843 | 117 160 | 102 712 |
| TOTAL ASSETS | 134 925 | 170 022 | 156 640 |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Equity | 107 598 | 135 499 | 121 913 |
| Total equity | 107 598 | 135 499 | 121 913 |
| Long-term liabilities | |||
| Long-term liabilities | 0 | 103 | |
| Total long-term liabilities | 0 | 103 | 0 |
| Current liabilities | |||
| Current liabilities | 27 327 | 34 420 | 34 727 |
| Total current liabilities | 27 327 | 34 420 | 34 727 |
| TOTAL EQUITY AND LIABILITIES | 134 925 | 170 022 | 156 640 |
CONSOLIDATED KEY FIGURES
| 2019 | 2018 | 2019 | 2018 | 2018 | Rullande | |
|---|---|---|---|---|---|---|
| Amounts in SEK thousand unless otherwise stated | Q3 | Q3 | Q1 - Q3 | Q1 - Q3 | Full year | 12 mån |
| Net sales | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Net sales growth, % | 63,6% | 66,8% | -1,1% | 14,6% | 10,8% | -1,2% |
| Gross margin, % | 89,2% | 84,3% | 82,5% | 86,4% | 85,2% | 82,1% |
| Operating profit/loss | 3 259 | -367 | -11 883 | -5 696 | -19 958 | -26 145 |
| Operating profit/loss, total operations | 3 004 | -139 | -12 138 | -4 956 | -18 225 | -25 407 |
| Working capital, total operations | 62 429 | 85 424 | 62 429 | 85 424 | 71 395 | 62 429 |
| Capital employed, total operations | 120 224 | 139 387 | 120 224 | 139 387 | 125 481 | 120 224 |
| Liquidity ratio, total operations, % | 313% | 360% | 313% | 360% | 314% | 313% |
| Equity/assets ratio, total operations, % | 75,8% | 80,9% | 75,8% | 80,9% | 79,0% | 75,8% |
| Return on equity, total operations, % | 2,5% | neg | neg | neg | neg | Neg |
| Earnings per share before dilution, SEK | 0,01 | 0,00 | -0,03 | -0,02 | -0,06 | -0,08 |
| Earnings per share before dilution, total operations, SEK |
0,01 | 0,00 | -0,03 | -0,02 | -0,06 | -0,07 |
| Earnings per share after dilution, SEK | 0,01 | 0,00 | -0,03 | -0,02 | -0,06 | -0,08 |
| Earnings per share after dilution, total operations, SEK | 0,01 | 0,00 | -0,03 | -0,02 | -0,06 | -0,07 |
| Equity per share, total operations, SEK | 0,31 | 0,39 | 0,31 | 0,39 | 0,35 | 0,31 |
| Number of shares (thousands) | 360 231 | 360 231 | 360 231 | 360 231 | 360 231 | 360 231 |
| Weighted average number of shares, adjusted for dilution effect (thousands) |
361 531 | 360 231 | 360 664 | 360 231 | 360 231 | 360 556 |
| Number of employees at the end of the period | 22 | 33 | 22 | 33 | 27 | 22 |
| Average number of employees during the period | 22 | 33 | 23 | 34 | 32 | 25 |
RECONCILIATION OF ALTERNATIVE KEY INDICATORS
| 2019 | 2018 | 2019 | 2018 | 2018 | Rullande | |
|---|---|---|---|---|---|---|
| Amounts in SEK thousand unless otherwise stated | Q3 | Q3 | Q1 - Q3 | Q1 - Q3 | Full year | 12 mån. |
| Net sales | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Net sales growth, % | 63,6% | 66,8% | -1,1% | 14,6% | 10,8% | -1,2% |
| Gross profit | 24 559 | 14 178 | 43 800 | 46 417 | 57 645 | 55 028 |
| Net sales | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Gross margin, % | 89,2% | 84,3% | 82,5% | 86,4% | 85,2% | 82,1% |
| Operating profit/loss | 3 259 | -367 | -11 883 | -5 696 | -19 958 | -26 145 |
| Net sales | 27 521 | 16 817 | 53 111 | 53 697 | 67 645 | 67 059 |
| Operating margin, % | 11,8% | -2,2% | -22,4% | -10,6% | -29,5% | -39,0% |
| Operating profit/loss remaining operations | 3 259 | -367 | -11 883 | -5 696 | -19 958 | -26 145 |
| Operating profit/loss discontinued operations | -255 | 228 | -255 | 740 | 1 733 | 737 |
| Rörelseresultat total verksamhet | 3 004 | -139 | -12 139 | -4 956 | -18 225 | -25 408 |
| EBITDA | 6 587 | 2 108 | -2 206 | 629 | -11 189 | -14 024 |
| Depreciation and amortization | -3 328 | -2 475 | -9 677 | -5 393 | -7 837 | -12 121 |
| Write-downs | 0 | 0 | 0 | -932 | -932 | 0 |
| Operating profit/loss remaining operations | 3 259 | -367 | -11 883 | -5 696 | -19 958 | -26 145 |
| EBITDA | 6 332 | 2 336 | -2 462 | 1 369 | -9 456 | -13 287 |
| Depreciation and amortization | -3 328 | -2 475 | -9 677 | -5 393 | -7 837 | -12 121 |
| Write-downs | 0 | 0 | 0 | -932 | -932 | 0 |
| Operating profit/loss total operations | 3 004 | -139 | -12 138 | -4 956 | -18 225 | -25 407 |
| Sales expenses | -8 068 | -6 005 | -18 944 | -21 121 | -27 664 | -25 487 |
| Administrative expenses | -3 234 | -2 849 | -11 541 | -11 801 | -15 508 | -15 248 |
| R&D expenses | -10 539 | -5 683 | -26 016 | -18 739 | -33 519 | -40 796 |
| Other operating income/expenses | 541 | -8 | 818 | -453 | -911 | 360 |
| Total operating expenses | -21 300 | -14 545 | -55 683 | -52 113 | -77 602 | -81 171 |
| Balance sheet total, total operations | 149 469 | 172 207 | 149 469 | 172 207 | 158 787 | 149 469 |
| Non-interest-bearing liabilities, total operations | 29 245 | 32 820 | 29 245 | 32 820 | 33 306 | 29 245 |
| Capital employed, total operations | 120 224 | 139 387 | 120 224 | 139 387 | 125 481 | 120 224 |
| Closing equity, total operations | 113 351 | 139 387 | 113 351 | 139 387 | 125 481 | 113 351 |
| Average equity, total operations | 116 694 | 142 116 | 116 694 | 142 116 | 137 034 | 116 694 |
| Current assets minus inventories | 91 674 | 118 244 | 91 674 | 118 244 | 104 701 | 91 674 |
| Current liabilities | 29 245 | 32 820 | 29 245 | 32 820 | 33 306 | 29 245 |
| Liquidity ratio, total operations | 313% | 360% | 313% | 360% | 314% | 313% |
| Equity | 113 351 | 139 387 | 113 351 | 139 387 | 125 481 | 113 351 |
| Total assets | 149 469 | 172 207 | 149 469 | 172 207 | 158 787 | 149 469 |
| Equity/assets ratio, total operations | 75,8% | 80,9% | 75,8% | 80,9% | 79,0% | 75,8% |
| Profit/loss after tax | 2 944 | -440 | -12 586 | -6 479 | -20 454 | -26 561 |
| Average equity, total operations | 116 694 | 142 116 | 116 694 | 142 116 | 137 034 | 116 694 |
| Return on equity, total operations | 2,5% | Neg | Neg | Neg | Neg | Neg |
FINANCIAL GLOSSARY
NET SALES GROWTH
Percentage change compared with the corresponding period in the previous year. A key figure on how the company's sales are growing.
GROSS MARGIN
Gross profit/loss divided by net sales. Shows how large share of sales that remains to cover salaries, operating costs, interests and profits.
OPERATING PROFIT/LOSS
Profit/loss before financial net and tax. A key figure on how the company's profit before interests and taxes, i.e. the difference between revenue and operating costs. Divestment operations are not included in total operations.
OPERATING PROFIT/LOSS, TOTAL OPERATION
Operating profit/loss plus profit/loss after tax from discontinued operation. A key figure on the company's profits before interest and taxes, i.e. the difference between revenues and operating costs. Divested operations are part of the total operation.
OPERATING EXPENSES
Operating expenses excluding cost of goods sold. Operating expenses are costs that is not connected directly to a specific good or group of goods. Normal operating expenses are for example, salaries and other personnel costs and rentals costs.
EBITDA
Profit/loss before financial net and depreciation. This key figure shows the Group's profit/loss before depreciation/amortization of capitalized assets. The figure enables comparisons with other companies independent of the operation based on acquisitions or via organic growth.
OPERATING MARGIN
Operating profit/loss divided by net sales. Specifies how large share of each crown that remains to cover interest, tax and provide a potential profit.
CASH FLOW, TOTAL OPERATION
Cash flow from operating activities after changes in working capital. The operating cash flow indicates if a company is generating enough positive cash flow to maintain and develop its operations, or if extern financing is necessary.
WORKING CAPITAL, TOTAL OPERATION
Current assets minus current liabilities. This key figure t shows the capital a company needs to finance the operating activities.
CAPITAL EMPLOYMENT, TOTAL OPERATION
Total assets less non-interest-bearing liabilities and provisions. The key figure shows how much capital that is used in the operations and with that the one component to measure return from the operations.
EQUITY, TOTAL OPERATION
Equity at the end of the period. Equity is the difference between assets and liabilities, which corresponds to the company's equity capital contributed by owners and the Group's accumulated results.
AVARAGE EQUITY, TOTAL OPERATION
Calculated as equity for the last four quarters divided by four.
LIQUIDITY RATIO, TOTAL OPERATION
Current assets excluding inventories divided by current liabilities. This key figure shows the Group's ability to pay in the short term.
EQUITY/ASSETS RATIO, TOTAL OPERATION
Equity divided by total assets on the balance sheet date. This key figure shows what proportion of assets is funded by equity. This measure can be of interest when assessing the Group's ability to pay in the long term.
RETURN ON EQUITY, TOTAL OPERATION
Profit/loss after tax divided by average equity. This key figure shows the operation's return on shareholders' capital invested and is thus a measure of how profitable the Group is. Investors can compare this measure with the current bank interest rate or return from alternative investments. The measure can also be used to compare profitability between companies in the same industry.
EARINGS PER SHARE, REMAINING OPERATION, BEFORE DILUTION
Profit/loss for the period from remaining operation divided by average number of shares.
EARNINGS PER SHARE, REMAINING OPERATION, AFTER DILUTION
Profit/loss for the period from remaining operation divided by weighted average number of shares.
EARNING PER SHARE, TOTAL OPERATION, BEFORE DILUTION
Profit/loss for the period from total operation divided by average number of shares.
EARNINGS PER SHARE, TOTAL OPERATION, AFTER DILUTION
Profit/loss for the period from total operation divided by weighted average number of shares.
EQUITY PER SHARE, TOTAL OPERATION
Equity on the balance sheet date divided by the number of shares on the balance sheet date.