Best quarter and year in terms of sales - now's the time to accelerate

CEO's comments
In terms of sales, the fourth quarter of 2013 was the best quarter to date in the history of Fingerprint Cards (FPC), with sales of SEK 34 M. During the quarter, fingerprint sensor technology entered the mass market, driven largely by the launch of Apple's iPhone 5s with Touch-ID, and it became apparent that the biometric industry was again becoming the subject of major focus. FPC accounted for by far the largest number of all Design Wins (DWs) for future Smartphone and Tablet products. It is with pride that I am able to confirm that FPC was chosen in 2013 as a supplier in 21 of 22 launched mobile devices with integrated fingerprint scanners. For FPC, the fourth quarter of 2013 also meant that we launched our FPC 1020 capacitive touch sensor, which received considerable attention from customers and the industry. Our product portfolio offers sensors for all types of applications and users, which will position us well in a market with growing demand for fingerprint sensors. During the quarter, we also announced that we had secured an initial DW for the 1020 for a flagship model from one of the world's five largest manufacturers of smartphones, as well as an order for the same 1020 totaling SEK 11 M from China, which is clear confirmation that our most recent product offering has got off to a flying start.

Our opinion of the market remains very positive, with several external analytical firms now are in line with our market forecasts. A global survey conducted by Ericsson Consumer Labs, based on interviews with 100,000 consumers from 40 countries, confirms our opinion that future growth will be very strong. Based on consumer responses, Ericsson believes that Fingerprint recognition will be one of the ten most popular consumer trends for 2014 and the following years. We view this trend, combined with the trend showing that sales of smartphones now exceed sales of "feature phones" globally, as a very strong driver to use the fingerprint sensor as the start key and for authentication of secure mobile transactions.

During the fourth quarter of 2013, a number of key programs of cooperation between FPC and partners were announced. Together with Nok Nok Labs, we introduced a broad infrastructure solution for secure online user verification based on smartphones and tablets with integrated fingerprint sensors. This solution is the first result of our joint activities to support the FIDO Alliance and our objective is to assist the FIDO Alliance in achieving its goal of transforming the way we currently verify our online identity, and also to help FPC customers to easily become a part of this eco system. In connection with the launch of the 1020 Touch fingerprint sensor, we announced that we are now partnering with Microsoft, and we see a very large market opening thanks to Microsoft's efforts to integrate biometrics and, in particular, fingerprint sensors into Windows 8.1 and in units that are currently, and will be in the future, based on future Windows.

In December 2013 and January this year, two private placements of 5,000,000 Class B shares were implemented, generating a capital contribution totaling slightly more than SEK 258 M before issue costs. What we see now is that the company is well capitalized and that we will continue with the expansion we initiated to meet the demand for our products and to build the capacity that being a global supplier necessitates. During the quarter, we opened a new office in Malmö with recruitments in development, customer support and sales, thus adding valuable and experienced expertise from the mobile industry to the company. Meanwhile, we are continuing to recruit resources for our head office in Gothenburg and will expand in customer support, as well as in sales globally, particularly in markets where we have major customers and where we know that success requires close relationships.
As a result of the successes we recorded in 2013, especially during the very strong fourth quarter, NASDAQ OMX announced in December that FPC will be traded on the Mid Cap list as of January 2014. It is with great optimism that FPC now enters 2014.

Key figures Oct-Dec 2013 Oct-Dec 2012 Jan-Dec 2013 Jan-Dec 2012
Sales, SEK M 34.1      1.9      95.4      10.3     
Gross profit, SEK M 14.9      -1.5      39.1      -5.7     
Gross margin % 44      -77      41      -55     
Operating profit, SEK M -15.1      -9.8      -34.0      -38.7     
EBITDA, SEK M -11.3      -7.0      -21.4      -27.4     
EBITDA, % -12      -368      -22      -266     
Profit after financial items,  SEK M -14.8      -9.7      -33.1      -38.1     
Earnings per share -0.27      -0.22      -0.60      -0.89     
Dec 31, 2013 Dec 31, 2012
Cash and cash equivalents, SEK M 211.7      60.6     
Order backlog, SEK M 22.8      19.7     

Future prospects
FPC remains of the opinion that sales in 2014 will exceed SEK 500 M and that the full-year EBITDA margin will exceed 20%. Sales are expected to increase sequentially during the year. Most of the income is expected to occur during the second half of 2014 since volume deliveries of area sensors are scheduled for the end of the second quarter. This entails that the previously issued forecasts are repeated.

Revenue for the first quarter of 2014 is anticipated to total SEK 10-15 M. The low level is due in part to FPC's customarily weak first quarter and in part to the shift in the OEMs' demand from swipe sensors to area sensors, resulting in relatively low volumes until volume deliveries of the area sensors have commenced.

FPC believes that most of the 15 largest manufacturers of smartphones will introduce models featuring fingerprint sensors in 2014. As a result of the ongoing transition from swipe sensors to area sensors, the market volumes are difficult to assess. According to FPC, the market for fingerprint sensors in consumer electronics will exceed 350 million units in 2014 and be followed by continued strong growth. Compared with earlier market forecasts, this entails a lower sales volume, but at a significantly higher average sales price. FPC's aim to capture 60% of the market for area sensors in smartphones stands firm.

For further information, contact: Johan Carlström, President and CEO, Fingerprint Cards AB (publ), +46 31-60 78 20, investrel@fingerprints.com
Website: www.fingerprints.com/corporate/

Fingerprint Cards AB (publ), Corp. Reg. No. 556154-2381, discloses this information pursuant to the Swedish Securities Market Act (2007:528) and the Swedish Financial Instruments Trading Act (1991:980). The information was issued for publication on February 6, 2014, at 8:00 a.m. (CET)

Key information
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