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Fingerprint Cards AB (Publ) Interim report January-September 2015 1

Fingerprint Cards AB (Publ.)

Interim report January to September 2015

Third quarter, 2015:

Revenues amounted to SEK 964.0 M (66.2), an increase of 1,358% compared with the third quarter of 2014

Gross margin was 45% (32).

Operating profit amounted to SEK 346.1 M (neg: 43.9).

Earnings per share increased to SEK 5.58 (neg: 0.76).

Order backlog at the end of the period was SEK 1,788.0 M (50.0).

Cash flow from operating activities was SEK 299.8 M (neg: 40.6).

January to September 2015

Revenues amounted to SEK 1,549 M (128.6), an increase of 1,105 % compared with the third quarter of 2014

Gross margin was 40% (30).

Operating profit amounted to SEK 393 M (neg: 115)

Earnings per share increased to SEK 6.36 (neg: 2.02).

Cash flow from operating activities was SEK 370.5 M (neg: 99.5)

Outlook

Revenues for the fourth quarter of 2015 are expected to be SEK 1,200-1,300 M, corresponding to a year-on-year

growth between 1,043-1,138 %.

The revenue guidance for 2015 is thus specified at SEK 2,750-2,850 M compared to more than SEK 2,500 M, which

was communicated earlier. This corresponds to an annual growth between 1,075-1,118% compared with full-year

2014.


CEO'S COMMENTS

Strong market imprint resulted in record quarter I am proud to report another strong quarter for Fingerprint Cards (FPC). Our revenues have continued to grow strongly

and for the second consecutive quarter, we have recorded an operating profit. Revenues of SEK 964.0 million

correspond to sequential growth of 117%, which demonstrates strong growth in the market and that we have assumed

a leading position.

Our primary market, touch fingerprint sensors for smartphones, is expanding rapidly. The rising number of smartphone

launches that include FPC’s sensors implies continued substantial growth in the delivery of sensors and related revenue

increase. During the third quarter, 26 smartphone models were launched with FPC’s touch fingerprint sensors by 14

manufacturers. To date, 20 smartphone manufacturers have launched smartphones with touch fingerprint sensors from

FPC. During the period, a tablet solution with a touch fingerprint sensor from FPC was also launched on the market.

Gross margin improved from 36% in the second quarter to 45% in the third quarter. This improvement is attributable to

a changed product mix. The positive earnings trend is also reflected in our cash flow from operating activities, which

corresponded to 87% of our operating profit in the third quarter. The third quarter and the period up to the interim

report was characterized by a strong order inflow from FPC’s module partners and, at the end of the quarter, the order

backlog amounted to SEK 1,788.0 million.

At the end of September, Google launched the market’s first two smartphones with Android 6.0, the new release of the

Android operating system, which has built-in support for fingerprint sensors. Our FPC1025 touch fingerprint sensor has

been integrated into Nexus 5X and Nexus 6P manufactured by LG and Huawei respectively, thereby highlighting FPC’s

market-leading position. The launch of Android 6.0 and its built-in support for fingerprint sensors is expected to

contribute to a continued rapidly expanding penetration of fingerprint sensors in smartphones.

FPC’s new touch fingerprint sensors FPC1140/FPC1145 and FPC1022/FPC1035 are now integrated into smartphones

that are being launched by globally leading smartphone manufacturers. As a complete systems supplier, our technology

comprises both sensor hardware and proprietary algorithms. The former generates the market’s best image quality,

which our algorithms capitalize on to be able to provide the market’s smallest sensors. This unique combination enables

us to offer market-leading biometric performance with retained security and makes our new sensors highly

competitive, which is strengthening our position entering into 2016.

During the third quarter, we launched the new FPC OneTouch® FPC1200 product series, our first offering in which FPC’s

touch fingerprint sensors can be installed under a sheet of glass or ceramics. This makes it possible to change the

appearance of the sensor and allows for new industrial designs. The first touch fingerprint sensors of the FPC1200 series

are now ready for mass production and are planned to be integrated into smartphones for market launch in the next

few months.

In cooperation with our suppliers, we have strengthened our delivery capacity and this is a strong contributory factor to

the increasing revenues in the second half of the year. We are well prepared to further strengthen the company’s

delivery capacity in 2016 in view of the growing demand for the company’s products.

In addition to the growing touch fingerprint sensor business for smartphones, we are continuing to develop our offering

for smart cards and to adapt the sensors for the special requirements arising from integration into future card solutions.

Developments are proceeding to plan and our sensors can now be made so thin that they allow for integration into

smart cards. This market is still in its infancy, but we expect the first commercial deliveries of touch fingerprint sensors

for smart cards to occur during 2016. We are now accelerating our investments to further drive the penetration of

fingerprint sensors in smart cards and we have a competitive advantage in our knowhow of how the manufacturing cost

of touch fingerprint sensors in smartphones can be reduced. We deem that our technology leadership in touch

fingerprint sensors for smartphones gives us a head start as this new market is created. Our ambition is to establish the

same leadership in this segment as we have in smartphones.

I am confident about the future, which is expected to be characterized by successive growth in deliveries and a large

number of further product launches in which FPC’s touch fingerprint sensors are included.

Jörgen Lantto, CEO


Outlook Revenues for the fourth quarter of 2015 are expected to be approximately SEK 1,200-1,300 M, corresponding to a year-

on-year growth between 1,043-1,138%. The revenue guidance for 2015 is thus specified at SEK 2,750-2,850 M

compared to more than SEK 2,500 M, which was communicated earlier. The reason for this is the growing market

interest in integrating touch fingerprint sensors and the company’s strong product portfolio.

Due to the continued increase in gross profit, operating profit in the fourth quarter is expected to further improve

compared with the third quarter.

Revenue guidance for 2016 will be announced in December.

Changed information disclosure Due to the rapid development in the market and the challenge of being able to provide precise revenue guidance, the

company intends to only provide full-year guidance as of the 2015 Year-end Report and to no longer announce revenue

guidance for the following quarters. As of the 2015 Year-end Report, the company will also no longer provide a closing

order backlog at the end of the quarter. In addition, as a result of the frequent launches of smartphones incorporating

FPC’s touch fingerprint sensors, the company will now only announce smartphone launches of particular significance.

Significant events in the third quarter of 2015

26 smartphone models with FPC’s touch fingerprint sensor were announced by the following manufacturers: Dazen,

ZTE, OnePlus, Huawei, ZUK, QiKu, HTC, Sony, Gigaset, Nextbit, ivvi, Meizu, Google, Blu

FPC launches touch fingerprint sensors under glass

The exercise of warrants in the period up to and including September increased the number of Class B shares by

3,553,000 to 60,774,135.

Market and sales FPC’s primary market, touch fingerprint sensors for smartphones, continued to grow at a rapid pace.

To date, Blu, Coolpad, Dazen, Gigaset, Gionee, Google, HTC, Huawei, Ivvi, LeTV, LG, Meizu, Newman, Nextbit, OnePlus,

Oppo, QiKu, Sony, ZTE and ZUK have launched smartphones with FPC’s touch fingerprint sensors. FPC’s touch

fingerprint sensor has now also been launched in a Windows-based tablet solution.

Revenues in the third quarter of 2015 amounted to SEK 964.0 M. Compared with the year-earlier period, revenues

increased 1,358%, and 117% compared with the second quarter of 2015.

In the preceding period, a number of mobile manufacturers launched smartphones, mostly in China, but also in South

Korea, Japan and the U.S., featuring our FPC1025, FPC1150, FPC1155, FPC1145 and FPC1035 touch fingerprint sensors.

As announced earlier, the smartphone manufacturers are now more rapidly integrating touch fingerprint sensor in

broader product segments than we previously expected, largely driven by the introduction of secure payment services

where the fingerprint sensor is a critical component. We also see that many manufacturers are deciding to introduce

fingerprint sensors not only in a specific model, but also across their portfolios, which means increased volumes and

revenues.

We have also increased our focus on the smart card segment, where we are involved in the initial phase of several

commercial projects with planned launch in 2016. Our ability to deliver small and very thin sensors with leading

biometric performance and very low power consumption also puts us in an excellent position in this potentially

extensive market for biometric smart cards.

At September 30, 2015, the order backlog was SEK 1,788.0 M.

Technological development, customer projects, sourcing and production The strong product portfolio with market-leading performance regardless of the touch fingerprint sensor’s position on

the back, front or as a side button on the smartphones has been a contributing factor to the strong position that the

company has captured in the market in 2015. All of the touch fingerprint sensors launched during the first half of 2015

are now integrated in smartphones launched commercially in the market.


The product development of new sensors during the period thus focused on the completion of touch fingerprint

sensors with retained biometric performance that can be mounted under a sheet of glass or ceramics, the FPC

OneTouch® FPC1200 series. These new touch fingerprint sensors make it possible to change the sensor’s appearance

and allow for new industrial design of the smartphones. The first touch fingerprint sensors of the FPC1200 series are

now in mass production and smartphones that integrate FPC1200 sensors are planned for launch in the next few

months.

Google’s launch of Nexus 6P and Nexus 5X, in which the FPC1025 is integrated, is the result of comprehensive work by

FPC’s development organization and is an example of FPC’s leading position in the industry. Nexus 6P and Nexus 5X are

the first smartphones that integrate Android 6.0, which contains built-in support for fingerprint verification. Android 6.0

makes it possible for Android apps to use the fingerprint sensor to verify the user and also contains Android Pay, a

secure payment service, in which the fingerprint sensor makes the payment service secure and easy to use.

During the period, FPC’s sourcing and supply organization – together with suppliers and partners – continued their

capacity expansion for our touch fingerprint sensors. Production capacity is established at a stable level and work is

now continuing on creating flexibility and scalability for additional volume increases.

During the third quarter the number of customer projects and the number of models launched continued to grow. The

company’s technical personnel conduct integration work at the smartphone manufacturers’ laboratories on a daily

basis, which is a strong reason for the growing involvement with customers. Thanks to the launch of the two Nexus

models, the company has established a lead in the rollout of new smartphone models based on Android 6.0. FPC also

sees a strong interest in updating smartphone models already launched to Android 6.0, which includes Android Pay, and

the company is well prepared to assist customers with this. During the quarter, the company’s first FIDO-based

products were launched in addition to earlier support for Alipay, which remains the largest payment solution in China.

FPC is now working to provide a combined solution with Android 6.0 and FIDO, an integration being conducted in

collaboration with leading smartphone manufacturers.

Revenues and earnings Consolidated revenues for the third quarter increased to SEK 964.0 M (66.2) and for the full interim period to SEK

1,549.0 M (128.6). For the third quarter, gross profit increased to SEK 430.7 M (21.2), with the gross margin amounting

to 45% (32). The corresponding values for the full reporting period amounted to SEK 627.0 M (37.9) and 40% (30).

Operating expenses for the quarter rose to SEK 96.1 M (74.1). The increased operating expenses for the quarter are

primarily due to the expansion of the business and a growing organization. Operating expenses for the third quarter

were somewhat lower compared with the second quarter of 2015, despite a larger organization. This is mainly due to

the effect of vacation taken and lower negative exchange effects.

Profit after financial items for the third quarter amounted to SEK 345.9 M (neg: 43.3) and SEK 392.5 M (neg: 114.3) for

the full reporting period. The order backlog at the end of the period was SEK 1,788 M (50.0).

The Parent Company’s revenue amounted to SEK 964.0 M (66.1) for the third quarter of 2015, and profit after financial

items was SEK 344.6 M (neg: 44.2) for the same period. The corresponding values for the entire reporting period

amounted to SEK 1,548.7 M (126.8) and SEK 388.4 M (neg: 116.8), respectively.


Financial position At September 30, 2015, the Group’s disposable cash and cash equivalents totaled SEK 498.7 M (192.1).

Consolidated working capital at the same date amounted to SEK 664.1 M (244.1).

Consolidated shareholders’ equity rose to SEK 731.5 M (307.1) and at period-end, the equity/assets ratio for the Group

was 64% (79).

The Parent Company’s disposable cash and cash equivalents at period-end totaled SEK 485.4 M (185.7).

Cash flow Cash flow from operations, including changes in working capital, was SEK 299.8 M (neg: 40.6) in the third quarter and

SEK 370.4 M (neg: 99.5) in the full interim period. The increased revenues and efficient handling of working capital

resulted in a positive effect on cash flow and growth of disposable cash and cash equivalents. Cash flow from

investments was a negative SEK 3.6 M (neg: 4.8) in the third quarter and a negative SEK 10.0 M (neg: 51.6) in the full

interim period. Cash flow from financing activities amounted to SEK 36.3 M (neg: 0.1) in the third quarter and SEK 36.3

M (131.5) for the full reporting period. Combined, the net change in cash and cash equivalents amounted to SEK 332.6

M (neg. 45.5) for the third quarter, and SEK 396.7 M (neg: 19.6) for the full reporting period.

Investments, fixed assets and depreciation/amortization Investments in intangible fixed assets amounted to a negative SEK 1.6 M (neg: 2.3) for the third quarter and to a

negative SEK 4.6 M (neg: 44.9) for the full reporting period in 2015. Investments in tangible fixed assets amounted to a

negative SEK 1.9 M (neg: 2.5) during the third quarter and SEK 5.5 (neg: 6.7) for the full interim period.

Depreciation/amortization according to plan, including impairment, amounted to a negative SEK 9.8 M (neg: 22.7) for

the third quarter and to a negative SEK 31.2 M (neg: 48.1) for the full reporting period. The lower level of capitalization

of development expenditure continued, with the largest portion of the development expenditure being expensed

directly in the profit and loss statement.

Accumulated tax loss carryforwards, which amounted to SEK 399.7 M in the Parent Company at the beginning of the

year, were capitalized in the balance sheet during the quarter. These loss carryforwards were offset during the quarter

against a current tax expense on the accumulated profit from January to September 2015, with a small amount

remaining for use thereafter.

Organization and Personnel The number of employees at September 30, 2015 was 131 (94), including 105 (78) men and 26 (16) women. In addition

to full-time employees, consultants primarily in technical development, customer projects and sales and marketing

were used during the third quarter corresponding to the equivalent of 92 (58) full-time positions, including 77 (52) men

and 15 (6) women. Accordingly, including employees and consultants, FPC had 223 (152) employees at September 30,

2015, including 182 (130) men and 41 (22) women.

Share capital trend The exercise of warrants in the TO4 incentive program occurred in September 2015, upon which the registered share

capital increased by SEK 710,600, amounting to SEK 12,394,827 at September 30, 2015.

The number of shares rose by 3,553,000 Class B shares, whereby the number of Class B shares subsequently amounted

to 60,774,135 and the number of Class A shares remained unchanged at 1,200,000, bringing the total number of shares

to 61,974,135.

The total number of votes is 72,774,135. The exercise price for the share was SEK 9.72, which means that SEK

34,535,160 was contributed to the company. The TO4 program was approved by an Extraordinary General Meeting on

September 5, 2012.

Related-party transactions There were no transactions between FPC and related parties that had any material impact on the Group or Parent

Company’s position and earnings during the reporting period.


Seasonal variations To date, sales have not shown any distinct seasonal variations.

Significant risks and uncertainties – Group and Parent Company FPC is exposed to risks. Each of the risks below, other risks and the uncertainties named could, if they occur, have a

material negative impact on the company’s operations, earnings, financial position or future outlook, or result in a

decline in the value of the company’s shares, which could result in investors losing all or parts of their invested capital.

The described risks and uncertainties are not ranked in any order of significance; nor are they claimed to be the only

risks or uncertainties to which the company is exposed. Additional risks and uncertainties that the company is currently

unaware of or that are currently not adjudged to be material could develop into factors that could in the future have a

material negative impact on the company’s operations, earnings, financial position or future outlook. The following

description does not claim to be complete or exact, since risks and their degree of impact vary over time:

Corporate risks: Financing, Rights, Development, Competencies

Market risks: Political risk, Taxation, Currency-exchange risk, Macroeconomic conditions

Operational risks: Production, Environment, Sales

Credit risks: Counterparty

Share risk: Dividend, Owner, Share price

For further information concerning the risks facing the Group, see the 2014 Annual Report, which is available on our

website www.fingerprints.com

Notable events after the reporting period

Smartphone models containing FPC’s touch fingerprint sensors were announced by the following manufacturers;

Huawei, LG, Coolpad, Meizu, HTC

FPC announces preliminary income for the third quarter

The exercise of warrants in October increased the number of Class B shares by 1,265,000 to 62,039,135

Future reporting dates and Annual General Meeting Interim Report Q4 2015 October-December: February 4, 2016

Interim Report Q1 2016 January-March: April 28, 2016

Interim Report Q2 2016 April-June: July 22, 2016

The company also announces that the Annual General Meeting 2016 will be held on May 4, 2016.

For further information, contact: Jörgen Lantto, CEO, Fingerprint Cards AB (publ),

+46 (0)31-60 78 20, [email protected]

Internet: www.fingerprints.com/corporate/

Welcome to Fingerprint Cards’ Q3 Financial Report Webcast on Thursday, November 5, at 10:00 a.m.

Participants can enter using this link and register:

https://engage.vevent.com/index.jsp?eid=3483&seid=46

https://engage.vevent.com/index.jsp?eid=3483&seid=46


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). This information was issued for publication on November 5,

2015 at 8:00 a.m. CET

Important information Issuance, publication or distribution of this press release in certain jurisdictions could be subject to restrictions. Recipients of this press

release are responsible for using this press release and the information herein in accordance with applicable rules in each jurisdiction.

This press release does not constitute an offer, or invitation to acquire or subscribe for new securities in Fingerprint Cards in any

jurisdiction.

Certification The Board of Directors and the CEO certify that this interim report provides a fair and accurate review of the operations,

financial position and earnings of the Parent Company and the Group and that it describes the significant risks and

uncertainties facing the Parent Company and the companies included in the Group.

Gothenburg, November 4, 2015

Urban Fagerstedt, Chairman Katarina Bonde Lars Söderfjell

Carl-Johan von Plomgren Jan Wäreby Alexander Kotsinas

Jörgen Lantto, CEO


Auditors’ review report

Introduction

We have reviewed the summary of the interim financial information of Fingerprint Cards AB (publ), as per September 30, 2015 and the nine-month period that ended on that date. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express an opinion on this interim report based on our review.

Scope and focus of the review

We conducted our review in accordance with the Swedish Standard on Review Engagements (ISRE) 2410, Review of Interim Reports Performed by the company’s elected auditors. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially smaller in scope than an audit conducted in accordance with the Standards on Auditing in Sweden (ISA) and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain such assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, a conclusion expressed on the basis of a review does not provide the same level of assurance as a conclusion expressed on the basis of an audit.

Opinion

Based on our review, nothing has come to our attention that causes us to believe that the interim report has not been

prepared on the Group’s behalf, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts

Act and, on the Parent Company’s behalf, the Swedish Annual Accounts Act.

Gothenburg, November 4, 2015

KPMG AB Johan Kratz Authorized Public Accountant


Condensed consolidated statement of comprehensive income

Jul–Sep Jul–Sep Jan-Sep Jan-Sep Jan–Dec

(SEK M) 2015 2014 2015 2014 2014

Revenue 964.0 66.2 1 549.0 128.6 233.6

Cost of goods sold -533.3 -45,0 -922.0 -90.7 -161.9

Gross profit 430.7 21.2 627.0 37.9 71.7

Selling costs -27.0 -14.5 -71.8 -38.9 -54.4

Administrative costs -13.3 -7.6 -37.7 -20.3 -28.9

Development costs -43.1 -45.1 -128.3 -97.5 -140.2

Other operating income/expenses -1.2 2.0 3.5 3.3 6.6

Operating profit/loss 346.1 -43.9 392.8 -115.5 -145.2

Net financial items -0.2 0.5 -0.3 1.1 1.7

Tax 1.5 - 1.5 - -0.5

Profit/loss for the period 347.4 -43.3 394.0 -114.4 -144,0

Other comprehensive income 0 - 0 - 0

Total comprehensive income/loss for the period 347.4 -43.3 394.0 -114.4 -144,0

Profit/loss for the period attributable to:

Parent Company shareholders 347.4 -43.3 394.0 -114.4 -144,0

Profit/loss for the period 347.4 -43.3 394.0 -114.4 -144,0

Total comprehensive income/loss for the period attributable to:

Parent Company shareholders 347.4 -43.3 394.0 -114.4 -144,0

Total comprehensive income/loss for the period 347.4 -43.3 394.0 -114.4 -144,0

Earnings/loss per share for the period:

Before dilution, SEK 5.58 -0.76 6.36 -2.02 -2.47

After dilution, SEK 5.39 -0.76 6.19 -2.02 -2.47

Condensed consolidated statement of financial position (SEK M) Sep 30, Sep 30, Dec 31,

2015 2014 2014

Assets 2015 2014 2014

Intangible fixed assets 47.3 54.1 69.8

Tangible fixed assets 20.1 9.0 18.8

Total fixed assets 67.4 63.1 88.6

Inventories 95.0 58.0 98.8

Accounts receivable 448.7 61.3 115.8

Other receivables 28.3 13.3 15.9

Prepaid expenses and accrued income 5.8 2.9 3.7

Cash and cash equivalents 498.7 192.1 101.9

Total current assets 1,076.5 327.6 336.1

Total assets 1,143.9 390.9 424.7

Shareholders’ equity and liabilities

Shareholders’ equity 731.5 307.1 301.1

Non-current liabilities 0.0 0.2 0.2

Accounts payable 351.7 58.0 66.1

Other liabilities 5.0 3.6 35.7


Total shareholders’ equity and liabilities 1,143.9 390.9 424.7

Pledged assets 15 15 15

Contingent liabilities None None None


Condensed consolidated statement of changes in shareholders’ equity (SEK M)

Jan-Sep 2015

Jan-Sep 2014

Jan-Dec 2014 2015 2014 2014

Opening shareholders’ equity 301.1 289.7 289.7

Total comprehensive income/loss for the period 394.0 -114.3 -144.0

Other comprehensive income 0.0 0.0 0.1

Exercise of warrants 36.4 - -

New share issue - 131.6 155.3

Closing shareholders’ equity 731.5 307.1 301.1

Condensed consolidated cash-flow statement Jul–Sep Jul–Sep Jan-Sep Jan-Sep Jan–Dec

(SEK M) 2015 2014 2015 2014 2014

Profit/loss before tax for the period 347.5 -43.3 393.9 -114.3 -144.0

Adjustment for non-cash items 9.8 22.7 31.2 48.1 61.7

Change in inventory 8.5 -31.6 3.8 -38.1 -78.9

Change in current receivables -212.9 -21.3 -347.5 -36.4 -94.1

Change in current liabilities 147.0 32.9 289.0 41.2 81.0

Cash flow from operating activities 299,8 -40.6 370.5 -99.5 -174.3

Cash flow from investing activities -3.6 -4.8 -10.0 -51.6 -90.6

Cash flow from financing activities 36.4 -0.1 36.3 131.5 155.1

Change in cash and cash equivalents 332.6 -45.5 396.8 -19.6 -109.8

Cash and cash equivalents on the opening date 166.1 237.6 101.9 211.7 211.7

Closing cash and cash equivalents 498.7 192.1 498.7 192.1 101.9

Key consolidated data


2015 2014 2015 2014 2014

Revenue (SEK M) 964.0 66.1 1,549.0 128.6 233.6

Revenue increase (%) 1,358 52 1,105 110 145

Adjusted gross margin (%) 46 46 43 47 46

Gross margin (%) 45 32 40 30 31

Operating margin (%) 36 -66 25 -90 -62

Profit margin (%) 36 -65 25 -89 -62

EBITDA (SEK M) 355.9 -21.1 424.0 -67.2 -83.6

Return on equity (%) 64 -13 76 38 -49

Cash flow from operating activities incl. changes in working capit(SEK M)

299,8 -40.6 370.5 -99.5 -174.3

Order backlog (SEK M) 1,788 50 1,788 50 71

Equity/assets ratio (%) 64 79 64 79 71

Investments (SEK M) -3.6 -4.8 -10.0 -51.6 -90.6

Average number of employees 121 89 112 73 71

Shareholders’ equity per share (SEK) 11.80 5.42 11.80 5.42 5.15

Shareholders’ equity per share after dilution, SEK(1) 11.42 5.02 11.42 5.02 4.86

Cash flow from operating activities/share (SEK) 4.84 -0.72 5.98 -1.76 -2.98

Cash flow from operating activities/share after dilution (SEK) (1) 4.71 -0.66 5.82 -1.63 -2.81

Number of shares at period end (000s) 61,974 56,661 61,974 56,661 58,421

Average number of shares (000s) 61,773 56,661 61,798 56,487 57,514

Average number of shares after dilution (000s)(1) 64,132 61,139 63,697 61,106 62,061

Market price of FPC Class B share (SEK) at end of period 309.00 36.50 309.00 36.50 34.80

1) At the end of the year, FPC had three warrant programs: TO4: The program is from 2012 and extends until October 6, 2015. The exercise price is SEK 9.72. The program was considered in calculating the number of shares after conversion. On full subscription, the program would result in a maximum of 4,818,000 new Class B shares. At September 30, 2015, 1,265,000 warrants from TO4 remain to be exercised. TO5: The program is from 2013 and extends until March 5, 2016. The exercise price is SEK 52.35. The program was considered in calculating the number of shares after conversion. On full subscription, the program would result in a maximum of 1,300,000 new Class B shares. The program is from 2013 and extends until December 27, 2016. The exercise price is SEK 90.16. The program has been taken into account when calculating the number of shares after conversion. On full subscription, the program would result in a maximum of 500,000 new Class B shares. Average number of shares after dilution: The average number of shares during the period and the maximum number of shares that could arise from exercise of warrants. If the average share price is lower than the exercise price, there is no discounted share price and thus no dilution, since the discount is what constitutes dilution.


The Group’s operating segments

Sensors Other Group

Jan-Sep Jan-Sep Jan-Sep Jan-Sep Jan-Sep Jan-Sep

(SEK M) 2015 2014 2015 2014 2015 2014

Revenues 1,549.0 128.6 - - 1,549.0 128.6

Segment earnings 392.8 -115.5 - - 392.8 -115.5

Net financial items -0.2 1.1 - - -0,2 1.1

Profit/loss for the period 394.0 -114.4 - - 394.0 -114.4

Consolidated statement of income and comprehensive income for the past nine quarters

(SEK M) Jul–Sep Apr-Jun Jan–Mar Oct–Dec Jul–Sep Apr-Jun Jan–Mar Oct–Dec Jul–Sep

2015 2015 2015 2014 2014 2014 2014 2013 2013

Revenues 964.0 445.2 139.9 105 66.2 44.0 18.4 34.1 31.6

Cost of goods sold -533.3 -286.2 -102.5 -71.3 -45,0 -30.9 -14.8 -19.1 -16.1

Gross profit 430.7 159.0 37.4 33.7 21.2 13.1 3.6 15 15.5

Selling costs -27.0 -25.5 -19.2 -15.7 -14.5 -12.8 -11.5 -11.6 -6.3

Administrative costs -13.3 -15.9 -8.5 -8.6 -7.6 -6.8 -5.8 -5.1 -4.0

Development costs -43.1 -43.3 -41.8 -42.6 -45.1 -40 -12.5 -13.1 -6.4

Other operating income/expenses -1.2 -8.8 13.4 3.2 2.0 1.5 -0.2 -0.1 -0.5

Operating profit/loss 346.1 65.4 -18.7 -30.0 -43.9 -45 -26.4 -14.9 -1.7

Net financial items -0.2 0.0 0.0 0.7 0.5 -0.1 0.6 0.4 0.4

Tax 1.5 - - -0.5 - - - - -

Profit/loss for the period 347.4 65.4 -18.7 -29.9 -43.3 -45.1 -25.8 -14.5 -1.3

Other comprehensive income 0 0 0 0 0 0 0 0 -

Total comprehensive income/loss for the period

347.4 65.4 -18.7 -29.9 -43.3 -45.1 -25.8 -14.5 -1.3

Consolidated statement of financial position for the past nine quarters Sep 30, June 30, Mar 31, Dec 31, Sep 30, June 30, Mar 31, Dec 31, Sep 30

2015 2015 2015 2014 2014 2014 2014 2013 2013

SEK/USD exchange rate, balance sheet date

8.39

8.23 8.62 7.81 7.24 6.74 6.51 6.50 6.43

Assets

Intangible fixed assets 47.4 54 60.3 69.8 54.1 72.8 62.4 54.3 47.3

Tangible fixed assets 20.1 19.6 18.4 18.8 9.0 8.3 7.4 5.4 4.2

Total fixed assets 67.5 73.6 78.7 88.6 63.1 81.1 69.8 59.7 51.5

Inventories 95.0 103.5 95.2 98.8 58 26.5 16.1 19.9 9.7

Accounts receivable 448.7 245.5 169.2 115.8 61.3 41.8 20.3 31.1 14.8

Tangible fixed assets 28.3 18.5 11.6 15.9 13.3 12.0 8.4 7.6 5.9

Prepaid expenses and accrued income

5.8 6.0 4.9 3.7 2.9 2.5 1.2 2.4 1.9

Cash and cash equivalents 498.6 166 120.9 101.9 192.1 237.6 306.5 211.7 142.3

Total current assets 1,076.4 539.5 401.8 336.1 327.6 320.4 352.5 272.7 174.6

Total assets 1,143.9 613.1 480.7 424.6 390.9 401.4 422.3 332.5 226.1


Shareholders’ equity 731.5 347.6 282.2 301.1 307.1 350.4 395.6 289.7 189.7

Non-current liabilities 0.0 0.1 0.1 0.2 0.2 0.3 0.4 0.4 0.5

Accounts payable 351.7 227.7 53.9 66.1 58 25.6 6.9 25.7 25.8

Other liabilities 5.0 5.6 113 35.7 3.6 3.8 1.6 1.5 0.9

Accrued exp. and def. income. Int. 55.7 32.1 31.5 21.5 22 21.3 17.8 15.2 9.3

Total shareholders’ equity and liabilities

1,143.9 613.1 480.7 424.6 390.9 401.4 422.3 332.5 226.1


Consolidated cash-flow statement for the past nine quarters Jul–Sep Apr-Jun Jan–

Mar Oct–Dec Jul–Sep Apr-Jun Jan–

Mar Oct–Dec Jul–Sep

(SEK M) 2015 2015 2015 2014 2014 2014 2014 2013 2013

Profit/loss before tax for the period 347.5 65.4 -18.9 -29.7 -43.3 -44.9 -26.0 -14.7 -1.3

Adjustments for non-cash items 9.8 9.5 12.0 13.6 22.7 21.2 4.2 3.7 3.0

Change in inventory 8.5 -8.3 3.5 -40.7 -31.6 -10.4 3.8 -10.1 -3.0

Change in current receivables -212.9 -84.1 -50.4 -57.7 -21.3 -26.3 11.2 -16.3 -11.4

Change in current liabilities 147.0 67.0 75.0 39.8 32.9 24.3 -15.9 6.4 21.8

Cash flow from operating activities 299.8 49.5 21.2 -74.8 -40.6 -36.1 -22.7 -31.1 9.1

Cash flow from investing activities -3.6 -4.3 -2.1 -39.0 -4.8 -32.5 -14.3 -11.9 -15.0

Cash flow from financing activities 36.4 -0.1 -0.1 23.6 -0.1 -0.3 131.8 112.4 -0.1

Change in cash and cash equivalents 332.6 45.1 19.0 -90.2 -45.5 -68.9 94.8 69.4 -6.0

Cash and cash equivalents on the opening date

166.1 120.9 101.9 192.1 237.6 306.5 211.7 142.3 148.2

Closing cash and cash equivalents 498.7 166.0 120.9 101,9 192.1 237.6 306.5 211.7 142.2

Key consolidated figures for the past nine quarters Jul–Sep Apr-Jun Jan-Mar Oct-Dec Jul–Sep Apr-Jun Jan-Mar Oct-Dec Jul–Sep

(SEK M) 2015 2015 2015 2014 2014 2014 2014 2013 2013

Revenues (SEK M) 964.0 445.2 139.9 105.0 66.1 44.0 18.4 34.1 31.6

Revenues increase (%) 1,358 912 660 208 52 114 102 1,795 554

Adjusted gross margin (%) 46 38 36 44 46 47 50 56 57

Gross margin (%) 45 36 27 32 32 30 39 44 49

Operating margin (%) 36 15 -13 -28 -66 -102 -145 -44 -5

Profit margin (%) 36 15 -13 -28 -65 -102 -142 -43 -4

EBITDA (SEK M) 355.9 74.9 -6.8 -16 -21.1 -24.1 -22.4 -11.3 1.3

Return on equity (%) 64 21 -6 -10 -13 -12 -6 -3 1

Cash flow from operating activities (SEK M)

299,8 49.5 19.0 -74.8 -40.6 -36.0 -22.7 -31.1 11.5

Order backlog (SEK M) 1,788 1,335 364 71 50 63 41 22 38

Equity/assets ratio (%) 64 57 59 71 79 87 94 87 84

Investments (SEK M) -3.6 -4.0 -2.1 -39.0 -4.8 -33.0 -14.3 -11.9 -15.0

Average number of employees 121 110 104 99 91 70 55 26 24

Shareholders’ equity per share (SEK) 11.80 5.95 4.83 5.15 5.42 6.18 6.98 5.19 3.67

Shareholders’ equity per share after dilution (SEK) (1)

11.42 5.53 4.57 4.86 5.02 5.69 6.41 5.20 3.46

Cash flow from operating activities per share (SEK)

4.84 0.85 0.33 -1.28 -0.72 -0.64 -0.40 -0.08 0.22

Cash flow from operating activities per share, after dilution (SEK)

4.71 0.79 0.32 -1.21 -0.66 -0.59 -0.37 -0.08 0.21

Number of shares at period end (000s)

61,974 58,421 58,421 58,421 56,661 56,661 56,661 54,161 51,661

Average number of shares (000s) 61,773 58,421 58,421 57,754 56,661 56,661 55,102 52,066 51,661

Average number of shares after dilution (000s) (1)

64,132 62,829 61,719 62,941 61,139 61,624 59,788 56,659 56,587

Market price of FPC Class B share (SEK)

309.00 178.50 53.50 34.80 36.50 49.50 54.00 54.25 52.50

1) At the end of the 2014, FPC had three warrant programs, see page 10

Rolling 12-month key figures for the Group for the past nine quarters Oct–Sep Jul-Jun Apr-Mar Jan–Dec Oct–Sep Jul-Jun Apr-Mar Jan–Dec Oct–Sep

2014/15 2014/15 2014/15 2014 2013/14 2013/14 2013/14 2013 2012/13

Revenues, rolling 12 months (SEK M) (SEK M)

1,654.1 756.2 355.1 233.6 162.7 128.2 104.6 95.4 63.2

Gross profit, rolling 12 months (SEK M)

660.7 251.3 105.5 71.7 53.0 47.1 42.6 39.1 22.8

Gross margin, rolling 12 months (%) 40.0 33.0 30.0 31.0 33.0 37.0 41.0 41.0 36.0

Operating profit/loss, rolling 12 months (SEK M)

362.9 -27.1 -137.5 -145.2 -130.5 -88.2 -48.6 -34.0 -28.7

Operating margin, rolling 12 mths (%) 22.0 -4.0 -39.0 -62.0 -80.0 -69.0 -46.0 -36.0 -45.0

EBITDA, rolling 12 months (SEK M) 407.7 30.6 -68.0 -83.6 -78.6 -56.1 -35.2 -21.4 -20.6


Disclosures on the consolidated fair value of financial instruments

SEK M Sept. 30, 2015 Sept. 30, 2014

Level Level

1 2 3 Total 1 2 3 Total

Current financial receivables Financial assets at fair value via profit or loss - - - - - - - -

Cash and cash equivalents

Financial assets at fair value via profit or loss 391.2 - - 391.2 26.1 - - 26.1

Total financial assets 391.2 391.2 26.1 - - 26.1

Current financial liabilities

Financial liabilities at fair value via profit or loss - - - - - - - -

Total financial liabilities - - - - - - - -

Qualitative fair value data for financial instruments

Financial instruments exist solely in category 1; there have been no transfers between categories. The company does not apply

a portfolio approach.

Fair value and carrying amount of financial liabilities and assets SEK M Sept. 30, 2015 Sept. 30, 2014

Carrying amount

Fair value

Carrying amount

Fair value

Financial assets

Current financial assets:

Financial assets at fair value via profit or loss - - - -

Loan receivables and accounts receivable

Accounts receivable 448.7 448.7 61.3 61.3

Cash and cash equivalents 498.7 498.7 192.1 192.1

Total financial assets 947.4 947.4 253.4 253.4

Financial liabilities

Current financial liabilities:

Accounts payable 351.7 351.7 58.0 58.0

Total financial liabilities 351.7 351.7 58.0 58.0

By category

Financial assets at fair value via profit or loss - -

Loan receivables and accounts receivable 947.4 947.4 253.4 253.4

Total financial assets 947.4 947.4 253.4 253.4

Financial liabilities at amortized cost 351.7 351.7 58.0 58.0

Total financial liabilities 351.7 351.7 58.0 58.0


Condensed income statement, Parent Company


(SEK M) 2015 2014 2015 2014 2014

Revenue 964.0 66.1 1 548.7 128.6 231.9

Cost of goods sold -533.3 -45.1 -922.0 -90.6 -161.9

Gross profit 430.7 21.0 626.8 36.2 70.0

Selling costs -27.5 -14.5 -72.4 -38.8 -54.4

Administrative costs -13.2 -7.6 -37.8 -20.3 -28.0

Development costs -44.1 -45.3 -131.5 -83.3 -127.1

Other operating income/expenses -1.2 2.0 3.5 3.3 6.6

Operating profit/loss 344.8 -44.3 388.7 -102.9 -133.0

Earnings shares in subsidiaries - -0.2 - -15.5 -15.5

Net financial items -0.2 0.3 -0.3 1.6 1.8

Tax +2.1 - 2.1 - -

Profit/loss for the period 346.7 -44.2 390.5 -116.8 -146.7

Condensed balance sheet, Parent Company

(SEK M) Sep 30, Sep 30, Dec 31,

Assets 2015 2014 2014

Intangible fixed assets 44.2 49.0 65.1

Tangible fixed assets 18.0 7.5 16.4

Financial fixed assets 1.8 9.2 1.8

Total fixed assets 64.0 65.7 83.3

Inventories 95.0 58.0 98.8

Accounts receivable 448.7 61.3 115.5

Current receivables 37.1 22.1 24.5


Cash and bank deposits 485.4 185.7 93.0

Total current assets 1,070.4 330.1 335.0

Total assets 1,134.4 395.9 418.4


Restricted shareholders’ equity 53.8 52.8 53.1

Unrestricted shareholders’ equity 668.5 251.2 244.6

Total shareholders’ equity 722.3 304.0 297.8

Current liabilities 412.1 91.8 120.6

Total shareholders’ equity and liabilities 1,134.4 395.9 418.4

Pledged assets 15.0 15.0 15.0

Contingent liabilities None None None

Accounting policies This condensed interim report for the Group was prepared in accordance with IAS 34 Interim Financial Reporting, and

applying the provisions in the Annual Accounts Act. The interim report for the Parent Company was prepared in

accordance with the Annual Accounts Act, Chapter 9, Interim reports. The application of these accounting policies

complies with those presented in the Annual Report for the fiscal year ending December 31, 2014 and must be read

together with Annual Report.

No new or revised IFRS that have become effective in 2015 have had any significant impact on the Group.


About Fingerprint Cards Fingerprint Cards AB (FPC) develops, produces and markets biometric components that through the analysis and matching of an

individual’s unique fingerprint verify the person’s identity.

The technology consists of biometric sensors, processors, algorithms and modules that can be used separately or combined with

others. The competitive advantages offered by FPC’s technology include unique image quality, extreme robustness, low power

consumption and complete biometric systems. With these advantages and the ability to achieve extremely low manufacturing

costs, the technology can be implemented in volume products, such as smart cards and mobile phones, where extremely rigorous

demands are placed on these characteristics. FPC’s technology can also be used in IT and Internet products for security and access

control, etc.

Vision

FPC aims to be the leading supplier of components and systems for fingerprint verification. “Beyond keys and pin codes – FPC

makes life easy to live through secure identification.”

Business concept

FPC develops and sells leading biometric products and solutions to companies that develop security and comfort systems.

Business models

FPC works with three business models – component sales, project sales and licensing. Sales are conducted via distributors and

direct selling to product developers/systems integrators and OEMs (Original Equipment Manufacturers).

Glossary available at http://www.fingerprints.com/corporate/en/about-fpc/glossary/

Definitions

Gross profit Income less cost of goods sold.

EBIT Earnings Before Interest and Taxes. Operating profit/loss before interest and taxes.

EBITDA Earnings Before Interest Taxes Depreciation and Amortization. Operating profit before interest rates, taxes,

depreciation/amortization and impairment losses.

Shareholders’ equity per share Shareholders’ equity attributable to the Parent Company’s shareholders divided by the number of

shares outstanding, before dilution, at period-end.

Shareholders’ equity per share after dilution See “Shareholders’ equity per share” plus adjustment for the number of shares and

the paid exercise price resulting from current remuneration and personnel programs.

Average number of shares The Parent Company’s average weighted number of shares for the fiscal year.

Average number of shares after dilution See “Average number of shares” plus an increase by the average number of shares that

could be issued as a result of current remuneration and personnel programs.

Earnings per share after dilution See “Earnings per share” plus adjustment for the number of shares and the paid exercise price

resulting from current remuneration and personnel programs. Earnings per share after dilution can never be better than earnings

per share before dilution.

Working capital Current assets less current non-interest-bearing provisions and liabilities.

Equity/assets ratio Shareholders’ equity divided by total assets.

Inventory turnover rate Cost of goods sold divided by average inventories.

Adjusted gross profit Revenues less cost of goods sold excluding production expenses and amortization according to plan of

capitalized development expenditure, meaning that only the cost of materials with subcontracted work and freight costs are

included in the costs component.

Cost of goods sold Cost for materials, production expenses and amortization according to plan of capitalized development

expenditure.

Gross margin Gross profit as a percentage of net sales.

Adjusted gross margin Adjusted gross profit as a percentage of net sales.

Operating margin Operating profit/loss as a percentage of revenues.

Net margin Profit/loss for the period as a percentage of net sales.

http://www.fingerprints.com/corporate/en/about-fpc/glossary/

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