YEAR-END REPORT FOR THE PERIOD JANUARY TO DECEMBER 2018
 FOURTH QUARTER 

• Net sales for the remaining operation totaled SEK 13.9 (14.2) million.
• The operating profit/loss for the remaining operation totaled SEK -14.3 (-5.3) million. 
• The profit/loss for the remaining operation totaled SEK -15 (-12.0) million. 
• Earnings per share for the remaining operation totaled SEK -0.04 (-0.03). 
• Earnings per share for the total operation totaled SEK -0.04 (-0.03).
• Cash flow from total operating activities totaled SEK -9.1 (3.1) million.

• Net sales for the remaining operation totaled SEK 67.6 (61.0) million.
• The operating profit/loss for the remaining operation totaled SEK -20.0 (-13.9) million. 
• The profit/loss for the period for the remaining operation totaled SEK -22.2 (-22.7) million. 
• Earnings per share for the remaining operation totaled SEK -0.06 (-0.06). 
• Earnings per share for the total operation totaled SEK -0.06 (-0.05).
• Cash flow from total operating activities totaled SEK -26.1 (22.8) million.
• Cash and cash equivalents were SEK 79.5 (117.0) million at the end of the period.

• A revised strategy was presented and the company started to develop solutions to secure digital identity.

• A planned reorganization of the business was initiated with the aim of improving customer service and enabling growth in new areas.

• A new office was established in Shanghai.

As a result of the Mobile Smart Card Solutions business area having been disposed of as of January 1, 2018, previously reported figures have been restated in order to improve comparability. The business area was reported as a business held for sale starting in the interim report for the second quarter of 2017. In order to obtain comparable historical data, previously reported figures have only been adjusted for the expenses relating directly to the discontinued business area, which will no longer affect the company's remaining operation. The discontinued operation's impact on the financial position has not been reported separately, as the company does not consider it possible to report the discontinued operation's impact on cash flow. Cash flow is instead reported for the total operation.
Unless otherwise specified, reported figures in the year-end report relate to the remaining operation. 

KEY INDICATORS 

Amounts in SEK thousand 2018  2017  2018  2017 
unless otherwise stated 
   Q4  Q4  Full year  Full year 
Net sales   13,948  14,181  67,645  61,039 
Net sales growth, %  -1.6%  -31.8%  10.8%  -26.7% 
Gross margin, %  80.5%  91.7%  85.2%  93.3% 
Operating profit/loss  -14,261  -5,279  -19,958  -13,936 
Operating margin, %  -102.2%  -37.2%  -29.5%  -22.8% 
Cash flow from operating  -9,067  3,093  -26,055  22,788 
activities 
Cash and cash 79,543  116,955  79,543  116,955 
equivalents, total
operation 

PRESENTATION OF THE YEAR-END REPORT
In connection with today's year-end report, we issue an invitation to an information event today at 10:00 AM. Please see the last page of the year-end report for further information about participation.
THE CEO'S COMMENTS 
During the year we have initiated a journey towards moving Precise Biometrics to a position in which we will come closer to the end customer. Precise Biometrics has for a long time been active primarily in the mobile market, where the customer was a long way from the end customer and there was a high degree of volatility. Since we announced the company's updated strategy on October 12, we have made a lot of progress in developing our new product, Precise YOUNiQ, which secures digital identity by combining different kinds of biometrics, such as face, fingerprint, iris and voice together with geodata.  

The product simplifies people's everyday lives in a revolutionary way by means of simple onboarding, smooth and secure authentication and unique personalization of digital services. Precise YOUNiQ takes us higher up the value chain, closer to the end customer.

Precise Biometrics currently operates its business in three main business areas: digital identity, smart cards and mobile devices, and it is also engaged in initiatives such as cars and door locks.

During the first half of 2019, pilot tests will be initiated in the field of digital identity, which will involve conducting tests together with customers up to and including the summer, before moving into a commercial phase during the second half of 2019. We do not, however, expect this to generate any significant revenue this year, but the focus during the year will be on preparing the product ahead of next year. 

Contactless payments are currently permitted only for amounts up to SEK 200 without verification; for higher amounts a PIN code is required for security reasons. The introduction of contactless payment cards with fingerprint sensors will increase the security of contactless payments and enable bigger purchases without a PIN code, improving convenience and security for both end user and card issuer.  

In the field of smart cards we have a number of strong partnerships, including NXP and other partners and sensor suppliers, together we supply a product that both improves convenience for the user while at the same time being the most secure solution for biometric payment cards. We are expecting modest initial volumes in the field of smart cards during the second half of 2019, with volumes increasing during 2020 and 2021. 

The mobile devices business area will account for the biggest proportion of revenue in 2019. The journey towards having the fingerprint sensor over the entire display is continuing, and the first phone with this technology will probably be launched during the second half of 2019. This means that the user can be verified regardless of where the finger is placed on the display, which enhances the experience and the security of the phone. 

We continue to have strong collaboration within the mobile area with actors such as Qualcomm and a number of sensor partners in China and Korea.

During the quarter a subsidiary of Xiaomi in China released an electronic door lock for domestic use with a fingerprint sensor that uses our algorithm. The launch had a big impact in the media in China, indicating the interest in new biometric solutions for consumers. 

The reorganization of the business that was initiated during the quarter continues, and a new office with a handful of employees has been established in Shanghai. The office in Karlstad is closing in the middle of the first quarter, which means that work is proceeding ahead of plan. A total one-off cost of SEK 5.4 million was incurred in 2018 for the internal reorganization. 

The new office in Shanghai will play an important role for the business area mobile, as the local presence is being reinforced in a key market. 

The journey to move Precise Biometrics to a higher level in the value chain will be our primary focus during 2019. We are convinced that the reorganization of the business, which will soon be completed, will make a positive contribution to our development and financial results. With continued high volatility in the mobile market, 2019 may be a challenging year from a financial perspective. Precise Biometrics does, however, have a secure financial position, which makes the initiatives we have undertaken possible and which we are convinced will contribute to an improved financial result in future years. 

This information is information that Precise Biometrics Biometrics AB is obligated to disclose pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 AM on February 12, 2019.

FOR MORE INFORMATION, PLEASE CONTACT
Stefan K Persson, CEO, Precise Biometrics AB 
Tel. +46 707 920831
E-mail stefan.k.persson@precisebiometrics.com 

ABOUT PRECISE BIOMETRICS
Precise Biometrics is a market leading supplier of solutions for convenient and secure authentication of people's identity using biometrics. Our solutions are used hundreds of millions of times every day by people all over the world and are marketed together with strong business partners. For more information, please visit www.precisebiometrics.com