Vipera Regulatory News (VIP)

For immediate release

9 May 2018

VIPERA PLC

("Vipera" or the "Company" or the "Group")

Preliminary Results for the Year Ending 31 December 2017

Vipera (AIM:VIP), the specialist provider of mobile financial software services, is pleased to announce its preliminary audited financial results for the year ended 31 December 2017.

Highlights

· Total revenue up 27% to €10.1 million (2016: €7.9 million)

· Recurring revenue up 43% to €1.6 million

· Adjusted underlying EBITDA loss, excluding non-recurring items, improved to €0.1million (2016: €1.0 million loss)

· Acquisition in Spain is profitable and expanding

· Successfully executed reorganization of Codd&Date

· Secured a strategic investment in the Company by Banca Sella Holdings who invested €2.5 million

· Continued to invest in product development

· Cash at year-end was €1.9 million (31 December 2016 €1.5million)

Marco Casartelli, CEO of Vipera plc, commented: "We took a number of significant steps forward in 2017 with continued growth, significantly reduced losses and evolving our relationship with Banca Sella. Subsequent to the year end it was announced on 18 April 2018 that Sella Open Fintech Platform S.p.A., a Banca Sella subsidiary, has made a recommended cash offer for the Company."

Contact:

About Vipera:

Vipera Plc (AIM:VIP) a cutting edge Mobile Financial Services and Digital Customer Engagement Solutions provider, serves financial institutions and retailers worldwide with differentiated mobile banking, card management and customer engagement capabilities based around its proprietary bank grade multi-purpose platform, Motif. Additionally, it provides consultancy and other services to banks and financial institutions. For further information, please visit www.vipera.com

Overview

Activities and business review

Vipera provides software and services that enable mobile access to personal financial services and offers multi-channel mobility solutions for a range of banking, card management, digital customer engagement and other functionality ready for deployment by financial institutions, primarily banks. We also provide consultancy services focused on the technology needs of banks and financial institutions.

In 2017 Vipera continued its growth in revenues; increasing from €7.9 million to €10.1 million. Part of the revenue growth was attributable to the acquisition of SoftTelecom Desarrollos I Mas D S.L. ("SoftTelecom") in Spain, announced on 27 July 2017, but even without the contribution from SoftTelecom revenues would have increased by 20%, versus 16% for 2015/16. The results of the Group for the year are set out in the Consolidated Statement of Comprehensive Income and the Consolidated Statement of Financial Position.

Of the total revenue, recurring revenues increased by 43% and now comprise 16% of total revenue. Gross margins increased from 22% to 32%, in part from increased licence sales, but primarily from a larger scale of operations

A key milestone achieved in August 2017 was the successful acquisition and integration of SoftTelecom. The company, now called Vipera Iberica, is profitable and has grown rapidly since acquisition.

Your Board would, again, like to thank all of our staff and our business partners for their enthusiastic work and commitment during the year.

Strategy

The Group's core strategy is to provide and develop customised mobile solutions, operating both directly and also with local partners in key markets for distribution and system integration.

Deployments of solutions are subject to varying pricing models according to the needs of the customer, in common with normal practice in the systems solutions and payments industries.

The digital banking and payments market

The market in which we operate continues to evolve and show new opportunities. The field of digital banking and payments is demanding ever more features and functionalities as banks and their customers re-set their expectations.

The Group continues to develop its customer proposition and remains confident that it is well placed to benefit from changes in the financial services market.

Customers

We have continued to win new customers, and to provide additional products and services to existing customers. The majority of our customers are in Mainland Europe and in the Middle East and range from smaller local banks to Tier 1 institutions with millions of active users. These customers embrace both our mainstream mobile banking solutions and new innovations.

Staff

Vipera operates with a blended mix of in-house and outsourced technical staff. This has enabled us to deal with past fluctuations in demands for specific skills and to manage staff risk. As we have grown, so too have the teams of both out-sourced staff and in-house technical staff. During 2017 the in-house technical team grew by over 70% to 89 people at the year-end as we look to meet the needs of new and larger projects. We look to keep our skill sets at a leading edge - which in itself assists in recruitment.

Research and development

We have continued to invest in our product, creating enhancements and additional functionality in response to and in anticipation of trends in industry and technology, investing in the year some €635k in in-house staff and external contractors output.

At the start of the year it was determined that the Group's intellectual property should be regarded as having two components: a core component of the Motif platform which should continue to be subject to impairment review, and an additional component that should be subject to annual amortisation. Whilst this evolution results a material annual amortisation charge, it is felt to appropriately reflect the business evolution.

Codd&Date

During the year we successfully executed on a planned restructuring of our subsidiary, Codd&Date so as to spin out a part of its operations into a new wholly-owned subsidiary of Vipera, and the Company increased its holding in Codd&Date srl to 81% (2016: 51%).

We believe this has improved the effectiveness of the Codd&Date staff.

Spain

In August we completed the acquisition of SoftTelecom for a total consideration of €1.3 million. This acquisition enabled us to access to the Spanish market more effectively with an established local presence and provided an enhanced team of technical staff. Since acquisition the company has expanded and operated profitably.

Dubai

Vipera has several customers in the Middle East. A new subsidiary has been formed in Dubai with the intention that having a local presence and a wider team based permanently there will enable us to serve those customers, and prospect new customers, better.

Capital

During the year, we secured a strategic investment in the company by Banca Sella Holdings ("Banca Sella") who invested €2.5 million. As well as being a customer, we regard Banca Sella, a leader in the Italian market in adopting new technologies, as a partner in developing new product concepts. The subscribed capital has been deployed to the acquisition of SoftTelecom and to provide additional working capital.

Financial review and key performance indicators

The Board considers that Group sales and the financial position for the year continue to be the key performance indicators of Vipera and these are set out in the Consolidated Statement of Comprehensive Income. Further strengthening our relationships with partners and with long standing customers continues to have a significantly positive impact on our increasing sales.

The adjusted underlying EBITDA, excluding non-recurring items improved substantially; from a €998,000 loss in 2016 to a €99,000 loss in 2017. This reflects, inter alia, €250,000 of transaction costs incurred in relation to the acquisition of SoftTelecom, additional costs incurred in relation to the set up of a new subsidiary in Dubai to meet growing demand in the area and foreign exchange movements. In addition, operating profit was impacted by an evolution in the Group's depreciation policy to depreciate capitalised intellectual property, absorbing a charge of €260,000 versus €39,000 impairment for 2016.

The Group loss before tax narrowed to €0.9 million for the year ended 31 December 2017 (2016: loss of €1.5 million); the loss per share was 0.38c (2016: 0.62c).

Cash as at 31 December 2017 was €1.9 million, which will allow for continued investment in product development and will support the working capital needs of the Group.

Risk management

The Group is exposed to a number of business risks. The risk appetite of the Group is determined by the Board which is responsible for identifying and evaluating the key risk areas of the business and ensuring that those risks can be managed at a level acceptable to the Board.

The Board has identified the following as the key risks:

· Technology

The business is highly dependent on its key software in providing its mobile banking solutions. Its own and competitive technology is always subject to evolution. The Group is constantly investing in its product offering and looking to address new additional needs of customers.

· Customer relationships

The Group is reliant upon key contracts with large financial institutions and other organisations. The Group has expanded its customer relationships and sales channels, in part, to mitigate this risk.

· Key staff

Staff are a key asset in the business and retaining the services of key staff is essential to ongoing revenue generation and development of the business. All the Directors during 2017 are shareholders in the business with longstanding commitment to its prosperity. In attracting and retaining staff, the Board seeks to have a remuneration structure that takes into account what is affordable, and what market rates are. Just as importantly, it seeks to create an environment of interesting work in a cordial but professional setting.

· Liquidity

Adequate working capital is a core requirement of the Group. The Group currently has cash balances and no long-term borrowings. Cash forecasts identifying the future liquidity requirements of the Group are produced on a regular basis. The Board seeks to strike the right balance between investing to grow the business rapidly, and the prudence of conserving cash. In assessing this balance, the board has regard to operational liquidity, and to the long-term solvency of the business.

Going concern

The Board keeps Group budgets and updated projections under regular review. As part of its assessment of the risks, and opportunities, facing the Group, the board keeps under review the longer-term capital requirements, the business model and customer proposition as these evolve in a fast moving technology environment over the foreseeable future.

Future developments

In October 2017, Vipera was been awarded Platinum status by Mastercard for its Digital Wallet and ranked among the five platinum vendors on Mastercard Engage global digital wallet vendor list. In March 2018 the launch of SME Pay was announced in collaboration with Mastercard, a solution which addresses the real needs of Small Business customers in controlling their card spend and receiving payments on the go.

SME Pay is built atop Motif and delivered as Cloud offering potentially available to any SME customer of banks working with Mastercard.

The evolution of banking services and payments continues, to our advantage, as consumers and businesses have become more accepting, and indeed more expecting, of their digital relationship with financial service providers. Within the EU, regulatory changes in the form of the Second Payment Services Directive reinforce this trend and we believe we are well placed to provide new services to banks and other service providers with products and services based on our Motif platform.

Cloud and SaaS solutions are one of the key drivers of future development of Vipera.

Outlook for the coming year

We have started 2018 with a significant backlog of business from a wide range of customers and the new SaaS offering with Mastercard. We therefore look to further substantial progress in the year.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2017

The loss for the financial year dealt with in the financial statements of the Parent Company, Vipera Plc, was €2,231,497 (2016 - loss of €1,810,918). As permitted by Section 408 of the Companies Act 2006, no separate statement of comprehensive income is presented in respect of the Parent Company.

All amounts relate to continuing operations.

Consolidated Statement of Financial Position

As at 31 December 2017

Consolidated Statement of Changes in Equity

For the year ended 31 December 2017

Attributable to equity shareholders

Consolidated Statement of Cash Flows

For the year ended 31 December 2017

Notes to the Financial Statements

For the year ended 31 December 2017

1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), and International Financial Reporting Interpretations Committee ("IFRIC") interpretations and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRS, as adopted by the European Union, and the Companies Act 2006.

The preliminary announcement for the year ended 31 December 2016 was approved and authorised for issue by the board of directors on 8 May 2017.

The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 December 2017.

The financial information for the year ended 31 December 2016 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified and did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or (3) Companies Act 2006 or equivalent preceding legislation.

The financial information for the year ended 31 December 2017 is derived from the statutory accounts for that year which will be posted to shareholders and delivered to the Registrar of Companies. The auditors reported on those accounts: their report was unqualified and did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or (3) Companies Act 2006 or equivalent preceding legislation.

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 434(3) of the Companies Act 2006.

2 Total revenue and segmental analysis

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision-maker ("CODM"), being the Chief Executive Officer, and the Chief Financial Officer to allocate resources to any segments and to assess their performance.

During the year, the Group executed a reconstruction of its subsidiary, Codd&Date srl ("Codd&Date") so as to assist the smooth delivery of an increasing number of customer deployments, centralise management of the group's solution offering for retailers and enable more specialisation within the wider Vipera delivery team.

Whereas the group had previously operated as a single segment given the size and straightforward nature of the business, Management now considers there to be two segments: Vipera, being systems focussed and Codd&Date, being consultancy focussed. This segmentation is activity based rather than geographically based.

Entity-wide information

* in 2017, only the largest customer represented more than 10% of turnover.

3 Reconciliation of Operating loss to EBITDA excluding non-recurring items

4 Tax

Factors affecting the tax credit for the year

The tax for the year is higher (2016 - higher) than the standard rate of corporation tax in the UK applied to the Group loss before tax of 19.25% (2016: 20%). The difference is explained below:

Factors affecting the tax charge of future periods

Tax losses available to be carried forward by the Group at 31 December 2017 against future taxable profit are estimated to comprise excess management expenses of approximately €4,596,361 (2016: €3,424,513) arising in the UK and trading losses of approximately €658,597 (2016: €1,701,582) arising in Switzerland. In addition, capital losses of approximately €2,447,686 (2016: €2,761,774) arising in the UK are available to be carried forward.

A deferred tax asset at 19.25% amounting to approximately €884,800 (31 December 2016: €685,000) has not been recognised in respect of accumulated realised losses in the UK (excluding capital losses), as there is insufficient evidence that the asset will be recovered in the foreseeable future. There were no other factors that may affect future tax charges.

5 Earnings per share

Basic earnings per share has been calculated by dividing the loss attributable to equity holders of the company after taxation by the weighted average number of shares in issue during the year. There is no difference between the basic and diluted earnings per share as the effect on the exercise of options and warrants would be to decrease the earnings per share.

Since the year end, no warrants have been exercised which may result in the dilution of the earnings per share in the future.

6 Goodwill

During the year, the Company acquired SoftTelecom Desarrollos I Mas D sl. Details are set out in note 7.

Impairment Tests on Goodwill

The recoverable amounts of the goodwill in Codd&Date Srl and in Vipera Iberica sl are determined based on value-in-use calculations. These calculations use pre-tax cash flow projections, based on financial budgets approved by management covering a one-year period. Cash flows beyond the one-year period are extrapolated using the estimated growth rates stated below. The key assumptions used for value-in-use calculations in 2017 are as follows:

Management determined budgeted gross margin based on past performance and its expectations of market development. The average growth rates used are consistent with the forecasts included in industry reports. The discount rates used are pre-tax, and reflect specific risks relating to the relevant operating segment.

An impairment review was not considered necessary in relation to the goodwill arising on the acquisition of Vipera Iberica Srl as the acquisition date was reasonably close to the reporting date and management consider there is no change in fair value between the two dates.

7 Business Combinations

On 3 August 2017, the Group acquired 100% of the share capital of SoftTelecom Desarrollos I Mas D sl ("SoftTelecom") for €1,300,000, from two private shareholders. Of the consideration, €250,000 was subject to retention (deferred consideration), being held as security against any future claims against the Vendors, to be released as to 50% in August 2018 and 50% in August 2019. As a result of the acquisition, the Group is expected to strengthen its presence in the Iberian market. It is also benefiting from the additional staff and customers.

The goodwill of €394,660 arising from the acquisition is attributable to economies of scale expected from combining the operations of the Group. None of the goodwill recognised is expected to be deductible for income tax purposes.

The following table summarises the consideration paid for SoftTelecom and the fair value of assets acquired and liabilities assumed at the acquisition date:

Acquisition-related costs of €249,000 have been charged to administrative expenses in the Group Statement of Comprehensive Income for the year ended 31 December 2017.

8 Intangible assets

All research and development costs not eligible for capitalisation have been expensed.

A distinction is made between the core component of the Motif platform - which is subject to impairment review, and an additional functionality component - which is amortised. The remaining amortisation period of the additional functionality component at the year-end is 5 years.

During the year, an impairment review as to specific components of the capitalised research and development costs gave rise to an impairment provision amounting to €nil (2016: €39,190).

 The recoverable amount of the above cash-generating units has been determined based on value in use calculations. The value in use calculations use cash flow projections based on financial projections approved by Management covering a five-year period. These incorporate contracted revenues, revenues which are based on project tenders and projected revenue. Given the nature of the work and the visibility of revenue in the future, it is considered appropriate not to extend the discounted cash flow workings beyond this period. Management are unlikely to make accurate forecasts for an indefinite period and therefore 5 years has been used a reliable estimate. Probabilities have been assigned to revenues, net of direct costs, based on the anticipated success - a rate of 60-90% has been applied to work which is contracted or from repeat customers, versus 60% applied to projected work from new customers. A discount rate of 15% has been used in the calculations, being an uplift on the discount rate used in assessing goodwill which reflects the business as a whole rather than the IP element alone. A reduction in the projected revenues by 51% would remove the remaining headroom and give rise to the recognition of a further impairment charge against profit or loss.

9 Deferred taxation

Deferred tax assets are recognised on tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable.

The movement in deferred tax assets and liabilities during the year is as follows:

The movement in deferred tax assets and liabilities during the prior year was as follows:

10 Property, plant and equipment

11 Investment in subsidiary undertakings

During the year the Company (i) executed a reorganisation of Codd&Date (ii) acquired SoftTelecom Desarrollos I Mas D sl (since renamed Vipera Iberica sl) as set out in note 7, and (iii) created a new subsidiary in Dubai, Vipera MENA fz-llp.

Pursuant to the reorganisation of Codd&Date srl, the Company increased its holding in Codd&Date srl from 51% to 80.7% in two steps, taking 100% ownership of a new subsidiary spun out of Codd&Date, Vipera Services srl, and increasing its holding in Codd&Date srl from 51.0% to 80.7%. The consideration for these steps was the allotment of a total of 21,779,560 new ordinary shares in Vipera Plc and warrants to subscribe for a further 6,000,000 ordinary shares at an exercise price of 5p. These allotments resulted in a charge of €1,212,375 directly to retained earnings, given the increased investment in a subsidiary.

12 Trade and other receivables

Trade receivables

Included in the Group's trade receivables are debtors with a carrying amount of €1,508,583 (2016 - €775,286) which are past due at the reporting date against which the Group has provided €472,407 (2016 - €377,633) to reflect changes in credit quality and recoverability.

The carrying amount of the Group's trade receivables are denominated in the following currencies:

The maximum exposure to credit risk at the reporting date is the carrying value reported above. The Group does not hold collateral as security. The carrying value of trade and other receivables is a fair approximation of their fair value.

13 Trade and other payables

Trade payables

Included in the Group's trade payables are creditors with a carrying amount of €98,151 (2016 - €335,942) which are past due at the reporting date.

14 Borrowings

Borrowings represent overdrafts and short term loans, in Italy, denominated in Euros, at borrowing rates between 1.5% and 2.75%. At 31 December 2017, there was some €427,000 of unused facility available.

The fair value of the current borrowings equals their carrying value, as the impact of discounting is not significant. The fair values are based on cash flows discounted using a rate based on the borrowings rate of 5%.

15 Called up share capital and reserves

Rights attaching to shares

The Ordinary Shares entitle the holders to receive all ordinary dividends and all assets on a winding up, subject only to satisfying the entitlement, if any, of the holders of the Deferred Shares.

A Deferred Share does not entitle the holder thereof to receive notice of or attend and vote at any general meeting of the Company or to receive a dividend or other distribution or to participate in any return of capital on a winding up other than the nominal amount paid on such shares once the holders of new Ordinary Shares have received a distribution of £10,000,000 per new Ordinary Share.

Description of reserves

Share premium represents the consideration received for the share capital of the company in excess of the nominal value.

Reverse acquisition reserve arose upon the acquisition of Vipera GmbH in August 2010.

Foreign currency translation reserve represents the accumulated foreign currency translation differences upon converting the group's results into the presentational currency.

Retained loss comprises the group's losses that have accumulated year on year since incorporation.

16 Events after the Reporting Period

On 18 April 2018 it was announced that the board of directors of Sella Open Fintech Platform S.p.A. ("SOFP") and the Independent Vipera Directors (being Luciano Martucci and Martin Perrin) had reached agreement on the terms of a recommended cash offer, of 7.5p per share, to be made by SOFP, and which extends to all the issued and to be issued ordinary share capital of Vipera, other than the 40,000,000 Vipera Shares already owned by SOFP or its holding company and 111,560,826 Vipera Shares the subject of the Management Share Exchange Agreement to be accepted, inter alia, by the other directors of Vipera. As at the date of the signing of these accounts, a firm offer document has not yet been despatched to shareholders.

No other adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.

-Ends -