Vipera Regulatory News (VIP)

For immediate release 26 April 2017

VIPERA PLC

("Vipera" or the "Company")

Preliminary Results for the Year Ending 31 December 2016

Vipera (AIM:VIP), the specialist provider of mobile financial software services, is pleased to announce its audited financial results for the year ended 31 December 2016.

Highlights

· Revenue increased to €7.9 million (2015: €6.8 million)

· Launch of retail product offering for a major European retailer

· Committed to reorganisation to deploy with greater efficiencies

· Continued to investment in product development

· Net cash at year-end was €1.5 million (2015: €3.2 million)

Marco Casartelli, CEO of Vipera plc, commented: "2016 has been another year of successful progress for Vipera. We are looking to accelerate our growth path in 2017 with both existing customers and products, and with new initiatives."

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 2016 Vipera continued its growth in revenues; increasing from €6.8M to €7.9M. The results of the Group for the year are set out in the Consolidated Statement of Comprehensive Income on page 13 and the Consolidated Statement of Financial Position on page 14.

Growth was strong in both product related revenues and consulting, with both showing a 17% increase on the prior year, driven particularly by increased business from core customers. Support and maintenance revenue continues to accumulate and represented 12% of the group's revenue in 2016.

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.

A key milestone achieved in 2016 was the deployment of a retailer-orientated solution, broadening the range of use cases with quality customers for our product offering.

Markets

The market in which we operate continues to evolve. Recent changes have been to our advantage: in particular the growing digitisation of the retail check-out process and shopping experience is favourable to our expansion into retail solutions. In addition the forthcoming Payment Services Directive 2 ("PDS2") creates opportunities for us, in Europe, to provide product and services to both banks and the anticipated new service providers empowered by PSD2.

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 continue 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. These customers embrace both our mainstream mobile banking solutions and new innovations.

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 is having a significantly positive impact on our increasing sales.

The continued addition of new customers and projects has led to the instigation of a reorganisation to assist smooth delivery of an increasing number of customer deployments and greater efficiencies within the Group. This Group reorganisation impacts the valuation of the goodwill attached to the Company's subsidiary operations, and appropriate accounting provisions are being made for this, however there will be no cash impact.

Aside from the accounting for the reorganisation, operating losses before provisions were in line with expectations.

The Group loss before tax was €1.5M for the year ended 31 December 2016 (2015: loss of €646k); the loss per share was 0.62c (2015: 0.33c).

Net cash as at 31 December 2016 was €1.5 million, which will allow for continued investment in product development and to support the working capital needs of the Group.

Research and development

We have continued to invest in our product, creating enhancements in response to and in anticipation of trends in industry and technology, capitalising some €420k of expenditure in the year. During 2016 two significant projects were undertaken to our Host Card Emulation product, and our Retail Offering.

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 customers' current and future expected needs.

· 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 2016 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.

· EU referendum

The decision to leave the European Union has created greater uncertainty in the UK economy which has implications for the financial statements of all entities. The Board has assessed the impact of the EU referendum result and considered the reporting requirements within the Strategic Report and Directors' Report. The Board is not aware of any significant impacts on the future performance and position of the business including solvency, liquidity and going concern.

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

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.

The group is currently undergoing a restructuring, the results of which will be announced when finalised. As a consequence of this we have started to assess the performance of Codd & Date differently and believe it can now be split into two cash generating units identifiable by their revenue streams; 'Consulting' and 'Projects', with Projects being subsumed into the main, 'Motif' operations of Vipera.

With this restructuring, and the impact on 'Projects', an impairment assessment has been undertaken and it is felt appropriate to recognise a provision of €776k during the year. We are satisfied that there are no other direct expenditures or losses necessarily entailed by the planned restructuring.

Outlook for the coming year

We have started 2017 with a larger backlog of business than ever before. We have enlarged our partner network and substantial additional new business has already been won from both existing customers and new financial institutions. We therefore look to further substantial progress in 2017.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2016

The loss for the financial year dealt with in the financial statements of the Parent Company, Vipera Plc, was €1,810,918 (2015 - loss of €664,355). 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 2016

Consolidated Statement of Changes in Equity

For the year ended 31 December 2016

Attributable to equity shareholders

Consolidated Statement of Cash Flows

For the year ended 31 December 2016

Notes to the Financial Statements

For the year ended 31 December 2016

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 25 April 2016.

The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 December 2016.

The financial information for the year ended 31 December 2015 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 2016 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. The CODM only considers the operating segments at a revenue level for internal reporting. All other reporting is due on a consolidated basis. As such apart from the information disclosed below all information is as per the primary statements.

* in 2015, the fourth largest customer represented less than 10% of turnover and as such is not disclosed.

3 Tax

Factors affecting the tax credit for the year

The tax for the year is higher (2015 - higher) than the standard rate of corporation tax in the UK applied to the Group loss before tax of 20% (2015: 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 2016 against future taxable profit are estimated to comprise excess management expenses of approximately €3,424,513 arising in the UK and trading losses of approximately €1,701,582 arising in Switzerland. In addition, capital losses of approximately €2,761,774 arising in the UK are available to be carried forward.

A deferred tax asset at 20% amounting to approximately €685,000 (31 December 2015: €368,000) 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.

4 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. Details of share options and warrants that were anti-dilutive but may be dilutive in the future are set out in note 22.

5 Goodwill

Impairment Tests on Goodwill

The recoverable amount of the goodwill in Codd & Date Srl is determined based on value-in-use calculations, taking into account the impact of the re-organisation described in the Strategic Report, which has led to Codd and Date also being assessed by its revenue segments. 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 2016 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 has arisen for the goodwill of Codd and Date, which relates solely to the CGU's 'Projects' revenue segment. The impairment to C&D's goodwill was calculated based on the proportion of 'Projects' revenue out of the total CGU's revenue.

6 Intangible assets

The above intangible assets comprise investment in the development of Vipera product platforms. All research and development costs not eligible for capitalisation have been expensed.

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 €39,190 (2015: €3,243).

The recoverable amount of the above cash-generating unit 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 56% would remove the remaining headroom and give rise to the recognition of a further impairment charge against profit or loss.

7 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:

8 Property, plant and equipment

9 Trade and other receivables

Trade receivables

Included in the Group's trade receivables are debtors with a carrying amount of €775,286 (2015 - €461,656) which are past due at the reporting date against which the Group has provided €377,633 (2015 - €439,575) 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.

10 Trade and other payables

Trade payables

Included in the Group's trade payables are creditors with a carrying amount of €335,942 (2015 - €305,629) which are past due at the reporting date.

11 Borrowings

Borrowings represent sales invoices, in Italy, denominated in Euros, which have been discounted at a floating borrowing rate of some 3.5% and are repayable upon collection of such invoices. At 31 December 2016, there was some €400,000 of unused invoice discounting 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%.

12 Called up share capital

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.

13 Events after the Reporting Period

On 19 April 2017, the Company completed the first stage of the reorganisation announced on 29 December 2016. Pursuant to this the company has issued 1,929,560 new ordinary shares in consideration for the acquisition of a further 7.12% of Codd & Date srl. Following this, the Company now holds 58.12% of the issued share capital of Codd & Date srl.

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

-Ends -