Vipera Regulatory News (VIP)

VIPERA PLC

("Vipera" or "THE Group")

Preliminary Results

Vipera, the specialist provider of mobile financial services, announces today the Preliminary Unaudited Results for the year ended 31 December 2014.

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 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 2014 Vipera continued its growth with revenues increasing from €1.7M to €5.9M. This increase reflects the substantial step forward arising from our acquisition of Codd&Date in December 2013. The results of the Group for the year are set out below.

Although the financial impact is yet to feed through to our operating results, customer response to our product offering during 2014, in particular Card Control, has been strong and we have continued to widen our customer base. Our credentials in the mobile financial services market place are enabling new opportunities with major European financial institutions. In parallel, we continue to receive further business from existing customers as we work with them to enhance their mobile services.

The integration with Codd&Date has proceeded successfully and has demonstrated our ability to scale the business.

During 2014 we added to our sales team and, given the long sales cycle, we are expecting to see progress made in 2015. We continue to seek to make additional sales and technologist hires to help us to deliver customer commitments on time, as well as keep enhance our product offering.

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

Strategy

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

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

A key milestone achieved at the end of 2014, starting with major banks in Germany, is the launch of the service model through which banking customers are provided a full end-to-end service with minimum impact on the IT systems of the bank. This model is offered on a per user per year revenue basis and we expect to see it grow in 2015.

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 €236k of expenditure.

Financial review and key performance indicators

The Board considers that for 2014, group sales and the financial outturn for the year continue to be the key performance indicators and these are set out in the Consolidated Statement of Comprehensive income. Increasing customer acceptance and market credibility has had a positive effect on sales which is our core performance measure.

There has been continued investment in developing our market position and the Group made an increased loss before tax of €762k for the year ended 31 December 2014 (2013: loss of €126k); being a loss per share of 0.47c (2013: 0.11c).

The growth of the Group has also called for additional working capital. Accordingly, in February 2014 investors contributed €1.3M of additional capital after expenses through the issue of 18.9M new ordinary shares. This further strengthened our balance sheet and provided additional capital. In addition, in May 2014 the Company issued 6,375,000 new ordinary shares pursuant to the acquisition of Codd&Date which had successfully met the criteria for this payment of deferred consideration.

Change in presentation currency

Given the growth in the Group's sales in Europe, the great majority of the Group's revenues and earnings are now denominated in Euros. As a result, the Group has made a change to its accounting policy as of 1 January 2014 and has adopted the Euro as its presentational currency which was previously Pounds Sterling. The change allows the financial statements to be presented in the currency that most closely represents the Group's operations. Prior year figures in these financial statements have been restated accordingly.

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

Consolidated Statement of Financial Position

As at 31 December 2014

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

Attributable to the owners of the parent

Consolidated Cash Flow Statement

For the year ended 31 December 2014

Notes to the Financial Statements

For the year ended 31 December 2014

1 Basis of preparation

The financial information has been prepared in accordance with International Financial Reporting Standards ("IFRS"), 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 financial information has been prepared under the historical cost convention, as modified by revaluations of financial assets and financial liabilities at fair value through the statement of comprehensive income.

The consolidated financial information presented herein has been prepared using accounting policies that are consistent with those applied for the year ended 31 December 2013 as well as applying the accounting policy detailed in note 3 below in respect of the basis of consolidation as extracted from the financial statements and the adoption of IFRS 10 and IAS 27 none of which has had an effect on the Group.

The preliminary announcement for the year ended 31 December 2014 was approved and authorised for issue by the board of directors on 8 May 2015. The financial information set out in this preliminary announcement does not constitute audited financial statements for the year ended 31 December 2014. The financial information for the year ended 31 December 2013 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 2014 is derived from draft financial statements. The audit of the statutory accounts for the year ended 31 December 2014 is not yet complete. These accounts are expected to be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.

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.

The statutory accounts for 2014 will be finalised on the basis of the financial information presented in this preliminary announcement and will be posted to shareholders in May 2015.

The Group financial statements are presented in Euros ("€") which, as the Group is expected to transact more of its business in Euros than any other currency, is also the functional currency of the Group.

2 Change in accounting policy

The Directors have previously used Pounds as the Group's presentational currency. Following the acquisition of Codd&Date Srl in December 2013 and the increasing amount of Euro-denominated sales being made, the Directors have elected to change the presentational currency of the group to Euros.

The Directors believe that this will provide a better reflection of the results of its activities as well as its financial position and align its presentational currency to the market in which the group expects to transact the majority of its business.

The effect of change in this policy is translating amounts previously reported in GBP into Euros with the effect of incurring translation differences where entities do not report in Euros. This change of policy has had no material impact on the Total Comprehensive Income for the year.

3 Basis of Consolidation

The consolidated financial information comprises the financial statements of the Group and its subsidiaries as at 31 December 2014. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

· Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

· Exposure, or rights, to variable returns from its involvement with the investee; and

· The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

· The contractual arrangement with the other vote holders of the investee;

· Rights arising from other contractual arrangements; and

· The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value at the date when control is lost.

4 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. Given the size and straightforward nature of the business, Management considers there to be a single activity, being the provision of software and associated services, substantially operating in one market: financial services in Europe and Middle East.

Total revenue comprises:

* in 2014, the third and fourth largest customers represented less than 10% of turnover.

5 Tax

Analysis of tax charge/(credit) on continuing operations:

Factors affecting the tax credit for the year

The tax for the year is higher (2013 - higher) than the standard rate of corporation tax in the UK applied to the Group loss before tax of 21% (2013: 24%). 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 2014 against future taxable profit are estimated to comprise excess management expenses of approximately €1,569,987 arising in the UK and trading losses of approximately €3,337,912 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 21% amounting to approximately €329,000 (31 December 2013: €265,000) 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.

6 Earnings per share

Basic loss 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 loss per share as the effect on the exercise of options and warrants would be to decrease the loss per share. At 31 December 2014, there were 8,069,932 warrants and 13,420,000 options outstanding.

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

7 Goodwill

On 30 December 2013, the Group acquired 51% of the share capital of AC&D Srl (since renamed Codd&Date Srl) for €2,185,889. This gave rise to the recognition of €2,021,473 of goodwill.

Impairment Tests on Goodwill

A summary of goodwill allocation in the Group is as follows:

The recoverable amount of the goodwill in Codd&Date Srl is 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 2014 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.

The recoverable amount calculated based on value in use exceeded carrying value by €1.0M. A reduction in gross margin to 10.9%, a fall in growth rate to 0.7% or a rise in discount rate to 16.3% would remove the remaining headroom and therefore trigger an impairment.

8 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 €198,425 (2013: €nil).

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. 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. The recoverable amount based on value in use exceeded the carrying value by €8.7M. A reduction in the projected revenues by 77% would remove the remaining headroom and give rise to the recognition of an 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:

10 Trade and other receivables

Trade receivables

Included in the Group's trade receivables are debtors with a carrying amount of €848,228 (2013 - €876,060) which are past due at the reporting date against which the Group has provided €65,428 (2013 - €32,065) 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.

11 Trade and other payables

12 Borrowings

Borrowings represent sales invoices, in Italy, denominated in Euros, which have been discounted at a floating borrowing rate of some 5% and are repayable upon collection of such invoices. At 31 December 2014, there was some €427,618 of unused facility.

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%.

13 Called up share capital

On 14 February 2014 and 26 February 2014 the Company issued respectively 17,648,363 and 1,229,999 ordinary shares of 1p each at 6p per share. On 30 May 2014 the Company issued 6,375,000 ordinary shares of 1p each by way of deferred consideration in respect of the acquisition of AC&D in 2013.

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.

-Ends-

About Vipera:

Vipera Plc (AIM:VIP) a cutting edge Mobile Financial Services and Digital Customer Engagement Solutions provider, serves financial institutions 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. Headquartered in London and Milan, Vipera powers one million end user financial applications for its top tier bank customers worldwide. For further information, please visit www.vipera.com