Vipera plc (LON:VIP), the specialist provider of mobile financial software services, has today announced 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.”
Overview
Activities and business review
Vipera plc 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.
