The market for biometric solutions has never been better. New demand is also emerging in the mobile phone sector, where SmartPhones and Tablet PCs are contributing to the rapid developments. Precise Biometrics will be intensifying its investments in new customer segments where there is significant potential for growth, and will be launching several new products and solutions in 2011.

New expansive customer segments

Our attitudes towards digital information are changing. With the rapid development of SmartPhones and Tablet PCs we are becoming increasingly reliant on the technology that surrounds us and we are storing more and more valuable information in our phones – today we can access most the web-based services no matter where we are. In a world more and more characterized by this type of communication there is an increased demand for protection of the information that we store in our SmartPhones and Tablet PCs.
 

We put a lot of effort into identifying new customer requirements and there is no doubt that in the Mobile segment there is a great demand for secure identification and authentication, where our technology can bring significant benefits to customers. We started working with several projects in this segment in 2010. 

Investment in the Mobile sector is just one of several elements in the new plan we presented in the year-end report for 2010 that will push us towards profitability in 2015. Our Plan 2015 is an ambitious business plan and strategic platform for accelerated growth and includes a new more costumer oriented organization.

Tough targets for expansion

The overall objective of Plan 2015 is that Precise Biometrics will qualify for quotation on the Nasdaq OMX Mid Cap list in 2015. For this to happen our growth and revenue need to increase significantly and we need to expand within our chosen segments and achieve a valuation of at least SEK 1.5 billion in accordance with the current listing regulations. This corresponds to five to six times our current valuation. 

This is an ambitious target, but I consider it to be entirely realistic considering the great market potential we have identified in the biometrics sector which is the basis for our business plan.

We are already in the process of implementing several activities to increase sales by developing our commercial offer and reinforcing the sales organization. 

We have developed a new customer-oriented organization that focuses on the most interesting segments. We continue to refine and package our world-leading technology to clarify how we solve specific problems for our customers. We are also enhancing our competence within our development activities to match the demand emerging in the new areas.

Three business areas with great potential for expansion 

In order to focus our efforts on specific customer segments we have as of 2011 organized the Company into three business areas structured around the most interesting and expansive needs of our customers.

•     Mobile – a completely new business area based on the rapid development of SmartPhones and Tablet PCs. This creates new business opportunities for biometrics and we will initially be focusing on the Apple platform, including solutions for iPhone and iPad, but our objective is to supply products and solutions for all the larger technological platforms in the market. We expect to be already in a position to launch new products and solutions during the second half of 2011. It’s within this business segment we are making investments and where we will focus our resources.
   
• IAM – covers the main part of our existing business activities and sales. IAM stands for Identity and Authentication Management and includes solutions for national ID cards and government agencies, banks and corporations, but also embedded solutions that create license earnings on a regular basis. The strategy here is to develop our existing world-leading position and to expand market shares in the ID card segments, mainly through already established partners. 
   
• Access Solutions – continues to build on the success we have already achieved with companies that offer customers and members access to services and capacity via biometric access. This can, for example, apply to gyms that with the help of our solutions stay open 24 hours a day with a minimum of personnel. Another area is security solutions within Aviation. What these solutions have in common is that they address tangible problems and create extra value for customers in the form of greater efficiency, higher potential earnings, or reduced costs. We will already start actively targeting the potential customers in Europe that can benefit from our concept this year.

The objective is that all business areas will achieve a high level of growth and have a major impact on Precise Biometrics’ future growth and profitability. Our ambition is that IAM will achieve profitability in 2011, and it is possible that Access Solutions also will achieve profitability this year. 

Our reporting to the capital market will be based on these business areas in future, so it will be easy to follow developments.

Continued improved results in 2010

If we look back at the market in 2010 we can see that awareness of our technology and its advantages is much greater now than just one year ago. It is becoming easier to get an overview of the market as it matures and because there are less regional differences. This means that we can focus more on globally marketable solutions for our customers, which is precisely what we want to do with our new business areas.

There has never been as much potential in the market as there is now, and we are involved in several interesting negotiations both with companies and government controlled activities. The greater interest being shown by corporate customers is motivated by two significant requirements: the need for cost-efficiency, and being able to compete with services that are more unique, more secure and more flexible when people need to identify themselves.

Developments in 2010 demonstrate that the trend of a year-by-year improvement in result has continued, which is a consequence of higher margins in combination with lower costs from a more effective organization. 

As I have previously maintained, the development of Precise Biometrics must be judged over a longer period of time, especially because we still have to rely on the timing of large individual orders, which result in significant fluctuations in turnover between different quarters. We now believe that by expanding within the Mobile segment we will not only reinforce our growth, but also balance fluctuations between quarters.

Sales this year have involved a combination of fingerprint readers and licenses, and a large part of these sales have gone to existing customers. One important event was the roll-out by our Nigerian partner Interswitch of ID cards in the federal state Cross River State in Nigeria. This government ID project is the first of its kind in the world and a turning point for Precise Biometrics in Africa. The solution is based on our biometric technology in combination with a traditional ID card and payment card.

Prospects for 2011

I am convinced that 2011 is going to be the best year Precise Biometrics has had so far. I am expecting the positive development from previous years to continue, but above all I am counting on excellent results within the framework of our Plan 2015.

Our strategy for future growth includes significant investments in new product solutions within the business field Mobile in 2011. We are expecting orders for national ID cards within the business field IAM where we are involved in several large pilots in Latin America. We are also expecting to increase sales in all areas through our advanced offers and by recruiting sales staff both in Europe and the US.

We will be expanding our development activities so that our competence corresponds to the demands encountered in the new areas. We will among other things be launching more new products and solutions than in any other year, including a new product family of fingerprint readers that focuses on the banking and corporate sector called Precise Sense™. And we will also be introducing a new embedded solution that can be integrated into several different types of hardware products, where biometrics can create value.

All in all, I am looking forward to a year with many new and exciting opportunities for Precise Biometrics!

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