secunet annual financial statement 2004: Sound basis for further profitable growth

In fiscal year 2004 secunet achieved sales of EUR 32.4 million. This corresponds to an increase of 53.3% compared to the previous year (EUR 21.1 million). This development more than compensated for the drop in turnover caused by the loss of a major customer in the business year 2003. The inclusion of SECARTIS AG, which was acquired on 1 April 2004, made a positive contribution to the increase in turnover of around EUR 4.5 million. secunet has thus grown organically, i.e. ignoring this acquisition effect, by a good 32%. 97% of turnover was made in the German AG, the foreign subsidiaries in Switzerland and the Czech Republic contributed 3% to the total turnover. 10% of the total turnover was realised with foreign customers handled from Germany. This is an increase of 4 percentage points on the previous year.
The turnaround in earnings was achieved in the 3rd quarter of 2004 thanks to constant cost control and budget discipline. This development continued in the 4th quarter. A clear indication of the successful cost limitation is the disproportionately low rise in the two main expense items at secunet Security Networks AG: The personnel expenses rose by 35.8% from EUR 11.5 million in the previous year to EUR 15.7 million in the business year 2004 and the other operating expenses by 32.7% from EUR 5.4 million to EUR 7.1 million. The rise in both cost items is below the turnover growth rate. For the overall year, secunet achieved an operative result before interest and taxes (EBIT) of EUR 0.5 million following EUR -1.2 million in the previous year.
As a consequence of the cash outflow through the acquisition of SECARTIS AG and the low interest rates for the money investment, the interest income dropped from EUR 0.2 million in the previous year to EUR 0.1 million in the business year 2004. This resulted in a net income of EUR 0.4 million (previous year: EUR -4.5 million) after taxes (almost EUR 0.2 million). The (basic) earnings per share amounts to EUR 0.07 (previous year: EUR -0.70).

At the end of the reporting period the balance-sheet total was EUR 24.4 million. Compared to total assets as per 31 December 2003 (EUR 17.6 million) this was a plus of 38.6%. The liquid assets only dropped by around EUR 0.1 million despite the outflow of funds for the acquisition of SECARTIS AG in the business year 2004 and totalled EUR 8.8 million at the end of 2004.
“The business year 2004 marked a positive turning point in the company's history,” commented Dr. Rainer Baumgart, CEO of secunet Security Networks AG. “We significantly increased the turnover and achieved a positive result. We successfully realised an acquisition which was fully financed from cash funds. We have thus created a sound basis for further growth.”
Through the rapid integration of SECARTIS last year, secunet demonstrated its ability to carry out acquisitions efficiently. Cost synergies were realised at an early stage by consolidating the entire administrative work at secunet. As a result of increased capacities and the expansion of the competence portfolio, lasting turnover synergies were developed that will come to bear in the course of the financial year 2005.
On 31 December 2004 secunet employed 208 persons, i.e. 20% more than at the end of the previous year. The increase in the number of employees is primarily due to the acquisition of SECARTIS; almost all of the new staff are productive personnel, i.e. consultants and developers.
Together with the figures for the overall year 2004, secunet also publishes the results for the 4th quarter. The isolated consideration of the last quarter of 2004 shows a turnover of EUR 13.6 million. This means an increase of around 119% on the 4th quarter of 2003 (EUR 6.2 million). The result before interest and taxes (EBIT) in the 4th quarter could be clearly improved over the previous year's figure of EUR 0.1 million to around EUR 1.1 million. secunet closed the 4th quarter with a profit of EUR 0.8 million after taxes (previous year: EUR -3.7 million). The (basic) earnings per share is EUR 0.13 (4th quarter 2003: EUR -0.58).
The orders on hand at the end of 2004 amount to EUR 11.1 million. This means an increase of 81% compared to the previous year's figure (EUR 6.1 million).
secunet’s range of services and products will continue to concentrate on the field of IT high security. Last year secunet was particularly successful with the Secure Inter-Network Architecture SINA®, which developed into a sophisticated, marketable product. Up to now the main customers are public authorities and other state organisations in Germany. This market will continue to grow. In future, SINA® will

be increasingly offered abroad and the distribution of the SINA® business version in the private sector will be pushed.
secunet also grew with regard to other services and products. For example, trust centers in accordance with the German Electronic Signature Act were established for the German Federal Employment Agency (BA) and the German Federal Pension Insurance Agency (BfA). In the field of electronic signatures, secunet traditionally plays a leading role. Future growth sectors include the field of biometrics, in which secunet recently acquired extensive know-how through the BioP II project for the German Federal Office for Information Security (BSI). Moreover, secunet proved its expertise regarding the protection of complex net applications and card-based applications in various projects.
Despite a sluggish economy the management board of secunet Security Networks AG looks to the future optimistically: “We want to continue to grow above the average,” comments Dr. Rainer Baumgart. “In this connection the further improvement in profitability will play a very important role – in the medium-term we want to be able to pay our shareholders a dividend.”
Today the Executive Board of secunet Security Networks AG presents the annual financial statement for 2004 at an analysts’ conference in Frankfurt. secunet will publish the results for the first quarter on 4 May 2005.