Successful start into fiscal year 2005 for secunet: double-digit, profitable growth in the first quarter

secunet Security Networks AG boosted its revenues from € 4.3 million to € 7.5 million in the first quarter of 2005, which represents an increase of 74% versus the previous year. This revenues growth is due both to acquisition effects and organic growth. Excluding the acquisition effect resulting from the April 2004 takeover of Secartis AG, secunet recorded an organic growth rate of just under 30%.

"Our portfolio of products and services focuses on the IT high-security market, especially on the specific needs of German and international government authorities and organizations," says Dr. Rainer Baumgart, CEO of secunet Security Networks AG. "This strategic orientation is validated by the market's recognition of our unique expertise and the sustained, high demand for secunet's products and services.”

secunet completed the first profitable first quarter in its history. Net income after tax for the quarter was € 0.4 million; earnings per share were € 0.06. This continues and supports the turnaround in earnings, which began in the third quarter of 2004. Three aspects contribute to the positive result: high capacity utilization, growing licensing revenues, and a disproportionately low increase in variable expenses compared to revenues.

Personnel expenses, for instance, rose by about 37% from just under € 3.0 million last year to € 4.0 million in the first quarter of 2005. The increase is primarily due to the higher number of staff as a result of the takeover of Secartis AG. The company's workforce grew from 172 on 31 March 2004 to 206 at the end of the first quarter of 2005. Amortization, depreciation and other operating expenses grew slower than revenues. Cost of materials is the only expense item to show a disproportionately high increase of 124%, from € 0.9 million in 2004 to € 2.0 million in 2005. This increase is caused by secunet's project structure.

The other operating income of secunet Security Networks AG showed a strong increase compared to the same period last year. This is due to the reversal of provisions for follow-up costs from fiscal year 2004.

secunet recorded positive earnings before interest and taxes (EBIT) of € 0.8 million in the first quarter of 2005. This is a turnaround compared to the previous year, in which secunet reported a negative EBIT of € 0.6 million. Taking into account the financial result (€ 0.04 million, up 5% compared to 2004), earnings before taxes came in at € 0.9 million. This compares to a negative EBIT of € 0.5 million in 2004. Net income (after tax) was € 0.4 million. Earnings per share were € 0.06.
"The positive development of earnings is primarily the result of our continued efforts to optimize processes and reduce costs," explains Dr. Rainer Baumgart. "We will continue to pursue this policy in the interest of both our employees and shareholders."

The high volume of orders on hand at the end of the first quarter is grounds for optimism: secunet has secured orders worth € 14.7 million, up 88% from the previous year (€ 7.8 million). The management expects the strong demand for the products and services of secunet and the positive development of business to continue in the next months.





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