secunet Security Networks AG

Earnings Release • Mar 29, 2007

News Details

Corporate | 29 March 2007 08:00

secunet Security Networks AG: annual accounts 2006 – decline from 2005, positive outlook

secunet Security Networks AG / Final Results

Release of a Corporate-announcement, transmitted by DGAP - a company of
EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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[Essen/Germany, 29 March 2007] In the financial year 2006, secunet Security
Networks AG, the leading European supplier of IT high security products and
services, generated turnover of Euro 36.5 million. This represents an 11 %
decline from the excellent previous year’s figure (Euro 40.8 million).
Despite the unsatisfactory trading result, the management board is pleased
with the company’s development throughout the year. Both turnover and
results went up each quarter. The financial year 2006 ended profitably:
EBIT as of the end of the year amounted to Euro 2.2 million (-51 % compared
to the previous year). Brisk distribution activity in 2006 had a positive
effect on the order backlog, thereby confirming a positive outlook for the
financial year 2007.

Following the excellent financial year 2005, the first half of 2006 in
particular was dominated by the fact that secunet’s government clients
exercised restraint in their procurement activities: The Federal budget was
not passed before June 2006. This delay caused a slump in demand and a loss
of turnover that secunet could not compensate in the second half of the
year. As in the previous year, SINA, the Secure Inter-Network Architecture,
generated a large share of secunet’s turnover. The decline in public
procurement is also reflected in the turnover distribution. The share of
secunet products sold predominantly to government agencies (consisting
mainly of SINA) declined from 52 % in the previous year to 47 % in 2006. At
the same time, the share of consulting services rose from 41 % (2005) to 49
% (2006). The company recorded a very positive turnover trend throughout
the year. Turnover rose substantially from quarter to quarter (Q2/Q1: + 26
%, Q3/Q2: + 13 %, Q4/Q3: + 24 %).

Despite the decline in revenues, secunet ended the year with positive
earnings before interest and taxes (EBIT) amounting to Euro 2.2 million.
This was predominantly due to the cost development within the secunet
group. All cost items declined compared to the previous year. The cost of
material declined in line with turnover, in particular the turnover
generated by SINA projects, which involve hardware deliveries. Despite a
rise in the number of staff (228 compared to 216), personnel expenses
declined by 6 % from Euro 17.6 million to Euro 16.6 million. This
development is owing to the decrease in the variable remuneration
components. Depreciations dropped by 7 %. Due to the large share of fixed
cost components, the decline in other operating expenses was slight (1 %).
The annual net profit of the secunet group came to Euro 2.2 million in
financial year 2006 following Euro 4.3 million in the previous year. The
undiluted earnings per share declined from Euro 0.66 to Euro 0.34.

'2006 did not bring the expected results – unfortunately', says Dr. Rainer
Baumgart, CEO of secunet Security Networks AG. 'However, the rising trend
throughout the year and the company’s overall profitability confirms the
soundness of our business model.'

In 2006, the company intensified its distribution activities: as per 31
December 2006, the order backlog had risen by 2 % over the previous year to
Euro 14.5 million. 'Our efforts in the distribution field are bearing
fruit', says Dr. Rainer Baumgart. 'At the end of the second quarter 2007,
the order backlog will increase further. Given the fact that contracts for
several major projects in which secunet is involved have not yet been
awarded, we are very confident about the financial year 2007'.

The secunet group’s investment spending in financial year 2006 came to
around Euro 1.3 million, a 19 % increase over the previous year. Due to the
lower annual net profit compared to the previous year, the outflow of funds
caused by the payment of the variable remuneration components for the
excellent year 2005 and the increase in accounts receivable compared to the
previous year, the cash flow from operating activities was negative.
Including investment financing, the total outflow of funds amounted to Euro
4.4 million which reduced the group’s liquid funds by the same amount.

The balance sheet total recorded by the secunet group rose from Euro 28.1
million as per 31 December 2005 to Euro 28.3 million as per 31 December
2006. The equity ratio increased from 60 % to 67 %. secunet has not taken
out any loans; the company’s debt ratio is still 0 %.

In its meeting on 28 March 2007, the supervisory board of secunet Security
Networks AG approved the annual accounts. The management board of secunet
Security Networks AG will present the results in Frankfurt on 29 March 2007
in the context of an analyst conference. secunet will simultaneously
publish its annual report for the year 2006. The first quarter results will
be published on 3 May 2007.

Dr. Kay Rathke
Head of Press Relations

Patrick Franitza
Press Relations Officer

secunet Security Networks AG
Kronprinzenstrasse 30
45128 Essen/Germany
Phone +49 201 54 54-300
Fax +49 201 54 54-301
E-mail: presse@secunet.com
http://www.secunet.com

DGAP 29.03.2007

Language: English
Issuer: secunet Security Networks AG
Kronprinzenstrasse 30
45128 Essen Deutschland
Phone: +49 (0)201 - 5454 - 0
Fax: +49 (0)201 - 5454 - 456
E-mail: investor.relations@secunet.com
www: www.secunet.com
ISIN: DE0007276503
WKN: 727650
Indices:
Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin-Bremen, Hannover, Düsseldorf, Hamburg, München,
Stuttgart

End of News DGAP News-Service

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