Annual Report Press Conference: Giesecke & Devrient raises net income by 20 per cent

Annual Report Press Conference: Giesecke & Devrient raises net income by 20 per cent

Berchtold: “G&D has managed to avoid the recessive trend”–high investment shows clear commitment to Germany as industrial base–increased revenue expected for 2004

Munich, May 17, 2004–Technology group Giesecke & Devrient (G&D) achieved a good result in fiscal 2003. The Munich-based organization succeeded in increasing its net income to EUR 28. 2 million. Compared with 2002, this was equivalent to an improvement of 20 per cent. Revenue fell by 3.8 per cent, to EUR 1.05 billion, as against the previous year, the result chiefly of currency translation effects. After adjustment, revenue was 4 per cent higher than the 2002 figure. Around 87 per cent of revenue was generated by foreign business.

G&D expects revenue to increase in the current year, due among other factors to new projects and the rollout of new products.

“We are very satisfied with our performance in fiscal 2003, as it shows that we were able to avoid the pervasive recessive trend. We increased our earning performance, lastingly improved our cost base and significantly strengthened our position in the global market. G&D further improved its performance last year in both operational and structural terms “, commented Willi Berchtold, Chairman of the Board of Directors and CEO of Giesecke & Devrient.

High investment in Germany as industrial base

Giesecke & Devrient invested around EUR 100 million in Germany last year. “At EUR 100.1 million in 2002 and EUR 99.8 million in 2003, this was our company’s highest investment level ever. As a result, Giesecke & Devrient has strong roots in Germany, and the picture will remain the same in future”, Berchtold stressed. In April 2003, a new facility for security thread and hologram production went into operation at the organization’s Louisenthal site. Five months later, a new technology center was opened on the extended premises of the company’s headquarters in Munich. The R&D activities of the currency automation and smart card divisions, previously spread over 16 sites, are now all located in the new facility. Due to this concentration of capacities, the efficiency of all processes rose significantly in 2003 from the moment the move to the new facility was completed.

Prospects for 2004: revenue increase anticipated

Berchtold expects a slight economic recovery in 2004, especially in the international environment. For G&D, he is anticipating higher revenue in the current fiscal year–especially in view of the favorable development during the first few months. New projects and the rollout of new products are stimulating marked growth. In April 2004, G&D was awarded the contract for the Austrian social insurance e-card, an electronic administration system incorporating leading-edge security technology. The project comprises the supply of eleven million chip cards and is worth EUR 48 million. In November 2003, G&D also became the first organization in Germany to supply hospitals with electronic health professional cards. “Use of the electronic health professional card now allows doctors to digitally sign the results of medical tests and other diagnostic findings “, Berchtold explained. “Due to a range of pilot and key projects, we are extremely well prepared for the launch of the smart health card in Germany from 2006. We have experts on all of the important bodies and committees that are working on this topic”, Berchtold pointed out.

Expansion of IT security consultancy services

Giesecke & Devrient’s development into a global services and solutions provider promises to deliver addition momentum for growth. The company’s proven competence in the field of security also covers the provision of expert advisory services. In a move aimed at strengthening its position in this sector, G&D is currently acquiring a majority stake in Essen-based secunet AG, a deal which will be completed at the end of May 2004. “The merger of our subsidiary Secartis AG with secunet will create Germany’s leading consultancy for IT security solutions. This excellent position will allow us to exploit national and international market potential much more efficiently”, Berchtold explained.

Extensive spending on research and development spurs innovation

The aim of shaping the future through innovation can only be achieved on a basis of consistent investment in research and development. “At EUR 74 million, equivalent to around 7 per cent of our revenue, spending on research and development in 2003 remained at virtually the same high level as previously. We intend to continue along the same path in future”, stressed Dr. Peter Zattler, member of the G&D Board of Directors responsible for Finance and Business Control.

There are currently 600 researchers and developers working on new security solutions for banknotes and smart cards at G&D. The objective set for the coming months is to exploit the synergies from the organization’s core competencies even more intensively than before, and to consolidate and expand market positions by means of innovative products. “An example of innovation in our company is the successful interaction of core areas of expertise in developing the chip passport–the travel document of the future”, Berchtold commented in this context. The chip will incorporate biometric characteristics of the passport holder, as demanded by the U.S. authorities and the ICAO, the International Civil Aviation Organization, a special U.N. agency. Data exchange between passport and reading device is contactless, and the privacy of the personal data is protected by proven methods stemming from smart card applications and cryptography.

About Giesecke & Devrient:

Giesecke & Devrient (G&D), based in Munich, Germany, is an international technology group operating subsidiaries and joint ventures throughout the world. In fiscal 2003, the group employed approx. 6,800 people and generated a revenue of €1.05 billion.

Founded in Leipzig in 1852 as a printer of securities, G&D soon specialized in banknote production. In 1970 the company began developing solutions and complete systems for automatic currency processing. G&D is also a technology leader in smart card production and a solutions provider in a range of fields, including telecommunications, electronic payments, transportation, health, ID, and Internet security. More information is available on our Web site at http://www.gi-de.com.

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