16.02.2012

In 2011, the Sygnity Group has generated net profit for the first time in 5 years in the amount of PLN 8.2 million. In 2011, the Group also noted an increase in the revenue levels compared to 2010 by 8 percent to the level of PLN 566 million. The net result of the Group was burdened with a reserve of over PLN 4 million, established as a result of one customer's withdrawal from the agreement on execution of an IT project concluded in 2006. According to the Management Board of the Company, considering that it was a one-off event, it is possible to start an option programme, assuming that stock options are awarded, if the Company achieves PLN 10 million net profit in 2011. The decision, in accordance with the resolution of the General Meeting of the Shareholders, shall be made by the Supervisory Board of the Company.

In Q4 2011 only, the Company generated net profit at the level of PLN 6.7 million and the revenues at the level of PLN 218 million. The EBIT operating profit in Q4 2011 was PLN 5 million. It is worth emphasizing that the Group recorded a positive balance of operating cash flow in the amount of PLN 4.3 million. The results from Q4 2011 were influenced by the infrastructural projects executed by the Group, which in turn contributed to decreasing the gross sales margin in the period to the level of 14.6% from almost 21% in 2010, throughout the whole calendar year the Company recorded the margin of over 17%. The results of the Group were also influenced negatively by the dynamic changes of the exchange rates, which resulted in a loss at the level of almost PLN 3 million. The net result achieved in Q4 2011 was also influenced by the recognized tax assets for tax losses from the preceding years in the amount of PLN 4.8 million

In the calendar year 2011, the Sygnity Group recorded a net profit at the level of PLN 8.2 million. This result is higher by as much as PLN 51 million compared to 2010. In 2011, the Sygnity Group also noted an increase in revenue levels by 8% y/y. EBIT operational profit in 2011 was PLN 8 million, which is by PLN 42.3 million better, compared to 2010. The profitability of the Group on operational activity also increased, from the level (-6.5%) in 2010 to 1.4% in 2011. The Company also reduced the use of financing from the bond market, which was decreased by 43% - from the sum PLN 60 million as of 31/12/2010 to PLN 34 million as of 31/12/2011.

In 2011, the Group recorded a significant decrease in costs, arising from the successful conclusion of the reorganisation process. Total financial costs in 2011 were PLN 6.8 million that is a drop by 38% compared to 2010. The costs of basic operating activity in 2011 reached PLN 556.8 million and dropped by PLN 3.3 million y/y, with the simultaneous increase in turnover. The Company also recorded a drop in the costs of general administration by 35% against 2010, which is a decrease of these costs by the sum of PLN 33.4 million and the drop of sales costs by 12 %, that is by the sum PLN 3.5 million. The highest drop was registered in the remuneration costs - by PLN 38.7 million compared to 2010.

When analysing the sales structure throughout the 2011 year, the Group recorded revenues from the products and services at the level similar to 2010 (PLN 446 million compared to PLN 439 million). In Q4 2011 only, the Company showed a significantly higher level of sales of goods and materials (75.3 million compared with 35.7), which resulted from realization of a few significant infrastructural projects in the discussed period, including a contract for Weaponry Inspectorate of the Ministry of National Defence (total value of the contract is PLN 80 million gross) and TAURON Polska Energia S.A. Group. (total value of the contract is PLN 36.2 million).

Throughout the calendar year, the Group registered a significant rise in sales in the public sector (from PLN 196 million to 267 million). In the Q4 2011, itself the highest revenues were noted in the public sector (rise from PLN 67 million to PLN 116 million).

In Q4 2011, the Company concluded a few major contracts with institutions from the public sector. Sygnity concluded an agreement for post-warranty service for the Voting Operating System in the Sejm Assembly Room (SOG) with the Chancellery of the Sejm. The agreement was concluded for the duration of four years. Its value is PLN 2 million. The Company also concluded an agreement with the Ministry of Justice for providing service and technical support as well as overseeing the exploitation of the New Land and Mortgage Register, the national IT system, whose objective is to keep registers in electronic form. The agreement for the value of PLN 8.5 million gross was concluded for the duration of two years. In Q4 2011, Sygnity also concluded an agreement with the value of about PLN 36.2 million with TAURON Polska Energia S.A. The object of the agreement is the delivery of Microsoft Corporation licences to the TAURON capital group and providing services connected with the delivery of these licences for the period of 3 years.

Among the major agreements concluded by the Company 2011, apart from those listed in reference to Q4 2011, it is important to list an agreement concluded with the Social Insurance Institution in Q1 2011 for realization of the project connected with the construction and implementation of a new information portal, which will allow SII to provide services to the customers by electronic means. The value of the agreement is PLN 18.1 million gross. In Q2 2011, the Group also concluded an agreement for the sum of PLN 16.7 million with Poczta Polska S.A. for the development of the Integrated Teleinformation System for registering and monitoring selected types of postal parcels. The agreement on the system development shall be binding until the end of 2013. In Q3 2011, the Group also concluded an agreement with the Weaponry Inspectorate for the delivery of the network equipment for expanding and modernizing the IT networks of the National Defence Ministry, along with the implementation service. The value of the agreement is almost PLN 80 million gross.

In 2011, Sygnity branched out abroad, concluding a framework agreement in Q3 2011 for the sale of infrastructural solutions with Huawei International Pte. Ltd.. The agreement was concluded for the duration of three years and covers the distribution of Huawei products on sixteen European markets. Due to the concluded agreement, the establishment of Sygnity Europe and the establishment of the partner network, the Group will start selling its own solutions abroad, realizing its plans concerning development outside Poland. The Management Board of Sygnity estimates that the cooperation with the foreign partner will allow for generating revenues at the level of PLN 100 million by the year 2013.

The current backlog of the Group is almost PLN 260 million, which, compared with PLN 215 million in 2010, means an increase by 21%. The value of the current backlog is also about 37-40% of revenues included in the forecasts for the company, assuming the revenues amounting to PLN 650-700 million and EBIT at the level of 5%-7% by 2012, which is the basis for confirming that forecast by the Sygnity Management.