Report PDF - NTT Com Security

Transcription

Annual Report 2014
2
NTT Com Security Group at a Glance
4
Shareholder Letter
5
Report of the Supervisory Board
7
NTT Com Security shares
11
Company Activities 2014
12
Marketing Activities 2014
13
IT Security Trends 2015
19
Group Management Report 23
Dependent company report 43
Income Statement
46
Consolidated Statement of comprehensive income
47
Consolidated Balance Sheet
48
Consolidated Statement of Cash Flows
50
Consolidated Statement of change in equity
51
Notes
53
Responsibility statement
98
Auditor’s Report
99
NTT Com Security worldwide
101
Ordinary Stock
102
Financial calendar
102
Imprint
102
Investor Relations
102
NTT Com Security AG | Annual Report 2014
NTT Com Security
recorded
a significant
increase
in revenues
in 2014.
3
RevenueEBITDA EBIT
M€
M€ M€
FY 2014
FY 2013
FY 2012
FY 2011
FY 2010
4
264.1
226.9
204.9
178.0
188.2
-12.4
-11.9
6.2
-7.8
3.0
-15.5
-16.8
2.4
-19.1
0.3
Net
income
M€
Earnings per share undiluted
€
Earnings
per share
diluted
€
-17.5
-17.2
1.9
-21.8
1.4
-1.37
-1.35
0.15
-1.93
0.12
-1.37
-1.35
0.15
-1.93
0.12
Shareholder Letter
Dear Shareholders and Business Associates
With a string of high-profile attacks in 2014, cyber-crime
is already forcing companies of all sizes in every sector to
consider their IT Security and Information Risk Management exposure. Hardly a week goes by without a new
security breach going public with the Heartbleed bug
having also affected the majority of organisations across
the globe. Attacks are getting more advanced and attackers
are getting smarter, making every organisation immune
from safety. Some vendors and analysts believe it’s now
a case of when, not if, organisations will be hit.
Many enterprises are not doing enough to protect their
data in the event of an incident with most falling behind
with the basic controls required to provide a solid foundation for security programmes. With the threat landscape
constantly changing, we are working with many global
and regional businesses to ensure that they are more
proactive than ever to these threats using all of our
Technology, Consulting and Managed Services experience
and resources to help get the basic (as well as the
complex) security measures right.
2015 will see critical infrastructure coming under
increased scrutiny from both attackers and defenders.
The risk of a cyber-attack is not going away and critical
systems are inherently vulnerable to an attack. Research
like our recent Risk: Value report shows that the many
senior executives expect to suffer a security breach,
but there are many different companies at various stages
of managing the risk of an attack. Furthermore we expect
to see more organisations (especially the mature security
purchasers) that traditionally outsourced critical security
functions, bringing such functions in-house, or selecting
flexible expert partners to develop hybrid-SOC solutions.
Such measures will reassure themselves that systems
are proactively monitored around the clock and experts
are on hand to provide essential advice and support when
needed. Additionally, the threat base will get larger and
larger and there currently are not enough people with
the right knowledge and skills in the marketplace.
Collaboration will therefore become an essential tool
Simon Church, Chief Executive Officer
for effectively targeting the mobile cyber criminals who
commit the crimes (and hide) from anywhere in the world.
It was also interesting to hear, first-hand at one of our
recent industry gatherings, how the growing appetite for
law enforcement authorities, governments, and those
organisations affected are increasingly coming together
as a body to draw up a type of ‘Kyoto Protocol‘ for cybersecurity, so as to provide the framework for affirmative
action. This is a welcome idea for helping prevent and
fight cyber-crime, and we expect to start to see vendors,
end users, service providers and CISOs also support this
concept, given that security is everyone’s problem and
everyone‘s responsibility.
5
Shareholder Letter
Looking ahead, I continue to remain confident that
our previous strategic decisions and changes, together
with the strong leadership team and depth of employee
experience that we have in place, will allow us to take
advantage of the increasingly attractive market
opportunity ahead of us.
Together with my fellow Board member Heiner Luntz,
I wish to thank our shareholders and business partners
for their support, and all our employees for their hard
work, commitment and dedication.
The Management Board of NTT Com Security AG:
Simon Church and Heiner Luntz
Simon Church
6
During the year under review, the Supervisory Board
performed the duties imposed on it by law and by the
Company’s articles of incorporation, monitoring and
advising the Company’s Management Board on an ongoing
basis. The Management Board briefed the Supervisory
Board in detail on the Company’s condition, conformance
to the principles of good corporate governance, the risk
situation and risk management. The Supervisory Board
was also briefed on planned business strategies including
corporate forecasts in written and oral reports submitted
at a total of four meetings in the different regions and
regular telephone conferences. All material investment
decisions, as well as decisions of fundamental and strategic
importance, were reviewed and approved by the Supervisory Board. The Management Board and the Supervisory
Board worked together closely and consulted on the
Company’s strategic orientation at regular intervals.
For this purpose, the Management Board kept us regularly
informed with both written and oral reports on all relevant
aspects of the Group’s plans and strategic development,
its business and financial performance, the course of
business and its status on a timely and comprehensive
basis. In addition to the risk situation and risk management, the Supervisory Board also devoted its attention
to NTT Com Security AG’s compliance programme. As
well as this, the remuneration system for the Management
Board, including the main contractual elements, was
regularly reviewed. For more details, reference should
be made to the remuneration report on pages 41-42. At
its meetings, the Supervisory Board also discussed the
semi-annual reports with the Management Board prior to
their publication. The details of any departure in business
performance from targets and plans were submitted to
the Supervisory Board and examined on the basis of the
documents provided.
Luc Loos, Chairman of the Supervisory Board
No conflicts of interests on the part of the members of the
Management Board and the Supervisory Board, which must
be disclosed to the Supervisory Board and reported to the
shareholders at the Annual General Meeting, arose in the
year under review. All meetings of the Supervisory Board
were attended by all members.
7
Meetings of and resolutions passed
by the Supervisory Board
In a written circular resolution passed on 24 January 2014,
the Supervisory Board approved the plan to have trading
in the Company’s shares transferred from the regulated
market of the Munich stock exchange to the m:access
trading segment within over-the-counter trading at the
Munich stock exchange.
At its meeting on 26 March 2014, the Supervisory Board
approved the annual financial statements of NTT Com
Security AG as of 31 December 2013. In addition, the
dependence report for 2013 stipulated by Section 312 of
the German Stock Corporation Act was discussed and
approved. During this meeting, the Management Board
reported on the Company’s profitability, particularly the
return on capital in accordance with Section 90 (1) No. 2
of the German Stock Corporation Act. Following lengthy
deliberations with the statutory auditors, we approved
NTT Com Security AG’s annual financial statements and
the consolidated financial statements as of 31 December
2013. We also finalised the agenda and worded the
proposed resolutions for the annual general meeting to
be held on 4 June 2014. Thereupon, the Management Board
reported on the current state of the Company’s business
and elaborated on the forecast for the rest of 2014. Finally,
we submitted the declaration of conformity to the Corporate Governance Code in accordance with Section 161
of the German Stock Corporation Act in consultation with
the Management Board. We discussed the budget situation
and the Company’s plans, the further expansion of its
Asian activities as well as business performance in February and in the year to date. In addition, a resolution was
passed approving the acquisition of BDG GmbH & Co. KG.
At its meeting on 4 and 5 June 2014, the Supervisory Board
deliberated on the results of the Annual General Meeting
and the Company’s business performance in the first four
months of 2014 as well as the forecast for the second
quarter. The Management Board reported on the progress
of further acquisition projects including Infotrust AG
(Switzerland) and the integration of BDG. Moreover, proposals for the issue of new share capital were presented
and discussed.
8
At the meeting of the Supervisory Board held in Tokyo on
4 September 2014, a revised budget for 2014 was presented, discussed and approved. In addition, a cost-cutting
programme was adopted. A staff-participation programme
was presented and a resolution passed to implement it as
quickly as possible. Further results of the negotiations for
the acquisition of Infotrust AG were presented and noted
by the Supervisory Board. The Management Board reported
on the measures for the possible issue of new share capital.
On 20 October 2014, a circular resolution was passed
by e-mail to unanimously approve the acquisition of
Infotrust AG.
At the Supervisory Board meeting held on 19 November
2014 in Switzerland, the results of the first ten months
of the year as well as the results of the budget process
were presented and discussed. The results of the cost-cutting programme were presented, discussed and approved.
The budget parameters for 2015 were outlined and
discussed. The progress on the plans to issue new share
capital was also discussed.
Annual and consolidated financial statements
The annual financial statements for 2014, the consolidated
financial statements and the management report and
Group management report were audited by KPMG AG
Wirtschaftsprüfungsgesellschaft Munich, which issued an
unqualified auditors’ report. In connection with their
activities, the statutory auditors were also required to
assess whether the Management Board had complied
with the statutory requirements and, in particular, had
established a monitoring system for the early detection
of any events liable to impair the status of the Company
or the Group as a going concern. The statutory auditors
were satisfied that the Management Board had established
an appropriate information and monitoring system whose
structure and operation are suitable for the timely detection of any threats to the Company’s going-concern status.
At its meeting on 25 March 2015, the Supervisory Board
deliberated at length with the Management Board and
in the presence of the statutory auditors on the report
on the audit of the annual financial statements and the
management report as well as the consolidated financial
statements and Group management report as of 31 December 2014. The statutory auditors presented the material
results of their audit to the Supervisory Board at its
meeting on 25 March 2015. The Supervisory Board
approved the results of the audit. The audit of the management report revealed that it was consistent with the
reports which the Management Board had submitted to the
Supervisory Board in the course of the year. In addition,
the Supervisory Board examined the annual financial
statements as of 31 December 2014, the management
report, the consolidated financial statements and the Group
management report. As no grounds for any objections were
found, the Supervisory Board approved the Company’s
annual financial statements and the consolidated financial
statements. Accordingly, the annual financial statements
are duly adopted.
Composition of the Supervisory Board
and the Management Board
There was no change in the composition of the Supervisory
Board in 2014. There were no changes in the composition
of NTT Com Security AG’s Management Board in the year
under review.
The Supervisory Board wishes to thank all employees of
the NTT Com Security Group as well as the members of
the Management Board for their great personal dedication
and service.
Related parties
The statutory auditors also examined the related parties
report stipulated by Section 312 of the German Stock
Corporation Act and issued the following unqualified
auditors’ report:
Luc Loos
Chairman of the Supervisory Board
“Having examined and assessed the related parties report
in accordance with our duties, we hereby confirm that
1. the facts stated in the report are correct,
2. the Company’s transactions as detailed in the Report
were not unreasonably high and that any disadvantages were duly eliminated,
3. in the measures described in the report there are no
circumstances warranting a materially different assessment to that provided by the Management Board.”
The related parties report was submitted to the Supervisory
Board together with the statutory auditors’ report. It was
discussed with the Management Board at the Supervisory
Board’s meeting on 25 March 2015 in the presence of the
statutory auditors and particularly checked for any errors
or omissions. The statutory auditors reported on the
main findings of their audit and were available to the
Supervisory Board for any additional questions. On the
basis of its conclusive review, the Supervisory Board did
not raise any objections to the related parties report and
the Management Board’s declaration which it contains
and is therefore in agreement with the results of the audit
performed by the statutory auditors.
9
With our exclusive
focus on information
security, we attract
and employ the
world’s most
experienced
IT security experts.
10
NTT Com Security shares
2014 was a permanent roller-coaster ride for equity
markets due to the global crises in the Ukraine and the
Middle East. At 9,806 points, the German bluechip index
DAX closed the year with a small gain of 2 %. After heavy
volatility in the first half of the year, the DAX exceeded
the 10,000 mark for the first time at the end of June.
In the ensuing months, it retreated, hitting a low for
the year of 8,571 points in mid October, but regained
momentum towards the end of 2014.
Tickersymbol: WKN:
ISIN:
Reuters: Bloomberg:
AAGN
515503
DE0005155030
AAGGn.DE
AAGN:GY
The TECDAX performed substantially better, rising by 17 %
over the previous year to 1,371 points. In the United States,
the NASDAQ advanced by 19 %, outperforming the Dow
Jones, which rose by only 8 percentage points.
The NTT Com Security share also fluctuated sharply last
year, reflecting the moves in the German DAX. After
entering the year at € 7.51, it retreated to a low of € 6.71
at the end of January. It then recovered, rising to € 7.00
by the end of May. However, it dropped again from June
until November before hitting a low for the year of € 5.52.
As the share made only few gains in the final month
of the year, it closed 2014 at € 5.59, down 24 % on the
beginning of the year. Consequently, it substantially
underperformed all the above-mentioned indices.
Trading volumes in NTT Com Security shares were
very small throughout the entire year, often remaining
well below 1,000.
11
Company Activities
Company Activities 2014
24 January 2014
Announcement
NTT Com Security intends change of stock
market segment.
3 March 2014
Announcement
Munich Stock Exchange approves change of segment
of NTT Com Security AG shares from regulated market
to open market.
17 March 2014
Press Release
NTT positioned as a challenger in the Gartner
Magic Circle Quadrant for Global Managed Security
Services Providers.
31 March 2014
Press Release
NTT continues to build IT Security Leadership in Europe
with BDG Acquisition.
31 March 2014
Annual Report 2013
NTT Com Security publishes its financial statements
for 2013.
12
4 June 2014
Annual General Meeting 2013
Resolution at the annual general meeting to change
the financial year such that it now ends on 31 March
of each year.
12 August 2014
H1 2014 Financial Report
> Strong growth in the manages service sector
strengthened sales growth in the first half of the year
> Acquisitions positive contribute to the further
development
3 November 2014
Press Release
NTT Com Security AG acquires Infotrust AG and
extends market leadership in Europe.
Marketing Activities 2014
Activities in the DACH region
Information Security World on Tour 2014:
‘Next Generation Cyber Defense’
From 16 October to 6 November 2014, our team once again
went on tour with the Information Security World (ISW)
event, which took place in Vienna, Zurich, Cologne,
Hamburg, Stuttgart and Munich. Themed ‘Next Generation
Cyber Defense’, CISOs, CIOs, ITSOs and other information
security professionals had the chance to explore a wide
range of presentations, case studies and discussions.
Participants could learn how to detect and defend against
cyber-attacks with fast and effective vulnerability
management methods. The roadshow offered delegates
the opportunity to interact with both NTT Com Security
consultants and vendor partners about the latest
technology developments in IT security. CISOs of several
well-known companies discussed issues around the
following topics:
• Cyber Defense 2.0 – New Defense Strategies • Uncovering Hidden Fouls – SIEM Intelligence vs. APT
• Defense in Depth – on the role of privileged accounts
as part of Cyber Defense
• The re-conquest of your IT - safe standards in
IT operations
Our two keynote speakers Dr. Sandro Gaycken and
Dr. Philipp Herrmann, gave inspiring and informative
presentations and NTT Com Security received very
positive feedback from participants, vendors and staff.
In particular, presentations by NTT Com Security
customers were very much appreciated.
13
Roadshow with Workshops and CISO Days
Activities in the UK
NTT Com Security invited selected CISOs and other top
information security executives to participate in the
NTT Com Security CISO Day 2014 and the Industry Workshops. Interesting lectures and high-level conversations
gave participants the chance to discuss IT security issues
across a number of industries. Workshops were aimed
at sectors including: Automotive, Public, Finance and
Manufacturing. Our experts shared detailed presentations
about current trends and information security issues in
these vertical markets.
Take a Break from InfoSec
The Roadshow toured from Zurich, to Munich, Stuttgart,
Hamburg, Frankfurt and Cologne, between 6 and
16 May 2014.
Partner Connect
Strong and reliable relationships with our vendor partners
underpin our success in the market. Therefore in 2014,
we started a new networking platform where account
managers and consultants from partners and NTT Com
Security could meet to share experiences and strengthen
their connections. Up to four times a year, we organise
a get together in different cities around the region, where
the NTT Com Security team and partners can network in
an enjoyable, relaxed atmosphere. These relationshipbuilding events have proved very popular amongst both
vendor partners and co-workers.
14
For the fifth successive year, NTT Com Security hosted
over 150 customers, prospects and partners during Info
Security Europe 2014. Guests joined us on 29 and 30 April
at a local Earls Court pub where they could “take a break”
from the tradeshow floor. In this relaxed and informal
environment, IT Security professionals joined us for lunch
and a drink, relaxed and discussed some of the key issues
of the show with the NTT Com Security team as well
as their peers in the industry. During these two days,
the NTT Com Security team also took the opportunity
to showcase some of the new developments around our
managed services portfolio. NTT Com Security will be
hosting a similar event again in June 2015, when Info
Security Europe moves to Olympia.
Marketing Activities
Information Security World 2014:
‘The Perimeter of One’
21 October was the date of 2014’s Information Security
World, the flagship event in the NTT Com Security event
calendar. This year’s theme was the ‘The Perimeter of One’,
which was chosen as a way to explore the need to place
the perimeter in context to better manage information
security risk in today’s mobile businesses. The event was
bigger and better than ever, with over 200 guests from our
customer and partner communities attending. Delegates
heard from speakers including a number of customers
discussing their IT Security challenges with their peers in
the industry, as well as keynote speakers Troels Oerting,
Head of the European Cybercrime Centre and World Cup
Referee Howard Webb.
PCI London
On 1 July at the Victoria Park Plaza Hotel in London, over
300 PCI practitioners gathered together for PCI London,
the largest event of its kind in the UK. As a leading authority in the field of PCI, NTT Com Security was a strategic
sponsor of this event and Managing Consultant Stuart
Moen opened the conference with the presentation ‘Control
and compliance: bringing simplicity to the complex world
of financial transactions.’ Throughout the day, a number
of delegates visited the booth to discuss how NTT Com
Security could assist them with their PCI requirements.
Two brand new elements were introduced to the ISW
agenda this year. For the first time, there were a number
of hands-on labs where delegates could see exciting new
technologies combating some of the most prominent IT
security threats in action. Delegates also had the opportunity to take part in one-to-one meetings with senior representatives from the 12 leading security vendor partners
who were exhibiting at the event. These new additions,
along with the keynote presentations, breakout sessions,
panel discussions and an industry-leading exhibition,
once again positioned ISW as a leading events in the information security calendar.
15
Activities in the US
Technology Council of Central Pennsylvania
Black Hat 2014
NTT Com Security was asked to join the three-part seminar
series on Data Breaches, sponsored by the Technology
Council of Central Pennsylvania Cyber Security Network.
William Klusovsky, Manager of Pre-Sales, was part of the
panel discussion on 21 November 2014 at Harrisburg
University. He helped lead the expert-driven dialogue
on data breaches and data security to a crowd of business
owners, executives, and officials. These sessions will
continue throughout 2015.
NTT Com Security was invited to speak at the annual
Black Hat convention in August 2014. This event is one
of the most anticipated security conferences of the year,
with over 9,000 attendees. Chris Camejo, Director of
Assessment Services and Stephen Breen, Senior Consultant,
spoke to the audience about Mobile Device Mismanagement. They provided an overview of the vulnerabilities
they discovered in the MDM solutions used, when conducing penetration tests for customers. The presentation
was so well received that NTT Com Security US held a
short series of webinars discussing the highlights, trends,
and tools discussed at the event.
16
Activities in France
Activities in the Nordic Region
Integralis Security World (France) 2014
IDG Security Days
For the third year running, ISW was once again a highlysuccessful event. Taking place at the famous Stade de
France, location of the 1998 World Cup, NTT Com Security
welcomed around 100 customers and prospects to our
conference, with 14 vendor partners present in the tradeshow area. Our consultants delivered presentations,
workshops and demonstrations around current security
challenges such as cybercriminality, cloud security and
Big Data. Attendees also had the opportunity to participate
in a guided tour of the Stade de France.
IDG Sweden’s main IT and information security industry
event gathered over 250 people for inspiration, knowledge
exchange and networking in February 2014. NTT Com
Security participated with a main speaker slot, stand and
onsite activities, as well as a roundtable lunch with
10 specially invited customers. The event targeted decision
makers – mainly in IT and information security roles –
in the largest organisations in Sweden.
Les Assises de la Sécurité 2014
NTT Com Security organised two open house event days
with customers in April and November. Participants had
the opportunity to visit our GROC in Gothenburg, get a full
day of updates and meet with our security analysts and
fellow colleagues in the information security community.
The agenda covered updates on the current threat landscape, introduced the WideAngle security services portfolio
and discussed threat intelligence research findings from
the Global Threat Intelligence report and more.
Les Assises de la Sécurité, the most highly-praised reference event on the professional IT security scene in France,
was very successful for NTT Com Security in 2014.
Our workshop on Incident Response was sold out and the
satisfaction survey by Les Assises ranks NTT Com Security
at 32 out of 130. The team met 250 CISOs and IT managers,
during the one-to-one meetings, networking sessions and
at our booth.
Nordic Open House & Security Forum
17
18
600Minutes Information Security
Breakfast seminar with national TV
NTT Com Security Sweden participated jointly with
Palo Alto Networks at 600Minutes Information Security,
an industry event targeting IT Security management
from top 500 companies in Sweden. The objective was
mainly to develop new contacts through one-to-one
meetings and the NTT com Security team met with
22 prospects. We also addressed all the delegates through
a 30 minute speaker slot, which covered how to address
the challenge of Advanced Persistent Threats.
NTT Com Security Norway was invited by the IT
infrastructure company ATEA Norway, to do a speaker
slot about targeted hacking and advanced threats.
The breakfast seminar, part of a roadshow arranged by
ATEA, took place in in September in Larvik, Norway.
The event gathered over 120 customers from 45 different
organisations and had Norwegian television NRK
reporting from the event.
IT Security Trends 2015
The experts at NTT Com Security have identified
a number of IT Security developments for 2015,
including the following:
With a string of high-profile attacks in 2014, cybercrime
is forcing companies of all sizes in every sector to take
stock. Yet, for those organisations that make up our critical
national infrastructure, the threat of a cyber attack has
serious repercussions that reach far beyond the disruption
to the individual business. 2015 will see critical infrastructure coming under increased scrutiny from both
attackers and defenders. The risk of a cyber attack is
not going away and critical systems remain inherently
vulnerable.
Next year, we expect to see more organisations (especially
the mature security purchasers) that traditionally outsourced critical security functions, to bring such functions
in-house, but selecting flexible expert partners to develop
hybrid-SOC solutions. Organisations are looking to
reassure themselves that systems are proactively monitored around the clock and experts are on hand to provide
essential advice and support when needed.
Incident Response
The information security budget will shift to advanced
detection, response and forensics. This requires executive
management support and should be promoted throughout
the organisation to ensure that risks are put in context
and everyone understands their responsibilities. It is clear
that traditionally, information security has been seen not
as the responsibility of the individual, but of the IT department – this has to change. Every part of the organisation
needs to understand the appropriate course of action in
advance of a security breach. The speed of reaction cannot
keep getting faster and faster, so technologies and services
focused on incident response, rather than just incident
prevention, should be high on the agenda for security
professionals in 2015.
Applications & Clouds
Whilst the core infrastructure will remain in place protecting the business as usual, we will see a continued
leverage of the cloud. With the increasing use of smart
devices there will be a greater requirement to secure these
devices and the diverse range of mobile and business
applications, to prevent fraud and social engineering.
Hybrid and private clouds will continue to dominate the
thinking of senior executives and specifically the CFO.
Security has to be embedded into this model and can’t
be bolted on; because of this, a new breed of information
security technologies and approaches are maturing in the
market and the traditional CAPEX model will change to
a more flexible and dynamic OPEX security model.
The enterprise security architecture has to reflect this
flexible model and provide the context and security over
and above compliance.
Risk-based approach
Organisations’ focus on risk will continue to mature,
ensuring that they have the appropriate controls and
balance of security measures. Understanding and collating
huge amounts of data will force organisations to develop
their SIEM platform to include advanced analytics and
business analysis. We will see more and more organi-
19
sations outsourcing the management of their Security
Information and Event Management (SIEM) and sharing
data for the increased provision of intelligence.
Technologies will be selected that provide a comprehensive and integrated approach, to provide a comprehensive
data source that can be used to look for indicators of
compromise.
Focus on endpoint security
With the increasing popularity of smart devices and the
increasing diversity of the endpoint, comes the realisation
that whilst we have done an increasingly effective job of
securing the perimeter, the endpoint is the weakest link in
the defences and is often beyond the perimeter. All of the
major technology providers are focusing their research
and acquisition dollars on endpoint security. This will take
many forms and care must be taken when reviewing
how to secure this diverse new environment. Initially the
focus was on containers and encryption, but this has
not proved dynamic and flexible enough for most
organisations. Technologies are emerging that focus on
the limited number of techniques that are deployed to
compromise an endpoint, these will continue to be
developed and organisations will look to secure their
critical resources. But service providers will need to ensure
that the support and service model is robust and scalable
to cope with the increasing demands of the tech savvy
user, and the business must also ensure that individuals
know and understand their security responsibilities.
Finally, we will see the emergence of micro hypervisors
that segregate and isolate applications as a way of securing
the endpoint.
20
Threat Intelligence Services
Organisations will be investing more in defensive and
threat intelligence capabilities, based on what was
observed in 2014. Generic threat intelligence, whilst useful,
does not enable the business to understand the real risks
or allow informed decisions to be made and acted upon
quickly. The goal is to mitigate the risk before it impact
the business – which can only realistically occur through
collaboration and an increased openness from service
providers and MSSPs.
Evolution of exploit kits
There will be increased malicious activity and challenges
faced within the financial sector, following the takedown
of BlackHole 2.0. There will also be a focus on the evolution
of malware, leading to an increase in client side banking
credential theft. The focus will shift to mobile banking
and the requirements for robust incident response and
fraud analytics, as this becomes more and more acceptable
within the marketplace.
We are an
internationally
activeprovider of
IT Security
solutions and
Services.
21
At € 264.1 million,
consolidated
revenues were up
16.4 % on the
previous year.
22
Group Management Report
of NTT Com Security AG for 2014
1. Fundamental principles of the Group
NTT Com Security – our business
1.1 Details of the Group
The digital business landscape creates great opportunity –
driving innovation, reducing trade barriers, reaching
new customers and allowing people to share knowledge
and collaborate across national boundaries. But with
this new opportunity comes new risk: that the data and
systems we rely upon will be compromised in ways that
are increasingly difficult to detect or defend against.
At NTT Com Security, we put information security and risk
management in context, enabling our customers to grasp
new business opportunities without constraints. Our choice
of WideAngle consulting, managed security and technology
services leaves our customers free to focus on business
opportunities while we focus on managing risk.
NTT Com Security AG is the parent company. Its shares
were listed in Deutsche Börse AG’s Prime Standard
segment in Frankfurt up until 19 December 2013. From
29 November 2013 to 28 March 2014, the shares of
NTT Com Security AG were listed in the regulated market
of the Munich stock exchange. Since 31 March 2014,
they have been listed in the Munich stock exchange’s
over-the-counter trading (m:access). The listing in XETRA
trading on the Frankfurt stock exchange (over the counter)
will be maintained.
NTT Com Security AG directly or indirectly holds all of
the NTT Com Security Group’s investments. The NTT Com
Security Group is an internationally active provider of
IT security solutions and services. As of the reporting date,
it had 864 employees and 18 branches in eight countries
across Europe, the United States, Singapore, Japan,
Hongkong, and Australia.
NTT Com Security helps companies to establish secure
communications infrastructure and to handle transactions
via public and private networks. With comprehensive
security solutions, advice, systems integration and
managed security services and support, it offers customers
a broad range of information security and risk management
services. In 2014, Infotrust AG, Switzerland, was consolidated for the first time after being acquired. Secode AB
in Sweden merged with NTT Com Security (Sweden) AB
at the beginning of 2014. In addition, ProtechT Technical
Services LLC was liquidated at the end of August and the
Finnish company NTT Com Security (Finland) Oy at the
end of December 2014.
What we do
We are a global company working exclusively within
the information security and risk management landscape.
Our people share their collective insight, specialist knowledge and practical experience with our global customers.
Innovative and independent, at NTT Com Security, we see
a more secure world.
How we do it
By orienting information security and risk management to
the strategic goals of the company and integrating best
practices in all aspects of our services and processes, we
are able to demonstrate the value of information security
and risk management as a competitive advantage. Together
with our parent, NTT Communications Inc., we have global
access to data centres, Security Operations Centres (SOCs)
and R&D centres as well as an insight into a large part of
global internet traffic. This places us in a unique position
when it comes to averting threats. Our work with other
NTT Group companies provides us with the foundations
for an exciting and innovative future, offering our customers genuine added value. Our unique position offers
unparalleled knowledge of global threats, allowing us to
protect our customers more effectively. Underpinned
by our research and development activities, our threat
analyses and alerts and broad-based technological partnerships, our shared strength provides our customers with
the information they need to make solid business decisions
impacting risk and safety.
23
Our approach
Our business has grown through solving the challenges
of internet, information and infrastructure security and we
continue to pioneer new standards using our consistent,
global approach. This approach differs from other
organisations in our industry: we understand that the
threat to information assets has never been greater and
its protection is more critical than ever.
To deliver the solutions that meet the unique needs of
your business, our consultants use the WideAngle Global
Enterprise Methodology – our global approach that enables
your organisation to understand its current exposure and
make informed decisions for continuous risk management.
Following this methodology, we define the relevant controls
and identify the prioritised activities to meet best practice;
align the solutions to your security architecture; implement
a programme of delivery measured against these agreed
goals, and deliver the agreed security operations model for
continuous risk management.
24
Our team
With our exclusive focus on information security, we
attract and employ the world’s most experienced IT
security experts with a who wish to work for the leading
company in this sector. These experts bring with them
practical experience from all corporate levels – from CISOs
of global market leaders, to compliance and technology
specialists. Many of the members of our dynamic team are
security professionals who are dedicated to addressing
complex security, risk and compliance challenges.
Our customers
We are trusted by customers in every industry sector
and company size – working with global businesses,
government agencies and fast-growing and market-leading
organisations, to provide a consistent approach to
practical security solutions.
Our services
Our customers rely on us to provide clear services that
demonstrate value and above all, to have the right people
who will quickly understand these business challenges.
They also want objective advice to make the right technology choices.
Our markets
NTT Com Security is a global company active in information safety and risk management. This means we are
able to keep pace with today’s rapidly evolving threat
scenarios and proactively share this information with our
customers. Our approach is to respond to our customers’
information security and risk management challenges
with the necessary sensitivity towards local cultures and
compliance.
Our solution is WideAngle, a global platform that integrates
our consulting, managed security and technology services
into one seamless portfolio that aligns information security
and risk management to an organisation’s strategic goals.
We have branches in Europe, the United States, Asia
and the Pacific, with national teams that understand local
requirements and are able to offer a consistent customer
experience worldwide.
Our services portfolio covers every aspect of information
security and risk management from initial assessment
through to strategic programme planning, hands on
deployment and round the clock management and support.
Our partners
We are a highly accredited global partner for many of
the leading security technology vendors. We invest in our
employees to ensure they have a comprehensive knowledge of vendor products and associated services, and
understand how these products and services fit within
the increasingly complex information security and risk
management landscape. Our Innovation Institute and
research and development labs not only assess the
capabilities of vendor products, but also integrate them
into comprehensive business solutions to match specific
customer requirements.
Market determinants
Convergence of four market forces
In contrast to the way things used to be, there are currently
four market forces which influence each other mutually
and which enterprises across the world must take into
account: Big Data, the Cloud, mobility and collaboration.
Smart Apps and an increasingly wide array of devices
ensure that Big Data is the driving force and mobile
devices are the point at which everything converges,
creating seamless mobility for accessing and collecting
information. In addition, the customer expects personalised
services and the Cloud permits this by allowing people
to work together and share knowledge. This generates a
digital convergence, allowing devices to communicate with
each other across all available cable or non-cable networks.
Digital convergence via the Cloud and mobility will also
make it easier to work together and share information.
Employees and companies will make use of the possibilities
which the Cloud offers to develop personalised services
for customers, adding real value and ensuring that the
business continues to thrive. Even so, many people still
think that security hinders innovation. To ensure that
they can harness these convergent forces, companies must
implement third-generation information security and
risk management. This will allow them to transform by
entrenching information security and risk management
firmly in every fibre of the enterprise structure.
Big Data
Big Data is a concept which experts in information security
have been advocating for quite some time. The more you
know about an event and a business, the more you can
reduce or lessen risk. As the volume of data grows, it
becomes increasingly difficult to analyse it and to derive
insight from it. Correlation between events identifies
heightened risks or threats not only for individual companies, but also for entire industries. Big Data will also
make it possible to implement more effective business
processes and ensure efficient use of resources. The Cloud
forms a material part of Big Data when it comes to storing
data and also drawing information from event correlations.
the 21st century. The Cloud will dominate – regardless
of which model prevails. However, management of the
Cloud should remain in companies’ hands. Cloud integration will falter if companies do not incorporate the
necessary level of security into their services from the
outset and are unable to clearly demonstrate that the
basic principles of information security: confidentiality,
integrity and availability – have been observed.
Mobility
Our private and business lives are merging. We want to
work and play in the same environment and use the
devices we wish to use. We are used to generating our
own content and to using the internet to find and share
information. The protective wall of IT is already being
compromised by the existence of different operating
systems and devices, something that is heightening risk
for companies. As this trend will continue, it is crucial
to render the identity of users and data secure. The
IT department can regain control by firmly integrating
security in its services.
Social networks and collaboration
Companies must come to terms with the fact that certain
things can no longer be ignored: information and opinions
are available around the clock and the power of social
networks, an image or a brand forms a material part of any
business model. Next-generation workers will also base
their decisions about which employers they want to work
for on the freedom which they have for using the devices
and social networks they are accustomed to. Companies
must balance this freedom with control mechanisms to
ensure that the security concepts work for employees
and all the devices they use. And businesses rely on
traditional providers of security services and information
and communications technology companies, fully
supporting these new requirements.
Cloud
It is not possible to view the cloud in isolation. Issues
relating to privacy, liability and transparency must also be
taken into account. These issues impact the individual as
well as the companies offering such services. This involves
a lot more than merely imposing strict rules on Cloud
operators. Instead, it is necessary to carefully consider how
personal information should be managed and protected in
25
1.2 Goals & Strategies
1.3 Management process system
Having launched our next generation Managed Security
Services (MSS), we will continue to invest in becoming the
number one provider of information and risk management
in Europe. We continue to see significant growth in the
US and will further develop in Asia, leveraging the regional
expertise of NTT Communications.
We attach importance to applying only a small number
of uniformly available performance indicators. For this
reason, there is no change in the management process
system over the previous year. At NTT Com Security,
we use historical and projected revenue, gross margin,
EBITDA and cash flow indicators.
We focus on our clients’ business challenges and embed
a comprehensive portfolio of strategic and technical
advisory and consulting services, technical solutions and
ongoing support, through Managed Security Services for
information security and risk management. The relative
contribution of standalone technology sales should
continue to reduce, while the share contributed by
Consulting and Managed Security Services, will continue
to grow. Our aim is to deliver services that allow our
customers to focus on business opportunities while we
focus on managing risk. We have also seen significant
requirements for our Advanced Security Operations
services, blending regional expertise with the scale and
expertise of a global managed security provider.
In operating terms, we attach importance to regional
management teams who assume local responsibility for
business and business development in accordance with
the Group strategy and goals. This entails both economic
factors as well as the type of services offered and industrywide determinants.
Our focus on becoming the most important global
information security company is ongoing. We intend to
grow employee numbers, expand our customer base and
our regional presence. Regional growth will be achieved
organically as well as through appropriate acquisitions.
Partnership and cooperation with leading technology
manufacturers will accelerate, enabling us to continue to
offer our customers the latest information security and risk
management solutions and services. We will also continue
to make the global cloud security services and solutions of
our majority shareholder, NTT Communications, available
to our customers.
By investing in information systems, management has
ongoing access to the latest business performance data.
The regional management teams submit monthly reports
on business performance and the specific outlook for the
next few months.
Annual budgets are prepared, supplemented and updated
with rolling forecasts.
There are separate approval processes for capital spending
and recruitment to ensure ongoing reconciliation between
actual business performance and costs. Major capital
spending projects are based on business cases.
1.4 Research and development
As in 2014, research and development activities this
year will again focus on the increasingly frequent threat
scenarios arising with respect to IT security. We are
investing in the knowledge required to address these
situations. Therefore, research focuses less on the development of technological capabilities and more on the ability
to detect patterns in hacker attacks, viruses, worms
and other threats, for example.
At the same time, new approaches are constantly arising
with respect to social engineering. We are observing
these in the marketplace and making this information
available to our customers in the form of the global threat
intelligence report (GTIR). Published for the first time in
the first half of 2014, this report summarises all the main
findings of an analysis of attacks collected by all the
NTT Group Security companies. It provides customers
with a valuable tool for planning their global approach
to information security and risk management.
26
2. Business report
2.1 Macroeconomic and sector environment
According to the International Monetary Fund January
2015 update, global economic growth in 2015–16 is
projected at 3.5 and 3.7 percent, which are downward
revisions of 0.3 percent relative to the October 2014 World
Economic Outlook (WEO). The revisions reflect a reassessment of prospects in China, Russia, the euro area, and
Japan – as well as weaker activity in some major oil
exporters because of the sharp drop in oil prices. The
United States is the only major economy for which growth
projections have been raised.
The distribution of risks to global growth is more balanced
than in October. The main upside risk is a greater boost
from lower oil prices, although there is uncertainty
about the persistence of the oil supply shock. Downside
risks relate to shifts in sentiment and volatility in global
financial markets, especially in emerging market
economies, where lower oil prices have introduced external
and balance sheet vulnerabilities in oil exporters.
Stagnation and low inflation are still concerns in the euro
area and in Japan.
Worldwide spending on information security will reach
$71.1 billion in 2014, an increase of 7.9 percent over 2013,
with the data loss prevention segment recording the fastest
growth at 18.9 percent, according to the latest forecast
from Gartner, Inc. Total information security spending will
grow a further 8.2 percent in 2015 to reach $76.9 billion.
According to Gartner, MSSP will grow by 15.4 percentage
points through 2017. Up until 2013, a sum of USD 13.8
billion was spent on outsourcing IT security.
According to Gartner, the increasing adoption of mobile,
cloud, social and information (often interacting together)
will drive use of new security technology and services
through 2016.
Other trends in the information security market that form
assumptions behind Gartner’s latest forecast include:
By 2015, roughly 10 % of overall IT security enterprise
product capabilities will be delivered in the cloud.
Regulatory pressure will increase in Western Europe and
Asia/Pacific from 2014.
By year-end 2015, about 30 % of infrastructure protection
products will be purchased as part of a suite offering.
By 2018, more than half of organisations will use security
services firms that specialise in data protection, security
risk management and security infrastructure management
to enhance their security postures. Mobile security will be
a higher priority for consumers from 2017 onward.
From a technology perspective, new technologies will
account for 100 % of growth, according to IDC Top Ten
Predictions for 2015. Worldwide IT and telecommunications spending will grow 3.8 % in 2015 to more than
$3.8 trillion. Nearly all of this spending growth and one
third of total spending will be focused on new technologies
such as mobile, cloud, big data analytics and the Internet
of Things.
IDC also predict that cloud service providers will become
the new data centre, redrawing the IT landscape. The
massive shift to data centres operated by cloud service
providers will spark a burst of ‘cloud first’ hardware
innovations and drive greater consolidation among server,
storage, software, and networking vendors. By 2016, over
50 % of compute and 70 % of storage capacity will be
installed in hyperscale data centres. IDC expects to see
two or three major mergers, acquisitions, or restructurings
among the top-tier IT vendors in 2015.
2.2 Business performance
In the first half of 2014, BDG GmbH & Co. KG, Cologne, was
acquired and integrated by NTT Com Security (Germany)
GmbH. The main reason for the acquisition was to gain
access to BDG’s specialists and expertise as well as its
customer portfolio. Customers will have access to a broader
range of solutions and services as part of the NTT Com
Security Group’s security services and this acquisition will
allow the Group to additionally reinforce its market leadership in Central Europe.
In October 2014, NTT Com Security AG acquired Infotrust
AG, Zurich, Switzerland. Consolidated for the first time
in November 2014, Infotrust AG is a wholly owned and
independent subsidiary of NTT Com Security AG. The main
reason for the acquisition was to gain access to Infotrust’s
specialists and expertise as well as its customer portfolio as
the leading provider of information security in Switzerland.
The merger of this company with the activities previously
performed by NTT Com Security (Switzerland) AG, has
yielded the largest specialist in information security and
risk management in the Swiss market. In particular,
27
customers benefit from global support in all aspects of
information security, as well as access to a broader range
of services under a single roof.
2.3 Results of operations
The figures at a glance* in M€
Secode AB merged with NTT Com Security (Sweden) AB
at the beginning of 2014.
ProtechT Technical Services LLC, Dubai, UAE, was liquidated at the end of August and Finnish company NTT Com
Security (Finland) Oy at the end of December 2014.
2014
2013
Revenues
264.1226.9
Gross profit
Gross margin in %
103.597.4
39.242.9
Personnel expenses
Personnel expenses in %
83.374.7
31.532.9
Other operating expenses Other operating expenses in %
41.544.0
15.719.4
Other operating income
Other operating income in %
8.98.5
3.43.7
EBITDA
EBITDA margin in %
-12.4-11.9
-4.7-5.2
EBIT (operating earnings)
EBIT margin in %
-15.5-16.8
-5.9-7.4
Earnings after tax
Net earnings after tax in %
-17.5
-6.6
-17.2
-7.6
-1.37 €
-1.37 €
-1.35 € -1.35 €
Earnings/loss per share basic
Earnings/loss per share diluted
* All percentages in these financial statements have been calculated based on
rounded € thousands.
28
2.3.1 Revenues by region
Following on from the previous year, NTT Com Security
AG’s revenues continued to grow, increasing by 16.4 % over
2013. Regionally, revenues painted a mixed picture.
NTT Com Security recorded a significant increase in
revenues as a whole in 2014. At € 264.1 million, consolidated revenues were up 16.4 % on the previous year.
Revenues in M€
20142013 United Kingdom
Germany / Austria /
Switzerland
USA
France
Nordics
Asia
Japan
NTT Com Security Global Services
Group head office
Eliminations
Total
Change
in %
88.8
82.6
7.5
90.2
26.3
15.6
14.3
3.7
25.5
76.4
22.1
15.0
16.2
2.5
6.0
18.1
19.0
3.8
-12.0
48.0
>100
12.5
8.8
41.5
9.0
-21.9
264.1
16.5
-19.2
226.9
-44.8
-13.7
16.4
EBITDA in M€
20142013
United Kingdom
Germany / Austria /
Switzerland
USA
France
Nordics
United Arab Emirates
Asia
Japan
Group head office Eliminations
Total
Change
in %
-8.8
-6.3
-39.6
-0.9
-4.8
-1.2
-6.2
-0.3
-4.2
1.2
3.9
-5.7
-0.5
-4.9
-0.3
-4.3
0.4
>-100
15.8
>-100
-26.1
0
2.2
>100
12.2
6.2
96.2
0.3
0
-12.4
-0.9
0.5
-11.9
>100
-4.5
> Revenues in the United Kingdom grew by € 6.2 million
or 7.5 %, underpinned by technology and support
services. The decline in revenues sustained in the first
half of 2014 was recouped by two major technology
transactions in the second half of the year. Among
other things, this was due to reinforcements to our sales
and marketing activities, which we expanded in 2014.
Support service business, which is linked to technology
sales, also rose accordingly.
> Total sales in Germany/Austria/Switzerland climbed
by 18.1 % in 2014. BDG GmbH & Co. KG, which was
acquired in April 2014 and merged with NTT Com
Security (Germany) GmbH, contributed revenues of
€ 7.0 million. Consolidated for the first time in November, Infotrust AG added € 1.8 million in revenues.
Technology revenues rose by € 5.5 million, while
support service revenues were up € 4.8 million.
Following the reinforcement of sales and marketing
activities, professional service revenues rose by 12.8 %.
The transition to MAPS in the region, which began in
2013, was successfully continued in 2014, accompanied
by growth in technology and professional services.
> Revenues in the United States were also up, rising
by 19.0 %. This was particularly due to technology
revenues, which grew by total of € 5.9 million as a
result of the addition of four major new customers.
At the same time, there was a small increase in professional service revenues (up € 0.6 million). Driven by
this top-line growth, the loss at the EBITDA level in the
United States came to € -4.8 million, an improvement
of 15.8 % over the previous year.
> The French unit was unable to consistently sustain the
dynamic growth in revenues achieved in the first half
of 2014. Thus, revenues in this region grew by 3.8 %
to € 15.6 million. Revenues from support services
climbed by € 0.9 million or 21 % due to the technology
previously sold in 2013. Professional services revenues
increased by 36 % over the previous year to € 1.5
million, thanks to the further expansion of sales
activities in this region. Despite this positive performance, net loss for the year widened substantially
to € 1.1 million.
29
> Revenues in the Nordics failed to remain on the growth
trajectory seen in 2013 in the year under review, with
revenues from sales of technology down € 1.1 million
compared with the previous year. Reflecting this,
support services revenues, which are tied to technology
sales, also dropped. This decline in revenues led to a
loss of € 6.2 million at the EBITDA level in the region.
> No revenues were generated in the United Arab
Emirates in 2014 as business operations had been
discontinued there in 2013. The company was to have
been fully wound down in the fourth quarter of 2014.
However, as the outstanding receivables have not
yet been fully collected, it will not be liquidated
until 2015/16.
> Following the commencement of the business activities
in Australia in the second quarter of 2014 and the
full-year consolidation of the company in Hongkong
for the first time, revenues in Asia rose by 48.0 %.
The Australian company contributed 20 % to total APAC
revenues, which rose by an absolute € 0.6 million in
the technology segment. Despite the higher revenues,
net loss contracted only marginally by 2.2 percentage
points to € 4.2 million.
> Consolidated for the first full year, Japanese business
generated total revenues of € 25.5 million, most of
which arose from Managed Services (€ 12.3 million)
and Technology (€ 8.2 million). These activities had
previously been performed directly by the majority
shareholder NTT Communications. EBITDA for the
region came to € 1.2 million.
> The loss at the EBITDA level was up on the previous
year in 2014, widening by 4.5 percentage points to
€ 12.4 million. This was due to ongoing spending on
product, regional and personnel expansion.
30
Revenues by Regions
in M€
in %
100
300
3.7
14.2
250
200
150
2.5
16.2
6.0
22.1
15.0
76.4
25.5
26.3
15.6
90.2
80
60
1
7
3
10
7
35
1
5
10
10
6
34
40
100
50
0
82.6
88.8
2013
2014
USA
France
DACH
United Kingdom
20
0
Asia
Nordics
Japan
37
2013
34
2014
Revenues by Solution Segment
Revenue Growth by Solution Segment
in M€
in %
100
300
250
200
34.4
22.9
100
50
0
Technology
Sales
100
24
20
80
30
29
60
40
67.7
2013
13
Support
Services
60
75.8
80.6
10
52.6
55.7
150
80
120
40
101.3
2014
20
0
36
38
2013
2014
Managed Security Services (MSS)
Consulting, Integration & Training
Support Services
Technology Sales
Consulting,
Integration
& Training
Managed
Security
Services
20
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Growth rate 2013 –> 2014
2.3.2 Revenues by solution segment
Revenues by product type were influenced by ongoing
spending on managed security services, which achieved
a substantial increase in revenues towards the end of
the year. At the same time, revenues from the sale of
technology and the provision of support services rose as
a result of the addition of major new customers.
Revenues from consulting, integration and training
were down slightly following the transition of individual
services to MSS.
31
Revenues by Solution Segment
Technology Sales
Support Services
Consulting, Integration and Training
Total
20142014
in M€
in %
20132013
in M€
in %
101.338.4
75.928.7
52.519.9
34.413.0
264.1100.0
80.635.5
67.729.8
55.724.6
22.910.1
226.9100.0
Change
in %
25.7
12.0
-5.7
50.3
16.4
Recurring vs. non-recurring revenues
20142014 in M€
in %
2013 in M€
Recurring revenues
Non-recurring revenues
Total
57.225.2
169.774.8
226.9100.0
65.925.0
198.275.0
264.1100.0
in M€
65.9
198.2
57.2
2013
0
50
150
250
200
300
Recurring revenues
in %
2014
25.0
75.0
2013
25.2
74.8
0
20
40
Recurring revenues
32
15.2
16.8
16.4
2.3.3 Gross profit and gross margins
169.7
100
Change
in %
Non-recurring revenues grew by an absolute € 28.5 million
or 16.8 % in relative terms, widening the share in total
revenues to 75 %. At the same time, recurring revenues
also increased by an encouraging € 8.7 million.
2014
2013
in %
60
80
100
At € 103.5 million, gross profit was up 6.2 % on the
previous year (€ 97.4 million). However, the gross margin
contracted from 42.9 percent in 2013 to 39.2 percent,
reflecting the greater proportion of cost-intensive technology sales.
2.3.4 Personnel expenses, other operating
expenses and income
Employees
The average headcount rose above the previous year
level, with NTT Com Security employing an annual average
of 845 people around the world (previous year 803).
At 864, the worldwide end-of-year headcount was also
up on the previous year (836).
Personnel expenses climbed by € 8.6 million over the
previous year to € 83.3 million (previous year € 74.7
million). This was primarily due to the increased staff
numbers following the first-time consolidation of Infotrust
AG in the fourth quarter of 2014 and the merger of
BDG GmbH & Co. KG with NTT Com Security (Germany)
GmbH in April 2014. Also, ongoing efforts to step up
sales and marketing in the various regions to safeguard the
global growth strategy, together with currency-translation
effects in connection with costs incurred in the United
States and the United Kingdom as a result of the strength
of the relevant currencies against the euro, impacted on
these expenses.
15 %
23 %
Sales
Asministration
Technical
62 %
Earnings 2010 – 2014
in M€
10
5
In contrast to personnel expenses, other operating
expenses dropped by € 2.5 million over the previous year
to € 41.5 million (2013: € 44.0 million). As in 2013, the
main factors here entailed the rebranding of the security
service under the WideAngle name and related marketing
expenses. In addition, the service organisation was
improved and global functions installed, for which external
service providers were also particularly required.
In addition, external advisors were retained to assist with
the acquisitions.
All told, a loss of € -12.4 million was sustained at the
EBITDA level, the Group’s main management ratio
(previous year loss at the EBITDA level of € -11.9 million).
2.3.5 Depreciation/amortisation, interest,
taxes and net profit/loss for the year
Depreciation and amortisation came to € 3.1 million
in 2014, less than in the previous year (€ 4.9 million).
The figure for the previous year had included impairments
of € 1.7 million on the residual carrying amount of the
Secode brand.
At the EBIT level, a loss of € -15.5 million was sustained,
better by € 1.3 million compared to the previous year’s
loss of € -16.8 million.
6.2
3.0 1.4
1.9
0
-5
-7.8
-10
-11.9
-15
-17.2
-20
-25
-12.4
-17.5
-21.8
2010
2011
2012
2013
2014
EBITDA
EAT
Net finance expenses came to € -0.2 million (previous
year: € -0.2 million).The very inexpensive funding provided
by NTT Communications, which furnishes the main credit
facilities for NTT Com Security, is continuing to help.
The loss before tax dropped by € 1.4 million over the
previous year to € -15.6 million in 2014 (previous year
€ -17.0 million).
Net tax expenses stood at € -1.9 million (previous year
€ -0.2 million).
This translates into a loss per share of € 1.37 (previous
year € 1.35).
33
2.4 Financial position and net assets
Total assets increased to € 196.2 million as of the reporting
date (previous year € 130.8 million). On the assets side,
current assets rose to € 139,1 million (previous year
€ 99.0 million) due to the higher trade receivables
(€ 81.8 million; previous year € 51.8 million) and the
increase in inventories (€ 4.3 million; previous year
€ 3.9 million). Trade payables rose from € 26.6 million to
€ 45.9 million. In addition, there was an increase in other
liabilities from € 23.2 million to € 26.4 million. Cash and
cash equivalents rose from € 6.8 million in the previous
year to € 9.4 million in 2014.
A substantial net cash outflow of € 21.0 million in 2014
(previous year € 16.0 million) arose from operating
activities as a result of the increased working capital and
poor earnings situation.
On the other hand, non-current assets rose from
€ 31.8 million to € 57.2 million in the year under review
primarily due to the addition of the new acquisitions
(Infotrust AG € 11.5 million and BDG GmbH & Co. KG
€ 7 million).
With respect to equity and liabilities, current liabilities
rose substantially over from € 117.1 million in 2013 to
€ 168.8 million. This is primarily attributable to the
financial liabilities (€ 61.3 million; previous year
€ 21.3 million) to NTT Communications Corporation, Japan.
This entails a credit facility of € 64.1 million of which
an amount of T€ 5,000 was unused as of the reporting
date. Similarly, trade payables rose by € 19.3 million to
€ 45.9 million (previous year € 26.6 million).
Non-current liabilities rose in the period under review
from € 19.0 million to € 34.7 million. This reflects the
increase in deferred income (€ 27.1 million; previous year
€ 16.2 million).
The equity ratio came to -12.85 percent (previous year
-4.05 percent) as a result of the loss sustained. Equity
stood at € -25.2 million as of 31 December 2014 (previous
year € 5.3 million).
All told, net assets have deteriorated again over the
previous year, due to the losses sustained and the
resultant negative equity as of the reporting date.
As a consequence of the further utilisation of the credit
facilities provided by NTT Communications, the financial
condition deteriorated in 2014 due to a further increase
in current liabilities relative to current assets.
All told, the Company remains in the implementation
process of a necessary strategic realignment, which can
only be achieved by heavy spending on infrastructure,
the range of services and employees. The principal shareholder, NTT Communications Corporation, is supporting
this strategy by providing the further funding necessary
to cover the losses which have arisen, as well as the
capital spending, and remains committed to a long-term
partnership. The funding provided for the acquisitions
executed in 2014 provides visible proof of this. This gives
NTT Com Security the basis for successfully completing
its strategic realignment in 2015 and beyond.
2.4.1 Finance management
The purpose of finance management at NTT Com Security
is to ensure the Group’s liquidity at all times and to
minimise financial risks such as currency or credit risks.
Cash pools are utilised in the Group’s main currencies –
EUR, USD, GBP, NOK and SEK – to ensure effective and
centralised cash management at the Group level and to
optimise interest income/expenses and reduce bank fees.
For the purposes of currency management, existing foreign
exchange positions are hedged centrally for all national
companies in the light of internal hedging capabilities.
2.4.2 Non-financial performance indicators
Corporate values
We place our customers and their needs at the core of
everything we do.
We are committed to integrity, a passion for skills and
mutual trust, to ensure our customers’ satisfaction.
We encourage the striving for professional expertise
by means of continuous improvements and international
partnerships.
We make a contribution and assume responsibility.
These efforts are reflected in the regular sector reports
by Gartner and the evaluation of these.
34
Business strategy
We are leaders in information security, thanks to our
skills and experience. We consistently develop the best
solutions and strategic partnerships. We offer proactive
and innovative added value for our customers. We seek the
highest possible quality in providing our global services.
The central components of our business strategy are the
consulting and quality initiatives which we have launched
in all regions. In this way, we can ensure our continued
growth and are on track towards implementing these
plans.
In the year under review, our growth strategy created
the basis for making the most of the opportunities and
successfully meeting the challenges of the marketplace.
As a result, we are in a position to combine growth and
efficiency on a sustained basis.
Management guidelines
We communicate openly and transparently and treat
each other with respect. Our employees receive all the
information they require for their work.
We jointly formulate clear targets and work towards
achieving them. Our employees know their area of
responsibility and the scope which they have for action.
We encourage our employees to think and act on a
holistic (and entrepreneurial) basis. We offer them a model
to follow and thus demonstrate the responsibility which
each employee bears. We encourage our employees and
provide them with active support. We pay particular
attention to tapping individual potential for further
development, steadily enhancing the high professional
quality of our joint work.
We encourage a team spirit which also goes beyond the
confines of our teams. We work with our employees on an
eye-to-eye level. We encourage our employees to participate
in efforts to find a solution. Our attitudes and actions set
a moral example for our employees to follow. For this
reason, we make sure that we protect our own integrity.
2.4.3 Financial performance indicators
Revenues
Revenues play a key role as a monetary indicator of
the output achieved and reflect the extent to which our
products and services are accepted by our customers.
In addition, this indicator allows us to track the product
mix and to determine which regions are most able to
implement strategic business changes.
Gross margin
The gross margin is the ratio of gross profit to revenues.
Expressed as a percentage, it shows revenues net of the
cost of materials and changes in inventories. Accordingly,
it tracks the Company’s cost efficiency.
EBITDA
EBITDA (earnings before interest, taxes, depreciation and
amortisation) allows management to track the profitability
of a given region. This indicator describes the operational
efficiency of the company in question and provides
information on the profitability of operating business.
Cash flow
Cash flow measures the net inflow of liquidity generated
by business activities during the year under review. It
permits an assessment of the financial scope for generating
the funds required to preserve assets held on the balance
sheet and for expansion spending. Accordingly, cash flow
is an important indicator of the Company’s liquidity and
internal financing potential.
3. Material events occurring after the
reporting date
In January 2015, the Management Board and Supervisory
Board of NTT Com Security AG decided to issue new
share capital including shareholders’ pre-emptive
subscription rights. This transaction was successfully
completed in February 2015. Accordingly, a total of
3,808,954 new shares were issued at a price of € 6.15 each.
Thus, the number of shares issued increased from
13,036,884.00 to 16,845,838.00. The new shares were
issued on a cash basis. NTT Com Security received liquidity
of € 23,425,067.10 before issuing costs.
35
4. Forecast, opportunities and risks
In 2014, the NTT Group widened the focus of its investments with the addition of two acquisitions with which
it additionally expanded its business in Germany/Austria/
Switzerland, the region with the largest revenues and
earnings. At the same time, numerous new customers were
obtained, while additional services were sold to existing
customers. The Snowden disclosures and concerns
surrounding data security in the light of the activities of
the NSA, have particularly prompted many customers
to seek local or at least national solutions. It is precisely for
this reason that we have developed and implemented the
customer-oriented Advanced Security Operations Centre
(ASOC), which we are also operating for our customers.
We expect this business to achieve significant growth in
2015 with revenues in the double digit millions.
The first calendar quarter of 2015 will be a stub financial
year in which we expect a general improvement in
revenues and operating earnings over the same period of
the previous year.
The following statements refer to the next full business
year from 1 April 2015 through to 31 March 2016.
The United Kingdom will continue returning to strong
revenue and EBITDA growth under new management.
Germany/Austria/Switzerland will post revenues of more
than € 100 million for the full fiscal year for the first time,
thanks to the successful integration of the acquisitions
completed in 2014, together with further organic growth.
The approach of the break-even threshold in the United
States resulted in an improvement in earnings in 2014,
in tandem with a return to growth. We expect a continuation of this performance. The close partnership with
the majority shareholder remains a key determinant
of success.
The French unit was previously highly dependent on
technology business and the related support services,
with MSS and consulting activities making only small
contributions. However, consulting revenues increased for
the first time in 2014, thus laying the foundations for
further profitable growth in 2015/16. In 2014, the Nordics
saw a substantial increase in profitability in tandem with
a slight decline in revenues. Revenues are expected to
continue climbing in 2015/16, accompanied by a further
increase in earnings thanks to the very successful offerings
in Security Information and Event Management as a
Service (SIEMaaS) as well as the addition of technology
36
sales. Capital spending in Asia will be maintained at the
current level, with a projected slight increase in revenues
expected to result in a small improvement in earnings.
Looking forward to 2015/16, management’s clear focus
will be on the European market. At the same time, market
position and profitability are to be strengthened by means
of further acquisitions.
The Management Board projects a continuation of the
revenue growth at the Group level in 2015/16, driven
by strong demand for high-quality security consulting,
technology and services. The new ASOC services, the
SIEMaaS offerings and the very good relations with leading
technology producers, will additionally strengthen the
Group’s market position and customer relations, generally
causing margins to widen. With cost management
remaining strict, the Management Board’s prime goal is
to return the Company to profitability. All told, we expect
revenues to climb to more than € 290 million, with EBITDA
coming to between € 2 and 5 million. Cash flow from
operating activities will be more or less balanced.
At the same time, further acquisitions are being planned,
resulting in a substantial net cash outflow before financing.
These acquisitions are expected to be financed by
NTT Communications Corporation.
Currency risks and opportunities
As a large part of our business is transacted in US dollars
and pounds sterling, we are exposed to exchange rate
risks when these amounts are translated into our Group
currency, the euro. At our national companies, our main
suppliers issue their invoices in the local currency,
meaning that the currency risk is primarily confined to the
translation of the national companies’ financial statements
(translation risk). In Germany and the UK, a proportion of
the goods are purchased in US dollars. To reduce the
currency risk within the NTT Com Security Group, various
hedges, such as currency forwards, zero-cost options and
currency swaps, were used in the year under review to cap
risks and opportunities.
A detailed description of hedging activities can be found
in the consolidated financial statements.
In addition, a centralised foreign currency management
system was in operation in the year under review for
Central Europe, the United States and the United Kingdom
to centrally measure, monitor and hedge foreign-currency
risks arising from operating business. These hedges reduce
exposure to volatile currency markets.
In addition, there are exchange rate risks and opportunities
arising from currency translation of the net assets held by
the non-Eurozone Group companies and their income and
expenses (translation risk) that the Group does not hedge.
Market and sector risks and opportunities
Over the past few years, IT security business has grown
more quickly than the economy as a whole, a trend which
sector experts assume will continue. As the economy as
a whole picks up, IT security should grow at a disproportionately strong rate. The IT security market is subject
to permanent change. With the speed of technological
progress accelerating, the ability to react quickly to
security-relevant situations is a competitive factor. As a
result of changes in individual technological areas, margins
on the main revenue drivers may erode, thus exerting
pressure on the NTT Com Security Group’s earnings. The
competitive situation and nascent trends in the sector and
the economy as a whole are therefore observed closely
and analysed to detect risks and opportunities at an early
stage, so that the Company’s range of products and services
can be adjusted accordingly with minimum delay.
Incremental efforts to extend the range of high-quality
services and to increase the proportion of recurring
revenues are minimising the NTT Com Security Group’s
exposure to market and sector risks, while allowing it to
harness economies of scale. This strategy entails extensions
to the range as well as a reduction in the dependence
on products and producers. Systematic spending on
technological expertise through the development of the
Company’s own services and new IT security technologies
will help to increase market penetration and heighten
opportunities. Efforts to extend NTT Com Security Services
are to substantially boost the Group’s profitability in the
future.
Product range and OEM risks and opportunities
NTT Com Security works closely with numerous top
international companies. As a result , it is exposed to the
risk of strategic changes on the part of the vendors from
whom it sources technology. This entails changes to
price and discount structures, as well as modifications to
corporate policy. Producers may sign contracts with our
competitors or change their distribution or marketing
strategies. In the past few years, several producers with
whom NTT Com Security works closely have been the
subject of takeovers. The consolidation process amongst
producers continued in 2014 and is likely to exert
considerable influence in 2015 as well. The ramifications
of these trends are difficult to assess. In an effort to track
such risks and opportunities, we maintain permanent
contact with the management of our suppliers and
technological partners at a national and international level.
This ensures that we are kept informed at short notice
of any possible positive or negative changes and allows
us to take action quickly to benefit from such changes
or to alleviate their effects. The dual sourcing strategy
is still being pursued. As a result, NTT Com Security has
alternative suppliers as well as product and solution
vendors. To date, there is no evidence of any monopolistic
structures in the market resulting in any undue
dependence on individual producers.
Staff expertise and motivation
Our employees’ skills form a crucial element of our
success and are part of the basis on which we are
extending and defending our competitive lead. For this
reason, human resources management is a key aspect
of corporate management.
The NTT Com Security Group’s continued success hinges
materially on its ability to recruit new qualified staff and
to motivate, retain and train existing employees.
As well as the business focusing on an interesting area
of activity and systematic personnel development policies,
appropriate remuneration and participation in the
Company’s success are an important source of motivation,
providing employees with an incentive to remain with
the Group.
A large part of the Group’s staff have a technical
background. For this reason, the Company is particularly
committed to offering staff scope for professional and
career development, in order to bind holders of expertise
on a long-term basis. As part of the integrated human
resources strategy, new career models are continuously
being developed for scientific/technical staff.
In addition, the sustained organisational changes are
making high demands of staff. For this reason, the planned
activities call for a high degree of management competence
on the part of individual supervisors. To support this,
over the past few years, international HR standards and
processes, backed up by annual global employee surveys,
have been receiving continuous enhancements.
37
IT risks
This comprises network failure, the risk of data being
corrupted, destroyed or stolen as a result of operating
errors and/or external factors and restrictions in the
availability of applications. These risks are addressed
by means of ongoing spending on our infrastructure and
the latest knowledge on security technology, not only in
customer projects but also inside the Group itself.
We are increasingly using standardised software on
a cross-border basis and making greater use of server
infrastructure virtualisation and encryption for mobile
terminals.
Impairment risks
This refers to the risk of further impairment losses on
goodwill or other assets. The goodwill recognised in
connection with past acquisitions is monitored on an
ongoing basis and it is currently assumed that there is
no evidence of any impairment.
Customer risks and opportunities
This risk particularly entails dependence on individual
key-account customers, the possibility of losing them and
exposure to undue economic pressure. There is also an
opportunity to gain new customers. This situation can
particularly occur in technology business, in which
customer ties tend to be looser and it is easier to substitute
suppliers. We will therefore be continuing to increasingly
orient our range of solutions to high-quality recurring
services.
Overall statement on future performance
At € 12.4 million, the loss recorded at the EBITDA level
fell substantially short of our expectations. However,
it was influenced by non-recurring expenses in connection
with acquisitions, restructuring and the delayed launch
of new services. On the other hand, our revenue target
for 2014 was substantially exceeded. In 2014, the initial
increase in the cost of central functions arising from our
strategic realignment was reduced substantially compared
with the previous year, and will be additionally trimmed
in 2015/16.
Analysts such as Gartner have repeatedly confirmed the
benefits of our strategic orientation. The Company is now
superbly positioned to address customers’ challenges
professionally and reliably. The planned growth will allow
the Company to return to profitability.
38
5. Risk management system
The business environment in which we operate is
characterised by swift technological change and strong
competitive pressure. We respond to these market
conditions by analysing opportunities and risks on the
basis of an integrated risk management system.
Our Group’s risk management system covers all
organisational and strategic control and monitoring
measures. As such, we pay particular attention to detecting
and analysing risks at an early stage and to taking suitable
precautions for averting them. At the same time, the
system ensures that the Group’s objectives, particularly
those of a financial, operating and strategic nature, can
be achieved as planned. One of the core elements of corporate governance is to detect, analyse and address risks.
The Company endeavours to make optimum use of
opportunities while minimising the risks as far as possible.
Risk management plays a crucial role in the early detection
of any trends liable to jeopardise the Group’s going-concern
status and in the definition of suitable strategies for
safeguarding its future. As a general principle, the risk
management system covers organisational, reporting and
management structures and is supplemented with specific
elements. Specifically, this entails an analysis of the risk
dimensions strategy, market and competition, service and
support, partner and technology management, personnel,
finance, IT and compliance.
The risk management system identifies and evaluates risks,
monitoring and capping them by means of a regulated
management, reporting and controlling system. Group
management monitors risks on the basis of key indicators,
allowing management to detect whether risk is still at
acceptable levels.
NTT Com Security risk management reports directly to
the Chief Financial Officer. Group management constantly
monitors operating business and the potential risks for
subsidiaries. For this purpose, monthly reports are
prepared documenting the performance and goals of the
subsidiaries and setting out the underlying performance
indicators and trends. These reports are regularly discussed
in the Management Board meetings. In addition, decisions
are made on any measures which may be necessary.
Information on the market, competitors and the technological developments of the subsidiaries are regularly shared,
consolidated with the Group’s controlling data and,
if necessary, supplemented with additional evaluations.
In addition, monthly telephone conferences are held to
provide accounting staff with a platform for discussing
the opportunities and risks arising in their specific areas
of responsibility. The figures for the previous month are
analysed and a forecast for the future provided. The Chief
Financial Officer submits the consolidated monthly
revenue figures to the Supervisory Board via a telephone
conference call. In addition, the Chief Executive Officer
reports to the Supervisory Board on details concerning the
market situation, recent developments with respect to
customers and the resultant ramifications for the Group’s
continued performance.
A risk management methodology, which is regularly
reviewed and updated, describes and documents the
various components of the risk management system.
The purpose of the internal control system as it relates to
accounting is to ensure uniform processes complying with
the statutory requirements, the principles of good accounting, the rules stipulated in the International Financial
Reporting Standards (IFRS) and Group-wide policies and
to provide appropriate and reliable information.
The organisational structures are defined in the accounting
principles. A Group-wide schedule ensures that all financial
accounts are prepared within the requisite period.
The basis for the internal control systems, particularly
those relating to accounting, is derived from the uniform
and centrally managed ERP and CRM systems, which track
more than 95 % of the Company’s global business activities.
This provides a high degree of predefined functions for
central sales and business processes. Clearly defined
processes, the allocation of responsibilities and uniform
IT systems therefore help to systematically avoid errors.
All systems of relevance to accounting are protected by
appropriate access restrictions. The double sign-off
principle is also implemented at the subsidiaries. A large
number of processes involved in consolidation accounting
have been standardised and documented to ensure more
effective monitoring of the matters of relevance for
consolidation accounting.
In addition, local management has access to numerous
internal controls and measures, e.g. process descriptions
and documentation in the local Intranets, which are
aimed at avoiding unnecessary risks. During the year
under review, the Group-wide policies were revised and
republished to establish uniform procedures within the
entire Group.
The Company was able to substantially reduce its risk
exposure following the takeover by NTT Com. Over the
last few years, NTT Com has proven that it is pursuing
long-term goals with its investments and would support the
Company in the event of any unexpected difficulties.
For example, NTT Com Security AG has access to a
substantial credit facility provided by NTT Communications
Corporation, Japan, to cover any short-term funding gaps.
In addition, it is now able to make more effective use
of growth potential. An attempt has been made to offer
solutions shared with customers in specific projects.
6. Explanatory report on the disclosures made
in accordance with Section 315 (4) of the German
Commercial Code
As of the end of the year, the Company’s subscribed capital
stood at € 13,036,884 and is divided into 13,036,884
no-par-value registered shares. There is no right to claim
the issue of individual share certificates. The shares are
ordinary shares granting full voting and asset rights.
There are no restrictions on voting rights or the transfer
of shares.
As of 31 December 2014, NTT Communications Deutschland GmbH held 78.30 % of the capital of NTT Com
Security AG. As the 296,840 shares (2.28 %) held by
Integralis AG as treasury stock are not voting-entitled,
NTT Communications Deutschland GmbH holds 80.13 %
of the voting rights in NTT Communications AG.
The number of shares held as treasury stock is unchanged
over the previous year.
There are no shares with special rights.
The inclusion of the NTT Com Security AG financial reports
in the NTT Group’s consolidated financial statements
provides further mechanisms for verifying Group data.
The Company’s Management Board comprises two or
more persons according to the articles of association.
The Management Board currently comprises two persons.
The members of the Management Board are appointed
by the Supervisory Board. Otherwise, the appointment
39
and dismissal of the members of the Management Board
is governed by Sections 84, 85 of the German Stock
Corporation Act. Amendments to the articles of incorporation are governed by the provisions contained in Sections
133, 179 of the German Stock Corporation Act. In the
absence of any binding statutory provisions to the contrary,
the Company’s articles of incorporation stipulate that
resolutions are passed with a simple majority of the votes
cast and that the majority of capital is deemed to constitute
the simple majority of the share capital represented during
the passing of the resolution.
As of 31 December 2014, the following authorised was
available for future use:
> Authorised capital 2014:
In accordance with a resolution passed at the annual
general meeting on 4 June 2014, the Management
Board is authorised until 31 May 2019 subject to the
Supervisory Board’s approval to increase the
Company’s share capital by up to € 6,500,000.00 on
a cash basis by issuing new bearer shares (ordinary
shares) once or repeatedly (authorised capital 2014).
The Management Board was additionally authorised
with the Supervisory Board’s approval to determine
further details of the equity issue and its execution.
The Supervisory Board was authorised to amend the
Company’s articles of incorporation to reflect the scope
of the equity issued using authorised capital and, if the
authorised capital is not used in full or only in part on
or before 31 May 2019, to amend them again following
the expiry of the authorisation.
40
The shareholders fundamentally have pre-emptive
subscription rights. The new shares may also be underwritten by banks or companies coming within the
definition in Section 186 (5) Sentence 1 of the German
Stock Corporation Act subject to the obligation that
they are offered to the Company’s shareholders for
subscription (indirect subscription rights). However,
the Company’s Management Board is authorised
subject to the Supervisory Board’s approval to exclude
the pre-emptive subscription rights as far as this is
necessary to eliminate any fractional amounts arising
from the subscription ratio.
As of 31 December 2014, the entire volume of authorised capital 2014 was still available for future use.
> Authorisation to buy back the Company’s
own stock:
In a resolution passed at the annual general meeting
on 29 June 2010, the shareholders authorised the
Company to acquire its own shares in a proportion
of up to 10 % of the share capital of T€ 11,585 on or
before 28 June 2015.
7. Remuneration report
7.1 Management Board remuneration
The members of NTT Com Security AG’s Management
Board receive annual remuneration comprising fixed
and variable components. In addition, there are
remuneration components with a long-term incentive
effect. The Supervisory Board reviews the reasonableness
of the variable components in regular intervals. The
Management Board remuneration is performance-oriented
and primarily comprises the following two components:
> a fixed component
> a variable component with a short and long-term
objective
The fixed component is paid in the form of a monthly
salary.
The variable remuneration comprises a short-term (annual)
and a long-term (2-year) component depending in both
cases on the extent to which the quantitative objectives for
the Group agreed upon with the Supervisory Board are
achieved. Monthly advance payments are made towards
the short-term component and must be repaid in the event
of any failure to achieve the objectives.
There is no share-based remuneration. The Management
Board did not hold any shares in the Company or related
subscription rights as of 31 December 2014.
In addition, the members of the Management Board receive
a monthly flat-rate car allowance to cover the use of
private cars on company business or have access to a
company car. The members of the Management Board
receive allowances for private pension savings schemes,
which are paid directly into corresponding insurance
policies (e.g. pension scheme arrangements). No direct
pension obligations are held by the Company or any other
Group members.
In 2014, total Management Board remuneration came
to T€ 1,162 (2013: T€ 1,126). The individualised breakdown
is as follows:
Allocation of remuneration in accordance with Section 314 (1) No. 6 of the German Commercial Code
Fixed remuneration Variable remuneration Car allowance
Allowances for
private retirement provisions
Allowances for
private health insurance
Total
Simon Church
in T€
in T€
20142013
278
262
336
362
2322
57
36
14
5
708687
Heiner Luntz
in T€
in T€
20142013
190
190
215
200
1515
30
30
4
4
454439
Total
in T€
in T€
20142013
468
452
551
562
3837
87
66
18
9
1,162
1,126
41
7.2 Remuneration of the Supervisory Board
The Supervisory Board of NTT Com Security AG receives
total fixed remuneration of T€ 50 plus VAT, if applicable,
as approved by the shareholders. If the Supervisory Board
has three members, the Chairman of the Supervisory Board
receives 4/9, his deputy 3/9 and an ordinary member of
the Supervisory Board 2/9 per year. The remuneration is
paid on a prorated basis if office is held on the Supervisory
Board for less than a full year.
In addition, a resolution was passed by the shareholders
at the annual general meeting on 18 May 2011 providing
for the members of the Supervisory Board to receive
a performance-tied remuneration component. Accordingly,
they receive variable performance-tied annual remuneration based on the Company’s earnings and revenues.
The annual variable compensation is capped at a maximum
of T€ 150 per year. 50 % of the variable annual remuneration is deemed to have been earned if the Company’s
earnings before interest and taxes (EBIT) as stated in its
consolidated financial statements exceed € 5.36 million
in the financial year in question. This share of 50 % is
deemed not to have been earned if EBIT for the financial
year in question equals € 2.68 million or less. If EBIT
for the financial year in question is between € 2.68 million
and € 5.36 million, a proportionate share of this 50 %
part of the variable remuneration is deemed to have
been earned in an amount proportionate to the EBIT
of € 5.36 million by which it exceeds € 2.68 million.
The remaining 50 % of the variable annual remuneration
is deemed to have been earned if the Company’s revenues
as stated in its consolidated financial statements amount
to or exceed € 189.6 million in the financial year in
question. This share of 50 % is deemed not to have been
earned if the revenues for the financial year in question
equal or are less than € 165.9 million.
42
If revenues for the financial year in question are between
€ 165.9 million and € 189.6 million, a proportionate share
of this 50 % part of the variable remuneration is deemed
to have been earned in an amount proportionate to the
revenues of € 189.6 million by which they exceed
€ 165.9 million.
In 2014, total remuneration paid to the Supervisory Board
came to T€ 142 (2013: T€ 133). The breakdown is as
follows:
Remuneration of the Supervisory Board Fixed remuneration Reimbursement of expenses
Variable remuneration
Total
20142013
in T€
in T€
50
17
75
142
50
8
75
133
Kazu Yozawa waived his fixed and variable remuneration
of T€ 28 for 2013 in 2014.
Dependent company report
Dependent company report
NTT Com Security AG’s majority shareholder has been
NTT Communications Deutschland GmbH, Munich, since
1 October 2009. As there is no control contract in force
with the majority shareholder, the Management Board
of NTT Com Security AG is required to prepare a report
on relations with related companies.
The Management Board confirms in accordance with
Section 312 (3) of the German Stock Corporation Act
that NTT Com Security AG has received reasonable
consideration for all transactions and activities referred
to in the related parties report in the light of the
circumstances known to the Management Board on the
date on which such transactions or activities were
executed and has not suffered any disadvantage as
a result of such activities being performed or omitted.
Ismaning, 20 March 2015
43
44
NTT Com Security
helps companies
to establish
secure
communications
infrastructure.
45
Income Statement
01.01.-31.12.2014 01.01.-31.12.2013
NotesT€ T€
Revenues
5.1
Changes in inventories
5.3
Cost of materials
5.5
Gross profit
Own work capitalised
5.4
5.2
Staff costs
5.6
Other operating expenses
5.7
Earnings before interest, taxes, depreciation and amortisation (EBITDA)
Amortisation of intangible assets and depreciation of property, plant and equipment
5.8
Earnings before interest and taxes (EBIT)
Other interest and similar income
Interest and similar expenses
Net finance expenses
5.9
Result from non-operative business
Earnings before tax (EBT)
Income taxes
5.10
Net loss after tax
264,123
-375
-160,267
103,481
0
8,946
-83,302
-41,528
226,925 479
-129,970 97,434 890 8,556
-74,737 -44,010 -12,403 -11,868 -3,104
-15,508
222
-376
-154
83
-15,579
-1,913
-17,492
-4,924
-16,792
148
-319
-171
0
-16,963 -234 -17,196 Of which attributable to:
Shareholders of NTT Com Security AG
-17,492 -17,196
Minority interest
0
0
Average outstanding shares (basic)
12,740,044
12,740,044
Basic result per share (€)
-1.37
-1.35
Average outstanding shares (diluted)
12,740,044
12,740,044
Diluted result per share (€)
-1.37
-1.35
46
Financial Report
Consolidated Statement of comprehensive income
01.01.-31.12.201401.01.-31.12.2013
NotesT€ T€
Earnings after tax
-17,492 -17,196 Foreign currency translation gains and losses
-2,427 -279
thereof “recyclable”
-2,427 -279
Comprehensive income
-19,919 -17,475 -19,919 -17,475 Total result
Of which attributable to:
Shareholders of NTT Com Security AG
-19,919 -17,475 Minority interest
0
0
47
Assets
48
31.12.201431.12.2013
NotesT€ T€
Cash and cash equivalents
4.1
Trade and other receivables
4.2
Inventories
4.3
Deferred costs
4.4
Other assets
4.5
Current assets
Deferred income tax assets
4.8
Sundry longterm financial assets
Prepaid cost of materials
4.4
Goodwill
4.7
Intangible assets
Property, plant and equipment 4.6
Non-current assets
9,351
81,791
4,295
38,486
5,160
139,083
1,066
1,148
21,211
27,959
1,160
4,619
57,162
6,791
51,838
3,917
32,514
3,966
99,026
2,699
0
12,889
9,465
2,123
4,654
31,830
Total assets
196,246 130,856
Financial Report
Equity and liabilities
31.12.201431.12.2013
Notes
T€
T€
Financial liabilities
4.10
Trade payables
4.9
Deferred revenues
4.11
Income tax liabilities
Other current liabilities
4.12
Short term part of long term provisions
4.12
Current liabilities
Deferred revenues
4.11
4.10
Deferred income tax liabilities
4.8
Non-current provisions
4.13
Non-current liabilities
Subscribed capital
Treasury shares
Share premium
Other reserves
Unappropriated surplus/accumulated deficit 4.14
Equity
61,324
45,888
52,355
745
8,725
17,713
186,751
27,147
4,761
530
2,279
34,717
13,037
-297
23,224
-4,242
-56,944
-25,222
21,289
26,622
44,790
1,226
12,424
10,768
117,119
16,227
899
832
1,081
19,040
13,037
-297
23,224
-1,815
-39,452
-5,303
Total equity and liabilities
196,246 130,856
49
Consolidated Statement of Cash Flows 01.01.-31.12.2014
01.01.-31.12.2013
T€T€
Earnings after tax -17,492 -17,196
Net finance income/expenses
154 -171
Current net tax expenses
600 924
Depreciation/amortisation
3,104 4,924
Decrease / (increase) in deferred income taxes
1,331 -690
Increase / (decrease) in provisions
8,144 -74 Book gains(-)/loss from the sale of assets
88 -26
Depreciation of bad depts expense
–
195 Unrealised currency translation gains / (losses)
-2,108 288
Interest received
222 148 Interest paid
-376 -319
Taxes paid
-1,034 -238 Changes in net current assets
-13,695 -3,786
Cash flow from operating activities
-21,061 -16,020
Payments from disposal of intangible assets
172 256 Received cash from acquisition
-19,016 –
Acquisition of property, plant and equipment and intangible assets
-1,678 -3,206 Cash flow from investing activities
-20,522 -2,950
Payments received from raising current or non-current financial liabilities
45,866 14,334 Payments made from raising current or non-current financial liabilities
-1,969 -337 Cash flow from financing activities
43,897 13,997
Currency translation effects on cash and cash equivalents
246 22 Decrease/increase in cash and cash equivalents
2,560 -4,952 Cash and cash equivalents at the beginning of the period
6,791 11,743 Cash and cash equivalents at the end of the period
9,351 6,791
50
Financial Report
Consolidated Statement of change in equity
Number of shares
Subscribed
Treasury
Capital
Currency
Accumu-
Total
lated loss
issued at 31.12.2014
capital
stock
reserve
translation
13.036.884 registered shares
differences
T€T€T€
T€T€T€
01.01.2014
13,037 -297 23,224 -1,815 -39,452 Net loss after tax
-17,492 Currency translation differences
-2,427 Comprehensive income
-2,427 -17,492 31.12.2014
13,037 -297 23,224 -4,242 -56,944 -5,303
-17,492
-2,427
-19,919
-25,222
01.01.2013
13,037 -297 23,224 -1,536 -22,256 Net loss after tax
-17,196 Currency translation differences
-279 Comprehensive income
-279 -17,196 31.12.2013
13,037 -297 23,224 -1,815 -39,452 12,172 -17,196
-279 -17,475 -5,303 NTT Com Security AG | Annual Report 2014
51
We assume
responsibility for
practical solutions
that advance
the companies.
52
Notes
to the 2014 Consolidated Financial Statements of NTT Com Security AG
1. General disclosures
The NTT Com Security Group is an internationally active
provider of IT security solutions and services. As of the
reporting date, it had 864 employees and 18 branches in
eight countries in Europe, the United States, Singapore,
Hong Kong, Japan and Australia.
NTT Com Security helps companies to establish secure
communications networks and to handle transactions via
public and private networks. The broad range of services
comprises extensive IT security solutions, consulting,
systems integration and support.
NTT Com Security AG is the parent company. Its shares
were listed in Deutsche Börse AG’s Prime Standard
segment in Frankfurt up until 19 December 2013. From
29 November 2013 until 28 March 2014, the shares of
NTT Com Security AG were listed in the regulated market
of the Munich stock exchange. Since 31 March 2014, they
have been listed in the Munich stock exchange’s over-thecounter trading (m:access). The listing in XETRA trading
on the Frankfurt stock exchange (over the counter) will be
maintained. NTT Com Security AG directly or indirectly
holds all of the NTT Com Security Group’s investments.
NTT Com Security AG’s parent company has been
NTT Communications Deutschland GmbH, Munich,
(NTT Com Germany) since 1 October 2009. In 2011,
NTT Com Security AG’s subscribed capital was increased
with the issue of 1,451,747 new shares in connection with
the acquisition of Secode AB in 2011. The new shares were
subscribed to in full by NTT Communications Deutschland
GmbH, which now holds 78.3 % of NTT Com Security AG’s
capital (Section 160 (1) No. 8 in connection with Section
16 (1) of the German Stock Corporation Act). NTT Com
Security AG holds treasury stock comprising 296,840 nonvoting shares, meaning that NTT Communications Deutschland GmbH holds roughly 80 % of the voting rights.
NTT Communications Deutschland GmbH is an indirectly
held subsidiary of Nippon Telegraph and Telephone
Corporation (NTT), Tokyo, Japan, which prepares consolidated financial statements as the ultimate parent company.
NTT’s consolidated financial statements are published in
Japan and in the United States, where it is listed.
NTT Com Security AG prepares its consolidated financial
statements in accordance with the International Financial
Reporting Standards (IFRS) published by the International
Accounting Standards Board (IASB) as endorsed in the
European Union, as well as the supplementary accounting
provisions contained in Section 315a of the German Commercial Code. The consolidated balance sheet, consolidated
income statement, consolidated statement of comprehensive income, consolidated cash flow statement and the
consolidated statement of changes in equity have been
prepared in thousands of euros (T€). The income statement
has been presented using the nature of expense method.
The Management Board of NTT Com Security AG released
the consolidated financial statements and the Group
management report for submission to the Supervisory
Board on 20 March 2015.
Legal disclosures
The shares of NTT Com Security AG have been listed in
the regulated market of the Munich stock exchange
until 28 March 2014. Since 31 March 2014 the shares are
traded at the over the counter market (m:access) of the
Munich stock exchange. The Company has registered
offices in 85737 Ismaning, Robert-Bürkle-Straße 3,
Germany. It is entered in the Munich commercial register
under the number HRB 121349.
Application of International Financial Reporting
Standards (IFRS) and declaration of conformity
The consolidated financial statements as of 31 December
2014 of NTT Com Security AG as the parent company in
the NTT Com Security Group have been prepared using
uniform recognition and measurement principles. As such,
the International Accounting Standards (IAS) /International
Financial Reporting Standards (IFRS), including the
interpretations of the Standing Interpretation Committee
(SIC)/International Financial Reporting Interpretations
Committee (IFRIC), as endorsed by the European Union,
in force as of the reporting date are applied. The additional
provisions of German corporate law were observed in
accordance with Section 315a (1) of the German Commercial Code. The figures for the previous year were calculated
using the same methods.
53
All standards issued by the International Accounting
Standards Board (IASB) and valid and endorsed by the
European Union as of the date on which the consolidated
financial statements were prepared were duly applied.
1.1 Consolidated companies
The domestic and non-domestic subsidiaries are consolidated in full by NTT Com Security AG. In the year under
review, the following companies in which NTT Com
Security AG holds a 100 % share either directly or indirectly or which are controlled by it, were consolidated:
Subsidiaries
Articon-Integralis SAS
NTT Com Security (France) SAS
NTT Com Security (Sweden) AB***
NTT Com Security (Norway) AS
NTT Com Security (Finland) Oy*
NTT Com Security (Netherlands) B.V.
NTT Com Security (US) Inc.
NTT Com Security (Switzerland) AG
Infotrust AG **
NTT Com Security (UK) Ltd.
NTT Com Security (Germany) Services GmbH
NTT Com Security (Germany) GmbH NTT Com Security (Austria) GmbH
Nocitra Ltd.
Integralis ME FZ LLC NTT Com Security (Singapore) Pte. Ltd.
NTT Com Security (Hong Kong) Ltd.
NTT Com Security (Japan) KK
NTT Com Security (Australia) Pty. Ltd.
NTT Com Security (Malaysia) SDN
Domicile
Paris, France
Paris, France
Share in
capital held
in %
100
100
Stockholm, Sweden
Arendal, Norway
Helsinki, Finland
100
100
100
Maastricht, Netherlands
Hartford, USA
100
100
Glattbrugg, Switzerland
Zurich, Switzerland
Reading, UK
100
100
100
Ismaning, Germany
100
Ismaning, Germany
100
Vienna, Austria
Reading, UK
Dubai, UAE
100
100
100
Singapore
100
Hongkong Tokio, Japan
100
100
West Ride, Australia
100
Petaling Jaya, Malaysia
100
* These companies were liquidated in 2014.
** Infotrust AG was consolidated for the first time effective 1 November 2014.
*** Merged with Secode AB.
54
Secode AB merged with NTT Com Security (Sweden) AB
at the beginning of 2014.
Infotrust AG, Switzerland, was acquired in October 2014.
NTT Com Security AG holds 100 % of this company’s capital.
The company was consolidated for the first time in
November 2014. NTT Com Security (Finland) Oy, Helsinki,
Finland, was liquidated at the end of 2014. Integralis
ME FZ LLC, Dubai, United Arab Emirates, discontinued its
business operations in 2013 and is to be liquidated in 2015.
The profit or loss of subsidiaries acquired or sold during
the year under review is reported in the consolidated
financial statements as of the date of actual acquisition,
i.e. from the date as of which the Group is able to exercise
a controlling influence or until the date on which such controlling influence is no longer exercised, as the case may be.
1.2 Balance sheet date
The consolidated balance sheet was prepared effective
31 December 2014. The consolidated income statement,
the consolidated statement of comprehensive income,
the consolidated cash flow statement and the consolidated
statement of changes in equity cover the period from
1 January 2014 until 31 December 2014. The balance sheet
date for the consolidated financial statements is identical
to that used in the single-entity financial statements
prepared by the consolidated companies.
At the annual general meeting held on 4 June 2014,
a resolution was passed to change the financial year such
that it now ends on 31 March of each year. This will give
rise to a stub financial year comprising the first quarter
of 2015. The Company’s 12-month financial year will cover
the period from 1 April 2015 to 31 March 2016.
1.3 Summary of significant accounting and
consolidation policies
The consolidated financial statements are prepared in
euros (EUR). In the absence of any indication to the
contrary, all figures are rounded up or down to the closest
thousand euros (TEUR). It should be noted that the use of
rounded figures and percentages may result in differences
due to commercial rounding.
Notes
In accordance with IAS 1, the current/non-current distinction is applied to assets and liabilities. Assets and liabilities
are classed as current if they are expected to be realised
or settled within twelve months of the balance-sheet date.
The consolidated income statement is prepared using
the total-cost method.
The consolidated financial statements are prepared
on the basis of historical cost, with the exception of the
re-measurement of certain non-current assets and financial
instruments. The main recognition and measurement
methods are explained below.
The consolidated financial statements include the parent
company’s financial statements and those of the companies
which it controls. An investor controls an investee when
it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to
affect those returns through its power over the investee.
Under IFRS, all business combinations must be accounted
for using the purchase method. The price of the subsidiary
acquired is allocated to the assets, liabilities and contingent
liabilities acquired at the values applicable as of the date
on which control is obtained over the subsidiary. The
assets received and liabilities and contingent liabilities
absorbed are recorded at their full fair values regardless
of the size of the share. Non-current available-for-sale
assets are recognised at fair value less the cost to sell.
Any remaining positive difference between the cost of the
business combination and the prorated net assets is
recognised as goodwill, which is reported using the full
goodwill approach.
The determination of fair value calls for certain estimates
and judgements, particularly with respect to intangible
assets and property, plant and equipment acquired and
liabilities assumed as well as the useful life of the
intangible assets and property, plant and equipment
acquired. These calculations are largely performed on
the basis of anticipated cash inflows and outflows. Any
deviations between actual cash inflows and outflows
and those used to calculate fair values may exert an
influence on future consolidated profit and loss.
The impairment-only approach stipulated by IAS 36
is applied to any subsequent measurement of goodwill.
Where necessary, goodwill is adjusted to match its
fair value.
Intragroup revenues and profits, expenses and income
as well as all receivables and liabilities between
consolidated companies, are eliminated in accordance
with IFRS 10.B86c.
Deferred taxes are set aside in accordance with IAS 12
for consolidation transactions.
The consolidation methods applied are unchanged over
the previous year.
1.4 Currency translation
Single-entity financial statements in foreign
currencies
The currencies of all the single-entity financial statements
prepared in a currency other than the euro were translated
in accordance with IAS 21 using the functional currency
principle. The functional currencies of the NTT Com
Security Group companies are the same as their respective
national currencies.
The consolidated financial statements were prepared
using the euro, this also being the parent company’s
functional currency.
The assets and liabilities of foreign subsidiaries whose
functional currency is not the euro were translated to
euro at the end-of-year exchange rate and expenses and
income using the closing-date exchange rate. The resultant
translation differences were recognised within other
comprehensive income in the statement of comprehensive
income. The cumulative amount recorded within equity
is reclassified upon the sale of the entity and reported
through profit and loss.
The goodwill arising from the acquisition of a foreign
business as well as any adjustments to fair value are
translated using the end-of-year exchange rate.
55
The single-entity financial statements not prepared in
euros were translated using the following exchange rates:
Exchange rates
GBP
USD
CHF
SEK
SGD
AED
JPY
HKD
End-of-year exchange rate
Average exchange rate
31.12.201431.12.2013
2014 2013
0.77842
1.21320
1.20235
9.39894
1.60489
4.45569
145.12550
9.41132
0.8338
1.3778
1.2275
8.8613
1.7407
5.0646
144.5502
10.68319
0.78757
1.23130
1.20249
9.41477
1.62078
4.52244
147.18607
9.54863
0.8367
1.3701
1.2246
8.9630
1.7258
5.0322
141.9167
10.6241
Foreign currency transactions
Foreign currency transactions which are not executed in
the functional currency are translated at the exchange
rate prevailing on the date on which they are executed.
Any translation differences arising between the date
of transaction and the date of payment are taken to the
income statement. All foreign currency monetary items are
translated into the functional currency at the end-of-year
exchange rate, with any resultant translation gains or
losses taken to the income statement.
1.5 Changes in presentation
The presentation of the balance sheet was altered
in 2014. In contrast to previous practice, current
provisions are now recognised for the first time.
These had previously been included within non-current
liabilities. This differentiation has only been possible
since 2014, due to a systematic distinction made in
accounting practices.
On the other hand, there are no changes to the presentation of the income statement over the previous year.
56
2. Summary of significant accounting policies
2.1 Changes in accounting policies due to
new standards
NTT Com Security AG applied all the accounting standards
which were mandatory for the first time as of 2014.
The recognition and measurement methods applied are
fundamentally the same as in the previous year.
Moreover, it was necessary for the following standards
and interpretations to be applied in the year under review.
However, this did not have any material effect on the
presentation of the consolidated financial statements:
IFRS 10: Consolidated Financial Statements
IFRS 10 redefines the control relationship between the
parent company and the subsidiary. An investor controls
an investee when it is exposed, or has rights, to variable
returns from its involvement with the investee and has
the ability to affect those returns through its power over
the investee. The standard provides guidance on numerous
specific circumstances giving rise to control.
IFRS 11: Joint Arrangements
IFRS 11 provides guidance on joint arrangements between
two or more parties, granting them joint control over an
economic entity. Joint control is based on a contractual
arrangement and is only presumed if decisions on the
relevant activities must be unanimously made by the
parties exercising joint control. The standard draws a
distinction between joint operations and joint ventures.
IFRS 12: Disclosures of interests in other entities
IFRS 12 provides additional guidance on the disclosure
requirements with respect to interests in other entities
and, to this extent, supplements IFRS 10, IFRS 11 and
IAS 28. Companies are required to disclose the significant
discretionary decisions and assumptions underlying
the classifications of interests in a given category.
In addition, disclosures must be made allowing the users
of the financial statements to evaluate the type and
nature of and risks associated with the company’s
interests in subsidiaries, associates, joint arrangements
and unconsolidated structured entities.
Notes
IFRS 10, 11 and 12: Modified transitional
requirements
The amendments clarify that the date for the first-time
assessment of consolidation under IFRS 10 is the first date
of the reporting period in which IFRS 10 is applied for
the first time. This was 1 January 2014 for the majority
of companies in the EU, unless they made use of the right
of early adoption.
IFRS 10, 12 and IAS 27: Amendments to
investment entities
IFRS 10 defines exceptions which are applicable to
investment entities. If an entity comes within the definition
of an investment entity according to the standard, it does
not have to be included in the controlling company’s
IFRS consolidated financial statements. Instead, investment
entities are required to measure their investments at fair
value through profit or loss.
IAS 27: Separate Financial Statements
An investment entity which is not permitted to consolidate
its subsidiaries under IFRS 10 solely prepares separate
financial statements.
IAS 36: Amendments to disclosures on recoverable
amount of non-financial assets
The amendments to IAS 36 restrict the disclosure
requirements for recoverable amounts. In the case of
cash-generating units which hold a material share of the
goodwill or intangible assets with an indefinite useful
life, the recoverable amount only needs to be disclosed
if an impairment is recognised or reversed in the current
accounting period.
IAS 39: Amendments to novation of derivatives
In contrast to the previous version, the amendments to
IAS 39 provide for the continuation of hedge accounting,
in the event of novation. The novation of a derivative
which is designated as a hedge does not result in the
discontinuation of hedge accounting provided that the
following conditions are satisfied cumulatively: novation
is the result of statutory or regulatory changes or the
introduction of new statutory or regulatory requirements,
it results in a change from the original counterparty to
a central counterparty, or to one or more entities acting
as clearing parties and the changes in the hedge solely
reflect matters relating to the change of counterparty.
IAS 28: Investments in Associates and
Joint Ventures
The introduction of IFRS 10, 11 and 12 resulted in
amendments to IAS 28.
IAS 32: Amendments to the offsetting of financial
assets and liabilities
As a general principle, financial assets and liabilities
are offset, provided that the company currently has
a legally enforceable right to set off the recognised
amount and intends either to settle on a net basis or to
realise the asset and settle the liability simultaneously.
The additions to IAS 32 refer to these two conditions.
The amendments now clarify that the current right must
be legally enforceable and unconditional.
57
In its consolidated financial statements for 2014,
NTT Com Security AG did not early adopt the following
standards which had been issued by the IASB as they
were not yet subject to compulsory application in the
year under review.
Standards
Standard/interpretation
IFRS 9 IFRS 15
IFRS 10 / IAS 28
Published by IASB
Mandatory application
Endorsed by the EU
Financial instruments: 24.07.2014
01.01.2018
No
Classification and Measurement
Revenue from Contracts 28.05.2014
01.01.2017
No
with Customers
Sale or Contribution of 11.09.2014
01.01.2016
No
Assets between an Investor and its Associate or Joint Venture
Bearer plants
30.06.2014
01.01.2016
No
IAS 16 / IAS 41
IAS 16 / Clarification of applicable 12.05.2014
01.01.2016
No
IAS 38
depreciation/amortisation methods
IFRS 14
Regulatory deferral accounts
30.01.2014
01.01.2016
No
IAS 19
Employee benefits
21.11.2013
01.02.2015
Yes
IAS 27
Equity method of accounting 12.08.2014
01.01.2016
No
in separate financial statements
IFRS 11
Joint arrangements
06.05.2014
01.01.2016
No
Annual Amendments to 25.09.2014
01.01.2016
No
Impovements and clarification of 2012-2014
various IFRSs
IFRS 10, 12, 28 Application of the exception 18.12.2014
01.01.2016
No
from the consolidation obliga-
tion under IFRS 10 if the parent
entity meets the definition
of an ‘investment entity’
IAS 1
Presentation of the 18.12.2014
01.01.2016
No
Financial Statements
IFRIC 21
Levies
20.05.2013
17.06.2014
Yes
01.02.2015
Yes
Improvements and clarification of 2010-2012
various IFRSs
01.01.2015
Yes
Improvements and clarification of 2011-2013
various IFRSs
58
Expected
impact
No material changes No material changes
None
None
None
None
No material changes
None
None
No material changes
No material changes
No material changes
None
No material changes
No material changes
Notes
2.2 Classification and recognition of
financial assets
A financial instrument is a contract that gives rise
to a financial asset of one entity and a financial liability
or equity instrument of another entity. Financial assets
particularly comprise cash and cash equivalents, trade
receivables and other loans and receivables, held-tomaturity investments and originated and derivative
financial assets held for trading. Financial liabilities
generally entail a contractual obligation to deliver cash
or some other financial asset to another entity. This
particularly includes trade payables, bank borrowings,
liabilities from finance leases and derivative financial
liabilities.
(including all fees forming part of the effective interest
rate and other premiums and discounts) can be discounted
over the expected term of the liability or, where applicable,
a shorter period to arrive at its net carrying amount upon
first-time recognition.
Income from liabilities is recorded using the effective
interest method. This does not apply to financial assets at
fair value through profit or loss.
Financial assets at fair value through profit and loss
Financial assets are classified as being at fair value through
profit and loss if they are held for trading purposes or are
designated as being at fair value through profit and loss.
A financial asset is classified as held for trading if:
Financial instruments are recognised as soon as
NTT Com Security becomes a party to them. However,
in the case of purchases and sales (purchases or sales
under the terms of a contract the conditions of which
provide for delivery of the asset within a period which
is customarily determined by the rules or conventions
of the market in question), the settlement day, i.e. the
day on which the asset is delivered to NTT Com Security,
is decisive for recognising the first-time addition to or
disposal from the balance sheet. Financial assets and
liabilities are not netted against each other.
Financial assets held for trading purposes are measured
at their fair value. This primarily entails derivative
financial instruments which are not effectively hedged
in accordance with IAS 39 and must therefore be classified
as ‘held for trading’. Any gains or losses derived from
subsequent measurement are reported through profit
and loss.
Some financial assets are intended and can be assumed
with reasonable certainty to be held until maturity.
Such financial assets are measured at amortised cost
using the effective interest method.
NTT Com Security has not made any use of the possibility
for initially recognising financial assets at fair value
through profit and loss.
Effective interest method
The effective interest method is a means of calculating
the amortised cost of a liability and of allocating the
interest income to the corresponding period. It equals
the interest rate with which the estimated future payments
> It was acquired primarily for the purpose of being
sold again in the near term, or
> On initial recognition it is part of a portfolio of
identified financial instruments that are managed
together and for which there is evidence of a recent
actual pattern of short-term profit-taking, or
> It is a derivative except for a derivative that is
a financial guarantee contract or a designated and
effective hedging instrument.
are measured at their fair value. Any gains or losses
arising from fair value measurement are recognised in
profit and loss.
Held-to-maturity financial instruments
Non-derivative financial assets with fixed or determinable
payments and fixed maturities that the Company has
the positive intention and ability to hold to maturity are
categorised as held-to-maturity financial instruments.
They are recognised at amortised cost using the effective
interest method less impairments. Interest income is
calculated using the effective interest method.
Loans and receivables
Trade receivables, loans and other receivables with fixed
or determinable payments that are not quoted in an active
market are classified as loans and receivables. Loans and
receivables are measured using the effective interest
method at amortised cost net of any impairment. Interest
income is recognised using the effective interest method
with the exception of current receivables, with which the
interest effect is negligible.
59
Impairment of financial assets
Impairment of financial assets: The carrying amounts
of financial assets which are not measured at fair value
through profit and loss are examined on each balance
sheet date to determine whether there is any objective
evidence (e.g. considerable financial difficulties on the
part of the debtor, significant changes in underlying
technological, economic and legal conditions as well as the
market environment of the debtor) pointing to impairment.
Loans and receivables: The amount of the impairment
in the case of loans and receivables equals the difference
between the asset’s carrying amount and the present value
of expected future cash flows discounted at the financial
instrument’s original effective interest rate. The impairment is reported through profit and loss.
If, in a subsequent period, the amount of the impairment
decreases and the decrease can be objectively attributed
to an event occurring after the adjustment, the impairment
is reversed through profit and loss.
Impairments of loans and receivables (trade receivables)
are very largely recorded by means of impairment
accounts. A decision on whether the risk of default is to
be recorded by means of an impairment account, or by
means of a direct adjustment to the receivable, depends
on the probability of default.
If receivables are classified as irretrievable, the correspondingly impaired asset is derecognised.
An impairment results in a direct reduction in the
carrying amount of the financial assets. Any subsequent
receipts of payments towards derecognised assets are
recognised through profit and loss.
2.3 Cash and cash equivalents
For the purpose of the cash flow statement in accordance
with IAS 7, all cash and cash equivalents which are due
for settlement in less than three months are recognised
at their nominal value. The cash and cash equivalents
reported in the consolidated balance sheet comprise cash
in hand, cheques and cash at banks. The cash and cash
equivalents recognised in the consolidated cash flow statement are deferred on the basis of the above definition.
2.4 Receivables and other financial assets
Receivables and other financial assets are recognised
at amortised cost subject, where applicable, to the effective
interest method. Allowance is made for individual interest
and credit risks. Profit and loss is assigned to earnings
for the period if the receivables are derecognised or
written down.
2.5 Other non-financial assets
Other non-financial assets are measured at amortised cost
net of any impairments.
2.6 Derivative financial instruments
Derivative financial instruments such as currency forwards, currency swaps and zero-cost options are used to
partially hedge the risks arising from currency fluctuations.
The derivative financial instruments do not satisfy the
hedge accounting conditions set forth in IAS 39 and are
classified as held for trading. Accordingly, they are
measured at their fair value as of the balance sheet date.
Negative fair values are reported within financial liabilities.
Positive fair values are reported within financial assets.
Any changes in fair value are reported through profit and
loss within net financial income/net financial expenses.
Fair value is defined as the value which can be achieved in
business operations under prevailing market conditions.
60
Notes
2.7 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes costs of purchase, conversion
and overheads incurred in bringing inventories to their
present location and condition. Net realisable value is the
estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated
costs necessary to make the sale and less reasonable
adjustments for all discernible risks arising from reduced
or absent marketability. All goods are measured using
the FIFO (first in-first out) method.
2.8 Prepaid cost of materials
The prepaid cost of materials primarily comprises payments made for maintenance contracts purchased from
suppliers which do not yet give rise to any expenditure
in the year under review. This item is reversed over the
remaining term of the contract.
2.9 Property, plant and equipment
In accordance with IAS 16, property, plant and equipment are recognised at cost less cumulative scheduled
straight-line depreciation. Production costs include directly
attributable costs as well as a reasonable proportion of
the attributable overheads. Where necessary, they are
adjusted to match their recoverable amount, if this is lower.
Maintenance costs are reported as expenses for the period.
Land is not depreciated. Depreciation is calculated on
a straight-line basis for all assets; in this case, historical
cost is written down to the residual carrying amount over
the following expected useful lives of the assets:
Buildings25-35 years
Motor vehicles5 years
Business equipment3-10 years
In accordance with IAS 16.67, property, plant and equipment is either derecognised upon being disposed of, or
when continued use or sale of the asset is not expected
to generate any economic benefits. The gains or losses
resulting from the disposal of an asset are calculated as
the difference of the net proceeds of the sale and the
carrying value of the asset and recognised in the income
statement for the period in which the asset is derecognised.
The expected useful lives, residual values and depreciation
methods are reviewed once a year and all necessary
changes to estimates made on a prospective basis.
The Group leases certain assets. Leases for assets in
which the Group holds the material risks and benefits
from ownership of the leased assets are classified as
finance leases. As a result, the asset in question is
capitalised as of the date on which it is used for the first
time. Assets leased under finance leases are recognised
at the lower of their fair value and the present value
of the minimum lease payment at the beginning of the
lease. A lease liability of the same amount is recorded
within non-current liabilities.
In accordance with IAS 17, the determination as to
whether an agreement is or contains a lease is made
on the basis of the economic nature of the agreement
as of the date on which this agreement is entered into
and calls for an estimate of whether the performance
of the contractual agreement depends on the utilisation
of a certain asset or assets and whether the agreement
grants a right to utilise the asset.
Each lease payment is divided into an interest and
a repayment portion to ensure that a constant interest
rate is applied to the lease liability. The present value
of the lease liability is reported within non-current and
current liabilities. The interest component of the lease
payment is recorded in the income statement and spread
evenly over the term of the lease. Assets under finance
lease are written off over the shorter of their expected
useful lifespan and the term of the lease.
If leases provide for economic ownership to remain with
the lessor (operating lease), the asset in question is carried
on the lessor’s books. In this case, the lease expenses are
recorded as expenses on a straight-line basis over the term
of the lease.
61
2.10 Intangible assets
Intangible assets acquired – other than as a result of
a business combination – are recognised at historical cost.
Software and licences are written down on a straight-line
basis over their expected useful lives of three to five years.
Where necessary, they are adjusted to match their fair
value, if this is lower.
The costs of such intangible assets acquired under business
combinations equal their fair value on their date of
acquisition. They are subsequently recorded at historical
cost less cumulative amortisation.
Contractual customer relations acquired as a result of
a business combination are reported at their fair value
on the date of acquisition. They have a limited useful life
and are measured at amortised cost net of scheduled
depreciation. Depreciation expenses are calculated on the
basis of the expected duration of the customer relations
(five to ten years).
The useful lives of and the amortisation method selected
for intangible assets, are examined at least once a year
on each reporting date; in the event of any difference
in the expectations over previous estimates, the corresponding changes are recorded as changes to estimates
in accordance with IAS 8.
The cost of development activities, i.e. for activities which
research results in a plan or draft for the production
of new or substantially improved products are capitalised.
Development expenses are capitalised as intangible
assets if the conditions for recognition stated in IAS 38
are satisfied. This means that development costs are
recognised as intangible assets if in terms of technical
and economic viability, it is likely that the Company will
derive a future economic benefit from the development
project and the costs attributable to the project during
the development phase can be reliably calculated. The
development costs recognised in accordance with IAS 38
are written down over three years, commencing with the
date on which the asset in question is ready for operation.
Research costs are not capitalised but recognised as
expenses upon arising.
62
2.11 Impairment of property, plant and equipment
and intangible assets except for goodwill
As a matter of principle, a distinction is drawn between
intangible assets with a definite useful life and those
with an indefinite useful life. The useful life is either the
expected period of time over which an asset is expected to
be used by the enterprise, or the number of production or
similar units expected to be obtained from the asset by the
enterprise. At each balance sheet date, the Group reviews
the carrying amounts of property, plant and equipment and
intangible assets to identify any evidence of impairment
of these assets. If such evidence is found, the recoverable
amount of the asset is estimated to determine the extent of
any impairment loss. If the recoverable amount of an asset
cannot be estimated, the recoverable amount of the cashgenerating unit to which the asset belongs is estimated.
In the case of intangible assets with an indefinite useful
life or those which are not yet available for use, an
impairment test is performed once a year and whenever
any evidence of impairment arises.
The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. In measuring value
in use, the estimated future payment flows are discounted
using a pre-tax interest rate. This pre-tax interest rate takes
account of the current market estimate of the present value
of the present value and the risks inherent in the asset,
unless these are already reflected in the estimate of the
payment flows.
If the estimated recoverable amount of an asset (or cashgenerating unit) is less than its carrying amount, the
carrying amount is written down to the recoverable value
of the asset (or the cash-generating unit). The impairment
loss is recognised in profit and loss.
In the event of any ensuing reversal of the impairment
loss, the carrying amount of the asset is increased to reflect
the new estimate of the recoverable amount. The increase
in the carrying amount is limited to the amount which
would have arisen had no impairment loss been recorded
for the asset (or cash-generating unit) in previous
periods. The reversal of impairment losses is recognised
in profit and loss.
Notes
2.12 Goodwill
Any excess in acquisition costs over the Group’s share
in the fair values of the identifiable assets, liabilities and
contingent liabilities acquired as a result of a business
combination is recognised initially as goodwill. Goodwill
is subsequently measured at amortised cost less any
impairments.
It does not undergo regular amortisation, but is instead
subjected to an impairment test at least once a year at
the level of the cash-generating unit. In the event of any
special events indicating that the carrying amount of
a cash-generating unit may no longer be covered by the
recoverable amount, an impairment test must also be
performed during the year.
New goodwill is always allocated to the cash-generating
unit which is expected to derive benefits from the business
combination.
Goodwill is tested for impairment by comparing the
recoverable amount of a cash-generating unit with its
carrying amount including goodwill. If the carrying amount
exceeds the realisable amount, the asset is deemed to be
impaired and written down to such realisable amount.
For this purpose, NTT Com Security initially calculates the
value in use on the basis of generally acknowledged
measuring methods, based on the medium-term forecasts
of the cash-generating units in question. A discounted cash
flow model is used. The discounted cash flow calculations
are based on forecasts derived from the company plans
approved by management and also used for internal
purposes. The material assumptions used to calculate
value in use relate to sales and costs, growth rates and
the discount rate.
Any impairment identified is initially deducted from
goodwill. If the impairment exceeds the goodwill, it is
applied to the other assets held by the unit coming within
the scope of IAS 36 pro rata on the basis of the carrying
amount of each asset. When an impairment is allocated,
the carrying amount of the asset must not be reduced
below the highest of:
The amount of the impairment loss that would otherwise
have been allocated to the asset, should be allocated to
the other assets of the unit on a pro-rata basis.
A later reversal of the impairment, due to the fact that the
indication that an impairment loss recognised in prior
periods for an asset may no longer exist, is not permissible.
2.13 Taxes
Current tax assets and liabilities for the current and
prior periods are measured at the amount expected to
be paid to (recovered from) the taxation authorities Using
the tax rates (and tax laws) that have been enacted or
substantively enacted by the balance sheet date.
Deferred taxes are calculated using the balance-sheet
oriented liability method (IAS 12), under which deferred
taxes are recognised for all accounting and measurement
differences arising between IFRS-based measurement and
the applicable tax bases.
In addition, current tax assets are recognised for future
tax reduction claims arising from tax losses.
Deferred income tax assets are calculated for all deductible
temporary differences and tax losses, however only to
the extent that it is probable that the Company will have
sufficient taxable income in the future against which the
temporary differences or unused tax losses can be utilised.
Deferred income taxes were measured on the basis of the
tax rates expected to be applicable. These are based on
the statutory rules in force or enacted on the balance sheet
date. Non-domestic income taxes are based on the rules
and laws applicable or enacted in the individual countries.
The income tax rates applied to the non-domestic
companies are between 0 % and 39 %.
> Its fair value less costs to sell,
> The value in use, and
> Zero
63
2.14 Deferred revenues
Deferred revenues primarily comprise income received
from customers for maintenance and MSS (Managed
Security Services) contracts. The contracts entered into
with customers in this area generally have a term of
between one and three years or, to a minor extent, a longer
period. The service is partially sourced from external
partners over this period and the customer invoiced for
the service at the beginning of the period.
Deferred revenues include the part of the service invoice
which does not yet constitute any income for the year
under review. This item is reversed over the remaining
term of the contracts.
2.15 Provisions and liabilities
Classification of financial liabilities
Financial liabilities are classified either as financial
liabilities at fair value through profit and loss or as other
financial liabilities.
Financial liabilities at fair value through profit
and loss
Financial liabilities are classified as being at fair value
through profit and loss if they are held for trading or are
voluntarily designated as being at fair value through
profit and loss.
A financial liability is classified as held for trading if:
> It is acquired primarily for the purpose of being sold
again in the near term, or
> On initial recognition it is part of a portfolio of
identified financial instruments that are managed
together and for which there is evidence of a recent
actual pattern of short-term profit-taking, or
> It is a derivative except for a derivative that is
a financial guarantee contract, or a designated and
effective hedging instrument
64
Other financial liabilities
Other financial liabilities, including loans raised, are
initially recorded at their fair value less transaction costs.
They are subsequently measured at amortised cost
using the effective interest method. In this case, interest
expenses are recorded on the basis of the effective
interest rate.
The effective interest method is a means of calculating
the amortised cost of a financial liability and of allocating
the interest expenses to the corresponding period. It equals
the interest rate with which the estimated future payments
can be discounted over the expected term of the financial
instrument or, where applicable, a shorter period to arrive
at its net carrying amount upon first-time recognition.
Provisions
Provisions are recognised in accordance with IAS 37
if the Group has a present obligation (legal or constructive)
towards a third party as a result of a past event, it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of the
obligation.
Provisions are recognised at the most likely amount.
If the Group is expecting a refund covering at least part of
the provisions recognised (e.g. under an insurance policy),
such refund is recorded as a separate asset provided that
the receipt of this refund is virtually certain. Expenses
from the recognition of provisions are recorded in the
income statement net of the refund.
The cost of setting aside provisions is taken to the income
statement. Income from the reversal of provisions is
reported within other operating income.
Provisions which are not expected to be used for more
than one year are discounted on normal market terms.
Notes
2.16 Equity
2.18 Borrowing costs
The breakdown of and changes in equity can be seen from
the consolidated statement of changes in equity and the
notes to the balance sheet. In accordance with IAS 32,
treasury stock is deducted from the Company’s equity in
an amount equalling the cost of such treasury stock.
Borrowing costs are recognised in the income statement
for the period in which they arise (IAS 23). Borrowing
costs that are directly attributable to qualifying assets are
recognised as part of the cost of that asset.
Treasury stock is reported separately within equity
and deducted from subscribed capital at its nominal value
of € 1 per share. The difference between the nominal
value and the buying or selling price is netted with the
capital reserve.
2.17 Revenues
Revenues are measured at the fair value of the consideration received or owing and are recognised when it is
likely that the economic benefit will flow to the Group and
the amount of the revenues can be reliably determined.
Revenues are recognised upon the sale of a product,
provided that the material opportunities and risks arising
from ownership of the products sold are transferred to
the buyer. This generally occurs upon the products being
dispatched.
Revenues are not recognised if there is any uncertainty
as to the consideration or if there is a high likelihood of
the goods being returned.
2.19 Earnings/loss per share
Basic earnings per share are calculated by dividing the net
profit for the year attributable to the shares by the average
number of shares outstanding. This figure may be diluted
by potential shares (primarily share options). Earnings per
shares are calculated in accordance with IAS 33.
2.20 Employee benefits
Retirement benefit plans
The subsidiaries in the UK and the United States have
established defined-benefit pension plans for employees.
With all these plans, the subsidiaries pay a certain
percentage of their employees’ remuneration into a pension
fund; employees are entitled to join the Retirement benefit
plan. The Group’s financial obligation is confined solely
to the prorated share. A defined benefit pension plan is
in operation at the subsidiary in France. This subsidiary
has set aside provisions for this obligation. Other than
this, there are no obligations.
In the case of long-term maintenance, support and MSS
contracts, the revenues and related costs are distributed
over the term of the contracts.
Some services are provided by third parties, while in other
cases the Company sells its own services. In the case of
the Company’s own services, the resultant revenues are
recorded in accordance with the percentage of completion
achieved as of the balance sheet date.
If it is not possible to reliably determine the percentage
of completion of a contract, only revenues equalling
the expenses which have arisen and are subject to
reimbursement are recognised.
65
2.21 Acquired businesses
BDG GmbH & Co. KG
BDG GmbH & Co. KG
In the first half of 2014, BDG GmbH & Co. KG, Cologne,
was acquired by NTT Com Security (Germany) GmbH and
integrated therein.
As of 1 April 2014
Fair value
in T€
The main reason for the acquisition was to gain access
to BDG’s specialists and expertise as well as its customer
portfolio. Customers will have access to a broader range
of solutions and services as part of the NTT Com Security
Group and this acquisition will allow the Group to additionally reinforce its market leadership in Central Europe.
The total purchase price came to T€ 7,300 (including
cash and cash equivalents of T€ 892). The goodwill of
T€ 6,982 includes non-separable intangible assets and
expected synergistic benefits. The following disclosures
resulting from purchase price allocation show the fair
values of the main groups of assets acquired and liabilities
assumed as of the date of acquisition:
Current assets
Trade receivables
Inventories
Other assets
Non-current assets
Property, plant and equipment
Intangible assets
Current liabilities
Trade payables
Current provisions
Other liabilities
892
1,384
105
45
258
5
1,268
119
49
79
Identifiable assets
(Allocation of the cost of the business combination)
Goodwill
6,982
Total assets
= Total purchase costs
7,300
If the company had been consolidated from 1 January 2014,
revenues would have been T€ 2,809 and consolidated
earnings T€ 210 higher.
Infotrust AG
In October 2014, NTT Com Security AG acquired Infotrust,
Zurich, Switzerland. Consolidated for the first time in
November 2014, Infotrust AG is a wholly owned and
independent subsidiary of NTT Com Security AG. The main
reasons for the acquisition were to gain access to Infotrust’s
specialists and expertise as well as its customer portfolio as
the leading provider of information security in Switzerland.
The merger of this company with the activities previously
performed by NTT Com Security (Switzerland) AG, has
yielded the largest specialist in information security and
risk management in the Swiss market. In particular,
customers benefit from global support in all aspects of
information security, as well as access to a broader range
of services under a single roof.
66
Notes
The total purchase price came to TCHF 17,250 (including
cash and cash equivalents of TCH 3,449). The goodwill
of T€ 11,513 includes non-separable intangible assets and
expected synergistic benefits. The following disclosures
resulting from purchase price allocation show the fair
values of the main groups of assets acquired and liabilities
assumed as of the date of acquisition:
Infotrust AG
Since the date of acquisition, Infotrust AG has contributed
revenues of T€ 1,793 and earnings before tax of T€ 50 to
consolidated earnings.
Up until its acquisition by NTT Com Security AG, Infotrust
AG had a financial year ending 30 June. It is not possible
to present the revenues and earnings for the current period
as if the company had been acquired at the beginning of
the period.
As of 1 November 2014
Fair value
in T€
Current assets
Trade receivables
Inventories
Other assets
Financial assets
2,859
1,011
500
250
95
Non-current assets
Financial assets
Other assets
753
1,229
1,989
Current liabilities
Trade payables
Current provisions
Other liabilities
Non-current liabilities
Other liabilities
150
621
432
1,144
3,533
Identifiable assets
(Allocation of the cost of the business combination)
Goodwill
11,513
Total assets
= Total purchase costs
14,319
67
3. Key sources of estimation uncertainty
In accordance with IFRS, proper and full preparation
of the consolidated financial statements requires the use
of estimates and assumptions, which affect the assets and
liabilities reported, the disclosure of contingent liabilities
and receivables on the balance sheet and the income
and expenses recognised. The estimates and underlying
assumptions are based on historical experience and other
factors which are considered to be relevant. Actual figures
may differ from the estimates.
The assumptions underlying the estimates chiefly relate
to the uniform Group-wide definition of useful lives,
the calculation of fair values of financial instruments,
the recognition and measurement of provisions, the
realisability of future tax losses and assumptions in
connection with the annual impairment test and the
allocation of the cost of business combinations.
The assumptions underlying the estimates are reviewed
regularly. Any changes in estimates which concern only
a single period are allowed for only in such period. If the
changes concern the current and future periods, allowance
is made for them in this and future periods.
The key assumptions concerning the future, and other
primary sources of estimation uncertainty at the balance
sheet date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
within the next financial years are discussed below.
3.1 Impairment of goodwill
To identify any impairment of goodwill, it is necessary
to calculate the value in use of the cash-generating unit
to which the goodwill has been allocated. The calculation
of the value in use necessitates an estimate of future cash
flows (which include material assumptions such as future
selling prices and volumes) from the cash-generating unit,
as well as a suitable discount rate for calculating the
present value. The goodwill had a carrying amount of
T€ 27,959 (previous year: T€ 9,465) as of the reporting
date (see Note 4.7).
68
3.2 Threatened losses in connection with
vacant buildings
In the United Kingdom, there are rental leases in force
for office space expiring in 2019. The Group does not use
all of the office space concerned and has not sublet all of it
or for the remainder of the lease. As of 31 December 2014,
it has set aside provisions of T€ 836 (2013: T€ 826) to
cover rental shortfalls on the assumption that only a small
part of the premises which it does not use itself will be
sublet. If the vacant space increases or there is any other
unfavourable change in the valuation parameters, this will
exert corresponding pressure on earnings. If a long-term
sublease is signed for all of the unused premises, this may
result in the provisions being reversed, in which case the
proceeds from such reversal will be taken to the income
statement.
3.3 Recognition of deferred income tax assets
for future tax reimbursement claims as a result
of unused tax losses and temporary differences
The Group recognised deferred income tax assets from
temporary differences as well as unused tax losses as
of 31 December 2014. Deferred income tax assets are
recorded only to the extent that it can be assumed from
the Company’s forecasts that there is sufficient probability
that future profit will be available to justify the recognition
of deferred income tax.
The estimate as to future taxable profit has been made
on the basis of historical experience, as well as future
expectations of the business performance of the companies
in question. If the business does not perform as expected
and it is no longer considered probable that sufficient
taxable profit will be available to realise all or part of the
tax reimbursement claims, the carrying value of the
deferred tax assets will be lowered as of the next balance
sheet date and the resulting expenses taken to the income
statement. Conversely, an improvement in business
expectations may also generate income tax reimbursements if the amount of deferred income taxes recognised
is too high.
Notes
4. Notes on the consolidated balance sheet
4.3 Inventories
4.1 Cash and cash equivalents
Inventories break down as follows:
As of the balance sheet date, there were cash and cash
equivalents of T€ 9,351 (previous year: T€ 6,791). Of this,
an amount of T€ 1,378 (previous year: T€ 350) was not
available as of the reporting date.
Inventories 4.2 Trade receivables, other assets and other
receivables
Trade receivables are shown net of impairments for
bad debts. Individual impairments of a total of T€ 133
(2013: T€ 139) have been included to allow for any
reduced payment receipts.
20142013
in T€
in T€
Finished goods and merchandise
Assets under construction
Total
1,4651,109
2,8302,808
4,2953,917
No impairments were recognised as of 31 December 2014
or 31 December 2013.
4.4 Prepaid cost of materials
Trade receivables Trade receivables
Other receivables
Derivatives Impairments
Total
20142013
in T€
in T€
80,865
51,202
866775
193
0
-133-139
81,79151,838
Current receivables and assets amount to T€ 81,791
(2013: T€ 51,838).
Of these, receivables from affiliated companies are
valued at T€ 42 (2013: T€ 16).
Of the prepaid cost of materials of T€ 59,697 (2013:
T€ 45,403), a sum of T€ 38,486 (2013: T€ 32,514) is
current and a sum of T€ 21,211 (2013: T€ 12,889) is
non-current. This item chiefly comprises payments made
for maintenance contracts purchased from suppliers
which do not yet give rise to any expenditure in the
year under review. This item is reversed over the
remaining term of the contract.
4.5 Other assets
Other assets come to T€ 5,160 (2013: T€ 3,966) and chiefly
comprise prepaid expenses of T€ 4,151 (2013: T€ 3,696).
Prepaid expenses primarily entail rentals, insurance
premiums and maintenance contracts.
4.6 Property, plant and equipment
Property, plant and equipment are analysed in the statement of changes in assets (see appendix).
Currency translation differences between the balance sheet
dates are reported in the consolidated statement of change
in assets under ’Currency translation’.
There were no impairment losses in connection with
property, plant and equipment in the year under review.
Property, plant and equipment include assets valued at
T€ 1,484 (previous year: T€ 1,226) for which the Group
company in question is deemed to be the economic owner
on account of the structure of the underlying leases.
There were no contingent lease payments.
69
Finance leases primarily concern two buildings and a plot
of land, for which call options may be exercised in 2017.
The leased items are recognised at their fair value by
the lessee in accordance with IAS 17. A depreciation rate
of 4 % is applied. In addition, leases for operating and office
equipment subject to a depreciation rate of 5 % have
been recognised for the subsidiary in Japan. The interest
expenses arising in connection with finance leases stands
at T€ 61 (2013: T€ 65.9) on the basis of an interest rate
of 5.84 % (previous year: 5.84 %) for land and buildings
and 2.91 % for operating and office equipment.
As of the balance sheet date, future lease payments break
down as follows:
2014
DurationFuture
Interest
Repay
paymentsments
in T€
in T€
in T€
4.7 Goodwill
Impairment testing involved a comparison of the carrying
amounts in question with the recoverable amount. The recoverable amount of the cash-generating unit in question is
determined on the basis of the value in use. The assumed
weighted average cost of capital (WACC) stands at 9.84 %
(2013: 9.59 %) with an unleveraged beta of 1.78
(2013: 1.44). The value in use is calculated on the basis
of the following assumptions:
> Period of five years commencing as of 2015
> Perpetual annuity with growth rates of between
one and two percent
> Use of internal forecasts for 2015
> For the years after 2015:
•Perpetual annuity with growth rates of 1 %
•Revenue growth of 10 % in new markets
•Pre-tax discount rates of between 12.54 % and 14.91 %
Less than one year186
55
131
Between one
and five years 30493211
More than five years0
0
0
Total
490148 342
2013
DurationFuture
Interest
Repay
paymentsments
in T€
in T€
in T€
Less than one year292
61
231
Between one
and five years1,189290 899
More than five years0
0
0
Total
1,481 3511,130
70
Notes
Disclosures on the impairment of goodwill
Impairments
Carrying Pre-tax Post-tax RevenueLong-term
2014
amount
WACC
WACC
growth
growth rate
31.12.20142016 - 2019
T€T€ % % % %
Germany / Austria / Switzerland
0
20,593
14.049.84 10 1.00
NTT Com Security UK
0 2212.54
9.84 101.00
Nordics 0
7,344
13.30
9.84
10
1.00 Total0
27,959
In the year under review, the goodwill of T€ 27,959
(2013: T€ 9,465) was found not to be impaired.
The carrying amounts of goodwill were assigned to the
following cash-generating units (CGUs):
Carrying amounts of goodwill Germany / Austria / Switzerland
NTT Com Security UK
Nordics Total
> Gross margin:
Gross margins were calculated on the basis of
management’s experience and historical performance.
> Personnel and other costs relative to changes
in revenues:
It was assumed that costs will increase at a slightly
slower rate than that at which revenues increase.
20142013
in T€
in T€
20,5932,099
2222
7,344
7,344
27,9599,465
The recoverable amounts of all the cash generating units
were calculated on the basis of the following assumptions,
which are subject to estimation uncertainties:
Revenue growth and growth rates used to extrapolate the cash flow forecasts beyond the current
planning period:
> The growth rates are based on various studies on the
future performance of the market. These include a risk
discount on account of the management estimates.
In the past, the forecast for the sector as a whole,
as well as the Group’s revenue growth before currency
translation, were taken into account in order to allow
for any estimating uncertainty. Since 2011, NTT Com
Security has been investing heavily in strengthening
its services business in response to the sustained
pressure on the technology margins.
71
Fixed Asset Movements 2014
Costs of Acquisition or Production
01.01.2014 Additions Additions
Re-
Disposals
Currency 31.12.2014
from first
classifi- conversion
consoli-
cation
dation
T€
T€T€
T€T€T€T€
Property and leasehold rights including buildings on non-owned land
Other equipment, fixtures,
fittings and equipment
2,093
13
0
0
0
-14
2,092
11,788
13,881
1,483
1,497
627
627
0
0
-1,322
-1,322
417
402
12,994
15,085
Intangible assets
Industrial property rights and similar
rights and licences to such rights
Self-developed intangible assets
10,294
4,436
14,730
146
35
181
0
0
0
0
0
0
-5,007
-3,621
-8,628
421
230
651
5,854
1,081
6,935
Goodwill
Goodwill
37,814
6,982
11,513
000
56,309
37,814
6,982
11,513
000
56,309
Financial assets
Financial assets
72
0
0
89
000
89
0
0
89
000
89
66,425
8,660
12,229
0
-9,949
1,054
78,418
Notes
Accumulated Depreciation
Net Book Value
01.01.2014 Additions
Additions
Re-
Disposals
Currency
31.12.2014
31.12.2013 31.12.2014
from first
classifi- conversion
consoli-
cation
dation
T€
T€ T€ T€ T€ T€ T€
T€ T€
919
101
0
0
0
2
1,019
1,174
1,073
8,308
9,227
1,948
2,049
59
59
0
0
-1,185
-1,185
318
317
9,448
10,466
3,480
4,654
3,546
4,619
817
1,305
2,122
257
903
1,160
9,477
3,131
12,608
466
589
1,055
0
0
0
0
0
0
-5,007
-3,497
-8,504
662
-45
618
5,597
178
5,775
28,349
0 0 0 0 0
28,349 9,465
27,959
28,349
0 0 0 0 0
28,349 9,465
27,959
0
0 0 0 0 0 0
0
0 0 0 0 0 0
50,184
3,104
59
0
-9,690
934
44,591
089
089
16,241
33,827
73
Fixed Asset Movements 2013
Costs of Acquisition or Production
01.01.2013 Additions Disposals Reclassi- Currency31.12.2013
fication
conversion
T€T€T€T€T€T€
Property and leasehold rights including buildings on non-owned land
2,185
17
0
0
-109
2,093
Other equipment, fixtures,
fittings and equipment
11,398
1,851
-1,228
0
-233
11,788
13,583
1,868
-1,228
0
-342
13,881
Intangible assets
Industrial property rights and similar
rights and licences to such rights
9,688
761
-41
0
-114
10,294
Self-developed intangible assets
3,837
890
-229
0
-62
4,436
13,525 1,651 -270
0 -17614,730
Goodwill
Goodwill
37,8140000
37,814
37,8140000
37,814
64,922 3,519 -1,498
0 -51866,425
74
Notes
Accumulated Depreciation
Net Book Value
01.01.2013
Additions
Impair- Disposals Reclassi- Currency31.12.2013
31.12.201231.12.2013
ment
fication
conversion
T€
T€ T€T€T€T€T€
T€T€
919
76
0
0
0
-76
919
1,266
1,174
7,912
8,831
1,927
2,003
0
0
-1,227
-1,227
0
0
-304
-380
8,308
9,227
3,486
4,752
3,480
4,654
7,270
661
1,702
2,588
558
0
9,858
1,219 1,702
-41
0
-41
0
-115
9,477
0
-15
3,131
0 -13012,608
2,418
817
1,249
1,305
3,667 2,122
28,349
0 0000
28,3499,465
9,465
28,349
0 0000
28,3499,465
9,465
47,038
3,222 1,702 -1,268
0 -51050,184
17,88416,241
75
4.8 Deferred income taxes
Deferred income tax assets break down as follows:
Deferred income taxes
2014
2013
Tax refund
claims
in T€
Intangible assets
Receivables and other assets
Prepaid cost of materials
Unused tax losses
Lease liabilities
Provisions
Other liabilities
Deferred revenue
Total
Tax
liabilities
in T€
Income/
expenses (-)
in T€
Tax refund
claims
in T€
1
274
-645
8
65
-228
156
115
-283
0
0
4
356
0
0
256
0
-30
279
45
10
70
-188
06-6
1,066530
-1,331
TaxIncome/
liabilities expenses (-)
in T€
in T€
665
293
318
236
65
236
387
63
243
106
110
-4
356
0
-274
286
0
-5
234
0
-30
429
301
206
000
2,699832690
All changes in deferred income taxes were recognised in
profit and loss.
The tax losses and the periods in which they must be
utilised are set out below:
In accordance with IAS 12.34, a deferred income tax asset
should be recognised for the carryforward of unused
tax losses and unused tax credits to the extent that it is
probable that future taxable profit will be available against
which the unused tax losses and unused tax credits can
be utilised. The tax forecast is derived from the company
forecast. Accordingly, the deferred income tax assets
on unused tax losses were largely eliminated as in the
previous year.
Tax losses
In the case of subsidiaries which continued to operate
profitably in the year under review, deferred tax assets
were recognised for unused tax losses in an amount
equalling the expected tax income from the utilisation
of the existing tax losses against the forecast profit.
Expiry date
Less than one year
Between 1 and 5 years
No expiry date
Total
31.12.2014
in T€
31.12.2013
in T€
00
00
20,600
13,663
22,651
5,187
43,251
18,850
No deferred income taxes have been recognised on
unused tax losses of 12,385 (2013: T€ 5,581).
4.9 Trade payables
All the trade payables of T€ 45,888 (2013: T€ 26,622) are
due for settlement in less than one year. Of these, liabilities
to affiliated companies account for T€ 3,061 (2013: T€ 4,046).
76
Notes
4.10 Financial liabilities
4.11 Deferred revenues
In the year under review, financial liabilities were valued
at a total of T€ 66,085 (2013: T€ 22,188), of which a sum
of T€ 61,324 (2013: T€ 21,289) is current and T€ 4,761
(2013: T€ 899) non-current.
In the year under review, deferred revenues came to
T€ 79,502 (2013: T€ 61,018). Of this, a sum of T€ 27,147
(2013: 16,227) is non-current.
Deferred revenues primarily comprise income received
from customers for maintenance and MSS contracts which
do not yet constitute any income in the year under review.
This item is reversed over the remaining term of the
contract.
Current financial liabilities break down as follows:
Current financial liabilities 2014
in T€
2013
in T€
Liabilities to affiliated companies 59,137
19,750
Bank borrowings
2,0381,269
Current liabilities from finance leases 133231
Fair value of derivatives 1639
Total
61,32421,289
The liability towards affiliated companies of T€ 59,137
(2013: T€ 19,750) is due in full to NTT Communications
Corporation, Tokyo, Japan (related party) and includes
interest of T€ 37. On 15 April 2010, NTT Com Security AG
and NTT Communications Corporation entered into a global
cash management service contract, providing for accounts
to be held with Mizuho Corporate Bank and credit facilities
to be granted. NTT Com Security AG has a credit facility
available to it for an amount of T€ 64,100; as of the
reporting date, an amount of T€ 5,000 was unutilised.
As of the reporting date, there were bank borrowings
of T€ 2,038 (2013: T€ 1,269). These liabilities are held in
the United Kingdom and Germany. NTT Com Security AG
has a guarantee facility of T€ 5,000. As of the reporting
sheet date, an amount of T€ 1,963 was being utilised
under this facility.
Non-current financial liabilities comprise liabilities under
finance leases of T€ 766 (2013: T€ 899) and liabilities
to NTT Finance Corporation of T€ 3,995 (2013: T€ 0).
4.12 Other current liabilities
Other current liabilities of T€ 26,438 (2013: T€ 23,192)
break down as follows:
Other current liabilities Accruals for outstanding invoices
Accruals for outstanding
vacation entitlement
Deferred income
Liabilities for outstanding
social security contributions Personnel obligations
Miscellaneous
Value added tax
Total
2014
in T€
2013
in T€
13,880
9,558
1,847
4
4,291
2,263
1,776
1,886
4,435
2,006
1,139337
3,3572,851
26,43823,192
Other liabilities include accruals of T€ 13,880 (2013:
T€ 9,558) for outstanding invoices, including T€ 1,442
(2013: T€ 411) due to affiliated companies.
Personnel obligations comprise social security liabilities
of T€ 1,776 (2013: T€ 1,886), variable salary obligations
of T€ 406 (2013: T€ 380), settlement obligations of T€ 167
(2013: T€ 289), overtime obligations of T€ 220 (2013: T€ 0)
and other personnel-related obligations of T€ 3,642
(2013: T€ 126).
77
4.13 Non-current provisions
The changes in non-current provisions were as follows in the year under review:
01.01.2014
Utilised
Released
Added
Interest 31.12.2014
expenses
in T€in T€in T€in T€in T€in T€
Building restoration obligations
Rental vacancies
Retirement benefit obligations Cash held in an escrow account
Total
180
826
75
0
1,081
0
0
0
0
0
The provisions for rental vacancies concern the office
space in the United Kingdom which was leased for
a period expiring in 2019. The rental and lease contracts
entered into by Nocitra Ltd. valued at € 6.0 million
(2013: € 6.0 million) have a remaining term of around
5 years. Please refer to the relevant disclosures in
Section 3.2. The retirement benefit obligations exist in
France; see Note 8.6 for more details.
4.14 Equity
4.14.1 Share capital and authorised capital
The share capital stood at € 13,036,884 as of 31 December
2014 (31 December 2013: € 13,036,884) and is divided
into 13,036,884 registered no-par-value shares.
The 296,840 treasury shares held as of the balance sheet
date equal 2.28 % of the Company’s subscribed capital.
The shareholders fundamentally have pre-emptive
subscription rights. The new shares may also be
underwritten by banks or companies coming within
the definition in Section 186 (5) Sentence 1 of the
German Stock Corporation Act subject to the obligation
that they are offered to the Company’s shareholders
for subscription (indirect subscription rights). However,
the Company’s Management Board is authorised
subject to the Supervisory Board’s approval, to exclude
the pre-emptive subscription rights as far as this is
necessary to eliminate any fractional amounts arising
from the subscription ratio.
As of 31 December 2014, the entire volume of authorised capital 2014 was still available for future use.
As of 31 December 2014, the following authorised and
contingent capital was available for future use:
0
193
0
836
0
103
0
1,147
0 2,279
> Authorised capital 2014:
In accordance with a resolution passed at the annual
general meeting on 4 June 2014, the Management
Board is authorised until 31 May 2019 subject to the
Supervisory Board’s approval, to increase the
Company’s share capital by up to € 6,500,000.00 on
a cash basis by issuing new bearer shares (ordinary
shares) once or repeatedly (authorised capital 2014).
The Management Board was additionally authorised
with the Supervisory Board’s approval to determine
further details of the equity issue and its execution.
The Supervisory Board was authorised to amend the
Company’s articles of incorporation to reflect the scope
of the equity issued using authorised capital and, if
the authorised capital is not used in full or only in
part on or before 31 May 2019, to amend them again
following the expiry of the authorisation.
In a resolution passed at the annual general meeting on
29 June 2010, the shareholders authorised the Company
to acquire its own shares in a proportion of up to 10 % of
the share capital on or before 28 June 2015.
78
0
13
0
10
0
28
0
1,147
01,199
Notes
4.14.2 Disclosures concerning capital
management
As of 31 December 2014, the equity ratio stood at -12.85 %
(previous year: -4.05 %). The NTT Com Security Group’s
main financial objectives are to ensure adequate equity
and to achieve an appropriate funding structure for its
future business.
4.14.4 Capital reserve
The Group’s share premium T€ 23,224 (2013: T€ 23,224)
comprises NTT Com Security AG’s share premium.
4.14.5 Other reserves
The currency translation difference rose from T€ -1,815
to T€ -4,242 in the year under review.
The Group’s approach to capital management is unchanged
over the previous year. Neither the Company nor any
of its subsidiaries were subject to any externally imposed
capital requirements.
NTT Com Security AG also has access to considerable
credit facilities provided by NTT Communications Corporation, (Japan) to bridge any short-term funding gaps.
In addition, the Company issued fresh share capital
in Q1 2015, generating proceeds of € 23.4 million.
4.14.3 Net loss for the year and loss
carried forward
The Management Board proposes to the Supervisory Board
that it pass a resolution at its meeting on 25 March 2015,
at which it approves the annual financial statements,
to carry forward the accumulated deficit of T€ 28,499
(previous year: accumulated deficit of T€ 18,446).
79
5. Notes on the consolidated income statement
5.3 Changes in inventories
5.1 Revenues
In a contract dated 28 September 2012, NTT Com Security
was instructed by NTT to continue development work
on the software acquired by NTT. Inventories dropped by
T€ -375 as of the end of the year (previous year: T€ +479).
Consolidated revenues for the year break down as follows:
Revenues
Technology Sales
Support Services
Total
80
5.4 Own work capitalised
20142013
in T€
in T€
101,33380,625
75,86467,730
52,55255,702
34,37422,868
264,123226,925
No software development expenses were capitalised in
the year under review (previous year: T€ 890).
5.5 Cost of materials
The consolidated cost of materials for the year breaks
down as follows:
5.2 Other operating income
Cost of materials
Other operating income breaks down as follows:
Technology Sales
Support Services
Discounts, rebates, other concessions, purchasing price differences
Total
20142013
in T€
in T€
Income from exchange-rate differences Other income from the sale
of non-current assets
Other operating income from advertising
Income from subletting
in the personnel area
from consulting
Reversals of impairments
of trade receivables
Miscellaneous other operating income
Total
6,678
6,478
56
0
767
465
795
580
246
394
152
277
107
-194
475
225
8,9468,556
20142013
in T€
in T€
83,01563,025
60,24552,637
10,3969,000
6,5795,289
3219
160,267129,970
5.6 Personnel expenses
In the year under review, wages and salaries came to
T€ 70,111 (2013: T€ 63,405). Social security payments
were valued at T€ 13,191 (2013: T€ 11,332) and included
expenditure on defined contribution retirement benefits
of T€ 2,387 (2013: T€ 1,999) (see also Note 8.6). An amount
of T€ 560 of the wages and salaries and T€ 122 of social
security payments is attributable to the newly acquired
Swiss company Infotrust AG, which was consolidated in
2014 for the first time.
Notes
5.7 Other operating expenses
5.9 Net finance expenses
Other operating expenses break down as follows:
Interest income and expenses breaks down as follows:
Other operating expenses
Interest income and expenses 20142013
in T€
in T€
Miscellaneous personnel expenses (e.g. travel, training, temporary staff)
9,023
8,405
Freelance expenses
6,139
9,549
Expenses from exchange-rate differences 5,079
6,686
Company cars
(maintenance, leases, insurance etc.)
3,087
2,720
Legal and consulting costs
3,350
2,641
Rental, repairs, maintenance
5,141
4,605
Marketing
2,444
2,371
Insurance
734
609
Recruiting
646
1,605
Finance costs (e.g. bank fees,
net currency translation gains and losses)
123
107
Telecommunications costs
1,918
1,415
Other administration expenses 3,844
3,297
Total 41,52844,010
Expenses from exchange-rate differences include currency
translation losses. The corresponding currency translation
gains are recorded within other operating income.
Personnel and other operating expenses for research and
development came to T€ 797 in 2014 (2013: T€ 1,162).
20142013
in T€
in T€
Interest income
Other interest income
Other interest and similar income
Interest expenses
Interest and similar expenses
Net finance expenses
218110
5
38
222
148
-376
-319
-376
-319
-154-171
5.10 Income taxes
Income taxes include the current and deferred income
taxes paid or owed in the individual countries.
Deferred taxes are calculated on the basis of the tax rates
applicable or expected as of the date of recognition in
the individual countries. As a matter of principle, these
are based on the statutory rules in force or enacted as
of the balance sheet date. Non-domestic income taxes
are based on the rules and laws applicable or enacted
in the individual countries. The income tax rates applied
to the non-domestic companies are between 0 % and 39 %.
Tax income/expenses for 2014 and 2013 is as follows:
Tax income/expenses A sum of T€ -2,427 (2013: T€ -279) from the currency
translation of non-domestic subsidiaries was recognised
within equity.
5.8 Depreciation/amortisation
The breakdown of depreciation/amortisation expenses
by intangible assets, property, plant and equipment can
be seen in the statement of changes in assets.
20142013
in T€
in T€
Current tax expenses
-582-924
Deferred income tax assets/liabilities
> from tax losses
0-274
> from temporary differences
-1,331964
Total
-1,913-234
Total depreciation/amortisation expenses came to T€ 3,104
in 2014 (2013: T€ 4,924); in the previous year, this included
goodwill amortisation of T€ 1,702 for Secode.
81
There were no deferred income tax assets on unused
tax losses.
Income tax expenses on net profit/loss before tax is
calculated as follows:
Income tax expenses on net profit/loss before tax 20142013
in T€
in T€
Net profit before taxes
-15,579-16,962
Income tax refund (previous year: income tax expenses)
on the basis of the German tax rate of 29.64 % (previous year: 30.02 %)
4,656
5,092
Differences in tax rates
Differences in foreign tax rates
-767
-1,193
Differences arising from changes in national tax rates
14
-41
Tax effects from differences in tax bases
Goodwill impairments
0
0
Non-deductible expenses
-96
-101
Recognition and measurement of deferred income tax assets
Additions to deferred income taxes on unused tax losses
0
0
Reduction in deferred income taxes on unused tax losses 0
-274
Non-recognition of deferred income tax assets
-5,720
-3,717
Off-period effects
Current and deferred taxes in previous years
0
0
Tax refund from the utilisation of unused tax losses
0
0
Actual tax expenses /(income)
-1,913
-234
In 2014, the corporate tax rate stood at 15 % plus the
solidarity surcharge of 5.5 %. This results in an effective
corporate tax rate of 15.8 %. Including trade tax of 14.06 %,
the total tax rate stood at 29.89 %.
No deferred income taxes were recognised on currency
translation differences.
82
Notes
5.11 Earnings/loss per share
Basic earnings per share as defined in IAS 33 are calculated by dividing the consolidated post-tax profit by
the average number of outstanding shares. In addition,
the diluted average number of shares is calculated. There
was an average of 12,740,044 basic shares and diluted
shares in the year under review. In 2013, the number
of basic and diluted shares had also stood at 12,740,044.
The basic number of shares as of 31 December 2014
is reconciled with the diluted number of shares as
of 31 December 2014 as follows:
The basic and diluted loss per share as defined in IAS 33
came to € -1.37 in 2014 (2013: € -1.35). To calculate
the average number of shares, new shares issued were
included on a time-proportionate basis. In addition, shares
bought back and reissued were also included on a timeproportionate basis. To calculate the diluted number
of shares, the weighted average number of shares is
adjusted by the number of all potentially diluting shares.
Number of shares as of 31 December 2014
Shares
Shareholdings as of 31 December 201413,036,884
Less treasury stock as of 31 December 2014296,840
Adjusted number of shares as of 31 December 201412,740,044
Weighted average number of shares in 2014 (basic)
Plus weighted average number of options in 2014
Weighted average number of shares in 2014 (diluted)
12,740,044 0
12,740,044
The basic number of shares is reconciled with the diluted
number of shares as of 31 December 2013 as follows:
Number of shares as of 31 December 2013
Shares
Shareholdings as of 31 December 201313,036,884
Less treasury stock as of 31 December 2013296,840
Adjusted number of shares as of 31 December 201312,740,044
Weighted average number of shares in 2013 (basic)
Plus weighted average number of options in 2013
Weighted average number of shares in 2013 (diluted)
12,740,044 0
12,740,044
83
6. Segment reporting
Segment reporting complies with the requirements of
IFRS 8 ’Operating Segments’,
IFRS 8 stipulates that entities must disclose financial
and descriptive information on their reportable segments.
Reportable segments are operating segments or aggregations of operating segments that meet specified criteria.
Operating segments are components of an entity on
which separate financial information is available, whose
operating results are regularly reviewed by the entity’s
chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its
performance. Generally speaking, financial information
must be reported on the basis of the internal management
system used to assess the output of the operating segments
and to decide how resources are to be allocated to the
operating segments.
IFRS 8 stipulates the use of the management approach
to distinguish the individual segments. Accordingly,
segments are fundamentally defined in accordance with
the internal reporting system.
Management reporting at NTT Com Security is based
on national companies.
Under certain circumstances, two or more segments may
be aggregated and treated as a single operating segment
provided that they exhibit similar economic characteristics.
Switzerland, Austria and Germany are combined to form
a single segment.
The former Secode Group is now included in the Nordics
region in segment reporting.
Further reporting duties are tied to the measure of profit
or loss selected, i.e. what is reviewed by the chief operating
decision maker. If, for example, EBITDA is used as the
measurement of profit or loss, there is no need to disclose
segment depreciation and amortisation.
84
NTT Com Security Global Services (NCS GS) is also defined
as a segment. It is the internal Group provider of all
managed security services and internal support outside the
Nordics. NTT Com Security Global Services is responsible
for all Security Operations Centres (SOCs) and the Global
Risk Operations Centre (GROC) as well as the development
of our MSS services. The regional segments source their
MSS and support services from NCS GS and resell them to
their final customers. This concerns the companies in the
United Kingdom, the United States and Singapore, as well
as the services companies in Germany.
The Group headquarters and shared services segment
comprise the Group management in Germany and the
administrative unit in the United Kingdom, which cannot
be allocated to any of the operating segments.
The segment referred to as ‘elimination of intra-segmental
revenues / consolidation’ comprises intragroup revenues
and consolidation bookings.
The measure of profit or loss selected is EBITDA. The
performance of the responsible national managers is also
measured on the basis of EBITDA. The chief operating
decision makers do not use any other measures of profit
or loss such as EBIT, EBT or net result for the segments.
Accordingly, the following segment disclosures are waived:
>
>
>
>
>
>
>
>
Depreciation and amortisation
Share of profit of associates
Investments in non-current assets
Interest expenses
Interest income
Income tax expenses/income
Material non-cash expenses and income
Main expense and income items in accordance
with IAS 1.86
Notes
No monthly balance-sheet figures are reported to the chief
operating decision makers; only outstanding receivables,
trade payables and liabilities to affiliated companies are
monitored. Accordingly, only receivables, trade payables
and liabilities to affiliated companies are recorded in
the segment report.
As no major customer accounts for more than 10 % of
revenues, the disclosures required by IFRS 8.34 can
be waived.
Revenues from continuing business, which entail the same
products and services in all segments with the exception of
NTT Com Security Global Services, break down as follows:
Revenues from continuing business
Technology Sales
Support Services Consulting, Integration and Training
Total
20142013
in T€
in T€
101,33380,625
75,86467,730
52,55255,702
34,37422,868
264,123226,925
Revenues
20142013
in T€
in T€
United Kingdom – external revenues
United Kingdom – internal revenues
Germany / Austria / Switzerland – external revenues
Germany / Austria / Switzerland –
internal revenues
USA – external revenues
USA – internal revenues
France – external revenues
France – internal revenues
Nordics – external revenues
Nordics – internal revenues
Asia – external revenues
Asia – internal revenues
Japan – external revenues
Japan – internal revenues
NTT Com Security Global Services –
external revenues
NTT Com Security Global Services –
internal revenues
Total for all segments
Elimination of intra-segmental revenues / consolidation
Group head office – external revenues
Group head office –
internal revenues
NTT Com Security Group
85,610
3,173
80,567
2,017
90,211
76,350
0
24,648
1,657
15,378
228
5,788
8,479
3,487
248
25,500
5
38
18,314
3,795
14,860
175
13,744
2,459
2,189
358
5,983
0
125
152
12,353
276,890
8,669
229,670
-21,855
-19,217
7,302
14,684
1,786
264,123
1,788
226,925 Revenues of T€ 74,737 were recorded in Germany in
2014 (2013: T€ 65,568) and revenues of T€ 189,386 outside
Germany (2013: T€ 161,357).
85
EBITDA
United Kingdom
USA
France
Nordics
Asia
Japan
Headquarters and shared services
Trade receivables
20142013
in T€
in T€
-8,820-6,318
-9823,854
-4,813-5,657
-1,196-548
-6,194-4,911
0
-290
-4,233
-4,328
1,237
424
12,204
6,222
-12,798-11,552
United Kingdom
USA
France
Nordics
Asia
Japan
Elimination of intra-segmental 57605
revenues / consolidation
338-920
-12,403
-11,868
EBIDTA margin
31.12.201431.12.2013
in T€
in T€
28,346
36,280
-3,602
5,606
2,923
464
3,252
4,622
-1,153
76,738
29,642
18,125
-2,719
4,589
2,269
547
1,516
3,737
3,483
61,189
-3,204
8,122
81,656
-13,262
3,135
51,062
Trade payables
20142013
in %
in %
United Kingdom
-9.9
-7.7
-1.1
5.0
USA
-4.5
-25.6
France
-39.7
-3.6
Nordics
-33.7
-30.3
Asia
-113.3
-169.9
Japan
4.9
7.1
126.9
70.5
-4.6
-5.0
3.7
-5.6 NTT Com Security Group
-4.7
-5.2
United Kingdom
USA
France
Nordics
Asia
Japan
31.12.201431.12.2013
in T€
in T€
13,835
26,976
5,071
6,512
4,117
521
10,204
6,265
-3,053
70,447
11,183
8,906
2,387
3,265
1,268
586
5,949
3,182
1,210
37,936
-36,726
75,298
109,019
-45,703
34,388
26,622 The Group is active in seven geographic regions –
Germany/Austria/Switzerland, France, the United Kingdom,
Nordics, the United States, Asia and Japan.
86
Notes
Non-current assets (net of deferred income taxes) break
down by geographic region as follows:
Non-current assets
France
United Kingdom
USA
Nordics
Asia
Japan
Total
31.12.201431.12.2013
in T€
in T€
35,587
45
9,164
2,074
8,309
411
356
240
56,186
6,358
50
11,172
2,175
8,172
130
430
643
29,130
8. Other disclosures
8.1 Disclosures in accordance with Section 314 (1)
No. 9 of the German Commercial Code
The fees for the auditors of the consolidated financial statements reported as expenses in 2014 break down as follows:
Auditor fees
20142013
in T€
in T€
Audit of financial statements
Other consulting activities
Tax consulting
Total
172202
00
2825
200227
The reconciliation statement eliminates the intragroup
activities between the segments.
8.2 Disclosures in accordance with Section 314 (1)
No. 6 of the German Commercial Code
The measurement principles used in NTT Com Security
AG’s segment report are based on the IFRS rules applied
to the consolidated financial statements (see also Note 2
et seq.).
In accordance with Section 315 (2) No. 4 of the German
Commercial Code, the disclosures on management
compensation are included in the remuneration report,
which forms part of the Group management report.
Compensation paid to the Management Board and the
Supervisory Board is described in Section 8.7.
7. Notes on the cash flow statement
The cash flow statement has been prepared using
the indirect method in accordance with IAS 7. For this
purpose, non-cash investing and financing activities
are ignored.
Cash and cash equivalents include cash in hand, cash
at banks and fixed-term deposits available at short notice.
Current account loans are not included.
8.3 Financial instruments
Categorisation of financial instruments
The following table analyses the allocation of financial
assets and liabilities to the individual categories in
accordance with IAS 39 as well as their carrying amounts
and fair values as of 31 December 2014. The fair value
of derivative instruments is calculated by reference to
the listed market prices as of the balance sheet date.
The fair values of cash and cash equivalents, current
receivables and trade payables and other current financial
liabilities match their carrying amounts due in particular
to the short-term nature of these instruments.
Explanation of the categories (see Note 2.2):
>LaR: Loans and receivables
>Afv: Financial assets at fair value through profit
and loss
>FLAC: Other financial liabilities
87
Recognised in accordance with IAS 39
Category in accordance
with IAS 39
in T€
Carrying Amortised Fair value
Fair value
IAS 17
amount on
cost
in equity
in P/L
31.12.2014
in T€
in T€
in T€
in T€
in T€
Assets
Cash and cash equivalentsLaR
9,351
9,351–––
Trade receivables, other assets
and receivablesLaR
81,598
81,598–––
Other non-current financial assets and receivablesLaR
1,148
1,148–––
Derivatives with no hedging relationshipAfv
192––
192–
Trade payablesFLAC
45,888
45,888–––
Bank borrowingsFLAC
2,036
2,036–––
Liabilities to affiliated companiesFLAC63,134
63,134–––
Liabilities under finance leasesFLAC 898
898–––
16––
16–
Of which aggregated by category in accordance with IAS 39 Loans and receivables (LaR)
93,302––––
Financial assets through P/L (Afv)
192––––
Financial liabilities through P/L (Afv)
16––––
Financial liabilities at amortised cost (FLAC)
111,956
–
–
–
–
88
Notes
Recognised in accordance with IAS 39
Category in accordance
with IAS 39
in T€
Carrying Amortised Fair value
Fair value
IAS 17
amount on
cost
in equity
in P/L
31.12.2013
in T€
in T€
in T€
in T€
in T€
Assets
Cash and cash equivalentsLaR
6,791
6,791–––
Trade receivables, other assets
and receivablesLaR
51,838
51,838–––
Other receivables
LaR
–––––
Derivatives with no hedging relationship
Afv
0–0––
Trade payablesFLAC
26,622
26,622–––
Bank borrowingsFLAC
1,269
1,269–––
Liabilities to affiliated companiesFLAC19,750
19,750–––
Liabilities under finance leasesFLAC1,130
1,130–––
39–
39 ––
Of which aggregated by category in accordance with IAS 39
Loans and receivables (LaR)
58,629––––
Financial assets through P/L (Afv)
39––––
Financial liabilities at amortised cost (FLAC)
48,771
–
–
–
–
89
The financial liabilities at fair value through profit and
loss comprise derivative financial instruments not included
in hedge accounting.
Financial assets at fair value through profit and loss can
be assigned to the following hierarchy for measurement
purposes:
Hierarchy for measurement
201420142014201320132013
Level 1*
Level 2**
Level 3***
Level 1*
Level 2**
Level 3***
in T€
in T€
in T€
in T€
in T€
in T€
–––
Financial assets at fair value
through profit and loss–
192–
Financial liabilities at fair value through profit and loss
–––
Financial liabilities at fair value
through profit and loss–
16–
–––
–0–
–––
–
39
* The market price is determined by reference to quoted, unadjusted prices in active markets for these assets and liabilities.
** The market price of these assets and liabilities is determined on the basis of parameters for which directly or indirectly derived quoted prices are available
in an active market.
*** The market price of these assets and liabilities is determined on the basis of parameters for which no observable market data is available.
Collateral
As of 31 December 2014, an amount of T€ 1,378 had
been pledged as collateral. In the previous year,
NTT Com Security AG had pledged financial assets
of T€ 350 as collateral.
Derivative financial instruments
As part of its risk management activities (see Section 5
of the Group management report for more details on
risk management), NTT Com Security uses various
derivative financial instruments, chiefly to limit
exposure to exchange rate fluctuation. The approved
derivative financial instruments used in 2014 comprised
the following:
> Currency forwards
> Currency swaps
> Plain-vanilla options, primarily zero-cost options
90
The following tables set out the derivative financial
instruments outstanding as of the balance sheet date,
all of which expire in less than 3 months.
Derivatives have been designated as hedges and are
therefore classified as held for trading.
–
Notes
The following derivatives were outstanding for the EUR/USD currency pairing as of 31 December 2014:
Derivatives EUR/USD
Foreign currency
Contract value
Measured Fair value
amount
in TUSD
in T€
in T€
in T€
Currency forwards with a positive FV 9,675
-7,806
-7,630
+175
The following derivatives were outstanding for the USD/GBP currency pairing as of 31 December 2014:
Derivatives USD/GBP
Foreign currency
Contract value
Fair value
amount
in TUSD
in TGBP
in T€
Currency forwards with a positive FV 2,550
-1,627
+10
The following derivatives were outstanding for the USD/CHF currency pairing as of 31 December 2014:
Derivatives USD/CHF
Foreign currency-
Contract value
Fair value
amount
in TUSD
in TCHF
in T€
Currency forwards with a positive FV 300
-290
+7
The following derivatives were outstanding for the EUR/CHF currency pairing as 31 December 2014:
Derivatives EUR/CHF
Foreign currency
Contract value
Fair value
amount
in TCHF
in TEUR
in T€
Currency swap with a negative FV
1,600
-1,333
-2
The following derivatives were outstanding for the EUR/GBP currency pairing as 31 December 2014:
Derivatives EUR/GBP
Foreign currency
Contract value
Fair value
amount
in TGBP
in TEUR
in T€
Currency swap with a negative FV
-1,256
1,600
-14
91
The following derivatives were outstanding for the EUR/USD currency pairing as of 31 December 2013:
Derivatives EUR/USD
Foreign currency
Contract value
Measured Fair value
amount
in TUSD
in T€
in T€
in T€
Currency forwards with a positive FV Currency forwards with a negative FV Currency swaps with a negative FV
Options with a negative FV
Options with a positive FV
0
4,700
0
1,000
0
All derivatives are recorded at their market value in the
consolidated balance sheet. As the derivatives are not part
of hedging relationships, any changes in market value
are reported in profit and loss.
Net gains or losses
The following net gains/losses were recognised in profit
and loss:
0
-3,410
0
-731
0
0
-37
0
-2
0
There were no adjustments to receivables due to receipts
towards derecognised receivables in the year under
review or in the previous year. Reference should be
made to Note 5.9 for an analysis of the interest income
and expenses recorded.
20142013
in T€
in T€
All assets classified as loans and receivables are due for
settlement in less than one year. Impairments of T€ -133
(2013: T€ -139) were recognised on trade receivables.
Overdue receivables were tested for impairment. For the
purpose of identifying impairment, the causes of the
payment delay (possible payment difficulties, poor credit
rating, and other reasons) were analysed.
Financial assets and liabilities at fair value through profit and loss*
Loans and receivables
Financial liabilities at amortised cost Total
606-210
1,599-207
-33-99
2,172-516
With respect to the loans and receivables which are not
overdue and have not been adjusted, there is no evidence
as of the reporting date indicating that debtors will be
unable to honour their payment obligations.
Net gains/losses
*These amounts are attributable to derivative financial instruments
> Foreign currency translation of loans and receivables
and other financial liabilities: net currency-translation
losses of a total of T€ 1,599 (2013: net currency
translation losses of T€ -207).
> Recognition of impairments on receivables of T€ -133
(2013: impairments of T€ -139) and reversal of the
impairments recognised in the previous year on
receivables of T€ 137.
> Interest income on loans and receivables of T€ 222
(2013: T€ 148)
> The net losses on financial liabilities at amortised cost
result from interest expenses of T€ 33 (2013: T€ 99).
92
0
-3,447
0
-733
0
Notes
Management of financial risks
Foreign currency risks
NTT Com Security’s international business operations
particularly expose it to foreign currency risks. These arise
from the measurement of balance sheet items as of the
balance sheet date, outstanding transactions in a foreign
currency (transaction-related foreign currency risks) and
from the translation of the financial statements of the
non-euro national companies into euros (translation-related
foreign currency risk).
NTT Com Security uses value-at-risk analyses as part
of its risk management system. These analyses regularly
measure risk exposure against changes in market risk
factors such as exchange rates by calculating a maximum
loss given a certain confidence level and holding period.
Value at risk is calculated on the basis of the following
assumptions:
> Potential loss refers to changes in market values
> The confidence level equals 95 % for a holding period
of 10 days.
The transaction-related foreign currency risks arise with
transactions with international partners which are not
settled in the functional currency of the national NTT Com
Security company in question. In addition, a centralised
foreign currency management system was in operation
in the year under review for Central Europe and the
United Kingdom to uniformly measure, monitor and hedge
foreign currency risks arising from operating business.
Foreign currency sensitivity analysis
Consolidated earnings are particularly influenced by
fluctuations in the US dollar and pound sterling relative
to the euro. The following table shows the Group’s
sensitivity to a ten percent rise or fall in the euro
against the US dollar and pound sterling. The ten percent
shift represents the Management Board’s appraisal
of a reasonable possible change in exchange rates.
The sensitivity analysis shows the influence of the local
earnings denominated in US dollars and pound sterling.
A positive figure indicates an increase in consolidated
earnings for the year if the euro increases by 10 % against
the US dollar and pound sterling. If the euro drops by
10 % against the US dollar and pound sterling, this has
an opposite effect of the same amplitude on net earnings
for the year and equity.
Effect of US dollar Effect of pound sterling
2014201320142013
in T€
in T€
in T€
in T€
Hypothetical effect on earnings
+/-381 +/-402 +/-353+/-516
Hypothetical effect on equity+/-381+/-402+/-353+/-516
Interest risks
As of the balance sheet date, the Company had raised
external debt capital from its parent and is exposed
to an interest risk as a floating rate has been agreed on
these loans. The loans are denominated in euros.
Operational liquidity management entails a cashconcentration process which pools cash on a daily basis.
In this way, liquidity surpluses and requirements can
be managed in accordance with the requirements of the
entire Group as well as individual Group companies.
Liquidity risks
The Company is exposed to liquidity risks if it is unable
to honour its payment obligations at short notice.
NTT Com Security limits this risk by means of effective
working capital and cash management, as well as access
to credit facilities.
Liquidity risk is managed through short and mediumterm finance planning over a period of six months.
In this way, it is possible to secure funding for any
foreseeable liquidity shortfalls. There are bilateral credit
facilities in force with NTT to ensure adequate liquidity.
93
The following table of maturities shows how cash
outflows for settling liabilities affect the Group’s liquidity
position as of 31 December 2014.
Liquidity position
Total2015201620172018
in T€
in T€
in T€
in T€
in T€
Finance lease liabilities
Derivative financial instruments
Trade payables
Liabilities to affiliated companies
Total
Credit risks
A credit risk is defined as the unexpected loss of cash
or income. This occurs if the customer or counterparty
is unable to honour its obligations upon maturity.
NTT Com Security limits this risk by means of effective
receivables management, as a part of which a regular
analysis of the age structure of receivables is performed
and efficient monitoring procedures installed. The credit
risk from financial contracts is minimised by engaging
in business solely with investment-grade counterparties.
The carrying amounts of the financial assets equal the
maximum credit risk. Credit risks are allowed for by
means of individual adjustments.
As of the reporting date, there was no material
clustering of credit risks; only one impairment of T€ -133
(2013: T€ -139) had been recognised.
94
899 132 102665
16
16
0
0
45,888
45,888 00
63,131
61,435
1,255
441
109,934107,471 1,357 1,106
0
0
0
0
0
Notes
8.3.1 Treasury stock
As of 31 December 2014, NTT Com Security AG held
a total of 296,840 treasury shares, equivalent to 2.28 %
of its total share capital as of that date.
Analysis of treasury stock holdings:
Treasury stock holdings
Disposal
Number of Share in
Period
Additions
at end of period
subscribed
capital*
2009
2010
2011
2012
2013
2014
Value on 31 December 2014
0
0
0
0
0
0
0
741,780
0
98,265
14,000
0
0
0
409,105
409,105
310,840
296,840
296,840
296,840
296,840
3.53 %
3.53 %
2.38 %
2.28 %
2.28 %
2.28 %
2.28 %
* Proportion of share capital as of the end of the year in question.
8.4 Other financial obligations
2013
The operating leases primarily cover office space and
company cars. Lease and rental expenses came to T€ 1,323
in 2014 (2013: T€ 1,207). Subletting income stood at
T€ 465 in 2014 (2013: T€ 580).
DurationOperating leases in T€
Analysis of future lease payments and subletting income
as of 31 December 2014 broken down by duration:
2014
1,298
2,261
290
3,849
121
16
–
137
8.5 Employees
DurationOperating leases in T€
Less than one year
More than 5 years
Total
Less than one year
More than 5 years
Total
Subletting
income in T€
1,083
1,060
0
2,143
Subletting
income in T€
16
0
0
16
The average headcount in the year under review stood
at 845 (2013: 803) and breaks down as follows:
Employees
2014
Number
Sales
Technical
Administration and management
Total
2013
Number
204176
521
492
120
135
845
803
95
8.6 Pension obligations
The subsidiaries in the UK and the United States have
established retirement benefit plans for staff. The expenditure recorded in the income statement for the individual
plans during the year stands at T€ 826 (2013: T€ 752).
Provisions of T€ 103 (2013: T€ 75) have been set aside.
There are no retirement benefit plans at any of the other
companies of the NTT Com Security Group.
8.7 Related parties
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial and
operating decisions.
Related party transactions entail the transfer of resources
or obligations between related parties, regardless of
whether a price is charged [IAS 24.9].
Balances and transactions between the Company and its
subsidiaries are eliminated as part of consolidation and not
disclosed in these notes. Details of transactions between
the Group and other related parties are disclosed below:
In accordance with the definition in IAS 24, related parties
include the Management Board and the Supervisory Board
of NTT Com Security AG as well as its main shareholders
(NTT Communications GmbH and its affiliated companies).
Management compensation
In 2014, total Management Board compensation came
to T€ 1,162 (2013: T€ 1,126). The individualised breakdown
is as follows:
Compensation in accordance with Section 314 (1) No. 6 of the German Commercial Code
Fixed remuneration Variable remuneration
Car allowance
Allowances for private
retirement provisions
Allowances for private health insurance
Total
Simon Church
in T€
in T€
20142013
Heiner Luntz
in T€
in T€
20142013
278
262
336362
2322
190
190
215200
1515
5736
3030
145
708687
44
454439
All the compensation components are short-term
employee benefits as defined in IAS 24.16a.
In addition, provisions of T€ 284 were set aside for
a long-term bonus programme.
Summe
in T€
in T€
20142013
468
452
551562
3837
8766
189
1,162
1,126
An agreement has been entered into providing for one
of the members of the Management Board to receive an
amount of GBP 190k per year until the ordinary expiry
date of his contract in the event of premature termination.
The Management Board did not hold any shares
in the Company or related subscription rights as of
31 December 2014.
96
Notes
Supervisory Board compensation
The members of the Supervisory Board received the
following compensation during the year under review:
The outstanding amounts are not secured and are subject
to settlement in cash. No guarantees were given or received.
No impairments were recognised on receivables from
related parties in the period under review.
Supervisory Board compensation
8.8 Management Board and Supervisory Board
Fixed remuneration Reimbursement of expenses
Variable compensation
Total
2014
in T€
50
17
75
142
2013
in T€
50
8
75
133
The compensation paid to the members of the Supervisory
Board and the Management Board is described in detail
in the remuneration report, which forms part of the
management report.
Reportable transactions between the Group
and companies affiliated with NTT Communications
Deutschland GmbH
On 28 September 2012, NTT Communications, Tokyo, Japan,
and NTT Com Security AG entered into agreements providing
for the transfer of intangible assets, chiefly in connection
with managed services, to NTT.
NTT Com Security has broad rights to utilise the transferred
assets subject to payment of a variable sales-based
licence fee to NTT. In this way, it will be possible for
NTT Com Security Managed Services to be continued in
full in the future.
In addition, contracts for the provision of services by
NTT Com Security were entered into. These particularly
provide for NTT Communications to be advised on the
continued development of the intangible assets and
development by NTT itself.
The members of the Management Board in the year
under review were:
> Simon Church, (Chief Executive Officer), London,
United Kingdom
> Heiner Luntz, (Chief Financial Officer), Markdorf,
Germany
The members of the Supervisory Board in the year
under review were:
> Luc Loos (chairman)
General Manager Verio Europe GmbH, Brakel,
Germany
> Makoto Takei (deputy chairman)
President of Digital Knowledge Co., Ltd., Tokyo, Japan
> Kazu Yozawa
Senior Vice President NTT Communications
Corporation, Tokyo, Japan
8.9 Exemption of subsidiaries in accordance with
Section 264 (3) of the German Commercial Code
In accordance with Section 264 (3) of the German
Commercial Code, NTT Com Security (Germany) GmbH,
Ismaning, and NTT Com Security (Germany) Services
GmbH, Ismaning, are exempt from the provisions of the
first, third and fourth subsection of the second section
of the third book of the German Commercial Code and are
thus absolved of the obligation to prepare notes to the
financial statements, a management report and to have
the financial statements for 2014 audited and published.
All contracts have been entered into on a customary
arm’s length basis.
Sales to related parties complied with arm’s length
principles.
The Management Board
97
To the best of knowledge, and in accordance with the
applicable reporting principles of financial reporting,
the consolidated financial statements give a true and fair
view of the assets, liabilities, financial position of profit
or loss of the NTT Com Security Group, and the management report includes a fair view of the development
and performance of the business and the position of the
NTT Com Security Group, together with the description
of the principal opportunities and risks associated with
the expected development of the group.
NTT Com Security AG
The Management Board
Simon Church 98
Heiner Luntz
Auditor’s Report
Auditor’s Report
We have audited the consolidated financial statements, comprising the consolidated balance sheet, the consolidated
income statement, the consolidated statement of comprehensive income, the consolidated statement of cash flow, the
consolidated statement of changes in equity, and the notes to the consolidated financial statements, as well as the group
management report prepared by NTT Com Security AG, Ismaning, for the financial year from 1 January to 31 December
2014. The preparation of the consolidated financial statements and group management report in accordance with IFRSs
as adopted by the EU, and the additional requirements of German commercial law pursuant to Section 315a (1) of the
German Commercial Code [HGB] are the responsibility of the Company’s legal representatives. Our responsibility is to
express an opinion on the consolidated financial statements and the group management report, based on our audit.
We conducted our audit of the annual financial statements in accordance with Section 317 HGB and the German generally
accepted standards for the audit of financial statements promulgated by the Institute of Public Auditors in Germany (IDW).
Those standards require that we plan and perform our audit such that misstatements materially affecting the presentation
of the net assets, financial position and results of operations in the consolidated financial statements in accordance with
the applicable financial reporting framework and in the group management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible
misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related
internal control system and the evidence supporting the disclosures in the consolidated financial statements and group
management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing
the annual financial statements of those entities included in consolidation, the determination of entities to be included in
consolidation, the accounting and consolidation principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements and group management report. We believe
that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by
the EU, the additional requirements of German commercial law pursuant to Section 315a (1) HGB and full IFRS and give
a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these
requirements. The group management report is consistent with the consolidated financial statements and, as a whole,
provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development.
Munich, 20 March 2015
KPMG AG
Wirtschaftsprüfungsgesellschaft
[Original German version signed by:]
SchubertHössl
WirtschaftsprüferWirtschaftsprüfer
[German Public Auditor]
[German Public Auditor]
99
NTT Com Security has
branches in Europe,
the United States,
as well as Singapore,
Hongkong, Japan
and Australia.
100
NTT Com Security worldwide
Australia
NTT Com Security (Australia) Pty Ltd.
Level 10, 68 Pitt Street, Sydney,
New South Wales 2000
NTT Com Security (Australia) Pty Ltd.
Level 19, 321 Kent Street, Sydney,
New South Wales 2000
Austria
NTT Com Security (Austria) GmbH
Rivergate
Handelskai 92
1200 Wien
France
NTT Com Security (France) SAS
1, rue de l’Égalité
92220 Bagneux
Germany
NTT Com Security AG
Robert-Bürkle-Straße 3
85737 Ismaning
NTT Com Security (Germany) GmbH
85737 Ismaning
Ferdinand-Braun-Straße 1
74074 Heilbronn
Industriestraße 23a
51399 Burscheid
Behringstraße 16b
22765 Hamburg
c/o NTT Europe Ltd.
Hanauer Landstraße 182
60314 Frankfurt am Main
c/o Dimension Data
Sachsendamm 2
10829 Berlin
Singapore
NTT Com Security (Singapore) Pte Ltd.
152 Beach Rd, #10-05 Gateway East
Singapore 189721
Stolberger Str. 307
50933 Köln
Sweden
NTT Com Security (Sweden) AB
Råsundavägen 12
169 67 Solna
Walramstraße 26
65541 Idstein
NTT Com Security (Sweden) AB
Krokslätts Fabriker 30
431 37 Mölndal
NTT Com Security (Germany)
Services GmbH
85737 Ismaning
Switzerland
Zunstrasse 11
8152 Glattbrugg
Hong Kong
NTT Com Security (HongKong) Ltd.
Room 706, 7th Floor
Tai Tung Building
8 Fleming Road, Wan Chai
Route du Crochet 7
1762 Givisiez
Japan
NTT Com Security (Japan) KK
Shiodome City Center
5-2 Higashi Shimbashi, 1-chrome
Minato-ku, Tokyo
Netherlands
NTT Com Security (Netherlands) B.V.
Stadionweg 70B
6225 XR Maastricht
Norway
Vollsveien 2B
1366 Lysaker
Kystveien 14
4808 Arendal
United Kingdom
Theale House, Brunel Road, Theale,
Reading RG7 4AQ
The Gherkin, 30 St. Mary Axe
London EC3A 8EP
USA
310 West Newberry Road
Bloomfield, CT 06002
One Boston Place
Suite 2600
Boston, MA 02108
13825 Sunrise Valley Drive
Suite 225
Herndon, VA 20171
101
Ordinary stock
Imprint
NTT Com Security stock is listed in the Munich stock
exchange’s over-the-counter trading (m:access).
Management Board
Simon Church, CEO
Heiner Luntz, CFO
Tickersymbol: WKN:
ISIN:
Reuters: Bloomberg:
AAGN
515503
DE0005155030
AAGGn.DE
AAGN:GY
Financial calendar for 2015
Tuesday, 31 March 2015
Annual Report 2014
Our Annual Report 2014 will be released
Tuesday, 30 June 2015
Annual Report January – March 2015
Our Annual Report January – March 2015
(Short financial year) will be released
Wednesday, 29 July 2015
Annual General Meeting
Financial year 2014 / Short financial year 2015
Lehel Carré, Room “Starnberger See”, Munich
Monday, 09 November 2015
Q2-Report 2015/2016
Our Half Year Report 2015/2016 will be released
Supervisory Board
Luc Loos (Chairman)
Makoto Takei (Deputy Chairman)
Kazu Yozawa
Shareholder Information
NTT Com Security AG is a Stock corporation registered at:
85737 Ismaning
Germany
Tel: +49 (0) 89 945 73 0
Fax: +49 (0) 89 945 73 180
Email: ir@nttcomsecurity.com
The company is entered on the Munich Commercial
Register, number HRB 121349
Investor Relations
You can register by e-mail with ir@nttcomsecurity.com
to receive regular financial information on NTT Com
Security AG. Please also use this address for any other
requests for financial information or answers to
investment related questions. Or contact us using the
following address:
NTT Com Security AG
Investor Relations
85737 Ismaning
Germany
Tel: +49 (0) 89 945 73 0
Fax: +49 (0) 89 945 73 180
Design: ad Borsche GmbH
Our last financial reports and corporate updates are
available on the internet at
www.nttcomsecurity.com
102
NTT Com Security AG
85737 Ismaning
Germany
Tel: +49 (0) 89 945 73 0
Fax: +49 (0) 89 945 73 180
Email: ir@nttcomsecurity.com
www.nttcomsecurity.com

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