Widespread security scares help boost nCipher revenue in '05
Data security developer nCipher plc reported late Friday that its revenue for 2005 grew 22% to £17.4m thanks to better sales in all the regions it operates in.
It said its net profit was £3.0 m and earnings per share were 11.26p, on a share price that closed Friday at 300.5 p
It is probably the last set of financial results that will be released by the Cambridge-based firm because it is subject to a board supported takeover by the US-based SafeNet.
nCipher benefited from several high profile security-related scares in 2005 at companies including ChoicePoint, LexisNexis and Time Warner, each of which had to acknowledge the loss of confidential data from theft or breach of internal trust.
The need for better data protection led nCipher to introduce its SecureDB database encryption product and the company said it shipped it to customers including the Irish Department of Defence for protection of military personnel records and sensitive inventory information.
The use of public key infrastructures (PKIs), where digital certificates are issued by a central authority to identify people or devices, are an increasingly regular feature of the IT security arsenal. nCipher believes it has leadership in the market for the hardware security modules (HSMs) used to safeguard the cryptographic keys central to a PKI. Its HSM customers include Volvo, The UK Passport Service, and Foreign and Commonwealth Office.
Chief executive officer Alex van Someren said the company remains focused on the application of cryptography to the real-world problems of identifying people and protecting their data, their businesses, and the transactions which occur between them.
"Over the coming years we expect customers’ IT security interest to focus increasingly on how to deliver and manage security whilst simultaneously meeting their obligations to comply with growing legislation surrounding the auditing and protection of corporate and personal data," he said.
To capture these broader market opportunities, nCipher needs to couple the technology of encryption and decryption with the technology for identifying and managing those who are the right users in the first place.
"Our recent acquisition of a majority stake in Abridean [in 2005] means we can start to meet customer demand for solutions that comprehensively manage the rights to access sensitive information within their enterprises.
"Our customers will be able to deploy the cryptographic security techniques, which are nCipher’s original area of expertise, much more widely, with user management and provisioning systems provided by Abridean as the focal point for administering this more complex security environment," he said.
By bringing together the two powerful technologies of cryptography and user management, the nCipher directors believe that nCipher and Abridean will establish a strongly-differentiated position in this emerging market.
It is a pity for market watchers, and perhaps investors, that we are unlikely to see much of detail as this strategy unfolds as nCipher gets swallowed into SafeNet over the coming months. The US firm's Offer Document was sent to all nCipher shareholders on 8 February. It stated that SafeNet would move to compulsory acquisition and delisting of nCipher if and when the offer becomes unconditional.
Mr van Someren believes the company is in "an excellent position" to chase further growth in 2006. But that "uncertainty created by the SafeNet Offer may have a short-term impact on revenues".
SafeNet's Offer Document says Mr van Someren will leave the company once the deal is done but that his brother and chief technical officer Dr Nicko van Someren will stay on.
