Nearing inflexion point?

Baar, (PresseBox) - Q2 numbers were close to our forecasts (see table 1 overleaf). Sales growth came in at a modest 11.1% for H1 as a whole but we expect that growth will accelerate in H2 and in 2010 and 2011, as the pilot and roll-out phases of the German eID project trigger increased activity across the digital signature market. We leave our forecasts unchanged and maintain our Buy recommendation and price target of €3.40.

Sales growth set to accelerate in H2/09, 2010, 2011 General economic uncertainty, absorption of company resources by the German eID project as well as reluctance by other eCard clients to invest before eID infrastructure is in place slowed business in H1. However, earlier this month, the authorities invited Openlimit's partners to submit an offer for the German eID project. Openlimit is very well placed to win business in this project, which should trigger a marked acceleration in the company's sales and earnings growth.

Key reference projects/other developments During H1 Openlimit won a contract from the pallet and container pooling specialist, CHEP, to supply it with batch processing components for electronic customer invoicing in Germany, France, Austria and Switzerland. CHEP thereby became the first client for Openlimit's new electronic archiving technology, MigSafe. Furthermore, together with its partner MSG Systems AG, Openlimit was also issued a tender for an ASP-based e-invoicing project to be operated for BMW. In addition, Openlimit's partner ECM Consulting GmbH in Hamburg received the tender for an e-invoicing project from one of the largest German mail order companies for office equipment, communication technology and office furniture. In July, Openlimit strengthened its financial position in a share issue which raised gross proceeds of CHF 1.46m. The new funds have provided the company with additional financial flexibility ahead of its expected participation in the pilot phase of the German eID card from October.

eID project catalyst for Openlimit and wider digital signature market Earlier this month, the authorities invited Openlimit's partners to submit an offer for the German eID project. Openlimit and its partners are firm favourites to win this contract, as so far no other competitor has been able to demonstrate a viable solution.

The pilot phase of the project runs between October 2009 and November 2010 and so if Openlimit and its partners win the bid, Openlimit should be able to book substantial revenue as early as Q4. By setting in train network effects, the eID project and the issue of eIDs to eligible German citizens should act as a catalyst for the digital signature market, both inside and outside Germany. On the basis of its certified technology Openlimit is well placed to benefit from this development.

Maintaining forecasts, recommendation and price target We leave our forecasts unchanged and maintain our Buy recommendation and price target of €3.40.

RISKS

Risks to our price target include but are not limited to: delay in large projects, erosion of the company's present competitive lead, further dilution of shareholders' interests and the failure of electronic signature applications to achieve widespread market acceptance.

OpenLimit Holding AG

Openlimit Holding AG develops and markets software applications for electronic signature, encryption and related fields. The company's internationally recognised Common Criteria-certified software products enhance the security, provability and efficiency of electronic transactions, workflow, communications and data. The company employed 50 staff as of 30 June 2009.

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