The operating margin (EBIT) for the full year rose to 22%, up from 20,4% for 2004. The improvement in operating income and margin was achieved with higher total revenue of ¬438m, up by 6,5% (5,8% on a constant currency basis) from the ¬411,4m for 2004. 

Revenue growth was driven in particular by a 15,2% increase in licensing revenue for the year, supported by a strengthened sales organisation and positive business developments in both of the company's business lines.

Results for the fourth quarter of 2005 confirmed developments for the year as a whole. Total revenue for the fourth quarter rose by 9,6% (5,9% on a constant currency basis) to ¬123,6m, while gross margin was 23,4% in comparison with 20,9% for the year ago period.

The growth in licensing revenue reflects increasing demand for both the XML Business Integration and the Enterprise Transaction Systems (ETS) business lines, as customers seek to modernise their mainframe systems and integrate their IT infrastructure.

Total licensing revenue for the XML Integration business line rose by 16,1% to ¬30,3m from the ¬26,1m for the previous year.

More importantly, licensing revenue with the company's own products increased by 31% (29% at constant currencies) to ¬26m from ¬19,9m in 2004, while third party sales declined in keeping with the decision to phase out this activity.

For the ETS business line, licensing revenue rose to ¬96m, up by 12% (10% at constant currencies) over the ¬85,9m for the year-ago period. Maintenance revenue for 2005 was ¬181,4m, substantially unchanged from the year-ago period (¬182,6m).

"The renewed increase in licensing revenue provides further confirmation of the validity of our strategy, says CEO, Karl-Heinz Streibich.

The company's results for 2005 show that we are indeed able to leverage the growth opportunities in XML Business Integration while capitalising on the sustained potential of the established ETS business line.

The operating margin (EBIT as a percentage of total revenue) for the full year 2005 was 20%, up significantly from the 20,4% margin for 2004.

The continued improvement in operating margin results from an enhanced product mix and effective cost management, as reflected in the total cost of sales, which rose by only 4% - less than the rate of revenue growth to ¬143,5m in comparison with ¬137,4m for 2004.

The company was also able to achieve the expansion in operating margin in spite of committing substantial resources to introduce new products, enter new markets, expand the partnership network, and strengthen sales and marketing activities.

The total number of employees at year end 2005 was 2 750, an increase of 12,8% from the 2 438 employees at year end 2004.

Although the number of employees in Germany rose by 1,2% to 774, most of the increase in headcount occurred outside Germany, as the company focused on expanding its sales and marketing presence in key growth markets.