PEER 1 Network Enterprises, Inc.

PEER 1 Network Enterprises, Inc.

October 12, 2005 08:45 ET

Peer 1 Network Files Fiscal 2005 Year End Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 12, 2005) -

77% increase in revenues, 325% increase in EBITDA

Peer 1 Network Enterprises, Inc. (TSX VENTURE:PIX), a worldwide leader in Internet infrastructure services, released the company's fiscal 2005 year end results today recording some of the most significant growth in the company's history.

Peer 1 reports that the company has generated revenues of $24.1 million for the year ended June 30, 2005 compared to $13.6 million for the year ended June 30, 2004. This represents growth of 77%. Gross margins were up to 38.9% from 36.5% for the same period in fiscal 2004 and EBITDA grew 325% from $0.9 million for fiscal 2004 to $3.7 million for fiscal 2005. The acquisition of ServerBeach, Ltd. in October of 2004 contributed to the dramatic increases, however a significant portion of the growth was derived from both new sales and organic growth from the Peer 1 base business. Net loss for the year was $2.5 million versus $1.0 million in 2004. The rise in the loss is due to a significant increase in interest expense and other non-operating expenses related to ServerBeach. Peer 1's working capital deficit was $18.8 million at June 30, 2005 versus $1.2 million at June 30, 2004. The increase is attributable to the maturity dates of notes payable less than one year. The working capital deficiency has been eliminated by way of the company's refinancing completed after year end.

"ServerBeach has grown from an emerging player when we purchased the company last fall into a flourishing business today," said Geoff Hampson, Peer 1's president and CEO. "Our successful integration of the dedicated server company has been reflected in the numbers we are reporting in this year's financial statements. That success and our industry leading technology and management team helped to justify the recent acquisition of the Interland dedicated server assets. We also continue to invest in and grow our core business of co-location and high performance Internet bandwidth as is evidenced by our recent expansions in Virginia and Toronto. A full 60% of our company's revenues come from the co-location and bandwidth business."


- 77% increase in annual revenues from $13.6 million to $24.1 million

- Gross profit margins increase from 36.5% to 38.9%

- Loss for the year increased from $1.0 million in 2004 to $2.5 million in 2005

- EBITDA for the year was $3.7 million compared to $0.9 million for 2004, an increase of 325%

- Completed the acquisition of the assets of ServerBeach Ltd., a dedicated server provider

- Opened a new colocation facility in Herndon VA to serve the eastern USA dedicated server operations of ServerBeach as well as for Peer 1 colocation and bandwidth operations

- Substantially completed the move of approximately 2,800 dedicated servers from a facility operated by the former owners of ServerBeach to the new Peer 1 data center in Herndon

A full annual report will be mailed to shareholders, including the annual financial statements and the Management Discussion and Analysis, along with the Annual General Meeting materials in November. Shareholders may access the financial statements and MD&A at the SEDAR website:

Additionally, Mark Benham, a director of Peer 1, has been granted options to purchase 100,000 common shares of Peer 1 at $0.41 per share for a period of five years.

About Peer 1 Network

Peer 1 Network, a leading Internet infrastructure solutions provider, delivers client-centric solutions that ensure customers' online presence is available 100% of the time. From colocation and self-managed dedicated servers to complex managed hosting, Peer 1 has a solution to meet the online needs of all types and sizes of customers. Since its inception in 1999, the company has grown to include data centers and network points of presence in 16 major cities across North America and Europe, all connected by Peer 1's world class IP network. Peer 1 serves a variety of customers including hosting providers, online gaming companies, Internet phone (VoIP) companies and many small and medium sized businesses. The company's headquarters are in Vancouver, Canada and the stock is traded on the TSX Venture exchange under the symbol PIX. For more information visit



"C. Geoffrey Hampson"

C. GEOFFREY HAMPSON, President and Director


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