2013-02-08 08:15:00 CET
2013-02-08 08:15:37 CET
REGULATED INFORMATION
Stonesoft - Financial Statement Release
Stonesoft Oyj :STONESOFT CORPORATION FINANCIAL STATEMENTS RELEASE FOR JANUARY-DECEMBER 2012
Stonesoft Corporation Stock Exchange Release 8 February 2013 at 9:15 a.m.
STONESOFT CORPORATION FINANCIAL STATEMENTS RELEASE FOR JANUARY-DECEMBER 2012
Product sales grew by almost 60%, positive operating result for full year
Stonesoft Corporation's operating result in the fourth quarter of 2012 grew by
almost MEUR 1.2 compared to the corresponding period in the previous year and
were MEUR 1.4. The company's product sales developed positively and were MEUR
9.6, growth 58%, whereby net sales were MEUR 13.5.
The comparable figures from the corresponding period in the previous year are in
brackets:
October-December 2012 (2011)
- Net sales MEUR 13.5 (9.5), growth 41%
- Product sales MEUR 9.6 (6.1), growth 58%
- Operating result MEUR 1.4 (0.3)
- Operating result as percentage of net sales 10 (3)%
- Earnings per share EUR 0.03 (0.01)
- Operative cash flow MEUR -0.0 (0.6)
- Liquid cash funds at the end of the reporting period MEUR 7.2 (7.7). The
corporate had no interest-bearing debts.
January-December 2012 (2011)
- Net sales MEUR 40.1 (30.6), growth 31%
- Product sales MEUR 25.6 (17.7), growth 45%
- Operating result MEUR 0.5 (-1.1)
- Operating result as percentage of net sales 1 (-4)%
- Earnings per share EUR 0.01 (-0.01)
- Operative cash flow MEUR -0.5 (-0.3)
CEO ILKKA HIIDENHEIMO
The year 2012 was a turning point in Stonesoft's history. We succeeded in our
long-term strategic goal to finance our business with operating cash flow,
despite strong investments in growth, and made a positive result for the full
year.
During the fourth quarter of the year 2012 Stonesoft's product sales grew by
almost 60% and net sales by approximately 41%. Once again, our product sales
made an all-time record. The net sales for the full year were also record-
breaking MEUR 40.1.
We invested and will continue to invest in making the growth continue by adding
resources in sales and marketing organization as well as product development. We
will extend our operations into new markets. We are actively seeking
distribution and OEM partnerships with internet solution providers. We will
continue to raise the competitiveness of our products in vertical sectors such
as teleoperator and defense industries and strengthen the suitability of our
products for channel partnership business, managed security service providers
(MSSPs) and securing cloud services.
There is a growing need on the market for our software based security technology
which uses standard hardware. In addition to the commercial success of our
products we continued to succeed extremely well in various tests by leading
independent test laboratories: among others, the NSS Labs tests prove that
Stonesoft has unique competence and our products are among the best of today's
rapidly developing security industry.
Our Evader testing tool, which is based on a relatively limited number of
evasions, is still capable of passing every next generation firewall, UTM and
IPS solution on the market, except Stonesoft's own security solutions. We will
introduce an updated version of the Evader tool at the RSA conference in the US
at the end of February.
Cyber security has been strongly visible in the media around the globe and
Stonesoft has received a lot of publicity in this respect. However, we are
dealing with a strategic level problem, to which there are no easy answers on
the operational level. The traditional approach where strategy is directed via
technology does not work. Based on Stonesoft's view, strategic level guidance is
required to direct operations and technology choices.
The Winning Cyber Strategy 2013 top forum we arranged after the reporting period
in January brought together leading cyber security experts from Finland and
abroad. In the forum, cyber risks and threats were discussed, but also
resilience, the opportunities brought by cyber security as well as cyber
strategy insights. Cyber security concerns all of us and provides significant
opportunities to both Stonesoft and the whole Finland. Our internationally
unique cyber competence provides us with the possibility to become the world's
leading experts in this demanding field. Numerous appearances and articles in
the world's leading media such as the Economist, Frankfurter Allgemeine Zeitung
and the New York Times have significantly strengthened the company's public
recognition.
NET SALES AND RESULT
October-December 2012 (hereinafter 'reporting period')
The Group's net sales in the reporting period were MEUR 13.5 (9.5). Increase
compared to the corresponding period in the previous year was MEUR 3.9, or 41%.
The operating result (EBIT) was MEUR 1.4 (0.3) and the result after taxes was
MEUR 1.7 (0.4).
Product sales were MEUR 9.6 (6.1), growth by 58% compared to the corresponding
quarter in the previous year.
The geographical distribution of net sales was as follows: Europe 67 (72) %,
Emerging Markets (North Africa, Middle East and Latin America) 20 (11) %, North
America) 12 (13) % and APAC (Asia-Pacific) 1 (4)%.
January-December 2012 (hereinafter 'fiscal period')
The Group's net sales in the fiscal period were MEUR 40.1 (30.6). Increase
compared to the corresponding period in the previous year was MEUR 9.5, or 31%.
The operating result (EBIT) was MEUR 0.5 (-1.1) and the result after taxes was
MEUR 0.7 (-0.9).
Product sales were MEUR 25.6 (17.7), growth by 45% compared to the corresponding
period in the previous year.
The geographical distribution of net sales was as follows: Europe 71 (69)%,
Emerging Markets (North Africa, Middle East and Latin America) 15 (13)%, North
America) 11 (15)% and APAC (Asia-Pacific) 2 (3)%.
FINANCE AND INVESTMENTS
At the end of the fiscal year, Stonesoft's total assets were MEUR 27.0 (21.2).
The equity ratio was 39 (40) % and gearing (the ratio of net debt to
shareholders' equity) was -1.48 (-1.99).
The comparable cash flow during the fiscal year was MEUR -0.5 (-0.3). The Group
has no interest-bearing debt. The consolidated liquid assets at the end of the
fiscal year totalled MEUR 7.2 (7.7).
The Group has in its 2012 financial statements temporary differences accumulated
in taxation consisting of 44.5 MEUR (69.6) losses and 18.6 (0) MEUR internal
goodwill deductable in taxation as well as deferred depreciation 25.9 MEUR in
2012 (19.3). 14.6 MEUR of the accumulated taxable losses will expire in 2013 and
the rest in the years 2014-2017. In accordance with IAS 12.34-35, the Group has
booked no tax receivables. It is in the company's interest to aim at utilizing
the taxable losses.
Investments in tangible and intangible assets totalled MEUR 1.0 (0.6).
DEVELOPMENT OF BUSINESS OPERATIONS AND STRATEGY
In November 2012 Stonesoft published the company's updated strategy and goals
for the years 2013-2014. The strategy is based on strong growth in the rapidly
growing security market and divided into cyber security-, customer-, product-,
channel-, and marketing strategies, each of which supports growth. After the
reporting period the company published clarifications to its updated strategy.
The company's budgeted net sales for 2013 are MEUR 60 and the net sales target
set in the strategy for the year 2014 is approximately MEUR 90. To support this,
the company will enter several new markets during 2013 and actively develop
partner business.
MAIN BUSINESS EVENTS
Main business events in 2012
In January Stonesoft announced it had, as the first non-French vendor, obtained
the CSPN (Certification de Sécurité de Premier Niveau) certification delivered
by ANSSI (French Network and Information Security Agency) in France.
In January the Board of Directors of Stonesoft Corporation decided on a new
stock option plan.
In January Stonesoft announced the availability of the Stonesoft(TM) IPS-1302
intrusion prevention system appliance for protecting data center and modern
corporate network environments. Designed for demanding Web and encrypted traffic
inspection, the appliance provides efficient protection against Advanced Evasion
Techniques (AETs) without compromising traffic speed or availability.
In February Stonesoft announced its Firewall/VPN product family had received the
Common Criteria Evaluation Assurance Level 4+ (EAL4+) certification.
In February Stonesoft announced it had been chosen as a vendor in the network
security part of a very significant public sector project. At this point, the
company has estimated the total value of the delivery to be approximately EUR
five (5) Million.
In February Stonesoft introduced the new Stonesoft Security Engine, which can be
configured to act as seven different security solutions or as a combination of
them. The Security Engine sets new criteria to network security and its cost
efficiency.
In March Stonesoft announced it had received the respected 'Recommend' rating
for the Stonesoft FW-1301 in NSS Labs' Next Generation Firewall (NGFW) Group
Test.
In March Stonesoft announced it had entered a partnership agreement with Cygate,
whereby Cygate will start providing Stonesoft's network security solutions to
companies and public sector organizations.
In April Stonesoft announced its firewall solution has received the IPv6
certification of the US-based ICSA Labs as well as met the U.S. National
Institute of Standards and Technology's USGv6 evaluation requirements.
In April Stonesoft announced it has joined the IBM company Q1 Labs' Security
Intelligence Partner Program (SIPP).
In May Stonesoft appointed Jarno Limnéll, Doctor of Military Science, as
Director, Cyber Security. Mr. Limnéll's main areas of responsibility are issues
related to cyber security, including cyber security strategies and partnerships.
In July Stonesoft released the new Evasion Prevention System (EPS) and Evader,
the world's first software-based testing tool that empowers organizations to
test their network security solutions' ability to withstand advanced evasion
techniques (AETs).
In August Stonesoft announced its IPS-1302 had received excellent results in the
NSS Labs Intrusion Prevention Systems (IPS) Test.
In August Mr. Mika Yletyinen was appointed Vice President, Europe and Global
Channel and a member of the Executive Management Team at Stonesoft Corporation.
In August Stonesoft announced the market research firm Gartner, Inc. had placed
it in the Visionaries Quadrant of its report, "Magic Quadrant for Intrusion
Prevention Systems (IPS)".
In September Stonesoft introduced the new software (version 5.4). The company's
flagship product, the Stonesoft Security Engine 5.4, now offers improved
security against Advanced Evasion Techniques (AETs).
In November, Stonesoft published its updated strategy for the years 2013-2014.
Aiming at rapid growth, the strategy is divided into cyber security-, customer-,
product-, channel-, and marketing strategies, each of which supports growth.
In December Stonesoft launched the new next generation Stonesoft MIL-320
firewall/VPN appliance, which provides military-grade security also in extreme
conditions.
In December Stonesoft signed a cooperation agreement with the Algerian Ministry
of Post and Information & Communication Technologies (MPTIC) to raise awareness
and knowledge about cybercrime and to provide academic security training in
Algeria.
In December Stonesoft segregated its post sales technical support by selling it
to its newly founded, fully owned subsidiary Stonesoft Global Support Ltd. The
new company will from now on perform the technical support services offered to
Stonesoft's customers as a subcontractor.
Main events after the fiscal period
In January Stonesoft published advance information on the Q4 and full year 2012
product sales and net sales as well as clarifications to its updated strategy.
In February Stonesoft introduced two new appliance models, the Stonesoft 1035
and 1065 appliances.
In February Stonesoft received the highest "Recommended" rating for the
Stonesoft FW-1301 in NSS Labs' Network Firewall Group test.
Estimate
Stonesoft estimates the above-mentioned operations and achievements to secure
the company's competitiveness in the future.
RESALES CHANNEL
The company sales are mainly conducted through an international resales channel.
RESEARCH AND DEVELOPMENT
Stonesoft's R&D operations are located in Finland, France and Poland. At the end
of the year 2012, R&D employed in total 104 (85) persons. The company's R&D
investments during the fiscal period totalled MEUR 7.5 (6.1).
R&D costs represented 23 (22) % of all expenses. R&D costs represented 19 (20) %
of net sales.
Product tests, certifications and patents
In January Stonesoft Firewall network security solution obtained the CSPN
(Certification de Sécurité de Premier Niveau) certification delivered by ANSSI
(French Network and Information Security Agency) in France.
In February Stonesoft Firewall/VPN product family received the Common Criteria
Evaluation Assurance Level 4+ (EAL4+) certification, an independent
international security standard for IT Security products. The EAL 4+ is the
highest assurance level existing commercial products can achieve.
In March Stonesoft received the highest (Recommend) rating for the Stonesoft FW-
1301 in NSS Labs' Next Generation Firewall (NGFW) Group test.
In April Stonesoft Firewall solution met the U.S. National Institute of
Standards and Technology's USGv6 evaluation requirements. And Stonesoft was
certified by Q1 Labs, an IBM company and global provider of security
intelligence solutions, for its Security Intelligence Partner Program (SIPP).
The integration of Stonesoft solutions with IBM's QRadar Security Intelligence
Platform open protocols allows for more powerful correlation of security and
application layer event data, facilitating customer solution deployments.
In August NSS Labs confirmed that the Stonesoft IPS-1302 provides 100 %
protection against all tested evasion techniques and low total cost of ownership
(TCO) during real-world traffic and threat scenarios. In NSS Labs' Intrusion
Prevention Systems (IPS) Test, Stonesoft also demonstrated excellent stability
and reliability. Stonesoft was positioned in the "Visionaries" Quadrant of
Gartner's Magic Quadrant for Intrusion Prevention Systems.
Stonesoft was granted one (1) patent during the year. The patent was related to
firewall personalization.
Most significant product launches
In January Stonesoft introduced IPS-1302 for demanding Web and encrypted traffic
inspection.
In February Stonesoft introduced its transformable Security Engine concept.
Stonesoft Security Engine is the first security solution where the customers can
choose the platform, capacity and product configuration based on their needs.
Security Engine can act as a traditional and/or next generation firewall (NGFW),
traditional and/or next generation intrusion prevention systems (IPS/NGIPS),
layer-2 firewall, VPN or UTM product.
The Security Engine's configuration or protection level can be changed according
to changes in the network or business environment. For example, the security
solution can be changed from the Next Generation Firewall (NGFW) role to Next
Generation IPS (NGIPS) role fast and without additional costs.
In July Stonesoft released the new Evasion Prevention System (EPS) and Evader,
the world's first software-based testing tool that empowers organizations to
test their network security solutions' ability to withstand advanced evasion
techniques (AETs).
In September Stonesoft introduced the new software (version 5.4) as well as the
3206 and 5206 high performance appliances with real-world application traffic
throughput over 100Gbps.
In December Stonesoft announced the new Stonesoft MIL-320 Next Generation
Firewall/VPN appliance that provides military-grade network security in a rugged
go-anywhere unit.
DEVELOPMENT OF SHARE PRICES AND TURNOVER
Stonesoft's share value at the beginning of the fiscal year on January 1, 2012
was EUR 0.86 (0.58). At the end of the fiscal year on December 31, 2012, the
share price was EUR 1.39 (0.86). The highest share price was EUR 1.78 (0.97),
and the lowest EUR 0.87 (0.41). The total annual turnover of Stonesoft shares
amounted to MEUR 28.8 (11.1) and 21.4 (16.8) million shares, which is 33.5
(26.5) % of the total amount of shares. Based on the share price on December
31, 2012, Stonesoft's market capitalization was MEUR 88.7 (54.6).
SHARE CAPITAL AND STOCK OPTION PROGRAMS
At the end of the fiscal year on December 31, 2012, Stonesoft's share capital
recorded in the Trade Register totalled EUR 1,150,574.64 (1,150,574.64). The
number of shares at the end of the fiscal year corrected by share issue was
65 052 195 (64 328 315). The weighted average value of the numbers of shares
corrected by share issue was 63 617 591 (63 316 427). There is one class of
shares and every share has one vote. The shares have no limitations on voting
rights. The shares have no nominal value and no bookkeeping equivalent value.
There are no redemption or approval clauses related to the shares, or securities
entitling to the shares, and no other limitations of transfer. Furthermore, the
shares and securities entitling to the shares have no special rights related to
the decision making of the company. The number of shares recorded in the Trade
Register on 31 December 2012 totalled 63.801.732.
The shares of the company have been connected to the book-entry securities
system maintained by Euroclear Finland Ltd, which maintains the official
shareholder register of the company. The shares of the company are rated on the
small company list with the trade identification SFT1V in the NASDAQ OMX
Helsinki Ltd.
The company has two valid stock option programs, Stock Option Program 2008,
under which the subscription price is EUR 0.30 and the total number of stock
options to be granted based on this program is 3 000 000 at the maximum, and the
Stock Option Program 2012, under which the total number of stock options is
4 500 000 at the maximum. The subscription price for the 2012A option rights
based on Option Program 2012 is 1.42 euros per share. The subscription price for
the stock options 2012B and 2012C will be determined based on the conditions of
the Option Program 2012 later. At the end of the year 2012, in total 2 251 250
option rights had been granted from the Stock Option Program 2008, of which
573 000 had been registered as shares. 785 000 option rights had been granted
from the Option Program 2012, of which according to the option conditions none
have been registered as shares yet. 748 750 option rights have still not been
granted from the program 2008 and 3 715 000 from the program 2012. At the end of
the fiscal period, in total 1 057 000 shares could be subscribed based on Option
Program 2008-2014, which is 1.7% of the company's current number of shares and
voting rights. No subscriptions were possible in 2012 based on the program
2012. Based on the option programs directed to the company's key personnel,
309 250 subscriptions were made based on the 2008 program.
The subscription period of the shares is graded and will end for all 2008 stock
options on December 31, 2014 and for 2012 stock options in 2017-2019.
Additional information about both option programs is provided by the company's
stock exchange releases and web pages.
SHAREHOLDERS
At the end of 2012, the company had 6 272 (6 091) shareholders. Nominee
registered holdings represented 6.1 (6.0)% of the share capital at the end of
2012.
The company gave no notices of change of ownership during the fiscal year.
SHAREHOLDINGS OF THE BOARD OF DIRECTORS AND THE CEO
On December 31, 2012, the members of the Board of Directors, the CEO and the
entities under their control held a total of 22,277,657 shares of the company.
These represented 34.9% of the shares and the voting rights. The stock option
rights held by the members of the Board of Directors on December 31, 2012
entitled them to a subscription of 77,500 shares.
PROPOSAL BY THE BOARD OF DIRECTORS FOR DISTRIBUTION OF PROFIT
The operating result of the parent company was MEUR 18.8. At the end of the
fiscal year the parent company had no distributable equity in its shareholders'
equity. The Board of Directors proposes that the company pay no dividend and
that the profit be credited to the Profit/Loss account.
AUTHORIZATIONS OF THE BOARD OF DIRECTORS
The Annual General Meeting of Shareholders (AGM) held on April 25, 2012 decided
to authorize the Board of Directors of the company to decide about one or more
share issues as well as the issuance of option and other special rights so that
the total number of new shares may be 12 600 000 at the maximum.
Based on the authorization the Board of Directors may decide on issuance of
shares to the shareholders according to the shareholders' pre-emptive
subscription rights as well as in a directed issuance of shares or stock options
or other special rights in deviation from the shareholders' pre-emptive
subscription rights in case the deviation is justified by a weighty financial
reason for the company, such as financing of an acquisition, other arrangement
concerning the business of the company or development of its capital structure,
or incentive to the company's personnel.
The Board of Directors was authorized to decide on other terms and conditions
related to the share issues and to the issuance of option or other special
rights. The authorization is in force until the end of the 2013 AGM. This
authorization supersedes the authorization given by the AGM in the previous
year.
The company does not have its own shares and the Board of Directors is not
authorized to purchase the company's own shares.
THE COMPANY'S BOARD OF DIRECTORS, EXECUTIVE MANAGEMENT AND AUDITORS
According to the Articles of Association of the company, the Board of Directors
is comprised of three to seven (3-7) ordinary members. The term of the member of
the Board of Directors starts at the end of the Annual General Meeting that
elects him/her and continues until the end of the next Annual General Meeting.
The Annual General Meeting held on April 25, 2012 elected six (6) members to the
Board of Directors. Ilkka Hiidenheimo, Harri Koponen, Jukka Manner, Timo Syrjälä
and Hannu Turunen were re-elected as a Board member and Satu Yrjänen was elected
as a new Board Member. In its statutory meeting held on April 25, 2012, the
Board elected Hannu Turunen as Chairman of the Board and Harri Koponen as Vice
Chairman. In addition, Hannu Turunen, Harri Koponen and Timo Syrjälä were
elected as members of the Audit Committee.
According to the Articles of Association, the company has a Chief Executive
Officer (CEO), who is appointed and discharged by the Board of Directors. In
2012, Ilkka Hiidenheimo was the CEO of the company. The CEO is in charge of the
day-to-day management of the company in accordance with the instructions and
orders given by the Board of Directors as well as the Companies Act.
The members of the company's Executive Management were Ilkka Hiidenheimo, Juha
Kivikoski, Kim Fagernäs, Mikael Nyberg, Mika Jalava, Ari Vänttinen and as of
August Mika Yletyinen.
In 2012, authorized public accountants Ernst & Young Oy acted as Stonesoft's
auditor and authorized public accountant Bengt Nyholm as the auditor in charge.
The compensation of the CEO
CEO Ilkka Hiidenheimo has not accepted any compensation for his services during
2012, The CEO's pension is the same as for all the company's employees, as
defined in Finland's Employee Pension Act (TYEL). The service contract for the
CEO provides for notice period of six (6) months prior to termination, with
compensation being equal to six (6) months' salary and a further optional six
(6) months' fixed salary if the company terminates the contract without
essential breach of contract by the CEO.
The CEO has been granted option rights, in total 70 000 pcs from Option Program
2008 and 140 000 pcs from Option Program 2012.
ACQUISITIONS AND CHANGES IN GROUP STRUCTURE
In December Stonesoft segregated its post sales technical support by selling it
to its newly founded, fully owned subsidiary Stonesoft Global Support Ltd.
No external acquisitions were made during the fiscal year.
FOREIGN REPRESENTATIVE OFFICES
The Group has at the end of the fiscal year representative offices in Algeria,
China, Saudi Arabia and UAE.
PERSONNEL
At the end of the fiscal year, the Group's personnel totalled 251 (222) people,
of which 221 (189) were employees and 30 (33) had contractual relationships as
full-time sales representatives or consultants.
The geographical distribution of Stonesoft personnel based on the new segment
reporting at the end of the fiscal period was Europe, 205 (176), Emerging
markets (North Africa, Middle East and Latin America) 15 (16), North America 25
(21) and APAC (Asia and Pacific) 6 (9).
The salaries and other remuneration paid to the employees, including social
security payments, were in total MEUR 19.9 (16.7).
The average number of personnel during the fiscal period was 237 (207).
ENVIRONMENT
Due to the nature of the company's business, the direct environmental impacts of
its business operations are fairly limited. The activities of the company
include internal software development and purchasing of external hardware
assembly services and related installation services from subcontractors.
Stonesoft is a member of PYR (The International Register of Packaging PYR ltd).
Stonesoft's products are compliant with RoHS and WEEE directives (directives for
restrictions of hazardous substances in electric appliances and recycling of
electric appliances).
CORPORATE GOVERNANCE STATEMENT
The Audit Committee of Stonesoft Corporation's Board of Directors will review
and approve the Corporate Governance Statement. Stonesoft Corporation's
Corporate Governance Statement will be issued separately from The Board of
Director's report and published in the Annual Report 2012.
Stonesoft Corporation applies the Corporate Governance Code recommendations for
listed companies prepared by the NASDAQ OMX Helsinki Ltd, the Central Chamber of
Commerce and the Confederation of Finnish Industries EK and published in June
2010. A more detailed description of the Corporate Governance principles of
Stonesoft Corporation is available at the corporate website (www.stonesoft.com).
The Corporate Governance Statement contains the main features of internal
control and risk management in relation to the financial reporting systems as
well as information about the composition and duties of the Board of Directors
and information about the Chief Executive Officer.
RISKS AND BUSINESS UNCERTAINTIES
There have been no significant changes in the risk scenario with respect to
Stonesoft.
The need of companies and authorities to protect themselves against network
attacks and cyber threats will increase significantly. The global economical
crisis has negative impact on total demand.
The biggest risk factors of the company's operations are related to operational
and financial risks as well as securing and managing critical data and
infrastructure.
Operational risks
The company sets financial targets annually in connection with the budgeting and
the realization of the targets is monitored on a monthly basis. The guidance and
supervision of the business operations takes place with the means of a reporting
and forecasting system covering the entire group that the company strives to
develop on a continuous basis. The product sales and related services are made
mainly through global channel partners, using standardized Stonesoft agreements.
The company keeps a buffer stock for sales to ensure rapid delivery and to be
able to meet unexpected peak demands. The sales operations are supported by the
company's legal unit seeking to reduce the risks related to the global business
operations through continuous management and development of contracts. The
company also uses insurance to cover property, operational and liability risks.
Financial risks
Stonesoft does not normally provide financing to its customers, other than
generally accepted terms of payment. The company invoices mainly in Euros, the
US dollar being the other invoicing currency. The company's costs occur mostly
in Euros. Exchange rate fluctuations can affect the company's financial results.
The company uses matching as a main tool for offsetting the exchange rate risks.
The task of Stonesoft's Corporate Treasury is to manage financial risks in
accordance with the Treasury Policy approved by Stonesoft's Board of Directors.
The main goals of the policy are
(i) to ensure the short-term liquidity of the company,
(ii) to guarantee efficient circulation of cash funds and
(iii) to follow prudent and transparent investment policy for the cash reserves,
aiming at guaranteeing competitive return on a selected risk level.
The company's cash reserves are invested in interest bearing instruments. The
company's profits and related costs are under continuous control.
Management and safeguard of critical business related information and assets
Stonesoft manages and safeguards its critical business information by stringent
internal policies and processes. The company constantly reviews and updates its
network infrastructure and actively utilizes its own products in order to
protect the network infrastructure of the company. The company has back-up
systems to ensure business continuity also in a state of emergency.
During the fiscal year 2013, Stonesoft's main risks and business uncertainties
relate to the realization timetable of the sales projects and possible
production disruption of our subcontractors and suppliers. Stonesoft has no
risks related to the order book, because it normally can process incoming orders
within a couple of work days.
Stonesoft's risk management and its principles are discussed more extensively at
the company website and in the Annual Report.
FUTURE OUTLOOK
In 2012, the network security market grew by approximately 10%, and based on
estimates by various sources the growth level of the total market will remain at
5-15% during the year 2013. For example, Gartner has estimated that the network
security market, without any support or other services, will reach USD 9 Billion
in 2013.
Stonesoft's comprehensive product offering meets the rapidly developing and
changing security challenges, including the demands brought by cloud services,
virtualization and outsourcing of security.
Advanced evasion techniques
Stonesoft's freely downloadable Evader testing tool provides organizations with
the possibility to see in their own environment that advanced evasion techniques
are able to bypass all except Stonesoft's security systems.
Due to incorrect technology choices, many competitors have great difficulties in
amending their solutions to provide protection against AETs now and in the
future.
Stonesoft has received the highest possible status in the Next Generation
Firewall, Intrusion Prevention System as well as the latest Network Firewall
Group tests of the independent research company NSS Labs. In addition, the
research company Gartner had positioned Stonesoft as a visionary in both its IPS
and Firewall Magic Quadrants. In the IPS Magic Quadrant Stonesoft is the only
company who has received the visionary status.
Cyber security
Stonesoft's active participation in the current discussion about cyber security
has brought the topic also to the awareness of the larger audience. Stonesoft is
a pioneer in cyber security and will maintain its thought leadership in the
market according to its strategy.
Estimate
Based on Stonesoft's view, these issues will continue to have a positive impact
on the company's net sales and profitability and will strengthen its
competitiveness and market position.
The company's budgeted net sales for 2013 is MEUR 60 and the net sales target
set in the strategy for the year 2014 is approximately MEUR 90. To support this,
the company will enter several new markets during 2013 and actively develop
partner business.
While the company is aiming for strong growth, the operating profit (EBIT) for
the first quarter of the year is expected to be negative and the operating
profit for the full year to improve compared to the previous year.
With regard to the development of the turnover and the operating result,
variation is expected between the quarters in comparison to the corresponding
quarter during the previous year as well as to the previous quarter as a
consequence of, among others, long sales cycles and the relatively big impact of
individual deals on the development of net sales and operating result.
SUMMARY OF FINANCIAL STATEMENTS AND NOTES JANUARY 1 - DECEMBER 31, 2012
ACCOUNTING PRINCIPLES
This Financial Statement Release has been prepared in accordance with the IAS
34 standard.
The company has adopted certain new or revised IFRS standards and IFRIC
interpretations at the beginning of the financial period as described in the
Financial Statements for 2011. However, the adoption of these new and amended
standards has not yet had an effect on the reported figures in practice. In
other respects, the same accounting policies have been followed as in the
Financial Statements for 2012. Key indicator calculations remain unchanged.
The figures presented in this release are audited.
Stonesoft Group
Income Statement 10-12/2012 10-12/2011 1-12/2012 1-12/2011
(1000 Euros)
Net sales 13 458 9 540 40 127 30 604
Other operating income 231 281 950 904
Materials and services -2 834 -1 946 -7 658 -5 240
Personnel expenses -5 620 -4 598 -19 885 -16 665
Depreciation -171 -115 -624 -479
Other operating expenses -3 662 -2 910 -12 459 -10 262
Operating result 1 402 251 451 -1 137
Financial income and expenses 117 97 257 358
Result before taxes 1 519 348 709 -779
Taxes 178 16 -23 -138
Result for the accounting period 1 697 364 685 -917
Other comprehensive income
Exchange differences on translating
foreign operations -3 7 5 -3
Total other comprehensive income -3 7 5 -3
Total comprehensive income 1 693 371 691 -920
Basic earnings per share (EUR),
continuing operations 0,03 0,01 0,01 -0,01
Diluted earnings per share (EUR),
continuing operations 0,03 0,01 0,01 -0,01
Stonesoft Group
Balance Sheet (1000 Euros) 31.12.2012 31.12.2011
ASSETS
Non-Current Assets
Tangible assets 1 008 700
Intangible assets 233 162
Other investments 10 10
Total 1 251 872
Current assets
Inventories 2 282 1 508
Trade and other receivables 16 187 10 847
Prepayments 102 220
Marketable securities 4 343 0
Cash and cash equivalents 2 848 7 710
Total 25 761 20 285
Total assets 27 012 21 157
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
company
Share capital 1 151 1 151
Issue of shares 12 0
Share premium account 76 602 76 602
Conversion differences -949 -954
Reserve for invested unrestricted equity fund 4 751 4 732
Retained earnings -76 696 -77 659
Total 4 871 3 873
Long-term liabilities
Prepayments *) 5 025 3 157
Total 5 025 3 157
Short-term liabilities
Trade and other payables 7 466 5 563
Prepayments *) 9 526 8 381
Tax liability 68 126
Provisions 56 58
Total 17 116 14 127
Total liabilities 22 141 17 285
Total equity and liabilities 27 012 21 157
*) Prepayments contain customers advance
payment of support and maintenance contracts 14 551 11 538
Stonesoft
Group
Statement of
changes in
equity
(1000 Euros)
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained
capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2011 1 151 0 76 603 -951 4 751 -76 986 4 567
Comprehensive
income 0 0 0 -3 0 -917 -920
Reserve for
invested
unrestricted
equity fund
reduction 0 0 0 0 -71 71 0
Transaction
costs from
equity 0 0 0 0 -1 0 -1
Stock options
exercised 0 0 0 0 54 0 54
Stock option
expenses 0 0 0 0 0 173 173
Shareholders'
equity at
31.12.2011 1 151 0 76 602 -954 4 732 -77 659 3 873
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained
capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2012 1 151 0 76 602 -954 4 732 -77 659 3 873
Comprehensive
income 0 0 0 5 0 685 691
Reserve for
invested
unrestricted
equity fund
reduction 0 0 0 0 -70 70 0
Transaction
costs from
equity 0 0 0 0 -4 0 -4
Stock options
exercised 0 12 0 0 93 0 105
Stock option
expenses 0 0 0 0 0 208 208
Shareholders'
equity at
31.12.2012 1 151 12 76 602 -949 4 751 -76 696 4 871
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-31.12.2012 1.1.-31.12.2011
Cash flow from operating activities
Operating Result 451 -1 137
Adjustments
Non-cash transactions 172 334
Financial expenses -77 -106
Financial incomes 245 445
Change in net working capital -264 904
Taxes paid -234 -218
Total cash flow from operating activities 294 221
Cash flow from investing activities
Investments in tangible assets -868 -460
Investments in intangible assets -135 -120
Total cash flow investing activities -1 003 -581
Cash flow from financing activities
Stock options exercised 101 53
Total cash flow from financing activities 101 53
Change in cash and cash equivalents
Cash and cash equivalents at beginning of
period 7 710 8 016
Conversion differences 0 1
Changes in the market value of investments 89 0
Total cash and cash equivalents at end of period
*) 7 191 7 710
*) Total cash and cash equivalents at end of the
period
contains pledged securities 711 496
Stonesoft Group
Geographical segments 1.1.-31.12.2012 1.1.-31.12.2011
(1000 Euros)
Net sales
Europe 28 588 20 979
Emerging Markets 6 073 3 926
Americas 4 517 4 656
APAC 949 1 043
Total net sales 40 127 30 604
Operating profit
Europe 1 612 150
Emerging Markets 573 -352
Americas -1 544 -650
APAC -190 -286
Total operating profit 451 -1 137
Stonesoft Group
Contingent liabilities 1.1.-31.12.2012 1.1.-31.12.2011
(1000 Euros)
Contingent off-balance sheet
Non-cancellable other leases 1 428 1 970
Contingent liabilities for the Company 339 223
Stonesoft Group
Quarterly development Q4 / Q3 / Q2 / Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2012 2012 2012 2012 2012 2011 2011 2011 2011 2011
Software 1,0 0,5 0,5 0,6 2,6 0,8 0,4 0,4 0,4 2,1
Security appliances 8,7 5,1 4,9 4,3 23,0 5,3 4,2 2,9 3,2 15,6
Services 3,9 3,7 3,6 3,4 14,5 3,4 3,3 3,2 3,0 12,8
Other products 0,0 0,0 0,1 0,0 0,0 0,1 0,1 0,0 -0,1 0,1
Net sales continuing
operations 13,5 9,3 9,1 8,3 40,1 9,5 8,0 6,5 6,5 30,6
Change-% from previous year 41 16 40 27 31 27 43 29 6 26
Sales margin 10,6 7,6 7,4 6,8 32,5 7,6 6,7 5,6 5,4 25,4
Sales margin % 79 82 81 82 81 80 83 87 83 83
Operative expenses 9,4 7,8 8,0 7,6 32,9 7,6 6,7 6,7 6,4 27,3
Operating profit (EBITA) 1,4 0,1 -0,4 -0,6 0,5 0,3 0,2 -0,7 -0,8 -1,1
% of net sales 10 1 -5 -7 1 3 2 -12 -13 -4
Result before taxes 1,5 0,0 -0,4 -0,5 0,7 0,3 0,2 -0,7 -0,6 -0,8
% of net sales 11 0 -6 -6 2 4 3 -11 -10 -3
Stonesoft Group
Key ratios 1.1.-31.12.2012 1.1.-31.12.2011
(1000 Euros)
Net sales 40 127 30 604
Net sales change-% 31 26
Operating result 451 -1 137
% of net sales 1 -4
Operating result before taxes 709 -779
% of net sales 2 -3
ROE - %, annualized 16 -22
ROI - %, annualized 18 -16
Equity ratio-% 39 40
Net gearing -1,48 -1,99
Total Assets 27 012 21 157
Capital expenditure 1 003 581
Capital disposals 0 0
R&D costs 7 476 6 131
% of net sales 19 20
Number of employees (weighted average) 237 207
Number of employees (end of the period) 251 222
Share Specific Ratios
Earnings per share 0,01 -0,01
Equity per share 0,07 0,06
Dividend 0,00 0,00
Dividend per share (EUR) 0,00 0,00
Dividend / Profit-% 0 0
Calculation of
indicators
Return on equity (Profit before taxes - income
(ROE) % = taxes) x 100 /
Shareholders' equity + minority interest
(average)
Return on invested (Profit before extraordinary items+interest and other
capital (ROI)% = financial expenses) x100 /
Balance sheet total - non-interest
bearing debt (average)
(Equity + minority
Equity ratio % = interest) x 100 /
Balance sheet total -
advances received
Interest bearing net debt - cash in hand and on deposit -
Net gearing = marketable securities /
Equity + minority
interest
Earning per share Profit before taxes - minority interest
(EPS) = - income taxes /
Average number of shares adjusted for dilutive
effect of options
Equity per share = Equity /
Number of shares at end of
period
FORWARD-LOOKING STATEMENTS
This report contains statements concerning, among other things, Stonesoft's
financial condition and the results of operations that are forward-looking in
nature. Such statements are not historical facts, but rather represent
Stonesoft's future expectations for the upcoming development. The company
believes that the expectations reflected in these forward-looking statements are
based on reasonable assumptions. However, these forward-looking statements
involve inherent risks and uncertainties, which could cause actual results or
outcomes to differ materially from those anticipated in the statements. These
risks and uncertainties may include, among other things, (1) changes in our
market position or in the Firewall/VPN and Intrusion detection and protection
market in general; (2) the effects of competition; (3) the success, financial
condition, and performance of our collaboration partners, suppliers and
customers;(4) our ability to source quality components without interruption and
at acceptable prices;(5) our ability to recruit, retain and develop
appropriately skilled employees;(6) exchange rate fluctuations, including, in
particular, fluctuations between the Euro, which is our reporting currency, and
the US dollar;(7) other factors related to sale of products, economic situation,
business, competition or legislation affecting the business of Stonesoft or the
industry in general and (8) our ability to control the variety of factors
affecting our ability to reach our targets and give accurate forecasts.
PRESS CONFERENCE
A press conference for analysts and investors will be held on 8 February, 2013
at 10.30 am at the Stonesoft headquarters, street address Itälahdenkatu 22 A,
00210 Helsinki.
ANNUAL REPORT 2012 AND ANNUAL GENERAL MEETING 2013
Stonesoft's Annual Report 2012, which includes the audited Financial Statements,
will be published at the company's website www.stonesoft.com on week 12.
Stonesoft's General Meeting of the Shareholders will be held on Wednesday 10
April 2013 at 3.00 pm.
For additional information, please contact:
Ilkka Hiidenheimo, CEO, Stonesoft Corporation
Tel. +358 9 476 711
E-mail: ilkka.hiidenheimo@stonesoft.com
Mikael Nyberg, CFO, Stonesoft Corporation
Tel. +358 9 476 711
E-mail: mikael.nyberg@stonesoft.com
Stonesoft Corporation
Ilkka Hiidenheimo
CEO
This stock exchange release and the presentation material related to this report
are also available at the Stonesoft web site www.stonesoft.com.
Distribution:
NASDAQ OMX Helsinki Ltd
www.stonesoft.com
[HUG#1676482]
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