2009-02-13 08:15:00 CET
2009-02-13 08:16:25 CET
REGULATED INFORMATION
Stonesoft - Financial Statement Release
STONESOFT CORPORATION'S FINANCIAL STATEMENT RELEASE FOR JANUARY-DECEMBER 2008
Stonesoft Corporation Stock Exchange Release 13 February 2009 AT 9:15
A.M.
STONESOFT CORPORATION'S FINANCIAL STATEMENT RELEASE FOR
JANUARY-DECEMBER 2008
StoneGate sales grew by 19%, net sales by 19% in the last quarter.
The sales of Stonesoft's main product portfolio, the StoneGate
product line, increased by 19% and the company's net sales by 19%
during the last quarter compared to the corresponding period in the
previous year. The positive development of the sales, net sales and
cash flow has now continued for five consecutive quarters.
SUMMARY
The comparable figures from 2007 and 2006 are in parentheses and
refer to the figures for continuing operations.
October - December 2008
- Stonesoft's core business, the sales of the StoneGate product
family, EUR 4.3 (3.6 and 2.3) million, growth 19%
- Net sales EUR 6.9 (5.8 and 4.3) million, growth 19%
- Operating result EUR -0.2 (-1.2 and -1.9) million
- Operating result as percentage of net sales -3 (-21 and -44)%
- Earnings per share EUR -0.00 (-0.02 and -0.03)
- Cash flow EUR -0.2 (-0.9 and -1.6) million
- Liquid assets at the end of the period EUR 7.0 (8.2 and 14.4)
million
January - December 2008
- Net sales EUR 24.4 (19.0 and 16.5) million, growth 28%
- Sales of the StoneGate product family, EUR 14.8 (10.6 and 8.3)
million, growth 40%
- Operating result EUR -2.3 (-6.5 and -6.6) million
- Operating result as percentage of net sales -9 (-34 and -40)%
- Earnings per share EUR -0.04 (-0.11 and -0.11)
- Cash flow EUR -1.9 (-6.2 and -7.4) million. The total cash flow,including the last payment of the selling price of Embe Systems Oy
amounting to EUR 0.8 million, was EUR -1.2 million.
- Liquid assets at the end of the period EUR 7.0 (8.2 and 14.4)
million
Reporting is done according to the International Financial Reporting
Standards (IFRS). The calculation indicators for the key figures are
described in the annexed information of the consolidated Financial
Statements, item 33. Definitions for key indications.
CEO Ilkka Hiidenheimo
During the last quarter, StoneGate sales were, regardless of the
economical recession, the highest ever in the company's history and
exceeded the sales in the corresponding period in the previous year
by 19%. The company's main target in 2008 was to generate improved
profitability through strong growth of sales. The company increased
its net sales by 28% and the sales of its main product, StoneGate, by
40% during the fiscal year. The growth of sales was especially strong
in the developing markets. Due to this development the company's
cash flow improved by EUR 4.2 million and profitability by EUR 4.2
million, even though the operating result (EBIT) remained EUR 2.3
million negative. The company achieved its targets set for the fiscal
year in respect of net sales, cash flow and result.
The company's position as a provider of integrated network security
and business continuity was further strengthened when the renowned
independent research company Gartner, Inc. positioned Stonesoft in
the Challengers Quadrant in its latest Magic Quadrant for Enterprise
Network Firewalls research report on network security vendors. In
this comparison Gartner positioned Stonesoft in the same quadrant
with the market leader Cisco Systems Inc.
We continued to make strong investments in extending our product line
and increasing our competitiveness. During the last quarter of 2008,
we launched the StoneGate FW-310 for remote offices with new
generation firewall functionality and increased performance, the
StoneGate UTM (Unified Threat Management) solution and the StoneGate
SSL VPN 1.2 for full mobility, security and ease of administration.
In 2008, Stonesoft was among the first to introduce new products to
VMware virtual environments to respond to the rapidly increasing
demand of virtualization of IT infrastructure. During the year, the
company launched the StoneGate Virtual Firewall and IPS solutions.
Both solutions, like all StoneGate appliances, can be centrally
managed with the StoneGate Management Center, which eliminates
barriers, limitations and security compromises between virtual and
physical networks. The security of virtual environments has attracted
a great deal of interest among our customers and this interest is
expected to turn into demand during 2009.
Despite the global economical uncertainty we have shown strong growth
and commitment to strengthening our product offering, competitiveness
and customer base. We believe the investments we have made provide a
solid base for positive development in the future.
FOURTH QUARTER 1.10. - 31.12.2008
Net sales
The Group's net sales totaled EUR 6.9 (5.8 and 4.3) million. Growth
compared to the corresponding period in the previous year was EUR 1.1
million or 19%. The operating result (EBIT) was EUR -0.2 (-1.2 and
-1.9) million.
The sales of the StoneGate product family, the Group's core business,
including Firewall, VPN, SSL VPN and IPS (Intrusion Prevention and
Detection System), were EUR 4.3 (3.6 and 2.3) million. In 2008 the
growth of the sales compared to the previous year was 19%.
The net sales were distributed geographically as follows: Europe 60
(70 and 64) %, Emerging markets (Russia, North Africa and Middle
East) 18 (8 and 10) %, Americas (North and South America) (18 and 18)
% and APAC (Asia-Pacific) 4 (4 and 8) %.
Result
Stonesoft's operating result (EBIT) was EUR -0.2 (-1.2 and -1.9)
million, i.e. 1.1 million better compared to the corresponding period
in the previous year. The operating result as percentage of net sales
was -3 (-21 and -44) %. The operating result after taxes was EUR -0.2
(-1.1 and -2.0) million. The earnings per share were EUR -0.00 (-0.02
and -0.03). The equity per share was EUR 0.06 (0.10 and 0.17).
FISCAL YEAR 2008
Net sales
The Group's net sales totaled EUR 24.4 (19.0 and 16.5) million.
Growth compared to the corresponding period in the previous year was
EUR 5.4 million or 28%. The operating result (EBIT) was EUR -2.3
(-6.5 and -6.6) million.
The sales of the StoneGate product family, the Group's core business,
including Firewall, VPN, SSL VPN and IPS (Intrusion Prevention and
Detection System), were EUR 14.8 (10.6 and 8.3) million. In 2008 the
growth of the sales compared to the previous year was 40%.
The net sales were distributed geographically as follows: Europe 60
(63 and 63) %, Emerging markets (Russia, North Africa and Middle
East) 17 (11 and 7) %, Americas (North and South America) 19 (21 and
22) % and APAC (Asia-Pacific) 4 (5 and 8) %.
Result
Stonesoft's operating result (EBIT) was EUR -2.3 (-6.5 and -6.6)
million, i.e. 4.2 million better compared to the previous year. The
operating result as percentage of net sales was -9 (-34 and -40) %.
The operating result after taxes was EUR -2.0 (-4.2 and -6.4)
million. The earnings per share were EUR -0.04 (-0.11 and -0.11). The
equity per share was EUR 0.06 (0.10 and 0.17). The dividend per share
was EUR 0 (0 and 0).
Finance and investments
At the end of the fiscal year, Stonesoft's total assets were EUR 16.2
(17.7 and 24.5) million. The equity ratio was 46 (52 and 66) % and
gearing (the ratio of net debt to shareholders' equity) was EUR -1.99
(-1.46 and -1.50).
The comparable cash flow was EUR -1.9 (-6.2 and -7.4) million. The
Group has no interest-bearing debt with the exception of EUR 2 206
related to a financial leasing agreement that is close to expire. The
consolidated liquid assets at the end of the fiscal year totaled EUR
7.0 (8.2 and 14.4) million.
At the end of the fiscal year the group had a considerable amount of
fiscal losses, for which no deferred tax receivables have been
entered into the balance sheet. The total amount of these deferred
tax receivables is EUR 23.0 million, of which EUR 22.2 million is
accrued in Finland and EUR 0.8 million in the United States.
In order to strengthen the company's capital structure and to ensure
the positive development of the company's strategy and growth plan
also in the future, the main shareholders of the company have
announced in October 2007 their willingness to invest at least EUR
three (3) million in the company in the form of a convertible bond.
The commitment given by the main shareholders is in force until the
end of the AGM in 2009. The company has not executed the convertible
bond arrangement.
Investments in tangible and intangible assets totaled EUR 0.5 (0.5
and 0.4) million.
Development of business operations and strategy
During the past years the company has carried out a considerable
amount of structural and operational changes as well as widened
intensely its product offering. A turning point was achieved in 2006
and the positive development of net sales and result has continued
since then. In 2008 this positive trend continued despite the general
global deterioration of the economic situation. In 2008, the
company's overall net sales grew by 28%, while the sales of the main
product StoneGate grew by 40%. Among this positive development the
company's profitability improved by EUR 4.2 million compared to the
previous year, even though the operating result (EBIT) remained EUR
2.3 million negative. The development of the company's net sales and
cash flow as well as the result corresponded to the future outlook
published by the company earlier and to the targets set for 2008.
The company has established its position in the market as a provider
of integrated network security and business continuity, and the
organization and sales processes of the company have reached the
level required by the growth expectations. Personnel turnover has
been low during the past couple years, offering stability and
continuity for the development of the company. In the last years, the
company has invested in three emerging growth markets: Africa, Russia
and China. These investments have turned out to be profitable,
especially through the strong and profitable growth that took place
in North-Africa and Russia during 2008.
The company will, in accordance with the chosen growth strategy,
continue its decisive and persistent efforts to increase its net
sales and to improve the profitability of the company. The company's
main target in 2009 is the growth of its net sales, and consequently
improved profitability.
The main business events in 2008:
- In January Stonesoft received a certification from ICSA
Labs, an independent division of Verizon Business. Stonesoft became
one of a select few vendors to achieve this distinction for
network-based intrusion prevention systems;
- In January Stonesoft introduced the new StoneGate security
solution for high capacity networks. StoneGate IPS-6100 and FW-5100
appliances offer managed service providers (MSPs) and large
organizations high performance, cost-efficiency and unrivalled
flexibility;
- In February Stonesoft became a member of the Technology
Alliance Partner (TAP) program of VMware, the world`s leading
provider of virtualization solutions. The cooperation brings
Stonesoft among the first providers to launch security solutions for
virtual environments and strengthens its position as a leading expert
in network security;
- In May Stonesoft introduced the new StoneGate Management
Center 4.3 for advanced unified management. The product offers
enhanced visibility and control over network security in both
traditional and virtual network environments;
- In May Stonesoft's StoneGate IPS was shortlisted for the
2008 Techworld awards in the category IPS/IDS Product of the Year;
- In May Stonesoft introduced the new StoneGate IPS 4.3 for
protecting internal networks and operating systems from malicious
traffic. The solution stands out through its scalability: the
revolutionary serial clustering technology of the new StoneGate
appliances allows adding IPS throughput up to 60%. The system also
supports the new IPv6 protocol;
- In July Stonesoft executed a partnership agreement with the
leading Algerian telecommunications company Algeria Telecom. The
first order at the value of more than EUR 700,000 was deliverd to the
Algerian Ministry of Healthcare at the end of the second quarter;
- In August Stonesoft certified the VMware ESX server as a
supported environment and became a member of the VMware VMsafe(TM)
technology program. In September, Stonesoft's StoneGate Virtual
Security Solutions received the VMware certification
- In September Stonesoft introduced the StoneGate Virtual IPS
4.3.1 (Intrusion Prevention System) to protect internal networks from
malicious traffic;
- In September Stonesoft received an order from a major
Russian telecom operator at the value of USD 1.9 million;
- In October Stonesoft and Magirus, one of the leading IT
solution providers in Europe extended their distribution agreement to
cover the whole Europe. The agreement covered originally Germany,
Austria, Switzerland and Italy, and now it has been extended to
include Great Britain, Denmark, Sweden, the Netherlands, France,
Spain, Portugal and the Middle East;
- In October Stonesoft introduced the StoneGate FW-310
firewall, which provides enhanced network security for the remote
offices of geographically distributed organizations;
- As an answer to the latest vulnerability announced by
Microsoft, Stonesoft announced in October that its StoneGate IPS
(Intrusion Prevention System) provided pre-emptive protection against
the vulnerability. StoneGate customers have had full protection
against this most recent vulnerability since August 2006;
- In November Stonesoft introduced the StoneGate UTM (Unified
Threat Management) solution for remote locations. The solution is
available as an integral part of the new StoneGate FW-310 firewall
appliance launched earlier this autumn;
- In November StoneGate introduced StoneGate SSL VPN 1.2 for
full mobility, security and ease of administration. In the new
version, log details and monitoring of SSL VPN appliances are
integrated with StoneGate Management Center, providing a centralized
view of all remote connections;
- In December the research company Gartner, Inc. positioned
Stonesoft in the Challengers Quadrant in its latest Magic Quadrant
for Enterprise Network Firewalls research report on network security
vendors;
- In December Stonesoft's StoneGate SSL VPN solution was
named finalist in "the Best IPsec/SSL VPN solution" category of the
2009 SC Awards program of the US SC Magazine;
- The following changes took place during the year in the
executive management group of Stonesoft Corporation: in May Outi
Torniainen, Vice President of Marketing and Communications, was
replaced by Klaus Majewski, Vice President of Marketing, and in
October, as Juha Kivikoski, Vice President of Sales, left the
company, his responsibilities were transferred to Kim Fagernäs, Vice
President of Sales;
- In December Stonesoft delivered to the Supreme Court a
petition for leave of appeal and a letter of complaint concerning the
verdict given by the Helsinki Court of Appeal on October 2008,
reversing the decision given by the District Court of Helsinki in
November 2006 dismissing all charges against Stonesoft, and imposing
Stonesoft a corporate fine of EUR 20.000 for a security market
information offence for a delay of a profit warning in February 2001.
Main business events after the fiscal period
No main business events.
Resales channel
The sales of the StoneGate product family as Stonesoft's core
business are mainly conducted through an international resale
channel.
Review of major research and development activities
The company's R&D operations are located in Finland and France. At
the end of 2008, R&D employed altogether 66 (69 and 67) persons. The
company's R&D investments during the fiscal period for continuing
operations totaled EUR 5.2 (5.3 and 4.8) million.
R&D costs represented 21 (22 and 22) % of all expenses for continuing
operations.
In January 2008 Stonesoft received the respected ICSA Labs Network
Intrusion Prevention System certificate. So far products of only
three vendors have been able to pass the requirements for the
certification. In February Stonesoft became a member of the VMware
Technology Alliance Program (TAP) of VMware, the leading provider of
virtual server environments, and introduced the StoneGate Firewall
for virtual environments.
In May Stonesoft launched a new version of the StoneGate Management
Center. The most significant benefits of the version include
assistance to help the user to avoid mistakes that may risk security,
monitoring feature with increasingly advanced usability and improved
auditing features for controlling requirements set by authorities and
standards.
The new StoneGate IPS launched in June offered increased performance
as well as support for inspecting IPv6 traffic. During autumn also
the StoneGate IPS for virtual environments became available and
Stonesoft's StoneGate Virtual Firewall/VPN and Virtual IPS received
the certification for VMware platform. The features of the StoneGate
Firewall were extended to include UTM (Unified Threat Management) by
adding anti-virus and IPS capabilities. The StoneGate SSL VPN offered
new features such as log and monitoring in the centralized management
system, load balancing and redundancy.
Stonesoft was granted nine patents during the year. The patents were
related to, among others, the rule management of security appliances,
load balancing and detection of vulnerabilities.
We believe that the above-mentioned incidents will improve the
competitiveness of the company in the markets.
Development of share prices and turnover
Stonesoft's share value at the beginning of the fiscal year on
January 2, 2009 was EUR 0.29 (0.47 and 0.49). At the end of the
fiscal year on December 30, 2008, the share price was EUR 0.32 (0.29
and 0.47). The highest share price was EUR 0.50 (0.56 and 0.61), and
the lowest EUR 0.24 (0.22 and 0.41). During 2008, the total turnover
of Stonesoft shares amounted to EUR 5.2 (8.4 and 10.9) million and
14.9 (20.0 and 22.3) million shares, which is 26.0 (34.9 and 38.9) %
of the total amount of the shares. Based on the share price on
December 31, 2008, Stonesoft's market capitalization was EUR 18.3
(16.6 and 26.9) million.
Share capital and stock option programs
At the end of the fiscal year on December 31, 2008, Stonesoft's share
capital recorded in the Trade Register totaled EUR 1,146,054. The
weighted average value of the numbers of shares corrected by share
issue was 57,309,875 (57,302,732 and 57,302,732). The share capital
remained unchanged. 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 shares of the company have been connected to the book-entry
securities system maintained by Euroclear Finland Ltd (former Finnish
Central Securities Depository Ltd), which maintains the official
shareholder register of the company. The shares of the company are
rated on the small company list under the information technology
classification with the trade identification SFT1VY in the NASDAQ OMX
Helsinki Ltd.
The company has currently two valid stock option programs, Stock
Option program 2004-2010 and Stock Option program 2008-2010. Under
the Stock Option program 2004-2010, the subscription price is EUR
0.56, and the total number of stock options to be granted based on it
is at the maximum 1,500,000. The subscription period of the shares is
graded and will end for all stock options on December 31, 2010. At
the end of the year 2008 in total 1,061,250 stock options had been
granted under this program. Under the Stock Option program 2008-2014,
the subscription price of which is EUR 0.30 and the total number of
stock options to be granted based on this program is at the maximum
of 3,000,000. The subscription period of the shares is graded and
will end for all stock options on December 31, 2014. At the end of
the year 2008 in total 50,000 stock options had been granted under
this program. At the end of the fiscal year in total 858,750 shares
could be subscribed based on these programs, which represents 1.50%
of the present number of shares and votes in the company. During
2008, no subscriptions were made on the basis of the stock option
programs targeted for key persons in the company.
Shareholders
At the end of 2008, the company had 5,877 (6,034 and 6,935)
shareholders. Nominee-registered holdings represented 6.8% of the
share capital in 2008.
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, 2008, the members of the Board of Directors, the CEO
and the entities under their control held a total of 23,471,061
shares of the company, which represented 41.0% of the shares and the
voting rights. The stock option rights held by the members of the
Board of Directors on December 31, 2008 entitled them to a
subscription of 90,000 shares.
Proposal by the Board of Directors for distribution of profit
The operating result of the parent company was EUR -1.3 million. 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 loss be debited to the
Profit/Loss account.
Authorizations of the Board of Directors
The Annual General Meeting of Shareholders (AGM) held on April 23,
2008, decided to grant the Board of Directors a new authorization and
to cancel the authorization granted by the AGM in 2007.
According to the new authorization, the Board of Directors is
authorized to issue new shares and to grant stock option rights and
other special rights, in one or several tranches, to the extent that
the total number of new shares may be 11,450,000 at the maximum.
According to the authorization, the Board of Directors may decide to
offer new shares to be issued in a new issue and/or the stock option
or special rights for subscription either according to the
shareholders' pre-emptive subscription rights, or in deviation from
the shareholders' pre-emptive subscription right in case the
deviation is justified by a weighty financial reason for the company,
such as financing of an acquisition, enabling of a joint venture
transaction, providing of additional financial alternatives, and/or
an arrangement for incentive program directed to the company's
personnel.
The issue may be directed partly or in full to the company's main
shareholders, Ilkka Hiidenheimo and Hannu Turunen, who have confirmed
to be ready to invest at least three (3) million Euros in the company
in form of a convertible bond in order to strengthen the company's
capital structure with an additional cash reserve and to ensure the
continuance of the positive development in the future in line with
the company's strategy and growth plan. The commitment given by the
main shareholders is in force until the end of the AGM in 2009.
The Board of Directors was authorized to decide other terms and
conditions related to the share issues and to the issuance of stock
option or other special rights. The authorization is in force until
the end of the AGM in 2009.
Based on the authorization given, the Board of Directors of Stonesoft
Corporation decided in its meeting on 6 May 2008 to approve the Stock
Option Plan 2008, under which new stock option rights can be granted
to the members of the Board of Directors, other management and key
persons in the personnel of the companies of Stonesoft Group. The
total amount of stock option rights that can be granted is 3,000,000
and they entitle to subscribe in total 3,000,000 shares in the
Stonesoft Corporation. The stock option rights of the Stock Option
Plan 2008 are divided into four series, each having an own
subscription period as follows:
Series A on March 1, 2010 - December 31, 2014,
Series B on March 1, 2011 - December 31, 2014,
Series C on March 1, 2012 - December 31, 2014, and
Series D on March 1, 2013 - December 31, 2014.
The subscription prices of the shares correspond to the
volume-weighted average share price of the Company during the last 90
trading days on the NASDAQ OMX Helsinki Ltd before the Board Meeting
deciding on this plan. The subscription price of a share with stock
options is EUR 0.30.
In its meeting held on 17 June 2008, the Board of Directors of
Stonesoft Corporation decided to supplement the terms in paragraph II
6 and II 7 of the Stock Option Plan 2008 approved earlier in order to
grant to a stock option holder the same or equal rights as a
shareholder has in case of issuance of new shares, stock options or
other specific rights prior to share subscriptions as well as in
certain other special cases.
The terms and conditions of the Stock Option Plan 2008 are available
in full on the company website at http://www.stonesoft.com.
The company does not own its shares and the Board of Directors do not
have an authorization to acquire its 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 23, 2008 elected five members to the Board of
Directors. Ilkka Hiidenheimo, Topi Piela, Matti Viljo, Hannu Turunen
and Timo Syrjälä were elected to the Board. In its statutory meeting
held on April 23, 2008, the Board elected Matti Viljo as Chairman of
the Board and Topi Piela as Vice Chairman. Furthermore, the Board
decided that there will be no separate Board committees because due
to the size of the company's business operations and the size of the
Board, there is no need to prepare issues in smaller units than the
entire Board.
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 2008, 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, Kim Fagernäs, Saara Laine, Mikael Nyberg, Mika Jalava
and Klaus Majewski.
In 2008, authorized public accountants Ernst & Young Oy acted as
Stonesoft's auditor and authorized public accountant Pekka Luoma as
the main auditor.
The compensation of the CEO
CEO Ilkka Hiidenheimo will not accept any compensation for his duties
until the company is profitable. There is no specific retirement age
set forth for the CEO, and the CEO's pension is the same as Finland's
Employee Pension Act (TYEL) that is compulsory for all Stonesoft
employees. The contract of employment for the CEO provides for notice
of six (6) months prior to termination, with compensation being equal
to six 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. Both the pension right and the right
to compensation in case of termination of contract are only
theoretical as long as the CEO is not receiving any compensation. The
same arrangement applies in connection with public take-over bids.
Acquisitions and changes in the structure of the Group
There were no acquisitions or other changes made in the Group
structure during the fiscal year.
Foreign branches and representative office
The company has no foreign branches. The company has a representative
office in China.
Personnel
The comparable figures from 2007 and 2006 are in parentheses and
refer to the figures for continuing operations.
At the end of the fiscal year, the Group's personnel totaled 185 (181
and 181) people, of which 167 (165 and 168) were employees and 18 (6
and 13) had contractual relationships as full-time sales
representatives or consultants.
The salaries and other remuneration paid to the employees, including
social security payments, were in total EUR 14.8 (14.2 and 13.1)
million.
The average number of personnel during the fiscal period was 183 (181
and 182).
The geographical distribution of Stonesoft personnel was Europe 144
(145 and 145), Emerging markets (Russia, North Africa and Middle
East) 9 (8 and 5), Americas (North and South America) 28 (23 and 23)
and APAC (Asia and Pasific) 4 (5 and 8).
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 a subcontractor. 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
Stonesoft complies with the Corporate Governance recommendations for
public listed companies published in October 2008 by the Securities
Market Association, a body established by the Confederation of
Finnish Industries EK, the Central Chamber of Commerce, and NASDAQ
OMX Helsinki Ltd., as explained on the company's web pages.
Short-term risks and business uncertainties
During the fiscal year in 2009, 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. In addition, the general economic uncertainty has
increased strongly lately. In other respects there have been no major
changes in Stonesoft's risks and business uncertainties. Furthermore,
the identified risks and business uncertainties have had barely any
impact on the company's operations or development of the result
during 2008.
Risk Management, Internal Control and Internal Audit
The Board of Directors of Stonesoft Corporation has primary
responsibility for accounting and monitoring of financial
administration of the company. The Board of Directors is also
ultimately responsible for risk management and internal control of
Stonesoft, and the CEO is in charge of arranging the risk management
and internal control in practice as well as of monitoring their
functioning. Co-ordination of risk management and internal control is
the responsibility of the Chief Financial Officer (CFO). The
Executive Management of the Group supports the risk management
processes by considering the risks and management thereof in its
meetings. Risk management and internal control aim at ensuring that
(i) the operation of the company is effective and suited to its
purpose, (ii) financial information is reliable and (iii) authority
regulation and internal policies are complied with.
CFO, as the coordinator of corporate risk management, creates
corporate-level risk management principles, develops risk management
tools and is in charge of global insurance policies. Business units
must adhere to the corporate level policies and proactively
contribute to the development of corporate risk management. Risk
management function concentrates on (i) evaluation and management of
operational risks, (ii) management of financial risk and (iii)
management and safeguard of critical business-related information and
assets.
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 sales are made mainly through global channel partners, using
standardized Stonesoft agreements. The sales operations are supported
by the company's internal 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 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 and short-term investments of
the operational cash flows 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 reserves are all invested on interest bearing low risk
instruments. The company's operations and related costs are
continuously controlled.
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 takes
actively advantage of its own products in order to protect the
network infrastructure of the company. The company has back-up
systems to ensure business continuity during the unexpected.
Internal audit Due to the small size of the company and the scope of
the business operations Stonesoft does not have a separate
organization for the internal audit function or a separate internal
audit committee. The regular audits conducted by the audit firm in
relation to the interim reports aim also for their part at evaluating
the efficiency of and constant developing of risk management,
internal audit and administrative processes. The structure of the
group and the financial administration has been set up with the aim
to prevent malpractice, among others, through clear internal
guidelines and definition of authorizations. In addition, all sales
are made in the name of the parent company and local payment
transactions of subsidiary companies and sales offices concern
generally only local salaries and other minor costs.
Future outlook
Companies will continue to network with their partners and
subcontractors, and this development will create even higher
requirements for network security and availability. At the same time,
the demand for outsourcing solutions and services will grow. Managed
security service providers (MSSPs) have a growing need to provide
their customers with the possibility to track the status of their
network security while maintaining an overview of their own data
network. According to the company's view combining security and high
availability, which is the cornerstone of the StoneGate product
design, will prove its strength even better in this development.
The convergence of voice, video and data on IP-based networks will
create more demand for capacity and drive the adoption of 10 Gbps
networks. The growing demand for added bandwidth together with new
protocols in the IP networks is expected to increase the general
demand for better reporting, monitoring and analysis tools. This
development will support Stonesoft in achieving its year 2009 growth
plan, since these features are the cornerstones in StoneGate
Management Center's functionality.
The strong growth of virtualization has created a demand for ensuring
network security and business continuity also in virtual
environments. StoneGate products are better suited for virtual
environments than the competitors' hardware-based products, because
they are based on software solutions.
As security threats in the public sector are increasing, growing
number of governments have started improving their protection against
network attacks and cyber espionage. StoneGate products offer
comprehensive, centrally managed protection and suit well to the
needs of the public sector.
While the global financial uncertainty continues, companies need to
pay more attention to the cost efficiency of their operations. This
will further strengthen the competitiveness of the StoneGate
solutions and emphasize the possibilities the solutions offer for
generating considerable cost savings in relation to infrastructure,
communications and operating costs.
Stonesoft will continue its decisive and persistent efforts to
increase its net sales and to improve the profitability of the
company. The company's main target in 2009 is to grow its net sales
and consequently generate improved profitability. Due to the present
global economical situation and the prevailing uncertainty in the
market, the company considers it difficult to give any estimates on
the future development. Accordingly, the company does not see it
justified to give any estimate on the future development of its
annual operating result at this stage.
With regard to the development of the turnover and the operating
result, significant 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, a relatively big impact of individual deals, and
the variation between the quarters in the previous year.
Stonesoft Group
Income Statement 10-12/2008 10-12/2007 1-12/2008 1-12/2007
(1000 Euro)
Continuing operations
Net sales 6 936 5 815 24 427 19 020
Other operating income 404 406 1 275 1 144
Materials and services -860 -1 137 -3 547 -3 064
Personnel expenses -4 000 -4 098 -14 796 -14 218
Depreciation -119 -108 -483 -449
Other operating expenses -2 539 -2 118 -9 161 -8 946
Operating result -177 -1 240 -2 286 -6 514
Financial income and
expenses 59 71 276 202
Result before taxes -118 -1 169 -2 010 -6 312
Taxes -69 -76 -219 -213
Result from continuing
operations -187 -1 245 -2 229 -6 525
Result from discontinued
operations 0 95 186 2 312
Result for the accounting
period -187 -1 150 -2 043 -4 212
Basic earnings per share
(EUR),
continuing operations 0,00 -0,02 -0,04 -0,11
Diluted earnings per share
(EUR),
continuing operations 0,00 -0,02 -0,04 -0,11
Basic earnings per share
(EUR),
discontinued operations 0,00 0,00 0,00 0,04
Diluted earnings per share
(EUR),
discontinued operations 0,00 0,00 0,00 0,04
Stonesoft Group
Balance Sheet (1000 Euro) 31.12.2008 31.12.2007
ASSETS
Non-Current Assets
Tangible assets 692 709
Intangible assets 104 82
Other investments 10 0
Deferred tax assets 0 1
Total 806 793
Current assets
Inventories 911 1 069
Trade and other receivables 7 371 7 498
Prepayments 19 97
Marketable securities 6 310 7 571
Cash and cash equivalents 738 640
Total 15 348 16 874
Total assets 16 154 17 666
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
company
Share capital 1 146 1 146
Share premium account 77 013 76 981
Conversion differences -951 -927
Retained earnings -73 665 -71 622
Total 3 543 5 579
Long-term liabilities
Provisions 26 56
Interest bearing liabilities 0 0
Other long-term liabilities 2 336 1 722
Total 2 363 1 779
Short-term liabilities
Trade and other payables 9 991 10 018
Tax liability 41 85
Provisions 214 131
Short-term interest bearing liabilities 2 75
Total 10 248 10 309
Total liabilities 12 611 12 088
Total equity and liabilities 16 154 17 666
Stonesoft Group
Statement of changes in
equity
(1000 Euro)
Share Share Conversion Retained Total
capital premium differences earnings
Shareholders' equity at
1.1.2007 1 146 76 897 -867 -67 410 9 767
Conversion differences -60 -60
Result for the period -4 212 -4 212
Total recognized income and
expense for the period -60 -4 212 -4 272
Stock options exercised 84 84
Shareholders' equity at
31.12.2007 1 146 76 981 -927 -71 622 5 579
Share Share Conversion Retained Total
capital premium differences earnings
Shareholders' equity at
1.1.2008 1 146 76 981 -927 -71 622 5 579
Conversion differences -24 -24
Result for the period -2 043 -2 043
Total recognized income and
expense for the period -24 -2 043 -2 068
Stock options exercised 32 32
Shareholders' equity at
31.12.2008 1 146 77 013 -951 -73 665 3 543
Stonesoft Group
Cash flow statement (1000 Euro) 1.1.-31.12.2008 1.1.-31.12.2007
Cash flow from operating activities
Operating Result -2 286 -6 514
Adjustments 601 417
Change in net working capital 614 687
Taxes paid -218 -212
Net cash flow from operating
activities continuing operations -1 288 -5 622
Net cash flow from operating
activities discontinued operations 0 0
Total cash flow from operating
activities -1 288 -5 622
Cash flow from investing activities
Investments in tangible assets -422 -463
Investments in intangible assets -66 -32
Investments in affiliated company 0 -1
Investments in other shares -10 0
Net cash flow investing activities
continuing operations -498 -496
Net cash flow investing activities
discontinued operations 761 -448
Total cash flow investing activities 263 -944
Cash flow from financing activities
Payments of financial leasing
liabilities -72 -95
Total cash flow from financing
activities -72 -95
Change in cash and cash equivalents
Cash and cash equivalents at
beginning of period 8 210 14 370
Conversion differences -30 -60
Changes in the market value of
investments -34 69
Discontinued operations 0 492
Total cash and cash equivalents at
end of period *) 7 048 8 210
*) Total cash and cash equivalents at end of the
period
contains pledged securities 315 281
Stonesoft Group
Geographical segments 1.1.-31.12.2008 1.1.-31.12.2007
(1000 Euro)
Net sales
Europe 14 740 12 075
Emerging Market 4 123 2 004
Americas 4 495 3 906
APAC 1 069 1 036
Total net sales 24 427 19 020
Operating profit
Europe -1 061 -4 119
Emerging Market 338 -231
Americas -1 532 -2 038
APAC -31 -126
Total operating profit -2 286 -6 514
Stonesoft Group
Contingent liabilities 1.1.-31.12.2008 1.1.-31.12.2007
(1000 Euro)
Contingent off-balance sheet
Non-cancelable other leases 3 377 4 624
Contingent liabilities for the
Company 63 20
Contingent liabilities for
inventories 0 0
Stonesoft Group
Related party information 1.1.-31.12.2008 1.1.-31.12.2007
(1000 Euro)
Consultation fees paid to the Board
of Directors 0 73
Stonesoft Group
Quarterly
development Q4 / Q3 / Q2 / Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007
Security
software and
appliances 4,3 3,3 4,1 3,2 14,9 3,7 2,0 2,7 2,3 10,7
Services 2,6 2,4 2,3 2,2 9,5 2,2 2,1 2,1 2,0 8,4
Other products 0,0 0,1 0,0 -0,1 0,1 -0,1 0,0 0,0 0,0 -0,1
Net sales
continuing
operations 6,9 5,9 6,4 5,3 24,4 5,8 4,0 4,8 4,3 19,0
Change-% from
previous year 19 45 32 22 28 35 -9 32 7 15
Net sales
discontinuing
operations 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
Change-% from
previous year - - - - - - - - - -
Net sales total 6,9 5,9 6,4 5,3 24,4 5,8 4,0 4,8 4,3 19,0
Change-% from
previous year 19 45 32 22 28 0 -27 -4 -22 -13
Sales margin 6,1 5,1 5,4 4,3 20,9 4,7 3,4 4,1 3,8 16,0
Sales margin % 88 86 85 82 85 80 84 85 87 84
Operative expenses 6,6 5,9 6,0 5,8 24,4 6,2 5,4 5,8 6,0 23,4
Operating profit
(EBITA) -0,2 -0,5 -0,4 -1,2 -2,3 -1,2 -1,6 -1,5 -2,1 -6,5
% of net sales -3 -9 -6 -24 -9 -21 -41 -32 -48 -34
Result before taxes -0,1 -0,4 -0,3 -1,2 -2,0 -1,2 -1,7 -1,4 -2,0 -6,3
% of net sales -2 -7 -4 -23 -8 -20 -43 -30 -46 -33
Stonesoft Group
Key ratios 1.1.-31.12.2008 1.1.-31.12.2007
(1000 Euro)
Net sales total 24 427 19 020
Net sales change-% 28 -13
Net sales, continuing operations 24 427 19 020
Net sales change-% 28 15
Net sales, discontinued operations 0 0
Net sales change-% - -
Operating result total -2 286 -6 514
% of net sales -9 -34
Operating result, continuing
operations -2 286 -6 514
% of net sales -9 -34
Operating result, discontinued
operations 0 0
% of net sales - -
Operating result before taxes -2 010 -6 312
% of net sales -8 -33
ROE - %, annualized, continuing
operations -49 -85
ROI - %, annualized -40 -78
Equity ratio-% 46 52
Net gearing -1,99 -1,46
Total Assets 16 154 17 666
Capital expenditure 488 500
Capital disposals 0 -5
R&D costs 5 230 5 285
% of net sales 21 28
Number of employees (weighted
average) 183 181
Number of employees (end of the
period 185 181
Share Specific Ratios
Earnings per share, continuing
operations -0,04 -0,11
Earnings per share, discontinued
operations 0,00 0,04
Equity per share 0,06 0,10
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 taxes)
(ROE) % = x 100 /
Shareholders' equity + minority interest
(average)
Return on invested (Profit before extraordinary items+interest and
capital (ROI)% = other financial expenses) x100 /
Balance sheet total - non-interest bearing
debt (average)
(Equity + minority interest) x
Equity ratio % = 100/
Balance sheet total - advances
received
Interest bearing net debt - cash in hand and on
Net gearing = deposit - 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. 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.
The figures presented in this release are unaudited.
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 release and the presentation material related to this report are
also available on Stonesoft's website at www.stonesoft.com.
Distribution:
NASDAQ OMX Helsinki Ltd
Main media
© 2024 Nasdaq, Inc. All Rights Reserved |