2013-04-26 08:15:00 CEST
2013-04-26 08:15:46 CEST
REGULATED INFORMATION
Stonesoft - Interim report (Q1 and Q3)
Stonesoft Oyj :STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-MARCH 2013
Stonesoft Corporation Stock Exchange Release 26 April 2013 at 9:15 a.m.
STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-MARCH 2013
NET SALES GREW BY 12 PER CENT
Stonesoft Corporation's product sales grew by 9% and net sales by 12% compared
to the corresponding period in the previous year. Operating result was MEUR
-2.2.
The comparable figures from the corresponding period in the previous year are in
brackets.
January-March 2013
- Net sales MEUR 9.2 (8.3), growth 12%
- Product sales MEUR 5.4 (4.9), growth 9%
- Operating result MEUR -2.2 (-0.6)
- Operating result as percentage of net sales -23 (-7)%
- Earnings per share EUR -0.03 (-0.01)
- Operative cash flow MEUR 1.1 (1.4)
- Liquid cash funds at the end of the fiscal period MEUR 8.3 (9.1). The
corporate had no interest-bearing debts.
CEO ILKKA HIIDENHEIMO
The first quarter of the year 2013 was a time of investing in strong growth. As
planned and according to our strategy we increased investments in the beginning
of the year in sales, marketing and product development. This, together with
some postponed deals, resulted in a weaker result.
During the first quarter of the year 2013 Stonesoft's product sales grew by
approximately 9% and net sales by approximately 12%.
We expanded our operations to new markets, among others to Sweden, Portugal and
Belgium. We will continue to invest in making the growth continue by adding
resources in our sales and marketing organization as well as in product
development. We will raise the competitiveness of our products in vertical
sectors important to us, such as in the public sector, teleoperator, military
and defense industries. In addition, Stonesoft is actively seeking distribution
and OEM partnerships with internet solution providers. Due to this, we will
strengthen the suitability of our products to channel partnership business,
managed security service providers (MSSPs) and securing cloud services. Our
ability to manage hybrid environments provides significant benefits for the
development of cloud services. This way various organizations can flexibly build
their solutions in the cloud for example with external partners, but still
continue to save their business critical information to their own servers and
utilize their own environments securely.
The research company Gartner, Inc. positioned Stonesoft as a visionary in its
latest Magic Quadrant Enterprise Network Firewalls reports. In the IPS Magic
Quadrant report, Stonesoft was the only company positioned in the Visionaries
quadrant. In its comparison report, Gartner has recognized this aim. The only
way to stay ahead of continuously evolving security threats is to invest in
research and product development- that is, to be visionary. Stonesoft develops
solutions which are able to secure lives and businesses in cyber space.
We introduced an updated version of the Evader testing tool at the RSA event in
the United States at the end of February. Evader is still able to bypass all
next generation firewall, UTM and intrusion prevention solution on the market,
except Stonesoft's own security solutions.
The Winning Cyber Strategy 2013 top forum we arranged in January brought
together leading cyber security experts from Finland and abroad, such as Toomas
Hendrik Ilves, the President of Estonia, and the British journalist Misha
Glenny, and provided up-to-date information about cyber risk and threats. We can
already refer to arms race in cyber security. Cyber security has still been
strongly visible in global media and Stonesoft has obtained the status of an
internationally recognized expert.
NET SALES AND RESULT
January-March 2013
The Group's net sales in the fiscal period were MEUR 9.2 (8.3). Increase
compared to the corresponding period in the previous year was MEUR 1.0, or 12%.
The operating result (EBIT) was MEUR -2.2 (-0.6) and the result after taxes was
MEUR -2.2 (-0.5).
Product sales were MEUR 5.4 (4.9), growth 9% compared to the corresponding
quarter in the previous year.
The geographical distribution of net sales was as follows: Europe 69 (67)%,
Emerging Markets (North Africa, Middle East and Latin America) 18 (18)%, North
America 12 (14)% and APAC (Asia-Pacific) 1 (1)%.
FINANCE AND INVESTMENTS
At the end of the fiscal period, Stonesoft's total assets were MEUR 25.9 (21.9).
The equity ratio was 29 (39)% and gearing (the ratio of net debt to
shareholders' equity) was -3.00 (-2.70).
The comparable cash flow during the fiscal period was MEUR 1.1 (1.4). The Group
has no interest-bearing debt. The consolidated liquid assets at the end of the
fiscal period totalled MEUR 8.3 (9.1).
Investments in tangible and intangible assets totalled MEUR 0.2 (0.4).
DEVELOPMENT OF BUSINESS OPERATIONS
Main business events in the fiscal period
In January Stonesoft published an updated version of the world's first advanced
evasion testing tool Evader.
In February Stonesoft introduced two new appliance models Stonesoft 1035 and
1065, offering flexibility and increased throughput with an excellent price-
performance-ratio.
In February Stonesoft FW-1301 obtained the "Recommend" status in the Network
Firewall Group Test of the world's leading independent network security research
and analyst organization NSS Labs.
In February the research company Garner, Inc. positioned Stonesoft as a
visionary in its Magic Quadrant for Enterprise Network Firewalls.
In March Stonesoft's Intrusion Prevention System (IPS) obtained the highest
level security certification CSPN (Certification de Sécurité de Premier Niveau)
delivered by the French security agency ANSSI (French Network and Information
Security Agency).
In March Stonesoft began cooperation with Red River, a national leader in
providing IT products and services to federal agencies in the United States.
Based on the partnership agreement the companies deliver advanced and cost-
effective cyber security solutions to federal and commercial agencies in the
United States.
Main business events after the fiscal period
In April, the Annual General Meeting of Shareholders re-elected Ilkka
Hiidenheimo, Harri Koponen, Jukka Manner, Timo Syrjälä, Hannu Turunen and Satu
Yrjänen as Board members.
In April Stonesoft announced it has received the fourth consecutive "Recommend"
status from the product tests of the world's leading independent network
security research and analyst organization NSS Labs.
RESEARCH AND DEVELOPMENT
Stonesoft continued its strong investments in R&D. Investments during the fiscal
period totalled MEUR 2.3 (1.8). This represented 22 (24)% of operating expenses.
R&D employed 105 (96) persons at the end of the fiscal period.
SHARE CAPITAL AND STOCK OPTION PROGRAMS
Stonesoft has one class of shares and all shares have equal rights. At the end
of the fiscal period, the share capital recorded in the Trade Register was
1 150 574.64 Euros. The number of shares was 63 841 732. Stonesoft or its
daughter companies do not own its shares. There were no changes in the share
capital.
Stock Option Programs
The company had 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
Stock Option Program 2012, under which the subscription price is EUR 1.42 for A-
series and the total number of stock options to be granted based on this program
is 4 500 000 at the maximum. 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.
During the fiscal period 40 000 company shares were registered on the basis of
the stock option programs.
DEVELOPMENT OF SHARE PRICES AND TURNOVER
In the beginning of the fiscal period on January 1, 2013, the price of Stonesoft
share was EUR 1.39 (0.86). At the end of the fiscal period on 31 March 2013 the
price was EUR 2.20 (1.42). The highest price was EUR 2.77 (1.78) and the lowest
EUR 1.41 (0.87). During the fiscal period the total turnover of Stonesoft shares
amounted to MEUR 21.6 (14.7) and 9.4 (11.2) million shares, which is 14.7
(17.6)% of the total amount of the shares. Based on the share price at the end
of the fiscal period on March 31, 2013, Stonesoft's market value was MEUR 140.5
(90.2).
The company gave no notices in change of ownership during the fiscal period.
ACQUISITIONS AND CHANGES IN GROUP STRUCTURE
No acquisitions were made during the fiscal period and there were no changes in
the Group structure.
PERSONNEL
At the end of the fiscal period, the Group's personnel totalled 265 (232).
ANNUAL GENERAL MEETING AND AUTHORIZATIONS OF THE BOARD OF DIRECTORS
The Annual General Meeting (AGM) of Stonesoft Corporation held after the fiscal
period on April 10, 2013 confirmed the financial statements of the fiscal year
1.1.2012-31.12.2012 and granted release from liability for the members of the
Board of Directors and the Chief Executive Officer (CEO). AGM decided that no
dividends are paid for the fiscal year 2012.
The AGM re-elected Ilkka Hiidenheimo, Harri Koponen, Jukka Manner, Timo Syrjälä,
Hannu Turunen and Satu Yrjänen as Board members.
The Board of Directors did not use the authorization granted by the previous AGM
that expired at the end of the AGM 2013. The AGM decided on 10.4.2013 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 2014 AGM.
The Board of Directors is not authorized to purchase the company's own shares.
SHORT-TERM RISKS AND BUSINESS UNCERTAINTIES
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. Insecurities related
to public economies may have a negative effect on the public sector projects.
Stonesoft has no risks related to the order book, because it normally can
process incoming orders within a couple of work days.
Risks and uncertainties as well as the principles of Stonesoft's risk management
are discussed more extensively at the company website and in the Annual Report
2012.
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 product tests of the
independent research company NSS Labs already for four consecutive times in the
product categories most significant to Stonesoft and its customers. In addition,
the research company Gartner has 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
The discussion about cyber security continues actively around the world and
Stonesoft has established its thought leadership position.
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 net sales target 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.
The company expects 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 - MARCH 31, 2013
Basis of preparation
The Interim Report has been prepared in accordance with the IAS 34 Interim
Reports 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 2012. 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 unaudited.
Stonesoft Group
Income Statement 1-3/2013 1-3/2012 1-12/2012
(1000 Euros)
Net sales 9 244 8 254 40 127
Other operating income 443 269 950
Materials and services -1 732 -1 458 -7 658
Personnel expenses -6 004 -4 787 -19 885
Depreciation -172 -142 -624
Other operating expenses -3 946 -2 710 -12 459
Operating result -2 168 -574 451
Financial income and expenses 23 97 257
Result before taxes -2 146 -477 709
Taxes -70 -60 -23
Result for the accounting period -2 215 -537 685
Other comprehensive income
Other comprehensive income to be reclassified to
profit or loss in subsequent periods:
Exchange differences on translating foreign
operations -3 5 5
Total other comprehensive income -3 5 5
Total comprehensive income -2 218 -532 691
Basic earnings per share (EUR),
continuing operations -0,03 -0,01 0,01
Diluted earnings per share (EUR),
continuing operations -0,03 -0,01 0,01
Stonesoft Group
Balance Sheet (1000 Euros) 31.3.2013 31.3.2012 31.12.2012
ASSETS
Non-Current Assets
Tangible assets 1 010 985 1 008
Intangible assets 296 159 233
Other investments 10 10 10
Total 1 316 1 154 1 251
Current assets
Inventories 2 264 1 746 2 282
Trade and other receivables 13 780 9 669 16 187
Prepayments 196 163 102
Marketable securities 0 5 503 4 343
Cash and cash equivalents 8 295 3 625 2 848
Total 24 536 20 706 25 761
Total assets 25 852 21 860 27 012
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent company
Share capital 1 151 1 151 1 151
Issue of shares 11 18 12
Share premium account 76 602 76 602 76 602
Conversion differences -952 -949 -949
Reserve for invested unrestricted equity
fund 4 762 4 732 4 751
Retained earnings -78 806 -78 169 -76 696
Total 2 768 3 385 4 871
Long-term liabilities
Prepayments *) 5 267 3 724 5 025
Total 5 267 3 724 5 025
Short-term liabilities
Trade and other payables 6 716 5 063 7 466
Prepayments *) 11 004 9 484 9 526
Tax liability 50 139 68
Provisions 48 64 56
Total 17 817 14 751 17 116
Total liabilities 23 084 18 475 22 141
Total equity and liabilities 25 852 21 860 27 012
*) Prepayments contain customers advance
payment of support and maintenance contracts 16 271 13 209 14 551
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
1.1.2012 1 151 0 76 602 -954 4 732 -77 659 3 873
Comprehensive
income 0 0 0 5 0 -537 -532
Transaction
costs from
equity 0 0 0 0 0 0 0
Stock options
exercised 0 18 0 0 0 0 18
Stock option
expenses 0 0 0 0 0 27 27
Shareholders'
equity at
31.3.2012 1 151 18 76 602 -949 4 732 -78 169 3 385
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2013 1 151 12 76 602 -949 4 751 -76 696 4 871
Comprehensive -2
income 0 0 0 -3 0 -2 215 218
Transaction
costs from
equity 0 0 0 0 -1 0 -1
Stock options
exercised 0 -2 0 0 12 0 11
Stock option
expenses 0 0 0 0 0 105 105
Shareholders'
equity at
31.3.2013 1 151 11 76 602 -952 4 762 -78 806 2 768
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-31.3.2013 1.1.-31.3.2012 1.1.-31.12.2012
Cash flow from operating
activities
Operating Result -2 168 -574 451
Adjustments
Non-cash transactions -50 -431 172
Financial expenses -21 -25 -77
Financial incomes 43 19 245
Change in net working capital 3 552 2 771 -264
Taxes paid -24 -40 -234
Total cash flow from operating
activities 1 332 1 720 294
Cash flow from investing
activities
Investments in tangible
assets -153 -411 -868
Investments in intangible
assets -85 -13 -135
Total cash flow investing
activities -237 -424 -1 003
Cash flow from financing
activities
Stock options exercised 9 18 101
Total cash flow from financing
activities 9 18 101
Change in cash and cash
equivalents
Cash and cash equivalents at
beginning of period 7 191 7 710 7 710
Conversion differences 0 0 0
Changes in the market value
of investments 0 103 89
Total cash and cash equivalents
at end of period *) 8 295 9 128 7 191
*) Total cash and cash
equivalents at end of the period
contains pledged securities 721 492 711
Stonesoft Group
Geographical segments 1.1.-31.3.2013 1.1.-31.3.2012 1.1.-31.12.2012
(1000 Euros)
Net sales
Europe 6 334 5 514 28 588
Emerging Markets 1 678 1 495 6 073
Americas 1 099 1 154 4 517
APAC 133 92 949
Total net sales 9 244 8 254 40 127
Operating profit
Europe -868 99 1 612
Emerging Markets -149 -183 573
Americas -1 139 -377 -1 544
APAC -12 -114 -190
Total operating profit -2 168 -574 451
Stonesoft Group
Contingent liabilities 1.1.-31.3.2013 1.1.-31.3.2012 1.1.-31.12.2012
(1000 Euros)
Contingent off-balance sheet
Non-cancellable other leases 1 852 1 807 1 428
Contingent liabilities for
the Company 368 223 339
Stonesoft Group
Quarterly development Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2013 2012 2012 2012 2012 2012
Software 0,6 1,0 0,5 0,5 0,6 2,6
Security appliances 4,8 8,7 5,1 4,9 4,3 23,0
Services 3,8 3,9 3,7 3,6 3,4 14,5
Other products 0,0 0,0 0,0 0,1 0,0 0,0
Net sales continuing operations 9,2 13,5 9,3 9,1 8,3 40,1
Change-% from previous year 12 41 16 40 27 31
Sales margin 7,5 10,6 7,6 7,4 6,8 32,5
Sales margin % 81 79 82 81 82 81
Operative expenses 10,1 9,4 7,8 8,0 7,6 32,9
Operating profit (EBITA) -2,2 1,4 0,1 -0,4 -0,6 0,5
% of net sales -23 10 1 -5 -7 1
Result before taxes -2,1 1,5 0,0 -0,4 -0,5 0,7
% of net sales -23 11 0 -6 -6 2
Stonesoft Group
Key ratios 1.1.-31.3.2013 1.1.-31.3.2012 1.1.-31.12.2012
(1000 Euros)
Net sales 9 244 8 254 40 127
Net sales change-% 12 27 31
Operating result -2 168 -574 451
% of net sales -23 -7 1
Operating result before taxes -2 146 -477 709
% of net sales -23 -6 2
ROE - %, annualized -232 -59 16
ROI - %, annualized -220 -49 18
Equity ratio-% 29 39 39
Net gearing -3,00 -2,70 -1,48
Total Assets 25 852 21 860 27 012
Capital expenditure 237 424 1 003
Capital disposals 0 0 0
R&D costs 2 251 1 832 7 476
% of net sales 24 22 19
Number of employees (weighted
average) 261 229 237
Number of employees (end of the
period) 265 232 251
Share Specific Ratios
Earnings per share -0,03 -0,01 0,01
Equity per share 0,04 0,05 0,07
Dividend 0,00 0,00 0,00
Dividend per share (EUR) 0,00 0,00 0,00
Dividend / Profit-% 0 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. 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 26 April, 2013 at
10.30 am at the Stonesoft headquarters, street address Itälahdenkatu 22 A,
00210 Helsinki.
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#1696382]
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