2010-04-22 08:15:00 CEST
2010-04-22 08:15:57 CEST
REGULATED INFORMATION
Stonesoft - Interim report (Q1 and Q3)
STONESOFT CORPORATION'S INTERIM REPORT FOR JANUARY-MARCH 2010
Stonesoft Corporation Stock Exchange Release April 22, 2010 at 9:15 a.m.
STONESOFT CORPORATION'S INTERIM REPORT FOR JANUARY-MARCH 2010
StoneGate sales back to growth path, net sales clearly improved
Stonesoft Corporation's operating result for the first quarter improved clearly
and was MEUR -0.2 or MEUR 0.9 better than during the corresponding period in the
previous year. The company's product sales grew to MEUR 3.3, a growth of 38%
from the previous year. Total net sales were MEUR 6.2, which is 21% higher than
in the corresponding previod in the previous year. Cash flow was MEUR 0.7, which
is MEUR 0.4 better than in the corresponding period in the previous year.
Summary
The comparable figures from the corresponding period in the previous year are in
brackets and refer to the figures of continuing operations.
January-March 2010
- Net sales MEUR 6.2 (5.1), growth 21%
- Product sales MEUR 3.3 (2.4), growth 38%
- Operating result MEUR -0.2 (-1.1)
- Operating result as percentage of net sales -3 % (-22 %)
- Earnings per share -0.00 (-0.02) EUR
- Cash flow 0.7 (0.3) MEUR
- Liquid cash funds at the end of the reporting period MEUR 11.5 (7.4). The
corporate had no interest-bearing debts.
CEO Ilkka Hiidenheimo
The positive development of Stonesofts' business continued in the first quarter
of year 2010. The company's net sales grew strongly and was MEUR 6.2, which is
21% more than in the previous year. StoneGate product sales returned to positive
figures and operating result was MEUR -0.2, which was 81% better than in the
previous year and a big step towards better profitability. Cash flow was MEUR
0.7 and positive for already the third consecutive quarter, and with the
directed share issue implemented in March the company strengthened its capital
structure by MEUR 4.6.
StoneGate products received once again international recognition. In January, we
announced that our IPS (intrusion prevention system) appliances had perfomed
well in the tests of the US-based NSS Labs Inc. testing and certification
company.
We further strengthened our product offering by introducing new software
versions and the StoneGate SSL VPN Virtual Appliance, along which we extended
our offering of network security solutions for virtual environments to cover our
whole product portfolio.
In March we implemented a directed share issue to strengthen the company's
capital structure and to ensure the positive development according to the
company's strategy and growth plan. In the share issue, 5,700,000 new shares
were subscribed for and released for experienced and professional domestic
investors. Due to the share issue, we have now even better conditions for
developing our business according to our targets.
We further continued expanding our operations in the emerging markets. In March,
we announced that we have signed partnership agreements with four (4)
Saubi-Arabian system integrators and that we are going to establish a
representative office in Riyadh, Kingdom of Saudi Arabia during spring 2010. In
addition, we signed a partnership agreement with Teamsun Technology, which is
one of the leading IT service providers in China.
During the first quarter of 2010 we have strengthened our capital structure and
competitiveness as well as taken steps in several markets that are significant
for the company's business I believe we have a strong basis and all the
prerequisites to make a positive result for the full year 2010.
NET SALES AND RESULT
January-March 2010
The Group's net sales increased by MEUR 1.1 compared to the corresponding period
in the previous year, or grew by 21% and were MEUR 6.2 (5.1). The operating
result (EBIT) was MEUR -0.2 (-1.1) and the result after taxes was MEUR -0.1
(-1.0).
Product sales were MEUR 3.3 (2.4), or 38% more than in previous year's
corresponding quarter.
The geographical distribution of net sales was as follows: Europe 59% (67%),
Emerging Markets (Russia, North Africa and Middle East) 21% (10%), Americas
(North and South America) 18% (20%) and APAC (Asia-Pacific) 2% (3%).
Finance and investments
At the end of reporting period, the Group's total assets were MEUR 21.2 (14.5).
The equity ratio was 63% (44%) and gearing (the ratio of net debt to
shareholder's equity) -1.63 (-2.92). Liquid cash funds at the end of the
reporting period were MEUR 11.5 (7.4). The corporate had no interest bearing
debts. Investments in tangible and intangible assets were MEUR 0.1 (0.1).
In March Stonesoft Corporation's Board of Directors implemented, based on the
authorization granted by the Annual General Meeting of Shareholders on 26 March
2009, a share issue in deviation from the shareholders' pre-emption rights by
offering a maximum number of 5.700.000 new shares to experienced and
professional domestic investors for subscription against payment. The company's
own capital grew thereby by MEUR 4.4. In the implemented directed share issue
the main shareholders of the company, Ilkka Hiidenheimo and Hannu Turunen, did
not subscribe for new shares according to their commitment to the AGM held on
26 March, 2009. The commitment is in force until the end of the AGM in 2010.
DEVELOPMENT OF BUSINESS OPERATIONS
Main business events in the reporting period
In January, Stonesoft announced the StoneGate Firewall 5.1 and StoneGate
Management Center 5.1 versions.
In January Stonesoft announced that its IPS (intrusion prevention system)
appliances had perfomed well in the tests of the US-based NSS Labs Inc. testing
and certification company.
In February, Stonesoft warned organizations about heightened security risks
associated with recent trends such as credit card payments, social media, cloud
computing and mobility.
In March, Stonesoft introduced the new StoneGate SSL VPN Virtual Appliance, SSL
VPN 1.4 and SSL-1060 for secure mobile and remote access.
In March, Stonesoft conducted a directed share issue based on the authorization
granted by the Annual General Meeting of Shareholders on 26 March 2009 and
offered in deviation from the shareholders' pre-emption rights a maximum number
of 5,700,000 new shares for subscription against payment for experienced and
professional domestic investors.
In March, Stonesoft announced it had signed partnership agreements with four
leading Saudi-Arabian system integrators and is in the process to established a
representative office in Riyadh, Kingdom of Saudi Arabia during spring 2010.
In March, Stonesoft announced it has entered a value added reseller agreement
with Teamsun Technology, a leading integrated IT service provider in China.
MAIN BUSINESS EVENTS AFTER THE REPORTING PERIOD
No main events.
Resales channel
The company sales are mainly conducted through an international resales channel.
REVIEW OF MAJOR RESEARCH AND DEVELOPMENT ACTIVITIES
Stonesoft continued its strong investments in R&D. Investments during the
reporting period totaled MEUR 1.5 (1.3). This represented 26% (22%) of operating
expenses.
R&D employed 70 (66) persons at the end of the reporting period.
SHARE CAPITAL AND STOCK OPTION PROGRAMS
At the end of the reporting period, Stonesoft's share capital recorded in the
Trade Register totaled EUR 1 146 054.64. The number of shares was 63 002 732.
The share capital remained unchanged.
The Board of Directors of Stonesoft Corporation decided on 19 March 2010, based
on the authorization granted by the Annual General Meeting of Shareholders on
26 March 2009, about a directed share issue for a limited number of experienced
and professional domestic investors. In the share issue, a maximum number of
5.700.000 new shares were offered for subscription, which corresponds to a
maximum of 9.95% of all the shares in the company and the voices attached to
said shares prior to implementing the share issue. The directed share issue was
subscribed for in full and the new shares were registered in the Finnish Trade
Register on 23 March 2010. The new shares were admitted for trading on Main
market of NASDAQ OMX Helsinki Ltd on 23 March 2010 together with the existing
shares of the company.
Stock option programs
The company has two valid stock option programs, Stock Option Program
2004-2010, the subscription price of which is EUR 0.56, and Stock Option Program
2008-2014, the subscription price of which is EUR 0.30.
During the reporting period 33.750 subscriptions were made on the basis of the
stock option program 2004-2010. Shares have not been registered in the Finnish
Trade Register during the reporting period or been admitted to public trading.
DEVELOPMENT OF SHARE PRICES AND TURNOVER
In the beginning of the reporting period the price of Stonesoft share was EUR
0.70 (0.32). At the end of the reporting period the price was EUR 0.96 (0.36).
The highest price was EUR 1.19 (0.42) and the lowest EUR 0.69 (0.31). During the
reporting period the total turnover of Stonesoft shares amounted to MEUR 7.0
(0.5). Based on the share price at the end of the reporting period, Stonesoft's
market value was MEUR 60.5 (20.6).
NOTICES IN CHANGE OF OWNERSHIP
The company gave three (3) notices in change of ownership during the reporting
period.
ACQUISITIONS AND CHANGES IN GROUP STRUCTURE
No acquisitions were made during the reporting period. The subsidiary in Brazil
was closed down in March. A subsidiary with the main task of product development
was established in Poland.
PERSONNEL
At the end of the reporting period, the Group's personnel totaled 185 (185).
AUTHORIZATIONS OF THE BOARD OF DIRECTORS
The Annual General Meeting held on March 26, 2009 decided to grant the Board of
Directors an authorization, according to which the Board of Directors may decide
to issue new shares in one or several issues and to grant option and other
special rights. The total number of shares or rights to the shares issued may be
11.450.000 at the maximum.
Based on the authorization, the Board of Directors may decide to issue new
shares for subscription according to the shareholders´ pre-emptive subscription
rights or in deviation from the shareholders´ pre-emptive subscription right, or
in a directed issue of option rights or other special 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 issue may be directed in whole or in part to the main shareholders of the
company Ilkka Hiidenheimo and Hannu Turunen, who have confirmed still to be
ready to invest at least three (3) million Euros in the company in form of
convertible bond or directed issuance of shares 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 2010.
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 2010 AGM.
As stated in section "Share capital and stock option programs", the Board of
Directors used the authorization on 19 March 2010, based on which 5.700.000 new
shares were subscribed for in a directed share issue. In the implemented
directed share issue the main shareholders of the company, Ilkka Hiidenheimo and
Hannu Turunen, did not subscribe for new shares.
The company does not own its shares and the Board of Directors do not have an
authorization to acquire its own shares.
CORPORATE GOVERNANCE
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 October
2008, with the exemption of recommendations concerning the establishment of
Board committees. The Board of Directors has decided not to establish any Board
committees due to the size of the Board and the size of the company. A more
detailed description of the Corporate Governance principles of Stonesoft
Corporation is available at the corporate website.
Short-term risks and business uncertainties
During the fiscal year 2010, 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.
The company's risk management and risk management principles are discussed more
extensively at the company's website and in the Annual Report 2009.
FUTURE OUTLOOK
According to the research company Gartner, Inc. the enterprise network equipment
market that declined by 19% during 2009, is estimated to recover to annual
growth of 4.7% during 2010.
Stonesoft's products protect large and critical network environments that
require advanced network security. During 2009 the company has launched security
solutions that meet the capacity needs of 10 Gbps networks. Large enterprises
are currently making a transition to 10 Gbps networks, which will fulfill their
needs today and in the near future. Large network environments are under
constant change pressures, because companies strive for increasingly efficient
operations and at the same time need to adapt to rapidly changing competitive
situations. This sets special demands to the flexibility and manageability of
security solutions. Many traditional security companies and products are not
able to adapt to these changes fast enough. Stonesoft has always stood out as a
company and with its product through its flexibility and ability to quickly meet
its customers' changing needs.
The strong growth of MSSP (Managed Security Service Provider)-, virtualization,
SAAS (Software as a Service) and cloud services has created a need for ensuring
network security and business continuity also in new environments. The
management features of StoneGate, the scalability of the appliance based product
family and the excellent suitability of the product for virtual environments
offer an optimal system for these environments.
As security threats in the public sector increase, a growing number of
government organizations have started improving their protection against network
attacks and for example cyber espionage. StoneGate products offer a
comprehensive, centrally managed protection and are ideally suited for the needs
of the public sector. Currently Stonesoft's network security solutions are used
by more than 50 government departments at five continents around the world.
The relative importance of the operationality and availability of data networks
to business is continuously increasing. This had led to the growth of the
demands to network security design and to the need to achieve a comprehensive
overview of the state of the network and data communications. This strengthens
Stonesoft's competitive position. We are specialized in delivering comprehensive
network security solutions, which meet also the exceptionally high demands of
critical network environments and enable increased efficiency and flexibility.
Stonesoft will continue its decisive and persistent efforts to increase its net
sales and operating result. During the year 2010 the company expects its net
sales to grow from the previous year's level and the result to be positive.
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, a relatively big impact of
individual deals, and the variation between the quarters in the previous year.
Stonesoft Group
Income Statement 1-3/2010 1-3/2009 1-12/2009
(1000 Euros)
Continuing operations
Net sales 6 156 5 084 23 597
Other operating income 241 164 969
Materials and services -835 -693 -3 539
Personnel expenses -3 802 -3 603 -14 004
Depreciation -107 -115 -454
Other operating expenses -1 848 -1 969 -7 616
Operating result -195 -1 133 -1 048
Financial income and expenses 151 104 316
Result before taxes -45 -1 029 -731
Taxes -29 -35 -240
Result for the accounting period -73 -1 064 -971
Other comprehensive income
Exchange differences on translating foreign
operations -10 20 15
Total other comprehensive income -10 20 15
Total comprehensive income -83 -1 044 -956
Basic earnings per share (EUR),
continuing operations -0.00 -0,02 -0,02
Diluted earnings per share (EUR),
continuing operations -0.00 -0,02 -0,02
Stonesoft Group
Balance Sheet (1000 Euros) 31.3.2010 31.3.2009 31.12.2009
ASSETS
Non-Current Assets
Tangible assets 516 633 494
Intangible assets 165 181 176
Other investments 10 10 10
Total 691 824 680
Current assets
Inventories 565 828 673
Trade and other receivables 8 347 5 353 8 383
Prepayments 119 72 67
Marketable securities 10 477 6 666 5 240
Cash and cash equivalents 991 717 970
Total 20 499 13 637 15 333
Total assets 21 190 14 461 16 013
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 1 146 1 146 1 146
Issue of shares 19 0 0
Share premium account 76 821 76 821 76 821
Conversion differences -946 -931 -936
Reserve for invested unrestricted equity
fund 4 392 0 0
Retained earnings -74 407 -74 511 -74 346
Total 7 025 2 525 2 685
Long-term liabilities
Prepayments *) 2 635 2 398 2 606
Total 2 635 2 398 2 606
Short-term liabilities
Trade and other payables 4 020 2 893 3 943
Prepayments *) 7 386 6 340 6 660
Tax liability 76 101 81
Provisions 49 204 37
Short-term interest bearing liabilities 0 1 0
Total 11 531 9 538 10 722
Total liabilities 14 165 11 937 13 328
Total equity and liabilities 21 190 14 461 16 013
*) Prepayments contain customers advance
payment of support and maintenance contracts 10 021 8 739 9 267
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
1.1.2009 1 146 0 76 821 -951 0 -73 473 3 543
Comprehensive -1
income 20 -1 064 044
Directed share
issue 0 0
Transaction
costs from
equity 0 0
Stock options
exercised 0 0
Stock option
expenses 25 25
Shareholders'
equity at
31.3.2009 1 146 0 76 821 -931 0 -74 511 2 525
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained
capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2010 1 146 0 76 821 -936 0 -74 346 2 685
Comprehensive
income -10 -73 -83
Directed share
issue 4 560 4 560
Transaction
costs from
equity -168 -168
Stock options
exercised 19 19
Stock option
expenses 12 12
Shareholders'
equity at
31.3.2010 1 146 19 76 821 -946 4 392 -74 407 7 025
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-31.3.2010 1.1.-31.3.2009 1.1.-31.12.2009
Cash flow from operating
activities
Operating Result -195 -1 133 -1 048
Adjustments
Non-cash transactions -285 105 644
Financial expenses 0 -30 -129
Financial incomes 127 82 336
Change in net working capital 1 334 1 410 -226
Taxes paid -29 -35 -210
Total cash flow from operating
activities 952 399 -632
Cash flow from investing
activities
Investments in tangible assets -114 -44 -202
Investments in intangible
assets -4 -90 -126
Investments in
other shares 0 0 0
Total cash flow investing
activities -118 -134 -328
Cash flow from financing
activities
Proceeds from issue
of share capital 4 392 0 0
Stock options exercised 19 0 0
Payments of financial leasing
liabilities 0 -1 -2
Total cash flow from financing
activities 4 411 -1 -2
Change in cash and cash
equivalents
Cash and cash equivalents at
beginning of period 6 210 7 048 7 048
Conversion differences 35 20 15
Changes in the market value of
investments -21 52 109
Total cash and cash equivalents at
end of period *) 11 469 7 383 6 210
*) Total cash and cash equivalents at end of the
period
contains pledged securities 471 333 452
Stonesoft Group
Geographical segments 1.1.-31.3.2010 1.1.-31.3.2009 1.1.-31.12.2009
(1000 Euros)
Net sales
Europe 3 622 3 402 15 182
Emerging Market 1 296 497 3 162
Americas 1 110 1 013 4 605
APAC 128 171 648
Total net sales 6 156 5 084 23 597
Operating profit
Europe -135 -461 546
Emerging Market 304 -102 -327
Americas -348 -569 -1 180
APAC -16 -1 -87
Total operating profit -195 -1 133 -1 048
Stonesoft Group
Contingent liabilities 1.1.-31.3.2010 1.1.-31.3.2009 1.1.-31.12.2009
(1000 Euros)
Contingent off-balance sheet
Non-cancelable other leases 2 386 2 987 2 541
Contingent liabilities for the
Company 121 63 117
Stonesoft Group
Quarterly development Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2010 2009 2009 2009 2009 2009
Software 0,3 0,6 0,4 0,3 0,4 1,6
Security appliances 2,9 3,1 2,9 3,1 2,0 11,0
Services 2,9 2,8 2,7 2,7 2,6 10,9
Other products 0,1 0,0 0,0 0,0 0,1 0,1
Net sales continuing operations 6,2 6,5 6,0 6,0 5,1 23,6
Change-% from previous year 21 -6 2 -5 -3 -3
Sales margin 5,3 5,7 5,1 4,9 4,4 20,1
Sales margin % 86 87 85 81 86 85
Operative expenses 5,7 5,8 4,7 5,8 5,7 22,0
Operating profit (EBITA) -0,2 0,1 0,5 -0,6 -1,1 -1,0
% of net sales -3 1 9 -9 -22 -4
Result before taxes 0,0 0,1 0,7 -0,5 -1,0 -0,7
% of net sales -1 2 11 -8 -20 -3
Stonesoft Group
Key ratios 1.1.-31.3.2010 1.1.-31.3.2009 1.1.-31.12.2009
(1000 Euros)
Net sales,
continuing
operations 6 156 5 084 23 597
Net sales
change-% 21 -3 -3
Operating result,
continuing
operations -195 -1 133 -1 048
% of net sales -3 -22 -4
Operating result
before taxes -45 -1 029 -731
% of net sales -1 -20 -3,10
ROE - %,
annualized,
continuing
operations -6 -140 -31
ROI - %,
annualized -4 -125 -19
Equity ratio-% 63 44 40
Net gearing -1,63 -2,92 -2,31
Total Assets 21 190 14 461 16 013
Capital
expenditure 118 134 328
Capital disposals 0 20 19
R&D costs 1 481 1 261 4 918
% of net sales 24 25 21
Number of
employees
(weighted
average) 181 185 178
Number of
employees (end of
the period 185 185 174
Share Specific
Ratios
Earnings per
share, continuing
operations 0,00 -0,02 -0,02
Equity per share 0,11 0,04 0,05
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) x 100 /
Balance sheet total - non-interest bearing debt
(average)
(Equity + minority interest)
Equity ratio % = 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
ACCOUNTING PRINCIPLES
This Interim Report Release has been prepared in accordance with IAS 34
standard.
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 presented figures are unaudited.
PRESS CONFERENCE
A press conference for analysts and investors will be held on April 22, 2010 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 release and the presentation material related to this report are also
available on Stonesoft's web site at www.stonesoft.com.
Distribution:
NASDAQ OMX Helsinki Ltd
www.stonesoft.com
[HUG#1406670]
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