2011-05-06 08:15:00 CEST
2011-05-06 08:15:35 CEST
REGULATED INFORMATION
Stonesoft - Interim report (Q1 and Q3)
STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-MARCH 2011
Stonesoft Corporation Stock Exchange Release 6 May 2011 at 9:15 a.m.
StoneGate product sales grew, cash flow clearly positive in the first quarter of
the year
Stonesoft Corporation's StoneGate product sales grew by 10% and net sales by 6%
compared to the corresponding period in the previous year. Operating result
remained negative and was MEUR -0.8, which is MEUR -0.6 weaker than in the
corresponding period in the previous year. The company continued investments in
commercializing the research findings related to advanced evasion techniques,
which resulted in increased expenses compared to previous year's corresponding
period.
The comparable figures from the corresponding period in the previous year are in
brackets and refer to the figures of continuing operations.
January-March 2011
- Net sales MEUR 6.5 (6.2), growth 6%
- Product sales MEUR 3.6 (3.3), growth 10%
- Operating result MEUR -0.8 (-0.2)
- Operating result as percentage of net sales -13 (-3)%
- Earnings per share EUR -0.01 (-0.00)
- Operative cash flow MEUR 1.8 (0.7)
- Liquid cash funds at the end of the fiscal period MEUR 9.8 (11.5). The
corporate had no interest-bearing debts.
CEO ILKKA HIIDENHEIMO
In the first quarter of the year 2011 the StoneGate product sales grew by 10%
and net sales by 6%. Cash flow was strongly positive. This development was
according to our expectations.
In February we delivered CERT-FI 124 new recordings of advanced evasion
techniques (AETs). We will continue to research the threats posed by AETs to
strengthen our unique competitive advantage on the market related to evasion
techniques.
As a result of the security breach against RSA, the authentication details of
even more than 40 million SecurID users may have gotten into wrong hands. Many
organizations have taken measures to strengthen their security. On the other
hand, uncertainty about the security of authentication methods has led many to
postpone the implementation of cloud services. In March we introduced the
dynamic, software based StoneGate Authentication solution, which combines
several different authentication methods, enabling secure use of cloud services.
The numerous security breaches targeted especially against security companies
that have occurred around the world lately have once again proven that there are
organizations and/or individuals who are capable of executing very advanced
targeted attacks. Even organizations who should have security systems of a very
high level have lost business critical data. These incidents have increased
organizations' need to re-evaluate the level of their security and increase
investments as well as further strengthen our view about the necessity of
dynamic security.
NET SALES AND RESULT
January-March 2011
The Group's net sales in the fiscal period were MEUR 6.5 (6.2). Increase
compared to the corresponding period in the previous year was MEUR 0.4, or 6%.
The operating result (EBIT) was MEUR -0.8 (-0.2) and the result after taxes was
MEUR -0.7 (-0.1).
Product sales were MEUR 3.6 (3.3), growth by 10% compared to the corresponding
quarter in the previous year.
The geographical distribution of net sales was as follows: Europe 56 (59)%,
Emerging Markets (Russia, North Africa and Middle East) 28 (21)%, Americas
(North and South America) 13 (18)% and APAC (Asia-Pacific) 3 (2)%.
FINANCE AND INVESTMENTS
At the end of the fiscal period, Stonesoft's total assets were MEUR 19.5 (21.2).
The equity ratio was 46 (63) % and gearing (the ratio of net debt to
shareholders' equity) was -2.53 (-1.63).
The comparable cash flow during the fiscal period was MEUR 1.8 (0.7). The Group
has no interest-bearing debt. The consolidated liquid assets at the end of the
fiscal period totalled MEUR 9.8 (11.5).
Investments in tangible and intangible assets totalled MEUR 0.3 (0.1).
DEVELOPMENT OF BUSINESS OPERATIONS
Main business events in the fiscal period
In January, Stonesoft announced its predictions for the most significant
security threats in 2011.
In January, Stonesoft announced its StoneGate(TM) IPS-1205 and IPS-3205
intrusion prevention system (IPS) appliances were rated excellent in value
purchase according to the latest Network Intrusion Prevention System Comparative
Test Report from NSS Labs, Inc. Both appliances ranked in the top three in their
respective performance categories for best price per Mbps protected and total
cost of ownership (TCO) per real world throughput.
In February, Stonesoft announced it has discovered 124 new advanced evasion
techniques (AETs).
In March, Stonesoft published advice for organisations to protect themselves
against Advanced Evasion Techniques.
In March, Stonesoft announced the availability of its new StoneGate
Authentication solution for secure remote access to the cloud services. The
solution combines multiple authentication methods, providing secure remote
access to cloud services.
Main business events after the fiscal period
In April, Stonesoft announced it has expanded its partnered offering with
OptimeSys.
In April, the Annual General Meeting of Shareholders re-elected Ilkka
Hiidenheimo, Jukka Manner, Timo Syrjälä and Hannu Turunen as Board members and
Harri Koponen as a new Board member.
RESEARCH AND DEVELOPMENT
Stonesoft continued its strong investments in R&D. Investments during the fiscal
period totalled MEUR 1.5 (1.5). This represented 23 (26)% of operating expenses.
R&D employed 74 (70) 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 63 312 482. Stonesoft or its
daughter companies do not own its shares. There were no changes in the share
capital.
Stock Option Programs
The company had one valid stock option program, Stock Option Program 2008-2014,
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. The
subscription period of the shares is graded and will end for all stock options
on December 31, 2014.
During the fiscal period no subscriptions were made on the basis of the Stock
Option Program 2008-2014.
DEVELOPMENT OF SHARE PRICES AND TURNOVER
In the beginning of the fiscal period on January 3, 2011, the price of Stonesoft
share was EUR 0.58 (0.70). At the end of the fiscal period on 31 March 2011 the
price was EUR 0.56 (0.96). The highest price was EUR 0.64 (1.19) and the lowest
EUR 0.51 (0.69). During the fiscal period the total turnover of Stonesoft shares
amounted to MEUR 2.3 (7.0) and 3.8 (11.1) million shares, which is 6.1 (19.4) %
of the total amount of the shares. Based on the share price at the end of the
fiscal period on March 31, 2011, Stonesoft's market value was MEUR 35.5 (60.5).
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 195 (185).
ANNUAL GENERAL MEETING AND AUTHORIZATIONS OF THE BOARD OF DIRECTORS
The Annual General Meeting (AGM) of Stonesoft Corporation held on April
13, 2011 confirmed the financial statements of the fiscal year
1.1.2010-31.12.2010 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 2010.
AGM re-elected Ilkka Hiidenheimo, Jukka Manner, Timo Syrjälä and Hannu Turunenas a Board member and Harri Koponen as a new Board member.
The Board of Directors did not use the authorization granted by the previous AGM
that expired at the end of the AGM 2011. The AGM decided on 13.4.2011 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 2012 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 2011, 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
recent political restlessness in North Africa and Middle East may have a
negative impact on the company's business operations in these markets. The
company has no risks related to the order book, because it normally can process
incoming orders within a couple of work days.
FUTURE OUTLOOK
According to the research company Infonetics, the enterprise network equipment
and software market is estimated to grow by 4% during 2011.
Stonesoft's products meet the new security challenges brought by cloud services,
virtualization and outsourcing of security.
Advanced evasion techniques
In 2010 Stonesoft announced it had discovered a new network security threat
category, advanced evasion techniques (AETs). In February 2011 Stonesoft
announced it has discovered 124 new advanced evasion techniques.
The most efficient protection against the threat posed by advanced evasions
techniques is provided by flexible software-based systems, which can detect
advanced evasion techniques and are remotely updated and centrally managed.
Stonesoft's network security solutions fulfill these criteria.
The security breaches that have lately been targeted especially against security
companies around the world have made many parties understand the importance of
security and demand organizations to take additional measures to strengthen
their security. Instead of speed or performance, the ability of security systems
to protect organizations' critical data capital and systems has become
increasingly important.
Based on Stonesoft's view, the above mentioned issues will open new business
opportunities for the company, have a positive effect on its net sales and
profitability and strengthen its competitiveness and market position as general
understanding and knowledge about advanced evasion techniques grow. In 2011,
Stonesoft aims for faster-than-market growth of net sales and improved
profitability.
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.
SUMMARY OF FINANCIAL STATEMENTS AND NOTES JANUARY 1 - MARCH 31, 2011
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 2010. 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 2010. Key indicator calculations remain unchanged.
The figures presented in this release are unaudited.
Stonesoft Group
Income Statement 1-3/2011 1-3/2010 1-12/2010
(1000 Euros)
Net sales 6 509 6 156 24 341
Other operating income 118 241 847
Materials and services -1 078 -835 -3 640
Personnel expenses -4 031 -3 802 -14 744
Depreciation -124 -107 -437
Other operating expenses -2 222 -1 848 -9 052
Operating result -827 -195 -2 685
Financial income and expenses 183 151 217
Result before taxes -644 -45 -2 468
Taxes -32 -29 -221
Result for the accounting period -676 -73 -2 689
Other comprehensive income
Exchange differences on translating foreign
operations -13 -10 -15
Total other comprehensive income -13 -10 -15
Total comprehensive income -689 -83 -2 704
Basic earnings per share (EUR),
continuing operations -0,01 0,00 -0,04
Diluted earnings per share (EUR),
continuing operations -0,01 0,00 -0,04
Stonesoft Group
Balance Sheet (1000 Euros) 31.3.2011 31.3.2010 31.12.2010
ASSETS
Non-Current Assets
Tangible assets 804 516 649
Intangible assets 163 165 112
Other investments 10 10 10
Total 977 691 771
Current assets
Inventories 908 565 953
Trade and other receivables 7 792 8 347 10 106
Prepayments 53 119 69
Marketable securities 8 432 10 477 0
Cash and cash equivalents 1 384 991 8 016
Total 18 569 20 499 19 144
Total assets 19 546 21 190 19 915
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent company
Share capital 1 151 1 146 1 151
Issue of shares 0 19 0
Share premium account 76 602 76 821 76 603
Conversion differences -964 -946 -951
Reserve for invested unrestricted equity fund 4 751 4 392 4 751
Retained earnings -77 654 -74 407 -76 986
Total 3 886 7 025 4 567
Long-term liabilities
Prepayments *) 2 946 2 635 2 976
Total 2 946 2 635 2 976
Short-term liabilities
Trade and other payables 4 338 4 020 4 571 Prepayments *) 8 214 7 386 7 687
Tax liability 123 76 76
Provisions 40 49 37
Total 12 714 11 531 12 372
Total liabilities 15 660 14 165 15 348
Total equity and liabilities 19 546 21 190 19 915
*) Prepayments contain customers advance
payment of support and maintenance contracts 11 160 10 021 10 663
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
1.1.2010 1 146 0 76 821 -936 0 -74 346 2 685
Comprehensive
income 0 0 0 -10 0 -73 -83
Share premium
termination 0 0 0 0 0 0 0
Directed share
issue 0 0 0 0 4 560 0 4 560
Transaction
costs from
equity 0 0 0 0 -168 0 -168
Stock options
exercised 0 19 0 0 0 0 19
Stock option
expenses 0 0 0 0 0 12 12
Shareholders'
equity at
31.3.2010 1 146 19 76 821 -946 4 392 -74 407 7 025
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained
capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2011 1 151 0 76 603 -951 4 751 -76 986 4 567
Comprehensive
income 0 0 0 -13 0 -676 -689
Share premium
termination 0 0 0 0 0 0 0
Directed share
issue 0 0 0 0 0 0 0
Transaction
costs from
equity 0 0 0 0 0 0 -1
Stock options
exercised 0 0 0 0 0 0 0
Stock option
expenses 0 0 0 0 0 9 9
Shareholders'
equity at
31.3.2011 1 151 0 76 602 -964 4 751 -77 654 3 886
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-31.3.2011 1.1.-31.3.2010 1.1.-31.12.2010
Cash flow from operating
activities
Operating Result -827 -195 -2 685
Adjustments
Non-cash transactions 64 -285 58
Financial expenses -51 0 -96
Financial incomes 9 127 464
Change in net working capital 2 777 1 334 481
Taxes paid -53 -29 -221
Total cash flow from operating
activities 1 918 952 -1 999
Cash flow from investing
activities
Investments in tangible assets -261 -114 -537
Investments in intangible
assets -68 -4 -30
Total cash flow investing
activities -330 -118 -566
Cash flow from financing
activities
Proceeds from issue of share
capital 0 4 392 4 391
Stock options exercised -1 19 146
Payments of financial leasing
liabilities 0 0 0
Total cash flow from financing
activities -1 4 411 4 537
Change in cash and cash
equivalents
Cash and cash equivalents at
beginning of period 8 016 6 210 6 210
Conversion differences -14 35 -17
Changes in the market value of
investments 226 -21 -148
Total cash and cash equivalents at
end of period *) 9 816 11 469 8 016
*) Total cash and cash equivalents
at end of the period
contains pledged securities 467 471 477
Stonesoft Group
Geographical segments 1.1.-31.3.2011 1.1.-31.3.2010 1.1.-31.12.2010
(1000 Euros)
Net sales
Europe 3 613 3 622 14 599
Emerging Markets 1 852 1 296 4 255
Americas 875 1 110 4 525
APAC 170 128 961
Total net sales 6 509 6 156 24 341
Operating profit
Europe -328 -135 -661
Emerging Markets -100 304 -169
Americas -320 -348 -1 479
APAC -79 -16 -375
Total operating profit -827 -195 -2 685
Stonesoft Group
Contingent liabilities 1.1.-31.3.2011 1.1.-31.3.2010 1.1.-31.12.2010
(1000 Euros)
Contingent off-balance sheet
Non-cancellable other leases
Contingent liabilities for the
Company 2 238 2 386 2 327
123 121 94
Stonesoft Group
Quarterly development Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2011 2010 2010 2010 2010 2010
Software 0,4 0,5 0,4 0,3 0,3 1,5
Security appliances 3,2 3,9 2,5 1,9 2,9 11,2
Services 3,0 3,1 2,8 2,8 2,8 11,6
Other products -0,1 0,0 -0,1 0,1 0,1 0,0
Net sales continuing operations 6,5 7,5 5,6 5,1 6,2 24,3
Change-% from previous year 6 15 -6 -16 21 3
Sales margin 5,4 6,2 4,7 4,4 5,3 20,7
Sales margin % 83 83 84 88 86 85
Operative expenses 6,4 7,1 5,4 5,9 5,7 24,2
Operating profit (EBITA) -0,8 -0,7 -0,6 -1,2 -0,2 -2,7
% of net sales -13 -9 -10 -25 -3 -11
Result before taxes -0,6 -0,8 -0,4 -1,2 0,0 -2,5
% of net sales -10 -11 -7 -24 -1 -10
Stonesoft Group
Key ratios 1.1.-31.3.2011 1.1.-31.3.2010 1.1.-31.12.2010
(1000 Euros)
Net sales 6 509 6 156 24 341
Net sales change-% 6 21 3
Operating result -827 -195 -2 685
% of net sales -13 -3 -11
Operating result before taxes -644 -45 -2 468
% of net sales -10 -1 -10
ROE - %, annualized -64 -6 -74
ROI - %, annualized -56 -4 -65
Equity ratio-% 46 63 49
Net gearing -2,53 -1,63 -1,75
Total Assets 19 546 21 190 19 915
Capital expenditure 330 118 566
Capital disposals 0 0 0
R&D costs 1 497 1 481 5 639
% of net sales 23 % 24 % 23
Number of employees (weighted
average) 197 181 191
Number of employees (end of the
period) 195 185 201
Share Specific Ratios
Earnings per share -0,01 0,00 -0,04
Equity per share 0,06 0,11 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
(Profit before taxes - income
Return on equity (ROE) % = taxes) x 100 /
Shareholders' equity + minority
interest (average)
(Profit before extraordinary
Return on invested capital items+interest and other financial
(ROI)% = 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 deposit -
Net gearing = marketable securities /
Equity + minority interest
Profit before taxes - minority
Earning per share (EPS) = interest - 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 6 May, 2011 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#1513076]
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