2010-02-18 08:15:00 CET
2010-02-18 08:17:03 CET
REGULATED INFORMATION
Stonesoft - Company Announcement
STONESOFT CORPORATION'S FINANCIAL STATEMENT RELEASE FOR JANUARY-DECEMBER 2009
Stonesoft Corporation Stock Exchange Release 18 February 2010 at 9:15 A.M.
STONESOFT CORPORATION'S FINANCIAL STATEMENT RELEASE FOR JANUARY-DECEMBER 2009
POSITIVE RESULT IN THE FOURTH QUARTER
The operating result of Stonesoft Corporation was EUR 0.1 million positive
during the fourth quarter whereas it was EUR -0.2 million negative during the
corresponding period in the previous year. The cash flow of the company was EUR
0.7 million positive whereas it was EUR -0.2 million negative during the
corresponding period in the previous year. The company expects its net sales to
grow from the previous year's level and the result for 2010 to be positive.
SUMMARY
The comparable figures from 2008 and 2007 are in parentheses and refer to the
figures for continuing operations.
October - December 2009
- Net sales EUR 6.5 (6.9 and 5.8) million, decrease -6%
- Product sales EUR 3.7 (4.3 and 3.6) million, decrease -15%
- Operating result EUR 0.1 (-0.2 and -1.2) million
- Operating result as percentage of net sales 1 (-3 and -21)%
- Earnings per share EUR 0.00 (-0.00 and -0.02)
- Cash flow EUR 0.7 (-0.2 and -0.9) million
- Liquid assets at the end of the period EUR 6.2 (7.0 and 8.2) million
January - December 2009
- Net sales EUR 23.6 (24.4 and 19.0) million, decrease -3%
- Product sales EUR 12.6 (14.8 and 10.6) million, decrease -15%
- Operating result EUR -1.0 (-2.3 and -6.5) million
- Operating result as percentage of net sales -4 (-9 and -34)%
- Earnings per share EUR -0.02 (-0.04 and -0.11)
- Cash flow EUR -0.8 (-1.9 and -6.2) million
- Liquid assets at the end of the period EUR 6.2 (7.0 and 8.2) 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.
CEO Ilkka Hiidenheimo
During the last quarter of the year 2009 Stonesoft succeeded in improving its
result despite the globally challenging financial situation. The operating
result (EBIT) of the last quarter of the year was EUR 0.1 million positive and
cash flow EUR 0.7 million positive.
The fiscal year 2009 was, as expected, challenging. Despite this, Stonesoft was
able to further strengthen its competitiveness. As an indication of this, the
company's products received international recognition. StoneGate Firewall/VPN
-solution received the Common Criteria Evaluation Assurance EAL 4+ information
security classification, which is the highest available sertificate for
commercial products. The company's StoneGate IPS was for the first time
positioned in Gartner's Network Intrusion Prevention System Appliances Magic
Quadrant report. In the test report published by the US-based NSS Labs Inc.
testing and certification company in December, StoneGate IPS products
outperformed the competitors' products with their usability and cost-efficiency.
We continued to make strong investments in our product development to strenghten
our competitiveness. Tekes decided to finance our research and product
development project"The protection of fast networks of critical infrastructure". In April 2009 we
launched the new StoneGate Management Center 5.0 and StoneGate Firewall/VPN 5.0
that meet especially the needs of distributed network environments and Managed
Security Service Providers. These products solve many fundamental problems
related to outsourcing network security, encrypting network traffic and
understanding the situation awareness of the whole network.
The capacity of the StoneGate FW-5105 and IPS-6105 launched in July exceeds the
needs of most large enterprises and meets the high capacity demands of telecom
operators. Stonesoft's products protect large and critical network environments,
where proactive and comprehensive security is required. Large network
environments are under constant pressure to change, which sets exceptional
demands to security and the systems managing it. Many traditional network
security companies and products are not able to adapt to these changes fast
enough. Stonesoft has always stood out from its competition through its
flexibility and ability to meet its customers' rapidly changing needs. Thanks to
our persistent and systematic product development, we have an extremely
competitive product offering we are continuously investing in. In January 2010
we established a new product development unit in Cracow, Poland, the purpose of
which is to help us further extend our lead in this area.
During the year 2009 we have managed to strengthen our product offering,
competitiveness and customer base despite the globally challenging market
situation. The company's result turned positive during the second half of the
year and I believe we have all the prerequisites to make a positive result for
the full year 2010.
FOURTH QUARTER 1.10. - 31.12.2009
Net sales
The Group's net sales totaled EUR 6.5 (6.9 and 5.8) million. Decrease compared
to the corresponding period in the previous year was EUR -0.4 million or -6%.
The operating result (EBIT) was positive, EUR 0.1 (-0.2 and -1.2) million.
Product sales did not quite reach the level of the previous year and was EUR
3.7 (4.3 and 3.6) million. Decrease from the previous year was -15%.
The net sales were distributed geographically as follows: Europe 68 (60 and 70)
%, Emerging markets (Russia, North Africa and Middle East) 9 (18 and 8) %,
Americas (North and South America) 20 (18 and 18) % and APAC (Asia-Pacific) 3 (4
and 4) %.
Result
Stonesoft's operating result (EBIT) was positive for the second consecutive
quarter and was EUR 0.1 (-0.2 and -1.2) million, which was EUR 0.3 million
higher compared to the corresponding period in the previous year. The operating
result as percentage of net sales was 1 (-3 and -21) %. The operating result
after taxes was EUR 0.0 (-0.2 and -1.1) million. The earnings per share were EUR
0.00 (-0.00 and -0.02). The equity per share was EUR 0.05 (0.06 and 0.10).
FISCAL YEAR 1.1. - 31.12.2009
Net sales
The Group's net sales totaled EUR 23.6 (24.4 and 19.0) million. Decrease
compared to the corresponding period in the previous year was EUR -0.8 million
or -3%. The operating result (EBIT) was EUR -1.0 (-2.3 and -6.5) million.
Product sales were EUR 12.6 (14.8 and 10.6) million. Decrease compared to the
previous year was -15%.
The net sales were distributed geographically as follows: Europe 64 (60 and 63)
%, Emerging markets (Russia, North Africa and Middle East) 13 (17 and 11) %,
Americas (North and South America) 20 (19 and 21) % and APAC (Asia-Pacific) 3 (4
and 5) %.
Result
Stonesoft's operating result (EBIT) was EUR -1.0 (-2.3 and -6.5) million, an
increase of EUR 1.2 million compared to the previous year. The operating result
as percentage of net sales was -4 (-9 and -34) %. The operating result after
taxes was EUR -1.0 (-2.0 and -4.2) million. The earnings per share were EUR
-0.02 (-0.04 and -0.11). The equity per share was EUR 0.05 (0.06 and 0.10). 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 16.0 (16.2 and
17.7) million. The equity ratio was 40 (46 and 52) % and gearing (the ratio of
net debt to shareholders' equity) was EUR -2.31 (-1.99 and -1.46).
The comparable cash flow during the fiscal year was EUR -0.8 (-1.9 and -6.2)
million. The Group has no interest-bearing debt. The consolidated liquid assets
at the end of the fiscal year totaled EUR 6.2 (7.0 and 8.2) 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 21.6 million,
of which EUR 20.9 million is accrued in Finland and EUR 0.7 million in the
United States. The company activated part of its research and development
expenses in the Finnish taxation (as of 1 January 2008), due to which the
Finnish calculated tax receivables have decreased from the previous year. The
company can deduct the activated research and development expenses in its
taxation later.
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 their willingness to
invest at least EUR three (3) million in the company in the form of a
convertible bond or directed issuance of shares. The commitment given by the
main shareholders is in force until the end of the AGM in 2010. The company has
not executed the convertible bond arrangement.
Investments in tangible and intangible assets totaled EUR 0.3 (0.5 and 0.5)
million.
Development of business operations and strategy
During the past years Stonesoft has carried out a considerably amount of
operational changes as well as intensely extended its product offering. Despite
the global financial insecurity the company has demonstrated strong commitment
in strengthening its product offering, competitiveness and customer base.
In 2009, the company's operational result (EBIT) improved considerably, turning
positive during the last two quarters of the year.
Stonesoft's organization and sales processes are at the level required by the
targets set for the year 2010. According to its selected growth strategy,
Stonesoft aims to continue its decisive and persistent efforts according to its
selected growth strategy to increase its net sales and result.
The main business events in 2009
In April, Stonesoft's StoneGate Firewall/VPN solution was granted a Common
Criteria Evaluation Assurance Level EAL 4+ information security classification,
which is the highest available certificate for commercial products.
In April, Stonesoft introduced the new StoneGate Management Center 5.0 and
StoneGate Firewall 5.0, offering new revenue opportunities and cost savings for
MSSPs (Managed Security Service Providers).
In April, the leading industry analyst firm Gartner, Inc. positioned Stonesof's
Network Intrusion Prevention System (IPS) for the first time in its Network
Intrusion Prevention System Appliances Magic Quadrant report, which compares
network intrusion prevention systems.
In May, Stonesoft announced it strives for improved profitability and specified
the savings target for the rest of the year to be around 1.5 million Euros. To
reach this target the company commenced, among other actions, co-operation
negotiations based on which the company decided to terminate employment contract
of six (6) employees and lay off the personnel in Finland with certain
exceptions for six weeks in stages during the rest of the year.
In May, Stonesoft announced that Tekes, the Finnish Funding Agency for
Technology and Innovation, decided to fund Stonesoft Corporation's research and
development project "The protection of fast networks of critical infrastructure"
with more than a million Euros.
In May, Stonesoft introduced the new StoneGate FW-1030 appliance with next
generation firewall capabilities.
In June, Stonesoft introduced the new StoneGate IPS-1030 appliance, which is
capable of inspecting and stopping also attacks hidden in encrypted Web traffic.
The new appliance provides efficient protection for both corporate network users
and public Web services against attacks hidden inside the encrypted Web
connection.
In June, Stonesoft introduced the new StoneGate FW-1060 firewall and IPS-1060
intrusion prevention system appliances, which enable efficient proactive
defense.
In June, Stonesoft announced it has received orders from Algerian Telecom at the
value of 1.2 million Euros. The orders were related to the strategic partnership
with the leading national telecommunications company Algeria Telecom, which was
entered in 2008 and was now renewed by a contract that is in force for one year
at the time, for a maximum period of three years, unless terminated.
In July, Stonesoft introduced the new StoneGate FW-5105 firewall/VPN and
StoneGate IPS-6105 intrusion prevention system appliances designed for most
demanding high capacity environments.
In August, Stonesoft introduced the new StoneGate SSL-1030 appliance that has
been designed to meet the needs of small and medium-sized organizations. The
solution is also a valuable tool for MSSPs (Managed Security Service Providers),
offering them a straightforward, simple way to fulfill the security and mobility
requirements of their customers.
In September, the US based Info Security Products Guide, industry's leading
publication on security-related products and technologies named Stonesoft a
winner of the 2009 Best Deployment Scenario Awards in the Firewall Solution
category.
In September, Stonesoft announced that its StoneGate VPN Client passed the"Compatible with Windows 7" testing requirements for compatibility.
In November, Stonesoft announced Mr. Juha Kivikoski has been appointed Stonesoft
Corporation's Chief Operating Officer (COO) as of 1 December 2009.
In November, Stonesoft announced that it has joined the RSA Secured® Partner
Program and received the SecurID® interoperability certification for its
StoneGate 5.0 solutions.
In December, Stonesoft announced it will accelerate its research and development
and establish a new R&D unit in Cracow, Poland in January 2010.
The above-mentioned events and business activities have strengthened the
company's sales, optimized the company's cost structure and reinforced the
competitiveness of Stonesoft's product offering during the fiscal period.
Main business events after the fiscal period
In January Stonesoft announced the StoneGate Firewall/VPN 5.1 and StoneGate
Management Center 5.1 versions.
In January Stonesoft announced that its IPS (intrusion prevention system) had
perfomed well in the tests of the US-based NSS Labs Inc. testing and
certification company.
Resales channel
The sales of the StoneGate product family as Stonesoft's core business are
mainly conducted through an international resales channel.
Review of major research and development activities
The company's R&D operations are located in Finland and France. At the end of
2009, R&D employed altogether 63 (66 and 69) persons. The company's R&D
investments during the fiscal period for continuing operations totaled EUR 4.9
(5.2 and 5.3) million.
R&D costs represented 22 (21 and 22) % of all expenses for continuing
operations.
During the fiscal period Stonesoft's StoneGate firewall solution was granted a
Common Criteria Evaluation Assurance Level EAL 4+ information security
classification. The leading industry analyst firm Gartner, Inc. positioned
Stonesof's Network Intrusion Prevention System (IPS) for the first time in its
Network Intrusion Prevention System Appliances Magic Quadrant report. The US
based Info Security Products Guide, industry's leading publication on
security-related products and technologies named Stonesoft a winner of the 2009
Best Deployment Scenario Awards in the Firewall Solution category, and
Stonesoft's StoneGate VPN Client passed the "Compatible with Windows 7" testing
requirements for compatibility. Stonesoft joined the RSA Secured® Partner
Program and received the SecurID® interoperability certification for its
StoneGate 5.0 solutions.
Further during the fiscal period Stonesoft introduced the new StoneGate
Management Center 5.0 and StoneGate Firewall 5.0, offering new revenue
opportunities and cost savings for MSSPs (Managed Security Service Providers).
The new StoneGate FW-1030 appliance was introduced and offers next generation
firewall capabilities. Stonesoft introduced also the new StoneGate IPS-1030
appliance, which is capable of inspecting and stopping also attacks hidden in
encrypted Web traffic, and the StoneGate FW-1060 firewall and IPS-1060 intrusion
prevention system appliances, which enable efficient proactive defense. The
StoneGate FW-5105 firewall/VPN and StoneGate IPS-6105 intrusion prevention
system appliances are designed for most demanding high capacity environment,
whereas the introduced StoneGate SSL-1030 appliance meets the needs of small and
medium-sized organizations.
In December, Stonesoft announced it will accelerate its research and development
and establish a new R&D unit in Cracow, Poland in January 2010.
Tekes, the Finnish Funding Agency for Technology and Innovation, decided to fund
Stonesoft Corporation's research and development project "The protection of fast
networks of critical infrastructure" with more than a million Euros.
Stonesoft was granted three patents during the year. The patents were related to
VPN performance measurement, personalized firewall and optimizing the rule base
traversal of a security appliance.
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 0.32 (0.29 and 0.47). At the end of the fiscal year on December
31, 2009, the share price was EUR 0.70 (0.32 and 0.29). The highest share price
was EUR 0.78 (0.50 and 0.56), and the lowest EUR 0.31 (0.24 and 0.22). During
the year, the total turnover of Stonesoft shares amounted to EUR 5.8 (5.2 and
8.4) million and 11.1 (14.9 and 20.0) million shares, which is 19.4 (26.0 and
34.9) % of the total amount of the shares. Based on the share price on December
31, 2009, Stonesoft's market capitalization was EUR 40.1 (18.3 and 16.6)
million.
Share capital development and stock option programs
At the end of the fiscal year on December 31, 2009, Stonesoft's share capital
recorded in the Trade Register totaled EUR 1,146,054. The number of shares at
the end of the fiscal year corrected by share issue was 57 727 732 (57 309 875
and 57 302 732). The weighted average value of the numbers of shares corrected
by share issue was 57 723 942 (57 307 748 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 SFT1V in the
NASDAQ OMX Helsinki Ltd.
The company has currently two valid stock option programs, Stock Option program
2004-2010 and Stock Option program 2008-2014. 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 2009 in total 1,076,250 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 2009 in total 1,175,000 stock
options had been granted under this program. At the end of the fiscal year in
total 1,076,250 shares could be subscribed based on these programs, which
represents 1.88% of the present number of shares and votes in the company.
During the fiscal year, no subscriptions were made on the basis of the stock
option programs targeted for key persons in the company.
Shareholders
At the end of 2009, the company had 5,862 (5,877 and 6,034) shareholders.
Nominee-registered holdings represented 6.7% of the share capital in 2009.
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, 2009, the members of the Board of Directors, the CEO and the
entities under their control held a total of 21,895,524 shares of the company,
which represented 38.2% of the shares and the voting rights. The stock option
rights held by the members of the Board of Directors on December 31, 2009
entitled them to a subscription of 150,000 shares.
Proposal by the Board of Directors for distribution of profit
The operating result of the parent company was EUR -0.6 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 March 26, 2009, decided
to grant the Board of Directors a new authorization.
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 2010.
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 2010.
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 March 26, 2009 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
March 26, 2009, 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
2009, Ilkka Hiidenheimo was the CEO of the company. The CEO is in charge of the
day-to-day management of the company in accordance with the instructions and
orders given by the Board of Directors as well as the Companies Act.
The members of the company's Executive Management were Ilkka Hiidenheimo,Juha
Kivikoski,Kim Fagernäs, Saara Laine, Mikael Nyberg, Mika Jalava and Klaus
Majewski.
In 2009, authorized public accountants Ernst & Young Oy acted as Stonesoft's
auditor and authorized public accountant Bengt Nyholm 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 for all the company´s employees, as
defined in Finland's Employee Pension Act (TYEL). 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
No acquisitions were made during the fiscal year. The Singapore subsidiary was
closed in spring 2009. There were no changes in the Group structure.
Foreign branches and representative office
The company has no foreign branches. The company has a representative office in
China.
Personnel
The comparable figures from 2008 and 2007 are in parentheses and refer to the
figures for continuing operations.
At the end of the fiscal year, the Group's personnel totaled 174 (185 and 181)
people, of which 154 (167 and 165) were employees and 20 (18 and 16) 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 14.0 (14.8 and 14.2) million.
The average number of personnel during the fiscal period was 178 (183 and 181).
The geographical distribution of Stonesoft personnel was Europe 135 (144 and
145), Emerging markets (Russia, North Africa and Middle East) 12 (9 and 8),
Americas (North and South America) 22 (28 and 23) and APAC (Asia and Pacific) 5
(4 and 5).
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's Board of Directors has reviewed and approved the Corporate
Governance Statement on 17.2.2010. The Statement will be issued separately from
The Board of Directors' report and published at the company's website as well as
in the Annual Report. The Corporate Governance Statement contains the main
features of internal control and risk management in relation to the financial
reporting systems as well as information about the composition and duties of the
Board of Directors and information about the Chief Executive Officer.
The Annual Report for the previous fiscal year is published during week 13 at
the corporate website www.stonesoft.com including the Financial Statements, the
Board of Directors' Report and the Auditor's report as well as the company's
Corporate Governance Statement.
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.
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 normally provide financing to its customers,
other than generally accepted terms of payment. The company invoices mainly in
Euros, the US dollar being the other invoicing currency. The company's costs
occur mostly in Euros. Exchange rate fluctuations can affect the company's
financial results. The company uses matching as a main tool for offsetting the
exchange rate risks. The task of Stonesoft's Corporate Treasury is to manage
financial risks in accordance with the Treasury Policy approved by Stonesoft's
Board of Directors. The main goals of the policy are: (i) to ensure the
short-term liquidity of the company, (ii) to guarantee efficient circulation 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
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 10-12/2009 10-12/2008 1-12/2009 1-12/2008
(1000 Euro)
Continuing operations
Net sales 6 510 6 936 23 597 24 427
Other operating income 276 404 969 1 275
Materials and services -854 -860 -3 539 -3 547
Personnel expenses -3 660 -4 000 -14 004 -14 796
Depreciation -113 -119 -454 -483
Other operating expenses -2 068 -2 539 -7 616 -9 161
Operating result 90 -177 -1 048 -2 286
Financial income and expenses 36 59 316 276
Result before taxes 126 -118 -731 -2 010
Taxes -125 -69 -240 -219
Result from continuing operations 1 -187 -971 -2 229
Result from discontinued operations 0 0 0 186
Result for the accounting period 1 -187 -971 -2 043
Other comprehensive income
Exchange differences on translating
foreign operations 8 -8 15 -30
Total other comprehensive income 8 -8 15 -30
Total comprehensive income 10 -195 -956 -2 074
Basic earnings per share (EUR),
continuing operations 0,00 0,00 -0,02 -0,04
Diluted earnings per share (EUR),
continuing operations 0,00 0,00 -0,02 -0,04
Basic earnings per share (EUR),
discontinued operations 0,00 0,00 0,00 0,00
Diluted earnings per share (EUR),
discontinued operations 0,00 0,00 0,00 0,00
Stonesoft Group
Balance Sheet (1000 Euro) 31.12.2009 31.12.2008
ASSETS
Non-Current Assets
Tangible assets 494 692
Intangible assets 176 104
Other investments 10 10
Deferred tax assets 0 0
Total 680 806
Current assets
Inventories 673 911
Trade and other receivables 8 383 7 371
Prepayments 67 19
Marketable securities 5 240 6 310
Cash and cash equivalents 970 738
Total 15 333 15 348
Total assets 16 013 16 154
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
company
Share capital 1 146 1 146
Share premium account 76 821 76 821
Conversion differences -936 -951
Retained earnings -74 346 -73 473
Total 2 685 3 543
Long-term liabilities
Provisions 0 26
Other long-term liabilities (* 2 606 2 336
Total 2 606 2 363
Short-term liabilities
Trade and other payables (* 10 604 9 991
Tax liability 81 41
Provisions 37 214
Short-term interest bearing liabilities 0 2
Total 10 722 10 248
Total liabilities 13 328 12 611
Total equity and liabilities 16 013 16 154
*) Other liabilities include customers'
pre-paid maintenance agreements
periodicity 9 267 8 372
Stonesoft Group
Statement of changes in equity
(1000 Euro)
Share Share Conversion Retained
capital premium differences earnings Total
Shareholders' equity at 1.1.2008 1 146 76 821 -927 -71 461 5 579
Comprehensive income -24 -2 043 -2 068
Stock options 32 32
At the closing on 31.12.2008
transferred stock option expenses
accumulated retained earnings -32 32 0
Shareholders' equity at
31.12.2008 1 146 76 821 -951 -73 473 3 543
Share Share Conversion Retained
capital premium differences earnings Total
Shareholders' equity at 1.1.2009 1 146 76 821 -951 -73 473 3 543
Comprehensive income 15 -971 -956
Stock options 98 98
Shareholders' equity at 31.12.2009 1 146 76 821 -936 -74 346 2 685
Stonesoft Group
Cash flow statement (1000 Euro) 1.1.-31.12.2009 1.1.-31.12.2008
Cash flow from operating activities
Operating Result -1 048 -2 286
Adjustments
Non-cash transactions 644 319
Financial expenses -129 -93
Financial incomes 336 375
Change in net working capital -226 614
Taxes paid -210 -218
Total cash flow from operating activities -632 -1 288
Cash flow from investing activities
Investments in tangible assets -202 -422
Investments in intangible assets -126 -66
Investments in affiliated company 0 0
Investments in other shares 0 -10
Net cash flow investing activities
continuing operations -328 -498
Net cash flow investing activities
discontinued operations 0 761
Total cash flow investing activities -328 263
Cash flow from financing activities
Payments of financial leasing liabilities -2 -72
Total cash flow from financing activities -2 -72
Change in cash and cash equivalents
Cash and cash equivalents at beginning of
period 7 048 8 210
Conversion differences 15 -30
Changes in the market value of investments 109 -34
Total cash and cash equivalents at end of
period *) 6 210 7 048
*) Total cash and cash equivalents at end of
the period
contains pledged securities 452 315
Stonesoft Group
Geographical segments 1.1.-31.12.2009 1.1.-31.12.2008
(1000 Euro)
Net sales
Europe 15 182 14 740
Emerging Market 3 162 4 123
Americas 4 605 4 495
APAC 648 1 069
Total net sales 23 597 24 427
Operating profit
Europe 546 -1 061
Emerging Market -327 338
Americas -1 180 -1 532
APAC -87 -31
Total operating profit -1 048 -2 286
Stonesoft Group
Contingent liabilities 1.1.-31.12.2009 1.1.-31.12.2008
(1000 Euro)
Contingent off-balance sheet
Non-cancelable other leases
Contingent liabilities for the Company 2 541 3 377
117 63
Stonesoft Group
Related party information 1.1.-31.12.2009 1.1.-31.12.2008
(1000 Euro)
Consultation fees paid to the Board of
Directors 0 0
Stonesoft Group
Quarterly development Q4 / Q3 / Q2 / Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2009 2009 2009 2009 2009 2008 2008 2008 2008 2008
Software 0,6 0,4 0,3 0,4 1,6 1,0 0,5 0,7 0,4 2,6
Security appliances 3,1 2,9 3,1 2,0 11,0 3,4 2,8 3,4 2,8 12,3
Services 2,8 2,7 2,7 2,6 10,9 2,6 2,4 2,3 2,2 9,5
Other products 0,0 0,0 0,0 0,1 0,1 0,0 0,1 0,0 -0,1 0,1
Net sales continuing
operations 6,5 6,0 6,0 5,1 23,6 6,9 5,9 6,4 5,3 24,4
Change-% from previous
year -6 2 -5 -3 -3 19 45 32 22 28
Sales margin 5,7 5,1 4,9 4,4 20,1 6,1 5,1 5,4 4,3 20,9
Sales margin % 87 85 81 86 85 88 86 85 82 85
Operative expenses 5,8 4,7 5,8 5,7 22,0 6,6 5,9 6,0 5,8 24,4
Operating profit (EBITA) 0,1 0,5 -0,6 -1,1 -1,0 -0,2 -0,5 -0,4 -1,2 -2,3
% of net sales 1 9 -9 -22 -4 -3 -9 -6 -24 -9
Result before taxes 0,1 0,7 -0,5 -1,0 -0,7 -0,1 -0,4 -0,3 -1,2 -2,0
% of net sales 2 11 -8 -20 -3 -2 -7 -4 -23 -8
Stonesoft Group
Key ratios 1.1.-31.12.2009 1.1.-31.12.2008
(1000 Euro)
Net sales, continuing operations 23 597 24 427
Net sales change-% -3 28
Operating result, continuing operations -1 048 -2 286
% of net sales -4 -9
Operating result before taxes -731 -2 010
% of net sales -3 -8
ROE - %, annualized, continuing operations -31 -49
ROI - %, annualized -19 -40
Equity ratio-% 40 46
Net gearing -2,31 -1,99
Total Assets 16 013 16 154
Capital expenditure 328 488
Capital disposals 19 0
R&D costs 4 918 5 230
% of net sales 21 21
Number of employees (weighted average) 178 183
Number of employees (end of the period 174 185
Share Specific Ratios
Earnings per share, continuing operations -0,02 -0,04
Earnings per share, discontinued operations 0,00 0,00
Equity per share 0,05 0,06
Dividend 0,00 0,00
Dividend per share (EUR) 0,00 0,00
Dividend / Profit-% 0 0
Calculation of
indicators
Return on equity (Profit before taxes - income
(ROE) % = taxes) x 100 /
Shareholders' equity + minority
interest (average)
Return on invested (Profit before extraordinary items+interest and other
capital (ROI)% = financial expenses) x100 /
Balance sheet total - non-interest bearing debt
(average)
(Equity + minority 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
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 Financial Statements 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 figures presented in this release are audited.
Press conference
A press conference for investors, journalists and analysts will be held on 18
February 2010 at 10.30 AM at the Stonesoft headquarters, street address
Itälahdenkatu 22 A, 00210 Helsinki.
Annual General Meeting
The Annual General of the shareholders of Stonesoft Corporation is held on 22
April 2010 at 3.00 PM at the company headquarters at 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 website at www.stonesoft.com.
Distribution:
NASDAQ OMX Helsinki Ltd
Main media
[HUG#1385825]
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