Stonesoft Oyj :STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-MARCH 2012
(Thomson Reuters ONE) -
Stonesoft Corporation Stock Exchange Release 20 April 2012 at 9:15 a.m.
STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-MARCH 2012
Product sales continues to grow strong, cash flow clearly positive
Stonesoft Corporation's product sales grew by 38 % and net sales by 27% compared
to the corresponding period in the previous year. Operating result was MEUR
-0.6, which is MEUR 0.3 better than in the corresponding period in the previous
year. Net sales grew and the company invested more than before in accelerating
future growth.
The comparable figures from the corresponding period in the previous year are in
brackets.
January-March 2012
- Net sales MEUR 8.3 (6.5), growth 27%
- Product sales MEUR 4.9 (3.6), growth 38%
- Operating result MEUR -0.6 (-0.8)
- Operating result as percentage of net sales -7 (-13)%
- Earnings per share EUR -0.01 (-0.01)
- Operative cash flow MEUR 1.4 (1.8)
- Liquid cash funds at the end of the fiscal period MEUR 9.1 (9.8). The
corporate had no interest-bearing debts.
CEO ILKKA HIIDENHEIMO
During the first quarter of the year 2012 Stonesoft's product sales grew by 38%
and net sales by 27%. Cash flow was clearly positive. Companies have continued
their investments in network security despite the current financial insecurity.
During the fiscal period, Stonesoft was selected as the vendor to a project
which is the largest in the company's history.
Our aim to develop increasingly flexible and secure solutions for demanding and
critical environments was rewarded in the Next Generation Firewall (NGFW) Group
test by NSS Labs. Stonesoft was selected in the best, so-called "Recommend"
category. We delivered 100 percent protection against year 2011 exploits, and
also full protection against evasions used in the test.
Stonesoft still provides the most efficient protection against advanced evasion
techniques, which was also stated by NSS Labs in their evasion tests. However,
the number of evasions covered by these tests is extremely small compared to the
amount Stonesoft's products can currently offer protection against from the
practically unlimited number of advanced evasions. For example, during the last
two years Stonesoft has delivered 310 evasions to CERT-FI, of which NSS Labs
tests only a part.
Consolidation in the market is still continuing. Dell acquired the security
company SonicWall. We believe this will strengthen our competitive position, as
security is not the core business of the entity created.
National security strategies have emerged even stronger to secure critical
infrastructure also under emergency. We will continue strong investments also in
this area.
At the RSA conference in San Francisco we announced the first transformable
security engine. The Stonesoft Security Engine is capable of transforming itself
into seven different products. This dramatically changes our ability to provide
the customer with exactly the right product. Deliveries will begin in the third
quarter of the year.
The development of the Security Engine is a part of our philosophy. We do not
believe that network security is a static area. Organizations' business and
functions evolve in a similar way as threats evolve. This means that without
adaptivity the capability of solutions will keep decreasing.
NET SALES AND RESULT
January-March 2012
The Group's net sales in the fiscal period were MEUR 8.3 (6.5). Increase
compared to the corresponding period in the previous year was MEUR 1.7, or 27%.
The operating result (EBIT) was MEUR -0.6 (-0.8) and the result after taxes was
MEUR -0.5 (-0.7). Additional investments compared to the corresponding period in
the previous year were MEUR 1.3.
Product sales were MEUR 4.9 (3.6), growth 38% compared to the corresponding
quarter in the previous year.
The geographical distribution of net sales was as follows: Europe 67 (67)%,
Emerging Markets (North Africa, Middle East and Latin America) 18 (17)%, North
America 14 (13)% and APAC (Asia-Pacific) 1 (3)%.
FINANCE AND INVESTMENTS
At the end of the fiscal period, Stonesoft's total assets were MEUR 21.9 (19.5).
The equity ratio was 39 (46) % and gearing (the ratio of net debt to
shareholders' equity) was -2.70 (-2.53).
The comparable cash flow during the fiscal period was MEUR 1.4 (1.8). The Group
has no interest-bearing debt. The consolidated liquid assets at the end of the
fiscal period totalled MEUR 9.1 (9.8).
Investments in tangible and intangible assets totalled MEUR 0.4 (0.3).
DEVELOPMENT OF BUSINESS OPERATIONS
Main business events in the fiscal period
In January Stonesoft announced it had, as the first non-French vendor, obtained
the CSPN (Certification de Sécurité de Premier Niveau) certification delivered
by ANSSI (French Network and Information Security Agency) in France.
In January the Board of Directors of Stonesoft Corporation decided on a new
stock option plan.
In January Stonesoft announced the availability of the Stonesoft(TM) IPS-1302
intrusion prevention system appliance for protecting data center and modern
corporate network environments. Designed for demanding Web and encrypted traffic
inspection, the appliance provides efficient protection against Advanced Evasion
Techniques (AETs) without compromising traffic speed or availability.
In February Stonesoft announced its Firewall/VPN product family had received the
Common Criteria Evaluation Assurance Level 4+ (EAL4+) certification.
Stonesoft Corporation announced it had been chosen as a vendor in the network
security part of a very significant public sector project. At this point, the
company has estimated the total value of the delivery to be approximately EUR
five (5) Million.
In February Stonesoft introduced the new Stonesoft Security Engine, which can be
configured to act as seven different security solutions or as a combination of
them. The Security Engine sets new criteria to network security and its cost
efficiency.
In March Stonesoft announced it had received the respected 'Recommend' rating
for the Stonesoft FW-1301 in NSS Labs' Next Generation Firewall (NGFW) Group
Test.
In March Stonesoft announced it had entered a partnership agreement with Cygate,
whereby Cygate will start providing Stonesoft's network security solutions to
companies and public sector organizations.
Main business events after the fiscal period
No significant events have occurred after the end of the fiscal period under
review.
RESEARCH AND DEVELOPMENT
Stonesoft continued its strong investments in R&D. Investments during the fiscal
period totalled MEUR 1.8 (1.5). This represented 24 (23)% of operating expenses.
R&D employed 96 (74) 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 63 492 482. Stonesoft or its
daughter companies do not own its shares. There were no changes in the share
capital.
Stock Option Programs
The company had two valid stock option programs, Stock Option Program 2008,
under which the subscription price is EUR 0.30 and the total number of stock
options to be granted based on this program is 3 000 000 at the maximum and
Stock Option Program 2012, under which the subscription price is EUR 1.42 and
the total number of stock options to be granted based on this program is
4 500 000 at the maximum. The subscription period of the shares is graded and
will end for all 2008 stock options on December 31, 2014 and for 2012 stock
options in 2017-2019.
Additional information about both option programs is provided by the company's
stock exchange releases and web pages.
During the fiscal period no company shares were registered on the basis of the
stock option programs.
DEVELOPMENT OF SHARE PRICES AND TURNOVER
In the beginning of the fiscal period on January 1, 2012, the price of Stonesoft
share was EUR 0.86 (0.58). At the end of the fiscal period on 31 March 2012 the
price was EUR 1.42 (0.56). The highest price was EUR 1.78 (0.64) and the lowest
EUR 0.87 (0.51). During the fiscal period the total turnover of Stonesoft shares
amounted to MEUR 14.7 (2.3) and 11.2 (3.8) million shares, which is 23.1 (6.1) %
of the total amount of the shares. Based on the share price at the end of the
fiscal period on March 31, 2012, Stonesoft's market value was MEUR 90.2 (35.5).
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 232 (195).
AUTHORIZATIONS OF THE BOARD OF DIRECTORS
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 Board of Directors used the authorization granted by the AGM held on 13
April 2011 as it decided on the new Stock Option Plan 2012. The stock options
issued by the plan can be used to subscribe for a maximum total of 4,500,000 new
or existing shares held by the company.
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 2012, Stonesoft's main risks and business uncertainties
relate to the realization timetable of the sales projects and possible
production disruption of our subcontractors and suppliers. Insecurities related
to public economies may have a negative effect on the public sector projects.
Stonesoft has no risks related to the order book, because it normally can
process incoming orders within a couple of work days.
Risks and uncertainties as well as the principles of Stonesoft's risk management
are discussed more extensively at the company website and in the Annual Report
2011.
FUTURE OUTLOOK
Based on Stonesoft's estimate the growth of the total market will continue to
grow by 5% also during the year 2012.
In 2011, a development started whereby Stonesoft and other companies specialized
in network security grew strongly. Stonesoft assumes security threats to become
increasingly worrying, which will create new business opportunities for the
company.
Stonesoft's comprehensive product offering meets the rapidly developing and
changing security challenges, including the demands brought by cloud services,
virtualization and outsourcing of security.
Advanced Evasion Techniques
Stonesoft continued the research and commercial utilization of Advanced Evasion
Techniques (AETs).
Due to their own technology choices, many competitors still seem to have great
difficulties in amending their solutions to provide protection against AETs.
Leading research institutes such as Gartner have confirmed that the best
protection against new, advanced evasion techniques is provided by flexible,
software based systems. The threat posed by advanced evasion techniques does not
concern only intrusion prevention system (IPS) appliances, but also UTM (Unified
Threat Management) and next generation firewall appliances.
The above mentioned issues have opened new business opportunities for Stonesoft
and had a strong impact on the growth of the company's product sales. The
improved awareness of the threat posed by advanced evasion techniques has
brought the company new customers and made contacting target customers
significantly easier. In addition, the average size of both the customer
companies and the projects in the sales pipeline has grown compared to previous.
Based on Stonesoft's view, these issues will continue to have a positive impact
on the company's net sales and profitability and will strengthen its
competitiveness and market position as the general understanding and knowledge
about advanced evasions techniques grow.
Stonesoft aims for at least 30% growth of net sales and a positive result for
the year 2012.
With regard to the development of the turnover and the operating result,
variation is expected between the quarters in comparison to the corresponding
quarter during the previous year as well as to the previous quarter as a
consequence of, among others, long sales cycles and the relatively big impact of
individual deals on the development of net sales and operating result.
SUMMARY OF FINANCIAL STATEMENTS AND NOTES JANUARY 1 - MARCH 31, 2012
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 2011. 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 2011. Key indicator calculations remain unchanged.
The figures presented in this release are unaudited.
Stonesoft Group
Income Statement 1-3/2012 1-3/2011 1-12/2011
(1000 Euros)
Net sales 8 254 6 509 30 604
Other operating income 269 118 904
Materials and services -1 458 -1 078 -5 240
Personnel expenses -4 787 -4 031 -16 665
Depreciation -142 -124 -479
Other operating expenses -2 710 -2 222 -10 262
Operating result -574 -827 -1 137
Financial income and expenses 97 183 358
Result before taxes -477 -644 -779
Taxes -60 -32 -138
Result for the accounting period -537 -676 -917
Other comprehensive income
Exchange differences on translating foreign
operations 5 -13 -3
Total other comprehensive income 5 -13 -3
Total comprehensive income -532 -689 -920
Basic earnings per share (EUR),
continuing operations -0,01 -0,01 -0,01
Diluted earnings per share (EUR),
continuing operations -0,01 -0,01 -0,01
Stonesoft Group
Balance Sheet (1000 Euros) 31.3.2012 31.3.2011 31.12.2011
ASSETS
Non-Current Assets
Tangible assets 985 804 700
Intangible assets 159 163 162
Other investments 10 10 10
Total 1 154 977 872
Current assets
Inventories 1 746 908 1 508
Trade and other receivables 9 669 7 792 10 847
Prepayments 163 53 220
Marketable securities 5 503 8 432 0
Cash and cash equivalents 3 625 1 384 7 710
Total 20 706 18 569 20 285
Total assets 21 860 19 546 21 157
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent company
Share capital 1 151 1 151 1 151
Issue of shares 18 0 0
Share premium account 76 602 76 602 76 602
Conversion differences -949 -964 -954
Reserve for invested unrestricted equity
fund 4 732 4 751 4 732
Retained earnings -78 169 -77 654 -77 659
Total 3 385 3 886 3 873
Long-term liabilities
Prepayments *) 3 724 2 946 3 157
Total 3 724 2 946 3 157
Short-term liabilities
Trade and other payables 5 063 4 338 5 563
Prepayments *) 9 484 8 214 8 381
Tax liability 139 123 126
Provisions 64 40 58
Total 14 751 12 714 14 127
Total liabilities 18 475 15 660 17 285
Total equity and liabilities 21 860 19 546 21 157
*) Prepayments contain customers advance
payment of support and maintenance contracts 13 209 11 160 11 538
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
1.1.2011 1 151 0 76 603 -951 4 751 -76 986 4 567
Comprehensive
income 0 0 0 -13 0 -676 -689
Reserve for
invested
unrestricted
equity fund
reduction 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
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained
capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2012 1 151 0 76 602 -954 4 732 -77 659 3 873
Comprehensive
income 0 0 0 5 0 -537 -532
Reserve for
invested
unrestricted
equity fund
reduction 0 0 0 0 0 0 0
Transaction
costs from
equity 0 0 0 0 0 0 0
Stock options
exercised 0 18 0 0 0 0 18
Stock option
expenses 0 0 0 0 0 27 27
Shareholders'
equity at
31.3.2012 1 151 18 76 602 -949 4 732 -78 169 3 385
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-31.3.2012 1.1.-31.3.2011 1.1.-31.12.2011
Cash flow from operating
activities
Operating Result -574 -827 -1 137
Adjustments
Non-cash transactions -431 64 334
Financial expenses -25 -51 -106
Financial incomes 19 9 445
Change in net working capital 2 771 2 777 904
Taxes paid -40 -53 -218
Total cash flow from operating
activities 1 720 1 918 221
Cash flow from investing
activities
Investments in tangible
assets -411 -261 -460
Investments in intangible
assets -13 -68 -120
Total cash flow investing
activities -424 -330 -581
Cash flow from financing
activities
Stock options exercised 18 -1 53
Total cash flow from financing
activities 18 -1 53
Change in cash and cash
equivalents
Cash and cash equivalents at
beginning of period 7 710 8 016 8 016
Conversion differences 0 -14 1
Changes in the market value
of investments 103 226 0
Total cash and cash equivalents
at end of period *) 9 128 9 816 7 710
*) Total cash and cash
equivalents at end of the period
contains pledged securities 492 467 496
Stonesoft Group
Geographical segments 1.1.-31.3.2012 1.1.-31.3.2011 1.1.-31.12.2011
(1000 Euros)
Net sales
Europe 5 514 4 328 20 979
Emerging Markets 1 495 1 137 3 926
Americas 1 154 875 4 656
APAC 92 170 1 043
Total net sales 8 254 6 509 30 604
Operating profit
Europe 99 -381 150
Emerging Markets -183 -48 -352
Americas -377 -320 -650
APAC -114 -79 -286
Total operating profit -574 -827 -1 137
Stonesoft Group
Contingent liabilities 1.1.-31.3.2012 1.1.-31.3.2011 1.1.-31.12.2011
(1000 Euros)
Contingent off-balance sheet
Non-cancellable other leases 1 807 2 238 1 970
Contingent liabilities for
the Company 223 123 223
Stonesoft Group
Quarterly development Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2012 2011 2011 2011 2011 2011
Software 0,6 0,8 0,4 0,4 0,4 2,1
Security appliances 4,3 5,3 4,2 2,9 3,2 15,6
Services 3,4 3,4 3,3 3,2 3,0 12,8
Other products 0,0 0,1 0,1 0,0 -0,1 0,1
Net sales continuing operations 8,3 9,5 8,0 6,5 6,5 30,6
Change-% from previous year 27 27 43 29 6 26
Sales margin 6,8 7,6 6,7 5,6 5,4 25,4
Sales margin % 82 80 83 87 83 83
Operative expenses 7,6 7,6 6,7 6,7 6,4 27,3
Operating profit (EBITA) -0,6 0,3 0,2 -0,7 -0,8 -1,1
% of net sales -7 3 2 -12 -13 -4
Result before taxes -0,5 0,3 0,2 -0,7 -0,6 -0,8
% of net sales -6 4 3 -11 -10 -3
Stonesoft Group
Key ratios 1.1.-31.3.2012 1.1.-31.3.2011 1.1.-31.12.2011
(1000 Euros)
Net sales 8 254 6 509 30 604
Net sales change-% 27 6 26
Operating result -574 -827 -1 137
% of net sales -7 -13 -4
Operating result before taxes -477 -644 -779
% of net sales -6 -10 -3
ROE - %, annualized -59 -64 -22
ROI - %, annualized -49 -56 -16
Equity ratio-% 39 46 40
Net gearing -2,70 -2,53 -1,99
Total Assets 21 860 19 546 21 157
Capital expenditure 424 330 581
Capital disposals 0 0 0
R&D costs 1 832 1 497 6 131
% of net sales 22 23 20
Number of employees (weighted
average) 229 197 207
Number of employees (end of the
period) 232 195 222
Share Specific Ratios
Earnings per share -0,01 -0,01 -0,01
Equity per share 0,05 0,06 0,06
Dividend 0,00 0,00 0,00
Dividend per share (EUR) 0,00 0,00 0,00
Dividend / Profit-% 0 0 0
Calculation of
indicators
Return on equity (Profit before taxes - income
(ROE) % = taxes) x 100 /
Shareholders' equity + minority interest
(average)
Return on invested (Profit before extraordinary items+interest and other
capital (ROI)% = financial expenses) x100 /
Balance sheet total - non-interest
bearing debt (average)
(Equity + minority
Equity ratio % = interest) x 100 /
Balance sheet total -
advances received
Interest bearing net debt - cash in hand and on deposit -
Net gearing = marketable securities /
Equity + minority
interest
Earning per share Profit before taxes - minority interest
(EPS) = - income taxes /
Average number of shares adjusted for dilutive
effect of options
Equity per share = Equity /
Number of shares at end of
period
FORWARD-LOOKING STATEMENTS
This report contains statements concerning, among other things, Stonesoft's
financial condition and the results of operations that are forward-looking in
nature. Such statements are not historical facts, but rather represent
Stonesoft's future expectations. The company believes that the expectations
reflected in these forward-looking statements are based on reasonable
assumptions. However, these forward-looking statements involve inherent risks
and uncertainties, which could cause actual results or outcomes to differ
materially from those anticipated in the statements. These risks and
uncertainties may include, among other things, (1) changes in our market
position or in the Firewall/VPN and Intrusion detection and protection market in
general; (2) the effects of competition; (3) the success, financial condition,
and performance of our collaboration partners, suppliers and customers;(4) our
ability to source quality components without interruption and at acceptable
prices;(5) our ability to recruit, retain and develop appropriately skilled
employees;(6) exchange rate fluctuations, including, in particular, fluctuations
between the Euro, which is our reporting currency, and the US dollar;(7) other
factors related to sale of products, economic situation, business, competition
or legislation affecting the business of Stonesoft or the industry in general
and (8) our ability to control the variety of factors affecting our ability to
reach our targets and give accurate forecasts.
PRESS CONFERENCE
A press conference for analysts and investors will be held on 20 April, 2012 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(at)stonesoft.com
Mikael Nyberg, CFO, Stonesoft Corporation
Tel. +358 9 476 711
E-mail: mikael.nyberg(at)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
STONESOFT CORPORATION INTERIM REPORT FOR JANUARY MARCH 2012:
http://hugin.info/120212/R/1604168/507478.pdf
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Stonesoft Oyj via Thomson Reuters ONE
[HUG#1604168]
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