SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMCNet:  Stonesoft Oyj :STONESOFT CORPORATION FINANCIAL STATEMENTS RELEASE FOR JANUARY-DECEMBER 2012

[February 08, 2013]

Stonesoft Oyj :STONESOFT CORPORATION FINANCIAL STATEMENTS RELEASE FOR JANUARY-DECEMBER 2012

(Thomson Reuters ONE Via Acquire Media NewsEdge) Stonesoft Corporation Stock Exchange Release 8 February 2013 at 9:15 a.m.

STONESOFT CORPORATION FINANCIAL STATEMENTS RELEASE FOR JANUARY-DECEMBER 2012 Product sales grew by almost 60%, positive operating result for full year Stonesoft Corporation's operating result in the fourth quarter of 2012 grew by almost MEUR 1.2 compared to the corresponding period in the previous year and were MEUR 1.4. The company's product sales developed positively and were MEUR 9.6, growth 58%, whereby net sales were MEUR 13.5.


The comparable figures from the corresponding period in the previous year are in brackets: October-December 2012 (2011) - Net sales MEUR 13.5 (9.5), growth 41% - Product sales MEUR 9.6 (6.1), growth 58% - Operating result MEUR 1.4 (0.3) - Operating result as percentage of net sales 10 (3)% - Earnings per share EUR 0.03 (0.01) - Operative cash flow MEUR -0.0 (0.6) - Liquid cash funds at the end of the reporting period MEUR 7.2 (7.7). The corporate had no interest-bearing debts.

January-December 2012 (2011) - Net sales MEUR 40.1 (30.6), growth 31% - Product sales MEUR 25.6 (17.7), growth 45% - Operating result MEUR 0.5 (-1.1) - Operating result as percentage of net sales 1 (-4)% - Earnings per share EUR 0.01 (-0.01) - Operative cash flow MEUR -0.5 (-0.3) CEO ILKKA HIIDENHEIMO The year 2012 was a turning point in Stonesoft's history. We succeeded in our long-term strategic goal to finance our business with operating cash flow, despite strong investments in growth, and made a positive result for the full year.

During the fourth quarter of the year 2012 Stonesoft's product sales grew by almost 60% and net sales by approximately 41%. Once again, our product sales made an all-time record. The net sales for the full year were also record- breaking MEUR 40.1.

We invested and will continue to invest in making the growth continue by adding resources in sales and marketing organization as well as product development. We will extend our operations into new markets. We are actively seeking distribution and OEM partnerships with internet solution providers. We will continue to raise the competitiveness of our products in vertical sectors such as teleoperator and defense industries and strengthen the suitability of our products for channel partnership business, managed security service providers (MSSPs) and securing cloud services.

There is a growing need on the market for our software based security technology which uses standard hardware. In addition to the commercial success of our products we continued to succeed extremely well in various tests by leading independent test laboratories: among others, the NSS Labs tests prove that Stonesoft has unique competence and our products are among the best of today's rapidly developing security industry.

Our Evader testing tool, which is based on a relatively limited number of evasions, is still capable of passing every next generation firewall, UTM and IPS solution on the market, except Stonesoft's own security solutions. We will introduce an updated version of the Evader tool at the RSA conference in the US at the end of February.

Cyber security has been strongly visible in the media around the globe and Stonesoft has received a lot of publicity in this respect. However, we are dealing with a strategic level problem, to which there are no easy answers on the operational level. The traditional approach where strategy is directed via technology does not work. Based on Stonesoft's view, strategic level guidance is required to direct operations and technology choices.

The Winning Cyber Strategy 2013 top forum we arranged after the reporting period in January brought together leading cyber security experts from Finland and abroad. In the forum, cyber risks and threats were discussed, but also resilience, the opportunities brought by cyber security as well as cyber strategy insights. Cyber security concerns all of us and provides significant opportunities to both Stonesoft and the whole Finland. Our internationally unique cyber competence provides us with the possibility to become the world's leading experts in this demanding field. Numerous appearances and articles in the world's leading media such as the Economist, Frankfurter Allgemeine Zeitung and the New York Times have significantly strengthened the company's public recognition.

NET SALES AND RESULT October-December 2012 (hereinafter 'reporting period') The Group's net sales in the reporting period were MEUR 13.5 (9.5). Increase compared to the corresponding period in the previous year was MEUR 3.9, or 41%.

The operating result (EBIT) was MEUR 1.4 (0.3) and the result after taxes was MEUR 1.7 (0.4).

Product sales were MEUR 9.6 (6.1), growth by 58% compared to the corresponding quarter in the previous year.

The geographical distribution of net sales was as follows: Europe 67 (72) %, Emerging Markets (North Africa, Middle East and Latin America) 20 (11) %, North America) 12 (13) % and APAC (Asia-Pacific) 1 (4)%.

January-December 2012 (hereinafter 'fiscal period') The Group's net sales in the fiscal period were MEUR 40.1 (30.6). Increase compared to the corresponding period in the previous year was MEUR 9.5, or 31%.

The operating result (EBIT) was MEUR 0.5 (-1.1) and the result after taxes was MEUR 0.7 (-0.9).

Product sales were MEUR 25.6 (17.7), growth by 45% compared to the corresponding period in the previous year.

The geographical distribution of net sales was as follows: Europe 71 (69)%, Emerging Markets (North Africa, Middle East and Latin America) 15 (13)%, North America) 11 (15)% and APAC (Asia-Pacific) 2 (3)%.

FINANCE AND INVESTMENTS At the end of the fiscal year, Stonesoft's total assets were MEUR 27.0 (21.2).

The equity ratio was 39 (40) % and gearing (the ratio of net debt to shareholders' equity) was -1.48 (-1.99).

The comparable cash flow during the fiscal year was MEUR -0.5 (-0.3). The Group has no interest-bearing debt. The consolidated liquid assets at the end of the fiscal year totalled MEUR 7.2 (7.7).

The Group has in its 2012 financial statements temporary differences accumulated in taxation consisting of 44.5 MEUR (69.6) losses and 18.6 (0) MEUR internal goodwill deductable in taxation as well as deferred depreciation 25.9 MEUR in 2012 (19.3). 14.6 MEUR of the accumulated taxable losses will expire in 2013 and the rest in the years 2014-2017. In accordance with IAS 12.34-35, the Group has booked no tax receivables. It is in the company's interest to aim at utilizing the taxable losses.

Investments in tangible and intangible assets totalled MEUR 1.0 (0.6).

DEVELOPMENT OF BUSINESS OPERATIONS AND STRATEGY In November 2012 Stonesoft published the company's updated strategy and goals for the years 2013-2014. The strategy is based on strong growth in the rapidly growing security market and divided into cyber security-, customer-, product-, channel-, and marketing strategies, each of which supports growth. After the reporting period the company published clarifications to its updated strategy.

The company's budgeted net sales for 2013 are MEUR 60 and the net sales target set in the strategy for the year 2014 is approximately MEUR 90. To support this, the company will enter several new markets during 2013 and actively develop partner business.

MAIN BUSINESS EVENTS Main business events in 2012 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.

In February Stonesoft 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.

In April Stonesoft announced its firewall solution has received the IPv6 certification of the US-based ICSA Labs as well as met the U.S. National Institute of Standards and Technology's USGv6 evaluation requirements.

In April Stonesoft announced it has joined the IBM company Q1 Labs' Security Intelligence Partner Program (SIPP).

In May Stonesoft appointed Jarno Limnéll, Doctor of Military Science, as Director, Cyber Security. Mr. Limnéll's main areas of responsibility are issues related to cyber security, including cyber security strategies and partnerships.

In July Stonesoft released the new Evasion Prevention System (EPS) and Evader, the world's first software-based testing tool that empowers organizations to test their network security solutions' ability to withstand advanced evasion techniques (AETs).

In August Stonesoft announced its IPS-1302 had received excellent results in the NSS Labs Intrusion Prevention Systems (IPS) Test.

In August Mr. Mika Yletyinen was appointed Vice President, Europe and Global Channel and a member of the Executive Management Team at Stonesoft Corporation.

In August Stonesoft announced the market research firm Gartner, Inc. had placed it in the Visionaries Quadrant of its report, "Magic Quadrant for Intrusion Prevention Systems (IPS)".

In September Stonesoft introduced the new software (version 5.4). The company's flagship product, the Stonesoft Security Engine 5.4, now offers improved security against Advanced Evasion Techniques (AETs).

In November, Stonesoft published its updated strategy for the years 2013-2014.

Aiming at rapid growth, the strategy is divided into cyber security-, customer-, product-, channel-, and marketing strategies, each of which supports growth.

In December Stonesoft launched the new next generation Stonesoft MIL-320 firewall/VPN appliance, which provides military-grade security also in extreme conditions.

In December Stonesoft signed a cooperation agreement with the Algerian Ministry of Post and Information & Communication Technologies (MPTIC) to raise awareness and knowledge about cybercrime and to provide academic security training in Algeria.

In December Stonesoft segregated its post sales technical support by selling it to its newly founded, fully owned subsidiary Stonesoft Global Support Ltd. The new company will from now on perform the technical support services offered to Stonesoft's customers as a subcontractor.

Main events after the fiscal period In January Stonesoft published advance information on the Q4 and full year 2012 product sales and net sales as well as clarifications to its updated strategy.

In February Stonesoft introduced two new appliance models, the Stonesoft 1035 and 1065 appliances.

In February Stonesoft received the highest "Recommended" rating for the Stonesoft FW-1301 in NSS Labs' Network Firewall Group test.

Estimate Stonesoft estimates the above-mentioned operations and achievements to secure the company's competitiveness in the future.

RESALES CHANNEL The company sales are mainly conducted through an international resales channel.

RESEARCH AND DEVELOPMENT Stonesoft's R&D operations are located in Finland, France and Poland. At the end of the year 2012, R&D employed in total 104 (85) persons. The company's R&D investments during the fiscal period totalled MEUR 7.5 (6.1).

R&D costs represented 23 (22) % of all expenses. R&D costs represented 19 (20) % of net sales.

Product tests, certifications and patents In January Stonesoft Firewall network security solution obtained the CSPN (Certification de Sécurité de Premier Niveau) certification delivered by ANSSI (French Network and Information Security Agency) in France.

In February Stonesoft Firewall/VPN product family received the Common Criteria Evaluation Assurance Level 4+ (EAL4+) certification, an independent international security standard for IT Security products. The EAL 4+ is the highest assurance level existing commercial products can achieve.

In March Stonesoft received the highest (Recommend) rating for the Stonesoft FW- 1301 in NSS Labs' Next Generation Firewall (NGFW) Group test.

In April Stonesoft Firewall solution met the U.S. National Institute of Standards and Technology's USGv6 evaluation requirements. And Stonesoft was certified by Q1 Labs, an IBM company and global provider of security intelligence solutions, for its Security Intelligence Partner Program (SIPP).

The integration of Stonesoft solutions with IBM's QRadar Security Intelligence Platform open protocols allows for more powerful correlation of security and application layer event data, facilitating customer solution deployments.

In August NSS Labs confirmed that the Stonesoft IPS-1302 provides 100 % protection against all tested evasion techniques and low total cost of ownership (TCO) during real-world traffic and threat scenarios. In NSS Labs' Intrusion Prevention Systems (IPS) Test, Stonesoft also demonstrated excellent stability and reliability. Stonesoft was positioned in the "Visionaries" Quadrant of Gartner's Magic Quadrant for Intrusion Prevention Systems.

Stonesoft was granted one (1) patent during the year. The patent was related to firewall personalization.

Most significant product launches In January Stonesoft introduced IPS-1302 for demanding Web and encrypted traffic inspection.

In February Stonesoft introduced its transformable Security Engine concept.

Stonesoft Security Engine is the first security solution where the customers can choose the platform, capacity and product configuration based on their needs.

Security Engine can act as a traditional and/or next generation firewall (NGFW), traditional and/or next generation intrusion prevention systems (IPS/NGIPS), layer-2 firewall, VPN or UTM product.

The Security Engine's configuration or protection level can be changed according to changes in the network or business environment. For example, the security solution can be changed from the Next Generation Firewall (NGFW) role to Next Generation IPS (NGIPS) role fast and without additional costs.

In July Stonesoft released the new Evasion Prevention System (EPS) and Evader, the world's first software-based testing tool that empowers organizations to test their network security solutions' ability to withstand advanced evasion techniques (AETs).

In September Stonesoft introduced the new software (version 5.4) as well as the 3206 and 5206 high performance appliances with real-world application traffic throughput over 100Gbps.

In December Stonesoft announced the new Stonesoft MIL-320 Next Generation Firewall/VPN appliance that provides military-grade network security in a rugged go-anywhere unit.

DEVELOPMENT OF SHARE PRICES AND TURNOVER Stonesoft's share value at the beginning of the fiscal year on January 1, 2012 was EUR 0.86 (0.58). At the end of the fiscal year on December 31, 2012, the share price was EUR 1.39 (0.86). The highest share price was EUR 1.78 (0.97), and the lowest EUR 0.87 (0.41). The total annual turnover of Stonesoft shares amounted to MEUR 28.8 (11.1) and 21.4 (16.8) million shares, which is 33.5 (26.5) % of the total amount of shares. Based on the share price on December 31, 2012, Stonesoft's market capitalization was MEUR 88.7 (54.6).

SHARE CAPITAL AND STOCK OPTION PROGRAMS At the end of the fiscal year on December 31, 2012, Stonesoft's share capital recorded in the Trade Register totalled EUR 1,150,574.64 (1,150,574.64). The number of shares at the end of the fiscal year corrected by share issue was 65 052 195 (64 328 315). The weighted average value of the numbers of shares corrected by share issue was 63 617 591 (63 316 427). 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 number of shares recorded in the Trade Register on 31 December 2012 totalled 63.801.732.

The shares of the company have been connected to the book-entry securities system maintained by Euroclear Finland Ltd, which maintains the official shareholder register of the company. The shares of the company are rated on the small company list with the trade identification SFT1V in the NASDAQ OMX Helsinki Ltd.

The company has 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 the Stock Option Program 2012, under which the total number of stock options is 4 500 000 at the maximum. The subscription price for the 2012A option rights based on Option Program 2012 is 1.42 euros per share. The subscription price for the stock options 2012B and 2012C will be determined based on the conditions of the Option Program 2012 later. At the end of the year 2012, in total 2 251 250 option rights had been granted from the Stock Option Program 2008, of which 573 000 had been registered as shares. 785 000 option rights had been granted from the Option Program 2012, of which according to the option conditions none have been registered as shares yet. 748 750 option rights have still not been granted from the program 2008 and 3 715 000 from the program 2012. At the end of the fiscal period, in total 1 057 000 shares could be subscribed based on Option Program 2008-2014, which is 1.7% of the company's current number of shares and voting rights. No subscriptions were possible in 2012 based on the program 2012. Based on the option programs directed to the company's key personnel, 309 250 subscriptions were made based on the 2008 program.

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.

SHAREHOLDERS At the end of 2012, the company had 6 272 (6 091) shareholders. Nominee registered holdings represented 6.1 (6.0)% of the share capital at the end of 2012.

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, 2012, the members of the Board of Directors, the CEO and the entities under their control held a total of 22,277,657 shares of the company.

These represented 34.9% of the shares and the voting rights. The stock option rights held by the members of the Board of Directors on December 31, 2012 entitled them to a subscription of 77,500 shares.

PROPOSAL BY THE BOARD OF DIRECTORS FOR DISTRIBUTION OF PROFIT The operating result of the parent company was MEUR 18.8. 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 profit be credited to the Profit/Loss account.

AUTHORIZATIONS OF THE BOARD OF DIRECTORS The Annual General Meeting of Shareholders (AGM) held on April 25, 2012 decided 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 2013 AGM. This authorization supersedes the authorization given by the AGM in the previous year.

The company does not have its own shares and the Board of Directors is not authorized to purchase the company's 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 April 25, 2012 elected six (6) members to the Board of Directors. Ilkka Hiidenheimo, Harri Koponen, Jukka Manner, Timo Syrjälä and Hannu Turunen were re-elected as a Board member and Satu Yrjänen was elected as a new Board Member. In its statutory meeting held on April 25, 2012, the Board elected Hannu Turunen as Chairman of the Board and Harri Koponen as Vice Chairman. In addition, Hannu Turunen, Harri Koponen and Timo Syrjälä were elected as members of the Audit Committee.

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 2012, 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, Mikael Nyberg, Mika Jalava, Ari Vänttinen and as of August Mika Yletyinen.

In 2012, authorized public accountants Ernst & Young Oy acted as Stonesoft's auditor and authorized public accountant Bengt Nyholm as the auditor in charge.

The compensation of the CEO CEO Ilkka Hiidenheimo has not accepted any compensation for his services during 2012, The CEO's pension is the same as for all the company's employees, as defined in Finland's Employee Pension Act (TYEL). The service contract for the CEO provides for notice period of six (6) months prior to termination, with compensation being equal to six (6) 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.

The CEO has been granted option rights, in total 70 000 pcs from Option Program 2008 and 140 000 pcs from Option Program 2012.

ACQUISITIONS AND CHANGES IN GROUP STRUCTURE In December Stonesoft segregated its post sales technical support by selling it to its newly founded, fully owned subsidiary Stonesoft Global Support Ltd.

No external acquisitions were made during the fiscal year.

FOREIGN REPRESENTATIVE OFFICES The Group has at the end of the fiscal year representative offices in Algeria, China, Saudi Arabia and UAE.

PERSONNEL At the end of the fiscal year, the Group's personnel totalled 251 (222) people, of which 221 (189) were employees and 30 (33) had contractual relationships as full-time sales representatives or consultants.

The geographical distribution of Stonesoft personnel based on the new segment reporting at the end of the fiscal period was Europe, 205 (176), Emerging markets (North Africa, Middle East and Latin America) 15 (16), North America 25 (21) and APAC (Asia and Pacific) 6 (9).

The salaries and other remuneration paid to the employees, including social security payments, were in total MEUR 19.9 (16.7).

The average number of personnel during the fiscal period was 237 (207).

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 subcontractors.

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 STATEMENT The Audit Committee of Stonesoft Corporation's Board of Directors will review and approve the Corporate Governance Statement. Stonesoft Corporation's Corporate Governance Statement will be issued separately from The Board of Director's report and published in the Annual Report 2012.

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 June 2010. A more detailed description of the Corporate Governance principles of Stonesoft Corporation is available at the corporate website (www.stonesoft.com).

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.

RISKS AND BUSINESS UNCERTAINTIES There have been no significant changes in the risk scenario with respect to Stonesoft.

The need of companies and authorities to protect themselves against network attacks and cyber threats will increase significantly. The global economical crisis has negative impact on total demand.

The biggest risk factors of the company's operations are related to operational and financial risks as well as securing and managing critical data and infrastructure.

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 are made mainly through global channel partners, using standardized Stonesoft agreements.

The company keeps a buffer stock for sales to ensure rapid delivery and to be able to meet unexpected peak demands. The sales operations are supported by the company's 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 of cash funds 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 cash reserves are invested in interest bearing instruments. The company's profits and related costs are under continuous control.

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 actively utilizes its own products in order to protect the network infrastructure of the company. The company has back-up systems to ensure business continuity also in a state of emergency.

During the fiscal year 2013, Stonesoft's main risks and business uncertainties relate to the realization timetable of the sales projects and possible production disruption of our subcontractors and suppliers. Stonesoft has no risks related to the order book, because it normally can process incoming orders within a couple of work days.

Stonesoft's risk management and its principles are discussed more extensively at the company website and in the Annual Report.

FUTURE OUTLOOK In 2012, the network security market grew by approximately 10%, and based on estimates by various sources the growth level of the total market will remain at 5-15% during the year 2013. For example, Gartner has estimated that the network security market, without any support or other services, will reach USD 9 Billion in 2013.

Stonesoft's comprehensive product offering meets the rapidly developing and changing security challenges, including the demands brought by cloud services, virtualization and outsourcing of security.

Advanced evasion techniques Stonesoft's freely downloadable Evader testing tool provides organizations with the possibility to see in their own environment that advanced evasion techniques are able to bypass all except Stonesoft's security systems.

Due to incorrect technology choices, many competitors have great difficulties in amending their solutions to provide protection against AETs now and in the future.

Stonesoft has received the highest possible status in the Next Generation Firewall, Intrusion Prevention System as well as the latest Network Firewall Group tests of the independent research company NSS Labs. In addition, the research company Gartner had positioned Stonesoft as a visionary in both its IPS and Firewall Magic Quadrants. In the IPS Magic Quadrant Stonesoft is the only company who has received the visionary status.

Cyber security Stonesoft's active participation in the current discussion about cyber security has brought the topic also to the awareness of the larger audience. Stonesoft is a pioneer in cyber security and will maintain its thought leadership in the market according to its strategy.

Estimate Based on Stonesoft's view, these issues will continue to have a positive impact on the company's net sales and profitability and will strengthen its competitiveness and market position.

The company's budgeted net sales for 2013 is MEUR 60 and the net sales target set in the strategy for the year 2014 is approximately MEUR 90. To support this, the company will enter several new markets during 2013 and actively develop partner business.

While the company is aiming for strong growth, the operating profit (EBIT) for the first quarter of the year is expected to be negative and the operating profit for the full year to improve compared to the previous year.

With regard to the development of the turnover and the operating result, variation is expected between the quarters in comparison to the corresponding quarter during the previous year as well as to the previous quarter as a consequence of, among others, long sales cycles and the relatively big impact of individual deals on the development of net sales and operating result.

SUMMARY OF FINANCIAL STATEMENTS AND NOTES JANUARY 1 - DECEMBER 31, 2012 ACCOUNTING PRINCIPLES This Financial Statement Release has been prepared in accordance with the IAS 34 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 2012. Key indicator calculations remain unchanged.

The figures presented in this release are audited.

Stonesoft Group Income Statement 10-12/2012 10-12/2011 1-12/2012 1-12/2011 (1000 Euros) Net sales 13 458 9 540 40 127 30 604 Other operating income 231 281 950 904 Materials and services -2 834 -1 946 -7 658 -5 240     Personnel expenses -5 620 -4 598 -19 885 -16 665 Depreciation -171 -115 -624 -479 Other operating expenses -3 662 -2 910 -12 459 -10 262 Operating result 1 402 251 451 -1 137 Financial income and expenses 117 97 257 358 Result before taxes 1 519 348 709 -779 Taxes 178 16 -23 -138 Result for the accounting period 1 697 364 685 -917 Other comprehensive income Exchange differences on translating foreign operations -3 7 5 -3 Total other comprehensive income -3 7 5 -3 Total comprehensive income 1 693 371 691 -920 Basic earnings per share (EUR), continuing operations 0,03 0,01 0,01 -0,01 Diluted earnings per share (EUR), continuing operations 0,03 0,01 0,01 -0,01 Stonesoft Group Balance Sheet  (1000 Euros) 31.12.2012 31.12.2011 ASSETS Non-Current Assets Tangible assets 1 008 700 Intangible assets 233 162 Other investments 10 10     Total 1 251 872 Current assets Inventories 2 282 1 508 Trade and other receivables 16 187 10 847 Prepayments 102 220 Marketable securities 4 343 0 Cash and cash equivalents 2 848 7 710     Total 25 761 20 285 Total assets 27 012 21 157 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent company     Share capital 1 151 1 151     Issue of shares 12 0     Share premium account 76 602 76 602     Conversion differences -949 -954     Reserve for invested unrestricted equity fund 4 751 4 732     Retained earnings -76 696 -77 659     Total   4 871 3 873 Long-term liabilities     Prepayments            *) 5 025 3 157     Total 5 025 3 157 Short-term liabilities     Trade and other payables                   7 466 5 563     Prepayments            *) 9 526 8 381     Tax liability 68 126     Provisions 56 58     Total 17 116 14 127 Total liabilities 22 141 17 285 Total equity and liabilities 27 012 21 157 *) Prepayments contain customers advance payment of support and maintenance contracts 14 551 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 -3 0 -917 -920 Reserve for invested unrestricted  equity fund reduction 0 0 0 0 -71 71 0 Transaction costs from equity 0 0 0 0 -1 0 -1 Stock options exercised 0 0 0 0 54 0 54 Stock option expenses 0 0 0 0 0 173 173 Shareholders' equity at 31.12.2011 1 151 0 76 602 -954 4 732 -77 659 3 873      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 0 685 691 Reserve for invested unrestricted  equity fund reduction 0 0 0 0 -70 70 0 Transaction costs from equity 0 0 0 0 -4 0 -4 Stock options exercised 0 12 0 0 93 0 105 Stock option expenses 0 0 0 0 0 208 208 Shareholders' equity at 31.12.2012 1 151 12 76 602 -949 4 751 -76 696 4 871 Stonesoft Group Cash flow statement (1000 Euros) 1.1.-31.12.2012 1.1.-31.12.2011 Cash flow from operating activities    Operating Result 451 -1 137    Adjustments     Non-cash transactions 172 334     Financial expenses -77 -106     Financial incomes 245 445    Change in net working capital -264 904    Taxes paid -234 -218 Total cash flow from operating activities 294 221 Cash flow from investing activities    Investments in tangible assets -868 -460    Investments in intangible assets -135 -120 Total cash flow investing activities -1 003 -581 Cash flow from financing activities    Stock options exercised 101 53 Total cash flow from financing activities 101 53 Change in cash and cash equivalents    Cash and cash equivalents at beginning of period 7 710 8 016    Conversion differences 0 1    Changes in the market value of investments 89 0 Total cash and cash equivalents at end of period  *) 7 191 7 710 *) Total cash and cash equivalents at end of the period contains pledged securities 711 496 Stonesoft Group Geographical segments 1.1.-31.12.2012 1.1.-31.12.2011 (1000 Euros) Net sales    Europe 28 588 20 979    Emerging Markets 6 073 3 926    Americas 4 517 4 656    APAC 949 1 043 Total net sales 40 127 30 604 Operating profit    Europe 1 612 150    Emerging Markets 573 -352    Americas -1 544 -650    APAC -190 -286 Total operating profit 451 -1 137 Stonesoft Group Contingent liabilities 1.1.-31.12.2012 1.1.-31.12.2011 (1000 Euros) Contingent off-balance sheet    Non-cancellable other leases 1 428 1 970    Contingent liabilities for the Company 339 223 Stonesoft Group Quarterly development Q4 / Q3 / Q2 / Q1 /   Q4 / Q3 / Q2 / Q1 / (Euro Millions) 2012 2012 2012 2012 2012 2011 2011 2011 2011 2011 Software 1,0 0,5 0,5 0,6 2,6 0,8 0,4 0,4 0,4 2,1 Security appliances 8,7 5,1 4,9 4,3 23,0 5,3 4,2 2,9 3,2 15,6 Services 3,9 3,7 3,6 3,4 14,5 3,4 3,3 3,2 3,0 12,8 Other products 0,0 0,0 0,1 0,0 0,0 0,1 0,1 0,0 -0,1 0,1 Net sales continuing operations 13,5 9,3 9,1 8,3 40,1 9,5 8,0 6,5 6,5 30,6    Change-% from previous year 41 16 40 27 31 27 43 29 6 26 Sales margin 10,6 7,6 7,4 6,8 32,5 7,6 6,7 5,6 5,4 25,4 Sales margin % 79 82 81 82 81 80 83 87 83 83 Operative expenses 9,4 7,8 8,0 7,6 32,9 7,6 6,7 6,7 6,4 27,3 Operating profit (EBITA) 1,4 0,1 -0,4 -0,6 0,5 0,3 0,2 -0,7 -0,8 -1,1    % of net sales 10 1 -5 -7 1 3 2 -12 -13 -4 Result before taxes 1,5 0,0 -0,4 -0,5 0,7 0,3 0,2 -0,7 -0,6 -0,8    % of net sales 11 0 -6 -6 2 4 3 -11 -10 -3 Stonesoft Group Key ratios 1.1.-31.12.2012 1.1.-31.12.2011 (1000 Euros) Net sales 40 127 30 604    Net sales change-% 31 26 Operating result 451 -1 137    % of net sales 1 -4 Operating result before taxes 709 -779    % of net sales 2 -3 ROE - %, annualized 16 -22 ROI - %, annualized 18 -16 Equity ratio-% 39 40 Net gearing -1,48 -1,99 Total Assets 27 012 21 157 Capital expenditure 1 003 581 Capital disposals 0 0 R&D costs 7 476 6 131    % of net sales 19 20 Number of employees (weighted average) 237 207 Number of employees (end of the period) 251 222 Share Specific Ratios Earnings per share 0,01 -0,01 Equity per share 0,07 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 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 for the upcoming development. 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 8 February, 2013 at 10.30 am at the Stonesoft headquarters, street address Itälahdenkatu 22 A, 00210 Helsinki.

ANNUAL REPORT 2012 AND ANNUAL GENERAL MEETING 2013 Stonesoft's Annual Report 2012, which includes the audited Financial Statements, will be published at the company's website www.stonesoft.com on week 12.

Stonesoft's General Meeting of the Shareholders will be held on Wednesday 10 April 2013 at 3.00 pm.

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 STONESOFT CORPORATION FINANCIAL STATEMENTS RELEASE FOR JAN DEC 2012: http://hugin.info/120212/R/1676482/546439.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (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#1676482]

[ Back To Technology News's Homepage ]

OTHER NEWS PROVIDERS







Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2014 Technology Marketing Corporation. All rights reserved | Privacy Policy