Stonesoft Corporation Stock Exchange Release 25 October 2013 at 9:15 a.m.
STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-SEPTEMBER 2013
INTEGRATION WITH MCAFEE IS ONGOING
Stonesoft's product sales grew by 14% and net sales grew by 13% compared to the
corresponding period in the previous year. Operating result was MEUR -0.4. The
holding of Stonesoft's largest shareholder, McAfee Suomi Funding LLC ("McAfee"),
in Stonesoft exceeded 90 % in June, and as a result of exceeding nine-tenths
(9/10) of the shares and voting rights in Stonesoft, McAfee initiated redemption
proceedings for the remaining Stonesoft shares held by minority shareholders
pursuant to the Finnish Companies Act with the intention of delisting Stonesoft
shares by the end of 2013. On 9 October 2013, Stonesoft submitted a delisting
application to the NASDAQ OMX Helsinki Ltd.
The comparable figures from the corresponding period in the previous year are in
brackets.
July-September 2013
- Net sales MEUR 10.5 (9.3), growth 13%
- Product sales MEUR 6.4 (5.6), growth 14%
- Operating result MEUR -0.4 (0.1)
- Operating result as percentage of net sales -4 (1)%
- Earnings per share EUR -0.01 (0.00)
- Operative cash flow MEUR -1.2 (-1.8)
- Liquid cash funds at the end of the fiscal period MEUR 4.5 (7.2).
January-September 2013
- Net sales MEUR 28.4 (26.7), growth 7%
- Product sales MEUR 16.5 (16.0), growth 3%
- Operating result MEUR -10.4 (-1.0)
- Operating result as percentage of net sales -37 (-4)%
- Earnings per share EUR -0.17 (-0.02)
- Operative cash flow MEUR -2.7 (-0.5)
CEO ILKKA HIIDENHEIMO
The combination of Stonesoft and McAfee provides our customers the benefits of
McAfee's global presence and sales organization of over 2,200 employees, best-
in-class threat research and technology synergies. Combined, we believe we can
offer our customers a world class product portfolio with world-class support.
With Stonesoft's innovative technology that can be deployed as an appliance, as
software or virtually, customers will be positioned to meet the high-performance
needs of demanding, secure, distributed networks today and in the future. Recent
incidents have shown that the need for high quality security is growing and we
believe this will continue to have a strong impact on the sales of security
solutions.
NET SALES AND RESULT
July-September 2013 (hereinafter 'reporting period')
The Group's net sales during the reporting period were MEUR 10.5 (9.3). Increase
compared to the corresponding period in the previous year was MEUR 1.2, or 13%.
The operating result (EBIT) was MEUR -0.4 (0.1) and the result after taxes was
MEUR -0.5 (-0.0).
Product sales were MEUR 6.4 (5.6), increased by 14% compared to the
corresponding quarter in the previous year.
The geographical distribution of net sales was as follows: Europe 61 (76)%,
Emerging Markets (North Africa, Middle East and Latin America) 18 (11)%, North
America 19 (10)% and APAC (Asia-Pacific) 2 (3)%.
January-September 2013 (hereinafter 'fiscal period')
The Group's net sales during the fiscal period were MEUR 28.4 (26.7). Increase
compared to the corresponding period in the previous year was MEUR 1.8, or 7%.
The operating result (EBIT) was MEUR -10.4 (-1.0) and the result after taxes was
MEUR -10.6 (-1.0).
The expenses during the fiscal period included approximately MEUR 5.1 direct
costs related to the McAfee acquisition process. Indirect costs effects are
estimated to have been approximately MEUR 1.3. The process has had a negative
impact on sales.
Product sales were MEUR 16.5 (16.0), increase by 3% compared to the
corresponding period in the previous year.
The geographical distribution of net sales was as follows: Europe 68 (73)%,
Emerging Markets (North Africa, Middle East and Latin America) 15 (13)%, North
America 15 (11)% and APAC (Asia-Pacific) 2 (3)%.
FINANCE AND INVESTMENTS
At the end of the fiscal period, Stonesoft's total assets were MEUR 22.4 (21.0).
The equity ratio was -70 (36)% and gearing (the ratio of net debt to
shareholders' equity) was -0,10 (-2.39).
The comparable cash flow during the fiscal period was MEUR -2.7 (-0.5). The
Group has interest-bearing debt from McAfee Suomi Funding LLC MEUR 5.0 (0.0).
The consolidated liquid assets at the end of the fiscal period totalled MEUR
4.5 (7.2).
Investments in tangible and intangible assets totalled MEUR 0.4 (0.8).
DEVELOPMENT OF BUSINESS OPERATIONS
Main business events during the fiscal period
In August, Stonesoft held an extraordinary general meeting, whereby the number
of the members of the Board of Directors was confirmed to be three (3). The
following members were elected to the Board: Mr. Daniel F. Vaughn, Mr. Louis
Riley and Mr. John Kearns.
In September, Mr. Anders Gottnersson was appointed as Stonesoft's Chief
Financial Officer and member of the Management Team as of 2 September 2013.
Main business events after the fiscal period
In October, Stonesoft submitted an application to terminate the trading in the
Stonesoft shares and to delist all the Stonesoft shares from the official list
of NASDAQ OMX Helsinki Ltd. as soon as possible upon McAfee gaining title to all
the shares in Stonesoft.
RESEARCH AND DEVELOPMENT
Investments in R&D during the fiscal period totalled MEUR 7.2 (5.5). This
represented 20 (23)% of operating expenses.
R&D employed 123 (97) 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 64 090 482. 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 and
Stock Option Program 2012. Additional information about both option programs is
provided by the company's stock exchange releases and web pages.
During the fiscal period 288 750 company shares were registered based on the
stock option programs.
Related to the tender offer process, McAfee has purchased all granted option
rights.
DEVELOPMENT OF SHARE PRICES AND TURNOVER
At the start of the fiscal period on 1 January 2013, the price of Stonesoft
share was EUR 1.39 (0.86). At the end of the fiscal period on 30 September 2013
the price was EUR 4.47 (1.56). The highest price was EUR 4.50 (1.78) and the
lowest EUR 1.41 (0.87). During the fiscal period the total turnover of Stonesoft
shares amounted to MEUR 365.9 (23.8) and 86.6 (17.6) million shares, which is
135.1 (27.7)% of the total amount of the shares. Based on the share price at the
end of the fiscal period on 30 September 2013 Stonesoft's market value was MEUR
286.5 (99.3).
The company gave 11 notices of change of ownership during the fiscal period.
MCAFEE'S VOLUNTARY PUBLIC TENDER OFFER AND RELATED REDEMPTION PROCEEDINGS
The final result of the voluntary public tender offer by McAfee Inc.'s
subsidiary McAfee Suomi Funding LLC was published on 25 June 2013, and according
to it the shares tendered represented approximately 95.26 per cent of the shares
and votes in Stonesoft. McAfee further extended the offer period by a subsequent
tender offer period. As a result of the tender offer and the subsequent tender
offer period the shares validly tendered represented approximately 97.93 per
cent of all the shares and votes in Stonesoft. In addition by using the
tendered option rights for the subscription of Stonesoft shares McAfee has the
possibility of increasing its holding to approximately 98.00 per cent of all the
shares and voting rights in Stonesoft.
The trades of the voluntary public tender offer were executed on 27 June, 2013,
and the ownership to the shares was transferred to McAfee on 2 July, 2013 upon
the settlement of the trades. The trades of the subsequent tender offer period
were settled on 22 July 2013.
McAfee's intention is to acquire all the shares in Stonesoft. Therefore it has
commenced the compulsory redemption proceedings for the remaining shares in
Stonesoft pursuant to chapter 18 of the Finnish Companies Act. On 4 July 2013
McAfee filed an application to the redemption board of the Finland Chamber of
Commerce to initiate the arbitral proceedings in the redemption matter and to
request the nomination of the arbitrator to the proceedings. 11 September 2013
the redemption board nominated professor (emeritus) Risto Nuolimaa as the sole
arbitrator in the arbitral proceedings.
In addition, pursuant to the redemption board's application the district court
of Helsinki appointed 9 August 2013 Mr. Joakim Rehn, APA as a trustee to
supervise the interests of the minority shareholders of Stonesoft in the
redemption proceedings.
The arbitrator shall decide upon the existence of the redemption right as well
as the redemption price for the shares that are subject to the arbitral
proceedings.
In conjunction with the progress of the arbitral proceedings, it is the
intention of McAfee to have Stonesoft delisted from the Nasdaq OMX Helsinki
stock exchange as soon as practically possible. Therefore, Stonesoft's Board of
Directors submitted on 9 October 2013 an application to Nasdaq OMX Helsinki Ltd.
to terminate the trading in the Stonesoft shares and to delist all the Stonesoft
shares from the official list of Nasdaq OMX Helsinki Ltd as soon as McAfee has
gained title to all the shares of Stonesoft.
ACQUISITIONS AND CHANGES IN GROUP STRUCTURE
Due to the public tender offer made by McAfee, Stonesoft Corporation has become
a group company of McAfee Group.
PERSONNEL
At the end of the fiscal period, the Group's personnel totalled 289 (240).
SHORT-TERM RISKS AND BUSINESS UNCERTAINTIES
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. 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
2012.
FUTURE OUTLOOK
Through the public tender offer made by McAfee Suomi Funding LLC, McAfee's
ownership in Stonesoft Corporation's shares has risen over 95 %. Due to the
significant changes caused by this, the company does not give any future outlook
at this stage.
SUMMARY OF FINANCIAL STATEMENTS AND NOTES JANUARY 1 - SEPTEMBER 30, 2013
Stonesoft Group
Income Statement 7-9/2013 7-9/2012 1-9/2013 1-9/2012 1-12/2012
(1000 Euros)
Net sales 10 544 9 319 28 426 26 668 40 127
Other operating income 307 219 1 223 719 950
Materials and services -1 638 -1 669 -4 691 -4 824 -7 658
Personnel expenses -5 688 -4 708 -18 238 -14 265 -19 885
Depreciation -169 -160 -521 -453 -624
Other operating expenses -3 767 -2 949 -16 626 -8 796 -12 459
Operating result -410 51 -10 427 -951 451
Financial income and expenses -27 -7 -41 141 257
Result before taxes -438 43 -10 468 -810 709
Taxes -46 -82 -123 -201 -23
Result for the accounting period -483 -39 -10 590 -1 011 685
Other comprehensive income
Other comprehensive income to be
reclassified to profit or loss
in subsequent periods:
Exchange differences on
translating foreign operations 0 2 -24 9 5
Total other comprehensive income 0 2 -24 9 5
Total comprehensive income -484 -36 -10 614 -1 003 691
Basic earnings per share (EUR),
continuing operations -0,01 0,00 -0,17 -0,02 0,01
Diluted earnings per share
(EUR),
continuing operations -0,01 0,00 -0,17 -0,02 0,01
Stonesoft Group
Balance Sheet (1000 Euros) 30.9.2013 30.9.2012 31.12.2012
ASSETS
Non-Current Assets
Tangible assets 908 1 033 1 008
Intangible assets 256 138 233
Other investments 10 10 10
Total 1 174 1 181 1 251
Current assets
Inventories 3 051 1 918 2 282
Trade and other receivables 13 500 10 467 16 187
Prepayments 168 160 102
Marketable securities 852 5 697 4 343
Cash and cash equivalents 3 647 1 543 2 848
Total 21 217 19 784 25 761
Total assets 22 392 20 965 27 012
EQUITY AND LIABILITIES
Equity attributable to equity holders of the
parent company
Share capital 1 151 1 151 1 151
Issue of shares 0 0 12
Share premium account 76 602 76 602 76 602
Conversion differences -973 -945 -949
Reserve for invested unrestricted equity
fund 4 809 4 718 4 751
Retained earnings -86 439 -78 496 -76 696
Total -4 850 3 029 4 871
Long-term liabilities
Prepayments *) 5 510 4 203 5 025
Total 5 510 4 203 5 025
Short-term liabilities
Other current financial liabilities 5 000 0 0
Trade and other payables 6 640 5 133 7 466
Prepayments *) 9 927 8 361 9 526
Tax liability 80 155 68
Provisions 84 84 56
Total 21 731 13 733 17 116
Total liabilities 27 241 17 935 22 141
Total equity and liabilities 22 392 20 965 27 012
*) Prepayments contain customers advance
payment of support and maintenance contracts 15 438 12 563 14 551
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
1.1.2012 1 151 0 76 602 -954 4 732 -77 659 3 873
Comprehensive -1
income 0 0 0 9 0 -1 011 003
Reserve for
invested
unrestricted
equity fund
reduction 0 0 0 0 -70 70 0
Transaction
costs from
equity 0 0 0 0 -2 0 -2
Stock options
exercised 0 0 0 0 57 0 57
Stock option
expenses 0 0 0 0 0 104 104
Shareholders'
equity at
30.9.2012 1 151 0 76 602 -945 4 718 -78 496 3 029
Reserve
Issue for invested
Share of Share Conversion unrestricted Retained
capital shares premium differences equity fund earnings Total
Shareholders'
equity at
1.1.2013 1 151 12 76 602 -949 4 751 -76 696 4 871
Comprehensive -10
income 0 0 0 -24 -10 590 614
Reserve for
invested
unrestricted
equity fund
reduction 0 0 0 0 -26 26 0
Transaction
costs from
equity 0 0 0 0 -3 0 -3
Stock options
exercised 0 -12 0 0 87 0 75
Stock option
expenses 0 0 0 0 0 821 821
Shareholders'
equity at -4
30.9.2013 1 151 0 76 602 -973 4 809 -86 439 850
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-30.9.2013 1.1.-30.9.2012 1.1.-31.12.2012
Cash flow from operating
activities
Operating Result -10 427 -951 451
Adjustments
Non-cash transactions 1 552 195 172
Financial expenses -110 -65 -77
Financial incomes 111 209 245
Change in net working capital 1 591 897 -264
Taxes paid -88 -47 -234
Total cash flow from operating
activities -7 371 239 294
Cash flow from investing
activities
Investments in tangible
assets -355 -739 -868
Investments in intangible
assets -89 -22 -135
Total cash flow investing
activities -444 -761 -1 003
Cash flow from financing
activities
Proceeds from borrowings 5 000 0 0
Stock options exercised 71 55 101
Total cash flow from financing
activities 5 071 55 101
Change in cash and cash
equivalents
Cash and cash equivalents at
beginning of period 7 191 7 710 7 710
Conversion differences 0 0 0
Changes in the market value
of investments 52 -3 89
Total cash and cash equivalents
at end of period *) 4 499 7 240 7 191
*) Total cash and cash
equivalents at end of the period
contains pledged securities 699 512 711
Stonesoft Group
Geographical segments 1.1.-30.9.2013 1.1.-30.9.2012 1.1.-31.12.2012
(1000 Euros)
Net sales
Europe 19 293 19 547 28 588
Emerging Markets 4 406 3 444 6 073
Americas 4 230 2 917 4 517
APAC 496 760 949
Total net sales 28 426 26 668 40 127
Operating profit
Europe -5 734 760 1 612
Emerging Markets -1 362 -144 573
Americas -3 174 -1 412 -1 544
APAC -157 -154 -190
Total operating profit -10 427 -951 451
Stonesoft Group
Contingent liabilities 1.1.-30.9.2013 1.1.-30.9.2012 1.1.-31.12.2012
(1000 Euros)
Contingent off-balance sheet
Non-cancellable other leases 2 004 1 530 1 428
Contingent liabilities for
the Company 368 223 339
Stonesoft Group
Related party information 1.1.-30.9.2013 1.1.-30.9.2012 1.1.-31.12.2012
(1000 Euros)
McAfee Inc.
Sales 261 0 0
Receivables 261 0 0
Liabilities 84 0 0
McAfee Suomi, LLC
Liabilities 5 094 0 0
Stonesoft Group
Quarterly development Q3 / Q2 / Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2013 2013 2013 2012 2012 2012 2012 2012
Software 0,9 0,7 0,6 1,0 0,5 0,5 0,6 2,6
Security appliances 5,5 4,1 4,8 8,7 5,1 4,9 4,3 23,0
Services 4,0 4,1 3,8 3,9 3,7 3,6 3,4 14,5
Other products 0,1 -0,2 0,0 0,0 0,0 0,1 0,0 0,0
Net sales continuing operations 10,5 8,6 9,2 13,5 9,3 9,1 8,3 40,1
Change-% from previous year 13 -5 12 41 16 40 27 31
Sales margin 8,9 7,3 7,5 10,6 7,6 7,4 6,8 32,5
Sales margin % 84 85 81 79 82 81 82 81
Operative expenses 9,6 15,6 10,1 9,4 7,8 8,0 7,6 32,9
Operating profit (EBITA) -0,4 -7,8 -2,2 1,4 0,1 -0,4 -0,6 0,5
% of net sales -4 -91 -23 10 1 -5 -7 1
Result before taxes -0,4 -7,9 -2,1 1,5 0,0 -0,4 -0,5 0,7
% of net sales -4 -91 -23 11 0 -6 -6 2
Stonesoft Group
Key ratios 1.1.-30.9.2013 1.1.-30.9.2012 1.1.-31.12.2012
(1000 Euros)
Net sales 28 426 26 668 40 127
Net sales change-% 7 27 31
Operating result -10 427 -951 451
% of net sales -37 -4 1
Operating result before taxes -10 468 -810 709
% of net sales -37 -3 2
ROE - %, annualized -130 456 -39 16
ROI - %, annualized -530 -28 18
Interest bearing liabilities 5 000 0 0
Equity ratio-% -70 36 39
Net gearing -0,10 -2,39 -1,48
Total Assets 22 392 20 965 27 012
Capital expenditure 444 761 1 003
Capital disposals 0 0 0
R&D costs 7 225 5 520 7 476
% of net sales 25 21 19
Number of employees (weighted
average) 272 233 237
Number of employees (end of the
period) 289 240 251
Share Specific Ratios
Earnings per share -0,17 -0,02 0,01
Equity per share -0,08 0,05 0,07
Dividend 0,00 0,00 0,00
Dividend per share (EUR) 0,00 0,00 0,00
Dividend / Profit-% 0 0 0
Calculation of
indicators
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
Basis of preparation
The Interim Report has been prepared in accordance with the IAS 34 Interim
Reports standard, and therefore it is not reflective of Stonesoft's results as
reported as a part of McAfee Inc.'s parent company Intel Corporation's
consolidated financial statements that are prepared in accordance with U.S.
GAAP.
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 2012. 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 unaudited.
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 CANCELLED
Stonesoft will not hold a separate press conference about the interim report.
For additional information, please contact:
Ilkka Hiidenheimo, CEO, Stonesoft Corporation
Tel. +358 9 476 711
E-mail: ilkka.hiidenheimo@stonesoft.com
Anders Gottnersson, CFO, Stonesoft Corporation
Tel. +358 9 476 711
E-mail: anders.gottnersson@stonesoft.com
Stonesoft Corporation
Ilkka Hiidenheimo
CEO
This stock exchange release and the presentation material related to this report
are also available at the Stonesoft web site www.stonesoft.com.
Distribution:
NASDAQ OMX Helsinki Ltd
www.stonesoft.com
[HUG#1737989]
Stonesoft Oyj :STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-SEPTEMBER 2013
| Source: Stonesoft
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