Stonesoft Corporation Stock Exchange Release 9 August 2013 at 9:15 a.m.
STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-JUNE 2013
A NEW ERA HAS BEGUN - STONESOFT HAS BECOME A PART OF INTEL MCAFEE
Stonesoft Corporation's product sales declined by -12 % and net sales declined
by -5 % compared to the corresponding period in the previous year. Operating
result was MEUR -7.8.
The comparable figures from the corresponding period in the previous year are in
brackets.
April-June 2013
- Net sales MEUR 8.6 (9.1), down by -5%
- Product sales MEUR 4.8 (5.4), down by -12%
- Operating result MEUR -7.8 (-0.4)
- Operating result as percentage of net sales -91 (-5)%
- Earnings per share EUR -0.13 (-0.01)
- Operative cash flow MEUR -2.6 (-0.1)
- Liquid cash funds at the end of the fiscal period MEUR 5.7 (9.1). The
corporate had no interest-bearing debts.
January-June 2013
- Net sales MEUR 17.9 (17.3), growth 3%
- Product sales MEUR 10.1 (10.4), down by -2%
- Operating result MEUR -10.0 (-1.0)
- Operating result as percentage of net sales -56 (-6)%
- Earnings per share EUR -0.16 (-0.02)
- Operative cash flow MEUR -1.5 (1.4)
CEO ILKKA HIIDENHEIMO
In the second quarter of the year 2013, McAfee Suomi Funding LLC ("McAfee") made
a voluntary public tender offer to purchase all of the issued and outstanding
shares and option rights in Stonesoft. McAfee is the world's largest dedicated
security technology company and a wholly-owned subsidiary of Intel. Intel is a
world leader in computing innovation, with its common stock listed on the NASDAQ
Global Select Market under the symbol INTC.
On 15 July McAfee announced it owns approximately 97.93 per cent of all the
shares and votes in Stonesoft. McAfee has initiated compulsory redemption
proceedings for the remaining Stonesoft shares under the Finnish Companies Act.
Stonesoft Corporation is expected be delisted from the NASDAQ OMX Stock Exchange
probably during the year 2013.
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. With
respect to recent indicents the need for high quality security has grown even
more and we believe this will continue to have a strong impact on the sales of
security solutions.
NET SALES AND RESULT
April-June 2013 (hereinafter 'reporting period')
The Group's net sales in the fiscal period were MEUR 8.6 (9.1). Decline compared
to the corresponding period in the previous year was MEUR -0.5, or -5%. The
operating result (EBIT) was MEUR -7.8 (-0.4) and the result after taxes was MEUR
-7,9 (-0.4).
The expenses in the reporting period included approximately MEUR 4.7 direct
costs related to the McAfee acquisition process. Indirect cost effects are
estimated to have been approximately MEUR 0.6. The process has had a clear
negative impact on sales.
Product sales were MEUR 4.8 (5.4), change -12% compared to the corresponding
quarter in the previous year.
The geographical distribution of net sales was as follows: Europe 75 (76)%,
Emerging Markets (North Africa, Middle East and Latin America) 10 (10)%, North
America 13 (10)% and APAC (Asia-Pacific) 2 (4)%.
January-June 2013 (hereinafter 'fiscal period')
The Group's net sales in the fiscal period were MEUR 17.9 (17.3). Increase
compared to the corresponding period in the previous year was MEUR 0.5, or 3%.
The operating result (EBIT) was MEUR -10.0 (-1.0) and the result after taxes was
MEUR -10.1 (-1.0).
The expenses in the fiscal period included approximately MEUR 4.9 direct costs
related to the McAfee acquisition process. Indirect costs effects are estimated
to have been approximately MEUR 0.7. The process has had a clear negative impact
on sales.
Product sales were MEUR 10.1 (10.4), down by -2% compared to the corresponding
period in the previous year.
The geographical distribution of net sales was as follows: Europe 72 (72)%,
Emerging Markets (North Africa, Middle East and Latin America) 14 (14)%, North
America 12 (11)% and APAC (Asia-Pacific) 2 (3)%.
FINANCE AND INVESTMENTS
At the end of the fiscal period, Stonesoft's total assets were MEUR 22.0 (21.7).
The equity ratio was -72 (36)% and gearing (the ratio of net debt to
shareholders' equity) was 1.30 (-3.02).
The comparable cash flow during the fiscal period was MEUR -1.5 (1.4). The Group
has no interest-bearing debt. The consolidated liquid assets at the end of the
fiscal period totalled MEUR 5.7 (9.1).
Investments in tangible and intangible assets totalled MEUR 0.4 (0.6).
DEVELOPMENT OF BUSINESS OPERATIONS
Main business events in the fiscal period
In April the Stonesoft 3202 appliance received the "recommend" status in the
latest Next Generation Firewall test by the world's leading independent network
security research and analyst organization NSS Labs.
In May Stonesoft and McAfee, Inc. entered into a combination agreement under
which they agreed to combine the operations of Stonesoft and McAfee. In order to
effect the combination, McAfee Suomi Funding LLC, an affiliate of McAfee and a
wholly-owned indirect subsidiary of Intel Corporation, made a voluntary public
tender offer to purchase all of the issued and outstanding shares and option
rights in Stonesoft that are not owned by Stonesoft or any of its subsidiaries.
In June the Stonesoft FW-315 appliance obtained the ICSA Labs Enterprise
Firewall Certification.
In June Stonesoft introduced the new Stonesoft Security Engine platform and
Stonesoft Management Center version 5.5.
In June McAfee announced the final result of the tender offer and extended the
offer period by a subsequent order period.
Main business events after the fiscal period
In July McAfee announced the final result of the subsequent tender offer period.
As McAfee's ownership in Stonesoft has exceeded nine-tenths (9/10) of the shares
and voting rights in Stonesoft through the tender offer, McAfee has initiated
compulsory redemption proceedings for the remaining Stonesoft shares under the
Finnish Companies Act.
In July Stonesoft published a notice to the extraordinary general meeting on 13
August 2013.
In August Stonesoft announced it had cancelled the press conferences scheduled
for 9 August and 25 October 2013.
RESEARCH AND DEVELOPMENT
Investments in R&D during the fiscal period totalled MEUR 4.7 (3.8). This
represented 18 (24)% of operating expenses.
R&D employed 104 (98) 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
In the beginning of the fiscal period on January 1, 2013, the price of Stonesoft
share was EUR 1.39 (0.86). At the end of the fiscal period on 30 June 2013 the
price was EUR 4.48 (1.09). 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 357.7 (17.6) and 84.8 (13.5) million shares, which is 132.3
(21.2)% of the total amount of the shares. Based on the share price at the end
of the fiscal period on June 30, 2013 Stonesoft's market value was MEUR 287.1
(69.4).
The company gave 11 notices of change of ownership during the fiscal period.
ACQUISITIONS AND CHANGES IN GROUP STRUCTURE
Due to the public tender offer made by McAfee, Stonesoft Corporation has become
a daughter company of McAfee.
PERSONNEL
At the end of the fiscal period, the Group's personnel totalled 271 (234).
ANNUAL GENERAL MEETING AND AUTHORIZATIONS OF THE BOARD OF DIRECTORS
The Annual General Meeting (AGM) of Stonesoft Corporation held after the fiscal
period on April 10, 2013 confirmed the financial statements of the fiscal year
1.1.2012-31.12.2012 and granted release from liability for the members of the
Board of Directors and the Chief Executive Officer (CEO). AGM decided that no
dividends are paid for the fiscal year 2012.
The AGM re-elected Ilkka Hiidenheimo, Harri Koponen, Jukka Manner, Timo Syrjälä,
Hannu Turunen and Satu Yrjänen as Board members.
The Board of Directors did not use the authorization granted by the previous AGM
that expired at the end of the AGM 2013. The AGM decided on 10.4.2013 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 2014 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 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 - JUNE 30, 2013
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 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.
Stonesoft Group
Income Statement 4-6/2013 4-6/2012 1-6/2013 1-6/2012 1-12/2012
(1000 Euros)
Net sales 8 638 9 095 17 882 17 350 40 127
Other operating income 474 231 917 500 950
Materials and services -1 321 -1 696 -3 053 -3 155 -7 658
Personnel expenses -6 546 -4 769 -12 550 -9 556 -19 885
Depreciation -181 -151 -353 -293 -624
Other operating expenses -8 913 -3 137 -12 860 -5 847 -12 459
Operating result -7 848 -427 -10 016 -1 001 451
Financial income and expenses -36 51 -13 148 257
Result before taxes -7 884 -376 -10 030 -853 709
Taxes -7 -59 -77 -120 -23
Result for the accounting period -7 892 -436 -10 107 -973 685
Other comprehensive income
Other comprehensive income to be
reclassified to profit or loss
in subsequent periods:
Exchange differences on
translating foreign operations -21 1 -24 6 5
Total other comprehensive income -21 1 -24 6 5
Total comprehensive income -7 912 -434 -10 131 -966 691
Basic earnings per share (EUR),
continuing operations -0,13 -0,01 -0,16 -0,02 0,01
Diluted earnings per share
(EUR),
continuing operations -0,12 -0,01 -0,16 -0,02 0,01
Stonesoft Group
Balance Sheet (1000 Euros) 30.6.2013 30.6.2012 31.12.2012
ASSETS
Non-Current Assets
Tangible assets 974 995 1 008
Intangible assets 277 151 233
Other investments 10 10 10
Total 1 261 1 156 1 251
Current assets
Inventories 2 672 1 345 2 282
Trade and other receivables 12 197 9 973 16 187
Prepayments 182 125 102
Marketable securities 0 0 4 343
Cash and cash equivalents 5 686 9 075 2 848
Total 20 738 20 518 25 761
Total assets 21 998 21 674 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 -972 -948 -949
Reserve for invested unrestricted equity
fund 4 809 4 708 4 751
Retained earnings -85 955 -78 509 -76 696
Total -4 366 3 004 4 871
Long-term liabilities
Prepayments *) 5 375 4 029 5 025
Total 5 375 4 029 5 025
Short-term liabilities
Trade and other payables 10 316 5 197 7 466
Prepayments *) 10 533 9 229 9 526
Tax liability 65 138 68
Provisions 76 77 56
Total 20 990 14 640 17 116
Total liabilities 21 998 21 674 22 141
Total equity and liabilities 25 852 21 860 27 012
*) Prepayments contain customers advance
payment of support and maintenance contracts 15 908 13 258 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
income 0 0 0 6 0 -973 -966
Reserve for
invested
unrestricted
equity fund
reduction 0 0 0 0 -70 70 0
Transaction
costs from
equity 0 0 0 0 0 0 0
Stock options
exercised 0 0 0 0 46 0 46
Stock option
expenses 0 0 0 0 0 53 53
Shareholders'
equity at
30.6.2012 1 151 0 76 602 -948 4 708 -78 509 3 004
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 0 -10 107 131
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 0 901 901
Shareholders'
equity at -4
30.6.2013 1 151 0 76 602 -972 4 809 -85 875 286
Stonesoft Group
Cash flow statement (1000 Euros) 1.1.-30.6.2013 1.1.-30.6.2012 1.1.-31.12.2012
Cash flow from operating
activities
Operating Result -10 016 -1 001 451
Adjustments
Non-cash transactions 1 140 96 172
Financial expenses -89 -35 -77
Financial incomes 76 183 245
Change in net working capital 7 710 2 682 -264
Taxes paid -34 -29 -234
Total cash flow from operating
activities -1 214 1 895 294
Cash flow from investing
activities
Investments in tangible
assets -275 -556 -868
Investments in intangible
assets -87 -20 -135
Total cash flow investing
activities -362 -576 -1 003
Cash flow from financing
activities
Stock options exercised 71 46 101
Total cash flow from financing
activities 71 46 101
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 0 0 89
Total cash and cash equivalents
at end of period *) 5 686 9 075 7 191
*) Total cash and cash
equivalents at end of the period
contains pledged securities 684 521 711
Stonesoft Group
Geographical segments 1.1.-30.6.2013 1.1.-30.6.2012 1.1.-31.12.2012
(1000 Euros)
Net sales
Europe 12 811 12 439 28 588
Emerging Markets 2 564 2 392 6 073
Americas 2 214 2 026 4 517
APAC 293 493 949
Total net sales 17 882 17 350 40 127
Operating profit
Europe -5 767 88 1 612
Emerging Markets -1 487 -166 573
Americas -2 641 -793 -1 544
APAC -121 -130 -190
Total operating profit -10 016 -1 001 451
Stonesoft Group
Contingent liabilities 1.1.-30.6.2013 1.1.-30.6.2012 1.1.-31.12.2012
(1000 Euros)
Contingent off-balance sheet
Non-cancellable other leases 1 668 1 626 1 428
Contingent liabilities for
the Company 368 223 339
Stonesoft Group
Quarterly development Q2 / Q1 / Q4 / Q3 / Q2 / Q1 /
(Euro Millions) 2013 2013 2012 2012 2012 2012 2012
Software 0,7 0,6 1,0 0,5 0,5 0,6 2,6
Security appliances 4,1 4,8 8,7 5,1 4,9 4,3 23,0
Services 4,1 3,8 3,9 3,7 3,6 3,4 14,5
Other products -0,2 0,0 0,0 0,0 0,1 0,0 0,0
Net sales continuing operations 8,6 9,2 13,5 9,3 9,1 8,3 40,1
Change-% from previous year -5 12 41 16 40 27 31
Sales margin 7,3 7,5 10,6 7,6 7,4 6,8 32,5
Sales margin % 85 81 79 82 81 82 81
Operative expenses 15,6 10,1 9,4 7,8 8,0 7,6 32,9
Operating profit (EBITA) -7,8 -2,2 1,4 0,1 -0,4 -0,6 0,5
% of net sales -91 -23 10 1 -5 -7 1
Result before taxes -7,9 -2,1 1,5 0,0 -0,4 -0,5 0,7
% of net sales -91 -23 11 0 -6 -6 2
Stonesoft Group
Key ratios 1.1.-30.6.2013 1.1.-30.6.2012 1.1.-31.12.2012
(1000 Euros)
Net sales 17 882 17 350 40 127
Net sales change-% 3 33 31
Operating result -10 016 -1 001 451
% of net sales -56 -6 1
Operating result before taxes -10 030 -853 709
% of net sales -56 -5 2
ROE - %, annualized -8 002 -57 16
ROI - %, annualized -6 245 -47 18
Equity ratio-% -72 36 39
Net gearing 1,30 -3,02 -1,48
Total Assets 21 998 21 674 27 012
Capital expenditure 362 576 1 003
Capital disposals 0 0 0
R&D costs 4 730 3 785 7 476
% of net sales 26 22 19
Number of employees (weighted
average) 266 231 237
Number of employees (end of the
period) 271 234 251
Share Specific Ratios
Earnings per share -0,16 -0,02 0,01
Equity per share -0,07 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
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
Mikael Nyberg, CFO, Stonesoft Corporation
Tel. +358 9 476 711
E-mail: mikael.nyberg@stonesoft.com
Stonesoft Corporation
Ilkka Hiidenheimo
CEO
This stock exchange release and the presentation material related to this report
are also available at the Stonesoft web site www.stonesoft.com.
Distribution:
NASDAQ OMX Helsinki Ltd
www.stonesoft.com
[HUG#1721982]
Stonesoft Oyj :STONESOFT CORPORATION INTERIM REPORT FOR JANUARY-JUNE 2013
| Source: Stonesoft
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