Trading Update

RNS Number : 8238W

Corero Network Security PLC

06 February 2012

 



6 February 2012

Corero Network Security plc (AIM: CNS)

("Corero" or the "Group")

Trading update

Corero Network Security plc, the AIM listed network security and business software provider, is pleased to provide an update on trading for the year ended 31 December 2011.

Highlights:

·     Consolidated revenue for the year ended 31 December 2011 is expected to be approximately £11.0 million (2010: £3.0 million).

·     Consolidated operating profit before depreciation, amortisation, exceptional costs and financing expected to be above breakeven.

·     Cash of £4.3 million at 31 December 2011.

·     Significant post acquisition progress in the Corero Network Security business ("CNS") as the business has been repositioned through investments in product development and a new international sales organisation.  Sales order intake was up on the previous year.

·     Strong year-on-year performance in the Corero Business Systems business ("CBS").

Andrew Miller, Group Chief Operating Officer commented:

"Corero's businesses operate in markets with strong growth prospects.

"The network security market is forecast to continue to grow strongly fueled by escalating cyber crime and cyber war threats, economic disruption and associated costs as cyber attacks multiply, and growing security compliance and business continuity requirements.

"The education sector in the UK offers Corero an excellent opportunity for growth, particularly in light of the continuing trend for schools in England to convert to Academies.

"Corero Network Security and Corero Business Systems are well placed to capitalise on the opportunities in their respective markets and deliver growth with a strong sales pipeline of opportunities going into 2012."

Corero Network Security ("CNS"):

Corero's acquisition of Top Layer Networks, Inc. closed on 2 March 2011.  This defined the Company's strategy to build a network security technology business focused on delivering software and hardware solutions to mid-market commercial and enterprise customers and telecommunication service providers, through international channels. Top Layer was rebranded Corero Network Security in June 2011.

CNS sales order intake (being amounts invoiced during 2011, as opposed to amounts recognised as revenue) in the year ended 31 December 2011 was $12.0 million (£7.5 million) with an average value per customer of $47,000 (£29,000). This compared to $11.7 million (£7.6 million) in 2010 with an average value per customer of $32,000 (£21,000).  The slight increase in total order intake along with the increase in the average value per customer, was encouraging, particularly in the light of the restructuring of the US sales team post the acquisition and establishing the international team in the second half of 2011.  The 2011 order intake included 28 customers with an order value in excess of $100,000 (£62,000) representing an average value per customer of $220,000 (£137,000) (2010: 24 customers with an average value of $188,000 (£121,000).

CNS secured 78 new customers in 2011 with an average order value per customer of $57,000 (£36,000) adding new customers in its core vertical markets: finance and banking, education, defence, on-line gaming and e-Retail.  New customer wins include significant orders from: bwin (one of the world's largest on-line gaming companies); City of Baltimore; a leading spread betting and CFD provider; an award winning developer and publisher of online games; and Bridgepoint Education (an on-line & campus based Higher Education provider). Particularly pleasing was new business wins with major telecommunications service providers in France and Spain. 

In addition, material upgrade orders were secured from existing customers including Party Gaming (which was acquired by bwin in 2011); a Texas based clinical healthcare provider; one of the largest health insurance associations in the United States; one of the largest insurers in the United States; and an agency of the United States Department of Defense.

In 2011, CNS secured maintenance and Threat Update Service renewals of $2.8 million (£1.75 million) including material renewals from a leading US based insurer and one of the world's largest energy companies.

Other key achievements in the year include:

·     Management team reshaped with the appointment of new CEO, VP of Engineering, Chief Marketing Officer, VP Sales North America and VP of Finance.

·     Launch of DDoS Defence System ('DDS'), a network-layer and application-layer Distributed Denial of Service ('DDoS') defence product.

·     Launch of DDoS defence support services, SecureWatch Plus, a comprehensive suite of DDoS defence, configuration optimisation, monitoring and response services.

·     Significant new investment and progress made in growing the product development team.

·     Sales teams recruited in France, Italy, Malaysia, Spain and Taiwan. 

·     The rebranding of Top Layer to "Corero Network Security".

·     Licensing agreement with Kaspersky Lab, a leading developer of threat management solutions, to augment Corero's Intrusion Prevention ("IPS") solution.

·     Appointment of 31 new channel partners. 

·     100 IPS/DDS units shipped in Q4 2011 - a record quarter.

Corero Business Systems ("CBS"):

CBS, which operates as a stand-alone business, performed strongly in 2011 with sales order intake of £5.1 million up 50% over 2010 (2010: £3.4 million). 

It won contracts from 192 Academies in the 12 months ended 31 December 2011, compared with 70 in 2010, underlying its strong position in this growth market. In addition, despite the tight Public Sector spending environment, CBS won four new contracts with sixth form colleges in 2011. These included three colleges, St John Rigby in Wigan, Joseph Chamberlain in Birmingham and St Dominic's in Harrow for the Resource EMS solution, CBS' Learner Management Information System and one new college for its Resource Financials solution.

Other key achievements in the year include:

·     Reseller agreement signed with Serco Learning, part of FTSE 100 Serco plc.

·     Strategic partnerships with two schools and academy groups:

o  The School Partnership Trust, a Leeds based educational charity, awarded 'Accredited Schools Group Status' in 2010, with 20 schools and Academies.

o  The Kemnal Academies Trust, a Kent based multi-Academy Trust with 26 secondary and primary Academies, who are establishing one of the first new Teaching Schools.

·     Strengthening of the management team by appointment of Sales Director, HR Manager, Product Manager and Service Delivery Manager.

·     Additional sales talent recruited - sales team (including sales management) increased from 6 at 31 December 2010 to 10 at 31 December 2011. 

·     Launch of Resource Financials v7, CBS' next generation financial software solution

Outlook:

Significant progress has been made in the Corero Network Security business.  The reshaping of the business and building of the international sales team has taken time but is now coming together.  The business is well positioned to deliver stronger growth in 2012.

Corero Business Systems performed strongly 2011 and this is expected to continue into 2012. 

Corero will release preliminary results for the 12 months ended 31 December 2011 at the end of March 2012.

Enquiries:

Corero Network Security plc
Andrew Miller, Group Chief Operating Officer	Tel: [phone]
FinnCap
Charles Cunningham/Henrik Persson	Tel: [phone]
Walbrook PR	Tel: [phone]
Bob Huxford (Media Relations)	Mob: [phone] or [e-mail]
Fiona Henson (Media Relations)	Mob: [phone] or [e-mail]
Paul Cornelius (Investor Relations)	Mob: [phone] or [e-mail]

About Corero Network Security

Corero Network Security plc, is a software focused business with a leading position in its two markets: network security, and accounting and business management solutions. 

·      Corero Network Security is an international network security company and the leading provider of Distributed Denial of Service (DDoS) defence and Intrusion Prevention System (IPS) solutions. Corero's products and services provide comprehensive, integrated, high-performance protection against constantly evolving network-borne cyber threats. Customers include enterprises, service providers and government organisations worldwide. Corero's appliance-based solutions are highly adaptive and pre-emptively respond to modern cyber attacks, known and unknown, protecting critical information and online assets. Corero's products have superior performance, are highly scalable, and feature the lowest latency and best reliability in the industry

·      Corero Business Systems is a leading provider of powerful and dynamic modular accounting, human resources, payroll and learner management information software to the schools (including academies) and further education sectors in the UK and internationally.  

 

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