Clavister Holding AB (publ)
Company description ahead of listing on
NASDAQ OMX First North
May 2014
2 ◀ ▶ Content
Important information ...3
Background and motive ...4
A word from the CEO ...6
Market overview ...8
Description of the business ... 12
Financial overview ... 19
Shares, share capital and ownership ...22
Risk factors ...25
Board of Directors, executive management and auditors ...27
Legal issues and additional information ...30
Tax issues ...32
Articles of Association ...33
Definitions ...34
Important information ◀ ▶ 3 Important dates
First day of trading on First North: May 21, 2014
Share information for Clavister
Short name: CLAV ISIN code: SE0005308558
Dates for release of financial information*
Extra general meeting of shareholders: June 9, 2014
AGM: June 2014 Interim reports:
Jan– Jun 2014: August 26, 2014 Jan – Sep 2014: November 26, 2014 Annual report:
February 2015 AGM: April 2015
* The dates for the release of financial informa-tion and reports are subject to change but are kept up to date on the Company’s website www.clavister.com/ir.
First North is an alternative market that is operated by the various exchanges
within NASDAQ OMX. It does not have the same legal status as a regulated
market. Companies at First North are subject to the rules of First North and
not the legal requirements for admission to trading on a regulated market. An
investment in a company whose shares are traded on First North is more risky
than an investment in a company whose shares are traded on a regulated
market. All companies whose shares are admitted to trading on First North
have a Certified Advisor who monitors compliance with the rules. NASDAQ
OMX Stockholm approves applications for admission to trading on First North.
Definitions
References to “Clavister” or “the Company” refer to the group consisting of Clavister Holding AB (corporate ID no. 556917-6612) and its subsidiary Clavister AB (corporate ID no. 556546-1877) and the latter’s subsidiaries Clavister APAC Ltd (with head office in Hong Kong) and Clavister China Ltd (with head office in China) or Clavister Holding AB (publ.) separately, depending on the context. References to “First North” refer to NASDAQ OMX First North. References to “Company Description” refer to this Company Description, which has been prepared on account of Clavister’s listing on First North. References to “Euroclear Sweden” refer to Euroclear Sweden AB (corporate ID no. 556585-8074), and references to “Remium” refer to Remium Nordic AB (corporate ID no. 556101-9174).
Important information for investors
Every investor should carefully consider the information provided in the Company Descrip-tion, in particular the factors that are mentioned under the section entitled Risk Factors, which describes certain risks that are associated with an investment in Clavister. This Company Description has been prepared on account of the listing of the Company’s shares on First North. No new shares will be issued in conjunction with the listing, and no prospectus will be registered with Finansinspektionen (the Swedish Financial Supervisory Authority) on account of the listing. This Company Description does not represent an offer to acquire, subscribe to or in some way trade in shares or other securities in Clavister.
Future-oriented information
The Company Description contains future-oriented statements and assumptions regarding future market conditions, operations and results. These future-oriented statements are to be found in several sections of the Company Description and include statements regarding the Com-pany’s current intentions, assessments and expectations. Words such as ”feels”, ”intends”, ”assesses”, ”expects”, ”anticipates”, ”plans” and similar expressions are indications of some of these future-oriented statements. Other statements are identified on the basis of the context in question. Actual events and results/outcomes may differ significantly from the outcomes described by such future-oriented statements due to risks and other factors that affect the Company’s operations.
Information from third parties
The Company Description contains historical and future-oriented market information. When the information has been obtained from a third party, the Company is responsible for ensuring that the information provided is correct. To the best of the Company’s knowledge, no informa-tion has been provided in a manner that could make the informainforma-tion incorrect or misleading in relainforma-tion to the original sources of the informainforma-tion. However, Clavister has not verified figures, market data or other information that has been provided by third parties, and consequently the Company’s Board of Directors does not accept any responsibility for the completeness or accuracy of such information that is presented in the Company Description. Such information should therefore be read with this in mind.
4 ◀ ▶ Background and motive
Background and motive
Clavister is a Swedish company that develops, manufactures and sells
network security solutions for telecom operators and medium-sized
compa-nies. The Company’s solutions are based on proprietary, innovative software
with very powerful performance and high quality.
History
Clavister was founded in 1997 under the name EnterNet in Örnsköldsvik, Sweden as a consulting firm that worked with customised software development within customer sec-tors such as the defence industry and the public sector. Around the turn of the century the Company was involved in a number of Internet-related development projects, and within the framework for these projects a technology emerged that was to become the basis of Clavister’s security products.
In 2001 the Company’s Board of Directors decided to implement a change in strategy whereby the profitable consulting operations were completely disposed of and focus was instead placed on building up a pure product company with focus on security. At the same time the Company, which had 42 employees at the time, changed name to Clavister. During its first years as a product company Clavister gradually built up a commercial ver-sion of a firewall product aimed at small and medium-sized companies. In 2002 the Com-pany launched Clavister Firewall 8.0, which had a completely unique technical architecture and was the fastest firewall product of its kind on the market at the time. Since then Clavis-ter has continued to develop and expand its product range on an ongoing basis, and the Company’s product range currently consists of a wide product portfolio that also includes service packages and expert services.
The Company’s organisation currently consists of 105 employees, of which 40 work with research and development, 38 with sales and marketing, 15 with administration and 12 with customer support.
Market with tremendous potential
Security in general and network security in particular are areas that are constantly in focus. The balance between personal integrity and security and the balance between efficiency, flexibility and security are just some examples of the aspects that make the area a complex one. We live in a world where the continuous appearance of new technological advances and new ways of communicating requires increasingly advanced powerful network secu-rity solutions, without sacrificing efficiency, secusecu-rity or personal integsecu-rity.
There are no signs to suggest that the level of demand for network security will diminish. The demand for advanced network security solutions within the telecom area will increase dramatically in conjunction with the increasing implementation of the fourth generation mobile telephony network (4G/LTE). Traffic volumes are also increasing dramatically in con-junction with the increasing use of smart devices.
The Company’s potential
Clavister has a strong position within network security. The development of solutions for security within telecoms is an area that is showing strong potential, and it is within this area that the Company has a unique position, with the right technology, strong business alliances and a clear vision. The area of network security for medium-sized companies is also an area in which the Company is extremely well equipped, with a large existing customer base, a well-designed product portfolio and a strong business model that gen-erates business in both the short and long term. Synergy effects within both these areas also represent an attractive effect that further enhances the Company’s potential, and the Company’s financial status is good.
Background and motive ◀ ▶ 5
Background and motive
The Board of Directors feels that the Company has tremendous potential to be able to gain significant market share in both these areas and thus create significant value for its shareholders.
About the listing
The listing of Clavister on First North is a natural step in the development of the Company. Organised trading of the Company’s share will facilitate future financing and the share can also be used as a means of payment in conjunction with any future acquisitions. A listing on First North also has the potential to generate positive effects in relation to the media and the Company’s brand, further strengthen the Company’s market position and increase the Company’s possibilities when it comes to the recruitment of new employees.
Declaration from the Board of Directors
The Board of Directors for Clavister is responsible for the information in this Company Description, which has been prepared on account of the application for listing of the Company’s shares on First North. The Board of Directors hereby declares that, to the best of its knowledge, the information in this Company Description is correct and in agreement with actual conditions and that nothing has been omitted that could affect the meaning of such information.
Örnsköldsvik, May 5, 2014
Clavister Holding AB (publ) Board of Directors
6 ◀ ▶ A word from the CEO
A word from the CEO
Dear Shareholders,
It was in an almost painful manner that the enormous and rapidly increasing
need for security was exposed last year.
2013 brought with it numerous revelations about wiretapping scandals and the clearly evident lack of protection and security at companies and organisations; a problem that could, in fact, even be seen to affect entire countries and continents in certain cases. Edward Snowden made half the world take notice, and people began to comprehend the terrifying fragility of our digital systems. No one dares to even think what might happen if they collapse.
At the same time, communication traffic volumes are increasing at an astounding rate, not least due to the fact that an increasing number of people are being offered the opportunity to get connected. The whole process is further accelerated by the increasing number of users of smartphones and tablets and the operators’ transition from closed systems to the open Internet.
Furthermore, we are now seeing the arrival of intelligent cars, household appliances, alarms, training equipment and much more besides. The advent of these developments is also leading to increased inducements for the many parties who wish to find vulnerability in security measures. At the same time, it is now stronger forces that are behind many of today’s attacks.
Organised crime, intelligence services and competitors that undertake industrial espio-nage are just a few examples of the types of parties for whom network-related crime has become commonplace. In the more shady parts of the Internet there are markets for extremely sophisticated tools and services that are offered to the highest bidder; tools and services that turn the networks of companies and private individuals into easy targets for those who wish to intrude on them.
As a consequence, IT security has now become an extremely important issue for boards of directors, management teams and even governments; and as people are becoming increasingly risk-conscious, more and more companies and organisations are now also viewing security as a vital competitive factor.
This is where Clavister comes into the picture.
The significant developments that have taken place during recent times place us in a unique position on the market. Clavister is an independent Swedish company that devel-ops products and technology that only the very largest American suppliers can match. We have received confirmation of this on a number of occasions.
For example, in February 2014 – despite tough competition from Ericsson, Huawei, Sony Mobile and Hexatronic – Clavister was named “Technology Provider of the Year” at the annual telecom awards ceremony at the Grand Hotel in Stockholm. Furthermore, we recently received recognition for our close collaboration with Intel and a number of other high-profile and prestigious partners.
As a relatively small and independent company in comparison with the largest actors on the market, it is also of the utmost importance that our strategy and business model are crystal clear and that we utilise the important key advantages that we have over our competitors in the best possible manner. We are convinced that international sales collaborations with global actors are an absolute necessity for the achievement of commercial success. In summary, we believe that all the key pieces of the puzzle are now in place.
A word from the CEO ◀ ▶ 7
A word from the CEO
With the listing of Clavister on First North, we are now taking a significant next step in the Company’s development by creating an important financial platform for further growth. I am truly looking forward to an exciting period in the Com-pany’s history, with new challenges and opportunities to become a significant and well-positioned actor in our endeavours to be part of the creation of a more secure world.
Örnsköldsvik, May 5, 2014
Jim Carlsson, CEO
8 ◀ ▶ Market overview
Market overview
The market for network security and information security is large and growing
steadily. The explosive increase in network traffic due to the advent of smart
mobile devices and billions of connected units dramatically increases the
investment requirements and operating costs for mobile operators and
places stringent demands on availability and security. Cybercrime is a global
threat to individuals and companies, and terms like SDN, NFV, Small Cells
and Backhaul Security are becoming increasingly familiar.
Background
Why is information security needed? When you leave the office at the end of the day, you most likely activate the alarm system and lock the door to prevent unauthorised persons from breaking in and stealing equipment and other valuables. You probably store confiden-tial company documents in a safe or some form of lockable filing cabinet.
The same type of protection is also required in the digital world, in this case with the help of various methods such as firewalls, anti-virus protection and the encryption of text.
The aim of a well-functioning information security solution is to protect the company’s information about products, tenders and quotes, contracts and agreements and other dig-itally stored information. Without a well-functioning solution in place, the company runs the risk of being subject to unauthorised intrusion, the theft of sensitive company information, network downtime, service disruptions and even lost business deals as a consequence. A well-functioning information security solution also contributes to increased flexibility by enabling employees and partners to access the network when they are away on business trips or working from home, or by ensuring that branch offices have a well-functioning connection with the head office that is completely secure in terms of preventing unautho-rised persons from accessing the connection. A high level of security and smooth network access means that employees can use important information when they need it, which enables them to be productive even when they are working at locations other than their desks at the office.
Security from a global perspective
Security is one of the most highly prioritised areas for IT decision-makers these days. IT budgets are constantly growing, in particular when it comes to the area of information security. According to leading market institutes, the global market for information security products and services was worth more than 400 billion SEK in 2013 and is expected to pass 600 billion SEK in 2016. Information security is divided up into a number of smaller areas, of which the ”Next-Generation Firewall” market is one of the more interesting areas for Clavister, especially in relation to the target group consisting of medium-sized com-panies. Gartner1 estimates that the global market for virtual private networks (VPN) and firewalls will grow from 42 billion SEK in 2012 to 61 billion SEK in 2016, with a steady annual increase of over 9 per cent.
Market drivers
The combination of increasing amounts of information and increased dependency on well-functioning IT support within more or less all areas has created a changed risk profile to which all market actors must adapt. The majority of the information management in soci-ety these days takes place digitally, which also increases vulnerability.
The total amount of digital data doubles every other year and is expected to have increased tenfold by 2020, from 4.4 to 44 trillion gigabytes. This conclusion is stated in an annual study by the global company EMC, a world-leader within data storage systems and
infor-Market overview ◀ ▶ 9
Market overview
mation management. In addition to this general change in the risk profile there are also a number of distinct drivers that are all contributing to the rapidly accelerating need for network security:
New patterns of behaviour
For the general public, digital communication – which only truly arrived on the scene a few years ago – was initially mostly limited to routine Internet surfing from a desktop PC. The demands on availability and security at that time were rudimentary to say the least. These days we are seeing completely different patterns of behaviour in a society in which the use of smart mobile telephones and tablets has become a central aspect of everyday life. These devices have developed into more or less essential components of people’s working life and leisure time. Social media, film services, email and videoconferencing are just a few examples of services that people carry around “in their pocket” and which are expected to function whenever and wherever people need them.
Naturally, these new patterns of behaviour entail more stringent demands on security, partly in relation to the integrity perspective, with users expecting their information to be protected, and partly in relation to the availability perspective. Users are not loyal to their suppliers in the same way as previously, which means that a service provider must do everything in its power to maintain its service delivery and protect itself against attacks in order to prevent its customers from moving their business to other competitors.
Internet of Things (IoT)
It is not just communication between people that is driving the market for network security; possibly an even more influential market driver is the communication between different “devices”, something that is now popularly referred to as the “Internet of Things (IoT)”. Typ-ical examples of connected devices include remote electricity meters, surveillance cam-eras, remote control of “smart homes” etc. The automotive industry is also contributing to these developments with Internet-based communication to and from vehicles. A number of analysts and suppliers are in agreement about the fact that the number of connected devices on the Internet will increase dramatically; any difference in opinion has more to do with the question of whether this increase will involve tens of billions or hundreds of billions of devices. A report from IDG2 suggests that no less than 212 billion devices will be able to communicate with each other over the Internet by the year 2020.
In principle all communication between connected devices needs to be secured, and the more operationally critical the applications, the higher the priority that will be allocated to investments in security.
Growth in developing countries
An important factor that is contributing to global developments, and that also gives rise to potentially enormous amounts of data that need to be protected, is the growth of Internet access that is taking place in less well-developed areas of the world. At the Economic Development Forum in Davos in 2014, the world’s business leaders and politicians met to discuss the vulnerability of the global society. One conclusion from this forum was that a reduction in global poverty has taken place that is largely due to Internet-based communi-cation. An example of this development can be found in Brazil, where free Wi-Fi networks have been built in the slum areas with the aim of increasing knowledge and reducing poverty and exclusion.
Increased consolidation
There is a clear trend in society that many organisations are increasingly tending to aban-don the development and operation of their own systems and are instead utilising leased functions or services, something that has been introduced under names such as SaaS (Software-as-a-Service) or Cloud Services. These leased functions are characterised by the fact that the information is consolidated to central computing resources and the users
10 ◀ ▶ Market overview
Market overview
need to be continuously ”online” on the Internet in order to gain access to the services. Naturally, this high concentration of data and demands on availability of the data place stringent demands on the service provider to offer a very high level of security. It is often the lack of – or at least doubts about – security that is named as the primary reason why a business or organisation has not yet embraced the concept of cloud services.
Political drivers
In conjunction with the globally-reported scandal involving the NSA’s espionage and Edward Snowden’s revelations, a lot of focus was placed on American, Chinese and Israeli manufacturers of security products, since it was claimed that they are prone to leaving “backdoors” open to cyber attacks. This has led, among other things, to the Swedish parliament’s decision to expand the financial support provided to national programmes for the development of special equipment for cyber attacks. Another consequence is Brazil’s new legislative proposal whereby the use of American communications solutions in Brazilian governmental networks will be largely prohibited. Regardless of the extent to which such new laws and programmes gain a foothold, we deem it to be extremely likely that European suppliers of security products and solutions will benefit from the political situation on many markets for a long time to come.
Technological changes in the telecom networks
Networks for mobile telephony have traditionally been designed on the basis of technical standards that have been specific to the telecom area and have thus for natural reasons generated little interest outside of the telecom industry. Given the limited dissemination of knowledge within this area, the mobile networks have therefore been relatively spared from problems related to network security. However, in conjunction with the introduction of third generation mobile telephony (3G), and to an even greater extent as a result of the advent of today’s 4G networks, the mobile networks have undergone major technological changes whereby the earlier industry-specific standards have given way to more open standards based on Internet technologies. While this change has entailed many advantages, it has also brought with it the undesirable consequence that the telecom networks have now become targets for attacks and an important arena for cybercrime. The combination of the rapid growth in the number of mobile users and services and the mobile networks’ role as socially critical infrastructure means that the mobile operators have important motives for needing to invest in equipment for network security.
The market’s challenges and Clavister’s role
The need for capacity
The increasing demands from users on availability and capacity in the networks are creating entirely new challenges for the service providers who are expected to expand their networks at an increasingly fast rate in order to be able to meet the needs that exist. The comprehensive expansion of 4G/LTE networks that is taking place around the globe at present is just one of many investments being made by operators in an effort to keep up with increasing demand. According to Cisco3, the global mobile data traffic is expected to grow dramatically during the next few years and is forecast to reach almost 16 exabytes (or 16 billion gigabytes) per
month by 2018, an increase of almost 11 times the level of mobile data traffic in 2013. The average rate of annual growth (CAGR) for the period 2013 to 2018 is expected to be 61 per cent (see “Figure 1: Annual growth of mobile data traffic”).
Despite these enormous investments in 4G, the available capacity is still not sufficient due to the fact that the need for bandwidth is growing disproportionately quickly. This means that mobile operators need to find new solutions that complement the tradi-tional mobile radio networks. One of the latest solutions in response to this challenge is represented by “Small Cells” which can, in simple terms, be viewed as miniature mobile networks that are installed at airports, shopping centres, sporting arenas and other locations with many people.
A number of mobile operators have already started to deliver Small Cells in large volumes; according to Informa Telecoms & Media4, well-known operators such as Sprint and AT&T have delivered millions of Small Cells, and a number of actors are planning major network expansions of this nature. According to Informa Telecoms & Media5, the total annual growth in Small Cells is expected to amount to 137 per
Market overview ◀ ▶ 11
Market overview
cent between now and 2016 and is forecast to have meant the total delivery of more than 90 million Small Cells during this period (see “Figure 2: Rate of expan-sion of Small Cells”).
As can be seen in figure 2, the accelerating need for capacity is in itself a major challenge for the market, although the thing that makes the situation even more intricate is that the need for security is accelerating at the same rate. Traditional security products have primarily been developed to meet the needs of individual corporate customers, and consequently they do not have the properties, in the form of scalability and capacity, that are necessary in order to be able to address the operators’ needs. Clavister is well-equipped in this regard, with a technology that has fundamentally been designed to be very scalable, and many years’ expe-rience of developing products for the telecom segment. Through a clear focus on a software-based solution, Clavister is able to constantly position itself at the abso-lute cutting edge of technological developments and thus deliver the absoabso-lutely highest level of performance. Quicker digital communication paths are leading to equally stringent demands on the development of security solutions that are both scalable and customisable.
Tied-up capital and lock-in effects
An increased rate of investment also entails a high degree of undesired tied-up capital; telecom operators have traditionally been forced to make heavy investments in expensive hardware-based solutions in order to be able to expand their customer base. Consequently, with the advent of more stringent demands on profitability and flexibility, operators are starting to look for solutions that enable them to avoid tied-up capital and the lock-in effects that this entails and instead work with business models where initial investments are reduced to a minimum and costs are incurred on an ongoing basis in conjunction with an increase in revenues.
Terms like NFV (Network Functions Virtualization) and SDN (Software-Defined Networking) have become the industry’s answers to these needs and are aimed at making it possible for operators to build up their networks with software-based functions on cheaper standardised hardware platforms instead of expensive niche hardware solutions. The challenge that exists for the market is that the need already exists but the solutions being presented are still relatively immature and, in many cases, purely conceptual. However, Clavister has a major edge through its ability to deliver a solution that combines a very high degree of functionality and focus on software with virtualisation possibilities and a great deal of flexibility regarding business and licensing models.
Confidence in the security provider
In the aftermath of the “NSA and Snowden scandal”, many organisations are asking themselves the question “in the hands of which providers of security solutions can we in fact entrust our networks with confidence?” The public debate following the aforementioned scandal has been a brutal awakening for many organisations, and earlier truths are no longer equally obvious. When the choice of a security solution is to be made, the selection criteria no longer solely concern technical functionality and the supplier’s balance sheet; these days the choice of security provider has just as much to do with aspects such as origin, elements of open source code and the possibility to conduct an undistorted audit of development methods, architecture and source code.
An occurrence that further highlights the problems that exist is the serious vulnerability (a security bug that goes under the name “Heartbleed”) that was recently revealed in one of the software components that a large majority of suppliers use to secure web traffic. All of a sudden, a significant part of the Internet was vulnerable to this new attack, despite the fact that the customers had chosen solutions from large and well-established suppliers.
Clavister is one of few suppliers that can challenge the market by demonstrating a solution that: Has been designed and developed in Sweden
Has a minimal element of open source code
Has been rigorously tested under extreme loads and conditions Is open to audit by all customers
12 ◀ ▶ Description of the business
Description of the business
Important technological and commercial milestones
2002 2003 2005 2011 2014
Clavister launches Clavis-ter Firewall 8.0, the world’s fastest firewall product at the time, for a broader market.
Clavister demonstrates that the unique techno-logy that the Company has developed can pro-vide major comparative advantages in relation to competing products.
This product represents the start of a generation of software that is still being used by a large number of Clavister’s customers today.
Clavister fends off tough competition from the market leader for network security to sign its first OEM agreement with D-Link, the world’s second largest manufacturer of network equipment.
This agreement marks the beginning of a long commercial partnership through which large volumes of Clavister’s products reach a broad customer group through D-Link’s comprehensive distribution network, and D-Link’s market presence provides Clavister with good market knowledge.
Clavister signs a glo-bal agreement with the world’s largest telecom provider.
This agreement is an im-portant confirmation of the fact that Clavister and Clavister’s technology meet the telecom indu-stry’s extremely stringent demands on quality and functionality.
Through this collabora-tion, Clavister’s products are delivered to a num-ber of well-known mobile operators throughout the world.
Clavister strengthens its market position in Asia through the acquisition of the Chinese compa-ny Amaranten, which now goes by the name Clavister China.
Clavister enters into a collaboration with Intel and is included in Intel Network Builders6.
Clavister and Intel jointly demonstrate a prototy-pe of a “Small Cell Ga-teway”, based on Clavis-ter’s software and Intel’s hardware, at the Mobile World Congress, the world’s largest telecom fair, in Barcelona.
Clavister overcomes tough competition from Ericsson, Sony Mobile and Huawei to win the Technology Pro-vider of the Year award at the 2014 Swedish Tele-com Gala.
Clavister AB was founded in 1997 in Örnsköldsvik, Sweden. The Company develops, manufactures and sells network
security solutions for telecom operators and medium-sized companies.
Vision
Clavister’s vision is to establish itself as an obvious alternative for customers in need of products, solutions and technology within the area of network security.
Mission
Clavister’s mission is to play a part in the creation of a more secure society within electronic communication by providing effective and reliable solutions for network security.
Mål
Clavister’s goal is to establish itself as a leading supplier of products, solutions and technology within the area of network security on specific markets. The Company’s financial goal is to achieve a significant level of turnover with good profitability within the next couple of years. The Company’s goal for 2014-2015 is to establish a number of major commercial telecom and OEM projects with existing and new partners as well as strategic collaborations with individual actors and on a broader basis on selected markets.
Overall Strategy
Clavister shall create value for the Company’s customers, owners and other stakeholders by continually developing and refining the unique technology and the products that the Company has developed within network security. Clavister shall achieve commercial success with this technology on specific markets where the Company has strong comparative advantages in relation to its major international competitors. The market for network security is global and is experiencing strong growth. The key for Clavister when it comes to achieving international success lies in active sales collaborations with strong and dedicated partners, both internationally and locally.
Description of the business ◀ ▶ 13
Description of the business
Business model
Overall
Clavister works according to a two-part business model with sales to two selected customer groups: partly to the telecom segment, with mobile operators as the primary target group, and partly to medium-sized companies (see “Figure 3: Business model”). The aim of working with two parallel target groups is primarily to achieve a good balance between the business opportunities that entail short to medium sales cycles with small to medium order values, and the business opportunities that have long sales cycles with large order values as a consequence. Furthermore, there are major technologi-cal synergies between the customer groups, which creates an inter-esting dynamic for the Company.
Clavister works with an indirect sales model in relation to both cus-tomer groups, which means that there is some form of go-between in the chain between Clavister and the end customer. This go-be-tween usually handles everything from closing the deal and delivery to installation and support. The Company uses two different models for indirect sales; a more traditional model that is based on sales of complete and packaged products, and an OEM model whereby the Company’s technology is sold via license to global actors in need of network security as a component of their own product offers. Packaged product sales
When it comes to packaged product sales, Clavister works together with specialised distributors and system integrators who can derive benefit from their partnership with Clavister to differentiate their offers to end customers and thus increase their market shares. One example of such a system integrator is Mirait, a Japanese company with more than 7,000 employees, with which Clavister entered into a partnership agreement during the first quarter of 2014. Clavister
also uses its own resources to analyse the market with the aim of identifying and qualifying major business opportunities, which are then channelled through an appropriate partner for closure of the deal. A typical product sales deal involves one or several Clavister products in combination with support and maintenance agreements that are signed for a period of 3 to 5 years. These agreements include access to any bug fixes as well as new software versions from Clavister. Since security is an area in which products and solutions have a relatively short “shelf life”, most customers choose to extend their support and maintenance agreements, which enables the Company to gradually build up a large volume of recurrent support revenues with relatively high margins. A normal-sized product order results in sales revenues for Clavister of around SEK 50,000 to 200,000 after the distributor and reseller have shared 40-50 per cent of the margin, and around an additional SEK 10,000 to 40,000 in annual support revenues.
When it comes to packaged product sales, Clavister has a geographical focus on selected markets in Western Europe, more specifically Sweden, Germany, France, Holland and Italy, as well as a few countries in Asia, where the Company’s operations in China, with around twenty employees, form the basis for its activities in the region. The Company shall create profitability and growth on these existing markets before any additional geographical markets are addressed.
In 2013 Clavister received the “Global Product Quality Leadership Award for Enterprise Firewalls” from the global consulting firm Frost & Sulli-van. This provides yet more proof of the fact that Clavister delivers competitive solutions of high quality to a demanding market.
OEM sales
When it comes to OEM sales, the Company offers its technology via license to global actors in need of a security solution as a complement to their own product and/or service portfolio. This type of sales deal is characterised by the opportunity to achieve large volumes and significant margins, but at the same time it involves lead times that demand a great deal of perseverance and often also involves some form of additional customised product development. For these reasons Clavister only works with a small number of well-defined providers where the chances of achieving commercial success are deemed to be good and where technological synergies between the customers can be achieved.
Mid-sized Enterprise Telecom
clavister
software
Distributor
Reseller OEM Partner TEM/SI
14 ◀ ▶ Description of the business
Description of the business
Example of business deal for 4G/LTE security
The following example illustrates how a possible commercial deal for Clavister within the 4G/LTE area can appear.
A mobile operator with around 20,000 radio base stations (eNB) needs to add security functions to its network. It is calculated that each base sta-tion gives rise to network traffic with a load of 0.150 Gigabytes per second (Gbps). This equates to a total capacity requirement of 20,000 x 0.15 = 3,000 Gbps. Furthermore, the mobile operator chooses to create redundancy in the network in order to protect it against operating disruptions, which doubles the capacity requirement to 6,000 Gbps.
With Clavister’s solution the mobile operator has an investment in security that amounts to somewhere between $2,500 and $5,000 USD per Gbps, depending on the configuration and discount rates. For Clavister this deal means license revenues of somewhere between 15 and 30 million USD as well as additional revenues of around 1 to 2 million USD per year from support and maintenance agreements.
The main benefits for the mobile operator with Clavister’s solution include:
Clear cost saving compared with competing alternatives.
Software-centric solution – the operator does not need to make large investments in tailor-made hardware solutions but can instead invest in software licenses at the rate required.
Highest capacity of Commercial-off-the-Shelf (COTS) platforms – fewer products are needed to cover greater requirements.
A good example of a typical OEM customer is Taiwanese D-Link, one of the world’s largest manufacturers of network equipment that is pri-marily aimed at smaller companies and consumers. Clavister entered into an OEM/licensing agreement with D-Link at the end of 2003. This agreement makes to possible for D-Link to offer its focus market a complete series of security products under the name “D-Link NetDefend Series” through its international network consisting of thousands of distributors and resellers. For Clavister the agreement with D-Link means that the Company can sell its software in large volumes with high gross margins, without having to build up a global sales organisation itself. Another important benefit of collaborations with companies like D-Link is that Clavister is able to reach an extremely broad customer base and thus gain good insights into the latest trends on the security market and the demands that are being made on products and services as a result. The Company can then apply these experiences in order to ensure that it is always at the cutting edge of developments and thus maintain technological competitive advantages, not least in relation to customer groups (such as telecom) that are traditionally slow to embrace new trends.
Another good example of OEM sales is the licensing agreement that Clavister has entered into with one of the world’s largest telecom provid-ers. This agreement provides the Company with an opportunity to reach out globally with its technology to mobile operators that are increas-ingly investing in security solutions for their mobile networks.
Growth potential and synergies
Against the background of the general significant market growth in the area of security, and in combination with Clavister’s busi-ness model and technology, there is good reason to feel that the Company has the right conditions and potential for very strong growth in the future.
As previously mentioned, the various sales channels have both different growth potential and different sales lead times. For this reason the different channels complement each other and con-tribute in total to an interesting mix of cashflow and high growth potential. This growth potential per sales channel can be illus-trated conceptually (see “Figure 4: Development potential”). Packaged product sales to medium-sized corporate custom-ers through distributors and resellcustom-ers have the potential to grow somewhat quicker than the underlying market growth. It is primar-ily the Company’s ability to maintain, develop and communicate significant advantages over its competitors that will be crucial to the achievement of commercial success. One potentially limiting
factor is the speed with which Clavister can successfully address the issue of new resellers on existing and new geographical markets. The speed of this development will naturally be greatly dependent on the Company’s access to expansion capital.
Description of the business ◀ ▶ 15
Description of the business
Selling via OEM partners to medium-sized corporate customers creates conditions for a significantly quicker rate of growth with larger volumes as a result. The most important reason why this type of sales channel can contribute to higher growth is of course the fact that the OEM partners that are relevant to the Company already have an internationally established base of resellers and end customers, which means that Clavister can achieve a greater leverage effect in a shorter amount of time. Naturally it requires a larger investment initially in order to achieve a new OEM collaboration, with significant sales work and commercial and technical validation of prod-ucts and offers. This means that the lead times and costs associated with the establishment of new OEM contracts should not be underestimated and require Clavister to be extra thorough in its mapping of the potential OEM col-laborations that are most likely to provide a good return. The Company already has two existing commercial OEM agreements and is currently undertaking ongoing dia-logues and negotiations with a handful of potential new OEM partners.
On top of the potential available in relation to the cus-tomer group medium-sized companies we also have the
business opportunities that are provided within the telecom segment. Even here there are major opportunities for a very high rate of growth given the substantial volumes of products and licenses that are procured by mobile operators. Within the framework for the telecom area there are a number of different applications where security has become a key component and where Clavister has excellent opportunities to take a strong position. The factors that primarily point to success in this area are the extremely competitive technical platform that the Company provides in combination with the strategic expediency of procuring products and services from a software-focused, flexible and non-American supplier.
One of the current applications within the telecom area is security for 4G/LTE networks. As the 4G networks are expanded, mobile operators are experiencing an increasing need to lease transport networks from third parties for the communication between the base stations and the central parts of the mobile network. Since the operator does not own the entire infrastructure itself, security functions are needed in order to be able to guarantee integrity for the users, protect the operator’s equipment from attacks and provide the customers with an enhanced quality experience. Figure 5 shows an example of how a typical deal for Clavister can appear when a mobile operator needs to complement its existing 4G/LTE network with security (see “Figure 5: Typical 4G/LTE network”).
Technology
Clavister’s intangible assets primarily consist of the two software applications; Clavister cOS Core and Clavister cOS Stream. Clavister cOS Core is the Company’s first generation security software, which has been subject to further development on an ongoing basis since its initial release. This software is characterised by its extreme compactness in relation to its size, which is a result of the unique architecture and design behind the software’s development. This is important not least in terms of the cost for the customers, since a compact size entails a high degree of utilisation of the hardware on which the software is executed, thus reducing the need for expensive investments in hardware. Furthermore, the software has a very high level of functional content, thus facilitating a large number of areas of use.
Clavister cOS Stream is the Company’s next generation software, which utilises modern hardware to an even greater degree and thus deliv-ers a price/performance level that is industry-leading. As a consequence, this software is extremely well suited to areas of use where high capacity is a prerequisite, for example the area of security for 4G/LTE networks. At present Clavister cOS Stream has a somewhat lower level of functional content than Clavister cOS Core, and consequently it is the Company’s intention to make continued investments in the devel-opment of the software.
Third-Party L3 Transport Internet Third-Party L3 Transport Security Gateways Security Gateway eNB eNB eNB Security Gateway SGSN/MME PDN/GGSN Own L2 or L3 Transport GRX (L3 Transport) Own L2 or L3 Transport Own National L2/L3 Transport LEGEND IPsec Communication SMALL CELL eNB BASE STATIONS
16 ◀ ▶ Description of the business
Description of the business
Product development
Clavister’s core expertise is software development with a considerable level of technological flexibility that is characterised by a high degree of systematisation in combination with agile work methods, which means that the Company can position itself at the technological cutting edge of developments and at the same time be extremely flexible in its dialogue with customers.
The Company’s continued technological success will be ensured by its continuing to be an attractive and exciting employer who attracts the necessary international expertise to a single or (at most) small number of centres of excellence in Sweden. Clavister does not intend to work with outsourced development other than under special circumstances, primarily in order to maintain a high level of technical expertise within the Company and to avoid the risk of the Company’s intellectual property rights falling into the wrong hands.
The Company shall continue to have a clear focus on software in the future, but in specific cases where the market demands turnkey solutions with pre-packaged software and hardware, Clavister shall work exclusively with Commercial-off-the-Shelf (COTS) hardware from established hardware suppliers.
Product portfolio (packaged products)
Based on the two software applications that have been presented above, the Company has chosen to create pre-packaged products with characteristics that are aimed at different customer segments.
The Company’s current product portfolio consists of the following product series: Clavister PolarBear Series – products for telecom solutions
Clavister Wolf Series – products for medium-sized companies
Clavister Virtual Series – virtual products for cloud and virtualisation solutions
Clavister Eagle Series – products for smaller local offices and other smaller installations
Clavister Lynx Series – products for industrial applications
Competition
The Company currently has clear technological advantages within the telecom market segment, with specific solutions for 4G/LTE security, Small Cells security and Mobile Data Offloading. Clavister’s greatest competitive advantages within these solutions are the software’s high level of capacity and technical flexibility, the Company’s long-standing experience of developing solutions for the telecom segment, and the strategic value of being a flexible, relatively small and politically independent security provider.
The telecom segment currently has a relatively simple structure in terms of competition, since the market is dominated by a small number of large American suppliers.
Within the corporate customer segment, however, the competitive situation is diversified, with many different suppliers within a number of different sub-segments. The procurement patterns of major companies are guided to a large extent by confidence and trust in strong brands and large international product suppliers. In this respect there are a small number of actors who dominate the market. The segment for small companies, on the other hand, is strongly overrepresented by suppliers with cheap products that are sold in high volumes, and this segment is characterised by large-scale logistics and strong price pressure.
Clavister has chosen to position itself specifically in relation to the segment for medium-sized companies, where each customer project involves a substantial amount of business, and where the technological level of the solutions is of significance.
IPR strategy
Technology and products shall be protected through a clear IPR strategy, whereby the Company shall actively apply for patents on strategi-cally important new developments. Development processes and methods shall be evaluated on an ongoing basis and shall be optimised to ensure that the Company is always working with the highest possible level of efficiency and productivity and in compliance with the relevant protection for the results that are achieved. The Company’s intangible assets primarily exist within the areas that are affected by the products Clavister cOS Core and Clavister cOS Stream.
Organisation
The Company is represented geographically according to the details below (see (se “Figure 6: Clavister offices”). The Company’s head office is located in Örnsköldsvik in Sweden, with functions such as accounting, HR, product management, product development, sales support, customer support and order/logistics/purchasing. The overall sales and marketing operations are managed from the Company’s office in
Description of the business ◀ ▶ 17
Description of the business
Stockholm, and at other geographical locations there are sales operations that are aimed at the local market/region. On certain markets the Company is represented by its own employees, while on other markets the Company uses an agent model whereby the personnel on these markets work solely with Clavister but are remunerated by way of sales commissions. The Company’s operational activities are managed by the CEO with support from an executive management team consisting of the CTO, CFO, VP Global Sales, VP Marketing, VP Product Man-agement, VP Engineering, VP Business Development and VP Customer Support and Supply Chain.
Örnsköldsvik Corporate Headquarters Amsterdam Sales Benelux Paris Sales France Torino Sales Italy Hamburg Sales DACH Stockholm Sales Nordic Beijing Sales China Nanjing Sales China Shanghai Sales China Guangzhou Sales China Chengdu Sales China Singapore Sales SEA Xian Sales China
Figure 6: Clavister offices
Quality
The Company and the Company’s processes have been audited and certified according to ISO 9001 by DNV (Det Norske Veritas).
Ongoing collaborations and customer references
Clavister has delivered more than 150,000 licenses for its software to date, both through its own sales channels and through OEM sales. The Company has commercial agreements with 28 distributors and 196 system integrators in 30 countries. Clavister has entered into licens-ing agreements with a number of major global actors and is undertaklicens-ing an ongolicens-ing business dialogue with a further handful of potential licensees. The Company has a market-related collaboration with Intel, and Clavister has been a member of the Intel Network Builders Program6 since 2013. Clavister collaborates with and has some of the world’s best-known companies and organisations as partners and customers. For obvious reasons, it is not possible to name many of these companies and organisations due to security and confidentiality aspects. Below you can find a selection of some of the companies and organisations we work with.
Technology partners
Intel – Intel is the world’s largest manufacturer of computer processors. Intel has identified Clavister as a key player within the area of NFV/
SDN, where an enormous potential for growth is perceived. Clavister has been a member of Intel’s Network Builders ecosystem since 2013.
Qosmos – With the Qosmos Deep Packet Inspection (DPI) and Network Intelligence (NI) products integrated, Clavister can offer
superior control of data traffic through True Application Control.
Kaspersky Labs – Kaspersky is one of the world’s foremost antivirus companies. Clavister has integrated Kaspersky’s technology
into its solutions in order to be able to offer its customers the best antivirus protection on the market.
Splunk – Clavister offers its customers and partners the use of Splunk for the simple detection, monitoring and analysis of data to
and from Clavister’s products. This is a good example of a well-functioning integration of a third-party product.
Corporate customers
D-Link – One of the world’s largest suppliers of network equipment for the SME market. Clavister delivers all software to D-Link’s
18 ◀ ▶ Description of the business
Description of the business
Regus – The world’s largest supplier of flexible workplaces, Regus has a turnover of around SEK 14 billion. Regus uses Clavister’s
products to secure its entire digital infrastructure and to provide secure internet connections to its tenants.
Terremark – A leading global hosting provider, part of the Verizon Group, with data centres in a number of countries. Clavister
provides virtualised security software that is used as part of Terremark’s range of services.
E. ON Climate and Renewables – The world’s largest privately owned energy company, with more than 25 million customers.
E.ON uses Clavister’s products globally to secure the communication between power plants and operating centres.
Brazilian Civil Police – The federal police authority in Brazil uses Clavister’s products to secure the communication between its
head office and local police stations.
bwin – The world’s largest listed online betting company. Subject to attacks on a daily basis, security is of the utmost importance to
bwin, and with Clavister’s products it is able to achieve the highest possible level of operating security.
DGC – DGC is a Swedish supplier of data communications, operating and telephony services. Clavister has delivered solutions to
DGC that provide for secure access to information both externally and internally.
East China Grid – Part of the State Grid Corporation, a government-owned energy company with operations in 26 regions in China that
equate to 88 per cent of the country’s total area. Clavister delivered a network security solution that guaranteed uninterrupted operations.
Unibase – Unibase offers customised total solutions within the areas of network infrastructure and system development. Unibase has
deliv-ered a complete security solution from Clavister to the City of Gothenburg for its surveillance of the city’s tram network and lighting systems.
Swedish municipalities – More than 150 Swedish municipalities have chosen to standardise their network security based on
Clavister’s products.
Nordic Police Authority – A central police authority in one of the Nordic countries uses Clavister’s solutions as a vital part of its
infrastructure.
OEM Customer 1 – Clavister is in dialogue with a large Asian actor that intends to replace an existing product portfolio by licensing
security software.
OEM Customer 2 – The Company is conducting in-depth discussions with public authority customers on an important
geographi-cal market about a national security solution for public networks.
Strategic Effort – Negotiations are underway with a high-profile system integrator about creating a common sales platform with the
aim of taking important market shares on the existing market.
Telecom customers
SoftBank – A Japanese group that operates within telecom, Internet and broadband. SoftBank also owns 70 per cent of American
Sprint Nextel.
Orange – A French telecom company with operations in more than 30 countries and some 236 million customers.
Rogers Wirelsess – Rogers Wireless is a Canadian mobile operator.
Telekom Malaysia – Malaysia’s largest broadband provider with more than 2.2 million customers.
Telecom Provider 1 – Clavister has an active global licensing agreement with one of the world’s largest suppliers of telecom
equipment.
Telecom Provider 2 – Clavister is currently taking part in a number of security-related procurement processes together with yet
another global telecom provider.
Telecom Provider 3 – Clavister is conducting in-depth commercial dialogues regarding Small Cells security with an international
Financial overview ◀ ▶ 19
Financial overview
Clavister’s current group structure was created prior to the listing on NASDAQ
OMX First North through the acquisition by way of a non-cash issue of
Clavis-ter AB by the newly-formed company ClavisClavis-ter Holding AB, which did not
have any other business operations prior to the acquisition. Clavister Holding
AB thus became the parent company in the Clavister Group.
For the above reason, this financial overview is based solely on Clavister AB’s audited annual reports for 2011, 2012 and Clavister Holding AB’s unaudited annual report for 2013, which is expected to be made public at the end of May 2014. Clavister AB’s audited annual reports for 2011, 2012 are available on Clavister’s website www.clavister.com. Clavister Holding AB will only encompass a group management function and Board of Directors as well as the management of subsidiary company Clavister AB and its wholly-owned subsid-iary Clavister APAC Ltd. (with head office in Hong Kong), which in turn owns Clavister China Ltd. Since its foundation in 1997 the Company has issued shares to a total value of SEK 301 million. The latest new issue was carried out in May 2014 to a broad group of investors and amounted to SEK 34 million. This latest new issue took place with a “post-money” valuation of SEK 244 million, which equates to SEK 17 per share1.
Turnover, result and continued investments
History
The Company’s turnover has fluctuated between SEK 50-70 million during the last few years, partly dependent on elements of – or the absence of – large individual deals. Signif-icant investments have been made within research and development for the development of products and services with the aim of maintaining and increasing the Company’s com-petitiveness and quality. The net turnover for 2013 amounted to 52.8 (72.0) MSEK. Sales development during 2013 was weaker than 2012 on a number of markets, due to a high level of price competition coupled with a lower level of demand. The greatest deviation compared with 2012 occurred in Germany and Sweden. However, the strategic segment, which is represented by the Company’s customers within Telecom as well as other (in terms of turnover) major customers, displayed stability in terms of sales during 2013. The gross margin was 64 (71) per cent (%) and was negatively affected by the sale of a higher proportion of products from the Clavister E7 Series, with lower margins, as well as the existence of fewer large deals with high margins. The Company’s operating loss amounted to -50.1 (-51.4) MSEK after capitalisation of development costs. The Company’s continued major investments in software development and business deals with long sales cycles have a negative effect on both the Company’s cashflow and net result. The net result after financial items was -50.8 (-52.0) MSEK, and the net loss for the year was -50.8 (-52.0) MSEK.
First quarter 2014
During the late autumn of 2013, an overview of the sales organisation was commenced with the aim of finding better ways to concentrate the Company’s resources, with more salespeople on prioritised markets, and in this way create conditions for higher gearing. This has affected sales during the first quarter of 2014, and the turnover for this quarter is therefore lower than for the equivalent period in 2013, 11.0 (16.4) MSEK. The first quarter of 2013 contained a number of major business deals, unlike the first quarter of 2014. This lack of major deals during the first quarter of 2014 accounts for around 3.5 MSEK of the
differ-1 This financing occurred during May. The Company is meeting comprehensive and increased pressure from its collaborations with existing and new customers, which is why the Company has increased its customer-rela-ted investments in addition to the previous plan. However, increased customer activities require more resources – hence the reason for the occurrence of the financing in May. This investment is included in the Company Des-cription as if it had been registered, even though this is not yet the case. The subsDes-cription applications have been received, and the contract notes have been sent out. Payment has been received, but the Company is waiting with the registration of these shares until after approval at the general meeting of shareholders.
Financial overview
20 ◀ ▶ Financial overview
ence in the turnover figures for Q1 2014 and Q1 2013. Sales during Q1 2014 exceeded the Company’s budget by around 10 per cent. The gross margin of 69 (65) per cent (%) is at the planned level and has risen by four (4) percentage points compared with the same period in 2013. The amount of capitalised costs for own work has increased marginally by 0.3 MSEK, while personnel costs and other external costs are at the same level, 20.4 (20.4) MSEK. The operating loss was -13.1 (-11.0) MSEK, which was 2.1 MSEK higher than the operating loss for Q1 2013. The net loss for the period amounted to -13.0 (-11.5) MSEK.
Present day
Major investments continue to be made, although the level of investments is not increasing significantly. Clavister is currently spending over SEK 40 million on Research and Development (R&D), and most of the revenues that will be generated from these investments in R&D lie ahead of us, with only a small part of such revenues actually being generated today. The investments being made are increasingly related to customer-managed projects with a commercial connection. The rate of increase in these types of investments may continue, but only if they are connected to customers with commercial interests. In addition, the Company has increased its investments several-fold during recent times within adjacent areas on the sales and marketing side of the business, for example within telecom, as well as within other areas. Certain geographical delimitations have been made with the aim of concentrating resources on the markets, product areas and solutions where the Company has made the most progress, in order to enhance the conditions for significant commercial success. This change has entailed extra costs while also impacting negatively on revenues in the short term.
The future
The gross margin is very good and has the potential to increase not only as a result of opportunities for increased software sales and higher volumes, but also due to the positive effects of the Company’s R&D.
The Company sees the increased investments as providing good opportunities for significant commercial results. Clavister is now taking part in more and larger procurement processes than in the past. A number of these procurement processes are of such a significant nature that success in relation to any one such procurement process alone would equate to a significant part of the Company’s turnover last year. These procurement processes relate to both commercial business deals and strategic collaborations involving a diverse range of customers, part-ners and geographical markets. Major potential business deals and collaborations generally involve very long lead times before they become commercial in nature. In a number of cases Clavister has been working with these potential deals for a long period of time, which is why we expect to see some form of results from this work during the latter part of 2014. The long lead times should not, however, be underestimated, even though the Company has now come a long way in a number of cases. These investments entail an estimated burden on the Company’s financial results during the current year of SEK 30 million. Significant revenues of “game-changing” character as a result of successful out-comes in relation to these processes are not expected to be recognised in the Company’s income statement until 2015, even though positive decisions regarding the progress of the projects are expected to be received successively during 2014.
Financial status
The Company has made significant investments and will continue to invest, even if the requirements in relation to the software platform, prod-ucts and solutions will be more of the nature of commercial adaptations rather than new development in the future. The Company has been dependent on external capital for the financing of its investments. Additional investments, increased commercial adaptations and increased customer projects place a burden on the Company’s liquidity and require a strong financial status. Given the far-advanced and increased customer prospects of dignity that the Company has been working with during recent times, and the short-term negative impact that these have on the Company’s cashflow and income statement, the Board of Directors decided on a new issue of shares in order to be able to meet these interests and the associated capital requirements. The Board of Directors wishes to have a liquidity margin in order to be able to make the most of these increased commercial interests. More and larger customer projects place a short-term burden on the Company’s liquidity – but at the same time they are representative of positive developments on the customer side of things.
A directed new issue to Swedish and foreign (partly institutional) investors was closed in May 2014 in the upper interval at SEK 34 million, prior to transaction costs of SEK 2.5 million. Pro forma liquidity as of 31 March 2014, including the above-named new issue in May 2014, amounted to SEK 58.4 million, including net issue liquidity of SEK 31.5 million. Pro forma equity as of 31 March 2014 amounted to SEK 60 million. The Board of Directors does not feel that the Company’s ready assets (cash and cash equivalents) are sufficient during a 12 month period given the current aggressive customer-related investments being made. However, when the executed new issue of SEK 34 million (which is subject to the approval of the extra general meeting of shareholders on 9 June 2014) is included in the calculations, the Board of Directors feels that the Company’s ready assets (cash and cash equivalents) are sufficient to finance the Company’s operations during the next twelve months. The Company will receive cash payment for the new issue directly after approval at the EGM.
Financial overview
Financial overview ◀ ▶ 21
Income statement Quarter 1 Whole year
(000 SEK) 2014* 2013* 2013* 2012** 2011**
Net sales 10 985 16 357 52 841 72 023 61 648 Goods purchased -3 372 -5 701 -19 048 -20 968 -10 319
Gross profit 7 613 10 656 33 793 51 055 51 329
Gross margin, % 69% 65% 64% 71% 83%
Capitalised costs for own work 3 900 3 600 15 574 16 416 14 928 Personnel costs -14 747 -14 988 -59 275 -62 037 -42 794 Other external costs -5 653 -5 418 -24 743 -41 461 -29 236 Depreciation/write-offs -4 188 -4 881 -15 451 -15 396 -14 020
Operating loss -13 074 -11 031 -50 101 -51 422 -19 792
Result from shares in group companies - - -132 64 -Other interest income and similar items - - 125 145 47 Other interest income and interest expenses 79 -471 -675 -763 -1 723 Total result from financial items 79 -471 -682 -554 -1 676
Result after financial items -12 995 -11 502 -50 783 -51 976 -21 468
Tax on result for the period -28 -20 18 -27 -184
Net loss for the period -13 023 -11 522 -50 765 -52 004 -21 652 * Non-audited figures – pro forma group ** Clavister AB
Table 1: Income statement
Balance sheet Quarter 1 Whole year (000 SEK) 2014* † 2013* 2013* 2012** 2011**
Intangible fixed assets 33 040 31 317 32 813 32 424 28 559 Tangible fixed assets 608 633 1 030 761 1 032 Inventories 4 678 6 857 2 902 5 620 4 582 Current receivables 8 238 20 959 10 520 23 307 29 787 Cash and Bank 58 353 1 658 44 496 8 272 3 130
Total assets 104 917 61 424 91 761 70 384 67 090
Equity 60 005 7 290 42 172 16 480 19 Provisions 4 488 5 345 4 588 5 345 5 345 Long-term liabilities 13 876 24 807 11 932 19 149 14 994 Current liabilities 26 548 23 982 33 069 29 410 46 732
Total equity and liabilities 104 917 61 424 91 761 70 384 67 090 * Non-audited figures – pro forma group ** Clavister AB + Includes pro forma ongoing new issue of 31.5 MSEK Table 2: Balance sheet
22 ◀ ▶ Shares, share capital and ownership
Shares, share capital and ownership
Share capital
The shares in Clavister have been issued in accordance with Swedish law and are denominated in Swedish kronor (SEK). There are no restrictions on the free transferability of the shares.
Clavister Holding AB’s share capital is SEK 1,402,212.50 divided into 14,022,125 shares. According to Clavister’s Articles of Association, the share capital shall be at least SEK 500,000 and no more than SEK 2,000,000. The number of shares shall be at least 5,000,000 shares and no more than 20,000,000 shares. The nominal value of the share is SEK 0.10. The Company only has one type of share, and all shares have the same rights in relation to any dividends or any surplus upon liquidation. Each share in the Company entitles its holder to one vote at a general meeting of shareholders, and every shareholder entitled to vote may cast one vote for each of his or her shares without restriction (in other words, the holder of 5,000 shares is entitled to cast 5,000 votes).
The shares in Clavister are not and have never been the subject of an offer as a result of a mandatory bid obligation, right of redemption or purchase obligation; nor have the shares ever been the subject of a public takeover offer.
The subsidiary company Clavister AB has issued a convertible promissory note which bears interest (STIBOR 90) and which falls due for payment no later than 30 September 2017 unless conversion has taken place before this date at a rate of SEK 0.75 per share in Clavister AB. This convertible promissory note has been issued to Norrl
