F-Secure Oyj

Annual / Quarterly Financial Statement • Jul 5, 2022

Disclosure 410551

F-Secure Oyj - Other information disclosed according to the rules of the Exchange

F-Secure Corporation publishes historical financial information for 2021

F-Secure Corporation, Stock Exchange Release 5 July 2022 at 18:00 EEST

F-Secure Corporation publishes historical financial information for 2021

As announced in a stock exchange release on 30 June 2022, F-Secure Corporation (“F-Secure”) was formed as a result of the demerger from WithSecure Corporation (“WithSecure”), which was completed on 30 June 2022. Trading in F-Secure's shares on the main market of Nasdaq Helsinki started on 1 July 2022.

The historical financial information of F-Secure for the interim periods 1 January – 31 March 2021, 1 April – 30 June 2021, 1 July – 30 September 2021 and 1 October – 31 December 2021 is presented herein on a carve-out basis. The carve-out principles and accounting principles applied are consistent with those followed in the preparation of the carve-out financial statements as at and for the years ended 31 December 2021, 2020 and 2019.

The carve-out financial information of F-Secure has been prepared on a carve-out basis from WithSecure’s audited consolidated financial statements using the historical income and expenses, assets and liabilities and cash flows attributable to F-Secure business. The carve-out financial information also includes the allocation of income, expense, assets, liabilities and cash flows which are based on management judgement, assumptions and estimates. The most significant estimates, judgements and assumptions relate to the allocation of the costs of certain centrally provided shared services, leasing arrangements, shared tangible and intangible assets, cash management and financing, determination on current and deferred income taxes and invested equity.

The carve-out financial information may not necessarily represent F-Secure’s combined results of operations, financial position and cash flows that would have been had F-Secure been managed as a stand-alone consolidated group, preparing consolidated financial information for the periods presented, separate from WithSecure. Further, the carve-out financial information may not be indicative of F-Secure’s future performance, financial position or cash flows.

The information of interim periods is unaudited. The carve-out financial information is presented in millions of euros unless otherwise stated. All figures have been rounded and consequently, the sum of individual figures may deviate from the sum totals presented.

Combined Statement of Comprehensive Income

	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Revenue	26.3	26.3	26.5	27.1	106.3
Cost of revenue	-2.1	-2.0	-2.2	-2.5	-8.8
Gross margin	24.2	24.3	24.3	24.6	97.4
Other operating income	0.1	0.1	0.1	0.2	0.5
Sales and marketing	-6.7	-7.3	-7.1	-7.6	-28.7
Research and development	-4.3	-4.1	-4.0	-4.6	-16.9
Administration	-1.7	-4.0	-1.4	-1.7	-8.8
EBIT	11.6	9.1	12.0	10.9	43.5
Financial income	0.1	-0.1	0.1	0.1	0.3
Financial expenses	-0.1	0.2	-0.2	-0.1	-0.2
Profit before taxes	11.5	9.2	11.9	10.9	43.6
Income tax	-2.4	-1.9	-2.4	-2.4	-9.1
Result for the period	9.1	7.4	9.5	8.5	34.4
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations	0.0	0.0	-0.1	0.1	0.1
Comprehensive Income for the period	9.1	7.4	9.4	8.6	34.5

Combined Statement of Financial Position

	Carve-out basis
EURm	31.3.2021	30.6.2021	30.9.2021	31.12.2021
ASSETS
NON-CURRENT ASSETS
Tangible assets	0.3	0.2	0.2	0.3
Intangible assets	5.4	5.6	5.6	5.9
Deferred tax assets	0.4	0.4	0.4	0.2
Total non-current assets	6.1	6.3	6.3	6.4
CURRENT ASSETS
Inventories	0.1	0.1	0.1	0.1
Accrued income	0.7	1.5	1.4	1.3
Trade and other receivables	22.2	20.9	21.1	19.1
Related party receivable from WithSecure 1)	11.5	10.5	10.2	12.1
Total current assets	34.4	32.9	32.8	32.5
TOTAL ASSETS	40.5	39.1	39.1	38.9
INVESTED EQUITY AND LIABILITIES
TOTAL INVESTED EQUITY	11.7	9.7	12.0	9.5
NON-CURRENT LIABILITIES
Interest bearing liabilities, non-current	0.1	0.1	0.1	0.1
Deferred tax liabilities	0.3	0.3	0.3	0.2
Other non-current liabilities	3.5	3.2	3.1	3.2
Total non-current liabilities	3.9	3.6	3.5	3.5
CURRENT LIABILITIES
Interest bearing liabilities, current	0.1	0.1	0.1	0.1
Trade and other payables	7.7	9.2	7.6	9.2
Other current liabilities	17.1	16.5	15.9	16.6
Total current liabilities	24.9	25.8	23.6	25.9
TOTAL INVESTED EQUITY AND LIABILITIES	40.5	39.1	39.1	38.9

1) Historically, WithSecure managed the financing of F-Secure through centralized cash management and therefore there are no cash balances directly attributable to F-Secure in the carve-out financial information.

Combined Statement of Cash Flows

	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Cash flow from operations
Result for the period	9.1	7.4	9.5	8.5	34.4
Adjustments	2.8	2.2	3.2	2.9	11.1
Cash flow from operations before change in working capital	11.9	9.5	12.7	11.3	45.5
Change in net working capital	-3.6	1.4	-2.7	4.5	-0.4
Cash flow from operations before financial items and taxes	8.3	10.9	10.0	15.9	45.1
Net financial items and taxes	-2.4	-1.9	-2.4	-2.3	-9.0
Cash flow from operations	5.9	9.0	7.6	13.6	36.1
Cash flow from investments
Investments in intangible and tangible assets	-0.2	-0.5	-0.4	-0.6	-1.7
Proceeds from sale of intangible and tangible assets	-	0.0	-	0.0	0.0
Cash flow from investments	-0.2	-0.5	-0.4	-0.6	-1.6
Cash flow from financing activities
Repayments of lease liabilities	0.0	0.0	-0.1	0.0	-0.2
Equity financing with WithSecure, net	-5.7	-8.5	-7.1	-13.0	-34.3
Cash flow from financing activities	-5.8	-8.5	-7.2	-13.0	-34.5
Change in balance 1)	-	-	-	-	-
Cash and cash equivalents at the beginning of the period 1)	-	-	-	-	-
Cash and cash equivalents at the end of the period 1)	-	-	-	-	-

1) Historically, WithSecure managed the financing of F-Secure through centralized cash management and therefore there are no cash balances directly attributable to F-Secure in the cash flow statement.

Disaggregation of revenue

	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Sales channels
Revenue from external customers
Partner channel	20.8	20.8	21.0	21.6	84.2
Direct channel (E-commerce)	5.5	5.5	5.5	5.5	22.1
Total	26.3	26.3	26.5	27.1	106.3
Geographical information
Revenue from external customers
Nordic countries	9.1	9.1	9.3	9.4	36.9
Rest of Europe	12.6	12.4	12.3	12.5	49.6
North America	3.4	3.6	3.7	3.8	14.6
Rest of the world	1.2	1.2	1.3	1.4	5.2
Total revenue	26.3	26.3	26.5	27.1	106.3
Customer contract related balances	Carve-out basis
EURm	31.3.2021	30.6.2021	30.9.2021	31.12.2021
Accrued income	0.7	1.5	1.4	1.3
Deferred revenue, non-current	3.4	3.2	3.1	3.1
Deferred revenue, current	17.1	16.5	15.9	16.6

ALTERNATIVE PERFORMANCE MEASURES

In addition to EBIT, F-Secure uses Adjusted EBIT, Adjusted EBITA and Adjusted EBITDA as key performance indicators when measuring performance between periods. Adjusted EBIT, Adjusted EBITA and Adjusted EBITDA exclude items that affect comparability. Items affecting comparability are associated with strategic reviews in 2021. Adjusted EBIT, Adjusted EBITA and Adjusted EBITDA are presented in addition to EBIT to reflect the underlying business performance and to enhance comparability between periods. F-Secure believes that these comparable alternative performance measures provide meaningful supplemental information by excluding items outside normal business operations, which reduce comparability between the periods.

Key Figures

	Carve-out basis
EURm, unless otherwise stated	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Revenue	26.3	26.3	26.5	27.1	106.3
Revenue growth %	-	-	-	-	6.1%
Gross margin	24.2	24.3	24.3	24.6	97.4
% of revenue	91.9%	92.3%	91.8%	90.8%	91.7%
Adjusted EBITDA	11.9	11.8	12.4	11.3	47.4
% of revenue	45.2%	45.0%	46.7%	41.7%	44.6%
Adjusted EBITA	11.8	11.8	12.3	11.2	47.2
% of revenue	45.0%	44.8%	46.4%	41.5%	44.4%
EBIT	11.6	9.1	12.0	10.9	43.5
% of revenue	43.9%	34.5%	45.1%	40.2%	40.9%
Adjusted EBIT	11.6	11.5	12.0	10.9	45.9
% of revenue	43.9%	43.5%	45.1%	40.2%	43.2%
Profit before taxes	11.5	9.2	11.9	10.9	43.6
% of revenue	43.9%	35.0%	44.9%	40.2%	41.0%
Capital expenditure	0.2	0.5	0.4	0.6	1.7
% of revenue	0.6%	2.0%	1.4%	2.2%	1.6%
Deferred revenue	20.5	19.7	19.0	19.7	19.7
Operating cash flow	5.9	9.0	7.6	13.6	36.1
Net debt 1)	0.2	0.2	0.2	0.2	0.2
Equity ratio %	28.8%	24.9%	30.8%	24.5%	24.5%
Cash conversion %	68.2%	107.3%	75.0%	134.9%	95.6%
Personnel at the end of the period 2)	244	245	246	248	248

1) In the Carve-out financial statements, no cash or certain lease liabilities, such as lease liabilities related to business premises, were allocated to F-Secure. As a result, the Net debt derived from the carve-out financial statements does not reflect F-Secure's Net debt after the Demerger when the Company operates as a separate entity.

2) Comprises the personnel directly employed by the consumer security business. The figure does not include the share of personnel in shared group functions.

Reconciliation of certain alternative performance measures

Reconciliation of Adjusted EBITDA to EBITDA and EBIT
	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Adjusted EBITDA	11.9	11.8	12.4	11.3	47.4
Adjustments to EBITDA
Costs related to strategic review	-	-2.4	-	-	-2.4
EBITDA	11.9	9.5	12.4	11.3	45.0
Depreciation and amortization	-0.3	-0.4	-0.4	-0.4	-1.5
EBIT	11.6	9.1	12.0	10.9	43.5
Reconciliation of Adjusted EBITA to EBITA and EBIT
	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Adjusted EBITA	11.8	11.8	12.3	11.2	47.2
Adjustments to EBITA
Costs related to strategic review	-	-2.4	-	-	-2.4
EBITA	11.8	9.4	12.3	11.2	44.8
Amortization	-0.3	-0.3	-0.3	-0.3	-1.3
EBIT	11.6	9.1	12.0	10.9	43.5
Reconciliation of Adjusted EBIT and EBIT
	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Adjusted EBIT	11.6	11.5	12.0	10.9	45.9
Adjustments to EBIT
Costs related to strategic review	-	-2.4	-	-	-2.4
EBIT	11.6	9.1	12.0	10.9	43.5
Classification of adjusted costs in operating expenses
	Carve-out basis
EURm	1-3/2021	4-6/2021	7-9/2021	10-12/2021	1-12/2021
Operating expenses
Sales and marketing	-6.7	-7.3	-7.1	-7.6	-28.7
Research and development	-4.3	-4.1	-4.0	-4.6	-16.9
Administration	-1.7	-4.0	-1.4	-1.7	-8.8
Total	-12.7	-15.4	-12.5	-13.9	-54.5
Depreciation and amortization by function
Sales and marketing	0.0	0.0	-0.1	-0.1	-0.2
Research and development	-0.3	-0.3	-0.3	-0.3	-1.3
Total	-0.3	-0.4	-0.4	-0.4	-1.5
Items affecting Comparability (IAC) by function
Administration	-1.7	-4.0	-1.4	-1.7	-8.8
Less: Costs related to strategic review	-	-2.4	-	-	-2.4
Administration excluding IAC	-1.7	-1.6	-1.4	-1.7	-6.5
Operating expenses excluding depreciation, amortization and IAC
Sales and marketing	-6.7	-7.2	-7.0	-7.6	-28.5
Research and development	-4.0	-3.7	-3.6	-4.2	-15.6
Administration	-1.7	-1.6	-1.4	-1.7	-6.5
Total	-12.4	-12.6	-12.1	-13.5	-50.6

Calculation of key figures

Key figure	Definition
EBITDA	EBIT + Depreciation, amortization and impairment
EBITA	EBIT + Amortization and impairment
EBIT	Result before taxes and net financial items
Adjusted EBITDA	EBITDA before items affecting comparability
Adjusted EBITA	EBITA before items affecting comparability
Adjusted EBIT	EBIT before items affecting comparability
Items affecting comparability	Items affecting comparability are associated with strategic reviews.
Capital expenditure	Corresponds to the Combined Statement of Cash Flows line item Investments in intangible and tangible assets
Operating cash flow	Corresponds to the Combined Statement of Cash Flows line item Cash flow from operations
Net debt	Interest bearing liabilities – Cash and cash equivalents
Equity ratio, %	Total invested equity/Total assets
Cash conversion, %	(Adjusted EBITDA –Capital expenditure– Change in net working capital) / Adjusted EBITDA

The demerger prospectus and an unofficial English language translation thereof are available at https://investors.f-secure.com/.

F-Secure Corporation

For more information:

Sari Somerkallio, CFO

tel. +358 40 3569251

investor.relations@f-secure.com

F-Secure in brief

F-Secure is Finland headquartered and globally operating consumer cyber security company. F-Secure offers award-winning security and privacy products and services that make every digital moment more secure, for everyone. F-Secure operates in over 100 countries, has ~170 Service Provider partners and is the global leader providing security through Communication Service Providers. F-Secure Corporation is listed on Nasdaq Helsinki Ltd. Read more: www.f-secure.com