AI assistant
F-Secure Oyj Annual Report 2014
3268_rns_2015-03-16_e6e3a081-24ee-4402-aade-3c433cef8a9c.pdf
Annual Report
Open in viewerOpens in your device viewer
ANNUAL REPORT 2014
SWITCH
ON
FREEDOM
Contents 01 F-Secure in brief 02 Board's report 03 Financial statements
F-Secure has been protecting the digital lives of consumers and businesses for over 25 years. Our Internet security and privacy services are available through over 200 operators in more than 40 countries, as well as through our reseller partners and direct consumer channels.
In 2014, the company's revenues were EUR 153.8 million and it had over 900 employees in 25 offices worldwide. F-Secure Corporation is listed on the NASDAQ OMX Helsinki.
THE REIS OF REPUBLIC UNITY IN THE AIR.
CONTENTS
01 Key figures 2014 01
F-Secure in brief. 02
CEO letter 04
02 Board of Directors' report 2014. 06
03 FINANCIAL STATEMENTS
F-SECURE CONSOLIDATED 12
Statement of comprehensive income. 12
Statement of financial position. 13
Statement of cash flows 14
Statement of changes in equity 15
Notes to the financial statements 16
Calculation of key ratios 34
F-SECURE CORPORATION. 35
Income statement 35
Balance sheet 36
Cash flow statement 37
Notes to the financial statements 38
Auditor's report (translation) 46
04 Corporate Governance statement 47
Board of Directors 50
Leadership Team 52
05 Information for shareholders 53
F-SECURE 2014 01
KEY FIGURES 2014
Revenues MEUR 153.8
Operating profit MEUR 23.1
Earnings per share EUR 0.10
Dividend per share EUR 0.06
Extra dividend per share EUR 0.10
Cash flow MEUR 29.1
Equity ratio 75%
Personnel 921
* excluding one-offs
Revenues and operating profit 2010–2014, MEUR
Revenues Operating profit
Operating profit margin
* excluding one-offs
Regional revenue split 2014, %
Finland and Scandinavia 31%
Rest of Europe 46%
North America 10%
Rest of the world 13%
Revenues and operating profit by quarters 2014, MEUR
Revenues Operating profit
Operating profit margin
* excluding one-offs
Personnel by function 2014, %
Sales and marketing 51%
Research and development 35%
Administration 14%
F-SECURE 2014
01 02
F-SECURE IN BRIEF
Hundreds of millions of people share all kinds of sensitive data while they shop online, gossip with friends, and use their devices to connect with others. When everything is connected all the time it is all too easy to leave yourself open to multiple threats and lose control over your privacy. We give control back to people and companies. This is why for more than 25 years F-Secure has been the preferred choice for consumers and corporations who value security and privacy.
We provide services and solutions for millions of homes and businesses around the globe. Our innovation goes beyond traditional anti-virus products. By delivering protection, privacy and cloud-based security software for every device, F-Secure's solutions enable consumers and business users to get the most out of the digital world. For us, privacy is a cultural value that underlies our creation of the best protection in the world. We switch on freedom.
Customers
We have tens of millions of satisfied customers through our 200 operator partners in more than 40 countries. We serve consumers directly through our e-store and retailers in selected markets, and business customers through our global network of resellers.
Our services help people enjoy their digital lives to the fullest, whether surfing, sharing content, social networking, or working. In the connected world, we create technology that enables our customers' security and privacy.
Products and services
Our products and solutions protect consumers' and businesses' devices and their connections. We've been awarded for providing the best protection in the world multiple times. We continue to innovate new services that meet the changing requirements of our users.
Our users are passionate about keeping their data safe from prying eyes, and we design our products with privacy in mind from the ground up.
next...
F-SECURE 2014
01 03
...previous
WE WORK WITH 200+ OPERATORS AND 6,000+ SERVICE PARTNERS
Serving tens of millions of people in 40+ countries.
OPERATORS
SERVICE PARTNERS AND IT RESELLERS
DIRECT
CONSUMERS AND CORPORATE CUSTOMERS
Strategy
F-Secure will increasingly use the cloud for powering existing PC and mobile security products and develop new products that are fully cloud-based. From the cloud, we can offer security to the ever-growing variety of connected devices (Internet of Things) in a scalable way.
We focus on consumers and corporate customers by leveraging our current channels: our extensive network of operator partners and our global reseller network. To better serve our increasing corporate customer base our reseller network in key markets will be further expanded. Direct business channels will be employed in providing security and privacy products to consumers globally.
We continue to invest in developing and bringing cloud-based privacy and security products to the market. We forecast substantial growth opportunities in cyber and cloud security in the coming years. We are especially looking at new initiatives to expand our offering to provide security for the new generation of connected devices (Internet of Things) and to protect companies against cyber-attacks. Towards the end of our 2015–2017 strategy period we aim to grow the overall subscriber base by tens of millions of users while seeking double-digit growth.
Market overview
The security software business is in transition. The Software-as-a-Service business model and cloud-based delivery are rapidly disrupting the marketplace. While PCs continue to play an important part in the device landscape, especially in business use, the majority of the growth in new device sales will come from post-PC mobile devices and Internet of Things.
The growing variety of connected devices and services creates increasing complexity for both business and individuals. The threat landscape is becoming more sophisticated and threats to online security have grown and evolved considerably. Since the Snowden revelations, consumers have become more aware that they may be revealing the most intimate details of their lives through their connected devices. The need for security has never been greater.
Overall, the security market is over $20 billion in size and growing. According to Gartner (Q3 2014) the consumer security software market is growing to be over a $6 billion market by 2017 ($5.1 billion in 2013). F-Secure is in a great position to capture the opportunity in the growing security market, with our extensive security heritage. We will continue to fight for digital freedom.
F-Secure has a solid track-record in protecting both individuals and companies.
In February 2015 we won our fourth consecutive "Best Protection" award from AV-TEST.
F-SECURE 2014 01 04
WE CONTINUE TO FIGHT FOR DIGITAL FREEDOM
We have continued to execute our cloud security strategy successfully. Our overall security sales kept growing even though total revenue development did not meet our targets. Our profitability and cash flow remained strong. The SAFE multi-device protection offering delivered good growth, along with our corporate business driven by the Protection Service for Business security suite. F-Secure's newest security and privacy product, Freedome, had a successful first year.
The sale of our younited online storage business simplifies our way of working and will help us sharpen our focus on F-Secure's core business – security. The threat landscape is getting more complex and attacks are becoming harder to detect, which will continue to endanger personal and corporate security and privacy. We believe substantial growth opportunities, especially in the areas of cyber and cloud security, are coming in the years ahead.
next...
F-SECURE 2014
01 05
...previous
Focus on security
F-Secure has always had a solid track-record in protecting both individuals and companies. In February we won our fourth consecutive “Best Protection” award from AV-TEST. Today’s security software technology goes far beyond traditional virus scanning tools. The market has a consistent need for new privacy and security products. Cloud technology gives us a scalable way to provide protection for the expanding fleet of connected devices.
We are re-doubling our focus on security. On the corporate side, our unique Protection Service for Business already offers a turnkey security solution for small and medium companies. Now we are looking at new initiatives to protect companies against targeted attacks and cyber threats. On the consumer side, we are keen to provide security for the new generation of connected devices (Internet of Things).
Customers seek simple solutions as the online world and the threats associated with it continue to become more complex. Freedome is such an easy-to-use solution. It is our newest fully cloud-based security and privacy product that secures people’s connections and encrypts their data. Freedome attracted close to 2 million downloads during the first year after launch and is our most rapidly growing product ever.
We fight for digital freedom
The ongoing transition in the security industry presents great growth opportunities. With our strong technology assets, foresight in the security landscape, and global understanding of cyber threats, we will continue to invest in developing and bringing cloud-based privacy and security products to the market. Through our network of operator and reseller partners – along with our direct channels – we already have tens of millions of consumer and thousands of corporate customers. In the next few years, we will drive for double digit revenue growth and seek tens of millions of new customers.
I would like to thank F-Secure personnel for their impressive commitment and hard work, our partners and customers for their valued cooperation, and our shareholders for their continued trust in F-Secure and their belief in our mission. I believe there are great opportunities ahead in the security business as we continue to fight for digital freedom.
Christian Fredrikson
President and CEO
> “THE THREAT LANDSCAPE IS GETTING MORE COMPLEX. THE MARKET HAS A CONSISTENT NEED FOR NEW SOLUTIONS.”
F-SECURE 2014 02 06
BOARD OF DIRECTORS' REPORT 2014
In 2014 F-Secure tightened its strategic focus on cloud based security. Overall security sales grew slightly despite the fact that overall revenues slightly declined. Profitability and cash flow also remained strong throughout the year.
next...
F-SECURE 2014
02 07
...previous
Growth was mostly attributed to increasing sales of the multi-device protection product (SAFE), the corporate security offering (Protection Service for Business) and the first truly cloud-based privacy and security product (Freedome). The decline in sales was mostly due to the planned phaseout of the old online backup business, which was not fully compensated for by the adoption of the new younited personal cloud service. After the end of the reporting period, the Company also announced it is divesting from personal cloud storage and had sold the business it to Synchronous Technologies. The sale further strengthened the Company's balance sheet while increasing net cash. The Company is focusing investments in developing new cloud security products.
F-Secure forecasts substantial growth opportunities in cyber and cloud security in the coming years. Going forward, the Company is looking into new initiatives to expand its offering to provide security for the new generation of connected devices (Internet of Things) as well as protecting companies against cyberattacks. During the strategy period of 2015–2017, the Company's goal towards the end of the period is to grow the overall subscriber base by tens of millions of users while seeking double-digit revenue growth.
Financial performance and key figures
Total revenues declined by 1% to 153.8 million (155.1 m). Revenues through the operator channel decreased by 4% from the previous year to 91.9 million (95.3 m), representing 60% (61%) of F-Secure's total revenues. Revenues through resellers and direct to consumer increased by 4% totaling 62 million (59.8 m). These channels represented 40% (39%) of F-Secure's total revenues. Deferred revenues increased to 43 million (38.7 m) at the end of the year as a result of strong license and renewal sales.
EBIT was 18.8 million (27.1 m). This represents 12% (17%) of revenues. Excluding one-off of 4.3 million related to overall restricting costs in during the first and last quarter EBIT was 23.1 million (27.1 m), representing 15% (17%) of revenues. Earnings per share were EUR 0.10 (EUR 0.11). Cash flow from operations was 29.1 million positive (28.5 m positive). The change of net cash was 22.4 million positive excluding paid dividends of 9.3 million (24.5 m positive excluding paid dividends of 9.3 m).
Total fixed costs were 130.4 million or 126.1 million (123.7 m) excluding one-off of 4.3 million related to the Bordeaux re-organization and efficiency gains during the first and last quarter, an increase of 5% or 2% from the previous year. These increases are mainly related to investments in Sales and Marketing activities for core businesses and geographical expansions. Depreciations (R&D activations, software, hardware) increased to 9.3 million (9 m). The capitalized development expenses were 2.3 million (0.3 m).
The 2014 geographical breakdown of revenues was as follows: Finland and Scandinavia 31% (31%), Rest of Europe 46% (45%), North America 10% (11%) and Rest of the World 13% (13%).
F-Secure Business in 2014
Security sales overall grew despite the decline in traditional PC-centric security. The growth was spurred by security sales based on the new cloud security strategy. The Company's core cloud businesses in security consist of SAFE (our multi-device offering for consumers), Protection Service for Business (our corporate offering), and Freedome, our next-generation privacy and security product fully powered by the cloud.
Among operators, F-Secure's security sales continued to gain traction, especially due to SAFE. The Company signed new deals and launched security products with several operators. Among the most significant launches were Netia (Poland), TIM (Italy), Frontier (USA), Darty (France), Polkomtel (Poland), Claro (Brazil), SFR (France), Telefonica (Peru and Ecuador) and VIVO FSVAS (Brazil). F-Secure holds a strong position in over 40 countries through more than 200 operator partners.
The Company's personal cloud business, younited, is very competitive in winning new operator partners. With younited, F-Secure has won about 30 operator partners, over 20 of which are already in production. During the year the company launched e.g. Elisa Saunalahti Pilvilinna (Finland), Virgin Media Cloud (UK), KPN (Netherlands), TDC (Denmark), Polkomtel (Poland), Globe (Philippines), Netia (Poland), PCCW (Hong Kong) and Claro (Brazil). During Q4 the Company decided to focus the personal cloud business on the operator channel, with direct business serving as only a touch point to end-users. This led to the reorganizing and optimizing of resources in the content cloud business. The Company concluded personnel cooperation negotiations in December to drive efficiencies (see stock exchange release on December 8, 2014).
The Company's overall operator channel revenues continued to decline. The decline was mainly due to the planned phaseout of the legacy online backup business and declining traditional PC-centric sales. Some of the decline was compensated for by the growth of the multi-device offering SAFE and the new younited personal cloud.
The Company's corporate security business performed very well, with sales growth driven by Protection Service for Business. Traditional client security sales among corporate customers grew as well. The Company has successfully focused on Germany, France and the USA, which has led to the growth of our reseller network and increasing sales.
F-Secure's direct to consumer security business had strong growth, driven by the launch of the new 2015 versions of F-Secure SAFE and Internet Security. The next generation privacy and security app, Freedome, continues to perform well with close to two million downloads by the end of the period.
In 2014 revenues from the operator channel declined by 4% to 91.9 million (95.3 m). Revenues to corporate and direct to consumers grew by 4% to 62 million (59.8 m). In total, revenues declined by 1% to 153.8 million (155.1 m).
Geographically, the Company continued its expansion in Latin America with Telefonica and American Moviles. Another investment area focus is corporate sales in Germany, France and the USA. The Company continues to investigate possible new geographical entries in the APAC area.
next…
F-SECURE 2014
02 08
...previous
Product announcements
F-Secure develops and sells security and privacy products that support personal computers, servers and an increasing array of major smartphone, tablet and other mobile device operating systems.
The most significant product announcements in 2014:
- The PC version of Freedome was launched after the end of the period in January 2015. The product is now available on all of the most popular platforms (iOS, Android, Windows). The product was also put on offer in selected retail stores.
- During the autumn the 2015 version of Internet Security was launched
- In September a new consumer website was released. The site is optimized for mobile device visitors with a responsive design. The new web and whole product portfolio was rebranded to match the new brand design and tone of voice. http://www.f-secure.com
- During the second quarter, a new version of the F-Secure Online Scanner was made available. The scanner enables users to get rid of viruses and spyware even if they already have security software installed on their computers. Online Scanner was also made available to users of the world's largest social network in a recent partnership with Facebook.
- During the spring younited Events, for sharing private photos and videos, and younited for Business, launched. Also a new feature, Group spaces, was launched for both younited by F-Secure (for consumers) and younited for Business. The feature allows employees and partners to share and collaborate on documents and other media files in a safe way.
-
In March Freedome, the next generation cloud-based security and online privacy product, was launched in the US and selected countries. Freedome encrypts all traffic to allow users to be untraceable and invisible while surfing online without collecting any personal data. It also allows users to select their virtual location.
-
In February, the younited service which had been launched in selected markets earlier was made available in several new markets. Younited allows the user to share photos, videos and other digital content on their mobile phone, computer, or tablet while ensuring the data stays private.
- Earlier, at the beginning of the year F-Secure Key was launched in Portuguese and Spanish language versions for the Latin American market. F-Secure Key stores your passwords, user names and other credentials so that you can conveniently access them through one master password.
F-Secure Client Security won the Best Protection 2014 award granted by the independent testing organization AV-TEST. The award is presented to the best product of the year in terms of protection against malware infections caused by current threats such as zero-day attacks from malicious websites and emails.
All of these new and enhanced products have been well received, and they are powered by F-Secure's safe European cloud.
Risks and uncertainties
The most significant risks for F-Secure are related to the following factors: instability in the economic climate, changes in the competitive environment and customer demand affecting the volume of business and price levels, the competitiveness of F-Secure's product portfolio in the changing market situation, the ability to protect the intellectual property (IPR) in F-Secure's solutions, risk exposure from increasing contractual liability requirements, regional development in new growth markets, the sustainability of partner relationships, the development of new business areas, continuous change in the storage and content cloud services markets, and potential security threats targeted at these services.
Events after period-end
As announced on 4 February, to strengthen the focus on security F-Secure has signed an agreement to sell its personal cloud business operations to Synchronous Technologies. The sales price is USD 60 million. The transaction's overall impact on F-Secure's operating profit in 2015 is estimated be close to 20 million euros positive with current exchange rate (see stock exchange release on February 4, 2015). The Company sees substantial growth opportunity in cyber and cloud security businesses.
Personnel and organization
F-Secure's personnel totaled 921 at the end of the year (939).
Currently, the Leadership Team consists of the following people: Christian Fredrikson (President and CEO), Janne Juvonen (Customer and Market Operations), Samu Konttinen (Consumer Security Business), Timo Laaksonen (Content Cloud Business), Johanna Orjatsalo (Human Resources & Facilities), Jari Still (R&D Operations), Pekka Usva (Corporate Security Business) and Taneli Virtanen (Chief Financial Officer, until 22 Feb 2015) and Saila Miettinen-Lähde (Chief Financial Officer, from 23 Feb 2015 onwards).
Financing and capital structure
Cash flow from operations was 29.1 million positive (28.5 m positive). The change of net cash was 13.1 million positive including paid dividends of 9.3 million in April (15.2 m positive including paid dividends of 9.3 m). Net financial income was 1.1 million positive (0.7 m negative).
The market value of the liquid assets of F-Secure at the end of the quarter was 61.3 million (47.7 m). Changes in exchange rates had a non-material impact on sales and costs.
The Company's capital expenditure was 5.8 million (3.7 m). The capitalized development expenses were 2.3 million (0.3 m).
next...
F-SECURE 2014
02 09
...previous
F-Secure's financial position remained solid. F-Secure's equity ratio at the end of the quarter was 75% (74%) and gearing ratio was 77% negative (66% negative).
Taxation
In 2013, Finnish tax authorities changed their interpretation of the right to deduct paid withholding tax in some countries. Thus, the Company was obligated to pay previously approved withholding tax from 2012 and could not deduct them in 2013. The Company has managed to collect some of this withholding tax from certain countries. However, the Company is partially double taxed. In 2014, based on the Company's request, the Supreme Administrative Court made a favorable decision on taxation related to the Company's Malaysian subsidiary. As a consequence of these activities, the Group's tax rate in 2014 is 21% (37% in 2013, 29% in 2012).
Shares, shareholders' equity, own shares and option programs
The total number of company shares is currently 158,798,739. The company's registered shareholders' equity is EUR 1,551,311.18. At the end of the year, the Company held 3,004,812 of its own shares. The company has purchased its own shares to be used in the incentive compensation plans, to be used for making acquisitions or implementing other arrangements related to the company's business, to improve the company's financial structure, or to be otherwise assigned or cancelled.
In January 2014, the company assigned a total of 379,591 shares to participants of the F-Secure share-based incentive program as a reward payment. Payments were based on the 2010 earning period (share-based incentive program 2008-2010) and on the 2011 earning period (share-based incentive program 20011-2013). The company currently has a share-based incentive program for key employees for the 2011-2013 earning period and for the 2014-2016 earning period, as well as a synthetic option-based incentive program, for the 2012-2014 earning period.
During 2014 reward payments assigned to Members of the Board also included Company's own shares (31,432 own shares in total).
Corporate Governance
F-Secure's corporate governance practices comply with Finnish laws and regulations, F-Secure's Articles of Association, the rules of NASDAQ OMX Helsinki, and the Finnish Corporate Governance Code issued by the Securities Market Association of Finland in 2010. The code is publicly available at www.cgfinland.com.
F-Secure published its corporate governance statement for 2013 in the Annual Report and on the Company website in March 2014.
Annual General Meeting
The Annual General Meeting of F-Secure Corporation was held on April 3, 2014. The Meeting confirmed the financial statements for the financial year 2013. The members of the Board and the President and CEO were granted a discharge from liability. In addition, the Annual General Meeting made the following decisions:
The Annual General Meeting decided to distribute a dividend of EUR 0.06 per share, which was to be paid to those shareholders that on the record date of April 8, 2014 are registered in the Register of Shareholders held by Euroclear Finland Ltd. The dividend was be paid on April 15, 2013.
It was decided that the annual compensation remain on the previous year's level; EUR 55,000 for the chairman, EUR 40,000 for the chairmen of the Executive and Audit Committee(s) and EUR 30,000 for members. Approximately 40% of the annual remuneration would be paid as company shares.
It was decided that the number of Board members would be seven (7). The current members that were re-elected: Mr. Jussi Arovaara, Mr. Pertti Ervi, Mr. Juho Malmberg, Ms. Anu Nissinen, Mr. Matti Heikkonen and Mr. Risto Siilasmaa. Mr. Peter Vesterbacka was elected as a new member to the Board of Directors. The Board elected in the first meeting Mr.
Siilasmaa as the Chairman of the Board. The Board nominated Mr. Siilasmaa as the Chairman of the Executive Committee and Mr. Malmberg and Ms. Nissinen as members of the Executive Committee. Mr. Ervi was nominated as the chairman of the Audit Committee and Mr. Arovaara, Mr. Heikkonen and Mr. Peter Vesterbacka were nominated as members of the Audit Committee.
It was decided that the auditor's fee would be paid against the approved invoice. Ernst & Young Oy was elected as the Group's auditors. APA, Mr. Mikko Järventausta is acting as the responsible partner.
It was decided that the Board of Directors may pass a resolution to purchase a maximum of 10,000,000 shares of the Company. The amount represents approximately 6.3% of all the shares issued by the Company. The authorization would be valid for one year. The authorization covers the purchase of shares through public trading on the NASDAQ OMX Helsinki Ltd. in accordance with its rules or through a public tender offer made to the shareholders of the Company. The consideration payable for the shares shall be based on the market price.
In purchasing of the Company's own shares derivative, share lending and other contracts customary to the capital markets may be concluded pursuant to law and applicable legal provisions. The authorization entitles the Board of Directors to pass a resolution to purchase the shares by deviating from the shareholders' pre-emptive rights (directed purchase) subject to the provisions of the applicable law. The own shares will be purchased to be used for making acquisitions or implementing other arrangements related to the Company's business, to improve the Company's financial structure, to be used as part of the incentive compensation plan or for the purpose of otherwise assigning or cancelling the shares. The Board of Directors shall have the right to decide on other matters related to the purchase of the Company's own shares.
The Annual General Meeting authorized the Board of Directors to decide on a transfer of a maximum of 13,036,244 of its own shares of the Company either against consideration or without payment. The authorization would be valid for
next...
F-SECURE 2014
02 10
...previous
one year. The Board of Directors is authorized to transfer the shares in deviation from the shareholders' pre-emptive rights (directed transfer) subject to the provisions of the applicable law. The shares may be transferred as a consideration to finance acquisitions or in other arrangements and used as part of the equity-based incentive plans of the Company as decided by the Board of Directors. The Board of Directors shall also have the right to sell the shares through public trading on the NASDAQ OMX Helsinki Ltd. The Board of Directors shall have the right to decide on other matters related to a transfer of its own shares
It was decided by the Annual General Meeting that the Board of Directors is authorized to decide on the issuance of shares. The amount of shares to be issued based on this authorization shall not exceed 40,000,000 shares. Board of Directors decides on all the conditions of the issuance of shares. The authorization concerns both the issuance of new shares as well as the transfer of treasury shares. The issuance of shares may be carried out in deviation from the shareholders' pre-emptive rights (directed issue). The authorization is valid for 18 months. In connection with registering this authorization, the authorization by the AGM 2013 for a directed share issue shall be reversed.
The decision made by the Annual General Meeting was to change section 9 of Articles of Association regarding the manner of convocation to be changed as follows: "9 The notice of a General Meeting and right to participate in and vote at the General Meeting The notice of a General Meeting of Shareholders shall be delivered to the shareholders within a period stipulated by the law by publishing the notice on the Company's website. To be entitled to participate in the General Meeting, a shareholder shall notify the Company about his/her intention to participate in the General Meeting no later than on the date indicated in the notice. At a General Meeting of Shareholders, each share has one (1) vote. The voting method shall be decided by the Chairman of the Meeting."
Market Overview
The security software business is in transition. The Software-as-a-Service business model and cloud-based delivery are rapidly disrupting the marketplace. While PCs continue to play an important part in the device landscape, especially in business use, the majority of the growth in new device sales will come from post-PC mobile devices and Internet of Things. These changes continue to transform the security markets, as well. The short-term growth in PC-centric security is challenging. However, there are substantial mid-and-long-term business opportunities due to this ongoing transition.
The growing variety of connected devices and services creates increasing complexity for both business and individuals. The threat landscape is becoming more sophisticated and threats to online security have grown and evolved considerably. Online criminals are following users to social media and mobile devices. In addition to traditional malware, government surveillance, espionage and targeted cyber-attacks are a reality. According to a recent study by the Pew Research Center Internet Project, 91% of adults in the survey agreed that consumers have lost control over how their personal information is collected and used by companies. Since the Snowden revelations, consumers have become more aware that they may be revealing the most intimate details of their lives through their connected devices. The need for security has never been greater.
Overall, the security market is over $20 billion in size and growing. According to Gartner (Q3 2014) the consumer security software market is growing to be over a $6 billion market by 2017 ($5.1 billion in 2013).
Long-term objectives and strategy summary for 2015-17
In 2014 F-Secure updated its strategy, last communicated in February 2014. The sharpened focus is on cloud security. F-Secure protects all connected devices and secures the privacy of people and corporations. The strategy is built on the following trends:
Connected devices. Mobility and the vast variety of connected devices (Internet of Things) are changing the Internet landscape rapidly. The need to protect privacy and reputations, safeguarding the digital freedom of businesses and individuals, has become even more relevant as threats to new types of connected devices emerge.
Cloudification. In the future, most data and services will be in the cloud - or rather, many clouds. This means there will be an opportunity to solve both security and usability problems while delivering products and services (including security) from the cloud.
With the Company's strong technology assets, foresight into the security landscape, and attention to customer insights, F-Secure continues to invest in developing and bringing cloud-based privacy and security products to the market. The Company will increasingly use the cloud to power existing PC and mobile security products and to develop new products that are fully cloud-based. From the cloud, the Company can offer security to the ever-growing variety of connected devices (Internet of Things) in a scalable way. Our position in the market is strengthened by the strong Finnish legal framework for privacy.
The Company will focus on consumers and corporate customers by leveraging its current channels, and will use its operator network to sell personal cloud services as well as traditional and cloud-based security to consumers. Our reseller network in key markets will be further expanded to serve our increasing corporate customer base. The Company will employ its direct business channels in providing security and privacy products to consumers globally.
During the strategy period of 2015-2017, the Company's target towards the end of the period is to grow the overall subscriber base by tens of millions of users while seeking double-digit revenue growth. The growth is expected to come from the western hemisphere and some emerging markets like Latin America. As the Company invests in growth, the proportional profitability will remain at the current level and
next...
...previous
longer-term profitability continues to be driven by revenue growth and scalable operations.
Outlook for 2015
The Company's decision to focus on security and sell the personal cloud business will reduce the revenues compared to 2014. In 2014, security revenues were 137.4 million in total. In 2015, the management estimates security revenues to grow slightly. Additionally, approximately 6 million euros in revenue are expected from the transition services due to the sale of the content cloud business. Profitability is estimated to be around 15% of revenues (excluding the profit from discontinued business).
Revenue growth is expected to come from the Company's core cloud security business, consisting of converged PC and mobile security (SAFE), Protection Service for Business, and security from the cloud (Freedome). The Company will also invest in new initiatives to further expand into cyber and cloud security offerings. Traditional PC security sales are expected to continue to slightly decline.
The revenue estimate is based on the sales pipeline at the time of publishing, existing subscriptions and support contracts, as well as current exchange rates. The Company continues to prioritize growth over short-term profitability and plans to invest the majority of the improved earnings in growth opportunities within its core business.
Proposal for dividend distribution
The Board of Directors is proposing to the Annual General Meeting, to be held on 8 April, 2015, that a dividend of EUR 0.06 and an extra dividend of EUR 0.10 per share be paid based on the adopted balance sheet for the financial year 2014. The suggested dividend record date is April 13, 2015 and the suggested payment date April 21, 2015. The dividend payout ratio is approximately 60% (excluding the extra dividend). On December 31, 2014, the parent company's distributable equity amounted to a total of EUR 51.6 million.
Events after period-end do not weaken the Company's financial position nor does the proposed dividend pose any risk to the company's financial standing.
Helsinki, February 13, 2015
F-Secure Corporation
Risto Siilasmaa
Jussi Arovaara
Pertti Ervi
Matti Heikkonen
Juho Malmberg
Anu Nissinen
Peter Vesterbacka
President and CEO
Christian Fredrikson
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 12
STATEMENT OF COMPREHENSIVE INCOME JAN 1–DEC 31, 2014
| EUR 1,000 | Note | Consolidated, IFRS 2014 | Consolidated, IFRS 2013 |
|---|---|---|---|
| NET SALES | (1) | 153,842 | 155,098 |
| Material and service | -7,645 | -7,036 | |
| GROSS MARGIN | 146,197 | 148,062 | |
| Other operating income | (2) | 2,991 | 2,707 |
| Sales and marketing | (3,4) | -84,855 | -73,600 |
| Research and development | (3,4) | -38,170 | -41,685 |
| Administration | (3,4) | -7,381 | -8,410 |
| OPERATING RESULT | 18,782 | 27,074 | |
| Financial income | (7) | 1,566 | 1,182 |
| Financial expenses | (7) | -446 | -1,896 |
| Share of profit of associate | (11) | -31 | |
| PROFIT (LOSS) BEFORE TAXES | 19,902 | 26,329 | |
| Income taxes | (8) | -4,130 | -9,861 |
| RESULT FOR THE FINANCIAL YEAR | 15,772 | 16,468 | |
| OTHER COMPREHENSIVE INCOME | |||
| Other comprehensive income to be reclassified to profit or loss in subsequent periods | |||
| Exchange difference on translation of foreign operations | 388 | -90 | |
| Available-for-sale financial assets | (7) | 226 | 141 |
| Taxes related to components of other comprehensive income | (8) | -45 | -15 |
| COMPREHENSIVE INCOME FOR THE YEAR | 16,341 | 16,504 | |
| Result of the financial year is attributable to: | |||
| Equity holders of the parent | 15,772 | 16,468 | |
| Comprehensive income for the year is attributable to: | |||
| Equity holders of the parent | 16,341 | 16,504 | |
| Earnings per share | |||
| - basic | (9) | 0.10 | 0.11 |
| - diluted | 0.10 | 0.11 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
STATEMENT OF FINANCIAL POSITION DEC 31, 2014
| EUR 1,000 | Note | Consolidated, IFRS 2014 | Consolidated, IFRS 2013 | EUR 1,000 | Note | Consolidated, IFRS 2014 | Consolidated, IFRS 2013 |
|---|---|---|---|---|---|---|---|
| ASSETS | SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||
| NON-CURRENT ASSETS | SHAREHOLDERS' EQUITY | (18) | |||||
| Tangible assets | (10) | 7,242 | 8,329 | Share capital | 1,551 | 1,551 | |
| Intangible assets | (10) | 14,060 | 16,839 | Share premium | 165 | 165 | |
| Goodwill | (12) | 19,398 | 19,398 | Treasury shares | -6,989 | -7,782 | |
| Deferred tax assets | (13) | 2,913 | 4,417 | Fair value reserve | 502 | 321 | |
| Other financial assets | Translation differences | 312 | -77 | ||||
| Total non-current assets | 43,613 | 48,983 | Reserve for invested unrestricted equity | 5,102 | 5,051 | ||
| Retained earnings | 79,290 | 73,531 | |||||
| CURRENT ASSETS | Equity attributable to equity holders of the parent | 79,933 | 72,760 | ||||
| Inventories | (14) | 108 | 270 | ||||
| Trade and other receivables | (15) | 42,478 | 39,227 | NON-CURRENT LIABILITIES | |||
| Income tax receivables | (15) | 2,140 | 260 | Deferred tax liabilities | (13) | 398 | 372 |
| Available-for-sale financial assets | (16) | 40,309 | 25,685 | Other non-current liabilities | (20) | 11,027 | 9,159 |
| Cash and bank accounts | (17) | 21,067 | 22,210 | Total non-current liabilities | 11,425 | 9,531 | |
| Total current assets | 106,102 | 87,653 | |||||
| CURRENT LIABILITIES | (20) | ||||||
| TOTAL ASSETS | 149,715 | 136,635 | Trade and other payables | 25,614 | 23,059 | ||
| Income tax liabilities | 784 | 1,732 | |||||
| Other current liabilities | 31,959 | 29,553 | |||||
| Total current liabilities | 58,356 | 54,344 | |||||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 149,715 | 136,635 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 14
STATEMENT OF CASH FLOWS DEC 31, 2014
| EUR 1,000 | Note | Consolidated, IFRS 2014 | Consolidated, IFRS 2013 | EUR 1,000 | Note | Consolidated, IFRS 2014 | Consolidated, IFRS 2013 |
|---|---|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||||
| Result for the financial year | 15,772 | 16,468 | Investments in intangible and tangible assets | -6,685 | -3,999 | ||
| Adjustments | (23) | 15,991 | 20,833 | Proceeds from sale of intangible and tangible assets | 12 | ||
| Cash flow from operations before change in working capital | 31,763 | 37,302 | Proceeds from sale of associated companies | 15 | |||
| Proceeds from sale of other investments | 19 | 7 | |||||
| Change in net working capital | |||||||
| Current receivables, increase (-), decrease (+) | -833 | -3,507 | Cash flow from investments | -6,665 | -3,965 | ||
| Inventories, increase (-), decrease (+) | 162 | -35 | CASH FLOW FROM FINANCING ACTIVITIES | ||||
| Non-interest bearing debt, increase (+), decrease (-) | 3,019 | 640 | Dividends paid | -9,346 | -9,323 | ||
| Provisions, increase (+), decrease (-) | -130 | Cash flow from financing activities | -9,346 | -9,323 | |||
| Cash flow from operations before financial items and taxes | 34,111 | 34,269 | Change in cash | 13,101 | 15,208 | ||
| Interest expenses paid | -8 | -58 | Cash and bank at the beginning of the period | 47,748 | 33,127 | ||
| Interest income received | 24 | 154 | Translation difference | 231 | -728 | ||
| Other financial income and expenses | 455 | -115 | |||||
| Income taxes paid | -5,470 | -5,754 | Change in net fair value of current available-for-sale assets | 226 | 141 | ||
| Cash flow from operations | 29,112 | 28,496 | Cash and bank at period end | 61,306 | 47,748 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
STATEMENT OF CHANGES IN EQUITY DEC 31, 2014
Attributable to the equity holders of the parent
| EUR 1,000 | Share capital | Share premium fund | Treasury shares | Available-for-sale | Translation diff. | Unrestricted equity reserve | Retained earnings | Total equity |
|---|---|---|---|---|---|---|---|---|
| Equity Dec 31, 2012 | 1,551 | 169 | -8,419 | 195 | 15 | 5,050 | 66,545 | 65,106 |
| Available-for-sale financial assets, net | 126 | 126 | ||||||
| Translation difference | -90 | -90 | ||||||
| Result of the financial year | 16,468 | 16,468 | ||||||
| Total comprehensive income for the year | 126 | -90 | 16,468 | 16,504 | ||||
| Dividends | -9,323 | -9,323 | ||||||
| Cost of share based payments | 637 | -163 | 474 | |||||
| Equity Dec 31, 2013 | 1,551 | 169 | -7,782 | 321 | -76 | 5,050 | 73,527 | 72,761 |
| Available-for-sale financial assets, net | 181 | 181 | ||||||
| Translation difference | 388 | 388 | ||||||
| Result of the financial year | 15,772 | 15,772 | ||||||
| Total comprehensive income for the year | 181 | 388 | 15,772 | 16,340 | ||||
| Dividends | -9,346 | -9,346 | ||||||
| Cost of share based payments | 726 | 37 | -658 | 104 | ||||
| Other changes | 68 | 14 | -7 | 75 | ||||
| Equity Dec 31, 2014 | 1,551 | 169 | -6,989 | 502 | 312 | 5,101 | 79,287 | 79,934 |
More information is stated in disclosure 18. Shaholders' equity
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 16
NOTES TO THE FINANCIAL STATEMENTS
ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED FINANCIAL STATEMENTS
Basic information
F-Secure produces online security and privacy services for consumers and businesses against malware and other threats, as well as cloud storage services enabling storing and sharing of important data.
The Parent Company of the Group is F-Secure Corporation incorporated in Finland and domiciled in Helsinki. Company's registered address is Tammasaarenkatu 7, 00180 Helsinki. A copy of consolidated financial statements can be downloaded on www.f-secure.com or can be received from the parent company's registered address.
The consolidated financial statements for 2014 were authorized for issue by the Board of Directors on 13 February 2015. According to the Finnish Companies Act, the Annual General Meeting can confirm or reject the consolidated financial statements after publication. The General Annual Meeting can also decide to change the financial statements.
ACCOUNTING PRINCIPLES
The consolidated financial statements of F-Secure Corporation of 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS), applying the IAS and IFRS standards as well as SIC and IFRIC interpretations that had been approved by the EU by 31 December 2014. The disclosures also comply with the Finnish accounting legislation.
IFRS 12 Disclosure of Interest in Other Entities (effective for financial year beginning on or after 1 January 2014)
IAS 36 Recoverable Amount Disclosures for Non-Financial Assets – Amendments to IAS 36 (effective for financial year beginning on or after 1 January 2014) The amendments clarify the disclosure requirements on respect of fair value less costs of disposal.
IAS 39 Novation of Derivatives and Continuation of Hedge Accounting – Amendments to IAS 39 (effective for financial year beginning on or after 1 January 2014) The amendments provide an exception to the requirements to discontinue hedge accounting in certain circumstances in which there is a change in counterparty to a hedging instrument in order to achieve clearing for that instrument.
IFRIC 21 Levies (effective for financial year beginning on or after 17.6.2014) The interpretation clarifies that an entity recognizes a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs.
Management judgment on significant accounting principles and use of estimates and assumptions
The preparation of the consolidated financial statements requires the use of estimates and assumptions as well as use of judgment when applying accounting principles that affect the reported amount of assets and liabilities, and the reported amounts of revenues and expenses during reporting periods. It is possible that actual results may differ from these estimates.
The estimates are based on management's best knowledge at the reporting date. Estimates and assumptions are based upon past experience, as well as information available relating to the Group's expected development of the economic environment. Possible changes in estimates and assumptions are recognized in the period when they occur.
The key judgments and assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk a material adjustment are the following:
- Revenue recognition: service based project deliveries are recognized with the percentage of completion method, when the outcome is reliably estimated.
- Assessment of assets: at each reporting date, the Group assesses whether there is any indication that an asset may be impaired.
- Impairment of assets: the recoverable amount is determined based on value in use calculations. The key variables used in the calculations are profitability, growth rate and the discount rate. The key assumption used to determine the recoverable amount for goodwill, including sensitivity analysis, are further explained in note 12;
- Deferred tax assets: the Group has assessed how much unused tax losses can be utilized in the future. Further details are disclosed in note 13;
- Development expenditures carried forward: initial capitalization of cost is based on management's judgment on technological and economical feasibility. The Group has made assumptions regarding the expected future cash generation of the projects. Further details are disclosed in note 10.
- Recognizing share-based payment transactions: the cost of share-based payment transactions are based on the fair value at the date at which they were granted. The cost of cash-settled transactions is measured by reference to the fair value at the date of balance sheet. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 19.
Principles of consolidation
Subsidiaries in which F-Secure Corporation's holding exceeds 50 percent are consolidated in the financial statements. Subsidiaries are consolidated from the date on which the Group obtains control on them. The consolidation stops when the control ceases. The Group does not have any holdings in the associated companies.
All intra-group transactions and balances, including unrealized profits arising from intra-group transactions, have been eliminated on consolidation. Where necessary, the accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
...previous
Segment reporting
The Group has one segment; data security. Segment reporting is consistent with the internal reporting submitted to the chief operating decision-maker. The Leadership Team has been appointed the chief operating decision-maker, responsible for allocating resources and assessing performance as well as making strategic decisions.
Transactions in foreign currency
The consolidated financial statements of F-Secure Group are presented in Euros, which is the parent company's measurement currency. The balance sheets of Group companies whose reporting currencies are other than Euro are translated into Euros using the exchange rates prevailing on the balance sheet date. The income statements are translated at the average exchange rates for the financial year. The translation difference is recognized in the shareholders' equity and the change in other comprehensive income.
The Consolidated Statement of Cash Flows has been prepared by translating each subsidiary's individual cash flow statements at the average exchange rates for the financial year.
Foreign currencies are translated into the local currency using fixed monthly exchange rates. At the balance sheet date, assets and liabilities denominated in foreign currencies are translated at the rates of exchange prevailing at that date. Exchange rate gains and losses of financial transactions are recognized in the income statement under financial items.
INTANGIBLE ASSETS
Goodwill
Mutual ownership of shares has been accounted using the acquisition method. The cost of an acquisition is measured at the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess cost of acquisition over the fair value of the net assets of the subsidiary acquired is recognized as goodwill. Goodwill represents the excess of purchase cost over the fair value of separately identifiable assets less liabilities of acquired companies. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
Research and development costs
Research expenditure is recognized as an expense at the time it is incurred. Development expenditures incurred on individual projects of totally new products or product versions with significant new features are carried forward when they are technically feasible and their future recoverability can reasonably be regarded as assured. Depreciation is recorded on a straight-line basis over the estimated useful life of an asset. The estimated useful life of these assets is 3 years.
Other intangible assets
Other intangible assets recognized separately from goodwill in acquisitions consist of customer-based intangible assets. The fair value was measured by using Multi-Period Excess Earnings model. Depreciation is recorded on a straight-line basis over the estimated useful life of an asset. The estimated useful life of these assets is 8 years.
Other intangible assets include also intangible rights and software licenses. Assets with finite useful life are recorded at historical cost less accumulated depreciation. Depreciation of intangible rights is recorded on a progressive basis over the estimated useful life of an asset. Depreciation of software licenses is recorded on straight-line basis over the estimated useful life of an asset. The estimated useful lives of other intangible assets are as follows:
Intangible rights 5 years
Other intangible assets 5-10 years
Tangible assets
Other tangible assets include renovation costs of rented office space. Tangible assets are recorded at historical cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful life of an asset. The estimated useful lives of tangible assets are as follows:
Machinery and equipment 3-8 years
Other tangible assets 5-10 years
Ordinary repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred. The cost of major renovations is included in the assets' carrying amount when it is probable that the Group will derive future economic benefits in excess of the originally assessed standard or performance of the existing asset. Any gain or loss arising on unrecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized. Gains or losses on de-recognition are shown in other operating income or expenses.
Government grants
Government grants are recognized at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Grants which are received as compensation for incurred expenses are recognized as income over the period necessary to match the grant to the costs that it is intended to compensate, on a systematic basis. These grants are recognized as other operating income in the income statement.
Inventories
Inventories are valued at the lower of cost and net realizable value. Cost is determined by first-in first-out method. Net realizable value is the estimated selling price that is obtainable, less estimated costs of completion and the estimated costs necessary to make the sale.
Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. The Group has only operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.
Impairment of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. The recoverable amount is estimated annually for the following assets regardless of whether any indication of impairment: goodwill, intangible assets with an indefinite useful life and intangible assets. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and written down to its recoverable
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
...previous
amount. The recoverable amount is the fair value of an asset less costs to sell or its value in use, whichever is higher. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. The maximum reversal of an impairment loss amounts to no more than the carrying amount of the asset if no impairment loss had been recognized, net of depreciation. Impairment losses relating to Goodwill cannot be reversed in future periods.
Pensions
All of F-Secure Group's pension arrangements are in accordance with local statutory arrangements and defined contribution plans. Contributions to defined contribution plans are recognized in the income statement in the period to which the contributions relate. The Group recognizes disability commitment of Finnish TYEL pension plan when disability appears.
Share-based payment transactions
In the Company's industry it is common practice internationally that incentives are provided to employees in the form of equity-settled share-based instruments. Company has two kinds of incentive programs; a synthetic warrant-based program and a share-based program.
The Company's warrant programs cover key personnel. The synthetic warrant-based program is settled as cash-settled payment. The cost of cash-settled transactions with employees is measured by reference to the fair value at the date of balance sheet. The fair value is determined by using the Binomial model. The cost of transactions is recognized, together with a corresponding entry in liability, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). If the holder of the warrant leaves the company before vesting, the warrant is forfeited. The cumulative expense recognized for transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the directors of the Group at that date, based on the best available estimate of the number of equity instruments that will ultimately vest.
The share-based incentive program has been established as part of the key employee incentive and retention system inside FSecure Group. Reward will be settled in two phases so that one part is settled as equity-settled payment and one part as cash-settled payment. Cost of equity-settled transactions is measured by reference to the fair value by using market price of F-Secure Corporation share at the date on which they are granted and cost of cash-settled by using market price of F-Secure Corporation on the date of balance sheet. The cost is recognized over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the reward (end of lock-up period). The cost of equity-settle corresponding entry is recognized in equity and cost of cash-settle in liabilities. If relevant employee leaves Company before being fully entitled to the reward, the reward is forfeited. The cumulative expense recognized for share-based incentive program transactions at each reporting date is based on the best available estimate of the number of equity instruments that will ultimately be fulfilled.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The Group has no provisions.
Income taxes
Direct current taxes are calculated on the results of all Group companies in accordance with the local tax and accounting rules in each country. Deferred taxes, resulting from temporary differences between the financial statement and the income tax basis of assets and liabilities, use the enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available.
Revenue recognition
Revenue is primarily derived from monthly software as a service sale, software license agreement sales and operator's system integration and maintenance sales. License agreements consist of initial license agreements and periodic maintenance agreements covering product updates and customer support. The revenue recognition policy of F-Secure Group recognizes the service revenue at the time of delivery, the license agreement's license fee revenues as the product is delivered, the license agreement's maintenance revenues are recognized over the maintenance period, and service based project deliveries are recognized with the percentage of completion method, when the outcome can be reliably estimated. The degree of completion is determined by relation of project costs incurred for work performed to date bear the estimated total project costs. If total project costs will exceed total project revenue, the expected loss is recognized as an expense immediately. Indirect taxes, discounts granted and exchange rate differences are excluded from net sales.
Other operating income
Other operating income includes profits from the sales of fixed assets, rental revenue, and government grants received for research and development projects.
Presentation of expenses
Classification of the functionally presented expenses has been made as follows: various types of expenses in different geographical locations have been allocated to the various functions by allocating directly allocable expenses to the respective function, and other operating expenses have been allocated to functions on the basis of the average headcount in each location.
Operating results
IAS 1 Presentation of Financial Statements standard does not define the concept of operating result. The Group has defined it as follows: operating result is the net amount, which consists of the net sales and other operating income less cost of purchase which is adjusted for changes in inventories, and reduced employee benefit costs, depreciation, possible impairment losses and other operating expenses.
Non-recurring items
One-off items include mainly income and expenses related to restructurings, non-current impairment of assets and other non-recurring items which are not based on the Group's
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
...previous
normal activities and which distort the comparability of the groups underlying profitability.
Treasury shares
Parent company has acquired treasury shares in years 2008–2011. The cost of acquisition is recognized as a deduction in the shareholders’ equity.
Financial assets
According to IAS 39 standard, financial assets have been classified into financial assets at fair value through profit or loss, held-to-maturity, loans and receivables originated by the enterprise and available-for-sale financial assets. The classification is dependent on the purpose for which the assets were acquired. Purchases and sales of financial assets are recognized on the trade date i.e. the date that the Group commits to purchase the asset. The cost of purchase includes transaction costs. Financial assets are currently classified as loans and receivables and available-for-sale financial asset.
Loans and receivables originated by the enterprise are measured at amortized cost. Trade receivables are carried at the original invoice amount to customers less an estimate made for doubtful receivables. The Group assesses, at each reporting date, whether there is objective evidence that trade receivables are impaired. Evidence of impairment may include indications that the debtor is experiencing significant financial difficulty, probability of bankruptcy or non-payments and delay of payment more than 90 days. Outstanding receivables are reviewed periodically and bad debts are written off when identified.
Available-for-sale financial assets consist of interest-bearing debt securities and shares in mutual funds invested in similar instruments. For assets that are actively traded in organized financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date. Assets, the fair value of which cannot be measured reliably, are recognized at cost less impairment. The fair value changes of available-for-sale financial assets are recognized in shareholders’ equity under fair value reserve. When financial assets recognized as available-for-sale is sold, the accumulated fair value changes are released from equity and recognized in the income statement.
Cash and cash equivalents in the Consolidated Statement of Financial position comprise cash at bank and in hand and other highly liquid short-term investments.
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
Financial liabilities
According to IAS 39 standard, financial liabilities have been classified into financial liabilities at fair value through profit or loss, loans and liabilities originated by the enterprise.
Financial liabilities are initially recognized at fair value. The Group’s financial liabilities consist of short-term trade payables.
Derivative financial instruments and hedging
The Group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign currency fluctuations. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently recognized at fair value. Any gains and losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly to net profit or loss for the year. The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The gains and losses arising from the changes of fair values are booked to profit and loss account because the Group does not include the derivative contracts in hedge accounting.
Adoption of new and revised IFRS standards
Annual Improvements to IFRSs 2010–2012 and 2011–2013 (effective mainly for financial year beginning on or after 1.7. 2014) as well as 2012–2014 (effective for financial year beginning on or after 1 January 2016). The improvements include small changes.
IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation – Amendments to IAS 16 and IAS 38 (effective for financial year beginning on or after 1 January 2016). The amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through
use of the asset. As a result, the ratio of revenue generated to total revenue expected to be generated cannot be used to depreciate the property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The Group expects that the revised standards will have an effect on the Group’s financial statements.
IFRS 15 Revenue from Contracts with Customers (effective for annual periods beginning on or after 1 January 2017). The standard outlines the principles an entity must apply to measure and recognize revenue. The core principle is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. The Group is currently assessing the impact of IFRS 15 on the consolidated financial statements.
IFRS 9 Financial Instruments (effective for annual periods on or after 1 January 2018). IFRS 9 replaces the IAS 9 standard. It includes a logical model for classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially-reformed approach to hedge accounting. The Group is currently assessing the impact of IFRS 9 on the consolidated financial statements.
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
1. SEGMENT INFORMATION
The Group has one business segment; data and content security. The chief operating decision maker i.e. the Leadership Team gets financial information on a monthly basis of the revenue of the sales channels. The revenues of different geographical areas are presented by the location of the customers and the long-term assets by the location of the assets.
Sales channels
| Consolidated Dec 31, 2014 | Operator Channel | Other Channels | Group | |
|---|---|---|---|---|
| Revenue from external customers | 91,892 | 61,950 | 153,842 | |
| Consolidated Dec 31, 2013 | Operator Channel | Other Channels | Group | |
| Revenue from external customers | 95,310 | 59,788 | 155,098 |
Geographical information
| Consolidated Dec 31, 2014 | Finland and Scandinavia | Rest of Europe | North America | Rest of the world | Group |
|---|---|---|---|---|---|
| Revenue from external customers | 48,344 | 70,430 | 15,583 | 19,485 | 153,842 |
| Segment long-term assets | 17,696 | 20,718 | 1,687 | 599 | 40,700 |
| Consolidated Dec 31, 2013 | Finland and Scandinavia | Rest of Europe | North America | Rest of the world | Group |
| Revenue from external customers | 47,398 | 70,091 | 17,844 | 19,765 | 155,098 |
| Segment long-term assets | 20,119 | 23,043 | 573 | 831 | 44,566 |
2. OTHER OPERATING INCOME
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Rental revenue | 153 | 149 |
| Government grants | 2,704 | 2,513 |
| Other | 133 | 45 |
| Total | 2,991 | 2,707 |
3. DEPRECIATION
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Depreciation from non-current assets | ||
| Other intangible assets | -2,415 | -2,185 |
| Capitalized development | -2,706 | -2,606 |
| Intangible assets | -5,122 | -4,791 |
| Machinery and equipment | -3,858 | -3,799 |
| Other tangible assets | -279 | -373 |
| Tangible assets | -4,138 | -4,172 |
| Total | -9,259 | -8,963 |
| Depreciations by function | ||
| Sales and marketing | -4,902 | -3,944 |
| Research and development | -4,147 | -4,831 |
| Administration | -210 | -188 |
| Total | -9,259 | -8,963 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 21
4. PERSONNEL EXPENSES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Personnel expenses | ||
| Wages and salaries | -57,414 | -54,052 |
| Pension expenses – defined contribution plan | -7,807 | -7,157 |
| Share-based payments | -670 | -1,264 |
| Other social expenses | -4,771 | -4,837 |
| Total | -70,663 | -67,309 |
Employee benefits of Management are stated in disclosure 26. Related party transactions
Share-based payments are stated in disclosure 19. Share-based payment transactions
| Average number of personnel | 937 | 949 |
|---|---|---|
| Personnel by function Dec 31 | ||
| Sales and marketing | 469 | 437 |
| Research and development | 325 | 366 |
| Administration | 127 | 136 |
| Total | 921 | 939 |
5. NON-RECURRING ITEMS
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Restructuring of content cloud business | ||
| Personnel expenses | -3,509 | |
| Other operating expenses | -798 | |
| Total | -4,308 | |
| Non-recurring items by function | ||
| Sales and marketing | -3,236 | |
| Research and development | -409 | |
| Administration | -663 | |
| Total | -4,308 |
6. AUDIT FEES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Group auditor | ||
| Audit fees | -146 | -138 |
| Tax consulting | -103 | -34 |
| Other consulting | -84 | -110 |
| Total | -333 | -283 |
| Others | ||
| Audit fees | -19 | -19 |
| Tax consulting | -20 | -29 |
| Total | -39 | -48 |
7. FINANCIAL INCOME AND EXPENSES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Financial income | ||
| Dividends from Available-for-sale financial assets | 5 | 2 |
| Other income from Available-for-sale financial assets | 827 | 103 |
| Interest income from loans and receivables | 25 | 155 |
| Exchange gains | 683 | 913 |
| Other financial income | 27 | 9 |
| Total | 1,566 | 1,182 |
| Financial expenses | ||
| Interest expense from loans and other liabilities | -7 | -56 |
| Exchange losses | -397 | -1,697 |
| Other financial expenses | -42 | -142 |
| Total | -446 | -1,896 |
| Components of other comprehensive income | ||
| Available-for-sale financial assets | ||
| Gains/(losses) arising during the year | 565 | 201 |
| Reclassification adjustments included in the income statement | -339 | -60 |
| Total | 226 | 141 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 22
8. INCOME TAXES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Income taxes of the business activity | -4,581 | -8,088 |
| Income taxes from previous years | 1,936 | -1,245 |
| Deferred tax | -1,485 | -528 |
| Total | -4,130 | -9,861 |
| Components of other comprehensive income | ||
| Available-for-sale financial assets | -45 | -15 |
A reconciliation of income tax expense applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the Groups' effective income tax rate for the years ended 31 December 2014 and 2013 is as follows:
| Result before taxes | 19,902 | 26,329 |
|---|---|---|
| Income taxes at statutory rate of 20%/24,5% | -3,980 | -6,451 |
| Taxes on foreign subsidiaries' net income in excess of income taxes at statutory rates | -70 | -35 |
| The change in tax rates | -474 | |
| Non-deductible expenses/tax-exempt revenues | -746 | 259 |
| Unrecognised tax losses | 45 | |
| Income taxes from previous years | 1,936 | -1,245 |
| Other | -1,270 | -1,960 |
| Total | -4,130 | -9,861 |
In year 2013 Finnish tax authorities changed their interpretation of the right to deduct paid withholding tax in some countries. Thus, the Parent Company was obligated to pay previously approved withholding tax from 2012. This applied also to the financial year 2013. During the period Parent Company has recovered back withholding tax from years 2012 and 2013 totaling 1.5 million euros.
9. EARNINGS PER SHARE
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year adjusted for the effects of dilutive options. | ||
| Net profit attributable to equity holders from continuing operations | 15,772 | 16,468 |
| Weighted average number of ordinary shares (1,000) | 155,757 | 155,374 |
| Effect of dilution: share options | 9 | |
| Adjusted weighted average number of ordinary shares for diluted earning per share | 155,757 | 155,383 |
| Basic earnings per share (EUR/share) | 0.10 | 0.11 |
| Diluted earnings per share (EUR/share) | 0.10 | 0.11 |
The weighted average number of shares take into account the effect of change in treasury shares.
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 23
- NON-CURRENT ASSETS
| INTANGIBLE ASSETS | TANGIBLE ASSETS | ||||||
|---|---|---|---|---|---|---|---|
| Other Intangible | Capitalized development | Goodwill | Total | Machinery & equipment | Other Tangible | Total | |
| Acquisition cost Jan 1, 2013 | 24,586 | 18,382 | 19,398 | 62,366 | 26,709 | 3,994 | 30,703 |
| Translation difference | -60 | -60 | -269 | -214 | -483 | ||
| Additions | 498 | 344 | 842 | 2,947 | 2,947 | ||
| Disposals | -405 | -137 | -542 | ||||
| Acquisition cost Dec 31, 2013 | 25,024 | 18,726 | 19,398 | 63,148 | 28,983 | 3,643 | 32,625 |
| Translation difference | 26 | 26 | 285 | 83 | 369 | ||
| Additions | 79 | 2,261 | 2,340 | 4,284 | 69 | 4,353 | |
| Disposals | -58 | -58 | -3,827 | -237 | -4,064 | ||
| Acquisition cost Dec 31, 2014 | 25,072 | 20,987 | 19,398 | 65,457 | 29,725 | 3,558 | 33,283 |
| Acc. depreciations Jan 1, 2013 | -17,735 | -4,388 | -22,122 | -18,139 | -2,797 | -20,936 | |
| Translation difference | -3 | -3 | 224 | 159 | 383 | ||
| Depreciation of the financial year | -2,179 | -2,606 | -4,785 | -3,787 | -338 | -4,125 | |
| Depreciation of disposals | 371 | 10 | 381 | ||||
| Acc. depreciations Dec 31, 2013 | -19,918 | -6,994 | -26,910 | -21,332 | -2,966 | -24,297 | |
| Translation difference | -23 | -23 | -246 | -67 | -312 | ||
| Depreciation of the financial year | -2,417 | -2,706 | -5,123 | -3,858 | -279 | -4,137 | |
| Depreciation of disposals | 58 | 58 | 2,578 | 127 | 2,705 | ||
| Acc. depreciations Dec 31, 2014 | -22,299 | -9,700 | -31,998 | -22,857 | -3,185 | -26,042 | |
| Book value as at Dec 31, 2013 | 5,107 | 11,732 | 19,398 | 36,238 | 7,651 | 677 | 8,328 |
| Book value as at Dec 31, 2014 | 2,772 | 11,287 | 19,398 | 33,458 | 6,868 | 373 | 7,241 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 24
11. INVESTMENTS IN ASSOCIATE
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Book value as at Jan 1 | 94 | |
| Share of associated companies’ results | –94 | |
| Book value as at Dec 31 |
12. IMPAIRMENT TESTING OF GOODWILL
In impairment testing the Group’s assets are tested against the Group’s total generated cash flow.
The cash flow estimates have been reviewed by the management and cover the next five years. The estimates are based on 2015 planning and after that revenue growth of 5% during 2015–2018, and after that terminal growth of 1%. The CAGR of 5% growth is based on Gartner’s estimation of revenues for the consumer and enterprise antivirus business globally. (source: Gartner). The profitability is based on past years’ profitability level, 2015 planning and longer term communicated profitability target level. The used discount rate is 12.2% before taxes. The impairment test, based on these assumptions, show no need to impair assets and/or goodwill.
Sensitivity to changes in assumptions
The main parameters in the calculations are profitability, growth rate and discount rate. If the revenue growth was as calculated and the profitability would decline below 7%, or if the profitability level remained the same, and the revenue would decline by 20% compared to previous year (year after year) in 2015–2019, the discounted amount would meet the book value. Test is not practically sensitive to discount rate.
13. DEFERRED TAX
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Deferred tax assets | ||
| Other temporary differences | 2,913 | 3,905 |
| Losses carried forward | 512 | |
| Total | 2,913 | 4,417 |
| Deferred tax assets, changes in year | ||
| Recognized in profit or loss | –1,504 | –618 |
| Deferred tax liability | ||
| Other temporary differences | 228 | 230 |
| Fair value adjustments on acquisition | 44 | 62 |
| Change in fair value, available-for-sale | 125 | 80 |
| Total | 398 | 372 |
| Deferred tax liabilities, changes in year | ||
| Recognized in profit or loss | –19 | –89 |
| Recognized in other comprehensive income | 45 | 15 |
At December 31, 2014 the Group had 5.8 million euro losses carried forward that are available indefinitely for offset against future taxable profits in the companies in which the losses arose.
14. INVENTORIES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Other inventories | 108 | 270 |
No impairment was recognized from inventories in years 2014 and 2013.
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 25
15. RECEIVABLES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Current receivables | ||
| Trade receivables | 34,306 | 32,737 |
| Loan receivables | 11 | 15 |
| Other receivables | 2,099 | 1,178 |
| Prepaid expenses and accrued income | 6,062 | 5,297 |
| Accrued income tax | 2,140 | 260 |
| Total | 44,619 | 39,487 |
As at 31 December 2014, trade receivables at nominal value of 964 thousand EUR (2013: 863 thousand EUR) were impaired and fully provided for.
Trade receivables
| Book value as at Jan 1 | 863 | 1,135 |
|---|---|---|
| Charge for the year | 204 | -65 |
| Utilised | -103 | -207 |
| Book value as at Dec 31 | 964 | 863 |
| Ageing analysis of trade receivables | total | not due |
| --- | --- | --- |
| As at 31 Dec, 2014 | 34,306 | 26,457 |
| As at 31 Dec, 2013 | 32,737 | 25,018 |
Material items included in prepaid expenses and accrued income
| Prepaid expenses | 3,913 | 3,361 |
|---|---|---|
| Prepaid expenses, royalty | 2,149 | 1,936 |
| Total | 6,062 | 5,297 |
16. AVAILABLE-FOR-SALE FINANCIAL ASSETS
Available-for-sale financial assets consist of interest-bearing debt securities and shares in funds invested in similar instruments. For assets that are actively traded in organized financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date. Assets, for which fair value cannot be measured reliably, are recognized at cost less impairment. The fair value changes of available-for-sale financial assets are recognized in shareholders' equity under fair value reserve.
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Fair value as at Jan 1 | 25,685 | 16,792 |
| Additions/deductions, net | 13,997 | 8,493 |
| Change in fair value | 627 | 401 |
| Fair value as at Dec 31 | 40,309 | 25,685 |
| Shares – unlisted | 70 | 147 |
| Maturity date less than 3 months | 40,239 | 25,538 |
| Fair value as at Dec 31 | 40,309 | 25,685 |
| Acquisition value as at Dec 31 | 39,682 | 25,284 |
17. CASH AND SHORT-TERM DEPOSITS
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Cash at bank and in hand | 21,067 | 22,210 |
Available-for-sale financial assets are recognized as liquid short-term investments and are held as part of the Group's ongoing cash management activities. See note 22. Financial risk management objectives and policies.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise the following at December 31:
| Cash at bank and in hand | 21,067 | 22,210 |
|---|---|---|
| Available-for-sale | 40,239 | 25,538 |
| Total | 61,306 | 47,748 |
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 26
18. SHAREHOLDERS' EQUITY
Issued and fully paid
| EUR 1,000 | Number of shares | Share capital | Share premium fund | Unrestricted equity reserve | Treasury shares |
|---|---|---|---|---|---|
| Dec 31, 2012 | 155,066,349 | 1,551 | 169 | 5,051 | -8,418 |
| Exercise of share based incentive | 316,555 | 636 | |||
| Dec 31, 2013 | 155,382,904 | 1,551 | 169 | 5,051 | -7,782 |
| Board compensation | 31,432 | 14 | 68 | ||
| Exercise of share based incentive | 379,591 | 37 | 726 | ||
| Dec 31, 2014 | 155,793,927 | 1,551 | 169 | 5,101 | -6,989 |
The share capital amounted to 1,551,311 euro and the number of shares was 158,798,739 (including own shares 3,004,812) at the end of the year 2014. A share has no nominal value. Accountable par value is EUR 0.01.
Share premium fund
Proceeds from exercised warrants were recognized under the share capital and share premium fund until March 26, 2008.
Unrestricted equity reserve
On March 20, 2007, the shareholders' meeting decided to decrease the share premium fund. The decreased amount of 33,582 thousand euro was transferred to unrestricted equity reserve. On March 26, 2008, the shareholders' meeting decided that the total amount of the subscription prices paid for new shares issued after the date of the meeting, based on stock options under the F-Secure Stock Option Plan 2005, be recorded in company's unrestricted equity reserve. Any excess after settling treasury shares as share based incentive and as board compensation is recorded in unrestricted equity reserve.
Translation differences
The translation difference is used to record exchange difference arising from the translation of the financial statements of foreign subsidiaries.
Dividends proposed and paid
Proposed for approval at AGM for year 2014 0.16 euro per share.
Final dividend for year 2013 0.06 euro per share, paid during the year 2014: 9,345,749.70 euro
Final dividend for year 2012 0.06 euro per share, paid during the year 2013: 9,322,974.24 euro
Treasury shares
The cost of acquisition is recognised as a deduction in the shareholders' equity. The shares were acquired through public trading on NASDAQ OMX Helsinki in accordance with its rules and at market price. The parent company has not acquired treasury shares during the period. The parent companies' treasury shares were exercised during the period as share based incentive and as board compensation.
The total number of acquired treasury shares was 3,004,812 at the end of the year 2014. This represent 1.89 percent of the company's voting power on December 31, 2014.
Fair value reserve
The reserve is used to record increments and decrements in the fair value of available-for-sale financial assets.
| EUR 1,000 | FAIR VALUE, AVAILABLE-FOR-SALE | Total | ||
|---|---|---|---|---|
| Before tax | Tax | After tax | ||
| Equity Dec 31, 2012 | 259 | -65 | 195 | 195 |
| Available-for-sale, net | 282 | -30 | 252 | 252 |
| Fair value gains/losses to PL | -141 | 15 | -126 | -126 |
| Equity Dec 31, 2013 | 400 | -80 | 321 | 321 |
| Available-for-sale, net | 452 | -90 | 362 | 362 |
| Fair value gains/losses to PL | -226 | 45 | -181 | -181 |
| Equity Dec 31, 2014 | 626 | -125 | 502 | 502 |
19. SHARE-BASED PAYMENT TRANSACTIONS
During the period the Group have had three different incentive plans which cover the key personnel.
Synthetic option-based incentive programs
The synthetic option-based incentive program have been established on November 2012 as part of the key employee incentive and retention system within F-Secure Group. The program offer for the participants a possibility to receive synthetic options of F-Secure Corporation as a long-term incentive compensation. No reward can be given to any participating employee, whose employment has terminated before the end of the vesting period.
The synthetic option-based incentive program will last five years. The program comprises three granting periods and subsequent vesting period of two years after each granting year. The program 2012-2014 ends on December 31, 2016. Within the framework of each program, the aggregate number of options to be given as reward cannot exceed 5 million. The actual compensation is the difference of subscription price and the vesting price, and will be paid to the participating employees as a cash-settled payment.
The subscription price of the synthetic option is the weighted average share price in the period of October to December prior to the granting year. The vesting price is the weighted average share price in period of September to November prior to the payment month. The
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 27
subscription price for the granting period of 2012 is 1.85 by Board decision on November 22, 2012. The subscription price for the granting period of 2013 is 1.57. The subscription price for the granting period of 2014 is 1.88.
Options outstanding
| EUR 1,000 | Jan 1–Dec 31, 2014 | Jan 1–Dec 31, 2013 |
|---|---|---|
| Outstanding Jan 01 | 1,805,000 | 1,845,000 |
| Granted | 900,000 | 965,000 |
| Forfeited | 170,000 | 230,000 |
| Exercised | 825,000 | |
| Expired | 775,000 | |
| Outstanding Dec 31 | 1,710,000 | 1,805,000 |
Expense arising from share-based payment transactions during the period was 504 thousand euro (88 thousand euro in year 2013). The carrying amount of liability at December 31, 2014 was 420 thousand euro.
The fair value of options granted during the period was determined by using the Binomial model.
Used arguments:
| Synthetic option program | ||
|---|---|---|
| 2014 | 2013 | |
| Weighted average share price € | 2.29 | 1.92 |
| Weighted average exercise price € | - | - |
| Expected volatility | 29.00% | 29.92% |
| Option life in years | 2.0 | 2.0 |
| Risk-free interest rate | 0.55% | 0.53% |
| Expected dividends | - | - |
Expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. Based on previous years, the company has estimated that 2–3% of granted options will be forfeited.
Share-based incentive programs
During the period the Group had two share-based incentive programs. The share-based incentive program has been established as part of the key employee incentive and retention system within F-Secure Group. The programs will offer for the participants a possibility to receive shares of F-Secure Corporation as an incentive reward if the Company's financial targets set for the earning period have been achieved. No reward can be given to any participating employee, whose employment has terminated before the end of the lock-up period.
The share-based incentive program 2011–2013 has been established in March 2011. The program will last five years. It comprises three earning and lock-up periods. The program ends on December 31, 2015. The rewards will be settled in two phases so that one part is settled as equity-settled payment and one part as cash-settled payment. The participants in the share-based incentive program are recommended not to sell more than 50% of the received shares and to cumulate the shares received from the share program equals the annual gross base salary of the employee. On the basis of the program maximum total of 2,500,000 shares and a cash payment corresponding the registration date value of the shares shall be given as reward.
The share-based incentive program 2014–2016 has been established in March 2014. The program will last five years. It comprises three earning periods. Each earning period lasts three years. The program ends on December 31, 2018. The rewards will be settled in two phases so that one part is settled as equity-settled payment and one part as cash-settled payment. On the basis of the program maximum total of 10,000,000 shares and a cash payment corresponding to the registration date value of the shares shall be given as reward. The Board approves the metrics, targets and participants on annual basis for each earning period.
The participating employee shall be entitled to the shareholder rights of to the reward shares from the moment the shares have been entered into the participating employee's book-entry account.
Expense arising from the share-based payment transactions during the period was 166 thousand euro (1,190 thousand euro in year 2013). During the period F-Secure has assigned a total of 379,591 shares and cash payment payment corresponding the registration measured by reference to the fair value of the F-Secure Corporation share at the date on which they are granted. The costs of cash-settled transactions are measured by reference to the fair value of the F-Secure Corporation share on the date of balance sheet. The Group has estimated the number of equity instruments that will ultimately fulfill.
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 28
20. LIABILITIES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Non-current liabilities | ||
| Deferred revenues | 11,028 | 9,159 |
| Total | 11,028 | 9,159 |
| Current liabilities | ||
| Deferred revenues | 31,959 | 29,553 |
| Trade payables | 6,941 | 5,194 |
| Other liabilities | 2,491 | 2,006 |
| Accrued expenses | 16,181 | 15,859 |
| Income tax liabilities | 784 | 1,732 |
| Total | 58,356 | 54,344 |
| Material amounts shown under accruals and deferred income | ||
| Accrued personnel expenses | 11,930 | 11,476 |
| Deferred royalty | 1,160 | 958 |
| Accrued expenses | 3,092 | 3,425 |
| Total | 16,181 | 15,859 |
21. FINANCIAL ASSETS AND LIABILITIES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Loans and other receivables | 11 | 15 |
| Trade receivables | 34,306 | 32,737 |
| Available-for-sale financial assets | 40,309 | 25,685 |
| Cash and bank accounts | 21,067 | 22,210 |
| Trade payables | -6,941 | -5,194 |
| Total | 88,752 | 75,453 |
The carrying amounts of the Group's financial instruments are equivalent to fair values.
Fair value hierarchy
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique
- Level 1: quoted prices in active markets for identical assets or liabilities
- Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data
| Assets measured at fair value | Total | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Available-for-sale financial assets Dec 31, 2014 | 40,309 | 40,239 | – | 70 |
| Available-for-sale financial assets Dec 31, 2013 | 25,685 | 25,538 | – | 147 |
During the reporting period ending 31 December 2014, there were no transfers between levels.
22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
General
The goal of risk management is to identify risks that may hinder the group from achieving its business objectives. The responsibility for the company's risk management lies with CEO, the management and finally with the Board of Directors. The risks related to the Group's financial instruments are mainly related to credit risks and foreign currency fluctuations. The Group's available-for-sale assets are also exposed to interest rate fluctuations.
Credit risk
The Group trades only with recognized, creditworthy third parties. Receivable balances are monitored and collected on an ongoing basis. The maximum exposure to credit risk at the reporting date is the carrying value of financial assets. There are no significant concentrations of credit risk within the Group. See notes 15. Receivables and 21. Financial assets and liabilities.
Liquidity risk
Despite of the economic downturn the Group's liquidity remained good. At the end of the year the market value of the liquid funds was 61.3 million euros (47.7 million euros in 2013) of which 40.3 million of were available-for-sale and the rest were cash and bank reserves. The Group's financial management makes regularly cash flow forecasts to ensure the financial needs of the business operations. The management has not identified any significant concentrations of liquidity risks in the financial assets or in sources of finance.
Foreign currency risk
The Group invoices mainly in Euros. However, there are some transactional currency exposures that arise from sales or purchasing in other currencies. The other main measurement currencies are USD, JPY, SEK, GBP and BRL. In order to minimize the impact of the fluctuation of the exchange rates, the goal is to use forward currency contracts to eliminate the currency exposure of the estimated cash flow of these currencies for a period of six months.
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 29
...previous
Derivatives
Currency instruments – Currency forward contract
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Nominal value | 1,979 | 2,785 |
| Fair value | 55 | 122 |
F-Secure Corporation has hedged receivables denominated in JPY, GBP and SEK with forward rate contracts. The forward rate contracts expires on January 22, 2015. The company does not have other derivatives.
F-Secure Corporation does not hedge investments made in its subsidiaries because the impact of changes of exchange rates would not be relevant in the Group's balance sheet.
| Sales in different currencies | % | % |
|---|---|---|
| EUR | 67 | 65 |
| SEK, GBP | 11 | 12 |
| USD, JPY | 17 | 18 |
| Other currencies | 5 | 5 |
| 100 | 100 |
The risk involved in the sales in foreign currency is notably diminished by the operational expenses in subsidiaries that use the same currency.
Financial assets and liabilities in different currencies
| EUR | % | % |
|---|---|---|
| EUR | 73 | 71 |
| SEK, GBP | 6 | 8 |
| USD, JPY | 14 | 13 |
| Other currencies | 7 | 8 |
| 100 | 100 |
The table below demonstrates how sensitive the Group's profit before taxes is to reasonably possible changes in the USD, JPY, SEK, GBP and BRL exchange rate, assuming that all other variables are held constant. The analysis is based +/-10% exchange rate change on trade receivables and includes forward currency contracts.
| USD, JPY | +444/-444 | +373/-373 |
|---|---|---|
| GBP, SEK | +284/-284 | +286/-286 |
| BRL | +180/-180 | +237/-237 |
Interest rate risk
The Group does not have any interest bearing liabilities. Based on the Group's conservative investment policy, it invests its cash mainly in short term and low risk funds. Investments are made in creditworthy funds. These available-for-sale investments are exposed to market risk for changes in interest risks.
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of cash and available-for-sale financial assets. See note 16.
Capital management
The Group's shareholders' equity is managed as capital. There are no external capital requirements related to the equity. The objective of the Group's capital management is to maintain an efficient capital structure that ensures the functioning of business operations and promotes the shareholder value. The Group's capital structure is reviewed as a part of financial performance monitoring.
The capital structure can be adjusted among other things by distribution of dividends, share repurchase or capital repayment. The dividend policy of F-Secure Corporation is to pay approximately half of its annual profit as dividend. Subject to circumstances, the Company may deviate from its policy.
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 30
23. NOTES TO CASH FLOW STATEMENT
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Adjustments | ||
| Deferred income | 4,549 | 2,101 |
| Depreciation and amortization | 9,259 | 8,963 |
| Profit / loss on sale of fixed assets | 308 | 27 |
| Other adjustments | -1,136 | -833 |
| Financial income and expenses | -1,120 | 714 |
| Income taxes | 4,130 | 9,861 |
| Total | 15,991 | 20,833 |
24. OPERATING LEASE COMMITMENTS
The Group has entered into commercial leases on office space and on motor vehicles. Motor vehicle leases have an average life of three years and office space between two and five years with renewal terms included in the contracts.
Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows
As lessee
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Within one year | 5,572 | 5,724 |
| After one year but not more than five years | 4,537 | 6,452 |
| Total | 10,109 | 12,176 |
| Rents during the period | 5,299 | 5,274 |
25. CONTINGENT LIABILITIES
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Other liabilities | ||
| Others | 40 | 40 |
F-Secure is a party in some disputes and is defending itself accordingly. Currently the Company is not able to assess the likelihood or amount of possible damages.
26. RELATED PARTY DISCLOSURES
The Group's related parties include Parent Company and subsidiaries, as well as members of the Board, Managing Director and members of the Leadership Team.
Compensation of the key management personnel of the Group
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Wages and other short-term employee benefits | 2,230 | 2,575 |
| Share-based payments | 332 | 430 |
| Total | 2,562 | 3,005 |
Wages and other short-term employee benefits
| EUR 1,000 | Consolidated 2014 | Consolidated 2013 |
|---|---|---|
| Managing Director | 396 | 420 |
| Members of the Board of Directors | 245 | 240 |
Board of Directors 2014 and Managing Director
| EUR 1,000 | Wages | Fees | Incentive reward | Other compensations |
|---|---|---|---|---|
| Christian Fredrikson, Managing Director | 396 | - | 293 | - |
| Risto Siilasmaa, Chairman of the Board | - | 55 | - | - |
| Jussi Arovaara | - | 30 | - | - |
| Sari Baldauf | - | 8 | - | - |
| Pertti Ervi | - | 40 | - | - |
| Matti Heikkonen | - | 30 | - | - |
| Juho Malmberg | - | 30 | - | - |
| Anu Nissinen | - | 30 | - | - |
| Peter Vesterbacka | - | 23 | - | - |
| Total | 396 | 245 | 293 | - |
Incentive reward granted to Managing Director is measured as following; the equity-settled part to the fair value of the F-Secure Corporation share at the date which it was granted and cash-settled part to the fair value of the share on the date of balance sheet. The cost is recognized over the period in which the performance conditions are fulfilled 23.4.2014–31.12.2016.
The Managing Director's retirement age and the determination of his pension conform to the standard rules specified by Finland's Employee Pension Act (TYEL). The pension cost of the
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 31
...previous
Managing Director over the period was 73 thousand euro (77 thousand euro in year 2013). The period of notice for the Managing Director is six (6) months both ways and Managing Director is entitled to severance payment equivalent of six (6) months' salary.
The consolidated financial statements include the financial statements of corporations listed in the following table.
| Name | Country of incorporation | Group (%) |
|---|---|---|
| Parent F-Secure Corporation, Helsinki | Finland | |
| DF-Data Oy, Helsinki | Finland | 100 |
| F-Secure Inc., San Jose | United States | 100 |
| F-Secure (UK) Ltd, London | Great Britain | 100 |
| F-Secure KK, Tokyo | Japan | 100 |
| F-Secure GmbH, München | Germany | 100 |
| F-Secure eStore GmbH, München | Germany | 100 |
| F-Secure SARL, Maisons-Laffitte | France | 100 |
| F-Secure SDC SAS, Bordeaux | France | 100 |
| F-Secure France SARL, Maisons-Laffitte | France | 100 |
| F-Secure BVBA, Heverlee-Leuven | Belgium | 100 |
| F-Secure AB, Stockholm | Sweden | 100 |
| F-Secure Srl, Milano | Italy | 100 |
| F-Secure SP z.o.o., Warsaw | Poland | 100 |
| F-Secure Corporation (M) Sdn Bhd, Kuala Lumpur | Malaysia | 100 |
| F-Secure Pvt Ltd, New Delhi | India | 100 |
| F-Secure Pte Ltd, Singapore | Singapore | 100 |
| F-Secure B.V., Utrecht | The Netherlands | 100 |
| F-Secure Limited, Hong Kong | Hong Kong | 100 |
| F-Secure Pty Limited, Sydney | Australia | 100 |
| F-Secure Iberia SL, Barcelona | Spain | 100 |
| F-Secure do Brasil Tecnol.da Informacao Ltda, Sao Paolo | Brazil | 100 |
| F-Secure Chile Limitada, Santiago | Chile | 100 |
| F-Secure Colombia SAS, Bogota D.C. | Colombia | 100 |
| F-Secure Informatica S de RL de CV, Mexico City | Mexico | 100 |
| F-Secure Software (Shanghai) Co Ltd, Shanghai | China | 100 |
- SHARES AND SHAREHOLDERS, DECEMBER 31, 2014
Shares and share ownership distribution, December 31, 2014
| Shares | Number of shareholders | Percentage of shareholders | Total shares | Percentage of shares |
|---|---|---|---|---|
| 1–100 | 3,270 | 14.80% | 204,144 | 0.13% |
| 101–1,000 | 14,127 | 63.92% | 5,272,937 | 3.32% |
| 1,001–50,000 | 4,632 | 20.96% | 19,259,786 | 12.13% |
| 50,001–100,000 | 31 | 0.14% | 2,164,199 | 1.36% |
| 100,001– | 42 | 0.19% | 131,897,673 | 83.06% |
| Total | 22,102 | 100.00% | 158,798,739 | 100.00% |
| Shareholder category, December 31, 2014 | Total shares | Percentage of shares | ||
| --- | --- | --- | ||
| Corporations | 7,136,014 | 4.49% | ||
| Financial and insurance institutions | 32,426,069 | 20.42% | ||
| General government | 22,039,986 | 13.88% | ||
| Non-profit organizations | 953,097 | 0.60% | ||
| Households | 95,245,389 | 59.98% | ||
| Other countries and international organizations | 998,184 | 0.63% | ||
| Total | 158,798,739 | 100.00% |
next...
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 32
...previous
Largest shareholders and administrative register
| Owner | Shares | % shares | % votes |
|---|---|---|---|
| Risto Siilasmaa | 63,120,972 | 39.75% | 40.52% |
| Varma Mutual Pension Insurance Company | 8,210,660 | 5.17% | 5.27% |
| Elo Mutual Pension Insurance Company | 7,770,000 | 4.89% | 4.99% |
| Mandatum Life Insurance Company | 6,674,081 | 4.20% | 4.28% |
| Nordea Nordic Small Cap Fund | 4,932,966 | 3.11% | 3.17% |
| Ari Hyppönen | 3,843,332 | 2.42% | 2.47% |
| The State Pension Fund | 3,500,000 | 2.20% | 2.25% |
| Ismo Bergroth | 3,000,000 | 1.89% | 1.93% |
| Ilmarinen Mutual Pension Insurance Company | 2,329,829 | 1.47% | 1.50% |
| Kaleva Mutual Insurance Company | 2,036,000 | 1.28% | 1.31% |
Administrative register
| Nordea Pankki Suomi Oyj | 9,097,127 | 5.73% | 5.84% |
|---|---|---|---|
| Skandinaviska Enskilda Banken | 5,802,493 | 3.65% | 3.72% |
| Clearstream Banking S.A. | 497,494 | 0.31% | 0.32% |
| Other registers | 312,171 | 0.20% | 0.20% |
| Other shareholders | 34,666,802 | 21.83% | 22.25% |
| Total | 155,793,927 | 100.00% | |
| Own shares F-Secure Corporation | 3,004,812 | 1.89% | |
| Total | 158,798,739 | 100.00% |
Ownership of management
| Board of Directors | Shares | % shares |
|---|---|---|
| Risto Siilasmaa | 63,120,972 | 39.75% |
| Jussi Arovaara | 28,554 | 0.02% |
| Pertti Ervi | 32,910 | 0.02% |
| Matti Heikkonen | 9,972 | 0.01% |
| Juho Malmberg | 48,185 | 0.03% |
| Anu Nissinen | 28,554 | 0.02% |
| Peter Vesterbacka | 3,849 | 0.00% |
| Total | 63,269,147 | 39.84% |
| Executive Team | Shares | % shares |
| --- | --- | --- |
| Samu Konttinen | 67,103 | 0.04% |
| Timo Laaksonen | 9,039 | 0.01% |
| Jari Still | 100,657 | 0.06% |
| Taneli Virtanen | 50,149 | 0.03% |
| Total | 226,948 | 0.14% |
Ownership of management
The Board of Directors owned a total of 63,269,147 shares on December 31, 2014. This represents 39.8 percent of the Company's shares and 40.6 percent of votes.
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014
03 33
- KEY RATIOS
| Economic indicators | IFRS 2014 | IFRS 2013 | IFRS 2012 | IFRS 2011 | IFRS 2010 | Key ratios | IFRS 2014 | IFRS 2013 | IFRS 2012 | IFRS 2011 | IFRS 2010 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales (MEUR) | 153.8 | 155.1 | 157.2 | 146.0 | 130.1 | Earnings / share (EUR) | 0.10 | 0.11 | 0.09 | 0.11 | 0.10 |
| Net sales growth % | -1% | -1% | 8% | 12% | 4% | Earnings / share diluted | 0.10 | 0.11 | 0.09 | 0.10 | 0.10 |
| Operating result (MEUR) | 18.8 | 27.1 | 20.3 | 23.6 | 19.8 | Shareholders' equity per share | 0.50 | 0.46 | 0.41 | 0.38 | 0.33 |
| % of net sales | 12.2% | 17.5% | 12.9% | 16.2% | 15.2% | Dividend per share * | 0.16 | 0.06 | 0.06 | 0.06 | 0.06 |
| Result before taxes | 19.9 | 26.3 | 19.9 | 23.5 | 19.9 | Dividend per earnings (%) | 160.0% | 54.5% | 66.7% | 54.5% | 60.0% |
| % of net sales | 12.9% | 17.0% | 12.7% | 16.1% | 15.3% | Effective dividends (%) | 7.1% | 3.2% | 3.9% | 3.0% | 3.0% |
| ROE (%) | 20.7% | 24.9% | 22.6% | 29.5% | 30.3% | P/E ratio | 22.2 | 17.6 | 17.1 | 19.0 | 23.1 |
| ROI (%) | 26.7% | 40.9% | 34.9% | 44.3% | 42.5% | Share price, lowest (EUR) | 1.78 | 1.55 | 1.32 | 1.88 | 1.97 |
| Equity ratio (%) | 74.9% | 74.3% | 72.7% | 68.1% | 69.1% | Share price, highest (EUR) | 2.90 | 2.15 | 2.14 | 2.66 | 2.93 |
| Investments (MEUR) | 5.8 | 3.7 | 10.3 | 18.7 | 10.4 | Mean share price (EUR) | 2.03 | 1.81 | 1.79 | 2.26 | 2.27 |
| % of net sales | 3.8% | 2.4% | 6.6% | 12.8% | 8.0% | Share price Dec 31 | 2.25 | 1.87 | 1.55 | 2.01 | 2.00 |
| R&D costs (MEUR) | 38.2 | 41.7 | 49.3 | 39.3 | 34.5 | Market capitalization (MEUR) | 357.3 | 297.0 | 246.1 | 319.2 | 315.1 |
| % of net sales | 24.8% | 26.9% | 31.4% | 26.9% | 26.5% | Trading volume (millions) | 44.3 | 31.8 | 23.0 | 42.6 | 65.9 |
| Capitalized development (MEUR) | 2.3 | 0.3 | 4.9 | 7.8 | 2.3 | Trading volume (%) | 28.4% | 20.5% | 14.9% | 27.6% | 42.5% |
| Gearing % | -76.6% | -65.6% | -50.9% | -47.1% | -63.2% | * Board proposal | |||||
| Wages and salaries (MEUR) | 57.4 | 54.1 | 56.1 | 48.3 | 45.9 | ||||||
| Personnel on average | 937 | 949 | 970 | 878 | 835 | ||||||
| Personnel on Dec 31 | 921 | 939 | 931 | 942 | 812 | ||||||
| Adjusted number of shares | IFRS 2014 | IFRS 2013 | IFRS 2012 | IFRS 2011 | IFRS 2010 | ||||||
| --- | --- | --- | --- | --- | --- | ||||||
| Average during the period | 155,756,751 | 155,374,231 | 155,056,557 | 154,432,955 | 154,967,615 | ||||||
| Average during the period, diluted | 155,756,751 | 155,382,904 | 156,774,495 | 157,499,090 | 158,893,701 | ||||||
| Dec 31 | 158,798,739 | 158,798,739 | 158,798,739 | 158,798,739 | 157,539,243 | ||||||
| Dec 31, diluted | 158,798,739 | 159,178,330 | 159,115,294 | 160,940,348 | 160,990,852 |
29. EVENTS AFTER THE REPORTING PERIOD
On 4 February 2015 F-Secure Corporation has signed an agreement to sell its personal cloud business operations to Synchronous Technologies Inc (NASDAQ: SNCR). Sold personal cloud business consists of F-Secure's younited, a cloud storage services for consumers and companies to securely store and share photos, movies, documents and other stuff online. The value of the transaction is USD 60 million in cash. Closing of the transaction is expected by the end of February 2015. The transaction's overall impact on F-secure's discontinued business operating profit in 2015 is estimated be close to EUR 20 million positive with current exchange rate. F-Secure will further increase its focus on developing new cloud-based privacy and security products. F-Secure sees substantial growth opportunities in cyber and cloud security business.
Turnover and average share price per month 2014
Turnover EUR
Average price
FINANCIAL STATEMENTS F-SECURE CONSOLIDATED
F-SECURE 2014 03 34
CALCULATION OF KEY RATIOS
| Equity ratio, % | Shareholders' equity + minority interest | × 100 |
|---|---|---|
| Balance total – received advance payments | ||
| ROI, % | Result before taxes + financial expenses | × 100 |
| Balance total – non-interest bearing liabilities (average) | ||
| ROE, % | Result before taxes – taxes | × 100 |
| Shareholders' equity + minority items (average) | ||
| Gearing, % | Interest bearing liabilities – cash and bank accounts, liquid financial assets | × 100 |
| Shareholders' equity + minority items | ||
| Earnings per share, euro | Result before taxes – taxes +/- minority interest | |
| Adjusted number of shares (average) | ||
| Shareholders' equity per share, euro | Shareholders' equity | |
| Adjusted number of shares, Dec 31 | ||
| P/E ratio | Share price closing, Dec 31 | |
| Earnings per share | ||
| Dividend per earnings, % | Dividend per share | × 100 |
| Earnings per share | ||
| Effective dividends, % | Dividend per share | × 100 |
| Share price closing, Dec 31 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
INCOME STATEMENT JAN 1–DEC 31, 2014
| EUR 1,000 | FAS 2014 | FAS 2013 | |
|---|---|---|---|
| NET SALES | (1) | 134,942 | 133,345 |
| Material and service | -7,501 | -7,225 | |
| GROSS MARGIN | 127,441 | 126,121 | |
| Other operating income | (2) | 4,851 | 4,341 |
| Sales and marketing | (3, 4) | -72,006 | -58,032 |
| Research and development | (3, 4) | -37,309 | -41,224 |
| Administration | (3, 4) | -7,275 | -8,350 |
| OPERATING RESULT | 15,701 | 22,856 | |
| Financial income and expenses | (6) | -4,134 | 1,909 |
| PROFIT (LOSS) BEFORE APPROPRIATIONS AND TAXES | 11,567 | 24,765 | |
| Change in depreciation reserve | 1 | -1 | |
| Income taxes | (7) | -2,085 | -8,510 |
| RESULT FOR THE FINANCIAL YEAR | 9,483 | 16,254 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
BALANCE SHEET DEC 31, 2014
| EUR 1,000 | FAS 2014 | FAS 2013 | EUR 1,000 | FAS 2014 | FAS 2013 | ||
|---|---|---|---|---|---|---|---|
| ASSETS | SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||
| NON-CURRENT ASSETS | SHAREHOLDERS' EQUITY | (15, 16) | |||||
| Intangible assets | (8) | 20,768 | 24,948 | Share capital | 1,551 | 1,551 | |
| Tangible assets | (8) | 3,864 | 3,668 | Share premium | 165 | 165 | |
| Investments in group companies | (9) | 595 | 5,926 | Treasury shares | -6,989 | -7,782 | |
| Total non-current assets | 25,227 | 34,543 | Fair value reserve | 502 | 321 | ||
| Reserve for invested unrestricted equity | 5,102 | 5,051 | |||||
| CURRENT ASSETS | Retained earnings | 44,003 | 37,865 | ||||
| Inventories | (11) | 108 | 270 | Profit for the financial year | 9,483 | 16,254 | |
| Long-term receivables | (12) | 682 | 3,023 | Total shareholders' equity | 53,817 | 53,424 | |
| Short-term receivables | (12) | 45,518 | 37,972 | ||||
| Short-term investments | (13) | 40,309 | 25,685 | APPROPRIATIONS | |||
| Cash and bank accounts | (14) | 13,686 | 15,739 | Depreciation reserve | 1,140 | 1,140 | |
| Total current assets | 100,303 | 82,689 | |||||
| LIABILITIES | |||||||
| TOTAL ASSETS | 125,530 | 117,232 | Deferred tax liabilities | (10) | 125 | 80 | |
| Long-term liabilities | (18) | 9,388 | 7,185 | ||||
| Short-term liabilities | (18) | 61,059 | 55,403 | ||||
| Total liabilities | 70,573 | 62,668 | |||||
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 125,530 | 117,232 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
CASH FLOW STATEMENT DEC 31, 2014
| EUR 1,000 | FAS 2014 | FAS 2013 | EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | CASH FLOW FROM INVESTMENTS | ||||
| Result for the financial year | 9,483 | 16,254 | Investments in intangible and tangible assets | -4,974 | -2,527 |
| Adjustments (20) | 16,474 | 15,743 | Investments in subsidiary shares | -11 | |
| Cash flow from operations before change in working capital | 25,958 | 31,997 | Proceeds from sale of intangible and tangible assets | 133 | 12 |
| Proceeds from sale of associated companies | 6 | 36 | |||
| CHANGE IN NET WORKING CAPITAL | Proceeds from sale of other investments | 9 | 5 | ||
| Current receivables, increase (-), decrease (+) | -1,249 | -451 | Dividends received | 5 | 2,487 |
| Inventories, increase (-), decrease (+) | 162 | -35 | |||
| Non-interest bearing debt, increase (+), decrease (-) | 6,177 | -986 | Cash flow from investments | -4,822 | 2 |
| CASH FLOW FROM FINANCING ACTIVITIES | |||||
| Cash flow from operations before financial items and taxes | 31,049 | 30,525 | Dividends paid | -9,346 | -9,323 |
| Cash flow from financing activities | -9,343 | -9,323 | |||
| Interest expenses paid | -2 | -202 | |||
| Interest income received | 16 | 6 | |||
| Other financial income and expenses | 519 | Change in cash | 12,422 | 16,433 | |
| Income taxes paid | -4,993 | -4,574 | Cash and bank at the beginning of the period | 41,277 | 24,658 |
| Change in net fair value of current available-for-sale assets | 226 | 186 | |||
| Cash flow from operations | 26,589 | 25,755 | Cash and bank at period end | 53,926 | 41,277 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
03 38
NOTES TO THE FINANCIAL STATEMENTS
Basic information
F-Secure produces online security and privacy services for consumers and businesses against malware and other threats, as well as cloud storage services enabling storing and sharing of important data.
The Parent Company of the Group is F-Secure Corporation incorporated in Finland and domiciled in Helsinki. Company's registered address is Tammasaarenkatu 7, 00180 Helsinki. Copy of consolidated financial statements can be downloaded from www.f-secure.com or can be received from the Parent Company's registered address.
ACCOUNTING PRINCIPLES
The financial statement of F-Secure Corporation has been prepared in accordance with Finnish Accounting Standards (FAS).
Foreign currency translation
Foreign currencies are translated into the local currency using fixed monthly exchange rates. At the balance sheet date, assets and liabilities denominated in foreign currencies are translated at the rates of exchange prevailing at that date. Exchange rate gains and losses of financial transactions are recognized in the income statement under financial items. Forward rate contracts for hedging purposes are recognized using the exchange rate prevailing at the balance sheet date.
Tangible and intangible assets
Intangible assets include intangible rights and software licenses. Intangible assets recognized on merger consist of technology-based intangible assets. Tangible and intangible assets are recorded at historical cost less accumulated depreciation. Depreciation of intangible rights is recorded on a progressive basis over the estimated useful life of an asset. Other depreciation is recorded on a straight-line basis over the estimated useful life of an asset. The estimated useful lives of tangible and intangible assets are as follows:
| Machinery and equipment | 3–8 years |
|---|---|
| Capitalized development costs | 3 years |
| Intangible rights | 5 years |
| Intangible assets | 5–10 years |
Ordinary repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred. The cost of major renovations is included in the assets' carrying amount when it is probable that the Company will derive future economic benefits in excess of the originally assessed standard or performance of the existing asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement in the year the asset is derecognized.
Research and development costs
Research expenditure is recognized as an expense at the time it is incurred. Development expenditures incurred on individual projects of totally new products or product versions with significant new features are carried forward when they are technically feasible and their future recoverability can reasonably be regarded as assured.
Inventories
Inventories are valued either by cost or net realizable value, whichever is lower. Cost is determined by first-in first-out method. Net realizable value is the estimated selling price that is obtainable, less estimated costs of completion and the estimated costs necessary to make the sale.
Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. The Company has only operating leases. Operating lease payments are recognized as an expense in the income statement on a straight-line basis over the lease term.
Pensions
Pension arrangement is of local statutory arrangement and defined contribution plans. Contributions to defined contribution plans are recognized in income statement in the period to which the contributions relate. The Company recognizes the disability commitment of TYEL pension plan when disability appears.
Share-based payment transactions
In the Company's industry it is common practice internationally that incentives are provided to employees in the form of equity-settled share-based instruments. The Company has two kinds of incentive programs; a synthetic warrant-based program and a share-based program.
The Company's warrant programs cover key personnel. The synthetic warrant-based program is settled as cash-settled payment. The cost of cash-settled transactions with employees is measured by reference to the fair value at the date of balance sheet. The fair value is determined by using the Binomial model. The cost of transactions is recognized, together with a corresponding entry in liability, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). If the holder of the warrant leaves the company before vesting, the warrant is forfeited. The cumulative expense recognized for transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the number of awards that, in the opinion of the directors of the Group at that date, based on the best available estimate of the number of equity instruments that will ultimately be fulfilled.
The share-based incentive program has been established as part of the key employee incentive and retention system inside F-Secure. Reward will be settled in two phases so that one part is settled as equity-settled payment and one part as cash-settled payment. Cost of cash-settled transactions is measured by reference to the fair value by using market price of F-Secure Corporation share on the date of balance sheet.
next...
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
03 39
...previous
The cost is recognized over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the reward (end of lock-up period). The cost of cash-settle corresponding entry is recognized in liabilities. If relevant employee leaves company before being fully entitled to the reward, the reward is forfeited. The cumulative expense recognized for share-based incentive program transactions at each reporting date is based on the best available estimate of the number of equity instruments that will ultimately be fulfilled.
Income taxes
Direct current taxes are calculated in accordance with the local tax and accounting rules. Deferred taxes, resulting from temporary differences between the financial statement and the income tax basis of assets and liabilities, use the enacted tax rates in effect in the years in which the differences are expected to reverse.
Revenue recognition
Revenue is primarily derived from monthly software as a service sale, software license agreement sales and operator's system integration and maintenance sales. License agreements consist of initial license agreements and periodic maintenance agreements covering product updates and customer support. The revenue recognition policy of F-Secure Group recognizes the service revenue at the time of delivery, the license agreement's license fee revenues as the product is delivered, the license agreement's maintenance revenues are recognized over the maintenance period, and service based project deliveries are recognized with the percentage of completion method, when the outcome can be reliably estimated. The degree of completion is determined by relation of project costs incurred for work performed to date bear the estimated total project costs. If total project costs will exceed total project revenue, the expected loss is recognized as an expense immediately. Indirect taxes, discounts granted and exchange rate differences are excluded from net sales.
Other operating income
Other operating income includes profits from the sales of fixed assets, rental revenue, and government grants received for research and development projects.
Presentation of expenses
Classification of the functionally presented expenses has been made as follows: various types of expenses in different geographical locations have been allocated to the various functions by allocating directly to allocable expenses to the respective function, and other operating expenses have been allocated to functions on the basis of the average headcount in each location.
Treasury shares
Company has acquired treasury shares in years 2008–2011. The cost of acquisition is recognized as a deduction in the shareholders' equity.
Financial assets
Short-term investments are measured at fair value. Short-term investments consist of interest-bearing debt securities and shares in mutual funds invested in similar instruments. For assets that are actively traded in organized financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date. Assets, the fair value of which cannot be measured reliably, are recognized at cost less impairment. The fair value changes of short-term investments are recognized in shareholders' equity under fair value reserve. When financial assets recognized as available-for-sale are sold, the accumulated fair value changes are released from equity and recognized in the income statement.
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and other highly liquid short-term investments.
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
- NET SALES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Geographical information | ||
| Finland and Scandinavia | 45,667 | 44,273 |
| Rest of Europe | 67,114 | 64,375 |
| North America | 7,753 | 10,359 |
| Rest of the world | 14,408 | 14,338 |
| Total | 134,942 | 133,345 |
- OTHER OPERATING INCOME
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Rental revenue | 47 | 45 |
| Government grants | 2,717 | 2,394 |
| Other | 2,087 | 1,902 |
| Total | 4,851 | 4,341 |
- DEPRECIATION
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Depreciations from non-current assets | ||
| Other intangible assets | -3,798 | -3,516 |
| Capitalized development | -2,706 | -2,606 |
| Intangible assets | -6,505 | -6,122 |
| Machinery and equipment | -2,058 | -2,102 |
| Tangible assets | -2,058 | -2,102 |
| Total | -8,563 | -8,224 |
| Depreciation by function | ||
| Sales and marketing | -4,344 | -3,817 |
| Research and development | -4,117 | -4,309 |
| Administration | -102 | -98 |
| Total | -8,563 | -8,224 |
- PERSONNEL EXPENSES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Personnel expenses | ||
| Wages and salaries | -36,114 | -34,094 |
| Pension expenses | -6,270 | -5,639 |
| Other social expenses | -1,910 | -1,761 |
| Total | -44,294 | -41,494 |
| Compensation of key management personnel | ||
| Wages and other short-term employee benefits | -2,024 | -2,217 |
| Wages and other short-term employee benefits | ||
| Managing Director | -396 | -420 |
| Members of the Board of Directors | -245 | -240 |
Wages and other short-term employee benefits of the Board of Directors and Managing Director: see group disclosure 26. Related party disclosure
The Managing Director's retirement age and the determination of his pension conform to the standard rules specified by Finland's Employee Pension Act (TYEL). The pension cost of the Managing Director over the period was 73 thousand euro (77 thousand euro in year 2013). The period of notice for the managing director is six (6) months both ways and Managing Director is entitled to severance payment equivalent of six (6) months' salary.
| FAS 2014 | FAS 2013 | |
|---|---|---|
| Average number of personnel | 540 | 504 |
| Personnel by function Dec 31 | ||
| Sales and marketing | 211 | 193 |
| Research and development | 295 | 288 |
| Administration | 37 | 39 |
| Total | 543 | 520 |
- AUDIT FEES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Audit fees | -124 | -112 |
| Tax consulting | -103 | -34 |
| Other consulting | -84 | -110 |
| Total | -311 | -256 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
- FINANCIAL INCOME AND EXPENSES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Interest income | 90 | 176 |
| Interest expense | -35 | -238 |
| Other financial income | 828 | 64 |
| Dividends | 5 | 2,487 |
| Exchange gains and losses | 271 | -516 |
| Impairment of non-current investments | -5,331 | |
| Other financial expenses | 37 | -63 |
| Total | -4,134 | 1,909 |
- INCOME TAXES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Income taxes of the business activity | -4,018 | -7,342 |
| Income taxes from previous years | 1,933 | -1,168 |
| Total | -2,085 | -8,510 |
| Result before taxes | 11,567 | 24,765 |
| Income taxes at statutory rate of 20.0%/24.5% | -2,313 | -6,067 |
| Tax-exempt income | 22 | 609 |
| Non-deductible expenses | -886 | -150 |
| Income taxes from previous years | 1,933 | -1,168 |
| Other | -841 | -1,733 |
| Total | -2,085 | -8,510 |
In year 2013 Finnish tax authorities changed their interpretation of the right to deduct paid withholding tax in some countries. Thus, the Parent Company was obligated to pay previously approved withholding tax from 2012. This applied also to the financial year 2013. During the period Parent Company has recovered back withholding tax from years 2012 and 2013 totaling 1.5 million euros.
- NON-CURRENT ASSETS
| Other Intangible | Capitalized development | Total | Machinery & equipment | Other Tangible | Total | |
|---|---|---|---|---|---|---|
| Acquisition cost Jan 1, 2013 | 30,013 | 17,071 | 47,084 | 17,309 | 5 | 17,314 |
| Additions | 207 | 344 | 551 | 1,650 | 1,650 | |
| Disposals | -279 | -279 | ||||
| Acquisition cost Dec 31, 2013 | 30,220 | 17,415 | 47,635 | 18,680 | 5 | 18,685 |
| Additions | 63 | 2,261 | 2,324 | 2,383 | 2,383 | |
| Disposals | -138 | -138 | ||||
| Acquisition cost Dec 31, 2014 | 30,283 | 19,676 | 49,959 | 20,925 | 5 | 20,930 |
| Acc. depreciations Jan 1, 2013 | -13,413 | -3,152 | -16,566 | -13,195 | -13,195 | |
| Depreciation of the financial year | -3,516 | -2,606 | -6,122 | -2,102 | -2,102 | |
| Acc. depreciations of disposals | 279 | 279 | ||||
| Acc. depreciations Dec 31, 2013 | -16,929 | -5,759 | -22,687 | -15,017 | -15,017 | |
| Depreciation of the financial year | -3,798 | -2,706 | -6,505 | -2,058 | -2,058 | |
| Acc. depreciations of disposals | 9 | 9 | ||||
| Acc. depreciations Dec 31, 2014 | -20,727 | -8,465 | -29,192 | -17,067 | -17,067 | |
| Book value as at Dec 31, 2013 | 13,291 | 11,657 | 24,948 | 3,663 | 5 | 3,668 |
| Book value as at Dec 31, 2014 | 9,557 | 11,211 | 20,768 | 3,859 | 5 | 3,864 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
- INVESTMENTS
| EUR 1,000 | Group comp. shares | Total |
|---|---|---|
| Book value as at Jan 1 | 5,926 | 5,926 |
| Reductions | -5,331 | -5,331 |
| Book value as at Dec 31 | 595 | 595 |
| Name | Country of incorporation | Share of ownership (%) |
| Parent F-Secure Corporation, Helsinki | Finland | |
| DF-Data Oy, Helsinki | Finland | 100 |
| F-Secure Inc., San Jose | United States | 100 |
| F-Secure (UK) Ltd, London | Great Britain | 100 |
| F-Secure KK, Tokyo | Japan | 100 |
| F-Secure GmbH, München | Germany | 100 |
| F-Secure eStore GmbH, München | Germany | 100 |
| F-Secure SARL, Maisons-Laffitte | France | 98 |
| F-Secure France SARL, Maisons-Laffitte | France | 100 |
| F-Secure BVBA, Heverlee-Leuven | Belgium | 100 |
| F-Secure AB, Stockholm | Sweden | 100 |
| F-Secure Srl, Milano | Italy | 100 |
| F-Secure SP z.o.o., Warsaw | Poland | 100 |
| F-Secure Corporation (M) Sdn Bhd, Kuala Lumpur | Malaysia | 100 |
| F-Secure Pvt Ltd, New Delhi | India | 100 |
| F-Secure Pte Ltd, Singapore | Singapore | 100 |
| F-Secure B.V., Utrecht | The Netherlands | 100 |
| F-Secure Limited, Hong Kong | Hong Kong | 100 |
| F-Secure Pty Limited, Sydney | Australia | 100 |
| F-Secure Iberia SL, Barcelona | Spain | 100 |
| F-Secure Chile Limitada, Santiago | Chile | 99 |
| F-Secure Colombia SAS, Bogota D.C. | Colombia | 100 |
| F-Secure Informática S. de R.L. de C.V, Mexico City | Mexico | 100 |
- DEFERRED TAX
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Deferred tax liability | ||
| Tax charged to shareholders’ equity | ||
| Change in fair value, available-for-sale | 125 | 80 |
| Total | 125 | 80 |
- INVENTORIES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Other inventories | 108 | 270 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
- RECEIVABLES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Receivables from group companies | 2,300 | |
| Other receivables | 682 | 723 |
| Total | 682 | 3,023 |
| Current receivables | ||
| Trade receivables | 26,198 | 22,571 |
| Loan receivables | 11 | 15 |
| Other receivables | 187 | 107 |
| Prepaid expenses and accrued income | 7,520 | 5,032 |
| Total | 33,916 | 27,725 |
| Receivables from group companies | ||
| Trade receivables | 11,602 | 10,147 |
| Other receivables | 100 | |
| Total | 11,602 | 10,247 |
| Current receivables total | 45,518 | 37,972 |
| Material items included in prepaid expenses and accrued income | ||
| Prepaid expenses | 3,403 | 3,096 |
| Prepaid expenses, royalty | 2,149 | 1,936 |
| Accrued tax | 1,968 | |
| Total | 7,520 | 5,032 |
- SHORT-TERM INVESTMENTS
Short-term investments consist of interest-bearing debt securities and shares in funds invested in similar instruments. For assets that are actively traded in organized financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date. Assets, of which fair value cannot be measured reliably, are recognized at cost less impairment. The fair value changes of short-term investments are recognized in shareholders' equity under fair value reserve.
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Fair value as at Jan 1 | 25,685 | 15,447 |
| Additions/deductions, net | 13,997 | 9,837 |
| Change in fair value | 627 | 401 |
| Fair value as at Dec 31 | 40,309 | 25,685 |
| Shares – unlisted | 70 | 147 |
| Maturity date less than 3 months | 40,239 | 25,538 |
| Fair value as at Dec 31 | 40,309 | 25,685 |
| Book value as at Dec 31 | 39,683 | 25,284 |
- CASH AND SHORT-TERM DEPOSITS
For the purposes of the cash flow statement, cash and cash equivalents comprise the following as at December 31:
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Cash at bank and in hand | 13,686 | 15,739 |
| Available-for-sale | 40,239 | 25,538 |
| Total | 53,926 | 41,277 |
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
03 44
15. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
| EUR 1,000 | Share capital | Share premium fund | Treasury shares | Fair value reserve | Unrestricted equity reserve | Retained earnings | Total equity |
|---|---|---|---|---|---|---|---|
| Equity Dec 31, 2012 | 1,551 | 165 | -8,419 | 163 | 5,051 | 47,271 | 45,780 |
| Available-for-sale financial assets, net | 159 | 159 | |||||
| Result of the financial year | 16,254 | 16,254 | |||||
| Dividend | -9,323 | -9,323 | |||||
| Cost of share based payments | 637 | -83 | 554 | ||||
| Equity Dec 31, 2013 | 1,551 | 165 | -7,782 | 321 | 5,051 | 54,119 | 53,424 |
| Available-for-sale financial assets, net | 181 | 181 | |||||
| Result of the financial year | 9,483 | 9,483 | |||||
| Dividend | -9,346 | -9,346 | |||||
| Cost of share based payments | 726 | 37 | -763 | ||||
| Other change | 68 | 14 | -7 | 75 | |||
| Equity Dec 31, 2014 | 1,551 | 165 | -6,989 | 502 | 5,102 | 53,487 | 53,817 |
16. SHAREHOLDERS' EQUITY
The Company's share capital amounted to 1,551,311 euro and the number of shares was 158,798,739 at the end of the year 2014. See group disclosure 18. Shareholders' Equity
Treasury shares
See group disclosure 18. Shareholders' Equity
Distributable shareholders' equity on December 31, 2014
EUR 1,000
| Unrestricted equity reserve | 5,102 |
|---|---|
| Retained earnings | 37,022 |
| Result of the financial year | 9,483 |
| Distributable shareholders' equity on December 31, 2014 | 51,608 |
17. SHARE-BASED PAYMENT TRANSACTIONS
See group disclosure 19. Share-based payment transactions
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014 03 45
18. LIABILITIES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Non-current liabilities | ||
| Deferred revenues | 9,388 | 7,185 |
| Deferred tax liabilities | 125 | 80 |
| Total | 9,514 | 7,265 |
| Current liabilities | ||
| Deferred revenues | 26,364 | 24,707 |
| Trade payables | 5,839 | 4,527 |
| Other liabilities | 1,527 | 1,122 |
| Accrued expenses | 12,906 | 13,447 |
| Total | 46,635 | 43,804 |
| Liabilities to the group companies | ||
| Advance payments | 3,617 | 3,410 |
| Trade payables | 8,347 | 5,577 |
| Other liabilities | 2,460 | 2,612 |
| Total | 14,424 | 11,599 |
| Total current liabilities | 61,059 | 55,403 |
| Material amounts shown under accruals and deferred income | ||
| Accrued personnel expenses | 8,767 | 8,044 |
| Deferred royalty | 1,160 | 958 |
| Accrued expenses | 2,375 | 2,900 |
| Accrued tax | 604 | 1,545 |
| Total | 12,906 | 13,447 |
19. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
See Group disclosure 22. Financial risk management objectives and policies
20. NOTES TO CASH FLOW STATEMENT
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Adjustments | ||
| Deferred income | 3,667 | 1,650 |
| Depreciation and amortization | 8,563 | 8,224 |
| Profit / loss on sale of fixed asset | -4 | -12 |
| Other adjustments | -1,970 | -720 |
| Financial income and expenses | 4,134 | -1,908 |
| Income taxes | 2,085 | 8,510 |
| Total | 16,474 | 15,743 |
21. OPERATING LEASE COMMITMENTS
The Group has entered into commercial leases on office space and on motor vehicles. Motor vehicle leases have an average life of three years and office space between two and five years with renewal terms included in the contracts.
Future minimum rentals payable under non-cancellable operating leases as at 31 December are as follows:
| As lessee | FAS 2014 | FAS 2013 |
|---|---|---|
| Within one year | 3,763 | 3,461 |
| After one year but not more than five years | 3,204 | 4,533 |
| Total | 6,967 | 7,994 |
22. CONTINGENT LIABILITIES
| EUR 1,000 | FAS 2014 | FAS 2013 |
|---|---|---|
| Guarantees for other group companies | 40 | 40 |
Derivatives see Group disclosure 22. Financial risk management objectives and policies
23. SHARES AND SHAREHOLDERS
See Group disclosure 27. Shares and shareholders
24. KEY RATIOS
See Group disclosure 28. Key ratios
FINANCIAL STATEMENTS F-SECURE CORPORATION
F-SECURE 2014
46
AUDITOR'S REPORT (TRANSLATION)
To the Annual General Meeting of F-Secure Corporation
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of F-Secure Corporation for the year ended 31 December, 2014. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company's balance sheet, income statement, cash flow statement and notes to the financial statements.
Responsibility of the Board of Directors and the Managing Director
The Board of Directors and the Managing Director are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU, as well as for the preparation of financial statements and the report of the Board of Directors that give a true and fair view in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The Board of Directors is responsible for the appropriate arrangement of the control of the company's accounts and finances, and the Managing Director shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the
report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements and report of the Board of Directors that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the report of the Board of Directors.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion on the consolidated financial statements
In our opinion, the consolidated financial statements give a true and fair view of the financial position, financial performance, and cash flows of the group in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Opinion on the company's financial statements and the report of the Board of Directors
In our opinion, the financial statements and the report of the Board of Directors give a true and fair view of both the
consolidated and the parent company's financial performance and financial position in accordance with the laws and regulations governing the preparation of the financial statements and the report of the Board of Directors in Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
In Helsinki on February 13, 2015
Ernst & Young Oy
Authorized Public Accountant Firm
Mikko Järventausta
Authorized Public Accountant
F-SECURE 2014
04 47
CORPORATE GOVERNANCE STATEMENT
General principles
F-Secure's corporate governance practices comply with Finnish laws and regulations, F-Secure's Articles of Association, the rules of NASDAQ OMX Helsinki and the Finnish Corporate Governance Code issued by the Securities Market Association of Finland in 2010. The code is publicly available at www.cgfinland.com.
The key elements of the Corporate Governance practices of F-Secure Corporation are described here in brief. The descriptions also include the most essential tasks and responsibilities of the Board of Directors, Board Committees and other main governing bodies in 2014. This statement also describes the main features of internal control and risk management pertaining to the financial reporting process. Further information on the corporate governance practices of the company is available on the F-Secure Corporation website.
Annual General Meeting of Shareholders (AGM)
The highest governing body of the corporation is the General Meeting of Shareholders. The AGM's tasks are defined in detail by the Finnish Companies Act and the Articles of Association of F-Secure Corporation. The AGM shall decide on the number of members of the Board of Directors, confirm remunerations to the Board members and auditors, appoint Board members, approve financial statements, determine dividends, select auditors, and determine other issues defined by the Articles of Association and the Finnish Companies Act. The AGM shall be held after the end of the financial year within a period determined by the Board of Directors and as defined by the Companies Act. F-Secure Corporation has only one class of shares and thus all shares have equal voting power at the General Meetings of Shareholders.
In 2014, the Annual General Meeting was held in Helsinki, at HTC Ruoholahti on April 3. The decisions made by the AGM 2014 are presented in detail in the Board of Directors' report for 2014.
The main tasks of the Board of Directors
The objective of the Board of Directors is to direct the company with the aim of achieving the best possible return on invested capital for shareholders in the long term. The Board of Directors represents all shareholders and shall always aim to achieve the best advantage for the company and all of its shareholders.
The Board of Directors is responsible for making sure that supervision of the company's accounting and financial management is duly organized. The meetings of the Board shall regularly discuss reports presented by the CEO of the company on the financial status and operations of the company. Furthermore, it is the duty of the Board to prepare the matters to be handled by the shareholders' meeting, to decide on the convening of the shareholders' meeting, and to make sure that the decisions made at the shareholders' meeting are executed.
Any matters that are significant or of long-term impact from the company's point of view shall be dealt with by the Board. These include strategic outlines, approval of budgets and operating plans and supervision of how these are put into effect, acquisitions and corporate structure, any major investments with regard to the operation of the company, organization of the supervision of accounting and financial management, internal control systems and risk management as well as personnel policies and reward systems.
The duties and responsibilities of the Board are defined by the Articles of Association of the company, the Finnish Companies Act, and other applicable laws and regulations. The Articles of Association and the charter of the Board, including a more detailed list of its main duties and tasks and its committees, are presented on the company's website.
According to the Articles of Association, the Board shall have a minimum of three and a maximum of seven ordinary members, whose term ends at the end of the next AGM following the election of the members. The Annual General Meeting of Shareholders shall decide the number of Board members according to the Articles of Association, and elect the Board members. The Board shall elect the Chairman of the Board from among its members. The Board shall also elect a secretary, who may be a non-member of the Board. The term of each Board member is one year. The majority of the Board members shall be independent of the company. More detailed information about other terms of Board membership can be found in the Articles of Association.
The Board of Directors shall convene at least five times during its term. The Board shall conduct an annual self-assessment of its operations.
Board of Directors in 2014
According to the decision of the Annual General Meeting 2014, the Board had seven (7) members. The re-elected members of the Board were Risto Siilasmaa, Jussi Arovaara, Matti Heikkonen, Pertti Ervi, Juho Malmberg and Anu Nissinen. Peter Vesterbacka was elected to the Board of Directors as a new member. The board elected Risto Siilasmaa as the Chairman of the Board.
The aforementioned members of F-Secure Corporation's Board of Directors, with the exception of Risto Siilasmaa, have no dependence either on the company or its significant shareholders. The Chairman of the Board, Risto Siilasmaa, is a major shareholder of the company.
In 2014 the Board of Directors held 12 meetings with an attendance rate of close to 100%. The Board of Directors focused, in addition to their ongoing duties, on the preparation and approval of the Company's revised strategy, new cloud based initiatives and long term value creation opportunities. The Board was also following closely the restructuring of the content cloud business. According to the strategy, F-Secure will focus on producing cloud-based security solutions to protect people and devices in a fast-evolving digital world. The main objectives during the strategy period 2015-2017 are to expand the user base by tens of millions of people and to drive accelerating revenue growth. The strategy is described in more detail in the Board of Director's report for 2014.
Other significant tasks and responsibilities of the Board comprised a general overview of the company's financials,
next...
F-SECURE 2014
04 48
budget approval, setting performance targets for the executive level, and deciding on the incentive program for the Leadership team and other key employees.
Board committees
The Board has two committees; Audit Committee and Executive Committee (nomination and remuneration issues).
The Chairman of the Audit Committee is Pertti Ervi and the members are Jussi Arovaara, Matti Heikkonen, and Peter Vesterbacka. The Chairman of the Executive Committee is Risto Siilasmaa and the members are Juho Malmberg and Anu Nissinen.
The charters of both Committees are available on the Company's website under About F-Secure > Investors > Governance.
Audit Committee
The Audit Committee prepares, instructs and evaluates the Corporation's risk management, internal control systems, IT strategy and practices, external and internal auditing of the accounts, and financial reporting. In 2014 the Audit Committee held five meetings with an attendance rate of close to 100%.
In 2014, the Audit Committee focused on several aspects of internal and external IT (hosting), as outlined in the Committee's charter. The Committee also assessed the efficiency of internal control systems and risk management processes and practices, including financial and legal risks. The Committee commented the renewed cash investment policy, taxation topics and also reviewed the interim reports before their publication.
Executive Committee
The Executive Committee prepares material and provides instructions on issues related to the composition and compensation of the Board of Directors and the remuneration of executive management. The Executive Committee held four meetings in 2014 with an attendance rate of 100%.
In 2014, the Executive Committee focused on remuneration issues, including both long-term and short-term incentive programs for the top management and other key personnel, as well as on succession planning regarding key roles. The Committee also prepared proposals for the Board composition and remuneration for the Annual General Meeting of Shareholders.
President and CEO
The President and CEO is responsible for the day-to-day management of the company. The CEO's duties include managing the business according to the instructions issued by the Board of Directors, presenting the matters to be handled in the Board of Directors' meetings, implementing the decisions made by the Board of Directors, and other duties determined in the Companies Act. The Board of Directors shall appoint the CEO and decide upon his/her remuneration and other benefits.
The President and CEO of the company is Christian Fredrikson.
Leadership Team
The Leadership Team supports the CEO in the daily operative management and development of the company. The CEO appoints the Leadership Team members and decides upon the terms and conditions of their employment. The Board of Directors approves the compensation for the Leadership Team. Bonuses and stock options are granted on the basis of individual performance and the performance of the company. The Leadership Team meets regularly once a month and holds additional meetings as needed.
The composition of the Leadership Team at the beginning of 2015 is as follows: Christian Fredrikson (President and CEO), Janne Juvonen (Customer and Market Operations), Samu Konttinen (Consumer Security Business), Timo Laaksonen (Content Cloud Business, until 28 Feb 2015), Johanna Orjatsalo (Human Resources & Facilities), Jari Still (R&D Operations), Pekka Usva (Corporate Security Business) and Taneli Virtanen (Chief Financial Officer, until 22 Feb 2015) and Saila Miettinen-Lähde (Chief Financial Officer, from 23 Feb 2015 onwards).
Remuneration
The remuneration paid to the Board of Directors and the Leadership Team as well as their holdings of F-Secure shares and options are described in notes 26 and 27 of the financial statements. The general principles of remuneration for the President and CEO are described in note 26 of the financial statements. More details on the remuneration and option programs are also available in the Remuneration Statement from 2014 published on the Company's investor web pages under Corporate Governance. The CEO and Leadership Team are presented later as part of this report.
Auditors
The auditor is elected by the Annual General Meeting for one year's term of service. The auditor is responsible for auditing the consolidated and parent company's financial statements and accounting. The auditor will report to the Board of Directors or the Audit Committee at least once a year.
For 2014, F-Secure Corporation's auditor was Ernst & Young Oy, an auditing company of Authorized Public Accountants authorized by the Central Chamber of Commerce. APA Mikko Järventausta acts as the responsible partner for the direction and coordination of the audit work. In 2014 the Company paid a total of EUR 164,448 (2013: EUR 157,518) for auditing services and EUR 84,265 (2013: EUR 109,954) for other services. Ernst & Young Oy has been F-Secure Corporation's auditor since 1999.
DESCRIPTION OF THE MAIN FEATURES OF INTERNAL CONTROL AND RISK MANAGEMENT PERTAINING TO THE FINANCIAL REPORTING PROCESS
Internal Control
The purpose of Internal Control is to ensure that operations are effective and aligned with the strategy, and that financial reporting and management information is reliable and in compliance with applicable regulations and operating principles.
Internal control consists of all the guidelines, policies, processes, practices and relevant information about organizational structure that help ensure that the business conduct is in compliance with all applicable regulations, and that all financial reporting is correct. The purpose of guidelines and instructions is to ensure that accounting and financial information provides a true and accurate reflection of the activities and financial situation of the company. Actual performance is monitored against sales and cost targets by operative reporting systems on a daily, weekly, or monthly basis.
The company constantly monitors its cost efficiency and profitability as well as incoming and outgoing payment
next...
F-SECURE 2014
04 49
...previous
transactions. If any inconsistencies appear, the issues are handled without delay. The company's controlling function works in close cooperation with the CFO and business units, providing relevant data for business planning purposes and sales estimates. Estimates and revenue recognition are constantly monitored through various follow-up methods. The company's controlling team is responsible for the consistency and reliability of internal control methods. The controlling team meets with business management and key personnel in order to assess the reliability of estimates on a continuous basis.
Internal audit
The principles of the internal audit are embedded in written guidelines and policies concerning accounting, risk management, internal control and operations in all departments of the company. These guidelines and policies are coordinated by the company's Finance department. The company guidelines cover accounting, reporting, documentation, authorization, and other relevant issues. F Secure has no separate internal audit function, and this has been taken into account when defining the scope of the external audit. The financial management team meets with the auditors several times a year. The company has taken into use a direct line for all employees to notify the Board of any unethical activity or abuse. The audit committee meets with auditors and head of legal counsel from time to time to discuss related matters of their areas of responsibility.
Risk management
Risk management is an integral part of F-Secure's governance and management. The purpose of risk management is to help the company reach its objectives and to support the continuity of the company's operations by ensuring that the company:
- has a comprehensive understanding of major risks, opportunities, and threats
- proactively manages opportunities and threats
- has systematic methods to identify, analyze, evaluate, and control risks
-
has a clear understanding of roles and responsibilities regarding risk management
-
has systematic methods to collect, analyze, and learn from occurred risks
The foundation for risk management is defined in the Company's Risk Management Policy. It expresses the mandate and commitment for F-Secure Risk Management and the processes and practices that are in place to identify, report and manage material risks across the company. The policy also defines responsibilities related to Risk Management.
The Board of Directors is responsible for the approval of the Risk Management Policy and determines the company's overall attitude towards risks. The Board of Directors and its Audit Committee are responsible for monitoring the company's key risks and related controls and the effective implementation of the policy. The Audit Committee annually conducts a key risk review and evaluates the effectiveness of the risk management system.
The CEO and Leadership Team are accountable to the Board for approving the Company's risk management standards and ensuring that they are applied in a consistent manner across the organization.
The Corporate Risk Management function provides and maintains a process to identify, analyze, evaluate, and treat risks. Risk assessments are conducted twice a year as a part of the company operational planning. The Leadership Team conducts a company-level risk review biannually as part of the operational planning and approves the company-level risk profile. The Board of Directors and its committees approve and monitor the reporting procedures, as well as the adequacy, appropriateness, and effectiveness of the company's business and administrative processes.
Weekly and monthly financial reporting that covers the entire company is used to monitor how well financial targets are being met. The reports include actual figures, plans and up-to-date forecasts. The company has sought to manage the risks relating to its business operations by developing its operating processes and control systems. The Board has set certain appropriate authorization limits to the management, and if these limits are exceeded, the decisions shall be handled by the Board of Directors.
Invoicing is mainly handled in euros. In order to minimize the impact of fluctuation in exchange rates, the goal is to hedge the estimated cash flow of affected currencies. The
company does not provide financing outside the industry's standard payment terms.
The company's investment policy for cash reserves was renewed in 2014. The Company's financial assets can be categorized in two groups: a) cash in bank accounts to ensure the everyday transactions ("working capital" and b) "excess cash" that is a strategic reserve for larger one-off cash needs like M&A cases. The Company's target is to keep "working capital cash" in banks as low as reasonable from the operational point of view. The excess cash is invested to reach higher return than money markets and therefore investments can stand more volatility. However, the main purpose is to ensure the value of investment, thus to support the shareholder value.
The most significant risks for F-Secure are related to the following factors: instability in the economic climate, changes in the competitive environment and customer demand affecting the volume of business and price levels, competitiveness of F-Secure's product portfolio in the changing market situation, the ability to protect the intellectual property (IPR) in F-Secure's solutions, risk exposure from increasing contractual liability requirements, regional development in new growth markets, sustainability of partner relationships, development of new business areas, continuous change in the storage and content cloud services markets, and potential security threats targeted at these services.
OTHER GOVERNANCE ISSUES
Management of insider issues
The company follows the insider regulations of the NASDAQ OMX Helsinki Ltd. Insiders are divided into three categories: (1) permanent public insiders including the members of the Board, the auditors, and the Leadership Team of the company, (2) permanent company-specific, non-public insiders, including persons who by virtue of their position or tasks learn inside information on a regular basis, and (3) project-based insiders. The company maintains its public insider registers in the Euroclear Finland Ltd's SIRE system. The trading of F-Secure shares and options of permanent public insiders is public.
Permanent public insiders and permanent company-specific insiders or their interest parties as defined in the Finnish Securities Markets Act are not entitled to trade shares,
F-SECURE 2014
04 50
...previous
options, or other securities 21 days prior to the publication of interim financial statements or company accounts. Project-based insiders are not entitled to trade shares, options, or other securities until the termination of the project. Up-to-date information on the holdings of F-Secure's permanent insiders who have a duty to declare can be found on the company's website.
F-Secure's IR-function is in charge of the company's insider issues.
Silent period
The company observes a silent period of 21 days before each quarterly report announcement. During the silent period, the company will arrange neither meetings nor conference calls with the investor community.
Communications
The aim of the Company's communications is to support the correct valuation of the company by providing the markets with sufficient information on F-Secure's financial position, strategy, and objectives. The Board of Directors has approved the disclosure policy that defines the guidelines in communications to financial markets and other parties. F-Secure's website contains all information that has been made public according to the disclosure requirements for listed companies.
BOARD OF DIRECTORS
RISTO SIILASMAA
Chairman of the Board of Directors since 2006
Bord member since 1988
b. 1966, M.Sc. (Engineering)
Main employment history:
Currently Chairman of the Board, F-Secure Corporation
Founder, F-Secure Corporation
President and CEO, F-Secure Corporation, 1988–2006
Main board memberships and public duties:
Chairman of the Board of Directors of Nokia Corporation
Member of the Board of Directors of Mendor Oy
Vice Chairman of the Board of Federation of Finnish Technology Industries
Member of the Board of Directors of Confederation of Finnish Industries, EK
Member the Tsinghua SEM Advisory Board, Tsinghua University
Member of ERT European Roudtable of Industrialists
Holdings: number of shares 63,120,972 holding 39.75%
JUSSI AROVAARA
Board member since 2010
b. 1966
Main employment history:
Currently Vice President, Global Sales in Corel Corporation (UK)
Vice President, Global Operations, Corel Corporation (UK), 2010–2012
Senior Director, International Sales and Marketing Operations, Corel Corporation (UK), 2005–2009
Director, International Product Marketing, Corel Corporation (UK), 2004–2005
Vice President, EMEA Sales, Corel Corporation (UK), 2002–2004
Vice President, Sales Operations, Corel Corporation (Canada), 1999–2001
Before 1996 worked in several sales and marketing positions in computer wholesaling.
Holdings: number of shares 28,554
next...
F-SECURE 2014
04 51
...previous
PERTTI ERVI
Board member since 2003, Chairman of the Audit Committee
b. 1957, B.Sc. (Electronics)
Main employment history:
Currently an independent management consultant
Co-CEO, Member of the Executive Board, Computer 2000 AG, 1995–2000
Co-founder, Managing Director, Computer 2000 Finland Oy, 1983–1995
Has worked at international management level with major IT vendors such as Cisco, IBM, Intel, HP and Microsoft.
Main Board Memberships and public duties:
Chairman of the Board of Directors Nevtor Oy
Chairman of the Board of Directors Efecte Corporation
Chairman of the Board of Directors Ixonos Plc
Chairman of the Board of Directors Comptel Corporation
Member of the Board of Directors of Teleste Corporation
Holdings: number of shares 32,910
MATTI HEIKKONEN
Board member since 2013
b. 1976, M.Sc. (Eng.)
Main employment history:
Currently SEVP, Global Operations and partner of QuestBack Group
Entrepreneur and CEO, Digium Ltd, 2007–2010
Head of Nokia-Cisco Systems global alliance in Nokia Corporation, 2004–2007
Entrepreneur, Triple Check Ltd, researcher of Aalto University of Finland, 2002–2004
Group marketing Director and Partner, Done Solutions Corp, 2000–2002
Entrepreneur and CEO, Identia Ltd, 1998–2000
Main board memberships and public duties:
Member of the Board of Directors of Ixonos Plc
Chairman of the Board of Directors of Finnish Software Entrepreneurs Association
Holdings: number of shares 9,972
JUHO MALMBERG
Board member since 2008
b. 1962, M.Sc. (Computer Science)
Main employment history:
CEO, ZenRobotics Ltd. 2012–2014
Executive Vice President, Development and a Member of Executive Board of KONE Corporation 2006–2012
Managing Director of Accenture Finland 2002–2005
Director, Nordic Outsourcing of Accenture, 2005
Deputy Managing Director of Accenture 1999–2002
Technology Director of Accenture 1992–1999
Main Board Memberships and public duties:
Member of the Board of Kemppi Oy
Senior advisor, ZenRobotics Ltd.
Holdings: number of shares 48,185
ANU NISSINEN
Board member since 2010
b. 1963, M.Sc. (Economics)
Main employment history:
Era Content Oy, Founding partner and CEO 2014-
CEO of Sanoma Media Finland Ltd and a Member of the Executive Management Group of Sanoma, 2011–2013
President of Sanoma Entertainment Ltd, 2008–2011, and Member of the Executive Management Group of Sanoma, 2008–2010
President of SW Television Ltd / Welho, 2004–2008
Marketing Director of Helsinki Televisio Ltd, 2001–2004
Marketing Manager of Oy Sinebrychoff Ab, 1998–2000
Main Board Memberships and public duties:
Member of the Board, DNA Oy
Member of the Board, Siili Solutions Oyj
Holdings: number of shares 28,554
PETER VESTERBACKA
Board member since 2014.
b. 1968
Main employment history:
Rovio Entertainment, Mighty Eagle, 2010–
Hewlett Packard, Founder, HP Bazaar, 1992–2006
Some Bazaar, Founder, 2006–2010
Main Board Memberships and public duties:
Member of the Board, American Chamber of Commerce in Finland
Member of the Board, Bluegiga Technologies
Member of the Board, Startup Foundation
Member of the Board, Slush
Member of the Board, Filmkompaniet
Member of the Board, Goo Technologies
Holdings: number of shares 3,849
F-SECURE 2014
04 52
LEADERSHIP TEAM
CHRISTIAN FREDRIKSON
President and CEO
b. 1964, M.Sc. (Engineering)
F-Secure CEO since 2012
Mr. Fredrikson joined F-Secure in 2012. He was previously responsible for global sales for of Network Systems business unit at Nokia Siemens Networks. Past positions at Nokia Siemens Networks include Head of Asia Pacific Region at Nokia Siemens Networks and Head of OBS Business Unit (Operations and Business Software), including R&D and sales.
Mr. Fredrikson joined Nokia in 1994, and has held several executive level positions in the company, including R&D and sales. He is a member of the Communications Administration Committee of Ministry of Transport and Communications in Finland as well as a member of the Steering Board of the European Cloud Partnership under the European Commission.
Main Board Memberships taken: member of the Board in Remedy Entertainment Ltd, member of the Board in DIGI.FI and in Åbo Akademi Stiftelse.
Holdings: -
JANNE JUVONEN
Executive Vice President, CMO
b. 1966 eMBA
Member of the Leadership Team since 2014
Mr. Juvonen joined F-Secure in 2014. Previously he worked for Rovio Entertainment Ltd. and prior to that he has held positions in sales and management in several domestic and international companies, such as Rautakirja Oy, Carlsberg Baltics, Carlsberg Singapore and Carlsberg Asia. He has also worked for Oy Sinebrychoff Ab, Coca Cola Juomat Oy, Anttila Oy and Masterfoods Oy.
Holdings: -
SAMU KONTTINEN
Executive Vice President, Consumer Security
b. 1973
Member of the Leadership Team since 2009
Mr. Konttinen joined F-Secure in 2005. Previously he has served as Executive Vice President, Sales and Marketing, Vice President of Sales and Geographical Operations as well as Vice President of Mobile Business Unit. Prior to that, he worked in sales and channel management, including as Director of Regional Operations, covering operations in EMEA. Before joining F-Secure Mr. Konttinen held a Vice President position at Valimo Wireless Ltd 2001–2005.
Main Board Memberships taken: member of the Board in Ixonos Plc.
Holdings: number of shares: 67,103
TIMO LAAKSONEN
Vice President, Content Cloud (until 28 Feb 2015)
b. 1961, M.Sc. (Economics)
Member of the Leadership Team since 2012
Prior to joining F-Secure in 2012, Mr. Laaksonen worked as Chief Commercial Officer in Tecnotree Corporation. He started his career in enterprise IT sales and marketing management in Nokia Data and Teamware Group (Fujitsu), then moved on to drive and manage a number of international growth business ventures in the telecom, internet and mobile arena, as Executive VP in Sonera SmartTrust and as CEO of First Hop and Xtract.
Holdings: 9,039
JOHANNA ORJATSALO
Vice President, Human Resources and Office services
b. 1973, M. Sc. (Economics)
Member of the Leadership Team since 2014
Mrs. Orjatsalo joined F-Secure in January 2011. Previously she has been responsible for organizational and talent development, especially in sales and marketing. Prior to joining F-Secure Orjatsalo has worked in sales and as a managing consultant at Accenture in 2006–2010. Prior to that she worked for Capgemini (2001–2006) McKinsey & Company (2000–2001) and Gemini Consulting (1998–2000).
Holdings: -
JARI STILL
Vice President, Research & Development Operations
b. 1965, B.Sc
Member of the Leadership Team since 2012
Mr Still joined F-Secure in 2000. Previously he has worked as the Head of research and development of Mobile Business Unit. Prior to joining F-Secure he worked as co-founder and Chief Executive Officer in Modera Point Oy and in its subsidiary in San Jose, CA. Earlier in his career Mr. Still has worked for Finnish telecommunication and software companies in product development and management positions. He also has several positions of trust in software and business forums. Still is e.g. a member of the VTT ICT and Electronics Advisory Board.
Holdings: number of shares: 100,657
PEKKA USVA
Vice President, Corporate Security
b. 1969, Datanome
Member of the Leadership Team since 2012.
Mr. Usva joined F-Secure in 1995 and has served in various positions including a Director in Corporate Business Solutions, a Director of Product Management and Development in Corporate Business and a Director of Solution Management in Corporate Business.
Holdings: -
next...
...previous
TANELI VIRTANEN
Chief Financial Officer (until 22 Feb 2015)
b. 1965, M.Sc. (Economics)
Member of the Leadership Team since 2002.
Prior to joining F Secure in 1999, Mr. Virtanen worked for Santasalo-JOT Group as Group Controller.
Holdings: number of shares: 50,149
SAILA MIETTINEN-LÄHDE
Chief Financial Officer (as of 23 Feb 2015)
s. 1962 M.Sc. (Engineering)
Member of the Leadership Team since 2015
Prior to joining F-Secure she worked as Deputy CEO and CFO of Talvivaara where her area of responsibility covered the Group's financial management, investor relations, treasury, risk management and communications. Her other previous employers include SIDOS Partners Ltd (2004), D. Carnegie AB (2000–2003), Orion Pharma (2000), Finnish National Fund for Research and Development (1998–1999) and various positions at Leiras Oy.
Holdings: number of shares: –
INFORMATION FOR SHAREHOLDERS
The main goal of F-Secure's investor communications is to make available correct, up-to-date information about F-Secure and its operations – impartially and simultaneously to all interest groups. All published investor information including annual reports, interim reports, as well as stock exchange and press releases are available on the Group's website www.f-secure.com/investors. All investor information is published in English and in Finnish. Subscriptions for the emailing list for stock exchange releases can be made by sending your contact details to [email protected].
F-Secure publishes a financial statement bulletin and three interim reports during 2015, and arranges news conferences for media and analysts at the time of publishing the quarterly reports. F-Secure observes a three-week silent period before the publishing of each quarterly report. During this time, F-Secure neither arranges meetings nor phone conferences with investors or analysts.
Annual General Meeting
The Annual General Meeting of F-Secure Corporation is scheduled to be held on Wednesday, April 8, 2015 at 3.30 p.m. (Finnish time) at F-Secure Corporation, Tammasaarenkatu 7, 00180 Helsinki. More information on how to attend as well as the documents for the meeting are available on the Group's webpage www.f-secure.com/investors.
Financial calendar for 2015
| Financial Statements Bulletin | February 4 |
|---|---|
| Annual Report | Latest week 12 in March |
| Q1 Interim Report | April 23 |
| Q2 Interim Report | July 23 |
| Q3 Interim Report | October 22 |
F-Secure share facts
| Listing since (1999) | NASDAQ OMX Helsinki Ltd. |
|---|---|
| Trading symbol | FSC1V |
| Number of shares | 158,798,739 |
IR Contacts
For any inquiries on F-Secure as an investment target, please contact: [email protected]
F-Secure Corporation
Corporate Headquarters
Tammasaarenkatu 7
P.O. Box 24
00181 Helsinki, Finland
Tel. +358 9 2520 0700
E-mail: [email protected]
www.f-secure.com
content F-Secure
design and layout Kreab
photographs F-Secure
print Libris 2015
Contents
JOIN THE MOVEMENT
F-Secure Corporation
Tammasaarenkatu 7
P.O. Box 24, 00181 Helsinki
Tel. +358 9 2520 0700
[email protected]
www.f-secure.com