F-SECURE CORPORATION
February 3, 2010 at 9.00
F-Secure Corporation - Interim Report January 1 - December 31, 2009
Performance as anticipated, Software as a Service business continued to drive
growth, strong position in operator business globally
(This report is unaudited. Unless otherwise stated the comparisons refer to the
corresponding period a year ago. The currency is euro. Acquired Steek, now
Storage and Digital Content business unit, is included in operator channel)
Highlights in Q4
- Total revenues grew by 4% reaching record revenues of 31.8 million
(Q408: 30.6m)
- Revenues from the operator business (ISPs, mobile operators and cable
operators) grew by 18% from Q408, reaching revenues of 15.9 million (13.5m)
- EBIT was 4.1 million; representing 13% of revenues
(7.2m including the gain from the sale of network control technology of 0.8m in
2008)
- Earnings per share was EUR 0.02 (EUR 0.05)
- Cash flow from operations was 4.6 million positive (8m positive)
- Online backup and storage services live in 4 countries with America Movil,
strengthens F-Secure's expansion into Latin America
Highlights in 2009
- Total revenues grew by 11% reaching record revenues of 125.1 million
(2008: 113.0m)
- Strong revenue growth of 24% from the operator business (ISPs, mobile
operators and cable operators), reaching revenues of 60.2 million (48.4m)
- EBIT was 24 million; representing 19% of revenues (24.3m including the gain
from the sale of network control technology of 0.8m in 2008)
- Good profitability level remained though major acquisition realized
- Earnings per share was EUR 0.12 (EUR 0.13)
- Cash flow from operations was 16.4 million positive (26.3m positive)
- Acquisition of Steek SA, storage and digital content business, was announced
in July, integration proceeds on schedule, demand from large operators confirms
longer term growth opportunities
- Strong position in operator business globally; good progress especially in
India and lately in Latin America
- New version of F-Secure's internet security product, F-Secure Internet
Security 2010, was successfully launched to the markets in September
- Mobile subscriber growth 80% for the year
Note that signing of the closing and Board's proposals to the AGM and will be
informed on February 18, 2010.
KEY FIGURES
2009 2008 2009 2008
Eur million 10-12 10-12 12m 12m
Revenues 31.8 30.6 125.1 113.0
Operating profit 4.1 7.2 24.0 24.3
% of revenues 13 % 24 % 19 % 20 %
Profit before taxes 4.4 8.0 25.2 26.4
Earnings per share (EUR) 0.02 0.05 0.12 0.13
At the end of period:
Deferred revenue 35.6 37.2 35.6 37.2
Equity ratio, % 70% 71% 70% 71%
Debt-to-equity ratio, % -68% -148% -68% -148%
Personnel 826 718 826 718
CEO Kimmo Alkio: "In a challenging financial environment F-Secure delivered a
solid year in terms of financial performance and the development of our core
businesses. While the short term results are not at the traditional level for
F-Secure, we have made important investments for our future competitiveness and
growth. Our opportunities as the leading Software as a Service partner for
operators globally has strengthened during the latter part of 2009. During this
coming year we are confident to be launching new operator partnerships for both
the Security and online storage related services. These two businesses combined
with our operator centric strategy will be a strong growth driver for the
future."
F-Secure business during 2009 at the Group level
For 2009, the total revenues were 125.1 million (2008: 113m), growth of 11%.
Revenue growth continued solid in the operator channel, up by 24% and 60.2m in
total, and in business through the traditional channels, up by 1% and 64.9m in
total. EBIT was 24 million (24.3m including the gain from the sale of network
control technology of 0.8m), representing 19% of revenues; 1% decline from 2008
and 2 % increase when excluding gain from the sale of technology in 2008. The
profitability level remained at good level including impact of the major
acquisition of Steek SA in July (more details on incremental Q4 cost level
below). Earnings per share were EUR 0.12 (EUR 0.13). Cash flow was 27.4 million
negative (23.1m negative) including a paid dividend, share buy backs and the
acquisition cost. The cash flow from operations was 16.4 million positive
(26.3m positive). The Group deferred revenue increase to 35.6m at the end of
year (33.7m at the end of September 2009) due to healthy renewal sales.
The Group total costs were 92.3 million (81m), representing 14% growth. The
cost increase in the second half of the year was especially impacted by the
running costs of acquired Steek in July and Q4 extra marketing and promotion
activities as explained below. The Group also capitalized some of its R&D
expenses according to accounting rules, totaling 1.7 million (0.5m) for 2009.
The impact of the acquired Storage and Digital Content business (Steek SA) in
2009 was EPS dilutive as previously informed.
The financial results for the fourth quarter of 2009 were in line with the
guidance given in July (revenues 31-33 million, cost level below 26 million);
revenues for the fourth quarter were 31.8, showing a growth of 4%. EBIT was
4.1m; 13% of revenues The costs were 25.6m; an increase of 19%, including the
Storage and Digital Content business' running costs, amortization and
integration activities. Additionally pre-planned, marketing investments for the
core Internet Security client solution took place in Q4. These marketing
activities were targeted at boosting visibility of the new Internet Security
2010 both for the benefit of the operator channel and the F-Secure direct
consumer channel. The impact of additional Q4 marketing costs were about 3 %
-points on the company EBIT.
In the fourth quarter of 2009 the geographical breakdown of the revenues split
as follows: Finland and Scandinavia 35% (39%), Rest of Europe 46% (43%), North
America 8% (9%) and Rest of the World 11% (9%).
Operator channel in Q4 and 2009
The Group's operator (ISPs, mobile operators and cable operators) business
continued to perform well. In the fourth quarter of 2009, revenues through the
operator business partners totaled 15.9 million (Q408: 13.5m), representing
already 50% of the Group total revenues (44%). Revenue growth was 18% compared
to the previous year. The annual revenues were 60.2m (48.4m), representing 48%
of the total revenues (43%) and a growth of 24% compared to 2008.
The Storage and Digital Content business (Steek SA) performed well while
revenues were slightly lower than previously estimated and EPS was dilutive as
anticipated. Revenue forecasting in this system integration type of business
has more variability than the traditional F-Secure business. In the future,
this business is anticipated to be reported as part of the operator channel.
The Group's position in the operator business has remained strong in the
traditional Internet security business, while the Storage and Digital Content
market entry has further strengthened F-Secure's attractiveness as a long term
strategic partner for major operators globally. The company currently has more
than 200 partners in over 40 countries with an addressable market of over 70
million broadband consumer customers. The Group has not lost any of its
existing partnerships; however, the number of partners may vary subject to
merger activity in the operator market.
The Group's offering in the Software as a Service business includes PC and
mobile security and a broad range of storage based services. The Group sees
that the acquired storage related business improves the Group's position in
partnering with major operators globally. The operator project pipeline of the
Storage and Digital Content business has developed favourably. Several
cross-selling opportunities have already materialized, thus strengthening long
term growth opportunities. Integration of the Storage and Digital Content
business is proceeding well and on schedule. In the long run, the management
believes that the acquisition will strongly support F-Secure's strategy to
broaden Value Added Service (VAS) offerings to consumers via operators.
During Q4 the Group has enforced its presence especially in Asia and Latin
America. For PC security new partnership were announced with Vietnam Telecom
(Vietnam), P1 (Malaysia) and CSL (Hong Kong). Online backup and storage
services with America Movil have gone live in 4 countries in Latin America.
America Movil is the largest mobile operator in Latin America covering 18
countries and more than 180m mobile customers. Additionally, the Group expects
to launch several significant operator partnerships during 2010.
The total number of the Group's operator partners is significantly larger than
that of any other security service vendor. At the end of 2009 the Group's
operator partners held approximately 39% (39%) market share of total broadband
consumer connections in Europe, approximately 10% (10%) in North America and in
the APAC region F-Secure has quickly become one of the leading vendors with
more than 11m potential addressable subscribers (Source: estimates by Dataxis
and F-Secure).
Other channels in Q4 and 2009
During Q4, the revenues through traditional channels were 15.9 million (17.1m),
showing a decline of 7% from the corresponding period in 2008. These channels
represented 50% of the Group's total revenues (56%). The annual revenues were
64.9m (64.6m), representing 48% of the total revenues (57%) and a growth of 1%
compared to 2008.
The traditional sales channels continued to perform at the lower end of
expectations, affected by the challenging economical environment. The slowdown
in new license sales continued. However, the renewal sales were showing some
signs of improvement. This is also seen in the growth of deferred revenues in
Q4. The launch of the totally renewed Internet Security 2010 product did not
yet contribute to Q4 volumes, however it is anticipated to contribute in the
upcoming quarters.
Mobile security in Q4 and 2009
Co-operation with major handset manufacturers, including Nokia, and operators
such as Vodafone Group, TeliaSonera Group, T-Mobile International, Swisscom and
Elisa continued well during the year. Currently, there are mobile operator
partnerships with more than 20 operators worldwide.
The investments for mobile security products development continues. The
F-Secure Mobile Security product includes anti-virus and malware protection and
firewall capabilities as well as an anti-theft feature with remote lock, remote
wipe and theft control functionalities. In January 2010 F-Secure announced the
availability of its new smartphone solution, F-Secure Anti-Theft for Mobile
providing remote lock, remote wipe and theft control.
The revenues from the Mobile Security business are included in the above
mentioned channels and were about 3% of the Group's total quarterly and annual
revenues. During the year mobile operator subscribers grew by appr. 80%
Products, Services and Technologies
F-Secure has been a pioneer in both Software as a Service and cloud computing.
Nearly ten years ago, F-Secure innovated and launched to the market a new
business model by offering security as a subscription service via operators
(SaaS). Cloud computing has been in the center of the company's technology
strategy and choices for the past few years. An example of cloud computing at
F-Secure is the real-time protection network which provides reputations of
files, sites and URLs to F-Secure's solutions. It is implemented as an
in-the-cloud reputation service, capable of supporting several types of
solutions now and in the future.
The real-time protection network moves the PC processing and memory intensive
functions to the cloud making the client software one of the fastest in the
industry. Furthermore, by harnessing the collective intelligence of client
systems, the real-time protection network is able to detect and react to new
emerging threats a magnitude faster. This is important in today's dramatically
changed threat situation where the Internet is facing a deluge of new malware
and variants that make traditional heuristics or signature-based solutions
inefficient and slow. This technology has been utilized for e.g. in F-Secure
Internet Security 2010, and in F-Secure Client Security 9, in their anti-virus,
browsing protection and parental control features.
F-Secure launched several new products and services into markets during 2009.
The key announcements were both for consumer and business customer segments.
In January 2010, F-Secure launched the availability of its new smartphone
solution, F-Secure Anti-Theft for Mobile. The solution provides three useful
security features to protect your phone: remote lock, remote wipe and theft
control and is available for Symbian and Windows Phone platforms.
In November, F-Secure launched F-Secure Client Security 9, which provides
enhanced malware detection by utilizing the latest in-the-cloud reputation
services, fast behavior monitoring and rootkit scanning technologies. The
updatable core security technology has been redesigned to provide instant
protection for the end-user and the administrator. This means high detection
rates against malware, spyware, and phishing, as well as enhanced performance
and protection against future threats. Businesses can protect their
confidential data, prevent the spread of malware in their networks, and block
hostile intrusion attempts more effectively, also on the Windows 7 operating
system.
In September, F-Secure launched a new version of its internet security product,
F-Secure Internet Security 2010, which is a complete security solution to
protect users from threats and to enable the safe use of the Internet.
According to performance tests by the independent testing organization
AV-Test.org, F-Secure Internet Security 2010 has 80% less overall system impact
and 60% faster virus scans than the previous version. The new product also
includes a new interface design. In connection with the launch of Internet
Security, F-Secure also renewed its brand commitment to “Protecting the
irreplaceable”, reflecting the importance that security of digital content has
in people's lives today.
In September, F-Secure and Nokia announced the extension on their collaboration
to include Internet Security on computers. Nokia Booklet 3G mini-laptops have
been preinstalled with F-Secure Internet Security 2010, the newest version of
F-Secure's flagship solution.
In June, F-Secure Mobile Security and its new advanced anti-theft feature was
made available for Windows Mobile phone users. The anti-theft feature includes
remote lock, remote wipe and theft control functionalities.
In May, F-Secure launched Online Backup to consumer customers through the
F-Secure eStore and retailers in Europe and North America. Online backup has
been available through selected Internet Service Provider partners since autumn
2008. In May, F-Secure Safe, a new value added offering that combines both
internet security and online backup as a new service, was launched in Germany.
In April, F-Secure launched a new version of its Protection Service for
Business (PSB), which is a comprehensive Security as a Service solution
specially designed for the needs of small and medium-sized companies. PSB 4.0
includes “in-the-cloud” technology to protect desktops and laptops. It also
provides comprehensive protection for servers, including rootkit detection.
This release also introduces high quality e-mail protection and spam control.
In February, F-Secure launched its F-Secure Mobile Security 5, which enables
smartphone users to experience the full potential of their devices without fear
of mobile threats. F-Secure Mobile Security includes combined real-time
antivirus functionality with a firewall, antitheft and antispyware for S60 5th
and 3rd Edition smartphones.
Market situation
Research data shows that the security software and services market in 2009 has
grown around 5% (source: Gartner), thus the figure is lower than the prior
industry forecasts for the year. This industry segment has likely been impacted
by the global economic downturn.
There were no significant changes in the competitive landscape or in the
pricing levels during the fourth quarter. However, there have been signs of
increasing price competition in some countries. The Group's competitive
position in the operator channel has remained strong though the slower growth
in sales of fixed broadband connections by operators may have slowed down
growth of the Security as a Service business. The broadband market is at the
same time experiencing a shift from fixed to mobile broadband access. The
combined broadband business is anticipated to continue as a healthy growth
driver for Security as a Service.
Personnel and organization
The Group's personnel totaled 826 at the end of December (Q408: 718, Q309:
818). The Group's number of personnel increased during the quarter slightly in
sales and marketing and in R&D.
The Executive Team currently consists of the following persons: Kimmo Alkio
(President and CEO), Ari Alakiuttu (Vice President, Human Resources),
Christophe Camborde (Vice President, Storage and Digital Content business
unit), Samu Konttinen (Vice President, Sales and Geographical Operations),
Pirkka Palomäki, (Chief Technology Officer), Kari Penttilä (Vice President,
R&D; joined the company in January 2010), Patrik Sallner (Vice President,
Mobile business unit; joined the company in January 2010), Antti Reijonen (Vice
President, Consumer Business and Marketing) and Taneli Virtanen (Chief
Financial Officer).
Financing and capital structure
The Group's financial position continued strong. The Group's equity ratio at
the end of year was 70% (71%). Gearing ratio was 68% negative (148% negative).
Cash flow for 2009 was 27.4 million negative (23.1m negative) including a paid
dividend, share buy backs and the acquisition cost. The cash flow from
operations was 16.4million positive (26.3m positive). The financial income for
2009 was 1.2 million (2m). The company's cash position has developed according
to the longer term efficient capital management objectives. The market value of
the liquid assets of the Group on December 31, 2009 was 33.6 million (61m). The
acquisition cost of Steek SA was paid from the Group's liquid funds in July.
The changes in exchange rates of USD and JPY had some positive impact and
changes in GBP and SEK had some negative impact on revenues and results for
2009.
Capital expenditure
The Group's capital expenditure in 2009 was 37.2 million (3.1m), consisting
mainly of the acquisition cost and in additionally of IT hardware and software
as well as capitalization of some research and development expenses.
Capital management and repurchase of own shares
The objective of the Group's capital management is to aim at an efficient
capital structure that ensures the functioning of business operations and
promotes the increase of shareholder value.
In its meeting on August 26, 2009, F-Secure's Board of Directors decided to
start repurchase of its own shares based on the authorization of the Annual
General Meeting of 2009. The maximum number of shares to be repurchased is
1.500.000 shares, representing 1% of all the shares issued by the Company.
The shares are purchased through public trading on the NASDAQ OMX Helsinki Ltd.
in accordance with its rules and at market price. 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.
Based on the authorizations by the General meetings, during January-December,
F-Secure has bought altogether 841,514 shares corresponding to 0.5% of the
company's shares and voting rights. Including all shares bought, the total
number of own shares held at the end of December 2009 was 1,549,446 shares,
corresponding to 1% of the company's shares and voting rights.
F-Secure has conveyed a total of 9,068 shares to Board members as part of Board
compensation as decided by the AGM.
Shares, shareholders' equity and option programs
In December, a total of 644,211 F-Secure shares were subscribed for with the A
warrants attached to the F-Secure 2005 Warrant Plan. The issue of the 2005
Warrant Plan was approved by the Annual General Meeting on March 23, 2005. In
aggregate the number of shares was increased by 644,211. The corresponding
increase in the share capital was registered in the Finnish Trade Register on
December 3, 2009. F-Secure received as subscription price a total amount of EUR
876,126.96, which will be recorded in the fund for company's distributable
equity. As a result of the registering the total number of shares is
157,469,243. The holders of the new shares were entitled to all shareholders'
rights from the registration day. The Company has submitted an application for
the new shares to be listed on the NASDAQ OMX Helsinki Ltd. together with the
other Company shares. The trading with the new shares commenced on December 4,
2009. The subscription period for the 2005A warrants began on March 3, 2008.
The 2005A warrants expired on November 30, 2009.
In September, a total of 54,625 F-Secure shares were subscribed for with the A
warrants attached to the F-Secure 2005 Warrant Plan. The issue of the 2005
Warrant Plan was approved by the Annual General Meeting on March 23, 2005. In
aggregate the number of shares was increased by 54,625. The corresponding
increase in the share capital was registered in the Finnish Trade Register on
September 2, 2009. F-Secure received as subscription price a total amount of
EUR 74,290.00, which was recorded in the fund for company's distributable
equity. As a result of the registering the total number of shares is
156,825,032. The trading with the new shares will commence on September 3,
2009. The subscription period for the 2005A warrants began on March 3, 2008.
In January, a total of 3,333 F-Secure shares were subscribed for with the A3
warrants, a total of 171,340 F-Secure shares were subscribed for with the A1/A2
warrants, a total of 162,650 F-Secure shares were subscribed for with the
B1/B2/B3 warrants and a total of 355,923 F-Secure shares were subscribed for
with the C1/C2/C3 warrants attached to the F-Secure 2002 Warrant Plan. In
aggregate, the number of shares was increased by 693,246. The Group received as
a subscription price a total amount of EUR 661,219.02, which was recorded in
the fund for the company's distributable equity.
The total number of shares is currently 157,469,243. The corresponding number
of shares diluted would be 161,269,612 including all stock option programs. The
company's registered shareholders' equity is EUR 1.551.311,18.
Corporate Governance
The Group complies with the Corporate Governance recommendations for public
listed companies published in October 2008 by the Securities Market
Association, a body established by the Confederation of Finnish Industries EK,
the Central Chamber of Commerce, and NASDAQ OMX Helsinki Ltd., as explained on
the Group's web pages.
Risks and uncertainties
Despite the current economic conditions, the Group has not seen material
changes to the risks and uncertainties during the reporting period. However,
the current situation in the global economy has continued to impact on the
traditional license sales. This is seen especially as a slowdown in new license
sales. The slower growth in sales of fixed broadband connections by operators
may also have impact on security service sales. As the uncertainty in the
economic environment has continued, the Group continues to monitor closely the
development in the economic and financial markets.
The Group's risks and uncertainties are related to, among other things, the
competitiveness of the Group's product portfolio, competitive dynamics in the
industry, pricing models (e.g. free services), impact of changes in technology,
timely and successful commercialization of complex technologies as new products
and solutions, the ability to protect own intellectual property (IPR) in the
Group's solutions as well as the use of third party technologies on reasonable
commercial terms, subcontracting relationships, regional development in new
growth markets, sustainability of partner relationships, service quality level
requirements and the overall development of value added security solutions in
the Internet Service Provider and mobile operator market.
As stated in the previous interim releases, F-Secure Inc. the U.S. subsidiary
of F-Secure Corporation has been named as a defendant in a patent infringement
lawsuit filed in a state court in the U.S in December 2008. F-Secure
investigates the claims and will defend itself accordingly. The Group does not
expect any material impact on its financials from this lawsuit.
Long-term objectives
The market opportunities for Internet security and other related services are
driven by the expansion of the Internet. The global Internet penetration is
around 26%; in Asia it is below 20%, in Europe over 50%, and in North America
over 70% (Source: Internet World Stats, U.S. Census Bureau). The growing number
of smart phones, which have an Internet browser increases the number of mobile
internet users (number of smart phones 2009: 200m and 2012 more than 500m;
Source: Gartner).
This will lead to an increasing number of internet users globally requiring
security services. The Security software market as a total is attractive
globally. The market is an over $13 billion industry (Source: Gartner, 2009).
The longer term security market growth is expected to be around 9% with
antivirus growth at around 4% annually between 2008 and 2013 (Source: Gartner).
The volume of user generated digital content is expected to increase rapidly
during coming years driven by digital photos and music. The market for emerging
online storage is expected to show strong growth and to reach $715m by 2011
showing a CAGR of 33% 2006-2011 (Source: IDC/Networkworld).
The Security as a Service (SaaS) business has been a strong growth driver for
the Group since the year 2000. Based on the company's pioneering role in
offering Software as a Service, the Group continues to expand its offering to
augment traditional security services. The Software as a Service business model
continues to gain further market share in the software industry at large
(Source: IDC Nov. 2008). Based on experience of the Software as a Service
business model, the Group anticipates that both the customer benefits (e.g.
lower total cost of ownership) and attractive partner business benefits (e.g.
lifetime revenue share) will accelerate the adoption of the Software as a
Service business model compared to traditional software acquisition as a
product.
The Group's first priority is to drive strong growth. The core growth driver
has been Security as a Service (SaaS) sales through the operators. In addition,
the Group offers Online Backup as a Service and other storage related services
that are expected to drive growth. The acquisition of Steek, enables the Group
to develop more comprehensive and innovative Value Added Services to consumers
to be sold through its large operator network of over 200 operator partners in
over 40 countries with an addressable market of over 70 million broadband
customers.
The Group is focusing on increasing the penetration within the current operator
base with security and storage related services and continues to selectively
seek partner expansion globally. In addition, the Group is developing its
operations in other channels, such as electronic sales, to offer value-added
services to consumers and other segments.
The Group's close co-operation with major mobile phone vendors and mobile phone
operators provides good opportunities to benefit from the growth of the mobile
Internet. Over time, the Group anticipates synergies across the value added
Services being developed and offered both for PC's and mobile phones.
The Group's target is to be the leader in providing security and other related
value added services to consumers through operators. The Group pursues
investments in new value added services for both PC and mobile users to augment
the existing security services. The Group continues to drive innovation also in
traditional IT security, enabling the secure use of internet.
The Group aims to continue to exceed the average market growth rates in
revenues and seeks to improve its profitability sustainably towards an EBIT
level of 25% over time. The Group's longer term profitability level continues
to be driven extensively by revenue growth and through systematic cost
controls. The Group targets its investments in strategic growth businesses,
specifically the operator channel with security and storage as a service.
Short-term outlook
Markets for Security as a Service are expected to continue to grow. During the
year 2010 the Group seeks to continue to exceed average market growth. For 2010
the antivirus security market growth is anticipated to be around 5% (source:
Gartner 2009).
For the first quarter of 2010 the management estimates total revenues to grow
at a low single digit rate. This lower growth is driven primarily by the
slowdown in the traditional license business. The Software as a Service
business is expected to continue to be the growth driver; however, in Q1 the
growth rate is expected temporarily to be lower due to contractual changes with
some partners. The Group continues to invest in sales and marketing activities
to further extend its strong position in the global operator market. However,
the management expects the cost level to grow at lower rates than previously -
in Q1 marketing costs have been lowered compared to the second half of 2009.
This is estimated to improve the profitability from Q4.
F-Secure revenues for the first quarter of 2010 are estimated to be between 30
million and 32 million. Costs are estimated to be around 24 million.
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.
News conference today at 11 am
A news conference for press and analysts will be arranged today, on February 3,
at 11 am Finnish time at Group headquarters, address: Tammasaarenkatu 7
(Ruoholahti), Helsinki. A conference call for international investors and
analysts will be arranged at 14.00 Finnish time (13.00 CET, 12.00 am UK time).
Instructions on how to attend the conference call are available on the investor
pages of the Group's web site at
http://www.f-secure.com/en_EMEA/about-us/investor-relations/.
Financial calendar for 2010
During 2010 F-Secure will publish interim reports on April 28 (Q1), on July 29
(Q2), and on October 27 (Q3). On the publication dates a stock exchange release
will be sent at 9 am Finnish time to the NASDAQ OMX Helsinki Ltd., a press and
analyst conference will be arranged at 11 am Finnish time in Helsinki, and an
international conference call will be arranged in the afternoon. The Annual
General Meeting of 2010 is scheduled to be held on March 24, 2010 and the
annual report for 2009 will be published in the beginning of March. Full
details will be provided at a later date on the Group's website.
F-Secure Corporation
Additional information
F-Secure Corporation
Kimmo Alkio, President and CEO
tel. +358 9 2520 0700
Taneli Virtanen, CFO
tel. +358 9 2520 5655
Mervi Pohjoisaho, IR
tel. +358 40 535 8989
This interim report is prepared in accordance with IAS 34 standard Interim
Financial Reporting and with accounting principles stated in the annual report
2008.
As of January 1, 2009 the group has applied IFRS 8 Operating segments standard
and IAS 1 Presentation of Financial Statements standard.
Key figures (unaudited):
Euro million
INCOME STATEMENT 2009 2008 2009 2008 Chge
10-12 10-12 1-12 1-12 %
Revenues 31.8 30.6 125.1 113.0 11
Cost of revenues 2.1 3.1 9.9 10.3 -3
Gross margin 29.7 27.4 115.2 102.7 12
Other operating income 0.1 1.3 1.1 2.6 -59
Sales and marketing 15.9 13.0 56.9 48.6 17
Research and development 7.5 6.7 28.0 25.5 10
Administration 2.2 1.9 7.5 6.8 9
Operating result 4.1 7.2 24.0 24.3 -1
Financial net 0.3 0.7 1.2 2.0
Result before taxes 4.4 8.0 25.2 26.4
Income taxes -1.1 -2.1 -6.5 -6.9
Result for the period 3.4 5.9 18.7 19.6
Other comprehensive income:
Exchange diff. on translating
foreign operations 0.2 -0.3 0.1 -0.3
Available-for-sale fin.assets-0.3 -0.5 0.1 -0.2
Income tax rel. to components
of other comprehensive income 0.1 0.1 0.0 0.0
Total comprehensive
Income (owners) 3.3 5.2 18.9 19.1
Earnings per share, e 0.02 0.05 0.12 0.13
EPS, diluted, e 0.02 0.05 0.12 0.12
BALANCE SHEET
ASSETS 31/12/2009 31/12/2008
Intangible assets 1) 13.5 3.5
Tangible assets 4.6 3.5
Goodwill 1) 19.4 0.0
Other financial assets 2.8 1.1
Non-current assets total 40.4 8.1
Inventories 0.4 0.1
Other receivables 31.3 25.5
Available-for-sale
financial assets 17.6 47.1
Cash and bank accounts 16.1 14.1
Current asset total 65.5 86.8
Total 105.9 94.9
SHAREHOLDERS' EQUITY
AND LIABILITIES 31/12/2009 31/12/2008
Equity 48.8 41.1
Other non-current 2.5 0.0
Deferred revenues 6.7 7.5
Non-current liabilities total 9.2 7.5
Other current 19.0 16.5
Deferred revenues 28.9 29.7
Current liabilities total 47.9 46.2
Total 105.9 94.9
Cash flow statement 31/12/2009 31/12/2008
Cash flow from operations 16.4 26.3
Cash flow from investments 1) -31.8 -3.2
Cash flow from financing
activities 2) -12.0 -46.2
Change in cash -27.4 -23.1
Cash and bank at 1 Jan 60.9 84.3
Change in net fair value of
Available-for-sale 0.1 -0.2
Cash and bank at 31 Dec 33.6 61.0
Statement of changes in shareholders' equity
share unstricted assets
share premium equity- treasury ret. avail. Trans. Total
Equity on: capital fund reserve shares earnings f.sale diff.
31.12.2008 1.6 0.2 2.1 -1.5 39.1 -0.1 -0.4 41.1
Total
comprehensive
income
for the year 18.7 0.1 0.1 18.9
Dividend -10.9 -10.9
Excercise of options 1.0 1.0
Treasury shares 0.0 -2.0 -2.0
Cost of
share based payments 0.8 0.8
Equity on
31.12.2009 1.6 0.2 3.1 -3.5 47.8 0.0 -0.3 48.8
NOTES
Note 1) Business combinations (preliminary)
On 10 July 2009, the Group acquired 100% of the voting shares of Steek SA, an
unlisted company based in France specializing in providing online storage and
data management solutions.
Under the terms of the agreement, the cash and debt free purchase price was
27.5 million euro. An additional contingent purchase price of a maximum of 2.5
million euro is based on the performance of the acquired business in a period
ending March 31, 2010. According to the information currently available, the
management estimates that the likelihood of the additional contingent purchase
price is remote.
Cost
Purchase price 27.5
Net working capital 3.9
Cost associated with the acquisition 0.4
Acquisition cost 31.8
The preliminary cost of the combination was 31.8 million euro and it comprised
a cash payment and costs of 0.4 million euro directly attributable to the
combination. The final net working capital will be defined later.
The goodwill recognized below is attributed to the expected sales channel
synergies in the existing F-Secure customer base and workforce.
The fair value of the identifiable assets and liabilities of Steek as at the
date of acquisition were:
fair value
recognised on carrying
acquisition value
Intangible assets, technology 4.2 0.9
Intangible assets, customers 4.9
Tangible assets 0.5 0.5
Deferred tax receivable 1.2
Receivables 1.6 1.6
Cash and equivalents 3.9 3.9
Total 16.4 6.9
Deferred tax liability -2.4
Trade payables -1.3 -1.3
Other payables -0.3 -0.3
Total -4.0 -1.6
Fair value of net assets 12.4 5.3
Goodwill arising on acquisition 19.4
Acquisition costs 31.8
Cash outflow on acquisition
Net cash acquired with the subsidiary 3.9
Cash paid -30.7
Net cash outflow -26.8
Unpaid net working capital -1.0
Net cash outflow -27.9
From the date of acquisition, Steek has contributed -1.1 million euro to the
net profit of the Group. If the combination had taken place at the beginning of
the year, the revenue from continuing operations for the period would have been
126.6 million euro and profit from continuing operations would have been 17.8
million euro.
Note 2) Cash flow from financing
The company has bought own shares by 2,055,226 euro. Dividend for year 2008
0.07 euro per share totaling 10,903,928.49 euro was paid on 7th April 2009. In
2008, paid dividend totaled 10,859,178.26 euro and capital repayment
35,719,370.76 euro.
Key ratios 2009 2008
12 m 12 m
Operating result,
% of revenues 19.2 21.5
ROI, % 45.0 51.5
ROE, % 32.2 36.0
Equity ratio, % 69.8 71.3
Debt-to-equity ratio, % -68.1 -148.5
Earnings per share (EUR) 0.12 0.13
Earnings per share diluted 0.12 0.12
Shareholders' equity
per share, e 0.31 0.26
P/E ratio 22.8 14.9
Capitalized expenditures (Me) 37.2 3.1
Contingent liabilities 19.4 7.8
Personnel, average 770 652
Personnel, Dec 31 826 718
Segment information
The Group has only one segment; data security.
Quarterly development
1/08 2/08 3/08 4/08 1/09 2/09 3/09 4/09
Revenues 26.6 27.2 28.6 30.6 30.6 31.7 31.1 31.8
Cost of revenues 2.1 2.4 2.6 3.1 2.6 2.5 2.7 2.1
Gross margin 24.5 24.7 26.0 27.4 28.0 29.2 28.4 29.7
Other operating income 0.3 0.6 0.4 1.3 0.3 0.4 0.3 0.1
Sales and marketing 11.5 12.4 11.8 13.0 13.5 13.9 13.6 15.9
Research and
development 6.3 6.5 6.1 6.7 6.8 6.7 6.9 7.5
Administration 1.8 1.7 1.4 1.9 2.0 1.7 1.6 2.2
Operating result 5.3 4.7 7.1 7.2 6.1 7.2 6.6 4.1
Financial net 0.3 0.6 0.4 0.7 0.5 0.4 0.1 0.3
Result before taxes 5.6 5.3 7.5 8.0 6.5 7.6 6.7 4.4
Geographical information
10-12/2009 10-12/2008 1-12/2009 1-12/2008
Revenue Revenue Revenue Revenue
Nordic countries 11.5 11.4 44.2 43.7
Rest of Europe 14.7 13.6 57.3 49.0
North America 2.3 2.5 10.5 9.8
Rest of the world 3.3 3.1 13.1 10.5
Total 31.8 30.6 125.1 113.0
12/2009 12/2008
Assets Assets
Nordic countries 56.3 85.3
Rest of Europe 38.2 1.3
North America 3.5 3.0
Rest of the world 5.6 4.5
Total 103.6 94.1
