ANNUAL

REPORT

2020

WE CREATE TRUST WITH OUR VALUES

CONTENTS

FSECURE 2020

98

95

191

KEY FIGURES 2020

Adjusted EBITDA

years in the business

employees

34%

FSECURE 2020

BUSINESS MODEL:

Holistic Endpoint Protection Suite

Pure-play software detection and response

Cloud Protection – securing content

exchanged e.g. on Salesforce

Software Business

Software Business

Service Business Software Business

/ Service Center

FSECURE 2020

FSECURE’S WAY OF OPERATING

and industry-leading technology

FSECURE 2020

FSECURE 2020

SOFTWARE BUSINESSES SHOWED THEIR RESILIENCE

corporations, increased attacks against cloud infrastructure, and

attacks targeting the COVID- vaccine research.

though the most damaging ones are orchestrated by state-

sponsored threat actors. A good example is the supply chain attack

multiple public officials was backed by a nation-state actor. This

CEO LETTER

fighting the most advanced persistent threats.

Our abilities have been yet again proven by recognitions in the field of detection

and response in the MITRE ATT&CK evaluation by Forrester Research and in

endpoint protection by achieving high scores throughout the year in various

AV-test.org evaluations. The top scores achieved in these independent tests are a

testimony to the high-quality research and development work done by F-Secure,

setting us apart from the competition.

F-Secure is now a well-established player in the MDR (Managed Detection and

Response) market. Despite the prolonged sales cycles due to the pandemic,

within our cloud native solutions, which is a sign of good and developing

momentum among the channel partners.

In consumer security we saw an increase in activation rates and a solid renewal

performance in our core solutions, including both the operator and direct

channels. The future of this business line looks better than for years, as we

came to win new operator deals – including our latest solutions: F-SECURE ID

PROTECTION and SENSE.

For consulting the year ended with a positive sentiment, even though this

business was clearly hit by the pandemic during the year. In the long term the

market remains attractive for profitable growth.

Juhani Hintikka

CEO LETTER

Key ratios

IFRS





IFRS

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IFRS

F-Secure has applied new IFRS16 standard from January 1, 2019 onwards with modified approach and comparatives are not restated. IFRS 15 and IFRS 9 standards have been applied from January 1, 2018 onwards

and 2017 financials are restated retrospectively. Figures for 2016 are not restated and thus not fully comparable.

CALCULATION OF KEY RATIOS

EUR  Consolidated  Consolidated 

Adjusted EBIT  

EBIT  

Operating expenses –  –   –

Shareholders by category,  Dec  Total shares % of shares

Administrative register Shares % of shares % of votes

Ownership of management

Board of Directors Shares % of shares

STATEMENT OF CHANGES IN EQUITY

EUR  Share capital

F-Secure provides cyber security products and services globally for

consumers and businesses.

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 of F-Secure Corporation

of 2020 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 were in force

and had been approved by the EU by 31 December 2020.

The consolidated financial statements incorporate the financial

statements of F-Secure Corporation and entities controlled

by F-Secure Corporation. Consolidation is done using the

on consolidation. Where necessary, accounting policies of the

no impairment was detected. Management has continuously

monitored any further indications of impairment. Annual

prolonging of the pandemic can still impact customer’s liquidity

kept at slightly higher level.

business has temporarily impacted profitability in certain

locations leading to taxable losses in some of Group’s subsidiaries.

have been booked accordingly. Impacts of the pandemic on

remained solid throughout the financial year, a repayment of EUR

5,000 thousand to the RCF was made in final quarter of the year.

use of estimates and assumptions as well as the use of judgment

when applying accounting principles. These affect the contents of

the financial statements and it is possible that actual results may

acquisitions is based on estimated future cash flows which are

subject to management judgment.

nized deferred tax assets from tax losses. Biggest losses are in

the UK where the deferred tax asset is EUR 2.9 million and in the

US where the deferred tax asset is EUR 0.4 million. The amount

of deferred tax assets is based on management estimation

about future recoverability of these tax losses.

in Group’s balance sheet is EUR 2.5 million. Managements has

used judgment especially in defining potential impacts of the

Cyber security products comprise endpoint protection solutions

(Protection Service for Business, PSB; Business Suite, Cloud

Protection for Salesforce, Cloud Protection for Microsoft Office

365), as well as solutions targeted at detecting and responding

to advanced attacks ( Rapid Detection and Response, RDR and

F-Secure Countercept) and vulnerability management (F-Secure

Goodwill is tested for impairment annually, or more frequently if there are indications that goodwill

might be impaired. The recoverable amount for each CGU is determined based on a value in use

calculation which uses cash flows for the period determined for the CGU. Cash flows are based on

financial budgets and forecasts approved by the Board of Directors. For Consulting forecast period

of five years is used and for MDR the forecast period covers following seven years during which the

business is expected to achieve steady state. Discount rate for Consulting is 9.9% before taxes and for

MDR 13.4% before taxes.

Cash flows beyond forecast period have been extrapolated using steady 2% per annum growth rate for

both CGUs. Markets where CGUs operate are expected to grow significantly faster than the terminal

growth rate used in impairment testing. Managed detection and response (MDR) market is expected

During second quarter of 2020 the management assessed that due to the impacts of COVID-19

pandemic on cyber security consulting business there is indication that Consulting goodwill might

be impaired. Additional impairment testing was carried out at the end of second quarter based on

updated long-term forecasts approved by the Board of Directors. Testing resulted in no need for

impairment but showed decreased sensitivity in the key assumptions. By the end of the year the

sensitivity has returned close to December 2019 level. More frequent forecasting to identify any

further indications of goodwill impairment in Consulting or MDR has taken place throughout the

financial year.

EUR 

Ageing of trade receivables

significant risks have not realized during the financial year, management has estimated that impacts

may become visible only during longer period as the pandemic prolongs. Thus, expected credit losses

under IFRS 9 have been reassessed during the financial year and provision increased slightly to address

the increased risk.

EUR  Consolidated  Consolidated 

Current receivables

Material items included in prepaid expenses

Proceeds from exercised warrants were recognized under the share capital and share premium fund

until March 26, 2008.

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 Companys’ unrestricted equity reserve.

acquisition is reported as a deduction in shareholders’ equity. The shares have been acquired through

public trading on NASDAQ OMX Helsinki. The parent company has not acquired treasury shares

during the period. During the financial year parent company’s treasury shares have been used for

board remuneration according to Annual General Meeting’s decision, for incentive programs and for

deferred payment of the 2017 acquisition.

the Company’s voting power on December 31, 2020.

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 the CEO, the management

and ultimately with the Board of Directors. The risks related to the Group’s financial instruments are

mainly related to credit risks, currency risk and interest rate risk.

The Group trades only with recognized, creditworthy third parties. Receivable balances are monitored

it’s liquidity risk by centralizing the management of cash and liquid assets and thereby optimizing the

use of liquid funds for operational and refinancing needs. Group Treasury is responsible for monitoring

cash balances and cash forecasts to keep liquidity risk at manageable level. The Group has not

identified any significant concentrations of liquidity risks in sources of available financing.

Cash and bank balance was at solid level throughout 2020, and at the end of the reporting period the

Group held EUR 51.4 million in it’s bank accounts (EUR 25.4 million euro in 2019). COVID-19 impacted

the liquidity risk management during second quarter, and due to unforeseeable uncertainties

regarding incoming cash flows the Group withdrew EUR 10 million from it’s Revolving Credit Facility

(RCF) to strengthen short term liquidity. As the pandemic continued and liquidity remained at solid

level, a repayment of EUR 5 million was done on the RCF in October. Repayments of the term loan

Majority of sales is invoiced in Euros. Other main currencies for invoicing are GBP, USD and JPY.

Currency risk arising from sales invoicing is notably diminished by operational expenses arising in same

currencies as the sales invoicing. In order to minimize the impact of the fluctuation of the exchange

rates, the Group uses forward currency contracts to eliminate the currency exposure of the estimated

cash flow of these currencies. At the end of the reporting period the Group did not have any open

currency forward contracts.

Sales in different currencies % %

Derivatives Consolidated  Consolidated 

follows:

Financial assets

rate fluctuations when all other variables are held constant. The open exposure against USD, GBP and

before taxes. In 2019 the contingent consideration from the acquisition of MWR InfoSecurity was also

measured in GBP. The sensitivity calculation is based on a change of 10% in the Euro exchange rate

Translation risk arises from the Group’s net investments in foreign currencies. Most significant

translation risks arise from goodwill generated in MWR InfoSecurity acquisition. Main currencies

in goodwill are GBP and ZAR. Translation differences also arise from translating Group companies’

balance sheets into euros using exchange rates prevailing on the reporting date. Internal loans are

granted mainly in subsidiaries’ home currencies. According to current policy F-Secure Corporation

does not hedge investments made in its subsidiaries.

The table below demonstrates how sensitive the Group’s equity is to foreign exchange rate fluctuations

when all other variables are held constant. The sensitivity calculation is based on a change of 10% in

the Euro exchange rate against the main functional currencies exposing the Group to translation risk.

the acquisition of MWR InfoSecurity and due to Revolving Credit Facility withdrawn in June 2020 to

decrease short-term liquidity risk under pandemic. The loans carry a variable interest rate. To manage

the risk of interest rate changes the Group is regularly evaluating the need for hedging. The table

below demonstrates the sensitivity of Group’s profit before taxes to 1% change in interest rate when all

other variables are held constant.

EUR million Consolidated  Consolidated 

The Group’s shareholders’ equity is managed as capital. Group’s financing agreement has a covenant

term related to equity ratio of the Group. The objective of the Group’s capital management is to

EUR  Consolidated  Consolidated 

management expects the subsidiaries to return profitable in the near future and thus have the ability

to utilize losses carried forward.

Non-current liabilities

Current liabilities