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The Finnish Financial Supervisory Authority has approved the demerger and listing prospectus related to the planned partial demerger of WithSecure Corporation

The Finnish Financial Supervisory Authority has approved the demerger and listing prospectus related to the planned partial demerger of WithSecure Corporation

WithSecure CorporationProspectus13 May 2022 at 23.00 pm EEST

NOT FOR DISCLOSURE OR DISTRIBUTION IN OR INTO THE UNITED STATES, OR IN ANY OTHER JURISDICTION WHERE DISCLOSURE OR DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW

WithSecure Corporation (“WithSecure”) announced on 17 February 2022 that the Board of Directors of WithSecure had decided to pursue the separation of WithSecure’s consumer security business and had approved a demerger plan (the “Demerger Plan”) according to which all assets and liabilities of the WithSecure’s consumer security business shall be transferred to a company to be incorporated in connection with the partial demerger and to be named F-Secure Corporation (“F-Secure”) (the “Demerger”). WithSecure will not be liquidated in connection with the Demerger, and it will retain the assets and liabilities related to its corporate security business. The completion of the Demerger is subject to, inter alia, approval by the Extraordinary General Meeting of WithSecure. The Board of Directors of WithSecure has on 12 April 2022 proposed that the Extraordinary General Meeting of WithSecure convened to be held on 31 May 2022 would resolve upon the Demerger as set forth in the Demerger Plan. The planned Demerger shall be completed on the date of registration of the execution of the Demerger with the Finnish Trade Register (the “Effective Date”). The planned Effective Date is 30 June 2022.

Upon the completion of the Demerger, shareholders of WithSecure will receive as demerger consideration one (1) new share in F-Secure for each share they hold in WithSecure; that is, the demerger consideration will be issued to WithSecure’s shareholders in proportion to their existing shareholdings with a ratio of 1:1. Treasury shares held by WithSecure do not entitle to the demerger consideration.

Shares of F-Secure will be applied for trading on the official list of Nasdaq Helsinki. The trading in shares of F-Secure on Nasdaq Helsinki is expected to begin as soon as possible after the Effective Date.

The Finnish Financial Supervisory Authority has today, on 13 May 2022, approved the Finnish language demerger and listing prospectus prepared by WithSecure on behalf of F-Secure concerning the Demerger and applying for the shares of F-Secure to be listed on the official list of Nasdaq Helsinki Ltd (the “Demerger Prospectus”). The Demerger Prospectus and an unofficial English language translation thereof (the “Offering Circular”) will be available on or about 13 May 2022 at www.withsecure.com/en/about-us/investor-relations/demerger.

The Demerger Prospectus and the Offering Circular will also be available on or about 13 May 2022 in print at the office of WithSecure at Tammasaarenkatu 7, FI-00180 Helsinki, Finland and at the reception of Nasdaq Helsinki at Fabianinkatu 14, FI-00100 Helsinki, Finland.

Demerger Prospectus

The Demerger Prospectus contains the following partly previously unpublished information in relation to F-Secure, which will be established in connection with the Demerger:

Financial targets for F-Secure

The following financial targets in the medium term for F-Secure (by 2025) have been adopted by the Board of Directors of WithSecure:

• Growth: High single digit organic revenue growth.
• Profitability: After initial growth investments, adjusted EBITA margin of above 42 per cent.
• Dividend Yield: F-Secure aims to pay around or above 50 per cent of net profit as dividend on an annual basis.

Strategy of F-Secure

The strategy of F-Secure is to provide holistic yet easy security experiences to its customers and channel partners (“Channel Partners”). By working through Channel Partners across the globe, F-Secure aims to increase its market reach and ensure every consumer behind these Channel Partners can feel safe. F-Secure has developed outcome-focused and differentiating security business capabilities that support its Channel Partners in launching, marketing, selling and further driving growth of their security business. In the view of WithSecure’s management based on an internal market analysis conducted in March 2022, these have enabled F-Secure to become a global market leader in providing consumer security and privacy services through communication service providers.

The strategy of F-Secure for continued profitable growth is built around three strategic pillars:

• Increase average revenue per user: The plan of F-Secure is to accelerate the roll-out of the all-in-one security suite that the management of WithSecure expects to provide new business opportunities to Channel Partners and increase both Channel Partners’ and F-Secure’s Average Revenue Per User.
• Develop current offering and new products: F-Secure aims to expand its market reach and addressable market by developing new product categories.
• Expand into new channels: Currently, a majority of Channel Partners are communication service providers (“CSP Partners”). However, banks, insurance companies, and retailers are facing many business challenges similar to communication service providers. WithSecure’s management believes that due to the security business capabilities that F-Secure has developed for communication service providers, it is well-positioned to help these new types of service providers address the same challenges that it has helped its CSP Partners to tackle.

Unaudited pro forma financial information of F-Secure

The Demerger Prospectus includes unaudited pro forma combined financial information (“unaudited pro forma financial information”) illustrating the effects of the Demerger to historical carve-out financial information of F-Secure had the Demerger been consummated at an earlier point in time. The unaudited pro forma financial information is presented for illustrative purposes only. The Demerger Prospectus also includes an independent auditor’s assurance report on the compilation of pro forma financial information included in the Demerger Prospectus prepared in accordance with the Commission Delegated Regulation (EU) N:o 2019/980.

The unaudited pro forma combined statement of income for the financial year ended 31 December 2021 and the unaudited pro forma combined statement of income for the three months period ended 31 March 2022 gives effect to the Demerger as if it had occurred on 1 January 2021. The unaudited pro forma combined statement of financial position as at 31 March 2022 illustrates the impact of the Demerger as if it had occurred on that date.

The unaudited pro forma financial information included in the Demerger Prospectus have been attached in their entirety as an appendix to this stock exchange release.

Because of its nature, the unaudited pro forma financial information illustrates what the hypothetical impact would have been if the Demerger had been consummated at the date assumed in this unaudited pro forma financial information, and therefore, does not represent the actual results of operations or financial position of F-Secure. The unaudited pro forma financial information is not intended to project the results of operations or financial position of F-Secure as of any future date and does not represent the results of operations or financial position had F-Secure been an independent listed company for the periods presented.

The following table sets forth the unaudited key figures presented on a pro forma basis for the periods indicated.

In EUR million unless otherwise indicated	1 January to 31 March 2022	For the financial year ended 31 December 2021	As at 31 March 2022
Pro Forma Revenue	27.4	106.3	-
Pro Forma Adjusted EBITDA	13.0	48.6	-
% of revenue	47.5%	45.7%	-
Pro Forma Adjusted EBITA	12.7	47.5	-
% of revenue	46.6%	44.7%	-
Pro Forma Adjusted EBIT	12.4	46.2	-
% of revenue	45.4%	43.5%	-
Pro Forma EBIT	12.4	40.3	-
% of revenue	45.4%	37.9%	-
Pro Forma Net debt (+) / Net cash (-)	-	-	1.7

The definitions for the pro forma key figures can be found in the appendix “Unaudited pro forma financial information of F-Secure“.

Carve-out financial information of F-Secure

The historical financial information of F-Secure included in the Demerger Prospectus has been derived from the audited carve-out financial statements as at and for the years ended 31 December 2021, 2020 and 2019 and the unaudited carve-out financial information of F-Secure as at and for the three months’ period ended 31 March 2022, including unaudited carve-out comparative financial information as at and for the three months’ period ended 31 March 2021.

The carve-out financial information of F-Secure included in the Demerger Prospectus have been attached in their entirety as an appendix to this stock exchange release.

The carve-out financial statements of F-Secure as at and for the years ended 31 December 2021, 2020 and 2019 have been audited by PricewaterhouseCoopers Oy, Authorised Public Accountants, with Authorised Public Accountant Janne Rajalahti as the auditor with the principal responsibility.

The carve-out financial statements of F-Secure for the financial year ended 31 December 2021, 2020 and 2019 and the carve-out financial information as at and for the three months’ period ended 31 March 2022 have been prepared on a carve-out basis from WithSecure’s audited consolidated financial statements and unaudited consolidated interim financial information using the historical income and expenses, assets and liabilities and cash flows attributable to F-Secure business. The carve-out financial statements also include the allocation of income, expense, assets, liabilities and cash flows which are based on management judgement, assumptions and estimates. The most significant estimates, judgements and assumptions relate to the allocation of the costs of certain centrally provided shared services, leasing arrangements, shared tangible and intangible assets, cash management and financing, determination on current and deferred income taxes and invested equity.

The carve-out financial statements of F-Secure have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union, under consideration of the principles for determining which assets and liabilities, income and expenses as well as cash flows are to be assigned to F-Secure as described in Note 1 under section “Carve-out principles applied in the F-Secure carve-out financial statements” of the audited carve-out financial statements. The unaudited carve-out financial information of F-Secure as at and for the three months period ended 31 March 2022, including unaudited carve-out comparative financial information as at and for the three months period ended 31 March 2021 have been prepared in accordance with “IAS 34 – Interim Financial Reporting” under the same carve-out considerations as in the audited carve-out financial statements.

Accordingly, the carve-out financial information of F-Secure does not necessarily reflect what results of operations, financial position or cash flows of F-Secure would have been had F-Secure operated as an independent company and had it presented stand-alone financial information during the periods presented. Moreover, the carve-out financial information of F-Secure may not be indicative of future results of operations, financial position or cash flows of F-Secure.

The following table sets forth certain key carve-out financial information of F-Secure, derived from the Demerger Prospectus, for the dates and periods indicated. The presented information is unaudited unless otherwise indicated.

	As at 31 March and 1 January to 31 March		As at and for the financial year ended 31 December
In EUR million unless otherwise indicated	2022	2021	2021	2020	2019
	IFRS		IFRS
	(unaudited)		(unaudited, unless otherwise indicated)
Revenue ...................................................................................	27.4	26.3	106.31)	100.11)	94.81)
Revenue growth %.................................................................	4.1%	-	6.1%	5.5%	-
Adjusted EBITDA .....................................................................	12.7	11.9	47.4	46.7	40.1
% of revenue.........................................................................	46.4%	45.2%	44.6%	46.7%	42.3%
EBITA .....................................................................................	11.9	11.8	44.8	46.5	39.1
% of revenue..........................................................................	43.3%	45.0%	42.2%	46.5%	41.2%
Adjusted EBITA........................................................................	12.7	11.8	47.2	46.5	39.9
% of revenue..........................................................................	46.3%	45.0%	44.4%	46.5%	42.0%
EBIT ........................................................................................	11.5	11.6	43.51)	44.71)	37.01)
% of revenue.........................................................................	42.1%	43.9%	40.9%	44.6%	39.0%
Adjusted EBIT ..........................................................................	12.3	11.6	45.9	44.7	37.7
% of revenue.........................................................................	45.0%	43.9%	43.2%	44.6%	39.8%
Profit before taxes .....................................................................	11.7	11.5	43.61)	43.71)	36.81)
% of revenue.........................................................................	42.8%	43.9%	41.0%	43.6%	38.8%
R&D costs ................................................................................	4.3	4.3	16.91)	15.31)	14.61)
% of revenue..........................................................................	15.6%	16.3%	15.9%	15.2%	15.4%
Investments...............................................................................	0.6	0.2	1.71)	1.71)	3.11)
% of revenue..........................................................................	2.0%	0.6%	1.6%	1.7%	3.3%
Operating cash flow...................................................................	8.3	5.9	36.11)	34.51)	32.01)
Net debt (+) / Net cash (-)3).........................................................	0.2	0.2	0.2	0.2	0.3
Equity ratio %............................................................................	23.7%	28.8%	24.5%	24.5%	5.9%
Cash conversion........................................................................	86.1%	68.2%	95.6%	89.8%	89.0%
Wages and salaries ....................................................................	4.2	4.2	16.11)	14.31)	16.21)
Personnel on average2)................................................................	250	243	245	233	223
Personnel at the end of the period2)..............................................	255	244	248	243	227

1) Audited2) Comprises the personnel directly employed by the consumer security business. The figure does not include the share of personnel in shared group functions.3) In the Carve-out financial statements, no cash or certain lease liabilities, such as lease liabilities related to business premises or lease liabilities related to machinery and equipment, have been allocated to F-Secure. As a result, the Net debt derived from the carve-out financial statements does not reflect net debt of F-Secure after the Demerger when the Company will be operating as a separate entity.

The definitions and reasons for the use of financial key indicators

Key figure	Definition	Reason for the use
Revenue growth	(Current year Revenue – Previous year Revenue) / Previous year Revenue	Revenue growth is presented to reflect the annual development of operating performance of F-Secure.
EBITDA	EBIT + Depreciation, amortisation and impairment	EBITDA and EBITA are an indicator to measure the operating performance of F-Secure.
EBITA	EBIT + Amortisation and impairment
EBIT	Result before taxes and net financial items	EBIT is used to measure profitability of operating activities of F-Secure.
Adjusted EBITDA	EBITDA before items affecting comparability	Adjusted EBITDA, adjusted EBITA and Adjusted EBIT are presented in addition to EBITDA, EBITA and EBIT to reflect the underlying business performance and to enhance comparability between periods.   F-Secure believes that these comparable performance measures provide meaningful supplemental information by excluding items outside normal business operations, which reduce comparability between the periods.
Adjusted EBITA	EBITA before items affecting comparability
Adjusted EBIT	EBIT before items affecting comparability
Items affecting comparability	Items affecting comparability are associated with restructuring activities, strategic reviews and cost related to contemplated listing
Investments	Corresponds to the Combined Statement of Cash Flows line item Investments in intangible and tangible assets	Investments are presented to reflect the investments made during the period.
Operating cash flow	Corresponds to the Combined Statement of Cash Flows line item Cash flow from operations	Presents the amount of cash generated by business operations of F-Secure.
Net debt (+) / Net cash (-)	Interest bearing liabilities – Cash and cash equivalents	Net debt indicates total external debt financing. A negative amount indicates a net cash position.
Equity ratio %	Total invested equity / Total assets	The equity ratio indicates the proportion of assets financed by equity to total assets of F-Secure.
Cash conversion	(Adjusted EBITDA – Investments – Change in net working capital) / Adjusted EBITDA	Cash conversion is used to assess efficiency of F-Secure to convert its operating results into cash. The ratio indicates capacity of F-Secure to pay dividends and / or generate funds for acquisitions or other transactions.

Shareholders and prospective investors are instructed to acquaint themselves with the entire Demerger Prospectus in addition to this release.

Advisors to WithSecure

Carnegie Investment Bank AB, Finland Branch is acting as the financial adviser, Castrén & Snellman Attorneys Ltd as the legal adviser and Hill+Knowlton Strategies as a communications adviser in the Demerger and the listing.

WITHSECURE CORPORATION

Board of Directors

Further information:

Laura Viita, Investor Relations Director, +358 50 487 1044

About F-Secure

F-Secure is a Finnish and globally operating cybersecurity company. F-Secure designs and offers award-winning security and privacy products and services that help millions of consumers to protect themselves against online threats. Offering of F-Secure includes a comprehensive range of security and privacy products and services related to endpoint security, privacy protection, password management and digital identity protection, and router security that protects consumers' entire connected home. The majority of sales of F-Secure come from selling products and services through its extensive and global network of Channel Partners, including approximately 170 Channel Partners. Channel Partners include, for example, communication service providers, retailers, banks, and insurance companies. In addition to selling products through Channel Partners, F-Secure makes standalone and all-in-one security offerings available to consumers through various e-commerce channels such as mobile application stores and its own online store. F-Secure operates globally with offices in multiple cities, and its headquarters is located in Helsinki. In the financial year 2021, F-Secure employed 245 employees on average. Following the Effective Date, F-Secure Corporation will be the parent company of the group. There will be 14 subsidiaries in direct or indirect ownership of F-Secure Corporation.

About WithSecure

WithSecure is the trusted cyber security partner. Businesses and IT service providers – along with the largest financial institutions, manufacturers, and thousands of communications and technology providers – trust WithSecure for outcome-based cyber security that protects and enables their operations. The AI-driven protection secures endpoints and cloud collaboration. WithSecure’s intelligent detection and response are powered by experts who identify business risks by proactively hunting for threats and confronting live attacks. WithSecure’s consultants partner with enterprises and tech challengers to build resilience through evidence-based security advice. With more than 30 years of experience in building technology that meets business objectives, WithSecure has built its portfolio to grow with its partners through flexible commercial models.

IMPORTANT INFORMATION

This release is not an offer of shares in the United States and it is not intended for distribution within or into the United States or in any other jurisdiction in which such distribution would be prohibited by applicable law. The shares of F-Secure Corporation or WithSecure Corporation have not been registered and will not be registered under the U.S. Securities Act of 1933 (the “U.S. Securities Act”) and may not be offered, sold or delivered within or into the United States, except pursuant to an applicable exemption of, or in a transaction not subject to, the Securities Act.

This release does not constitute an offer of securities for sale or an invitation for offers to purchase securities by or on behalf of F-Secure Corporation or WithSecure Corporation.

This release does not constitute an invitation to a general meeting or a demerger and listing prospectus. Any decision with respect to the proposed partial demerger pursuant to the Finnish Companies Act of WithSecure Corporation should be made solely on the basis of information to be contained, as applicable, in WithSecure Corporation’s notices convening the general meeting, the demerger and listing prospectus as well as on an independent assessment of the information contained therein. Investors are advised to consult the demerger and listing prospectus for more complete information about F-Secure Corporation and WithSecure as well as their shares and the partial demerger of WithSecure Corporation.

This release includes “forward-looking statements” that are based on present plans, estimates, forecasts and expectations and are not guarantees of future performance. They are based on certain expectations and assumptions that are currently justifiable but may turn out to be incorrect. Shareholders should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial position of F-Secure Corporation or WithSecure Corporation to differ materially from those expressed or implied in the forward-looking statements. Neither F-Secure Corporation or WithSecure Corporation, nor any of their respective affiliates, advisors or representatives or any other person undertakes any obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release.

This release includes estimates relating to the benefits expected to arise from the potential separation of the business operations of WithSecure Corporation’s consumer security business, which have been prepared by WithSecure Corporation and are based on a number of assumptions and judgments. Such estimates present the expected future impact of the potential separation of the business operations of WithSecure Corporation on the future company’s business, financial condition and results of operations. The assumptions relating to the estimated benefits and related costs are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause the actual benefits from the potential separation of the business operations of WithSecure Corporation, if any, and related costs to differ materially from the estimates in this release. Further, there can be no certainty that the demerger will be completed in the manner and timeframe described in this release, or at all.

Appendices

• Unaudited pro forma financial information of F-Secure
• Audited carve-out financial statements of F-Secure for the financial years ended 31 December 2021, 31 December 2020 and 31 December 2019 and auditor’s report
• Unaudited carve-out financial information of F-Secure as at and for the three months period ended 31 March 2022, including unaudited carve-out comparative financial information as at and for the three months period ended 31 March 2021

Attachments

• Unaudited pro forma financial information of F-Secure
• Audited carve-out financial statements of F-Secure for the financial years ended 31 December 2021, 31 December 2020 and 31 December 2019 and auditor’s report
• Unaudited carve-out financial information of F-Secure as at and for the three months period ended 31 March 2022, including unaudited carve-out comparative financial information as at and for the three months period ended 31 March 2021