(Unless otherwise stated comparisons are made to the same period
one year ago)
Q4 Highlights
- Total revenues 12.6m
- Anti-virus and intrusion prevention revenues increased by 43%
to a record level of 11.4m
- Corporate business increased by 16% to 7.4m
- Service provider business increased by 116% to 2.7m
- Consumer business increased by 303% to 1.4m
- The Group signed a record number of 9 new ISP partnerships,
out of which 3 in North America
- EBIT 1.8m (1.3m)
- Deferred revenues increased by 2.3m to 18.4m
- Cash flow 2.8 m positive
2004 Highlights
- Total revenues 47.3m; increase of 21%
- The Group was the fastest growing company in anti-virus and
intrusion prevention worldwide
- Anti-virus and intrusion prevention revenues increased by 50%
to a record level of 40.9m
- Corporate business increased by 25% to 28.1m
- Service provider business increased by 137% to 8.5m
- The Group achieved market leadership in the European ISP
market
- Consumer business increased by 335% to 4.1m
- The Group solidified its position as a leader in the mobile
security software industry
- The Group signed 22 new ISP partnerships, out of which 5 in
North America
- EBIT 6.8m (1.5m) -EBIT% 14.4 (3.9)
- Deferred revenues increased by 3.2m to 18.4m
- Cash flow 9.9 m positive -Earnings per share (EUR) 0,09
(0,01)
Business in 2004 at the Group level
2004 was a year of steady and profitable growth for the Group.
Annual revenues were 47.3m, representing 21% growth. EBIT was 6.8m
(1.5m). Cash flow was 9.9 m positive (5.3m) and deferred revenues
were 18.4 m at the end of the year (15.2m).
The geographical breakdown of the business was as follows:
Nordic Countries 34% (33%), Rest of Europe 47% (35%), North America
10% (21%) and Rest of the World 9% (11%). Anti-virus and intrusion
prevention represented 86% of the business (70%), encryption 13%
(29%) and other products less than 1% (1%).
Anti-virus and intrusion prevention business grew by 50% while
encryption declined by 45%. In anti-virus and intrusion prevention
growth was strong overall, but particularly strong in the ISP and
consumer segments. The fact that F-Secure was the fastest growing
company worldwide in the anti-virus business during 2004 is a
strong statement regarding the competitiveness of the company’s
products and business.
The development is fully in line with the Group’s communicated
strategy to strengthen its position in the key European markets and
to focus on the anti-virus and intrusion prevention
business.
The total fixed expenses were 37.7m (33.9m). The expenses
increased towards the end of the year (10.1m in Q4). The Group has
now activated some of its development expenses. This decreases
costs by approximately 0.3m. Previously the Group has not activated
any R&D expenses. More details can be found in the IFRS section
below. The increase of costs reflects the Group’s strategy to
accelerate growth through increased marketing and channel
development.
The Group’s customer satisfaction has remained at a good
level, averaging at 4.30 (4.31) on a scale of 1 to 5.
Business in different segments
Corporate customer revenues were 28.1m (22.6m), representing 69%
of the anti-virus and intrusion prevention business. A
comprehensive product portfolio, increased marketing and the
growing number of channel partners supported solid growth of 25%.
One particular growth area was solutions for the Linux platform.
Business on the Linux platform represented over 10% of the overall
corporate business.
Revenues through the service provider channel were 8.5m (3.5m),
representing 21% of the anti-virus and intrusion prevention
business. Annual growth in this segment was 137%. While older
partnerships continued to gain momentum, new partnerships were
launched at an increasing rate throughout the year. Nine out of the
total of 41 ISP relationships were launched during the last
quarter. The business was also successfully launched in North
America. A key goal for 2004 was to gain market leadership in ISP
contracts in Europe. This was reached with a comfortable margin to
the number two in the market.
The consumer revenues were 4.1m (0.9m), representing 10% of the
anti-virus and intrusion prevention business. Revenue growth rate
was very high (335%) as this is a relatively new segment to the
Group. Sales were boosted by a large number of new reseller
partners, positive press visibility and increased web sales.
Handheld and wireless security revenues represented less than 1%
of the anti-virus and intrusion prevention business. Visibility on
future business opportunities has improved over the year and
interest to the Group’s solutions has increased among phone
vendors, mobile operators and corporate customers.
The encryption business declined by 45% in 2004 as the Group
continued to prioritize anti-virus and intrusion prevention as its
primary business area. The Group signed an exclusive distributor
contract with WRQ Inc in September 2004. The level of revenues has
decreased due to distributor discounts.
Competitive situation in the anti-virus and intrusion prevention
business remained unaltered and price levels remained stable during
the course of the year. Microsoft Corporation has announced an
acquisition of Sybari. With this they are getting antivirus
products for messaging servers. This is a fairly small part of the
overall antivirus market, and especially insignificant for F-Secure
as we do not typically sell our antivirus for messaging server
products separately. Companies mostly purchase these server
applications as part of a suite solution covering all their
antivirus needs. We believe that F-Secure Total Suite sales will
not suffer from Microsoft offering separately one component among
many in the Total Suite.
Partners
In the corporate customer segment the number of value added
reseller partners has nearly doubled in key markets during the year
2004. The emphasis in channel development was in the largest
European countries where the Group has an office, i.e. Germany,
France, UK and Italy.
A large number of service provider partnerships were signed
during the year. Towards the end of the year, the concept was
launched successfully in North America where partnerships were
announced with Charter Communications (US), Insight Communications
(US), Cogeco Cable (Canada) and Shaw Communications (Canada). The
number of service provider partners is currently 41 in 19
countries, increase of 22 during 2004.
In the consumer segment the emphasis has been to continue
distributor channel development in Scandinavia and Central and West
European markets. An important partnership was signed in November
with KOCH Media for distribution in the German speaking countries.
In handheld and wireless security the key vendor partner is
Nokia. The Group provides anti-virus and intrusion prevention for
their S/60 operating system based product line. In Q4, a
partnership was announced with Elisa Communications, as they
introduced the world’s first mobile operator anti-virus
service.
Product Leadership
The year 2004 marked a transition towards a broader approach to
anti-virus and intrusion prevention. The network worm problems
encountered during the year alone manifested the importance to
equip every single computer with a firewall. In addition to new
products, new security functionalities, such as spam control,
spyware detection and parental guidance were introduced as add-ons
to the existing products.
New product releases received wide acclaim in the trade press
both in Europe and in the US. In addition, F-Secure was selected to
receive the 2004 Frost & Sullivan Technology Innovation Award.
The award comes in recognition of F-Secure’s pioneering anti-virus
solutions in mobile security.
F-Secure Spam Control was released to detect, filter and remove
email spam messages. It can be used in conjunction with F-Secure
Internet Gatekeeper and F-Secure Anti-Virus for Microsoft
Exchange.
The Group’s Anti-Virus and Intrusion Prevention offerings on the
Linux platform saw a number of new product and version releases
during the year. Now the Group has a comprehensive portfolio on
this platform.
he F-Secure Policy Manager 5.60 was released in August. It is
used for deploying and monitoring the Group’s anti-virus and
intrusion prevention software through a graphical, web-based
interface. The product is now also available in French, German and
Japanese.
For small and medium companies, both the F-Secure Anti-Virus
Client Security and the F-Secure Anti-Virus Small business Suite
were very well received in the market.
F-Secure Internet Security 2005 and F-Secure Anti-Virus 2005
were launched in Q4. They are targeted for home users as well as
for small companies without IT departments. The F-Secure Internet
Security 2005 provides total security against all Internet threats.
The product has performed extremely well and won numerous
comparative reviews in leading magazines (e.g. PC Pro in UK, PC
Magazine in Italy).
Personnel and Organization
The Group's personnel numbered 306 at the end of the year (283
at the end of 2003). The Group’s Executive Team consists of the
following persons: Risto Siilasmaa (President and CEO), Kimmo Alkio
(Chief Operating Officer), Pirkka Palomäki (Vice President,
Research and Development), Aki Mänttäri (Director, Human Resources)
and Taneli Virtanen (Chief Financial Officer).
Financing
The Group’s financial position remained strong throughout the
year. The Group’s equity ratio on December 31, 2004, was 84% (78%).
Financial income was 1.2m for the full year (1.1m).
Cash flow was 9.9m positive for the full year (5.3m). The
liquid assets of the Group were 49.3m on December 31, 2004 (39.5m).
The change in the USD-EUR exchange rate has had a negative
effect on both revenues and results.
Investments
The Group’s investments were 2.9m (0.6m). The investments
consisted mainly of IT hardware, software and activation of
development costs.
Shares, Shareholders' Equity, and Option Programs
In 2004, a total of 1,240,618 F-Secure shares were subscribed
for with the B warrants and 805,696 with the C warrants attached to
the F-Secure 1998 Warrant Plan. A total of 202,850 F-Secure shares
were subscribed for with the D warrants attached to the F-Secure
1999 I Warrant Plan.
A total of 554,155 F-Secure shares were subscribed for with the
1999D warrants, with the 2001B warrants, with the 2001C warrants,
with the 2001D warrants, with the 2002A warrants and with the 2002C
warrants attached to the F- Secure 1999 II Warrant Plan. A total of
170,977 F-Secure shares were subscribed for with the 2001B
warrants, with the 2001D warrants and with the 2002A warrants
attached to the F-Secure 1999 III Warrant Plan. A total of 2,250
F-Secure shares were subscribed for with the A1/A2 warrants
attached to the F-Secure 2002 Warrant Plan.
In aggregate the number of shares was increased by 2,976,546.
The corresponding increase in the share capital, in total EUR
29,765.46 was registered in the Finnish Trade Register during the
year.
After the reporting period in January, A total of 131,190
F-Secure shares were subscribed for with the C warrants attached to
the F-Secure 1998 Warrant Plan. A total of 30,598 F-Secure shares
were subscribed for with the 2001B warrants, with the 2001D
warrants and with the 2002B warrants attached to the F-Secure 1999
II Warrant Plan. In aggregate the number of shares was increased by
161,788. The corresponding increase in the share capital, in total
EUR 1,617.88 was registered in the Finnish Trade Register on
January 12, 2005.
As a result of the increases, the share capital of F-Secure
currently is EUR 1,496,714.38 and the total number of shares is
149,671,438. The corresponding number of shares fully diluted would
be 163,185,050, including all stock option programs.
IFRS Reporting
F-Secure publishes Financial Statements in accordance with the
IFRS for 2005. IFRS opening balance sheet 2004 and 2004 quarters
(comparison data) will be published later today. The major IFRS
changes are related to the capitalizing of the product development
and to the costs of granted options. The implications of the
changes are relatively minor.
Due to IFRS rules for 2005, the Group has made some changes in
the 2004 financial reporting to comply with the IFRS principles.
Development costs have been activated according to the company’s
IFRS principles. The impact is approximately 0.3m for 2004 and Q4.
The company has also booked deferred tax receivables according to
the IFRS/FAS principles. The impact on profit is approximately 6.4m
positive.
Corporate Governance
F-Secure complies with the Corporate Governance recommendations
for public listed companies published in December 2003 by HEX Plc,
the Central Chamber of Commerce of Finland and the Confederation of
Finnish Industry and Employers as explained on company's web
pages.
Future Outlook
After having achieved the fastest growth in the world in the
anti-virus and intrusion prevention business during 2004, the
Group's key goal is to continue to grow its anti-virus and
intrusion prevention business significantly faster than the
industry. This will be achieved through growing channel in the key
European markets and an increasingly comprehensive product
offering.
2005 is expected to be a breakthrough year for Security as a
Service, both with consumer and corporate end customers. The Group
is well positioned to benefit from the overall development with a
comprehensive, leading product offering and an ever-stronger
position with service providers in Europe and North America. The
Asian market will be targeted in the second half of the year.
The visibility in mobile security business is improving
constantly through increased operator awareness in mobile security
issues and increased vendor interest. We expect to see the number
of mobile malware continue growing steadily throughout the year
increasing the value of an up-to-date security solution for
smartphone and PDA users.
The Group's highly competitive consumer offering is expected to
keep the revenue growth for this market segment at a very high
level.
During the course of 2005 the encryption business is expected to
continue to decline.
The management estimates 1Q05 total revenues to be around 13m,
with an error margin of +-10%. The estimate is based on the sales
pipeline at the time of publishing, existing subscriptions and
support contracts, previous experience on purchasing patterns and a
EUR/USD exchange rate of 1.30 .
Based on its strategy to prioritize growth over short term
profitability, the Group is investing in new sales and marketing
activities as well as to major new development efforts and new
projects expanding the Group's offering to service providers and
facilities management companies. Fixed costs are estimated to be
slightly over 11m in Q1.
Key figures (audited):
Euro million
Income statement 2004 2003 2004 2003 Chge
10-12 10-12 1-12 1-12 %
Revenues 12.6 10.8 47.3 39.0 21
Cost of revenues 1.0 1.1 3.7 4.4 -14
Gross margin 11.6 9.7 43.5 34.6 26
Sales and marketing* 6.5 6.0 24.4 22.3 9
Research and development* 2.8 2.3 10.7 9.0 19
Administration* 0.8 0.6 2.6 2.6 0
Other operating income 0.3 0.5 0.9 0.9
Operating result 1.8 1.3 6.8 1.5
Financial income and
expenses 0.4 0.5 1.2 1.1
Profit (loss) before
extraordinary items 2.2 1.8 7.9 2.7
Extraordinary items +/-** 0.4 1.7 -0.5 1.7
Result before taxes 2.5 3.5 7.4 4.3
Income taxes 6.3 -1.1 6.0 -1.2
Result for the period 8.8 2.4 13.4 3.2
*Mandatory provision related a social security expense of
stock options is measured based on the stock price of the options
and the amount of provision is adjusted to reflect the change in
the share price.
** OEM-agreement correction. For year 2003 the effect of the
change in accounting method relevant to IFRS in mandatory provision
for the social security expenses have been recorded as an
extraordinary item.
BALANCE SHEET
ASSETS 31/12/2004 31/12/2003
Intangible assets 2.6 0.9
Tangible assets 1.5 1.2
Investments 0.1 0.1
Short-term receivables 17.8 12.2
Cash and bank accounts 49.3 39.5
Total 71.3 53.9
LIABILITIES AND
SHAREHOLDERS' EQUITY 31/12/2004 31/12/2003
Total shareholders' equity 44.7 30.2
Mandatory provisions 0.2 0.2
Deferred revenues 18.4 15.2
Other current liabilities 8.1 8.3
Total 71.3 53.9
Cash flow statement 31/12/2004 31/12/2003
Cash flow from operations 11.7 5.8
Cash flow from investments -2.8 -0.7
Cash flow from financing
activities 1.0 0.3
Change in cash 9.9 5.3
Cash and bank at 1 Jan 39.4 34.2
Cash and bank at 30 Sep 49.3 39.5
Key ratios 2004 2003
12 m 12 m
Operating result,
% of revenues 14.4 3.9
ROI, % 22.1 11.5
ROE, % 36.7 7.0
Equity ratio, % 84.4 78.1
Debt-to-equity ratio, % -110.3 -130.7
Earnings per share (EUR) 0.09 0.01
Earnings per share diluted 0.09 0.01
Shareholders' equity
per share, e 0.30 0.21
P/E ratio 19.5 97.1
Investments (Meuro) 2.9 0.6
Contingent liabilities (Me)* 14.6 15.4
Personnel, average 291 295
Personnel, Dec 31 306 283
* Includes the lease responsibility for the facilities at
Helsinki High Tech Center
Quarterly development
1/03 2/03 3/03 4/03 1/04 2/04 3/04 4/04
Revenues 9.1 9.1 10.1 10.8 10.5 11.7 12.5 12.6
Cost of revenues 1.0 1.1 1.3 1.1 0.8 1.0 1.0 1.0
Gross margin 8.1 8.0 8.8 9.7 9.7 10.7 11.5 11.6
Sales and marketing 5.5 5.6 5.3 6.0 6.0 6.0 5.9 6.5
Research and
development 2.3 2.3 2.1 2.3 2.4 2.6 2.8 2.8
Administration 0.7 0.7 0.6 0.6 0.7 0.6 0.6 0.8
Other operating
income 0.1 0.2 0.1 0.5 0.2 0.2 0.2 0.3
Operating result -0.2 -0.4 0.8 1.3 0.8 1.7 2.5 1.8
Financial income
and expenses 0.2 0.2 0.2 0.5 0.4 0.1 0.3 0.4
Profit (Loss) before
extraordinary items 0.0 -0.2 1.1 1.8 1.2 1.8 2.8 2.2
The proposal s of the Board to the Annual General Meeting
1) Dividend proposal
The Board proposes not to issue any dividend for the year 2004,
and to transfer the profit into the profit and loss account.
2) The authorization of Board of Directors to increase the
share capital of the company as follows:
a) The duration of the authorisation
The Board to be authorised during the period of one (1) year
from the date of the shareholders' meeting to decide on an increase
of the share capital of the company by one or more new share issues
or by launching one or more convertible bonds or option rights. As
a result of such share issues, option rights or convertible loans,
the share capital of the company may be increased by a maximum of
280,000 Euros. The maximum number of new shares to be issued is
28,000,000. To the extent the authorization is used to create
incentive systems for the personnel of the group, the share capital
may increase by a maximum of 70,000 EUR, in which case a maximum
amount of 7,000,000 shares may be issued.
b) Deviation from subscription rights
The shares, convertible bonds or option rights may be offered
to be subscribed by deviating from the subscription rights of the
shareholders. This deviation from the subscription rights is
proposed for the purpose that the company may fund its possible
acquisitions which are of strategic importance by way of share
arrangements, or strengthen its financing and capital structure, or
create incentive programs for Group’s employees.
c) The determination of the subscription price
The subscription price for the shares issued in the share
capital increase and converted or subscribed on the basis of
convertible bonds or option rights will be determined by the Board
of Directors. At minimum, the subscription or conversion price per
share is the counter book value of the share. To the extent the
authorization is used to create incentive systems for the personnel
of the Group, the subscription price will be determined by the
Board of Directors so that it is based on the market price of the
share.
d) Payment of the subscription price
The Board may accept as payment also a set-off or provision
of other assets (in-kind contributions).
e) Previous authorization
The proposal of the Board includes also that the unused
portion of the authorisation given by the Shareholders’ meeting on
the March 24, 2004, will be cancelled simultaneously with the
registration of the new authorization.
3) Authorization of the Board to acquire and dispose own
shares
According to the proposal the Board is authorized to acquire own
shares of the company in public trade with company’s distributable
funds to a maximum of 5% of company’s all shares. Shares can be
acquired to be used in incentive programs for the group’s
personnel, in financing the company’s arrangements, to be disposed
of or to be cancelled, providing that the action is considered by
the Board to be beneficial to the shareholders. The authorization
will be valid for one year from the date of shareholders’ meeting.
The authorization includes the right to dispose of the shares for
the purposes described above and with the price to be determined by
the Board.
4) New option program to replace the options proposed to be
cancelled in Article 5
The Board of Directors proposes the creation of a new option
program (F-Secure Option program 2005). In the new program, key
personnel of F-Secure will be offered a total of 4.5 million stock
options belonging into four series. The options entitle to
subscribe for a total of 4.5 million shares with a counter book
value of 0.01 euros. This refers to an increase of the share
capital of the company due to share subscriptions by a maximum of
45.000 euros. The share subscription prices pursuant to the options
will be based on the market value of the F-Secure share in public
trading. The details of the terms and conditions of the options
also in other respects can be seen from the attached terms and
conditions.
5) Cancellation of the unallocated option rights in the
previous option programs
The Board proposes to cancel, in connection with the new Stock
Option Plan 2005, all stock options having not been allocated from
the Company Stock Option Plan 1999/II, 1999III & 2002 in order
not to increase the total number of stock options. This proposal is
conditional upon the approval by the Shareholders’ Meeting of the
proposal under Article 4 above.
Financial Reporting
A press and analyst conference will be arranged today, February
15, at 11 am Finnish time at the Group's Headquarters,
Tammasaarenkatu 7, Helsinki. A conference call for international
investors and analysts will be arranged at 1530 Finnish time (1430
CET, 1.30 pm UK time). Instructions can be found at our investor
pages.
The Annual Report for 2004 will be published on March 14, 2005.
Annual General Meeting will be held on March 23, 2005. Quarterly
reports for 2005 will be published on April 26 (Q1), August 2 (Q2)
and October 25 (Q3). A Stock Exchange bulletin will be sent at 9 am
Finnish time to the Helsinki Exchanges, 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.
Full details will be provided later on the Group's web site.
F-Secure Corporation
Board of Directors
Additional information:
F-Secure Corporation
Risto Siilasmaa, President and CEO
tel.358 9 2520 5510
Taneli Virtanen, CFO
tel.358 9 2520 5655
DISTRIBUTION
Helsinki Exchanges
Main media
F-SECURE CORPORATION’S OPTION SCHEME 2005
I TERMS AND CONDITIONS OF STOCK OPTIONS
1. Amount of stock options
The number of stock options issued shall be a maximum of
4,500,000. The issued stock options entitle their holders to
subscribe for a maximum total of 4,500,000 F-Secure Corporation's
("the Company" or "F-Secure") shares with an accounting equivalent
value of 0.01 euros each.
2. Holders of stock options
The stock options shall, in deviation the shareholders'
pre-emptive right to subscription, be issued to the key personnel
(including the President and CEO and the Board of Directors) ("the
Participants") of F-Secure Corporation's (or its subsidiaries,
together forming "the F-Secure Group") as determined by the Board
of Directors of the Company ("the Board'") to increase the
Participants' motivation and commitment to the Company. Part of the
stock options, or if the Board so decides all of the stock options,
will be at first granted to a wholly-owned subsidiary of the
Company. The subsidiary may then, at a later stage, grant these
stock options to Participants included in the Company's incentive
plan. By accepting the stock options, each Participant undertakes
to comply with all of the terms and conditions of this stock option
plan.
The shareholders' pre-emptive right to subscription is
deviated from because the stock options are meant to be part of the
F-Secure Group's incentive plan. From the point of view of the
Company, this constitutes a valid economic reason for deviating
from the shareholders' pre-emptive right.
3. Subscription of stock options
The Company shall notify each Participant of the granting of
the stock options at the time and in the manner specified by the
Board. The stock options will be granted free of charge. The
acceptance of the stock options shall take place at the time and in
the manner specified by the Board.
The stock options shall be distributed to the Participants in
the manner determined by the Board. The stock options granted to a
subsidiary of F-Secure are intended to be granted at a later date
to Participants employed by the F-Secure Group at the time or to be
recruited later. The subsidiary is not permitted to exercise the
stock options.
4. The stock options and the book entry-system
F-Secure Corporation shall issue a maximum of 4,500,000 stock
options, belonging to the stock option series 2005A, provided that
the Board does not otherwise decide prior to the granting of the
stock options to the Participants.
The stock options shall be issued within the book-entry
system. The Board shall decide on the applicable procedure and
schedule. The stock options concerned are subject to the
restriction stated in Section I.5 below, which will be recorded in
the book-entry system as a restriction concerning all the stock
options. The Company may record any transfer restrictions or other
restrictions relating to the stock options as referred to in
Section I.5 below in the book-entry account of the option holder
without the consent of the option holder. The Company shall also
have the right to transfer the stock options of the option holder
to a book-entry account designated by the Company without the
consent of the option holder to implement the restrictions
mentioned under Section I.5 below.
5. Restrictions regarding the transfer of stock options and an
obligation to return stock options
Those stock options whose share subscription period referred
to in Section II.2 below has not commenced may not be transferred
to a third party or pledged without the Company's approval. The
decision on the approval is made by the Board. After the
commencement of the share subscription period, the stock options
may be transferred freely.
Should the Participant cease to be employed by a company
belonging to the F-Secure Group for any reason other than
retirement or death, such a person shall without delay offer to the
Company, free of charge, those stock options whose share
subscription period referred to in Section II.2 has not commenced
by the date of the termination of the employment contract. The
Board may for special reasons make an exception to this rule. The
Company may on its own initiative decide to remove the stock
options when this condition applies, even if the option holder has
not offered the stock options, free of charge, to the Company or to
a third party designated by the Company. The Company shall have the
right to grant the stock options returned to its custody, or to
order them to be granted, to parties referred to in the stock
option plan.
The Participant is obliged to inform the Company of a
transfer of the stock options without delay.
When the aforesaid obligation applies to the stock options, the
Company shall be entitled to have the transfer of the stock options
to the Company, or to a third party specified by the Company,
recorded in the book-entry system.
II TERMS AND CONDITIONS OF SHARE SUBSCRIPTION
1. Right to subscribe for new shares
Each stock option entitles its holder to subscribe for one
(1) share of F-Secure Corporation with the accounting equivalent
value of 0.01 euros per share. As a result of such share
subscription, the amount of shares of F-Secure Corporation may
increase by a maximum of 4,500,000 new shares and the share capital
may increase by a maximum of 45,000 euros.
However, an option holder shall not have the right to
subscribe for new shares of the Company if the Company resolves to
assign to the option holder existing shares held by the Company. In
this case, the Company shall be responsible for paying the possible
transfer tax. Otherwise the procedure is exactly the same as in the
case of subscribing for new shares.
2. Share subscription and payment
The share subscription period shall be:
- for stock option 2005A from 1 March 2008 to 30 November
2009,
- for stock option 2005B from 1 March 2009 to 30 November
2010,
- for stock option 2005C from 1 March 2010 to 30 November
2011,
- for stock option 2005D from 1 March 2011 to 30 November
2012
The share subscription shall take place at the head office of
F-Secure Corporation or possibly at another location specified by
the Company later. The payment for the subscription shall take
place immediately upon making the subscription. The Board shall
decide on the acceptance of the subscriptions.
3. Subscription price
The share subscription price
- for the 2005A stock options shall be the trade volume
weighted average price of the Company's share on the Helsinki
Exchanges in March 2005, rounded off to the nearest cent.
- for the 2005B stock options shall be the trade volume
weighted average price of the Company's share on the Helsinki
Exchanges in March 2006, rounded off to the nearest cent.
- for the 2005C stock options shall be the trade volume
weighted average price of the Company's share on the Helsinki
Exchanges in March 2007, rounded off to the nearest cent.
- for the 2005D stock options shall be the trade volume
weighted average price of the Company's share on the Helsinki
Exchanges in March 2008, rounded off to the nearest cent.
The subscription price of the stock options shall, as per the
dividend record date, be reduced by the amount of dividend per
share. However, only such dividends whose distribution has been
agreed upon after of the period for determination of the share
subscription price and which have been distributed prior to the
share subscription are deducted from the subscription price.
Pursuant to the Companies Act, the share subscription price
shall, nevertheless, always be at least the accounting equivalent
value per share.
4. Registration of the shares
Shares subscribed for and fully paid for shall be entered in
the subscriber's book-entry account.
The Board shall accept subscriptions regularly and shall have
the increases in the share capital based on the accepted
subscriptions registered without delay. The Board shall also submit
the new shares to public trading together with the existing shares
of the Company, provided that the Company's share is publicly
traded at the time. The Board does not have any obligation to
accept subscriptions made after the end of the financial year
before the Annual General Meeting.
5. Shareholder rights
The shares shall entitle their holders to a dividend for the
financial year during which the shares have been subscribed for.
Other shareholder rights shall commence once the increase in the
share capital has been entered in the trade register.
6. Share issues, convertible bonds, bonds with warrants and
stock options before share subscription
6.1 Bonus issue
Should the Company, before the end of the share subscription
period, raise its share capital by a bonus issue, the share
subscription price and the number of shares underlying each stock
option is adjusted in accordance with the following formulas:
New subscription price = subscription price before the bonus
issue x number of shares before the bonus issue / the number of
shares after the bonus issue.
New total number of shares underlying all of the stock
options = the number of shares underlying all the stock options
before the bonus issue x the number of shares after the bonus issue
/ the number of shares before the bonus issue.
Should the Company, before the end of the subscription
period, amend its share capital without changing the number of
shares, the subscription rights attached to the stock options are
not affected.
6.2 Changing the number of shares without changing the share
capital
Should the Company, before the end of the subscription
period, amend the number of shares without changing the share
capital, the formulas presented in 6.1 above shall be applied when
adjusting the share subscription price and the number of shares
underlying each stock option.
6.3 New issue, and issue of convertible bonds, bonds with
warrants and stock options
Should the Company, before share subscription, raise its
share capital through an issue of new shares or an issue of new
convertible bonds or bonds with warrants or stock options in such a
way that the shareholder's pre-emptive right is taken into account,
an option holder's rights shall be the same as, or equal to, the
rights of a shareholder. Equality shall be achieved in the manner
determined by the Board, either by adjusting the number of shares
available for subscription, or the subscription price, or both.
7. Rights in certain specific situations
a) Should the Company, before share subscription, reduce its
share capital, the subscription right of the option holders shall
be adjusted accordingly in the manner specified in the resolution
to reduce the share capital.
b) Should the Company, before the subscription period
commences, be placed in liquidation, the option holders shall be
given an opportunity to exercise their options before the
commencement of the liquidation during a period specified by the
Board. After this, the subscription rights shall expire.
c) Should the Company, before the end of the share
subscription period, make a resolution to acquire its own shares by
means of an offer made to all of the shareholders, the Company is
obliged to make an equal offer to the option holders regarding
those stock options whose share subscription period has commenced.
If the Company acquires its own shares in any other manner, no
action needs to be taken with regard to the stock options.
d) Should the Company resolve to merge with another existing
company or with a company to be formed or should the Company
resolve to be divided, the option holders will be given the right
to subscribe for all the Shares pertaining to their stock options
or to convert their stock options into stock options issued by
another company or, where a new company will be formed, by the
formed company, on such terms and within such a time period prior
to the merger or division, as prescribed by the Board of Directors.
Following the closing of the merger or division, any rights to
subscribe for Shares or to convert the stock options will lapse.
The provision stated in this paragraph also applies to a merger, in
which the Company takes part, and whereby the Company registers
itself as a European Company (Societas Europae) in another member
state in the European Economic Area. The same also applies, if the
Company resolves to restructure itself into a European Company and
registers a transfer of its domicile into another member state.
This provision constitutes an agreement referred to in Chapter 14,
Section 3 of the Companies Act. In the above situations, the option
holder has no right to demand that the Company redeems the stock
options at their market value.
e) If, before the end of the subscription period, a situation
referred to in Chapter 14, Section 19, of the Companies Act arises
in which a shareholder possesses over 90% of the shares of the
Company and therefore has the right and the obligation to redeem
the shares of the remaining shareholders, or if a situation
referred to in Chapter 6, Section 6, of the Securities Market Act
arises, the option holders are given an opportunity to exercise
their subscription rights within a period specified by the Board.
In a situation referred to in Chapter 14, Section 19, of the
Companies Act, the stock options expire once the period specified
by the Board expires.
f) Should the share of the Company cease to be publicly
traded on the Helsinki Exchanges before the end of the share
subscription period, the option holders are given an opportunity to
exercise their options during a period specified by the Board
before the trading of the Company's shares ends. As soon as the
trading ends, the stock options shall expire.
g) Should the Company, before the end of the share
subscription period, resolve to be converted from a public limited
company to a private limited company, the option holders are given
an opportunity to exercise their options during a period specified
by the Board. After this, the subscription rights shall expire.
h) If, on the basis of entries b), d), e), f), or g), the
option holder should be entitled to exercise the stock options but
the subscription price of the stock options cannot yet be
determined, the stock options do not entitle their holders to share
subscription. In this case, the stock options shall expire.
8. Dispute resolution
Any disputes regarding the stock options shall be settled by
arbitration in accordance with the arbitration rules of the
Helsinki Central Chamber of Commerce by using a single arbitrator.
The law of Finland shall apply to the arbitration proceedings.
9. Other matters
The Board shall decide on all other matters related to the
stock options and the underlying shares. The Board may also issue
binding orders applicable to the Participants. The Board may make
amendments to these terms and conditions provided that they do not
substantially alter them. Regarding all matters in which the Board
has the power of decision, the Board may authorise the President
and CEO to act on its behalf within the limits of the Companies
Act.
In the event of conflict, the Finnish language version of
these terms and conditions shall prevail.
In respect of the stock options granted, the Participant
shall not be entitled to any compensation on any grounds from any
company belonging to the F-Secure Group either during or after the
option holder's employment relationship with any of the said
companies. No benefit derived from the stock options under this
stock option plan is pensionable.
Should a Participant breach these terms and conditions, the
Company's stipulations regarding these terms and conditions, and/or
any applicable laws or official regulations, the Company has the
right to redeem, free of charge, all of the option holder's stock
options which have not yet been transferred or exercised.
The Company may send any notices relating to this stock
option plan to the option holder by post or by e-mail, or if the
stock options are listed on the stock exchange, by means of a stock
exchange release. The documentation relating to the stock options
is available for inspection at the Company's head office in
Helsinki.
By accepting the stock options, the Participant undertakes to
comply with the terms and conditions of this stock option plan,
with any other terms and conditions stipulated by the Company, and
with all applicable laws and official regulations. The Participant
also undertakes to take care of the tax payments which result from
the use of the options.
