printmgr file

ELECTRONIC TRANSMISSION DISCLAIMER

STRICTLY NOT TO BE FORWARDED TO ANY OTHER PERSONS

IMPORTANT: You must read the following disclaimer before continuing. This electronic transmission applies to

the attached document and you are therefore advised to read this disclaimer carefully before reading, accessing or

making any other use of the attached prospectus (the “Prospectus ”) relating to Avast plc (the “Company”) dated

10 May 2018 accessed from this page or otherwise received as a result of such access and you are therefore

advised to read this disclaimer carefully before reading, accessing or making any other use of the attached

document. In accessing the attached document, you agree to be bound by the following terms and conditions,

including any modifications to them from time to time, each time you receive any information from us as a result

of such access. You acknowledge that this electronic transmission and the delivery of the attached document is

confidential and intended for you only and you agree you will not forward, reproduce, copy, download or publish

this electronic transmission or the attached document, in whole or in part, whether electronically or otherwise to

any other person. The Prospectus has been prepared solely in connection with the proposed offer to certain

institutional and professional investors (the “Global Offer”) of ordinary shares (the “Shares”) of the Company.

The Prospectus has been published in connection with the admission of the Shares to the premium listing

segment of the Official List of the UK Financial Conduct Authority (the “FCA”) and to trading on the London

Stock Exchange plc’s main market for listed securities (together, “Admission”). The Prospectus has been

approved by the FCA as a prospectus prepared in accordance with the Prospectus Rules made under section 73A

of the FSMA. The Prospectus has been published and is available from the Company’s registered office and on

the Company’s website at http://investors.avast.com. Pricing information and other related disclosures have also

been published on this website. Prospective investors are advised to access such information prior to making an

investment decision.

THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT MAY ONLY BE

DISTRIBUTED IN CONNECTION WITH “OFFSHORE TRANSACTIONS” AS DEFINED IN, AND IN

RELIANCE ON, REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE

“U.S. SECURITIES ACT”) (“REGULATION S”) OR WITHIN THE UNITED STATES TO QUALIFIED

INSTITUTIONAL BUYERS (“QIBs”) AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT

(“RULE 144A”) OR PURSUANT TO ANOTHER EXEMPTION FROM, OR IN A TRANSACTION NOT

SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT. ANY

FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE ATTACHED DOCUMENT IN WHOLE

OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A

VIOLATION OF THE U.S. SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

NOTHING IN THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT CONSTITUTES

AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

THE SHARES REFERRED TO HEREIN HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER

THE U.S. SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE

OF THE UNITED STATES OR OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD, PLEDGED

OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON THAT THE SELLER AND ANY PERSON

ACTING ON ITS BEHALF REASONABLY BELIEVES IS A QIB IN RELIANCE ON RULE 144A OR

PURSUANT TO ANOTHER EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE

REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT OR (2) IN AN “OFFSHORE

TRANSACTION“ AS DEFINED IN, AND IN ACCORDANCE WITH RULE 903 OR RULE 904 OF,

REGULATION S, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF

ANY STATE OF THE UNITED STATES.

This electronic transmission and the attached document and the Global Offer when made are only addressed to

and directed at persons in member states of the European Economic Area who are “qualified investors” within

the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) and amendments thereto

(“Qualified Investors”). In addition, in the United Kingdom, this electronic transmission and the attached

document is being distributed only to, and is directed only at, Qualified Investors (i) who have professional

experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets

Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); (ii) who are high net worth companies,

unincorporated associations and other persons falling within Article 49(2)(a) to (d) of the Order, and (iii) to

whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant

persons”). This electronic transmission and the attached document must not be acted on or relied on (i) in the

United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European

Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or

investment activity to which this document relates is available only to (i) in the United Kingdom, relevant

persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified

Investors, and will be engaged in only with such persons.

Confirmation of your Representation: This electronic transmission and the attached document is delivered to

you on the basis that you are deemed to have represented to Morgan Stanley & Co. International plc (“Morgan

Stanley”), UBS Limited (“UBS”), Barclays Bank PLC, acting through its Investment Bank (“Barclays”), Merrill

Lynch International (“BofA Merrill Lynch”), Credit Suisse Securities (Europe) Limited (“Credit Suisse”),

Jefferies International Limited (“Jefferies”), and KeyBanc Capital Markets Inc. (“KeyBanc” and together with

Morgan Stanley, UBS, Barclays, BofA Merrill Lynch, Credit Suisse and Jefferies, the “Underwriters”), N M

Rothschild & Sons Limited (the “Financial Adviser”), the Company, each of the Selling Shareholders and the

Over-allotment Shareholders (as defined in Part 15 “Definitions and Glossary”) that (i) you are (a) a QIB

acquiring such securities for its own account or for the account of another QIB or (b) acquiring such securities in

“offshore transactions”, as defined in, and in reliance on, Regulation S; (ii) if you are in the United Kingdom, you

are a relevant person, and/or a relevant person who is acting on behalf of, relevant persons in the United

Kingdom and/or Qualified Investors to the extent you are acting on behalf of persons or entities in the United

Kingdom or the EEA; (iii) if you are in any member state of the European Economic Area other than the United

Kingdom, you are a Qualified Investor and/or a Qualified Investor acting on behalf of, Qualified Investors or

relevant persons, to the extent you are acting on behalf of persons or entities in the EEA or the United Kingdom;

(iv) if you are outside of the EEA and the United States, you are a person to whom this electronic transmission

and the attached document may be lawfully delivered in accordance with the laws of the jurisdiction in which

you are located and (v) you are an institutional investor that is eligible to receive this document and you consent

to delivery by electronic transmission.

You are reminded that you have received this electronic transmission and the attached document on the basis that

you are a person into whose possession this document may be lawfully delivered in accordance with the laws of

the jurisdiction in which you are located and you may not nor are you authorised to deliver this document,

electronically or otherwise, to any other person. This document has been made available to you in an electronic

form. You are reminded that documents transmitted via this medium may be altered or changed during the

process of electronic transmission and consequently none of the Company, the Selling Shareholders, the Over-

allotment Shareholders, the Underwriters, the Financial Adviser nor any of their respective affiliates accepts any

liability or responsibility whatsoever in respect of any difference between the document distributed to you in

electronic format and the hard copy version. By accessing the attached document, you consent to receiving it in

electronic form. None of the Underwriters, the Financial Adviser nor any of their respective affiliates accepts any

responsibility whatsoever for the contents of the attached document or for any statement made or purported to be

made by it, or on its behalf, in connection with the Company, the Global Offer or the Shares. To the fullest extent

permitted by law, the Underwriters, the Financial Adviser and each of their respective affiliates, each accordingly

disclaims all and any liability whether arising in tort, contract or otherwise which they might otherwise have in

respect of such document or any such statement. No representation or warranty express or implied, is made by

any of the Underwriters, the Financial Adviser or any of their respective affiliates as to the accuracy,

completeness, reasonableness, verification or sufficiency of the information set out in the attached document.

The Underwriters and the Financial Adviser are acting exclusively for the Company and no one else in

connection with the Global Offer. They will not regard any other person (whether or not a recipient of this

document) as their client in relation to the Global Offer and will not be responsible to anyone other than the

Company for providing the protections afforded to their respective clients nor for giving advice in relation to the

Global Offer or any transaction or arrangement referred to the attached document.

Restriction: Nothing in this electronic transmission constitutes, and this electronic transmission may not be used

in connection with, an offer of securities for sale to persons other than the specified categories of institutional

buyers described above and to whom it is directed and access has been limited to that it shall not constitute a

general solicitation. If you have gained access to this transmission contrary to the foregoing restrictions, you will

be unable to purchase any of the securities described herein.

You are responsible for protecting against viruses and other destructive items. Your receipt of this document via

electronic transmission is at your own risk and it is your responsibility to take precautions to ensure that it is free

from viruses and other items of a destructive nature.

This document comprises a prospectus (the “Prospectus”) for the purposes of Article 3 of European Union

Directive 2003/71/EC, as amended (the “Prospectus Directive”) relating to Avast plc (the “Company”)

prepared in accordance with the Prospectus Rules of the Financial Conduct Authority (the “FCA”) made under

section 73A of the Financial Services and Markets Act 2000 (the “FSMA”). The Prospectus has been approved

by the FCA in accordance with section 87A of the FSMA and has been made available to the public in

accordance with Prospectus Rule 3.2.1.

Application has been made to the FCA for all of the ordinary shares of the Company (the “Shares”) issued and to

be issued in connection with the Global Offer to be admitted to the premium listing segment of the Official List

of the FCA and to London Stock Exchange plc (the “London Stock Exchange”) for all of the Shares to be

admitted to trading on the London Stock Exchange’s main market for listed securities (together, “Admission”).

Admission in trading on the London Stock Exchange’s main market for listed securities constitutes admission to

trading on a regulated market. In the global offering (the “Global Offer”), 58,977,478 new Shares are being

offered by the Company (the “New Shares ”) and 181,815,424 existing Shares (the “Existing Shares”) are being

offered by certain existing holders of Shares. Conditional dealings in the Shares are expected to commence on

the London Stock Exchange on 10 May 2018. It is expected that Admission will become effective and that

unconditional dealings in the Shares will commence on 15 May 2018. All dealings before the commencement

of unconditional dealings will be of no effect if Admission does not take place and such dealings will be at

the sole risk of the parties concerned. No application is currently intended to be made for the Shares to be

admitted to listing or dealt with on any other exchange. The New Shares issued by the Company will rank

pari passu in all respects with the Existing Shares. No application has been made or is currently intended

to be made for the Shares to be admitted to listing or dealt with on any other exchange.

The directors of the Company, whose names appear on page 50 of this Prospectus (the “Directors”), and the

Company accept responsibility for the information contained in this Prospectus. To the best of the knowledge of

the Directors and the Company (each of whom has taken all reasonable care to ensure that such is the case), the

information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect

the import of such information.

Prospective investors should read this Prospectus in its entirety before making any

decision as to whether to subscribe for or purchase Shares. See in Part 1—“Risk

Factors” for a discussion of certain risks and other factors that should be considered

prior to any investment in the Shares.

AVAST PLC

(Incorporated under the Companies Act 2006 and registered in England and Wales with registered

number 07118170)

Global Offer of 240,792,902 Shares

at an Offer Price of 250 pence per Share

and admission to the Premium Listing Segment of the Official List

and to trading on the Main Market of the London Stock Exchange

Joint Global Co-ordinators, Joint Bookrunners

and Joint Sponsors

Morgan Stanley UBS Investment Bank

Joint Bookrunners

Barclays BofA Merrill

Lynch

Credit Suisse Jefferies

Co-Lead Manager

KeyBanc Capital Markets

Financial Adviser

Rothschild

ORDINARY SHARE CAPITAL IMMEDIATELY FOLLOWING ADMISSION

Issued and fully paid

Number Nominal Value

952,639,185 10 pence

The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective investor

should consult his or her own lawyer, independent financial adviser or tax adviser for legal, financial or tax

advice in relation to any subscription, purchase or proposed subscription or purchase of Shares. Prospective

investors should be aware that an investment in the Company involves a degree of risk and that, if certain of the

risks described in the Prospectus occur, investors may find their investment materially adversely affected.

Accordingly, an investment in the Shares is only suitable for investors who are particularly knowledgeable in

investment matters and who are able to bear the loss of the whole or part of their investment.

Each of Morgan Stanley & Co. International plc (“Morgan Stanley”), UBS Limited (“UBS”), Barclays Bank

PLC, acting through its Investment Bank (“Barclays”), Merrill Lynch International (“BofA Merrill Lynch”) and

Credit Suisse Securities (Europe) Limited (“Credit Suisse”) is authorised by the Prudential Regulation Authority

(the “PRA”) and regulated by the FCA and the PRA in the United Kingdom. Jefferies International Limited

(“Jefferies”) and N M Rothschild & Sons Limited (“Rothschild” or the “Financial Adviser”) are authorised and

regulated by the FCA in the United Kingdom. KeyBanc Capital Markets Inc. (“KeyBanc Capital Markets”) is

regulated by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority.

Morgan Stanley, UBS, Barclays, Credit Suisse, Jefferies, BofA Merrill Lynch and KeyBanc Capital Markets

(together, the “Underwriters”) and Rothschild (together with the Underwriters, the “Banks”) are acting

exclusively for the Company and no-one else in connection with the Global Offer. None of the Banks will regard

any other person (whether or not a recipient of this Prospectus) as a client in relation to the Global Offer and will

not be responsible to anyone other than the Company for providing the protections afforded to their respective

clients or for the giving of advice in relation to the Global Offer or any transaction, matter, or arrangement

referred to in this Prospectus. Apart from the responsibilities and liabilities, if any, which may be imposed on the

Banks by the FSMA or the regulatory regime established thereunder or under the regulatory regime of any

jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or

unenforceable, none of the Banks nor any of their respective affiliates accepts any responsibility whatsoever for

the contents of this Prospectus including its accuracy, completeness and verification or for any other statement

made or purported to be made by them, or on their behalf, in connection with the Company, the Shares or the

Global Offer. Each of the Banks and each of their respective affiliates accordingly disclaim, to the fullest extent

permitted by applicable law, all and any liability whether arising in tort, contract or otherwise (save as referred to

above) which they might otherwise be found to have in respect of this Prospectus or any such statement.

Investors should rely only on the information contained in this Prospectus. No representation or warranty express

or implied, is made by any of the Banks or any of their respective affiliates as to the accuracy, completeness,

verification or sufficiency of the information set out in this Prospectus, and nothing in this Prospectus will be

relied upon as a promise or representation in this respect, whether or not to the past or future. This Prospectus is

not intended to provide the basis of any credit or other evaluation and should not be considered as a

recommendation by the Company, the Directors, the Selling Shareholders or any of the Banks or any of their

representatives or affiliates that any recipient of this Prospectus should subscribe for or purchase Shares.

In connection with the Global Offer of the Shares, each of the Underwriters and any of their respective affiliates

or agents acting as an investor for its or their own account(s) may purchase Shares and, in that capacity, may

retain, purchase, sell, offer to sell or otherwise deal for its or their own account(s) in such securities, any other

securities of the Company or other related investments in connections with the Global Offer or otherwise.

Accordingly, references in this Prospectus to Shares being offered, sold or otherwise dealt with should be read as

including any offer to purchase or dealing to any of the Underwriters or any of them or any of their respective

affiliates acting in such capacity as an investor for its or their own account(s). In addition, certain of the

Underwriters and any of their respective affiliates may in the ordinary course of their business activities enter

into financing arrangements (including swaps) with investors in connection with which such Underwriters (or

their affiliates) may from time to time acquire, hold or dispose of Shares. The Underwriters do not intend to

disclose the extent of any such investment or transactions otherwise than in accordance with any legal or

regulatory obligation to do so.

Each of the Underwriters and their respective affiliates may have engaged in transactions with, and provided

various investment banking, financial advisory and other services for, the Company and/or the Selling

Shareholders for which they would have received customary fees. Each of the Underwriters and their respective

affiliates may provide such services to the Company and/or the Selling Shareholders and any of its affiliates in

the future.

This Prospectus does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of

any offer to purchase or subscribe for, any securities other than the securities to which it relates or any offer or

invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any

person in any circumstances or in any jurisdiction in which such offer or solicitation is unlawful.

Information to Distributors: Solely for the purposes of the product governance requirements contained within:

(a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and

10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing

measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability,

whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the Product

Governance Requirements) may otherwise have with respect thereto, the Shares the subject of the Global Offer

have been subject to a product approval process, which has determined that such Shares are: (i) compatible with

an end target market of retail investors and investors who meet the criteria of professional clients and eligible

counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as

are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment,

distributors should note that: the price of the Shares may decline and investors could lose all or part of their

investment; the Shares offer no guaranteed income and no capital protection; and an investment in the Shares is

compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or

in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of

such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The

Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling

restrictions in relation to the Offer. Furthermore, it is noted that, notwithstanding the Target Market Assessment,

the Underwriters will only procure investors who meet the criteria of professional clients and eligible

counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment

of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group

of investors to invest in, or purchase, or take any other action whatsoever with respect to the Shares. Each

distributor is responsible for undertaking its own target market assessment in respect of the Shares and

determining appropriate distribution channels.

Notice to overseas shareholders

The Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the

“U.S. Securities Act”). The Shares offered by this Prospectus may not be offered or sold in the United States,

except to qualified institutional buyers (“QIBs”), as defined in, and in reliance on, the exemption from the

registration requirements of the U.S. Securities Act provided in Rule 144A under the U.S. Securities Act

(“Rule 144A”) or another exemption from, or in a transaction not subject to, the registration requirements of the

U.S. Securities Act. Prospective investors are hereby notified that the sellers of the Shares may be relying on the

exemption from the provisions of section 5 of the U.S. Securities Act provided by Rule 144A. Outside of the

United States, the Global Offer is being made in offshore transactions as defined in Regulation S of the U.S.

Securities Act. No actions have been taken to allow a public offering of the Shares under the applicable securities

laws of any jurisdiction, including Canada, Australia or Japan. Subject to certain exceptions, the Shares may not

be offered or sold in any jurisdiction, or to or for the account or benefit of any national, resident or citizen of any

jurisdiction, including Canada, Australia or Japan. This Prospectus does not constitute an offer of, or the

solicitation of an offer to subscribe for or purchase any of the Shares to any person in any jurisdiction to whom it

is unlawful to make such offer or solicitation in such jurisdiction.

The Shares have not been and will not be registered or qualified for distribution by this Prospectus under the

applicable securities laws of Canada, Australia or Japan. Subject to certain exceptions, the Shares may not be

offered or sold in any jurisdiction, or to or for the account or benefit of any national, resident or citizen in

Australia or Japan or to any person located or resident in Canada. The Shares have not been recommended by

any U.S. federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities

have not confirmed the accuracy or determined the adequacy of this Prospectus. Any representation to the

contrary is a criminal offence in the United States.

The distribution of this Prospectus and the offer and sale of the Shares in certain jurisdictions may be restricted

by law, including, without limitation, the United States, Australia, Canada, Dubai, Hong Kong, Japan, Singapore,

South Africa and Switzerland. No action has been or will be taken by the Company, the Selling Shareholders (as

defined in Part 15—“Definitions and Glossary”) or the Banks to permit a public offering of the Shares under the

applicable securities laws of any jurisdiction. Other than in the United Kingdom, no action has been taken or will

be taken to permit the possession or distribution of this Prospectus (or any other offering or publicity materials

relating to the Shares) in any jurisdiction where action for that purpose may be required or where doing so is

restricted by law. Accordingly, neither this Prospectus, nor any advertisement, nor any other offering material

may be distributed or published in any jurisdiction except under circumstances that will result in compliance with

any applicable laws and regulations. Persons into whose possession this Prospectus comes should inform

themselves about and observe any such restrictions. Any failure to comply with such restrictions may constitute a

violation of the securities laws of any such jurisdiction. In particular, no actions have been or will be taken to

permit a public offering of the Shares under the applicable securities laws of any jurisdiction, including the

United States, Australia, Canada, Dubai, Hong Kong, Japan, Singapore, South Africa and Switzerland.

Accordingly, subject to certain exceptions, the Shares may not be offered, sold or delivered within the United

States, Australia, Canada, Dubai, Hong Kong, Japan, Singapore, South Africa and Switzerland.

For a description of these and certain further restrictions on the offer, subscription, sale and transfer of the Shares

and distribution of this Prospectus, please see Part 13—“Details of the Global Offer” of this Prospectus. Please

note that by receiving this Prospectus, subscribers and purchasers shall be deemed to have made certain

representations, acknowledgements and agreements set out herein including, without limitation, those set out in

Part 13—“Details of the Global Offer” of this Prospectus.

Available information

For so long as any of the Shares are in issue and are “restricted securities” within the meaning of Rule 144(a)(3)

under the U.S. Securities Act, the Company will, during any period in which it is not subject to section 13 or

15(d) under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), nor exempt from

reporting under the U.S. Exchange Act pursuant to Rule 12g3-2(b) thereunder, make available to any holder or

beneficial owner of a Share, or to any prospective purchaser of a Share designated by such holder or beneficial

owner, the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the U.S. Securities

Act.

iii

TABLE OF CONTENTS

SUMMARY ........................................................................... 1

PART 1 RISK FACTORS ................................................................. 19

PART 2 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ....................... 38

PART 3 DIRECTORS, SECRETARY, REGISTERED AND HEAD OFFICE AND ADVISERS ........ 50

PART 4 EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND OFFER STATISTICS ........... 52

PART 5 INDUSTRY OVERVIEW ......................................................... 53

PART 6 BUSINESS ..................................................................... 61

PART 7 DIRECTORS AND CORPORATE GOVERNANCE .................................... 81

PART 8 SELECTED FINANCIAL INFORMATION ........................................... 89

PART 9 OPERATING AND FINANCIAL REVIEW ........................................... 95

PART 10 CAPITALISATION AND INDEBTEDNESS ......................................... 145

PART 11 HISTORICAL FINANCIAL INFORMATION ........................................ 147

PART 12 UNAUDITED PRO FORMA FINANCIAL INFORMATION ............................ 264

PART 13 DETAILS OF THE GLOBAL OFFER ............................................... 268

PART 14 ADDITIONAL INFORMATION ................................................... 277

PART 15 DEFINITIONS AND GLOSSARY ................................................. 319

SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These Elements are numbered in

Sections A-E (A. 1 - E. 7). This summary contains all the Elements required to be included in a summary for this

type of security and issuer. Because some Elements are not required to be addressed, there may be gaps in the

numbering sequence of the Elements.

Even though an Element may be required to be inserted in the summary because of the type of securities and

issuer, it is possible that no relevant information can be given regarding the Element. In this case a short

description of the Element is included in the summary with the mention of “not applicable”.

Section A—Introductions and warnings

A.1 Warning

This summary should be read as an introduction to the prospectus (the “Prospectus”).

Any decision to invest in the securities should be based on consideration of the Prospectus as a whole

by the investor. Where a claim relating to the information contained in the Prospectus is brought

before a court, the plaintiff investor might, under the national legislation of the Member States, have

to bear the costs of translating the prospectus before the legal proceedings are initiated.

Civil liability attaches only to those persons who have tabled the summary including any translation

thereof, and applied its notification, but only if the summary is misleading, inaccurate or inconsistent

when read together with the other parts of the Prospectus or it does not provide, when read together

with the other parts of the Prospectus, key information in order to aid investors when considering

whether to invest in such securities.

A.2 Subsequent resale of securities or final placement of securities through financial intermediaries

Not applicable. No consent has been given by the Company or any person responsible for drawing up

this Prospectus to the use of the Prospectus for subsequent resale or final placement of securities by

financial intermediaries.

Section B—Issuer

B.1 Legal and commercial name

Avast plc (the “Company”).

B.2 Domicile and legal form

The Company was incorporated and registered in England and Wales on 7 January 2010 as a private

company limited by shares with the name Avast Limited and with the registered number 07118170.

On 18 April 2018, the Company was acquired by Sybil Holdings S.à r.l. Prior to acquisition, the

Company was a dormant company. On 3 May 2018, the Company was re-registered as a public

limited company with the name Avast plc.

The principal legislation under which the Company operates and under which the New Shares will be

created is the Companies Act 2006, as amended (the “Act”).

B.3 Key factors affecting current operations and principal activities

The Group is the number one provider of security software to the consumer market as measured by

number of users. The Group has been delivering security solutions to the consumer market for the last

30 years and offers a range of products that protect users’ security, device performance and privacy

(collectively, their “digital lives”). Headquartered in the Czech Republic, the Group has users in

almost every country in the world, with more than 435 million users worldwide as of 31 December

2017, including more than 290 million desktop users. Of these desktop users, approximately 4% were

users of paid products (“customers”). As of the same date, there were 59 countries in which the

Group had at least one million users. The Group’s consumer personal computer (“PC”) software

products had over 290 million users as of 31 December 2017, approximately six times more than the

Group’s nearest competitor.

The Group offers products in two segments: consumer products (which generate direct and indirect

revenue streams) and products for the small and medium business (“SMB”) market. These products

secure not just the devices of users, but also their data, families, networks and homes. The Group

offers next-generation consumer PC antivirus security software under the Avast and AVG brands,

each in the form of both free offerings and paid premium products. In addition to security products,

the Group also offers value-added solutions for PCs and mobile devices focused on performance and

privacy, such as optimisation products (including CCleaner, Avast Cleanup and AVG Tune Up), VPN

products (including HideMyAss (“HMA ”) and Avast SecureLine and AVG Secure VPN), password

manager products (including Avast Passwords) and family safety products (such as Location Labs’

mobile parental controls products). The Group is also developing products to address the Smart Home

market and the privacy and security threats posed by the rapid growth of connected devices,

collectively known as the internet of things (“IoT”). In addition, the Group monetises its users

indirectly through advertisements and third party software distribution agreements, as well as through

its secure browser, Avast Secure Browser; its e-commerce offering, SafePrice; and its data analytics

business, Jumpshot. Specifically designed for the SMB market, the Group offers cloud and

on-premises antivirus protection and IT administrative solutions under both the Avast and AVG

brands.

The Group’s antivirus solutions use artificial intelligence (“AI”) and employ machine-learning

capabilities to conduct behavioural analysis and improve detection abilities. With both local and

cloud-based deep learning capabilities, the Group’s security engine is powered by a continuous data

loop of inputs from the Group’s users, who act as a geographically dispersed global threat detection

system. The Group’s security engine stopped approximately two billion attacks per month in the year

ended 31 December 2017. The Group places a heavy focus on the continuous development and

improvement of these technologies, with more than 45% of its employees working in research and

development (“R&D”). The Group believes this focus on R&D strongly contributes to the fact that

the Group’s products are consistently ranked among the highest-rated antivirus solutions by both users

and editors on leading download websites, as well as in popular media globally.

The Group offers versions of its high-performance consumer PC antivirus security software to

consumers free of charge. The Group focuses on promoting these free products as a part of its user

acquisition strategy. The Group monetises its user base by converting users of its free antivirus

software to paid antivirus customers and selling existing customers of its paid antivirus products a

higher tier of paid antivirus software (collectively, “up-selling”) or adjacent (non-antivirus) paid

products, such as VPN products or PC optimisation tools (“cross-selling”). The large user base not

only drives direct revenues by growing the market to which the Group can target its up-selling and

cross-selling campaigns, but it also improves the accuracy and effectiveness of the Group’s machine-

learning-powered consumer monetisation platform. The platform becomes more effective with

increased inputs, improving the Group’s ability to market and advertise its products to its existing user

base by learning the most effective time and manner to message and prompt users to purchase

premium paid antivirus software or value-added solutions. The Group’s free products provide

comprehensive malware protection to users, while imposing low user support and servicing costs on

the Group, amounting to, on average, $0.02 per free incremental PC antivirus software user per

annum for the year ended 31 December 2017.

The Group has successfully grown its business in recent years while maintaining strong levels of

profitability. Further, the Group’s billings are primarily composed of subscription agreements, which

enhance the predictability and visibility of the Group’s future revenue streams. Subscription

agreements are typically paid in full up front with revenue being recognised on a deferred basis over

the life of the agreements, which typically vary from one to three years. On a like-for-like basis, the

Group’s Adjusted Billings increased 9% from $745.4 million for the year ended 31 December 2016 to

$811.3 million for the year ended 31 December 2017 and increased 1% from $739.0 million for the

year ended 31 December 2015 to $745.4 million for the year ended 31 December 2016. Piriform

contributed $10.6 million to the Group’s 2017 Adjusted Billings of $811.3 million from the date of its

acquisition on 18 July 2017 to 31 December 2017, and, had Piriform always been a part of the Group,

it would have contributed an additional $10.9 million. The Discontinued Business contributed

$38.5 million to the Group’s Adjusted Billings in 2017, $66.7 million in 2016, and $101.4 million in

2015. Excluding Piriform and Discontinued Business, on a like-for-like basis, the Group’s Adjusted

Billings increased 11% from 2016 to 2017, and 6% from 2015 to 2016. On a like-for-like basis, the

Group’s Adjusted Revenues increased 6% from $736.5 million for the year ended 31 December 2016

to $779.5 million for the year ended 31 December 2017 and 2% from $720.5 million for the year

ended 31 December 2015 to $736.5 million for the year ended 31 December 2016. Piriform

contributed $6.1 million to the Group’s 2017 Adjusted Revenues of $779.5 million from the date of

its acquisition on 18 July 2017 to 31 December 2017, and, had Piriform always been a part of the

Group, it would have contributed an additional $15.6 million. Discontinued Business contributed

$38.5 million to 2017, $66.7 million to 2016, and $101.4 million to 2015 Adjusted Revenue.

Excluding Piriform and Discontinued Business, on a like-for-like basis, the Group’s Adjusted

Revenue increased 7% from 2016 to 2017, and 8% from 2015 to 2016.

B.4a Significant recent trends affecting the Group and the industry in which it operates

The Group offers products directly to consumers and SMBs in several markets encompassing

cybersecurity, device computing performance and data privacy. The Group also generates revenue

indirectly through the analytics, affiliate publishing and web browsing markets. Despite operating in

several varied markets, the core of the Group’s business is its global user base. The Group has

achieved significant scale and success by developing products for hundreds of millions of consumers

who have recognised the growing need for solutions that enable them to live their online lives safely

and securely.

As increasingly larger segments of consumers’ lives become digital, fear of financial losses to hackers

has risen. The primary attack vectors fuelling these fears include ransomware, identity theft and

socially engineered malware. Ransomware enables hackers to extort consumers and businesses by

first encrypting all of the data at the centre of consumers’ digital lives and then demanding monetary

compensation to prevent the permanent deletion of that data. Identity theft involves stealing key

personal information, often online or in a digital form, to gain benefits, financial or otherwise.

Socially engineered malware disguises malware inside seemingly innocuous links, email attachments

and images to covertly collect consumer information. As a result, consumers reported worrying

approximately twice as often about digital crimes such as identity theft and online financial hacking

compared to physical crimes such as car theft, home burglary and terrorism (source: Gallup—Gallup

Poll Social Series: Crime; October 2017).

Furthermore, the scale and magnitude of broader cybercrime has increased. According to Norton,

53% of consumers have experienced a cybercrime or know someone who has, and the average

affected consumer spends approximately 24 hours of total time recovering from a cybercrime. This

reduction in consumers’ sense of safety has culminated in 51% of consumers believing it has become

more difficult to stay secure online over the last five years (source: Norton Cyber Security Insights

Report 2016). In total, 978 million consumers were impacted by a cybercrime in 2017, generating

$172 billion in losses to cybercrime during the same period (source: Norton Cyber Security Insights

Report 2017).

The Group’s markets can be divided into three categories: Consumer Direct, Consumer Indirect, and

SMB. The Consumer Direct category includes consumer security, performance and privacy products

and services sold directly to customers to protect their devices and data and to improve device

performance. Consumer Indirect includes a broad range of products and services which aim to

generate revenue from the Group’s existing user community without the direct sale of products or

services. These products and services include analytics, affiliate publishing, secure web browsing,

advertising within applications and distribution of third party software. The SMB category includes

endpoint and network security products for small and medium-sized businesses as well as tools for

managed service providers to maintain and monitor security on a customer’s behalf.

The Group believes its current addressable market achieved total revenue of $14.5 billion in 2017 and

that the market will reach revenues of $21.3 billion in 2021, representing a CAGR of 10.1% (source:

Company market study). The Consumer Direct segment revenue projections have been based on

global consumer spend on desktop & mobile antivirus (“AV”), VPN, PC utilities, other consumer

endpoint products and protection products for home-centric IoT devices. The Consumer Indirect

segment revenue projections have been based on the market for paid distribution of consumer

software, the non-network half of the e-commerce affiliate publishing market, the search distribution

market represented by third-party browsers, the market for advertising within applications and a

combination of the clickstream analytics and specialised analytics markets. The SMB segment

revenue projections include the global SMB endpoint spend and the total SMB network security

spend attributable to cloud-based, Software-as-a-Service (SaaS) products.

B.5 Group description

The term “Group” refers to Avast Holding B.V. and each of its consolidated subsidiaries and

subsidiary undertakings prior to the completion of a Group reorganisation (the “Reorganisation”)

(which is expected to be immediately prior to Admission) and, thereafter, the Company and its

consolidated subsidiaries and subsidiary undertakings from time to time. The main trading entity of

the Group is Avast Software s.r.o. Upon completion of the Reorganisation, the Company will,

immediately prior to Admission, become the holding company of the Group. The term “Admission”

refers to admission of the ordinary shares of the Company of 10 pence each (“Shares”) to the

premium listing segment of the Official List of the FCA (the “Official List”) and to trading on the

London Stock Exchange’s main market for listed securities.

B.6 Major shareholders

As at the date of this Prospectus, the Company is owned or controlled by Sybil Holdings S.à r.l.,

which is owned by funds advised by affiliates of CVC Capital Partners Advisory Company

(Luxembourg) S.à r.l. (“Sybil”); Pavel Baudisˇ; Eduard Kucˇera; funds advised by Summit Partners,

L.P. and its affiliates (“Summit Partners” and together with Sybil, Pavel Baudisˇ and Eduard Kucˇera,

the “Major Shareholders”) and current and former Directors and employees, which together hold

100% of the voting rights attached to the issued share capital of the Company. Immediately following

the Global Offer and Admission, it is expected that the Major Shareholders will hold approximately

65.9%, assuming no exercise of the Over-allotment Option, and 62.1%, assuming the Over-allotment

Option is exercised in full.

As far as it is known to the Company, the following are the interests (within the meaning of Part IV of

the Act) (other than interests held by the Directors) which represent, or will represent, directly or

indirectly 3% or more of the issued share capital of the Company (assuming no exercise of the option

granted to Morgan Stanley & Co. International plc as stabilising manager (the “Stabilising

Manager”) to purchase, or procure purchasers for, up to 36,118,935 additional Existing Shares (as

defined below) (the “Over-Allotment Option”)):

Immediately prior to

Admission

Immediately following

Admission

Shareholders

Number of

Percentage

of issued

capital

Number of

Percentage

of issued

capital

Sybil Holdings S.à r.l. ................................ 270,378,756 30.3% 216,303,002 22.7%

Pavel Baudisˇ

(1)

...................................... 317,696,900 35.6% 257,182,165 27.0%

Eduard Kucˇera

(2)

.................................... 123,275,331 13.8% 99,793,912 10.5%

Summit Partners

(3)

................................... 68,416,648 7.7% 54,733,318 5.7%

Notes

(1) Immediately prior to Admission, Pavel Baudisˇ will hold Shares in the Company directly and through PaBa Software s.r.o.

Mr. Baudisˇ will hold 60,514,735 Shares on an individual basis immediately prior to Admission (and 0 Shares immediately

following Admission). Mr. Baudisˇ will hold 257,182,165 Shares through PaBa Software s.r.o. immediately prior to

Admission (and 257,182,165 Shares immediately following Admission).

(2) Immediately prior to Admission, Eduard Kucˇera will hold Shares in the Company directly and through Pratincole

Investments Limited. Mr. Kucˇera will hold 23,481,419 Shares on an individual basis immediately prior to Admission (and

0 Shares immediately following Admission). Mr. Kucˇera held 99,793,912 Shares through Pratincole Investments Limited

immediately prior to Admission (and 99,793,912 Shares immediately following Admission).

(3) Immediately prior to Admission, Summit Partners will hold Shares in the Company through its funds Leia 1 S.a` r.l,

Summit Investors I, LLC and Summit Investors I (UK), L.P.

The Shares owned by the Major Shareholders rank pari passu with other Shares in all respects.

Sybil Relationship Agreement

On 10 May 2018, the Company entered into a relationship agreement with Sybil (the “Sybil Relationship

Agreement”), which will take effect on Admission. Pursuant to the Sybil Relationship Agreement, Sybil

shall, and shall (so far as it is legally able to do so) procure that certain of its affiliates (excluding any

portfolio or investee companies in which funds advised by affiliates of CVC Capital Partners Advisory

Company (Luxembourg) S.à r.l. hold an interest or investment) (“CVC Affiliates”) shall:

(a) (i) conduct all transactions, agreements or arrangements entered into between any member of the

Group and Sybil and/or any CVC Affiliates (or the enforcement, implementation or amendment

thereof) and all relationships between any member of the Group and Sybil and/or any CVC

Affiliates at arm’s length and on normal commercial terms; and (ii) where applicable, enter into

all transactions, agreements or arrangements in accordance with the related party transaction

rules set out in Chapter 11 of the listing rules of the FCA made under section 74(4) of the FSMA

(the “Listing Rules”);

(b) not take any action which would have the effect of preventing the Company or any other member

of the Group from carrying on its business independently of Sybil and/or any CVC Affiliates;

of the Group from complying with its obligations under the Listing Rules, the Disclosure

Guidance and Transparency Rules of the FCA (the “DGTRs”), Regulation (EU) 596/2014 of the

European Parliament and of the Council of 16 April 2014 on market abuse (the “Market Abuse

Regulation”), the FSMA, the Financial Services Act 2012 (the “FS Act”) or the principles of

good governance set out in the UK Corporate Governance Code issued by the Financial

Reporting Council from time to time in force (the “Governance Code”) save in respect of any

matters of non compliance with the Governance Code which are disclosed in this Prospectus or

in the Company’s annual report or which have been agreed to in writing by a majority of the

Independent Non-Executive Directors;

(d) not exercise any of their voting rights in a manner which would prevent the Company from

making decisions for the benefit of the Shareholders taken as a whole;

(e) not exercise any of their voting rights in a manner that would require the Company to operate or

make decisions solely for the benefit of Sybil and/or any CVC Affiliates;

(f) not propose or procure the proposal of a shareholder resolution which is intended or appears to

be intended to circumvent the proper application of the Listing Rules;

(g) without prejudice to (f) above, not exercise any of their voting rights to vary the articles of

association of the Company to be adopted upon Admission (the “Articles”) which would:

(A) be contrary to the maintenance of the Company’s independence (including the Company’s

ability to operate and make decisions independently of Sybil and/or any CVC Affiliates); or

(B) prevent the election of independent directors; or

Agreement or the Listing Rules, the DGTRs or the Market Abuse Regulation; and

(h) abstain from voting on any resolution required by paragraph 11.1.7R(3) of the Listing Rules to

approve a related party transaction where Sybil or any of its associates is the related party for the

purposes of the Listing Rules and, in any event that any of Sybil’s associates are shareholders at

the relevant time, Sybil shall take all reasonable steps to ensure that such associates also abstain

from voting on such resolution.

In addition, pursuant to the Sybil Relationship Agreement:

(a) Sybil has agreed that, for a period of two years from Admission, or, if earlier, the date which is

three months after the date of termination of the Sybil Relationship Agreement, subject to limited

exceptions, it shall not, and will (insofar as it is legally able to do) direct the CVC Affiliates not

to, solicit for service or employment any of the executive Directors of the Company or any other

member of the executive management team of the Group, in each case without the prior written

consent of the Company;

(b) Sybil is entitled to appoint one natural person to be a non-executive director of the Company for

so long as Sybil and/or CVC Affiliates hold in aggregate 10% or more of the voting rights

attaching to the issued share capital of the Company;

attaching to the issued share capital of the Company, the Company shall, if requested by Sybil,

procure that the director appointed by Sybil is permitted to attend as an observer at the Board’s

Nomination Committee, Audit Committee and Remuneration Committee;

(d) the Company has agreed, to the extent permitted by applicable laws and regulation, to provide

certain information to Sybil on an ongoing basis in order to enable Sybil and certain connected

persons to complete any tax return, compilation or filing or to comply with any audit or

regulatory request or any other laws or regulations which apply to Sybil or any such person;

(e) the Company has agreed, subject to compliance with relevant regulatory requirements, to procure

that the Group’s senior management shall provide reasonable assistance to Sybil or any CVC

Affiliate in relation to any proposed sale of Shares by Sybil or any CVC Affiliate at any time

following Admission; and

(f) the Company agrees not to undertake any transaction in the Shares which may reasonably be

expected to give rise to an obligation for Sybil or any CVC Affiliate (and/or persons with whom

they are acting in concert within the meaning of the UK City Code on Takeovers and Mergers

(the “City Code”) to make a general offer in accordance with Rule 9 of the City Code unless the

Company has first obtained a waiver of Rule 9 in accordance with the City Code, or the

Company has otherwise obtained the necessary waivers or consents from the Takeover Panel to

prevent such obligations from applying.

The Sybil Relationship Agreement will be effective as from Admission and remain in effect for so

long as Sybil and/or any of the CVC Affiliates hold, in aggregate, 10% of voting rights attaching to

the Shares and the Shares continue to be admitted to listing on the Official List of the FCA.

Founder Relationship Agreement

On 10 May 2018, the Company entered into a relationship agreement with Pavel Baudisˇ and Eduard

Kucˇera and their respective investment vehicles. PaBa Software s.r.o. and Pratincole Investments

Limited (each a “Founder” and together, the “Founders”) (the “Founder Relationship Agreement”,

and, together with the Sybil Relationship Agreement, the “Relationship Agreements”), which will

take effect on Admission. Pursuant to the Founder Relationship Agreement, each Founder shall, and

shall (so far as he or it is legally able to do so) procure that any of his or its associates shall:

(a) conduct all transactions, agreements or arrangements entered into between any member of the

Group and such Founder and/or any of his or its associates (or the enforcement, implementation

or amendment thereof) and all relationships between any member of the Group and such Founder

and/or any of his or its associates at arm’s length and on normal commercial terms and where

applicable, enter into all transactions, agreements or arrangements in accordance with the related

party transaction rules set out in Chapter 11 of the Listing Rules;

(b) not take any action which would have the effect of preventing the Company or any other member

of the Group from carrying on its business independently of the Founders and/or any of their

associates;

of the Group from complying with its obligations under the Listing Rules, the DGTRs, the

Market Abuse Regulation, the FSMA, the FS Act or the principles of good governance set out in

the Governance Code (save in respect of any matters of non compliance with the Governance

Code which are disclosed in this Prospectus or in the Company’s annual report or which have

been agreed to in writing by a majority of the Independent Non-Executive Directors);

(d) not exercise any of their voting rights in a manner which would prevent the Company from

making decisions for the benefit of the Shareholders taken as a whole;

(e) not exercise any of their voting rights in a manner that would require the Company to operate or

make decisions solely for the benefit of any of the Founders and/or any of their associates;

(f) not propose or procure the proposal of a shareholder resolution which is intended or appears to

be intended to circumvent the proper application of the Listing Rules;

(g) without prejudice to (f) above, not exercise any of their voting rights to vary the Articles which

would:

(A) be contrary to the maintenance of the Company’s independence (including the Company’s

ability to operate and make decisions independently of the Founders and/or any of their

associates); or

(B) prevent the election of independent directors; or

Agreement or the Listing Rules, the DGTRs or the Market Abuse Regulation; and

(h) abstain from voting on any resolution required by paragraph 11.1.7R(3) of the Listing Rules to

approve a related party transaction where such Founder or any of his or its associates is the

related party for the purposes of the Listing Rules.

In addition, pursuant to the Founder Relationship Agreement:

(a) each Founder has undertaken that, until the later of the termination of the Founder Relationship

Agreement and the date falling two years after Admission, he or it shall not, and will procure

(insofar as is within his or its power or control) that any of his or its associates shall not, operate,

establish, own or acquire a Competing Business. This undertaking shall not prohibit, after

Admission, either of Mr. Baudisˇ or Mr. Kucˇera (together with their connected founder

investment vehicle) from being entitled to acquire up to 5% in aggregate of the shares of any

class of any company engaged in business that would constitute a Competing Business provided

the shares of such company are listed on a recognised stock exchange. For the purposes of this

Prospectus, “Competing Business” means a company, an undertaking, a business, a business

operation or other enterprise or entity which from time to time itself or through one or more of its

subsidiary undertakings, operates in the software anti-virus or cyber-security sector, or offers any

products or services which compete with such products or services as are offered or marketed by

the Group at the date of this Prospectus;

(b) each Founder has agreed that, during the period from the date of the Founder Relationship

Agreement to the later of: (i) the termination of such agreement or (ii) the date which is two

years after the date of Admission, subject to certain limitations, he or it shall not, and will

procure (insofar as is within his or its power or control) that any of his or its associates shall not,

solicit for service or employment any employee of the Group;

of the Company for so long as the Founders and/or their associates hold in aggregate 10% or

more (but less than 20%) of the voting rights attaching to the issued share capital of the

Company; and (ii) two natural persons to be non-executive directors for so long as the Founders

and/or their associates hold 20% or more of the voting rights attaching to the issued share capital

of the Company;

(d) for so long as the Founders hold in aggregate 10% or more of the voting rights attaching to the

issued share capital of the Company, the Company shall, if requested by the Founders, procure

that one of the directors appointed by the Founders is permitted to attend as an observer at the

Board’s Nomination Committee, Audit Committee and Remuneration Committee;

(e) if, at any time after Admission, either of Mr. Baudisˇ and his connected founder investment

vehicle on the one hand and Mr. Kucˇera and his connected founder investment vehicle on the

other hand: (i) is in material breach of the Founder Relationship Agreement; or (ii) together with

any of his associates, holds, in aggregate, fewer than 5% of the voting rights attaching to the

issued share capital of the Company, the other Founders shall become so entitled to appoint (and

remove and reappoint) directors or an observer to the committees as described above; and

(f) the Company has agreed, to the extent permitted by applicable laws and regulation, to provide

certain information to each Founder on an ongoing basis in order to enable such Founder or any

of his associates to complete any tax return, compilation or filing or to comply with any other

laws or regulations which apply to such Founder or any of his or its associates.

The Founder Relationship Agreement will be effective as from Admission and remain in effect for so

long as the Founders and any of their associates together hold, in aggregate, 10% of voting rights

attaching to the Shares and the Shares continue to be admitted to listing on the Official List of the

FCA.

The Group believes that the terms of the Relationship Agreements will enable the Group to carry on

its business independently of Sybil and the Founders and ensure that all transactions and arrangements

between the Group, on the one hand, and Sybil and the CVC Affiliates and/or the Founders and their

respective associates, on the other hand, will be conducted at arm’s length and on normal commercial

terms.

Following Admission, the Articles will allow the election of independent directors to be conducted in

accordance with any requirements of the Listing Rules.

In all other circumstances, the Company’s major shareholders have and will have the same voting

rights attached to the Shares as all other shareholders.

B.7 Key financial information and narrative description of significant changes to financial condition

and operating results of the Group during or subsequent to the period covered by the historical

key financial information

The selected financial information set out below has been extracted without material adjustment from

the historical financial information relating to the Group and the historical financial information

relating to AVG, each as included in Part 11—“Historical Financial Information”.

The Group

Consolidated Income Statement Data

Group

Year ended 31 December

2015 2016 2017

(in $ millions)

Revenues ............................................................ 251.0 340.7 652.9

Cost of revenues ....................................................... (72.8) (112.1) (232.8)

Gross profit .......................................................... 178.2 228.6 420.1

Operating costs:

Sales and marketing ................................................ (29.0) (59.6) (121.4)

Research and development ........................................... (23.7) (46.8) (75.5)

General and administrative ........................................... (25.9) (90.3) (98.9)

Total operating costs .................................................... (78.6) (196.7) (295.8)

Operating profit (loss) ................................................. 99.6 31.9 124.3

Analysed as:

Underlying Operating Profit ............................................ 165.7 183.8 299.7

Share-based payment ................................................... (6.1) (2.7) (7.7)

Exceptional items ...................................................... (0.8) (69.8) (34.8)

Amortisation of acquisition intangible items ................................. (59.2) (79.4) (132.9)

Finance income and expenses, net ......................................... (27.9) (12.4) (153.2)

Profit (loss) before income tax ........................................... 71.7 19.5 (28.9)

Income tax ............................................................ (0.2) 5.1 (4.9)

Profit (loss) for the financial year ........................................ 71.5 24.6 (33.8)

Consolidated Balance Sheet Data

Group

As at 31 December

2015 2016 2017

(in $ millions)

Assets

Current assets

Cash and cash equivalents ................................................. 141.2 240.7 176.3

Trade and other receivables ................................................ 34.7 71.4 93.2

Prepaid expenses ........................................................ 3.1 14.8 35.8

Inventory .............................................................. — — 0.5

Tax receivables ......................................................... 1.6 3.4 7.5

Other financial assets ..................................................... 0.4 2.0 1.0

Total current assets ................................................. 181.0 332.3 314.3

Non-current assets

Property, plant and equipment .............................................. 10.1 34.7 29.5

Intangible assets ......................................................... 255.5 492.3 394.3

Deferred tax asset ........................................................ 6.4 46.9 66.3

Other financial assets ..................................................... 0.4 3.6 1.9

Prepaid expenses ........................................................ 1.5 1.8 0.5

Goodwill .............................................................. 720.5 1,895.8 1,986.7

Total non-current assets ............................................. 994.4 2,475.1 2,479.2

Total assets ............................................................ 1,175.4 2,807.4 2,793.5

Shareholders’ equity and liabilities

Current liabilities

Trade and other payables .................................................. 9.5 44.3 35.4

Lease liability ........................................................... 0.3 1.6 1.7

Provisions .............................................................. 1.0 27.9 6.2

Income tax liability ...................................................... 9.6 25.0 28.1

Deferred revenues ....................................................... 121.9 201.1 324.3

Other current liabilities ................................................... 13.5 81.1 38.7

Term loan .............................................................. 263.1 81.5 92.5

Financial liability ........................................................ — 0.3 —

Total current liabilities .............................................. 418.9 462.8 526.9

Non-current liabilities

Lease liability ........................................................... — 4.3 3.3

Provisions .............................................................. 0.2 1.6 1.2

Deferred revenues ....................................................... 15.1 30.0 54.5

Term loan .............................................................. — 1,476.5 1,688.8

Financial liability ........................................................ 0.5 — 3.2

Other non-current liabilities ................................................ — 0.9 2.2

Deferred tax liability ..................................................... 46.4 106.8 78.3

Total non-current liabilities .......................................... 62.2 1,620.1 1,831.5

Shareholders’ equity

Share capital ............................................................ 565.3 565.3 371.7

Share premium, statutory and other reserves ................................... 70.7 73.1 3.3

Translation differences ................................................... — 2.9 1.3

Retained earnings ........................................................ 57.9 82.5 57.9

Equity attributable to equity holders of the parent ........................... 693.9 723.8 434.2

Non-controlling interest ................................................... 0.4 0.7 0.9

Total shareholders’ equity ........................................... 694.3 724.5 435.1

Total shareholders’ equity and liabilities ................................... 1,175.4 2,807.4 2,793.5

Consolidated Cash Flow Data

Group

Year ended 31 December

2015 2016 2017

(in $ millions)

Net cash flows from operating activities ...................................... 202.3 224.6 306.5

Net cash used in investing activities .......................................... (30.5) (1,250.0) (173.8)

Net cash used in financing activities ......................................... (154.3) 1,124.9 (193.7)

Cash and cash equivalents at end of period .................................. 141.2 240.7 176.3

Certain significant changes to the Group’s financial condition and results of operations occurred

during the years ended 31 December 2015, 2016 and 2017, respectively, which are set out below.

The Group’s Revenues increased by $312.2 million, or 92%, from $340.7 million in 2016 to

$652.9 million in 2017, and by $89.7 million, or 36%, from $251.0 million in 2015 to $340.7 million

in 2016. The Group’s Adjusted Revenue increased by $358.0 million, or 85%, from $421.5 million in

2016 to $779.5 million in 2017, and by $126.8 million, or 43%, from $294.7 million in 2015 to

$421.5 million in 2017. On a like-for-like basis, with 2017 including full year Piriform results,

Adjusted Revenue for the Group for the year ended 31 December 2016 as compared to the year ended

31 December 2017 increased (by $43.0 million, from $736.5 million in 2016 to $779.5 million in

2017). Excluding the impact of the AVG Acquisition in the fourth quarter of 2016, Adjusted Revenue

for the Group for the year ended 31 December 2015 as compared to the year ended 31 December 2016

increased on a like-for-like basis (by 8% or $23.2 million, from $294.7 million in 2015 to

$317.9 million in 2016). Excluding Piriform and Discontinued Business, on a like-for-like basis, the

Group’s Adjusted Revenue increased 7% from 2016 to 2017, and 8% from 2015 to 2016.

Net Income decreased by $58.4 million, from $24.6 million in 2016 to a net loss of $33.8 million in

2017, and decreased by $46.9 million, from $71.5 million in 2015 to $24.6 million in 2016. Adjusted

Net Income increased by $84.6 million, or 53%, from $159.5 million in 2016 to $244.1 million in

2017 and increased by $29.0 million, or 22%, from $130.5 million in 2015 to $159.5 million in 2016.

On a like-for-like basis, with 2017 including Piriform results from date of acquisition, Adjusted Net

Income for the Group for the year ended 31 December 2016 as compared to the year ended

31 December 2017 increased (by $46.6 million, from $197.5 million in 2016 to $244.1 million in

2017), due to the factors described above. Excluding the impact of the AVG Acquisition, Adjusted

Net Income for the Group for the year ended 31 December 2015 as compared to the year ended

31 December 2016 decreased on a like-for-like basis (by $11.6 million, from $130.5 million in 2015

to $118.9 million in 2016).

There has been no significant change in the financial position or results of operations of the Group

since 31 December 2017, the date to which the last audited consolidated financial information of the

Group was prepared.

AVG

Consolidated Income Statement Data

AVG

Year ended 31 December

2015 2016

(in $ millions)

Revenues .............................................................. 425.8 418.6

Cost of revenues ........................................................ (64.4) (85.8)

Gross profit ........................................................... 361.4 332.8

Operating costs:

Sales and marketing .................................................. (126.6) (123.2)

Research and development ............................................ (88.4) (91.5)

General and administrative ............................................ (69.1) (118.3)

Total operating costs ..................................................... (284.1) (333.0)

Operating profit (loss) ................................................... 77.3 (0.2)

Analysed as:

Underlying Operating Profit ............................................. 132.6 131.6

Share-based payment ..................................................... (15.3) (14.8)

Exceptional items ....................................................... (9.0) (86.9)

Amortisation of acquisition intangible items .................................. (31.0) (30.1)

Finance income and expenses, net .......................................... (16.7) (24.1)

Profit (loss) before income tax ............................................. 60.6 (24.3)

Income tax ......................................................... (11.4) (4.1)

Profit (loss) for the financial year ......................................... 49.2 (28.4)

Consolidated Balance Sheet Data

AVG

As at 31 December

2015 2016

(in $ millions)

Assets

Current assets

Cash and cash equivalents ................................................... 123.8 33.2

Trade and other receivables .................................................. 44.0 38.0

Prepaid expenses .......................................................... 16.6 17.6

Inventory ................................................................ 1.0 —

Tax receivables ........................................................... 8.7 2.1

Other financial assets ....................................................... 27.3 1.7

Total current assets ................................................... 221.4 92.6

Non-current assets

Property, plant and equipment ................................................ 23.5 23.9

Intangible assets ........................................................... 105.7 76.3

Deferred tax asset .......................................................... 36.6 43.1

Other financial assets ....................................................... 0.8 3.1

Prepaid expenses .......................................................... 4.0 2.8

Goodwill ................................................................ 296.8 297.1

Total non-current assets ............................................... 467.4 446.3

Total assets .............................................................. 688.8 538.9

Shareholders’ equity and liabilities

Current liabilities

Trade and other payables .................................................... 33.4 25.6

Lease liability ............................................................. 1.8 1.6

Provisions ................................................................ 4.1 26.9

Income tax liability ........................................................ 1.1 6.0

Deferred revenues ......................................................... 167.1 157.4

Other current liabilities ..................................................... 90.3 22.4

Term loan ................................................................ 2.3 38.5

Financial liability .......................................................... 1.8 0.1

Total current liabilities ................................................ 301.9 278.5

Non-current liabilities

Lease liability ............................................................. 4.1 4.3

Provisions ................................................................ 1.0 0.9

Deferred revenues ......................................................... 33.0 29.9

Term loan ................................................................ 212.8 —

Financial liability .......................................................... 2.3 —

Other non-current liabilities .................................................. 5.4 2.7

Deferred tax liability ....................................................... 28.7 27.3

Total non-current liabilities ............................................ 287.3 65.1

Shareholders’ equity

Share capital .............................................................. 0.7 0.7

Share premium, statutory and other reserves ..................................... (49.9) 2.6

Treasury shares ........................................................... (62.8) —

Translation differences ..................................................... (14.2) (4.2)

Retained earnings .......................................................... 225.8 196.2

Equity attributable to equity holders of the parent ............................. 99.6 195.3

Total shareholders’ equity and liabilities ..................................... 688.8 538.9

Consolidated Cash Flow Data

AVG

Year ended 31 December

2015 2016

(in $ millions)

Net cash flows from operating activities ...................................... 114.9 101.1

Net cash used in investing activities ......................................... (82.4) (46.1)

Net cash used in financing activities ......................................... (47.4) (143.0)

Cash and cash equivalents at end of period ................................. 123.8 33.2

Certain significant changes to AVG’s financial condition and results of operations occurred during the

years ended 31 December 2015 and 2016, respectively, which are set out below.

AVG’s Revenue decreased by $7.2 million, or 2%, from $425.8 million for the year ended

31 December 2015 to $418.6 million for the year ended 31 December 2016. AVG’s Adjusted

Revenue decreased by 2% from $425.8 million for the year ended 31 December 2015 to

$418.6 million for the year ended 31 December 2016.

AVG’s Net Income decreased by $77.6 million, or 158%, from $49.2 million for the year ended

31 December 2015 to a net loss of $28.4 million for the year ended 31 December 2016. AVG’s

Adjusted Net Income decreased by $8.3 million, or 10%, from $86.9 million in 2015 to $78.6 million

in 2016.

No audited consolidated financial information of AVG has been prepared since 31 December 2016,

and all financial reporting presented in this Prospectus is consolidated at the level of the Group from

1 January 2017 onward.

B.8 Key pro forma financial information

The unaudited pro forma statement of net assets set out below has been prepared to illustrate the

effects of the Global Offer and the repayment and repricing of its existing credit agreement on the

consolidated net assets of the Group as at 31 December 2017 as if they had taken place on that date.

The unaudited pro forma net assets statement is based on the audited consolidated net assets of the

Group as at 31 December 2017 and has been prepared in a manner consistent with the accounting

policies adopted by the Group in preparing its historical financial information for the period ending 31

December 2017.

This unaudited pro forma information has been prepared for illustrative purposes only and, by its

nature, addresses a hypothetical situation and therefore does not represent the Group’s actual financial

position or results, nor is it indicative of results that may or may not be achieved in the future. The

unaudited pro forma statement of net assets is compiled on the basis set out in the notes below and in

accordance with the requirements of Annex II of the Prospectus Directive Regulation. The unaudited

pro forma statement of net assets does not constitute financial statements within the meaning of

section 434 of the Act.

Adjustments

As at

31 December

2017

(1)

Net proceeds

of the Global

Offer

(2)

Repayment

and

Repricing of

its Existing

Credit

Agreement

(3)

Unaudited

pro forma

total

(4)

Current assets ................................... 314.3 170.0 (303.1) 181.2

Non-current assets ............................... 2,479.2 — — 2,479.2

Total assets ..................................... 2,793.5 170.0 (303.1) 2,660.4

Current liabilities ................................ 526.9 — (16.5) 510.4

Non-current liabilities 1,831.5 — (286.6) 1,544.9

Total liabilities .................................. 2,358.4 — (303.1) 2,055.3

Net assets ....................................... 435.1 170.0 — 605.1

Notes

(1) The net assets of the Group as at 31 December 2017 have been extracted without material adjustment from the historical

financial information set out in Part 11— “Historical Financial Information”.

(2) The adjustment reflects the receipt by the Group of the net proceeds of the Global Offer of £125.3 million based on

58,977,478 Ordinary Shares being issued by the Company at an Offer Price of 250 pence (gross proceeds of £147.4 million

($200.0 million) less estimated expenses payable by the Company of $30.0 million. The estimated costs of the Global

Offer are the estimated costs and fees incurred in respect of the Global Offer, relating principally to investment banking,

underwriting commissions, legal and accounting fees. The gross and net proceeds from the Global Offer have been

converted from £ to $ at the exchange rate of £1.00000 per $1.35645, being the Thomson Reuters hourly fix rate published

at 12:05pm (London time) on 9 May 2018.

(3) The Company intends to use the net proceeds of the Global Offer, as set out in Part 13 “Details of the Global Offer”, along

with existing cash and cash equivalents to repay $300.0 million of the dollar term loan as part of the repricing of its credit

agreement. The Company expects to pay and capitalise $3.1 million of fees in connection with the repricing agreement.

(4) No adjustment has been made to reflect any change in the trading performance of the Group since 31 December 2017, nor

of any other event, save as disclosed above.

B.9 Profit forecast

Not applicable. There is no profit forecast or estimate.

B.10 Description of the nature of any qualifications in the audit report on the historical financial

information

Not applicable. There are no qualifications to the accountant’s report on the Group’s historical

financial information or to the accountant’s report on AVG’s historical financial information.

B.11 Insufficient working capital

Not applicable. In the opinion of the Company, taking into account the net underwritten proceeds

receivable by the Company from the Global Offer and the bank and other facilities available to the

Group, the Group has sufficient working capital for its present requirements, that is for at least the

next 12 months following the date of this Prospectus.

Section C—Securities

C.1 Type and class of securities

Pursuant to the Global Offer, the Company intends to issue 58,977,478 new Shares (the “New

Shares”), raising proceeds of approximately £125.3 million, net of base underwriting commissions

and other estimated fees and expenses of approximately £22.1 million. The New Shares will represent

approximately 6.2% of the expected issued ordinary share capital of the Company immediately

following Admission.

Approximately 181,815,424 existing Shares (the “Existing Shares”) are expected to be sold by the

Selling Shareholders. In addition, a further 36,118,935 Shares are being made available by the Over-

allotment Shareholders (the “Over-allotment Shares”) pursuant to the Over-allotment Option.

When admitted to trading, the Shares will be registered with ISIN GB00BDD85M81 and SEDOL

number BDD85M8.

C.2 Currency

United Kingdom pounds sterling.

C.3 Number of securities to be issued

As at the date of this Prospectus, assuming that the Reorganisation has been completed in full, the

issued share capital of the Company is £89.4 million, comprising 893,661,707 Shares of 10 pence

each (all of which were fully paid or credited as fully paid). Immediately following completion of the

Global Offer, the issued share capital of the Company is expected to be £95.3 million, comprising

952,639,185 Shares of 10 pence each (all of which will be fully paid or credited as fully paid).

C.4 Description of the rights attaching to the securities

The rights attaching to the Shares will be uniform in all respects and they will form a single class for

all purposes, including with respect to voting and for all dividends and other distributions thereafter

declared, made or paid on the ordinary share capital of the Company.

On a show of hands, every Shareholder who is present in person shall have one vote and, on a poll,

every Shareholder present in person or by proxy shall have one vote per Share.

Except as provided by the rights and restrictions attached to any class of shares, Shareholders will

under general law be entitled to participate in any surplus assets in a winding up in proportion to their

shareholdings.

C.5 Restrictions on the free transferability of the securities

There are no restrictions on the free transferability of the Shares.

C.6 Admission

Application has been made to the FCA for all of the Shares, issued and to be issued, to be admitted to

the premium listing segment of the Official List of the FCA and to the London Stock Exchange for

such Shares to be admitted to trading on the London Stock Exchange’s main market for listed

securities.

C.7 Dividend policy

The Group expects to adopt a dividend policy that focuses on providing significant returns to

shareholders, whilst also ensuring that the Group retains the flexibility to continue to deploy capital

towards profitable growth. There can be no guarantees that the Company will pay future dividends.

The determination of the level of future dividends, if any, will depend upon the Group’s results of

operations, financial condition, capital requirements, contractual restrictions, business prospects and

any other factors the Board may deem relevant. The Group currently expects to maintain dividend

payments of approximately 40% of levered free cash flow in the short to medium term.

Dividend payments will be made on an approximate one-third:two-thirds split for interim and final

dividends, respectively. The Group intends to commence dividend payments with a final dividend

payment in respect of 2018, which will be payable in the first half of 2019.

The Group may revise its dividend policy from time to time.

Section D—Risks

D.1 Key information on the key risks specific to the issuer and its industry

The occurrence of any of the key risks below would have a material adverse effect on the Group’s

business, results of operations, financial condition and/or prospects:

• The Group is subject to risks related to revenue concentration in the consumer desktop market,

and it may be unable to sufficiently diversify its offerings and monetise its user base to increase

or maintain its revenues.

• Actual, possible or perceived defects, disruptions or vulnerabilities in the Group’s products,

solutions or cloud infrastructure, including risks from security attacks, may lead to negative

publicity, damage to its reputation, and cause a decline in revenues and profits.

• If computing platforms make it harder or impossible for users to install the Group’s security

solutions, or for the Group to communicate with or distribute products to its users, or for the

Group to retrieve information that the Group believes it needs, this will restrict the Group’s

ability to acquire new users, retain existing ones or distribute additional products to existing

users.

• If the Group fails to maintain its user engagement and continue to attract new users, it may be

unable to maintain its scale and improve the quality of its user base on a cost-effective basis, if at

all, and the Group’s revenues and profits may not increase even if it continues to gain additional

users.

• The Group derives a material portion of its revenues from short-term contracts and runs the risk

that the parties to these contracts will not renew them.

• The Group operates in a highly competitive environment and may not be able to compete

successfully.

• The Group depends on search engines, download sites and app stores to attract a significant

percentage of its users and if those search engines, download sites or app stores change their

rankings, it could adversely affect the Group’s ability to attract new users.

• The Group may be unable to successfully integrate its recently acquired companies or any

business it may acquire in the future, and those acquisitions may fail to provide the benefits the

Group had anticipated.

• The Group’s current operations are international in scope and it plans further geographic

expansion, creating a variety of operational challenges.

• If the Group fails to keep up with rapid changes in technologies and the evolution of malware

and virus threats, its business may be materially and adversely affected.

D.3 Key information on the key risks specific to the securities

There is no existing market for the Shares and an active trading market for the Shares may not

develop or be sustained. Moreover, even if a market develops, Shares may be subject to market price

volatility and the market price of the Shares may decline disproportionately in response to

developments that are unrelated to the Group’s operating performance, or as a result of sales of

substantial amounts of such Shares in the public markets, for example following the expiry of the

lock-up period, or the issuance of additional Shares in the future, and shareholders could earn a

negative or no return on, or otherwise experience a dilution, of their investment in the Company.

In addition, each of Sybil and the Founders will retain a significant interest in and will continue to

exert substantial influence over the Group following the Global Offer and their respective interests

may differ from or conflict with those of other shareholders.

Finally, shareholders in the United States and other jurisdictions may not be able to participate in

future equity offerings.

Section E—Global Offer

E.1 Net proceeds and costs of the offer

Pursuant to the Global Offer, the Company intends to issue 58,977,478 New Shares, raising proceeds

of approximately £125.3 million, net of base underwriting commissions and other estimated fees and

expenses of approximately £22.1 million.

Pursuant to the Global Offer, the Major Shareholders intend to sell 151,755,238 Existing Shares and

Equiniti Financial Services Limited (acting as agent for and on behalf of the other Selling

Shareholders under the Deeds of Election) expects to sell 30,060,186 Existing Shares, resulting in

proceeds to the Selling Shareholders of approximately £454.5 million.

The fees and expenses to be borne by the Company in connection with Admission, including the

FCA’s fees, professional fees and expenses and the costs of printing and distribution of documents are

estimated to amount to approximately £22.1 million (assuming that no Over-allotment Shares are

acquired pursuant to the Over-allotment Option).

E.2a Reasons for the offer and use of proceeds

The Company intends to use the net proceeds from the issue of the New Shares to redeem the

Redeemable Shares (as defined in Part 14), reduce the Group’s overall indebtedness and repay debt on

its outstanding dollar term loan facility under a credit agreement dated 30 September 2016, which is

expected to provide the Company with greater financial flexibility to drive the future growth of the

business.

The Group believes that the Global Offer will:

• further increase the Group’s profile, brand recognition and credibility with its users, suppliers

and employees;

• assist in recruiting, retaining and incentivising key management and employees; and

• provide the Selling Shareholders with a partial realisation of their investment in the Group.

E.3 Terms and conditions of the offer

The Global Offer consists of an institutional offer only. In the Global Offer, Shares will be offered

(i) to certain institutional investors in the United Kingdom and elsewhere outside the United States

and (ii) in the United States only to QIBs in reliance on Rule 144A or pursuant to another exemption

from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act.

The Shares allocated under the Global Offer have been fully underwritten, subject to certain

conditions, by the Underwriters. Allocations under the Global Offer will be determined at the sole

discretion of the Company and the Selling Shareholders after having received a recommendation from

the Joint Global Co-ordinators. All Shares issued or sold pursuant to the Global Offer will be issued

or sold, payable in full, at the Offer Price.

Conditional dealings in the Shares are expected to commence on the London Stock Exchange at

8.00 a.m. on 10 May 2018. The earliest date for such settlement of such dealings will be 15 May

2018. It is expected that Admission will become effective, and that unconditional dealings in the

Shares will commence on the London Stock Exchange, at 8.00 a.m. (London time) on 15 May 2018.

Settlement of dealings from that date will be on a two-trading day rolling basis.

E.4 Material interests

There are no interests, including conflicting interests, which are material to the Global Offer, other

than those disclosed in B.6 above.

E.5 Selling Shareholders and Lock-up

Expected interests of the Selling Shareholders immediately prior to and following Admission

The indicative interests in Shares of the Selling Shareholders immediately prior to Admission,

together with the number of Shares to be sold pursuant to the offer (assuming no exercise of the Over-

Allotment Option) and their interests in Shares immediately following Admission, are set out in the

table below.

Immediately prior to

Admission

Shares to be sold

pursuant to the Global Offer

Immediately following

Admission

Shareholders

Number of

Percentage

of issued

capital

Number of

Percentage

of issued

share capital

Number of

Percentage

of issued

capital

Sybil Holdings S.à r.l. .......... 270,378,756 30.3% 54,075,754 6.1% 216,303,002 22.7%

Pavel Baudisˇ

(1)

............... 317,696,900 35.6% 60,514,735 6.8% 257,182,165 27.0%

Eduard Kucˇera

(2)

.............. 123,275,331 13.8% 23,481,419 2.6% 99,793,912 10.5%

Summit Partners

(3)

............. 68,416,648 7.7% 13,683,330 1.5% 54,733,318 5.7%

Other

(4)

..................... 113,894,072 12.7% 30,060,186 3.4% 83,833,886 8.8%

Notes:

(1) Immediately prior to Admission, Pavel Baudisˇ will hold Shares in the Company directly and through PaBa Software s.r.o.

(2) Immediately prior to Admission, Eduard Kucˇera will hold Shares in the Company directly and through Pratincole

Investments Limited.

(3) Immediately prior to Admission, Summit Partners will hold Shares in the Company through its funds Leia 1 S.a` r.l,

Summit Investors I, LLC and Summit Investors I (UK), L.P.

(4) Equiniti Financial Services Limited will sell as nominee for the other Selling Shareholders, being the beneficial owners of

such Existing Shares. The business address of Equiniti Financial Services is Aspect House, Spencer Road, Lancing

Business Park, West Sussex BN99 6DA, United Kingdom.

Lock-up Arrangements

Pursuant to the Underwriting Agreement, the Company has agreed that, subject to certain exceptions,

during the period of 180 days from the date of Admission, it will not, without the prior written

consent of the Joint Global Co-ordinators, issue, offer, sell or contract to sell, or otherwise dispose of,

directly or indirectly, or announce an offer of any Shares (or any interest therein or in respect thereof)

or enter into any transaction with the same economic effect as any of the foregoing.

Pursuant to the Underwriting Agreement and the Deeds of Election, the Selling Shareholders the

Directors and certain members of the Company’s management team have agreed that, subject to

certain exceptions, during the period of 180 days in respect of the Major Shareholders, and 360 days

in respect of the other Directors and other Selling Shareholders, they will not, without the prior

written consent of the Joint Global Co-ordinators or the majority of the Underwriters, offer, sell or

contract to sell, or otherwise dispose of, directly or indirectly, or announce an offer of any Shares (or

any interest therein in respect thereof) or enter into any transaction with the same economic effect as

any of the foregoing.

Certain other shareholders who are not party to the Underwriting Agreement have separately agreed,

subject to certain exceptions, during the period of 360 days from the date of Admission, they will not,

without the prior written consent of the Joint Global Co-ordinators or the majority of the

Underwriters, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce

an offer of any Shares (or any interest therein in respect thereof) or enter into any transaction with the

same economic effect as any of the foregoing.

E.6 Dilution

Pursuant to the Global Offer, existing Shareholders will experience a 6.6% dilution from the issue of

58,977,478 New Shares.

E.7 Expenses charged to the investor

Not applicable. No expenses will be charged by the Company or the Selling Shareholders to any

investor who subscribes for or purchases Shares pursuant to the Global Offer.

PART 1

RISK FACTORS

Any investment in the Shares is subject to a number of risks. Prior to investing in the Shares, prospective

investors should carefully consider risk factors associated with any investment in the Shares, the Group’s

business and the industry in which it operates, together with all other information contained in this Prospectus

including, in particular, the risk factors described below.

Prospective investors should note that the risks relating to the Group, its industry and the Shares summarised in

the section of this Prospectus headed “Summary” are the risks that the Directors and the Company believe to be

the most essential to an assessment by a prospective investor of whether to consider an investment in the Shares.

However, as the risks which the Group faces relate to events and depend on circumstances that may or may not

occur in the future, prospective investors should consider not only the information on the key risks summarised in

the section of this Prospectus headed “Summary” but also, among other things, the risks and uncertainties

described below.

The risk factors described below are not an exhaustive list or explanation of all risks which investors may face

when making an investment in the Shares and investors should use them as guidance only. The risk factors

detailed below and additional risks and uncertainties relating to the Group that are not currently known to the

Group, or that the Group currently deems immaterial, may individually or cumulatively also have a material

adverse effect on the Group’s business, results of operations, financial condition, prospects and/or ability to pay

dividends and, if any such risk should occur, the price of the Shares may decline and investors could lose all or

part of their investment. Prospective investors should consider carefully whether an investment in the Shares is

suitable for them in the light of the information in this Prospectus and their personal circumstances.

Risks relating to the Group’s business and industry

1. The Group is subject to risks related to revenue concentration in the consumer desktop market, and

it may be unable to sufficiently diversify its offerings and monetise its user base to increase or

maintain its revenues.

The Group derives a substantial portion of its revenues from consumer antivirus desktop products and expects

these products to continue to account for a large percentage of its revenues in the near term. The Group derives a

significant portion of its revenues from converting its free antivirus users to its paid antivirus products and selling

paid users (“customers”) of its paid antivirus products to a higher tier of paid antivirus software (collectively,

“up-selling”). The Group generates the remainder of its revenues by selling adjacent (non-antivirus) products to

any existing free user or customer (“cross-selling”), by indirect monetisation channels, including through

advertising and third party software distribution agreements, and through the sale of products to the small and

medium business (“SMB”) market. If the Group’s installed base decreases significantly, or consumer demand

shifts away from consumer antivirus desktop products or desktop computers generally, and the Group is unable

to correspondingly grow in sales of adjacent products or otherwise increase the direct monetisation of its user

base, the Group’s revenues could significantly reduce and its business would be harmed. If the Group is less

successful in either directly or indirectly monetising its user base than it has been historically, it will harm the

Group’s business.

The Group expects the consumer desktop antivirus market to be $2.6 billion in 2021. If the market experiences

low growth or declines and the Group is unable to address the market for other security products or otherwise

replace this revenue by monetising its users in other ways, it will harm the Group’s business, results of operations

and financial condition and affect its ability to pay dividends.

2. Actual, possible or perceived defects, disruptions or vulnerabilities in the Group’s products, solutions

or cloud infrastructure, including risks from security attacks, may lead to negative publicity, damage

to its reputation, and/or cause a decline in revenues and profits.

Defects. The Group’s software is inherently complex and may contain material defects, errors or vulnerabilities

that may cause it to fail to perform in accordance with user expectations. As may happen to any vendor of

software, end users may find errors, failures and bugs in some new offerings after their initial distribution,

particularly given that end users may deploy such products in computing environments with operating systems,

software and/or hardware different than those in which the Group tests products before release. In addition,

certain of the Group’s products operate in conjunction with third party systems which may contain vulnerabilities

that the Group fails to remedy. These defects may cause the Group’s products or services to be vulnerable to

security attacks, cause them to fail to help secure networks, temporarily interrupt users’ networking traffic, or fail

to detect or prevent viruses, worms or similar threats. The costs incurred in analysing, correcting or eliminating

any material defects or errors in software may be substantial. Furthermore, the Group may not be able to correct

any defects or errors or address vulnerabilities promptly, or at all, causing significant harm to its reputation and

competitive position.

Attacks. The Group has been the target of hackers’ intentional spam attacks on its email addresses and denial of

service and other sophisticated attacks on its websites, mail system, network cloud infrastructure and firewalls.

For example, the Group’s optimisation product CCleaner was the subject of a malware attack in 2017. Although

the attack occurred before the Group completed the acquisition of Piriform, which owns CCleaner, the updated

(and infected) version of CCleaner was released following the acquisition, affecting approximately two million

of the Group’s users. Although the Group has found no evidence that the attack harmed any of its users, in the

future the Group may not be able to prevent or mitigate such attacks on its products. The Group believes that

security companies are particularly attractive targets for such attacks, and the impact of any attack would be more

serious than in other industries, given the negative optics of a security provider being itself insecure. Such attacks

may result in security breaches, disruption or damage to users’ computers or networks and theft of confidential

information or other negative consequences. This may result in negative publicity, damage to the Group’s brands,

withdrawals from contracts, loss of or delay in market acceptance of the Group’s products, loss of competitive

position or claims by users or others against the Group. Experienced computer programmers, including

programmers on the Group’s staff, could also attempt to exploit weaknesses in the Group’s computer systems or

those of the Group’s third party hosting providers, or attempt to penetrate the Group’s network security or the

security of solutions, with the intention of misappropriating proprietary information or cause industrial sabotage.

Because the techniques used by such computer programmers to access or sabotage the Group’s networks change

frequently and may not be recognised until launched against a target, the Group may be unable to anticipate these

attacks. Even if a security vulnerability and its remedy have been made public, the Group may not be able to put

the fix in place in advance of the attack. The Group may roll out upgrades to fix vulnerabilities over an extended

period of time in order to minimise service disruption. While the Group deploys sophisticated physical and

electronic security protections and policies, procedures and protocols to protect against attacks and to help

identify suspicious activity, no system or combination of systems can provide a guarantee of protection. If these

intentionally disruptive efforts are, or the market perceives them to be, successful, the Group may face legal

liability and these efforts could adversely affect the Group’s activities or harm its reputation, brand and future

sales.

False positives. Furthermore, security software products and solutions may falsely identify programs or websites

as malicious or otherwise undesirable (i.e., false positives). These “false positives” may impair the perceived

reliability of the Group’s services and may therefore harm its market reputation. Also, the Group’s anti-spam and

anti-spyware services may falsely identify emails or programs as unwanted spam or potentially unwanted

programs, or alternatively fail to properly identify unwanted emails or programs, particularly as hackers often

design spam emails or spyware to circumvent internet security software. Parties whose programs are incorrectly

blocked by these products or solutions, or whose websites are incorrectly identified as unsafe or malicious, may

seek redress against the Group for labelling them as malicious and interfering with their businesses. In addition,

false identification of emails or programs as unwanted spam or potentially unwanted software may reduce the

popularity and adoption of the Group’s services. Moreover, these false positives may render a device’s entire

operating system unusable and disrupt or damage users’ devices. The Group and other providers of security

software products have experienced problems with false positives in the past that have impacted large numbers of

users. Alleviating any of these problems could require significant expenditures of capital and other resources and

could cause interruptions, delays, or cessation of product licensing, which could result in the loss of both existing

and potential users and could materially and adversely affect the Group’s results of operations.

Any actual, possible or perceived defects, errors or vulnerabilities may cause interruptions to the availability of

software and result in lost or delayed market acceptance and sales, or may require the Group to issue refunds to

users. Security products are critical to the businesses of many users, which may make them more sensitive to

defects in such products than to defects in other types of software. The Group could face claims for product

liability, tort, breach of warranty or damages caused by faulty installation of, or defects in, its products. In the

event of claims, provisions in contracts relating to warranty disclaimers and liability limitations may be

unenforceable. Defending a lawsuit, regardless of its merit, could be costly and divert management attention.

Defects, errors and vulnerabilities may also lead to the loss of existing or potential users, diversion of

development resources, or increasing services, warranty, product replacement and product liability insurance

costs, and may damage the Group’s reputation. The Group’s insurance coverage may be inadequate or future

coverage may be unavailable on acceptable terms or at all.

3. If computing platforms make it harder or impossible for users to install the Group’s security

solutions, or for the Group to communicate with or distribute products to its users, or for the Group

to retrieve information that the Group believes it needs, this will restrict the Group’s ability to

acquire new users, retain existing ones or distribute additional products to existing users.

Platform vendors, notably Microsoft with Windows but also Google with Android and Apple with MacOS and

iOS, could restrict third party antivirus software’s access to their platforms. The Group’s products are designed to

interface with the existing computing platforms. As new versions of platforms are introduced that include

antivirus software offered by the platform vendors themselves, there is a risk that such platform vendors may

close their platforms to third party antivirus software such as the Group’s, or make it more difficult to install and

use such third party antivirus software. For example, the Windows operating system includes built-in antivirus

protection through Windows Defender. If in the future, Microsoft were to close the Windows platform to third

party antivirus software, to restrict the ability of third party antivirus providers to access the platform or

communicate with the Group’s common users, or to promote Windows Defender aggressively while restricting

the ability of third party antivirus software providers to do the same, the Group’s competitive position and

business prospects would be harmed.

In addition, as the Group’s products and service offerings expand, there is a risk that platform vendors will regard

one or other of the Group’s offerings as a competitive threat and will impose restrictions on the Group’s ability to

offer those products or services. For example, if Google prevents software application providers from being able

to use mobile data from Android phones, it would limit the Group’s ability to continue to offer and improve its

mobile products and could impact the Group’s direct and indirect monetisation outcomes. If either Microsoft or

Google were to impose further restrictions on the Group’s ability to offer additional products or services to its

existing users, or to obtain vital information that the Group believes it needs to improve its products and services,

it may harm the Group’s business.

4. If the Group fails to maintain its user engagement and continue to attract new users, it may be

unable to maintain its scale and improve the quality of its user base on a cost-effective basis, if at all,

and the Group’s revenues and profits may not increase even if it continues to gain additional users.

Consumer software has greater user turnover than software sold to enterprises, because the cost to switch

providers is typically lower for consumer products than for businesses. In addition, users replace their computers

every few years and may not reinstall the software on their new computer or may delay doing so. A significant

portion of the Group’s users stop using its products or switch to competing products in any given period. To

continue to maintain its user base, the Group must retain existing users to the extent possible and continuously

attract new users to replace those who exit the Group’s user base. Free antivirus products protected

approximately 75% of personal computers (“PCs”) in the year ended 31 December 2017. As the market for PC

antivirus products, and specifically for free PC antivirus products, becomes more saturated, competition for users

will continue to increase. Any failure to maintain the Group’s user base could impact the Group’s direct and

indirect monetisation outcomes, and a significant loss of users could also impact the Group’s ability to monitor

and detect new malware threats given that each user acts as a sensor for the network.

The Group is dependent on the acquisition of new users to replace lost users, and its ability to attract new users

depends on the perceived value of its products and online services versus that of the premium and free products

and online services offered by competitors. The Group relies heavily on viral marketing as a strategy to attract

new users to its solutions. This viral marketing ensures low user acquisition costs. If the Group’s current

marketing strategy is not successful or becomes less effective, or if marketing costs were to significantly

increase, it may not be able to maintain or expand its user base on a cost-effective basis or at all.

Numerous factors could adversely impact the growth of revenues and profits even if the Group continues to gain

additional users. In particular, the Group can provide no assurance that revenues will grow or remain at current

levels even if it continues to gain new users. If the Group needs to expend additional resources in order to

maintain existing users, it could have a significant impact on the Group’s business and financial condition. The

failure to maintain a high number of users would also affect the Group’s ability to indirectly monetise its user

base through, for example, distribution agreements or advertising.

5. The Group derives a material portion of its revenues from short-term contracts and runs the risk

that the parties to these contracts will not renew them.

The Group contracts with many partners in order to expand its service offerings and to receive additional revenue

streams. Certain of these agreements are short-term contracts put in place with an expectation that they will be

regularly extended. This arrangement allows the Group to maintain flexibility and negotiating power on pricing

and terms, but also introduces a risk that the parties to these agreements will not agree to extend them as

regularly as anticipated or at all.

One such short-term agreement is a promotion and distribution agreement Avast entered into with Google, which

originally became effective as of 1 July 2012 (to replace an original agreement entered into on 1 September 2009

and a subsequent agreement entered into on 1 December 2010) and (following several amendments to extend the

term by short-term intervals) terminates on 31 March 2020, or earlier if the Group reaches a pre-determined limit

on payments in accordance with the terms of the contract. The Group has a similar promotion and distribution

agreement which Piriform entered into with Google, which became effective as of 1 April 2017 and will

terminate on 31 March 2019, or earlier if a pre-determined limit on payments is reached, unless it is renewed or

amended. Under these agreements, the Group receives fees in connection with the Group’s offers to users of the

Google Chrome browser and Google Toolbar. The Group derived material billings from these promotion and

distribution agreements with Google for the year ended 31 December 2017. If Google decides not to pursue

renewal of these promotion and distribution agreements, or if Google seeks via any renewal discussion to impose

restrictions on the Group’s products or services or other conditions which are unacceptable to the Group, the

Group’s business and results of operations could be adversely affected unless it is able to either replace the

contract with another provider or develop its own alternative products in time to offset any lost revenue.

The Group depends on the renewal of one to two year contracts in other parts of its business, including, for

example, in its Location Labs business, where it partners with certain mobile network operators to provide

parental control solutions. One of Location Labs’ mobile network partners has notified the Group that it does not

intend to renew its contract, although there is currently no impact on the Group’s operations as a result of such

non-renewal, as the Group continues to provide the service to existing users, and the Group expects that such

non-renewal will not result in a meaningful loss of revenue. If any of Location Labs’ other partners decide not to

extend their contracts and Location Labs is unable to replace the related revenue with new contracts, it could

adversely affect the Group’s Location Labs business.

6. The Group operates in a highly competitive environment and may not be able to compete

successfully.

The Group has a broad set of product offerings and faces competition from a large set of companies for each of

its different products. The markets for the products offered by the Group are subject to rapid technological

changes and market dynamics. The Group expects that competition will continue to increase in the future, and the

Group may not be able to compete successfully against current or new competitors. In particular, some such

competitors may make acquisitions or enter into agreements or other strategic relationships to offer more

comprehensive products and/or services, and new competitors may enter the market through acquisitions,

agreements or strategic or other such relationships. Further, platform vendors, such as those with operating

systems or browsers, may integrate their own security solutions into their platforms to the exclusion of

competitors or make it more difficult for competitors to attract and retain users.

The Group and other vendors compete on price and functionality at different price points. While the Group has

historically been able to withstand pricing pressure on premium solutions, there can be no assurance that pricing

pressure from competition will not adversely affect subscription revenues, which would have a material adverse

effect on the Group’s business and results of operations. Similarly, across the Group’s markets, competitors may

offer free products perceived to be superior to, or not materially worse than, the Group’s consumer offerings,

causing the Group’s free users and/or customers to switch and shrinking its monetiseable consumer user base if

the Group is not able to differentiate itself.

The Group’s main competitors fall into the following categories:

• PC security competitors (including Windows Defender and Avira, which use a free model; and McAfee,

Symantec and Kaspersky Lab which use a paid model);

• PC utilities competitors (including UniBlue), mobile security and utilities competitors (including Cheetah

Mobile);

• personal VPN competitors (including AnchorFree);

• parental controls and insights competitors (including Net Nanny);

• Smart Home security market competitors (including Luma and Linksys); and

• SMB security market competitors (including Symantec, McAfee and Microsoft).

The Group is also seeing competition emerge from network and cloud-based security vendors such as Cisco.

Some of these competitors have greater brand name recognition and financial resources to devote to the

development, promotion and sale of their products and/or services than the Group does. Microsoft, for example,

has achieved success in the security market through Windows Defender, free but basic malware protection that is

included with, and built into, Windows computers. Similarly, Google could begin to aggressively promote its

own native security solution in Android at the expense of third party solutions. If in the future, this were to

happen, or if any platform provider were to prohibit or impede the inclusion or promotion of third party security

or utility software offerings, it could harm the Group’s competitive position and business prospects. In addition,

other competitors may leverage their greater resources to develop relationships with original equipment

manufacturers (“OEMs”) or operating system vendors, thereby diminishing demand for the Group’s products

and adversely affecting its ability to acquire and retain users.

7. The Group depends on search engines, download sites and app stores to attract a significant

percentage of its users and if those search engines, download sites or app stores change their

rankings, it could adversely affect the Group’s ability to attract new users.

Many users locate the Group’s products and online services and the Group’s websites through search engines,

download sites and app stores. Search engines and app stores typically provide two types of search results—

organic (unpaid) search rankings and paid advertising—and the Group relies on both types to attract new users.

Companies cannot purchase organic rankings, which are determined and displayed based on criteria formulated

by the relevant search engine or app store. Search engines and app stores may revise their algorithms from time

to time in an attempt to optimise their search results. If the search engines, download sites or app stores modify

their algorithms in a manner that reduces the prominence of the Group’s rankings, fewer potential users could

click through to the Group’s websites or view the Group’s products, requiring the Group to resort to more costly

methods of attracting this traffic. Furthermore, the majority of the Group’s traffic from search engines comes

from a single source, Google, and the majority of the Group’s traffic from app stores comes from Google Play.

The concentration of search traffic from a single search engine and a single app store increases the Group’s

vulnerability to potential algorithm modification. The failure to replace any lost traffic could reduce revenue or

require the Group to increase user acquisition costs by, for example, paying for purchased rankings.

8. The Group may be unable to successfully integrate its recently acquired companies or any business

it may acquire in the future, and those acquisitions may fail to provide the benefits the Group had

anticipated.

The Group has acquired other companies and services to expand its technological capabilities, its product breadth

and functionalities, its user base and its geographical presence, and the Group intends to continue to make

acquisitions and investments in the future. In 2016, the Group acquired AVG Technologies N.V. (along with its

subsidiaries as at the date of the acquisition, “AVG”), a leading security software company which developed

business, mobile and PC security software applications on a free and paid basis, similar to the Group. As of the

date of this Prospectus, the integration of AVG into the Group is continuing in line with expectations, with the

closure or reduction of certain redundant offices and the completion of the integration of Mac, VPN and mobile

product offerings, among others. In 2017, the Group acquired Piriform Group Limited (along with its subsidiaries

as at the date of the acquisition, “Piriform”), the leading provider of device performance optimisation software

including its flagship product, CCleaner, to expand the Group’s product offerings in the PC and smartphone

optimisation market. As of the date of this Prospectus, the integration of Piriform into the Group is continuing,

with the integration of support functions in progress and the full implementation of cross-sell offerings of Avast

products during the installation process for CCleaner. Although the Group has a successful track record of

integration, there is no guarantee that the Group will be able to successfully integrate any business it may acquire

in the future or that the integration of AVG and Piriform will continue to be successful. The integration of AVG,

Piriform and other businesses and their respective operations, technologies and products involves the incurrence

of acquisition costs and may expose the Group to a number of risks. These include unanticipated liabilities and

tax liabilities, operating difficulties and expenditures associated with the assimilation and retention of employees

of the acquired business, acquisition legal contingencies, risks related to maintaining procedures, controls and

quality standards and other risks and difficulties. The Group may not be able to achieve the anticipated benefits

from any acquisition or investment and the consideration paid for an acquisition or investment may also affect

financial results. Such acquisitions and investments could divert management’s time and focus from operating

the business and divert other resources needed in other parts of the business. The financing of acquisitions or

investments in other companies may require the Group to use a substantial portion of its available cash; raise

debt, which would increase interest expense; or to issue shares or other rights to purchase shares, which may

result in dilution to existing shareholders and decrease the Group’s earnings per share. Moreover, acquisitions

may result in write-offs and restructuring charges as well as in creation of goodwill and other intangible assets

that are subject to regular impairment testing, which could result in future impairment charges. All of these

factors could adversely affect the Group’s business, results of operations and financial condition.

Even if the Group obtains indemnification from the seller of an acquired business, the indemnification may be

insufficient or unavailable for the particular liabilities incurred. Any inability to integrate completed

combinations or acquisitions in an efficient and timely manner could have an adverse impact on the Group’s

results of operations. In addition, the Group may not recognise the expected benefits in connection with a future

acquisition. If the Group is not successful in completing acquisitions that it pursues in the future, the Group may

incur substantial expenses and devote significant management time and resources without a successful result.

9. The Group’s current operations are international in scope and it plans further geographic

expansion, creating a variety of operational challenges.

The Group’s offices, employees and users are dispersed around the world. This creates operational challenges

including:

• costs associated with developing software and providing support in many languages;

• varying patterns of use in different countries, different payment cycles and difficulties in implementing

auto-renewal in some currencies;

• legal challenges associated with international operations;

• the effect of tariffs and trade barriers (resulting from, for example, trade wars or the withdrawal or

renegotiation of multilateral trade agreements);

• a variety of regulatory or contractual limitations on its ability to operate and reduced protection of

intellectual property rights in some countries;

• potential additional financial costs to the Group, such as potential adverse movements in currency exchange

rates and adverse tax events; and

• a geographically and culturally diverse workforce and user base.

Failure to overcome any of these difficulties could negatively affect results of operations or increase the Group’s

expenses. The Group intends to further expand its operations globally, focusing on key local markets such as

Latin America, Southeast Asia and Japan. If these efforts are unsuccessful in creating and expanding the Group’s

global user base, or if its expansion increases the difficulties of running a global company, it could harm the

Group’s results of operations.

Further, the Group derives a meaningful portion of its revenues from emerging markets, such as Brazil, which are

subject to greater risks than more developed markets, including legal, economic, tax and political risks. For

example, the Group derived $28.7 million of Billings and $25.9 million of Revenues from Brazil in the year

ended 31 December 2017 and had approximately 44 million users in Brazil as of 31 December 2017. In 2017, 4%

of the Group’s Billings and 3% of the Group’s Revenues derived from Brazil. During the same year, the Group

derived $11.6 million of Billings and $10.6 million of Revenues from Russia, and the Group had approximately

26 million users in Russia as of 31 December 2017. In 2017, 1% of the Group’s Billings and 1% of the Group’s

Revenues derived from Russia. Expanding the business in these and other emerging markets may present

additional risks beyond those associated with more developed international markets. Emerging markets are

particularly vulnerable to restrictive, inconsistent or frequently changing government policies. For example,

Russia implemented legislation in November 2017 regulating VPN products and imposing restrictions on proxy

avoidance tools, specifically restricting VPN products from allowing users to access certain banned websites, and

China tries to block the use of VPNs entirely. Moreover, emerging markets have higher instances of piracy and

licence misuse, and therefore may require additional time, precautions and resources to develop the Group’s

business and presence in such markets. In order to enter new markets in highly regulated countries such as China

or Russia, modifications to the Group’s business plan or operations to comply with changing regulations or

certain actions taken by regulatory authorities may increase the costs of providing products and solutions and

materially and adversely affect the Group’s financial condition.

10. If the Group fails to keep up with rapid changes in technologies and the evolution of malware and

virus threats, its business may be materially and adversely affected.

The security software industry is characterised by rapid technological change. The needs of the Group’s users

and the threats they face evolve constantly. Hackers and cybercriminals continuously develop and employ

increasingly sophisticated techniques to penetrate systems and networks and access information. The Group

needs to introduce software solutions to respond to new threats quickly. The nature of future threats is not always

known, which is also a challenge to the development of these solutions. The Group may experience delays in the

introduction of new solutions, updates, enhancements and features. If the Group fails or is perceived to fail to

respond to the rapidly changing needs of users by developing and introducing internet security solutions that do

not effectively protect against new security threats quickly enough, its competitive position, reputation and

business prospects could be harmed.

The Group’s future success will depend on its ability to respond to rapidly changing threats and improve the

performance and reliability of its products and solutions. The Group’s users rely on its security software products

and related solutions for safe access to the internet. Hackers are continuously creating and modifying new

malware and malicious websites with increasing sophistication, such as the “WannaCry” ransomware, which

infected a number of Windows PCs worldwide in 2017. Responding to (and proactively preparing for) this type

of new threat requires significant expertise and technical resources. Although the Group’s software was able to

protect its users from WannaCry, the detection technologies underlying the Group’s products and solutions may

not immediately detect all forms of malware or malicious websites to which its users are exposed.

The development and introduction of products and functionalities that address risks such as these involve a

significant commitment of time and resources and is subject to a number of risks and challenges. Further, the

categories of connected devices are expanding, and the Group will need to continue to expand its product

offerings to protect users across various devices, platforms and networks. Responding to the challenges posed by

these new platforms and their corresponding new threats can be difficult and require significant reengineering of

software. The Group may therefore fail or be perceived to fail to provide solutions for these new technology

platforms as threats to them arise. If the Group does not succeed in keeping pace with the rapid technological

change in the security software industry or if its new products and product upgrades fail to achieve widespread

acceptance, its revenues and competitive position could be materially and adversely affected.

11. The Group operates in a number of jurisdictions with strict consumer laws and regulations, and any

failure to comply with such laws and regulations may adversely affect its business.

Data Protection. A wide variety of local, national and international laws and regulations apply to consumer

businesses such as the Group’s, including the collection, use, retention, protection, disclosure, transfer and other

processing of personal data. These consumer compliance laws and regulations, such as those related to personal

data and privacy, are evolving and may result in ever-increasing regulatory and public scrutiny and escalating

levels of enforcement and sanctions. Failure to comply with applicable laws and regulations, or to protect such

data, could result in enforcement action, including fines, imprisonment of company officials and public censure,

claims for damages by users and other affected individuals, damage to reputation and loss of goodwill (both in

relation to existing users and prospective users). Any of these consequences could have a material adverse effect

on the Group’s operations, financial performance and prospects. Evolving and changing definitions of personal

data and personal information, both within the European Union and elsewhere, especially relating to

classification of IP addresses, machine identification, location data and other information, may limit or inhibit the

ability of the Group to operate or expand its business, including limiting strategic partnerships that may involve

the sharing of data. For example, the General Data Protection Regulation (GDPR) (Regulation (EU) 2016/679)

(the “EU Data Protection Regulation”) came into effect in May 2016 and will become directly applicable in

Member States from 25 May 2018. The EU Data Protection Regulation introduces substantial changes to the EU

data protection regime and will impose a substantially higher compliance burden on the Group, may increase its

data protection costs and may restrict its ability to use data. Even the perception of privacy concerns, whether or

not valid, may harm the Group’s reputation and inhibit adoption of its solutions by current and future users. Any

regulatory changes could also impair the Group’s ability to continue to use its consumer data in such systems in

the way in which it currently uses them (specifically in its analytics business, Jumpshot), or failure by the Group

to comply with applicable privacy, data protection and related laws or regulations, may have a material adverse

effect on the Group’s financial condition, financial returns or results of operations.

Auto-Renewal. The Group sells the great majority of its paid consumer products online through e-commerce

shopping cart and online payment processing service providers such as Digital River (“E-commerce Partners”)

who act as resellers and are the seller of record and merchant of record for such sales to customers. The Group’s

E-commerce Partners offer the Group’s paid consumer products to customers on a subscription basis. At the end

of the subscription period, the subscription is automatically extended (for periods equal in length to the initial

subscription period) and the end user is charged the undiscounted price as in effect when the subscription is

extended until the end user cancels their subscription. Many jurisdictions worldwide have existing laws and

regulations applicable to online sales of continuing subscriptions or may propose to introduce such laws and

regulations in future. Any legal and regulatory restriction that impairs the Group’s ability or that of the Group’s

E-commerce Partners to automatically extend subscriptions, or failure to comply with applicable laws and

regulations, may have a material adverse effect on the Group’s financial condition, financial returns or results of

operations.

Consumer Sales. There are different laws in the various jurisdictions in which the Group operates that relate to

how online sales may be made, particularly to consumers, including laws regulating the size and prominence of

lettering, regulations surrounding the use of opt-in as compared to opt-out provisions and other specifics as to

how sales may be made. The Group operates globally and must continue to monitor changes to, understand, and

comply with the relevant laws in each jurisdiction. The consumer protection laws are currently under review in

the EU, which may lead to additional obligations on the Group and expenditures and resources may be required

to implement these. Furthermore, the Group must rely on its third party partners, over whom it has no control, to

also comply with such laws and regulations. The failure to comply with any consumer laws and regulations in

any jurisdiction could have a material adverse effect on the Group’s financial condition, financial returns or

results of operations.

12. Accurately measuring the number and retention of the Group’s users is difficult and the failure to

accurately measure the number and retention of users at any time will compromise the Group’s

ability to monitor key performance indicators, which in turn could adversely affect the Group’s

ability to manage its business.

Certain of the Group’s users may have the same Group products installed on multiple devices or may have more

than one of the Group’s products installed on a single device. While certain of the Group’s products have systems

in place that allow for the tracking of unique users and de-duplication of user numbers, not all of the Group’s

products use the same method to count users, partially due to the Group’s acquisition history and the different

methods employed by various companies prior to their acquisition by the Group.

The Group defines “users” as unique devices, which include PCs, Macs and mobile devices (primarily Android

and iOS), which have at least one of the Group’s free or paid software products installed and which have

connected to the Group’s servers at least once in the previous 30 days. Even where the Group can identify the

fact that its products were installed on a unique device, there is no reliable method of measuring the number of

individuals who use each device or the number of devices used by a single individual.

The Group defines users of paid products as “customers”. The Group is able to more accurately measure the

number of its customers compared to free users, as customers are required to provide the Group with certain

identifying information, such as their e-mail address for PC desktop customers. The Group is able to measure the

number of mobile subscribers through collecting unique user IDs for mobile customers. Similarly, the number of

SMB customers can be calculated by collecting specific company information from SMB customers.

The Group therefore is able to count its customers within product categories relatively accurately, and can

de-duplicate to ensure that customers are not double-counted in its user estimates to the extent they use the same

identifying information more than once. The Group’s non-financial metrics are calculated using internal

company data collections and have not been validated by an independent third party. However, the Group has

data quality assurance processes in place to ensure accuracy.

There is also a risk that one customer may register different of the Group’s products under different identifying

information, which could lead to duplication in customer counts in certain situations, including when a customer

uses their e-mail address to register a PC desktop product and a unique user ID to install a mobile product (i.e.

when a mobile customer doesn’t supply an e-mail address), or when a single customer has more than one e-mail

address and registers different of the Group’s products under different e-mail addresses. In addition, there is a

risk that the Group under-reports customer numbers in certain situations, for example, where a single e-mail

address or unique user ID is used by multiple individuals in the same household.

The Group continues to attempt to improve the accuracy of its measurement of the number of users, but there can

be no assurance that it will be successful in doing so. Although the Group believes that it is able to calculate

customer numbers with reasonable accuracy and that the Group’s internal and third party estimates of users are

reasonably accurate, there are certain products which do not allow the Group to precisely track user duplication.

The Directors’ understanding and management of the business depends on accurate measures of the numbers of

users and other key performance indicators derived from these metrics, and management decisions may be

suboptimal if measurements of these key metrics are inaccurate. Furthermore, the Group compares itself against

its competitors and peer companies who may count their users using different methods. If a significant

understatement or overstatement of user metrics were to occur, the market might perceive the Group to be

underperforming or to have inadequate systems, which would adversely affect the price of its shares.

13. If the Group is unable to maintain and enhance its brands’ reputations, it may harm the Group’s

business and operating results.

As a consumer business, the Group’s business depends on its brand recognition and the Group believes that

maintaining and enhancing its brands is critical to the Group’s business. In particular, the Group relies on its

users as primary drivers of its user-driven marketing strategy for its security products and any negative change to

the perception of the Group’s brands among its users could have a material adverse effect on its business. For

example, any negative discussions in user forums or online review sites, any negative media attention or any

negative comments online regarding customer support or other services could have a significant adverse effect on

the Group’s brands. In addition, negative reviews of the Group’s security software solutions or the company

generally could harm the Group’s brands. Furthermore, the Group depends upon certain third party distributors of

its solutions, online download sites and actions by those third parties could have a negative effect on the Group’s

brands.

The successful promotion of the Group’s brands will depend largely upon the quality of the internet security

solutions offered, the ability of the Group to differentiate itself from its competitors and the effectiveness of the

Group’s marketing and public relations efforts. The promotion of the Group’s brands may require substantial

expenditures, which will likely increase as the market becomes more competitive and as the Group expands into

new markets. If the Group is not successful at maintaining and enhancing its brands, it could adversely affect its

ability to attract new users and it could lose users, third party distributors and resellers.

The Group has in the past and may in the future be the target of so-called “cybersquatters” who seek to register

internet domain names that are confusingly similar to the Group’s domains or marks. Some cybersquatters may

take the Group’s free products, or other non-Group products, and sell them to users, which could lead to

confusion among users and could have a material adverse effect on the Group’s reputation and brands.

14. The Group currently relies on one e-commerce service provider to process and collect a significant

portion of its consumer segment revenues.

The Group’s online sales model enables consumers and SMBs to purchase products through the Group’s

websites. In the year ended 31 December 2017, the Group derived 27% of its revenues from sales of licensed

software processed by Digital River, Inc. and Digital River Ireland Limited (together, “Digital River”), the

Group’s primary e-commerce service provider. The Group has a framework services agreement with Digital

River which has an initial term until 4 November 2020. The framework agreement automatically renews for

further periods of one year unless terminated by either party with at least three months’ notice. Digital River

collects payments and user data from transactions for the Group. While Digital River is not the exclusive supplier

of such services to the Group, it is the Group’s primary supplier of such services for new online consumer sales:

in 2017, online sales processed by Digital River accounted for 36% of the Group’s billings. The Group has

partnered with Digital River since 2002 as a primary e-commerce service provider. Any disruption to Digital

River’s ability to provide the Group with services could materially and adversely affect operations. In the event

that Digital River is unable or unwilling to provide its services, the Group believes it would be able to find a

comparable alternative e-commerce provider on similar terms that it has with Digital River. However, it may take

the Group a number of days or weeks to fully transition to one of its other e-commerce service providers for the

processing of first purchases and manual renewals, and it would likely take up to several months to fully

transition the processing of auto-renewals. A number of challenges would come with the migration of all auto-

renewal payment information from Digital River to a new service provider (including those related to the

logistics of transferring the contact names, email addresses and payment information for each customer). Any

interruption to the normal processing of auto-renewals could have a material adverse effect on the Group’s

business and results of operations. Further, if Digital River or another e-commerce provider experiences financial

difficulties and fail to forward the payments owed to the Group within 15 days from the end of the month in

which those payments were made, the Group’s cash flow and income may be significantly affected. Additionally,

the Group runs sales to the SMB segment through a proprietary e-commerce payment platform that it has

developed in-house, and may in the future decide to perform these operations for the consumer segment as well,

which would increase the demand on personnel and technological resources. Any such occurrence could

materially and adversely affect the Group’s business and results of operations.

15. Currency exchange rates may materially adversely affect the Group’s results of operations.

Fluctuations in currency exchange rates may impact the business significantly, as the Group conducts business in

multiple countries. For the year ended 31 December 2017, the Group generated 54% of its Adjusted Billings in

the Americas, 40% in EMEA and 6% in Asia Pacific. For the year ended 31 December 2017, 52% of the Group’s

billings were denominated in U.S. dollars, 19% were denominated in Euros and 9% were denominated in British

pounds. Conversely, in the same year, 59% of the Group’s adjusted total costs (excluding currency losses and

changes in deferred tax) were denominated in U.S. dollars, 21% in Czech korunas and 8% in Euros. As a result, a

substantial weakening of the U.S. dollar and the Euro relative to the Czech koruna would present an increase in

the Group’s costs. Further, the Group is also exposed to translation effects given that its financial statements are

stated in U.S. dollars. Any strengthening in the U.S. dollar relative to other currencies in which the Group derives

its revenues will result in reductions in reported revenue. For example, for the year ended 31 December 2017, the

Group reported a loss from the effect of exchange rate changes on cash and cash equivalents held in foreign

currencies of $3.4 million (compared to zero for the year ended 31 December 2016 and a loss of $2.6 million for

the year ended 31 December 2015). Likewise, if the U.S. dollar declines in value relative to the other currencies

in which the Group derives its revenues, reported revenue will increase, but the Group’s profitability may be

lower. If there is a significant change in the value of the U.S. dollar relative to foreign currencies, the profits of

the Group may be materially adversely affected. In addition, the majority of the Group’s tax liabilities are

denominated in Czech koruna. The Group’s effective tax rate is impacted by foreign exchange gains and losses

from U.S. dollars as compared to the Czech koruna, which is the functional currency of the Group for local

GAAP and tax purposes. For the year ended 31 December 2017, the Group had $56.8 million of losses resulting

from the impact of foreign exchange rate differences (functional as compared to statutory) (as compared to a loss

of $4.6 million for the year ended 31 December 2015 and a gain of $24.3 million for the year ended 31 December

2016).

16. The Group depends on the attraction and retention of specialised personnel. If these individuals

leave without effective replacements or if personnel costs increase, the Group’s operations may

suffer.

The Group’s performance largely depends on the talents and efforts of highly skilled individuals. The Group’s

future success depends on the continuing ability to identify, hire, develop, motivate, and retain highly skilled

personnel for all areas of the organisation. As a technology company, the Group’s primary cost is personnel

costs. While the Group’s personnel costs are currently low compared to its peers given the location of many of its

employees in the Czech Republic, in the future, the Group may incur increased expenses to recruit qualified

personnel in the Czech Republic or in other countries. There is currently low unemployment in the Czech

Republic, resulting in a shortage of labour. If high market demand forces the Group to increase wages, it would

raise the Group’s personnel costs, which would impact the Group’s business and results of operations and reduce

its competitive advantage.

Further, the success of the Group’s business is dependent to a large degree on the continued services of its

directors and executive officers and other key personnel who have extensive experience in the industry. If the

services of any of these integral personnel are lost and the Group fails to manage a smooth transition to new

personnel, the business could suffer. The Group does not carry key person insurance on any executive officers or

other key personnel. The Group has entered into employment agreements with certain executive officers and key

employees that contain non-compete covenants. However, despite these agreements, the Group may not be able

to retain these officers and employees. Further, the non-compete covenants may themselves not be enforceable in

certain jurisdictions (for example, in California, where the Group has operations, they are only enforceable in

limited circumstances). This means that the Group may be unable to prevent its competitors from benefiting from

the expertise of such former employees, which could materially and adversely affect the Group’s business and

results of operations.

17. The Group faces risks related to its operation of VPN products, which could have a material adverse

effect on its reputation and/or future sales.

The Group’s VPN products offer anonymity and secure communication channels to its users online, which is

often a key reason its customers purchase such products. There is a risk that a user will use the Group’s VPN

products for illegal purposes. Governmental law enforcement agencies in some countries frequently ask the

Group to provide information on certain of its VPN users which such governments cannot otherwise access,

related to ongoing investigations or otherwise. The Group has a policy to comply with such requests when

required by law and has published a report for all of these requests from 2017 with full transparency. If the

Group’s compliance with such an order were characterised by users as potentially compromising their privacy or

anonymity, the Group may suffer reputational harm and future sales of VPN products, or sales of other of the

Group’s products by association, may decrease.

Further, the use of the Group’s VPN products may at times violate government laws. For example, the

government of China has banned the use of VPN products within the country. In addition, certain governments

restrict specific uses of VPN products: for example, the Russian government has outlawed the use of VPNs to

connect to certain banned websites. Any use of the Group’s VPN products in China, misuse of the products in

Russia, or use of the products in a way that conflicts with any other government’s laws, could potentially expose

the Group to penalties or have a material adverse effect on the Group’s reputation.

18. The Group may be unable to protect its intellectual property rights and proprietary information and

prevent third parties from making unauthorised use of its products and technology.

The Group’s intellectual property rights and proprietary information are important to its business. The Group

attempts to protect its intellectual property rights through a combination of patent, trademark, copyright and trade

secret laws, as well as restrictions in its licensing-out agreements and third-party nondisclosure and assignment

agreements. The Group’s policy requires that employment contracts include clauses requiring employees to

assign all of the inventions and intellectual property rights they develop in the course of their employment, or the

economic benefits thereof, to the Group and that all employees and contractors sign confidentiality agreements in

which they agree not to disclose or misuse any confidential information. However, the Group cannot guarantee

that its confidentiality agreements or other agreements with employees and independent contractors adequately

protect the Group’s intellectual property rights, know-how and other proprietary information. In particular,

because the protection of confidential information ultimately relies on the discretion of individuals who hold this

information, the Group cannot guarantee that they will not breach these agreements. Furthermore, the steps the

Groups has taken and may take in the future may not prevent misappropriation of the Group’s proprietary

solutions or technologies, particularly in respect of former officers and employees or in foreign countries where

laws or law enforcement practices may not protect the Group’s intellectual property rights and other proprietary

information as fully as in the United States, the United Kingdom and the EU.

Trade Secrets. Additionally, some of the Group’s trade secrets and know-how, such as the Group’s virus

databases and development tools, are stored electronically and thus highly portable. The Group employs physical

and electronic security systems designed to protect its servers from unauthorised access. Despite these efforts,

third parties could gain access to the Group’s know-how and trade secrets, which could cause the Group to lose

any competitive advantage resulting from such know-how or trade secrets. In addition, third parties could

successfully reverse engineer the Group’s products. If any of the Group’s competitors were to gain access to any

of the Group’s trade secrets, know-how or other technologies not protected by a patent, or otherwise

independently develop this information, it could materially adversely affect the Group’s business, financial

condition and results of operations.

Patents. The Group has filed various patent applications for its products and solutions. The Group cannot ensure

that any of the patent applications will proceed to grant or that the claims allowed on any issued patents will be

sufficiently broad to protect the Group’s technology or products. Any issued patents may be challenged,

invalidated or circumvented, and any rights granted under these patents may not actually provide adequate

defensive protection or competitive advantages. The majority of the Group’s patents are filed in the United

States. Patent applications in the United States are typically not published until 18 months after filing, or, in some

cases, not at all, and publications of discoveries in industry-related literature lag behind actual discoveries. The

Group cannot be certain that it was the first to make the inventions claimed in its pending patent applications or

that it was the first to file for patent protection. Because some patent applications are confidential for a period of

time, there is also a risk that the Group could adopt a technology without knowledge of a pending patent

application, and that the technology would infringe a third party patent once that patent is issued. Additionally,

the process of obtaining patent protection is expensive and time-consuming, and the Group may not be able to

prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. The Group

may choose not to pursue patents or other protection for innovations that later turn out to be important.

Trademarks. The Group relies on its trademarks, trade names, and brand names to distinguish its solutions from

the products of its competitors, and has registered or applied to register many of these trademarks in key markets.

However, occasionally third parties may have already registered identical or similar signs for products or

solutions that also address the software market. If the Group is unable to adequately protect its trademarks, third

parties may use the Group’s brand names or trademarks similar to the Group’s in a manner that may cause

confusion to users and confusion in the market, which could decrease the value of the brand and harm the

Group’s reputation. The Group relies in part on brand names and trademark protection to enforce its intellectual

property rights. Efforts by third parties to limit use of the Group’s brand names or trademarks and barriers to the

registration of its brand names and trademarks in various countries may restrict the Group’s ability to promote

and maintain a cohesive brand throughout key markets. There can also be no assurance that pending or future

United States or foreign applications will proceed to registration in a timely manner or at all, or that such

registrations will effectively protect the Group’s brand names and trademarks.

From time to time, the Group may discover that third parties are infringing or otherwise violating its intellectual

property rights. To protect its intellectual property rights, the Group may become involved in litigation, which

could result in substantial expenses, divert the attention of management, cause significant delays to the

development or launch of products, materially disrupt the conduct of its business or adversely affect revenues,

financial condition and results of operations. Any infringement of the Group’s intellectual property rights by

third parties may eliminate any competitive advantage such intellectual property rights provide and harm the

Group’s results of operations.

19. The Group may become subject to claims of intellectual property infringement by third parties that,

regardless of merit, could result in litigation and materially adversely affect its business, results of

operations or financial condition.

The Group’s success largely depends on its ability to use and develop its technology without infringing the

intellectual property rights of third parties, including patents, copyrights, trade secrets and trademarks. The

Group may be subject to litigation involving claims of patent infringement or violation of other intellectual

property rights of third parties. The Group has also in the past, and expects in the future, to be the target of

so-called “patent trolls”, companies that do not manufacture or sell products and whose sole activity is to assert

patent rights against accused infringers in an attempt to collect licensing fees. In addition, the Group licenses and

utilises certain third party “proprietary” and “open source” software as part of its solutions offering. An author or

another third party that distributes such third party or open source software could allege that the Group had not

complied with the conditions of one or more of these licences. Any such claims, regardless of merit, could

(i) result in litigation, which could result in substantial expenses, (ii) divert the attention of management,

(iii) cause significant delays, (iv) materially disrupt the conduct of the business and (v) have a material and

adverse effect on the Group’s financial condition and results of operations.

As a consequence of such claims, the Group could be required to pay substantial damages, develop

non-infringing technology, enter into royalty-bearing licensing agreements, stop selling some or all of its

products or re-brand certain products. The Group is also frequently required to indemnify its third party partners

in the event of infringement claims against such partners who offer the Group’s products, such as mobile network

operators who partner with the Group to offer its Location Labs products. If it appears necessary, the Group may

seek to license the intellectual property which the Group is alleged to have infringed, potentially even if the

Group believes such claims to be without merit. However, such licencing agreements may not be available on

acceptable terms, or at all. If the Group cannot obtain required licences, or if existing licences are not renewed,

litigation could result. Litigation is inherently uncertain and any adverse decision could result in a loss of

proprietary rights, subject the Group to significant liabilities, require the Group to seek licences from others and

otherwise negatively affect the Group’s business operations.

20. In addition to direct sales and distribution channels, the Group relies on third party distributors and

resellers to sell its software. Any failure by the Group to sell its products effectively through third

party distributors and resellers could adversely affect the Group’s results of operations.

The Group sells and markets its products to users indirectly through third party distributors and resellers, as well

as directly by the Group. For example, the Group currently sells its SMB products through approximately 9,000

active partners, the Group distributes its Location Labs products to users via mobile network operators and

certain of the Group’s consumer antivirus products are offered at physical retail outlets. If third party distributors

or resellers are ineffective at marketing or promoting the Group’s products, the Group’s sales could decline or it

could damage the Group’s brand. Further, the Group has limited control over the amount of software that these

indirect sales partners purchase from the Group or sell on the Group’s behalf. Weakness in the end-user market

could also negatively affect the cash flow of distributors and resellers who could, in turn, delay paying their

obligations. A change in the credit quality of a distributor or other counterparty can increase the risk that such

counterparty is unable or unwilling to pay amounts owed, which could directly or indirectly (through a disruption

in the Group’s distribution network) have a material adverse effect on results of operations. Any material

decrease in the volume of revenue generated by the Group’s indirect sales channels could adversely affect its

revenue and results of operations.

21. Increased user demands on technical support services may adversely affect the Group’s

relationships with its users and its financial results.

The Group offers technical support for its products, primarily in the form of web forums, email, chat and call

centres that are in some cases operated by third parties. The Group may be unable to modify the format of its

support services to compete with changes in support services provided by competitors or successfully integrate

support for users. Further user demand for these services, without corresponding revenues, could increase costs

and adversely affect results of operations.

The Group has outsourced a substantial majority of its support functions to third party service providers. The

Group has approximately 135 technical support staff in-house and contracts with third parties to outsource an

additional approximately 600 technical support staff. If these third party service providers experience financial

difficulties, do not maintain sufficiently skilled workers and resources to satisfy their contracts, or otherwise fail

to perform at a sufficient level under these contracts, the level of support services to users may be significantly

disrupted, which could materially harm the Group’s relationships with these users. In addition, some of the

Group’s third party service providers provide general support services in the area of electronics/IT to users who

request it. While the Group does randomly monitor technical support calls and all complaints of any third party

service providers or their agents which are escalated for resolution, it is not feasible for the Group to monitor all

calls or identify all up-sells or charges which may be unnecessary or inflated. If third party service providers do

not maintain the appropriate balance between providing support and selling their solutions, the Group’s

reputation and relationship with its users could be materially harmed.

22. The Group is subject to evolving sanctions laws as well as governmental export controls, and any

breaches of such laws could subject the Group to fines or other forms or criminal or administrative

penalties, as well as reputational damage.

The Group is subject to complex export control and economic sanctions laws in the jurisdictions where it

operates, including the United States, the European Union and the United Kingdom. Economic sanctions laws

prohibit most dealings with listed persons, entities or bodies designated under the applicable sanctions regime,

and restrict or prohibit certain business activities in certain sanctioned territories (notably, in respect of U.S.

sanctions, Cuba, Iran, North Korea, Syria and the Ukrainian territory of Crimea). Export control laws impose

controls, export licence requirements and restrictions on the export of certain items, including software, and

technology, such as encryption software and VPNs.

The Group has in the past grown by acquisitions, and anticipates that such growth may continue in the future.

Historically, the Group has acquired businesses that the Group has discovered, subsequent to the acquisition, may

not have had adequate procedures in place to prevent inadvertent violations of certain applicable sanctions laws.

When this has occurred, the Group has taken steps to remediate these failings and ensure compliance with Group

policies. Accordingly, there is a risk that the Group may in the future acquire businesses that the Group

determines do not have adequate compliance controls to prevent inadvertent violations of export control and

economic sanctions laws, and will in such instances need to implement remedial procedures.

Further, in light of the complexity of laws and regulations applicable to the export of software and other products

that the Group produces, and as the technical means by which persons can access its products are constantly

evolving, the systems that the Group needs to put in place to prevent violations of sanctions and export control

laws needs to evolve to reflect those changes. In the past, the Group has experienced instances of non-compliance

with U.S. sanctions and export control laws. The Group has worked with specialised U.S. sanctions and export

control counsel to evaluate such occurrences, and the Group continues to work with its outside counsel to

enhance its procedures and safeguards to ensure future compliance. There is a risk that, despite the procedures

and controls that the Group implements to prevent breaches of sanctions and export control laws, sanctioned

persons or users in sanctioned territories could download and use the Group’s products in breach of applicable

sanctions or export control laws. Such downloads and exports could have negative consequences to the Group,

including government investigations, fines and other forms of criminal or administrative penalties and

reputational damage, to the extent that the Group’s ongoing compliance efforts and remedial actions taken to

prevent further persons from accessing its products in breach of sanctions are ineffective.

23. The Company’s ability to pay dividends in the future depends, among other things, on the Group’s

financial performance and capital requirements.

There can be no guarantee that the Group’s historical performance will be repeated in the future, particularly

given the competitive nature of the industry in which it operates, and its sales, profit and cash flow may

significantly underperform market expectations. If the Group’s cash flow deteriorates, then the Company’s

capacity to pay a dividend will suffer. The Directors will make any decision to declare and pay dividends at their

discretion. This decision will depend on, among other things, applicable law, regulation, restrictions, the Group’s

financial position (including the existence of sufficient distributable reserves and cash in the Group), regulatory

capital requirements, working capital requirements, finance costs, general economic conditions and other factors

the Directors deem significant from time to time. Further, the total amount of dividends that can be distributed by

the Group to shareholders is restricted under the Group’s credit agreement entered into by Avast Software B.V.

(among others) unless the Group has capacity available in applicable baskets or other exceptions apply, and may

be restricted by such future agreements.

24. The use of open source and third party software could impose unanticipated conditions or

restrictions on the Group’s ability to commercialise its solutions.

The Group has in the past and could in the future combine its proprietary software with certain open source

software in a certain manner, which could, under the terms of certain of the open source licences, require the

Group to release the source code of such proprietary software and make it publicly available at no cost. Open

source software is accessible, usable and modifiable by anyone, provided that users and modifiers abide by

restrictions and requirements imposed by the applicable open source licence. In addition to risks related to

licence requirements, usage of certain open source software can lead to greater risks than use of third party

commercial software, as open source licensors generally do not provide warranties or controls on the origin of

software. The Group has internal control procedures governing the usage of open source software but the Group

cannot be sure that it deals with all open source code in accordance with this procedure, nor that it will be risk-

free even if the Group complies with such procedure. In addition, some of the risks associated with the usage of

open source software may be difficult to eliminate and could, if not properly addressed, negatively affect the

Group’s business. Under certain conditions, the use of some open source code to create derivative code may

obligate the Group to make the resulting derivative code available to others at no cost. The Group monitors the

use of open source code in an effort to avoid situations that would require making parts of the Group’s core

proprietary technology freely available as open source code and generally use only code licensed under open

source licences that allow free redistribution and selling of the resulting products without restriction. However,

the Group cannot guarantee that it will not use code governed by more restrictive licences or that a court will not

interpret a licence to require certain source code to be made available to the public without charge. Under that

circumstance, if the Group fails to make the code available, the Group would be in breach of the licence which

could cause its termination and liability for copyright infringement or breach of contract. As a result, the Group

may have to take remedial action, such as replacing certain code used in its products, paying a royalty to use

some proprietary code, making certain proprietary source code available to others or discontinuing certain

products.

The Group relies on software, and other patented technology, licensed from third parties to offer its services. In

addition, the Group may need to obtain future licences from third parties to use their intellectual property rights

associated with the development of its solutions, which might not be available on acceptable terms, or at all. Any

loss of the right to use any third party software required for the development and maintenance of solutions could

result in delays in the provision of until equivalent technology is either developed by the Group or, if available,

identified, obtained and integrated, which could harm the Group’s business. Any errors or defects in third party

software could result in errors or a failure of the Group’s solutions which could harm the business.

25. The Group operates its servers worldwide and faces significant challenges responding to disruption

of its servers.

The Group owns a number of key servers, and the Group rents additional servers, data centre space and internet

connectivity bandwidth capacity from third party providers. The Group’s server content is located in data centres

worldwide. The Group is using distributed server infrastructure for critical services and has also developed

back-up storage for key data; however, there can be no assurance that such back-up storage arrangements or

redundant or distributed server infrastructure will become operational, or, if they do, will be effective if it

becomes necessary to rely on them. In the past, third party database providers for the Group have experienced

service disruptions, which have led to customers not being able to process payments until such providers have

restored operations. Further, disruption of the servers and/or internet bandwidth connectivity due to technical

reasons, natural disaster or other unanticipated catastrophic events, including power interruptions, storms, fires,

floods, earthquakes, terrorist attacks and wars could significantly impair the Group’s ability to continue its usual

business operations and could materially and adversely affect the Group’s business and results of operations. In

situations where there is no geographic redundancy built into the back-up system and both a main server and its

backup are located in the same place, there is a risk that such an event would lead to a shutdown of both servers,

which could in turn lead to a particular product or network. The Group is continuously working to improve its

disaster recovery response and to better understand which servers and how many servers can go down before the

business is interrupted. Although the Group believes it has the technical knowledge necessary to mitigate

problems relating to such systems and system architecture, the Group may at any time be required to expend

significant capital or other resources (including staff and management time and resources) to protect against

network failure and disruption. This may include the replacement or upgrading of existing business continuity

systems, procedures and security measures. In addition, the Group will require continuing expansion and

upgrading of systems to support additional users, localities, products and online services. These expansions and

upgrades may consume significant capital and managerial resources.

26. Changes in applicable tax rulings and taxation requirements could materially affect the Group’s

business, financial condition and results of operations.

The Group is subject to income tax in the Czech Republic, the United Kingdom, the United States, Germany, the

Netherlands and other jurisdictions in which it does business. The Group determines the amount of taxes it is

required to pay based on its interpretation of the applicable laws and regulations in the jurisdictions in which it

operates and its application of the general transfer pricing principles to intercompany transactions. Many

countries’ tax laws and international treaties impose taxation upon entities that conduct a trade or business or

operate through a permanent establishment in those countries. However, these applicable laws and treaties are

subject to interpretation. The tax authorities in these countries may contend that a greater portion of the income

of the Group should be subject to income or other tax in their respective jurisdictions. This may result in an

increase to the Group’s effective tax rate and adversely affect the Group’s results of operations. Further, there is a

risk that a country may consider implementing new laws related to the taxation of the digital economy or to

broadly interpret its existing laws, for example by construing permanent establishment in a country based solely

on a digital presence within the country (without the company having any physical presence). If any taxing

authority takes such a view, there is a risk that the Group would be subject to additional taxes and potentially

double taxation, which would adversely affect its results of operations.

Sales tax

Sales of the Group’s products are also subject to tax in a number of jurisdictions. Such taxes include value-added

tax (“VAT”), corporate tax, goods and services tax (“GST”) and excise duties. In certain jurisdictions,

particularly those in emerging markets, there is limited guidance or interpretation of the laws related to these

taxes, many of which have not been in force for a significant period. As a result, implementing regulations are

often unclear or non-existent. While the Group makes a portion of its sales through third party hosted resellers

who undertake to comply with any local taxing requirements, it does make certain sales itself. Furthermore, local

taxing authorities could seek to impose penalties notwithstanding the Group’s agreement with hosted resellers. If

the Group or any of the third parties on which the Group relies do not comply with any local taxing requirements

as determined by the taxing local authorities, the Group may be subject to unexpected taxes which could

adversely affect its results of operations.

Tax audits

The Group’s tax position for all taxes, including matters related to its corporate structure and intercompany

transactions, is subject to review and audit by taxing authorities in accordance with the relevant local statute of

limitations, who may impose significant fines, penalties and interest charges. The Group is currently subject to a

corporation tax audit in the United Kingdom for the 2013, 2014 and 2015 financial years. The corporate income

tax returns in the Czech Republic for the 2016 financial year and Canada for the 2014, 2015 and 2016 financial

years are also under review. Additionally, a review of the VAT returns and reporting systems in the United

Kingdom (in relation to Piriform) are under a routine VAT compliance review. If the tax authorities dispute any

of the Group’s tax positions, the Group could be subject to substantial tax liabilities that could have a material

adverse effect on its financial position and results of operations.

Changes in law

Changes in tax laws or their interpretations could decrease the amount of cash the Group receives, the value of

any tax loss carry forwards and tax credits recorded on its balance sheet and the amount of the Group’s net cash

flow, and have a material adverse impact on its business, financial condition and results of operations.

Furthermore, owing to and following the changes in the international tax regulations and international initiatives,

such as the OECD Base Erosion and Profit Shifting Action Plan (“OECD BEPS”), tax authorities are likely to be

more focused on areas such as transfer pricing and, as a result of the increasing exchange of information between

tax authorities, more challenges may arise. Most jurisdictions in which the Group operates have transfer pricing

regulations that require transactions involving associated companies to be made on arm’s length terms. It is the

Group’s policy that arrangements between Group companies are carried out on an arm’s length basis. However,

if the tax authorities in any relevant jurisdiction do not regard such arrangements as being made on an arm’s

length basis or being properly documented and successfully challenge those arrangements, the amount of tax

payable, in respect of both current and previous years, may increase materially and penalties or interest may be

payable. The same applies in case of changes in the transfer pricing system, which may result in challenges of the

past or new set-up. Further, in some jurisdictions in which the Group operates the tax authorities undertake

lengthy reviews of transfer pricing arrangements, with the result that the Group’s tax positions in those

jurisdictions remains open and subject to review for several years. Any challenge to the Group’s transfer pricing

arrangements or changes in the transfer pricing system could have a material adverse effect on the Group’s

business, financial condition and results of operations.

Taxation of digital businesses

On 21 March 2018, the European Commission published two proposals for Council Directives for taxation of

digital businesses. The first proposed Directive (COM(2018)147 final inclusive of Annexes 1 to 3) will allow a

member state to tax digital businesses, regardless of physical presence that state, by extending the meaning of

“permanent establishment” to include a “significant digital presence” in that member state. Such a presence

exists if certain digital services are supplied to users there through a digital interface and those services exceed

certain thresholds. Profits will be attributed to such a presence according to the “economically significant

activities” performed by such a presence. The Directive will apply to entities regardless of their tax residence,

and so may alter the allocation of taxable profits between member states.

The second proposed Directive (COM(2018)148 final) will introduce a temporary “digital services” tax (“DST”),

to be removed once permanent measures are introduced. DST will be levied by each member state, at 3%, on

revenues from certain digital activities:

• placing advertising on a digital interface targeted at users of that interface located in that member state;

• making available to users in that member state a multi-sided digital interface which allows users to find (and

interact with) other users; and

• transmission of data collected about users in that member state generated from users’ activities on digital

interfaces.

The proposed DST would only apply to entities with worldwide revenues exceeding €750 million and taxable EU

revenues exceeding €50 million.

According to the two proposals, member shares shall implement the provisions included in the proposals by the

end of 2019 and shall apply the provisions from 1 January 2020.

27. The Group is currently and may be in the future subject to periodic litigation and other regulatory

proceedings, which could result in unexpected expense of time and resources that could have a

material adverse impact on its results of operation, financial condition and liquidity.

From time to time the Group may be called upon to defend itself against lawsuits and regulatory actions in the

ordinary course of business. The Group is currently involved in two related litigation matters concerning the

former Chief Executive Officer of AVG, Gary Kovacs, following the termination of his employment by the

Group. Mr. Kovacs has filed suit in the United States with the San Francisco County Superior Court for breach of

contract and wrongful termination, inter alia (the “California Matter”), and has also filed suit in the Netherlands

with the Sub District Court of Amsterdam to enforce the payment of the value of certain equity award

agreements (the “Netherlands Matter”). Mr. Kovacs is seeking approximately $1,181,400 in the California

Matter and approximately €8,444,600 in the Netherlands Matter. A hearing has been conducted in the

Netherlands Matter, and the Group is currently in pre-trial proceedings in the California Matter with a trial date

in June 2018, unless such date is otherwise extended. The Group believes that it is too early in the proceedings to

assess the likelihood of its success in defending Mr. Kovacs’ claims.

Any future litigation could generate negative publicity that significantly harms the Group’s reputation, which

could materially and adversely affect the user community and the number of customers. In addition to the related

cost, managing and defending litigation and related indemnity obligations can significantly divert management’s

and the board of directors’ attention from operating the business. The Group may also need to pay damages or

settle the litigation with a substantial amount of cash. All of these could have a material adverse effect on the

Group’s business, results of operation and cash flows.

Risks relating to the Global Offer and the Shares

1. Each of Sybil and the Founders will retain a significant interest in and will continue to exert

substantial influence over the Group following the Global Offer and their respective interests may

differ from or conflict with those of other shareholders.

Immediately following Admission, Sybil Holdings S.à r.l., which is owned by funds advised by affiliates of CVC

Capital Partners Advisory Company (Luxembourg) S.à r.l. (“Sybil”) will continue to beneficially own

approximately 22.7%, of the issued ordinary share capital of the Company (assuming no exercise of the Over-

allotment Option) and 19.7%, if the Over-allotment Option is exercised in full, and Pavel Baudisˇ and Eduard

Kucˇera and their respective investment vehicles, PaBa Software s.r.o. and Pratincole Investments Limited (the

“Founders”) will continue to beneficially own approximately 37.5%, of the issued ordinary share capital of the

Company (assuming no exercise of the Over-allotment Option) and 37.5%, if the Over-allotment Option is

exercised in full. As a result, each of Sybil and the Founders will possess sufficient voting power to have a

significant influence over all matters requiring shareholder approval, including the election of directors and

approval of significant corporate transactions. The respective interests of Sybil and the Founders may not always

be aligned with those of other holders of Shares.

The Company entered into a relationship agreement with Sybil (the “Sybil Relationship Agreement”) and a

relationship agreement with the Founders (the “Founder Relationship Agreement”, and, together with the Sybil

Relationship Agreement, the “Relationship Agreements”) (details of which are set out in Part 7—“Directors and

Corporate Governance—Relationship Agreements with Sybil and the Founders”) to regulate their relationship

following Admission and, in particular, to help to ensure that the Company will be capable of operating and

making decisions for the benefit of Shareholders as a whole and independently of each of Sybil and the Founders,

respectively, at all times after Admission. Notwithstanding the Relationship Agreements, the concentration of

ownership in Sybil and the Founders may have the effect of delaying, deferring or preventing a change of

control, merger, consolidation, takeover or other business combination or discouraging a potential acquirer from

making a tender offer or otherwise attempting to obtain control of the Company, which in turn could have an

adverse effect on the trading price of the Shares.

2. The market price of the Shares could be negatively affected by sales of substantial amounts of such

Shares in the public markets, including following the expiry of the lock-up period, or the perception

that these sales could occur.

Following completion of the Global Offer, the Major Shareholders will own beneficially, in aggregate, 65.9% of

the Company’s issued ordinary share capital (assuming no exercise of the Over-allotment Option) and 62.1% if

the Over-allotment Option is exercised in full. The Company, the Selling Shareholders, the Directors and certain

members of the Company’s management team are subject to restrictions on the issue, sale and/or transfer, as

applicable, of their respective holdings in the Company’s issued share capital as described in Part 13—“Details

of the Global Offer—Lock up arrangements”. The issue or sale of a substantial number of Shares by the

Company, Selling Shareholders, the Directors or certain members of the Company’s management team in the

public market after the lock up restrictions in the Underwriting Agreement and related arrangements expire (or

are waived by the Joint Global Co-ordinators or the majority of the Underwriters), or the perception that these

sales may occur, may depress the market price of the Shares and could impair the Company’s ability to raise

capital through the sale of additional equity securities.

3. There is no existing market for the Shares and an active trading market for the Shares may not

develop or be sustained.

Prior to Admission, there has been no public trading market for the Shares. Although the Company has applied to

the UK Listing Authority for admission to the premium listing segment of the Official List and has applied to the

London Stock Exchange for admission to trading on its main market for listed securities, the Company can give

no assurance that an active trading market for the Shares will develop or, if developed, could be sustained

following the closing of the Global Offer. If an active trading market is not developed or maintained, the liquidity

and trading price of the Shares could be adversely affected. In addition, the Offer Price for the Shares has been

determined by the Company and the Selling Shareholders (in consultation with the Underwriters) and may not be

indicative of prices that will prevail in the open market following the Global Offer. Consequently, investors may

not be able to sell Shares at prices equal to or greater than the price they paid in the Global Offer.

4. Shares in the Company may be subject to market price volatility and the market price of the Shares

in the Company may decline disproportionately in response to developments that are unrelated to the

Group’s operating performance.

The Offer Price is not indicative of the market price of the Shares following Admission. The market price of the

Shares may be volatile and subject to wide fluctuations. The market price of the Shares may fluctuate as a result

of a variety of factors, including, but not limited to, those referred to in these Risk Factors or as a result of the

negotiations related to the United Kingdom’s exit from the European Union, as well as period to period

variations in operating results or changes in revenue or profit estimates by the Group, industry participants or

financial analysts. The market price could also be adversely affected by developments unrelated to the Group’s

operating performance, such as the operating and share price performance of other companies that investors may

consider comparable to the Group, speculation about the Group in the press or the investment community,

unfavourable press, strategic actions by competitors (including acquisitions and restructurings), changes in

market conditions and regulatory changes. Any or all of these factors could result in material fluctuations in the

price of Shares, which could lead to investors getting back less than they invested or a total loss of their

investment.

5. Shareholders in the United States and other jurisdictions may not be able to participate in future

equity offerings.

The Articles provide for pre-emption rights to be granted to shareholders in the Company, unless such rights are

dis-applied by a shareholder resolution. However, securities laws of certain jurisdictions may restrict the Group’s

ability to allow participation by shareholders in future offerings. In particular, shareholders in the United States

may not be entitled to exercise these rights, unless either the Shares and any other securities that are offered and

sold are registered under the U.S. Securities Act, or the Shares and such other securities are offered pursuant to

an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. The

Company cannot assure prospective investors that any exemption from such overseas securities law requirements

would be available to enable U.S. or other shareholders to exercise their pre-emption rights or, if available, that

the Company will utilise any such exemption.

6. The issuance of additional Shares in the Company in connection with future acquisitions, any share

incentive or share option plan or otherwise may dilute all other shareholdings.

The Group may seek to raise financing to fund future acquisitions and other growth opportunities. The Group

may, for these and other purposes, issue additional equity or convertible equity securities. The Group may also

make awards of Shares under share-incentive or share-option plans in the future. As a result, existing holders of

Shares may suffer dilution in their percentage ownership or the market price of the Shares may be adversely

affected.

7. Non-U.K. shareholders may be subject to exchange rate risk.

The Shares are, and any dividends to be paid in respect of them will be, denominated in pounds sterling. An

investment in Shares by an investor whose principal currency is not pounds sterling exposes the investor to

foreign currency exchange rate risk. Any depreciation of pounds sterling in relation to such foreign currency will

reduce the value of the investment in the Shares or any dividends in foreign currency terms.

8. Not all rights available to shareholders under U.S. law will be available to holders of the Shares.

Rights afforded to shareholders under English law differ in certain respects from the rights of shareholders in

typical U.S. companies. The rights of holders of the Shares are governed by English law and the Articles. In

particular, English law currently limits significantly the circumstances under which the shareholders of English

companies may bring derivative actions. Under English law, in most cases, only the Company may be the proper

plaintiff for the purposes of maintaining proceedings in respect of wrongful acts committed against it and,

generally, neither an individual shareholder, nor any group of shareholders, has any right of action in such

circumstances. In addition, English law does not afford appraisal rights to dissenting shareholders in the form

typically available to shareholders in a U.S. company.

9. The Company is a holding company with substantially all of its operations conducted through its

subsidiaries. Its ability to pay dividends on the Shares depends on its ability to obtain cash dividends

and other payments or obtain loans from the Group’s subsidiaries.

Following the Reorganisation, the Company will be a holding company with substantially all of its operations

conducted through its subsidiaries. Its ability to pay dividends on the Shares depends on its ability to obtain cash

dividends and other cash payments or obtain loans from the Group’s subsidiaries. The Company conducts

substantially all of its operations through subsidiaries that generate substantially all of the Group’s operating

income and cash flow. Because the Company has no direct operations or significant assets other than the share

capital of its subsidiaries, it relies on those entities for cash flows to pay dividends, if any, on the Shares and, in

the long-term, to pay other obligations at the holding company level that may arise from time to time. The ability

of the Company’s subsidiaries to make payments to the Company depends largely on their financial condition

and ability to generate profits. In addition, because the Company’s subsidiaries are separate and distinct legal

entities, they will have no obligation to pay dividends or to lend or advance the Company funds and may be

restricted from doing so by contract (including financing arrangements), other shareholders or the applicable

laws and regulations of the countries in which they operate. There can be no assurances that the Group’s

subsidiaries will generate sufficient profits and cash flows to pay dividends or lend or advance to the Company

sufficient funds to enable it to meet its obligations, including obligations to pay interest and other expenses, and

to pay dividends, if any, on the Shares. Consequently, holders of the Shares may not receive any return on their

investment unless they sell their Shares for a price greater than that which they paid for them, which may not be

possible. These risks could have a material adverse effect on the Group’s business, financial condition, results of

operations and prospects.

PART 2

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

General

Investors should only rely on the information in this Prospectus. No person has been authorised to give any

information or to make any representations in connection with the Global Offer, other than those

contained in this Prospectus and, if given or made, such information or representations must not be relied

upon as having been authorised by or on behalf of the Company, the Directors, the Selling Shareholders,

or the Banks. No representation or warranty, express or implied, is made by any of the Banks or any

selling agent as to the accuracy or completeness of such information, and nothing contained in this

Prospectus is, or shall be relied upon as, a promise or representation by any of the Banks or any selling

agent as to the past, present or future. Without prejudice to any obligation of the Company to publish a

supplementary prospectus pursuant to the FSMA, neither the delivery of this Prospectus nor any

subscription or sale of Shares pursuant to the Global Offer shall, under any circumstances, create any

implication that there has been no change in the business or affairs of the Group since the date of this

Prospectus or that the information contained herein is correct as of any time subsequent to its date.

The Company will update the information provided in this Prospectus by means of a supplement hereto if a

significant new factor that may affect the evaluation by prospective investors of the Global Offer occurs after the

publication of the Prospectus or if this Prospectus contains any mistake or substantial inaccuracy. The Prospectus

and any supplement thereto will be subject to approval by the FCA and will be made public in accordance with

the Prospectus Rules. If a supplement to the Prospectus is published prior to Admission, investors shall have the

right to withdraw their applications for Shares made prior to the publication of the supplement. Such withdrawal

must be made within the time limits and in the manner set out in any such supplement (which shall not be shorter

than two clear business days after publication of the supplement).

None of the Company, the Directors, the Selling Shareholders or any of the Banks or any of their representatives

is making any representation to any offeree, subscriber or purchaser of the Shares regarding the legality of an

investment by such offeree, subscriber or purchaser under the laws applicable to such offeree, subscriber or

purchaser.

The contents of this Prospectus are not to be construed as legal, business or tax advice and related aspects of a

purchase of the Shares. Each prospective investor should consult his or her own lawyer, financial adviser or tax

adviser for legal, financial or tax advice. In making an investment decision, each investor must rely on their own

examination, analysis and enquiry of the Company and the terms of the Global Offer, including the merits and

risks involved.

This Prospectus is not intended to provide the basis of any credit or other evaluation and should not be

considered as a recommendation by any of the Company, the Directors, the Selling Shareholders, any of the

Banks or any of their representatives that any recipient of this Prospectus should subscribe for or purchase the

Shares. Prior to making any decision as to whether to subscribe for or purchase the Shares, prospective investors

should read this Prospectus. Investors should ensure that they read the whole of this Prospectus carefully and not

just rely on key information or information summarised within it. In making an investment decision, prospective

investors must rely upon their own examination, analysis and enquiry of the Company and the terms of this

Prospectus, including the risks involved.

Investors will be deemed to have acknowledged that: (i) they have not relied on any of the Banks or any person

affiliated with any of them in connection with any investigation of the accuracy of any information contained in

this Prospectus or their investment decision; and (ii) they have relied on the information contained in this

Prospectus, and no person has been authorised to give any information or to make any representation concerning

the Group or the Shares (other than as contained in this Prospectus) and, if given or made, any such other

information or representation should not be relied upon as having been authorised by the Company, the

Directors, the Selling Shareholders or any of the Banks.

In connection with the Global Offer of the Shares, each of the Underwriters and any of their respective affiliates,

may take up a portion of the Shares in the Global Offer as a principal position and in that capacity may retain,

purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of the

Company or related investments in connection with the Global Offer or otherwise. Accordingly, references in

this Prospectus to the Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be

read as including any or issue, offer, subscription, acquisition, dealing or placing to any of the Underwriters and

any of their affiliates acting in that capacity as investors for their own accounts. None of the Underwriters intends

to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or

regulatory obligations to do so.

Over-allotment and stabilisation

In connection with the Global Offer, Morgan Stanley & Co. International plc, as Stabilising Manager, or any of

its agents, may (but will be under no obligation to), to the extent permitted by applicable law, over-allot Shares or

effect other stabilisation transactions with a view to supporting the market price of the Shares at a higher level

than that which might otherwise prevail in the open market. The Stabilising Manager is not required to enter into

such transactions and such transactions may be effected on any securities market, over-the-counter market, stock

exchange or otherwise and may be undertaken at any time during the period commencing on the date of the

commencement of conditional dealings of the Shares on the London Stock Exchange and ending no later than

30 calendar days thereafter. However, there will be no obligation on the Stabilising Manager or any of its agents

to effect stabilising transactions and there is no assurance that stabilising transactions will be undertaken. Such

stabilisation, if commenced, may be discontinued at any time without prior notice. In no event will measures be

taken to stabilise the market price of the Shares above the Offer Price. Except as required by law or regulation,

neither the Stabilising Manager nor any of its agents intends to disclose the extent of any over-allotments made

and/or stabilisation transactions conducted in relation to the Global Offer.

In connection with the Global Offer, the Stabilising Manager may, for stabilisation purposes, over-allot Shares up

to a maximum of 15% of the total number of Shares comprised in the Global Offer. For the purposes of allowing

the Stabilising Manager to cover short positions resulting from any such overallotments and/or from sales of

Shares effected by it during the stabilising period, it is expected that the Over-allotment Shareholders will grant

the Stabilising Manager the Over-allotment Option, pursuant to which the Stabilising Manager may purchase or

procure purchasers for additional Shares up to a maximum of 15% of the total number of Shares comprised in the

Global Offer (the “Over-allotment Shares”) at the Offer Price. The Over-allotment Option will be exercisable in

whole or in part, upon notice by the Stabilising Manager, at any time on or before the 30

calendar day after the

commencement of conditional dealings of the Shares on the London Stock Exchange. Any Over-allotment Shares

made available pursuant to the Over-allotment Option will rank pari passu in all respects with the Shares,

including for all dividends and other distributions declared, made or paid on the Shares, will be purchased on the

same terms and conditions as the Shares being issued or sold in the Global Offer and will form a single class for

all purposes with the other Shares.

Presentation of financial information

The financial information in this Prospectus has been prepared in accordance with International Financial

Reporting Standards as adopted by the European Union (“IFRS”). The significant IFRS accounting policies

applied in the financial information of the Group are applied consistently in the financial information in this

Prospectus.

Financial information

The Company’s financial year runs from 1 January to 31 December. The financial information for the Group and

AVG included in Part 11— “Historical Financial Information” is covered by the accountant’s reports included in

Section A and Section C, which were prepared in accordance with the Standards for Investment Reporting issued

by the Auditing Practices Board in the United Kingdom.

None of the financial information used in this Prospectus has been audited in accordance with auditing standards

generally accepted in the United States of America (“U.S. GAAS”) or auditing standards of the Public Company

Accounting Oversight Board (United States) (“PCAOB”). In addition, there could be differences between the

Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom and U.S.

GAAS or the auditing standards of the PCAOB. Potential investors should consult their own professional

advisers to gain an understanding of the “Historical Financial Information” in Part 11— “Historical Financial

Information” and the implications of differences between the auditing standards noted herein.

Non-IFRS financial information

This Prospectus contains certain financial measures that are not defined or recognised under IFRS, including

Adjusted Billings, Adjusted Billings by Segment, Adjusted Revenue, Adjusted Revenue by Segment, Adjusted

EBITDA, Adjusted Cash EBITDA, Adjusted Net Income and Unlevered Free Cash Flow, each as defined below.

These non-IFRS financial measures and other metrics are unaudited and are not measures recognised under IFRS

or any other internationally accepted accounting principles, and prospective investors should not consider such

measures as an alternative to the IFRS measures included in the Group’s historical financial information. The

non-IFRS financial measures and other metrics, each as defined herein, may not be comparable to similarly titled

measures presented by other companies as there are no generally accepted principles governing the calculation of

these measures and the criteria upon which these measures are based can vary from company to company. Even

though the non-IFRS financial measures and other metrics are used by management to assess the Group’s

financial results and these types of measures are commonly used by investors, they have important limitations as

analytical tools, and investors should not consider them in isolation or as substitutes for analysis of the Group’s

position or results as reported under IFRS. The Group believes that each of these measures provides useful

information with respect to the performance of the Group’s business and operations.

For further description of these non-IFRS financial measures, see Part 9 “Operating and Financial Review—Key

Performance Indicators (“KPIs”)”.

Unaudited financial measures and other metrics in relation to the Group have been derived from (i) management

accounts for the relevant accounting periods presented; (ii) internal financial reporting systems supporting the

preparation of the Group’s historical financial information contained in Part 11— “Historical Financial

Information”; and (iii) the Group’s other business operating systems and records. Management accounts are

prepared using information derived from accounting records used in the preparation of the Group’s historical

financial information contained in Part 11— “Historical Financial Information” but may also include certain

other assumptions and analyses.

Adjusted Billings

Billings represents the full value of products and services, the majority of which are delivered under subscription

agreements and include sales to new customers plus renewals and additional sales to existing customers

(“Billings”). Under the subscription model, customers pay the Group for the entire amount of the subscription in

cash up front upon initial delivery of the applicable products. Although the cash is paid up front, under IFRS,

subscription revenue is deferred and recognised ratably over the life of the subscription agreement, whereas

non-subscription revenue is typically recognised up front. Adjusted Billings (“Adjusted Billings”) is comprised

of the Group’s Billings (including the Billings of Piriform from the date of its acquisition by the Group on

18 July 2017) as adjusted for the Gross-Up Adjustment (as defined below) and adding Piriform’s Billings for the

period prior to its acquisition, from 1 January 2017 to 17 July 2017 (“Piriform Pre-Acquisition Billings”).

Eighty-four percent of Adjusted Billings for the year ended 31 December 2017 were comprised of Billings from

subscription agreements of between one and three years (and 88% of Adjusted Billings for the year ended

31 December 2017, excluding Discontinued Business), the majority of which lasted approximately one year.

The “Gross-Up Adjustment” refers to the estimated impact of the additional amount of 2015 and 2016 revenue

and expenses and their deferral that would have been recognised by Avast had the contractual arrangements with

certain customers qualified to have been recognised on a gross (of commissions to e-commerce shopping cart and

online payment processes service providers) rather than a net basis prior to 2017 (AVG had historically

recognised Billings and revenues on a gross basis, whereas Avast recognised them on a net basis). From 2017,

the revenue and expenditure for these arrangements have been recognised by the Group on a gross basis.

Adjusted Billings

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Revenue ....................................... 425.8 418.6 251.0 340.7 652.9 49.4

Net deferral of revenue ............................ (1.8) (12.7) 36.2 76.8 147.5 54.6

Billings ........................................ 424.0 405.9 287.2 417.5 800.4 104.0

Gross-Up Adjustment ............................. — — 27.8 26.0 — —

Piriform Pre-Acquisition Billings .................... ————10.9 —

Adjusted Billings ................................ 424.0 405.9 315.0 443.5 811.3 104.0

The following is a reconciliation of the Group’s Billings to the Group’s Adjusted Billings by segment for the

years ended 31 December 2015, 2016 and 2017, and the reconciliation of AVG’s Billings to Adjusted Billings by

segment for the years ended 31 December 2015 and 2016 and the three months ended 31 December 2016, is as

follows:

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Billings

Consumer ...................................... 360.9 352.5 275.6 393.9 736.3 91.3

Direct ...................................... 278.8 286.3 210.0 317.4 622.5 75.8

Indirect .................................... 5.5 11.3 40.8 53.5 75.3 4.3

Discontinued Business ........................ 76.6 54.9 24.8 23.0 38.5 11.2

SMB .......................................... 63.1 53.4 11.6 23.6 64.1 12.7

Total Billings ................................... 424.0 405.9 287.2 417.5 800.4 104.0

Gross-Up Adjustment

Consumer ...................................... — — 27.3 25.5 — —

Direct ...................................... — — 27.3 25.5 — —

Indirect .................................... ————— —

Discontinued Business ........................ ————— —

SMB .......................................... — — 0.5 0.5 — —

Total Gross-Up Adjustment ....................... — — 27.8 26.0 ——

Piriform Pre-Acquisition Billings

Consumer ...................................... ————10.1 —

Direct ...................................... ———— 6.1 —

Indirect .................................... ———— 4.0 —

Discontinued Business ........................ ————— —

SMB .......................................... ———— 0.8 —

Total Piriform Pre-Acquisition Billings ............. ————10.9 —

Adjusted Billings by Segment

Consumer ...................................... 360.9 352.5 302.9 419.4 746.4 91.3

Direct ...................................... 278.8 286.3 237.3 342.9 628.6 75.8

Indirect .................................... 5.5 11.3 40.8 53.5 79.3 4.3

Discontinued Business ........................ 76.6 54.9 24.8 23.0 38.5 11.2

SMB .......................................... 63.1 53.4 12.1 24.1 64.9 12.7

Total Adjusted Billings ........................... 424.0 405.9 315.0 443.5 811.3 104.0

Total Adjusted Billings (excl. Discontinued

Business) ..................................... 347.4 351.0 290.2 420.5 772.8 92.8

Adjusted Revenue

Adjusted Revenue represents the Group’s reported revenue (including Piriform from the date of its acquisition by

the Group on 18 July 2017) adjusted for the Deferred Revenue Haircut Reversal (as defined below)

(“Underlying Revenue”), as further adjusted for the Gross-Up Adjustment (as defined above), and the Piriform

Revenue Adjustments (as defined below).

Under IFRS 3, Business Combinations, an acquirer must recognise assets acquired and liabilities assumed at fair

value as of the acquisition date. The process of determining the fair value of deferred revenues acquired often

results in a significant downward adjustment to the target’s book value of deferred revenues. The reversal of the

downward adjustment to the book value of deferred revenues of companies the Group has acquired during the

periods under review is referred to as the “Deferred Revenue Haircut Reversal”.

“Piriform Revenue Adjustment” is defined as the additional revenue that the Group would have recognised in

2017 had the Piriform business always been a part of the Group, following consistent accounting policies and

assuming there would not have been any business combination deferred revenue haircut recorded under IFRS.

This differs to the pro forma revenue referred to in the business combination footnote in the Group Historical

Financial Information, which discloses the additional revenue that would have been recorded had the business

combination occurred on 1 January 2017 (which would exclude the impact of revenue recognised for Billings

made prior to 1 January 2017).

The reconciliation of the Group’s reported revenue to Adjusted Revenue for the years ended 31 December 2015,

2016 and 2017, and the reconciliation of AVG’s reported revenue to Adjusted Revenue for the years ended

31 December 2015 and 2016 and the three months ended 31 December 2016, is as follows:

Adjusted Revenue

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Revenue ....................................... 425.8 418.6 251.0 340.7 652.9 49.4

Deferred Revenue Haircut Reversal .................. — — 17.9 56.7 98.0 54.2

Underlying Revenue ............................. 425.8 418.6 268.9 397.4 750.9 103.6

Gross-Up Adjustment ............................. — — 25.8 24.1 12.9 —

Piriform Revenue Adjustment ....................... ————15.6 —

Adjusted Revenue ............................... 425.8 418.6 294.7 421.5 779.5 103.6

The reconciliations of the Group’s reported revenue by segment to Adjusted Revenue by segment for the years

ended 31 December 2015, 2016 and 2017, and the reconciliation of AVG’s reported revenue by segment to

Adjusted Revenue by segment for the years ended 31 December 2015 and 2016 and the three months ended

31 December 2016, is as follows:

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Revenue

Consumer ...................................... 361.9 358.1 240.7 324.2 604.8 43.9

Direct ...................................... 279.8 291.9 175.3 249.8 491.1 28.4

Indirect .................................... 5.5 11.3 40.6 51.4 75.2 4.3

Discontinued Business ........................ 76.6 54.9 24.8 23.0 38.5 11.2

SMB .......................................... 63.9 60.5 10.3 16.5 48.1 5.5

Total Revenue .................................. 425.8 418.6 251.0 340.7 652.9 49.4

Deferred Revenue Haircut Reversal

Consumer ...................................... — — 14.5 45.8 79.3 44.6

Direct ...................................... — — 14.5 45.8 79.3 44.6

Indirect .................................... ————— —

Discontinued Business ........................ ————— —

SMB .......................................... — — 3.4 10.9 18.7 9.6

Total Deferred Revenue Haircut Reversal ........... — — 17.9 56.7 98.0 54.2

Underlying Revenue

Consumer ...................................... 361.9 358.1 255.2 370.0 684.1 88.5

Direct ...................................... 279.8 291.9 189.8 295.6 570.4 73.0

Indirect .................................... 5.5 11.3 40.6 51.4 75.2 4.3

Discontinued Business ........................ 76.6 54.9 24.8 23.0 38.5 11.2

SMB .......................................... 63.9 60.5 13.7 27.4 66.8 15.1

Total Underlying Revenue ........................ 425.8 418.6 268.9 397.4 750.9 103.6

Gross-Up Adjustment

Consumer ...................................... — — 25.2 23.6 12.6 —

Direct ...................................... — — 25.2 23.6 12.6 —

Indirect .................................... ————— —

Discontinued Business ........................ ————— —

SMB .......................................... — — 0.6 0.5 0.3 —

Total Gross-Up Adjustment ....................... — — 25.8 24.1 12.9 —

Piriform Revenue Adjustment

Consumer ...................................... ————14.4 —

Direct ...................................... ————10.4 —

Indirect .................................... ———— 4.0 —

Discontinued Business ........................ ————— —

SMB .......................................... ———— 1.2 —

Total Piriform Revenue Adjustment ................ ————15.6 —

Adjusted Revenue by Segment

Consumer ...................................... 361.9 358.1 280.4 393.6 711.1 88.5

Direct ...................................... 279.8 291.9 215.0 319.2 593.4 73.0

Indirect .................................... 5.5 11.3 40.6 51.4 79.2 4.3

Discontinued Business ........................ 76.6 54.9 24.8 23.0 38.5 11.2

SMB .......................................... 63.9 60.5 14.3 27.9 68.3 15.1

Total Adjusted Revenue .......................... 425.8 418.6 294.7 421.5 779.5 103.6

Total Adjusted Revenue (excl. Discontinued

Business) ..................................... 349.2 363.7 269.9 398.5 741.0 92.4

Adjusted EBITDA

Adjusted earnings before interest, taxation, depreciation and amortisation (“Adjusted EBITDA”) is defined as

the Group’s operating loss/profit before depreciation, amortisation of non-acquisition acquisition intangible

assets, share-based payments, exceptional items, amortisation of acquisition intangible assets, capitalised

research and development costs, the Deferred Revenue Haircut Reversal (as described above), and the COGS

Deferral Adjustments (as described below). Piriform has been included from the date of its acquisition by the

Group (18 July 2017). No adjustment has been made to reverse any Piriform Deferred Revenue Haircut that

would have been recognised had Piriform followed Avast’s accounting policies pre-acquisition.

There was no deferred cost of goods sold (“COGS”) balance consolidated by the Group in the acquisition

balance sheet of AVG in 2016 and thus no subsequent expense was recorded as the revenue in respect of

pre-acquisition date billings was recognised. The “COGS Deferral Adjustments” refers to an adjustment to

reflect the recognition of deferred cost of goods sold expenses that would have been recorded in 2016 and 2017

in respect of pre-acquisition date AVG billings, had the AVG and the Group’s businesses always been combined

and had AVG always been deferring cost of goods sold.

The reconciliation of the Group’s reported operating profit to Adjusted EBITDA for the years ended

31 December 2015, 2016 and 2017, and the reconciliation of AVG’s reported operating profit to Adjusted

EBITDA for the years ended 31 December 2015 and 2016 and the three months ended 31 December 2016, is as

follows:

Adjusted EBITDA

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Operating profit ................................ 77.3 (0.2) 99.6 31.9 124.3 (38.3)

Share-based payments

(1)

........................... 15.3 14.8 6.1 2.7 7.7 —

Exceptional items

(2)

............................... 9.0 86.9 0.8 69.8 34.8 27.6

Amortisation of acquisition intangible assets ........... 31.0 30.1 59.2 79.4 132.9 —

Underlying Operating Profit ...................... 132.6 131.6 165.7 183.8 299.7 (10.7)

Deferred Revenue Haircut Reversal .................. — — 17.9 56.7 98.0 54.2

COGS Deferral Adjustments ........................ — — — (5.1) (7.8) (5.1)

Depreciation .................................... 9.8 11.4 3.3 6.7 15.0 3.0

Capitalised research and development costs

(3)

.......... (3.9) (5.3) — — — —

Amortisation of non-acquisition intangible assets ....... 5.5 5.9 0.7 1.7 3.7 0.8

Adjusted EBITDA ............................... 144.0 143.6 187.6 243.8 408.6 42.2

(1) Refers to remuneration of employees in the form of share-based payment transactions whereby employees render services as

consideration for equity instruments. The cost of equity-settled transactions is recognised, together with a corresponding increase in other

capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled.

(2) Refers to material and non-recurring items of income and expense which Group believes should be separately disclosed to show the

underlying business performance of the Group more accurately. Exceptional items include primarily costs related to AVG Acquisition,

such as consultancy and professional fees, and integration such as severance payments, retention bonuses and office related costs. See

Note 13 of the audited consolidated financial information for the periods indicated for additional information.

(3) The decision of whether to capitalise costs incurred in developing assets that will have a useful economic life exceeding one year is based

on management’s judgment of whether such developing assets’ technological and economic feasibility are confirmed.

Adjusted Cash EBITDA

Cash earnings before interest, taxation, depreciation and amortisation (“Adjusted Cash EBITDA”) is defined as

Adjusted EBITDA plus the net deferral of revenue, the net change in deferred cost of goods sold and reversal of

the COGS Deferral Adjustments. Piriform has been included from the date of its acquisition by the Group (18

July 2017).

The reconciliation of the Group’s Adjusted EBITDA to Adjusted Cash EBITDA for the years ended

31 December 2015, 2016 and 2017, and the reconciliation of AVG’s Adjusted EBITDA to Adjusted Cash

EBITDA for the years ended 31 December 2015 and 2016 and the three months ended 31 December 2016, is as

follows:

Adjusted Cash EBITDA

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Adjusted EBITDA ............................... 144.0 143.6 187.6 243.8 408.6 42.2

Net deferral of revenue ............................ (1.8) (12.7) 18.4 20.1 49.5 0.4

Net change in deferred cost of goods sold ............. (5.5) (1.6) — (6.6) (20.6) (6.3)

Reversal of COGS Deferral Adjustments .............. — — — 5.1 7.8 5.1

Adjusted Cash EBITDA .......................... 136.7 129.3 206.0 262.4 445.3 41.4

Adjusted Net Income

Adjusted Net Income represents net income plus the Deferred Revenue Haircut Reversal, share-based payments,

exceptional items, amortisation of acquisition intangible assets, amortisation of capitalised research and

development costs, unrealised foreign exchange gain/loss on EUR tranche of bank loan, tax impact on foreign

exchange difference on intercompany loans, recognition of capitalised debt issuance costs as a result of early

extinguishment of external loan, and the COGS Deferral Adjustments, less capitalised research and development

costs and the tax impact of the foregoing adjusting items. Piriform has been included from the date of its

acquisition by the Group (18 July 2017).

The reconciliation of the Group’s reported net income to Adjusted Net Income for the years ended 31 December

2015, 2016 and 2017, and the reconciliation of AVG’s reported net income to Adjusted Net Income for the years

ended 31 December 2015 and 2016 and the three months ended 31 December 2016, is as follows:

Adjusted Net Income

Year ended 31 December

Three months

ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Net income ...................................... 49.2 (28.4) 71.5 24.6 (33.8) (19.6)

Deferred Revenue Haircut Reversal ................... — — 17.9 56.7 98.0 54.2

Share-based payments

(1)

............................ 15.3 14.8 6.1 2.7 7.7 —

Exceptional items

(2)

............................... 9.0 86.9 0.8 69.8 34.8 27.6

Amortisation of acquisition intangible assets ............ 31.0 30.1 59.2 79.4 132.9 —

Amortisation of capitalised research and development

costs ......................................... 1.2 2.0 — — — —

Capitalised research and development costs

(3)

........... (3.9) (5.3) — — — —

Unrealised foreign exchange gain/loss on EUR tranche of

bank loan ..................................... — — — (26.7) 63.0 —

Tax impact on foreign exchange difference on

intercompany loans .............................. — — (10.0) (8.6) 19.0 —

Recognition of capitalised debt issuance costs as a result of

early extinguishment of external loan

(4)

.............. — 8.5 — — — —

COGS Deferral Adjustments ........................ — — — (5.1) (7.8) (5.1)

Tax impact on adjusting items ....................... (14.9) (30.0) (15.0) (33.3) (69.7) (16.5)

Adjusted Net Income ............................. 86.9 78.6 130.5 159.5 244.1 40.6

(1) Refers to remuneration of employees in the form of share-based payment transactions whereby employees render services as

consideration for equity instruments. The cost of equity-settled transactions is recognised, together with a corresponding increase in other

capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled.

(2) Refers to material and non-recurring items of income and expense which the Group believes should be separately disclosed to show the

underlying business performance of the Group more accurately. See Note 13 of the audited consolidated financial information for the

periods indicated for additional information.

(3) The decision of whether to capitalise costs incurred in developing assets that will have a useful economic life exceeding one year is based

on management’s judgment of whether such developing assets’ technological and economic feasibility are confirmed.

(4) Relates to arrangement fees associated with the third-party loan entered into in 2014 which were capitalised and amortised over the term

of the loan using the effective interest method. On 30 September 2016, the Company repaid the loan early as part of the AVG

Acquisition and therefore recognised all remaining capitalised arrangement fees.

Unlevered Free Cash Flow

Unlevered Free Cash Flow represents Adjusted Cash EBITDA (as adjusted for exceptional items as per the

definition of “Adjusted Cash EBITDA” above) less purchases of property, plant and equipment and intangibles,

plus cash flows in relation to changes in working capital (excluding change in deferred revenue and change in

deferred cost of goods sold as these were already included in Adjusted Cash EBITDA) and taxation. Changes in

working capital and taxation are as per the cash flow statement on an unadjusted historical basis and unadjusted

for exceptional items. Piriform has been included from the date of its acquisition by the Group (18 July 2017).

The Group believes that Unlevered Free Cash Flow is an appropriate supplemental measure that provides useful

information to the Group and investors about the amount of cash generated by the Group’s business.

Accordingly, the Group believes that Unlevered Free Cash Flow provides useful information to management to

run the Group’s business and allocate resources.

The reconciliation of the Group’s Adjusted Cash EBITDA to Unlevered Free Cash Flow for the years ended

31 December 2015, 2016 and 2017, and the reconciliation of AVG’s Adjusted Cash EBITDA to Unlevered Free

Cash flow for the years ended 31 December 2015 and 2016 and the three months ended 31 December 2016, is as

follows:

Unlevered Free Cash Flow

Year ended 31 December

Three months ended

31 December

AVG Group AVG

2015 2016 2015 2016 2017 2016

(in $ millions)

(unaudited)

Adjusted Cash EBITDA ..................... 136.7 129.3 206.0 262.4 445.3 41.4

Capital expenditure .......................... (14.6) (18.8) (12.2) (9.2) (15.9) (4.3)

Change in working capital:

Change in trade and other receivables

(excluding change in deferred COGS) ...... (9.4) 3.5 (6.7) 8.9 (24.5) 1.0

Change in trade and other payables .......... 4.3 (2.7) 6.4 10.8 (10.6) 3.2

Income tax paid ............................. (6.1) (2.2) — (21.0) (54.8) (0.4)

Unlevered Free Cash Flow

(1)

.................. 110.9 109.1 193.5 251.9 339.5 40.9

(1) Ignores the Gross-Up Adjustment as impact is nil.

Currency presentation

Unless otherwise indicated, all references to “U.S. dollars”, “USD”, “$” or “US$” are to the lawful currency of

the United States. The Company prepares its financial statements in U.S. dollars. All references in this

Prospectus to “sterling”, “pounds sterling”, “GBP”, “£”, or “pence” are to the lawful currency of the United

Kingdom.

The following tables set out, for the periods set forth below, the high, low, average and period-end Bloomberg

Composite Rate expressed as U.S. dollar per £1.00. The Bloomberg Composite Rate is a “best market”

calculation, in which, at any point in time, the composite bid rate is equal to the highest bid rate of all currently

active, contributed, bank indications, and the composite ask rate is equal to the lowest ask rate offered by these

same bank indications. The Bloomberg Composite Rate is a mid-value rate between the composite bid rate and

the composite ask rate. The rates may differ from the actual rates used in the preparation of the combined

historical financial information and other financial information appearing in this Prospectus.

The average rate for a year, a month, or for any shorter period, means the average of the final daily Bloomberg

Composite Rates during that year, month, or shorter period, as the case may be.

Period (Year/Month) Period end Average High Low

(GBP per $1.00)

2015 ....................................................... 0.6787 0.6545 0.6827 0.6298

2016 ....................................................... 0.8101 0.7408 0.8224 0.6753

2017 ....................................................... 0.7395 0.7768 0.8285 0.7362

January 2018 ................................................ 0.7050 0.7242 0.7407 0.7015

February 2018 ............................................... 0.7253 0.7161 0.7253 0.7028

March 2018 ................................................. 0.7125 0.7156 0.7280 0.7030

Source: Bloomberg

Roundings

Certain data in this Prospectus, including financial, statistical, and operating information has been rounded. As a

result of the rounding, the totals of data presented in this Prospectus may vary slightly from the actual arithmetic

totals of such data. Percentages in tables have been rounded and accordingly may not add up to 100%.

Market, economic and industry data

Unless the source is otherwise stated, the market, economic and industry data in this Prospectus constitute the

Directors’ estimates, using underlying data from independent third parties. The Company obtained market data

and certain industry forecasts used in this Prospectus from internal surveys, reports and studies, where

appropriate, as well as market research, publicly available information and industry publications, including

publications and data compiled by the Boston Consulting Group.

The Company confirms that all such data contained in this Prospectus has been accurately reproduced and, so far

as the Company is aware and able to ascertain, no facts have been omitted that would render the reproduced

information inaccurate or misleading.

Service of process and enforcement of civil liabilities

The Company has been incorporated under English law. Service of process upon Directors and officers of the

Company may be difficult to obtain within the United States. Furthermore, since most directly owned assets of

the Company are outside the United States, any judgment obtained in the United States against it may not be

collectible within the United States. There is doubt as to the enforceability of certain civil liabilities under U.S.

federal securities laws in original actions in English courts, and, subject to certain exceptions and time

limitations, English courts will treat a final and conclusive judgment of a U.S. court for a liquidated amount as a

debt enforceable by fresh proceedings in the English courts.

No incorporation of website information

The contents of the Company’s website do not form part of this Prospectus.

Definitions and glossary

Certain terms used in this Prospectus, including all capitalised terms and certain technical and other items, are

defined and explained in Part 15—“Definitions and Glossary”.

Information not contained in this Prospectus

No person has been authorised to give any information or make any representation other than those contained in

this Prospectus and, if given or made, such information or representation must not be relied upon as having been

so authorised. Neither the delivery of this Prospectus nor any subscription or sale made hereunder shall, under

any circumstances, create any implication that there has been no change in the affairs of the Company since the

date of this Prospectus or that the information in this Prospectus is correct as of any time subsequent to the date

hereof.

Information regarding forward-looking statements

This Prospectus includes forward-looking statements. These forward-looking statements involve known and

unknown risks and uncertainties, many of which are beyond the Group’s control and all of which are based on

the Directors’ current beliefs and expectations about future events. Forward-looking statements are sometimes

identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”,

“should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”,

“positioned” or “anticipates” or the negative thereof, other variations thereon or comparable terminology. These

forward-looking statements include all matters that are not historical facts. They appear in a number of places

throughout this Prospectus and include statements regarding the intentions, beliefs or current expectations of the

Directors or the Group concerning, among other things, the results of operations, financial condition, prospects,

growth, strategies, and dividend policy of the Group and the industry in which it operates. In particular, the

statements under the headings “Summary”, “Risk Factors”, “Business” and “Operating and Financial Review”

regarding the Company’s strategy and other future events or prospects are forward-looking statements.

These forward-looking statements and other statements contained in this Prospectus regarding matters that are

not historical facts involve predictions. No assurance can be given that such future results will be achieved;

actual events or results may differ materially as a result of risks and uncertainties facing the Group. Such risks,

uncertainties and other important factors include, but are not limited to, those listed under the heading “Risk

Factors”, including changes in economic conditions, the Group’s competitive environment, the Group’s ability to

execute its strategies, including new product development and launches, as well as other factors within and

beyond the Group’s control that may affect its planned strategies and operational initiatives including actions

taken by counterparties.

The following include some but not all of the factors that could cause actual results or events to differ materially

from the anticipated results or events:

• risks related to revenue concentration in the consumer desktop market;

• actual, possible or perceived defects, disruptions or vulnerabilities in the Group’s products, solutions and

cloud infrastructure;

• if computing platforms make it harder or impossible for users to install the Group’s security solutions, or for

the Group to communicate with or distribute products to its users, or for the Group to retrieve information

that the Group believes it needs;

• failure to maintain user engagement and continue to attract new users;

• non-renewal of short-term contracts;

• highly competitive environment;

• if search engines, download sites or app stores change their rankings;

• inability to successfully integrate recently acquired companies or any business it may acquire in the future;

• operational challenges related to international scope;

• failure to keep up with rapid changes in technologies and the evolution of malware and virus threats;

• failure to comply with consumer laws and regulations;

• failure to accurately measure the number and retention of users at any time;

• inability to maintain and enhance its brands’ reputations;

• reliance on one e-commerce service provider;

• fluctuations in currency exchange rates;

• attraction and retention of specialised personnel;

• risks related to its operation of VPN products;

• failure to protect its intellectual property rights and proprietary information and prevent third parties from

making unauthorised use of its products and technology;

• claims of intellectual property infringement by third parties;

• failure to sell products effectively through third party distributors and resellers;

• increased user demands on technical support services;

• evolving sanctions laws as well as governmental export controls;

• the use of open source and third party software;

• disruption of servers;

• periodic litigation and other regulatory proceedings; and

• changes in applicable tax rulings and taxation requirements.

Should one or more of these risks or uncertainties materialise or should any of the assumptions underlying the

above or other factors prove to be incorrect, the Group’s actual future business, results of operations, financial

condition, liquidity, performance, prospects, anticipated growth, strategies or opportunities could differ

materially from those described herein as currently anticipated, believed, estimated or expected.

Investors or potential investors should not place undue reliance on the forward looking statements in this

Prospectus. Investors should read the sections of this Prospectus titled “Risk Factors”, “Industry Overview”,

“Business” and “Operating and Financial Review” for a more complete discussion of the factors that could affect

the Group’s future performance and the markets in which it operates. In light of the possible changes to the

Group’s beliefs, assumptions and expectations, the forward looking events described in this Prospectus may not

occur. Additional risks currently not known to the Group or that the Group has not considered material as of the

date of this Prospectus could also cause the forward looking events discussed in this Prospectus not to occur.

Forward looking statements involve inherent risks and uncertainties and speak only as of the date they are made.

Such forward-looking statements contained in this Prospectus speak only as of the date of this Prospectus. The

Company, the Directors, the Selling Shareholders and the Banks expressly disclaim any obligation or

undertaking to update these forward-looking statements contained in the Prospectus to reflect any change in their

expectations or any change in events, conditions, or circumstances on which such statements are based unless

required to do so by applicable law, the Prospectus Rules, the Listing Rules, or the DGTRs.

PART 3

DIRECTORS, SECRETARY, REGISTERED AND HEAD OFFICE AND ADVISERS

Directors ..................................... John Schwarz (Independent Chairman)

Vincent Steckler (Chief Executive Officer)

Ondrej Vlcek (Executive Vice President, General

Manager of Consumer, Chief Technology Officer)

Philip Marshall (Chief Financial Officer)

Pavel Baudisˇ (Non-Executive Director)

Eduard Kucˇera (Non-Executive Director)

Lorne Somerville (Non-Executive Director)

Warren Finegold (Senior Independent Non-Executive

Director)

Ulf Claesson (Independent Non-Executive Director)

Erwin Gunst (Independent Non-Executive Director)

Company Secretary ............................ Alan Rassaby

Registered and head office of the Company ........ 110High Holborn

London WC1V 6JS

United Kingdom

Joint Global Co-ordinators, Joint Bookrunners and

Joint Sponsors .............................. Morgan Stanley & Co. International plc

25 Cabot Square

Canary Wharf

London E14 4QA

United Kingdom

1585 Broadway

New York, New York 10036

United States

UBS Limited

5 Broadgate

London EC2M 2QS

United Kingdom

1285 Avenue of the Americas

New York, New York 10019

United States

Joint Bookrunners ............................. Barclays Bank PLC

5 The North Colonnade

London E14 4BB

United Kingdom

Merrill Lynch International

2 King Edward Street

London EC1A 1HQ

United Kingdom

Credit Suisse Securities (Europe) Limited

One Cabot Square

London E14 4QJ

United Kingdom

Jefferies International Limited

Vintners Place

68 Upper Thames Street

London EC4V 3BJ

United Kingdom

Co-Lead Manager ............................. KeyBanc Capital Markets Inc.

127 Public Square

Cleveland, Ohio 44114

United States of America

Financial Adviser .............................. NMRothschild & Sons Limited

New Court

St. Swithin’s Lane

London EC4N 8AL

United Kingdom

English and U.S. legal advisers to the Company ..... White & Case LLP

5 Old Broad Street

London EC2N 1DW

United Kingdom

English and U.S. legal advisers to the Joint Global

Co-ordinators, Joint Bookrunners, Sponsor and

Co-Lead Manager ...........................

Latham & Watkins (London) LLP

99 Bishopsgate

London EC2M 3XF

United Kingdom

Reporting Accountants and Auditors ............. Ernst & Young LLP

1 More London Place

London, SE1 2AF

United Kingdom

Registrars .................................... Equiniti Limited

Aspect House

Spencer Road

Lancing Business Park

West Sussex BN99 6DA

United Kingdom

PART 4

EXPECTED TIMETABLE OF PRINCIPAL EVENTS AND OFFER STATISTICS

Expected timetable of principal events

Event Time and Date

Announcement of Offer Price and allocation ................... 7.00 a.m. on 10 May 2018

Publication of Prospectus .................................. 10May2018

Commencement of conditional dealings on the London Stock

Exchange ............................................. 8.00 a.m. on 10 May 2018

Admission and commencement of unconditional dealings in the

Shares on the London Stock Exchange ...................... 8.00 a.m. on 15 May 2018

Crediting of Shares to CREST accounts ....................... 15May2018

Despatch of definitive share certificates (where applicable) ....... Onorbefore 30 May 2018

It should be noted that, if Admission does not occur, all conditional dealings will be of no effect and any

such dealings will be at the sole risk of the parties concerned. Temporary documents of title will not be

issued.

All times are London times. Each of the times and dates in the above timetable is subject to change without

further notice.

Global Offer statistics

(1)

Offer Price (per Share) ......................................................... 250pence

Number of Shares being offered in the Global Offer

(2)

................................ 240,792,902

—New Shares ................................................................ 58,977,478

—Existing Shares ............................................................. 181,815,424

Percentage of the issued Share capital being offered in the Global Offer

(2)

................. 25.3%

Number of Existing Shares subject to the Over-allotment Option

(3)

...................... 36,118,935

Number of Shares in issue immediately following the Global Offer

(4)

.................... 952,639,185

Market capitalisation of the Company on Admission at the Offer Price

(5)

................. £2,381.6 million

Estimated net proceeds of the Global Offer receivable by the Company

(6)

................. £125.3 million

Estimated net proceeds of the Global Offer receivable by the Selling Shareholders

(2)(7)

....... £445.8 million

Notes:

(1) Assumes all of the steps set out in paragraph 2 of Part 14—“Additional Information—Reorganisation” are completed in full. To the

extent that these steps are not completed in full, the Global Offer will not proceed and Admission will not be sought.

(2) Does not include any Over-allotment Shares that may be sold pursuant to the Over-allotment Option.

(3) The maximum number of Shares subject to the Over-allotment Option is 15% of the total number of Shares being offered in the Global

Offer.

(4) On Admission, options under the Share Option Plans will be outstanding over a total of 82,242,591 Shares, of which 34,317,475 Shares

will relate to vested options and 47,925,116 Shares will related to unvested options. All of the 34,317,475 Shares related to vested

options have an exercise price below the IPO price (“in the money”). Of the 47,925,116 Shares related to unvested options, 36,969,335

Shares relate to options with an exercise price below the IPO price and 10,955,781 Shares relate to options with an exercise price at or

above the IPO price (“out of the money”). It is anticipated that, on Admission, the average weighted exercise price payable in relation to

a vested Share under option will be 55 pence; the average weighted exercise payable related to a unvested Share under option will be (i)

110 pence for those unvested Shares under option which are in the money, and (ii) 266 pence for those unvested Shares under option

which are out of the money.

(5) The market capitalisation of the Company at any given time will depend on the market price of the Shares at that time. There can be no

assurance that the market price of a Share will equal or exceed the Offer Price.

(6) The estimated net proceeds receivable by the Company are stated after deduction of the estimated base underwriting commissions and

other fees and expenses of the Global Offer payable by the Company, which are currently expected to be approximately £22.1 million.

The Company will not receive any of the net proceeds from the sale of the Existing Shares in the Global Offer by the Selling

Shareholders or the sale of Shares pursuant to the Over-allotment Option.

(7) The estimated net proceeds receivable by the Selling Shareholders are stated after deduction of the estimated base underwriting

commissions and other fees and expenses of the Global Offer (excluding any stamp duties) payable by the Selling Shareholders, which

are currently expected to be approximately £8.8 million.

PART 5

INDUSTRY OVERVIEW

Overview of the Group’s addressable market

The Group offers products directly to consumers and small and medium sized businesses (“SMB”) in several

markets encompassing cybersecurity, device computing performance and data privacy. The Group also generates

revenue indirectly through the analytics, affiliate publishing and web browsing markets. Despite operating in

several varied markets, the core of the Group’s business is its global user base. The Group has achieved

significant scale and success by developing products for hundreds of millions of consumers who have recognised

the growing need for solutions that enable them to live their online lives safely and securely.

As increasingly larger segments of consumers’ lives become digital, fear of financial losses to hackers has risen.

The primary attack vectors fuelling these fears include ransomware, identity theft and socially engineered

malware. Ransomware enables hackers to extort consumers and businesses by first encrypting all of the data at

the centre of consumers’ digital lives and then demanding monetary compensation to prevent the permanent

deletion of that data. Identity theft involves stealing key personal information, often online or in a digital form, to

gain benefits, financial or otherwise. Socially engineered malware disguises malware inside seemingly innocuous

links, email attachments and images to covertly collect consumer information. As a result, consumers reported

worrying approximately twice as often about digital crimes such as identity theft and online financial hacking

compared to physical crimes such as car theft, home burglary and terrorism (source: Gallup —Gallup Poll Social

Series: Crime; October 2017).

2017 Gallup Poll—How often do you, yourself, worry about the following things? (% frequently or

occasionally)

30%

36%

38%

66%

67%

Victim of

Terrorism

Home BurglarizedCar StolenIdentity Theft

Victim

Financial Info

Stolen By Hackers

Source: Gallup–American’s Greatest Fears

Furthermore, the scale and magnitude of broader cybercrime has increased. According to Symantec, 53% of

consumers have experienced a cybercrime or know someone who has, and the average affected consumer spends

approximately 24 hours of total time recovering from a cybercrime. This reduction in consumers’ sense of safety

has culminated in 51% of consumers believing it has become more difficult to stay secure online over the last

five years (source: Norton Cyber Security Insights Report 2016). In total, 978 million consumers were impacted

by a cybercrime in 2017, generating $172 billion in losses to cybercrime during the same period (source: Norton

Cyber Security Insights Report 2017).

The Group’s markets can be divided into three categories: Consumer Direct, Consumer Indirect, and SMB. The

Consumer Direct category includes consumer security, performance and privacy products and services sold

directly to customers to protect their devices and data and to improve device performance. Consumer Indirect

includes a broad range of products and services which aim to generate revenue from the Group’s existing user

community without the direct sale of products or services. These products and services include analytics, affiliate

publishing, secure web browsing, advertising within applications and distribution of third party software. The

SMB category includes endpoint and network security products for small and medium-sized businesses as well as

tools for managed service providers to maintain and monitor security on a customer’s behalf.

The Group believes its current addressable market achieved total revenue of $14.5 billion in 2017 and that the

market will reach revenues of $21.3 billion in 2021, representing a CAGR of 10.1% (source: Company market

study). The Consumer Direct segment revenue projections have been based on global consumer spend on

desktop & mobile antivirus (“AV”), VPN, PC utilities, other consumer endpoint products and protection products

for home-centric IoT devices. The Consumer Indirect segment revenue projections have been based on the

market for paid distribution of consumer software, the non-network half of the e-commerce affiliate publishing

market, the search distribution market represented by third-party browsers, the market for advertising within

applications and a combination of the clickstream analytics and specialised analytics markets. The SMB segment

revenue projections include the global SMB endpoint spend and the total SMB network security spend

attributable to cloud-based, Software-as-a-Service (“SaaS”) products.

Total Addressable Market by Business Segment

$10.4

$3.1

$21.3

$7.8

$5.9

$6.9

$1.8

$14.5

$6.1

$7.7

$2.0

$15.8

$6.6

$8.5

$2.2

$17.3

$7.3

$9.5

$2.6

$19.3

2017 2018 2019 2020 2021

Consumer Direct Consumer Indirect SMB

17-21 CAGR: 10.1%

Note: in billions

Source: Company market study

Consumer Direct

The Consumer Direct market consists broadly of the consumer security and smart home markets which include

the AV, utilities, passwords, customer care, virtual private network (“VPN”) services and smart home markets.

The Group believes that the total Consumer Direct market is projected to grow at a 7.4% CAGR from

$5.9 billion in 2017 to $7.8 billion in 2021 (source: Company market study).

Consumer Direct Addressable Market by Sub-segment

2017 2018 2019 2020 2021

17-21 CAGR: 7.4%

$0.4

$0.6

$5.5

$5.9

$5.5

$6.1

$5.5

$1.1

$6.6

$5.6

$1.7

$7.3

$5.5

$2.3

$7.8

Consumer Securit

Smart Home Protection

Note: in billions

Source: Company market study

Key Consumer Direct Growth Drivers

• Expanding attack surface driven by rapid device growth—Security vendors face significant challenges in

protecting devices as the variety and number of consumer devices rapidly expand. Smartphones, tablets, and

IoT devices have greater capacity to create, store, access and share data resulting in a significantly larger

number of attack vectors available for exploitation. With greater connections between devices, the number

of vulnerabilities and avenues of attack increase dramatically. IoT device growth especially necessitates

more sophisticated protection to defend an increasing number of new connected devices in consumers’

homes. New smart home products will require home network protection capabilities to defend the most

weakly secured hardware.

• Increasing hacker sophistication and number of data breaches—Hackers have industrialised with highly

developed research and development, business operations and money laundering infrastructure. This

professionalisation of hacking enables teams to design more sophisticated attacks that utilise leading

technology, tactics, techniques and procedures. Device makers and security providers must develop

solutions to meet these rising and dynamic challenges. The global scale and variety of victims of the 2017

WannaCry ransomware attack exemplifies the current capability of highly developed cybercriminals to

build mass attacks capable of disrupting broad based infrastructure.

• Users prefer freemium distribution followed by upsell—Anti-virus distribution models have also changed as

users move from paid-only products to freemium vendors with 75% of AV users now using a freemium

brand in 2017, up from just 19% in 2005 (source: Company market study). Given the proliferation of the

free model, vendors have increasingly relied on premium features and capabilities to up-sell users to paid

products.

• Increasing connected time and applications will increase desire for privacy products—As connected

devices, and online applications grow, users are spending more time online. Users are increasingly mobile,

and thus at a higher risk of connecting to unsecured public Wi-Fi connections. VPN solutions address the

need to secure personally identifiable information over unsecured networks.

• Consumer confidence in corporate data governance falling—Several large corporate hacks exposed

hundreds of millions of highly sensitive consumer records to hackers in 2017. As a result, consumer faith in

corporate security dwindled in 2017 as 68% of UK and US consumers no longer trust corporations to handle

their personal information safely. Data privacy has become a top concern for many consumers as 63%

believe they bear responsibility for protecting their own data creating opportunity for data privacy solutions

to cater to this growing consumer fear (source: Gigya 2017 State of Consumer Privacy Trust).

• Users require PC optimisation tools—Given the size and scale of applications and data running on personal

computers, users understand how regular maintenance and clean up tasks can improve system performance

significantly. As a result, users will demand maintenance of the performance of their PC thorough

optimisation tools. Traditional users are also now beginning to utilise higher levels of system processing

power and therefore will continue to drive utilisation of PC optimisation tools.

Consumer security

The Consumer security market encompasses four key product categories: next-generation (“next-gen”) antivirus,

utilities, password management, and VPN services. Next-gen antivirus and mobile security utilise a variety of

pattern recognition, threat detection and device monitoring methodologies to protect computing devices. Utilities

and password management allow more advanced users to optimise their device’s speed and storage usage as well

as manage their various passwords across devices. VPN services protect user privacy by encrypting user data and

network traffic before sending out information through a public connection. The Group believes the consumer

security market achieved total revenue of $5.5 billion in 2017 and will remain stable through 2021.

Next-gen antivirus

Next-gen antivirus products for PC and mobile devices protect against malicious programs such as malware and

ransomware that attempt to steal, destroy or alter users’ information. PC AV solutions block viruses, provide

firewalls, block spam, prevent webcam spying and more for desktops, laptops (notebooks) and premium

ultramobile devices. Additionally, mobile AV solutions enable users to safely connect to Wi-Fi networks, browse

securely online and remove malicious messages for mobile operating systems.

Growth in device shipments, install base totals, and in consumer preference for freemium solutions drives growth

opportunities for AV providers. PC shipments will stay flat between 2017 and 2021, while the total protected PC

install base will decline slightly over the same period (source: Company market study).

Growth in mobile device shipments and total install base stems from the continued penetration of smartphones

globally. Developing countries will see significant growth in mobile install base, benefiting vendors with a broad

geographical user base.

Utilities & Passwords

Utilities optimise hard drive space and decrease device start-up times to improve overall performance. Password

management tools enable users to securely save their passwords all in one place allowing for ease of access and

safekeeping. Fragmentation in the utilities market divides standalone products provided by independent brands

and AV suites’ bundled solutions. Like utilities, the password management market is divided between

independent brands and bundled solutions associated with AV providers. AV providers’ ability to cross-sell

password solutions lends a significant advantage to the AV providers with the security expertise to build

password vaults that hackers cannot reach.

VPN

Virtual private network services utilise a network of servers to securely access private information over the

public internet without sharing personal information over a connection. VPN providers must maintain a network

of servers that user information can move through before eventually moving to its final location. Thus, the

technology requires significant data centre operations to maintain servers across continents.

Market consolidation and efforts to monetise a mostly freemium market signify substantial opportunities for

vendors in the VPN market. Over 150 independent brands earn 82% of revenues, but consolidation has begun as

the top participants in the market secure competitive advantages through inexpensive, scaled servers (source:

Company market study). As maintaining a wide geographic range of servers is critical to VPN services,

economies of scale play a significant role in shaping the market.

Smart Home

Smart Home includes solutions that protect the numerous devices connected to the internet, including kitchen

appliances, baby monitors, smart locks and more. Both hardware and software solutions are available to protect

users from attacks on their connected home devices. Given the variety of potential Smart Home devices, the

market focuses on the network’s safety and possible vectors of attack created by each device.

The exponential growth of Smart Home devices and the growing awareness of risks associated with IoT devices

creates an opportunity for Smart Home solutions. The number of smart homes is expected to grow from 7 million

in 2017 to 50 million in 2021, creating a significant new customer base (source: Company market study).

Consumer awareness of IoT security risks is also growing. Today only 8% of consumers perceive IoT security to

be a risk but 54% expect IoT to represent a much larger risk in the future (source: Company market study).

Recent major hacks include the Mirai botnet attack which scanned specifically for IoT devices and took over

hundreds of thousands of devices and shut off major sites like Twitter, Netflix and Airbnb. This growing

awareness of hacks creates a significant opportunity to sell into the expanding customer base. In addition, market

fragmentation between hardware and software providers has created an opportunity for a software vendor tightly

integrated into a significant number of hardware providers to capture market share. As a result of these factors,

the Group believes the Smart Home market achieved total revenue of $400 million in 2017 and is expected to

achieve total revenue of $2.3 billion by 2021, representing a CAGR of 54.9% (source: Company market study).

Smart Home Devices are Ripe for Hacking

Total Consumer Direct Addressable Market

The Consumer Direct category includes the PC AV, smart home protection, family safety, device clean-up,

password management, customer care, and VPN services markets. The commissioned market study calculated

the total Consumer Direct market as growing at 7.4% CAGR from $5.9 billion in 2017 to $7.8 billion in 2021

(source: Company market study).

Consumer Indirect

The Consumer Indirect category consists of analytics, advertising, third party product distribution and secure

browsing. The analytics market anonymises user data and develops insights into wider consumer behaviour

trends for advertisers and consumer brands. The advertising market provides content and referral links to users to

connect them to e-commerce sites. Secure browsing tools help users to stay safe online and achieve better control

of the sharing of their personal, geographic and device data.

The category is further driven by two forces: the development of consumer digital behaviour and the strength of

the platform and analytics end markets: e-commerce and digital advertising. Broad consumer digital consumption

is primarily driven by the increasing digitalisation of services and the addition of approximately one billion users

to the internet. The strong demand in e-commerce and digital advertising for analytics solutions is expected to

further drive the Consumer Indirect category (source: Company market study).

The Group believes the total Consumer Indirect market will grow at an 11.0% CAGR from 2017 to 2021, from

$6.9 billion in 2017 to $10.4 billion in 2021. The Group further believes that the advertising and distribution

market will grow at a 9.5% CAGR from $4.6 billion in 2017 to $6.6 billion in 2021, that the analytics market will

grow at a 17.6% CAGR from $1.5 billion in 2017 to $2.8 billion in 2021 and that the Group’s total achievable

secure browsing market will grow at a 5.7% CAGR from $0.8 billion in 2017 to $1.0 billion in 2021 (source:

Company market study).

Consumer Indirect Addressable Market by Sub-segment

$4.6

$5.0

$5.5

$6.0

$6.6

$1.5

$1.8

$2.1

$2.4

$2.8

$0.8

$0.9

$1.0

$6.9

$7.7

$8.5

$9.5

$10.4

Advertisin

& Distribution Anal

tics Browser

2017 2018 2019 2020 2021

17-21 CAGR: 11.0%

Note: in billions.

Source: Company market study

Key Consumer Indirect Drivers

Several broad market trends are driving the wider Consumer Indirect industries’ growth:

• High customer acquisition costs drive demand for efficient software distribution—Customer acquisition

costs rise quickly as a business scales forcing companies to invest additional resources to acquire each

incremental customer. To reduce these costs, vendors leverage a variety of customer acquisition channels

including third party distribution. Distributors are typically scaled platforms with broad reach that bundle

other products with their more popular offerings and charge a fee to the third party vendor for each customer

or download acquired. Consumer focused technology companies often have large user bases and less costly

product distribution process creating demand from third party vendors to develop partnerships. As vendors

aim to distribute their products as cost effectively as possible, successful distribution platforms with large

user bases will see significant demand for partnerships.

• Growing number of global e-commerce platforms need affiliate referrals from trusted sources to drive user

traffic—Fuelled by the dramatic growth of the e-commerce market and its need for greater user traffic, the

affiliate referral market will experience significant growth. The two primary vendor categories in the

market, affiliate networks and publishers, aid e-commerce platforms by either publishing content (articles,

coupons, etc.) that drive traffic to brands or working with an affiliate network to push the brand onto many

publishers. A 15% CAGR in e-commerce market revenues from $1.4 trillion in 2017 to $2.3 trillion in 2021

underpins continued growth for affiliates (source: Company market study).

• Providing accurate and meaningful insights into consumer online behaviour requires large consumer data

sets—Advertisers have deployed an increasing amount of targeted advertising and brand awareness

campaigns as the return on investment has proven greater than untargeted efforts. However, targeted

campaigns require content-rich and accurate data to find audiences and match their interests effectively.

Given the varied consumer base advertisers want to target, analytics providers need data sets with both

significant geographic and demographic breadth as well as deep consumer behaviour insights.

• Demand for large consumer data sets growing—The underlying growth in the data licensing and market

research industries, two of the largest buyers of consumer data sets, will drive significant growth in the

analytics industry. Data collection should be with user consent, and sensitive Personally Identifiable

Information (“PII”) must be protected. The Group believes that anonymised data, such as that collected by

the Group, will be increasing in demand. In addition, the percentage share of data licensing and market

research spend dedicated to buying data sets is increasing, compounding the growth in the analytics market.

The importance of online consumer behaviour trends to market research and broad consumer consumption

data is also driving the market.

Advertising and Distribution

Affiliate publishers create content or provide value that pushes user traffic to their website or software

application. Examples of affiliate publishers include coupon or cash back sites, price comparison websites, paid

review or news sites, and social media. The publisher offers a referral link to an e-commerce site alongside their

content and takes a small fee for driving traffic from their site to the e-commerce site. In addition to linking to

e-commerce sites, the Group distributes third party software through its applications. For additional downloads

made as a result of distribution programs, a third party software provider pays fees to the Group.

The underlying growth of e-commerce into a multi-trillion dollar industry fuels growth in the global affiliate

market given the number of new platform and affiliate spend available. Often publishers partner with affiliate

networks that have relationships with numerous e-commerce brands and provide dozens of referral links for

publishers to serve to their users. While the affiliate network market consolidates around the top competitors,

publishing remains fragmented with many competitors across a variety of publisher categories.

eCommerce Affiliate Ecosystem

Publisher partners with a retailer/brand; either via an affiliate network

or via linking site, that partners with multiple retailers

Consumer action

(e.g. purchase)

drives response

from retailer

(e.g. Product

distributed)

Brand retailer

Affiliate Networks

Publisher

Consumer action

Publisher is paid for consumer action (via affiliate network); may earn

commission on purchases/pay per click

Publisher

creates content

(e.g. a review)

driving a

consumer action

(e.g. a purchase)

Source: Company market study

Analytics

Three categories of markets make up the broader analytics market: clickstream data and analytics, data

management platforms and analytic applications. Clickstream providers license large data sets and provide

analytics tools to derive insights from the click-by-click activity of consumers online. Data management

platforms integrate multiple sources of client data into a single platform to develop broad omni-channel analytics

capabilities. Analytic applications providers develop niche analytical capabilities in areas like social media

listening and predictive analytics to provide deeper consumer behaviour insights.

Within the analytics market, the Group focuses on the clickstream data and analytics and analytic applications

subsectors through its analytics business, Jumpshot. The Group believes it is careful in its collection and use of

user data: before the Group’s data is shared with Jumpshot, it is anonymised and devoid of any PII. As a result,

no user will see a third party product targeted uniquely for them from Jumpshot customers. Consumer brands and

advertising agencies use clickstream data and analytics to understand user behaviour on a granular level and

develop insights into how consumers interact with websites and applications. Analytic applications capabilities

allow advertisers and brands to measure the efficacy of their targeted ad campaigns, gain real-time visibility into

consumer sentiment on topics and more.

Demand for large consumer data sets from brands, advertisers, and market researchers drive the clickstream

market. Strong data licensing and digital advertising growth as well as stable market research data spend will

generate significant growth in the clickstream market. The analytic applications market’s fragmented collection

of analytical vendors and niche capabilities make scaling difficult, but overall demand for analytic applications is

far greater than clickstream data. Developing significant share of the analytic applications market for any player

will depend upon their capability to not only gain access to significant quantities of data but also expand their

offerings through deep analytical expertise.

Secure Browsing

Secure desktop browsers provide a safe method of accessing the internet through a web portal. Browsers earn

fees from search providers for driving traffic to search engines, typically on a per search basis. Large search

engines pay significant fees to browser partners who drive traffic to their platforms while increasing internet

usage increases market revenues for the overall ecosystem.

The rapid growth in new internet users, which is projected to increase from 3.7 billion in 2017 to 4.7 billion in

2021, is generating strong secular tailwinds within web browsing (source: Company market study). An

additional one billion internet users represent significant future demand for web browsers and the opportunity to

earn substantial search revenue. While the top market participants represent the vast majority of browser share,

substantial demand for fast, secure, and lightweight browsers creates the opportunity for additional market

participants to capture tens of millions of users. As a result, the Group believes secure web browsing represents a

considerable market opportunity.

SMB

Small and medium sized businesses face several unique security challenges given (1) their lack of dedicated

resources and (2) the substantial rise in cybercrime focused on attacking SMBs’ systems. Current solutions in the

market mainly include endpoint AV and network security solutions. Endpoint AV protects individual devices on a

corporate network with firewalls, anti-malware programs and spam blockers. Network security programs employ

hardware and/or software maintained by the business itself that track network activity and protect against potential

hackers. However, a new hybrid solution, the unified threat management platforms (“UTM”), offers the capability

to efficiently manage and secure small businesses with integrated endpoint and network protection without

requiring significant business resources. With the shift to cloud-deployed UTM, SMBs can protect themselves more

effectively at more attractive prices with vendor-managed solutions that do not drain business resources.

The SMB addressable market includes the SMB cloud networking security and endpoint AV markets. The Group

believes the total SMB market for these solutions will grow at a 14.6% CAGR from $1.8 billion in 2017 to

$3.1 billion in 2021 (source: Company market study).

SMB Addressable Market

$1.8

$2.0

$2.2

$2.6

$3.1

17-21 CAGR: 14.6%

2017 2018 2019 2020 2021

Note: in billions.

Source: Company market study

Key SMB Drivers

• SMBs lack adequate cybersecurity budgets and expertise—For most SMBs, the greatest challenge to

developing better security equates to a lack of expertise and budget to spend on software and hardware.

With 62% of businesses in 2017 stating they do not have the expertise to build strong cybersecurity

programs, the security skills gap remains a major hurdle (source: 2017 State of Cybersecurity in Small &

Medium-Sized Businesses, Ponemon Institute). In addition, a majority of SMBs also do not have the budget

to build out their programs, as 69% do not believe their current spend was adequate in 2017, up from 63% in

2016 (source: 2017 State of Cybersecurity in Small & Medium-Sized Businesses, Ponemon Institute). For

an SMB security vendor to succeed in the market, offerings must meet tight resource and labour and skill

constraints.

• Cybercriminals specifically target SMBs—Hackers attack SMBs because they often do not have the budget

to build significant security capabilities but still hold sensitive employee and financial data. Attack rates

have risen with 61% of SMBs experiencing a cyber-attack in 2017, up from 55% in 2016 (source: 2017

State of Cybersecurity in Small & Medium-Sized Businesses, Ponemon Institute). For 60% of small

companies, an attack forces the business to close down within six months of the event (source: US National

Cyber Security Alliance).

• Unified Threat Management platforms are moving to the cloud—Historically SMBs have relied on either

hardware appliances or virtual appliances for threat management capabilities with significant time and

resources spent maintaining appliances or private cloud. SMBs plan on transitioning to public cloud-based

solutions with 52% of SMBs deploying their UTM in the cloud by 2021, up from 37% in 2017 (source:

Company market study).

Unified Threat Management: Endpoint Protection & Network Security All-in-One

SMBs have historically not adopted extensive security programs due to the high cost of hardware, software, and

staff needed to manage these solutions. To meet increasingly complex security demands in the face of tight

budgets, SMBs need a unified, cloud-based solution to manage their security services with endpoint and network

security capabilities integrated for both cost savings and efficiency. Cloud-based SaaS unified threat management

platforms meet these requirements by managing network and endpoint security needs in a single console while

significantly reducing security costs. As next generation UTM platforms are cloud-based SaaS solutions with

vendor managed updates, hardware spend and staffing needs are minimised. Broadly, SMBs plan on moving

away from standalone products in favour of cloud-based and especially SaaS solutions to simplify the

management process. In addition, SMBs plan to expand beyond just employing basic endpoint protection to also

add secure web gateway (SWG) and UTM platforms, as only 13% of SMBs are expected to rely primarily on just

basic endpoint protection in 2021, down from 34% of SMBs in 2017 (source: Company market study).

SMB Security Environment—Unified Threat Platform

PART 6

BUSINESS

Investors should read this Part 6—“Business” in conjunction with the more detailed information contained in

this Prospectus including the financial and other information appearing in Part 5—“Industry Overview” and

Part 9—“Operating And Financial Review”.

Overview

The Group is the number one provider of security software to the consumer market as measured by number of

users. The Group has been delivering security solutions to the consumer market for the last 30 years and offers a

range of products that protect users’ security, device performance and privacy (collectively, their “digital lives”).

Headquartered in the Czech Republic, the Group has users in almost every country in the world, with more than

435 million users worldwide as of 31 December 2017, of which approximately 4% were users of paid products

(“customers”). As of the same date, there were 59 countries in which the Group had at least one million users.

The Group’s consumer personal computer (“PC”) software products had over 290 million users as of

31 December 2017, approximately six times more than the Group’s nearest competitor.

The Group offers products in two segments: consumer products (which generate direct and indirect revenue

streams) and products for the small and medium business (“SMB”) market. These products secure not just the

devices of users, but also their data, families, networks and homes. The Group offers next-generation consumer

PC antivirus security software under the Avast and AVG brands, each in the form of both free offerings and paid

premium products. In addition to security products, the Group also offers value-added solutions for PCs and

mobile devices focused on performance and privacy, such as optimisation products (including CCleaner, Avast

Cleanup and AVG Tune Up), VPN products (including HideMyAss (“HMA”) and Avast SecureLine and AVG

Secure VPN), password manager products (including Avast Passwords) and family safety products (such as

Location Labs’ mobile parental controls products). The Group is also developing products to address the Smart

Home market and the privacy and security threats posed by the rapid growth of connected devices, collectively

known as the internet of things (“IoT”). In addition, the Group monetises its users indirectly through

advertisements and third party software distribution agreements, as well as through its secure browser, Avast

Secure Browser; its e-commerce offering, SafePrice; and its data analytics business, Jumpshot. Specifically

designed for the SMB market, the Group offers cloud and on-premises antivirus protection and IT administrative

solutions under both the Avast and AVG brands.

The Group’s antivirus solutions use artificial intelligence (“AI”) and employ machine-learning capabilities to

conduct behavioural analysis and improve detection abilities. With both local and cloud-based deep learning

capabilities, the Group’s security engine is powered by a continuous data loop of inputs from the Group’s users,

who act as a geographically dispersed global threat detection system. The Group’s security engine stopped

approximately two billion attacks per month in the year ended 31 December 2017. The Group places a heavy

focus on the continuous development and improvement of these technologies, with more than 45% of its

employees working in research and development (“R&D”). The Group believes this focus on R&D strongly

contributes to the fact that the Group’s products are consistently ranked among the highest-rated antivirus

solutions by both users and editors on leading download websites, as well as in popular media globally.

The Group offers versions of its high-performance consumer PC antivirus security software to consumers free of

charge. The Group focuses on promoting these free products as a part of its user acquisition strategy. The Group

monetises its user base by converting users of its free antivirus software to paid antivirus customers and selling

existing customers of its paid antivirus products a higher tier of paid antivirus software (collectively,

“up-selling”) or adjacent (non-antivirus) paid products, such as VPN products or PC optimisation tools (“cross-

selling”). The large user base not only drives direct revenues by growing the market to which the Group can

target its up-selling and cross-selling campaigns, but it also improves the accuracy and effectiveness of the

Group’s machine-learning-powered consumer monetisation platform. The platform becomes more effective with

increased inputs, improving the Group’s ability to market and advertise its products to its existing user base by

learning the most effective time and manner to message and prompt users to purchase premium paid antivirus

software or value-added solutions. The Group’s free products provide comprehensive malware protection to

users, while imposing low user support and servicing costs on the Group, amounting to, on average, $0.02 per

free incremental PC antivirus software user per annum for the year ended 31 December 2017.

The Group has successfully grown its business in recent years while maintaining strong levels of profitability.

Further, the Group’s billings are primarily composed of subscription agreements, which enhance the

predictability and visibility of the Group’s future revenue streams. Subscription agreements are typically paid in

full up front with revenue being recognised on a deferred basis over the life of the agreements, which typically

vary from one to three years. On a like-for-like basis, the Group’s Adjusted Billings increased from

$745.4 million for the year ended 31 December 2016 to $811.3 million for the year ended 31 December 2017 and

increased from $739.0 million for the year ended 31 December 2015 to $745.4 million for the year ended

31 December 2016. Piriform contributed $10.6 million to the Group’s 2017 Adjusted Billings from the date of its

acquisition on 18 July 2017 to 31 December 2017, and, had Piriform always been a part of the Group, it would

have contributed an additional $10.9 million. Both of these amounts are included in the Group’s 2017 Adjusted

Billings of $811.3 million. The Discontinued Business contributed $38.5 million to the Group’s Adjusted

Billings in 2017, $66.7 million in 2016, and $101.4 million in 2015. On a like-for-like basis, the Group’s

Adjusted Revenues increased from $736.5 million for the year ended 31 December 2016 to $779.5 million for the

year ended 31 December 2017 and from $720.5 million for the year ended 31 December 2015 to $736.5 million

for the year ended 31 December 2016. Piriform contributed $6.1 million to the Group’s 2017 Adjusted Revenues

from the date of its acquisition on 18 July 2017 to 31 December 2017, and, had Piriform always been a part of

the Group, it would have contributed an additional $15.6 million. Both of these amounts are included in the

Group’s 2017 Adjusted Revenues of $779.5 million. Discontinued Business contributed $38.5 million to 2017,

$66.7 million to 2016, and $101.4 million to 2015 Adjusted Revenue.

The Group calculates its organic growth over time by adjusting for two elements. First, growth figures exclude

Piriform, which the Group acquired in the third quarter of 2017. Second, as the company is exiting its toolbar-

related search distribution business, which had previously been an important contributor to AVG’s revenues

(referred to above and throughout the Prospectus, with the Group’s browser clean-up business, as Discontinued

Business), the growth figures exclude Discontinued Business, which the Group expects to be negligible by 2019.

On a like-for-like basis, excluding Piriform and Discontinued Businesses, the Group’s Adjusted Billings

increased 11% from 2016 to 2017, and 6% from 2015 to 2016. On a like-for-like basis, excluding Piriform and

Discontinued Business, the Group’s Adjusted Revenue increased 7% from 2016 to 2017, and 8% from 2015 to

2016.

Competitive strengths

The Group believes that it benefits from the following key competitive strengths:

Global leader in security, performance and privacy, specialising in protecting consumers’ digital lives.

The Group is the number one provider of security software to the consumer market as measured by number of

users. With more than 435 million users worldwide as of 31 December 2017, the Group had a user base of

comparable magnitude to other leading global online consumer brands such as Twitter (which had approximately

330 million users as of 30 September 2017 based on estimates), Amazon (which had approximately 310 million

users as of 31 March 2016 based on estimates) and Pinterest (which had approximately 200 million users as of

30 September 2017 based on estimates). The Group has a penetration rate of 4% globally, with approximately

35% of its users in the Americas, 48% of its users in Europe, the Middle East and Africa, and 17% of its users in

Asia Pacific for the year ended 31 December 2017.

The Group had more than 145 million mobile users and more than 290 million consumer PC users as of

31 December 2017, which was approximately six times the number of consumer PC users as Symantec, its

nearest competitor, and more than double the number of consumer PC users of Symantec, McAfee and Trend

Micro combined, each as of the same date. The Group has also continued to achieve sustained growth in the

wake of Windows Defender, pre-installed antivirus software on Windows 10 devices which applies as default

protection if the user has not selected a third party provider. Specifically, the Group’s installation data shows that

the share of the Group’s users using Windows 10 devices has closely tracked the overall market share of

Windows 10 in both the U.S. and globally. The Group believes that this data suggests users are continuing to

install the Group’s antivirus products on Windows 10 devices rather than relying on the default protection

provided by Windows Defender.

Highly recognisable leading consumer brand.

The Group has high brand awareness among consumers. According to data from Google Trends, which tracked

trends in Google searches for antivirus vendors (and their name variations) for the year ended 31 December

2017, the Group’s two major brands, Avast and AVG, together generated 21.4% of named searches worldwide.

These brand awareness results were best-in-class in the industry, outranking all the Group’s competitors,

including Symantec (20.1%), ESET (9.5%), Kaspersky Lab (8.6%) McAfee (6.6%) and Avira (3.6%).

Further, the Group has also been recognised by the online security community as a leading and trusted provider

in consumer security. For example, the Group’s free antivirus products under both the Avast and AVG brands

have been recognised by PC Mag as an Editors’ Choice in 2018 and have been given the title of “best free

antivirus”. AV Test rated the Group’s Mobile Security product as the best antivirus software for Android in

November 2017, giving it a perfect score for its antivirus capabilities. In 2017, CNET ranked the Group’s

products as the #1 download for PC. These and other such recognitions have helped the Group improve its

brand’s visibility and promote its reputation and its products.

Advanced next-generation security engine, driven by cloud-based machine-learning capabilities.

The Group has developed a next-generation security engine which uses a combination of behavioural detection,

machine-learning capabilities and signature-based detection to drive best-in-class protection. Unlike signature-

based antivirus products that can only detect known viruses, the Group’s proprietary scanning engine proactively

searches for previously unknown viruses and malware, as well as new variants of known viruses and malware

undetectable with normal definitions and virus signatures. The security engine adds additional layers of defence

to protect against more sophisticated and advanced threats and will flag anomalous behaviours (e.g., the creation

of new binary files, the execution of files or the modification of certain registry entries), even if such behaviours

have not previously been identified as known viruses. The Group’s threat detection engine is continuously

refined through technology that uses a global network of sensors to provide the Group with data gathered

anonymously from the online experiences of its users. This threat detection engine uses advanced techniques,

such as these behavioural insights as well as machine-learning capabilities, to leverage the data collected in order

to provide effective protection for users. The Group has a highly specialised team of researchers, including a core

team of individuals with advanced degrees, who have a specific focus in developing the Group’s next-generation

technology and machine-learning capabilities, with the task of continuing to improve the Group’s security engine

and core technologies.

The Group’s security engine is supported by more than 10,000 servers handling more than 60 million

simultaneous connections, enabling a high level of automation and scalability to process extensive data sets from

users to drive industry leading protection against file and memory attacks as well as network-based attacks. This

powerful technology, together with the large collections of data from users, helped the Group discover

approximately 200,000 new, unique malware samples per day on average in the year ended 31 December 2017.

The multi-layered security protection integrated into the Group’s products successfully defended users against

specific attacks, including the WannaCry attack which affected millions of PCs worldwide in 2017 (in which the

devices of many well-known organisations were infected with ransomware, which encrypted these organisations’

files and threatened to delete them unless the hackers were paid a ransom) and the BankBot router attack in 2017.

Sophisticated consumer platform with strong monetisation opportunities from the Group’s existing user base.

The Group believes that its consumer monetisation platform is a key driver of its success, allowing the Group to

leverage data from and monitor the behaviour of its base of more than 435 million users. The Group uses this

consumer monetisation platform to promote up-sells and cross-sells within its existing user base in an efficient

manner. The Group believes that the most powerful features of its consumer monetisation platform are those

underpinned by machine-learning algorithms. Through this predictive modelling method (which statistically

analyses potential outcomes of various campaigns), the Group optimises its marketing campaigns to better

identify monetisation opportunities through price optimisation (which provides customised prices for different

users), campaign muting (which minimises the number of messages in order to optimise effectiveness), and

churn prediction (which predicts when and how likely a user is to leave the Group so the Group can take

proactive measures).

The Group’s consumer monetisation platform is a sophisticated predictive platform which uses contextual

messaging to convert, up-sell and cross-sell the Group’s users, targeting users at the most appropriate moment.

The Group believes these messages are minimally intrusive and provide offers for quality products that add value

for the user in the appropriate context. For example, the consumer monetisation platform will push a message to

users who have connected to an unsecure Wi-Fi network to suggest downloading the Group’s paid VPN

products, or warn antivirus users of device performance issues that could be resolved by downloading the

Group’s paid optimisation products. These messages are applied to the Group’s indirect consumer offerings as

well. For example, if a user were to go to a banking website, a tailored message would appear prompting the user

to download the Group’s secure browser, Avast Secure Browser. The Group continuously tracks and tests this

consumer monetisation system, applying machine-learning to optimise yield.

The combination of the Group’s large user base and powerful consumer monetisation platform provides the

Group with strong monetisation and marketing capabilities for new and existing product offerings. The Group

has been successful in converting, up-selling and cross-selling its wide range of products and solutions to its user

base: as of 31 December 2017, 25% of customers had purchased more than one Group product, compared to 19%

as of 31 December 2015. The Group believes that up-sells and cross-sells will continue to drive the Group’s

growth in the future.

Differentiated and cost-effective user acquisition model.

The Group believes its direct sales model promotes a low sales and marketing expense that distinguishes the

Group from competitors in the traditional retail channel or OEM channel. In the traditional retail channel,

antivirus software is promoted through material marketing spend, requiring fees in the form of slotting,

promotions and stocking, in addition to the revenues shared with the retailer (which can be up to 100%). In the

OEM partnership channel, software companies will pay large fees to OEMs to pre-install their software on

equipment. There is generally a large loss of users who will stop using the pre-installed product upon the expiry

of a free trial, and there are fees (often more than 50%) that are shared with the OEM for revenues from users

who opt to continue to use the product.

By contrast, the Group’s differentiated and cost-effective business model primarily focuses on online sales with

low user acquisition costs. The Group believes that its most effective marketing tool is the quality of the Group’s

free antivirus software: users have positive experiences with these products, which promotes viral marketing

through interactive marketing channels, including through word-of-mouth recommendations and reviews. At the

same time, the Group also maintains low user support and servicing costs even after successfully acquiring new

users, due to its community forum user support platform. For the Group’s free PC antivirus products, there is a

service cost of, on average, $0.02 per free incremental PC antivirus software user per annum for the year ended

31 December 2017. Further, the Group still generates revenues from these free PC users through indirect

monetisation methods.

For the Group’s customers, the Group retains the majority of the revenues it generates. Certain revenue share

agreements with mobile network operators for certain mobile offerings result in a revenue share of up to 50%

The Group believes that its direct sales model provides strong benefits as compared to the traditional retail or

OEM partnership channels and allows the Group to cost-effectively scale its business globally.

Highly scalable business model benefitting from significant network effects.

The Group operates in a large and robust market, which is estimated to have reached $14.5 billion for the year

ended 31 December 2017, and the Group believes the market will reach revenues of $21.3 billion in 2021,

according to Group estimates. Within this market, the Group believes it is well-positioned to grow, given the

Group’s history of growth and of increasing its market share. Furthermore, as the Group continues to expand its

product offerings, its total addressable market is expected to continue to expand to include the markets of such

product offerings.

The large size of the Group’s user base promotes strong network effects and a continuing cycle of growth. The

Group’s large user base generates large amounts of data with unique insights into their behaviour, which acts as

an input to improve the Group’s machine-learning-based technology platform, including its virus detection

capabilities and its consumer monetisation platform. As the Group’s technology platform improves and

successfully protects users, the Group earns more trust from its users, promoting strong global brand awareness.

As the Group’s global brands strengthen, there is an increase in demand for its products. This increased demand

leads, in turn, to more users. Together, this cycle enables continued company growth, and the Group believes the

related network effects create high barriers for new market entrants.

Attractive financial profile with robust cash flow generation and high cash conversion.

The Group’s business model provides a high level of billings and revenue visibility, driven by a high proportion

of subscription agreements, which are typically paid up front, enhancing the predictability and visibility of the

Group’s future revenue streams. For the year ended 31 December 2017, 84% of Adjusted Billings were

attributable to subscription agreements, compared to 83% for the year ended 31 December 2016 and 79% for the

year ended 31 December 2015. Revenues are predictable as a result of primarily being driven by prior period

billings that were recorded as deferred revenue to be recognised in future periods, as the revenue from

subscription agreements is recognised on a deferred basis over the life of the agreement, which are typically from

one to three years. Further, 88% of the Group’s consumer direct desktop renewal revenues are from existing

customers auto-renewing their subscriptions.

The Group has established a track record of consistent growth and strong profitability and cash flow generation.

As a technology company, the Group benefits from low overhead costs, and its primary cost is personnel costs,

which remain low compared to its peers given the location of many of its employees in the Czech Republic, a

relatively low-cost jurisdiction. The Group also maintains a cost efficient distribution model with low user

acquisition costs and low sales and marketing costs compared to competitors.

The Group also benefits from a high cash conversion profile, resulting from a combination of low capital

expenditure, limited working capital requirements and high margins. The Group had 76% cash conversion for the

year ended 31 December 2017, driven by deferred revenue inflows and its low capital expenditure requirements.

On a like-for-like basis, the Group had capital expenditures of $15.9 million for the year ended 31 December

2017, $23.7 million for the year ended 31 December 2016 and $26.8 million for the year ended 31 December

2015.

Experienced management team with a strong track record of execution.

The Group’s management team has significant experience in sales, technology, product development and

marketing and each member has years of experience in the security software industry. The Group’s Chief

Executive Officer, Vincent Steckler, has been with the Group for nine years and has worked in the security

software industry for over eighteen years. Ondrej Vlcek, the head of the Group’s Consumer business, has been

with the Group for over twenty years. Mr. Steckler, Mr. Vlcek and the other members of the management team

have led the Group through its growth into the leading global provider of software to consumers, growing both

organically and through the acquisition and integration of AVG, a leading security software company with

$418.6 million in revenue for the year ended 31 December 2016, and Piriform, a leading provider of device

performance optimisation software, in 2017, among other key strategic acquisitions. The Group’s management

team has experience working at blue-chip companies such as Google, Apple, Symantec, General Electric and

NETGEAR, and has been key in attracting and retaining talent from similar companies. The Group believes that

the experience of the Group’s management team has driven the Group’s strong performance, increasing total

users from approximately 100 million in 2009 to more than 435 million in 2017.

Strategy

The Group has the following key business strategies:

Continue to drive direct monetisation by up-selling users to paid premium security products and to higher tier

premium security products

The Group generates revenues from users who upgrade to paid antivirus security products with advanced

functionalities. The Group plans to further differentiate its premium antivirus products from its free antivirus

products to continue driving users toward its paid premium security products by adding better add-on products to

its premium antivirus offerings and by improving its bundling options for paid antivirus products. Four percent of

the Group’s desktop antivirus users were premium security software customers in the year ended 31 December

2017 (and 96% were free desktop antivirus users), with over 11 million desktop customers (and over 5 million

mobile customers). The Group therefore continues to have a large percentage of its user base which it can convert

to its premium paid security products.

The Group also seeks to directly monetise its user base by continuing to sell existing antivirus customers higher

tier premium security products. The Group has been successful in recent years with its up-sell campaigns, with

average revenue per customer for the Group’s antivirus products increasing from $43.09 in 2015 to $45.35 in

2017. As only a small portion of the Group’s customers subscribed to its top-tier products within the Avast and

AVG brand offerings as of 31 December 2017, the Group continues to have a significant opportunity to up-sell

the majority of its customers to higher-tier security offerings.

Continue to drive direct monetisation by successful cross-selling across multiple platforms and services

As the Group’s user base grows, the Group utilises its consumer monetisation engine, powered by machine-

learning, to effectively push cross-selling campaigns to its users to promote its paid value-added products. The

Group has a proven model of driving success with cross-selling its value-added non-antivirus solutions in past

years, with the portion of the Group’s revenues driven by non-antivirus solutions increasing from 2015 to 2017.

In addition to achieving success in cross-selling to the Group’s free antivirus users, the Group has also been

successful at increasing the average spend of customers on value-added products. The Group plans to continue to

improve the breadth and quality of its value-added solutions through product innovation and acquisitions, which

the Group believes will further increase its direct monetisation from cross-sales. As the markets grow, the Group

believes it is well-positioned to continue to increase its billings and revenues from such products.

Leverage scale, historical expertise and user data to find new ways of indirect monetisation

The Group has powerful methods by which to indirectly monetise its large user community. The Group earns

revenues through its distribution agreements with Google to promote Chrome downloads, advertising on its free

mobile applications, distribution of promotion codes to drive traffic and user acquisition for online retailers in

exchange for e-commerce affiliate payments, its analytics business and its secure desktop web browser product.

Through these channels, the Group is able to monetise its user base, including its free users, at different points

throughout their relationship with the Group.

The Group plans to specifically focus on continued distribution of third party products as well as improving its

secure web browsing product, e-commerce rewards business and analytics business to continue to strengthen its

success with, and variety of, indirect monetisation methods.

On 5 March 2018, the Group began a process by which existing installations of the Group’s SafeZone browser

product are being updated globally to the newly launched Avast Secure Browser, the Group’s updated and

renamed successor product, which the Group markets together with, and as an extension of, its online security

offerings. The browser is expected to earn the Group a share of advertising revenue generated by user search

activity.

The Group also plans to launch an upgrade and successor to its existing SafePrice e-commerce affiliate product,

offering improved discounts or rebates to users during their online shopping activities through a browser plugin

or mobile application. The Group earns revenues reflecting the value that retailers receive in the form of

increased traffic, user acquisition and sales.

Further, the Group intends to continue to grow its analytics business, Jumpshot, to enhance its brand recognition

to be able to target business partners on a larger scale. As the business continues to build products focused on

solving today’s digital marketing problems, the Group believes it will continue to become more valuable and

attractive to market research firms, advertising agencies and consumer brands.

Achieve product innovation to continually improve its product offerings

The Group has a strong portfolio of existing products to improve PC and mobile security, privacy and

performance. The Group seeks to more deeply penetrate this market by continuing to innovate and improve upon

its offerings, leveraging the Group’s large global footprint and customer understanding to feed its product

innovation pipeline. The Group believes that its strong focus on R&D, which accounts for over 45% of its

employees, will help the Group implement this strategy and continue to improve its offerings. Further, the

Group’s employees are based in the Czech Republic, which the Group believes is a benefit not only for its cost

efficient model but also for its welcoming environment for innovation: the Czech Republic was identified as one

of the top ten most innovative countries in the Consumer Technology Association’s 2018 International

Innovation Scorecard.

The Group’s near-term product pipeline includes new and updated products such as anti-tracking products,

parental controls, identity theft monitoring and Smart Home security, among others. The Group also plans to

continue to improve its SMB offerings to expand its market share in that sector and drive growth.

The Group plans to release its first Smart Home security product in 2018. The Group believes that this market

will continue to come into increasing user focus as IoT growth increases. Smart Home devices are complex with

high threats to privacy, potentially worse than those threats to PCs, as once a hacker breaks into the network

through its weakest link (i.e., a Smart Home product), that hacker could gain access to all devices on that

network, resulting in a greater potential for harm. To enter the Smart Home security market, the Group plans to

market to its existing users using its consumer monetisation platform. It will also focus on a partnership model

with internet service providers, with the potential to also partner with OEMs to offer its products direct to

consumers pre-installed on Smart Home equipment.

In addition, the Group plans to release a new anti-tracking product which, similarly to its VPN products, will

protect users’ privacy online. The anti-tracking product will shield users’ internet browsing by masking a user’s

location, detecting threats, scheduling browser cleanings and allowing private searching and browsing. The

Group will also offer a new free service to monitor whether users have been hacked or had their personal details

stolen online, providing regular alerts and reports. This hack checking service will allow the Group to establish

regular communications with users, which will include product promotions for the purpose of up-selling and

cross-selling. Further, the Group also plans to finalise a new parental control innovation which will increase the

variety of functionalities as compared to its existing offering, such as location tracking and smart alerts. The

Group intends to market this parental control offering both on a direct-to-consumer basis and to consumers

through mobile carriers and internet service providers as intermediaries.

Continue strong track record of successful acquisitions

The Group strategically seeks out acquisitions that will consolidate the market and grow the Group’s scale and

market share, such as the acquisition of AVG in 2016. The Directors recognised that AVG was very similar to

the Group in terms of its product offerings, culture and strategy: it offered a free consumer PC antivirus product,

with a business model focused on converting free users to paid products, and had its main office in the Czech

Republic. The Group believed the two businesses would integrate well, increasing the scale of the Group,

expanding its product offerings and creating significant synergies and cost savings compared to running the two

as separate entities. The acquisition of AVG brought approximately 141 million new users to the Group’s user

base, and, by combining the two businesses, the Group expects to over-deliver by approximately $10 million on

the Group’s original cost synergy projections of $118 million, in particular related to payroll cost reductions in

the Czech Republic and the U.S. The Group plans to continue to integrate the two brands and their products over

time to achieve further synergies. The Group continues to monitor the market for any other similar security

companies which it could acquire to increase its scale. For example, the Group is continuously monitoring

companies focusing on the SMB security market, with the possibility of growing its presence in that market

through future acquisitions.

The Group also believes that there is value in acquiring well-recognised companies and brands that will increase

its distribution network and user base. The addition of new product lines and offerings increases the Group’s

functionalities and ability to sell adjacent products to its users, while also increasing its total addressable market.

For example, the Group acquired Piriform (including its main brand, CCleaner) in 2017. The Group sought out

this acquisition because it added a compatible optimisation product through CCleaner and brought with it a

significant number of users who did not already use Avast or AVG products to whom the Group could cross-sell.

As of the date of the acquisition, of CCleaner’s approximately 90 million users, approximately 79% (or

71 million users) did not yet use any Group products as of 31 December 2017. In addition, CCleaner was seen as

a well-regarded product with strong brand recognition which the Group could cross-sell to its existing users who

use more recent versions of the product; users with older versions of the product cannot be communicated with in

the same manner. The Group continues to monitor the market for other complementary businesses focused on

adjacent products which it could acquire to increase its distribution.

The Group has a strong track record in diversifying its business and expanding its product breadth in recent years

through acquisitions. The Group acquired a small PC optimisation company in 2013 and launched its first

organic PC optimisation product, Avast Cleanup, in 2014. Also in 2014, AVG acquired Location Labs to enter

the parental controls market. These acquisitions, among others, allowed the Group to broaden its offerings and

focus more on cross-selling its value added products, such as its VPN and PC cleaner, to its users. The Group

plans to continue to seek out opportunities for acquisitions that will diversify its product offerings, and in turn,

grow the size of its total addressable market.

History

The Group was founded in 1988 in what is now the Czech Republic when founders Pavel Baudisˇ and Eduard

Kucˇera established the ALWIL cooperative and released one of the first antivirus programs in the market.

In 2001, the company made a pivotal business model change by offering fully-featured security products to

consumers for free, with the opportunity to upgrade to premium paid products with advanced functionalities.

User growth accelerated, doubling twice in one year and by 2006, reached 20 million users.

In 2009, Vincent Steckler was appointed CEO, bringing years of cybersecurity and management experience to

the Group.

In 2010, funds advised by U.S.-based private equity firm Summit Partners, L.P. and its affiliates became

shareholders of the Group, and ALWIL was rebranded to Avast. In 2012, Avast Free Mobile Security became the

best-rated security app on Google Play, Avast Free Antivirus was the most downloaded software on

Download.com, and the Group launched its first Mac product.

By 2014, Avast had 100 million mobile antivirus users, reaching that download milestone faster than any mobile

security tool in Google Play history. Also in 2014, funds advised by affiliates of CVC Capital Partners Advisory

Company (Luxembourg) S.à r.l. invested in the Group.

In 2016, the Group acquired AVG, a group of companies with a very similar business to that of the Group:

developing PC, mobile and business security software applications, including both free and paid products. The

acquisition further diversified the Group’s product portfolio, geographic base, and revenue streams.

In 2017, the Group acquired Piriform, a leading provider of device performance optimisation software including

its flagship product, CCleaner. With the addition of Piriform, the Group expanded its product offerings in the PC

and mobile optimisation markets. As at and for the year ended 31 December 2017, the Group had over

435 million users and $811.3 million in Adjusted Billings.

Other acquisitions of the Group since 2015 include, but are not limited to, the acquisitions of Privax (a leading

provider of PC and mobile privacy services for consumers, including its flagship product HMA) in 2015, Flavyr

Media (an Israeli photo-management start-up) in 2015 and Remotium (an enterprise mobility company) in 2015.

Products

The Group’s business has two segments: the consumer segment and the SMB segment. Within the consumer

segment, the Group offers products and solutions for protection, performance, privacy and additional tools. In the

SMB segment, the Group secures small businesses with managed protection. For the year ended 31 December

2017, the consumer segment generated approximately 92% of the Group’s Adjusted Billings and the SMB

segment generated approximately 8% of the Group’s Adjusted Billings.

Consumer offerings

The Group’s consumer products include direct revenue streams through its offerings for desktop security, server

protection and mobile device protection and consist of free and premium paid products for the individual

consumer market (“Consumer Direct”). The Group also has several value-added solutions for performance,

privacy and other tools. The Group will continue to expand its offerings of products and solutions to secure

additional platforms, such as Smart Home devices. These direct revenue sources comprised approximately 77%

of the Group’s Adjusted Billings for the year ended 31 December 2017.

The Group’s business model also involves a number of opportunities for monetisation that do not involve any

direct payment (“Consumer Indirect”). Through its partners, the Group additionally receives revenues through

its distribution of third party software, advertising, analytics, secure desktop web browsing and e-commerce

rewards. These indirect revenue sources comprised approximately 15% of the Group’s Adjusted Billings for the

year ended 31 December 2017.

Consumer Direct

Security

The Group’s antivirus products secure users’ online lives and activities.

Avast Free Antivirus is the Group’s core free security software product for Windows users branded under Avast.

It uses Avast’s core security engine, AI-assisted intelligent scanner, machine-learning technologies and cloud-

based malware identification and blocking technologies. It detects and blocks viruses, malware, spyware,

ransomware and phishing. It automatically sends suspicious files for analysis in the cloud and pushes a cure to all

Avast users if it is a threat. Using a smart scan, it finds vulnerabilities to malware, from unsafe settings and

passwords to suspicious add-ons and out-of-date software. It can automatically detect weaknesses in home Wi-Fi

networks and identifies when unauthorised users access the network. It stores passwords securely in one place. It

contains a feature called “Behavior Shield” which is able to identify zero-day attacks by their behaviour (for

example, code execution behaviour, and network communication behaviour). This layer of protection is

specifically efficient against new strains of ransomware. It has modes for specific scenarios, such as game mode

to automatically detect full-screen applications, disabling pop-ups and other notifications to allow maximum

processing power and speed for gaming without compromising security. Browser cleanup deletes unwanted

browser toolbars, add-ons and extensions.

Avast Security for Mac is Avast’s free consumer security software for Macs running Mac OS X. It is based on a

central virus-scanning daemon—a computer program that runs in the background, rather than under the direct

control of a user—and contains many of the features included in Avast Free Antivirus.

AVG Antivirus FREE and AVG Antivirus for Mac are the Group’s core free security software products for both

Windows and Mac users branded under AVG. These products offer features similar to those in the Avast branded

free products.

The Group also offers several levels of its premium paid desktop security products for Windows customers:

Avast Pro Antivirus, Avast Internet Security, Avast Premier, Avast Ultimate, AVG Internet Security and AVG

Ultimate. The pricing of these products increases with increased functionality.

Avast Pro Antivirus comes with all the functionalities of Avast Free Antivirus, and adds (a) Sandbox to allow

users to test suspicious files in a safe environment before they run on, and potentially infect, a user’s computer,

and (b) Real Site, which protects against hackers who attempt to hijack system settings to direct a user to fake

websites.

Avast Internet Security and AVG Internet Security build on the functionalities contained in Avast Pro Antivirus

with additional capabilities, including a ransomware shield that blocks ransomware and other untrusted apps

from changing, deleting, or encrypting personal photos and files; a firewall to monitor and control what goes in

and out of a PC; and anti-spam functionalities to stop phishing and spam emails.

Avast Premier builds on the functionalities in Avast Internet Security with additional capabilities, including a

webcam shield which requires applications to ask for permission in order to use the webcam; an automatic

software updater to keep software up to date automatically; and a data shredder to permanently delete sensitive

files so they cannot be recovered.

Avast Ultimate and AVG Ultimate come with certain performance and privacy features in addition to those

security features included in Avast Premier and AVG Internet Security.

The Group offers a premium paid desktop security product for Mac users through Avast Security Pro for Mac.

This product offers all of the functionalities available in Avast Security for Mac, in addition to a Wi-Fi Inspector

to automatically detect weaknesses in home Wi-Fi networks and identifies when unauthorised users access the

network; and a ransomware shield to block ransomware and other untrusted apps from changing, deleting, or

encrypting personal photos and files.

For mobile devices, the Group offers Avast Mobile Security and AVG AntiVirus, mobile security products

designed to protect Android-based mobile phones and tablets. These products come in both a free version and a

paid version. These products keep Android phones protected from malware and viruses from installed apps and

offer additional functionalities such as call blocking and the ability to lock apps or track a lost phone. The Group

also offers AVG Anti-Virus for Xperia, another mobile operating system, which offers similar functionalities to

its Android products and is also offered in both a free version and a paid version.

Performance (Utilities)

In addition to its security software, the Group also offers a number of utilities products that improve mobile or

computer performance by cleaning devices for optimal operation.

Avast Cleanup (including Cleanup Premium for Windows and Cleanup Pro for Mac) is the Group’s PC optimiser

and tune-up toolkit under the Avast brand name. AVG TuneUp and AVG Cleaner for Mac are the Group’s PC

optimiser and tune-up toolkits under the AVG brand name. Each of these optimisers, among other things, scans a

PC to remove unused files from applications and browsers to free up space; updates a user’s computer to prevent

security holes and bugs; removes leftover files and cleans a computer; restores a computer’s speed by switching

off unnecessary features, putting unused programs to sleep and identifying and uninstalling unused programs;

stops freezing and crashing by de-cluttering, reorganising and cleaning a device’s registry; fixing hard drive

problems and deleting “dead” desktop shortcuts; and works automatically to check and update key programs,

performs routine maintenance and regular updates.

AVG Driver Updater is designed to fix and update a device’s drivers. It scans a computer for outdated, missing

or corrupt drivers, in real-time, chooses optimal drivers for individual users, backs up drivers to allow restoration

of unwanted changes and installs drivers one by one to reduce hardware problems.

With its recent acquisition of Piriform, the Group added CCleaner to its product line. CCleaner comes in three

versions: free, professional and professional plus. These programs improve a computer’s speed by allowing users

to control which apps use the computer’s resources and protect users’ privacy by removing tracking files and

browsing data. The paid versions also, among other things, cleans more thoroughly, guards against junk files and

automatically clears a browser’s history whenever the browser is closed.

The Group also offers certain optimisation products for mobile devices. Avast Cleanup for Android quickly

cleans up unnecessary data, system caches, gallery thumbnails, installation files, and residual files, identifies the

largest categories of data usage, and allows users to transfer their data to cloud storage systems. Battery Saver

extends battery life by stopping apps that a user is not using and optimising device settings. Photo Space includes

unlimited photo storage, optimises photos to reduce the amount of space they take up, saves original unoptimised

photos to the cloud, and includes a camera app.

Privacy

The Group offers several products and solutions which are focused on protecting users’ privacy on their

connected devices.

VPN

The Group offers VPN products, which encrypt data sent or received and hide a user’s location and identity to

privatise online communication, browsing, uploads and downloads. The Group has three paid VPN product

offerings: Avast’s SecureLine VPN, AVG’s Secure VPN and the HMA VPN which was acquired by AVG in

2015 and subsequently by the Group in 2016. These products can be used on Windows and Mac computers and

on Android and Apple mobile devices.

Passwords

Additional privacy-based offerings of the Group include Avast Passwords, which allows users to manage

accounts with one secure password, autofill login details safely and sync login details across devices. The free

version is a browser add-on which can auto-fill web forms when using protected accounts. A paid version is also

available, which will notify users when one of their protected accounts has been attacked.

Family Safety

The Group also has a number of products for mobile devices which protect privacy, including but not limited to

the following:

• Avast Locator helps consumers track their family’s or friends’ phones and find their own lost phones;

• Avast Controls & Insights alerts parents to critical calls and messages sent to their children’s phones to

protect against cyber-bullying; and

• Call Blocker warns of spam calls or automatically blocks them and allows users to choose additional

numbers to block.

In the United States, for example, the Group has partnered with major mobile network operators to implement its

family safety solutions such as Avast Locator and Avast Controls & Insights.

Tools

The Group’s offerings include certain other miscellaneous tools which improve the functionality of computers

and mobile devices, including but not limited to the following:

• Wi-Fi Finder and Secure Me help users find free public Wi-Fi locations nearby and allow the user to

connect securely with an encrypted connection; and

• Alarm Clock Xtreme is an alarm clock, timer, stopwatch and sleep tracker for mobile phones.

Smart Home products

The Group is developing new Smart Home products to protect users’ connected home and all its devices. Such

products will be hardware in the form of a dongle which can attach to third party routers and will provide

protection against attacks and other threats related to the Smart Home environment. Smart Home products may

also be provided via carriers (with no hardware requirements). No Smart Home product offerings by the Group

are yet available as of the date of this Prospectus, however, the Group’s first product, Avast Smart Home,

including a companion network monitor called Avast Scout, is currently under development.

Consumer indirect

The Group’s business model also involves a number of revenue streams which do not involve any direct user

payment. Through its partners, the Group additionally receives revenues through its distribution of third party

software, advertising, analytics, secure desktop web browsing and e-commerce affiliate activities. These indirect

consumer revenue sources comprised approximately 15% of the Group’s Adjusted Billings for the year ended

31 December 2017.

Distribution

The Group is a party to certain contractual agreements whereby it promotes third party software and earns

revenue for such promotional activity. The Group has promotion and distribution agreements with Google under

which it offers users Google Chrome for download in connection with installing Avast software, in return for

which the Group is paid by Google.

Advertising

The Group places advertisements on its mobile applications to generate revenue through its free offerings. These

advertisements are syndicated to both Facebook and Google, among other companies.

E-commerce affiliate agreements

Through its partnerships with e-commerce providers, the Group offers users a price comparison and discounting

service via its Avast SafePrice browser extension that operates as a plug-in to leading browsers. Users receive

price comparisons and discounts on products for which they are shopping, and the Group earns, via its partners,

e-commerce affiliate revenues reflecting the value that retailers receive in the form of increased traffic, user

acquisition and sales. In 2018, the Group plans to introduce an upgrade and successor to the current Avast

SafePrice product to improve the product and its performance.

Secure Browsing

The Group offers secure desktop web browsing through its Avast SafeZone browser product, which it markets

together with and as an extension of its online security offerings. Since the beginning of March 2018, the Group

has been engaged in a process of introducing Avast Secure Browser as a major update and successor, which it

will continue to market in the same manner. The existing browser earns the Group a share of advertising revenue

generated by end user search activity, and the successor browser is expected to continue to earn such search

revenues.

Analytics

The Group offers big data and marketing analytics through its entity Jumpshot. The Group provides Jumpshot

with anonymised and aggregated data that is collected from scanning the 150 billion websites that the Group’s

users visit each month. The Group is a key data source for Jumpshot. Data provided from the Group is only

provided from users who accepted the data collection, and all data is anonymised and aggregated before it is

provided to Jumpshot. The Group’s policies require that no Personally Identifiable Information (PII) is provided.

Jumpshot operates as a standalone company within the Group. Jumpshot aggregates anonymised data from users’

behaviours from their full internet usage, not just the data of a user’s usage on a single company’s website.

Jumpshot unlocks walled-garden data to provide user interaction insights on products and service, and helps

customers to target and optimise their campaigns. Customers of Jumpshot include market research firms,

investment and advisory firms, advertising agencies and consumer brands.

Discontinued Products

The Group offers search engine capabilities through its legacy AVG extensions, plug-ins and toolbar business.

The Group earns revenues through third party products and advertisements which come installed on the search

toolbar. The Group discontinued this product after the acquisition of AVG, believing that this product is

incompatible with the Group’s strategy as it provides low value for users and may be an unwanted product. No

new development is being applied to this product and the Group has discontinued distribution (although the

Group will continue to receive diminishing revenues from users who continue to use the already-installed

product).

The Group is also discontinuing its Browser Cleanup product, which was created to remove unwanted products

that were often installed without user consent. Browsers have improved protections against these unwanted

products, thus the need for the Browser Cleanup product is significantly diminished. The Group has stopped

further development of the product, and, while it still allows for its distribution from the Group’s website and

bundled within certain of its PC antivirus packages, the Group has no plans to continue to update or improve the

product in the future.

SMB offerings

The Group offers security solutions specifically designed for small businesses. The SMB business comprised

approximately 8% of the Group’s Adjusted Billings for the year ended 31 December 2017.

Avast Business Antivirus is the Group’s entry-level product under the Avast brand name designed for companies

that want to protect their business data and online communications. It includes many of the functions of the

consumer security products such as Intelligent Antivirus, Behaviour Shield, CyberCapture, SmartScan, Wi-Fi

Inspector, Firewall, Web Shield, Email Shield, Anti-Spam and Sandbox, with the addition of remote installation

and update functions and a central management console which saves both time and costs associated with

traditional deployment and management at individual devices. In case of infection, the central console receives

immediate real-time alerts. Avast Business Antivirus will automatically detect new or unprotected (or “rogue”)

computers on the network. It also offers file server protection by scanning all traffic on the servers.

Avast Business Antivirus Pro is the next level of protection for companies under the Avast brand name. It

includes all of the functions of Avast Business Antivirus along with additional data protection through Software

Defender (which lists out-of-date programs and applications on a device and allows customers to update them

with a single click), Data Shredder, Exchange Protection (which encrypts deleted data and scans email

attachments) and Sharepoint Protection (which scans files before they are uploaded onto the Sharepoint server to

ensure they are not infected).

Avast Business Antivirus Pro Plus is the Group’s product under the Avast brand name designed for companies

that require network security with maximum protection. It includes all of the functions of Avast Business

Antivirus Pro product along with additional identity protection: Passwords, SecureLine VPN and Browser

Cleanup.

Avast Managed Workplace is a complete remote monitoring and management platform with integrated security

tools and services for home office or SMB customers. With Managed Workplace, managed service providers can

deliver enhanced security services all from a single dashboard. Managed Workplace brings a cost-effective,

multi-tenant security lens to remote monitoring management. Managed Workplace will, for example, notify an

administrator upon identifying an unprotected computer on the network.

Avast Business CloudCare is a cloud-based, endpoint security platform that makes it easier for managed service

providers to monitor threats, resolve issues, and deliver multiple layers of protection to their clients. From the

single, cloud-based dashboard, managed service providers can remotely secure multiple clients and protect

networks with both pay-as-you-go and subscription services, including antivirus, antispam, content filtering, and

backup.

AVG File Server Edition is the Group’s entry level product under the AVG brand name designed for companies

that want to protect their business data and online communications. It includes free business technical support

services, remote installation and update functions and a central management console, protection of Microsoft File

Servers and Windows Sharepoint Servers, and scans, detects and removes malware and viruses from PCs and

laptops.

AVG Antivirus Business Edition includes all of the functions of AVG File Server Edition, along with additional

antivirus and privacy protections: advanced detection of malware through crowd intelligence; privacy protection

while on public Wi-Fi networks; firewall to help stop spam, viruses, hackers and malware; and protection from

online threats including suspicious email attachments or links.

AVG Internet Security Business Edition is the Group’s product under the AVG name designed for companies

who require full protection. It includes all the functions of AVG Antivirus Business Edition, and adds email

server security (defending the server against hackers, malware and spam) and spam protection.

Avast Cloud Secured Web Gateway (SWG) and Unified Threat Management (UTM) are new products which

the Company expects to launch later in 2018 following the signing of a four year contract with Zscaler in April

2018 to sell integrated white label network security services to SMBs.

The Group’s technology, infrastructure and operations

Core technologies

The Group’s security products offer holistic protection against cyber threats, including protection against viruses

and other types of malware, network-based attacks, privacy controls and password and identity management.

These security capabilities are implemented through a proprietary security engine which uses a combination of

behavioural detection, machine-learning capabilities and signature-based detection to drive best-in-class

protection. The innovative security engine provides for industry-leading detection rates and scanning speeds

while using minimal resources and contains components that run both locally on the device as well as in the

Group’s bespoke internet cloud, resulting in constant updates of new detections and definitions and continuous

protection against the latest threats.

Unlike signature-based antivirus products that can only detect known viruses, the Group’s proprietary security

engine proactively detects previously unknown viruses and malware, as well as new variants of known viruses

and malware undetectable with normal definitions and virus signatures. The security engine adds additional

layers of specialised fortification for more sophisticated and advanced threats and will flag anomalous behaviours

(e.g., the creation of new binary files, the execution of files or the modification of certain registry entries), even if

such behaviours have not previously been identified as known viruses.

This security engine uses advanced techniques, such as these behaviour insights as well as artificial intelligence

and machine-learning capabilities, to leverage the collected data to provide rapid protection for users. The first

layer of protection is called “WebShield”, which protects at the entry level against network-based exploits,

malicious websites and anomalies. The second layer is “Static Scanner”, which performs real-time security

assessments using cloud-based reputation data and the local classification engine. The third layer is “Emulator”,

which detects possible malicious content by executing code in a fully emulated environment. The Group’s

security engine analyses unknown files using its proprietary technology called “DeepScreen” in the fourth layer

of protection. DeepScreen takes a snapshot of the currently running system, clones it, and analyses the scanned

file (in a process referred to as “sandboxing”). On top of that, the engine is also capable of performing cloud-

based sandboxing using another proprietary technology called “CyberCapture”, the fifth layer of protection.

DeepScreen and CyberCapture work together to minimise the likelihood of any malicious file executing on the

device. In addition, the sixth layer “Behavior Shield”, monitors each environment as programs run and protects

against malicious behaviour.

The Group’s security engine is continuously refined through technology that uses a global network of sensors to

provide the Group with data gathered anonymously from the online experiences of its users. The Group’s

security engine is supported by more than 10,000 servers supporting more than 60 million simultaneous

connections, enabling a high level of automation and scalability to process huge data sets from users to drive

industry leading protection against file and memory attacks as well as network-based attacks. By using advanced

techniques such as artificial intelligence and machine-learning, the engine leverages the collected data to

effectively protect users and provide rapid protection. It takes less than 12 hours to add new features, train and

deploy into production.

The Group’s security products feature an intelligent scanner which creates a baseline of files to be scanned by

creating lists of files that have been identified as safe and are not rescanned unless they change. This process

speeds up the scan by reducing the number of scanned files. The infected files are automatically processed

without requiring user instructions.

This powerful technology, together with the large collections of data from users, helped the Group discover about

200,000 new, unique malware samples per day on average during the year ended 31 December 2017. The Group

has a highly specialised team of researchers, including a core team of individuals with advanced degrees, who

have a specific focus on the Group’s next-generation technology and machine-learning capabilities, with the task

of continuing to improve the Group’s security engine and core technologies.

The Group’s network infrastructure and operations

The Group’s infrastructure includes servers and bandwidth capacity leased from third parties. The Group owns

certain key servers that are located in its headquarters in Prague and in its offices in Brno, both in the Czech

Republic. The Group uses its own servers for R&D activities and the ThreatLab, to operate office applications, to

store user data and to generate licence codes that users need to activate the Group’s products. Through the

ThreatLab, the Group automatically processes virus samples, generates virus definitions, tests for false positives

and releases new definitions to the public. For network infrastructure and redundancy, the Group’s servers are

distributed, virtualised and mirrored in a separate data centre located in Brno, Czech Republic. The Group also

owns servers in Europe (Czech Republic, Germany, the Netherlands, United Kingdom) and North America (both

the east and west coasts of the United States) to support the Group’s products and backend infrastructure. The

Group manages these servers while the third party providers of hosting facilities manage their data centres and

other third party suppliers bandwidth capacities needed to maintain the network infrastructure and operations.

The Group also leases servers located in North America (United States, Canada and Mexico), Latin America

(Brazil and Argentina), Europe (Italy, Spain, Poland, France, Denmark, Sweden and Russia) and the Asian

Pacific (Japan, Hong Kong, Singapore, Australia, India and Vietnam) on a monthly basis. Most leased servers are

servers for the Group’s VPN products. The Group has 59 VPN locations in 34 countries. The remaining leased

servers fulfil various functions, including web servers from which the Group operates its websites, e-commerce

servers procuring orders made by users on the Group’s websites and redirecting them to Digital River or other

e-commerce service providers, and servers powering the Group’s cloud backends needed on those locations. The

Group leases these servers for internet connectivity capacities under agreements with its providers. For its

website and product downloads, the Group utilises content delivery networks from major providers like Akamai.

The Group manages the security of its leased servers through host-based firewalls or security appliances in cloud

deployments. The Group manages vulnerabilities of systems operated on leased servers, while the lessors provide

physical security and hardware maintenance.

Sales and marketing

The Group’s business model and high quality security products have enabled the Group to build strong brands

and loyal user communities for the Group’s products. As a result, the Group benefits from significant efficiencies

in its marketing activities for its consumer products. Further, as a large portion of the Group’s revenues are

generated from subscription agreements and are renewed through auto-renewals, there is significant revenue

visibility and minimal sales or marketing expense is required to maintain these users.

The Group primarily sells its consumer products directly online and primarily sells its SMB products through

resellers and distributors. The Group’s resellers include its SMB partners and managed service providers, and its

resellers and distributors for its consumer products include certain mobile network providers (for example, for

Location Labs products), certain affiliates (for example, for HMA) and big box retail stores (for example, for the

Group’s premium consumer antivirus products).

Consumer products

The substantial majority of the Group’s desktop sales to consumers are generated through online sales. The

Group’s primary task in marketing is to pull consumers to its websites. Consumers are typically directed to the

Group’s websites from search engines. A significant portion of the Group’s mobile sales are processed through

the app store Google Play. On Google Play, the high ratings of the Group’s products help attract new users. For

example, the Group’s product Avast Mobile Security has over 100 million installations and approximately five

million reviews with an average rating of 4.5 out of 5.

The Group regularly publishes threat intelligence security research reports and other security blog posts, video

and helpful information to attract consumers to its website from search engines in addition to advertising through

video, podcasts, and industry sponsorships. The Group has a completion rate of 61% for its online videos,

compared to a 41% industry average. The Group also engages on social media, with 7.7 million followers

combined on Facebook, Twitter, LinkedIn, YouTube and Instagram, which is over double the Group’s nearest

competitor (Kaspersky, with 3.7 million followers combined on the same platforms). This engagement with users

helps to drive viral marketing: users have positive experiences with these products, which they share through

interactive marketing channels, including through social media, word-of-mouth recommendations and reviews.

The Group realises efficiencies in sales operations since they are predominantly online-based. The online sales

model enables individual businesses and consumers to purchase products through the Group’s website. The

Group does not process any online payments directly, but through partners. Generally, the checkout web page

(including cart, payment, email communication and vender of record) is provided by e-commerce vendors

(“E-commerce Partners”). While the Group continually tests and works with payment processing competitors,

its primary online third party payment processing service provider is Digital River. Digital River collects

payments and user data from the transaction. In 2017, online sales procured through Digital River accounted for

36% of the Group’s Billings. Other E-commerce Partners with whom the Group works include Cleverbridge and

Avangate, and 47% of the Group’s Adjusted Billings for the year ended 31 December 2017 were processed by

E-commerce Partners. The Group does not consider its E-Commerce Partners to be resellers or distributors for

internal analysis purposes or for reporting purposes, though they are the merchant of sale on record for consumer

product transactions.

Although the majority of the Group’s sales are direct to consumers, the Group also partners with certain resellers

of its products to sell and market its solutions in certain situations, including OEMs, internet service providers

and mobile service providers. For example, in the United States, the Group has partnered with major mobile

network operators to implement its privacy and safety solutions such as Avast Controls & Insights and Avast

Locator. These and other partnerships increase sales for the Group and also increase brand visibility. Certain of

the Group’s paid antivirus security products are also available as box sets at brick-and-mortar retailers such as

Dixon’s and Best Buy.

SMB products

The Group sells premium paid products for businesses, targeting primarily the SMB market, through partners and

managed service providers that support SMBs as well as through direct online sales from its websites. In 2017,

approximately 60% of SMB revenues were generated through sales made by partners. Direct online sales to

SMBs are mainly made to small office or home office customers (i.e., businesses with one to ten workers) and

other direct sales are mainly educational institutions (e.g., schools and universities).

The Group has approximately 9,000 active partners in its SMB unit. The in-country partner sales and marketing

teams focus on both renewals of existing customers (including up-sell and cross-sell opportunities) and on first

purchases of new customers. The sales and marketing teams acquire new customers by developing a pipeline of

leads that they work to convert into buying customers over a prospect lifecycle, originally sourced through

search, social media, webinars, regional events and other marketing campaigns. In 2017, the Group implemented

a new partner program which compensates partners based on their technical skills, sales skills and annual

revenue.

Managed service providers are service providers who manage and assume responsibility for a set of services to

their SMB clients. The Group strategically partners with managed service providers, distributors and resellers,

with the goal that such partners recommend the use of the Group’s products to their SMB clients who are seeking

security solutions.

Customer support

Consumer

The Group provides customer support, technological support and billing support services for its users. The Group

operates a community forum on which users provide support to other users, and it also operates more traditional

customer support functions. The Group has approximately 100 employees working in product technological

support in-house in Prague, Czech Republic, Brno, Czech Republic and Belgrade, Serbia.

The Group has out-sourced providers of technological support for its products in addition to its own employees.

The Group has oversight of agent recruitment, training and general policy with the service providers. In addition,

the Group monitors individual agent performance: reviewing sample calls, recording customer satisfaction

measures and conducting regular KPI reviews and governance meetings with both operational staff and

management to check on quality. The Group has agreements with customer service providers to provide

approximately 300 additional product technological support staff providing services to users. The Group also has

premium paid customer service offerings such as Avast Total Care and AVG Go. In order to service the

technological support needs of these customers, the Group has out-sourced with a service provider to engage

another approximately 300 support staff.

The Group also provides billing and payment support for users. The Group makes use of shared (not dedicated)

out-sourced agents for these purposes. Generally, these support services are managed by the Group’s

E-commerce Partners: for example, approximately 150 agents in Digital River support the Group’s customers,

but also support other companies’ customers.

SMB

The Group offers customer support specifically tailored for its SMB customers. The Group has approximately 40

employees working in SMB technical support in-house in Prague, Czech Republic; Charlotte, North Carolina,

United States and Ottawa, Canada. None of the Group’s SMB support for the Group’s products is out-sourced.

Geographic area

The Group operates globally, with its user footprint being the largest in the United States, Canada, Brazil, France,

Germany and Russia. In the year ended 31 December 2017, approximately 35% of the Group’s users were in the

Americas, 48% of its users were in Europe, the Middle East and Africa, and 17% of its users were in Asia

Pacific.

Research and development

The Group had research and development costs of $75.5 million in the year ended 31 December 2017, 12% of

the Group’s total revenues. The Group’s research and development costs were $46.8 million for the year ended

31 December 2016 and $23.7 million for the year ended 31 December 2015, or 14% and 9% of revenues,

respectively. The Group’s research and development costs consist primarily of compensation and related benefits

for personnel engaged in research and development. A small portion of research and development costs and

expenses is the cost of bandwidth and utilities, licence and technical service fees and depreciation of equipment

and amortisation of acquired intangible assets.

As of 31 December 2017, the Group had more than 600 employees focused on R&D, representing greater than

45% of its total headcount. Of these employees, approximately 70% were located in the Czech Republic. The

majority of the remaining R&D employees were located in the United States or Canada. The Group’s R&D

personnel focus primarily on product development and quality assurance.

The Group has teams which specifically focus on cloud technology and machine-learning capabilities. The Group

has more than 50 data scientists and threat researchers, including the Avast machine-learning team.

Approximately 60% of the Group’s R&D employees have either a master’s level degree or doctorate.

The Group invests in R&D in order to enhance and expand its product offerings. The Group’s development

strategy is to identify updates, features and new products based on users’ needs and expectations. Additionally, a

number of the Group’s R&D personnel focus on quality assurance.

The Group continuously looks to identify new malware and deliver effective responses to protect users. The

ThreatLab team relies heavily on sophisticated, internally-developed tools to process the substantial majority of

these samples automatically. This automated AI-based infrastructure and use of machine-learning are the primary

reasons that the Group can maintain a relatively small team of employees focused on daily updates of malware

definitions. In addition to employees dedicated to improving the Group’s core security technologies, the Group

also has employees dedicated to enhancing its consumer monetisation platform.

For the predominately Czech Republic-based R&D team, the Group recruits talented individuals through a

variety of techniques, including cooperation with local universities where the Group’s employees regularly teach

courses. The Group ranks as one of the top technology employers in the region, which further enhances its ability

to recruit talented individuals. The Group is a member of key industry organisations, is heavily involved in

various technological communities and regularly attends and participates in organising industry events where the

Group’s employees are frequent speakers. Further, the Czech Republic was identified as one of the top ten most

innovative countries by the Consumer Technology Association for their 2018 International Innovation Scorecard.

Intellectual property

The Group’s intellectual property rights are important to its business. The Group relies on a combination of

patent, trademark, copyright and trade secret laws, as well as licensing agreements and third party nondisclosure

and assignment agreements to protect its intellectual property and know-how. It is customarily required when

their relationship with the Group begins that employees and independent contractors execute confidentiality

agreements or otherwise agree to keep the Group’s proprietary information confidential. The Group’s policy

requires that employment contracts also include clauses requiring employees to assign all of the inventions and

intellectual property rights they develop in the course of their employment, or the economic benefits thereof, to

the Group and to agree not to disclose or misuse any confidential information. Since some of the Group’s trade

secrets and know-how, such as the Group’s virus databases and development tools, are stored electronically, the

Group employs security systems designed to protect its servers from unauthorised external access.

As of 31 December 2017, the Group owned 144 patents, with the majority granted in the United States, and some

also in other jurisdictions. As of 31 December 2017, the Group had also applied for over 70 additional patent

applications which are pending in various jurisdictions, with the vast majority of them in the United States. Of

the Group’s patent portfolio, a total of 14 patents (and 36 pending patents) relate to antivirus technology, 14

patents (and 25 pending patents) relate to artificial intelligence and machine-learning, 43 patents (and 12 pending

patents) relate to location technology and one patent (and 7 pending patents) relates to the IoT, in addition to its

other mobile, PC and backend related patents.

The Group has obtained trademark registrations that it considers material to the marketing of its products,

including Avast and AVG. While the Group aims to acquire adequate protection of its brand through trademark

registrations in all key markets, occasionally third parties may have already registered identical or similar signs

for identical or similar products or solutions. As the Group relies in part on brand names and trademark

protection to enforce its intellectual property rights, barriers to the registration of the Group’s brand names and

trademarks in various countries may restrict its ability to promote and maintain a cohesive brand throughout key

markets.

Pursuant to a licence agreement that the Group entered into in November 2008 with the Group’s founders, Pavel

Baudisˇ and Eduard Kucˇera, as subsequently amended, the Group was granted an exclusive, unrestricted,

perpetual, worldwide, sublicensable licence to use all versions of its antivirus software created before 1 January

2007, including all virus and user databases, development and administration software tools and computer

programs related to updating, supporting and distributing the antivirus software. The Group also licenses all

know-how related to the development and distribution of antivirus software created by the founders before

1 January 2007. After 1 January 2007, all such activities were conducted by the Group such that all subsequent

upgrades, updates and new versions of formerly developed products and newly developed products are owned by

the Group. The Group pays no royalties or other fees to maintain the licence (as these were payable under the

license agreement only until 31 December 2016). The licence agreement may not be terminated pursuant to its

terms and may not be assigned pursuant to Czech law by the licensors. However, under Czech law, the license

can be terminated if there is a material breach or if the Group ceases to use the licensed software. Given that the

Group has no obligations under the licence, the Group is comfortable that there is minimal risk of this licence

being terminated while the Group continues to use the software and related know-how.

The Group maintains “click-wrap” licencing agreements for its products which grant the user a non-exclusive

licence to use the software and documentation for the agreed term at the time of purchase pursuant to the terms of

the agreements.

Competition

The markets for the products offered by the Group are highly competitive and subject to rapid technological

changes and market dynamics. It is expected that competition will continue to increase in the future.

In particular, some such competitors may make acquisitions or enter into agreements or other strategic

relationships to offer more comprehensive products and/or services, and new competitors may enter the market

through acquisitions, agreements or strategic or other such relationships. Further, platform vendors, such as those

with operating systems or browsers, may integrate security solutions into their platforms to the exclusion of

competitors or make it more difficult for competitors to attract and retain users.

The Group believes that the key competitive factors in the market include:

• product quality such as detection rate and scanning speed;

• size of user base;

• the ability to grow into market adjacencies in the face of the flat consumer PC antivirus market;

• product and brand awareness;

• brand reputation, user ratings and third party reviews;

• ability to develop and introduce new security functionalities, keeping up with rapid changes in malware and

virus threats as well as emerging market demands;

• product design and ease of use;

• ability to support multiple device types and operating systems;

• cost of user acquisition;

• the ability to reach large groups of users;

• cost of service delivery; and

• pricing flexibility.

The Group faces competition from a number of companies in its consumer business due to the diversity of its

product offerings. The Group’s main competitors include:

• antivirus companies offering free products, such as Avira, Panda and Qihoo 360 (primarily in China);

vendors with a traditional paid model such as McAfee, Symantec (Norton), Bitdefender, ESET, Kaspersky

Lab, Sophos, and Webroot; and Microsoft with Windows Defender;

• utilities competitors such as UniBlue, Iolo, Ashampoo, and Glarysoft;

• mobile security and utilities competitors such as Cheetah Mobile, Baidu, Qihoo 360, and Lookout;

• personal VPN competitors such as AnchorFree, ExpressVPN, NordVPN, VyperVPN, IP Vanish, and

CyberGhost;

• parental controls and insights competitors such as many of the antivirus companies cited above; pure-play

vendors such as Net Nanny, CyberPatrol, Qustodio, and uKnow; and mobile carriers, although currently

significant channel partners for the Group, may potentially become competitors if they were to develop their

own solutions for their users; and

• smart home security market competitors such as hardware vendors delivering solutions through home

networking equipment such as Luma, Eero, Circle, Cujo, and Keezel; established router vendors such as

Netgear and Linksys; and antivirus competitors with hardware-based solutions such as Symantec,

Bitdefender, and F-Secure.

• SMB security market competitors include Symantec, McAfee, Sophos, Kaspersky Lab, ESET, Bitdefender,

Webroot and Microsoft. The Group is also seeing competition emerge from network and cloud-based

security vendors such as Barracuda, WatchGuard, Check Point, Fortinet and Cisco.

Some of these companies have significantly greater brand recognition and greater financial, technical, marketing

and other resources than the Group. In particular, Microsoft has achieved success in the security market through

Windows Defender, free malware protection that is included with and built into Windows computers. At present,

Windows Defender is embedded in Windows 10 as a default antivirus protection, but it could become more

aggressive in preventing other security providers from placing their products on the Windows platform.

Similarly, Google could begin to aggressively promote its own native security solution in Android at the expense

of third party solutions.

Employees

As of 31 December 2017, the Group had approximately 1,464 full time employees, of which approximately 570

worked in Prague, Czech Republic and approximately 300 worked in Brno, Czech Republic. The remaining

employees are primarily located in the United States, the United Kingdom, Canada, the Netherlands and Serbia.

In addition to employees, the Group had approximately 100 independent contractors and approximately 125

long-term and short-term employees as of 31 December 2017.

As of 31 December 2016, the Group had approximately 1,785 full time employees following its acquisition of

AVG, and as of 31 December 2015 the Group had approximately 600 full time employees.

The Group employed over 650 engineers as of 31 December 2017, over 40% of full time employees. The Group

also employed, as of the same date, over 60 data scientists and threat researchers.

The following table details the breakdown of the Group’s employees by function in the years ended 31 December

2015, 2016 and 2017:

Employees by function (full time)

Year ended 31 December

2015 2016 2017

Consumer .............................................. 60% 46% 49%

SMB .................................................. 7% 16% 16%

Corporate functions

(1)

..................................... 33% 37% 35%

Total

(2)

................................................ 100% 100% 100%

(1) Includes executive management, finance, human resources, IT, legal, marketing and technology and innovation.

(2) Numbers may not sum due to rounding.

The following table details the breakdown of the Group’s employees by location for the years ended

31 December 2015, 2016 and 2017:

Employees by location (full time)

Year ended 31 December

2015 2016 2017

Czech Republic .......................................... 83% 57% 60%

Americas ............................................... 11% 24% 25%

Europe (excluding the Czech Republic) ....................... 3% 18% 15%

Asia Pacific ............................................. 2% 0% 0%

Total

(1)

................................................ 100% 100% 100%

(1) Numbers may not sum due to rounding.

Labour laws in the Czech Republic (applicable to employees but not to independent contractors) provide

minimum standards regarding annual paid and unpaid leave, sick leave, maternity leave and other provisions

regarding leave from work and other terms of employment. The Group contributes to pension schemes for its

employees in the Czech Republic, Germany, the United States and the United Kingdom.

None of the Group’s employees are represented by a labour organisation or covered by collective bargaining

agreements. To date, the Group has not experienced a labour-related work stoppage. The Directors consider the

Group’s relations with its employees to be good.

Properties

The Group has 25 offices worldwide. The Group’s offices are located in leased premises. Individual office leases

vary as to their terms, rental provisions and expiration dates. The Group’s principal facilities are located in

Prague, Czech Republic and Brno, Czech Republic. The Group’s Prague office consists of approximately 16,000

square meters of leased office space. The lease for this facility expires on 4 August 2024, with the possibility of

extension upon request. The Group’s Brno office consists of approximately 8,500 square meters of leased office

space. The lease for this facility expires on 1 May 2020, with the possibility of extension upon request. Certain of

the Group’s leases have a term as short as one year while others are indefinite in length. Rent on the majority of

the Group’s offices is paid monthly in advance. The Group also has offices or other facilities in the United States

(Kansas City, Fort Walton Beach, Emeryville, Charlotte, San Francisco, Redwood City and Brooklyn), the

United Kingdom (Lincoln, Maidenhead and London), Brazil (Sao Paolo), Canada (Ottawa), Germany

(Friedrichshafen, Muenchen, Darmstadt and Dusseldorf), the Netherlands (Amsterdam and Schiphol), Norway

(Lysaker), Serbia (Belgrade), Switzerland (Basel and Baar), Hong Kong, China (Beijing), Taiwan (Taipei),

Russia (Moscow and Novosibirsk) and Japan (Tokyo).

Environment

The Group believes that it does not have any material environmental compliance costs or environmental

liabilities.

Insurance

The Group maintains insurance coverage for property damage, professional liability and commercial general

liability. The Group also maintains business travel insurance and directors’ and officers’ insurance. The Group

believes that its current insurance coverage is appropriate for its business, in respect of its level and applicable

excesses and deductibles. The Group does not have any material outstanding insurance claims.

Dividend policy

The Group expects to adopt a dividend policy that focuses on providing significant returns to shareholders, whilst

also ensuring that the Group retains the flexibility to continue to deploy capital towards profitable growth. There

can be no guarantees that the Company will pay future dividends. The determination of the level of future

dividends, if any, will depend upon the Group’s results of operations, financial condition, capital requirements,

contractual restrictions, business prospects and any other factors the Board may deem relevant. The Group

currently expects to maintain dividend payments of approximately 40% of levered free cash flow in the short to

medium term.

Dividend payments will be made on an approximate one-third:two-thirds split for interim and final dividends,

respectively. The Group intends to commence dividend payments with a final dividend payment in respect of

2018, which will be payable in the first half of 2019.

The Group may revise its dividend policy from time to time.

Legal proceedings

See paragraph 18 of Part 14—“Additional Information”.

Regulatory matters

The Group is subject to the laws and regulations of a number of countries covering a wide variety of areas

affecting international transactions, including data protection and privacy, consumer protection, export controls,

anti-corruption legislation, labour laws, laws related to internet commerce, and information technology.

PART 7

DIRECTORS AND CORPORATE GOVERNANCE

Directors

The following table lists the names, positions and ages of the Directors. Each of the Directors became a director

of the Company on 9 May 2018.

Name Age Position

John Schwarz ................ 67 Independent Chairman

Vincent Steckler .............. 59 Chief Executive Officer

Ondrej Vlcek ................. 40 Executive Vice President, General Manager of Consumer, Chief

Technology Officer

Philip Marshall ............... 48 Chief Financial Officer

Pavel Baudisˇ ................. 58 Non-Executive Director

Eduard Kucˇera ............... 65 Non-Executive Director

Lorne Somerville ............. 54 Non-Executive Director

Warren Finegold .............. 61 Senior Independent Non-Executive Director

Ulf Claesson ................. 65 Independent Non-Executive Director

Erwin Gunst ................. 58 Independent Non-Executive Director

The business address of each of the Directors is 110 High Holborn, London WC1V 6JS, United Kingdom.

The management experience and expertise of each of the Directors is set out below.

John Schwarz (Independent Chairman)

Mr. Schwarz has served as one of the Group’s Directors since December 2011 and as Chairman of the Group

since January 2014. Mr. Schwarz will be the Independent Chairman of the Company at Admission. Since May

2010, Mr. Schwarz has served as co-founder and Chief Executive Officer of Visier, Inc., a business analytics

software firm. Mr. Schwarz joined SAP AG through its acquisition of Business Objects S.A. in January 2008 and

served on the executive board of SAP from March 2008 to February 2010, where he led the successful

integration of the two companies. From September 2005 until 2010, Mr. Schwarz was the Chief Executive

Officer of Business Objects S.A., later SAP Business Objects, a provider of business intelligence software and

services that was acquired by SAP in January 2008. Before joining Business Objects, Mr. Schwarz served as

President and Chief Operating Officer of Symantec Corporation from December 2001 to September 2005. Prior

to joining Symantec, from January 2000 to November 2001, Mr. Schwarz served as President and Chief

Executive Officer of Reciprocal Inc., which provided business-to-business secure e-commerce services to the

media industry. Before joining Reciprocal, Mr. Schwarz spent 25 years at IBM Corporation, working in various

development, manufacturing, sales and marketing roles. His last position was general manager of IBM’s Industry

Solutions unit, a worldwide organisation focused on building business applications and related services for

IBM’s large industry customers. Mr. Schwarz currently serves as a director of Synopsys, Inc. and Teradata, Inc.

in addition to his role as an advisor to Dalhousie University in Halifax, Nova Scotia. Mr. Schwarz holds a B.S. in

Computer Science from the University of Manitoba, a Diploma in Business Administration from the University

of Toronto, and an honorary Ph.D. from Dalhousie University.

Vincent Steckler (Chief Executive Officer)

Mr. Steckler has served as Chief Executive Officer and Director of the Group since January 2009. Prior to

joining the Group, Mr. Steckler was the Senior Vice President of Worldwide Consumer Sales at Symantec

Corporation, where he was in charge of multi-channel international consumer sales valued at $2.0 billion.

Mr. Steckler joined Symantec in 2000 as Vice President of Public Sector Business and started Symantec’s

business of serving U.S. local, state and federal governments. Mr. Steckler also served over two years as

Symantec’s Vice President for Asia Pacific and Japan and was responsible for all enterprise and consumer

business in that region. Prior to joining Symantec, Mr. Steckler had 20 years of experience in software

development, systems analysis and engineering, project management, and business development. Mr. Steckler

holds two B.S.’s from the University of California, Irvine, one in Mathematics and the other in Information and

Computer Science.

Ondrej Vlcek (Executive Vice President and General Manager of Consumer, and Chief Technology Officer)

Mr. Vlcek serves as the Group’s Executive Vice President, the General Manager for the Consumer business and

Chief Technology Officer (“CTO”), leading the largest business unit at Avast. Mr. Vlcek has architected the

Group’s cloud based security network for the newly announced IoT security solutions and has led his team to

significant growth. Serving as the Group’s CTO since 2009, Mr. Vlcek has pioneered Avast’s transformation

from a traditional PC antivirus vendor into the leading provider of next-gen security solutions it is today. In 2003,

Mr. Vlcek led the team that developed one of the first antivirus programs for Windows. He has worked for the

Group since 1996. Mr. Vlcek holds an MS in Mathematics from Czech Technical University in Prague.

Philip Marshall (Chief Financial Officer)

Mr. Marshall has served as the Chief Financial Officer and Director of the Group since February 2018. Prior to

joining the Group, Mr. Marshall was the Chief Financial Officer and Board Member at Exova Group plc from

2015 to 2017. Mr. Marshall was a Non-Executive Director and Audit Committee Member at PhotonStar LED plc

from 2013 to 2016 and Chief Financial Officer and Board Member at Wood Mackenzie from 2014 to 2015. Prior

to this, Mr. Marshall worked at General Electric from 1996 to 2013. He also currently serves as a Supervisory

Board and Audit Committee Member at Waberer’s International. Mr. Marshall holds a BA in Accounting Studies

from University of West London.

Rene-H Bienz was the Group’s Chief Financial Officer from October 2014 until February 2018. Mr. Bienz has

agreed to continue working with the Group as finance advisor to the CEO until the end of 2018 to assist with the

transition and on-boarding of Mr. Marshall.

Pavel Baudisˇ (Non-Executive Director)

Mr. Baudisˇ is one of the Group’s co-founders and has served as a Director of the Group since the incorporation

of Avast Software a.s. in December 2006. Mr. Baudisˇ will be a Non-Executive Director of the Company at

Admission. In 1988, Mr. Baudisˇ wrote the original program from which the Group’s portfolio of products is

generated. Since 1991, Mr. Baudisˇ has played a leading role in the development of the Group’s business with its

predecessor entity, ALWIL Software partnership. Prior to co-founding Avast, Mr. Baudisˇ was a graphics

specialist at the Czech Computer Research Institute (VUMS). Mr. Baudisˇ holds an M.S. in Information

Technology from the Prague School of Chemical Engineering.

Eduard Kucˇera (Non-Executive Director)

Dr. Kucˇera is one of the Group’s co-founders and has served as a Director of the Group from the incorporation of

Avast Software a.s. in December 2006, including as Chairman from January 2007 to February 2014. Dr. Kucˇera

will be a Non-Executive Director of the Company at Admission. Since 1991, Dr. Kucˇera was responsible for the

activities of the Group’s predecessor entity, ALWIL Software partnership. From 1991 to 2009, Dr. Kucˇera served

as Chief Executive Officer of the Group, directing day-to-day operations that included the transition to a free

software distribution model in 2002. Prior to co-founding the Group, Dr. Kucˇera was a computer hardware

specialist at the Czech Computer Research Institute (VUMS). Dr. Kucˇera holds a doctorate in experimental

physics from the Charles University in Prague.

Lorne Somerville (Non-Executive Director)

Mr. Somerville has been one of the Group’s Directors since 2014. Mr. Somerville will be a Non-Executive

Director of the Company at Admission. Mr. Somerville is a Managing Partner at CVC Capital Partners Limited

(“CVC Capital Partners”), having joined CVC Capital Partners in 2008 and led the team investing on behalf of

funds advised by CVC Capital Partners Advisory Company (Luxembourg) S.à r.l. in 2014. Mr. Somerville is the

Co-Head of the CVC Strategic Opportunities Fund and is the Head of the CVC Capital Partners

Telecommunications, Media, and Technology team. Prior to joining CVC Capital Partners, he worked for UBS,

where he was Joint Global Head of Telecommunications and Head of the European Communications Group, and

Swisscom AG as Head of Swisscom International. Lorne holds an MA in Computer Sciences from the University

of Cambridge and an MBA from IMD, Lausanne.

Warren Finegold (Senior Independent Non-Executive Director)

Mr. Finegold has been one of the Group’s Directors since February 2015. Mr. Finegold will be the Senior

Independent Director of the Company at Admission. Mr. Finegold retired from the Vodafone Group Executive

Committee in June 2016 having served for 10 years, most recently as Group Business Development Director. He

had previously served as Group Strategy and Business Development Director and CEO Global Business

Development. While a member of the Executive Committee, Mr. Finegold was responsible for strategy, business

development, mergers and acquisitions and partner networks. From 1985 to 1995, he was an Executive Director

at Goldman Sachs International in New York and London. From 1996 to 2006, he served as a Managing Director

of UBS Investment Bank and head of its technology team in Europe. He has been a Member of Supervisory

Board at VodafoneZiggo Group B.V. since 31 December 2016. He has been an Independent Non-Executive

Director at Inmarsat plc since August 2017. He has been a Non-Executive Director at UBM plc since 19 May

2017 and its Senior Independent Director since January 2018. Mr. Finegold holds a M.A. in Philosophy, Politics

and Economics from Oxford University and a Masters degree in Business Administration from London Business

School.

Ulf Claesson (Independent Non-Executive Director)

Mr. Claesson has been one of the Group’s Directors since October 2012. Mr. Claesson will be an Independent

Non-Executive Director of the Company at Admission. Since 2009, Mr. Claesson has served as a Partner at

BLR & Partners AG, a private equity firm in Zurich, Switzerland where he advises technology companies and

investors. In addition, since 1997, Mr. Claesson has served as founder and Managing Director of Whitecap

GmbH and Whitecap LLP. From 2006 to 2009, Mr. Claesson served as General Manager and Vice President at

Hewlett-Packard Corporation. Prior to founding Whitecap in 1997, Mr. Claesson worked for 20 years at IBM

Corporation serving in various engineering, sales, management and director positions. Mr. Claesson currently

serves as a member of the board of the Swiss Federal Commission for Innovation and Technology. He is also a

lecturer at the Swiss Federal Institute of Technology in Zurich. Mr. Claesson holds a M.Sc. from Chalmers

University of Technology.

Erwin Gunst (Independent Non-Executive Director)

Mr. Gunst has been one of the Group’s Directors since October 2012. Mr. Gunst will be an Independent

Non-Executive Director of the Company at Admission. From July 2008 to March 2010, Erwin served as Chief

Operating Officer and a Member of the Executive Board of SAP AG where he was responsible for global

operations, information technology, human resources and the management of all SAP Labs worldwide. From

October 2004 to July 2008, Erwin served as a Corporate Officer of SAP AG and President of Customer and

Solutions Operations for Europe, the Middle East and Africa. From 1988 to 2004, Erwin served in a variety of

positions with SAP, including Managing Director of SAP AG subsidiaries in Belgium, Switzerland and the

United Kingdom. Erwin holds a M.S. degree in Commercial Engineering from the Free University (Solvay) in

Brussels, Belgium.

Corporate governance

UK Corporate Governance Code

The Board is committed to the highest standards of corporate governance. As of the date of this Prospectus and

on and following Admission, the Board will comply with the UK Corporate Governance Code (the “Governance

Code”) published in April 2016 by the Financial Reporting Council except as set out below. As envisaged by the

Governance Code, the Board has established an audit and risk committee, a nomination committee and a

remuneration committee. If the need should arise, the Board may set up additional committees as appropriate.

The Governance Code recommends that at least half of the board of directors of a UK-listed company, excluding

the chairman, should comprise non-executive directors determined by the board to be independent in character

and judgment and free from relationships or circumstances which may affect, or could appear to affect, the

director’s judgment. As six of the Directors are not independent, the Company will not at Admission comply

with the recommendation of the Governance Code that at least half the board of directors, excluding the

chairman, should comprise non-executive directors. The Company intends to achieve full compliance with the

Governance Code over time.

The Board considers its Independent Non-Executive Directors and Senior Independent Director to bring strong

judgment and considerable knowledge and experience to the Board’s deliberations. The Governance Code

requires a company to state its reasons if it determines that a director is independent in certain circumstances,

including where a director holds cross-directorships or participates in the company’s share option or performance

related pay scheme. Although Mr. Schwarz, Mr. Finegold, Mr. Claesson and Mr. Gunst participate in the Group’s

existing share option plan, it should be noted (as mentioned in paragraph 8.1.1 of Part 14—“Additional

Information”) that this plan will no longer continue to operate following Admission. Further, the other Directors

have concluded that the judgement, experience and challenging approach of each of them should ensure that they

make a significant contribution to the work of the Board and its committees. Accordingly, the Company is

satisfied that Mr. Schwarz, Mr. Finegold, Mr. Claesson and Mr. Gunst are independent as defined in the

Governance Code and free from any business or other relationship which could materially interfere with the

exercise of their independent judgement. The Governance Code provides that the chairman of a company should

be independent on appointment. The Board further considers that Mr. Schwarz, the Chairman, was independent

upon appointment .

The Governance Code also recommends that the Board appoint one of the independent non-executive directors to

be the senior independent director. On Admission, Warren Finegold will fulfil this position. As noted above, the

Board considers Warren Finegold to be independent.

The Group believes the Board and Committees at Admission will act in the best interests of the Company and all

its future shareholders, and will provide appropriate corporate governance and experience. The Board believes

that the non-independent directors will ensure stability and continuity, as well as relevant experience and

expertise, and that the independent Non-Executive Directors of the Company will bring strong judgment and

considerable knowledge to the Board’s deliberations.

Audit and risk committee

The audit and risk committee’s role is to assist the Board with the discharge of its responsibilities in relation to

financial reporting, including reviewing the Group’s annual and half year financial statements and accounting

policies, internal and external audits and controls, reviewing and monitoring the scope of the annual audit and the

extent of the non-audit work undertaken by external auditors, advising on the appointment of external auditors

and reviewing the effectiveness of the internal audit, internal controls, whistleblowing, cybersecurity controls and

readiness and fraud systems in place within the Group. The audit and risk committee will normally meet not less

than three times a year.

The audit and risk committee is chaired by Erwin Gunst and its other members are Ulf Claesson and Warren

Finegold. The Governance Code recommends that all members of the audit and risk committee be non-executive

directors, independent in character and judgment and free from any relationship or circumstance which may,

could or would be likely to, or appear to, affect their judgment and that one such member has recent and relevant

financial experience. The Board considers that the Company complies with the requirements of the Governance

Code in this respect.

Nomination committee

The nomination committee assists the Board in reviewing the structure, size, performance and composition of the

Board. It is also responsible for reviewing succession plans for the Directors, including the Chairman and Chief

Executive and other senior executives. The nomination committee will normally meet not less than once a year.

The nomination committee is chaired by Warren Finegold and its other members are John Schwarz and Erwin

Gunst. The Governance Code recommends that a majority of the nomination committee be non-executive

directors, independent in character and judgment and free from any relationship or circumstance which may,

could or would be likely to, or appear to, affect their judgment. The Board considers that the Company complies

with the requirements of the Governance Code in this respect.

Remuneration committee

The remuneration committee recommends the Group’s policy on executive remuneration, recommends the levels

of remuneration for Executive Directors, the Chairman and other senior executives, grants awards under the

Group’s incentive plans and prepares an annual remuneration report for approval by the Shareholders at the

annual general meeting. The remuneration committee will normally meet not less than twice a year.

The remuneration committee is chaired by Ulf Claesson, and its other members are John Schwarz and Warren

Finegold. The Governance Code recommends that all members of the remuneration committee be non-executive

directors, independent in character and judgment and free from any relationship or circumstance which may,

could or would be likely to, or appear to, affect their judgment. The Board considers that the Group complies

with the requirements of the Governance Code in this respect.

Share dealing code

The Company has adopted, with effect from Admission, a code of securities dealings in relation to the Shares

which is based on the requirements of the Market Abuse Regulation. The code adopted will apply to the

Directors and other relevant employees of the Group.

Relationship Agreements with Sybil and the Founders

On 10 May 2018, the Company entered into a relationship agreement with Sybil Holdings S.à r.l. (“Sybil”),

which is owned by funds advised by affiliates of CVC Capital Partners Advisory Company (Luxembourg) S.à r.l.

(the “Sybil Relationship Agreement”), which will take effect on Admission. Pursuant to the Sybil Relationship

Agreement, Sybil shall, and shall (so far as it is legally able to do so) procure that certain of its affiliates

(excluding any portfolio or investee companies in which funds advised by affiliates of CVC Capital Partners

Advisory Company (Luxembourg) S.à r.l hold an interest or investment) (“CVC Affiliates”) shall:

(a) (i) conduct all transactions, agreements or arrangements entered into between any member of the Group and

Sybil and/or any CVC Affiliates (or the enforcement, implementation or amendment thereof) and all

relationships between any member of the Group and Sybil and/or any CVC Affiliates at arm’s length and on

normal commercial terms and (ii) where applicable, enter into all transactions, agreements or arrangements

in accordance with the related party transaction rules set out in Chapter 11 of the listing rules of the FCA

made under section 74(4) of the FSMA (the “Listing Rules”);

(b) not take any action which would have the effect of preventing the Company or any other member of the

Group from carrying on its business independently of Sybil and/or any CVC Affiliates;

Group from complying with its obligations under the Listing Rules, the Disclosure Guidance and

Transparency Rules of the FCA (the “DGTRs”), Regulation (EU) 596/2014 of the European Parliament and

of the Council of 16 April 2014 on market abuse (the “Market Abuse Regulation”), the FSMA, the

Financial Services Act 2012 (the “FS Act”) or the principles of good governance set out in the UK

Corporate Governance Code issued by the Financial Reporting Council from time to time in force (the

“Governance Code”) save in respect of any matters of non-compliance with the UK Corporate Governance

Code which are disclosed in this Prospectus or in the Company’s annual report or which have been agreed

to in writing by a majority of the Independent Non-Executive Directors;

(d) not exercise any of their voting rights in a manner which would prevent the Company from making

decisions for the benefit of the Shareholders taken as a whole;

(e) not exercise any of their voting rights in a manner that would require the Company to operate or make

decisions solely for the benefit of Sybil and/or any CVC Affiliates;

(f) not propose or procure the proposal of a shareholder resolution which is intended or appears to be intended

to circumvent the proper application of the Listing Rules;

(g) without prejudice to (f) above, not exercise any of their voting rights to vary the articles of association of the

Company to be adopted upon Admission (the “Articles”) which would:

(i) be contrary to the maintenance of the Company’s independence (including the Company’s ability to

operate and make decisions independently of Sybil and/or any CVC Affiliates); or

(ii) prevent the election of independent directors; or

(iii) be inconsistent with, undermine or breach any provision of the Sybil Relationship Agreement or the

Listing Rules, the DGTRs or the Market Abuse Regulation; and

(h) abstain from voting on any resolution required by paragraph 11.1.7R(3) of the Listing Rules to approve a

related party transaction where Sybil or any of its associates is the related party for the purposes of the

Listing Rules and, in any event that any of Sybil’s associates are shareholders at the relevant time, Sybil

shall take all reasonable steps to ensure that such associates also abstain from voting on such resolution.

In addition, pursuant to the Sybil Relationship Agreement:

(a) Sybil has agreed that, for a period of two years from Admission or, if earlier, the date which is three months

after the date of termination of the Sybil Relationship Agreement, subject to limited exceptions it shall not,

and will (insofar as it is legally able to do so) direct the CVC Affiliates not to, solicit for service or

employment any of the executive Directors of the Company or any other member of the executive

management team of the Group, in each case without the prior written consent of the Company;

(b) Sybil is entitled to appoint one natural person to be a non-executive director of the Company for so long as

Sybil and/or any CVC Affiliates hold in aggregate 10% or more of the voting rights attaching to the issued

share capital of the Company;

the issued share capital of the Company, the Company shall, if requested by Sybil, procure that the director

appointed by Sybil is permitted to attend as an observer at the Board’s Nomination Committee, Audit

Committee and Remuneration Committee;

(d) the Company has agreed, to the extent permitted by applicable laws and regulation, to provide certain

information to Sybil on an ongoing basis in order to enable Sybil and certain connected persons to complete

any tax return, compilation or filing or to comply with any audit or regulatory request or any other laws or

regulations which apply to Sybil or any such person;

(e) the Company has agreed, subject to compliance with relevant regulatory requirements, to procure that the

Group’s senior management shall provide reasonable assistance to Sybil or any CVC Affiliate in relation to

any proposed sale of Shares by Sybil or any CVC Affiliate at any time following Admission; and

(f) the Company agrees not to undertake any transaction in the Shares which may reasonably be expected to

give rise to an obligation for Sybil or any CVC Affiliate (and/or persons with whom they are acting in

concert within the meaning of the UK City Code on Takeovers and Mergers (the “City Code”)) to make a

general offer in accordance with Rule 9 of the City Code unless the Company has first obtained a waiver of

Rule 9 in accordance with the City Code, or the Company has otherwise obtained the necessary waivers or

consents from the Takeover Panel to prevent such obligations from applying.

The Sybil Relationship Agreement will be effective as from Admission and remain in effect for so long as Sybil

and/or any of the CVC Affiliates hold, in aggregate, 10% of voting rights attaching to the Shares and the Shares

continue to be admitted to listing on the Official List of the FCA.

On 10 May 2018, the Company entered into a relationship agreement with Pavel Baudisˇ and Eduard Kucˇera and

their respective investment vehicles PaBa Software s.r.o. and Pratincole Investments Limited (each a “Founder”

and together, the “Founders”) (the “Founder Relationship Agreement”, and, together with the Sybil

Relationship Agreement, the “Relationship Agreements”), which will take effect on Admission. Pursuant to the

Founder Relationship Agreement, each Founder shall, and shall (so far as he or it is legally able to do so) procure

that any of his or its associates shall:

(a) conduct all transactions, agreements or arrangements entered into between any member of the Group and

such Founder and/or any of his or its associates (or the enforcement, implementation or amendment thereof)

and all relationships between any member of the Group and such Founder and/or any of his or its associates

at arm’s length and on normal commercial terms and where applicable, enter into all transactions,

agreements or arrangements in accordance with the related party transaction rules set out in Chapter 11 of

the Listing Rules;

(b) not take any action which would have the effect of preventing the Company or any other member of the

Group from carrying on its business independently of the Founders and/or any of their associates;

Group from complying with its obligations under the Listing Rules, the DGTRs, the Market Abuse

Regulation, the FSMA, the FS Act or the principles of good governance set out in the Governance Code

(save in respect of any matters of non-compliance with the Governance Code which are disclosed in this

Prospectus or in the Company’s annual report or which have been agreed to in writing by a majority of the

Independent Non-Executive Directors);

(d) not exercise any of their voting rights in a manner which would prevent the Company from making

decisions for the benefit of the Shareholders taken as a whole;

(e) not exercise any of their voting rights in a manner that would require the Company to operate or make

decisions solely for the benefit of any of the Founders and/or any of their associates;

(f) not propose or procure the proposal of a shareholder resolution which is intended or appears to be intended

to circumvent the proper application of the Listing Rules;

(g) without prejudice to (f) above, not exercise any of their voting rights to vary the Articles which would:

(i) be contrary to the maintenance of the Company’s independence (including the Company’s ability to

operate and make decisions independently of the Founders and/or any of their associates); or

(ii) prevent the election of independent directors; or

(iii) be inconsistent with, undermine or breach any provision of the Founder Relationship Agreement or the

Listing Rules, the DGTRs or the Market Abuse Regulation; and

(h) abstain from voting on any resolution required by paragraph 11.1.7R(3) of the Listing Rules to approve a

related party transaction where such Founder or any of his or its associates is the related party for the

purposes of the Listing Rules.

In addition, pursuant to the Founder Relationship Agreement:

(a) each Founder has undertaken that, until the later of the termination of the Founder Relationship Agreement

and the date falling two years after Admission, he or it shall not, and will procure (insofar as is within his or

its power or control) that any of his or its associates shall not, operate, establish, own or acquire a

Competing Business. This undertaking shall not prohibit, after Admission, either of Mr. Baudisˇor

Mr. Kucˇera (together with their connected founder investment vehicle) from being entitled to acquire up to

5% in aggregate of the shares of any class of any company engaged in business that would constitute a

Competing Business provided the shares of such company are listed on a recognised stock exchange. For the

purposes of this Prospectus, “Competing Business” means a company, an undertaking, a business, a

business operation or other enterprise or entity which from time to time itself or through one or more of its

subsidiary undertakings, operates in the software anti-virus or cyber-security sector, or offers any products

or services which compete with such products or services as are offered or marketed by the Group at the

date of the Founder Relationship Agreement;

(b) each Founder has agreed that, during the period from the date of the Founder Relationship Agreement to the

later of: (i) the termination of such agreement or (ii) the date which is two years after the date of Admission,

subject to limited expectations, he or it shall not, and will procure (insofar as is within his or its power or

control) that any of his or its associates shall not solicit for service or employment any employee of the

Group;

Company for so long as the Founders and/or their associates hold in aggregate 10% or more (but less than

20%) of the voting rights attaching to the issued share capital of the Company; and (ii) two natural persons

to be non-executive directors for so long as the Founders and/or their associates hold 20% or more of the

voting rights attaching to the issued share capital of the Company;

(d) for so long as the Founders hold in aggregate 10% or more of the voting rights attaching to the issued share

capital of the Company, the Company shall, if requested by the Founders, procure that one of the directors

appointed by the Founders is permitted to attend as an observer at the Board’s Nomination Committee,

Audit Committee and Remuneration Committee;

(e) if, at any time after Admission, either of Mr. Baudisˇ and his connected founder investment vehicle on the

one hand and Mr. Kucˇera and his connected founder investment vehicle on the other hand: (i) is in material

breach of the Founder Relationship Agreement; or (ii) together with any of his associates, holds, in

aggregate, fewer than 5% of the voting rights attaching to the issued share capital of the Company, such

Founder shall cease to be jointly entitled, and the other Founders shall become entitled, to appoint (and

remove and reappoint) directors or an observer to the committees as described above; and

(f) the Company has agreed, to the extent permitted by applicable laws and regulation, to provide certain

information to each Founder on an ongoing basis in order to enable such Founder or any of his associates to

complete any tax return, compilation or filing or to comply with any other laws or regulations which apply

to such Founder or any of his or its associates.

The Founder Relationship Agreement will be effective as from Admission and remain in effect for so long as the

Founders and any of their associates together hold, in aggregate, 10% of voting rights attaching to the Shares and

the Shares continue to be admitted to listing on the Official List of the FCA.

The Group believes that the terms of the Relationship Agreements will enable the Group to carry on its business

independently of Sybil and the Founders and ensure that all transactions and arrangements between the Group, on

the one hand, and Sybil and the CVC Affiliates and/or the Founders and their respective associates, on the other

hand, will be conducted at arm’s length and on normal commercial terms.

Conflicts of interest