2009-02-10 07:00:00 CET
2009-02-10 07:02:15 CET
REGULATED INFORMATION
TietoEnator Oyj - Financial Statement Release
TIETO's interim report 4/2008 and financial statements bulletin 2008 - Profitability on track, growth hampered by weak Swedish currency (SEK) and soft demand in banking and telecom sectors
TietoEnator Corporation Quarterly Report 10 February 2009, 8.00 am
EET
To download the PDF file, please use this link:
http://hugin.info/3114/R/1288185/289990.pdf
Highlights - the fourth quarter
* Net sales remained at the same level as in the fourth quarter of
2007 and amounted to EUR 492.0 (491.3) million. In local
currencies, growth was 4%.
* Operating profit, excluding one-off items mainly related to the
Performance Improvement Programme, amounted to EUR 42.4 (39.1)
million, representing an operating margin of 8.6% (8.0).
* Operating profit, including one-off items of EUR 18.8 million,
amounted to EUR 23.6 (-63.8) million.
* Profit after taxes was EUR 1.8 (-71.3) million.
* EPS amounted to EUR 0.02 (-1.00).
* Net cash flow from operations amounted to EUR 78.2 (61.1)
million.
* The company launched a new corporate brand: Tieto.
Highlights - January-December
* Net sales totalled EUR 1 865.7 (1 772.4) million, up 5%.
* Operating profit, excluding one-off items mainly related to the
Performance Improvement Programme, totalled EUR149.9 (107.6)
million, representing an operating margin of 8.0% (6.1).
* Operating profit including one-off items amounted to EUR 111.6
(1.3) million.
* Profit after taxes was EUR 60.5 (-31.2) million.
* EPS amounted to EUR 0.83 (-0.44).
* Net cash flow from operations amounted to EUR 191.0 (119.0)
million.
* Dividend proposal: EUR 0.50 (0.50) per share.
Hannu Syrjälä, President and CEO:
Tieto's Turnaround programme progressed well in 2008. Our sales grew
in line with our expectations and our profitability improved
substantially from the previous year thanks to the Performance
Improvement Programme, which has advanced ahead of schedule. We
achieved all this in rather turbulent circumstances starting from the
public tender offer during late spring followed by major changes in
the financial markets and the overall global economy later in the
year.
The macroeconomic environment has continued to deteriorate, and
visibility is poor in all business sectors including IT. Therefore we
anticipate the IT markets to be challenging in 2009. Customers are
cautious about IT investments and new projects are being postponed.
On the other hand, customers are rationalizing their businesses, and
we expect that their outsourcing will provide growth opportunities.
During 2009, we will continue to focus on implementing our new
business structure and operating model, supporting our customers
through this economic downturn with high value-adding services, and
maintaining our profitability. Actions to keep our costs in control
will be taken as needed. At the same time, we will continue to invest
in our competence development and the implementation of the global
delivery model to ensure our future competitiveness.
Market development
In the fourth quarter, demand for IT services slackened due to the
rapid weakening of the world economy. The effects of the economic
slowdown on IT investments varied by customer segment. Demand for IT
services was at a good level especially in the public sector, i.e.
government, healthcare and welfare as well as the utilities segment
whereas the finance sector was hit hard. Prices were fairly stable in
most areas, although price pressure increased during the quarter,
especially in new agreements. The labour market has settled down and
the attrition rate is decreasing, easing pressure for higher
salaries. In the full year, the Nordic IT services market is
estimated to have grown by around 6%.
Going forward, cautiousness regarding future IT investments in new
solutions will increase and customers are expected to shift their
focus in IT expenditure. New large-scale investments will be
postponed, unless they offer clear short-term productivity benefits.
However, companies' investments designed to lengthen the life cycles
of their current IT systems and their efforts to achieve cost savings
by rationalizing their operations might open up new business
opportunities and, as a result, balance the changes in demand.
Banking and insurance
The overall market situation has changed rapidly in the finance
sector. Due to the credit crisis, customers have adopted a cautious
attitude towards IT investments and it is expected that they will
delay some of their investment decisions. Especially in the UK, IT
spending has been cut significantly and today, banks concentrate on
very few selected projects, mainly regulatory ones.
Telecom and media
As anticipated, overall IT demand in the telecom and media sectors
remained weak in the fourth quarter, especially in network R&D.
During the long and strong growth cycle in the sector, the industry
has made big investments in new technologies, such as 3G and wireless
IP access. Investments by operators and telecom equipment
manufacturers will thus be lower for some time. Due to cost-saving
initiatives launched by customers, price pressure increased and
average prices were at a slightly lower level.
Telecom manufacturers continue to consolidate their supplier base in
the hands of a few key vendors. The upshot is that the volumes of
each of the selected vendors will most likely grow. As the leading
R&D service provider, Tieto has been a key partner to many of its
customers. The company expects this trend to favour Tieto in the
future as well and hence to offset the weakness of the market.
Government, manufacturing and retail
Overall demand has remained solid in all of these areas as customers
are seeking to improve performance and productivity. For example, the
Finnish government sector will reorganize its regional administration
and this will open up new opportunities.
The positive trend in the manufacturing industry continued in the
fourth quarter. As uncertainty in the global markets has increased,
manufacturing companies may tighten their IT budgets in future.
Retail customers are in the market for IT systems to help them
provide new ways to manage customer demand more accurately. The
economic slowdown has not yet impacted on retail business.
Healthcare and welfare
Rationalization measures have been ongoing for a long time in some
areas, such as the public sector, i.e. government, healthcare and
welfare. Tieto anticipates that steady demand will continue,
underpinned by national initiatives to connect and consolidate
patient information systems.
Forest and energy
In the forest sector, restructuring in the industry, customers'
cost-saving initiatives and the tight finance market may increase
uncertainty in the short term, but on the other hand, restructuring
opens up new opportunities. Nordic customers are closing down excess
capacity in the Nordic countries, but are expanding business in
Russia and Asia, especially China.
In the fourth quarter, the market situation remained good for the
utilities sector. Both the rising demand for energy and the
deregulation of the sector in Europe ensure IT investments in the
coming years. In the oil & gas segment, the market is affected by
declining price of oil and there are signs of increasing cautiousness
regarding new IT projects. However, the worldwide long-term trend is
that demand for energy is growing fast, especially in countries like
China, India, Russia and Brazil. This is expected to maintain IT
investments at a healthy level in the long run.
ICT infrastructure outsourcing
The market for ICT infrastructure outsourcing in the Nordic countries
has remained at a fairly good level. The need to rationalize
operations and achieve fast cost reductions may speed up customers'
new outsourcing decisions going forward as well. On the other hand,
customers' cost savings programmes create pressure on prices in new
outsourcing contracts and contract renewals.
Tieto's business transactions and major agreements in
January-December
Following the acquisition of Sampo Bank by Danske Bank, Tieto's
business volumes to these customers have decreased. For this reason,
Primasoft Oy's operations and ownership have been reorganized. In
April, Tieto acquired the entire share capital of Primasoft Oy, a
joint venture previously owned by Tieto (60%) and other parties
(40%). In connection with the agreement, parts of Primasoft's
application management business were sold. These transactions had a
negative impact of EUR 9 million on the full-year net sales of
Banking & Insurance and Processing & Network in 2008. Thanks to
business generated by the related transfer projects, the impact was
less negative than anticipated.
In January, Tieto opened a new office in Chengdu to expand its
operations in China. The Chengdu centre serves Tieto's telecom
customers and offers services for mobile devices and network
manufacturers as well as for operators.
In March, Sjukvårdsrådgivningen SVR AB (the Swedish Healthcare
Advisory Organization) chose Tieto as a supplier of a solution for a
national patient overview (NPO). The agreement will run for five
years and the total value of the agreement is at least EUR 12
million.
In May, Tieto, OP-Pohjola Group Central Cooperative (OPK) and
Ilmarinen Mutual Pension Insurance Company concluded an agreement on
the delivery of ICT operations management services for the OP Pohjola
Group and Ilmarinen for the next seven years starting on 1 June 2008.
The services are produced by the joint venture FD Finanssidata, of
which Tieto owns 60%, OPK 36% and Ilmarinen 4%. This is one of the
largest agreements Tieto has made in recent years. In June, Tieto
concluded another major agreement when TeliaSonera renewed its IT and
application operations agreement.
In September, the City of Stockholm and Tieto extended their
agreement on the end-to-end provision of IT and telephony. The
extended agreement comes into effect on 1 August 2010 and runs until
31 July 2012. The delivery to the City of Stockholm will be made in
co-operation with SYSteam, SiriusIT, Aditro and TeliaSonera. The
order is valued at approximately EUR 41 million, of which Tieto's
share is approximately EUR 26 million.
Net sales
Net sales in the fourth quarter
Fourth-quarter net sales remained at the same level as in the fourth
quarter of 2007 and amounted to EUR 492.0 (491.3) million. In local
currencies, net sales grew by 4%. As 27% of Tieto's net sales are
generated in Sweden, the weakened Swedish currency (SEK) had a
negative impact on net sales in euros.
Net sales Organic
Q4 net sales Q4 organic growth in growth in
growth, % growth, % Jan-Dec, % Jan-Dec, %
Banking & Insurance -7 -6 0 2
Telecom & Media -8 -8 2 2
Government, 15 15 7 8
Manufacturing & Retail
Healthcare & Welfare 23 24 19 19
Forest & Energy 5 5 2 2
Processing & Network 4 4 12 12
Total incl. Group 0 0 5 6
eliminations
In Banking & Insurance, net sales fell by 7%. The finance sector is
hit hard by the credit crisis, and therefore investment decisions are
being postponed. Additionally, the transactions related to Primasoft
described earlier in this report had a negative impact of
approximately 4 percentage points on net sales. The trend in net
sales remained positive in certain product areas, such as Cards and
Capital Markets.
Telecom & Media held on to its market position in the fourth quarter.
There were several reasons behind the decline in net sales. The
weakened Swedish currency (SEK) had a negative impact of 4 percentage
points on net sales. Additionally, weak market development in the
telecom sector, especially in network R&D, affected both the volumes
and the prices.
Processing & Network's net sales grew by a modest 4%. The weakened
Swedish currency (SEK) had a negative impact of close to 4 percentage
points on the growth.
In Government, Manufacturing & Retail, strong demand has continued in
all sectors, especially in the government sector. In the
manufacturing sector, net sales growth was strong during the quarter,
but there are some signs that demand is weakening. In Healthcare &
Welfare, the positive trend continued. All units posted good growth
and the business area improved its position in all market areas. The
business area concluded several new agreements during 2008. In the
fourth quarter, growth was also driven by strong licence sales.
In Forest & Energy, net sales growth was mainly attributable to good
performance in the forest sector. Despite the challenging market, the
business segment grew its net sales. On the other hand, growth was
curbed by lower sales to one major customer in the utilities sector.
Net sales in January-December
Tieto's full-year net sales grew by 5% to EUR 1 865.7 (1 772.4)
million. In local currencies, growth was 7%. Organic growth totalled
6%, well in line with market growth.
Demand for IT services slowed down towards the year-end due to the
sharp downturn in the world economy. However, the effects varied
largely by business area. Banking & Insurance and Telecom & Media
were affected the most. In line with the market, Telecom & Media's
net sales growth slowed down in 2008 after a long period of strong
growth. On the other hand, business areas serving the public sector -
that is, Government, Manufacturing & Retail and Healthcare & Welfare
- held on.
In Healthcare & Welfare, growth has been excellent throughout the
year, underpinned by good demand for IT solutions and actions to turn
the business around. The business area concluded several mid-sized
and large new agreements during the second half of 2007 and 2008. All
units posted good growth and the business area improved its position
an all market areas. Sweden was the strongest growing market for
Healthcare & Welfare.
Processing & Network saw robust growth, clearly outpacing the
relevant market. The business area concluded several major agreements
in 2008. The most significant of these agreements were made with
TeliaSonera, OP-Pohjola Group and Ilmarinen. The transactions related
to Primasoft had a negative impact of around EUR 5 million on the
full-year net sales of Processing & Network in 2008, as described
earlier in this report.
In Banking & Insurance, the transactions related to Primasoft had a
negative impact of around EUR 4 million on the full-year net sales of
the business area in 2008. Additionally, the closure of Banking &
Insurance's German operations in October 2007 had a negative impact
on net sales growth, close to 3 percentage points. The trend in net
sales was positive in certain product areas, such as Cards and
Capital Markets.
Government, Manufacturing & Retail saw strong demand in all sectors.
In Forest & Energy, sales growth remained modest. Both the utilities
market and the oil & gas market remained active up until the
year-end, but the sales declined somewhat, mainly due to lower sales
to one major customer in the utilities sector. Despite the weak
market conditions in the forest sector, the business segment grew its
net sales.
Net sales were up 6% in Finland and 2% in Sweden. In Finland, all
business areas saw growth. In Sweden, the modest growth was mainly
attributable to weak development in Telecom & Media and of the
Swedish krona. In Denmark, all business areas powered ahead and net
sales grew by 85%. In Norway, net sales grew by 5%, supported by
Healthcare & Welfare's strong performance. In Germany, net sales
declined by 4%, mainly due to the closure of Banking & Insurance's
operations in 2007.
The telecom and media sector's share of consolidated net sales
amounted to 35% (37). The banking and insurance sector generated 22%
(22) of net sales, whereas the public sector's contribution was 16%
(15).
The order backlog, which only comprises services ordered with binding
contracts, amounted to EUR 1 124.1 (1 058.1) million at the end of
the period. Processing & Network's share of the order backlog is 39%.
In total, 54% (61) of the backlog is expected to be invoiced in 2009.
Performance Improvement Programme
The Performance Improvement Programme is expected to generate annual
cost savings of EUR 130 million as from the end of 2009. A major part
of the actions related to this programme were implemented in 2008.
The programme has resulted for example in a higher utilization rate,
accelerated transfer of production to the global delivery centres,
better procurement conditions and enhanced management of deliveries.
The programme has progressed ahead of schedule. The actions taken by
the end of December amount to annualized savings of EUR 120 million,
of which close to EUR 43 million has impacted 2008 performance. The
savings reached to date will come into full effect as from the end of
2009. About two thirds of this improvement is employee related.
The costs related to these actions have impacted Tieto's
profitability during 2008 and will continue to impact profitability
during 2009. The restructuring costs, provisions and impairments
related to the programme are expected to amount to approximately EUR
160 million of which one-off costs of EUR 104.7 million materialized
in 2007 and EUR 39.6 million in 2008.
Profitability
Operating Operating Operating
profit Operating profit margin of
of the margin of of the the
underlying the underlying underlying
business (1) underlying business (1) business (1)
in business (1) in in
Q4/2008, in Jan-Dec, Jan-Dec, %
EUR million Q4/2008, % EUR million
Banking & 9.6 12.6 29.9 10.2
Insurance
Telecom & Media 19.2 11.0 61.5 9.1
Government, 4.9 9.3 19.3 9.8
Manufacturing &
Retail
Healthcare & 10.4 20.3 15.3 9.2
Welfare
Forest & Energy 4.1 8.7 13.4 7.5
Processing & 9.6 8.1 50.2 11.0
Network
Group operations -15.5 -39.8
and other
Total 42.4 8.6 149.9 8.0
1) Excl. one-off items related to the Performance Improvement
Programme, capital gains/losses, badwill and impairment losses
Profitability in the fourth quarter
Profitability continued to improve in all business areas in the
fourth quarter. Operating profit, excluding one-off items related to
the Performance Improvement Programme, amounted to EUR 42.4 (39.1)
million, representing a margin of 8.6% (8.0). The actions related to
the Performance Improvement Programme were the main contributor to
the rise in margin.
In the fourth quarter of 2008, Tieto booked EUR 18.8 million in
one-off costs related to the programme. There were no capital gains
(capital gain of EUR 1.5 million in 2007) in the quarter.
Fourth-quarter operating profit, including one-off items, amounted to
EUR 23.6 (-63.8) million.
In Banking & Insurance, the operating margin of the underlying
business improved to 12.6% (3.9). In the fourth quarter of 2007, the
business area suffered from a few loss-making projects. In the fourth
quarter of 2008, the profitability of the product business improved
materially. The margin improvement is also attributable to decreased
use of subcontractors and lower personnel and other costs.
In Telecom & Media, the operating margin improved to 11.0% (10.0).
The margin improvement is mainly attributable to the actions related
to the Performance Improvement Programme.
In Processing & Network, the operating margin totalled 8.1% (10.2).
The decline in margin is mainly attributable to timing of start-up
and transition costs related to major agreements. In Government,
Manufacturing & Retail, strong performance was achieved thanks to a
higher utilization rate and cost savings related to the Performance
Improvement Programme.
In Healthcare & Welfare, the positive trend continued, driven
primarily by strong licence sales in the fourth quarter, a higher
utilization rate and better management of deliveries in the
solution-based business. Improvement in profitability was somewhat
curbed by unsatisfactory profitability in the Scandinavian and
Central European healthcare business. In the Forest & Energy business
area, profitability was at a good level, especially in the oil & gas
and forest segments. In the utilities sector, there are still
challenges but profitability is improving.
Net financial expenses stood at EUR 17.0 (3.9) million in the fourth
quarter. Net interest expenses were EUR 2.5 (1.5) million and net
losses from foreign exchange transactions EUR 16.7 (0.8) million, out
of which EUR 14.9 million were unrealized. Other financial income and
expenses amounted to EUR positive 2.2 (negative 1.6) million.
Fourth-quarter earnings per share (EPS) totalled EUR 0.02 (-1.00).
Operating profit (EBIT) includes EUR 2.4 (2.5) million from
amortization on allocated intangible assets. The costs arising from
share-based payments of EUR 1.4 (0.9 positive impact due to reversed
expenses) million are included in employee benefit expenses.
Profitability in January-December
Operating profit, excluding one-off items mainly related to the
Performance Improvement Programme, amounted to EUR 149.9 (107.6)
million, representing a margin of 8.0% (6.1). All business areas
improved their profitability. The actions related to the Performance
Improvement Programme were the main contributor to the rise in
margin.
In the full year, Tieto booked EUR 39.6 million in one-off items
related to the programme. Out of these items, costs from personnel
restructuring totalled EUR 24.8 million. Full-year operating profit,
including one-off items, amounted to EUR 111.6 (1.3) million. The
total costs related to the public tender offer amounted to EUR 12.2
million in 2008.
In Banking & Insurance, the operating margin of the underlying
business improved to 10.2% (0.6). In 2007, the business area suffered
from a few loss-making projects. The margin improvement is also
attributable to decreased use of subcontractors and lower personnel
and other costs.
In Telecom & Media, the operating margin improved to 9.1% (8.9). The
margin improvement is mainly attributable to the actions related to
the Performance Improvement Programme. In order to offset the
negative impact of price pressures, the business area has moved its
capacity to the company's global delivery centres during the past
couple of years.
In Processing & Network, the operating margin totalled 11.0% (9.5).
The margin improvement is mainly attributable to a higher utilization
rate. In Government, Manufacturing & Retail, strong performance was
achieved thanks to a higher utilization rate and cost savings related
to the Performance Improvement Programme.
In Healthcare & Welfare, the positive trend continued throughout the
year, driven primarily by better management of deliveries in the
solution-based business, enhanced quality and a higher utilization
rate. Improvement in profitability was somewhat curbed by
unsatisfactory profitability in the Scandinavian and Central European
healthcare business. In the Forest & Energy business area,
profitability was at a good level, especially in the oil & gas and
forest segments. However, a decline in sales to one major customer in
the utilities sector curbed the margin.
The full-year operating margin was 14% (14) in Finland. In Sweden,
all business areas improved their profitability and operating margin
totalled 8% (3). Compared to 2007, the operating margin also rose in
all other main markets due to fewer project losses and the actions
related to the Performance Improvement Programme.
Net financial expenses stood at EUR 29.2 (9.9) million. Net interest
expenses were EUR 9.3 (7.1) million and net losses from foreign
exchange transactions EUR 21.2 (0.7) million, of which unrealized net
losses EUR 23.4 million. Other financial income and expenses amounted
to EUR positive 1.3 (negative 2.1) million.
Full-year earnings per share totalled EUR 0.83 (-0.44).
Operating profit (EBIT) for the full year includes EUR 10.0 (9.8)
million from amortization on allocated intangible assets. The costs
arising from share-based payments of EUR 5.3 (2.9) million are
included in employee benefit expenses.
The 12-month rolling return on capital employed (ROCE) was 25.2% and
the return on shareholders' equity (ROE) 12.6%.
Financing
Fourth-quarter net cash flow from operations amounted to EUR 78.2
million (61.0). Operating profit contributed EUR 41.3 million (2.5)
and the decrease in net working capital contributed EUR 35.6 million
(56.3).
In the full year, net cash flow from operations amounted to EUR 191.0
(119.0) million. Operating profit contributed EUR 180.7 (121.8)
million and the decrease in net working capital contributed EUR 30.3
(8.4) million.
Tax payments amounted to EUR 14.0 (9.9) million.
Dividends of EUR 35.8 million were paid in April.
Acquisitions totalled EUR 8.0 (28.3) million in the full year.
The equity ratio was 41.1% (40.2). Gearing decreased to 21.0% (34.4).
Net debt totalled EUR 101.4 (164.5) million, including EUR 216.7
million in interest-bearing debt, EUR 14.5 million in finance lease
liabilities, EUR 9.6 million in finance lease receivables and EUR
120.2 million in cash and cash equivalents.
The interest-bearing debt consists of one seven-year bond at EUR 100
million (maturing in December 2013) and one seven-year private
placement at EUR 50 million (maturing in July 2012) and usage of EUR
3.0 million from the short-term EUR 250 million commercial paper
programme and EUR 57.5 million from the five-year 250 million
committed syndicated loan facility (maturing in December 2011).
Investments
Accrual-based investments totalled EUR 97.9 (87.7) million for the
period. Capital expenditure, including financial leasing, accounted
for EUR 83.2 (52.9) million and investments in subsidiary and
associated company shares for EUR 14.5 (34.8) million.
Personnel
The number of full-time employees totalled 16 618 (16 324) at the end
of December. A total of 2 841 (3 066) employees were hired in 2008.
Due to the exceptionally high attrition rate, recruitment activity
was brisk both in high-cost counties, 1 220, and offshore locations,
1 621. However, as the number of persons who resigned was high, the
net number of new hires did not grow accordingly. The net number
increased by 1 094 in offshore sites, and decreased by 443 in onshore
countries.
At the end of December, the number of employees in global delivery
centres had increased by almost 30% from last year and totalled about
4 280 (3 270), or 25% (19) of the total headcount. In line with the
company's strategy, global operations grew fast, especially in India
and China.
The 12-month rolling employee turnover stood at 12.8% (11.2) at the
end of December. Turnover, however, decreased substantially towards
the end of 2008. The average number of full-time employees was 16 397
(15 588) in the full year.
New corporate brand launched
In December, the company launched a new corporate brand: Tieto. The
official registered name of the company, TietoEnator Corporation,
will remain unchanged for the time being, as the change of the
registered company name is subject to a decision by the Annual
General Meeting.
Transactions with related parties
The related parties of Tieto are its Board of Directors, President
and CEO, the Leadership Team (LT) and the Group's associated
companies. The Corporate Management Team (CMT), now replaced by the
Leadership Team, was regarded as a related party in 2008.
The bonus levels of the President and CEO and CMT (Corporate
Management Team) members were reviewed with effect from the beginning
of 2008. The President and CEO's bonus is a maximum of 100% of his
annual base salary and is based on the Group's net sales and
operating profit. The reward factors for the CMT members are based on
the financial performance of the Group and their own units. In
addition, the Board has implemented a retention plan for the
President and CEO and CMT members connected to the public tender
offer that was ongoing during the second quarter of 2008.
In December, the Board of Directors approved a new share-based
incentive plan (Performance Share Plan 2009-2011) to be offered to
the President and CEO and other members of the Leadership Team and
share ownership guidelines for the President and CEO and other
Leadership Team members. The Board also decided to continue
preparations to launch an option plan for Tieto's key personnel.
The Performance Share Plan 2009-2011 includes one three-year earning
period, which will begin on 1 January 2009 and end on 31 December
2011. The potential reward from the plan is based on Tieto's earnings
per share (EPS) in 2011 and it will be paid in the form of shares in
the company. According to the Board's decision, the rewards to be
paid will correspond to a maximum of 540 000 shares, and the
participants shall receive cash compensation for accumulated
dividends on the shares during 2009-2011. No new shares will be
issued in connection with the Performance Share Plan.
Transactions with associated companies are not considered to be
material.
Shares and options
At the end of December, the total number of shares amounted to
72 023 173 and the share capital to EUR 75 841 523. The number of
shares in the company's possession totalled 361 650, representing
0.5% of the total number of shares and voting rights. The outstanding
number of shares, excluding the shares in the company's possession,
was 71 661 523 at the end of December.
In 2008, there were altogether fifteen announcements of changes in
the company's shareholding by the following companies: Goldman Sachs
Group, Inc., JPMorgan Chase & Co., OP Pohjola Group and UBS AG. The
latest announcements made in November are as follows: Goldman Sachs
Group, Inc.4.67% on 21 November, JPMorgan Chase & Co 3.67% on 19
November and OP Pohjola Group 5.24% on 10 November.
More detailed information about the changes in ownership during 2008
is available on the company's website.
Dividend proposal
The distributable funds of the parent company amount to EUR
801 791 803.78 of which net profit for the current year amounts to
EUR 19 541 399.60. The Board of Directors proposes a dividend of EUR
0.50 (0.50) per share for 2008.
The proposed dividend payout does not endanger the liquidity of the
company.
Risks and uncertainties
The economic slowdown might have a negative impact on volume growth
and increase price pressure in 2009. As 27% of Tieto's net sales are
generated in Sweden, the weakened Swedish currency (SEK) and
potential further weakening will also have a negative impact on net
sales and operating profit translated into euros. Additionally,
credit risks resulting from customer claims pose a growing risk.
Implementing the new strategy and company structure may create
uncertainty within the company in the short term. The ability to
control ever more complex multinational deliveries also poses a
continuous risk.
On the other hand, the labour market has now settled down and the
attrition rate is decreasing, easing pressure for higher salaries.
A comprehensive description of the major long-term risks is available
on the company's website.
Some items affecting 2009
The remaining costs related to the Performance Improvement Programme,
approximately EUR 20 million, will materialize in the first half of
2009.
The total costs related to the public tender offer are estimated to
amount to approximately EUR 7 million in 2009. This estimate includes
the retention compensation for a number of key managers and the
President and CEO.
Outlook for 2009
Tieto anticipates the overall growth of the IT services market to
remain flat in 2009 due to the economic slowdown. In the Nordic
countries, the best prospects in 2009 are seen in outsourcing as
fairly good demand for application and ICT infrastructure management
as well as maintenance is expected to continue in most sectors. These
services account for more than half of Tieto's net sales.
Visibility to the market is poor, as uncertainty prevails over the
future development of the IT market. Tieto expects its service
volumes to grow, supported by new outsourcing cases, but the lower
price level and weak Swedish currency (SEK) are anticipated to have a
negative impact on net sales. Price pressure is felt most in new
contracts and contract renewals as well as sectors where overall
demand is now declining.
A major part of the actions related to Tieto's Performance
Improvement Programme were implemented in 2008 and the majority of
the related costs materialized in 2007 and 2008. The remaining costs
related to the Performance Improvement Programme, approximately EUR
20 million, will materialize in the first half of 2009. The savings
reached to date have already favourably impacted Tieto's financial
performance and this will continue in 2009.
Tieto expects the labour market to continue to settle down in 2009,
easing pressure for higher salaries. In Finland and Sweden, wage
inflation is expected to be about 2-3% in 2009.
Financial calendar in 2009
Financial Statements and Annual Review 2008 on Tieto's website in
week 10
Annual General Meeting on 26 March 2009
Interim report for January-March 2009 on 24 April
Interim report for January-June 2009 on 17 July
Interim report for January-September 2009 on 21 October
Accounting policies in 2008
The interim report has been prepared in accordance with International
Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted
by the EU.
Amended standards that are effective in 2008, but not relevant to the
Group's financial statements: IAS 39 (Amendment) and IFRS 7
(Amendment), 'Reclassification of financial assets.
The full-year figures in this report are audited.
Accounting policies for 2009 can be found on pages 24 and 25 in this
report.
Key figures 2008 2007 2008 2008 2008 2008 2007
10-12 10-12 7-9 4-6 1-3 1-12 1-12
Earnings per share, EUR
- basic 0.02 -1.00 0.33 0.26 0.23 0.83 -0.44
- diluted 0.02 -1.00 0.33 0.26 0.23 0.83 -0.44
Earnings per share, EUR *) 0.21 0.05 0.36 0.29 0.36 1.21 0.77
Equity per share, EUR 6.75 6.67 6.90 6.58 6.29 6.75 6.67
Return on equity rolling 12
month, % 12.6 -5.7 -2.4 -4.9 -7.7 12.6 -5.7
Return on capital employed
rolling 12 month, % 25.2 7.8 8.9 8.8 7.2 25.2 7.8
Equity ratio % 41.1 40.2 42.0 38.8 38.0 41.1 40.2
Net interest-bearing
liabilities, EUR million 101.4 164.5 169.7 138.1 139.7 101.4 164.5
Gearing, % 21.0 34.4 34.3 29.3 31.0 21.0 34.4
Investments, EUR million 12.8 22.3 25.7 23.2 36.2 97.9 87.7
*) Excluding one-off items related to the Performance Improvement
Programme, goodwill impairment, badwill and capital gains and losses.
Income statement, EUR million 2008 2007 2008 2007 change
10-12 10-12 1-12 1-12 %
Net sales 492.0 491.3 1 865.7 1 772.4 5
Other operating income 2.4 4.1 10.8 13.3 -19
Employee benefit expenses 278.8 287.0 1 056.0 1 021.3 3
Depreciation and amortization 16.8 27.7 66.1 77.0 -14
Impairment of goodwill - 40.0 - 40.0
Other operating expenses 175.2 204.5 642.8 646.2 -1
Share of associated companies'
result 0.0 0.0 0.0 0.1
Operating profit (EBIT) *) 23.6 -63.8 111.6 1.3 8 485
Net interest expenses -2.5 -1.5 -9.3 -7.1 31
Net exchange losses/gains -16.7 -0.8 -21.2 -0.7 2 929
Other financial income and
expenses 2.2 -1.6 1.3 -2.1 Pos.
Profit before taxes 6.6 -67.7 82.4 -8.6 Pos
Income taxes -4.8 -3.6 -21.9 -22.6 -3
Net profit for the period 1.8 -71.3 60.5 -31.2 Pos.
Net profit for the period
attributable to
Shareholders of the parent
company 1.6 -71.9 59.9 -32.3 Pos.
Minority interest 0.2 0.6 0.6 1.1 -45
1.8 -71.3 60.5 -31.2 Pos.
Earnings attributable to the shareholders of the parent company per
share, EUR
Basic 0.02 -1.00 0.83 -0.44 Pos.
Diluted 0.02 -1.00 0.83 -0.44 Pos.
Employee benefit expenses include rental payments on company cars and
non-statutory employee benefits such as meals, healthcare and leisure
time activities.
The result-based bonuses were EUR 31.9 (23.6) million and stock
option expenses (share based payments) were EUR 5.3 (2.9) million.
*) Operating profit 2008 includes one-off items of EUR 39.6 million
related to the Performance Improvement Programme in the full-year and
EUR 18.8 million in the fourth quarter. In addition, the full-year
profit is negatively impacted by the cost of EUR 12.2 million related
to the occurred public tender offer and by EUR 2.5 million in the
fourth quarter.
Number of
shares 2008 2008 2008 2008 2008 2007
10-12 7-9 4-6 1-3 1-12 1-12
Outstanding
shares, end
of period
Basic 71 661 523 71 661 523 71 661 523 71 661 523 71 661 523 71 661 523
Diluted 71 739 083 71 661 523 71 661 523 71 661 523 71 739 083 71 661 523
Outstandingshares,
average
Basic 71 661 523 71 661 523 71 661 523 71 661 523 71 661 523 72 941 089
Diluted 71 739 083 71 661 523 71 661 523 71 661 523 71 739 083 72 941 089
Company's possession
of its own shares
End of
period 361 650 361 650 361 650 361 650 361 650 2 296 650
Average 361 650 361 650 361 650 531 760 403 945 1 203 733
Balance Sheet, EUR million 2008 2007 change
31 Dec 31 Dec %
Goodwill 389.3 415.7 -6
Other intangible assets 53.1 66.4 -20
Property, plant and equipment 100.5 76.8 31
Deferred tax assets 67.8 66.4 2
Investments in associated
companies 0.0 1.6 -100
Other non-current assets 1.5 1.5 0
Total non-current assets 612.2 628.4 -3
Trade and other receivables 498.5 560.2 -11
Current income tax receivables 13.9 9.9 40
Interest-bearing current assets 9.7 11.3 -14
Cash and cash equivalents 120.2 72.9 65
Total current assets 642.3 654.3 -2
Total assets 1 254.5 1 282.7 -2
Share capital, share issue
premiums and other reserves 109.0 115.4 -6
Retained earnings 373.0 358.2 4
Parent shareholders' equity 482.0 473.6 2
Minority interest 1.6 4.0 -60
Total Equity 483.6 477.6 1
Finance lease liability 14.5 1.4 936
Other interest-bearing loans 150.0 150.5 0
Deferred tax liabilities 29.2 23.4 25
Pension obligations 17.2 22.0 -22
Provisions 28.6 35.9 -20
Other non-current liabilities 1.6 1.7 -6
Total non-current liabilities 241.1 234.9 3
Trade and other payables 447.5 461.7 -3
Current income tax liabilities 15.6 11.6 34
Interest-bearing loans 66.7 96.9 -31
Total current liabilities 529.8 570.2 -7
Total equity and liabilities 1 254.5 1 282.7 -2
Net working capital in the balance sheet, EUR
million 2008 2007 change
31 Dec 31 Dec %
Accounts receivable 357.7 391.2 -9
Other working capital receivables 140.3 168.4 -17
Working capital receivables included in assets 498.0 559.6 -11
Operative accruals 191.1 225.4 -15
Other working capital liabilities 250.6 228.6 10
Pension obligations and provisions 45.7 57.9 -21
Working capital liabilities included in current
liabilities 487.4 511.9 -5
Net working capital in the balance sheet 10.6 47.7 -78
The change in net working capital in the balance sheet does not equal
to that in the cash flow due to acquisitions and disposals.
Cash flow, EUR million 2008 2007 2008 2008 2008 2008 2007
10-12 10-12 7-9 4-6 1-3 1-12 1-12
Cash flow from operations
Net profit 1.8 -71.3 23.7 18.7 16.3 60.5 -31.2
Adjustments
Depreciation,
amortization and
impairment 16.8 67.7 16.7 16.3 16.3 66.1 117.0
Share of associated
companies' result 0.0 0.0 0.0 0.0 0.0 0.0 -0.1
Share-based payments 0.9 0.2 1.3 1.1 0.8 4.1 2.3
Profit/loss on sale of
fixed assets and shares 0.0 -2.9 0.0 0.2 0.0 0.2 0.0
Other adjustments 0.0 1.3 0.0 -1.3 0.0 -1.3 1.3
Net financial expenses 17.0 3.9 3.5 5.8 2.9 29.2 9.9
Income taxes 4.8 3.6 6.6 5.1 5.4 21.9 22.6
Change in net working
capital 35.6 56.3 -46.5 19.5 21.7 30.3 8.4
Cash generated from
operations 76.9 58.8 5.3 65.4 63.4 211.0 130.2
Net financial expenses
paid -1.0 -1.4 -4.2 -0.6 -0.2 -6.0 -1.3
Income taxes paid 2.3 3.6 -6.8 -10.9 1.4 -14.0 -9.9
Net cash flow from
operations 78.2 61.0 -5.7 53.9 64.6 191.0 119.0
Cash flow from investing
activities
Acquisition of Group
companies and business
operations, net of cash
acquired -1.4 -16.0 -3.8 5.2 -8.0 -8.0 -28.3
Capital expenditures -15.3 -11.1 -21.7 -17.0 -14.5 -68.5 -48.6
Disposal of business
operations and associated
company 0.0 3.7 0.0 0.0 0.0 0.0 4.6
Change in loan receivables 0.9 -5.7 -0.1 -2.2 0.0 -1.4 -1.2
Sales of fixed assets 1.5 19.0 0.2 1.2 0.1 3.0 8.0
Net cash used in investing
activities from operations -14.3 -10.1 -25.4 -12.8 -22.4 -74.9 -65.5
Cash flow from financing
activites
Dividends paid 0.0 0.0 0.0 -36.0 0.0 -36.0 -88.5
Repurchase of own shares - -2.1 - - - - -32.1
Payment of finance lease
liabilities 0.0 -3.5 -0.9 -0.8 -0.9 -2.6 -12.1
Change in
interest-bearing
liabilities 0.6 -29.2 -3.1 2.5 -27.5 -27.5 17.1
Net cash used in other
financing activities 0.1 -0.2 -0.1 1.4 -1.4 0.0 0.5
Net cash used in financing
activities from operations 0.7 -35.0 -4.1 -32.9 -29.8 -66.1 -115.1
Change in cash and cash
equivalents 64.6 15.9 -35.2 8.2 12.4 50.0 -61.6
Cash and cash equivalents
at beginning of period -58.2 -57.7 -93.4 -85.0 -72.9 -72.9 -138.9
Foreign exchange
differences 2.6 0.7 0.0 -0.2 0.3 2.7 4.4
Cash and cash equivalents
at end of period 120.2 72.9 58.2 93.4 85.0 120.2 72.9
64.6 15.9 -35.2 8.2 12.4 50.0 -61.6
Change in loan receivables related to IFRIC 4 has been regrouped from
financing activities to investing activities.
Foreign exchange rate differences related to cash and cash
equivalents have been regrouped from change in net working capital.
2007 figures have been corrected accordingly.
Statement of changes in
Shareholders' equity
Parent shareholders' equity Minority Total
interest equity
Share
issue Trans-
premiums lation
and
Share other Own diffe- Retained
EUR million capital reserves shares rences earnings
Balance at 31
Dec 2006 75.8 68.8 -52.3 -6.6 536.7 4.0 626.4
Translation
difference -2.7 -5.9 10.2 1.6
Cancellation
of own shares 43.3 -43.3 0.0
Transfer
between
restricted
and
non-restricted
equity -26.5 26.5 0.0
Share-based
payments
recognized
against equity 2.3 2.3
Dividend -88.3 -88.3
Own shares
purchased -32.1 -32.1
Exercise of
share options 0.0 0.0 0.0
Net profit for
the period -32.3 -32.3
At 31 December
2007 75.8 39.6 -41.1 -12.5 411.8 4.0 477.6
Balance at 31
Dec 2007 75.8 39.6 -41.1 -12.5 411.8 4.0 477.6
Translation
difference -4.2 -63.6 46.3 -21.5
Minority
interest 0.3 -3.0 -2.7
Cancellation
of own shares 32.1 -32.1 0.0
Transfer
between
restricted
and
non-restricted
equity -2.2 2.2 0.0
Share-based
payments
recognized
against equity 3.8 3.8
Dividend -35.8 -35.8
Other changes
*) 1.7 1.7
Net profit for
the period 59.9 0.6 60.5
At 31 December
2008 75.8 33.2 -9.0 -76.1 458.1 1.6 483.6
*) Due to changes in accounting policies.
Net sales by business area, EUR
million (primary segment)
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Banking & Insurance 76 82 -7 293 293 0
Telecom & Media 174 188 -8 677 664 2
Government, Manufacturing &
Retail 53 46 15 198 184 7
Healthcare & Welfare 51 41 23 167 141 19
Forest & Energy 48 46 5 180 177 2
Processing & Network 119 115 4 458 409 12
Group elimination incl. other -29 -27 8 -107 -96 12
Group total 492 491 0 1 866 1 772 5
Country sales, EUR million
(secondary segment)
2008 Change Share 2007 Change Share
1-12 % % 1-12 % %
Finland 853 6 46 802 7 45
Sweden 506 2 27 495 9 28
Germany 146 -4 8 152 23 9
Norway 92 5 5 88 8 5
Denmark 48 85 3 26 -49 1
Great Britain 42 -24 2 55 15 3
Italy 34 10 2 31 84 2
France 28 15 1 24 32 1
Netherlands 23 -3 1 23 -7 1
Other 95 22 5 78 1 4
Group total 1 866 5 100 1 772 8 100
Net sales by industry segment,
EUR million
2008 Change Share 2007 Change Share
1-12 % % 1-12 % %
Banking and insurance 402 3 22 390 4 22
Public 303 11 16 273 -7 15
Telecom and media 648 0 35 650 26 37
Forest 91 7 5 84 -4 5
Energy 110 10 6 100 27 6
Manufacturing 105 7 6 99 11 6
Retail and logistics 121 36 6 89 1 5
Other 86 -2 5 87 -29 5
Group total 1 866 5 100 1 772 8 100
Operating profit (EBIT), EUR
million
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Banking & Insurance 7.5 -48.0 Pos. 27.1 -53.3 Pos.
Telecom & Media 17.5 13.3 31.6 51.9 53.2 -2.5
Government, Manufacturing &
Retail 3.9 -13.6 Pos. 15.5 -6.1 Pos.
Healthcare & Welfare 9.9 -5.3 Pos. 14.2 -5.2 Pos.
Forest & Energy 2.5 -1.7 Pos. 12.0 8.5 40.9
Processing & Network 7.5 5.9 26.9 45.5 32.8 38.9
Business areas 48.8 - 49.4 -198.7 166.2 29.9 456.6
Group operations incl. other -25.3 -17.2 -46.9 -54.6 -31.5 -73.6
Group capital gain 0.0 2.9 -100.0 0.0 2.9 -99.9
Operating profit (EBIT) 23.6 -63.8 Pos. 111.6 1.3 8 314.4
Operating profit, EUR million excl. capital gains/losses, impairment
losses,
badwill and Performance Improvement Programme related costs
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Banking & Insurance 9.6 3.2 203.5 29.9 1.7 1 686.4
Telecom & Media 19.2 18.9 1.8 61.5 58.9 4.3
Government, Manufacturing &
Retail 4.9 2.8 75.4 19.3 11.2 72.5
Healthcare & Welfare 10.4 4.6 126.9 15.3 3.2 383.0
Forest & Energy 4.1 3.0 38.2 13.4 13.2 1.8
Processing & Network 9.6 11.7 -18.1 50.2 38.8 29.6
Business areas 57.9 44.1 31.1 189.7 126.9 49.5
Group operations incl. other -15.5 - 5.0 -210.7 - 39.8 -19.3 -106.4
Operating profit (EBIT),
excl. capital
gains/losses, impairment
losses, badwill
and Performance Improvement
Programme
related costs 42.4 39.1 8.2 149.9 107.6 39.3
Operating margin (EBIT), %
2008 2007 Change 2008 2007 Change
10-12 10-12 1-12 1-12
Banking & Insurance 9.8 -58.5 68.3 9.2 -18.2 27.4
Telecom & Media 10.0 7.1 3.0 7.7 8.0 -0.3
Government, Manufacturing &
Retail 7.4 -29.3 36.7 7.9 -3.3 11.2
Healthcare & Welfare 19.4 -12.8 32.2 8.5 -3.7 12.2
Forest & Energy 5.2 -3.7 9.0 6.6 4.8 1.9
Processing & Network 6.3 5.2 1.2 9.9 8.0 1.9
Business areas 9.9 -10.1 20.0 8.9 1.7 7.2
Operating margin (EBIT) 4.8 -13.0 17.8 6.0 0.1 5.9
Operating margin (EBIT), % excl. capital gains/losses, impairment
losses,
badwill and Performance Improvement Programme related costs
2008 2007 Change 2008 2007 Change
10-12 10-12 1-12 1-12
Banking & Insurance 12.6 3.9 8.7 10.2 0.6 9.6
Telecom & Media 11.0 10.0 1.0 9.1 8.9 0.2
Government, Manufacturing &
Retail 9.3 6.1 3.2 9.8 6.1 3.7
Healthcare & Welfare 20.3 11.0 9.3 9.2 2.3 6.9
Forest & Energy 8.7 6.6 2.1 7.5 7.4 0.0
Processing & Network 8.1 10.2 -2.1 11.0 9.5 1.5
Business areas 11.8 9.0 2.8 10.2 7.2 3.0
Operating margin (EBIT), excl.
capital
gains/losses, impairment losses,
badwill
and Performance Improvement
Programme
related costs 8.6 8.0 0.6 8.0 6.1 2.0
Personnel by business area (primary
segment)
End of period Average
2008 Change Share 2007 2008 2007
1-12 % % 1-12 1-12 1-12
Banking & Insurance 2 040 - 6 12 2 180 2 104 2 229
Telecom & Media 5 791 - 3 35 5 990 5 871 5 563
Government, Manufacturing &
Retail 1 449 - 6 9 1 542 1 478 1 579
Healthcare & Welfare 1 154 4 7 1 114 1 121 1 095
Forest & Energy 1 217 - 4 7 1 274 1 245 1 272
Processing & Network 2 211 4 13 2 124 2 159 2 086
Software Centres 2 112 36 13 1 548 1 822 1 211
Other Group Operations 645 17 4 553 598 555
Group total 16 618 2 100 16 324 16 397 15 588
From Jan 2008, 12 persons were moved from Forest & Energy to
Government, Manufacturing & Retail. Figures for 2007 have been
restated. The change had minor effect on Net sales and EBIT 2007 in
the business areas.
Personnel by country (secondary
segment)
End of period Average
2008 Change Share 2007 2008 2007
1-12 % % 1-12 1-12 1-12
Finland 6 021 - 5 36 6 357 6 136 6 292
Sweden 3 291 - 3 20 3 381 3 323 3 351
Czech 1 501 27 9 1 186 1 358 968
Germany 1 143 - 14 7 1 325 1 226 1 346
India 784 32 5 594 652 348
Norway 655 - 9 4 720 668 744
Latvia 628 14 4 551 595 551
Poland 558 42 3 393 492 326
Great Britain 347 6 2 327 344 321
China 290 134 2 124 205 93
Denmark 289 - 16 2 344 308 318
Italy 251 8 2 233 247 226
Lithuania 186 49 1 125 156 108
France 143 11 1 129 133 123
Netherlands 138 1 1 137 135 109
Estonia 119 0 1 119 120 113
Other 274 - 2 2 280 299 253
Group total 16 618 2 100 16 324 16 397 15 588
The personnel figures for the associated companies under Group's
management responsiblity are reported according to our holding.
Personnel figures including these associated companies to 100% give a
total of
16 886 (16 701) at the end of the period.
Total assets by business area, EUR million (primary segment)
2008 2007 Change
31 Dec 31 Dec %
Banking & Insurance 178.7 215.8 -17
Telecom & Media*) 445.2 485.6 -8
Government, Manufacturing & Retail 50.1 51.2 -2
Healthcare & Welfare 83.9 96.0 -13
Forest & Energy 104.9 116.8 -10
Processing & Network 218.6 178.1 23
Group elimination -22.8 -21.9 4
Business areas 1 058.6 1 121.6 -6
Group Operations*) 195.9 161.1 22
Total assets 1 254.5 1 282.7 -2
Total liabilities by business area, EUR million (primary segment)
2008 2007 Change
31 Dec 31 Dec %
Banking & Insurance 120.5 127.6 -6
Telecom & Media*) 169.2 194.3 -13
Government, Manufacturing & Retail 39.3 49.4 -21
Healthcare & Welfare 40.1 44.3 -9
Forest & Energy 66.8 72.2 -7
Processing & Network 102.6 64.4 59
Group elimination - 15.5 -17.3 -10
Business areas 523.1 535.0 -2
Group Operations*) 247.8 270.1 -8
Total liabilities 770.8 805.1 -4
*) Assets, EUR 10.5 million, and liabilities, EUR 5.7 million, in
France have been regrouped from Group Operations to Telecom & Media.
2007 figures have been corrected accordingly (assets EUR 10.8 million
and liabilities EUR 6.9 million).
Segment assets by country, EUR million (secondary segment)
2008 2007 Change
31 Dec 31 Dec %
Finland 348.2 348.4 0
Sweden 287.4 333.8 -14
Norway 62.7 94.7 -34
Germany 178.9 160.9 11
Great Britain 35.1 45.7 -23
Other 146.3 138.1 6
Business areas 1 058.6 1 121.6 -6
Depreciation, EUR million
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Processing & Network 10.9 12.5 -13 41.8 40.0 5
whereof Finland 8.9 11.0 -19 34.3 34.1 0
Sweden 1.8 1.1 58 6.7 4.9 35
Other countries 0.2 0.4 -38 0.8 0.9 -10
Other 3.4 12.4 -73 14.3 27.2 -48
Group total 14.3 24.9 -43 56.0 67.2 -17
Amortization on allocated intangible assets from acquisitions, EUR
million
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Telecom & Media 1.4 1.5 -6 5.8 5.3 10
Other 1.0 1.0 0 4.2 4.5 -7
Group total 2.4 2.5 -4 10.0 9.8 2
Impairment losses, EUR million
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Banking & Insurance 0.0 40.0 -100 0.0 40.0 -100
Group total 0.0 40.0 -100 0.0 40.0 -100
Capital expenditure by business area, EUR million
2008 2007 Change 2008 2007 Change
10-12 10-12 % 1-12 1-12 %
Processing & Network 7.5 9.3 -20 63.7 36.1 76
whereof Finland 6.8 7.4 -8 54.8 29.7 85
Sweden 0.7 1.9 -63 8.9 6.4 39
Other countries 0.0 0.0 - 0.0 0.0 -
Other 5.3 3.5 51 19.5 16.8 16
Group total 12.8 12.8 0 83.2 52.9 57
2008 2007
Commitments and contingencies, EUR million 31 Dec 31 Dec change %
For TietoEnator obligations
Pledges - -
On behalf of joint ventures
Guarantees 0.0 1.8 -100
Other TietoEnator obligations
Rent commitments due in one year 54.4 56.0 -3
Rent commitments due in 1-5 years 102.2 129.4 -21
Rent commitments due after 5 years 19.5 25.6 -24
Operating lease commitments due in one year 8.2 9.3 -12
Operating lease commitments due in 1-5 years 7.9 15.0 -47
Operating lease commitments due after 5
years 0.0 0.0
Other commitments *) 13.9 53.7 -74
Operating lease commitments are principally three-year lease
agreements that do not include buyout clauses.
*) Including in 2007 commitment mainly for purchase of hardware and
software. In 2008 the commitment is presented in finance lease
liabilities and operating lease commitments.
Notional amounts of derivative financial 2008 2007
instruments, EUR million 31 Dec 31 Dec
Foreign exchange contracts 252.0 249.1
Interest rate swaps 100.0 100.0
Includes the gross amount of all notional values for contracts that
have not yet been settled or closed. The amount of notional value
outstanding is not necessarily a measure or indication of market
risk, as the exposure of certain contracts may be offset by that of
other contracts.
Fair values of derivatives, EUR million
The net fair values of derivative financial instruments
at the 2008 2007
balance sheet date were: 31 Dec 31 Dec
Foreign exchange contracts -6.1 2.8
Interest rate swaps 0.6 -2.0
Derivatives are used for hedging purposes only.
Contingent assets
The Finnish tax authorities have confirmed an additonal loss EUR 41.0
million (of which a deferred tax asset EUR 10.7 million could be
recognized) on the loss incurred by the parent company in connection
with the intra-group transaction carried out in April 2004, but the
decision has been contested.
Accounting policies as from 2009
The IASB has published the following standards and interpretations
whose application will be mandatory in 2009 or later. Tieto has not
early adopted these standards, but will adopt them in later periods.
The following standards and interpretations will be adopted by Tieto
in 2009:
- IAS 1 (Revised), 'Presentation of Financial Statements' will have a
minor impact on required disclosures
- Amendment to IAS 23, 'Borrowing Costs' requires that borrowing
costs that are attributable to contract activity are to be considered
part of the contract cost. As Tieto has a net credit position on
average, the amendment will not have any material impact
- IFRS 8, 'Operating Segments' replaces IAS 14. The new standard
requires a "management approach", under which segment information is
presented on the same basis as that used for internal reporting
purposes. The number of reportable segments, as well as the manner in
which the segments are reported, will be changed to conform with
internal reporting. As Tieto's new structure and operating model call
for a new type of reporting, the Business Area structure will be
discontinued and replaced by country segments: Finland, Sweden and
International. The new standard will require some additional
disclosures.
- Amendments to IAS 32, 'Financial Instruments: Presentation' and IAS
1, 'Presentation of Financial Statements' - Puttable Financial
Instruments and Obligations Arising on Liquidation. The amendment is
not expected to have an impact on the group's financial statements.
*)
- Amendment to IFRS 2, 'Share-based payment'. The amendment is not
expected to have an impact on the Group's financial statements.
- IFRIC 11, 'IFRS 2 - Group and treasury share transactions'. The
interpretation is not expected to have an impact on the Group's
financial statements.
- IFRIC 13, 'Customer Loyalty Programmes'. The interpretation is not
expected to have an impact on the Group's financial statements.
- IFRIC 14, 'IAS 19 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction'. The interpretation is
not expected to have an impact on the Group's financial statements.
- IFRIC 15, 'Agreements for the Construction of Real Estate'. The
interpretation is not expected to have an impact on the Group's
financial statements. *)
- IFRIC 16, 'Hedges of a Net Investment in a Foreign Operation'. The
interpretation is not expected to have an impact on the Group's
financial statements. *)
IASB published changes to several standards in May 2008 as part of
the annual Improvements to IFRS project, but they are not expected to
have an impact on the Group's financial statements. *)
- IAS 1 (Amendment), 'Presentation of financial statements'.
- IAS 16 (Amendment), 'Property, plant and equipment' (and
consequential amendment to IAS 7, 'Statement of cash flows').
- IAS 19 (Amendment), 'Employee benefits'.
- IAS 20 (Amendment), 'Accounting for government grants and
disclosure of government assistance'.
- IAS 23 (Amendment), 'Borrowing costs'.
- IAS 27 (Amendment), 'Consolidated and separate financial
statements'.
- IAS 28 (Amendment), 'Investments in associates' (and consequential
amendments to IAS 32, 'Financial Instruments: Presentation' and IFRS
7, 'Financial instruments: Disclosures').
- IAS 31 (Amendment), 'Interests in joint ventures' (and
consequential amendments to IAS 32 and IFRS 7).
- IAS 36 (Amendment), 'Impairment of assets'.
- IAS 38 (Amendment), 'Intangible assets'.
- IAS 39 (Amendment), 'Financial instruments: Recognition and
measurement'.
- IAS 40 (Amendment), 'Investment property' (and consequential
amendments to IAS 16).
- IAS 41 (Amendment), 'Agriculture'.
The following new standards, amendments and interpretations effective
in 2009 are not relevant to the financial statements of the Group:
- IFRS 1 (Amendment) 'First time adoption of IFRS', and IAS 27
'Consolidated and separate financial statements' (Amendment). *)
The following standards and interpretations published by the IASB
will be adopted by the Group in 2009 and management is assessing
their impact on the financial statements of the Group:
- IAS 27 (Revised), 'Consolidated and separate financial statements'.
*)
- IAS 39 (amendment), 'Financial instruments: Recognition and
measurement - Eligible Hedged Items'. *)
- IFRS 5 (Amendment), 'Non-current assets held-for-sale and
discontinued operations' (and consequential amendment to IFRS 1,
'First-time adoption'). *)
- IFRIC 17, 'Distributions of non-cash assets to owners'. *)
The following standards and interpretations published by the IASB
will be adopted by the Group in 2010:
- IFRS 3 (Revised), 'Business combinations'. The revised standard
continues to apply the acquisition method to business combinations,
with some significant changes. For example, all payments to purchase
a business are to be recorded at fair value at the acquisition date,
with some contingent payments subsequently remeasured at fair value
through income. Goodwill may be calculated based on the parent's
share of net assets or it may include goodwill related to the
minority interest. All transaction costs will be expensed. Management
is assessing the impact of this revision on the financial statements
of the group. *
The following new standards and interpretations effective in 2010 are
not relevant to the financial statements of the Group:
- IFRIC 12, 'Service Concession Arrangements'.
* The standard/ interpretation is still subject to endorsement by the
European Union.
The accounting policies will be described in more detail in the
annual financial statements for the year ended 31 December 2008.
Major shareholders 31 December 2008
Shares %
1 OP Pohjola Group 4 097 000 5.7%
2 Didner & Gerge Aktiefond 2 525 899 3.5%
Ilmarinen Mutual Pension Insurance
3 Co. 2 122 400 2.9%
4 Swedbank Robur fonder 1 987 195 2.8%
5 The State Pension Fund 1 600 000 2.2%
Svenska Litteratursällskapet i
6 Finland 1 504 000 2.1%
7 Varma Mutual Pension Insurance Co. 1 349 749 1.9%
8 Tapiola Pension 910 000 1.3%
9 Pekka Viljakainen 649 447 0.9%
10 FIM 593 567 0.8%
Nominee registered 44 260 931 61.5%
Others 10 422 985 14.5%
Total 72 023 173 100.0%
Based on the ownership records of the Finnish and Swedish central
securities depositories.
TIETOENATOR CORPORATION
For further information:
Hannu Syrjälä, President and CEO, tel. +358 2072 68729,
hannu.syrjala@tieto.com
Seppo Haapalainen, CFO, tel. +358 2072 63500,
seppo.haapalainen@tieto.com
Reeta Kaukiainen, EVP, Communications and Investor Relations, tel.
+358 2072 68711,
+358 50 522 0924, reeta.kaukiainen@tieto.com
Pasi Hiedanpää, Manager, Investor Relations, tel. +358 2072 68088,
+358 50 3782228, pasi.hiedanpaa@tieto.com
Press conference for analysts and media will be held in Helsinki,
Radisson SAS Royal Hotel, cabinet Finland, Runeberginkatu 2, at 10.00
am EET (9.00 am CET, 8.00 am UK time). The results will be presented
in English by Hannu Syrjälä, President and CEO. Notification of
attendance to sirpa.salo@tieto.com, tel. +358 2072 68714.
The conference will be webcasted and published live on Tieto's
website www.tieto.com. Questions can be asked online. An on-demand
video will be available after the conference.
Conference call hosted by the management starting at 3.00 pm EET
(2.00 pm EET, 1.00 pm UK time), will also be available as live audio
webcast at www.tieto.com. Callers may access the conference directly
at the following telephone numbers: US callers: +1 866 966 5335,
non-US callers: +44 20 3023 4402, no code. Lines are to be reserved
ten minutes before the start of the conference call.
An on-demand audiocast of the conference will also be published on
Tieto's website later during the day. A replay will be available
until 17 February 2009 at the following numbers: US callers:
+1 866 583 1035, non-US callers: +44 20 8196 1998, access code:
141833#.
Tieto publishes financial information in English, Finnish and
Swedish. All releases are posted in full on Tieto's website as soon
as they are published.
TIETOENATOR CORPORATION
DISTRIBUTION
Nasdaq OMX Helsinki
Nasdaq OMX Stockholm
Principal Media
Tieto is an IT service company providing IT, R&D and consulting
services. With approximately 16 000 experts, we are among the leading
IT service companies in Northern Europe and the global leader in
selected segments. We specialize in areas where we have the deepest
understanding of our customers' businesses and needs. Our superior
customer centricity and Nordic expertise set us apart from our
competitors.
Tieto is our new brand name as of 1 December 2008. The official
registered name of the company is TietoEnator Corporation.
www.tieto.com
TietoEnator Corporation
Business ID: 0101138-5
Aku Korhosentie 2-6
PO Box 38
FI-00441 HELSINKI, FINLAND
Tel +358 2072010
Fax +358 207268898
Registered office: Espoo
Kronborgsgränd 1
SE-164 87 KISTA, SWEDEN
Tel +46 8 632 1400
Fax +46 8 632 1420
mail: info@tieto.com
www.tieto.com
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